Brighthouse Financial, Inc. Q1 FY2025 earnings call

• Eric Steigerwalt noted solid results in Q1 2025, strong sales in annuities and life insurance, progress on capital-focused initiatives, corporate expenses higher but expected to normalize, capital returned via stock repurchase, and ability to navigate macro environment. • Ed Spehar discussed statutory results, adjusted earnings, segment performance, and capital position, including that statutory results were in line with expectations, estimated combined RBC ratio within target range, and maintained robust holding company liquid assets.

Annuity segment: adjusted earnings less notable items of $324 million, relatively flat sequentially. Life segment: adjusted earnings of $9 million, with lower underwriting margin, net investment income, and higher expenses. Runoff segment: adjusted loss of $64 million, lower net investment income partially offset by higher underwriting margin. Corporate and other segment: adjusted loss of $24 million due to higher expenses.

• Eric Steigerwalt expects flows to be at 2024 level or higher in 2025. • Ongoing work on hedging strategy and capital-focused initiatives, with focus on simplifying hedging for in-force VA and first-generation Shield business.

• Discussion of forward-looking statements and risks from market uncertainties, competitive environment, and potential deviations from expected results as mentioned in SEC filings.

Q: Wes Carmichael asked about the quantification of the 25 basis points increase in mean reversion point's benefit to normalized stat earnings.

A: Ed Spehar said it was around $200 million.

Q: Wes Carmichael asked about fixed annuities sales softness.

A: David Rosenbaum said sales move around, market is competitive and rate-dependent, monitoring sales volumes and reinsurance partners to build momentum for fixed sales.

Q: John Barnidge asked about outlook for flows and surrender activity.

A: Eric Steigerwalt said drivers continued, expected flows to be at 2024 level or higher in 2025, with factors like fixed rate annuities surrendering, Shield coming out of surrender, and variable annuity outflows.

Q: Elyse Greenspan asked about RBC move and other factors.

A: Ed Spehar discussed mean reversion benefit and seasonality of capital charges related to fixed business.

Q: Elyse Greenspan asked about actions to increase value.

A: Eric Steigerwalt mentioned considering reinsurance options, prioritizing simplification of hedging strategy for in-force VA and first-generation Shield business.

Q: Suneet Kamath asked about BLIC distributable earnings.

A: Ed Spehar said plan contemplates dividends over three-year period from operating companies, no specific annual forecast.

Q: Suneet Kamath asked about being part of a larger organization.

A: Eric Steigerwalt said will keep following strategy to produce shareholder value, with ongoing buybacks and strategic initiatives.

Q: Wilma Burdis asked about hedging legacy block.

A: Eric Steigerwalt said standalone hedging for new business, but wouldn't go into detail on legacy block hedging due to derivative book size.

Q: Ryan Krueger asked about hedging strategy changes.

A: Eric Steigerwalt said goal is simplification, pivoting from complexity to simplicity now that risk profile is balanced.

Q: Ryan Krueger asked about VA hedge program performance in April.

A: Eric Steigerwalt said looked at grids and showed little impact under certain market conditions.

Q: Wilma Burdis asked about share repurchase program.

A: Eric Steigerwalt said repurchased $59 million in Q1 and $26 million since then, no forward-looking guidance on repurchases.

Q: Thomas Gallagher asked about hedging performance and reevaluation.

A: Ed Spehar said Q1 results in line with expectations, hedging portfolio performance key, and reevaluation is due to balanced risk profile and simplification goal.

Q: Alex Scott asked about cash flow projections and balance sheet.

A: Ed Spehar said mid-year target for statutory free cash flow projections slipped, focus on hedging strategy simplification first.

Q: Alex Scott asked about growth opportunities.

A: Eric Steigerwalt said March was highest RILA sales month ever, growing well, LifePath paycheck expected to have more flows, and growth possibilities are fantastic but with pricing discipline.

Q: Wes Carmichael asked about surrenders in annuity business.

A: David Rosenbaum said drivers continued, Shield and VA surrenders, fixed annuities also contributing, flows expected at 2024 level or higher in 2025.

Q: Thomas Gallagher asked about industry transactions.

A: Eric Steigerwalt said looking at transactions, but one block doesn't extrapolate to overall business, and monitoring for future opportunities.

Q: Jimmy Bhullar asked about RBC ratio and strategic initiatives.

A: Ed Spehar discussed mean reversion benefit and seasonality of capital charges, and Eric Steigerwalt said focusing on unlocking capital to remain unconstrained for growth.