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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-08 · 222 added, 446 removed, 845 unchanged (44% of the section changed)

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Securities and Exchange Commission (“SEC”) on February 28, 2025;

(iii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “First Quarter Form 10-Q”) filed with the SEC on May 8, 2024;

(iv) our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (the “Second Quarter Form 10-Q” and, together with the First Quarter Form 10-Q, the “Quarterly Reports”) filed with the SEC on August 8, 2024;

and (v) our current reports on Form 8-K filed in 2024.

and (iii) our current reports on Form 8-K filed in 2025.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations, financial condition and cash flows of Brighthouse Financial for the periods indicated.

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• “Industry Trends and Uncertainties” discusses updates and changes to a number of trends and uncertainties included in our 2024 Annual Report that we believe may materially affect our future financial condition, results of operations or cash flows.

• “Summary of Critical Accounting Estimates” explains the most critical estimates and judgments applied in determining our results in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

• “Summary of Critical Accounting Estimates” explains what we believe to be the most critical estimates and judgments applied in determining our results in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

• “Non-GAAP Financial Disclosures” defines key financial measures presented in our results of operations discussion that are not calculated in accordance with GAAP but are used by management in evaluating company and segment performance.

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This section also refers to certain other terms used to describe our insurance business and financial and operating metrics but is not intended to be exhaustive.

Our Results of Operations discussion and analysis presents a review for the three months and nine months ended September 30, 2024 and 2023 and period-over-period, as well as year-over-year, comparisons between these periods.

Our Results of Operations discussion and analysis presents a review for the three months ended March 31, 2025 and 2024 and period-over-period comparisons between these periods.

Executive Summary

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through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners.

We are organized into the following segments:

(i) Annuities, (ii) Life and (iii) Run-off, which consists primarily of products that are no longer actively sold and are separately managed.

In addition, we report certain of our results of operations in Corporate & Other.

See “Business — Segments and Corporate & Other” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary” included in our 2023 Annual Report, as well as Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for further information regarding our segments and Corporate & Other.

Net income (loss) available to shareholders and adjusted earnings, a non-GAAP financial measure, were as follows:

We are organized into the following reportable segments:

and Corporate & Other.

See “Business — Segment Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary” included in our 2024 Annual Report, as well as Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for further information regarding our segments.

Net income (loss) available to shareholders and adjusted earnings (loss), a non-GAAP financial measure, were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

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__________________

(1) We use the term “net income (loss) available to shareholders” to refer to “net income (loss) available to Brighthouse Financial, Inc.’s common shareholders” and “adjusted loss” to refer to negative adjusted earnings values throughout the results of operations discussions.

For the three months ended September 30, 2024, we had net income available to shareholders of $150 million and adjusted earnings of $767 million compared to net income available to shareholders of $453 million and adjusted earnings of $326 million for the three months ended September 30, 2023.

Net income available to shareholders for the three months ended September 30, 2024 primarily reflects favorable pre-tax adjusted earnings and a favorable change in the estimated fair value of freestanding interest rate derivatives we use to hedge our universal life with secondary guarantees (“ULSG”) business resulting from decreasing long-term interest rates.

The favorable impacts were partially offset by net unfavorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors, net investment losses on sales of fixed maturity securities and net investment losses on mortgage loans.

For the nine months ended September 30, 2024, we had net loss available to shareholders of $360 million and adjusted earnings of $1.0 billion compared to net loss available to shareholders of $272 million and adjusted earnings of $792 million for the nine months ended September 30, 2023.

Net loss available to shareholders for the nine months ended September 30, 2024 primarily reflects net unfavorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors, net investment losses on sales of fixed maturity securities, net investment losses on mortgage loans and 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.

These unfavorable impacts were partially offset by favorable pre-tax adjusted earnings, net of an unfavorable impact due to a reinsurance premium rate increase retroactive to September 2019, which resulted from the conclusion of a reinsurance arbitration, and the related impacts.

For the three months ended March 31, 2025, we had net loss available to shareholders of $294 million and adjusted earnings of $235 million compared to net loss available to shareholders of $519 million and an adjusted loss of $98 million for the three months ended March 31, 2024.

Net loss available to shareholders for the three months ended March 31, 2025 primarily reflects net unfavorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors, net investment losses on mortgage loans and net investment losses on sales of fixed maturity securities.

These unfavorable impacts were partially offset by favorable pre-tax adjusted earnings and a favorable change in the estimated fair value of freestanding interest rate derivatives we use to hedge our universal life with secondary guarantees (“ULSG”) business resulting from decreasing long-term interest rates.

See “— Non-GAAP Financial Disclosures.” See “— Results of Operations” for a detailed discussion of our results.

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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 2023 Annual Report, as amended or supplemented by our subsequent Quarterly Reports 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.

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties” included in our 2024 Annual Report, as amended or supplemented 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.

Financial and Economic Environment

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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 and other separate account products as a result of the effects it has on product demand, revenues, expenses, reserves and our risk management effectiveness.

Equity market performance can affect our profitability for variable annuities, Shield ® Level Annuities (“Shield” and “Shield Annuity”) 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, the Federal Reserve Board (the “Federal Reserve”) decreased the target range for the federal funds rate, 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.

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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.

The Federal Reserve Board (the “Federal Reserve”) decreased the target range for the federal funds rate in September and November 2024, and may decrease the target range again, which 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.

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.

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We continue to closely monitor political and economic conditions that might contribute to market volatility and their impact on our business operations, investment portfolio and derivatives, such as global inflation, uncertainty and instability in certain asset classes (including commercial real estate), supply chain disruptions and recent geopolitical conflicts, including in Europe and the Middle East.

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.

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.

or foreign governments, uncertainty and instability in certain asset classes (including commercial real estate), supply chain disruptions and recent geopolitical conflicts, including in Europe and the Middle East.

See “— Investments — Current Environment” herein, as well as “Risk Factors — Economic Environment and Capital Markets-Related Risks,” “Risk Factors — Risks Related to Our Investment Portfolio,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Investments” included in our 2024 Annual Report for a detailed discussion of financial and economic impacts on our business, including the potential impacts of interest rate risk and inflation risk on our investments and overall business.

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Adjusted earnings, which may be positive or negative, focuses on our primary businesses by excluding the impact of market volatility, which could distort trends.

The Company uses the term “adjusted loss” throughout this report to refer to negative adjusted earnings values.

The following are significant items excluded from total revenues in calculating adjusted earnings:

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.

The Company did not have trading securities prior to the first quarter of 2025.

The following items are excluded from total revenues in calculating adjusted earnings:

• Net investment gains (losses);

• Investment gains (losses) on trading securities measured at estimated fair value through net investment income;

• Net derivative gains (losses), excluding earned income and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment (“Investment Hedge Adjustments”).

The following are significant items excluded from total expenses in calculating adjusted earnings:

The following items are excluded from total expenses in calculating adjusted earnings:

• Change in MRBs;

• Change in fair value of the crediting rate on experience-rated contracts (“Market Value Adjustments”).

• 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”).

The provision for income tax related to adjusted earnings is calculated using the statutory tax rate of 21%, net of impacts related to the dividends received deduction, tax credits and current period non-recurring items.

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(i) Fee income (i) Universal life and investment-type product policy fees plus Other revenues .

(ii) Net investment spread (ii) Net investment income plus Investment Hedge Adjustments reduced by Interest credited to policyholder account balances (excluding Market Value Adjustments) and interest on future policy benefits.

(ii) Net investment spread (ii) Net investment income (excluding investment gains (losses) on trading securities) plus Investment Hedge Adjustments reduced by Interest credited to policyholder account balances (excluding Market Value Adjustments) and interest on future policy benefits.

(iii) Insurance-related activities (iii) Premiums less Policyholder benefits and claims , excluding interest on future policy benefits.

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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.

Adjusted net investment income represents GAAP net investment income plus Investment Hedge 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.”

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Results of Operations

Annual Actuarial Review

We typically conduct our annual actuarial review (“AAR”) in the third quarter of each year.

As part of the 2024 AAR, for our ULSG business, we increased the long-term general account earned rate, driven by an increase in the mean reversion rate, from 3.75% to 4.00%.

Also, with respect to our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses and withdrawals.

For our variable annuity business, we updated our annuitization, mortality, lapses and withdrawals, as well as separate account assumptions, including fund fees and allocations.

For term participating and non-participating whole life insurance, we updated assumptions regarding mortality and lapses.

As part of the 2023 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% to 3.75%.

Also, with respect to our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawals and maintenance expenses.

For our variable annuity business, we updated our annuitization, mortality, lapses and withdrawals, as well as separate account assumptions, including fund fees, allocations and volatility.

For term participating and non-participating whole life insurance, we updated assumptions regarding mortality and lapses.

The impact on income (loss) available to shareholders before provision for income tax was as follows:

Nine Months Ended

September 30,

(In millions)

Market risk benefits

Embedded derivatives

Total market risk benefits and embedded derivatives

Included in pre-tax adjusted earnings (loss):

Other annuity business 26 15

Life business (83) (90)

Run-off 359 119

Total included in pre-tax adjusted earnings (loss)

Total impact on income (loss) available to shareholders before provision for income tax $ 413 $ (207)

Consolidated Results for the Three Months and Nine Months Ended September 30, 2024 and 2023

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.

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

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Policyholder benefits and claims (including liability remeasurement gains (losses) of $0 and $0, respectively)

22 590 1,632 1,966

Interest credited to policyholder account balances 561 502

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Net income (loss) attributable to Brighthouse Financial, Inc.

176 479 (283) (195)

Preferred stock dividends 26 26

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

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Net investment gains (losses) (83) (42)

Investment gains (losses) on trading securities

Net derivative gains (losses), excluding investment hedge adjustments 311 (1,934)

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Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

940 401 1,248 965

Income (loss) available to shareholders before provision for income tax (382) (642)

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$ (294) $ (519)

Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023

Income available to shareholders before provision for income tax was $160 million ($150 million, net of income tax), a decrease of $402 million ($303 million, net of income tax) from income available to shareholders before provision for income tax of $562 million ($453 million, net of income tax) in the prior period.

The decrease in income before provision for income tax was driven by the following unfavorable items:

• losses from variable annuity guaranteed benefit riders, see “— Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months and Nine Months Ended September 30, 2024 and 2023”;

• the net impact of embedded derivatives and equity options we use to hedge our non-variable annuity business, as equity markets increased in the current period, resulting in a loss of $26 million, and decreased in the prior period, resulting in a gain of $71 million.

The decrease in income before provision for income taxes was partially offset by the following favorable items:

• 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 $113 million, and increased in the prior period, resulting in a loss of $500 million;

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

The provision for income tax, expressed as a percentage of income (loss) before provision for income tax, resulted in an effective tax rate of 5% in the current period compared to 18% in 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.

Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September 30, 2023

Loss available to shareholders before provision for income tax was $493 million ($360 million, net of income tax), a higher loss of $112 million ($88 million, net of income tax) from loss available to shareholders before provision for income tax of $381 million ($272 million, net of income tax) in the prior period.

The higher loss before provision for income tax was driven 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 and Nine Months Ended September 30, 2024 and 2023”;

• the net impact of embedded derivatives and equity options we use to hedge our non-variable annuity business, as equity markets increased more in the current period, resulting in a loss of $26 million, and increased less in the prior period, resulting in a gain of $74 million.

The higher loss before provision for income tax was partially offset by the following favorable items:

Three Months Ended March 31, 2025 Compared with the Three Months Ended March 31, 2024

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;

• 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 increased less in the current period, resulting in a loss of $196 million, and increased more in the prior period, resulting in a loss of $443 million.

The provision for income tax, expressed as a percentage of income (loss) before provision for income tax, resulted in an effective tax rate of 32% in the current period compared to 36% in the prior period.

• 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;

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

• 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.

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

Three Months Ended September 30, 2024

Annuities Life Run-off Corporate & Other Total

(In millions)

Net income (loss) available to shareholders $ (504) $ (36) $ 761 $ (71) $ 150

Provision for income tax expense (benefit) 76 (7) (88) 29 10

Income (loss) available to shareholders before provision for income tax

(428) (43) 673 (42) 160

Net investment gains (losses) (20) (10) (22) (8) (60)

Net derivative gains (losses), excluding investment hedge adjustments of $6

(201) (1) 122 (19) (99)

Change in market risk benefits (610) — — — (610)

Market value adjustments — — (11) — (11)

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

403 (32) 584 (15) 940

Provision for income tax expense (benefit) 76 (7) 121 (17) 173

Adjusted earnings (loss)

$ 327 $ (25) $ 463 $ 2 $ 767

Three Months Ended September 30, 2023

Annuities Life Run-off Corporate & Other Total

(In millions)

Net income (loss) available to shareholders $ 1,017 $ (88) $ (573) $ 97 $ 453

Provision for income tax expense (benefit) 75 (20) 182 (128) 109

Income (loss) available to shareholders before provision for income tax

1,092 (108) (391) (31) 562

Net investment gains (losses) (31) (10) (12) — (53)

Net derivative gains (losses), excluding investment hedge adjustments of $25

(334) (5) (514) (12) (865)

Change in market risk benefits 1,064 — — — 1,064

Market value adjustments — — 15 — 15

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

393 (93) 120 (19) 401

Provision for income tax expense (benefit) 74 (20) 25 (4) 75

Adjusted earnings (loss)

$ 319 $ (73) $ 95 $ (15) $ 326

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Annuities Life Run-off Corporate & Other Total

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Net investment gains (losses) (52) (4) (18) (9) (83)

Investment gains (losses) on trading securities

Net derivative gains (losses), excluding investment hedge adjustments of $ 0

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$ 314 $ 9 $ (64) $ (24) $ 235

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Annuities Life Run-off Corporate & Other Total

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Net investment gains (losses) (24) (16) (6) 4 (42)

Investment gains (losses) on trading securities

Net derivative gains (losses), excluding investment hedge adjustments of $ 13

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$ 313 $ (36) $ (341) $ (34) $ (98)

Consolidated Results for the Three Months and Nine Months Ended September 30, 2024 and 2023 — Adjusted Earnings

The components of adjusted earnings were 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:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

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Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

940 401 1,248 965

Provision for income tax expense (benefit) 52 (12)

Adjusted earnings (loss)

$ 767 $ 326 $ 1,015 $ 792

Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023

Three Months Ended March 31, 2025 Compared with the Three Months Ended March 31, 2024

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

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• 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 in our Run-off and Annuities segments and other refinements;

◦ 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;

◦ an increase in income annuity underwriting margins;

partially offset by

◦ higher paid claims, net of reinsurance;

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

• higher net fee income due to:

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

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

◦ 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;

partially offset by

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

Key net unfavorable impacts were:

• lower net investment spread due to:

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

partially offset by

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

◦ 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 other expenses due to:

◦ higher deferred compensation expenses;

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

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

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

• lower other expenses due to:

◦ 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;

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

partially offset by

◦ lower operational expenses.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 18% in the current period compared to 17% in 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.

Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September 30, 2023

Adjusted earnings were $1.0 billion in the current period, an increase of $223 million.

Key net favorable impacts were:

• 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 in our Run-off and Annuities segments and other refinements;

◦ lower paid claims, net of reinsurance;

◦ 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;

◦ lower returns on other limited partnerships;

partially offset by

◦ an increase in liability balances in our Run-off segment resulting from a reinsurance premium rate increase associated with the conclusion of a reinsurance arbitration;

◦ a decrease in income annuity underwriting margins;

• higher net investment spread due to:

◦ 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;

◦ 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 returns on other limited partnerships;

partially offset by

Key net unfavorable impacts were:

• lower net fee income due to:

◦ higher ceded cost of insurance fees related to the conclusion of the aforementioned reinsurance arbitration in our Life and Run-off segments, as well as the aging in-force business in our Run-off segment;

partially offset by

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

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

• higher other expenses due to:

◦ higher variable and deferred compensation expenses;

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

partially offset by

◦ lower operational expenses;

◦ lower transition services agreement expenses.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 18% in the current period compared to 17% in the prior period.

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.

Segments and Corporate & Other Results for the Three Months and Nine Months Ended September 30, 2024 and 2023 — Adjusted Earnings

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

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The changes in our variable annuities separate account balances are presented in Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements.

Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023

Adjusted earnings were $327 million in the current period, an increase of $8 million.

Key net favorable impacts were:

• higher fee income due to:

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

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

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

◦ an increase in income annuity underwriting margins;

partially offset by

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

Key net unfavorable impacts were:

• lower net investment spread due to:

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

partially offset by

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

◦ 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 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;

◦ higher deferred compensation expenses;

partially offset by

◦ lower operational expenses.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), 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 impacts of the dividends received deduction.

Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 Compared with the Three Months Ended March 31, 2024

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

Key net favorable impacts were:

• higher fee income due to:

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

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

• 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;

◦ 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;

partially offset by

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

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

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

Key net unfavorable impacts were:

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

◦ a decrease in income annuity underwriting margins;

◦ 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;

◦ higher variable and deferred compensation expenses;

◦ higher operational expenses;

partially offset by

◦ lower 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;

◦ lower transition services agreement expenses;

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 19% in both the current period and the prior period.

• 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.

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

5 unchanged sentences

Pre-tax adjusted earnings (loss)

(32) (93) (26) (75)

Provision for income tax expense (benefit) 1 (10)

Adjusted earnings (loss)

$ (25) $ (73) $ (19) $ (57)

Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023

Adjusted loss was $25 million in the current period, a lower loss of $48 million.

The key favorable impact was lower costs associated with insurance-related activities due to lower paid claims, net of reinsurance.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 22% 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.

Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September 30, 2023

Adjusted loss was $19 million in the current period, a lower loss of $38 million.

The key favorable impact was lower costs associated with insurance-related activities due to lower paid claims, net of reinsurance.

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, expressed as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 27% in the current period compared to 24% in the prior period.

Three Months Ended March 31, 2025 Compared with the Three Months Ended March 31, 2024

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

Key net favorable impacts were:

• higher net fee income due to:

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

partially offset by

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

• lower other expenses due to:

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

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

partially offset by

◦ 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.

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

5 unchanged sentences

Pre-tax adjusted earnings (loss)

584 120 115 (35)

Provision for income tax expense (benefit) (17) (91)

1 unchanged sentence

$ (64) $ (341)

Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023

Adjusted earnings were $463 million in the current period, an increase of $368 million.

The key net favorable impact was:

• 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;

partially offset by

◦ higher paid claims, net of reinsurance.

Key net unfavorable impacts were:

• lower net investment spread due to:

◦ lower returns on real estate joint ventures;

◦ lower average invested long-term assets;

partially offset by

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

• lower fee income due to a decline in the net cost of insurance fees driven by the aging in-force business.

The provision for income tax, expressed 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 differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September 30, 2023

Adjusted earnings were $92 million in the current period, an increase of $119 million.

Three Months Ended March 31, 2025 Compared with the Three Months Ended March 31, 2024

Adjusted loss was $64 million in the current period, a lower loss of $277 million.

Key net favorable impacts were:

• 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;

• 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;

◦ lower claims, net of reinsurance;

• higher net fee income due to:

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

partially offset by

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

◦ higher paid claims, net of reinsurance;

• higher net investment spread due to:

◦ higher returns on other limited partnerships;

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

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

• lower other expenses due to:

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

partially offset by

◦ higher operational expenses.

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

◦ lower returns on other limited partnerships;

◦ 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, expressed 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.

partially offset by

◦ 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 for Corporate & Other were as follows:

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

6 unchanged sentences

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

(15) (19) (39) (62)

Provision for income tax expense (benefit) (5) 17

1 unchanged sentence

$ (24) $ (34)

Three Months Ended September 30, 2024 Compared with the Three Months Ended September 30, 2023

Adjusted earnings were $2 million in the current period, an increase of $17 million.

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

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), resulted in a lower 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 combined operating segments.

Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 Compared with the Three Months Ended March 31, 2024

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

The provision for income tax, expressed 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.

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.

Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months and Nine Months Ended September 30, 2024 and 2023

The overall impact on income (loss) available to shareholders before provision for income tax from the performance of annuity guaranteed benefits and Shield ® Level Annuity (“Shield” 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:

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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

3 unchanged sentences

Total changes attributable to annuity guaranteed benefits

(610) 1,064 1,186 2,170

Variable annuity hedges (877) 67

1 unchanged sentence

$ (599) $ (310)

Three Months Ended September 30, 2024

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the three months ended September 30, 2024, primarily driven by:

• unfavorable increases in annuity guaranteed benefits liabilities due to decreasing interest rates, partially offset by increasing equity markets and changes made in connection with the AAR;

• favorable changes in variable annuity hedges due to decreasing long-term interest rates and increasing equity markets;

• unfavorable changes in Shield embedded derivatives due to increasing equity markets and decreasing interest rates, partially offset by changes made in connection with the AAR.

Three Months Ended September 30, 2023

Annuity guaranteed benefits and Shield annuity liabilities performance was favorable for the three months ended September 30, 2023, primarily driven by:

• favorable decreases in annuity guaranteed benefits liabilities due to increasing interest rates, partially offset by decreasing equity markets and changes made in connection with the AAR;

• unfavorable changes in variable annuity hedges due to increasing long-term interest rates and decreasing equity markets;

• favorable changes in Shield embedded derivatives due to decreasing equity markets and increasing interest rates.

Nine Months Ended September 30, 2024

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the nine months ended September 30, 2024, primarily driven by:

• favorable decreases in annuity guaranteed benefits liabilities due to increasing equity markets and interest rates, as well as changes made in connection with the AAR;

• favorable changes in variable annuity hedges due to increasing equity markets;

• unfavorable changes in Shield embedded derivatives due to increasing equity markets, partially offset by changes made in connection with the AAR.

Nine Months Ended September 30, 2023

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the nine months ended September 30, 2023, primarily driven by:

• favorable decreases in annuity guaranteed benefits liabilities due to increasing interest rates and equity markets, partially offset by changes made in connection with the AAR;

• unfavorable changes in variable annuity hedges due to increasing long-term interest rates;

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;

• 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;

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

13 unchanged sentences

insurance company, we are affected by the monetary policy of the Federal Reserve in the U.S.

In 2024, the Federal Reserve decreased the target range for the federal funds rate three times — from between 5.25% and 5.50% to between 4.25% and 4.50%.

The Federal Reserve may increase or decrease the federal funds rate in the future, which may have an impact on the pricing levels of risk-bearing investments and may adversely impact the level of product sales.

1 unchanged sentence

See “— Industry Trends and Uncertainties — Financial and Economic Environment.”

On September 18, 2024, the Federal Reserve decreased the target range for the federal funds rate from between 5.25% and 5.50% to between 4.75% and 5.00%.

On November 7, 2024, the Federal Reserve further decreased the target range for the federal funds rate from between 4.75% and 5.00% to between 4.50% and 4.75%.

In 2023, the Federal Reserve increased the target range four times — from between 4.25% and 4.50% to between 5.25% and 5.50%.

Target range increases have contributed to the net unrealized loss position in our investment portfolio.

As a result of increases in interest rates, the unrealized losses on our fixed maturity securities exceeded the unrealized gains as of September 30, 2024.

Interest rate increases have contributed to the net unrealized loss position in our investment portfolio.

As a result of increases in interest rates, the unrealized losses on our fixed maturity securities exceeded the unrealized gains as of March 31, 2025.

See “Risk Factors — Risks Related to Our Investment Portfolio — Our investment portfolio is subject to significant financial risks both in the U.S.

4 unchanged sentences

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,” and “Risk Factors — Risks Related to Our Investment Portfolio — Ongoing military actions, the continued threat of terrorism, climate change as well as other catastrophic events may adversely affect the value of our investment portfolio and the level of claim losses we incur” included in our 2024 Annual Report.

There has been an increased market focus on commercial real estate, including office properties, as a result of companies shifting to hybrid work arrangements and the resulting impact on the demand for office space.

There has been a continued market focus on commercial real estate, including office properties, as a result of hybrid work arrangements and the resulting impact on the demand for office space.

We have direct commercial real estate exposure through mortgage loans and certain structured securities, which include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Yield % Amount Yield % Amount Yield % Amount Yield % Amount

Yield % Amount Yield % Amount

(Dollars in millions)

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(In millions)

1 unchanged sentence

Investment hedge adjustments

Investment gains (losses) on trading securities

Adjusted net investment income — in the above yield table $ 1,291 $ 1,267

See “— Results of Operations — Consolidated Results for the Three Months and Nine Months Ended September 30, 2024 and 2023” for an analysis of the period-over-period changes in net investment income.

See “— Results of Operations — Consolidated Results for the Three Months Ended March 31, 2025 and 2024” for an analysis of the period-over-period changes in net investment income.

Fixed Maturity Securities Available-For-Sale

Fixed maturity securities held by type (public or private) were as follows at:

September 30, 2024 December 31, 2023

Fair Value % of

Total Estimated

Fair Value % of

March 31, 2025 December 31, 2024

Estimated Fair Value % of

Total Estimated Fair Value % of

(Dollars in millions)

8 unchanged sentences

The following table presents total fixed maturity securities by NRSRO rating and the applicable NAIC designation from the NAIC published comparison of NRSRO ratings to NAIC designations, except for certain Structured Securities, which are presented using the NAIC methodologies, as well as the percentage, based on estimated fair value that each NAIC designation is comprised of at:

September 30, 2024 December 31, 2023

Designation NRSRO Rating Amortized

Cost Allowance for Credit Losses Unrealized

Gain (Loss) Estimated Fair Value % of

Total Amortized

Cost Allowance for Credit Losses Unrealized

Gain (Loss) Estimated Fair Value % of

March 31, 2025 December 31, 2024

NAIC Designation

NRSRO Rating Amortized Cost Allowance for Credit Losses Unrealized Gain (Loss) Estimated Fair Value % of Total Amortized Cost Allowance for Credit Losses Unrealized Gain (Loss) Estimated Fair Value % of Total

(Dollars in millions)

12 unchanged sentences

Fixed Maturity Securities — by Sector & Credit Quality Rating

NAIC Designation 1 2 3 4 5 6 Total

NAIC Designation 1 2 3 4 5 6 Total Estimated Fair Value

NRSRO Rating Aaa/Aa/A Baa Ba B Caa and

1 unchanged sentence

(In millions)

September 30, 2024

March 31, 2025

corporate $ 17,741 $ 18,153 $ 1,325 $ 248 $ 53 $ 23 $ 37,543

Foreign corporate 5,164 6,022 333 68 42 — 11,629

government and agency 7,456 113 — — — — 7,569

RMBS 7,570 8 9 — 1 — 7,588

government and agency 6,719 112 — — — — 6,831

CMBS 6,052 338 18 5 4 — 6,417

6 unchanged sentences

Foreign corporate 5,327 6,026 391 41 45 — 11,830

government and agency 8,306 113 — — — — 8,419

RMBS 7,254 15 16 — 1 1 7,287

government and agency 6,636 111 — — — — 6,747

CMBS 5,985 344 17 6 4 — 6,356

5 unchanged sentences

We maintain a diversified portfolio of corporate fixed maturity securities across industries and issuers.

Our portfolio does not have any exposure to any single issuer in excess of 1% of total investments and the top ten holdings in aggregate comprise 2% and 1% of total investments at September 30, 2024 and December 31, 2023, respectively.

Our portfolio does not have any exposure to any single issuer in excess of 1% of total investments and the top ten holdings in aggregate comprise 1% total investments at both March 31, 2025 and December 31, 2024.

and foreign corporate fixed maturity securities holdings by industry were as follows at:

September 30, 2024 December 31, 2023

Fair Value % of

Total Estimated

Fair Value % of

March 31, 2025 December 31, 2024

(Dollars in millions)

6 unchanged sentences

Structured Securities

We held $20.7 billion and $20.2 billion of Structured Securities, at estimated fair value, at September 30, 2024 and December 31, 2023, respectively, as presented in the RMBS, CMBS and ABS sections below.

We held $20.1 billion and $20.0 billion of Structured Securities, at estimated fair value, at March 31, 2025 and December 31, 2024, respectively, as presented in the RMBS, CMBS and ABS sections below.

Our RMBS holdings are diversified by security type, risk profile and ratings profile, which were as follows at:

September 30, 2024 December 31, 2023

Fair Value % of

Total Net Unrealized Gains (Losses) Estimated

Fair Value % of

March 31, 2025 December 31, 2024

Estimated Fair Value % of

Total Net Unrealized Gains (Losses) Estimated Fair Value % of

Total Net Unrealized Gains (Losses)

1 unchanged sentence

Security type:

Pass-through securities $ 3,973 50.0 % $ (380) $ 3,922 52.8 % $ (491)

Collateralized mortgage obligations $ 4,080 53.8 % $ (232) $ 3,906 53.6 % $ (304)

Pass-through securities 3,508 46.2 (453) 3,381 46.4 (525)

Total RMBS $ 7,588 100.0 % $ (685) $ 7,287 100.0 % $ (829)

6 unchanged sentences

Ratings profile:

Rated Aaa (1)

$ 1,022 13.5 % $ 892 12.2 %

Designated NAIC 1 $ 7,570 99.8 % $ 7,254 99.5 %

_______________

(1) During the year ended December 31, 2023, Fitch Ratings downgraded the U.S.

credit rating from Aaa to Aa1, which resulted in a decrease in Aaa assets in our RMBS holdings.

Historically, our exposure to sub-prime RMBS holdings has been managed by focusing primarily on senior tranche securities, stress-testing the portfolio with severe loss assumptions and closely monitoring the performance of the portfolio.

2 unchanged sentences

Our CMBS holdings are diversified by vintage year, which were as follows at:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

13 unchanged sentences

2024 336 338 282 282

2025 103 103 — —

Total $ 6,766 $ 6,417 $ 6,776 $ 6,356

The estimated fair value of CMBS rated Aaa using rating agency ratings was $4.4 billion, or 68.5% of total CMBS, and designated NAIC 1 was $6.1 billion, or 93.9% of total CMBS, at September 30, 2024.

The estimated fair value of CMBS rated Aaa using rating agency ratings was $4.4 billion, or 68.8% of total CMBS, and designated NAIC 1 was $6.1 billion, or 94.3% of total CMBS, at March 31, 2025.

The estimated fair value of CMBS rated Aaa using rating agency ratings was $4.3 billion, or 67.7% of total CMBS, and designated NAIC 1 was $6.0 billion, or 94.2% of total CMBS, at December 31, 2024.

1 unchanged sentence

Our ABS holdings by collateral type and ratings profile were as follows at:

September 30, 2024 December 31, 2023

Fair Value % of

Total Net Unrealized

Gains (Losses) Estimated

Fair Value % of

Total Net Unrealized

Gains (Losses)

March 31, 2025 December 31, 2024

Estimated Fair Value % of

Total Net Unrealized Gains (Losses) Estimated Fair Value % of

Total Net Unrealized Gains (Losses)

(Dollars in millions)

25 unchanged sentences

Information regarding mortgage loans by portfolio segment is summarized as follows at:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Amortized Cost % of

Total Allowance for Credit Losses % of Amortized Cost Amortized Cost % of

Total Allowance for Credit Losses % of Amortized Cost

Allowance for Credit Losses % of Amortized Cost Amortized Cost % of

Allowance for Credit Losses % of Amortized Cost

(Dollars in millions)

1 unchanged sentence

Agricultural 4,543 19.5 22 0.5%.

4,591 19.6 30 0.7 %

Residential 5,583 24.0 41 0.7 % 5,543 23.6 42 0.8 %

2 unchanged sentences

The percentage of our commercial and agricultural mortgage loan portfolios collateralized by properties located in the U.S.

were 98% at both September 30, 2024 and December 31, 2023.

was 98% at both March 31, 2025 and December 31, 2024.

The remainder was collateralized by properties located outside of the U.S.

At September 30, 2024, the carrying value as a percentage of total commercial and agricultural mortgage loans for the top three states in the U.S.

was 17% for California, 11% for Texas and 8% for Florida.

At March 31, 2025, the carrying value as a percentage of total commercial and agricultural mortgage loans for the top three states in the U.S.

was 17% for California, 11% for Texas and 8% for New York.

Additionally, we manage risk when originating commercial and agricultural mortgage loans by generally lending up to 75% of the estimated fair value of the underlying real estate collateral.

1 unchanged sentence

All residential mortgage loans were collateralized by properties located in the U.S.

at both September 30, 2024 and December 31, 2023.

At September 30, 2024, the carrying value as a percentage of total residential mortgage loans for the top three states in the U.S.

at both March 31, 2025 and December 31, 2024.

At March 31, 2025, the carrying value as a percentage of total residential mortgage loans for the top three states in the U.S.

was 38% for California, 10% for Florida and 6% for New York.

2 unchanged sentences

The diversification across geographic regions and property types of commercial mortgage loans was as follows at:

September 30, 2024 December 31, 2023

Total Amount % of

March 31, 2025 December 31, 2024

Amount % of Total

(Dollars in millions)

5 unchanged sentences

Mountain 1,077 8.2 1,114 8.4

728 5.5 735 5.6

East North Central

832 6.3 834 6.2

International 405 3.1 409 3.1

West North Central

608 4.6 726 5.4

International 395 3.0 391 2.9

East South Central

363 2.8 363 2.7

West North Central

356 2.7 358 2.7

Multi-region and Other

30 unchanged sentences

Generally, the lower the debt-service coverage ratio, the higher the risk of experiencing a credit loss.

For our commercial mortgage loans, our average loan-to-value ratio was 68% and 65% at September 30, 2024 and December 31, 2023, respectively, and our average debt-service coverage ratio was 2.3x at both September 30, 2024 and December 31, 2023.

For our commercial mortgage loans, our average loan-to-value ratio was 68% and 69% at March 31, 2025 and December 31, 2024, respectively, and our average debt-service coverage ratio was 2.3x at both March 31, 2025 and December 31, 2024.

The debt-service coverage ratio, as well as the values utilized in calculating the ratio, is updated annually on a rolling basis, with a portion of the portfolio updated each quarter.

In addition, the loan-to-value ratio is routinely updated for all but the lowest risk loans as part of our ongoing review of our commercial mortgage loan portfolio.

For our agricultural mortgage loans, our average loan-to-value ratio was 48% and 47% at September 30, 2024 and December 31, 2023, respectively.

For our agricultural mortgage loans, our average loan-to-value ratio was 47% and 48% at March 31, 2025 and December 31, 2024, respectively.

The values utilized in calculating the agricultural mortgage loan loan-to-value ratio are developed in connection with the ongoing review of the agricultural loan portfolio and are routinely updated.

Mortgage Loan Allowance for Credit Losses .

See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for information about how the allowance for credit losses is established and monitored, as well as activity in and balances of the allowance for credit losses for the nine months ended September 30, 2024 and 2023.

Limited Partnerships and Limited Liability Companies

The carrying values of our limited partnerships and limited liability companies (“LLC”) were as follows at:

September 30, 2024 December 31, 2023

The carrying values of our limited partnerships and LLCs were as follows at:

March 31, 2025 December 31, 2024

(In millions)

3 unchanged sentences

__________________

(1) The estimated fair value of real estate limited partnerships and LLCs was $888 million and $927 million at September 30, 2024 and December 31, 2023, respectively.

(1) The estimated fair value of real estate limited partnerships and LLCs was $828 million and $836 million at March 31, 2025 and December 31, 2024, respectively.

Cash distributions on these investments are generated from investment gains, operating income from the underlying investments of the funds and liquidation of the underlying investments of the funds.

2 unchanged sentences

The carrying value of our other invested assets by type was as follows at:

September 30, 2024 December 31, 2023

Total Carrying

March 31, 2025 December 31, 2024

Carrying Value

Carrying Value % of Total

(Dollars in millions)

14 unchanged sentences

See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for:

• information about the gross notional amount, estimated fair value, and primary underlying risk exposure of our derivatives by type of hedge designation, excluding embedded derivatives held at September 30, 2024 and December 31, 2023;

• the effects of derivatives in cash flow, fair value, or non-qualifying hedge relationships on the statements of operations for the nine months ended September 30, 2024 and 2023.

See “Business — Segments and Corporate & Other — Annuities,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies” included in our 2023 Annual Report for more information about our use of derivatives by major hedging programs.

• the effects of derivatives in cash flow, fair value, or non-qualifying hedge relationships on the statements of operations for the three months ended March 31, 2025 and 2024.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies” included in our 2024 Annual Report for more information about our hedging strategies.

In addition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Annual Actuarial Review” and “Risk Factors — Risks Related to Our Investment Portfolio — Our investment portfolio is subject to significant financial risks both in the U.S.

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The use of different inputs or methodologies could have a material effect on the estimated fair value of Level 3 derivatives and could materially affect net income.

Derivatives categorized as Level 3 at September 30, 2024 include:

Derivatives categorized as Level 3 at March 31, 2025 include:

credit default swaps priced using unobservable credit spreads, or that are priced through independent broker quotations;

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The gross notional amount and estimated fair value of credit default swaps were as follows at:

September 30, 2024 December 31, 2023

Gross Notional

Amount Estimated

Fair Value Gross Notional

Amount Estimated

March 31, 2025 December 31, 2024

Gross Notional Amount

Estimated Fair Value

Gross Notional Amount

Estimated Fair Value

(In millions)

Written $ 780 $ 16 $ 780 $ 19

Total $ 1,095 $ 20 $ 1,405 $ 27

The maximum amount at risk related to our written credit default swaps is equal to the corresponding gross notional amount.

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Our variable annuity account value and NAR by type of GMxB were as follows at:

September 30, 2024

March 31, 2025

December 31, 2024

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Additionally, the index protection and accumulation features of Shield Annuities are accounted for as embedded derivatives, measured at estimated fair value, and are reported in policyholder account balances on the consolidated balance sheets, with changes reported in net derivative gains (losses) on the consolidated statements of operations.

These liabilities were valued at $10.8 billion at September 30, 2024.

The Shield embedded derivative liabilities were valued at $9.4 billion at March 31, 2025.

Our variable annuity MRBs by type of GMxB were as follows at:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In millions)

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The estimated fair value of these guarantees can change significantly due to changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital markets inputs, as well as changes in nonperformance risk.

See “Risk Factors — Risks Related to Our Business — Guarantees within certain of our annuity products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased market risk” included in our 2023 Annual Report.

Derivatives Hedging Variable Annuity Guarantees

The gross notional amount and estimated fair value of the derivatives hedging our in-force variable annuity guarantees and ULSG business viewed in aggregate in our interest rate hedging program were as follows at:

September 30, 2024 December 31, 2023

Instrument Type Gross Notional Amount (1) Estimated Fair Value Gross Notional Amount (1) Estimated Fair Value

Assets Liabilities Assets Liabilities

(In millions)

Interest rate swaps $ 58,241 $ 113 $ 193 $ 23,037 $ 71 $ 50

Interest rate options 21,400 38 208 33,680 47 167

Interest rate forwards 16,692 69 1,162 16,155 32 1,877

Hybrid options (2) — — — 270 — —

Total $ 96,333 $ 220 $ 1,563 $ 73,142 $ 150 $ 2,094

__________________

(1) The gross notional amounts presented do not necessarily represent the relative economic coverage provided by derivative instruments because certain positions were closed out by entering into offsetting positions that are not netted in the above table.

(2) Hybrid options have equity exposure in addition to interest rate exposure.

The gross notional amount and estimated fair value of the derivatives held in our variable annuity hedging program were as follows at:

September 30, 2024 December 31, 2023

Instrument Type Gross Notional Amount (1) Estimated Fair Value Gross Notional Amount (1) Estimated Fair Value

Assets Liabilities Assets Liabilities

(In millions)

Equity index options $ 10,620 $ 360 $ 404 $ 16,183 $ 472 $ 680

Equity total return swaps 108,562 1,891 1,923 53,742 2,236 2,137

Interest rate swaps 58,241 113 193 30,864 92 103

Interest rate options 14,900 38 113 27,580 39 123

Interest rate forwards 7,657 17 276 8,519 — 619

Hybrid options — — — 270 — —

Total $ 199,980 $ 2,419 $ 2,909 $ 137,158 $ 2,839 $ 3,662

__________________

(1) The gross notional amounts presented do not necessarily represent the relative economic coverage provided by option instruments because certain positions were closed out by entering into offsetting positions that are not netted in the above table.

Period-to-period changes in the estimated fair value of these hedges affect our net income, as well as stockholders’ equity and these effects can be material in any given period.

See “Risk Factors — Risks Related to Our Business — Our variable annuity exposure risk management strategy may not be effective, may result in significant volatility in our profitability measures or may negatively affect our statutory capital,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies” included in our 2023 Annual Report.

See “Risk Factors — Risks Related to Our Business — Differences between actual experience and actuarial assumptions may adversely affect our financial results, capitalization and financial condition” and “Risk Factors — Risks Related to Our Business — Guarantees within certain of our annuity products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased market risk” included in our 2024 Annual Report.

Liquidity and Capital Resources

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We continuously monitor and adjust our liquidity and capital plans in light of market conditions, as well as changing needs and opportunities.

We maintain a substantial short-term liquidity position, which was $5.7 billion and $3.8 billion at September 30, 2024 and December 31, 2023, respectively.

We maintain a substantial short-term liquidity position, which was $4.7 billion and $5.2 billion at March 31, 2025 and December 31, 2024, respectively.

Short-term liquidity is comprised of cash and cash equivalents and short-term investments, excluding assets that are pledged or otherwise committed.

Assets pledged or otherwise committed include amounts received in connection with securities lending, derivatives and assets held on deposit or in trust.

An integral part of our liquidity management includes managing our level of liquid assets, which was $51.5 billion and $45.2 billion at September 30, 2024 and December 31, 2023, respectively.

An integral part of our liquidity management includes managing our level of liquid assets, which was $48.0 billion and $48.1 billion at March 31, 2025 and December 31, 2024, respectively.

Liquid assets are comprised of cash and cash equivalents, short-term investments and publicly-traded securities, excluding assets that are pledged or otherwise committed.

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There can be no assurance that we will be able to complete any such financing transactions on terms and conditions favorable to us or at all.

In support of our target combined risk-based capital (“RBC”) ratio of 400% to 450% in normal market conditions, we expect to continue to maintain a capital and exposure risk management program that targets total assets supporting our variable annuity contracts at or above the average of the worst two percent of a set of capital markets scenarios over the life of the contracts level in normal market conditions.

In support of our target combined risk-based capital (“RBC”) ratio of 400% to 450% in normal market conditions, we expect to continue to maintain a capital and risk management strategy that targets total assets supporting our variable annuity and Shield Annuity contracts at or above the average of the worst two percent of a set of capital markets scenarios over the life of the contracts level in normal market conditions.

With our risk management focus on the core drivers of our combined RBC ratio, we believe we can better manage our RBC in stressed market scenarios.

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Our primary sources and uses of liquidity and capital were as follows at:

Nine Months Ended

September 30,

Three Months Ended

(In millions)

Operating activities, net $ 146 $ —

Investing activities, net 563 —

Changes in policyholder account balances, net

Changes in payables for collateral under securities loaned and other transactions, net

Financing element on certain derivative instruments and other derivative related transactions, net 305 43

Total sources 722 1,367

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Investing activities, net — 625

Changes in policyholder account balances, net

Changes in payables for collateral under securities loaned and other transactions, net

Long-term debt repaid 1 1

Dividends on preferred stock

Treasury stock acquired in connection with share repurchases 59 62

Financing element on certain derivative instruments and other derivative related transactions, net

Other, net 15 13

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The institutional spread margin business is comprised of funding agreements issued in connection with the programs described in more detail below.

Activity related to these programs are reported in Corporate & Other.

Activity related to these programs is reported in Corporate & Other.

See Note 3 of the Notes to the Consolidated Financial Statements included in our 2024 Annual Report for additional information on funding agreements.

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Outstanding Issuances Repayments

Nine Months Ended September 30,

September 30, 2024 December 31, 2023 2024 2023 2024 2023

Three Months Ended March 31,

March 31, 2025 December 31, 2024 2025 2024 2025 2024

(In millions)

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Our Revolving Credit Facility contains financial covenants, including requirements to maintain a specified minimum adjusted consolidated net worth, to maintain a ratio of total indebtedness to total capitalization not in excess of a specified percentage and that place limitations on the dollar amount of indebtedness that may be incurred by our subsidiaries, which could restrict our operations and use of funds.

At September 30, 2024, we were in compliance with these financial covenants.

At March 31, 2025, we were in compliance with these financial covenants.

Primary Uses of Liquidity and Capital

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Common Stock Repurchases

See Note 10 of the Notes to the Interim Condensed Consolidated Financial Statements for information relating to authorizations to repurchase BHF common stock, amounts of common stock repurchased pursuant to such authorizations and the amount remaining under such authorizations at September 30, 2024.

Subsequent to September 30, 2024 and through November 1, 2024, BHF repurchased an additional 506,800 shares of its common stock through open market purchases pursuant to a Rule 10b5-1 plan for $24 million.

Subsequent to March 31, 2025 and through May 6, 2025, BHF repurchased an additional 479,500 shares of its common stock through open market purchases, pursuant to a Rule 10b5-1 plan, for $25 million.

Preferred Stock Dividends

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We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives.

At September 30, 2024, we did not pledge any cash collateral to counterparties.

At December 31, 2023, we pledged $16 million of cash collateral to counterparties.

At September 30, 2024 and December 31, 2023, we were obligated to return cash collateral pledged to us by counterparties of $659 million and $393 million, respectively.

At March 31, 2025, we pledged $16 million of cash collateral to counterparties.

At December 31, 2024, we did not pledge any cash collateral to counterparties.

At March 31, 2025 and December 31, 2024, we were obligated to return cash collateral pledged to us by counterparties of $858 million and $812 million, respectively.

The timing of the return of the derivatives collateral is uncertain.

See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for additional information about pledged collateral.

We also pledge collateral from time to time in connection with our funding agreements.

We also pledge collateral from time to time in connection with certain funding agreements.

We receive non-cash collateral from counterparties for derivatives, which can be sold or re-pledged subject to certain constraints, and which is not recorded on our consolidated balance sheets.

The amount of this non-cash collateral at estimated fair value was $2.4 billion at both September 30, 2024 and December 31, 2023.

The amount of this non-cash collateral at estimated fair value was $1.9 billion and $2.3 billion at March 31, 2025 and December 31, 2024, respectively.

See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for additional information regarding pledged collateral.

Securities Lending

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Generally, our securities lending contracts expire within twelve months of issuance.

We were liable for cash collateral under our control of $3.3 billion at both September 30, 2024 and December 31, 2023.

We were liable for cash collateral under our control of $3.3 billion and $3.2 billion at March 31, 2025 and December 31, 2024, respectively.

We receive non-cash collateral for securities lending from counterparties, which cannot be sold or re-pledged, and which is not recorded on our consolidated balance sheets.

There was no non-cash collateral at both September 30, 2024 and December 31, 2023.

There was no non-cash collateral at both March 31, 2025 and December 31, 2024.

See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for further discussion of our securities lending program.

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Short-term Liquidity and Liquid Assets

At September 30, 2024 and December 31, 2023, BHF and certain of its non-insurance subsidiaries had short-term liquidity of $1.1 billion and $1.2 billion, respectively.

At March 31, 2025 and December 31, 2024, BHF and certain of its non-insurance subsidiaries had short-term liquidity of $872 million and $912 million, respectively.

Short-term liquidity is comprised of cash and cash equivalents and short-term investments, excluding assets that are pledged or otherwise committed.

Assets pledged or otherwise committed include assets held in trust.

At both September 30, 2024 and December 31, 2023, BHF and certain of its non-insurance subsidiaries had liquid assets of $1.3 billion, of which $1.2 billion was held by BHF.

At March 31, 2025 and December 31, 2024, BHF and certain of its non-insurance subsidiaries had liquid assets of $987 million and $1.1 billion, respectively, of which $936 million and $1.1 billion, respectively, was held by BHF.

Liquid assets are comprised of cash and cash equivalents, short-term investments and publicly-traded securities, excluding assets that are pledged or otherwise committed.

Assets pledged or otherwise committed include assets held in trust.

On February 11, 2025, Brighthouse Life Insurance Company received a $100 million capital contribution from Brighthouse Holdings, LLC (“BH Holdings”).

Statutory Capital and Dividends

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Primary Sources and Uses of Liquidity and Capital

The principal sources of funds available to BHF include distributions from Brighthouse Holdings, LLC (“BH Holdings”), dividends and returns of capital from its insurance subsidiaries and BRCD, capital markets issuances, as well as its own cash and cash equivalents and short-term investments.

The principal sources of funds available to BHF include distributions from BH Holdings, dividends and returns of capital from its insurance subsidiaries and BRCD, capital markets issuances, as well as its own cash and cash equivalents and short-term investments.

These sources of funds may also be supplemented by alternate sources of liquidity either directly or indirectly through our insurance subsidiaries.

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Distributions from and Capital Contributions to BH Holdings

During both the nine months ended September 30, 2024 and 2023, BHF did not receive any cash distributions from BH Holdings and did not make any cash capital contributions to BH Holdings.

During both the three months ended March 31, 2025 and 2024, BHF did not receive any cash distributions from BH Holdings and did not make any cash capital contributions to BH Holdings.

Short-term Intercompany Loans

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Each loan entered into under this intercompany loan agreement has a term not more than 364 days and bears interest on the unpaid principal amount at a variable rate, payable monthly.

During the nine months ended September 30, 2024 and 2023, BHF borrowed $420 million and $569 million, respectively, from certain of its non-insurance subsidiaries and repaid $180 million and $369 million of such borrowings during the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024 and December 31, 2023, BHF had total obligations outstanding of $967 million and $727 million, respectively, under such agreements.

During the three months ended March 31, 2025 and 2024, BHF borrowed $185 million and $110 million, respectively, from certain of its non-insurance subsidiaries and repaid $227 million and $50 million of such borrowings during the three months ended March 31, 2025 and 2024, respectively.

At March 31, 2025 and December 31, 2024, BHF had total obligations outstanding of $540 million and $582 million, respectively, under such agreements.

Intercompany Liquidity Facilities

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Under these facilities, which are comprised of a series of revolving loan agreements among BHF and its participating subsidiaries, each company may lend to or borrow from each other, subject to certain maximum limits for a term of up to 364 days, depending on the agreement.

During both the nine months ended September 30, 2024 and 2023, there were no borrowings or repayments by BHF under these facilities and, at both September 30, 2024 and December 31, 2023, BHF had no obligations outstanding under such facilities.

During both the three months ended March 31, 2025 and 2024, there were no borrowings or repayments by BHF under these facilities and, at both March 31, 2025 and December 31, 2024, BHF had no obligations outstanding under such facilities.

Note Regarding Forward-Looking Statements

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• higher risk management costs and exposure to increased market risk due to guarantees within certain of our products;

• the effectiveness of our variable annuity exposure risk management strategy and the impacts of such strategy on volatility in our profitability measures and the negative effects on our statutory capital;

• material differences between actual outcomes and the sensitivities calculated under certain scenarios that we may utilize in connection with our variable annuity risk management strategies;

• the effectiveness of our risk management strategy and the impacts of such strategy on volatility in our profitability measures and the negative effects on our statutory capital;

• material differences between actual outcomes and the sensitivities calculated under certain scenarios that we may utilize in connection with our risk management strategies;

• the impact of interest rates on our future ULSG policyholder obligations and net income volatility;

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• the availability of reinsurance and the ability of the counterparties to our reinsurance or indemnification arrangements to perform their obligations thereunder;

• heightened competition, including with respect to service, product features, scale, price, actual or perceived financial strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition;

• our ability to market and distribute our products through distribution channels;

• heightened competition, including with respect to service, product features, product mix, scale, price, actual or perceived financial strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition;

• our ability to market and distribute our products through distribution channels and maintain relationships with key distribution partners;

• any failure of third parties to provide services we need, any failure of the practices and procedures of such third parties and any inability to obtain information or assistance we need from third parties;

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• the impact of economic conditions in the capital markets and the U.S.

and global economy, as well as geopolitical events, military actions or catastrophic events, on our profitability measures as well as our investment portfolio, including on realized and unrealized losses and impairments, net investment spread and net investment income;

and global economy, as well as geopolitical events, tariffs imposed or threatened by the U.S.

or foreign governments, military actions or catastrophic events, on our profitability measures as well as our investment portfolio, including on realized and unrealized losses and impairments, net investment spread and net investment income;

• the financial risks that our investment portfolio is subject to, including credit risk, interest rate risk, inflation risk, market valuation risk, liquidity risk, real estate risk, derivatives risk, and other factors outside our control;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis