bhf-20240930

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 September 30, 2024


☐			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
Depositary Shares, each representing a 1/1,000th interest in a share of 4.625% Non-Cumulative Preferred Stock, Series D	BHFAM	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 November 1, 2024, 59,354,252 shares of the registrant’s common stock were outstanding.

Table of Contents


		Page
Part I — Financial Information
Item 1.	Consolidated Financial Statements (at September 30, 2024 (Unaudited) and December 31, 2023 and for the Three Months and Nine Months Ended September 30, 2024 and 2023 (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 Liabilities	11
	Note 4 — Market Risk Benefits	16
	Note 5 — Separate Accounts	17
	Note 6 — Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles	19
	Note 7 — Investments	20
	Note 8 — Derivatives	32
	Note 9 — Fair Value	38

	Note 10 — Equity	48
	Note 11 — Other Revenues and Other Expenses	51
	Note 12 — Earnings Per Common Share	52
	Note 13 — Contingencies, Commitments and Guarantees	52

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	56
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	97
Item 4.	Controls and Procedures	98

Part II — Other Information
Item 1.	Legal Proceedings	98
Item 1A.	Risk Factors	98
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	98
Item 5.	Other Information	98
Item 6.	Exhibits	99

Signature		100

Table of Contents

Part I — Financial Information

Item 1. Financial Statements

Brighthouse Financial, Inc.

Interim Condensed Consolidated Balance Sheets

September 30, 2024 (Unaudited) and December 31, 2023

(In millions, except share and per share data)


	September 30, 2024		December 31, 2023
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $87,838 and $87,131, respectively; allowance for credit losses of $61 and $21, respectively)	$	83,298	$	80,991
Equity securities, at estimated fair value	87		102
Mortgage loans (net of allowance for credit losses of $167 and $137, respectively)	22,938		22,508
Policy loans	1,387		1,331
Limited partnerships and limited liability companies	4,870		4,946
Short-term investments, principally at estimated fair value	1,812		1,169
Other invested assets, principally at estimated fair value (net of allowance for credit losses of $12 and $13, respectively)	4,462		4,409
Total investments	118,854		115,456
Cash and cash equivalents	5,630		3,851
Accrued investment income	2,083		1,183
Premiums, reinsurance and other receivables (net of allowance for credit losses of $3 and $3, respectively)	20,692		19,761
Deferred policy acquisition costs and value of business acquired	4,745		4,872
Current income tax recoverable	28		27
Deferred income tax asset	1,737		1,893
Market risk benefit assets	750		656
Other assets	324		370
Separate account assets	90,313		88,271
Total assets	$	245,156	$	236,340
Liabilities and Equity
Liabilities
Future policy benefits	$	32,781	$	32,569
Policyholder account balances	87,678		81,068
Market risk benefit liabilities	9,580		10,323
Other policy-related balances	3,853		3,836
Payables for collateral under securities loaned and other transactions	3,764		3,670
Long-term debt	3,155		3,156


Other liabilities	8,442		8,439
Separate account liabilities	90,313		88,271
Total liabilities	239,566		231,332
Contingencies, Commitments and Guarantees (Note 13)
Equity
Brighthouse Financial, Inc.’s stockholders’ equity:
Preferred stock, par value $0.01 per share; $1,753 aggregate liquidation preference	—		—
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 123,456,323 and 122,818,568 shares issued, respectively; 59,838,034 and 63,503,355 shares outstanding, respectively	1		1
Additional paid-in capital	13,953		14,004
Retained earnings (deficit)	(1,790)		(1,507)
Treasury stock, at cost; 63,618,289 and 59,315,213 shares, respectively	(2,512)		(2,309)
Accumulated other comprehensive income (loss)	(4,127)		(5,246)
Total Brighthouse Financial, Inc.’s stockholders’ equity	5,525		4,943
Noncontrolling interests	65		65
Total equity	5,590		5,008
Total liabilities and equity	$	245,156	$	236,340

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 and Nine Months Ended September 30, 2024 and 2023 (Unaudited)

(In millions, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues
Premiums	$	180	$	194	$	563	$	602
Universal life and investment-type product policy fees	560		542		1,576		1,749
Net investment income	1,288		1,202		3,849		3,457
Other revenues	143		125		429		348
Net investment gains (losses)	(60)		(53)		(222)		(213)
Net derivative gains (losses)	(93)		(840)		(2,676)		(3,226)
Total revenues	2,018		1,170		3,519		2,717
Expenses
Policyholder benefits and claims (including liability remeasurement gains (losses) of ($978), ($234), ($978) and ($234), respectively)	22		590		1,632		1,966
Interest credited to policyholder account balances	556		426		1,567		1,300
Amortization of deferred policy acquisition costs and value of business acquired	150		155		451		468
Change in market risk benefits	610		(1,064)		(1,186)		(2,170)
Other expenses	492		473		1,467		1,453
Total expenses	1,830		580		3,931		3,017
Income (loss) before provision for income tax	188		590		(412)		(300)
Provision for income tax expense (benefit)	10		109		(133)		(109)
Net income (loss)	178		481		(279)		(191)
Less: Net income (loss) attributable to noncontrolling interests	2		2		4		4
Net income (loss) attributable to Brighthouse Financial, Inc.	176		479		(283)		(195)
Less: Preferred stock dividends	26		26		77		77
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders	$	150	$	453	$	(360)	$	(272)
Comprehensive income (loss)	$	1,470	$	(754)	$	840	$	(1,201)
Less: Comprehensive income (loss) attributable to noncontrolling interests	2		2		4		4
Comprehensive income (loss) attributable to Brighthouse Financial, Inc.	$	1,468	$	(756)	$	836	$	(1,205)


Earnings per common share
Basic	$	2.49	$	6.92	$	(5.82)	$	(4.08)
Diluted	$	2.47	$	6.89	$	(5.82)	$	(4.08)

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 and Nine Months Ended September 30, 2024 and 2023 (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, 2023	$	—	$	1	$	14,004	$	(1,507)	$	(2,309)	$	(5,246)	$	4,943	$	65	$	5,008
Treasury stock acquired in connection with share repurchases									(126)				(126)				(126)
Share-based compensation			—		19				(12)				7				7
Dividends on preferred stock					(51)								(51)				(51)
Change in noncontrolling interests													—		(2)		(2)
Net income (loss)							(459)						(459)		2		(457)
Other comprehensive income (loss), net of income tax											(173)		(173)				(173)
Balance at June 30, 2024	—		1		13,972		(1,966)		(2,447)		(5,419)		4,141		65		4,206
Treasury stock acquired in connection with share repurchases									(64)				(64)				(64)
Share-based compensation			—		7				(1)				6				6
Dividends on preferred stock					(26)								(26)				(26)
Change in noncontrolling interests													—		(2)		(2)
Net income (loss)							176						176		2		178
Other comprehensive income (loss), net of income tax											1,292		1,292				1,292
Balance at September 30, 2024	$	—	$	1	$	13,953	$	(1,790)	$	(2,512)	$	(4,127)	$	5,525	$	65	$	5,590


	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, 2022	$	—	$	1	$	14,075	$	(395)	$	(2,042)	$	(6,106)	$	5,533	$	65	$	5,598
Treasury stock acquired in connection with share repurchases									(126)				(126)				(126)
Share-based compensation			—		15				(15)				—				—
Dividends on preferred stock					(51)								(51)				(51)
Change in noncontrolling interests													—		(2)		(2)
Net income (loss)							(674)						(674)		2		(672)
Other comprehensive income (loss), net of income tax											225		225				225
Balance at June 30, 2023	—		1		14,039		(1,069)		(2,183)		(5,881)		4,907		65		4,972
Treasury stock acquired in connection with share repurchases									(64)				(64)				(64)
Share-based compensation			—		9				(1)				8				8
Dividends on preferred stock					(26)								(26)				(26)
Change in noncontrolling interests													—		(2)		(2)
Net income (loss)							479						479		2		481
Other comprehensive income (loss), net of income tax											(1,235)		(1,235)				(1,235)
Balance at September 30, 2023	$	—	$	1	$	14,022	$	(590)	$	(2,248)	$	(7,116)	$	4,069	$	65	$	4,134

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 Nine Months Ended September 30, 2024 and 2023 (Unaudited)

(In millions)


	Nine Months Ended September 30,
	2024		2023
Net cash provided by (used in) operating activities	$	(172)	$	(289)
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	7,968		4,588
Equity securities	34		16
Mortgage loans	1,033		904
Limited partnerships and limited liability companies	227		136
Purchases of:
Fixed maturity securities	(8,397)		(6,626)
Equity securities	(5)		(6)
Mortgage loans	(1,503)		(659)
Limited partnerships and limited liability companies	(216)		(336)
Cash received in connection with freestanding derivatives	8,653		4,013
Cash paid in connection with freestanding derivatives	(8,648)		(4,640)



Net change in policy loans	(56)		(29)
Net change in short-term investments	(628)		112
Net change in other invested assets	(295)		(117)
Other, net	(4)		—
Net cash provided by (used in) investing activities	(1,837)		(2,644)
Cash flows from financing activities
Policyholder account balances:
Deposits	39,141		16,292
Withdrawals	(35,469)		(12,773)
Net change in payables for collateral under securities loaned and other transactions	94		(619)

Long-term debt repaid	(1)		(1)

Dividends on preferred stock	(77)		(77)
Treasury stock acquired in connection with share repurchases	(190)		(190)



Financing element on certain derivative instruments and other derivative related transactions, net	305		43
Other, net	(15)		(18)
Net cash provided by (used in) financing activities	3,788		2,657
Change in cash, cash equivalents and restricted cash	1,779		(276)
Cash, cash equivalents and restricted cash, beginning of period	3,851		4,115
Cash, cash equivalents and restricted cash, end of period	$	5,630	$	3,839
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest	$	82	$	82
Income tax	$	10	$	1

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, Inc. (“BHF” and together with its subsidiaries, “Brighthouse Financial” or the “Company”) 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 U.S. through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners. The Company is organized into the following 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 (“LLC”) 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.

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, 2023 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, 2023 (the “2023 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 2023 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 significant ASUs adopted during the period ended September 30, 2024.

Future Adoption of New Accounting Pronouncements

In December 2023, the FASB issued new guidance on Income Tax Disclosures (ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures). This ASU updates the required income tax disclosures to include disclosure of income taxes paid disaggregated by jurisdiction and greater disaggregation of information in the required rate reconciliation. This ASU is effective for fiscal years starting January 1, 2025, and will be applied on a prospective basis. The Company is currently evaluating the impact of this guidance on its financial statements.

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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)

In November 2023, the FASB issued new guidance on Segment Reporting Disclosures (ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures). This ASU updates reportable segment disclosures primarily through enhanced disclosures about significant segment expenses. This ASU does not change how a company identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. This ASU is effective for fiscal years starting January 1, 2024, and for interim periods starting January 1, 2025, and will be applied on a retrospective basis. The Company is currently evaluating the impact of this guidance on its financial statements.

2. Segment Information

The Company is organized into the following 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, including term, universal, whole and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be on a tax-advantaged basis.

Run-off

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

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 business reinsured through 100% quota share reinsurance agreements and activities related to funding agreements associated with the Company’s institutional spread margin business.

Financial Measures and Segment Accounting Policies

Adjusted earnings is a financial measure used by management to evaluate performance 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, which may be positive or negative, focuses on the Company’s primary businesses by excluding the impact of market volatility, which could distort trends. The Company uses the term “adjusted loss” throughout this report to refer to negative adjusted earnings values.

The following are significant items excluded from total revenues in calculating adjusted earnings:

•Net investment gains (losses); and

•Net derivative gains (losses), excluding 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”).

The following are significant items excluded from total expenses in calculating adjusted earnings:

•Change in market risk benefits (“MRB”); and

•Change in fair value of the crediting rate on experience-rated contracts (“Market Value Adjustments”).

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Brighthouse Financial, Inc.

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

2. Segment Information (continued)

The provision for income tax related to adjusted earnings is calculated using the statutory tax rate of 21%, net of impacts related to the dividends received deduction, tax credits and current period non-recurring items.

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 September 30, 2024
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings (loss)	$	403	$	(32)	$	584	$	13	$	968
Provision for income tax expense (benefit)	76		(7)		121		(17)		173
Post-tax adjusted earnings (loss)	327		(25)		463		30		795
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		2		2
Less: Preferred stock dividends	—		—		—		26		26
Adjusted earnings (loss)	$	327	$	(25)	$	463	$	2	767
Adjustments for:
Net investment gains (losses)									(60)
Net derivative gains (losses), excluding investment hedge adjustments of $6									(99)
Change in market risk benefits									(610)
Market value adjustments									(11)
Provision for income tax (expense) benefit									163
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	150

Interest revenue	$	729	$	112	$	275	$	178
Interest expense	$	—	$	—	$	—	$	38

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Brighthouse Financial, Inc.

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

2. Segment Information (continued)


	Three Months Ended September 30, 2023
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings (loss)	$	393	$	(93)	$	120	$	9	$	429
Provision for income tax expense (benefit)	74		(20)		25		(4)		75
Post-tax adjusted earnings (loss)	319		(73)		95		13		354
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		2		2
Less: Preferred stock dividends	—		—		—		26		26
Adjusted earnings (loss)	$	319	$	(73)	$	95	$	(15)	326
Adjustments for:
Net investment gains (losses)									(53)
Net derivative gains (losses), excluding investment hedge adjustments of $25									(865)
Change in market risk benefits									1,064
Market value adjustments									15
Provision for income tax (expense) benefit									(34)
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	453

Interest revenue	$	652	$	115	$	300