Shares of Brighthouse Financial (BHF) jumped nearly 10% in after-market trading hours on Tuesday after the Wall Street Journal reported that Aquarian Holdings is in exclusive talks to acquire the U.S.-based insurance company.
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For context, Brighthouse Financial provides life insurance and annuity products via independent advisors and brokerage channels. The company was spun out of MetLife (MET) in 2017. Meanwhile, Aquarian is a holding company backed by RedBird Capital and Abu Dhabi’s Mubadala, investing in insurance and asset management businesses.
More Details About the Potential Deal
According to people familiar with the matter, a deal could be finalized in the next few weeks. Notably, Brighthouse has been exploring a potential sale for much of this year, with reports in January indicating it had started working with bankers on a possible deal.
One of the final bidders, TPG (TPG), was aiming for a partial deal to buy just certain parts of Brighthouse rather than the whole company. However, they couldn’t reach an agreement and ended up not submitting a final offer.
In recent years, U.S. life insurance and annuity companies like Brighthouse have attracted growing interest from private equity firms and asset managers. These buyers are drawn to the opportunity to manage the insurers’ large asset bases, allowing them to deploy those funds into their investment strategies. In doing so, they not only aim for higher returns on the insurance assets but also boost the performance of their broader portfolios.
Although Aquarian already owns some insurance assets and created a subsidiary called Aquarian Insurance Holdings in March to manage them, sources say the potential Brighthouse deal is also seen as a way to build a larger platform in the insurance industry.
Is Brighthouse Financial a Good Stock to Buy?
Wall Street analysts hold mixed opinions on BHF stock. Earlier this week, Morgan Stanley lowered its price target from $45 to $42 while maintaining a Sell rating. Meanwhile, Wells Fargo and KBW both reiterated their Hold ratings. In contrast, Raymond James remains optimistic, continuing to rate the stock a Buy.
According to TipRanks, BHF stock has received a Hold consensus rating, with two Buys, four Holds, and two Sells assigned in the last three months. The average Brighthouse Financial stock price target is $59, suggesting a potential upside of 25% from the current level.
