BHF 10-K & 10-Q changes, risk factors and insider trading

Furthermore, our Shield Annuities are index-linked annuities with guarantees for a defined amount of equity loss protection and upside participation. If the separate account assets are insufficient to support the increased liabilities, we may be required to fund such separate accounts with additional assets from our general account. ToWe theuse extentderivatives policyholderto persistencyhedge is different from what we anticipate in a sustained period ofagainst equity index growth,movements, itand margin calls on such options could have a negative impact on our liquidity.

Our risk management strategy seeks to mitigate the potential adverse effects of changes in capital markets, specifically equity markets and interest rates. Our risk management strategy reliesincludes onproduct sellingdesign products that provide a risk offset to each other,strategies, hedging using derivative instrumentsinstruments, and,as towell a lesser extent,as reinsurance. We utilize a combination of short-term and longer-term derivative instruments to have a laddered maturity of protection and reduce roll-over risk during periods of market disruption or higher volatility.

Our ULSG Target is sensitive to the actual and future expected level of long-term U.S. interest rates. If interest rates fall, our ULSG Target will likely increase, and conversely, if interest rates rise, our ULSG Target will likely decline. We may use interest rate swaps, swaptions and interest rate forwards, among other instruments, to protect our statutory capitalization from increases in the ULSG Target in lower interest rate environments. This risk mitigation strategy may negatively impact our GAAP stockholders’ equity and net income when interest rates rise and our ULSG Target likely declines as a result, since our interest rate derivatives are measured at fair value, while our ULSG liabilities under GAAP are largely insensitive to actual fluctuations in interest rates. The ULSG liabilities under GAAP reflect changes in interest rates only when we revise our long-term assumptions due to sustained changes in the market interest rates, such as when we increased our mean reversion rate from 3.75%4.00% to 4.00%4.50% in the third quarter of 20242025 following our GAAP AAR.

Credit rating agencies may continue to review and adjust their ratings for the companies that they rate, including us. For example, in NovemberJuly 2024,2025, FitchS&P revised the outlooks on the financial strength rating and the long-term issuer credit ratingratings for BHF and BH Holdings to BBB from BBB+. In addition, S&P revised the financial strength ratings for certain of itsour insurance subsidiaries to negativeA from stable.A+, Inamong addition,other inrevisions. January 2025, A.M. Best revisedFollowing the outlookannouncement onthat BHF has entered into the long-termMerger issuerAgreement, rating agencies took certain actions relating to our financial strength ratings and credit rating for BHF and certain of its subsidiaries to negative from stable.ratings. The credit rating agencies also evaluate the insurance industry as a whole and may change our credit rating based on their overall view of our industry. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Rating Agencies” for a discussion of the actions taken by rating agencies following the announcement of the Merger and for additional information regarding our financial strength ratings and credit ratings, including current ratings and outlooks.

We compete with major, well-established stock and mutual life insurance companies and non-insurance financial services companies (e.g., banks, private equity firms, broker-dealers and asset managers) in all of our product offerings, and our distributors sell such competitors’ products along with our products. In addition, certain of our distributors currently offer their own competing products or may offer competing products in the future. If our distributors concentrate their efforts inon selling their firm’s own products or our other competitors’ products instead of ours, our sales could be adversely impacted.

In addition, from time to time, certain third parties have brought to our attention practices,practices and procedures andused to estimate our reserves with respect to certain products they administer on our behalf that require further review. While we do not believe, based on the information made available to us to date, that any of the matters brought to our attention will require material modifications to reserves or will have a material effect on our business and financial reporting, we are reliant on our third-party service providers to provide further information and assistance with respect to those products. There can also be no assurance that such matters will not require material modifications to reserves or have a material effect on our financial condition or results of operations in the future, or that our third-party service providers will provide further information and assistance.

There is continued scrutiny and evolving expectations, as well as conflicting expectations, from investors, customers, regulators and other stakeholders on environmental, social and governance (“ESG”) practices and disclosures, including those related to environmental stewardship, climate change, diversity,workplace equityconduct and inclusion,other racial justicesocial and workplacepolitical conduct.mandates. Regulators have imposed and may continue to impose ESG-related rules and guidance, which may conflict with one another and impose additional costs on us or expose us to new or additional risks. In view of evolving regulatory expectations, investor scrutiny, and changing consumer preferences and social expectations, ESG issues can represent emerging or unforeseen risks to our long-term operating performance and financial condition. Moreover, certain organizations that provide information to investors have developed ratings for evaluating companies on their approach to different ESG matters, and unfavorable ratings of the Company or our industry may lead to negative investor sentiment and the diversion of investment to other companies or industries.

Significant market volatility in reaction to the evolving and uncertain regulatory, legal and geopolitical risks,landscape in the U.S. and abroad due to tariffs, trade disputes, changing monetary policy, trade disputes and uncertain fiscal policypolicy, military conflicts and the political environment may exacerbate some of the risks we face. Increased market volatility may affect the performance of the various asset classes in which we invest, as well as separate account values. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Current Environment” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties — Financial and Economic Environment.”

We need liquidity at our holding company to pay our operating expenses, pay interest on our indebtedness, pay dividends on our preferred stock, carry out any share or debt repurchases that we may undertake, pay any potential dividends on our common stock,stock and provide our subsidiaries with cash or collateral,collateral. Furthermore, our insurance subsidiaries need liquidity to maintain our securities lending activitiesactivities, andto replace certain maturing liabilities.liabilities and to post collateral for derivative transactions. Without sufficient liquidity, we could be forced to curtail our operations and limit the investments necessary to grow our business.

For our insurance subsidiaries, the principal sources of liquidity are insurance premiums and fees paid in connection with annuity products, andas well as cash flowflows from our investment portfolio to the extent consisting of cash and readily marketable securities.

We manage our exposures to equity risk bythrough product design strategies such as selling products or introducing product features that provide a risk offset to each other, throughhedging hedging,using andderivative toinstruments, aas lesserwell extentas reinsurance. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies,” for details regarding our risk management and hedging programs.

Defaults or deteriorating credit of other financial institutions could adversely affect us as we have exposure to many different industries and counterparties,counterparties and routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, central clearinghouses, commercial banks, investment banks, hedge funds and investment funds and other financial institutions. Many of these transactions expose us to credit risk in the event of the default of our counterparty. In addition, with respect to secured transactions, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due to us. We also have exposure to these financial institutions in the form of unsecured debt instruments, non-redeemable and redeemable preferred securities, derivatives, joint ventures and equity investments. Any losses or impairments to the carrying value of these investments or other changes could materially and adversely affect our financial condition and results of operations.

We cannot predict the impact that “best interest” or fiduciary standards adopted or proposed by various regulators may have on our business, financial condition or results of operations. Compliance with new or changed rules or legislation in this area may increase our regulatory burden and that of our distribution partners, require changes to our compensation practices and product offerings, and increase litigation risk, which could adversely affect our financial condition and results of operations. See “Business — Regulation — Standard of Conduct Regulation — State Law Standard of Conduct Rules and Regulations.”

In any particular year, TAC amounts, and thus RBC ratios, may fluctuate depending on a variety of factors, including the amount of statutory income or losses generated by the insurance subsidiary, the amount of additional capital such insurer must hold to support business growth, equity and credit market conditions, the value and credit ratings of certain fixed income and equity securities in its investment portfolio, the value of certain derivative instruments that do not receive hedge accounting,instruments, as well as changes to the RBC formulas and the interpretation of the NAIC’s instructions with respect to RBC calculation methodologies. In addition, rating agencies may implement changes to their own proprietary capital models, which differ from the RBC capital model, that have the effect of increasing or decreasing the amount of capital our insurance subsidiaries should hold relative to the rating agencies’ expectations. Under stressed or stagnant capital markets conditions and with the aging of existing insurance liabilities, without offsets from new business, the amount of additional statutory reserves that an insurance subsidiary is required to hold could materially increase. This increase in reserves would decrease the capital available for use in calculating the subsidiary’s RBC ratio. To the extent that an insurance subsidiary’s RBC ratio is deemed to be insufficient, we may seek to take actions either to increase the capitalization of the insurer, for example, by contributing capital, which may adversely impact BHF’s liquidity, or to reduce the capitalization requirements. If we were unable to accomplish such actions, the rating agencies could view this as a reason for a ratings downgrade.

Changes in tax laws or interpretations of such laws, including in relation to the extension of expiring provisions of the 2017 Tax Cuts and Jobs Act,laws could have a material adverse effect on our profitability and financial condition and could result in our incurring materially higher statutory taxes. Changes, including changes in tax laws, higher corporate tax rates or differences in interpretation of tax laws may adversely affect our business, financial condition, results of operations and liquidity. In addition, current U.S. federal income tax law permits tax-deferred accumulation of income earned under life insurance and annuity products and permits exclusion from taxation of death benefits paid under life insurance contracts. Changes in tax laws that restrict these tax benefits, or declines in individual income tax rates more generally, could make our products less attractive to consumers. See “Business — Regulation — Federal Tax Reform” for a discussion of the potential impacts of the Inflation Reduction Act and the related corporate alternative minimum tax.

In connection with our insurance operations, plaintiffs’ lawyers may bring or are bringing class actions and individual suits alleging, among other things, issues relating to sales or underwriting practices, claims payments and procedures, escheatment, product design, disclosure, administration, investments, denial or delay of benefits, lapse or termination of policies, cost of insuranceCOI and breaches of fiduciary or other duties to customers. Plaintiffs in class action and other lawsuits against us may seek very large or indeterminate amounts, including punitive and treble damages. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may be difficult to ascertain. Material pending litigation and other legal disputes, as well as regulatory matters affecting us and risks to our business presented by these proceedings, if any, are discussed in Note 17 of the Notes to the Consolidated Financial Statements.

We heavily rely on communications, information systems (both internal and provided by third parties), and the internet to conduct our business. We rely on these systems throughout our business for a variety of functions, including processing new business, claims, and post-issue transactions, providing information to customers and distributors, performing actuarial analyses, managing our investments and maintaining financial records. A failure in the security of such systems or a failure to maintain the security of such systems, or the confidential information stored thereon, may result in regulatory enforcement action, harm our reputation or otherwise adversely affect our ability to conduct business, our financial condition or results of operations. In addition, our continuous technological evaluations and enhancements, including changes designed and intended to update our protective measures, may increase our risk of a breach or gap in our security, and there can be no assurance that any such efforts will be effective in preventing or limiting the impact of future cyberattacks.

We and our vendors, like other commercial entities, have been, and will likely continue to be, subject to a variety of forms of cyberattacks with the objective of gaining unauthorized access to our systems and data, or disrupting our operations. Potential attacks may include, but are not limited to, cyberattacks, phishing attacks, account takeover attempts, the introduction of computer viruses or malicious code (commonly referred to as “malware”), ransomware or other extortion tactics, denial of service attacks, credential stuffing, and other computer-related penetrations.penetrations, each of which may be facilitated by the use of AI. Hardware, software or applications developed by us or received from third parties may contain exploitable vulnerabilities, bugs, or defects in design, maintenance or manufacture or other issues that could compromise information and cybersecurity. The risk of cyberattacks has also increased and may continue to increase in connection with recent geopolitical conflicts, including in Europe and the Middle East, and other geopolitical events and dynamics that may adversely disrupt or degrade our operations and may compromise our data. Malicious actors may attempt to fraudulently induce employees, customers, or other users of our systems to disclose credentials or other similar sensitive information in order to gain access to our systems or data, or that of our customers, through social engineering, phishing, mobile phone malware, and other methods.

Federal and state legislatures and various government agencies have established laws and regulations protecting the privacy and security of personal information. See “Business — Regulation — Privacy and Cybersecurity Regulation.” Our third-party service-providersservice providers and our employees have access to, and routinely process, personal information through a variety of media, including information technology systems. It is possible that an employee or third-party service provider (or their suppliers, vendors or subcontractors) could, intentionally or unintentionally, disclose or misappropriate confidential personal information, and there can be no assurance that our information security policies and systems in place can prevent unauthorized use or disclosure of confidential information, including nonpublic personal information. Additionally, our data has been and could in the future be the subject of cyberattacks, and the misappropriation or intentional or unintentional inappropriate disclosure or misuse of employee or client information has occurred and could occur in the future, including as a result of us or our third-party service providers (or their suppliers, vendors or subcontractors) failing to maintain adequate internal controls or if our associates or any of our third-party service providers fail to comply with applicable policies and procedures. Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to customers, employees, or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include personally identifiablepersonal information or other user data, may result in governmental investigations, enforcement actions, regulatory fines, litigation and public statements against us by consumer advocacy groups or others, and could cause our customers, employees, or other third parties to lose trust in us, all of which could be costly and have a material adverse effect on our business, financial condition and results of operations. See “— Any failure in our cybersecurity risk management program, as well as the occurrence of events unanticipated in Brighthouse Financial’s or our third-party service providers’ disaster recovery systems and business continuity planning, could result in a loss or disclosure of confidential information, damage to our reputation and impairment of our ability to conduct business effectively.” In addition, compliance with complex variations in privacy and data security laws may require modifications to current business practices, including significant technologytechnological efforts that require long implementation timelines, increased costs and dedicated resources.

Furthermore, there has been increased scrutiny as well as enacted and proposed additional laws and regulations, including from state regulators, regarding the use of customerpersonal data.information. These laws and regulations are increasing in complexity and number, change frequently, and may be subject to interpretation by different regulators and courts. We may analyze customerpersonal datainformation or input such datainformation into third-party analytics in order to better manage our business. Any inquiry in connection with our analytics business practices, as well as any misuse or alleged misuse of those analytics insights, including for alleged violation of third-party privacy and intellectual property rights, or other rights, or alleged breach of contractual obligations, such as limitations on the use of data,personal information, could cause reputational harm or result in regulatory enforcement actions or litigation, and any related limitations imposed on us could have a material impact on our business, financial condition and results of operations.

We are not currently have no planspermitted to declare and pay dividends on our common stock, and legal restrictions could limit our ability to pay dividends on our capital stock and our ability to repurchase our common stock at the level we wish in the future

WePursuant currentlyto the Merger Agreement, we have noagreed plansthat toduring declarethe period beginning the date of the Merger Agreement through the earlier of the closing of the Merger and the termination of the Merger Agreement, we will not, without the written consent of Aquarian Parent, pay cashany dividendsdividend onor other distribution payable in cash, stock or property with respect to our common stock.stock, or subject to certain exceptions, purchase directly or indirectly any of BHF’s or its subsidiaries’ capital stock or other equity or voting interests of BHF or any of its subsidiaries. We currently intend to use our future statutory free cash flow, if any, to pay debt obligations, to fund our growth, to develop our business, for working capital needs, to carry out any share or debt repurchases that we may undertake, as well as for general corporate purposes. Therefore, you are not likely to receive any dividends on your common stock in the near-term,foreseeable and the success of an investment in shares of our common stock will depend upon any future appreciation in their value.future. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which the shares currently trade, and the market price of our common stock may fluctuate widely depending on many factors, some of which may be beyond our control.control, Anyincluding futurethe declaration and paymentpendency of dividendsthe orMerger. otherSee distributions“Risks orRelated returnsto the Merger – Failure to complete the Merger could adversely affect our business, results of capitaloperations will be at the discretion of BHF’s Board of Directors and will depend on many factors, including ouror financial condition, earnings, cash needs, regulatory constraints, capital requirements (including capital requirements of our insurance subsidiaries), and any other factors that BHF’s Board of Directors deems relevant in makingthe suchevent athe determination.Company Therefore,is thererequired can be no assurance that we willto pay any dividends or make other distributions or returns on our common stock, or as to the amounttermination of any such dividends, distributions or returns of capital.fee.”

For the year ended December 31, 2024,2025, we had net income available to shareholders of $331 million and adjusted earnings of $1.6 billion compared to net income available to shareholders of $286 million and adjusted earnings of $1.3 billion compared to net loss available to shareholders of $1.2 billion and adjusted earnings of $969 million for the year ended December 31, 2023.2024. Net income available to shareholders for the year ended December 31, 20242025 primarily reflects favorable pre-tax adjusted earnings,earnings and a net ofinvestment angain unfavorable impact due to a reinsurance premium rate increase retroactive to September 2019, which resulted fromon the conclusionsale of a reinsurancesubsidiary arbitration,which andowned certain mineral rights across the relatedU.S. impacts.These Favorablefavorable pre-taximpacts adjusted earnings waswere partially offset by unfavorable changes in our Shield embedded derivatives net of our variable annuity and Shield hedges due to market factors, an unfavorable change in the estimated fair value of freestanding interest rate derivatives we use to hedge our ULSG business resulting from increasing long-term interest rates, net unfavorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors,business, net investment losses on sales of fixed maturity securities, and net investment losses on mortgage loans.loans and the weakening of the U.S. dollar unfavorably impacting foreign currency forwards and swaps.

We employ risk management strategies to mitigate the effects of severe market disruptions and other economic events on our business. These strategies currently include macro hedge programs that manage market risks across all products, hedging certain market risk exposures at the product level while taking into consideration market risk exposures at an aggregated level, and,as towell a lesser extent,as reinsurance. Our risk management strategies focus on protecting the capital and surplus of our insurance subsidiaries, through the use of metrics aligned with regulatory capital requirements. We continually review our risk management strategies in the context of our overall capitalization targets as well asand monitor the capital markets for opportunities to adjust our derivative positions to manage our market risk exposure, as appropriate.

We have historically managed the risks related to our variable annuity and first generation Shield Annuity contracts on a combined basis. However, in the third quarter of 2025, we completed an initiative that established a standalone hedging program for each product allowing us to more effectively manage the risks related to these two products. We launched updated versions of our Shield Annuity products in 2024, which we also manage and hedge on a standalone basis separately from our variable annuity and first generation Shield Annuity products.

We are exposed to interest rate risk in most of our products, with the more significant longer-dated exposure residing in our in-force variable annuity guarantees and ULSG business. Historically, we have managed interest rate exposure in aggregate across the Company, while also setting individual hedge targets for certain products such as ULSG, where the economics of the interest rate derivatives are ceded through reinsurance to BRCD. As discussed above, in the third quarter of 2025, we established a standalone hedging program for our variable annuity block. Our current macrovariable hedgeannuity interest rate hedging program is usedintended to managemitigate our exposure to changes in interest raterates riskarising in aggregate, with rebalancing and trade executions determined by net exposure. By managingfrom the interestvariable rateannuity exposure on a net basis, we expect to more efficiently manage the derivative portfolio, protect capital and reduce costs.contracts. Our interest rate hedge programs may also include hybrid options that have other risk exposure in addition to interest rate exposure. We continue to set individual hedge targets for certain products such as ULSG, where the economics of the interest rate derivatives are ceded through reinsurance to BRCD. While we now manage interest rate risk primarily on a product basis, we also manage interest rate exposure in aggregate across the Company.

Our ULSG Target is sensitive to the actual and future expected level of long-term U.S. interest rates. If interest rates fall, our ULSG Target increases. Likewise, if interest rates rise, our ULSG Target declines. The interest rate derivatives allocatedincluded toin ULSG Assets prioritizeseek to offset movement in the ULSG Target. This could increase the period-to-period volatility of net income and equity due to differences in the sensitivity of the ULSG Target and GAAP liabilities to the changes in interest rates. We closely monitor the sensitivity of our ULSG Target to changes in interest rates. We seek to maintain ULSG Assets above the ULSG Target across a wide range of interest rate scenarios. At December 31, 2024,2025, BRCD assets exceeded the ULSG CFT requirement.

We are exposed to equity market risk from policyholder liabilities with long-term guarantees based on equity performance, with our most significant exposures found in crediting rates on Shield Annuities and variable annuity guarantees. WeWhile we manage equity risk primarily through the use of product-specific hedging strategiesstrategies, andwe havealso a macro hedging program for managing residualmanage equity risk.risk in aggregate across the Company. As discussed above, we have historically managed equity risk of variable annuities and first generation Shield AnnuitiesAnnuity contracts together, recognizingbut in the naturalthird riskquarter offsetof between2025, we established standalone equity hedging programs for each product. We also manage the tworisks products.associated with our updated Shield Annuity product, launched in 2024, on a standalone basis.

InWe 2024,hedge wethe launchedequity updatedrisk versionsassociated of ourwith Shield Annuity products,products whichby we manage on a standalone basis separately from our variable annuity and first generation Shield Annuity products. As we write new business, we usepurchasing equity derivatives that are intended to offset the embeddedindex optionscredits relateddue to thecontract crediting rate in Shield Annuity contracts.holders. Since it is not practical to hedge each policy individually, we may group individual policies into cohorts or use other industry methods to reduce the number of hedge trades. We manage the equity risk associated with our variable annuity contracts through the use of derivatives intended to offset the exposure attributable to changes in equity markets.

Our business and results of operations are materially affected by conditions in the capital markets and the economy generally. Stressed conditions, volatility and disruptions in the capital markets or financial asset classes can have an adverse effect on us. Equity market performance can affect our profitability for variable annuities, Shield Annuities and other separate account products as a result of the effects it has on product demand, revenues, expenses, reserves and our risk management effectiveness. In September, November and December 2024, theThe Federal Reserve Board (the “Federal Reserve”) decreased the target range for the federal funds rate,rate in September, October and December 2025, as well as in September, November and December 2024, and any additional future decrease may negatively impact our business in certain respects, including our investment portfolio, by lowering the level of long-term interest rates and changing the shape of the yield curve. The level of long-term interest rates and the shape of the yield curve can have a negative effect on the profitability for variable annuities, as well as the demand for, and the profitability of, spread-based products such as fixed annuities, index-linked annuities and universal life insurance. Low interest rates and risk premium, including credit spread, affect new money rates on invested assets and the cost of product guarantees. Insurance premium growth and demand for our products is impacted by the general health of U.S. economic activity. A sustained or material increase in inflation could also affect our business in several ways. During inflationary periods, the value of fixed income investments falls which could increase realized and unrealized losses. Inflation also increases our expenses (including, among others, for labor and third-party services), potentially putting pressure on profitability if such costs cannot be passed through to policyholders in our product prices. Prolonged and elevated inflation could adversely affect the financial markets and the economy generally and dispelling it may require governments to pursue restrictive fiscal and monetary policies, which could constrain overall economic activity and inhibit revenue growth. Events involving limited liquidity, defaults, nonperformancenonperformance, fraud or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about events of these kinds or other similar risks, could adversely affect market-wide liquidity, which could increase the risk of a recession or an equity market downturn and negatively impact various portions of our business, including our investment portfolio. See “Risk Factors — Economic Environment and Capital Markets-Related Risks — If difficult conditions in the capital markets and the U.S. economy generally persist or are perceived to persist, they may materially adversely affect our business and results of operations” and “Risk Factors — Risks Related to ourOur Investment Portfolio — Our investment portfolio is subject to significant financial risks both in the U.S. and global financial markets, including credit risk, interest rate risk, inflation risk, market valuation risk, liquidity risk, real estate risk, derivatives risk, and other factors outside our control, the occurrence of any of which could have a material adverse effect on our financial condition and results of operations.”

The above factors affect our expectations regarding future margins. We review our long-term assumptions about capital markets returns and interest rates, along with other assumptions such as contract holder behavior, as part of our annual actuarial review.AAR. As additional company specific or industry information on contract holder behavior becomes available, related assumptions may change and may potentially have a material impact on liability valuations and net income.

Adjusted earnings, which may be positive or negative, focuses on our primary businesses by excluding the impact of market volatility, which could distort trends. Adjusted earnings was updated during the first quarter of 2025 in connection with the establishment of a trading portfolio comprised of certain fixed income securities (classified as “trading securities” under GAAP). The Company did not have trading securities prior to the first quarter of 2025.

•Net investment gains (losses); and

•Change in fair value of the crediting rate on experience-rated contracts and market value adjustments on institutional group annuities that are economically offset by gains (losses) on the related trading securities (“Market Value Adjustments”).

Adjusted net investment income is used by management to measure our performance, and we believe it enhances the understanding of our investment portfolio results. Adjusted net investment income represents GAAP net investment income plus Investment Hedge Adjustments.Adjustments less investment gains (losses) on trading securities. For a reconciliation of adjusted net investment income to net investment income, the most directly comparable GAAP measure, see table note (3) to the summary yield table located in “— Investments — Current Environment — Investment Portfolio Results.”

We typically conductconducted our GAAP AAR in the third quarter of each year.2025. As part of the 20242025 GAAP AAR, for our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses and withdrawals. In addition, we increased the long-term general account earned rate, driven by an increase in the mean reversion rate, from 3.75%4.00% to 4.00%. Also, with respect to our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses and withdrawals.4.50%. For our variable annuity business, we updated ourassumptions regarding annuitization, mortality, guaranteed principal option utilization, lapses and withdrawals, as well as separate account assumptions, including fund fees and allocations. For the payout annuity business, we updated assumptions regarding mortality. For term participating and non-participating whole life insurance, we updated assumptions regarding mortality and lapses.

As part of the 20232024 GAAP AAR, for our ULSG business, we increased the long-term general account earned rate, driven by an increase in the mean reversion rate, from 3.50%3.75% to 3.75%.4.00%. Also, with respect to our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawalslapses and maintenance expenses.withdrawals. For our variable annuity business, we updated ourassumptions regarding annuitization, mortality, lapses and withdrawals, as well as separate account assumptions, including fund fees, allocationsfees and volatility.allocations. For term participating and non-participating whole life insurance, we updated assumptions regarding mortality and lapses.

Market Value Adjustments. Includes the change in fair value of the crediting rate on experience-rated contracts.contracts and market value adjustments on institutional group annuities that are economically offset by gains (losses) on the related trading securities.

Income available to shareholders before provision for income tax was $315$367 million ($286$331 million, net of income tax), an increase of $1.9$52 billionmillion ($1.5$45 billion,million, net of income tax) from lossincome available to shareholders before provision for income tax of $1.6$315 billionmillion ($1.2$286 billion,million, net of income tax) in the prior period.

•higher pre-tax adjusted earnings, as discussed in greater detail below.below;

The•lower increaselosses in income before provision for income tax was partially offset byfrom the unfavorable impact of long-term interest rates on interest rate derivatives used to manage interest rate exposure in our ULSG business, as the long-term interestrates ratewere increasedrelatively moreflat in the current period resulting in a loss of $557 million and increased less in the prior period; resulting in a loss of $197 million.and

The components of adjusted earnings (loss) were as follows:

◦ana increasenet decrease in liability balances resulting from year-over-year changes made in connection with the AAR in our Run-off and Life segments and other refinements; and ◦a decrease in liability balances in our Run-off segment resulting from a reinsurance premium rate increase associated with the conclusion of a reinsurance arbitration; and ◦a decrease in incomethe annuityprior underwriting marginsperiod;

•higher net investmentfee spreadincome due to:

◦higherlower returns on other limited partnerships; and

•lowerhigher other expenses due to:

◦lowerhigher operational expenses;

◦higherlower asset-based variable annuity expenses resulting from higherlower average separate account balances, a portion of which is offset in fee income; and ◦higher variable compensation expenses.

◦higherlower cededreinsurance cost of insurance feesexpenses in our Life and Run-off segments relatedassociated towith the conclusion of the aforementioned reinsurance arbitration,arbitration as well asin the agingprior in-forceperiod; businessand in◦lower ourtransition Run-offservices segmentagreement expenses; and

The provision for income tax, calculated as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 18% in both the current period compared to 17% inand the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction, tax credits and current period non-recurring items.

Key favorable impactimpacts waswere:

•higher feenet incomeinvestment spread due to:

For purposes of this discussion, “Brighthouse Financial,” the “Company,” “we,” “our” and “us” refer to Brighthouse Financial, Inc. and its subsidiaries, and “BHF” refers solely to Brighthouse Financial, Inc., the ultimate holding company for all of our subsidiaries, and not to any of its subsidiaries. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with (i) the Interim Condensed Consolidated Financial Statements and related notes included elsewhere herein; (ii) our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”) on February 24, 2026; (iii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (the “First Quarter Form 10-Q”) filed with the SEC on May 7, 2026; and (iiiiv) our current reports on Form 8-K filed in 2026.

Our Results of Operations discussion and analysis presents a review for the three months and six months ended MarchJune 31,30, 2026 and 2025 and period-over-periodperiod-over-period, as well as year-over-year, comparisons between these periods.

For the three months ended MarchJune 31,30, 2026, we had a net lossincome available to shareholders of $792$956 million and adjusted earnings of $239$258 million compared to a net lossincome available to shareholders of $294$60 million and adjusted earnings of $235$198 million for the three months ended MarchJune 31,30, 2025. TheNet net lossincome available to shareholders for the three months ended MarchJune 31,30, 2026 primarily reflects unfavorablenet favorable changes in our variable annuity and Shield hedges, as well as the estimated fair value of our variable annuity guaranteed benefit riders net of Shield embedded derivatives due to market factors, and net investment losses on sales of fixed maturity securities. These unfavorable impacts were partially offset by favorable pre-tax adjusted earnings.

The Merger Agreement was adopted by stockholders at the special meeting held on February 12, 2026, and the applicable waiting period under the Hart-Scott RodinoHart-Scott-Rodino Antitrust ImprovementImprovements Act of 1976, as amended, has expired. TheOn MergerMay is19, expected2026, tothe closeFinancial Industry Regulatory Authority (“FINRA”) approved the change of control of Brighthouse Securities, LLC. In addition, on June 18, 2026, the Committee on Foreign Investment in 2026.the However,United States (“CFIUS”) informed the completionparties ofthat theit Mergerhad remainsconcluded subjectits toreview theand satisfactionthat orthere waiverwere ofno certainunresolved othernational customarysecurity conditions, including receipt of insurance regulatory approvals. See “Risks Related to the Merger — The completion of the Merger is subject to a number of conditions, many of which are largely outside the parties’ control, and, if these conditions are not satisfied or waived, the Merger may not be completed within the expected timeframe or at all” included in our 2025 Annual Report.concerns.

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we discuss a number of trends and uncertainties that we believe may materially affect our future financial condition, results of operations or cash flows. Where these trends or uncertainties are specific to a particular aspect of our business, we often include such a discussion under the relevant caption of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, as part of our broader analysis of that area of our business. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties” included in our 2025 Annual Report, as amended or supplemented by our First Quarter Form 10-Q and herein, for a comprehensive discussion of some of the key general trends and uncertainties that have influenced the development of our business and our historical financial performance and that we believe will continue to influence our business and results of operations in the future.

Consolidated Results for the Three Months and Six Months Ended MarchJune 31,30, 2026 and 2025

The lossIncome available to shareholders before provision for income tax was $1.0$1.2 billion ($792$956 million, net of income tax), aan higher lossincrease of $632$1.1 millionbillion ($498$896 million, net of income tax) from lossincome available to shareholders before provision for income tax of $382$68 million ($294$60 million, net of income tax) in the prior period.

The increase in lossincome before provision for income tax was driven by the following unfavorablefavorable items:

•higher lossesgains from variable annuity guaranteed benefit riders, see “— Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months and Six Months Ended MarchJune 31,30, 2026 and 2025”; and

•losses from the impact of interest ratesgains on derivatives used to manage interest rate exposure in our universal life with secondary guarantees (“ULSG”) business,business asfrom long-termthe ratesfavorable increasedimpact of interest rate movements in the current period andcompared decreasedto the unfavorable impact in the prior period.period;

•net investment gains (losses) reflecting lower net losses on sales of fixed maturity securities and lower net losses on mortgage loans due to a smaller increase in the allowance for credit losses.

The provision for income tax, calculated as a percentage of income (loss) before provision for income tax, resulted in an effective tax rate of 23%20% in the current period compared to 25%9% in the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction,deduction and tax credits and current period non-recurring items.credits.

Consolidated Results for the Three Months and Six Months Ended MarchJune 31,30, 2026 and 2025 — Adjusted Earnings (Loss)

•higher net investmentfee spreadincome due to:

◦lower interest credited to policyholders duein toour fixed annuity business resulting from lower account balances and prior period actuarial modeling improvements in our Annuities segment;

◦lower operational expenses; and

◦lower reinsurance fees on our fixed annuity business resulting from lower account balances; and ◦lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses;

Segment Results for the Three Months and Six Months Ended MarchJune 31,30, 2026 and 2025 — Adjusted Earnings (Loss)

•The key favorable impact was a higher net investment spread due to:

◦lower interest credited to policyholders due to actuarial modeling improvements in the prior period and lower account balances; and ◦•higher investment yields on our fixed income portfolio, as proceeds from maturing investments and the growth in the investment portfolio were invested at higher yields than the portfolio average; and