Summary of Brighthouse Financial Q2 2025 Earnings Call

1Key Financial Results and Metrics

Adjusted Earnings: $198 million, or $3.43 per share, down from $245 million in Q1 2025 and $346 million in Q2 2024.

Total Annuity Sales: $2.6 billion, a 16% sequential increase and an 8% year-over-year increase. Shield sales contributed $1.9 billion.

Life Insurance Sales: $33 million for the quarter, leading to record year-to-date sales of $69 million, up 21% year-over-year.

Combined Risk-Based Capital (RBC) Ratio: Estimated between 405% and 425%, within the target range of 400% to 450%.

Total Adjusted Capital (TAC): Approximately $5.6 billion, up from $5.5 billion in Q1 2025, driven by a decline in reserves.

Corporate Expenses: $202 million, down from $239 million in Q1 2025 but slightly up from $200 million in Q2 2024.

Share Repurchases: $43 million in Q2, totaling $102 million year-to-date, with $441 million remaining under the repurchase program.

2Strategic Updates and Business Highlights

Continued execution of capital-focused strategic initiatives aimed at improving capital efficiency and managing risk.

Strong performance in annuity and life insurance sales, with a focus on the BlackRock LifePath Paycheck product, which generated $176 million in deposits.

Ongoing revisions to the hedging strategy for variable annuity and Shield business to enhance capital management.

The company remains committed to expense discipline and maintaining a strong liquidity position with over $900 million in liquid assets.

3Forward Guidance and Outlook

The company expects to complete the transition to a revised hedging strategy by the end of September 2025, which is anticipated to simplify management and reduce volatility.

There is no change in the appetite for new business, with strong sales trends continuing into Q3 2025.

The management team is optimistic about the company's ability to generate positive capital in the future while maintaining franchise value.

4Bad News, Challenges, or Points of Concern

Adjusted earnings fell significantly below expectations due to lower alternative investment income and a reduced underwriting margin, attributed to higher claims severity.

The RBC ratio decreased during the quarter, primarily due to seasonality and adverse results in non-variable annuity business, raising concerns about capital adequacy.

Shield sales, while still strong, showed signs of slowing growth, which could indicate increased competition in the market.

The company faces challenges related to managing legacy liabilities and the complexity of its variable annuity block, which could impact future performance.

5Notable Q&A Insights

Management confirmed that the actuarial review will continue as planned, with no immediate concerns about statutory charges despite recent losses.

There was a discussion about the potential for future dividends from the Delaware Reinsurance Company, emphasizing the need for regulatory conversations given the current capital situation.

The transition to a separate hedging strategy is expected to improve transparency and management effectiveness, although the immediate impact on capital ratios is not anticipated to be significant.

Management acknowledged competitive pressures in the annuity market but emphasized their commitment to pricing discipline and maintaining a strong product offering. Overall, Brighthouse Financial's Q2 2025 results reflect a mix of strong sales performance and strategic initiatives, tempered by challenges in earnings and capital management. The outlook remains cautiously optimistic, with a focus on enhancing operational efficiency and navigating competitive pressures.