Brighthouse Financial, Inc. 2025 10-K Summary
Business Context and Reporting Period
This Annual Report on Form 10-K covers the fiscal year ended December 31, 2025. Brighthouse Financial, Inc. (BHF) is a leading provider of annuity and life insurance products in the U.S., operating through four segments: Annuities, Life, Run-off, and Corporate & Other. The company distributes products through independent channels including broker-dealers, banks, and financial planners.
Material Transaction: On November 6, 2025, BHF entered into a Merger Agreement with Aquarian Holdings VI L.P. The transaction, approved by stockholders on February 12, 2026, provides for a cash consideration of $70.00 per share. The merger is expected to close in 2026, subject to regulatory approvals. Pending the merger, BHF is restricted from paying common stock dividends or repurchasing common stock.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 | 2024 |
|---|---|---|
| Net Income Available to Common Shareholders | $331 million | $286 million |
| Adjusted Earnings (Non-GAAP) | $1.617 billion | $1.319 billion |
| Total Revenues | $6.766 billion | $4.724 billion |
| Net Investment Income | $5.244 billion | $5.222 billion |
| Total Assets | $241.8 billion | $238.5 billion |
| Total Liabilities | $235.0 billion | $233.5 billion |
| Long-Term Debt | $3.155 billion | $3.155 billion |
| Short-Term Liquidity | $4.3 billion | $5.2 billion |
| Combined RBC Ratio (Preliminary) | 456% | N/A |
Material Changes vs. Prior Period
- Profitability: Net income available to shareholders increased by $45 million (16%) to $331 million. Adjusted earnings increased by $298 million (23%) to $1.617 billion, driven by lower net costs in insurance-related activities and higher net fee income, partially offset by lower net investment spread.
- Market Volatility Impact: GAAP net income was significantly impacted by market volatility. Net derivative losses were $1.792 billion (vs. $3.668 billion loss in 2024), and the change in market risk benefits was a gain of $268 million (vs. a gain of $2.673 billion in 2024).
- Investment Portfolio: The portfolio held $82.0 billion in fixed maturity securities. Net investment gains/losses were a loss of $97 million, improved from a $295 million loss in 2024, aided by a $66 million gain on the sale of a subsidiary owning mineral rights.
- Segment Performance:
- Annuities: Adjusted earnings were $1.254 billion (flat vs. 2024).
- Run-off: Adjusted earnings surged to $436 million from $65 million, driven by lower net costs associated with insurance-related activities following a reinsurance arbitration conclusion.
- Life: Adjusted earnings increased to $41 million from $33 million.
Guidance, Outlook, and Risks
Outlook and Capital Management: BHF targets a Combined Risk-Based Capital (RBC) Ratio of 400% to 450%. The preliminary 2025 Combined RBC Ratio was 456%, indicating strong capitalization without the need for capital contributions. The company maintains a substantial short-term liquidity position of $4.3 billion.
Rating Agency Actions: Following the merger announcement, rating agencies took negative actions. S&P, Moody's, and A.M. Best placed BHF and its subsidiaries on watch/review for downgrade. Fitch downgraded long-term issuer credit ratings to BBB from BBB+ and financial strength ratings to A- from A.
Key Risks:
- Merger Completion: The transaction is subject to regulatory approvals and other conditions. Failure to close could result in a termination fee of approximately $144 million and stock price volatility.
- Market Risk: Significant exposure to interest rate and equity market volatility through variable annuity guarantees and Shield Annuities. Hedging strategies may not fully offset liability changes, causing GAAP earnings volatility.
- Actuarial Assumptions: Differences between actual experience and assumptions regarding mortality, lapses, and utilization rates could materially impact liabilities and earnings.
- Reinsurance Counterparty Risk: Significant concentration of reinsurance risk with Genworth reinsurers (C++ rating) for long-term care business, though secured by trust accounts and Citigroup indemnity.
Investor Verification Checklist
- Merger Status: Verify the status of regulatory approvals (Delaware, New York, Massachusetts) and FINRA Rule 1017 approval required for the Aquarian merger.
- Rating Agency Actions: Monitor for final rating downgrades and their potential impact on distribution channels and cost of capital.
- Actuarial Review (AAR): Review the impact of the 2025 AAR on ULSG and variable annuity liabilities, specifically the increase in the mean reversion rate to 4.50%.
- Reinsurance Arbitration: Confirm the final resolution of the reinsurance arbitration that drove the Run-off segment's earnings improvement and assess future reinsurance cost trends.
- Dividend Restrictions: Note that common stock dividends and repurchases are suspended pending the merger; verify preferred stock dividend payments ($102 million paid in 2025).