AM Best revised the outlooks to negative from stable for the Long-Term Issuer Credit Ratings (Long-Term ICR) of Brighthouse Financial, Inc. and its subsidiaries on January 10, 2025. The Financial Strength Rating (FSR) of A (Excellent) was affirmed, with a stable outlook.
The negative outlook is primarily driven by a decline in Brighthouse's operating performance, specifically citing the variable annuity (VA) and registered index linked annuity (RILA) lines of business and their associated hedging programs. The company reported a statutory net loss of $2.6 billion at year-end 2023 and $1.3 billion through the third quarter of 2024.
Brighthouse's risk-adjusted capitalization declined from the prior year's level at year-end 2023, and statutory combined total adjusted capital decreased by 9.5% to $5.7 billion at Q3 2024 from $6.3 billion at year-end 2023. Despite these challenges, the company maintained an estimated combined RBC ratio of 400% to 420% at Q3 2024, consistent with its target range.
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