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Segment Information
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Segment Information
2. Segment Information
The Company is organized into three segments: Annuities; Life; and Run-off. In addition, the Company reports certain of its results of operations in Corporate & Other.
Annuities
The Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security.
Life
The Life segment consists of insurance products and services, including term, universal, whole and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis.
Run-off
The Run-off segment consists of products no longer actively sold and which are separately managed, including structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, funding agreements and universal life with secondary guarantees.
Corporate & Other
Corporate & Other contains the excess capital not allocated to the segments and interest expense related to the majority of the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts, long-term care and workers compensation business reinsured through 100% quota share reinsurance agreements, and term life insurance sold direct to consumers, which is no longer being offered for new sales.
Financial Measures and Segment Accounting Policies
Adjusted earnings is a financial measure used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance. The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted earnings should not be viewed as a substitute for net income (loss) attributable to Brighthouse Life Insurance Company and excludes net income (loss) attributable to noncontrolling interests.
Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends.
The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings:
•
Net investment gains (losses);
•
Net derivative gains (losses) except earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment; and
•
Certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”) and amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses).
The following are significant items excluded from total expenses, net of income tax, in calculating adjusted earnings:
•
Amounts associated with benefits and hedging costs related to GMIBs (“GMIB Costs”);
•
Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and
•
Amortization of DAC and value of business acquired (“VOBA”) related to: (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments.
The tax impact of the adjustments mentioned above is calculated net of the statutory tax rate, which could differ from the Company’s effective tax rate.
Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months and six months ended June 30, 2019 and 2018 and at June 30, 2019 and December 31, 2018. The segment accounting policies are the same as those used to prepare the Company’s condensed consolidated financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below.
Segment investment and capitalization targets are based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company’s variable annuity risk management strategy. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets.
 
 
Operating Results
Three Months Ended June 30, 2019
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
 
 
(In millions)
Pre-tax adjusted earnings
 
$
321

 
$
72

 
$
2

 
$
(74
)
 
$
321

Provision for income tax expense (benefit)
 
59

 
15

 
—

 
(22
)
 
52

Post-tax adjusted earnings
 
262

 
57

 
2

 
(52
)
 
269

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

 
—

 
—

 
1

 
1

Adjusted earnings
 
$
262

 
$
57

 
$
2

 
$
(53
)
 
268

Adjustments for:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
 
 
 
 
 
 
 
 
56

Net derivative gains (losses)
 
 
 
 
 
 
 
 
 
108

Other adjustments to net income
 
 
 
 
 
 
 
 
 
(46
)
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
(24
)
Net income (loss) attributable to Brighthouse Life Insurance Company
 
 
 
 
 
 
 
 
 
$
362

 
 
 
 
 
 
 
 
 
 
 
Interest revenue
 
$
468

 
$
101

 
$
339

 
$
10

 
 
Interest expense
 
$
—

 
$
—

 
$
—

 
$
16

 
 
 
 
Operating Results
Three Months Ended June 30, 2018
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
 
 
(In millions)
Pre-tax adjusted earnings
 
$
255

 
$
26

 
$
(8
)
 
$
(38
)
 
$
235

Provision for income tax expense (benefit)
 
43

 
6

 
(2
)
 
(14
)
 
33

Post-tax adjusted earnings
 
212

 
20

 
(6
)
 
(24
)
 
202

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

 
—

 
—

 
—

 
—

Adjusted earnings
 
$
212

 
$
20

 
$
(6
)
 
$
(24
)
 
202

Adjustments for:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
 
 
 
 
 
 
 
 
(74
)
Net derivative gains (losses)
 
 
 
 
 
 
 
 
 
(278
)
Other adjustments to net income
 
 
 
 
 
 
 
 
 
(112
)
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
98

Net income (loss) attributable to Brighthouse Life Insurance Company
 
 
 
 
 
 
 
 
 
$
(164
)
 
 
 
 
 
 
 
 
 
 
 
Interest revenue
 
$
374

 
$
92

 
$
314

 
$
7

 
 
Interest expense
 
$
—

 
$
—

 
$
—

 
$
1

 
 

 
 
Operating Results
Six Months Ended June 30, 2019
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
 
 
(In millions)
Pre-tax adjusted earnings
 
$
668

 
$
97

 
$
(44
)
 
$
(140
)
 
$
581

Provision for income tax expense (benefit)
 
122

 
20

 
(10
)
 
(42
)
 
90

Post-tax adjusted earnings
 
546

 
77

 
(34
)
 
(98
)
 
491

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

 
—

 
—

 
1

 
1

Adjusted earnings
 
$
546

 
$
77

 
$
(34
)
 
$
(99
)
 
490

Adjustments for:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
 
 
 
 
 
 
 
 
46

Net derivative gains (losses)
 
 
 
 
 
 
 
 
 
(1,202
)
Other adjustments to net income
 
 
 
 
 
 
 
 
 
39

Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
235

Net income (loss) attributable to Brighthouse Life Insurance Company
 
 
 
 
 
 
 
 
 
$
(392
)
 
 
 
 
 
 
 
 
 
 
 
Interest revenue
 
$
886

 
$
183

 
$
615

 
$
22

 
 
Interest expense
 
$
—

 
$
—

 
$
—

 
$
26

 
 
 
 
Operating Results
Six Months Ended June 30, 2018
 
Annuities
 
Life
 
Run-off
 
Corporate & Other
 
Total
 
 
(In millions)
Pre-tax adjusted earnings
 
$
510

 
$
90

 
$
56

 
$
(55
)
 
$
601

Provision for income tax expense (benefit)
 
87

 
18

 
11

 
(23
)
 
93

Post-tax adjusted earnings
 
423

 
72

 
45

 
(32
)
 
508

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

 
—

 
—

 
—

 
—

Adjusted earnings
 
$
423

 
$
72

 
$
45

 
$
(32
)
 
508

Adjustments for:
 
 
 
 
 
 
 
 
 
 
Net investment gains (losses)
 
 
 
 
 
 
 
 
 
(78
)
Net derivative gains (losses)
 
 
 
 
 
 
 
 
 
(565
)
Other adjustments to net income
 
 
 
 
 
 
 
 
 
(211
)
Provision for income tax (expense) benefit
 
 
 
 
 
 
 
 
 
180

Net income (loss) attributable to Brighthouse Life Insurance Company
 
 
 
 
 
 
 
 
 
$
(166
)
 
 
 
 
 
 
 
 
 
 
 
Interest revenue
 
$
733

 
$
180

 
$
657

 
$
17

 
 
Interest expense
 
$
—

 
$
—

 
$
—

 
$
2

 
 

The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other:
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2019
 
2018
 
2019

2018
 
 
(In millions)
Annuities
 
$
1,048

 
$
985

 
$
2,015

 
$
1,962

Life
 
275

 
278

 
529

 
578

Run-off
 
527

 
509

 
1,003

 
1,058

Corporate & Other
 
33

 
31

 
70

 
67

Adjustments
 
229

 
(293
)
 
(1,028
)
 
(531
)
Total
 
$
2,112

 
$
1,510

 
$
2,589

 
$
3,134


The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:

 
June 30, 2019

December 31, 2018

 
(In millions)
Annuities
 
$
148,581

 
$
137,079

Life
 
15,426

 
14,928

Run-off
 
34,258

 
32,390

Corporate & Other
 
11,643

 
11,433

Total
 
$
209,908


$
195,830