Brighthouse Financial(BHF) - 2025 Q4 - Annual Report

Assets Under Management (AUM) - Total Assets Under Management (AUM) for Annuities segment increased to $152.745 billion in 2025 from $149.120 billion in 2024, reflecting a growth of approximately 1.8%[29] - Life segment AUM rose to $15.821 billion in 2025, up from $15.751 billion in 2024, indicating a slight increase of 0.4%[29] - Run-off segment AUM remained stable at $26.900 billion in 2025 compared to $26.370 billion in 2024, showing a marginal increase of 2.0%[29] - Corporate & Other segment AUM decreased to $10.691 billion in 2025 from $11.782 billion in 2024, representing a decline of approximately 9.2%[29] Insurance Liabilities - Total insurance liabilities for annuity products reached $138.737 billion in 2025, compared to $138.210 billion in 2024, marking a growth of 0.4%[32] - The total insurance liabilities for life insurance products increased from $15,455 million in 2024 to $16,043 million in 2025, reflecting a growth of approximately 3.8%[82] - The total insurance liabilities for the Run-off segment increased from $26,880 million in 2024 to $26,885 million in 2025, indicating a slight growth[95] Revenue and Fees - Variable annuity contracts generated fee revenue of $2.5 billion in 2025, down from $2.6 billion in 2024, reflecting a decrease of approximately 3.8%[44] Product Innovations - New product innovations include Shield Annuities, which combine features of both variable and fixed annuities, aimed at enhancing customer wealth accumulation[34] - The company plans to focus on selling the new suite of Shield Annuity products alongside variable annuities with GMWBs and GMDBs only[56] - The company launched Brighthouse SmartGuard Plus, an index-linked universal life product, in 2023, which includes a guaranteed distribution rider[86] Risk Management - The company aims to maintain a strong capital base and excess liquidity to support financial strength ratings and mitigate risks from market disruptions[27] - The company continues to focus on disciplined risk selection and innovative product design to achieve risk-adjusted return objectives in the Annuities segment[33] - The company has established controls around underwriting and pricing processes, including regular experience studies and formal new product approval processes[89] - The company retains liability up to $20 million per life under its reinsurance agreements, with the reinsurer responsible for amounts in excess[100] - The company utilizes affiliated reinsurance arrangements through Brighthouse Reinsurance Company of Delaware (BRCD) to manage capital and risk exposures, enhancing operational flexibility[107] Sales and Distribution - The distribution of annuity sales by independent financial planners accounted for 57% of total sales for the year ended December 31, 2025[115] - Life insurance sales were predominantly distributed through financial intermediaries, contributing 88% of total life insurance sales for the year ended December 31, 2025[116] - The top five distributors of annuity products generated 15%, 13%, 12%, 11%, and 7% of total deposits for the year ended December 31, 2025[115] - The company has a diverse distribution network with over 400 partners, allowing for maximized market penetration without incurring fixed costs[110] Regulatory Compliance - Regulatory compliance is maintained through detailed annual financial statements filed with insurance regulatory authorities in each jurisdiction where the company operates[124] - In August 2025, the NAIC adopted Actuarial Guideline LV ("AG 55") for asset adequacy testing, effective for year-end 2025 reporting, which may impact future business operations[130] - The NAIC established a new principle-based reserving framework for non-variable annuities, effective January 1, 2026, with a three-year implementation period[131] - The NAIC is updating the methodology for determining RBC on collateralized loan obligations, with changes delayed until December 31, 2026[134] - The NAIC adopted a group capital calculation tool in 2022 to assess group risks and capital adequacy, though its future implications remain uncertain[140] - The NYDFS amended Insurance Regulation 47, effective January 1, 2023, impacting the competitive landscape for annuity products in New York[151] - The NYDFS Cybersecurity Regulation amendments, effective in phases from November 1, 2023, impose new compliance obligations regarding cybersecurity risk management[154] - The adequacy of statutory reserves must be annually analyzed by qualified actuaries, ensuring they meet anticipated cash flow obligations[149] - Regulatory examinations by state insurance departments have not resulted in material adverse findings in recent years, although future findings cannot be guaranteed[146] Employee and Community Engagement - The company holds approximately 1,400 employees as of December 31, 2025, emphasizing the importance of human capital resources[196] - The company offers a 401(k) savings plan with matching contributions and an Employee Stock Purchase Plan for employees[202] - The company conducts annual pay equity reviews to ensure compensation is based on performance and other non-discriminatory factors[202] - The company is committed to fostering an inclusive workplace to attract and retain talent, recognizing the value of diverse backgrounds and perspectives[204] - The company provides various learning and development opportunities, including mentorship programs and access to education sessions[203] - Brighthouse Financial established the Brighthouse Financial Foundation in 2017 to improve financial security and opportunities in communities, providing resources to tax-exempt organizations[206] - The company launched Brighthouse Scholar Connections, Inc. in 2022 to offer scholarships to historically underrepresented or disadvantaged students, with employees serving as mentors[206] Leadership and Governance - Brighthouse Financial's executive team includes Eric T. Steigerwalt as President and CEO since August 2017, with extensive experience in leadership roles at MetLife and Brighthouse[208] - The company relies on a combination of contractual rights and intellectual property laws to protect its trademarks, including the name "Brighthouse Financial" and its logo[209] - Brighthouse Financial's Investor Relations website serves as a key channel for distributing material information, including SEC filings and financial reports[211] - The company emphasizes the importance of monitoring its website for material disclosures in compliance with SEC regulations[212] - Brighthouse Financial cautions against relying on forward-looking statements, highlighting the risks and uncertainties associated with such statements[214] - The company encourages investors to review important information shared on its Investor Relations website, including press releases and statutory filings[19] - Brighthouse Financial's executive team includes experienced professionals with backgrounds in finance, human resources, and marketing, contributing to the company's strategic direction[208] Financial Regulations and Taxation - The Inflation Reduction Act establishes a 15% corporate alternative minimum tax (CAMT) for corporations with average annual adjusted financial statement income exceeding $1.0 billion[183] - The company assessed that it was not subject to the CAMT for the years ended December 31, 2025, 2024, and 2023, but will continue to evaluate its applicability annually[185] - The Dodd-Frank Act imposes mandatory clearing and margin requirements for certain over-the-counter derivatives, increasing costs for risk mitigation[188] - The company faces increased costs and reduced income due to higher margin requirements and capital charges under Dodd-Frank regulations[188] - The California Climate Corporate Data Accountability Act requires companies with annual revenues exceeding $1.0 billion to report Scope 1 and 2 greenhouse gas emissions starting in 2026[191]