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Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-08 · 195 added, 448 removed, 883 unchanged (42% of the section changed)

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Securities and Exchange Commission (“SEC”) on February 22, 2024;

(iii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “First Quarter Form 10-Q”) filed with the SEC on May 9, 2023;

(iv) our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Second Quarter Form 10-Q” and, together with the First Quarter Form 10-Q, the “Quarterly Reports”) filed with the SEC on August 9, 2023;

and (v) our current reports on Form 8-K filed in 2023.

and (iii) our current reports on Form 8-K filed in 2024.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations, financial condition and cash flows of Brighthouse Financial for the periods indicated.

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This section also refers to certain other terms used to describe our insurance business and financial and operating metrics but is not intended to be exhaustive.

Our Results of Operations discussion and analysis presents a review for the three months and nine months ended September 30, 2023 and 2022 and period-over-period, as well as year-over-year, comparisons between these periods.

Certain amounts presented in prior periods within the following discussions of our financial results have been reclassified to conform with the current year presentation.

Our Results of Operations discussion and analysis presents a review for the three months ended March 31, 2024 and 2023 and period-over-period comparisons between these periods.

Executive Summary

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We are organized into three segments:

(i) Annuities, (ii) Life and (iii) Run-off, which consists of products that are no longer actively sold and are separately managed.

(i) Annuities, (ii) Life and (iii) Run-off, which consists primarily of products that are no longer actively sold and are separately managed.

In addition, we report certain of our results of operations in Corporate & Other.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

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Net income (loss) available to shareholders (1) $ (519) $ (525)

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends (1)

$ (110) $ 230

Provision for income tax expense (benefit) (12) 35

Adjusted earnings $ 326 $ 115 $ 792 $ 639

Adjusted earnings (loss) (1)

__________________

(1) We use the term “net income (loss) available to shareholders” to refer to “net income (loss) available to Brighthouse Financial, Inc.’s common shareholders” throughout the results of operations discussions.

For the three months ended September 30, 2023, we had net income available to shareholders of $453 million and adjusted earnings of $326 million compared to net income available to shareholders of $388 million and adjusted earnings of $115 million for the three months ended September 30, 2022.

Net income available to shareholders for the three months ended September 30, 2023 primarily reflects net favorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors and favorable pre-tax adjusted earnings.

These favorable impacts were partially offset by an unfavorable change in the estimated fair value of freestanding interest rate derivatives we use to hedge our universal life with secondary guarantees (“ULSG”) business resulting from increasing long-term interest rates and net investment losses on sales of fixed maturity securities.

For the nine months ended September 30, 2023, we had net loss available to shareholders of $272 million and adjusted earnings of $792 million compared to net income available to shareholders of $3.7 billion and adjusted earnings of $639 million for the nine months ended September 30, 2022.

Net loss available to shareholders for the nine months ended September 30, 2023 primarily reflects net unfavorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors, an unfavorable change in the estimated fair value of freestanding interest rate derivatives we use to hedge our ULSG business resulting from increasing long-term interest rates, and net investment losses on sales of fixed maturity securities and net investment losses on mortgage loans.

These unfavorable impacts were partially offset by favorable pre-tax adjusted earnings.

(1) We use the term “net income (loss) available to shareholders” to refer to “net income (loss) available to Brighthouse Financial, Inc.’s common shareholders” and “adjusted loss” to refer to negative adjusted earnings values throughout the results of operations discussions.

For the three months ended March 31, 2024, we had net loss available to shareholders of $519 million and an adjusted loss of $98 million compared to net loss available to shareholders of $525 million and adjusted earnings of $195 million for the three months ended March 31, 2023.

Net loss available to shareholders for the three months ended March 31, 2024 primarily reflects net unfavorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors, an unfavorable change in the estimated fair value of freestanding interest rate derivatives we use to hedge our universal life with secondary guarantees (“ULSG”) business resulting from increasing long-term interest rates, a pre-tax adjusted loss resulting from the conclusion of a reinsurance premium rate increase retroactive to September 2019 and the related impacts, and net investment losses on sales of fixed maturity securities.

See “— Non-GAAP and Other Financial Disclosures.” See “— Results of Operations” for a detailed discussion of our results.

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Where these trends or uncertainties are specific to a particular aspect of our business, we often include such a discussion under the relevant caption of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, as part of our broader analysis of that area of our business.

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties” included in our 2022 Annual Report, as amended or supplemented by our subsequent Quarterly Reports and herein, for a comprehensive discussion of some of the key general trends and uncertainties that have influenced the development of our business and our historical financial performance and that we believe will continue to influence our business and results of operations in the future.

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties” included in our 2023 Annual Report, as amended or supplemented herein, for a comprehensive discussion of some of the key general trends and uncertainties that have influenced the development of our business and our historical financial performance and that we believe will continue to influence our business and results of operations in the future.

Financial and Economic Environment

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Equity market performance can affect our profitability for variable annuities and other separate account products as a result of the effects it has on product demand, revenues, expenses, reserves and our risk management effectiveness.

The level of long-term interest rates and the shape of the yield curve can have a negative effect on the profitability for variable annuities and the demand for, and the profitability of, spread-based products such as fixed annuities, index-linked annuities and universal life insurance.

The level of long-term interest rates and the shape of the yield curve can have a negative effect on the profitability for variable annuities, as well as the demand for, and the profitability of, spread-based products such as fixed annuities, index-linked annuities and universal life insurance.

Low interest rates and risk premium, including credit spread, affect new money rates on invested assets and the cost of product guarantees.

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During inflationary periods, the value of fixed income investments falls which could increase realized and unrealized losses.

Interest rates have increased and may continue to increase due to central bank policy responses to combat inflation, which may positively impact our business in certain respects, but could also increase the risk of a recession or an equity market downturn and could negatively impact various portions of our business, including our investment portfolio.

equity market downturn and could negatively impact various portions of our business, including our investment portfolio.

Inflation also increases our expenses (including, among others, for labor and third-party services), potentially putting pressure on profitability if such costs cannot be passed through to policyholders in our product prices.

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Regulatory Developments

Our insurance subsidiaries and Brighthouse Reinsurance Company of Delaware (“BRCD”) are regulated primarily at the state level, with some products and services also subject to federal regulation.

Our insurance subsidiaries and Brighthouse Reinsurance Company of Delaware (“BRCD”) are primarily regulated at the state level, with some products and services also subject to federal regulation.

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

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See “Business — Regulation,” as well as “Risk Factors — Regulatory and Legal Risks” included in our 2023 Annual Report, as amended or supplemented by our subsequent quarterly reports under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties — Regulatory Developments.”

Department of Labor Fiduciary Advice Rule

A regulatory action by the Department of Labor (“DOL”) (the “Fiduciary Advice Rule”), which became effective on February 16, 2021, reinstated the text of the DOL’s 1975 investment advice regulation defining what constitutes fiduciary “investment advice” to Employee Retirement Income Security Act (“ERISA”) Plans and Individual Retirement Accounts (“IRA”) and provides guidance interpreting such regulation.

Under the Fiduciary Advice Rule, individuals or entities providing investment advice would be considered fiduciaries under ERISA or the Internal Revenue Code of 1986, as amended, as applicable, and would therefore be required to act solely in the interest of ERISA Plan participants or IRA beneficiaries, or risk exposure to fiduciary liability with respect to their advice.

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

On April 23, 2024, the DOL issued a final Fiduciary Advice Rule, which was originally proposed in October 2023, that updates the definition of an “investment advice fiduciary” under ERISA and amends related administrative Prohibited Transaction Exemptions (each, a “PTE”), including PTE 2020-02 (which allows fiduciaries to receive compensation in connection with providing investment advice, including advice with respect to roll overs, that would otherwise be prohibited as a result of their fiduciary relationship to the ERISA Plan or IRA) and PTE 84-24 (which, as amended by the final Fiduciary Advice Rule, is available exclusively to independent producer fiduciaries receiving reasonable compensation for products that are not considered securities in connection with providing investment advice, including advice with respect to roll overs, that would otherwise be prohibited as a result of their fiduciary relationship to an ERISA plan or IRA).

The Fiduciary Advice Rule broadens the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries to ERISA plans and IRA investors.

We are assessing the potential

impacts of the Fiduciary Advice Rule and cannot currently predict whether, or the extent to which, the Fiduciary Advice Rule may impact us, including with respect to sales of our products through our independent distribution partners, changes in our compliance requirements, product offerings or compensation practices, or increase our litigation risk, any of which could adversely affect our financial condition and results of operations.

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

We will continue to monitor developments regarding the new rule.

See “Business — Regulation — Standard of Conduct Regulation — Department of Labor Fiduciary Advice Rule” included in our 2023 Annual Report for additional information regarding the Fiduciary Advice Rule.

Summary of Critical Accounting Estimates

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Actual results could differ from these estimates.

In connection with the adoption of new guidance on long-duration contracts (Accounting Standards Update 2018-12, Financial Services-Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts (“LDTI”)), effective January 1, 2023, the Company updated its impacted critical accounting estimates.

The impacted critical accounting estimates are described in our First Quarter Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and in Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” in the 2022 Annual Report for a description of income taxes and the valuation of deferred tax assets, which remain unchanged following the adoption of LDTI.

The above critical accounting estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and Note 1 of the Notes to the Consolidated Financial Statements included in our 2023 Annual Report.

Non-GAAP and Other Financial Disclosures

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

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:

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Results of Operations

Annual Actuarial Review

We typically conduct our annual actuarial review (“AAR”) in the third quarter of each year.

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

Also, with respect to our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawals and maintenance expenses.

For our variable annuity business, we updated our annuitization, mortality, lapses and withdrawals, as well as separate account assumptions, including fund fees, allocations and volatility.

For term participating and non-participating whole life insurance, we updated assumptions regarding mortality and lapses.

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

Also, with respect to our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawals and maintenance expenses.

For our variable annuity business, we updated our fund allocations, mortality, lapses and withdrawals.

For term and non-participating whole life insurance, we updated assumptions regarding mortality and lapses.

The impact on income (loss) available to shareholders before provision for income tax was as follows:

Nine Months Ended

September 30,

(In millions)

Market risk benefits

$ (251) $ (210)

Included in pre-tax adjusted earnings:

Other annuity business 15 (69)

Life business (90) (20)

Run-off 119 162

Total included in pre-tax adjusted earnings 44 73

Total impact on income (loss) available to shareholders before provision for income tax $ (207) $ (137)

Consolidated Results for the Three Months and Nine Months Ended September 30, 2023 and 2022

Consolidated Results for the Three Months Ended March 31, 2024 and 2023

Unless otherwise noted, all amounts in the following discussions of our results of operations are stated before income tax except for adjusted earnings, which are presented net of income tax.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

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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

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Net income (loss) attributable to Brighthouse Financial, Inc.

479 413 (195) 3,743

Preferred stock dividends 26 26

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

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Market value adjustments 4 (8)

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

401 141 965 781

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Income (loss) available to shareholders before provision for income tax (642) (681)

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$ (519) $ (525)

Change in Market Risk Benefits.

The change in MRBs reflects changes in the projected value of annuity guaranteed benefits discounted at current risk-free rates, plus a nonperformance risk spread that is locked-in at policy issuance.

Net Derivative Gains (Losses).

We have derivative instruments for which changes in estimated fair value are recognized in net derivative gains (losses).

Freestanding Derivatives.

We have freestanding derivatives that economically hedge certain invested assets and insurance liabilities.

The majority of this hedging activity is focused in the following areas:

• use of a proprietary mix of derivative instruments to hedge variable annuity guaranteed benefit riders against adverse changes in capital markets;

• as part of the Company’s macro interest rate hedging program, the use of interest rate swaps, swaptions and interest rate forwards in connection with our ULSG business;

• use of interest rate swaps when we have duration mismatches where suitable assets with maturities similar to those of our long-dated liabilities are not readily available in the market and use of interest rate forwards hedging reinvestment risk from maturing assets with higher yields than currently available in the market that support long-dated liabilities;

• use of foreign currency swaps when we hold fixed maturity securities denominated in foreign currencies that are matching insurance liabilities denominated in U.S.

• use of equity index options to hedge index-linked annuity products against adverse changes in equity markets.

Embedded Derivatives.

The changes in liability values of our fixed index-linked annuity and Shield ® Level Annuity (“Shield”) products that result from changes in the underlying equity index are accounted for as embedded derivatives.

In addition, certain ceded reinsurance agreements in our Life and Run-off segments are written on a coinsurance with funds withheld basis.

The funds withheld component is accounted for as an embedded derivative with changes in the estimated fair value recognized in net income (loss) in the period in which they occur.

Market value adjustments .

See “— Non-GAAP and Other Financial Disclosures — Non-GAAP Financial Disclosures — Adjusted Earnings.”

Pre-tax Adjusted Earnings.

See “— Non-GAAP and Other Financial Disclosures — Non-GAAP Financial Disclosures — Adjusted Earnings.”

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Income available to shareholders before provision for income tax was $562 million ($453 million, net of income tax), an increase of $77 million ($65 million, net of income tax) from income available to shareholders before provision for income tax of $485 million ($388 million, net of income tax) in the prior period.

The increase in income before provision for income tax was driven by higher pre-tax adjusted earnings, as discussed in greater detail below.

The increase in income before provision for income taxes was partially offset by the following unfavorable items:

• losses from variable annuity guaranteed benefit riders, see “— Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months and Nine Months Ended September 30, 2023 and 2022”;

• the impact of long-term interest rates on interest rate derivatives used to manage interest rate exposure in our ULSG business, as the long-term interest rate increased more in the current period resulting in a loss of $500 million and increased less in the prior period resulting in a loss of $483 million.

The provision for income tax, expressed as a percentage of income (loss) before provision for income tax, resulted in an effective tax rate of 18% in the current period compared to 19% in the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction and tax credits.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Loss available to shareholders before provision for income tax was $381 million ($272 million, net of income tax), a decrease of $5.0 billion ($3.9 billion, net of income tax) from income available to shareholders before provision for income tax of $4.6 billion ($3.7 billion, net of income tax) in the prior period.

The decrease in income before provision for income tax was driven by losses from variable annuity guaranteed benefit riders, see “— Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months and Nine Months Ended September 30, 2023 and 2022.”

The decrease in income before provision for income tax was partially offset by the following favorable items:

• the impact of long-term interest rates on interest rate derivatives used to manage interest rate exposure in our ULSG business, as the long-term interest rate increased less in the current period resulting in a loss of $443 million and increased more in the prior period resulting in a loss of $1.7 billion;

• higher pre-tax adjusted earnings, as discussed in greater detail below.

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Loss available to shareholders before provision for income tax was $642 million ($519 million, net of income tax), a lower loss of $39 million ($6 million, net of income tax) from loss available to shareholders before provision for income tax of $681 million ($525 million, net of income tax) in the prior period.

The lower loss before provision for income tax was driven by the following favorable items:

• lower losses from variable annuity guaranteed benefit riders, see “— Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months Ended March 31, 2024 and 2023”;

• the impact of equity markets on equity options we use to hedge our non-variable annuity business, as equity markets increased more in the current period than the prior period;

• net investment gains (losses) reflecting lower net losses on sales of fixed maturity securities and lower net losses on mortgage loans due to a smaller increase in the allowance for credit losses.

The lower loss before provision for income tax was partially offset by the following unfavorable items:

• the impact of long-term interest rates on interest rate derivatives used to manage interest rate exposure in our ULSG business, as the long-term interest rate increased in the current period resulting in a loss of $212 million and decreased in the prior period resulting in a gain of $141 million;

• lower pre-tax adjusted earnings, as discussed in greater detail below.

The provision for income tax, expressed as a percentage of income (loss) before provision for income tax, resulted in an effective tax rate of 20% in the current period compared to 24% in the prior period.

The increase in the effective tax rate was driven by the decrease in income before provision for income tax as discussed above.

The decrease in the effective tax rate was driven by a lower loss before provision for income tax as discussed above.

Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction, tax credits and current period non-recurring items.

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The reconciliation of net income (loss) available to shareholders to adjusted earnings was as follows:

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Annuities Life Run-off Corporate & Other Total

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Market value adjustments — — 4 — 4

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

385 (46) (432) (17) (110)

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

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

Three Months Ended September 30, 2022

Annuities Life Run-off Corporate & Other Total

(In millions)

Net income (loss) available to shareholders $ 869 $ (29) $ (600) $ 148 $ 388

Provision for income tax expense (benefit) 96 (10) 114 (103) 97

Income (loss) available to shareholders before provision for income tax

965 (39) (486) 45 485

Net investment gains (losses) (26) (5) (27) 13 (45)

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

(239) 10 (459) 73 (615)

Change in market risk benefits 984 — — — 984

Market value adjustments — — 20 — 20

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Adjusted earnings (loss)

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

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

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

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2023

Annuities Life Run-off Corporate & Other Total

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Market value adjustments — — (8) — (8)

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

387 — (134) (23) 230

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

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

Nine Months Ended September 30, 2022

Annuities Life Run-off Corporate & Other Total

(In millions)

Net income (loss) available to shareholders $ 6,047 $ 43 $ (2,584) $ 159 $ 3,665

Provision for income tax expense (benefit) 325 14 794 (188) 945

Income (loss) available to shareholders before provision for income tax

6,372 57 (1,790) (29) 4,610

Net investment gains (losses) (105) (30) (63) 19 (179)

Net derivative gains (losses), excluding investment hedge adjustments of $ 38

2,774 12 (1,628) 135 1,293

Change in market risk benefits 2,625 — — — 2,625

Market value adjustments — — 90 — 90

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Adjusted earnings (loss)

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

Provision for income tax expense (benefit) 202 14 (40) (34) 142

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

Consolidated Results for the Three Months and Nine Months Ended September 30, 2023 and 2022 — Adjusted Earnings

Consolidated Results for the Three Months Ended March 31, 2024 and 2023 — Adjusted Earnings

The components of adjusted earnings were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

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Net income (loss) attributable to noncontrolling interests and preferred stock dividends

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

401 141 965 781

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Provision for income tax expense (benefit) (12) 35

Adjusted earnings $ 326 $ 115 $ 792 $ 639

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Adjusted earnings were $326 million in the current period, an increase of $211 million.

Key net favorable impacts were:

• higher net investment spread due to:

◦ higher returns on other limited partnerships;

◦ higher average invested assets resulting from positive net flows in the general account;

◦ higher investment yields on our fixed income portfolio, as proceeds from maturing investments and the growth in the investment portfolio were invested at higher yields than the portfolio average;

◦ higher returns from short-term investments;

◦ lower interest credited to policyholders due to changes made in the prior period in connection with the AAR along with current period actuarial modeling improvements, net of higher interest credited consistent with higher account balances;

partially offset by

◦ lower returns on real estate limited partnerships and limited liability companies (“LLC”);

• lower other expenses due to:

◦ higher systems conversion costs in the prior period;

◦ lower asset-based variable annuity expenses resulting from lower average separate account balances, a portion of which is offset in fee income.

Key unfavorable impacts were:

• lower fee income due to:

◦ a decline in the net cost of insurance fees driven by the aging in-force business in our Run-off segment;

◦ lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses;

Adjusted earnings (loss)

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Adjusted loss was $98 million in the current period, a decrease of $293 million.

Key net unfavorable impacts were:

• higher net costs associated with insurance-related activities due to:

◦ a net increase in liability balances resulting from year-over-year changes made in connection with the AAR in our Life, Run-off, and Annuities segments;

◦ an increase in liability balances in our Run-off segment resulting from a reinsurance premium rate increase associated with the conclusion of a reinsurance arbitration;

◦ a decrease in income annuity underwriting margins;

partially offset by

◦ lower paid claims, net of reinsurance, in our Run-off segment.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 17% in the current period compared to 15% in the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction and tax credits.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Adjusted earnings were $792 million in the current period, an increase of $153 million.

Key net favorable impacts were:

• lower other expenses due to:

◦ the settlement of a reinsurance-related matter in the prior period;

◦ lower asset-based variable annuity expenses resulting from lower average separate account balances, a portion of which is offset in fee income;

◦ higher systems conversion costs in the prior period;

◦ lower transition services agreement expenses;

◦ lower paid claims, net of reinsurance, in our Life and Run-off segments;

• lower net fee income due to:

◦ higher ceded cost of insurance fees in our Life and Run-off segments related to the conclusion of the aforementioned reinsurance arbitration;

partially offset by

◦ lower ceded cost of insurance expenses consistent with favorable equity market returns in our Life segment, which is offset in fee income;

◦ higher reinsurance fees commensurate with an increase in deposit balances resulting from increased sales in our Annuity segment;

• higher other expenses due to:

◦ the conclusion of the aforementioned reinsurance arbitration;

◦ higher deferred compensation and operational expenses;

partially offset by

◦ lower transition services agreement expenses.

Key net favorable impact was:

• higher net investment spread due to:

◦ higher investment yields and average invested long-term assets from funding agreements issued in connection with our institutional spread margin business;

◦ higher average invested assets resulting from positive net flows in the general account;

◦ higher returns on other limited partnerships;

◦ higher investment yields on our fixed income portfolio, as proceeds from maturing investments and the growth in the investment portfolio were invested at higher yields than the portfolio average;

◦ higher returns from short-term investments;

partially offset by

◦ lower returns on real estate limited partnerships and LLCs;

◦ lower returns on other limited partnerships;

◦ higher interest credited to policyholders due to higher account balances, net of changes made in the prior period in connection with the AAR, and current period actuarial modeling improvements;

• lower net costs associated with insurance-related activities due to:

◦ lower liabilities in our Run-off segment from the impact of new reinsurance agreements entered into in the prior period;

◦ lower paid claims, net of reinsurance, in our Run-off and Life segments;

◦ an increase in income annuity underwriting margin;

partially offset by

◦ a net increase in liability balances resulting from year-over-year changes made in connection with the AAR in our Life, Run-off, and Annuities segments.

Key net unfavorable impacts were:

• lower net fee income due to:

◦ lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses;

◦ a decline in the net cost of insurance fees driven by the aging in-force business in our Run-off segment;

◦ higher average invested assets resulting from positive net flows in the general account;

partially offset by

◦ lower ceded cost of insurance fees consistent with favorable equity market returns in our Life segment, which is mostly offset in other expenses.

◦ higher interest credited to policyholders due to higher account balances.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 15% in the current period compared to 14% in the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction, tax credits and current period non-recurring items.

Segments and Corporate & Other Results for the Three Months and Nine Months Ended September 30, 2023 and 2022 — Adjusted Earnings

Segments and Corporate & Other Results for the Three Months Ended March 31, 2024 and 2023 — Adjusted Earnings

The components of adjusted earnings for our Annuities segment were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

9 unchanged sentences

The changes in our variable annuities separate account balances are presented in Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements.

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Adjusted earnings were $319 million in the current period, an increase of $117 million.

Key net favorable impacts were:

• higher net investment spread due to:

◦ higher investment yields on our fixed income portfolio, as proceeds from maturing investments and the growth in the investment portfolio were invested at higher yields than the portfolio average;

◦ higher average invested assets resulting from positive net flows in the general account;

◦ lower interest credited to policyholders due to changes made in the prior period in connection with the AAR and current period actuarial modeling improvements, net of higher interest credited consistent with higher account balances;

◦ higher returns from short-term investments;

◦ higher returns on other limited partnerships;

partially offset by

◦ lower returns on real estate limited partnerships and LLCs;

• lower costs associated with insurance-related activities due a net decrease in liability balances resulting from changes made in the current period in connection with the AAR;

• lower other expenses due to lower asset-based variable annuity expenses resulting from lower average separate account balances, a portion of which is offset in fee income.

Key unfavorable impact was lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 19% in the current period compared to 18% in the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Adjusted earnings were $924 million in the current period, an increase of $48 million.

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Adjusted earnings were $313 million in the current period, a decrease of $1 million.

Key unfavorable impact was higher costs associated with insurance-related activities due to a decrease in income annuity underwriting margins.

Key net favorable impacts were:

• higher fee income due to higher reinsurance fees commensurate with an increase in deposit balances resulting from increased sales;

• higher net investment spread due to:

1 unchanged sentence

◦ higher investment yields on our fixed income portfolio, as proceeds from maturing investments and the growth in the investment portfolio were invested at higher yields than the portfolio average;

◦ higher returns from short-term investments;

partially offset by

◦ lower returns on real estate limited partnerships and LLCs;

◦ higher interest credited to policyholders due to higher account balances, net of changes made in the prior period in connection with the AAR, and current period actuarial modeling improvements;

• lower costs associated with insurance-related activities due to:

◦ an increase in income annuity underwriting margins;

◦ a net decrease in liability balances resulting from changes made in the current period in connection with the AAR;

• lower other expenses due to:

◦ lower asset-based variable annuity expenses resulting from lower average separate account balances, a portion of which is offset in fee income;

◦ lower transition services agreement expenses;

partially offset by

◦ higher deferred compensation and operational expenses.

Key unfavorable impact was lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 19% in both the current period and prior period.

◦ higher interest credited to policyholders due to higher account balances.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 19% in both the current period and the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

4 unchanged sentences

Other expenses (64) (50)

Pre-tax adjusted earnings (93) (44) (75) 75

Pre-tax adjusted earnings (loss)

Provision for income tax expense (benefit) (10) (1)

Adjusted earnings $ (73) $ (34) $ (57) $ 61

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Adjusted earnings were a loss of $73 million in the current period, a decrease of $39 million.

Key unfavorable impacts were:

• higher net costs associated with insurance-related activities due to:

◦ a net increase in liability balances resulting from year-over-year changes made in connection with the AAR;

◦ higher paid claims, net of reinsurance.

Key favorable impact was higher net investment spread due to higher returns on other limited partnerships.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 22% in the current period compared to 23% in the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Adjusted earnings were a loss of $57 million in the current period, a decrease of $118 million.

Key net unfavorable impacts were:

• higher net costs associated with insurance-related activities due to:

◦ a net increase in liability balances resulting from year-over-year changes made in connection with the AAR;

partially offset by

◦ lower paid claims, net of reinsurance;

• higher other expenses due to:

◦ lower ceded cost of insurance expenses consistent with favorable equity market returns, which is offset in fee income;

◦ higher deferred compensation and operational expenses;

• lower net investment spread due to:

◦ lower returns on other limited partnerships;

◦ lower income from our securities lending program.

Key favorable impact was higher fee income due to lower ceded cost of insurance fees consistent with favorable equity market returns, which is offset in other expenses.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 24% in the current period compared to 19% in the prior period.

Adjusted earnings (loss)

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Adjusted loss was $36 million in the current period, a decrease of $37 million.

Key unfavorable impacts were lower fee income due to higher ceded cost of insurance fees and higher other expenses, both related to the conclusion of a reinsurance arbitration.

Key favorable impact was lower costs associated with insurance-related activities due to lower paid claims, net of reinsurance.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in a higher effective tax rate in the current period compared to the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

4 unchanged sentences

Other expenses (46) (40)

Pre-tax adjusted earnings 120 (20) (35) (189)

Pre-tax adjusted earnings (loss)

Provision for income tax expense (benefit) (91) (28)

Adjusted earnings $ 95 $ (16) $ (27) $ (149)

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Adjusted earnings were $95 million in the current period, an increase of $111 million.

Key net favorable impacts were:

• higher net investment spread due to higher returns on other limited partnerships;

• lower costs associated with insurance-related activities due to:

◦ lower paid claims, net of reinsurance;

Adjusted earnings (loss)

$ (341) $ (106)

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Adjusted loss was $341 million in the current period, a higher loss of $235 million.

Key net unfavorable impacts were:

• higher net costs associated with insurance-related activities due to:

◦ an increase in liability balances resulting from a reinsurance premium rate increase associated with the conclusion of a reinsurance arbitration;

partially offset by

◦ a net increase in liability balances resulting from year-over-year changes made in connection with the AAR.

Key unfavorable impact was lower fee income due to a decline in the net cost of insurance fees driven by the aging in-force business.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 21% in the current period compared to 20% in the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Adjusted earnings were a loss of $27 million in the current period, a lower loss of $122 million.

Key net favorable impacts were:

• lower other expenses due to the settlement of a reinsurance-related matter in the prior period;

• lower costs associated with insurance-related activities due to:

◦ lower liabilities from the impact of new reinsurance agreements entered into in the prior period;

◦ lower paid claims, net of reinsurance;

partially offset by

◦ a net increase in liability balances resulting from year-over-year changes made in connection with the AAR.

Key unfavorable impacts were:

• lower fee income due to a decline in the net cost of insurance fees driven by the aging in-force business;

• lower net investment spread due to:

◦ lower average invested long-term assets;

◦ lower returns on other limited partnerships.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 23% in the current period compared to 21% in the prior period.

• lower fee income due to higher ceded cost of insurance fees and higher other expenses, both related to the conclusion of the aforementioned reinsurance arbitration.

Key favorable impact was a higher net investment spread due to higher returns on other limited partnerships.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of 21% in both the current period and the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impact of the dividends received deduction.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

5 unchanged sentences

Net income (loss) attributable to noncontrolling interests and preferred stock dividends

Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests and preferred stock dividends

(19) (41) (62) (183)

Pre-tax adjusted earnings (loss), less net income (loss) attributable to noncontrolling interests and preferred stock dividends

Provision for income tax expense (benefit) 17 (9)

Adjusted earnings $ (15) $ (37) $ (48) $ (149)

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Adjusted earnings were a loss of $15 million in the current period, a lower loss of $22 million.

Key favorable impact was lower other expenses due to higher systems conversion costs in the prior period.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in a lower effective tax rate in the current period compared to the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction and tax credits.

We believe the effective tax rate for Corporate & Other is not generally meaningful, neither on a standalone basis nor for comparison to prior periods, since taxes for Corporate & Other are derived from the difference between the overall consolidated effective tax rate and total taxes for the combined operating segments.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Adjusted earnings were a loss of $48 million in the current period, a lower loss of $101 million.

Key favorable impacts were:

• lower other expenses due to higher systems conversion costs in the prior period;

• higher net investment spread due to:

◦ higher investment yields and average invested long-term assets from funding agreements issued in connection with our institutional spread margin business;

◦ higher returns from short-term investments.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in a lower effective tax rate in the current period compared to the prior period.

Adjusted earnings (loss)

$ (34) $ (14)

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Adjusted loss was $34 million in the current period, a higher loss of $20 million.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in a higher effective tax rate in the current period compared to the prior period.

Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction, tax credits and current period non-recurring items.

Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months and Nine Months Ended September 30, 2023 and 2022

The overall impact on income (loss) available to shareholders before provision for income tax from the performance of annuity guaranteed benefits and Shield annuity liabilities, which includes (i) changes in the fair value of liabilities and reinsurance, (ii) fees net of claims and (iii) the mark-to-market of hedges, was as follows:

Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months Ended March 31, 2024 and 2023

The overall impact on income (loss) available to shareholders before provision for income tax from the performance of annuity guaranteed benefits and Shield ® Level Annuity (“Shield” and “Shield annuity”) liabilities, which includes (i) changes in the fair value of liabilities and reinsurance, (ii) fees net of claims and (iii) the mark-to-market of hedges, was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

3 unchanged sentences

Total changes attributable to annuity guaranteed benefits

1,064 984 2,170 2,625

Variable annuity hedges 67 365

1 unchanged sentence

$ (310) $ (896)

Market Risk Benefits Mark-to-Market.

Annuity guaranteed rider benefits are accounted for as MRBs.

MRBs related to guaranteed rider benefits represent the current estimated fair value of the obligation to protect policyholders against the possibility that a downturn in the markets will reduce the specified benefits that can be claimed under the base annuity contract.

Any periods of significant or sustained downturns in equity markets, increased equity volatility, or reduced interest rates could result in an increase in the valuation of these liabilities.

An increase in these liabilities would result in a decrease to our net income (loss) available to shareholders, which could be significant.

Annuity Guaranteed Benefit Rider Fees, Net of Claims.

We earn fees from the guaranteed rider benefits, which are calculated using the policyholder’s minimum return based on their initial deposit (the “Benefit Base”).

Fees calculated based on the Benefit Base are more stable in market downturns, compared to fees based on the account value because the Benefit Base excludes the impact of a decline in the market value of the policyholder’s account value.

We use the fees directly earned from the guarantee riders to fund the reserves, future claims and costs associated with the hedges of market risks inherent in these liabilities.

The future fees are included in the estimated fair value of MRB liabilities, with changes recorded in MRBs.

Variable Annuity Hedges and Reinsurance.

We enter into freestanding derivatives to hedge certain aspects of the annuity guaranteed benefits accounted for as MRBs and index-linked crediting rates accounted for as embedded derivatives.

Generally, the same market factors that impact the estimated fair value of the annuity guaranteed benefits impact the value of the hedges, though in the opposite direction.

However, the changes in value of MRBs and related hedges may not be symmetrical and the divergence could be significant due to certain factors, including unhedged risks within MRBs.

We may also use reinsurance to manage our exposure related to MRBs.

Shield Embedded Derivatives.

Shield Annuities provide the contract holder the ability to participate in the appreciation of certain financial markets up to a stated level, while offering protection from a portion of declines in the applicable indices or benchmark.

Shield embedded derivatives represent the estimated fair value of these features.

We believe that Shield Annuities provide us with a risk offset to liabilities related to guaranteed rider benefits.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies — Variable Annuity Exposure Risk Management” in our 2022 Annual Report for discussion of our management of our hedging strategy associated with our variable annuity business, which remains unchanged following the adoption of LDTI.

Three Months Ended September 30, 2023 Compared with the Three Months Ended September 30, 2022

Annuity guaranteed benefits and Shield annuity liabilities performance was favorable for the three months ended September 30, 2023, primarily driven by:

• decreases in annuity guaranteed benefits liabilities due to increasing interest rates, partially offset by decreasing equity markets and changes made in connection with the AAR;

• unfavorable changes in variable annuity hedges due to increasing long-term interest rates and decreasing equity markets;

• favorable changes in Shield embedded derivatives due to decreasing equity markets and increasing interest rates.

Annuity guaranteed benefits and Shield annuity liabilities performance was favorable for the three months ended September 30, 2022, primarily driven by:

• decreases in annuity guaranteed benefits liabilities due to increasing interest rates, partially offset by decreasing equity markets and changes made in connection with the AAR;

• unfavorable changes in variable annuity hedges due to increasing long-term interest rates;

• favorable changes in Shield embedded derivatives due to decreasing equity markets, partially offset by increasing interest rates.

Nine Months Ended September 30, 2023 Compared with the Nine Months Ended September 30, 2022

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the nine months ended September 30, 2023, primarily driven by:

• decreases in annuity guaranteed benefits liabilities due to increasing interest rates and equity markets, partially offset by changes made in connection with the AAR;

• unfavorable changes in variable annuity hedges due to increasing long-term interest rates;

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the three months ended March 31, 2024, primarily driven by:

• decreases in annuity guaranteed benefits liabilities due to increasing interest rates and equity markets;

• favorable changes in variable annuity hedges due to increasing equity markets, partially offset by increasing long-term interest rates;

• unfavorable changes in Shield embedded derivatives due to increasing equity markets.

Annuity guaranteed benefits and Shield annuity liabilities performance was favorable for the nine months ended September 30, 2022, primarily driven by:

• decreases in annuity guaranteed benefits liabilities due to increasing interest rates, partially offset by decreasing equity markets and changes made in connection with the AAR;

• unfavorable changes in variable annuity hedges due to increasing long-term interest rates, partially offset by decreasing equity markets;

• favorable changes in Shield embedded derivatives due to decreasing equity markets, partially offset by increasing interest rates.

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the three months ended March 31, 2023, primarily driven by:

• increases in annuity guaranteed benefits liabilities due to decreasing interest rates, partially offset by increasing equity markets;

• favorable changes in variable annuity hedges due to decreasing long-term interest rates, partially offset by increasing equity markets;

• unfavorable changes in Shield embedded derivatives due to increasing equity markets.

Investment Risk Management Strategy

3 unchanged sentences

Interest rate risk is managed as part of our Asset Liability Management (“ALM”) strategies.

We also utilize product design, such as the use of market value adjustment features and surrender charges to manage interest rate risk.

We also utilize product design to manage interest rate risk (e.g., market value adjustment features and surrender charges).

These ALM strategies include maintaining an investment portfolio that targets a weighted average duration that reflects the duration of our estimated liability cash flow profile.

9 unchanged sentences

See “— Industry Trends and Uncertainties — Financial and Economic Environment.”

In 2023, the Federal Reserve increased the target range for the federal funds rate four times — from between 4.25% and 4.50% to between 4.50% and 4.75% on February 1, 2023;

to between 4.75% and 5.00% on March 22, 2023;

to between 5.00% and 5.25% on May 3, 2023;

and to between 5.25% and 5.50% on July 26, 2023.

These target range increases have contributed to a decrease in the net unrealized gains in our investment portfolio, and any additional target increases could similarly contribute to further decreases.

In the current period, as a result of rising interest rates, the unrealized losses on our fixed maturity securities exceeded the unrealized gains.

If interest rates continue to rise, our unrealized gains would decrease, and our unrealized losses would increase, perhaps substantially.

In 2023, the Federal Reserve increased the target range for the federal funds rate four times — from between 4.25% and 4.50% to between 5.25% and 5.50%.

These target range increases have contributed to the net unrealized loss position in our investment portfolio, and any additional target increases could similarly contribute to further increases in net unrealized losses.

In the current period, as a result of recent increases in interest rates, the unrealized losses on our fixed maturity securities exceeded the unrealized gains.

If interest rates rise further, our unrealized gains would decrease, and our unrealized losses would increase, perhaps substantially.

See “Risk Factors — Risks Related to Our Investment Portfolio — Our investment portfolio is subject to significant financial risks both in the U.S.

5 unchanged sentences

There has been an increased market focus on commercial real estate, including office properties, as a result of companies shifting to hybrid work arrangements and the resulting impact on the demand for office space.

We have direct commercial real estate exposure through mortgage loans and certain structured securities.

Structured securities include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

We have direct commercial real estate exposure through mortgage loans and certain structured securities, which include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

In addition, we have direct and indirect exposure through certain financial industry corporate fixed maturity securities.

See “Risk Factors — Risks Related to Our Investment Portfolio — Our investment portfolio is subject to significant financial risks both in the U.S.

and global financial markets, including credit risk, interest rate risk, inflation risk, market valuation risk, liquidity risk, real estate risk, derivatives risk, and other factors outside our control, the occurrence of any of which could have a material adverse effect on our financial condition and results of operations” included in our 2022 Annual Report, as well as “— Investments — Mortgage Loans” and Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information on mortgage loans, including credit quality by portfolio segment and commercial mortgage loans by property type.

and global financial markets,

including credit risk, interest rate risk, inflation risk, market valuation risk, liquidity risk, real estate risk, derivatives risk, and other factors outside our control, the occurrence of any of which could have a material adverse effect on our financial condition and results of operations” included in our 2023 Annual Report, as well as “— Investments — Mortgage Loans” and Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for information on mortgage loans, including credit quality by portfolio segment and commercial mortgage loans by property type.

Additionally, see “— Investments — Fixed Maturity Securities Available-for-sale — Structured Securities” for information on Structured Securities, including security type, risk profile and ratings profile as well as “— Investments — Fixed Maturity Securities Available-for-sale — U.S.

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Yield % Amount Yield % Amount Yield % Amount Yield % Amount

Yield % Amount Yield % Amount

(Dollars in millions)

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(In millions)

2 unchanged sentences

Adjusted net investment income — in the above yield table $ 1,267 $ 1,097

See “— Results of Operations — Consolidated Results for the Three Months and Nine Months Ended September 30, 2023 and 2022” for an analysis of the period-over-period changes in net investment income.

See “— Results of Operations — Consolidated Results for the Three Months Ended March 31, 2024 and 2023” for an analysis of the period-over-period changes in net investment income.

Fixed Maturity Securities Available-for-sale

Fixed maturity securities held by type (public or private) were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Fair Value % of

11 unchanged sentences

The following table presents total fixed maturity securities by NRSRO rating and the applicable NAIC designation from the NAIC published comparison of NRSRO ratings to NAIC designations, except for certain Structured Securities, which are presented using the NAIC methodologies, as well as the percentage, based on estimated fair value that each NAIC designation is comprised of at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Designation NRSRO Rating Amortized

22 unchanged sentences

(In millions)

September 30, 2023

March 31, 2024

corporate $ 16,839 $ 17,342 $ 1,249 $ 399 $ 57 $ 51 $ 35,937

19 unchanged sentences

We maintain a diversified portfolio of corporate fixed maturity securities across industries and issuers.

Our portfolio does not have any exposure to any single issuer in excess of 1% of total investments and the top ten holdings in aggregate comprise 1% of total investments at both September 30, 2023 and December 31, 2022.

Our portfolio does not have any exposure to any single issuer in excess of 1% of total investments and the top ten holdings in aggregate comprise 1% of total investments at both March 31, 2024 and December 31, 2023.

and foreign corporate fixed maturity securities holdings by industry were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Fair Value % of

9 unchanged sentences

Structured Securities

We held $19.5 billion of Structured Securities, at estimated fair value, at both September 30, 2023 and December 31, 2022, as presented in the RMBS, CMBS and ABS sections below.

We held $20.4 billion and $20.2 billion of Structured Securities, at estimated fair value, at March 31, 2024 and December 31, 2023, respectively, as presented in the RMBS, CMBS and ABS sections below.

Our RMBS holdings are diversified by security type, risk profile and ratings profile, which were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Fair Value % of

18 unchanged sentences

_______________

(1) In the current period, Fitch Ratings downgraded the U.S.

(1) During the year ended December 31, 2023, Fitch Ratings downgraded the U.S.

credit rating from Aaa to Aa1, which resulted in a decrease in Aaa assets in our RMBS holdings.

3 unchanged sentences

Our CMBS holdings are diversified by vintage year, which were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

14 unchanged sentences

Total $ 7,005 $ 6,454 $ 7,023 $ 6,410

The estimated fair value of CMBS rated Aaa using rating agency ratings was $4.3 billion, or 68.0% of total CMBS, and designated NAIC 1 was $5.9 billion, or 94.0% of total CMBS, at September 30, 2023.

The estimated fair value of CMBS rated Aaa using rating agency ratings was $4.4 billion, or 68.5% of total CMBS, and designated NAIC 1 was $6.1 billion, or 94.1% of total CMBS, at March 31, 2024.

The estimated fair value of CMBS Aaa rating agency ratings was $4.4 billion, or 68.5% of total CMBS, and designated NAIC 1 was $6.0 billion, or 94.2% of total CMBS, at December 31, 2023.

1 unchanged sentence

Our ABS holdings by collateral type and ratings profile were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Fair Value % of

7 unchanged sentences

Collateralized obligations $ 3,801 58.8 % $ 9 $ 3,819 59.6 % $ (9)

Consumer loans 349 5.7 (27) 420 7.8 (36)

Student loans 386 6.3 (27) 393 7.3 (34)

Automobile loans 520 8.1 (3) 487 7.6 (2)

Student loans 389 6.0 (19) 397 6.2 (22)

Consumer loans

331 5.1 (16) 346 5.4 (19)

Credit card loans 240 3.7 (5) 262 4.1 (6)

18 unchanged sentences

Information regarding mortgage loans by portfolio segment is summarized as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Amortized Cost % of

8 unchanged sentences

The percentage of our commercial and agricultural mortgage loan portfolios collateralized by properties located in the U.S.

were 98% at both September 30, 2023 and December 31, 2022.

were 98% at both March 31, 2024 and December 31, 2023.

The remainder was collateralized by properties located outside of the U.S.

At September 30, 2023, the carrying value as a percentage of total commercial and agricultural mortgage loans for the top three states in the U.S.

At March 31, 2024, the carrying value as a percentage of total commercial and agricultural mortgage loans for the top three states in the U.S.

was 17% for California, 11% for Texas and 8% for New York.

2 unchanged sentences

All residential mortgage loans were collateralized by properties located in the U.S.

at both September 30, 2023 and December 31, 2022.

At September 30, 2023, the carrying value as a percentage of total residential mortgage loans for the top three states in the U.S.

at both March 31, 2024 and December 31, 2023.

At March 31, 2024, the carrying value as a percentage of total residential mortgage loans for the top three states in the U.S.

was 39% for California, 11% for Florida and 7% for New York.

2 unchanged sentences

The diversification across geographic regions and property types of commercial mortgage loans was as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Total Amount % of

6 unchanged sentences

Mountain 1,181 8.9 1,182 9.0

New England 753 5.7 741 5.4

East North Central 737 5.6 737 5.6

728 5.5 735 5.6

International 399 3.0 409 3.1

West North Central 359 2.7 361 2.7

East South Central

343 2.6 306 2.3

West North Central

342 2.6 347 2.6

Multi-region and Other

12 unchanged sentences

Carrying value, net of allowance for credit losses $ 13,130 $ 13,124

__________________

(1) In the current quarter, certain commercial mortgage loans have been reclassified into the Multi-region and Other geographic region.

Mortgage Loan Credit Quality — Monitoring Process.

16 unchanged sentences

Generally, the lower the debt-service coverage ratio, the higher the risk of experiencing a credit loss.

For our commercial mortgage loans, our average loan-to-value ratio was 61% and 57% at September 30, 2023 and December 31, 2022, respectively and our average debt-service coverage ratio was 2.3x and 2.2x at September 30, 2023 and December 31, 2022, respectively.

For our commercial mortgage loans, our average loan-to-value ratio was 65% at both March 31, 2024 and December 31, 2023, and our average debt-service coverage ratio was 2.3x at both March 31, 2024 and December 31, 2023.

The debt-service coverage ratio, as well as the values utilized in calculating the ratio, is updated annually on a rolling basis, with a portion of the portfolio updated each quarter.

In addition, the loan-to-value ratio is routinely updated for all but the lowest risk loans as part of our ongoing review of our commercial mortgage loan portfolio.

For our agricultural mortgage loans, our average loan-to-value ratio was 48% at both September 30, 2023 and December 31, 2022.

For our agricultural mortgage loans, our average loan-to-value ratio was 47% at both March 31, 2024 and December 31, 2023.

The values utilized in calculating the agricultural mortgage loan loan-to-value ratio are developed in connection with the ongoing review of the agricultural loan portfolio and are routinely updated.

Mortgage Loan Allowance for Credit Losses .

See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information about how the allowance for credit losses is established and monitored, as well as activity in and balances of the allowance for credit losses for the nine months ended September 30, 2023 and 2022.

See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for information about how the allowance for credit losses is established and monitored, as well as activity in and balances of the allowance for credit losses for the three months ended March 31, 2024 and 2023.

Limited Partnerships and Limited Liability Companies

The carrying values of our limited partnerships and LLCs were as follows at:

September 30, 2023 December 31, 2022

The carrying values of our limited partnerships and limited liability companies (“LLC”) were as follows at:

March 31, 2024 December 31, 2023

(In millions)

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__________________

(1) The estimated fair value of real estate limited partnerships and LLCs was $933 million and $987 million at September 30, 2023 and December 31, 2022, respectively.

(1) The estimated fair value of real estate limited partnerships and LLCs was $887 million and $927 million at March 31, 2024 and December 31, 2023, respectively.

Cash distributions on these investments are generated from investment gains, operating income from the underlying investments of the funds and liquidation of the underlying investments of the funds.

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The carrying value of our other invested assets by type was as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Total Carrying

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See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for:

• information about the gross notional amount, estimated fair value, and primary underlying risk exposure of our derivatives by type of hedge designation, excluding embedded derivatives held at September 30, 2023 and December 31, 2022;

• the effects of derivatives in cash flow, fair value, or non-qualifying hedge relationships on the statements of operations for the nine months ended September 30, 2023 and 2022.

• the effects of derivatives in cash flow, fair value, or non-qualifying hedge relationships on the statements of operations for the three months ended March 31, 2024 and 2023.

See “Business — Segments and Corporate & Other — Annuities,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies” included in our 2023 Annual Report for more information about our use of derivatives by major hedging programs.

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The use of different inputs or methodologies could have a material effect on the estimated fair value of Level 3 derivatives and could materially affect net income.

Derivatives categorized as Level 3 at September 30, 2023 include:

Derivatives categorized as Level 3 at March 31, 2024 include:

credit default swaps priced using unobservable credit spreads, or that are priced through independent broker quotations;

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The gross notional amount and estimated fair value of credit default swaps were as follows at:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Gross Notional

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Written $ 1,405 $ 29 $ 1,405 $ 27

Purchased — — — —

Total $ 1,405 $ 29 $ 1,405 $ 27

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We establish liabilities for future amounts payable under insurance policies.

See Notes 2 and 4 of the Notes to the Interim Condensed Consolidated Financial Statements.

See Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements.

Policyholder Account Balances

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Our variable annuity account value and NAR by type of GMxB were as follows at:

September 30, 2023

March 31, 2024

December 31, 2023

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

These liabilities were valued at $5.6 billion at September 30, 2023.

These liabilities were valued at $9.4 billion at March 31, 2024.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(In millions)

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Derivatives Hedging Variable Annuity Guarantees

The gross notional amount and estimated fair value of the derivatives held in our macro interest rate hedging program were as follows at:

September 30, 2023 December 31, 2022

The gross notional amount and estimated fair value of the derivatives hedging our in-force variable annuity guarantees and ULSG business viewed in aggregate in our interest rate hedging program were as follows at:

March 31, 2024 December 31, 2023

Instrument Type Gross Notional Amount (1) Estimated Fair Value Gross Notional Amount (1) Estimated Fair Value

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(2) Hybrid options have equity exposure in addition to interest rate exposure.

The gross notional amount and estimated fair value of the derivatives held in our variable annuity hedging program, as well as the interest rate hedges allocated from our macro interest rate hedging program, were as follows at:

September 30, 2023 December 31, 2022

The gross notional amount and estimated fair value of the derivatives held in our variable annuity hedging program were as follows at:

March 31, 2024 December 31, 2023

Instrument Type Gross Notional Amount (1) Estimated Fair Value Gross Notional Amount (1) Estimated Fair Value

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Period-to-period changes in the estimated fair value of these hedges affect our net income, as well as stockholders’ equity and these effects can be material in any given period.

See “Risk Factors — Risks Related to Our Business — Our variable annuity exposure risk management strategy may not be effective, may result in significant volatility in our profitability measures and may negatively affect our statutory capital,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies” included in our 2022 Annual Report.

See “Risk Factors — Risks Related to Our Business — Our variable annuity exposure risk management strategy may not be effective, may result in significant volatility in our profitability measures or may negatively affect our statutory capital,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies” included in our 2023 Annual Report.

Liquidity and Capital Resources

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We continuously monitor and adjust our liquidity and capital plans in light of market conditions, as well as changing needs and opportunities.

We maintain a substantial short-term liquidity position, which was $3.2 billion and $3.6 billion at September 30, 2023 and December 31, 2022, respectively.

We maintain a substantial short-term liquidity position, which was $4.0 billion and $3.8 billion at March 31, 2024 and December 31, 2023, respectively.

Short-term liquidity is comprised of cash and cash equivalents and short-term investments, excluding assets that are pledged or otherwise committed.

Assets pledged or otherwise committed include amounts received in connection with securities lending, derivatives and assets held on deposit or in trust.

An integral part of our liquidity management includes managing our level of liquid assets, which was $42.0 billion and $40.8 billion at September 30, 2023 and December 31, 2022, respectively.

An integral part of our liquidity management includes managing our level of liquid assets, which was $44.5 billion and $45.2 billion at March 31, 2024 and December 31, 2023, respectively.

Liquid assets are comprised of cash and cash equivalents, short-term investments and publicly-traded securities, excluding assets that are pledged or otherwise committed.

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We manage our capital position to maintain our financial strength and credit ratings.

Our capital position is supported by our ability to generate cash flows within our insurance companies, our ability to effectively manage the risks of our businesses and our expected ability to borrow funds and raise additional capital to meet operating and growth needs under a variety of market and economic conditions.

Our capital position is supported by our ability to generate cash flows within our insurance subsidiaries, our ability to effectively manage the risks of our businesses and our expected ability to borrow funds and raise additional capital to meet operating and growth needs under a variety of market and economic conditions.

We monitor our debt-to-capital ratio using an average of our key leverage ratios as calculated by A.M.

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Our primary sources and uses of liquidity and capital were as follows at:

Nine Months Ended

September 30,

Three Months Ended

(In millions)

Changes in policyholder account balances, net $ 1,367 $ 1,566

Changes in payables for collateral under securities loaned and other transactions, net — 263

Financing element on certain derivative instruments and other derivative related transactions, net — 91

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Changes in payables for collateral under securities loaned and other transactions, net 17 159

Long-term debt repaid 1 2

Dividends on preferred stock 26 26

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The institutional spread margin business is comprised of funding agreements issued in connection with the programs described in more detail below.

Activity related to these programs are reported in Corporate & Other.

See Note 4 of the Notes to the Consolidated Financial Statements included in our 2023 Annual Report for additional information on funding agreements.

Funding Agreement-Backed Repurchase Agreement Program

In January 2024, Brighthouse Life Insurance Company established a secured funding agreement-backed repurchase agreement program (the “FABR Program”), pursuant to which Brighthouse Life Insurance Company may enter into repurchase agreements with bank counterparties and the proceeds of the repurchase agreements are then used by a special-purpose entity to purchase funding agreements from Brighthouse Life Insurance Company.

Funding Agreement-Backed Commercial Paper Program

In July 2021, Brighthouse Life Insurance Company established a funding agreement-backed commercial paper program (the “FABCP Program”) for spread lending purposes, pursuant to which a special purpose limited liability company (the “SPLLC”) may issue commercial paper and deposit the proceeds with Brighthouse Life Insurance Company under a funding agreement issued by Brighthouse Life Insurance Company to the SPLLC.

The maximum aggregate principal amount permitted to be outstanding at any one time under the FABCP Program was increased from $3.0 billion to $5.0 billion in June 2023.

Activity related to this funding agreement is reported in Corporate & Other.

The maximum aggregate principal amount permitted to be outstanding at any one time under the FABCP Program is $5.0 billion.

Funding Agreement-Backed Notes Program

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The maximum aggregate principal amount permitted to be outstanding at any one time under the FABN Program is $7.0 billion.

Activity related to these funding agreements is reported in Corporate & Other.

Federal Home Loan Bank Funding Agreements

Brighthouse Life Insurance Company is a member of the Federal Home Loan Bank (“FHLB”) of Atlanta, where it maintains a secured funding agreement program, under which funding agreements may be issued either (i) for spread lending purposes or (ii) to provide additional liquidity.

Activity related to these funding agreements is reported in Corporate & Other.

Farmer Mac Funding Agreements

Brighthouse Life Insurance Company has a secured funding agreement program with the Federal Agricultural Mortgage Corporation and its affiliate Farmer Mac Mortgage Securities Corporation (“Farmer Mac”) with a term ending on December 1, 2026, pursuant to which the parties may enter into funding agreements in an aggregate amount of up to $750 million either (i) for spread lending purposes or (ii) to provide additional liquidity.

Activity related to these funding agreements is reported in Corporate & Other.

Information regarding funding agreements issued for spread lending purposes is as follows:

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Outstanding Issuances Repayments

Nine Months Ended September 30,

September 30, 2023 December 31, 2022 2023 2022 2023 2022

Three Months Ended March 31,

March 31, 2024 December 31, 2023 2024 2023 2024 2023

(In millions)

$ 500 $ — $ 500 $ — $ — $ —

FABCP Program 2,998 3,442 3,804 2,598 4,248 2,187

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Credit and Committed Facilities

See Note 9 of the Notes to the Interim Condensed Consolidated Financial Statements and Notes 9 and 10 of the Notes to the Consolidated Financial Statements included in our 2022 Annual Report for information regarding our credit and committed facilities.

See Notes 12 and 13 of the Notes to the Consolidated Financial Statements included in our 2023 Annual Report for information regarding our credit and committed facilities.

We have no reason to believe that our lending counterparties would be unable to fulfill their respective contractual obligations under these facilities.

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Our Revolving Credit Facility contains financial covenants, including requirements to maintain a specified minimum adjusted consolidated net worth, to maintain a ratio of total indebtedness to total capitalization not in excess of a specified percentage and that place limitations on the dollar amount of indebtedness that may be incurred by our subsidiaries, which could restrict our operations and use of funds.

At September 30, 2023, we were in compliance with these financial covenants.

At March 31, 2024, we were in compliance with these financial covenants.

Primary Uses of Liquidity and Capital

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Common Stock Repurchases

See Note 10 of the Notes to the Interim Condensed Consolidated Financial Statements for information relating to authorizations to repurchase BHF common stock, amounts of common stock repurchased pursuant to such authorizations and the amount remaining under such authorizations at September 30, 2023.

Subsequent to September 30, 2023 and through November 3, 2023, BHF repurchased an additional 522,548 shares of its common stock through open market purchases pursuant to a 10b5-1 plan for $25 million.

Subsequent to March 31, 2024 and through May 3, 2024, BHF repurchased an additional 507,621 shares of its common stock through open market purchases pursuant to a 10b5-1 plan for $25 million.

Preferred Stock Dividends

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Similarly, the terms of our outstanding preferred stock contain restrictions on our ability to repurchase our common stock or pay dividends thereon if we have not fulfilled our dividend obligations under such preferred stock or other preferred securities.

In addition, the terms of the agreements governing any preferred stock, debt or other financial instruments that we may issue in the

future, may limit or prohibit the payment of dividends on our common stock or preferred stock, or the payment of interest on our junior subordinated debentures.

In addition, the terms of the agreements governing any preferred stock, debt or other financial instruments that we may issue in the future, may limit or prohibit the payment of dividends on our common stock or preferred stock, or the payment of interest on our junior subordinated debentures.

Debt Repayments, Repurchases, Redemptions and Exchanges

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We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives.

At September 30, 2023, we did not pledge any cash collateral to counterparties.

At December 31, 2022, we pledged $7 million of cash collateral to counterparties.

At September 30, 2023 and December 31, 2022, we were obligated to return cash collateral pledged to us by counterparties of $770 million and $829 million, respectively.

At March 31, 2024 and December 31, 2023, we pledged $24 million and $16 million, respectively, of cash collateral to counterparties.

At March 31, 2024 and December 31, 2023, we were obligated to return cash collateral pledged to us by counterparties of $483 million and $393 million, respectively.

The timing of the return of the derivatives collateral is uncertain.

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We receive non-cash collateral from counterparties for derivatives, which can be sold or re-pledged subject to certain constraints, and which is not recorded on our consolidated balance sheets.

The amount of this non-cash collateral at estimated fair value was $1.6 billion and $1.0 billion at September 30, 2023 and December 31, 2022, respectively.

The amount of this non-cash collateral at estimated fair value was $2.0 billion and $2.4 billion at March 31, 2024 and December 31, 2023, respectively.

Securities Lending

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Generally, our securities lending contracts expire within twelve months of issuance.

We were liable for cash collateral under our control of $3.2 billion and $3.7 billion at September 30, 2023 and December 31, 2022, respectively.

We were liable for cash collateral under our control of $3.2 billion and $3.3 billion at March 31, 2024 and December 31, 2023, respectively.

We receive non-cash collateral for securities lending from counterparties, which cannot be sold or re-pledged, and which is not recorded on our consolidated balance sheets.

There was no non-cash collateral at both September 30, 2023 and December 31, 2022.

There was no non-cash collateral at both March 31, 2024 and December 31, 2023.

See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for further discussion of our securities lending program.

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Short-term Liquidity and Liquid Assets

At September 30, 2023 and December 31, 2022, BHF and certain of its non-insurance subsidiaries had short-term liquidity of $891 million and $1.0 billion, respectively.

At both March 31, 2024 and December 31, 2023, BHF and certain of its non-insurance subsidiaries had short-term liquidity of $1.2 billion.

Short-term liquidity is comprised of cash and cash equivalents and short-term investments, excluding assets that are pledged or otherwise committed.

Assets pledged or otherwise committed include assets held in trust.

At September 30, 2023 and December 31, 2022, BHF and certain of its non-insurance subsidiaries had liquid assets of $928 million and $1.0 billion, respectively, of which $883 million and $987 million, respectively, was held by BHF.

At both March 31, 2024 and December 31, 2023, BHF and certain of its non-insurance subsidiaries had liquid assets of $1.3 billion, of which $1.2 billion was held by BHF.

Liquid assets are comprised of cash and cash equivalents, short-term investments and publicly-traded securities, excluding assets that are pledged or otherwise committed.

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Certain of these activities may require regulatory approval.

Furthermore, the payment of dividends and other distributions by our insurance subsidiaries is governed by insurance laws and regulations.

See Note 10 of the Notes to the Consolidated Financial Statements included in our 2022 Annual Report.

Furthermore, the payment of dividends and other distributions by our insurance subsidiaries is governed by the insurance laws and regulations of the states where they are domiciled.

Any payment of dividends by Brighthouse Life Insurance Company in 2024 would be subject to Delaware Department of Insurance approval.

See Note 13 of the Notes to the Consolidated Financial Statements included in our 2023 Annual Report for additional information regarding the applicable dividend restrictions and certain of our subsidiaries’ ordinary dividend capacity, as well as the circumstances under which regulatory approval would be required.

Primary Sources and Uses of Liquidity and Capital

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The primary uses of liquidity of BHF include debt-service obligations (including interest expense and debt repayments), preferred stock dividends, capital contributions to subsidiaries, common stock repurchases and payment of general operating expenses.

liquidity and capital to enable BHF to make payments on debt, pay preferred stock dividends, contribute capital to its subsidiaries, repurchase its common stock, pay all general operating expenses and meet its cash needs.

Based on our analysis and comparison of our current and future cash inflows from the dividends we receive from subsidiaries that are permitted to be paid without prior insurance regulatory approval, our investment portfolio and other cash flows and anticipated access to the capital markets, we believe there will be sufficient liquidity and capital to enable BHF to make payments on debt, pay preferred stock dividends, contribute capital to its subsidiaries, repurchase its common stock, pay all general operating expenses and meet its cash needs.

In addition to the liquidity and capital sources discussed in “— The Company — Primary Sources of Liquidity and Capital” and “— The Company — Primary Uses of Liquidity and Capital,” the following additional information is provided regarding BHF’s primary sources and uses of liquidity and capital:

Distributions from and Capital Contributions to BH Holdings

During the nine months ended September 30, 2023, BHF did not receive any distributions from BH Holdings.

During the nine months ended September 30, 2022, BHF received non-cash distributions of $350 million from BH Holdings.

During the nine months ended September 30, 2023 and 2022, BHF did not make any capital contributions to BH Holdings.

During both the three months ended March 31, 2024 and 2023, BHF did not receive any cash distributions from BH Holdings and did not make any cash capital contributions to BH Holdings.

Short-term Intercompany Loans

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

During the nine months ended September 30, 2023 and 2022, BHF borrowed $569 million and $661 million, respectively, from certain of its non-insurance subsidiaries and repaid $369 million and $945 million of such borrowings during the nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023 and December 31, 2022, BHF had total obligations outstanding of $713 million and $513 million, respectively, under such agreements.

During the three months ended March 31, 2024 and 2023, BHF borrowed $110 million and $217 million, respectively, from certain of its non-insurance subsidiaries and repaid $50 million and $172 million of such borrowings during the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024 and December 31, 2023, BHF had total obligations outstanding of $787 million and $727 million, respectively, under such agreements.

Intercompany Liquidity Facilities

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Under these facilities, which are comprised of a series of revolving loan agreements among BHF and its participating subsidiaries, each company may lend to or borrow from each other, subject to certain maximum limits for a term of up to 364 days, depending on the agreement.

During both the nine months ended September 30, 2023 and 2022, there were no borrowings or repayments by BHF under these facilities and, at both September 30, 2023 and December 31, 2022, BHF had no obligations outstanding under such facilities.

During both the three months ended March 31, 2024 and 2023, there were no borrowings or repayments by BHF under these facilities and, at both March 31, 2024 and December 31, 2023, BHF had no obligations outstanding under such facilities.

Note Regarding Forward-Looking Statements

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• higher risk management costs and exposure to increased market risk due to guarantees within certain of our products;

• the effectiveness of our variable annuity exposure risk management strategy and the impact of such strategy on volatility in our profitability measures and negative effects on our statutory capital;

• the effectiveness of our variable annuity exposure risk management strategy and the impacts of such strategy on volatility in our profitability measures and the negative effects on our statutory capital;

• material differences between actual outcomes and the sensitivities calculated under certain scenarios that we may utilize in connection with our variable annuity risk management strategies;

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Corporate Information

We routinely use our Investor Relations website to provide presentations, press releases and other information that may be deemed material to investors.

We routinely use our Investor Relations website to provide presentations, press releases, our insurance subsidiaries’ statutory filings, and other information that may be deemed important or material to investors.

Accordingly, we encourage investors and others interested in the Company to review the information that we share at http://investor.brighthousefinancial.com.

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

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

Information contained on or connected to any website referenced in this report or any of our other filings with the SEC is not incorporated by reference in this report or in any other report or document we file with the SEC, and any website references are intended to be inactive textual references only unless expressly noted.

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 2. Management’s Discussion and Analysis