0001685040-20-000019.txt : 20200511 0001685040-20-000019.hdr.sgml : 20200511 20200511162254 ACCESSION NUMBER: 0001685040-20-000019 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 20200511 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20200511 DATE AS OF CHANGE: 20200511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Brighthouse Financial, Inc. CENTRAL INDEX KEY: 0001685040 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 813846992 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-37905 FILM NUMBER: 20865146 BUSINESS ADDRESS: STREET 1: 11225 N COMMUNITY HOUSE ROAD CITY: CHARLOTTE STATE: NC ZIP: 28277 BUSINESS PHONE: 980-365-7100 MAIL ADDRESS: STREET 1: 11225 N COMMUNITY HOUSE ROAD CITY: CHARLOTTE STATE: NC ZIP: 28277 8-K 1 bhf-20200511.htm 8-K bhf-20200511
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 11, 2020
bhf-20200511_g1.jpg
Brighthouse Financial, Inc.
(Exact name of registrant as specified in its charter)

Delaware
001-37905
81-3846992
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
11225 North Community House Road
Charlotte, North Carolina
28277
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (980) 365-7100

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareBHFThe Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/1,000th interest in a share of 6.600% Non-Cumulative Preferred Stock, Series ABHFAPThe Nasdaq Stock Market LLC
6.250% Junior Subordinated Debentures due 2058BHFALThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 Emerging growth company
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.




Item 2.02.   Results of Operations and Financial Condition.
On May 11, 2020, Brighthouse Financial, Inc. (“Brighthouse Financial” or the “Company”) issued (i) a news release announcing its results for the quarter ended March 31, 2020, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference, and (ii) a Financial Supplement for the quarter ended March 31, 2020, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in Items 2.02, 7.01 and Exhibits 99.1 and 99.2 listed in Item 9.01 of this Current Report on Form 8-K shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 7.01.  Regulation FD Disclosure.
In connection with its earnings call for the quarter ended March 31, 2020, Brighthouse Financial has prepared a presentation for use with investors and other members of the investment community. This presentation is available on the Brighthouse Financial investor relations website at http://investor.brighthousefinancial.com.

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

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits

* Filed herewith.
** Furnished herewith.




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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BRIGHTHOUSE FINANCIAL, INC.
By:/s/ Lynn A. Dumais
Name:Lynn A. Dumais
Title:Chief Accounting Officer

Date: May 11, 2020




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EX-99.1 2 q12020bhfearningspress.htm EX-99.1 Document
PUBLIC RELATIONS

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

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Exhibit 99.1
FOR IMMEDIATE RELEASE
Brighthouse Financial Announces First Quarter 2020 Results
First quarter 2020 net income available to shareholders of $4,950 million, or $47.11 per diluted share, driven primarily by net derivative mark-to-market gains
First quarter 2020 adjusted earnings, less notable items*, of $273 million, or $2.60 per diluted share
Annuity sales grew 15 percent over the first quarter of 2019
Estimated combined risk-based capital ("RBC") ratio between 515 and 535 percent
$300 million ordinary subsidiary dividend paid to the holding company in the first quarter of 2020; additional $500 million ordinary subsidiary dividend paid in April
Company repurchased approximately $316 million of its common stock year-to-date through May 8, 2020, representing over 12% of shares outstanding relative to year-end 2019; repurchases temporarily suspended while the company continues to evaluate the impacts of the COVID-19 pandemic
CHARLOTTE, NC, May 11, 2020 — Brighthouse Financial, Inc. ("Brighthouse Financial" or the "company") (Nasdaq: BHF) announced today its financial results for the first quarter ended March 31, 2020.
First Quarter 2020 Results
The company reported net income available to shareholders of $4,950 million in the first quarter of 2020, or $47.11 per diluted share, compared with a net loss available to shareholders of $737 million in the first quarter of 2019. During the quarter, as a result of significantly lower equity markets and lower interest rates, the value of our hedges, which the company uses to protect its balance sheet against adverse market conditions, increased, as expected, while corresponding liabilities are not reflected at fair value under U.S. GAAP accounting, and thus are less sensitive to market movements. The company ended the first quarter of 2020 with common stockholders' equity ("book value") of $20.0 billion, or $198.62 per common share, and book value, excluding accumulated other comprehensive income ("AOCI") of $17.3 billion, or $172.28 per common share.

For the first quarter of 2020, the company reported adjusted earnings* of $211 million, or $2.01 per diluted share.

Adjusted earnings for the quarter reflected $62 million after tax of the following unfavorable notable items, or $0.59 per diluted share:

$48 million unfavorable impact to the Run-off segment related to a reinsurance recapture and a one-time adjustment related to the transition to a new vendor, and
$14 million unfavorable impact to Corporate & Other as a result of establishment costs related to planned technology and other expenses associated with the company's separation from its former parent company.
__________________
* Information regarding the non-GAAP and other financial measures included in this news release and a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures are provided in the Non-GAAP and Other Financial Disclosures discussion below, as well as in the tables that accompany this news release and/or the First Quarter 2020 Brighthouse Financial, Inc. Financial Supplement and/or the First Quarter 2020 Brighthouse Financial, Inc. Earnings Call Presentation (which are available on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com). Additional information regarding notable items can be found on the last page of this news release.
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PUBLIC RELATIONS

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

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Corporate expenses in the first quarter of 2020 were $214 million, down from $283 million in the fourth quarter of 2019, both on a pre-tax basis.
Annuity sales increased 15 percent quarter-over-quarter and 5 percent sequentially. Life sales increased 33 percent sequentially.

The company repurchased approximately $316 million of its common stock year-to-date through May 8, 2020, representing over 12% of shares outstanding relative to year-end 2019. During the first quarter of 2020, the company repurchased approximately $142 million of its common stock, with an additional approximately $174 million of its common stock repurchased through May 8. Since the announcement of the company's first stock repurchase authorization in August 2018, the company has repurchased a total of approximately $864 million of its common stock through May 8, 2020. The company has temporarily suspended repurchases while it continues to evaluate the impacts of the COVID-19 pandemic.

"Brighthouse Financial’s top priority at this time remains the well-being and safety of our employees, their families, our partners and our customers," said Eric Steigerwalt, president and CEO, Brighthouse Financial. "In March, we promptly implemented our business continuity plans and transitioned to a fully remote-work environment. Due to our employees’ outstanding adaptability and commitment, we are able to continue to support our customers and financial professionals as usual. We entered the current climate from a position of strength and our balance sheet and liquidity remain strong, our investment portfolio is well-diversified and we believe that we are well-positioned to weather the current downturn."

“Regarding our results in the first quarter of 2020, our sales were very strong, we continued to make necessary investments in our technology infrastructure and in our businesses, and our hedging program performed well. I am particularly pleased with our life insurance sales in the quarter. While the immediate future may be more difficult from a sales perspective, I am proud of what we've been able to accomplish so far since our introduction last year of Brighthouse SmartCare, our first life insurance product launched as an independent, public company,” Steigerwalt continued. “Although it is not possible to estimate the severity or duration of the COVID-19 pandemic, we remain confident in our strategy and continue to believe it will generate long-term shareholder value.”


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

As of or For the Three Months Ended
March 31, 2020March 31, 2019
TotalPer shareTotalPer share
Net income (loss) available to shareholders (1)
$4,950$47.11$(737)$(6.31)
Adjusted earnings (1)$211$2.01$232$1.98
Adjusted earnings, less notable items (1)
$273$2.60$259$2.21
Weighted average common shares outstanding - diluted (1)
105,093,515N/A117,229,854N/A
Book value$19,962$198.62$14,587$125.55
Book value, excluding AOCI$17,315$172.28$12,917$111.18
Ending common shares outstanding100,502,488N/A116,182,687N/A
(1) Per share amounts are on a diluted basis and may not recalculate due to rounding. For loss periods, dilutive shares were not included in the calculation as inclusion of such shares would have an anti-dilutive effect. See Non-GAAP and Other Financial Disclosures discussion in this news release.
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PUBLIC RELATIONS

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

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Results by Business Segment and Corporate & Other (Unaudited, in millions)
For the Three Months Ended
ADJUSTED EARNINGSMarch 31,
2020
December 31,
2019
March 31,
2019
Annuities$316$265$295
Life $11$75$25
Run-off (1)$(70)$6$(36)
Corporate & Other (1)$(46)$(64)$(52)
(1) The company uses the term “adjusted loss” throughout this news release to refer to negative adjusted earnings values.

Sales (Unaudited, in millions)
For the Three Months Ended
March 31,
2020
December 31,
2019
March 31,
2019
Annuities (1)$1,969$1,871$1,707
Life$16$12$1
(1) Annuities sales include sales of a fixed indexed annuity product sold by Massachusetts Mutual Life Insurance Company, representing 90% of gross sales of that product. Sales of this product were $208 million for the first quarter of 2020, $261 million for the fourth quarter of 2019, and $281 million for the first quarter of 2019.

Annuities
Adjusted earnings in the Annuities segment were $316 million in the current quarter, compared with adjusted earnings of $295 million in the first quarter of 2019 and adjusted earnings of $265 million in the fourth quarter of 2019.
There were no notable items in the current quarter or in the first quarter of 2019. The fourth quarter of 2019 included $42 million of favorable notable items.
On a quarter-over-quarter basis, adjusted earnings, less notable items, reflect lower amortization of deferred acquisition costs ("DAC"), lower expenses, and higher net investment income, partially offset by higher reserves. On a sequential basis, adjusted earnings, less notable items, reflect lower DAC amortization and lower expenses, partially offset by higher reserves and lower fees.
As mentioned above, annuity sales increased 15 percent quarter-over-quarter and increased 5 percent sequentially.
Life
Adjusted earnings in the Life segment were $11 million in the current quarter, compared with adjusted earnings of $25 million in the first quarter of 2019 and adjusted earnings of $75 million in the fourth quarter of 2019.
There were no notable items in the current quarter or the comparison quarters.
On a quarter-over-quarter and sequential basis, adjusted earnings reflect higher DAC amortization and a lower underwriting margin, partially offset by lower expenses and higher net investment income.
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PUBLIC RELATIONS

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

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As mentioned above, life sales increased 33 percent sequentially.
Run-off
The Run-off segment had an adjusted loss of $70 million in the current quarter, compared with an adjusted loss of $36 million in the first quarter of 2019 and adjusted earnings of $6 million in the fourth quarter of 2019.
There was $48 million of unfavorable notable items in the current quarter. There were no notable items in the comparison quarters.
On a quarter-over-quarter basis, the adjusted loss, less notable items, reflects higher net investment income, partially offset by a lower underwriting margin and higher expenses. On a sequential basis, the adjusted loss, less notable items, reflects a lower underwriting margin, partially offset by higher alternative investment income.
Corporate & Other
Corporate & Other had an adjusted loss of $46 million in the current quarter, compared with an adjusted loss of $52 million in the first quarter of 2019 and an adjusted loss of $64 million in the fourth quarter of 2019.
The current quarter included a $14 million unfavorable notable item related to establishment costs, as described above. The first quarter of 2019 included a $27 million unfavorable notable item and the fourth quarter of 2019 included a $25 million unfavorable notable item, both also related to establishment costs.
On a quarter-over-quarter basis, the adjusted loss, less notable items, reflects the preferred stock dividends which the company began paying in the second quarter of 2019. On a sequential basis, the adjusted loss, less notable items, reflects lower expenses.

Net Investment Income and Adjusted Net Investment Income (Unaudited, in millions)
For the Three Months Ended
March 31,
2020
December 31,
2019
March 31,
2019
Net investment income$916$898$811
Adjusted net investment income$920$904$811

Net Investment Income
Net investment income was $916 million and adjusted net investment income* was $920 million for the first quarter of 2020. On a quarter-over-quarter basis, adjusted net investment income increased $109 million and on a sequential basis increased $16 million. The quarter-over-quarter and sequential results were primarily driven by higher alternative investment income and asset growth.
The net investment income yield was 4.30 percent during the quarter.

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PUBLIC RELATIONS

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

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Statutory Capital and Liquidity (Unaudited, in billions)
As of
March 31,
2020 (1)
December 31,
2019
March 31,
2019
Statutory combined total adjusted capital$7.2$9.7$6.3
(1) Reflects preliminary statutory results as of March 31, 2020.


Capitalization

At March 31, 2020:

Holding company liquid assets were approximately $1.0 billion

Statutory combined total adjusted capital on a preliminary basis decreased to approximately $7.2 billion, driven primarily by equity market and interest rate declines, a $300 million ordinary subsidiary dividend paid to the holding company, and unfavorable non-variable annuity results

Estimated combined RBC ratio between 515 and 535 percent, which includes the decline in statutory combined total adjusted capital noted above, mostly offset by a decline in required capital

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PUBLIC RELATIONS

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

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Earnings Conference Call

Brighthouse Financial will hold a conference call and audio webcast to discuss its financial results for the first quarter 2020 at 8:00 a.m. Eastern Time on Tuesday, May 12, 2020. In connection with this call, the company has prepared a presentation for use with investors and other members of the investment community. This presentation is available on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com.

To listen to the audio webcast via the internet and to access the related presentation, please visit the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com. To join the conference call via telephone, please dial (844) 358-9117 (+1 (209) 905-5952 from outside the U.S.) and use conference ID 4360648.

A replay of the conference call will be made available until Friday, May 29, 2020, on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com.



About Brighthouse Financial, Inc.

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



CONTACT

FOR INVESTORS
David Rosenbaum
(980) 949-3326
david.rosenbaum@brighthousefinancial.com

FOR MEDIA
Deon Roberts
(980) 949-3071
deon.roberts@brighthousefinancial.com


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PUBLIC RELATIONS

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

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Note Regarding Forward-Looking Statements

This news release and other oral or written statements that we make from time to time may contain information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve substantial risks and uncertainties. We have tried, wherever possible, to identify such statements using words such as "anticipate," "estimate," "expect," "project," "may," "will," "could," "intend," "goal," "target," "guidance," "forecast," "preliminary," "objective," "continue," "aim," "plan," "believe" and other words and terms of similar meaning, or that are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include, without limitation, statements relating to future actions, prospective services or products, financial projections, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, as well as trends in operating and financial results.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of Brighthouse Financial. These statements are based on current expectations and the current economic environment and involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others: the impact of the ongoing COVID-19 pandemic; differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models; higher risk management costs and exposure to increased market risk due to guarantees within certain of our products; the effectiveness of our variable annuity exposure risk management strategy and the impact of such strategy on volatility in our profitability measures and negative effects on our statutory capital; the reserves we are required to hold against our variable annuities as a result of actuarial guidelines; the potential material adverse effect of changes in accounting standards, practices and/or policies applicable to us, including changes in the accounting for long-duration contracts; our degree of leverage due to indebtedness; the impact of adverse capital and credit market conditions, including with respect to our ability to meet liquidity needs and access capital; the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations; the availability of reinsurance and the ability of the counterparties to our reinsurance or indemnification arrangements to perform their obligations thereunder; the adverse impact to liabilities for policyholder claims as a result of extreme mortality events; 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; any failure of third parties to provide services we need, any failure of the practices and procedures of such third parties and any inability to obtain information or assistance we need from third parties; the ability of our insurance subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders and repurchase our common stock; the effectiveness of our policies and procedures in managing risk; our ability to market and distribute our products through distribution channels; whether all or any portion of the tax consequences of our separation from MetLife, Inc. (“MetLife”) are not as expected, leading to material additional taxes or material adverse consequences to tax attributes that impact us; the uncertainty of the outcome of any disputes with MetLife over tax-related or other matters and agreements or disagreements regarding MetLife’s or our obligations under our other agreements; the potential material negative tax impact of potential future tax legislation that could make some of our products less attractive to consumers; and other factors described from time to time in documents that we file with the U.S. Securities and Exchange Commission (the "SEC").

For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements included and the risks, uncertainties and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2019, particularly in the sections entitled "Risk Factors" and "Quantitative and Qualitative Disclosures About Market Risk," as well as in our other 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
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PUBLIC RELATIONS

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

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revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

Non-GAAP and Other Financial Disclosures

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

Non-GAAP Financial Disclosures

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

The following non-GAAP financial measures, previously referred to as operating measures, should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:
Non-GAAP financial measures:Most directly comparable GAAP financial measures:
adjusted earningsnet income (loss) available to shareholders (1)
adjusted earnings, less notable itemsnet income (loss) available to shareholders (1)
adjusted revenuesrevenues
adjusted expensesexpenses
adjusted earnings per common shareearnings per common share, diluted (1)
adjusted earnings per common share, less notable itemsearnings per common share, diluted (1)
adjusted return on common equityreturn on common equity (2)
adjusted return on common equity, less notable itemsreturn on common equity (2)
adjusted net investment income net investment income
__________________

(1) Brighthouse uses net income (loss) available to shareholders to refer to net income (loss) available to Brighthouse Financial, Inc.'s common shareholders, and earnings per common share, diluted to refer to net income (loss) available to shareholders per common share.
(2) Brighthouse uses return on common equity to refer to return on Brighthouse Financial, Inc.'s common stockholders' equity.

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

Adjusted Earnings, Adjusted Revenues and Adjusted Expenses

Adjusted earnings, which may be positive or negative, is used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. This financial measure focuses on our primary businesses principally by excluding the impact of market volatility, which could distort trends.

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

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

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

Net investment gains (losses);

Net derivative gains (losses) ("NDGL"), except earned income 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

Certain variable annuity GMIB fees ("GMIB Fees").

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

Amounts associated with benefits related to GMIBs ("GMIB Costs");

Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts ("Market Value Adjustments"); and

Amortization of DAC and value of business acquired ("VOBA") related to (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments.

The tax impact of the adjustments mentioned is calculated net of the statutory tax rate, which could differ from our effective tax rate.

Consistent with GAAP guidance for segment reporting, adjusted earnings is also our GAAP measure of segment performance.

Adjusted Earnings per Common Share and Adjusted Return on Common Equity

Adjusted earnings per common share and adjusted return on common equity are measures used by management to evaluate the execution of our business strategy and align such strategy with our shareholders' interests.

Adjusted earnings per common share is defined as adjusted earnings for the period divided by the weighted average number of fully diluted shares of common stock outstanding for the period. The weighted average common shares outstanding used to calculate adjusted earnings per share will differ from such shares used to calculate diluted net income (loss) available to shareholders per common share when the inclusion of dilutive shares has an anti-dilutive effect for one calculation but not for the other.

Adjusted return on common equity is defined as total annual adjusted earnings on a four quarter trailing basis, divided by the simple average of the most recent five quarters of total Brighthouse Financial, Inc.'s common stockholders' equity, excluding AOCI.

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PUBLIC RELATIONS

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

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Adjusted Net Investment Income

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

Other Financial Disclosures

Corporate Expenses

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

Notable items

Certain of the non-GAAP measures described above may be presented further adjusted to exclude notable items. Notable items reflect the impact on our results of certain unanticipated items and events, as well as certain items and events that were anticipated, such as establishment costs. The presentation of notable items and non-GAAP measures, less notable items is intended to help investors better understand our results and to evaluate and forecast those results.

Book Value per Common Share and Book Value per Common Share, excluding AOCI

Brighthouse uses the term "book value" to refer to "Brighthouse Financial, Inc.'s common stockholders' equity, including AOCI." Book value per common share is defined as ending Brighthouse Financial, Inc.'s common stockholders' equity, including AOCI, divided by ending common shares outstanding. Book value per common share, excluding AOCI, is defined as ending Brighthouse Financial, Inc.'s common stockholders' equity, excluding AOCI, divided by ending common shares outstanding.

CTE95

CTE95 is defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst five percent of a set of capital market scenarios over the life of the contracts.

CTE98

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

Holding Company Liquid Assets

Holding company liquid assets include liquid assets in Brighthouse Financial, Inc., Brighthouse Holdings, LLC, and Brighthouse Services, LLC. Liquid assets include cash and cash equivalents, short-term investments and publicly traded securities excluding assets that are pledged or otherwise committed. Assets pledged or otherwise committed include amounts received in connection with derivatives and collateral financing arrangements.

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PUBLIC RELATIONS

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

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Total Adjusted Capital

Total adjusted capital primarily consists of statutory capital and surplus, as well as the statutory asset valuation reserve. When referred to as “combined,” represents that of our insurance subsidiaries as a whole.

Sales

Life insurance sales consist of 100 percent of annualized new premium for term life, first-year paid premium for whole life, universal life, and variable universal life, and total paid premium for indexed universal life. We exclude company-sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placement variable universal life.

Annuity sales consist of 100 percent of direct statutory premiums, except for fixed indexed annuity sales distributed through MassMutual that consist of 90 percent of gross sales. Annuity sales exclude company sponsored internal exchanges. These sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity.

Net Investment Income Yield

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

Normalized Statutory Earnings (Loss)

Normalized statutory earnings (loss) is used by management to measure our insurance companies’ ability to pay future distributions and is reflective of whether our hedging program functions as intended. Normalized statutory earnings (loss) is calculated as statutory pre-tax net gain from operations adjusted for the favorable or unfavorable impacts of (i) net realized capital gains (losses), (ii) the change in both the reserve-based and capital methodology-based CTE95 calculation, net of the change in our variable annuity reserves, and (iii) unrealized gains (losses) associated with our variable annuities risk management strategy. Normalized statutory earnings (loss) may be further adjusted for certain unanticipated items that impacted our results in order to help management and investors better understand, evaluate and forecast those results.

Risk-Based Capital Ratio

The risk-based capital ratio is a method of measuring an insurance company’s capital, taking into consideration its relative size and risk profile, in order to ensure compliance with minimum regulatory capital requirements set by the National Association of Insurance Commissioners. When referred to as “combined,” represents that of our insurance subsidiaries as a whole. The reporting of our combined risk-based capital ratio is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.
11



PUBLIC RELATIONS

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

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Condensed Statements of Operations (Unaudited, in millions)
For the Three Months Ended
RevenuesMarch 31,
2020
December 31,
2019
March 31,
2019
Premiums$198$209$227
Universal life and investment-type product policy fees886950875
Net investment income916898811
Other revenues10210792
Revenues before NIGL and NDGL2,1022,1642,005
Net investment gains (losses)(19)33(11)
Net derivative gains (losses)6,902(1,891)(1,303)
Total revenues$8,985$306$691
Expenses
Interest credited to policyholder account balances$259$268$258
Policyholder benefits and claims1,187734772
Amortization of DAC and VOBA770922
Interest expense on debt474747
Other expenses470620545
Total expenses2,7331,6781,644
Income (loss) before provision for income tax6,252(1,372)(953)
Provision for income tax expense (benefit)1,293(303)(218)
Net income (loss)4,959(1,069)(735)
Less: Net income (loss) attributable to noncontrolling interests212
Net income (loss) attributable to Brighthouse Financial, Inc.4,957(1,070)(737)
Less: Preferred stock dividends77
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders$4,950$(1,077)$(737)




12



PUBLIC RELATIONS

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

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Condensed Balance Sheets (Unaudited, in millions)
As of
ASSETSMarch 31,
2020
December 31,
2019
March 31,
2019
Investments:
Fixed maturity securities available-for-sale$71,302$71,036$64,847
Equity securities122147150
Mortgage loans, net15,54715,75314,504
Policy loans1,2501,2921,385
Limited partnerships and limited liability companies2,5052,3802,253
Short-term investments4,3481,958799
Other invested assets9,6583,2162,302
Total investments104,73295,78286,240
Cash and cash equivalents8,9302,8773,864
Accrued investment income868684791
Reinsurance recoverables14,22013,99013,098
Premiums and other receivables774770928
DAC and VOBA4,8625,4485,680
Current income tax recoverable917
Other assets550584618
Separate account assets89,008107,107105,211
Total assets$223,953$227,259$216,430
LIABILITIES AND EQUITY
Liabilities
Future policy benefits$40,653$39,686$37,157
Policyholder account balances47,28845,77141,177
Other policy-related balances3,1693,1113,005
Payables for collateral under securities loaned and other transactions10,9884,3913,990
Long-term debt4,3654,3654,364
Current income tax payable19
Deferred income tax liability2,4821,3551,005
Other liabilities5,5615,2365,438
Separate account liabilities89,008107,107105,211
Total liabilities203,514211,022201,366
Equity
Preferred Stock, at par value
Common stock, at par value111
Additional paid-in capital12,91112,90812,889
Retained earnings (deficit)5,521585609
Treasury stock(706)(562)(170)
Accumulated other comprehensive income (loss)2,6473,2401,670
Total Brighthouse Financial, Inc.’s stockholders’ equity20,37416,17214,999
Noncontrolling interests656565
Total equity20,43916,23715,064
Total liabilities and equity$223,953$227,259$216,430
13



PUBLIC RELATIONS

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

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Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings and Adjusted Earnings, Less Notable Items, and Reconciliation of Net Income (Loss) Available to Shareholders per Common Share to Adjusted Earnings per Common Share and Adjusted Earnings, Less Notable Items per Common Share (Unaudited, in millions except per share data)
For the Three Months EndedFor the Year Ended
ADJUSTED EARNINGS, LESS NOTABLE ITEMS
March 31,
2020
December 31,
2019
March 31,
2019
Net income (loss) available to shareholders$4,950$(1,077)$(737)
Less: Net investment gains (losses)(19)33(11)
Less: Net derivative gains (losses), excluding investment hedge adjustments
6,898(1,897)(1,303)
Less: GMIB Fees and GMIB Costs(166)3435
Less: Amortization of DAC and VOBA(671)9375
Less: Market value adjustments and other(43)17(23)
Less: Provision for income tax (expense) benefit on reconciling adjustments
(1,260)361258
Adjusted earnings211282232
Less: Notable items(62)17(27)
Adjusted earnings, less notable items$273$265$259
ADJUSTED EARNINGS, LESS NOTABLE ITEMS PER COMMON SHARE (1)
Net income (loss) available to shareholders per common share$47.11$(10.02)$(6.31)
Less: Net investment gains (losses)(0.18)0.31(0.09)
Less: Net derivative gains (losses), excluding investment hedge adjustments
65.64(17.65)(11.16)
Less: GMIB Fees and GMIB Costs(1.58)0.320.30
Less: Amortization of DAC and VOBA(6.38)0.870.64
Less: Market value adjustments and other(0.41)0.16(0.20)
Less: Provision for income tax (expense) benefit on reconciling adjustments
(11.99)3.362.21
Less: Impact of inclusion of dilutive shares0.010.01
Adjusted earnings per common share2.012.611.98
Less: Notable items(0.59)0.16(0.23)
Adjusted earnings, less notable items per common share$2.60$2.46$2.21
(1) Per share calculations are on a diluted basis and may not recalculate or foot due to rounding. For loss periods, dilutive shares were not included in the calculation as inclusion of such shares would have an anti-dilutive effect. See Non-GAAP and Other Financial Disclosures discussion in this news release.
14



PUBLIC RELATIONS

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

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

For the Three Months EndedFor the Three Months Ended
March 31,
2020
December 31,
2019
March 31,
2019
Net investment income$916$898$811
Less: Investment hedge adjustments(4)(6)
Adjusted net investment income$920$904$811


Notable Items (Unaudited, in millions)

For the Three Months EndedFor the Three Months Ended
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGS
March 31,
2020
December 31,
2019
March 31,
2019
Actuarial items and other insurance adjustments$48$(42)$—
Establishment costs142527
Total notable items (1)$62$(17)$27
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER
Annuities$—$(42)$—
Life
Run-off48
Corporate & Other142527
Total notable items (1)$62$(17)$27
(1) Notable items reflect the negative (positive) after-tax impact to adjusted earnings of certain unanticipated items and events, as well as certain items and events that were anticipated, such as establishment costs. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.

15


EX-99.2 3 q12020bhffinancialsupp.htm EX-99.2 Document



Exhibit 99.2








Brighthouse Financial, Inc.
Financial Supplement

First Quarter 2020

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Table of ContentsFinancial Results
Earnings and Select Metrics from Business Segments and Corporate & Other
Other Information
Appendix
A-2
A-6
A-7
A-8
A-9
A-10

Note: See the 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.
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Financial Results
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Financial Supplement
1



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

As of or For the Three Months Ended
Financial Results and Metrics (1)March 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
Net income (loss) available to shareholders$4,950$(1,077)$676$377$(737)
Adjusted earnings$211$282$(169)$254$232
Adjusted earnings, less notable items (2)$273$265$260$296$259
Total corporate expenses (3)$214$283$248$242$225
Combined total adjusted capital (4)$7,200$9,694$8,406$6,897$6,314
Combined risk-based capital ratio (4), (5)515% - 535%552%N/AN/AN/A
Stockholders' Equity
Brighthouse Financial, Inc.’s stockholders’ equity$20,374$16,172$17,695$16,276$14,999
Less: Preferred stock, net412412412412412
Brighthouse Financial, Inc.’s common stockholders’ equity, including AOCI$19,962$15,760$17,283$15,864$14,587
Less: AOCI2,6473,2403,5672,7021,670
Brighthouse Financial, Inc.’s common stockholders’ equity, excluding AOCI $17,315$12,520$13,716$13,162$12,917
Return on Common Equity (1)
Return on common equity29.5%(4.9)%11.7%5.7%1.4%
Return on common equity, excluding AOCI35.4%(5.8)%13.4%6.3%1.5%
Adjusted return on common equity4.2%4.5%3.8%7.3%6.5%
Earnings Per Common Share, Diluted (1), (6)
Net income (loss) available to shareholders per common share$47.11$(10.02)$6.06$3.27$(6.31)
Adjusted earnings per common share$2.01$2.61$(1.52)$2.19$1.98
Adjusted earnings, less notable items per common share$2.60$2.46$2.33$2.56$2.21
Weighted average common shares outstanding105,093,515107,840,324111,527,480115,536,654117,229,854
Book Value Per Common Share
Book value per common share (1)$198.62$148.64$158.18$140.83$125.55
Book value per common share, excluding AOCI (1)$172.28$118.08$125.53$116.85$111.18
Ending common shares outstanding100,502,488106,027,301109,264,305112,644,952116,182,687
(1) See definitions for Non-GAAP and Other Financial Disclosures in the Appendix beginning on page A-2.
(2) See additional information regarding notable items on page 17.
(3) Includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs.
(4) Reflects preliminary statutory results for the three months ended March 31, 2020. See additional information on page 5.
(5) RBC ratios prior to the implementation of variable annuity capital reform are not presented.
(6) For loss periods, dilutive shares were not included in the calculation of net income (loss) available to shareholders per common share or adjusted earnings per common share as inclusion of such shares would have an anti-dilutive effect.

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Financial Supplement
2



GAAP Condensed Statements of Operations (Unaudited, in millions)

For the Three Months EndedFor the Three Months Ended
RevenuesMarch 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
March 31,
2020
March 31,
2019
Premiums$198$209$214$232$227$198$227
Universal life and investment-type product policy fees886950867888875886875
Net investment income916898928942811916811
Other revenues10210794969210292
Revenues before NIGL and NDGL2,1022,1642,1032,1582,0052,1022,005
Net investment gains (losses)(19)332763(11)(19)(11)
Net derivative gains (losses)6,902(1,891)1,057149(1,303)6,902(1,303)
Total revenues$8,985$306$3,187$2,370$691$8,985$691
Expenses
Interest credited to policyholder account balances$259$268$272$265$258$259$258
Policyholder benefits and claims1,1877341,3198457721,187772
Amortization of DAC and VOBA77091811702277022
Interest expense on debt47474948474747
Other expenses470620562573545470545
Total expenses2,7331,6782,3831,9011,6442,7331,644
Income (loss) before provision for income tax6,252(1,372)804469(953)6,252(953)
Provision for income tax expense (benefit)1,293(303)11985(218)1,293(218)
Net income (loss)4,959(1,069)685384(735)4,959(735)
Less: Net income (loss) attributable to noncontrolling interests212222
Net income (loss) attributable to Brighthouse Financial, Inc.4,957(1,070)683384(737)4,957(737)
Less: Preferred stock dividends77777
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders$4,950$(1,077)$676$377$(737)$4,950$(737)

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Financial Supplement
3



GAAP Balance Sheets (Unaudited, in millions)

As of
ASSETSMarch 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
Investments:
Fixed maturity securities available-for-sale$71,302$71,036$70,723$67,211$64,847
Equity securities122147148153150
Mortgage loans, net15,54715,75315,35915,07814,504
Policy loans1,2501,2921,3321,3421,385
Limited partnerships and limited liability companies2,5052,3802,3532,2962,253
Short-term investments4,3481,9581,985793799
Other invested assets9,6583,2164,7343,0642,302
Total investments104,73295,78296,63489,93786,240
Cash and cash equivalents8,9302,8774,2893,9813,864
Accrued investment income868684732747791
Reinsurance recoverables14,22013,99013,41213,36613,098
Premiums and other receivables774770973865928
DAC and VOBA4,8625,4485,3175,4925,680
Current income tax recoverable91714
Other assets550584577610618
Separate account assets89,008107,107103,928106,214105,211
Total assets$223,953$227,259$225,876$221,212$216,430
LIABILITIES AND EQUITY
Liabilities
Future policy benefits$40,653$39,686$39,846$38,280$37,157
Policyholder account balances47,28845,77144,91942,94141,177
Other policy-related balances3,1693,1113,0793,0413,005
Payables for collateral under securities loaned and other transactions10,9884,3915,2914,0943,990
Long-term debt4,3654,3654,3654,3654,364
Current income tax payable1419
Deferred income tax liability2,4821,3551,7491,3641,005
Other liabilities5,5615,2364,9394,5585,438
Separate account liabilities89,008107,107103,928106,214105,211
Total liabilities203,514211,022208,116204,871201,366
Equity
Preferred Stock, at par value
Common stock, at par value11111
Additional paid-in capital12,91112,90812,89712,89312,889
Retained earnings (deficit)5,5215851,662986609
Treasury stock(706)(562)(432)(306)(170)
Accumulated other comprehensive income (loss)2,6473,2403,5672,7021,670
Total Brighthouse Financial, Inc.’s stockholders’ equity20,37416,17217,69516,27614,999
Noncontrolling interests6565656565
Total equity20,43916,23717,76016,34115,064
Total liabilities and equity$223,953$227,259$225,876$221,212$216,430

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Earnings and Select
Metrics from
Business Segments and Corporate & Other

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Financial Supplement
5



Statements of Adjusted Earnings by Segment and Corporate & Other (Unaudited, in millions)
  For the Three Months Ended March 31, 2020
Adjusted revenuesAnnuitiesLifeRun-offCorporate & OtherTotal
Premiums$35$141$—$22$198
Universal life and investment-type product policy fees56693162821
Net investment income46011632420920
Other revenues9047101
Total adjusted revenues$1,151$354$493$42$2,040
Adjusted expenses
Interest credited to policyholder account balances$155$27$77$—$259
Policyholder benefits and claims20423745417912
Amortization of DAC and VOBA3858399
Interest expense on debt4747
Other operating costs365195234470
Total adjusted expenses7623415831011,787
Adjusted earnings before provision for income tax38913(90)(59)253
Provision for income tax expense (benefit)732(20)(22)33
Adjusted earnings after provision for income tax31611(70)(37)220
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends99
Adjusted earnings$316$11$(70)$(46)$211
  For the Three Months Ended March 31, 2019
Adjusted revenuesAnnuitiesLifeRun-offCorporate & OtherTotal
Premiums$58$145$1$23$227
Universal life and investment-type product policy fees56158193(3)809
Net investment income4219727617811
Other revenues7736692
Total adjusted revenues$1,117$303$476$43$1,939
Adjusted expenses
Interest credited to policyholder account balances$137$25$96$—$258
Policyholder benefits and claims14318138014718
Amortization of DAC and VOBA8211497
Interest expense on debt4747
Other operating costs394554650545
Total adjusted expenses7562725221151,665
Adjusted earnings before provision for income tax36131(46)(72)274
Provision for income tax expense (benefit)666(10)(22)40
Adjusted earnings after provision for income tax29525(36)(50)234
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends 22
Adjusted earnings$295$25$(36)$(52)$232

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Financial Supplement
6



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

  For the Three Months EndedFor the Three Months Ended
Adjusted revenuesMarch 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
March 31,
2020
March 31,
2019
Premiums$35$32$48$60$58$35$58
Universal life and investment-type product policy fees566585596584561566561
Net investment income460457461470421460421
Other revenues90797980779077
Total adjusted revenues$1,151$1,153$1,184$1,194$1,117$1,151$1,117
Adjusted expenses
Interest credited to policyholder account balances$155$151$149$147$137$155$137
Policyholder benefits and claims204134152180143204143
Amortization of DAC and VOBA3895211128823882
Interest expense on debt
Other operating costs365449417416394365394
Total adjusted expenses762829929871756762756
Adjusted earnings before provision for income tax389324255323361389361
Provision for income tax expense (benefit)73595258667366
Adjusted earnings$316$265$203$265$295$316$295

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Financial Supplement
7



Annuities — Select Operating Metrics (Unaudited, in millions)

  For the Three Months Ended
VARIABLE & SHIELD LEVEL ANNUITIES ACCOUNT VALUE (1)March 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
Account value, beginning of period$116,426$112,707$114,041$112,247$105,089
Deposits1,6071,6081,4901,5111,327
Withdrawals, surrenders and contract benefits(2,656)(2,826)(2,667)(2,716)(2,479)
Net flows (2)(1,049)(1,218)(1,177)(1,205)(1,152)
Investment performance (3)(14,066)5,6936503,6878,971
Policy charges and other(620)(756)(807)