bhf-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, 2021


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

For the transition period from ___ to ___

Commission File Number: 001-37905

Brighthouse Financial, Inc.

(Exact name of registrant as specified in its charter)

Delaware

81-3846992

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

11225 North Community House Road, Charlotte, North Carolina

28277

(Address of principal executive offices)

(Zip Code)

(980) 365-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BHF	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/1,000th interest in a share of 6.600% Non-Cumulative Preferred Stock, Series A	BHFAP	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/1,000th interest in a share of 6.750% Non-Cumulative Preferred Stock, Series B	BHFAO	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/1,000th interest in a share of 5.375% Non-Cumulative Preferred Stock, Series C	BHFAN	The Nasdaq Stock Market LLC
6.250% Junior Subordinated Debentures due 2058	BHFAL	The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

As of May 6, 2021, 85,793,967 shares of the registrant’s common stock were outstanding.

Table of Contents


		Page
Part I — Financial Information
Item 1.	Consolidated Financial Statements (at March 31, 2021 (Unaudited) and December 31, 2020 and for the Three Months Ended March 31, 2021 and 2020 (Unaudited)):
	Interim Condensed Consolidated Balance Sheets	2
	Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	3
	Interim Condensed Consolidated Statements of Equity	4
	Interim Condensed Consolidated Statements of Cash Flows	5
	Notes to the Interim Condensed Consolidated Financial Statements (Unaudited):
	Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies	6
	Note 2 — Segment Information	7
	Note 3 — Insurance	10
	Note 4 — Investments	11
	Note 5 — Derivatives	23
	Note 6 — Fair Value	28

	Note 7 — Equity	37
	Note 8 — Other Revenues and Other Expenses	38
	Note 9 — Earnings Per Common Share	39
	Note 1 0 — Contingencies, Commitments and Guarantees	40

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	81
Item 4.	Controls and Procedures	81

Part II — Other Information
Item 1.	Legal Proceedings	83
Item 1A.	Risk Factors	83
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83

Item 6.	Exhibits	84

Signature		85

Table of Contents

Part I — Financial Information

Item 1. Financial Statements

Brighthouse Financial, Inc.

Interim Condensed Consolidated Balance Sheets

March 31, 2021 (Unaudited) and December 31, 2020

(In millions, except share and per share data)


	March 31, 2021		December 31, 2020
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $72,078 and $70,529, respectively; allowance for credit losses of $8 and $2, respectively)	$	78,971	$	82,495
Equity securities, at estimated fair value	106		138
Mortgage loans (net of allowance for credit losses of $91 and $94, respectively)	15,690		15,808
Policy loans	1,245		1,291
Limited partnerships and limited liability companies	3,219		2,810
Short-term investments, principally at estimated fair value	1,673		3,242
Other invested assets, principally at estimated fair value (net of allowance for credit losses of $13 and $13, respectively)	2,267		3,747
Total investments	103,171		109,531
Cash and cash equivalents	4,025		4,108
Accrued investment income	734		676
Premiums, reinsurance and other receivables (net of allowance for credit losses of $10 and $10, respectively)	16,129		16,158
Deferred policy acquisition costs and value of business acquired	5,148		4,911

Other assets	506		516
Separate account assets	112,224		111,969
Total assets	$	241,937	$	247,869
Liabilities and Equity
Liabilities
Future policy benefits	$	42,426	$	44,448
Policyholder account balances	55,152		54,508
Other policy-related balances	3,355		3,411
Payables for collateral under securities loaned and other transactions	4,281		5,252
Long-term debt	3,435		3,436
Current income tax payable	152		126
Deferred income tax liability	812		1,620
Other liabilities	5,018		5,011
Separate account liabilities	112,224		111,969
Total liabilities	226,855		229,781
Contingencies, Commitments and Guarantees (Note 10)
Equity
Brighthouse Financial, Inc.’s stockholders’ equity:
Preferred stock, par value $0.01 per share; $1,403 aggregate liquidation preference	—		—
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 121,439,906 and 121,002,523 shares issued, respectively; 86,841,260 and 88,211,618 shares outstanding, respectively	1		1
Additional paid-in capital	13,858		13,878
Retained earnings (deficit)	(1,119)		(534)
Treasury stock, at cost; 34,598,646 and 32,790,905 shares, respectively	(1,112)		(1,038)
Accumulated other comprehensive income (loss)	3,389		5,716
Total Brighthouse Financial, Inc.’s stockholders’ equity	15,017		18,023
Noncontrolling interests	65		65
Total equity	15,082		18,088
Total liabilities and equity	$	241,937	$	247,869

See accompanying notes to the interim condensed consolidated financial statements.

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Brighthouse Financial, Inc.

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

For the Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions, except per share data)


	Three Months Ended March 31,
		2021		2020
Revenues
Premiums		$	184	$	198
Universal life and investment-type product policy fees		930		886
Net investment income		1,187		916
Other revenues		127		102
Net investment gains (losses)		14		(19)
Net derivative gains (losses)		(1,504)		6,902
Total revenues		938		8,985
Expenses
Policyholder benefits and claims		756		1,187
Interest credited to policyholder account balances		297		259
Amortization of deferred policy acquisition costs and value of business acquired		91		770
Other expenses		562		517
Total expenses		1,706		2,733
Income (loss) before provision for income tax		(768)		6,252
Provision for income tax expense (benefit)		(185)		1,293
Net income (loss)		(583)		4,959
Less: Net income (loss) attributable to noncontrolling interests		2		2
Net income (loss) attributable to Brighthouse Financial, Inc.		(585)		4,957
Less: Preferred stock dividends		25		7
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders		$	(610)	$	4,950
Comprehensive income (loss)		$	(2,910)	$	4,366
Less: Comprehensive income (loss) attributable to noncontrolling interests		2		2
Comprehensive income (loss) attributable to Brighthouse Financial, Inc.		$	(2,912)	$	4,364


Earnings per common share
Basic	$	(6.96)	$	47.26
Diluted	$	(6.96)	$	47.11

See accompanying notes to the interim condensed consolidated financial statements.

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Brighthouse Financial, Inc.

Interim Condensed Consolidated Statements of Equity

For the Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)


	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Treasury Stock at Cost		Accumulated Other Comprehensive Income (Loss)		Brighthouse Financial, Inc.’s Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2020	$	—	$	1	$	13,878	$	(534)	$	(1,038)	$	5,716	$	18,023	$	65	$	18,088
Treasury stock acquired in connection with share repurchases									(68)				(68)				(68)
Share-based compensation			—		5				(6)				(1)				(1)
Dividends on preferred stock					(25)								(25)				(25)
Change in noncontrolling interests													—		(2)		(2)
Net income (loss)							(585)						(585)		2		(583)
Other comprehensive income (loss), net of income tax											(2,327)		(2,327)				(2,327)
Balance at March 31, 2021	$	—	$	1	$	13,858	$	(1,119)	$	(1,112)	$	3,389	$	15,017	$	65	$	15,082


	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Treasury Stock at Cost		Accumulated Other Comprehensive Income (Loss)		Brighthouse Financial, Inc.’s Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2019	$	—	$	1	$	12,908	$	585	$	(562)	$	3,240	$	16,172	$	65	$	16,237
Cumulative effect of change in accounting principle, net of income tax							(14)				3		(11)				(11)
Balance at January 1, 2020	—		1		12,908		571		(562)		3,243		16,161		65		16,226
Treasury stock acquired in connection with share repurchases									(142)				(142)				(142)
Share-based compensation					3				(2)				1				1
Dividends on preferred stock							(7)						(7)				(7)
Change in noncontrolling interests													—		(2)		(2)
Net income (loss)							4,957						4,957		2		4,959
Other comprehensive income (loss), net of income tax											(596)		(596)				(596)
Balance at March 31, 2020	$	—	$	1	$	12,911	$	5,521	$	(706)	$	2,647	$	20,374	$	65	$	20,439

See accompanying notes to the interim condensed consolidated financial statements.

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Brighthouse Financial, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)


	Three Months Ended March 31,
	2021		2020
Net cash provided by (used in) operating activities	$	(104)	$	96
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	2,662		1,674
Equity securities	54		14
Mortgage loans	726		481
Limited partnerships and limited liability companies	49		69
Purchases of:
Fixed maturity securities	(3,959)		(2,541)
Equity securities	(6)		—
Mortgage loans	(568)		(279)
Limited partnerships and limited liability companies	(204)		(178)
Cash received in connection with freestanding derivatives	1,012		3,412
Cash paid in connection with freestanding derivatives	(1,581)		(1,807)



Net change in policy loans	46		41
Net change in short-term investments	1,569		(2,387)
Net change in other invested assets	—		17

Net cash provided by (used in) investing activities	(200)		(1,484)
Cash flows from financing activities
Policyholder account balances:
Deposits	2,058		1,974
Withdrawals	(698)		(478)
Net change in payables for collateral under securities loaned and other transactions	(971)		6,597



Dividends on preferred stock	(25)		(7)
Treasury stock acquired in connection with share repurchases	(68)		(142)



Financing element on certain derivative instruments and other derivative related transactions, net	(67)		(486)
Other, net	(8)		(17)
Net cash provided by (used in) financing activities	221		7,441
Change in cash, cash equivalents and restricted cash	(83)		6,053
Cash, cash equivalents and restricted cash, beginning of period	4,108		2,877
Cash, cash equivalents and restricted cash, end of period	$	4,025	$	8,930
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest	$	6	$	15
Income tax	$	(21)	$	—

See accompanying notes to the interim condensed consolidated financial statements.

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Brighthouse Financial, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

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

Business

“Brighthouse Financial” and the “Company” refer to Brighthouse Financial, Inc. and its subsidiaries. Brighthouse Financial, Inc. (“BHF”) is a holding company formed in 2016 to own the legal entities that historically operated a substantial portion of MetLife, Inc.’s former retail segment until becoming a separate, publicly-traded company in August 2017. Brighthouse Financial is one of the largest providers of annuity and life insurance products in the United States through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners. 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.

Basis of Presentation

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

Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Brighthouse Financial, as well as partnerships and limited liability companies (“LLCs”) that the Company controls. Intercompany accounts and transactions have been eliminated.

The Company uses the equity method of accounting for investments in limited partnerships and LLCs when it has more than a minor ownership interest or more than a minor influence over the investee’s operations. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. When the Company has virtually no influence over the investee’s operations, the investment is carried at fair value.

Reclassifications

Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the current period presentation as may be discussed when applicable in the Notes to the Interim Condensed Consolidated Financial Statements.

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2020 consolidated balance sheet data was derived from audited consolidated financial statements included in Brighthouse Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2020 Annual Report.

Adoption of New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. There were no ASUs adopted during the first quarter of 2021.

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Brighthouse Financial, Inc.

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

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

Future Adoption of New Accounting Pronouncements

In August 2018, the FASB issued new guidance on long-duration contracts (ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts). This new guidance is effective for fiscal years beginning after January 1, 2023. The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (i) require all guarantees that qualify as market risk benefits to be measured at fair value, (ii) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (iii) modify the methods of amortization for deferred policy acquisition costs (“DAC”), and (iv) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances. The market risk benefit guidance is required to be applied on a retrospective basis, while the changes to guidance for insurance liabilities and DAC may be applied to existing carrying amounts on the effective date or on a retrospective basis.

The Company continues to evaluate the new guidance and therefore is unable to estimate the impact on its financial statements. The most significant impact from the ASU is the requirement that all variable annuity guarantees will be considered market risk benefits and measured at fair value, whereas currently a significant amount of variable annuity guarantees are classified as insurance liabilities.

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 that are no longer actively sold and are separately managed, including structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, certain funding agreements and universal life with secondary guarantees.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments and interest expense related to the 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 by highlighting the results of operations and the underlying profitability drivers of the business. 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.

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Brighthouse Financial, Inc.

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

2. Segment Information (continued)

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

•Net investment gains (losses);

•Net derivative gains (losses) except earned income 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 guaranteed minimum income benefits (“GMIB”) fees (“GMIB Fees”).

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

The tax impact of the adjustments mentioned above is calculated net of the 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 interim condensed consolidated financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below.

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. 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.

Operating results by segment, as well as Corporate & Other, were as follows:


	Three Months Ended March 31, 2021
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	414	$	52	$	85	$	(61)	$	490
Provision for income tax expense (benefit)	78		10		9		(19)		78
Post-tax adjusted earnings	336		42		76		(42)		412
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		2		2
Less: Preferred stock dividends	—		—		—		25		25
Adjusted earnings	$	336	$	42	$	76	$	(69)	385
Adjustments for:
Net investment gains (losses)									14
Net derivative gains (losses)									(1,504)
Other adjustments to net income (loss)									232
Provision for income tax (expense) benefit									263
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	(610)

Interest revenue	$	550	$	166	$	462	$	14
Interest expense	$	—	$	—	$	—	$	41

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Brighthouse Financial, Inc.

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

2. Segment Information (continued)


	Three Months Ended March 31, 2020
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	389	$	13	$	(90)	$	(59)	$	253
Provision for income tax expense (benefit)	73		2		(20)		(22)		33
Post-tax adjusted earnings	316		11		(70)		(37)		220
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		2		2
Less: Preferred stock dividends	—		—		—		7		7
Adjusted earnings	$	316	$	11	$	(70)	$	(46)	211
Adjustments for:
Net investment gains (losses)									(19)
Net derivative gains (losses)									6,902
Other adjustments to net income (loss)									(884)
Provision for income tax (expense) benefit									(1,260)
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	4,950

Interest revenue	$	460	$	116	$	324	$	20
Interest expense	$	—	$	—	$	—	$	47

Total revenues by segment, as well as Corporate & Other, were as follows:


	Three Months Ended March 31,
		2021		2020
		(In millions)
Annuities		$	1,298	$	1,151
Life		410		354
Run-off		628		493
Corporate & Other		35		42
Adjustments		(1,433)		6,945
Total		$	938	$	8,985

Total assets by segment, as well as Corporate & Other, were as follows at:


	March 31, 2021		December 31, 2020
	(In millions)
Annuities	$	170,955	$	172,233
Life	23,293		23,809
Run-off	35,270		38,366
Corporate & Other	12,419		13,461
Total	$	241,937	$	247,869

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Brighthouse Financial, Inc.

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

3. Insurance

Guarantees

As discussed in Notes 1 and 3 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report, the Company issues variable annuity contracts with guaranteed minimum benefits. Guaranteed minimum death benefits, the life contingent portion of guaranteed minimum withdrawal benefits (“GMWB”) and certain portions of GMIBs are accounted for as insurance liabilities in future policyholder benefits, while other guarantees are accounted for in whole or in part as embedded derivatives in policyholder account balances and are further discussed in Note 5.

The Company also has secondary guarantees on universal and variable life insurance contracts accounted for as insurance liabilities.

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


	March 31, 2021						December 31, 2020
	In the Event of Death			At Annuitization			In the Event of Death			At Annuitization
	(Dollars in millions)
Annuity Contracts (1), (2)
Variable Annuity Guarantees
Total account value (3)	$	108,533		$	60,162		$	108,424		$	60,674
Separate account value	$	103,398		$	58,912		$	103,315		$	59,419
Net amount at risk	$	6,708	(4)	$	5,647	(5)	$	6,438	(4)	$	6,692	(5)
Average attained age of contract holders	71 years			70 years			70 years			70 years


	March 31, 2021		December 31, 2020
	Secondary Guarantees
	(Dollars in millions)
Universal Life Contracts
Total account value (3)	$	5,691	$	5,772
Net amount at risk (6)	$	68,529	$	69,083
Average attained age of policyholders	67 years		67 years

Variable Life Contracts
Total account value (3)	$	4,523	$	3,926
Net amount at risk (6)	$	19,743	$	19,909
Average attained age of policyholders	51 years		51 years

_______________

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

(2)Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured.

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

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

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Brighthouse Financial, Inc.

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

3. Insurance (continued)

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

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

4. Investments

See Note 1 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report for a description of the Company’s accounting policies for investments and Note 6 for information about the fair value hierarchy for investments and the related valuation methodologies.

Fixed Maturity Securities Available-for-sale

Fixed Maturity Securities by Sector

Fixed maturity securities by sector were as follows at:

March 31, 2021

December 31, 2020

Amortized
Cost

Allowance for Credit Losses

Gross Unrealized

Estimated
Fair
Value

Amortized
Cost

Allowance for Credit Losses

Gross Unrealized

Estimated
Fair
Value

Gains

Losses

Gains

Losses

(In millions)

U.S. corporate

33,299