Brighthouse Financial, Inc. 6.600% Non-Cumulative Preferred Stock, Series A

Company Overview

Business Model: Brighthouse Financial is a large provider of annuity and life insurance products in the U.S., serving over 2.0 million annuity contracts and insurance policies as of December 31, 2025. The Company generates revenue through its diverse product offerings, which include variable, fixed, index-linked, and income annuities, as well as term, universal, whole, and variable life products. Distribution occurs through multiple independent channels and a network of over 400 distribution partners. Its primary insurance subsidiaries are Brighthouse Life Insurance Company, Brighthouse Life Insurance Company of NY, and New England Life Insurance Company.

Market Position: Brighthouse Financial maintains a significant presence in the U.S. annuity and life insurance markets. Its Annuities segment, which includes Shield® Level Annuities, fixed annuities, and variable annuities, represents a substantial portion of its Assets Under Management (AUM). The Life segment focuses on universal life products with index-linked benefits. The Company's strategy includes updating existing products, such as the Shield Annuities in 2024, and focusing new sales on specific product types like variable annuities with GMWBs and GMDBs only.

Recent Strategic Developments: On November 6, 2025, Brighthouse Financial, Inc. entered into a Merger Agreement with Aquarian Holdings VI L.P., Aquarian Beacon Merger Sub Inc., and Aquarian Holdings LLC. Under this agreement, Brighthouse Financial, Inc. will become a wholly-owned subsidiary of Aquarian Holdings VI L.P., with common stockholders receiving $70.00 per share in cash. Stockholders adopted the Merger Agreement on February 12, 2026, and the merger is expected to close in 2026. If terminated, Brighthouse Financial could be required to pay a termination fee of approximately $144 million.

Geographic Footprint: Substantially all premiums, universal life and investment-type product policy fees, and other revenues originated in the U.S.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Margin: 6.47% (2025)
• Net Margin: 8.32% (2024)

Investment in Growth:

• Strategic Investments:
  • Share Repurchases: $102 million (2025), $250 million (2024). A $750 million share repurchase program was authorized in November 2023, with $441 million remaining at December 31, 2025.
  • Capital Contributions: Brighthouse Life Insurance Company received a $100 million capital contribution from Brighthouse Holdings, LLC on February 11, 2025.

Business Segment Analysis

Annuities

Financial Performance:

• Adjusted Earnings: $1,254 million (2025) (+0.2% YoY)
• Adjusted Earnings: $1,251 million (2024)
• Key Growth Drivers: New sales primarily consist of Shield® Level Annuities, fixed annuities, and variable annuities with simplified living benefits. Updated Shield Annuities were launched in 2024. Deposits for Shield Annuities were $2,500 million in 2025.

Product Portfolio:

• Major product lines: Variable, fixed, index-linked, and income annuities.
• New product launches or major updates: Updated Shield Annuities in 2024. Future focus includes a new suite of Shield Annuity products and variable annuities with GMWBs and GMDBs only.
• Insurance Liabilities (2025): Variable $79,321 million, Shield Annuities $35,621 million, Fixed deferred $19,007 million, Income $4,788 million.

Market Dynamics:

• Competitive positioning within segment: Approximately 75% of the variable annuity block included living benefit guarantees at December 31, 2025. Approximately 28% of GMIB total account value was invested in managed volatility funds.
• Key customer types and market trends: Top five distributors of annuity products produced 15%, 13%, 12%, 11%, and 7% of deposits for 2025.

Life

Financial Performance:

• Adjusted Earnings: $41 million (2025) (+24.2% YoY)
• Adjusted Earnings: $33 million (2024)
• Key Growth Drivers: Focus on universal life products with index-linked benefits.

Product Portfolio:

• Major product lines: Term, universal, whole, and variable life products.
• New product launches or major updates: Brighthouse SmartCare® (index-linked universal life, 2019); Brighthouse SmartGuard Plus® (index-linked universal life, 2023).
• Product changes: Ceased offering 10-, 20-, or 30-year level premium term options in H1 2025; currently offers a one-year term option. Does not currently offer variable life policies.
• In-Force Face Amount (2025): Term $312,477 million, Whole $16,098 million, Universal $9,339 million, Variable $31,714 million.

Market Dynamics:

• Key customer types and market trends: Top five distributors of life insurance policies produced 28%, 25%, 20%, 10%, and 4% of sales for 2025.

Run-off

Financial Performance:

• Adjusted Earnings: $436 million (2025) (+570.8% YoY)
• Adjusted Earnings: $65 million (2024)
• Key Growth Drivers: This segment comprises products no longer actively sold, including Universal Life with Secondary Guarantees (ULSG), structured settlements, pension risk transfer contracts, and certain company-owned life insurance policies.

Product Portfolio:

• Major product lines: ULSG, structured settlements, pension risk transfer, company-owned life insurance, and certain funding agreements.
• Insurance Liabilities (2025): ULSG $17,137 million, Structured settlements $4,477 million, Pension risk transfer $2,110 million, Company-owned life insurance $3,109 million.

Corporate & Other

Financial Performance:

• Adjusted Earnings: $(114) million (2025) (vs. $(38) million in 2024)
• Key Growth Drivers: This segment includes funding agreements for institutional spread margin business, unallocated excess capital, interest expense on debt, preferred stock dividends, legal proceedings, and income tax audit issues. It also includes long-term care business reinsured via 100% quota share agreements.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $102 million (2025) for 1,844,396 shares through open market purchases. $441 million remained under the repurchase program at December 31, 2025.
• Dividend Payments: Aggregate preferred stock dividends declared were $102 million in 2025. On February 17, 2026, Brighthouse Financial, Inc. declared a total dividend of $26 million on its Series A, B, C, and D Preferred Stock, payable March 25, 2026.

Balance Sheet Position:

• Cash and Equivalents: $5,387 million (2025)
• Total Debt: $3,155 million (2025)
• Net Cash Position: $2,232 million (2025)
• Credit Rating:
  • Brighthouse Financial, Inc.: bbb+ (A.M. Best, Watch), BBB (Fitch, Stable), Baa3 (Moody’s, Watch), BBB (S&P, Watch).
  • Brighthouse Life Insurance Company: A (A.M. Best, Watch), A- (Fitch, Stable), A3 (Moody’s, Watch), A (S&P, Watch).
  • Note: "Watch" indicates under review with negative implications (A.M. Best, S&P) or on review for downgrade (Moody's) following the merger announcement.
• Debt Maturity Profile (as of December 31, 2025): $3 million (2026), $761 million (2027), $3 million (2028), $4 million (2029), $619 million (2030), $1.8 billion (thereafter).

Cash Flow Generation:

• Operating Cash Flow: $259 million (2025)
• Free Cash Flow: Not explicitly stated or derivable.

Operational Excellence

Production & Service Model: Brighthouse Financial operates as a U.S. provider of annuity and life insurance products. Its model involves developing and distributing a range of financial protection products, including variable, fixed, index-linked, and income annuities, as well as various life insurance policies. The Company manages a substantial portfolio of assets, including general account investments and separate account assets, to support its policyholder liabilities.

Supply Chain Architecture: Key Suppliers & Partners:

• Reinsurance Partners: Brighthouse Financial utilizes reinsurance to manage risk and capacity. Key unaffiliated third-party reinsurers (based on 2025 recoverables) include MetLife, Inc. ($632 million), Munich American Reassurance Company ($559 million, A+), Reinsurance Group of America, Inc. ($491 million, A+), Swiss Re AG ($419 million, A++), The Travelers Indemnity Company ($352 million, A+), SCOR SE ($154 million, A+), Aegon Ltd ($109 million, A), and General Re Life Corporation ($358 million, A++).
• Long-Term Care Reinsurers: Genworth Life Insurance Company and Genworth Life Insurance Company of New York (rated C++ by A.M. Best) reinsure a long-term care block with $5.5 billion in reserves. Citigroup, Inc. indemnifies Brighthouse Financial for losses on this block.
• Affiliated Reinsurance: Brighthouse Reinsurance Company of Delaware supports term life and ULSG businesses.

Facility Network:

• Manufacturing: Not explicitly detailed in the filing.
• Research & Development: Not explicitly detailed in the filing, but product launches indicate ongoing development.
• Distribution: Not explicitly detailed in the filing beyond the network of over 400 distribution partners.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Channel Partners: Brighthouse Financial distributes its products through multiple independent distribution channels and a network of over 400 distribution partners.
• Direct Sales: Not explicitly detailed as a primary channel.

Customer Portfolio: Enterprise Customers:

• Customer Concentration: For annuity products, the top five distributors produced 15%, 13%, 12%, 11%, and 7% of deposits for 2025. For life insurance policies, the top five distributors produced 28%, 25%, 20%, 10%, and 4% of sales for 2025.

Geographic Revenue Distribution:

• United States: Substantially all premiums, universal life and investment-type product policy fees, and other revenues originated in the U.S.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Brighthouse Financial operates in the U.S. annuity and life insurance markets, characterized by a diverse range of products designed for financial protection and retirement planning. The industry is subject to evolving regulatory frameworks and requires continuous product innovation to meet changing customer needs and market conditions.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Not explicitly named in the filing.

Competitive Response Strategy: Brighthouse Financial's strategy includes updating its product portfolio, such as the Shield Annuities, and focusing on specific product types like variable annuities with GMWBs and GMDBs only, to maintain relevance and competitiveness in the market.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Interest Rate Sensitivity: Sensitivity to a 100 basis point rise in interest rates was $4.9 billion (2025).
• Equity Price Sensitivity: Sensitivity to a 10% decrease in equity prices was $725 million (2025).
• Technology Disruption: Not explicitly detailed as a risk, but product innovation is ongoing.
• Customer Concentration: Reliance on a limited number of top distributors for a significant portion of annuity deposits and life insurance sales.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on key reinsurance partners, including those with lower credit ratings (e.g., Genworth reinsurers for long-term care block).
• Geographic Concentration: Operations are substantially concentrated in the U.S.
• Capacity Constraints: Not explicitly detailed.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Not explicitly detailed.
• Foreign Exchange: Not explicitly detailed.
• Credit & Liquidity: Short-term liquidity was $4.3 billion (2025), down from $5.2 billion (2024). Parent Company short-term liquidity was $763 million (2025), down from $912 million (2024).
• Credit Rating Downgrades: Credit ratings for Brighthouse Financial, Inc. and its subsidiaries were revised or placed on review for downgrade by rating agencies following the merger announcement.

Regulatory & Compliance Risks:

• Industry Regulation: Exposure to changes in NAIC guidelines (e.g., AG 55, Valuation Manual amendments, GOES, bond definition, RBC changes for CLOs, Best Interest Safe Harbor), NYDFS regulations (Insurance Regulation 47, 187), SEC Regulation Best Interest, and DOL's Fiduciary Advice Rule.
• Data Privacy: Compliance with CPPA regulations (effective January 1, 2026) requiring data protection risk assessments and annual cybersecurity audits.
• Cybersecurity: Compliance with SEC Cybersecurity Final Rule (July 2023).
• Climate-Related Disclosures: Compliance with California Climate Corporate Data Accountability Act (CCDAA) and Climate-Related Financial Risk Act (CRFRA), requiring GHG emissions reporting and climate-related financial risk disclosures.

Geopolitical & External Risks

Geopolitical Exposure: Not explicitly detailed beyond general regulatory compliance. Trade Relations: Not explicitly detailed. Sanctions & Export Controls: Not explicitly detailed.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Brighthouse Financial's innovation is evident in its product development, including the launch of updated Shield Annuities in 2024 and index-linked universal life products like Brighthouse SmartCare® (2019) and Brighthouse SmartGuard Plus® (2023). The Company continues to focus on new product suites for annuities and specific variable annuity features. Innovation Pipeline: New technology development is focused on enhancing existing product lines and introducing new offerings in the annuity and life insurance segments.

Intellectual Property Portfolio:

• Patent Strategy: Not explicitly detailed in the filing.
• Licensing Programs: Not explicitly detailed in the filing.
• IP Litigation: Not explicitly detailed in the filing.

Technology Partnerships: Not explicitly detailed in the filing.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Not explicitly detailed in the filing.

Board Composition: C. Edward Chaplin is the Chairman of the Board. Further details on independence, expertise areas, or committee structure are incorporated by reference from the 2026 Proxy Statement.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 1,400 at December 31, 2025.
• Geographic Distribution: Not explicitly detailed.
• Skill Mix: Not explicitly detailed.

Talent Management: Acquisition & Retention:

• Employee Value Proposition: Core values include collaboration, adaptability, and passion.

Diversity & Development:

• Development Programs: Brighthouse Financial Foundation (established 2017) and Brighthouse Scholar Connections, Inc. (established 2022) are non-profit initiatives, indicating a commitment to social impact and potentially employee engagement.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: Not explicitly detailed in the filing. Supply Chain Sustainability: Not explicitly detailed in the filing.

Social Impact Initiatives:

• Community Investment: Brighthouse Financial Foundation, a non-profit organization, was established in 2017.
• Product Impact: Brighthouse Scholar Connections, Inc., a non-profit organization, was established in 2022.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• NAIC Regulations: Actuarial Guideline LV (AG 55) effective for year-end 2025 reporting; amendments to Valuation Manual for non-variable annuities (effective January 1, 2026) and for a new Generator of Economic Scenarios (GOES) (effective January 1, 2026); new principles-based bond definition (effective January 1, 2025); delayed RBC changes for collateralized loan obligations (effective December 31, 2026); Best Interest Safe Harbor Guidance for NAIC SAT (December 2025).
• NYDFS Regulations: Amended Insurance Regulation 47 (effective January 1, 2023 and January 1, 2024); Insurance Regulation 187 (effective July 2018).
• Federal Regulations: SEC Regulation Best Interest (effective June 2020); DOL's Fiduciary Advice Rule and PTE 2020-02 (updated April 23, 2024, but stayed by U.S. District Courts).
• AI Regulation: NAIC Model Bulletin on the Use of Artificial Intelligence Systems by Insurers (December 2023); President Trump's executive order on AI regulation (December 11, 2025).
• Data Privacy: CPPA regulations effective January 1, 2026, requiring data protection risk assessments and annual cybersecurity audits.
• Cybersecurity: SEC Cybersecurity Final Rule (July 2023).

Trade & Export Controls: Not explicitly detailed.

Legal Proceedings:

• Litigation: Estimated aggregate range of reasonably possible losses up to approximately $10 million at December 31, 2025. Includes class action lawsuits related to Universal Life policies (Richard A. Newton v. Brighthouse Life Insurance Company, Lawrence Martin v. Brighthouse Life Insurance Company) and a class action related to a data security incident (Kennedy v. Progress Software Corporation, et al.).
• Other Loss Contingencies: Estimated range of reasonably possible losses from zero up to approximately $100 million at December 31, 2025, relating to tax and reinsurance matters. A Q1 2024 arbitration panel ruling resulted in a $187 million loss.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 8% (2025) based on net income. 18% (2025) based on Adjusted Earnings.
• Geographic Tax Planning: Not explicitly detailed.
• Tax Reform Impact: Not subject to the 15% corporate alternative minimum tax (CAMT) established by the Inflation Reduction Act for 2025, 2024, and 2023. The One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025, is not expected to have a material impact.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Brighthouse Financial uses reinsurance to limit losses, minimize exposure to significant risks, and provide additional capacity. This includes reinsuring variable annuity guarantees, ceding fixed rate annuities, assuming index-linked annuities, and reinsuring mortality risk on life products. The Company may retain up to $20 million per life and reinsure 100% of amounts in excess.
• Risk Transfer Mechanisms: The Brighthouse Financial Balance Sheet Committee (BSC) oversees financial risks. Its voting members are the CEO, Chief Risk Officer, Chief Financial Officer, Chief Investment Officer, and Head of Product Strategy and Underwriting.
• Reinsurance Recoverables: Net ceded reinsurance recoverables were $19.7 billion (2025). $16.5 billion (84%) of unsecured reinsurance recoverable balances were with the five largest ceded reinsurers in 2025.