Insurance Liabilities

12 Months Ended

Dec. 31, 2023

4. 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,
	2023									2022									2021
	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	$	2,804		$	—		$	—		$	3,212		$	—		$	—		$	3,274		$	—		$	—
Beginning balance at original discount rate	3,146			—			—			2,964			—			—			2,868			—			—
Effect of model refinements	—			—			—			121			—			—			—			—			—
Effect of changes in cash flow assumptions	206			—			—			159			—			—			100			—			—
Effect of actual variances from expected experience	(17)			—			—			114			—			—			158			—			—
Adjusted beginning of year balance	3,335			—			—			3,358			—			—			3,126			—			—
Issuances	93			—			—			93			—			—			112			—			—
Interest accrual	108			—			—			112			—			—			107			—			—
Net premiums collected	(374)			—			—			(417)			—			—			(381)			—			—
Ending balance at original discount rate	3,162			—			—			3,146			—			—			2,964			—			—
Effect of changes in discount rate assumptions	(263)			—			—			(342)			—			—			248			—			—
Balance, end of year	$	2,899		$	—		$	—		$	2,804		$	—		$	—		$	3,212		$	—		$	—
Present value of expected future policy benefits:
Balance, beginning of year	$	5,172		$	3,469		$	6,793		$	6,253		$	4,283		$	10,171		$	6,606		$	4,636		$	11,301
Beginning balance at original discount rate	5,816			3,848			7,410			5,682			3,817			8,165			5,678			3,889			8,531
Effect of model refinements	—			—			—			134			—			(278)			—			—			—
Effect of changes in cash flow assumptions	296			—			—			179			55			(157)			100			(40)			(41)
Effect of actual variances from expected experience	(15)			(21)			(47)			150			(21)			(23)			158			(6)			(16)
Adjusted beginning of year balance	6,097			3,827			7,363			6,145			3,851			7,707			5,936			3,843			8,474
Issuances	99			369			—			101			220			—			128			193			—
Interest accrual	211			139			314			216			144			327			214			149			359
Benefit payments	(502)			(342)			(592)			(646)			(367)			(624)			(596)			(368)			(668)
Ending 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 changes in discount rate assumptions	(520)			(274)			(388)			(644)			(379)			(617)			571			466			2,006
Balance, end of year	$	5,385		$	3,719		$	6,697		$	5,172		$	3,469		$	6,793		$	6,253		$	4,283		$	10,171
Net liability for future policy benefits, end of year	$	2,486		$	3,719		$	6,697		$	2,368		$	3,469		$	6,793		$	3,041		$	4,283		$	10,171
Less: Reinsurance recoverable, end of year	24			30			65			32			25			68			42			28			93
Net liability for future policy benefits, after reinsurance recoverable	$	2,462		$	3,689		$	6,632		$	2,336		$	3,444		$	6,725		$	2,999		$	4,255		$	10,078
Weighted-average duration of liability	8.8 years			8.2 years			11.6 years			8.5 years			8.5 years			11.6 years			8.5 years			8.5 years			12.7 years
Weighted-average interest accretion rate	3.91		%	3.99		%	4.46		%	3.94		%	3.89		%	4.45		%	3.94		%	3.98		%	4.45		%
Current discount rate	4.94		%	4.95		%	5.03		%	5.26		%	5.27		%	5.32		%	2.53		%	2.55		%	2.81		%
Gross premiums or assessments recognized during period	$	595		$	472		$	—		$	625		$	243		$	—		$	648		$	240		$	—
Expected future gross premiums, undiscounted	$	5,999		$	—		$	—		$	6,535		$	—		$	—		$	6,736		$	—		$	—
Expected future gross premiums, discounted	$	4,535		$	—		$	—		$	4,875		$	—		$	—		$	5,014		$	—		$	—
Expected future benefit payments, undiscounted	$	8,148		$	5,616		$	13,767		$	8,015		$	5,434		$	14,418		$	7,877		$	5,446		$	17,241
Expected future benefit payments, discounted	$	5,905		$	3,993		$	7,085		$	5,816		$	3,848		$	7,410		$	5,682		$	3,817		$	8,165

The measurement of LFPBs can be significantly impacted by changes in assumptions for policyholder behavior. As part of the 2023 and 2022 annual actuarial review (“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,
	2023			2022			2021
	(Dollars in millions)
Balance, beginning of year	$	6,935		$	7,168		$	6,743
Beginning balance before the effect of unrealized gains and losses	7,175			6,731			6,203
Effect of changes in cash flow assumptions	52			(37)			153
Effect of actual variances from expected experience	145			179			(124)
Adjusted beginning of year balance	7,372			6,873			6,232
Interest accrual	357			333			308
Net assessments collected	414			416			475
Benefit payments	(359)			(447)			(286)
Effect of realized capital gains (losses)	—			—			2
Ending balance before the effect of unrealized gains and losses	7,784			7,175			6,731
Effect of unrealized gains and losses	(177)			(240)			437
Balance, end of year	7,607			6,935			7,168
Less: Reinsurance recoverable, end of year	1,438			1,384			1,294
Net additional liability, after reinsurance recoverable	$	6,169		$	5,551		$	5,874
Weighted-average duration of liability	6.7 years			6.7 years			6.7 years
Weighted-average interest accretion rate	4.92		%	4.90		%	4.90		%
Gross assessments recognized during period	$	1,064		$	1,070		$	1,255

The measurement of liabilities for secondary guarantees can be significantly impacted by changes in 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 2023 AAR, the Company increased the long-term general account earned rate, driven by an increase in the mean reversion rate from 3.50% to 3.75%. The Company also updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawals and maintenance expenses. As part of the 2022 AAR, the Company increased the long-term general account earned rate, driven by an increase in the mean reversion rate from 3.00% to 3.50%. Both period assumption updates are reflected in the table above.

A reconciliation of the net LFPBs for nonparticipating 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,
	2023		2022
	(In millions)
Liabilities reported in the preceding rollforward tables	$	20,509	$	19,565
Long-term care insurance (1)	5,581		5,686
ULSG liabilities, including liability for profits followed by losses	2,427		2,449

Participating whole life insurance (2)	2,849		2,689
Deferred profit liabilities	475		369
Other	308		388
Total liability for future policy benefits	$	32,149	$	31,146

_______________

(1)Includes liabilities related to fully reinsured individual long-term care insurance. See Note 8.

(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, 2023 and 2022, and 40% and 41% of gross traditional life insurance premiums for the years ended December 31, 2023 and 2022, respectively.

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, 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		%
Year Ended December 31, 2021
Balance, beginning of year	$	2,110		$	4,605		$	23,274		$	12,349		$	5,823		$	679
Premiums and deposits	290			194			7,054			114			687			—
Surrenders and withdrawals	(48)			(566)			(1,419)			(610)			(46)			—
Benefit payments	(55)			(95)			(151)			(342)			(77)			(10)
Net transfers from (to) separate account	17			238			—			—			—			(35)
Interest credited	84			140			365			338			186			24
Policy charges	(264)			(41)			(6)			—			(1,004)			(12)
Changes related to embedded derivatives	—			—			2,883			—			—			—

Balance, end of year	$	2,134		$	4,475		$	32,000		$	11,849		$	5,569		$	646
Weighted-average crediting rate	3.97		%	3.07		%	1.12		%	2.79		%	3.27		%	3.66		%

_______________

(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.

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,
	2023		2022
	(In millions)
Policyholder account balances reported in the preceding rollforward table	$	68,095	$	60,883
Funding agreements classified as investment contracts	11,115		10,689
Other investment contract liabilities	983		1,030
Total policyholder account balances	$	80,193	$	72,602

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, 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
December 31, 2022
Annuities (1):
Less than 2.00%	$	805	$	293	$	356	$	5,805	$	7,259
2.00% to 3.99%	5,224		4,871		594		8		10,697
Greater than 3.99%	470		—		—		—		470
Total	$	6,499	$	5,164	$	950	$	5,813	$	18,426
Life insurance (2) (3):
Less than 2.00%	$	—	$	—	$	—	$	172	$	172
2.00% to 3.99%	—		462		87		150		699
Greater than 3.99%	1,148		—		—		—		1,148
Total	$	1,148	$	462	$	87	$	322	$	2,019
ULSG (3):
Less than 2.00%	$	—	$	—	$	—	$	—	$	—
2.00% to 3.99%	1,224		1,581		1,729		266		4,800
Greater than 3.99%	527		—		—		—		527
Total	$	1,751	$	1,581	$	1,729	$	266	$	5,327

_______________

(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 6 for information regarding net amount at risk and cash surrender values.

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, 2023 and 2022.

Brighthouse Life Insurance Company has a secured funding agreement program with the Federal Home Loan Bank (“FHLB”) of Atlanta. The Company had obligations outstanding under this program of $4.4 billion and $3.9 billion at December 31, 2023 and 2022, respectively. Funding agreements are issued to FHLBs in exchange for cash, for which the FHLBs have been granted liens on certain assets, some of which are in their custody to collateralize the Company’s obligations under the funding agreements. The Company is permitted to withdraw any portion of the collateral in the custody of the FHLBs as long as there is no event of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by the Company, the FHLBs’ recovery on the collateral is limited to the amount of the Company’s liabilities to the FHLBs. See Note 9 for information on invested assets pledged as collateral in connection with funding agreements.

Brighthouse Life Insurance Company has a secured funding agreement program with the Federal Agricultural Mortgage Corporation and its affiliate Farmer Mac Mortgage Securities Corporation (“Farmer Mac”). The Company had obligations outstanding under this program of $700 million at both December 31, 2023 and 2022. Funding agreements are issued to Farmer Mac in exchange for cash, for which Farmer Mac have been granted liens on certain assets to collateralize the Company’s obligations under the funding agreements. Upon any event of default by the Company, Farmer Mac’s recovery on the collateral is limited to the amount of the Company’s liabilities to Farmer Mac. See Note 9 for information on invested assets pledged as collateral in connection with funding agreements.

Inactive Funding Agreement Programs

Brighthouse Life Insurance Company has obligations outstanding under inactive funding agreement programs of $525 million at both December 31, 2023 and 2022.