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 11, 2019
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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 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 11, 2019, Brighthouse Financial, Inc. (“Brighthouse Financial” or the “Company”) issued (i) a news release announcing its results for the quarter ended December 31, 2018, 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, 2018, 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 Items 2.02, 7.01 and Exhibits 99.1 and 99.2 listed in Item 9.01 of this Current Report on Form 8-K 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 7.01.  Regulation FD Disclosure.
In connection with its earnings call for the quarter ended December 31, 2018, Brighthouse Financial has prepared a presentation for use with investors and other members of the investment community. This presentation is available on the Brighthouse Financial investor relations website at http://investor.brighthousefinancial.com.

Brighthouse Financial routinely uses its investor relations website to provide presentations, press releases and other information that may be deemed material to investors. Accordingly, the Company encourages investors and others interested in the Company to review the information that it shares at http://investor.brighthousefinancial.com.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
Description





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 11, 2019





2
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 2018 Results
Fourth quarter 2018 net income available to shareholders of $1,442 million, or $12.14 on a per diluted share basis, driven primarily by net derivative mark-to-market gains
Adjusted earnings, less notable items*, of $199 million, or $1.68 on a per diluted share basis
Annuity sales grew 27 percent over the fourth quarter of 2017
Variable annuity assets remained above CTE98*
Company repurchased $63 million of its common stock during the quarter, bringing the 2018 total to $105 million
CHARLOTTE, NC, February 11, 2019 — Brighthouse Financial, Inc. ("Brighthouse Financial" or the "company") (Nasdaq: BHF) announced today its financial results for the fourth quarter ended December 31, 2018.
Fourth Quarter 2018 Results
The company reported net income available to shareholders of $1,442 million in the fourth quarter of 2018, or $12.14 on a per diluted share basis, compared to net income available to shareholders of $668 million in the fourth quarter of 2017. The company ended the fourth quarter of 2018 with stockholders' equity ("book value") of $14.4 billion, or $122.67 on a per share basis, and book value, excluding accumulated other comprehensive income ("AOCI") of $13.7 billion, or $116.58 on a per share basis.

For the fourth quarter of 2018, the company reported adjusted earnings* of $186 million, or $1.56 on a per diluted share basis.

The adjusted earnings for the quarter reflected $13 million of net unfavorable notable items, or $0.11 on a per diluted share basis, including:

A $26 million net favorable impact related to modeling improvements resulting from an actuarial system conversion; and

Establishment costs of $39 million related to planned technology and branding expenses associated with the company's separation from its former parent company.

_______________________
* 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 2018 Brighthouse Financial, Inc. Financial Supplement and/or the Fourth Quarter 2018 Brighthouse Financial, Inc. Earnings Call Presentation (which are available on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com). Additional information regarding notable items can be found on the last page of this news release.

1



 
 
 
 
 
PUBLIC RELATIONS

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

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For the full year 2018, the company reported net income available to shareholders of $865 million, or $7.21 on a per diluted share basis. The company reported full year adjusted earnings of $892 million, or $7.44 on a per diluted share basis, and full year adjusted earnings, less notable items, of $998 million, or $8.33 on a per diluted share basis.
Corporate expenses in the fourth quarter of 2018 were $233 million pre-tax, down from $242 million pre-tax in the third quarter of 2018.
Annuity sales increased 27 percent quarter-over-quarter and 10 percent sequentially, driven by an increase in sales of Shield and fixed indexed annuities. The company's fourth quarter 2018 sales results were its highest since becoming an independent company.
During the quarter, the company repurchased $63 million of its common stock under its stock repurchase program announced on August 6, 2018, resulting in a total of $105 million of its shares repurchased during 2018.
"We are pleased with our continued strong growth in annuity sales as well as the solid performance of our hedging program in the face of financial market headwinds during the quarter," commented Eric Steigerwalt, president and chief executive officer, Brighthouse Financial. "We made significant progress executing our strategy during 2018, which we believe will enable us to achieve our longer-term financial targets and generate value for shareholders."

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

 
 
As of or For the Three Months Ended
 
 
December 31, 2018
 
December 31, 2017
 
 
Total
 
Per share
 
Total
 
Per share
Net income (loss) available to shareholders (1)
 
$1,442
 
$12.14
 
$668
 
$5.57
Adjusted earnings (1)
 
$186
 
$1.56
 
$992
 
$8.28
Weighted average common shares outstanding - diluted
 
118,685,082
 
N/A
 
119,773,106
 
N/A
 
 
 
 
 
 
 
 
 
Book value
 
$14,418
 
$122.67
 
$14,515
 
$121.19
Book value, excluding AOCI
 
$13,702
 
$116.58
 
$12,839
 
$107.19
Ending common shares outstanding
 
117,532,336
 
N/A
 
119,773,106
 
N/A
 
 
 
 
 
 
 
 
 
(1) Per share amounts are on a diluted basis and may not recalculate due to rounding.


2



 
 
 
 
 
PUBLIC RELATIONS

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,
2018
 
September 30,
2018
 
December 31,
2017
Annuities
 
$175
 
$401
 
$208
Life
 
$64
 
$61
 
$5
Run-off
 
$18
 
$(105)
 
$(80)
Corporate & Other (1)
 
$(71)
 
$(87)
 
$859
 
 
 
 
 
 
 
(1) The company uses the term “adjusted loss” throughout this news release to refer to negative adjusted earnings values.

Sales (Unaudited, in millions)
 
 
For the Three Months Ended
 
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
Annuities (1)
 
$1,698
 
$1,541
 
$1,341
Life
 
$1
 
$2
 
$3
 
 
 
 
 
 
 
(1) Annuities sales include sales of a fixed indexed annuity product sold by Massachusetts Mutual Life Insurance Company, representing 90% of gross sales of that product. Sales of this product were $368 million for the fourth quarter of 2018, $302 million for the third quarter of 2018, and $203 million for the fourth quarter of 2017.

Annuities
Adjusted earnings in the Annuities segment were $175 million in the current quarter, compared to adjusted earnings of $208 million in the fourth quarter of 2017 and adjusted earnings of $401 million in the third quarter of 2018.
The current quarter includes a $12 million favorable notable item related to an actuarial system conversion, as described above. The fourth quarter of 2017 did not include any notable items. The third quarter of 2018 included a $154 million favorable notable item related to the annual actuarial review completed during the third quarter.
On a quarter-over-quarter basis, adjusted earnings, less notable items, reflect higher deferred acquisition costs ("DAC") amortization, higher reserves and lower fees, driven primarily by negative market performance in the quarter, and higher claims, partially offset by higher net investment income and lower expenses. On a sequential basis, adjusted earnings, less notable items, reflect higher DAC amortization, higher reserves and lower fees, driven by negative market performance in the quarter, partially offset by lower expenses.
As mentioned above, annuity sales increased 27 percent quarter-over-quarter and 10 percent sequentially, driven by an increase in sales of Shield and fixed indexed annuities.

3



 
 
 
 
 
PUBLIC RELATIONS

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

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Life
Adjusted earnings in the Life segment were $64 million in the current quarter, compared to adjusted earnings of $5 million in the fourth quarter of 2017 and adjusted earnings of $61 million in the third quarter of 2018.
There were no notable items in the current quarter or in the fourth quarter of 2017. The third quarter of 2018 included $11 million of favorable notable items, primarily related to the annual actuarial review completed during the third quarter.
On a quarter-over-quarter basis, adjusted earnings, less notable items, reflect lower claims and higher net investment income. On a sequential basis, adjusted earnings, less notable items, reflect lower claims, partially offset by higher DAC amortization driven by negative market performance in the quarter.
Run-off
The Run-off segment had adjusted earnings of $18 million in the current quarter, compared to an adjusted loss of $80 million in the fourth quarter of 2017 and an adjusted loss of $105 million in the third quarter of 2018.
The current quarter includes a $14 million favorable notable item related to an actuarial system conversion, as described above. The fourth quarter of 2017 included $91 million of unfavorable notable items, primarily related to reserve adjustments. The third quarter of 2018 included $140 million of unfavorable notable items, primarily related to reinsurance recaptures.
On a quarter-over-quarter basis, adjusted earnings, less notable items, reflect lower net investment income. On a sequential basis, adjusted earnings, less notable items, reflect higher claims and lower fees.
Corporate & Other
Corporate & Other had an adjusted loss of $71 million in the current quarter, compared to adjusted earnings of $859 million in the fourth quarter of 2017 and an adjusted loss of $87 million in the third quarter of 2018.
The current quarter includes a $39 million unfavorable notable item related to establishment costs, as described above. The fourth quarter of 2017 included $886 million of favorable notable items, primarily related to tax reform. The third quarter of 2018 included $69 million of unfavorable notable items related to establishment costs.
On a quarter-over-quarter basis, the adjusted loss, less notable items, reflects lower net investment income and higher interest expense on debt. On a sequential basis, the adjusted loss, less notable items, reflects higher expenses, including higher interest expense on debt.
Net Investment Income and Adjusted Net Investment Income (Unaudited, in millions)
 
 
For the Three Months Ended
 
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
Net investment income
 
$862
 
$853
 
$769
Adjusted net investment income*
 
$863
 
$852
 
$780
 

4



 
 
 
 
 
PUBLIC RELATIONS

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

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Net Investment Income
Net investment income for the fourth quarter of 2018 was $862 million.
Adjusted net investment income for the quarter was $863 million. On a quarter-over-quarter basis, adjusted net investment income increased $83 million, primarily driven by growth in average invested assets, the ongoing repositioning of the investment portfolio, and higher alternative investment income. On a sequential basis, adjusted net investment income increased $11 million, primarily driven by growth in average invested assets and the ongoing repositioning of the investment portfolio, partially offset by lower alternative investment income.
The net investment income yield was 4.48 percent during the quarter.

Statutory Capital and Liquidity (Unaudited, in billions)
 
 
As of
 
 
December 31, 2018 (1)
 
September 30,
2018
 
December 31,
2017
Statutory combined total adjusted capital
 
$7.4
 
$6.0
 
$6.6
 
 
 
 
 
 
 
(1) Reflects preliminary statutory results as of December 31, 2018.

Capitalization

Holding company liquid assets were $752 million at December 31, 2018.

For the full year 2018, adjusted statutory earnings were approximately $320 million.

Statutory combined total adjusted capital on a preliminary basis increased to $7.4 billion at December 31, 2018, driven by the performance of the variable annuity exposure management program.

Variable annuity assets remained above the CTE98 level at December 31, 2018.
 
As previously announced, on February 1, 2019, the company entered into a new term loan agreement with respect to a new $1.0 billion unsecured term loan facility. The company used the borrowings under this facility to prepay in full all loans outstanding under its $600 million term loan facility that was scheduled to mature in December 2019 and to pay related fees and expenses, with the remainder to be used for general corporate purposes. The company has no outstanding debt maturing prior to 2024.



5



 
 
 
 
 
PUBLIC RELATIONS

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

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Earnings Conference Call
Brighthouse Financial plans to hold a conference call and audio webcast to discuss its financial results for the fourth quarter of 2018 at 8:00 a.m. Eastern Time on Tuesday, February 12, 2019.
To listen to the audio webcast via the internet and to access the related presentation, please visit the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com. To join the conference call via telephone from within the U.S., please dial (844) 358-9117 and use conference ID 3028509. To join the conference call via telephone from outside the U.S., please dial +1 (209) 905-5952 and use conference ID 3028509.
A replay of the conference call will be made available until Friday, March 1, 2019 on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com.





6



 
 
 
 
 
PUBLIC RELATIONS

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

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Non-GAAP and Other Financial Disclosures

Our definitions of the non-GAAP and other financial measures may differ from those used by other companies.

Non-GAAP Financial Disclosures

We present certain measures of our performance that are not calculated in accordance with accounting principles generally accepted in the United States of America, also known as "GAAP." We believe that these non-GAAP financial measures highlight our results of operations and the underlying profitability drivers of our business, as well as enhance the understanding of our performance by the investor community.

The following non-GAAP financial measures, previously referred to as operating measures, should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:
Non-GAAP financial measures:
Most directly comparable GAAP financial measures:
adjusted earnings
net income (loss) available to shareholders (1)
adjusted earnings, less notable items
net income (loss) available to shareholders (1)
adjusted revenues
revenues
adjusted expenses
expenses
adjusted earnings per common share
earnings per common share, diluted (1)
adjusted earnings per common share, less notable items
earnings per common share, diluted (1)
adjusted return on equity
return on equity
adjusted return on equity, less notable items
return on equity
adjusted net investment income
net investment income
__________________
 
(1) Brighthouse uses net income (loss) available to shareholders to refer to net income (loss) available to Brighthouse Financial, Inc.'s common shareholders, and earnings per common share, diluted to refer to net income (loss) available to shareholders per common share.

Reconciliations to the most directly comparable historical GAAP measures are included for those measures which are presented herein. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are not accessible on a forward-looking basis because we believe it is not possible without unreasonable efforts to provide other than a range of net investment gains and losses and net derivative gains and losses, which can fluctuate significantly within or outside the range and from period to period and may have a material impact on net income (loss) available to shareholders.

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 (i) the impact of market volatility, which could distort trends, and (ii) businesses that have been or will be sold or exited by us, referred to as divested businesses.


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PUBLIC RELATIONS

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

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Adjusted earnings reflects adjusted revenues less adjusted expenses, both net of income tax, and excludes net income (loss) attributable to noncontrolling interests. Provided below are the adjustments to GAAP revenues and GAAP expenses used to calculate adjusted revenues and adjusted expenses, respectively.

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) ("NDGL"), 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 (losses) and net derivative gains (losses) and certain variable annuity GMIB fees ("GMIB Fees")(1).
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 value of business acquired ("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 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 Brighthouse Financial, Inc.'s stockholders' equity, excluding AOCI.





_______________________

(1) Collectively, amounts related to GMIB, excluding amounts recorded in NDGL, may be referred to as "GMIB adjustments."

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PUBLIC RELATIONS

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

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Adjusted Net Investment Income
We present adjusted net investment income to measure our performance for management purposes, and we believe it enhances the understanding of our investment portfolio results. Adjusted net investment income represents net investment income including investment hedge adjustments.


Other Financial Disclosures

Corporate Expenses
Corporate expenses includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs.

Notable items
Certain of the non-GAAP measures described above may be presented further adjusted to exclude notable items. Notable items reflect the impact on our results 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 and non-GAAP measures, less notable items is intended to help investors better understand our results and to evaluate and forecast those results.

Book Value per Common Share and 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 Brighthouse Financial, Inc.'s stockholders' equity, including AOCI, divided by ending common shares outstanding. Book value per common share, excluding AOCI, is defined as ending Brighthouse Financial, Inc.'s stockholders' equity, excluding AOCI, divided by ending common shares outstanding.

CTE95
CTE95 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 a set of capital market scenarios over the life of the contracts.

CTE98
CTE98 is defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst 2 percent of a set of capital market scenarios over the life of the contracts.

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.

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PUBLIC RELATIONS

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

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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 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.

Net Investment Income Yield
Similar to adjusted net investment income, we present net investment income yields as a performance measure we believe enhances the understanding of our investment portfolio results. Net investment income yields are calculated on adjusted net investment income as a percent of average quarterly asset carrying values. Asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties.

Adjusted Statutory Earnings
Adjusted statutory earnings is a measure of our insurance companies' ability to pay future distributions and are reflective of whether our hedging program functions as intended. Adjusted statutory earnings is calculated as statutory pre-tax income less the change in the variable annuities reserve methodology (Actuarial Guideline 43) while including the change in both the reserve and capital methodology based CTE95 calculation, as well as unrealized gains (losses) associated with the variable annuities risk management strategy. Adjusted statutory earnings may be further adjusted for certain unanticipated items that impacted our results in order to help management and investors better understand, 
evaluate and forecast those results.


Forward-Looking Statements

This news release and other oral or written statements that we make from time to time may contain information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve substantial risks and uncertainties. We have tried, wherever possible, to identify such statements using words such as "anticipate," "estimate," "expect," "project," "may," "will," "could," "intend," "goal," "target," "guidance," "forecast," "preliminary," "objective," "continue," "aim," "plan," "believe" and other words and terms of similar meaning, or that are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include, without limitation, statements relating to future actions, 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 operating and financial results, as well as statements regarding the expected benefits of the separation (the "Separation") from MetLife, Inc. ("MetLife") and the recapitalization actions.

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 Financial. These statements are based on current expectations and the current economic

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PUBLIC RELATIONS

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

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environment and 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 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 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; any failure of third parties to provide services we need, any failure of the practices and procedures of these third parties and any inability to obtain information or assistance we need from third parties, including MetLife; 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 that impact us; the uncertainty of the outcome of any disputes with MetLife over tax-related or other matters and agreements including the potential of outcomes adverse to us that could cause us to owe MetLife material tax reimbursements or payments or disagreements regarding MetLife's or our obligations under our other agreements; 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 the Tax Cuts and Jobs Act and other potential future tax legislation that could decrease the value of our tax attributes, lead to increased risk-based capital requirements and cause other cash expenses, such as reserves, to increase materially and make some of our products less attractive to consumers; whether the distribution of shares of Brighthouse Financial, Inc. common stock to MetLife's stockholders in connection with the Separation (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 our Annual Report on Form 10-K for the year ended December 31, 2017 and our subsequent Quarterly Reports on Form 10-Q, particularly in the sections entitled "Risk Factors" and "Quantitative and Qualitative Disclosures About Market Risk," as well as in our subsequent filings with the SEC. 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.

11



 
 
 
 
 
PUBLIC RELATIONS

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

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About Brighthouse Financial, Inc.
Brighthouse Financial, Inc. (Brighthouse Financial) (Nasdaq: BHF) is on a mission to help people achieve financial security. As one of the largest providers of annuities and life insurance in the U.S., we specialize in products designed to help people protect what they've earned and ensure it lasts. Learn more at 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


12



 
 
 
 
 
PUBLIC RELATIONS

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,
2018
 
September 30,
2018
 
December 31,
2017
Premiums
 
$223
 
$225
 
$233
Universal life and investment-type product policy fees
 
899
 
972
 
963
Net investment income
 
862
 
853
 
769
Other revenues
 
89
 
105
 
322
Revenues before NIGL and NDGL
 
2,073
 
2,155
 
2,287
Net investment gains (losses)
 
(86)
 
(42)
 
6
Net derivative gains (losses)
 
2,039
 
(691)
 
(413)
Total revenues
 
$4,026
 
$1,422
 
$1,880
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$270
 
$273
 
$273
Policyholder benefits and claims
 
899
 
822
 
904
Amortization of DAC and VOBA
 
469
 
30
 
231
Interest expense on debt
 
45
 
40
 
37
Other expenses
 
556
 
625
 
657
Total expenses
 
2,239
 
1,790
 
2,102
Income (loss) before provision for income tax
 
1,787
 
(368)
 
(222)
Provision for income tax expense (benefit)
 
345
 
(99)
 
(890)
Net income (loss)
 
1,442
 
(269)
 
668
Less: Net income (loss) attributable to noncontrolling interests
 
 
2
 
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
$1,442
 
$(271)
 
$668





13



 
 
 
 
 
PUBLIC RELATIONS

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,
2018
 
September 30,
2018
 
December 31,
2017
Investments:
 
 
 
 
 
 
Fixed maturity securities available-for-sale
 
$62,608
 
$62,279
 
$64,991
Equity securities (1)
 
140
 
150
 
161
Mortgage loans, net
 
13,694
 
13,033
 
10,742
Policy loans
 
1,421
 
1,443
 
1,523
Real estate joint ventures
 
451
 
444
 
433
Other limited partnership interests
 
1,840
 
1,765
 
1,669
Short-term investments
 
 
116
 
312
Other invested assets (1)
 
3,027
 
2,099
 
2,507
Total investments
 
83,181
 
81,329
 
82,338
Cash and cash equivalents
 
4,145
 
2,144
 
1,857
Accrued investment income
 
724
 
675
 
601
Reinsurance recoverables
 
12,929
 
12,683
 
12,763
Premiums and other receivables
 
768
 
868
 
762
DAC and VOBA
 
5,717
 
6,050
 
6,286
Current income tax recoverable
 
1
 
878
 
740
Other assets
 
573
 
583
 
588
Separate account assets
 
98,256
 
111,736
 
118,257
Total assets
 
$206,294
 
$216,946
 
$224,192
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Future policy benefits
 
$36,209
 
$35,748
 
$36,616
Policyholder account balances
 
40,054
 
39,446
 
37,783
Other policy-related balances
 
3,000
 
2,907
 
2,985
Payables for collateral under securities loaned and other transactions
 
5,057
 
4,043
 
4,169
Long-term debt
 
3,963
 
3,966
 
3,612
Current income tax payable
 
15
 
 
Deferred income tax liability
 
972
 
576
 
927
Other liabilities
 
4,285
 
5,575
 
5,263
Separate account liabilities
 
98,256
 
111,736
 
118,257
Total liabilities
 
191,811
 
203,997
 
209,612
Equity
 
 
 
 
 
 
Common stock
 
1
 
1
 
1
Additional paid-in capital
 
12,473
 
12,469
 
12,432
Retained earnings (deficit)
 
1,346
 
(96)
 
406
Treasury stock
 
(118)
 
(42)
 
Accumulated other comprehensive income (loss)
 
716
 
552
 
1,676
Total Brighthouse Financial, Inc.’s stockholders’ equity
 
14,418
 
12,884
 
14,515
Noncontrolling interests
 
65
 
65
 
65
Total equity
 
14,483
 
12,949
 
14,580
Total liabilities and equity
 
$206,294
 
$216,946
 
$224,192
 
 
 
 
 
 
 
(1) The Company reclassified $71 million as of December 31, 2017 of Federal Home Loan Bank common stock from equity securities to other invested assets, principally at estimated fair value, to conform to current presentation.

14



 
 
 
 
 
PUBLIC RELATIONS

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

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Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings and Adjusted Earnings, Less Notable Items, and Reconciliation of Net Income (Loss) Available to Shareholders per Common Share to Adjusted Earnings per Common Share and Adjusted Earnings, Less Notable Items per Common Share (Unaudited, in millions except per share data)
 
 
For the Three Months Ended
 
For the Year Ended
ADJUSTED EARNINGS, LESS NOTABLE ITEMS
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
 
December 31,
2018
Net income (loss) available to shareholders
 
$1,442
 
$(271)
 
$668
 
$865
Adjustments from net income (loss) available to shareholders to adjusted earnings:
 
 
 
 
 
 
 
 
Less: Net investment gains (losses)
 
(86)
 
(42)
 
6
 
(207)
Less: Net derivative gains (losses), excluding investment hedge adjustments
 
2,038
 
(693)
 
(424)
 
687
Less: GMIB adjustments (1)
 
(169)
 
26
 
(35)
 
(175)
Less: Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses)
 
(202)
 
24
 
(37)
 
(385)
Less: Market value adjustments
 
(1)
 
7
 
(3)
 
45
Less: Other (1)
 
1
 
(4)
 
(4)
 
(6)
Less: Provision for income tax (expense) benefit on reconciling adjustments
 
(325)
 
141
 
173
 
14
Adjusted earnings
 
186
 
270
 
992
 
892
Less: Notable items
 
(13)
 
(44)
 
795
 
(106)
Adjusted earnings, less notable items
 
$199
 
$314
 
$197
 
$998
 
 
 
 
 
 
 
 
 
ADJUSTED EARNINGS, LESS NOTABLE ITEMS PER COMMON SHARE (2)
 
 
 
 
 
 
 
 
Net income (loss) available to shareholders per common share
 
$12.14
 
$(2.26)
 
$5.57
 
$7.21
Less: Net investment gains (losses)
 
(0.73)
 
(0.35)
 
0.05
 
(1.73)
Less: Net derivative gains (losses), excluding investment hedge adjustments
 
17.17
 
(5.79)
 
(3.54)
 
5.73
Less: GMIB adjustments (1)
 
(1.42)
 
0.22
 
(0.29)
 
(1.46)
Less: Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses)
 
(1.70)
 
0.20
 
(0.31)
 
(3.21)
Less: Market value adjustments
 
(0.01)
 
0.06
 
(0.03)
 
0.38
Less: Other (1)
 
0.01
 
(0.03)
 
(0.03)
 
(0.05)
Less: Provision for income tax (expense) benefit on reconciling adjustments
 
(2.74)
 
1.18
 
1.44
 
0.12
Less: Impact of inclusion of dilutive shares
 
 
0.02
 
 
Adjusted earnings per common share
 
1.56
 
2.23
 
8.28
 
7.44
Less: Notable items
 
(0.11)
 
(0.36)
 
6.64
 
(0.88)
Adjusted earnings, less notable items per common share
 
$1.68
 
$2.60
 
$1.64
 
$8.33
 
 
 
 
 
 
 
 
 
(1) Certain amounts prior to June 30, 2018 have been reclassified to conform to the current period presentation.
(2) Per share calculations are on a diluted basis and may not recalculate or foot due to rounding. For loss periods, dilutive shares were not included in the calculation as inclusion of such shares would have an anti-dilutive effect.

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PUBLIC RELATIONS

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

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Reconciliation of Net Investment Income to Adjusted Net Investment Income (Unaudited, in millions)

 
 
For the Three Months Ended
 
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
Net investment income
 
$862
 
$853
 
$769
Less: Investment hedge adjustments
 
(1)
 
(2)
 
(11)
Less: Other incremental net investment income
 
 
3
 
Adjusted net investment income
 
$863
 
$852
 
$780


Notable Items (Unaudited, in millions)
 
 
For the Three Months Ended
 
For the Year Ended
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGS
 
December 31,
2018
 
September 30,
2018
 
December 31,
2017
 
December 31,
2018
Actuarial items and other insurance adjustments
 
$(26)
 
$(25)
 
$91
 
$(83)
Establishment costs
 
39
 
69
 
47
 
189
Separation related transactions
 
 
 
14
 
Tax reform adjustment (1)
 
 
 
(947)
 
Total notable items (2)
 
$13
 
$44
 
$(795)
 
$106
 
 
 
 
 
 
 
 
 
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER
 
 
 
 
 
 
 
 
Annuities
 
$(12)
 
$(154)
 
$—
 
$(166)
Life
 
 
(11)
 
 
(27)
Run-off
 
(14)
 
140
 
91
 
110
Corporate & Other
 
39
 
69
 
(886)
 
189
Total notable items (2)
 
$13
 
$44
 
$(795)
 
$106
 
 
 
(1) The notable item for the three months ended December 31, 2017 includes a reduction of $222 million 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 our results and to evaluate and forecast those results.


16


Exhibit

 
 
 
 
 



Exhibit 99.2








Brighthouse Financial, Inc.
Financial Supplement

Fourth Quarter 2018













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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) Available to Shareholders to Adjusted Earnings and Adjusted Earnings, Less Notable Items, and Reconciliation of Net Income (Loss) Available to Shareholders per Common Share to Adjusted Earnings per Common Share and Adjusted Earnings, Less Notable Items 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.

As used in this financial supplement, “Brighthouse Financial,” “Brighthouse,” the “Company,” “we,” “our” and “us” refer to Brighthouse Financial, Inc.



 
 
 
 
 









Financial Results



 
 
Financial Supplement
 
1




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

 
 
As of or For the Three Months Ended
Financial Results and Metrics
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
Net income (loss) available to shareholders
 
$1,442
 
$(271)
 
$(239)
 
$(67)
 
$668
Adjusted earnings (1)
 
$186
 
$270
 
$153
 
$283
 
$992
Total corporate expenses (2)
 
$233
 
$242
 
$288
 
$230
 
$287
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
Ending Brighthouse Financial, Inc.’s stockholders’ equity
 
$14,418
 
$12,884
 
$13,435
 
$13,608
 
$14,515
Ending AOCI (3)
 
716
 
552
 
815
 
801
 
1,676
Ending Brighthouse Financial, Inc.’s stockholders’ equity, excluding AOCI (3)
 
$13,702
 
$12,332
 
$12,620
 
$12,807
 
$12,839
 
 
 
 
 
 
 
 
 
 
 
Return on Equity
 
 
 
 
 
 
 
 
 
 
Return on equity
 
6.3%
 
0.7%
 
(4.0)%
 
(0.7)%
 
(2.5)%
Return on equity, excluding AOCI (1)
 
6.7%
 
0.7%
 
(4.5)%
 
(0.7)%
 
(2.8)%
Adjusted return on equity (1)
 
6.9%
 
13.5%
 
5.8%
 
7.0%
 
6.9%
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Common Share, Diluted
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to shareholders per common share (4)
 
$12.14
 
$(2.26)
 
$(2.01)
 
$(0.56)
 
$5.57
Adjusted earnings per common share (1)
 
$1.56
 
$2.23
 
$1.27
 
$2.36
 
$8.28
Weighted average common shares outstanding
 
118,685,082
 
120,641,572
 
120,200,149
 
119,773,106
 
119,773,106
 
 
 
 
 
 
 
 
 
 
 
Book Value Per Common Share
 
 
 
 
 
 
 
 
 
 
Book value per common share (1)
 
$122.67
 
$108.45
 
$112.17
 
$113.61
 
$121.19
Book value per common share, excluding AOCI (1)
 
$116.58
 
$103.80
 
$105.37
 
$106.93
 
$107.19
Ending common shares outstanding
 
117,532,336
 
118,800,611
 
119,773,106
 
119,773,106
 
119,773,106
 
 
 
 
 
 
 
 
 
 
 
(1) See definitions for non-GAAP and other financial disclosures in the Appendix beginning on Page A-2.
(2) Includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs.
(3) Ending AOCI and Ending Brighthouse Financial, Inc.'s stockholders' equity, excluding AOCI, have been recast as of December 31, 2017 to conform to amounts presented in Brighthouse Financial, Inc.'s annual report on Form 10-K for the year ended December 31, 2017. The change was made as a result of the adoption of accounting guidance related to the accounting for deferred taxes that was issued subsequent to the filing of the Q4 2017 Financial Supplement.
(4) For loss periods, dilutive shares were not included in the calculation of net income (loss) available to shareholders per common share as inclusion of such shares would have an anti-dilutive effect.

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Financial Supplement
 
2




Condensed Statements of Operations (Unaudited, in millions)

 
 
For the Three Months Ended
 
For the Years Ended
Revenues
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
December 31,
2018
 
December 31,
2017
Premiums
 
$223
 
$225
 
$223
 
$229
 
$233
 
$900
 
$863
Universal life and investment-type product policy fees
 
899
 
972
 
962
 
1,002
 
963
 
3,835
 
3,898
Net investment income
 
862
 
853
 
806
 
817
 
769
 
3,338
 
3,078
Other revenues
 
89
 
105
 
98
 
105
 
322
 
397
 
651
Revenues before NIGL and NDGL
 
2,073
 
2,155
 
2,089
 
2,153
 
2,287
 
8,470
 
8,490
Net investment gains (losses)
 
(86)
 
(42)
 
(75)
 
(4)
 
6
 
(207)
 
(28)
Net derivative gains (losses)
 
2,039
 
(691)
 
(312)
 
(334)
 
(413)
 
702
 
(1,620)
Total revenues
 
$4,026
 
$1,422
 
$1,702
 
$1,815
 
$1,880
 
$8,965
 
$6,842
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$270
 
$273
 
$269
 
$267
 
$273
 
$1,079
 
$1,111
Policyholder benefits and claims
 
899
 
822
 
813
 
738
 
904
 
3,272
 
3,636
Amortization of DAC and VOBA
 
469
 
30
 
246
 
305
 
231
 
1,050
 
227
Interest expense on debt
 
45
 
40
 
36
 
37
 
37
 
158
 
153
Other expenses
 
556
 
625
 
655
 
581
 
657
 
2,417
 
2,330
Total expenses
 
2,239
 
1,790
 
2,019
 
1,928
 
2,102
 
7,976
 
7,457
Income (loss) before provision for income tax
 
1,787
 
(368)
 
(317)
 
(113)
 
(222)
 
989
 
(615)
Provision for income tax expense (benefit)
 
345
 
(99)
 
(79)
 
(48)
 
(890)
 
119
 
(237)
Net income (loss)
 
1,442
 
(269)
 
(238)
 
(65)
 
668
 
870
 
(378)
Less: Net income (loss) attributable to noncontrolling interests
 
 
2
 
1
 
2
 
 
5
 
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
$1,442
 
$(271)
 
$(239)
 
$(67)
 
$668
 
$865
 
$(378)
 

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Financial Supplement
 
3




Balance Sheets (Unaudited, in millions)
 
 
As of
ASSETS
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
Investments:
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities available-for-sale
 
$62,608
 
$62,279
 
$62,343
 
$63,178
 
$64,991
Equity securities (1)
 
140
 
150
 
153
 
160
 
161
Mortgage loans, net
 
13,694
 
13,033
 
12,337
 
11,308
 
10,742
Policy loans
 
1,421
 
1,443
 
1,458
 
1,517
 
1,523
Real estate joint ventures
 
451
 
444
 
449
 
441
 
433
Other limited partnership interests
 
1,840
 
1,765
 
1,706
 
1,700
 
1,669
Short-term investments
 
 
116
 
177
 
293
 
312
Other invested assets (1)
 
3,027
 
2,099
 
2,305
 
2,452
 
2,507
Total investments
 
83,181
 
81,329
 
80,928
 
81,049
 
82,338
Cash and cash equivalents
 
4,145
 
2,144
 
2,135
 
1,888
 
1,857
Accrued investment income
 
724
 
675
 
607
 
640
 
601
Reinsurance recoverables
 
12,929
 
12,683
 
12,745
 
12,746
 
12,763
Premiums and other receivables
 
768
 
868
 
848
 
781
 
762
DAC and VOBA
 
5,717
 
6,050
 
5,968
 
6,083
 
6,286
Current income tax recoverable
 
1
 
878
 
814
 
832
 
740
Other assets
 
573
 
583
 
580
 
593
 
588
Separate account assets
 
98,256
 
111,736
 
111,587
 
114,385
 
118,257
Total assets
 
$206,294
 
$216,946
 
$216,212
 
$218,997
 
$224,192
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Future policy benefits
 
$36,209
 
$35,748
 
$35,816
 
$36,223
 
$36,616
Policyholder account balances
 
40,054
 
39,446
 
38,407
 
37,940
 
37,783
Other policy-related balances
 
3,000
 
2,907
 
2,941
 
2,991
 
2,985
Payables for collateral under securities loaned and other transactions
 
5,057
 
4,043
 
4,265
 
4,244
 
4,169
Long-term debt
 
3,963
 
3,966
 
3,607
 
3,609
 
3,612
Current income tax payable
 
15
 
 
 
 
Deferred income tax liability
 
972
 
576
 
684
 
752
 
927
Other liabilities
 
4,285
 
5,575
 
5,405
 
5,180
 
5,263
Separate account liabilities
 
98,256
 
111,736
 
111,587
 
114,385
 
118,257
Total liabilities
 
191,811
 
203,997
 
202,712
 
205,324
 
209,612
Equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
1
 
1
 
1
 
1
 
1
Additional paid-in capital
 
12,473
 
12,469
 
12,444
 
12,432
 
12,432
Retained earnings (deficit)
 
1,346
 
(96)
 
175
 
374
 
406
Treasury stock
 
(118)
 
(42)
 
 
 
Accumulated other comprehensive income (loss)
 
716
 
552
 
815
 
801
 
1,676
Total Brighthouse Financial, Inc.’s stockholders’ equity
 
14,418
 
12,884
 
13,435
 
13,608
 
14,515
Noncontrolling interests
 
65
 
65
 
65
 
65
 
65
Total equity
 
14,483
 
12,949
 
13,500
 
13,673
 
14,580
Total liabilities and equity
 
$206,294
 
$216,946
 
$216,212
 
$218,997
 
$224,192
 
 
 
 
 
 
 
 
 
 
 
(1) The Company reclassified $71 million as of December 31, 2017 of FHLB common stock from equity securities to other invested assets, principally at estimated fair value, to conform to current presentation.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12692867&doc=5
 
 
 
 
 






 
 
 
 
 








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, 2018
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$44
 
$155
 
$1
 
$23
 
$223
Universal life and investment-type product policy fees
 
594
 
61
 
180
 
(3)
 
832
Net investment income
 
398
 
115
 
331
 
19
 
863
Other revenues
 
78
 
4
 
6
 
1
 
89
Total adjusted revenues
 
$1,114
 
$335
 
$518
 
$40
 
$2,007
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$147
 
$25
 
$98
 
$—
 
$270
Policyholder benefits and claims
 
174
 
153
 
351
 
16
 
694
Amortization of DAC and VOBA
 
198
 
35
 
 
3
 
236
Interest expense on debt
 
 
 
 
45
 
45
Other operating costs
 
387
 
42
 
47
 
80
 
556
Total adjusted expenses
 
906
 
255
 
496
 
144
 
1,801
Adjusted earnings before provision for income tax
 
208
 
80
 
22
 
(104)
 
206
Provision for income tax expense (benefit)
 
33
 
16
 
4
 
(33)
 
20
Adjusted earnings after provision for income tax
 
175
 
64
 
18
 
(71)
 
186
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
 
Adjusted earnings
 
$175
 
$64
 
$18
 
$(71)
 
$186
 
 
 
 
 
 
 
 
 
 
 
  
 
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 to policyholder account balances
 
$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 after provision for income tax
 
208
 
5
 
(80)
 
859
 
992
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
 
Adjusted earnings
 
$208
 
$5
 
$(80)
 
$859
 
$992

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12692867&doc=5
 
 
 
 
 






 
 
Financial Supplement
 
6




Statements of Adjusted Earnings by Segment and Corporate & Other (Cont.) (Unaudited, in millions)
  
 
For the Year Ended December 31, 2018
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$185
 
$616
 
$1
 
$98
 
$900
Universal life and investment-type product policy fees
 
2,491
 
317
 
776
 
(13)
 
3,571
Net investment income
 
1,536
 
449
 
1,310
 
57
 
3,352
Other revenues
 
355
 
7
 
25
 
10
 
397
Total adjusted revenues
 
$4,567
 
$1,389
 
$2,112
 
$152
 
$8,220
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$593
 
$113
 
$372
 
$—
 
$1,078
Policyholder benefits and claims
 
607
 
655
 
1,595
 
64
 
2,921
Amortization of DAC and VOBA
 
505
 
95
 
 
16
 
616
Interest expense on debt
 
 
 
 
158
 
158
Other operating costs
 
1,629
 
241
 
202
 
345
 
2,417
Total adjusted expenses
 
3,334
 
1,104
 
2,169
 
583
 
7,190
Adjusted earnings before provision for income tax
 
1,233
 
285
 
(57)
 
(431)
 
1,030
Provision for income tax expense (benefit)
 
210
 
57
 
(14)
 
(120)
 
133
Adjusted earnings after provision for income tax
 
1,023
 
228
 
(43)
 
(311)
 
897
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
5
 
5
Adjusted earnings
 
$1,023
 
$228
 
$(43)
 
$(316)
 
$892
 
 
 
 
 
 
 
 
 
 
 
  
 
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 to policyholder account balances
 
$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