Brighthouse Financial, Inc. Q2 FY2025 earnings call

• Brighthouse Financial continued progress on capital-focused strategic initiatives to improve capital efficiency, unlock capital, and stay within target combined RBC ratio range.
• Strong sales results in annuities and life insurance; $2.6 billion in annuity sales (16% sequential increase), $33 million in life insurance sales in Q2.
• Received $176 million in deposits through BlackRock's LifePath Paycheck.
• Prudently managed corporate expenses: $202 million pretax in Q2.
• Strong capital position: estimated combined RBC ratio between 405%-425% (within target range), holding company liquid assets over $900 million as of June 30.
• Progress on hedging strategy: ongoing work to simplify and revise hedging for VA and Shield books, plan to complete transition to revised strategy by end of September.
• Share buybacks: $43 million repurchased in Q2, year-to-date $102 million, $441 million capacity remaining under share repurchase program.

In the second quarter, the Annuities segment had adjusted earnings of $332 million. The Life segment reported an adjusted loss of $26 million. The Run-off segment had an adjusted loss of $83 million. The Corporate and Other segment had an adjusted loss of $25 million. Total annuity sales were $2.6 billion in Q2, with Shield sales at $1.9 billion and fixed annuities at $500 million. Life insurance sales were $33 million in Q2, contributing to record YTD life insurance sales of $69 million.

• Progress on capital-focused initiatives, including completing the hedging strategy transition for VA and Shield books by end of September.
• Continued focus on protecting the statutory balance sheet under adverse market scenarios.
• Evaluating reinsurance opportunities to generate near-term capital while safeguarding the franchise (ability to grow new business).

• Volatility in results due to market conditions affecting reserves and capital.
• Uncertainties related to actuarial reviews and their impact on financial statements.
• Regulatory and market risks that could affect the company's ability to execute strategic initiatives and maintain capital position.

Q: About actuarial review for 3Q, 4Q and risk of charge on stat side A: Edward Allen Spehar said actuarial review is ongoing, with stat review in 4Q and GAAP in 3Q, and detailed progress on hedging strategy transition for VA and Shield books Q: About buybacks and M&A confidence A: Eric Thomas Steigerwalt mentioned buybacks via 10b5-1 plans, and confidence in the company's standalone position with ongoing strategic initiatives Q: About Shield sales slowdown A: Myles Lambert said competition is reasonable, but focus on pricing discipline and maintaining market leadership in Shield sales Q: About unassigned surplus and cash out A: Edward Allen Spehar explained normalized statutory earnings include unrealized gains, unassigned funds are technical, and plans to take cash out as discussed in prior calls Q: About capital and hedging change impact A: Edward Allen Spehar and Eric Thomas Steigerwalt discussed the impact of hedging changes on the balance sheet, emphasizing it's a gradual transition with focus on protecting the statutory balance sheet under adverse market scenarios