BRIGHTHOUSE FIN(US:BHFAM)2025-11-07 22:31Financial Performance - For the three months ended September 30, 2025, net income available to shareholders was $453 million, an increase of 202% compared to $150 million for the same period in 2024[286]. - Adjusted earnings for the three months ended September 30, 2025, were $970 million, up 27% from $767 million in the prior year[287]. - For the nine months ended September 30, 2025, net income available to shareholders was $219 million, compared to a net loss of $360 million for the same period in 2024[288]. - Adjusted earnings for the nine months ended September 30, 2025, reached $1.4 billion, a 40% increase from $1.0 billion in 2024[288]. - Total revenues for the three months ended September 30, 2025, were $1,816 million, a decrease of 10% from $2,018 million in the prior year[322]. - The total expenses for the three months ended September 30, 2025, were $1,231 million, a decrease of 33% from $1,830 million in the prior year[322]. - For the nine months ended September 30, 2025, income available to shareholders before provision for income tax was $243 million, an increase of $736 million from a loss of $493 million in the same period of 2024[326]. - Adjusted earnings for the nine months ended September 30, 2025, were $1.4 billion, an increase of $388 million compared to the same period in 2024[337]. Merger and Regulatory Matters - The company entered into a Merger Agreement on November 6, 2025, with Aquarian Holdings VI L.P., which will result in each share of common stock being converted into $70.00 per share in cash[290][291]. - The Merger is subject to customary closing conditions, including regulatory approvals and the absence of a Company Material Adverse Effect[293]. - The Inflation Reduction Act established a 15% corporate alternative minimum tax for corporations with average annual adjusted financial statement income exceeding $1.0 billion[298]. - The company is assessing the impact of proposed regulations regarding the corporate alternative minimum tax, which may introduce significant uncertainties[299]. - The Company was not subject to the CAMT for the years ended December 31, 2023 and 2024, and does not expect to be subject to it for the year ended December 31, 2025[300]. - The OBBBA enacted on July 4, 2025, is not expected to have a material impact on the Company[301]. - The CCDAA requires companies with annual revenues exceeding $1.0 billion to report Scope 1 and 2 GHG emissions starting in 2026, and Scope 3 emissions starting in 2027[302]. Investment Portfolio and Economic Conditions - The Federal Reserve decreased the target range for the federal funds rate multiple times in 2024 and 2025, which may negatively impact the company's investment portfolio and profitability[295]. - The company continues to monitor economic conditions, including inflation and geopolitical conflicts, that could affect market volatility and its business operations[296]. - As of September 30, 2025, unrealized losses on fixed maturity securities exceeded unrealized gains due to interest rate increases, contributing to a net unrealized loss position in the investment portfolio[365]. - The company does not expect its general account investments in current sectors and asset classes to materially adversely affect its financial condition or results of operations[371]. - The company actively monitors and adjusts its investment exposure across sectors and asset classes to mitigate financial risks[371]. Tax and Regulatory Compliance - The effective tax rate for the three months ended September 30, 2025, was 18%, compared to 5% in the prior period[325]. - The effective tax rate for the nine months ended September 30, 2025, was 19%, up from 18% in the prior period[337]. - The effective tax rate for the Life segment was 18% for the three months ended September 30, 2025, down from 22% in the prior period[346]. - The effective tax rate for the Run-off segment remained stable at 21% for both the current and prior periods[351]. Segment Performance - Adjusted earnings for the Annuities segment for the nine months ended September 30, 2025, were $950 million, a decrease of $22 million from 2024[342]. - Adjusted earnings for the Life segment were $40 million for the three months ended September 30, 2025, an increase of $65 million compared to the same period in 2024[344]. - The Run-off segment achieved adjusted earnings of $641 million for the three months ended September 30, 2025, an increase of $178 million year-over-year[350]. - The Corporate & Other segment reported an adjusted loss of $64 million for the nine months ended September 30, 2025, an increase in loss of $34 million compared to the prior year[358]. Liquidity and Capital Management - The company maintained a substantial short-term liquidity position of $5.2 billion as of both September 30, 2025, and December 31, 2024[429]. - Liquid assets totaled $50.4 billion as of September 30, 2025, compared to $48.1 billion as of December 31, 2024[430]. - The company continuously monitors and adjusts its liquidity and capital plans in response to changing market conditions[428]. - The total outstanding amount under various funding agreements was $9,817 million as of September 30, 2025, with significant issuances and repayments reported[451]. - The company has established intercompany liquidity facilities but reported no borrowings or repayments under these facilities during the nine months ended September 30, 2025 and 2024[478]. Investment Income and Derivatives - Net investment income for the three months ended September 30, 2025, was $1,334 million, an increase of 4% from $1,288 million in the same period of 2024[322]. - Adjusted net investment income yield represents adjusted net investment income as a percentage of average quarterly asset carrying values[315]. - The company reported net derivative losses of $410 million for the three months ended September 30, 2025, compared to losses of $93 million in the prior year[322]. - The company established a stand-alone hedging program for variable annuity and Shield Annuity contracts to better manage associated risks[403]. Credit Quality and Risk Management - The credit quality of fixed maturity securities showed that 97.1% were rated investment grade as of September 30, 2025, with a total amortized cost of $84,000 million[381]. - The company manages credit risk related to derivatives through various strategies, including the use of master netting agreements[408]. - The average loan-to-value ratio for commercial mortgage loans was 68% as of September 30, 2025, while the average debt-service coverage ratio was 2.2x[397]. - The average loan-to-value ratio for agricultural mortgage loans was 46% as of September 30, 2025, indicating a lower risk profile compared to commercial loans[397].