Aging Population And Digital Transformation Will Expand Market Opportunities

Key Takeaways

• Strong demand for annuities and innovative retirement products, plus expanded distribution, is broadening Brighthouse's customer base and supporting premium growth.
  
• Strategic focus on capital efficiency, technology investment, and a favorable interest rate environment is driving improved margins, operational leverage, and earnings stability.
  
• Ongoing losses, limited capital flexibility, competitive pressure, and exposure to market-driven products threaten Brighthouse's earnings stability, future growth, and shareholder returns.

Catalysts

Provides annuity and life insurance products in the United States.

• Ongoing strong demand for annuity and life insurance products, as evidenced by record year-to-date life sales and significant Shield sales, is underpinned by the substantial retirement wave among older Americans, expanding Brighthouse's revenue base as more individuals seek guaranteed income solutions and longevity protection.
  
• The company's growing involvement with innovative retirement income products, such as BlackRock's LifePath Paycheck, is opening up new distribution channels via the workplace and allowing Brighthouse to reach broader customer segments, which should drive higher premium growth and diversify top-line revenue.
  
• Strategic initiatives focused on capital efficiency-such as the refinement and separation of hedging strategies for variable annuities and Shield business, coupled with prudent expense management-are expected to reduce earnings volatility and improve net margins over time.
  
• Brighthouse's ongoing investment in technology and the strength of its distribution partnerships support efficient customer acquisition and operational scalability, which are likely to enhance operating leverage and profitability as digital transformation continues across the industry.
  
• A higher-for-longer interest rate environment is beneficial for fixed and annuity products, supporting improved spread income and investment yields for Brighthouse, which should provide an uplift to net investment income and strengthen overall earnings.

Brighthouse Financial Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Brighthouse Financial's revenue will grow by 6.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 7.0% today to 10.7% in 3 years time.
• Analysts expect earnings to reach $1.0 billion (and earnings per share of $20.79) by about August 2028, up from $562.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.3 billion in earnings, and the most bearish expecting $774 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 3.5x on those 2028 earnings, down from 4.7x today. This future PE is lower than the current PE for the US Insurance industry at 14.6x.
• Analysts expect the number of shares outstanding to decline by 5.93% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.27%, as per the Simply Wall St company report.

Brighthouse Financial Future Earnings Per Share Growth

Risks

• Persistent statutory and GAAP losses in recent periods (notably $400 million normalized statutory loss in Q2 2025 and sequentially declining adjusted earnings) raise concerns about the company's ability to generate sustainable earnings, which could pressure return on equity and long-term profitability.
  
• Heavy reliance on variable annuities and Shield products, which are highly sensitive to capital markets, policyholder behavior, and hedging effectiveness, exposes Brighthouse to greater earnings volatility and capital strain, particularly in adverse or volatile market environments.
  
• Questions around legacy liabilities, complicated capital structure, and negative unassigned surplus in core operating subsidiaries (BLIC)-combined with disclosure that capital excesses from certain reinsurance subsidiaries have largely been exhausted-point to ongoing constraints on capital flexibility, which may limit future dividend capacity, buybacks, and reinvestment, thus impacting shareholder value.
  
• Increased competitive pressure-including slowing growth in the company's key Shield product line and references to more challenging pricing and competition-suggests potential for stagnating or declining revenues, especially if Brighthouse does not keep pace with broader industry innovation or digital distribution trends.
  
• Heightened mortality severity and underwriting losses in both Life and Run-off segments this quarter, if not transitory, could signal adverse risk trends or liability projections, leading to lower underwriting margins and potentially necessitating strengthening of reserves, further affecting future earnings and capital adequacy.

Valuation

• The analysts have a consensus price target of $56.222 for Brighthouse Financial based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $72.0, and the most bearish reporting a price target of just $42.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $9.6 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 3.5x, assuming you use a discount rate of 11.3%.
  
• Given the current share price of $46.68, the analyst price target of $56.22 is 17.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.