Brighthouse Financial(US:BHF)2025-08-08 20:10Part I — Financial Information Financial Statements Presents Brighthouse Financial's unaudited interim condensed consolidated financial statements for periods ending June 30, 2025 and 2024 Interim Condensed Consolidated Balance Sheets - Total assets increased to $242.6 billion as of June 30, 2025, from $238.5 billion at December 31, 2024, primarily driven by an increase in total investments. Total equity also rose to $5.7 billion from $5.0 billion over the same period8 Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $242,645 | $238,537 | | Total Investments | $120,747 | $117,387 | | Cash and cash equivalents | $5,540 | $5,045 | | Separate account assets | $86,085 | $85,636 | | Total Liabilities | $236,907 | $233,513 | | Future policy benefits | $31,974 | $31,475 | | Policyholder account balances | $88,046 | $87,989 | | Separate account liabilities | $86,085 | $85,636 | | Total Equity | $5,738 | $5,024 | Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - The company reported a net income available to common shareholders of $60 million for Q2 2025, a significant improvement from the $9 million in Q2 2024. For the six-month period, the net loss available to common shareholders narrowed to $234 million in 2025 from a loss of $510 million in 202412 Statement of Operations Summary (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $871 | $1,427 | $3,261 | $1,501 | | Total Expenses | $778 | $1,413 | $3,522 | $2,101 | | Net Income (Loss) | $85 | $34 | $(181) | $(457) | | Net Income (Loss) available to Common Shareholders | $60 | $9 | $(234) | $(510) | | Diluted EPS | $1.02 | $0.12 | $(4.06) | $(8.17) | Interim Condensed Consolidated Statements of Equity - Total equity increased from $5.02 billion at the end of 2024 to $5.74 billion as of June 30, 2025. The increase was primarily driven by other comprehensive income of $1.02 billion, partially offset by a net loss of $181 million and share repurchases totaling $102 million during the six-month period15 Interim Condensed Consolidated Statements of Cash Flows - For the six months ended June 30, 2025, net cash provided by operating activities was $145 million, a significant turnaround from the $196 million used in the same period in 2024. Net cash from investing activities was $675 million, compared to a use of $1.71 billion in the prior year period18 Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $145 | $(196) | | Net cash provided by (used in) investing activities | $675 | $(1,707) | | Net cash provided by (used in) financing activities | $(325) | $2,493 | | Change in cash, cash equivalents and restricted cash | $495 | $590 | Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) - The company is organized into four reportable segments: Annuities, Life, Run-off, and Corporate & Other. The Annuities segment is the largest, with total assets of $168.1 billion as of June 30, 2025213255 - The company uses adjusted earnings, a non-GAAP measure, to evaluate segment performance. This measure excludes the impact of market volatility, such as net investment gains/losses and net derivative gains/losses, to highlight underlying profitability3738 Adjusted Earnings by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Annuities | $332 | $332 | $646 | $645 | | Life | $(26) | $42 | $(17) | $6 | | Run-off | $(83) | $(30) | $(147) | $(371) | | Corporate & Other | $(25) | $2 | $(49) | $(32) | | Total Adjusted Earnings | $198 | $346 | $433 | $248 | - The investment portfolio is primarily composed of fixed maturity securities, with a fair value of $80.8 billion at June 30, 2025. The portfolio is predominantly investment grade, with 97.1% of securities rated NAIC 1 or 288356 - During the six months ended June 30, 2025, the company repurchased 1.84 million shares of its common stock for $102 million. As of June 30, 2025, $441 million remained available under the current share repurchase authorization232 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations, including segment performance, investment portfolio, and liquidity and capital resources Executive Summary - For Q2 2025, the company reported net income available to shareholders of $60 million and adjusted earnings of $198 million. This compares to a net income of $9 million and adjusted earnings of $346 million in Q2 2024. The increase in net income was primarily due to favorable changes in the fair value of variable annuity guaranteed benefit riders277278 Financial Summary (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Available to Shareholders | $60 | $9 | $(234) | $(510) | | Adjusted Earnings (Loss) | $198 | $346 | $433 | $248 | Results of Operations - Consolidated adjusted earnings decreased by $148 million to $198 million in Q2 2025 compared to Q2 2024. The decrease was driven by lower net investment spread and higher insurance-related costs, particularly in the Life and Run-off segments308309 - For the first six months of 2025, consolidated adjusted earnings increased by $185 million to $433 million compared to the prior year period. This improvement was primarily due to lower net costs in insurance-related activities, driven by a significant positive swing in the Run-off segment related to a prior-year reinsurance arbitration308311313 - The Annuities segment's adjusted earnings remained stable at $332 million in Q2 2025, as a higher net investment spread was offset by lower fee income and higher expenses314315 - The Life segment reported an adjusted loss of $26 million in Q2 2025, a $68 million decrease from the $42 million profit in Q2 2024, mainly due to higher claims318319 - The Run-off segment's adjusted loss widened to $83 million in Q2 2025 from $30 million in Q2 2024, driven by lower net investment spread and higher insurance costs323326 Investments - The company's investment portfolio is primarily composed of fixed maturity securities, totaling $80.8 billion at fair value as of June 30, 2025. The portfolio remains high-quality, with 97.1% classified as investment grade (NAIC 1 or 2)353356 - The adjusted net investment income yield was 4.28% for Q2 2025, slightly down from 4.39% in Q2 2024349 - The commercial mortgage loan portfolio, with a carrying value of $12.9 billion, remains diversified by property type and geography. The average loan-to-value ratio was 68% and the average debt-service coverage ratio was 2.2x as of June 30, 2025367370372 Liquidity and Capital Resources - The company maintained a substantial short-term liquidity position of $4.6 billion as of June 30, 2025, consisting of cash, cash equivalents, and short-term investments, excluding pledged assets401 - The parent holding company, BHF, held $803 million in short-term liquidity and $941 million in total liquid assets as of June 30, 2025441442 - The company continues its capital return program, having repurchased $102 million of common stock in the first half of 2025, with $441 million remaining under its authorization as of June 30, 2025408427 - In July 2025, S&P revised the long-term issuer credit ratings for BHF to BBB from BBB+ and the financial strength ratings for certain subsidiaries to A from A+410 Quantitative and Qualitative Disclosures About Market Risk States no material changes to market risk exposures from the 2024 Annual Report, primarily related to interest rates, equity, credit spreads, and foreign currency - The company reports no material changes to its market risk exposures from those previously disclosed in the 2024 Annual Report455 Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, noting MetLife transition changes as material to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025457 - Ongoing changes to business processes and systems due to the transition from MetLife are considered material changes in internal control over financial reporting458 Part II — Other Information Legal Proceedings Refers to Note 13 for legal proceedings details, with estimated possible losses up to $10 million for some matters and $100 million for tax matters - For detailed information on legal proceedings, the report refers to Note 13 of the Interim Condensed Consolidated Financial Statements460 Risk Factors Indicates no material changes to the company's risk factors from those disclosed in its 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report461 Unregistered Sales of Equity Securities and Use of Proceeds Details common stock repurchases in Q2 2025, totaling 781,800 shares, with $441 million remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Value Remaining in Program (end of period) | | :--- | :--- | :--- | :--- | | April 2025 | 410,200 | $51.65 | $463 million | | May 2025 | 356,400 | $59.14 | $442 million | | June 2025 | 15,200 | $59.34 | $441 million | | Total Q2 | 781,800 | | | Other Information Discloses that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - During Q2 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading plan463 Exhibits Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley and XBRL data files - Exhibits filed with this report include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files465