Related Party Transactions

3 Months Ended

Mar. 31, 2022

10. Related Party TransactionsThe Company has various existing arrangements with its Brighthouse Financial affiliates and had previous arrangements with MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”) for services necessary to conduct its activities. Certain of the MetLife services have continued, however, MetLife ceased to be a related party in June 2018. See Note 8 for amounts related to continuing transition services. Other material arrangements between the Company and its related parties not disclosed elsewhere are as follows:

Reinsurance Agreements

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 related parties. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth.

Information regarding the significant effects of assumed reinsurance with New England Life Insurance Company (“NELICO”), an affiliate, included on the interim condensed consolidated statements of operations and comprehensive income (loss) was as follows:


	Three Months Ended March 31,
		2022		2021
		(In millions)
Premiums		$	—	$	2


Universal life and investment-type product policy fees		$	1	$	2


Other revenues		$	—	$	1


Policyholder benefits and claims		$	7	$	7


Other expenses		$	(7)	$	(4)

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


	March 31, 2022		December 31, 2021
	(In millions)
Assets
Premiums, reinsurance and other receivables (net of allowance for credit losses)	$	27		$	26
Liabilities
Future policy benefits	$	120		$	119
Policyholder account balances	$	350		$	427
Other policy-related balances	$	10		$	9
Other liabilities	$	23		$	26

The Company assumes risks from NELICO related to guaranteed minimum benefits written directly by the cedent. The assumed reinsurance agreements contain embedded derivatives and changes in the estimated fair value are included within net derivative gains (losses). The embedded derivatives associated with these agreements are included within policyholder account balances and were $350 million and $427 million at March 31, 2022 and December 31, 2021, respectively. Net derivative gains (losses) associated with the embedded derivatives were $77 million and $176 million for the three months ended March 31, 2022 and 2021, respectively.

Shared Services and Overhead Allocations

Brighthouse Services, LLC, an affiliate, currently provides the Company 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. Revenues received from an affiliate related to these agreements, recorded in universal life and investment-type product policy fees, were $54 million and $57 million for the three months ended March 31, 2022 and 2021, respectively. Costs incurred under these arrangements were $223 million and $228 million for the three months ended March 31, 2022 and 2021, respectively, and were recorded in other expenses.

The Company had net receivables from/(payables to) affiliates, related to the items discussed above, of ($145) million and ($182) million at March 31, 2022 and December 31, 2021, 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 $52 million and $55 million for the three months ended March 31, 2022 and 2021, respectively. Commission expenses incurred related to these transactions and recorded in other expenses was $230 million and $236 million for the three months ended March 31, 2022 and 2021, respectively. The Company also had related party fee income receivables of $17 million and $19 million at March 31, 2022 and December 31, 2021, respectively.