As noted by aj in the comments just now Brighthouse Financial (BHF) is looking to sell itself.
I have very modest exposure to 2 preferred issues which I may/may not exit with losses. My concern is a potential delisting of preferred shares–I will need to read the prospectus to see what it has to say on the matter.
Thanks everyone for the comments! I’m not concerned about going dark, although I certainly realize that is a risk. I’ve mentioned this before, but I own what was a Delphi Financial floating-rate preferred (DFP) which was de-listed after Delphi was bought by Tokio Marine. I think I originally bought in 2009, was de-listed in 2012(?), and has paid the dividend every quarter since I bought. Hardly even trades these days. I guess we’ll see what happens with BHF.
rmh,
what symbol does the delphi trade under if it’s expert market?
It’s CUSIP 247131303 but I believe it trades OTC. I’ve not tried to buy or sell since it was de-listed many moons ago. Fun fact – a person at Ameritrade once told me it was worthless because it had been de-listed. LOL.
Notes: April 27, 2012 – Delphi Financial Group, Inc. announced today that it has notified the New York Stock Exchange that the Board of Directors of Delphi have authorized and empowered designated officers of Delphi to voluntarily delist from the NYSE the 7.376% Fixed-to-Floating Rate Junior Subordinated Debentures due May 1, 2067 issued by Delphi with NYSE ticker symbol DFP, as well as terminate the registration of the Hybrid Securities and the 7.875% Senior Notes due January 31, 2020 issued by Delphi and the reporting obligations of Delphi with respect to the Hybrid Securities and Senior Notes under the Securities Exchange Act of 1934, as amended. After the delisting and deregistration of the Hybrid Securities and Senior Notes, the holders of each of the Hybrid Securities and Senior Notes will continue to deal with and receive their respective principal and interest payments through the trustee, U.S. Bank National Association. Delphi has not arranged for the listing and/or registration of the Hybrid Securities or Senior News Notes on another national securities exchange or for the quotation of the Hybrid Securities or Senior Notes in a quotation medium.
Merger aside, is there any advantage of one BHF preferred over another?
One might think the highest coupon would get called first in a perfect world. Cap gain potential down the road?
fc and Rocky
Don’t think the issue is the probability of a call.
Right now, I IMHO that is zero..
The concern is going dark if a PE buys it (likely)
Some have mentioned APO as a potential buyer. They did ‘merge’ or acquired Athene an insurer and AHL and those preferreds still trade.
What exactly could happen if they went ‘Dark’ ? Do they just de-list and stop trading? Would there be a warning before such an event? Or, is the price drop just now is our warnings shot?
lastly, do they have to keep paying dividends till called?
Rocky
FWIW, BHFAL is debt, not a preferred. IIRC, the M, N, O, and P are preferreds,
BH Financial Global Funding is A2/A+
BH Financial is BBB+/BBB3
I’m looking at all the bond issues now, and it seems speculation on the preferred going to EM with the now listed baby bond is truly the concern as .otherwise the bonds would have dropped.
It’s really a little early to speculatively buy the preferreds, but I’d have to say they are not a terrible buy given no bond movement.
IFSR is always a big deal for a life or annuity carrier. Who is going to want their offerings if they are not at least A- rated?
I had not , however thought about the fact my fixed annuities could be transferred to a lower rated insurer after buying them . I should have thought of that.
Lt you just scared me. My pension was moved over to an annuity with an A rated insurer. But I have no control if they decided to set up a pool of annuities and spin them off to another company. I’m really beginning to hate these P.E deals
The $1000 debt issues seem little affected. They may move when a deal is announced.
Before I found III , I would never have considered the preferred would move to a largely unlit market.
Perhaps we should buy ourselves some political influence to get that market made more accessible….after loading our portfolios with EM issues
What a piece of sheee. Should have seen it coming. No wonder they tanked here recently. Nobody sells their insurance wrappers which were billed as a way to apply Variable annuity insurance wrappers with an equity investment. I had put a few positions back on. Yikes…….This looks like fry daddy to me.
Not a huge deal for me. Just hitting prices I saw in 2023. Fortunately I’ve never bought these securities near par value.
PREJ and Enstar group have worked out well assuming you were not the party buying them around par.
This deal is many months out if it happens so anything you see today is very preemptive.
I have checked two prospectus for Brighthouse preferred and I cannot find any change of control provision. Meaning if someone buys them they do not have to redeem the preferred.
So far my lowball bids are not even close to hitting. Need another good .75-.90 cent drop to get close.
Hm. Earlier I expected a bigger reaction with these preferred. More selling. Things have settled down already. Are expert market/going private fears starting to wane with a better understanding of how things play out over time? I feel there was a period of time where many people did not quite fully understand the “new normal” but it appears to be changing. Back in 2022 there was a lot of fear. Now…
Using BHFAM as an example anything below or close to 15 a share is quickly purchased. It was under 15 for a very brief moment in time. I am using BHFAM as the example because common sense says it would stay outstanding the longest.
fc –
So this could be the PRE fiasco all over again? Of course we don’t know yet if BHF will even be sold, but now that the investment bankers are being paid, chances are it will be privatized.
But 4.875% PREJF now trades openly on OTC and can be easily bought and sold at Schwab.
I have essentially given up trying to figure out these delisting scenarios – and no longer invest in any preferreds issued by small cap insurance companies.
You just don’t see these issues with banks (since mergers are nearly always with another public bank), and most property REIT preferreds have far better protections on change of control (although some issues here too with PSB and CDR).
It would be great if they merged with a larger public insurer, but these private equity houses have been scooping up these deals.
Mseni–I suspect they will do so again–Brookfield likes these type of deals.
Exactly who I was thinking could swoop in.
I would guess PE. PE likes to buy cash-rich annuity companies as a source of cheap funding. PE will set up an off shore captive insurance subsidiary in a less regulated country, replace the “better” assets with paper from its captive subsidiary, then tap into the freed up excess annuity reserves to buy the PE’s “products.” “The Bermuda Triangle” some call it.
IMHO the structure allows PE to cash out so the risk of loss falls on the annuity holders and unrelated insurance policy holders in the state of issue who although its not advertised are actually the “state insurance plan.” There is very little coverage on this phenomenon but it is my bet for the next big financial scandal. JMO. DYODD.
Bear the states can deal with this somewhat since it’s the state insurance pool that gets hit. They can cancel their license to sell in the state, but with the Internet it would be hard to enforce. Old saying about closing the door after the horse gets out.
BHS is a spin off of Met life. At last report Black Rock owned almost 10% of the common stock
I own a small position in the BB. My much bigger concern is that I bought a fixed index annuity from Met Life twelve years ago. Somehow the annuity was dumped into a new vehicle: Brighthouse. I had literally turned on the income option this month.
Seeing they were a spin off of Met Life that doesn’t sound likely….
If you prefer, my parents had a policy with Met Life that ended up with Bright House. An inherited IRA that was split 3 ways with my siblings. They gave me two options, cash it in or roll over to an annuity. At the time both my wife and me were working so I elected the annuity as I didn’t want to declare the income for the lump sum.
There’s no concern with that. You’re fine Charles
Its marketable debt obligations that could get left short changed by a potential acquirer. And just knowing they are trying to sell will turn off the new business spigot by 99%. Which can hang us out in numerous ways.
Their business was to insure against equity market declines. I thought w markets rallying to all time highs their risks were limited. And they could hedge them for less and less.
I always wanted to buy the BHF common because it sold for so much under book value. But reading the 10Q quarter after quarter I could never understand the big swings, either gains or losses, because of all the hedging. It was just too complicated and the market has never valued the shares anywhere near book.
Well, that somewhat explains the BHFAN drop of over 5% today