Brighthouse Financial Inc

Segment Results for the Years Ended December 31, 2024 and 2023 — Adjusted Earnings (Loss)

The components of adjusted earnings for our Annuities segment were as follows:

A significant portion of our adjusted earnings is driven by separate account balances related to our variable annuity business, as these balances determine asset-based fee income and commissions. The changes in our variable annuities separate account balances are presented in Note 5 of the Notes to the Consolidated Financial Statements.

Adjusted earnings were $1.3 billion in the current period, an increase of $82 million.

Key favorable impact was:

•higher fee income due to:

◦higher reinsurance fees on our fixed annuity business resulting from higher account balances; and

◦higher asset-based fees resulting from higher average separate account balances, a portion of which is offset in other expenses.

Key net unfavorable impacts were:

•higher net costs associated with insurance-related activities due to:

◦a decrease in income annuity underwriting margins; and

◦a net increase in liability balances resulting from year-over-year changes made in connection with the AAR;

•higher other expenses due to:

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

◦higher variable compensation expenses;

◦lower transition services agreement expenses; and

•lower net investment spread due to:

◦higher interest credited to policyholders due to higher account balances and current and prior period actuarial modeling improvements, net of changes made in the current period in connection with the AAR;

◦higher average invested assets resulting from positive net flows in the general account; 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.

The provision for income tax, calculated as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 19% in both the current period and the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

Life

The components of adjusted earnings (loss) for our Life segment were as follows:

Adjusted earnings were $33 million in the current period, an increase of $86 million.

•lower net costs associated with insurance-related activities due to lower paid claims, net of reinsurance;

◦higher returns on other limited partnerships;

◦lower average invested long-term assets; and

◦lower transition services agreement expenses.

The key unfavorable impact was lower fee income due to higher ceded cost of insurance fees related to the conclusion of the aforementioned reinsurance arbitration.

The provision for income tax, calculated as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 13% in the current period compared to 23% in the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

Run-off

The components of adjusted earnings (loss) for our Run-off segment were as follows:

Adjusted earnings were $65 million in the current period, an increase of $142 million.

•lower net costs associated with insurance-related activities due to:

◦a net decrease in liability balances resulting from year-over-year changes made in connection with the AAR and other refinements;

◦an increase in liability balances resulting from a reinsurance premium rate increase associated with the conclusion of the aforementioned reinsurance arbitration; and

◦higher paid claims, net of reinsurance; and

◦higher returns on other limited partnerships; and

◦lower interest credited to policyholders due to lower account balances;

◦lower average invested long-term assets.

The key unfavorable impact was lower fee income due to higher ceded cost of insurance fees related to the conclusion of the aforementioned reinsurance arbitration and the aging in-force business.

The provision for income tax, calculated as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 20% in the current period compared to 23% in the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

The components of adjusted earnings (loss) for our Corporate & Other segment were as follows:

Adjusted loss was $30 million in the current period, a lower loss of $40 million.

Key favorable impacts were:

◦lower legal reserves; and

•higher net investment spread due to higher investment yields and higher average invested long-term assets from funding agreements issued in connection with our institutional spread margin business.

The provision for income tax, calculated as a percentage of pre-tax adjusted earnings (loss), resulted in a higher effective tax rate in the current period compared to the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction and tax credits. We believe the effective tax rate for Corporate & Other is not generally meaningful, neither on a standalone basis nor for comparison to prior periods, since taxes for Corporate & Other are derived from the difference between the overall consolidated effective tax rate and total taxes for the other operating segments.