Financial Performance - For the three months ended September 30, 2025, net income available to shareholders was $453 million, an increase of 202% compared to $150 million for the same period in 2024[286]. - Adjusted earnings for the three months ended September 30, 2025, were $970 million, up 27% from $767 million in the prior year[287]. - For the nine months ended September 30, 2025, net income available to shareholders was $219 million, compared to a net loss of $360 million for the same period in 2024[288]. - Adjusted earnings for the nine months ended September 30, 2025, reached $1.4 billion, a 40% increase from $1.0 billion in 2024[288]. - Total revenues for the three months ended September 30, 2025, were $1,816 million, a decrease of 10% from $2,018 million in the prior year[322]. - The total expenses for the three months ended September 30, 2025, were $1,231 million, a decrease of 33% from $1,830 million in the prior year[322]. - For the nine months ended September 30, 2025, income available to shareholders before provision for income tax was $243 million, an increase of $736 million from a loss of $493 million in the same period of 2024[326]. - Adjusted earnings for the nine months ended September 30, 2025, were $1.4 billion, an increase of $388 million compared to the same period in 2024[337]. Merger and Regulatory Matters - The company entered into a Merger Agreement on November 6, 2025, with Aquarian Holdings VI L.P., which will result in each share of common stock being converted into $70.00 per share in cash[290][291]. - The Merger is subject to customary closing conditions, including regulatory approvals and the absence of a Company Material Adverse Effect[293]. - The Inflation Reduction Act established a 15% corporate alternative minimum tax for corporations with average annual adjusted financial statement income exceeding $1.0 billion[298]. - The company is assessing the impact of proposed regulations regarding the corporate alternative minimum tax, which may introduce significant uncertainties[299]. - The Company was not subject to the CAMT for the years ended December 31, 2023 and 2024, and does not expect to be subject to it for the year ended December 31, 2025[300]. - The OBBBA enacted on July 4, 2025, is not expected to have a material impact on the Company[301]. - The CCDAA requires companies with annual revenues exceeding $1.0 billion to report Scope 1 and 2 GHG emissions starting in 2026, and Scope 3 emissions starting in 2027[302]. Investment Portfolio and Economic Conditions - The Federal Reserve decreased the target range for the federal funds rate multiple times in 2024 and 2025, which may negatively impact the company's investment portfolio and profitability[295]. - The company continues to monitor economic conditions, including inflation and geopolitical conflicts, that could affect market volatility and its business operations[296]. - As of September 30, 2025, unrealized losses on fixed maturity securities exceeded unrealized gains due to interest rate increases, contributing to a net unrealized loss position in the investment portfolio[365]. - The company does not expect its general account investments in current sectors and asset classes to materially adversely affect its financial condition or results of operations[371]. - The company actively monitors and adjusts its investment exposure across sectors and asset classes to mitigate financial risks[371]. Tax and Regulatory Compliance - The effective tax rate for the three months ended September 30, 2025, was 18%, compared to 5% in the prior period[325]. - The effective tax rate for the nine months ended September 30, 2025, was 19%, up from 18% in the prior period[337]. - The effective tax rate for the Life segment was 18% for the three months ended September 30, 2025, down from 22% in the prior period[346]. - The effective tax rate for the Run-off segment remained stable at 21% for both the current and prior periods[351]. Segment Performance - Adjusted earnings for the Annuities segment for the nine months ended September 30, 2025, were $950 million, a decrease of $22 million from 2024[342]. - Adjusted earnings for the Life segment were $40 million for the three months ended September 30, 2025, an increase of $65 million compared to the same period in 2024[344]. - The Run-off segment achieved adjusted earnings of $641 million for the three months ended September 30, 2025, an increase of $178 million year-over-year[350]. - The Corporate & Other segment reported an adjusted loss of $64 million for the nine months ended September 30, 2025, an increase in loss of $34 million compared to the prior year[358]. Liquidity and Capital Management - The company maintained a substantial short-term liquidity position of $5.2 billion as of both September 30, 2025, and December 31, 2024[429]. - Liquid assets totaled $50.4 billion as of September 30, 2025, compared to $48.1 billion as of December 31, 2024[430]. - The company continuously monitors and adjusts its liquidity and capital plans in response to changing market conditions[428]. - The total outstanding amount under various funding agreements was $9,817 million as of September 30, 2025, with significant issuances and repayments reported[451]. - The company has established intercompany liquidity facilities but reported no borrowings or repayments under these facilities during the nine months ended September 30, 2025 and 2024[478]. Investment Income and Derivatives - Net investment income for the three months ended September 30, 2025, was $1,334 million, an increase of 4% from $1,288 million in the same period of 2024[322]. - Adjusted net investment income yield represents adjusted net investment income as a percentage of average quarterly asset carrying values[315]. - The company reported net derivative losses of $410 million for the three months ended September 30, 2025, compared to losses of $93 million in the prior year[322]. - The company established a stand-alone hedging program for variable annuity and Shield Annuity contracts to better manage associated risks[403]. Credit Quality and Risk Management - The credit quality of fixed maturity securities showed that 97.1% were rated investment grade as of September 30, 2025, with a total amortized cost of $84,000 million[381]. - The company manages credit risk related to derivatives through various strategies, including the use of master netting agreements[408]. - The average loan-to-value ratio for commercial mortgage loans was 68% as of September 30, 2025, while the average debt-service coverage ratio was 2.2x[397]. - The average loan-to-value ratio for agricultural mortgage loans was 46% as of September 30, 2025, indicating a lower risk profile compared to commercial loans[397].

Merger Agreement - The merger agreement states that each issued and outstanding share will be converted into the right to receive $70.00 per share in cash[16]. - The Board of Directors of Brighthouse Financial has unanimously approved the merger agreement, determining it to be fair and in the best interests of the company and its stockholders[16]. - The merger will result in Brighthouse Financial becoming a wholly owned subsidiary of Aquarian Holdings[16]. - The merger is subject to the satisfaction of various conditions outlined in the agreement, including stockholder approval[16]. - The agreement includes provisions for the treatment of dissenting shares and the rights of stockholders[16]. - The merger is expected to enhance the strategic position of both companies in the market[16]. - The agreement outlines the corporate governance structure of the surviving corporation post-merger[16]. - The merger is anticipated to close following the fulfillment of regulatory approvals and other conditions[16]. - The financial statements and disclosures related to the merger are to be filed with the SEC as part of the process[16]. - The effective time of the merger will be when the Certificate of Merger is filed with the Secretary of State of Delaware[112]. - The Surviving Corporation will possess all property, rights, privileges, and powers of both the Company and Merger Sub[113]. - The closing of the merger will occur six business days after the last condition is satisfied or waived[114]. - The certificate of incorporation of the Company will be amended and restated at the effective time[115]. - The bylaws of the Company will be amended to reflect the bylaws of Merger Sub at the effective time[116]. - The initial directors of the Surviving Corporation will be the directors of Merger Sub immediately prior to the effective time[117]. - Each outstanding share will be converted into the right to receive $70.00 per share in cash as part of the merger consideration[119]. - All shares converted into the merger consideration will automatically be canceled and retired, ceasing to exist[120]. - The merger consideration will be adjusted for any changes in the outstanding shares prior to the effective time, including stock splits or dividends[121]. - Excluded shares, including those owned by Parent or held in treasury, will be canceled without any consideration[122]. - Company stock options will be deemed fully vested and converted into cash payments equal to the excess of the merger consideration over the exercise price[127]. - Restricted stock units will also be converted into cash payments based on the merger consideration[128]. - The company ESPP will be suspended, and no new participants will be allowed after the agreement date[129]. - The payment of the aggregate merger consideration will be made through a designated paying agent[135]. - Holders of book-entry shares will not need to deliver certificates to receive the merger consideration[136]. - Payments will be made only to the registered holders of book-entry shares[137]. Financial Performance - The company reported a revenue increase of 15% year-over-year, reaching $1.2 billion in Q3 2023[110]. - User data showed a growth of 25% in active users, totaling 5 million by the end of the quarter[110]. - The company provided guidance for Q4 2023, expecting revenue between $1.3 billion and $1.5 billion, representing a growth of 10% to 25%[110]. - New product launches included a premium subscription service, projected to generate an additional $200 million in annual revenue[110]. - The company is investing $50 million in R&D for new technologies aimed at enhancing user experience[110]. - Market expansion efforts are underway in Europe, with a target to increase market share by 15% by the end of 2024[110]. - The company completed a strategic acquisition of a smaller competitor for $300 million, expected to enhance its product offerings[110]. - Cost-cutting measures implemented are projected to save $30 million annually[110]. - The company reported a net income of $200 million, a 20% increase compared to the previous year[110]. - Customer satisfaction ratings improved to 90%, reflecting the success of recent service enhancements[110]. Corporate Governance and Compliance - The Company has a defined process for handling Company Acquisition Proposals that could significantly impact its operations[34]. - The Company has a defined process for assessing Company Material Adverse Effects that could impact its financial condition[42]. - The Company has established a Deferred RSU Amount related to its RSU Awards, which may affect compensation structures[52]. - The Company is involved in a Director Deferred Compensation Plan that affects non-management directors[53]. - The Company has a comprehensive Employee Stock Purchase Plan effective from April 3, 2024[41]. - The Company has a Revolving Credit Agreement in place, dated April 15, 2022, to support its financial operations[40]. - The Company has authorized capital stock consisting of 1,000,000,000 shares of Common Stock and 100,000,000 shares of Preferred Stock, with 57,171,217 shares of Common Stock issued and outstanding as of November 5, 2025[150]. - As of the Company Measurement Date, there are 166,769 shares of Common Stock underlying Stock Options, 612,282 shares underlying RSU Awards, and 747,274 shares underlying PSU Awards at target performance[150]. - The Company Board has unanimously determined that the Agreement and Transactions are fair and in the best interests of the Company and its stockholders[147]. - The execution and performance of the Agreement require no action by any Governmental Entity other than necessary filings and compliance with applicable laws[148]. - The Company is not in violation of any provision of its Charter or Bylaws, and all outstanding shares of capital stock are fully paid and nonassessable[144][150]. - The Company has made available true and accurate copies of the Organizational Documents of each Subsidiary, confirming their good standing[153]. - The Company has timely filed all required SEC documents since January 1, 2023, with no ongoing SEC reviews or investigations[159]. - The audited financial statements comply with GAAP and fairly present the consolidated financial position of the Company and its Subsidiaries[160]. - There are no undisclosed material liabilities that would be required by GAAP to be reflected on a consolidated balance sheet[171]. - The Company maintains a system of internal control over financial reporting that provides reasonable assurance regarding the reliability of financial reporting[165]. - The Company has not received any complaints regarding illegal accounting or auditing practices since January 1, 2023[168]. - The Company has no obligations related to off-balance sheet arrangements[169]. - The Company’s subsidiaries are wholly owned and free of any encumbrances, ensuring full ownership[154]. - The Company has made available true and complete copies of statutory statements for its Insurance Companies for the years ended December 31, 2022, 2023, and 2024[161]. - The Proxy Statement will comply with the applicable requirements of the Exchange Act when filed[163]. - The Company has timely filed all required Tax Returns and paid all due Taxes, ensuring compliance with applicable Laws[4]. - There are no ongoing Tax Proceedings against the Company or its Subsidiaries that could result in material liabilities[4]. - The Company has complied with all applicable Laws regarding employee benefit plans, ensuring timely contributions and filings[178]. - No Company Benefit Plan has been subject to examination or investigation by any Governmental Entity since January 1, 2023[179]. - The Company has not maintained any defined benefit pension plans or multiemployer plans within the last six years, mitigating potential liabilities[180]. - The minimum funding standards for Title IV Plans have been satisfied, with no outstanding liabilities under ERISA[181]. - Each Company Benefit Plan intended to be qualified under Section 401(a) of the Code has received favorable determination letters from the IRS[183]. - The execution of the Agreement will not trigger any severance pay or accelerate benefits for employees[186]. - No Tax gross-up payments are owed to any Person due to excise Taxes under Section 4999 of the Code[188]. - Each Company Stock Option has been granted with an exercise price at or above the fair market value of the underlying Share at the time of grant[189]. - Since January 1, 2023, the Company and its Subsidiaries have not been involved in any collective bargaining agreements with labor unions[190]. - The Company has complied with all applicable labor laws since January 1, 2023, with no material non-compliance issues reported[191]. - No allegations of sexual harassment or misconduct have been made against any managerial employees since January 1, 2023[192]. - The Company is not delinquent in payments to current or former employees, except for minor arrearages in the ordinary course of business[193]. - The Company has been in full compliance with the WARN Act since January 1, 2023, with no required notifications to employees[196]. - There have been no violations of applicable laws since January 1, 2023, that would be expected to be material to the Company[197]. - The Company has maintained compliance with Anti-Money Laundering Laws and anti-bribery laws since January 1, 2023[198]. - No disclosures or investigations related to non-compliance with Economic Sanctions or Anti-Money Laundering Laws have occurred since January 1, 2023[199]. - The Company has not received any notices alleging violations of Environmental Laws and is in compliance with applicable Environmental Laws[200].

Financial Performance - For the three months ended June 30, 2025, net income available to shareholders was $60 million, compared to $9 million for the same period in 2024, reflecting a significant improvement [278]. - Adjusted earnings for the three months ended June 30, 2025, were $198 million, down from $346 million in the prior year, indicating a decrease of approximately 42.9% [278]. - For the six months ended June 30, 2025, the net loss available to shareholders was $234 million, an improvement from a net loss of $510 million in the same period of 2024 [279]. - Adjusted earnings for the six months ended June 30, 2025, were $433 million, compared to $248 million for the same period in 2024, representing a 74.8% increase [279]. - Total revenues for Q2 2025 were $871 million, a decrease of 39% from $1,427 million in Q2 2024 [300]. - Net income available to shareholders for Q2 2025 was $60 million, compared to $9 million in Q2 2024, reflecting an increase of 566% [301]. - Adjusted earnings for the three months ended June 30, 2025, were $198 million, a decrease of $148 million compared to the same period in 2024 [309]. - For the six months ended June 30, 2025, adjusted earnings increased to $433 million, up $185 million from the same period in 2024 [311]. Operational Challenges - The company experienced unfavorable changes in the estimated fair value of variable annuity guaranteed benefit riders and freestanding interest rate derivatives, impacting overall profitability [279]. - The financial and economic environment, including capital market conditions and inflation, significantly affects the company's operations and profitability [283]. - The company continues to monitor political and economic conditions that may contribute to market volatility, including global inflation and geopolitical conflicts [284]. - The company reported higher operational expenses, impacting overall profitability for the six months ended June 30, 2025 [311]. Regulatory and Compliance - The company is subject to various regulatory developments at both state and federal levels, impacting its operations and compliance requirements [285]. - The effective tax rate for the first half of 2025 was 31%, up from 24% in the same period of 2024 [303]. - The effective tax rate for the three months ended June 30, 2025, was 17%, slightly up from 16% in the prior period [310]. Investment and Asset Management - Adjusted net investment income for Q2 2025 was $1,285 million, slightly down from $1,307 million in Q2 2024 [301]. - The yield on investment income for the three months ended June 30, 2025, was 4.41%, slightly down from 4.52% in the same period of 2024 [349]. - The total fixed maturity securities as of June 30, 2025, amounted to $80,835 million, an increase from $80,055 million at the end of 2024 [353]. - Investment-grade securities represented 97.1% of total fixed maturity securities, with a fair value of $78.535 billion [356]. - The company manages investment risks through asset-type allocation and diversification strategies to mitigate credit and interest rate risks [339]. Liquidity and Capital Management - The company maintained a short-term liquidity position of $4.6 billion at June 30, 2025, down from $5.2 billion at December 31, 2024 [402]. - Liquid assets totaled $48.9 billion as of June 30, 2025, an increase from $48.1 billion as of December 31, 2024 [403]. - The company continuously monitors and adjusts its liquidity and capital plans in light of market conditions and changing needs [401]. - The company authorized a $750 million share repurchase program, which may be executed through various methods at management's discretion [409]. - The company has established intercompany liquidity facilities to provide short-term liquidity across its subsidiaries, with no obligations outstanding under these facilities as of June 30, 2025 [450]. Segment Performance - The company is organized into reportable segments: Annuities, Life, Run-off, and Corporate & Other, which are crucial for analyzing financial results [275]. - Adjusted earnings for the Annuities segment were $332 million for the three months ended June 30, 2025, unchanged from the prior period [315]. - The Life segment reported an adjusted loss of $26 million for the three months ended June 30, 2025, a decrease of $68 million compared to the previous year [319]. - The Run-off segment experienced an adjusted loss of $83 million for the three months ended June 30, 2025, an increase of $53 million in losses compared to the prior period [326]. - Adjusted earnings for the Corporate & Other segment were a loss of $25 million for the three months ended June 30, 2025, a decrease of $27 million from the previous year [331].

[Financial Results](index=3&type=section&id=Financial%20Results) [Key Metrics](index=4&type=section&id=Key%20Metrics) Q2 2025 net income was $60 million, adjusted earnings $198 million, with common stockholders' equity (ex-AOCI) at $8.23 billion and a 405%-425% RBC ratio Key Financial Metrics (Q2 2025 vs. Prior Periods) | Financial Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Net income (loss) available to shareholders | $60M | $(294)M | $9M | | Adjusted earnings | $198M | $235M | $346M | | Adjusted earnings per common share | $3.43 | $4.01 | $5.57 | | Combined risk-based capital ratio | 405%-425% | 420%-440% | 380%-400% | | Common stockholders' equity, excluding AOCI | $8,231M | $8,210M | $7,861M | | Book value per common share, excluding AOCI | $144.09 | $141.87 | $128.36 | [GAAP Statements of Operations](index=5&type=section&id=GAAP%20Statements%20of%20Operations) Q2 2025 total revenues were $871 million and net income $85 million, significantly impacted by $1.24 billion net derivative losses compared to Q2 2024 GAAP Statement of Operations Highlights (Q2 2025 vs. Q2 2024) | Line Item | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenues | $871M | $1,427M | | Net derivative gains (losses) | $(1,237)M | $(662)M | | Total expenses | $778M | $1,413M | | Change in market risk benefits | $(1,101)M | $(356)M | | Net income (loss) | $85M | $34M | | Net income (loss) available to common shareholders | $60M | $9M | [GAAP Balance Sheets](index=6&type=section&id=GAAP%20Balance%20Sheets) As of June 30, 2025, total assets increased to $242.6 billion, liabilities to $236.9 billion, and stockholders' equity grew to $5.7 billion, primarily due to reduced AOCI Key Balance Sheet Items (As of June 30, 2025 vs. June 30, 2024) | Balance Sheet Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total investments | $120,747M | $115,299M | | Total assets | $242,645M | $237,438M | | Total liabilities | $236,907M | $233,232M | | Accumulated other comprehensive income (loss) | $(4,257)M | $(5,419)M | | Total Brighthouse Financial, Inc.'s stockholders' equity | $5,673M | $4,141M | [Earnings and Select Metrics from Segments](index=7&type=section&id=Earnings%20and%20Select%20Metrics%20from%20Segments) [Statements of Adjusted Earnings by Segment](index=8&type=section&id=Statements%20of%20Adjusted%20Earnings%20by%20Segment) Q2 2025 total adjusted earnings were $198 million, primarily from Annuities ($332 million), while Life, Run-off, and Corporate & Other segments reported losses Adjusted Earnings by Segment (Q2 2025 vs. Q2 2024) | Segment | Adjusted Earnings (Q2 2025) | Adjusted Earnings (Q2 2024) | | :--- | :--- | :--- | | Annuities | $332M | $332M | | Life | $(26)M | $42M | | Run-off | $(83)M | $(30)M | | Corporate & Other | $(25)M | $2M | | **Total** | **$198M** | **$346M** | [Annuities](index=10&type=section&id=Annuities) Annuities segment adjusted earnings were $332 million in Q2 2025, with strong sales, negative net flows, and Variable and Shield Level Annuities account values growing to $127.2 billion [Annuities — Statements of Adjusted Earnings](index=10&type=section&id=Annuities%20%E2%80%94%20Statements%20of%20Adjusted%20Earnings) Annuities Adjusted Earnings (Q2 2025 vs. Q2 2024) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total adjusted revenues | $1,331M | $1,314M | | Total adjusted expenses | $921M | $904M | | **Adjusted earnings** | **$332M** | **$332M** | [Annuities — Select Operating Metrics](index=11&type=section&id=Annuities%20%E2%80%94%20Select%20Operating%20Metrics) - Variable and Shield Level Annuities account value increased to **$127.2 billion** at the end of Q2 2025, up from $124.5 billion a year ago, despite net outflows of $2.0 billion in the quarter[19](index=19&type=chunk) Annuity Sales (Q2 2025) | Annuity Type | Sales (Q2 2025) | | :--- | :--- | | Shield Level Annuities | $1,925M | | Other Variable Annuities | $180M | | **Total Variable & Shield** | **$2,105M** | | Fixed & Income Annuities | $505M | [Life](index=13&type=section&id=Life) The Life segment posted a **$26 million adjusted loss** in Q2 2025, a decline from $42 million earnings in Q2 2024, driven by higher policyholder benefits, though total life sales rose to $33 million [Life — Statements of Adjusted Earnings](index=13&type=section&id=Life%20%E2%80%94%20Statements%20of%20Adjusted%20Earnings) Life Adjusted Earnings (Q2 2025 vs. Q2 2024) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total adjusted revenues | $283M | $297M | | Policyholder benefits and claims | $213M | $155M | | Total adjusted expenses | $316M | $245M | | **Adjusted earnings (loss)** | **$(26)M** | **$42M** | [Life — Select Operating Metrics](index=14&type=section&id=Life%20%E2%80%94%20Select%20Operating%20Metrics) - Total life sales increased to **$33 million** in Q2 2025 from $28 million in Q2 2024[25](index=25&type=chunk) - Total life insurance in-force, net of reinsurance, was **$302.7 billion** as of June 30, 2025, with Term Life constituting the largest portion at **$267.8 billion**[25](index=25&type=chunk) [Run-off](index=16&type=section&id=Run-off) The Run-off segment posted an **adjusted loss of $83 million** in Q2 2025, compared to a $30 million loss in Q2 2024, with its Universal Life with Secondary Guarantees block holding a $4.6 billion account value [Run-off — Statements of Adjusted Earnings](index=16&type=section&id=Run-off%20%E2%80%94%20Statements%20of%20Adjusted%20Earnings) Run-off Adjusted Earnings (Q2 2025 vs. Q2 2024) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total adjusted revenues | $382M | $429M | | Total adjusted expenses | $487M | $466M | | **Adjusted earnings (loss)** | **$(83)M** | **$(30)M** | [Run-off — Select Operating Metrics](index=17&type=section&id=Run-off%20%E2%80%94%20Select%20Operating%20Metrics) - The account value for Universal Life with Secondary Guarantees (ULSG) was **$4.62 billion** as of June 30, 2025, down from $4.91 billion a year prior[27](index=27&type=chunk) - ULSG life insurance in-force, net of reinsurance, stood at **$32.9 billion** at the end of Q2 2025[27](index=27&type=chunk) [Corporate & Other](index=18&type=section&id=Corporate%20%26%20Other) The Corporate & Other segment recorded an **adjusted loss of $25 million** in Q2 2025, including preferred stock dividends, compared to $2 million adjusted earnings in Q2 2024, primarily driven by net investment income Corporate & Other Adjusted Earnings (Q2 2025 vs. Q2 2024) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total adjusted revenues | $158M | $178M | | Total adjusted expenses | $161M | $160M | | Adjusted earnings (loss) after tax & NCI | $0M | $27M | | Less: Preferred stock dividends | $25M | $25M | | **Adjusted earnings (loss)** | **$(25)M** | **$2M** | [Other Information](index=19&type=section&id=Other%20Information) [Change in Market Risk Benefits and Net Derivative Gains (Losses)](index=20&type=section&id=Change%20in%20Market%20Risk%20Benefits%20and%20Net%20Derivative%20Gains%20(Losses)) Q2 2025 experienced a favorable $1.1 billion change in market risk benefits, largely offset by $1.24 billion net derivative losses, driven by market movements and hedging programs for variable annuity and Shield products Market-Related Gains & Losses (Q2 2025) | Item | Amount (Q2 2025) | | :--- | :--- | | Change in market risk benefits | $1,101M | | Net derivative gains (losses) | $(1,237)M | | - Variable annuity hedges | $1,073M | | - Shield embedded derivatives | $(2,103)M | | - ULSG hedges | $(154)M | [Notable Items](index=21&type=section&id=Notable%20Items) No notable items impacted Q2 2025 adjusted earnings, contrasting with a $10 million actuarial adjustment in Q1 2025 - The company reported zero notable items impacting adjusted earnings for the three months ended June 30, 2025[31](index=31&type=chunk) [Variable Annuity Separate Account Returns and Allocations](index=22&type=section&id=Variable%20Annuity%20Separate%20Account%20Returns%20and%20Allocations) Q2 2025 variable annuity separate account gross return was 7.59%, with diversified asset allocation led by balanced (40.6%) and equity (32.5%) funds - Total quarterly VA separate account gross return was **7.59%** for Q2 2025, a strong rebound from (0.54)% in Q1 2025[32](index=32&type=chunk) - Asset allocation in VA separate accounts at the end of Q2 2025 was led by balanced funds (**40.61%**) and equity funds (**32.54%**)[32](index=32&type=chunk) [Summary of Investments](index=23&type=section&id=Summary%20of%20Investments) As of June 30, 2025, the $126.3 billion investment portfolio was mainly fixed maturity securities ($80.8 billion) and mortgage loans ($23.0 billion), yielding an adjusted net investment income of 4.28% Investment Portfolio Composition (June 30, 2025) | Investment Type | Amount | % of Total | | :--- | :--- | :--- | | Fixed maturity securities | $80,835M | 64.01% | | Mortgage loans, net | $22,993M | 18.21% | | Limited partnerships/LLCs | $4,798M | 3.80% | | Cash, cash equivalents & short-term | $6,710M | 5.31% | | Other invested assets | $8,932M | 7.07% | | **Total** | **$126,287M** | **100.00%** | - The adjusted net investment income yield was **4.28%** for Q2 2025, slightly up from 4.25% in Q1 2025 but down from 4.39% in Q2 2024[33](index=33&type=chunk) [Statutory Financial Information](index=24&type=section&id=Statutory%20Financial%20Information) Q2 2025 preliminary statutory results show a $1.6 billion combined net loss, with total adjusted capital at $5.6 billion and a strong 405%-425% risk-based capital ratio [Statutory Statement of Operations Information](index=24&type=section&id=Statutory%20Statement%20of%20Operations%20Information) Preliminary Statutory Results (Q2 2025) | Statutory Item | Q2 2025 (Preliminary) | | :--- | :--- | | Total revenues | $1,500M | | Total benefits and expenses | $2,400M | | Net income (loss) | $(1,600)M | [Statutory Balance Sheet and Surplus Information](index=25&type=section&id=Statutory%20Balance%20Sheet%20and%20Surplus%20Information) Statutory Capital Position (June 30, 2025 Preliminary) | Capital Metric | As of June 30, 2025 | | :--- | :--- | | Total capital and surplus | $4,000M | | Combined total adjusted capital | $5,600M | | Combined risk-based capital ratio | 405%-425% | [Appendix](index=26&type=section&id=Appendix) [Note Regarding Forward-Looking Statements](index=27&type=section&id=Note%20Regarding%20Forward-Looking%20Statements) This section cautions that forward-looking statements involve risks and uncertainties, and actual results may differ materially from projections, with no obligation for updates - The report includes forward-looking statements involving risks and uncertainties, which are not guarantees of future performance[40](index=40&type=chunk)[41](index=41&type=chunk) - Readers are cautioned against relying on these statements and are directed to the company's SEC filings for a more detailed discussion of risk factors[42](index=42&type=chunk) [Non-GAAP and Other Financial Disclosures](index=28&type=section&id=Non-GAAP%20and%20Other%20Financial%20Disclosures) This section defines non-GAAP financial measures, including 'Adjusted Earnings,' used by management to assess performance by excluding market volatility and other distorting items - The company uses non-GAAP measures like 'Adjusted Earnings' to enhance understanding of performance by excluding market volatility[44](index=44&type=chunk)[48](index=48&type=chunk) - Adjusted earnings excludes net investment gains/losses, net derivative gains/losses (with certain adjustments), and changes in market risk benefits from the GAAP calculation[52](index=52&type=chunk) [Reconciliations](index=33&type=section&id=Reconciliations) This section provides detailed tables reconciling non-GAAP financial measures, including adjusted earnings and adjusted return on equity, to their directly comparable GAAP counterparts [Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss)](index=33&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20Earnings%20(Loss)) - For Q2 2025, Net Income of **$60 million** is reconciled to Adjusted Earnings of **$198 million** primarily by excluding a **$1.1 billion** favorable change in market risk benefits and a **$1.24 billion** unfavorable net derivative loss[73](index=73&type=chunk) [Reconciliation of Return on Common Equity to Adjusted Return on Common Equity, Excluding AOCI](index=34&type=section&id=Reconciliation%20of%20Return%20on%20Common%20Equity%20to%20Adjusted%20Return%20on%20Common%20Equity%2C%20Excluding%20AOCI) - The GAAP Return on Common Equity of **16.5%** for the four quarters ending June 30, 2025, is reconciled to an Adjusted Return on Common Equity, excluding AOCI, of **18.4%** by adjusting for market-related volatility and the impact of AOCI[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=Reconciliation%20of%20Total%20Revenues%20to%20Adjusted%20Revenues%20and%20Reconciliation%20of%20Total%20Expenses%20to%20Adjusted%20Expenses) - For Q2 2025, GAAP Total Revenues of **$871 million** are adjusted to **$2,154 million** by excluding items like net derivative losses. GAAP Total Expenses of **$778 million** are adjusted to **$1,885 million** by excluding the change in market risk benefits[76](index=76&type=chunk) [Investment Reconciliation Details](index=36&type=section&id=Investment%20Reconciliation%20Details) - Provides a breakdown of net investment gains and losses, showing that for Q2 2025, the **$(39) million** total was composed of **$(5) million** in portfolio gains/losses and **$(34) million** in credit loss provisions[77](index=77&type=chunk)

Part I [Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The consolidated financial statements present Brighthouse Financial's financial position and performance, showing a net loss of **$266 million** in Q1 2025, an improvement from **$491 million** in Q1 2024, with total assets at **$234.7 billion** Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Investments** | $117,257 | $117,387 | | **Total Assets** | $234,681 | $238,537 | | **Total Liabilities** | $229,377 | $233,513 | | **Total Equity** | $5,304 | $5,024 | Consolidated Statements of Operations Highlights (in millions) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total Revenues** | $2,390 | $74 | | **Total Expenses** | $2,744 | $688 | | **Income (loss) before income tax** | $(354) | $(614) | | **Net income (loss)** | $(266) | $(491) | | **Net income (loss) available to common shareholders** | $(294) | $(519) | | **Basic EPS** | $(5.04) | $(8.22) | Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $146 | $(530) | | **Net cash provided by (used in) investing activities** | $563 | $(625) | | **Net cash provided by (used in) financing activities** | $(1,087) | $1,127 | | **Change in cash, cash equivalents and restricted cash** | $(378) | $(28) | [Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201%20%E2%80%94%20Business%2C%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Brighthouse Financial operates through four segments, with Q1 2025 seeing a key accounting policy update for a new fixed income trading portfolio where gains and losses are now reported in net investment income - The company is organized into four reportable segments: Annuities, Life, Run-off, and Corporate & Other[22](index=22&type=chunk) - In Q1 2025, the company established a trading portfolio of fixed maturity securities. Realized and unrealized gains/losses on these securities are now reported in net investment income[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2 — Segment Information](index=9&type=section&id=Note%202%20%E2%80%94%20Segment%20Information) Segment performance is evaluated using adjusted earnings, which improved to **$235 million** in Q1 2025 from a **$98 million** loss in Q1 2024, with the Annuities segment contributing most to earnings and holding **$160.7 billion** in assets Adjusted Earnings (Loss) by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Annuities | $314 | $313 | | Life | $9 | $(36) | | Run-off | $(64) | $(341) | | Corporate & Other | $(24) | $(34) | | **Total** | **$235** | **$(98)** | Total Assets by Segment (in millions) | Segment | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Annuities | $160,690 | $163,830 | | Life | $26,147 | $26,261 | | Run-off | $25,034 | $24,873 | | Corporate & Other | $22,810 | $23,573 | | **Total** | **$234,681** | **$238,537** | [Note 3 — Insurance Liabilities](index=14&type=section&id=Note%203%20%E2%80%94%20Insurance%20Liabilities) This note details insurance liabilities, with future policy benefits totaling **$12.4 billion**, policyholder account balances at **$85.6 billion**, and universal life-type contracts with secondary guarantees showing a net liability of **$7.6 billion** Net Liability for Future Policy Benefits (in millions) | Product Type | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Term and Whole Life Insurance | $2,497 | $2,408 | | Income Annuities | $3,779 | $3,687 | | Structured Settlement and Pension Risk Transfer | $6,050 | $6,375 | Policyholder Account Balances (in millions) | Product Type | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Universal Life Insurance | $2,597 | $2,561 | | Variable Annuities | $3,730 | $4,170 | | Index-linked Annuities | $47,896 | $44,350 | | Fixed Rate Annuities | $14,516 | $14,923 | | ULSG | $4,710 | $4,984 | | Company-Owned Life Insurance | $673 | $856 | | **Total in Rollforward** | **$74,122** | **$71,844** | [Note 4 — Market Risk Benefits](index=18&type=section&id=Note%204%20%E2%80%94%20Market%20Risk%20Benefits) Market Risk Benefits, primarily from variable annuities, had a net balance of **$8.22 billion** at Q1 2025, with changes driven by interest rates, fund returns, and nonperformance risk Market Risk Benefits Rollforward (in millions) | Description | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Balance, beginning of period | $7,233 | $9,701 | | Effect of changes in interest rates | $676 | $(988) | | Effect of changes in fund returns | $87 | $(630) | | **Balance, end of period, net of reinsurance** | **$8,221** | **$8,117** | [Note 5 — Separate Accounts](index=18&type=section&id=Note%205%20%E2%80%94%20Separate%20Accounts) Separate account liabilities decreased to **$82.5 billion** at March 31, 2025, primarily due to investment performance and net withdrawals, with variable annuities being the largest component and a net amount at risk of **$13.3 billion** Separate Account Liabilities by Product (in millions) | Product | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Variable Annuities | $73,889 | $81,792 | | Universal Life Insurance | $6,125 | $6,259 | | Company Owned Life Insurance | $2,249 | $2,054 | | **Total in Rollforward** | **$82,263** | **$90,105** | [Note 6 — Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles](index=20&type=section&id=Note%206%20%E2%80%94%20Deferred%20Policy%20Acquisition%20Costs%2C%20Value%20of%20Business%20Acquired%20and%20Other%20Intangibles) The total DAC and VOBA balance was **$4.67 billion** at March 31, 2025, with variable annuities comprising **$2.34 billion**, and Q1 2025 amortization at **$148 million** Total DAC and VOBA by Product (in millions) | Product | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Variable Annuities | $2,344 | $2,554 | | Fixed Rate Annuities | $170 | $171 | | Index-linked Annuities | $1,492 | $1,363 | | Term and Whole Life Insurance | $302 | $347 | | Universal Life Insurance | $364 | $394 | | **Total DAC and VOBA** | **$4,672** | **$4,829** | [Note 7 — Investments](index=21&type=section&id=Note%207%20%E2%80%94%20Investments) The investment portfolio totaled **$117.3 billion** at March 31, 2025, with fixed maturity securities at **$80.6 billion** and net investment income for Q1 2025 at **$1.3 billion**, up from **$1.25 billion** Fixed Maturity Securities by Sector (Fair Value, in millions) | Sector | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | U.S. corporate | $37,543 | $37,123 | | Foreign corporate | $11,629 | $11,830 | | Residential mortgage-backed | $7,588 | $7,287 | | U.S. government and agency | $6,831 | $6,747 | | Commercial mortgage-backed | $6,417 | $6,356 | | **Total Fixed Maturity Securities** | **$80,640** | **$80,055** | Mortgage Loans by Portfolio Segment (Carrying Value, in millions) | Segment | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial | $13,134 | $13,330 | | Agricultural | $4,543 | $4,591 | | Residential | $5,583 | $5,543 | | **Total Mortgage Loans (Gross)** | **$23,260** | **$23,464** | Net Investment Income Components (in millions) | Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Fixed maturity securities | $924 | $919 | | Mortgage loans | $257 | $245 | | Limited partnerships and LLCs | $71 | $74 | | **Total Net Investment Income** | **$1,297** | **$1,254** | [Note 8 — Derivatives](index=33&type=section&id=Note%208%20%E2%80%94%20Derivatives) The company uses derivatives to manage market risks, with a total gross notional amount of **$271.4 billion** at March 31, 2025, primarily for economic hedging and not designated as accounting hedges Derivatives by Primary Risk Exposure (Notional Amount, in millions) | Risk Exposure | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Interest rate | $93,169 | $116,736 | | Foreign currency exchange rate | $4,849 | $4,894 | | Credit | $780 | $780 | | Equity market | $164,081 | $146,514 | | **Total** | **$262,879** | **$268,924** | - A substantial portion of the company's derivatives were not designated or did not qualify as part of a formal hedging relationship for accounting purposes[152](index=152&type=chunk) [Note 9 — Fair Value](index=38&type=section&id=Note%209%20%E2%80%94%20Fair%20Value) Total assets measured at fair value on a recurring basis were **$170.3 billion** at March 31, 2025, with **$164.3 billion** in Level 2 and **$2.0 billion** in Level 3, while Level 3 liabilities included **$9.2 billion** in Market Risk Benefits and **$10.0 billion** in embedded derivatives Assets and Liabilities Measured at Fair Value (Recurring, in millions) - March 31, 2025 | Category | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Fixed maturity securities | $2,702 | $76,910 | $1,028 | $80,640 | | Derivative assets | $1 | $4,147 | $9 | $4,157 | | Market risk benefit assets | $— | $— | $914 | $914 | | Separate account assets | $3 | $82,521 | $— | $82,524 | | **Total Assets** | **$4,023** | **$164,252** | **$2,005** | **$170,280** | | **Liabilities** | | | | | | Market risk benefit liabilities | $— | $— | $9,165 | $9,165 | | Derivative liabilities | $— | $5,287 | $— | $5,287 | | Embedded derivatives on index-linked annuities | $— | $— | $9,963 | $9,963 | | **Total Liabilities** | **$—** | **$5,287** | **$19,128** | **$24,415** | [Note 10 — Equity](index=47&type=section&id=Note%2010%20%E2%80%94%20Equity) The company's equity includes **$1.75 billion** in preferred stock, and in Q1 2025, **1.06 million** common shares were repurchased for **$59 million**, with **$484 million** remaining under the repurchase authorization - During Q1 2025, BHF repurchased **1,062,596** shares of its common stock for **$59 million**[224](index=224&type=chunk) - At March 31, 2025, **$484 million** remained available under the company's common stock repurchase program[224](index=224&type=chunk) - Quarterly dividends declared on preferred stock totaled **$26 million** for both Q1 2025 and Q1 2024[223](index=223&type=chunk) [Note 11 — Other Revenues and Other Expenses](index=49&type=section&id=Note%2011%20%E2%80%94%20Other%20Revenues%20and%20Other%20Expenses) Other revenues for Q1 2025 were **$136 million**, primarily from **$65 million** in 12b-1 fees, while total other expenses were **$493 million**, driven by volume-related costs, compensation, and separate account fees - 12b-1 fees, included in other revenues, were **$65 million** for Q1 2025, compared to **$67 million** for Q1 2024[233](index=233&type=chunk) Other Expenses Breakdown (in millions) | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Compensation | $130 | $111 | | Contracted services and other labor costs | $72 | $63 | | Separate account fees | $83 | $92 | | Volume related costs, net of DAC | $132 | $147 | | Interest expense on debt | $38 | $38 | | **Total other expenses** | **$493** | **$507** | [Note 12 — Earnings Per Common Share](index=50&type=section&id=Note%2012%20%E2%80%94%20Earnings%20Per%20Common%20Share) Brighthouse Financial reported a basic and diluted loss per common share of **$5.04** for Q1 2025, an improvement from **$8.22** in Q1 2024, based on a net loss of **$294 million** and **58.3 million** weighted average shares Earnings Per Common Share Calculation | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss available to common shareholders (millions) | $(294) | $(519) | | Weighted average common shares outstanding (millions) | 58.3 | 63.0 | | **Basic and Diluted EPS** | **$(5.04)** | **$(8.22)** | [Note 13 — Contingencies, Commitments and Guarantees](index=51&type=section&id=Note%2013%20%E2%80%94%20Contingencies%2C%20Commitments%20and%20Guarantees) The company faces litigation with possible losses up to **$10 million** and tax-related contingencies up to **$100 million**, alongside **$1.8 billion** in commitments to lend funds and fund partnerships - The company estimates the aggregate range of reasonably possible losses for certain litigation matters to be up to approximately **$10 million** as of March 31, 2025[243](index=243&type=chunk) - For certain tax matters, the company estimates the range of reasonably possible losses in excess of accrued amounts to be from zero up to approximately **$100 million**[254](index=254&type=chunk) - Commitments to fund partnership investments, bank credit facilities, and private corporate bond investments totaled **$1.6 billion**, and mortgage loan commitments were **$249 million** at March 31, 2025[256](index=256&type=chunk)[257](index=257&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a Q1 2025 net loss of **$294 million** but positive adjusted earnings of **$235 million**, detailing operational results, investment performance, derivative strategies, policyholder liabilities, and the company's strong liquidity and capital position [Executive Summary](index=56&type=section&id=Executive%20Summary) Brighthouse Financial reported a Q1 2025 net loss of **$294 million**, an improvement from **$519 million** in Q1 2024, while generating positive adjusted earnings of **$235 million**, a significant turnaround from a **$98 million** adjusted loss Q1 2025 vs Q1 2024 Performance (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) available to shareholders | $(294) | $(519) | | Adjusted earnings (loss) | $235 | $(98) | [Industry Trends and Uncertainties](index=57&type=section&id=Industry%20Trends%20and%20Uncertainties) The company's performance is significantly influenced by capital markets, interest rates, and economic conditions, with ongoing monitoring of inflation, geopolitical conflicts, and commercial real estate market stress - The business is materially affected by equity market performance, interest rates, and the general health of the U.S. economy[272](index=272&type=chunk) - The Federal Reserve's rate decreases in late 2024 may negatively impact the investment portfolio by lowering long-term interest rates[272](index=272&type=chunk) - The company continues to monitor risks from global inflation, geopolitical conflicts, and instability in asset classes like commercial real estate[276](index=276&type=chunk) [Non-GAAP Financial Disclosures](index=59&type=section&id=Non-GAAP%20Financial%20Disclosures) This section defines 'Adjusted Earnings' as a non-GAAP measure, excluding market volatility impacts like net investment gains/losses and changes in Market Risk Benefits, to highlight core business profitability - Adjusted earnings excludes the impact of market volatility to focus on the primary business drivers[284](index=284&type=chunk) - Items excluded from adjusted earnings include: Net investment gains/losses, most net derivative gains/losses, and changes in market risk benefits[285](index=285&type=chunk) [Results of Operations](index=61&type=section&id=Results%20of%20Operations) Net loss available to shareholders improved to **$294 million** in Q1 2025 from **$519 million** in Q1 2024, driven by increased pre-tax adjusted earnings of **$287 million** and favorable derivative movements, with segment performance showing Annuities at **$314 million** and Run-off loss narrowing to **$64 million** Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss) (in millions) | Description | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net income (loss) available to shareholders** | **$(294)** | **$(519)** | | Add: Provision for income tax expense (benefit) | (88) | (123) | | Less: Net investment gains (losses) | (83) | (42) | | Less: Net derivative gains (losses), excluding investment hedge adjustments | 311 | (1,934) | | Less: Change in market risk benefits | (893) | 1,440 | | Less: Other adjustments | (4) | 4 | | **Pre-tax adjusted earnings (loss), adjusted** | **287** | **(110)** | | Less: Provision for income tax expense (benefit) | 52 | (12) | | **Adjusted earnings (loss)** | **$235** | **$(98)** | - The improvement in results was driven by higher pre-tax adjusted earnings and favorable impacts from interest rate derivatives hedging the ULSG business[295](index=295&type=chunk) - The Run-off segment's adjusted loss narrowed significantly to **$64 million** from **$341 million**, primarily due to lower insurance-related costs following a reinsurance arbitration conclusion in the prior period[311](index=311&type=chunk)[312](index=312&type=chunk) [Investments](index=69&type=section&id=Investments) The investment portfolio's adjusted net investment income yield remained stable at **4.25%**, with the **$80.6 billion** fixed maturity securities portfolio being **97.3%** investment grade, and the **$13.1 billion** commercial mortgage loan portfolio diversified across property types Adjusted Net Investment Income and Yield | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Adjusted Net Investment Income (millions) | $1,291 | $1,267 | | Yield % | 4.25% | 4.25% | - At March 31, 2025, **97.3%** of the fixed maturity securities portfolio was rated investment grade (NAIC 1 or 2), consistent with year-end 2024[337](index=337&type=chunk) - The commercial mortgage loan portfolio's largest property type exposures are Apartment (**38.3%**) and Office (**22.9%**) as of March 31, 2025[350](index=350&type=chunk) [Derivatives](index=79&type=section&id=Derivatives) Brighthouse uses various derivative instruments to manage interest rate, foreign currency, credit, and equity market risks, primarily for economic hedging of insurance liabilities and market risk benefits, with counterparty risk managed through netting and collateral arrangements - The company uses derivatives to manage interest rate, foreign currency exchange rate, credit, and equity market risks[358](index=358&type=chunk) - The company writes credit default swaps in replication transactions to synthetically create corporate bond exposures, which is an important tool for managing overall corporate credit risk and ALM needs[365](index=365&type=chunk) [Policyholder Liabilities](index=80&type=section&id=Policyholder%20Liabilities) This section details major policyholder liabilities, including future policy benefits, policyholder account balances, and Market Risk Benefits (MRBs), with the Net Amount at Risk for living benefits at **$5.8 billion** as of March 31, 2025 Variable Annuity Net Amount at Risk (NAR) by Benefit Type (in millions) | Benefit Type | Account Value | Death Benefit NAR | Living Benefit NAR | | :--- | :--- | :--- | :--- | | GMIB | $29,023 | $3,857 | $4,267 | | GMWB | $18,379 | $320 | $319 | | GMAB | $255 | $1 | $1 | | **Total (Selected)** | **$47,657** | **$4,178** | **$4,587** | Variable Annuity MRB Liabilities by Benefit Type (in millions) | Benefit Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | GMIB | $8,322 | $7,560 | | GMWB | $13 | $7 | | GMDB | $800 | $740 | | **Total** | **$9,135** | **$8,307** | [Liquidity and Capital Resources](index=82&type=section&id=Liquidity%20and%20Capital%20Resources) Brighthouse maintains a strong liquidity position with **$4.7 billion** in short-term liquidity and **$48.0 billion** in total liquid assets, targeting a combined RBC ratio of **400% to 450%**, and utilized capital for **$59 million** in share repurchases and **$26 million** in preferred stock dividends in Q1 2025 - The company maintained a short-term liquidity position of **$4.7 billion** and total liquid assets of **$48.0 billion** at March 31, 2025[383](index=383&type=chunk)[384](index=384&type=chunk) - The parent company, BHF, held short-term liquidity of **$872 million** at March 31, 2025[423](index=423&type=chunk) - The company targets a combined risk-based capital (RBC) ratio of **400% to 450%** in normal market conditions[389](index=389&type=chunk) - In Q1 2025, the company used **$59 million** to repurchase common stock and paid **$26 million** in preferred stock dividends[392](index=392&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=91&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, equity prices, credit spreads, and foreign currency, with no material changes to these exposures from the 2024 Annual Report - There have been no material changes to the company's market risk exposures from those previously disclosed in the 2024 Annual Report[437](index=437&type=chunk) [Controls and Procedures](index=92&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2025, noting ongoing changes related to the MetLife transition as material to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[439](index=439&type=chunk) - Ongoing changes related to the separation from MetLife, including process changes and new systems, are considered material changes to internal control over financial reporting[440](index=440&type=chunk) Part II — Other Information [Legal Proceedings](index=92&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 for details on legal proceedings, including class actions and a data security incident, with estimated possible losses up to **$10 million** for certain matters - For detailed information on legal proceedings, refer to Note 13 of the Notes to the Interim Condensed Consolidated Financial Statements[442](index=442&type=chunk) [Risk Factors](index=92&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those disclosed in its 2024 Annual Report - There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report[443](index=443&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=92&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, Brighthouse Financial repurchased **1,062,596** common shares, with approximately **$484 million** remaining under the stock repurchase authorization as of March 31, 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 374,009 | $50.56 | | Feb 2025 | 317,600 | $60.10 | | Mar 2025 | 370,987 | $56.52 | | **Total** | **1,062,596** | **-** | - As of March 31, 2025, approximately **$484 million** remained available for repurchase under the company's stock buyback program[444](index=444&type=chunk) [Other Information](index=92&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during Q1 2025[445](index=445&type=chunk) [Exhibits](index=93&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits filed include CEO/CFO certifications and XBRL data files[447](index=447&type=chunk)

Financial Performance - Net income available to shareholders for Q1 2025 was $(294) million, compared to $646 million in Q4 2024, and $(519) million in Q1 2024[9]. - Adjusted earnings for Q1 2025 were $235 million, down from $304 million in Q4 2024 and up from $(98) million in Q1 2024[9]. - Total revenues for Q1 2025 reached $2,390 million, significantly higher than $1,205 million in Q4 2024 and $74 million in Q1 2024[13]. - Total adjusted revenues for Q1 2025 reached $2,156 million, a 5.2% increase from $2,050 million in Q1 2024[16]. - Adjusted earnings after provision for income tax for Q1 2025 were $263 million, compared to a loss of $98 million in Q1 2024[16]. - Total revenues for the three months ended March 31, 2025, increased to $4,800 million, compared to $2,229 million for the same period in 2024, representing a growth of 115.4%[34]. - Combined net income for the three months ended March 31, 2025, was $400 million, a significant recovery from a net loss of $18 million in the same period of 2024[34]. - Adjusted earnings, less notable items, for the three months ended March 31, 2025, were $245 million, compared to $268 million for the same period in 2024[74]. - The adjusted return on common equity, excluding AOCI, was 6.3% for the quarter ended March 31, 2025, compared to (13.6)% for the same period in 2024[76]. Capital and Assets - Combined total adjusted capital as of March 31, 2025, was $5,500 million, an increase from $5,373 million in Q4 2024[9]. - Total assets decreased to $234,681 million as of March 31, 2025, down from $238,537 million in Q4 2024[14]. - The total capital and surplus as of March 31, 2025, increased to $4,100 million from $4,503 million as of March 31, 2024[38]. - The company’s common stockholders' equity, excluding AOCI, was $8,094 million as of March 31, 2025, compared to $8,864 million a year earlier[76]. Risk and Ratios - The combined risk-based capital ratio improved to a range of 420%-440% as of March 31, 2025, compared to 402% in Q4 2024[9]. - The combined risk-based capital ratio for March 31, 2025, was reported at 420%-440%, an improvement from 415%-435% in the previous year[38]. - The risk-based capital ratio is used to ensure compliance with minimum regulatory capital requirements, reflecting the company's relative size and risk profile[72]. Expenses - The company reported total corporate expenses of $239 million in Q1 2025, up from $210 million in Q4 2024[9]. - Total adjusted expenses for Q1 2025 were $1,841 million, a decrease from $2,132 million in Q1 2024, indicating a 13.6% reduction[16]. - Total adjusted expenses for the three months ended March 31, 2025, were $1,841 million, compared to $2,132 million for the same period in 2024[77]. Investment Performance - Net investment income for the Annuities segment increased to $753 million in Q1 2025, up from $676 million in Q1 2024, representing an 11.4% growth[17]. - The investment portfolio reported net investment losses of $(83) million for the three months ended March 31, 2025, compared to $(42) million in the same period last year[78]. - The adjusted net investment income yield for the three months ended March 31, 2025, was 4.25%, slightly down from 4.25% in the same period last year[78]. Sales and Premiums - Premiums in the Annuities segment for Q1 2025 were $65 million, down from $83 million in Q1 2024, reflecting a 21.7% decrease[17]. - Life segment total adjusted revenues for Q1 2025 were $291 million, up from $217 million in Q1 2024, marking a 33.9% increase[22]. - Total variable and Shield Level annuity sales for Q1 2025 were $2,122 million, a slight increase from $2,017 million in Q1 2024, reflecting a 5.2% growth[20]. - Fixed index annuities sales decreased to $26 million in Q1 2025 from $191 million in Q1 2024, a significant decline of 86.4%[20]. - Total life sales reached $36 million for the three months ended March 31, 2025, up from $29 million in the same period last year, representing a 24.1% increase[24]. Other Key Metrics - Book value per common share increased to $61.17 as of March 31, 2025, from $55.60 in Q4 2024[9]. - The percentage allocated to equity funds in variable annuity separate accounts was 31.28% for the three months ended March 31, 2025, slightly down from 31.54% in the same period of 2024[32]. - Normalized statutory earnings for the three months ended March 31, 2025, were $300 million, compared to a loss of $200 million in the same period of 2024[36]. - The total change in market risk benefits was $(893) million for the three months ended March 31, 2025, compared to $1,440 million in the same period last year[30]. - Net derivative gains for the three months ended March 31, 2025, amounted to $311 million, a significant recovery from a loss of $(1,921) million in the same period last year[30].

Financial Performance - Net income available to shareholders for Q4 2024 was $646 million, a significant increase from a loss of $942 million in Q4 2023[12] - Adjusted earnings for Q4 2024 were $304 million, compared to $177 million in Q4 2023, reflecting a year-over-year improvement[12] - Total revenues for Q4 2024 were $1,205 million, down from $1,400 million in Q4 2023, primarily due to net derivative losses[12] - Total adjusted revenues for Q4 2024 reached $2,273 million, an increase of 6.6% compared to $2,133 million in Q4 2023[15] - Adjusted earnings after provision for income tax for Q4 2024 were $330 million, up from $177 million in Q4 2023, representing an increase of 86.1%[15] - For the year ended December 31, 2024, total adjusted revenues were $8,718 million, a 4.1% increase from $8,375 million in 2023[16] - Adjusted earnings after provision for income tax for the year 2024 were $1,319 million, compared to $969 million in 2023, reflecting a growth of 36.1%[16] - Adjusted earnings, less notable items, for the year ended December 31, 2024, reached $1,209 million, compared to $930 million for the previous year, reflecting a year-over-year growth of approximately 30%[72] Capital and Equity - The combined risk-based capital ratio remained stable at approximately 400% for Q4 2024, consistent with previous quarters[9] - The company’s stockholders' equity, excluding accumulated other comprehensive income, was $8,538 million as of December 31, 2024, up from $8,490 million in Q4 2023[9] - Total capital and surplus as of December 31, 2024, decreased to $3,900 million from $4,763 million as of December 31, 2023[36] - The risk-based capital ratio for the insurance subsidiaries was reported at 400%, indicating strong capital adequacy[70] Expenses and Cost Management - Total corporate expenses for Q4 2024 were $210 million, a decrease from $244 million in Q4 2023, reflecting cost management efforts[9] - Total adjusted expenses for Q4 2024 were $1,872 million, an increase of 4.3% from $1,890 million in Q4 2023[15] - The company reported total expenses of $371 million for the three months ended December 31, 2024, a decrease from $2,574 million in the same quarter last year[75] Sales and Premiums - Premiums collected in Q4 2024 were $207 million, down from $226 million in Q4 2023, indicating a decline in new business activity[12] - Premiums for annuities in Q4 2024 were $81 million, a decrease of 12.9% from $93 million in Q4 2023[17] - Total fixed and income annuity sales for the year 2024 were $1,748 million, a decrease of 43.8% from $3,109 million in 2023[20] - Total life sales for the year ended December 31, 2024, reached $120 million, a 17.6% increase compared to $102 million in 2023[24] - Annuity sales reached $1.2 billion, representing a 10% increase from the prior year, with fixed index annuities showing robust growth[68] Investment Performance - Net investment income for annuities in Q4 2024 was $752 million, an increase of 9.2% from $689 million in Q4 2023[17] - The net investment income for the year ended December 31, 2024, was $466 million, up from $437 million in 2023, indicating a growth of 6.7%[22] - The investment portfolio reported net investment losses of $(73) million for the three months ended December 31, 2024, compared to $(246) million in the same period last year[76] - The adjusted net investment income yield for the three months ended December 31, 2024, was 4.51%, an increase from 4.16% in the same quarter of the previous year[76] Market and Strategic Initiatives - The company anticipates a 5% growth in adjusted revenues for the next fiscal year, supported by new product launches and market expansion strategies[41] - The company is investing in technology to enhance customer experience and streamline operations, with a budget allocation of $50 million for the upcoming year[60] - The company plans to expand its market presence in Asia, targeting a 20% increase in market share over the next three years[41] Other Notable Metrics - The account value for variable and shield level annuities at the end of Q4 2024 was $125,121 million, down from $128,234 million at the end of Q3 2024[18] - The life insurance in-force, net of reinsurance, for whole life policies was $2,932 million as of December 31, 2024, a decrease from $2,962 million in the previous year[24] - The universal and variable universal life account value at the end of December 2024 was $2,590 million, up from $2,579 million at the end of September 2024[23] - The variable universal life account value decreased to $6,419 million at the end of December 2024 from $6,511 million at the end of September 2024, reflecting a decline of 1.4%[23]

Financial Performance - For the three months ended September 30, 2024, net income available to shareholders was $150 million, a decrease of 66.9% from $453 million in the same period of 2023[268]. - Adjusted earnings for the three months ended September 30, 2024, were $767 million, an increase of 134.0% compared to $326 million for the same period in 2023[269]. - For the nine months ended September 30, 2024, the net loss available to shareholders was $360 million, compared to a net loss of $272 million for the same period in 2023[270]. - Adjusted earnings for the nine months ended September 30, 2024, were $1.0 billion, up 27.8% from $792 million in the same period of 2023[270]. - Total revenues for the three months ended September 30, 2024, were $2,018 million, an increase from $1,170 million in the same period of 2023[295]. - Adjusted earnings for the three months ended September 30, 2024, were $767 million, an increase of $441 million compared to the same period in 2023[306]. - For the nine months ended September 30, 2024, adjusted earnings were $1.0 billion, reflecting an increase of $223 million year-over-year[308]. Investment and Market Conditions - The company experienced unfavorable changes in the estimated fair value of variable annuity guaranteed benefit riders due to market factors, impacting profitability[270]. - The financial and economic environment, including capital market conditions and inflation, significantly affects the company's operations and profitability[274]. - The Federal Reserve decreased the target range for the federal funds rate in September and November 2024, which may negatively impact the company's investment portfolio[274]. - The company closely monitors political and economic conditions that could contribute to market volatility, including global inflation and geopolitical conflicts[275]. - The company utilizes adjusted earnings as a non-GAAP financial measure to evaluate performance, which excludes the impact of market volatility[281]. Tax and Regulatory Environment - The effective tax rate for the three months ended September 30, 2024, was 5%, down from 18% in the prior period[297]. - The company is subject to various regulatory developments at both state and federal levels, affecting its operations and products[276]. Segment Performance - Adjusted earnings for the Annuities segment were $327 million for Q3 2024, an increase of $8 million compared to Q3 2023[313]. - Fee income in the Annuities segment rose to $523 million in Q3 2024, up from $494 million in Q3 2023, driven by higher asset-based fees[312]. - Adjusted earnings for the Life segment were a loss of $25 million in Q3 2024, an improvement of $48 million compared to a loss of $73 million in Q3 2023[321]. - Adjusted earnings for the Run-off segment increased to $463 million in Q3 2024, a significant rise of $368 million from $95 million in Q3 2023[326]. - For the nine months ended September 30, 2024, adjusted earnings for the Annuities segment were $972 million, an increase of $48 million from $924 million in the same period of 2023[317]. - The Run-off segment's adjusted earnings for the nine months ended September 30, 2024, were $92 million, an increase of $119 million compared to a loss of $27 million in the same period of 2023[327]. Investment Portfolio and Risk Management - The company has engaged external asset management firms to manage its general account portfolio and certain separate account assets, while managing derivatives trading in-house[340]. - The company monitors direct and indirect investment exposure across sectors and asset classes, adjusting investment levels as appropriate, and does not expect material adverse effects on its financial condition from current exposures[347]. - The company’s investment portfolio is subject to significant financial risks, including credit risk, interest rate risk, and market valuation risk, which could materially affect its financial condition and results of operations[383]. Liquidity and Capital Management - The company maintained a substantial short-term liquidity position of $5.7 billion as of September 30, 2024, up from $3.8 billion at December 31, 2023[407]. - Liquid assets totaled $51.5 billion at September 30, 2024, compared to $45.2 billion at December 31, 2023[408]. - The company aims to maintain a target combined risk-based capital (RBC) ratio of 400% to 450% under normal market conditions[414]. - The company has established a funding agreement-backed commercial paper program with a maximum aggregate principal amount of $5.0 billion[425]. - The company has a share repurchase program, with repurchases dependent on capital position, liquidity, and market conditions[415]. Risks and Uncertainties - Brighthouse Financial cautions that forward-looking statements may be affected by various risks and uncertainties, which could lead to actual results differing materially from expectations[459]. - Key risks include differences between actual experience and actuarial assumptions, higher risk management costs, and the impact of interest rates on future policyholder obligations[459]. - The company highlights potential adverse effects from changes in accounting standards and the availability of reinsurance, which could impact financial strength and credit ratings[459]. - Competition in the market is heightened, affecting service, product features, and distribution channels[459]. - The company emphasizes the risks associated with climate change and public health crises on its business operations and the economy[459].

[Financial Results](index=3&type=section&id=Financial%20Results) [Key Metrics](index=4&type=section&id=Key%20Metrics) Brighthouse Financial reported a net income of $150 million in Q3 2024, a significant improvement from prior losses, with robust adjusted earnings of $767 million including notable items, and a strong risk-based capital ratio | Financial Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net income (loss) available to shareholders | $150M | $9M | $453M | | Adjusted earnings (loss) | $767M | $346M | $326M | | Adjusted earnings, less notable items | $243M | $346M | $275M | | Net income (loss) per common share | $2.47 | $0.12 | $6.89 | | Adjusted earnings (loss) per common share | $12.58 | $5.57 | $4.97 | | Book value per common share, excluding AOCI | $132.91 | $128.36 | $146.61 | | Combined risk-based capital ratio | 365%-385% | 380%-400% | 400%-420% | [GAAP Statements of Operations](index=5&type=section&id=GAAP%20Statements%20of%20Operations) Total revenues for Q3 2024 increased to $2.0 billion from $1.2 billion in Q3 2023, primarily due to reduced net derivative losses and a positive change in market risk benefits, resulting in a net income of $178 million | (in millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total revenues | $2,018 | $1,170 | | Premiums | $180 | $194 | | Net investment income | $1,288 | $1,202 | | Net derivative gains (losses) | $(93) | $(840) | | Total expenses | $1,830 | $580 | | Change in market risk benefits | $(610) | $1,064 | | Income (loss) before income tax | $188 | $590 | | Net income (loss) | $178 | $481 | | Net income (loss) available to common shareholders | $150 | $453 | [GAAP Balance Sheets](index=6&type=section&id=GAAP%20Balance%20Sheets) As of September 30, 2024, total assets increased to $245.2 billion, with total investments reaching $118.9 billion, while total stockholders' equity grew to $5.5 billion due to a significant reduction in accumulated other comprehensive loss | (in millions) | Sept 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | | Total investments | $118,854 | $108,660 | | Total assets | $245,156 | $223,516 | | Total liabilities | $239,566 | $219,382 | | Total Brighthouse Financial, Inc.'s stockholders' equity | $5,525 | $4,069 | | Accumulated other comprehensive income (loss) | $(4,127) | $(7,116) | [Earnings and Select Metrics from Segments and Corporate & Other](index=7&type=section&id=Earnings%20and%20Select%20Metrics%20from%20Segments%20and%20Corporate%20%26%20Other) [Statements of Adjusted Earnings by Segment and Corporate & Other](index=8&type=section&id=Statements%20of%20Adjusted%20Earnings%20by%20Segment%20and%20Corporate%20%26%20Other) Total adjusted earnings for Q3 2024 reached $767 million, primarily driven by a $463 million contribution from the Run-off segment due to favorable actuarial adjustments, while Annuities provided $327 million | Adjusted Earnings (in millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Annuities | $327 | $319 | | Life | $(25) | $(73) | | Run-off | $463 | $95 | | Corporate & Other | $2 | $(15) | | **Total** | **$767** | **$326** | [Annuities](index=10&type=section&id=Annuities) The Annuities segment reported adjusted earnings of $327 million in Q3 2024, a slight increase from the prior year, supported by higher net investment income and strong total annuity sales exceeding $2.5 billion, despite net outflows in variable and Shield Level annuities | Annuities - Key Metrics (in millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Adjusted earnings | $327 | $319 | | Total adjusted revenues | $1,314 | $1,214 | | Variable & Shield Annuities Net Flows | $(1,980) | $(1,052) | | Fixed Annuities Net Flows | $57 | $(213) | | Total Variable & Shield Annuity Sales | $2,031 | $2,018 | - Variable and Shield Level Annuities account value grew to **$128.2 billion** at the end of Q3 2024, up from $112.8 billion a year ago, primarily due to positive investment performance[21](index=21&type=chunk) [Life](index=13&type=section&id=Life) The Life segment's adjusted loss significantly improved to $25 million in Q3 2024 from $73 million in Q3 2023, driven by lower policyholder benefits and claims, while total life sales increased to $30 million | Life - Key Metrics (in millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Adjusted earnings (loss) | $(25) | $(73) | | Total adjusted revenues | $303 | $299 | | Policyholder benefits and claims | $247 | $302 | | Total life sales | $30 | $25 | - Term Life insurance in-force, net of reinsurance, decreased to **$280.7 billion** as of September 30, 2024, from $286.4 billion a year prior, reflecting the run-off nature of this block[27](index=27&type=chunk) [Run-off](index=16&type=section&id=Run-off) The Run-off segment reported substantial adjusted earnings of $463 million in Q3 2024, a significant increase from $95 million in Q3 2023, primarily due to a large favorable actuarial adjustment in policyholder benefits and claims | Run-off - Key Metrics (in millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Adjusted earnings (loss) | $463 | $95 | | Total adjusted revenues | $377 | $413 | | Policyholder benefits and claims | $(313) | $183 | | ULSG Account Value, end of period | $4,848 | $5,125 | [Corporate & Other](index=18&type=section&id=Corporate%20%26%20Other) The Corporate & Other segment achieved adjusted earnings of $2 million in Q3 2024, improving from a $15 million loss in the prior year, driven by higher net investment income and stable expenses, with institutional spread margin business account balance growing to $11.0 billion | Corporate & Other - Key Metrics (in millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Adjusted earnings (loss) | $2 | $(15) | | Net investment income | $178 | $160 | | Total adjusted expenses | $170 | $153 | | Institutional spread margin business account balance | $11,033 | $10,525 | [Other Information](index=19&type=section&id=Other%20Information) [Change in Market Risk Benefits and Net Derivative Gains (Losses)](index=20&type=section&id=Change%20in%20Market%20Risk%20Benefits%20and%20Net%20Derivative%20Gains%20(Losses)) In Q3 2024, the company recorded a $610 million favorable change in market risk benefits and a net derivative loss of $93 million, reflecting market impacts on liabilities and hedging activities | (in millions) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total change in market risk benefits | $(610) | $1,064 | | Total net derivative gains (losses) | $(93) | $(840) | [Notable Items](index=21&type=section&id=Notable%20Items) Adjusted earnings for Q3 2024 included a net favorable impact of $524 million from notable items, primarily driven by a $570 million favorable actuarial adjustment in the Run-off segment | Notable Items by Segment (in millions) | Q3 2024 | | :--- | :--- | | Annuities | $(20) | | Life | $66 | | Run-off | $(570) | | Corporate & Other | $— | | **Total notable items** | **$(524)** | [Summary of Investments](index=23&type=section&id=Summary%20of%20Investments) As of September 30, 2024, the total investment portfolio, including cash, was $124.5 billion, predominantly comprising fixed maturity securities and mortgage loans, with an adjusted net investment income yield of 4.26% - The investment portfolio is primarily composed of **fixed maturity securities (66.9%)** and **mortgage loans (18.4%)**[35](index=35&type=chunk) - The adjusted net investment income yield was **4.26%** for Q3 2024, slightly higher than the 4.20% in Q3 2023[35](index=35&type=chunk) [Statutory Information](index=24&type=section&id=Statutory%20Information) On a preliminary statutory basis for Q3 2024, the combined entities reported a net loss of $300 million, with total adjusted capital of $5.7 billion and a strong combined risk-based capital ratio estimated between 365%-385% | Statutory Metric | As of Sept 30, 2024 (Preliminary) | | :--- | :--- | | Combined net income (loss) (Q3) | $(300)M | | Combined total adjusted capital | $5,700M | | Combined risk-based capital ratio | 365%-385% | | Dividends paid to holding company (Q3) | $— | [Appendix](index=26&type=section&id=Appendix) [Non-GAAP and Other Financial Disclosures](index=28&type=section&id=Non-GAAP%20and%20Other%20Financial%20Disclosures) This section defines non-GAAP financial measures like adjusted earnings, adjusted revenues, and adjusted expenses, explaining how they enhance understanding by excluding market volatility and other items to highlight underlying business profitability - Adjusted earnings is a key non-GAAP measure that excludes the impact of market volatility by removing net investment gains/losses, net derivative gains/losses (with certain adjustments), and changes in market risk benefits from GAAP results[51](index=51&type=chunk)[62](index=62&type=chunk) - Notable items are also presented, which reflect the after-tax impact of certain unanticipated or significant events to help investors better evaluate and forecast results[64](index=64&type=chunk) [Reconciliations](index=33&type=section&id=Reconciliations) This section provides detailed tables reconciling GAAP financial measures to non-GAAP measures, including Net Income to Adjusted Earnings, Return on Common Equity to Adjusted Return on Common Equity, and Total Revenues and Expenses to their adjusted counterparts | Reconciliation to Adjusted Earnings (Q3 2024, in millions) | Amount | | :--- | :--- | | **Net income (loss) available to shareholders** | **$150** | | Less: Net investment gains (losses) | $(60) | | Less: Net derivative gains (losses), excluding investment hedge adjustments | $(99) | | Less: Change in market risk benefits | $(610) | | Less: Market value adjustments | $(11) | | Less: Provision for income tax (expense) benefit on reconciling adjustments | $163 | | **Adjusted earnings (loss)** | **$767** |

Part I — Financial Information This section presents the company's consolidated financial statements and management's analysis of its financial condition and operations [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Brighthouse Financial, Inc.'s unaudited interim consolidated financial statements and explanatory notes [Interim Condensed Consolidated Balance Sheets](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$237,438** | **$236,340** | | Total Investments | $115,299 | $115,456 | | Separate Account Assets | $88,260 | $88,271 | | **Total Liabilities** | **$233,232** | **$231,332** | | Policyholder Account Balances | $85,865 | $81,068 | | Separate Account Liabilities | $88,260 | $88,271 | | **Total Equity** | **$4,206** | **$5,008** | - Total assets increased slightly to **$237.4 billion** as of June 30, 2024, from **$236.3 billion** at year-end 2023. However, total equity decreased significantly to **$4.2 billion** from **$5.0 billion**, primarily due to a retained deficit increase and treasury stock purchases[8](index=8&type=chunk) [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)) Consolidated Statements of Operations Summary (in millions, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,427 | $263 | $1,501 | $1,547 | | Total Expenses | $1,413 | $500 | $2,101 | $2,437 | | Net Income (Loss) | $34 | $(175) | $(457) | $(672) | | Net Income (Loss) Available to Common Shareholders | $9 | $(200) | $(510) | $(725) | | Diluted EPS | $0.12 | $(3.01) | $(8.17) | $(10.77) | - The company reported net income available to common shareholders of **$9 million** for Q2 2024, a significant improvement from a net loss of **$200 million** in Q2 2023. The improvement was largely driven by lower net derivative losses and a positive change in market risk benefits[11](index=11&type=chunk) [Interim Condensed Consolidated Statements of Equity](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Equity) - Total equity decreased from **$5,008 million** at December 31, 2023, to **$4,206 million** at June 30, 2024. The decrease was primarily driven by a net loss of **$459 million** and treasury stock repurchases totaling **$126 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) Consolidated Statements of Cash Flows Summary (in millions) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(196) | $(628) | | Net cash provided by (used in) investing activities | $(1,707) | $(1,659) | | Net cash provided by (used in) financing activities | $2,493 | $1,909 | | **Change in cash, cash equivalents and restricted cash** | **$590** | **$(378)** | - For the first six months of 2024, the company saw a net increase in cash of **$590 million**, a reversal from a **$378 million** decrease in the same period of 2023. This was driven by strong net cash from financing activities, which included **$20.6 billion** in policyholder deposits, offsetting cash used in operating and investing activities[17](index=17&type=chunk) [Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) - Brighthouse Financial is a major U.S. provider of annuity and life insurance products, organized into three segments: Annuities, Life, and Run-off, in addition to a Corporate & Other category[21](index=21&type=chunk) - The company's financial statements are prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that can affect reported amounts[22](index=22&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations [Executive Summary](index=57&type=section&id=Executive%20Summary) Financial Highlights (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Available to Shareholders | $9 | $(200) | $(510) | $(725) | | Adjusted Earnings (Loss) | $346 | $271 | $248 | $466 | - For Q2 2024, the company reported net income of **$9 million** and adjusted earnings of **$346 million**. The net income for the quarter was primarily driven by favorable pre-tax adjusted earnings, which was partially offset by unfavorable market impacts on variable annuity guarantees and derivatives[264](index=264&type=chunk) [Industry Trends and Uncertainties](index=58&type=section&id=Industry%20Trends%20and%20Uncertainties) - The company's business is materially affected by capital markets and economic conditions, including equity market performance, interest rates, and inflation. The Federal Reserve's interest rate policy has contributed to unrealized losses in the investment portfolio[269](index=269&type=chunk)[270](index=270&type=chunk) - Regulatory developments, particularly the Department of Labor's (DOL) Fiduciary Advice Rule issued in April 2024, are being monitored. The implementation of this rule has been stayed by federal court decisions in July 2024, but these rulings are subject to appeal[273](index=273&type=chunk)[274](index=274&type=chunk) [Results of Operations](index=61&type=section&id=Results%20of%20Operations) Adjusted Earnings by Segment (in millions) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Annuities | $332 | $291 | $645 | $605 | | Life | $42 | $15 | $6 | $16 | | Run-off | $(30) | $(16) | $(371) | $(122) | | Corporate & Other | $2 | $(19) | $(32) | $(33) | | **Total Adjusted Earnings** | **$346** | **$271** | **$248** | **$466** | - Consolidated adjusted earnings increased by **$75 million** in Q2 2024 compared to Q2 2023, driven by higher net investment spread and lower other expenses. For the first six months of 2024, adjusted earnings decreased by **$218 million**, primarily due to higher costs in the Run-off segment related to a reinsurance arbitration[296](index=296&type=chunk)[298](index=298&type=chunk) [Investments](index=74&type=section&id=Investments) - The company manages investment risk through diversification by asset type, industry, and issuer. The investment portfolio is primarily managed by external asset managers[328](index=328&type=chunk)[329](index=329&type=chunk) Fixed Maturity Securities Credit Quality (by NAIC Designation, Estimated Fair Value) | NAIC Designation | June 30, 2024 | % of Total | December 31, 2023 | % of Total | | :--- | :--- | :--- | :--- | :--- | | 1 (Highest Quality) | $53,131M | 65.9% | $53,353M | 65.8% | | 2 (High Quality) | $25,179M | 31.2% | $25,236M | 31.2% | | **Subtotal Investment Grade** | **$78,310M** | **97.1%** | **$78,589M** | **97.0%** | | Below Investment Grade | $2,271M | 2.9% | $2,402M | 3.0% | - The commercial mortgage loan portfolio, totaling **$13.1 billion**, is diversified by property type, with Apartment (**40.0%**) and Office (**23.6%**) being the largest exposures[360](index=360&type=chunk) [Derivatives](index=83&type=section&id=Derivatives) - The company uses a variety of derivative instruments to manage interest rate, foreign currency, credit, and equity market risks. At June 30, 2024, the total gross notional amount of derivatives was **$197.7 billion**[368](index=368&type=chunk)[143](index=143&type=chunk) - The company writes credit default swaps as part of replication transactions to synthetically create corporate bond exposures, which helps in managing overall corporate credit risk and matching long-dated insurance liabilities[375](index=375&type=chunk) [Policyholder Liabilities](index=84&type=section&id=Policyholder%20Liabilities) Variable Annuity Net Amount at Risk (NAR) by Benefit Type (in millions) | Benefit Type | Account Value (June 30, 2024) | Death Benefit NAR (June 30, 2024) | Living Benefit NAR (June 30, 2024) | | :--- | :--- | :--- | :--- | | GMIB | $31,522 | $3,727 | $3,718 | | GMWB | $19,749 | $314 | $234 | | GMDB only | $17,172 | $973 | N/A | | **Total (All Types)** | **$83,566** | **$12,642** | **$4,703** | - Variable annuity guaranteed benefits are classified as Market Risk Benefits (MRBs) and measured at fair value. The total liability for these benefits was **$8.7 billion** as of June 30, 2024, down from **$10.3 billion** at year-end 2023[389](index=389&type=chunk) [Liquidity and Capital Resources](index=87&type=section&id=Liquidity%20and%20Capital%20Resources) - The company maintains a substantial short-term liquidity position of **$4.3 billion** and total liquid assets of **$48.5 billion** as of June 30, 2024[396](index=396&type=chunk)[397](index=397&type=chunk) - The parent holding company, BHF, is largely dependent on cash flows from its insurance subsidiaries. BHF held **$1.2 billion** in short-term liquidity and liquid assets as of June 30, 2024[436](index=436&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) - During the first six months of 2024, the company repurchased **$126 million** of its common stock. As of June 30, 2024, **$667 million** remained under the common stock repurchase authorization[216](index=216&type=chunk)[404](index=404&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=96&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the company's exposure to market risks, including changes in interest rates, equity market prices, credit spreads, and foreign currency exchange rates - The company has determined that there have been no material changes to its market risk exposures from those previously disclosed in its 2023 Annual Report on Form 10-K[451](index=451&type=chunk) [Item 4. Controls and Procedures](index=97&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2024 - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[453](index=453&type=chunk) - The company identified ongoing changes in business processes, system implementations, and new third-party arrangements related to transitional services from MetLife as material changes in its internal control over financial reporting[454](index=454&type=chunk) Part II — Other Information This section covers legal proceedings, risk factors, equity sales, and other key disclosures [Item 1. Legal Proceedings](index=97&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the financial statements for details on legal proceedings - For information regarding legal proceedings, the report refers to Note 13 of the Notes to the Interim Condensed Consolidated Financial Statements[456](index=456&type=chunk) [Item 1A. Risk Factors](index=97&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to its risk factors from those disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes to the company's risk factors from those previously disclosed in the 2023 Annual Report[457](index=457&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=97&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchases during the second quarter of 2024 Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased | Average Price Paid per Share | Dollar Value Remaining for Purchase (End of Period) | | :--- | :--- | :--- | :--- | | April 2024 | 444,121 | $49.51 | $709M | | May 2024 | 515,699 | $46.08 | $686M | | June 2024 | 426,910 | $42.76 | $667M | | **Total Q2** | **1,386,730** | **N/A** | **$667M** | [Item 5. Other Information](index=97&type=section&id=Item%205.%20Other%20Information) This section reports on director and officer trading plans - During the three months ended June 30, 2024, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[459](index=459&type=chunk) [Item 6. Exhibits](index=98&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and Inline XBRL documents[461](index=461&type=chunk)