BRIGHTHSE(US:BHFAO)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 Developments - The company entered into a Merger Agreement on November 6, 2025, with Aquarian Holdings VI L.P., where each share of common stock will be 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 introduces 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]. Economic and Market 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 market volatility, which could affect its business operations and investment portfolio[296]. - The Federal Reserve decreased the target range for the federal funds rate from 4.25%-4.50% to 4.00%-4.25% on September 17, 2025, and further to 3.75%-4.00% on October 29, 2025[365]. Investment and Portfolio Management - Adjusted net investment income is calculated as GAAP net investment income plus Investment Hedge Adjustments less investment gains on trading securities[314]. - Investment income for the three months ended September 30, 2025, was $1,366 million with a yield of 4.54%, compared to $1,332 million and 4.40% for the same period in 2024[373]. - Adjusted net investment income for the nine months ended September 30, 2025, was $3,910 million, reflecting a yield of 4.31%, compared to $3,877 million and 4.30% for the same period in 2024[373]. - The company has direct exposure to commercial real estate through mortgage loans and structured securities, with ongoing market focus due to hybrid work arrangements[369]. - The company does not expect its general account investments in current sectors to have a material adverse effect on its financial condition[371]. - The company is subject to significant financial risks including credit risk, interest rate risk, and market valuation risk, which could adversely affect its financial condition[366]. Segment Performance - Adjusted earnings for the Annuities segment for the nine months ended September 30, 2025, were $950 million, a decrease of $22 million compared to 2024[342]. - Insurance-related activities resulted in a loss of $499 million for the nine months ended September 30, 2025, compared to a loss of $984 million in 2024[334]. - 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]. - Adjusted earnings for the Corporate & Other segment were a loss of $15 million for the three months ended September 30, 2025, a decrease of $17 million compared to the same period in 2024[356]. 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 company aims to maintain capital consistent with its ratings objectives, which may involve adjusting dividend amounts[473]. - The company’s liquidity sources include dividends from insurance subsidiaries, capital markets issuances, and its own cash and cash equivalents[474]. - The company established a stand-alone hedging program for its variable annuity and first generation Shield Annuity contracts in Q3 2025[403]. Credit and Risk Management - The net amount at risk (NAR) for guaranteed minimum income benefits (GMIB) was $3.178 billion, representing 28.0% of the account value of $29.978 billion as of September 30, 2025, compared to $3.660 billion and 33.5% of $30.280 billion as of December 31, 2024[422]. - The total market risk benefits (MRBs) for variable annuities amounted to $8.500 billion as of September 30, 2025, up from $8.307 billion as of December 31, 2024[426]. - The estimated fair value of embedded derivative liabilities related to Shield Annuities was $11.4 billion as of September 30, 2025[425]. - The company reported short-term liquidity of $865 million and liquid assets of $970 million as of September 30, 2025, compared to $912 million and $1.1 billion, respectively, at December 31, 2024[470][471]. - The company has provided indemnities and guarantees to third parties, which may require future payments[468].