A.M. Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of "bbb-" to the recently priced $375 million 6.25% junior subordinated debentures due 2058 for Brighthouse Financial, Inc. (Brighthouse) (headquartered in Charlotte, NC) [Nasdaq: BHF]. Concurrently, A.M. Best has assigned indicative Long-Term IRs of "bbb+" to senior unsecured debt, "bbb" to subordinated debt, "bbb-" to junior subordinated debt and "bbb-" to preferred stock, to Brighthouse's recently filed universal shelf registration. The outlook assigned to these Credit Ratings (ratings) is stable. Brighthouse's Long-Term Issuer Credit Rating of "bbb+" and the ratings of its operating insurance subsidiaries are unchanged.
A.M. Best expects the debt issuance to increase cash and liquid assets at the holding company level, which exceeded $500 million prior to the debt issuance. However, A.M. Best notes that Brighthouse recently has been authorized to repurchase up to $200 million of common stock over the next 12 months, which will be funded by existing cash at the holding company and is not expected to impact risk-adjusted capital at the operating insurance companies.
Brighthouse's adjusted financial leverage is just below its target level of 25% and well within A.M. Best guidelines for its current rating. This includes the option for the underwriters of the debt offering to purchase up to an additional $56.25 million until Oct. 5, 2018. While operating results have been somewhat volatile in recent periods due to establishment costs, some fluctuations in mortality and expenses associated with its spin-off from MetLife, Inc., A.M. Best expects interest coverage to remain in the mid-single digits over the near-term.
This press release relates to Credit Ratings that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases
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