EX-99.2 3 bhffinancialsupplement-q318.htm EXHIBIT 99.2 Exhibit

 
 
 
 
 



Exhibit 99.2








Brighthouse Financial, Inc.
Financial Supplement

Third Quarter 2018













bhflogorgb970pxa14.jpg




 
 
 
 
 



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

Note: See Appendix for non-GAAP financial information, definitions and reconciliations. Financial information, unless otherwise noted, is rounded to millions. Some financial information, therefore, may not sum to the corresponding total.

As used in this financial supplement, “Brighthouse Financial,” “Brighthouse,” the “Company,” “we,” “our” and “us” refer to Brighthouse Financial, Inc., the entity that subsequent to the separation holds, through its subsidiaries, the assets (including the equity interests of certain former MetLife, Inc. subsidiaries) and liabilities associated with MetLife, Inc.’s former Brighthouse Financial segment.



 
 
 
 
 









Financial Results



 
 
Financial Supplement
 
1




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

 
 
As of or For the Three Months Ended
Financial Results and Metrics
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Net income (loss) available to shareholders (1)
 
$(271)
 
$(239)
 
$(67)
 
$668
 
$(943)
Adjusted earnings (1) (2)
 
$270
 
$153
 
$283
 
$992
 
$(676)
Total corporate expenses (3)
 
$242
 
$288
 
$230
 
$287
 
$241
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
Ending Brighthouse Financial, Inc.’s stockholders’ equity
 
$12,884
 
$13,435
 
$13,608
 
$14,515
 
$13,766
Ending AOCI (4)
 
552
 
815
 
801
 
1,676
 
1,308
Ending Brighthouse Financial, Inc.’s stockholders’ equity, excluding AOCI (4)
 
$12,332
 
$12,620
 
$12,807
 
$12,839
 
$12,458
 
 
 
 
 
 
 
 
 
 
 
Return on Equity
 
 
 
 
 
 
 
 
 
 
Return on equity
 
0.7%
 
(4.0)%
 
(0.7)%
 
(2.5)%
 
(17.9)%
Return on equity, excluding AOCI (2)
 
0.7%
 
(4.5)%
 
(0.7)%
 
(2.8)%
 
(20.1)%
Adjusted return on equity (2)
 
13.5%
 
5.8%
 
7.0%
 
6.9%
 
(1.0)%
 
 
 
 
 
 
 
 
 
 
 
Per Diluted Common Share
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to shareholders per common share (5)
 
$(2.26)
 
$(2.01)
 
$(0.56)
 
$5.58
 
$(7.87)
Adjusted earnings per common share (2)
 
$2.23
 
$1.27
 
$2.36
 
$8.28
 
$(5.64)
Weighted average common shares outstanding
 
120,641,572
 
120,200,149
 
119,773,106
 
119,773,106
 
119,773,106
 
 
 
 
 
 
 
 
 
 
 
Book value per common share (2)
 
$108.45
 
$112.17
 
$113.61
 
$121.19
 
$114.93
Book value per common share, excluding AOCI (2)
 
$103.80
 
$105.37
 
$106.93
 
$107.19
 
$104.01
Ending common shares outstanding
 
118,800,611
 
119,773,106
 
119,773,106
 
119,773,106
 
119,773,106
 
 
 
 
 
 
 
 
 
 
 
(1) The Company recorded a non-cash tax expense of $1.1 billion in the third quarter of 2017 related to a tax obligation triggered prior to the separation, recognized by the Company’s former parent. This tax expense had no impact on the book value of Brighthouse.
(2) See definitions for non-GAAP and other financial disclosures in the appendix beginning on Page A-2.
(3) Includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs.
(4) Ending AOCI and Ending Brighthouse Financial, Inc.'s stockholders' equity, excluding AOCI, have been recast as of December 31, 2017 to conform to amounts presented in Brighthouse Financial, Inc.'s annual report on Form 10-K for the year ended December 31, 2017. The change was made as a result of the adoption of accounting guidance related to the accounting for deferred taxes that was issued subsequent to the filing of the Q4 2017 Financial Supplement.
(5) Dilutive shares were not included in the calculation of net income (loss) available to shareholders per common share as inclusion of such shares would have an anti-dilutive effect.

croppedlogocopya01.jpg
 
 
 
 
 






 
 
Financial Supplement
 
2




Condensed Statements of Operations (Unaudited, in millions)

 
 
For the Three Months Ended
 
For the Nine Months Ended
Revenues
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Premiums
 
$225
 
$223
 
$229
 
$233
 
$236
 
$677
 
$630
Universal life and investment-type product policy fees
 
972
 
962
 
1,002
 
963
 
1,025
 
2,936
 
2,935
Net investment income
 
853
 
806
 
817
 
769
 
761
 
2,476
 
2,309
Other revenues
 
105
 
98
 
105
 
322
 
93
 
308
 
329
Revenues before NIGL and NDGL
 
2,155
 
2,089
 
2,153
 
2,287
 
2,115
 
6,397
 
6,203
Net investment gains (losses)
 
(42)
 
(75)
 
(4)
 
6
 
21
 
(121)
 
(34)
Net derivative gains (losses)
 
(691)
 
(312)
 
(334)
 
(413)
 
(164)
 
(1,337)
 
(1,207)
Total revenues
 
$1,422
 
$1,702
 
$1,815
 
$1,880
 
$1,972
 
$4,939
 
$4,962
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$273
 
$269
 
$267
 
$273
 
$279
 
$809
 
$838
Policyholder benefits and claims
 
822
 
813
 
738
 
904
 
1,083
 
2,373
 
2,732
Amortization of DAC and VOBA
 
30
 
246
 
305
 
231
 
123
 
581
 
(4)
Interest expense on debt
 
40
 
36
 
37
 
37
 
34
 
113
 
116
Other expenses
 
625
 
655
 
581
 
657
 
577
 
1,861
 
1,673
Total expenses
 
1,790
 
2,019
 
1,928
 
2,102
 
2,096
 
5,737
 
5,355
Income (loss) before provision for income tax
 
(368)
 
(317)
 
(113)
 
(222)
 
(124)
 
(798)
 
(393)
Provision for income tax expense (benefit)
 
(99)
 
(79)
 
(48)
 
(890)
 
819
 
(226)
 
653
Net income (loss)
 
(269)
 
(238)
 
(65)
 
668
 
(943)
 
(572)
 
(1,046)
Less: Net income (loss) attributable to noncontrolling interests
 
2
 
1
 
2
 
 
 
5
 
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
$(271)
 
$(239)
 
$(67)
 
$668
 
$(943)
 
$(577)
 
$(1,046)
 

croppedlogocopya01.jpg
 
 
 
 
 






 
 
Financial Supplement
 
3




Balance Sheets (Unaudited, in millions)
 
 
As of
ASSETS
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Investments:
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities available-for-sale
 
$62,279
 
$62,343
 
$63,178
 
$64,991
 
$63,565
Equity securities (1)
 
150
 
153
 
160
 
161
 
195
Mortgage loans, net
 
13,033
 
12,337
 
11,308
 
10,742
 
10,431
Policy loans
 
1,443
 
1,458
 
1,517
 
1,523
 
1,522
Real estate joint ventures
 
444
 
449
 
441
 
433
 
407
Other limited partnership interests
 
1,765
 
1,706
 
1,700
 
1,669
 
1,654
Short-term investments
 
116
 
177
 
293
 
312
 
1,149
Other invested assets (1)
 
2,099
 
2,305
 
2,452
 
2,507
 
2,736
Total investments
 
81,329
 
80,928
 
81,049
 
82,338
 
81,659
Cash and cash equivalents
 
2,144
 
2,135
 
1,888
 
1,857
 
1,698
Accrued investment income
 
675
 
607
 
640
 
601
 
641
Reinsurance recoverables
 
12,683
 
12,745
 
12,746
 
12,763
 
12,727
Premiums and other receivables
 
868
 
848
 
781
 
762
 
864
DAC and VOBA
 
6,050
 
5,968
 
6,083
 
6,286
 
6,414
Current income tax recoverable
 
878
 
814
 
832
 
740
 
1,772
Other assets
 
583
 
580
 
593
 
588
 
647
Separate account assets
 
111,736
 
111,587
 
114,385
 
118,257
 
116,857
Total assets
 
$216,946
 
$216,212
 
$218,997
 
$224,192
 
$223,279
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Future policy benefits
 
$35,748
 
$35,816
 
$36,223
 
$36,616
 
$36,035
Policyholder account balances
 
39,446
 
38,407
 
37,940
 
37,783
 
37,298
Other policy-related balances
 
2,907
 
2,941
 
2,991
 
2,985
 
2,964
Payables for collateral under securities loaned and other transactions
 
4,043
 
4,265
 
4,244
 
4,169
 
4,569
Long-term debt
 
3,966
 
3,607
 
3,609
 
3,612
 
3,615
Deferred income tax liability
 
576
 
684
 
752
 
927
 
2,116
Other liabilities
 
5,575
 
5,405
 
5,180
 
5,263
 
5,994
Separate account liabilities
 
111,736
 
111,587
 
114,385
 
118,257
 
116,857
Total liabilities
 
203,997
 
202,712
 
205,324
 
209,612
 
209,448
Equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
1
 
1
 
1
 
1
 
1
Additional paid-in capital
 
12,469
 
12,444
 
12,432
 
12,432
 
12,418
Retained earnings (deficit)
 
(96)
 
175
 
374
 
406
 
39
Treasury stock
 
(42)
 
 
 
 
Accumulated other comprehensive income (loss)
 
552
 
815
 
801
 
1,676
 
1,308
Total Brighthouse Financial, Inc.’s stockholders’ equity
 
12,884
 
13,435
 
13,608
 
14,515
 
13,766
Noncontrolling interests
 
65
 
65
 
65
 
65
 
65
Total equity
 
12,949
 
13,500
 
13,673
 
14,580
 
13,831
Total liabilities and equity
 
$216,946
 
$216,212
 
$218,997
 
$224,192
 
$223,279
 
 
 
 
 
 
 
 
 
 
 
(1) The Company reclassified $71 million as of December 31, 2017 and $70 million as of September 30, 2017 of FHLB common stock from equity securities to other invested assets, principally at estimated fair value, to conform to current presentation.

croppedlogocopya01.jpg
 
 
 
 
 






 
 
 
 
 








Earnings and Select
Metrics from
Business Segments and Corporate & Other




 
 
Financial Supplement
 
5




Statements of Adjusted Earnings by Segment and Corporate & Other (Unaudited, in millions)
  
 
For the Three Months Ended September 30, 2018
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$48
 
$152
 
$—
 
$25
 
$225
Universal life and investment-type product policy fees
 
625
 
77
 
208
 
(3)
 
907
Net investment income
 
399
 
115
 
322
 
16
 
852
Other revenues
 
88
 
2
 
6
 
9
 
105
Total adjusted revenues
 
$1,160
 
$346
 
$536
 
$47
 
$2,089
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$152
 
$29
 
$92
 
$—
 
$273
Policyholder benefits and claims
 
72
 
169
 
532
 
15
 
788
Amortization of DAC and VOBA
 
40
 
8
 
 
5
 
53
Interest expense on debt
 
 
 
 
39
 
39
Other operating costs
 
409
 
62
 
46
 
105
 
622
Total adjusted expenses
 
673
 
268
 
670
 
164
 
1,775
Adjusted earnings before provision for income tax
 
487
 
78
 
(134)
 
(117)
 
314
Provision for income tax expense (benefit)
 
86
 
17
 
(29)
 
(32)
 
42
Adjusted earnings after provision for income tax
 
401
 
61
 
(105)
 
(85)
 
272
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
2
 
2
Adjusted earnings
 
$401
 
$61
 
$(105)
 
$(87)
 
$270
 
 
 
 
 
 
 
 
 
 
 
  
 
For the Three Months Ended September 30, 2017
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$44
 
$164
 
$—
 
$28
 
$236
Universal life and investment-type product policy fees
 
629
 
134
 
196
 
(4)
 
955
Net investment income
 
310
 
87
 
348
 
35
 
780
Other revenues
 
87
 
2
 
3
 
 
92
Total adjusted revenues
 
$1,070
 
$387
 
$547
 
$59
 
$2,063
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$153
 
$40
 
$86
 
$—
 
$279
Policyholder benefits and claims
 
258
 
161
 
287
 
21
 
727
Amortization of DAC and VOBA
 
(228)
 
138
 
 
4
 
(86)
Interest expense on debt
 
 
 
 
36
 
36
Other operating costs
 
399
 
56
 
55
 
93
 
603
Total adjusted expenses
 
582
 
395
 
428
 
154
 
1,559
Adjusted earnings before provision for income tax
 
488
 
(8)
 
119
 
(95)
 
504
Provision for income tax expense (benefit)
 
133
 
(14)
 
36
 
1,025
 
1,180
Adjusted earnings after provision for income tax
 
355
 
6
 
83
 
(1,120)
 
(676)
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
 
Adjusted earnings
 
$355
 
$6
 
$83
 
$(1,120)
 
$(676)

croppedlogocopya01.jpg
 
 
 
 
 






 
 
Financial Supplement
 
6




Statements of Adjusted Earnings by Segment and Corporate & Other (Cont.) (Unaudited, in millions)
  
 
For the Nine Months Ended September 30, 2018
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$141
 
$461
 
$—
 
$75
 
$677
Universal life and investment-type product policy fees
 
1,897
 
256
 
596
 
(10)
 
2,739
Net investment income
 
1,138
 
334
 
979
 
38
 
2,489
Other revenues
 
277
 
3
 
19
 
9
 
308
Total adjusted revenues
 
$3,453
 
$1,054
 
$1,594
 
$112
 
$6,213
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$446
 
$88
 
$274
 
$—
 
$808
Policyholder benefits and claims
 
433
 
502
 
1,244
 
48
 
2,227
Amortization of DAC and VOBA
 
307
 
60
 
 
13
 
380
Interest expense on debt
 
 
 
 
113
 
113
Other operating costs
 
1,242
 
199
 
155
 
265
 
1,861
Total adjusted expenses
 
2,428
 
849
 
1,673
 
439
 
5,389
Adjusted earnings before provision for income tax
 
1,025
 
205
 
(79)
 
(327)
 
824
Provision for income tax expense (benefit)
 
177
 
41
 
(18)
 
(87)
 
113
Adjusted earnings after provision for income tax
 
848
 
164
 
(61)
 
(240)
 
711
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
5
 
5
Adjusted earnings
 
$848
 
$164
 
$(61)
 
$(245)
 
$706
 
 
 
 
 
 
 
 
 
 
 
  
 
For the Nine Months Ended September 30, 2017
Adjusted revenues
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
Premiums
 
$142
 
$406
 
$1
 
$81
 
$630
Universal life and investment-type product policy fees
 
1,900
 
292
 
544
 
(10)
 
2,726
Net investment income
 
948
 
263
 
1,060
 
159
 
2,430
Other revenues
 
280
 
21
 
26
 
 
327
Total adjusted revenues
 
$3,270
 
$982
 
$1,631
 
$230
 
$6,113
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$457
 
$108
 
$271
 
$—
 
$836
Policyholder benefits and claims
 
581
 
477
 
874
 
48
 
1,980
Amortization of DAC and VOBA
 
(22)
 
190
 
6
 
15
 
189
Interest expense on debt
 
 
 
23
 
94
 
117
Other operating costs
 
1,143
 
207
 
185
 
134
 
1,669
Total adjusted expenses
 
2,159
 
982
 
1,359
 
291
 
4,791
Adjusted earnings before provision for income tax
 
1,111
 
 
272
 
(61)
 
1,322
Provision for income tax expense (benefit)
 
302
 
(11)
 
88
 
1,015
 
1,394
Adjusted earnings after provision for income tax
 
809
 
11
 
184
 
(1,076)
 
(72)
Less: Net income (loss) attributable to noncontrolling interests
 
 
 
 
 
Adjusted earnings
 
$809
 
$11
 
$184
 
$(1,076)
 
$(72)

croppedlogocopya01.jpg
 
 
 
 
 






 
 
Financial Supplement
 
7




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

  
 
For the Three Months Ended
 
For the Nine Months Ended
Adjusted revenues
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Premiums
 
$48
 
$48
 
$45
 
$33
 
$44
 
$141
 
$142
Universal life and investment-type product policy fees
 
625
 
632
 
640
 
645
 
629
 
1,897
 
1,900
Net investment income
 
399
 
376
 
363
 
329
 
310
 
1,138
 
948
Other revenues
 
88
 
90
 
99
 
93
 
87
 
277
 
280
Total adjusted revenues
 
$1,160
 
$1,146
 
$1,147
 
$1,100
 
$1,070
 
$3,453
 
$3,270
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$152
 
$148
 
$146
 
$148
 
$153
 
$446
 
$457
Policyholder benefits and claims
 
72
 
181
 
180
 
153
 
258
 
433
 
581
Amortization of DAC and VOBA
 
40
 
124
 
143
 
102
 
(228)
 
307
 
(22)
Interest expense on debt
 
 
 
 
 
 
 
Other operating costs
 
409
 
427
 
406
 
422
 
399
 
1,242
 
1,143
Total adjusted expenses
 
673
 
880
 
875
 
825
 
582
 
2,428
 
2,159
Adjusted earnings before provision for income tax
 
487
 
266
 
272
 
275
 
488
 
1,025
 
1,111
Provision for income tax expense (benefit)
 
86
 
45
 
46
 
67
 
133
 
177
 
302
Adjusted earnings
 
$401
 
$221
 
$226
 
$208
 
$355
 
$848
 
$809


croppedlogocopya01.jpg
 
 
 
 
 






 
 
Financial Supplement
 
8




Annuities — Select Operating Metrics (Unaudited, in millions)

  
 
For the Three Months Ended
VARIABLE & SHIELD ANNUITIES ACCOUNT VALUE (1)
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Account value, beginning of period
 
$116,283
 
$117,178
 
$120,333
 
$118,574
 
$116,830
Deposits
 
1,243
 
1,129
 
1,074
 
1,128
 
981
Withdrawals, surrenders and contract benefits
 
(2,754)
 
(2,877)
 
(2,853)
 
(2,799)
 
(2,402)
Net flows
 
(1,511)
 
(1,748)
 
(1,779)
 
(1,671)
 
(1,421)
Investment performance (2)
 
2,953
 
1,568
 
(695)
 
4,129
 
3,873
Policy charges and other
 
(740)
 
(715)
 
(681)
 
(699)
 
(708)
Account value, end of period
 
$116,985
 
$116,283
 
$117,178
 
$120,333
 
$118,574
 
 
 
 
 
 
 
 
 
 
 
FIXED ANNUITIES ACCOUNT VALUE
 
 
 
 
 
 
 
 
 
 
Account value, beginning of period
 
$13,112
 
$13,036
 
$13,062
 
$13,123
 
$13,230
Deposits
 
330
 
305
 
205
 
232
 
113
Withdrawals, surrenders and contract benefits
 
(296)
 
(308)
 
(320)
 
(374)
 
(331)
Net flows
 
34
 
(3)
 
(115)
 
(142)
 
(218)
Interest credited
 
105
 
105
 
105
 
106
 
111
Other
 
(26)
 
(26)
 
(16)
 
(25)
 
Account value, end of period
 
$13,225
 
$13,112
 
$13,036
 
$13,062
 
$13,123
 
 
 
 
 
 
 
 
 
 
 
INCOME ANNUITIES (1)
 
 
 
 
 
 
 
 
 
 
Income annuity insurance liabilities
 
$4,561
 
$4,547
 
$4,541
 
$4,544
 
$4,544
 
 
 
 
 
 
 
 
 
 
 
(1) Includes general account and separate account.
(2) Includes imputed interest on indexed annuities and the interest credited on the general account investment option of variable products.

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Financial Supplement
 
9




Annuities — Select Operating Metrics (Cont.) (Unaudited, in millions)

 
 
For the Three Months Ended
 
For the Nine Months Ended
VARIABLE & INDEXED ANNUITY SALES
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Shield Annuities (1)
 
$867
 
$723
 
$729
 
$794
 
$653
 
$2,319
 
$1,681
GMWB/GMAB
 
218
 
237
 
183
 
173
 
190
 
638
 
639
GMDB only
 
84
 
96
 
92
 
94
 
92
 
272
 
314
GMIB
 
22
 
33
 
32
 
36
 
25
 
87
 
119
Total variable & indexed annuity sales
 
$1,191
 
$1,089
 
$1,036
 
$1,097
 
$960
 
$3,316
 
$2,753
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIXED ANNUITY SALES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed indexed annuities (2)
 
$302
 
$272
 
$173
 
$203
 
$69
 
$747
 
$69
Fixed deferred annuities
 
28
 
36
 
34
 
32
 
37
 
98
 
133
Single premium immediate annuities
 
16
 
13
 
9
 
6
 
7
 
38
 
27
Other fixed annuities
 
4
 
2
 
4
 
3
 
1
 
10
 
18
Total fixed annuity sales
 
$350
 
$323
 
$220
 
$244
 
$114
 
$893
 
$247
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Shield Annuities refers to our suite of structured annuities consisting of products marketed under various names.
(2) Represents 90% of gross sales assumed via reinsurance agreement.


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Financial Supplement
 
10




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

 
 
For the Three Months Ended
 
For the Nine Months Ended
Adjusted revenues
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Premiums
 
$152
 
$151
 
$158
 
$172
 
$164
 
$461
 
$406
Universal life and investment-type product policy fees
 
77
 
76
 
103
 
81
 
134
 
256
 
292
Net investment income
 
115
 
111
 
108
 
79
 
87
 
334
 
263
Other revenues
 
2
 
1
 
 
1
 
2
 
3
 
21
Total adjusted revenues
 
$346
 
$339
 
$369
 
$333
 
$387
 
$1,054
 
$982
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$29
 
$28
 
$31
 
$48
 
$40
 
$88
 
$108
Policyholder benefits and claims
 
169
 
168
 
165
 
187
 
161
 
502
 
477
Amortization of DAC and VOBA
 
8
 
23
 
29
 
33
 
138
 
60
 
190
Interest expense on debt
 
 
 
 
 
 
 
Other operating costs
 
62
 
74
 
63
 
58
 
56
 
199
 
207
Total adjusted expenses
 
268
 
293
 
288
 
326
 
395
 
849
 
982
Adjusted earnings before provision for income tax
 
78
 
46
 
81
 
7
 
(8)
 
205
 
Provision for income tax expense (benefit)
 
17
 
9
 
15
 
2
 
(14)
 
41
 
(11)
Adjusted earnings
 
$61
 
$37
 
$66
 
$5
 
$6
 
$164
 
$11

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Financial Supplement
 
11




Life — Select Operating Metrics (Unaudited, in millions)

  
 
For the Three Months Ended
LIFE ACCOUNT VALUE: GENERAL ACCOUNT
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Variable universal and universal life account value, beginning of period
 
$2,758
 
$2,763
 
$2,775
 
$2,800
 
$2,818
Premiums and deposits (1)
 
58
 
62
 
66
 
66
 
64
Surrenders and contract benefits
 
(29)
 
(44)
 
(43)
 
(49)
 
(49)
Net flows
 
29
 
18
 
23
 
17
 
15
Net transfers from (to) separate account
 
12
 
17
 
14
 
7
 
14
Interest credited
 
28
 
29
 
26
 
30
 
29
Policy charges and other
 
(74)
 
(69)
 
(75)
 
(79)
 
(76)
Variable universal and universal life account value, end of period
 
$2,753
 
$2,758
 
$2,763
 
$2,775
 
$2,800
 
 
 
 
 
 
 
 
 
 
 
LIFE ACCOUNT VALUE: SEPARATE ACCOUNT
 
 
 
 
 
 
 
 
 
 
Variable universal life account value, beginning of period
 
$5,222
 
$5,174
 
$5,250
 
$5,107
 
$4,977
Premiums and deposits
 
57
 
59
 
62
 
60
 
65
Surrenders and contract benefits
 
(67)
 
(67)
 
(68)
 
(69)
 
(58)
Net flows
 
(10)
 
(8)
 
(6)
 
(9)
 
7
Investment performance
 
207
 
133
 
(2)
 
215
 
196
Net transfers from (to) general account
 
(12)
 
(17)
 
(14)
 
(7)
 
(14)
Policy charges and other
 
(56)
 
(60)
 
(54)
 
(56)
 
(59)
Variable universal life account value, end of period
 
$5,351
 
$5,222
 
$5,174
 
$5,250
 
$5,107
 
 
 
 
 
 
 
 
 
 
 
(1) Includes premiums and sales directed to the general account investment option of variable products.

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Financial Supplement
 
12




Life — Select Operating Metrics (Cont.) (Unaudited, in millions)

 
 
For the Three Months Ended
 
For the Nine Months Ended
LIFE SALES
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Whole life
 
$1
 
$1
 
$—
 
$—
 
$1
 
$2
 
$15
Term life
 
1
 
1
 
1
 
1
 
2
 
3
 
11
Variable universal life
 
 
 
 
 
 
 
3
Universal life without secondary guarantees
 
 
 
1
 
2
 
2
 
1
 
4
Total life sales
 
$2
 
$2
 
$2
 
$3
 
$5
 
$6
 
$33

 
 
As of
LIFE INSURANCE IN-FORCE
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Whole Life
 
 
 
 
 
 
 
 
 
 
Life Insurance in-force, before reinsurance
 
$22,127
 
$22,467
 
$22,890
 
$23,204
 
$23,532
Life Insurance in-force, net of reinsurance
 
$3,690
 
$3,713
 
$3,764
 
$3,820
 
$3,747
 
 
 
 
 
 
 
 
 
 
 
Term Life
 
 
 
 
 
 
 
 
 
 
Life Insurance in-force, before reinsurance
 
$438,564
 
$443,532
 
$448,431
 
$453,804
 
$459,001
Life Insurance in-force, net of reinsurance
 
$332,204
 
$335,524
 
$338,841
 
$342,487
 
$329,833
 
 
 
 
 
 
 
 
 
 
 
Universal and Variable Universal Life
 
 
 
 
 
 
 
 
 
 
Life Insurance in-force, before reinsurance
 
$58,108
 
$58,837
 
$59,625
 
$60,514
 
$61,408
Life Insurance in-force, net of reinsurance
 
$41,279
 
$41,146
 
$41,601
 
$42,009
 
$40,183
 
 
 
 
 
 
 
 
 
 
 


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Financial Supplement
 
13




Run-off — Statements of Adjusted Earnings (Unaudited, in millions)

  
 
For the Three Months Ended
 
For the Nine Months Ended
Adjusted revenues
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
September 30,
2018
 
September 30,
2017
Premiums
 
$—
 
$—
 
$—
 
$—
 
$—
 
$—
 
$1
Universal life and investment-type product policy fees
 
208
 
189
 
199
 
169
 
196
 
596
 
544
Net investment income
 
322
 
314
 
343
 
339
 
348
 
979
 
1,060
Other revenues
 
6
 
7
 
6
 
8
 
3
 
19
 
26
Total adjusted revenues
 
$536
 
$510
 
$548
 
$516
 
$547
 
$1,594
 
$1,631
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest credited to policyholder account balances
 
$92
 
$92
 
$90
 
$76
 
$86
 
$274
 
$271
Policyholder benefits and claims
 
532
 
365
 
347
 
493
 
287
 
1,244
 
874
Amortization of DAC and VOBA
 
 
 
 
1
 
 
 
6
Interest expense on debt
 
 
 
 
 
 
 
23
Other operating costs
 
46
 
61
 
48
 
71
 
55
 
155
 
185
Total adjusted expenses
 
670
 
518
 
485
 
641
 
428
 
1,673
 
1,359
Adjusted earnings before provision for income tax
 
(134)
 
(8)
 
63
 
(125)
 
119
 
(79)
 
272
Provision for income tax expense (benefit)
 
(29)
 
(2)
 
13
 
(45)
 
36
 
(18)
 
88
Adjusted earnings
 
$(105)
 
$(6)
 
$50
 
$(80)
 
$83
 
$(61)