N-VPFS 1 tm251593d24_nvpfs.htm N-VPFS 25-1593-24.ba

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Index to Consolidated Financial Statements, Notes and Schedules

   

Page

  

Report of Independent Registered Public Accounting Firm

      
Financial Statements at December 31, 2024 and 2023 and for the Years Ended December 31, 2024, 2023
and 2022:		    

2

    

Consolidated Balance Sheets

    

5

    

Consolidated Statements of Operations

    

6

    

Consolidated Statements of Comprehensive Income (Loss)

    

7

    

Consolidated Statements of Equity

    

8

    

Consolidated Statements of Cash Flows

    

9

    

Notes to the Consolidated Financial Statements

  

Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies

    

11

    

Note 2 — Segment Information

    

20

    

Note 3 — Insurance Liabilities

    

26

    

Note 4 — Market Risk Benefits

    

33

    

Note 5 — Separate Accounts

    

34

    

Note 6 — Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

    

36

    

Note 7 — Reinsurance

    

37

    

Note 8 — Investments

    

41

    

Note 9 — Derivatives

    

54

    

Note 10 — Fair Value

    

61

    

Note 11 — Long-term and Short-term Debt

    

71

    

Note 12 — Equity

    

72

    

Note 13 — Other Revenues and Other Expenses

    

76

    

Note 14 — Income Tax

    

77

    

Note 15 — Contingencies, Commitments and Guarantees

    

80

    

Note 16 — Related Party Transactions

    

84

    

Note 17 — Subsequent Event

    

84

    
Financial Statement Schedules at December 31, 2024 and 2023 and for the Years Ended December 31,
2024, 2023 and 2022:		  

Schedule I — Consolidated Summary of Investments — Other Than Investments in Related Parties

    

85

    

Schedule II — Condensed Financial Information (Parent Company Only)

    

86

    

Schedule III — Consolidated Supplementary Insurance Information

    

90

    

Schedule IV — Consolidated Reinsurance

    

92

    


1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Brighthouse Life Insurance Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Brighthouse Life Insurance Company and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and the schedules listed in the Index to Consolidated Financial Statements, Notes and Schedules (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Certain Assumptions Used in the Valuation of Liability for Future Policy Benefits — Refer to Notes 1 and 3 to the financial statements

Critical Audit Matter Description

The Company has obligations under insurance contracts to pay benefits over an extended period of time. The Company establishes a liability for future policy benefits ("LFPB") for nonparticipating traditional and limited-payment contracts and the additional insurance liabilities for universal life-type contracts with secondary guarantees.


2

Management regularly reviews its cash flow assumptions supporting the estimates of these actuarial liabilities and, if such assumptions change significantly, the associated liability is adjusted. The measurement of LFPBs can be significantly impacted by changes in economic assumptions related to market interest rates and the general account rate of return and changes in assumptions for policyholder behavior including premium persistency, mortality, lapses and withdrawals.

Given the future policy benefit obligation for certain contracts is sensitive to changes in these economic and policyholder behavior assumptions and the significant uncertainty inherent in estimating these actuarial liabilities, we identified management's evaluation of these assumptions in the valuation of certain LFPBs as a critical audit matter. This required a high degree of auditor judgment and an increased extent of effort, including the involvement of our actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to these assumptions in the valuation of certain LFPBs included the following, among others:

•  We tested the effectiveness of management's controls over the assumption review process, including those over the selection of the significant economic and policyholder behavior assumptions.

•  With the assistance of our actuarial specialists, we evaluated the appropriateness of the significant assumptions used, developed an independent estimate of the LFPBs for a sample of policies and cohorts, and compared our estimates to management's estimates.

•  We tested the completeness and accuracy of the underlying data that served as the basis for the actuarial analysis to test that the inputs to the actuarial estimate were reasonable.

•  We evaluated the methods and significant assumptions used by management to identify potential bias.

•  We evaluated whether the significant assumptions used were consistent with evidence obtained in other areas of the audit.

Certain Assumptions Used in the Valuation of Market Risk Benefits — Refer to Notes 1, 4, and 10 to the financial statements

Critical Audit Matter Description

Market risk benefits are measured at fair value and separately presented on the consolidated balance sheet. The Company estimates market risk benefit assets and liabilities using significant judgment including discount rate assumptions, nonperformance risk, and actuarially determined assumptions including policyholder behavior, mortality and risk margins.

Given the sensitivity of certain market risk benefits to changes in these assumptions and the significant uncertainty inherent in estimating the market risk benefits, we identified management's evaluation of these assumptions in the valuation of certain market risk benefits as a critical audit matter. This required a high degree of auditor judgment and an increased extent of effort, including the involvement of our actuarial and fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to these assumptions in the valuation of certain market risk benefits included the following, among others:

•  We tested the effectiveness of management's controls over the assumption review process, including those over the selection of the significant assumptions related to policyholder behavior, mortality and risk margins, as well as changes in nonperformance risk.

•  With the assistance of our actuarial specialists, we evaluated the appropriateness of the significant assumptions used, developed an independent estimate of the market risk benefits for a sample of policies, and compared our estimates to management's estimates.

•  We tested the completeness and accuracy of the underlying data that served as the basis for the actuarial analysis to test that the inputs to the actuarial estimate were reasonable.

•  We evaluated the reasonableness of the Company's assumptions by comparing those selected by management to those independently derived by our fair value and actuarial specialists, drawing upon standard actuarial and industry practice.


3

•  We evaluated the methods and assumptions used by management to identify potential bias in the determination of the market risk benefits.

•  We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

/s/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
March 3, 2025

We have served as the Company's auditor since 2005.


4

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Consolidated Balance Sheets
December 31, 2024 and 2023

(In millions, except share and per share data)

   

2024

  

2023

  

Assets

  

Investments:

  
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $86,565 and $86,129, respectively;
allowance for credit losses of $79 and $21, respectively)		  

$

79,129

    

$

80,085

    

Equity securities, at estimated fair value

    

32

      

66

    

Mortgage loans (net of allowance for credit losses of $178 and $137, respectively)

    

23,254

      

22,475

    

Policy loans

    

1,626

      

938

    

Limited partnerships and limited liability companies

    

4,827

      

4,946

    

Short-term investments, principally at estimated fair value

    

1,157

      

574

    

Other invested assets, principally at estimated fair value (net of allowance for credit losses of $0 and $13, respectively)

    

5,244

      

4,411

    

Total investments

    

115,269

      

113,495

    

Cash and cash equivalents

    

4,592

      

3,165

    

Accrued investment income

    

1,261

      

1,163

    

Premiums, reinsurance and other receivables (net of allowance for credit losses of $3 and $3, respectively)

    

20,809

      

19,389

    

Deferred policy acquisition costs and value of business acquired

    

4,374

      

4,487

    

Current income tax recoverable

    

51

      

24

    

Deferred income tax asset

    

1,823

      

1,833

    

Market risk benefit assets

    

1,092

      

656

    

Other assets

    

314

      

302

    

Separate account assets

    

79,006

      

81,690

    

Total assets

  

$

228,591

    

$

226,204

    

Liabilities and Equity

  

Liabilities

  

Future policy benefits

  

$

31,085

    

$

32,149

    

Policyholder account balances

    

87,162

      

80,193

    

Market risk benefit liabilities

    

8,346

      

10,344

    

Other policy-related balances

    

3,677

      

3,619

    

Payables for collateral under securities loaned and other transactions

    

3,874

      

3,660

    

Long-term debt

    

833

      

836

    

Other liabilities

    

8,460

      

7,772

    

Separate account liabilities

    

79,006

      

81,690

    

Total liabilities

    

222,443

      

220,263

    

Contingencies, Commitments and Guarantees (Note 15)

  

Equity

  

Brighthouse Life Insurance Company's stockholder's equity:

  

Common stock, par value $25,000 per share; 4,000 shares authorized; 3,000 shares issued and outstanding

    

75

      

75

    

Additional paid-in capital

    

17,507

      

17,507

    

Retained earnings (deficit)

    

(6,286

)

    

(6,542

)

  

Accumulated other comprehensive income (loss)

    

(5,163

)

    

(5,114

)

  

Total Brighthouse Life Insurance Company's stockholder's equity

    

6,133

      

5,926

    

Noncontrolling interests

    

15

      

15

    

Total equity

    

6,148

      

5,941

    

Total liabilities and equity

  

$

228,591

    

$

226,204

    

See accompanying notes to the consolidated financial statements.


5

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Consolidated Statements of Operations
For the Years Ended December 31, 2024, 2023 and 2022

(In millions)

   

2024

  

2023

  

2022

  

Revenues

          

Premiums

  

$

759

    

$

811

    

$

641

    

Universal life and investment-type product policy fees

    

1,601

      

1,778

      

1,876

    

Net investment income

    

5,100

      

4,560

      

4,064

    

Other revenues

    

499

      

418

      

406

    

Net investment gains (losses)

    

(298

)

    

(242

)

    

(240

)

  

Net derivative gains (losses)

    

(3,688

)

    

(3,920

)

    

(585

)

  

Total revenues

    

3,973

      

3,405

      

6,162

    

Expenses

  
Policyholder benefits and claims (including liability remeasurement gains (losses) of ($980),
($233), $137, respectively)		    

2,139

      

2,418

      

2,186

    

Interest credited to policyholder account balances

    

2,110

      

1,801

      

1,313

    

Amortization of deferred policy acquisition costs and value of business acquired

    

550

      

564

      

568

    

Change in market risk benefits

    

(2,669

)

    

(1,497

)

    

(4,105

)

  

Other expenses

    

1,601

      

1,625

      

1,694

    

Total expenses

    

3,731

      

4,911

      

1,656

    

Income (loss) before provision for income tax

    

242

      

(1,506

)

    

4,506

    

Provision for income tax expense (benefit)

    

(15

)

    

(383

)

    

795

    

Net income (loss)

    

257

      

(1,123

)

    

3,711

    

Less: Net income (loss) attributable to noncontrolling interests

    

1

      

1

      

1

    

Net income (loss) attributable to Brighthouse Life Insurance Company

  

$

256

    

$

(1,124

)

  

$

3,710

    

See accompanying notes to the consolidated financial statements.


6

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2024, 2023 and 2022

(In millions)

   

2024

  

2023

  

2022

  

Net income (loss)

  

$

257

    

$

(1,123

)

  

$

3,711

    

Other comprehensive income (loss):

  

Unrealized investment gains (losses), net of related offsets

    

(1,053

)

    

2,313

      

(13,946

)

  

Unrealized gains (losses) on derivatives

    

116

      

(284

)

    

308

    

Changes in instrument-specific credit risk on market risk benefits

    

352

      

(637

)

    

2,344

    

Changes in discount rates on the liability for future policy benefits

    

541

      

(376

)

    

4,060

    

Foreign currency translation adjustments

    

(18

)

    

18

      

(22

)

  

Other comprehensive income (loss), before income tax

    

(62

)

    

1,034

      

(7,256

)

  

Income tax (expense) benefit related to items of other comprehensive income (loss)

    

13

      

(217

)

    

1,524

    

Other comprehensive income (loss), net of income tax

    

(49

)

    

817

      

(5,732

)

  

Comprehensive income (loss)

    

208

      

(306

)

    

(2,021

)

  

Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax

    

1

      

1

      

1

    

Comprehensive income (loss) attributable to Brighthouse Life Insurance Company

  

$

207

    

$

(307

)

  

$

(2,022

)

  

See accompanying notes to the consolidated financial statements.


7

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Consolidated Statements of Equity
For the Years Ended December 31, 2024, 2023 and 2022

(In millions)

    Common
Stock		   Additional
Paid-in
Capital		   Retained
Earnings
(Deficit)		   Accumulated
Other
Comprehensive
Income (Loss)		   Brighthouse Life
Insurance
Company's
Stockholder's
Equity		   Noncontrolling
Interests		   Total
Equity		  

Balance at December 31, 2021

  

$

75

    

$

17,773

    

$

(9,128

)

  

$

(199

)

  

$

8,521

    

$

15

    

$

8,536

    

Change in noncontrolling interests

                                    

—

      

(1

)

    

(1

)

  

Net income (loss)

                    

3,710

              

3,710

      

1

      

3,711

    
Other comprehensive income (loss), net of
income tax		                            

(5,732

)

    

(5,732

)

            

(5,732

)

  

Balance at December 31, 2022

    

75

      

17,773

      

(5,418

)

    

(5,931

)

    

6,499

      

15

      

6,514

    

Dividends paid to parent

            

(266

)

                    

(266

)

            

(266

)

  

Change in noncontrolling interests

                                    

—

      

(1

)

    

(1

)

  

Net income (loss)

                    

(1,124

)

            

(1,124

)

    

1

      

(1,123

)

  
Other comprehensive income (loss), net of
income tax		                            

817

      

817

              

817

    

Balance at December 31, 2023

    

75

      

17,507

      

(6,542

)

    

(5,114

)

    

5,926

      

15

      

5,941

    

Change in noncontrolling interests

                                    

—

      

(1

)

    

(1

)

  

Net income (loss)

                    

256

              

256

      

1

      

257

    
Other comprehensive income (loss), net of
income tax		                            

(49

)

    

(49

)

            

(49

)

  

Balance at December 31, 2024

  

$

75

    

$

17,507

    

$

(6,286

)

  

$

(5,163

)

  

$

6,133

    

$

15

    

$

6,148

    

See accompanying notes to the consolidated financial statements.


8

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024, 2023 and 2022

(In millions)

   

2024

  

2023

  

2022

  

Cash flows from operating activities

  

Net income (loss)

  

$

257

    

$

(1,123

)

  

$

3,711

    

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

  

Amortization of premiums and accretion of discounts associated with investments, net

    

(301

)

    

(258

)

    

(225

)

  

(Gains) losses on investments, net

    

267

      

227

      

240

    

(Gains) losses on derivatives, net

    

1,456

      

2,632

      

162

    

(Income) loss from equity method investments, net of dividends and distributions

    

41

      

76

      

109

    

Interest credited to policyholder account balances

    

2,110

      

1,801

      

1,313

    

Universal life and investment-type product policy fees

    

(1,601

)

    

(1,778

)

    

(1,876

)

  

Change in market risk benefits, net

    

(2,089

)

    

(888

)

    

(3,353

)

  

Change in accrued investment income

    

(117

)

    

(212

)

    

(115

)

  

Change in premiums, reinsurance and other receivables

    

(1,482

)

    

(1,279

)

    

(1,388

)

  

Change in deferred policy acquisition costs and value of business acquired, net

    

113

      

155

      

144

    

Change in income tax

    

(8

)

    

(380

)

    

804

    

Change in other assets

    

1,116

      

1,100

      

1,220

    

Change in future policy benefits and other policy-related balances

    

(316

)

    

(62

)

    

(1,814

)

  

Change in other liabilities

    

377

      

(18

)

    

286

    

Net cash provided by (used in) operating activities

    

(177

)

    

(7

)

    

(782

)

  

Cash flows from investing activities

  

Sales, maturities and repayments of:

  

Fixed maturity securities

    

11,559

      

5,922

      

10,647

    

Equity securities

    

46

      

30

      

50

    

Mortgage loans

    

1,518

      

1,206

      

2,075

    

Limited partnerships and limited liability companies

    

337

      

205

      

252

    

Purchases of:

  

Fixed maturity securities

    

(11,811

)

    

(8,699

)

    

(15,720

)

  

Equity securities

    

(3

)

    

(4

)

    

(14

)

  

Mortgage loans

    

(2,374

)

    

(813

)

    

(5,321

)

  

Limited partnerships and limited liability companies

    

(299

)

    

(453

)

    

(814

)

  

Cash received in connection with freestanding derivatives

    

12,453

      

5,048

      

4,439

    

Cash paid in connection with freestanding derivatives

    

(11,856

)

    

(5,422

)

    

(4,270

)

  

Receipts on loans to affiliate

    

—

      

125

      

—

    

Issuances of loans to affiliate

    

—

      

—

      

(125

)

  

Net change in policy loans

    

(688

)

    

(40

)

    

(29

)

  

Net change in short-term investments

    

(572

)

    

(259

)

    

365

    

Net change in other invested assets

    

(369

)

    

(109

)

    

(372

)

  

Net cash provided by (used in) investing activities

  

$

(2,059

)

  

$

(3,263

)

  

$

(8,837

)

  

See accompanying notes to the consolidated financial statements.


9

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Consolidated Statements of Cash Flows (continued)
For the Years Ended December 31, 2024, 2023 and 2022

(In millions)

   

2024

  

2023

  

2022

  

Cash flows from financing activities

  

Policyholder account balances:

  

Deposits

  

$

29,950

    

$

21,514

    

$

31,190

    

Withdrawals

    

(26,287

)

    

(17,641

)

    

(19,960

)

  

Net change in payables for collateral under securities loaned and other transactions

    

214

      

(887

)

    

(1,706

)

  

Long-term and short-term debt issued

    

—

      

—

      

125

    

Long-term and short-term debt repaid

    

(2

)

    

(127

)

    

(3

)

  

Dividends paid to parent

    

—

      

(266

)

    

—

    

Financing element on certain derivative instruments and other derivative related transactions, net

    

(211

)

    

91

      

(178

)

  

Other, net

    

(1

)

    

(1

)

    

(1

)

  

Net cash provided by (used in) financing activities

    

3,663

      

2,683

      

9,467

    

Change in cash, cash equivalents and restricted cash

    

1,427

      

(587

)

    

(152

)

  

Cash, cash equivalents and restricted cash, beginning of year

    

3,165

      

3,752

      

3,904

    

Cash, cash equivalents and restricted cash, end of year

  

$

4,592

    

$

3,165

    

$

3,752

    

Supplemental disclosures of cash flow information

  

Net cash paid (received) for:

  

Interest

  

$

67

    

$

71

    

$

69

    

Income tax

  

$

—

    

$

—

    

$

(12

)

  

Non-cash transactions:

  

Transfer of mortgage loans to affiliates

  

$

—

    

$

—

    

$

95

    

Transfer of limited partnerships and limited liability companies from affiliates

  

$

—

    

$

—

    

$

99

    

See accompanying notes to the consolidated financial statements.


10

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements

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

Business

"BLIC" and the "Company" refer to Brighthouse Life Insurance Company, a Delaware corporation originally incorporated in Connecticut in 1863, and its subsidiaries. Brighthouse Life Insurance Company is a wholly-owned subsidiary of Brighthouse Holdings, LLC ("BH Holdings") and an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. ("BHF" and, together with its subsidiaries, "Brighthouse Financial").

BLIC offers a range of annuity and life insurance products to individuals. The Company is organized into the following reportable segments: Annuities; Life; Run-off; and 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 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 consolidated financial statements include the accounts of Brighthouse Life Insurance Company and its subsidiaries, 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.

Summary of Significant Accounting Policies

Insurance Contract Obligations

The Company has obligations under insurance contracts to pay benefits over an extended period of time. The Company establishes liabilities for future obligations under long-duration insurance contracts based on the accounting model appropriate for each type of contract or contract feature. Liabilities for insurance contract benefits are generally accrued over time as revenue is recognized, or established based on the balance that accrues to the contract holder. In addition, certain insurance contracts may contain features that are required to be measured at fair value separately from the base contracts, either as a market risk benefit ("MRB") or embedded derivative.

The discussion below provides an overview of the different accounting models for insurance contract obligations and the applicability of such models to the Company's insurance products.

Liability for Future Policy Benefits

The Company establishes a liability for future policy benefits ("LFPB") for non-participating term and whole life insurance and income annuities. LFPBs are accrued over time as revenue is recognized based on a net premium ratio. The net premium ratio is the portion of gross premiums required to provide for all future benefits. LFPBs are established using the Company's current assumptions of future cash flows, discounted at a rate that approximates a single A corporate bond curve. The Company generally aggregates insurance contracts into groupings by issue year, product and segment for determining the net premium ratio and related LFPBs.


11

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

The Company reviews cash flow assumptions regularly, and if they change significantly, LFPBs are adjusted by determining a revised net premium ratio. The revised net premium ratio is calculated as of contract inception using both actual historical experience and updated future cash flow assumptions. The recalculated net premium ratio is applied to derive a remeasurement gain or loss recognized in the current period net income. For insurance policies in-force as of December 31, 2020, January 1, 2021 is considered the contract inception date. The net premium ratio is also updated quarterly for the difference between actual and expected experience.

The net premium ratio is not updated for changes in discount rate assumptions, as changes in the discount rate are updated quarterly and the impacts are reflected in other comprehensive income (loss) ("OCI"). The discount rate assumption is determined by developing a yield curve based on market observable yields for upper-medium grade fixed income instruments derived from an external index. The yield curve is applied to the expected future cash flows used in the measurement of LFPBs based on the duration characteristics of those liabilities.

The most significant cash flow assumptions used in the establishment of LFPBs are mortality, policy lapses and market interest rates. See Note 3 for more information on the effect of changes in assumptions on the measurement of LFPBs.

The Company also establishes an LFPB for participating term and whole life insurance using a net premium ratio and the Company's current assumptions of future cash flows. Assumptions are determined at issuance of the policy and are not updated unless a premium deficiency exists. A premium deficiency exists when the LFPB plus the present value of expected future gross premiums are less than expected future benefits and expenses (based on current assumptions). When a premium deficiency exists, the Company will reduce any deferred acquisition costs and may also establish an additional liability to eliminate the deficiency. See Note 3 for more information on assumptions used in establishing LFPBs related to participating term and whole life insurance.

Policyholder Account Balances

The Company establishes a policyholder account balance liability for customer deposits on universal life insurance, universal life insurance with secondary guarantees ("ULSG") and deferred annuity contracts. The policyholder account balance liability is equal to the sum of deposits, plus interest credited, less charges and withdrawals, excluding the impact of any applicable charge that may be incurred upon surrender. The Company also holds additional liabilities for certain product features including secondary guarantees on universal life insurance contracts and the crediting rates associated with index-linked annuities.

Additional Liabilities for ULSG

The Company establishes a liability in addition to the account balance for ULSG. These liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the contract period based on total expected assessments. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. The Company also maintains a liability for profits followed by losses on ULSG determined by projecting future earnings and establishing a liability to offset losses that are expected to occur in later years. Both ULSG liabilities are adjusted for the effects of unrealized investment gains and losses.

The Company reviews cash flow assumptions regularly, and, if they change significantly, the liability for secondary guarantees is adjusted by a cumulative charge or credit to net income. Liabilities for secondary guarantees are presented within future policy benefits with changes in the liabilities reported in policyholder benefits and claims, except for the effects of unrealized investment gains and losses, which are reported in OCI.

The most significant assumptions used in estimating liabilities for secondary guarantees are the general account rate of return, mortality, premium persistency, lapses and withdrawals. See Note 3 for more information on the effect of changes in assumptions on the measurement of liabilities for secondary guarantees.


12

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

Market Risk Benefits on Annuity Guarantees

MRBs are contracts or contract features that provide protection to the policyholder from capital markets risks by transferring such risks to the Company. MRBs are required to be separated from the deferred annuity host contract and measured at fair value. The Company establishes MRB assets and liabilities for guaranteed minimum benefits on variable annuity contracts including guaranteed minimum death benefits, guaranteed minimum income benefits ("GMIB"), guaranteed minimum accumulation benefits ("GMAB") and guaranteed minimum withdrawal benefits ("GMWB"). MRB assets are also established for reinsured benefits related to these guarantees. Certain index-linked annuity products may also have guaranteed minimum benefits classified as MRBs.

The measurement of fair value includes an adjustment for the risk that the Company fails to satisfy its obligations, which is referred to as nonperformance risk, as well as risk margin to capture the non-capital markets risks of the instrument, which represents the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. MRBs are measured at estimated fair value, with changes reported in change in MRBs on the consolidated statements of operations, except for the change due to nonperformance risk, which is reported in OCI.

See Note 4 for more information on the effect of changes in inputs and assumptions on the measurement of MRBs and Note 10 for more information on the determination of fair value of MRBs.

Embedded Derivatives on Index-Linked Annuities

The Company issues, and assumes through reinsurance, index-linked annuities which allow the policyholder to participate in returns from certain specified equity indices. The crediting rates associated with these features are classified as embedded derivatives and measured at estimated fair value, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

Embedded derivative liabilities are required to be separated from the deferred annuity host contract and measured at fair value. The estimated fair value is determined using a combination of an option pricing model and an option-budget approach. Under this approach, the Company estimates the cost of funding the crediting rate using option pricing and establishes that cost on the balance sheet as a reduction to the initial deposit amount. The estimate of fair value includes an adjustment for nonperformance risk, as well as a risk margin.

Actuarial assumptions are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income. Capital market inputs used in the measurement of index-linked crediting rate embedded derivatives are updated quarterly through net income. The reduction to the initial deposit is accreted back up to the initial deposit over the estimated life of the contract. Embedded derivatives related to index-linked annuities are presented within policyholder account balances while changes in the estimated fair value are reported in net derivative gains (losses).

For more information on the determination of estimated fair value of embedded derivatives, see Note 10.

Recognition of Revenues and Deposits on Insurance Contracts

Premiums related to traditional long-duration contracts are recognized as revenues when due from policyholders. When premiums for income annuities are due over a significantly shorter period than the period over which policyholder benefits are incurred, the Company establishes a deferred profit liability ("DPL") for the excess of the gross premium over the net premium. DPLs are amortized into net income in proportion to the amount of expected future benefit payments. Assumptions used in the measurement of the DPL are updated at the same time as the related LFPBs, with the updated estimates used to recalculate the DPL as of contract inception. The remeasurement gain or loss from updating DPLs is recognized in current period net income along with the related change in LFPBs.


13

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

Deposits related to universal life insurance, deferred annuity contracts and investment contracts are credited to policyholder account balances. Revenues from such contracts consist of asset-based investment management fees, cost of insurance charges, risk charges, policy administration fees and surrender charges. These fees, which are included in universal life and investment-type product policy fees, are recognized when assessed to the contract holder, except for non-level insurance charges which are deferred by the establishment of an unearned revenue liability and amortized over the expected life of the contracts.

Premiums and policy fees are presented net of reinsurance.

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are directly related to the successful acquisition or renewal of insurance contracts are capitalized as deferred policy acquisition costs ("DAC"). These costs mainly consist of commissions and include the portion of employees' compensation and benefits related to time spent selling, underwriting or processing the issuance of new insurance contracts. All other acquisition-related costs are expensed as incurred.

Value of business acquired ("VOBA") is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity and investment-type contracts in-force as of the acquisition date.

The Company amortizes DAC and VOBA in a manner that approximates a straight-line basis over the expected life of the related contracts. For life insurance contracts, amortization is based on projections of amounts of insurance in-force, while projections of policy counts are used for deferred annuity contracts and expected future benefits payments for income annuities. These assumptions are reviewed at least annually, and if they change significantly, updates are recognized through changes to future amortization. VOBA balances are tested annually to determine if the balance is deemed unrecoverable from expected future profits. All changes in DAC and VOBA balances are recorded to net income.

Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of an existing contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If a modification is considered to have substantially changed the contract, the associated DAC or VOBA is written off immediately through net income and any new acquisition costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC or VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed.

The Company also has intangible assets representing deferred sales inducements ("DSI"), which are included in other assets, and unearned revenue liabilities, which are included in other policy-related balances. The Company defers sales inducements and unearned revenue and amortizes the balances using the same methodology and assumptions used to amortize DAC and VOBA.

Reinsurance

The Company enters into reinsurance arrangements pursuant to which it cedes certain insurance risks to unaffiliated and former related party reinsurers. Cessions under reinsurance agreements do not discharge the Company's obligations as the primary insurer. The accounting for reinsurance arrangements depends on whether the arrangement provides indemnification against loss or liability relating to insurance risk in accordance with GAAP.

For ceded reinsurance of existing in-force blocks of insurance contracts that transfer significant insurance risk, premiums, benefits and the amortization of DAC are reported net of reinsurance ceded. Amounts recoverable from reinsurers related to incurred claims and ceded reserves are included in premiums, reinsurance and other receivables and amounts payable to reinsurers included in other liabilities.

If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included in premiums, reinsurance and other receivables. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate.


14

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

The funds withheld liability represents amounts withheld by the Company in accordance with the terms of the reinsurance agreements. Under certain reinsurance agreements, the Company withholds the funds rather than transferring the underlying investments and, as a result, records a funds withheld liability in other liabilities. The Company recognizes interest on funds withheld, included in other expenses, at rates defined by the terms of the agreement which may be contractually specified or directly related to the investment portfolio.

Certain funds withheld arrangements may also contain embedded derivatives measured at fair value that are related to the investment return on the assets withheld. Embedded derivatives related to funds withheld arrangements are presented within policyholder account balances on the consolidated balance sheets, with changes in the estimated fair value reported in net derivative gains (losses).

Reinsurance arrangements may also contain features classified as MRBs, including reinsurance of guaranteed minimum benefits associated with variable annuity contracts.

The Company accounts for assumed reinsurance similar to directly written business.

Investments

Net Investment Income and Net Investment Gains (Losses)

Income from investments is reported in net investment income, unless otherwise stated herein. Gains and losses on sales of investments, impairment losses and changes in valuation allowances are reported in net investment gains (losses), unless otherwise stated herein.

Fixed Maturity Securities Available-For-Sale

The Company's fixed maturity securities are classified as available-for-sale and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of OCI, net of policy-related amounts and deferred income taxes. Publicly-traded security transactions are recorded on a trade date basis, while privately-placed and bank loan security transactions are recorded on a settlement date basis. Investment gains and losses on sales are determined on a specific identification basis.

Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premiums and accretion of discounts and is based on the estimated economic life of the securities, which for residential mortgage-backed securities ("RMBS"), commercial mortgage- backed securities ("CMBS") and asset-backed securities ("ABS") (collectively, "Structured Securities") considers the estimated timing and amount of prepayments of the underlying loans. The amortization of premium and accretion of discount of fixed maturity securities also takes into consideration call and maturity dates.

Amortization of premium and accretion of discount on Structured Securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed, and effective yields are recalculated when differences arise between the originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for Structured Securities are estimated using inputs obtained from third- party specialists and based on management's knowledge of the current market. For credit-sensitive Structured Securities and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. For all other Structured Securities, the effective yield is recalculated on a retrospective basis.

The Company regularly evaluates fixed maturity securities for declines in fair value to determine if a credit loss exists. This evaluation is based on management's case-by-case evaluation of the underlying reasons for the decline in fair value including, but not limited to, an analysis of the gross unrealized losses by severity and financial condition of the issuer.

For fixed maturity securities in an unrealized loss position, when the Company has the intent to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery, the amortized cost basis of the security is written down to fair value through net investment gains (losses).


15

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

For fixed maturity securities that do not meet the aforementioned criteria, management evaluates whether the decline in estimated fair value has resulted from credit losses or other factors. If the Company determines the decline in estimated fair value is due to credit losses, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as an allowance through net investment gains (losses). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the allowance related to other-than-credit factors is recorded in OCI.

Once a security specific allowance for credit losses is established, the present value of cash flows expected to be collected from the security continues to be reassessed. Any changes in the security specific allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in net investment gains (losses).

Fixed maturity securities are also evaluated to determine whether any amounts have become uncollectible. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses.

Mortgage Loans

Mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and any deferred fees or expenses, and net of an allowance for credit losses. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premiums and accretion of discounts. The allowance for credit losses for mortgage loans represents the Company's best estimate of expected credit losses over the remaining life of the loans and is determined using relevant available information from internal and external sources, relating to past events, current conditions, and a reasonable and supportable forecast.

Policy Loans

Policy loans are stated at unpaid principal balances. Interest income is recorded as earned using the contractual interest rate. Generally, accrued interest is capitalized on the policy's anniversary date. Any unpaid principal and accrued interest is deducted from the cash surrender value or the death benefit prior to settlement of the insurance policy.

Limited Partnerships and LLCs

The Company uses the equity method of accounting for investments when it has more than a minor ownership interest or more than a minor influence over the investee's operations; when the Company has virtually no influence over the investee's operations the investment is carried at estimated fair value. The Company generally recognizes its share of the equity method 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; while distributions on investments carried at estimated fair value are recognized as earned or received.

Short-term Investments

Short-term investments include securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase and are stated at estimated fair value or amortized cost, which approximates estimated fair value. The Company's short-term investments generally involve large dollar amounts that turn over quickly and have short maturities.

For the years ended December 31, 2024, 2023 and 2022, cash proceeds from sales, maturities and repayments of short-term investments were $1.1 billion, $1.1 billion and $976 million, respectively. For the years ended December 31, 2024, 2023 and 2022, cash payments on purchases of short-term investments were $1.7 billion, $1.4 billion and $611 million, respectively.

Other Invested Assets

Other invested assets consist principally of freestanding derivatives with positive estimated fair values which are described in "— Derivatives" below.


16

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

Securities Lending Program

Securities lending transactions whereby blocks of securities are loaned to third parties, primarily brokerage firms and commercial banks, are treated as financing arrangements and the associated liability is recorded at the amount of cash received. Income and expenses associated with securities lending transactions are reported as investment income and investment expense, respectively, in net investment income.

The Company obtains collateral at the inception of the loan, usually cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned and maintains it at a level greater than or equal to 100% for the duration of the loan. The Company monitors the estimated fair value of the securities loaned on a daily basis and additional collateral is obtained as necessary throughout the duration of the loan. Securities loaned under such transactions may be sold or re-pledged by the transferee. The Company is liable to return to the counterparties the cash collateral received.

Funding Agreements

The Company established liabilities for funding agreements associated with the Company's institutional spread margin business, which are equal to the unpaid principal balance, adjusted for any unamortized premium or discount. Liabilities related to funding agreements are reported in policyholder account balances.

Derivatives

Freestanding Derivatives

Freestanding derivatives are carried at estimated fair value on the Company's balance sheet either as assets in other invested assets or as liabilities in other liabilities. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

If a derivative is not designated or did not qualify as an accounting hedge, changes in the estimated fair value of the derivative are reported in net derivative gains (losses).

The Company generally reports cash received or paid for a derivative in the investing activity section of the statement of cash flows except for cash flows of certain derivative options with deferred premiums, which are reported in the financing activity section of the statement of cash flows.

Hedge Accounting

The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company's earnings are affected by the variability in cash flows of the hedged item.

To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument's effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship.

The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative or hedged item expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument.


17

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

When hedge accounting is discontinued the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). The changes in estimated fair value of derivatives previously recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company's earnings are affected by the variability in cash flows of the hedged item. When the hedged item matures or is sold, or the forecasted transaction is not probable of occurring, the Company immediately reclassifies any remaining balances in OCI to net derivative gains (losses).

Embedded Derivatives

The Company has index-linked annuities that are directly written or assumed through reinsurance contracts that contain embedded derivatives which are required to be separated from their host contracts and reported as derivatives. Certain funds withheld arrangements associated with reinsurance may also contain embedded derivatives. See "— Insurance Contract Obligations" and "— Reinsurance" for additional information on the accounting policies for embedded derivatives.

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In most cases, the exit price and the transaction (or entry) price will be the same at initial recognition.

In determining the estimated fair value of the Company's investments, fair values are based on unadjusted quoted prices for identical investments in active markets that are readily and regularly obtainable. When such quoted prices are not available, fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical investments, or other observable inputs. If these inputs are not available, or observable inputs are not determinable, unobservable inputs and/or adjustments to observable inputs requiring management judgment are used to determine the estimated fair value of investments.

Separate Accounts

Separate accounts underlying the Company's variable life and annuity contracts are reported at fair value. Assets in separate accounts supporting the contract liabilities are legally insulated from the Company's general account liabilities. Investments in these separate accounts are directed by the contract holder and all investment performance, net of contract fees and assessments, is passed through to the contract holder. Investment performance and the corresponding amounts credited to contract holders of such separate accounts are offset in the same line on the statements of operations.

Separate accounts that do not pass all investment performance to the contract holder, including those underlying certain index-linked annuities, are combined on a line-by-line basis with the Company's general account assets, liabilities, revenues and expenses. The accounting for investments in these separate accounts is consistent with the methodologies described herein for similar financial instruments held in the general account.

The Company receives asset-based distribution and service fees from mutual funds available to the variable life and annuity contract holders as investment options in its separate accounts. These fees are recognized in the period in which the related services are performed and are included in other revenues.

Income Tax

The Company's income tax provision was prepared following the modified separate return method. The modified separate return method applies the Accounting Standards Codification 740 — Income Taxes ("ASC 740") to the standalone financial statements of each member of the consolidated group as if the member were a separate taxpayer and a standalone enterprise, after providing benefits for losses. The Company's accounting for income taxes represents management's best estimate of various events and transactions. Current and deferred income taxes included herein and attributable to periods up until the Company's separation from MetLife, Inc. (together with its subsidiaries and affiliates, "MetLife") ("Separation") have been allocated to the Company in a manner that is systematic, rational and consistent with the asset and liability method prescribed by ASC 740.


18

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse.

The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established, as well as the amount of such allowances. When making such determination, the Company considers many factors, including the jurisdiction in which the deferred tax asset was generated, the length of time that carryforward can be utilized in the various taxing jurisdictions, future taxable income exclusive of reversing temporary differences and carryforwards, future reversals of existing taxable temporary differences, taxable income in prior carryback years, tax planning strategies and the nature, frequency, and amount of cumulative financial reporting income and losses in recent years.

The Inflation Reduction Act, which was enacted in 2022, established a 15% corporate alternative minimum tax ("CAMT") for corporations whose average annual adjusted financial statement income for any consecutive three — tax year period ending after December 31, 2021, and preceding the tax year exceeds $1.0 billion. The Company elects not to consider any future effects resulting from applicability of the CAMT when assessing the valuation allowance for regular deferred tax assets.

The Company may be required to change its provision for income taxes when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, the effect of changes in tax laws, tax regulations, or interpretations of such laws or regulations, is recognized in net income tax expense (benefit) in the period of change.

The Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded on the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included in other liabilities and are charged to earnings in the period that such determination is made.

The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax expense.

Litigation and Other Loss Contingencies

The Company is a party to or involved in a number of legal disputes, including litigation matters, as well as disputes or other matters involving third parties (e.g., vendors, reinsurers or tax or other authorities), and are subject in the ordinary course to a number of regulatory examinations and investigations. The Company reviews relevant information with respect to litigation and other loss contingencies related to these matters and establishes liabilities when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Legal costs are recognized as incurred.

In matters where it is not probable, but it is reasonably possible that a loss will be incurred and the amount of loss can be reasonably estimated, such losses or range of losses are disclosed, and no accrual is made. In the absence of sufficient information to support an assessment of a reasonably possible loss or range of loss, no accrual is made and no loss or range of loss is disclosed.

Other Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at estimated fair value or amortized cost, which approximates estimated fair value.


19

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

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

Employee Benefit Plans

Brighthouse Services, LLC ("Brighthouse Services"), an affiliate, sponsors qualified and non-qualified defined contribution plans, and New England Life Insurance Company ("NELICO"), an affiliate, sponsors certain frozen defined benefit pension and postretirement plans. Within its consolidated statement of operations, the Company has included expenses associated with its participants in these plans.

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. Except as noted below, there were no significant ASUs adopted during the year ended December 31, 2024.

In November 2023, the FASB issued new guidance on Segment Reporting Disclosures (ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07")). 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. The Company adopted this guidance during fiscal year 2024 on a retrospective basis.

Future Adoption of New Accounting Pronouncements

In November 2024, the FASB issued new guidance on income statement expense disclosures (ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses). This ASU requires public companies to disclose additional disaggregated information about expenses in the notes to financial statements at each interim and annual reporting period. This ASU is effective for fiscal years starting January 1, 2027, and for interim periods starting January 1, 2028. This ASU is required to be adopted prospectively with the option of retrospective application. The Company is currently evaluating the impact of this guidance on its financial statements.

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.

2. Segment Information

The Company is organized and provides its products and services through the following reportable segments: Annuities; Life; Run-off; and Corporate & Other. The Company's chief operating decision maker ("CODM") views and manages the business through these segments.

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 ULSG, structured settlements, pension risk transfer contracts, certain company-owned life insurance policies and certain funding agreements.


20

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

2. Segment Information (continued)

Corporate & Other

The Corporate & Other segment consists of activities related to funding agreements associated with the Company's institutional spread margin business, excess capital not allocated to the other 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.

In connection with the adoption of ASU 2023-07, the Company's presentation of segment information has been updated for all periods.

Financial Measure and Segment Accounting Policies

The Company's CODM is its Chief Executive Officer ("CEO"). The CEO uses adjusted earnings to evaluate segment performance and facilitate comparisons to industry results. 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 following items are 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 items are excluded from total expenses in calculating adjusted earnings:

•  Change in MRBs; and

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

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 consolidated financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below.

Segment investment and capitalization targets are based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company's variable annuity risk management strategy. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital ("RBC"). Assets in excess of those allocated to the Annuities, Life and Run-off segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment's respective invested assets.


21

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

2. Segment Information (continued)

The tables below provide information about the Company's segments, including significant segment expenses, and reconciliations to Net income (loss) attributable to Brighthouse Life Insurance Company.

   

Year Ended December 31, 2024

  
   

Annuities

  

Life

  

Run-off

   Corporate
& Other		  

Total

  
   

(In millions)

  

Total revenues

  

$

1,500

    

$

898

    

$

995

    

$

580

    

$

3,973

    

Less: Revenues excluded from adjusted earnings (1)

    

(3,350

)

    

(20

)

    

(599

)

    

(47

)

          

Less: Segment expenses:

  

Policyholder benefits and claims

    

486

      

548

      

1,105

      

—

            
Interest credited to policyholder account balances, excluding market value
adjustments		    

1,346

      

85

      

243

      

449

            

Amortization of DAC and VOBA

    

497

      

53

      

—

      

—

            

Interest expense on debt

    

—

      

—

      

—

      

67

            

Other expenses (2)

    

1,007

      

169

      

165

      

193

            

Less: Provision for income tax expense (benefit)

    

291

      

12

      

16

      

(55

)

          

Less: Net income (loss) attributable to noncontrolling interests

    

—

      

—

      

—

      

1

    

 

  

Adjusted earnings (loss)

  

$

1,223

    

$

51

    

$

65

    

$

(28

)

    

1,311

    

Adjustments for:

  

Net investment gains (losses)

                    

(298

)

  
Net derivative gains (losses), excluding investment hedge adjustments of
$30		                    

(3,718

)

  

Change in market risk benefits

                    

2,669

    

Market value adjustments

                    

13

    

Provision for income tax (expense) benefit

                    

279

    

Net income (loss) attributable to Brighthouse Life Insurance Company

                  

$

256

    

Interest revenue

  

$

2,850

    

$

420

    

$

1,234

    

$

626

            


22

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

2. Segment Information (continued)

   

Year Ended December 31, 2023

  
   

Annuities

  

Life

  

Run-off

   Corporate
& Other		  

Total

  
   

(In millions)

  

Total revenues

  

$

508

    

$

987

    

$

1,404

    

$

506

    

$

3,405

    

Less: Revenues excluded from adjusted earnings (1)

    

(3,932

)

    

(26

)

    

(239

)

    

(70

)

          

Less: Segment expenses:

  

Policyholder benefits and claims

    

508

      

609

      

1,301

      

—

            
Interest credited to policyholder account balances, excluding market value
adjustments		    

1,048

      

79

      

274

      

388

            

Amortization of DAC and VOBA

    

507

      

57

      

—

      

—

            

Interest expense on debt

    

—

      

—

      

—

      

70

            

Other expenses (2)

    

997

      

182

      

167

      

209

            

Less: Provision for income tax expense (benefit)

    

257

      

17

      

(22

)

    

(50

)

          

Less: Net income (loss) attributable to noncontrolling interests

    

—

      

—

      

—

      

1

            

Adjusted earnings (loss)

  

$

1,123

    

$

69

    

$

(77

)

  

$

(42

)

    

1,073

    

Adjustments for:

  

Net investment gains (losses)

                    

(242

)

  
Net derivative gains (losses), excluding investment hedge adjustments of
$105		                    

(4,025

)

  

Change in market risk benefits

                    

1,497

    

Market value adjustments

                    

(12

)

  

Provision for income tax (expense) benefit

                    

585

    

Net income (loss) attributable to Brighthouse Life Insurance Company

                  

$

(1,124

)

  

Interest revenue

  

$

2,558

    

$

391

    

$

1,141

    

$

575

            


23

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

2. Segment Information (continued)

   

Year Ended December 31, 2022

  
   

Annuities

  

Life

  

Run-off

   Corporate
& Other		  

Total

  
   

(In millions)

  

Total revenues

  

$

5,015

    

$

959

    

$

(198

)

  

$

386

    

$

6,162

    

Less: Revenues excluded from adjusted earnings (1)

    

967

      

(29

)

    

(1,901

)

    

67

            

Less: Segment expenses:

  

Policyholder benefits and claims

    

382

      

790

      

1,013

      

1

            
Interest credited to policyholder account balances, excluding market value
adjustments		    

889

      

57

      

290

      

163

            

Amortization of DAC and VOBA

    

505

      

63

      

—

      

—

            

Interest expense on debt

    

—

      

—

      

—

      

70

            

Other expenses (2)

    

981

      

110

      

292

      

241

            

Less: Provision for income tax expense (benefit)

    

244

      

(8

)

    

21

      

(154

)

          

Less: Net income (loss) attributable to noncontrolling interests

    

—

      

—

      

—

      

1

            

Adjusted earnings (loss)

  

$

1,047

    

$

(24

)

  

$

87

    

$

(3

)

    

1,107

    

Adjustments for:

  

Net investment gains (losses)

                    

(240

)

  
Net derivative gains (losses), excluding investment hedge adjustments of
$71		                    

(656

)

  

Change in market risk benefits

                    

4,105

    

Market value adjustments

                    

86

    

Provision for income tax (expense) benefit

                    

(692

)

  

Net income (loss) attributable to Brighthouse Life Insurance Company

                  

$

3,710

    

Interest revenue

  

$

2,254

    

$

396

    

$

1,166

    

$

319

            

(1)  For each reportable segment, certain revenues are excluded from adjusted earnings (loss), including net investment gains (losses) and net derivative gains (losses), excluding investment hedge adjustments.

(2)  Other expenses include corporate expense allocations directly attributable to each of the segments.


24

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

2. Segment Information (continued)

Total assets by segment were as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Annuities

  

$

160,887

    

$

157,614

    

Life

    

20,821

      

20,363

    

Run-off

    

24,894

      

26,849

    

Corporate & Other

    

21,989

      

21,378

    

Total

  

$

228,591

    

$

226,204

    

Total premiums, universal life and investment-type product policy fees and other revenues by major product group were as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Annuity products

  

$

2,001

    

$

1,890

    

$

1,796

    

Life insurance products

    

848

      

1,110

      

1,119

    

Other products

    

10

      

7

      

8

    

Total

  

$

2,859

    

$

3,007

    

$

2,923

    

Substantially all of the Company's premiums, universal life and investment-type product policy fees and other revenues originated in the U.S.

Revenues derived from any individual customer did not exceed 10% of premiums, universal life and investment-type product policy fees and other revenues for the years ended December 31, 2024, 2023 and 2022.


25

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

3. Insurance Liabilities

Liability for Future Policy Benefits

Information regarding LFPBs for non-participating traditional and limited-payment contracts was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
    Term and
Whole
Life
Insurance		   Income
Annuities		   Structured
Settlement
and
Pension
Risk
Transfer
Annuities		   Term and
Whole
Life
Insurance		   Income
Annuities		   Structured
Settlement
and
Pension
Risk
Transfer
Annuities		   Term and
Whole
Life
Insurance		   Income
Annuities		   Structured
Settlement
and
Pension
Risk
Transfer
Annuities		  
   

(Dollars in millions)

  

Present value of expected net premiums:

  

Balance, beginning of year

  

$

2,899

    

$

—

    

$

—

    

$

2,804

    

$

—

    

$

—

    

$

3,212

    

$

—

    

$

—

    

Beginning balance at original discount rate

    

3,162

      

—

      

—

      

3,146

      

—

      

—

      

2,964

      

—

      

—

    

Effect of model refinements

    

4

      

—

      

—

      

—

      

—

      

—

      

121

      

—

      

—

    

Effect of changes in cash flow assumptions

    

146

      

—

      

—

      

206

      

—

      

—

      

159

      

—

      

—

    
Effect of actual variances from expected
experience		    

8

      

—

      

—

      

(17

)

    

—

      

—

      

114

      

—

      

—

    

Adjusted beginning of year balance

    

3,320

      

—

      

—

      

3,335

      

—

      

—

      

3,358

      

—

      

—

    

Issuances

    

67

      

—

      

—

      

93

      

—

      

—

      

93

      

—

      

—

    

Interest accrual

    

110

      

—

      

—

      

108

      

—

      

—

      

112

      

—

      

—

    

Net premiums collected

    

(387

)

    

—

      

—

      

(374

)

    

—

      

—

      

(417

)

    

—

      

—

    

Ending balance at original discount rate

    

3,110

      

—

      

—

      

3,162

      

—

      

—

      

3,146

      

—

      

—

    

Effect of changes in discount rate assumptions

    

(352

)

    

—

      

—

      

(263

)

    

—

      

—

      

(342

)

    

—

      

—

    

Balance, end of year

  

$

2,758

    

$

—

    

$

—

    

$

2,899

    

$

—

    

$

—

    

$

2,804

    

$

—

    

$

—

    
Present value of expected future policy
benefits:		  

Balance, beginning of year

  

$

5,385

    

$

3,719

    

$

6,697

    

$

5,172

    

$

3,469

    

$

6,793

    

$

6,253

    

$

4,283

    

$

10,171

    

Beginning balance at original discount rate

    

5,905

      

3,993

      

7,085

      

5,816

      

3,848

      

7,410

      

5,682

      

3,817

      

8,165

    

Effect of model refinements

    

10

      

—

      

—

      

—

      

—

      

—

      

134

      

—

      

(278

)

  

Effect of changes in cash flow assumptions

    

235

      

(23

)

    

82

      

296

      

—

      

—

      

179

      

55

      

(157

)

  
Effect of actual variances from expected
experience		    

(5

)

    

—

      

(10

)

    

(15

)

    

(21

)

    

(47

)

    

150

      

(21

)

    

(23

)

  

Adjusted beginning of year balance

    

6,145

      

3,970

      

7,157

      

6,097

      

3,827

      

7,363

      

6,145

      

3,851

      

7,707

    

Issuances

    

72

      

400

      

—

      

99

      

369

      

—

      

101

      

220

      

—

    

Interest accrual

    

213

      

148

      

305

      

211

      

139

      

314

      

216

      

144

      

327

    

Benefit payments

    

(522

)

    

(397

)

    

(586

)

    

(502

)

    

(342

)

    

(592

)

    

(646

)

    

(367

)

    

(624

)

  

Ending balance at original discount rate

    

5,908

      

4,121

      

6,876

      

5,905

      

3,993

      

7,085

      

5,816

      

3,848

      

7,410

    

Effect of changes in discount rate assumptions

    

(663

)

    

(393

)

    

(758

)

    

(520

)

    

(274

)

    

(388

)

    

(644

)

    

(379

)

    

(617

)

  

Balance, end of year

  

$

5,245

    

$

3,728

    

$

6,118

    

$

5,385

    

$

3,719

    

$

6,697

    

$

5,172

    

$

3,469

    

$

6,793

    
Net liability for future policy benefits, end of
year		  

$

2,487

    

$

3,728

    

$

6,118

    

$

2,486

    

$

3,719

    

$

6,697

    

$

2,368

    

$

3,469

    

$

6,793

    

Less: Reinsurance recoverable, end of year

    

19

      

31

      

59

      

24

      

30

      

65

      

32

      

25

      

68

    
Net liability for future policy benefits, after
reinsurance recoverable		  

$

2,468

    

$

3,697

    

$

6,059

    

$

2,462

    

$

3,689

    

$

6,632

    

$

2,336

    

$

3,444

    

$

6,725

    

Weighted-average duration of liability

     7.6 years       7.9 years       11.6 years       8.8 years       8.2 years       11.6 years       8.5 years       8.5 years       11.6 years    

Weighted-average interest accretion rate

    

3.92

%

    

4.04

%

    

4.46

%

    

3.91

%

    

3.99

%

    

4.46

%

    

3.94

%

    

3.89

%

    

4.45

%

  

Current discount rate

    

5.42

%

    

5.48

%

    

5.64

%

    

4.94

%

    

4.95

%

    

5.03

%

    

5.26

%

    

5.27

%

    

5.32

%

  
Gross premiums or assessments recognized
during period		  

$

563

    

$

485

    

$

—

    

$

595

    

$

472

    

$

—

    

$

625

    

$

243

    

$

—

    

Expected future gross premiums, undiscounted

  

$

5,714

    

$

—

    

$

—

    

$

5,999

    

$

—

    

$

—

    

$

6,535

    

$

—

    

$

—

    

Expected future gross premiums, discounted

  

$

4,244

    

$

—

    

$

—

    

$

4,535

    

$

—

    

$

—

    

$

4,875

    

$

—

    

$

—

    
Expected future benefit payments,
undiscounted		  

$

8,031

    

$

5,759

    

$

13,336

    

$

8,148

    

$

5,616

    

$

13,767

    

$

8,015

    

$

5,434

    

$

14,418

    

Expected future benefit payments, discounted

  

$

5,908

    

$

4,121

    

$

6,876

    

$

5,905

    

$

3,993

    

$

7,085

    

$

5,816

    

$

3,848

    

$

7,410

    


26

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

3. Insurance Liabilities (continued)

The measurement of LFPBs can be significantly impacted by changes in assumptions for policyholder behavior. As part of the 2024 and 2023 annual actuarial reviews ("AAR"), the Company updated assumptions regarding mortality and lapses for term and non-participating whole life insurance. The impact from changes in assumptions is presented in effect of changes in cash flow assumptions in the table above.

Information regarding the additional insurance liabilities for universal life-type contracts with secondary guarantees was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(Dollars in millions)

  

Balance, beginning of year

  

$

7,607

    

$

6,935

    

$

7,168

    

Beginning balance before the effect of unrealized gains and losses

    

7,784

      

7,175

      

6,731

    

Effect of changes in cash flow assumptions

    

895

      

52

      

(37

)

  

Effect of actual variances from expected experience

    

167

      

145

      

179

    

Adjusted beginning of year balance

    

8,846

      

7,372

      

6,873

    

Interest accrual

    

406

      

357

      

333

    

Net assessments collected

    

446

      

414

      

416

    

Benefit payments

    

(421

)

    

(359

)

    

(447

)

  

Ending balance before the effect of unrealized gains and losses

    

9,277

      

7,784

      

7,175

    

Effect of unrealized gains and losses

    

(291

)

    

(177

)

    

(240

)

  

Balance, end of year

    

8,986

      

7,607

      

6,935

    

Less: Reinsurance recoverable, end of year

    

1,535

      

1,438

      

1,384

    

Net additional liability, after reinsurance recoverable

  

$

7,451

    

$

6,169

    

$

5,551

    

Weighted-average duration of liability

     6.6 years       6.7 years       6.7 years    

Weighted-average interest accretion rate

    

4.94

%

    

4.92

%

    

4.90

%

  

Gross assessments recognized during period

  

$

1,083

    

$

1,064

    

$

1,070

    

The measurement of liabilities for secondary guarantees can be significantly impacted by changes in assumptions for policyholder behavior, as well as the expected general account rate of return, which is driven by the Company's assumption for long-term treasury yields. The Company's practice of projecting treasury yields uses a mean reversion approach that assumes that long-term interest rates are less influenced by short-term fluctuations and are only changed when sustained interim deviations are expected. As part of the 2024 and 2023 AARs, the Company updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses and withdrawals. In 2024, the Company also increased the long-term general account earned rate, driven by an increase in the mean reversion rate, from 3.75% to 4.00%. The impact from changes in assumptions, excluding the effects on the ULSG liability for profits followed by losses, is presented in effect of changes in cash flow assumptions in the table above.


27

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

3. Insurance Liabilities (continued)

A reconciliation of the net LFPBs for non-participating traditional and limited-payment contracts and the additional insurance liabilities for universal life-type contracts with secondary guarantees reported in the preceding rollforward tables to LFPBs on the consolidated balance sheets was as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Liabilities reported in the preceding rollforward tables

  

$

21,319

    

$

20,509

    

Long-term care insurance (1)

    

5,190

      

5,581

    

ULSG liabilities, including liability for profits followed by losses

    

875

      

2,427

    

Participating whole life insurance (2)

    

2,969

      

2,849

    

Deferred profit liabilities

    

428

      

475

    

Other

    

304

      

308

    

Total liability for future policy benefits

  

$

31,085

    

$

32,149

    

(1)  Includes liabilities related to fully reinsured individual long-term care insurance. See Notes 2 and 7.

(2)  Participating whole life insurance uses an interest assumption based on the non-forfeiture interest rate, ranging from 3.5% to 4.0%, and mortality rates guaranteed in calculating the cash surrender values described in such contracts, and also includes a liability for terminal dividends. Participating whole life insurance represented 3% of the Company's life insurance in-force at both December 31, 2024 and 2023, and 39% and 40% of gross traditional life insurance premiums for the years ended December 31, 2024 and 2023, respectively.


28

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

3. Insurance Liabilities (continued)

Policyholder Account Balances

Information regarding policyholder account balances was as follows:

    Universal
Life
Insurance		   Variable
Annuities
(1)		   Index-
linked
Annuities		   Fixed Rate
Annuities		  

ULSG

   Company-
Owned Life
Insurance
(1)		  
   

(Dollars in millions)

  

Year Ended December 31, 2024

  

Balance, beginning of year

  

$

1,980

    

$

4,111

    

$

41,627

    

$

14,672

    

$

5,052

    

$

653

    

Premiums and deposits

    

229

      

73

      

8,228

      

1,127

      

645

      

—

    

Surrenders and withdrawals

    

(56

)

    

(616

)

    

(5,532

)

    

(1,356

)

    

(23

)

    

—

    

Benefit payments

    

(46

)

    

(93

)

    

(324

)

    

(345

)

    

(70

)

    

(9

)

  

Net transfers from (to) separate account

    

32

      

102

      

—

      

—

      

—

      

500

    

Interest credited

    

82

      

109

      

673

      

567

      

163

      

29

    

Policy charges

    

(193

)

    

(19

)

    

(23

)

    

—

      

(988

)

    

(7

)

  

Changes related to embedded derivatives

    

—

      

—

      

3,956

      

—

      

—

      

—

    

Balance, end of year

  

$

2,028

    

$

3,667

    

$

48,605

    

$

14,665

    

$

4,779

    

$

1,166

    

Weighted-average crediting rate (2)

    

4.10

%

    

2.81

%

    

1.79

%

    

3.84

%

    

3.32

%

    

3.63

%

  

Year Ended December 31, 2023

  

Balance, beginning of year

  

$

2,100

    

$

4,664

    

$

33,897

    

$

14,274

    

$

5,307

    

$

641

    

Premiums and deposits

    

210

      

75

      

7,183

      

2,694

      

660

      

—

    

Surrenders and withdrawals

    

(129

)

    

(647

)

    

(3,732

)

    

(2,405

)

    

(23

)

    

—

    

Benefit payments

    

(59

)

    

(101

)

    

(240

)

    

(377

)

    

(85

)

    

(8

)

  

Net transfers from (to) separate account

    

18

      

14

      

—

      

—

      

—

      

1

    

Interest credited

    

40

      

129

      

445

      

486

      

208

      

28

    

Policy charges

    

(200

)

    

(23

)

    

(11

)

    

—

      

(1,015

)

    

(9

)

  

Changes related to embedded derivatives

    

—

      

—

      

4,085

      

—

      

—

      

—

    

Balance, end of year

  

$

1,980

    

$

4,111

    

$

41,627

    

$

14,672

    

$

5,052

    

$

653

    

Weighted-average crediting rate (2)

    

2.03

%

    

2.91

%

    

1.47

%

    

3.31

%

    

4.02

%

    

4.33

%

  

Year Ended December 31, 2022

  

Balance, beginning of year

  

$

2,134

    

$

4,475

    

$

32,000

    

$

11,849

    

$

5,569

    

$

646

    

Premiums and deposits

    

199

      

145

      

6,632

      

3,676

      

697

      

—

    

Surrenders and withdrawals

    

(49

)

    

(453

)

    

(2,220

)

    

(904

)

    

(32

)

    

—

    

Benefit payments

    

(59

)

    

(104

)

    

(180

)

    

(345

)

    

(84

)

    

(8

)

  

Net transfers from (to) separate account

    

21

      

131

      

—

      

—

      

—

      

(13

)

  

Interest credited

    

56

      

493

      

392

      

(2

)

    

197

      

23

    

Policy charges

    

(202

)

    

(23

)

    

(8

)

    

—

      

(1,040

)

    

(7

)

  

Changes related to embedded derivatives

    

—

      

—

      

(2,719

)

    

—

      

—

      

—

    

Balance, end of year

  

$

2,100

    

$

4,664

    

$

33,897

    

$

14,274

    

$

5,307

    

$

641

    

Weighted-average crediting rate (2)

    

2.65

%

    

10.91

%

    

1.16

%

    

(0.02

)%

    

3.62

%

    

3.41

%

  

(1)  Includes liabilities related to separate account products where the contract holder elected a general account investment option.

(2)  Excludes the effects of embedded derivatives related to index-linked crediting rates.


29

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

3. Insurance Liabilities (continued)

A reconciliation of policyholder account balances reported in the preceding rollforward table to the liability for policyholder account balances on the consolidated balance sheets was as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Policyholder account balances reported in the preceding rollforward table

  

$

74,910

    

$

68,095

    

Funding agreements classified as investment contracts

    

11,002

      

11,115

    

Institutional group annuities

    

370

      

—

    

Other investment contract liabilities

    

880

      

983

    

Total policyholder account balances

  

$

87,162

    

$

80,193

    


30

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

3. Insurance Liabilities (continued)

The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums was as follows at:

Range of Guaranteed Minimum Crediting Rate

   At Guaranteed
Minimum		   1 to 50 Basis
Points Above		   51 to 150 Basis
Points Above		   Greater than
150 Basis
Points Above		  

Total

  
   

(In millions)

  

December 31, 2024

      

Annuities (1):

      

Less than 2.00

  

$

516

    

$

112

    

$

230

    

$

8,749

    

$

9,607

    

2.00 to 3.99

    

6,633

      

439

      

416

      

334

      

7,822

    

Greater than 3.99

    

781

      

—

      

—

      

—

      

781

    

Total

  

$

7,930

    

$

551

    

$

646

    

$

9,083

    

$

18,210

    

Life insurance (2) (3):

      

Less than 2.00

  

$

—

    

$

—

    

$

—

    

$

308

    

$

308

    
2.00 to 3.99    

—

      

471

      

47

      

128

      

646

    

Greater than 3.99

    

1,020

      

—

      

—

      

—

      

1,020

    

Total

  

$

1,020

    

$

471

    

$

47

    

$

436

    

$

1,974

    

ULSG (3):

      

Less than 2.00

  

$

—

    

$

—

    

$

—

    

$

—

    

$

—

    
2.00 to 3.99    

1,052

      

1,386

      

1,602

      

238

      

4,278

    

Greater than 3.99

    

484

      

—

      

—

      

—

      

484

    

Total

  

$

1,536

    

$

1,386

    

$

1,602

    

$

238

    

$

4,762

    

December 31, 2023

      

Annuities (1):

      

Less than 2.00

  

$

645

    

$

204

    

$

301

    

$

7,632

    

$

8,782

    
2.00 to 3.99    

8,125

      

233

      

201

      

307

      

8,866

    

Greater than 3.99

    

872

      

—

      

—

      

—

      

872

    

Total

  

$

9,642

    

$

437

    

$

502

    

$

7,939

    

$

18,520

    

Life insurance (2) (3):

      

Less than 2.00

  

$

—

    

$

—

    

$

—

    

$

236

    

$

236

    
2.00 to 3.99    

—

      

441

      

49

      

132

      

622

    

Greater than 3.99

    

1,077

      

—

      

—

      

—

      

1,077

    

Total

  

$

1,077

    

$

441

    

$

49

    

$

368

    

$

1,935

    

ULSG (3):

      

Less than 2.00

  

$

—

    

$

—

    

$

—

    

$

—

    

$

—

    
2.00 to 3.99    

1,134

      

1,485

      

1,663

      

254

      

4,536

    

Greater than 3.99

    

506

      

—

      

—

      

—

      

506

    

Total

  

$

1,640

    

$

1,485

    

$

1,663

    

$

254

    

$

5,042

    

(1)  Includes policyholder account balances for fixed rate annuities and the fixed account portion of variable annuities.

(2)  Includes policyholder account balances for retained asset accounts, universal life policies and the fixed account portion of universal variable life insurance policies.

(3)  Amounts are gross of policy loans.

See Note 5 for information regarding net amount at risk and cash surrender values.


31

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

3. Insurance Liabilities (continued)

Obligations Under Funding Agreements

Institutional Spread Margin Business

Brighthouse Life Insurance Company has issued unsecured fixed and floating rate funding agreements to certain special purpose entities that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. The Company had obligations outstanding under these funding agreements of $5.5 billion at both December 31, 2024 and 2023.

Brighthouse Life Insurance Company established a secured funding agreement-backed repurchase agreement program in January 2024. Brighthouse Life Insurance Company may enter into repurchase agreements with bank counterparties and the proceeds of the repurchase agreements are then used by a special purpose entity to purchase funding agreements from Brighthouse Life Insurance Company. The Company had obligations under this program of $500 million at December 31, 2024.

Brighthouse Life Insurance Company has a secured funding agreement program with the Federal Home Loan Bank ("FHLB") of Atlanta and the Federal Agricultural Mortgage Corporation and its affiliate Farmer Mac Mortgage Securities Corporation ("Farmer Mac"). Funding agreements are issued to FHLB and Farmer Mac in exchange for cash, for which these programs have been granted liens on certain assets, some of which are in their custody to collateralize the Company's obligations under the funding agreements. Upon any event of default by the Company, the program recovery on the collateral is limited to the amount of the Company's liabilities to FHLB and Farmer Mac, respectively. The Company had obligations outstanding under these programs of $5.0 billion and $5.1 billion at December 31, 2024 and 2023, respectively.

See Note 8 for information on invested assets pledged as collateral in connection with funding agreements.

Inactive Funding Agreement Programs

Brighthouse Life Insurance Company had obligations outstanding under inactive funding agreement programs of $25 million and $525 million at December 31, 2024 and 2023, respectively.


32

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

4. Market Risk Benefits

Information regarding MRB assets and liabilities associated with variable annuities was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(Dollars in millions)

  

Balance, beginning of year

  

$

9,722

    

$

9,997

    

$

15,726

    

Balance, beginning of year, before effect of changes in nonperformance risk

    

7,348

      

8,253

      

11,639

    

Decrements

    

(180

)

    

(176

)

    

16

    

Effect of changes in future expected assumptions

    

(53

)

    

260

      

212

    

Effect of actual different from expected experience

    

140

      

186

      

(48

)

  

Effect of changes in interest rates

    

(1,940

)

    

(427

)

    

(8,397

)

  

Effect of changes in fund returns

    

(973

)

    

(2,203

)

    

3,806

    

Issuances

    

(4

)

    

(7

)

    

(47

)

  

Effect of changes in risk margin

    

(72

)

    

(34

)

    

(152

)

  

Aging of the block and other

    

970

      

1,496

      

1,224

    

Balance, end of year, before effect of changes in nonperformance risk

    

5,236

      

7,348

      

8,253

    

Effect of changes in nonperformance risk

    

2,014

      

2,374

      

1,744

    

Balance, end of year

    

7,250

      

9,722

      

9,997

    

Less: Reinsurance recoverable, end of year

    

17

      

43

      

71

    

Balance, end of year, net of reinsurance (1)

  

$

7,233

    

$

9,679

    

$

9,926

    

Weighted-average attained age of contract holder

     73.9 years       73.0 years       71.8 years    

(1)  Amounts represent the sum of MRB assets and MRB liabilities presented on the consolidated balance sheets at December 31, 2024, 2023 and 2022, with the exception of $21 million, $9 million and $2 million, respectively, of index-linked annuities not included in this table.

Market conditions, including, but not limited to, changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital markets inputs, as well as changes in nonperformance risk, may result in significant fluctuations in the estimated fair value of the guarantees. As part of the 2024 AAR, the Company updated assumptions regarding policyholder behavior, mortality and separate account fund allocations. As part of the 2023 AAR, the Company updated assumptions regarding policyholder behavior, mortality, separate account fund allocations and volatility. The impact from changes in assumptions is presented in effect of changes in future expected assumptions in the table above.


33

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

5. Separate Accounts

Separate Accounts

Information regarding separate account liabilities was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
    Variable
Annuities		   Universal
Life
Insurance		   Company
-Owned
Life
Insurance		   Variable
Annuities		   Universal
Life
Insurance		   Company
-Owned
Life
Insurance		   Variable
Annuities		   Universal
Life
Insurance		   Company
-Owned
Life
Insurance		  
   

(In millions)

  

Balance, beginning of year

  

$

77,086

    

$

2,276

    

$

2,148

    

$

74,845

    

$

1,970

    

$

1,919

    

$

101,108

    

$

2,576

    

$

2,367

    

Premiums and deposits

    

828

      

80

      

—

      

762

      

84

      

—

      

1,199

      

91

      

—

    

Surrenders and withdrawals

    

(7,836

)

    

(80

)

    

(21

)

    

(6,073

)

    

(68

)

    

(20

)

    

(5,965

)

    

(55

)

    

(16

)

  

Benefit payments

    

(1,511

)

    

(25

)

    

(22

)

    

(1,391

)

    

(18

)

    

(28

)

    

(1,298

)

    

(24

)

    

(33

)

  

Investment performance

    

8,150

      

346

      

251

      

11,071

      

405

      

327

      

(17,878

)

    

(519

)

    

(356

)

  

Policy charges

    

(2,109

)

    

(81

)

    

(62

)

    

(2,098

)

    

(78

)

    

(58

)

    

(2,227

)

    

(78

)

    

(61

)

  
Net transfers from (to) general
account		    

(102

)

    

(32

)

    

(500

)

    

(14

)

    

(18

)

    

(1

)

    

(131

)

    

(21

)

    

13

    

Other

    

(23

)

    

—

      

5

      

(16

)

    

(1

)

    

9

      

37

      

—

      

5

    

Balance, end of year

  

$

74,483

    

$

2,484

    

$

1,799

    

$

77,086

    

$

2,276

    

$

2,148

    

$

74,845

    

$

1,970

    

$

1,919

    

A reconciliation of separate account liabilities reported in the preceding rollforward table to the separate account liabilities balance on the consolidated balance sheets was as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Separate account liabilities reported in the preceding rollforward table

  

$

78,766

    

$

81,510

    

Variable income annuities

    

217

      

161

    

Pension risk transfer annuities

    

23

      

19

    

Total separate account liabilities

  

$

79,006

    

$

81,690

    

The aggregate estimated fair value of assets, by major investment asset category, supporting separate accounts was as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Equity securities

  

$

78,793

    

$

81,417

    

Fixed maturity securities

    

207

      

259

    

Cash and cash equivalents

    

2

      

7

    

Other assets

    

4

      

7

    

Total aggregate estimated fair value of assets

  

$

79,006

    

$

81,690

    


34

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

5. Separate Accounts (continued)

Net Amount at Risk and Cash Surrender Values

Information regarding the net amount at risk and cash surrender value for insurance products was as follows at:

    Universal
Life
Insurance		   Variable
Annuities		   Index-
linked
Annuities		   Fixed Rate
Annuities		  

ULSG

   Company-
Owned Life
Insurance		  
   

(In millions)

  

December 31, 2024

  
Account balances reported in the preceding rollforward
tables:		  

Policyholder account balances

  

$

2,028

    

$

3,667

    

$

48,605

    

$

14,665

    

$

4,779

    

$

1,166

    

Separate account liabilities

    

2,484

      

74,483

      

—

      

—

      

—

      

1,799

    

Total account balances

  

$

4,512

    

$

78,150

    

$

48,605

    

$

14,665

    

$

4,779

    

$

2,965

    

Net amount at risk

  

$

20,958

    

$

12,757

      

N/A

      

N/A

    

$

63,580

    

$

2,649

    

Cash surrender value

  

$

4,303

    

$

77,761

    

$

47,013

    

$

14,361

    

$

4,316

    

$

2,134

    

December 31, 2023

  
Account balances reported in the preceding rollforward
tables:		  

Policyholder account balances

  

$

1,980

    

$

4,111

    

$

41,627

    

$

14,672

    

$

5,052

    

$

653

    

Separate account liabilities

    

2,276

      

77,086

      

—

      

—

      

—

      

2,148

    

Total account balances

  

$

4,256

    

$

81,197

    

$

41,627

    

$

14,672

    

$

5,052

    

$

2,801

    

Net amount at risk

  

$

22,214

    

$

13,156

      

N/A

      

N/A

    

$

65,299

    

$

2,644

    

Cash surrender value

  

$

4,049

    

$

80,756

    

$

39,270

    

$

14,068

    

$

4,498

    

$

2,579

    

December 31, 2022

  
Account balances reported in the preceding rollforward
tables:		  

Policyholder account balances

  

$

2,100

    

$

4,664

    

$

33,897

    

$

14,274

    

$

5,307

    

$

641

    

Separate account liabilities

    

1,970

      

74,845

      

—

      

—

      

—

      

1,919

    

Total account balances

  

$

4,070

    

$

79,509

    

$

33,897

    

$

14,274

    

$

5,307

    

$

2,560

    

Net amount at risk

  

$

23,818

    

$

16,334

      

N/A

      

N/A

    

$

66,926

    

$

3,368

    

Cash surrender value

  

$

3,789

    

$

79,222

    

$

31,293

    

$

13,723

    

$

4,671

    

$

2,344

    

Products may contain both separate account and general account fund options; accordingly, net amount at risk and cash surrender value reported in the table above relate to the total account balance for each respective product grouping.


35

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

6. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

Deferred Policy Acquisition Costs and Value of Business Acquired

See Note 1 for a description of capitalized acquisition costs.

Information regarding DAC and VOBA was as follows:

    Variable
Annuities		   Fixed Rate
Annuities		   Index-linked
Annuities		   Term and
Whole Life
Insurance		   Universal Life
Insurance		  
   

(In millions)

  

DAC:

  

Balance at January 1, 2022

  

$

2,614

    

$

88

    

$

1,081

    

$

397

    

$

114

    

Capitalization

    

54

      

31

      

330

      

(1

)

    

10

    

Amortization

    

(254

)

    

(12

)

    

(198

)

    

(49

)

    

(9

)

  

Balance at December 31, 2022

    

2,414

      

107

      

1,213

      

347

      

115

    

Capitalization

    

36

      

14

      

344

      

2

      

13

    

Amortization

    

(233

)

    

(11

)

    

(225

)

    

(43

)

    

(9

)

  

Balance at December 31, 2023

    

2,217

      

110

      

1,332

      

306

      

119

    

Capitalization

    

39

      

8

      

373

      

4

      

13

    

Amortization

    

(216

)

    

(3

)

    

(243

)

    

(39

)

    

(10

)

  

Balance at December 31, 2024

  

$

2,040

    

$

115

    

$

1,462

    

$

271

    

$

122

    

VOBA:

  

Balance at January 1, 2022

  

$

377

    

$

70

    

$

—

    

$

6

    

$

39

    

Amortization

    

(36

)

    

(5

)

    

—

      

(1

)

    

(4

)

  

Balance at December 31, 2022

    

341

      

65

      

—

      

5

      

35

    

Amortization

    

(32

)

    

(6

)

    

—

      

(1

)

    

(4

)

  

Balance at December 31, 2023

    

309

      

59

      

—

      

4

      

31

    

Amortization

    

(30

)

    

(4

)

    

—

      

(1

)

    

(4

)

  

Balance at December 31, 2024

  

$

279

    

$

55

    

$

—

    

$

3

    

$

27

    

Total DAC and VOBA:

  

Balance at December 31, 2024

  

$

2,319

    

$

170

    

$

1,462

    

$

274

    

$

149

    

Balance at December 31, 2023

  

$

2,526

    

$

169

    

$

1,332

    

$

310

    

$

150

    

Balance at December 31, 2022

  

$

2,755

    

$

172

    

$

1,213

    

$

352

    

$

150

    

Deferred Sales Inducements

Information regarding DSI, included in other assets, was as follows:

   

December 31,

  
   

2024

  

2023

  

2022

  
    Variable
Annuities		   Fixed Rate
Annuities		   Variable
Annuities		   Fixed Rate
Annuities		   Variable
Annuities		   Fixed Rate
Annuities		  
   

(In millions)

  

Balance, beginning of year

  

$

209

    

$

8

    

$

233

    

$

9

    

$

259

    

$

10

    

Capitalization

    

1

      

—

      

1

      

—

      

1

      

—

    

Amortization

    

(21

)

    

(2

)

    

(25

)

    

(1

)

    

(27

)

    

(1

)

  

Balance, end of year

  

$

189

    

$

6

    

$

209

    

$

8

    

$

233

    

$

9

    


36

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

6. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued)

Unearned Revenue

Information regarding unearned revenue, included in other policy-related balances, was as follows:

   

December 31,

  
   

2024

  

2023

  

2022

  
    Universal
Life
Insurance		  

ULSG

   Variable
Annuities		   Universal
Life
Insurance		  

ULSG

   Variable
Annuities		   Universal
Life
Insurance		  

ULSG

   Variable
Annuities		  
   

(In millions)

  

Balance, beginning of year

  

$

167

    

$

612

    

$

66

    

$

143

    

$

488

    

$

73

    

$

118

    

$

344

    

$

79

    

Capitalization

    

34

      

166

      

—

      

35

      

174

      

—

      

35

      

181

      

2

    

Amortization

    

(11

)

    

(63

)

    

(7

)

    

(11

)

    

(50

)

    

(7

)

    

(10

)

    

(37

)

    

(8

)

  

Balance, end of year

  

$

190

    

$

715

    

$

59

    

$

167

    

$

612

    

$

66

    

$

143

    

$

488

    

$

73

    

7. Reinsurance

The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products and also as a provider of reinsurance for some insurance products issued by NELICO, as well as former affiliated and unaffiliated companies. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth.

Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed in Note 8.

Annuities and Life

For annuities, the Company reinsures portions of the living and death benefit guarantees issued in connection with certain variable annuities to unaffiliated reinsurers. Under these reinsurance agreements, the Company pays a reinsurance premium generally based on fees associated with the guarantees collected from policyholders and receives reimbursement for benefits paid or accrued in excess of account values, subject to certain limitations. The value of MRBs on the ceded risk is determined using a methodology consistent with the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer. The Company also assumes 100% of the living and death benefit guarantees issued in connection with certain variable annuities issued by NELICO. The Company cedes certain fixed rate annuities to unaffiliated third-party reinsurers and assumes certain index-linked annuities from an unaffiliated third- party insurer. These reinsurance arrangements are structured on a coinsurance basis and are reported as deposit accounting.

For its life products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis or on a quota share basis. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as well as specific coverages. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specified characteristics. On a case-by-case basis, the Company may retain up to $20 million per life and reinsure 100% of amounts in excess of the amount the Company retains. The Company also reinsures 90% of the risk associated with participating whole life policies to a former affiliate and assumes certain term life policies and universal life policies with secondary death benefit guarantees issued by a former affiliate. The Company evaluates its reinsurance programs routinely and may increase or decrease its retention at any time.

Corporate & Other

The Company reinsures, through 100% quota share reinsurance agreements, certain run-off long-term care and workers' compensation business written by the Company. At December 31, 2024, the Company had $5.4 billion of reinsurance recoverables associated with its reinsured long-term care business. The reinsurer has established trust accounts for the Company's benefit to secure their obligations under the reinsurance agreements. Additionally, the Company is indemnified for losses and certain other payment obligations it might incur with respect to such reinsured long-term care insurance business.


37

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

7. Reinsurance (continued)

Catastrophe Coverage

The Company has exposure to catastrophes which could contribute to significant fluctuations in the Company's results of operations. The Company uses excess of retention and quota share reinsurance agreements to provide greater diversification of risk and minimize exposure to larger risks.

Reinsurance Recoverables

The Company reinsures its business through a diversified group of primarily highly rated reinsurers. The Company analyzes recent trends in arbitration and litigation outcomes in disputes, if any, with its reinsurers and monitors ratings and the financial strength of its reinsurers. In addition, the reinsurance recoverable balance due from each reinsurer and the recoverability of such balance is evaluated as part of this overall monitoring process.

The Company generally secures large reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance, which at both December 31, 2024 and 2023 were not significant. The Company had $6.1 billion and $6.0 billion of unsecured reinsurance recoverable balances with third-party reinsurers at December 31, 2024 and 2023, respectively.

The Company records an allowance for credit losses which is a valuation account that reduces reinsurance recoverable balances to present the net amount expected to be collected from reinsurers. When assessing the creditworthiness of the Company's reinsurance recoverable balances, beyond the analysis of individual claims disputes, the Company considers the financial strength of its reinsurers using public ratings and ratings reports, current existing credit enhancements to reinsurance agreements and the statutory and GAAP financial statements of the reinsurers. Impairments are then determined based on probable and estimable defaults. The Company had an allowance for credit losses of $3 million on its reinsurance recoverable balances at both December 31, 2024 and 2023.

At December 31, 2024, the Company had $19.6 billion of net ceded reinsurance recoverables with third-party reinsurers. Of this total, $16.9 billion, or 86%, were with the Company's five largest ceded reinsurers, including $4.3 billion of net ceded reinsurance recoverables which were unsecured. At December 31, 2023, the Company had $18.7 billion of net ceded reinsurance recoverables with third-party reinsurers. Of this total, $16.7 billion, or 89%, were with the Company's five largest ceded reinsurers, including $4.2 billion of net ceded reinsurance recoverables which were unsecured.


38

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

7. Reinsurance (continued)

The amounts on the consolidated statements of operations include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Premiums

  

Direct premiums

  

$

1,367

    

$

1,458

    

$

1,321

    

Reinsurance assumed

    

20

      

20

      

8

    

Reinsurance ceded

    

(628

)

    

(667

)

    

(688

)

  

Net premiums

  

$

759

    

$

811

    

$

641

    

Universal life and investment-type product policy fees

  

Direct universal life and investment-type product policy fees

  

$

2,440

    

$

2,402

    

$

2,525

    

Reinsurance assumed

    

52

      

48

      

44

    

Reinsurance ceded

    

(891

)

    

(672

)

    

(693

)

  

Net universal life and investment-type product policy fees

  

$

1,601

    

$

1,778

    

$

1,876

    

Other revenues

  

Direct other revenues

  

$

209

    

$

202

    

$

220

    

Reinsurance assumed

    

4

      

3

      

3

    

Reinsurance ceded

    

286

      

213

      

183

    

Net other revenues

  

$

499

    

$

418

    

$

406

    

Policyholder benefits and claims

  

Direct policyholder benefits and claims

  

$

3,772

    

$

3,608

    

$

3,788

    

Reinsurance assumed

    

94

      

123

      

134

    

Reinsurance ceded

    

(1,727

)

    

(1,313

)

    

(1,736

)

  

Net policyholder benefits and claims

  

$

2,139

    

$

2,418

    

$

2,186

    

Change in market risk benefits

  

Direct change in market risk benefits

  

$

(2,597

)

  

$

(1,436

)

  

$

(3,942

)

  

Reinsurance assumed

    

(105

)

    

(92

)

    

(214

)

  

Reinsurance ceded

    

33

      

31

      

51

    

Net change in market risk benefits

  

$

(2,669

)

  

$

(1,497

)

  

$

(4,105

)

  

Other expenses

  

Direct other expenses

  

$

1,572

    

$

1,625

    

$

1,758

    

Reinsurance assumed

    

21

      

25

      

—

    

Reinsurance ceded

    

8

      

(25

)

    

(64

)

  

Net other expenses

  

$

1,601

    

$

1,625

    

$

1,694

    


39

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

7. Reinsurance (continued)

The amounts on the consolidated balance sheets include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows at:

   

December 31,

  
   

2024

  

2023

  
   

Direct

  

Assumed

  

Ceded

   Total
Balance
Sheet		  

Direct

  

Assumed

  

Ceded

   Total
Balance
Sheet		  
   

(In millions)

  

Assets

  
Premiums, reinsurance and other receivables
(net of allowance for credit losses)		  

$

340

    

$

32

    

$

20,437

    

$

20,809

    

$

289

    

$

33

    

$

19,067

    

$

19,389

    

Market risk benefit assets

  

$

1,075

    

$

—

    

$

17

    

$

1,092

    

$

613

    

$

—

    

$

43

    

$

656

    

Liabilities

  

Future policy benefits

  

$

30,925

    

$

160

    

$

—

    

$

31,085

    

$

31,989

    

$

160

    

$

—

    

$

32,149

    

Policyholder account balances

  

$

83,019

    

$

4,143

    

$

—

    

$

87,162

    

$

75,893

    

$

4,300

    

$

—

    

$

80,193

    

Market risk benefit liabilities

  

$

8,095

    

$

251

    

$

—

    

$

8,346

    

$

9,972

    

$

372

    

$

—

    

$

10,344

    

Other policy-related balances

  

$

2,109

    

$

1,568

    

$

—

    

$

3,677

    

$

2,023

    

$

1,596

    

$

—

    

$

3,619

    

Other liabilities

  

$

6,774

    

$

9

    

$

1,677

    

$

8,460

    

$

6,526

    

$

11

    

$

1,235

    

$

7,772

    

Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on reinsurance were $8.4 billion and $7.4 billion at December 31, 2024 and 2023, respectively. The deposit liabilities on reinsurance were $3.9 billion and $4.0 billion at December 31, 2024 and 2023, respectively.

Related Party Reinsurance Transactions

Information regarding the significant effects of assumed reinsurance with NELICO included on the consolidated statements of operations was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Premiums

  

$

8

    

$

6

    

$

2

    

Universal life and investment-type product policy fees

  

$

(1

)

  

$

(1

)

  

$

(1

)

  

Other revenues

  

$

1

    

$

1

    

$

2

    

Policyholder benefits and claims

  

$

14

    

$

39

    

$

22

    

Change in market risk benefits

  

$

(112

)

  

$

(92

)

  

$

(214

)

  

Other expenses

  

$

(3

)

  

$

—

    

$

(6

)

  


40

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

7. Reinsurance (continued)

Information regarding the significant effects of assumed reinsurance with NELICO included on the consolidated balance sheets was as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Assets

  

Premiums, reinsurance and other receivables (net of allowance for credit losses)

  

$

32

    

$

28

    

Liabilities

  

Future policy benefits

  

$

51

    

$

47

    

Market risk benefit liabilities

  

$

235

    

$

367

    

Other policy-related balances

  

$

14

    

$

13

    

Other liabilities

  

$

(16

)

  

$

(4

)

  

Related party reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. There were no deposit assets on related party reinsurance at both December 31, 2024 and 2023. The deposit liabilities on related party reinsurance were $97 million and $112 million at December 31, 2024 and 2023, respectively.

8. Investments

See Notes 1 and 10 for a description of the Company's accounting policies for investments and 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:

   

December 31, 2024

  

December 31, 2023

  

 

Amortized

   Allowance
for Credit		  

Gross Unrealized

   Estimated
Fair		  

Amortized

   Allowance
for Credit		  

Gross Unrealized

   Estimated
Fair		  
   

Cost

  

Losses

  

Gains

  

Losses

  

Value

  

Cost

  

Losses

  

Gains

  

Losses

  

Value

  
   

(In millions)

  

U.S. corporate

  

$

40,437

    

$

47

    

$

212

    

$

3,865

    

$

36,737

    

$

38,303

    

$

15

    

$

383

    

$

3,332

    

$

35,339

    

Foreign corporate

    

13,203

      

26

      

53

      

1,468

      

11,762

      

12,769

      

—

      

89

      

1,276

      

11,582

    

RMBS

    

8,056

      

4

      

45

      

867

      

7,230

      

8,127

      

4

      

48

      

805

      

7,366

    

U.S. government and agency

    

7,112

      

—

      

39

      

691

      

6,460

      

8,446

      

—

      

285

      

517

      

8,214

    

ABS

    

6,348

      

—

      

33

      

75

      

6,306

      

6,509

      

—

      

23

      

131

      

6,401

    

CMBS

    

6,702

      

2

      

7

      

415

      

6,292

      

6,940

      

2

      

2

      

601

      

6,339

    

State and political subdivision

    

3,671

      

—

      

78

      

367

      

3,382

      

3,958

      

—

      

153

      

298

      

3,813

    

Foreign government

    

1,036

      

—

      

24

      

100

      

960

      

1,077

      

—

      

41

      

87

      

1,031

    

Total fixed maturity securities

  

$

86,565

    

$

79

    

$

491

    

$

7,848

    

$

79,129

    

$

86,129

    

$

21

    

$

1,024

    

$

7,047

    

$

80,085

    

The Company held non-income producing fixed maturity securities with an estimated fair value of $30 million and $52 million at December 31, 2024 and 2023, respectively.


41

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at December 31, 2024:

    Due in One
Year or Less		   Due After One
Year Through
Five Years		   Due After Five
Years
Through Ten
Years		   Due After Ten
Years		   Structured
Securities		   Total Fixed
Maturity
Securities		  
   

(In millions)

  

Amortized cost

  

$

3,837

    

$

19,627

    

$

13,501

    

$

28,494

    

$

21,106

    

$

86,565

    

Estimated fair value

  

$

3,821

    

$

19,066

    

$

12,266

    

$

24,148

    

$

19,828

    

$

79,129

    

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity.

Continuous Gross Unrealized Losses for Fixed Maturity Securities by Sector

The estimated fair value and gross unrealized losses of fixed maturity securities in an unrealized loss position, by sector and by length of time that the securities have been in a continuous unrealized loss position, were as follows at:

   

December 31, 2024

  

December 31, 2023

  
   

Less than 12 Months

  

12 Months or Greater

  

Less than 12 Months

  

12 Months or Greater

  
    Estimated
Fair
Value		   Gross
Unrealized
Losses		   Estimated
Fair
Value		   Gross
Unrealized
Losses		   Estimated
Fair
Value		   Gross
Unrealized
Losses		   Estimated
Fair
Value		   Gross
Unrealized
Losses		  
   

(Dollars in millions)

  

U.S. corporate

  

$

10,758

    

$

719

    

$

17,329

    

$

3,146

    

$

4,549

    

$

409

    

$

22,435

    

$

2,923

    

Foreign corporate

    

3,269

      

351

      

5,502

      

1,117

      

1,010

      

74

      

8,229

      

1,202

    

RMBS

    

1,227

      

82

      

4,624

      

785

      

413

      

21

      

5,749

      

784

    

U.S. government and agency

    

2,384

      

116

      

1,858

      

575

      

445

      

8

      

3,453

      

509

    

CMBS

    

1,326

      

90

      

4,338

      

325

      

411

      

33

      

5,713

      

568

    

ABS

    

717

      

10

      

1,076

      

65

      

572

      

3

      

3,355

      

128

    

State and political subdivision

    

871

      

63

      

1,435

      

304

      

460

      

31

      

1,636

      

267

    

Foreign government

    

273

      

29

      

433

      

71

      

113

      

6

      

620

      

81

    

Total fixed maturity securities

  

$

20,825

    

$

1,460

    

$

36,595

    

$

6,388

    

$

7,973

    

$

585

    

$

51,190

    

$

6,462

    
Total number of securities in an
unrealized loss position		    

3,356

    

 

    

5,195

    

 

    

1,339

    

 

    

6,958

    

 

  


42

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Allowance for Credit Losses for Fixed Maturity Securities

Evaluation and Measurement Methodologies

For fixed maturity securities in an unrealized loss position, management first assesses whether the Company intends to sell, or whether it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to estimated fair value through net investment gains (losses). For fixed maturity securities that do not meet the aforementioned criteria, management evaluates whether the decline in estimated fair value has resulted from credit losses or other factors. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the allowance for credit loss evaluation process include, but are not limited to: (i) the extent to which estimated fair value is less than amortized cost; (ii) any changes to the rating of the security by a rating agency; (iii) adverse conditions specifically related to the security, industry or geographic area; and (iv) payment structure of the fixed maturity security and the likelihood of the issuer being able to make payments in the future or the issuer's failure to make scheduled interest and principal payments. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss is deemed to exist and an allowance for credit losses is recorded, limited by the amount that the estimated fair value is less than the amortized cost basis, with a corresponding charge to net investment gains (losses). Any unrealized losses that have not been recorded through an allowance for credit losses are recognized in OCI.

Once a security specific allowance for credit losses is established, the present value of cash flows expected to be collected from the security continues to be reassessed. Any changes in the security specific allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in net investment gains (losses).

Fixed maturity securities are also evaluated to determine whether any amounts have become uncollectible. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses.

Accrued interest receivables are presented separate from the amortized cost basis of fixed maturity securities. An allowance for credit losses is not estimated on an accrued interest receivable, rather receivable balances 90-days past due are deemed uncollectible and are written off with a corresponding reduction to net investment income. The accrued interest receivable on fixed maturity securities totaled $665 million and $648 million at December 31, 2024 and 2023, respectively, and is included in accrued investment income.

Fixed maturity securities are also evaluated to determine if they qualify as purchased financial assets with credit deterioration ("PCD"). To determine if the credit deterioration experienced since origination is more than insignificant, both (i) the extent of the credit deterioration and (ii) any rating agency downgrades are evaluated. For securities categorized as PCD assets, the present value of cash flows expected to be collected from the security are compared to the par value of the security. If the present value of cash flows expected to be collected is less than the par value, credit losses are embedded in the purchase price of the PCD asset. In this situation, both an allowance for credit losses and amortized cost gross-up is recorded, limited by the amount that the estimated fair value is less than the grossed-up amortized cost basis. Any difference between the purchase price and the present value of cash flows is amortized or accreted into net investment income over the life of the PCD asset. Any subsequent PCD asset allowance for credit losses is evaluated in a manner similar to the process described above for fixed maturity securities.

Current Period Evaluation

Based on the Company's current evaluation of its fixed maturity securities in an unrealized loss position and the current intent or requirement to sell, the Company recorded an allowance for credit losses of $79 million, relating to 20 securities, at December 31, 2024. Management concluded that for all other fixed maturity securities in an unrealized loss position, the unrealized loss was not due to issuer-specific credit-related factors and as a result was recognized in OCI. Where unrealized losses have not been recognized into income, it is primarily because the securities' bond issuer(s) are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in estimated fair value is largely due to changes in interest rates and non-issuer specific credit spreads. These issuers continued to make timely principal and interest payments and the estimated fair value is expected to recover as the securities approach maturity.


43

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Rollforward of the Allowance for Credit Losses for Fixed Maturity Securities by Sector

The changes in the allowance for credit losses for fixed maturity securities by sector were as follows:

    U.S.
Corporate		  

RMBS

  

CMBS

   Foreign
Corporate		  

Total

  
   

(In millions)

  

Balance at December 31, 2022

  

$

1

    

$

1

    

$

3

    

$

1

    

$

6

    

Allowance on securities where credit losses were not previously recorded

    

15

      

3

      

—

      

—

      

18

    

Reductions for securities sold

    

(1

)

    

—

      

—

      

—

      

(1

)

  
Change in allowance on securities with an allowance recorded in a
previous period		    

—

      

—

      

(1

)

    

—

      

(1

)

  

Write-offs charged against allowance (1)

    

—

      

—

      

—

      

(1

)

    

(1

)

  

Balance at December 31, 2023

    

15

      

4

      

2

      

—

      

21

    

Allowance on securities where credit losses were not previously recorded

    

29

      

1

      

—

      

26

      

56

    

Reductions for securities sold

    

—

      

—

      

—

      

—

      

—

    
Change in allowance on securities with an allowance recorded in a
previous period		    

3

      

(1

)

    

—

      

—

      

2

    

Write-offs charged against allowance (1)

    

—

      

—

      

—

      

—

      

—

    

Balance at December 31, 2024

  

$

47

    

$

4

    

$

2

    

$

26

    

$

79

    

(1)  The Company recorded total write-offs of $12 million and $8 million for the years ended December 31, 2024 and 2023, respectively.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

   

December 31,

  
   

2024

  

2023

  
    Carrying
Value		   % of
Total		   Carrying
Value		   % of
Total		  
   

(Dollars in millions)

  

Commercial

  

$

13,326

      

57.3

%

  

$

13,189

      

58.7

%

  

Agricultural

    

4,563

      

19.6

      

4,416

      

19.6

    

Residential

    

5,543

      

23.8

      

5,007

      

22.3

    

Total mortgage loans (1)

    

23,432

      

100.7

      

22,612

      

100.6

    

Allowance for credit losses

    

(178

)

    

(0.7

)

    

(137

)

    

(0.6

)

  

Total mortgage loans, net

  

$

23,254

      

100.0

%

  

$

22,475

      

100.0

%

  

(1)  Purchases of mortgage loans from third parties were $1.0 billion and $311 million for the years ended December 31, 2024 and 2023, respectively, and were primarily comprised of residential mortgage loans.

Allowance for Credit Losses for Mortgage Loans

Evaluation and Measurement Methodologies

The allowance for credit losses is a valuation account that is deducted from the mortgage loan's amortized cost basis to present the net amount expected to be collected on the mortgage loan. The loan balance, or a portion of the loan balance, is written-off against the allowance when management believes this amount is uncollectible.


44

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Accrued interest receivables are presented separate from the amortized cost basis of mortgage loans. An allowance for credit losses is generally not estimated on an accrued interest receivable, rather when a loan is placed in nonaccrual status the associated accrued interest receivable balance is written off with a corresponding reduction to net investment income. The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $132 million and $122 million at December 31, 2024 and 2023, respectively.

The allowance for credit losses is estimated using relevant available information, from internal and external sources, relating to past events, current conditions, and a reasonable and supportable forecast. Historical credit loss experience provides the basis for estimating expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics and environmental conditions. A reasonable and supportable forecast period of two years is used with an input reversion period of one year.

Mortgage loans are evaluated in each of the three portfolio segments to determine the allowance for credit losses. The loan-level loss rates are determined using individual loan terms and characteristics, risk pools/internal ratings, national economic forecasts, prepayment speeds, and estimated default and loss severity. The resulting loss rates are applied to the mortgage loan's amortized cost to generate an allowance for credit losses. In certain situations, the allowance for credit losses is measured as the difference between the loan's amortized cost and liquidation value of the collateral. These situations include collateral dependent loans, modifications, foreclosure probable loans, and loans with dissimilar risk characteristics.

Mortgage loans are also evaluated to determine if they qualify as PCD assets. To determine if the credit deterioration experienced since origination is more than insignificant, the extent of credit deterioration is evaluated. All re-performing/ modified loan ("RPL") pools purchased after December 31, 2019 are determined to have been acquired with evidence of more than insignificant credit deterioration since origination and are classified as PCD assets. RPLs are pools of residential mortgage loans acquired at a discount or premium which have both credit and non-credit components. For PCD mortgage loans, the allowance for credit losses is determined using a similar methodology described above, except the loss-rate is determined at the pool level instead of the individual loan level. The initial allowance for credit losses, determined on a collective basis, is then allocated to the individual loans. The initial amortized cost of the loan is grossed-up to reflect the sum of the loan's purchase price and allowance for credit losses. The difference between the grossed-up amortized cost basis and the par value of the loan is a non-credit discount or premium, which is accreted or amortized into net investment income over the remaining life of the loan. Any subsequent PCD mortgage loan allowance for credit losses is evaluated in a manner similar to the process described above for each of the three portfolio segments.

Rollforward of the Allowance for Credit Losses for Mortgage Loans by Portfolio Segment

The changes in the allowance for credit losses by portfolio segment were as follows:

   

Commercial

  

Agricultural

  

Residential

  

Total

  
   

(In millions)

  

Balance at December 31, 2022

  

$

49

    

$

15

    

$

55

    

$

119

    

Current period provision

    

24

      

5

      

(6

)

    

23

    

Charge-offs, net of recoveries

    

(4

)

    

(1

)

    

—

      

(5

)

  

Balance at December 31, 2023

    

69

      

19

      

49

      

137

    

Current period provision

    

50

      

11

      

(7

)

    

54

    

Charge-offs, net of recoveries

    

(13

)

    

—

      

—

      

(13

)

  

Balance at December 31, 2024

  

$

106

    

$

30

    

$

42

    

$

178

    


45

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Credit Quality of Mortgage Loans by Portfolio Segment

The amortized cost of mortgage loans by year of origination and credit quality indicator was as follows at:

   

2024

  

2023

  

2022

  

2021

  

2020

  

Prior

  

Total

  
   

(In millions)

  

December 31, 2024

      

Commercial mortgage loans

      

Loan-to-value ratios:

  

Less than 65%

  

$

640

    

$

199

    

$

279

    

$

1,850

    

$

196

    

$

2,844

    

$

6,008

    
65% to 75%    

208

      

—

      

1,022

      

713

      

62

      

1,171

      

3,176

    
76% to 80%    

—

      

—

      

117

      

201

      

174

      

601

      

1,093

    

Greater than 80%

    

—

      

—

      

972

      

388

      

—

      

1,689

      

3,049

    

Total commercial mortgage loans

    

848

      

199

      

2,390

      

3,152

      

432

      

6,305

      

13,326

    

Agricultural mortgage loans

      

Loan-to-value ratios:

  

Less than 65%

    

408

      

203

      

594

      

1,073

      

400

      

1,632

      

4,310

    
65% to 75%    

—

      

18

      

80

      

113

      

6

      

19

      

236

    
76% to 80%    

—

      

—

      

—

      

—

      

1

      

—

      

1

    

Greater than 80%

    

—

      

—

      

—

      

—

      

—

      

16

      

16

    

Total agricultural mortgage loans

    

408

      

221

      

674

      

1,186

      

407

      

1,667

      

4,563

    

Residential mortgage loans

      

Performing

    

586

      

222

      

1,268

      

1,640

      

146

      

1,563

      

5,425

    

Nonperforming

    

1

      

—

      

44

      

21

      

1

      

51

      

118

    

Total residential mortgage loans

    

587

      

222

      

1,312

      

1,661

      

147

      

1,614

      

5,543

    

Total

  

$

1,843

    

$

642

    

$

4,376

    

$

5,999

    

$

986

    

$

9,586

    

$

23,432

    


46

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

   

2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Total

  
   

(In millions)

  

December 31, 2023

      

Commercial mortgage loans

      

Loan-to-value ratios:

  

Less than 65%

  

$

206

    

$

655

    

$

1,823

    

$

177

    

$

1,239

    

$

2,628

    

$

6,728

    
65% to 75%    

—

      

935

      

1,079

      

222

      

261

      

1,157

      

3,654

    
76% to 80%    

—

      

427

      

76

      

39

      

209

      

563

      

1,314

    

Greater than 80%

    

—

      

400

      

227

      

—

      

150

      

716

      

1,493

    

Total commercial mortgage loans

    

206

      

2,417

      

3,205

      

438

      

1,859

      

5,064

      

13,189

    

Agricultural mortgage loans

      

Loan-to-value ratios:

  

Less than 65%

    

202

      

571

      

1,132

      

452

      

505

      

1,265

      

4,127

    
65% to 75%    

1

      

127

      

108

      

6

      

30

      

17

      

289

    
76% to 80%    

—

      

—

      

—

      

—

      

—

      

—

      

—

    

Greater than 80%

    

—

      

—

      

—

      

—

      

—

      

—

      

—

    

Total agricultural mortgage loans

    

203

      

698

      

1,240

      

458

      

535

      

1,282

      

4,416

    

Residential mortgage loans

      

Performing

    

105

      

1,286

      

1,669

      

145

      

204

      

1,508

      

4,917

    

Nonperforming

    

—

      

22

      

22

      

1

      

2

      

43

      

90

    

Total residential mortgage loans

    

105

      

1,308

      

1,691

      

146

      

206

      

1,551

      

5,007

    

Total

  

$

514

    

$

4,423

    

$

6,136

    

$

1,042

    

$

2,600

    

$

7,897

    

$

22,612

    

The loan-to-value ratio is a measure commonly used to assess the quality of commercial and agricultural mortgage loans. The loan-to-value ratio compares the amount of the loan to the estimated fair value of the underlying property collateralizing the loan and is commonly expressed as a percentage. A loan-to-value ratio less than 100% indicates an excess of collateral value over the loan amount. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. Performing status is a measure commonly used to assess the quality of residential mortgage loans. A loan is considered performing when the borrower makes consistent and timely payments.

The amortized cost of commercial mortgage loans by debt-service coverage ratio was as follows at:

   

December 31,

  
   

2024

  

2023

  
    Amortized
Cost		   % of
Total		   Amortized
Cost		   % of
Total		  
   

(Dollars in millions)

  

Debt-service coverage ratios:

  

Greater than 1.20x

  

$

12,029

      

90.3

%

  

$

12,082

      

91.6

%

  
1.00x - 1.20x    

801

      

6.0

      

702

      

5.3

    

Less than 1.00x

    

496

      

3.7

      

405

      

3.1

    

Total

  

$

13,326

      

100.0

%

  

$

13,189

      

100.0

%

  

The debt-service coverage ratio compares a property's net operating income to its debt-service payments. Debt-service coverage ratios less than 1.00 times indicate that property operations do not generate enough income to cover the loan's current debt payments. A debt-service coverage ratio greater than 1.00 times indicates an excess of net operating income over the debt-service payments.


47

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Past Due Mortgage Loans by Portfolio Segment

The Company has a high-quality, well-performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both December 31, 2024 and 2023. Delinquency is defined consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days; and agricultural mortgage loans — 90 days.

The aging of the amortized cost of past due mortgage loans by portfolio segment was as follows at:

   

December 31,

  
   

2024

  

2023

  
   

Commercial

  

Agricultural

  

Residential

  

Total

  

Commercial

  

Agricultural

  

Residential

  

Total

  
   

(In millions)

  

Current

  

$

13,206

    

$

4,538

    

$

5,423

    

$

23,167

    

$

13,172

    

$

4,400

    

$

4,915

    

$

22,487

    
30-59 days past due    

—

      

—

      

2

      

2

      

—

      

—

      

2

      

2

    
60-89 days past due    

—

      

—

      

36

      

36

      

—

      

—

      

30

      

30

    
90-179 days past due    

21

      

9

      

36

      

66

      

—

      

—

      

23

      

23

    
180+ days past due    

99

      

16

      

46

      

161

      

17

      

16

      

37

      

70

    

Total

  

$

13,326

    

$

4,563

    

$

5,543

    

$

23,432

    

$

13,189

    

$

4,416

    

$

5,007

    

$

22,612

    

Mortgage Loans in Nonaccrual Status by Portfolio Segment

Mortgage loans are placed in a nonaccrual status if there are concerns regarding collectability of future payments or the loan is past due, unless the past due loan is well collateralized.

The amortized cost of mortgage loans in a nonaccrual status by portfolio segment was as follows at:

   

Commercial

  

Agricultural

  

Residential (1)

  

Total

  
   

(In millions)

  

December 31, 2024

  

$

120

    

$

25

    

$

118

    

$

263

    

December 31, 2023

  

$

17

    

$

—

    

$

90

    

$

107

    

(1)  The Company had $3 million of mortgage loans in nonaccrual status for which there was no related allowance for credit losses at December 31, 2024. The Company did not have any mortgage loans in nonaccrual status for which there was no related allowance for credit losses at December 31, 2023.

Current period investment income on mortgage loans in nonaccrual status was $6 million and $2 million for December 31, 2024 and 2023, respectively.

Modified Mortgage Loans by Portfolio Segment

Under certain circumstances, modifications are granted to nonperforming mortgage loans. Generally, the types of concessions may include interest rate reduction, term extension, principal forgiveness, or a combination of all three.

As of December 31, 2024, the Company has $386 million of commercial mortgage loans that were modified under a term extension during the year which represent 2% of the carrying value of total mortgage loans. All commercial mortgage loans that were modified are current as of December 31, 2024. The Company did not have a significant amount of agricultural and residential mortgage loans modified during the year ended December 31, 2024. The Company did not have a significant amount of mortgage loans modified during the year ended December 31, 2023.

Other Invested Assets

Over 75% of other invested assets is comprised of freestanding derivatives with positive estimated fair values. See Note 9 for information about freestanding derivatives with positive estimated fair values. Other invested assets also includes the Company's investment in company-owned life insurance, FHLB stock, leveraged leases and tax credit and renewable energy partnerships.


48

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Leveraged Leases

The carrying value of leveraged leases was $60 million and $47 million at December 31, 2024 and 2023, respectively. The allowance for credit losses was less than $1 million and $13 million at December 31, 2024 and 2023, respectively. Rental receivables are generally due in periodic installments. The payment periods for leveraged leases generally range from zero to eight years. For rental receivables, the primary credit quality indicator is whether the rental receivable is performing or nonperforming, which is assessed monthly. Nonperforming rental receivables are generally defined as those that are 90 days or more past due. At both December 31, 2024 and 2023, all leveraged leases were performing.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities, and the effect on future policy benefits that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in accumulated other comprehensive income (loss) ("AOCI").

The components of net unrealized investment gains (losses), included in AOCI, were as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Fixed maturity securities

  

$

(7,357

)

  

$

(6,023

)

  

$

(8,632

)

  

Derivatives

    

460

      

344

      

628

    

Other

    

(7

)

    

(7

)

    

(7

)

  

Subtotal

    

(6,904

)

    

(5,686

)

    

(8,011

)

  

Amounts allocated from:

  

Future policy benefits

    

977

      

696

      

992

    

Deferred income tax benefit (expense)

    

1,245

      

1,048

      

1,474

    

Net unrealized investment gains (losses)

  

$

(4,682

)

  

$

(3,942

)

  

$

(5,545

)

  

The changes in net unrealized investment gains (losses) were as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Balance at January 1,

  

$

(3,942

)

  

$

(5,545

)

  

$

5,229

    

Unrealized investment gains (losses) during the year

    

(1,218

)

    

2,325

      

(16,555

)

  

Unrealized investment gains (losses) relating to:

  

Future policy benefits

    

281

      

(296

)

    

2,917

    

Deferred income tax benefit (expense)

    

197

      

(426

)

    

2,864

    

Balance at December 31,

  

$

(4,682

)

  

$

(3,942

)

  

$

(5,545

)

  

Change in net unrealized investment gains (losses)

  

$

(740

)

  

$

1,603

    

$

(10,774

)

  

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company's equity, other than the U.S. government and its agencies, at both December 31, 2024 and 2023.


49

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Securities Lending

Elements of the securities lending program are presented below at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Securities on loan: (1)

  

Amortized cost

  

$

3,582

    

$

3,420

    

Estimated fair value

  

$

3,127

    

$

3,194

    

Cash collateral received from counterparties (2)

  

$

3,210

    

$

3,277

    

Reinvestment portfolio — estimated fair value

  

$

3,217

    

$

3,246

    

(1)  Included in fixed maturity securities.

(2)  Included in payables for collateral under securities loaned and other transactions.

The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at:

   

December 31, 2024

  

December 31, 2023

  
   

Open (1)

   1 Month
or Less		   1 to 6
Months		  

Total

  

Open (1)

   1 Month
or Less		   1 to 6
Months		  

Total

  
   

(In millions)

  

U.S. government and agency

  

$

490

    

$

1,467

    

$

886

    

$

2,843

    

$

647

    

$

655

    

$

1,584

    

$

2,886

    

U.S. corporate

    

—

      

248

      

—

      

248

      

—

      

252

      

—

      

252

    

Foreign corporate

    

—

      

105

      

—

      

105

      

—

      

130

      

—

      

130

    

Foreign government

    

—

      

14

      

—

      

14

      

—

      

9

      

—

      

9

    

Total

  

$

490

    

$

1,834

    

$

886

    

$

3,210

    

$

647

    

$

1,046

    

$

1,584

    

$

3,277

    

(1)  The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral.

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized in normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at December 31, 2024 was $478 million, primarily comprised of U.S. government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement.

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, ABS, U.S. and foreign corporate securities, U.S. government and agency securities, non-agency RMBS and CMBS) with 51% invested in agency RMBS, U.S. government and agency securities and cash and cash equivalents at December 31, 2024. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.


50

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral at estimated fair value were as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Invested assets on deposit (regulatory deposits) (1)

  

$

6,246

    

$

8,590

    

Invested assets held in trust (reinsurance agreements) (2)

    

8,226

      

7,103

    

Invested assets pledged as collateral (3)

    

12,471

      

13,979

    

Total invested assets on deposit, held in trust and pledged as collateral

  

$

26,943

    

$

29,672

    

(1)  The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $68 million and $102 million of the assets on deposit represents restricted cash and cash equivalents at December 31, 2024 and 2023, respectively.

(2)  The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which $332 million and $117 million of the assets held in trust balance represents restricted cash and cash equivalents at December 31, 2024 and 2023, respectively.

(3)  The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 3) and derivative transactions (see Note 9).

See "— Securities Lending" for information regarding securities on loan. In addition, the Company's investment in FHLB common stock, which is considered restricted until redeemed by the issuer, was $222 million and $245 million at redemption value at December 31, 2024 and 2023, respectively.

Collectively Significant Equity Method Investments

The Company holds investments in limited partnerships and LLCs consisting of leveraged buy-out funds, private equity funds, joint ventures and other funds. The portion of these investments accounted for under the equity method had a carrying value of $4.8 billion at December 31, 2024. The Company's maximum exposure to loss related to these equity method investments is the carrying value of these investments plus unfunded commitments of $1.3 billion at December 31, 2024. The Company's investments in limited partnerships and LLCs are generally of a passive nature in that the Company does not participate in the management of the entities.

As described in Note 1, the Company generally records its share of earnings in its equity method investments using a three-month lag methodology and within net investment income. Aggregate net investment income from these equity method investments exceeded 10% of the Company's consolidated pre-tax income (loss) for each of the years ended December 31, 2024, 2023 and 2022. This aggregated summarized financial data does not represent the Company's proportionate share of the assets, liabilities or earnings of such entities.

The aggregated summarized financial data presented below reflects the latest available financial information and is as of and for the years ended December 31, 2024, 2023 and 2022. Aggregate total assets of these entities totaled $903.8 billion and $799.0 billion at December 31, 2024 and 2023, respectively. Aggregate total liabilities of these entities totaled $78.5 billion and $56.7 billion at December 31, 2024 and 2023, respectively. Aggregate net income (loss) of these entities totaled $60.1 billion, $24.8 billion and ($12.8) billion for the years ended December 31, 2024, 2023 and 2022, respectively. Aggregate net income (loss) from the underlying entities in which the Company invests is primarily comprised of investment income, including recurring investment income and realized and unrealized investment gains (losses).

Variable Interest Entities

A variable interest entity ("VIE") is a legal entity that does not have sufficient equity at risk to finance its activities or is structured such that equity investors lack the ability to make significant decisions relating to the entity's operations through voting rights or do not substantively participate in the gains and losses of the entity.


51

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

The Company enters into various arrangements with VIEs in the normal course of business and has invested in legal entities that are VIEs. VIEs are consolidated when it is determined that the Company is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both (i) the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In addition, the evaluation of whether a legal entity is a VIE and if the Company is a primary beneficiary includes a review of the capital structure of the VIE, the related contractual relationships and terms, the nature of the operations and purpose of the VIE, the nature of the VIE interests issued and the Company's involvement with the entity.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either December 31, 2024 or 2023.

The carrying amount and maximum exposure to loss related to the VIEs for which the Company has concluded that it holds a variable interest, but is not the primary beneficiary, were as follows at:

   

December 31,

  
   

2024

  

2023

  
    Carrying
Amount		   Maximum
Exposure
to Loss		   Carrying
Amount		   Maximum
Exposure
to Loss		  
   

(In millions)

  

Fixed maturity securities

  

$

14,248

    

$

15,330

    

$

15,386

    

$

16,611

    

Limited partnerships and LLCs

    

4,223

      

5,265

      

4,220

      

5,242

    

Total

  

$

18,471

    

$

20,595

    

$

19,606

    

$

21,853

    

The Company's investments in unconsolidated VIEs are described below.

Fixed Maturity Securities

The Company invests in U.S. corporate bonds, foreign corporate bonds and Structured Securities issued by VIEs. The Company is not obligated to provide any financial or other support to these VIEs, other than the original investment. The Company's involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer, or investment manager, which are generally viewed as having the power to direct the activities that most significantly impact the economic performance of the VIE, nor does the Company function in any of these roles. The Company does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity; as a result, the Company has determined it is not the primary beneficiary, or consolidator, of the VIE. The Company's maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See "— Fixed Maturity Securities Available-For-Sale" for information on these securities.

Limited Partnerships and LLCs

The Company holds investments in certain limited partnerships and LLCs which are VIEs. These ventures include limited partnerships, LLCs, private equity funds, and, to a lesser extent, tax credit and renewable energy partnerships. The Company is not considered the primary beneficiary, or consolidator, when its involvement takes the form of a limited partner interest and is restricted to a role of a passive investor, as a limited partner's interest does not provide the Company with any substantive kick-out or participating rights, nor does it provide the Company with the power to direct the activities of the fund. The Company's maximum exposure to loss on these investments is limited to: (i) the amount invested in debt or equity of the VIE and (ii) commitments to the VIE, as described in Note 15.


52

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Net Investment Income

The components of net investment income were as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Investment income:

  

Fixed maturity securities

  

$

3,708

    

$

3,481

    

$

3,044

    

Equity securities

    

3

      

2

      

2

    

Mortgage loans

    

1,000

      

957

      

840

    

Policy loans

    

48

      

45

      

42

    

Limited partnerships and LLCs (1)

    

357

      

167

      

263

    

Cash, cash equivalents and short-term investments

    

225

      

181

      

56

    

Other

    

104

      

84

      

66

    

Total investment income

    

5,445

      

4,917

      

4,313

    

Less: Investment expenses

    

345

      

357

      

249

    

Net investment income

  

$

5,100

    

$

4,560

    

$

4,064

    

(1)  Includes net investment income pertaining to other limited partnership interests of $367 million, $186 million and $170 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Net Investment Gains (Losses)

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Fixed maturity securities

  

$

(243

)

  

$

(214

)

  

$

(188

)

  

Equity securities

    

(12

)

    

(1

)

    

(12

)

  

Mortgage loans

    

(55

)

    

(24

)

    

(20

)

  

Limited partnerships and LLCs

    

(2

)

    

(1

)

    

(20

)

  

Other

    

14

      

(2

)

    

—

    

Total net investment gains (losses)

  

$

(298

)

  

$

(242

)

  

$

(240

)

  

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($1) million, ($1) million and ($18) million for the years ended December 31, 2024, 2023 and 2022, respectively.


53

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

8. Investments (continued)

Sales or Disposals of Fixed Maturity Securities

Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Proceeds

  

$

3,436

    

$

2,223

    

$

6,557

    

Gross investment gains

  

$

20

    

$

15

    

$

55

    

Gross investment losses

    

(193

)

    

(206

)

    

(236

)

  

Net investment gains (losses)

  

$

(173

)

  

$

(191

)

  

$

(181

)

  

9. Derivatives

Accounting for Derivatives

See Note 1 for a description of the Company's accounting policies for derivatives and Note 10 for information about the fair value hierarchy for derivatives.

Derivative Strategies

The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to minimize its exposure to various market risks, including interest rate, foreign currency exchange rate, credit and equity market.

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter ("OTC") market. Certain of the Company's OTC derivatives are cleared and settled through central clearing counterparties ("OTC-cleared"), while others are bilateral contracts between two counterparties ("OTC-bilateral").

Interest Rate Derivatives

The Company uses derivatives to manage its exposure to changes in interest rate risk from its product liabilities and invested assets. The most significant types of derivative instruments used for hedging interest rate risk are as follows:

Interest rate swaps: The Company uses interest rate swaps to manage interest rate risk in both qualified cash flow and non-qualifying hedging relationships. In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount.

Interest rate swaptions: The Company uses interest rate swaptions to manage interest rate risk in non-qualifying hedging relationships. A swaption is an option to enter into a swap with a forward starting effective date. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. Interest rate swaptions are included in interest rate options.

Interest rate forwards: The Company uses interest rate forwards to manage interest rate risk in both qualified cash flow and non-qualifying hedging relationships. An interest rate forward is an agreement between parties to exchange a future settlement amount based on a predetermined notional amount and forward interest rate.

Foreign Currency Exchange Rate Derivatives

Foreign currency swaps: The Company uses foreign currency swaps to convert foreign currency denominated cash flows to U.S. dollars to reduce cash flow fluctuations due to changes in currency exchange rates. Foreign currency swaps are used in cash flow and non-qualifying hedging relationships.

Foreign currency forwards: The Company uses foreign currency forwards to hedge currency exposure on its invested assets. Foreign currency forwards are used in non-qualifying hedging relationships.


54

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

9. Derivatives (continued)

Credit Derivatives

Credit default swaps: The Company uses credit default swaps to create synthetic credit investments to replicate credit exposure that is more economically attractive than what is available in the market or otherwise unavailable (written credit protection). Credit default swaps are used in non-qualifying hedging relationships.

Credit default swaptions: The Company uses credit default swaptions to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. Swaptions are used to create callable bonds from replication synthetic asset transaction ("RSAT") positions. This enhances the income of the RSAT program through earned premiums while not changing the credit profile of the RSATs. Credit default swaptions are used in non-qualifying hedging relationships.

Equity Market Derivatives

The Company uses derivatives to manage its exposure to equity markets from its product liabilities. The most significant types of derivative instruments used for hedging equity market risk are as follows:

Equity total return swaps: The Company uses equity total return swaps in non-qualifying hedge relationships to manage equity risks related to variable and index-linked annuities. Total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a floating rate, calculated by reference to an agreed notional amount.

Equity index options: The Company uses equity index options to manage equity risks related to variable and index- linked annuities in non-qualifying hedging relationships. In an equity index option transaction, the Company enters into contracts to buy or sell the equity index within a limited time at a contracted price. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options.


55

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

9. Derivatives (continued)

Primary Risks Managed by Derivatives

The primary underlying risk exposure, gross notional amount and estimated fair value of derivatives, excluding embedded derivatives, held were as follows at:

       

December 31,

  
       

2024

  

2023

  
        Gross
Notional		  

Estimated Fair Value

   Gross
Notional		  

Estimated Fair Value

  
   

Primary Underlying Risk Exposure

  

Amount

  

Assets

  

Liabilities

  

Amount

  

Assets

  

Liabilities

  
       

(In millions)

  

Derivatives Designated as Hedging Instruments:

  

Cash flow hedges:

  

Interest rate swaps

  

Interest rate

  

$

500

    

$

9

    

$

—

    

$

—

    

$

—

    

$

—

    

Foreign currency swaps

  

Foreign currency exchange rate

    

3,778

      

430

      

25

      

3,895

      

339

      

45

    

Total qualifying hedges

        

4,278

      

439

      

25

      

3,895

      

339

      

45

    

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

  

Interest rate swaps

  

Interest rate

    

69,303

      

131

      

444

      

31,252

      

140

      

103

    

Interest rate floors

  

Interest rate

    

8,000

      

1

      

30

      

3,500

      

7

      

1

    

Interest rate caps

  

Interest rate

    

7,850

      

14

      

14

      

7,050

      

19

      

1

    

Interest rate futures

  

Interest rate

    

171

      

—

      

—

      

—

      

—

      

—

    

Interest rate options

  

Interest rate

    

23,060

      

11

      

371

      

33,680

      

47

      

167

    

Interest rate forwards

  

Interest rate

    

16,352

      

121

      

1,876

      

17,017

      

32

      

1,937

    

Foreign currency swaps

  

Foreign currency exchange rate

    

674

      

111

      

—

      

735

      

99

      

1

    

Foreign currency forwards

  

Foreign currency exchange rate

    

304

      

6

      

—

      

384

      

—

      

1

    

Credit default swaps — written

  

Credit

    

780

      

19

      

—

      

1,405

      

27

      

—

    

Equity futures

  

Equity market

    

316

      

—

      

1

      

—

      

—

      

—

    

Equity index options

  

Equity market

    

39,897

      

1,722

      

1,041

      

20,099

      

757

      

687

    

Equity total return swaps

  

Equity market

    

106,301

      

1,543

      

1,446

      

53,742

      

2,236

      

2,137

    

Hybrid options

  

Equity market

    

—

      

—

      

—

      

270

      

—

      

—

    

Total non-designated or non-qualifying derivatives

        

273,008

      

3,679

      

5,223

      

169,134

      

3,364

      

5,035

    

Total

      

$

277,286

    

$

4,118

    

$

5,248

    

$

173,029

    

$

3,703

    

$

5,080

    

Based on gross notional amounts, a substantial portion of the Company's derivatives was not designated or did not qualify as part of a hedging relationship at both December 31, 2024 and 2023. The Company's use of derivatives includes (i) derivatives that serve as hedges of the Company's exposure to various risks and generally do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedging rules; (ii) derivatives that economically hedge insurance liabilities and generally do not qualify for hedge accounting because they do not meet the criteria of being "highly effective" as outlined in Accounting Standards Codification 815 — Derivatives and Hedging; (iii) derivatives that economically hedge MRBs that do not qualify for hedge accounting because the changes in estimated fair value of the MRBs are already recorded in net income; and (iv) written credit default swaps that are used to create synthetic credit investments and that do not qualify for hedge accounting because they do not involve a hedging relationship.


56

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

9. Derivatives (continued)

The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items reported in net derivative gains (losses) were as follows:

   

Year Ended December 31, 2024

  
    Net Derivative
Gains (Losses)
Recognized for
Derivatives		   Net Derivative
Gains (Losses)
Recognized for
Hedged Items		   Net Investment
Income		   Policyholder
Benefits and
Claims		   Amount of Gains
(Losses)
Deferred in
AOCI		  
   

(In millions)

  
Derivatives Designated as Hedging
Instruments:		  

Cash flow hedges:

  

Interest rate

  

$

2

    

$

—

    

$

3

    

$

8

    

$

9

    

Foreign currency exchange rate

    

13

      

(10

)

    

50

      

—

      

125

    

Total cash flow hedges

    

15

      

(10

)

    

53

      

8

      

134

    
Derivatives Not Designated or Not
Qualifying as Hedging Instruments:		  

Interest rate

    

(1,690

)

    

—

      

—

      

—

      

—

    

Foreign currency exchange rate

    

48

      

(9

)

    

—

      

—

      

—

    

Credit

    

14

      

—

      

—

      

—

      

—

    

Equity market

    

1,894

      

—

      

—

      

—

      

—

    

Embedded

    

(3,950

)

    

—

      

—

      

—

      

—

    

Total non-qualifying hedges

    

(3,684

)

    

(9

)

    

—

      

—

      

—

    

Total

  

$

(3,669

)

  

$

(19

)

  

$

53

    

$

8

    

$

134

    
   

Year Ended December 31, 2023

  
    Net Derivative
Gains (Losses)
Recognized for
Derivatives		   Net Derivative
Gains (Losses)
Recognized for
Hedged Items		   Net Investment
Income		   Policyholder
Benefits and
Claims		   Amount of Gains
(Losses)
Deferred in
AOCI		  
   

(In millions)

  
Derivatives Designated as Hedging
Instruments:		  

Cash flow hedges:

  

Interest rate

  

$

1

    

$

—

    

$

3

    

$

—

    

$

(1

)

  

Foreign currency exchange rate

    

7

      

(8

)

    

51

      

—

      

(272

)

  

Total cash flow hedges

    

8

      

(8

)

    

54

      

—

      

(273

)

  
Derivatives Not Designated or Not
Qualifying as Hedging Instruments:		  

Interest rate

    

(384

)

    

—

      

—

      

—

      

—

    

Foreign currency exchange rate

    

(40

)

    

2

      

—

      

—

      

—

    

Credit

    

32

      

—

      

—

      

—

      

—

    

Equity market

    

570

      

—

      

—

      

—

      

—

    

Embedded

    

(4,100

)

    

—

      

—

      

—

      

—

    

Total non-qualifying hedges

    

(3,922

)

    

2

      

—

      

—

      

—

    

Total

  

$

(3,914

)

  

$

(6

)

  

$

54

    

$

—

    

$

(273

)

  


57

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

9. Derivatives (continued)

   

Year Ended December 31, 2022

  
    Net Derivative
Gains (Losses)
Recognized for
Derivatives		   Net Derivative
Gains (Losses)
Recognized for
Hedged Items		   Net Investment
Income		   Policyholder
Benefits and
Claims		   Amount of Gains
(Losses)
Deferred in
AOCI		  
   

(In millions)

  
Derivatives Designated as Hedging
Instruments:		  

Cash flow hedges:

  

Interest rate

  

$

5

    

$

—

    

$

4

    

$

—

    

$

(50

)

  

Foreign currency exchange rate

    

12

      

(11

)

    

52

      

—

      

379

    

Total cash flow hedges

    

17

      

(11

)

    

56

      

—

      

329

    
Derivatives Not Designated or Not
Qualifying as Hedging Instruments:		  

Interest rate

    

(4,001

)

    

—

      

—

      

—

      

—

    

Foreign currency exchange rate

    

95

      

(16

)

    

—

      

—

      

—

    

Credit

    

(2

)

    

—

      

—

      

—

      

—

    

Equity market

    

590

      

—

      

—

      

—

      

—

    

Embedded

    

2,743

      

—

      

—

      

—

      

—

    

Total non-qualifying hedges

    

(575

)

    

(16

)

    

—

      

—

      

—

    

Total

  

$

(558

)

  

$

(27

)

  

$

56

    

$

—

    

$

329

    

At December 31, 2024 and 2023, the Company held no qualified derivatives hedging exposure to future cash flows for forecasted asset purchases.

At December 31, 2024 and 2023, the balance in AOCI associated with cash flow hedges was $460 million and $344 million, respectively.


58

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

9. Derivatives (continued)

Credit Derivatives

In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation.

The estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps were as follows at:

   

December 31,

  
   

2024

  

2023

  
Rating Agency Designation of Referenced
Credit Obligations (1)		   Estimated
Fair Value
of Credit
Default
Swaps		   Maximum
Amount of Future
Payments under
Credit Default
Swaps		   Weighted
Average
Years to
Maturity (2)		   Estimated
Fair Value
of Credit
Default
Swaps		   Maximum
Amount of Future
Payments under
Credit Default
Swaps		   Weighted
Average
Years to
Maturity (2)		  
   

(Dollars in millions)

  

Aaa/Aa/A

  

$

2

    

$

100

      

2.7

    

$

6

    

$

419

      

1.6

    

Baa

    

7

      

300

      

4.5

      

19

      

958

      

4.9

    

Ba

    

10

      

376

      

4.8

      

2

      

24

      

3.0

    

Caa and Lower

    

—

      

4

      

1.0

      

—

      

4

      

2.0

    

Total

  

$

19

    

$

780

      

4.4

    

$

27

    

$

1,405

      

3.9

    

            

(1)  The Company has written credit protection on both single name and index references. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody's, S&P and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.

(2)  The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Counterparty Credit Risk

The Company may be exposed to credit-related losses in the event of counterparty nonperformance on derivative instruments. Generally, the credit exposure is the fair value at the reporting date less any collateral received from the counterparty.

The Company manages its credit risk by: (i) entering into derivative transactions with creditworthy counterparties governed by master netting agreements; (ii) trading through regulated exchanges and central clearing counterparties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.

See Note 10 for a description of the impact of credit risk on the valuation of derivatives.


59

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

9. Derivatives (continued)

The estimated fair values of net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:

        Gross Amounts Not Offset on the
Consolidated Balance Sheets		              
    Gross Amount
Recognized		   Financial
Instruments (1)		   Collateral
Received/Pledged
(2)		  

Net Amount

   Securities
Collateral
Received/Pledged
(3)		   Net Amount
After Securities
Collateral		  
   

(In millions)

  

December 31, 2024

  

Derivative assets

  

$

4,122

    

$

(3,039

)

  

$

(524

)

  

$

559

    

$

(558

)

  

$

1

    

Derivative liabilities

  

$

5,353

    

$

(3,039

)

  

$

—

    

$

2,314

    

$

(2,306

)

  

$

8

    

December 31, 2023

  

Derivative assets

  

$

3,495

    

$

(3,112

)

  

$

(154

)

  

$

229

    

$

(194

)

  

$

35

    

Derivative liabilities

  

$

4,917

    

$

(3,112

)

  

$

—

    

$

1,805

    

$

(1,805

)

  

$

—

    

(1)  Represents amounts subject to an enforceable master netting agreement or similar agreement.

(2)  The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreement.

(3)  Securities collateral received from counterparties is not reported on the consolidated balance sheets and may not be sold or re-pledged unless the counterparty is in default. Amounts do not include excess of collateral pledged or received.

The Company's collateral arrangements generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. Certain of these arrangements also include credit-contingent provisions which permit the party with positive fair value to terminate the derivative at the current fair value or demand immediate full collateralization from the party in a net liability position, in the event that the financial strength or credit rating of the party in a net liability position falls below a certain level.

The aggregate estimated fair values of derivatives in a net liability position containing such credit-contingent provisions and the aggregate estimated fair value of assets posted as collateral for such instruments were as follows at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Estimated fair value of derivatives in a net liability position (1)

  

$

2,314

    

$

1,805

    

Estimated fair value of collateral provided (2):

  

Fixed maturity securities

  

$

4,883

    

$

4,811

    

(1)  After taking into consideration the existence of netting agreements.

(2)  Substantially all of the Company's collateral arrangements provide for daily posting of collateral for the full value of the derivative contract. As a result, if the credit-contingent provisions of derivative contracts in a net liability position were triggered, minimal additional assets would be required to be posted as collateral or needed to settle the instruments immediately. Additionally, the Company is required to pledge initial margin for certain new OTC-bilateral derivative transactions to third-party custodians.


60

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value

When developing estimated fair values, the Company considers three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs, giving priority to observable inputs. The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the significant input with the lowest level in its valuation. The input levels are as follows:

Level 1  Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities.

Level 2  Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs can include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3  Unobservable inputs that are supported by little or no market activity and are significant to the determination of estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability.


61

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy are presented in the tables below. Investments that do not have a readily determinable fair value and are measured at net asset value (or equivalent) as a practical expedient to estimated fair value are excluded from the fair value hierarchy.

   

December 31, 2024

  
   

Fair Value Hierarchy

      
   

Level 1

  

Level 2

  

Level 3

   Total Estimated
Fair Value		  
   

(In millions)

  

Assets

  

Fixed maturity securities:

  

U.S. corporate

  

$

—

    

$

36,041

    

$

696

    

$

36,737

    

Foreign corporate

    

—

      

11,366

      

396

      

11,762

    

RMBS

    

—

      

7,213

      

17

      

7,230

    

U.S. government and agency

    

2,514

      

3,946

      

—

      

6,460

    

ABS

    

—

      

5,984

      

322

      

6,306

    

CMBS

    

—

      

6,266

      

26

      

6,292

    

State and political subdivision

    

—

      

3,382

      

—

      

3,382

    

Foreign government

    

—

      

939

      

21

      

960

    

Total fixed maturity securities

    

2,514

      

75,137

      

1,478

      

79,129

    

Equity securities

    

11

      

6

      

15

      

32

    

Short-term investments

    

916

      

239

      

2

      

1,157

    

Derivative assets: (1)

  

Interest rate

    

—

      

287

      

—

      

287

    

Foreign currency exchange rate

    

—

      

540

      

7

      

547

    

Credit

    

—

      

17

      

2

      

19

    

Equity market

    

—

      

3,265

      

—

      

3,265

    

Total derivative assets

    

—

      

4,109

      

9

      

4,118

    

Embedded derivatives on index-linked annuities (2)

    

—

      

—

      

47

      

47

    

Market risk benefit assets

    

—

      

—

      

1,092

      

1,092

    

Separate account assets

    

3

      

79,003

      

—

      

79,006

    

Total assets

  

$

3,444

    

$

158,494

    

$

2,643

    

$

164,581

    

Liabilities

  

Market risk benefit liabilities

  

$

—

    

$

—

    

$

8,346

    

$

8,346

    

Derivative liabilities: (1)

  

Interest rate

    

—

      

2,735

      

—

      

2,735

    

Foreign currency exchange rate

    

—

      

25

      

—

      

25

    

Equity market

    

1

      

2,487

      

—

      

2,488

    

Total derivative liabilities

    

1

      

5,247

      

—

      

5,248

    

Embedded derivatives on index-linked annuities (2)

    

—

      

—

      

11,540

      

11,540

    

Total liabilities

  

$

1

    

$

5,247

    

$

19,886

    

$

25,134

    


62

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

   

December 31, 2023

  
   

Fair Value Hierarchy

      
   

Level 1

  

Level 2

  

Level 3

   Total Estimated
Fair Value		  
   

(In millions)

  

Assets

  

Fixed maturity securities:

  

U.S. corporate

  

$

—

    

$

34,344

    

$

995

    

$

35,339

    

Foreign corporate

    

—

      

11,257

      

325

      

11,582

    

RMBS

    

—

      

7,351

      

15

      

7,366

    

U.S. government and agency

    

3,680

      

4,534

      

—

      

8,214

    

ABS

    

—

      

6,075

      

326

      

6,401

    

CMBS

    

—

      

6,300

      

39

      

6,339

    

State and political subdivision

    

—

      

3,813

      

—

      

3,813

    

Foreign government

    

—

      

995

      

36

      

1,031

    

Total fixed maturity securities

    

3,680

      

74,669

      

1,736

      

80,085

    

Equity securities

    

18

      

23

      

25

      

66

    

Short-term investments

    

214

      

360

      

—

      

574

    

Derivative assets: (1)

  

Interest rate

    

—

      

245

      

—

      

245

    

Foreign currency exchange rate

    

—

      

426

      

12

      

438

    

Credit

    

—

      

21

      

6

      

27

    

Equity market

    

—

      

2,993

      

—

      

2,993

    

Total derivative assets

    

—

      

3,685

      

18

      

3,703

    

Embedded derivatives on index-linked annuities (2)

    

—

      

—

      

—

      

—

    

Market risk benefit assets

    

—

      

—

      

656

      

656

    

Separate account assets

    

20

      

81,670

      

—

      

81,690

    

Total assets

  

$

3,932

    

$

160,407

    

$

2,435

    

$

166,774

    

Liabilities

  

Market risk benefit liabilities

  

$

—

    

$

—

    

$

10,344

    

$

10,344

    

Derivative liabilities: (1)

  

Interest rate

    

—

      

2,209

      

—

      

2,209

    

Foreign currency exchange rate

    

—

      

47

      

—

      

47

    

Equity market

    

—

      

2,824

      

—

      

2,824

    

Total derivative liabilities

    

—

      

5,080

      

—

      

5,080

    

Embedded derivatives on index-linked annuities (2)

    

—

      

—

      

8,186

      

8,186

    

Total liabilities

  

$

—

    

$

5,080

    

$

18,530

    

$

23,610

    

(1)  Derivative assets are reported in other invested assets and derivative liabilities are reported in other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets.

(2)  Embedded derivative assets on index-linked annuities are reported in premiums and other receivables. Embedded derivative liabilities on index-linked annuities are reported in policyholder account balances.


63

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

Valuation Controls and Procedures

The Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by its valuation service providers. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of BHF's Board of Directors regarding compliance with fair value accounting standards.

The fair value of financial assets and financial liabilities is based on quoted market prices, where available. Prices received are assessed to determine if they represent a reasonable estimate of fair value. Several controls are performed, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as "consensus pricing," are used for a non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments.

A formal process is also applied to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, the last available price will be used.

Additional controls are performed, such as, balance sheet analytics to assess reasonableness of period-to-period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the year ended December 31, 2024.

Determination of Fair Value

Fixed Maturity Securities

The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below.

U.S. corporate and foreign corporate securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues.

U.S. government and agency, state and political subdivision and foreign government securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker-dealer quotes, and comparable securities that are actively traded.


64

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

Structured Securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to, collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance.

Equity Securities and Short-term Investments

The fair value for actively traded equity securities and short-term investments are determined using quoted market prices and are classified as Level 1 assets. For financial instruments classified as Level 2 assets, fair values are determined using a market approach and are valued based on a variety of observable inputs as described below.

Equity securities and short-term investments: Fair value is determined using third-party commercial pricing services, with the primary input being quoted prices in markets that are not active.

Derivatives

The fair values for exchange-traded derivatives are determined using the quoted market prices and are classified as Level 1 assets. For OTC-bilateral derivatives and OTC-cleared derivatives classified as Level 2 assets or liabilities, fair values are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs.

The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC- bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.

Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company's derivatives and could materially affect net income.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company's ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.

Market Risk Benefits

MRBs principally include guaranteed minimum benefits on variable annuity contracts including benefits reinsured related to these guarantees.


65

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

The estimated fair value of variable annuity guarantees accounted for as MRBs is determined based on the present value of projected future benefits less the present value of projected future fees attributable to the guarantees. At policy inception, the Company determines an attributed fee ratio by solving for a percentage of projected future rider fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. To the extent the rider fees are insufficient, the Company may also include fees related to mortality and expense charges in the attributed fee ratio, provided the total fees included in the calculation do not exceed total contract fees and assessments collected from the contract holder. Any additional fees not included in the attributed fee ratio are considered revenue and reported in universal life and investment-type product policy fees. The attributed fee ratio is not updated in subsequent periods.

The Company updates the estimated fair value of variable annuity guarantees in subsequent periods by projecting future benefits using capital markets inputs and actuarial assumptions including expectations of policyholder behavior. A risk neutral valuation methodology is used to project the cash flows from the guarantees under multiple capital markets scenarios. The reported estimated fair value is then determined by taking the present value of these cash flows using a discount rate that incorporates a spread over the risk-free rate to reflect the Company's nonperformance risk and adding a risk margin.

The valuation of MRBs includes an adjustment for the risk that the Company fails to satisfy its obligations, which is referred to as nonperformance risk. The nonperformance risk adjustment is captured as an additional spread applied to the risk-free rate in determining the rate to discount the cash flows of the liability. The spread over the risk-free rate is based on the Company's creditworthiness taking into consideration publicly available information relating to spreads in the secondary market for Brighthouse Financial's debt. These observable spreads are then adjusted, as necessary, to reflect the financial strength ratings of the issuing insurance subsidiaries as compared to the credit rating of Brighthouse Financial.

Risk margins are established to capture the non-capital markets risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. The establishment of risk margins requires the use of significant actuarial judgment, including assumptions of the amount needed to cover the guarantees.

Actuarial assumptions are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income. Capital market inputs used in the measurement of variable annuity guarantees are updated quarterly through net income, except for the change attributable to the Company's nonperformance risk, which is reported in OCI.

Embedded Derivatives

Embedded derivatives include crediting rates associated with index-linked annuity contracts. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.

The crediting rates associated with these features are embedded derivatives which are measured at estimated fair value separately from the host fixed annuity contract. These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

The estimated fair value of crediting rates associated with index-linked annuities is determined using a combination of an option pricing model and an option-budget approach. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in nonperformance risk.

Actuarial assumptions including policyholder behavior and expectations for renewals at the end of the term period are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income. Capital market inputs used in the measurement of crediting rate embedded derivatives are updated quarterly through net income.


66

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

Transfers Into or Out of Level 3:

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

Certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows at:

           

December 31, 2024

  

December 31, 2023

   Impact of
Increase in Input		  
    Valuation
Techniques		   Significant
Unobservable Inputs		  

Range

  

Range

   on Estimated
Fair Value		  

Market Risk Benefits

  
Variable annuity guaranteed minimum
benefits		   • Discounted
cash flows		  

• Mortality rates

    

0.04

% - 12.90%

    

0.04

% - 12.90%

  

Decrease (1)

  
       

• Lapse rates

    

1.00

% - 20.20%

    

1.00

% - 22.80%

  

Decrease (2)

  
       

• Utilization rates

    

0.00

% - 25.00%

    

0.00

% - 25.00%

  

Increase (3)

  
       

• Withdrawal rates

    

0.00

% - 10.00%

    

0.00

% - 10.00%

   (4)  
        • Long-term equity
volatilities		    

12.22

% - 37.04%

    

12.59

% - 22.50%

  

Increase (5)

  
        • Nonperformance
risk spread		    

0.20

% - 1.19%

    

0.76

% - 1.63%

  

Decrease (6)

  

Embedded Derivatives

  
Registered index-linked annuity crediting
rates		   • Option pricing
techniques		  

• Mortality rates

    

0.03

% - 7.86%

    

0.03

% - 9.24%

  

Decrease (1)

  
       

• Lapse rates

    

1.00

% - 62.30%

    

1.00

% - 62.30%

  

Decrease (2)

  
       

• Withdrawal rates

    

0.50

% - 13.00%

    

0.50

% - 9.00%

   (4)  
        • Nonperformance
risk spread		    

0.30

% - 1.63%

    

0.45

% - 1.74%

  

Decrease (6)

  

(1)  Mortality rates vary by age and by demographic characteristics such as gender. The range shown reflects the mortality rate for policyholders between 35 and 90 years old. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement.

(2)  The lapse rate range reflects base lapse rates for major product categories for duration 1-20. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. For variable annuity guarantees, a dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies.

(3)  The utilization rate assumption for variable annuity guarantees estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract's withdrawal history and by the age of the policyholder.


67

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

(4)  The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For variable annuity GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For variable annuity GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(5)  Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing MRBs.

(6)  Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the MRB or embedded derivative.

The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a (lower) higher fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a (lower) higher fair value.


68

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

The changes in assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (excluding MRBs disclosed in Note 4) were summarized as follows:

   

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

  
   

Fixed Maturity Securities

                  
   

Corporate (1)

   Structured
Securities		   Foreign
Government		   Equity
Securities		   Short-term
Investments		   Net
Derivatives (2)		   Embedded
Derivatives on
Index-Linked
Annuities		  
   

(In millions)

  

Balance, January 1, 2023

  

$

1,787

    

$

365

    

$

38

    

$

27

    

$

—

    

$

35

    

$

(3,932

)

  
Total realized/unrealized gains (losses)
included in net income (loss) (3) (4)		    

(11

)

    

—

      

—

      

(3

)

    

—

      

(6

)

    

(4,097

)

  
Total realized/unrealized gains (losses)
included in AOCI		    

28

      

5

      

3

      

—

      

—

      

(3

)

    

—

    

Purchases (5)

    

162

      

85

      

—

      

2

      

—

      

4

      

—

    

Sales (5)

    

(116

)

    

(22

)

    

(2

)

    

(1

)

    

—

      

—

      

—

    

Issuances (5)

    

—

      

—

      

—

      

—

      

—

      

—

      

—

    

Settlements (5)

    

—

      

—

      

—

      

—

      

—

      

—

      

(157

)

  

Transfers into Level 3 (6)

    

188

      

3

      

—

      

—

      

—

      

—

      

—

    

Transfers out of Level 3 (6)

    

(718

)

    

(56

)

    

(3

)

    

—

      

—

      

(12

)

    

—

    

Balance, December 31, 2023

    

1,320

      

380

      

36

      

25

      

—

      

18

      

(8,186

)

  
Total realized/unrealized gains (losses)
included in net income (loss) (3) (4)		    

(67

)

    

1

      

—

      

(10

)

    

—

      

1

      

(3,951

)

  
Total realized/unrealized gains (losses)
included in AOCI		    

2

      

3

      

—

      

—

      

—

      

—

      

—

    

Purchases (5)

    

323

      

137

      

—

      

—

      

2

      

—

      

—

    

Sales (5)

    

(239

)

    

(87

)

    

—

      

—

      

—

      

—

      

—

    

Issuances (5)

    

—

      

—

      

—

      

—

      

—

      

—

      

—

    

Settlements (5)

    

—

      

—

      

—

      

—

      

—

      

(4

)

    

644

    

Transfers into Level 3 (6)

    

53

      

—

      

—

      

—

      

—

      

—

      

—

    

Transfers out of Level 3 (6)

    

(300

)

    

(69

)

    

(15

)

    

—

      

—

      

(6

)

    

—

    

Balance, December 31, 2024

  

$

1,092

    

$

365

    

$

21

    

$

15

    

$

2

    

$

9

    

$

(11,493

)

  
Changes in unrealized gains (losses)
included in net income (loss) for the
instruments still held at December 31,
2022 (7)		  

$

3

    

$

—

    

$

—

    

$

1

    

$

—

    

$

(1

)

  

$

2,485

    
Changes in unrealized gains (losses)
included in net income (loss) for the
instruments still held at December 31,
2023 (7)		  

$

(11

)

  

$

—

    

$

—

    

$

(2

)

  

$

—

    

$

(5

)

  

$

(4,513

)

  
Changes in unrealized gains (losses)
included in net income (loss) for the
instruments still held at December 31,
2024 (7)		  

$

(59

)

  

$

—

    

$

—

    

$

—

    

$

—

    

$

1

    

$

(4,687

)

  
Changes in unrealized gains (losses)
included in OCI for the instruments still
held as of December 31, 2022 (7)		  

$

(268

)

  

$

(23

)

  

$

(10

)

  

$

—

    

$

—

    

$

17

    

$

—

    
Changes in unrealized gains (losses)
included in OCI for the instruments still
held as of December 31, 2023 (7)		  

$

11

    

$

4

    

$

3

    

$

—

    

$

—

    

$

(3

)

  

$

—

    
Changes in unrealized gains (losses)
included in OCI for the instruments still
held as of December 31, 2024 (7)		  

$

(33

)

  

$

—

    

$

—

    

$

—

    

$

—

    

$

—

    

$

—

    
Gains (Losses) Data for the year ended
December 31, 2022:		  
Total realized/unrealized gains (losses)
included in net income (loss) (3) (4)		  

$

(5

)

  

$

1

    

$

—

    

$

—

    

$

—

    

$

(9

)

  

$

2,743

    
Total realized/unrealized gains (losses)
included in AOCI		  

$

(266

)

  

$

(23

)

  

$

(10

)

  

$

—

    

$

—

    

$

17

    

$

—

    

(1)  Comprised of U.S. and foreign corporate securities.


69

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

(2)  Freestanding derivative assets and liabilities are reported net for purposes of the rollforward.

(3)  Amortization of premium/accretion of discount is included in net investment income. Changes in the allowance for credit losses and direct write-offs are charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

(4)  Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

(5)  Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

(6)  Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and out of Level 3 in the same period are excluded from the rollforward.

(7)  Changes in unrealized gains (losses) included in net income (loss) for fixed maturities are reported in either net investment income or net investment gains (losses). Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

Fair Value of Financial Instruments Carried at Other Than Fair Value

The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income and payables for collateral under securities loaned and other transactions. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:

   

December 31, 2024

  
       

Fair Value Hierarchy

      
    Carrying
Value		  

Level 1

  

Level 2

  

Level 3

   Total
Estimated
Fair Value		  
   

(In millions)

  

Assets

  

Mortgage loans

  

$

23,254

    

$

—

    

$

—

    

$

21,343

    

$

21,343

    

Policy loans

  

$

1,626

    

$

—

    

$

1,123

    

$

523

    

$

1,646

    

Other invested assets

  

$

237

    

$

—

    

$

222

    

$

15

    

$

237

    

Premiums, reinsurance and other receivables

  

$

8,394

    

$

—

    

$

43

    

$

9,102

    

$

9,145

    

Liabilities

  

Policyholder account balances

  

$

31,830

    

$

—

    

$

—

    

$

31,467

    

$

31,467

    

Long-term debt

  

$

833

    

$

—

    

$

23

    

$

762

    

$

785

    

Other liabilities

  

$

1,360

    

$

—

    

$

648

    

$

712

    

$

1,360

    

Separate account liabilities

  

$

1,244

    

$

—

    

$

1,244

    

$

—

    

$

1,244

    


70

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

10. Fair Value (continued)

   

December 31, 2023

  
       

Fair Value Hierarchy

      
    Carrying
Value		  

Level 1

  

Level 2

  

Level 3

   Total
Estimated
Fair Value		  
   

(In millions)

  

Assets

  

Mortgage loans

  

$

22,475

    

$

—

    

$

—

    

$

20,578

    

$

20,578

    

Policy loans

  

$

938

    

$

—

    

$

479

    

$

494

    

$

973

    

Other invested assets

  

$

260

    

$

—

    

$

245

    

$

15

    

$

260

    

Premiums, reinsurance and other receivables

  

$

7,431

    

$

—

    

$

80

    

$

7,498

    

$

7,578

    

Liabilities

  

Policyholder account balances

  

$

31,362

    

$

—

    

$

—

    

$

30,501

    

$

30,501

    

Long-term debt

  

$

836

    

$

—

    

$

26

    

$

755

    

$

781

    

Other liabilities

  

$

1,191

    

$

—

    

$

438

    

$

753

    

$

1,191

    

Separate account liabilities

  

$

1,148

    

$

—

    

$

1,148

    

$

—

    

$

1,148

    

11. Long-term and Short-term Debt

Long-term debt outstanding was as follows at:

           

December 31,

  
   

Stated Interest Rate

  

Maturity

  

2024

  

2023

  
           

(In millions)

  

Surplus note — affiliated (1)

    

8.070

%

    

2059

    

$

412

    

$

412

    

Surplus note — affiliated (1)

    

8.150

%

    

2058

      

200

      

200

    

Surplus note — affiliated (1)

    

7.800

%

    

2058

      

200

      

200

    

Other long-term debt — unaffiliated (2)

    

7.028

%

    

2030

      

21

      

24

    

Total long-term debt

          

$

833

    

$

836

    

(1)  Interest on affiliated surplus notes is payable annually. Payments of interest and principal may be made only with the prior approval of the Delaware Department of Insurance.

(2)  Represents non-recourse debt of a subsidiary for which creditors have no access, subject to customary exceptions, to the general assets of the Company other than recourse to certain investment companies.

The aggregate maturities of long-term debt at December 31, 2024 were $3 million in each of 2025, 2026, 2027 and 2028, $4 million in 2029, and $817 million thereafter.

Interest expense related to long-term and short-term debt of $67 million, $70 million and $70 million for the years ended December 31, 2024, 2023 and 2022, respectively, is included in other expenses, of which $65 million, $68 million and $68 million, respectively, was associated with affiliated debt.

Intercompany Liquidity Facilities

BHF has established an intercompany liquidity facility with certain of its insurance and non-insurance subsidiaries to provide short-term liquidity within and across the combined group of companies. Under the facility, which is comprised of a series of revolving loan agreements among BHF and its participating subsidiaries, each company may lend to or borrow from each other, subject to certain maximum limits for a term of up to 364 days, depending on the agreement.


71

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

11. Long-term and Short-term Debt (continued)

On May 16, 2022, BH Holdings issued a $125 million promissory note to Brighthouse Life Insurance Company and Brighthouse Life Insurance Company of NY ("BHNY") issued a $125 million promissory note to BH Holdings (the "May 2022 Promissory Notes"), in which both notes bore interest at a fixed rate of 2.5363%. Upon maturity on August 16, 2022, the May 2022 Promissory Notes were replaced by two new promissory notes which bore interest at a fixed rate of 4.0466% (the "August 2022 Promissory Notes"). Upon maturity on November 16, 2022, the August 2022 Promissory Notes were replaced by two new promissory notes which bore interest at a fixed rate of 5.7689% and 5.4504%, respectively (the "November 2022 Promissory Notes"). Upon maturity on February 16, 2023, the November 2022 Promissory Notes were replaced by two new promissory notes which bore interest at a fixed rate of 5.9966% and 5.9937%, respectively (the "May 2023 Promissory Notes"). On March 28, 2023, BHNY repaid to BH Holdings, and BH Holdings repaid to Brighthouse Life Insurance Company, each $50 million of principal plus accrued interest in cash on the respective May 2023 Promissory Notes. Upon maturity on May 16, 2023, the May 2023 Promissory Notes were replaced by two new $75 million promissory notes that bear interest at a fixed rate of 6.4433% and 6.2918%, respectively, and were both repaid on June 30, 2023.

Committed Facilities

Reinsurance Financing Arrangement

Brighthouse Reinsurance Company of Delaware ("BRCD") maintains a $15.0 billion financing arrangement with a pool of highly rated third-party reinsurers consisting of credit-linked notes that each mature in 2039. At December 31, 2024, there were no borrowings and there was $15.0 billion of funding available under this financing arrangement. For the years ended December 31, 2024, 2023 and 2022, the Company recognized commitment fees of $21 million, $21 million and $26 million, respectively, in other expenses associated with this financing arrangement.

Repurchase Facilities

At December 31, 2024, Brighthouse Life Insurance Company maintains secured committed repurchase facilities (the "Repurchase Facilities") with terms of up to three years under which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $2.5 billion. Under the Repurchase Facilities, Brighthouse Life Insurance Company may sell certain eligible securities at a purchase price based on the market value of the securities less an applicable margin based on the types of securities sold, with a concurrent agreement to repurchase such securities at a predetermined future date (up to three months) and at a price which represents the original purchase price plus interest. At December 31, 2024, there were no borrowings under the Repurchase Facilities.

12. Equity

Statutory Financial Information

The states of domicile of Brighthouse Life Insurance Company and BHNY impose RBC requirements that were developed by the National Association of Insurance Commissioners ("NAIC"). Such requirements are used by regulators to assess the minimum amount of statutory capital and surplus needed for an insurance company to support its operations, based on its size and risk profile (referred to as "company action level RBC"). RBC is based on statutory financial statements and is calculated in a manner prescribed by the NAIC. The RBC ratio, which is the basis for determining regulatory compliance, is equal to total adjusted capital divided by the applicable company action level RBC. Companies below 100% of their company action level RBC are subject to corrective action. As of December 31, 2024, the annual RBC ratios for Brighthouse Life Insurance Company and BHNY were each in excess of 390%.

Brighthouse Life Insurance Company and BHNY prepare statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile.

Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, reporting of reinsurance agreements and valuing investments and deferred tax assets on a different basis.


72

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

12. Equity (continued)

The tables below present amounts from Brighthouse Life Insurance Company and BHNY, which are derived from the statutory-basis financial statements to be filed with the insurance regulators.

Statutory net income (loss) was as follows:

       

Years Ended December 31,

  

Company

  

State of Domicile

  

2024

  

2023

  

2022

  
       

(In millions)

  

Brighthouse Life Insurance Company

  

Delaware

  

$

(787

)

  

$

(3,131

)

  

$

1,373

    

Brighthouse Life Insurance Company of NY

  

New York

  

$

(120

)

  

$

539

    

$

(152

)

  

Statutory capital and surplus was as follows at:

   

December 31,

  

Company

  

2024

  

2023

  
   

(In millions)

  

Brighthouse Life Insurance Company

  

$

3,673

    

$

4,623

    

Brighthouse Life Insurance Company of NY

  

$

699

    

$

819

    

The Company has a reinsurance subsidiary, BRCD, which reinsures risks including level premium term life and ULSG assumed from other Brighthouse Financial life insurance subsidiaries. BRCD, with the explicit permission of the Delaware Insurance Commissioner ("Delaware Commissioner"), has included the value of credit-linked notes as admitted assets, which resulted in higher statutory capital and surplus of $11.5 billion and $11.0 billion for the years ended December 31, 2024 and 2023, respectively.

The statutory net income (loss) of BRCD was ($447) million, ($300) million and ($208) million for the years ended December 31, 2024, 2023 and 2022, respectively, and the combined statutory capital and surplus, including the aforementioned prescribed practices, were $703 million and $661 million at December 31, 2024 and 2023, respectively.

Dividend Restrictions

The table below sets forth the dividends permitted to be paid by Brighthouse Life Insurance Company and BHNY without insurance regulatory approval and dividends paid:

   

2025

  

2024

  

2023

  

2022

  

Company

   Permitted
Without
Approval (1)		  

Paid (2)

  

Paid (2)

  

Paid (2)

  
   

(In millions)

  

Brighthouse Life Insurance Company (3)

  

$

—

    

$

—

    

$

266

    

$

—

    

Brighthouse Life Insurance Company of NY

  

$

—

    

$

—

    

$

—

    

$

—

    

(1)  Reflects dividend amounts that may be paid during 2025 without prior regulatory approval.

(2)  Reflects all amounts paid, including those requiring regulatory approval.

(3)  Any payment of dividends in 2025 would be considered an extraordinary dividend subject to regulatory approval due to negative unassigned funds (surplus).


73

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

12. Equity (continued)

Under the Delaware Insurance Law, Brighthouse Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay a stockholder dividend as long as the amount of the dividend when aggregated with all other dividends in the preceding 12 months does not exceed the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its net gain from operations for the immediately preceding calendar year (excluding realized capital gains), not including pro rata distributions of Brighthouse Life Insurance Company's own securities. Brighthouse Life Insurance Company will be permitted to pay a stockholder dividend in excess of the greater of such two amounts only if it files notice of the declaration of such a dividend and the amount thereof with the Delaware Commissioner and the Delaware Commissioner either approves the distribution of the dividend or does not disapprove the distribution within 30 days of its filing. In addition, any dividend that exceeds earned surplus (defined as "unassigned funds (surplus)") as of the immediately preceding calendar year requires insurance regulatory approval. Under the Delaware Insurance Law, the Delaware Commissioner has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

Under New York insurance laws, BHNY is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to its parent in any calendar year based on one of two standards. Under one standard, BHNY is permitted, without prior insurance regulatory clearance, to pay dividends out of earned surplus (defined as positive "unassigned funds (surplus)," excluding 85% of the change in net unrealized capital gains or losses (less capital gains tax), for the immediately preceding calendar year), in an amount up to the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains), not to exceed 30% of surplus to policyholders as of the end of the immediately preceding calendar year. In addition, under this standard, BHNY may not, without prior insurance regulatory clearance, pay any dividends in any calendar year immediately following a calendar year for which its net gain from operations, excluding realized capital gains, was negative. Under the second standard, if dividends are paid from a source other than earned surplus, BHNY may, without prior insurance regulatory clearance, pay an amount up to the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains). In addition, BHNY will be permitted to pay a dividend to its parent in excess of the amounts allowed under both standards only if it files notice of its intention to declare such a dividend and the amount thereof with the New York Superintendent of Financial Services (the "NY Superintendent"), and the NY Superintendent either approves the distribution of the dividend or does not disapprove the dividend within 30 days of its filing. To the extent BHNY pays a stockholder dividend, such dividend will be paid to Brighthouse Life Insurance Company, its direct parent and sole stockholder.

Under BRCD's plan of operations, no dividend or distribution may be made by BRCD without the prior approval of the Delaware Commissioner. BRCD did not pay any extraordinary dividends during the years ended December 31, 2024, 2023 and 2022. During each of the years ended December 31, 2024, 2023 and 2022, BRCD paid cash dividends of $1 million to its preferred shareholders.


74

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

12. Equity (continued)

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI was as follows:

    Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)		   Unrealized
Gains (Losses)
on Derivatives		   Changes in
Nonperformance
Risk on Market
Risk Benefits		   Changes in
Discount Rates
on the Liability
for Future
Policy Benefits		   Foreign
Currency
Translation
Adjustments		  

Total

  
   

(In millions)

  

Balance at December 31, 2021

  

$

4,996

    

$

233

    

$

(3,229

)

  

$

(2,192

)

  

$

(7

)

  

$

(199

)

  

OCI before reclassifications

    

(14,148

)

    

329

      

2,344

      

4,060

      

(22

)

    

(7,437

)

  

Deferred income tax benefit (expense) (2)

    

2,951

      

(50

)

    

(492

)

    

(852

)

    

4

      

1,561

    
AOCI before reclassifications, net of income
tax		    

(6,201

)

    

512

      

(1,377

)

    

1,016

      

(25

)

    

(6,075

)

  

Amounts reclassified from AOCI

    

202

      

(21

)

    

—

      

—

      

—

      

181

    

Deferred income tax benefit (expense) (2)

    

(42

)

    

5

      

—

      

—

      

—

      

(37

)

  
Amounts reclassified from AOCI, net of
income tax		    

160

      

(16

)

    

—

      

—

      

—

      

144

    

Balance at December 31, 2022

    

(6,041

)

    

496

      

(1,377

)

    

1,016

      

(25

)

    

(5,931

)

  

OCI before reclassifications

    

2,109

      

(273

)

    

(637

)

    

(376

)

    

18

      

841

    

Deferred income tax benefit (expense) (2)

    

(443

)

    

58

      

134

      

79

      

(4

)

    

(176

)

  
AOCI before reclassifications, net of income
tax		    

(4,375

)

    

281

      

(1,880

)

    

719

      

(11

)

    

(5,266

)

  

Amounts reclassified from AOCI

    

204

      

(11

)

    

—

      

—

      

—

      

193

    

Deferred income tax benefit (expense) (2)

    

(43

)

    

2

      

—

      

—

      

—

      

(41

)

  
Amounts reclassified from AOCI, net of
income tax		    

161

      

(9

)

    

—

      

—

      

—

      

152

    

Balance at December 31, 2023

    

(4,214

)

    

272

      

(1,880

)

    

719

      

(11

)

    

(5,114

)

  

OCI before reclassifications

    

(1,241

)

    

134

      

352

      

541

      

(18

)

    

(232

)

  

Deferred income tax benefit (expense) (2)

    

260

      

(28

)

    

(74

)

    

(114

)

    

4

      

48

    
AOCI before reclassifications, net of income
tax		    

(5,195

)

    

378

      

(1,602

)

    

1,146

      

(25

)

    

(5,298

)

  

Amounts reclassified from AOCI

    

188

      

(18

)

    

—

      

—

      

—

      

170

    

Deferred income tax benefit (expense) (2)

    

(39

)

    

4

      

—

      

—

      

—

      

(35

)

  
Amounts reclassified from AOCI, net of
income tax		    

149

      

(14

)

    

—

      

—

      

—

      

135

    

Balance at December 31, 2024

  

$

(5,046

)

  

$

364

    

$

(1,602

)

  

$

1,146

    

$

(25

)

  

$

(5,163

)

  

(1)  See Note 8 for information on offsets to investments related to future policy benefits.

(2)  The effects of income taxes on amounts recorded to AOCI are also recognized in AOCI. These income tax effects are released from AOCI when the related activity is reclassified into results from operations.


75

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

12. Equity (continued)

Information regarding amounts reclassified out of each component of AOCI was as follows:

AOCI Components

  

Amounts Reclassified from AOCI

   Consolidated Statements of
Operations Locations		  
   

Years Ended December 31,

      
   

2024

  

2023

  

2022

      
   

(In millions)

      

Net unrealized investment gains (losses):

  

Net unrealized investment gains (losses)

  

$

(173

)

  

$

(192

)

  

$

(182

)

  

Net investment gains (losses)

  

Net unrealized investment gains (losses)

    

(15

)

    

(12

)

    

(20

)

  

Net derivative gains (losses)

  
Net unrealized investment gains (losses), before
income tax		    

(188

)

    

(204

)

    

(202

)

          

Income tax (expense) benefit

    

39

      

43

      

42

            
Net unrealized investment gains (losses), net of
income tax		    

(149

)

    

(161

)

    

(160

)

          
Unrealized gains (losses) on derivatives — cash
flow hedges:		  

Interest rate swaps

    

2

      

1

      

5

    

Net derivative gains (losses)

  

Interest rate swaps

    

3

      

3

      

4

    

Net investment income

  

Foreign currency swaps

    

13

      

7

      

12

    

Net derivative gains (losses)

  
Gains (losses) on cash flow hedges, before
income tax		    

18

      

11

      

21

            

Income tax (expense) benefit

    

(4

)

    

(2

)

    

(5

)

          
Gains (losses) on cash flow hedges, net of
income tax		    

14

      

9

      

16

            

Total reclassifications, net of income tax

  

$

(135

)

  

$

(152

)

  

$

(144

)

          

13. Other Revenues and Other Expenses

Other Revenues

The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the "Funds") whereby the Company is paid monthly or quarterly fees ("12b-1 fees") for providing certain services to customers and distributors of the Funds. The 12b-1 fees, which are included in other revenues, are generally equal to a fixed percentage of the average daily balance of the customer's investment in a fund. The percentage is specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees.

To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company's performance obligations to the Funds and is used to recognize revenue associated with 12b-1 fees.

Other revenues included 12b-1 fees of $205 million, $199 million and $217 million for the years ended December 31, 2024, 2023 and 2022, respectively, of which substantially all were reported in the Annuities segment.


76

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

13. Other Revenues and Other Expenses (continued)

Other Expenses

Information on other expenses was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Compensation

  

$

379

    

$

383

    

$

336

    

Contracted services and other labor costs

    

261

      

282

      

266

    

Transition services agreements

    

20

      

30

      

55

    

Establishment costs

    

—

      

—

      

63

    

Premium and other taxes, licenses and fees

    

55

      

55

      

49

    

Volume related costs, excluding compensation, net of DAC capitalization

    

568

      

536

      

496

    

Interest expense on debt

    

67

      

70

      

70

    

Other

    

251

      

269

      

359

    

Total other expenses

  

$

1,601

    

$

1,625

    

$

1,694

    

Capitalization of DAC

See Note 6 for additional information on the capitalization of DAC.

Interest Expense on Debt

See Note 11 for attribution of interest expense by debt issuance.

Related Party Expenses

See Note 16 for a discussion of related party expenses included in the table above.

14. Income Tax

The provision for income tax was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Current:

  

Federal

  

$

(39

)

  

$

(5

)

  

$

(88

)

  

Deferred:

  

Federal

    

24

      

(378

)

    

883

    

Provision for income tax expense (benefit)

  

$

(15

)

  

$

(383

)

  

$

795

    


77

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

14. Income Tax (continued)

The reconciliation of the income tax provision at the statutory tax rate to the provision for income tax as reported was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(Dollars in millions)

  

Tax provision at statutory rate

  

$

51

    

$

(316

)

  

$

946

    

Tax effect of:

  

Resolution of prior years

    

—

      

—

      

(71

)

  

Dividends received deduction

    

(31

)

    

(31

)

    

(32

)

  

Change in uncertain tax benefits

    

(12

)

    

—

      

(20

)

  

Tax credits

    

(22

)

    

(8

)

    

(19

)

  

Change in valuation allowance

    

—

      

(18

)

    

—

    

Return to provision

    

(10

)

    

(5

)

    

(5

)

  

Adjustments to deferred tax

    

14

      

—

      

(2

)

  

Other, net

    

(5

)

    

(5

)

    

(2

)

  

Provision for income tax expense (benefit)

  

$

(15

)

  

$

(383

)

  

$

795

    

Effective tax rate

    

(6

)%

    

25

%

    

18

%

  

Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at:

   

December 31,

  
   

2024

  

2023

  
   

(In millions)

  

Deferred income tax assets:

  

Net unrealized investment losses

  

$

1,245

    

$

1,048

    

Net operating loss carryforwards

    

2,003

      

1,826

    

Investments, including derivatives

    

145

      

210

    

Tax credit carryforwards

    

188

      

189

    

Employee benefits

    

2

      

3

    

Intangibles

    

41

      

48

    

Other

    

4

      

—

    

Total deferred income tax assets

    

3,628

      

3,324

    

Less: Valuation allowance

    

—

      

—

    

Total net deferred income tax assets

    

3,628

      

3,324

    

Deferred income tax liabilities:

  

Policyholder liabilities and receivables

    

1,224

      

910

    

DAC

    

581

      

580

    

Other

    

—

      

1

    

Total deferred income tax liabilities

    

1,805

      

1,491

    

Net deferred income tax asset (liability)

  

$

1,823

    

$

1,833

    


78

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

14. Income Tax (continued)

The following table sets forth the net operating loss carryforwards for tax purposes at December 31, 2024.

    Net Operating Loss
Carryforwards		  
   

(In millions)

  

Expiration

  

2032

  

$

1,938

    

Indefinite

    

7,598

    
   

$

9,536

    

The following table sets forth the general business credits and foreign tax credits available for carryforward for tax purposes at December 31, 2024.

   

Tax Credit Carryforwards

  
    General Business
Credits		  

Foreign Tax Credits

  
   

(In millions)

  

Expiration

  

2027-2031

  

$

—

    

$

121

    

2032-2036

    

12

      

41

    

2037-2041

    

13

      

—

    

2042-2044

    

1

      

—

    

Indefinite

    

—

      

—

    
   

$

26

    

$

162

    

The Company's liability for unrecognized tax benefits may increase or decrease in the next 12 months. A reasonable estimate of the increase or decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of the pending issues will not result in a material change to its consolidated financial statements, although the resolution of income tax matters could impact the Company's effective tax rate in the future.

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:

   

Years Ended December 31,

  
   

2024

  

2023

  

2022

  
   

(In millions)

  

Balance at January 1,

  

$

14

    

$

14

    

$

34

    

Additions for tax positions of prior years

    

—

      

—

      

—

    

Reductions for tax positions of prior years

    

—

      

—

      

—

    

Additions for tax positions of current year

    

—

      

—

      

—

    

Reductions for tax positions of current year

    

—

      

—

      

—

    

Settlements with tax authorities

    

—

      

—

      

—

    

Lapses of statutes of limitations

    

(12

)

    

—

      

(20

)

  

Balance at December 31,

  

$

2

    

$

14

    

$

14

    

Unrecognized tax benefits that, if recognized would impact the effective rate

  

$

2

    

$

14

    

$

14

    

The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included in other expenses, while penalties are included in income tax expense. Interest related to unrecognized tax benefits was not significant. The Company had no penalties for each of the years ended December 31, 2024, 2023 and 2022.


79

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

14. Income Tax (continued)

The Company is subject to examination by the Internal Revenue Service and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction and subsidiary. The Company is no longer subject to federal, state or local income tax examinations for years prior to 2017. Management believes it has established adequate tax liabilities, and final resolution of any audits for the years 2017 and forward is not expected to have a material impact on the Company's consolidated financial statements.

Tax Sharing Agreements

For the periods prior to the Separation, the Company filed a consolidated federal income tax return with MetLife, Inc. and its insurance and non-insurance subsidiaries. Current taxes (and the benefits of tax attributes such as losses) are allocated to the Company, and its includable subsidiaries, under a tax sharing agreement with MetLife, Inc. This tax sharing agreement states that federal taxes are computed on a modified separate return basis with benefits for losses.

For periods after the Separation through the year ended December 31, 2022, Brighthouse Life Insurance Company, BHNY and BRCD entered into a tax sharing agreement to join a consolidated federal income tax return. The tax sharing agreement states that federal taxes are computed on a modified separate return basis with benefit for losses. The non- insurance subsidiaries of the Company filed their own federal income tax returns.

For periods beginning with the year ended December 31, 2023, Brighthouse Life Insurance Company, BHNY and BRCD file a consolidated federal income tax return with Brighthouse Financial, Inc. and certain of its subsidiaries. In furtherance thereof, such parties joined a single tax sharing agreement, pursuant to which federal taxes are computed on a modified separate return basis with benefits for losses.

Income Tax Transactions with Former Parent

The Company entered into a tax separation agreement with MetLife (the "Tax Separation Agreement"). Among other things, the Tax Separation Agreement governs the allocation between MetLife and the Company of the responsibility for the taxes of the MetLife group. The Tax Separation Agreement also allocates rights, obligations and responsibilities in connection with certain administrative matters relating to the preparation of tax returns and control of tax audits and other proceedings relating to taxes. For the years ended December 31, 2024, 2023 and 2022, MetLife, Inc. paid the Company 0, 0 and 14 million, respectively, under the Tax Separation Agreement. At December 31, 2024 and 2023, there was a current income tax receivable of 17 million and 15 million, respectively, related to this agreement.

15. Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a number of litigation matters. In some of the matters, large or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

The Company also receives and responds to subpoenas or other inquiries seeking a broad range of information from various state and federal regulators, agencies and officials. The issues involved in information requests and regulatory matters vary widely, but can include inquiries or investigations concerning the Company's compliance with applicable insurance and other laws and regulations. The Company cooperates in these inquiries.


80

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

15. Contingencies, Commitments and Guarantees (continued)

Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is possible that some matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated at December 31, 2024.

Matters as to Which an Estimate Can Be Made

For some loss contingency matters, the Company is able to estimate a reasonably possible range of loss. For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. In addition to amounts accrued for probable and reasonably estimable losses, as of December 31, 2024, the Company estimates the aggregate range of reasonably possible losses to be up to approximately $10 million.

Matters as to Which an Estimate Cannot Be Made

For other matters, the Company is not currently able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

Sales Practices Claims

Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities or other products. The Company continues to defend vigorously against the claims in these matters. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters.

Cost of Insurance Class Actions

Richard A. Newton v. Brighthouse Life Insurance Company (U.S. District Court, Northern District of Georgia, Atlanta Division, filed May 8, 2020). Plaintiff has filed a purported class action lawsuit against Brighthouse Life Insurance Company. Plaintiff was the owner of a universal life insurance policy issued by Travelers Insurance Company, a predecessor to Brighthouse Life Insurance Company. Plaintiff seeks to certify a class of all persons who own or owned life insurance policies issued where the terms of the life insurance policy provide or provided, among other things, a guarantee that the cost of insurance rates would not be increased by more than a specified percentage in any contract year. Plaintiff also alleges that cost of insurance charges were based on improper factors and should have decreased over time due to improving mortality but did not. Plaintiff alleges, among other things, causes of action for breach of contract, fraud, suppression and concealment, and violation of the Georgia Racketeer Influenced and Corrupt Organizations Act. Plaintiff seeks to recover damages, including punitive damages, interest and treble damages, attorneys' fees, and injunctive and declaratory relief. Brighthouse Life Insurance Company filed a motion to dismiss in June 2020, which was granted in part and denied in part in March 2021. Plaintiff was granted leave to amend the complaint. On January 18, 2023, plaintiff filed a motion on consent to amend the second amended class action complaint to narrow the scope of the class sought to those who own or owned policies issued in Georgia. The motion was granted on January 23, 2023, and the third amended class action complaint was filed on January 23, 2023. The Company intends to vigorously defend this matter.


81

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

15. Contingencies, Commitments and Guarantees (continued)

Lawrence Martin v. Brighthouse Life Insurance Company (U.S. District Court, Southern District of New York, filed April 6, 2021). Plaintiff has filed a purported class action lawsuit against Brighthouse Life Insurance Company. Plaintiff is the owner of a universal life insurance policy issued by Travelers Insurance Company, a predecessor to Brighthouse Life Insurance Company. Plaintiff seeks to certify a class of similarly situated owners of universal life insurance policies issued or administered by defendants and alleges that cost of insurance charges were based on improper factors and should have decreased over time due to improving mortality but did not. Plaintiff alleges, among other things, causes of action for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. Plaintiff seeks to recover compensatory damages, attorney's fees, interest, and equitable relief including a constructive trust. Brighthouse Life Insurance Company filed a motion to dismiss in June 2021, which was denied in February 2022. Brighthouse Life Insurance Company of NY was initially named as a defendant when the lawsuit was filed, but was dismissed as a defendant, without prejudice, in April 2022. The Company intends to vigorously defend this matter.

MOVEit Data Security Incident Litigation

Kennedy v. Progress Software Corporation, et al. (U.S. District Court, District of Massachusetts, filed October 3, 2023). BHF has been named as a defendant in a purported class action lawsuit. The action relates to a data security incident at an alleged third-party vendor, PBI Research Services ("PBI"), and allegedly involves the MOVEit file transfer system that PBI uses in its provision of services ("MOVEit Incident"). As it relates to BHF, plaintiff seeks to certify a subclass of persons whose private information was allegedly maintained by BHF and accessed or acquired in relation to the MOVEit Incident. Plaintiff alleges, among other things, that BHF negligently chose to utilize PBI to store and transfer plaintiff's and purported class members' private information despite PBI's use of the MOVEit software which plaintiff contends contained security vulnerabilities. The complaint asserts claims against BHF for negligence, negligence per se, and unjust enrichment, and plaintiff seeks declaratory and injunctive relief, damages, attorneys' fees and prejudgment interest. The court dismissed claims for injunctive relief against BHF but denied the remainder of a motion to dismiss based on plaintiff's lack of standing. BHF intends to vigorously defend this matter.

Summary

Various litigations, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company's consolidated financial statements, have arisen in the course of the Company's business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company's compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations, it is possible that an adverse outcome in certain cases could have a material effect upon the Company's financial position, based on information currently known by the Company's management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company's consolidated net income or cash flows in particular quarterly or annual periods.

Other Loss Contingencies

As with litigation and regulatory loss contingencies, the Company considers establishing liabilities for loss contingencies associated with disputes or other matters involving third parties, including counterparties to contractual arrangements entered into by the Company (e.g., third-party vendors and reinsurers), as well as with tax or other authorities ("other loss contingencies"). The Company establishes liabilities for such other loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In matters where it is not probable, but is reasonably possible that a loss will be incurred and the amount of loss can be reasonably estimated, such losses or range of losses are disclosed, and no accrual is made. In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual is made and no loss or range of loss is disclosed. On a quarterly basis, the Company reviews relevant information with respect to other loss contingencies and, when applicable, updates its accruals, disclosures and estimates of reasonably possible losses or estimated ranges of loss based on such reviews.


82

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

15. Contingencies, Commitments and Guarantees (continued)

The Company's tax-related matters have involved disputes with taxing authorities, ongoing audits, evaluation of filing positions and any potential assessments related thereto. In the matters where the Company's subsidiaries are acting as the reinsured or the reinsurer, such reinsurance matters have involved assertions by third parties primarily related to rates, fees or reinsured benefit calculations, and certain of such reinsurance matters have resulted in arbitration. As of December 31, 2024, the Company has no matters where it is reasonably possible that a loss will be incurred and the amount of loss can be reasonably estimated. For certain matters, the Company may not currently be able to estimate the reasonably possible loss or estimated range of loss until developments in such matters have provided sufficient information to support an assessment of such loss. During the first quarter of 2024, an arbitration panel ruled in favor of a reinsurer seeking a premium rate increase retroactive to September 2019 resulting in a $187 million loss, of which $167 million was reported in universal life and investment product-type policy fees and $20 million was reported in other expenses.

Commitments

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $271 million and $374 million at December 31, 2024 and 2023, respectively.

Commitments to Fund Partnership Investments, and Private Corporate Bond Investments

The Company commits to fund partnership investments and to lend funds under private corporate bond investments. The amounts of these unfunded commitments were $1.7 billion and $1.4 billion at December 31, 2024 and 2023, respectively.

Guarantees

In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of reinsurance, acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation with a cumulative maximum of $82 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments.

In addition, the Company indemnifies its directors and officers as provided in its charters and bylaws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company's interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.

The Company did not have any liabilities recorded for indemnities, guarantees and commitments at December 31, 2024 and had recorded liabilities for indemnities, guarantees and commitments of $1 million at December 31, 2023.


83

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Consolidated Financial Statements (continued)

16. Related Party Transactions

The Company has various existing arrangements with its Brighthouse Financial affiliates including related party reinsurance, debt and equity transactions (see Notes 7, 11 and 12). Other material arrangements between the Company and its related parties not disclosed elsewhere are as follows:

Shared Services and Overhead Allocations

The Company has entered into various agreements with affiliates regarding the provision of certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting and information technology. When specific identification to a particular legal entity and/or product is not practicable, an allocation methodology based on various performance measures or activity-based costing, such as sales, new policies/contracts issued, reserves, and in-force policy counts is used. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Management believes that the methods used to allocate expenses under these arrangements are reasonable. Revenues received from an affiliate related to these agreements, recorded in universal life and investment-type product policy fees, were $177 million, $175 million and $193 million for the years ended December 31, 2024, 2023 and 2022, respectively. Costs incurred under these arrangements were $891 million, $935 million and $946 million for the years ended December 31, 2024, 2023 and 2022, respectively, and were recorded in other expenses.

The Company had net receivables from/(payables to) affiliates, related to the items discussed above, of ($71) million and ($110) million at December 31, 2024 and 2023, respectively.

Broker-Dealer Transactions

The related party expense for the Company was commissions paid on the sale of variable products and passed through to the broker-dealer affiliate. The related party revenue for the Company was fee income passed through the broker-dealer affiliate from trusts and mutual funds whose shares serve as investment options of policyholders of the Company. Fee income received related to these transactions and recorded in other revenues was $174 million, $169 million and $186 million for the years ended December 31, 2024, 2023 and 2022, respectively. Commission expenses incurred related to these transactions and recorded in other expenses was $930 million, $887 million and $920 million for the years ended December 31, 2024, 2023 and 2022, respectively. The Company also had related party fee income receivables of $15 million and $14 million at December 31, 2024 and 2023, respectively.

17. Subsequent Event

Capital Transaction

On February 11, 2025, Brighthouse Life Insurance Company received a $100 million capital contribution from BH Holdings.


84

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Schedule I

Consolidated Summary of Investments
Other Than Investments in Related Parties
December 31, 2024

(In millions)

Types of Investments

   Cost or
Amortized Cost (1)		   Estimated Fair
Value		   Amount at
Which Shown on
Balance Sheet		  

Fixed maturity securities:

  

Bonds:

  

U.S. government and agency

  

$

7,112

    

$

6,460

    

$

6,460

    

State and political subdivision

    

3,671

      

3,382

      

3,382

    

Public utilities

    

4,035

      

3,625

      

3,625

    

Foreign government

    

1,036

      

960

      

960

    

All other corporate bonds

    

49,229

      

44,513

      

44,513

    

Total bonds

    

65,083

      

58,940

      

58,940

    

Mortgage-backed and asset-backed securities

    

21,106

      

19,828

      

19,828

    

Redeemable preferred stock

    

376

      

361

      

361

    

Total fixed maturity securities

    

86,565

      

79,129

      

79,129

    

Equity securities:

  

Non-redeemable preferred stock

    

18

      

11

      

11

    

Common stock:

  

Industrial, miscellaneous and all other

    

23

      

20

      

20

    

Public utilities

    

—

      

1

      

1

    

Total equity securities

    

41

      

32

      

32

    

Mortgage loans

    

23,254

              

23,254

    

Policy loans

    

1,626

              

1,626

    

Limited partnerships and LLCs

    

4,827

              

4,827

    

Short-term investments

    

1,157

              

1,157

    

Other invested assets

    

5,244

              

5,244

    

Total investments

  

$

122,714

            

$

115,269

    

(1)  Cost or amortized cost for fixed maturity securities represents original cost reduced by impairments that are charged to earnings and adjusted for amortization of premiums or accretion of discounts; for mortgage loans, cost represents original cost reduced by repayments and valuation allowances and adjusted for amortization of premiums or accretion of discounts; for equity securities, cost represents original cost; for limited partnerships and LLCs, cost represents original cost adjusted for equity in earnings and distributions.


85

Brighthouse Life Insurance Company

Schedule II

Condensed Financial Information
(Parent Company Only)
December 31, 2024 and 2023

(In millions, except share and per share data)

   

2024

  

2023

  

Condensed Balance Sheets

  

Assets

  

Investments:

  
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $72,741 and $73,144,
respectively; allowance for credit losses of $78 and $20, respectively)		  

$

66,860

    

$

68,317

    

Equity securities, at estimated fair value

    

27

      

48

    

Mortgage loans (net of allowance for credit losses of $172 and $129, respectively)

    

22,089

      

21,249

    

Policy loans

    

1,625

      

938

    

Limited partnerships and limited liability companies

    

4,288

      

4,384

    

Short-term investments, principally at estimated fair value

    

1,120

      

574

    

Investment in subsidiaries

    

2,046

      

2,347

    

Other invested assets, principally at estimated fair value

    

10,387

      

8,697

    

Total investments

    

108,442

      

106,554

    

Cash and cash equivalents

    

3,856

      

2,682

    

Accrued investment income

    

1,139

      

1,049

    

Premiums, reinsurance and other receivables (net of allowance for credit losses of $3 and $3, respectively)

    

20,298

      

18,869

    

Receivable from subsidiaries

    

11,558

      

15,830

    

Deferred policy acquisition costs and value of business acquired

    

3,958

      

4,047

    

Current income tax recoverable

    

26

      

23

    

Deferred income tax receivable

    

3,299

      

3,380

    

Market risk benefits assets

    

993

      

588

    

Other assets

    

293

      

279

    

Separate account assets

    

74,966

      

77,563

    

Total assets

  

$

228,828

    

$

230,864

    

Liabilities and Stockholder's Equity

  

Liabilities

  

Future policy benefits

  

$

31,126

    

$

32,066

    

Policyholder account balances

    

85,968

      

79,017

    

Market risk benefits liabilities

    

8,181

      

10,183

    

Other policy-related balances

    

3,827

      

3,902

    

Payables for collateral under securities loaned and other transactions

    

3,762

      

3,616

    

Long-term debt

    

812

      

812

    

Other liabilities

    

14,053

      

17,779

    

Separate account liabilities

    

74,966

      

77,563

    

Total liabilities

    

222,695

      

224,938

    

Stockholder's Equity

  

Common stock, par value $25,000 per share; 4,000 shares authorized; 3,000 shares issued and outstanding

    

75

      

75

    

Additional paid-in capital

    

17,507

      

17,507

    

Retained earnings (deficit)

    

(6,286

)

    

(6,542

)

  

Accumulated other comprehensive income (loss)

    

(5,163

)

    

(5,114

)

  

Total stockholder's equity

    

6,133

      

5,926

    

Total liabilities and stockholder's equity

  

$

228,828

    

$

230,864

    

See accompanying notes to the condensed financial information.


86

Brighthouse Life Insurance Company

Schedule II

Condensed Financial Information (continued)
(Parent Company Only)
For the Years Ended December 31, 2024, 2023 and 2022

(In millions)

   

2024

  

2023

  

2022

  

Condensed Statements of Operations

  

Revenues

  

Premiums

  

$

577

    

$

599

    

$

423

    

Universal life and investment-type product policy fees

    

1,378

      

1,527

      

1,607

    

Net investment income

    

4,431

      

3,992

      

3,620

    

Other revenues

    

755

      

519

      

480

    

Net investment gains (losses)

    

(287

)

    

(234

)

    

(233

)

  

Net derivative gains (losses)

    

(3,066

)

    

(3,616

)

    

1,800

    

Total revenues

    

3,788

      

2,787

      

7,697

    

Expenses

  
Policyholder benefits and claims (including remeasurement gains (losses) of ($366), ($137),
$79, respectively)		    

1,635

      

1,692

      

1,420

    

Interest credited to policyholder account balances

    

1,989

      

1,641

      

1,152

    

Amortization of deferred policy acquisition costs and value of business acquired

    

485

      

499

      

504

    

Change in market risk benefits

    

(2,665

)

    

(1,494

)

    

(4,107

)

  

Other expenses

    

1,886

      

1,817

      

1,926

    

Total expenses

    

3,330

      

4,155

      

895

    

Income (loss) before provision for income tax and equity in earnings (losses) of subsidiaries

    

458

      

(1,368

)

    

6,802

    

Provision for income tax expense (benefit)

    

41

      

(347

)

    

1,292

    

Income (loss) before equity in earnings (losses) of subsidiaries

    

417

      

(1,021

)

    

5,510

    

Equity in earnings (losses) of subsidiaries

    

(161

)

    

(103

)

    

(1,800

)

  

Net income (loss) attributable to Brighthouse Life Insurance Company

  

$

256

    

$

(1,124

)

  

$

3,710

    

Comprehensive income (loss)

  

$

207

    

$

(307

)

  

$

(2,022

)

  

See accompanying notes to the condensed financial information.


87

Brighthouse Life Insurance Company

Schedule II

Condensed Financial Information (continued)
(Parent Company Only)
For the Years Ended December 31, 2024, 2023 and 2022

(In millions)

   

2024

  

2023

  

2022

  

Condensed Statements of Cash Flows

  

Net cash provided by (used in) operating activities

  

$

240

    

$

238

    

$

(938

)

  

Cash flows from investing activities

  

Sales, maturities and repayments of:

  

Fixed maturity securities

    

10,717

      

5,561

      

9,701

    

Equity securities

    

25

      

18

      

48

    

Mortgage loans

    

1,441

      

1,180

      

2,036

    

Limited partnerships and limited liability companies

    

325

      

197

      

249

    

Purchases of:

  

Fixed maturity securities

    

(10,280

)

    

(7,587

)

    

(14,364

)

  

Equity securities

    

(2

)

    

(3

)

    

(14

)

  

Mortgage loans

    

(2,347

)

    

(775

)

    

(4,864

)

  

Limited partnerships and limited liability companies

    

(293

)

    

(449

)

    

(807

)

  

Cash received in connection with freestanding derivatives

    

12,416

      

4,505

      

4,327

    

Cash paid in connection with freestanding derivatives

    

(11,794

)

    

(5,207

)

    

(3,833

)

  

Receipts on loans to affiliate

    

—

      

125

      

—

    

Issuances of loans to affiliate

    

—

      

—

      

(125

)

  

Returns of capital and dividends from subsidiaries

    

19

      

25

      

30

    

Capital contributions to subsidiaries

    

—

      

—

      

(100

)

  

Net change in policy loans

    

(688

)

    

(40

)

    

(29

)

  

Net change in short-term investments

    

(523

)

    

(261

)

    

351

    

Net change in other invested assets

    

(1,380

)

    

(4,530

)

    

(381

)

  

Net cash provided by (used in) investing activities

    

(2,364

)

    

(7,241

)

    

(7,775

)

  

Cash flows from financing activities

  

Policyholder account balances:

  

Deposits

    

29,602

      

24,917

      

29,938

    

Withdrawals

    

(26,235

)

    

(17,305

)

    

(19,680

)

  

Net change in payables for collateral under securities loaned and other transactions

    

146

      

(737

)

    

(1,569

)

  

Dividends paid to parent

    

—

      

(266

)

    

—

    

Financing element on certain derivative instruments and other derivative related transactions, net

    

(215

)

    

(26

)

    

(183

)

  

Net cash provided by (used in) financing activities

    

3,298

      

6,583

      

8,506

    

Change in cash, cash equivalents and restricted cash

    

1,174

      

(420

)

    

(207

)

  

Cash, cash equivalents and restricted cash, beginning of year

    

2,682

      

3,102

      

3,309

    

Cash, cash equivalents and restricted cash, end of year

  

$

3,856

    

$

2,682

    

$

3,102

    

Supplemental disclosures of cash flow information

  

Net cash paid (received) for:

  

Interest

  

$

65

    

$

65

    

$

65

    

Income tax

  

$

1

    

$

(20

)

  

$

(56

)

  

Non-cash transactions:

  

Transfer of fixed maturity securities from affiliates

  

$

—

    

$

103

    

$

589

    

Transfer of limited partnerships and limited liability companies to affiliates

  

$

—

    

$

—

    

$

587

    

Transfer of fixed maturity securities to affiliates

  

$

126

    

$

234

    

$

296

    

Transfer of mortgage loans to affiliates

  

$

—

    

$

—

    

$

89

    

See accompanying notes to the condensed financial information.


88

Brighthouse Life Insurance Company

Schedule II

Notes to the Condensed Financial Information
(Parent Company Only)

1. Basis of Presentation

The condensed financial information of Brighthouse Life Insurance Company (the "Parent Company") should be read in conjunction with the consolidated financial statements of Brighthouse Life Insurance Company and its subsidiaries and the notes thereto (the "Consolidated Financial Statements"). These condensed unconsolidated financial statements reflect the results of operations, financial position and cash flows for the Parent Company. Investments in subsidiaries are accounted for using the equity method of accounting.

The preparation of these condensed unconsolidated financial statements in conformity with GAAP requires management to adopt accounting policies and make certain estimates and assumptions. The most important of these estimates and assumptions relate to the fair value measurements, identifiable intangible assets and the provision for potential losses that may arise from litigation and regulatory proceedings and tax audits, which may affect the amounts reported in the condensed unconsolidated financial statements and accompanying notes. Actual results could differ from these estimates.

2. Investment in Subsidiaries

During the year ended December 31, 2023, Brighthouse Life Insurance Company paid a non-cash capital contribution of $100 million to BHNY. During the year ended December 31, 2022, Brighthouse Life Insurance Company paid a cash capital contribution of $100 million to BHNY.


89

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Schedule III

Consolidated Supplementary Insurance Information
December 31, 2024 and 2023

(In millions)

Segment

   DAC
and
VOBA		   Future Policy
Benefits and Other
Policy-Related
Balances		   Policyholder
Account
Balances		   Unearned
Premiums (1)(2)		   Unearned
Revenue (1)		  

2024

  

Annuities

  

$

3,951

    

$

4,013

    

$

67,602

    

$

—

    

$

59

    

Life

    

420

      

6,083

      

2,207

      

9

      

190

    

Run-off

    

3

      

18,672

      

6,376

      

—

      

715

    

Corporate & Other

    

—

      

5,994

      

10,977

      

5

      

—

    

Total

  

$

4,374

    

$

34,762

    

$

87,162

    

$

14

    

$

964

    

2023

  

Annuities

  

$

4,027

    

$

3,995

    

$

60,723

    

$

—

    

$

65

    

Life

    

456

      

5,942

      

2,187

      

11

      

167

    

Run-off

    

4

      

19,420

      

6,694

      

—

      

612

    

Corporate & Other

    

—

      

6,411

      

10,589

      

5

      

—

    

Total

  

$

4,487

    

$

35,768

    

$

80,193

    

$

16

    

$

844

    

(1)  Amounts are included in the future policy benefits and other policy-related balances column.

(2)  Includes premiums received in advance.


90

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Schedule III

Consolidated Supplementary Insurance Information (continued)
December 31, 2024, 2023 and 2022

(In millions)

Segment

   Premiums and
Universal Life
and Investment-Type
Product Policy Fees		   Net
Investment
Income (1)		   Policyholder Benefits
and Claims and
Interest Credited to
Policyholder Account
Balances		   Amortization of
DAC and VOBA		   Other
Expenses		  

2024

  

Annuities

  

$

1,531

    

$

2,841

    

$

1,832

    

$

497

    

$

1,007

    

Life

    

496

      

418

      

633

      

53

      

169

    

Run-off

    

333

      

1,230

      

1,335

      

—

      

165

    

Corporate & Other

    

—

      

611

      

449

      

—

      

260

    

Total

  

$

2,360

    

$

5,100

    

$

4,249

    

$

550

    

$

1,601

    

2023

  

Annuities

  

$

1,499

    

$

2,536

    

$

1,556

    

$

507

    

$

997

    

Life

    

615

      

385

      

688

      

57

      

182

    

Run-off

    

475

      

1,115

      

1,587

      

—

      

167

    

Corporate & Other

    

—

      

524

      

388

      

—

      

279

    

Total

  

$

2,589

    

$

4,560

    

$

4,219

    

$

564

    

$

1,625

    

2022

  

Annuities

  

$

1,418

    

$

2,233

    

$

1,271

    

$

505

    

$

980

    

Life

    

588

      

391

      

847

      

63

      

110

    

Run-off

    

511

      

1,146

      

1,216

      

—

      

292

    

Corporate & Other

    

—

      

294

      

165

      

—

      

312

    

Total

  

$

2,517

    

$

4,064

    

$

3,499

    

$

568

    

$

1,694

    

(1)  See Note 2 of the Notes to the Consolidated Financial Statements for the basis of allocation of net investment income.


91

Brighthouse Life Insurance Company
(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Schedule IV

Consolidated Reinsurance
December 31, 2024, 2023 and 2022

(Dollars in millions)

   

Gross Amount

  

Ceded

  

Assumed

  

Net Amount

   % Amount
Assumed to Net		  

2024

  

Life insurance in-force (1)

  

$

447,395

    

$

121,327

    

$

6,940

    

$

333,008

      

2.1

%

  

Insurance premium

  

Life insurance (2)

  

$

1,181

    

$

444

    

$

20

    

$

757

      

2.6

%

  

Accident & health insurance

    

186

      

184

      

—

      

2

      

0.0

%

  

Total insurance premium

  

$

1,367

    

$

628

    

$

20

    

$

759

      

2.6

%

  

2023

  

Life insurance in-force (1)

  

$

463,582

    

$

129,016

    

$

7,479

    

$

342,045

      

2.2

%

  

Insurance premium

  

Life insurance (2)

  

$

1,257

    

$

475

    

$

20

    

$

802

      

2.5

%

  

Accident & health insurance

    

201

      

192

      

—

      

9

      

0.0

%

  

Total insurance premium

  

$

1,458

    

$

667

    

$

20

    

$

811

      

2.5

%

  

2022

  

Life insurance in-force (1)

  

$

475,382

    

$

138,063

    

$

8,034

    

$

345,353

      

2.3

%

  

Insurance premium

  

Life insurance (2)

  

$

1,123

    

$

493

    

$

8

    

$

638

      

1.3

%

  

Accident & health insurance

    

198

      

195

      

—

      

3

      

0.0

%

  

Total insurance premium

  

$

1,321

    

$

688

    

$

8

    

$

641

      

1.2

%

  

(1)  Includes life insurance products in the Life, Run-off and Corporate & Other segments.

(2)  Includes annuities with life contingencies.

For the years ended December 31, 2024, 2023 and 2022, reinsurance assumed included related party transactions for life insurance in-force of $1.3 billion, $1.4 billion and $1.5 billion, respectively, and life insurance premiums of $8 million, $6 million and $2 million, respectively. There were no related party transactions for ceded life insurance in-force and life insurance premiums for the years ended December 31, 2024, 2023 and 2022.


92