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Segment Information
 12 Months Ended
Dec. 31, 2019
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, universal, whole 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 (“ULSG”).
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 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 BHF’s common shareholders and excludes net income (loss) attributable to noncontrolling interests and preferred stock dividends.
Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends.
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
•
Certain variable annuity GMIB fees (“GMIB Fees”) and amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses).
The following are significant items excluded from total expenses, net of income tax, in calculating adjusted earnings:
•
Amounts associated with benefits 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 above is calculated net of the statutory tax rate, which could differ from the Company’s effective tax rate.
The segment accounting policies are the same as those used to prepare the Company’s 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.
Segment investment and capitalization targets are 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. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital (“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.
Set forth in the tables below are the operating results with respect to the Company’s segments, as well as Corporate & Other, for the years ended December 31, 2019, 2018 and 2017 and at December 31, 2019 and 2018.
 
 
Operating Results
Year Ended December 31, 2019
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
 
 
(In millions)
Pre-tax adjusted earnings
 
$
1,263

 
$
288

 
$
(580
)
 
$
(301
)
 
$
670

Provision for income tax expense (benefit)
 
235

 
57

 
(126
)
 
(121
)
 
45

Post-tax adjusted earnings
 
1,028

 
231

 
(454
)
 
(180
)
 
625

Less: Net income (loss) attributable to noncontrolling interests
 
—

 
—

 
—

 
5

 
5

Less: Preferred stock dividends
 
—

 
—

 
—

 
21

 
21

Adjusted earnings
 
$
1,028

 
$
231

 
$
(454
)
 
$
(206
)
 
599

Adjustments for:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
 
 
 
 
 
 
 
 
112

Net derivative gains (losses)
 
 
 
 
 
 
 
 
 
(1,988
)
Other adjustments to net income (loss)
 
 
 
 
 
 
 
 
 
154

Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
362

Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
 
 
 
 
 
 
 
 
$
(761
)
 
 
 
 
 
 
 
 
 
 
 
Interest revenue
 
$
1,809

 
$
436

 
$
1,265

 
$
75

 
 
Interest expense
 
$
—

 
$
—

 
$
—

 
$
191

 
 
Balance at December 31, 2019
 
Annuities
 
Life
 
Run-off
 
Corporate
& Other
 
Total
 
 
(In millions)
Total assets
 
$
156,965

 
$
21,876

 
$
35,112

 
$
13,306

 
$
227,259

Separate account assets
 
$
99,498

 
$
5,493

 
$
2,116

 
$
—

 
$
107,107

Separate account liabilities
 
$
99,498

 
$
5,493

 
$
2,116

 
$
—

 
$
107,107

 
 
Operating Results
Year Ended December 31, 2018
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
 
 
(In millions)
Pre-tax adjusted earnings
 
$
1,233

 
$
285

 
$
(57
)
 
$
(431
)
 
$
1,030

Provision for income tax expense (benefit)
 
210

 
57

 
(14
)
 
(120
)
 
133

Post-tax adjusted earnings
 
1,023

 
228

 
(43
)
 
(311
)
 
897

Less: Net income (loss) attributable to noncontrolling interests
 
—

 
—

 
—

 
5

 
5

Less: Preferred stock dividends
 
—

 
—

 
—

 
—

 
—

Adjusted earnings
 
$
1,023

 
$
228

 
$
(43
)

$
(316
)
 
892

Adjustments for:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
 
 
 
 
 
 
 
 
(207
)
Net derivative gains (losses)
 
 
 
 
 
 
 
 
 
702

Other adjustments to net income (loss)
 
 
 
 
 
 
 
 
 
(536
)
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
14

Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
 
 
 
 
 
 
 
 
$
865

 
 
 
 
 
 
 
 
 
 
 
Interest revenue
 
$
1,536

 
$
449

 
$
1,310

 
$
57

 
 
Interest expense
 
$
—

 
$
—

 
$
—

 
$
158

 
 
Balance at December 31, 2018
 
Annuities
 
Life
 
Run-off
 
Corporate
& Other
 
Total
 
 
(In millions)
Total assets
 
$
141,489

 
$
20,449

 
$
32,393

 
$
11,963

 
$
206,294

Separate account assets
 
$
91,922

 
$
4,679

 
$
1,655

 
$
—

 
$
98,256

Separate account liabilities
 
$
91,922

 
$
4,679

 
$
1,655

 
$
—

 
$
98,256

 
 
Operating Results
Year Ended December 31, 2017
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
 
 
(In millions)
Pre-tax adjusted earnings
 
$
1,386

 
$
7

 
$
147

 
$
57

 
$
1,597

Provision for income tax expense (benefit)
 
369

 
(9
)
 
43

 
274

 
677

Post-tax adjusted earnings
 
1,017

 
16

 
104

 
(217
)
 
920

Less: Net income (loss) attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

Less: Preferred stock dividends
 
—

 
—

 
—

 
—

 
—

Adjusted earnings
 
$
1,017

 
$
16

 
$
104


$
(217
)
 
920

Adjustments for:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
 
 
 
 
 
 
 
 
(28
)
Net derivative gains (losses)
 
 
 
 
 
 
 
 
 
(1,620
)
Other adjustments to net income (loss)
 
 
 
 
 
 
 
 
 
(564
)
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
914

Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders
 
 
 
 
 
 
 
 
 
$
(378
)
 
 
 
 
 
 
 
 
 
 
 
Interest revenue
 
$
1,277

 
$
342

 
$
1,399

 
$
192

 
 
Interest expense
 
$
—

 
$
—

 
$
23

 
$
132

 
 

The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other:
 
Years Ended December 31,
 
2019
 
2018
 
2017
 
(In millions)
Annuities
$
4,648

 
$
4,567

 
$
4,370

Life
1,328

 
1,389

 
1,315

Run-off
2,009

 
2,112

 
2,147

Corporate & Other
176

 
152

 
510

Adjustments
(1,607
)
 
745

 
(1,500
)
Total
$
6,554

 
$
8,965

 
$
6,842


The following table presents total premiums, universal life and investment-type product policy fees and other revenues by major product group:
 
Years Ended December 31,
 
2019
 
2018
 
2017
 
(In millions)
Annuity products
$
3,106

 
$
3,304

 
$
3,363

Life insurance products
1,709

 
1,827

 
1,822

Other products
36

 
1

 
227

Total
$
4,851

 
$
5,132

 
$
5,412


Substantially all of the Company’s premiums, universal life and investment-type product policy fees and other revenues originated in the U.S.
Revenues derived from any individual customer did not exceed 10% of premiums, universal life and investment-type product policy fees and other revenues for the years ended December 31, 2019, 2018 and 2017.