What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-23 compared with 2022-02-24 · 319 added, 310 removed, 2527 unchanged (20% of the section changed)

65 unchanged sentences

• We evaluated whether the significant assumptions used were consistent with evidence obtained in other areas of the audit.

Deferred Acquisition Cost (DAC) – Refer to Notes 1 and 4 to the consolidated financial statements

Deferred Policy Acquisition Costs (DAC) – Refer to Notes 1 and 4 to the consolidated financial statements

Critical Audit Matter Description

51 unchanged sentences

Deferred policy acquisition costs and value of business acquired 5,659 5,377

Current income tax recoverable 38 —

Deferred income tax asset 1,618 —

Other assets 442 482

15 unchanged sentences

Preferred stock, par value $ 0.01 per share;

$ 1,753 and $ 1,403 , respectively, aggregate liquidation preference

$ 1,753 aggregate liquidation preference

Common stock, par value $ 0.01 per share;

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

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

Preferred stock issuance — 948 948 948

6 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 ( 14 ) 3 ( 11 ) ( 11 )

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

Preferred stock issuances — 339 339 339

6 unchanged sentences

Balance at December 31, 2021 — 1 14,154 ( 642 ) ( 1,543 ) 4,172 16,142 65 16,207

Preferred stock issuance — 339 339 339

Treasury stock acquired in connection with share repurchases ( 488 ) ( 488 ) ( 488 )

72 unchanged sentences

Income tax $ 44 $ 103 $ ( 100 )

Non-cash transactions:

Transfer of mortgage loans to affiliates $ 95 $ — $ —

Transfer of limited partnerships and limited liability companies from affiliates $ 99 $ — $ —

See accompanying notes to the consolidated financial statements.

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Brighthouse Financial, Inc.

(“BHF” and together with its subsidiaries, “Brighthouse Financial” or the “Company”) is one of the largest providers of annuity and life insurance products in the U.S.

(“BHF” and together with its subsidiaries, “Brighthouse Financial” or the “Company”) is a holding company formed in 2016 to own the legal entities that historically operated a substantial portion of MetLife, Inc.’s (together with its subsidiaries and affiliates, “MetLife”) former retail segment until becoming a separate, publicly-traded company in August 2017.

Brighthouse Financial is one of the largest providers of annuity and life insurance products in the U.S.

through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners.

BHF is a holding company that was incorporated in Delaware in 2016 in preparation for the separation of a substantial portion of MetLife, Inc.’s (together with its subsidiaries and affiliates, “MetLife”) former Retail segment, as well as certain portions of its former Corporate Benefit Funding segment, into a separate, publicly-traded company, Brighthouse Financial (the “Separation”), which was completed on August 4, 2017.

The Company is organized into three segments:

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When the Company has virtually no influence over the investee’s operations, the investment is carried at fair value.

Reclassifications

Certain amounts in the prior years’ consolidated financial statements and related footnotes thereto have been reclassified to conform with the current year presentation as may be discussed when applicable in the Notes to the Consolidated Financial Statements.

Summary of Significant Accounting Policies

9 unchanged sentences

In applying the profitability criteria, groupings are limited by segment.

The Company is also required to reflect the effect of investment gains and losses in its premium deficiency testing.

When a premium deficiency exists related to unrealized gains and losses, any reductions in deferred acquisition costs or increases in insurance liabilities are recorded to other comprehensive income (loss) (“OCI”).

Brighthouse Financial, Inc.

1 unchanged sentence

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

The Company is also required to reflect the effect of investment gains and losses in its premium deficiency testing.

Policyholder account balances relate to customer deposits on universal life insurance and deferred annuity contracts and are equal to the sum of deposits, plus interest credited, less charges and withdrawals.

Policyholder account balances primarily relate to customer deposits on universal life insurance and deferred annuity contracts and are equal to the sum of deposits, plus interest credited, less charges and withdrawals.

The Company may also hold additional liabilities for certain guaranteed benefits related to these contracts.

Policyholder account balances also include liabilities related to funding agreements which are equal to the unpaid principal balance, adjusted for any unamortized premium or discount.

Liabilities for secondary guarantees on universal life insurance contracts are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the contract period based on total expected assessments.

8 unchanged sentences

These fees, which are included in universal life and investment-type product policy fees, are recognized when assessed to the contract holder, except for non-level insurance charges which are deferred and amortized over the life of the contracts.

Premiums, policy fees, policyholder benefits and expenses are presented net of reinsurance.

Premiums, policy fees, policyholder benefits and expenses are reported net of reinsurance.

Deferred Policy Acquisition Costs, Value of Business Acquired and Deferred Sales Inducements

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These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

The Company amortizes DAC and VOBA on deferred annuities and universal life insurance contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits.

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When significant negative gross profits are expected in future periods, the Company substitutes the amount of insurance in-force for expected future gross profits as the amortization basis for DAC.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

Assumptions for DAC and VOBA are reviewed at least annually, and if they change significantly, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to net income.

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Amounts recoverable from reinsurers related to incurred claims and ceded reserves are included in premiums, reinsurance and other receivables and amounts payable to reinsurers included in other liabilities.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting.

Deposits received are included in other liabilities and deposits made are included within premiums, reinsurance and other receivables.

Deposits received are included in other liabilities and deposits made are included in premiums, reinsurance and other receivables.

As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted.

Interest on such deposits is recorded as other revenues or other expenses, as appropriate.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

The funds withheld liability represents amounts withheld by the Company in accordance with the terms of the reinsurance agreements.

Under certain reinsurance agreements, the Company withholds the funds rather than transferring the underlying investments and, as a result, records a funds withheld liability within other liabilities.

Under certain reinsurance agreements, the Company withholds the funds rather than transferring the underlying investments and, as a result, records a funds withheld liability in other liabilities.

The Company recognizes interest on funds withheld, included in other expenses, at rates defined by the terms of the agreement which may be contractually specified or directly related to the investment portfolio.

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Guarantees accounted for as embedded derivatives in policyholder account balances include the non-life contingent portion of GMWBs, guaranteed minimum accumulation benefits (“GMAB”), and for GMIBs the non-life contingent portion of the expected annuitization when the policyholder is forced into an annuitization upon depletion of their account value, as well as the guaranteed principal option.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

The estimated fair values of guarantees accounted for as embedded derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees.

2 unchanged sentences

The percentage of fees included in the initial fair value measurement is not updated in subsequent periods.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

The Company updates the estimated fair value of guarantees in subsequent periods by projecting future benefits using capital markets and actuarial assumptions including expectations of policyholder behavior.

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Net Investment Income and Net Investment Gains (Losses)

Income from investments is reported within net investment income, unless otherwise stated herein.

Gains and losses on sales of investments, impairment losses and changes in valuation allowances are reported within net investment gains (losses), unless otherwise stated herein.

Income from investments is reported in net investment income, unless otherwise stated herein.

Gains and losses on sales of investments, impairment losses and changes in valuation allowances are reported in net investment gains (losses), unless otherwise stated herein.

Fixed Maturity Securities Available-For-Sale

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For all other Structured Securities, the effective yield is recalculated on a retrospective basis.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

The Company regularly evaluates fixed maturity securities for declines in fair value to determine if a credit loss exists.

1 unchanged sentence

For fixed maturity securities in an unrealized loss position, when the Company has the intent to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery, the amortized cost basis of the security is written down to fair value through net investment gains (losses).

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

For fixed maturity securities that do not meet the aforementioned criteria, management evaluates whether the decline in estimated fair value has resulted from credit losses or other factors.

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Short-term investments include securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase and are stated at estimated fair value or amortized cost, which approximates estimated fair value.

The Company’s short-term investments generally involve large dollar amounts that turn over quickly and have short maturities.

For the year ended December 31, 2022, gross cash receipts from sales and purchases of short-term investments were $ 4.9 billion and $ 4.1 billion, respectively.

Other Invested Assets

Other invested assets consist principally of freestanding derivatives with positive estimated fair values which are described in “— Derivatives” below.

Securities Lending Program

Securities lending transactions whereby blocks of securities are loaned to third parties, primarily brokerage firms and commercial banks, are treated as financing arrangements and the associated liability is recorded at the amount of cash received.

Income and expenses associated with securities lending transactions are reported as investment income and investment expense, respectively, in net investment income.

Brighthouse Financial, Inc.

1 unchanged sentence

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

Securities Lending Program

Income and expenses associated with securities lending transactions are reported as investment income and investment expense, respectively, within net investment income.

The Company obtains collateral at the inception of the loan, usually cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned and maintains it at a level greater than or equal to 100% for the duration of the loan.

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The Company is liable to return to the counterparties the cash collateral received.

Funding Agreements

The Company established liabilities for funding agreements associated with the Company’s institutional spread margin business, which are equal to the unpaid principal balance, adjusted for any unamortized premium or discount.

Liabilities related to funding agreements are reported in policyholder account balances.

Freestanding Derivatives

Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value.

Freestanding derivatives are carried at estimated fair value on the Company’s balance sheet either as assets in other invested assets or as liabilities in other liabilities.

The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

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and ceded reinsurance of variable annuity GMIBs.

Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables on the consolidated balance sheets.

Embedded derivatives within liability host contracts are presented within policyholder account balances on the consolidated balance sheets.

Embedded derivatives within asset host contracts are reported in premiums, reinsurance and other receivables.

Embedded derivatives within liability host contracts are reported in policyholder account balances.

Changes in the estimated fair value of the embedded derivative are reported in net derivative gains (losses).

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Investments in these separate accounts are directed by the contract holder and all investment performance, net of contract fees and assessments, is passed through to the contract holder.

Investment performance and the corresponding amounts credited to contract holders of such separate accounts are offset within the same line on the statements of operations.

Investment performance and the corresponding amounts credited to contract holders of such separate accounts are offset in the same line on the statements of operations.

Separate accounts that do not pass all investment performance to the contract holder, including those underlying certain index-linked annuities, are combined on a line-by-line basis with the Company’s general account assets, liabilities, revenues and expenses.

The accounting for investments in these separate accounts is consistent with the methodologies described herein for similar financial instruments held within the general account.

The accounting for investments in these separate accounts is consistent with the methodologies described herein for similar financial instruments held in the general account.

The Company receives asset-based distribution and service fees from mutual funds available to the variable life and annuity contract holders as investment options in its separate accounts.

These fees are recognized in the period in which the related services are performed and are included in other revenues on the statements of operations.

These fees are recognized in the period in which the related services are performed and are included in other revenues.

The Company’s income tax provision was prepared following the modified separate return method.

1 unchanged sentence

The Company’s accounting for income taxes represents management’s best estimate of various events and transactions.

Current and deferred income taxes included herein and attributable to periods up until the Separation have been allocated to the Company in a manner that is systematic, rational and consistent with the asset and liability method prescribed by ASC 740.

Current and deferred income taxes included herein and attributable to periods up until the Company’s separation from MetLife (“Separation”) have been allocated to the Company in a manner that is systematic, rational and consistent with the asset and liability method prescribed by ASC 740.

Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse.

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When making such determination, the Company considers many factors, including the jurisdiction in which the deferred tax asset was generated, the length of time that carryforward can be utilized in the various taxing jurisdictions, future taxable income exclusive of reversing temporary differences and carryforwards, future reversals of existing taxable temporary differences, taxable income in prior carryback years, tax planning strategies and the nature, frequency, and amount of cumulative financial reporting income and losses in recent years.

On August 16, 2022, the Inflation Reduction Act was signed into law by President Biden.

The Inflation Reduction Act establishes a 15% corporate alternative minimum tax (“CAMT”) for corporations whose average annual adjusted financial statement income for any consecutive three–tax year period ending after December 31, 2021, and preceding the tax year exceeds $1 billion.

The Inflation Reduction Act also establishes a one percent excise tax on stock repurchases made by publicly traded U.S.

corporations.

Both provisions are effective for tax years beginning after December 31, 2022.

The Company elects not to consider any future effects resulting from potential applicability of the CAMT when assessing the valuation allowance for regular deferred taxes.

The Company may be required to change its provision for income taxes when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances.

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A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement.

Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made.

Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included in other liabilities and are charged to earnings in the period that such determination is made.

The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax expense.

Litigation Contingencies

The Company is a party to a number of legal actions and may be involved in a number of regulatory investigations.

Given the inherent unpredictability of these matters, it is difficult to estimate the impact on the Company’s financial position.

Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

Litigation and Other Loss Contingencies

The Company is a party to or involved in a number of legal disputes, including litigation matters and disputes or other matters involving third parties (e.g., vendors, reinsurers or tax or other authorities), and are subject in the ordinary course to a number of regulatory examinations and investigations.

The Company reviews relevant information with respect to litigation and other loss contingencies related to these matters and establishes liabilities when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

Legal costs are recognized as incurred.

On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected on the Company’s financial statements.

In matters where it is not probable, but it is reasonably possible that a loss will be incurred and the amount of loss can be reasonably estimated, such losses or range of losses are disclosed, and no accrual is made.

In the absence of sufficient information to support an assessment of a reasonably possible loss or range of loss, no accrual is made and no loss or range of loss is disclosed.

Other Accounting Policies

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Cash equivalents are stated at estimated fair value or amortized cost, which approximates estimated fair value.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

Employee Benefit Plans

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Prior service costs (credit) are recognized in AOCI at the time of the amendment and then amortized into net periodic benefit costs over the average projected future lifetime of all plan participants or projected future working lifetime, as appropriate.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

Net periodic benefit costs are determined using management estimates and actuarial assumptions;

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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) Guaranteed benefits associated with variable annuity and certain fixed annuity contracts will be classified and presented separately on the consolidated balance sheets as market risk benefits (“MRB”).

(1) Guaranteed benefits associated with variable annuity and certain fixed annuity contracts will be classified and reported separately on the consolidated balance sheets as market risk benefits (“MRB”).

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 OCI.

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Changes in assumptions used to amortize DAC will be recognized as a revision to future amortization amounts.

(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 to 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 are 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 the end of 2021, the Company expects the new guidance, upon adoption, would likely result in a material decrease in stockholders’ equity.

(5) There will be a significant increase in required disclosures, including disaggregated roll-forwards 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.

LDTI will be applied to the earliest period reported 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.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

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

LDTI will have a significant impact on the Company’s financial statements upon adoption and is expected to 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 GAAP.

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

The Company estimates the impact of LDTI adoption as of January 1, 2021 (the transition date) will be to reduce opening stockholders’ equity by $ 8 billion — $ 10 billion, and total stockholders’ equity excluding accumulated other comprehensive income by $ 5 billion — $ 6 billion.

The impact of LDTI to total stockholders’ equity as of December 31, 2021 is estimated to be a reduction of $ 6 billion — $ 8 billion, and a reduction to total stockholders’ equity excluding accumulated other comprehensive income of $ 3 billion — $ 4 billion.

The impact of LDTI on net income for the year ended December 31, 2021 is estimated to be an increase of $ 1 billion — $ 2 billion.

The changes from the adoption of LDTI are primarily driven by the MRB changes and to a lesser extent the requirement to update the discount rate quarterly in the measurement of the liability for traditional long-duration contracts.

Based on prevailing interest rates at December 31, 2022, the Company expects the impact of LDTI to total stockholders’ equity as of December 31, 2022 to be significantly lower as compared to such impact as of 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 preparing financial disclosures.

Implementation remains in process as of December 31, 2022 as the Company continues to refine its internal controls and processes in advance of formal implementation for the reporting of first quarter of 2023 results.

Segment Information

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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.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Segment Information (continued)

Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses by excluding the impact of market volatility, which could distort trends.

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• Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets;

• Amortization of DAC and VOBA related to:

(i) net investment gains (losses), (ii) net derivative gains (losses) and (iii) GMIB Fees and GMIB Costs.

• Amortization of DAC and VOBA related to (i) net investment gains (losses), (ii) net derivative gains (losses) and (iii) GMIB Fees and GMIB Costs.

The tax impact of the adjustments discussed 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 Consolidated Financial Statements (continued)

Segment Information (continued)

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

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The most significant assumptions for variable annuity guarantees included in future policyholder benefits are projected general account and separate account investment returns, and policyholder behavior including mortality, benefit election and utilization, and withdrawals.

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

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

The most significant assumptions used in estimating the secondary guarantee liabilities are general account rates of return, premium persistency, mortality and lapses, which are reviewed and updated at least annually.

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(2) Includes direct business, but excludes offsets from hedging or reinsurance, if any.

Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company.

Therefore, the net amount at risk reported reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company.

See Note 5 for a discussion of guaranteed minimum benefits which have been reinsured.

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Brighthouse Life Insurance Company has issued unsecured fixed and floating rate funding agreements to certain special purpose entities that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements.

The Company had obligations outstanding under these funding agreements of $ 4.7 billion and $ 0 at December 31, 2021 and 2020, respectively.

The Company had obligations outstanding under these funding agreements of $ 5.5 billion and $ 4.7 billion at December 31, 2022 and 2021, respectively.

Brighthouse Life Insurance Company has a secured funding agreement program with the Federal Home Loan Bank (“FHLB”) of Atlanta.

The Company had obligations outstanding under this program of $ 900 million and $ 0 at December 31, 2021 and 2020, respectively.

The Company had obligations outstanding under this program of $ 3.9 billion and $ 900 million at December 31, 2022 and 2021, respectively.

Funding agreements are issued to FHLBs in exchange for cash, for which the FHLBs have been granted liens on certain assets, some of which are in their custody to collateralize the Company’s obligations under the funding agreements.

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Brighthouse Life Insurance Company has a secured funding agreement program with the Federal Agricultural Mortgage Corporation and its affiliate Farmer Mac Mortgage Securities Corporation (“Farmer Mac”).

The Company had obligations outstanding under this program of $ 125 million and $ 0 at December 31, 2021 and 2020, respectively.

The Company had obligations outstanding under this program of $ 700 million and $ 125 million at December 31, 2022 and 2021, respectively.

Funding agreements are issued to Farmer Mac in exchange for cash, for which Farmer Mac have been granted liens on certain assets to collateralize the Company’s obligations under the funding agreements.

2 unchanged sentences

Inactive Funding Agreement Programs

Brighthouse Life Insurance Company issued a floating rate funding agreement, which is denominated in foreign currency, to a special purpose entity that issued debt securities for which payment of interest and principal is secured by such funding agreement.

The Company had an obligation outstanding under this funding agreement of $ 134 million and $ 144 million at December 31, 2021 and 2020, respectively.

The remaining obligation at December 31, 2021 matures in June 2022.

Brighthouse Life Insurance Company had obligations with certain regional banks in the FHLB system outstanding under an inactive program of $ 500 million and $ 595 million at December 31, 2021 and 2020, respectively.

The remaining obligation at December 31, 2021 matures in February 2025.

Brighthouse Life Insurance Company has obligations outstanding under inactive funding agreement programs of $ 525 million and $ 634 million at December 31, 2022 and 2021, respectively.

Brighthouse Financial, Inc.

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Balance at January 1, 530 504 502

Amortization related to net investment gains (losses) and net derivative gains (losses) — — ( 1 )

All other amortization 7 ( 28 ) ( 8 )

Total amortization 7 ( 28 ) ( 9 )

Amortization ( 66 ) 7 ( 28 )

Unrealized investment gains (losses) 123 19 30

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Amortization ( 15 ) ( 4 ) ( 71 )

Unrealized investment gains (losses) — — 5

Balance at December 31, $ 293 $ 307 $ 310

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Impairments are then determined based on probable and estimable defaults.

At both December 31, 2021 and 2020, the Company had an allowance for credit losses of $ 10 million on its reinsurance recoverable balances.

The Company had an allowance for credit losses of $ 10 million on its reinsurance recoverable balances at both December 31, 2022 and 2021.

Brighthouse Financial, Inc.

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Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting.

The deposit assets on reinsurance at both December 31, 2021 and 2020 were $ 3.2 billion.

The deposit assets on reinsurance were $ 6.0 billion and $ 3.2 billion at December 31, 2022 and 2021, respectively.

The deposit liabilities on reinsurance were $ 3.8 billion and $ 3.3 billion at December 31, 2022 and 2021, respectively.

See Note 8 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, 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.

See Notes 1 and 8 for a description of the Company’s accounting policies for investments and the fair value hierarchy for investments and the related valuation methodologies.

Fixed Maturity Securities Available-for-sale

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CMBS 7,324 3 — 710 6,611 6,976 2 333 25 7,282

State and political subdivision 3,995 — 846 6 4,835 3,673 — 967 — 4,640

ABS 5,652 — 3 296 5,359 4,261 — 33 14 4,280

State and political subdivision 4,074 — 125 400 3,799 3,995 — 846 6 4,835

Foreign government 1,148 — 39 106 1,081 1,593 — 244 5 1,832

Total fixed maturity securities $ 84,344 $ 7 $ 752 $ 9,512 $ 75,577 $ 79,246 $ 11 $ 8,806 $ 459 $ 87,582

The Company held non-income producing fixed maturity securities with an estimated fair value of $ 3 million and $ 5 million at December 31, 2021 and 2020, respectively.

The Company did no t hold non-income producing fixed maturity securities at December 31, 2022.

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

Maturities of Fixed Maturity Securities

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CMBS 5,589 543 970 167 1,401 21 95 4

State and political subdivision 356 6 7 — 48 — — —

ABS 3,347 159 1,733 137 2,459 13 93 1

State and political subdivision 2,041 317 247 83 356 6 7 —

Foreign government 777 99 21 7 278 4 18 1

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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 $ 11 million, relating to eight securities at December 31, 2021.

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 $ 7 million, relating to twenty-one securities at December 31, 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.

1 unchanged sentence

These issuers continued to make timely principal and interest payments and the estimated fair value is expected to recover as the securities approach maturity.

Rollforward of the Allowance for Credit Losses for Fixed Maturity Securities by Sector

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

Corporate CMBS Foreign Corporate Total

(In millions)

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

Allowance on securities where credit losses were not previously recorded 3 — 1 4

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

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 at December 31, 2020 2 — — 2

Allowance on securities where credit losses were not previously recorded 2 2 7 11

Reductions for securities sold ( 2 ) — — ( 2 )

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

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

Balance at December 31, 2021 $ 2 $ 2 $ 7 $ 11

_______________

(1) The Company recorded total write-offs of $ 5 million and $ 13 million for the years ended December 31, 2021 and 2020, respectively.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Allowance for Credit Losses for Fixed Maturity Securities

The allowance for credit losses for fixed maturity securities was $ 7 million and $ 11 million at December 31, 2022 and 2021, respectively.

During the period, the change in allowance for fixed maturity securities by sector was immaterial.

The Company recorded total write-offs of $ 10 million and $ 5 million for December 31, 2022 and 2021, respectively.

Mortgage Loans

10 unchanged sentences

_______________

(1) Purchases of mortgage loans from third parties were $ 2.1 billion and $ 815 million for the years ended December 31, 2021 and 2020, respectively, and were primarily comprised of residential mortgage loans.

(1) Purchases of mortgage loans from third parties were $ 2.2 billion and $ 2.1 billion for the years ended December 31, 2022 and 2021, respectively, and were primarily comprised of residential mortgage loans.

Allowance for Credit Losses for Mortgage Loans

2 unchanged sentences

The loan balance, or a portion of the loan balance, is written-off against the allowance when management believes this amount is uncollectible.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Accrued interest receivables are presented separate from the amortized cost basis of mortgage loans.

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 both December 31, 2021 and 2020.

The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $ 115 million and $ 95 million at December 31, 2022 and 2021, respectively.

8 unchanged sentences

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

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Mortgage loans are also evaluated to determine if they qualify as PCD assets.

11 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

Current period provision 17 ( 2 ) 13 28

3 unchanged sentences

Balance at December 31, 2021

Current period provision 5 3 11 19

Charge-offs, net of recoveries ( 23 ) — — ( 23 )

Balance at December 31, 2022

$ 49 $ 15 $ 55 $ 119

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

PCD Mortgage Loans

5 unchanged sentences

Par value $ 69 $ 435

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Credit Quality of Mortgage Loans by Portfolio Segment

14 unchanged sentences

65% to 75% 148 90 59 56 1 16 370

Greater than 80% — — — — 1 — 1

Total agricultural mortgage loans 680 1,253 479 552 645 756 4,365

4 unchanged sentences

Total $ 4,369 $ 6,197 $ 1,091 $ 2,648 $ 2,191 $ 6,559 $ 23,055

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

2021 2020 2019 2018 2017 Prior Total

18 unchanged sentences

Total $ 5,793 $ 1,349 $ 2,821 $ 2,384 $ 1,199 $ 6,427 $ 19,973

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

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

16 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 Consolidated Financial Statements (continued)

Investments (continued)

Past Due Mortgage Loans by Portfolio Segment

2 unchanged sentences

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.

At December 31, 2021 and 2020, $ 30 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:

7 unchanged sentences

Total $ 13,574 $ 4,365 $ 5,116 $ 23,055 $ 12,187 $ 4,163 $ 3,623 $ 19,973

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (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.

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 December 31, 2021 and 2020, $ 30 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:

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

Commercial Agricultural Residential (1) Total

5 unchanged sentences

_______________

(1) The Company had $ 0 and $ 7 million of residential mortgage loans in nonaccrual status for which there was no related allowance for credit losses for the years ended December 31, 2021 and 2020, respectively.

(1) All mortgage loans in nonaccrual status had an allowance for credit losses at both December 31, 2022 and 2021.

Current period investment income on mortgage loans in nonaccrual status was $ 2 million and $ 1 million for the years ended December 31, 2022 and 2021, respectively.

4 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 years ended December 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.

The Company did not have a significant amount of mortgage loans modified in a TDR during both years ended December 31, 2022 and 2021.

Other Invested Assets

1 unchanged sentence

See Note 7 for information about freestanding derivatives with positive estimated fair values.

Other invested assets also includes FHLB stock, tax credit and renewable energy partnerships and leveraged leases.

Other invested assets also includes the Company’s investment in company-owned life insurance, FHLB stock, tax credit and renewable energy partnerships and leveraged leases.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Leveraged Leases

7 unchanged sentences

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities and the effect on DAC, VOBA, 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 Consolidated Financial Statements (continued)

Investments (continued)

Unrealized investment gains (losses) on fixed maturity securities and the effect on DAC, VOBA 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.

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

8 unchanged sentences

Future policy benefits 916 ( 2,903 ) ( 4,313 )

DAC, VOBA and DSI ( 403 ) ( 520 ) ( 341 )

DAC and VOBA 410 ( 403 ) ( 520 )

Subtotal 1,326 ( 3,306 ) ( 4,833 )

9 unchanged sentences

Future policy benefits 3,819 1,410 ( 1,621 )

DAC, VOBA and DSI 117 ( 179 ) ( 251 )

DAC and VOBA 813 117 ( 179 )

Deferred income tax benefit (expense) 2,548 410 ( 658 )

4 unchanged sentences

government and its agencies, at both December 31, 2022 and 2021.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Securities Lending

8 unchanged sentences

_______________

(1) Included within fixed maturity securities.

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

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

(1) Included in fixed maturity securities.

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

(3) Securities collateral received from counterparties may not be sold or re-pledged, unless the counterparty is in default, and is not reported on the consolidated financial statements.

5 unchanged sentences

corporate 2 410 — 412 1 — — 1

Foreign corporate — 152 — 152 — — — —

Foreign government — 16 — 16 — — — —

Total $ 642 $ 2,105 $ 984 $ 3,731 $ 1,095 $ 2,125 $ 1,391 $ 4,611

2 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 December 31, 2021 was $ 1.1 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 agency RMBS, ABS, U.S.

government and agency securities, non-agency RMBS and CMBS) with 52 % invested in agency RMBS, U.S.

government and agency securities and short-term investments at December 31, 2021.

The estimated fair value of the securities on loan related to the cash collateral on open at December 31, 2022 was $ 627 million, comprised of U.S.

government and agency and U.S.

corporate 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 ABS, agency RMBS, U.S.

government and agency securities, U.S.

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

government and agency securities and cash and cash equivalents at December 31, 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.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

11 unchanged sentences

In addition, the Company’s investment in FHLB common stock, which is considered restricted until redeemed by the issuer, was $ 201 million and $ 70 million at redemption value at December 31, 2022 and 2021, respectively.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Collectively Significant Equity Method Investments

11 unchanged sentences

Aggregate net income (loss) from the underlying entities in which the Company invests is primarily comprised of investment income, including recurring investment income and realized and unrealized investment gains (losses).

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Variable Interest Entities

13 unchanged sentences

Total $ 20,032 $ 22,962 $ 20,151 $ 20,917

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (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 15.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

Net Investment Income

15 unchanged sentences

_______________

(1) Includes net investment income pertaining to other limited partnership interests of $ 1.3 billion, $ 225 million and $ 181 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Investments (continued)

(1) Includes net investment income pertaining to other limited partnership interests of $ 170 million, $ 1.3 billion and $ 225 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Net Investment Gains (Losses)

10 unchanged sentences

Total net investment gains (losses) $ ( 248 ) $ ( 59 ) $ 278

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($ 17 ) million, $ 1 million and $ 7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Sales or Disposals of Fixed Maturity Securities

8 unchanged sentences

Net investment gains (losses) $ ( 184 ) $ ( 4 ) $ 312

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Accounting for Derivatives

12 unchanged sentences

Interest rate caps are used in non-qualifying hedging relationships.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Derivatives (continued)

Interest rate floors:

The Company uses interest rate floors to protect against a decline in interest rates on floating rate assets in the Company’s institutional spread margin business.

Interest rate floors are used in non-qualifying hedging relationships.

Interest rate swaptions:

22 unchanged sentences

Credit default swaptions are used in non-qualifying hedging relationships.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Derivatives (continued)

Equity Market Derivatives

11 unchanged sentences

Equity variance swaps are used in non-qualifying hedging relationships.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Derivatives (continued)

Primary Risks Managed by Derivatives

10 unchanged sentences

Interest rate swaps Interest rate 3,145 98 46 2,595 325 17

Interest rate floors Interest rate 3,250 12 3 — — —

Interest rate caps Interest rate 6,350 137 43 5,100 29 4

18 unchanged sentences

Total $ 116,991 $ 2,401 $ 9,307 $ 90,931 $ 3,312 $ 10,140

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Derivatives (continued)

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 December 31, 2022 and 2021.

3 unchanged sentences

and (iv) written credit default swaps that are used to create synthetic credit investments and that do not qualify for hedge accounting because they do not involve a hedging relationship.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Derivatives (continued)

The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses) were as follows:

The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items reported in net derivative gains (losses) were as follows:

Year Ended December 31, 2022

3 unchanged sentences

Cash flow hedges:

Interest rate derivatives $ 2 $ — $ 3 $ ( 20 )

Foreign currency exchange rate derivatives 10 ( 4 ) 36 191

Interest rate $ 5 $ — $ 4 $ ( 50 )

Foreign currency exchange rate 13 ( 12 ) 53 381

Total cash flow hedges 18 ( 12 ) 57 331

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

Interest rate derivatives ( 717 ) — — —

Foreign currency exchange rate derivatives 57 ( 7 ) — —

Credit derivatives 17 — — —

Equity market derivatives ( 486 ) — — —

Embedded derivatives ( 1,341 ) — — —

Interest rate ( 4,001 ) — — —

Foreign currency exchange rate 120 ( 48 ) — —

Credit ( 2 ) — — —

Equity market 590 — — —

Embedded 3,639 — — —

Total non-qualifying hedges 346 ( 48 ) — —

5 unchanged sentences

Cash flow hedges:

Interest rate derivatives $ 2 $ — $ 3 $ 77

Foreign currency exchange rate derivatives 15 ( 7 ) 37 ( 129 )

Interest rate $ 2 $ — $ 3 $ ( 20 )

Foreign currency exchange rate 10 ( 4 ) 36 191

Total cash flow hedges 12 ( 4 ) 39 171

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

Interest rate derivatives 3,565 — — —

Foreign currency exchange rate derivatives ( 16 ) ( 7 ) — —

Credit derivatives 18 — — —

Equity market derivatives ( 1,367 ) — — —

Embedded derivatives ( 2,221 ) — — —

Interest rate ( 717 ) — — —

Foreign currency exchange rate 57 ( 7 ) — —

Credit 17 — — —

Equity market ( 486 ) — — —

Embedded ( 1,341 ) — — —

Total non-qualifying hedges ( 2,470 ) ( 7 ) — —

8 unchanged sentences

Cash flow hedges:

Interest rate derivatives $ 32 $ — $ 2 $ 25

Foreign currency exchange rate derivatives 25 ( 29 ) 34 15

Interest rate $ 2 $ — $ 3 $ 77

Foreign currency exchange rate 15 ( 7 ) 37 ( 129 )

Total cash flow hedges 17 ( 7 ) 40 ( 52 )

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

Interest rate derivatives 1,589 — — —

Foreign currency exchange rate derivatives 22 ( 3 ) — —

Credit derivatives 44 — — —

Equity market derivatives ( 2,476 ) — — —

Embedded derivatives ( 1,192 ) — — —

Interest rate 3,565 — — —

Foreign currency exchange rate ( 16 ) ( 7 ) — —

Credit 18 — — —

Equity market ( 1,367 ) — — —

Embedded ( 2,221 ) — — —

Total non-qualifying hedges ( 21 ) ( 7 ) — —

Total $ ( 4 ) $ ( 14 ) $ 40 $ ( 52 )

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

At December 31, 2022 and 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 December 31, 2022 and 2021, the balance in AOCI associated with cash flow hedges was $ 638 million and $ 329 million, respectively.

16 unchanged sentences

Baa 8 1,185 5.0 27 1,131 5.0

Ba 2 24 4.0 — — 0.0

Caa and Lower ( 1 ) 4 3.0 ( 1 ) 4 4.0

4 unchanged sentences

If no rating is available from a rating agency, then an internally developed rating is used.

(2) The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Brighthouse Financial, Inc.

1 unchanged sentence

Derivatives (continued)

(2) The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Counterparty Credit Risk

24 unchanged sentences

Certain of these arrangements also include credit-contingent provisions which permit the party with positive fair value to terminate the derivative at the current fair value or demand immediate full collateralization from the party in a net liability position, in the event that the financial strength or credit rating of the party in a net liability position falls below a certain level.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Derivatives (continued)

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:

5 unchanged sentences

(1) After taking into consideration the existence of netting agreements.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Derivatives (continued)

(2) Substantially all of the Company’s collateral arrangements provide for daily posting of collateral for the full value of the derivative contract.

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 OTC-bilateral derivative transactions to third-party custodians.

When developing estimated fair values, the Company considers three broad valuation techniques:

26 unchanged sentences

CMBS — 6,578 33 6,611

State and political subdivision — 4,835 — 4,835

ABS — 5,041 318 5,359

State and political subdivision — 3,799 — 3,799

Foreign government — 1,043 38 1,081

32 unchanged sentences

CMBS — 7,239 43 7,282

State and political subdivision — 4,640 — 4,640

ABS — 4,115 165 4,280

State and political subdivision — 4,835 — 4,835

Foreign government — 1,806 26 1,832

14 unchanged sentences

Foreign currency exchange rate — 47 — 47

Credit — — 1 1

Equity market — 1,465 1 1,466

3 unchanged sentences

_______________

(1) Derivative assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities are presented within other liabilities on the consolidated balance sheets.

(1) Derivative assets are reported in other invested assets and derivative liabilities are reported in other liabilities.

The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets.

(2) Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables on the consolidated balance sheets.

Embedded derivatives within liability host contracts are presented within policyholder account balances on the consolidated balance sheets.

(2) Embedded derivatives within asset host contracts are reported in premiums, reinsurance and other receivables.

Embedded derivatives within liability host contracts are reported in policyholder account balances.

Valuation Controls and Procedures

63 unchanged sentences

GMABs, 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).

These embedded derivatives are classified in policyholder account balances, 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 markets assumptions including expectations of policyholder behavior.

14 unchanged sentences

The crediting rates associated with these features are embedded derivatives which are measured at estimated fair value separately from the host fixed 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.

These embedded derivatives are classified in policyholder account balances.

The estimated fair value of crediting rates associated with index-linked annuities is determined using a combination of an option pricing model and an option-budget approach.

53 unchanged sentences

Fixed Maturity Securities

Corporate (1) Structured Securities State and

Subdivision Foreign Government Equity

Corporate (1) Structured Securities Foreign Government Equity

Securities Short-term Investments Net Derivatives (2) Net Embedded Derivatives (3) Separate Account Assets (4)

32 unchanged sentences

$ 3 $ — $ — $ 1 $ — $ ( 1 ) $ 3,334 $ —

Changes in unrealized gains (losses) included in OCI for the instruments still held at December 31, 2020 (9)

$ ( 3 ) $ 1 $ — $ — $ — $ ( 9 ) $ — $ —

Changes in unrealized gains (losses) included in OCI for the instruments still held as of December 31, 2021 (9)

11 unchanged sentences

and foreign corporate securities.

(2) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.

(3) Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

(2) Freestanding derivative assets and liabilities are reported net for purposes of the rollforward.

(3) Embedded derivative assets and liabilities are reported net for purposes of the rollforward.

(4) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders within separate account liabilities.

Therefore, such changes in estimated fair value are not recorded in net income (loss).

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

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

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

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

Changes in the allowance for credit losses and direct write-offs are charged to net income (loss) on securities are included in net investment gains (losses).

60 unchanged sentences

(3) Includes unamortized debt issuance costs, discounts and premiums, as applicable, totaling net $ 32 million and $ 33 million for the senior notes and junior subordinated debentures on a combined basis at December 31, 2022 and 2021, respectively.

The aggregate maturities of long-term debt at December 31, 2021 were $ 2 million in each of 2022, 2023 and 2024, $ 3 million in each of 2025 and 2026, and $ 3.2 billion thereafter.

The aggregate maturities of long-term debt at December 31, 2022 were $ 2 million in each of 2023 and 2024, $ 3 million in each of 2025 and 2026, $ 761 million in 2027, and $ 2.4 billion thereafter.

Unsecured senior notes rank highest in priority, followed by subordinated debt consisting of junior subordinated debentures.

16 unchanged sentences

Revolving Credit Facility

At December 31, 2021, BHF maintains a $ 1.0 billion senior unsecured revolving credit facility maturing May 7, 2024 (the “Revolving Credit Facility”), which may be used for revolving loans or letters of credit.

On April 15, 2022, BHF entered into a new revolving credit agreement with respect to a new $ 1.0 billion senior unsecured revolving credit facility maturing April 15, 2027 (the “2022 Revolving Credit Facility”), all of which may be used for revolving loans or letters of credit.

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 December 31, 2022, there were no borrowings or letters of credit outstanding under the 2022 Revolving Credit Facility.

4 unchanged sentences

Reinsurance Financing Arrangement

At December 31, 2021, Brighthouse Reinsurance Company of Delaware (“BRCD”) maintains a $ 12.0 billion financing arrangement with a pool of highly rated third-party reinsurers consisting of credit-linked notes that each mature in 2039.

Brighthouse Reinsurance Company of Delaware (“BRCD”) maintains a financing arrangement with a pool of highly rated third-party reinsurers consisting of credit-linked notes that each mature in 2039.

Effective December 31, 2022, with the explicit permission of the Delaware Commissioner, BRCD amended its financing agreement to increase the maximum facility from $ 12.0 billion to $ 15.0 billion.

At December 31, 2022, there were no borrowings and there was $ 15.0 billion of funding available under this financing arrangement.

4 unchanged sentences

At December 31, 2022, there were no borrowings under the Repurchase Facilities.

For the years ended December 31, 2021, 2020 and 2019, fees associated with the Repurchase Facilities were not significant.

Brighthouse Financial, Inc.

39 unchanged sentences

Prior to the optional redemption date applicable to each series of Preferred Stock, the Preferred Stock is redeemable at the Company’s option in whole but not in part within 90 days of the occurrence of (i) a specified rating agency event or (ii) a specified regulatory capital event, in each case at a specified redemption price.

The declaration, record and payment dates, as well as per share and aggregate dividend amounts for BHF’s preferred stock by series for the years ended December 31, 2021, 2020 and 2019 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)

November 15, 2021 December 10, 2021 December 27, 2021 $ 412.50 $ 7 $ 421.88 $ 6 $ 335.94 $ 8

August 16, 2021 September 10, 2021 September 27, 2021 412.50 7 421.88 7 335.94 8

May 17, 2021 June 10, 2021 June 25, 2021 412.50 7 421.88 7 335.94 7

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

$ 1,650.00 $ 28 $ 1,687.52 $ 27 $ 1,474.40 $ 34

November 16, 2020 December 10, 2020 December 28, 2020 $ 412.50 $ 7 $ 421.88 $ 6 $ — $ —

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

$ 1,650.00 $ 28 $ 1,017.19 $ 16 $ — $ —

November 15, 2019 December 10, 2019 December 26, 2019 $ 412.50 $ 7 $ — $ — $ — $ —

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

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

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

Years Ended December 31,

2022 2021 2020

Series Per Share Aggregate Per Share Aggregate Per Share Aggregate

(In millions, except per share data)

A $ 1,650.00 $ 28 $ 1,650.00 $ 28 $ 1,650.00 $ 28

B $ 1,687.52 28 $ 1,687.52 27 $ 1,017.19 16

C $ 1,343.76 31 $ 1,474.40 34 $ — —

D $ 1,262.23 17 $ — — $ — —

Total $ 104 $ 89 $ 44

See Note 16 for information relating to preferred dividends declared subsequent to December 31, 2022.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Changes in common shares outstanding were as follows:

7 unchanged sentences

(1) Includes shares of common stock withheld with respect to tax withholding obligations associated with the vesting of share-based compensation awards under the Company’s publicly announced benefit plans or programs.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

At December 31, 2022, book value per common share was $ 62.60 .

On August 2, 2021, BHF authorized the repurchase of up to $ 1.0 billion of its common stock, which is in addition to the $ 200 million repurchase announced on February 10, 2021.

12 unchanged sentences

The Company grants the majority of each year’s awards in the first quarter of the year.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Compensation Expense Related to Share-Based Compensation

4 unchanged sentences

RSUs $ 13 $ 13 $ 15

Stock options — — 1

Employee stock purchase plan 1 1 1

9 unchanged sentences

Vesting is subject to continued service, except for employees who meet specified age and service criteria, and in certain other limited circumstances.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Performance Share Units

15 unchanged sentences

628,870 $ 43.18 808,549 $ 42.30

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

The weighted average grant date fair value of RSUs granted during the years ended December 31, 2021 and 2020, was $ 41.81 and $ 35.68 , respectively.

1 unchanged sentence

The total fair value of RSUs that vested during the years ended December 31, 2022, 2021 and 2020, was $ 15 million, $ 15 million and $ 10 million, respectively.

The total fair value of PSUs that vested during the years ended December 31, 2021, 2020 and 2019, was $ 4 million, $ 0 and $ 0 , respectively.

The total fair value of PSUs that vested during the years ended December 31, 2022, 2021 and 2020, was $ 7 million, $ 4 million and $ 0 , respectively.

Stock Options

17 unchanged sentences

The weighted average per share fair value of the discount under the ESPP was $ 8.54 , $ 10.06 and $ 8.34 during the years ended December 31, 2022, 2021 and 2020, respectively, which was recorded in other expenses.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Statutory Financial Information

1 unchanged sentence

The requirements are used by regulators to assess the minimum amount of statutory capital needed for an insurance company to support its operations, based on its size and risk profile.

RBC is based on the statutory financial statements and is calculated in a manner prescribed by the NAIC, with the RBC ratio equal to the Company’s Total Adjusted Capital (“TAC”) divided by the Company Action Level.

Companies below specific trigger levels or RBC ratios are subject to specified corrective action.

The minimum level of TAC before corrective action commences is the Company Action Level RBC.

The RBC ratios for the Company’s insurance subsidiaries were each in excess of 400% for all periods presented.

RBC is based on the statutory financial statements and is calculated in a manner prescribed by the NAIC, with the RBC ratio equal to the total adjusted capital (“TAC”) divided by the applicable company action level.

Companies below minimum RBC ratios are subject to corrective action.

The RBC ratios for the Company’s insurance subsidiaries were each in excess of such minimums for all periods presented.

The Company’s insurance subsidiaries prepare statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of domicile.

1 unchanged sentence

The tables below present amounts from certain of the Company’s insurance subsidiaries, which are derived from the statutory-basis financial statements as filed with the insurance regulators.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Statutory net income (loss) was as follows:

12 unchanged sentences

The statutory net income (loss) of BRCD was ($ 208 ) million, $ 543 million and $ 145 million for the years ended December 31, 2022, 2021 and 2020, respectively, and the combined statutory capital and surplus, including the aforementioned prescribed practices, were $ 696 million and $ 644 million at December 31, 2022 and 2021, respectively.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Dividend Restrictions

8 unchanged sentences

(1) Reflects dividend amounts that may be paid during 2023 without prior regulatory approval.

However, because dividend tests may be based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2022, some or all of such dividends may require regulatory approval.

However, because dividend tests may be based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2023, some or all of such dividends may require regulatory approval to the extent dividends were paid in 2022.

(2) Reflects all amounts paid, including those requiring regulatory approval.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Under the Delaware Insurance Law, Brighthouse Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay a stockholder dividend as long as the amount of the dividend when aggregated with all other dividends in the preceding 12 months does not exceed the greater of:

10 unchanged sentences

Under the Massachusetts State Insurance Law, the Massachusetts Commissioner has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Equity (continued)

Under New York insurance laws, Brighthouse Life Insurance Company of NY (“BHNY”) is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to its parent in any calendar year based on one of two standards.

Under one standard, BHNY is permitted, without prior insurance regulatory clearance, to pay dividends out of earned surplus (defined as positive “unassigned funds (surplus)”, excluding 85% of the change in net unrealized capital gains or losses (less capital gains tax), for the immediately preceding calendar year), in an amount up to the greater of:

(i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains), not to exceed 30% of surplus to policyholders as of the end of the immediately preceding calendar year.

In addition, under this standard, BHNY may not, without prior insurance regulatory clearance, pay any dividends in any calendar year immediately following a calendar year for which its net gain from operations, excluding realized capital gains, was negative.

Under the second standard, if dividends are paid from a source other than earned surplus, BHNY may, without prior insurance regulatory clearance, pay an amount up to the lesser of:

In addition, BHNY will be permitted to pay a dividend to its parent in excess of the amounts allowed under both standards only if it files notice of its intention to declare such a dividend and the amount thereof with the NY Superintendent, and the NY Superintendent either approves the distribution of the dividend or does not disapprove the dividend within 30 days of its filing.

To the extent BHNY pays a stockholder dividend, such dividend will be paid to Brighthouse Life Insurance Company, its direct parent and sole stockholder.

Under BRCD’s plan of operations, no dividend or distribution may be made by BRCD without the prior approval of the Delaware Commissioner.

BRCD did no t pay any extraordinary dividends during the year ended December 31, 2022.

During the year ended December 31, 2021, BRCD paid an extraordinary dividend in the form of the settlement of affiliated reinsurance balances of $ 400 million, invested assets of $ 197 million and cash of $ 3 million.

During the year ended December 31, 2020, BRCD paid an extraordinary dividend in the form of invested assets of $ 423 million and the settlement of affiliated reinsurance balances of $ 177 million, which was approved by the Delaware Commissioner in December 2019.

BRCD did no t pay any extraordinary dividends during the year ended December 31, 2019.

During each of the years ended December 31, 2022, 2021 and 2020, BRCD paid cash dividends of $ 1 million to its preferred shareholders.

40 unchanged sentences

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

(3) The effects of income taxes on amounts recorded to AOCI are also recognized in AOCI.

(3) The effects of income taxes on amounts recorded in AOCI are also recognized in AOCI.

These income tax effects are released from AOCI when the related activity is reclassified into results from operations.

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

Brighthouse Financial, Inc.

1 unchanged sentence

Equity (continued)

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

AOCI Components Amounts Reclassified from AOCI Consolidated Statements of Operations Locations

55 unchanged sentences

Brighthouse Services sponsors qualified and non-qualified defined contribution plans.

For the years ended December 31, 2021, 2020 and 2019, the total employer contributions for the qualified defined contribution plan were $ 18 million, $ 17 million and $ 15 million, respectively, and the total expense recognition for the non-qualified defined contribution plans were $ 9 million, $ 7 million and $ 6 million, respectively, all of which are reported in other expenses.

For the years ended December 31, 2022, 2021 and 2020, the total employer contributions for the qualified defined contribution plan were $ 18 million, $ 18 million and $ 17 million, respectively, and the total (benefit) expense recognition for the non-qualified defined contribution plans were ($ 2 ) million, $ 9 million and $ 7 million, respectively, all of which are reported in other expenses.

NELICO Legacy Pension and Other Unfunded Benefit Plans

2 unchanged sentences

The qualified defined benefit pension plan had an accumulated benefit obligation of $ 128 million and $ 174 million at December 31, 2022 and 2021, respectively.

This plan was fully funded at both December 31, 2021 and 2020 with assets in excess of the accumulated benefit obligation of $ 8 million.

This plan was fully funded at December 31, 2022 and 2021 with assets in excess of the accumulated benefit obligation of $ 3 million and $ 8 million, respectively.

The Company did not make any employer contributions to this qualified plan during 2022 or 2021.

7 unchanged sentences

Although NELICO remains the legal obligor for these plans, an employee matters agreement (“EMA”) exists between BHF and MetLife, whereby MetLife has agreed to reimburse BHF for the obligations under the non-qualified and other unfunded plans as payments are made.

At the time of Separation, BHF established a receivable from MetLife in the amount of the unfunded obligations due under these plans.

BHF established a receivable in the amount of the unfunded obligations due under these plans.

MetLife is required to annually reimburse BHF for each prior year’s benefit payments, claims and premiums under the NELICO plans that are listed in the EMA.

The Company’s receivable from MetLife under the EMA for future total estimated benefit payments, claims and premiums was $ 194 million and $ 197 million at December 31, 2021 and 2020, respectively.

The Company’s receivable under the EMA for future total estimated benefit payments, claims and premiums was $ 174 million and $ 194 million at December 31, 2022 and 2021, respectively.

The receivable is reported in premiums, reinsurance and other receivables.

12 unchanged sentences

2022 2021 2020

(In millions)

(Dollars in millions)

Tax provision at statutory rate $ ( 36 ) $ ( 44 ) $ ( 298 )

Tax effect of:

Resolution of prior years ( 76 ) ( 4 ) —

Dividends received deduction ( 36 ) ( 37 ) ( 42 )

Tax credits ( 20 ) ( 16 ) ( 25 )

Change in valuation allowance 18 1 —

Change in uncertain tax benefits ( 15 ) — —

Return to provision ( 6 ) 14 2

1 unchanged sentence

( 2 ) ( 48 ) ( 5 )

Change in valuation allowance — 18 1

State tax, net of federal benefit 10 9 5

Other, net ( 1 ) 3 ( 1 )

8 unchanged sentences

Deferred income tax assets:

Net unrealized investment losses $ 1,426 $ —

Net operating loss carryforwards 1,247 1,254

Investments, including derivatives 360 —

Tax credit carryforwards 183 151

Employee benefits 24 15

Intangibles 40 42

Employee benefits 13 24

Total deferred income tax assets 3,298 1,477

2 unchanged sentences

Deferred income tax liabilities:

Net unrealized investment gains 1,122 1,532

Policyholder liabilities and receivables 950 404

Net unrealized investment gains — 1,122

Investments, including derivatives — 196

11 unchanged sentences

Indefinite — —

The Company believes that it is more likely than not that the benefit from certain tax credit carryforwards will not be realized.

Accordingly, a valuation allowance of $ 18 million has been established on the deferred tax assets related to the tax credit carryforwards at December 31, 2021.

Brighthouse Financial, Inc.

1 unchanged sentence

Income Tax (continued)

The Company believes that it is more likely than not that the benefit from certain tax credit carryforwards will not be realized.

Accordingly, a valuation allowance of $ 18 million has been established on the deferred tax assets related to the tax credit carryforwards at December 31, 2022.

The Company’s liability for unrecognized tax benefits may increase or decrease in the next 12 months.

11 unchanged sentences

Settlements with tax authorities — — —

Lapses of statutes of limitations

Balance at December 31, $ 19 $ 35 $ 35

Unrecognized tax benefits that, if recognized would impact the effective rate $ 19 $ 35 $ 35

The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses, while penalties are included in income tax expense.

The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included in other expenses, while penalties are included in income tax expense.

Interest related to unrecognized tax benefits was not significant.

3 unchanged sentences

The Company is no longer subject to federal, state or local income tax examinations for years prior to 2017.

Management believes it has established adequate tax liabilities, and final resolution of the audit for the years 2010 and forward is not expected to have a material impact on the Company’s consolidated financial statements.

Management believes it has established adequate tax liabilities, and final resolution of any audits for the years 2017 and forward is not expected to have a material impact on the Company’s consolidated financial statements.

Tax Sharing Agreements

8 unchanged sentences

The tax sharing agreements state that federal taxes are computed on a modified separate return basis with benefit for losses.

Income Tax Transactions with Former Parent

In connection with the Separation, the Company entered into a tax receivables agreement (the “Tax Receivables Agreement”) with MetLife that provides MetLife with the right to receive as partial consideration for its contribution of assets to BHF future payments from BHF, equal to 86 % of the amount of cash savings, if any, in federal income tax that Brighthouse Financial actually, or are deemed to, realize as a result of the utilization of Brighthouse Financial, Inc.

and its subsidiaries’ net operating losses, capital losses, tax basis and amortization or depreciation deductions in respect of certain tax benefits it may realize as a result of certain transactions involved in the Separation.

In connection with the Tax Receivables Agreement, the Company has a payable to MetLife of $ 328 million at both December 31, 2021 and 2020 included in other liabilities.

Brighthouse Financial, Inc.

1 unchanged sentence

Income Tax (continued)

Income Tax Transactions with Former Parent

In connection with the Separation, the Company entered into a tax receivables agreement (the “Tax Receivables Agreement”) with MetLife that provides MetLife with the right to receive, as partial consideration for its contribution of assets to BHF, future payments from BHF equal to 86 % of the amount of cash savings, if any, in federal income tax that Brighthouse Financial actually, or is deemed to, realize as a result of the utilization of Brighthouse Financial, Inc.

In connection with the Tax Receivables Agreement, the Company has a payable to MetLife of $ 328 million at both December 31, 2022 and 2021, reported in other liabilities.

The Company also entered into a tax separation agreement with MetLife.

1 unchanged sentence

The tax separation agreement also allocates rights, obligations and responsibilities in connection with certain administrative matters relating to the preparation of tax returns and control of tax audits and other proceedings relating to taxes.

For the years ended December 31, 2021, 2020 and 2019, Brighthouse Financial paid MetLife $ 81 million, $ 0 and $ 3 million, respectively, under the tax separation agreement.

At December 31, 2021 and 2020, the current income tax liability included $ 76 million and $ 136 million, respectively, payable to MetLife related to this agreement.

For the year ended December 31, 2022, MetLife paid Brighthouse Financial $ 7 million, and for the years ended December 31, 2021 and 2020, Brighthouse Financial paid MetLife $ 81 million and $ 0 , respectively, under the tax separation agreement.

At December 31, 2022, there was a current income tax receivable of $ 19 million, and at December 31, 2021, there was a current income tax payable of $ 76 million related to this agreement.

Earnings Per Common Share

13 unchanged sentences

See Note 10 for further information on share-based compensation plans.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Contingencies, Commitments and Guarantees

13 unchanged sentences

Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Contingencies, Commitments and Guarantees (continued)

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.

12 unchanged sentences

The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Contingencies, Commitments and Guarantees (continued)

Cost of Insurance Class Actions

4 unchanged sentences

Plaintiff seeks to certify a class of all persons who own or owned life insurance policies issued where the terms of the life insurance policy provide or provided, among other things, a guarantee that the cost of insurance rates would not be increased by more than a specified percentage in any contract year.

Plaintiff also alleges that cost of insurance charges were based on improper factors and should have decreased over time due to improving mortality but did not.

Plaintiff alleges, among other things, causes of action for breach of contract, fraud, suppression and concealment, and violation of the Georgia Racketeer Influenced and Corrupt Organizations Act.

2 unchanged sentences

Plaintiff was granted leave to amend the complaint.

On January 18, 2023, the plaintiff filed a motion on consent to amend the second amended class action complaint to narrow the scope of the class sought to those who own or owned policies issued in Georgia;

the motion was granted on January 23, 2023, and the third amended complaint was filed on January 23, 2023.

The Company intends to vigorously defend this matter.

Lawrence Martin v.

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

Brighthouse Life Insurance Company (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 has filed a purported class action lawsuit against Brighthouse Life Insurance Company.

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 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 were based on improper factors and 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.

Brighthouse Life Insurance Company and Brighthouse Life Insurance Company of NY filed a motion to dismiss in June 2021, which was denied in February 2022.

Brighthouse Life Insurance Company filed a motion to dismiss in June 2021, which was denied in February 2022.

Brighthouse Life Insurance Company of NY was initially named as a defendant when the lawsuit was filed, but was dismissed as a defendant, without prejudice, in April 2022.

The Company intends to vigorously defend this matter.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Contingencies, Commitments and Guarantees (continued)

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.

5 unchanged sentences

Other Loss Contingencies

As with litigation and regulatory loss contingencies, the Company considers establishing liabilities for loss contingencies associated with disputes or other matters involving third parties, including counterparties to contractual arrangements entered into by the Company (e.g., third-party vendors and reinsurers), as well as with tax authorities (“other loss contingencies”).

The Company establishes liabilities for such other loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated.

1 unchanged sentence

In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual is made and no loss or range of loss is disclosed.

In the disputes where the Company’s subsidiaries are acting as the reinsured or the reinsurer, such matters involve assertions by third parties primarily related to rates, fees or reinsured benefit calculations, and in certain of such matters, the counterparty has made a request to arbitrate.

As of December 31, 2021, 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 $ 250 million, which are primarily associated with the above reinsurance-related matters.

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.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Contingencies, Commitments and Guarantees (continued)

In the matters where the Company’s subsidiaries are acting as the reinsured or the reinsurer, such matters involve assertions by third parties primarily related to rates, fees or reinsured benefit calculations, and in certain of such matters, the counterparty has made a request to arbitrate.

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 December 31, 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

4 unchanged sentences

The amounts of these unfunded commitments were $ 1.9 billion and $ 2.3 billion at December 31, 2022 and 2021, respectively.

Brighthouse Financial, Inc.

Notes to the Consolidated Financial Statements (continued)

Contingencies, Commitments and Guarantees (continued)

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.

35 unchanged sentences

Industrial, miscellaneous and all other 49 50 50

Banks, trust and insurance companies 1 — —

Public utilities — 2 2

17 unchanged sentences

Condensed Balance Sheets

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

$ 0 and $ 45 , respectively;

allowance for credit losses of $ 0 and $ 0 , respectively)

Short-term investments, principally at estimated fair value $ 763 $ 1,168

5 unchanged sentences

Current income tax recoverable 3 2

Deferred income tax receivable 26 1

Deferred income tax asset 33 26

Other assets 5 2

6 unchanged sentences

Preferred stock, par value $ 0.01 per share;

$ 1,753 and $ 1,403 , respectively, aggregate liquidation preference

$ 1,753 aggregate liquidation preference

Common stock, par value $ 0.01 per share;

53 unchanged sentences

Cash paid in connection with freestanding derivatives ( 5 ) ( 2 ) —

Capital contributions to subsidiary — — ( 412 )

Net change in short-term investments 408 162 ( 873 )

7 unchanged sentences

Treasury stock acquired in connection with share repurchases ( 488 ) ( 499 ) ( 473 )

Financing element on certain derivative instruments and other derivative related transactions, net ( 7 ) — —

Other, net ( 14 ) ( 7 ) ( 5 )

9 unchanged sentences

Brighthouse Financial, Inc.

Notes to the Condensed Financial Information

Condensed Financial Information (continued)

(Parent Company Only)

1 unchanged sentence

The condensed financial information of Brighthouse Financial, Inc.

(the “Parent Company”) should be read in conjunction with the consolidated financial statements of Brighthouse Financial, Inc.

(the “Parent Company” or “BHF”) should be read in conjunction with the consolidated financial statements of Brighthouse Financial, Inc.

and its subsidiaries and the notes thereto (the “Consolidated Financial Statements”).

5 unchanged sentences

Investment in Subsidiary

During the years ended December 31, 2021, 2020 and 2019, BHF received cash distributions of $ 310 million, $ 1.5 billion and $ 195 million, respectively, from Brighthouse Holdings, LLC (“BH Holdings”) and made cash capital contributions of $ 0 , $ 0 and $ 412 million, respectively, to BH Holdings.

Distributions received during the years ended December 31, 2021 and 2020 primarily relate to $ 550 million and $ 1.3 billion, respectively, of ordinary cash dividends paid by Brighthouse Life Insurance Company to BH Holdings.

During the year ended December 31, 2022, BHF received non-cash distributions of $ 350 million from Brighthouse Holdings, LLC (“BH Holdings”) and did not make any capital contributions to BH Holdings.

The non-cash distributions received related to reductions of short-term intercompany loans of $ 250 million from Brighthouse Services, LLC to BH Holdings and of $ 100 million from BH Holdings to BHF.

During the years ended December 31, 2021 and 2020, BHF received cash distributions of $ 310 million and $ 1.5 billion, respectively, from BH Holdings and did not make any capital contributions to BH Holdings.

Distributions received during the years ended December 31, 2021 and 2020 primarily related to $ 550 million and $ 1.3 billion, respectively, of ordinary cash dividends paid by Brighthouse Life Insurance Company to BH Holdings.

Long-term and Short-term Debt

12 unchanged sentences

(1) Includes unamortized debt issuance costs, discounts and premiums, as applicable, totaling net $ 32 million and $ 33 million for the senior notes and junior subordinated debentures on a combined basis at December 31, 2022 and 2021, respectively.

The aggregate maturities of long-term and short-term debt at December 31, 2021 were $ 712 million in 2022, $ 0 in each of 2023, 2024, 2025 and 2026, and $ 3.2 billion thereafter.

The aggregate maturities of long-term and short-term debt at December 31, 2022 were $ 513 million in 2023, $ 0 in each of 2024, 2025, and 2026, $ 757 million in 2027, and $ 2.4 billion thereafter.

Interest expense related to long-term and short-term debt of $ 155 million, $ 159 million and $ 183 million for the years ended December 31, 2022, 2021 and 2020, respectively, is included in other expenses.

1 unchanged sentence

See Note 9 of the Notes to the Consolidated Financial Statements for information regarding the unaffiliated senior notes and junior subordinated debentures.

Credit Facilities

See Note 9 of the Notes to the Consolidated Financial Statements for information regarding BHF’s credit facilities.

Brighthouse Financial, Inc.

Notes to the Condensed Financial Information (continued)

Condensed Financial Information (continued)

(Parent Company Only)

Credit Facilities

See Note 9 of the Notes to the Consolidated Financial Statements for information regarding BHF’s credit facilities.

Short-term Intercompany Loans

2 unchanged sentences

Each loan entered into under this intercompany loan agreement has a term not more than 364 days and bears interest on the unpaid principal amount at a variable rate, payable monthly.

During the years ended December 31, 2021, 2020 and 2019, BHF borrowed $ 1.1 billion, $ 1.2 billion and $ 1.2 billion, respectively, from certain of its non-insurance subsidiaries and repaid $ 805 million, $ 1.0 billion and $ 1.1 billion of such borrowings during the years ended December 31, 2021, 2020 and 2019, respectively.

During the years ended December 31, 2022, 2021 and 2020, BHF borrowed $ 1.0 billion, $ 1.1 billion and $ 1.2 billion, respectively, from certain of its non-insurance subsidiaries and repaid $ 811 million, $ 805 million and $ 1.0 billion of such borrowings during the years ended December 31, 2022, 2021 and 2020, respectively.

The weighted average interest rate on short-term intercompany loans outstanding at December 31, 2022, 2021 and 2020 was 3.73 %, 0.05 % and 0.05 %, respectively.

1 unchanged sentence

BHF has established intercompany liquidity facilities with certain of its insurance and non-insurance subsidiaries to provide short-term liquidity within and across the combined group of companies.

Under these facilities, which are comprised of a series of revolving loan agreements among BHF and its participating subsidiaries, each company may lend to or borrow from each other, subject to certain maximum limits for a term not more than 364 days.

During the years ended December 31, 2022, 2021 and 2020, there were no borrowings or repayments by BHF under these facilities.

15 unchanged sentences

_______________

(1) Amounts are included within the future policy benefits and other policy-related balances column.

(1) Amounts are included in the future policy benefits and other policy-related balances column.

(2) Includes premiums received in advance.

53 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data