BRIGHTHOUSE FIN(BHFAM) - 2024 Q3 - Quarterly Results

Financial Results Key Metrics 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 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 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 Statements of Adjusted Earnings by Segment and Corporate & Other 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 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] 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] 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 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 Change in Market Risk Benefits and Net Derivative Gains (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 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 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] - The adjusted net investment income yield was 4.26% for Q3 2024, slightly higher than the 4.20% in Q3 2023[35] Statutory Information 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 Non-GAAP and Other Financial Disclosures 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][62] - 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] 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 |