What changed in this filing

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Item 1. Financial Statements

2022-11-08 compared with 2022-08-05 · 164 added, 151 removed, 1554 unchanged (17% of the section changed)

2 unchanged sentences

Interim Condensed Consolidated Balance Sheets

June 30, 2022 (Unaudited) and December 31, 2021

September 30, 2022 (Unaudited) and December 31, 2021

(In millions, except share and per share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

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

48 unchanged sentences

Total Brighthouse Financial, Inc.’s stockholders’ equity

10,191 16,142

Noncontrolling interests 65 65

10,256 16,207

Total liabilities and equity

3 unchanged sentences

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

For the Three Months and Six Months Ended June 30, 2022 and 2021 (Unaudited)

For the Three Months and Nine Months Ended September 30, 2022 and 2021 (Unaudited)

(In millions, except per share data)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

29 unchanged sentences

Interim Condensed Consolidated Statements of Equity

For the Three Months and Six Months Ended June 30, 2022 and 2021 (Unaudited)

For the Three Months and Nine Months Ended September 30, 2022 and 2021 (Unaudited)

(In millions)

15 unchanged sentences

( 7,263 ) ( 7,263 ) ( 7,263 )

Balance at March 31, 2022 — 1 14,133 ( 2 ) ( 1,681 ) 363 12,814 65 12,879

Balance at June 30, 2022 — 1 14,113 981 ( 1,813 ) ( 3,091 ) 10,191 65 10,256

Treasury stock acquired in connection with share repurchases

4 unchanged sentences

Change in noncontrolling interests

— ( 2 ) ( 2 )

Net income (loss)

2 unchanged sentences

( 3,546 ) ( 3,546 ) ( 3,546 )

Balance at June 30, 2022 $ — $ 1 $ 14,113 $ 981 $ ( 1,813 ) $ ( 3,091 ) $ 10,191 $ 65 $ 10,256

Balance at September 30, 2022 $ — $ 1 $ 14,095 $ 304 $ ( 1,949 ) $ ( 6,637 ) $ 5,814 $ 65 $ 5,879

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

13 unchanged sentences

( 1,120 ) ( 1,120 ) ( 1,120 )

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

Balance at June 30, 2021 — 1 13,842 ( 1,088 ) ( 1,236 ) 4,596 16,115 65 16,180

Treasury stock acquired in connection with share repurchases

4 unchanged sentences

Change in noncontrolling interests

— ( 2 ) ( 2 )

Net income (loss)

383 383 2 385

Other comprehensive income (loss), net of income tax

( 306 ) ( 306 ) ( 306 )

Balance at June 30, 2021 $ — $ 1 $ 13,842 $ ( 1,088 ) $ ( 1,236 ) $ 4,596 $ 16,115 $ 65 $ 16,180

Balance at September 30, 2021 $ — $ 1 $ 13,830 $ ( 705 ) $ ( 1,385 ) $ 4,290 $ 16,031 $ 65 $ 16,096

See accompanying notes to the interim condensed consolidated financial statements.

1 unchanged sentence

Interim Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021 (Unaudited)

For the Nine Months Ended September 30, 2022 and 2021 (Unaudited)

(In millions)

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by (used in) operating activities $ ( 939 ) $ 644

64 unchanged sentences

The Company considers the applicability and impact of all ASUs.

There were no significant ASUs adopted during the period ended June 30, 2022.

There were no significant ASUs adopted during the period ended September 30, 2022.

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 measurement, presentation and disclosure requirements for long-duration insurance contracts.

Targeted Improvements to the Accounting for Long-Duration Contracts (“LDTI”)).

LDTI is effective for fiscal years beginning after January 1, 2023.

LDTI will result in significant changes to the measurement, presentation and disclosure requirements for long-duration insurance contracts.

A summary of the most significant changes is provided below:

1 unchanged sentence

MRBs will be measured at fair value through net income and reported separately on the consolidated statements of operations, except for instrument-specific credit risk changes, which will be recognized in other comprehensive income (loss) (“OCI”).

(2) Cash flow assumptions used to measure the liability for future policy benefits on traditional long-duration contracts (including term and non-participating whole life insurance and immediate annuities) will be updated on an annual basis using

Brighthouse Financial, Inc.

1 unchanged sentence

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

a retrospective method.

The resulting remeasurement gain or loss will be reported separately on the consolidated statements of operations along with the remeasurement gain or loss on universal life-type contract liabilities.

3 unchanged sentences

(5) There will be a significant increase in required disclosures, including disaggregated rollforwards of insurance contract assets and liabilities supplemented by qualitative and quantitative information regarding the cash flows, assumptions, methods and judgements used to measure those balances.

The amendments to Topic 944 will be applied to the earliest period presented in the financial statements, making the transition date January 1, 2021.

The MRB guidance is required to be applied on a retrospective basis, while the guidance for insurance liability assumption updates and DAC amortization will be applied to existing carrying amounts on the transition date.

The new guidance will have a significant impact on the Company’s financial statements upon adoption, and will change the pattern and market sensitivity of the Company’s earnings after the transition date.

The most significant impact will be the requirement that all variable annuity guarantees be considered MRBs and measured at fair value, because a significant amount of variable annuity guarantees are classified as insurance liabilities under current guidance.

The impacts to the financial statements at adoption are highly dependent on market conditions, especially interest rates.

The Company is, therefore, unable to currently estimate the ultimate impact of the new guidance on the financial statements;

however, at prevailing interest rate levels at December 31, 2021, the Company expects the new guidance, upon adoption, would likely result in a material decrease in stockholders’ equity.

Based on prevailing interest rate levels at June 30, 2022, while still anticipated to be material, the impact is expected to be less significant compared to prevailing interest rates at December 31, 2021.

LDTI will be applied to the earliest period presented in the financial statements, making the transition date January 1, 2021.

The MRB changes are required to be applied on a retrospective basis, while the changes for insurance liability assumption updates and DAC amortization will be applied to existing carrying amounts on the transition date.

LDTI will have a significant impact on the Company’s financial statements and will change the pattern and market sensitivity of the Company’s earnings after the transition date.

The impacts to the financial statements are highly dependent on market conditions, especially interest rates.

The Company estimates the impact of LDTI to total stockholders’ equity as of December 31, 2021 to be a reduction of between $ 6 billion and $ 8 billion, and a reduction to total stockholders’ equity excluding accumulated other comprehensive income of between $ 3 billion and $ 4 billion, both primarily driven by the MRB changes.

Based on prevailing interest rates at September 30, 2022, post adoption of LDTI, the Company expects the impact to total stockholders’ equity as of September 30, 2022 to have significantly improved since December 31, 2021.

The Company has made significant progress toward adopting the new guidance, including updating systems, validating computations, establishing proper controls, finalizing accounting policies and developing disclosures.

5 unchanged sentences

The Run-off segment consists of products that are no longer actively sold and are separately managed, including universal life with secondary guarantees, structured settlements, pension risk transfer contracts, certain company-owned life insurance policies and certain funding agreements.

Brighthouse Financial, Inc.

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

Segment Information (continued)

Corporate & Other

1 unchanged sentence

Corporate & Other also includes long-term care and workers’ compensation business reinsured through 100% quota share reinsurance agreements, activities related to funding agreements associated with the Company’s institutional spread margin business, as well as direct-to-consumer life insurance that is no longer actively sold.

Brighthouse Financial, Inc.

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

Segment Information (continued)

Financial Measures and Segment Accounting Policies

24 unchanged sentences

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

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Annuities Life Run-off Corporate & Other Total

14 unchanged sentences

Interest expense $ — $ — $ — $ 38

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Annuities Life Run-off Corporate & Other Total

17 unchanged sentences

Segment Information (continued)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Annuities Life Run-off Corporate & Other Total

14 unchanged sentences

Interest expense $ — $ — $ — $ 114

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Annuities Life Run-off Corporate & Other Total

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In millions)

8 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Event of Death At

12 unchanged sentences

Insurance (continued)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Secondary Guarantees

28 unchanged sentences

Fixed maturity securities by sector were as follows at:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cost Allowance for Credit Losses Gross Unrealized Estimated

12 unchanged sentences

Total fixed maturity securities $ 85,307 $ 5 $ 694 $ 10,725 $ 75,271 $ 79,246 $ 11 $ 8,806 $ 459 $ 87,582

The Company held non-income producing fixed maturity securities with an estimated fair value of $ 20 million and $ 3 million at June 30, 2022 and December 31, 2021, respectively.

The Company held non-income producing fixed maturity securities with an estimated fair value of $ 15 million and $ 3 million at September 30, 2022 and December 31, 2021, 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 June 30, 2022:

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at September 30, 2022:

Year or Less Due After One

17 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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

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

33 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 $ 557 million and $ 534 million at June 30, 2022 and December 31, 2021, respectively, and is included in accrued investment income.

The accrued interest receivable on fixed maturity securities totaled $ 634 million and $ 534 million at September 30, 2022 and December 31, 2021, respectively, and is included in accrued investment income.

Brighthouse Financial, Inc.

9 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 five securities at June 30, 2022.

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 $ 5 million, relating to thirteen securities at September 30, 2022.

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.

2 unchanged sentences

Allowance for Credit Losses for Fixed Maturity Securities

The allowance for credit losses for fixed maturity securities was $ 4 million and $ 11 million at June 30, 2022 and December 31, 2021, respectively.

For both the six months ended June 30, 2022 and 2021, the change in the allowance for fixed maturity securities by sector was immaterial.

The Company recorded total write-offs of $ 10 million for the six months ended June 30, 2022.

The Company did no t record any write-offs for the six months ended June 30, 2021.

The allowance for credit losses for fixed maturity securities was $ 5 million and $ 11 million at September 30, 2022 and December 31, 2021, respectively.

For both the nine months ended September 30, 2022 and 2021, the change in the allowance for fixed maturity securities by sector was immaterial.

The Company recorded total write-offs of $ 10 million for the nine months ended September 30, 2022.

The Company did no t record any write-offs for the nine months ended September 30, 2021.

Mortgage Loans

1 unchanged sentence

Mortgage loans are summarized as follows at:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Total Carrying

7 unchanged sentences

_______________

(1) Purchases of mortgage loans from third parties were $ 415 million and $ 1.3 billion for the three months and six months ended June 30, 2022, respectively, and $ 621 million and $ 799 million for the three months and six months ended June 30, 2021, respectively, and were primarily comprised of residential mortgage loans.

(1) Purchases of mortgage loans from third parties were $ 387 million and $ 1.6 billion for the three months and nine months ended September 30, 2022, respectively, and $ 698 million and $ 1.5 billion for the three months and nine months ended September 30, 2021, respectively, and were primarily comprised of residential mortgage loans.

Brighthouse Financial, Inc.

8 unchanged sentences

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 both June 30, 2022 and December 31, 2021.

The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $ 99 million and $ 95 million at June 30, 2022 and December 31, 2021, respectively.

Accrued interest on COVID-19 pandemic impacted loans was not significant at both September 30, 2022 and December 31, 2021.

The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $ 103 million and $ 95 million at September 30, 2022 and December 31, 2021, 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.

23 unchanged sentences

(In millions)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Balance, beginning of period $ 67 $ 12 $ 44 $ 123

2 unchanged sentences

Balance, end of period $ 45 $ 15 $ 39 $ 99

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

Current period provision 6 ( 2 ) — 4

PCD credit allowance — — 2 2

Balance, end of period $ 50 $ 13 $ 37 $ 100

3 unchanged sentences

(In millions)

June 30, 2022

September 30, 2022

Commercial mortgage loans

46 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amortized Cost % of

13 unchanged sentences

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 June 30, 2022 and December 31, 2021.

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, 2022 and December 31, 2021.

Delinquency is defined consistent with industry practice, when mortgage loans are past due as follows:

2 unchanged sentences

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.

At June 30, 2022 and December 31, 2021, $ 26 million and $ 30 million, respectively, of the COVID-19 pandemic modified loans were classified as delinquent.

At September 30, 2022 and December 31, 2021, $ 23 million and $ 30 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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Commercial Agricultural Residential Total Commercial Agricultural Residential Total

10 unchanged sentences

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 June 30, 2022 and December 31, 2021, $ 26 million and $ 30 million, respectively, of the COVID-19 pandemic modified loans were in nonaccrual status.

At September 30, 2022 and December 31, 2021, $ 23 million and $ 30 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 was as follows at:

1 unchanged sentence

(In millions)

June 30, 2022

September 30, 2022

$ — $ 3 $ 59 $ 62

1 unchanged sentence

$ — $ — $ 59 $ 59

The Company had $ 23 million and $ 0 of loans in nonaccrual status for which there was no related allowance for credit losses at June 30, 2022 and December 31, 2021, respectively.

The Company had $ 2 million and $ 0 of loans in nonaccrual status for which there was no related allowance for credit losses at September 30, 2022 and December 31, 2021, respectively.

The $ 2 million of mortgage loans for which there was no related allowance for credit losses pertains to collateral dependent loans where the collateral value exceeds amortized cost.

Current period investment income on mortgage loans in nonaccrual status was less than $ 1 million for both the six months ended June 30, 2022 and 2021 .

Current period investment income on mortgage loans in nonaccrual status was $ 1 million for both the nine months ended September 30, 2022 and 2021 .

Brighthouse Financial, Inc.

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

Investments (continued)

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 TDR during both the six months ended June 30, 2022 and 2021.

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 TDR during both the nine months ended September 30, 2022 and 2021.

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.

6 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In millions)

10 unchanged sentences

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

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(In millions)

5 unchanged sentences

Deferred income tax benefit (expense) 2,861

Balance at June 30, 2022 $ ( 3,017 )

Balance at September 30, 2022 $ ( 6,545 )

Change in net unrealized investment gains (losses) $ ( 10,765 )

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 June 30, 2022 and December 31, 2021.

Brighthouse Financial, Inc.

1 unchanged sentence

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, 2022 and December 31, 2021.

Securities Lending

Elements of the securities lending program are presented below at:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In millions)

10 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

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

8 unchanged sentences

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized in normal market conditions, or both.

The estimated fair value of the securities on loan related to the cash collateral on open at June 30, 2022 was $ 1.4 billion, primarily comprised of U.S.

The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2022 was $ 1.3 billion, 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 U.S.

government and agency securities, agency RMBS, ABS, U.S.

government and agency securities, ABS, agency RMBS, U.S.

and foreign corporate securities and CMBS) with 52 % invested in U.S.

government and agency securities, agency RMBS and cash and cash equivalents at June 30, 2022.

government and agency securities, agency RMBS and cash and cash equivalents at September 30, 2022.

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.

4 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(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 $ 42 million and $ 25 million of the assets on deposit represents restricted cash and cash equivalents at June 30, 2022 and December 31, 2021, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which $ 131 million and $ 119 million of the assets held in trust balance represents restricted cash and cash equivalents at June 30, 2022 and December 31, 2021, respectively.

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $ 32 million and $ 25 million of the assets on deposit represents restricted cash and cash equivalents at September 30, 2022 and December 31, 2021, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which $ 281 million and $ 119 million of the assets held in trust balance represents restricted cash and cash equivalents at September 30, 2022 and December 31, 2021, 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 2021 Annual Report) and derivative transactions (see Note 5).

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

In addition, the Company’s investment in FHLB common stock, which is considered restricted until redeemed by the issuer, was $ 144 million and $ 70 million at redemption value at June 30, 2022 and December 31, 2021, respectively.

In addition, the Company’s investment in FHLB common stock, which is considered restricted until redeemed by the issuer, was $ 176 million and $ 70 million at redemption value at September 30, 2022 and December 31, 2021, respectively.

Variable Interest Entities

4 unchanged sentences

In addition, the evaluation of whether a legal entity is a VIE and if the Company is a primary beneficiary includes a review of the capital structure of the VIE, the related contractual relationships and terms, the nature of the operations and purpose of the VIE, the nature of the VIE interests issued and the Company’s involvement with the entity.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either June 30, 2022 or December 31, 2021.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either September 30, 2022 or December 31, 2021.

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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amount Maximum

28 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

12 unchanged sentences

_______________

(1) Includes net investment income pertaining to other limited partnership interests of $ 93 million and $ 305 million for the three months and six months ended June 30, 2022, respectively, and $ 339 million and $ 670 million for the three months and six months ended June 30, 2021, respectively.

(1) Includes net investment income pertaining to other limited partnership interests of ($ 127 ) million and $ 178 million for the three months and nine months ended September 30, 2022, respectively, and $ 378 million and $ 1.0 billion for the three months and nine months ended September 30, 2021, respectively.

Brighthouse Financial, Inc.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Limited partnerships and LLCs ( 4 ) — ( 21 ) 1

Other ( 3 ) ( 9 ) ( 3 ) ( 9 )

Total net investment gains (losses) $ ( 45 ) $ ( 16 ) $ ( 179 ) $ ( 36 )

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($ 5 ) million and ($ 21 ) million for the three months and six months ended June 30, 2022, respectively, and $ 1 million and $ 0 for the three months and six months ended June 30, 2021, respectively.

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($ 1 ) million and ($ 22 ) million for the three months and nine months ended September 30, 2022, respectively, and $ 1 million for both the three months and nine months ended September 30, 2021.

Sales or Disposals of Fixed Maturity Securities

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

10 unchanged sentences

• Interest rate derivatives:

swaps, floors, caps, swaptions and forwards;

swaps, floors, caps, swaptions, futures and forwards;

• Foreign currency exchange rate derivatives:

10 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Primary Underlying Risk Exposure Gross

30 unchanged sentences

Total $ 105,578 $ 3,869 $ 8,774 $ 90,931 $ 3,312 $ 10,140

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 June 30, 2022 and December 31, 2021.

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, 2022 and December 31, 2021.

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 June 30, 2022

Three Months Ended September 30, 2022

Derivatives Designated as Hedging Instruments:

11 unchanged sentences

Total $ ( 387 ) $ ( 29 ) $ 18 $ 333

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Derivatives Designated as Hedging Instruments:

16 unchanged sentences

(In millions)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Derivatives Designated as Hedging Instruments:

11 unchanged sentences

Total $ 1,900 $ ( 70 ) $ 45 $ 617

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Derivatives Designated as Hedging Instruments:

11 unchanged sentences

Total $ ( 2,129 ) $ ( 3 ) $ 28 $ 150

At June 30, 2022 and December 31, 2021, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions was one year and two years, respectively.

At June 30, 2022 and December 31, 2021, the balance in AOCI associated with cash flow hedges was $ 606 million and $ 329 million, respectively.

At September 30, 2022 and December 31, 2021, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions was one year and two years , respectively.

At September 30, 2022 and December 31, 2021, the balance in AOCI associated with cash flow hedges was $ 930 million and $ 329 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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Rating Agency Designation of Referenced Credit Obligations (1) Estimated

32 unchanged sentences

(In millions)

June 30, 2022

September 30, 2022

Derivative assets $ 3,821 $ ( 2,172 ) $ ( 1,535 ) $ 114 $ ( 29 ) $ 85

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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(In millions)

6 unchanged sentences

As a result, if the credit-contingent provisions of derivative contracts in a net liability position were triggered, minimal additional assets would be required to be posted as collateral or needed to settle the instruments immediately.

Additionally, the Company is required to pledge initial margin for certain new over-the-counter (“OTC”) bilateral contracts between two counterparties (“OTC-bilateral”) derivative transactions to third party custodians.

Brighthouse Financial, Inc.

4 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.

June 30, 2022

September 30, 2022

Fair Value Hierarchy Total Estimated

90 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 six months ended June 30, 2022.

The Company did not have significant price adjustments during the nine months ended September 30, 2022.

Determination of Fair Value

23 unchanged sentences

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices.

Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market.

Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”).

Derivatives may be exchange-traded or contracted in the OTC market.

Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are OTC-bilateral.

The fair values for exchange-traded derivatives are determined using the quoted market prices and are classified as Level 1 assets.

48 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:

June 30, 2022 December 31, 2021 Impact of

September 30, 2022 December 31, 2021 Impact of

Increase in Input

48 unchanged sentences

(In millions)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Balance, beginning of period

11 unchanged sentences

Balance, end of period $ 1,555 $ 339 $ 35 $ 28 $ — $ 62 $ ( 3,933 ) $ —

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Balance, beginning of period

11 unchanged sentences

Balance, end of period $ 1,293 $ 266 $ — $ 3 $ — $ 39 $ ( 7,596 ) $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (9)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2022 (9)

$ — $ — $ — $ 1 $ — $ 3 $ 589 $ —

Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2022 (9)

Changes in unrealized gains (losses) included in OCI for the instruments still held at September 30, 2022 (9)

$ ( 109 ) $ ( 11 ) $ ( 4 ) $ — $ — $ 21 $ — $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2021 (9)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2021 (9)

$ — $ — $ — $ — $ — $ ( 5 ) $ 258 $ —

Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2021 (9)

Changes in unrealized gains (losses) included in OCI for the instruments still held at September 30, 2021 (9)

$ ( 8 ) $ — $ — $ — $ — $ 3 $ — $ —

12 unchanged sentences

(In millions)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Balance, beginning of period

11 unchanged sentences

Balance, end of period $ 1,555 $ 339 $ 35 $ 28 $ — $ 62 $ ( 3,933 ) $ —

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Balance, beginning of period

11 unchanged sentences

Balance, end of period $ 1,293 $ 266 $ — $ 3 $ — $ 39 $ ( 7,596 ) $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (9)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2022 (9)

$ — $ — $ — $ 1 $ — $ ( 4 ) $ 4,590 $ —

Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2022 (9)

Changes in unrealized gains (losses) included in OCI for the instruments still held at September 30, 2022 (9)

$ ( 288 ) $ ( 23 ) $ ( 13 ) $ — $ — $ 36 $ — $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2021 (9)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2021 (9)

$ — $ — $ — $ — $ — $ ( 3 ) $ ( 302 ) $ —

Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2021 (9)

Changes in unrealized gains (losses) included in OCI for the instruments still held at September 30, 2021 (9)

$ ( 9 ) $ 1 $ — $ — $ — $ 12 $ — $ —

7 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.

2 unchanged sentences

Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

Brighthouse Financial, Inc.

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

Fair Value (continued)

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

12 unchanged sentences

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:

June 30, 2022

September 30, 2022

Fair Value Hierarchy

27 unchanged sentences

The 2022 Revolving Credit Facility refinanced and replaced BHF’s former $ 1.0 billion senior unsecured revolving credit facility that was scheduled to mature May 7, 2024.

At June 30, 2022, there were no borrowings or letters of credit outstanding under the 2022 Revolving Credit Facility.

At September 30, 2022, there were no borrowings or letters of credit outstanding under the 2022 Revolving Credit Facility.

Preferred Stock

Preferred stock shares authorized, issued and outstanding were as follows at both June 30, 2022 and December 31, 2021:

Preferred stock shares authorized, issued and outstanding were as follows at both September 30, 2022 and December 31, 2021:

Shares Authorized Shares Issued Shares Outstanding

10 unchanged sentences

The per share and aggregate dividend declared for BHF’s preferred stock by series was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

10 unchanged sentences

Common Stock Repurchase Program

During the six months ended June 30, 2022 and 2021, BHF repurchased 5,152,415 and 4,312,267 shares, respectively, of its common stock through open market purchases pursuant to 10b5-1 plans for $ 259 million and $ 192 million, respectively.

At June 30, 2022, BHF had $ 522 million remaining under its common stock repurchase program.

During the nine months ended September 30, 2022 and 2021, BHF repurchased 8,194,191 and 7,603,089 shares, respectively, of its common stock through open market purchases pursuant to 10b5-1 plans for $ 395 million and $ 341 million, respectively.

At September 30, 2022, BHF had $ 386 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 June 30, 2022

Three Months Ended September 30, 2022

Investment Gains

5 unchanged sentences

(In millions)

Balance at March 31, 2022 $ 167 $ 252 $ ( 13 ) $ ( 43 ) $ 363

Balance at June 30, 2022 $ ( 3,495 ) $ 478 $ ( 32 ) $ ( 42 ) $ ( 3,091 )

OCI before reclassifications ( 4,850 ) 333 ( 24 ) 1 ( 4,540 )

4 unchanged sentences

Amounts reclassified from AOCI, net of income tax 47 ( 7 ) — — 40

Balance at June 30, 2022 $ ( 3,495 ) $ 478 $ ( 32 ) $ ( 42 ) $ ( 3,091 )

Three Months Ended June 30, 2021

Balance at September 30, 2022 $ ( 7,203 ) $ 658 $ ( 51 ) $ ( 41 ) $ ( 6,637 )

Three Months Ended September 30, 2021

Investment Gains

5 unchanged sentences

(In millions)

Balance at March 31, 2021 $ 3,387 $ 55 $ ( 14 ) $ ( 39 ) $ 3,389

Balance at June 30, 2021 $ 4,506 $ 142 $ ( 13 ) $ ( 39 ) $ 4,596

OCI before reclassifications ( 499 ) 104 10 — ( 385 )

4 unchanged sentences

Amounts reclassified from AOCI, net of income tax ( 1 ) ( 1 ) — — ( 2 )

Balance at June 30, 2021

Balance at September 30, 2021

$ 4,110 $ 223 $ ( 5 ) $ ( 38 ) $ 4,290

2 unchanged sentences

Equity (continued)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Investment Gains

13 unchanged sentences

Amounts reclassified from AOCI, net of income tax 145 ( 13 ) — 2 134

Balance at June 30, 2022

Balance at September 30, 2022

$ ( 7,203 ) $ 658 $ ( 51 ) $ ( 41 ) $ ( 6,637 )

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Investment Gains

13 unchanged sentences

Amounts reclassified from AOCI, net of income tax 14 ( 10 ) — ( 1 ) 3

Balance at June 30, 2021

Balance at September 30, 2021

$ 4,110 $ 223 $ ( 5 ) $ ( 38 ) $ 4,290

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

27 unchanged sentences

The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds and is used to recognize revenue associated with 12b-1 fees.

Other revenues consisted primarily of 12b-1 fees of $ 74 million and $ 156 million for the three months and six months ended June 30, 2022, respectively, and $ 91 million and $ 179 million for the three months and six months ended June 30, 2021, respectively, of which substantially all were reported in the Annuities segment.

Other revenues consisted primarily of 12b-1 fees of $ 70 million and $ 226 million for the three months and nine months ended September 30, 2022, respectively, and $ 91 million and $ 270 million for the three months and nine months ended September 30, 2021, respectively, of which substantially all were reported in the Annuities segment.

Brighthouse Financial, Inc.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

Diluted $ ( 9.82 ) $ 4.34 $ 11.61 $ ( 2.80 )

For the three months ended June 30, 2022 and 2021 and the six months ended June 30, 2022, weighted average shares used for calculating diluted earnings per common share excludes 187,371 of out-of-the-money stock options, as the inclusion of such shares would be antidilutive to the earnings per common share calculation due to the average share price for the three months ended June 30, 2022 and 2021 and the six months ended June 30, 2022.

For the six months ended June 30, 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 the nine months ended September 30, 2022 and the three months ended September 30, 2021, weighted average shares used for calculating diluted earnings per common share excludes 187,371 of out-of-the-money stock options, as the inclusion of such shares would be antidilutive to the earnings per common share calculation due to the average share price for the nine months ended September 30, 2022 and the three months ended September 30, 2021.

For the three months ended September 30, 2022 and the nine months ended September 30, 2021, basic loss per common share equaled diluted loss per common share.

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

Brighthouse Financial, Inc.

16 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 June 30, 2022.

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, 2022.

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.

In addition to amounts accrued for probable and reasonably estimable losses, as of June 30, 2022, the Company estimates the aggregate range of reasonably possible losses to be up to approximately $ 10 million.

In addition to amounts accrued for probable and reasonably estimable losses, as of September 30, 2022, 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

46 unchanged sentences

Contingencies, Commitments and Guarantees (continued)

As of June 30, 2022, the Company estimates the range of reasonably possible losses in excess of the amounts accrued for certain other loss contingencies to be from zero up to approximately $ 125 million, which are primarily associated with the above reinsurance-related matters.

The reduction in the estimated range reflects the settlement of a reinsurance-related matter with a third party during the second quarter of 2022 for $ 140 million, which is reported in other expenses.

For certain other matters, the Company may not currently be 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 basis, the Company reviews relevant information with respect to other loss contingencies and, when applicable, updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

As of September 30, 2022, the Company estimates the range of reasonably possible losses in excess of the amounts accrued for certain other loss contingencies to be from zero up to approximately $ 125 million, which are primarily associated with the reinsurance-related matters described above.

During the second quarter of 2022, the Company settled a reinsurance-related matter with a third party for $ 140 million, which is reported in other expenses.

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments.

The amounts of these mortgage loan commitments were $ 358 million and $ 719 million at June 30, 2022 and December 31, 2021, respectively.

The amounts of these mortgage loan commitments were $ 439 million and $ 719 million at September 30, 2022 and December 31, 2021, 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 $ 2.4 billion and $ 2.3 billion at June 30, 2022 and December 31, 2021, respectively.

The amounts of these unfunded commitments were $ 2.2 billion and $ 2.3 billion at September 30, 2022 and December 31, 2021, 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.

8 unchanged sentences

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 June 30, 2022 and December 31, 2021 for indemnities, guarantees and commitments.

The Company’s recorded liabilities were $ 1 million at both September 30, 2022 and December 31, 2021 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