Brighthouse Financial's Q2 2025 Earnings Call: Key Contradictions Unraveled on Hedging, Dividends, and Capital Strategies

Hedging strategy and balance sheet impact, dividend expectations, buyback strategy, actuarial review and capital adequacy, capital and distribution strategy are the key contradictions discussed in Brighthouse Financial's latest 2025Q2 earnings call.



Capital and Financial Performance:
- Brighthouse Financial reported a combined RBC ratio between 405% and 425%, within their target range of 400% to 450%, indicating strong capital positioning.
- The company recorded total annuity sales of $2.6 billion, up 16% sequentially and 8% year-on-year, with Shield sales contributing $1.9 billion.
- The growth in sales was driven by strong demand for Shield products and a diversified suite of annuity offerings.

Shareholder Returns:
- Brighthouse Financial returned $43 million to shareholders through common stock repurchases in the second quarter, contributing to year-to-date repurchases totaling $102 million.
- The company has repurchased over $2.6 billion of common stock since August 2018, representing 52% of outstanding shares.
- This strategy reflects the company's commitment to returning capital to shareholders while maintaining a strong capital position.

Hedging Strategy and Risk Management:
- Brighthouse Financial is transitioning to a new hedging strategy by separating and managing the Shield and VA blocks separately, effective by September.
- This change aims to simplify management, reduce volatility, and align with the current risk profile of their business.
- The new strategy is designed to improve capital efficiency and align with their financial and risk management objectives.

Operational Efficiency and Strategic Focus:
- The company achieved corporate expenses of $202 million on a pretax basis, down from $239 million in the first quarter, showing expense discipline efforts.
- Brighthouse Financial continued to deliver strong sales results and received $176 million in deposits through BlackRock's LifePath Paycheck product.
- These results reflect their strategic focus on executing capital-focused initiatives, managing expenses, and expanding their sales channels.