Brighthouse Financial’s Q1 2025 Results: Navigating Volatility with Strategic Resilience

Brighthouse Financial, Inc. (BHF) delivered mixed but instructive results for Q1 2025, reflecting both the challenges of a volatile financial landscape and the company’s efforts to solidify its position in the annuity and life insurance markets. While headline losses widened, adjusted metrics and strategic shifts suggest a focus on long-term stability over short-term gains. Let’s dissect the key takeaways.

Financial Performance: Adjusted Gains Amid Headwinds

The company reported a net loss of $294 million, or $5.04 per share, a narrower loss compared to the $519 million loss in Q1 2024. However, the adjusted earnings—excluding notable items—improved dramatically to $245 million ($4.17 per share), a stark contrast to the adjusted loss of $98 million in the prior-year quarter. This underscores management’s success in mitigating volatile factors like actuarial model adjustments and market swings.

The Annuities segment, Brighthouse’s core business, faced a 21% quarterly sales decline to $2.26 billion, driven by weaker fixed annuity demand. Yet, Shield Level Annuities—a key growth product—rose 5% sequentially, signaling resilience in high-margin offerings. Meanwhile, the Life segment saw a 24% quarterly sales jump to $36 million, fueled by steady demand for life insurance products.

Segment Dynamics: Run-off Challenges and Cost Pressures

The Run-off segment, which manages legacy liabilities, posted an adjusted loss of $64 million—a marked improvement from $341 million in Q1 2024 but a deterioration from $27 million in Q4 2024. This volatility highlights the ongoing complexity of managing older policies.

Costs in the Corporate & Other segment also rose to $239 million pre-tax, up from $207 million in Q1 2024. While this reflects increased operational spending, Brighthouse emphasized that capital remains robust.

Capital Strength: A Buffer Against Uncertainty

Brighthouse’s capital metrics remain a bright spot. Its statutory combined RBC ratio stood at 420–440%, well above regulatory minimums and within its target range. Statutory capital reached $5.5 billion (preliminary), and holding company liquidity stayed at $1.0 billion. CEO Eric Steigerwalt reiterated that maintaining this buffer is critical to weathering market turbulence, particularly given the sensitivity of hedge targets to interest rate shifts.

Sales Trends and Strategic Priorities

Despite the annuity sales slump, sequential improvements in Shield Level Annuities and Life products suggest a strategic pivot toward higher-margin, growth-oriented products. Brighthouse’s focus on these areas aligns with industry trends favoring simplified, transparent insurance solutions. However, the 21% quarterly drop in total annuity sales raises questions about competitive pressures or customer demand fluctuations.

Risks on the Horizon

• Market Volatility: Brighthouse’s earnings remain tied to investment performance and interest rate environments, as noted in its risk disclosures.
• Run-off Liabilities: The segment’s variability could continue to pressure quarterly results until legacy policies mature.
• Cost Management: Rising corporate expenses must be monitored to ensure they don’t erode profitability.

Conclusion: A Resilient Foundation, but Challenges Linger

Brighthouse’s Q1 results paint a picture of a company navigating choppy waters with discipline. The adjusted earnings rebound and strong capital position are positives, supported by $245 million in adjusted profits and an RBC ratio above 420%. The Shield Level Annuity growth—up 5% sequentially—and Life segment momentum also indicate strategic wins.

However, the annuity sales decline and rising costs highlight execution risks. Investors should watch for whether Brighthouse can stabilize annuity sales in Q2 and reduce Run-off volatility. With its fortress balance sheet and focus on high-margin products, Brighthouse remains positioned to capitalize on market opportunities—but sustained growth hinges on addressing these headwinds.

For now, the stock’s valuation (trading at ~$28.50 as of May 2025, down 12% YTD) reflects investor caution. Yet, with a book value per share excluding AOCI of $141.87—up from $126.35 in Q1 2024—there’s room for appreciation if operational execution improves. Brighthouse’s story is one of resilience; the next chapter will depend on turning tactical wins into sustained momentum.