What changed in this filing

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Item 1. Business

2024-02-22 compared with 2023-02-23 · 172 added, 209 removed, 738 unchanged (34% of the section changed)

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however, NELICO does not currently write new business.

At December 31, 2022, our insurance subsidiaries had a combined statutory total adjusted capital (“TAC”) of approximately $8.1 billion, resulting in a combined risk-based capital (“RBC”) ratio of approximately 440%.

We believe we are a financially disciplined company with an emphasis on independent distribution and that our strategy of offering a targeted set of products to serve our customers and distribution partners will enhance our ability to invest in our business and distribute cash to our shareholders over time.

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Risk management of both our in-force book and our new business to enhance sustained, long-term shareholder value is fundamental to our strategy.

In writing new business, we prioritize products that provide a risk offset and diversification to our legacy variable annuity products.

We assess the value of new products by taking into account the amount and timing of cash flows, the use and cost of capital required to support our financial strength ratings and the cost of risk mitigation.

In writing new business, we assess the value of new products by taking into account the amount and timing of cash flows, the use and cost of capital required to support our financial strength ratings, diversification to our in-force business and the cost of risk mitigation.

We remain focused on maintaining our strong capital base and excess liquidity at the holding company, and we have established a risk management approach that seeks to mitigate the effects of severe market disruptions and other economic events on our business.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies,” “Risk Factors — Risks Related to Our Business — Our variable annuity exposure risk management strategy may not be effective, may result in significant volatility in our profitability measures and may negatively affect our statutory capital” and “— Segments and Corporate & Other — Annuities.”

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies,” “Risk Factors — Risks Related to Our Business — Our variable annuity exposure risk management strategy may not be effective, may result in significant volatility in our profitability measures or may negatively affect our statutory capital” and “— Segments and Corporate & Other — Annuities.”

Segments and Corporate & Other

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Our Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security.

In 2013, we began a shift in our business mix towards fixed products with lower guaranteed minimum crediting rates and variable products with less risky living benefits while simultaneously increasing our emphasis on index-linked annuity products.

In 2013, we began a shift in our business mix towards fixed products with lower guaranteed minimum crediting rates and variable annuity products with less risky living benefits while simultaneously increasing our emphasis on index-linked annuity products.

Since 2014, our new sales have primarily consisted of Shield ® Level Annuities (“Shield” and “Shield Annuities”) and variable annuities with simplified living benefits.

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(1) Excludes reserve liabilities for guaranteed minimum benefits (“GMxB”) and Shield embedded derivatives.

(1) Excludes market risk benefit (“MRB”) liabilities for guaranteed minimum benefits (“GMxB”) and Shield embedded derivatives.

We seek to meet our risk-adjusted return objectives in our Annuities segment through a disciplined risk selection approach and innovative product design, balancing overall profitability with sales growth.

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Shield Annuities also offer account value and return of premium death benefits.

A new addition to our suite of Shield Annuities is an individual single premium deferred annuity contract, which provides for the potential accumulation of retirement savings as well as an opportunity for lifetime income through a guaranteed lifetime withdrawal benefit rider.

A recent addition to our suite of Shield Annuities is an individual single premium deferred annuity contract, which provides for the potential accumulation of retirement savings as well as an opportunity for lifetime income through a guaranteed lifetime withdrawal benefit rider.

To protect us from premature withdrawals, we impose surrender charges, which are typically applicable during the early years of the annuity contract and decline over time.

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Credited interest rates are guaranteed for at least one year.

A new addition to our FIA offerings is an individual single premium deferred annuity contract, which provides for the potential accumulation of retirement savings as well as an opportunity for lifetime income through an optional guaranteed lifetime withdrawal benefit rider.

To protect us from premature withdrawals, we impose surrender charges, which are typically applicable during the early years of the annuity contract and decline over time.

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The account value of most types of general account options is guaranteed and is not exposed to market risk, because the issuing insurance company (rather than the contract holder) directly bears the risk that the value of the underlying general account investments of the insurance companies may decline.

The majority of the variable annuities we have issued have GMxBs, which we believe make these products attractive to our customers in periods of economic uncertainty.

These GMxBs must be elected by the contract holder no later than at the time of issuance of the contract.

The majority of the variable annuities we issue have GMxBs, which we believe make these products attractive to our customers in periods of economic uncertainty.

GMxBs provide the contract holder with protection against the possibility that a downturn in the markets will reduce the certain specified benefits that can be claimed under the contract.

Variable annuities may have more than one type of GMxB.

The primary types of GMxBs are those that guarantee death benefits payable upon the death of a contract holder (guaranteed minimum death benefits, “GMDB”) and those that guarantee benefits payable while the contract holder or annuitant is alive (guaranteed minimum living benefits, “GMLB”).

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guaranteed minimum income benefits (“GMIB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum accumulation benefits (“GMAB”).

The guaranteed benefit received by a contract holder pursuant to the GMxBs is calculated based on the benefit base (“Benefit Base”).

The guaranteed benefit received by a contract holder pursuant to the GMxBs is calculated based on a notional amount known as the benefit base (“Benefit Base”).

The calculation of the Benefit Base varies by benefit type and may differ in value from the contract holder’s account value for the following reasons:

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• The Benefit Base may also increase with subsequent purchase payments, after the initial purchase payment made by the contract holder at the time of issuance of the contract, or at the contract holder’s election with an increase in the account value due to market performance.

GMxBs provide the contract holder with protection against the possibility that a downturn in the markets will reduce the certain specified benefits that can be claimed under the contract.

The principal features of our in-force block of variable annuity contracts with GMxBs are as follows:

• GMDBs, a contract holder’s beneficiaries are entitled to the greater of (a) the account value or (b) the Benefit Base upon the death of the annuitant;

• GMIBs, a contract holder is entitled to annuitize the policy after a specified period of time and receive a minimum amount of lifetime income based on predetermined payout factors and the Benefit Base, which could be greater than the account value;

• GMWBs, a contract holder is entitled to withdraw a maximum amount of their Benefit Base each year, which could be greater than the underlying account value;

• GMABs, a contract holder is entitled to a percentage of the Benefit Base, which could be greater than the account value, after the specified accumulation period, regardless of actual investment performance.

Variable annuities may have more than one type of GMxB.

For example, variable annuities with a GMLB may also have a GMDB.

Additional detail concerning our GMxBs is provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies — Variable Annuity Exposure Risk Management.”

Variable Annuity Fees

We earn various types of fee revenue based on account value, fund assets and the Benefit Base for contracts that invest through a separate account.

In general, GMxB fees calculated based on the Benefit Base are more stable in market downturns compared to fees based on the account value.

We earned fees and charges on our variable annuity contracts that

invest through a separate account of $2.8 billion and $3.1 billion, net of pass-through amounts, for the years ended December 31, 2022 and 2021, respectively.

We earn various types of fee revenue based on account value, fund assets and the guarantees for contracts that invest through a separate account.

We earned fees and charges on our variable annuity contracts that invest through a separate account of $2.6 billion and $2.8 billion, net of pass-through amounts, for the years ended December 31, 2023 and 2022, respectively.

In addition to fee revenue, we also earn a spread on the portion of the account value allocated to the general account.

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Investment management fees differ by fund.

A portion of the investment management fees charged on proprietary funds managed by subadvisors unaffiliated with us are paid by us to the subadvisors.

A portion of the investment management fees charged on proprietary funds managed by subadvisors unaffiliated with us are paid by us to such subadvisors.

Investment management fees reduce the net returns on the variable annuity investments.

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The fees earned vary by generation and rider type and are typically calculated based on the Benefit Base.

In general, GMLB fees calculated based on the Benefit Base are more stable in market downturns compared to fees based on the account value.

These fees are set at a level intended to be sufficient to cover anticipated expenses related to claim payments and hedge costs associated with these benefits.

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We ceased offering GMABs and GMIBs for new purchases in 2016 and, to the extent permitted, we suspended subsequent premium payments on all but our final generation of GMIBs.

While we added GMWBs to our variable annuity product suite in 2003, we shifted our marketing focus from GMIBs to GMWBs in 2015 with the release of FlexChoice SM , a GMWB with lifetime payments (“GMWB4L”).

While we added GMWBs to our variable annuity product suite in 2003, we shifted our marketing focus from GMIBs to GMWBs in 2015 with the release of FlexChoice SM , a GMWB with lifetime payments.

In 2018, we launched an updated version of FlexChoice SM , “Flex Choice Access” to provide financial advisors and their clients more investment flexibility.

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At December 31, 2023, we had $28.8 billion of policyholder account balances for Shield Annuities.

We intend to focus on selling the following products with the goal of continuing to diversify and better manage our in-force block:

We intend to focus on selling the following variable annuity products with the goal of continuing to diversify and better manage our in-force block:

• our suite of Shield Annuities;

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Guaranteed Minimum Death Benefits

Since 2001, we have offered a variety of GMDBs to our contract holders, which include the following (with no additional charge, unless noted):

Since 2001, we have offered a variety of GMDBs to our contract holders, which include the following:

• Account Value Death Benefit .

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• Return of Premium Death Benefit .

The Return of Premium Death Benefit, also referred to as Principal Protection, comes standard with many of our base contracts and pays the greater of the contract holder’s account value at the time of the claim or their total purchase payments, adjusted proportionately for any withdrawals.

• Interval Reset Death Benefit .

The Interval Reset Death Benefit enables the contract holder to lock in their guaranteed death benefit on the interval anniversary date with this level of death benefit being reset (either up or down) on the next interval anniversary date.

This may only be available through a maximum age.

This death benefit pays the greater of the contract holder’s account value at the time of the claim, their total purchase payments, adjusted proportionately for any withdrawals, or the interval reset value, adjusted proportionally for any withdrawals.

We no longer offer this guarantee.

The Return of Premium Death Benefit, also referred to as Principal Protection, pays the greater of (i) the account value at the time of the claim or (ii) the total purchase payments, adjusted proportionately for any withdrawals.

• Annual Step-Up Death Benefit .

Contract holders may elect, for an additional fee, the option to step-up their guaranteed death benefit on any contract anniversary through age 80.

The Annual Step-Up Death Benefit allows the contract holder to lock in the high-water mark on their death benefit, adjusted proportionally for any withdrawals.

This death benefit may only be elected at issue through age 79.

Fees charged for this benefit are usually based on account value.

This death benefit pays the greater of the contract holder’s account value at the time of the claim, their total purchase payments, adjusted proportionately for any withdrawals, or the highest anniversary value, adjusted proportionally for any withdrawals.

The Annual Step-Up Death Benefit, an election made for an additional fee, allows the contract holder the option to “step-up” or lock-in the high-water mark on their guaranteed death benefit on any contract anniversary.

This benefit pays the greater of (i) the account value at the time of the claim, (ii) the total purchase payments or (iii) the highest anniversary “step-up” value, adjusted proportionately for any withdrawals.

• Combination Death Benefit .

Contract holders may elect, for an additional fee, a combination death benefit that, in addition to the Annual Step-Up Death Benefit as described above, includes a roll-up feature which accumulates aggregate purchase payments at a predetermined roll-up rate, as adjusted for withdrawals.

Two principal versions of this guaranteed death benefit are:

• Compounded-Plus Death Benefit .

The death benefit is the greater of (i) the account value at time of the claim, (ii) the highest anniversary value (highest anniversary value/high-water mark through age 80, adjusted proportionately for any withdrawals) or (iii) a roll-up Benefit Base, which rolls up through age 80, and is adjusted proportionally for withdrawals.

Fees for this benefit are calculated and charged against the account value.

We no longer offer this benefit.

• Enhanced Death Benefit .

The death benefit is equal to the Benefit Base which is defined as the greater of (i) the highest anniversary value Benefit Base (highest anniversary value/high-water mark through age 80, adjusted proportionately for any withdrawals) or (ii) a roll-up benefit, which may apply to the step-up (roll-up applies through age 90), which allows for dollar-for-dollar withdrawals up to the permitted amount for that contract year and proportional adjustments for withdrawals in excess of the permitted amount.

The fee may be increased upon step-up of the roll-up Benefit Base.

Fees charged for this benefit are calculated based on the Benefit Base and charged annually against the account value.

We no longer offer this benefit.

In addition, we currently also offer an optional death benefit for an additional fee with our FlexChoice SM GMWB4L riders, available at issue through age 65, which has a similar level of death benefit protection as the Benefit Base for the living benefit rider.

The Combination Death Benefit, which we no longer offer, consists of the Compounded-Plus Death Benefit and the Enhanced Death Benefit.

The Compounded-Plus Death Benefit pays the greater of (i) the account value at the time of the claim, (ii) the highest anniversary “step-up” value or (iii) a roll-up Benefit Base, adjusted proportionately for any withdrawals.

The Enhanced Death Benefit pays the greater of (i) the highest anniversary “step-up” value or (ii) a roll-up benefit which allows for dollar-for-dollar withdrawals up to the permitted amount for that contract year and proportional adjustments for withdrawals in excess of the permitted amount.

• Interval Reset Death Benefit .

The Interval Reset Death Benefit, which we no longer offer, pays the greater of (i) the account value at the time of the claim, (ii) the total purchase payments or (iii) the interval reset value, a guaranteed death benefit on the interval anniversary date with this level of death benefit being reset (either up or down) on the next interval anniversary date, adjusted proportionately for any withdrawals.

In addition, we currently also offer an optional death benefit for an additional fee with our FlexChoice SM riders, available at issue through age 65, which has a similar level of death benefit protection as the Benefit Base for the living benefit rider.

However, the Benefit Base for this death benefit is adjusted for all withdrawals.

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Return of premium 37,826 38,194 37,171 37,921

Interval reset 4,940 5,327 6,442 6,646

Annual step-up 17,269 18,485 16,737 20,020

Combination (2) 20,847 32,084 20,806 32,695

Interval reset 5,316 5,562 4,940 5,327

Total $ 84,297 $ 96,808 $ 82,561 $ 98,394

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Contract holders must wait for a defined period, usually 10 years, before they can elect to receive income through guaranteed annuity payments.

This initial phase when the contract holder invests their account value in the separate or general account to grow on a tax-deferred basis is often referred to as the “accumulation phase.” The contract holder may elect to continue the accumulation phase beyond the waiting period in order to maintain access to their account value or continue to participate in the potential growth of both the account value and Benefit Base pursuant to the contract terms.

accumulation phase, the contract holder still has access to their account value, although their Benefit Base may be adjusted downward.

The second phase of the contract starts upon annuitization.

The occurrence and timing of annuitization depends on how the contract holder chooses to utilize the multiple benefit options available to them in their annuity contract.

Contract holder behavior around choosing a particular option cannot be predicted with certainty at the time of contract issuance or thereafter.

The incidence and timing of benefit elections and the resulting benefit payments may differ materially from those we anticipate at the time we issue a variable annuity contract.

The incidence and timing of benefit elections and the resulting benefit payments may differ materially from those we anticipated at the time we issued a variable annuity contract with a GMIB.

As we observe actual contract holder behavior, we periodically update our assumptions with respect to contract holder behavior and take appropriate action with respect to the amount of the reserves we establish for the future payment of such benefits.

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In addition, we increased the setback period used to determine the annuity payout rates for contract holders from seven years to 10 years.

For example, a 10-year age setback would determine actual annuitization monthly payout rates for a contract holder assuming they were 10 years younger than their actual age at the time of annuitization, thereby reducing the monthly guaranteed annuity claim payments.

We have also reduced the guaranteed roll-up rates from 6% to 4%.

We also reduced the guaranteed roll-up rates from 6% to 4%.

Additionally, we introduced limitations on fund selections inside certain legacy variable annuity contracts.

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Withdrawal rates may differ if they are offered on a single contract holder or a couple (joint life).

GMWBs primarily come in two versions depending on if they are period certain or if they are lifetime payments, GMWB4L.

GMWBs primarily come in two versions depending on if they are period certain or if they are lifetime payments.

GMABs guarantee a minimum amount of account value to the contract holder after a set period of time, which can also include locking in capital markets gains.

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(2) In-the-money is defined as any contract with a living benefit NAR in excess of zero.

Under accounting principles generally accepted in the United States of America (“GAAP”), certain of our variable annuity guarantee features are accounted for as insurance liabilities and reported in future policy benefits on the consolidated balance sheets, with changes reported in policyholder benefits and claims on the consolidated statements of operations.

These liabilities are accounted for using long-term assumptions of equity and bond market returns and the level of interest rates.

Therefore, these liabilities, valued at $7.3 billion at December 31, 2022, are less sensitive than derivative instruments to periodic changes to equity and fixed income market returns and the level of interest rates.

Guarantees accounted for as insurance liabilities in future policy benefits include GMDBs, the life contingent portion of GMWBs and the portion of GMIBs that require annuitization, as well as the life contingent portion of the expected annuitization when the policyholder is required to annuitize upon depletion of their account value.

All other variable annuity guarantee features are accounted for as embedded derivatives and reported in policyholder account balances on the consolidated balance sheets, with changes reported in net derivative gains (losses) on the consolidated statements of operations.

These liabilities, valued at $1.5 billion at December 31, 2022, are accounted for at estimated fair value.

In some cases, a guarantee will have multiple features or options that require separate accounting such that the guarantee is not fully accounted for under only one of the accounting models (known as “split accounting”).

Additionally, the index protection and accumulation features of Shield Annuities are accounted for as embedded derivatives (“Shield liabilities”) and reported in policyholder account balances on the consolidated balance sheets, with changes reported in net derivative gains (losses) on the consolidated statements of operations.

These liabilities, valued at $3.5 billion at December 31, 2022, are accounted for at estimated fair value.

Our variable annuity reserves by type of GMxB were as follows at:

December 31, 2022 December 31, 2021

Future Policy Benefits Policyholder Account Balances Total Reserves Future Policy Benefits Policyholder Account Balances Total Reserves

Under accounting principles generally accepted in the United States of America (“GAAP”), variable annuity guarantees are classified as MRBs, measured at estimated fair value, and are reported in market risk benefit assets and liabilities on the consolidated balance sheets, with changes reported in change in market risk benefits on the consolidated statements of operations, except for changes related to nonperformance risk, which are reported in other comprehensive income on the consolidated statements of comprehensive income (loss).

Additionally, the index protection and accumulation features of Shield Annuities are accounted for as embedded derivatives (“Shield liabilities”), measured at estimated fair value, and are reported in policyholder account balances on the consolidated balance sheets, with changes reported in net derivative gains (losses) on the consolidated statements of operations.

These liabilities were valued at $7.7 billion at December 31, 2023.

Our variable annuity MRBs by type of GMxB were as follows at:

(In millions)

GMIB $ 9,485 $ 9,457

GMIB Max 1,231 161 1,392 967 (36) 931

GMWB 460 (71) 389 327 97 424

GMAB — (10) (10) — — —

GMDB 1,874 — 1,874 1,535 — 1,535

Total $ 10,314 $ 10,386

The carrying values of these guarantees can change significantly during periods of sizable and sustained shifts in equity market performance, equity market volatility, or interest rates.

Carrying values are also affected by our assumptions around mortality, separate account returns and policyholder behavior, including lapse, annuitization and withdrawal rates.

See “Risk Factors — Risks Related to Our Business — Guarantees within certain of our annuity products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased market risk.” Furthermore, changes in policyholder behavior assumptions can result in additional changes in accounting estimates.

Our Life segment consists of insurance products and services, including term, universal, whole and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be on a tax-advantaged basis.

While our in-force book reflects a broad range of life products, we are currently focused on term life products and an indexed universal life product with long-term care benefits, consistent with our financial objectives, with a concentration on design and profitability over volume.

The estimated fair value of these guarantees can change significantly due to changes in equity market performance, equity market volatility or interest rates.

Fair values are also affected by our assumptions around mortality, separate account returns and policyholder behavior, including lapse, annuitization and withdrawal rates.

Our Life segment consists of insurance products, including term, universal, whole and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be on a tax-advantaged basis.

While our in-force book reflects a broad range of life products, we are currently focused on term life products and universal life products with index-linked benefits, consistent with our financial objectives, with a concentration on design and profitability over volume.

By managing our in-force book of business, we expect to generate future revenue and profits from premiums, investment margins, expense margins, mortality margins, morbidity margins and surrender fees.

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Universal Life

We have a significant in-force book of universal life policies and currently offer an indexed universal life product with long-term care benefits.

We have a significant in-force book of universal life policies and currently offer two universal life products with index-linked benefits.

Universal life products typically provide a death benefit in return for payment of specified annual policy charges that are generally related to specific costs, which may change over time.

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Consequently, universal life policies can be used in a variety of different ways.

Brighthouse SmartCare ® , our indexed universal life product launched in 2019, which we market as a hybrid life insurance and long-term care policy, allows policyholders to pay for qualified long-term care expenses by accelerating a significant portion of the face amount of the policy over a period of time.

Brighthouse SmartCare ® , our index-linked universal life product launched in 2019, which we market as a hybrid life insurance and long-term care policy, allows policyholders to

pay for qualified long-term care expenses by accelerating a significant portion of the face amount of the policy over a period of time.

After that period of time, the policyholder may continue to receive benefits up to their maximum monthly amount for up to four additional years.

Brighthouse SmartGuard Plus ® , our index-linked universal life product launched in 2023, offers a guaranteed distribution rider that ensures a minimum amount of distribution payments will always be payable, regardless of policy performance, through policy loans.

With positive policy performance, the amount of guaranteed distribution payments available may increase over time.

We currently offer a non-participating conversion whole life product that is available for term and group conversions and to satisfy other contractual obligations.

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Whole life products also have guaranteed minimum cash surrender values.

Our in-force whole life products provide for participation in the

returns generated by the business, delivered to the policyholder in the form of non-guaranteed dividend payments.

Our in-force whole life products provide for participation in the returns generated by the business, delivered to the policyholder in the form of non-guaranteed dividend payments.

The policyholder can elect to receive the dividends in cash or to use them to increase the paid-up policy death benefit or pay the required premium.

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(In millions)

Annuities (1) $ 8,670 $ 16 $ 8,686 $ 10,612 $ 21 $ 10,633

Life (2) 18,300 1,933 20,233 19,787 2,384 22,171

ULSG $ 17,487 $ — $ 17,487 $ 16,999 $ — $ 16,999

Structured settlements 4,997 — 4,997 4,933 — 4,933

Pension risk transfer 2,423 — 2,423 2,510 — 2,510

Other 1,191 2,181 3,372 1,179 1,949 3,128

Total $ 26,098 $ 2,181 $ 28,279 $ 25,621 $ 1,949 $ 27,570

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(1) Includes $2.7 billion and $3.4 billion of pension risk transfer general account liabilities at December 31, 2022 and 2021, respectively.

(2) Includes $17.6 billion and $19.1 billion of general account liabilities associated with our ULSG business at December 31, 2022 and 2021, respectively.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments and interest expense related to our outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues.

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

Corporate & Other contains the excess capital not allocated to the segments, interest expense related to our outstanding debt, and preferred stock dividends, as well as expenses associated with certain legal proceedings and income tax audit issues.

Corporate & Other also includes long-term care business reinsured through 100% quota share reinsurance agreements and activities related to funding agreements associated with our institutional spread margin business.

Reinsurance Activity

Unaffiliated Third-Party Reinsurance

In connection with our risk management efforts and in order to provide opportunities for growth and capital management, we enter into reinsurance arrangements pursuant to which we cede certain insurance risks to unaffiliated reinsurers.

We cede risks to third parties in order to limit losses, minimize exposure to significant risks and provide capacity for future growth.

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On a case-by-case basis, we may retain up to $20 million per life and reinsure 100% of the risk in excess of the amount we retain.

We also reinsure portions of the risk associated with certain whole life policies to a former affiliate and

we assume certain term life policies and universal life policies with secondary death benefit guarantees issued by a former affiliate.

We also reinsure portions of the risk associated with certain whole life policies to a former affiliate, and we assume certain term life policies and universal life policies with secondary death benefit guarantees issued by a former affiliate.

We routinely evaluate our reinsurance program and may increase or decrease our retention at any time.

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Swiss Re Life & Health America Inc.

Corporate Solutions Life Reinsurance Company 126 NR

Aegon NV 126 A

General Re Life Corporation 99 NR

Allowance for credit losses (3)

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Additionally, Citigroup agreed to indemnify us for losses and certain other payment obligations we might incur with respect to this block of reinsured long-term care insurance business.

The most currently available financial strength rating for each of the Genworth reinsurers is C++ from A.M.

The most currently

available financial strength rating for each of the Genworth reinsurers is C++ from A.M.

Best, and Citigroup’s credit ratings are A3 from Moody’s and BBB+ from S&P.

In February 2021, we received a demand for arbitration from the Genworth reinsurers seeking authorization to withdraw certain amounts from the trust accounts.

In August 2022, we participated in an arbitration hearing with the Genworth reinsurers, and a decision has not yet been issued by the arbitration panel.

we had sought to mitigate, which could materially adversely affect our financial condition and results of operations.” Further, as disclosed in Genworth’s filings with the SEC, UFLIC has established trust accounts for the Genworth reinsurers’ benefit to secure UFLIC’s obligations under its arrangements with them concerning this block of long-term care insurance business, and GE has also agreed, under a capital maintenance agreement, to maintain sufficient capital in UFLIC to maintain UFLIC’s RBC above a specified minimum level.

In March 2023, the arbitration panel ruled that the trusts were funded in excess of the amount required and that such excess amounts were to be released from the trusts.

We have complied with the arbitration panel’s ruling.

See “Risk Factors — Risks Related to Our Business — If the counterparties to our reinsurance or indemnification arrangements or to the derivatives we use to hedge our business risks default or fail to perform, we may be exposed to risks we had sought to mitigate, which could materially adversely affect our financial condition and results of operations.” Further, as disclosed in Genworth’s filings with the SEC, UFLIC has established trust accounts for the Genworth reinsurers’ benefit to secure UFLIC’s obligations under its arrangements with them concerning this block of long-term care insurance business, and GE has also agreed, under a capital maintenance agreement, to keep sufficient capital in UFLIC to maintain UFLIC’s risk-based capital (“RBC”) above a specified minimum level.

Affiliated Reinsurance

Affiliated reinsurance companies are affiliated insurance companies licensed under specific provisions of insurance law of their respective jurisdictions, such as the Special Purpose Financial Captive law adopted by several states, including Delaware.

Brighthouse Reinsurance Company of Delaware (“BRCD”), our reinsurance subsidiary, was formed to manage our capital and risk exposures and to support our term life insurance and ULSG businesses through the use of affiliated reinsurance arrangements and related reserve financing.

BRCD is capitalized with cash and invested assets, including funds withheld, at a level we believe to be sufficient to satisfy its future cash obligations under a variety of scenarios, including a permanent level yield curve and interest rates at lower levels, consistent with National Association of Insurance Commissioners (“NAIC”) cash flow testing scenarios.

BRCD utilizes reserve financing to cover the difference between the sum of the fully required statutory assets (i.e., NAIC Valuation of Life Insurance Policies Model Regulation (“Regulation XXX”) and NAIC Actuarial Guideline 38 (“Guideline AXXX”) reserves) and the target margins less cash, invested assets and funds withheld, on BRCD’s statutory statements.

BRCD’s admitted deferred tax asset could also serve to reduce the amount of funding required on a statutory basis under BRCD’s reserve financing.

See Notes 9 and 10 of the Notes to the Consolidated Financial Statements for additional information regarding BRCD’s reserve financing.

BRCD utilizes reinsurance financing to cover the difference between the sum of the fully required statutory assets (i.e., NAIC Valuation of Life Insurance Policies Model Regulation (“Regulation XXX”) and NAIC Actuarial Guideline 38 (“Guideline AXXX”) reserves) and the target margins less cash, invested assets and funds withheld, on BRCD’s statutory statements.

BRCD’s admitted deferred tax asset could also serve to reduce the amount of funding required on a statutory basis under BRCD’s reinsurance financing.

See Notes 12 and 13 of the Notes to the Consolidated Financial Statements for additional information regarding BRCD’s reinsurance financing.

BRCD provides certain benefits to Brighthouse Financial, including (i) enhancing our ability to hedge the interest rate risk of our reinsurance liabilities, (ii) allowing increased allocation flexibility in managing our investment portfolio and (iii) improving operating flexibility and administrative cost efficiency, however there can be no assurance that such benefits will continue to materialize.

See “Risk Factors — Risks Related to Our Business — We may not be able to take credit for reinsurance, our statutory life insurance reserve financings may be subject to cost increases and new financings may be subject to limited market capacity” and “— Regulation — Insurance Regulation.”

See “Risk Factors — Risks Related to Our Business — We may not be able to take credit for reinsurance, our statutory life insurance reinsurance financings may be subject to cost increases and new financings may be subject to limited market capacity” and “— Regulation — Insurance Regulation.”

Catastrophe Coverage

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SRMs are responsible for tracking and providing certain key distributors with sales and activity data.

They participate in business planning sessions with our distributors and are

critical to providing us with insights into the product design, education and other support requirements of our principal distributors.

They participate in business planning sessions with our distributors and are critical to providing us with insights into the product design, education and other support requirements of our principal distributors.

They are also responsible for proactively addressing relationship issues with our distributors.

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Privacy and Cybersecurity Regulation

Regulation of the Use of Artificial Intelligence

Securities, Broker-Dealer and Investment Advisor Regulation

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Federal Tax Reform

Transition from LIBOR

Regulation of Over-the-Counter Derivatives

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Unclaimed Property

Our life insurance subsidiaries and BRCD are regulated primarily at the state level, with some products and services also subject to federal regulation.

Our insurance subsidiaries and BRCD are primarily regulated at the state level, with some products and services also subject to federal regulation.

In addition, BHF and its insurance subsidiaries are subject to regulation under the insurance holding company laws of various U.S.

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The primary regulator of an insurance company, however, is the insurance regulator in its state of domicile.

Our insurance subsidiaries, Brighthouse Life Insurance Company, BHNY and NELICO, are domiciled in Delaware, New York and Massachusetts, respectively, and regulated by the Delaware Department of Insurance, the New York State Department of Financial Services (“NYDFS”) and the Massachusetts Division of Insurance, respectively.

In addition, BRCD, which provides reinsurance to our insurance subsidiaries, is domiciled in Delaware and regulated by the Delaware Department of Insurance.

Our insurance subsidiaries, Brighthouse Life Insurance Company, BHNY and NELICO, are domiciled in Delaware, New York and Massachusetts, respectively, and regulated by the Delaware Department of Insurance (the “Delaware DOI”), the New York State Department of Financial Services (“NYDFS”) and the Massachusetts Division of Insurance, respectively.

In addition, BRCD, which provides reinsurance to our insurance subsidiaries, is domiciled in Delaware and regulated by the Delaware DOI.

The extent of such regulation varies, but most jurisdictions have laws and regulations governing certain financial aspects of insurers and the administration and design of their respective products, as well as the business conduct of insurers and distributors.

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• regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales practices, distribution arrangements and payment of inducements, and identifying and paying to the states benefits and other property that are not claimed by the owners;

• regulating advertising and marketing of insurance products;

• protecting privacy;

• establishing statutory capital (including RBC) reserve requirements and solvency standards;

• regulating underwriting, advertising and marketing of insurance products, including the use of external data and information, as well as the use of certain emerging technologies;

• protecting privacy and cybersecurity;

• establishing statutory accounting and reserve requirements and solvency standards (including RBC);

• specifying the conditions under which a ceding company can take credit for reinsurance in its statutory financial statements (i.e., reduce its reserves by the amount of reserves ceded to a reinsurer);

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See Note 18 of the Notes to the Consolidated Financial Statements.

Surplus and Capital;

Risk-Based Capital

Statutory Accounting, Reserves and Risk-Based Capital

The NAIC is an organization whose mission is to assist state insurance regulatory authorities in serving the public interest and achieving the insurance regulatory goals of its members, the state insurance regulatory officials.

Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate their regulatory oversight.

The NAIC provides standardized insurance industry accounting and reporting guidance through its Accounting Practices and Procedures Manual (the “Manual”), which states have largely adopted by regulation.

However, statutory accounting principles continue to be established by individual state laws, regulations and permitted practices, which may differ from the Manual.

Changes to the Manual or modifications by the various states may impact our statutory capital and surplus.

The NAIC has established regulations that provide minimum capitalization requirements based on RBC formulas for insurance companies.

The NAIC provides standardized insurance industry accounting and reporting guidance through its Accounting Practices and Procedures Manual.

The NAIC also provides guidance for the computation of reserves through its Valuation Manual, which states have largely adopted by regulation.

However, statutory accounting principles and reserve requirements continue to be established by individual state laws, regulations and permitted practices, which may differ from the guidance provided by the NAIC.

Changes to accounting, reporting or reserve guidance, or modifications to any laws, regulations or permitted practices by the various states, may impact our statutory capital and surplus.

The NAIC has established RBC requirements that are used by regulators to assess the minimum amount of statutory capital and surplus needed for an insurance company to support its operations, based on its size and risk profile (referred to as “company action level RBC”).

Insurers are required to maintain their capital and surplus at or above minimum levels.

Companies below 100% of the company action level RBC are subject to corrective action.

Regulators have discretionary authority, in connection with the continued licensing of an insurer, to limit or prohibit the insurer’s sales to policyholders if, in their judgment, the regulators determine that such insurer has not maintained the minimum surplus or capital or that the further transaction of business will be hazardous to policyholders.

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The major categories of risk involved are asset risk, insurance risk, interest rate risk, market risk and business risk, including equity, interest rate and expense recovery risks associated with variable annuities that contain guaranteed minimum death and living benefits.

The RBC ratio is a method of measuring an insurance company’s capital and is based on statutory financial statements.

The RBC ratio, which is the basis for determining regulatory compliance, is equal to total adjusted capital (“TAC”) divided by the applicable company action level RBC.

The RBC framework is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally.

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In August 2022, the NAIC adopted changes to the RBC factors for life insurance contracts.

These changes became effective on December 31, 2022, and they have not had a material impact on our combined RBC ratio.

These changes became effective on December 31, 2022, and, upon adoption, they did not have a material impact on our combined RBC ratio.

In June 2021, the NAIC adopted changes to the RBC factors for bonds and real estate and created a new set of RBC charges for longevity risk.

These changes became effective on December 31, 2021, and they have not had a material impact on our combined RBC ratio.

In December 2020, the NAIC adopted a group capital calculation tool that uses an RBC aggregation methodology for all entities within an insurance holding company system.

The NAIC has stated that the calculation will be a tool to assist regulators in assessing group risks and capital adequacy and does not constitute a minimum capital requirement or standard, however, there is no guarantee that will be the case in the future.

It is unclear how the group capital calculation will interact with existing capital requirements for insurance companies in the U.S.

In August 2018, the NAIC adopted the framework for variable annuity reserve and capital reform (“VA Reform”).

The revisions, which have resulted in substantial changes in reserves, statutory surplus and capital requirements, were designed to mitigate the incentive for insurers to engage in captive reinsurance transactions by making improvements to Actuarial Guideline 43 and the Life Risk Based Capital C3 Phase II (“RBC C3 Phase II”) capital requirements.

VA Reform is intended to (i) mitigate the asset liability accounting mismatch between hedge instruments and statutory instruments and

statutory liabilities, (ii) remove the non-economic volatility in statutory capital charges and the resulting solvency ratios and (iii) facilitate greater harmonization across insurers and their products for greater comparability.

VA Reform became effective as of January 1, 2020, with early adoption permitted as of December 31, 2019.

Brighthouse Financial elected to early adopt the changes effective December 31, 2019.

Further changes to this framework, including changes resulting from work currently underway by the NAIC to find a suitable replacement for the Economic Scenario Generators developed by the American Academy of Actuaries, could negatively impact our statutory surplus and required capital.

These changes became effective on December 31, 2021, and, upon adoption, they did not have a material impact on our combined RBC ratio.

In August 2018, the NAIC adopted the framework for variable annuity reserve and capital reform (“VA Reform”), which was adopted by Brighthouse Financial effective December 31, 2019.

The revisions, which resulted in substantial changes in reserves, statutory surplus and capital requirements, were designed to mitigate the incentive for insurers to engage in captive reinsurance transactions by making improvements to Actuarial Guideline 43 and the Life Risk Based Capital C3 Market Risk (“RBC C3 Market Risk”) capital requirements.

VA Reform is intended to (i) mitigate the asset liability accounting mismatch between hedge instruments and statutory instruments and statutory liabilities, (ii) remove the non-economic volatility in statutory capital charges and the resulting solvency ratios and (iii) facilitate greater harmonization across insurers and their products for greater comparability.

In August 2022, the NAIC adopted amendments to the Valuation Manual that changed the requirements for reflecting hedge instruments in variable annuity reserves and RBC C3 Market Risk.

The changes became effective on December 31, 2023, resulting in a decrease to our statutory capital and surplus and an insignificant change to our combined RBC ratio as of such date.

Further changes to VA Reform, including changes resulting from work currently underway by the NAIC to find a suitable replacement for the Economic Scenario Generators developed by the American Academy of Actuaries, could negatively impact our statutory surplus and required capital.

See “Risk Factors — Regulatory and Legal Risks — Our insurance business is highly regulated, and changes in regulation and in supervisory and enforcement policies or interpretations thereof may materially impact our capitalization or cash flows, reduce our profitability and limit our growth.”

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insurer file an annual enterprise risk report with the lead state of the insurance holding company system identifying risks likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.

To date, all of the states where Brighthouse Financial has domestic insurers have enacted this enterprise risk reporting requirement.

All of the states where Brighthouse Financial has domestic insurers have enacted this enterprise risk reporting requirement.

State insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance subsidiaries to their parent companies, as well as on transactions between an insurer and its affiliates.

Dividends in excess of prescribed limits and transactions above a specified size between an insurer and its affiliates require the prior approval of the insurance regulator in the insurer’s state of domicile.

The Delaware Insurance Commissioner (the “Delaware Commissioner”), the Massachusetts Commissioner of Insurance and the New York Superintendent of Financial Services (the “NY Superintendent”) have broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

For a discussion of dividend restrictions pursuant to the Delaware Insurance Code, the New York insurance laws, and the insurance provisions of the Massachusetts General Law, as well as the dividend restrictions under BRCD’s plan of operations, see Note 10 of the Notes to the Consolidated Financial Statements.

See “Risk Factors — Risks Related to Our Business — As a holding company, BHF depends on the ability of its subsidiaries to pay dividends.” See also “Dividend Restrictions” in Note 10 of the Notes to the Consolidated Financial Statements for further information regarding such limitations and dividends paid.

The Delaware Insurance Commissioner (the “Delaware Commissioner”), the Massachusetts Commissioner of Insurance and the New York Superintendent of Financial Services have broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

See Note 13 of the Notes to the Consolidated Financial Statements for a discussion of dividend restrictions under the insurance laws of Delaware, New York and Massachusetts, as well as the dividend restrictions under BRCD’s plan of operations.

See “Risk Factors — Risks Related to Our Business — As a holding company, BHF depends on the ability of its subsidiaries to pay dividends.”

Group Capital Contribution

The NAIC adopted a group capital calculation tool, implemented by Brighthouse Financial in 2022, that uses an RBC aggregation methodology for all entities within an insurance holding company system.

The NAIC has stated that the calculation is a tool to assist regulators in assessing group risks and capital adequacy and does not constitute a minimum capital requirement or standard;

however, there is no guarantee that will be the case in the future.

It is unclear how the group capital calculation will interact with existing capital requirements for insurance companies in the U.S.

Own Risk and Solvency Assessment Model Act

In 2012, the NAIC adopted the Risk Management and Own Risk and Solvency Assessment Model Act (“ORSA”), which has been enacted by our insurance subsidiaries’ domiciliary states.

ORSA requires that insurers maintain a risk management framework and conduct an internal own risk and solvency assessment of the insurer’s material risks in normal

and stressed environments.

ORSA requires that insurers maintain a risk management framework and conduct an internal own risk and solvency assessment of the insurer’s material risks in normal and stressed environments.

The assessment must be documented in a confidential annual summary report, a copy of which must be made available to regulators as required or upon request.

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is primarily regulated by the states, federal initiatives often have an impact on our business in a variety of ways.

Federal regulation of financial services, securities, derivatives and pensions, as well as legislation affecting privacy, tort reform and taxation, may significantly and adversely affect the insurance business.

Federal regulation of financial services, securities, derivatives and pensions, as well as legislation affecting cybersecurity, privacy, tort reform and taxation, may significantly and adversely affect the insurance business.

In addition, various forms of direct and indirect federal regulation of insurance have been proposed from time to time, including proposals for the establishment of an optional federal charter for insurance companies.

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In each case, a qualified actuary must submit an opinion which states that the statutory reserves make adequate provision, according to accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurance company.

The adequacy of the statutory reserves is considered in light of the assets held by the insurer with respect to such reserves and related actuarial items, including, but not limited to, the investment earnings on such assets, and the consideration anticipated to be received and retained under the related policies

and contracts.

An insurance company may increase reserves in order to submit an opinion without qualification.

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Failure to comply with these laws and regulations would cause investments exceeding regulatory limitations to be treated as non-admitted assets for purposes of measuring surplus and, in some instances, would require divestiture of such non-qualifying investments.

The NAIC periodically reviews the statutory accounting and RBC requirements for investments and makes changes from time to time.

For example, the NAIC is currently examining the risks associated with certain types of structured securities including Collateralized Loan Obligations and is considering modifications to the methodology used to assess credit risk and determine RBC requirements.

NYDFS Insurance Regulation 47

In August 2022, the NYDFS amended Insurance Regulation 47 (as amended, “Regulation 47”), which implemented new requirements for certain annuity products.

Certain sections of Regulation 47 became effective as of January 1, 2023, and the remainder will become effective January 1, 2024.

Certain sections of Regulation 47 became effective as of January 1, 2023, and the remainder became effective on January 1, 2024.

The regulation is likely to open the New York market to new competitors and has impacted some components of our current product designs.

We continue to assess the impact of these new factors on our sales in New York.

See “Risk Factors — Risks Related to our Business — Factors affecting our competitiveness may adversely affect our market share or profitability” and “Risk Factors — Risks Related to our Business — We may experience difficulty in marketing and distributing products through our distribution channels.”

See “Risk Factors — Risks Related to Our Business — Factors affecting our competitiveness may adversely affect our market share and profitability” and “Risk Factors — Risks Related to Our Business — We may experience difficulty in marketing and distributing products through our distribution channels.”

NYDFS Insurance Regulation 210

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The regulation establishes standards for the determination and readjustment of non-guaranteed elements (“NGE”) that may vary at the insurer’s discretion for life insurance policies and annuity contracts delivered or issued for delivery in New York.

In addition, the regulation establishes guidelines for related disclosure to NYDFS and policy owners prior to any adverse change in NGEs.

In addition, the regulation establishes guidelines for related disclosure to the NYDFS and policy owners prior to any adverse change in NGEs.

The regulation applies to all individual life insurance policies, individual annuity contracts and certain group life insurance and group annuity certificates that contain NGEs.

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In the course of our business, we and our distributors collect and maintain customer data, including personally identifiable nonpublic financial and health information.

We also collect and handle the personal information of our employees and certain third parties who distribute our products.

We also collect and handle the personal information of our associates and certain third parties who distribute our products.

As a result, we and the third parties who distribute our products are subject to U.S.

federal and state privacy laws and regulations, including the Health Insurance Portability and Accountability Act as well as additional regulation, including the laws described below.

These laws require that we institute and maintain certain policies and procedures to safeguard this information from improper use or disclosure and that we provide notice of our practices related to the collection and disclosure of such information.

federal and state privacy laws and regulations, including the Health Insurance Portability and Accountability Act as well as additional regulation, including those described below.

These laws and regulations require that we implement and maintain certain policies and procedures to safeguard this information from improper use or disclosure and that we provide notice of our practices related to the collection and disclosure of such information.

Other laws and regulations require us to notify affected individuals and regulators of security breaches.

Congress and many states have enacted privacy and information security laws and regulations that impose compliance obligations applicable to our business, including obligations to protect sensitive personal and creditworthiness information, as well as limitations on the use and sharing of such information.

For example, the NYDFS cybersecurity regulation, which became effective in March 2017, requires companies to establish a cybersecurity program.

The NYDFS cybersecurity regulation includes specific technical safeguards as well as requirements regarding governance, incident planning, training, data management, system testing and regulator notification in the event of certain cybersecurity events.

For example, the NYDFS’s Part 500 – Cybersecurity Regulation (the “NYDFS Cybersecurity Regulation”), which became effective in March 2017, requires companies to establish a cybersecurity program.

In November 2023, the NYDFS announced amendments to the NYDFS Cybersecurity Regulation.

The amended NYDFS Cybersecurity Regulation went into effect in phases beginning November 1, 2023 and continuing through December 2025, and it includes additional and new requirements regarding certification, governance, audit requirements, technology and business continuity, security control and training requirements, and notification obligations.

In addition, the California Consumer Privacy Act of 2018 (the “CCPA”), which became effective in January 2020, affords California residents expanded privacy protections and control over the collection, use and sharing of their personal information.

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Failure to comply with the CCPA risks regulatory fines, and the CCPA grants a private right of action and statutory damages for an unauthorized access and exfiltration, theft, or disclosure of certain types of personal information resulting from the Company’s violation of a duty to maintain reasonable security procedures and practices.

The CCPA, amended by the California Privacy Rights Act (the “CPRA”), effective as of January 1, 2023, requires additional investment in compliance programs and potential modifications to business processes.

Further, the amended CCPA creates a California data protection agency to enforce the statute and will impose new

requirements relating to additional consumer rights, data minimization, and other obligations.

The CCPA, amended by the California Privacy Rights Act (the “CPRA”), effective as of January 1, 2023, and the implementing regulations require additional investment in compliance programs and potential modifications to business processes.

Further, the CCPA, as amended, creates the California Privacy Protection Agency to enforce the statute as well as its regulations, and it imposes new requirements relating to additional consumer rights, data minimization, and other obligations.

The California legislature did not extend certain exemptions under the amended CCPA, specifically information collected in employment or business-to-business contexts, and such information therefore is now covered by the CCPA.

Enforcement of the CCPA, as amended by the CPRA, will begin on July 1, 2023.

Enforcement of the CCPA, as amended by the CPRA, began on July 1, 2023.

In 2017, the NAIC adopted the Insurance Data Security Model Law, which established standards for data security and for the investigation and notification of insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information.

A number of states have enacted the Insurance Data Security Model Law or similar laws, and we expect more states to follow.

More than 20 U.S.

states have enacted the Insurance Data Security Model Law or similar laws, and we expect more states to follow.

In July 2023, the SEC adopted the Risk Management, Strategy, Governance, and Incident Disclosure Final Rule (the “Cybersecurity Final Rule”) that enhances the disclosure requirements for registered companies covering cybersecurity risk and management.

The Cybersecurity Final Rule requires registrants to disclose material cybersecurity incidents on Form 8-K.

The Cybersecurity Final Rule also requires periodic disclosures of the Company’s cybersecurity risk management processes, governance, and management’s role in overseeing such a compliance program.

See “Cybersecurity” for a discussion of our cybersecurity risk management and governance framework.

states, the District of Columbia, and U.S.

territories also require entities to provide notification to affected residents and, in certain instances, state regulators, such as state attorneys general or state insurance commissions, in the event of certain security breaches affecting personal information.

territories also require entities to provide notification to affected residents and, in certain instances, state regulators, such as state attorneys general or state insurance commissioners, in the event of certain security breaches affecting personal information.

Also, as noted above, state governments, Congress, and agencies may consider and enact additional legislation or promulgate regulations governing privacy, cybersecurity, and data breach reporting requirements.

We cannot predict whether such legislation will be enacted, or what impact, if any, such legislation may have on our business practices, results of operations or financial condition.

Regulation of the Use of Artificial Intelligence

State legislatures and insurance regulators have shown increasing concern about the use of artificial intelligence (“AI”) and the potential for discrimination and bias in insurance practices.

For example, on September 21, 2023, the Colorado Division of Insurance released its Final Governance and Risk Management Framework Requirements for Life Insurers’ Use of External Consumer Data and Information Sources (“ECDIS”), Algorithms, and Predictive Models, which requires life insurers authorized to do business in Colorado to implement AI governance and risk management measures that are reasonably designed to prevent unfair discrimination in the use of ECDIS, algorithms and predictive models.

Additionally, on September 28, 2023, the Colorado Department of Insurance released its draft regulation on Quantitative Testing for Unfairly Discriminatory Outcomes for Algorithms and Predictive Models Used for Life Insurance Underwriting, which would require insurers to estimate the race and ethnicity of proposed insureds that have applied for life insurance coverage on or after the insurer’s initial adoption of the use of ECDIS, or algorithms and predictive models that used ECDIS.

While we currently do not expect any of the existing regulations to have a material impact on our business, there can be no assurance that there will not be any material impacts in the future.

Other state legislatures and insurance regulators, as well as U.S.

federal agencies, may also adopt regulations that govern the use of AI.

Securities, Broker-Dealer and Investment Advisor Regulation

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Also, a portion of our in-force life insurance products and annuity products are held by tax-qualified pension and retirement plans that are subject to ERISA or the Tax Code.

While we currently believe manufacturers do not have as much exposure to ERISA and the Tax Code as distributors, certain activities are subject to the restrictions imposed by ERISA and the Tax Code, including restrictions on the provision of investment advice to ERISA qualified plans, plan participants and individual retirement annuity and individual retirement account (collectively, “IRAs”) owners if the investment recommendation results in fees paid to an individual advisor, the firm that

employs the advisor or their affiliates.

In June 2020, the Department of Labor (“DOL”) issued guidance that expands the definition of “investment advice.” See “— Standard of Conduct Regulation — Department of Labor Fiduciary Advice Rule.”

(collectively, “IRAs”) owners if the investment recommendation results in fees paid to an individual advisor, the firm that employs the advisor or their affiliates.

In June 2020, the Department of Labor (“DOL”) issued guidance that expands the definition of “investment advice.” In October 2023, the DOL issued a new proposed regulation that would further update the definition of “investment advice.” See “— Standard of Conduct Regulation — Department of Labor Fiduciary Advice Rule.”

The DOL has issued a number of regulations that increase the level of disclosure that must be provided to plan sponsors and participants.

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Department of Labor Fiduciary Advice Rule

A regulatory action by the DOL (the “Fiduciary Advice Rule”), which became effective on February 16, 2021, reinstates the text of the DOL’s 1975 investment advice regulation defining what constitutes fiduciary “investment advice” to ERISA Plans and IRAs and provides guidance interpreting such regulation.

A regulatory action by the DOL (the “Fiduciary Advice Rule”), which became effective on February 16, 2021, reinstated the text of the DOL’s 1975 investment advice regulation defining what constitutes fiduciary “investment advice” to ERISA Plans and IRAs and provides guidance interpreting such regulation.

The guidance provided by the DOL broadens the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries under ERISA or the Tax Code.

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They would further be prohibited from receiving compensation for this advice, unless an exemption applied.

In connection with the Fiduciary Advice Rule, the DOL also issued an exemption, Prohibited Transaction Exemption 2020-02, that allows fiduciaries to receive compensation in connection with providing investment advice, including advice with respect to roll overs, that would otherwise be prohibited as a result of their fiduciary relationship to the ERISA Plan or IRA.

In connection with the Fiduciary Advice Rule, the DOL also issued an exemption, Prohibited Transaction Exemption (“PTE”) 2020-02, that allows fiduciaries to receive compensation in connection with providing investment advice, including advice with respect to roll overs, that would otherwise be prohibited as a result of their fiduciary relationship to the ERISA Plan or IRA.

In order to be eligible for the exemption, among other conditions, the investment advice fiduciary is required to acknowledge its fiduciary status, refrain from putting its own interests ahead of the plan beneficiaries’ interests or making material misleading statements, act in accordance with ERISA’s “prudent person” standard of care and receive no more than reasonable compensation for the advice.

Because we do not engage in direct distribution of retail products, including IRA products and retail annuities sold to ERISA Plan participants and to IRA owners, we believe that we will have limited exposure to the Fiduciary Advice Rule.

However, while we cannot predict the rule’s impact, the DOL’s interpretation of the ERISA fiduciary investment advice

regulation could have an adverse effect on sales of annuity products through our independent distribution partners, as a significant portion of our annuity sales are as IRAs.

Because we do not engage in direct distribution of retail products, including IRA products and retail annuities sold to ERISA Plan participants and to IRA owners, we believe that we have limited exposure to the Fiduciary Advice Rule.

However, while we cannot predict the rule’s impact, the DOL’s interpretation of the ERISA fiduciary investment advice regulation could have an adverse effect on sales of annuity products through our independent distribution partners, as a significant portion of our annuity sales are as IRAs.

The Fiduciary Advice Rule may also lead to changes to our compensation practices and product offerings as well as increase our litigation risk, any of which could adversely affect our financial condition and results of operations.

We may also need to take certain additional actions in order to comply with, or assist our distributors in their compliance with, the Fiduciary Advice Rule.

In 2021, the DOL announced that it intends to make further changes to its fiduciary investment advice framework, which may include amending the regulations defining fiduciary investment advice and evaluating the current exemptions relied upon by financial institutions in providing services to ERISA Plans and IRAs or proposing new exemptions.

We will continue to monitor developments regarding any proposed framework updates.

On October 31, 2023, the DOL announced a proposed regulation that would update the definition of an “investment advice fiduciary” under ERISA and amend related administrative PTEs, including PTE 2020-02.

The proposed regulation would broaden the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries to ERISA plans and IRA investors.

While we cannot predict whether the proposed regulation will be adopted or enacted in its proposed form, it could have further adverse effects on sales of our products through our independent distribution partners and may also lead to further changes to our product offerings and compensation practices, as well as increase our litigation risk, any of which could adversely affect our financial condition and results of operations.

We may also need to take certain additional actions to comply with, or assist our distributors in their compliance with, the regulation.

We are assessing the potential impact of the proposed regulation and PTE amendments on our annuity and life insurance businesses and will continue to monitor developments regarding the proposal.

State Law Standard of Conduct Rules and Regulations

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Broker-dealers were required to comply with the requirements of Regulation Best Interest beginning June 30, 2020.

In addition, individual

states and their securities regulators may adopt their own enhanced conduct standards for broker-dealers that may further impact their practices, and it is uncertain to what extent they would be preempted by Regulation Best Interest.

In addition, individual states and their securities regulators may adopt their own enhanced conduct standards for broker-dealers that may further impact their practices, and it is uncertain to what extent they would be preempted by Regulation Best Interest.

Federal Tax Reform

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The Inflation Reduction Act establishes a 15% corporate alternative minimum tax (the “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 $1.0 billion.

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

Based on limited guidance issued by the U.S.

Department of Treasury to date, the Company does not currently expect to be subject to the CAMT for the year ended December 31, 2023.

However, the Company will assess the applicability of the CAMT on an annual basis and may be subject to the CAMT in future years.

In addition, 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.

To date, the Internal Revenue Service has issued only limited guidance on the CAMT and has signaled that additional future guidance with respect to the insurance industry is forthcoming;

uncertainty remains regarding the application of and potential adjustments to the CAMT.

Accordingly, the company is currently unable to assess the applicability of the CAMT or the potential impact it may have on our financial statements.

It is possible that the CAMT could, therefore, result in a materially higher income tax in a given year.

Transition from LIBOR

As a result of concerns about the accuracy of the calculation of the London Inter-Bank Offered Rate (“LIBOR”), in 2017, the United Kingdom Financial Conduct Authority, the current administrator of LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021.

In March 2021, the ICE Benchmark Administration and the United Kingdom Financial Conduct Authority announced that all LIBOR settings either will cease to be provided by any administrator or will no longer be representative (i) immediately after December 31, 2021, for all non-USD LIBOR settings and one-week and two-month USD LIBOR settings and (ii) immediately after June 30, 2023 for the remaining USD LIBOR settings or, if adopted, at such later dates set forth in the FCA Proposal.

In connection with the cessation of LIBOR, the Federal Reserve Board (the “Federal Reserve”) began publishing a secured overnight funding rate, which is intended to replace U.S.

dollar (“USD”) LIBOR.

On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was signed into law, which provides a statutory mechanism and safe harbor that applies on a nationwide basis to replace LIBOR with a benchmark rate, selected by the Federal Reserve based on a secured overnight funding rate, for certain contracts that reference LIBOR and contain no or insufficient fallback provisions.

Substantially all of our agreements referencing LIBOR expiring after June 30, 2023 have been amended to include alternative reference rates.

As of December 31, 2022, our remaining exposure to LIBOR was not material.

Regulation of Over-the-Counter Derivatives

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Federal banking regulators adopted rules that apply to certain qualified financial contracts, including many derivatives contracts, securities lending agreements and repurchase agreements, with certain banking institutions and certain of their affiliates.

These rules, which became effective on January 1, 2019, generally require the banking institutions and their applicable affiliates to include contractual provisions in their qualified financial contracts that limit or delay certain rights of their counterparties arising in connection with the banking institution or an applicable affiliate becoming subject to a

bankruptcy, insolvency, resolution or similar proceeding.

Certain of our derivatives, securities lending agreements and repurchase agreements are subject to these rules, and as a result, we are subject to greater risk and more limited recovery in the event of a default by such banking institutions or their applicable affiliates.

Environmental Considerations

As an owner and operator of real property, we are subject to extensive federal, state and local environmental laws and regulations.

Inherent in such ownership and operation is also the risk that there may be potential environmental liabilities and costs in connection with any investigation or required remediation of such properties.

In addition, we hold equity interests in companies that could potentially be subject to environmental liabilities.

We routinely have environmental assessments performed with respect to real estate being acquired for investment and real property to be acquired through foreclosure.

We hold equity interests in companies that may be subject to extensive federal, state and local environmental laws and regulations and, accordingly, could potentially be subject to environmental liabilities.

Our properties routinely have environmental assessments performed with respect to real estate being acquired for investment and real property to be acquired through foreclosure.

We cannot provide assurance that unexpected environmental liabilities will not arise.

However, based on information currently available to us, we believe that any costs associated with our compliance with environmental laws and regulations or any remediation of our properties will not have a material adverse effect on our results of operations or financial condition.

However, based on information currently available to us, we believe that any costs associated with compliance with environmental laws and regulations or any remediation of properties in our investment portfolio will not have a material adverse effect on our results of operations or financial condition.

See Note 9 of the Notes to the Consolidated Financial Statements for a discussion on certain limitations and interests regarding our arrangements in or with variable interest entities.

Unclaimed Property

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For income annuities, the competitiveness of the lifetime income payment amount is generally the principal factor.

Principal competitive factors in the life insurance business include customer service and distribution channel relationships, price, the financial strength ratings of the insurance company, technology and financial stability.

Principal competitive factors in the life insurance business include product and underwriting features, customer service and distribution channel relationships, price, the financial strength ratings of the insurance company, technology and financial stability.

For our hybrid indexed universal life with long-term care product, product features, long-term care benefits and our underwriting process are the primary competitive factors.

The principal factors for our income product are its guaranteed distributions, crediting strategies and underwriting process.

Human Capital Resources

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At December 31, 2023, we had approximately 1,500 employees.

The Company’s Board of Directors and its Compensation and Human Capital Committee oversee our human capital management matters, including pay equity;

The Company’s Board of Directors and its Compensation and Human Capital Committee oversee our human capital matters, including pay equity;

talent and leadership development;

the Company’s efforts to attract, engage and retain talent;

and the development and execution of the Company’s strategy to achieve its diversity, equity and inclusion (“DEI”) objectives.

Such objectives include increasing representation of underrepresented populations across the Company, strengthening our inclusive culture, engaging diverse suppliers and vendors, supporting the communities we serve and working with educational institutions and other organizations to help create more opportunities for individuals from underrepresented groups.

and the development and execution of the Company’s strategy to advance its diversity, equity and inclusion (“DEI”) objectives.

Such objectives include increasing representation of underrepresented populations across the Company, by seeking a diverse slate of candidates for open positions and through other efforts, strengthening our inclusive culture, promoting the development of an inclusive pipeline for supplier and vendor opportunities, supporting the communities we serve and working with educational institutions and other organizations to help create more opportunities for individuals from underrepresented groups.

Our Culture, Values and Ethics

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As part of our commitment to ethics and integrity, we require all employees to review and certify compliance with our code of conduct for employees on an annual basis, as well as complete more extensive training on the code of conduct on a biennial basis.

In addition, we help to ensure that employees are well informed of the Company’s clearly defined reporting and escalation process, including options for anonymous whistleblower reporting, through regular communications.

In addition, we help to ensure that employees are well informed of the Company’s reporting and escalation process, including options for anonymous whistleblower reporting, through regular communications.

Attracting, Engaging, Developing and Retaining Talent

We believe that our success depends, in large part, on our ability to attract and retain highly skilled employees.

Competition for talent in our industry is intense, and current U.S.

There is strong competition for talent in our industry, and current U.S.

labor market dynamics may further increase the challenge of attracting and retaining employees.

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These efforts include, among other things, seeking to support our employees with competitive and equitable pay and benefits and to provide our employees with training and other learning and development opportunities.

In addition, we continue to operate under a flexible, hybrid work model, which has enabled us to expand our recruiting strategy.

We offer all of our employees benefits programs that are designed to help meet their financial, physical and mental needs.

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In addition, we offer all employees access to optional monthly learning sessions designed to further enhance their understanding of our corporate strategy and culture, as well as to provide the opportunity to build and enhance skills.

We also offer high-performing talent a mentorship program that puts our core values and DEI at the forefront of mentor-mentee relationships and is designed to provide professional development opportunities through engagement with leaders across the Company.

We also offer a mentorship program designed to provide professional development opportunities through engagement with leaders across the Company.

As noted above, we collect employee feedback on an ongoing basis, which facilitates our efforts to understand and optimize our employees’ experiences at the Company and assists us in attracting, engaging, developing and retaining talent.

To further help our employees remain engaged and well connected to the Company and each other, we hold a variety of events and issue a wide range of communications throughout the year, including town hall meetings, podcasts from our CEO, companywide discussions with members of our leadership team, intranet articles and a weekly newsletter highlighting events and news from around the Company.

In March 2020, in response to the COVID-19 pandemic and to protect the health and safety of our employees and their families, we shifted all of our employees to a remote-work environment.

Since 2022, we have been operating under a flexible, hybrid work model.

Diversity, Equity and Inclusion

We are committed to providing an inclusive workplace where employees can trust that their unique backgrounds and perspectives will be recognized, respected and celebrated.

We believe that by building such a workplace, we are better able to

attract and retain talent and provide valuable products that meet the needs of our distribution partners and the financial professionals who sell our products, as well as their clients.

We seek to attract and retain talent that reflects the diversity of our communities, and we remain focused on increasing representation of underrepresented groups across the Company, including by seeking diverse candidates for open positions.

Our varied approach to attracting and recruiting talent includes ensuring diversification of candidate slates for open positions, diversifying interview teams to reduce bias and building partnerships with diverse professional organizations and universities.

In recognition of the importance of DEI to Brighthouse Financial, in 2021, the Compensation and Human Capital Committee began to incorporate into its assessment of our senior leaders’ individual performance, in connection with the approval of their short-term incentive awards, their achievements with respect to advancing the Company’s DEI strategy.

We believe that by building such a workplace, we are better able to attract and retain talent and provide valuable products that meet the needs of our distribution partners and the financial professionals who sell our products, as well as their clients.

We seek to attract and retain talent that reflects the diversity of our communities, and we remain focused on maintaining strong representation of underrepresented groups across the Company.

Our varied approach to attracting and recruiting talent includes efforts to diversify candidate slates for open positions, diversify interview teams to reduce bias and build partnerships with diverse professional organizations and universities.

In recognition of the importance of DEI to Brighthouse Financial, in 2021, the Compensation and Human Capital Committee began to incorporate into its assessment of our senior leaders’ individual performance, in connection with the approval of their short-term incentive awards, their efforts with respect to advancing the Company’s DEI strategy.

We employ a multifaceted approach to advancing DEI across the Company that includes various programs and initiatives.

One such initiative is our Diversity, Equity and Inclusion Council (the “DEI Council”), composed of representatives from across Brighthouse Financial, which creates and sponsors programs and development opportunities with the aim of further embedding DEI within the Company.

In 2022, the DEI Council’s key initiatives included the launch of the Company’s employee network groups, which are open to all employees and provide a forum for employees across various dimensions of diversity to discuss relevant professional and personal topics, learn from one another, find support and allyship, expand their networks and deepen their level of compassion and understanding.

One such initiative is our DEI Council which is comprised of representatives from across Brighthouse Financial.

The DEI Council creates and sponsors programs and development opportunities with the aim of further embedding DEI within the Company and continuously enhancing our Company’s culture.

In 2022, we launched our Company’s employee network groups, which are open to all employees and provide a forum for employees across various dimensions of diversity to discuss relevant professional and personal topics, learn from one another, find support and allyship, expand their networks and deepen their level of compassion and understanding.

In addition, to continue fostering our inclusive workplace, the Company requires all employees to complete annual DEI training.

In 2022, our DEI training focused on creating psychological safety in the workplace.

The Company also has developed a supplier diversity program designed to continue enhancing its engagement with diverse suppliers and vendors.

The Company also has developed a supplier diversity program designed to advance the building of an inclusive pipeline of talent for supplier and vendor opportunities.

The Company further seeks to deliver on its commitment to DEI through its own charitable organizations and through strategic partnerships with community organizations, educational institutions and industry peers.

The Brighthouse Financial Foundation (the “Foundation”), a non-profit organization, was established in 2017 with the mission to improve the financial security, culture and opportunities afforded to communities in which the Company’s employees live and work by providing resources and support to other tax-exempt organizations which further that mission.

In addition, through Brighthouse Scholar Connections, Inc., a non-profit organization established in 2022, scholarships are provided to expand educational opportunities for students who are members of historically underrepresented or disadvantaged populations due to race, ethnicity, socioeconomic status or similar factors.

Brighthouse Financial employees have the opportunity to serve as mentors for students who have been awarded scholarships by this organization.

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Name Age Position with Brighthouse Financial and Certain Other Business Experience

Steigerwalt 61

Brighthouse Financial:

Steigerwalt 62 Brighthouse Financial:

President and Chief Executive Officer (August 2017 – present)

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Our website is located at www.brighthousefinancial.com.

We use our website as a routine channel for distribution of information that may be deemed material for investors, including news releases, presentations, financial information and corporate governance information.

We post filings on our website as soon as practicable after they are electronically filed with, or furnished to, the SEC, including our annual and quarterly reports on Forms 10-K and 10-Q and current reports on Form 8-K;

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All such postings and filings are available on the “Investor Relations” portion of our website free of charge.

In addition, our Investor Relations website allows interested persons to sign up to automatically receive e-mail alerts when we post financial information.

In addition, our Investor Relations website allows interested persons to sign up to automatically receive e-mail alerts when we make filings with the SEC.

The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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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 1. Business