What changed in this filing

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Item 1. Financial Statements

2024-05-08 compared with 2023-11-08 · 183 added, 710 removed, 1548 unchanged (37% of the section changed)

2 unchanged sentences

Interim Condensed Consolidated Balance Sheets

September 30, 2023 (Unaudited) and December 31, 2022

March 31, 2024 (Unaudited) and December 31, 2023

(In millions, except share and per share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

52 unchanged sentences

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

For the Three Months and Nine Months Ended September 30, 2023 and 2022 (Unaudited)

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

(In millions, except per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Premiums $ 202 $ 197

6 unchanged sentences

Policyholder benefits and claims (including liability remeasurement gains (losses) of $ 0 and $ 0 , respectively)

590 534 1,966 1,926

Interest credited to policyholder account balances 502 422

21 unchanged sentences

Interim Condensed Consolidated Statements of Equity

For the Three Months and Nine Months Ended September 30, 2023 and 2022 (Unaudited)

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

(In millions)

14 unchanged sentences

Other comprehensive income (loss), net of income tax

Balance at June 30, 2023 — 1 14,039 ( 1,069 ) ( 2,183 ) ( 5,881 ) 4,907 65 4,972

Treasury stock acquired in connection with share repurchases

( 167 ) ( 167 ) ( 167 )

Share-based compensation

— 9 ( 1 ) 8 8

Dividends on preferred stock

( 26 ) ( 26 ) ( 26 )

Change in noncontrolling interests

— ( 2 ) ( 2 )

Net income (loss)

479 479 2 481

Other comprehensive income (loss), net of income tax

( 1,235 ) ( 1,235 ) ( 1,235 )

Balance at September 30, 2023 $ — $ 1 $ 14,022 $ ( 590 ) $ ( 2,248 ) $ ( 7,116 ) $ 4,069 $ 65 $ 4,134

Balance at March 31, 2024 $ — $ 1 $ 13,989 $ ( 2,000 ) $ ( 2,382 ) $ ( 5,413 ) $ 4,195 $ 65 $ 4,260

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

3 unchanged sentences

Treasury stock acquired in connection with share repurchases ( 62 ) ( 62 ) ( 62 )

( 259 ) ( 259 ) ( 259 )

Share-based compensation — 5 ( 15 ) ( 10 ) ( 10 )

— 12 ( 11 ) 1 1

Dividends on preferred stock ( 26 ) ( 26 ) ( 26 )

Change in noncontrolling interests — ( 2 ) ( 2 )

— ( 2 ) ( 2 )

Net income (loss) ( 499 ) ( 499 ) 2 ( 497 )

3,330 3,330 2 3,332

Other comprehensive income (loss), net of income tax 818 818 818

( 4,223 ) ( 4,223 ) ( 4,223 )

Balance at June 30, 2022 — 1 14,113 ( 944 ) ( 1,813 ) ( 4,176 ) 7,181 65 7,246

Treasury stock acquired in connection with share repurchases

( 136 ) ( 136 ) ( 136 )

Share-based compensation

Dividends on preferred stock

( 25 ) ( 25 ) ( 25 )

Change in noncontrolling interests

— ( 2 ) ( 2 )

Net income (loss)

413 413 2 415

Other comprehensive income (loss), net of income tax

( 2,839 ) ( 2,839 ) ( 2,839 )

Balance at September 30, 2022 $ — $ 1 $ 14,095 $ ( 531 ) $ ( 1,949 ) $ ( 7,015 ) $ 4,601 $ 65 $ 4,666

Balance at March 31, 2023 $ — $ 1 $ 14,054 $ ( 894 ) $ ( 2,119 ) $ ( 5,288 ) $ 5,754 $ 65 $ 5,819

See accompanying notes to the interim condensed consolidated financial statements.

1 unchanged sentence

Interim Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2023 and 2022 (Unaudited)

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

(In millions)

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by (used in) operating activities $ ( 530 ) $ ( 500 )

22 unchanged sentences

Net change in payables for collateral under securities loaned and other transactions ( 17 ) ( 159 )

Long-term debt repaid ( 1 ) ( 2 )

Dividends on preferred stock ( 26 ) ( 26 )

36 unchanged sentences

Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2023 Annual Report.

Reclassifications

Certain amounts in the prior year period’s interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the 2023 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements.

See “— Adoption of New Accounting Pronouncements” for discussion of the adoption of new guidance on long-duration contracts in the first quarter of 2023, parts of which were retrospectively applied to prior periods presented in the interim condensed consolidated financial statements.

Summary of Significant Accounting Policies

In connection with the adoption of new guidance on long-duration insurance contracts, the Company updated its impacted accounting policies as described below.

See Note 1 of the Notes to the Consolidated Financial Statements included in the 2022 Annual Report for a description of the Company’s accounting policies that did not change.

Brighthouse Financial, Inc.

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

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

Insurance Contract Obligations

The Company has obligations under insurance contracts to pay benefits over an extended period of time.

The Company establishes liabilities for future obligations under long-duration insurance contracts based on the accounting model appropriate for each type of contract or contract feature.

Liabilities for insurance contract benefits are generally accrued over time as revenue is recognized, or established based on the balance that accrues to the contract holder.

In addition, certain insurance contracts may contain features that are required to be measured at fair value separately from the base contracts, either as a market risk benefit or embedded derivative.

The discussion below provides an overview of the different accounting models for insurance contract obligations and the applicability of such models to the Company’s insurance products.

Liability for Future Policy Benefits

The Company establishes a liability for future policy benefits (“LFPB”) for non-participating term and whole life insurance and income annuities.

LFPBs are accrued over time as revenue is recognized based on a net premium ratio.

The net premium ratio is the portion of gross premiums required to provide for all future benefits.

LFPBs are established using the Company’s current assumptions of future cash flows, discounted at a rate that approximates a single A corporate bond curve.

The Company generally aggregates insurance contracts into groupings by issue year, product and segment for determining the net premium ratio and related LFPBs.

The Company reviews cash flow assumptions regularly, and if they change significantly, LFPBs are adjusted by determining a revised net premium ratio.

The revised net premium ratio is calculated as of contract inception using both actual historical experience and updated future cash flow assumptions.

The recalculated net premium ratio is applied to derive a remeasurement gain or loss recognized in the current period net income.

For insurance policies in-force as of December 31, 2020, January 1, 2021 is considered the contract inception date.

The net premium ratio is also updated quarterly for the difference between actual and expected experience.

The net premium ratio is not updated for changes in discount rate assumptions, as changes in the discount rate are updated quarterly and the impacts are reflected in other comprehensive income (loss) (“OCI”).

The discount rate assumption is determined by developing a yield curve based on market observable yields for upper-medium grade fixed income instruments derived from an external index.

The yield curve is applied to the expected future cash flows used in the measurement of LFPBs based on the duration characteristics of those liabilities.

The most significant cash flow assumptions used in the establishment of LFPBs are mortality, policy lapses and market interest rates.

See Note 4 for more information on the effect of changes in assumptions on the measurement of LFPBs.

The Company also establishes an LFPB for participating term and whole life insurance using a net premium ratio and the Company’s current assumptions of future cash flows.

Assumptions are determined at issuance of the policy and are not updated unless a premium deficiency exists.

A premium deficiency exists when the LFPB plus the present value of expected future gross premiums are less than expected future benefits and expenses (based on current assumptions).

When a premium deficiency exists, the Company will reduce any deferred acquisition costs and may also establish an additional liability to eliminate the deficiency.

See Note 4 for more information on assumptions used in establishing LFPBs related to participating term and whole life insurance.

Policyholder Account Balances

The Company establishes a policyholder account balance liability for customer deposits on universal life insurance, universal life insurance with secondary guarantees (“ULSG”) and deferred annuity contracts.

The policyholder account balance liability is equal to the sum of deposits, plus interest credited, less charges and withdrawals, excluding the impact of any applicable charge that may be incurred upon surrender.

The Company also holds additional liabilities for certain product features including secondary guarantees on universal life insurance contracts and the crediting rates associated with index-linked annuities.

Brighthouse Financial, Inc.

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

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

Additional Liabilities for ULSG

The Company establishes a liability in addition to the account balance for secondary guarantees on universal life insurance.

These liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the contract period based on total expected assessments.

The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios.

The Company also maintains a liability for profits followed by losses on ULSG determined by projecting future earnings and establishing a liability to offset losses that are expected to occur in later years.

Both ULSG liabilities are adjusted for the effects of unrealized investment gains and losses.

The Company reviews cash flow assumptions regularly, and, if they change significantly, the liability for secondary guarantees is adjusted by a cumulative charge or credit to net income.

Liabilities for secondary guarantees are presented within future policy benefits with changes in the liabilities reported in policyholder benefits and claims, except for the effects of unrealized investment gains and losses, which are reported in OCI.

The most significant assumptions used in estimating liabilities for secondary guarantees are the general account rate of return, premium persistency, mortality and lapses.

See Note 4 for more information on the effect of changes in assumptions on the measurement of liabilities for secondary guarantees.

Market Risk Benefits on Annuity Guarantees

Market risk benefits (“MRB”) are contracts or contract features that provide protection to the policyholder from capital markets risk by transferring such risks to the Company.

MRBs are required to be separated from the deferred annuity host contract and measured at fair value.

The Company establishes MRB assets and liabilities for guaranteed minimum benefits on variable annuity contracts including guaranteed minimum death benefits (“GMDB”), guaranteed minimum income benefits (“GMIB”), guaranteed minimum accumulation benefits (“GMAB”) and guaranteed minimum withdrawal benefits (“GMWB”).

MRB assets are also established for reinsured benefits related to these guarantees.

Certain index-linked annuity products may also have guaranteed minimum benefits classified as MRBs.

The measurement of fair value includes an adjustment for the risk that the Company fails to satisfy its obligations, which is referred to as nonperformance risk, as well as risk margin to capture the non-capital markets risks of the instrument, which represents the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions.

MRBs are measured at estimated fair value, with changes reported in change in MRBs on the consolidated statements of operations, except for the change due to nonperformance risk, which is reported in OCI.

See Note 4 for more information on the effect of changes in inputs and assumptions on the measurement of MRBs and Note 8 for more information on the determination of fair value of MRBs.

Embedded Derivatives on Index-Linked Annuities

The Company issues, and assumes through reinsurance, index-linked annuities which allow the policyholder to participate in returns from certain specified equity indices.

The crediting rates associated with these features are classified as embedded derivatives and measured at estimated fair value, with changes in estimated fair value reported in net derivative gains (losses).

These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

Embedded derivative liabilities are required to be separated from the deferred annuity host contract and measured at fair value.

The estimated fair value is determined using a combination of an option pricing model and an option-budget approach.

Under this approach, the Company estimates the cost of funding the crediting rate using option pricing and establishes that cost on the balance sheet as a reduction to the initial deposit amount.

The estimate of fair value includes an adjustment for nonperformance risk, as well as a risk margin.

Brighthouse Financial, Inc.

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

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

Actuarial assumptions are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income.

Capital market inputs used in the measurement of index-linked crediting rate embedded derivatives are updated quarterly through net income.

The reduction to the initial deposit is accreted back up to the initial deposit over the estimated life of the contract.

Embedded derivatives related to index-linked annuities are presented within policyholder account balances while changes in the estimated fair value are reported in net derivative gains (losses).

For more information on the determination of estimated fair value of embedded derivatives, see Note 8.

Recognition of Revenues and Deposits on Insurance Contracts

Premiums related to traditional long-duration contracts are recognized as revenues when due from policyholders.

When premiums for income annuities are due over a significantly shorter period than the period over which policyholder benefits are incurred, the Company establishes a deferred profit liability (“DPL”) for the excess of the gross premium over the net premium.

DPLs are amortized into net income in proportion to the amount of expected future benefit payments.

Assumptions used in the measurement of the DPL are updated at the same time as the related LFPBs, with the updated estimates used to recalculate the DPL as of contract inception.

The remeasurement gain or loss from updating DPLs is recognized in current period net income along with the related change in LFPBs.

Deposits related to universal life insurance, deferred annuity contracts and investment contracts are credited to policyholder account balances.

Revenues from such contracts consist of asset-based investment management fees, cost of insurance charges, risk charges, policy administration fees and surrender charges.

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

Premiums and policy fees are presented net of reinsurance.

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

The Company incurs significant costs in connection with acquiring new and renewal insurance business.

Costs that are directly related to the successful acquisition or renewal of insurance contracts are capitalized as deferred policy acquisition costs (“DAC”).

These costs mainly consist of commissions and include the portion of employees’ compensation and benefits related to time spent selling, underwriting or processing the issuance of new insurance contracts.

All other acquisition-related costs are expensed as incurred.

Value of business acquired (“VOBA”) is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity and investment-type contracts in-force as of the acquisition date.

The Company amortizes DAC and VOBA in a manner that approximates a straight-line basis over the expected life of the related contracts.

For life insurance contracts, amortization is based on projections of amounts of insurance in-force, while projections of policy counts are used for deferred annuity contracts and expected future benefits payments for income annuities.

These assumptions are reviewed at least annually, and if they change significantly, updates are recognized through changes to future amortization.

VOBA balances are tested annually to determine if the balance is deemed unrecoverable from expected future profits.

All changes in DAC and VOBA balances are recorded to net income.

Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of an existing contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract.

If a modification is considered to have substantially changed the contract, the associated DAC or VOBA is written off immediately through net income and any new acquisition costs associated with the replacement contract are deferred.

If the modification does not substantially change the contract, the DAC or VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed.

The Company also has intangible assets representing deferred sales inducements (“DSI”), which are included in other assets, and unearned revenue liabilities, which are included in other policy-related balances.

The Company defers sales inducements and unearned revenue and amortizes the balances using the same methodology and assumptions used to amortize DAC and VOBA.

Brighthouse Financial, Inc.

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

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

Adoption of New Accounting Pronouncements

1 unchanged sentence

The Company considers the applicability and impact of all ASUs.

Except as noted below, there were no significant ASUs adopted during the period ended September 30, 2023.

In March 2022, the FASB issued new guidance on Troubled Debt Restructurings (“TDR”) (ASU 2022-02, Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures).

This ASU eliminates TDR recognition and measurement guidance and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

The Company adopted this guidance on January 1, 2023.

This ASU was applied prospectively and did not have a material impact on the consolidated financial statements upon adoption but could change the future recognition and measurement of modified loans and other receivables.

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

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

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

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

A summary of the most significant changes is provided below:

(1) Guaranteed benefits associated with variable annuity and certain fixed annuity contracts have been classified and presented separately on the consolidated balance sheets as MRBs.

MRBs are now measured at estimated fair value through net income and reported separately on the consolidated statements of operations, except for nonperformance risk changes, which will be recognized in OCI.

(2) Cash flow assumptions used to measure LFPBs on traditional long-duration contracts (including term and non-participating whole life insurance and immediate annuities) have been updated on an annual basis using a retrospective method.

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

(3) The discount rate assumption used to measure the liability for traditional long-duration contracts is now based on an upper-medium grade fixed income yield, updated quarterly, with changes recognized in OCI.

(4) DAC for all insurance products are required to be amortized on a constant-level basis over the expected term of the contracts, using amortization methods that are not a function of revenue or profit emergence.

Changes in assumptions used to amortize DAC have been recognized as a revision to future amortization amounts.

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

The transition date was January 1, 2021.

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

The cumulative effect, on an after-tax basis, of the adoption of ASU 2018-12 as of the transition date was a $ 5.4 billion decrease to retained earnings and a $ 3.9 billion decrease to accumulated other comprehensive income (loss) (“AOCI”).

See Note 2 for more detailed information on the impacts of the ASU to the Company’s financial statements.

Brighthouse Financial, Inc.

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

ASU 2018-12 Transition

The Company adopted ASU 2018-12 for LFPBs, DAC and other balances amortized on a basis consistent with DAC by applying the guidance to contracts in-force on the basis of their existing carrying amounts at the transition date.

The Company adopted ASU 2018-12 for MRBs on a fully retrospective basis.

The effect of transition adjustments on stockholders’ equity at January 1, 2021 due to the adoption of ASU 2018-12 was as follows:

Retained Earnings (Deficit) AOCI

(In millions)

Liability for future policy benefits $ ( 436 ) $ ( 2,073 )

Market risk benefits and related adjustments ( 6,237 ) ( 3,454 )

DAC and VOBA — 520

Reinsurance recoverables ( 141 ) 34

Deferred income tax asset 1,431 1,044

Total $ ( 5,383 ) $ ( 3,929 )

For LFPBs, the transition adjustment to retained earnings relates to instances where net premiums exceed gross premiums resulting in LFPBs being increased to eliminate the premium deficiency.

The premium deficiency primarily relates to structured settlement annuities.

The transition adjustment related to AOCI represents the effect of the requirement to discount LFPBs based on an upper-medium grade fixed income rate as well as the removal of amounts previously recorded in AOCI for the effects of unrealized investment gains and losses.

For MRBs, the transition adjustment to AOCI relates to the cumulative effect of changes in the nonperformance risk between contract issue date and transition date.

In aggregate, the additional spread applied to the risk-free rate decreased from contract inception to the transition date, which had a negative impact on equity.

The remaining difference between the estimated fair value and carrying amount of MRBs at transition, excluding the amounts recorded in AOCI, was recorded as an adjustment to retained earnings as of the transition date.

For DAC and VOBA, the Company removed amounts previously recorded in AOCI for the effect of unrealized investment gains and losses.

For reinsurance, the adjustments to both retained earnings and AOCI were made to align the measurement of reinsurance recoverables with the related LFPBs.

The balances of and changes in LFPBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:

Term and Whole Life Insurance Income Annuities Structured Settlement and Pension Risk Transfer Annuities

(In millions)

Balance at December 31, 2020 $ 2,854 $ 4,311 $ 10,115

Removal of related balances in AOCI — ( 203 ) ( 1,784 )

Change in cash flow assumptions 14 ( 171 ) 200

Initial recognition of deferred profit liabilities — 176 217

Change in discount rate assumptions 536 754 2,770

Adjusted balance at January 1, 2021 3,404 4,867 11,518

Reinsurance recoverable 85 29 102

Adjusted balance at January 1, 2021, net of reinsurance $ 3,319 $ 4,838 $ 11,416

Brighthouse Financial, Inc.

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

ASU 2018-12 Transition (continued)

The balance of and changes in liabilities classified as MRBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:

Variable Annuities

(In millions)

Balance at December 31, 2020 $ 8,924

Adjustment for the difference between carrying amount and estimated fair value, except for the difference due to nonperformance risk 6,010

Adjustment for cumulative effect of changes in nonperformance risk since issuance 3,454

Adjusted balance at January 1, 2021 18,388

Reinsurance recoverable 169

Adjusted balance at January 1, 2021, net of reinsurance $ 18,219

The balances of and changes in DAC and VOBA on January 1, 2021 due to the adoption of ASU 2018-12 were as follows:

Variable Annuities Fixed Rate Annuities Index-Linked Annuities Term and Whole Life Insurance Universal Life Insurance

(In millions)

Balance at December 31, 2020 $ 2,440 $ 64 $ 886 $ 527 $ 492

Removal of related amounts in AOCI 472 — — — ( 23 )

Adjusted balance at January 1, 2021 $ 2,912 $ 64 $ 886 $ 527 $ 469

Balance at December 31, 2020 $ 363 $ 76 $ — $ 8 $ 55

Removal of related amounts in AOCI 65 — — — 6

Adjusted balance at January 1, 2021 $ 428 $ 76 $ — $ 8 $ 61

The following tables present amounts previously reported in 2022 and 2021, the effect on those amounts of the change due to the adoption of ASU 2018-12 as described in Note 1, and the currently reported amounts in the Unaudited Interim Consolidated Balance Sheets and Unaudited Interim Consolidated Statements of Operations and Comprehensive Income (Loss).

See Notes 4 and 5 for more information.

December 31, 2022 December 31, 2021

As Previously

Reported Effect of

Change As Currently

Reported As Previously

Reported Effect of

Change As Currently

(In millions)

Total assets $ 225,580 $ ( 733 ) $ 224,847 $ 259,840 $ 2,417 $ 262,257

Future policy benefits $ 41,569 $ ( 10,072 ) $ 31,497 $ 43,807 $ ( 3,817 ) $ 39,990

Policyholder account balances $ 74,836 $ ( 1,309 ) $ 73,527 $ 66,851 $ ( 1,602 ) $ 65,249

Market risk benefit liabilities $ — $ 10,389 $ 10,389 $ — $ 16,034 $ 16,034

Total liabilities $ 219,542 $ ( 293 ) $ 219,249 $ 243,633 $ 10,174 $ 253,807

Retained earnings (deficit) $ ( 637 ) $ 242 $ ( 395 ) $ ( 642 ) $ ( 3,632 ) $ ( 4,274 )

Accumulated other comprehensive income (loss) $ ( 5,424 ) $ ( 682 ) $ ( 6,106 ) $ 4,172 $ ( 4,125 ) $ 47

Total equity $ 6,038 $ ( 440 ) $ 5,598 $ 16,207 $ ( 7,757 ) $ 8,450

Total liabilities and equity $ 225,580 $ ( 733 ) $ 224,847 $ 259,840 $ 2,417 $ 262,257

There were no significant ASUs adopted during the period ended March 31, 2024.

Future Adoption of New Accounting Pronouncements

In December 2023, the FASB issued new guidance on Income Tax Disclosures (ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures) .

This ASU updates the required income tax disclosures to include disclosure of income taxes paid disaggregated by jurisdiction and greater disaggregation of information in the required rate reconciliation.

This ASU is effective for fiscal years starting January 1, 2025, and will be applied on a prospective basis.

The Company is currently evaluating the impact of this guidance on its financial statements.

Brighthouse Financial, Inc.

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

ASU 2018-12 Transition (continued)

Year Ended December 31, 2022 Year Ended December 31, 2021

As Previously

Reported Effect of

Change As Currently

Reported As Previously

Reported Effect of

Change As Currently

(In millions)

Universal life and investment-type product policy fees $ 3,141 $ ( 706 ) $ 2,435 $ 3,636 $ ( 656 ) $ 2,980

Net derivative gains (losses) $ 304 $ ( 896 ) $ ( 592 ) $ ( 2,469 ) $ ( 1,514 ) $ ( 3,983 )

Total revenues $ 8,473 $ ( 1,600 ) $ 6,873 $ 7,142 $ ( 2,166 ) $ 4,976

Policyholder benefits and claims $ 4,165 $ ( 1,972 ) $ 2,193 $ 3,443 $ ( 697 ) $ 2,746

Change in market risk benefits $ — $ ( 4,104 ) $ ( 4,104 ) $ — $ ( 4,134 ) $ ( 4,134 )

Total expenses $ 8,645 $ ( 6,504 ) $ 2,141 $ 7,350 $ ( 4,383 ) $ 2,967

Net income (loss) $ 10 $ 3,874 $ 3,884 $ ( 103 ) $ 1,751 $ 1,648

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

In November 2023, the FASB issued new guidance on Segment Reporting Disclosures (ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures) .

This ASU updates reportable segment disclosures primarily through enhanced disclosures about significant segment expenses.

This ASU does not change how a company identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

This ASU is effective for fiscal years starting January 1, 2024, and for interim periods starting January 1, 2025, and will be applied on a retrospective basis.

The Company is currently evaluating the impact of this guidance on its financial statements.

Segment Information

3 unchanged sentences

The 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.

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

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

Corporate & Other

1 unchanged sentence

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

In connection with the adoption of ASU 2018-12, the Company reclassified direct-to-consumer life insurance that is no longer sold from Corporate & Other to the Life segment.

The segment information below reflects the direct-to consumer life insurance in the Life segment for all periods presented.

Financial Measures and Segment Accounting Policies

3 unchanged sentences

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

Brighthouse Financial, Inc.

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

Segment Information (continued)

The Company uses the term “adjusted loss” throughout this report to refer to negative adjusted earnings values.

The following are significant items excluded from total revenues in calculating adjusted earnings:

2 unchanged sentences

The following are significant items excluded from total expenses in calculating adjusted earnings:

• Change in MRBs;

• Change in market risk benefits (“MRB”);

• Change in fair value of the crediting rate on experience-rated contracts (“Market Value Adjustments”).

Brighthouse Financial, Inc.

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

Segment Information (continued)

The provision for income tax related to adjusted earnings is calculated using the statutory tax rate of 21%, net of impacts related to the dividends received deduction, tax credits and current period non-recurring items.

The Company’s adjusted earnings definition and presentation has been updated for all periods presented to reflect the adoption of ASU 2018-12.

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

7 unchanged sentences

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

Three Months Ended September 30, 2023

Annuities Life Run-off Corporate & Other Total

(In millions)

Pre-tax adjusted earnings $ 393 $ ( 93 ) $ 120 $ 9 $ 429

Provision for income tax expense (benefit) 74 ( 20 ) 25 ( 4 ) 75

Post-tax adjusted earnings 319 ( 73 ) 95 13 354

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

Preferred stock dividends — — — 26 26

Adjusted earnings $ 319 $ ( 73 ) $ 95 $ ( 15 ) 326

Adjustments for:

Net investment gains (losses) ( 53 )

Net derivative gains (losses), excluding investment hedge adjustments of $ 25

Change in market risk benefits 1,064

Market value adjustments 15

Provision for income tax (expense) benefit ( 34 )

Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders $ 453

Interest revenue $ 652 $ 115 $ 300 $ 160

Interest expense $ — $ — $ — $ 38

Brighthouse Financial, Inc.

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

Segment Information (continued)

Three Months Ended September 30, 2022

Annuities Life Run-off Corporate & Other Total

(In millions)

Pre-tax adjusted earnings $ 246 $ ( 44 ) $ ( 20 ) $ ( 14 ) $ 168

Provision for income tax expense (benefit) 44 ( 10 ) ( 4 ) ( 4 ) 26

Post-tax adjusted earnings 202 ( 34 ) ( 16 ) ( 10 ) 142

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

Preferred stock dividends — — — 25 25

Adjusted earnings $ 202 $ ( 34 ) $ ( 16 ) $ ( 37 ) 115

Adjustments for:

Net investment gains (losses) ( 45 )

Net derivative gains (losses), excluding investment hedge adjustments of $ 23

Change in market risk benefits 984

Market value adjustments 20

Provision for income tax (expense) benefit ( 71 )

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

Interest revenue $ 547 $ 77 $ 168 $ 108

Interest expense $ — $ — $ — $ 38

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Annuities Life Run-off Corporate & Other Total

(In millions)

Pre-tax adjusted earnings $ 1,137 $ ( 75 ) $ ( 35 ) $ 19 $ 1,046

Pre-tax adjusted earnings (loss)

$ 385 $ ( 46 ) $ ( 432 ) $ 11 $ ( 82 )

Provision for income tax expense (benefit) 72 ( 10 ) ( 91 ) 17 ( 12 )

Post-tax adjusted earnings 924 ( 57 ) ( 27 ) 33 873

Post-tax adjusted earnings (loss)

313 ( 36 ) ( 341 ) ( 6 ) ( 70 )

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

Preferred stock dividends — — — 26 26

Adjusted earnings $ 924 $ ( 57 ) $ ( 27 ) $ ( 48 ) 792

Adjusted earnings (loss)

$ 313 $ ( 36 ) $ ( 341 ) $ ( 34 ) ( 98 )

Adjustments for:

10 unchanged sentences

Segment Information (continued)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Annuities Life Run-off Corporate & Other Total

(In millions)

Pre-tax adjusted earnings $ 1,078 $ 75 $ ( 189 ) $ ( 101 ) $ 863

Pre-tax adjusted earnings (loss)

$ 387 $ — $ ( 134 ) $ 5 $ 258

Provision for income tax expense (benefit) 73 ( 1 ) ( 28 ) ( 9 ) 35

Post-tax adjusted earnings 876 61 ( 149 ) ( 67 ) 721

Post-tax adjusted earnings (loss)

314 1 ( 106 ) 14 223

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

Preferred stock dividends — — — 26 26

Adjusted earnings $ 876 $ 61 $ ( 149 ) $ ( 149 ) 639

Adjusted earnings (loss)

$ 314 $ 1 $ ( 106 ) $ ( 14 ) 195

Adjustments for:

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

Annuities $ 1,304 $ 1,170

Life 299 270 915 922

Run-off 356 380

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(In millions)

6 unchanged sentences

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

Insurance Liabilities

Liability for Future Policy Benefits

Information regarding LFPBs for non-participating traditional and limited-payment contracts was as follows:

Nine Months Ended September 30,

Information regarding liability for future policy benefits (“LFPB”) for non-participating traditional and limited-payment contracts was as follows:

Three Months Ended March 31,

Term and Whole Life Insurance Income Annuities Structured Settlement and Pension Risk Transfer Annuities Term and Whole Life Insurance Income Annuities Structured Settlement and Pension Risk Transfer Annuities

4 unchanged sentences

Effect of model refinements 1 — — — — —

Effect of changes in cash flow assumptions 215 — — 139 — —

Effect of actual variances from expected experience ( 7 ) — — ( 9 ) — —

10 unchanged sentences

Effect of model refinements 1 — — — — —

Effect of changes in cash flow assumptions 309 — — 159 — —

Effect of actual variances from expected experience ( 5 ) 4 ( 2 ) ( 9 ) ( 31 ) ( 31 )

19 unchanged sentences

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

Insurance (continued)

The measurement of LFPBs can be significantly impacted by changes in assumptions for policyholder behavior.

As part of the 2023 and 2022 annual actuarial review (“AAR”), the Company updated assumptions regarding mortality and lapses for term and non-participating whole life insurance.

The impact from changes in assumptions is presented in effect of changes in cash flow assumptions in the table above.

Insurance Liabilities (continued)

Information regarding the additional insurance liabilities for universal life-type contracts with secondary guarantees was as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in millions)

1 unchanged sentence

Beginning balance before the effect of unrealized gains and losses 7,784 7,175

Effect of changes in cash flow assumptions 52 ( 37 )

Effect of actual variances from expected experience 40 34

3 unchanged sentences

Benefit payments ( 115 ) ( 103 )

Effect of realized capital gains (losses) — —

Ending balance before the effect of unrealized gains and losses 7,906 7,294

6 unchanged sentences

Gross assessments recognized during period

The measurement of liabilities for secondary guarantees can be significantly impacted by changes in the expected general account rate of return, which is driven by the Company’s assumption for long-term treasury yields.

The Company’s practice of projecting treasury yields uses a mean reversion approach that assumes that long-term interest rates are less influenced by short-term fluctuations and are only changed when sustained interim deviations are expected.

As part of the 2023 AAR, the Company increased the long-term general account earned rate, driven by an increase in the mean reversion rate from 3.50 % to 3.75 %.

The Company also updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawals and maintenance expenses.

As part of the 2022 AAR, the Company increased the long-term general account earned rate, driven by an increase in the mean reversion rate from 3.00 % to 3.50 %.

Both period assumption updates are reflected in the table above.

Brighthouse Financial, Inc.

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

Insurance (continued)

A reconciliation of the net LFPBs for nonparticipating traditional and limited-payment contracts and the additional insurance liabilities for universal life-type contracts with secondary guarantees reported in the preceding rollforward tables to LFPBs on the consolidated balance sheets was as follows at:

September 30,

(In millions)

9 unchanged sentences

(2) Participating whole life insurance uses an interest assumption based on the non-forfeiture interest rate, ranging from 3.5 % to 4.5 %, and mortality rates guaranteed in calculating the cash surrender values described in such contracts, and also includes a liability for terminal dividends.

Participating whole life insurance represented 3 % of the Company’s life insurance in-force at both September 30, 2023 and 2022, and 40 % and 41 % of gross traditional life insurance premiums for the nine months ended September 30, 2023 and 2022, respectively.

Brighthouse Financial, Inc.

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

Insurance (continued)

Information regarding LFPBs for non-participating traditional and limited-payment contracts was as follows:

Years Ended December 31,

(Dollars in millions)

Present value of expected net premiums:

Balance, beginning of year $ 3,325 $ — $ — $ 3,448 $ — $ —

Beginning balance at original discount rate 3,051 — — 2,994 — —

Effect of model refinements 122 — — — — —

Effect of changes in cash flow assumptions 137 — — 70 — —

Effect of actual variances from expected experience 119 — — 153 — —

Adjusted beginning of year balance 3,429 — — 3,217 — —

Issuances 93 — — 113 — —

Interest accrual 116 — — 111 — —

Net premiums collected ( 426 ) — — ( 390 ) — —

Ending balance at original discount rate 3,212 — — 3,051 — —

Effect of changes in discount rate assumptions ( 341 ) — — 274 — —

Balance, end of year $ 2,871 $ — $ — $ 3,325 $ — $ —

Present value of expected future policy benefits:

Balance, beginning of year $ 6,426 $ 4,333 $ 10,171 $ 6,852 $ 4,691 $ 11,301

Beginning balance at original discount rate 5,820 3,865 8,165 5,862 3,938 8,531

Effect of model refinements 135 — ( 278 ) — — —

Effect of changes in cash flow assumptions 157 56 ( 157 ) 70 ( 41 ) ( 41 )

Effect of actual variances from expected experience 155 ( 22 ) ( 23 ) 153 ( 6 ) ( 16 )

Adjusted beginning of year balance 6,267 3,899 7,707 6,085 3,891 8,474

Issuances 101 224 — 128 198 —

Interest accrual 222 146 327 222 150 359

Benefit payments ( 668 ) ( 372 ) ( 624 ) ( 615 ) ( 374 ) ( 668 )

Ending balance at original discount rate 5,922 3,897 7,410 5,820 3,865 8,165

Effect of changes in discount rate assumptions ( 643 ) ( 385 ) ( 617 ) 606 468 2,006

Balance, end of year $ 5,279 $ 3,512 $ 6,793 $ 6,426 $ 4,333 $ 10,171

Net liability for future policy benefits, end of year $ 2,408 $ 3,512 $ 6,793 $ 3,101 $ 4,333 $ 10,171

Reinsurance recoverable, end of year 45 24 68 64 27 93

Net liability for future policy benefits, after reinsurance recoverable $ 2,363 $ 3,488 $ 6,725 $ 3,037 $ 4,306 $ 10,078

Participating whole life insurance represented 3 % of the Company’s life insurance in-force at both March 31, 2024 and 2023, and 41 % and 39 % of gross traditional life insurance premiums for the three months ended March 31, 2024 and 2023, respectively.

Brighthouse Financial, Inc.

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

Insurance (continued)

Insurance Liabilities (continued)

Policyholder Account Balances

2 unchanged sentences

(Dollars in millions)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance, beginning of period $ 2,550 $ 4,307 $ 41,627 $ 14,672 $ 5,052 $ 653

8 unchanged sentences

Weighted-average crediting rate (2) 0.98 % 0.66 % 0.41 % 0.94 % 0.80 % 1.06 %

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Balance, beginning of period $ 2,658 $ 4,908 $ 33,896 $ 14,274 $ 5,307 $ 641

12 unchanged sentences

A reconciliation of policyholder account balances reported in the preceding rollforward table to the liability for policyholder account balances on the consolidated balance sheets was as follows at:

September 30,

(In millions)

5 unchanged sentences

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

Insurance (continued)

Insurance Liabilities (continued)

The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums was as follows at:

1 unchanged sentence

(In millions)

September 30, 2023

March 31, 2024

Annuities (1):

31 unchanged sentences

(3) Amounts are gross of policy loans.

See Note 5 for information regarding net amount at risk and cash surrender values .

Brighthouse Financial, Inc.

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

Insurance (continued)

Market Risk Benefits

Information regarding MRB assets and liabilities associated with variable annuities was as follows:

Nine Months Ended

September 30, Years Ended

2023 2022 2022 2021

Three Months Ended March 31,

(Dollars in millions)

2 unchanged sentences

Decrements ( 30 ) ( 28 )

Effect of changes in future expected assumptions 259 210 210 41

Effect of actual different from expected experience — 122

9 unchanged sentences

Balance, end of period, net of reinsurance (1) $ 8,117 $ 10,215

Weighted-average attained age of contract holder 72.6 years 71.6 years 71.8 years 71.1 years

Weighted-average attained age of contract holder 73.2 years 72.1 years

_______________

(1) Amounts represent the sum of MRB assets and MRB liabilities presented on the consolidated balance sheets at September 30, 2023 and 2022, with the exception of ($ 7 ) million and $ 2 million, respectively, of index-linked annuities not included in this table, and at December 31, 2022 and 2021, with the exception of $ 3 million and $ 5 million, respectively, of index-linked annuities not included in this table.

Market conditions, including, but not limited to, changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital markets inputs, as well as changes in nonperformance risk, may result in significant fluctuations in the estimated fair value of the guarantees.

As part of the AAR in 2023 and 2022, the Company updated assumptions regarding policyholder behavior, mortality, separate account fund allocations and volatility, which are reflected in the table above.

Brighthouse Financial, Inc.

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

Insurance (continued)

(1) Amounts represent the sum of MRB assets and MRB liabilities presented on the consolidated balance sheets at March 31, 2024 and 2023, with the exception of $ 8 million and $ 4 million, respectively, of index-linked annuities not included in this table.

Separate Accounts

Information regarding separate account liabilities was as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

Variable Annuities Universal Life Insurance Company-Owned Life Insurance Variable Annuities Universal Life Insurance Company-Owned Life Insurance

9 unchanged sentences

Balance, end of period $ 81,792 $ 6,259 $ 2,054 $ 79,770 $ 5,483 $ 2,019

Brighthouse Financial, Inc.

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

Separate Accounts (continued)

A reconciliation of separate account liabilities reported in the preceding rollforward table to the separate account liabilities balance on the consolidated balance sheets was as follows at:

September 30,

(In millions)

4 unchanged sentences

The aggregate estimated fair value of assets, by major investment asset category, supporting separate accounts was as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(In millions)

5 unchanged sentences

Total aggregate estimated fair value of assets $ 90,332 $ 88,271

Brighthouse Financial, Inc.

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

Insurance (continued)

Net Amount at Risk and Cash Surrender Values

2 unchanged sentences

(In millions)

September 30, 2023

March 31, 2024

Account balances reported in the preceding rollforward tables:

4 unchanged sentences

Cash surrender value $ 8,245 $ 85,533 $ 41,958 $ 14,260 $ 4,455 $ 2,381

September 30, 2022

March 31, 2023

Account balances reported in the preceding rollforward tables:

10 unchanged sentences

Deferred Policy Acquisition Costs and Value of Business Acquired

Information regarding DAC and VOBA was as follows:

Information regarding deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”) was as follows:

Variable Annuities Fixed Rate Annuities Index-linked Annuities Term and Whole Life Insurance Universal Life Insurance

(In millions)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance, beginning of period $ 2,301 $ 110 $ 1,331 $ 354 $ 360

7 unchanged sentences

Balance, end of period $ 2,554 $ 171 $ 1,363 $ 347 $ 394

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Balance, beginning of period $ 2,508 $ 107 $ 1,213 $ 405 $ 392

7 unchanged sentences

Balance, end of period $ 2,789 $ 172 $ 1,239 $ 397 $ 430

Brighthouse Financial, Inc.

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

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued)

Variable Annuities Fixed Rate Annuities Index-linked Annuities Term and Whole Life Insurance Universal Life Insurance

(In millions)

Adjusted balance at January 1, 2021 (1) $ 2,912 $ 64 $ 886 $ 527 $ 469

Capitalization 90 37 354 ( 3 ) 16

Amortization ( 284 ) ( 12 ) ( 159 ) ( 62 ) ( 54 )

Balance at December 31, 2021 2,718 89 1,081 462 431

Capitalization 55 30 330 ( 1 ) 11

Amortization ( 265 ) ( 12 ) ( 198 ) ( 56 ) ( 50 )

Balance at December 31, 2022 $ 2,508 $ 107 $ 1,213 $ 405 $ 392

Adjusted balance at January 1, 2021 (1) $ 428 $ 76 $ — $ 8 $ 61

Amortization ( 51 ) ( 6 ) — ( 2 ) ( 7 )

Balance at December 31, 2021 377 70 — 6 54

Amortization ( 36 ) ( 5 ) — ( 1 ) ( 6 )

Balance at December 31, 2022 341 65 — 5 48

Total DAC and VOBA:

Balance at December 31, 2022 $ 2,849 $ 172 $ 1,213 $ 410 $ 440

Balance at December 31, 2021 $ 3,095 $ 159 $ 1,081 $ 468 $ 485

_______________

(1) Includes an adjustment to eliminate balances included in AOCI related to the adoption of ASU 2018-12 (see Note 2).

Deferred Sales Inducements

Information regarding DSI, included in other assets, was as follows:

Nine Months Ended September 30,

Information regarding deferred sales inducements, included in other assets, was as follows:

Three Months Ended March 31,

Variable Annuities Fixed Rate Annuities Variable Annuities Fixed Rate Annuities

3 unchanged sentences

Balance, end of period $ 214 $ 8 $ 238 $ 9

Brighthouse Financial, Inc.

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

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued)

Unearned Revenue

Information regarding unearned revenue, included in other policy-related balances, was as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

Universal Life Insurance ULSG Variable Annuities Universal Life Insurance ULSG Variable Annuities

4 unchanged sentences

Balance, end of period $ 356 $ 640 $ 65 $ 356 $ 521 $ 73

Brighthouse Financial, Inc.

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

See Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2023 Annual Report for a description of the Company’s accounting policies for investments and the fair value hierarchy for investments and the related valuation methodologies.

2 unchanged sentences

Fixed maturity securities by sector were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cost Allowance for Credit Losses Gross Unrealized Estimated

12 unchanged sentences

Total fixed maturity securities $ 87,555 $ 27 $ 724 $ 7,778 $ 80,474 $ 87,131 $ 21 $ 1,037 $ 7,156 $ 80,991

The Company held non-income producing fixed maturity securities with an estimated fair value of $ 12 million at September 30, 2023.

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

The Company held non-income producing fixed maturity securities with an estimated fair value of $ 51 million and $ 52 million at March 31, 2024 and December 31, 2023, respectively.

Brighthouse Financial, Inc.

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

Investments (continued)

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at September 30, 2023:

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at March 31, 2024:

Year or Less Due After One

12 unchanged sentences

Structured Securities are shown separately, as they are not due at a single maturity.

Brighthouse Financial, Inc.

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

Investments (continued)

Continuous Gross Unrealized Losses for Fixed Maturity Securities by Sector

The estimated fair value and gross unrealized losses of fixed maturity securities in an unrealized loss position, by sector and by length of time that the securities have been in a continuous unrealized loss position, were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

13 unchanged sentences

Total number of securities in an unrealized loss position 1,825 6,712 1,347 7,038

Brighthouse Financial, Inc.

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

Investments (continued)

Allowance for Credit Losses for Fixed Maturity Securities

18 unchanged sentences

An allowance for credit losses is not estimated on an accrued interest receivable, rather receivable balances 90-days past due are deemed uncollectible and are written off with a corresponding reduction to net investment income.

The accrued interest receivable on fixed maturity securities totaled $ 689 million and $ 602 million at September 30, 2023 and December 31, 2022, respectively, and is included in accrued investment income.

Brighthouse Financial, Inc.

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

Investments (continued)

The accrued interest receivable on fixed maturity securities totaled $ 709 million and $ 655 million at March 31, 2024 and December 31, 2023, respectively, and is included in accrued investment income.

Fixed maturity securities are also evaluated to determine if they qualify as purchased financial assets with credit deterioration (“PCD”).

6 unchanged sentences

Current Period Evaluation

Based on the Company’s current evaluation of its fixed maturity securities in an unrealized loss position and the current intent or requirement to sell, the Company recorded an allowance for credit losses of $ 22 million, relating to 24 securities at September 30, 2023.

Based on the Company’s current evaluation of its fixed maturity securities in an unrealized loss position and the current intent or requirement to sell, the Company recorded an allowance for credit losses of $ 27 million, relating to 23 securities at March 31, 2024.

Management concluded that for all other fixed maturity securities in an unrealized loss position, the unrealized loss was not due to issuer-specific credit-related factors and as a result was recognized in OCI.

1 unchanged sentence

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

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

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

Corporate RMBS Foreign Corporate CMBS Total

(In millions)

Nine Months Ended September 30, 2023

Balance, beginning of period $ 1 $ 2 $ 1 $ 3 $ 7

Allowance on securities where credit losses were not previously recorded 14 4 — — 18

Reductions for securities sold ( 1 ) — — ( 1 ) ( 2 )

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

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

Balance, end of period $ 14 $ 6 $ — $ 2 $ 22

Nine Months Ended September 30, 2022

Balance, beginning of period $ 2 $ — $ 7 $ 2 $ 11

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

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

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

Write-offs charged against allowance (1) — — ( 7 ) — ( 7 )

Balance, end of period $ 1 $ 2 $ — $ 2 $ 5

_______________

(1) The Company recorded total write-offs of $ 8 million and $ 10 million for the nine months ended September 30, 2023 and 2022, respectively.

Brighthouse Financial, Inc.

1 unchanged sentence

Investments (continued)

Allowance for Credit Losses for Fixed Maturity Securities

The allowance for credit losses for fixed maturity securities was $ 27 million and $ 21 million at March 31, 2024 and December 31, 2023, respectively.

For both the three months ended March 31, 2024 and 2023, the change in the allowance for fixed maturity securities by sector was not significant.

The Company did no t record total write-offs for the three months ended March 31, 2024.

The Company recorded total write-offs of $ 7 million for the three months ended March 31, 2023.

Mortgage Loans

1 unchanged sentence

Mortgage loans are summarized as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Total Carrying

7 unchanged sentences

_______________

(1) Purchases of mortgage loans from third parties were $ 224 million and $ 255 million for the three months and nine months ended September 30, 2023, respectively, and $ 387 million and $ 1.6 billion for the three months and nine months ended September 30, 2022, respectively, and were primarily comprised of residential mortgage loans.

(1) Purchases of mortgage loans from third parties were $ 161 million and $ 32 million for the three months ended March 31, 2024 and 2023, respectively, and were primarily comprised of residential mortgage loans.

Allowance for Credit Losses for Mortgage Loans

4 unchanged sentences

An allowance for credit losses is generally not estimated on an accrued interest receivable, rather when a loan is placed in nonaccrual status the associated accrued interest receivable balance is written off with a corresponding reduction to net investment income.

The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $ 118 million and $ 115 million at September 30, 2023 and December 31, 2022, respectively.

The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $ 118 million and $ 123 million at March 31, 2024 and December 31, 2023, respectively.

The allowance for credit losses is estimated using relevant available information, from internal and external sources, relating to past events, current conditions, and a reasonable and supportable forecast.

23 unchanged sentences

(In millions)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance, beginning of period $ 69 $ 19 $ 49 $ 137

Current period provision 9 — ( 4 ) 5

Charge-offs, net of recoveries ( 4 ) ( 1 ) — ( 5 )

Balance, end of period $ 78 $ 19 $ 45 $ 142

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Balance, beginning of period $ 49 $ 15 $ 55 $ 119

Current period provision 15 ( 1 ) 3 17

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

Balance, end of period $ 64 $ 14 $ 58 $ 136

6 unchanged sentences

(In millions)

September 30, 2023

March 31, 2024

Commercial mortgage loans

9 unchanged sentences

65% to 75% — 1 127 108 5 43 284

Greater than 80% — — — — — — —

Total agricultural mortgage loans 128 208 711 1,228 450 1,814 4,539

18 unchanged sentences

65% to 75% 1 127 108 6 30 17 289

Greater than 80% — — — — 1 — 1

Total agricultural mortgage loans 203 698 1,240 460 535 1,309 4,445

14 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Amortized Cost % of

10 unchanged sentences

Past Due Mortgage Loans by Portfolio Segment

The Company has a high-quality, well-performing mortgage loan portfolio, with over 99 % of all mortgage loans classified as performing at both September 30, 2023 and December 31, 2022.

The Company has a high-quality, well-performing mortgage loan portfolio, with over 99 % of all mortgage loans classified as performing at both March 31, 2024 and December 31, 2023.

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

2 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Commercial Agricultural Residential Total Commercial Agricultural Residential Total

14 unchanged sentences

(In millions)

September 30, 2023

March 31, 2024

$ 31 $ — $ 101 $ 132

2 unchanged sentences

_______________

(1) The Company had no mortgage loans in nonaccrual status for which there was no related allowance for credit losses at both September 30, 2023 and December 31, 2022.

Current period investment income on mortgage loans in nonaccrual status was $ 1 million for both the nine months ended September 30, 2023 and 2022 .

(1) The Company had no mortgage loans in nonaccrual status for which there was no related allowance for credit losses at both March 31, 2024 and December 31, 2023.

Current period investment income on mortgage loans in nonaccrual status was less than $ 1 million for both the three months ended March 31, 2024 and 2023.

Modified Mortgage Loans by Portfolio Segment

Under certain circumstances, modifications are granted to nonperforming mortgage loans.

Generally, the types of concessions may include interest rate reduction, term extension, principal forgiveness, or a combination of all three.

The Company did not have a significant amount of mortgage loans modified during both the three months ended March 31, 2024 and 2023.

Other Invested Assets

3 unchanged sentences

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities and the effect on future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(In millions)

11 unchanged sentences

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

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

(In millions)

4 unchanged sentences

Deferred income tax benefit (expense) 154

Balance at September 30, 2023 $ ( 7,210 )

Balance at March 31, 2024 $ ( 4,620 )

Change in net unrealized investment gains (losses) $ ( 580 )

1 unchanged sentence

There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S.

government and its agencies, at both September 30, 2023 and December 31, 2022.

government and its agencies, at both March 31, 2024 and December 31, 2023.

Securities Lending

Elements of the securities lending program are presented below at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(In millions)

8 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

11 unchanged sentences

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

The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2023 was $ 699 million, primarily comprised of U.S.

The estimated fair value of the securities on loan related to the cash collateral on open at March 31, 2024 was $ 568 million, primarily comprised of U.S.

government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement.

1 unchanged sentence

government and agency securities, U.S.

and foreign corporate securities, non-agency RMBS and CMBS) with 58 % invested in U.S.

government and agency securities, agency RMBS and cash and cash equivalents at September 30, 2023.

and foreign corporate securities, non-agency RMBS and CMBS) with 54 % invested in agency RMBS, U.S.

government and agency securities and cash and cash equivalents at March 31, 2024.

If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.

1 unchanged sentence

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(In millions)

4 unchanged sentences

_______________

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $ 94 million and $ 21 million of the assets on deposit represents restricted cash and cash equivalents at September 30, 2023 and December 31, 2022, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which $ 228 million and $ 240 million of the assets held in trust balance represents restricted cash and cash equivalents at September 30, 2023 and December 31, 2022, respectively.

(1) The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which $ 37 million and $ 102 million of the assets on deposit represents restricted cash and cash equivalents at March 31, 2024 and December 31, 2023, respectively.

(2) The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which $ 99 million and $ 120 million of the assets held in trust balance represents restricted cash and cash equivalents at March 31, 2024 and December 31, 2023, respectively.

(3) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 4 of the Notes to the Consolidated Financial Statements included in the 2023 Annual Report) and derivative transactions (see Note 8).

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

In addition, the Company’s investment in FHLB common stock, which is considered restricted until redeemed by the issuer, was $ 247 million and $ 201 million at redemption value at September 30, 2023 and December 31, 2022, respectively.

In addition, the Company’s investment in FHLB common stock, which is considered restricted until redeemed by the issuer, was $ 245 million at redemption value at both March 31, 2024 and December 31, 2023 .

Variable Interest Entities

7 unchanged sentences

Investments (continued)

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either September 30, 2023 or December 31, 2022.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either March 31, 2024 or December 31, 2023.

The carrying amount and maximum exposure to loss related to the VIEs for which the Company has concluded that it holds a variable interest, but is not the primary beneficiary, were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Amount Maximum

28 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

6 unchanged sentences

Cash, cash equivalents and short-term investments 61 50

Other 24 20 66 52

Total investment income 1,340 1,150

2 unchanged sentences

_______________

(1) Includes net investment income pertaining to other limited partnership interests of $ 64 million and $ 156 million for the three months and nine months ended September 30, 2023, respectively, and ($ 127 ) million and $ 178 million for the three months and nine months ended September 30, 2022, respectively.

(1) Includes net investment income pertaining to other limited partnership interests of $ 93 million and ($ 1 ) million for the three months ended March 31, 2024 and 2023, respectively.

Net Investment Gains (Losses)

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

2 unchanged sentences

Mortgage loans ( 5 ) ( 17 )

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

Other ( 1 ) ( 3 ) ( 2 ) ( 3 )

Total net investment gains (losses) $ ( 42 ) $ ( 96 )

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($ 2 ) million for both the three months and nine months ended September 30, 2023, and ($ 1 ) million and ($ 22 ) million for the three months and nine months ended September 30, 2022, respectively.

Gains (losses) from foreign currency transactions included within net investment gains (losses) were not significant for both the three months ended March 31, 2024 and 2023.

Brighthouse Financial, Inc.

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

17 unchanged sentences

For detailed information on these contracts and the related strategies, see Note 7 of the Notes to the Consolidated Financial Statements included in the 2023 Annual Report.

In the first quarter of 2024, the Company entered into interest rate swaps to manage the interest rate risk in funding agreement liabilities.

These interest rate swaps are qualifying hedges.

Brighthouse Financial, Inc.

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Primary Underlying Risk Exposure Gross

5 unchanged sentences

Cash flow hedges:

Interest rate forwards Interest rate $ — $ — $ — $ 60 $ — $ 12

Interest rate swaps

Interest rate $ 500 $ 9 $ — $ — $ — $ —

Foreign currency swaps Foreign currency exchange rate 3,923 377 31 3,939 348 45

15 unchanged sentences

Total $ 181,765 $ 3,845 $ 5,373 $ 173,236 $ 3,714 $ 5,088

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both September 30, 2023 and December 31, 2022.

The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and generally do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedging rules;

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both March 31, 2024 and December 31, 2023.

The Company’s use of derivatives includes (i) derivatives that serve as hedges of the Company’s exposure to various risks and generally do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedging rules;

(ii) derivatives that economically hedge insurance liabilities and generally do not qualify for hedge accounting because they do not meet the criteria of being “highly effective” as outlined in Accounting Standards Codification 815 — Derivatives and Hedging;

5 unchanged sentences

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

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

(In millions)

Three Months Ended September 30, 2023

Derivatives Designated as Hedging Instruments:

Cash flow hedges:

Interest rate $ — $ — $ 1 $ ( 2 )

Foreign currency exchange rate 1 ( 1 ) 13 ( 31 )

Total cash flow hedges 1 ( 1 ) 14 ( 33 )

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

Interest rate ( 1,481 ) — — —

Foreign currency exchange rate 21 ( 16 ) — —

Credit 3 — — —

Equity market ( 280 ) — — —

Embedded 913 — — —

Total non-qualifying hedges ( 824 ) ( 16 ) — —

Total $ ( 823 ) $ ( 17 ) $ 14 $ ( 33 )

Three Months Ended September 30, 2022

Derivatives Designated as Hedging Instruments:

Cash flow hedges:

Interest rate $ — $ — $ 1 $ ( 8 )

Foreign currency exchange rate 8 ( 6 ) 17 341

Total cash flow hedges 8 ( 6 ) 18 333

Derivatives Not Designated or Not Qualifying as Hedging Instruments:

Interest rate ( 1,233 ) — — —

Foreign currency exchange rate 99 ( 23 ) — —

Credit 5 — — —

Equity market 40 — — —

Embedded 518 — — —

Total non-qualifying hedges ( 571 ) ( 23 ) — —

Total $ ( 563 ) $ ( 29 ) $ 18 $ 333

Brighthouse Financial, Inc.

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

Derivatives (continued)

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

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

(In millions)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Derivatives Designated as Hedging Instruments:

11 unchanged sentences

Total $ ( 1,917 ) $ ( 4 ) $ 13 $ 2 $ 53

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Derivatives Designated as Hedging Instruments:

11 unchanged sentences

Total $ ( 585 ) $ 10 $ 15 $ — $ ( 40 )

At September 30, 2023, the Company held no qualified derivatives hedging exposure to future cash flows for forecasted asset purchases.

At December 31, 2022, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions was less than one year .

At September 30, 2023 and December 31, 2022, the balance in AOCI associated with cash flow hedges was $ 509 million and $ 638 million, respectively.

At March 31, 2024 and December 31, 2023, the Company held no qualified derivatives hedging exposure to future cash flows for forecasted asset purchases.

At March 31, 2024 and December 31, 2023, the balance in AOCI associated with cash flow hedges was $ 401 million and $ 351 million, respectively.

Credit Derivatives

5 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Rating Agency Designation of Referenced Credit Obligations (1) Estimated

32 unchanged sentences

(In millions)

September 30, 2023

March 31, 2024

Derivative assets $ 3,605 $ ( 3,308 ) $ ( 275 ) $ 22 $ ( 16 ) $ 6

14 unchanged sentences

The aggregate estimated fair values of derivatives in a net liability position containing such credit-contingent provisions and the aggregate estimated fair value of assets posted as collateral for such instruments were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(In millions)

13 unchanged sentences

Investments that do not have a readily determinable fair value and are measured at net asset value (or equivalent) as a practical expedient to estimated fair value are excluded from the fair value hierarchy.

September 30, 2023

March 31, 2024

Fair Value Hierarchy Total Estimated

19 unchanged sentences

Total derivative assets — 3,834 11 3,845

Embedded derivatives on index-linked annuities (2)

Market risk benefit assets — — 839 839

35 unchanged sentences

Total derivative assets — 3,696 18 3,714

Embedded derivatives on index-linked annuities (2)

Market risk benefit assets — — 656 656

13 unchanged sentences

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

(2) Embedded derivative assets on index-linked annuities are reported in premiums and other receivables.

Embedded derivative liabilities on index-linked annuities are reported in policyholder account balances .

18 unchanged sentences

Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value.

The Company did not have significant price adjustments during the nine months ended September 30, 2023.

The Company did not have significant price adjustments during the three months ended March 31, 2024.

Determination of Fair Value

80 unchanged sentences

Certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows at:

September 30, 2023 December 31, 2022 Impact of

March 31, 2024 December 31, 2023 Impact of

Increase in Input

24 unchanged sentences

Fair Value (continued)

(3) The utilization rate assumption for variable annuity guarantees estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year.

(3) The utilization rate assumption for variable annuity guarantees estimates the percentage of contract holders with a guaranteed minimum income benefit (“GMIB”) or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year.

The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money.

4 unchanged sentences

For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

For variable annuity GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees.

For variable annuity GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

For variable annuity guaranteed minimum withdrawal benefits, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees.

For variable annuity guaranteed minimum accumulation benefits and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(5) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available.

15 unchanged sentences

Government Equity

Securities Short-term

Investments Net

Derivatives (2) Embedded Derivatives on Index-Linked Annuities

(In millions)

Three Months Ended September 30, 2023

Balance, beginning of period

$ 1,931 $ 371 $ 38 $ 25 $ — $ 27 $ ( 6,886 )

Total realized/unrealized gains (losses) included in net income (loss) (3) (4)

( 9 ) — — — — 2 913

Total realized/unrealized gains (losses) included in AOCI

( 19 ) ( 2 ) ( 1 ) — — ( 3 ) —

Purchases (5)

32 17 — — — — —

( 56 ) ( 11 ) ( 1 ) — — — —

Issuances (5)

— — — — — — —

Settlements (5)

— — — — — — ( 58 )

Transfers into Level 3 (6)

45 12 — — — — —

Transfers out of Level 3 (6)

( 784 ) ( 42 ) ( 3 ) — — — —

Balance, end of period $ 1,140 $ 345 $ 33 $ 25 $ — $ 26 $ ( 6,031 )

Three Months Ended September 30, 2022

Balance, beginning of period

$ 1,710 $ 345 $ 40 $ 27 $ — $ 38 $ ( 2,831 )

Total realized/unrealized gains (losses) included in net income (loss) (3) (4)

— — — 1 — 3 518

Total realized/unrealized gains (losses) included in AOCI

( 108 ) ( 11 ) ( 4 ) — — 21 —

Purchases (5)

278 125 — — — — —

( 22 ) ( 1 ) ( 1 ) — — — —

Issuances (5)

— — — — — — —

Settlements (5)

— — — — — — ( 29 )

Transfers into Level 3 (6)

16 19 — — — — —

Transfers out of Level 3 (6)

( 319 ) ( 138 ) — — — — —

Balance, end of period $ 1,555 $ 339 $ 35 $ 28 $ — $ 62 $ ( 2,342 )

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2023 (7)

$ ( 9 ) $ — $ — $ 1 $ — $ 3 $ 785

Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2023 (7)

$ ( 25 ) $ ( 3 ) $ ( 1 ) $ — $ — $ ( 3 ) $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2022 (7)

$ — $ — $ — $ 1 $ — $ 3 $ 461

Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2022 (7)

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

Brighthouse Financial, Inc.

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

Fair Value (continued)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Fixed Maturity Securities

Corporate (1) Structured Securities Foreign

Government Equity

Securities Short-term

Investments Net

Securities Net

Derivatives (2) Embedded Derivatives on Index-Linked Annuities

(In millions)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance, beginning of period

8 unchanged sentences

Issuances (5)

— — — — — — —

Settlements (5)

1 unchanged sentence

Transfers into Level 3 (6)

101 10 — — — — —

Transfers out of Level 3 (6)

1 unchanged sentence

Balance, end of period $ 1,267 $ 482 $ 21 $ 25 $ 11 $ ( 9,941 )

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Balance, beginning of period

8 unchanged sentences

Issuances (5)

— — — — — — —

Settlements (5)

1 unchanged sentence

Transfers into Level 3 (6)

31 25 19 — — — —

Transfers out of Level 3 (6)

1 unchanged sentence

Balance, end of period $ 1,936 $ 350 $ 39 $ 25 $ 33 $ ( 5,164 )

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2023 (7)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2024 (7)

$ ( 3 ) $ — $ — $ — $ ( 3 ) $ ( 2,040 )

Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2023 (7)

Changes in unrealized gains (losses) included in OCI for the instruments still held as of March 31, 2024 (7)

$ ( 19 ) $ ( 2 ) $ — $ — $ — $ —

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2022 (7)

Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2023 (7)

$ 1 $ ( 1 ) $ — $ ( 2 ) $ — $ ( 1,166 )

Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2022 (7)

Changes in unrealized gains (losses) included in OCI for the instruments still held as of March 31, 2023 (7)

$ 23 $ 1 $ 1 $ — $ ( 1 ) $ —

7 unchanged sentences

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

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

Brighthouse Financial, Inc.

1 unchanged sentence

Fair Value (continued)

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

(5) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward.

11 unchanged sentences

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:

September 30, 2023

March 31, 2024

Fair Value Hierarchy

24 unchanged sentences

Separate account liabilities $ 1,150 $ — $ 1,150 $ — $ 1,150

Long-term Debt

Repurchase Facility

In July 2023, Brighthouse Life Insurance Company entered into an additional secured committed repurchase facility (the “Repurchase Facility”) under which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $ 500 million for a term of up to two years , which is available to Brighthouse Life Insurance Company under certain market conditions.

Under the Repurchase Facility, Brighthouse Life Insurance Company may sell certain eligible securities at a purchase price based on the market value of the securities less an applicable margin based on the types of securities sold, with a concurrent agreement to repurchase such securities at a predetermined future date (up to three months) and at a price which represents the original purchase price plus interest.

At September 30, 2023, there were no borrowings under the Repurchase Facility.

Preferred Stock

Preferred stock shares authorized, issued and outstanding were as follows at both September 30, 2023 and December 31, 2022:

Preferred stock shares authorized, issued and outstanding were as follows at both March 31, 2024 and December 31, 2023:

Shares Authorized Shares Issued Shares Outstanding

9 unchanged sentences

Total 100,000,000 70,100 70,100

Brighthouse Financial, Inc.

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

Equity (continued)

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

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

2023 2022 2023 2022

Series Per Share Aggregate Per Share Aggregate Per Share Aggregate Per Share Aggregate

(In millions, except per share data) (In millions, except per share data)

Three Months Ended March 31,

Series Per Share Aggregate Per Share Aggregate

(In millions, except per share data)

A $ 412.50 $ 7 $ 412.50 $ 7

4 unchanged sentences

Common Stock Repurchase Program

During the nine months ended September 30, 2023 and 2022, BHF repurchased 3,968,138 and 8,194,191 shares, respectively, of its common stock through open market purchases pursuant to 10b5-1 plans for $ 190 million and $ 395 million, respectively.

At September 30, 2023, BHF had $ 104 million remaining under its common stock repurchase program.

Accumulated Other Comprehensive Income (Loss)

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

Three Months Ended September 30, 2023

Unrealized Investment Gains (Losses), Net of Related Offsets (1) Unrealized

Gains (Losses)

on Derivatives Changes in Nonperformance Risk on Market Risk Benefits Changes in Discount Rates on the Liability for Future Policy Benefits Other (2) Total

(In millions)

Balance at June 30, 2023 $ ( 5,689 ) $ 430 $ ( 1,475 ) $ 905 $ ( 52 ) $ ( 5,881 )

OCI before reclassifications ( 2,490 ) ( 33 ) 174 744 ( 8 ) ( 1,613 )

Deferred income tax benefit (expense) (3) 523 8 ( 37 ) ( 157 ) 2 339

AOCI before reclassifications, net of income tax ( 7,656 ) 405 ( 1,338 ) 1,492 ( 58 ) ( 7,155 )

Amounts reclassified from AOCI 55 ( 2 ) — — ( 2 ) 51

Deferred income tax benefit (expense) (3) ( 12 ) — — — — ( 12 )

Amounts reclassified from AOCI, net of income tax 43 ( 2 ) — — ( 2 ) 39

Balance at September 30, 2023

$ ( 7,613 ) $ 403 $ ( 1,338 ) $ 1,492 $ ( 60 ) $ ( 7,116 )

Three Months Ended September 30, 2022

Unrealized Investment Gains (Losses), Net of Related Offsets (1) Unrealized

Gains (Losses)

on Derivatives Changes in Nonperformance Risk on Market Risk Benefits Changes in Discount Rates on the Liability for Future Policy Benefits Other (2) Total

(In millions)

Balance at June 30, 2022 $ ( 3,727 ) $ 534 $ ( 1,350 ) $ 441 $ ( 74 ) $ ( 4,176 )

OCI before reclassifications ( 5,130 ) 333 130 1,045 ( 23 ) ( 3,645 )

Deferred income tax benefit (expense) (3) 1,209 ( 202 ) ( 27 ) ( 219 ) 5 766

AOCI before reclassifications, net of income tax ( 7,648 ) 665 ( 1,247 ) 1,267 ( 92 ) ( 7,055 )

Amounts reclassified from AOCI 60 ( 9 ) — — — 51

Deferred income tax benefit (expense) (3) ( 13 ) 2 — — — ( 11 )

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

Balance at September 30, 2022 $ ( 7,601 ) $ 658 $ ( 1,247 ) $ 1,267 $ ( 92 ) $ ( 7,015 )

During the three months ended March 31, 2024 and 2023, BHF repurchased 1,247,311 and 1,200,124 shares, respectively, of its common stock through open market purchases pursuant to 10b5-1 plans for $ 62 million for both periods.

At March 31, 2024, BHF had $ 731 million remaining under its common stock repurchase program.

Brighthouse Financial, Inc.

1 unchanged sentence

Equity (continued)

Nine Months Ended September 30, 2023

Accumulated Other Comprehensive Income (Loss)

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

Three Months Ended March 31, 2024

Unrealized Investment Gains (Losses), Net of Related Offsets (1) Unrealized

10 unchanged sentences

Amounts reclassified from AOCI, net of income tax 29 ( 2 ) — — 1 28

Balance at September 30, 2023

Balance at March 31, 2024

$ ( 4,937 ) $ 317 $ ( 1,711 ) $ 969 $ ( 51 ) $ ( 5,413 )

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Unrealized Investment Gains (Losses), Net of Related Offsets (1) Unrealized

10 unchanged sentences

Amounts reclassified from AOCI, net of income tax 48 — — — 2 50

Balance at September 30, 2022

Balance at March 31, 2023

$ ( 5,028 ) $ 472 $ ( 1,383 ) $ 706 $ ( 55 ) $ ( 5,288 )

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

6 unchanged sentences

Unrealized gains (losses) on derivatives - cash flow hedges:

Interest rate swaps — — ( 2 ) 4 Net derivative gains (losses)

Interest rate swaps 3 1 Net investment income

17 unchanged sentences

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

Other revenues consisted primarily of 12b-1 fees of $ 68 million and $ 201 million for the three months and nine months ended September 30, 2023, respectively, and $ 70 million and $ 226 million for the three months and nine months ended September 30, 2022, respectively, of which substantially all were reported in the Annuities segment.

Other revenues consisted primarily of 12b-1 fees of $ 67 million for both the three months ended March 31, 2024 and 2023, of which substantially all were reported in the Annuities segment.

Brighthouse Financial, Inc.

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

2 unchanged sentences

Transition services agreements 7 11

Establishment costs — 21 — 47

Premium and other taxes, licenses and fees 11 14

2 unchanged sentences

Interest expense on debt 38 38

Other 20 18 55 211

Total other expenses $ 507 $ 478

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions, except share and per share data)

6 unchanged sentences

Diluted $ ( 8.22 ) $ ( 7.72 )

For the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2022, weighted average shares used for calculating diluted earnings per common share excludes 187,371 of out-of-the-money stock options, as the inclusion of such shares would be antidilutive to the earnings per common share calculation due to the average share price for the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2022.

For the nine months ended September 30, 2023, basic loss per common share equaled diluted loss per common share.

For the three months ended March 31, 2023 and 2024, basic loss per common share equaled diluted loss per common share.

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

17 unchanged sentences

The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

It is possible that some matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated at September 30, 2023.

It is possible that some matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated at March 31, 2024.

Matters as to Which an Estimate Can Be Made

1 unchanged sentence

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

In addition to amounts accrued for probable and reasonably estimable losses, as of September 30, 2023, the Company estimates the aggregate range of reasonably possible losses to be up to approximately $ 10 million.

In addition to amounts accrued for probable and reasonably estimable losses, as of March 31, 2024, the Company estimates the aggregate range of reasonably possible losses to be up to approximately $ 10 million.

Matters as to Which an Estimate Cannot Be Made

57 unchanged sentences

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

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

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

As of September 30, 2023, the Company estimates the range of reasonably possible losses in excess of the amounts accrued for certain other loss contingencies to be from zero up to approximately $ 125 million, which are primarily associated with the reinsurance-related matters described above.

The Company’s tax-related matters have involved disputes with taxing authorities, ongoing audits, evaluation of filing positions and any potential assessments related thereto.

In the matters where the Company’s subsidiaries are acting as the reinsured or the reinsurer, such reinsurance matters have involved assertions by third parties primarily related to rates, fees or reinsured benefit calculations, and certain of such reinsurance matters have resulted in arbitration.

In March 2024, an arbitration panel ruled in favor of a reinsurer seeking a premium rate increase retroactive to September 2019 resulting in a $ 187 million loss, of which $ 167 million is reported in universal life and investment product-type policy fees and $ 20 million is reported in other expenses.

As of March 31, 2024, the Company estimates the range of reasonably possible losses in excess of the amounts accrued for certain other loss contingencies to be from zero up to approximately $ 75 million for the aforementioned tax matters.

The reduction in the estimated range of reasonably possible losses reflects the conclusion of the reinsurance arbitration described above.

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

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

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments.

The amounts of these mortgage loan commitments were $ 294 million and $ 247 million at September 30, 2023 and December 31, 2022, respectively.

The amounts of these mortgage loan commitments were $ 387 million and $ 377 million at March 31, 2024 and December 31, 2023, respectively.

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

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

The amounts of these unfunded commitments were $ 1.4 billion and $ 1.9 billion at September 30, 2023 and December 31, 2022, respectively.

The amounts of these unfunded commitments were $ 1.4 billion at both March 31, 2024 and December 31, 2023.

Brighthouse Financial, Inc.

11 unchanged sentences

Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.

The Company’s recorded liabilities were $ 1 million at both September 30, 2023 and December 31, 2022 for indemnities, guarantees and commitments.

The Company’s recorded liabilities were $ 1 million at both March 31, 2024 and December 31, 2023 for indemnities, guarantees and commitments.

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

What changed 10-Q

Item 1. Financial Statements