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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-08 · 281 added, 128 removed, 950 unchanged (30% of the section changed)

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Summary of Critical Accounting Estimates

Non-GAAP and Other Financial Disclosures

Non-GAAP Financial Disclosures

Results of Operations

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

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

(iii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “First Quarter Form 10-Q”) filed with the SEC on May 8, 2024;

and (iv) 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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• “Summary of Critical Accounting Estimates” explains the most critical estimates and judgments applied in determining our results in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

• “Non-GAAP and Other Financial Disclosures” defines key financial measures presented in our results of operations discussion that are not calculated in accordance with GAAP but are used by management in evaluating company and segment performance.

• “Non-GAAP Financial Disclosures” defines key financial measures presented in our results of operations discussion that are not calculated in accordance with GAAP but are used by management in evaluating company and segment performance.

As described in this section, adjusted earnings is presented by key business activities which are derived, but different, from the line items presented in the GAAP statements of operations.

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 ended March 31, 2024 and 2023 and period-over-period comparisons between these periods.

Our Results of Operations discussion and analysis presents a review for the three months and six months ended June 30, 2024 and 2023 and period-over-period, as well as year-over-year, comparisons between these periods.

Executive Summary

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

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$ 346 $ 271 $ 248 $ 466

__________________

(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.

For the three months ended June 30, 2024, we had net income available to shareholders of $9 million and adjusted earnings of $346 million compared to net loss available to shareholders of $200 million and adjusted earnings of $271 million for the three months ended June 30, 2023.

Net income available to shareholders for the three months ended June 30, 2024 primarily reflects favorable pre-tax adjusted earnings.

The favorable impact was partially offset by net unfavorable changes in the estimated fair value of our variable annuity guaranteed benefit riders due to market factors, net investment losses on sales of fixed maturity securities, net investment losses on mortgage loans and 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.

For the six months ended June 30, 2024, we had net loss available to shareholders of $510 million and adjusted earnings of $248 million compared to net loss available to shareholders of $725 million and adjusted earnings of $466 million for the six months ended June 30, 2023.

Net loss available to shareholders for the six months ended June 30, 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 ULSG business resulting from increasing long-term interest rates, 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, net of an unfavorable impact due to a reinsurance premium rate increase retroactive to September 2019, which resulted from the conclusion of a reinsurance arbitration, and the related impacts.

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

Industry Trends and Uncertainties

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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 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.

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 by our First Quarter Form 10-Q 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.

Financial and Economic Environment

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

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

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.

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.

Prolonged and elevated inflation could adversely affect the financial markets and the economy generally and dispelling it may require governments to pursue a restrictive fiscal and monetary policy, which could constrain overall economic activity and inhibit revenue growth.

Prolonged and elevated inflation could adversely affect the financial markets and the economy generally and dispelling it may require governments to pursue restrictive fiscal and monetary policies, which could constrain overall economic activity and inhibit revenue growth.

Events involving limited liquidity, defaults, nonperformance or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about events of these kinds or other similar risks, could adversely affect market-wide liquidity, which could increase the risk of a recession or an equity market downturn and negatively impact various portions of our business, including our investment portfolio.

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Furthermore, some of our operations, products and services are subject to the Employee Retirement Income Security Act of 1974, consumer protection laws, securities, broker-dealer and investment advisor regulations, as well as environmental and unclaimed property laws and regulations.

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.”

See “Business — Regulation,” as well as “Risk Factors — Regulatory and Legal Risks” included in our 2023 Annual Report, as amended or supplemented by our First Quarter Form 10-Q 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

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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.

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) (the “PTE 2020-02 Amendment”) 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 “PTE 84-24 Amendment” and, together with the PTE 2020-02 Amendment, the “PTE Amendments”).

On July 25, 2024, the U.S.

District Court for the Eastern District of Texas and, on July 26, 2024, the U.S.

District Court for the Northern District of Texas issued decisions, which together stayed the effective date for implementation of the Fiduciary Advice Rule and the PTE Amendments.

These rulings are subject to appeal by the DOL.

For further information about the potential effect and impact of the Fiduciary Advice Rule and the PTE Amendments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends and Uncertainties — Regulatory Developments” included in our First Quarter Form 10-Q and “Business — Regulation — Standard of Conduct Regulation — Department of Labor Fiduciary Advice Rule” included in our 2023 Annual Report.

We will continue to monitor developments regarding the new rule and related litigation.

Summary of Critical Accounting Estimates

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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

Our definitions of non-GAAP and other financial measures may differ from those used by other companies.

Non-GAAP Financial Disclosures

We present certain measures of our performance that are not calculated in accordance with GAAP.

Our definitions of non-GAAP financial measures may differ from those used by other companies.

Adjusted Earnings

In this report, we present adjusted earnings as a measure of our performance that is not calculated in accordance with GAAP.

Adjusted earnings is used by management to evaluate performance and facilitate comparisons to industry results.

Adjusted earnings is a financial measure used by management to evaluate performance and facilitate comparisons to industry results.

We believe the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of our performance by the investor community by highlighting the results of operations and the underlying profitability drivers of our business.

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For a reconciliation of adjusted net investment income to net investment income, the most directly comparable GAAP measure, see table note (3) to the summary yield table located in “— Investments — Current Environment — Investment Portfolio Results.”

Other Financial Disclosures

Similar to adjusted net investment income, we present net investment income yields as a performance measure we believe enhances the understanding of our investment portfolio results.

Net investment income yields are calculated on adjusted net investment income as a percentage of average quarterly asset carrying values.

Adjusted Net Investment Income Yield

Similar to adjusted net investment income, we present adjusted net investment income yield as a performance measure we believe enhances the understanding of our investment portfolio results.

Adjusted net investment income yield represents adjusted net investment income as a percentage of average quarterly asset carrying values.

Asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties.

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Asset estimated fair values exclude collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties.

For a reconciliation of adjusted net investment income yield to net investment income, the most directly comparable GAAP measure, see the summary yield table located in “— Investments — Current Environment — Investment Portfolio Results.”

Results of Operations

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

Consolidated Results for the Three Months and Six Months Ended June 30, 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

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

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

642 689 1,610 1,376

Interest credited to policyholder account balances 509 452 1,011 874

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

34 (175) (459) (674)

Preferred stock dividends 25 25 51 51

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

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

418 334 308 564

Income (loss) available to shareholders before provision for income tax (11) (262) (653) (943)

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$ 9 $ (200) $ (510) $ (725)

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

Three Months Ended June 30, 2024 Compared with the Three Months Ended June 30, 2023

Loss available to shareholders before provision for income tax was $11 million (income of $9 million, net of income tax), a lower loss of $251 million ($209 million, net of income tax) from loss available to shareholders before provision for income tax of $262 million ($200 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 and Six Months Ended June 30, 2024 and 2023”;

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

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

• net investment gains (losses) reflecting higher net losses on sales of fixed maturity securities and an increase in the allowance for credit losses, and higher net losses on mortgage loans due to an increase in the allowance for credit losses;

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

The provision for income tax, expressed as a percentage of income (loss) before provision for income tax, 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.

Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023

Loss available to shareholders before provision for income tax was $653 million ($510 million, net of income tax), a lower loss of $290 million ($215 million, net of income tax) from loss available to shareholders before provision for income tax of $943 million ($725 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:

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

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

Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings

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

Three Months Ended March 31, 2024

Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings (Loss)

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

Three Months Ended June 30, 2024

Annuities Life Run-off Corporate & Other Total

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$ 332 $ 42 $ (30) $ 2 $ 346

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Annuities Life Run-off Corporate & Other Total

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$ 291 $ 15 $ (16) $ (19) $ 271

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

Six Months Ended June 30, 2024

Annuities Life Run-off Corporate & Other Total

(In millions)

Net income (loss) available to shareholders $ 23 $ (8) $ (142) $ (383) $ (510)

Provision for income tax expense (benefit) 150 — (638) 345 (143)

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

173 (8) (780) (38) (653)

Net investment gains (losses) (105) (23) (21) (13) (162)

Net derivative gains (losses), excluding investment hedge adjustments of $ 22

(2,313) 9 (300) (1) (2,605)

Change in market risk benefits 1,796 — — — 1,796

Market value adjustments — — 10 — 10

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

795 6 (469) (24) 308

Provision for income tax expense (benefit) 150 — (98) 8 60

Adjusted earnings (loss)

$ 645 $ 6 $ (371) $ (32) $ 248

Six Months Ended June 30, 2023

Annuities Life Run-off Corporate & Other Total

(In millions)

Net income (loss) available to shareholders $ (918) $ 12 $ 513 $ (332) $ (725)

Provision for income tax expense (benefit) 134 2 (633) 279 (218)

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

(784) 14 (120) (53) (943)

Net investment gains (losses) (128) (7) (14) (11) (160)

Net derivative gains (losses), excluding investment hedge adjustments of $ 61

(2,506) 3 55 1 (2,447)

Change in market risk benefits 1,106 — — — 1,106

Market value adjustments — — (6) — (6)

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

744 18 (155) (43) 564

Provision for income tax expense (benefit) 139 2 (33) (10) 98

Adjusted earnings (loss)

$ 605 $ 16 $ (122) $ (33) $ 466

Consolidated Results for the Three Months and Six Months Ended June 30, 2024 and 2023 — Adjusted Earnings

The components of adjusted earnings were as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

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

418 334 308 564

Provision for income tax expense (benefit) 72 63 60 98

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.

$ 346 $ 271 $ 248 $ 466

Three Months Ended June 30, 2024 Compared with the Three Months Ended June 30, 2023

Adjusted earnings were $346 million in the current period, an increase of $75 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;

partially offset by

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

• lower other expenses due to:

◦ lower deferred compensation and operational expenses;

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

◦ lower transition services agreement expenses;

• lower net costs associated with insurance-related activities due to an increase in income annuity underwriting margins.

Key net unfavorable impact was:

• lower net fee income due to:

◦ higher ceded cost of insurance fees driven by the aging in-force business in our Run-off segment, as well as less favorable equity market returns in our Life segment, which is mostly offset in other expenses;

partially offset by

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

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 16% 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 and tax credits.

Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023

Adjusted earnings were $248 million in the current period, a decrease of $218 million.

Key net unfavorable impacts were:

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• 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;

◦ higher ceded cost of insurance fees related to the conclusion of the aforementioned reinsurance arbitration in our Life and Run-off segments, as well as the aging in-force business in our Run-off segment;

partially offset by

◦ 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 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 on other limited partnerships;

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

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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 Ended March 31, 2024 and 2023 — Adjusted Earnings

Segments and Corporate & Other Results for the Three Months and Six Months Ended June 30, 2024 and 2023 — Adjusted Earnings

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

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

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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 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.

Three Months Ended June 30, 2024 Compared with the Three Months Ended June 30, 2023

Adjusted earnings were $332 million in the current period, an increase of $41 million.

Key net favorable impacts were:

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

• lower other expenses due to lower operational expenses;

• lower costs associated with insurance-related activities due an increase in income annuity underwriting margins;

• higher net investment spread due to:

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◦ 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.

◦ lower returns on other limited partnerships.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), 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.

Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023

Adjusted earnings were $645 million in the current period, an increase of $40 million.

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:

◦ 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;

partially offset by

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

• lower other expenses due to:

◦ lower operational expenses;

◦ lower transition services agreement expenses;

partially offset by

◦ higher variable compensation.

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

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), 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.

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

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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.

$ 42 $ 15 $ 6 $ 16

Three Months Ended June 30, 2024 Compared with the Three Months Ended June 30, 2023

Adjusted earnings were $42 million in the current period, an increase of $27 million.

Key favorable impacts were:

• lower net costs associated with insurance-related activities due to lower paid claims, net of reinsurance;

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

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

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), resulted in an effective tax rate of 19% in the current period compared to 17% in the prior period.

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

Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023

Adjusted earnings were $6 million in the current period, a decrease of $10 million.

Key unfavorable impact was lower fee income due to higher ceded cost of insurance fees related to the conclusion of the aforementioned 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.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), 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 impact of the dividends received deduction.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

5 unchanged sentences

Pre-tax adjusted earnings (loss)

(37) (21) (469) (155)

Provision for income tax expense (benefit) (7) (5) (98) (33)

1 unchanged sentence

$ (30) $ (16) $ (371) $ (122)

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

Three Months Ended June 30, 2024 Compared with the Three Months Ended June 30, 2023

Adjusted loss was $30 million in the current period, a higher loss of $14 million.

Key unfavorable impacts were:

• higher costs associated with insurance-related activities due to higher paid claims, net of reinsurance;

• lower fee income due to higher ceded cost of insurance fees driven by the aging in-force business.

Key favorable impacts were:

• higher net investment spread due to lower interest credited to policyholders due to lower account balances;

• lower other expenses due to lower operational expenses.

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

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

Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023

Adjusted loss was $371 million in the current period, a higher loss of $249 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;

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

partially offset by

◦ lower paid claims, net of reinsurance;

• 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.

• lower fee income due to higher ceded cost of insurance fees related to the conclusion of the aforementioned reinsurance arbitration and the aging in-force business.

Key favorable impact was:

• higher net investment spread due to:

◦ higher returns on other limited partnerships;

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

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), 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

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

6 unchanged sentences

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

(7) (20) (24) (43)

Provision for income tax expense (benefit) (9) (1) 8 (10)

1 unchanged sentence

$ 2 $ (19) $ (32) $ (33)

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.

Three Months Ended June 30, 2024 Compared with the Three Months Ended June 30, 2023

Adjusted earnings were $2 million in the current period, an increase of $21 million.

Key favorable impacts were:

• 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;

• lower other expenses due to lower deferred compensation and operational expenses.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), 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.

Six Months Ended June 30, 2024 Compared with the Six Months Ended June 30, 2023

Adjusted loss was $32 million in the current period, a lower loss of $1 million.

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings (loss), 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 Ended March 31, 2024 and 2023

Annuity Guaranteed Benefits and Shield Annuity Liabilities for the Three Months and Six Months Ended June 30, 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

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

3 unchanged sentences

Total changes attributable to annuity guaranteed benefits

356 1,300 1,796 1,106

Variable annuity hedges 137 (73) 204 292

1 unchanged sentence

$ (204) $ (466) $ (514) $ (1,368)

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;

Three Months Ended June 30, 2024

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the three months ended June 30, 2024, primarily driven by:

• favorable decreases in annuity guaranteed benefits liabilities due to increasing interest rates;

• 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 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;

Three Months Ended June 30, 2023

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

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

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

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

Six Months Ended June 30, 2024

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the six months ended June 30, 2024, primarily driven by:

• favorable 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.

Six Months Ended June 30, 2023

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

• favorable decreases in annuity guaranteed benefits liabilities due to increasing equity markets;

• favorable changes in variable annuity hedges due to increasing equity markets;

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

Investment Risk Management Strategy

40 unchanged sentences

Three Months Ended

Yield % Amount Yield % Amount

June 30, Six Months Ended

2024 2023 2024 2023

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

(Dollars in millions)

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In millions)

2 unchanged sentences

Adjusted net investment income — in the above yield table $ 1,316 $ 1,219 $ 2,583 $ 2,316

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.

See “— Results of Operations — Consolidated Results for the Three Months and Six Months Ended June 30, 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:

March 31, 2024 December 31, 2023

June 30, 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:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Designation NRSRO Rating Amortized

22 unchanged sentences

(In millions)

March 31, 2024

June 30, 2024

corporate $ 16,894 $ 17,524 $ 1,302 $ 356 $ 53 $ 41 $ 36,170

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 March 31, 2024 and December 31, 2023.

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 2% and 1% of total investments at June 30, 2024 and December 31, 2023, respectively.

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Fair Value % of

9 unchanged sentences

Structured Securities

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.

We held $20.6 billion and $20.2 billion of Structured Securities, at estimated fair value, at June 30, 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:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Fair Value % of

24 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value

14 unchanged sentences

Total $ 6,920 $ 6,383 $ 7,023 $ 6,410

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 rated Aaa using rating agency ratings was $4.4 billion, or 68.9% of total CMBS, and designated NAIC 1 was $6.0 billion, or 94.6% of total CMBS, at June 30, 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:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Fair Value % of

31 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 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 March 31, 2024 and December 31, 2023.

were 98% at both June 30, 2024 and December 31, 2023.

The remainder was collateralized by properties located outside of 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.

At June 30, 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 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.

at both June 30, 2024 and December 31, 2023.

At June 30, 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 6% for New York.

2 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Total Amount % of

45 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 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.

For our commercial mortgage loans, our average loan-to-value ratio was 66% and 65% at June 30, 2024 and December 31, 2023, respectively, and our average debt-service coverage ratio was 2.3x at both June 30, 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 47% at both March 31, 2024 and December 31, 2023.

For our agricultural mortgage loans, our average loan-to-value ratio was 47% at both June 30, 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 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 limited liability companies (“LLC”) were as follows at:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions)

3 unchanged sentences

__________________

(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.

(1) The estimated fair value of real estate limited partnerships and LLCs was $915 million and $927 million at June 30, 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.

2 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Total Carrying

13 unchanged sentences

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 March 31, 2024 and December 31, 2023;

• 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.

• the effects of derivatives in cash flow, fair value, or non-qualifying hedge relationships on the statements of operations for the six months ended June 30, 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.

6 unchanged sentences

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 March 31, 2024 include:

Derivatives categorized as Level 3 at June 30, 2024 include:

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

8 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Gross Notional

14 unchanged sentences

See Note 9 of the Notes to the Interim Condensed Consolidated Financial Statements for (i) information about embedded derivatives measured at estimated fair value on a recurring basis and their corresponding fair value hierarchy and (ii) a rollforward of the fair value measurements for net embedded derivatives measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs.

See “— Summary of Critical Accounting Estimates — Derivatives” for additional information on the estimates and assumptions that affect embedded derivatives.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates — Derivatives” included in our 2023 Annual Report for additional information on the estimates and assumptions that affect embedded derivatives.

Policyholder Liabilities

1 unchanged sentence

Amounts for actuarial liabilities are computed and reported in the financial statements in conformity with GAAP.

See “— Summary of Critical Accounting Estimates” for more details on policyholder liabilities.

See “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 — Policyholder Liabilities” included in our 2023 Annual Report for more details on policyholder liabilities.

Future Policy Benefits

21 unchanged sentences

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

March 31, 2024

June 30, 2024

December 31, 2023

15 unchanged sentences

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 $9.4 billion at March 31, 2024.

These liabilities were valued at $10.0 billion at June 30, 2024.

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions)

6 unchanged sentences

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

June 30, 2024 December 31, 2023

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

10 unchanged sentences

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

June 30, 2024 December 31, 2023

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

19 unchanged sentences

Based upon our capitalization, expectations regarding maintaining our business mix, ratings, and funding sources available to us, we believe we have sufficient liquidity to meet business requirements in current market conditions and certain stress scenarios.

Our Board of Directors and senior management are directly involved in the governance of the capital management process, including proposed changes to the annual capital plan and capital targets.

BHF’s Board of Directors and senior management are directly involved in the governance of the capital management process, including proposed changes to the annual capital plan and capital targets.

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 $4.0 billion and $3.8 billion at March 31, 2024 and December 31, 2023, respectively.

We maintain a substantial short-term liquidity position, which was $4.3 billion and $3.8 billion at June 30, 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 $44.5 billion and $45.2 billion at March 31, 2024 and December 31, 2023, respectively.

An integral part of our liquidity management includes managing our level of liquid assets, which was $48.5 billion and $45.2 billion at June 30, 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.

17 unchanged sentences

With our risk management focus on the core drivers of our combined RBC ratio, we believe we can better manage our RBC in stressed market scenarios.

We have a share repurchase program under which repurchases may be made through open market purchases, including pursuant to 10b5-1 plans or pursuant to accelerated stock repurchase plans, or through privately negotiated transactions, from time to time at management’s discretion in accordance with applicable legal requirements.

We have a share repurchase program under which repurchases may be made through open market purchases, including pursuant to Rule 10b5-1 plans or pursuant to accelerated stock repurchase plans, or through privately negotiated transactions, from time to time at management’s discretion in accordance with applicable legal requirements.

Common stock repurchases are dependent upon several factors, including our capital position, liquidity, financial strength and credit ratings, general market conditions, the market price of our common stock compared to management’s assessment of the stock’s underlying value and applicable regulatory approvals, as well as other legal and accounting factors.

We currently have no plans to declare and pay dividends on our common stock.

Any future declaration and payment of dividends or other distributions or returns of capital will be at the discretion of our Board of Directors and will depend on and be subject to our financial condition, results of operations, cash needs, regulatory and other constraints, capital requirements (including capital requirements of our insurance subsidiaries), contractual restrictions and any other factors that our Board of Directors deems relevant in making such a determination.

Any future declaration and payment of dividends or other distributions or returns of capital will be at the discretion of BHF’s Board of Directors and will depend on and be subject to our financial condition, results of operations, cash needs, regulatory and other constraints, capital requirements (including capital requirements of our insurance subsidiaries), contractual restrictions and any other factors that BHF’s Board of Directors deems relevant in making such a determination.

Therefore, there can be no assurance that we will pay any dividends or make other distributions or returns of capital on our common stock, or as to the amount of any such dividends, distributions or returns of capital.

1 unchanged sentence

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

Three Months Ended

Six Months Ended

(In millions)

Changes in policyholder account balances, net $ 2,623 $ 2,584

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

Changes in payables for collateral under securities loaned and other transactions, net 236 —

Total sources 2,859 2,584

2 unchanged sentences

Changes in payables for collateral under securities loaned and other transactions, net — 427

Long-term debt repaid 1 1

Dividends on preferred stock 51 51

49 unchanged sentences

Outstanding Issuances Repayments

Three Months Ended March 31,

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

Six Months Ended June 30,

June 30, 2024 December 31, 2023 2024 2023 2024 2023

(In millions)

12 unchanged sentences

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

At June 30, 2024, we were in compliance with these financial covenants.

Primary Uses of Liquidity and Capital

1 unchanged sentence

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 March 31, 2024.

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.

Subsequent to June 30, 2024 and through August 2, 2024, BHF repurchased an additional 509,400 shares of its common stock through open market purchases pursuant to a Rule 10b5-1 plan for $24 million.

Preferred Stock Dividends

16 unchanged sentences

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

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.

At June 30, 2024 and December 31, 2023, we pledged $38 million and $16 million, respectively, of cash collateral to counterparties.

At June 30, 2024 and December 31, 2023, we were obligated to return cash collateral pledged to us by counterparties of $627 million and $393 million, respectively.

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

2 unchanged sentences

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 $2.0 billion and $2.4 billion at March 31, 2024 and December 31, 2023, respectively.

The amount of this non-cash collateral at estimated fair value was $2.0 billion and $2.4 billion at June 30, 2024 and December 31, 2023, respectively.

Securities Lending

2 unchanged sentences

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 $3.3 billion at March 31, 2024 and December 31, 2023, respectively.

We were liable for cash collateral under our control of $3.3 billion at both June 30, 2024 and December 31, 2023.

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 March 31, 2024 and December 31, 2023.

There was no non-cash collateral at both June 30, 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.

13 unchanged sentences

Short-term Liquidity and Liquid Assets

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.

At both June 30, 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 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.

At June 30, 2024 and December 31, 2023, BHF and certain of its non-insurance subsidiaries had liquid assets of $1.2 billion and $1.3 billion, respectively, of which $1.2 billion and $1.2 billion, respectively, 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.

22 unchanged sentences

Distributions from and 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.

During both the six months ended June 30, 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

2 unchanged sentences

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

During the 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.

During the six months ended June 30, 2024 and 2023, BHF borrowed $290 million and $397 million, respectively, from certain of its non-insurance subsidiaries and repaid $85 million and $279 million of such borrowings during the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024 and December 31, 2023, BHF had total obligations outstanding of $932 million and $727 million, respectively, under such agreements.

Intercompany Liquidity Facilities

1 unchanged sentence

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 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.

During both the six months ended June 30, 2024 and 2023, there were no borrowings or repayments by BHF under these facilities and, at both June 30, 2024 and December 31, 2023, BHF had no obligations outstanding under such facilities.

Note Regarding Forward-Looking Statements

43 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis