Brighthouse Financial(BHF) - 2025 Q2 - Quarterly Results

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