Credit Suisse Downgrades Brighthouse Financial, Inc. (BHF) to Underperform

Credit Suisse analyst Andrew Kligerman downgraded Brighthouse Financial, Inc. (NASDAQ: BHF) from Neutral to Underperform with a price target of $22.00 (from $35.00).

Kligerman cited volatile distributable earnings. He noted

1. We estimate lower interest rates year-todate could reduce BHF’s 2019-2021 distributable earnings by $(1.0)B, though favorable equity markets may have largely offset it. But, this underscores BHF’s sensitivity to markets is outsized relative to peers. And,
2. unlike peers, BHF puts capital (its “deductible”) at risk, which ranges from $1.0-1.2B with targeted $1.5B by year-end 2019 and $2.0B by 2020.

Further, the analyst cited new accounting pressure. Kligerman said while it's too early to quantify, but impact to GAAP book value (GAAP BV) should be substantial. "In 2021 (possibly extended to 2022), FASB will implement new fair value accounting standards for insurance products with market risk guarantees, which include most variable annuities (VAs)," he noted.

For an analyst ratings summary and ratings history on Brighthouse Financial, Inc. click here. For more ratings news on Brighthouse Financial, Inc. click here.

Shares of Brighthouse Financial, Inc. closed at $36.40 yesterday.

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