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): May 6, 2019 (May 3, 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
BHF
The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/1,000th interest in a share of 6.600% Non-Cumulative Preferred Stock, Series A
BHFAP
The Nasdaq Stock Market LLC
6.250% Junior Subordinated Debentures due 2058
BHFAL
The Nasdaq Stock Market LLC





Item 2.02.   Results of Operations and Financial Condition.
On May 6, 2019, Brighthouse Financial, Inc. (“Brighthouse Financial” or the “Company”) issued (i) a news release announcing its results for the quarter ended March 31, 2019, 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 March 31, 2019, a copy of which is attached hereto as Exhibit 99.3 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 99.3 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 March 31, 2019, 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 8.01.  Other Events.

On May 6, 2019, Brighthouse Financial issued a news release announcing that it has authorized the repurchase of up to $400 million of Brighthouse Financial common stock. The stock repurchase program supplements the Company’s $200 million stock repurchase program announced in August 2018. Repurchases under the stock repurchase program may be made through open market purchases, pursuant to 10b5-1 plans or pursuant to accelerated stock repurchase plans, from time to time at management's discretion in accordance with applicable federal securities laws. A copy of the news release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

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: May 6, 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 First Quarter 2019 Results
First quarter 2019 net loss available to shareholders of $737 million, or $6.31 on a per diluted share basis, driven primarily by net derivative mark-to-market losses
Adjusted earnings, less notable items*, of $259 million, or $2.21 on a per diluted share basis
Annuity sales grew 36 percent over the first quarter of 2018
Variable annuity assets approximately $1.1 billion in excess of CTE98*
Company repurchased $52 million of its common stock during the quarter; announced the repurchase of up to an additional $400 million shares of common stock
CHARLOTTE, NC, May 6, 2019 — Brighthouse Financial, Inc. ("Brighthouse Financial" or the "company") (Nasdaq: BHF) announced today its financial results for the first quarter ended March 31, 2019.
First Quarter 2019 Results
The company reported a net loss available to shareholders of $737 million in the first quarter of 2019, or $6.31 on a per diluted share basis, compared to a net loss available to shareholders of $67 million in the first quarter of 2018. The company ended the first quarter of 2019 with stockholders' equity ("book value") of $15.0 billion, or $129.10 on a per share basis, and book value, excluding preferred stock and accumulated other comprehensive income ("AOCI") of $12.9 billion, or $111.18 on a per share basis.

For the first quarter of 2019, the company reported adjusted earnings* of $232 million, or $1.98 on a per diluted share basis.

The adjusted earnings for the quarter reflected a $27 million unfavorable notable item, or $0.23 on a per diluted share basis, for establishment costs related to planned technology and branding expenses associated with the company's separation from its former parent company.
Corporate expenses in the first quarter of 2019 were $225 million pre-tax, down from $233 million pre-tax in the fourth quarter of 2018.



_______________________
* 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 First Quarter 2019 Brighthouse Financial, Inc. Financial Supplement and/or the First Quarter 2019 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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Annuity sales increased 36 percent quarter-over-quarter and 1 percent sequentially. The company's first quarter 2019 sales results were its highest since becoming an independent public company.
The company also announced today that it has authorized the repurchase of up to $400 million of Brighthouse Financial common stock. This stock repurchase authorization is in addition to the $200 million stock repurchase authorization announced in August 2018. During the first quarter of 2019, the company repurchased $52 million of its common stock, with an additional $14 million of its common stock repurchased in April 2019, bringing total repurchases pursuant to the August 2018 authorization to $171 million through April 30, 2019.

“Brighthouse delivered solid results during the first quarter of 2019, driven by robust annuity sales, favorable market conditions, and prudent capital and expense management,” said Eric Steigerwalt, president and chief executive officer, Brighthouse Financial. “We remain focused on executing our strategy, which we continue to believe will generate long-term value for our customers, partners and shareholders."


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

 
 
As of or For the Three Months Ended
 
 
March 31, 2019
 
March 31, 2018
 
 
Total
 
Per share
 
Total
 
Per share
Net income (loss) available to shareholders (1)
 
$(737)
 
$(6.31)
 
$(67)
 
$(0.56)
Adjusted earnings (1)
 
$232
 
$1.98
 
$283
 
$2.36
Weighted average common shares outstanding - diluted
 
117,229,854
 
N/A
 
119,773,106
 
N/A
 
 
 
 
 
 
 
 
 
Book value
 
$14,999
 
$129.10
 
$13,584
 
$113.41
Book value, excluding preferred stock and AOCI
 
$12,917
 
$111.18
 
$12,847
 
$107.26
Ending common shares outstanding
 
116,182,687
 
N/A
 
119,773,106
 
N/A
 
 
 
 
 
 
 
 
 
(1) Per share amounts are on a diluted basis and may not recalculate 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.








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
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Annuities
 
$295
 
$175
 
$226
Life
 
$25
 
$64
 
$66
Run-off (1)
 
$(36)
 
$18
 
$50
Corporate & Other (1)
 
$(52)
 
$(71)
 
$(59)
 
 
 
 
 
 
 
(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
 
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Annuities (1)
 
$1,707
 
$1,698
 
$1,256
Life
 
$1
 
$1
 
$2
 
 
 
 
 
 
 
(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 $281 million for the first quarter of 2019, $368 million for the fourth quarter of 2018, and $173 million for the first quarter of 2018.

Annuities
Adjusted earnings in the Annuities segment were $295 million in the current quarter, compared to adjusted earnings of $226 million in the first quarter of 2018 and adjusted earnings of $175 million in the fourth quarter of 2018.
There were no notable items in the current quarter or in the first quarter of 2018. The fourth quarter of 2018 included a $12 million favorable notable item.
On a quarter-over-quarter and sequential basis, adjusted earnings, less notable items, reflect lower amortization of deferred acquisition costs ("DAC"), lower reserves, and higher net investment income, driven primarily by positive market performance in the quarter, partially offset by lower fees.
As mentioned above, annuity sales increased 36 percent quarter-over-quarter and 1 percent sequentially.
Life
Adjusted earnings in the Life segment were $25 million in the current quarter, compared to adjusted earnings of $66 million in the first quarter of 2018 and adjusted earnings of $64 million in the fourth quarter of 2018.

3



 
 
 
 
 
PUBLIC RELATIONS

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

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There were no notable items in the current quarter. The first quarter of 2018 included $16 million of favorable notable items, while the fourth quarter of 2018 did not include any notable items.
On a quarter-over-quarter basis, adjusted earnings, less notable items, reflect higher claims and lower net investment income, partially offset by lower expenses. On a sequential basis, adjusted earnings, less notable items, reflect higher claims related to lower reinsurance recoveries, and lower net investment income, partially offset by lower DAC amortization.
Run-off
The Run-off segment had an adjusted loss of $36 million in the current quarter, compared to adjusted earnings of $50 million in the first quarter of 2018 and adjusted earnings of $18 million in the fourth quarter of 2018.
There were no notable items in the current quarter while the first quarter of 2018 included $16 million of favorable notable items. The fourth quarter of 2018 included $14 million of favorable notable items.
On a quarter-over-quarter basis, the adjusted loss, less notable items, reflects lower net investment income and higher claims related to lower reinsurance recoveries. On a sequential basis, the adjusted loss, less notable items, reflects lower net investment income.
Corporate & Other
Corporate & Other had an adjusted loss of $52 million in the current quarter, compared to an adjusted loss of $59 million in the first quarter of 2018 and an adjusted loss of $71 million in the fourth quarter of 2018.
The current quarter includes a $27 million unfavorable notable item related to establishment costs, as described above. The first quarter of 2018 included a $37 million unfavorable notable item and the fourth quarter of 2018 included a $39 million unfavorable notable item.
On a quarter-over-quarter basis, the adjusted loss, less notable items, reflects higher interest expense, partially offset by higher net investment income. On a sequential basis, the adjusted loss, less notable items, reflects lower expenses, partially offset by a non-recurring tax benefit in the fourth quarter of 2018.

Net Investment Income and Adjusted Net Investment Income (Unaudited, in millions)
 
 
For the Three Months Ended
 
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Net investment income
 
$811
 
$862
 
$817
Adjusted net investment income*
 
$811
 
$863
 
$825
 

4



 
 
 
 
 
PUBLIC RELATIONS

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

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Net Investment Income
Net investment income and adjusted net investment income for the first quarter of 2019 were each $811 million. On a quarter-over-quarter and sequential basis, adjusted net investment income decreased $14 million and $52 million, respectively. These results were primarily driven by lower alternative investment income, partially offset by growth in average invested assets and the ongoing repositioning of the investment portfolio.
The net investment income yield was 4.10 percent during the quarter.

Statutory Capital and Liquidity (Unaudited, in billions)
 
 
As of
 
 
March 31,
2019 (1)
 
December 31,
2018
 
March 31,
2018
Statutory combined total adjusted capital
 
$6.3
 
$7.4
 
$6.5
 
 
 
 
 
 
 
(1) Reflects preliminary statutory results as of March 31, 2019.

Capitalization

Holding company liquid assets were approximately $1.1 billion at March 31, 2019.

Statutory combined total adjusted capital on a preliminary basis decreased to approximately $6.3 billion at March 31, 2019, driven primarily by net derivative mark-to-market losses.

Variable annuity assets were approximately $1.1 billion above the CTE98 level at March 31, 2019.
 
As previously announced, on March 25, 2019, the company issued depositary shares each representing a 1/1,000th interest in a share of its 6.600% Non-Cumulative Preferred Stock, Series A. The net proceeds of $412 million were contributed to Brighthouse Life Insurance Company.





5



 
 
 
 
 
PUBLIC RELATIONS

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

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Earnings Conference Call
Brighthouse Financial will hold a conference call and audio webcast to discuss its financial results for the first quarter of 2019 at 8:00 a.m. Eastern Time on Tuesday, May 7, 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 please dial (844) 358-9117 (+1 (209) 905-5952 from outside the U.S.) and use conference ID 3895856.
A replay of the conference call will be made available until Friday, May 24, 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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Note Regarding 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").

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 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 market and counterparty risk due to guarantees within certain of our products; the effectiveness of our variable annuity exposure management strategy and the impact of such strategy on net income volatility and negative effects on our statutory capital; the reserves we are 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; the potential material adverse effect of changes in accounting standards, practices and/or policies applicable to us, including changes in the accounting for long-duration contracts; our degree of leverage due to indebtedness; 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; 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; 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 all or any portion of the tax consequences of the Separation 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 potential future tax legislation that could decrease the value of our tax attributes and cause other cash expenses, such as reserves, to increase materially and make some of our products less attractive to consumers; whether the Separation will qualify for non-recognition treatment for federal income tax purposes and potential indemnification

7



 
 
 
 
 
PUBLIC RELATIONS

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

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to MetLife if the Separation does not so qualify; the impact of the Separation on our business and profitability due to MetLifes 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; 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, 2018, 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.


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.


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PUBLIC RELATIONS

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

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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 the impact of market volatility, which could distort trends.

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
Certain variable annuity GMIB fees ("GMIB Fees") and amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses).
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");
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.
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.


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PUBLIC RELATIONS

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

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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 preferred stock and AOCI.

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 Preferred Stock and 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 preferred stock and AOCI, is defined as ending Brighthouse Financial, Inc.'s stockholders' equity, excluding preferred stock and 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 five percent of a set of capital market scenarios over the life of the contracts.


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PUBLIC RELATIONS

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

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CTE98
CTE98 is defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst two 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.

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.






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
Meghan Lantier
(980) 949-4142
mlantier@brighthousefinancial.com


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=12883580&doc=5


Condensed Statements of Operations (Unaudited, in millions)
 
 
For the Three Months Ended
Revenues
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Premiums
 
$227
 
$223
 
$229
Universal life and investment-type product policy fees
 
875
 
899
 
1,002
Net investment income
 
811
 
862
 
817
Other revenues
 
92
 
89
 
105
Revenues before NIGL and NDGL
 
2,005
 
2,073
 
2,153
Net investment gains (losses)
 
(11)
 
(86)
 
(4)
Net derivative gains (losses)
 
(1,303)
 
2,039
 
(334)
Total revenues
 
$691
 
$4,026
 
$1,815
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$258
 
$270
 
$267
Policyholder benefits and claims
 
772
 
899
 
738
Amortization of DAC and VOBA
 
22
 
469
 
305
Interest expense on debt
 
47
 
45
 
37
Other expenses
 
545
 
556
 
581
Total expenses
 
1,644
 
2,239
 
1,928
Income (loss) before provision for income tax
 
(953)
 
1,787
 
(113)
Provision for income tax expense (benefit)
 
(218)
 
345
 
(48)
Net income (loss)
 
(735)
 
1,442
 
(65)
Less: Net income (loss) attributable to noncontrolling interests
 
2
 
 
2
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
$(737)
 
$1,442
 
$(67)





13



 
 
 
 
 
PUBLIC RELATIONS

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

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12883580&doc=5


Condensed Balance Sheets (Unaudited, in millions)
 
 
As of
ASSETS
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Investments:
 
 
 
 
 
 
Fixed maturity securities available-for-sale
 
$64,847
 
$62,608
 
$63,178
Equity securities
 
150
 
140
 
160
Mortgage loans, net
 
14,504
 
13,694
 
11,308
Policy loans
 
1,385
 
1,421
 
1,517
Real estate limited partnerships and limited liability companies
 
453
 
451
 
441
Other limited partnership interests
 
1,800
 
1,840
 
1,700
Short-term investments
 
799
 
 
293
Other invested assets
 
2,302
 
3,027
 
2,452
Total investments
 
86,240
 
83,181
 
81,049
Cash and cash equivalents
 
3,864
 
4,145
 
1,888
Accrued investment income
 
791
 
724
 
640
Reinsurance recoverables
 
13,098
 
12,929
 
12,746
Premiums and other receivables
 
928
 
768
 
781
DAC and VOBA
 
5,680
 
5,717
 
6,083
Current income tax recoverable
 
 
1
 
832
Other assets
 
618
 
573
 
593
Separate account assets
 
105,211
 
98,256
 
114,385
Total assets
 
$216,430
 
$206,294
 
$218,997
LIABILITIES AND EQUITY
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Future policy benefits
 
$37,157
 
$36,209
 
$36,223
Policyholder account balances
 
41,177
 
40,054
 
37,940
Other policy-related balances
 
3,005
 
3,000
 
2,991
Payables for collateral under securities loaned and other transactions
 
3,990
 
5,057
 
4,244
Long-term debt
 
4,364
 
3,963
 
3,609
Current income tax payable
 
19
 
15
 
Deferred income tax liability (1)
 
1,005
 
972
 
730
Other liabilities (1)
 
5,438
 
4,285
 
5,226
Separate account liabilities
 
105,211
 
98,256
 
114,385
Total liabilities
 
201,366
 
191,811
 
205,348
Equity
 
 
 
 
 
 
Preferred Stock, at par value
 
 
 
Common stock, at par value
 
1
 
1
 
1
Additional paid-in capital
 
12,889
 
12,473
 
12,432
Retained earnings (deficit) (1)
 
609
 
1,346
 
414
Treasury stock
 
(170)
 
(118)
 
Accumulated other comprehensive income (loss) (1)
 
1,670
 
716
 
737
Total Brighthouse Financial, Inc.’s stockholders’ equity
 
14,999
 
14,418
 
13,584
Noncontrolling interests
 
65
 
65
 
65
Total equity
 
15,064
 
14,483
 
13,649
Total liabilities and equity
 
$216,430
 
$206,294
 
$218,997
 
 
 
 
 
 
 
(1) During the second quarter of 2018, and effective January 1, 2018, the Company recorded adjustments related to accretion of certain investments in equity securities. As a result, amounts originally reported as of March 31, 2018 have been revised to conform to such changes. Additionally, certain key metrics for the first quarter of 2018, as well as amounts affecting the adjusted return on equity for certain periods, have also been revised for such impact.

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
ADJUSTED EARNINGS, LESS NOTABLE ITEMS
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Net income (loss) available to shareholders
 
$(737)
 
$1,442
 
$(67)
Adjustments from net income (loss) available to shareholders to adjusted earnings:
 
 
 
 
 
 
Less: Net investment gains (losses)
 
(11)
 
(86)
 
(4)
Less: Net derivative gains (losses), excluding investment hedge adjustments
 
(1,303)
 
2,038
 
(342)
Less: GMIB Fees and GMIB Costs (1)
 
35
 
(137)
 
4
Less: Amortization of DAC and VOBA (1)
 
75
 
(233)
 
(128)
Less: Market value adjustments
 
(23)
 
(1)
 
31
Less: Other
 
 
 
(4)
Less: Provision for income tax (expense) benefit on reconciling adjustments
 
258
 
(325)
 
93
Adjusted earnings
 
232
 
186
 
283
Less: Notable items
 
(27)
 
(13)
 
(5)
Adjusted earnings, less notable items
 
$259
 
$199
 
$288
 
 
 
 
 
 
 
ADJUSTED EARNINGS, LESS NOTABLE ITEMS PER COMMON SHARE (2)
 
 
 
 
 
 
Net income (loss) available to shareholders per common share
 
$(6.31)
 
$12.14
 
$(0.56)
Less: Net investment gains (losses)
 
(0.09)
 
(0.73)
 
(0.03)
Less: Net derivative gains (losses), excluding investment hedge adjustments
 
(11.16)
 
17.17
 
(2.86)
Less: GMIB Fees and GMIB Costs (1)
 
0.30
 
(1.15)
 
0.03
Less: Amortization of DAC and VOBA (1)
 
0.64
 
(1.96)
 
(1.07)
Less: Market value adjustments
 
(0.20)
 
(0.01)
 
0.26
Less: Other
 
 
 
(0.03)
Less: Provision for income tax (expense) benefit on reconciling adjustments
 
2.21
 
(2.74)
 
0.78
Less: Impact of inclusion of dilutive shares
 
0.01
 
 
Adjusted earnings per common share
 
1.98
 
1.56
 
2.36
Less: Notable items
 
(0.23)
 
(0.11)
 
(0.04)
Adjusted earnings, less notable items per common share
 
$2.21
 
$1.68
 
$2.40
 
 
 
 
 
 
 
(1) Certain amounts prior to March 31, 2019 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.

15



 
 
 
 
 
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
 
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Net investment income
 
$811
 
$862
 
$817
Less: Investment hedge adjustments
 
 
(1)
 
(8)
Adjusted net investment income
 
$811
 
$863
 
$825


Notable Items (Unaudited, in millions)
 
 
For the Three Months Ended
 
For the Three Months Ended
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGS
 
March 31,
2019
 
December 31,
2018
 
March 31,
2018
 
March 31,
2019
Actuarial items and other insurance adjustments
 
$—
 
$(26)
 
$(32)
 
$—
Establishment costs
 
27
 
39
 
37
 
27
Total notable items (1)
 
$27
 
$13
 
$5
 
$27
 
 
 
 
 
 
 
 
 
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER
 
 
 
 
 
 
 
 
Annuities
 
$—
 
$(12)
 
$—
 
$—
Life
 
 
 
(16)
 
Run-off
 
 
(14)
 
(16)
 
Corporate & Other
 
27
 
39
 
37
 
27
Total notable items (1)
 
$27
 
$13
 
$5
 
$27
 
 
 
(1) 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
 
 
 
 
 
PUBLIC RELATIONS

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

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Exhibit 99.2

FOR IMMEDIATE RELEASE

Brighthouse Financial Announces $400 Million Stock Repurchase Program

CHARLOTTE, NC, May 6, 2019 — Brighthouse Financial, Inc. ("Brighthouse Financial" or the "company") (Nasdaq: BHF) today announced that it has authorized the repurchase of up to $400 million of Brighthouse Financial common stock. The stock repurchase program supplements the company's $200 million stock repurchase program announced in August 2018. As of April 30, 2019, the company has repurchased $171 million of its common stock under the August 2018 authorization.

“We are pleased to announce this second stock repurchase program, which contributes significantly to our goal of returning $1.5 billion of capital to our shareholders by 2021,” said Eric Steigerwalt, president and chief executive officer, Brighthouse Financial. “This additional program reflects our financial strength and ongoing commitment to returning capital over time.”

Repurchases under the program may be made through open market purchases, including pursuant to 10b5-1 plans or pursuant to accelerated stock repurchase plans, from time to time at management's discretion in accordance with applicable federal securities laws.


Note Regarding 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 from MetLife, Inc.

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 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. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in Brighthouse Financials most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”), particularly in the sections entitled “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk” as well as in in Brighthouse Financials subsequent filings with the SEC. Brighthouse Financial does not undertake any

1



 
 
 
 
 
PUBLIC RELATIONS

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

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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.


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
Meghan Lantier
(980) 949-4142
mlantier@brighthousefinancial.com






2


Exhibit

 
 
 
 
 



Exhibit 99.3








Brighthouse Financial, Inc.
Financial Supplement

First Quarter 2019













http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12883580&doc=5




 
 
 
 
 



    
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
 
Note Regarding Forward-Looking Statements
 
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
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Net income (loss) available to shareholders
 
$(737)
 
$1,442
 
$(271)
 
$(239)
 
$(67)
Adjusted earnings (1)
 
$232
 
$186
 
$270
 
$153
 
$283
Total corporate expenses (2)
 
$225
 
$233
 
$242
 
$288
 
$230
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
Brighthouse Financial, Inc.’s stockholders’ equity (3)
 
$14,999
 
$14,418
 
$12,884
 
$13,435
 
$13,584
Less: Preferred stock
 
412
 
 
 
 
Less: AOCI (3)
 
1,670
 
716
 
552
 
815
 
737
Brighthouse Financial, Inc.’s stockholders’ equity, excluding preferred stock and AOCI
 
$12,917
 
$13,702
 
$12,332
 
$12,620
 
$12,847
 
 
 
 
 
 
 
 
 
 
 
Return on Equity
 
 
 
 
 
 
 
 
 
 
Return on equity
 
1.4%
 
6.3%
 
0.7%
 
(4.0)%
 
(0.7)%
Return on equity, excluding preferred stock and AOCI (1)
 
1.5%
 
6.7%
 
0.7%
 
(4.5)%
 
(0.7)%
Adjusted return on equity (1)
 
6.5%
 
6.9%
 
13.5%
 
5.8%
 
7.0%
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Common Share, Diluted
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to shareholders per common share (4)
 
$(6.31)
 
$12.14
 
$(2.26)
 
$(2.01)
 
$(0.56)
Adjusted earnings per common share (1)
 
$1.98
 
$1.56
 
$2.23
 
$1.27
 
$2.36
Weighted average common shares outstanding
 
117,229,854
 
118,685,082
 
120,641,572
 
120,200,149
 
119,773,106
 
 
 
 
 
 
 
 
 
 
 
Book Value Per Common Share
 
 
 
 
 
 
 
 
 
 
Book value per common share (1), (3)
 
$129.10
 
$122.67
 
$108.45
 
$112.17
 
$113.41
Book value per common share, excluding preferred stock and AOCI (1), (3)
 
$111.18
 
$116.58
 
$103.80
 
$105.37
 
$107.26
Ending common shares outstanding
 
116,182,687
 
117,532,336
 
118,800,611
 
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) See Note (1) to the Balance Sheets on page 3 for information regarding changes to amounts originally reported for the first quarter of 2018.
(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.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12883580&doc=7
 
 
 
 
 






 
 
Financial Supplement
 
2




Condensed Statements of Operations (Unaudited, in millions)

 
 
For the Three Months Ended
 
For the Three Months Ended
Revenues
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
March 31,
2019
 
March 31,
2018
Premiums
 
$227
 
$223
 
$225
 
$223
 
$229
 
$227
 
$229
Universal life and investment-type product policy fees
 
875
 
899
 
972
 
962
 
1,002
 
875
 
1,002
Net investment income
 
811
 
862
 
853
 
806
 
817
 
811
 
817
Other revenues
 
92
 
89
 
105
 
98
 
105
 
92
 
105
Revenues before NIGL and NDGL
 
2,005
 
2,073
 
2,155
 
2,089
 
2,153
 
2,005
 
2,153
Net investment gains (losses)
 
(11)
 
(86)
 
(42)
 
(75)
 
(4)
 
(11)
 
(4)
Net derivative gains (losses)
 
(1,303)
 
2,039
 
(691)
 
(312)
 
(334)
 
(1,303)
 
(334)
Total revenues
 
$691
 
$4,026
 
$1,422
 
$1,702
 
$1,815
 
$691
 
$1,815
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$258
 
$270
 
$273
 
$269
 
$267
 
$258
 
$267
Policyholder benefits and claims
 
772
 
899
 
822
 
813
 
738
 
772
 
738
Amortization of DAC and VOBA
 
22
 
469
 
30
 
246
 
305
 
22
 
305
Interest expense on debt
 
47
 
45
 
40
 
36
 
37
 
47
 
37
Other expenses
 
545
 
556
 
625
 
655
 
581
 
545
 
581
Total expenses
 
1,644
 
2,239
 
1,790
 
2,019
 
1,928
 
1,644
 
1,928
Income (loss) before provision for income tax
 
(953)
 
1,787
 
(368)
 
(317)
 
(113)
 
(953)
 
(113)
Provision for income tax expense (benefit)
 
(218)
 
345
 
(99)
 
(79)
 
(48)
 
(218)
 
(48)
Net income (loss)
 
(735)
 
1,442
 
(269)
 
(238)
 
(65)
 
(735)
 
(65)
Less: Net income (loss) attributable to noncontrolling interests
 
2
 
 
2
 
1
 
2
 
2
 
2
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
$(737)
 
$1,442
 
$(271)
 
$(239)
 
$(67)
 
$(737)
 
$(67)
 

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12883580&doc=7
 
 
 
 
 






 
 
Financial Supplement
 
3




Balance Sheets (Unaudited, in millions)
 
 
As of
ASSETS
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Investments:
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities available-for-sale
 
$64,847
 
$62,608
 
$62,279
 
$62,343
 
$63,178
Equity securities
 
150
 
140
 
150
 
153
 
160
Mortgage loans, net
 
14,504
 
13,694
 
13,033
 
12,337
 
11,308
Policy loans
 
1,385
 
1,421
 
1,443
 
1,458
 
1,517
Real estate limited partnerships and limited liability companies
 
453
 
451
 
444
 
449
 
441
Other limited partnership interests
 
1,800
 
1,840
 
1,765
 
1,706
 
1,700
Short-term investments
 
799
 
 
116
 
177
 
293
Other invested assets
 
2,302
 
3,027
 
2,099
 
2,305
 
2,452
Total investments
 
86,240
 
83,181
 
81,329
 
80,928
 
81,049
Cash and cash equivalents
 
3,864
 
4,145
 
2,144
 
2,135
 
1,888
Accrued investment income
 
791
 
724
 
675
 
607
 
640
Reinsurance recoverables
 
13,098
 
12,929
 
12,683
 
12,745
 
12,746
Premiums and other receivables
 
928
 
768
 
868
 
848
 
781
DAC and VOBA
 
5,680
 
5,717
 
6,050
 
5,968
 
6,083
Current income tax recoverable
 
 
1
 
878
 
814
 
832
Other assets
 
618
 
573
 
583
 
580
 
593
Separate account assets
 
105,211
 
98,256
 
111,736
 
111,587
 
114,385
Total assets
 
$216,430
 
$206,294
 
$216,946
 
$216,212
 
$218,997
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Future policy benefits
 
$37,157
 
$36,209
 
$35,748
 
$35,816
 
$36,223
Policyholder account balances
 
41,177
 
40,054
 
39,446
 
38,407
 
37,940
Other policy-related balances
 
3,005
 
3,000
 
2,907
 
2,941
 
2,991
Payables for collateral under securities loaned and other transactions
 
3,990
 
5,057
 
4,043
 
4,265
 
4,244
Long-term debt
 
4,364
 
3,963
 
3,966
 
3,607
 
3,609
Current income tax payable
 
19
 
15
 
 
 
Deferred income tax liability (1)
 
1,005
 
972
 
576
 
684
 
730
Other liabilities (1)
 
5,438
 
4,285
 
5,575
 
5,405
 
5,226
Separate account liabilities
 
105,211
 
98,256
 
111,736
 
111,587
 
114,385
Total liabilities
 
201,366
 
191,811
 
203,997
 
202,712
 
205,348
Equity
 
 
 
 
 
 
 
 
 
 
Preferred Stock, at par value
 
 
 
 
 
Common stock, at par value
 
1
 
1
 
1
 
1
 
1
Additional paid-in capital
 
12,889
 
12,473
 
12,469
 
12,444
 
12,432
Retained earnings (deficit) (1)
 
609
 
1,346
 
(96)
 
175
 
414
Treasury stock
 
(170)
 
(118)
 
(42)
 
 
Accumulated other comprehensive income (loss) (1)
 
1,670
 
716
 
552
 
815
 
737
Total Brighthouse Financial, Inc.’s stockholders’ equity
 
14,999
 
14,418
 
12,884
 
13,435
 
13,584
Noncontrolling interests
 
65
 
65
 
65
 
65
 
65
Total equity
 
15,064
 
14,483
 
12,949
 
13,500
 
13,649
Total liabilities and equity
 
$216,430
 
$206,294
 
$216,946
 
$216,212
 
$218,997
 
 
 
 
 
 
 
 
 
 
 
(1) During the second quarter of 2018, and effective January 1, 2018, the Company recorded adjustments related to accretion of certain investments in equity securities. As a result, amounts originally reported as of March 31, 2018 have been revised to conform to such changes. Additionally, certain key metrics for the first quarter of 2018, as well as amounts affecting the adjusted return on equity for certain periods, have also been revised for such impact.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12883580&doc=7
 
 
 
 
 






 
 
 
 
 








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 March 31, 2019
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$58
 
$145
 
$1
 
$23
 
$227
Universal life and investment-type product policy fees
 
561
 
58
 
193
 
(3)
 
809
Net investment income
 
421
 
97
 
276
 
17
 
811
Other revenues
 
77
 
3
 
6
 
6
 
92
Total adjusted revenues
 
$1,117
 
$303
 
$476
 
$43
 
$1,939
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$137
 
$25
 
$96
 
$—
 
$258
Policyholder benefits and claims
 
143
 
181
 
380
 
14
 
718
Amortization of DAC and VOBA
 
82
 
11
 
 
4
 
97
Interest expense on debt
 
 
 
 
47
 
47
Other operating costs
 
394
 
55
 
46
 
50
 
545
Total adjusted expenses
 
756
 
272
 
522
 
115
 
1,665
Adjusted earnings before provision for income tax
 
361
 
31
 
(46)
 
(72)
 
274
Provision for income tax expense (benefit)
 
66
 
6
 
(10)
 
(22)
 
40
Adjusted earnings after provision for income tax
 
295
 
25
 
(36)
 
(50)
 
234
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
2
 
2
Adjusted earnings
 
$295
 
$25
 
$(36)
 
$(52)
 
$232
 
 
 
 
 
 
 
 
 
 
 
  
 
For the Three Months Ended March 31, 2018
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$45
 
$158
 
$—
 
$26
 
$229
Universal life and investment-type product policy fees
 
640
 
103
 
199
 
(3)
 
939
Net investment income
 
363
 
108
 
343
 
11
 
825
Other revenues
 
99
 
 
6
 
 
105
Total adjusted revenues
 
$1,147
 
$369
 
$548
 
$34
 
$2,098
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$146
 
$31
 
$90
 
$—
 
$267
Policyholder benefits and claims
 
180
 
165
 
347
 
14
 
706
Amortization of DAC and VOBA
 
143
 
29
 
 
5
 
177
Interest expense on debt
 
 
 
 
37
 
37
Other operating costs
 
406
 
63
 
48
 
64
 
581
Total adjusted expenses
 
875
 
288
 
485
 
120
 
1,768
Adjusted earnings before provision for income tax
 
272
 
81
 
63
 
(86)
 
330
Provision for income tax expense (benefit)
 
46
 
15
 
13
 
(29)
 
45
Adjusted earnings after provision for income tax
 
226
 
66
 
50
 
(57)
 
285
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
2
 
2
Adjusted earnings
 
$226
 
$66
 
$50
 
$(59)
 
$283

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12883580&doc=7
 
 
 
 
 






 
 
Financial Supplement
 
6




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

  
 
For the Three Months Ended
 
For the Three Months Ended
Adjusted revenues
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
March 31,
2019
 
March 31,
2018
Premiums
 
$58
 
$44
 
$48
 
$48
 
$45
 
$58
 
$45
Universal life and investment-type product policy fees
 
561
 
594
 
625
 
632
 
640
 
561
 
640
Net investment income
 
421
 
398
 
399
 
376
 
363
 
421
 
363
Other revenues
 
77
 
78
 
88
 
90
 
99
 
77
 
99
Total adjusted revenues
 
$1,117
 
$1,114
 
$1,160
 
$1,146
 
$1,147
 
$1,117
 
$1,147
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$137
 
$147
 
$152
 
$148
 
$146
 
$137
 
$146
Policyholder benefits and claims
 
143
 
174
 
72
 
181
 
180
 
143
 
180
Amortization of DAC and VOBA
 
82
 
198
 
40
 
124
 
143
 
82
 
143
Interest expense on debt
 
 
 
 
 
 
 
Other operating costs
 
394
 
387
 
409
 
427
 
406
 
394
 
406
Total adjusted expenses
 
756
 
906
 
673
 
880
 
875
 
756
 
875
Adjusted earnings before provision for income tax
 
361
 
208
 
487
 
266
 
272
 
361
 
272
Provision for income tax expense (benefit)
 
66
 
33
 
86
 
45
 
46
 
66
 
46
Adjusted earnings
 
$295
 
$175
 
$401
 
$221
 
$226
 
$295
 
$226


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12883580&doc=7
 
 
 
 
 






 
 
Financial Supplement
 
7




Annuities — Select Operating Metrics (Unaudited, in millions)

  
 
For the Three Months Ended
VARIABLE & SHIELD ANNUITIES ACCOUNT VALUE (1)
 
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Account value, beginning of period
 
$105,089
 
$116,985
 
$116,283
 
$117,178
 
$120,333
Deposits
 
1,327
 
1,295
 
1,243
 
1,129
 
1,074
Withdrawals, surrenders and contract benefits
 
(2,479)