Brighthouse Financial Inc

Results of Operations

Consolidated Results for the Three Months Ended March 31, 2025 and 2024

Unless otherwise noted, all amounts in the following discussions of our results of operations are stated before income tax except for adjusted earnings, which are presented net of income tax.

The components of net income (loss) available to shareholders were as follows:

Loss available to shareholders before provision for income tax was $382 million ($294 million, net of income tax), a lower loss of $260 million ($225 million, net of income tax) from loss available to shareholders before provision for income tax of $642 million ($519 million, net of income tax) in the prior period.

The lower loss before provision for income tax was driven by the following favorable items:

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

•the impact of long-term interest rates on interest rate derivatives used to manage interest rate exposure in our ULSG business, as the long-term interest rate decreased in the current period, resulting in a gain of $22 million, and increased in the prior period, resulting in a loss of $212 million.

The lower loss before provision for income tax was partially offset by the following unfavorable items:

•higher losses from variable annuity guaranteed benefit riders, see “— Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months Ended March 31, 2025 and 2024”;

•net investment gains (losses) reflecting higher net losses on mortgage loans due to an increase in the allowance for credit losses;

•the U.S. dollar weakening in the current period and strengthening in the prior period, unfavorably impacting foreign currency forwards; and

•the net impact of embedded derivatives and equity options we use to hedge our non-variable annuity business, as equity markets decreased in the current period and increased in the prior period.

The provision for income tax, calculated as a percentage of income (loss) before provision for income tax, resulted in an effective tax rate of 25% in the current period compared to 20% in 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.

Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings (Loss)

The reconciliation of net income (loss) available to shareholders to adjusted earnings (loss) was as follows:

Consolidated Results for the Three Months Ended March 31, 2025 and 2024 — Adjusted Earnings (Loss)

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

Adjusted earnings were $235 million in the current period, an increase of $333 million.

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

◦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 in the prior period; and

◦an increase in income annuity underwriting margins;

◦higher claims, net of reinsurance, in our Life segment;

◦lower ceded cost of insurance fees in our Life and Run-off segments related to the conclusion of the aforementioned reinsurance arbitration in the prior period;

◦a decline in the net cost of insurance fees driven by the aging in-force business in our Run-off segment;

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

◦higher ceded cost of insurance fees consistent with unfavorable equity market returns in our Life segment, which is offset in other expenses; and

◦the conclusion of the aforementioned reinsurance arbitration in our Life and Run-off segments in the prior period;

◦higher ceded cost of insurance expenses consistent with unfavorable equity market returns in our Life segment, which is offset in fee income; and

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

◦higher deferred compensation and operational expenses.

The key unfavorable impact was a lower net investment spread due to:

◦higher interest credited to policyholders due to higher account balances and actuarial modeling improvements in our Annuities segment; and

◦lower returns on other limited partnerships;

◦higher returns on real estate limited partnerships and limited liability companies (“LLC”);

◦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 (loss), resulted in an effective tax rate of 17% in the current period compared to 15% in 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.

Segment Results for the Three Months Ended March 31, 2025 and 2024 — Adjusted Earnings (Loss)

Annuities

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 Interim Condensed Consolidated Financial Statements.

Adjusted earnings were $314 million in the current period, an increase of $1 million.

•higher net investment spread due to:

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

◦higher returns on real estate limited partnerships and LLCs; 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;

◦higher interest credited to policyholders due to higher account balances and actuarial modeling improvements; and

•lower net costs associated with insurance-related activities due to an increase in income annuity underwriting margins.

Key net unfavorable impacts were:

•higher other expenses due to:

◦higher operational expenses;

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

◦lower deferred compensation expenses; and

◦lower transition services agreement expenses; and

•lower fee income due to lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses.

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 $9 million in the current period, an increase of $45 million.

◦lower ceded cost of insurance fees related to the conclusion of the aforementioned reinsurance arbitration in the prior period;

◦higher ceded cost of insurance fees consistent with unfavorable equity market returns, which is offset in other expenses; and

◦higher ceded cost of insurance expenses consistent with unfavorable equity market returns, which is offset in fee income; and

◦the conclusion of the aforementioned reinsurance arbitration in the prior period;

◦higher operational expenses.

The key unfavorable impact was higher net costs associated with insurance-related activities due to higher claims, net of reinsurance.

The provision for income tax, calculated as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 10% in the current period compared to 22% 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 loss was $64 million in the current period, a lower loss of $277 million.

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

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

◦lower claims, net of reinsurance;

◦lower ceded cost of insurance fees related to the conclusion of the aforementioned reinsurance arbitration in the prior period;

◦a decline in the net cost of insurance fees driven by the aging in-force business; and

◦the conclusion of the aforementioned reinsurance arbitration in the prior period;

◦higher operational expenses.

The key unfavorable impact was a lower net investment spread due to:

◦lower returns on other limited partnerships; and

◦lower average invested long-term assets;

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

The provision for income tax, calculated as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 21% in both the current period and the prior period. Our effective tax rate may differ from the statutory tax rate primarily due to the impact of the dividends received deduction.

Corporate & Other

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

Adjusted loss was $24 million in the current period, a lower loss of $10 million.

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, tax credits and current period non-recurring items. 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.

Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months Ended March 31, 2025 and 2024

The overall impact on income (loss) available to shareholders before provision for income tax from the performance of annuity guaranteed benefits and Shield Annuity liabilities, which includes (i) changes in the fair value of liabilities and related reinsurance, (ii) fees net of claims and (iii) the mark-to-market of hedges, was as follows:

Three Months Ended March 31, 2025

Annuity guaranteed benefits and Shield Annuity liabilities performance was unfavorable for the three months ended March 31, 2025, primarily driven by:

•unfavorable increases in annuity guaranteed benefits liabilities due to decreasing interest rates and equity markets;

•unfavorable changes in variable annuity hedges due to decreasing equity markets, partially offset by decreasing long-term interest rates; and

•favorable changes in Shield embedded derivatives due to decreasing equity markets.

Three Months Ended March 31, 2024

Annuity guaranteed benefits and Shield Annuity liabilities performance was unfavorable for the three months ended March 31, 2024, primarily driven by:

•favorable decreases in annuity guaranteed benefits liabilities due to increasing interest rates and equity markets;

•favorable changes in variable annuity hedges due to increasing equity markets, partially offset by increasing long-term interest rates; and

•unfavorable changes in Shield embedded derivatives due to increasing equity markets.