Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 12, 2018
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Brighthouse Financial, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
001-37905
 
81-3846992
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
11225 North Community House Road
Charlotte, North Carolina

28277
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:
(980) 365-7100
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act (17 CFR 230.405) or Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




Item 2.02.   Results of Operations and Financial Condition.
On February 12, 2018, Brighthouse Financial, Inc. issued (i) a news release announcing its results for the quarter ended December 31, 2017, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference, and (ii) a Financial Supplement for the quarter ended December 31, 2017, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
Description of Exhibit
99.1
99.2





1


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BRIGHTHOUSE FINANCIAL, INC.
 
 
 
By:
/s/ Lynn A. Dumais
 
Name:
Lynn A. Dumais
 
Title:
Chief Accounting Officer

Date: February 12, 2018





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EXHIBIT INDEX
Exhibit No.
Description of Exhibit
99.1

99.2







3
Exhibit
 
 
 
 
 
PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Exhibit 99.1
FOR IMMEDIATE RELEASE
Brighthouse Financial Announces Fourth Quarter 2017 Results
Fourth quarter 2017 net income of $668 million, benefiting from the Tax Cuts and Jobs Act
Annuity sales grew 26 percent over the fourth quarter of 2016, driven by strong sales of Shield annuities
Variable annuity assets above CTE95 increased to $2.6 billion, driven by strong market performance
CHARLOTTE, NC, February 12, 2018 — Brighthouse Financial, Inc. ("Brighthouse Financial") (Nasdaq: BHF) announced today its financial results for the fourth quarter ended December 31, 2017.
Fourth Quarter 2017 Results
The company reported net income of $668 million in the fourth quarter of 2017, or $5.58 on a per share basis, compared to a net loss of $1,765 million in the fourth quarter of 2016. The company ended the fourth quarter of 2017 with stockholders' equity ("book value") of $14.5 billion, or $121.19 on a per share basis, and book value, excluding accumulated other comprehensive income ("AOCI"), of $13.1 billion, or $109.71 on a per share basis.

For the fourth quarter of 2017, the company reported adjusted earnings* (previously reported as operating earnings) of $992 million, or $8.28 on a per share basis. Results for the fourth quarter included a $947 million favorable impact, or $7.91 on a per share basis, primarily related to the re-measurement of the company's net deferred tax liability due to the enactment of the Tax Cuts and Jobs Act ("tax reform") during the quarter. Excluding the impact of tax reform, adjusted earnings for the quarter would have been $45 million, or $0.37 on a per share basis.

Adjusted earnings for the quarter also included $152 million of net unfavorable notable items, or $1.27 on a per share basis, including:
$53 million in unfavorable reserve adjustments from recaptured business, partially offset by reserve refinements, in the company's universal life with secondary guarantees ("ULSG") book of business;
$47 million in establishment costs related to planned technology and branding investments;
$38 million increase in reserves related to certain legacy non-retail, group annuity contracts administered by the company's former parent; and
$14 million unfavorable impact from tax items related to the company's separation from its former parent.
Annuity sales increased 26 percent quarter-over-quarter and 25 percent sequentially, primarily driven by sales of Shield annuities, which increased 74 percent quarter-over-quarter and 22 percent sequentially.

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Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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“We are pleased with the sales performance of our annuity products in the quarter, and with the progress we have made in building Brighthouse Financial into a standalone company and a recognizable brand,” commented Eric Steigerwalt, president and chief executive officer, Brighthouse Financial. “As we continue to execute on our strategy in 2018, we believe our sales momentum and focus on expense management will serve as positive drivers towards achieving our goals.”

Key Metrics (Unaudited, dollars in millions except share and per share amounts)

 
 
As of or for the Three Months Ended
 
 
December 31, 2017
 
December 31, 2016
 
 
Total
 
Per share
 
Total
 
Per share
Net income (loss)
 
$668
 
$5.58
 
$(1,765)
 
N/A
Adjusted earnings (1)
 
$992
 
$8.28
 
$(61)
 
N/A
Book value
 
$14,515
 
$121.19
 
$14,862
 
N/A
Book value, excluding AOCI
 
$13,140
 
$109.71
 
$13,597
 
N/A
Weighted average common shares outstanding - basic
 
119,773,106
 
 
N/A
 
N/A
Weighted average common shares outstanding - diluted
 
119,773,106
 
 
N/A
 
N/A
Ending common shares outstanding
 
119,773,106
 
 
N/A
 
N/A
Ending common shares outstanding - diluted
 
119,773,106
 
 
N/A
 
N/A
 
 
 
 
 
 
 
 
 
(1) The company uses the term "adjusted loss" throughout this news release to refer to negative adjusted earnings values.














* Information regarding the non-GAAP and other financial measures included in this news release and a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is provided in the Non-GAAP and Other Financial Disclosures discussion below as well as in the tables that accompany this news release and/or the Fourth Quarter 2017 Brighthouse Financial, Inc. Financial Supplement (which is available on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com). Additional information regarding notable items can be found on page 13 of this news release.


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Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Results by Business Segment and Corporate & Other (Unaudited, in millions)
 
 
For the Three Months Ended
Adjusted earnings
 
December 31,
2017
 
September 30,
2017
 
December 31,
2016
Annuities
 
$208
 
$355
 
$292
Life
 
$5
 
$6
 
$(24)
Run-off
 
$(80)
 
$83
 
$(349)
Corporate & Other
 
$859
 
$(1,120)
 
$20

Sales (Unaudited, in millions)
 
 
For the Three Months Ended
 
 
December 31,
2017
 
September 30,
2017
 
December 31,
2016
Annuities (1)
 
$1,341
 
$1,074
 
$1,067
Life
 
$3
 
$5
 
$33
(1) Annuities sales in the fourth quarter of 2017 include $203 million in sales of a fixed indexed annuity product sold by MassMutual, representing 90% of gross sales of that product.

Annuities
Adjusted earnings in the Annuities segment were $208 million in the current quarter, compared to adjusted earnings of $292 million in the fourth quarter of 2016 and adjusted earnings of $355 million in the third quarter of 2017.
There were no notable items in the current quarter. The fourth quarter of 2016 included $46 million of favorable notable items and the third quarter of 2017 included $142 million of favorable notable items. On a quarter-over-quarter basis, adjusted earnings reflect higher expenses and lower derivative net investment income. On a sequential basis, adjusted earnings reflect higher expenses.
As mentioned above, overall annuity sales increased 26 percent quarter-over-quarter and 25 percent sequentially, primarily driven by strong sales of Shield annuities, which increased 74 percent quarter-over-quarter and 22 percent sequentially.
Life
Adjusted earnings in the Life segment were $5 million in the current quarter, compared to an adjusted loss of $24 million in the fourth quarter of 2016 and adjusted earnings of $6 million in the third quarter of 2017.
There were no notable items in either the current quarter or in the fourth quarter of 2016. The third quarter of 2017 included $17 million of unfavorable notable items. Quarter-over-quarter life insurance product underwriting results, in the aggregate, were flat, reflecting elevated mortality that was offset by lower reinsurance costs. Resegmentation

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Brighthouse Financial, Inc.
11225 N. Community House Rd.
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activity between the Life and Run-off segments in the fourth quarter of 2016 makes quarter-over-quarter segment-level analysis between Life and Run-off less meaningful this period. On a sequential basis, adjusted earnings reflect unfavorable underwriting due to elevated mortality.
Life insurance sales were down, consistent with the company's strategy of migrating to simpler life insurance solutions and away from products such as participating whole life. The company expects life insurance sales to remain at similar levels over the next 12 to 18 months, as it revamps its life insurance business.
Run-off
The adjusted loss in the Run-off segment was $80 million in the current quarter, compared to an adjusted loss of $349 million in the fourth quarter of 2016 and adjusted earnings of $83 million in the third quarter of 2017.
The current quarter contains $91 million of unfavorable notable items, while the fourth quarter of 2016 included $399 million in unfavorable notable items. The third quarter of 2017 included $9 million in favorable notable items. As mentioned above, quarter-over-quarter life insurance product underwriting results, in the aggregate, were flat, reflecting elevated mortality that was offset by lower reinsurance costs. Resegmentation activity between the Life and Run-off segments in the fourth quarter of 2016 makes quarter-over-quarter segment-level analysis between Life and Run-off less meaningful this period. On a sequential basis, adjusted earnings reflect unfavorable underwriting due to elevated mortality coupled with higher expenses.
Corporate & Other
Corporate & Other had adjusted earnings of $859 million in the current quarter, compared to adjusted earnings of $20 million in the fourth quarter of 2016 and an adjusted loss of $1,120 million in the third quarter of 2017.
The current quarter contains $886 million of favorable notable items, primarily due to tax reform, while the fourth quarter of 2016 did not include notable items. The third quarter of 2017 included $1,104 million in unfavorable notable items, primarily related to a non-cash tax expense triggered prior to separation, recognized by the company's former parent. On a quarter-over-quarter basis, adjusted earnings reflect higher corporate expenses and lower net investment income. On a sequential basis, adjusted earnings reflect higher taxes.
Net Investment Income
On a quarter-over-quarter basis, net investment income decreased $16 million to $769 million, primarily from a reduction in the size of the securities lending program and a lower average asset base. On a sequential basis, net investment income in the quarter reflected a slight increase of $8 million.
The net investment income yield was 4.30 percent during the quarter.



4



 
 
 
 
 
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Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Statutory Capital and Liquidity (Unaudited, in billions)
 
 
As of
 
 
December 31, 2017
 
September 30,
2017
 
December 31, 2016
Variable annuity assets above CTE95 (1)
 
$2.6
 
$2.3
 
N/A
Statutory combined total adjusted capital (2) (3)
 
$6.6
 
$6.6
 
$5.4
(1) Conditional Tail Expectation ("CTE") 95 is defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst 5 percent of 1,000 capital market scenarios over the life of the contracts ("CTE95").
(2) Represents combined results for Brighthouse Life Insurance Company, Brighthouse Life Insurance Company of NY and New England Life Insurance Company.
(3) Reflects preliminary statutory results as of December 31, 2017.

Capitalization

Holding company liquid assets were $655 million at December 31, 2017.

Statutory total adjusted capital on a preliminary basis remained at $6.6 billion.

Assets above CTE95 increased to $2.6 billion due to strong market performance in the quarter.

Earnings Conference Call
Brighthouse Financial plans to hold a conference call and audio webcast to discuss its financial results for the fourth quarter of 2017 at 8:00 a.m. Eastern Time on Tuesday, February 13, 2018.
To listen to the audio webcast via the internet, please visit the Brighthouse Financial Investor Relations webpage at http://investor.brighthousefinancial.com. To join the conference call via telephone, please dial (844) 358-9117 from within the U.S. or +1-209-905-5952 from outside the U.S.
A replay of the conference call will be made available until Friday, February 23, 2018 on the Brighthouse Financial Investor Relations webpage at http://investor.brighthousefinancial.com.

Non-GAAP and Other Financial Disclosures
Non-GAAP Financial Disclosures
In this news release, we present certain measures of our performance that are not calculated in accordance with generally accepted accounting principles in the United States of America ("GAAP"). We believe that these non-GAAP

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Brighthouse Financial, Inc.
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financial measures enhance the understanding of our performance by highlighting the results of operations and the underlying profitability drivers of our business.
The following non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:
Non-GAAP financial measures:

Comparable GAAP financial measures:

adjusted earnings
net income (loss)
adjusted revenues
revenues
adjusted expenses
expenses
adjusted earnings per common share
earnings per share
adjusted return on equity
return on equity
Reconciliations of these measures to the most directly comparable historical GAAP measures are included in this news release. These adjusted measures were previously referred to as operating measures.
Our definitions of the non-GAAP and other financial measures discussed in this news release may differ from those used by other companies. For example, as indicated below, we exclude guaranteed minimum income benefit ("GMIB") revenues and related embedded derivatives gains (losses) as well as GMIB benefits and associated DAC and value of business acquired ("VOBA") offsets from adjusted earnings, thereby excluding substantially all guaranteed minimum living benefit ("GMLB") activity from adjusted earnings.
Adjusted Earnings, Adjusted Revenues and Adjusted Expenses
Adjusted earnings, which may be positive or negative, is used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. This financial measure focuses on our primary businesses principally by excluding the impact of market volatility, which could distort trends, as well as businesses that have been or will be sold or exited by us, referred to as divested businesses.
Provided below are the adjustments to GAAP revenues and GAAP expenses used to calculate adjusted revenues and adjusted expenses, respectively. Adjusted earnings, as presented in this news release, reflects adjusted revenues less adjusted expenses, both net of income tax.
The following are significant items excluded from total revenues, net of income tax, in calculating the adjusted revenues component of adjusted earnings:
Net investment gains (losses);
Net derivative gains (losses) except: earned income 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"); and
Amortization of unearned revenue related to net investment gains (loss) and net derivative gains (losses) and certain variable annuity GMIB fees ("GMIB Fees").(1) 

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Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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The following are significant items excluded from total expenses, net of income tax, in calculating the adjusted expenses component of adjusted earnings:
Amounts associated with benefits and hedging costs related to GMIBs (“GMIB Costs”);(1) 
Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and
Amortization of DAC and VOBA related to (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments.(1) 
The tax impact of the adjustments mentioned is calculated net of the U.S. statutory tax rate, which could differ from our effective tax rate.
Consistent with GAAP guidance for segment reporting, adjusted earnings is also our GAAP measure of segment performance.
Adjusted Earnings per Common Share and Adjusted Return on Equity
Adjusted earnings per common share and adjusted return on equity are measures used by management to evaluate the execution of our business strategy and align such strategy with our shareholders’ interests.
Adjusted earnings per common share is defined as adjusted earnings for the period divided by the weighted average number of fully diluted shares of common stock outstanding for the period.
Adjusted return on equity is defined as total annual adjusted earnings on a four quarter trailing basis, divided by the simple average of the most recent five quarters of total stockholders’ equity, excluding AOCI.

(1) Collectively, amounts related to GMIB, excluding amounts recorded in NDGL, may be referred to as "GMIB adjustments".
Other Financial Disclosures
Book Value per Common Share, excluding AOCI
Brighthouse uses the term "book value" to refer to "stockholders' equity." Book value per common share is defined as ending stockholders' equity, including AOCI, divided by ending common shares outstanding - diluted. Book value per common share, excluding AOCI, is defined as ending stockholders' equity, excluding AOCI, divided by ending common shares outstanding - diluted.
Sales
Statistical sales information for Life sales is calculated using the LIMRA definition of sales for core direct sales, excluding company-sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placement variable universal life insurance. Annuity sales consist of 100 percent of direct statutory premiums, except for fixed indexed annuity sales distributed through MassMutual that consist of 90 percent of gross

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sales. Annuity sales exclude company sponsored internal exchanges. These sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity.
Holding company liquid assets
Holding company liquid assets include liquid assets in Brighthouse Financial, Inc., Brighthouse Holdings, LLC, and Brighthouse Services, LLC. Liquid assets include 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 amounts received in connection with derivatives and collateral financing arrangements.

Basis of Presentation
The information presented in this news release is derived from the consolidated financial statements of Brighthouse Financial, Inc. for periods subsequent to the separation from MetLife, Inc. that occurred on August 4, 2017, and is derived from the combined financial information of the MetLife U.S. Retail Separation Business for periods prior to the separation. The combined financial information was prepared in connection with the separation of a substantial portion of MetLife, Inc.’s former Retail segment as well as certain portions of its former Corporate Benefit Funding segment, and presents the combined results of operations and financial condition of certain former direct and indirect subsidiaries and certain of its current and former affiliates.

Forward-Looking Statements
This news release may contain information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “will,” “intend,” “plan,” “believe” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, statements regarding the separation from MetLife, including the expected benefits thereof, the recapitalization actions, including the expected benefits thereof, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.
Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of Brighthouse, its subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others: differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models; higher risk management costs and exposure to increased counterparty risk due to guarantees within certain of our products; the effectiveness of our exposure management strategy and the impact of such strategy on net income volatility and

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negative effects on our statutory capital; the additional reserves we will be required to hold against our variable annuities as a result of actuarial guidelines; a sustained period of low equity market prices and interest rates that are lower than those we assumed when we issued our variable annuity products; our degree of leverage following the separation due to indebtedness incurred in connection with the separation; the effect adverse capital and credit market conditions may have on our ability to meet liquidity needs and our access to capital; the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations; the effectiveness of our risk management policies and procedures; the availability of reinsurance and the ability of our 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; changes in accounting standards, practices and/or policies applicable to us; the ability of our insurance subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders; our ability to market and distribute our products through distribution channels; the impact of the separation on our business and profitability due to MetLife’s strong brand and reputation, the increased costs related to replacing arrangements with MetLife with those of third parties and incremental costs as a public company; whether the operational, strategic and other benefits of the separation can be achieved, and our ability to implement our business strategy; whether all or any portion of the separation tax consequences are not as expected, leading to material additional taxes or material adverse consequences to tax attributes booked to us; the uncertainty of the outcome of any disputes with MetLife over tax-related matters and agreements including the potential of outcomes adverse to us that could cause us to owe MetLife material tax reimbursements or payments; the impact on our business structure, profitability, cost of capital and flexibility due to restrictions we have agreed to that preserve the tax-free treatment of certain parts of the separation; the potential material negative tax impact of proposed legislation that could decrease the value of our tax attributes, lead to increased RBC requirements and cause other cash expenses, such as reserves, to increase materially; whether the distribution will qualify for non-recognition treatment for U.S. federal income tax purposes and potential indemnification to MetLife if the distribution does not so qualify; our ability to attract and retain key personnel; and other factors described from time to time in documents that we file with the U.S. Securities and Exchange Commission (the “SEC”).
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements included and the risks, uncertainties and other factors identified in the Preliminary Information Statement of Brighthouse Financial, Inc., subject to completion, dated June 30, 2017 included as Exhibit 99.1 to Amendment No. 5 to Brighthouse Financial, Inc.’s Registration Statement on Form 10, filed with the SEC on June 30, 2017 and in Brighthouse Financial, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed with the SEC on November 9, 2017, including under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Note Regarding Forward-Looking Statements” and “Risk Factors.” Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law. Please consult any further disclosures Brighthouse Financial, Inc. makes on related subjects in reports to the SEC.

About Brighthouse Financial, Inc.
Brighthouse Financial, Inc. (Nasdaq: BHF) is a major provider of annuities and life insurance in the U.S. Established by MetLife, our mission is to help people achieve financial security by offering essential annuity and life insurance

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solutions designed to protect what they have earned and help ensure it lasts. Learn more at www.brighthousefinancial.com.

CONTACT

FOR INVESTORS
David Rosenbaum
(980) 949-3326
david.rosenbaum@brighthousefinancial.com
FOR MEDIA
Tim Miller
(980) 949-3121
tim.w.miller@brighthousefinancial.com

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Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Condensed Statements of Operations (Unaudited, in millions)
 
 
For the Three Months Ended
Revenues
 
December 31,
2017
 
September 30,
2017
 
December 31,
2016
Premiums
 
$233
 
$236
 
$201
Universal life and investment-type product policy fees
 
963
 
1,025
 
939
Net investment income
 
769
 
761
 
785
Other revenues
 
322
 
93
 
255
Revenues before NIGL and NDGL
 
2,287
 
2,115
 
2,180
Net investment gains (losses)
 
6
 
21
 
(63)
Net derivative gains (losses)
 
(413)
 
(164)
 
(2,670)
Total revenues
 
$1,880
 
$1,972
 
$(553)
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
Interest credited
 
$273
 
$279
 
$294
Policyholder benefits and claims
 
904
 
1,083
 
955
Amortization of DAC and VOBA
 
231
 
123
 
416
Interest expense
 
37
 
34
 
42
Other expenses
 
657
 
577
 
517
Total expenses
 
2,102
 
2,096
 
2,224
Income (loss) before provision for income tax
 
(222)
 
(124)
 
(2,777)
Provision for income tax expense (benefit)
 
(890)
 
819
 
(1,012)
Net income (loss)
 
$668
 
$(943)
 
$(1,765)





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Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Condensed Balance Sheets (Unaudited, in millions)
 
 
As of
ASSETS
 
December 31,
2017
 
September 30,
2017
 
December 31,
2016
Investments:
 
 
 
 
 
 
Fixed maturity securities available-for-sale
 
$64,991
 
$63,565
 
$61,388
Equity securities available-for-sale
 
232
 
265
 
300
Mortgage loans, net
 
10,742
 
10,431
 
9,378
Policy loans
 
1,523
 
1,522
 
1,517
Real estate and real estate joint ventures
 
433
 
407
 
215
Other limited partnership interests
 
1,669
 
1,654
 
1,642
Short-term investments
 
312
 
1,149
 
1,288
Other invested assets
 
2,436
 
2,666
 
4,904
Total investments
 
82,338
 
81,659
 
80,632
Cash and cash equivalents
 
1,857
 
1,698
 
5,228
Accrued investment income
 
601
 
641
 
693
Reinsurance recoverables
 
12,763
 
12,727
 
13,455
Premiums and other receivables
 
762
 
864
 
1,192
DAC and VOBA
 
6,286
 
6,414
 
6,293
Current income tax recoverable
 
740
 
1,772
 
778
Other assets
 
588
 
647
 
616
Separate account assets
 
118,257
 
116,857
 
113,043
Total assets
 
$224,192
 
$223,279
 
$221,930
 
 
 
 
 
 
 
LIABILITIES, STOCKHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Future policy benefits
 
$36,616
 
$36,035
 
$33,372
Policyholder account balances
 
37,783
 
37,298
 
37,526
Other policy-related balances
 
2,985
 
2,964
 
3,045
Payables for collateral under securities loaned and other transactions
 
4,169
 
4,569
 
7,390
Long-term financing obligations:
 
 
 
 
 
 
Debt
 
3,612
 
3,615
 
810
Reserve financing
 
 
 
3,897
Deferred income tax liability
 
927
 
2,116
 
2,056
Other liabilities
 
5,263
 
5,994
 
5,929
Separate account liabilities
 
118,257
 
116,857
 
113,043
Total liabilities
 
209,612
 
$209,448
 
$207,068
Stockholders' Equity and Noncontrolling Interests
 
 
 
 
 
 
Common stock
 
1
 
1
 
Additional paid-in capital
 
12,432
 
12,418
 
Retained earnings
 
707
 
39
 
Shareholder's net investment
 
 
 
13,597
Accumulated other comprehensive income (loss)
 
1,375
 
1,308
 
1,265
Total stockholders' equity
 
14,515
 
$13,766
 
$14,862
Noncontrolling interests
 
65
 
65
 
Total stockholders' equity and noncontrolling interests
 
14,580
 
$13,831
 
$14,862
Total liabilities, stockholders' equity and noncontrolling interests
 
$224,192
 
$223,279
 
$221,930
For periods ending prior to the separation, stockholders' equity was previously reported as shareholder's net investment.

12



 
 
 
 
 
PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12045027&doc=4

Reconciliation of Net Income (Loss) to Adjusted Earnings and Reconciliation of Net Income (Loss) per Common Share to Adjusted Earnings per Common Share (Unaudited, in millions except per share data)
 
 
For the Three Months Ended
 
 
December 31, 2017
 
September 30,
2017
 
December 31,
2016
Net income (loss)
 
$668
 
$(943)
 
$(1,765)
Adjustments from net income (loss) to adjusted earnings:
 
 
 
 
 
 
Less: Net investment gains (losses)
 
6
 
21
 
(63)
Less: Net derivative gains (losses)
 
(424)
 
(182)
 
(2,767)
Less: GMIB adjustments
 
(76)
 
(488)
 
179
Less: Market value adjustments
 
(3)
 
(1)
 
34
Less: Other
 
 
22
 
(3)
Less: Provision for income tax (expense) benefit on reconciling adjustments
 
173
 
361
 
917
Adjusted earnings
 
$992
 
$(676)
 
$(62)
 
 
 
 
 
 
 
Net income (loss) per common share
 
$5.58
 
$(7.87)
 
N/A
Less: Net investment gains (losses)
 
0.05
 
0.18
 
N/A
Less: Net derivative gains (losses)
 
(3.54)
 
(1.52)
 
N/A
Less: GMIB adjustments
 
(0.63)
 
(4.07)
 
N/A
Less: Market value adjustments
 
(0.02)
 
(0.01)
 
N/A
Less: Other
 
 
0.18
 
N/A
Less: Provision for income tax (expense) benefit on reconciling adjustments
 
1.44
 
3.01
 
N/A
Adjusted earnings per common share
 
$8.28
 
$(5.64)
 
N/A

Notable Items (Unaudited, in millions)
 
 
For the Three Months Ended
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGS
 
December 31, 2017
 
September 30,
2017
 
December 31,
2016
Actuarial assumption review and other insurance adjustments
 
$91
 
$(134)
 
$399
Establishment costs
 
47
 
31
 
Separation related transactions
 
14
 
1,073
 
(23)
Tax reform adjustment (1)
 
(947)
 
 
Other
 
 
 
(23)
Total notable items (2)
 
$(795)
 
$970
 
$353
 
 
 
 
 
 
 
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER
 
 
 
 
 
 
Annuities
 
$—
 
$(142)
 
$(46)
Life
 
 
17
 
Run-off
 
91
 
(9)
 
399
Corporate & Other
 
(886)
 
1,104
 
Total notable items (2)
 
$(795)
 
$970
 
$353
 
 
 
 
 
 
 
 
(1) The notable item for the three month period ended December 31, 2017 includes a reduction of $222 in a tax-related obligation to our former parent, MetLife, Inc.
(2) Notable items reflect the negative (positive) after-tax impact to adjusted earnings of certain unanticipated items and events, as well as certain items and events that were anticipated, such as establishment costs. The presentation of notable items is intended to help investors better understand the Company's results and to evaluate and forecast those results.

13


Exhibit

 
 
 
 
 


Exhibit 99.2








Brighthouse Financial, Inc.
Financial Supplement

Fourth Quarter 2017











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Table of Contents
 
 
Financial Results
Key Metrics
Condensed Statements of Operations
Balance Sheets
 
 
Earnings and Select Metrics from Business Segments and Corporate & Other
 
Statements of Adjusted Earnings by Segment and Corporate & Other
 
Annuities — Statements of Adjusted Earnings
 
Annuities — Select Operating Metrics
 
Life — Statements of Adjusted Earnings
 
Life — Select Operating Metrics
 
Run-off — Statements of Adjusted Earnings
 
Run-off — Select Operating Metrics
 
Corporate & Other — Statements of Adjusted Earnings
 
 
 
 
Other Information
 
DAC and VOBA and Net Derivative Gains (Losses)
 
Notable Items
 
Variable Annuity Separate Account Returns and Allocations
 
Summary of Investments
 
Select Actual and Preliminary Statutory Financial Results
 
 
 
 
Appendix
 
Non-GAAP and Other Financial Disclosures
 
Acronyms
 
Reconciliation of Net Income (Loss) to Adjusted Earnings and Reconciliation of Net Income (Loss) per Common Share to Adjusted Earnings per Common Share
 
Reconciliation of Return on Equity to Adjusted Return on Equity
 
Reconciliation of Total Revenues to Adjusted Revenues and Reconciliation of Total Expenses to Adjusted Expenses
 
Investment Reconciliation Details

Note: See Appendix for non-GAAP financial information, definitions and reconciliations. Financial information, unless otherwise noted, is rounded to millions. Some financial information, therefore, may not sum to the corresponding total.
The information presented in this financial supplement is derived from the consolidated financial statements of Brighthouse Financial, Inc. for periods subsequent to the separation from MetLife, Inc. that occurred on August 4, 2017, and is derived from the combined financial information of the MetLife U.S. Retail Separation Business for periods prior to the separation. The combined financial information was prepared in connection with the separation of a substantial portion of MetLife, Inc.’s former Retail segment as well as certain portions of its former Corporate Benefit Funding segment, and presents the combined results of operations and financial condition of certain former direct and indirect subsidiaries and certain of its current and former affiliates. As used in this financial supplement, “Brighthouse Financial,” “Brighthouse,” the “Company,” “we,” “our” and “us” refer to Brighthouse Financial, Inc., the entity that subsequent to the separation holds, through its subsidiaries, the assets (including the equity interests of certain former MetLife, Inc. subsidiaries) and liabilities associated with MetLife, Inc.’s former Brighthouse Financial segment.



 
 
 
 
 








Financial Results




 
 
Financial Supplement
 
1

Key Metrics (Unaudited, dollars in millions except share and per share amounts)
 
 
As of or for the Three Months Ended
Financial Results and Metrics
 
December 31, 2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
Net income (loss) (1)
 
$668
 
$(943)
 
$246
 
$(349)
 
$(1,765)
Adjusted earnings (1)
 
$992
 
$(676)
 
$324
 
$280
 
$(61)
Total corporate expenses (2)
 
$287
 
$241
 
$226
 
$215
 
$198
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity (3)
 
 
 
 
 
 
 
 
 
 
Ending stockholders' equity
 
$14,515
 
$13,766
 
$16,415
 
$15,116
 
$14,862
Ending AOCI
 
1,375
 
1,308
 
1,894
 
1,506
 
1,265
   Ending stockholders' equity, excluding AOCI
 
$13,140
 
$12,458
 
$14,521
 
$13,610
 
$13,597
   Pro forma ending stockholders' equity, excluding AOCI (4)
 
$12,840
 
N/A
 
$12,170
 
N/A
 
N/A
 
 
 
 
 
 
 
 
 
 
 
Return on Equity
 
 
 
 
 
 
 
 
 
 
Return on equity
 
(2.5)%
 
(17.9)%
 
(12.2)%
 
(21.4)%
 
(16.7)%
Return on equity, excluding AOCI (5)
 
(2.8)%
 
(20.1)%
 
(13.8)%
 
(24.3)%
 
(18.9)%
Adjusted return on equity (6)
 
6.8%
 
(1.0)%
 
5.9%
 
4.1%
 
4.4%
 
 
 
 
 
 
 
 
 
 
 
Per Common Share
 
 
 
 
 
 
 
 
 
 
Net income (loss) per common share (7)
 
$5.58
 
$(7.87)
 
N/A
 
N/A
 
N/A
Adjusted earnings per common share (8)
 
$8.28
 
$(5.64)
 
N/A
 
N/A
 
N/A
 
 
 
 
 
 
 
 
 
 
 
Book value per common share (9)
 
$121.19
 
$114.93
 
N/A
 
N/A
 
N/A
Book value per common share, excluding AOCI (10)
 
$109.71
 
$104.01
 
N/A
 
N/A
 
N/A
 
 
 
 
 
 
 
 
 
 
 
Common Shares
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
119,773,106
 
119,773,106
 
N/A
 
N/A
 
N/A
Weighted average common shares outstanding - diluted (7)(8)
 
119,773,106
 
119,773,106
 
N/A
 
N/A
 
N/A
 
 
 
 
 
 
 
 
 
 
 
Ending common shares outstanding
 
119,773,106
 
119,773,106
 
N/A
 
N/A
 
N/A
Ending common shares outstanding - diluted (9)(10)
 
119,773,106
 
119,773,106
 
N/A
 
N/A
 
N/A
 
 
 
 
 
 
 
 
 
 
 
(1) The Company recorded a non-cash tax expense of $1.1 billion in the third quarter of 2017 related to a tax obligation triggered prior to the separation, recognized by the Company's former parent. This tax expense had no impact on the book value of Brighthouse.
(2) Includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs.
(3) For periods ending prior to the separation, stockholders' equity was previously reported as shareholder's net investment.
(4) December 31, 2017 amounts have been adjusted for an estimated $300 million of tax reform impact related to the unwinding of previously recognized amounts of unrealized gains (losses) at the former statutory tax rate. June 30, 2017 amounts have been adjusted for subsequent separation transactions, including the distribution to MetLife, Inc. of $1.8 billion and a tax separation liability of $600 million.
(5) Return on equity, excluding AOCI, is defined as total annual net income (loss) on a four quarter trailing basis, divided by the simple average of the most recent five quarters of total stockholders' equity, excluding AOCI.
(6) Adjusted return on equity is defined as total annual adjusted earnings on a four quarter trailing basis, divided by the simple average of the most recent five quarters of total stockholders' equity, excluding AOCI.
(7) Net income (loss) per common share is defined as net income (loss), divided by weighted average common shares outstanding - diluted.
(8) Adjusted earnings per common share is defined as adjusted earnings, divided by weighted average common shares outstanding - diluted.
(9) Book value per common share is defined as ending stockholders' equity, including AOCI, divided by ending common shares outstanding - diluted.
(10) Book value per common share, excluding AOCI, is defined as ending stockholders' equity, excluding AOCI, divided by ending common shares outstanding - diluted.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12045027&doc=5
 
 
 
 
 




 
 
Financial Supplement
 
2

Condensed Statements of Operations (Unaudited, in millions)

 
 
For the Three Months Ended
 
For the Years Ended
Revenues
 
December 31, 2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
December 31, 2017
 
December 31,
2016
Premiums
 
$233
 
$236
 
$218
 
$176
 
$201
 
$863
 
$1,222
Universal life and investment-type product policy fees
 
963
 
1,025
 
957
 
953
 
939
 
3,898
 
3,782
Net investment income
 
769
 
761
 
766
 
782
 
785
 
3,078
 
3,207
Other revenues
 
322
 
93
 
162
 
74
 
255
 
651
 
736
Revenues before NIGL and NDGL
 
2,287
 
2,115
 
2,103
 
1,985
 
2,180
 
8,490
 
8,947
Net investment gains (losses)
 
6
 
21
 
 
(55)
 
(63)
 
(28)
 
(78)
Net derivative gains (losses)
 
(413)
 
(164)
 
(78)
 
(965)
 
(2,670)
 
(1,620)
 
(5,851)
Total revenues
 
$1,880
 
$1,972
 
$2,025
 
$965
 
$(553)
 
$6,842
 
$3,018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited
 
$273
 
$279
 
$284
 
$275
 
$294
 
$1,111
 
$1,165
Policyholder benefits and claims
 
904
 
1,083
 
785
 
864
 
955
 
3,636
 
3,903
Amortization of DAC and VOBA
 
231
 
123
 
21
 
(148)
 
416
 
227
 
371
Interest expense on debt
 
37
 
34
 
37
 
45
 
42
 
153
 
175
Other expenses
 
657
 
577
 
577
 
519
 
517
 
2,330
 
2,109
Total expenses
 
2,102
 
2,096
 
1,704
 
1,555
 
2,224
 
7,457
 
7,723
Income (loss) before provision for income tax
 
(222)
 
(124)
 
321
 
(590)
 
(2,777)
 
(615)
 
(4,705)
Provision for income tax expense (benefit)
 
(890)
 
819
 
75
 
(241)
 
(1,012)
 
(237)
 
(1,766)
Net income (loss)
 
$668
 
$(943)
 
$246
 
$(349)
 
$(1,765)
 
$(378)
 
$(2,939)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Financial Supplement
 
3

Balance Sheets (Unaudited, in millions)
 
 
As of
ASSETS
 
December 31, 2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
Investments:
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities available-for-sale
 
$64,991
 
$63,565
 
$63,507
 
$60,870
 
$61,388
Equity securities available-for-sale
 
232
 
265
 
278
 
290
 
300
Mortgage loans, net
 
10,742
 
10,431
 
10,263
 
9,908
 
9,378
Policy loans
 
1,523
 
1,522
 
1,513
 
1,512
 
1,517
Real estate and real estate joint ventures
 
433
 
407
 
302
 
242
 
215
Other limited partnership interests
 
1,669
 
1,654
 
1,623
 
1,596
 
1,642
Short-term investments
 
312
 
1,149
 
1,286
 
1,058
 
1,288
Other invested assets
 
2,436
 
2,666
 
3,037
 
3,817
 
4,904
Total investments
 
82,338
 
81,659
 
81,809
 
79,293
 
80,632
Cash and cash equivalents
 
1,857
 
1,698
 
4,443
 
5,812
 
5,228
Accrued investment income
 
601
 
641
 
608
 
641
 
693
Reinsurance recoverables
 
12,763
 
12,727
 
12,732
 
12,869
 
13,455
Premiums and other receivables
 
762
 
864
 
683
 
817
 
1,192
DAC and VOBA
 
6,286
 
6,414
 
6,464
 
6,500
 
6,293
Current income tax recoverable
 
740
 
1,772
 
1,423
 
1,247
 
778
Other assets
 
588
 
647
 
600
 
644
 
616
Separate account assets
 
118,257
 
116,857
 
115,566
 
115,365
 
113,043
Total assets
 
$224,192
 
$223,279
 
$224,328
 
$223,188
 
$221,930
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES, STOCKHOLDERS' EQUITY AND NONCONTROLLING INTERESTS
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Future policy benefits
 
$36,616
 
$36,035
 
$34,352
 
$33,622
 
$33,372
Policyholder account balances
 
37,783
 
37,298
 
37,296
 
36,986
 
37,526
Other policy-related balances
 
2,985
 
2,964
 
2,985
 
3,009
 
3,045
Payables for collateral under securities loaned and other transactions
 
4,169
 
4,569
 
7,121
 
7,177
 
7,390
Long-term financing obligations:
 
 
 
 
 
 
 
 
 
 
Debt
 
3,612
 
3,615
 
3,016
 
807
 
810
Reserve financing
 
 
 
 
3,897
 
3,897
Deferred income tax liability
 
927
 
2,116
 
2,337
 
2,445
 
2,056
Other liabilities
 
5,263
 
5,994
 
5,190
 
4,764
 
5,929
Separate account liabilities
 
118,257
 
116,857
 
115,566
 
115,365
 
113,043
Total liabilities
 
209,612
 
209,448
 
207,863
 
208,072
 
207,068
Stockholders' Equity and Noncontrolling Interests
 
 
 
 
 
 
 
 
 
 
Common stock
 
1
 
1
 
 
 
Additional paid-in capital
 
12,432
 
12,418
 
 
 
Retained earnings
 
707
 
39
 
 
 
Shareholder's net investment
 
 
 
14,521
 
13,610
 
13,597
Accumulated other comprehensive income (loss)
 
1,375
 
1,308
 
1,894
 
1,506
 
1,265
Total stockholders' equity
 
14,515
 
13,766
 
16,415
 
15,116
 
14,862
Noncontrolling interests
 
65
 
65
 
50
 
 
Total stockholders' equity and noncontrolling interests
 
14,580
 
13,831
 
16,465
 
15,116
 
14,862
Total liabilities, stockholders' equity and noncontrolling interests
 
$224,192
 
$223,279
 
$224,328
 
$223,188
 
$221,930

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Earnings and Select
Metrics from
Business Segments and Corporate & Other





 
 
Financial Supplement
 
5

Statements of Adjusted Earnings by Segment and Corporate & Other (Unaudited, in millions)
  
 
For the Three Months Ended December 31, 2017
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$33
 
$172
 
$—
 
$28
 
$233
Universal life and investment-type product policy fees
 
645
 
81
 
169
 
(3)
 
892
Net investment income
 
329
 
79
 
339
 
33
 
780
Other revenues
 
93
 
1
 
8
 
222
 
324
Total adjusted revenues
 
$1,100
 
$333
 
$516
 
$280
 
$2,229
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited
 
$148
 
$48
 
$76
 
$—
 
$272
Policyholder benefits and claims
 
153
 
187
 
493
 
14
 
847
Amortization of DAC and VOBA
 
102
 
33
 
1
 
5
 
141
Interest expense on debt
 
 
 
 
38
 
38
Other operating costs
 
422
 
58
 
71
 
105
 
656
Total adjusted expenses
 
825
 
326
 
641
 
162
 
1,954
Adjusted earnings before provision for income tax
 
275
 
7
 
(125)
 
118
 
275
Provision for income tax expense (benefit)
 
67
 
2
 
(45)
 
(741)
 
(717)
Adjusted earnings
 
$208
 
$5
 
$(80)
 
$859
 
$992
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
For the Three Months Ended December 31, 2016
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$58
 
$114
 
$1
 
$29
 
$202
Universal life and investment-type product policy fees
 
629
 
12
 
232
 
(3)
 
870
Net investment income
 
376
 
66
 
384
 
52
 
878
Other revenues
 
86
 
128
 
6
 
32
 
252
Total adjusted revenues
 
$1,149
 
$320
 
$623
 
$110
 
$2,202
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited
 
$153
 
$31
 
$110
 
$—
 
$294
Policyholder benefits and claims
 
182
 
138
 
390
 
17
 
727
Amortization of DAC and VOBA
 
92
 
162
 
556
 
3
 
813
Interest expense on debt
 
 
 
15
 
29
 
44
Other operating costs
 
314
 
31
 
88
 
48
 
481
Total adjusted expenses
 
741
 
362
 
1,159
 
97
 
2,359
Adjusted earnings before provision for income tax
 
408
 
(42)
 
(536)
 
13
 
(157)
Provision for income tax expense (benefit)
 
116
 
(18)
 
(187)
 
(7)
 
(96)
Adjusted earnings
 
$292
 
$(24)
 
$(349)
 
$20
 
$(61)

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Financial Supplement
 
6

Statements of Adjusted Earnings by Segment and Corporate & Other (Cont.) (Unaudited, in millions)
  
 
For the Year Ended December 31, 2017
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$175
 
$578
 
$1
 
$109
 
$863
Universal life and investment-type product policy fees
 
2,545
 
373
 
713
 
(13)
 
3,618
Net investment income
 
1,277
 
342
 
1,399
 
192
 
3,210
Other revenues
 
373
 
22
 
34
 
222
 
651
Total adjusted revenues
 
$4,370
 
$1,315
 
$2,147
 
$510
 
$8,342
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited
 
$605
 
$156
 
$347
 
$—
 
$1,108
Policyholder benefits and claims
 
734
 
664
 
1,367
 
62
 
2,827
Amortization of DAC and VOBA
 
80
 
223
 
7
 
20
 
330
Interest expense on debt
 
 
 
23
 
132
 
155
Other operating costs
 
1,565
 
265
 
256
 
239
 
2,325
Total adjusted expenses
 
2,984
 
1,308
 
2,000
 
453
 
6,745
Adjusted earnings before provision for income tax
 
1,386
 
7
 
147
 
57
 
1,597
Provision for income tax expense (benefit)
 
369
 
(9)
 
43
 
274
 
677
Adjusted earnings
 
$1,017
 
$16
 
$104
 
$(217)
 
$920
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
For the Year Ended December 31, 2016
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$444
 
$493
 
$146
 
$139
 
$1,222
Universal life and investment-type product policy fees
 
2,521
 
248
 
731
 
(11)
 
3,489
Net investment income
 
1,451
 
371
 
1,441
 
239
 
3,502
Other revenues
 
540
 
138
 
24
 
33
 
735
Total adjusted revenues
 
$4,956
 
$1,250
 
$2,342
 
$400
 
$8,948
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited
 
$627
 
$114
 
$421
 
$—
 
$1,162
Policyholder benefits and claims
 
1,079
 
567
 
1,519
 
87
 
3,252
Amortization of DAC and VOBA
 
368
 
284
 
961
 
22
 
1,635
Interest expense on debt
 
 
 
61
 
111
 
172
Other operating costs
 
1,246
 
259
 
214
 
141
 
1,860
Total adjusted expenses
 
3,320
 
1,224
 
3,176
 
361
 
8,081
Adjusted earnings before provision for income tax
 
1,636
 
26
 
(834)
 
39
 
867
Provision for income tax expense (benefit)
 
484
 
 
(295)
 
(8)
 
181
Adjusted earnings
 
$1,152
 
$26
 
$(539)
 
$47
 
$686

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12045027&doc=5
 
 
 
 
 




 
 
Financial Supplement
 
7

Annuities — Statements of Adjusted Earnings (Unaudited, in millions)

  
 
For the Three Months Ended
 
For the Years Ended
Adjusted revenues
 
December 31, 2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
 
December 31, 2017
 
December 31,
2016
Premiums
 
$33
 
$44
 
$48
 
$50
 
$58
 
$175
 
$444
Universal life and investment-type product policy fees
 
645
 
629
 
639
 
632
 
629
 
2,545
 
2,521
Net investment income
 
329
 
310
 
311
 
327
 
376
 
1,277
 
1,451
Other revenues
 
93
 
87
 
128
 
65
 
86
 
373
 
540
Total adjusted revenues
 
$1,100
 
$1,070
 
$1,126
 
$1,074
 
$1,149
 
$4,370
 
$4,956
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited
 
$148
 
$153
 
$152
 
$152
 
$153
 
$605
 
$627
Policyholder benefits and claims
 
153
 
258
 
163
 
160
 
182
 
734
 
1,079
Amortization of DAC and VOBA
 
102
 
(228)
 
112
 
94
 
92
 
80
 
368
Interest expense on debt
 
 
 
 
 
 
 
Other operating costs
 
422
 
399
 
386
 
358
 
314
 
1,565
 
1,246
Total adjusted expenses
 
825
 
582
 
813
 
764
 
741
 
2,984
 
3,320
Adjusted earnings before provision for income tax
 
275
 
488
 
313
 
310
 
408
 
1,386
 
1,636
Provision for income tax expense (benefit)
 
67
 
133
 
87
 
82
 
116
 
369
 
484
Adjusted earnings
 
$208
 
$355
 
$226
 
$228
 
$292
 
$1,017
 
$1,152


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12045027&doc=5
 
 
 
 
 




 
 
Financial Supplement
 
8

Annuities — Select Operating Metrics (Unaudited, in millions)

  
 
For the Three Months Ended
FIXED ANNUITIES ACCOUNT VALUE
 
December 31, 2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
December 31,
2016
Account value, beginning of period
 
$13,123
 
$13,230
 
$13,369
 
$13,523
 
$13,715
Premiums and deposits
 
232
 
113
 
47
 
48
 
56
Surrenders and contract benefits
 
(374)
 
(331)
 
(298)
 
(313)
 
(358)