Brighthouse Financial(BHF) - 2025 Q1 - Quarterly Results

Financial Results Key Metrics For Q1 2025, Brighthouse Financial reported a net loss of $294 million, adjusted earnings of $235 million ($4.01 per share), and maintained a strong capital position with a combined risk-based capital ratio estimated between 420% and 440% Q1 2025 Key Financial Metrics (in millions) | Financial Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net income (loss) available to shareholders | $(294)M | $646M | $(519)M | | Adjusted earnings (loss) | $235M | $304M | $(98)M | | Adjusted earnings, less notable items | $245M | $352M | $268M | | Net income (loss) per common share | $(5.04) | $10.79 | $(8.22) | | Adjusted earnings (loss) per common share | $4.01 | $5.07 | $(1.56) | | Combined risk-based capital ratio | 420%-440% | 402% | 415%-435% | | Combined total adjusted capital | $5,500M | $5,373M | $6,030M | - Book value per common share, excluding AOCI, increased to $141.87 as of March 31, 2025, compared to $126.35 as of March 31, 2024[9] GAAP Statements of Operations In Q1 2025, the company reported total revenues of $2.39 billion and total expenses of $2.74 billion, leading to a net loss of $294 million, significantly impacted by net derivative gains and unfavorable market risk benefit changes GAAP Statement of Operations Highlights (in millions) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $2,390 | $74 | | Net derivative gains (losses) | $311 | $(1,921) | | Total expenses | $2,744 | $688 | | Change in market risk benefits | $893 | $(1,440) | | Net income (loss) available to common shareholders | $(294) | $(519) | GAAP Balance Sheets As of March 31, 2025, total assets were $234.7 billion and total liabilities $229.4 billion, with stockholders' equity increasing to $5.24 billion due to a reduction in AOCI loss Balance Sheet Summary (in millions) | Item | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total investments | $117,257 | $115,894 | | Total assets | $234,681 | $239,688 | | Total liabilities | $229,377 | $235,428 | | Total Brighthouse Financial, Inc.'s stockholders' equity | $5,239 | $4,195 | | Accumulated other comprehensive income (loss) | $(4,670) | $(5,413) | Statements of Adjusted Earnings by Segment Total adjusted earnings for Q1 2025 reached $235 million, a turnaround from Q1 2024, primarily driven by the Annuities segment's $314 million contribution Adjusted Earnings by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Annuities | $314 | $313 | | Life | $9 | $(36) | | Run-off | $(64) | $(341) | | Corporate & Other | $(24) | $(34) | | Total Adjusted Earnings | $235 | $(98) | Annuities The Annuities segment reported stable adjusted earnings of $314 million in Q1 2025, with increased sales of Shield Level Annuities offset by $2.0 billion in net outflows from variable and Shield Level products Annuities — Statements of Adjusted Earnings The Annuities segment's adjusted earnings remained stable at $314 million in Q1 2025, as increased adjusted revenues were largely offset by higher adjusted expenses Annuities Adjusted Earnings (in millions) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total adjusted revenues | $1,344 | $1,304 | | Total adjusted expenses | $957 | $919 | | Adjusted earnings | $314 | $313 | Annuities — Select Operating Metrics Q1 2025 saw total variable and Shield Level annuity sales rise to $2.12 billion, yet the segment experienced $1.96 billion in net outflows, while fixed and income annuity sales significantly declined - Variable and Shield Level Annuities experienced net outflows of $1,955 million in Q1 2025, compared to net outflows of $1,755 million in Q1 2024[18] Annuity Sales (in millions) | Product | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Shield Level Annuities | $1,957 | $1,861 | | Total variable and Shield Level annuity sales | $2,122 | $2,017 | | Total fixed and income annuity sales | $137 | $856 | Life The Life segment achieved adjusted earnings of $9 million in Q1 2025, a positive shift from a prior-year loss, driven by higher revenues and increased sales, despite a slight decline in total life insurance in-force Life — Statements of Adjusted Earnings The Life segment's adjusted earnings turned positive to $9 million in Q1 2025, primarily due to a significant increase in adjusted revenues from universal life and investment-type product policy fees Life Adjusted Earnings (in millions) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total adjusted revenues | $291 | $217 | | Total adjusted expenses | $281 | $263 | | Adjusted earnings (loss) | $9 | $(36) | Life — Select Operating Metrics Total life sales increased to $36 million in Q1 2025, while universal and variable universal life account values remained stable, and total life insurance in-force, net of reinsurance, slightly decreased to $307.5 billion - Total life sales increased by 24% year-over-year to $36 million in Q1 2025[24] Life Insurance In-Force, Net of Reinsurance (in millions) | Product Type | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Whole Life | $2,855 | $2,936 | | Term Life | $272,711 | $284,862 | | Universal and Variable Universal Life | $31,926 | $33,391 | Run-off The Run-off segment's adjusted loss significantly narrowed to $64 million in Q1 2025, driven by lower policyholder benefits and claims, as the ULSG account value continued its gradual decline Run-off — Statements of Adjusted Earnings The Run-off segment's adjusted loss improved to $64 million in Q1 2025, primarily due to a sharp decrease in policyholder benefits and claims Run-off Adjusted Earnings (in millions) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Policyholder benefits and claims | $352 | $673 | | Adjusted earnings (loss) | $(64) | $(341) | Run-off — Select Operating Metrics The account value for Universal Life with Secondary Guarantees (ULSG) decreased to $4.71 billion in Q1 2025, with life insurance in-force also declining to $33.2 billion - The account value for Universal Life with Secondary Guarantees (ULSG) declined by 5.4% year-over-year[26] Corporate & Other The Corporate & Other segment's adjusted loss improved to $24 million in Q1 2025, despite a decrease in the institutional spread margin business account balance to $10.1 billion Corporate & Other — Statements of Adjusted Earnings and Select Operating Metrics The Corporate & Other segment's adjusted loss narrowed to $24 million in Q1 2025, driven by lower adjusted expenses offsetting reduced adjusted revenues, with the institutional spread margin business account balance at $10.09 billion Corporate & Other Adjusted Earnings (in millions) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total adjusted revenues | $154 | $173 | | Total adjusted expenses | $155 | $162 | | Adjusted earnings (loss) | $(24) | $(34) | - The institutional spread margin business account balance was $10,092 million at the end of Q1 2025, down from $10,718 million at the end of Q1 2024[28] Other Information Change in Market Risk Benefits and Net Derivative Gains (Losses) Q1 2025 saw an $893 million negative change in market risk benefits, contrasting with $311 million in net derivative gains, largely driven by Shield embedded derivatives Key Drivers of GAAP Volatility (in millions) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Change in market risk benefits | $(893) | $1,440 | | Net derivative gains (losses) | $311 | $(1,921) | - Gains on Shield embedded derivatives were $1,171 million in Q1 2025, reversing a loss of $1,817 million in Q1 2024[30] Notable Items Notable items impacting adjusted earnings totaled $10 million in Q1 2025, solely from Annuities segment actuarial adjustments, a significant decrease from $366 million in Q1 2024 Notable Items by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Annuities | $10 | $— | | Life | — | $73 | | Run-off | — | $293 | | Total notable items | $10 | $366 | Variable Annuity Separate Account Returns and Allocations The Variable Annuity separate account reported a -0.54% gross return in Q1 2025, a decline from the prior year, with balanced funds and equity funds remaining the largest asset allocations - Total quarterly VA separate account gross returns were -0.54% for Q1 2025, compared to 5.96% for Q1 2024[32] - As of March 31, 2025, the largest allocation in the VA separate account was to balanced funds (40.73%), followed by equity funds (31.28%)[32] Summary of Investments Total investments and cash equivalents were $121.9 billion as of March 31, 2025, primarily in fixed maturity securities, with the adjusted net investment income yield remaining at 4.25% Investment Portfolio Composition (March 31, 2025) | Asset Class | Amount (in millions) | % of Total | | :--- | :--- | :--- | | Fixed maturity securities | $80,640 | 66.14% | | Mortgage loans, net | $23,051 | 18.91% | | Limited partnerships and LLCs | $4,839 | 3.97% | | Cash, cash equivalents and short-term investments | $6,236 | 5.11% | | Other invested assets | $5,284 | 4.33% | | Total | $121,924 | 100.00% | - The adjusted net investment income yield was 4.25% for Q1 2025, unchanged from Q1 2024[33] Statutory Statement of Operations Information Preliminary statutory results for Q1 2025 show a combined net income of $400 million and normalized statutory earnings of $0.3 billion, a significant improvement from the prior-year loss Preliminary Statutory Results (in millions) | Item | Q1 2025 (Preliminary) | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $4,800 | $2,229 | | Net income (loss) | $400 | $(18) | | Normalized statutory earnings (loss) | $0.3B | $(0.2)B | Statutory Balance Sheet and Surplus Information As of March 31, 2025, preliminary combined statutory total adjusted capital was $5.5 billion, with a strong combined risk-based capital ratio estimated between 420%-440%, and no dividends paid to the holding company Statutory Capital Position (Preliminary) (in millions) | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Combined total adjusted capital | $5,500M | $6,030M | | Combined risk-based capital ratio | 420%-440% | 415%-435% | - No dividends were paid to the holding company in Q1 2025, consistent with the prior year[38] Appendix Note Regarding Forward-Looking Statements This section provides a standard safe harbor statement, cautioning that forward-looking statements are subject to substantial risks and uncertainties, including market volatility, interest rate changes, and regulatory shifts - The company identifies forward-looking statements with words like "anticipate," "expect," "project," "believe," and similar terms[41] - Key risks include differences between actual experience and actuarial models, the effectiveness of risk management, interest rate impacts, regulatory changes, and competition[42] Non-GAAP and Other Financial Disclosures This section defines non-GAAP financial measures like Adjusted Earnings, used to evaluate underlying business profitability by excluding market volatility, and clarifies terms such as Total Adjusted Capital and Risk-Based Capital Ratio - Adjusted earnings is a key non-GAAP measure that excludes net investment gains/losses, net derivative gains/losses, and changes in market risk benefits from GAAP net income to focus on primary business performance[49][53][59] - Notable items are defined as certain unanticipated or anticipated events whose exclusion from non-GAAP measures helps investors better understand and forecast results[62] - The Risk-Based Capital (RBC) Ratio is a regulatory measure of an insurance company's capital adequacy relative to its risk profile[72] Acronyms This section provides a comprehensive list of acronyms and their definitions used throughout the financial supplement, including AOCI, GAAP, RBC, and ULSG - Provides definitions for key acronyms including DAC, GMDB, NIGL, NDGL, TAC, and VA[73] Reconciliations This section provides detailed reconciliations of non-GAAP financial measures, including Net Income to Adjusted Earnings and Return on Common Equity, to their GAAP counterparts, ensuring transparency of adjustments Reconciliation of Net Income to Adjusted Earnings This table reconciles the Q1 2025 GAAP net loss of $294 million to adjusted earnings of $235 million, primarily by excluding market risk benefit changes and including net derivative gains Q1 2025 Reconciliation of Net Income to Adjusted Earnings (in millions) | Item | Amount | | :--- | :--- | | Net income (loss) available to shareholders | $(294) | | Less: Reconciling items (net) | $(539) | | Adjusted earnings (loss) | $235 | | Less: Notable items | $(10) | | Adjusted earnings, less notable items | $245 | Reconciliation of Return on Common Equity to Adjusted Return on Common Equity This reconciliation details the calculation of the adjusted return on common equity, excluding AOCI, which was 20.4% for the trailing four quarters ending March 31, 2025, after adjusting for non-GAAP items - For the four quarters ended March 31, 2025, the adjusted return on common equity, excluding AOCI, was 20.4%, compared to the GAAP return on common equity of 16.4%[76] Reconciliation of Total Revenues and Expenses to Adjusted Q1 2025 GAAP total revenues of $2.39 billion were reconciled to adjusted revenues of $2.16 billion, and GAAP total expenses of $2.74 billion to adjusted expenses of $1.84 billion, by excluding specific items Q1 2025 Revenue and Expense Reconciliation (in millions) | Item | GAAP | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Total revenues | $2,390 | $(234) | $2,156 | | Total expenses | $2,744 | $(903) | $1,841 | Investment Reconciliation Details This section details the Q1 2025 net investment loss of $83 million, comprising portfolio losses and credit loss provisions, and confirms the adjusted net investment income yield of 4.25% - The adjusted net investment income yield for Q1 2025 was 4.25%, derived from a 4.39% investment income yield less 0.14% for investment fees and expenses[78]