Brighthouse Financial (BHF)

Insurance and annuity provider Brighthouse Financial (NASDAQ:BHF) missed Wall Street’s revenue expectations in Q2 CY2025, with sales falling 2.9% year on year to $2.15 billion. Its non-GAAP profit of $3.43 per share was 21.8% below analysts’ consensus estimates.

Company Overview

Spun off from MetLife in 2017 to focus specifically on retail financial products, Brighthouse Financial (NASDAQ:BHF) provides annuity contracts and life insurance products designed to help individuals protect wealth, generate income, and transfer assets.

Life insurance companies collect premiums from policyholders in exchange for providing a future death benefit or retirement income stream. Interest rates matter for the sector (and make it cyclical), with higher rates allowing insurers to reinvest their fixed-income portfolios at more attractive yields and vice versa. Additionally, favorable demographic shifts, such as an aging population, are driving strong demand for retirement products while AI and data analytics offer significant opportunities to improve underwriting accuracy and operational efficiency. Conversely, the industry faces headwinds from persistent competition from agile insurtechs that threaten traditional distribution models.

Brighthouse Financial competes with major life insurance and annuity providers including Prudential Financial (NYSE:PRU), Lincoln National (NYSE:LNC), Equitable Holdings (NYSE:EQH), and American Equity Investment Life (NYSE:AEL). The company also faces competition from diversified financial services firms like Principal Financial Group (NASDAQ:PFG) and Ameriprise Financial (NYSE:AMP).

Insurance companies earn revenue from three primary sources:

• The core insurance business itself, often called underwriting and represented in the income statement as premiums
• Income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities
• Fees from various sources such as policy administration, annuities, or other value-added services

Regrettably, Brighthouse Financial’s revenue grew at a sluggish 2.2% compounded annual growth rate over the last five years. This fell short of our benchmarks and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Brighthouse Financial’s annualized revenue growth of 5.8% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Brighthouse Financial missed Wall Street’s estimates and reported a rather uninspiring 2.9% year-on-year revenue decline, generating $2.15 billion of revenue.

Net premiums earned made up 8.6% of the company’s total revenue during the last five years, meaning Brighthouse Financial is well diversified and has a variety of income streams driving its overall growth. Nevertheless, net premiums earned is critical to analyze for insurers because they’re considered a higher-quality, more recurring revenue source by investors.

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

Brighthouse Financial’s net premiums earned has declined by 1.9% annually over the last five years, much worse than the broader insurance industry. This shows that policy underwriting underperformed its other business lines.

When analyzing Brighthouse Financial’s net premiums earned over the last two years, we can see a sliver of stabilization as income was flat. Since two-year net premiums earned underperformed total revenue over this period, it’s implied that insurance policies were a detractor of consolidated growth.

In Q2, Brighthouse Financial produced $166 million of net premiums earned, down 8.3% year on year and short of Wall Street Consensus estimates.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

The economics of insurers are driven by their balance sheets, where assets (investing the float + premiums receivable) and liabilities (claims to pay) define the fundamentals. Interest income and expense should therefore be factored into the definition of profit but taxes - which are largely out of a company’s control - should not.

Over the last four years, Brighthouse Financial’s pre-tax profit margin has risen by 74.5 percentage points, clocking in at 8.7% for the past 12 months. It has also expanded by 13 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue - a good sign.

In Q2, Brighthouse Financial’s pre-tax profit margin was 4.3%. This result was 3.7 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Brighthouse Financial’s EPS grew at an astounding 39% compounded annual growth rate over the last five years, higher than its 2.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Brighthouse Financial, its two-year annual EPS growth of 18.8% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, Brighthouse Financial reported adjusted EPS at $3.43, down from $5.57 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Brighthouse Financial’s full-year EPS of $16.66 to grow 26.8%.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float – premiums collected but not yet paid out – are invested, creating an asset base supported by a liability structure. Book value captures this dynamic by measuring:

• Assets (investment portfolio, cash, reinsurance recoverables) - liabilities (claim reserves, debt, future policy benefits)

BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality because it reflects long-term capital growth and is harder to manipulate than more commonly-used metrics like EPS.

Brighthouse Financial’s BVPS declined at a 20.9% annual clip over the last five years. On a two-year basis, BVPS fell at a slower pace, dropping by 3.3% annually from $74.40 to $69.57 per share.

Over the next 12 months, Consensus estimates call for Brighthouse Financial’s BVPS to grow by 159% to $146.30, elite growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Brighthouse Financial currently has $3.16 billion of debt and $5.67 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 1.1×. We think this is dangerous - for an insurance business, anything above 1.0× raises red flags.

Return on equity (ROE) serves as a comprehensive measure of an insurer's performance, showing how efficiently it converts shareholder capital into profits. Strong ROE performance typically translates to better returns for investors through a combination of earnings retention, share repurchases, and dividend distributions.

Over the last five years, Brighthouse Financial has averaged an ROE of negative 1.7%, a bad result not only in absolute terms but also relative to the majority of insurers putting up 20%+. It also shows that Brighthouse Financial has little to no competitive moat.

We struggled to find many positives in these results. Its net premiums earned missed and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock remained flat at $45.75 immediately following the results.

Updated: October 23, 2025 at 12:11 AM EDT

Before deciding whether to buy Brighthouse Financial or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Brighthouse Financial isn’t a terrible business, but it doesn’t pass our bar. For starters, its revenue growth was weak over the last five years. And while its expanding pre-tax profit margin shows the business has become more efficient, the downside is its relatively low ROE suggests management has struggled to find compelling investment opportunities. On top of that, its BVPS has declined over the last five years.

Brighthouse Financial’s P/B ratio based on the next 12 months is 0.6x. While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $56.33 on the company (compared to the current share price of $46.82).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.