Brighthouse Financial(US:BHF)2025-05-09 20:11Part I — Financial Information Presents the company's consolidated financial statements and management's analysis of financial performance Consolidated Financial Statements The unaudited interim condensed consolidated financial statements for Brighthouse Financial, Inc. as of March 31, 2025, and for the three months ended March 31, 2025 and 2024. For the first quarter of 2025, the company reported a net loss attributable to common shareholders of $294 million, an improvement from a net loss of $519 million in the prior-year period. Total assets decreased to $234.7 billion from $238.5 billion at year-end 2024, primarily due to changes in separate account assets and liabilities Interim Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, at specific dates | Balance Sheet Highlights | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Investments | $117,257 | $117,387 | | Total Assets | $234,681 | $238,537 | | Total Liabilities | $229,377 | $233,513 | | Total Equity | $5,304 | $5,024 | - Total assets decreased from $238.5 billion at the end of 2024 to $234.7 billion as of March 31, 2025, while total equity increased from $5.0 billion to $5.3 billion over the same period8 Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Details the company's revenues, expenses, and net income or loss over a specific period | Income Statement Highlights | Three Months Ended Mar 31, 2025 (in millions) | Three Months Ended Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Revenues | $2,390 | $74 | | Total Expenses | $2,744 | $688 | | Net Income (Loss) | $(266) | $(491) | | Net Income (Loss) available to Common Shareholders | $(294) | $(519) | | Basic EPS | $(5.04) | $(8.22) | | Diluted EPS | $(5.04) | $(8.22) | - The significant increase in total revenues for Q1 2025 compared to Q1 2024 was primarily driven by a substantial positive swing in Net derivative gains (losses), which were $311 million in Q1 2025 versus $(1,921) million in Q1 202412 Interim Condensed Consolidated Statements of Equity Outlines changes in the company's equity, including net income, comprehensive income, and share repurchases - Total equity increased from $5,024 million at December 31, 2024, to $5,304 million at March 31, 2025. The increase was primarily driven by $608 million in other comprehensive income, partially offset by a net loss of $266 million and $59 million in share repurchases16 Interim Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Highlights | Three Months Ended Mar 31, 2025 (in millions) | Three Months Ended Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | 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) | Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) Provides detailed explanations of accounting policies, estimates, and segment information - Brighthouse Financial is a major provider of annuity and life insurance products in the U.S., organized into four reportable segments: Annuities, Life, Run-off, and Corporate & Other22 - 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 amounts23 Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion provides an analysis of the company's financial performance for Q1 2025. The company reported a net loss available to shareholders of $294 million, an improvement from a $519 million loss in Q1 2024. However, on a non-GAAP basis, adjusted earnings were $235 million, a significant turnaround from an adjusted loss of $98 million in the prior-year period. The results were influenced by market factors impacting variable annuity guarantees, investment performance, and derivative hedging outcomes. The discussion also covers industry trends, liquidity, capital resources, and investment portfolio management Executive Summary Provides a high-level overview of the company's financial performance and key drivers for the period | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net income (loss) available to shareholders | $(294) | $(519) | | Adjusted earnings (loss) (Non-GAAP) | $235 | $(98) | - The Q1 2025 net loss was primarily driven by unfavorable changes in the fair value of variable annuity guaranteed benefit riders due to market factors, and net investment losses. This was partially offset by favorable pre-tax adjusted earnings and gains on interest rate derivatives hedging the ULSG business269 Industry Trends and Uncertainties Discusses external factors such as market conditions, interest rates, and geopolitical events affecting the business - 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 decreases in late 2024 may negatively impact the investment portfolio and profitability of spread-based products272 - The company continues to monitor geopolitical conflicts, supply chain disruptions, and uncertainty in asset classes like commercial real estate for their potential impact on business operations and the investment portfolio276 Non-GAAP Financial Disclosures Explains the company's use of non-GAAP financial measures and their reconciliation to GAAP equivalents - Adjusted earnings is a non-GAAP measure used by management that excludes market volatility impacts such as net investment gains/losses, net derivative gains/losses (with certain exceptions), and changes in market risk benefits to highlight underlying business profitability283284285 Results of Operations Analyzes the company's revenue, expenses, and profitability across its business segments - The lower net loss in Q1 2025 compared to Q1 2024 was driven by higher pre-tax adjusted earnings and gains on interest rate derivatives. This was partially offset by higher losses from variable annuity guaranteed benefit riders and higher net investment losses on mortgage loans293295 - Adjusted earnings increased by $333 million year-over-year to $235 million, primarily due to lower insurance-related costs and higher fee income, partially offset by a lower net investment spread298 | Adjusted Earnings (Loss) by Segment | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Annuities | $314 | $313 | | Life | $9 | $(36) | | Run-off | $(64) | $(341) | | Corporate & Other | $(24) | $(34) | | Total | $235 | $(98) | Investments Details the composition, performance, and risk management of the company's investment portfolio - The company manages investment risk through asset allocation, diversification, and risk limits. The investment portfolio's adjusted net investment income yield was 4.25% for Q1 2025, consistent with Q1 2024318329 - As of March 31, 2025, 97.3% of the fixed maturity securities portfolio was rated investment grade, with a total estimated fair value of $80.6 billion337 - The company has direct exposure to commercial real estate through mortgage loans and CMBS. The office property sector, which represents 22.9% of the commercial mortgage loan portfolio, is under continued market focus due to hybrid work arrangements324350 Derivatives Describes the company's use of derivative instruments for risk management purposes - The company uses a variety of derivative instruments to manage interest rate, foreign currency, credit, and equity market risks. As of March 31, 2025, the total gross notional amount of derivatives was $271.4 billion152358 Policyholder Liabilities Explains the nature and valuation of liabilities related to insurance and annuity products - Variable annuity guaranteed benefits (MRBs) are measured at fair value. The total Net Amount at Risk (NAR) for variable annuities was $13.3 billion for death benefits and $5.8 billion for living benefits as of March 31, 2025371376 Liquidity and Capital Resources Assesses the company's ability to meet its financial obligations and maintain adequate capital levels - The company maintains a substantial short-term liquidity position of $4.7 billion and total liquid assets of $48.0 billion as of March 31, 2025383384 - The company targets a combined risk-based capital (RBC) ratio of 400% to 450% in normal market conditions389 - During Q1 2025, the company repurchased $59 million of its common stock. As of March 31, 2025, $484 million remained under its repurchase authorization224 - The parent holding company, BHF, is largely dependent on cash flows from its insurance subsidiaries to meet its obligations. BHF and its non-insurance subsidiaries held $872 million in short-term liquidity at the end of Q1 2025422423 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risk from changes in interest rates, equity market prices, credit spreads, and foreign currency exchange rates through its insurance and investment activities. The company regularly analyzes these exposures. There have been no material changes to the market risk exposures disclosed in the 2024 Annual Report - The company's market risk exposures, primarily from interest rates and secondarily from equity prices and foreign currency rates, have not materially changed from those disclosed in the 2024 Annual Report on Form 10-K436437 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. The company noted that ongoing changes in business processes, system implementations, and new third-party arrangements related to the transition services from MetLife are considered material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025439 - Ongoing changes to business processes and systems related to the separation from MetLife are considered material changes to internal control over financial reporting440 Part II — Other Information Covers legal proceedings, risk factors, equity sales, and other relevant disclosures Legal Proceedings The company is involved in various litigation matters. For contingencies where a loss is reasonably possible but not probable, the company estimates an aggregate range of reasonably possible losses up to approximately $10 million as of March 31, 2025. For other matters, an estimate cannot be made. (See Note 13 for details) - The company is a defendant in a number of litigation matters. For details, refer to Note 13 of the Notes to the Interim Condensed Consolidated Financial Statements442239 Risk Factors There have been no material changes to the company's risk factors from those previously disclosed in the 2024 Annual Report on Form 10-K - No material changes to the company's risk factors have occurred since the filing of the 2024 Annual Report443 Unregistered Sales of Equity Securities and Use of Proceeds During the first quarter of 2025, Brighthouse Financial repurchased 1,062,596 shares of its common stock for a total of approximately $59 million. As of March 31, 2025, $484 million remained available for future repurchases under the authorized program | 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 Q1 2025 | 1,062,596 | N/A | - As of March 31, 2025, approximately $484 million remained available for repurchase under the company's publicly announced stock repurchase program444 Other Information During the first quarter of 2025, 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 - No directors or officers adopted or terminated Rule 10b5-1 trading plans during the first quarter of 2025445 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and XBRL data files