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Core Viewpoint - Brighthouse Financial's stock is experiencing a surge due to Aquarian's late-stage discussions with investors for financing its takeover of the insurer [2] Group 1 - Aquarian is planning to submit a final offer for Brighthouse Financial, which is based in Charlotte, NC [2]

Core Viewpoint - Brighthouse Financial shares increased by 14% following reports of Aquarian Holdings' plans to acquire the US life insurer [1] Company Summary - Aquarian Holdings is a New York-based private capital group that is advancing acquisition plans for Brighthouse Financial [1] - The acquisition interest has led to a significant surge in Brighthouse Financial's stock price, indicating positive market sentiment regarding the potential deal [1]

Core Viewpoint - Brighthouse Financial, Inc. (BHF) is experiencing a short-term bearish trend as it trades below its 50-day simple moving average (SMA), which is a key indicator for identifying support and resistance levels [1] Price Performance - BHF shares have declined by 2.8% year-to-date, while the industry has seen a decline of 1.6%. In contrast, the Finance sector and the Zacks S&P 500 Composite have increased by 10.6% and 8.9%, respectively [2] - The market capitalization of Brighthouse Financial is $2.7 billion, with an average trading volume of 0.8 million shares over the last three months [2] Valuation Metrics - BHF shares are trading at a price-to-book value of 0.47X, significantly lower than the industry average of 1.87X, indicating that the shares are affordable compared to peers [4] Sales Performance - Life insurance sales grew by 17.8% in Q2 2025, reaching $33 million, while annuity sales rose by 8.4% year-over-year to $2.6 billion, driven by strong demand for fixed annuities [7][14] - Total expenses surged by 68% to $3.5 billion in the first half of 2025, with long-term debt reaching $3.2 billion [7] Revenue and Earnings Projections - The Zacks Consensus Estimate for 2025 revenues is $8.9 billion, reflecting a year-over-year improvement of 1.5%. The current-year earnings estimate is $18.24 per share, down 7.1% from the previous year [8] - For 2026, earnings per share and revenues are projected to increase by 19.4% and 3%, respectively [8] Analyst Sentiment - The Zacks Consensus Estimate for 2025 earnings has decreased by 0.8% over the past week, while the estimate for 2026 has increased by 0.2% [9] Target Price and Upside Potential - The average price target for BHF, based on short-term projections from 10 analysts, is $56.90 per share, suggesting a potential upside of 23.4% from the last closing price [10] Strategic Initiatives - Brighthouse Financial is focused on expanding life insurance sales, enhancing annuity products, and extending its distribution reach to capture growth in the individual insurance market [13] - The company is reshaping its product lineup to meet changing client demands, including the introduction of SecureKey fixed indexed annuities and SmartGuard Plus, its first universal life product tied to market indexes [16] Financial Challenges - Despite solid fundamentals, Brighthouse Financial faces challenges from rising expenses, higher policyholder claims, and weakening margins, with total expenses increasing significantly [18] - The company's long-term debt has risen to $3.2 billion, resulting in a debt-to-equity ratio of 55%, which is considerably higher than the industry average of 16.7% [19] Conclusion - Brighthouse Financial is gaining traction through strong annuity sales and improving life insurance momentum, but rising expenses and high debt levels present notable challenges that could impact long-term performance [20]

Part I — Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Presents Brighthouse Financial's unaudited interim condensed consolidated financial statements for periods ending June 30, 2025 and 2024 [Interim Condensed Consolidated Balance Sheets](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) - Total assets increased to **$242.6 billion** as of June 30, 2025, from **$238.5 billion** at December 31, 2024, primarily driven by an increase in total investments. Total equity also rose to **$5.7 billion** from **$5.0 billion** over the same period[8](index=8&type=chunk) Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$242,645** | **$238,537** | | Total Investments | $120,747 | $117,387 | | Cash and cash equivalents | $5,540 | $5,045 | | Separate account assets | $86,085 | $85,636 | | **Total Liabilities** | **$236,907** | **$233,513** | | Future policy benefits | $31,974 | $31,475 | | Policyholder account balances | $88,046 | $87,989 | | Separate account liabilities | $86,085 | $85,636 | | **Total Equity** | **$5,738** | **$5,024** | [Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) - The company reported a net income available to common shareholders of **$60 million** for Q2 2025, a significant improvement from the **$9 million** in Q2 2024. For the six-month period, the net loss available to common shareholders narrowed to **$234 million** in 2025 from a loss of **$510 million** in 2024[12](index=12&type=chunk) Statement of Operations Summary (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $871 | $1,427 | $3,261 | $1,501 | | Total Expenses | $778 | $1,413 | $3,522 | $2,101 | | Net Income (Loss) | $85 | $34 | $(181) | $(457) | | Net Income (Loss) available to Common Shareholders | $60 | $9 | $(234) | $(510) | | Diluted EPS | $1.02 | $0.12 | $(4.06) | $(8.17) | [Interim Condensed Consolidated Statements of Equity](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Equity) - Total equity increased from **$5.02 billion** at the end of 2024 to **$5.74 billion** as of June 30, 2025. The increase was primarily driven by other comprehensive income of **$1.02 billion**, partially offset by a net loss of **$181 million** and share repurchases totaling **$102 million** during the six-month period[15](index=15&type=chunk) [Interim Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) - For the six months ended June 30, 2025, net cash provided by operating activities was **$145 million**, a significant turnaround from the **$196 million** used in the same period in 2024. Net cash from investing activities was **$675 million**, compared to a use of **$1.71 billion** in the prior year period[18](index=18&type=chunk) Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $145 | $(196) | | Net cash provided by (used in) investing activities | $675 | $(1,707) | | Net cash provided by (used in) financing activities | $(325) | $2,493 | | **Change in cash, cash equivalents and restricted cash** | **$495** | **$590** | [Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) - The company is organized into four reportable segments: Annuities, Life, Run-off, and Corporate & Other. The Annuities segment is the largest, with total assets of **$168.1 billion** as of June 30, 2025[21](index=21&type=chunk)[32](index=32&type=chunk)[55](index=55&type=chunk) - The company uses adjusted earnings, a non-GAAP measure, to evaluate segment performance. This measure excludes the impact of market volatility, such as net investment gains/losses and net derivative gains/losses, to highlight underlying profitability[37](index=37&type=chunk)[38](index=38&type=chunk) Adjusted Earnings by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Annuities | $332 | $332 | $646 | $645 | | Life | $(26) | $42 | $(17) | $6 | | Run-off | $(83) | $(30) | $(147) | $(371) | | Corporate & Other | $(25) | $2 | $(49) | $(32) | | **Total Adjusted Earnings** | **$198** | **$346** | **$433** | **$248** | - The investment portfolio is primarily composed of fixed maturity securities, with a fair value of **$80.8 billion** at June 30, 2025. The portfolio is predominantly investment grade, with **97.1%** of securities rated NAIC 1 or 2[88](index=88&type=chunk)[356](index=356&type=chunk) - During the six months ended June 30, 2025, the company repurchased **1.84 million** shares of its common stock for **$102 million**. As of June 30, 2025, **$441 million** remained available under the current share repurchase authorization[232](index=232&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, including segment performance, investment portfolio, and liquidity and capital resources [Executive Summary](index=60&type=section&id=Executive%20Summary) - For Q2 2025, the company reported net income available to shareholders of **$60 million** and adjusted earnings of **$198 million**. This compares to a net income of **$9 million** and adjusted earnings of **$346 million** in Q2 2024. The increase in net income was primarily due to favorable changes in the fair value of variable annuity guaranteed benefit riders[277](index=277&type=chunk)[278](index=278&type=chunk) Financial Summary (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Available to Shareholders | $60 | $9 | $(234) | $(510) | | Adjusted Earnings (Loss) | $198 | $346 | $433 | $248 | [Results of Operations](index=63&type=section&id=Results%20of%20Operations) - Consolidated adjusted earnings decreased by **$148 million** to **$198 million** in Q2 2025 compared to Q2 2024. The decrease was driven by lower net investment spread and higher insurance-related costs, particularly in the Life and Run-off segments[308](index=308&type=chunk)[309](index=309&type=chunk) - For the first six months of 2025, consolidated adjusted earnings increased by **$185 million** to **$433 million** compared to the prior year period. This improvement was primarily due to lower net costs in insurance-related activities, driven by a significant positive swing in the Run-off segment related to a prior-year reinsurance arbitration[308](index=308&type=chunk)[311](index=311&type=chunk)[313](index=313&type=chunk) - The Annuities segment's adjusted earnings remained stable at **$332 million** in Q2 2025, as a higher net investment spread was offset by lower fee income and higher expenses[314](index=314&type=chunk)[315](index=315&type=chunk) - The Life segment reported an adjusted loss of **$26 million** in Q2 2025, a **$68 million** decrease from the **$42 million** profit in Q2 2024, mainly due to higher claims[318](index=318&type=chunk)[319](index=319&type=chunk) - The Run-off segment's adjusted loss widened to **$83 million** in Q2 2025 from **$30 million** in Q2 2024, driven by lower net investment spread and higher insurance costs[323](index=323&type=chunk)[326](index=326&type=chunk) [Investments](index=75&type=section&id=Investments) - The company's investment portfolio is primarily composed of fixed maturity securities, totaling **$80.8 billion** at fair value as of June 30, 2025. The portfolio remains high-quality, with **97.1%** classified as investment grade (NAIC 1 or 2)[353](index=353&type=chunk)[356](index=356&type=chunk) - The adjusted net investment income yield was **4.28%** for Q2 2025, slightly down from **4.39%** in Q2 2024[349](index=349&type=chunk) - The commercial mortgage loan portfolio, with a carrying value of **$12.9 billion**, remains diversified by property type and geography. The average loan-to-value ratio was **68%** and the average debt-service coverage ratio was **2.2x** as of June 30, 2025[367](index=367&type=chunk)[370](index=370&type=chunk)[372](index=372&type=chunk) [Liquidity and Capital Resources](index=87&type=section&id=Liquidity%20and%20Capital%20Resources) - The company maintained a substantial short-term liquidity position of **$4.6 billion** as of June 30, 2025, consisting of cash, cash equivalents, and short-term investments, excluding pledged assets[401](index=401&type=chunk) - The parent holding company, BHF, held **$803 million** in short-term liquidity and **$941 million** in total liquid assets as of June 30, 2025[441](index=441&type=chunk)[442](index=442&type=chunk) - The company continues its capital return program, having repurchased **$102 million** of common stock in the first half of 2025, with **$441 million** remaining under its authorization as of June 30, 2025[408](index=408&type=chunk)[427](index=427&type=chunk) - In July 2025, S&P revised the long-term issuer credit ratings for BHF to **BBB** from **BBB+** and the financial strength ratings for certain subsidiaries to **A** from **A+**[410](index=410&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=98&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States no material changes to market risk exposures from the 2024 Annual Report, primarily related to interest rates, equity, credit spreads, and foreign currency - The company reports no material changes to its market risk exposures from those previously disclosed in the 2024 Annual Report[455](index=455&type=chunk) [Controls and Procedures](index=99&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, noting MetLife transition changes as material to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[457](index=457&type=chunk) - Ongoing changes to business processes and systems due to the transition from MetLife are considered material changes in internal control over financial reporting[458](index=458&type=chunk) Part II — Other Information [Legal Proceedings](index=99&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 13 for legal proceedings details, with estimated possible losses up to **$10 million** for some matters and **$100 million** for tax matters - For detailed information on legal proceedings, the report refers to Note 13 of the Interim Condensed Consolidated Financial Statements[460](index=460&type=chunk) [Risk Factors](index=99&type=section&id=Item%201A.%20Risk%20Factors) Indicates no material changes to the company's risk factors from those disclosed in its 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report[461](index=461&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=99&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common stock repurchases in Q2 2025, totaling **781,800** shares, with **$441 million** remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Value Remaining in Program (end of period) | | :--- | :--- | :--- | :--- | | April 2025 | 410,200 | $51.65 | $463 million | | May 2025 | 356,400 | $59.14 | $442 million | | June 2025 | 15,200 | $59.34 | $441 million | | **Total Q2** | **781,800** | | | [Other Information](index=99&type=section&id=Item%205.%20Other%20Information) Discloses that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - During Q2 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading plan[463](index=463&type=chunk) [Exhibits](index=100&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley and XBRL data files - Exhibits filed with this report include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files[465](index=465&type=chunk)

Core Insights - Brighthouse Financial, Inc. (BHF) reported second-quarter 2025 adjusted earnings of $3.43 per share, missing the Zacks Consensus Estimate by 27% and reflecting a year-over-year decline of 38.4% [1][9] - The lower-than-expected results were attributed to reduced premiums and lower net investment income, although total expenses decreased significantly [1][9] Financial Performance - Total operating revenues for the quarter were $2.2 billion, down 2.9% year over year, primarily due to lower universal life and investment-type product policy fees and net investment income, missing the consensus estimate by 2.1% [2] - Premiums amounted to $166 million, an 8.3% decrease year over year, falling short of the Zacks consensus estimate of $200 million [2] - Adjusted net investment income was $1.3 billion, down 1.8% year over year, mainly due to lower income from alternative investments, with an investment income yield of 4.28% [3] - Total expenses were $778 million, a nearly 45% decrease from $1.4 billion year over year, which partially offset the revenue decline [3] Segment Performance - Annuities generated an adjusted operating income of $332 million, remaining flat year over year, with annuity sales increasing 8.4% to $2.6 billion, driven by stronger fixed annuity sales [4] - Life insurance segment reported an adjusted operating loss of $26 million compared to earnings of $42 million in the prior year, with life insurance sales increasing 17.8% quarter over quarter to $33 million [5] - The Run-off segment recorded an adjusted operating loss of $83 million, wider than the previous year's loss of $30 million, while Corporate & Other had an adjusted operating loss of $25 million compared to earnings of $2 million in the prior year [6] Financial Position - Cash and cash equivalents increased by 24.7% year over year to $5.5 billion, while shareholders' equity rose 37% to $5.7 billion [7] - Book value per share, excluding accumulated other comprehensive income, was $144.09 as of June 30, 2025, reflecting a 12.3% year-over-year increase [7] - Statutory combined total adjusted capital was $5.6 billion as of June 30, 2025, up 3.7% year over year [7] - The estimated combined risk-based capital ratio was in the range of 405-425% as of June 30, 2025 [8] Share Buyback Program - Brighthouse Financial repurchased shares worth $43 million in the second quarter of 2025, bringing the year-to-date total to $102 million [10]

Financial Data and Key Metrics Changes - The estimated combined risk-based capital (RBC) ratio was between 405% and 425%, within the target range of 400% to 450% in normal market conditions [7][14] - Total adjusted capital (TAC) increased to approximately $5.6 billion at June 30, compared to approximately $5.5 billion at March 31 [14] - Adjusted earnings for the quarter were $198 million or $3.43 per share, down from $245 million in the previous quarter and $346 million in the same quarter of 2024 [17] Business Line Data and Key Metrics Changes - Total annuity sales were $2.6 billion, a 16% sequential increase and an 8% increase compared to 2024 [9] - Shield sales totaled $1.9 billion in the quarter, with year-to-date Shield sales at $3.9 billion, consistent with the same period last year [10] - Life insurance sales in the second quarter were $33 million, contributing to record year-to-date life insurance sales of $69 million, a 21% increase compared to the same period in 2024 [10] Market Data and Key Metrics Changes - The company received $176 million in deposits through BlackRock's LifePath Paycheck product in the second quarter, indicating strong market engagement [10] - The company noted increased competition in the marketplace, particularly affecting Shield sales, which saw a decline for the first time in several years [49] Company Strategy and Development Direction - The company is focused on capital efficiency and maintaining a strong capital position at its insurance subsidiaries [6] - A strategic initiative includes separating the management of the Shield and variable annuity (VA) books to improve risk management and transparency [27][28] - The company aims to continue innovating with respect to products and maintaining pricing discipline despite competitive pressures [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage its legacy liabilities and maintain operational capabilities [46] - The company is committed to protecting its statutory balance sheet under adverse market conditions and expects to see less volatility in results over time [20][29] - Management indicated that the transition to a revised hedging strategy is expected to be completed by the end of the third quarter [28] Other Important Information - Corporate expenses for the second quarter were $200 million, down from $239 million in the first quarter [11] - The company returned $43 million to shareholders through common stock repurchases in the second quarter, with a total of $102 million year-to-date [11] Q&A Session Summary Question: Concerns about actuarial review for 3Q and 4Q - Management stated that the actuarial review is ongoing and no updates are available at this time [22][23] Question: Buyback plans and capital preservation - Management confirmed that buybacks are part of the normal plan but noted that the recent program expired in May [41][42] Question: Impact of competition on Shield sales - Management acknowledged increased competition but emphasized that they remain pleased with their performance and pricing discipline [49][52] Question: Clarification on unassigned surplus and cash flow - Management explained that the negative unassigned surplus is a technical consideration and does not fundamentally impact capital [58][61] Question: Long-term free cash flow projections - Management indicated that they need to complete ongoing initiatives before providing an outlook for future results [117]

Financial Performance - The estimated combined risk-based capital (RBC) ratio is between 405% and 425%[9, 32] - The holding company liquid assets are $0.9 billion[9, 31] - The statutory combined total adjusted capital (TAC) is $5.6 billion[9] - The year-to-date normalized statutory loss is $0.1 billion[9] - Adjusted earnings were $198 million, $60 million below expectations, primarily due to a lower alternative investment income yield of 1.5%[9] Segment Performance - Annuities adjusted earnings, less notable items, were $332 million, an increase of 8% compared to 2Q 2024[12, 69] - Life Insurance adjusted earnings, less notable items, were $(26) million[17, 69] - Run-off adjusted earnings (loss), less notable items, were $(83) million[23, 69] - Corporate & Other adjusted earnings (loss), less notable items, were $(25) million[25, 69] Investment Portfolio - Total investments are $127 billion[36] - Fixed maturity securities (FMS) are $87 billion, with 97% investment grade[36] - Commercial mortgage loan portfolio is $12.9 billion, representing 10% of total investments[40]

Core Insights - Brighthouse Financial reported quarterly earnings of $3.43 per share, missing the Zacks Consensus Estimate of $4.7 per share, and down from $5.57 per share a year ago, representing an earnings surprise of -27.02% [1] - The company posted revenues of $2.15 billion for the quarter, missing the Zacks Consensus Estimate by 2.09% and down from $2.22 billion year-over-year [2] - The stock has underperformed the market, losing about 1.2% since the beginning of the year compared to the S&P 500's gain of 7.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $4.97 on revenues of $2.24 billion, and for the current fiscal year, it is $18.40 on revenues of $8.84 billion [7] - The estimate revisions trend for Brighthouse Financial was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Insurance - Life Insurance industry, to which Brighthouse Financial belongs, is currently in the top 20% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

[Financial Results](index=3&type=section&id=Financial%20Results) This section presents Brighthouse Financial's Q2 2025 financial performance, including key metrics, GAAP statements, and segment-level adjusted earnings [Key Metrics](index=4&type=section&id=1%20Key%20Metrics) Brighthouse Financial's key metrics for Q2 2025 show a significant increase in net income available to shareholders to $60 million, a rebound from a loss in the prior quarter. Adjusted earnings decreased QoQ but remained positive. The company maintained a strong capital position with combined total adjusted capital at $5,600 million and a robust risk-based capital ratio of 405%-425% | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Net income (loss) available to shareholders | $60 | $(294) | $9 | | Adjusted earnings | $198 | $235 | $346 | | Adjusted earnings, less notable items | $198 | $245 | $346 | | Total corporate expenses | $202 | $239 | $200 | | Combined total adjusted capital | $5,600 | $5,549 | $5,397 | | Combined risk-based capital ratio | 405%-425% | 420%-440% | 380%-400% | | Brighthouse Financial, Inc.'s stockholders' equity | $5,673 | $5,239 | $4,141 | | Brighthouse Financial, Inc.'s common stockholders' equity, excluding AOCI | $8,231 | $8,210 | $7,861 | | Return on common equity | 16.5% | 16.4% | (36.3)% | | Adjusted return on common equity, excluding AOCI | 18.4% | 20.4% | 8.8% | | Net income (loss) available to shareholders per common share | $1.02 | $(5.04) | $0.12 | | Adjusted earnings per common share | $3.43 | $4.01 | $5.57 | | Book value per common share | $69.57 | $61.17 | $39.87 | | Book value per common share, excluding AOCI | $144.09 | $141.87 | $128.36 | - Net income available to shareholders significantly improved to **$60 million** in Q2 2025, compared to a loss of **$(294) million** in Q1 2025 and a gain of **$9 million** in Q2 2024[9](index=9&type=chunk) - Adjusted earnings decreased to **$198 million** in Q2 2025 from **$235 million** in Q1 2025 and **$346 million** in Q2 2024[9](index=9&type=chunk) - The combined risk-based capital ratio is reported as a preliminary range of **405%-425%** for Q2 2025, indicating a strong capital position[9](index=9&type=chunk)[11](index=11&type=chunk) [GAAP Statements of Operations](index=5&type=section&id=2%20GAAP%20Statements%20of%20Operations) For Q2 2025, Brighthouse Financial reported total revenues of $871 million, a decrease from $2,390 million in Q1 2025, primarily due to significant net derivative losses. Net income available to common shareholders was $60 million, a substantial improvement from a loss of $(294) million in the previous quarter | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Premiums | $166 | $186 | $181 | | Universal life and investment-type product policy fees | $553 | $543 | $580 | | Net investment income | $1,285 | $1,297 | $1,307 | | Net investment gains (losses) | $(39) | $(83) | $(120) | | Net derivative gains (losses) | $(1,237) | $311 | $(662) | | Total revenues | $871 | $2,390 | $1,427 | | Policyholder benefits and claims | $711 | $649 | $642 | | Interest credited to policyholder account balances | $537 | $561 | $509 | | Change in market risk benefits | $(1,101) | $893 | $(356) | | Total expenses | $778 | $2,744 | $1,413 | | Net income (loss) available to Brighthouse Financial, Inc.'s common shareholders | $60 | $(294) | $9 | - Total revenues for Q2 2025 were **$871 million**, a decrease from **$2,390 million** in Q1 2025, largely driven by net derivative losses of **$(1,237) million**[13](index=13&type=chunk) - Net income available to common shareholders improved significantly to **$60 million** in Q2 2025 from a loss of **$(294) million** in Q1 2025[13](index=13&type=chunk) [GAAP Balance Sheets](index=6&type=section&id=3%20GAAP%20Balance%20Sheets) As of June 30, 2025, Brighthouse Financial reported total assets of $242,645 million, an increase from $234,681 million in the prior quarter. Total liabilities also increased to $236,907 million, while total equity rose to $5,738 million, reflecting an increase in stockholders' equity | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :---------------- | :------------ | | Total investments | $120,747 | $117,257 | $117,387 | $115,299 | | Cash and cash equivalents | $5,540 | $4,667 | $5,045 | $4,441 | | Separate account assets | $86,085 | $82,524 | $85,636 | $88,260 | | Total assets | $242,645 | $234,681 | $238,537 | $237,438 | | Future policy benefits | $31,974 | $31,834 | $31,475 | $31,886 | | Policyholder account balances | $88,046 | $85,618 | $87,989 | $85,865 | | Market risk benefit liabilities | $8,051 | $9,165 | $8,329 | $8,708 | | Long-term debt | $3,155 | $3,155 | $3,155 | $3,155 | | Separate account liabilities | $86,085 | $82,524 | $85,636 | $88,260 | | Total liabilities | $236,907 | $229,377 | $233,513 | $233,232 | | Total Brighthouse Financial, Inc.'s stockholders' equity | $5,673 | $5,239 | $4,959 | $4,141 | | Total equity | $5,738 | $5,304 | $5,024 | $4,206 | - Total assets increased by **$7,964 million** from March 31, 2025, to June 30, 2025, reaching **$242,645 million**[14](index=14&type=chunk) - Total equity grew to **$5,738 million** as of June 30, 2025, up from **$5,304 million** in the previous quarter[14](index=14&type=chunk) [Statements of Adjusted Earnings by Segment](index=8&type=section&id=5%20Statements%20of%20Adjusted%20Earnings%20by%20Segment) Brighthouse Financial's adjusted earnings by segment for Q2 2025 show Annuities as the primary contributor to positive adjusted earnings, while Life and Run-off segments reported losses. Corporate & Other also recorded a loss, reflecting ongoing operational costs and preferred stock dividends | Segment | Adjusted Earnings (Loss) (Q2 2025) ($ millions) | Adjusted Earnings (Loss) (Q2 2024) ($ millions) | Adjusted Earnings (Loss) (YTD Q2 2025) ($ millions) | Adjusted Earnings (Loss) (YTD Q2 2024) ($ millions) | | :---------------- | :--------------------------------- | :--------------------------------- | :------------------------------------- | :------------------------------------- | | Annuities | $332 | $332 | $646 | $645 | | Life | $(26) | $42 | $(17) | $6 | | Run-off | $(83) | $(30) | $(147) | $(371) | | Corporate & Other | $(25) | $2 | $(49) | $(32) | | Total | $198 | $346 | $433 | $248 | - The Annuities segment consistently generated positive adjusted earnings, reporting **$332 million** in Q2 2025, flat compared to Q2 2024[16](index=16&type=chunk) - The Life segment recorded an adjusted loss of **$(26) million** in Q2 2025, a decline from adjusted earnings of **$42 million** in Q2 2024[16](index=16&type=chunk) - The Run-off segment's adjusted loss widened to **$(83) million** in Q2 2025 from **$(30) million** in Q2 2024[16](index=16&type=chunk) [Annuities — Statements of Adjusted Earnings](index=10&type=section&id=7%20Annuities%20%E2%80%94%20Statements%20of%20Adjusted%20Earnings) The Annuities segment reported stable adjusted earnings of $332 million in Q2 2025, consistent with Q2 2024. Total adjusted revenues increased slightly year-over-year, driven by higher net investment income, while total adjusted expenses also saw a modest rise | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Premiums | $60 | $65 | $63 | | Universal life and investment-type product policy fees | $385 | $396 | $419 | | Net investment income | $757 | $753 | $702 | | Total adjusted revenues | $1,331 | $1,344 | $1,314 | | Policyholder benefits and claims | $98 | $110 | $109 | | Interest credited to policyholder account balances | $354 | $358 | $328 | | Total adjusted expenses | $921 | $957 | $904 | | Adjusted earnings | $332 | $314 | $332 | - Annuities adjusted earnings remained flat at **$332 million** in Q2 2025 compared to Q2 2024[18](index=18&type=chunk) - Net investment income for Annuities increased to **$757 million** in Q2 2025 from **$702 million** in Q2 2024[18](index=18&type=chunk) [Annuities — Select Operating Metrics](index=11&type=section&id=8%20Annuities%20%E2%80%94%20Select%20Operating%20Metrics) The Annuities segment saw an increase in Variable and Shield Level Annuities account value to $127,180 million as of June 30, 2025, driven by strong investment performance despite negative net flows. Fixed Annuities account value remained stable, while total annuity sales decreased year-over-year | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Variable and Shield Level Annuities Account Value, end of period | $127,180 | $120,963 | $124,488 | | Variable and Shield Level Annuities Net flows | $(2,002) | $(1,955) | $(1,616) | | Variable and Shield Level Annuities Investment performance | $8,758 | $(1,715) | $1,598 | | Fixed Annuities Account Value, end of period | $19,339 | $19,355 | $19,600 | | Total variable and Shield Level annuity sales | $2,105 | $2,122 | $2,183 | | Total fixed and income annuity sales | $505 | $137 | $225 | - Variable and Shield Level Annuities account value increased to **$127,180 million** at June 30, 2025, from **$120,963 million** at March 31, 2025, primarily due to **$8,758 million** in investment performance[19](index=19&type=chunk) - Total variable and Shield Level annuity sales decreased to **$2,105 million** in Q2 2025 from **$2,183 million** in Q2 2024[21](index=21&type=chunk) - Fixed and income annuity sales saw a significant increase to **$505 million** in Q2 2025 from **$137 million** in Q1 2025 and **$225 million** in Q2 2024, driven by fixed deferred annuities[21](index=21&type=chunk) [Life — Statements of Adjusted Earnings](index=13&type=section&id=10%20Life%20%E2%80%94%20Statements%20of%20Adjusted%20Earnings) The Life segment reported an adjusted loss of $(26) million in Q2 2025, a notable decline from adjusted earnings of $42 million in Q2 2024. This shift was primarily due to a significant increase in policyholder benefits and claims, which more than offset stable revenues | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Premiums | $104 | $121 | $118 | | Universal life and investment-type product policy fees | $78 | $59 | $55 | | Net investment income | $97 | $107 | $121 | | Total adjusted revenues | $283 | $291 | $297 | | Policyholder benefits and claims | $213 | $187 | $155 | | Interest credited to policyholder account balances | $28 | $27 | $25 | | Total adjusted expenses | $316 | $281 | $245 | | Adjusted earnings (loss) | $(26) | $9 | $42 | - The Life segment's adjusted earnings turned to a loss of **$(26) million** in Q2 2025, compared to earnings of **$42 million** in Q2 2024[23](index=23&type=chunk) - Policyholder benefits and claims increased significantly to **$213 million** in Q2 2025 from **$155 million** in Q2 2024, contributing to the adjusted loss[23](index=23&type=chunk) [Life — Select Operating Metrics](index=14&type=section&id=11%20Life%20%E2%80%94%20Select%20Operating%20Metrics) Life insurance account values remained relatively stable, with Universal and Variable Universal Life general account value at $2,605 million and separate account value at $6,632 million as of June 30, 2025. Total life sales increased to $33 million in Q2 2025 from $28 million in Q2 2024, while life insurance in-force generally saw a slight decrease across all categories | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Universal and variable universal life account value, end of period (General Account) | $2,605 | $2,597 | $2,566 | | Variable universal life account value, end of period (Separate Account) | $6,632 | $6,125 | $6,231 | | Total life sales | $33 | $36 | $28 | | Whole Life Insurance in-force, net of reinsurance | $2,818 | $2,855 | $2,915 | | Term Life Insurance in-force, net of reinsurance | $267,845 | $272,711 | $283,452 | | Universal and Variable Universal Life Insurance in-force, net of reinsurance | $32,026 | $31,926 | $33,029 | - Total life sales increased to **$33 million** in Q2 2025, up from **$28 million** in Q2 2024[25](index=25&type=chunk) - Life Insurance in-force, net of reinsurance, for Term Life decreased to **$267,845 million** as of June 30, 2025, from **$283,452 million** a year prior[25](index=25&type=chunk) [Run-off — Statements of Adjusted Earnings](index=16&type=section&id=13%20Run-off%20%E2%80%94%20Statements%20of%20Adjusted%20Earnings) The Run-off segment's adjusted loss widened to $(83) million in Q2 2025, compared to a loss of $(30) million in Q2 2024. This was primarily driven by an increase in policyholder benefits and claims, despite a slight decrease in total adjusted revenues | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Premiums | $2 | $— | $— | | Universal life and investment-type product policy fees | $90 | $88 | $106 | | Net investment income | $283 | $272 | $315 | | Total adjusted revenues | $382 | $367 | $429 | | Policyholder benefits and claims | $400 | $352 | $378 | | Interest credited to policyholder account balances | $58 | $60 | $53 | | Total adjusted expenses | $487 | $448 | $466 | | Adjusted earnings (loss) | $(83) | $(64) | $(30) | - The Run-off segment reported an adjusted loss of **$(83) million** in Q2 2025, an increase from **$(30) million** in Q2 2024[26](index=26&type=chunk) - Policyholder benefits and claims increased to **$400 million** in Q2 2025 from **$378 million** in Q2 2024[26](index=26&type=chunk) [Run-off — Select Operating Metrics](index=17&type=section&id=14%20Run-off%20%E2%80%94%20Select%20Operating%20Metrics) The Universal Life with Secondary Guarantees (ULSG) account value in the Run-off segment decreased to $4,619 million as of June 30, 2025, from $4,914 million a year prior, primarily due to policy charges and other adjustments. Life insurance in-force for ULSG also saw a decline | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Universal Life with Secondary Guarantees Account Value, end of period | $4,619 | $4,710 | $4,914 | | Universal Life with Secondary Guarantees Life Insurance in-force, net of reinsurance | $32,879 | $33,212 | $34,026 | - ULSG account value decreased by **$295 million** year-over-year, from **$4,914 million** in Q2 2024 to **$4,619 million** in Q2 2025[27](index=27&type=chunk) - Life Insurance in-force, net of reinsurance, for ULSG declined to **$32,879 million** as of June 30, 2025, from **$34,026 million** a year ago[27](index=27&type=chunk) [Corporate & Other — Statements of Adjusted Earnings and Select Operating Metrics](index=18&type=section&id=15%20Corporate%20%26%20Other%20%E2%80%94%20Statements%20of%20Adjusted%20Earnings%20and%20Select%20Operating%20Metrics) The Corporate & Other segment reported an adjusted loss of $(25) million in Q2 2025, a decrease from adjusted earnings of $2 million in Q2 2024. This was mainly due to a decline in net investment income and an increase in other operating costs, alongside consistent interest expense on debt and preferred stock dividends | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Net investment income | $155 | $159 | $178 | | Total adjusted revenues | $158 | $154 | $178 | | Interest credited to policyholder account balances | $103 | $106 | $109 | | Interest expense on debt | $38 | $38 | $38 | | Other operating costs | $20 | $11 | $13 | | Total adjusted expenses | $161 | $155 | $160 | | Adjusted earnings (loss) | $(25) | $(24) | $2 | | Institutional spread margin business account balance, end of period | $10,149 | $10,092 | $10,974 | - The Corporate & Other segment's adjusted earnings shifted to a loss of **$(25) million** in Q2 2025, from earnings of **$2 million** in Q2 2024[28](index=28&type=chunk) - Net investment income decreased to **$155 million** in Q2 2025 from **$178 million** in Q2 2024[28](index=28&type=chunk) - Institutional spread margin business account balance decreased to **$10,149 million** as of June 30, 2025, from **$10,974 million** a year prior[28](index=28&type=chunk) [Other Information](index=19&type=section&id=Other%20Information) This section provides additional financial details, including market risk benefits, notable items, variable annuity performance, investment summaries, and statutory financial information [Change in Market Risk Benefits and Net Derivative Gains (Losses)](index=20&type=section&id=17%20Change%20in%20Market%20Risk%20Benefits%20and%20Net%20Derivative%20Gains%20(Losses)) In Q2 2025, the total change in market risk benefits was a gain of $1,101 million, a significant positive reversal from a loss of $(893) million in Q1 2025. Concurrently, net derivative gains (losses) showed a substantial loss of $(1,237) million, primarily driven by Shield embedded derivatives | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Market risk benefits mark-to-market | $1,020 | $(999) | $228 | | Total change in market risk benefits | $1,101 | $(893) | $356 | | Variable annuity hedges | $1,073 | $(877) | $137 | | Shield embedded derivatives | $(2,103) | $1,171 | $(697) | | Total net derivative gains (losses) | $(1,237) | $311 | $(662) | - The total change in market risk benefits was a positive **$1,101 million** in Q2 2025, a significant improvement from **$(893) million** in Q1 2025[30](index=30&type=chunk) - Net derivative gains (losses) resulted in a loss of **$(1,237) million** in Q2 2025, largely due to **$(2,103) million** from Shield embedded derivatives[30](index=30&type=chunk) [Notable Items](index=21&type=section&id=18%20Notable%20Items) For Q2 2025, there were no notable items impacting adjusted earnings. In Q1 2025, a $10 million positive impact was recorded, primarily within the Annuities segment | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | September 30, 2024 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Actuarial items and other insurance adjustments | $— | $10 | $48 | $(524) | $— | | Total notable items | $— | $10 | $48 | $(524) | $— | | Notable Items by Segment: | | | | | | | Annuities | $— | $10 | $48 | $(20) | $— | | Life | $— | $— | $— | $66 | $— | | Run-off | $— | $— | $— | $(570) | $— | | Corporate & Other | $— | $— | $— | $— | $— | - No notable items impacted adjusted earnings in Q2 2025. In Q1 2025, there was a **$10 million** positive impact from actuarial items and other insurance adjustments, entirely within the Annuities segment[31](index=31&type=chunk) [Variable Annuity Separate Account Returns and Allocations](index=22&type=section&id=19%20Variable%20Annuity%20Separate%20Account%20Returns%20and%20Allocations) Variable Annuity (VA) separate accounts achieved strong gross returns of 7.59% in Q2 2025, a significant rebound from negative returns in the prior two quarters. Asset allocations remained diversified, with balanced funds holding the largest share at 40.61% | Metric | June 30, 2025 (%) | March 31, 2025 (%) | December 31, 2024 (%) | September 30, 2024 (%) | June 30, 2024 (%) | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total Quarterly VA separate account gross returns | 7.59% | (0.54)% | (1.23)% | 6.14% | 0.91% | | Percent allocated to equity funds | 32.54% | 31.28% | 32.36% | 31.69% | 31.60% | | Percent allocated to bond funds/other funds | 9.04% | 9.58% | 9.21% | 9.02% | 9.02% | | Percent allocated to target volatility funds | 17.81% | 18.41% | 18.03% | 18.60% | 18.59% | | Percent allocated to balanced funds | 40.61% | 40.73% | 40.40% | 40.69% | 40.79% | - Total Quarterly VA separate account gross returns were **7.59%** in Q2 2025, a strong recovery from **(0.54)%** in Q1 2025[32](index=32&type=chunk) - Balanced funds continued to represent the largest allocation at **40.61%** of total VA separate account allocations as of June 30, 2025[32](index=32&type=chunk) [Summary of Investments](index=23&type=section&id=20%20Summary%20of%20Investments) As of June 30, 2025, Brighthouse Financial's investment portfolio totaled $126,287 million, with fixed maturity securities comprising the largest portion at 64.01%. Equity market derivatives saw a significant increase, reflecting active risk management strategies. The adjusted net investment income yield was 4.28% for Q2 2025 | Investment Category | June 30, 2025 Amount ($ millions) | June 30, 2025 % of Total (%) | December 31, 2024 Amount ($ millions) | December 31, 2024 % of Total (%) | | :------------------------------------------ | :------------------- | :----------------------- | :----------------------- | :--------------------------- | | Total fixed maturity securities | $80,835 | 64.01% | $80,055 | 65.39% | | Total mortgage loans, net | $22,993 | 18.21% | $23,286 | 19.02% | | Limited partnerships and limited liability companies | $4,798 | 3.80% | $4,827 | 3.94% | | Cash, cash equivalents and short-term investments | $6,710 | 5.31% | $6,913 | 5.65% | | Total other invested assets (incl. derivatives) | $8,932 | 7.07% | $5,250 | 4.29% | | Total investments and cash and cash equivalents | $126,287 | 100.00% | $122,432 | 100.00% | | Adjusted net investment income yield (Q2 2025) | 4.28% | | | | - Total investments and cash and cash equivalents increased to **$126,287 million** as of June 30, 2025, from **$122,432 million** at December 31, 2024[33](index=33&type=chunk) - Equity market derivatives within other invested assets significantly increased to **$7,183 million** from **$3,265 million** at December 31, 2024[33](index=33&type=chunk) - The adjusted net investment income yield for Q2 2025 was **4.28%**, slightly higher than **4.25%** in Q1 2025[33](index=33&type=chunk) [Statutory Statement of Operations Information](index=24&type=section&id=21%20Statutory%20Statement%20of%20Operations%20Information) Preliminary statutory results for Q2 2025 show a combined net loss of $(1,600) million, a significant decline from a gain of $441 million in Q1 2025, primarily due to net realized capital losses. Normalized statutory earnings also remained negative at $(0.1) billion for the six months ended June 30, 2025 | Metric | June 30, 2025 (Preliminary) ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :-------------------------- | :------------- | :------------ | | Total revenues | $1,500 | $4,809 | $3,656 | | Total benefits and expenses before dividends to policyholders | $2,400 | $3,584 | $4,027 | | Gain (loss) from operations net of taxes and dividends to policyholders | $(900) | $1,225 | $(373) | | Net realized capital gains (losses), net of taxes and certain transfers to interest maintenance reserve | $(700) | $(784) | $(588) | | Net income (loss) | $(1,600) | $441 | $(961) | | Normalized statutory earnings (loss) (Six Months Ended) | $(0.1) billion | | $(0.8) billion | - Combined statutory net income (loss) for Q2 2025 was a preliminary loss of **$(1,600) million**, a sharp decrease from a gain of **$441 million** in Q1 2025[34](index=34&type=chunk) - Net realized capital losses contributed significantly to the Q2 2025 statutory loss, totaling **$(700) million**[34](index=34&type=chunk) - Normalized statutory earnings (loss) for the six months ended June 30, 2025, was a loss of **$(0.1) billion**[35](index=35&type=chunk) [Statutory Balance Sheet and Surplus Information](index=25&type=section&id=22%20Statutory%20Balance%20Sheet%20and%20Surplus%20Information) Preliminary statutory results as of June 30, 2025, show combined total assets of $202,900 million and total liabilities of $198,900 million. Total capital and surplus stood at $4,000 million, while the combined total adjusted capital was $5,600 million, supporting a strong risk-based capital ratio of 405%-425% | Metric | June 30, 2025 (Preliminary) ($ millions) | March 31, 2025 ($ millions) | December 31, 2024 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :-------------------------- | :------------- | :---------------- | :------------ | | Total assets | $202,900 | $193,978 | $198,370 | $198,413 | | Total liabilities | $198,900 | $189,859 | $194,491 | $194,539 | | Total capital and surplus | $4,000 | $4,119 | $3,879 | $3,874 | | Combined total adjusted capital | $5,600 | $5,549 | $5,373 | $5,397 | | Combined risk-based capital ratio | 405%-425% | 420%-440% | 402% | 380%-400% | | Total dividends paid | $— | $— | $— | $— | - Combined total adjusted capital increased to **$5,600 million** as of June 30, 2025, from **$5,549 million** in the prior quarter[37](index=37&type=chunk) - The preliminary combined risk-based capital ratio for Q2 2025 is estimated between **405%-425%**, indicating strong regulatory capital adequacy[37](index=37&type=chunk)[38](index=38&type=chunk) - No dividends were paid to the holding company in Q2 2025 or the preceding quarters shown[37](index=37&type=chunk) [Appendix](index=26&type=section&id=Appendix) This section contains important disclosures, definitions of non-GAAP financial measures, acronyms, and detailed reconciliations of GAAP to adjusted financial metrics [Note Regarding Forward-Looking Statements](index=27&type=section&id=A-1%20Note%20Regarding%20Forward-Looking%20Statements) This section provides a cautionary note regarding forward-looking statements, emphasizing that they involve substantial risks and uncertainties and are not guarantees of future performance. Actual results may differ materially due to various known and unknown factors, including actuarial assumptions, market risk, regulatory changes, and economic conditions - Forward-looking statements are subject to **substantial risks and uncertainties** and are not guarantees of future performance[40](index=40&type=chunk)[41](index=41&type=chunk) - Key risk factors include differences between actual experience and actuarial assumptions, market risk management costs, effectiveness of risk management strategies, interest rate impacts, changes in accounting standards, and regulatory changes[41](index=41&type=chunk) - Readers are cautioned against relying on forward-looking statements and should review risk factors detailed in the company's SEC filings, including the Annual Report on Form 10-K[42](index=42&type=chunk) [Non-GAAP and Other Financial Disclosures](index=28&type=section&id=A-2%20Non-GAAP%20and%20Other%20Financial%20Disclosures) This section defines the non-GAAP financial measures used by Brighthouse Financial, such as Adjusted Earnings, Adjusted Revenues, and Adjusted Expenses, which are intended to provide a clearer view of underlying business performance by excluding market volatility. It also outlines other key financial disclosures and metrics used by management - Non-GAAP financial measures are presented to enhance understanding of performance by highlighting operational results and underlying profitability drivers, excluding market volatility[44](index=44&type=chunk)[48](index=48&type=chunk) - Reconciliations to GAAP measures are provided for historical data, but not for forward-looking statements due to the unpredictable nature of net investment and derivative gains/losses[47](index=47&type=chunk) [Non-GAAP Financial Disclosures](index=28&type=section&id=Non-GAAP%20Financial%20Disclosures) This sub-section details the definitions and calculation methodologies for key non-GAAP financial measures, including Adjusted Earnings, Adjusted Revenues, Adjusted Expenses, Adjusted Earnings per Common Share, Adjusted Return on Common Equity, and Adjusted Net Investment Income, emphasizing their role in evaluating core business performance - Adjusted earnings is a key management metric that excludes the impact of market volatility to focus on primary business performance[48](index=48&type=chunk) - Adjusted revenues exclude net investment gains/losses, investment gains/losses on trading securities, and net derivative gains/losses (excluding Investment Hedge Adjustments)[52](index=52&type=chunk)[58](index=58&type=chunk) - Adjusted expenses exclude change in market risk benefits and market value adjustments[52](index=52&type=chunk)[58](index=58&type=chunk) - Adjusted return on common equity is calculated using total annual adjusted earnings on a four-quarter trailing basis, divided by the simple average of the most recent five quarters of common stockholders' equity, excluding AOCI[56](index=56&type=chunk) [Other Financial Disclosures](index=30&type=section&id=Other%20Financial%20Disclosures) This sub-section provides definitions for various other financial and operational metrics, including Corporate Expenses, Notable Items, Book Value per Common Share, CTE70, CTE98, Holding Company Liquid Assets, Total Adjusted Capital, Sales, Normalized Statutory Earnings (Loss), and Risk-Based Capital Ratio, clarifying their meaning and application within the company's reporting - Notable items reflect the after-tax impact of certain unanticipated or anticipated items and events on results, presented to aid investor understanding and forecasting[61](index=61&type=chunk) - Total adjusted capital primarily consists of statutory capital and surplus, plus the statutory asset valuation reserve[67](index=67&type=chunk) - Normalized statutory earnings (loss) measures insurance companies' ability to pay future distributions, incorporating hedging program effectiveness and other business factors[70](index=70&type=chunk) - The risk-based capital ratio assesses an insurance company's capital relative to its size and risk profile, ensuring compliance with minimum regulatory capital requirements[71](index=71&type=chunk) [Acronyms](index=32&type=section&id=A-6%20Acronyms) This section provides a comprehensive list of acronyms used throughout the financial supplement, aiding readers in understanding the specialized terminology - The section lists common acronyms such as **AOCI** (Accumulated other comprehensive income (loss)), **DAC** (Deferred policy acquisition costs), **GAAP** (Accounting principles generally accepted in the United States of America), **RBC** (Risk-based capital), and **VA** (Variable annuity)[72](index=72&type=chunk) [Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings (Loss) and Adjusted Earnings, Less Notable Items, and Reconciliation of Net Income (Loss) Available to Shareholders per Common Share to Adjusted Earnings (Loss) per Common Share and Adjusted Earnings, Less Notable Items per Common Share](index=33&type=section&id=A-7%20Reconciliation%20of%20Net%20Income%20(Loss)%20Available%20to%20Shareholders%20to%20Adjusted%20Earnings%20(Loss)%20and%20Adjusted%20Earnings,%20Less%20Notable%20Items,%20and%20Reconciliation%20of%20Net%20Income%20(Loss)%20Available%20to%20Shareholders%20per%20Common%20Share%20to%20Adjusted%20Earnings%20(Loss)%20per%20Common%20Share%20and%20Adjusted%20Earnings,%20Less%20Notable%20Items%20per%20Common%20Share) This reconciliation details the adjustments from GAAP net income (loss) available to shareholders to adjusted earnings and adjusted earnings, less notable items, both in total and on a per common share basis. For Q2 2025, net income of $60 million was adjusted to $198 million in adjusted earnings, with no notable items | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Net income (loss) available to shareholders | $60 | $(294) | $9 | | Less: Net investment gains (losses) | $(39) | $(83) | $(120) | | Less: Net derivative gains (losses), excluding investment hedge adjustments | $(1,238) | $311 | $(671) | | Less: Change in market risk benefits | $1,101 | $(893) | $356 | | Adjusted earnings (loss) | $198 | $235 | $346 | | Less: Notable items | $— | $(10) | $— | | Adjusted earnings, less notable items | $198 | $245 | $346 | | Net income (loss) available to shareholders per common share | $1.02 | $(5.04) | $0.12 | | Adjusted earnings per common share | $3.43 | $4.01 | $5.57 | | Adjusted earnings, less notable items per common share | $3.43 | $4.17 | $5.57 | - Net income available to shareholders of **$60 million** in Q2 2025 reconciles to adjusted earnings of **$198 million**, primarily by excluding net derivative losses and including positive changes in market risk benefits[73](index=73&type=chunk) - Adjusted earnings per common share was **$3.43** in Q2 2025, compared to **$4.01** in Q1 2025 and **$5.57** in Q2 2024[73](index=73&type=chunk) [Reconciliation of Return on Common Equity to Adjusted Return on Common Equity, Excluding AOCI](index=34&type=section&id=A-8%20Reconciliation%20of%20Return%20on%20Common%20Equity%20to%20Adjusted%20Return%20on%20Common%20Equity,%20Excluding%20AOCI) This reconciliation shows the adjustment from GAAP return on common equity to adjusted return on common equity, excluding Accumulated Other Comprehensive Income (AOCI). For the four quarters ended June 30, 2025, the adjusted return on common equity, excluding AOCI, was 18.4%, significantly higher than the GAAP return on common equity of 16.5% | Metric (Four Quarters Cumulative Trailing Basis) | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Net income (loss) available to shareholders | $562 | $511 | $(999) | | Adjusted earnings | $1,504 | $1,652 | $751 | | Brighthouse Financial, Inc.'s common stockholders' equity, excluding AOCI (Five Quarters Average) | $8,158 | $8,094 | $8,567 | | Return on common equity | 16.5% | 16.4% | (36.3)% | | Return on common equity, excluding AOCI | 6.9% | 6.3% | (11.7)% | | Adjusted return on common equity, excluding AOCI | 18.4% | 20.4% | 8.8% | - Adjusted return on common equity, excluding AOCI, was **18.4%** for the four quarters ended June 30, 2025, demonstrating strong underlying profitability[75](index=75&type=chunk) - The exclusion of net derivative gains (losses) and change in market risk benefits significantly impacts the reconciliation from GAAP to adjusted return on common equity[75](index=75&type=chunk) [Reconciliation of Total Revenues to Adjusted Revenues and Reconciliation of Total Expenses to Adjusted Expenses](index=35&type=section&id=A-9%20Reconciliation%20of%20Total%20Revenues%20to%20Adjusted%20Revenues%20and%20Reconciliation%20of%20Total%20Expenses%20to%20Adjusted%20Expenses) This section reconciles GAAP total revenues and total expenses to their adjusted counterparts. For Q2 2025, total revenues of $871 million were adjusted to $2,154 million, primarily by adding back net derivative losses. Total expenses of $778 million were adjusted to $1,885 million, mainly by adding back the positive change in market risk benefits | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Total revenues | $871 | $2,390 | $1,427 | | Less: Net investment gains (losses) | $(39) | $(83) | $(120) | | Less: Net derivative gains (losses) | $(1,237) | $311 | $(662) | | Total adjusted revenues | $2,154 | $2,156 | $2,218 | | Total expenses | $778 | $2,744 | $1,413 | | Less: Change in market risk benefits | $(1,101) | $893 | $(356) | | Total adjusted expenses | $1,885 | $1,841 | $1,775 | - Total adjusted revenues for Q2 2025 were **$2,154 million**, significantly higher than GAAP total revenues of **$871 million**, mainly due to the exclusion of net derivative losses[76](index=76&type=chunk) - Total adjusted expenses for Q2 2025 were **$1,885 million**, higher than GAAP total expenses of **$778 million**, primarily due to the exclusion of the positive change in market risk benefits[76](index=76&type=chunk) [Investment Reconciliation Details](index=36&type=section&id=A-10%20Investment%20Reconciliation%20Details) This section provides detailed reconciliation for net investment gains (losses) and the adjusted net investment income yield. For Q2 2025, net investment losses were $(39) million, and the adjusted net investment income yield was 4.28% | Metric | June 30, 2025 ($ millions) | March 31, 2025 ($ millions) | June 30, 2024 ($ millions) | | :------------------------------------------ | :------------ | :------------- | :------------ | | Investment portfolio gains (losses) | $(5) | $(31) | $(80) | | Investment portfolio credit loss (provision) release and (writedowns) | $(34) | $(52) | $(40) | | Net investment gains (losses) | $(39) | $(83) | $(120) | | Adjusted net investment income yield | 4.28% | 4.25% | 4.39% | - Net investment losses for Q2 2025 were **$(39) million**, an improvement from **$(83) million** in Q1 2025 and **$(120) million** in Q2 2024[77](index=77&type=chunk) - The adjusted net investment income yield slightly increased to **4.28%** in Q2 2025 from **4.25%** in Q1 2025[77](index=77&type=chunk)