10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File Number: 001-37905

Brighthouse Financial, Inc.

(Exact name of registrant as specified in its charter)

Delaware	81-3846992
(State of incorporation)	(I.R.S. Employer Identification No.)
11225 North Community House Road, Charlotte, North Carolina	28277
(Address of principal executive offices)	(Zip Code)

(980) 365-7100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ  No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes þ    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer    þ	Smaller reporting company  ¨
Emerging growth company  ¨

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.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨    No þ

At November 2, 2018, 118,601,232 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

Table of Contents

		Page
Part I — Financial Information
Item 1.	Consolidated Financial Statements (at September 30, 2018 (Unaudited) and December 31, 2017 and for the Three Months and Nine Months Ended September 30, 2018 and 2017 (Unaudited)):
	Interim Condensed Consolidated Balance Sheets	2
	Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	3
	Interim Condensed Consolidated Statements of Equity	4
	Interim Condensed Consolidated Statements of Cash Flows	5
	Notes to the Interim Condensed Consolidated Financial Statements:
	Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies	6
	Note 2 — Segment Information	9
	Note 3 — Insurance	13
	Note 4 — Investments	15
	Note 5 — Derivatives	26
	Note 6 — Fair Value	38
	Note 7 — Long-term Debt	52
	Note 8 — Equity	52
	Note 9 — Other Revenues and Other Expenses	57
	Note 10 — Earnings Per Share	58
	Note 11 — Contingencies, Commitments and Guarantees	58
	Note 12 — Related Party Transactions	60
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	63
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	111
Item 4.	Controls and Procedures	111
Part II — Other Information
Item 1.	Legal Proceedings	112
Item 1A.	Risk Factors	112
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	112
Item 6.	Exhibits	114
Signatures		115

Part I — Financial Information

Item 1. Financial Statements

Brighthouse Financial, Inc.

Interim Condensed Consolidated Balance Sheets

September 30, 2018 (Unaudited) and December 31, 2017

(In millions, except share and per share data)

	September 30, 2018			December 31, 2017
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $60,705 and $60,173, respectively)	$	62,279		$	64,991
Equity securities, at estimated fair value (cost: $139 and $142, respectively)	150			161
Mortgage loans (net of valuation allowances of $56 and $47, respectively; includes $93 and $115, respectively, at estimated fair value, relating to variable interest entities)	13,033			10,742
Policy loans	1,443			1,523
Real estate joint ventures	444			433
Other limited partnership interests	1,765			1,669
Short-term investments, principally at estimated fair value	116			312
Other invested assets, principally at estimated fair value	2,099			2,507
Total investments	81,329			82,338
Cash and cash equivalents, principally at estimated fair value	2,144			1,857
Accrued investment income (includes $0 and $1, respectively, relating to variable interest entities)	675			601
Premiums, reinsurance and other receivables	13,551			13,525
Deferred policy acquisition costs and value of business acquired	6,050			6,286
Current income tax recoverable	878			740
Other assets	583			588
Separate account assets	111,736			118,257
Total assets	$	216,946		$	224,192
Liabilities and Equity
Liabilities
Future policy benefits	$	35,748		$	36,616
Policyholder account balances	39,446			37,783
Other policy-related balances	2,907			2,985
Payables for collateral under securities loaned and other transactions	4,043			4,169
Long-term debt (includes $3 and $11, respectively, at estimated fair value, relating to variable interest entities)	3,966			3,612
Deferred income tax liability	576			927
Other liabilities	5,575			5,263
Separate account liabilities	111,736			118,257
Total liabilities	203,997			209,612
Contingencies, Commitments and Guarantees (Note 11)
Equity
Brighthouse Financial, Inc.’s stockholders’ equity:
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 119,782,668 and 119,773,106 shares issued, respectively; 118,800,611 and 119,773,106 shares outstanding, respectively	1			1
Additional paid-in capital	12,469			12,432
Retained earnings (deficit)	(96		)	406
Treasury stock, at cost; 982,057 and 0 shares, respectively	(42		)	—
Accumulated other comprehensive income (loss)	552			1,676
Total Brighthouse Financial, Inc.’s stockholders’ equity	12,884			14,515
Noncontrolling interests	65			65
Total equity	12,949			14,580
Total liabilities and equity	$	216,946		$	224,192

See accompanying notes to the interim condensed consolidated financial statements.

2

Brighthouse Financial, Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the Three Months and Nine Months EndedSeptember 30, 2018 and 2017 (Unaudited)

(In millions, except share and per share data)

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
Revenues
Premiums	$	225		$	236		$	677		$	630
Universal life and investment-type product policy fees	972			1,025			2,936			2,935
Net investment income	853			761			2,476			2,309
Other revenues	105			93			308			329
Net investment gains (losses)	(42		)	21			(121		)	(34		)
Net derivative gains (losses)	(691		)	(164		)	(1,337		)	(1,207		)
Total revenues	1,422			1,972			4,939			4,962
Expenses
Policyholder benefits and claims	822			1,083			2,373			2,732
Interest credited to policyholder account balances	273			279			809			838
Amortization of deferred policy acquisition costs and value of business acquired	30			123			581			(4		)
Other expenses	665			611			1,974			1,789
Total expenses	1,790			2,096			5,737			5,355
Income (loss) before provision for income tax	(368		)	(124		)	(798		)	(393		)
Provision for income tax expense (benefit)	(99		)	819			(226		)	653
Net income (loss)	(269		)	(943		)	(572		)	(1,046		)
Less: Net income (loss) attributable to noncontrolling interests	2			—			5			—
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	$	(271	)	$	(943	)	$	(577	)	$	(1,046	)
Comprehensive income (loss)	$	(532	)	$	(1,529	)	$	(1,617	)	$	(1,003	)
Less: Comprehensive income (loss) attributable to noncontrolling interests	2			—			5			—
Comprehensive income (loss) attributable to Brighthouse Financial, Inc.	$	(534	)	$	(1,529	)	$	(1,622	)	$	(1,003	)
Earnings per common share:
Basic	$	(2.26	)	$	(7.87	)	$	(4.82	)	$	(8.73	)
Diluted	$	(2.26	)	$	(7.87	)	$	(4.82	)	$	(8.73	)

See accompanying notes to the interim condensed consolidated financial statements.

3

Brighthouse Financial, Inc.

Interim Condensed Consolidated Statements of Equity

For the Nine Months EndedSeptember 30, 2018 and 2017 (Unaudited)

(In millions)

	Shareholder’s Net Investment			Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)			Treasury Stock at Cost			Accumulated Other Comprehensive Income (Loss)			Brighthouse Financial, Inc.’s Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2017	$	—		$	1	$	12,432	$	406		$	—		$	1,676		$	14,515		$	65		$	14,580
Cumulative effect of change in accounting principle and other, net of income tax (Note 1)								75						(79		)	(4		)				(4		)
Balance at January 1, 2018	—			1		12,432		481			—			1,597			14,511			65			14,576
Treasury stock acquired in connection with share repurchases											(42		)				(42		)				(42		)
Share-based compensation						37											37						37
Change in noncontrolling interests																	—			(5		)	(5		)
Net income (loss)								(577		)							(577		)	5			(572		)
Other comprehensive income (loss), net of income tax														(1,045		)	(1,045		)				(1,045		)
Balance at September 30, 2018	$	—		$	1	$	12,469	$	(96	)	$	(42	)	$	552		$	12,884		$	65		$	12,949
	Shareholder’s Net Investment			Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)			Treasury Stock at Cost			Accumulated Other Comprehensive Income (Loss)			Brighthouse Financial, Inc.’s Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2016	$	13,597		$	—	$	—	$	—		$	—		$	1,265		$	14,862		$	—		$	14,862
Issuance of Common Stock to MetLife, Inc.	1																1						1
Distribution to MetLife, Inc.	(1,798		)														(1,798		)				(1,798		)
Other separation related transactions	1,704																1,704						1,704
Net income (loss)	(1,085		)					39									(1,046		)				(1,046		)
Separation from MetLife, Inc.	(12,419		)	1		12,418											—						—
Change in noncontrolling interests																	—			65			65
Other comprehensive income (loss), net of income tax														43			43						43
Balance at September 30, 2017	$	—		$	1	$	12,418	$	39		$	—		$	1,308		$	13,766		$	65		$	13,831

See accompanying notes to the interim condensed consolidated financial statements.

4

Brighthouse Financial, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the Nine Months EndedSeptember 30, 2018 and 2017 (Unaudited)

(In millions)

	Nine Months Ended  September 30,
	2018			2017
Net cash provided by (used in) operating activities	$	1,496		$	2,030
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	11,680			12,784
Equity securities	15			58
Mortgage loans	446			565
Real estate and real estate joint ventures	87			47
Other limited partnership interests	137			195
Purchases of:
Fixed maturity securities	(12,005		)	(12,888		)
Equity securities	(1		)	(2		)
Mortgage loans	(2,771		)	(1,554		)
Real estate and real estate joint ventures	(31		)	(224		)
Other limited partnership interests	(194		)	(174		)
Cash received in connection with freestanding derivatives	1,142			1,811
Cash paid in connection with freestanding derivatives	(2,286		)	(3,382		)
Net change in policy loans	81			(5		)
Net change in short-term investments	196			180
Net change in other invested assets	35			33
Other, net	—			2
Net cash provided by (used in) investing activities	(3,469		)	(2,554		)
Cash flows from financing activities
Policyholder account balances:
Deposits	4,704			3,464
Withdrawals	(2,199		)	(2,269		)
Net change in payables for collateral under securities loaned and other transactions	(126		)	(2,747		)
Long-term debt issued	375			3,589
Long-term debt repaid	(9		)	(10		)
Collateral financing arrangements repaid	—			(2,797		)
Treasury stock acquired in connection with share repurchases	(42		)	—
Distribution to MetLife, Inc.	—			(1,798		)
Cash received from MetLife, Inc. in connection with shareholder’s net investment	—			293
Cash paid to MetLife, Inc. in connection with shareholder’s net investment	—			(668		)
Financing element on certain derivative instruments and other derivative related transactions, net	(386		)	(37		)
Other, net	(57		)	(26		)
Net cash provided by (used in) financing activities	2,260			(3,006		)
Change in cash, cash equivalents and restricted cash	287			(3,530		)
Cash, cash equivalents and restricted cash, beginning of period	1,857			5,228
Cash, cash equivalents and restricted cash, end of period	$	2,144		$	1,698
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest	$	83		$	89
Income tax	$	3		$	76
Non-cash transactions:
Transfer of fixed maturity securities to former affiliates	$	—		$	293
Reduction of policyholder account balances in connection with reinsurance transactions	$	—		$	293

See accompanying notes to the interim condensed consolidated financial statements.

5

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business

“Brighthouse” and the “Company” refer to Brighthouse Financial, Inc. and its subsidiaries. Brighthouse Financial, Inc. is a holding company formed to own the legal entities that historically operated a substantial portion of the former Retail segment of MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”). Brighthouse Financial, Inc. was incorporated in Delaware on August 1, 2016 in preparation for MetLife, Inc.’s separation of a substantial portion of its former Retail segment, as well as certain portions of its Corporate Benefit Funding segment (the “Separation”), which was completed on August 4, 2017.

In connection with the Separation, 80.8% of MetLife, Inc.’s interest in Brighthouse Financial, Inc. was distributed to holders of MetLife, Inc.’s common stock and MetLife, Inc. retained the remaining 19.2%. On June 14, 2018, MetLife, Inc. divested its remaining shares of Brighthouse Financial, Inc. common stock (the “MetLife Divestiture”). As a result, MetLife, Inc. and its subsidiaries and affiliates are no longer considered related parties subsequent to the MetLife Divestiture.

The Company offers a range of individual annuities and individual life insurance products. The Company reports results through three segments: Annuities, Life and Run-off. In addition, the Company reports certain of its results in Corporate & Other.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.

Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Brighthouse Financial, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.

The Company uses the equity method of accounting for equity securities when it has significant influence or at least 20% interest and for real estate joint ventures and other limited partnership interests (“investee”) when it has more than a minor ownership interest or more than a minor influence over the investee’s operations. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. When the Company has virtually no influence over the investee’s operations, the investment is carried at fair value.

Reclassifications

Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform to the 2018 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements. Additionally, effective January 1, 2018 the Company recorded an increase to other liabilities of $46 million, a decrease to deferred tax liabilities of $22 million, a decrease to accumulated other comprehensive income (“AOCI”) of$64 million, and an increase to retained earnings (deficit) of $40 million, to reflect an adjustment, net of tax, to prior year accretion of certain investments in redeemable preferred stock.

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2017 consolidated balance sheet data was derived from audited consolidated financial statements included in Brighthouse Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated and combined financial statements of the Company included in the 2017 Annual Report.

6

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Adoption of New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. The following table provides a description of new ASUs issued by the FASB and the expected impact of the adoption on the Company’s financial statements.

ASUs adopted as of September 30, 2018 are summarized in the table below.

Standard	Description	Effective Date	Impact on Financial Statements
ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities	The new guidance changes the current accounting guidance related to (i) the classification and measurement of certain equity investments, (ii) the presentation of changes in the fair value of financial liabilities measured under the fair value option (“FVO”) that are due to instrument-specific credit risk, and (iii) certain disclosures associated with the fair value of financial instruments. Additionally, there will no longer be a requirement to assess equity securities for impairment since such securities will be measured at fair value through net income.	January 1, 2018 using the modified retrospective method	The Company 1) reclassified net unrealized gains related to equity securities previously classified as available-for-sale (“AFS”) from AOCI to retained earnings (deficit) and 2) increased the carrying value of equity investments previously accounted for under the cost method to estimated fair value. The cumulative effect of the adoption is a net increase to retained earnings (deficit) of $38 million and a net decrease of $15 million to AOCI, after taxes.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)	For those contracts that are impacted, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services.	January 1, 2018 using the modified retrospective method	The adoption did not have an impact on the Company’s financial statements other than expanded disclosures in Note 9.

ASUs issued but not yet adopted as of September 30, 2018 are summarized in the table below.

Standard	Description	Effective Date	Impact on Financial Statements
ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	The amendments to Topic 350 require the capitalization of certain implementation costs incurred in a cloud computing arrangement that is a service contract. The requirements align with the existing requirements to capitalize implementation costs incurred to develop or obtain internal-use software.	January 1, 2020 using the prospective method or retrospective method (with early adoption permitted)	The Company is currently evaluating the impact of this guidance on its financial statements.

7

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

ASU 2018-12, Financial Services -Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts	The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred acquisition costs, and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances.	January 1, 2021 using a modified retrospective method for the new market risk benefit guidance and prospective methods for the increased frequency of updating assumptions, the new discount rate requirements and deferred policy acquisition costs (“DAC”) amortization changes. Early adoption is permitted.	The Company is in the early stages of evaluating the new guidance and therefore is unable to estimate the impact to its financial statements. The most significant impact will be the measurement of liabilities for variable annuity guarantees. Upon adoption of the ASU, all guarantees associated with variable annuities will be measured at fair value, with changes in fair value reported in net income (excluding the change in fair value attributable to nonperformance risk, which would be reported in other comprehensive income). These changes will result in an impact to equity upon adoption and more volatility in net income going forward. Additionally, certain life insurance and payout annuity contract liabilities will be affected by more frequent updating of cash flow assumptions and changes to the rate used to discount those cash flows. Most products will be impacted by the changes to deferred acquisition cost amortization.
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities	The amendments to Topic 815 (i) refine and expand the criteria for achieving hedge accounting on certain hedging strategies, (ii) require the earnings effect of the hedging instrument be presented in the same line item in which the earnings effect of the hedged item is reported, and (iii) eliminate the requirement to separately measure and report hedge ineffectiveness.	January 1, 2019 using modified retrospective method (with early adoption permitted)	The Company does not expect a material impact on its financial statements from adoption of the new guidance.
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts. The new guidance also requires that an other-than- temporary impairment (“OTTI”) on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses.	January 1, 2020 using the modified retrospective method (with early adoption permitted beginning January 1, 2019)	The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be earlier recognition of credit losses on mortgage loan investments.
ASU 2016-02, Leases - Topic 842	The new guidance will require a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Leases would be classified as finance or operating leases and both types of leases will be recognized on the balance sheet. Lessor accounting will remain largely unchanged from current guidance except for certain targeted changes. The amendments also require new qualitative and quantitative disclosures.	January 1, 2019 using the modified retrospective method (with early adoption permitted)	The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be a gross-up of certain lease assets and liabilities on the balance sheet.

8

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. Segment Information

The Company is organized into three segments: Annuities; Life; and Run-off. In addition, the Company reports certain of its results of operations in Corporate & Other.

Annuities

The Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security.

Life

The Life segment consists of insurance products and services, including term, whole, universal and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis.

Run-off

The Run-off segment consists of products no longer actively sold and which are separately managed, including structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, funding agreements and universal life with secondary guarantees.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments and interest expense related to the majority of the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts, long-term care and workers compensation business reinsured through 100% quota share reinsurance agreements, and term life insurance sold direct to consumers, which is no longer being offered for new sales.

Financial Measures and Segment Accounting Policies

Adjusted earnings is a financial measure used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance. The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by the investor community. Adjusted earnings should not be viewed as a substitute for net income (loss) available to Brighthouse Financial, Inc.’s common shareholders, and excludes net income (loss) attributable to noncontrolling interests.

Adjusted earnings, which may be positive or negative, focuses on the Company’s 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 the Company, referred to as divested businesses.

9

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. Segment Information (continued)

The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings:

• Net investment gains (losses);

• Net derivative gains (losses) except earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment; and

• Amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”).

The following are significant items excluded from total expenses, net of income tax, in calculating 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 above is calculated net of the U.S. statutory tax rate, which could differ from the Company’s effective tax rate.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months and nine months ended September 30, 2018 and 2017 and at September 30, 2018 and December 31, 2017. The segment accounting policies are the same as those used to prepare the Company’s condensed consolidated financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below.

Beginning in the first quarter of 2018, the Company changed the methodology for how capital is allocated to segments and, in some cases, products (the “Portfolio Realignment”). Segment investment and capitalization targets are now based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company’s variable annuity risk management strategy discussed in the 2017 Annual Report. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets.

Previously, invested assets held in the segments were based on net GAAP liabilities. Excess capital was retained in Corporate & Other and allocated to segments based on an internally developed statistics based capital model intended to capture the material risks to which the Company was exposed (referred to as “allocated equity”). Surplus assets in excess of the combined allocations to the segments were held in Corporate & Other with net investment income being credited back to the segments at a predetermined rate. Any excess or shortfall in net investment income from surplus assets was recognized in Corporate & Other.

The Portfolio Realignment had no effect on the Company’s consolidated net income (loss) available to Brighthouse Financial, Inc.’s common shareholders or adjusted earnings, but it did impact segment results for the nine months ended September 30, 2018. It was not practicable to determine the impact of the Portfolio Realignment to adjusted earnings in prior periods; however, the Company estimates that pre-tax adjusted earnings in the Life segment for the nine months ended September 30, 2018 increased between $90 million and $105 million as a result of the change, with most of the offsetting impact in the Run-off segment. Impacts to the Annuities segment and Corporate & Other would not have been significantly different under the previous allocation method.

In addition, the total assets recognized in the segments changed as a result of the Portfolio Realignment. Total assets (on a book value basis) in the Annuities and Life segments increased approximately $2 billion and approximately $5 billion, respectively, under the new allocation method. The Run-off segment and Corporate & Other experienced decreases in total assets of approximately $3 billion and approximately $4 billion, respectively, as a result of the Portfolio Realignment.

10

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. Segment Information (continued)

	Operating Results
Three Months Ended September 30, 2018	Annuities		Life		Run-off			Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	487	$	78	$	(134	)	$	(117	)	$	314
Provision for income tax expense (benefit)	86		17		(29		)	(32		)	42
Post-tax adjusted earnings	401		61		(105		)	(85		)	272
Less: Net income (loss) attributable to noncontrolling interests	—		—		—			2			2
Adjusted earnings	$	401	$	61	$	(105	)	$	(87	)	270
Adjustments for:
Net investment gains (losses)											(42		)
Net derivative gains (losses)											(691		)
Other adjustments to net income											51
Provision for income tax (expense) benefit											141
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(271	)
Interest revenue	$	399	$	115	$	322		$	16
Interest expense	$	—	$	—	$	—		$	39

	Operating Results
Three Months Ended September 30, 2017	Annuities		Life			Run-off		Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	488	$	(8	)	$	119	$	(95	)	$	504
Provision for income tax expense (benefit)	133		(14		)	36		1,025			1,180
Post-tax adjusted earnings	355		6			83		(1,120		)	(676		)
Less: Net income (loss) attributable to noncontrolling interests	—		—			—		—			—
Adjusted earnings	$	355	$	6		$	83	$	(1,120	)	(676		)
Adjustments for:
Net investment gains (losses)											21
Net derivative gains (losses)											(164		)
Other adjustments to net income											(485		)
Provision for income tax (expense) benefit											361
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(943	)
Interest revenue	$	310	$	87		$	348	$	35
Interest expense	$	—	$	—		$	—	$	36

11

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. Segment Information (continued)

	Operating Results
Nine Months Ended September 30, 2018	Annuities		Life		Run-off			Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	1,025	$	205	$	(79	)	$	(327	)	$	824
Provision for income tax expense (benefit)	177		41		(18		)	(87		)	113
Post-tax adjusted earnings	848		164		(61		)	(240		)	711
Less: Net income (loss) attributable to noncontrolling interests	—		—		—			5			5
Adjusted earnings	$	848	$	164	$	(61	)	$	(245	)	706
Adjustments for:
Net investment gains (losses)											(121		)
Net derivative gains (losses)											(1,337		)
Other adjustments to net income											(164		)
Provision for income tax (expense) benefit											339
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(577	)
Interest revenue	$	1,138	$	334	$	979		$	38
Interest expense	$	—	$	—	$	—		$	113

	Operating Results
Nine Months Ended September 30, 2017	Annuities		Life			Run-off		Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	1,111	$	—		$	272	$	(61	)	$	1,322
Provision for income tax expense (benefit)	302		(11		)	88		1,015			1,394
Post-tax adjusted earnings	809		11			184		(1,076		)	(72		)
Less: Net income (loss) attributable to noncontrolling interests	—		—			—		—			—
Adjusted earnings	$	809	$	11		$	184	$	(1,076	)	(72		)
Adjustments for:
Net investment gains (losses)											(34		)
Net derivative gains (losses)											(1,207		)
Other adjustments to net income											(474		)
Provision for income tax (expense) benefit											741
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(1,046	)
Interest revenue	$	948	$	263		$	1,060	$	159
Interest expense	$	—	$	—		$	23	$	94

12

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. Segment Information (continued)

The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Annuities	$	1,160		$	1,070		$	3,453		$	3,270
Life	346			387			1,054			982
Run-off	536			547			1,594			1,631
Corporate & Other	47			59			112			230
Adjustments	(667		)	(91		)	(1,274		)	(1,151		)
Total	$	1,422		$	1,972		$	4,939		$	4,962

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:

	September 30, 2018		December 31, 2017
	(In millions)
Annuities	$	152,342	$	154,667
Life	20,485		18,049
Run-off	31,710		36,824
Corporate & Other	12,409		14,652
Total	$	216,946	$	224,192

3. Insurance

Guarantees

As discussed inNotes 1and3of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report, the Company issues variable annuity products with guaranteed minimum benefits. Guaranteed minimum accumulation benefits (“GMABs”), the non-life contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and the portion of certain GMIBs that do not require annuitization are accounted for as embedded derivatives in policyholder account balances and are further discussed inNote 5.

The Company also issues universal and variable life contracts where the Company contractually guarantees to the contract holder a secondary guarantee.

Information regarding the Company’s guarantee exposure was as follows at:

	September 30, 2018						December 31, 2017
	In the Event of Death			At Annuitization			In the Event of Death			At Annuitization
	(Dollars in millions)
Annuity Contracts (1), (2)
Variable Annuity Guarantees
Total account value (3)	$	109,613		$	63,194		$	115,147		$	67,110
Separate account value	$	104,479		$	61,945		$	109,792		$	65,782
Net amount at risk	$	6,471	(4)	$	2,521	(5)	$	5,261	(4)	$	2,642	(5)
Average attained age of contract holders	68 years			68 years			68 years			68 years

13

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

3. Insurance (continued)

	September 30, 2018		December 31, 2017
	Secondary Guarantees
	(Dollars in millions)
Universal Life Contracts
Total account value (3)	$	6,133	$	6,244
Net amount at risk (6)	$	73,680	$	75,304
Average attained age of policyholders	65 years		64 years
Variable Life Contracts
Total account value (3)	$	3,486	$	3,379
Net amount at risk (6)	$	23,250	$	24,546
Average attained age of policyholders	49 years		49 years

__________________

(1) The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.

(2) Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured.

(3) Includes the contract holder’s investments in the general account and separate account, if applicable.

(4) Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.

(5) Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved.

(6) Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.

14

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments

See Note 6 for information about the fair value hierarchy for investments and the related valuation methodologies.

Fixed Maturity Securities AFS

Fixed Maturity Securities AFS by Sector

The following table presents the fixed maturity securities AFS by sector at:

	September 30, 2018											December 31, 2017
	Amortized Cost		Gross Unrealized							Estimated Fair Value		Amortized Cost		Gross Unrealized							Estimated Fair Value
			Gains		Temporary Losses		OTTI Losses (1)							Gains		Temporary Losses		OTTI Losses (1)
	(In millions)
Fixed maturity securities: (2)
U.S. corporate	$	23,475	$	918	$	458	$	—		$	23,935	$	21,190	$	1,859	$	92	$	—		$	22,957
U.S. government and agency	10,089		1,075		214		—			10,950		14,548		1,862		118		—			16,292
RMBS	8,373		227		230		(4		)	8,374		7,749		285		60		(3		)	7,977
Foreign corporate	7,311		155		218		—			7,248		6,703		386		66		—			7,023
State and political subdivision	3,747		369		47		—			4,069		3,635		553		6		1			4,181
CMBS	4,381		9		101		(1		)	4,290		3,386		53		17		(1		)	3,423
ABS	2,006		10		7		—			2,009		1,810		21		2		—			1,829
Foreign government	1,323		104		23		—			1,404		1,152		161		4		—			1,309
Total fixed maturity securities	$	60,705	$	2,867	$	1,298	$	(5	)	$	62,279	$	60,173	$	5,180	$	365	$	(3	)	$	64,991

__________________

(1) Noncredit OTTI losses included in AOCI in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).”

(2) Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

The Company held non-income producing fixed maturity securities with an estimated fair value of less than $1 million and $4 million with unrealized gains (losses) of less than ($1) million and ($2) million at September 30, 2018 and December 31, 2017, respectively.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at September 30, 2018:

	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities		Total Fixed Maturity Securities
	(In millions)
Amortized cost	$	1,956	$	8,580	$	11,376	$	24,033	$	14,760	$	60,705
Estimated fair value	$	1,962	$	8,638	$	11,263	$	25,743	$	14,673	$	62,279

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity.

15

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at:

	September 30, 2018								December 31, 2017
	Less than 12 Months				Equal to or Greater  than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(Dollars in millions)
Fixed maturity securities:
U.S. corporate	$	9,484	$	308	$	1,742	$	150	$	1,783	$	21	$	1,451	$	71
U.S. government and agency	2,530		52		1,901		162		4,962		38		1,573		80
RMBS	3,838		103		1,619		123		2,367		14		1,332		43
Foreign corporate	3,410		131		562		87		637		8		603		58
State and political subdivision	1,076		34		151		13		170		3		106		4
CMBS	3,078		68		542		32		619		6		335		10
ABS	998		7		27		—		170		—		74		2
Foreign government	449		17		111		6		155		2		69		2
Total fixed maturity securities	$	24,863	$	720	$	6,655	$	573	$	10,863	$	92	$	5,543	$	270
Total number of securities in an unrealized loss position	2,978				807				911				638

Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities

Evaluation and Measurement Methodologies

Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the estimated fair value has been below amortized cost; (ii) the potential for impairments when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments where the issuer, series of issuers or industry has suffered a catastrophic loss or has exhausted natural resources; (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers; (vii) with respect to Structured Securities, changes in forecasted cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security; (viii) the potential for impairments due to weakening of foreign currencies on non-functional currency denominated fixed maturity securities that are near maturity; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies.

Current Period Evaluation

Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company concluded that these securities were not other-than-temporarily impaired at September 30, 2018.

Gross unrealized losses on fixed maturity securities increased$931 million during the nine months ended September 30, 2018 to $1.3 billion. The increase in gross unrealized losses for the nine months ended September 30, 2018 was primarily attributable to increasing longer-term interest rates and widening credit spreads.

16

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

At September 30, 2018, $4 million of the total $1.3 billion of gross unrealized losses were from ten fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

	September 30, 2018					December 31, 2017
	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Mortgage loans:
Commercial	$	8,405		64.5	%	$	7,260		67.5	%
Agricultural	2,767			21.2		2,276			21.2
Residential	1,824			14.0		1,138			10.6
Subtotal (1)	12,996			99.7		10,674			99.3
Valuation allowances (2)	(56		)	(0.4	)	(47		)	(0.4	)
Subtotal mortgage loans, net	12,940			99.3		10,627			98.9
Commercial mortgage loans held by CSEs — FVO	93			0.7		115			1.1
Total mortgage loans, net	$	13,033		100.0	%	$	10,742		100.0	%

__________________

(1) Purchases of mortgage loans from third parties were$816 millionand$1.4 billionfor thethree monthsandnine months ended September 30, 2018, respectively, and$147 million and $307 million for the three months and nine months ended September 30, 2017, respectively, and were primarily comprised of residential mortgage loans.

(2) The valuation allowances were primarily from collective evaluation (non-specific loan related).

See “— Variable Interest Entities” for discussion of consolidated securitization entities (“CSEs”).

Information on commercial, agricultural and residential mortgage loans is presented in the tables below. Information on commercial mortgage loans held by CSEs — FVO is presented in Note 6. The Company elects the FVO for certain commercial mortgage loans and related long-term debt that are managed on a total return basis.

Valuation Allowance Methodology

Mortgage loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the loan agreement. Specific valuation allowances are established using the same methodology for all three portfolio segments as the excess carrying value of a loan over either (i) the present value of expected future cash flows discounted at the loan’s original effective interest rate, (ii) the estimated fair value of the loan’s underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or (iii) the loan’s observable market price. A common evaluation framework is used for establishing non-specific valuation allowances for all loan portfolio segments; however, a separate non-specific valuation allowance is calculated and maintained for each loan portfolio segment that is based on inputs unique to each loan portfolio segment. Non-specific valuation allowances are established for pools of loans with similar risk characteristics where a property-specific or market-specific risk has not been identified, but for which the Company expects to incur a credit loss. These evaluations are based upon several loan portfolio segment-specific factors, including the Company’s experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. These evaluations are revised as conditions change and new information becomes available.

17

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Credit Quality of Commercial Mortgage Loans

The credit quality of commercial mortgage loans was as follows at:

	Recorded Investment
	Debt Service Coverage Ratios								% of Total		Estimated Fair Value		% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total
	(Dollars in millions)
September 30, 2018
Loan-to-value ratios:
Less than 65%	$	7,438	$	38	$	15	$	7,491	89.2	%	$	7,440	89.2	%
65% to 75%	738		12		68		818		9.7		809		9.7
76% to 80%	87		—		9		96		1.1		92		1.1
Total	$	8,263	$	50	$	92	$	8,405	100.0	%	$	8,341	100.0	%
December 31, 2017
Loan-to-value ratios:
Less than 65%	$	6,194	$	293	$	33	$	6,520	89.8	%	$	6,681	90.0	%
65% to 75%	642		—		14		656		9.0		658		8.9
76% to 80%	42		—		9		51		0.7		50		0.7
Greater than 80%	—		9		24		33		0.5		30		0.4
Total	$	6,878	$	302	$	80	$	7,260	100.0	%	$	7,419	100.0	%

Credit Quality of Agricultural Mortgage Loans

The credit quality of agricultural mortgage loans was as follows at: 

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Loan-to-value ratios:
Less than 65%	$	2,488	89.9	%	$	2,113	92.8	%
65% to 75%	279		10.1		163		7.2
Total	$	2,767	100.0	%	$	2,276	100.0	%

The estimated fair value of agricultural mortgage loans was $2.7 billion and $2.3 billion at September 30, 2018 and December 31, 2017, respectively.

18

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Credit Quality of Residential Mortgage Loans

The credit quality of residential mortgage loans was as follows at:

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	1,792	98.2	%	$	1,106	97.2	%
Nonperforming	32		1.8		32		2.8
Total	$	1,824	100.0	%	$	1,138	100.0	%

The estimated fair value of residential mortgage loans was$1.8 billionand$1.2 billionatSeptember 30, 2018andDecember 31, 2017, respectively.

Past Due, Nonaccrual and Modified Mortgage Loans

The Company has a high quality, well performing mortgage loan portfolio, with over99%of all mortgage loans classified as performing at bothSeptember 30, 2018andDecember 31, 2017. The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days. The Company hadnocommercial or agricultural mortgage loans past due andnocommercial or agricultural mortgage loans in nonaccrual status at eitherSeptember 30, 2018orDecember 31, 2017. The recorded investment of residential mortgage loans past due and in nonaccrual status was$32 millionat bothSeptember 30, 2018andDecember 31, 2017. During the three months andninemonths endedSeptember 30, 2018and2017, the Companydid not have a significant amount of mortgage loans modified in a troubled debt restructuring.

Cash Equivalents

The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $1.1 billion and $1.4 billion at September 30, 2018 and December 31, 2017, respectively.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity and equity securities and the effect on DAC, VOBA, deferred sales inducements (“DSI”) and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

19

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

The components of net unrealized investment gains (losses), included in AOCI, were as follows:

	September 30, 2018			December 31, 2017
	(In millions)
Fixed maturity securities	$	1,558		$	4,806
Fixed maturity securities with noncredit OTTI losses included in AOCI	5			2
Total fixed maturity securities	1,563			4,808
Equity securities	—			39
Derivatives	202			239
Other	(14		)	(8		)
Subtotal	1,751			5,078
Amounts allocated from:
Future policy benefits	(851		)	(2,626		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(5		)	(2		)
DAC, VOBA and DSI	(136		)	(265		)
Subtotal	(992		)	(2,893		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3			—
Deferred income tax benefit (expense)	(161		)	(459		)
Net unrealized investment gains (losses)	$	601		$	1,726

The changes in net unrealized investment gains (losses) were as follows:

	Nine Months Ended  September 30, 2018
	(In millions)
Balance, December 31, 2017	$	1,726
Unrealized investment gains (losses) change due to cumulative effect, net of income tax (1)	(79		)
Balance, January 1, 2018	1,647
Fixed maturity securities on which noncredit OTTI losses have been recognized	3
Unrealized investment gains (losses) during the period	(3,251		)
Unrealized investment gains (losses) relating to:
Future policy benefits	1,775
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(3		)
DAC, VOBA and DSI	129
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3
Deferred income tax benefit (expense)	298
Balance, September 30, 2018	$	601
Change in net unrealized investment gains (losses)	$	(1,046	)

__________________

(1) See Note 1 for more information related to the cumulative effect of change in accounting principle and other.

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both September 30, 2018 and December 31, 2017.

20

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Securities Lending

Elements of the securities lending program are presented below at:

	September 30, 2018		December 31, 2017
	(In millions)
Securities on loan: (1)
Amortized cost	$	3,317	$	3,085
Estimated fair value	$	3,664	$	3,748
Cash collateral received from counterparties (2)	$	3,746	$	3,791
Security collateral received from counterparties (3)	$	—	$	29
Reinvestment portfolio — estimated fair value	$	3,749	$	3,823

__________________

(1) Included within fixed maturity securities.

(2) Included within payables for collateral under securities loaned and other transactions.

(3) Security collateral received from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.

The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at:

	September 30, 2018								December 31, 2017
	Remaining Tenor of Securities Lending Agreements								Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		1 to 6 Months		Total		Open (1)		1 Month or Less		1 to 6 Months		Total
	(In millions)
U.S. government and agency	$	1,317	$	2,015	$	414	$	3,746	$	1,626	$	964	$	1,201	$	3,791

__________________

(1) The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral.

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2018 was $1.3 billion, all of which were U.S. government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement.

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, U.S. government and agency securities, ABS, U.S. and foreign corporate securities, and non-agency RMBS) with 58% invested in agency RMBS, U.S. government and agency securities, cash equivalents, short-term investments or held in cash at September 30, 2018. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.

21

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value at:

	September 30, 2018		December 31, 2017
	(In millions)
Invested assets on deposit (regulatory deposits) (1)	$	8,035	$	8,263
Invested assets held in trust (reinsurance agreements) (2)	3,275		2,634
Invested assets pledged as collateral (3)	4,514		3,199
Total invested assets on deposit, held in trust and pledged as collateral	$	15,824	$	14,096

__________________

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $92 million and $34 million of the assets on deposit balance represents restricted cash at September 30, 2018 and December 31, 2017, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions. $27 million and $42 million of the assets held in trust balance represents restricted cash at September 30, 2018 and December 31, 2017, respectively.

(3) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 3 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report) and derivative transactions (see Note 5).

See “— Securities Lending” for information regarding securities on loan.

Variable Interest Entities

The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity.

The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.

Consolidated VIEs

Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.

22

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at:

	September 30, 2018				December 31, 2017
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
CSEs (assets (primarily loans) and liabilities (primarily debt)) (1)	$	93	$	3	$	116	$	11

__________________

(1) The Company consolidates entities that are structured as CMBS. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its remaining investment in these entities of $72 million and $86 million at estimated fair value at September 30, 2018 and December 31, 2017, respectively.

Unconsolidated VIEs

The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:

	September 30, 2018				December 31, 2017
	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS:
Structured Securities (2)	$	11,560	$	11,560	$	11,461	$	11,461
U.S. and foreign corporate	418		418		504		504
Other limited partnership interests	1,600		2,977		1,511		2,463
Other investments (3)	88		91		82		89
Total	$	13,666	$	15,046	$	13,558	$	14,517

__________________

(1) The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2) For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.

(3) Other investments is comprised of real estate joint ventures and other invested assets.

As described in Note 11, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during both the three months and nine months ended September 30, 2018 and 2017.

23

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Net Investment Income

The components of net investment income were as follows:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2018		2017		2018		2017
	(In millions)
Investment income:
Fixed maturity securities	$	641	$	601	$	1,907	$	1,809
Equity securities	1		2		5		7
Mortgage loans	138		112		384		332
Policy loans	17		18		67		53
Real estate joint ventures	12		13		36		39
Other limited partnership interests	69		38		159		144
Cash, cash equivalents and short-term investments	8		11		21		29
Other	11		10		29		25
Subtotal	897		805		2,608		2,438
Less: Investment expenses	53		46		145		135
Subtotal, net	844		759		2,463		2,303
FVO CSEs — interest income — commercial mortgage loans	9		2		13		6
Net investment income	$	853	$	761	$	2,476	$	2,309

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of related party investment expenses.

24

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Net Investment Gains (Losses)

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized — by sector:
State and political subdivision	$	—		$	—		$	—		$	(1	)
OTTI losses on fixed maturity securities recognized in earnings	—			—			—			(1		)
Fixed maturity securities — net gains (losses) on sales and disposals	(34		)	21			(138		)	(15		)
Total gains (losses) on fixed maturity securities	(34		)	21			(138		)	(16		)
Total gains (losses) on equity securities:
Equity securities — Mark to market and net gains (losses) on sales and disposals	(1		)	3			(5		)	4
Total gains (losses) on equity securities	(1		)	3			(5		)	4
Mortgage loans	(5		)	(2		)	(12		)	(7		)
Real estate joint ventures	—			1			42			4
Other limited partnership interests	—			—			—			(10		)
Other	1			(1		)	3			(6		)
Subtotal	(39		)	22			(110		)	(31		)
FVO CSEs:
Commercial mortgage loans	(4		)	(1		)	(12		)	(2		)
Long-term debt — related to commercial mortgage loans	1			—			1			—
Non-investment portfolio gains (losses)	—			—			—			(1		)
Subtotal	(3		)	(1		)	(11		)	(3		)
Total net investment gains (losses)	$	(42	)	$	21		$	(121	)	$	(34	)

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of related party net investment gains (losses) related to transfers of invested assets.

Sales or Disposals and Impairments of Fixed Maturity Securities

Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Proceeds	$	3,091		$	4,929		$	8,428		$	9,316
Gross investment gains	$	58		$	30		$	70		$	50
Gross investment losses	(92		)	(9		)	(208		)	(65		)
OTTI losses	—			—			—			(1		)
Net investment gains (losses)	$	(34	)	$	21		$	(138	)	$	(16	)

25

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Investments (continued)

Credit Loss Rollforward

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (“OCI”):

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018		2017
	(In millions)
Balance, beginning of period	$	—	$	9		$	—	$	28
Reductions:
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	—		(8		)	—		(27		)
Balance, end of period	$	—	$	1		$	—	$	1

Related Party Investment Transactions

The Company previously transferred invested assets, primarily consisting of fixed maturity securities, to former affiliates. During the three months and nine months ended September 30, 2018, the Company did not transfer any invested assets to former affiliates or receive transfers of invested assets from former affiliates. During the three months ended September 30, 2017, the Company did not transfer any invested assets to former affiliates or receive transfers of invested assets from former affiliates. The amortized cost and estimated fair value on transfers of invested assets to former affiliates was $294 million and $292 million, respectively, for the nine months ended September 30, 2017. The net investment gains (losses) recognized on transfers of invested assets to former affiliates was ($2) million for the nine months ended September 30, 2017.

At March 31, 2017, the Company had $1.1 billion of loans due from MetLife, Inc., which were included in other invested assets. These loans were carried at fixed interest rates of 4.21% and 5.10%, payable semiannually, and were due on September 30, 2032 and December 31, 2033, respectively. In April 2017, these loans were satisfied in a non-cash exchange for $1.1 billion of notes due to MetLife, Inc. See Note 9 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report.

In January 2017, Metropolitan Life Insurance Company (“MLIC”), a former affiliate, recaptured risks related to guaranteed minimum benefit guarantees on certain variable annuities being reinsured by the Company. The Company transferred invested assets and cash and cash equivalents which are included in the table above. See Note 12 for additional information related to these transfers.

In March 2017, the Company sold an operating joint venture with a book value of $89 million to MLIC for $286 million. The operating joint venture was accounted for under the equity method and included in other invested assets. This sale resulted in an increase in additional paid-in capital of $202 million in the first quarter of 2017.

The Company receives investment administrative services from MetLife Investment Advisors, LLC (“MLIA”), which was considered a related party investment manager until the completion of the MetLife Divestiture. The related investment administrative service charges were $0 and $50 million for the three months and nine months ended September 30, 2018, respectively, and $22 million and $71 million for the three months and nine months ended September 30, 2017, respectively. All of the charges reported as related party activity in 2018 occurred prior to the MetLife Divestiture. See Note 1 regarding the MetLife Divestiture.

5. Derivatives

Accounting for Derivatives

Freestanding Derivatives

Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivatives carrying value in other invested assets or other liabilities.

26

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported in net derivative gains (losses) except for economic hedges of variable annuity guarantees which are presented in future policy benefits and claims.

Hedge Accounting

The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. The Company also designates derivatives as a hedge of the estimated fair value of a recognized asset or liabilities (fair value hedge). When a derivative is designated as fair value hedge and is determined to be highly effective, changes in fair value are recorded in net derivative gains (losses), consistent with the change in estimated fair value of the hedged item attributable to the designated risk being hedged.

To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method that will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship.

The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument.

When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.

In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses).

Embedded Derivatives

The Company sells variable annuities and issues certain insurance products and investment contracts and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if:

• the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;

• the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and

• a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.

Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses), except for those in policyholder benefits and claims related to ceded reinsurance of GMIB.

27

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

See “— Variable Annuity Guarantees” in Note 1 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for additional information on the accounting policy for embedded derivatives bifurcated from variable annuity host contracts.

Derivative Strategies

The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets.

Interest Rate Derivatives

The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards.

Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging relationships.

Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the LIBOR (London Interbank Offered Rate), calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total return swaps in nonqualifying hedging relationships.

The Company purchases interest rate caps and floors primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging relationships.

In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships.

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options.

28

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

Foreign Currency Exchange Rate Derivatives

The Company uses foreign currency swaps to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in cash flow and nonqualifying hedging relationships.

To a lesser extent, the Company uses foreign currency forwards in nonqualifying hedging relationships.

Credit Derivatives

The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations, repudiation, moratorium, involuntary restructuring or governmental intervention. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, Inc. (“ISDA”) deems that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging relationships.

The Company enters into written credit default swaps to create synthetic credit investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such as U.S. government and agency securities or other fixed maturity securities. These credit default swaps are not designated as hedging instruments.

Equity Derivatives

The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and equity total return swaps.

Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships.

Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships.

In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded equity futures in nonqualifying hedging relationships.

29

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the LIBOR, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to create synthetic investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships.

Primary Risks Managed by Derivatives

The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair valueof the Company’s derivatives, excluding embedded derivatives, held at:

		September 30, 2018						December 31, 2017
	Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges:
Interest rate swaps	Interest rate	$	—	$	—	$	—	$	175	$	44	$	—
Cash flow hedges:
Interest rate swaps	Interest rate	—		—		—		27		5		—
Foreign currency swaps	Foreign currency exchange rate	2,347		116		65		1,827		94		75
Subtotal		2,347		116		65		1,854		99		75
Total qualifying hedges		2,347		116		65		2,029		143		75
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps	Interest rate	15,237		546		940		20,213		922		774
Interest rate caps	Interest rate	3,350		32		—		2,671		7		—
Interest rate futures	Interest rate	54		—		—		282		1		—
Interest rate options	Interest rate	13,819		51		105		24,600		133		63
Foreign currency swaps	Foreign currency exchange rate	1,140		68		28		1,115		71		42
Foreign currency forwards	Foreign currency exchange rate	125		1		—		130		—		1
Credit default swaps — purchased	Credit	86		3		1		65		—		1
Credit default swaps — written	Credit	1,894		32		—		1,900		40		—
Equity futures	Equity market	2,215		1		1		2,713		15		—
Equity index options	Equity market	51,044		862		1,657		47,066		794		1,664
Equity variance swaps	Equity market	9,713		143		445		8,998		128		430
Equity total return swaps	Equity market	2,516		1		63		1,767		—		79
Total non-designated or nonqualifying derivatives		101,193		1,740		3,240		111,520		2,111		3,054
Total		$	103,540	$	1,856	$	3,305	$	113,549	$	2,254	$	3,129

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both September 30, 2018 and December 31, 2017. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules; (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship; (iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes in estimated fair value of the embedded derivatives are already recorded in net income; and (iv) written credit default swaps that are used to create synthetic credit investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.

30

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

The following table presents earned income on derivatives:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2018		2017		2018		2017
	(In millions)
Qualifying hedges:
Net investment income	$	8	$	5	$	20	$	17
Nonqualifying hedges:
Net derivative gains (losses)	33		67		124		253
Policyholder benefits and claims	—		1		—		8
Total	$	41	$	73	$	144	$	278

31

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)		Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Three Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(2	)	$	2		$	—	$	—		$	—
Total fair value hedges	(2		)	2			—		—			—
Cash flow hedges (5):
Interest rate derivatives	46			—			1		—			(3		)
Foreign currency exchange rate derivatives	—			—			—		—			(4		)
Total cash flow hedges	46			—			1		—			(7		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(281		)	—			—		—			—
Foreign currency exchange rate derivatives	2			(3		)	—		—			—
Credit derivatives	8			—			—		—			—
Equity derivatives	(458		)	—			—		—			—
Embedded derivatives	(38		)	—			—		(2		)	—
Total non-qualifying hedges	(767		)	(3		)	—		(2		)	—
Total	$	(723	)	$	(1	)	$	1	$	(2	)	$	(7	)
Three Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	1		$	(1	)	$	—	$	—		$	—
Total fair value hedges	1			(1		)	—		—			—
Cash flow hedges (5):
Interest rate derivatives	—			—			1		—			1
Foreign currency exchange rate derivatives	—			—			—		—			(53		)
Total cash flow hedges	—			—			1		—			(52		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(81		)	—			—		6			—
Foreign currency exchange rate derivatives	(30		)	4			—		—			—
Credit derivatives	6			—			—		—			—
Equity derivatives	(712		)				—		(64		)	—
Embedded derivatives	582			—			—		(21		)	—
Total non-qualifying hedges	(235		)	4			—		(79		)	—
Total	$	(234	)	$	3		$	1	$	(79	)	$	(52	)

32

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)			Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Nine Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(12	)	$	12		$	—		$	—		$	—
Total fair value hedges	(12		)	12			—			—			—
Cash flow hedges (5):
Interest rate derivatives	62			—			4			—			(5		)
Foreign currency exchange rate derivatives	(1		)	—			—			—			33
Total cash flow hedges	61			—			4			—			28
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(1,255		)	—			—			—			—
Foreign currency exchange rate derivatives	17			(4		)	—			—			—
Credit derivatives	(2		)	—			—			—			—
Equity derivatives	(942		)	—			—			—			—
Embedded derivatives	664			—			—			(4		)	—
Total non-qualifying hedges	(1,518		)	(4		)	—			(4		)	—
Total	$	(1,469	)	$	8		$	4		$	(4	)	$	28
Nine Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	2		$	(2	)	$	—		$	—		$	—
Total fair value hedges	2			(2		)	—			—			—
Cash flow hedges (5):
Interest rate derivatives	2			—			4			—			3
Foreign currency exchange rate derivatives	11			(10		)	—			—			(107		)
Total cash flow hedges	13			(10		)	4			—			(104		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(145		)	—			—			8			—
Foreign currency exchange rate derivatives	(72		)	(30		)	—			—			—
Credit derivatives	17			—			—			—			—
Equity derivatives	(2,123		)	—			(1		)	(341		)	—
Embedded derivatives	890			—			—			(22		)	—
Total non-qualifying hedges	(1,433		)	(30		)	(1		)	(355		)	—
Total	$	(1,418	)	$	(42	)	$	3		$	(355	)	$	(104	)

______________

(1) Includes gains (losses) reclassified from AOCI for cash flow hedges.

(2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. Hedged items in fair value hedging relationship includes fixed rate liabilities reported in policyholder account balances or future policy benefits and fixed maturity securities. Ineffective portion of the gains (losses) recognized in income is not significant.

(3) Includes changes in estimated fair value related to economic hedges of equity method investments in joint ventures and gains (losses) reclassified from AOCI for cash flow hedges.

33

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

(4) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.

(5) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net derivative gains (losses). These amounts were $0 for both the three months and nine months ended September 30, 2018, and $0 and $12 million for the three months and nine months ended September 30, 2017, respectively.

There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for the nine months ended September 30, 2018. At December 31, 2017, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed two years.

At September 30, 2018 and December 31, 2017, the balance in AOCI associated with cash flow hedges was $202 million and $239 million, respectively.

Credit Derivatives

In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the nonqualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps.

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at: 

	September 30, 2018					December 31, 2017
Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)
	(Dollars in millions)
Aaa/Aa/A	$	11	$	677	2.4	$	12	$	558	2.8
Baa	21		1,217		5.2	28		1,317		4.7
Ba	—		—		—	—		25		4.5
Total	$	32	$	1,894	4.2	$	40	$	1,900	4.1

__________________

(1) Includes both single name credit default swaps that may be referenced to the credit of corporations, foreign governments or state and political subdivisions and credit default swaps referencing indices. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”),Standard & Poor’s Global Ratings (“S&P”)and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.

(2) The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Counterparty Credit Risk

The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.

34

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.

See Note 6 for a description of the impact of credit risk on the valuation of derivatives.

The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: 

	September 30, 2018						December 31, 2017
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement	Assets			Liabilities			Assets			Liabilities
	(In millions)
Gross estimated fair value of derivatives:
OTC-bilateral (1)	$	1,903		$	3,295		$	2,233		$	3,081
OTC-cleared and Exchange-traded (1), (6)	22			2			70			40
Total gross estimated fair value of derivatives (1)	1,925			3,297			2,303			3,121
Amounts offset on the consolidated balance sheets	—			—			—			—
Estimated fair value of derivatives presented on the consolidated balance sheets (1), (6)	1,925			3,297			2,303			3,121
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(1,569		)	(1,569		)	(1,942		)	(1,942		)
OTC-cleared and Exchange-traded	(1		)	(1		)	(1		)	(1		)
Cash collateral: (3), (4)
OTC-bilateral	(237		)	—			(257		)	—
OTC-cleared and Exchange-traded	(21		)	—			(28		)	(39		)
Securities collateral: (5)
OTC-bilateral	(86		)	(1,726		)	(31		)	(1,138		)
OTC-cleared and Exchange-traded	—			(1		)	—			—
Net amount after application of master netting agreements and collateral	$	11		$	—		$	44		$	1

__________________

(1) At September 30, 2018 and December 31, 2017, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $69 million and $49 million, respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($8) million and ($8) million, respectively.

(2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.

(3) Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives is included in cash and cash equivalents, short-term investments or in fixed maturity securities, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

35

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

(4) The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At September 30, 2018 and December 31, 2017, the Company received excess cash collateral of $39 million and $94 million, respectively, and provided excess cash collateral of $0 and $5 million, respectively, which is not included in the table above due to the foregoing limitation.

(5) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but atSeptember 30, 2018,noneof the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. AtSeptember 30, 2018andDecember 31, 2017, the Company received excess securities collateral with an estimated fair value of$69 millionand$337 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. AtSeptember 30, 2018andDecember 31, 2017, the Company provided excess securities collateral with an estimated fair value of$307 millionand$471 million, respectively, for its OTC-bilateral derivatives, and$79 millionand$427 million, respectively, for its OTC-cleared derivatives, and$105 millionand$118 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.

(6) Effective January 16, 2018, the London Clearing House (“LCH”) amended its rulebook, resulting in the characterization of variation margin transfers as settlement payments, as opposed to adjustments to collateral.These amendments impacted the accounting treatment of the Company’s centrally cleared derivatives, for which the LCH serves as the central clearing party.

The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. A small number of these arrangements also include credit-contingent provisions that include a threshold above which collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of the Company and/or the counterparty. In addition, substantially all of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s and S&P. If a party’s financial strength or credit ratings were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives.

The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. The Company’s collateral agreements require both parties to be fully collateralized, as such, the Company would not be required to post additional collateral as a result of a downgrade in its financial strength rating. OTC-bilateral derivatives that are not subject to collateral agreements are excluded from this table.  

	September 30, 2018		December 31, 2017
	(In millions)
Estimated fair value of derivatives in a net liability position (1)	$	1,726	$	1,138
Estimated Fair Value of Collateral Provided:
Fixed maturity securities	$	1,999	$	1,414

__________________

(1) After taking into consideration the existence of netting agreements.

36

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

Embedded Derivatives

The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; related party ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; related party assumed reinsurance of guaranteed minimum benefits related to GMWBs and certain GMIBs; funds withheld on assumed and ceded reinsurance; assumed reinsurance on fixed deferred annuities; fixed annuities with equity-indexed returns; and certain debt and equity securities. 

The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:

	Balance Sheet Location	September 30, 2018		December 31, 2017
		(In millions)
Embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	Premiums, reinsurance and other receivables	$	166	$	227
Options embedded in debt or equity securities (1)	Investments	—		(52		)
Embedded derivatives within asset host contracts		$	166	$	175
Embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	Policyholder account balances	$	396	$	1,212
Assumed reinsurance on fixed deferred annuities	Policyholder account balances	—		1
Fixed annuities with equity indexed returns	Policyholder account balances	1,205		674
Embedded derivatives within liability host contracts		$	1,601	$	1,887

__________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018, the Company is no longer required to bifurcate and account separately for derivatives embedded in equity securities. Beginning January 1, 2018, the entire change in the estimated fair value of equity securities is recognized as a component of net investment gains and losses.

The following table presents changes in estimated fair value related to embedded derivatives:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net derivative gains (losses) (1), (2)	$	(38	)	$	582		$	664		$	890
Policyholder benefits and claims	$	(2	)	$	(21	)	$	(4	)	$	(22	)

__________________

(1) The valuation of direct and assumed guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustmentwere($150) millionand ($116) millionfor thethree monthsandnine months ended September 30, 2018, respectively, and$457 millionand$385 millionfor thethree monthsandnine months ended September 30, 2017, respectively.

(2) See Note 12 for discussion of related party net derivative gains (losses).

37

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value

Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, including those items for which the Company has elected the FVO, are presented below at:

	September 30, 2018
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	23,332	$	603	$	23,935
U.S. government and agency	4,072		6,878		—		10,950
RMBS	—		7,291		1,083		8,374
Foreign corporate	—		6,206		1,042		7,248
State and political subdivision	—		4,069		—		4,069
CMBS	—		4,160		130		4,290
ABS	—		1,948		61		2,009
Foreign government	—		1,404		—		1,404
Total fixed maturity securities	4,072		55,288		2,919		62,279
Equity securities	15		13		122		150
Short-term investments	56		60		—		116
Real estate joint ventures (1)	—		—		15		15
Other limited partnership interests (1)	—		—		25		25
Commercial mortgage loans held by CSEs — FVO	—		93		—		93
Derivative assets: (2)
Interest rate	—		629		—		629
Foreign currency exchange rate	—		185		—		185
Credit	—		25		10		35
Equity market	1		854		152		1,007
Total derivative assets	1		1,693		162		1,856
Embedded derivatives within asset host contracts (3)	—		—		166		166
Separate account assets	202		111,530		4		111,736
Total assets	$	4,346	$	168,677	$	3,413	$	176,436
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	1,045	$	—	$	1,045
Foreign currency exchange rate	—		92		1		93
Credit	—		1		—		1
Equity market	1		1,716		449		2,166
Total derivative liabilities	1		2,854		450		3,305
Embedded derivatives within liability host contracts (3)	—		—		1,601		1,601
Long-term debt of CSEs — FVO	—		3		—		3
Total liabilities	$	1	$	2,857	$	2,051	$	4,909

38

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

	December 31, 2017
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	22,048	$	909	$	22,957
U.S. government and agency	8,304		7,988		—		16,292
RMBS	—		6,989		988		7,977
Foreign corporate	—		5,935		1,088		7,023
State and political subdivision	—		4,181		—		4,181
CMBS	—		3,287		136		3,423
ABS	—		1,723		106		1,829
Foreign government	—		1,304		5		1,309
Total fixed maturity securities	8,304		53,455		3,232		64,991
Equity securities (4)	18		19		124		161
Short-term investments	142		156		14		312
Commercial mortgage loans held by CSEs — FVO	—		115		—		115
Derivative assets: (2)
Interest rate	1		1,111		—		1,112
Foreign currency exchange rate	—		165		—		165
Credit	—		30		10		40
Equity market	15		773		149		937
Total derivative assets	16		2,079		159		2,254
Embedded derivatives within asset host contracts (3)	—		—		227		227
Separate account assets	410		117,842		5		118,257
Total assets	$	8,890	$	173,666	$	3,761	$	186,317
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	837	$	—	$	837
Foreign currency exchange rate	—		117		1		118
Credit	—		1		—		1
Equity market	—		1,736		437		2,173
Total derivative liabilities	—		2,691		438		3,129
Embedded derivatives within liability host contracts (3)	—		—		1,887		1,887
Long-term debt of CSEs — FVO	—		11		—		11
Total liabilities	$	—	$	2,702	$	2,325	$	5,027

__________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(2) Derivative assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities are presented within other liabilities on the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.

(3) Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables and other invested assets on the consolidated balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the consolidated balance sheets. At September 30, 2018 and December 31, 2017, debt and equity securities also included embedded derivatives of $0 and ($52) million, respectively.

39

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

(4) The Company reclassified Federal Home Loan Bank (“FHLB”) stock in the prior period from equity securities to other invested assets.

Valuation Controls and Procedures

The Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by MLIA. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary, based on changing market conditions. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of Brighthouse’s Board of Directors regarding compliance with fair value accounting standards.

The fair value of financial assets and financial liabilities is based on quoted market prices, where available. The Company assesses whether prices received represent a reasonable estimate of fair value through controls designed to ensure valuations represent an exit price. MLIA performs several controls, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as “consensus pricing,” are used for non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments. Fixed maturity securities priced using independent non-binding broker quotations represent less than 1% of the total estimated fair value of fixed maturity securities and 5% of the total estimated fair value of Level 3 fixed maturity securities at September 30, 2018.

MLIA also applies a formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, MLIA will use the last available price.

The Company reviews outputs of MLIA’s controls and performs additional controls, including certain monthly controls, which include but are not limited to, performing balance sheet analytics to assess reasonableness of period to period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the nine months ended September 30, 2018.

Determination of Fair Value

Fixed maturity securities

The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below.

U.S. corporate and foreign corporate securities:Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues.

U.S. government and agency, state and political subdivision and foreign government securities:Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker dealer quotes, and comparable securities that are actively traded.

40

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

Structured securities:Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to; collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance.

Equity securities, short-term investments, real estate joint ventures, other limited partnership interests, commercial mortgage loans held by CSEs — FVO and long-term debt of CSEs — FVO

The fair value for actively traded equity securities and short-term investments are determined using quoted market prices and are classified as Level 1 assets. For financial instruments classified as Level 2 assets or liabilities, fair values are determined using a market approach and are valued based on a variety of observable inputs as described below.

Equity securities and short-term investments:Fair value is determined using third-party commercial pricing services, with the primary input being quoted prices in markets that are not active.

Real Estate Joint Ventures and Other Limited Partnership Interests: Fair value is generally based on the Company’s share of the net asset value (“NAV”) as provided on the financial statements of the investees.

Commercial mortgage loans held by CSEs — FVO and long-term debt of CSEs — FVO:Fair value is determined using third-party commercial pricing services, with the primary input being quoted securitization market price determined principally by independent pricing services using observable inputs or quoted prices or reported NAV provided by the fund managers.

Derivatives

The fair values for exchange-traded derivatives are determined using the quoted market prices and are classified as Level 1 assets. For OTC-bilateral derivatives and OTC-cleared derivatives classified as Level 2 assets or liabilities, fair values are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs.

The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.

Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.

41

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

Embedded Derivatives

Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees, equity or bond indexed crediting rates within certain annuity contracts, and those related to funds withheld on ceded reinsurance agreements. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.

The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

The Company’s actuarial department calculates the fair value of these embedded derivatives, which are estimated as the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations concerning policyholder behavior. The calculation is based on in-force business, and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates.

Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience.

The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for Brighthouse Financial, Inc.’s debt. These observable spreads are then adjusted to reflect the priority of these liabilities and claims paying ability of the issuing insurance subsidiaries as compared to Brighthouse Financial, Inc.’s overall financial strength.

Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income.

The Company recaptured from a former affiliate the risk associated with certain GMIBs. These embedded derivatives are included in policyholder account balances on the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on these recaptured risks is determined using a methodology consistent with that described previously for the guarantees directly written by the Company.

The Company ceded to a former affiliate the risk associated with certain of the GMIBs, GMABs and GMWBs described above that are also accounted for as embedded derivatives. In addition to ceding risks associated with guarantees that are accounted for as embedded derivatives, the Company also ceded, to a former affiliate, certain directly written GMIBs that are accounted for as insurance (i.e., not as embedded derivatives), but where the reinsurance agreement contains an embedded derivative. These embedded derivatives are included within premiums, reinsurance and other receivables on the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer.

42

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as previously described in “— Equity securities, short-term investments, real estate joint ventures, other limited partnership interests, commercial mortgage loans held by CSEs — FVO and long-term debt of CSEs — FVO.” The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities on the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.

The Company issues certain annuity contracts which allow the policyholder to participate in returns from equity indices. These equity indexed features are embedded derivatives which are measured at estimated fair value separately from the host fixed annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

The estimated fair value of the embedded equity indexed derivatives, based on the present value of future equity returns to the policyholder using actuarial and present value assumptions including expectations concerning policyholder behavior, is calculated by the Company’s actuarial department. The calculation is based on in-force business and uses standard capital market techniques, such as Black-Scholes, to calculate the value of the portion of the embedded derivative for which the terms are set. The portion of the embedded derivative covering the period beyond where terms are set is calculated as the present value of amounts expected to be spent to provide equity indexed returns in those periods. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in nonperformance risk.

Transfers between Levels

Overall, transfers between levels occur when there are changes in the observability of inputs and market activity. Transfers into or out of any level are assumed to occur at the beginning of the period.

Transfers between Levels 1 and 2:

For assets and liabilities measured at estimated fair value and still held at September 30, 2018 and December 31, 2017, transfers between Levels 1 and 2 were not significant.

Transfers into or out of Level 3:

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

43

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:

					September 30, 2018				December 31, 2017				Impact of Increase in Input on Estimated Fair Value (2)
	Valuation Techniques		Significant Unobservable Inputs		Range			Weighted Average (1)	Range			Weighted Average (1)
Fixed maturity securities (3)
U.S. corporate and foreign corporate	•	Matrix pricing	•	Offered quotes (4)	86	-	126	104	93	-	142	111	Increase
	•	Market pricing	•	Quoted prices (4)	53	-	316	101	—	-	443	77	Increase
RMBS	•	Market pricing	•	Quoted prices (4)	59	-	107	95	3	-	107	95	Increase (5)
CMBS	•	Market pricing	•	Quoted prices (4)	67	-	104	92	8	-	104	88	Increase (5)
	•	Consensus pricing	•	Offered quotes (4)	103	-	103	103	105	-	105	105	Increase (5)
ABS	•	Market pricing	•	Quoted prices (4)	99	-	101	100	100	-	104	101	Increase (5)
	•	Consensus pricing	•	Offered quotes (4)	100	-	100	100	100	-	100	100	Increase (5)
Derivatives
Foreign currency exchange rate	•	Present value techniques	•	Swap yield (17)	(23)	-	2		—	-	—		Increase (6)
Credit	•	Present value techniques	•	Credit spreads (7)	97	-	99		—	-	—		Decrease (6)
	•	Consensus pricing	•	Offered quotes (8)
Equity market	•	Present value techniques or option pricing models	•	Volatility (9)	12%	-	26%		11%	-	31%		Increase (6)
			•	Correlation (10)	30%	-	30%		10%	-	30%
Embedded derivatives
Direct, assumed and ceded guaranteed minimum benefits	•	Option pricing techniques	•	Mortality rates:
				Ages 0 - 40	0%	-	0.08%		0%	-	0.09%		Decrease (11)
				Ages 41 - 60	0.04%	-	0.60%		0.04%	-	0.65%		Decrease (11)
				Ages 61 - 115	0.26%	-	100%		0.26%	-	100%		Decrease (11)
			•	Lapse rates:
				Durations 1 - 10	0.25%	-	100%		0.25%	-	100%		Decrease (12)
				Durations 11 - 20	2%	-	100%		2%	-	100%		Decrease (12)
				Durations 21 - 116	2%	-	100%		2%	-	100%		Decrease (12)
			•	Utilization rates	0%	-	25%		0%	-	25%		Increase (13)
			•	Withdrawal rates	0.25%	-	10%		0.25%	-	10%		(14)
			•	Long-term equity volatilities	17.40%	-	25%		17.40%	-	25%		Increase (15)
			•	Nonperformance risk spread	1.05%	-	1.91%		0.64%	-	1.43%		Decrease (16)

___________________

(1) The weighted average for fixed maturity securities is determined based on the estimated fair value of the securities.

(2) The impact of a decrease in input would have the opposite impact on estimated fair value. For embedded derivatives, changes to direct and assumed guaranteed minimum benefits are based on liability positions; changes to ceded guaranteed minimum benefits are based on asset positions.

(3) Significant increases (decreases) in expected default rates in isolation would result in substantially lower (higher) valuations.

(4) Range and weighted average are presented in accordance with the market convention for fixed maturity securities of dollars per hundred dollars of par.

(5) Changes in the assumptions used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates.

44

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

(6) Changes in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions.

(7) Represents the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives with significant unobservable inputs are primarily comprised of written credit default swaps.

(8) At September 30, 2018 and December 31, 2017, independent non-binding broker quotations were used in the determination of less than 1% and 1% of the total net derivative estimated fair value, respectively.

(9) Ranges represent the underlying equity volatility quoted in percentage points. Since this valuation methodology uses a range of inputs across multiple volatility surfaces to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.

(10) Ranges represent the different correlation factors utilized as components within the valuation methodology. Presenting a range of correlation factors is more representative of the unobservable input used in the valuation. Increases (decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations.

(11) Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(12) Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(13) The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(14) The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(15) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(16) Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.

(17) Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curves are utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.

45

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

The following is a summary of the valuation techniques and significant unobservable inputs used in the fair value measurement of assets and liabilities classified within Level 3 that are not included in the preceding table. Generally, all other classes of securities classified within Level 3, including those within separate account assets and embedded derivatives within funds withheld related to certain assumed reinsurance, use the same valuation techniques and significant unobservable inputs as previously described for Level 3 securities. This includes matrix pricing and discounted cash flow methodologies, inputs such as quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2, as well as independent non-binding broker quotations. The sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is similar in nature to that described in the preceding table.

The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)			Structured Securities			State and Political Subdivision			Foreign Government		Equity Securities
	(In millions)
Three Months Ended September 30, 2018
Balance, beginning of period	$	1,872		$	1,268		$	8		$	—	$	120
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			10			2			—		(2		)
Total realized/unrealized gains (losses) included in AOCI	(44		)	(8		)	(2		)	—		—
Purchases (8)	56			287			—			—		—
Sales (8)	(51		)	(114		)	(6		)	—		—
Issuances (8)	—			—			—			—		—
Settlements (8)	—			—			—			—		—
Transfers into Level 3 (9)	20			3			—			—		9
Transfers out of Level 3 (9)	(208		)	(172		)	(2		)	—		(5		)
Balance, end of period	$	1,645		$	1,274		$	—		$	—	$	122
Three Months Ended September 30, 2017
Balance, beginning of period	$	2,356		$	1,489		$	—		$	—	$	134
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	1			13			—			—		—
Total realized/unrealized gains (losses) included in AOCI	35			6			—			—		(1		)
Purchases (8)	92			147			—			—		—
Sales (8)	(57		)	(230		)	(1		)	—		(3		)
Issuances (8)	—			—			—			—		—
Settlements (8)	—			—			—			—		—
Transfers into Level 3 (9)	191			—			10			—		—
Transfers out of Level 3 (9)	(19		)	(13		)	—			—		—
Balance, end of period	$	2,599		$	1,412		$	9		$	—	$	130
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	—		$	4		$	—		$	—	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	1		$	10		$	—		$	—	$	—

46

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real Estate Joint Ventures (2)			Other Limited Partnership Interests (2)			Short-term Investments			Net Derivatives (3)			Net Embedded Derivatives (4)			Separate Account Assets (5)
	(In millions)
Three Months Ended September 30, 2018
Balance, beginning of period	$	17		$	24		$	—		$	(284	)	$	(1,241	)	$	4
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			3			—			(4		)	(40		)	—
Total realized/unrealized gains (losses) included in AOCI	—			(1		)	—			—			—			—
Purchases (8)	—			—			—			—			—			1
Sales (8)	(2		)	(1		)	—			—			—			—
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			—			(154		)	—
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			—			—			—			(1		)
Balance, end of period	$	15		$	25		$	—		$	(288	)	$	(1,435	)	$	4
Three Months Ended September 30, 2017
Balance, beginning of period	$	—		$	—		$	91		$	(780	)	$	(2,113	)	$	6
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			—			—			4			558			—
Total realized/unrealized gains (losses) included in AOCI	—			—			—			—			—			—
Purchases (8)	—			—			—			—			—			2
Sales (8)	—			—			—			—			—			—
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			370			(155		)	—
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			(90		)	—			—			(2		)
Balance, end of period	$	—		$	—		$	1		$	(406	)	$	(1,710	)	$	6
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	—		$	3		$	—		$	(4	)	$	(37	)	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	—		$	—		$	—		$	4		$	330		$	—

47

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)			Structured Securities			State and Political Subdivision			Foreign Government			Equity Securities
	(In millions)
Nine Months Ended September 30, 2018
Balance, beginning of period	$	1,997		$	1,230		$	—		$	5		$	124
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	2			21			—			—			(4		)
Total realized/unrealized gains (losses) included in AOCI	(121		)	(10		)	—			—			—
Purchases (8)	164			339			—			—			—
Sales (8)	(184		)	(229		)	—			—			(3		)
Issuances (8)	—			—			—			—			—
Settlements (8)	—			—			—			—			—
Transfers into Level 3 (9)	20			—			—			—			10
Transfers out of Level 3 (9)	(233		)	(77		)	—			(5		)	(5		)
Balance, end of period	$	1,645		$	1,274		$	—		$	—		$	122
Nine Months Ended September 30, 2017
Balance, beginning of period	$	2,391		$	1,711		$	17		$	—		$	137
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	(2		)	22			—			—			—
Total realized/unrealized gains (losses) included in AOCI	179			43			—			—			2
Purchases (8)	235			186			—			—			4
Sales (8)	(231		)	(467		)	(1		)	—			(13		)
Issuances (8)	—			—			—			—			—
Settlements (8)	—			—			—			—			—
Transfers into Level 3 (9)	180			—			3			—			—
Transfers out of Level 3 (9)	(153		)	(83		)	(10		)	—			—
Balance, end of period	$	2,599		$	1,412		$	9		$	—		$	130
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	(1	)	$	14		$	—		$	—		$	(4	)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	1		$	19		$	—		$	—		$	—

48

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real Estate Joint Ventures (2)			Other Limited Partnership Interests (2)			Short-term Investments			Net Derivatives (3)			Net Embedded Derivatives (4)			Separate Account Assets (5)
	(In millions)
Nine Months Ended September 30, 2018
Balance, beginning of period	$	22		$	28		$	14		$	(279	)	$	(1,660	)	$	5
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	(1		)	2			—			(12		)	660			—
Total realized/unrealized gains (losses) included in AOCI	—			(1		)	—			—			—			—
Purchases (8)	—			—			—			3			—			1
Sales (8)	(6		)	(4		)	(14		)	—			—			(1		)
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			—			(435		)	(1		)
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			—			—			—			—
Balance, end of period	$	15		$	25		$	—		$	(288	)	$	(1,435	)	$	4
Nine Months Ended September 30, 2017
Balance, beginning of period	$	—		$	—		$	2		$	(954	)	$	(2,383	)	$	10
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			—			—			100			883			—
Total realized/unrealized gains (losses) included in AOCI	—			—			—			—			—			—
Purchases (8)	—			—			—			4			—			2
Sales (8)	—			—			—			—			—			(3		)
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			444			(210		)	—
Transfers into Level 3 (9)	—			—			—			—			—			1
Transfers out of Level 3 (9)	—			—			(1		)	—			—			(4		)
Balance, end of period	$	—		$	—		$	1		$	(406	)	$	(1,710	)	$	6
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	(1	)	$	2		$	—		$	(12	)	$	867		$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	—		$	—		$	—		$	98		$	1,002		$	—

_________________

(1) Comprised of U.S. and foreign corporate securities.

(2) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(3) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.

(4) Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

(5) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income (loss). For the purpose of this disclosure, these changes are presented within net investment gains (losses).

(6) Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

(7) Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

49

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

(8) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

(9) Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.

(10) Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

Fair Value Option

The following table presents information for certain assets and liabilities of CSEs, which are accounted for under the FVO. These assets and liabilities were initially measured at fair value.

	September 30, 2018		December 31, 2017
	(In millions)
Assets (1)
Unpaid principal balance	$	59	$	70
Difference between estimated fair value and unpaid principal balance	34		45
Carrying value at estimated fair value	$	93	$	115
Liabilities (1)
Contractual principal balance	$	3	$	10
Difference between estimated fair value and contractual principal balance	—		1
Carrying value at estimated fair value	$	3	$	11

__________________

(1) These assets and liabilities are comprised of commercial mortgage loans and long-term debt. Changes in estimated fair value on these assets and liabilities and gains or losses on sales of these assets are recognized in net investment gains (losses). Interest income on commercial mortgage loans held by CSEs — FVO is recognized in net investment income. Interest expense from long-term debt of CSEs — FVO is recognized in other expenses.

Fair Value of Financial Instruments Carried at Other Than Fair Value

The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income, payables for collateral under securities loaned and other transactions and those short-term investments that are not securities, such as time deposits, and therefore are not included in the three level hierarchy table disclosed in the “— Recurring Fair Value Measurements” section. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure.

50

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:

	September 30, 2018
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	12,940	$	—	$	—	$	12,914	$	12,914
Policy loans	$	1,443	$	—	$	685	$	922	$	1,607
Other invested assets	$	77	$	—	$	64	$	13	$	77
Premiums, reinsurance and other receivables	$	1,636	$	—	$	60	$	1,719	$	1,779
Liabilities
Policyholder account balances	$	16,026	$	—	$	—	$	14,871	$	14,871
Long-term debt	$	3,963	$	—	$	2,992	$	600	$	3,592
Other liabilities	$	515	$	—	$	304	$	211	$	515
Separate account liabilities	$	1,227	$	—	$	1,227	$	—	$	1,227

	December 31, 2017
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	10,627	$	—	$	—	$	10,871	$	10,871
Policy loans	$	1,523	$	—	$	781	$	959	$	1,740
Real estate joint ventures (1)	$	5	$	—	$	—	$	22	$	22
Other limited partnership interests (1)	$	36	$	—	$	—	$	28	$	28
Other invested assets (2)	$	71	$	—	$	71	$	—	$	71
Premiums, reinsurance and other receivables	$	1,758	$	—	$	128	$	1,985	$	2,113
Liabilities
Policyholder account balances	$	15,791	$	—	$	—	$	15,927	$	15,927
Long-term debt	$	3,601	$	—	$	3,039	$	600	$	3,639
Other liabilities	$	314	$	—	$	100	$	214	$	314
Separate account liabilities	$	1,210	$	—	$	1,210	$	—	$	1,210

_________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(2) The Company reclassified FHLB stock in the prior period from equity securities to other invested assets.

51

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

7. Long-term Debt

Junior Subordinated Debentures

On September 12, 2018, Brighthouse Financial, Inc. issued $375 million of junior subordinated debentures (the “debentures”) due September 2058, which bear interest at a fixed rate of 6.250%, payable quarterly, subject to Brighthouse Financial, Inc.’s right to defer interest payments in accordance with the terms of the debentures. The debentures are unsecured obligations and are subordinate and junior in right of payment to Brighthouse Financial, Inc.’s senior indebtedness.

Repurchase Facility

In April 2018, Brighthouse Life Insurance Company entered into a committed repurchase facility (the “Repurchase Facility”) with a financial institution, pursuant to which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $2.0 billion in respect of certain eligible securities. The Repurchase Facility has a term of three years, beginning on July 31, 2018 and ending on July 31, 2021. At September 30, 2018, there were no drawdowns under the Repurchase Facility.

8. Equity

Common Stock Repurchase Program

On August 5, 2018, Brighthouse Financial, Inc.’s Board of Directors authorized the repurchase of up to $200 million of common stock. Repurchases made under such authorization 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. As of September 30, 2018, the Company repurchased 982,057 shares of its common stock through open market purchases for $42 million.

Share-Based Compensation Plans

The Company’s share-based compensation plans provide awards to employees and non-employee directors and may be in the form of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other share-based awards. Additionally, employees may purchase shares at a discount under an employee stock purchase plan. The Company also granted restricted stock units to certain employees and non-employee directors on September 8, 2017, shortly following the Separation (the “Founders’ Grant”). The employee stock incentive plan and the non-employee director stock compensation plan were each approved at the Brighthouse Financial, Inc. annual meeting of stockholders held on May 23, 2018. The aggregate number of authorized shares available for issuance at September 30, 2018 under the Company’s various share-based compensation plans was 7,330,377.

All share-based compensation is measured at fair value as of the grant date. The Company recognizes compensation expense related to share-based awards based on the number of awards expected to vest, which represents the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant. Unless a material deviation from the assumed forfeiture rate is observed during the term in which the awards are expensed, the Company recognizes any adjustment necessary to reflect differences in actual experience in the period the award becomes payable or exercisable. Compensation expense related to share-based awards, which is included in other expenses, is principally related to the issuance of restricted stock units with other costs incurred relating to stock options and performance units. With the exception of the Founders’ Grant, the Company grants the majority of each year’s awards in the first quarter of the year.

Compensation Expense Related to Share-Based Compensation

The following table presents total share-based compensation expense:

	Three Months Ended  September 30, 2018		Nine Months Ended  September 30, 2018
	(In millions)
Restricted stock units, Founders’ Grant	$	21	$	31
Restricted stock units	$	3	$	4
Stock options	$	—	$	1
Performance share units	$	—	$	—

52

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Equity (continued)

The share-based compensation cost for the Founders’ Grant was fully recognized at September 30, 2018. Unrecognized share-based compensation for other grants related to restricted stock units, stock options and performance share units was $16 million at September 30, 2018 with a weighted average recognition period of six quarters.

Equity Awards

Restricted Share Units (“RSUs”)

RSUs are units that, if vested, are payable in shares of Brighthouse Financial, Inc. common stock. The Company does not credit RSUs with dividend-equivalents as RSUs do not accrue dividends. Accordingly, the estimated fair value of RSUs is based upon the closing price of shares on the date of grant, less a forfeiture rate. With the exception of the Founders’ Grant, most RSUs use graded vesting and vest in thirds on, or shortly after, the first three anniversaries of their grant date, while other RSUs vest in their entirety on the third or later anniversary of their grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances.

Performance Share Units (“PSUs”)

PSUs are units that, if vested, are multiplied by a performance factor to produce a number of final PSUs, which are payable in shares of Brighthouse Financial, Inc. common stock. PSUs cliff vest at the end of the three-year performance period. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances. The performance factors will be based on the achievement of corporate expense reductions and the capital return targets over the respective three-year period.

For awards granted for performance periods in progress through September 30, 2018, the vested PSUs will be multiplied by a performance factor of 0% to 150%. Assuming the Company has met certain threshold performance goals, the Compensation Committee of Brighthouse Financial, Inc.’s Board of Directors will determine the performance factor in its discretion. The Company estimates the fair value of performance shares semi-annually until they become payable.

The following table presents a summary of PSU and RSU activity:

	Restricted			Performance
	Units	Weighted Average Grant-Date Fair Value		Units	Weighted Average Grant-Date Fair Value
Outstanding at January 1, 2018	—	$	—	—	$	—
Granted	995,861	$	48.06	73,849	$	48.10
Forfeited	15,007	$	48.10	—	$	—
Paid	—	$	—	—	$	—
Outstanding at September 30, 2018	980,854	$	48.05	73,849	$	48.10
Vested at September 30, 2018	648,561	$	48.10	—	$	—

Stock Options

Stock options represent the contingent right of award holders to purchase shares of Brighthouse Financial, Inc. common stock at a stated price for a limited time. All stock options have an exercise price equal to the closing price of a share on the date of grant and have a maximum term of ten years. Certain stock options granted are exercisable at a rate of one-third of each award on each of the first three anniversaries of the grant date, while others are exercisable entirely on the third anniversary of the grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances. In May 2018, the Company granted 242,560 options at a weighted average exercise price of $53.47 for aggregate intrinsic value of $0. No stock options were exercised, expired or forfeited during the period ended September 30, 2018.

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes model. The significant assumptions the Company uses in its model include: expected volatility of the price of shares; risk-free rate of return; graded three-year vesting; and expected option life.

53

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Equity (continued)

The following table presents the weighted average assumptions used to determine the grant-date fair value of stock options that Brighthouse Financial, Inc. has granted:

	September 30, 2018
Risk-free rate of return	2.93%
Expected volatility	25.00%
Expected option life, years	5.80
Weighted average exercise price of stock options granted	$53.47
Weighted average fair value of stock options granted	$12.54

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI was as follows:

	Three Months Ended  September 30, 2018
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, June 30, 2018	$	690		$	168		$	(19	)	$	(24	)	$	815
OCI before reclassifications	(310		)	(7		)	(7		)	—			(324		)
Deferred income tax benefit (expense)	66			1			1			—			68
AOCI before reclassifications, net of income tax	446			162			(25		)	(24		)	559
Amounts reclassified from AOCI	38			(47		)	—			—			(9		)
Deferred income tax benefit (expense)	(8		)	10			—			—			2
Amounts reclassified from AOCI, net of income tax	30			(37		)	—			—			(7		)
Balance, September 30, 2018	$	476		$	125		$	(25	)	$	(24	)	$	552

	Three Months Ended  September 30, 2017
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, June 30, 2017	$	1,721		$	223		$	(33	)	$	(17	)	$	1,894
OCI before reclassifications	(844		)	(52		)	9			—			(887		)
Deferred income tax benefit (expense)	302			18			(2		)	(1		)	317
AOCI before reclassifications, net of income tax	1,179			189			(26		)	(18		)	1,324
Amounts reclassified from AOCI	(26		)	(1		)	—			—			(27		)
Deferred income tax benefit (expense)	9			2			—			—			11
Amounts reclassified from AOCI, net of income tax	(17		)	1			—			—			(16		)
Balance, September 30, 2017	$	1,162		$	190		$	(26	)	$	(18	)	$	1,308

54

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Equity (continued)

	Nine Months Ended  September 30, 2018
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, December 31, 2017	$	1,572		$	154		$	(24	)	$	(26	)	$	1,676
Cumulative effect of change in accounting principle and other, net of income tax (see Note 1)	(79		)	—			—			—			(79		)
Balance, January 1, 2018	1,493			154			(24		)	(26		)	1,597
OCI before reclassifications	(1,448		)	28			(1		)	3			(1,418		)
Deferred income tax benefit (expense)	325			(6		)	—			(1		)	318
AOCI before reclassifications, net of income tax	370			176			(25		)	(24		)	497
Amounts reclassified from AOCI	138			(65		)	—			—			73
Deferred income tax benefit (expense)	(32		)	14			—			—			(18		)
Amounts reclassified from AOCI, net of income tax	106			(51		)	—			—			55
Balance, September 30, 2018	$	476		$	125		$	(25	)	$	(24	)	$	552

	Nine Months Ended  September 30, 2017
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, December 31, 2016	$	1,044		$	268		$	(31	)	$	(16	)	$	1,265
OCI before reclassifications	118			(104		)	5			(14		)	5
Deferred income tax benefit (expense)	(41		)	36			—			12			7
AOCI before reclassifications, net of income tax	1,121			200			(26		)	(18		)	1,277
Amounts reclassified from AOCI	64			(17		)	—			—			47
Deferred income tax benefit (expense)	(23		)	7			—			—			(16		)
Amounts reclassified from AOCI, net of income tax	41			(10		)	—			—			31
Balance, September 30, 2017	$	1,162		$	190		$	(26	)	$	(18	)	$	1,308

__________________

(1) See Note 4 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI.

55

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Equity (continued)

Information regarding amounts reclassified out of each component of AOCI was as follows:

AOCI Components	Amounts Reclassified from AOCI												Consolidated Statements of Operations and Comprehensive Income (Loss) Locations
	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	(36	)	$	24		$	(137	)	$	(22	)	Net investment gains (losses)
Net unrealized investment gains (losses)	—			—			1			2			Net investment income
Net unrealized investment gains (losses)	(2		)	2			(2		)	(44		)	Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax	(38		)	26			(138		)	(64		)
Income tax (expense) benefit	8			(9		)	32			23
Net unrealized investment gains (losses), net of income tax	(30		)	17			(106		)	(41		)
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	15			—			31			—			Net derivative gains (losses)
Interest rate swaps	—			—			2			2			Net investment income
Interest rate forwards	31			—			31			2			Net derivative gains (losses)
Interest rate forwards	1			1			2			2			Net investment income
Foreign currency swaps	—			—			(1		)	11			Net derivative gains (losses)
Gains (losses) on cash flow hedges, before income tax	47			1			65			17
Income tax (expense) benefit	(10		)	(2		)	(14		)	(7		)
Gains (losses) on cash flow hedges, net of income tax	37			(1		)	51			10
Total reclassifications, net of income tax	$	7		$	16		$	(55	)	$	(31	)

56

Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

9. Other Revenues and Other Expenses

Other Revenues

The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the “Funds”) whereby the Company is paid monthly or quarterly fees (“12b-1 fees”) for providing certain services to customers and distributors of the Funds. The 12b-1 fees are generally equal to a fixed percentage of the average daily balance of the customer’s investment in a fund are based on a specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees.

To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds, and is used to recognize revenue associated with 12b-1 fees.

Other revenues consisted primarily of 12b-1 fees of $91 million and $275 million for the three months and nine months ended September 30, 2018, respectively, and $94 million and $263 million for the three months and nine months ended September 30, 2017, respectively, of which substantially all were reported in the Annuities segment.

Other Expenses

Information on other expenses was as follows:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Compensation	$	99		$	84		$	252		$	213
Commissions	221			212			650			602
Volume-related costs	104			112			318			375
Expenses on ceded and assumed reinsurance with former affiliates	5			4			12			30
Capitalization of DAC	(83		)	(72		)	(235		)	(187		)
Interest expense on debt	40			34			113			116
Premium taxes, licenses and fees	12			16			55			49
Professional services	112			76			320			164
Rent and related expenses	4			2			10			10
Other	151			143			479			417
Total other expenses	$	665		$	611		$	1,974		$	1,789

Related Party Expenses

Commissions and capitalization of DAC include the impact of related party reinsurance transactions. See Note 12 for a discussion of related party expenses included in the table above.

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Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

10. Earnings Per Common Share

The following table sets forth the calculation of earnings per common share:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions, except share and per share data)
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	$	(271	)	$	(943	)	$	(577	)	$	(1,046	)
Weighted average common shares outstanding:
Basic	119,657,443			119,773,106			119,734,128			119,773,106
Earnings per common share:
Basic	$	(2.26	)	$	(7.87	)	$	(4.82	)	$	(8.73	)

Basic loss per common share equaled diluted loss per common share for the three months and nine months ended September 30, 2018. The diluted shares were not utilized in the per share calculation, as the inclusion of such shares would have an antidilutive effect.

11. Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a number of litigation matters. In some of the matters, large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is possible that some matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated at September 30, 2018.

Matters as to Which an Estimate Can Be Made

For some loss contingency matters, the Company is able to estimate a reasonably possible range of loss. For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. As of September 30, 2018, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued, if any, for these matters to be $0 to $10 million.

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Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

11. Contingencies, Commitments and Guarantees (continued)

Matters as to Which an Estimate Cannot Be Made

For other matters, the Company is not currently able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

Sales Practices Claims

Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. The Company vigorously defends against the claims in these matters. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters.

Group Annuity Class Action

Edward Roycroft v. Brighthouse Financial, Inc., et al.(U.S. District Court, Southern District of New York, filed June 18, 2018). Edward Roycroft filed a purported class action against Brighthouse Financial, Inc., MetLife, Inc., and Metropolitan Life Insurance Company. The complaint alleges plaintiff is a beneficiary of a Martindale-Hubbell group annuity contract and did not receive payments plaintiff claims he was entitled to upon his retirement in 1999. Plaintiff seeks to represent a class of all beneficiaries who were due annuity benefits pursuant to group annuity contracts and whose annuity benefits were released from reserves. Plaintiff’s causes of action are for conversion, unjust enrichment, an accounting and for a constructive trust. Plaintiff seeks damages, attorneys’ fees, declaratory and injunctive relief and other equitable remedies. In September 2018, plaintiff dismissed Brighthouse Financial, Inc. from the action without prejudice.

Summary

Various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations, it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.

Commitments

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $422 million and $388 million at September 30, 2018 and December 31, 2017, respectively.

Commitments to Fund Partnership Investments and Private Corporate Bond Investments

The Company commits to fund partnership investments and to lend funds under private corporate bond investments. The amounts of these unfunded commitments were $1.8 billion and $1.4 billion at September 30, 2018 and December 31, 2017, respectively.

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Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

11. Contingencies, Commitments and Guarantees (continued)

Guarantees

In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from less than $1 million to $169 million, with a cumulative maximum of $175 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments.

In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.

The Company’s recorded liabilities were $2 million at both September 30, 2018 and December 31, 2017 for indemnities, guarantees and commitments.

12. Related Party Transactions

The Company had not historically operated as a standalone business prior to the Separation, and as a result had various existing arrangements with MetLife for services necessary to conduct its activities. Subsequent to the Separation, certain of such services continued, as provided for under a master service agreement and various transition services agreements entered into in connection with the Separation. MetLife was no longer considered a related party upon the completion of the MetLife Divestiture on June 14, 2018. All of the MetLife transactions reported as related party activity occurred prior to the MetLife Divestiture. See Note 1 for information regarding the MetLife Divestiture.

The following table summarizes income and expense from transactions with MetLife for the periods indicated:

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018			2017
	(In millions)
Income	$	—	$	(96	)	$	(182	)	$	(496	)
Expense	$	—	$	108		$	133		$	288

The following table summarizes assets and liabilities from transactions with MetLife at:

	September 30, 2018		December 31, 2017
	(In millions)
Assets	$	—	$	2,907
Liabilities	$	—	$	2,178

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Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

12. Related Party Transactions (continued)

The material arrangements between the Company and MetLife are as follows:

Reinsurance Agreements

The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products and also as a provider of reinsurance for some insurance products issued by former affiliates. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth.

The Company has reinsurance agreements with certain MetLife subsidiaries, including MLIC, Metropolitan Tower Life Insurance Company and MetLife Reinsurance Company of Vermont, all of which were related parties until the completion of the MetLife Divestiture.

Information regarding the significant effects of reinsurance with former MetLife affiliates included on the interim condensed consolidated statements of operations and comprehensive income (loss) was as follows:

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018			2017
	(In millions)
Premiums
Reinsurance assumed	$	—	$	1		$	6		$	9
Reinsurance ceded	—		(106		)	(201		)	(423		)
Net premiums	$	—	$	(105	)	$	(195	)	$	(414	)
Universal life and investment-type product policy fees
Reinsurance assumed	$	—	$	31		$	45		$	77
Reinsurance ceded	—		1			1			(16		)
Net universal life and investment-type product policy fees	$	—	$	32		$	46		$	61
Other revenues
Reinsurance assumed	$	—	$	—		$	—		$	27
Reinsurance ceded	—		—			18			39
Net other revenues	$	—	$	—		$	18		$	66
Policyholder benefits and claims
Reinsurance assumed	$	—	$	9		$	8		$	21
Reinsurance ceded	—		(89		)	(177		)	(318		)
Net policyholder benefits and claims	$	—	$	(80	)	$	(169	)	$	(297	)

Information regarding the significant effects of reinsurance with former MetLife affiliates included on the interim condensed consolidated balance sheets was as follows at:

	September 30, 2018				December 31, 2017
	Assumed		Ceded		Assumed		Ceded
	(In millions)
Assets
Premiums, reinsurance and other receivables	$	—	$	—	$	18	$	3,410
Liabilities
Other policy-related balances	$	—	$	—	$	1,674	$	—
Other liabilities	$	—	$	—	$	30	$	401

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Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

12. Related Party Transactions (continued)

The Company cedes risks to MLIC related to guaranteed minimum benefits written directly by the Company. The ceded reinsurance agreements contain embedded derivatives and changes in the estimated fair value are also included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were $0 and $2 million at September 30, 2018 and December 31, 2017, respectively. Net derivative gains (losses) associated with the embedded derivatives were $0 and less than ($1) million for the three months and nine months ended September 30, 2018, respectively, and ($1) million and ($264) million for the three months and nine months ended September 30, 2017, respectively.

In May 2017, the Company recaptured from MLIC risks related to multiple life products ceded under yearly renewable term and coinsurance agreements. This recapture resulted in an increase in cash and cash equivalents of $214 million and a decrease in premiums, reinsurance and other receivables of $189 million. The Company recognized a gain of $17 million, net of income tax, as a result of this reinsurance termination.

In January 2017, the Company executed a novation and assignment of a reinsurance agreements under which MLIC reinsured certain variable annuities, including guaranteed minimum benefits, issued by Brighthouse Life Insurance Company of NY (“BHNY”) and New England Life Insurance Company (“NELICO”). As a result of the novation and assignment, the reinsurance agreement is now between Brighthouse Life Insurance Company and BHNY and NELICO. The transaction is treated as a termination of the existing reinsurance agreement with recognition of a loss and a new reinsurance agreement with no recognition of a gain or loss. The transaction resulted in an increase in other liabilities of $274 million. The Company recognized a loss of $178 million, net of income tax, as a result of this transaction.

InJanuary2017,MLICrecaptured risks related to guaranteed minimum benefits written by MLIC that were reinsured by the Company. This recapture resulted in a decrease in investments and cash and cash equivalents of$568 million, a decrease in future policy benefits of$106 million, and a decrease in policyholder account balances of$460 million. In June 2017, there was an adjustment to the recapture amounts of this transaction, which resulted in an increase in premiums, reinsurance and other receivables of$140 millionat June 30, 2017. The Company recognized a gain of$89 million, net of income tax, as a result of this transaction.

Financing Arrangements

Prior to the Separation, the Company had collateral financing arrangements with MetLife that were used to support reinsurance obligations arising under previously affiliated reinsurance agreements. The Company recognized interest expense for such arrangements of $0 and $55 million for the three months and nine months ended September 30, 2017, respectively. These arrangements were terminated in April 2017.

Investment Transactions

In the ordinary course of business, the Company had previously transferred invested assets, primarily consisting of fixed maturity securities, to and from former affiliates. See Note 4 for further discussion of the related party investment transactions.

Shared Services and Overhead Allocations

MetLife provides the Company certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting, and information technology. The Company is charged for these services through a transition services agreement and allocated to the legal entities and products within the Company. When specific identification to a particular legal entity and/or product is not practicable, an allocation methodology based on various performance measures or activity-based costing, such as sales, new policies/contracts issued, reserves, and in-force policy counts is used. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Management believes that the methods used to allocate expenses under these arrangements are reasonable. Costs incurred with MetLife prior to the MetLife Divestiture under these arrangements, that were considered related party expenses, were $0 and $186 million for the three months and nine months ended September 30, 2018, respectively, and $101 million and $296 million for the three months and nine months ended September 30, 2017, respectively, and were recorded in other expenses.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Page
Introduction	64
Executive Summary	65
Industry Trends	66
Summary of Critical Accounting Estimates	67
Non-GAAP and Other Financial Disclosures	67
Segment Capital	69
Results of Operations	70
Investments	86
Derivatives	97
Off Balance Sheet Arrangements	99
Policyholder Liabilities	100
Liquidity and Capital Resources	102
Note Regarding Forward-Looking Statements	110

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Introduction

For purposes of this discussion, “Brighthouse,” the “Company,” “we,” “our” and “us” refer to Brighthouse Financial, Inc. a corporation incorporated in Delaware in 2016, and its subsidiaries. Brighthouse Financial, Inc. was formerly a wholly-owned subsidiary of MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”). Following this summary is a discussion addressing the consolidated results of operations and financial condition of the Company for the periods indicated. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with (i) the unaudited interim condensed consolidated financial statements and related notes included elsewhere herein; (ii) our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 16, 2018 (the “2017 Annual Report”); (iii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 (the “First Quarter Form 10-Q”) filed with the SEC on May 9, 2018; (iv) our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (the “Second Quarter Form 10-Q”) filed with the SEC on August 7, 2018; and (v) our current reports on Form 8-K filed in 2018.

The term “Separation” refers to the separation of MetLife’s former Brighthouse Financial segment from MetLife’s other businesses and the creation of a separate, publicly traded company, Brighthouse Financial, Inc., to hold the assets (including the equity interests of certain former MetLife subsidiaries) and liabilities associated with MetLife’s former Brighthouse Financial segment from and after the Distribution; the term “Distribution” refers to the distribution on August 4, 2017 of 96,776,670, or 80.8%, of the 119,773,106 shares of Brighthouse Financial, Inc. common stock outstanding immediately prior to the Distribution date by MetLife, Inc. to shareholders of MetLife, Inc. as of the record date for the Distribution. The term “MetLife Divestiture” refers to the disposition by MetLife, Inc. on June 14, 2018 of all its remaining shares of Brighthouse Financial, Inc. common stock. Effective with the MetLife Divestiture, MetLife, Inc. and its subsidiaries and affiliates are no longer considered related parties to Brighthouse Financial, Inc. and its subsidiaries and affiliates.

Presentation

Prior to discussing our Results of Operations, we present background information and definitions that we believe are useful to understanding the discussion of our financial results. This information precedes the Results of Operations and is most beneficial when read in the sequence presented. A summary of key informational sections is as follows:

• “Executive Summary” contains the following sub-sections:

• “Overview” provides information regarding our business, segments and results as discussed in the Results of Operations.

• “Background” presents details of the Company’s legal entity structure.

• “Industry Trends” discusses updates and changes to a number of trends and uncertainties included in the 2017 Annual Report that we believe may materially affect our future financial condition, results of operations or cash flows.

• “Summary of Critical Accounting Estimates” explains the most critical estimates and judgments applied in determining our GAAP results.

• “Non-GAAP and Other Financial Disclosures” defines key financial measures presented in the Results of Operations that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”) but are used by management in evaluating company and segment performance. As described in this section, adjusted earnings is presented by key business activities which are derived from, but different than, the line items presented in the GAAP statement of operations. This section also refers to certain other terms used to describe our insurance business and financial and operating metrics, but is not intended to be exhaustive.

Certain amounts presented in prior periods within the foregoing discussions of our financial results have been reclassified to conform with the current year presentation.

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Executive Summary

Overview

We are a major provider of annuity products and life insurance in the United States through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners.

For operating purposes, we have established three segments: (i) Annuities, (ii) Life and (iii) Run-off, which consists of operations relating to products we are not actively selling and which are separately managed. In addition, we report certain of our results of operations not included in the segments in Corporate & Other.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary — Overview,” and “Business — Segments and Corporate & Other” included in the 2017 Annual Report along with Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for further information on our segments and Corporate & Other.

The table below presents a summary of our net income (loss) available to shareholders and adjusted earnings. For a detailed discussion of our results see “— Results of Operations.”

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net income (loss) available to shareholders before provision for income tax	$	(370	)	$	(124	)	$	(803	)	$	(393	)
Less: Provision for income tax expense (benefit)	(99		)	819			(226		)	653
Net income (loss) available to shareholders	$	(271	)	$	(943	)	$	(577	)	$	(1,046	)
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	$	312		$	504		$	819		$	1,322
Less: Provision for income tax expense (benefit)	42			1,180			113			1,394
Adjusted earnings	$	270		$	(676	)	$	706		$	(72	)

For the three months ended September 30, 2018, we had a net loss available to shareholders of $271 million and adjusted earnings of $270 million, compared to a net loss available to shareholders of $943 million and adjusted earnings of ($676) million for the three months ended September 30, 2017. The net loss available to shareholders for the three months ended September 30, 2018 was driven primarily by net derivative losses resulting from changes in connection with the annual actuarial review in our variable annuity business, as well as market impacts on our structured annuities, embedded derivatives and freestanding interest rate derivatives. The net loss available to shareholders for the three months ended September 30, 2017 resulted from a non-cash tax charge in connection with the Separation.For the nine months ended September 30, 2018, we had a net loss available to shareholders of $577 million and adjusted earnings of $706 million, compared to a net loss available to shareholders of $1.0 billion and adjusted earnings of ($72) million for the nine months ended September 30, 2017. The net loss available to shareholders for the nine months ended September 30, 2018 was driven primarily by net derivative losses resulting from changes in connection with the annual actuarial review in our variable annuity business as well as market impacts on our structured annuities, embedded derivatives and freestanding interest rate derivatives. The net loss available to shareholders for the nine months ended September 30, 2017 resulted primarily from a non-cash tax charge in connection with the Separation combined with equity hedge losses in our variable annuity exposure management program from higher equity markets.

See Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding the adoption of new accounting pronouncements in 2018.

Background

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations, financial condition and cash flows of Brighthouse for the periods indicated. In addition to Brighthouse Financial, Inc., the companies and businesses included in the results of operations, financial condition and cash flows are:

• Brighthouse Life Insurance Company (together with its subsidiaries and affiliates, “BLIC”), formerly MetLife Insurance Company USA, our largest insurance operating entity, domiciled in Delaware and licensed to write business in 49 states;

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• New England Life Insurance Company (“NELICO”), domiciled in Massachusetts and licensed to write business in all 50 states;

• Brighthouse Life Insurance Company of NY (“BHNY”), formerly First MetLife Investors Insurance Company, domiciled in New York and licensed to write business in New York, which is a subsidiary of Brighthouse Life Insurance Company;

• Brighthouse Reinsurance Company of Delaware (“BRCD”), our single reinsurance company licensed in Delaware, which is a subsidiary of Brighthouse Life Insurance Company;

• Brighthouse Investment Advisers, LLC, formerly MetLife Advisers, LLC, serving as investment advisor to certain proprietary mutual funds that are underlying investments under our and MetLife’s variable insurance products;

• Brighthouse Services, LLC, an internal services and payroll company;

• Brighthouse Securities, LLC, registered as a broker-dealer with the SEC, approved as a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and registered as a broker-dealer and licensed as an insurance agency in all required states; and

• Brighthouse Holdings, LLC (“BH Holdings”), a wholly-owned holding company subsidiary of Brighthouse Financial, Inc., domiciled in Delaware.

Industry Trends

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we discuss a number of trends and uncertainties that we believe may materially affect our future financial condition, results of operations or cash flows. Where these trends or uncertainties are specific to a particular aspect of our business, we often include such a discussion under the relevant caption of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, as part of our broader analysis of that area of our business. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties” included in the 2017 Annual Report, as amended or supplemented by such information in the First Quarter Form 10-Q and the Second Quarter Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends”, for a comprehensive discussion of some of the key general trends and uncertainties that have influenced the development of our business and our historical financial performance and that we believe will continue to influence our business and results of operations in the future. In addition, significant changes or updates in certain of these trends and uncertainties are discussed below.

Variable Annuity Capital Reform

We currently support our variable annuity contracts with assets which are $2.0 billion to $3.0 billion in excess of the amount of assets required under CTE95 (defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst five percent of 1,000 capital market scenarios over the life of the contracts (“CTE95”)); see “Business — Risk Management Strategies — Variable Annuity Statutory Reserving Requirements and Exposure Management” in our 2017 Annual Report. At September 30, 2018, we had in excess of $600 million of assets above CTE98 (defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst two percent of 1,000 capital market scenarios over the life of the contracts (“CTE98”)) to support our variable annuity contracts.

On August 7, 2018, the National Association of Insurance Commissioners (the “NAIC”) approved the framework for variable annuity reserve and capital reform, which includes modifications to the calculation of risk-based capital (“RBC”). Various NAIC committees will now begin the process of clarifying certain implementation guidelines. The effective date of the reform is January 1, 2020. For capital management purposes and our CTE95 and CTE98 calculations, we have incorporated the new framework, including the equity and interest rate scenarios and behavioral assumptions, in our 2018 annual actuarial review process in the third quarter of 2018. We expect to continue to support our variable annuity contracts with assets which are $2.0 billion to $3.0 billion in excess of the amount of assets required under CTE95, which we expect will be above CTE98. For statutory reporting purposes, we will incorporate the new framework when permitted, which is expected to be either in 2019 through early adoption or by the effective date in 2020. It is not possible at this time to predict the extent to which the new framework would impact the effectiveness and design of our risk mitigation and hedging programs, and our historical estimates of the sensitivity of our variable annuity cash flows to capital market changes do not reflect the impact of variable annuity capital reform or the reduction in the federal corporate income tax rate pursuant to the Tax Cuts and Jobs Act (the “Tax Act”). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Regulatory Developments — NAIC” in the Second Quarter 10-Q.

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Changes in Accounting Standards

Our financial statements are subject to the application of GAAP, which is periodically revised by the Financial Accounting Standards Board (“FASB”).

The FASB exposed several proposed amendments to the accounting for long-duration insurance contracts in 2016, and on August 15, 2018 issued a final accounting standards update (“ASU”) effective January 1, 2021. The ASU will result in significant changes to the accounting for long-duration insurance contracts, including a requirement for all guarantees associated with our variable annuity business to be measured at fair value. The Company is in the early stages of evaluating the new guidance and therefore is unable to estimate the impact to its financial statements. The ASU could result in a material adverse effect on our stockholders’ equity and results of operations, including our net income.

Summary of Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the Interim Condensed Consolidated Financial Statements.

The most critical estimates include those used in determining:

(i) liabilities for future policy benefits;

(ii) accounting for reinsurance;

(iii) capitalization and amortization of deferred policy acquisition costs (“DAC”) and the establishment and amortization of value of business acquired (“VOBA”);

(iv) estimated fair values of investments in the absence of quoted market values;

(v) investment impairments;

(vi) estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation;

(vii) measurement of income taxes and the valuation of deferred tax assets; and

(viii) liabilities for litigation and regulatory matters.

In applying our accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our business and operations. Actual results could differ from these estimates.

The above critical accounting estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and Note 1 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report.

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

Adjusted Earnings

In this report, we present adjusted earnings, which excludes net income (loss) attributable to noncontrolling interests, as a measure of our performance that is not calculated in accordance with GAAP. We believe that this non-GAAP financial measure highlights our results of operations and the underlying profitability drivers of our business, as well as enhances the understanding of our performance by the investor community. However, adjusted earnings should not be viewed as a substitute for net income (loss) available to Brighthouse Financial, Inc.’s common shareholders, which is the most directly comparable financial measure calculated in accordance with GAAP. See “— Results of Operations” for a reconciliation of adjusted earnings to net income (loss) available to Brighthouse Financial, Inc.’s common shareholders.

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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The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings:

• Net investment gains (losses);

• Net derivative gains (losses) except earned income on derivatives and amortization of premium 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 annuityguaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”).

The following are significant items excluded from total expenses, net of income tax, in calculating 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 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 U.S. statutory tax rate, which could differ from our effective tax rate.

We present adjusted earnings in a manner consistent with management’s view of the primary business activities that drive the profitability of our core businesses. The following table illustrates how each component of adjusted earnings is calculated from the GAAP statement of operations line items:

Component of Adjusted Earnings		How Derived from GAAP (1)
(i)	Fee income	(i)	Universal life and investment-type policy fees (excluding (a) unearned revenue adjustments related to net investment gains (losses) and net derivative gains (losses) and (b) GMIB Fees) plusOther revenues(excluding other revenues associated with related party reinsurance) and amortization of deferred gain on reinsurance.
(ii)	Net investment spread	(ii)	Net investment income (excluding securitization entities income) plus Investment Hedge Adjustments and interest received on ceded fixed annuity reinsurance deposit funds reduced by Interest credited to policyholder account balances and interest on future policy benefits.
(iii)	Insurance-related activities	(iii)	Premiums less Policyholder benefits and claims (excluding (a) GMIB Costs, (b) Market Value Adjustments, (c) interest on future policy benefits and (d) amortization of deferred gain on reinsurance) plus the pass through of performance of ceded separate account assets.
(iv)	Amortization of DAC and VOBA	(iv)	Amortization of DAC and VOBA (excluding amounts related to (a) net investment gains (losses), (b) net derivative gains (losses), (c) GMIB Fees and GMIB Costs and (d) Market Value Adjustments).
(v)	Other expenses, net of DAC capitalization	(v)	Other expensesreduced by capitalization of DAC and securitization entities expense.
(vi)	Provision for income tax expense (benefit)	(vi)	Tax impact of the above items.

______________

(1) Italicized items indicate GAAP statement of operations line items.

Consistent with GAAP guidance for segment reporting, adjusted earnings is also our GAAP measure of segment performance. Accordingly, we report adjusted earnings by segment in Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements.

Adjusted Net Investment Income

We present adjusted net investment income, which is not calculated in accordance with GAAP. 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 and excluding the incremental net investment income of consolidated securitization entities (“CSEs”). For a reconciliation of adjusted net investment income to net investment income, the most directly comparable GAAP measure,

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please see footnote 3 to the summary yield table located in “— Investments — Current Environment— Investment Portfolio Results.”

Other Financial Disclosures

The following additional information is relevant to an understanding of our performance results:

• We sometimes refer to sales activity for various products. Statistical sales information for life sales are calculated using the LIMRA (Life Insurance Marketing and Research Association) 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 10% of direct statutory premiums, excluding company sponsored internal exchanges. These sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity.

• Allocated equity is the portion of common stockholders’ equity that management allocated to each of its segments prior to 2018. See “— Segment Capital” and Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for further information.

• 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, collateral received from derivative counterparties and the effects of consolidating under GAAP certain variable interest entities (“VIEs”) that are treated as CSEs.

Segment Capital

Beginning in the first quarter of 2018, we changed the methodology for how capital is allocated to segments and, in some cases, products. Segment investment and capitalization targets are now based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For our variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with our variable annuity risk management strategy discussed in the 2017 Annual Report. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory RBC. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets.

We refer to this change in methodology as the “Portfolio Realignment.” While this change had no effect on our consolidated net income (loss) or adjusted earnings, it did, and we expect will continue to, impact segment results. Prior period segment results were not recast for this change in methodology as the inventory of assets has changed over time. Therefore, it is not reasonably possible to replicate the asset transfers as of prior periods and estimating such would not provide a meaningful comparison. In the future, management will evaluate, on a periodic basis, the excess capital held by each segment and may rebalance or move capital between segments based on market changes or changes in our statutory metrics.

Previously, invested assets held in the segments were based on net GAAP liabilities. Excess capital was retained in Corporate & Other and allocated to segments based on an internally developed statistics based capital model intended to capture the material risks to which we were exposed (referred to as “allocated equity”). Surplus assets in excess of the combined allocations to the segments were held in Corporate & Other with net investment income being credited back to the segments at a predetermined rate. Any excess or shortfall in net investment income from surplus assets was recognized in Corporate & Other.

Management is responsible for the periodic review and enhancement of the capital allocation model to ensure it remains consistent with the Company’s overall objectives and emerging industry practices.

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Results of Operations

Annual Actuarial Review

Generally, in the third quarter of each year we conduct an annual actuarial review (“AAR”). As a result of the 2017 AAR related to our variable annuity business, we made certain changes to policyholder behavior, harmonized models and assumptions between GAAP and statutory and reflected Brighthouse specific variables after the completion of the Separation from our former parent.

The 2018 AAR for our variable annuity business reflected the alignment to the statutory variable annuity capital reform framework. See “— Industry Trends — Variable Annuity Capital Reform.” These changes included lower lapse and utilization assumptions, consistent with updated Brighthouse policyholder experience and industry participants, as well as updates to the equity market scenario generator as reflected in the framework. We also updated the tax rate to reflect the statutory rate change due to the Tax Act. In our life business, we updated assumptions related to market returns, policyholder behavior and expenses.

The following table presents the impact on pre-tax adjusted earnings and net income (loss) before provision for income tax from the AAR’s for the nine months ended September 30, 2018 and 2017. The impact related to guaranteed minimum living benefits (“GMLBs”) is included in net income (loss), but is not included in pre-tax adjusted earnings. See “— Non-GAAP and Other Financial Disclosures.”

	Nine Months Ended  September 30,
	2018			2017
	(In millions)
GMLBs	$	(226	)	$	(329	)
Included in pre-tax adjusted earnings:
Other annuity business	195			218
Life business	15			(28		)
Run-off	(24		)	43
Total included in pre-tax adjusted earnings	186			233
Total impact on net income (loss) available to common shareholders	$	(40	)	$	(96	)

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Consolidated Results for theThree Months and Nine Months Ended September 30, 2018and2017

Business Overview. We continue to evaluate our product offerings with the goal to provide new products that are simpler, more transparent and provide value to our advisors, clients and shareholders. New business efforts in both 2017 and 2018 centered on the sale of our suite of structured annuities consisting of products marketed under various names (collectively, “Shield Annuities”), which increased 33% and 38% compared to the three and nine months ending September 30, 2017, respectively. In addition, as part of our distribution agreement with Massachusetts Mutual Life Insurance Company (“MassMutual”), we launched a new fixed index annuity product in the second half of 2017.

Unless otherwise noted, all amounts in the following discussions of our results of operations are stated before income tax except for adjusted earnings, which are presented net of income tax.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Revenues
Premiums	$	225		$	236		$	677		$	630
Universal life and investment-type product policy fees	972			1,025			2,936			2,935
Net investment income	853			761			2,476			2,309
Other revenues	105			93			308			329
Net investment gains (losses)	(42		)	21			(121		)	(34		)
Net derivative gains (losses)	(691		)	(164		)	(1,337		)	(1,207		)
Total revenues	1,422			1,972			4,939			4,962
Expenses
Policyholder benefits and claims	822			1,083			2,373			2,732
Interest credited to policyholder account balances	273			279			809			838
Capitalization of DAC	(83		)	(72		)	(235		)	(187		)
Amortization of DAC and VOBA	30			123			581			(4		)
Interest expense on debt	43			34			113			116
Other expenses	705			649			2,096			1,860
Total expenses	1,790			2,096			5,737			5,355
Income (loss) before provision for income tax	(368		)	(124		)	(798		)	(393		)
Provision for income tax expense (benefit)	(99		)	819			(226		)	653
Net income (loss)	(269		)	(943		)	(572		)	(1,046		)
Less: Net income (loss) attributable to noncontrolling interests	2			—			5			—
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	$	(271	)	$	(943	)	$	(577	)	$	(1,046	)

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The table below shows the components of net income (loss) available to shareholders, in addition to pre-tax adjusted earnings.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
GMLB Riders	$	(585	)	$	(641	)	$	(1,008	)	$	(1,507	)
Other derivative instruments	(60		)	(30		)	(539		)	(137		)
Net investment gains (losses)	(42		)	21			(121		)	(34		)
Other adjustments	5			22			46			(37		)
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	312			504			819			1,322
Net income (loss) available to shareholders before provision for income tax	(370		)	(124		)	(803		)	(393		)
Provision for income tax expense (benefit)	(99		)	819			(226		)	653
Net income (loss) available to shareholders	$	(271	)	$	(943	)	$	(577	)	$	(1,046	)

Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017

Overview. We had a higher pre-tax net loss in the current period of $246 million, driven primarily by a decline in pre-tax adjusted earnings, as well as unfavorable changes in net investment gains (losses) and other derivative instruments. These changes were partially offset by favorable changes in GMLB Riders. Our net loss was lower by $672 million primarily due to anon-cash tax charge in connection with the Separationrecognized in the prior period.

GMLB Riders.Results from GMLB Riders reflect (i) changes in the carrying value of GMLB liabilities, including GMIBs, GMWBs, and guaranteed minimum accumulation benefits (“GMABs”); (ii) changes in the fair value of the hedges and reinsurance of GMLB liabilities; (iii) the fees earned from GMLB liabilities; and (iv) the related DAC and VOBA amortization offsets to certain of the preceding components (collectively, “GMLB Riders”).

GMLB Riders had a favorable impact on comparative results of $56 million as favorable changes from the hedging program and DAC offsets were partially offset by unfavorable changes in the GMLB liabilities. For a detailed discussion of GMLB Riders, see “— GMLB Riders — Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017.”

Other Derivative Instruments.We have other derivative instruments, in addition to the hedges and embedded derivatives included in GMLB Riders, for which changes in fair value are recognized in net derivative gains (losses). Changes in the fair value of other derivative instruments had an unfavorable impact on comparative results of $30 million.

Freestanding Derivatives. Changes in the fair value of freestanding derivatives had an unfavorable impact on comparative results of $30 million, primarily due to the impact of changes in interest rates on the fair value of our interest rate swaps.

Embedded Derivatives. Embedded derivatives were largely unchanged compared to the prior period.

Net Investment Gains (Losses). Net investment gains (losses) had an unfavorable impact on comparative results of$63 million, primarily due to current period net losses on sales of U.S. Treasuries due to portfolio repositioning actions.

Other Adjustments.Other adjustments to determine adjusted earnings had an unfavorable impact on comparative results of $17 million, primarily due to lower policyholder benefits and claims resulting from the adjustment for market performance related to participating products in our Run-off segment.

Pre-tax Adjusted Earnings. Pre-tax adjusted earnings, less net income attributable to noncontrolling interests, decreased $192 million (increased $946 million, net of income tax) for thethree months ended September 30, 2018, compared to the prior period. Adjusted earnings are discussed in greater detail below.

Income Tax Expense (Benefit).Income tax benefit for thethree months ended September 30, 2018was $99 million, or 27% of net income (loss) available to shareholders before provision for income tax, compared to income tax expense of $819 million, for thethree months ended September 30, 2017. Our effective tax rates typically differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions and utilization of tax credits. The inclusion of thenon-cash tax charge in connection with the Separationrecognized in the prior period resulted in an effective tax rate percentage that is not meaningful for comparison purposes and accordingly has not been included.

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Nine Months Ended September 30, 2018 Compared with the Nine Months Ended September 30, 2017

Overview. We had a higher pre-tax loss in the current period of $410 million, driven primarily by (i) a decline in pre-tax adjusted earnings, (ii) net unfavorable changes in other derivative instruments and (iii) unfavorable net investment losses. These changes were partially offset by net favorable changes in GMLB Riders and favorable changes related to market value adjustments for participating products. Our net loss was lower by $469 million, primarily due to a non-cash tax charge in connection with the Separation recognized in the prior period.

GMLB Riders. GMLB Riders had a favorable impact on comparative results of $499 million as favorable changes from the hedging program were partially offset by unfavorable changes in the GMLB Riders liabilities as well as the DAC offsets. For a detailed discussion of GMLB Riders see “— GMLB Riders —Nine Months Ended September 30, 2018Compared with theNine Months Ended September 30, 2017.”

Other Derivative Instruments.Changes in the fair value of other derivative instruments had an unfavorable impact on comparative results of $402 million.

Freestanding Derivatives. Changes in the fair value of freestanding derivatives had an unfavorable impact on comparative results of $597 million, primarily due to the impact of changes in interest rates on the fair value of our interest rate swaps.

Embedded Derivatives.Changes in the fair value of embedded derivatives had a favorable impact on comparative results of $195 million, primarily due to unfavorable mark-to-market adjustments in the prior period on our Shield Annuities liabilities from an increase in underlying equity index levels. In connection with the transition to our new variable annuity hedging program, changes in the fair value of the Shield Annuities liabilities are included in the hedging program component of GMLB Riders beginning in the third quarter of 2017 on a prospective basis.

Net Investment Gains (Losses). Net investment gains (losses) had an unfavorable impact on comparative results of $87 million, primarily due to higher current period net losses on sales of U.S. Treasuries due to portfolio repositioning actions and higher current period net losses on commercial mortgage loans. These unfavorable impacts were partially offset by higher current period net gains on real estate joint ventures and prior period net losses on disposals of other limited partnership interests.

Other Adjustments.Other adjustments to determine adjusted earnings had a favorable impact on comparative results of$83 million, primarily due to lower policyholder benefits and claims resulting from the adjustment for market performance related to participating products in our Run-off segment.

Pre-tax Adjusted Earnings. Pre-tax adjusted earnings, less net income attributable to noncontrolling interests, decreased $503 million (increased $778 million, net of income tax) for thenine months ended September 30, 2018, compared to the prior period. Adjusted earnings are discussed in greater detail below.

Income Tax Expense (Benefit).Income tax benefit for thenine months ended September 30, 2018was $226 million, or 28% of net income (loss) available to shareholders before provision for income tax, compared to income tax expense of $653 million for thenine months ended September 30, 2017. Our effective tax rates typically differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions and utilization of tax credits. The inclusion of thenon-cash tax charge in connection with the Separationrecognized in the prior period resulted in an effective tax rate percentage that is not meaningful for comparison purposes and accordingly has not been included.

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Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings

Three Months Ended September 30, 2018

	Annuities			Life			Run-off			Corporate & Other			Total
	(In millions)
Net income (loss) available to shareholders	$	(196	)	$	46		$	(51	)	$	(70	)	$	(271	)
Add: Provision for income tax expense (benefit)	62			18			(125		)	(54		)	(99		)
Net income (loss) available to shareholders before provision for income tax	(134		)	64			(176		)	(124		)	(370		)
Less: GMLB Riders	(585		)	—			—			—			(585		)
Less: Other derivative instruments	12			5			(77		)	—			(60		)
Less: Net investment gains (losses)	(48		)	(18		)	28			(4		)	(42		)
Less: Other adjustments	—			(1		)	7			(1		)	5
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	487			78			(134		)	(119		)	312
Less: Provision for income tax expense (benefit)	86			17			(29		)	(32		)	42
Adjusted earnings	$	401		$	61		$	(105	)	$	(87	)	$	270

Three Months Ended September 30, 2017

	Annuities			Life			Run-off			Corporate & Other			Total
	(In millions)
Net income (loss) available to shareholders	$	(64	)	$	1		$	88		$	(968	)	$	(943	)
Add: Provision for income tax expense (benefit)	(94		)	(14		)	40			887			819
Net income (loss) available to shareholders before provision for income tax	(158		)	(13		)	128			(81		)	(124		)
Less: GMLB Riders	(641		)	—			—			—			(641		)
Less: Other derivative instruments	(13		)	(9		)	(2		)	(6		)	(30		)
Less: Net investment gains (losses)	12			4			12			(7		)	21
Less: Other adjustments	(4		)	—			(1		)	27			22
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	488			(8		)	119			(95		)	504
Less: Provision for income tax expense (benefit)	133			(14		)	36			1,025			1,180
Adjusted earnings	$	355		$	6		$	83		$	(1,120	)	$	(676	)

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Nine Months Ended September 30, 2018

	Annuities			Life			Run-off			Corporate & Other			Total
	(In millions)
Net income (loss) available to shareholders	$	(245	)	$	132		$	(309	)	$	(155	)	$	(577	)
Add: Provision for income tax expense (benefit)	146			53			(241		)	(184		)	(226		)
Net income (loss) available to shareholders before provision for income tax	(99		)	185			(550		)	(339		)	(803		)
Less: GMLB Riders	(1,008		)	—			—			—			(1,008		)
Less: Other derivative instruments	26			(8		)	(556		)	(1		)	(539		)
Less: Net investment gains (losses)	(144		)	(11		)	40			(6		)	(121		)
Less: Other adjustments	2			(1		)	45			—			46
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	1,025			205			(79		)	(332		)	819
Less: Provision for income tax expense (benefit)	177			41			(18		)	(87		)	113
Adjusted earnings	$	848		$	164		$	(61	)	$	(245	)	$	706

Nine Months Ended September 30, 2017

	Annuities			Life			Run-off			Corporate & Other			Total
	(In millions)
Net income (loss) available to shareholders	$	(329	)	$	4		$	162		$	(883	)	$	(1,046	)
Add: Provision for income tax expense (benefit)	(310		)	(12		)	76			899			653
Net income (loss) available to shareholders before provision for income tax	(639		)	(8		)	238			16			(393		)
Less: GMLB Riders	(1,507		)	—			—			—			(1,507		)
Less: Other derivative instruments	(227		)	(3		)	(21		)	114			(137		)
Less: Net investment gains (losses)	3			(5		)	1			(33		)	(34		)
Less: Other adjustments	(19		)	—			(14		)	(4		)	(37		)
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	1,111			—			272			(61		)	1,322
Less: Provision for income tax expense (benefit)	302			(11		)	88			1,015			1,394
Adjusted earnings	$	809		$	11		$	184		$	(1,076	)	$	(72	)

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Consolidated Results for the Three Months and Nine Months Ended September 30, 2018 and 2017 — Adjusted Earnings

The following table presents the components of adjusted earnings:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Fee income	$	1,014		$	1,050		$	3,040		$	3,052
Net investment spread	363			299			1,037			984
Insurance-related activities	(349		)	(292		)	(899		)	(739		)
Amortization of DAC and VOBA	(53		)	86			(380		)	(189		)
Other expenses, net of DAC capitalization	(661		)	(639		)	(1,974		)	(1,786		)
Less: Net income (loss) attributable to noncontrolling interests	2			—			5			—
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	312			504			819			1,322
Provision for income tax expense (benefit)	42			1,180			113			1,394
Adjusted earnings	$	270		$	(676	)	$	706		$	(72	)

Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017

Overview.Adjusted earnings increased $946 million, due to lower income tax expenses and higher net investment spread. These increases were partially offset by (i) higher amortization of DAC and VOBA, (ii) higher costs from insurance-related activities and (iii) lower fee income.

Fee Income.Fee income decreased $36million, primarily due to the unfavorable impacts from the AAR in our Life and Run-off segments, partially offset by the favorable impact of lower ceded fees in our Run-off segment.

Net Investment Spread.Net investment spread increased $64 million, primarily due to (i) repositioning a portion of our portfolio into higher yielding assets, (ii) higher interest rates and (iii) an increase in average invested assets resulting from positive net flows in the general account. This increase was partially offset by lower derivatives income driven by the termination of interest rate swaps.

Insurance-Related Activities. Net costs from insurance-related activities increased $57 million, primarily due to net unfavorable impacts from the recapture of reinsurance agreements in our Run-off and Life segments, as well as net unfavorable underwriting in our universal life with secondary guarantees (“ULSG”) business. These unfavorable impacts were partially offset by lower reserves in our Annuity segment resulting from the AAR.

Amortization of DAC and VOBA.Amortization of DAC and VOBA had an unfavorable impact on comparative results of $139 million as higher amortization in our Annuities segment was partially offset by lower amortization in our Life segment, both of which resulted from the AAR.

Other Expenses, Net of DAC Capitalization. Expenses increased $22 million, as higher expenses in Corporate & Other and our Annuities segment were partially offset by lower expenses in our Run-off segment.

Income Tax Expense (Benefit).Income tax expense for thethree months ended September 30, 2018was $42 million, or 13% of pre-tax adjusted earnings, less net income attributable to noncontrolling interests, compared to $1.2 billion for thethree months ended September 30, 2017. In 2018, our effective tax rate reflects the impact of the Tax Act, which lowered the U.S. statutory rate however reduced the tax benefit for the dividend received deductions. In the prior period, we recognized a$1.1 billionnon-cash tax charge in connection with the Separation. We also recognized a tax benefit in the prior period of$39 millionrelated to the dividend received deductions and tax credits, as well as a downward adjustment of reserves by$19 million. These adjustments resulted in an effective tax rate percentage that is not meaningful for comparison purposes and accordingly has not been included.

Nine Months Ended September 30, 2018 Compared with the Nine Months Ended September 30, 2017

Overview.Adjusted earnings increased $778 million, primarily due to lower income tax expenses and higher net investment spread. These favorable items were partially offset by (i) higher amortization of DAC and VOBA, (ii) higher expenses and (iii) higher costs from insurance-related activities.

Fee Income.Fee income was lower by $12 million, primarily due to decreases in our Annuities segment. Net decreases in our Life segment were mostly offset by increases in our Run-off segment and Corporate & Other.

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Net Investment Spread.Net investment spread increased $53 million, primarily from the repositioning of the investment portfolio into higher yielding assets and higher average invested assets resulting from positive net flows in the general account. These increases were partially offset by lower derivatives income driven by the termination of interest rate swaps.

Insurance-Related Activities. Net costs from insurance-related activities increased $160 million, as increases in our Run-off segment were partially offset by decreased net costs in our Annuities and Life segments.

Amortization of DAC and VOBA.Amortization of DAC and VOBA had an unfavorable impact on comparative results of $191 million as higher amortization in our Annuities segment was partially offset by lower amortization in our Life segment, both of which resulted from the AAR.

Other Expenses, Net of DAC Capitalization.Expenses increased $188 million, as higher expenses in Corporate & Other and our Annuities segment were partially offset by lower expenses in our Run-off segment.

Income Tax Expense (Benefit).Income tax expense for thenine months ended September 30, 2018was $113 million, or 14% of pre-tax adjusted earnings, less net income attributable to noncontrolling interests, compared to $1.4 billion for thenine months ended September 30, 2017. In 2018, our effective tax rate reflects the impact of the Tax Act, which lowered the U.S. statutory rate however reduced the tax benefit for the dividend received deductions. In the prior period, we recognized a$1.1 billionnon-cash tax charge in connection with the Separation. We also recognized a tax benefit in the prior period of$117 millionrelated to the dividend received deductions and tax credits, as well as a downward adjustment of reserves by$17 million. These adjustments resulted in an effective tax rate percentage that is not meaningful for comparison purposes and accordingly has not been included.

77

Segments and Corporate & Other Results for the Three Months and Nine Months Ended September 30, 2018 and 2017 — Adjusted Earnings

Annuities

The following table presents the components of adjusted earnings for our Annuities segment:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Fee income	$	715		$	719		$	2,166		$	2,178
Net investment spread	204			114			565			363
Insurance-related activities	17			(174		)	(157		)	(309		)
Amortization of DAC and VOBA	(40		)	228			(307		)	22
Other expenses, net of DAC capitalization	(409		)	(399		)	(1,242		)	(1,143		)
Pre-tax adjusted earnings	487			488			1,025			1,111
Provision for income tax expense (benefit)	86			133			177			302
Adjusted earnings	$	401		$	355		$	848		$	809

A significant portion of our adjusted earnings is driven by separate account balances related to our variable annuity business. Most directly, these balances determine asset-based fee income but they also impact DAC amortization and asset-based commissions. Separate account balances are driven by sales, market movements, withdrawals, surrenders, benefit payments, policy charges and transfers. Below is a rollforward of our variable annuities separate account balances. Variable annuities separate account balances decreased for the three months and nine months ended September 30, 2018 driven by negative net flows and policy charges, partially offset by increases from equity market performance.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Balance, beginning of period	$	104,649		$	107,603		$	109,888		$	104,855
Deposits	340			272			994			964
Withdrawals, surrenders and contract benefits	(2,596		)	(2,221		)	(7,863		)	(7,096		)
Net flows	(2,256		)	(1,949		)	(6,869		)	(6,132		)
Investment performance	2,908			3,833			3,700			12,035
Policy charges	(667		)	(682		)	(1,971		)	(1,986		)
Net transfers from (to) general account	(59		)	(76		)	(173		)	(43		)
Balance, end of period	$	104,575		$	108,729		$	104,575		$	108,729
Average balance	$	105,208		$	108,121		$	106,869		$	106,918

Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017

Overview.Adjusted earnings increased $46 million, primarily driven by (i) lower net costs from insurance-related activities, (ii) higher net investment spread and (iii) lower income tax expense. These favorable items were partially offset by higher amortization of DAC and VOBA.

Fee Income. Fee income decreased slightly due to lower asset-based fees, consistent with the decrease in average separate account balances, largely offset by the impact from an unfavorable AAR adjustment to unearned revenue in the prior period.

Net Investment Spread.Net investment spread increased $90 million, primarily driven by (i) the net impact from the Portfolio Realignment, (ii) the repositioning of a portion of our portfolio into higher yielding assets, (iii) higher income on other limited partnership interests as a result of equity market performance and (iv) higher average invested assets resulting from positive net flows in the general account.

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Insurance-Related Activities.Net costs from insurance-related activities decreased $191 million, primarily due toa$258 millionfavorable change from lower GMDB costs driven by a decrease in liability balances resulting from the AAR. This decrease was partially offset by$68 million from a less favorable adjustment to deferred sales inducements from the AAR in the current period than in the prior period.

Amortization of DAC and VOBA.Higher DAC and VOBA amortization had an unfavorable impact on comparative results of $268 million, primarily due to less favorable changes from the AAR in the current period than the prior period.

Other Expenses, Net of DAC Capitalization.Expenses increased $10 million, primarily due to a favorable adjustment recognized in the prior period related to the reallocation of corporate branding costs to Corporate & Other as well as higher operating costs as a result of being a stand-alone company.

Income Tax Expense (Benefit).Income tax expense for thethree months ended September 30, 2018was $86 million, or 18% of pre-tax adjusted earnings, compared to $133 million, or 27% of pre-tax adjusted earnings, for thethree months ended September 30, 2017. Our effective tax rates in both periods differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions.

Nine Months Ended September 30, 2018 Compared with the Nine Months Ended September 30, 2017

Overview.Adjusted earnings increased $39 million, primarily due to higher net investment spread and lower costs of insurance-related activities, partially offset by higher amortization of DAC and VOBA and higher expenses.

Fee Income. Fee income decreased $12 million, primarily due to a favorable adjustment recognized in the prior period related to the recapture of certain ceded and assumed variable annuity reinsurance agreements as well as lower asset-based fees in the current period resulting from lower average separate account balances.These decreases were partially offset by lower unfavorable impacts from AAR adjustments to unearned revenue in the current period than in the prior period.

Net Investment Spread.Net investment spread increased $202 million, primarily due to higher net investment income driven by (i) the net impact from the Portfolio Realignment, (ii) the repositioning of a portion of our portfolio into higher yielding assets, (iii) higher income on other limited partnership interests as a result of equity market performance and (iv) higher average invested assets resulting from positive net flows in the general account. These increases were partially offset by lower income on derivatives as a result of the termination of certain interest rate swaps.

Insurance-Related Activities.Net costs from insurance-related activities decreased $152 million, primarily due to a$215 millionfavorable change fromlower GMDB costs driven by a decrease in liability balances resulting from the AAR.This decrease was partially offset bya less favorable impact of $75 million from the AAR affecting deferred sales inducements.

Amortization of DAC and VOBA.Higher DAC and VOBA amortization had an unfavorable impact on comparative results of $329 million, primarily due to less favorable changes from the AAR in the current period than the prior period.

Other Expenses, Net of DAC Capitalization.Expenses increased $99 million, primarily due to higher operating costs as a result of being a stand-alone company and an increase in pass-through variable annuity expenses, partially offset by the impact of expenses incurred in the prior period related to reinsurance recapture activity. With respect to the pass-through variable annuity expenses, we had an increase of $79 million driven by Separation related changes to arrangements with third parties impacting the recognition of pass-through investment management and revenue sharing fees, most of which is offset in fee income.

Income Tax Expense (Benefit).Income tax expense for thenine months ended September 30, 2018was $177 million, or 17% of pre-tax adjusted earnings, compared to $302 million, or 27% of pre-tax adjusted earnings, for thenine months ended September 30, 2017. Our effective tax rates in both periods differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions.

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Life

The following table presents the components of adjusted earnings for our Life segment:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Fee income	$	79		$	136		$	259		$	313
Net investment spread	56			25			154			80
Insurance-related activities	13			25			51			4
Amortization of DAC and VOBA	(8		)	(138		)	(60		)	(190		)
Other expenses, net of DAC capitalization	(62		)	(56		)	(199		)	(207		)
Pre-tax adjusted earnings	78			(8		)	205			—
Provision for income tax expense (benefit)	17			(14		)	41			(11		)
Adjusted earnings	$	61		$	6		$	164		$	11

Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017

Overview.Adjusted earnings increased $55 million, primarily due to lower amortization of DAC and VOBA and higher net investment spread, partially offset by lower fee income.

Fee Income.Fee income decreased $57 million, primarilyfrom changes to assumptions regarding mortality and maintenance expenses in connection with the AAR.

Net Investment Spread.Net investment spread increased $31 million, primarily driven by an increase in income on fixed maturity securities and mortgage loans due to the Portfolio Realignment.

Insurance-Related Activities.Insurance-related activities had an unfavorable impact on comparative results of $12 million, primarily due to net unfavorable underwriting experience as a result of reinsurance recapture activity.

Amortization of DAC and VOBA.Lower amortization of DAC and VOBA had a favorable impact on comparative results of $130 million,primarily from changes in assumptions regarding mortality and maintenance expenses in connection with the AAR.

Other expenses, net of DAC capitalization. Expenses increased $6 million primarily due to a favorable adjustment recognized in the prior period related to the reallocation of corporate branding costs to Corporate & Other.

Income Tax Expense (Benefit).Income tax expense for thethree months ended September 30, 2018was $17 million, or 22% of adjusted earnings before provision for income tax, compared to a benefit of $14 million, or 175% of adjusted earnings before provision for income tax, for thethree months ended September 30, 2017. Our effective tax rates typically differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions.

Nine Months Ended September 30, 2018 Compared with the Nine Months Ended September 30, 2017

Overview.Adjusted earnings increased $153 million, primarily due to (i) lower amortization of DAC and VOBA, (ii) higher net investment spread and (iii) favorable changes in insurance-related activities. These increases were partially offset by lower fee income.

Fee Income.Fee income decreased $54 million, primarilyfromfavorable impacts recognized in the prior period related to changes inassumptions regarding mortality and maintenance expenses in connection with the AAR. This decrease was partially offset by lower ceded fees resulting fromthe recapture of various reinsurance agreements in both 2017 and 2018.

Net Investment Spread.Net investment spread increased $74 million, primarily driven by the Portfolio Realignment, which led to an increase in income on fixed maturity securities and mortgage loans.

Insurance-Related Activities.Insurance-related activities had a favorable impact on comparative results of $47 million, primarily due to the ongoing impacts in the current period from the yearly renewable term reinsurance recapture (the “YRT Recapture”) which occurred in the prior period, partially offset by net unfavorable mortality in the current period.

Amortization of DAC and VOBA. Amortization of DAC and VOBA had a favorable impact on comparative results of$130 million,primarily due to favorable adjustments recognized in the current period, compared to unfavorable adjustments

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recognized in the prior period, related to changes in assumptions regarding mortality and maintenance expenses in connection with the AAR.

Other expenses, net of DAC capitalization. Expenses decreased $8 million, primarily due to a charge recognized in the prior period for deferred marketing allowances and the exit in the current period of various transition services agreements with MetLife. These decreases were partially offset by the higher costs as a result of being a stand-alone company.

Income Tax Expense (Benefit).Income tax expense for thenine months ended September 30, 2018was $41 million, or 20% of adjusted earnings before provision for income tax, compared to a benefit of $11 million for thenine months ended September 30, 2017. Our effective tax rates typically differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions.

Run-off

The following table presents the components of adjusted earnings for our Run-off segment:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Fee income	$	214		$	199		$	616		$	571
Net investment spread	87			125			280			382
Insurance-related activities	(389		)	(150		)	(820		)	(467		)
Amortization of DAC and VOBA	—			—			—			(6		)
Other expenses, net of DAC capitalization	(46		)	(55		)	(155		)	(208		)
Pre-tax adjusted earnings	(134		)	119			(79		)	272
Provision for income tax expense (benefit)	(29		)	36			(18		)	88
Adjusted earnings	$	(105	)	$	83		$	(61	)	$	184

Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017

Overview. Adjusted earnings decreased $188 million, primarily due to higher net costs from insurance-related activities combined with lower net investment spread, partially offset by lower expenses and higher fee income.

Fee Income. Fee income increased $15 million, primarily due tolower ceded fees as a result of the recaptureof various reinsurance agreements in 2017 and 2018. This increase was partially offset by the impact from favorable changes recognized in the prior period related to assumptions regarding mortality and maintenance expenses in connection with the AAR.

Net Investment Spread. Net investment spread decreased $38 million, primarily driven by the Portfolio Realignment and lower income on derivatives from the termination of certain interest rates swaps. These decreases were partially offset by higher income on other limited partnership interests resulting from an improvement in equity market performance.

Insurance-Related Activities.Net costs from insurance-related activities increased $239 million, primarily due to

• $208 million unfavorable impact to life insurance reserves, mainly from the recapture of reinsurance agreements in the current period; and

• $46 million net unfavorable change related to assumptions regarding long-term asset growth rates, premium persistency, mortality and maintenance expenses in connection with the AAR; partially offset by

• $17 million favorable mortality experience driven by lower net benefit costs in the current year.

Other expenses, net of DAC capitalization. Expenses decreased $9 million, primarily due to lower costs related to reinsurance financing arrangements that were terminated in the second quarter of 2017.

Income Tax Expense (Benefit).Income tax benefit for thethree months ended September 30, 2018was $29 million, or 22% of pre-tax adjusted earnings, compared to income tax expense of $36 million, or 30% of pre-tax adjusted earnings for thethree months ended September 30, 2017. Our effective tax rates typically differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions.

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Nine Months Ended September 30, 2018 Compared with the Nine Months Ended September 30, 2017

Overview. Adjusted earnings decreased $245 million primarily due to higher net costs from insurance-related activities and lower net investment spread. These decreases were partially offset by (i) lower expenses, (ii) higher fee income and (iii) lower income taxes.

Fee Income.Fee income increased $45 million, primarily due to lower ceded fees as a result of the recapture of various reinsurance agreements in 2017 and 2018. This increase was partially offset by the impact from a favorable adjustment recognized in the prior period from changes to assumptions regarding mortality and maintenance expenses in connection with the AAR.

Net Investment Spread. Net investment spread decreased $102 million, primarily due to (i) the Portfolio Realignment, (ii) lower income on derivatives from the termination of certain interest rates swaps and (iii) lower income from our securities lending program, resulting from a reduction in program size and lower margins due to the impact of a flatter yield curve. These decreases were partially offset by higher income on other limited partnership interests driven by an improvement in equity market performance.

Insurance-Related Activities.Net costs from insurance-related activities increased $353 million, primarily due to:

• $164 million unfavorable impact to life insurance reserves, mainly from the recapture of reinsurance treaties in the current period;

• $132 million unfavorable mortality experience driven by higher net benefit costs in the current year; and

• $46 million net unfavorable change related to assumptions regarding long-term asset growth rates, premium persistency, mortality and maintenance expenses in connection with the AAR.

Other expenses, net of DAC capitalization. Expenses decreased $53 million, primarily due to (i) lower costs related to reinsurance financing arrangements that were terminated in the second quarter of 2017, (ii) allocation changes between segments and (iii) lower commissions.

Income Tax Expense (Benefit).Income tax benefit for thenine months ended September 30, 2018was $18 million, or 23% of pre-tax adjusted earnings, compared to an income tax expense of $88 million, or 32% of pre-tax adjusted earnings for thenine months ended September 30, 2017. Our effective tax rates typically differ from the U.S. statutory rates primarily due to the impacts of the dividend received deductions.

Corporate & Other

The following table presents the components of adjusted earnings for Corporate & Other:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Fee income	$	6		$	(4	)	$	(1	)	$	(10	)
Net investment spread	16			35			38			159
Insurance-related activities	10			7			27			33
Amortization of DAC and VOBA	(5		)	(4		)	(13		)	(15		)
Other expenses, net of DAC capitalization	(144		)	(129		)	(378		)	(228		)
Less: Net income (loss) attributable to noncontrolling interests	2			—			5			—
Pre-tax adjusted earnings, less net income attributable to noncontrolling interests	(119		)	(95		)	(332		)	(61		)
Provision for income tax expense (benefit)	(32		)	1,025			(87		)	1,015
Adjusted earnings	$	(87	)	$	(1,120	)	$	(245	)	$	(1,076	)

Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017

Overview.Adjusted earnings increased $1.0 billion,primarily due to anon-cash tax charge in connection with the Separationrecognized in the prior period.

Fee Income.Fee income increased $10 million, primarily driven by a benefit in the current period related to Separation-related tax agreements with MetLife which was recognized in other revenue.

Net Investment Spread.Net investment spread decreased $19 million, primarily driven by the Portfolio Realignment.

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Other Expenses, Net of DAC Capitalization.Expenses increased $15 million, primarily due to higher establishment costs related to planned technology and branding investments. These increases were partially offset by an additional charge recognized in the prior period from changes in the allocation of branding costs.

Income Tax Expense (Benefit).Income tax benefit for thethree months ended September 30, 2018was $32 million, or 27% of pre-tax adjusted earnings less net income attributable to noncontrolling interests, compared to a income tax expense of$1.0 billionfor thethree months ended September 30, 2017. In the prior period we recognized a $1.1 billion non-cash tax charge in connection the Separation and an additional tax charge of $8 million related to tax credits, as well as a downward adjustment of reserves by $20 million. These adjustments resulted in an effective tax rate percentage that is not meaningful for comparison purposes and accordingly has not been included.

Nine Months Ended September 30, 2018 Compared with the Nine Months Ended September 30, 2017

Overview.Adjusted earnings increased $831 million,primarily due to anon-cash tax charge in connection with the Separationrecognized in the prior period.

Fee Income.Fee income increased $9 million, primarily driven by a benefit in the current period related to Separation related tax agreements with MetLife which was recognized in other revenue.

Net Investment Spread.Net investment spread decreased $121 million, primarily driven by the Portfolio Realignment combined with lower income on derivatives from the termination of interest rate swaps.

Other Expenses, Net of DAC Capitalization.Expenses increased $150 million, primarily due to higher establishment costs related to planned technology and branding investments, as well as higher interest on debt which was issued in the second quarter of 2017. These increases were partially offset by a charge in the prior period related to the sale of MPCG to MassMutual and lower letter of credit fees.

Income Tax Expense (Benefit).Income tax benefit for thenine months ended September 30, 2018was $87 million, or 26% of pre-tax adjusted earnings less net income attributable to noncontrolling interests, compared to income tax expense of $1.0 billion for thenine months ended September 30, 2017. Our effective tax rates typically differ from the U.S. statutory rates primarily due to the utilization of tax credits.In the prior period, we recognized a $1.1 billion non-cash tax charge in connection with the Separation and an additional tax charge of $20 million related to tax credits, as well as a downward adjustment of reserves by $17 million. These adjustments resulted in an effective tax rate percentage that is not meaningful for comparison purposes and accordingly has not been included.

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GMLB Riders

The following table presents the overall impact to income (loss) available to shareholders before provision for income tax from the performance of GMLB Riders, which includes (i) changes in carrying value of the GAAP liabilities, (ii) the mark-to-market of hedges and reinsurance, (iii) fees, and (iv) associated DAC offsets:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Directly Written Liabilities (1)	$	(220	)	$	146		$	92		$	407
Assumed Reinsurance Liabilities	—			—			—			1
Total Liabilities	(220		)	146			92			408
Hedging Program (2)	(591		)	(787		)	(1,472		)	(2,595		)
Ceded Reinsurance	(17		)	(22		)	(61		)	(176		)
Total Hedging Program and Reinsurance	(608		)	(809		)	(1,533		)	(2,771		)
Directly Written Fees	222			227			641			647
Assumed Reinsurance Fees	—			—			—			—
Total Fees (3)	222			227			641			647
GMLB Riders before DAC Offsets	(606		)	(436		)	(800		)	(1,716		)
DAC Offsets	21			(205		)	(208		)	209
Total GMLB Riders	$	(585	)	$	(641	)	$	(1,008	)	$	(1,507	)

______________

(1) Includes changes in fair value of the Shield Annuities embedded derivatives of ($462) million and ($531) million for the three months and nine months ended September 30, 2018, respectively, and ($142) million for both the three months and nine months ended September 30, 2017.

(2) Certain hedges of GMIB insurance liabilities were historically reported in policyholder benefits and claims. Amounts reported in policyholder benefits and claims were ($57) million and ($324) million for the three months and nine months ended September 30, 2017, respectively. Consistent with the hedge strategy now focused on a statutory target, with less emphasis on matching GAAP liabilities, all hedge program amounts are recorded in net derivative gains (losses) beginning in 2018.

(3) Excludes living benefit fees, included as a component of adjusted earnings, of $18 million and $53 million for the three months and nine months ended September 30, 2018, respectively, and $18 million and $54 million for the three months and nine months ended September 30, 2017, respectively.

Three Months Ended September 30, 2018 Compared with the Three Months Ended September 30, 2017

Comparative results from GMLB Riders, before provision for income tax, were favorable by $56 million. Of this amount, an unfavorable change of $620 million was recorded in net derivative gains (losses).

GMLB Riders Liabilities.The change in the carrying value of GMLB Riders liabilities resulted in an unfavorable impact on comparative results of $366 million, primarily due to unfavorable changes from (i) an increase in reserves from the AAR recognized in the current period, compared to a decrease in the prior period, (ii) an unfavorable change in the fair value of our Shield Annuities embedded derivatives and (iii) a charge for non-performance risk, net of risk margins, in the current period. These unfavorable impacts were partially offset by favorable changes in equity markets and interest rates.

GMLB Riders Hedging Program and Reinsurance.The change in the fair value of GMLB Riders hedging program and reinsurance had a favorable impact on comparative results of $201 million, primarily due to relative changes in equity markets and interest rates.

GMLB Riders Fees. Fees from GMLB Riders were unchanged.

DAC Offsets. DAC offsets, which are inversely related to the changes in certain components of GMLB Riders discussed above, resulted in a favorable impact on comparative results of $226 million.

Nine Months Ended September 30, 2018 Compared with the Nine Months Ended September 30, 2017

Comparative results from GMLB Riders, before provision for income tax, were favorable by $499 million. Of this amount, a favorable change of $237 million was recorded in net derivative gains (losses).

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GMLB Riders Liabilities. The change in the carrying value of GMLB Riders liabilities resulted in an unfavorable impact on comparative results of $316 million, primarily due to unfavorable changes from an increase in reserves from the AAR recognized in the current period, compared to a decrease in the prior period, as well as an unfavorable change in the fair value of our Shield Annuities embedded derivatives. These unfavorable impacts were partially offset by favorable changes in equity markets and interest rates.

GMLB Riders Hedging Program and Reinsurance. The change in the fair value of GMLB Riders hedging program and reinsurance had a favorable impact on comparative results of $1.2 billion, primarily due to favorable changes from relative changes in equity markets and interest rates as well as a net charge recognized in the prior period in connection with the recapture of certain ceded and assumed variable annuity insurance agreements.

GMLB Riders Fees. Fees from GMLB Riders were largely unchanged.

DAC Offsets. DAC offsets, which are inversely related to the changes in certain components of GMLB Riders liabilities discussed above, resulted in an unfavorable impact on comparative results of $417 million.

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Investments

Investment Risks

Our primary investment objective is to optimize risk-adjusted net investment income and risk-adjusted total return while appropriately matching assets and liabilities. In addition, the investment process is designed to ensure that the portfolio has an appropriate level of liquidity, quality and diversification.

We are exposed to the following primary sources of investment risks:

• credit risk, relating to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest;

• interest rate risk, relating to the market price and cash flow variability associated with changes in market interest rates. Changes in market interest rates will impact the net unrealized gain or loss position of our fixed income investment portfolio and the rates of return we receive on both new funds invested and reinvestment of existing funds;

• market valuation risk, relating to the variability in the estimated fair value of investments associated with changes in market factors such as credit spreads and equity market levels. A widening of credit spreads will adversely impact the net unrealized gain (loss) position of the fixed income investment portfolio, will increase losses associated with credit-based non-qualifying derivatives where we assume credit exposure, and, if credit spreads widen significantly or for an extended period of time, will likely result in higher other-than-temporary impairment (“OTTI”). Credit spread tightening will reduce net investment income associated with new purchases of fixed maturity securities and will favorably impact the net unrealized gain (loss) position of the fixed income investment portfolio;

• liquidity risk, relating to the diminished ability to sell certain investments, in times of strained market conditions;

• real estate risk, relating to commercial, agricultural and residential real estate, and stemming from factors, which include, but are not limited to, market conditions, including the demand and supply of leasable commercial space, creditworthiness of borrowers and their tenants and joint venture partners, capital markets volatility and inherent interest rate movements; and

• currency risk, relating to the variability in currency exchange rates for foreign denominated investments.

We manage these risks through asset-type allocation and industry and issuer diversification. Risk limits are also used to promote diversification by asset sector, avoid concentrations in any single issuer and limit overall aggregate credit and equity risk exposure. Real estate risk is managed through geographic and property type and product type diversification. We manage interest rate risk as part of our Asset Liability Management (“ALM”) strategies. Product design, such as the use of market value adjustment features and surrender charges, is also utilized to manage interest rate risk. These strategies include maintaining an investment portfolio with diversified maturities that targets a weighted average duration that reflects the duration of our estimated liability cash flow profile. For certain of our liability portfolios, it is not possible to invest assets to the full liability duration, thereby creating some asset/liability mismatch. We also use certain derivatives in the management of currency, credit, interest rate, and equity market risks.

Current Environment

Our business and results of operations are materially affected by conditions in capital markets and the economy, generally. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties — Financial and Economic Environment” included in the 2017 Annual Report.

As a U.S. insurance company, we are affected by the monetary policy of the Federal Reserve Board in the United States. The Federal Open Market Committee has increased the federal funds rate six times since the start of 2017. The Federal Reserve may take further actions to influence interest rates in the future, which may have an impact on the pricing levels of risk-bearing investments and may adversely impact the level of product sales. We are also affected by the monetary policy of central banks around the world due to the diversification of our investment portfolio.

Investment Portfolio Results

The following summary yield table presents the yield and net investment income for our investment portfolio for the periods indicated. As described below, this table reflects certain differences from the presentation of net investment income presented in the GAAP statement of operations. This summary yield table presentation is consistent with how we measure our investment performance for management purposes, and we believe it enhances understanding of our investment portfolio results.

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	Three Months Ended  September 30,										Nine Months Ended  September 30,
	2018					2017					2018					2017
	Yield% (1)		Amount			Yield% (1)		Amount			Yield% (1)		Amount			Yield% (1)		Amount
	(Dollars in millions)
Investment income	4.67	%	$	883		4.47	%	$	806		4.62	%	$	2,576		4.64	%	$	2,511
Investment fees and expenses	(0.17	)	(31		)	(0.15	)	(26		)	(0.16	)	(87		)	(0.15	)	(81		)
Adjusted net investment income (2), (3)	4.50	%	$	852		4.32	%	$	780		4.46	%	$	2,489		4.49	%	$	2,430

______________

(1) Yields are calculated as investment income as a percent of average quarterly asset carrying values. Investment income excludes realized gains and losses and reflects the adjustments presented in footnote (3) below to arrive at adjusted net investment income. Asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, freestanding derivative assets, collateral received from derivative counterparties and the effects of consolidating certain VIEs under GAAP that are treated as CSEs.

(2) Adjusted net investment income included in yield calculations includes investment hedge adjustments.

(3) Adjusted net investment income presented in the yield table varies from the most directly comparable GAAP measure due to certain reclassifications and adjustments and excludes the effects of consolidating certain VIEs under GAAP that are treated as CSEs, as presented below.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net investment income	$	853		$	761		$	2,476		$	2,309
Less: Investment hedge adjustments	(2		)	(18		)	(13		)	(121		)
Less: Incremental net investment income from CSEs	3			(1		)	—			—
Adjusted net investment income — in the above yield table	$	852		$	780		$	2,489		$	2,430

See “— Results of Operations — Consolidated Results for the Three Months and Nine Months Ended September 30, 2018 and 2017 — Adjusted Earnings” for an analysis of the period over period changes in net investment income.

Fixed Maturity Securities AFS and Equity Securities

The following table presents fixed maturity securities available-for-sale (“AFS”) and equity securities by type (public or private) held at:

	September 30, 2018					December 31, 2017
	Estimated Fair Value			% of Total		Estimated Fair Value			% of Total
	(Dollars in millions)
Fixed maturity securities
Publicly-traded	$	51,030		81.9	%	$	54,332		83.6	%
Privately-placed	11,249			18.1		10,659			16.4
Total fixed maturity securities	$	62,279		100.0	%	$	64,991		100.0	%
Percentage of cash and invested assets	74.6		%			77.2		%
Equity securities
Publicly-traded	$	147		98.0	%	$	156		96.9	%
Privately-held	3			2.0		5			3.1
Total equity securities	$	150		100.0	%	$	161		100.0	%
Percentage of cash and invested assets	0.2		%			0.2		%

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Valuation of Securities. We engage MetLife Investment Advisors, LLC, which was considered a related party investment manager until the completion of the MetLife Divestiture, to execute on our valuation controls and policies to determine the estimated fair value of our investments. See “— Introduction” for information regarding the MetLife Divestiture. The estimated fair value of publicly-traded securities is determined after considering one of three primary sources of information: quoted market prices in active markets, independent pricing services, or independent broker quotations. The estimated fair value of privately-placed securities is determined after considering one of three primary sources of information: market standard internal matrix pricing, market standard internal discounted cash flow techniques, or independent pricing services (after the independent pricing services’ use of available observable market data is determined). For publicly-traded securities, the number of quotations obtained varies by instrument and depends on the liquidity of the particular instrument. Generally, prices are obtained from multiple pricing services to cover all asset classes and obtain multiple prices for certain securities, but ultimately use the price with the highest placement in the fair value hierarchy. Independent pricing services that value these instruments use market standard valuation methodologies based on data about market transactions and inputs from multiple pricing sources that are market observable or can be derived principally from or corroborated by observable market data. See Note 6of the Notes to the Interim Condensed Consolidated Financial Statements for a discussion of the types of market standard valuation methodologies utilized and key assumptions and observable inputs used in applying these standard valuation methodologies. When a price is not available in the active market or through an independent pricing service, the security is priced primarily using non-binding quotations from independent brokers who are knowledgeable about these securities. Independent non-binding broker quotations use inputs that may be difficult to corroborate with observable market data. As shown in the following section, less than 1% of our fixed maturity securities were valued using non-binding quotations from independent brokers atSeptember 30, 2018.

The Company is responsible for monitoring and providing the oversight over the valuation controls and policies, including reviewing and approving new transaction types and markets, for ensuring that observable market prices and market-based parameters are used for valuation, wherever possible, and for determining that valuation adjustments, when applied, are based upon established policies and are applied consistently over time. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for further information on our valuation controls and procedures including our formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value.

We have reviewed the significance and observability of inputs used in the valuation methodologies to determine the appropriate fair value hierarchy level for each of our securities. Based on the results of this review and investment class analysis, each instrument is categorized as Level 1, 2 or 3 based on the lowest level significant input to its valuation. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding the valuation techniques and inputs by level within the three-level fair value hierarchy by major classes of invested assets.

Fair Value of Fixed Maturity Securities AFS and Equity Securities

Fixed maturity securities AFS and equity securities measured at estimated fair value on a recurring basis and their corresponding fair value pricing sources are as follows at:

	September 30, 2018
	Fixed Maturity Securities				Equity Securities
	(Dollars in millions)
Level 1
Quoted prices in active markets for identical assets	$	4,072	6.5	%	$	15	10.0	%
Level 2
Independent pricing sources	54,690		87.8		13		8.7
Internal matrix pricing or discounted cash flow techniques	598		1.0		—		—
Significant other observable inputs	55,288		88.8		13		8.7
Level 3
Independent pricing sources	2,430		3.9		119		79.3
Internal matrix pricing or discounted cash flow techniques	346		0.6		3		2.0
Independent broker quotations	143		0.2		—		—
Significant unobservable inputs	2,919		4.7		122		81.3
Total estimated fair value	$	62,279	100.0	%	$	150	100.0	%

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See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for the fixed maturity securities AFS and equity securities fair value hierarchy.

The composition of fair value pricing sources for and significant changes in Level 3 securities at September 30, 2018 are as follows:

• The majority of the Level 3 fixed maturity securities AFS and equity securities were concentrated in three sectors: U.S. and foreign corporate securities and residential mortgage-backed securities (“RMBS”).

• Level 3 fixed maturity securities are priced principally through market standard valuation methodologies, independent pricing services and, to a much lesser extent, independent non-binding broker quotations using inputs that are not market observable or cannot be derived principally from or corroborated by observable market data. Level 3 fixed maturity securities consist of less liquid securities with very limited trading activity or where less price transparency exists around the inputs to the valuation methodologies.

• During the three months ended September 30, 2018, Level 3 fixed maturity securities decreased by $229 million, or 7%. The decrease was driven by net transfers out of Level 3 and a decrease in estimated fair value recognized in other comprehensive income (“OCI”), partially offset by purchases in excess of sales.

• During the nine months ended September 30, 2018, Level 3 fixed maturity securities decreased by $313 million, or 10%. The decrease was driven by net transfers out of Level 3 and a decrease in estimated fair value recognized in OCI, partially offset by purchases in excess of sales.

See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for a rollforward of the fair value measurements for fixed maturity securities and equity securities AFS measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs; transfers into and/or out of Level 3; and further information about the valuation techniques and inputs by level by major classes of invested assets that affect the amounts reported above.

Fixed Maturity Securities AFS

See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements for information about fixed maturity securities AFS by sector, contractual maturities and continuous gross unrealized losses.

Fixed Maturity Securities Credit Quality — Ratings

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Fixed Maturity AFS and Equity Securities — Fixed Maturity Securities Credit Quality — Ratings” included in the 2017 Annual Report for a discussion of the credit quality ratings assigned by Nationally Recognized Statistical Rating Organizations (“NRSRO”), credit quality designations assigned by and methodologies used by the Securities Valuation Office of the NAIC for fixed maturity securities and the revised methodologies adopted by the NAIC for certain RMBS, commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

The following table presents total fixed maturity securities by NRSRO rating and the applicable NAIC designation from the NAIC published comparison of NRSRO ratings to NAIC designations, except for certain Structured Securities, which are presented using the revised NAIC methodologies, as well as the percentage, based on estimated fair value that each NAIC designation is comprised of at:

		September 30, 2018									December 31, 2017
NAIC Designation	NRSRO Rating	Amortized Cost		Unrealized Gain (Loss)			Estimated Fair Value		% of Total		Amortized Cost		Unrealized Gain (Loss)			Estimated Fair Value		% of Total
		(Dollars in millions)
1	Aaa/Aa/A	$	40,732	$	1,451		$	42,183	67.7	%	$	42,098	$	3,631		$	45,729	70.4	%
2	Baa	17,062		135			17,197		27.6		15,137		1,113			16,250		25.0
Subtotal investment grade		57,794		1,586			59,380		95.3		57,235		4,744			61,979		95.4
3	Ba	2,029		1			2,030		3.3		2,102		63			2,165		3.3
4	B	850		(6		)	844		1.4		799		15			814		1.3
5	Caa and lower	32		(7		)	25		—		31		(2		)	29		—
6	In or near default	—		—			—		—		6		(2		)	4		—
Subtotal below investment grade		2,911		(12		)	2,899		4.7		2,938		74			3,012		4.6
Total fixed maturity securities		$	60,705	$	1,574		$	62,279	100.0	%	$	60,173	$	4,818		$	64,991	100.0	%

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The following tables present total fixed maturity securities, based on estimated fair value, by sector classification and by NRSRO rating and the applicable NAIC designations from the NAIC published comparison of NRSRO ratings to NAIC designations, except for certain Structured Securities, which are presented using the NAIC methodologies as described above:

	Fixed Maturity Securities — by Sector & Credit Quality Rating
NAIC Designation	1			2			3			4			5			6			Total Estimated Fair Value
NRSRO Rating	Aaa/Aa/A			Baa			Ba			B			Caa and Lower			In or Near Default
	(Dollars in millions)
September 30, 2018
U.S. corporate	$	10,494		$	11,260		$	1,416		$	746		$	19		$	—		$	23,935
U.S. government and agency	10,770			180			—			—			—			—			10,950
RMBS	8,185			101			67			15			6			—			8,374
Foreign corporate	2,055			4,750			388			55			—			—			7,248
State and political subdivision	3,966			100			3			—			—			—			4,069
CMBS	4,288			2			—			—			—			—			4,290
ABS	1,750			214			43			2			—			—			2,009
Foreign government	675			590			113			26			—			—			1,404
Total fixed maturity securities	$	42,183		$	17,197		$	2,030		$	844		$	25		$	—		$	62,279
Percentage of total	67.7		%	27.6		%	3.3		%	1.4		%	—		%	—		%	100.0		%
December 31, 2017
U.S. corporate	$	10,263		$	10,548		$	1,408		$	714		$	23		$	1		$	22,957
U.S. government and agency	16,111			181			—			—			—			—			16,292
RMBS	7,830			27			102			12			6			—			7,977
Foreign corporate	1,835			4,657			483			48			—			—			7,023
State and political subdivision	4,105			70			3			—			—			3			4,181
CMBS	3,423			—			—			—			—			—			3,423
ABS	1,538			258			33			—			—			—			1,829
Foreign government	624			509			136			40			—			—			1,309
Total fixed maturity securities	$	45,729		$	16,250		$	2,165		$	814		$	29		$	4		$	64,991
Percentage of total	70.4		%	25.0		%	3.3		%	1.3		%	—		%	—		%	100.0		%

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U.S. and Foreign Corporate Fixed Maturity Securities

We maintain a diversified portfolio of corporate fixed maturity securities across industries and issuers. This portfolio does not have any exposure to any single issuer in excess of 1% of total investments and the top ten holdings in aggregate comprise 2% of total investments at both September 30, 2018 and December 31, 2017. The tables below present our U.S. and foreign corporate securities holdings by industry at:

	September 30, 2018				December 31, 2017
	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
	(Dollars in millions)
Industrial	$	9,648	30.9	%	$	9,459	31.5	%
Consumer	7,424		23.8		7,213		24.1
Finance	6,440		20.7		5,834		19.4
Utility	4,561		14.6		4,333		14.5
Communications	2,297		7.4		2,338		7.8
Other	813		2.6		803		2.7
Total	$	31,183	100.0	%	$	29,980	100.0	%

Structured Securities

We held $14.7 billion and $13.2 billion of Structured Securities, at estimated fair value, at September 30, 2018 and December 31, 2017, respectively, as presented in the RMBS, CMBS and ABS sections below.

RMBS

The following table presents our RMBS holdings at:

	September 30, 2018							December 31, 2017
	Estimated Fair Value		% of Total		Net Unrealized Gains (Losses)			Estimated Fair Value		% of Total		Net Unrealized Gains (Losses)
	(Dollars in millions)
By security type:
Collateralized mortgage obligations	$	4,812	57.5	%	$	99		$	4,623	58.0	%	$	219
Pass-through securities	3,562		42.5		(98		)	3,354		42.0		9
Total RMBS	$	8,374	100.0	%	$	1		$	7,977	100.0	%	$	228
By risk profile:
Agency	$	6,037	72.1	%	$	(170	)	$	5,439	68.1	%	$	46
Prime	366		4.4		14			333		4.2		22
Alt-A	1,057		12.6		99			1,185		14.9		93
Sub-prime	914		10.9		58			1,020		12.8		67
Total RMBS	$	8,374	100.0	%	$	1		$	7,977	100.0	%	$	228
Ratings profile:
Rated Aaa/AAA	$	6,356	75.9	%				$	5,553	69.6	%
Designated NAIC 1	$	8,185	97.7	%				$	7,830	98.2	%

Historically, we have managed our exposure to sub-prime RMBS holdings by focusing primarily on senior tranche securities, stress testing the portfolio with severe loss assumptions and closely monitoring the performance of the portfolio. Our sub-prime RMBS portfolio consists predominantly of securities that were purchased after 2012 at significant discounts to par value and discounts to the expected principal recovery value of these securities. The vast majority of these securities are investment grade under the NAIC designations (e.g., NAIC 1 and NAIC 2). The estimated fair value of our sub-prime RMBS holdings purchased since 2012 was $878 million and $976 million at September 30, 2018 and December 31, 2017, respectively, with unrealized gains (losses) of $56 million and $65 million at September 30, 2018 and December 31, 2017, respectively.

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CMBS

Our CMBS holdings are diversified by vintage year. The following tables present our CMBS holdings by rating agency rating and by vintage year at:

	September 30, 2018
	Aaa					Aa					A					Baa					Below Investment Grade					Total
	Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
	(Dollars in millions)
2003 — 2010	$	28	$	30		$	—	$	—		$	—	$	—		$	—	$	—		$	—	$	1		$	28	$	31
2011	262		261			11		11			33		31			—		—			—		—			306		303
2012	62		62			101		99			99		97			3		3			—		—			265		261
2013	102		102			122		120			73		72			—		—			—		—			297		294
2014	214		211			261		256			44		43			—		—			—		—			519		510
2015	846		822			162		158			29		29			—		—			—		—			1,037		1,009
2016	448		432			50		48			28		26			—		—			—		—			526		506
2017	569		553			51		49			13		13			—		—			—		—			633		615
2018	728		719			38		38			4		4			—		—			—		—			770		761
Total	$	3,259	$	3,192		$	796	$	779		$	323	$	315		$	3	$	3		$	—	$	1		$	4,381	$	4,290
Ratings Distribution			74.4		%			18.2		%			7.3		%			0.1		%			—		%			100.0		%

	December 31, 2017
	Aaa					Aa					A					Baa					Below Investment Grade					Total
	Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
	(Dollars in millions)
2003 — 2010	$	28	$	31		$	—	$	—		$	—	$	—		$	1	$	1		$	—	$	1		$	29	$	33
2011	270		274			11		11			32		32			—		—			—		—			313		317
2012	88		90			111		112			102		103			2		3			—		—			303		308
2013	102		106			143		144			73		73			—		—			—		—			318		323
2014	215		220			285		289			44		45			—		—			—		—			544		554
2015	840		848			184		186			29		30			—		—			—		—			1,053		1,064
2016	430		431			51		49			28		27			—		—			—		—			509		507
2017	251		251			53		53			13		13			—		—			—		—			317		317
Total	$	2,224	$	2,251		$	838	$	844		$	321	$	323		$	3	$	4		$	—	$	1		$	3,386	$	3,423
Ratings Distribution			65.8		%			24.7		%			9.4		%			0.1		%			—		%			100.0		%

The tables above reflect rating agency ratings assigned by NRSROs, including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Global Rating (“S&P”), Fitch Ratings (“Fitch”) and Morningstar. CMBS designated NAIC 1 were 100.0% of total CMBS at both September 30, 2018 and December 31, 2017.

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ABS

Our ABS are diversified both by collateral type and by issuer. The following table presents our ABS holdings at:

	September 30, 2018							December 31, 2017
	Estimated Fair Value		% of Total		Net Unrealized Gains (Losses)			Estimated Fair Value		% of Total		Net Unrealized Gains (Losses)
	(Dollars in millions)
By collateral type:
Collateralized obligations	$	1,085	54.0	%	$	1		$	819	44.8	%	$	8
Consumer loans	199		9.9		—			262		14.3		3
Automobile loans	182		9.1		(1		)	189		10.3		—
Student loans	188		9.4		4			169		9.3		4
Credit card loans	1		—		—			101		5.5		—
Other loans	354		17.6		(1		)	289		15.8		4
Total	$	2,009	100.0	%	$	3		$	1,829	100.0	%	$	19
Ratings profile:
Rated Aaa/AAA	$	824	41.0	%				$	637	34.8	%
Designated NAIC 1	$	1,750	87.1	%				$	1,538	84.1	%

Evaluation of Fixed Maturity Securities AFS for OTTI and Evaluating Temporarily Impaired Fixed Maturity Securities AFS

See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements for information about the evaluation of fixed maturity securities AFS and equity securities for OTTI and evaluation of temporarily impaired AFS securities.

OTTI Losses on Fixed Maturity Securities AFS Recognized in Earnings

See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements for information about OTTI losses and gross gains and gross losses on AFS securities sold.

Overview of Fixed Maturity Security OTTI Losses Recognized in Earnings

There were no impairments of fixed maturity securities for the three months and nine months ended September 30, 2018. Impairments of fixed maturity securities were $0 and $1 million for the three months and nine months ended September 30, 2017, respectively.

Future Impairments

Future OTTI will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), and changes in credit ratings, collateral valuation, interest rates and credit spreads, as well as a change in our intention to hold or sell a security that is in an unrealized loss position. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods.

Securities Lending

We participate in a securities lending program whereby securities are loaned to third parties, primarily brokerage firms and commercial banks. We obtain collateral, usually cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned, which is obtained at the inception of a loan and maintained at a level greater than or equal to 100% for the duration of the loan. We monitor the estimated fair value of the securities loaned on a daily basis with additional collateral obtained as necessary throughout the duration of the loan. Securities loaned under such transactions may be sold or repledged by the transferee. We are liable to return to our counterparties the cash collateral under our control. Security collateral received from counterparties may not be sold or repledged, unless the counterparty is in default, and is not reflected in the financial statements. These transactions are treated as financing arrangements and the associated cash collateral liability is recorded at the amount of the cash received.

See“— Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Securities Lending” and Note4of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding our securities lending program.

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Mortgage Loans

Our mortgage loans are principally collateralized by commercial, agricultural and residential properties. Mortgage loans and the related valuation allowances are summarized as follows at:

	September 30, 2018								December 31, 2017
	Recorded Investment		% of Total		Valuation Allowance		% of Recorded Investment		Recorded Investment		% of Total		Valuation Allowance		% of Recorded Investment
	(Dollars in millions)
Commercial	$	8,405	64.7	%	$	42	0.5	%	$	7,260	68.0	%	$	36	0.5	%
Agricultural	2,767		21.3	%	8		0.3	%	2,276		21.3	%	7		0.3	%
Residential	1,824		14.0	%	6		0.3	%	1,138		10.7	%	4		0.4	%
Total	$	12,996	100.0	%	$	56	0.4	%	$	10,674	100.0	%	$	47	0.4	%

The information presented in the tables herein exclude mortgage loans where we elected the fair value option (“FVO”). Such amounts are presented in Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements.

We diversify our mortgage loan portfolio by both geographic region and property type to reduce the risk of concentration. Of our commercial and agricultural mortgage loan portfolios, at September 30, 2018 and December 31, 2017, 96% and 97%, respectively, were collateralized by properties located in the U.S. and the remainder was collateralized by properties located outside of the U.S. The carrying value as a percentage of total commercial and agricultural mortgage loans for the top three states in the U.S. is as follows at:

	September 30, 2018		December 31, 2017
State
California	25	%	24	%
New York	14	%	15	%
Texas	8	%	9	%

Additionally, we manage risk when originating commercial and agricultural mortgage loans by generally lending up to 75% of the estimated fair value of the underlying real estate collateral.

We manage our residential mortgage loan portfolio in a similar manner to reduce risk of concentration. All residential mortgage loans were collateralized by properties located in the U.S. at both September 30, 2018 and December 31, 2017. The carrying value as a percentage of total residential mortgage loans for the top three states in the U.S. is as follows at:

	September 30, 2018		December 31, 2017
State
California	36	%	32	%
Florida	10	%	13	%
New York	6	%	8	%

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Commercial Mortgage Loans by Geographic Region and Property Type. Commercial mortgage loans are the largest component of the mortgage loan invested asset class. The tables below present the diversification across geographic regions and property types of commercial mortgage loans at:

	September 30, 2018				December 31, 2017
	Amount		% of Total		Amount		% of Total
	(Dollars in millions)
Region
Pacific	$	2,440	29.0	%	$	1,955	26.9	%
Middle Atlantic	1,858		22.1		1,699		23.4
South Atlantic	1,279		15.2		1,190		16.4
West South Central	862		10.3		777		10.7
East North Central	497		5.9		489		6.7
Mountain	400		4.8		266		3.7
International	395		4.7		323		4.5
New England	335		4.0		220		3.0
West North Central	128		1.5		130		1.8
East South Central	48		0.6		48		0.7
Multi-Region and Other	163		1.9		163		2.2
Total recorded investment	8,405		100.0	%	7,260		100.0	%
Less: valuation allowances	42				36
Carrying value, net of valuation allowances	$	8,363			$	7,224
Property Type
Office	$	3,748	44.6	%	$	3,246	44.7	%
Retail	2,011		23.9		1,933		26.7
Apartment	1,439		17.1		968		13.3
Hotel	748		8.9		683		9.4
Industrial	414		4.9		385		5.3
Other	45		0.6		45		0.6
Total recorded investment	8,405		100.0	%	7,260		100.0	%
Less: valuation allowances	42				36
Carrying value, net of valuation allowances	$	8,363			$	7,224

Mortgage Loan Credit Quality — Monitoring Process. We monitor our mortgage loan investments on an ongoing basis, including a review of loans that are current, past due, restructured and under foreclosure. See Note4of the Notes to the Interim Condensed Consolidated Financial Statements for information on mortgage loans by credit quality indicator, past due and nonaccrual mortgage loans, as well as impaired mortgage loans.

We review our commercial mortgage loans on an ongoing basis. These reviews may include an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, loan-to-value ratios, debt service coverage ratios and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher loan-to-value ratios and lower debt service coverage ratios. The monitoring process for agricultural mortgage loans is generally similar, with a focus on higher risk loans, such as loans with higher loan-to-value ratios, including reviews on a geographic and sector basis. We review our residential mortgage loans on an ongoing basis. See Note 6 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for information on our evaluation of residential mortgage loans and related valuation allowance methodology.

Loan-to-value ratios and debt service coverage ratios are common measures in the assessment of the quality of commercial mortgage loans. Loan-to-value ratios are a common measure in the assessment of the quality of agricultural mortgage loans. Loan-

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to-value ratios compare the amount of the loan to the estimated fair value of the underlying collateral. A loan-to-value ratio greater than 100% indicates that the loan amount is greater than the collateral value. A loan-to-value ratio of less than 100% indicates an excess of collateral value over the loan amount. Generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss. The debt service coverage ratio compares a property’s net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss. For our commercial mortgage loans, our average loan-to-value ratio was 52% and 51% at September 30, 2018 and December 31, 2017, respectively, and our average debt service coverage ratio was 2.3x at both September 30, 2018 and December 31, 2017. The debt service coverage ratio, as well as the values utilized in calculating the ratio, is updated annually on a rolling basis, with a portion of the portfolio updated each quarter. In addition, the loan-to-value ratio is routinely updated for all but the lowest risk loans as part of our ongoing review of our commercial mortgage loan portfolio. For our agricultural mortgage loans, our average loan-to-value ratio was 46% and 43% at September 30, 2018 and December 31, 2017, respectively. The values utilized in calculating the agricultural mortgage loan loan-to-value ratio are developed in connection with the ongoing review of the agricultural loan portfolio and are routinely updated.

Mortgage Loan Valuation Allowances. Our valuation allowances are established both on a loan specific basis for those loans considered impaired where a property specific or market specific risk has been identified that could likely result in a future loss, as well as for pools of loans with similar risk characteristics where a property specific or market specific risk has not been identified, but for which we expect to incur a loss. Accordingly, a valuation allowance is provided to absorb these estimated probable credit losses.

The determination of the amount of valuation allowances is based upon our periodic evaluation and assessment of known and inherent risks associated with our loan portfolios. Such evaluations and assessments are based upon several factors, including our experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. These evaluations and assessments are revised as conditions change and new information becomes available, which can cause the valuation allowances to increase or decrease over time as such evaluations are revised. Negative credit migration, including an actual or expected increase in the level of problem loans, will result in an increase in the valuation allowance. Positive credit migration, including an actual or expected decrease in the level of problem loans, will result in a decrease in the valuation allowance.

See Notes 4 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information about how valuation allowances are established and monitored, activity in and balances of the valuation allowance, and the estimated fair value of impaired mortgage loans and related impairments included within net investment gains (losses) at and for the nine months ended September 30, 2018 and 2017.

Real Estate Joint Ventures

Real estate joint ventures is comprised of joint ventures with interests in single property income-producing real estate, and to a lesser extent joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the operation of income-producing properties, as well as a runoff portfolio of real estate private equity funds.

The estimated fair value of the real estate joint ventures and wholly owned real estate investment portfolios was $558 million and $594 million at September 30, 2018 and December 31, 2017, respectively.

Other Limited Partnership Interests

Other limited partnership interests are comprised of private equity funds and hedge funds. The carrying value of other limited partnership interests was $1.8 billion and $1.7 billion at September 30, 2018 and December 31, 2017, respectively, which included $102 million and $104 million of hedge funds at September 30, 2018 and December 31, 2017, respectively. Cash distributions on these investments are generated from investment gains, operating income from the underlying investments of the funds and liquidation of the underlying investments of the funds. We estimate that the underlying investments of the funds will be liquidated over the next 10 to 20 years.

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Other Invested Assets

The following table presents the carrying value of our other invested assets by type at:

	September 30, 2018				December 31, 2017
	Carrying Value		% of Total		Carrying Value		% of Total
	(Dollars in millions)
Freestanding derivatives with positive estimated fair values	$	1,856	88.4	%	$	2,254	89.9	%
Tax credit and renewable energy partnerships	99		4.7		103		4.1
FHLB Stock (1)	64		3.1		71		2.8
Leveraged leases, net of non-recourse debt	66		3.1		66		2.6
Other	14		0.7		13		0.6
Total	$	2,099	100.0	%	$	2,507	100.0	%

__________________

(1) The Company reclassified Federal Home Loan Bank (“FHLB”) stock in prior periods from equity securities to other invested assets.

Derivatives

Derivative Risks

We are exposed to various risks relating to our ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. We use a variety of strategies to manage these risks, including the use of derivatives. See Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements for:

• A comprehensive description of the nature of our derivatives, including the strategies for which derivatives are used in managing various risks.

• Information about the gross notional amount, estimated fair value, and primary underlying risk exposure of our derivatives by type of hedge designation, excluding embedded derivatives, held at September 30, 2018 and December 31, 2017.

• The statement of operations effects of derivatives in cash flow, fair value, or nonqualifying hedge relationships for the three months and nine months ended September 30, 2018 and 2017.

See“Business — Segments and Corporate & Other — Annuities,” “Business — Risk Management Strategies — ULSG Market Risk Exposure Management” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Actuarial Assumption Review” included in the 2017 Annual Report for more information about our use of derivatives by major hedge programs.

Fair Value Hierarchy

SeeNote 5of the Notes to the Interim Condensed Consolidated Financial Statements for derivatives measured at estimated fair value on a recurring basis and their corresponding fair value hierarchy.

The valuation of Level 3 derivatives involves the use of significant unobservable inputs and generally requires a higher degree of management judgment or estimation than the valuations of Level 1 and Level 2 derivatives. Although Level 3 inputs are unobservable, management believes they are consistent with what other market participants would use when pricing such instruments and are considered appropriate given the circumstances. The use of different inputs or methodologies could have a material effect on the estimated fair value of Level 3 derivatives and could materially affect net income.

Derivatives categorized as Level 3 at September 30, 2018 include: credit default swaps priced using unobservable credit spreads, or that are priced through independent broker quotations; equity variance swaps with unobservable volatility inputs; foreign currency swaps with certain unobservable inputs and equity index options with unobservable correlation inputs. The estimated fair value of our derivatives priced through independent broker quotations were less than1% and 1% at September 30, 2018 and December 31, 2017, respectively.

SeeNote 6of the Notes to Interim Condensed Consolidated Financial Statements for a rollforward of the fair value measurements for derivatives measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs.

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Credit Risk

SeeNote 5of the Notes to the Interim Condensed Consolidated Financial Statements for information about how we manage credit risk related to derivatives and for the estimated fair value of our net derivative assets and net derivative liabilities after the application of master netting agreements and collateral.

Our policy is not to offset the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. This policy applies to the recognition of derivatives in the balance sheets, and does not affect our legal right of offset.

Credit Derivatives

The following tables present the gross notional amount and estimated fair value of credit default swaps at:

	September 30, 2018				December 31, 2017
Credit Default Swaps	Gross Notional Amount		Estimated Fair Value		Gross Notional Amount		Estimated Fair Value
	(In millions)
Purchased	$	86	$	2	$	65	$	(1	)
Written	1,894		32		1,900		40
Total	$	1,980	$	34	$	1,965	$	39

The maximum amount at risk related to our written credit default swaps is equal to the corresponding gross notional amount. In a replication transaction, we pair an asset on our balance sheet with a written credit default swap to synthetically replicate a corporate bond, a core asset holding of life insurance companies. Replications are entered into in accordance with the guidelines approved by state insurance regulators and the NAIC and are an important tool in managing the overall corporate credit risk within the Company. In order to match our long-dated insurance liabilities, we seek to buy long-dated corporate bonds. In some instances, these may not be readily available in the market, or they may be issued by corporations to which we already have significant corporate credit exposure. For example, by purchasing Treasury bonds (or other high-quality assets) and associating them with written credit default swaps on the desired corporate credit name, we, can replicate the desired bond exposures and meet our ALM needs.

Embedded Derivatives

See Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements for information about the nonperformance risk adjustment included in the valuation of guaranteed minimum benefits accounted for as embedded derivatives.

See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information about embedded derivatives measured at estimated fair value on a recurring basis and their corresponding fair value hierarchy.

See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for a rollforward of the fair value measurements for embedded derivatives measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs.

See“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates — Derivatives” included in the 2017 Annual Report for further information on the estimates and assumptions that affect embedded derivatives.

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Off Balance Sheet Arrangements

Credit and Committed Facilities

In April 2018, Brighthouse Life Insurance Company entered into a committed repurchase facility (the “Repurchase Facility”) with a financial institution, pursuant to which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $2.0 billion, in respect of certain eligible securities. The Repurchase Facility has a term of three years, beginning on July 31, 2018 and ending on July 31, 2021.

We maintain a $2.0 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”), as well as a$600 millionunsecured delayed draw term loan facility (the “2017 Term Loan Facility”). AtSeptember 30, 2018, there were no drawdowns under the Revolving Credit Facility and there was$600 millionoutstanding under the 2017 Term Loan Facility, resulting in unused commitments totaling$2.0 billionin comparison to the maximum capacity of$2.6 billionunder these facilities. For the classification of expenses on such credit and committed facilities and the nature of the associated liability for letters of credit issued and drawdowns on these credit and committed facilities, seeNote 9of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report.

Our reinsurance subsidiary, BRCD, was formed to manage our capital and risk exposures and to support our various operations, through the use of affiliated reinsurance arrangements and related reserve financing. BRCD has a $10.0 billion reinsurance financing arrangement with a pool of highly rated third-party reinsurers. This financing arrangement consists of credit-linked notes that each have a term of 20 years. At September 30, 2018, there were no drawdowns on such notes and there was $9.7 billion of funding available under this financing arrangement.

Collateral for Securities Lending, Repurchase Programs and Derivatives

We have a securities lending program for the purpose of enhancing the total return on our investment portfolio. Periodically we receive non-cash collateral for securities lending from counterparties, which cannot be sold or repledged, and which is not recorded on our balance sheets. The amount of this collateral was $0 million and $29 million at estimated fair value at September 30, 2018 and December 31, 2017, respectively. See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as “— Investments — Securities Lending” for discussion of our securities lending program, the classification of revenues and expenses, and the nature of the secured financing arrangement and associated liability.

We enter into derivatives to manage various risks relating to our ongoing business operations. We have non-cash collateral from counterparties for derivatives, which can be sold or repledged subject to certain constraints, and which has not been recorded on our balance sheets. The amount of this non-cash collateral was $155 million and $368 million at September 30, 2018 and December 31, 2017, respectively. See Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding the earned income on and the gross notional amount, estimated fair value of assets and liabilities and primary underlying risk exposure of our derivatives.

Guarantees

See“Guarantees” in Note 11of the Notes to the Interim Condensed Consolidated Financial Statements.

Other

Additionally, we enter into commitments in the normal course of business for the purpose of enhancing the total return on our investment portfolio: mortgage loan commitments and commitments to fund partnerships, bank credit facilities and private corporate bond investments. See “Net Investment Income” and “Net Investment Gains (Losses)” in Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements for information on the investment income, investment expense, gains and losses from such investments. See also “— Investments — Fixed Maturity AFS and Equity Securities” and “— Investments — Mortgage Loans” for information on our investments in fixed maturity securities and mortgage loans. See “— Investments — Real Estate Joint Ventures” and “— Investments — Other Limited Partnership Interests” for information on our partnership investments.

Other than the commitments disclosed in Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements, there are no other material obligations or liabilities arising from the commitments to fund mortgage loans, partnerships, bank credit facilities, and private corporate bond investments. For further information on commitments to fund partnership investments, mortgage loans, bank credit facilities and private corporate bond investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Contractual Obligations” included in the 2017 Annual Report.

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Policyholder Liabilities

We establish, and carry as liabilities, actuarially determined amounts that are calculated to meet policy obligations or to provide for future annuity payments. Amounts for actuarial liabilities are computed and reported in the financial statements in conformity with GAAP. For more details on Policyholder Liabilities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Policyholder Liabilities” included in the 2017 Annual Report. Except as otherwise discussed below, there have been no material changes to our actuarial liabilities.

Future Policy Benefits

We establish liabilities for amounts payable under insurance policies. See Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements. A discussion of future policy benefits by segment (as well as Corporate & Other) can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Policyholder Liabilities” included in the 2017 Annual Report.

Policyholder Account Balances

Policyholder account balances (“PABs”) are generally equal to the account value, which includes accrued interest credited, but excludes the impact of any applicable charge that may be incurred upon surrender. See Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements. A discussion of PABs by segment (as well as Corporate & Other) can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Policyholder Liabilities” included in the 2017 Annual Report.

Variable Annuity Guarantees

We issue certain variable annuity products with guaranteed minimum benefits that provide the policyholder a minimum return based on their initial deposit (i.e., the Benefit Base) less withdrawals. In some cases, the Benefit Base may be increased by additional deposits, bonus amounts, accruals or optional market value step-ups. See Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements. See also “Quantitative and Qualitative Disclosures About Market Risk — Market Risk - Fair Value Exposures — Interest Rates” and “Business — Segments and Corporate & Other — Annuities — Current Products — Variable Annuities” included in the 2017 Annual Report for additional information.

Select information that management considers relevant to understanding our variable annuity risk management strategy has been included below.

Net Amount at Risk

The net amount at risk (“NAR”) for the GMDB is the amount of death benefit in excess of the account value (if any) at the balance sheet date. It represents the amount of the claim we would incur if death claims were made on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.

The NAR for the GMWB and GMAB is the amount of guaranteed benefits in excess of the account values (if any) at the balance sheet date. The NAR assumes utilization of benefits by all contract holders at the balance sheet date. For the GMWB benefits, only a small portion of the Benefit Base is available for withdrawal on an annual basis. For the GMAB, the NAR would not be available until the GMAB maturity date.

The NAR for the GMWB with lifetime payments (“GMWB4L”) is the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream based on current annuity rates, equal to the lifetime amount provided under the guaranteed benefit. For contracts where the GMWB4L provides for a guaranteed cumulative dollar amount of payments, the NAR is based on the purchase of a lifetime with period certain income stream where the period certain ensures payment of this cumulative dollar amount. The NAR represents our potential economic exposure to such guarantees in the event all contract holders were to begin lifetime withdrawals on the balance sheet date regardless of age. Only a small portion of the Benefit Base is available for withdrawal on an annual basis.

The NAR for the GMIB is the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents our potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the guaranteed amount under the contracts may not be annuitized until after the waiting period of the contract.

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A detailed description of NAR by type of guaranteed minimum benefit can be found in “Business — Segments and Corporate & Other — Annuities — Net Amount at Risk” included in the 2017 Annual Report.

The account values and NAR of contract owners by type of guaranteed minimum benefit for variable annuity contracts are summarized below at:

	September 30, 2018 (1)								December 31, 2017 (1)
	Account Value		Death Benefit NAR (1)		Living Benefit NAR (1)		% of Account Value In-the-Money (2)		Account Value		Death Benefit NAR (1)		Living Benefit NAR (1)		% of Account Value In-the-Money (2)
	(Dollars in millions)
GMIB	$	43,932	$	2,129	$	2,517	23.5	%	$	46,585	$	1,796	$	2,641	25.0	%
GMIB Max w/ Enhanced DB	12,208		2,599		4		0.4	%	13,035		1,850		1		0.1	%
GMIB Max w/o Enhanced DB	7,054		8		1		0.1	%	7,490		3		—		<0.1%
GMWB4L (FlexChoiceSM)	2,865		4		—		.7	%	2,351		—		1		1.0	%
GMAB	677		2		2		4.0	%	695		2		1		0.3	%
GMWB	3,110		47		13		5.8	%	3,355		46		13		2.0	%
GMWB4L	16,842		77		194		8.6	%	18,026		73		267		13.5	%
EDB Only	3,841		591		—		N/A		4,020		453		—		N/A
GMDB Only (Other than EDB)	19,084		1,014		—		N/A		19,587		1,038		—		N/A
Total	$	109,613	$	6,471	$	2,731			$	115,144	$	5,261	$	2,924

__________

(1) The “Death Benefit NAR” and “Living Benefit NAR” are not additive at the contract level.

(2) In-the-Money is defined as any contract with a living benefit NAR in excess of zero.

Reserves

Under GAAP, certain of our variable annuity guarantee features are accounted for as insurance liabilities and recorded on the balance sheet in future policy benefits with changes reported in policyholder benefits and claims. These liabilities are accounted for using long term assumptions of equity and bond market returns and the level of interest rates. Therefore, these liabilities, valued at $4.4 billion at September 30, 2018, are less sensitive than derivative instruments to periodic changes to equity and fixed income market returns and the level of interest rates. Guarantees accounted for in this manner include GMDBs, as well as the life contingent portion of GMIBs and certain GMWBs. All other variable annuity guarantee features are accounted for as embedded derivatives and recorded on the balance sheet in PABs with changes reported in net derivative gains (losses). These liabilities, valued at $396 million at September 30, 2018, are accounted for at fair value. Guarantees accounted for in this manner include GMABs, GMWBs and the non-life contingent portions of GMIBs. In some cases, a guarantee will have multiple features or options that require separate accounting such that the guarantee is not fully accounted for under only one of the accounting models (known as “split accounting”). Additionally, the index protection and accumulation features of Shield Annuities are accounted for as embedded derivatives, recorded on the balance sheet in PABs with changes reported in net derivative gains (losses) and valued at $1.3 billion at September 30, 2018. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” included in the 2017 Annual Report.

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The table below presents the GAAP variable annuity reserve balances by guarantee type and accounting model at:

	Reserves
	September 30, 2018								December 31, 2017
	Future Policy Benefits		Policyholder Account Balances			Total Reserves			Future Policy Benefits		Policyholder Account Balances			Total Reserves
	(In millions)
GMDB	$	1,227	$	—		$	1,227		$	1,163	$	—		$	1,163
GMIB	2,405		989			3,394			2,310		1,416			3,726
GMIB Max	473		(399		)	74			399		(243		)	156
GMAB	—		(23		)	(23		)	—		(15		)	(15		)
GMWB	—		6			6			—		18			18
GMWB4L	269		(136		)	133			277		30			307
GMWB4L (FlexChoiceSM)	—		(41		)	(41		)	—		5			5
Total	$	4,374	$	396		$	4,770		$	4,149	$	1,211		$	5,360

Derivatives Hedging Variable Annuity Guarantees

The table below presents the gross notional amount and estimated fair value of the derivatives in our variable annuity hedging program at:

		September 30, 2018						December 31, 2017
Primary Underlying Risk Exposure	Instrument Type	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Interest Rate	Interest rate swaps	$	12,361	$	513	$	246	$	14,586	$	899	$	378
	Interest rate futures	54		—		—		282		1		—
	Interest rate options	7,150		11		14		20,800		68		27
Equity Market	Equity futures	2,215		1		1		2,713		15		—
	Equity index options	49,140		847		1,653		47,066		793		1,663
	Equity variance swaps	9,713		143		445		8,998		128		430
	Equity total return swaps	2,516		1		63		1,767		—		79
	Total	$	83,149	$	1,516	$	2,422	$	96,212	$	1,904	$	2,577

Period to period changes in the estimated fair value of these hedges affect our net income, as well as stockholders’ equity and these effects can be material in any given period. See “Risk Factors — Risks Related to Our Business — Our variable annuity exposure management strategy may not be effective, may result in net income volatility and may negatively affect our statutory capital” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates,” both included in the 2017 Annual Report.

Liquidity and Capital Resources

Liquidity refers to our ability to generate adequate cash flows from our normal operations to meet the cash requirements of our operating, investing and financing activities. Capital refers to our long-term financial resources available to support our business operations and contribute to future growth. Our ability to generate and maintain sufficient liquidity and capital depends on the profitability of our businesses, timing of cash flows from investments and products, general economic conditions and access to our credit facilities, repurchase facility and reinsurance financing arrangement, as well as access to the capital markets and the alternate sources of liquidity and capital described herein.

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Parent Company

Liquidity

In evaluating liquidity, it is important to distinguish the cash flow needs of the parent company, Brighthouse Financial, Inc., from the cash flow needs of the combined group of companies. Brighthouse Financial, Inc. is largely dependent on cash flows from its insurance subsidiaries to meet its obligations. The principal sources of funds available to Brighthouse Financial, Inc. include dividends and returns of capital from its insurance subsidiaries, as well as its own cash and cash equivalents and short-term investments. Such funds are paid to Brighthouse Financial, Inc. by BH Holdings, its direct wholly-owned holding company subsidiary. These sources of funds may also be supplemented by alternate sources of liquidity either directly or indirectly through our insurance subsidiaries. For example, we have established internal liquidity facilities to provide liquidity within and across our regulated and non-regulated entities to support our businesses.

Liquid Assets and Short-term Liquidity

An integral part of our liquidity management includes managing our levels of liquid assets and short-term liquidity. Our non-insurance company liquid assets and short-term liquidity are generated primarily through borrowings, as well as through dividends and returns of capital from our insurance subsidiaries, offset by payments for certain services provided from our insurance and non-insurance subsidiaries, which include, but are not limited to, executive oversight, treasury, finance, legal, human resources, tax planning, internal audit, financial reporting, information technology, distribution services and investor relations. Insurance subsidiary dividends are subject to local insurance regulatory requirements, as discussed in “— The Company — Capital — Restrictions on Dividends and Returns of Capital from Insurance Company Subsidiaries.”

Liquid assets and short-term liquidity were made available from the issuance of $375 million of junior subordinated debentures in September 2018 and $3.0 billion of senior notes in June 2017, as well as from drawdowns under the 2017 Term Loan Facility in the third quarter of 2017. In addition, any undrawn capacity under the Revolving Credit Facility, as well as under our collateralized financing arrangements, are potential sources of liquidity. In order to manage our capital more efficiently, we have established internal liquidity facilities to provide liquidity within and across our combined group of companies. At September 30, 2018 and December 31, 2017, total obligations outstanding under these internal liquidity facilities were $3 million and $136 million, respectively.

At September 30, 2018 and December 31, 2017, Brighthouse Financial, Inc. and certain of its non-insurance subsidiaries had liquid assets of $603 million and $656 million, respectively, of which $534 million and $563 million, respectively, was held by Brighthouse Financial, Inc. 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 collateralized financing arrangements.

At September 30, 2018 and December 31, 2017, Brighthouse Financial, Inc. and certain of its non-insurance subsidiaries had short-term liquidity of $371 million and $419 million, respectively. Short-term liquidity includes cash and cash equivalents and short-term investments, excluding assets that are pledged or otherwise committed, including amounts received in connection with securities lending, repurchase agreements, derivatives and secured borrowings.

Capital

We expect to maintain adequate liquidity at Brighthouse Financial, Inc., a debt-to-capital ratio of approximately 25% and a funding of $2.0 billion to $3.0 billion of assets in excess of CTE95 to support our variable annuity contracts during normal markets. We monitor our financial leverage ratio based on an average of our key leverage calculations of A.M. Best, Fitch Ratings, Moody’s and Standard & Poor’s. At September 30, 2018, we had in excess of $600 millionof assets above CTE98 to support our variable annuity contracts. We do not expect that our ability to maintain adequate liquidity will be materially affected by the Tax Act, or by the NAIC’s current reform activities related to the statutory framework for variable annuities. See “— Industry Trends — Variable Annuity Capital Reform.”

We may opportunistically look to pursue additional financing over time to reach our targeted debt-to-capital ratio of 25% and to refinance borrowings outstanding under the 2017 Term Loan Facility. Such financing may include the incurrence of term loans or the issuance of debt, equity or hybrid securities. There can be no assurance that we will be able to complete any such financing transactions on terms and conditions favorable to us or at all.

We do not currently pay regular cash dividends on our common stock. Any future declaration and payment of dividends or other distributions of capital will be at the discretion of our Board of Directors and depend on and be subject to our financial conditions, results of operations, earnings, cash needs, regulatory and other constraints, capital requirements (including capital requirements of our subsidiaries), contractual restrictions and any other factors that our Board of Directors deems relevant in

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making such a determination. Therefore, there can be no assurance that we will pay any dividends or make other distributions on our common stock, or as to the amount of any such dividends or distribution of capital.

See “— The Company — Capital” for a discussion of how we manage our capital for the combined group of companies. See also “— The Company — Primary Uses of Liquidity and Capital — Common Stock Repurchases” for information regarding our common stock repurchase program.

The Company

Sources and Uses of Liquidity and Capital

Our principal sources of liquidity are insurance premiums and annuity considerations, net investment income and proceeds from the maturity and sale of investments. The primary uses of these funds are investing activities, payments of policyholder benefits, commissions and operational expenses, contract maturities, withdrawals and surrenders.

The following table presents a summary of the primary sources and uses of liquidity and capital:

	Nine Months Ended  September 30,
	2018		2017
	(In millions)
Sources:
Operating activities, net	$	1,496	$	2,030
Changes in policyholder account balances, net	2,505		1,195
Long-term debt issued	375		3,589
Cash received from MetLife, Inc. in connection with shareholder’s net investment	—		293
Total sources	4,376		7,107
Uses:
Investing activities, net	3,469		2,554
Changes in payables for collateral under securities loaned and other transactions, net	126		2,747
Long-term debt repaid (1)	9		10
Collateral financing arrangements repaid	—		2,797
Treasury stock acquired in connection with share repurchases	42		—
Distribution to MetLife, Inc.	—		1,798
Cash paid to MetLife, Inc. in connection with shareholder’s net investment	—		668
Financing element on certain derivative instruments and other derivative related transactions, net	386		37
Other, net	57		26
Total uses	4,089		10,637
Net increase (decrease) in cash and cash equivalents	$	287	$	(3,530	)

______________ 

(1) Represents long-term debt repayments related to CSEs.

Cash Flows from Operations. The principal cash inflows from our insurance activities come from insurance premiums, annuity considerations and net investment income. The principal cash outflows are the result of various life insurance and annuity products, operating expenses and income tax, as well as interest expense. A primary liquidity concern with respect to these cash flows is the risk of early contract holder and policyholder withdrawal.

Cash Flows from Investments. The principal cash inflows from our investment activities come from repayments of principal, proceeds from maturities and sales of investments, as well as settlements of freestanding derivatives. The principal cash outflows relate to purchases of investments and settlements of freestanding derivatives. We typically can have a net cash outflow from investing activities because cash inflows from insurance operations are reinvested in accordance with our ALM discipline to fund insurance liabilities. We closely monitor and manage these risks through our comprehensive investment risk management process. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption.

Cash Flows from Financing, The Company. The principal cash inflows from our financing activities come from issuances of debt, deposits of funds associated with PABs and lending of securities. The principal cash outflows come from repayments

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of debt, withdrawals associated with PABs and the return of securities on loan. The primary liquidity concerns with respect to these cash flows are market disruption and the risk of early contract holder and policyholder withdrawal.

Cash Flows from Financing, Parent Company. The principal cash inflows from parent company financing activities come from issuance of debt and dividends from subsidiaries. The principal cash outflows from parent company financing activities relate to interest expense on and repayments of debt, and payment of dividends on and repurchases of common or preferred stock.

Liquidity

Liquidity Management

Based upon our capitalization, expectations regarding maintaining our ratings, business mix and funding sources available to us, we believe we have sufficient liquidity to meet business requirements under current market conditions and certain stress scenarios. We continuously monitor and adjust our liquidity and capital plans in light of market conditions, as well as changing needs and opportunities.

We determine our liquidity needs based on a rolling 12-month forecast by portfolio of invested assets which we monitor daily. We adjust the general account asset and derivatives mix and general account asset maturities based on this rolling 12-month forecast. To support this forecast, we conduct cash flow and stress testing, which include various scenarios of the potential increase to post or return collateral, reduction to new business sales, and risk of early contract holder and policyholder withdrawals, and lapses and surrenders of existing policies and contracts. We include provisions limiting withdrawal rights on many of our products. Certain of these provisions prevent the customer from making withdrawals prior to the maturity date of the product. In the event of significant cash requirements beyond anticipated liquidity needs, we have various alternatives available depending on market conditions and the amount and timing of the liquidity need. These potential available alternative sources of liquidity include cash flows from operations, sales of liquid assets, internal liquidity facilities, collateralized financing arrangements and any undrawn capacity under the Revolving Credit Facility.

Consolidated Liquid Assets and Short-term Liquidity

Consolidated liquid assets were $33.9 billion and $38.3 billion at September 30, 2018 and December 31, 2017, respectively. Consolidated short-term liquidity was $1.8 billion and $1.6 billion at September 30, 2018 and December 31, 2017, respectively.

Capital

We manage our capital position to maintain our financial strength and credit ratings. Our capital position will be supported by our ability to generate cash flows within our insurance companies, our ability to effectively manage the risk of our businesses, and our expected ability to borrow funds and raise additional capital to meet operating and growth needs in the event of adverse market and economic conditions.

Capital Management

Our Board of Directors and senior management are directly involved in the governance of the capital management process, including proposed changes to the annual capital plan and capital targets. In connection with the Separation, we undertook various capitalization activities. For example, we have eliminated intercompany financing arrangements with or guaranteed by MetLife. We are targeting a debt-to-total capitalization ratio commensurate with our parent company credit ratings and our insurance subsidiaries’ financial strength ratings.

See “— Primary Uses of Liquidity and Capital — Common Stock Repurchases” for information regarding our common stock repurchase program.

Statutory Capital

Our insurance companies have statutory surplus above the level needed to meet current regulatory requirements.

At the date of the most recent annual statutory financial statements filed with insurance regulators, the total adjusted capital of each of these insurance subsidiaries subject to these requirements was in excess of each of those RBC levels.

Restrictions on Dividends and Returns of Capital from Insurance Subsidiaries

Our business is primarily conducted through our insurance subsidiaries. The insurance subsidiaries are subject to regulatory restrictions on the payment of dividends and other distributions imposed by the regulators of their respective state domiciles. For more information, see “Business — Regulation — Insurance Regulation — Holding Company Regulation” in our 2017 Annual Report.

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Any requested payment of dividends by Brighthouse Life Insurance Company and NELICO to BH Holdings, or by BHNY to Brighthouse Life Insurance Company, in excess of the 2018 limit on the permitted payment of dividends without approval would be considered an extraordinary dividend and would require prior approval from the Delaware Department of Insurance or the Massachusetts Division of Insurance, and the NYDFS, respectively. Statutory accounting practices, as prescribed by insurance regulators of various states in which we conduct business, differ in certain respects from accounting principles used in financial statements prepared in conformity with GAAP. The significant differences relate to the treatment of DAC, certain deferred income tax, required investment liabilities, statutory reserve calculation assumptions and surplus notes.

The table below sets forth the dividends permitted to be paid in 2018 by our insurance subsidiaries without insurance regulatory approval and the respective dividends paid during the nine months ended September 30, 2018.

Company	Paid		Permitted without Approval (1)
	(In millions)
Brighthouse Life Insurance Company	$	—	$	84
New England Life Insurance Company	$	—	$	65
Brighthouse Life Insurance Company of NY (2)	$	—	$	21

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(1) Reflects dividend amounts that may be paid during 2018 without prior regulatory approval. However, because dividend tests may be based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2018, some or all of such dividends may require regulatory approval.

(2) Dividends are not anticipated to be paid by BHNY in 2018.

Brighthouse Financial, Inc. received a $52 million cash distribution from BH Holdings during the nine months ended September 30, 2018. There were no cash distributions or returns of capital paid by our non-insurance subsidiaries for the nine months ended September 30, 2017.

Rating Agencies

Rating agencies use an “outlook statement” of “positive,” “stable,” ‘‘negative’’ or “developing” to indicate a medium- or long-term trend in credit fundamentals which, if continued, may lead to a rating change. A rating may have a “stable” outlook to indicate that the rating is not expected to change; however, a “stable” rating does not preclude a rating agency from changing a rating at any time, without notice. Certain rating agencies assign rating modifiers such as “CreditWatch” or “under review” to indicate their opinion regarding the potential direction of a rating. These ratings modifiers are generally assigned in connection with certain events such as potential mergers, acquisitions, dispositions or material changes in a company’s results, in order for the rating agency to perform its analysis to fully determine the rating implications of the event.

Information about financial strength ratings and credit ratings can be found in the 2017 Annual Report, as well as on the respective websites of the rating agencies.

Rating agencies may continue to review and adjust our ratings. A downgrade in the credit ratings of Brighthouse Financial, Inc., the parent company, would likely impact us in many ways, including the cost and availability of financing for Brighthouse Financial, Inc., and its subsidiaries. See Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements.

Downgrades in our financial strength ratings could have a material adverse effect on our financial condition and results of operations in many ways, including:

• reducing new sales of insurance products and annuity products;

• adversely affecting our relationships with independent sales intermediaries;

• increasing the number or amount of policy surrenders and withdrawals by contract holders and policyholders;

• requiring us to reduce prices for many of our products and services to remain competitive;

• providing termination rights for the benefit of our derivative instrument counterparties;

• triggering termination and recapture rights under certain of our ceded reinsurance agreements;

• adversely affecting our ability to obtain reinsurance at reasonable prices, if at all;

• requiring us to post additional collateral under certain of our financing and derivative transactions; and

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• subjecting us to potentially increased regulatory scrutiny.

Additionally, downgrades in the credit ratings of Brighthouse Financial, Inc. or financial strength ratings of our insurance subsidiaries would likely impact us in the following ways:

• impact our ability to generate cash flows from the sale of funding agreements and other capital market products we offer; and

• impact the cost and availability of financing for Brighthouse.

Primary Sources of Liquidity and Capital

Liquidity is provided by a variety of funding sources, including funding agreements. Capital is provided by a variety of funding sources, including long-term debt, credit facilities and reserve financing facilities. The diversity of our funding sources enhances our funding flexibility, limits dependence on any one market or source of funds and generally lowers the cost of funds. In addition to our senior note and junior subordinated debenture issuances, credit facilities, repurchase facility and reinsurance financing arrangement, our other funding sources include or have included:

Federal Home Loan Bank Funding Agreements, Reported in Policyholder Account Balances

In July 2018, Brighthouse Life Insurance Company became a member of FHLB of Atlanta. Brighthouse Life Insurance Company was previously a member of FHLB of Pittsburgh. At September 30, 2018, Brighthouse Life Insurance Company had obligations outstanding with certain regional banks in the FHLB system. During the nine months ended September 30, 2018 and 2017, there were no issuances, and we repaid $0 and $50 million, respectively, under funding agreements with such regional FHLBs. At both September 30, 2018 and December 31, 2017, total obligations outstanding under these funding agreements were $595 million. Activity related to these funding agreements is reported in the Run-off segment.

Special Purpose Entity Funding Agreements, Reported in Policyholder Account Balances

Brighthouse Life Insurance Company issued fixed and floating rate funding agreements which are denominated in either U.S. dollars or foreign currencies, to certain special purpose entities that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. During the nine months ended September 30, 2018 and 2017, there were no issuances and we repaid $6 million during both periods, under such funding agreements. At September 30, 2018 and December 31, 2017, total obligations outstanding under these funding agreements were $136 million and $141 million, respectively. Activity related to these funding agreements is reported in the Run-off segment.

Outstanding Debt

The following table summarizes our outstanding debt at:

	Interest Rate	Maturity	September 30, 2018		December 31, 2017
			(Dollars in millions)
Senior notes (1)	3.700%	2027	$	1,490	$	1,489
Senior notes (1)	4.700%	2047	1,477		1,477
Term loan	LIBOR plus 1.5%	2019	600		600
Junior subordinated debentures (1)	6.250%	2058	361		—
Other long-term debt (2)	7.028%	2030	35		35
Total long-term debt (3)			$	3,963	$	3,601

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(1) Includes unamortized debt issuance costs and debt discount totaling $46 million and $34 million for senior notes due 2027 and 2047 and junior subordinated debentures due 2058 on a combined basis at September 30, 2018 and December 31, 2017, respectively.

(2) Represents non-recourse debt for which creditors have no access, subject to customary exceptions, to the general assets of the Company other than recourse to certain investment companies.

(3) Excludes $3 million and $11 million of long-term debt related to CSEs at September 30, 2018 and December 31, 2017, respectively. See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements for more information regarding CSEs.

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Junior Subordinated Debentures

On September 12, 2018, Brighthouse Financial, Inc. issued $375 million of junior subordinated debentures (the “debentures”) due September 2058, which bear interest at a fixed rate of 6.250%, payable quarterly, subject to Brighthouse Financial, Inc.’s right to defer interest payments in accordance with the terms of the debentures. The debentures are unsecured obligations and are subordinate and junior in right of payment to Brighthouse Financial, Inc.’s senior indebtedness.

Credit Facilities

At September 30, 2018, there were no drawdowns under the Revolving Credit Facility and there was $600 million outstanding under the 2017 Term Loan Facility, resulting in unused commitments totaling $2.0 billion in comparison to the maximum capacity of $2.6 billion under these facilities.

Repurchase Facility

In April 2018, Brighthouse Life Insurance Company entered into a committed repurchase facility (the “Repurchase Facility”) with a financial institution, pursuant to which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $2.0 billion, in respect of certain eligible securities. The Repurchase Facility has a term of three years, beginning on July 31, 2018 and ending on July 31, 2021. Under the Repurchase Facility, Brighthouse Life Insurance Company may sell securities at a purchase price based on the market value of the securities less an applicable margin, with a concurrent agreement to repurchase such securities at a predetermined future date (ranging from two weeks to three months) and at a price which represents the original purchase price plus interest. At September 30, 2018, there were no drawdowns under the Repurchase Facility.

Reinsurance Financing Arrangement

Our reinsurance subsidiary, BRCD, was formed to manage our capital and risk exposures and to support our term and ULSG businesses, through the use of affiliated reinsurance arrangements and related reserve financing. BRCD has a $10.0 billion financing arrangement with a pool of highly rated third-party reinsurers. This financing arrangement consists of credit-linked notes that each have a term of 20 years. At September 30, 2018, there were no drawdowns on such notes and there was $9.7 billion of funding available under this financing arrangement.

BRCD is capitalized with cash and invested assets, including funds withheld (“Minimum Initial Target Assets”) at a level that is sufficient to satisfy its future cash obligations assuming a permanent level yield curve, consistent with NAIC cash flow testing scenarios. BRCD utilizes a financing program to cover the difference between full required statutory assets (i.e., XXX/AXXX reserves plus target risk margin appropriate to meet capital needs) and Minimum Initial Target Assets. An admitted deferred tax asset, if any, would also serve to reduce the amount of funding required under this financing program.

Historically, the assets for the BRCD cash flow testing were aggregated and not allocated to products. As we finalize the movement of our ULSG business from the Life segment to the Run-off segment, we plan to focus more on product level allocations and therefore anticipate that our Minimum Initial Target Assets by product will change. This will have no impact on BRCD in total but could reduce our total ULSG asset requirement target.

Debt and Facility Covenants

The Company’s debt instruments and committed facilities contain certain administrative, reporting and legal covenants. Additionally, the 2017 Term Loan Facility and the Revolving Credit Facility contain financial covenants, including requirements to maintain a specified minimum consolidated net worth and to maintain a ratio of indebtedness to total capitalization not in excess of a specified percentage, and limitations on the dollar amount of indebtedness that may be incurred by our subsidiaries, which could restrict our operations and use of funds. The Company is not aware of any non-compliance with these financial covenants at September 30, 2018.

Primary Uses of Liquidity and Capital

In addition to the general description of liquidity and capital uses in “— Sources and Uses of Liquidity and Capital,” the following additional information is provided regarding our primary uses of liquidity and capital:

Common Stock Repurchases

On August 5, 2018, Brighthouse Financial, Inc.’s Board of Directors authorized the repurchase of up to $200 million of Brighthouse Financial, Inc.’s common stock. Repurchases made under such authorization may be made through open market purchases, pursuant to 10b5-1plans, or pursuant to accelerated stock repurchase plans from time to time at management’s discretion in accordance with applicable federal securities laws. As of September 30, 2018, the Company had repurchased 982,057 shares of its common stock through open market purchases for $42 million.

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Insurance Liabilities

Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance products and annuity products, as well as payments for policy surrenders, withdrawals and loans. Surrender or lapse behavior differs somewhat by product, but tends to occur in the normal course of business. During thenine months ended September 30, 2018and2017, general account surrenders and withdrawals totaled$1.8 billionand$1.7 billion, respectively, of which$1.3 billionand$1.2 billion, respectively, were attributable to products within the Annuities segment.

Pledged Collateral

We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives. At September 30, 2018 and December 31, 2017, counterparties were obligated to return cash collateral pledged by us of $0 and $44 million, respectively. At September 30, 2018 and December 31, 2017, we were obligated to return cash collateral pledged to us by counterparties of $297 million and $379 million, respectively. See Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements for additional information about pledged collateral.

We also pledge collateral from time to time in connection with funding agreements.

Securities Lending

We have a securities lending program whereby securities are loaned to third parties, primarily brokerage firms and commercial banks. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the loaned securities are returned to us. Under our securities lending program, we were liable for cash collateral under our control of $3.7 billion and $3.8 billion at September 30, 2018 and December 31, 2017, respectively. Of these amounts, $1.3 billion and $1.6 billion at September 30, 2018 and December 31, 2017, respectively, were on open, meaning that the related loaned security could be returned to us on the next business day requiring the immediate return of cash collateral we hold. The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2018 was $1.3 billion, all of which were U.S. government and agency securities which, if put to us, could be immediately sold to satisfy the cash requirement. See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements.

Litigation

Putative or certified class action litigation and other litigation, and claims and assessments against us, in addition to those discussed elsewhere herein and those otherwise provided for in the financial statements, have arisen in the course of our business, including, but not limited to, in connection with our activities as an insurer, employer, investor, investment advisor, and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning our compliance with applicable insurance and other laws and regulations. See Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements.

We establish liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For material matters where a loss is believed to be reasonably possible but not probable, no accrual is made but we disclose the nature of the contingency and an aggregate estimate of the reasonably possible range of loss in excess of amounts accrued, when such an estimate can be made. It is not possible to predict or determine the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to herein, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations, it is possible that an adverse outcome in certain cases could have a material adverse effect upon our financial position, based on information currently known by us, in our opinion, the outcome of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our combined net income or cash flows in particular quarterly or annual periods.

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Note Regarding Forward-Looking Statements

This report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, 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,” “forecast,” “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 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. 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 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;

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• 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 RBC 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 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 in our 2017 Annual Report, our subsequent Quarterly Reports on Form 10-Q, and from time to time in documents that we file with 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 2017 Annual Report, our subsequent Quarterly Reports on Form 10-Q, particularly in the sections entitled “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk,” and included elsewhere herein, 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. Please consult any further disclosures the Company makes on related subjects in reports to the SEC.

Corporate Information

We announce financial and other information about Brighthouse to our investors through the Brighthouse Investor Relations web page at www.brighthousefinancial.com, as well as SEC filings, news releases, public conference calls and webcasts. Brighthouse encourages investors to visit the Investor Relations web page from time to time, as information is updated and new information is posted. The information found on our website is not incorporated by reference in this report or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We regularly analyze our market risk exposure to interest rate, equity market price, credit and foreign currency exchange rate risks. As a result of that analysis, we have determined that the estimated fair values of certain assets and liabilities are significantly exposed to changes in interest rates, and to a lesser extent, to changes in equity market prices and foreign currency exchange rates. We have exposure to market risk through our insurance and annuity operations and general account investment activities. For purposes of this discussion, “market risk” is defined as changes in fair value resulting from changes in interest rates, equity market prices, credit spreads and foreign currency exchange rates. We may have additional financial impacts other than changes in fair value, which are beyond the scope of this discussion. A description of our market risk exposures may be found under “Quantitative and Qualitative Disclosures About Market Risk” in the 2017 Annual Report. There have been no material changes to our market risk exposures from the market risk exposures previously disclosed in the 2017 Annual Report.

Item 4. Controls and Procedures

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of September 30, 2018.

MetLife continues to provide certain services to the Company on a transitional basis through services agreements. The Company continues to change business processes and implement systems, establish and implement third-party arrangements as a standalone entity, and identify, document and evaluate controls to ensure controls over our financial reporting are effective. We consider these to be a material change in our internal control over financial reporting.

Other than as noted above, there were no changes to the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II — Other Information

Item 1. Legal Proceedings

The following should be read in conjunction with (i) Part I, Item 3 of the 2017 Annual Report and Note 15 to the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report; (ii) Part II, Item 1 of the First Quarter Form 10-Q; (iii) Part II, Item 1 of the Second Quarter Form 10-Q; and (iv) Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements in Part I of this report.

Group Annuity Class Action

Edward Roycroft v. Brighthouse Financial, Inc., et al.(U.S. District Court, Southern District of New York, filed June 18, 2018). Edward Roycroft filed a purported class action against Brighthouse Financial, Inc., MetLife, Inc., and Metropolitan Life Insurance Company. The complaint alleges plaintiff is a beneficiary of a Martindale-Hubbell group annuity contract and did not receive payments plaintiff claims he was entitled to upon his retirement in 1999. Plaintiff seeks to represent a class of all beneficiaries who were due annuity benefits pursuant to group annuity contracts and whose annuity benefits were released from reserves. Plaintiff’s causes of action are for conversion, unjust enrichment, an accounting and for a constructive trust. Plaintiff seeks damages, attorneys’ fees, declaratory and injunctive relief and other equitable remedies. In September 2018, plaintiff dismissed Brighthouse Financial, Inc. from the action without prejudice.

In addition to the matter discussed above, various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.

Item 1A. Risk Factors

We discuss in the 2017 Annual Report and our other filings with the SEC, including our subsequent Quarterly Reports on Form 10-Q, various risks that may materially affect our business. In addition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends” for regulatory and other updates, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Note Regarding Forward-Looking Statements” included in this report, each of which is incorporated by reference herein. There have otherwise been no other material changes to our risk factors from the risk factors previously disclosed in the 2017 Annual Report, as amended or supplemented by such information in our subsequent Quarterly Reports on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Purchases of Brighthouse Financial, Inc. common stock made by or on behalf of Brighthouse Financial, Inc. or its affiliates during the quarter ended September 30, 2018 are set forth below:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1 — July 31, 2018	—	$	—	—	$	—
August 1 — August 31, 2018	—	$	—	—	$	200,000,000
September 1 — September 30, 2018	982,057	$	42.64	982,057	$	158,122,941
Total	982,057			982,057

__________

(1) On August 5, 2018, Brighthouse Financial, Inc.’s Board of Directors authorized the repurchase of up to $200 million of common stock. For more information on common stock repurchases, see “Management’s Discussion and Analysis of

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Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Primary Uses of Liquidity and Capital — Common Stock Repurchases” and Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements.

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Item 6. Exhibits

(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits herein, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about Brighthouse Financial, Inc. and its subsidiaries or affiliates, or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about Brighthouse Financial, Inc. and its subsidiaries and affiliates may be found elsewhere herein and Brighthouse Financial, Inc.’s other public filings, which are available without charge through the U.S. Securities and Exchange Commission website at www.sec.gov.)

Exhibit No.	Description
4.1	Junior Subordinated Indenture, dated as of September 12, 2018, between Brighthouse Financial, Inc. and U.S. Bank National Association, as Trustee is incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K, filed on September 12, 2018 (File No. 001-37905) (the “September 12, 2018 8-K”).
4.1.2	First Supplemental Indenture, dated as of September 12, 2018, between Brighthouse Financial, Inc. and U.S. Bank National Association, as Trustee, is incorporated by reference to Exhibit 4.2 to the September 12, 2018 8-K.
4.2	Form of Junior Subordinated Debenture (included in Exhibit A to Exhibit 4.1.2).
10.1*#	Brighthouse Financial Relocation Policy.
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.

* Filed herewith.

# Denotes management contracts or compensation plans or arrangements.

114

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 thereunto duly authorized.

BRIGHTHOUSE FINANCIAL, INC.
By:		/s/ Anant Bhalla
	Name:	Anant Bhalla
	Title:	Executive Vice President and Chief Financial Officer
		(Authorized Signatory and Principal Financial Officer)

Date: November 6, 2018

115

EX-10.1

Exhibit 10.1

Blue Relocation Policy

Salary Grades 14 & Above

Revised October 2018

Table of Contents

I.INTRODUCTION    4

II.ELIGIBILITY    4

III.BENEFIT HIGHLIGHTS    4

IV.CONDITIONS    5

a.Benefits Must be Used Within 1 Year of Relocation    5

b.Repayment Agreement    5

c.Cooperation with SIRVA    6

V.EXPENSE REIMBURSEMENT – GENERAL    7

VI.DEPARTURE SERVICES AND HOME SALE ASSISTANCE    8

a.Home Marketing Assistance    8

i.Broker Market Analysis    8

b.Home Sale Assistance    9

i.Homes Eligible for Home Sale Assistance    10

ii.Homes Not Eligible for Home Sale Assistance    11

iii.Inspections and Repairs    12

iv.Acquisition of the Home    13

v.Equity Advance    15

vi.Cooperative Apartment    15

vii.Loss-on-Sale    15

c.Participation Bonus    16

i.Coordination of Home Sale Assistance with Participation Bonus    16

VII.DESTINATION SERVICES    16

a.Home Finding Assistance    16

b.House-Hunting Trip    17

c.Temporary Housing Assistance    18

d.Miscellaneous Allowance    18

e.Home Purchase Assistance    19

f.Rental Assistance    20

i.Rental Home Finding Trip    21

ii.Lease Cancellation Payment    22

g.Transportation and/or Storage of Your Household Goods    22

i.Authorized Charges    23

ii.Brighthouse Services, LLC will not pay for the following:    24

iii.Replacement Value Protection of Household Goods    24

h.Automobile Shipping    25

i.Moving Day and Final Trip    25

j.Career Assistance Services    26

k.Community Assistance Services    26

VIII.TAXES    27

IX.CONDITIONS FOR RECEIVING BENEFITS    29

X.CLAIMS AND APPEAL PROCEDURES    30

XI.EXCLUSION OF PAYMENTS FOR PURPOSES OF BENEFITS OR STATUTORY SEVERANCE    31

BRIGHTHOUSE SERVICES, LLC BLUE RELOCATION POLICY

I.INTRODUCTION

Brighthouse Services, LLC has contracted with SIRVA to administer its relocation benefits. This Relocation Policy (the “Policy”) is effective as of January 1, 2018. The Policy is not intended to be an expressed or implied contract, nor is it intended to otherwise create any legally enforceable obligations on the part of Brighthouse Services, LLC or any of its affiliated entities. This Policy supersedes and replaces all previous policies, practices and guidelines regarding domestic relocation within the United States for those individuals to which it applies. Brighthouse Services, LLC reserves the right to add to, modify or delete provisions of this Policy at any time without advance notice to employees who are subject to this Policy. Modifications can be made for any reason at the discretion of Brighthouse Services, LLC or the administrator, including changes to reflect Brighthouse Services, LLC’s changing business objectives or otherwise as required by local laws and regulations. Brighthouse Services, LLC will make all determinations regarding eligibility for and amount of benefits or payments under this program, in its sole discretion, and its interpretation of this Policy will be final and binding.

II.ELIGIBILITY

To be eligible for this Policy you must meet the following criteria:

◦ You are a full-time, salaried Brighthouse Services, LLC employee or a new hire scheduled to be a full-time, salaried Brighthouse Services, LLC employee, at Grade 14 or above.

◦ You have received a letter from Brighthouse Services, LLC requesting that you relocate and stating that you are entitled to the benefits provided under this Policy. Employee-initiated relocations are NOT eligible for relocation benefits.

◦ The distance between your former residence and your new job site must be at least 50 miles greater than the distance between your former residence and your former job site.

Relocation assistance is provided to you and your family members who permanently reside with you, are relocating with you, and who will reside with you in the new location. If your spouse or domestic partner is also a Brighthouse Services, LLC employee being transferred, only one set of relocation benefits will be provided.

III.BENEFIT HIGHLIGHTS

The following benefits are available under this Policy:

◦ Assistance from SIRVA with selling your home and buying or leasing a new one.

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◦ A Loss-on-Sale payment up to $50,000 to assist you with a financial loss you may incur on the sale of your home.

The various types of expense reimbursements and assistance from SIRVA available under this Policy are listed below as either Departure Services (related to selling your home) or Destination Services (relating to buying a home and transitioning to the new home).

The benefits listed above are only an outline of the types of benefits provided under this Policy. For more information regarding a specific benefit, including limitations and conditions, please see the full description of each benefit in the applicable sections of this Policy which follow.

IV.CONDITIONS

a. Benefits Must be Used Within 1 Year of Relocation

All events necessary for receiving relocation benefits under this Policy, including (if necessary) the submission of forms, must be completed within one year of the date your new address is entered into the Human Resources system of record. For example, if your household goods have not been transported to your new home within one year of the date that your new address was entered into the Human Resources system of record, Brighthouse Services, LLC will not pay for the cost of transporting your household goods. If you have not submitted the necessary HUD-1 form or Settlement Statement to SIRVA within one year of the date that your new address is entered into the Human Resources system of record, Brighthouse Services, LLC will not reimburse you for any Loss-on-Sale that you incur. Please consult with your SIRVA Relocation Consultant if you have any questions regarding the one-year deadline.

b. Repayment Agreement

The costs that Brighthouse Services, LLC will incur because of this move are extensive. For this reason, and to be sure you are committed to the new position, we require that you sign a Repayment Agreement. The Repayment Agreement stipulates that you will repay costs* incurred by Brighthouse Services, LLC on your behalf if you leave within two years of the date your new address is entered into the Human Resources system of record, based on the chart below.

0 – 180 days	100%
181 – 365 days	75%
366 – 545 days	50%
546 – 730 days	25%

*If you repay these costs in the same calendar year you received payment, you are responsible for repaying only the actual costs incurred. If you repay these costs in a year

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after the year that you received payment, you are responsible for repayment of the actual costs plus any associated taxes that were withheld by the company.

These costs include home marketing and sale assistance, home finding and purchase assistance or rental assistance, household good transportation, temporary housing, among other benefits. Repayment is required for the following reasons: 1) you voluntarily terminate employment with Brighthouse Services, LLC; 2) Brighthouse Services, LLC terminates your employment because you engaged in a serious infraction of Brighthouse Services, LLC policy, theft of Brighthouse Services, LLC property or services or other dishonest conduct, or conduct otherwise injurious to the interests of Brighthouse Services, LLC, or because you demonstrated unacceptable lateness or absenteeism; or 3) you voluntarily transfer your employment to another position or function within Brighthouse Services, LLC that either is not at the new location or is materially different from the position or function for which you were transferred to the new location. The Repayment Agreement must be signed and returned to Brighthouse Services, LLC prior to implementing any relocation services.

c. Cooperation with SIRVA

Your cooperation with SIRVA throughout the process will help ensure that your move is handled with the least inconvenience possible. Accordingly, please comply with all timelines spelled out in this Policy and in the instructions you receive from SIRVA. Failing to comply with the terms of this Policy or with SIRVA’s instructions may jeopardize your eligibility for benefits under this Policy.

As part of your cooperation with SIRVA, Brighthouse Services, LLC requires that you:

◦ Refrain from contacting a real estate broker or listing your home with an agent. SIRVA will recommend pre-qualified brokers who are trained and experienced in corporate relocation transactions. They will recommend brokers for both selling your current home and purchasing a home in the destination location.

◦ Accurately complete all required disclosure materials. Real estate transactions are governed by laws and regulations designed to protect the interests of both sellers and buyers. Every home seller has certain duties and obligations to a buyer, including full disclosure of all pertinent information about the condition of the home and its surroundings.

In this regard, you can protect both yourself and Brighthouse Services, LLC from potential litigation by the timely and thorough completion of all forms and documents pertaining to the condition of the property. It is not the intent of Brighthouse Services, LLC to relieve you of your duties and obligations relating to full disclosure. You will be asked to complete property disclosure forms for the real

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estate agent and for SIRVA. You must complete and return these forms at the beginning of the listing period.

◦ DO NOT sign anything or accept any monies as this may affect the taxability of Home Sale Assistance described in the Home Sale Assistance section, should you receive an offer on the sale of your home. Simply contact your SIRVA Relocation Consultant and he or she will instruct you on how to proceed. SIRVA ensures that you will have after-hours access to your SIRVA Relocation Consultant or a designated representative at all times.

◦ Retain receipts and other documentation to verify relocation expenses and to support payments made to you by Brighthouse Services, LLC. You must submit expense reports and required receipts (scanned receipts are acceptable) within 60 days of the incurred expense.

V.EXPENSE REIMBURSEMENT – GENERAL

Most standard expenses involved in relocation are covered under this Policy via a direct payment to a supplier, through a lump sum payment, or by reimbursement of relocation expense reports that you submit. Reimbursements will be made under this Policy only after an expense is incurred, and only if a reimbursement request and proper documentation is submitted within 60 days after the expense is incurred (unless the terms of this Policy specifically provide otherwise in a particular case). You must submit your out-of-pocket costs to SIRVA, either online or on a Relocation Expense Report form. It is very important that the expenses submitted are strictly related to the relocation and does not include other business expenses. Relocation expenses and travel should not be paid with a Brighthouse Services, LLC corporate credit card.

Your SIRVA Relocation Consultant will provide you with instructions for completing these forms online and can also provide you with a hard copy of the Relocation Expense Report for your convenience. It is also important that you retain records and submit original receipts, or scans of original receipts. If you choose to submit your expenses via a Relocation Expense Report, rather than through SIRVA’s password protected website, you must submit original receipts to SIRVA.

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse the expense as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the expense was incurred. Please see the Taxes section for a list of expenses that Brighthouse Services, LLC will reimburse upon receipt of the proper documentation.

Unless another specific deadline for payment is specified below, allowances under this Policy that do not require the submission of a request for reimbursement and

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accompanying receipts will be paid by Brighthouse Services, LLC no later than March 1 following the calendar year in which you signed your Repayment Agreement. Please see the Taxes section for a list of available Brighthouse Services, LLC -paid allowances under this Policy that do not require the submission of receipts.

VI.DEPARTURE SERVICES AND HOME SALE ASSISTANCE

The sale of your home at a reasonable price and within the shortest amount of time is probably one of your main concerns. Brighthouse Services, LLC wants to help you accomplish this goal, as it benefits both Brighthouse Services, LLC and you by expediting your relocation and keeping costs to a minimum. If you are a homeowner, Brighthouse Services, LLC offers a comprehensive program through SIRVA to assist in marketing and coordinating the sale of your residence to a qualified buyer. Through Home Sale Assistance, Brighthouse Services, LLC will pay those expenses associated with selling and closing your home that it deems to be reasonable and customary.

a. Home Marketing Assistance

To ensure the highest level of service in the most cost-effective manner, you must NOT enter into any binding listing agreements with brokers before contacting your SIRVA Relocation Consultant and you must fully participate in the marketing plan.

Brighthouse Services, LLC will provide you with professional assistance on how to market your home to ensure optimum success. Do not contact a real estate agent or broker before talking to your SIRVA Counselor. Your SIRVA Relocation Consultant will recommend a broker that is experienced in working on corporate relocation transactions and the specific requirements of these transactions. Furthermore, recommended brokers will have a proven track record of market knowledge and sales success, as well as familiarity with SIRVA’s service standards.

SIRVA requires its brokers to meet the following standards:

◦ Brokerage must have a relocation department or proven relocation-related experience.

◦ Real estate firm must have no interest (actual or contemplated) in Brighthouse Services, LLC, departure property, or home to be purchased, including any business or family relationship with the owners of the properties.

◦ Broker must have a proven track record in the selling community. SIRVA tracks list price to sales price ratio, number of current listings, and number of recent sales.

i. Broker Market Analysis

Your SIRVA Relocation Consultant will contact two qualified brokers in your area and ask them to complete a Broker’s Market Analysis (BMA) on your home, which will include suggested marketing conditions, competing listing information, and

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recent sales in the neighborhood. Based on the data they gather and their knowledge of the marketplace, they will provide a most likely sales price.

Your SIRVA Relocation Consultant will review and analyze the market data contained in the BMAs to help you formulate a competitive list price and marketing strategy to achieve the highest possible sales price within a reasonable timeframe. If the recommended list prices indicated by the BMAs are not within 5% of each other, a third one will be ordered and the two closest values will be used to formulate listing and marketing strategies.

You and your SIRVA Relocation Consultant will work with the selected agent to list and market your home and identify potential buyers. You will receive continuous feedback and updates on marketing activity throughout the process.

In addition to ensuring top-of-the-line service delivery to you, SIRVA collects referral fees from its approved brokers, which offsets relocation costs for Brighthouse Services, LLC. If you do not list with a SIRVA-approved real estate broker, your relocation benefits may be reduced to cover the additional cost to Brighthouse Services, LLC.

To assist with a successful sale, Brighthouse Services, LLC and SIRVA require that you:

◦ Use an agent or broker who has been qualified by SIRVA. If you have a preferred agent, please submit the name of that agent for qualification and consideration, realizing that you cannot list the house with a relative or friend as this may cause a conflict of interest.

◦ Agree to list the home for sale at a price that does not exceed 105% of the average of the two most likely sales prices from the Broker Market Analyses (BMAs) requested by SIRVA.

◦ Allow reasonable showings and open houses as suggested and maintain the home in marketing condition.

◦ Present all offers to your SIRVA Relocation Consultant for review.

◦ Continuously market the home until it is sold.

b. Home Sale Assistance

In addition to Home Marketing Assistance you are eligible for SIRVA’s Home Sale Assistance program. Home Sale Assistance states that once you receive an acceptable offer from a potential buyer, SIRVA will buy your house from you at that offer price (which is deemed the house’s “Market Value”). Following this, SIRVA will then sell the house to the prospective buyer, bearing the responsibility of closing the sale. Once you are authorized for Home Sale Assistance with SIRVA, your SIRVA Relocation Consultant will contact you to review the program and procedures.

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CONTACT YOUR SIRVA RELOCATION CONSULTANT TO DISCUSS ALL OFFERS. DO NOT ACCEPT ANY OFFERS, ANY DEPOSIT MONIES, OR SIGN ANYTHING WITHOUT FIRST CONTACTING YOUR SIRVA RELOCATION CONSULTANT. IF YOU ACCEPT ANY OFFER, DEPOSIT, OR SIGN ANY AGREEMENT WITHOUT SIRVA APPROVAL, SIRVA AND BRIGHTHOUSE SERVICES, LLC RESERVE THE RIGHT TO EXCLUDE YOUR HOME FROM THE HOME SALE ASSISTANCE PROGRAM.

To assist with a successful sale, Brighthouse Services, LLC and SIRVA require that you:

◦ Enter into an Option to Purchase with SIRVA instead of listing your home under your name. This agreement enables SIRVA to list the property in SIRVA’s name, facilitate the move and defray many relocation costs. The option will last for six months and is renewable at the end of that period of time with your consent. During this option period SIRVA will expose the home to the marketplace. Most typically, the home will be listed with a real estate agent by SIRVA who will, through exposure to the public, determine what a buyer will pay at arm’s length for the home. The Option to Purchase must be executed and returned to SIRVA prior to proceeding with the program.

◦ Comply with all federal, state and local disclosure requirements associated with the sale of your home. This includes the completion of all real estate disclosure forms that may be required, as well as a SIRVA Seller’s Disclosure Statement for execution. This document must be executed prior to proceeding with the program.

◦ Properly clearing title before selling the home to SIRVA, in the event the title report ordered by SIRVA indicates a cloud on title. SIRVA may be able to assist you in clearing clouds on title. A cloud on title is defined as any outstanding claim, lien, encumbrance, document or condition usually revealed by a title search which impairs the title and the marketability of a property.

i. Homes Eligible for Home Sale Assistance

Not all homes are eligible for Home Sale Assistance. To qualify for Home Sale Assistance, the home must be:

◦ Located in the U.S.

◦ A completed primary, single-family residence, townhouse, two-family duplex, or condominium unit (provided said unit meets FNMA/FHLMC approval), in each case owned and occupied by the Employee (or in the case of a two-family duplex, where the entire property is owned by the Employee and one unit of which occupied by the Employee).

◦ Not rendered ineligible by the provisions listed below.

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ii. Homes Not Eligible for Home Sale Assistance

The following properties are ineligible for Home Sale Assistance, unless Brighthouse Services, LLC and SIRVA agree in writing to permit the property into the program on mutually agreed upon terms and conditions. Please speak to your SIRVA Relocation Consultant immediately if your home falls into the category of an excludable property.

◦ Any income producing properties or properties with inherent in coproducing characteristics (including but not limited to properties with mineral rights, properties with commercial businesses and rental properties but not including two family duplexes owned by the Employee, one unit of which is occupied by the Employee).

◦ Resort properties.

◦ Mobile homes/manufactured homes.

◦ Cooperative units (see Item vi Cooperative Apartment).

◦ Farms.

◦ Properties with acreage in excess of five acres.

◦ Properties with acreage that does not conform to the immediate area.

◦ Properties on which clear title cannot be delivered.

◦ Properties which do not qualify for conventional mortgage financing.

◦ Properties containing or located by hazardous, toxic or potentially hazardous or toxic containers, materials, chemicals or gases (including but not limited to, radon, underground storage tanks, mold, Urea Formaldehyde Foam Insulation (UFFI), carcinogens, irritants, corrosives, environment hazardous and the like).

◦ Vacant land.

◦ Residences that are not Fannie Mae approved or income properties other than two-family dwellings.

◦ Properties that have Exterior Insulation Finishing System (EIFS)/synthetic stucco exterior finishing.

◦ Properties in which investigations disclose conditions which render the property unmarketable and/or which the Employee does not resolve to the satisfaction of SIRVA.

◦ Properties not zoned for 1-4 family residential.

◦ Properties not insurable under SIRVA’s property and general insurance liability coverage for relocation homes.

◦ Partially completed dwelling.

◦ Converted properties (not originally residential).

◦ Properties where the Employee currently has or has previously had their home on the market.

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◦ Properties with building materials commonly known as “Chinese Drywall” or other drywall material with similar characteristics.

◦ Properties with a most probable sales price of at least one million dollars as determined by the average of the BMAs.

If your home is ineligible for Home Sale Assistance program and closing costs on the sale are reimbursed, the direct reimbursement of closing costs is taxable, and will be included in your taxable wages reported on your Form W-2. This payment will be grossed-up for taxes as described in the Taxes section.

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse the costs as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the costs were incurred.

iii. Inspections and Repairs    

In general, SIRVA does not order nor pay for inspections on your home up front. However, SIRVA will typically not acquire a home without inspections. Inspections may be ordered and paid for by a buyer to assist in determining if he/she should purchase the home. SIRVA may use those inspections in its purchase from you. If the buyer does not order inspections SIRVA reserves the right to order its own set of inspections.

If there is a reason to believe inspections are necessary on your home in order to determine if the home is eligible for Home Sale Assistance, SIRVA will order and pay for inspections including but not limited to, a general home, pest, and well and septic, if applicable.

If any additional inspections such as Exterior Insulation Finishing System (EIFS), structural, hardboard siding, etc. are required as a result of the general inspection or SIRVA’s due diligence, you may be responsible for those inspection costs.

SIRVA follows the Worldwide Employee Relocation Council’s (ERC) Relocation Property Assessment (“Assessment”) that identifies structural, safety and inoperable items, regardless of local/state codes. You will also be responsible for repairs required to ensure the home follows state and local codes even if not identified on the Assessment form.

You will be solely responsible for rectifying or repairing any adverse items that appear in any inspections obtained prior to closing with SIRVA. All final re-inspection reports must be satisfactory to SIRVA. If any inspection discloses a significant problem, SIRVA reserves the right to exclude the home from Home Sale Assistance.

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iv. Acquisition of the Home

REMEMBER: DO NOT SIGN ANY CONTRACT OR ACCEPT ANY DEPOSIT MONIES. CONTACT YOUR SIRVA RELOCATION CONSULTANT TO DISCUSS ALL OFFERS.

Your SIRVA Relocation Consultant will review all offers to ensure they are bona fide (considering any contingencies such as points, closing costs, repairs, etc.). The SIRVA Relocation Consultant will also determine whether the buyer is likely to qualify for any financing terms included in the contract. If it is determined that the offer is bona fide and that all contingencies can be met, the contract will be sent to and signed by SIRVA as the Seller.

Once SIRVA has exercised the Option to Purchase, a closing will be scheduled with you approximately three days prior to closing with the buyer (referred to as the “Prorate Date”). You will be responsible for all costs and risks associated with the home, up to and including the date of closing with SIRVA. These include but are not limited to: pro-rations for taxes, interest on the mortgage, utilities, homeowner’s insurance, agreed upon repairs required from any inspections, and any other costs associated with the ownership of the home. After the date of the closing, SIRVA will be responsible for all of those items regarding the home.

If, after all contingencies of the sale of your home to SIRVA have been met and the property remains eligible for the relocation, the sale of the home to the buyer falls through, the Contract of Sale between you and SIRVA will still be honored.

At the closing between SIRVA and you, SIRVA will provide a Promissory Note for the amount due to you under the Contract of Sale. You will receive the final net proceeds (the equity) in the property within approximately 10 business days from the date of the Promissory Note. Net proceeds are defined as the sales price of the home minus liens, mortgages, appropriate pro-rations, and less any equity advance already received by you. The Contract of Sale states that there will be no real estate commissions or other standard closing costs that will be deducted from the house proceeds.

Home sale closing costs differ by location, but typically consist of:

◦ Brokerage or agent commission up to a maximum of six percent of the sale price

◦ Normal and customary home sale closing costs, including:

• Attorney/escrow fees

• Customary federal, state, and local transfer taxes

• Filing and notary fees

• Legal fees

Note: Points and special financing costs are not reimbursed

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If the mortgage company submits funds to you that were previously paid by SIRVA (i.e., escrow payments or additional interest payments), you must immediately return the funds to SIRVA or they will revert to a loan, requiring interest and a payroll deduction.

You are responsible for disclosing all known conditions and defects of the property. If you fail to disclose a condition that is known to you, you may be responsible for all costs incurred by SIRVA as a result of the non-disclosure. Of course, if you do not know that a condition exists, you will not be held responsible for failing to disclose it.

IMPORTANT NOTE: At the closing with you, SIRVA does not actually record title to your home in its name or pay off your mortgage. Instead, SIRVA takes full responsibility for making your mortgage payments, and ultimately paying off the mortgage when a sale between SIRVA and the buyer closes. Until a sale between SIRVA and the buyer closes, the title and mortgage remain in your name and will continue to appear on your credit report. SIRVA assumes all responsibility for the care and maintenance of the home once you close with SIRVA under the provisions of Home Sale Assistance (this is called “Equitable Title” or “Equitable Ownership”.) SIRVA will assist you if any questions should arise in regard to this process.

In the event you are unable to vacate the property at the time of closing with SIRVA, the home may be leased back to you during the approximate three-day period prior to closing with a buyer, at a minimum per diem of $50. A $500 security deposit will be withheld from the net proceeds and will be returned after SIRVA inspects the home following the vacate date. Under the lease, you would be responsible for utilities, general maintenance and insurance on household goods through the date of vacating and/or transfer of possession to SIRVA. The SIRVA Relocation Consultant will provide instructions for transferring utilities, keys, etc.

v. Equity Advance

If you find a home in the new location, you may request an equity advance for a down payment on the purchase, as long as you have a signed purchase contract on your current residence and it has been signed by SIRVA as the Seller. Once you satisfy all the requirements for an equity advance, including any finance contingency, SIRVA will provide you with the necessary paperwork for this request. You may request up to 90% of your equity at this time and the remainder will be available to you after the closing on your current residence. Brighthouse Services, LLC reserves the right to decide, in its sole discretion, whether to grant any request for an equity advance and to determine the amount of any equity advance.

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vi. Cooperative Apartment

If you own a cooperative apartment which does not qualify for purchase by SIRVA, you should follow the Home Marketing Assistance procedures and list your home according to the marketing strategy (and program requirements). Your SIRVA Relocation Consultant will advise you with regard to negotiating/accepting an offer. However, when you receive an acceptable offer, you should conclude the sale directly with the buyer. You will be reimbursed normal and reasonable closing costs (as determined by Brighthouse Services, LLC in its sole discretion) which are customarily paid by the seller, and which must be substantiated by a HUD-1 form or other similar documentation. For a cooperative apartment, up to 6% commission will be paid along with $1,000 in advertising costs.

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse the costs as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the costs were incurred.

The direct reimbursement of closing costs is taxable, and will be included in your taxable wages reported on your Form W-2. This payment will be grossed-up for taxes as described in the Taxes section.

vii. Loss-on-Sale

Brighthouse Services, LLC realizes that selling your home in order to relocate could cause you to realize a financial loss. To further facilitate your relocation, Brighthouse Services, LLC has agreed to reimburse you for 85% of your loss on the sale of your home up to a maximum of $50,000.

For purposes of the Loss-on-Sale reimbursement, your loss will be the difference between the documented amount you originally paid for the house and the amount of which it was sold. In order to receive the Loss-on-Sale reimbursement, you must submit HUD-1 settlement forms (or other similar documentation), for both your original purchase of the house and for your sale of the house, to SIRVA within 60 days after the date of the closing of the sale of your house. The Loss-on-Sale amount will generally be paid to you in a lump sum on either the first or second pay day following the date that all necessary documents are submitted to SIRVA, and in no event will it be paid later than the March 1 following the calendar year in which the closing of the sale of your house occurs.

The lump sum payment reimbursing your Loss-on-Sale is taxable, and will be included in your taxable wages reported on your Form W-2. This payment will be grossed-up for taxes as described in the Taxes section.

c. Participation Bonus

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Brighthouse Services, LLC’s goal is to assist you in selling your home as quickly as possible at a reasonable price so your family can get settled in the new community, and you can become more productive in your new role at Brighthouse Services, LLC. Industry statistics indicate that homes that are properly priced will sell more quickly. To encourage you to fully participate in the home marketing process as outlined above, Brighthouse Services, LLC will provide you with a bonus equal to 2% of the contract sale price of your property up to a maximum of $5,000, if you sell it in the first 120 days of marketing. To be eligible for this bonus, you must participate in all aspects of Home Marketing Assistance. The bonus will be payable as soon as possible, but not later than the March 1 following the calendar year in which the closing occurred.

The Participation Bonus is taxable, and will be included in your taxable wages reported on your Form W-2. This payment will be grossed-up for taxes as described in the Taxes section.

i. Coordination of Home Sale Assistance with Participation Bonus

Your home sale may be eligible for both the Participation Bonus and Home Sale Assistance if within 120 days of placing the house on the market, you accept an offer on the house from a third party and sell the house to SIRVA, so that they can proceed to sell the house to third party.

VII.DESTINATION SERVICES

a. Home Finding Assistance

You are required to contact your SIRVA Relocation Consultant prior to beginning the new home search with any real estate agent. Home Finding Assistance includes selecting a qualified agent, understanding purchase guidelines, negotiations and contracts and obtaining a new mortgage. Your SIRVA Relocation Consultant will contact you to review the program, explain the benefits and offer assistance. This assistance includes:

◦ Conducting a telephone interview with you to discuss your housing needs and wants at the destination location. After this discussion, the SIRVA Relocation Consultant will use the information acquired to recommend a real estate agent, who is a relocation specialist in the destination area and who is knowledgeable regarding homes within the price range you have requested.

◦ Explaining “agency” and clarifying who the real estate agent is representing and why.

◦ Discussing real estate agent expectations so you fully understand what the real estate agent is expected to do for you and in what time frame.

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◦ Reviewing purchase guidelines to help you make a good decision on the home you decide to purchase, including: disclosure hazards such as synthetic stucco, lead paint and other toxic hazards.

◦ Explaining comparable market analysis and encouraging you to have the real estate agent assist you in putting one together on the home you are purchasing. This will help you determine the best price for the property and eliminate purchasing an over-priced home.

◦ Assisting with negotiations, which can be very helpful to have the opinion of an uninvolved specialist when you are negotiating the purchase price of a new home.

◦ Reviewing the purchase agreement, or contract. The SIRVA Relocation Consultant will be available to look over the purchase agreement to help determine if it is written in your best interest.

◦ Encouraging you to be prequalified with a lender. In many markets, sellers are requiring buyers to be prequalified at the time the offer to purchase is made. The Company has made lender arrangements through SIRVA Mortgage.

b. House-Hunting Trip

The house-hunting trip includes a one-time trip for you and one family member for up to three days/two nights if the distance of the move is 200 miles or less, or seven days/six nights if the distance of the move is more than 200 miles. Reasonable transportation and lodging will be reimbursed, and a per diem meal stipend will be provided ($40 a day for ages 13 and older, and $20 for ages 12 and younger).

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse these costs as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the expenses were incurred.

The reimbursements for the house-hunting trip are taxable, and will be included in your taxable wages reported on your Form W-2. The house-hunting reimbursements will be grossed-up for taxes, as described in the Taxes section.

c. Temporary Housing Assistance

Brighthouse Services, LLC will provide assistance for temporary housing expenses such as travel and lodging.

In order to qualify for the assistance, the following conditions must be met:

◦ You must not have established a permanent residence in the new area.

◦ Your position and work have transferred permanently to the new office.

◦ A new lease has not been executed or a new home closing has not occurred and you still have a residence in the former location.

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◦ You are not submitting travel/hotel/meal expenses through Brighthouse Services, LLC’s Business Expense Reimbursement system.

You will receive temporary housing assistance for up to 60 days if you are purchasing a home, or 30 days if you will be renting a home. If you need a rental car during your time in temporary housing, Brighthouse Services, LLC will reimburse you for the rental car for the duration of time you are in temporary housing. You must submit eligible expenses online or complete a SIRVA Relocation Expense Report form and provide copies of all expenses and their receipts.

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse the expenses as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the expenses were incurred.

Temporary Housing Assistance reimbursement is taxable, and will be included in your taxable wages reported on your Form W-2. The Temporary Housing Assistance reimbursement will be grossed-up for taxes, as described in the Taxes section.

d. Miscellaneous Allowance

Brighthouse Services, LLC will provide you with a $10,000 Miscellaneous Allowance to help offset expenses associated with your relocation. You are not required to furnish any accounting or documentation as to how you utilized this allowance. This payment will generally be made available to you approximately six weeks prior to the effective date of the transfer of your location in the payroll system, but in no event later than the March 1 following the calendar year in which you signed your Repayment Agreement.

The Miscellaneous Allowance is taxable, and will be included in your taxable wages reported on your Form W-2. The Miscellaneous Allowance will be grossed-up for taxes as described in the Taxes section.

e. Home Purchase Assistance

To help you find a home in the new location that is suitable for your family’s needs, Brighthouse Services, LLC provides you with assistance from SIRVA. SIRVA will, through its affiliate, SIRVA Mortgage, provide various mortgage-related services for you if you currently own a home and will be purchasing a home in the destination location. The assistance will include:

◦ Counseling on various types of loan programs available and the impact of those programs based upon your specific financial situation and relocation mortgage benefits.

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◦ Pre-approval assessment for mortgage financing, including credit review, so you are more aware of the value of a home you can acquire in the destination location. You are encouraged to be pre- approved before embarking on a home finding trip. This benefit is without cost or obligation.

SIRVA Mortgage is a mortgage banker that is licensed to originate loans in all fifty states plus Washington DC, specializing in relocation lending. SIRVA Mortgage offers a wide variety of mortgage products through the nation’s leading lenders. SIRVA will shop rates and programs through its multi-lender approach to find the most competitive rate for your mortgage loan.

SIRVA Mortgage offers a no closing cost loan. In order to be eligible for the no closing cost loan program:

◦ You must sell your home through SIRVA’s Home Sale Assistance program.

◦ The residence purchased must be your permanent residence.

◦ The home purchased cannot be a mobile home or boat.

You must be responsible for recurring costs such as prepaid interest, real estate taxes, and private mortgage insurance (PMI).

If you participate in the no closing cost loan program through SIRVA Mortgage, tax assistance (gross-up) on the new home purchase closing costs will not be applicable.

If your home is ineligible for Home Sale Assistance program, the closing costs on the new home will be reimbursed. The reimbursement will be considered compensation and the Company will gross-up for the reimbursement for taxes as described in the Taxes section.

If you elect not to participate in the no closing cost loan program and use a lender other than SIRVA Mortgage, the closing costs on the new home will be reimbursed. The reimbursement will be reported as additional compensation, although Brighthouse Services, LLC will not provide tax assistance in the form of a tax gross-up.

A general home inspection will be recommended by your SIRVA Relocation Consultant to help you assess the prospective home’s overall condition. Brighthouse Services, LLC will reimburse the cost of this inspection in addition to providing the no closing cost loan.

The general home inspection will be reported as additional compensation and Brighthouse Services, LLC will gross-up for the reimbursement for taxes as described in the Taxes section.

Once you have submitted all the documents required for the reimbursements under this subsection (e), Brighthouse Services, LLC will reimburse the expenses as soon as

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practicable, but not later than the last day of the calendar year following the calendar year in which the expenses were incurred.

NOTE: Building a new home versus buying an existing property can be a frustrating and expensive proposition. It’s a personal decision, but you are encouraged to purchase an existing home to avoid the added costs (which are your responsibility) and risks involved in purchasing new construction. Some of the added costs you may incur include:

◦ Additional temporary housing expenses due to construction delays.

◦ Reimbursement of purchase closing costs related to the builder or construction loan.

◦ Household goods storage costs.

In the event that you are relocated again, it is important to keep in mind when purchasing a home that SIRVA will not accept certain properties into Home Sale Assistance. See the Home Sale Assistance section for a checklist of ineligible properties. However, if you choose to build a new home, Brighthouse Services, LLC will reimburse certain closing costs that it determines, in its discretion, to be reasonable.

f. Rental Assistance

If you choose to rent a home in the new location, your Relocation Consultant will assist you in finding a home to rent in the destination location. You will be contacted to review the program and benefits, and discuss your rental housing and community needs. You will then be referred to a rental expert at the destination location. If you are obligated to pay a finder or broker’s fee, Brighthouse Services, LLC will reimburse the fee that is normal and customary for that location, not to exceed 15% of the first year’s rent.

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse the fee as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the fee was incurred.

The reimbursement for the finder or broker’s fee is taxable, and will be included in your taxable wages reported on your Form W-2. The finder or broker’s fee reimbursement will be grossed-up for taxes as described in the Taxes section.

The Relocation Consultant will counsel you on areas of consideration during the rental process such as:

◦ Rental applications

◦ Rental deposits

◦ Security considerations

◦ Lease considerations

◦ Renters insurance

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If you do sign a lease in the new location, please make sure it includes the following Lease Cancellation Clause, which will allow you to cancel the lease without penalty providing proper notice is given in the event of a Brighthouse Services, LLC-initiated relocation:

“If tenant is transferred out of the city or country in which the leased premises is located, then tenant may terminate this lease by giving sixty (60) days written notice, with a copy of the company transfer notice attached, provided tenant is not otherwise in default.”

i. Rental Home Finding Trip

Brighthouse Services, LLC will provide you with a one-time trip for you and one family member for up to three days/two nights if the distance of the move is 200 miles or less, or seven days/six nights if the distance of the move is more than 200 miles. Reasonable transportation and lodging will be reimbursed, and a per diem meal stipend will be provided ($40 a day for ages 13 and older, and $20 for ages 12 and younger).

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse these costs as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the expenses were incurred.

The reimbursement for the home-finding trip is taxable, and will be included in your taxable wages reported on your Form W-2. The home-finding reimbursement will be grossed-up for taxes as described in the Taxes section.

**If it is not known whether you want to purchase or rent a home in your destination location, only one trip is allowed (either house-hunting or rental home finding).

ii. Lease Cancellation Payment

If you incur penalties for canceling or breaking your lease, Brighthouse Services, LLC will reimburse up to two months’ rent to assist with this payment. This penalty does not include the loss of deposit due to damage, repairs, pet damage or neglect.

To receive payment, submit expenses online or through a Relocation Expense Report form along with a copy of your lease and a letter from the landlord or property manager outlining the charges no later than 60 days after the date on which your lease is terminated.

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse the penalties as soon as practicable, but

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not later than the last day of the calendar year following the calendar year in which the penalties were incurred.

The payment reimbursing your lease cancelation fee is taxable, and will be included in your taxable wages reported on your Form W-2. The lease cancellation fee reimbursement will be grossed-up for taxes as described in the Taxes section.

Depending on the location, SIRVA will advise you as to whether Brighthouse Services, LLC will be directly billed for these cancellation fees, or whether you must pay the fees yourself and submit for reimbursement (including receipts) online or by a Relocation Expense Report form.

g. Transportation and/or Storage of Your Household Goods

Your SIRVA Relocation Consultant will help you with the arrangements for moving your household goods to the new location. The SIRVA Relocation Consultant will explain the process and put you in touch with a professional mover. It is important that you or an adult family member arrange to be present to supervise the move and that you provide a telephone number where the moving company can reach you prior to your move date. Brighthouse Services, LLC will be billed directly from the carrier for the cost of shipping your household goods. Brighthouse Services, LLC does not reimburse tips to the movers.

i. Authorized Charges

Brighthouse Services, LLC will pay the following charges in connection with your move by an approved professional moving service:

◦ Provide all required packing materials.

◦ Crate and uncrate necessary household items as recommended by the movers.

◦ Perform normal appliance servicing at origin and destination locations.

◦ Perform all packing, loading, transporting, and unloading.

◦ Provide partial unpacking services.

◦ Remove debris upon completion of the move (includes one pickup by the carrier of all cartons unpacked by you within 30 days of delivery); make sure during any unpacking that you inspect every carton and all packaging material so that no item is accidentally discarded.

Partial unpacking services include:

◦ Unload the moving van and place furniture and boxes in specific rooms in the home per the transferee’s instructions.

◦ Unpack mattresses and assemble beds.

◦ Unpack dresser mirrors and similar items and reassemble.

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◦ Reassemble any item disassembled by the mover to facilitate transportation. Exceptions include any item needing professional expertise to reassemble, such as a slate pool table, major appliances, etc.

Items of value such as deeds, coin collections, jewelry and precious stones should not be shipped with the carrier. Should you choose to ship these items, you must make special arrangements, at your own expense, to do so. If you do send such items with the SIRVA- selected mover and do not disclose them, then neither the mover nor the insurer will be responsible for any loss or damage to such items.

The moving service will prepare a complete inventory list of the household goods describing the condition of each item (nicks, scratches, dents, etc.). You should review the inventory list carefully to make sure you agree with the driver's description before signing the inventory list. The inventory list is an important document in the settlement of claims for loss and damage.

If you must vacate your residence at the departure location before you have procured permanent housing at the destination location, the Brighthouse Services, LLC will pay for storage costs of household goods for up to 60 days if you are a homeowner in the departure location or up to 30 days if you are a renter in the departure location. Storage costs are figured on a daily basis. Although storage will be provided, the Brighthouse Services, LLC recommends that you attempt to coordinate the shipment to be transported directly from your home at the departure location to your home at the destination location to avoid excessive handling of your household goods. The Brighthouse Services, LLC will not cover the cost of accessing items that have been placed in storage. Your mover will designate an agent to arrange storage of your goods. Be sure to obtain the name, address, and telephone number of the warehouse where your goods will be stored. The storage costs are taxable and will be included in your taxable wages reported on your Form W-2. The value of these expenses will be grossed-up for taxes via a gross up payment as described in the Taxes section below.

ii. Brighthouse Services, LLC will not pay for the following:

◦ Exclusive use of the moving service van or truck, expedited service or extra drop off/pick up stops.

◦ Housecleaning, maid, or debris removal service at either the old or new home.

◦ Removal or installation of wall-to-wall carpeting, draperies and/or rods, electrical fixtures, water softeners, or similar items.

◦ Packing or transportation of boats, trailers, airplanes, household pets, plants, building materials, wood, or any perishable item.

◦ Transportation of flammable items such as paints, household cleaners, etc.

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◦ Swing sets, portable swimming pools, waterbeds, hot tubs, utility sheds, fencing, or items of similar nature.

◦ Firearms and/or ammunition.

◦ Valuable items, such as jewelry, precious stones, art, or collectibles (coins, sports memorabilia, etc.).

iii. Replacement Value Protection of Household Goods

Replacement value protection will be provided through the selected moving company based on a dollar value per pound, multiplied by the total weight of the shipment (excluding automobiles). Discuss valuation coverage based on the pre-move survey with your Relocation Consultant or the moving company representative. If coverage is not adequate, additional coverage may be procured. Any items lost or damaged while in the carrier’s custody, will be either repaired or replaced with a similar kind or the carrier will pay the replacement value of such items. High value items must be listed on a separate inventory form and are not covered by Brighthouse Services, LLC. Brighthouse Services, LLC cannot replace (nor will shippers agree to handle) high value items like securities, cash, art, heirlooms or precious jewelry. We recommend that you pack and transport these items yourself, or that you hire (at your own expense) a specialized carrier to do so.

The costs associated with your household goods shipment will be included in your taxable wages reported on your Form W-2. The value of these expenses will be grossed-up for taxes via a gross up payment as described in the Taxes section below.

h. Automobile Shipping

Your automobiles will be handled by the same carrier who handles your household goods or in some cases, a dedicated automobile carrier. Brighthouse Services, LLC will pay the cost of shipping for up to two cars if the distance of your move is 500 miles or more. Brighthouse Services, LLC is paying for the standard shipping of both vehicles. It will not pay extra costs associated with shipping an antique or collectible car. In order to ensure that the van lines can transport the automobile(s), arrangements should be made at least six weeks before packing day. The costs incurred to ship your automobile(s) are taxable, and will be included in your taxable wages reported on your Form W-2. The value of these expenses will be grossed-up income taxes via a gross up payment as described in the Taxes section below.

i. Moving Day and Final Trip

Brighthouse Services, LLC will reimburse eligible en route expenses from the departure location to the destination location incurred by you and your family

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members. You must book all travel through the Company’s designated travel booking tool and in accordance with the Company’s travel policy. Expenses include:

◦ Airfare

• Transportation to and from the terminal

• Airline luggage charges (one bag per person)

◦ Lodging

• One night in the departure location

• Nights in route

• One night in the destination location

◦ Meals

• $40 per diem per family member age 13 and older

• $20 per diem per family member age 12 and younger

• Receipts will not be required

◦ Mileage

• Reimbursed at the current IRS business rate for up to two automobiles

• Brighthouse Services, LLC covers up to a total of two automobiles, whether by shipping, mileage reimbursement or a combination of both.

◦ Parking and tolls

To limit lodging and meal expenses when driving to the destination location, Brighthouse Services, LLC will expect you to travel a minimum of 500 miles per day as established by Google Maps or an equivalent source. Your trip must be made by the most direct route—no vacation, extended trips, personal side trips, or leisure travel will be covered.

Once you have submitted all the documents required for reimbursement, Brighthouse Services, LLC will reimburse the expenses as soon as practicable, but not later than the last day of the calendar year following the calendar year in which the expenses were incurred.

Lodging, airfare, meals, parking, tolls and mileage expenses are taxable, and will be included in your taxable wages reported on your Form W-2. The value of these expenses will be grossed-up for taxes via a gross up payment as described in the Taxes section below.

j. Career Assistance Services

Brighthouse Services, LLC offers your spouse or domestic partner career guidance to help with a job search in the new area through the Impact Group. A Career Counselor will develop or give input on resume or curriculum vitae, cover letters, letters of introduction, etc. The Career Counselor will provide the job seeker with information regarding local industry, salary range, licensing and/or certification, and contact

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information for pertinent associations. They will provide a listing of resources to assist in the job search. The Career Counselor can administer career assistance tools such as Strong Interest Inventory, Self-Directed Search, Myers Briggs Inventory, and other assessments to help in the job search.

Career Assistance services are taxable, and will be included in your taxable wages reported on your Form W-2. The value of the career assistance services will be grossed-up for taxes via a gross up payment as described in the Taxes section.

k. Community Assistance Services

Brighthouse Services, LLC provides assistance to you and your household members with gathering information regarding the new communities. The research is conducted at the time of the need and customized to your specific needs. A Community Counselor will provide detailed information to enable you and your household members to make educated decisions about daycare, schools, activities, or whatever they need to resume their lifestyles in the new community.

Research topics can include, but are not limited to: public and private schools, day care, preschool, child care, recreational interests, pet boarding and veterinary services, elder care needs, medical resources, shopping, places of worship, volunteer opportunities, and cultural and professional sports venues. The information requested is treated as confidential and the research information is provided only to you and your household members.

Community assistance services are taxable, and will be included in your taxable wages reported on your Form W-2. The value of the community assistance services will be grossed-up for taxes via a gross up payment as described in the Taxes section below.

VIII.TAXES

The tax effects of relocation transactions can only be determined on an individual basis. It is important that you talk to a tax professional to find out how certain kinds of assistance may affect your own tax situation. Keep in mind that Brighthouse Services, LLC will not reimburse tax preparation or tax counseling expenses.

The current tax law and Internal Revenue Service (IRS) regulations require that Brighthouse Services, LLC report as wages all relocation expense reimbursements made to you, or paid on your behalf that are not excludable expenses.

Brighthouse Services, LLC will include all taxable reimbursed relocation expenses as wages on your W-2 form in the year in which they are paid. You will also receive a statement called the Relocation Tax Report from SIRVA detailing the relocation expenses related to your move including all lump-sum payments paid to you and money paid to tax authorities on your

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behalf to help offset the tax liability from this additional income. This money paid to tax authorities to help offset the tax liability is called a tax gross-up.

A tax gross-up is a payment made on your behalf by Brighthouse Services, LLC with respect to your Social Security and Medicare taxes, and the federal, state and local income taxes that would be due on the relocation expenses reported as wages to you. The taxes paid by the Company are also additional wages to you. The company will pay the tax on the additional wages resulting from the payment of taxes. This tax on the tax paid by the company is known as a gross-up. All gross-up payments are included in the wages and taxes reported on your W-2 form.

The tax gross-up calculation will be based on the following factors:

◦ Your tax filing status.

◦ Your tax rates based on your compensation from Brighthouse Services, LLC. Compensation from Brighthouse Services, LLC is defined to only include your annualized base salary and relocation expenses. Any bonus and stock options, etc. are excluded. Brighthouse Services, LLC will not include any spousal income, even if you are filing jointly.

◦ The higher of the standard deduction or estimated itemized deduction of the respective taxing authorities.

◦ Your destination state.

Nothing in this Policy should be construed as providing, directly or indirectly, income tax advice. For more information about moving expenses, we suggest that you retain the services of a professional tax advisor/preparer.

An expense reimbursement or allowance will not be subject to a gross-up payment unless this Policy specifically states otherwise.

For your convenience, the following table summarizes how Brighthouse Services, LLC withholds taxes and the relocation allowance under this Policy.

Relocation Expense	Taxable	Gross-Up Calculation	Payment Deadline
Rental/House Hunting Trip	Yes	At individual’s tax rate	Deadline for reimbursement2
Miscellaneous Allowance Lump Sum	Yes	At individual’s tax rate	Deadline for allowances1
Temporary Housing Assistance	Yes	At individual’s tax rate	Deadline for reimbursement2
Final Move meals, mileage, airfare, lodging, tolls, parking	Yes	At individual’s tax rate	Deadline for reimbursement2
Transportation of Household Goods	Yes	At individual’s tax rate	Employer will generally be billed directly by moving company. If employee pays moving company’s bill, deadline for reimbursement2

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Relocation Expense	Taxable	Gross-Up Calculation	Payment Deadline
Storage of Household Goods	Yes	At individual’s tax rate	Employer will generally be billed directly by moving company. If employee pays storage company’s bill, deadline for reimbursement2
New Home Closing Costs (No Closing Cost Loan program)	No	No closing cost, as such, nothing to include in employee’s income	N/A
New Home Closing Costs (reimbursement if home not eligible for Home Purchase Assistance)	Yes	At individual’s tax rate	Deadline for reimbursement2
New Home Closing Costs (when employee chooses a lender other than SIRVA Mortgage)	Yes	No	Deadline for reimbursement2
Finder or Broker’s Fee for New Rental Home	Yes	At individual’s tax rate	Deadline for reimburseent2
Home Sale through SIRVA	No	No – not included in employee income	N/A
Home Sale – Direct Reimbursement for Excluded Primary Homes and Coops	Yes	At individual’s tax rate	Deadline for reimbursement2
Loss-on-Sale	Yes	At individual’s tax rate	Generally, on the 1st or 2nd pay day following the date that all necessary documents are submitted to SIRVA, but not later than the March 1 following the calendar year in which the closing of the sale of your house occurs
Lease Cancellation	Yes	At individual’s tax rate	Deadline for reimbursement2
Career/Community Assistance	Yes	At individual’s tax rate	N/A – employer will pay provider directly
Participation Bonus	Yes	At individual’s tax rate	Generally, as soon as possible, but not later than March 1 following the calendar year in which the closing of the sale of your house occurs
Automobile Shipping	Yes	At individual’s tax rate	Employer will generally be billed directly by moving company. If employee pays moving company’s bill, deadline for reimbursement2
Home Inspection Costs	Yes	At individual’s tax rate	Deadline for reimbursement2

¹ These items are considered allowances. Allowance will be paid no later than the March 1 following the calendar year in which you signed your Repayment Agreement.

² These items are considered expense reimbursements. Assuming all documents required by the Company have been submitted by the due date established by the Company for such

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claims for reimbursement, expense reimbursements will be paid not later than the last day of the calendar year following the calendar in which the expense was incurred.

IX.CONDITIONS FOR RECEIVING BENEFITS

To receive payment of allowances and reimbursements or to receive services under this Policy, on the day such allowances or reimbursements are paid or services provided, you (i) must be actively employed by the Company, (ii) are not under investigation by Human Resources or by any governmental authority for any criminal activity or otherwise, or (iii) must be in good standing with the Company. Further, if your employment terminates for any reason before you incur reimbursable expenses, before an event resulting in the payment of an allowance, or before you use any services under this Policy, you will not be entitled to the reimbursement, allowance, services, or other benefits under this Policy.

X.CLAIMS AND APPEAL PROCEDURES

If you wish to challenge an adverse benefit determination, payment amount or plan interpretation relating to benefits under this Policy, you must file a claim. In order to be considered a “claim” under this Policy, your challenge must be made in writing via email and sent to your SIRVA Relocation Consultant in a timely manner as determined by Brighthouse Services, LLC or its delegate, in its sole discretion. You should note that a question or inquiry you may make to your manager or a member of human resources concerning or questioning your benefits will not be treated as a "claim" under these rules unless these procedures are followed. Further, any advice or interpretation regarding the Policy that you may receive from a manager or a human resources representative is not authoritative or binding.

Claims will be responded to within 30 days.

If your claim has been denied, you will receive a written explanation for the reason for the denial. If you receive a denial you will have 60 days from the date on the letter to appeal if you disagree with the determination. After that period, no further administrative appeals can be made. Appeals must be made in writing and sent to:

Administrator – Brighthouse Relocation Policy

Attention: Appeals

11225 North Community House Road

Charlotte, NC 28277

If you appeal, you may submit written comments, documents, records and other information relating to the claim as part of the review. The review by the administrator or his or her designee will consider all comments, documents, records and other information submitted by you at the time of the appeal. The initial adverse decision will

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not receive any deference in the appeal decision making process. The administrator will review the appeal and decide within 60 days.

If the administrator needs additional information to reach a determination, the Policy administrator will notify you, in writing, before the end of the 60-day review period, that the deadline for responding to the appeal has been extended for another 60 days.

All appeal decisions are final and are not open to further administrative appeal. The administrator or his or her designee has full discretion in making all required determinations. If you wish to pursue your claim further, a civil suit challenging a denial of benefits under this Policy must be filed not later than six months after the date of the denial of the final appeal.

XI.EXCLUSION OF PAYMENTS FOR PURPOSES OF BENEFITS OR STATUTORY SEVERANCE

Payments or benefits made under this Policy are not part of your salary for the purpose of benefit determinations and are not considered benefit eligible compensation or salary for the purpose of calculating benefits under any retirement plan, both pension or 401(k) plan, if applicable, insurance, or other benefit program of Brighthouse Services, LLC. Additionally, to the extent allowable under local law, payments or benefits made under this Policy shall not be used for the purposes of calculating your severance, whether statutory or otherwise.

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Eric T. Steigerwalt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Brighthouse Financial, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2018

/s/ Eric T. Steigerwalt

Eric T. Steigerwalt

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Anant Bhalla, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Brighthouse Financial, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2018

/s/ Anant Bhalla

Anant Bhalla

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED

STATES CODE

I, Eric T. Steigerwalt, certify that, to my knowledge, (i) Brighthouse Financial, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Brighthouse Financial, Inc.

Date: November 6, 2018

/s/ Eric T. Steigerwalt

Eric T. Steigerwalt

President and Chief Executive Officer

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by Brighthouse Financial, Inc. (the “Company”) for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION

CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED

STATES CODE

I, Anant Bhalla, certify that, to my knowledge, (i) Brighthouse Financial, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Brighthouse Financial, Inc.

Date: November 6, 2018

/s/ Anant Bhalla

Anant Bhalla

Executive Vice President and Chief Financial Officer

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by Brighthouse Financial, Inc. (the “Company”) for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

XML

Document and Entity Information - USD ($)	9 Months Ended
	Sep. 30, 2018	Nov. 02, 2018	Jun. 30, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	BRIGHTHOUSE FINANCIAL, INC.
Entity Central Index Key	0001685040
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Filer Category	Non-accelerated Filer
Entity Public Float			$ 0
Entity Common Stock, Shares Outstanding		118,601,232

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $60,705 and $60,173, respectively)	$ 62,279	$ 64,991
Equity securities, at estimated fair value (cost: $139 and $142, respectively)	150	161
Mortgage loans (net of valuation allowances of $56 and $47, respectively; includes $93 and $115, respectively, at estimated fair value, relating to variable interest entities)	13,033	10,742
Policy loans	1,443	1,523
Real estate joint ventures	444	433
Other limited partnership interests	1,765	1,669
Short-term investments, principally at estimated fair value	116	312
Other invested assets, principally at estimated fair value	2,099	2,507
Total investments	81,329	82,338
Cash and cash equivalents, principally at estimated fair value	2,144	1,857
Accrued investment income (includes $0 and $1, respectively, relating to variable interest entities)	675	601
Premiums, reinsurance and other receivables	13,551	13,525
Deferred policy acquisition costs and value of business acquired	6,050	6,286
Current income tax recoverable	878	740
Other assets	583	588
Separate account assets	111,736	118,257
Total assets	216,946	224,192
Liabilities
Future policy benefits	35,748	36,616
Policyholder account balances	39,446	37,783
Other policy-related balances	2,907	2,985
Payables for collateral under securities loaned and other transactions	4,043	4,169
Long-term debt (includes $3 and $11, respectively, at estimated fair value, relating to variable interest entities)	3,966	3,612
Deferred income tax liability	576	927
Other liabilities	5,575	5,263
Separate account liabilities	111,736	118,257
Total liabilities	203,997	209,612
Contingencies, Commitments and Guarantees (Note 11)
Brighthouse Financial, Inc.’s stockholders’ equity:
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 119,782,668 and 119,773,106 shares issued, respectively; 118,800,611 and 119,773,106 shares outstanding, respectively	1	1
Additional paid-in capital	12,469	12,432
Retained earnings (deficit)	(96)	406
Treasury Stock, Value	(42)	0
Accumulated other comprehensive income (loss)	552	1,676
Total Brighthouse Financial, Inc.’s stockholders’ equity	12,884	14,515
Noncontrolling interests	65	65
Total equity	12,949	14,580
Total liabilities and equity	$ 216,946	$ 224,192

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Assets
Amortized cost of fixed maturity securities available-for-sale	$ 60,705	$ 60,173
Cost of equity securities available-for-sale	139	142
Mortgage loans valuation allowances	56	47
Mortgage Loans on Real Estate, Commercial and Consumer, Net	13,033	10,742
Accrued investment income relating to variable interest entities	675	601
Liabilities
Long-term debt, at estimated fair value, relating to variable interest entities	$ 3,966	$ 3,612
Brighthouse Financial, Inc.’s stockholders’ equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	119,782,668	119,773,106
Common stock, shares outstanding	118,800,611	119,773,106
Treasury Stock, Shares	982,057	0
Variable interest entities
Assets
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 93	$ 115
Accrued investment income relating to variable interest entities	0	1
Liabilities
Long-term debt, at estimated fair value, relating to variable interest entities	$ 3	$ 11

XML

Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share, Basic	$ (2.26)	$ (7.87)	$ (4.82)	$ (8.73)
Earnings Per Share, Diluted	$ (2.26)		$ (4.82)
Revenues
Premiums	$ 225	$ 236	$ 677	$ 630
Universal life and investment-type product policy fees	972	1,025	2,936	2,935
Net investment income	853	761	2,476	2,309
Other revenues	105	93	308	329
Net investment gains (losses)
Total net investment gains (losses)	(42)	21	(121)	(34)
Net derivative gains (losses)	(691)	(164)	(1,337)	(1,207)
Total revenues	1,422	1,972	4,939	4,962
Expenses
Policyholder benefits and claims	822	1,083	2,373	2,732
Interest credited to policyholder account balances	273	279	809	838
Amortization of deferred policy acquisition costs and value of business acquired	30	123	581	(4)
Other expenses	665	611	1,974	1,789
Total expenses	1,790	2,096	5,737	5,355
Income (loss) from continuing operations before provision for income tax	(368)	(124)	(798)	(393)
Provision for income tax expense (benefit)	(99)	819	(226)	653
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(269)	(943)	(572)	(1,046)
Net Income (Loss) Attributable to Noncontrolling Interest	2	0	5	0
Net income (loss)	(271)	(943)	(577)	(1,046)
Comprehensive income (loss)	(534)	(1,529)	(1,622)	(1,003)
Noncontrolling Interest, Period Increase (Decrease)	2	0	5	0
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest	$ (532)	$ (1,529)	$ (1,617)	$ (1,003)
Pro Forma
Earnings Per Share, Diluted		$ (7.87)		$ (8.73)

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Millions	Total	Shareholder's net investment	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss)	Parent	Noncontrolling Interest	Restatement adjustment	Restatement adjustment Shareholder's net investment	Restatement adjustment Common Stock	Restatement adjustment Additional Paid-in Capital	Restatement adjustment Retained Earnings	Restatement adjustment Treasury Stock [Member]	Restatement adjustment Accumulated Other Comprehensive Income (Loss)	Restatement adjustment Parent	Restatement adjustment Noncontrolling Interest
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 14,862								$ 0
Beginning Balance at Dec. 31, 2016		$ 13,597	$ 0	$ 0	$ 0	$ 0	$ 1,265	$ 14,862
Stockholders' Equity, Other	1	1						1
Stockholders' Equity, Period Increase (Decrease)	(1,798)	(1,798)						(1,798)
Change in shareholders Net Investment	1,704	1,704						1,704
Noncontrolling Interest, Period Increase (Decrease)	65							0	65
Other separation related transactions	(1,046)	(1,085)			39			(1,046)
Net Income (Loss) Attributable to Noncontrolling Interest	0
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(1,046)
Adjustments to Additional Paid in Capital, Other	0	(12,419)	1	12,418				0
Other comprehensive income (loss), net of income tax	43						43	43
Ending Balance at Sep. 30, 2017		0	1	12,418	39	0	1,308	13,766
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	13,831								65
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	14,580								65	$ 14,576								$ 65
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets							(79)
Beginning Balance at Dec. 31, 2017	14,515	0	1	12,432	406	0	1,676	14,515			$ 0	$ 1	$ 12,432	$ 481	$ 0	$ 1,597	$ 14,511
Treasury Stock, Value, Acquired, Cost Method	(42)					(42)		(42)
Share-based compensation	37			37				37
Noncontrolling Interest, Period Increase (Decrease)	(5)							0	(5)
Other separation related transactions	(577)				(577)			(577)
Net Income (Loss) Attributable to Noncontrolling Interest	5								5
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(572)
Other comprehensive income (loss), net of income tax	(1,045)						(1,045)	(1,045)
Ending Balance at Sep. 30, 2018	12,884	$ 0	$ 1	$ 12,469	(96)	$ (42)	552	12,884
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	12,949								$ 65
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	$ (4)				$ 75		$ (79)	$ (4)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Statement of Cash Flows [Abstract]
Net cash provided by (used in) operating activities	$ 1,496	$ 2,030
Cash flows from investing activities
Sales, maturities and repayments of fixed maturity securities	11,680	12,784
Sales, maturities and repayments of equity securities	15	58
Sales, maturities and repayments of mortgage loans	446	565
Sales, maturities and repayments of real estate and real estate joint ventures	87	47
Sales, maturities and repayments of other limited partnership interests	137	195
Purchases of fixed maturity securities	(12,005)	(12,888)
Purchases of equity securities	(1)	(2)
Purchases of mortgage loans	(2,771)	(1,554)
Purchases of real estate and real estate joint ventures	(31)	(224)
Purchases of other limited partnership interests	(194)	(174)
Cash received in connection with freestanding derivatives	1,142	1,811
Cash paid in connection with freestanding derivatives	(2,286)	(3,382)
Net change in policy loans	81	(5)
Net change in short-term investments	196	180
Net change in other invested assets	35	33
Other, net	0	2
Net cash provided by (used in) investing activities	(3,469)	(2,554)
Cash flows from financing activities
Policyholder account balances: Deposits	4,704	3,464
Policyholder account balances: Withdrawals	(2,199)	(2,269)
Net change in payables for collateral under securities loaned and other transactions	(126)	(2,747)
Long-term debt issued	375	3,589
Long-term debt repaid	(9)	(10)
Collateral financing arrangements repaid	0	(2,797)
Treasury stock acquired in connection with share repurchases	(42)	0
Distribution to MetLife, Inc.	0	(1,798)
Cash received from MetLife, Inc. in connection with shareholder’s net investment	0	293
Cash paid to MetLife, Inc. in connection with shareholder’s net investment	0	(668)
Financing element on certain derivative instruments and other derivative related transactions, net	(386)	(37)
Other, net	(57)	(26)
Net cash provided by (used in) financing activities	2,260	(3,006)
Change in cash, cash equivalents and restricted cash	287	(3,530)
Cash, cash equivalents and restricted cash, beginning of period	1,857	5,228
Cash, cash equivalents and restricted cash, end of period	2,144	1,698
Supplemental disclosures of cash flow information
Net cash paid (received) for interest	83	89
Net cash paid (received) for income tax	3	76
Non-cash transactions:
Transfer of fixed maturity securities to former affiliates	0	293
Reduction of policyholder account balances in connection with reinsurance transactions	$ 0	$ 293

XML

Business, Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business, Basis of Presentation and Summary of Significant Accounting Policies

1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business

“Brighthouse” and the “Company” refer to Brighthouse Financial, Inc. and its subsidiaries. Brighthouse Financial, Inc. is a holding company formed to own the legal entities that historically operated a substantial portion of the former Retail segment of MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”). Brighthouse Financial, Inc. was incorporated in Delaware on August 1, 2016 in preparation for MetLife, Inc.’s separation of a substantial portion of its former Retail segment, as well as certain portions of its Corporate Benefit Funding segment (the “Separation”), which was completed on August 4, 2017.

In connection with the Separation, 80.8% of MetLife, Inc.’s interest in Brighthouse Financial, Inc. was distributed to holders of MetLife, Inc.’s common stock and MetLife, Inc. retained the remaining 19.2%. On June 14, 2018, MetLife, Inc. divested its remaining shares of Brighthouse Financial, Inc. common stock (the “MetLife Divestiture”). As a result, MetLife, Inc. and its subsidiaries and affiliates are no longer considered related parties subsequent to the MetLife Divestiture.

The Company offers a range of individual annuities and individual life insurance products. The Company reports results through three segments: Annuities, Life and Run-off. In addition, the Company reports certain of its results in Corporate & Other.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.

Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Brighthouse Financial, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.

The Company uses the equity method of accounting for equity securities when it has significant influence or at least 20% interest and for real estate joint ventures and other limited partnership interests (“investee”) when it has more than a minor ownership interest or more than a minor influence over the investee’s operations. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. When the Company has virtually no influence over the investee’s operations, the investment is carried at fair value.

Reclassifications

Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform to the 2018 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements. Additionally, effective January 1, 2018 the Company recorded an increase to other liabilities of $46 million, a decrease to deferred tax liabilities of $22 million, a decrease to accumulated other comprehensive income (“AOCI”) of$64 million, and an increase to retained earnings (deficit) of $40 million, to reflect an adjustment, net of tax, to prior year accretion of certain investments in redeemable preferred stock.

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2017 consolidated balance sheet data was derived from audited consolidated financial statements included in Brighthouse Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated and combined financial statements of the Company included in the 2017 Annual Report.

Adoption of New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. The following table provides a description of new ASUs issued by the FASB and the expected impact of the adoption on the Company’s financial statements.

ASUs adopted as of September 30, 2018 are summarized in the table below.

Standard	Description	Effective Date	Impact on Financial Statements
ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities	The new guidance changes the current accounting guidance related to (i) the classification and measurement of certain equity investments, (ii) the presentation of changes in the fair value of financial liabilities measured under the fair value option (“FVO”) that are due to instrument-specific credit risk, and (iii) certain disclosures associated with the fair value of financial instruments. Additionally, there will no longer be a requirement to assess equity securities for impairment since such securities will be measured at fair value through net income.	January 1, 2018 using the modified retrospective method	The Company 1) reclassified net unrealized gains related to equity securities previously classified as available-for-sale (“AFS”) from AOCI to retained earnings (deficit) and 2) increased the carrying value of equity investments previously accounted for under the cost method to estimated fair value. The cumulative effect of the adoption is a net increase to retained earnings (deficit) of $38 million and a net decrease of $15 million to AOCI, after taxes.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)	For those contracts that are impacted, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services.	January 1, 2018 using the modified retrospective method	The adoption did not have an impact on the Company’s financial statements other than expanded disclosures in Note 9.

ASUs issued but not yet adopted as of September 30, 2018 are summarized in the table below.

Standard	Description	Effective Date	Impact on Financial Statements
ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	The amendments to Topic 350 require the capitalization of certain implementation costs incurred in a cloud computing arrangement that is a service contract. The requirements align with the existing requirements to capitalize implementation costs incurred to develop or obtain internal-use software.	January 1, 2020 using the prospective method or retrospective method (with early adoption permitted)	The Company is currently evaluating the impact of this guidance on its financial statements.

ASU 2018-12, Financial Services -Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts	The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred acquisition costs, and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances.	January 1, 2021 using a modified retrospective method for the new market risk benefit guidance and prospective methods for the increased frequency of updating assumptions, the new discount rate requirements and deferred policy acquisition costs (“DAC”) amortization changes. Early adoption is permitted.	The Company is in the early stages of evaluating the new guidance and therefore is unable to estimate the impact to its financial statements. The most significant impact will be the measurement of liabilities for variable annuity guarantees. Upon adoption of the ASU, all guarantees associated with variable annuities will be measured at fair value, with changes in fair value reported in net income (excluding the change in fair value attributable to nonperformance risk, which would be reported in other comprehensive income). These changes will result in an impact to equity upon adoption and more volatility in net income going forward. Additionally, certain life insurance and payout annuity contract liabilities will be affected by more frequent updating of cash flow assumptions and changes to the rate used to discount those cash flows. Most products will be impacted by the changes to deferred acquisition cost amortization.
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities	The amendments to Topic 815 (i) refine and expand the criteria for achieving hedge accounting on certain hedging strategies, (ii) require the earnings effect of the hedging instrument be presented in the same line item in which the earnings effect of the hedged item is reported, and (iii) eliminate the requirement to separately measure and report hedge ineffectiveness.	January 1, 2019 using modified retrospective method (with early adoption permitted)	The Company does not expect a material impact on its financial statements from adoption of the new guidance.
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts. The new guidance also requires that an other-than- temporary impairment (“OTTI”) on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses.	January 1, 2020 using the modified retrospective method (with early adoption permitted beginning January 1, 2019)	The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be earlier recognition of credit losses on mortgage loan investments.
ASU 2016-02, Leases - Topic 842	The new guidance will require a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Leases would be classified as finance or operating leases and both types of leases will be recognized on the balance sheet. Lessor accounting will remain largely unchanged from current guidance except for certain targeted changes. The amendments also require new qualitative and quantitative disclosures.	January 1, 2019 using the modified retrospective method (with early adoption permitted)	The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be a gross-up of certain lease assets and liabilities on the balance sheet.

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Segment Information

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Information

2. Segment Information

The Company is organized into three segments: Annuities; Life; and Run-off. In addition, the Company reports certain of its results of operations in Corporate & Other.

Annuities

The Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security.

Life

The Life segment consists of insurance products and services, including term, whole, universal and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis.

Run-off

The Run-off segment consists of products no longer actively sold and which are separately managed, including structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, funding agreements and universal life with secondary guarantees.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments and interest expense related to the majority of the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts, long-term care and workers compensation business reinsured through 100% quota share reinsurance agreements, and term life insurance sold direct to consumers, which is no longer being offered for new sales.

Financial Measures and Segment Accounting Policies

Adjusted earnings is a financial measure used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance. The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by the investor community. Adjusted earnings should not be viewed as a substitute for net income (loss) available to Brighthouse Financial, Inc.’s common shareholders, and excludes net income (loss) attributable to noncontrolling interests.

Adjusted earnings, which may be positive or negative, focuses on the Company’s 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 the Company, referred to as divested businesses.

The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings:

• Net investment gains (losses);

• Net derivative gains (losses) except earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment; and

• Amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”).

The following are significant items excluded from total expenses, net of income tax, in calculating 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 above is calculated net of the U.S. statutory tax rate, which could differ from the Company’s effective tax rate.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months and nine months ended September 30, 2018 and 2017 and at September 30, 2018 and December 31, 2017. The segment accounting policies are the same as those used to prepare the Company’s condensed consolidated financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below.

Beginning in the first quarter of 2018, the Company changed the methodology for how capital is allocated to segments and, in some cases, products (the “Portfolio Realignment”). Segment investment and capitalization targets are now based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company’s variable annuity risk management strategy discussed in the 2017 Annual Report. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets.

Previously, invested assets held in the segments were based on net GAAP liabilities. Excess capital was retained in Corporate & Other and allocated to segments based on an internally developed statistics based capital model intended to capture the material risks to which the Company was exposed (referred to as “allocated equity”). Surplus assets in excess of the combined allocations to the segments were held in Corporate & Other with net investment income being credited back to the segments at a predetermined rate. Any excess or shortfall in net investment income from surplus assets was recognized in Corporate & Other.

The Portfolio Realignment had no effect on the Company’s consolidated net income (loss) available to Brighthouse Financial, Inc.’s common shareholders or adjusted earnings, but it did impact segment results for the nine months ended September 30, 2018. It was not practicable to determine the impact of the Portfolio Realignment to adjusted earnings in prior periods; however, the Company estimates that pre-tax adjusted earnings in the Life segment for the nine months ended September 30, 2018 increased between $90 million and $105 million as a result of the change, with most of the offsetting impact in the Run-off segment. Impacts to the Annuities segment and Corporate & Other would not have been significantly different under the previous allocation method.

In addition, the total assets recognized in the segments changed as a result of the Portfolio Realignment. Total assets (on a book value basis) in the Annuities and Life segments increased approximately $2 billion and approximately $5 billion, respectively, under the new allocation method. The Run-off segment and Corporate & Other experienced decreases in total assets of approximately $3 billion and approximately $4 billion, respectively, as a result of the Portfolio Realignment.

	Operating Results
Three Months Ended September 30, 2018	Annuities		Life		Run-off			Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	487	$	78	$	(134	)	$	(117	)	$	314
Provision for income tax expense (benefit)	86		17		(29		)	(32		)	42
Post-tax adjusted earnings	401		61		(105		)	(85		)	272
Less: Net income (loss) attributable to noncontrolling interests	—		—		—			2			2
Adjusted earnings	$	401	$	61	$	(105	)	$	(87	)	270
Adjustments for:
Net investment gains (losses)											(42		)
Net derivative gains (losses)											(691		)
Other adjustments to net income											51
Provision for income tax (expense) benefit											141
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(271	)
Interest revenue	$	399	$	115	$	322		$	16
Interest expense	$	—	$	—	$	—		$	39

	Operating Results
Three Months Ended September 30, 2017	Annuities		Life			Run-off		Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	488	$	(8	)	$	119	$	(95	)	$	504
Provision for income tax expense (benefit)	133		(14		)	36		1,025			1,180
Post-tax adjusted earnings	355		6			83		(1,120		)	(676		)
Less: Net income (loss) attributable to noncontrolling interests	—		—			—		—			—
Adjusted earnings	$	355	$	6		$	83	$	(1,120	)	(676		)
Adjustments for:
Net investment gains (losses)											21
Net derivative gains (losses)											(164		)
Other adjustments to net income											(485		)
Provision for income tax (expense) benefit											361
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(943	)
Interest revenue	$	310	$	87		$	348	$	35
Interest expense	$	—	$	—		$	—	$	36

	Operating Results
Nine Months Ended September 30, 2018	Annuities		Life		Run-off			Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	1,025	$	205	$	(79	)	$	(327	)	$	824
Provision for income tax expense (benefit)	177		41		(18		)	(87		)	113
Post-tax adjusted earnings	848		164		(61		)	(240		)	711
Less: Net income (loss) attributable to noncontrolling interests	—		—		—			5			5
Adjusted earnings	$	848	$	164	$	(61	)	$	(245	)	706
Adjustments for:
Net investment gains (losses)											(121		)
Net derivative gains (losses)											(1,337		)
Other adjustments to net income											(164		)
Provision for income tax (expense) benefit											339
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(577	)
Interest revenue	$	1,138	$	334	$	979		$	38
Interest expense	$	—	$	—	$	—		$	113

	Operating Results
Nine Months Ended September 30, 2017	Annuities		Life			Run-off		Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	1,111	$	—		$	272	$	(61	)	$	1,322
Provision for income tax expense (benefit)	302		(11		)	88		1,015			1,394
Post-tax adjusted earnings	809		11			184		(1,076		)	(72		)
Less: Net income (loss) attributable to noncontrolling interests	—		—			—		—			—
Adjusted earnings	$	809	$	11		$	184	$	(1,076	)	(72		)
Adjustments for:
Net investment gains (losses)											(34		)
Net derivative gains (losses)											(1,207		)
Other adjustments to net income											(474		)
Provision for income tax (expense) benefit											741
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(1,046	)
Interest revenue	$	948	$	263		$	1,060	$	159
Interest expense	$	—	$	—		$	23	$	94

The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Annuities	$	1,160		$	1,070		$	3,453		$	3,270
Life	346			387			1,054			982
Run-off	536			547			1,594			1,631
Corporate & Other	47			59			112			230
Adjustments	(667		)	(91		)	(1,274		)	(1,151		)
Total	$	1,422		$	1,972		$	4,939		$	4,962

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:

	September 30, 2018		December 31, 2017
	(In millions)
Annuities	$	152,342	$	154,667
Life	20,485		18,049
Run-off	31,710		36,824
Corporate & Other	12,409		14,652
Total	$	216,946	$	224,192

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Insurance

9 Months Ended

Sep. 30, 2018

Insurance [Abstract]

Insurance

3. Insurance

Guarantees

As discussed inNotes 1and3of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report, the Company issues variable annuity products with guaranteed minimum benefits. Guaranteed minimum accumulation benefits (“GMABs”), the non-life contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and the portion of certain GMIBs that do not require annuitization are accounted for as embedded derivatives in policyholder account balances and are further discussed inNote 5.

The Company also issues universal and variable life contracts where the Company contractually guarantees to the contract holder a secondary guarantee.

Information regarding the Company’s guarantee exposure was as follows at:

	September 30, 2018						December 31, 2017
	In the Event of Death			At Annuitization			In the Event of Death			At Annuitization
	(Dollars in millions)
Annuity Contracts (1), (2)
Variable Annuity Guarantees
Total account value (3)	$	109,613		$	63,194		$	115,147		$	67,110
Separate account value	$	104,479		$	61,945		$	109,792		$	65,782
Net amount at risk	$	6,471	(4)	$	2,521	(5)	$	5,261	(4)	$	2,642	(5)
Average attained age of contract holders	68 years			68 years			68 years			68 years

	September 30, 2018		December 31, 2017
	Secondary Guarantees
	(Dollars in millions)
Universal Life Contracts
Total account value (3)	$	6,133	$	6,244
Net amount at risk (6)	$	73,680	$	75,304
Average attained age of policyholders	65 years		64 years
Variable Life Contracts
Total account value (3)	$	3,486	$	3,379
Net amount at risk (6)	$	23,250	$	24,546
Average attained age of policyholders	49 years		49 years

__________________

(1) The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.

(2) Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured.

(3) Includes the contract holder’s investments in the general account and separate account, if applicable.

(4) Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.

(5) Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved.

(6) Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.

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Investments

9 Months Ended

Sep. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Investments

4. Investments

See Note 6 for information about the fair value hierarchy for investments and the related valuation methodologies.

Fixed Maturity Securities AFS

Fixed Maturity Securities AFS by Sector

The following table presents the fixed maturity securities AFS by sector at:

	September 30, 2018											December 31, 2017
	Amortized Cost		Gross Unrealized							Estimated Fair Value		Amortized Cost		Gross Unrealized							Estimated Fair Value
			Gains		Temporary Losses		OTTI Losses (1)							Gains		Temporary Losses		OTTI Losses (1)
	(In millions)
Fixed maturity securities: (2)
U.S. corporate	$	23,475	$	918	$	458	$	—		$	23,935	$	21,190	$	1,859	$	92	$	—		$	22,957
U.S. government and agency	10,089		1,075		214		—			10,950		14,548		1,862		118		—			16,292
RMBS	8,373		227		230		(4		)	8,374		7,749		285		60		(3		)	7,977
Foreign corporate	7,311		155		218		—			7,248		6,703		386		66		—			7,023
State and political subdivision	3,747		369		47		—			4,069		3,635		553		6		1			4,181
CMBS	4,381		9		101		(1		)	4,290		3,386		53		17		(1		)	3,423
ABS	2,006		10		7		—			2,009		1,810		21		2		—			1,829
Foreign government	1,323		104		23		—			1,404		1,152		161		4		—			1,309
Total fixed maturity securities	$	60,705	$	2,867	$	1,298	$	(5	)	$	62,279	$	60,173	$	5,180	$	365	$	(3	)	$	64,991

__________________

(1) Noncredit OTTI losses included in AOCI in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).”

(2) Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

The Company held non-income producing fixed maturity securities with an estimated fair value of less than $1 million and $4 million with unrealized gains (losses) of less than ($1) million and ($2) million at September 30, 2018 and December 31, 2017, respectively.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at September 30, 2018:

	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities		Total Fixed Maturity Securities
	(In millions)
Amortized cost	$	1,956	$	8,580	$	11,376	$	24,033	$	14,760	$	60,705
Estimated fair value	$	1,962	$	8,638	$	11,263	$	25,743	$	14,673	$	62,279

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity.

Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at:

	September 30, 2018								December 31, 2017
	Less than 12 Months				Equal to or Greater  than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(Dollars in millions)
Fixed maturity securities:
U.S. corporate	$	9,484	$	308	$	1,742	$	150	$	1,783	$	21	$	1,451	$	71
U.S. government and agency	2,530		52		1,901		162		4,962		38		1,573		80
RMBS	3,838		103		1,619		123		2,367		14		1,332		43
Foreign corporate	3,410		131		562		87		637		8		603		58
State and political subdivision	1,076		34		151		13		170		3		106		4
CMBS	3,078		68		542		32		619		6		335		10
ABS	998		7		27		—		170		—		74		2
Foreign government	449		17		111		6		155		2		69		2
Total fixed maturity securities	$	24,863	$	720	$	6,655	$	573	$	10,863	$	92	$	5,543	$	270
Total number of securities in an unrealized loss position	2,978				807				911				638

Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities

Evaluation and Measurement Methodologies

Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the estimated fair value has been below amortized cost; (ii) the potential for impairments when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments where the issuer, series of issuers or industry has suffered a catastrophic loss or has exhausted natural resources; (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers; (vii) with respect to Structured Securities, changes in forecasted cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security; (viii) the potential for impairments due to weakening of foreign currencies on non-functional currency denominated fixed maturity securities that are near maturity; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies.

Current Period Evaluation

Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company concluded that these securities were not other-than-temporarily impaired at September 30, 2018.

Gross unrealized losses on fixed maturity securities increased$931 million during the nine months ended September 30, 2018 to $1.3 billion. The increase in gross unrealized losses for the nine months ended September 30, 2018 was primarily attributable to increasing longer-term interest rates and widening credit spreads.

At September 30, 2018, $4 million of the total $1.3 billion of gross unrealized losses were from ten fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

	September 30, 2018					December 31, 2017
	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Mortgage loans:
Commercial	$	8,405		64.5	%	$	7,260		67.5	%
Agricultural	2,767			21.2		2,276			21.2
Residential	1,824			14.0		1,138			10.6
Subtotal (1)	12,996			99.7		10,674			99.3
Valuation allowances (2)	(56		)	(0.4	)	(47		)	(0.4	)
Subtotal mortgage loans, net	12,940			99.3		10,627			98.9
Commercial mortgage loans held by CSEs — FVO	93			0.7		115			1.1
Total mortgage loans, net	$	13,033		100.0	%	$	10,742		100.0	%

__________________

(1) Purchases of mortgage loans from third parties were$816 millionand$1.4 billionfor thethree monthsandnine months ended September 30, 2018, respectively, and$147 million and $307 million for the three months and nine months ended September 30, 2017, respectively, and were primarily comprised of residential mortgage loans.

(2) The valuation allowances were primarily from collective evaluation (non-specific loan related).

See “— Variable Interest Entities” for discussion of consolidated securitization entities (“CSEs”).

Information on commercial, agricultural and residential mortgage loans is presented in the tables below. Information on commercial mortgage loans held by CSEs — FVO is presented in Note 6. The Company elects the FVO for certain commercial mortgage loans and related long-term debt that are managed on a total return basis.

Valuation Allowance Methodology

Mortgage loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the loan agreement. Specific valuation allowances are established using the same methodology for all three portfolio segments as the excess carrying value of a loan over either (i) the present value of expected future cash flows discounted at the loan’s original effective interest rate, (ii) the estimated fair value of the loan’s underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or (iii) the loan’s observable market price. A common evaluation framework is used for establishing non-specific valuation allowances for all loan portfolio segments; however, a separate non-specific valuation allowance is calculated and maintained for each loan portfolio segment that is based on inputs unique to each loan portfolio segment. Non-specific valuation allowances are established for pools of loans with similar risk characteristics where a property-specific or market-specific risk has not been identified, but for which the Company expects to incur a credit loss. These evaluations are based upon several loan portfolio segment-specific factors, including the Company’s experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. These evaluations are revised as conditions change and new information becomes available.

Credit Quality of Commercial Mortgage Loans

The credit quality of commercial mortgage loans was as follows at:

	Recorded Investment
	Debt Service Coverage Ratios								% of Total		Estimated Fair Value		% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total
	(Dollars in millions)
September 30, 2018
Loan-to-value ratios:
Less than 65%	$	7,438	$	38	$	15	$	7,491	89.2	%	$	7,440	89.2	%
65% to 75%	738		12		68		818		9.7		809		9.7
76% to 80%	87		—		9		96		1.1		92		1.1
Total	$	8,263	$	50	$	92	$	8,405	100.0	%	$	8,341	100.0	%
December 31, 2017
Loan-to-value ratios:
Less than 65%	$	6,194	$	293	$	33	$	6,520	89.8	%	$	6,681	90.0	%
65% to 75%	642		—		14		656		9.0		658		8.9
76% to 80%	42		—		9		51		0.7		50		0.7
Greater than 80%	—		9		24		33		0.5		30		0.4
Total	$	6,878	$	302	$	80	$	7,260	100.0	%	$	7,419	100.0	%

Credit Quality of Agricultural Mortgage Loans

The credit quality of agricultural mortgage loans was as follows at: 

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Loan-to-value ratios:
Less than 65%	$	2,488	89.9	%	$	2,113	92.8	%
65% to 75%	279		10.1		163		7.2
Total	$	2,767	100.0	%	$	2,276	100.0	%

The estimated fair value of agricultural mortgage loans was $2.7 billion and $2.3 billion at September 30, 2018 and December 31, 2017, respectively.

Credit Quality of Residential Mortgage Loans

The credit quality of residential mortgage loans was as follows at:

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	1,792	98.2	%	$	1,106	97.2	%
Nonperforming	32		1.8		32		2.8
Total	$	1,824	100.0	%	$	1,138	100.0	%

The estimated fair value of residential mortgage loans was$1.8 billionand$1.2 billionatSeptember 30, 2018andDecember 31, 2017, respectively.

Past Due, Nonaccrual and Modified Mortgage Loans

The Company has a high quality, well performing mortgage loan portfolio, with over99%of all mortgage loans classified as performing at bothSeptember 30, 2018andDecember 31, 2017.The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days.The Company hadnocommercial or agricultural mortgage loans past due andnocommercial or agricultural mortgage loans in nonaccrual status at eitherSeptember 30, 2018orDecember 31, 2017. The recorded investment of residential mortgage loans past due and in nonaccrual status was$32 millionat bothSeptember 30, 2018andDecember 31, 2017. During the three months andninemonths endedSeptember 30, 2018and2017, the Companydid not have a significant amount of mortgage loans modified in a troubled debt restructuring.

Cash Equivalents

The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $1.1 billion and $1.4 billion at September 30, 2018 and December 31, 2017, respectively.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity and equity securities and the effect on DAC, VOBA, deferred sales inducements (“DSI”) and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

The components of net unrealized investment gains (losses), included in AOCI, were as follows:

	September 30, 2018			December 31, 2017
	(In millions)
Fixed maturity securities	$	1,558		$	4,806
Fixed maturity securities with noncredit OTTI losses included in AOCI	5			2
Total fixed maturity securities	1,563			4,808
Equity securities	—			39
Derivatives	202			239
Other	(14		)	(8		)
Subtotal	1,751			5,078
Amounts allocated from:
Future policy benefits	(851		)	(2,626		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(5		)	(2		)
DAC, VOBA and DSI	(136		)	(265		)
Subtotal	(992		)	(2,893		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3			—
Deferred income tax benefit (expense)	(161		)	(459		)
Net unrealized investment gains (losses)	$	601		$	1,726

The changes in net unrealized investment gains (losses) were as follows:

	Nine Months Ended  September 30, 2018
	(In millions)
Balance, December 31, 2017	$	1,726
Unrealized investment gains (losses) change due to cumulative effect, net of income tax (1)	(79		)
Balance, January 1, 2018	1,647
Fixed maturity securities on which noncredit OTTI losses have been recognized	3
Unrealized investment gains (losses) during the period	(3,251		)
Unrealized investment gains (losses) relating to:
Future policy benefits	1,775
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(3		)
DAC, VOBA and DSI	129
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3
Deferred income tax benefit (expense)	298
Balance, September 30, 2018	$	601
Change in net unrealized investment gains (losses)	$	(1,046	)

__________________

(1) See Note 1 for more information related to the cumulative effect of change in accounting principle and other.

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both September 30, 2018 and December 31, 2017.

Securities Lending

Elements of the securities lending program are presented below at:

	September 30, 2018		December 31, 2017
	(In millions)
Securities on loan: (1)
Amortized cost	$	3,317	$	3,085
Estimated fair value	$	3,664	$	3,748
Cash collateral received from counterparties (2)	$	3,746	$	3,791
Security collateral received from counterparties (3)	$	—	$	29
Reinvestment portfolio — estimated fair value	$	3,749	$	3,823

__________________

(1) Included within fixed maturity securities.

(2) Included within payables for collateral under securities loaned and other transactions.

(3) Security collateral received from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.

The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at:

	September 30, 2018								December 31, 2017
	Remaining Tenor of Securities Lending Agreements								Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		1 to 6 Months		Total		Open (1)		1 Month or Less		1 to 6 Months		Total
	(In millions)
U.S. government and agency	$	1,317	$	2,015	$	414	$	3,746	$	1,626	$	964	$	1,201	$	3,791

__________________

(1) The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral.

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2018 was $1.3 billion, all of which were U.S. government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement.

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, U.S. government and agency securities, ABS, U.S. and foreign corporate securities, and non-agency RMBS) with 58% invested in agency RMBS, U.S. government and agency securities, cash equivalents, short-term investments or held in cash at September 30, 2018. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value at:

	September 30, 2018		December 31, 2017
	(In millions)
Invested assets on deposit (regulatory deposits) (1)	$	8,035	$	8,263
Invested assets held in trust (reinsurance agreements) (2)	3,275		2,634
Invested assets pledged as collateral (3)	4,514		3,199
Total invested assets on deposit, held in trust and pledged as collateral	$	15,824	$	14,096

__________________

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $92 million and $34 million of the assets on deposit balance represents restricted cash at September 30, 2018 and December 31, 2017, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions. $27 million and $42 million of the assets held in trust balance represents restricted cash at September 30, 2018 and December 31, 2017, respectively.

(3) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 3 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report) and derivative transactions (see Note 5).

See “— Securities Lending” for information regarding securities on loan.

Variable Interest Entities

The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity.

The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.

Consolidated VIEs

Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.

The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at:

	September 30, 2018				December 31, 2017
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
CSEs (assets (primarily loans) and liabilities (primarily debt)) (1)	$	93	$	3	$	116	$	11

__________________

(1) The Company consolidates entities that are structured as CMBS. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its remaining investment in these entities of $72 million and $86 million at estimated fair value at September 30, 2018 and December 31, 2017, respectively.

Unconsolidated VIEs

The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:

	September 30, 2018				December 31, 2017
	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS:
Structured Securities (2)	$	11,560	$	11,560	$	11,461	$	11,461
U.S. and foreign corporate	418		418		504		504
Other limited partnership interests	1,600		2,977		1,511		2,463
Other investments (3)	88		91		82		89
Total	$	13,666	$	15,046	$	13,558	$	14,517

__________________

(1) The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2) For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.

(3) Other investments is comprised of real estate joint ventures and other invested assets.

As described in Note 11, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during both the three months and nine months ended September 30, 2018 and 2017.

Net Investment Income

The components of net investment income were as follows:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2018		2017		2018		2017
	(In millions)
Investment income:
Fixed maturity securities	$	641	$	601	$	1,907	$	1,809
Equity securities	1		2		5		7
Mortgage loans	138		112		384		332
Policy loans	17		18		67		53
Real estate joint ventures	12		13		36		39
Other limited partnership interests	69		38		159		144
Cash, cash equivalents and short-term investments	8		11		21		29
Other	11		10		29		25
Subtotal	897		805		2,608		2,438
Less: Investment expenses	53		46		145		135
Subtotal, net	844		759		2,463		2,303
FVO CSEs — interest income — commercial mortgage loans	9		2		13		6
Net investment income	$	853	$	761	$	2,476	$	2,309

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of related party investment expenses.

Net Investment Gains (Losses)

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized — by sector:
State and political subdivision	$	—		$	—		$	—		$	(1	)
OTTI losses on fixed maturity securities recognized in earnings	—			—			—			(1		)
Fixed maturity securities — net gains (losses) on sales and disposals	(34		)	21			(138		)	(15		)
Total gains (losses) on fixed maturity securities	(34		)	21			(138		)	(16		)
Total gains (losses) on equity securities:
Equity securities — Mark to market and net gains (losses) on sales and disposals	(1		)	3			(5		)	4
Total gains (losses) on equity securities	(1		)	3			(5		)	4
Mortgage loans	(5		)	(2		)	(12		)	(7		)
Real estate joint ventures	—			1			42			4
Other limited partnership interests	—			—			—			(10		)
Other	1			(1		)	3			(6		)
Subtotal	(39		)	22			(110		)	(31		)
FVO CSEs:
Commercial mortgage loans	(4		)	(1		)	(12		)	(2		)
Long-term debt — related to commercial mortgage loans	1			—			1			—
Non-investment portfolio gains (losses)	—			—			—			(1		)
Subtotal	(3		)	(1		)	(11		)	(3		)
Total net investment gains (losses)	$	(42	)	$	21		$	(121	)	$	(34	)

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of related party net investment gains (losses) related to transfers of invested assets.

Sales or Disposals and Impairments of Fixed Maturity Securities

Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Proceeds	$	3,091		$	4,929		$	8,428		$	9,316
Gross investment gains	$	58		$	30		$	70		$	50
Gross investment losses	(92		)	(9		)	(208		)	(65		)
OTTI losses	—			—			—			(1		)
Net investment gains (losses)	$	(34	)	$	21		$	(138	)	$	(16	)

Credit Loss Rollforward

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (“OCI”):

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018		2017
	(In millions)
Balance, beginning of period	$	—	$	9		$	—	$	28
Reductions:
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	—		(8		)	—		(27		)
Balance, end of period	$	—	$	1		$	—	$	1

Related Party Investment Transactions

The Company previously transferred invested assets, primarily consisting of fixed maturity securities, to former affiliates. During the three months and nine months ended September 30, 2018, the Company did not transfer any invested assets to former affiliates or receive transfers of invested assets from former affiliates. During the three months ended September 30, 2017, the Company did not transfer any invested assets to former affiliates or receive transfers of invested assets from former affiliates. The amortized cost and estimated fair value on transfers of invested assets to former affiliates was $294 million and $292 million, respectively, for the nine months ended September 30, 2017. The net investment gains (losses) recognized on transfers of invested assets to former affiliates was ($2) million for the nine months ended September 30, 2017.

At March 31, 2017, the Company had $1.1 billion of loans due from MetLife, Inc., which were included in other invested assets. These loans were carried at fixed interest rates of 4.21% and 5.10%, payable semiannually, and were due on September 30, 2032 and December 31, 2033, respectively. In April 2017, these loans were satisfied in a non-cash exchange for $1.1 billion of notes due to MetLife, Inc. See Note 9 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report.

In January 2017, Metropolitan Life Insurance Company (“MLIC”), a former affiliate, recaptured risks related to guaranteed minimum benefit guarantees on certain variable annuities being reinsured by the Company. The Company transferred invested assets and cash and cash equivalents which are included in the table above. See Note 12 for additional information related to these transfers.

In March 2017, the Company sold an operating joint venture with a book value of $89 million to MLIC for $286 million. The operating joint venture was accounted for under the equity method and included in other invested assets. This sale resulted in an increase in additional paid-in capital of $202 million in the first quarter of 2017.

The Company receives investment administrative services from MetLife Investment Advisors, LLC (“MLIA”), which was considered a related party investment manager until the completion of the MetLife Divestiture. The related investment administrative service charges were $0 and $50 million for the three months and nine months ended September 30, 2018, respectively, and $22 million and $71 million for the three months and nine months ended September 30, 2017, respectively. All of the charges reported as related party activity in 2018 occurred prior to the MetLife Divestiture. See Note 1 regarding the MetLife Divestiture.

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Derivatives

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

5. Derivatives

Accounting for Derivatives

Freestanding Derivatives

Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivatives carrying value in other invested assets or other liabilities.

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported in net derivative gains (losses) except for economic hedges of variable annuity guarantees which are presented in future policy benefits and claims.

Hedge Accounting

The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. The Company also designates derivatives as a hedge of the estimated fair value of a recognized asset or liabilities (fair value hedge). When a derivative is designated as fair value hedge and is determined to be highly effective, changes in fair value are recorded in net derivative gains (losses), consistent with the change in estimated fair value of the hedged item attributable to the designated risk being hedged.

To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method that will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship.

The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument.

When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.

In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses).

Embedded Derivatives

The Company sells variable annuities and issues certain insurance products and investment contracts and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if:

• the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;

• the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and

• a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.

Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses), except for those in policyholder benefits and claims related to ceded reinsurance of GMIB.

See “— Variable Annuity Guarantees” in Note 1 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for additional information on the accounting policy for embedded derivatives bifurcated from variable annuity host contracts.

Derivative Strategies

The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets.

Interest Rate Derivatives

The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards.

Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging relationships.

Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the LIBOR (London Interbank Offered Rate), calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total return swaps in nonqualifying hedging relationships.

The Company purchases interest rate caps and floors primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging relationships.

In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships.

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options.

Foreign Currency Exchange Rate Derivatives

The Company uses foreign currency swaps to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in cash flow and nonqualifying hedging relationships.

To a lesser extent, the Company uses foreign currency forwards in nonqualifying hedging relationships.

Credit Derivatives

The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations, repudiation, moratorium, involuntary restructuring or governmental intervention. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, Inc. (“ISDA”) deems that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging relationships.

The Company enters into written credit default swaps to create synthetic credit investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such as U.S. government and agency securities or other fixed maturity securities. These credit default swaps are not designated as hedging instruments.

Equity Derivatives

The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and equity total return swaps.

Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships.

Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships.

In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded equity futures in nonqualifying hedging relationships.

In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the LIBOR, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to create synthetic investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships.

Primary Risks Managed by Derivatives

The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair valueof the Company’s derivatives, excluding embedded derivatives, held at:

		September 30, 2018						December 31, 2017
	Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges:
Interest rate swaps	Interest rate	$	—	$	—	$	—	$	175	$	44	$	—
Cash flow hedges:
Interest rate swaps	Interest rate	—		—		—		27		5		—
Foreign currency swaps	Foreign currency exchange rate	2,347		116		65		1,827		94		75
Subtotal		2,347		116		65		1,854		99		75
Total qualifying hedges		2,347		116		65		2,029		143		75
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps	Interest rate	15,237		546		940		20,213		922		774
Interest rate caps	Interest rate	3,350		32		—		2,671		7		—
Interest rate futures	Interest rate	54		—		—		282		1		—
Interest rate options	Interest rate	13,819		51		105		24,600		133		63
Foreign currency swaps	Foreign currency exchange rate	1,140		68		28		1,115		71		42
Foreign currency forwards	Foreign currency exchange rate	125		1		—		130		—		1
Credit default swaps — purchased	Credit	86		3		1		65		—		1
Credit default swaps — written	Credit	1,894		32		—		1,900		40		—
Equity futures	Equity market	2,215		1		1		2,713		15		—
Equity index options	Equity market	51,044		862		1,657		47,066		794		1,664
Equity variance swaps	Equity market	9,713		143		445		8,998		128		430
Equity total return swaps	Equity market	2,516		1		63		1,767		—		79
Total non-designated or nonqualifying derivatives		101,193		1,740		3,240		111,520		2,111		3,054
Total		$	103,540	$	1,856	$	3,305	$	113,549	$	2,254	$	3,129

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both September 30, 2018 and December 31, 2017. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules; (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship; (iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes in estimated fair value of the embedded derivatives are already recorded in net income; and (iv) written credit default swaps that are used to create synthetic credit investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.

The following table presents earned income on derivatives:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2018		2017		2018		2017
	(In millions)
Qualifying hedges:
Net investment income	$	8	$	5	$	20	$	17
Nonqualifying hedges:
Net derivative gains (losses)	33		67		124		253
Policyholder benefits and claims	—		1		—		8
Total	$	41	$	73	$	144	$	278

The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)		Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Three Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(2	)	$	2		$	—	$	—		$	—
Total fair value hedges	(2		)	2			—		—			—
Cash flow hedges (5):
Interest rate derivatives	46			—			1		—			(3		)
Foreign currency exchange rate derivatives	—			—			—		—			(4		)
Total cash flow hedges	46			—			1		—			(7		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(281		)	—			—		—			—
Foreign currency exchange rate derivatives	2			(3		)	—		—			—
Credit derivatives	8			—			—		—			—
Equity derivatives	(458		)	—			—		—			—
Embedded derivatives	(38		)	—			—		(2		)	—
Total non-qualifying hedges	(767		)	(3		)	—		(2		)	—
Total	$	(723	)	$	(1	)	$	1	$	(2	)	$	(7	)
Three Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	1		$	(1	)	$	—	$	—		$	—
Total fair value hedges	1			(1		)	—		—			—
Cash flow hedges (5):
Interest rate derivatives	—			—			1		—			1
Foreign currency exchange rate derivatives	—			—			—		—			(53		)
Total cash flow hedges	—			—			1		—			(52		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(81		)	—			—		6			—
Foreign currency exchange rate derivatives	(30		)	4			—		—			—
Credit derivatives	6			—			—		—			—
Equity derivatives	(712		)				—		(64		)	—
Embedded derivatives	582			—			—		(21		)	—
Total non-qualifying hedges	(235		)	4			—		(79		)	—
Total	$	(234	)	$	3		$	1	$	(79	)	$	(52	)

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)			Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Nine Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(12	)	$	12		$	—		$	—		$	—
Total fair value hedges	(12		)	12			—			—			—
Cash flow hedges (5):
Interest rate derivatives	62			—			4			—			(5		)
Foreign currency exchange rate derivatives	(1		)	—			—			—			33
Total cash flow hedges	61			—			4			—			28
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(1,255		)	—			—			—			—
Foreign currency exchange rate derivatives	17			(4		)	—			—			—
Credit derivatives	(2		)	—			—			—			—
Equity derivatives	(942		)	—			—			—			—
Embedded derivatives	664			—			—			(4		)	—
Total non-qualifying hedges	(1,518		)	(4		)	—			(4		)	—
Total	$	(1,469	)	$	8		$	4		$	(4	)	$	28
Nine Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	2		$	(2	)	$	—		$	—		$	—
Total fair value hedges	2			(2		)	—			—			—
Cash flow hedges (5):
Interest rate derivatives	2			—			4			—			3
Foreign currency exchange rate derivatives	11			(10		)	—			—			(107		)
Total cash flow hedges	13			(10		)	4			—			(104		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(145		)	—			—			8			—
Foreign currency exchange rate derivatives	(72		)	(30		)	—			—			—
Credit derivatives	17			—			—			—			—
Equity derivatives	(2,123		)	—			(1		)	(341		)	—
Embedded derivatives	890			—			—			(22		)	—
Total non-qualifying hedges	(1,433		)	(30		)	(1		)	(355		)	—
Total	$	(1,418	)	$	(42	)	$	3		$	(355	)	$	(104	)

______________

(1) Includes gains (losses) reclassified from AOCI for cash flow hedges.

(2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. Hedged items in fair value hedging relationship includes fixed rate liabilities reported in policyholder account balances or future policy benefits and fixed maturity securities. Ineffective portion of the gains (losses) recognized in income is not significant.

(3) Includes changes in estimated fair value related to economic hedges of equity method investments in joint ventures and gains (losses) reclassified from AOCI for cash flow hedges.

(4) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.

(5) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net derivative gains (losses). These amounts were $0 for both the three months and nine months ended September 30, 2018, and $0 and $12 million for the three months and nine months ended September 30, 2017, respectively.

There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for the nine months ended September 30, 2018. At December 31, 2017, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed two years.

At September 30, 2018 and December 31, 2017, the balance in AOCI associated with cash flow hedges was $202 million and $239 million, respectively.

Credit Derivatives

In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the nonqualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps.

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at: 

	September 30, 2018					December 31, 2017
Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)
	(Dollars in millions)
Aaa/Aa/A	$	11	$	677	2.4	$	12	$	558	2.8
Baa	21		1,217		5.2	28		1,317		4.7
Ba	—		—		—	—		25		4.5
Total	$	32	$	1,894	4.2	$	40	$	1,900	4.1

__________________

(1) Includes both single name credit default swaps that may be referenced to the credit of corporations, foreign governments or state and political subdivisions and credit default swaps referencing indices. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”),Standard & Poor’s Global Ratings (“S&P”)and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.

(2) The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Counterparty Credit Risk

The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.

The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.

See Note 6 for a description of the impact of credit risk on the valuation of derivatives.

The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: 

	September 30, 2018						December 31, 2017
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement	Assets			Liabilities			Assets			Liabilities
	(In millions)
Gross estimated fair value of derivatives:
OTC-bilateral (1)	$	1,903		$	3,295		$	2,233		$	3,081
OTC-cleared and Exchange-traded (1), (6)	22			2			70			40
Total gross estimated fair value of derivatives (1)	1,925			3,297			2,303			3,121
Amounts offset on the consolidated balance sheets	—			—			—			—
Estimated fair value of derivatives presented on the consolidated balance sheets (1), (6)	1,925			3,297			2,303			3,121
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(1,569		)	(1,569		)	(1,942		)	(1,942		)
OTC-cleared and Exchange-traded	(1		)	(1		)	(1		)	(1		)
Cash collateral: (3), (4)
OTC-bilateral	(237		)	—			(257		)	—
OTC-cleared and Exchange-traded	(21		)	—			(28		)	(39		)
Securities collateral: (5)
OTC-bilateral	(86		)	(1,726		)	(31		)	(1,138		)
OTC-cleared and Exchange-traded	—			(1		)	—			—
Net amount after application of master netting agreements and collateral	$	11		$	—		$	44		$	1

__________________

(1) At September 30, 2018 and December 31, 2017, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $69 million and $49 million, respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($8) million and ($8) million, respectively.

(2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.

(3) Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives is included in cash and cash equivalents, short-term investments or in fixed maturity securities, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

(4) The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At September 30, 2018 and December 31, 2017, the Company received excess cash collateral of $39 million and $94 million, respectively, and provided excess cash collateral of $0 and $5 million, respectively, which is not included in the table above due to the foregoing limitation.

(5) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but atSeptember 30, 2018,noneof the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. AtSeptember 30, 2018andDecember 31, 2017, the Company received excess securities collateral with an estimated fair value of$69 millionand$337 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. AtSeptember 30, 2018andDecember 31, 2017, the Company provided excess securities collateral with an estimated fair value of$307 millionand$471 million, respectively, for its OTC-bilateral derivatives, and$79 millionand$427 million, respectively, for its OTC-cleared derivatives, and$105 millionand$118 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.

(6) Effective January 16, 2018, the London Clearing House (“LCH”) amended its rulebook, resulting in the characterization of variation margin transfers as settlement payments, as opposed to adjustments to collateral.These amendments impacted the accounting treatment of the Company’s centrally cleared derivatives, for which the LCH serves as the central clearing party.

The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. A small number of these arrangements also include credit-contingent provisions that include a threshold above which collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of the Company and/or the counterparty. In addition, substantially all of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s and S&P. If a party’s financial strength or credit ratings were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives.

The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. The Company’s collateral agreements require both parties to be fully collateralized, as such, the Company would not be required to post additional collateral as a result of a downgrade in its financial strength rating. OTC-bilateral derivatives that are not subject to collateral agreements are excluded from this table.  

	September 30, 2018		December 31, 2017
	(In millions)
Estimated fair value of derivatives in a net liability position (1)	$	1,726	$	1,138
Estimated Fair Value of Collateral Provided:
Fixed maturity securities	$	1,999	$	1,414

__________________

(1) After taking into consideration the existence of netting agreements.

Embedded Derivatives

The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; related party ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; related party assumed reinsurance of guaranteed minimum benefits related to GMWBs and certain GMIBs; funds withheld on assumed and ceded reinsurance; assumed reinsurance on fixed deferred annuities; fixed annuities with equity-indexed returns; and certain debt and equity securities. 

The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:

	Balance Sheet Location	September 30, 2018		December 31, 2017
		(In millions)
Embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	Premiums, reinsurance and other receivables	$	166	$	227
Options embedded in debt or equity securities (1)	Investments	—		(52		)
Embedded derivatives within asset host contracts		$	166	$	175
Embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	Policyholder account balances	$	396	$	1,212
Assumed reinsurance on fixed deferred annuities	Policyholder account balances	—		1
Fixed annuities with equity indexed returns	Policyholder account balances	1,205		674
Embedded derivatives within liability host contracts		$	1,601	$	1,887

__________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018, the Company is no longer required to bifurcate and account separately for derivatives embedded in equity securities. Beginning January 1, 2018, the entire change in the estimated fair value of equity securities is recognized as a component of net investment gains and losses.

The following table presents changes in estimated fair value related to embedded derivatives:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net derivative gains (losses) (1), (2)	$	(38	)	$	582		$	664		$	890
Policyholder benefits and claims	$	(2	)	$	(21	)	$	(4	)	$	(22	)

__________________

(1) The valuation of direct and assumed guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustmentwere($150) millionand ($116) millionfor thethree monthsandnine months ended September 30, 2018, respectively, and$457 millionand$385 millionfor thethree monthsandnine months ended September 30, 2017, respectively.

(2) See Note 12 for discussion of related party net derivative gains (losses).

XML

Fair Value

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value

6. Fair Value

Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, including those items for which the Company has elected the FVO, are presented below at:

	September 30, 2018
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	23,332	$	603	$	23,935
U.S. government and agency	4,072		6,878		—		10,950
RMBS	—		7,291		1,083		8,374
Foreign corporate	—		6,206		1,042		7,248
State and political subdivision	—		4,069		—		4,069
CMBS	—		4,160		130		4,290
ABS	—		1,948		61		2,009
Foreign government	—		1,404		—		1,404
Total fixed maturity securities	4,072		55,288		2,919		62,279
Equity securities	15		13		122		150
Short-term investments	56		60		—		116
Real estate joint ventures (1)	—		—		15		15
Other limited partnership interests (1)	—		—		25		25
Commercial mortgage loans held by CSEs — FVO	—		93		—		93
Derivative assets: (2)
Interest rate	—		629		—		629
Foreign currency exchange rate	—		185		—		185
Credit	—		25		10		35
Equity market	1		854		152		1,007
Total derivative assets	1		1,693		162		1,856
Embedded derivatives within asset host contracts (3)	—		—		166		166
Separate account assets	202		111,530		4		111,736
Total assets	$	4,346	$	168,677	$	3,413	$	176,436
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	1,045	$	—	$	1,045
Foreign currency exchange rate	—		92		1		93
Credit	—		1		—		1
Equity market	1		1,716		449		2,166
Total derivative liabilities	1		2,854		450		3,305
Embedded derivatives within liability host contracts (3)	—		—		1,601		1,601
Long-term debt of CSEs — FVO	—		3		—		3
Total liabilities	$	1	$	2,857	$	2,051	$	4,909

	December 31, 2017
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	22,048	$	909	$	22,957
U.S. government and agency	8,304		7,988		—		16,292
RMBS	—		6,989		988		7,977
Foreign corporate	—		5,935		1,088		7,023
State and political subdivision	—		4,181		—		4,181
CMBS	—		3,287		136		3,423
ABS	—		1,723		106		1,829
Foreign government	—		1,304		5		1,309
Total fixed maturity securities	8,304		53,455		3,232		64,991
Equity securities (4)	18		19		124		161
Short-term investments	142		156		14		312
Commercial mortgage loans held by CSEs — FVO	—		115		—		115
Derivative assets: (2)
Interest rate	1		1,111		—		1,112
Foreign currency exchange rate	—		165		—		165
Credit	—		30		10		40
Equity market	15		773		149		937
Total derivative assets	16		2,079		159		2,254
Embedded derivatives within asset host contracts (3)	—		—		227		227
Separate account assets	410		117,842		5		118,257
Total assets	$	8,890	$	173,666	$	3,761	$	186,317
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	837	$	—	$	837
Foreign currency exchange rate	—		117		1		118
Credit	—		1		—		1
Equity market	—		1,736		437		2,173
Total derivative liabilities	—		2,691		438		3,129
Embedded derivatives within liability host contracts (3)	—		—		1,887		1,887
Long-term debt of CSEs — FVO	—		11		—		11
Total liabilities	$	—	$	2,702	$	2,325	$	5,027

__________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(2) Derivative assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities are presented within other liabilities on the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.

(3) Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables and other invested assets on the consolidated balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the consolidated balance sheets. At September 30, 2018 and December 31, 2017, debt and equity securities also included embedded derivatives of $0 and ($52) million, respectively.

(4) The Company reclassified Federal Home Loan Bank (“FHLB”) stock in the prior period from equity securities to other invested assets.

Valuation Controls and Procedures

The Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by MLIA. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary, based on changing market conditions. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of Brighthouse’s Board of Directors regarding compliance with fair value accounting standards.

The fair value of financial assets and financial liabilities is based on quoted market prices, where available. The Company assesses whether prices received represent a reasonable estimate of fair value through controls designed to ensure valuations represent an exit price. MLIA performs several controls, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as “consensus pricing,” are used for non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments. Fixed maturity securities priced using independent non-binding broker quotations represent less than 1% of the total estimated fair value of fixed maturity securities and 5% of the total estimated fair value of Level 3 fixed maturity securities at September 30, 2018.

MLIA also applies a formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, MLIA will use the last available price.

The Company reviews outputs of MLIA’s controls and performs additional controls, including certain monthly controls, which include but are not limited to, performing balance sheet analytics to assess reasonableness of period to period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the nine months ended September 30, 2018.

Determination of Fair Value

Fixed maturity securities

The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below.

U.S. corporate and foreign corporate securities:Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues.

U.S. government and agency, state and political subdivision and foreign government securities:Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker dealer quotes, and comparable securities that are actively traded.

Structured securities:Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to; collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance.

Equity securities, short-term investments, real estate joint ventures, other limited partnership interests, commercial mortgage loans held by CSEs — FVO and long-term debt of CSEs — FVO

The fair value for actively traded equity securities and short-term investments are determined using quoted market prices and are classified as Level 1 assets. For financial instruments classified as Level 2 assets or liabilities, fair values are determined using a market approach and are valued based on a variety of observable inputs as described below.

Equity securities and short-term investments:Fair value is determined using third-party commercial pricing services, with the primary input being quoted prices in markets that are not active.

Real Estate Joint Ventures and Other Limited Partnership Interests: Fair value is generally based on the Company’s share of the net asset value (“NAV”) as provided on the financial statements of the investees.

Commercial mortgage loans held by CSEs — FVO and long-term debt of CSEs — FVO:Fair value is determined using third-party commercial pricing services, with the primary input being quoted securitization market price determined principally by independent pricing services using observable inputs or quoted prices or reported NAV provided by the fund managers.

Derivatives

The fair values for exchange-traded derivatives are determined using the quoted market prices and are classified as Level 1 assets. For OTC-bilateral derivatives and OTC-cleared derivatives classified as Level 2 assets or liabilities, fair values are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs.

The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.

Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.

Embedded Derivatives

Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees, equity or bond indexed crediting rates within certain annuity contracts, and those related to funds withheld on ceded reinsurance agreements. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.

The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

The Company’s actuarial department calculates the fair value of these embedded derivatives, which are estimated as the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations concerning policyholder behavior. The calculation is based on in-force business, and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates.

Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience.

The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for Brighthouse Financial, Inc.’s debt. These observable spreads are then adjusted to reflect the priority of these liabilities and claims paying ability of the issuing insurance subsidiaries as compared to Brighthouse Financial, Inc.’s overall financial strength.

Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income.

The Company recaptured from a former affiliate the risk associated with certain GMIBs. These embedded derivatives are included in policyholder account balances on the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on these recaptured risks is determined using a methodology consistent with that described previously for the guarantees directly written by the Company.

The Company ceded to a former affiliate the risk associated with certain of the GMIBs, GMABs and GMWBs described above that are also accounted for as embedded derivatives. In addition to ceding risks associated with guarantees that are accounted for as embedded derivatives, the Company also ceded, to a former affiliate, certain directly written GMIBs that are accounted for as insurance (i.e., not as embedded derivatives), but where the reinsurance agreement contains an embedded derivative. These embedded derivatives are included within premiums, reinsurance and other receivables on the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer.

The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as previously described in “— Equity securities, short-term investments, real estate joint ventures, other limited partnership interests, commercial mortgage loans held by CSEs — FVO and long-term debt of CSEs — FVO.” The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities on the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.

The Company issues certain annuity contracts which allow the policyholder to participate in returns from equity indices. These equity indexed features are embedded derivatives which are measured at estimated fair value separately from the host fixed annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

The estimated fair value of the embedded equity indexed derivatives, based on the present value of future equity returns to the policyholder using actuarial and present value assumptions including expectations concerning policyholder behavior, is calculated by the Company’s actuarial department. The calculation is based on in-force business and uses standard capital market techniques, such as Black-Scholes, to calculate the value of the portion of the embedded derivative for which the terms are set. The portion of the embedded derivative covering the period beyond where terms are set is calculated as the present value of amounts expected to be spent to provide equity indexed returns in those periods. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in nonperformance risk.

Transfers between Levels

Overall, transfers between levels occur when there are changes in the observability of inputs and market activity. Transfers into or out of any level are assumed to occur at the beginning of the period.

Transfers between Levels 1 and 2:

For assets and liabilities measured at estimated fair value and still held at September 30, 2018 and December 31, 2017, transfers between Levels 1 and 2 were not significant.

Transfers into or out of Level 3:

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:

					September 30, 2018				December 31, 2017				Impact of Increase in Input on Estimated Fair Value (2)
	Valuation Techniques		Significant Unobservable Inputs		Range			Weighted Average (1)	Range			Weighted Average (1)
Fixed maturity securities (3)
U.S. corporate and foreign corporate	•	Matrix pricing	•	Offered quotes (4)	86	-	126	104	93	-	142	111	Increase
	•	Market pricing	•	Quoted prices (4)	53	-	316	101	—	-	443	77	Increase
RMBS	•	Market pricing	•	Quoted prices (4)	59	-	107	95	3	-	107	95	Increase (5)
CMBS	•	Market pricing	•	Quoted prices (4)	67	-	104	92	8	-	104	88	Increase (5)
	•	Consensus pricing	•	Offered quotes (4)	103	-	103	103	105	-	105	105	Increase (5)
ABS	•	Market pricing	•	Quoted prices (4)	99	-	101	100	100	-	104	101	Increase (5)
	•	Consensus pricing	•	Offered quotes (4)	100	-	100	100	100	-	100	100	Increase (5)
Derivatives
Foreign currency exchange rate	•	Present value techniques	•	Swap yield (17)	(23)	-	2		—	-	—		Increase (6)
Credit	•	Present value techniques	•	Credit spreads (7)	97	-	99		—	-	—		Decrease (6)
	•	Consensus pricing	•	Offered quotes (8)
Equity market	•	Present value techniques or option pricing models	•	Volatility (9)	12%	-	26%		11%	-	31%		Increase (6)
			•	Correlation (10)	30%	-	30%		10%	-	30%
Embedded derivatives
Direct, assumed and ceded guaranteed minimum benefits	•	Option pricing techniques	•	Mortality rates:
				Ages 0 - 40	0%	-	0.08%		0%	-	0.09%		Decrease (11)
				Ages 41 - 60	0.04%	-	0.60%		0.04%	-	0.65%		Decrease (11)
				Ages 61 - 115	0.26%	-	100%		0.26%	-	100%		Decrease (11)
			•	Lapse rates:
				Durations 1 - 10	0.25%	-	100%		0.25%	-	100%		Decrease (12)
				Durations 11 - 20	2%	-	100%		2%	-	100%		Decrease (12)
				Durations 21 - 116	2%	-	100%		2%	-	100%		Decrease (12)
			•	Utilization rates	0%	-	25%		0%	-	25%		Increase (13)
			•	Withdrawal rates	0.25%	-	10%		0.25%	-	10%		(14)
			•	Long-term equity volatilities	17.40%	-	25%		17.40%	-	25%		Increase (15)
			•	Nonperformance risk spread	1.05%	-	1.91%		0.64%	-	1.43%		Decrease (16)

___________________

(1) The weighted average for fixed maturity securities is determined based on the estimated fair value of the securities.

(2) The impact of a decrease in input would have the opposite impact on estimated fair value. For embedded derivatives, changes to direct and assumed guaranteed minimum benefits are based on liability positions; changes to ceded guaranteed minimum benefits are based on asset positions.

(3) Significant increases (decreases) in expected default rates in isolation would result in substantially lower (higher) valuations.

(4) Range and weighted average are presented in accordance with the market convention for fixed maturity securities of dollars per hundred dollars of par.

(5) Changes in the assumptions used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates.

(6) Changes in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions.

(7) Represents the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives with significant unobservable inputs are primarily comprised of written credit default swaps.

(8) At September 30, 2018 and December 31, 2017, independent non-binding broker quotations were used in the determination of less than 1% and 1% of the total net derivative estimated fair value, respectively.

(9) Ranges represent the underlying equity volatility quoted in percentage points. Since this valuation methodology uses a range of inputs across multiple volatility surfaces to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.

(10) Ranges represent the different correlation factors utilized as components within the valuation methodology. Presenting a range of correlation factors is more representative of the unobservable input used in the valuation. Increases (decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations.

(11) Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(12) Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(13) The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(14) The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(15) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(16) Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.

(17) Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curves are utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.

The following is a summary of the valuation techniques and significant unobservable inputs used in the fair value measurement of assets and liabilities classified within Level 3 that are not included in the preceding table. Generally, all other classes of securities classified within Level 3, including those within separate account assets and embedded derivatives within funds withheld related to certain assumed reinsurance, use the same valuation techniques and significant unobservable inputs as previously described for Level 3 securities. This includes matrix pricing and discounted cash flow methodologies, inputs such as quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2, as well as independent non-binding broker quotations. The sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is similar in nature to that described in the preceding table.

The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)			Structured Securities			State and Political Subdivision			Foreign Government		Equity Securities
	(In millions)
Three Months Ended September 30, 2018
Balance, beginning of period	$	1,872		$	1,268		$	8		$	—	$	120
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			10			2			—		(2		)
Total realized/unrealized gains (losses) included in AOCI	(44		)	(8		)	(2		)	—		—
Purchases (8)	56			287			—			—		—
Sales (8)	(51		)	(114		)	(6		)	—		—
Issuances (8)	—			—			—			—		—
Settlements (8)	—			—			—			—		—
Transfers into Level 3 (9)	20			3			—			—		9
Transfers out of Level 3 (9)	(208		)	(172		)	(2		)	—		(5		)
Balance, end of period	$	1,645		$	1,274		$	—		$	—	$	122
Three Months Ended September 30, 2017
Balance, beginning of period	$	2,356		$	1,489		$	—		$	—	$	134
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	1			13			—			—		—
Total realized/unrealized gains (losses) included in AOCI	35			6			—			—		(1		)
Purchases (8)	92			147			—			—		—
Sales (8)	(57		)	(230		)	(1		)	—		(3		)
Issuances (8)	—			—			—			—		—
Settlements (8)	—			—			—			—		—
Transfers into Level 3 (9)	191			—			10			—		—
Transfers out of Level 3 (9)	(19		)	(13		)	—			—		—
Balance, end of period	$	2,599		$	1,412		$	9		$	—	$	130
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	—		$	4		$	—		$	—	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	1		$	10		$	—		$	—	$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real Estate Joint Ventures (2)			Other Limited Partnership Interests (2)			Short-term Investments			Net Derivatives (3)			Net Embedded Derivatives (4)			Separate Account Assets (5)
	(In millions)
Three Months Ended September 30, 2018
Balance, beginning of period	$	17		$	24		$	—		$	(284	)	$	(1,241	)	$	4
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			3			—			(4		)	(40		)	—
Total realized/unrealized gains (losses) included in AOCI	—			(1		)	—			—			—			—
Purchases (8)	—			—			—			—			—			1
Sales (8)	(2		)	(1		)	—			—			—			—
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			—			(154		)	—
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			—			—			—			(1		)
Balance, end of period	$	15		$	25		$	—		$	(288	)	$	(1,435	)	$	4
Three Months Ended September 30, 2017
Balance, beginning of period	$	—		$	—		$	91		$	(780	)	$	(2,113	)	$	6
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			—			—			4			558			—
Total realized/unrealized gains (losses) included in AOCI	—			—			—			—			—			—
Purchases (8)	—			—			—			—			—			2
Sales (8)	—			—			—			—			—			—
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			370			(155		)	—
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			(90		)	—			—			(2		)
Balance, end of period	$	—		$	—		$	1		$	(406	)	$	(1,710	)	$	6
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	—		$	3		$	—		$	(4	)	$	(37	)	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	—		$	—		$	—		$	4		$	330		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)			Structured Securities			State and Political Subdivision			Foreign Government			Equity Securities
	(In millions)
Nine Months Ended September 30, 2018
Balance, beginning of period	$	1,997		$	1,230		$	—		$	5		$	124
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	2			21			—			—			(4		)
Total realized/unrealized gains (losses) included in AOCI	(121		)	(10		)	—			—			—
Purchases (8)	164			339			—			—			—
Sales (8)	(184		)	(229		)	—			—			(3		)
Issuances (8)	—			—			—			—			—
Settlements (8)	—			—			—			—			—
Transfers into Level 3 (9)	20			—			—			—			10
Transfers out of Level 3 (9)	(233		)	(77		)	—			(5		)	(5		)
Balance, end of period	$	1,645		$	1,274		$	—		$	—		$	122
Nine Months Ended September 30, 2017
Balance, beginning of period	$	2,391		$	1,711		$	17		$	—		$	137
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	(2		)	22			—			—			—
Total realized/unrealized gains (losses) included in AOCI	179			43			—			—			2
Purchases (8)	235			186			—			—			4
Sales (8)	(231		)	(467		)	(1		)	—			(13		)
Issuances (8)	—			—			—			—			—
Settlements (8)	—			—			—			—			—
Transfers into Level 3 (9)	180			—			3			—			—
Transfers out of Level 3 (9)	(153		)	(83		)	(10		)	—			—
Balance, end of period	$	2,599		$	1,412		$	9		$	—		$	130
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	(1	)	$	14		$	—		$	—		$	(4	)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	1		$	19		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real Estate Joint Ventures (2)			Other Limited Partnership Interests (2)			Short-term Investments			Net Derivatives (3)			Net Embedded Derivatives (4)			Separate Account Assets (5)
	(In millions)
Nine Months Ended September 30, 2018
Balance, beginning of period	$	22		$	28		$	14		$	(279	)	$	(1,660	)	$	5
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	(1		)	2			—			(12		)	660			—
Total realized/unrealized gains (losses) included in AOCI	—			(1		)	—			—			—			—
Purchases (8)	—			—			—			3			—			1
Sales (8)	(6		)	(4		)	(14		)	—			—			(1		)
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			—			(435		)	(1		)
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			—			—			—			—
Balance, end of period	$	15		$	25		$	—		$	(288	)	$	(1,435	)	$	4
Nine Months Ended September 30, 2017
Balance, beginning of period	$	—		$	—		$	2		$	(954	)	$	(2,383	)	$	10
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			—			—			100			883			—
Total realized/unrealized gains (losses) included in AOCI	—			—			—			—			—			—
Purchases (8)	—			—			—			4			—			2
Sales (8)	—			—			—			—			—			(3		)
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			444			(210		)	—
Transfers into Level 3 (9)	—			—			—			—			—			1
Transfers out of Level 3 (9)	—			—			(1		)	—			—			(4		)
Balance, end of period	$	—		$	—		$	1		$	(406	)	$	(1,710	)	$	6
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	(1	)	$	2		$	—		$	(12	)	$	867		$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	—		$	—		$	—		$	98		$	1,002		$	—

_________________

(1) Comprised of U.S. and foreign corporate securities.

(2) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(3) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.

(4) Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

(5) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income (loss). For the purpose of this disclosure, these changes are presented within net investment gains (losses).

(6) Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

(7) Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

(8) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

(9) Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.

(10) Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

Fair Value Option

The following table presents information for certain assets and liabilities of CSEs, which are accounted for under the FVO. These assets and liabilities were initially measured at fair value.

	September 30, 2018		December 31, 2017
	(In millions)
Assets (1)
Unpaid principal balance	$	59	$	70
Difference between estimated fair value and unpaid principal balance	34		45
Carrying value at estimated fair value	$	93	$	115
Liabilities (1)
Contractual principal balance	$	3	$	10
Difference between estimated fair value and contractual principal balance	—		1
Carrying value at estimated fair value	$	3	$	11

__________________

(1) These assets and liabilities are comprised of commercial mortgage loans and long-term debt. Changes in estimated fair value on these assets and liabilities and gains or losses on sales of these assets are recognized in net investment gains (losses). Interest income on commercial mortgage loans held by CSEs — FVO is recognized in net investment income. Interest expense from long-term debt of CSEs — FVO is recognized in other expenses.

Fair Value of Financial Instruments Carried at Other Than Fair Value

The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income, payables for collateral under securities loaned and other transactions and those short-term investments that are not securities, such as time deposits, and therefore are not included in the three level hierarchy table disclosed in the “— Recurring Fair Value Measurements” section. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:

	September 30, 2018
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	12,940	$	—	$	—	$	12,914	$	12,914
Policy loans	$	1,443	$	—	$	685	$	922	$	1,607
Other invested assets	$	77	$	—	$	64	$	13	$	77
Premiums, reinsurance and other receivables	$	1,636	$	—	$	60	$	1,719	$	1,779
Liabilities
Policyholder account balances	$	16,026	$	—	$	—	$	14,871	$	14,871
Long-term debt	$	3,963	$	—	$	2,992	$	600	$	3,592
Other liabilities	$	515	$	—	$	304	$	211	$	515
Separate account liabilities	$	1,227	$	—	$	1,227	$	—	$	1,227

	December 31, 2017
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	10,627	$	—	$	—	$	10,871	$	10,871
Policy loans	$	1,523	$	—	$	781	$	959	$	1,740
Real estate joint ventures (1)	$	5	$	—	$	—	$	22	$	22
Other limited partnership interests (1)	$	36	$	—	$	—	$	28	$	28
Other invested assets (2)	$	71	$	—	$	71	$	—	$	71
Premiums, reinsurance and other receivables	$	1,758	$	—	$	128	$	1,985	$	2,113
Liabilities
Policyholder account balances	$	15,791	$	—	$	—	$	15,927	$	15,927
Long-term debt	$	3,601	$	—	$	3,039	$	600	$	3,639
Other liabilities	$	314	$	—	$	100	$	214	$	314
Separate account liabilities	$	1,210	$	—	$	1,210	$	—	$	1,210

_________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(2) The Company reclassified FHLB stock in the prior period from equity securities to other invested assets.

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Long-term Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Long-term Debt

7. Long-term Debt

Junior Subordinated Debentures

On September 12, 2018, Brighthouse Financial, Inc. issued $375 million of junior subordinated debentures (the “debentures”) due September 2058, which bear interest at a fixed rate of 6.250%, payable quarterly, subject to Brighthouse Financial, Inc.’s right to defer interest payments in accordance with the terms of the debentures. The debentures are unsecured obligations and are subordinate and junior in right of payment to Brighthouse Financial, Inc.’s senior indebtedness.

Repurchase Facility

In April 2018, Brighthouse Life Insurance Company entered into a committed repurchase facility (the “Repurchase Facility”) with a financial institution, pursuant to which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $2.0 billion in respect of certain eligible securities. The Repurchase Facility has a term of three years, beginning on July 31, 2018 and ending on July 31, 2021. At September 30, 2018, there were no drawdowns under the Repurchase Facility.

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Equity

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Equity

8. Equity

Common Stock Repurchase Program

On August 5, 2018, Brighthouse Financial, Inc.’s Board of Directors authorized the repurchase of up to $200 million of common stock. Repurchases made under such authorization 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. As of September 30, 2018, the Company repurchased 982,057 shares of its common stock through open market purchases for $42 million.

Share-Based Compensation Plans

The Company’s share-based compensation plans provide awards to employees and non-employee directors and may be in the form of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other share-based awards. Additionally, employees may purchase shares at a discount under an employee stock purchase plan. The Company also granted restricted stock units to certain employees and non-employee directors on September 8, 2017, shortly following the Separation (the “Founders’ Grant”). The employee stock incentive plan and the non-employee director stock compensation plan were each approved at the Brighthouse Financial, Inc. annual meeting of stockholders held on May 23, 2018. The aggregate number of authorized shares available for issuance at September 30, 2018 under the Company’s various share-based compensation plans was 7,330,377.

All share-based compensation is measured at fair value as of the grant date. The Company recognizes compensation expense related to share-based awards based on the number of awards expected to vest, which represents the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant. Unless a material deviation from the assumed forfeiture rate is observed during the term in which the awards are expensed, the Company recognizes any adjustment necessary to reflect differences in actual experience in the period the award becomes payable or exercisable. Compensation expense related to share-based awards, which is included in other expenses, is principally related to the issuance of restricted stock units with other costs incurred relating to stock options and performance units. With the exception of the Founders’ Grant, the Company grants the majority of each year’s awards in the first quarter of the year.

Compensation Expense Related to Share-Based Compensation

The following table presents total share-based compensation expense:

	Three Months Ended  September 30, 2018		Nine Months Ended  September 30, 2018
	(In millions)
Restricted stock units, Founders’ Grant	$	21	$	31
Restricted stock units	$	3	$	4
Stock options	$	—	$	1
Performance share units	$	—	$	—

The share-based compensation cost for the Founders’ Grant was fully recognized at September 30, 2018. Unrecognized share-based compensation for other grants related to restricted stock units, stock options and performance share units was $16 million at September 30, 2018 with a weighted average recognition period of six quarters.

Equity Awards

Restricted Share Units (“RSUs”)

RSUs are units that, if vested, are payable in shares of Brighthouse Financial, Inc. common stock. The Company does not credit RSUs with dividend-equivalents as RSUs do not accrue dividends. Accordingly, the estimated fair value of RSUs is based upon the closing price of shares on the date of grant, less a forfeiture rate. With the exception of the Founders’ Grant, most RSUs use graded vesting and vest in thirds on, or shortly after, the first three anniversaries of their grant date, while other RSUs vest in their entirety on the third or later anniversary of their grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances.

Performance Share Units (“PSUs”)

PSUs are units that, if vested, are multiplied by a performance factor to produce a number of final PSUs, which are payable in shares of Brighthouse Financial, Inc. common stock. PSUs cliff vest at the end of the three-year performance period. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances. The performance factors will be based on the achievement of corporate expense reductions and the capital return targets over the respective three-year period.

For awards granted for performance periods in progress through September 30, 2018, the vested PSUs will be multiplied by a performance factor of 0% to 150%. Assuming the Company has met certain threshold performance goals, the Compensation Committee of Brighthouse Financial, Inc.’s Board of Directors will determine the performance factor in its discretion. The Company estimates the fair value of performance shares semi-annually until they become payable.

The following table presents a summary of PSU and RSU activity:

	Restricted			Performance
	Units	Weighted Average Grant-Date Fair Value		Units	Weighted Average Grant-Date Fair Value
Outstanding at January 1, 2018	—	$	—	—	$	—
Granted	995,861	$	48.06	73,849	$	48.10
Forfeited	15,007	$	48.10	—	$	—
Paid	—	$	—	—	$	—
Outstanding at September 30, 2018	980,854	$	48.05	73,849	$	48.10
Vested at September 30, 2018	648,561	$	48.10	—	$	—

Stock Options

Stock options represent the contingent right of award holders to purchase shares of Brighthouse Financial, Inc. common stock at a stated price for a limited time. All stock options have an exercise price equal to the closing price of a share on the date of grant and have a maximum term of ten years. Certain stock options granted are exercisable at a rate of one-third of each award on each of the first three anniversaries of the grant date, while others are exercisable entirely on the third anniversary of the grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances. In May 2018, the Company granted 242,560 options at a weighted average exercise price of $53.47 for aggregate intrinsic value of $0. No stock options were exercised, expired or forfeited during the period ended September 30, 2018.

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes model. The significant assumptions the Company uses in its model include: expected volatility of the price of shares; risk-free rate of return; graded three-year vesting; and expected option life.

The following table presents the weighted average assumptions used to determine the grant-date fair value of stock options that Brighthouse Financial, Inc. has granted:

	September 30, 2018
Risk-free rate of return	2.93%
Expected volatility	25.00%
Expected option life, years	5.80
Weighted average exercise price of stock options granted	$53.47
Weighted average fair value of stock options granted	$12.54

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI was as follows:

	Three Months Ended  September 30, 2018
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, June 30, 2018	$	690		$	168		$	(19	)	$	(24	)	$	815
OCI before reclassifications	(310		)	(7		)	(7		)	—			(324		)
Deferred income tax benefit (expense)	66			1			1			—			68
AOCI before reclassifications, net of income tax	446			162			(25		)	(24		)	559
Amounts reclassified from AOCI	38			(47		)	—			—			(9		)
Deferred income tax benefit (expense)	(8		)	10			—			—			2
Amounts reclassified from AOCI, net of income tax	30			(37		)	—			—			(7		)
Balance, September 30, 2018	$	476		$	125		$	(25	)	$	(24	)	$	552

	Three Months Ended  September 30, 2017
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, June 30, 2017	$	1,721		$	223		$	(33	)	$	(17	)	$	1,894
OCI before reclassifications	(844		)	(52		)	9			—			(887		)
Deferred income tax benefit (expense)	302			18			(2		)	(1		)	317
AOCI before reclassifications, net of income tax	1,179			189			(26		)	(18		)	1,324
Amounts reclassified from AOCI	(26		)	(1		)	—			—			(27		)
Deferred income tax benefit (expense)	9			2			—			—			11
Amounts reclassified from AOCI, net of income tax	(17		)	1			—			—			(16		)
Balance, September 30, 2017	$	1,162		$	190		$	(26	)	$	(18	)	$	1,308

	Nine Months Ended  September 30, 2018
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, December 31, 2017	$	1,572		$	154		$	(24	)	$	(26	)	$	1,676
Cumulative effect of change in accounting principle and other, net of income tax (see Note 1)	(79		)	—			—			—			(79		)
Balance, January 1, 2018	1,493			154			(24		)	(26		)	1,597
OCI before reclassifications	(1,448		)	28			(1		)	3			(1,418		)
Deferred income tax benefit (expense)	325			(6		)	—			(1		)	318
AOCI before reclassifications, net of income tax	370			176			(25		)	(24		)	497
Amounts reclassified from AOCI	138			(65		)	—			—			73
Deferred income tax benefit (expense)	(32		)	14			—			—			(18		)
Amounts reclassified from AOCI, net of income tax	106			(51		)	—			—			55
Balance, September 30, 2018	$	476		$	125		$	(25	)	$	(24	)	$	552

	Nine Months Ended  September 30, 2017
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, December 31, 2016	$	1,044		$	268		$	(31	)	$	(16	)	$	1,265
OCI before reclassifications	118			(104		)	5			(14		)	5
Deferred income tax benefit (expense)	(41		)	36			—			12			7
AOCI before reclassifications, net of income tax	1,121			200			(26		)	(18		)	1,277
Amounts reclassified from AOCI	64			(17		)	—			—			47
Deferred income tax benefit (expense)	(23		)	7			—			—			(16		)
Amounts reclassified from AOCI, net of income tax	41			(10		)	—			—			31
Balance, September 30, 2017	$	1,162		$	190		$	(26	)	$	(18	)	$	1,308

__________________

(1) See Note 4 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI.

Information regarding amounts reclassified out of each component of AOCI was as follows:

AOCI Components	Amounts Reclassified from AOCI												Consolidated Statements of Operations and Comprehensive Income (Loss) Locations
	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	(36	)	$	24		$	(137	)	$	(22	)	Net investment gains (losses)
Net unrealized investment gains (losses)	—			—			1			2			Net investment income
Net unrealized investment gains (losses)	(2		)	2			(2		)	(44		)	Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax	(38		)	26			(138		)	(64		)
Income tax (expense) benefit	8			(9		)	32			23
Net unrealized investment gains (losses), net of income tax	(30		)	17			(106		)	(41		)
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	15			—			31			—			Net derivative gains (losses)
Interest rate swaps	—			—			2			2			Net investment income
Interest rate forwards	31			—			31			2			Net derivative gains (losses)
Interest rate forwards	1			1			2			2			Net investment income
Foreign currency swaps	—			—			(1		)	11			Net derivative gains (losses)
Gains (losses) on cash flow hedges, before income tax	47			1			65			17
Income tax (expense) benefit	(10		)	(2		)	(14		)	(7		)
Gains (losses) on cash flow hedges, net of income tax	37			(1		)	51			10
Total reclassifications, net of income tax	$	7		$	16		$	(55	)	$	(31	)

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Other Revenues and Other Expenses

9 Months Ended

Sep. 30, 2018

Other Income and Expenses [Abstract]

Other Expenses

9. Other Revenues and Other Expenses

Other Revenues

The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the “Funds”) whereby the Company is paid monthly or quarterly fees (“12b-1 fees”) for providing certain services to customers and distributors of the Funds. The 12b-1 fees are generally equal to a fixed percentage of the average daily balance of the customer’s investment in a fund are based on a specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees.

To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds, and is used to recognize revenue associated with 12b-1 fees.

Other revenues consisted primarily of 12b-1 fees of $91 million and $275 million for the three months and nine months ended September 30, 2018, respectively, and $94 million and $263 million for the three months and nine months ended September 30, 2017, respectively, of which substantially all were reported in the Annuities segment.

Other Expenses

Information on other expenses was as follows:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Compensation	$	99		$	84		$	252		$	213
Commissions	221			212			650			602
Volume-related costs	104			112			318			375
Expenses on ceded and assumed reinsurance with former affiliates	5			4			12			30
Capitalization of DAC	(83		)	(72		)	(235		)	(187		)
Interest expense on debt	40			34			113			116
Premium taxes, licenses and fees	12			16			55			49
Professional services	112			76			320			164
Rent and related expenses	4			2			10			10
Other	151			143			479			417
Total other expenses	$	665		$	611		$	1,974		$	1,789

Related Party Expenses

Commissions and capitalization of DAC include the impact of related party reinsurance transactions. See Note 12 for a discussion of related party expenses included in the table above.

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Common Share

10. Earnings Per Common Share

The following table sets forth the calculation of earnings per common share:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions, except share and per share data)
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	$	(271	)	$	(943	)	$	(577	)	$	(1,046	)
Weighted average common shares outstanding:
Basic	119,657,443			119,773,106			119,734,128			119,773,106
Earnings per common share:
Basic	$	(2.26	)	$	(7.87	)	$	(4.82	)	$	(8.73	)

Basic loss per common share equaled diluted loss per common share for the three months and nine months ended September 30, 2018. The diluted shares were not utilized in the per share calculation, as the inclusion of such shares would have an antidilutive effect.

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Contingencies, Commitments and Guarantees

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Contingencies, Commitments and Guarantees

11. Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a number of litigation matters. In some of the matters, large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is possible that some matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated at September 30, 2018.

Matters as to Which an Estimate Can Be Made

For some loss contingency matters, the Company is able to estimate a reasonably possible range of loss. For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. As of September 30, 2018, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued, if any, for these matters to be $0 to $10 million.

Matters as to Which an Estimate Cannot Be Made

For other matters, the Company is not currently able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

Sales Practices Claims

Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. The Company vigorously defends against the claims in these matters. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters.

Group Annuity Class Action

Edward Roycroft v. Brighthouse Financial, Inc., et al.(U.S. District Court, Southern District of New York, filed June 18, 2018). Edward Roycroft filed a purported class action against Brighthouse Financial, Inc., MetLife, Inc., and Metropolitan Life Insurance Company. The complaint alleges plaintiff is a beneficiary of a Martindale-Hubbell group annuity contract and did not receive payments plaintiff claims he was entitled to upon his retirement in 1999. Plaintiff seeks to represent a class of all beneficiaries who were due annuity benefits pursuant to group annuity contracts and whose annuity benefits were released from reserves. Plaintiff’s causes of action are for conversion, unjust enrichment, an accounting and for a constructive trust. Plaintiff seeks damages, attorneys’ fees, declaratory and injunctive relief and other equitable remedies. In September 2018, plaintiff dismissed Brighthouse Financial, Inc. from the action without prejudice.

Summary

Various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations, it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.

Commitments

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $422 million and $388 million at September 30, 2018 and December 31, 2017, respectively.

Commitments to Fund Partnership Investments and Private Corporate Bond Investments

The Company commits to fund partnership investments and to lend funds under private corporate bond investments. The amounts of these unfunded commitments were $1.8 billion and $1.4 billion at September 30, 2018 and December 31, 2017, respectively.

Guarantees

In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from less than $1 million to $169 million, with a cumulative maximum of $175 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments.

In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.

The Company’s recorded liabilities were $2 million at both September 30, 2018 and December 31, 2017 for indemnities, guarantees and commitments.

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Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

12. Related Party Transactions

The Company had not historically operated as a standalone business prior to the Separation, and as a result had various existing arrangements with MetLife for services necessary to conduct its activities. Subsequent to the Separation, certain of such services continued, as provided for under a master service agreement and various transition services agreements entered into in connection with the Separation. MetLife was no longer considered a related party upon the completion of the MetLife Divestiture on June 14, 2018. All of the MetLife transactions reported as related party activity occurred prior to the MetLife Divestiture. See Note 1 for information regarding the MetLife Divestiture.

The following table summarizes income and expense from transactions with MetLife for the periods indicated:

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018			2017
	(In millions)
Income	$	—	$	(96	)	$	(182	)	$	(496	)
Expense	$	—	$	108		$	133		$	288

The following table summarizes assets and liabilities from transactions with MetLife at:

	September 30, 2018		December 31, 2017
	(In millions)
Assets	$	—	$	2,907
Liabilities	$	—	$	2,178

The material arrangements between the Company and MetLife are as follows:

Reinsurance Agreements

The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products and also as a provider of reinsurance for some insurance products issued by former affiliates. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth.

The Company has reinsurance agreements with certain MetLife subsidiaries, including MLIC, Metropolitan Tower Life Insurance Company and MetLife Reinsurance Company of Vermont, all of which were related parties until the completion of the MetLife Divestiture.

Information regarding the significant effects of reinsurance with former MetLife affiliates included on the interim condensed consolidated statements of operations and comprehensive income (loss) was as follows:

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018			2017
	(In millions)
Premiums
Reinsurance assumed	$	—	$	1		$	6		$	9
Reinsurance ceded	—		(106		)	(201		)	(423		)
Net premiums	$	—	$	(105	)	$	(195	)	$	(414	)
Universal life and investment-type product policy fees
Reinsurance assumed	$	—	$	31		$	45		$	77
Reinsurance ceded	—		1			1			(16		)
Net universal life and investment-type product policy fees	$	—	$	32		$	46		$	61
Other revenues
Reinsurance assumed	$	—	$	—		$	—		$	27
Reinsurance ceded	—		—			18			39
Net other revenues	$	—	$	—		$	18		$	66
Policyholder benefits and claims
Reinsurance assumed	$	—	$	9		$	8		$	21
Reinsurance ceded	—		(89		)	(177		)	(318		)
Net policyholder benefits and claims	$	—	$	(80	)	$	(169	)	$	(297	)

Information regarding the significant effects of reinsurance with former MetLife affiliates included on the interim condensed consolidated balance sheets was as follows at:

	September 30, 2018				December 31, 2017
	Assumed		Ceded		Assumed		Ceded
	(In millions)
Assets
Premiums, reinsurance and other receivables	$	—	$	—	$	18	$	3,410
Liabilities
Other policy-related balances	$	—	$	—	$	1,674	$	—
Other liabilities	$	—	$	—	$	30	$	401

The Company cedes risks to MLIC related to guaranteed minimum benefits written directly by the Company. The ceded reinsurance agreements contain embedded derivatives and changes in the estimated fair value are also included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were $0 and $2 million at September 30, 2018 and December 31, 2017, respectively. Net derivative gains (losses) associated with the embedded derivatives were $0 and less than ($1) million for the three months and nine months ended September 30, 2018, respectively, and ($1) million and ($264) million for the three months and nine months ended September 30, 2017, respectively.

In May 2017, the Company recaptured from MLIC risks related to multiple life products ceded under yearly renewable term and coinsurance agreements. This recapture resulted in an increase in cash and cash equivalents of $214 million and a decrease in premiums, reinsurance and other receivables of $189 million. The Company recognized a gain of $17 million, net of income tax, as a result of this reinsurance termination.

In January 2017, the Company executed a novation and assignment of a reinsurance agreements under which MLIC reinsured certain variable annuities, including guaranteed minimum benefits, issued by Brighthouse Life Insurance Company of NY (“BHNY”) and New England Life Insurance Company (“NELICO”). As a result of the novation and assignment, the reinsurance agreement is now between Brighthouse Life Insurance Company and BHNY and NELICO. The transaction is treated as a termination of the existing reinsurance agreement with recognition of a loss and a new reinsurance agreement with no recognition of a gain or loss. The transaction resulted in an increase in other liabilities of $274 million. The Company recognized a loss of $178 million, net of income tax, as a result of this transaction.

InJanuary2017,MLICrecaptured risks related to guaranteed minimum benefits written by MLIC that were reinsured by the Company. This recapture resulted in a decrease in investments and cash and cash equivalents of$568 million, a decrease in future policy benefits of$106 million, and a decrease in policyholder account balances of$460 million. In June 2017, there was an adjustment to the recapture amounts of this transaction, which resulted in an increase in premiums, reinsurance and other receivables of$140 millionat June 30, 2017. The Company recognized a gain of$89 million, net of income tax, as a result of this transaction.

Financing Arrangements

Prior to the Separation, the Company had collateral financing arrangements with MetLife that were used to support reinsurance obligations arising under previously affiliated reinsurance agreements. The Company recognized interest expense for such arrangements of $0 and $55 million for the three months and nine months ended September 30, 2017, respectively. These arrangements were terminated in April 2017.

Investment Transactions

In the ordinary course of business, the Company had previously transferred invested assets, primarily consisting of fixed maturity securities, to and from former affiliates. See Note 4 for further discussion of the related party investment transactions.

Shared Services and Overhead Allocations

MetLife provides the Company certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting, and information technology. The Company is charged for these services through a transition services agreement and allocated to the legal entities and products within the Company. When specific identification to a particular legal entity and/or product is not practicable, an allocation methodology based on various performance measures or activity-based costing, such as sales, new policies/contracts issued, reserves, and in-force policy counts is used. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Management believes that the methods used to allocate expenses under these arrangements are reasonable. Costs incurred with MetLife prior to the MetLife Divestiture under these arrangements, that were considered related party expenses, were $0 and $186 million for the three months and nine months ended September 30, 2018, respectively, and $101 million and $296 million for the three months and nine months ended September 30, 2017, respectively, and were recorded in other expenses.

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Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.

Consolidation of Subsidiaries

Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Brighthouse Financial, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.

The Company uses the equity method of accounting for equity securities when it has significant influence or at least 20% interest and for real estate joint ventures and other limited partnership interests (“investee”) when it has more than a minor ownership interest or more than a minor influence over the investee’s operations. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. When the Company has virtually no influence over the investee’s operations, the investment is carried at fair value.

Reclassifications

Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform to the 2018 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements. Additionally, effective January 1, 2018 the Company recorded an increase to other liabilities of $46 million, a decrease to deferred tax liabilities of $22 million, a decrease to accumulated other comprehensive income (“AOCI”) of$64 million, and an increase to retained earnings (deficit) of $40 million, to reflect an adjustment, net of tax, to prior year accretion of certain investments in redeemable preferred stock.

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2017 consolidated balance sheet data was derived from audited consolidated financial statements included in Brighthouse Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated and combined financial statements of the Company included in the 2017 Annual Report.

Investments

Maturities of Fixed Maturity Securities

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity.

The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days.

Past Due, Nonaccrual and Modified Mortgage Loans

Variable Interest Entities

The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity.

Derivatives

Accounting for Derivatives

Freestanding Derivatives

Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivatives carrying value in other invested assets or other liabilities.

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported in net derivative gains (losses) except for economic hedges of variable annuity guarantees which are presented in future policy benefits and claims.

Hedge Accounting

The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. The Company also designates derivatives as a hedge of the estimated fair value of a recognized asset or liabilities (fair value hedge). When a derivative is designated as fair value hedge and is determined to be highly effective, changes in fair value are recorded in net derivative gains (losses), consistent with the change in estimated fair value of the hedged item attributable to the designated risk being hedged.

To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method that will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship.

The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument.

When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.

In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses).

Embedded Derivatives

The Company sells variable annuities and issues certain insurance products and investment contracts and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if:

• the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;

• the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and

• a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.

Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses), except for those in policyholder benefits and claims related to ceded reinsurance of GMIB.

See “— Variable Annuity Guarantees” in Note 1 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for additional information on the accounting policy for embedded derivatives bifurcated from variable annuity host contracts.

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets.

Derivative Strategies

The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.

The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.

See Note 6 for a description of the impact of credit risk on the valuation of derivatives.

New Accounting Pronouncements, Policy [Policy Text Block]

Adoption of New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. The following table provides a description of new ASUs issued by the FASB and the expected impact of the adoption on the Company’s financial statements.

ASUs adopted as of September 30, 2018 are summarized in the table below.

Standard	Description	Effective Date	Impact on Financial Statements
ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities	The new guidance changes the current accounting guidance related to (i) the classification and measurement of certain equity investments, (ii) the presentation of changes in the fair value of financial liabilities measured under the fair value option (“FVO”) that are due to instrument-specific credit risk, and (iii) certain disclosures associated with the fair value of financial instruments. Additionally, there will no longer be a requirement to assess equity securities for impairment since such securities will be measured at fair value through net income.	January 1, 2018 using the modified retrospective method	The Company 1) reclassified net unrealized gains related to equity securities previously classified as available-for-sale (“AFS”) from AOCI to retained earnings (deficit) and 2) increased the carrying value of equity investments previously accounted for under the cost method to estimated fair value. The cumulative effect of the adoption is a net increase to retained earnings (deficit) of $38 million and a net decrease of $15 million to AOCI, after taxes.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)	For those contracts that are impacted, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services.	January 1, 2018 using the modified retrospective method	The adoption did not have an impact on the Company’s financial statements other than expanded disclosures in Note 9.

ASUs issued but not yet adopted as of September 30, 2018 are summarized in the table below.

Standard	Description	Effective Date	Impact on Financial Statements
ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	The amendments to Topic 350 require the capitalization of certain implementation costs incurred in a cloud computing arrangement that is a service contract. The requirements align with the existing requirements to capitalize implementation costs incurred to develop or obtain internal-use software.	January 1, 2020 using the prospective method or retrospective method (with early adoption permitted)	The Company is currently evaluating the impact of this guidance on its financial statements.

ASU 2018-12, Financial Services -Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts	The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred acquisition costs, and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances.	January 1, 2021 using a modified retrospective method for the new market risk benefit guidance and prospective methods for the increased frequency of updating assumptions, the new discount rate requirements and deferred policy acquisition costs (“DAC”) amortization changes. Early adoption is permitted.	The Company is in the early stages of evaluating the new guidance and therefore is unable to estimate the impact to its financial statements. The most significant impact will be the measurement of liabilities for variable annuity guarantees. Upon adoption of the ASU, all guarantees associated with variable annuities will be measured at fair value, with changes in fair value reported in net income (excluding the change in fair value attributable to nonperformance risk, which would be reported in other comprehensive income). These changes will result in an impact to equity upon adoption and more volatility in net income going forward. Additionally, certain life insurance and payout annuity contract liabilities will be affected by more frequent updating of cash flow assumptions and changes to the rate used to discount those cash flows. Most products will be impacted by the changes to deferred acquisition cost amortization.
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities	The amendments to Topic 815 (i) refine and expand the criteria for achieving hedge accounting on certain hedging strategies, (ii) require the earnings effect of the hedging instrument be presented in the same line item in which the earnings effect of the hedged item is reported, and (iii) eliminate the requirement to separately measure and report hedge ineffectiveness.	January 1, 2019 using modified retrospective method (with early adoption permitted)	The Company does not expect a material impact on its financial statements from adoption of the new guidance.
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts. The new guidance also requires that an other-than- temporary impairment (“OTTI”) on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses.	January 1, 2020 using the modified retrospective method (with early adoption permitted beginning January 1, 2019)	The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be earlier recognition of credit losses on mortgage loan investments.
ASU 2016-02, Leases - Topic 842	The new guidance will require a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Leases would be classified as finance or operating leases and both types of leases will be recognized on the balance sheet. Lessor accounting will remain largely unchanged from current guidance except for certain targeted changes. The amendments also require new qualitative and quantitative disclosures.	January 1, 2019 using the modified retrospective method (with early adoption permitted)	The Company is currently evaluating the impact of this guidance on its financial statements, with the most significant impact expected to be a gross-up of certain lease assets and liabilities on the balance sheet.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

All share-based compensation is measured at fair value as of the grant date. The Company recognizes compensation expense related to share-based awards based on the number of awards expected to vest, which represents the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant. Unless a material deviation from the assumed forfeiture rate is observed during the term in which the awards are expensed, the Company recognizes any adjustment necessary to reflect differences in actual experience in the period the award becomes payable or exercisable. Compensation expense related to share-based awards, which is included in other expenses, is principally related to the issuance of restricted stock units with other costs incurred relating to stock options and performance units.

RSUs are units that, if vested, are payable in shares of Brighthouse Financial, Inc. common stock. The Company does not credit RSUs with dividend-equivalents as RSUs do not accrue dividends. Accordingly, the estimated fair value of RSUs is based upon the closing price of shares on the date of grant, less a forfeiture rate. With the exception of the Founders’ Grant, most RSUs use graded vesting and vest in thirds on, or shortly after, the first three anniversaries of their grant date, while other RSUs vest in their entirety on the third or later anniversary of their grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances.

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes model. The significant assumptions the Company uses in its model include: expected volatility of the price of shares; risk-free rate of return; graded three-year vesting; and expected option life.

PSUs are units that, if vested, are multiplied by a performance factor to produce a number of final PSUs, which are payable in shares of Brighthouse Financial, Inc. common stock. PSUs cliff vest at the end of the three-year performance period. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances.

Stock options represent the contingent right of award holders to purchase shares of Brighthouse Financial, Inc. common stock at a stated price for a limited time. All stock options have an exercise price equal to the closing price of a share on the date of grant and have a maximum term of ten years. Certain stock options granted are exercisable at a rate of one-third of each award on each of the first three anniversaries of the grant date, while others are exercisable entirely on the third anniversary of the grant date. Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances.

The Company’s share-based compensation plans provide awards to employees and non-employee directors and may be in the form of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other share-based awards. Additionally, employees may purchase shares at a discount under an employee stock purchase plan.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Reporting Information, by Segment

	Operating Results
Three Months Ended September 30, 2018	Annuities		Life		Run-off			Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	487	$	78	$	(134	)	$	(117	)	$	314
Provision for income tax expense (benefit)	86		17		(29		)	(32		)	42
Post-tax adjusted earnings	401		61		(105		)	(85		)	272
Less: Net income (loss) attributable to noncontrolling interests	—		—		—			2			2
Adjusted earnings	$	401	$	61	$	(105	)	$	(87	)	270
Adjustments for:
Net investment gains (losses)											(42		)
Net derivative gains (losses)											(691		)
Other adjustments to net income											51
Provision for income tax (expense) benefit											141
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(271	)
Interest revenue	$	399	$	115	$	322		$	16
Interest expense	$	—	$	—	$	—		$	39

	Operating Results
Three Months Ended September 30, 2017	Annuities		Life			Run-off		Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	488	$	(8	)	$	119	$	(95	)	$	504
Provision for income tax expense (benefit)	133		(14		)	36		1,025			1,180
Post-tax adjusted earnings	355		6			83		(1,120		)	(676		)
Less: Net income (loss) attributable to noncontrolling interests	—		—			—		—			—
Adjusted earnings	$	355	$	6		$	83	$	(1,120	)	(676		)
Adjustments for:
Net investment gains (losses)											21
Net derivative gains (losses)											(164		)
Other adjustments to net income											(485		)
Provision for income tax (expense) benefit											361
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(943	)
Interest revenue	$	310	$	87		$	348	$	35
Interest expense	$	—	$	—		$	—	$	36

	Operating Results
Nine Months Ended September 30, 2018	Annuities		Life		Run-off			Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	1,025	$	205	$	(79	)	$	(327	)	$	824
Provision for income tax expense (benefit)	177		41		(18		)	(87		)	113
Post-tax adjusted earnings	848		164		(61		)	(240		)	711
Less: Net income (loss) attributable to noncontrolling interests	—		—		—			5			5
Adjusted earnings	$	848	$	164	$	(61	)	$	(245	)	706
Adjustments for:
Net investment gains (losses)											(121		)
Net derivative gains (losses)											(1,337		)
Other adjustments to net income											(164		)
Provision for income tax (expense) benefit											339
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(577	)
Interest revenue	$	1,138	$	334	$	979		$	38
Interest expense	$	—	$	—	$	—		$	113

	Operating Results
Nine Months Ended September 30, 2017	Annuities		Life			Run-off		Corporate & Other			Total
	(In millions)
Pre-tax adjusted earnings	$	1,111	$	—		$	272	$	(61	)	$	1,322
Provision for income tax expense (benefit)	302		(11		)	88		1,015			1,394
Post-tax adjusted earnings	809		11			184		(1,076		)	(72		)
Less: Net income (loss) attributable to noncontrolling interests	—		—			—		—			—
Adjusted earnings	$	809	$	11		$	184	$	(1,076	)	(72		)
Adjustments for:
Net investment gains (losses)											(34		)
Net derivative gains (losses)											(1,207		)
Other adjustments to net income											(474		)
Provision for income tax (expense) benefit											741
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders											$	(1,046	)
Interest revenue	$	948	$	263		$	1,060	$	159
Interest expense	$	—	$	—		$	23	$	94

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:

	September 30, 2018		December 31, 2017
	(In millions)
Annuities	$	152,342	$	154,667
Life	20,485		18,049
Run-off	31,710		36,824
Corporate & Other	12,409		14,652
Total	$	216,946	$	224,192

Reconciliation of Revenue from Segments to Consolidated

The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Annuities	$	1,160		$	1,070		$	3,453		$	3,270
Life	346			387			1,054			982
Run-off	536			547			1,594			1,631
Corporate & Other	47			59			112			230
Adjustments	(667		)	(91		)	(1,274		)	(1,151		)
Total	$	1,422		$	1,972		$	4,939		$	4,962

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Insurance (Tables)

9 Months Ended

Sep. 30, 2018

Insurance [Abstract]

Guarantees related to Annuity, Universal and Variable Life Contracts

Information regarding the Company’s guarantee exposure was as follows at:

	September 30, 2018						December 31, 2017
	In the Event of Death			At Annuitization			In the Event of Death			At Annuitization
	(Dollars in millions)
Annuity Contracts (1), (2)
Variable Annuity Guarantees
Total account value (3)	$	109,613		$	63,194		$	115,147		$	67,110
Separate account value	$	104,479		$	61,945		$	109,792		$	65,782
Net amount at risk	$	6,471	(4)	$	2,521	(5)	$	5,261	(4)	$	2,642	(5)
Average attained age of contract holders	68 years			68 years			68 years			68 years

	September 30, 2018		December 31, 2017
	Secondary Guarantees
	(Dollars in millions)
Universal Life Contracts
Total account value (3)	$	6,133	$	6,244
Net amount at risk (6)	$	73,680	$	75,304
Average attained age of policyholders	65 years		64 years
Variable Life Contracts
Total account value (3)	$	3,486	$	3,379
Net amount at risk (6)	$	23,250	$	24,546
Average attained age of policyholders	49 years		49 years

__________________

(1) The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.

(2) Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured.

(3) Includes the contract holder’s investments in the general account and separate account, if applicable.

(4) Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.

(5) Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved.

(6) Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.

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Investments (Tables)

9 Months Ended

Sep. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Fixed Maturity and Equity Securities Available-for-Sale

The following table presents the fixed maturity securities AFS by sector at:

	September 30, 2018											December 31, 2017
	Amortized Cost		Gross Unrealized							Estimated Fair Value		Amortized Cost		Gross Unrealized							Estimated Fair Value
			Gains		Temporary Losses		OTTI Losses (1)							Gains		Temporary Losses		OTTI Losses (1)
	(In millions)
Fixed maturity securities: (2)
U.S. corporate	$	23,475	$	918	$	458	$	—		$	23,935	$	21,190	$	1,859	$	92	$	—		$	22,957
U.S. government and agency	10,089		1,075		214		—			10,950		14,548		1,862		118		—			16,292
RMBS	8,373		227		230		(4		)	8,374		7,749		285		60		(3		)	7,977
Foreign corporate	7,311		155		218		—			7,248		6,703		386		66		—			7,023
State and political subdivision	3,747		369		47		—			4,069		3,635		553		6		1			4,181
CMBS	4,381		9		101		(1		)	4,290		3,386		53		17		(1		)	3,423
ABS	2,006		10		7		—			2,009		1,810		21		2		—			1,829
Foreign government	1,323		104		23		—			1,404		1,152		161		4		—			1,309
Total fixed maturity securities	$	60,705	$	2,867	$	1,298	$	(5	)	$	62,279	$	60,173	$	5,180	$	365	$	(3	)	$	64,991

__________________

(1) Noncredit OTTI losses included in AOCI in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also “— Net Unrealized Investment Gains (Losses).”

(2) Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

Available-for-sale fixed maturity securities by contractual maturity date

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at September 30, 2018:

	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities		Total Fixed Maturity Securities
	(In millions)
Amortized cost	$	1,956	$	8,580	$	11,376	$	24,033	$	14,760	$	60,705
Estimated fair value	$	1,962	$	8,638	$	11,263	$	25,743	$	14,673	$	62,279

Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale

The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at:

	September 30, 2018								December 31, 2017
	Less than 12 Months				Equal to or Greater  than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(Dollars in millions)
Fixed maturity securities:
U.S. corporate	$	9,484	$	308	$	1,742	$	150	$	1,783	$	21	$	1,451	$	71
U.S. government and agency	2,530		52		1,901		162		4,962		38		1,573		80
RMBS	3,838		103		1,619		123		2,367		14		1,332		43
Foreign corporate	3,410		131		562		87		637		8		603		58
State and political subdivision	1,076		34		151		13		170		3		106		4
CMBS	3,078		68		542		32		619		6		335		10
ABS	998		7		27		—		170		—		74		2
Foreign government	449		17		111		6		155		2		69		2
Total fixed maturity securities	$	24,863	$	720	$	6,655	$	573	$	10,863	$	92	$	5,543	$	270
Total number of securities in an unrealized loss position	2,978				807				911				638

Disclosure of Mortgage Loans Net of Valuation Allowance

Mortgage loans are summarized as follows at:

	September 30, 2018					December 31, 2017
	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Mortgage loans:
Commercial	$	8,405		64.5	%	$	7,260		67.5	%
Agricultural	2,767			21.2		2,276			21.2
Residential	1,824			14.0		1,138			10.6
Subtotal (1)	12,996			99.7		10,674			99.3
Valuation allowances (2)	(56		)	(0.4	)	(47		)	(0.4	)
Subtotal mortgage loans, net	12,940			99.3		10,627			98.9
Commercial mortgage loans held by CSEs — FVO	93			0.7		115			1.1
Total mortgage loans, net	$	13,033		100.0	%	$	10,742		100.0	%

__________________

(1) Purchases of mortgage loans from third parties were$816 millionand$1.4 billionfor thethree monthsandnine months ended September 30, 2018, respectively, and$147 million and $307 million for the three months and nine months ended September 30, 2017, respectively, and were primarily comprised of residential mortgage loans.

(2) The valuation allowances were primarily from collective evaluation (non-specific loan related).

Components of net unrealized investment gains (losses) included in accumulated other comprehensive income (loss)

The components of net unrealized investment gains (losses), included in AOCI, were as follows:

	September 30, 2018			December 31, 2017
	(In millions)
Fixed maturity securities	$	1,558		$	4,806
Fixed maturity securities with noncredit OTTI losses included in AOCI	5			2
Total fixed maturity securities	1,563			4,808
Equity securities	—			39
Derivatives	202			239
Other	(14		)	(8		)
Subtotal	1,751			5,078
Amounts allocated from:
Future policy benefits	(851		)	(2,626		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(5		)	(2		)
DAC, VOBA and DSI	(136		)	(265		)
Subtotal	(992		)	(2,893		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3			—
Deferred income tax benefit (expense)	(161		)	(459		)
Net unrealized investment gains (losses)	$	601		$	1,726

The changes in net unrealized investment gains (losses) were as follows:

	Nine Months Ended  September 30, 2018
	(In millions)
Balance, December 31, 2017	$	1,726
Unrealized investment gains (losses) change due to cumulative effect, net of income tax (1)	(79		)
Balance, January 1, 2018	1,647
Fixed maturity securities on which noncredit OTTI losses have been recognized	3
Unrealized investment gains (losses) during the period	(3,251		)
Unrealized investment gains (losses) relating to:
Future policy benefits	1,775
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(3		)
DAC, VOBA and DSI	129
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3
Deferred income tax benefit (expense)	298
Balance, September 30, 2018	$	601
Change in net unrealized investment gains (losses)	$	(1,046	)

__________________

(1) See Note 1 for more information related to the cumulative effect of change in accounting principle and other.

Securities Lending

Elements of the securities lending program are presented below at:

	September 30, 2018		December 31, 2017
	(In millions)
Securities on loan: (1)
Amortized cost	$	3,317	$	3,085
Estimated fair value	$	3,664	$	3,748
Cash collateral received from counterparties (2)	$	3,746	$	3,791
Security collateral received from counterparties (3)	$	—	$	29
Reinvestment portfolio — estimated fair value	$	3,749	$	3,823

__________________

(1) Included within fixed maturity securities.

(2) Included within payables for collateral under securities loaned and other transactions.

(3) Security collateral received from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.

The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at:

	September 30, 2018								December 31, 2017
	Remaining Tenor of Securities Lending Agreements								Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		1 to 6 Months		Total		Open (1)		1 Month or Less		1 to 6 Months		Total
	(In millions)
U.S. government and agency	$	1,317	$	2,015	$	414	$	3,746	$	1,626	$	964	$	1,201	$	3,791

__________________

(1) The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral.

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value at:

	September 30, 2018		December 31, 2017
	(In millions)
Invested assets on deposit (regulatory deposits) (1)	$	8,035	$	8,263
Invested assets held in trust (reinsurance agreements) (2)	3,275		2,634
Invested assets pledged as collateral (3)	4,514		3,199
Total invested assets on deposit, held in trust and pledged as collateral	$	15,824	$	14,096

__________________

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $92 million and $34 million of the assets on deposit balance represents restricted cash at September 30, 2018 and December 31, 2017, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions. $27 million and $42 million of the assets held in trust balance represents restricted cash at September 30, 2018 and December 31, 2017, respectively.

(3) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 3 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report) and derivative transactions (see Note 5).

The Components of Net Investment Income

The components of net investment income were as follows:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2018		2017		2018		2017
	(In millions)
Investment income:
Fixed maturity securities	$	641	$	601	$	1,907	$	1,809
Equity securities	1		2		5		7
Mortgage loans	138		112		384		332
Policy loans	17		18		67		53
Real estate joint ventures	12		13		36		39
Other limited partnership interests	69		38		159		144
Cash, cash equivalents and short-term investments	8		11		21		29
Other	11		10		29		25
Subtotal	897		805		2,608		2,438
Less: Investment expenses	53		46		145		135
Subtotal, net	844		759		2,463		2,303
FVO CSEs — interest income — commercial mortgage loans	9		2		13		6
Net investment income	$	853	$	761	$	2,476	$	2,309

The components of net investment gains (losses)

The components of net investment gains (losses) were as follows:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized — by sector:
State and political subdivision	$	—		$	—		$	—		$	(1	)
OTTI losses on fixed maturity securities recognized in earnings	—			—			—			(1		)
Fixed maturity securities — net gains (losses) on sales and disposals	(34		)	21			(138		)	(15		)
Total gains (losses) on fixed maturity securities	(34		)	21			(138		)	(16		)
Total gains (losses) on equity securities:
Equity securities — Mark to market and net gains (losses) on sales and disposals	(1		)	3			(5		)	4
Total gains (losses) on equity securities	(1		)	3			(5		)	4
Mortgage loans	(5		)	(2		)	(12		)	(7		)
Real estate joint ventures	—			1			42			4
Other limited partnership interests	—			—			—			(10		)
Other	1			(1		)	3			(6		)
Subtotal	(39		)	22			(110		)	(31		)
FVO CSEs:
Commercial mortgage loans	(4		)	(1		)	(12		)	(2		)
Long-term debt — related to commercial mortgage loans	1			—			1			—
Non-investment portfolio gains (losses)	—			—			—			(1		)
Subtotal	(3		)	(1		)	(11		)	(3		)
Total net investment gains (losses)	$	(42	)	$	21		$	(121	)	$	(34	)

Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains and losses

Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below.

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Proceeds	$	3,091		$	4,929		$	8,428		$	9,316
Gross investment gains	$	58		$	30		$	70		$	50
Gross investment losses	(92		)	(9		)	(208		)	(65		)
OTTI losses	—			—			—			(1		)
Net investment gains (losses)	$	(34	)	$	21		$	(138	)	$	(16	)

Rollforward of the Cumulative Credit Loss Component of OTTI income (loss)

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (“OCI”):

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018		2017
	(In millions)
Balance, beginning of period	$	—	$	9		$	—	$	28
Reductions:
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	—		(8		)	—		(27		)
Balance, end of period	$	—	$	1		$	—	$	1

Disclosure of the mortgage loans portfolio segment by the recorded investment, prior to valuation allowances, by credit quality indicator categories

The credit quality of agricultural mortgage loans was as follows at: 

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Loan-to-value ratios:
Less than 65%	$	2,488	89.9	%	$	2,113	92.8	%
65% to 75%	279		10.1		163		7.2
Total	$	2,767	100.0	%	$	2,276	100.0	%

The credit quality of commercial mortgage loans was as follows at:

	Recorded Investment
	Debt Service Coverage Ratios								% of Total		Estimated Fair Value		% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total
	(Dollars in millions)
September 30, 2018
Loan-to-value ratios:
Less than 65%	$	7,438	$	38	$	15	$	7,491	89.2	%	$	7,440	89.2	%
65% to 75%	738		12		68		818		9.7		809		9.7
76% to 80%	87		—		9		96		1.1		92		1.1
Total	$	8,263	$	50	$	92	$	8,405	100.0	%	$	8,341	100.0	%
December 31, 2017
Loan-to-value ratios:
Less than 65%	$	6,194	$	293	$	33	$	6,520	89.8	%	$	6,681	90.0	%
65% to 75%	642		—		14		656		9.0		658		8.9
76% to 80%	42		—		9		51		0.7		50		0.7
Greater than 80%	—		9		24		33		0.5		30		0.4
Total	$	6,878	$	302	$	80	$	7,260	100.0	%	$	7,419	100.0	%

The credit quality of residential mortgage loans was as follows at:

	September 30, 2018				December 31, 2017
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	1,792	98.2	%	$	1,106	97.2	%
Nonperforming	32		1.8		32		2.8
Total	$	1,824	100.0	%	$	1,138	100.0	%

Variable interest entity, primary beneficiary

Variable Interest Entity [Line Items]

Variable Interest Entities

The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at:

	September 30, 2018				December 31, 2017
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
CSEs (assets (primarily loans) and liabilities (primarily debt)) (1)	$	93	$	3	$	116	$	11

__________________

(1) The Company consolidates entities that are structured as CMBS. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its remaining investment in these entities of $72 million and $86 million at estimated fair value at September 30, 2018 and December 31, 2017, respectively.

Variable Interest Entity, Not Primary Beneficiary

Variable Interest Entity [Line Items]

Variable Interest Entities

The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:

	September 30, 2018				December 31, 2017
	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS:
Structured Securities (2)	$	11,560	$	11,560	$	11,461	$	11,461
U.S. and foreign corporate	418		418		504		504
Other limited partnership interests	1,600		2,977		1,511		2,463
Other investments (3)	88		91		82		89
Total	$	13,666	$	15,046	$	13,558	$	14,517

__________________

(1) The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2) For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.

(3) Other investments is comprised of real estate joint ventures and other invested assets.

XML

Derivatives (Tables)

9 Months Ended

Sep. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location

The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair valueof the Company’s derivatives, excluding embedded derivatives, held at:

		September 30, 2018						December 31, 2017
	Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges:
Interest rate swaps	Interest rate	$	—	$	—	$	—	$	175	$	44	$	—
Cash flow hedges:
Interest rate swaps	Interest rate	—		—		—		27		5		—
Foreign currency swaps	Foreign currency exchange rate	2,347		116		65		1,827		94		75
Subtotal		2,347		116		65		1,854		99		75
Total qualifying hedges		2,347		116		65		2,029		143		75
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps	Interest rate	15,237		546		940		20,213		922		774
Interest rate caps	Interest rate	3,350		32		—		2,671		7		—
Interest rate futures	Interest rate	54		—		—		282		1		—
Interest rate options	Interest rate	13,819		51		105		24,600		133		63
Foreign currency swaps	Foreign currency exchange rate	1,140		68		28		1,115		71		42
Foreign currency forwards	Foreign currency exchange rate	125		1		—		130		—		1
Credit default swaps — purchased	Credit	86		3		1		65		—		1
Credit default swaps — written	Credit	1,894		32		—		1,900		40		—
Equity futures	Equity market	2,215		1		1		2,713		15		—
Equity index options	Equity market	51,044		862		1,657		47,066		794		1,664
Equity variance swaps	Equity market	9,713		143		445		8,998		128		430
Equity total return swaps	Equity market	2,516		1		63		1,767		—		79
Total non-designated or nonqualifying derivatives		101,193		1,740		3,240		111,520		2,111		3,054
Total		$	103,540	$	1,856	$	3,305	$	113,549	$	2,254	$	3,129

The following table presents earned income on derivatives:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2018		2017		2018		2017
	(In millions)
Qualifying hedges:
Net investment income	$	8	$	5	$	20	$	17
Nonqualifying hedges:
Net derivative gains (losses)	33		67		124		253
Policyholder benefits and claims	—		1		—		8
Total	$	41	$	73	$	144	$	278

Schedule of estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at: 

	September 30, 2018					December 31, 2017
Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)
	(Dollars in millions)
Aaa/Aa/A	$	11	$	677	2.4	$	12	$	558	2.8
Baa	21		1,217		5.2	28		1,317		4.7
Ba	—		—		—	—		25		4.5
Total	$	32	$	1,894	4.2	$	40	$	1,900	4.1

__________________

(1) Includes both single name credit default swaps that may be referenced to the credit of corporations, foreign governments or state and political subdivisions and credit default swaps referencing indices. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”),Standard & Poor’s Global Ratings (“S&P”)and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.

(2) The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Estimated Fair Value of Derivative Assets and Liabilities after Master Netting Agreements and Cash Collateral

The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: 

	September 30, 2018						December 31, 2017
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement	Assets			Liabilities			Assets			Liabilities
	(In millions)
Gross estimated fair value of derivatives:
OTC-bilateral (1)	$	1,903		$	3,295		$	2,233		$	3,081
OTC-cleared and Exchange-traded (1), (6)	22			2			70			40
Total gross estimated fair value of derivatives (1)	1,925			3,297			2,303			3,121
Amounts offset on the consolidated balance sheets	—			—			—			—
Estimated fair value of derivatives presented on the consolidated balance sheets (1), (6)	1,925			3,297			2,303			3,121
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(1,569		)	(1,569		)	(1,942		)	(1,942		)
OTC-cleared and Exchange-traded	(1		)	(1		)	(1		)	(1		)
Cash collateral: (3), (4)
OTC-bilateral	(237		)	—			(257		)	—
OTC-cleared and Exchange-traded	(21		)	—			(28		)	(39		)
Securities collateral: (5)
OTC-bilateral	(86		)	(1,726		)	(31		)	(1,138		)
OTC-cleared and Exchange-traded	—			(1		)	—			—
Net amount after application of master netting agreements and collateral	$	11		$	—		$	44		$	1

__________________

(1) At September 30, 2018 and December 31, 2017, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $69 million and $49 million, respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($8) million and ($8) million, respectively.

(2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.

(3) Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives is included in cash and cash equivalents, short-term investments or in fixed maturity securities, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

(4) The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At September 30, 2018 and December 31, 2017, the Company received excess cash collateral of $39 million and $94 million, respectively, and provided excess cash collateral of $0 and $5 million, respectively, which is not included in the table above due to the foregoing limitation.

(5) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but atSeptember 30, 2018,noneof the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. AtSeptember 30, 2018andDecember 31, 2017, the Company received excess securities collateral with an estimated fair value of$69 millionand$337 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. AtSeptember 30, 2018andDecember 31, 2017, the Company provided excess securities collateral with an estimated fair value of$307 millionand$471 million, respectively, for its OTC-bilateral derivatives, and$79 millionand$427 million, respectively, for its OTC-cleared derivatives, and$105 millionand$118 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.

(6) Effective January 16, 2018, the London Clearing House (“LCH”) amended its rulebook, resulting in the characterization of variation margin transfers as settlement payments, as opposed to adjustments to collateral.These amendments impacted the accounting treatment of the Company’s centrally cleared derivatives, for which the LCH serves as the central clearing party.

Derivative Instruments, Gain (Loss) [Line Items]

Offsetting Liabilities [Table Text Block]

The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: 

	September 30, 2018						December 31, 2017
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement	Assets			Liabilities			Assets			Liabilities
	(In millions)
Gross estimated fair value of derivatives:
OTC-bilateral (1)	$	1,903		$	3,295		$	2,233		$	3,081
OTC-cleared and Exchange-traded (1), (6)	22			2			70			40
Total gross estimated fair value of derivatives (1)	1,925			3,297			2,303			3,121
Amounts offset on the consolidated balance sheets	—			—			—			—
Estimated fair value of derivatives presented on the consolidated balance sheets (1), (6)	1,925			3,297			2,303			3,121
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(1,569		)	(1,569		)	(1,942		)	(1,942		)
OTC-cleared and Exchange-traded	(1		)	(1		)	(1		)	(1		)
Cash collateral: (3), (4)
OTC-bilateral	(237		)	—			(257		)	—
OTC-cleared and Exchange-traded	(21		)	—			(28		)	(39		)
Securities collateral: (5)
OTC-bilateral	(86		)	(1,726		)	(31		)	(1,138		)
OTC-cleared and Exchange-traded	—			(1		)	—			—
Net amount after application of master netting agreements and collateral	$	11		$	—		$	44		$	1

__________________

(1) At September 30, 2018 and December 31, 2017, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $69 million and $49 million, respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($8) million and ($8) million, respectively.

(2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.

(3) Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives is included in cash and cash equivalents, short-term investments or in fixed maturity securities, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

(4) The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At September 30, 2018 and December 31, 2017, the Company received excess cash collateral of $39 million and $94 million, respectively, and provided excess cash collateral of $0 and $5 million, respectively, which is not included in the table above due to the foregoing limitation.

(5) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but atSeptember 30, 2018,noneof the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. AtSeptember 30, 2018andDecember 31, 2017, the Company received excess securities collateral with an estimated fair value of$69 millionand$337 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. AtSeptember 30, 2018andDecember 31, 2017, the Company provided excess securities collateral with an estimated fair value of$307 millionand$471 million, respectively, for its OTC-bilateral derivatives, and$79 millionand$427 million, respectively, for its OTC-cleared derivatives, and$105 millionand$118 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.

(6) Effective January 16, 2018, the London Clearing House (“LCH”) amended its rulebook, resulting in the characterization of variation margin transfers as settlement payments, as opposed to adjustments to collateral.These amendments impacted the accounting treatment of the Company’s centrally cleared derivatives, for which the LCH serves as the central clearing party.

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)		Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Three Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(2	)	$	2		$	—	$	—		$	—
Total fair value hedges	(2		)	2			—		—			—
Cash flow hedges (5):
Interest rate derivatives	46			—			1		—			(3		)
Foreign currency exchange rate derivatives	—			—			—		—			(4		)
Total cash flow hedges	46			—			1		—			(7		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(281		)	—			—		—			—
Foreign currency exchange rate derivatives	2			(3		)	—		—			—
Credit derivatives	8			—			—		—			—
Equity derivatives	(458		)	—			—		—			—
Embedded derivatives	(38		)	—			—		(2		)	—
Total non-qualifying hedges	(767		)	(3		)	—		(2		)	—
Total	$	(723	)	$	(1	)	$	1	$	(2	)	$	(7	)
Three Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	1		$	(1	)	$	—	$	—		$	—
Total fair value hedges	1			(1		)	—		—			—
Cash flow hedges (5):
Interest rate derivatives	—			—			1		—			1
Foreign currency exchange rate derivatives	—			—			—		—			(53		)
Total cash flow hedges	—			—			1		—			(52		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(81		)	—			—		6			—
Foreign currency exchange rate derivatives	(30		)	4			—		—			—
Credit derivatives	6			—			—		—			—
Equity derivatives	(712		)				—		(64		)	—
Embedded derivatives	582			—			—		(21		)	—
Total non-qualifying hedges	(235		)	4			—		(79		)	—
Total	$	(234	)	$	3		$	1	$	(79	)	$	(52	)

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)			Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Nine Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(12	)	$	12		$	—		$	—		$	—
Total fair value hedges	(12		)	12			—			—			—
Cash flow hedges (5):
Interest rate derivatives	62			—			4			—			(5		)
Foreign currency exchange rate derivatives	(1		)	—			—			—			33
Total cash flow hedges	61			—			4			—			28
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(1,255		)	—			—			—			—
Foreign currency exchange rate derivatives	17			(4		)	—			—			—
Credit derivatives	(2		)	—			—			—			—
Equity derivatives	(942		)	—			—			—			—
Embedded derivatives	664			—			—			(4		)	—
Total non-qualifying hedges	(1,518		)	(4		)	—			(4		)	—
Total	$	(1,469	)	$	8		$	4		$	(4	)	$	28
Nine Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	2		$	(2	)	$	—		$	—		$	—
Total fair value hedges	2			(2		)	—			—			—
Cash flow hedges (5):
Interest rate derivatives	2			—			4			—			3
Foreign currency exchange rate derivatives	11			(10		)	—			—			(107		)
Total cash flow hedges	13			(10		)	4			—			(104		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(145		)	—			—			8			—
Foreign currency exchange rate derivatives	(72		)	(30		)	—			—			—
Credit derivatives	17			—			—			—			—
Equity derivatives	(2,123		)	—			(1		)	(341		)	—
Embedded derivatives	890			—			—			(22		)	—
Total non-qualifying hedges	(1,433		)	(30		)	(1		)	(355		)	—
Total	$	(1,418	)	$	(42	)	$	3		$	(355	)	$	(104	)

______________

(1) Includes gains (losses) reclassified from AOCI for cash flow hedges.

(2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. Hedged items in fair value hedging relationship includes fixed rate liabilities reported in policyholder account balances or future policy benefits and fixed maturity securities. Ineffective portion of the gains (losses) recognized in income is not significant.

(3) Includes changes in estimated fair value related to economic hedges of equity method investments in joint ventures and gains (losses) reclassified from AOCI for cash flow hedges.

(4) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.

(5) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net derivative gains (losses). These amounts were $0 for both the three months and nine months ended September 30, 2018, and $0 and $12 million for the three months and nine months ended September 30, 2017, respectively.

There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for the nine months ended September 30, 2018. At December 31, 2017, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed two years.

At September 30, 2018 and December 31, 2017, the balance in AOCI associated with cash flow hedges was $202 million and $239 million, respectively.

Derivatives, Methods of Accounting, Derivatives Not Designated or Qualifying as Hedges [Policy Text Block]

The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)		Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Three Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(2	)	$	2		$	—	$	—		$	—
Total fair value hedges	(2		)	2			—		—			—
Cash flow hedges (5):
Interest rate derivatives	46			—			1		—			(3		)
Foreign currency exchange rate derivatives	—			—			—		—			(4		)
Total cash flow hedges	46			—			1		—			(7		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(281		)	—			—		—			—
Foreign currency exchange rate derivatives	2			(3		)	—		—			—
Credit derivatives	8			—			—		—			—
Equity derivatives	(458		)	—			—		—			—
Embedded derivatives	(38		)	—			—		(2		)	—
Total non-qualifying hedges	(767		)	(3		)	—		(2		)	—
Total	$	(723	)	$	(1	)	$	1	$	(2	)	$	(7	)
Three Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	1		$	(1	)	$	—	$	—		$	—
Total fair value hedges	1			(1		)	—		—			—
Cash flow hedges (5):
Interest rate derivatives	—			—			1		—			1
Foreign currency exchange rate derivatives	—			—			—		—			(53		)
Total cash flow hedges	—			—			1		—			(52		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(81		)	—			—		6			—
Foreign currency exchange rate derivatives	(30		)	4			—		—			—
Credit derivatives	6			—			—		—			—
Equity derivatives	(712		)				—		(64		)	—
Embedded derivatives	582			—			—		(21		)	—
Total non-qualifying hedges	(235		)	4			—		(79		)	—
Total	$	(234	)	$	3		$	1	$	(79	)	$	(52	)

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)			Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Nine Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(12	)	$	12		$	—		$	—		$	—
Total fair value hedges	(12		)	12			—			—			—
Cash flow hedges (5):
Interest rate derivatives	62			—			4			—			(5		)
Foreign currency exchange rate derivatives	(1		)	—			—			—			33
Total cash flow hedges	61			—			4			—			28
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(1,255		)	—			—			—			—
Foreign currency exchange rate derivatives	17			(4		)	—			—			—
Credit derivatives	(2		)	—			—			—			—
Equity derivatives	(942		)	—			—			—			—
Embedded derivatives	664			—			—			(4		)	—
Total non-qualifying hedges	(1,518		)	(4		)	—			(4		)	—
Total	$	(1,469	)	$	8		$	4		$	(4	)	$	28
Nine Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	2		$	(2	)	$	—		$	—		$	—
Total fair value hedges	2			(2		)	—			—			—
Cash flow hedges (5):
Interest rate derivatives	2			—			4			—			3
Foreign currency exchange rate derivatives	11			(10		)	—			—			(107		)
Total cash flow hedges	13			(10		)	4			—			(104		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(145		)	—			—			8			—
Foreign currency exchange rate derivatives	(72		)	(30		)	—			—			—
Credit derivatives	17			—			—			—			—
Equity derivatives	(2,123		)	—			(1		)	(341		)	—
Embedded derivatives	890			—			—			(22		)	—
Total non-qualifying hedges	(1,433		)	(30		)	(1		)	(355		)	—
Total	$	(1,418	)	$	(42	)	$	3		$	(355	)	$	(104	)

______________

(1) Includes gains (losses) reclassified from AOCI for cash flow hedges.

(2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. Hedged items in fair value hedging relationship includes fixed rate liabilities reported in policyholder account balances or future policy benefits and fixed maturity securities. Ineffective portion of the gains (losses) recognized in income is not significant.

(3) Includes changes in estimated fair value related to economic hedges of equity method investments in joint ventures and gains (losses) reclassified from AOCI for cash flow hedges.

(4) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.

(5) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net derivative gains (losses). These amounts were $0 for both the three months and nine months ended September 30, 2018, and $0 and $12 million for the three months and nine months ended September 30, 2017, respectively.

There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for the nine months ended September 30, 2018. At December 31, 2017, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed two years.

At September 30, 2018 and December 31, 2017, the balance in AOCI associated with cash flow hedges was $202 million and $239 million, respectively.

Derivative Instruments and Hedging Activities Disclosure [Text Block]

5. Derivatives

Accounting for Derivatives

Freestanding Derivatives

Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivatives carrying value in other invested assets or other liabilities.

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported in net derivative gains (losses) except for economic hedges of variable annuity guarantees which are presented in future policy benefits and claims.

Hedge Accounting

The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. The Company also designates derivatives as a hedge of the estimated fair value of a recognized asset or liabilities (fair value hedge). When a derivative is designated as fair value hedge and is determined to be highly effective, changes in fair value are recorded in net derivative gains (losses), consistent with the change in estimated fair value of the hedged item attributable to the designated risk being hedged.

To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method that will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship.

The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument.

When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.

In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses).

Embedded Derivatives

The Company sells variable annuities and issues certain insurance products and investment contracts and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if:

• the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;

• the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and

• a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.

Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses), except for those in policyholder benefits and claims related to ceded reinsurance of GMIB.

See “— Variable Annuity Guarantees” in Note 1 of the Notes to the Consolidated and Combined Financial Statements included in the 2017 Annual Report for additional information on the accounting policy for embedded derivatives bifurcated from variable annuity host contracts.

Derivative Strategies

The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets.

Interest Rate Derivatives

The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards.

Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging relationships.

Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the LIBOR (London Interbank Offered Rate), calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total return swaps in nonqualifying hedging relationships.

The Company purchases interest rate caps and floors primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging relationships.

In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships.

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options.

Foreign Currency Exchange Rate Derivatives

The Company uses foreign currency swaps to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in cash flow and nonqualifying hedging relationships.

To a lesser extent, the Company uses foreign currency forwards in nonqualifying hedging relationships.

Credit Derivatives

The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations, repudiation, moratorium, involuntary restructuring or governmental intervention. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, Inc. (“ISDA”) deems that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging relationships.

The Company enters into written credit default swaps to create synthetic credit investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such as U.S. government and agency securities or other fixed maturity securities. These credit default swaps are not designated as hedging instruments.

Equity Derivatives

The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and equity total return swaps.

Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships.

Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships.

In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded equity futures in nonqualifying hedging relationships.

In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the LIBOR, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to create synthetic investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships.

Primary Risks Managed by Derivatives

The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair valueof the Company’s derivatives, excluding embedded derivatives, held at:

		September 30, 2018						December 31, 2017
	Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges:
Interest rate swaps	Interest rate	$	—	$	—	$	—	$	175	$	44	$	—
Cash flow hedges:
Interest rate swaps	Interest rate	—		—		—		27		5		—
Foreign currency swaps	Foreign currency exchange rate	2,347		116		65		1,827		94		75
Subtotal		2,347		116		65		1,854		99		75
Total qualifying hedges		2,347		116		65		2,029		143		75
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps	Interest rate	15,237		546		940		20,213		922		774
Interest rate caps	Interest rate	3,350		32		—		2,671		7		—
Interest rate futures	Interest rate	54		—		—		282		1		—
Interest rate options	Interest rate	13,819		51		105		24,600		133		63
Foreign currency swaps	Foreign currency exchange rate	1,140		68		28		1,115		71		42
Foreign currency forwards	Foreign currency exchange rate	125		1		—		130		—		1
Credit default swaps — purchased	Credit	86		3		1		65		—		1
Credit default swaps — written	Credit	1,894		32		—		1,900		40		—
Equity futures	Equity market	2,215		1		1		2,713		15		—
Equity index options	Equity market	51,044		862		1,657		47,066		794		1,664
Equity variance swaps	Equity market	9,713		143		445		8,998		128		430
Equity total return swaps	Equity market	2,516		1		63		1,767		—		79
Total non-designated or nonqualifying derivatives		101,193		1,740		3,240		111,520		2,111		3,054
Total		$	103,540	$	1,856	$	3,305	$	113,549	$	2,254	$	3,129

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both September 30, 2018 and December 31, 2017. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules; (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship; (iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes in estimated fair value of the embedded derivatives are already recorded in net income; and (iv) written credit default swaps that are used to create synthetic credit investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.

The following table presents earned income on derivatives:

	Three Months Ended  September 30,				Nine Months Ended  September 30,
	2018		2017		2018		2017
	(In millions)
Qualifying hedges:
Net investment income	$	8	$	5	$	20	$	17
Nonqualifying hedges:
Net derivative gains (losses)	33		67		124		253
Policyholder benefits and claims	—		1		—		8
Total	$	41	$	73	$	144	$	278

The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)		Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Three Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(2	)	$	2		$	—	$	—		$	—
Total fair value hedges	(2		)	2			—		—			—
Cash flow hedges (5):
Interest rate derivatives	46			—			1		—			(3		)
Foreign currency exchange rate derivatives	—			—			—		—			(4		)
Total cash flow hedges	46			—			1		—			(7		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(281		)	—			—		—			—
Foreign currency exchange rate derivatives	2			(3		)	—		—			—
Credit derivatives	8			—			—		—			—
Equity derivatives	(458		)	—			—		—			—
Embedded derivatives	(38		)	—			—		(2		)	—
Total non-qualifying hedges	(767		)	(3		)	—		(2		)	—
Total	$	(723	)	$	(1	)	$	1	$	(2	)	$	(7	)
Three Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	1		$	(1	)	$	—	$	—		$	—
Total fair value hedges	1			(1		)	—		—			—
Cash flow hedges (5):
Interest rate derivatives	—			—			1		—			1
Foreign currency exchange rate derivatives	—			—			—		—			(53		)
Total cash flow hedges	—			—			1		—			(52		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(81		)	—			—		6			—
Foreign currency exchange rate derivatives	(30		)	4			—		—			—
Credit derivatives	6			—			—		—			—
Equity derivatives	(712		)				—		(64		)	—
Embedded derivatives	582			—			—		(21		)	—
Total non-qualifying hedges	(235		)	4			—		(79		)	—
Total	$	(234	)	$	3		$	1	$	(79	)	$	(52	)

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)			Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Nine Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(12	)	$	12		$	—		$	—		$	—
Total fair value hedges	(12		)	12			—			—			—
Cash flow hedges (5):
Interest rate derivatives	62			—			4			—			(5		)
Foreign currency exchange rate derivatives	(1		)	—			—			—			33
Total cash flow hedges	61			—			4			—			28
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(1,255		)	—			—			—			—
Foreign currency exchange rate derivatives	17			(4		)	—			—			—
Credit derivatives	(2		)	—			—			—			—
Equity derivatives	(942		)	—			—			—			—
Embedded derivatives	664			—			—			(4		)	—
Total non-qualifying hedges	(1,518		)	(4		)	—			(4		)	—
Total	$	(1,469	)	$	8		$	4		$	(4	)	$	28
Nine Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	2		$	(2	)	$	—		$	—		$	—
Total fair value hedges	2			(2		)	—			—			—
Cash flow hedges (5):
Interest rate derivatives	2			—			4			—			3
Foreign currency exchange rate derivatives	11			(10		)	—			—			(107		)
Total cash flow hedges	13			(10		)	4			—			(104		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(145		)	—			—			8			—
Foreign currency exchange rate derivatives	(72		)	(30		)	—			—			—
Credit derivatives	17			—			—			—			—
Equity derivatives	(2,123		)	—			(1		)	(341		)	—
Embedded derivatives	890			—			—			(22		)	—
Total non-qualifying hedges	(1,433		)	(30		)	(1		)	(355		)	—
Total	$	(1,418	)	$	(42	)	$	3		$	(355	)	$	(104	)

______________

(1) Includes gains (losses) reclassified from AOCI for cash flow hedges.

(2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. Hedged items in fair value hedging relationship includes fixed rate liabilities reported in policyholder account balances or future policy benefits and fixed maturity securities. Ineffective portion of the gains (losses) recognized in income is not significant.

(3) Includes changes in estimated fair value related to economic hedges of equity method investments in joint ventures and gains (losses) reclassified from AOCI for cash flow hedges.

(4) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.

(5) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness.

In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net derivative gains (losses). These amounts were $0 for both the three months and nine months ended September 30, 2018, and $0 and $12 million for the three months and nine months ended September 30, 2017, respectively.

There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for the nine months ended September 30, 2018. At December 31, 2017, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed two years.

At September 30, 2018 and December 31, 2017, the balance in AOCI associated with cash flow hedges was $202 million and $239 million, respectively.

Credit Derivatives

In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the nonqualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps.

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at: 

	September 30, 2018					December 31, 2017
Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)
	(Dollars in millions)
Aaa/Aa/A	$	11	$	677	2.4	$	12	$	558	2.8
Baa	21		1,217		5.2	28		1,317		4.7
Ba	—		—		—	—		25		4.5
Total	$	32	$	1,894	4.2	$	40	$	1,900	4.1

__________________

(1) Includes both single name credit default swaps that may be referenced to the credit of corporations, foreign governments or state and political subdivisions and credit default swaps referencing indices. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”),Standard & Poor’s Global Ratings (“S&P”)and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.

(2) The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Counterparty Credit Risk

The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.

The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.

See Note 6 for a description of the impact of credit risk on the valuation of derivatives.

The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: 

	September 30, 2018						December 31, 2017
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement	Assets			Liabilities			Assets			Liabilities
	(In millions)
Gross estimated fair value of derivatives:
OTC-bilateral (1)	$	1,903		$	3,295		$	2,233		$	3,081
OTC-cleared and Exchange-traded (1), (6)	22			2			70			40
Total gross estimated fair value of derivatives (1)	1,925			3,297			2,303			3,121
Amounts offset on the consolidated balance sheets	—			—			—			—
Estimated fair value of derivatives presented on the consolidated balance sheets (1), (6)	1,925			3,297			2,303			3,121
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(1,569		)	(1,569		)	(1,942		)	(1,942		)
OTC-cleared and Exchange-traded	(1		)	(1		)	(1		)	(1		)
Cash collateral: (3), (4)
OTC-bilateral	(237		)	—			(257		)	—
OTC-cleared and Exchange-traded	(21		)	—			(28		)	(39		)
Securities collateral: (5)
OTC-bilateral	(86		)	(1,726		)	(31		)	(1,138		)
OTC-cleared and Exchange-traded	—			(1		)	—			—
Net amount after application of master netting agreements and collateral	$	11		$	—		$	44		$	1

__________________

(1) At September 30, 2018 and December 31, 2017, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $69 million and $49 million, respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($8) million and ($8) million, respectively.

(2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.

(3) Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives is included in cash and cash equivalents, short-term investments or in fixed maturity securities, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

(4) The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At September 30, 2018 and December 31, 2017, the Company received excess cash collateral of $39 million and $94 million, respectively, and provided excess cash collateral of $0 and $5 million, respectively, which is not included in the table above due to the foregoing limitation.

(5) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but atSeptember 30, 2018,noneof the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. AtSeptember 30, 2018andDecember 31, 2017, the Company received excess securities collateral with an estimated fair value of$69 millionand$337 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. AtSeptember 30, 2018andDecember 31, 2017, the Company provided excess securities collateral with an estimated fair value of$307 millionand$471 million, respectively, for its OTC-bilateral derivatives, and$79 millionand$427 million, respectively, for its OTC-cleared derivatives, and$105 millionand$118 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.

(6) Effective January 16, 2018, the London Clearing House (“LCH”) amended its rulebook, resulting in the characterization of variation margin transfers as settlement payments, as opposed to adjustments to collateral.These amendments impacted the accounting treatment of the Company’s centrally cleared derivatives, for which the LCH serves as the central clearing party.

The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. A small number of these arrangements also include credit-contingent provisions that include a threshold above which collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of the Company and/or the counterparty. In addition, substantially all of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s and S&P. If a party’s financial strength or credit ratings were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives.

The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. The Company’s collateral agreements require both parties to be fully collateralized, as such, the Company would not be required to post additional collateral as a result of a downgrade in its financial strength rating. OTC-bilateral derivatives that are not subject to collateral agreements are excluded from this table.  

	September 30, 2018		December 31, 2017
	(In millions)
Estimated fair value of derivatives in a net liability position (1)	$	1,726	$	1,138
Estimated Fair Value of Collateral Provided:
Fixed maturity securities	$	1,999	$	1,414

__________________

(1) After taking into consideration the existence of netting agreements.

Embedded Derivatives

The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; related party ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; related party assumed reinsurance of guaranteed minimum benefits related to GMWBs and certain GMIBs; funds withheld on assumed and ceded reinsurance; assumed reinsurance on fixed deferred annuities; fixed annuities with equity-indexed returns; and certain debt and equity securities. 

The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:

	Balance Sheet Location	September 30, 2018		December 31, 2017
		(In millions)
Embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	Premiums, reinsurance and other receivables	$	166	$	227
Options embedded in debt or equity securities (1)	Investments	—		(52		)
Embedded derivatives within asset host contracts		$	166	$	175
Embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	Policyholder account balances	$	396	$	1,212
Assumed reinsurance on fixed deferred annuities	Policyholder account balances	—		1
Fixed annuities with equity indexed returns	Policyholder account balances	1,205		674
Embedded derivatives within liability host contracts		$	1,601	$	1,887

__________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018, the Company is no longer required to bifurcate and account separately for derivatives embedded in equity securities. Beginning January 1, 2018, the entire change in the estimated fair value of equity securities is recognized as a component of net investment gains and losses.

The following table presents changes in estimated fair value related to embedded derivatives:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net derivative gains (losses) (1), (2)	$	(38	)	$	582		$	664		$	890
Policyholder benefits and claims	$	(2	)	$	(21	)	$	(4	)	$	(22	)

__________________

(1) The valuation of direct and assumed guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustmentwere($150) millionand ($116) millionfor thethree monthsandnine months ended September 30, 2018, respectively, and$457 millionand$385 millionfor thethree monthsandnine months ended September 30, 2017, respectively.

(2) See Note 12 for discussion of related party net derivative gains (losses).

Components of Net Derivatives Gains (Losses)

The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)		Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Three Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(2	)	$	2		$	—	$	—		$	—
Total fair value hedges	(2		)	2			—		—			—
Cash flow hedges (5):
Interest rate derivatives	46			—			1		—			(3		)
Foreign currency exchange rate derivatives	—			—			—		—			(4		)
Total cash flow hedges	46			—			1		—			(7		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(281		)	—			—		—			—
Foreign currency exchange rate derivatives	2			(3		)	—		—			—
Credit derivatives	8			—			—		—			—
Equity derivatives	(458		)	—			—		—			—
Embedded derivatives	(38		)	—			—		(2		)	—
Total non-qualifying hedges	(767		)	(3		)	—		(2		)	—
Total	$	(723	)	$	(1	)	$	1	$	(2	)	$	(7	)
Three Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	1		$	(1	)	$	—	$	—		$	—
Total fair value hedges	1			(1		)	—		—			—
Cash flow hedges (5):
Interest rate derivatives	—			—			1		—			1
Foreign currency exchange rate derivatives	—			—			—		—			(53		)
Total cash flow hedges	—			—			1		—			(52		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(81		)	—			—		6			—
Foreign currency exchange rate derivatives	(30		)	4			—		—			—
Credit derivatives	6			—			—		—			—
Equity derivatives	(712		)				—		(64		)	—
Embedded derivatives	582			—			—		(21		)	—
Total non-qualifying hedges	(235		)	4			—		(79		)	—
Total	$	(234	)	$	3		$	1	$	(79	)	$	(52	)

	Net Derivative Gains (Losses) Recognized for Derivatives (1)			Net Derivative Gains (Losses) Recognized for Hedged Items (2)			Net Investment Income (3)			Policyholder Benefits and Claims (4)			Amount of Gains (Losses) deferred in AOCI
	(In millions)
Nine Months Ended September 30, 2018
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	(12	)	$	12		$	—		$	—		$	—
Total fair value hedges	(12		)	12			—			—			—
Cash flow hedges (5):
Interest rate derivatives	62			—			4			—			(5		)
Foreign currency exchange rate derivatives	(1		)	—			—			—			33
Total cash flow hedges	61			—			4			—			28
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(1,255		)	—			—			—			—
Foreign currency exchange rate derivatives	17			(4		)	—			—			—
Credit derivatives	(2		)	—			—			—			—
Equity derivatives	(942		)	—			—			—			—
Embedded derivatives	664			—			—			(4		)	—
Total non-qualifying hedges	(1,518		)	(4		)	—			(4		)	—
Total	$	(1,469	)	$	8		$	4		$	(4	)	$	28
Nine Months Ended September 30, 2017
Derivatives Designated as Hedging Instruments:
Fair value hedges (5):
Interest rate derivatives	$	2		$	(2	)	$	—		$	—		$	—
Total fair value hedges	2			(2		)	—			—			—
Cash flow hedges (5):
Interest rate derivatives	2			—			4			—			3
Foreign currency exchange rate derivatives	11			(10		)	—			—			(107		)
Total cash flow hedges	13			(10		)	4			—			(104		)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives	(145		)	—			—			8			—
Foreign currency exchange rate derivatives	(72		)	(30		)	—			—			—
Credit derivatives	17			—			—			—			—
Equity derivatives	(2,123		)	—			(1		)	(341		)	—
Embedded derivatives	890			—			—			(22		)	—
Total non-qualifying hedges	(1,433		)	(30		)	(1		)	(355		)	—
Total	$	(1,418	)	$	(42	)	$	3		$	(355	)	$	(104	)

______________

(1) Includes gains (losses) reclassified from AOCI for cash flow hedges.

(2) Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships. Hedged items in fair value hedging relationship includes fixed rate liabilities reported in policyholder account balances or future policy benefits and fixed maturity securities. Ineffective portion of the gains (losses) recognized in income is not significant.

(3) Includes changes in estimated fair value related to economic hedges of equity method investments in joint ventures and gains (losses) reclassified from AOCI for cash flow hedges.

(4) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.

(5) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness

Schedule of Derivative Instruments

The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. The Company’s collateral agreements require both parties to be fully collateralized, as such, the Company would not be required to post additional collateral as a result of a downgrade in its financial strength rating. OTC-bilateral derivatives that are not subject to collateral agreements are excluded from this table.  

	September 30, 2018		December 31, 2017
	(In millions)
Estimated fair value of derivatives in a net liability position (1)	$	1,726	$	1,138
Estimated Fair Value of Collateral Provided:
Fixed maturity securities	$	1,999	$	1,414

__________________

(1) After taking into consideration the existence of netting agreements.

Embedded Derivative Financial Instruments

Derivative Instruments, Gain (Loss) [Line Items]

Components of Net Derivatives Gains (Losses)

The following table presents changes in estimated fair value related to embedded derivatives:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net derivative gains (losses) (1), (2)	$	(38	)	$	582		$	664		$	890
Policyholder benefits and claims	$	(2	)	$	(21	)	$	(4	)	$	(22	)

__________________

(1) The valuation of direct and assumed guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustmentwere($150) millionand ($116) millionfor thethree monthsandnine months ended September 30, 2018, respectively, and$457 millionand$385 millionfor thethree monthsandnine months ended September 30, 2017, respectively.

(2) See Note 12 for discussion of related party net derivative gains (losses).

Schedule of Derivative Instruments

The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:

	Balance Sheet Location	September 30, 2018		December 31, 2017
		(In millions)
Embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	Premiums, reinsurance and other receivables	$	166	$	227
Options embedded in debt or equity securities (1)	Investments	—		(52		)
Embedded derivatives within asset host contracts		$	166	$	175
Embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	Policyholder account balances	$	396	$	1,212
Assumed reinsurance on fixed deferred annuities	Policyholder account balances	—		1
Fixed annuities with equity indexed returns	Policyholder account balances	1,205		674
Embedded derivatives within liability host contracts		$	1,601	$	1,887

__________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018, the Company is no longer required to bifurcate and account separately for derivatives embedded in equity securities. Beginning January 1, 2018, the entire change in the estimated fair value of equity securities is recognized as a component of net investment gains and losses.

XML

Fair Value (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, including those items for which the Company has elected the FVO, are presented below at:

	September 30, 2018
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	23,332	$	603	$	23,935
U.S. government and agency	4,072		6,878		—		10,950
RMBS	—		7,291		1,083		8,374
Foreign corporate	—		6,206		1,042		7,248
State and political subdivision	—		4,069		—		4,069
CMBS	—		4,160		130		4,290
ABS	—		1,948		61		2,009
Foreign government	—		1,404		—		1,404
Total fixed maturity securities	4,072		55,288		2,919		62,279
Equity securities	15		13		122		150
Short-term investments	56		60		—		116
Real estate joint ventures (1)	—		—		15		15
Other limited partnership interests (1)	—		—		25		25
Commercial mortgage loans held by CSEs — FVO	—		93		—		93
Derivative assets: (2)
Interest rate	—		629		—		629
Foreign currency exchange rate	—		185		—		185
Credit	—		25		10		35
Equity market	1		854		152		1,007
Total derivative assets	1		1,693		162		1,856
Embedded derivatives within asset host contracts (3)	—		—		166		166
Separate account assets	202		111,530		4		111,736
Total assets	$	4,346	$	168,677	$	3,413	$	176,436
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	1,045	$	—	$	1,045
Foreign currency exchange rate	—		92		1		93
Credit	—		1		—		1
Equity market	1		1,716		449		2,166
Total derivative liabilities	1		2,854		450		3,305
Embedded derivatives within liability host contracts (3)	—		—		1,601		1,601
Long-term debt of CSEs — FVO	—		3		—		3
Total liabilities	$	1	$	2,857	$	2,051	$	4,909

	December 31, 2017
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	22,048	$	909	$	22,957
U.S. government and agency	8,304		7,988		—		16,292
RMBS	—		6,989		988		7,977
Foreign corporate	—		5,935		1,088		7,023
State and political subdivision	—		4,181		—		4,181
CMBS	—		3,287		136		3,423
ABS	—		1,723		106		1,829
Foreign government	—		1,304		5		1,309
Total fixed maturity securities	8,304		53,455		3,232		64,991
Equity securities (4)	18		19		124		161
Short-term investments	142		156		14		312
Commercial mortgage loans held by CSEs — FVO	—		115		—		115
Derivative assets: (2)
Interest rate	1		1,111		—		1,112
Foreign currency exchange rate	—		165		—		165
Credit	—		30		10		40
Equity market	15		773		149		937
Total derivative assets	16		2,079		159		2,254
Embedded derivatives within asset host contracts (3)	—		—		227		227
Separate account assets	410		117,842		5		118,257
Total assets	$	8,890	$	173,666	$	3,761	$	186,317
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	837	$	—	$	837
Foreign currency exchange rate	—		117		1		118
Credit	—		1		—		1
Equity market	—		1,736		437		2,173
Total derivative liabilities	—		2,691		438		3,129
Embedded derivatives within liability host contracts (3)	—		—		1,887		1,887
Long-term debt of CSEs — FVO	—		11		—		11
Total liabilities	$	—	$	2,702	$	2,325	$	5,027

__________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(2) Derivative assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities are presented within other liabilities on the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.

(3) Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables and other invested assets on the consolidated balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the consolidated balance sheets. At September 30, 2018 and December 31, 2017, debt and equity securities also included embedded derivatives of $0 and ($52) million, respectively.

(4) The Company reclassified Federal Home Loan Bank (“FHLB”) stock in the prior period from equity securities to other invested assets.

Fair Value Inputs, Quantitative Information

The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:

					September 30, 2018				December 31, 2017				Impact of Increase in Input on Estimated Fair Value (2)
	Valuation Techniques		Significant Unobservable Inputs		Range			Weighted Average (1)	Range			Weighted Average (1)
Fixed maturity securities (3)
U.S. corporate and foreign corporate	•	Matrix pricing	•	Offered quotes (4)	86	-	126	104	93	-	142	111	Increase
	•	Market pricing	•	Quoted prices (4)	53	-	316	101	—	-	443	77	Increase
RMBS	•	Market pricing	•	Quoted prices (4)	59	-	107	95	3	-	107	95	Increase (5)
CMBS	•	Market pricing	•	Quoted prices (4)	67	-	104	92	8	-	104	88	Increase (5)
	•	Consensus pricing	•	Offered quotes (4)	103	-	103	103	105	-	105	105	Increase (5)
ABS	•	Market pricing	•	Quoted prices (4)	99	-	101	100	100	-	104	101	Increase (5)
	•	Consensus pricing	•	Offered quotes (4)	100	-	100	100	100	-	100	100	Increase (5)
Derivatives
Foreign currency exchange rate	•	Present value techniques	•	Swap yield (17)	(23)	-	2		—	-	—		Increase (6)
Credit	•	Present value techniques	•	Credit spreads (7)	97	-	99		—	-	—		Decrease (6)
	•	Consensus pricing	•	Offered quotes (8)
Equity market	•	Present value techniques or option pricing models	•	Volatility (9)	12%	-	26%		11%	-	31%		Increase (6)
			•	Correlation (10)	30%	-	30%		10%	-	30%
Embedded derivatives
Direct, assumed and ceded guaranteed minimum benefits	•	Option pricing techniques	•	Mortality rates:
				Ages 0 - 40	0%	-	0.08%		0%	-	0.09%		Decrease (11)
				Ages 41 - 60	0.04%	-	0.60%		0.04%	-	0.65%		Decrease (11)
				Ages 61 - 115	0.26%	-	100%		0.26%	-	100%		Decrease (11)
			•	Lapse rates:
				Durations 1 - 10	0.25%	-	100%		0.25%	-	100%		Decrease (12)
				Durations 11 - 20	2%	-	100%		2%	-	100%		Decrease (12)
				Durations 21 - 116	2%	-	100%		2%	-	100%		Decrease (12)
			•	Utilization rates	0%	-	25%		0%	-	25%		Increase (13)
			•	Withdrawal rates	0.25%	-	10%		0.25%	-	10%		(14)
			•	Long-term equity volatilities	17.40%	-	25%		17.40%	-	25%		Increase (15)
			•	Nonperformance risk spread	1.05%	-	1.91%		0.64%	-	1.43%		Decrease (16)

___________________

(1) The weighted average for fixed maturity securities is determined based on the estimated fair value of the securities.

(2) The impact of a decrease in input would have the opposite impact on estimated fair value. For embedded derivatives, changes to direct and assumed guaranteed minimum benefits are based on liability positions; changes to ceded guaranteed minimum benefits are based on asset positions.

(3) Significant increases (decreases) in expected default rates in isolation would result in substantially lower (higher) valuations.

(4) Range and weighted average are presented in accordance with the market convention for fixed maturity securities of dollars per hundred dollars of par.

(5) Changes in the assumptions used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates.

(6) Changes in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions.

(7) Represents the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives with significant unobservable inputs are primarily comprised of written credit default swaps.

(8) At September 30, 2018 and December 31, 2017, independent non-binding broker quotations were used in the determination of less than 1% and 1% of the total net derivative estimated fair value, respectively.

(9) Ranges represent the underlying equity volatility quoted in percentage points. Since this valuation methodology uses a range of inputs across multiple volatility surfaces to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.

(10) Ranges represent the different correlation factors utilized as components within the valuation methodology. Presenting a range of correlation factors is more representative of the unobservable input used in the valuation. Increases (decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations.

(11) Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(12) Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(13) The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(14) The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(15) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(16) Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.

(17) Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curves are utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.

Fair Value, Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)			Structured Securities			State and Political Subdivision			Foreign Government		Equity Securities
	(In millions)
Three Months Ended September 30, 2018
Balance, beginning of period	$	1,872		$	1,268		$	8		$	—	$	120
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			10			2			—		(2		)
Total realized/unrealized gains (losses) included in AOCI	(44		)	(8		)	(2		)	—		—
Purchases (8)	56			287			—			—		—
Sales (8)	(51		)	(114		)	(6		)	—		—
Issuances (8)	—			—			—			—		—
Settlements (8)	—			—			—			—		—
Transfers into Level 3 (9)	20			3			—			—		9
Transfers out of Level 3 (9)	(208		)	(172		)	(2		)	—		(5		)
Balance, end of period	$	1,645		$	1,274		$	—		$	—	$	122
Three Months Ended September 30, 2017
Balance, beginning of period	$	2,356		$	1,489		$	—		$	—	$	134
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	1			13			—			—		—
Total realized/unrealized gains (losses) included in AOCI	35			6			—			—		(1		)
Purchases (8)	92			147			—			—		—
Sales (8)	(57		)	(230		)	(1		)	—		(3		)
Issuances (8)	—			—			—			—		—
Settlements (8)	—			—			—			—		—
Transfers into Level 3 (9)	191			—			10			—		—
Transfers out of Level 3 (9)	(19		)	(13		)	—			—		—
Balance, end of period	$	2,599		$	1,412		$	9		$	—	$	130
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	—		$	4		$	—		$	—	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	1		$	10		$	—		$	—	$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real Estate Joint Ventures (2)			Other Limited Partnership Interests (2)			Short-term Investments			Net Derivatives (3)			Net Embedded Derivatives (4)			Separate Account Assets (5)
	(In millions)
Three Months Ended September 30, 2018
Balance, beginning of period	$	17		$	24		$	—		$	(284	)	$	(1,241	)	$	4
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			3			—			(4		)	(40		)	—
Total realized/unrealized gains (losses) included in AOCI	—			(1		)	—			—			—			—
Purchases (8)	—			—			—			—			—			1
Sales (8)	(2		)	(1		)	—			—			—			—
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			—			(154		)	—
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			—			—			—			(1		)
Balance, end of period	$	15		$	25		$	—		$	(288	)	$	(1,435	)	$	4
Three Months Ended September 30, 2017
Balance, beginning of period	$	—		$	—		$	91		$	(780	)	$	(2,113	)	$	6
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			—			—			4			558			—
Total realized/unrealized gains (losses) included in AOCI	—			—			—			—			—			—
Purchases (8)	—			—			—			—			—			2
Sales (8)	—			—			—			—			—			—
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			370			(155		)	—
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			(90		)	—			—			(2		)
Balance, end of period	$	—		$	—		$	1		$	(406	)	$	(1,710	)	$	6
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	—		$	3		$	—		$	(4	)	$	(37	)	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	—		$	—		$	—		$	4		$	330		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)			Structured Securities			State and Political Subdivision			Foreign Government			Equity Securities
	(In millions)
Nine Months Ended September 30, 2018
Balance, beginning of period	$	1,997		$	1,230		$	—		$	5		$	124
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	2			21			—			—			(4		)
Total realized/unrealized gains (losses) included in AOCI	(121		)	(10		)	—			—			—
Purchases (8)	164			339			—			—			—
Sales (8)	(184		)	(229		)	—			—			(3		)
Issuances (8)	—			—			—			—			—
Settlements (8)	—			—			—			—			—
Transfers into Level 3 (9)	20			—			—			—			10
Transfers out of Level 3 (9)	(233		)	(77		)	—			(5		)	(5		)
Balance, end of period	$	1,645		$	1,274		$	—		$	—		$	122
Nine Months Ended September 30, 2017
Balance, beginning of period	$	2,391		$	1,711		$	17		$	—		$	137
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	(2		)	22			—			—			—
Total realized/unrealized gains (losses) included in AOCI	179			43			—			—			2
Purchases (8)	235			186			—			—			4
Sales (8)	(231		)	(467		)	(1		)	—			(13		)
Issuances (8)	—			—			—			—			—
Settlements (8)	—			—			—			—			—
Transfers into Level 3 (9)	180			—			3			—			—
Transfers out of Level 3 (9)	(153		)	(83		)	(10		)	—			—
Balance, end of period	$	2,599		$	1,412		$	9		$	—		$	130
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	(1	)	$	14		$	—		$	—		$	(4	)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	1		$	19		$	—		$	—		$	—

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real Estate Joint Ventures (2)			Other Limited Partnership Interests (2)			Short-term Investments			Net Derivatives (3)			Net Embedded Derivatives (4)			Separate Account Assets (5)
	(In millions)
Nine Months Ended September 30, 2018
Balance, beginning of period	$	22		$	28		$	14		$	(279	)	$	(1,660	)	$	5
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	(1		)	2			—			(12		)	660			—
Total realized/unrealized gains (losses) included in AOCI	—			(1		)	—			—			—			—
Purchases (8)	—			—			—			3			—			1
Sales (8)	(6		)	(4		)	(14		)	—			—			(1		)
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			—			(435		)	(1		)
Transfers into Level 3 (9)	—			—			—			—			—			—
Transfers out of Level 3 (9)	—			—			—			—			—			—
Balance, end of period	$	15		$	25		$	—		$	(288	)	$	(1,435	)	$	4
Nine Months Ended September 30, 2017
Balance, beginning of period	$	—		$	—		$	2		$	(954	)	$	(2,383	)	$	10
Total realized/unrealized gains (losses) included in net income (loss) (6) (7)	—			—			—			100			883			—
Total realized/unrealized gains (losses) included in AOCI	—			—			—			—			—			—
Purchases (8)	—			—			—			4			—			2
Sales (8)	—			—			—			—			—			(3		)
Issuances (8)	—			—			—			—			—			—
Settlements (8)	—			—			—			444			(210		)	—
Transfers into Level 3 (9)	—			—			—			—			—			1
Transfers out of Level 3 (9)	—			—			(1		)	—			—			(4		)
Balance, end of period	$	—		$	—		$	1		$	(406	)	$	(1,710	)	$	6
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2018 (10)	$	(1	)	$	2		$	—		$	(12	)	$	867		$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2017 (10)	$	—		$	—		$	—		$	98		$	1,002		$	—

_________________

(1) Comprised of U.S. and foreign corporate securities.

(2) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(3) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.

(4) Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

(5) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income (loss). For the purpose of this disclosure, these changes are presented within net investment gains (losses).

(6) Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

(7) Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

(8) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

(9) Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.

(10) Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

Fair Value Option

The following table presents information for certain assets and liabilities of CSEs, which are accounted for under the FVO. These assets and liabilities were initially measured at fair value.

	September 30, 2018		December 31, 2017
	(In millions)
Assets (1)
Unpaid principal balance	$	59	$	70
Difference between estimated fair value and unpaid principal balance	34		45
Carrying value at estimated fair value	$	93	$	115
Liabilities (1)
Contractual principal balance	$	3	$	10
Difference between estimated fair value and contractual principal balance	—		1
Carrying value at estimated fair value	$	3	$	11

__________________

(1) These assets and liabilities are comprised of commercial mortgage loans and long-term debt. Changes in estimated fair value on these assets and liabilities and gains or losses on sales of these assets are recognized in net investment gains (losses). Interest income on commercial mortgage loans held by CSEs — FVO is recognized in net investment income. Interest expense from long-term debt of CSEs — FVO is recognized in other expenses.

Fair Value of Financial Instruments Carried at Other Than Fair Value

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:

	September 30, 2018
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	12,940	$	—	$	—	$	12,914	$	12,914
Policy loans	$	1,443	$	—	$	685	$	922	$	1,607
Other invested assets	$	77	$	—	$	64	$	13	$	77
Premiums, reinsurance and other receivables	$	1,636	$	—	$	60	$	1,719	$	1,779
Liabilities
Policyholder account balances	$	16,026	$	—	$	—	$	14,871	$	14,871
Long-term debt	$	3,963	$	—	$	2,992	$	600	$	3,592
Other liabilities	$	515	$	—	$	304	$	211	$	515
Separate account liabilities	$	1,227	$	—	$	1,227	$	—	$	1,227

	December 31, 2017
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	10,627	$	—	$	—	$	10,871	$	10,871
Policy loans	$	1,523	$	—	$	781	$	959	$	1,740
Real estate joint ventures (1)	$	5	$	—	$	—	$	22	$	22
Other limited partnership interests (1)	$	36	$	—	$	—	$	28	$	28
Other invested assets (2)	$	71	$	—	$	71	$	—	$	71
Premiums, reinsurance and other receivables	$	1,758	$	—	$	128	$	1,985	$	2,113
Liabilities
Policyholder account balances	$	15,791	$	—	$	—	$	15,927	$	15,927
Long-term debt	$	3,601	$	—	$	3,039	$	600	$	3,639
Other liabilities	$	314	$	—	$	100	$	214	$	314
Separate account liabilities	$	1,210	$	—	$	1,210	$	—	$	1,210

_________________

(1) In connection with the adoption of new guidance related to the recognition and measurement of financial instruments (see Note 1), effective January 1, 2018 on a modified retrospective basis, the Company carries real estate joint ventures and other limited partnership interests previously accounted under the cost method of accounting at estimated fair value.

(2) The Company reclassified FHLB stock in the prior period from equity securities to other invested assets.

XML

Equity (Tables)

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following table presents the weighted average assumptions used to determine the grant-date fair value of stock options that Brighthouse Financial, Inc. has granted:

	September 30, 2018
Risk-free rate of return	2.93%
Expected volatility	25.00%
Expected option life, years	5.80
Weighted average exercise price of stock options granted	$53.47
Weighted average fair value of stock options granted	$12.54

Schedule of Other Share-based Compensation, Activity [Table Text Block]

The following table presents a summary of PSU and RSU activity:

	Restricted			Performance
	Units	Weighted Average Grant-Date Fair Value		Units	Weighted Average Grant-Date Fair Value
Outstanding at January 1, 2018	—	$	—	—	$	—
Granted	995,861	$	48.06	73,849	$	48.10
Forfeited	15,007	$	48.10	—	$	—
Paid	—	$	—	—	$	—
Outstanding at September 30, 2018	980,854	$	48.05	73,849	$	48.10
Vested at September 30, 2018	648,561	$	48.10	—	$	—

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block]

The following table presents total share-based compensation expense:

	Three Months Ended  September 30, 2018		Nine Months Ended  September 30, 2018
	(In millions)
Restricted stock units, Founders’ Grant	$	21	$	31
Restricted stock units	$	3	$	4
Stock options	$	—	$	1
Performance share units	$	—	$	—

Components of Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI was as follows:

	Three Months Ended  September 30, 2018
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, June 30, 2018	$	690		$	168		$	(19	)	$	(24	)	$	815
OCI before reclassifications	(310		)	(7		)	(7		)	—			(324		)
Deferred income tax benefit (expense)	66			1			1			—			68
AOCI before reclassifications, net of income tax	446			162			(25		)	(24		)	559
Amounts reclassified from AOCI	38			(47		)	—			—			(9		)
Deferred income tax benefit (expense)	(8		)	10			—			—			2
Amounts reclassified from AOCI, net of income tax	30			(37		)	—			—			(7		)
Balance, September 30, 2018	$	476		$	125		$	(25	)	$	(24	)	$	552

	Three Months Ended  September 30, 2017
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, June 30, 2017	$	1,721		$	223		$	(33	)	$	(17	)	$	1,894
OCI before reclassifications	(844		)	(52		)	9			—			(887		)
Deferred income tax benefit (expense)	302			18			(2		)	(1		)	317
AOCI before reclassifications, net of income tax	1,179			189			(26		)	(18		)	1,324
Amounts reclassified from AOCI	(26		)	(1		)	—			—			(27		)
Deferred income tax benefit (expense)	9			2			—			—			11
Amounts reclassified from AOCI, net of income tax	(17		)	1			—			—			(16		)
Balance, September 30, 2017	$	1,162		$	190		$	(26	)	$	(18	)	$	1,308

	Nine Months Ended  September 30, 2018
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, December 31, 2017	$	1,572		$	154		$	(24	)	$	(26	)	$	1,676
Cumulative effect of change in accounting principle and other, net of income tax (see Note 1)	(79		)	—			—			—			(79		)
Balance, January 1, 2018	1,493			154			(24		)	(26		)	1,597
OCI before reclassifications	(1,448		)	28			(1		)	3			(1,418		)
Deferred income tax benefit (expense)	325			(6		)	—			(1		)	318
AOCI before reclassifications, net of income tax	370			176			(25		)	(24		)	497
Amounts reclassified from AOCI	138			(65		)	—			—			73
Deferred income tax benefit (expense)	(32		)	14			—			—			(18		)
Amounts reclassified from AOCI, net of income tax	106			(51		)	—			—			55
Balance, September 30, 2018	$	476		$	125		$	(25	)	$	(24	)	$	552

	Nine Months Ended  September 30, 2017
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, December 31, 2016	$	1,044		$	268		$	(31	)	$	(16	)	$	1,265
OCI before reclassifications	118			(104		)	5			(14		)	5
Deferred income tax benefit (expense)	(41		)	36			—			12			7
AOCI before reclassifications, net of income tax	1,121			200			(26		)	(18		)	1,277
Amounts reclassified from AOCI	64			(17		)	—			—			47
Deferred income tax benefit (expense)	(23		)	7			—			—			(16		)
Amounts reclassified from AOCI, net of income tax	41			(10		)	—			—			31
Balance, September 30, 2017	$	1,162		$	190		$	(26	)	$	(18	)	$	1,308

__________________

(1) See Note 4 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI.

Reclassification out of Accumulated Other Comprehensive Income (Loss)

Information regarding amounts reclassified out of each component of AOCI was as follows:

AOCI Components	Amounts Reclassified from AOCI												Consolidated Statements of Operations and Comprehensive Income (Loss) Locations
	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	(36	)	$	24		$	(137	)	$	(22	)	Net investment gains (losses)
Net unrealized investment gains (losses)	—			—			1			2			Net investment income
Net unrealized investment gains (losses)	(2		)	2			(2		)	(44		)	Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax	(38		)	26			(138		)	(64		)
Income tax (expense) benefit	8			(9		)	32			23
Net unrealized investment gains (losses), net of income tax	(30		)	17			(106		)	(41		)
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	15			—			31			—			Net derivative gains (losses)
Interest rate swaps	—			—			2			2			Net investment income
Interest rate forwards	31			—			31			2			Net derivative gains (losses)
Interest rate forwards	1			1			2			2			Net investment income
Foreign currency swaps	—			—			(1		)	11			Net derivative gains (losses)
Gains (losses) on cash flow hedges, before income tax	47			1			65			17
Income tax (expense) benefit	(10		)	(2		)	(14		)	(7		)
Gains (losses) on cash flow hedges, net of income tax	37			(1		)	51			10
Total reclassifications, net of income tax	$	7		$	16		$	(55	)	$	(31	)

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Other Revenues and Other Expenses (Tables)

9 Months Ended

Sep. 30, 2018

Other Income and Expenses [Abstract]

Other Expenses

Information on other expenses was as follows:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions)
Compensation	$	99		$	84		$	252		$	213
Commissions	221			212			650			602
Volume-related costs	104			112			318			375
Expenses on ceded and assumed reinsurance with former affiliates	5			4			12			30
Capitalization of DAC	(83		)	(72		)	(235		)	(187		)
Interest expense on debt	40			34			113			116
Premium taxes, licenses and fees	12			16			55			49
Professional services	112			76			320			164
Rent and related expenses	4			2			10			10
Other	151			143			479			417
Total other expenses	$	665		$	611		$	1,974		$	1,789

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Common Share

The following table sets forth the calculation of earnings per common share:

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2018			2017			2018			2017
	(In millions, except share and per share data)
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	$	(271	)	$	(943	)	$	(577	)	$	(1,046	)
Weighted average common shares outstanding:
Basic	119,657,443			119,773,106			119,734,128			119,773,106
Earnings per common share:
Basic	$	(2.26	)	$	(7.87	)	$	(4.82	)	$	(8.73	)

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2018

Reinsurance Disclosure [Line Items]

Schedule of Related Party Transactions [Table Text Block]

The following table summarizes assets and liabilities from transactions with MetLife at:

	September 30, 2018		December 31, 2017
	(In millions)
Assets	$	—	$	2,907
Liabilities	$	—	$	2,178

The following table summarizes income and expense from transactions with MetLife for the periods indicated:

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018			2017
	(In millions)
Income	$	—	$	(96	)	$	(182	)	$	(496	)
Expense	$	—	$	108		$	133		$	288

Effects of reinsurance

Information regarding the significant effects of reinsurance with former MetLife affiliates included on the interim condensed consolidated statements of operations and comprehensive income (loss) was as follows:

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018		2017			2018			2017
	(In millions)
Premiums
Reinsurance assumed	$	—	$	1		$	6		$	9
Reinsurance ceded	—		(106		)	(201		)	(423		)
Net premiums	$	—	$	(105	)	$	(195	)	$	(414	)
Universal life and investment-type product policy fees
Reinsurance assumed	$	—	$	31		$	45		$	77
Reinsurance ceded	—		1			1			(16		)
Net universal life and investment-type product policy fees	$	—	$	32		$	46		$	61
Other revenues
Reinsurance assumed	$	—	$	—		$	—		$	27
Reinsurance ceded	—		—			18			39
Net other revenues	$	—	$	—		$	18		$	66
Policyholder benefits and claims
Reinsurance assumed	$	—	$	9		$	8		$	21
Reinsurance ceded	—		(89		)	(177		)	(318		)
Net policyholder benefits and claims	$	—	$	(80	)	$	(169	)	$	(297	)

Information regarding the significant effects of reinsurance with former MetLife affiliates included on the interim condensed consolidated balance sheets was as follows at:

	September 30, 2018				December 31, 2017
	Assumed		Ceded		Assumed		Ceded
	(In millions)
Assets
Premiums, reinsurance and other receivables	$	—	$	—	$	18	$	3,410
Liabilities
Other policy-related balances	$	—	$	—	$	1,674	$	—
Other liabilities	$	—	$	—	$	30	$	401

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Business, Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2018 Segment	Dec. 31, 2017 USD ($)	Aug. 04, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of segments | Segment	3
Parent shareholders' percentage | Spinoff
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Common Stock Distribution by Parent			80.80%
Parent percentage | Spinoff
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Common Stock Retained by Parent			19.20%
Accumulated Other Comprehensive Income (Loss)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption		$ 15
Retained Earnings | Accounting Standards Update 2016-01
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption		38
Other Liabilities
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		46
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		40
Deferred Income Tax [Domain]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		(22)
Accumulated Other Comprehensive Income (Loss)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification		$ (64)

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Segment Information (Operating Results) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Pre-tax adjusted earnings	$ (368)	$ (124)	$ (798)	$ (393)
Provision for income tax expense (benefit)	(99)	819	(226)	653
Post-tax adjusted earnings	(269)	(943)	(572)	(1,046)
Less: Net income (loss) attributable to noncontrolling interests	2	0	5	0
Net investment gains (losses)	(42)	21	(121)	(34)
Net derivative gains (losses)	(691)	(164)	(1,337)	(1,207)
Other adjustments to net income	105	93	308	329
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	(271)	(943)	(577)	(1,046)
Annuities
Segment Reporting Information [Line Items]
Interest revenue	399	310	1,138	948
Interest expense	0	0	0	0
Life
Segment Reporting Information [Line Items]
Interest revenue	115	87	334	263
Interest expense	0	0	0	0
Run-off
Segment Reporting Information [Line Items]
Interest revenue	322	348	979	1,060
Interest expense	0	0	0	23
Corporate & Other
Segment Reporting Information [Line Items]
Interest revenue	16	35	38	159
Interest expense	39	36	113	94
Operating Segments
Segment Reporting Information [Line Items]
Pre-tax adjusted earnings	314	504	824	1,322
Provision for income tax expense (benefit)	42	1,180	113	1,394
Post-tax adjusted earnings	272	(676)	711	(72)
Less: Net income (loss) attributable to noncontrolling interests	2	0	5	0
Adjusted earnings	270	(676)	706	(72)
Operating Segments | Annuities
Segment Reporting Information [Line Items]
Pre-tax adjusted earnings	487	488	1,025	1,111
Provision for income tax expense (benefit)	86	133	177	302
Post-tax adjusted earnings	401	355	848	809
Less: Net income (loss) attributable to noncontrolling interests	0	0	0	0
Adjusted earnings	401	355	848	809
Operating Segments | Life
Segment Reporting Information [Line Items]
Pre-tax adjusted earnings	78	(8)	205	0
Provision for income tax expense (benefit)	17	(14)	41	(11)
Post-tax adjusted earnings	61	6	164	11
Less: Net income (loss) attributable to noncontrolling interests	0	0	0	0
Adjusted earnings	61	6	164	11
Operating Segments | Run-off
Segment Reporting Information [Line Items]
Pre-tax adjusted earnings	(134)	119	(79)	272
Provision for income tax expense (benefit)	(29)	36	(18)	88
Post-tax adjusted earnings	(105)	83	(61)	184
Less: Net income (loss) attributable to noncontrolling interests	0	0	0	0
Adjusted earnings	(105)	83	(61)	184
Operating Segments | Corporate & Other
Segment Reporting Information [Line Items]
Pre-tax adjusted earnings	(117)	(95)	(327)	(61)
Provision for income tax expense (benefit)	(32)	1,025	(87)	1,015
Post-tax adjusted earnings	(85)	(1,120)	(240)	(1,076)
Less: Net income (loss) attributable to noncontrolling interests	2	0	5	0
Adjusted earnings	(87)	(1,120)	(245)	(1,076)
Segment Reconciling Items
Segment Reporting Information [Line Items]
Provision for income tax expense (benefit)	141	361	339	741
Net investment gains (losses)	(42)	21	(121)	(34)
Net derivative gains (losses)	(691)	(164)	(1,337)	(1,207)
Other adjustments to net income	$ 51	$ (485)	$ (164)	$ (474)

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Segment Information (Reconciliation of Operating Revenues to Total Revenues) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 1,422	$ 1,972	$ 4,939	$ 4,962
Annuities
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	1,160	1,070	3,453	3,270
Life
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	346	387	1,054	982
Run-off
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	536	547	1,594	1,631
Corporate & Other
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	47	59	112	230
Segment Reconciling Items
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ (667)	$ (91)	$ (1,274)	$ (1,151)

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Segment Information (Total Assets) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total assets	$ 216,946	$ 224,192
Annuities
Segment Reporting Information [Line Items]
Total assets	152,342	154,667
Life
Segment Reporting Information [Line Items]
Total assets	20,485	18,049
Run-off
Segment Reporting Information [Line Items]
Total assets	31,710	36,824
Corporate & Other
Segment Reporting Information [Line Items]
Total assets	$ 12,409	$ 14,652

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Segment Information (Narrative) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($) Segment
Segment Reporting Information [Line Items]
Number of segments | Segment	3
Life
Segment Reporting Information [Line Items]
Estimated increase (decrease) in total assets due to new methodology	$ 5,000
Run-off
Segment Reporting Information [Line Items]
Estimated increase (decrease) in total assets due to new methodology	(3,000)
Annuities
Segment Reporting Information [Line Items]
Estimated increase (decrease) in total assets due to new methodology	2,000
Corporate & Other
Segment Reporting Information [Line Items]
Estimated increase (decrease) in total assets due to new methodology	(4,000)
Minimum | Life
Segment Reporting Information [Line Items]
Estimated increase (decrease) in adjusted earnings due to new methodology	90
Maximum | Life
Segment Reporting Information [Line Items]
Estimated increase (decrease) in adjusted earnings due to new methodology	$ 105

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Insurance (Guarantees Related to Annuity Contracts) (Details) - Variable Annuity Guarantees - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Guaranteed Death Benefits
Net Amount at Risk by Product and Guarantee [Line Items]
Total account value	$ 109,613	$ 115,147
Separate account value	104,479	109,792
Net amount at risk	$ 6,471	$ 5,261
Average attained age of contract holders	68 years	68 years
Guaranteed Annuitization Benefits
Net Amount at Risk by Product and Guarantee [Line Items]
Total account value	$ 63,194	$ 67,110
Separate account value	61,945	65,782
Net amount at risk	$ 2,521	$ 2,642
Average attained age of contract holders	68 years	68 years

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Insurance (Guarantees Related to Universal and Variable Life Contracts) (Details) - Secondary Guarantees - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Universal Life Contracts
Net Amount at Risk by Product and Guarantee [Line Items]
Total account value (3)	$ 6,133	$ 6,244
Net amount at risk	$ 73,680	$ 75,304
Average attained age of policyholders	65 years	64 years
Variable Life Contracts
Net Amount at Risk by Product and Guarantee [Line Items]
Total account value (3)	$ 3,486	$ 3,379
Net amount at risk	$ 23,250	$ 24,546
Average attained age of policyholders	49 years	49 years

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Investments (Fixed Maturity and Equity Securities Available-For-Sale by Sector) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	$ 60,705	$ 60,173
Gross Unrealized OTTI Loss	5	2
Debt Securities, Available-for-sale	62,279	64,991
Fixed maturity securities
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	60,705	60,173
Gross Unrealized Gain	2,867	5,180
Gross Unrealized Temporary Loss	1,298	365
Gross Unrealized OTTI Loss	(5)	(3)
Debt Securities, Available-for-sale	62,279	64,991
U.S. corporate
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	23,475	21,190
Gross Unrealized Gain	918	1,859
Gross Unrealized Temporary Loss	458	92
Gross Unrealized OTTI Loss	0	0
Debt Securities, Available-for-sale	23,935	22,957
U.S. government and agency
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	10,089	14,548
Gross Unrealized Gain	1,075	1,862
Gross Unrealized Temporary Loss	214	118
Gross Unrealized OTTI Loss	0	0
Debt Securities, Available-for-sale	10,950	16,292
RMBS
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	8,373	7,749
Gross Unrealized Gain	227	285
Gross Unrealized Temporary Loss	230	60
Gross Unrealized OTTI Loss	(4)	(3)
Debt Securities, Available-for-sale	8,374	7,977
Foreign corporate
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	7,311	6,703
Gross Unrealized Gain	155	386
Gross Unrealized Temporary Loss	218	66
Gross Unrealized OTTI Loss	0	0
Debt Securities, Available-for-sale	7,248	7,023
State and political subdivision
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	3,747	3,635
Gross Unrealized Gain	369	553
Gross Unrealized Temporary Loss	47	6
Gross Unrealized OTTI Loss	0	1
Debt Securities, Available-for-sale	4,069	4,181
CMBS
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	4,381	3,386
Gross Unrealized Gain	9	53
Gross Unrealized Temporary Loss	101	17
Gross Unrealized OTTI Loss	(1)	(1)
Debt Securities, Available-for-sale	4,290	3,423
ABS
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	2,006	1,810
Gross Unrealized Gain	10	21
Gross Unrealized Temporary Loss	7	2
Gross Unrealized OTTI Loss	0	0
Debt Securities, Available-for-sale	2,009	1,829
Foreign government
Debt Securities, Available-for-sale [Abstract]
Amortized Cost	1,323	1,152
Gross Unrealized Gain	104	161
Gross Unrealized Temporary Loss	23	4
Gross Unrealized OTTI Loss	0	0
Debt Securities, Available-for-sale	$ 1,404	$ 1,309

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Investments (Maturities of Fixed Maturity Securities) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Available-for-sale Securities, Debt Maturities [Abstract]
Amortized Cost, Due in one year or less	$ 1,956
Amortized Cost, Due after one year through five years	8,580
Amortized Cost, Due after five years through ten years	11,376
Amortized Cost, Due after ten years	24,033
Amortized Cost, Structured Securities	14,760
Amortized Cost, Subtotal	60,705	$ 60,173
Estimated Fair Value, Due in one year or less	1,962
Estimated Fair Value, Due after one year through five years	8,638
Estimated Fair Value, Due after five years through ten years	11,263
Estimated Fair Value, Due after ten years	25,743
Estimated Fair Value, Structured Securities	14,673
Debt Securities, Available-for-sale	$ 62,279	$ 64,991

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Investments (Continuous Gross Unrealized Losses for Fixed Maturity and Equity Securities Available-For-Sale) (Details) $ in Millions	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Total number of securities in an unrealized loss position less than 12 months	2,978	911
Total number of securities in an unrealized loss position equal to or greater than 12 months	807	638
Fixed maturity securities
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	$ 24,863	$ 10,863
Less than 12 Months Gross Unrealized Loss	720	92
Equal to or Greater than 12 Months Estimated Fair Value	6,655	5,543
Equal to or Greater than 12 Months Gross Unrealized Loss	573	270
U.S. corporate
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	9,484	1,783
Less than 12 Months Gross Unrealized Loss	308	21
Equal to or Greater than 12 Months Estimated Fair Value	1,742	1,451
Equal to or Greater than 12 Months Gross Unrealized Loss	150	71
U.S. government and agency
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	2,530	4,962
Less than 12 Months Gross Unrealized Loss	52	38
Equal to or Greater than 12 Months Estimated Fair Value	1,901	1,573
Equal to or Greater than 12 Months Gross Unrealized Loss	162	80
RMBS
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	3,838	2,367
Less than 12 Months Gross Unrealized Loss	103	14
Equal to or Greater than 12 Months Estimated Fair Value	1,619	1,332
Equal to or Greater than 12 Months Gross Unrealized Loss	123	43
Foreign corporate
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	3,410	637
Less than 12 Months Gross Unrealized Loss	131	8
Equal to or Greater than 12 Months Estimated Fair Value	562	603
Equal to or Greater than 12 Months Gross Unrealized Loss	87	58
State and political subdivision
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	1,076	170
Less than 12 Months Gross Unrealized Loss	34	3
Equal to or Greater than 12 Months Estimated Fair Value	151	106
Equal to or Greater than 12 Months Gross Unrealized Loss	13	4
CMBS
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	3,078	619
Less than 12 Months Gross Unrealized Loss	68	6
Equal to or Greater than 12 Months Estimated Fair Value	542	335
Equal to or Greater than 12 Months Gross Unrealized Loss	32	10
ABS
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	998	170
Less than 12 Months Gross Unrealized Loss	7	0
Equal to or Greater than 12 Months Estimated Fair Value	27	74
Equal to or Greater than 12 Months Gross Unrealized Loss	0	2
Foreign government
Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale
Less than 12 months Estimated Fair Value	449	155
Less than 12 Months Gross Unrealized Loss	17	2
Equal to or Greater than 12 Months Estimated Fair Value	111	69
Equal to or Greater than 12 Months Gross Unrealized Loss	$ 6	$ 2

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Investments (Mortgage Loans by Portfolio Segment) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Company-held mortgage loans held-for-investment, net
Commercial Mortgage Loans	$ 8,405	$ 7,260
Percentage of loans receivable on commercial mortgage loans	64.50%	67.50%
Agricultural Mortgage Loans	$ 2,767	$ 2,276
Percentage of loans receivable on agricultural mortgage loans	21.20%	21.20%
Residential Mortgage Loans	$ 1,824	$ 1,138
Percentage of loans receivable on residential mortgage loans	14.00%	10.60%
Subtotal	$ 12,996	$ 10,674
Percentage of loans receivable on subtotal	99.70%	99.30%
Valuation allowances	$ (56)	$ (47)
Percentage of loans receivable on valuation allowances	(0.40%)	(0.40%)
Subtotal mortgage loans, net	$ 12,940	$ 10,627
Percentage of loans receivable on subtotal mortgage loans held-for-investment, net	99.30%	98.90%
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 13,033	$ 10,742
Percentage of loans receivable on commercial mortgage loans held by consolidated securitization entities - fair value option	0.70%	1.10%
Percentage of loans held for sale on total mortgage loans, net	100.00%	100.00%
Variable interest entity, primary beneficiary
Company-held mortgage loans held-for-investment, net
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 93	$ 115

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Investments (Credit Quality of Commercial Mortgage Loans) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Financing Receivable, Recorded Investment [Line Items]
% of Total	100.00%	100.00%
Estimated Fair Value	$ 8,341	$ 7,419
% of Total	100.00%	100.00%
Commercial Mortgage Loans	$ 8,405	$ 7,260
Less than 65%
Financing Receivable, Recorded Investment [Line Items]
% of Total	89.20%	90.00%
Estimated Fair Value	$ 7,440	$ 6,681
% of Total	89.20%	89.80%
Commercial Mortgage Loans	$ 7,491	$ 6,520
65% to 75%
Financing Receivable, Recorded Investment [Line Items]
% of Total	9.70%	8.90%
Estimated Fair Value	$ 809	$ 658
% of Total	9.70%	9.00%
Commercial Mortgage Loans	$ 818	$ 656
76% to 80%
Financing Receivable, Recorded Investment [Line Items]
% of Total	1.10%	0.70%
Estimated Fair Value	$ 92	$ 50
% of Total	1.10%	0.70%
Commercial Mortgage Loans	$ 96	$ 51
Greater than 80%
Financing Receivable, Recorded Investment [Line Items]
% of Total		0.40%
Estimated Fair Value		$ 30
% of Total		0.50%
Commercial Mortgage Loans		$ 33
Greater than 1.20x
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	8,263	6,878
Greater than 1.20x | Less than 65%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	7,438	6,194
Greater than 1.20x | 65% to 75%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	738	642
Greater than 1.20x | 76% to 80%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	87	42
Greater than 1.20x | Greater than 80%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans		0
1.00x - 1.20x
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	50	302
1.00x - 1.20x | Less than 65%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	38	293
1.00x - 1.20x | 65% to 75%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	12	0
1.00x - 1.20x | 76% to 80%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	0	0
1.00x - 1.20x | Greater than 80%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans		9
Less than 1.00x
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	92	80
Less than 1.00x | Less than 65%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	15	33
Less than 1.00x | 65% to 75%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	68	14
Less than 1.00x | 76% to 80%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans	$ 9	9
Less than 1.00x | Greater than 80%
Financing Receivable, Recorded Investment [Line Items]
Commercial Mortgage Loans		$ 24

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Investments (Credit Quality of Agricultural and Residential Mortgage Loans) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Agricultural Mortgage Loans - by Credit Quality Indicator:
Recorded Investment	$ 2,767	$ 2,276
% of Total	100.00%	100.00%
Residential Mortgage Loans By Credit Quality Indicator [Abstract]
Recorded Investment	$ 1,824	$ 1,138
% of Total	100.00%	100.00%
Less than 65%
Agricultural Mortgage Loans - by Credit Quality Indicator:
Recorded Investment	$ 2,488	$ 2,113
% of Total	89.90%	92.80%
65% to 75%
Agricultural Mortgage Loans - by Credit Quality Indicator:
Recorded Investment	$ 279	$ 163
% of Total	10.10%	7.20%
Performing
Residential Mortgage Loans By Credit Quality Indicator [Abstract]
Recorded Investment	$ 1,792	$ 1,106
% of Total	98.20%	97.20%
Nonperforming
Residential Mortgage Loans By Credit Quality Indicator [Abstract]
Recorded Investment	$ 32	$ 32
% of Total	1.80%	2.80%

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Investments (Net Unrealized Investment Gains Losses) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Components of net unrealized investment gains (losses) included in accumulated other comprehensive loss
Fixed maturity securities	$ 1,558	$ 4,806
Fixed maturity securities with noncredit OTTI losses included in AOCI	5	2
Total fixed maturity securities	1,563	4,808
Equity securities	0	39
Derivatives	202	239
Other	(14)	(8)
Subtotal	1,751	5,078
Future policy benefits	(851)	(2,626)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(5)	(2)
DAC, VOBA and DSI	(136)	(265)
Subtotal	(992)	(2,893)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3	0
Deferred income tax benefit (expense)	(161)	(459)
Net unrealized investment gains (losses)	$ 601	$ 1,726

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Investments (Changes in Net Unrealized Investment Gains Losses) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Balance, December 31, 2017	$ 601	$ 1,726
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	4
Balance, January 1, 2018	601	1,726
Changes In Net Unrealized Investment Gains Losses Included In Accumulated Other Comprehensive Loss [Abstract]
Balance, December 31, 2017	601	1,726
Fixed maturity securities on which noncredit OTTI losses have been recognized	3
Unrealized investment gains (losses) during the period	(3,251)
Unrealized investment gains (losses) relating to:
Future policy benefits	1,775
Changes In Net Unrealized Investment Gains Losses Related To Dac And Voba Related To Non Credit Otti Losses Recognized In Other Comprehensive Income Loss	(3)
DAC, VOBA and DSI	129
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	3
Deferred income tax benefit (expense)	298
Change in net unrealized investment gains (losses)	(1,046)
AOCI Attributable to Parent
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	$ 79	79
Restatement adjustment
Balance, December 31, 2017		1,647
Balance, January 1, 2018		1,647
Changes In Net Unrealized Investment Gains Losses Included In Accumulated Other Comprehensive Loss [Abstract]
Balance, December 31, 2017		$ 1,647

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Investments (Securities Lending) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Securities Financing Transaction [Line Items]
Cash collateral on deposit from counterparties	$ 3,746	$ 3,791
Security collateral on deposit from counterparties	0	29
Reinvestment portfolio — estimated fair value	3,749	3,823
Amortized cost
Securities Financing Transaction [Line Items]
Securities loaned	3,317	3,085
Estimated fair value
Securities Financing Transaction [Line Items]
Securities loaned	$ 3,664	$ 3,748

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Investments (Securities Lending Remaining Tenor) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Securities Financing Transaction [Line Items]
Total	$ 3,746	$ 3,791
U.S. government and agency
Securities Financing Transaction [Line Items]
Total	3,746	3,791
Maturity Overnight | U.S. government and agency
Securities Financing Transaction [Line Items]
Total	1,317	1,626
Maturity Less than 30 Days | U.S. government and agency
Securities Financing Transaction [Line Items]
Total	2,015	964
Maturity 30 to 180 Days | U.S. government and agency
Securities Financing Transaction [Line Items]
Total	$ 414	$ 1,201

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Investments (Invested Assets on Deposit, Held In Trust and Pledged as Collateral) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Invested assets on deposit	$ 8,035	$ 8,263
Invested assets held-in-trust	3,275	2,634
Invested assets pledged as collateral	4,514	3,199
Invested Assets On Deposit Held In Trust And Pledged As Collateral	$ 15,824	$ 14,096

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Investments (Consolidated Variable Interest Entities) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Total Assets	$ 93	$ 116
Total Liabilities	$ 3	$ 11

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Investments (Unconsolidated Variable Interest Entities) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Variable Interest Entity [Line Items]
Carrying Amount Asset	$ 13,666	$ 13,558
Carrying Amount Liability	15,046	14,517
Other limited partnership interests
Variable Interest Entity [Line Items]
Carrying Amount Asset	1,600	1,511
Carrying Amount Liability	2,977	2,463
Other investments
Variable Interest Entity [Line Items]
Carrying Amount Asset	88	82
Carrying Amount Liability	91	89
Structured Securities
Variable Interest Entity [Line Items]
Carrying Amount Asset	11,560	11,461
Carrying Amount Liability	11,560	11,461
U.S. and foreign corporate
Variable Interest Entity [Line Items]
Carrying Amount Asset	418	504
Carrying Amount Liability	$ 418	$ 504

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Investments (Net Investment Income) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net Investment Income [Line Items]
Subtotal	$ 844	$ 759	$ 2,463	$ 2,303
Less: Investment expenses	53	46	145	135
Subtotal , net	853	761	2,476	2,309
Fixed maturity securities
Net Investment Income [Line Items]
Subtotal	641	601	1,907	1,809
Equity securities
Net Investment Income [Line Items]
Subtotal	1	2	5	7
Mortgage loans
Net Investment Income [Line Items]
Subtotal	138	112	384	332
Policy loans
Net Investment Income [Line Items]
Subtotal	17	18	67	53
Real estate joint ventures
Net Investment Income [Line Items]
Subtotal	12	13	36	39
Other limited partnership interests
Net Investment Income [Line Items]
Subtotal	69	38	159	144
Cash, cash equivalents and short-term investments
Net Investment Income [Line Items]
Subtotal	8	11	21	29
Other investments
Net Investment Income [Line Items]
Subtotal	11	10	29	25
Securities Investment
Net Investment Income [Line Items]
Subtotal	897	805	2,608	2,438
FVO CSEs — interest income — commercial mortgage loans | Consolidated Securitization Entities
Net Investment Income [Line Items]
Subtotal	$ 9	$ 2	$ 13	$ 6

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Investments (Components of Net Investment Gains Losses) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Marketable Securities, Gain (Loss) [Abstract]
Fixed maturity securities — net gains (losses) on sales and disposals	$ (34)	$ 21	$ (138)	$ (15)
Equity securities — Mark to market and net gains (losses) on sales and disposals	(1)	3	(5)	4
Other net investment gains (losses) [Abstract]
Mortgage loans	(5)	(2)	(12)	(7)
Real estate joint ventures	0	1	42	4
Other limited partnership interests	0	0	0	(10)
Other	1	(1)	3	(6)
Subtotal	(39)	22	(110)	(31)
FVO CSEs - changes in estimated fair value [Abstract]
Commercial mortgage loans	(4)	(1)	(12)	(2)
Long-term debt — related to commercial mortgage loans	1	0	1	0
Non-investment portfolio gains (losses)	0	0	0	(1)
Subtotal	(3)	(1)	(11)	(3)
Total net investment gains (losses)	(42)	21	(121)	(34)
State and political subdivision
Gain (Loss) on Securities [Line Items]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	0	0	0	(1)
Fixed maturity securities
Gain (Loss) on Securities [Line Items]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	0	0	0	(1)
Marketable Securities, Gain (Loss) [Abstract]
Net investment gains (losses)	(34)	21	(138)	(16)
Equity securities
Marketable Securities, Gain (Loss) [Abstract]
Net investment gains (losses)	$ (1)	$ 3	$ (5)	$ 4

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Investments (Sales or Disposals and Impairments of Fixed Maturity and Equity Securities) (Details) - Fixed maturity securities - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Debt Securities, Available-for-sale [Line Items]
Proceeds from Sale of Insurance Investments	$ 3,091	$ 4,929	$ 8,428	$ 9,316
Available-for-sale Securities, Gross Realized Gains	58	30	70	50
Available-for-sale Securities, Realized Losses, Excluding Other than Temporary Impairments	(92)	(9)	(208)	(65)
Total OTTI losses recognized in earnings [Abstract]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	0	0	0	(1)
Components of Sales or Disposals of Fixed Maturity and Equity Securities [Abstract]
Net investment gains (losses)	$ (34)	$ 21	$ (138)	$ (16)

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Investments (Credit Loss Rollforward) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Balance, beginning of period	$ 0	$ 9	$ 0	$ 28
Reductions:
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	0	(8)	0	(27)
Balance, end of period	$ 0	$ 1	$ 0	$ 1

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Investments (Fixed Maturity and Equity Securities Available-For-Sale - Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Summary of Certain Fixed Maturity Securities
Debt Securities, Available-for-sale	$ 62,279	$ 64,991
Non-Income Producing Debt Securities
Summary of Certain Fixed Maturity Securities
Debt Securities, Available-for-sale		4
Gross Unrealized Gain loss		$ (2)
Non-Income Producing Debt Securities | Maximum
Summary of Certain Fixed Maturity Securities
Debt Securities, Available-for-sale	1
Gross Unrealized Gain loss	$ (1)

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Investments (Evaluation of Available-For-Sale Securities for OTTI and Evaluating Temporarily Impaired AFS Securities - Narrative) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($) Contracts
Debt Securities, Available-for-sale [Line Items]
Fixed maturity securities available-for-sale with gross unrealized loss of equal to or greater than stated percentage	20.00%
Fixed maturity securities
Debt Securities, Available-for-sale [Line Items]
Change in Gross Unrealized Temporary Loss	$ 931
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	1,300
20% or more | Six months or greater | Fixed maturity securities
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 4
Number of Securities | Contracts	10

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Investments (Mortgage Loans - Narrative) (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($) Contracts	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) Contracts	Sep. 30, 2017 USD ($) Contracts	Dec. 31, 2017 USD ($) Contracts
Financing Receivable, Additional Disclosures [Abstract]
Financing Receivable, Significant Purchases | $	$ 816	$ 147	$ 1,400	$ 307
Financing Receivable, Recorded Investment, Aging [Abstract]
Percentage of Mortgage Loans Classified as Performing	99.00%		99.00%		99.00%
Financing Receivable, Modifications, Subsequent Default, Number of Contracts | Contracts			0	0
Residential
Financing Receivable, Additional Disclosures [Abstract]
Estimated fair value of mortgage loans held-for-investment | $	$ 1,800		$ 1,800		$ 1,200
Financing Receivable, Recorded Investment, Aging [Abstract]
Financing Receivable, Recorded Investment, Past Due | $	32		32		32
Loans and Leases Receivable, Nonperforming, Nonaccrual of interest | $	32		32		32
Agricultural
Financing Receivable, Additional Disclosures [Abstract]
Estimated fair value of mortgage loans held-for-investment | $	$ 2,700		$ 2,700		$ 2,300
Financing Receivable, Recorded Investment, Aging [Abstract]
Financing Receivable Number of Contract of Recorded Investment Past Due | Contracts	0		0		0
Loans and Leases Receivable, Number of Contract, Nonperforming, Nonaccrual of Interest | Contracts	0		0		0
Commercial
Financing Receivable, Recorded Investment, Aging [Abstract]
Financing Receivable Number of Contract of Recorded Investment Past Due | Contracts	0		0		0
Loans and Leases Receivable, Number of Contract, Nonperforming, Nonaccrual of Interest | Contracts	0		0		0

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Investments (Cash Equivalents - Narrative) (Details) - USD ($) $ in Billions	Sep. 30, 2018	Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Cash equivalents	$ 1.1	$ 1.4

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Investments (Concentrations of Credit Risk - Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Investments in any counterparty that were greater than 10% of equity	$ 0	$ 0
Securities holdings exposure in single issuer greater than stated percentage of Company's equity	10.00%

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Investments (Securities Lending Remaining Tenor - Narrative) (Details) $ in Billions	Sep. 30, 2018 USD ($)
Securities Investment
Securities Financing Transaction [Line Items]
Percentage of Reinvestment Portfolio in Fixed Maturity Securities	58.00%
Estimated fair value
Securities Financing Transaction [Line Items]
Cash collateral on deposit from counterparties	$ 1.3
Estimated fair value | U.S. government and agency
Securities Financing Transaction [Line Items]
Percentage Of US Treasury And Agency Securities At Estimated Fair Value Of Securities On Loan Relating To Cash Collateral On Open	100.00%

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Investments Investments (Invest Assets On Deposit, Held in Trust and Pledged as Collateral (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Invested assets on deposit	$ 8,035	$ 8,263
Assets Held-in-trust	3,275	2,634
Fixed maturity securities | Policyholder Account Balances
Invested assets on deposit	92	34
Fixed maturity securities | Reinsurance
Assets Held-in-trust	$ 27	$ 42

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Investments (Consolidated Variable Interest Entities - Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Variable interest, maximum exposure to loss in consolidated securitization entities	$ 72	$ 86

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Investments (Unconsolidated Variable Interest Entities - Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Financial or other support to investees designated as VIEs	$ 0	$ 0	$ 0	$ 0

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Investments (Related Party Investment Transactions - Narrative) (Details) - USD ($) $ in Millions		3 Months Ended			9 Months Ended
	Apr. 28, 2017	Sep. 30, 2018	Sep. 30, 2017	Mar. 31, 2017	Sep. 30, 2018	Sep. 30, 2017
Related Party Transaction [Line Items]
Transfers of Financial Assets Accounted for as Sale, Amortized Cost of Assets Obtained as Proceeds						$ 294
Assets Transferred To Affiliates, Estimated Fair Value						292
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale, Gain (Loss) on Sale						(2)
Equity Method Investments				$ 89
Proceeds from Sale of Equity Method Investments				286
Adjustments To Additional Paid In Capital, Capital Contribution				202
Related party investment administrative services		$ 0	$ 101		$ 186	296
Other investments
Related Party Transaction [Line Items]
Debt instrument, face amount				$ 1,100
Increase (Decrease) in Notes Receivable, Related Parties	$ 1,100
Other investments | Related Party Loan One
Related Party Transaction [Line Items]
Debt instrument, interest rate		4.21%			4.21%
Debt Instrument, Maturity Date					Sep. 30, 2032
Other investments | Related Party Loan Two
Related Party Transaction [Line Items]
Debt instrument, interest rate		5.10%			5.10%
Debt Instrument, Maturity Date					Dec. 31, 2033
Metlife Investment Advisors, LLC
Related Party Transaction [Line Items]
Related party investment administrative services		$ 0	$ 22		$ 50	$ 71

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Derivatives (Primary Risks) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Derivatives, Fair Value [Line Items]
Gross Notional Amount	$ 103,540	$ 113,549
Derivative Asset, Fair Value, Gross Asset	1,856	2,254
Derivative Liability, Fair Value, Gross Liability	3,305	3,129
Derivatives Designated as Hedging Instruments:
Derivatives, Fair Value [Line Items]
Gross Notional Amount	2,347	2,029
Derivative Asset, Fair Value, Gross Asset	116	143
Derivative Liability, Fair Value, Gross Liability	65	75
Derivatives Designated as Hedging Instruments: | Fair Value Hedges | Interest rate swaps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	0	175
Derivative Asset, Fair Value, Gross Asset	0	44
Derivative Liability, Fair Value, Gross Liability	0	0
Derivatives Designated as Hedging Instruments: | Cash Flow Hedges
Derivatives, Fair Value [Line Items]
Gross Notional Amount	2,347	1,854
Derivative Asset, Fair Value, Gross Asset	116	99
Derivative Liability, Fair Value, Gross Liability	65	75
Derivatives Designated as Hedging Instruments: | Cash Flow Hedges | Interest rate swaps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	0	27
Derivative Asset, Fair Value, Gross Asset	0	5
Derivative Liability, Fair Value, Gross Liability	0	0
Derivatives Designated as Hedging Instruments: | Cash Flow Hedges | Foreign currency swaps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	2,347	1,827
Derivative Asset, Fair Value, Gross Asset	116	94
Derivative Liability, Fair Value, Gross Liability	65	75
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Derivatives, Fair Value [Line Items]
Gross Notional Amount	101,193	111,520
Derivative Asset, Fair Value, Gross Asset	1,740	2,111
Derivative Liability, Fair Value, Gross Liability	3,240	3,054
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Interest rate swaps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	15,237	20,213
Derivative Asset, Fair Value, Gross Asset	546	922
Derivative Liability, Fair Value, Gross Liability	940	774
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Interest rate caps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	3,350	2,671
Derivative Asset, Fair Value, Gross Asset	32	7
Derivative Liability, Fair Value, Gross Liability	0	0
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Interest rate futures
Derivatives, Fair Value [Line Items]
Gross Notional Amount	54	282
Derivative Asset, Fair Value, Gross Asset	0	1
Derivative Liability, Fair Value, Gross Liability	0	0
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Interest rate options
Derivatives, Fair Value [Line Items]
Gross Notional Amount	13,819	24,600
Derivative Asset, Fair Value, Gross Asset	51	133
Derivative Liability, Fair Value, Gross Liability	105	63
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Foreign currency swaps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	1,140	1,115
Derivative Asset, Fair Value, Gross Asset	68	71
Derivative Liability, Fair Value, Gross Liability	28	42
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Foreign currency forwards
Derivatives, Fair Value [Line Items]
Gross Notional Amount	125	130
Derivative Asset, Fair Value, Gross Asset	1	0
Derivative Liability, Fair Value, Gross Liability	0	1
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Credit default swaps — purchased
Derivatives, Fair Value [Line Items]
Gross Notional Amount	86	65
Derivative Asset, Fair Value, Gross Asset	3	0
Derivative Liability, Fair Value, Gross Liability	1	1
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Credit default swaps — written
Derivatives, Fair Value [Line Items]
Gross Notional Amount	1,894	1,900
Derivative Asset, Fair Value, Gross Asset	32	40
Derivative Liability, Fair Value, Gross Liability	0	0
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Equity futures
Derivatives, Fair Value [Line Items]
Gross Notional Amount	2,215	2,713
Derivative Asset, Fair Value, Gross Asset	1	15
Derivative Liability, Fair Value, Gross Liability	1	0
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Equity index options
Derivatives, Fair Value [Line Items]
Gross Notional Amount	51,044	47,066
Derivative Asset, Fair Value, Gross Asset	862	794
Derivative Liability, Fair Value, Gross Liability	1,657	1,664
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Equity variance swaps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	9,713	8,998
Derivative Asset, Fair Value, Gross Asset	143	128
Derivative Liability, Fair Value, Gross Liability	445	430
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Equity total return swaps
Derivatives, Fair Value [Line Items]
Gross Notional Amount	2,516	1,767
Derivative Asset, Fair Value, Gross Asset	1	0
Derivative Liability, Fair Value, Gross Liability	$ 63	$ 79

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Derivatives (Earned Income On Derivatives) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Total earned income	$ 41	$ 73	$ 144	$ 278
Derivatives Designated as Hedging Instruments: | Net investment income
Derivative Instruments, Gain (Loss) [Line Items]
Total earned income	8	5	20	17
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Net derivative gains (losses)
Derivative Instruments, Gain (Loss) [Line Items]
Total earned income	33	67	124	253
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Policyholder benefits and claims
Derivative Instruments, Gain (Loss) [Line Items]
Total earned income	$ 0	$ 1	$ 0	$ 8

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Derivatives Derivatives (NQ, CF, FV) (Details) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Derivative [Line Items]
Gain (Loss) on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring, Net	$ 0	$ 0	$ 0	$ 12
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	(7)	(52)	28	(104)
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	(1)	3	8	(42)
Cash Flow Hedging
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	(7)	(52)	28	(104)
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	(10)
Cash Flow Hedging | Interest rate contracts
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	(3)	1	(5)	3
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Cash Flow Hedging | Foreign currency exchange rate contracts
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	(4)	(53)	33	(107)
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	(10)
Fair Value Hedging
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	2	(1)	12	(2)
Fair Value Hedging | Interest rate contracts
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	2	(1)	12	(2)
Net investment income
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	1	1	4	3
Net investment income | Cash Flow Hedging
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	1	1	4	4
Net investment income | Cash Flow Hedging | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	1	1	4	4
Net investment income | Cash Flow Hedging | Foreign currency exchange rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Net investment income | Fair Value Hedging
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Net investment income | Fair Value Hedging | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Net derivative gains (losses)
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(723)	(234)	(1,469)	(1,418)
Net derivative gains (losses) | Cash Flow Hedging
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	46	0	61	13
Net derivative gains (losses) | Cash Flow Hedging | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	46	0	62	2
Net derivative gains (losses) | Cash Flow Hedging | Foreign currency exchange rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	(1)	11
Net derivative gains (losses) | Fair Value Hedging
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(2)	1	(12)	2
Net derivative gains (losses) | Fair Value Hedging | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(2)	1	(12)	2
Policyholder benefits and claims
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(2)	(79)	(4)	(355)
Policyholder benefits and claims | Cash Flow Hedging
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Policyholder benefits and claims | Cash Flow Hedging | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Policyholder benefits and claims | Cash Flow Hedging | Foreign currency exchange rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Policyholder benefits and claims | Fair Value Hedging
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Policyholder benefits and claims | Fair Value Hedging | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Not Designated as Hedging Instrument
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	(3)	4	(4)	(30)
Not Designated as Hedging Instrument | Interest rate contracts
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Not Designated as Hedging Instrument | Foreign currency exchange rate contracts
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	(3)	4	(4)	(30)
Not Designated as Hedging Instrument | Credit
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Not Designated as Hedging Instrument | Equity market contracts
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0		0	0
Not Designated as Hedging Instrument | Embedded Derivative Financial Instruments
Derivative [Line Items]
Gains Losses Deferred In Accumulated Other Comprehensive Income Loss On Derivatives Effective Portion	0	0	0	0
Change in Unrealized Gain (Loss) on Hedged Item in Fair Value Hedge	0	0	0	0
Not Designated as Hedging Instrument | Net investment income
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	(1)
Not Designated as Hedging Instrument | Net investment income | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Not Designated as Hedging Instrument | Net investment income | Foreign currency exchange rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Not Designated as Hedging Instrument | Net investment income | Credit
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Not Designated as Hedging Instrument | Net investment income | Equity market contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	(1)
Not Designated as Hedging Instrument | Net investment income | Embedded Derivative Financial Instruments
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Not Designated as Hedging Instrument | Net derivative gains (losses)
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(767)	(235)	(1,518)	(1,433)
Not Designated as Hedging Instrument | Net derivative gains (losses) | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(281)	(81)	(1,255)	(145)
Not Designated as Hedging Instrument | Net derivative gains (losses) | Foreign currency exchange rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	2	(30)	17	(72)
Not Designated as Hedging Instrument | Net derivative gains (losses) | Credit
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	8	6	(2)	17
Not Designated as Hedging Instrument | Net derivative gains (losses) | Equity market contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(458)	(712)	(942)	(2,123)
Not Designated as Hedging Instrument | Net derivative gains (losses) | Embedded Derivative Financial Instruments
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(38)	582	664	890
Not Designated as Hedging Instrument | Policyholder benefits and claims
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	(2)	(79)	(4)	(355)
Not Designated as Hedging Instrument | Policyholder benefits and claims | Interest rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	6	0	8
Not Designated as Hedging Instrument | Policyholder benefits and claims | Foreign currency exchange rate contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Not Designated as Hedging Instrument | Policyholder benefits and claims | Credit
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	0	0	0
Not Designated as Hedging Instrument | Policyholder benefits and claims | Equity market contracts
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	0	(64)	0	(341)
Not Designated as Hedging Instrument | Policyholder benefits and claims | Embedded Derivative Financial Instruments
Derivative [Line Items]
Derivative, Gain (Loss) on Derivative, Net	$ (2)	$ (21)	$ (4)	$ (22)

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Derivatives (Gains Losses Recognized in Income Not Designated or Qualifying) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net derivative gains (losses)
Derivative Instruments, Gain (Loss) [Line Items]
Net Derivative Gains (Losses) Recognized for Derivatives	$ (723)	$ (234)	$ (1,469)	$ (1,418)
Net investment income
Derivative Instruments, Gain (Loss) [Line Items]
Net Derivative Gains (Losses) Recognized for Derivatives	1	1	4	3
Policyholder benefits and claims
Derivative Instruments, Gain (Loss) [Line Items]
Net Derivative Gains (Losses) Recognized for Derivatives	(2)	(79)	(4)	(355)
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Net derivative gains (losses)
Derivative Instruments, Gain (Loss) [Line Items]
Net Derivative Gains (Losses) Recognized for Derivatives	(767)	(235)	(1,518)	(1,433)
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Net investment income
Derivative Instruments, Gain (Loss) [Line Items]
Net Derivative Gains (Losses) Recognized for Derivatives	0	0	0	(1)
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | Policyholder benefits and claims
Derivative Instruments, Gain (Loss) [Line Items]
Net Derivative Gains (Losses) Recognized for Derivatives	$ (2)	$ (79)	$ (4)	$ (355)

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Derivatives (Credit Derivatives) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Credit Derivatives [Line Items]
Maximum Length of Time Hedged in Cash Flow Hedge			0 years		2 years
Gain (Loss) on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring, Net	$ 0	$ 0	$ 0	$ 12
Estimated Fair Value of Credit Default Swaps	32		32		$ 40
Maximum Amount of Future Payments under Credit Default Swaps	1,894		$ 1,894		$ 1,900
Weighted Average Years to Maturity			4 years 2 months		4 years 1 month
Aaa/Aa/A
Credit Derivatives [Line Items]
Weighted Average Years to Maturity			2 years 5 months
Aaa/Aa/A | Aaa/Aa/A
Credit Derivatives [Line Items]
Estimated Fair Value of Credit Default Swaps	11		$ 11		$ 12
Maximum Amount of Future Payments under Credit Default Swaps	677		$ 677		$ 558
Weighted Average Years to Maturity					2 years 9 months
Baa
Credit Derivatives [Line Items]
Weighted Average Years to Maturity			5 years 2 months
Baa | Aaa/Aa/A
Credit Derivatives [Line Items]
Estimated Fair Value of Credit Default Swaps	21		$ 21		$ 28
Maximum Amount of Future Payments under Credit Default Swaps	1,217		$ 1,217		$ 1,317
Weighted Average Years to Maturity					4 years 8 months
Ba
Credit Derivatives [Line Items]
Weighted Average Years to Maturity			0 years
Ba | Aaa/Aa/A
Credit Derivatives [Line Items]
Estimated Fair Value of Credit Default Swaps	0		$ 0		$ 0
Maximum Amount of Future Payments under Credit Default Swaps	$ 0		$ 0		$ 25
Weighted Average Years to Maturity					4 years 6 months

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Derivatives (Estimated Fair Value of Derivative Assets and Liabilities after Master Netting Agreements and Cash Collateral) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Offsetting Assets [Line Items]
Derivative Asset, Fair Value, Gross Asset Excluding Accruals	$ 1,925	$ 2,303
Derivative Liability, Fair Value, Gross Liability Excluding Accruals	3,297	3,121
Amounts offset in the consoilidated balance sheets, Assets	0	0
Amounts offset in the consoilidated balance sheets, Liabilities	0	0
Estimated fair value of derivative assets presented in the consolidated balance sheets	1,925	2,303
Estimated fair value of derivative liabilities presented in the consolidated balance sheets	3,297	3,121
Net amount of derivative assets after application of master netting agreements and cash collateral	11	44
Net amount of derivative liabilities after application of master netting agreements and cash collateral	0	1
Over the counter
Offsetting Assets [Line Items]
Derivative Asset, Fair Value, Gross Asset Excluding Accruals	1,903	2,233
Derivative Liability, Fair Value, Gross Liability Excluding Accruals	3,295	3,081
Gross estimated fair value of derivative assets	(1,569)	(1,942)
Gross estimated fair value of derivative liabilities	(1,569)	(1,942)
Cash collateral on derivative assets	(237)	(257)
Cash collateral on derivative liabilities	0	0
Securities collateral on derivative assets	(86)	(31)
Securities collateral on derivative liabilities	(1,726)	(1,138)
OTC-cleared and exchange-traded
Offsetting Assets [Line Items]
Derivative Asset, Fair Value, Gross Asset Excluding Accruals	22	70
Derivative Liability, Fair Value, Gross Liability Excluding Accruals	2	40
Gross estimated fair value of derivative assets	(1)	(1)
Gross estimated fair value of derivative liabilities	(1)	(1)
Cash collateral on derivative assets	(21)	(28)
Cash collateral on derivative liabilities	0	(39)
Securities collateral on derivative assets	0	0
Securities collateral on derivative liabilities	$ (1)	$ 0

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Derivatives (Credit Risk on Freestanding Derivatives) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Credit Derivatives [Line Items]
Derivative Liability, Fair Value, Gross Liability	$ 3,305	$ 3,129
Accrued Investment Income Receivable	675	601
Estimated Fair Value of Derivatives in Net Liability Position	1,726	1,138
Premiums and Other Receivables, Net	13,551	13,525
Fixed Maturity Securities
Credit Derivatives [Line Items]
Estimated Fair Value of Collateral Provided	$ 1,999	$ 1,414

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Derivatives (Embedded Derivatives) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract]
Embedded derivatives within asset host contracts	$ 166		$ 166		$ 175
Embedded derivatives within liability host contracts	1,601		1,601		1,887
Ceded guaranteed minimum benefits | Premiums, reinsurance and other receivables
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract]
Embedded derivatives within asset host contracts	166		166		227
Direct guaranteed minimum benefits | Policyholder account balances
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract]
Embedded derivatives within liability host contracts	396		396		1,212
Assumed reinsurance on fixed deferred annuities | Policyholder account balances
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract]
Embedded derivatives within liability host contracts	0		0		1
Fixed annuities with equity indexed returns | Policyholder account balances
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract]
Embedded derivatives within liability host contracts	1,205		1,205		674
Options embedded in debt or equity securities (1) | Investments
Embedded Derivative, Fair Value of Embedded Derivative, Net [Abstract]
Embedded derivatives within asset host contracts	0		0		$ (52)
Nonperformance risk | Direct and assumed guaranteed minimum benefit
Derivatives, Fair Value [Line Items]
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	(150)	$ 457	(116)	$ 385
Policyholder benefits and claims
Derivatives, Fair Value [Line Items]
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	$ (2)	$ (21)	$ (4)	$ (22)

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Derivatives (Changes in Estimated Fair Value Related to Embedded Derivatives) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net derivative gains (losses)
Derivative Instruments, Gain (Loss) [Line Items]
Embedded derivatives gains (losses)	$ (38)	$ 582	$ 664	$ 890
Policyholder benefits and claims
Derivative Instruments, Gain (Loss) [Line Items]
Embedded derivatives gains (losses)	$ (2)	$ (21)	$ (4)	$ (22)

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Derivatives (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	$ 1,856		$ 1,856		$ 2,254
Derivative Liability, Fair Value, Gross Liability	3,305		3,305		3,129
Maximum Amount of Future Payments under Credit Default Swaps	1,894		1,894		1,900
Cash collateral on derivative assets	39		39		$ 94
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring, Net	0	$ 0	$ 0	$ 12
Derivative Instrument Detail [Abstract]
Hedging exposure to variability in future cash flows for specific length of time			0 years		2 years
Accumulated Other Comprehensive Income (Loss)	202		$ 202		$ 239
Cash collateral on derivative liabilities	0		0		5
Securities collateral received which the company is permitted to sell or repledge, amount that has been sold or repledged	0		0
Over the counter
Derivatives, Fair Value [Line Items]
Cash collateral on derivative assets	(237)		(237)		(257)
Excess securities collateral received on derivatives	69		69		337
Excess securities collateral provided on derivatives	307		307		471
Exchange cleared
Derivatives, Fair Value [Line Items]
Cash collateral on derivative assets	(21)		(21)		(28)
Excess securities collateral provided on derivatives	79		79		427
Exchange-traded
Derivatives, Fair Value [Line Items]
Excess securities collateral provided on derivatives	105		105		118
Direct and assumed guaranteed minimum benefit | Nonperformance risk
Derivative Instruments, Gain (Loss) [Line Items]
Embedded derivatives gains (losses)	(150)	$ 457	(116)	$ 385
Accrued liabilities
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	69		69		49
Derivative Liability, Fair Value, Gross Liability	$ (8)		$ (8)		$ (8)

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Fair Value (Recurring Fair Value Measurements) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Assets [Abstract]
Debt Securities, Available-for-sale	$ 62,279	$ 64,991
Available-for-sale Securities, Equity Securities	150	161
Short-term investments	116	312
Mortgage Loans on Real Estate, Commercial and Consumer, Net	13,033	10,742
Derivative assets	1,856	2,254
Embedded derivatives within asset host contracts	166	175
Separate account assets	111,736	118,257
Liabilities [Abstract]
Derivative liabilities	3,305	3,129
Embedded derivatives within liability host contracts	1,601	1,887
Long-term Debt	3,966	3,612
Recurring
Assets [Abstract]
Debt Securities, Available-for-sale	62,279	64,991
Available-for-sale Securities, Equity Securities	150	161
Short-term investments	116	312
Real Estate Investments, Joint Ventures	15
Other limited partnership interests	25
Derivative assets	1,856	2,254
Embedded derivatives within asset host contracts	166	227
Separate account assets	111,736	118,257
Total assets	176,436	186,317
Liabilities [Abstract]
Derivative liabilities	3,305	3,129
Embedded derivatives within liability host contracts	1,601	1,887
Total liabilities	4,909	5,027
Recurring | Interest rate contracts
Assets [Abstract]
Derivative assets	629	1,112
Liabilities [Abstract]
Derivative liabilities	1,045	837
Recurring | Foreign currency exchange rate contracts
Assets [Abstract]
Derivative assets	185	165
Liabilities [Abstract]
Derivative liabilities	93	118
Recurring | Credit contracts
Assets [Abstract]
Derivative assets	35	40
Liabilities [Abstract]
Derivative liabilities	1	1
Recurring | Equity market contracts
Assets [Abstract]
Derivative assets	1,007	937
Liabilities [Abstract]
Derivative liabilities	2,166	2,173
Recurring | U.S. corporate
Assets [Abstract]
Debt Securities, Available-for-sale	23,935	22,957
Recurring | U.S. government and agency
Assets [Abstract]
Debt Securities, Available-for-sale	10,950	16,292
Recurring | RMBS
Assets [Abstract]
Debt Securities, Available-for-sale	8,374	7,977
Recurring | Foreign corporate
Assets [Abstract]
Debt Securities, Available-for-sale	7,248	7,023
Recurring | State and political subdivision
Assets [Abstract]
Debt Securities, Available-for-sale	4,069	4,181
Recurring | ABS
Assets [Abstract]
Debt Securities, Available-for-sale	2,009	1,829
Recurring | CMBS
Assets [Abstract]
Debt Securities, Available-for-sale	4,290	3,423
Recurring | Foreign government
Assets [Abstract]
Debt Securities, Available-for-sale	1,404	1,309
Recurring | Level 1
Assets [Abstract]
Debt Securities, Available-for-sale	4,072	8,304
Available-for-sale Securities, Equity Securities	15	18
Short-term investments	56	142
Real Estate Investments, Joint Ventures	0
Other limited partnership interests	0
Derivative assets	1	16
Embedded derivatives within asset host contracts	0	0
Separate account assets	202	410
Total assets	4,346	8,890
Liabilities [Abstract]
Derivative liabilities	1	0
Embedded derivatives within liability host contracts	0	0
Total liabilities	1	0
Recurring | Level 1 | Interest rate contracts
Assets [Abstract]
Derivative assets	0	1
Liabilities [Abstract]
Derivative liabilities	0	0
Recurring | Level 1 | Foreign currency exchange rate contracts
Assets [Abstract]
Derivative assets	0	0
Liabilities [Abstract]
Derivative liabilities	0	0
Recurring | Level 1 | Credit contracts
Assets [Abstract]
Derivative assets	0	0
Liabilities [Abstract]
Derivative liabilities	0	0
Recurring | Level 1 | Equity market contracts
Assets [Abstract]
Derivative assets	1	15
Liabilities [Abstract]
Derivative liabilities	1	0
Recurring | Level 1 | U.S. corporate
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 1 | U.S. government and agency
Assets [Abstract]
Debt Securities, Available-for-sale	4,072	8,304
Recurring | Level 1 | RMBS
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 1 | Foreign corporate
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 1 | State and political subdivision
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 1 | ABS
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 1 | CMBS
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 1 | Foreign government
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 2
Assets [Abstract]
Debt Securities, Available-for-sale	55,288	53,455
Available-for-sale Securities, Equity Securities	13	19
Short-term investments	60	156
Real Estate Investments, Joint Ventures	0
Other limited partnership interests	0
Derivative assets	1,693	2,079
Embedded derivatives within asset host contracts	0	0
Separate account assets	111,530	117,842
Total assets	168,677	173,666
Liabilities [Abstract]
Derivative liabilities	2,854	2,691
Embedded derivatives within liability host contracts	0	0
Total liabilities	2,857	2,702
Recurring | Level 2 | Interest rate contracts
Assets [Abstract]
Derivative assets	629	1,111
Liabilities [Abstract]
Derivative liabilities	1,045	837
Recurring | Level 2 | Foreign currency exchange rate contracts
Assets [Abstract]
Derivative assets	185	165
Liabilities [Abstract]
Derivative liabilities	92	117
Recurring | Level 2 | Credit contracts
Assets [Abstract]
Derivative assets	25	30
Liabilities [Abstract]
Derivative liabilities	1	1
Recurring | Level 2 | Equity market contracts
Assets [Abstract]
Derivative assets	854	773
Liabilities [Abstract]
Derivative liabilities	1,716	1,736
Recurring | Level 2 | U.S. corporate
Assets [Abstract]
Debt Securities, Available-for-sale	23,332	22,048
Recurring | Level 2 | U.S. government and agency
Assets [Abstract]
Debt Securities, Available-for-sale	6,878	7,988
Recurring | Level 2 | RMBS
Assets [Abstract]
Debt Securities, Available-for-sale	7,291	6,989
Recurring | Level 2 | Foreign corporate
Assets [Abstract]
Debt Securities, Available-for-sale	6,206	5,935
Recurring | Level 2 | State and political subdivision
Assets [Abstract]
Debt Securities, Available-for-sale	4,069	4,181
Recurring | Level 2 | ABS
Assets [Abstract]
Debt Securities, Available-for-sale	1,948	1,723
Recurring | Level 2 | CMBS
Assets [Abstract]
Debt Securities, Available-for-sale	4,160	3,287
Recurring | Level 2 | Foreign government
Assets [Abstract]
Debt Securities, Available-for-sale	1,404	1,304
Recurring | Level 3
Assets [Abstract]
Debt Securities, Available-for-sale	2,919	3,232
Available-for-sale Securities, Equity Securities	122	124
Short-term investments	0	14
Real Estate Investments, Joint Ventures	15
Other limited partnership interests	25
Derivative assets	162	159
Embedded derivatives within asset host contracts	166	227
Separate account assets	4	5
Total assets	3,413	3,761
Liabilities [Abstract]
Derivative liabilities	450	438
Embedded derivatives within liability host contracts	1,601	1,887
Total liabilities	2,051	2,325
Recurring | Level 3 | Interest rate contracts
Assets [Abstract]
Derivative assets	0	0
Liabilities [Abstract]
Derivative liabilities	0	0
Recurring | Level 3 | Foreign currency exchange rate contracts
Assets [Abstract]
Derivative assets	0	0
Liabilities [Abstract]
Derivative liabilities	1	1
Recurring | Level 3 | Credit contracts
Assets [Abstract]
Derivative assets	10	10
Liabilities [Abstract]
Derivative liabilities	0	0
Recurring | Level 3 | Equity market contracts
Assets [Abstract]
Derivative assets	152	149
Liabilities [Abstract]
Derivative liabilities	449	437
Recurring | Level 3 | U.S. corporate
Assets [Abstract]
Debt Securities, Available-for-sale	603	909
Recurring | Level 3 | U.S. government and agency
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 3 | RMBS
Assets [Abstract]
Debt Securities, Available-for-sale	1,083	988
Recurring | Level 3 | Foreign corporate
Assets [Abstract]
Debt Securities, Available-for-sale	1,042	1,088
Recurring | Level 3 | State and political subdivision
Assets [Abstract]
Debt Securities, Available-for-sale	0	0
Recurring | Level 3 | ABS
Assets [Abstract]
Debt Securities, Available-for-sale	61	106
Recurring | Level 3 | CMBS
Assets [Abstract]
Debt Securities, Available-for-sale	130	136
Recurring | Level 3 | Foreign government
Assets [Abstract]
Debt Securities, Available-for-sale	0	5
Variable interest entity, primary beneficiary
Assets [Abstract]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	93	115
Liabilities [Abstract]
Long-term Debt	3	11
Variable interest entity, primary beneficiary | Recurring
Assets [Abstract]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	93	115
Liabilities [Abstract]
Long-term Debt	3	11
Variable interest entity, primary beneficiary | Recurring | Level 1
Assets [Abstract]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	0	0
Liabilities [Abstract]
Long-term Debt	0	0
Variable interest entity, primary beneficiary | Recurring | Level 2
Assets [Abstract]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	93	115
Liabilities [Abstract]
Long-term Debt	3	11
Variable interest entity, primary beneficiary | Recurring | Level 3
Assets [Abstract]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	0	0
Liabilities [Abstract]
Long-term Debt	$ 0	$ 0

XML

Fair Value (Quantitative Information) (Details) - Fair Value, Inputs, Level 3	Sep. 30, 2018 $ / shares	Dec. 31, 2017 $ / shares
Minimum | Measurement input, age 0 - 40, mortality rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0000	0.0000
Minimum | Measurement input, age 41- 60, mortality rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0004	0.0004
Minimum | Measurement input, age 61 - 115, mortality rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0026	0.0026
Minimum | Measurement input, duration 1 - 10, lapse rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0025	0.0025
Minimum | Measurement input, duration 11 - 20, lapse rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.02	0.02
Minimum | Measurement input, duration 21 - 116, lapse rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.02	0.02
Minimum | Measurement input, utilization rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0000	0.0000
Minimum | Measurement input, withdrawal rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0025	0.0025
Minimum | Measurement input, long term equity volatilities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.1740	0.1740
Minimum | Measurement input, entity credit risk
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0105	0.0064
Maximum | Measurement input, age 0 - 40, mortality rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0008	0.0009
Maximum | Measurement input, age 41- 60, mortality rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0060	0.0065
Maximum | Measurement input, age 61 - 115, mortality rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	1.0000	1.0000
Maximum | Measurement input, duration 1 - 10, lapse rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	1.0000	1.0000
Maximum | Measurement input, duration 11 - 20, lapse rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	1.0000	1.0000
Maximum | Measurement input, duration 21 - 116, lapse rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	1.0000	1.0000
Maximum | Measurement input, utilization rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.2500	0.2500
Maximum | Measurement input, withdrawal rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.1000	0.1000
Maximum | Measurement input, long term equity volatilities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.2500	0.2500
Maximum | Measurement input, entity credit risk
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Embedded Derivative Liability, Measurement Input	0.0191	0.0143
U.S. corporate and foreign corporate | Minimum | Valuation technique, matrix pricing | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	86	93
U.S. corporate and foreign corporate | Minimum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	53	0
U.S. corporate and foreign corporate | Maximum | Valuation technique, matrix pricing | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	126	142
U.S. corporate and foreign corporate | Maximum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	316	443
U.S. corporate and foreign corporate | Weighted average | Valuation technique, matrix pricing | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	104	111
U.S. corporate and foreign corporate | Weighted average | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	101	77
RMBS | Minimum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	59	3
RMBS | Maximum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	107	107
RMBS | Weighted average | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	95	95
CMBS | Minimum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	67	8
CMBS | Minimum | Valuation technique, consensus pricing model | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	103	105
CMBS | Maximum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	104	104
CMBS | Maximum | Valuation technique, consensus pricing model | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	103	105
CMBS | Weighted average | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	92	88
CMBS | Weighted average | Valuation technique, consensus pricing model | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	103	105
ABS | Minimum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	99	100
ABS | Minimum | Valuation technique, consensus pricing model | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	100	100
ABS | Maximum | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	101	104
ABS | Maximum | Valuation technique, consensus pricing model | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	100	100
ABS | Weighted average | Valuation, market approach | Measurement input, quoted price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	100	101
ABS | Weighted average | Valuation technique, consensus pricing model | Measurement input, offered price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Securities, Available-for-sale, Measurement Input	100	100
Foreign Exchange Contract [Member] | Minimum | Valuation, income approach | Measurement input, swap yield [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	(23)	0
Foreign Exchange Contract [Member] | Maximum | Valuation, income approach | Measurement input, swap yield [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	2	0
Credit | Minimum | Valuation, income approach | Measurement input, credit spread
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	97	0
Credit | Maximum | Valuation, income approach | Measurement input, credit spread
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	99	0
Equity market | Minimum | Valuation, income approach | Measurement input, option volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	0.12	0.11
Equity market | Minimum | Valuation, income approach | Measurement input, comparability adjustment
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	0.30	0.10
Equity market | Maximum | Valuation, income approach | Measurement input, option volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	0.26	0.31
Equity market | Maximum | Valuation, income approach | Measurement input, comparability adjustment
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative Asset (Liability) Net, Measurement Input	0.30	0.30

XML

Fair Value (Unobservable Input Reconciliation) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net Derivatives
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance, beginning of period	$ (284)	$ (780)	$ (279)	$ (954)
Total realized/unrealized gains (losses) included in net income (loss)	(4)	4	(12)	100
Total realized/unrealized gains (losses) included in AOCI	0	0	0	0
Purchases	0	0	3	4
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	370	0	444
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Balance, end of period	(288)	(406)	(288)	(406)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	(4)	4	(12)	98
Net Embedded Derivatives
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance, beginning of period	(1,241)	(2,113)	(1,660)	(2,383)
Total realized/unrealized gains (losses) included in net income (loss)	(40)	558	660	883
Total realized/unrealized gains (losses) included in AOCI	0	0	0	0
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(154)	(155)	(435)	(210)
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Balance, end of period	(1,435)	(1,710)	(1,435)	(1,710)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	(37)	330	867	1,002
U.S. and foreign corporate
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	1,872	2,356	1,997	2,391
Total realized/unrealized gains (losses) included in net income (loss)	0	1	2	(2)
Total realized/unrealized gains (losses) included in AOCI	(44)	35	(121)	179
Purchases	56	92	164	235
Sales	(51)	(57)	(184)	(231)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	20	191	20	180
Transfers out of Level 3	(208)	(19)	(233)	(153)
Balance, end of period	1,645	2,599	1,645	2,599
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	0	1	(1)	1
Structured Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	1,268	1,489	1,230	1,711
Total realized/unrealized gains (losses) included in net income (loss)	10	13	21	22
Total realized/unrealized gains (losses) included in AOCI	(8)	6	(10)	43
Purchases	287	147	339	186
Sales	(114)	(230)	(229)	(467)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	3	0	0	0
Transfers out of Level 3	(172)	(13)	(77)	(83)
Balance, end of period	1,274	1,412	1,274	1,412
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	4	10	14	19
State and political subdivision
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	8	0	0	17
Total realized/unrealized gains (losses) included in net income (loss)	2	0	0	0
Total realized/unrealized gains (losses) included in AOCI	(2)	0	0	0
Purchases	0	0	0	0
Sales	(6)	(1)	0	(1)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	0	10	0	3
Transfers out of Level 3	(2)	0	0	(10)
Balance, end of period	0	9	0	9
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	0	0	0	0
Foreign government
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	0	0	5	0
Total realized/unrealized gains (losses) included in net income (loss)	0	0	0	0
Total realized/unrealized gains (losses) included in AOCI	0	0	0	0
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	(5)	0
Balance, end of period	0	0	0	0
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	0	0	0	0
Equity securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	120	134	124	137
Total realized/unrealized gains (losses) included in net income (loss)	(2)	0	(4)	0
Total realized/unrealized gains (losses) included in AOCI	0	(1)	0	2
Purchases	0	0	0	4
Sales	0	(3)	(3)	(13)
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	9	0	10	0
Transfers out of Level 3	(5)	0	(5)	0
Balance, end of period	122	130	122	130
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	0	0	(4)	0
Real estate joint ventures
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	17	0	22	0
Total realized/unrealized gains (losses) included in net income (loss)	0	0	(1)	0
Total realized/unrealized gains (losses) included in AOCI	0	0	0	0
Purchases	0	0	0	0
Sales	(2)	0	(6)	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Balance, end of period	15	0	15	0
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	0	0	(1)	0
Other limited partnership interests
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	24	0	28	0
Total realized/unrealized gains (losses) included in net income (loss)	3	0	2	0
Total realized/unrealized gains (losses) included in AOCI	(1)	0	(1)	0
Purchases	0	0	0	0
Sales	(1)	0	(4)	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	0	0	0
Balance, end of period	25	0	25	0
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	3	0	2	0
Short-term investments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	0	91	14	2
Total realized/unrealized gains (losses) included in net income (loss)	0	0	0	0
Total realized/unrealized gains (losses) included in AOCI	0	0	0	0
Purchases	0	0	0	0
Sales	0	0	(14)	0
Issuances	0	0	0	0
Settlements	0	0	0	0
Transfers into Level 3	0	0	0	0
Transfers out of Level 3	0	(90)	0	(1)
Balance, end of period	0	1	0	1
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	0	0	0	0
Separate account assets
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning of period	4	6	5	10
Total realized/unrealized gains (losses) included in net income (loss)	0	0	0	0
Total realized/unrealized gains (losses) included in AOCI	0	0	0	0
Purchases	1	2	1	2
Sales	0	0	(1)	(3)
Issuances	0	0	0	0
Settlements	0	0	(1)	0
Transfers into Level 3	0	0	0	1
Transfers out of Level 3	(1)	(2)	0	(4)
Balance, end of period	4	6	4	6
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at end of period	$ 0	$ 0	$ 0	$ 0

XML

Fair Value (Fair Value Option for Certain Assets and Liabilities) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Option, Quantitative Disclosures [Line Items]
Loans Receivable, Gross, Commercial, Mortgage	$ 8,405	$ 7,260
Difference between estimated fair value and unpaid principal balance	34	45
Mortgage Loans on Real Estate, Commercial and Consumer, Net	13,033	10,742
Contractual principal balance	3	10
Difference between estimated fair value and contractual principal balance	0	1
Long-term Debt	3,966	3,612
Variable interest entity, primary beneficiary
Fair Value, Option, Quantitative Disclosures [Line Items]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	93	115
Long-term Debt	3	11
Consolidated entities
Fair Value, Option, Quantitative Disclosures [Line Items]
Loans Receivable, Gross, Commercial, Mortgage	$ 59	$ 70

XML

Fair Value (Financial Instruments Carried at Other Than Fair Value) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Assets
Policy loans	$ 1,443	$ 1,523
Liabilities
Separate account liabilities	111,736	118,257
Carrying Value
Assets
Mortgage loans	12,940	10,627
Policy loans	1,443	1,523
Real estate joint ventures		5
Other limited partnership interests		36
Other invested assets	77	71
Premiums, reinsurance and other receivables	1,636	1,758
Liabilities
Policyholder account balances	16,026	15,791
Long-term debt	3,963	3,601
Other liabilities	515	314
Separate account liabilities	1,227	1,210
Estimated Fair Value
Assets
Mortgage loans	12,914	10,871
Policy loans	1,607	1,740
Real estate joint ventures		22
Other limited partnership interests		28
Other invested assets	77	71
Premiums, reinsurance and other receivables	1,779	2,113
Liabilities
Policyholder account balances	14,871	15,927
Long-term debt	3,592	3,639
Other liabilities	515	314
Separate account liabilities	1,227	1,210
Estimated Fair Value | Level 1
Assets
Mortgage loans	0	0
Policy loans	0	0
Real estate joint ventures		0
Other limited partnership interests		0
Other invested assets	0	0
Premiums, reinsurance and other receivables	0	0
Liabilities
Policyholder account balances	0	0
Long-term debt	0	0
Other liabilities	0	0
Separate account liabilities	0	0
Estimated Fair Value | Level 2
Assets
Mortgage loans	0	0
Policy loans	685	781
Real estate joint ventures		0
Other limited partnership interests		0
Other invested assets	64	71
Premiums, reinsurance and other receivables	60	128
Liabilities
Policyholder account balances	0	0
Long-term debt	2,992	3,039
Other liabilities	304	100
Separate account liabilities	1,227	1,210
Estimated Fair Value | Level 3
Assets
Mortgage loans	12,914	10,871
Policy loans	922	959
Real estate joint ventures		22
Other limited partnership interests		28
Other invested assets	13	0
Premiums, reinsurance and other receivables	1,719	1,985
Liabilities
Policyholder account balances	14,871	15,927
Long-term debt	600	600
Other liabilities	211	214
Separate account liabilities	$ 0	$ 0

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Fair Value (Recurring Fair Value Measurements) (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Embedded Derivative, Fair Value of Embedded Derivative, Net	$ 0	$ (52)

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Long-term Debt (Details) - USD ($)	Apr. 16, 2018	Sep. 30, 2018	Sep. 12, 2018
Repurchase Facility
Debt Instrument [Line Items]
Credit facilities, maximum borrowing capacity	$ 2,000,000,000
Credit facilities, term	3 years
Credit facilities, outstanding balance		$ 0
Junior Subordinated Debentures
Debt Instrument [Line Items]
Debt instrument, face amount			$ 375,000,000
Debt instrument, interest rate			6.25%

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Equity (Common Stock Repurchase Program - Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Aug. 05, 2018
Equity [Abstract]
Stock repurchase program, authorized amount		$ 200
Treasury stock, shares acquired	982,057
Treasury stock, value acquired	$ 42

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Equity (Components of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period	$ 815	$ 1,894	$ 1,676	$ 1,265
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets					$ (4)
Restatement Balance	815	1,894	1,676	1,265	552	$ 1,676
OCI before reclassifications	(324)	(887)	(1,418)	5
Deferred income tax benefit (expense)	68	317	318	7
AOCI before reclassifications, net of income tax	559	1,324	497	1,277
Amounts reclassified from AOCI	(9)	(27)	73	47
Deferred income tax benefit (expense)	2	11	(18)	(16)
Amounts reclassified from AOCI, net of income tax	(7)	(16)	55	31
Balance, end of period	552	1,308	552	1,308
Unrealized Investment Gains (Losses), Net of Related Offsets
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period	690	1,721	1,572	1,044
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets						(79)
Restatement Balance	690	1,721	1,572	1,044	476	1,572
OCI before reclassifications	(310)	(844)	(1,448)	118
Deferred income tax benefit (expense)	66	302	325	(41)
AOCI before reclassifications, net of income tax	446	1,179	370	1,121
Amounts reclassified from AOCI	38	(26)	138	64
Deferred income tax benefit (expense)	(8)	9	(32)	(23)
Amounts reclassified from AOCI, net of income tax	30	(17)	106	41
Balance, end of period	476	1,162	476	1,162
Unrealized Gains (Losses) on Derivatives
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period	168	223	154	268
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets						0
Restatement Balance	168	223	154	268	125	154
OCI before reclassifications	(7)	(52)	28	(104)
Deferred income tax benefit (expense)	1	18	(6)	36
AOCI before reclassifications, net of income tax	162	189	176	200
Amounts reclassified from AOCI	(47)	(1)	(65)	(17)
Deferred income tax benefit (expense)	10	2	14	7
Amounts reclassified from AOCI, net of income tax	(37)	1	(51)	(10)
Balance, end of period	125	190	125	190
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period	(19)	(33)	(24)	(31)
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets						0
Restatement Balance	(19)	(33)	(24)	(31)	(25)	(24)
OCI before reclassifications	(7)	9	(1)	5
Deferred income tax benefit (expense)	1	(2)	0	0
AOCI before reclassifications, net of income tax	(25)	(26)	(25)	(26)
Amounts reclassified from AOCI	0	0	0	0
Deferred income tax benefit (expense)	0	0	0	0
Amounts reclassified from AOCI, net of income tax	0	0	0	0
Balance, end of period	(25)	(26)	(25)	(26)
Accumulated Defined Benefit plans adjustment attributable to parent
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period	(24)	(17)	(26)	(16)
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets						0
Restatement Balance	(24)	(17)	(26)	(16)	(24)	(26)
OCI before reclassifications	0	0	3	(14)
Deferred income tax benefit (expense)	0	(1)	(1)	12
AOCI before reclassifications, net of income tax	(24)	(18)	(24)	(18)
Amounts reclassified from AOCI	0	0	0	0
Deferred income tax benefit (expense)	0	0	0	0
Amounts reclassified from AOCI, net of income tax	0	0	0	0
Balance, end of period	$ (24)	$ (18)	(24)	$ (18)
AOCI Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Line Items]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets					$ (79)	(79)
Restatement adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period			1,597
Restatement Balance			1,597			1,597
Restatement adjustment | Unrealized Investment Gains (Losses), Net of Related Offsets
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period			1,493
Restatement Balance			1,493			1,493
Restatement adjustment | Unrealized Gains (Losses) on Derivatives
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period			154
Restatement Balance			154			154
Restatement adjustment | Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period			(24)
Restatement Balance			(24)			(24)
Restatement adjustment | Accumulated Defined Benefit plans adjustment attributable to parent
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, beginning of period			(26)
Restatement Balance			$ (26)			$ (26)

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Equity (Reclassifications Out of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net investment gains (losses)	$ (42)	$ 21	$ (121)	$ (34)
Net derivative gains (losses)	(691)	(164)	(1,337)	(1,207)
Net investment income	853	761	2,476	2,309
Income (loss) from continuing operations before provision for income tax	(368)	(124)	(798)	(393)
Provision for income tax expense (benefit)	99	(819)	226	(653)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(269)	(943)	(572)	(1,046)
Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	7	16	(55)	(31)
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Investment Gains (Losses), Net of Related Offsets
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net investment gains (losses)	(36)	24	(137)	(22)
Net derivative gains (losses)	(2)	2	(2)	(44)
Net investment income	0	0	1	2
Income (loss) from continuing operations before provision for income tax	(38)	26	(138)	(64)
Provision for income tax expense (benefit)	8	(9)	32	23
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(30)	17	(106)	(41)
Reclassification out of Accumulated Other Comprehensive Income | Unrealized gains (losses) on derivatives
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income (loss) from continuing operations before provision for income tax	47	1	65	17
Provision for income tax expense (benefit)	(10)	(2)	(14)	(7)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	37	(1)	51	10
Reclassification out of Accumulated Other Comprehensive Income | Unrealized gains (losses) on derivatives | Interest rate swaps
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net derivative gains (losses)	15	0	31	0
Net investment income	0	0	2	2
Reclassification out of Accumulated Other Comprehensive Income | Unrealized gains (losses) on derivatives | Interest rate forwards
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net derivative gains (losses)	31	0	31	2
Net investment income	1	1	2	2
Reclassification out of Accumulated Other Comprehensive Income | Unrealized gains (losses) on derivatives | Foreign currency swaps
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net derivative gains (losses)	$ 0	$ 0	$ (1)	$ 11

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Equity (Stockholder's Compensation) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Restricted Stock Units (RSUs), Founders' Grant | Restricted stock units, Founders’ Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 21.0	$ 31.0
Other share based | Restricted stock units, Founders’ Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	3.0	4.0
Other share based | Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	0.0	1.0
Other share based | Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 0.0	$ 0.0

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Equity (Performance Share Units) (Details) - $ / shares	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Paid
Performance and Restricted Share Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	980,854	0
Granted	995,861
Forfeited	15,007
Vested at September 30, 2018	648,561
Restricted and Performance Weighted Average Exercise Price
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 48.05	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Intrinsic Value, Amount Per Share	48.10
Granted	48.06
Forfeited	$ 48.10
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised	0
Paid	$ 0
Performance
Performance and Restricted Share Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	73,849	0
Granted	73,849
Forfeited	0
Vested at September 30, 2018	0
Restricted and Performance Weighted Average Exercise Price
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 48.10	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Intrinsic Value, Amount Per Share	0
Granted	48.10
Forfeited	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised	0
Paid	$ 0

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Equity (Stock Options) (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price of stock options granted	$ 53.47
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free rate of return	2.93%
Expected volatility	25.00%
Expected option life, years	5 years 9 months 18 days
Weighted average exercise price of stock options granted	$ 53.47
Weighted average fair value of stock options granted	$ 12.54

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Equity (Stockholder's Compensation - Narrative) (Details)	9 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	242,560
Weighted average exercise price of stock options granted | $ / shares	$ 53.47
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	7,330,377
Other share based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 16,000,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	18 months
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance Factor	0.00%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance Factor	150.00%

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Other Expenses (Other Expenses) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other Income and Expenses [Abstract]
Compensation	$ 99	$ 84	$ 252	$ 213
Commissions	221	212	650	602
Cost, Overhead	104	112	318	375
Interest Income (Expense), Net	5	4	12	30
Deferred Policy Acquisition Costs, Capitalization	(83)	(72)	(235)	(187)
Interest expense on debt	40	34	113	116
Premium taxes, licenses and fees	12	16	55	49
Professional services	112	76	320	164
Rent and related expenses	4	2	10	10
Other	151	143	479	417
Total other expenses	$ 665	$ 611	$ 1,974	$ 1,789

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Other Revenues and Other Expenses Other Revenues (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Distribution service
Revenue from Contract with Customer, Including Assessed Tax	$ 91	$ 94	$ 275	$ 263

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Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	$ (271)	$ (943)	$ (577)	$ (1,046)
Weighted average common shares outstanding - basic	119,657,443	119,773,106	119,734,128	119,773,106
Earnings per common share - basic	$ (2.26)	$ (7.87)	$ (4.82)	$ (8.73)

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Contingencies, Commitments and Guarantees (Commitments and Guarantees - Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Liabilities for indemnities, guarantees and commitments	$ 2	$ 2
Cumulative maximum indemnities and guarantees contractual limitation	175
Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Indemnities And Guarantees Contractual Limitation Range	1
Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Indemnities And Guarantees Contractual Limitation Range	169
Mortgage Loan Commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability	422	388
Commitments to Fund Partnership Investments and Private Corporate Bond Investments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure, Off-balance Sheet Risks, Face Amount, Liability	$ 1,800	$ 1,400

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Contingencies, Commitments and Guarantees Contingencies and Commitments Disclosure (Details)	Sep. 30, 2018 USD ($)
Minimum
Loss Contingencies [Line Items]
Loss Contingency, Range of Possible Loss, Portion Not Accrued	$ 0
Maximum
Loss Contingencies [Line Items]
Loss Contingency, Range of Possible Loss, Portion Not Accrued	$ 10,000,000

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Related Party Transactions (Related Party - Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Related Party Transaction, Due from (to) Related Party [Abstract]
Other expenses	$ 0	$ 101	$ 186	$ 296
Interest Expense, Debt		$ 0		$ 55

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Related Party Transactions Related Party Transactions (Non Broker Dealer Transactions) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Related Party Transaction [Line Items]
Assets	$ 0		$ 0		$ 2,907
Liabilities	0		0		$ 2,178
All services and transactions except broker dealer activities
Related Party Transaction [Line Items]
Income	0	$ (96)	(182)	$ (496)
Expense	$ 0	$ 108	$ 133	$ 288

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Related Party Transactions (Effects of Affiliated Reinsurance on Statements of Operations) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Premiums:
Net premiums	$ 225	$ 236	$ 677	$ 630
Universal life and investment-type product policy fees:
Net universal life and investment-type product policy fees	972	1,025	2,936	2,935
Other revenues:
Other revenues	105	93	308	329
Interest credited to policyholder account balances:
Net interest credited to policyholder account balances	273	279	809	838
Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Amortization Expense, [Abstract]
Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Amortization	30	123	581	(4)
Other expenses:
Net other expenses	665	611	1,974	1,789
Affiliated Entity | Assumed
Premiums:
Reinsurance assumed	0	1	6	9
Universal life and investment-type product policy fees:
Reinsurance assumed	0	31	45	77
Other revenues:
Reinsurance assumed	0	0	0	27
Policyholder benefits and claims:
Reinsurance assumed	0	9	8	21
Affiliated Entity | Ceded
Premiums:
Reinsurance ceded	0	(106)	(201)	(423)
Universal life and investment-type product policy fees:
Reinsurance ceded	0	1	1	(16)
Other revenues:
Reinsurance ceded	0	0	18	39
Policyholder benefits and claims:
Reinsurance ceded	0	(89)	(177)	(318)
Affiliated Entity | Reinsurance
Premiums:
Net premiums	0	(105)	(195)	(414)
Universal life and investment-type product policy fees:
Net universal life and investment-type product policy fees	0	32	46	61
Other revenues:
Other revenues	0	0	18	66
Policyholder benefits and claims:
Policyholder Benefits and Claims Incurred, Assumed and Ceded	$ 0	$ (80)	$ (169)	$ (297)

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Related Party Transactions (Effects of Affiliated Reinsurance on Balance Sheets) (Details) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Assets:
Premiums, reinsurance and other receivables	$ 13,551	$ 13,525
Deferred policy acquisition costs and value of business acquired	6,050	6,286
Liabilities:
Future policy benefits	35,748	36,616
Policyholder account balances	39,446	37,783
Other liabilities relating to variable interest entities	5,575	5,263
Assumed
Assets:
Premiums, reinsurance and other receivables	0	18
Liabilities:
Other policy-related balances	0	1,674
Other liabilities relating to variable interest entities	0	30
Ceded
Assets:
Premiums, reinsurance and other receivables	0	3,410
Liabilities:
Other policy-related balances	0	0
Other liabilities relating to variable interest entities	$ 0	$ 401

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Related Party Transactions (Reinsurance Transactions - Narrative) (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended		6 Months Ended	9 Months Ended
	Apr. 30, 2017	Jan. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	May 01, 2017	Jan. 01, 2017
Reinsurance Disclosures [Abstract]
Embedded Derivative, Fair Value of Embedded Derivative Liability			$ 1,601			$ 1,601		$ 1,887
Embedded Derivative, Fair Value of Embedded Derivative Asset			166			166		175
Income (loss) from continuing operations before provision for income tax			(368)	$ (124)		(798)	$ (393)
Other liabilities relating to variable interest entities			5,575			5,575		5,263
Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Net			6,050			6,050		6,286
Premiums, reinsurance and other receivables			(13,551)			(13,551)		(13,525)
Liability for Future Policy Benefits			35,748			35,748		36,616
Policyholder Contract Deposits			39,446			39,446		37,783
Ceded guaranteed minimum benefits
Reinsurance Disclosures [Abstract]
Embedded Derivative, Fair Value of Embedded Derivative Asset			0			0		$ 2
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net			$ 0	$ (1)			$ (264)
Affiliate Recapture Variable Annuities
Reinsurance Disclosures [Abstract]
Income (loss) from continuing operations before provision for income tax		$ (178)
Other liabilities relating to variable interest entities										$ 274
Maximum | Ceded guaranteed minimum benefits
Reinsurance Disclosures [Abstract]
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net						$ (1)
Affiliated Entity | Life and Other
Reinsurance Disclosures [Abstract]
Income (loss) from continuing operations before provision for income tax	$ 17
Cash, Cash Equivalents, and Short-term Investments									$ 214
Premiums, reinsurance and other receivables									$ 189
Affiliated Entity | Metropolitan Life Insurance Company | BHL Recapture GMIB
Reinsurance Disclosures [Abstract]
Income (loss) from continuing operations before provision for income tax					$ 89
Cash, Cash Equivalents, and Short-term Investments										(568)
Premiums, reinsurance and other receivables										(140)
Liability for Future Policy Benefits										(106)
Policyholder Contract Deposits										$ (460)