BRIGHTHOUSE FIN(BHFAM) - 2025 Q2 - Quarterly Results

Financial Results Key Metrics 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 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 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 Statements of Adjusted Earnings by Segment 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 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 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 - 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] 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 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 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 - Total life sales increased to $33 million in Q2 2025 from $28 million in Q2 2024[25] - 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] 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 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 - 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] - ULSG life insurance in-force, net of reinsurance, stood at $32.9 billion at the end of Q2 2025[27] Corporate & Other 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 Change in Market Risk Benefits and Net Derivative Gains (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 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] Variable Annuity Separate Account Returns and Allocations 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] - 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] Summary of Investments 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] Statutory Financial Information 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 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 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 Note Regarding Forward-Looking Statements 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][41] - 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] Non-GAAP and Other Financial Disclosures 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][48] - 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] 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) - 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] Reconciliation of Return on Common Equity to Adjusted Return on Common Equity, Excluding AOCI - 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] Reconciliation of Total Revenues to Adjusted Revenues and Reconciliation of Total Expenses to Adjusted Expenses - 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] Investment Reconciliation Details - 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]