What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-10 compared with 2020-11-06 · 243 added, 443 removed, 1248 unchanged (35% of the section changed)

2 unchanged sentences

Interim Condensed Consolidated Balance Sheets

September 30, 2020 (Unaudited) and December 31, 2019

March 31, 2021 (Unaudited) and December 31, 2020

(In millions, except share and per share data)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Fixed maturity securities available-for-sale, at estimated fair value (amortized cost:

13 unchanged sentences

Accrued investment income 734 676

Premiums, reinsurance and other receivables 16,087 14,760

Premiums, reinsurance and other receivables (net of allowance for credit losses of $ 10 and $ 10 , respectively)

16,129 16,158

Deferred policy acquisition costs and value of business acquired 5,148 4,911

Current income tax recoverable — 17

Other assets 506 516

16 unchanged sentences

Preferred stock, par value $ 0.01 per share;

$ 828 and $ 425 , respectively, aggregate liquidation preference

$ 1,403 aggregate liquidation preference

Common stock, par value $ 0.01 per share;

17 unchanged sentences

Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the Three Months and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

For the Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions, except per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Premiums $ 184 $ 198

28 unchanged sentences

Interim Condensed Consolidated Statements of Equity

For the Three Months and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

For the Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)

3 unchanged sentences

Balance at December 31, 2020 $ — $ 1 $ 13,878 $ ( 534 ) $ ( 1,038 ) $ 5,716 $ 18,023 $ 65 $ 18,088

Cumulative effect of change in accounting principle, net of income tax (Note 1)

( 14 ) 3 ( 11 ) ( 11 )

Balance at January 1, 2020

— 1 12,908 571 ( 562 ) 3,243 16,161 65 16,226

Preferred stock issuance

— 390 390 390

Treasury stock acquired in connection with share repurchases

10 unchanged sentences

( 2,327 ) ( 2,327 ) ( 2,327 )

Balance at June 30, 2020 — 1 13,307 3,523 ( 887 ) 4,965 20,909 65 20,974

Treasury stock acquired in connection with share repurchases

( 54 ) ( 54 ) ( 54 )

Share-based compensation 7 7 7

Dividends on preferred stock ( 17 ) ( 17 ) ( 17 )

Change in noncontrolling interests — ( 2 ) ( 2 )

Net income (loss) ( 2,995 ) ( 2,995 ) 2 ( 2,993 )

Other comprehensive income (loss), net of income tax

Balance at September 30, 2020 $ — $ 1 $ 13,314 $ 511 $ ( 941 ) $ 5,381 $ 18,266 $ 65 $ 18,331

Balance at March 31, 2021 $ — $ 1 $ 13,858 $ ( 1,119 ) $ ( 1,112 ) $ 3,389 $ 15,017 $ 65 $ 15,082

Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings (Deficit) Treasury Stock at Cost Accumulated

2 unchanged sentences

Balance at December 31, 2019 $ — $ 1 $ 12,908 $ 585 $ ( 562 ) $ 3,240 $ 16,172 $ 65 $ 16,237

Preferred stock issuance

— 412 412 412

Cumulative effect of change in accounting principle, net of income tax ( 14 ) 3 ( 11 ) ( 11 )

Balance at January 1, 2020 — 1 12,908 571 ( 562 ) 3,243 16,161 65 16,226

Treasury stock acquired in connection with share repurchases

2 unchanged sentences

Dividends on preferred stock ( 7 ) ( 7 ) ( 7 )

( 7 ) ( 7 ) ( 7 )

Change in noncontrolling interests

4 unchanged sentences

( 596 ) ( 596 ) ( 596 )

Balance at June 30, 2019 — 1 12,893 986 ( 306 ) 2,702 16,276 65 16,341

Treasury stock acquired in connection with share repurchase

( 126 ) ( 126 ) ( 126 )

Share-based compensation

Dividends on preferred stock ( 7 ) ( 7 ) ( 7 )

Change in noncontrolling interests

— ( 2 ) ( 2 )

Net income (loss)

683 683 2 685

Other comprehensive income (loss), net of income tax

Balance at September 30, 2019 $ — $ 1 $ 12,897 $ 1,662 $ ( 432 ) $ 3,567 $ 17,695 $ 65 $ 17,760

Balance at March 31, 2020 $ — $ 1 $ 12,911 $ 5,521 $ ( 706 ) $ 2,647 $ 20,374 $ 65 $ 20,439

See accompanying notes to the interim condensed consolidated financial statements.

1 unchanged sentence

Interim Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019 (Unaudited)

For the Three Months Ended March 31, 2021 and 2020 (Unaudited)

(In millions)

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by (used in) operating activities $ ( 104 ) $ 96

15 unchanged sentences

Net change in other invested assets — 17

Other, net ( 14 ) —

Net cash provided by (used in) investing activities

5 unchanged sentences

Net change in payables for collateral under securities loaned and other transactions ( 971 ) 6,597

Long-term debt issued 614 1,000

Long-term debt repaid ( 1,001 ) ( 601 )

Preferred stock issued, net of issuance costs 390 412

Dividends on preferred stock ( 25 ) ( 7 )

39 unchanged sentences

Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2020 Annual Report.

Brighthouse Financial, Inc.

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

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

Adoption of New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification.

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.

ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s consolidated financial statements.

ASUs adopted as of September 30, 2020 are summarized as follows:

Standard Description Effective Date Impact on Financial Statements

ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts.

The new guidance also requires that an other-than-temporary impairment on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses.

January 1, 2020 using the modified retrospective method The Company recorded an after tax net decrease to retained earnings of $ 14 million and a net increase to accumulated other comprehensive income (loss) (“AOCI”) of $ 3 million for the cumulative effect of adoption.

The adjustment included establishing or updating the allowance for credit losses on fixed maturity securities, mortgage loans, and other invested assets.

ASUs issued but not yet adopted as of September 30, 2020 are summarized as follows:

Standard Description Effective Date Impact on Financial Statements

ASU 2018-12, Financial Services-Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts.

These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred policy acquisition costs (“DAC”), and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances.

The market risk benefit guidance is required to be applied on a retrospective basis, while the changes to guidance for insurance liabilities and DAC may be applied to existing carrying amounts on the effective date or on a retrospective basis.

January 1, 2023 The Company continues to evaluate the new guidance and therefore is unable to estimate the impact to its financial statements.

The most significant impact is expected to be the measurement of liabilities for variable annuity guarantees.

In response to the worldwide pandemic sparked by the novel coronavirus (the “COVID-19 pandemic”), on March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The CARES Act contains numerous provisions intended to provide swift aid, including through tax relief, to businesses and individuals affected by the COVID-19 pandemic.

The Company does not believe that the CARES Act will have a material impact to its consolidated financial statements at this time.

The Company will continue to closely monitor developments related to the COVID-19 pandemic and the CARES Act.

There were no ASUs adopted during the first quarter of 2021.

Brighthouse Financial, Inc.

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

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

Future Adoption of New Accounting Pronouncements

In August 2018, the FASB issued new guidance on long-duration contracts (ASU 2018-12, Financial Services-Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts) .

This new guidance is effective for fiscal years beginning after January 1, 2023.

The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts.

These changes (i) require all guarantees that qualify as market risk benefits to be measured at fair value, (ii) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (iii) modify the methods of amortization for deferred policy acquisition costs (“DAC”), and (iv) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances.

The Company continues to evaluate the new guidance and therefore is unable to estimate the impact on its financial statements.

The most significant impact from the ASU is the requirement that all variable annuity guarantees will be considered market risk benefits and measured at fair value, whereas currently a significant amount of variable annuity guarantees are classified as insurance liabilities.

Segment Information

3 unchanged sentences

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.

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.

The Run-off segment consists of products that are no longer actively sold and are separately managed, including structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, certain 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 contains the excess capital not allocated to the segments and interest expense related to the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues.

Corporate & Other also includes long-term care 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.

2 unchanged sentences

Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance.

The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by the investor community.

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 should not be viewed as a substitute for net income (loss) available to BHF’s common shareholders and excludes net income (loss) attributable to noncontrolling interests and preferred stock dividends.

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.

Brighthouse Financial, Inc.

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

Segment Information (continued)

The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings:

1 unchanged sentence

• Net derivative gains (losses) except 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;

• Certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB Fees”).

• Certain variable annuity guaranteed minimum income benefits (“GMIB”) fees (“GMIB Fees”).

The following are significant items excluded from total expenses, net of income tax, in calculating adjusted earnings:

4 unchanged sentences

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.

Brighthouse Financial, Inc.

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

Segment Information (continued)

The segment accounting policies are the same as those used to prepare the Company’s interim condensed consolidated financial statements, except for the adjustments to calculate adjusted earnings described above.

7 unchanged sentences

Operating results by segment, as well as Corporate & Other, were as follows:

Three Months Ended September 30, 2020

Annuities Life Run-off Corporate & Other Total

(In millions)

Pre-tax adjusted earnings $ 479 $ 94 $ ( 1,443 ) $ ( 32 ) $ ( 902 )

Provision for income tax expense (benefit) 92 18 ( 304 ) ( 38 ) ( 232 )

Post-tax adjusted earnings 387 76 ( 1,139 ) 6 ( 670 )

Net income (loss) attributable to noncontrolling interests — — — 2 2

Preferred stock dividends — — — 17 17

Adjusted earnings $ 387 $ 76 $ ( 1,139 ) $ ( 13 ) ( 689 )

Adjustments for:

Net investment gains (losses) 5

Net derivative gains (losses) ( 1,857 )

Other adjustments to net income (loss) ( 1,089 )

Provision for income tax (expense) benefit 618

Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders $ ( 3,012 )

Interest revenue $ 469 $ 131 $ 383 $ 18

Interest expense $ — $ — $ — $ 47

Brighthouse Financial, Inc.

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

Segment Information (continued)

Three Months Ended September 30, 2019

Annuities Life Run-off Corporate & Other Total

(In millions)

Pre-tax adjusted earnings $ 255 $ 91 $ ( 543 ) $ ( 67 ) $ ( 264 )

Provision for income tax expense (benefit) 52 18 ( 117 ) ( 57 ) ( 104 )

Post-tax adjusted earnings 203 73 ( 426 ) ( 10 ) ( 160 )

Net income (loss) attributable to noncontrolling interests — — — 2 2

Preferred stock dividends — — — 7 7

Adjusted earnings $ 203 $ 73 $ ( 426 ) $ ( 19 ) ( 169 )

Adjustments for:

Net investment gains (losses) 27

Net derivative gains (losses) 1,057

Other adjustments to net income (loss) ( 16 )

Provision for income tax (expense) benefit ( 223 )

Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders

Interest revenue $ 461 $ 117 $ 327 $ 23

Interest expense $ — $ — $ — $ 49

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Annuities Life Run-off Corporate & Other Total

17 unchanged sentences

Segment Information (continued)

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Annuities Life Run-off Corporate & Other Total

16 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions)

Annuities $ 1,298 $ 1,151

Life 350 320 989 953

Run-off 628 493

3 unchanged sentences

Total assets by segment, as well as Corporate & Other, were as follows at:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In millions)

7 unchanged sentences

As discussed in Notes 1 and 3 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report, the Company issues variable annuity contracts with guaranteed minimum benefits.

Guaranteed minimum accumulation benefits (“GMABs”), the non-life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and the portion of certain GMIBs that do not require annuitization are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 5.

The Company also has universal and variable life insurance contracts with secondary guarantees.

Guaranteed minimum death benefits, the life contingent portion of guaranteed minimum withdrawal benefits (“GMWB”) and certain portions of GMIBs are accounted for as insurance liabilities in future policyholder benefits, while other guarantees are accounted for in whole or in part as embedded derivatives in policyholder account balances and are further discussed in Note 5.

The Company also has secondary guarantees on universal and variable life insurance contracts accounted for as insurance liabilities.

Information regarding the Company’s guarantee exposure was as follows at:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Event of Death At

9 unchanged sentences

Average attained age of contract holders 71 years 70 years 70 years 70 years

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Secondary Guarantees

25 unchanged sentences

See Note 1 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report for a description of the Company’s accounting policies for investments and Note 6 for information about the fair value hierarchy for investments and the related valuation methodologies.

In connection with the adoption of new guidance related to the credit losses (see Note 1), effective January 1, 2020, the Company updated its accounting policies on certain investments.

Any accounting policy updates required by the new guidance are described in this footnote.

Fixed Maturity Securities Available-for-sale

1 unchanged sentence

Fixed maturity securities by sector were as follows at:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Cost Allowance for Credit Losses Gross Unrealized Estimated

5 unchanged sentences

Foreign corporate 10,415 6 953 129 11,233 10,060 — 1,501 50 11,511

RMBS 7,807 1 652 9 8,449 8,692 — 438 12 9,118

government and agency 6,283 — 1,662 134 7,811 6,007 — 2,637 6 8,638

RMBS 7,324 — 520 18 7,826 7,653 — 644 3 8,294

CMBS 6,327 — 373 34 6,666 6,207 — 592 9 6,790

3 unchanged sentences

Total fixed maturity securities $ 72,078 $ 8 $ 7,695 $ 794 $ 78,971 $ 70,529 $ 2 $ 12,117 $ 149 $ 82,495

The Company did no t hold any non-income producing fixed maturity securities at either September 30, 2020 or December 31, 2019.

The Company held non-income producing fixed maturity securities with an estimated fair value of $ 2 million and $ 5 million at March 31, 2021 and December 31, 2020, respectively.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at September 30, 2020:

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at March 31, 2021:

Year or Less Due After One

16 unchanged sentences

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:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Less than 12 Months 12 Months or Greater Less than 12 Months 12 Months or Greater

5 unchanged sentences

Foreign corporate 1,638 88 330 41 254 8 387 42

RMBS 420 9 11 — 857 8 386 4

government and agency 1,005 134 — — 236 6 — —

RMBS 849 16 56 2 180 2 22 1

CMBS 871 31 87 3 332 7 44 2

28 unchanged sentences

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 $ 546 million at September 30, 2020 and is included in accrued investment income.

The accrued interest receivable on fixed maturity securities totaled $ 566 million and $ 514 million at March 31, 2021 and December 31, 2020, 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”).

6 unchanged sentences

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 $ 4 million, relating to 11 securities at September 30, 2020.

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 $ 8 million, relating to five securities at March 31, 2021.

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.

3 unchanged sentences

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

Corporate RMBS Foreign Corporate Total

Corporate Foreign Corporate Foreign Government Total

(In millions)

Balance at January 1, 2020 $ 3 $ — $ 1 $ 4

Three Months Ended March 31, 2021

Balance, beginning of period $ 2 $ — $ — $ 2

Allowance on securities where credit losses were not previously recorded — 6 — 6

Reductions for securities sold ( 1 ) — — ( 1 )

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

Write-offs charged against allowance (1) — — — —

Balance at September 30, 2020

$ 2 $ 1 $ 1 $ 4

Balance, end of period $ 2 $ 6 $ — $ 8

Three Months Ended March 31, 2020

Balance, beginning of period $ 3 $ 1 $ — $ 4

Allowance on securities where credit losses were not previously recorded 8 — 1 9

Change in allowance on securities with an allowance recorded in a previous period — 1 — 1

Write-offs charged against allowance (1) ( 3 ) ( 1 ) — ( 4 )

Balance, end of period $ 8 $ 1 $ 1 $ 10

_______________

(1) The Company recorded total write-offs of $ 13 million during the nine months ended September 30, 2020.

(1) The Company did no t record any write-offs during the three months ended March 31, 2021.

The Company recorded total write-offs of $ 12 million during the three months ended March 31, 2020.

Brighthouse Financial, Inc.

4 unchanged sentences

Mortgage loans are summarized as follows at:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Total Carrying

7 unchanged sentences

_______________

(1) Purchases of mortgage loans from third parties were $ 47 million and $ 535 million for the three months and nine months ended September 30, 2020, respectively, and $ 159 million and $ 722 million for the three months and nine months ended September 30, 2019, respectively, and were primarily comprised of residential mortgage loans.

(1) Purchases of mortgage loans from third parties were $ 178 million and $ 157 million for the three months ended March 31, 2021 and 2020, respectively, and were primarily comprised of residential mortgage loans.

Allowance for Credit Losses for Mortgage Loans

4 unchanged sentences

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.

For mortgage loans that are granted payment deferrals due to the COVID-19 pandemic, interest continues to be accrued during the deferral period if the loan was less than 30 days past due at December 31, 2019 and performing at the onset of the pandemic.

Accrued interest on COVID-19 pandemic impacted loans was not significant at September 30, 2020.

The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $ 89 million at September 30, 2020.

For mortgage loans that are granted payment deferrals due to the impact of the ongoing worldwide pandemic sparked by the novel coronavirus (“COVID-19 pandemic”), interest continues to be accrued during the deferral period if the loan was less than 30 days past due at December 31, 2019 and performing at the onset of the pandemic.

Accrued interest on COVID-19 pandemic impacted loans was not significant at both March 31, 2021 and December 31, 2020.

The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $ 83 million and $ 89 million at March 31, 2021 and December 31, 2020, 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.

6 unchanged sentences

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, expected troubled debt restructurings (“TDRs”), foreclosure probable loans, and loans with dissimilar risk characteristics.

These situations include collateral dependent loans, expected troubled debt restructurings (“TDR”), foreclosure probable loans, and loans with dissimilar risk characteristics.

Brighthouse Financial, Inc.

4 unchanged sentences

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 discounts which have both credit and non-credit components.

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.

1 unchanged sentence

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 noncredit discount, which is accreted into net investment income over the remaining life of the loan.

The difference between the grossed-up amortized cost basis and the par value of the loan is a noncredit 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.

3 unchanged sentences

(In millions)

Balance at December 31, 2019 $ 47 $ 10 $ 7 $ 64

Cumulative effect of change in accounting principle ( 20 ) 7 15 2

Balance at January 1, 2020 27 17 22 66

Three Months Ended March 31, 2021

Balance, beginning of period $ 44 $ 15 $ 35 $ 94

Current period provision 1 ( 2 ) ( 2 ) ( 3 )

Balance at September 30, 2020 $ 44 $ 16 $ 30 $ 90

Balance, end of period $ 45 $ 13 $ 33 $ 91

Three Months Ended March 31, 2020

Balance, beginning of period $ 27 $ 17 $ 22 $ 66

Current period provision — 1 2 3

Balance, end of period $ 27 $ 18 $ 24 $ 69

PCD Mortgage Loans

Purchases of PCD mortgage loans are summarized as follows:

Nine Months Ended September 30, 2020

(In millions)

Purchase price $ 77

Allowance at acquisition date $ 2

Discount or premium attributable to other factors $ 2

Par value $ 81

The Company did no t purchase any PCD mortgage loans during both the three months ended March 31, 2021 and 2020.

Brighthouse Financial, Inc.

5 unchanged sentences

(In millions)

September 30, 2020

March 31, 2021

Commercial mortgage loans

15 unchanged sentences

Total $ 389 $ 1,410 $ 2,978 $ 2,593 $ 1,368 $ 7,043 $ 15,781

2020 2019 2018 2017 2016 Prior Total

(In millions)

December 31, 2020

Commercial mortgage loans

Loan-to-value ratios:

Less than 65% $ 317 $ 1,527 $ 1,004 $ 515 $ 1,109 $ 2,808 $ 7,280

65% to 75% 200 450 482 322 59 521 2,034

76% to 80% — — — 44 79 8 131

Greater than 80% — — 29 — 6 234 269

Total commercial mortgage loans 517 1,977 1,515 881 1,253 3,571 9,714

Agricultural mortgage loans

Loan-to-value ratios:

Less than 65% 569 526 749 391 417 663 3,315

65% to 75% 81 81 10 33 — 18 223

Total agricultural mortgage loans 650 607 759 424 417 681 3,538

Residential mortgage loans

Performing 214 381 413 131 70 1,375 2,584

Nonperforming 2 6 4 — 1 53 66

Total residential mortgage loans 216 387 417 131 71 1,428 2,650

Total $ 1,383 $ 2,971 $ 2,691 $ 1,436 $ 1,741 $ 5,680 $ 15,902

Brighthouse Financial, Inc.

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

Investments (continued)

The loan-to-value ratio is a measure commonly used to assess the quality of commercial and agricultural mortgage loans.

5 unchanged sentences

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Amortized Cost % of

9 unchanged sentences

A debt-service coverage ratio greater than 1.00 times indicates an excess of net operating income over the debt-service payments.

Brighthouse Financial, Inc.

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

Investments (continued)

Past Due Mortgage Loans by Portfolio Segment

The Company has a high-quality, well-performing mortgage loan portfolio, with over 99 % of all mortgage loans classified as performing at both September 30, 2020 and December 31, 2019.

The Company has a high-quality, well-performing mortgage loan portfolio, with over 99 % of all mortgage loans classified as performing at both March 31, 2021 and December 31, 2020.

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.

To the extent a payment deferral is agreed to with a borrower, in response to the COVID-19 pandemic, the past due status of the impacted loans during the forbearance period is locked-in as of March 1, 2020, which reflects the date on which the COVID-19 pandemic began to affect the borrower’s ability to make payments, as provided in the CARES Act.

At September 30, 2020, 5 % of the COVID-19 pandemic modified loans were classified as delinquent.

commercial and residential mortgage loans — 60 days;

and agricultural mortgage loans — 90 days.

At March 31, 2021 and December 31, 2020, $ 41 million and $ 38 million, respectively, of the COVID-19 pandemic modified loans were classified as delinquent.

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

September 30, 2020

Commercial Agricultural Residential Total

March 31, 2021 December 31, 2020

Commercial Agricultural Residential Total Commercial Agricultural Residential Total

(In millions)

5 unchanged sentences

$ 9,642 $ 3,607 $ 2,532 $ 15,781 $ 9,714 $ 3,538 $ 2,650 $ 15,902

Brighthouse Financial, Inc.

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

Investments (continued)

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 and in the process of foreclosure.

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.

To the extent a payment deferral is agreed to with a borrower, in response to the COVID-19 pandemic, the impacted loans generally will not be reported as in a nonaccrual status during the period of deferral.

A COVID-19 pandemic modified loan is only reported as a nonaccrual asset in the event a borrower declares bankruptcy, the borrower experiences significant credit deterioration such that the Company does not expect to collect all principal and interest due, or the loan was 90 days past due at the onset of the pandemic.

At September 30, 2020, 5 % of the COVID-19 pandemic modified loans were in nonaccrual status.

At March 31, 2021 and December 31, 2020, $ 41 million and $ 38 million, respectively, of the COVID-19 pandemic modified loans were in nonaccrual status.

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

1 unchanged sentence

(In millions)

December 31, 2019

March 31, 2021

$ — $ 14 $ 74 $ 88

September 30, 2020 (1)

December 31, 2020

$ — $ — $ 66 $ 66

_______________

(1) The Company had $ 8 million of residential mortgage loans in nonaccrual status for which there was no related allowance for credit losses at September 30, 2020.

Current period investment income on mortgage loans in nonaccrual status was $ 1 million for the nine months ended September 30, 2020.

(1) The Company had $ 10 million and $ 7 million of residential mortgage loans in nonaccrual status for which there was no related allowance for credit losses at March 31, 2021 and December 31, 2020, respectively.

Current period investment income on mortgage loans in nonaccrual status was less than $ 1 million for both the three months ended March 31, 2021 and 2020.

Modified Mortgage Loans by Portfolio Segment

3 unchanged sentences

Generally, the types of concessions may include reducing the amount of debt owed, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest.

The Company did not have a significant amount of mortgage loans modified in a troubled debt restructuring during the nine months ended September 30, 2020.

Brighthouse Financial, Inc.

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

Investments (continued)

The Company did not have a significant amount of mortgage loans modified in a troubled debt restructuring during both the three months ended March 31, 2021 and 2020.

Short-term modifications made on a good faith basis to borrowers who were not more than 30 days past due at December 31, 2019 and in response to the COVID-19 pandemic are not considered TDRs.

4 unchanged sentences

Leveraged Leases

The carrying value of leveraged leases at September 30, 2020 and December 31, 2019 was $ 51 million and $ 64 million, respectively, net of allowance for credit losses of $ 13 million and $ 0 , respectively.

The carrying value of leveraged leases and the allowance for credit losses were $ 50 million and $ 13 million, respectively, at both March 31, 2021 and December 31, 2020.

Rental receivables are generally due in periodic installments.

2 unchanged sentences

Nonperforming rental receivables are generally defined as those that are 90 days or more past due.

At both September 30, 2020 and December 31, 2019, all leveraged leases were performing.

At both March 31, 2021 and December 31, 2020, all leveraged leases were performing.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities and the effect on DAC, VOBA, deferred sales inducements (“DSI”) and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

Brighthouse Financial, Inc.

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

Investments (continued)

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In millions)

10 unchanged sentences

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

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

(In millions)

5 unchanged sentences

Deferred income tax benefit (expense) 617

Balance at September 30, 2020 $ 5,427

Balance at March 31, 2021 $ 3,442

Change in net unrealized investment gains (losses) $ ( 2,319 )

Brighthouse Financial, Inc.

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

Investments (continued)

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 September 30, 2020 and December 31, 2019.

government and its agencies, at both March 31, 2021 and December 31, 2020.

Securities Lending

Elements of the securities lending program are presented below at:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In millions)

3 unchanged sentences

Cash collateral received from counterparties (2) $ 3,330 $ 3,674

Securities collateral received from counterparties (3) $ 6 $ —

Reinvestment portfolio — estimated fair value $ 3,501 $ 3,830

2 unchanged sentences

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

(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.

Brighthouse Financial, Inc.

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

Investments (continued)

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Open (1) 1 Month or Less 1 to 6 Months Total Open (1) 1 Month or Less 1 to 6 Months Total

1 unchanged sentence

government and agency $ 906 $ 1,709 $ 714 $ 3,329 $ 937 $ 2,300 $ 437 $ 3,674

Foreign corporate 2 — — 2 — — — —

corporate 1 — — 1 — — — —

Total $ 907 $ 1,709 $ 714 $ 3,330 $ 937 $ 2,300 $ 437 $ 3,674

1 unchanged sentence

(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 under normal market conditions, or both.

The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2020 was $ 1.2 billion, primarily U.S.

The estimated fair value of the securities on loan related to the cash collateral on open at March 31, 2021 was $ 879 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, non-agency RMBS and U.S.

government and agency securities) with 63 % invested in agency RMBS, cash and cash equivalents and U.S.

government and agency securities at September 30, 2020.

government and agency securities, U.S.

and foreign corporate securities and non-agency RMBS) with 56 % invested in agency RMBS, U.S.

government and agency securities and cash and cash equivalents at March 31, 2021.

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.

Brighthouse Financial, Inc.

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

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:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In millions)

4 unchanged sentences

_______________

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $ 83 million and $ 69 million of the assets on deposit represents restricted cash and cash equivalents at September 30, 2020 and December 31, 2019, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which $ 83 million and $ 124 million of the assets held in trust balance represents restricted cash and cash equivalents at September 30, 2020 and December 31, 2019, respectively.

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $ 61 million and $ 60 million of the assets on deposit represents restricted cash and cash equivalents at March 31, 2021 and December 31, 2020, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which $ 74 million and $ 101 million of the assets held in trust balance represents restricted cash and cash equivalents at March 31, 2021 and December 31, 2020, respectively.

(3) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 3 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report) and derivative transactions (see Note 5).

See “— Securities Lending” for information regarding securities on loan.

Brighthouse Financial, Inc.

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

Investments (continued)

Variable Interest Entities

The Company has invested in legal entities that are variable interest entities (“VIEs”).

The Company has invested in legal entities that are variable interest entities (“VIE”).

VIEs are consolidated when the investor is the primary beneficiary.

A primary beneficiary is the variable interest holder in a VIE with both the power to (i) 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.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either September 30, 2020 or December 31, 2019.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either March 31, 2021 or December 31, 2020.

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:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Amount Maximum

5 unchanged sentences

Total $ 15,971 $ 16,465 $ 15,984 $ 16,159

Brighthouse Financial, Inc.

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

Investments (continued)

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

15 unchanged sentences

(i) the amount invested in debt or equity of the VIE and (ii) commitments to the VIE, as described in Note 10.

Brighthouse Financial, Inc.

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

Investments (continued)

Net Investment Income

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions)

6 unchanged sentences

Cash, cash equivalents and short-term investments 2 23

Other 14 12 39 31

Total investment income 1,222 968

2 unchanged sentences

_______________

(1) Includes net investment income pertaining to other limited partnership interests of $ 153 million and $ 34 million for the three months and nine months ended September 30, 2020, respectively, and $ 67 million and $ 143 million for the three months and nine months ended September 30, 2019, respectively.

Brighthouse Financial, Inc.

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

Investments (continued)

(1) Includes net investment income pertaining to other limited partnership interests of $ 331 million and $ 73 million for the three months ended March 31, 2021 and 2020, respectively.

Net Investment Gains (Losses)

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions)

3 unchanged sentences

Limited partnerships and LLCs — ( 1 )

Other ( 2 ) — 8 —

Total net investment gains (losses) $ 14 $ ( 19 )

Brighthouse Financial, Inc.

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

Investments (continued)

Sales or Disposals of Fixed Maturity Securities

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions)

16 unchanged sentences

• Credit derivatives:

single and index reference credit default swaps.

single and index reference credit default swaps and swaptions.

For detailed information on these contracts and the related strategies, see Note 7 of the Notes to the Consolidated Financial Statements included in the 2020 Annual Report.

4 unchanged sentences

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Primary Underlying Risk Exposure Gross

17 unchanged sentences

Credit default swaps — written Credit 1,774 38 2 1,755 41 —

Credit default options Credit 150 — — 100 — —

Equity index options Equity market 30,438 1,092 872 31,576 1,071 838

2 unchanged sentences

Total non-designated or non-qualifying derivatives 105,318 1,983 1,960 89,515 3,382 1,912

89,825 4,427 1,484 110,287 2,809 2,510

Embedded derivatives:

Ceded guaranteed minimum income benefits

Other N/A 321 — N/A 217 —

Ceded guaranteed minimum income benefits Other N/A 197 — N/A 283 —

Direct index-linked annuities Other N/A — 4,560 N/A — 3,855

Direct guaranteed minimum benefits

Other N/A — 3,853 N/A — 1,656

Direct guaranteed minimum benefits Other N/A — 1,720 N/A — 2,920

Assumed index-linked annuities Other N/A — 385 N/A — 382

1 unchanged sentence

Total $ 108,417 $ 2,300 $ 8,732 $ 92,617 $ 3,865 $ 9,181

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 September 30, 2020 and December 31, 2019.

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 March 31, 2021 and December 31, 2020.

The Company’s use of derivatives includes (i) derivatives that serve as macro 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;

8 unchanged sentences

(In millions)

Three Months Ended September 30, 2020

Derivatives Designated as Hedging Instruments:

Cash flow hedges:

Interest rate derivatives $ — $ — $ 1 $ ( 1 )

Foreign currency exchange rate derivatives 10 ( 3 ) 8 ( 184 )

Total cash flow hedges 10 ( 3 ) 9 ( 185 )

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

Interest rate derivatives ( 435 ) — — —

Foreign currency exchange rate derivatives ( 50 ) ( 3 ) — —

Credit derivatives 4 — — —

Equity derivatives ( 752 ) — — —

Embedded derivatives ( 628 ) — — —

Total non-qualifying hedges ( 1,861 ) ( 3 ) — —

Total $ ( 1,851 ) $ ( 6 ) $ 9 $ ( 185 )

Three Months Ended September 30, 2019

Derivatives Designated as Hedging Instruments:

Cash flow hedges:

Interest rate derivatives $ — $ — $ 1 $ 51

Foreign currency exchange rate derivatives — — 9 109

Total cash flow hedges — — 10 160

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

Interest rate derivatives 1,657 — — —

Foreign currency exchange rate derivatives 49 ( 3 ) — —

Credit derivatives 2 — — —

Equity derivatives ( 18 ) — — —

Embedded derivatives ( 630 ) — — —

Total non-qualifying hedges 1,060 ( 3 ) — —

Total $ 1,060 $ ( 3 ) $ 10 $ 160

Brighthouse Financial, Inc.

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

Derivatives (continued)

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

(In millions)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Derivatives Designated as Hedging Instruments:

11 unchanged sentences

Total $ ( 1,504 ) $ — $ 9 $ ( 68 )

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Derivatives Designated as Hedging Instruments:

11 unchanged sentences

Total $ 6,909 $ ( 7 ) $ 12 $ 560

At September 30, 2020 and December 31, 2019, the balance in AOCI associated with cash flow hedges was $ 464 million and $ 245 million, respectively.

At both March 31, 2021 and December 31, 2020, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions was three years.

At March 31, 2021 and December 31, 2020, the balance in AOCI associated with cash flow hedges was $ 98 million and $ 173 million, respectively.

Credit Derivatives

5 unchanged sentences

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

September 30, 2020 December 31, 2019

Rating Agency Designation of Referenced

Credit Obligations (1) Estimated

March 31, 2021 December 31, 2020

Rating Agency Designation of Referenced Credit Obligations (1) Estimated

Swaps Maximum

29 unchanged sentences

(In millions)

September 30, 2020

March 31, 2021

Derivative assets $ 2,124 $ ( 1,309 ) $ ( 766 ) $ 49 $ ( 44 ) $ 5

14 unchanged sentences

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:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In millions)

12 unchanged sentences

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.

September 30, 2020

March 31, 2021

Fair Value Hierarchy Total Estimated

4 unchanged sentences

Foreign corporate — 11,039 194 11,233

RMBS — 8,449 — 8,449

government and agency 2,264 5,547 — 7,811

RMBS — 7,786 40 7,826

CMBS — 6,666 — 6,666

32 unchanged sentences

Foreign corporate — 11,314 197 11,511

RMBS — 9,074 44 9,118

government and agency 2,217 6,421 — 8,638

RMBS — 8,272 22 8,294

CMBS — 6,785 5 6,790

45 unchanged sentences

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 nine months ended September 30, 2020.

The Company did not have significant price adjustments during the three months ended March 31, 2021.

Determination of Fair Value

20 unchanged sentences

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 or liabilities, fair values are determined using a market approach and are valued based on a variety of observable inputs as described below.

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:

25 unchanged sentences

The Company issues certain variable annuity products with guaranteed minimum benefits.

GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, 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.

Guaranteed minimum accumulation benefits (“GMAB”), the non-life contingent portion of GMWBs and certain portions of GMIBs are accounted for as embedded derivatives and measured at estimated fair value separately from the host variable annuity contract.

These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets, with changes in estimated fair value reported in net derivative gains (losses).

The Company determines the fair value of these embedded derivatives by estimating the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations of policyholder behavior.

24 unchanged sentences

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:

September 30, 2020 December 31, 2019 Impact of

March 31, 2021 December 31, 2020 Impact of

Increase in Input

33 unchanged sentences

For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value.

For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value.

For derivatives valued

Brighthouse Financial, Inc.

1 unchanged sentence

Fair Value (continued)

based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value.

The changes in assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3) were summarized as follows:

2 unchanged sentences

Corporate (1) Structured Securities State and

Subdivision Equity

Subdivision Foreign

Government Equity

Securities Short-term

4 unchanged sentences

(In millions)

Three Months Ended September 30, 2020

Three Months Ended March 31, 2021

Balance, beginning of period

11 unchanged sentences

Balance, end of period $ 670 $ 126 $ — $ — $ 3 $ — $ 8 $ ( 6,468 ) $ 2

Three Months Ended September 30, 2019

Three Months Ended March 31, 2020

Balance, beginning of period

11 unchanged sentences

Balance, end of period $ 851 $ 218 $ 73 $ 7 $ 4 $ 2 $ 50 $ ( 4,263 ) $ 4

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2020 (9)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2021 (9)

$ ( 1 ) $ — $ — $ — $ — $ — $ 8 $ 544 $ —

Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at September 30, 2020 (9)

Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at March 31, 2021 (9)

$ ( 22 ) $ — $ — $ — $ — $ — $ ( 1 ) $ — $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2019 (9)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2020 (9)

$ ( 1 ) $ — $ — $ — $ — $ — $ 1 $ ( 91 ) $ —

Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at March 31, 2020 (9)

$ ( 46 ) $ ( 8 ) $ — $ — $ — $ — $ 30 $ — $ —

Brighthouse Financial, Inc.

1 unchanged sentence

Fair Value (continued)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Fixed Maturity Securities

Corporate (1) Structured Securities State and

Subdivision Equity

Securities Short-term

Investments Net

Derivatives (2) Net Embedded

Derivatives (3) Separate

Account Assets (4)

(In millions)

Nine Months Ended September 30, 2020

Balance, beginning of period

_______________

Total realized/unrealized gains (losses) included in net income (loss) (5) (6)

( 2 ) — — — — 3 ( 1,590 ) —

Total realized/unrealized gains (losses) included in AOCI

12 1 — — — 10 — —

Purchases (7) 509 34 — — 10 — — —

Sales (7) ( 103 ) ( 2 ) — — ( 5 ) ( 14 ) — —

Issuances (7) — — — — — — — —

Settlements (7) — — — — — — ( 507 ) —

Transfers into Level 3 (8) 285 9 — — — — — —

Transfers out of Level 3 (8) ( 84 ) ( 78 ) ( 73 ) ( 5 ) — — — —

Balance, end of period $ 1,078 $ 81 $ — $ 3 $ 10 $ 15 $ ( 6,128 ) $ 3

Nine Months Ended September 30, 2019

Balance, beginning of period

$ 732 $ 173 $ 74 $ 3 $ — $ ( 122 ) $ ( 1,998 ) $ 1

Total realized/unrealized gains (losses) included in net income (loss) (5) (6)

— 1 — — — ( 10 ) ( 1,316 ) —

Total realized/unrealized gains (losses) included in AOCI

11 3 — — — 5 — —

Purchases (7) 179 75 — — — — — —

Sales (7) ( 78 ) ( 24 ) ( 1 ) — — — — ( 1 )

Issuances (7) — — — — — — — —

Settlements (7) — — — — — — ( 656 ) —

Transfers into Level 3 (8) 147 92 — 1 — — — —

Transfers out of Level 3 (8) ( 165 ) ( 145 ) — — — ( 4 ) — —

Balance, end of period $ 826 $ 175 $ 73 $ 4 $ — $ ( 131 ) $ ( 3,970 ) $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2020 (9)

$ ( 1 ) $ — $ — $ — $ — $ ( 11 ) $ ( 1,687 ) $ —

Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at September 30, 2020 (9)

$ 12 $ 2 $ — $ — $ — $ 10 $ — $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2019 (9)

$ — $ 1 $ — $ — $ — $ ( 11 ) $ ( 1,531 ) $ —

_______________

(1) Comprised of U.S.

5 unchanged sentences

For the purpose of this disclosure, these changes are presented within net investment gains (losses).

Brighthouse Financial, Inc.

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

Fair Value (continued)

(5) Amortization of premium/accretion of discount is included within net investment income.

15 unchanged sentences

All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure.

Brighthouse Financial, Inc.

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

Fair Value (continued)

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:

September 30, 2020

March 31, 2021

Fair Value Hierarchy

9 unchanged sentences

Separate account liabilities $ 1,361 $ — $ 1,361 $ — $ 1,361

Brighthouse Financial, Inc.

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

Fair Value (continued)

December 31, 2020

10 unchanged sentences

Separate account liabilities $ 1,334 $ — $ 1,334 $ — $ 1,334

Long-term Debt

During the second quarter of 2020, BHF issued $ 615 million aggregate principal amount of senior notes due May 2030 (the “2030 Senior Notes”) for aggregate net cash proceeds of $ 614 million.

The 2030 Senior Notes bear interest at a fixed rate of 5.625 %, payable semi-annually.

Term Loan Facility

During the second quarter of 2020, BHF used the aggregate net proceeds from the issuances of the 2030 Senior Notes and the Series B Depositary Shares (as defined in Note 8) to repay all outstanding borrowings under its $ 1.0 billion unsecured term loan facility (the “Term Loan Facility”).

On June 2, 2020, BHF terminated the Term Loan Facility without penalty.

Reinsurance Financing Arrangement

On June 11, 2020, Brighthouse Reinsurance Company of Delaware, with the explicit permission of the Delaware Commissioner of Insurance, amended its financing arrangement with a pool of highly rated third-party reinsurers to increase the maximum amount from $ 10.0 billion to $ 12.0 billion and to extend the term by two years to 2039.

At September 30, 2020, there were no borrowings and there was $ 10.8 billion of funding available under this financing arrangement.

Brighthouse Financial, Inc.

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

Preferred Stock

Preferred stock shares authorized, issued and outstanding were as follows at:

September 30, 2020 December 31, 2019

Shares Authorized Shares Issued Shares Outstanding Shares Authorized Shares Issued Shares Outstanding

Preferred stock shares authorized, issued and outstanding were as follows at both March 31, 2021 and December 31, 2020:

Shares Authorized Shares Issued Shares Outstanding

6.600 % Non-Cumulative Preferred Stock, Series A

2 unchanged sentences

16,100 16,100 16,100

5.375 % Non-Cumulative Preferred Stock, Series C

23,000 23,000 23,000

Not designated 99,943,900 — —

Total 100,000,000 56,100 56,100

Brighthouse Financial, Inc.

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

Equity (continued)

In May 2020, BHF issued depositary shares (the “Series B Depositary Shares”), each representing a 1/1,000th ownership interest in a share of its perpetual 6.750 % non-cumulative preferred stock, Series B (the “Series B Preferred Stock”) and in the aggregate representing 16,100 shares of Series B Preferred Stock, with a stated amount of $ 25,000 per share, for aggregate net cash proceeds of $ 390 million.

Dividends, if declared, will accrue and be payable quarterly, in arrears, at an annual rate of 6.750 % on the stated amount per share.

In connection with the issuance of the Series B Depositary Shares and the underlying Series B Preferred Stock, BHF incurred $ 13 million of issuance costs, which have been recorded as a reduction of additional paid-in capital.

The declaration, record and payment dates, as well as per share and aggregate dividend amounts for BHF’s preferred stock by series for the nine months ended September 30, 2020 and 2019 were as follows:

Series A Series B

Declaration Date Record Date Payment Date Per Share Aggregate Per Share Aggregate

The declaration, record and payment dates, as well as per share and aggregate dividend amounts for BHF’s preferred stock by series for the three months ended March 31, 2021 and 2020 were as follows:

Series A Series B Series C

Declaration Date Record Date Payment Date Per Share Aggregate Per Share Aggregate Per Share Aggregate

(In millions, except per share data)

August 17, 2020 September 10, 2020 September 25, 2020 $ 412.50 $ 7 $ 595.31 $ 10

May 15, 2020 June 10, 2020 June 25, 2020 412.50 7 — —

February 16, 2021 March 10, 2021 March 25, 2021 $ 412.50 $ 7 $ 421.88 $ 7 $ 466.58 $ 11

$ 1,237.50 $ 21 $ 595.31 $ 10

August 15, 2019 September 10, 2019 September 25, 2019 $ 412.50 $ 7 $ — $ —

May 15, 2019 June 10, 2019 June 25, 2019 412.50 7 — —

$ 825.00 $ 14 $ — $ —

February 14, 2020 March 10, 2020 March 25, 2020 $ 412.50 $ 7 $ — $ — $ — $ —

Common Stock Repurchase Program

On February 6, 2020, BHF authorized the repurchase of up to an additional $ 500 million of its common stock.

On February 10, 2021, BHF authorized the repurchase of up to $ 200 million of its common stock, which is in addition to the $ 1.1 billion aggregate stock repurchase authorizations announced in February 2020, May 2019 and August 2018.

Repurchases under this authorization may be made through open market purchases, including pursuant to 10b5-1 plans or pursuant to accelerated stock repurchase plans, or through privately negotiated transactions, from time to time at management’s discretion in accordance with applicable legal requirements.

On May 11, 2020, the Company announced that it had temporarily suspended repurchases of its common stock.

On August 24, 2020, the Company resumed repurchases of its common stock, as was announced on August 21, 2020.

During the nine months ended September 30, 2020 and 2019, BHF repurchased 15,119,010 and 8,395,371 shares, respectively, of its common stock through open market purchases pursuant to 10b5-1 plans for $ 376 million and $ 314 million, respectively.

At September 30, 2020, BHF had $ 177 million remaining under its common stock repurchase program.

Brighthouse Financial, Inc.

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

Equity (continued)

During the three months ended March 31, 2021 and 2020, BHF repurchased 1,659,872 and 5,674,387 shares, respectively, of its common stock through open market purchases pursuant to 10b5-1 plans for $ 68 million and $ 142 million, respectively.

At March 31, 2021, BHF had $ 212 million remaining under its common stock repurchase program.

Accumulated Other Comprehensive Income (Loss)

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

Three Months Ended September 30, 2020

Investment Gains

(Losses), Net of

Related Offsets (1) Unrealized

Gains (Losses)

on Derivatives Foreign

Adjustments Defined Benefit Plans Adjustment Total

(In millions)

Balance at June 30, 2020 $ 4,517 $ 500 $ ( 24 ) $ ( 28 ) $ 4,965

OCI before reclassifications 707 ( 185 ) 9 ( 2 ) 529

Deferred income tax benefit (expense) ( 149 ) 39 ( 1 ) — ( 111 )

AOCI before reclassifications, net of income tax 5,075 354 ( 16 ) ( 30 ) 5,383

Amounts reclassified from AOCI 8 ( 11 ) — — ( 3 )

Deferred income tax benefit (expense) ( 1 ) 2 — — 1

Amounts reclassified from AOCI, net of income tax 7 ( 9 ) — — ( 2 )

Balance at September 30, 2020 $ 5,082 $ 345 $ ( 16 ) $ ( 30 ) $ 5,381

Three Months Ended September 30, 2019

Investment Gains

(Losses), Net of

Related Offsets (1) Unrealized

Gains (Losses)

on Derivatives Foreign

Adjustments Defined Benefit Plans Adjustment Total

(In millions)

Balance at June 30, 2019 $ 2,564 $ 181 $ ( 20 ) $ ( 23 ) $ 2,702

OCI before reclassifications 970 160 ( 3 ) — 1,127

Deferred income tax benefit (expense) ( 204 ) ( 33 ) — — ( 237 )

AOCI before reclassifications, net of income tax 3,330 308 ( 23 ) ( 23 ) 3,592

Amounts reclassified from AOCI ( 30 ) ( 1 ) — — ( 31 )

Deferred income tax benefit (expense) 6 — — — 6

Amounts reclassified from AOCI, net of income tax ( 24 ) ( 1 ) — — ( 25 )

Balance at September 30, 2019 $ 3,306 $ 307 $ ( 23 ) $ ( 23 ) $ 3,567

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Investment Gains

6 unchanged sentences

Balance at December 31, 2020

$ 5,646 $ 115 $ ( 8 ) $ ( 37 ) $ 5,716

OCI before reclassifications ( 2,848 ) ( 68 ) ( 7 ) ( 2 ) ( 2,925 )

4 unchanged sentences

Amounts reclassified from AOCI, net of income tax ( 10 ) ( 6 ) — — ( 16 )

Balance at September 30, 2020 $ 5,082 $ 345 $ ( 16 ) $ ( 30 ) $ 5,381

Balance at March 31, 2021

$ 3,387 $ 55 $ ( 14 ) $ ( 39 ) $ 3,389

Brighthouse Financial, Inc.

1 unchanged sentence

Equity (continued)

Nine Months Ended September 30, 2019

Three Months Ended March 31, 2020

Investment Gains

6 unchanged sentences

Balance at December 31, 2019

$ 3,111 $ 172 $ ( 15 ) $ ( 28 ) $ 3,240

OCI before reclassifications (2) ( 1,291 ) 560 ( 5 ) ( 1 ) ( 737 )

4 unchanged sentences

Amounts reclassified from AOCI, net of income tax ( 9 ) ( 2 ) — — ( 11 )

Balance at September 30, 2019 $ 3,306 $ 307 $ ( 23 ) $ ( 23 ) $ 3,567

Balance at March 31, 2020

$ 2,083 $ 612 $ ( 19 ) $ ( 29 ) $ 2,647

__________________

(1) See Note 4 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI.

(2) Includes $ 3 million related to the adoption of ASU 2016-13, see Note 1.

(2) Includes $ 3 million related to the adoption of the allowance for credit losses guidance.

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

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions)

24 unchanged sentences

Other Revenues and Other Expenses (continued)

Other revenues consisted primarily of 12b-1 fees of $ 83 million and $ 240 million for the three months and nine months ended September 30, 2020, respectively, and $ 84 million and $ 251 million for the three months and nine months ended September 30, 2019, respectively, of which substantially all were reported in the Annuities segment.

Other revenues consisted primarily of 12b-1 fees of $ 88 million and $ 81 million for the three months ended March 31, 2021 and 2020, respectively, of which substantially all were reported in the Annuities segment.

Other Expenses

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions)

7 unchanged sentences

Interest expense on debt 41 47

Other 52 43 99 104

Total other expenses $ 562 $ 517

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions, except share and per share data)

6 unchanged sentences

Diluted $ ( 6.96 ) $ 47.11

For both the three months and nine months ended September 30, 2020, basic loss per common share equaled diluted loss per common share.

For the three months ended March 31, 2021, basic loss per common share equaled diluted loss per common share.

The diluted shares were not utilized in the per share calculation for this period as the inclusion of such shares would have an antidilutive effect.

For both the three months and nine months ended September 30, 2019, weighted average shares used for calculating diluted earnings per common share excludes 196,492 of out-of-the-money stock options, as the inclusion of these shares would be antidilutive to the earnings per common share calculation due to the average share price for the three and nine months ended September 30, 2019.

For the three months ended March 31, 2020, weighted average shares used for calculating diluted earnings per common share excludes 196,492 of out-of-the-money stock options, as the inclusion of these shares would be antidilutive to the earnings per common share calculation due to the average share price for the three months ended March 31, 2020.

Brighthouse Financial, Inc.

3 unchanged sentences

The Company is a defendant in a number of litigation matters.

In some of the matters, large and/or indeterminate amounts, including punitive and treble damages, are sought.

In some of the matters, large or indeterminate amounts, including punitive and treble damages, are sought.

Modern pleading practice in the U.S.

7 unchanged sentences

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 September 30, 2020.

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 March 31, 2021.

Matters as to Which an Estimate Can Be Made

1 unchanged sentence

For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made.

As of September 30, 2020, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued for these matters to be $ 0 to $ 10 million.

In addition to amounts accrued for probable and reasonably estimable losses, as of March 31, 2021, 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

9 unchanged sentences

Contingencies, Commitments and Guarantees (continued)

Cost of Insurance Class Action

Cost of Insurance Class Actions

Brighthouse Life Insurance Company (U.S.

5 unchanged sentences

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 and intends to vigorously defend this matter.

Brighthouse Life Insurance Company filed a motion to dismiss in June 2020, which was granted in part and denied in part.

Plaintiff was granted leave to amend the complaint.

The Company intends to vigorously defend this matter.

Lawrence Martin v.

Brighthouse Life Insurance Company and Brighthouse Life Insurance Company of NY (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 and Brighthouse Life Insurance Company of NY.

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 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.

The Company intends to vigorously defend this matter.

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.

1 unchanged sentence

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 and/or indeterminate amounts, including punitive and treble damages, are sought.

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 and/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.

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 Contingencies

4 unchanged sentences

Disputes have arisen with counterparties in connection with reinsurance arrangements where the Company’s subsidiaries are acting as either the reinsured or the reinsurer.

These disputes involve assertions by third parties primarily related to rates, fees and/or reinsured benefit calculations, and in certain of such disputes the counterparty has made a request to arbitrate the dispute.

As of September 30, 2020, the Company estimates the amount of reasonably possible losses in excess of the amounts accrued for certain non-litigation loss contingencies to be up to $ 50 million, which are primarily associated with reinsurance-related matters.

For certain other reinsurance-related matters, the Company is not currently able to estimate the reasonably possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of such loss.

On a quarterly and annual basis, the Company reviews relevant information with respect to non-litigation contingencies and, when applicable, updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

These disputes involve assertions by third parties primarily related to rates, fees or reinsured benefit calculations, and in certain of such disputes the counterparty has made a request to arbitrate the dispute.

Brighthouse Financial, Inc.

1 unchanged sentence

Contingencies, Commitments and Guarantees (continued)

As of March 31, 2021, the Company estimates the amount of reasonably possible losses in excess of the amounts accrued for certain non-litigation loss contingencies to be up to approximately $ 125 million, which are primarily associated with reinsurance-related matters.

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments.

The amounts of these mortgage loan commitments were $ 271 million and $ 206 million at September 30, 2020 and December 31, 2019, respectively.

The amounts of these mortgage loan commitments were $ 279 million and $ 210 million at March 31, 2021 and December 31, 2020, respectively.

Commitments to Fund Partnership Investments, Bank Credit Facilities and Private Corporate Bond Investments

The Company commits to fund partnership investments and to lend funds under bank credit facilities and private corporate bond investments.

The amounts of these unfunded commitments were $ 1.8 billion at both September 30, 2020 and December 31, 2019.

The amounts of these unfunded commitments were $ 2.0 billion and $ 1.7 billion at March 31, 2021 and December 31, 2020, respectively.

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.

5 unchanged sentences

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 by-laws.

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’s recorded liabilities were $ 1 million at both September 30, 2020 and December 31, 2019 for indemnities, guarantees and commitments.

The Company’s recorded liabilities were $ 1 million at both March 31, 2021 and December 31, 2020 for indemnities, guarantees and commitments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements