Index to Business
−Removed: Segments and Corporate & Other
+Added: Segment Information
Reinsurance Activity
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We remain focused on maintaining our strong capital base and excess liquidity at the holding company, and we have established a risk management approach that seeks to mitigate the effects of severe market disruptions and other economic events on our business.
−Removed: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies,” “Risk Factors — Risks Related to Our Business — Our variable annuity exposure risk management strategy may not be effective, may result in significant volatility in our profitability measures or may negatively affect our statutory capital” and “— Segments and Corporate & Other — Annuities.”
−Removed: Segments and Corporate & Other
−Removed: We are organized into three segments:
−Removed: In addition, we report certain of our results of operations in Corporate & Other.
−Removed: In addition to the discussion that follows, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Segments and Corporate & Other Results for the Years Ended December 31, 2023 and 2022 - Adjusted Earnings” and Note 3 of the Notes to the Consolidated Financial Statements for additional information regarding each of our segments and Corporate & Other.
+Added: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies,” “Risk Factors — Risks Related to Our Business — Our hedging strategy may not be effective, which may result in significant volatility in our profitability measures or may negatively affect our statutory capital” and “— Segment Information — Annuities.”
+Added: Segment Information
+Added: We are organized into the following reportable segments:
+Added: and Corporate & Other.
+Added: In addition to the discussion that follows, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Segment Results for the Years Ended December 31, 2024 and 2023 - Adjusted Earnings (Loss)” and Note 2 of the Notes to the Consolidated Financial Statements for additional information regarding each of our segments.
Substantially all of our premiums, universal life and investment-type product policy fees and other revenues originated in the U.S.
−Removed: Assets under management (“AUM”) for each of our segments, as well as Corporate & Other, was as follows at:
+Added: Assets under management (“AUM”) for each of our segments was as follows at:
December 31, 2024 December 31, 2023
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In 2013, we began a shift in our business mix towards fixed products with lower guaranteed minimum crediting rates and variable annuity products with less risky living benefits while simultaneously increasing our emphasis on index-linked annuity products.
−Removed: Since 2014, our new sales have primarily consisted of Shield ® Level Annuities (“Shield” and “Shield Annuities”) and variable annuities with simplified living benefits.
+Added: Since 2014, our new sales have primarily consisted of Shield ® Level Annuities (“Shield” and “Shield Annuities”), fixed annuities and variable annuities with simplified living benefits.
We have launched new products and refined existing products as we continue to strive to innovate in response to customer and distributor needs and market conditions.
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We seek to meet our risk-adjusted return objectives in our Annuities segment through a disciplined risk selection approach and innovative product design, balancing overall profitability with sales growth.
−Removed: We believe we have the underwriting approach, product design capabilities and distribution relationships to permit us to offer new products that meet our risk-adjusted return objectives and that such capabilities will enhance our ability to maintain market presence and relevance over the long-term.
+Added: We believe we have the underwriting approach, product design capabilities and distribution relationships that allows us to offer new products that meet our risk-adjusted return objectives and that such capabilities will enhance our ability to maintain market presence and relevance over the long-term.
We intend to meet our risk management objectives by continuing to hedge significant market risks associated with our existing annuity products, as well as new business.
−Removed: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies — Variable Annuity Exposure Risk Management.”
+Added: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies.”
Shield Annuities
Our flagship suite of Shield Annuities provides for accumulation of retirement savings or other long-term investments and combines certain features found in both variable and fixed annuities.
−Removed: Shield Annuities are deferred annuity contracts that provide the contract holder with the ability to participate in the appreciation of certain financial markets up to a stated level, while offering protection from a portion of declines.
+Added: Shield Annuities are registered index-linked annuity contracts that provide the contract holder with the ability to participate in the appreciation of certain financial markets up to a stated level, while offering protection from a portion of declines.
Rather than allocating purchase payments directly into the equity market, the contract holder has an opportunity to participate in the returns of a specified market index.
Shield Annuities also offer account value and return of premium death benefits.
−Removed: A recent addition to our suite of Shield Annuities is an individual single premium deferred annuity contract, which provides for the potential accumulation of retirement savings as well as an opportunity for lifetime income through a guaranteed lifetime withdrawal benefit rider.
+Added: In addition, newer versions of Shield Annuities may also provide an opportunity for lifetime income through a guaranteed lifetime withdrawal benefit feature.
To protect us from premature withdrawals, we impose surrender charges, which are typically applicable during the early years of the annuity contract and decline over time.
Surrender charges allow us to recoup amounts we expended to initially market and sell such annuities.
+Added: Newer versions of our Shield Annuities also have a provision that adjusts the amount available upon surrender or withdrawal that is intended to protect us against rising interest rates.
Fixed Deferred Annuities
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Credited interest rates are guaranteed for at least one year.
−Removed: A new addition to our FIA offerings is an individual single premium deferred annuity contract, which provides for the potential accumulation of retirement savings as well as an opportunity for lifetime income through an optional guaranteed lifetime withdrawal benefit rider.
+Added: Our FIA offerings are individual single premium deferred annuity contracts that provide for the potential accumulation of retirement savings as well as an opportunity for lifetime income through an optional guaranteed lifetime withdrawal benefit rider.
To protect us from premature withdrawals, we impose surrender charges, which are typically applicable during the early years of the annuity contract and decline over time.
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DIAs differ from SPIAs in that DIAs require the contract holder to wait at least 15 months before income payments commence.
−Removed: SPIAs and DIAs are priced based on considerations consistent with the annuitant’s age, gender and, in the case of DIAs, the deferral period.
+Added: SPIAs and DIAs are priced utilizing the annuitant’s age, gender and, in the case of DIAs, the deferral period.
DIAs provide a pension-like stream of income payments after a specified deferral period.
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Variable annuities may have more than one type of GMxB.
−Removed: The primary types of GMxBs are those that guarantee death benefits payable upon the death of a contract holder (guaranteed minimum death benefits, “GMDB”) and those that guarantee benefits payable while the contract holder or annuitant is alive (guaranteed minimum living benefits, “GMLB”).
−Removed: There are three primary types of GMLBs:
−Removed: guaranteed minimum income benefits (“GMIB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum accumulation benefits (“GMAB”).
+Added: The primary types of GMxBs are those that guarantee death benefits payable upon the death of a contract holder (guaranteed minimum death benefits, “GMDB”) and those that guarantee benefits payable while the contract holder or annuitant is alive (guaranteed minimum living benefits, “GMLB,” which include guaranteed minimum income benefits (“GMIB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum accumulation benefits (“GMAB”)).
The guaranteed benefit received by a contract holder pursuant to the GMxBs is calculated based on a notional amount known as the benefit base (“Benefit Base”).
−Removed: The calculation of the Benefit Base varies by benefit type and may differ in value from the contract holder’s account value for the following reasons:
−Removed: • The Benefit Base is defined to exclude the effect of a decline in the market value of the contract holder’s account value.
−Removed: By excluding market declines, actual claim payments to be made in the future to the contract holder will be determined without giving effect to equity market declines;
−Removed: • The terms of the Benefit Base may allow it to increase at a guaranteed rate irrespective of the rate of return on the contract holder’s account value;
−Removed: • The Benefit Base may also increase with subsequent purchase payments, after the initial purchase payment made by the contract holder at the time of issuance of the contract, or at the contract holder’s election with an increase in the account value due to market performance.
+Added: The calculation of the Benefit Base varies by benefit type and may differ in value from the contract holder’s account value.
Variable Annuity Fees
We earn various types of fee revenue based on account value, fund assets and the guarantees for contracts that invest through a separate account.
−Removed: We earned fees and charges on our variable annuity contracts that invest through a separate account of $2.6 billion and $2.8 billion, net of pass-through amounts, for the years ended December 31, 2023 and 2022, respectively.
+Added: We earned fees and charges on our variable annuity contracts that invest through a separate account of $2.6 billion, net of pass-through amounts, for both years ended December 31, 2024 and 2023.
In addition to fee revenue, we also earn a spread on the portion of the account value allocated to the general account.
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A surrender charge is a deduction of a percentage of the contract holder’s account value prior to distribution to him or her.
−Removed: Surrender charges generally decline gradually over the surrender charge period, which can range from zero to 10 years.
+Added: Surrender charges generally decline gradually over the surrender charge period, which can range from zero to ten years.
Our variable annuity contracts typically permit contract holders to withdraw up to 10% of their account value each year without any surrender charge, however, their guarantees may be significantly impacted by such withdrawals.
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We may also reevaluate the type and level of guarantee features being offered from time to time.
−Removed: We continually review our pricing guidelines, models and assumptions in light of applicable regulations and experience to ensure that our policies remain competitive and aligned with our marketing strategies and profitability goals.
−Removed: Evolution of our Variable Annuity Business
−Removed: Our in-force variable annuity block reflects a wide variety of product offerings within each type of guarantee, reflecting the changing nature of these products over the past two decades.
−Removed: The changes in product features and terms over time are driven partially by customer demand and also reflect our continually refined evaluation of the guarantees, their expected long-term claims costs and the most effective market risk management strategies.
+Added: We regularly review our pricing guidelines, models and assumptions in light of applicable regulations and experience in an effort to ensure that our policies remain competitive and aligned with our marketing strategies and profitability goals.
+Added: Evolution of our Annuity Business
+Added: Our in-force annuity block reflects a wide variety of product offerings, reflecting the changing nature of these products over the past three decades.
+Added: The changes in product features and terms over time are driven partially by customer demand and also reflect our continually refined evaluation of product guarantees, their expected long-term claims costs and the most effective market risk management strategies.
We introduced our first variable annuity product over 50 years ago and began offering GMIBs, which were our first living benefit riders, in 2001.
−Removed: Beginning in 2009, we reduced the minimum payments we guaranteed if the contract holder were to annuitize;
−Removed: in 2012 we began to reduce the guaranteed portion of account value up to a percentage of the Benefit Base (“roll-up rates”);
−Removed: and, after first reducing the maximum equity allocation in separate accounts, in 2011 we introduced managed volatility funds for all of our GMIBs.
−Removed: We ceased offering GMABs and GMIBs for new purchases in 2016 and, to the extent permitted, we suspended subsequent premium payments on all but our final generation of GMIBs.
−Removed: While we added GMWBs to our variable annuity product suite in 2003, we shifted our marketing focus from GMIBs to GMWBs in 2015 with the release of FlexChoice SM , a GMWB with lifetime payments.
+Added: Beginning in 2009, we began taking actions to reduce our risk exposure to GMIBs, and, in 2016, we ceased offering GMABs and GMIBs for purchase.
+Added: In 2015, we shifted our marketing focus from GMIBs to GMWBs with the release of FlexChoice SM , a GMWB with lifetime payments.
In 2018, we launched an updated version of FlexChoice SM , “Flex Choice Access,” to provide financial advisors and their clients more investment flexibility.
−Removed: We introduced Shield Annuities in 2013 and expect to continue to increase sales of Shield Annuities due to growing consumer demand.
−Removed: In addition, we believe Shield Annuities provide us with risk offset to the GMxBs offered in our traditional variable annuity products.
−Removed: At December 31, 2023, we had $28.8 billion of policyholder account balances for Shield Annuities.
−Removed: We intend to focus on selling the following variable annuity products with the goal of continuing to diversify and better manage our in-force block:
−Removed: • our suite of Shield Annuities;
−Removed: • variable annuities with GMWBs;
−Removed: • variable annuities with GMDB only.
+Added: We introduced Shield Annuities in 2013 and sales have continued to increase due to growing consumer demand.
+Added: Shield Annuities have historically provided us with a risk offset to the GMxBs offered in our traditional variable annuity products, and we historically managed our variable annuities and Shield Annuities on a combined basis.
+Added: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Strategies.”
+Added: In July 2024, we launched updated versions of our suite of Shield Annuities, which we manage separately from our variable annuities and first generation Shield Annuities.
+Added: Going forward, we intend to focus on selling our new suite of Shield Annuity products, along with variable annuities with GMWBs and GMDBs only.
Deposits for our Shield Annuities and variable annuities were as follows:
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GMIBs are our largest block of living benefit guarantees based on in-force account value.
−Removed: Contract holders must wait for a defined period, usually 10 years, before they can elect to receive income through guaranteed annuity payments.
+Added: Contract holders must wait for a defined period, usually ten years, before they can elect to receive income through guaranteed annuity payments.
Contract holder behavior around choosing a particular option cannot be predicted with certainty at the time of contract issuance or thereafter.
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See “Risk Factors — Risks Related to Our Business — Guarantees within certain of our annuity products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased market risk” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates.”
−Removed: We employed several risk exposure reduction strategies at the product level.
+Added: Before we ceased offering GMIBs for purchase in 2016, we employed several risk exposure reduction strategies at the product level.
These include reducing the interest rates used to determine annuity payout rates on GMIBs from 2.5% to 0.5% over time.
−Removed: In addition, we increased the setback period used to determine the annuity payout rates for contract holders from seven years to 10 years.
+Added: In addition, we increased the setback period used to determine the annuity payout rates for contract holders from seven years to ten years.
We also reduced the guaranteed roll-up rates from 6% to 4%.
−Removed: Additionally, we introduced limitations on fund selections inside certain legacy variable annuity contracts.
−Removed: In 2005, we reduced the maximum equity allocation in the separate accounts.
−Removed: Further, in 2011 we introduced managed volatility funds to our fund offerings in conjunction with the introduction of our last generation GMIB product “Max.” Approximately 29% and 30% of GMIB total account value at December 31, 2023 and 2022, respectively, was invested in managed volatility funds.
+Added: Additionally, we introduced limitations on fund selections inside certain variable annuity contracts and introduced managed volatility funds to our fund offerings in conjunction with the introduction of our last generation GMIB product “Max.” Approximately 28% and 29% of GMIB total account value at December 31, 2024 and 2023, respectively, was invested in managed volatility funds.
The managers of these funds seek to reduce the risk of large, sudden declines in account value during market downturns by managing the volatility or draw-down risk of the underlying fund holdings by rebalancing the fund holdings within certain guidelines or overlaying hedging strategies at the fund level.
We believe that these risk mitigation actions at the fund level reduce the amount of hedging or reinsurance we require to manage our risks arising from guarantees we provide on the underlying variable annuity separate accounts.
−Removed: GMWBs have a Benefit Base that contract holders may roll up for up to 10 years.
−Removed: If contract holders take withdrawals early, the roll-up may be less than 10 years.
−Removed: This is in contrast to GMIBs, in which roll-ups may continue beyond 10 years.
+Added: GMWBs have a Benefit Base that contract holders may roll up for up to ten years.
+Added: If contract holders take withdrawals early, the roll-up may be less than ten years.
+Added: This is in contrast to GMIBs, in which roll-ups may continue beyond ten years.
Therefore, the roll-up period for the Benefit Base on GMWBs is typically less uncertain and is shorter than those on GMIBs.
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GMABs guarantee a minimum amount of account value to the contract holder after a set period of time, which can also include locking in capital markets gains.
−Removed: This protects the value of the annuity from market fluctuations.
+Added: This can protect the value of the annuity from market fluctuations.
Our variable annuity account value and Benefit Base by type of GMLB were as follows at:
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Under accounting principles generally accepted in the United States of America (“GAAP”), variable annuity guarantees are classified as MRBs, measured at estimated fair value, and are reported in market risk benefit assets and liabilities on the consolidated balance sheets, with changes reported in change in market risk benefits on the consolidated statements of operations, except for changes related to nonperformance risk, which are reported in other comprehensive income on the consolidated statements of comprehensive income (loss).
−Removed: Additionally, the index protection and accumulation features of Shield Annuities are accounted for as embedded derivatives (“Shield liabilities”), measured at estimated fair value, and are reported in policyholder account balances on the consolidated balance sheets, with changes reported in net derivative gains (losses) on the consolidated statements of operations.
−Removed: These liabilities were valued at $7.7 billion at December 31, 2023.
+Added: 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.
+Added: The Shield embedded derivative liabilities were valued at $10.9 billion at December 31, 2024.
Our variable annuity MRBs by type of GMxB were as follows at:
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Total $ 8,307 $ 10,314
−Removed: The estimated fair value of these guarantees can change significantly due to changes in equity market performance, equity market volatility or interest rates.
−Removed: Fair values are also affected by our assumptions around mortality, separate account returns and policyholder behavior, including lapse, annuitization and withdrawal rates.
−Removed: See “Risk Factors — Risks Related to Our Business — Guarantees within certain of our annuity products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased market risk.”
+Added: The estimated fair value of these guarantees can change significantly due to changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital markets inputs, as well as changes in nonperformance risk.
+Added: See “Risk Factors — Risks Related to Our Business — Differences between actual experience and actuarial assumptions may adversely affect our financial results, capitalization and financial condition” and “Risk Factors — Risks Related to Our Business — Guarantees within certain of our annuity products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased market risk.”
Our Life segment consists of insurance products, including term, universal, whole and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be on a tax-advantaged basis.
−Removed: While our in-force book reflects a broad range of life products, we are currently focused on term life products and universal life products with index-linked benefits, consistent with our financial objectives, with a concentration on design and profitability over volume.
+Added: While our in-force book reflects a broad range of life products, we are currently focused on term life products and universal life products with index-linked benefits, concentrating on design and profitability over volume.
By managing our in-force book of business, we expect to generate future revenue and profits from premiums, investment margins, expense margins, mortality margins, morbidity margins and surrender fees.
We aim to maximize our profits by focusing on efficiency in order to continue to reduce the cost basis and underwriting expenses.
−Removed: Our life insurance in-force book provides natural diversification to our Annuities segment.
Insurance liabilities of our life insurance products were as follows at:
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Term life products are designed to provide a fixed death benefit in exchange for a guaranteed level premium to be paid over a specified period of time.
−Removed: In 2019, we suspended sales of our 10- to 30-year level premium term products and, in 2020, we launched a new term product with 10-, 20- or 30-year level premium term options.
+Added: In 2020, we launched a new term product with 10-, 20- or 30-year level premium term options, which we plan to cease offering during the first half of 2025.
We also offer a one-year term option.
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Such conversion does not require additional medical or financial underwriting.
−Removed: Term life products allow us to spread expenses over a large number of policies while gaining mortality insights that come from high policy volumes.
+Added: We currently offer a non-participating conversion whole life product that is available for term and group conversions and to satisfy other contractual obligations.
+Added: We have a significant in-force book of both participating and non-participating whole life policies.
+Added: Whole life products provide a guaranteed death benefit in exchange for a guaranteed level premium for a specified period of time in order to maintain coverage for the life of the insured.
+Added: Whole life products also have guaranteed minimum cash surrender values.
+Added: Our in-force whole life products provide for participation in the returns generated by the business, delivered to the policyholder in the form of non-guaranteed dividend payments.
+Added: The policyholder can elect to receive the dividends in cash or use them to increase the paid-up policy death benefit or pay the required premium.
+Added: They can also be used for other purposes, including payment of loans and loan interest.
+Added: The versatility of whole life allows it to be used for a variety of purposes beyond just the primary purpose of death benefit protection.
+Added: With our in-force policies, the policyholder can withdraw or borrow against the policy (sometimes on a tax favored basis).
Universal Life
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Consequently, universal life policies can be used in a variety of different ways.
−Removed: Brighthouse SmartCare ® , our index-linked universal life product launched in 2019, which we market as a hybrid life insurance and long-term care policy, allows policyholders to
−Removed: pay for qualified long-term care expenses by accelerating a significant portion of the face amount of the policy over a period of time.
+Added: Brighthouse SmartCare ® , our index-linked universal life product launched in 2019, which we market as a hybrid life insurance and long-term care policy, allows policyholders to pay for qualified long-term care expenses by accelerating a significant portion of the face amount of the policy over a period of time.
After that period of time, the policyholder may continue to receive benefits up to their maximum monthly amount for up to four additional years.
1 unchanged sentence
With positive policy performance, the amount of guaranteed distribution payments available may increase over time.
−Removed: We currently offer a non-participating conversion whole life product that is available for term and group conversions and to satisfy other contractual obligations.
−Removed: We have a significant in-force book of both participating and non-participating whole life policies.
−Removed: Whole life products provide a guaranteed death benefit in exchange for a guaranteed level premium for a specified period of time in order to maintain coverage for the life of the insured.
−Removed: Whole life products also have guaranteed minimum cash surrender values.
−Removed: Our in-force whole life products provide for participation in the returns generated by the business, delivered to the policyholder in the form of non-guaranteed dividend payments.
−Removed: The policyholder can elect to receive the dividends in cash or to use them to increase the paid-up policy death benefit or pay the required premium.
−Removed: They can also be used for other purposes, including payment of loans and loan interest.
−Removed: The versatility of whole life allows it to be used for a variety of purposes beyond just the primary purpose of death benefit protection.
−Removed: With our in-force policies, the policyholder can withdraw or borrow against the policy (sometimes on a tax favored basis).
Variable Life
We have a significant in-force book of variable life policies, but do not currently offer variable life policies.
−Removed: We may choose to issue additional variable life products in the future.
Variable life products operate similarly to universal life products, with the additional feature that the excess amount paid over policy charges can be directed by the policyholder into a variety of separate account investment options.
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Our product pricing reflects our pricing standards and guidelines.
−Removed: We continually review our pricing guidelines in light of applicable regulations and to ensure that our policies remain competitive and aligned with our marketing strategies and profitability goals.
+Added: We regularly review our pricing guidelines in light of applicable regulations and to ensure that our policies remain competitive and aligned with our marketing strategies and profitability goals.
We have established important controls around management of underwriting and pricing processes, including regular experience studies to monitor assumptions against expectations, formal new product approval processes, periodic updates to product profitability studies and the use of reinsurance to manage our exposures, as appropriate.
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The office is also subject to periodic external audits by reinsurers with whom we do business.
−Removed: We have established oversight of the underwriting process that facilitates quality sales and serves the needs of our customers, while supporting our financial strength and business objectives.
+Added: We believe we have established oversight of the underwriting process that facilitates quality sales and serves the needs of our customers, while supporting our financial strength and business objectives.
Our goal is to achieve the underwriting, mortality and morbidity levels reflected in the assumptions in our product pricing.
−Removed: This is accomplished by determining and establishing underwriting policies, guidelines, philosophies and strategies that are competitive and suitable for the customer, the agent and us.
−Removed: We continually review our underwriting guidelines (i) in light of applicable regulations and (ii) to ensure that our practices remain competitive and aligned with our marketing strategies, emerging industry trends and profitability goals.
−Removed: Our Run-off segment consists of products that are no longer actively sold and are separately managed, including ULSG, structured settlements, pension risk transfer contracts, certain company-owned life insurance policies and certain funding agreements.
+Added: We seek to accomplish this by determining and establishing underwriting policies, guidelines, philosophies and strategies that are competitive and suitable for the customer, the agent and us.
+Added: We regularly review our underwriting guidelines (i) in light of applicable regulations and (ii) to ensure that our practices remain competitive and aligned with our marketing strategies, emerging industry trends and profitability goals.
+Added: Our Run-off segment consists primarily of products that are no longer actively sold and are separately managed, including ULSG, structured settlements, pension risk transfer contracts, certain company-owned life insurance policies and certain funding agreements.
Insurance liabilities of our annuity contracts and life insurance policies reported in our Run-off segment were as follows at:
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Pension risk transfer 2,217 — 2,217 2,423 — 2,423
+Added: Company-owned life insurance
+Added: 1,173 1,808 2,981 663 2,162 2,825
Other 26 23 49 528 19 547
1 unchanged sentence
Corporate & Other
−Removed: Corporate & Other contains the excess capital not allocated to the segments, interest expense related to our outstanding debt, and preferred stock dividends, as well as expenses associated with certain legal proceedings and income tax audit issues.
−Removed: Corporate & Other also includes long-term care business reinsured through 100% quota share reinsurance agreements and activities related to funding agreements associated with our institutional spread margin business.
+Added: Our Corporate & Other segment consists of activities related to funding agreements associated with our institutional spread margin business, excess capital not allocated to the other segments, interest expense related to our outstanding debt, and preferred stock dividends, as well as expenses associated with certain legal proceedings and income tax audit issues.
+Added: Corporate & Other also includes long-term care business reinsured through 100% quota share reinsurance agreements.
+Added: See Note 3 of the Notes to the Consolidated Financial Statements for additional information on funding agreements.
Reinsurance Activity
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Munich American Reassurance Company 545 A+
−Removed: The Travelers Indemnity Company (2) 470 A++
RGA Reinsurance Company 481 A+
+Added: The Travelers Indemnity Company (2) 443 A++
Swiss Re Life & Health America Inc.
−Removed: Aegon NV 126 A
−Removed: General Re Life Corporation 99 NR
+Added: Aegon NV 133 NR
+Added: General Re Life Corporation 101 A++
Allowance for credit losses (3)
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_______________
−Removed: (1) These financial strength ratings are the most currently available for our reinsurance counterparties and reflect the ratings of the ultimate parent companies of such counterparties, as there may be numerous subsidiary counterparties to each listed parent.
+Added: (1) These financial strength ratings were the most currently available for our reinsurance counterparties as of December 31, 2024, and reflect the ratings of the ultimate parent companies of such counterparties, as there may be numerous subsidiary counterparties to each listed parent.
(2) Relates to a block of workers’ compensation insurance policies reinsured in connection with a former affiliate’s acquisition of The Travelers Indemnity Company (“Travelers”) from Citigroup, Inc.
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Additionally, Citigroup agreed to indemnify us for losses and certain other payment obligations we might incur with respect to this block of reinsured long-term care insurance business.
−Removed: The most currently
−Removed: available financial strength rating for each of the Genworth reinsurers is C++ from A.M.
−Removed: Best, and Citigroup’s credit ratings are A3 from Moody’s and BBB+ from S&P.
−Removed: In February 2021, we received a demand for arbitration from the Genworth reinsurers seeking authorization to withdraw certain amounts from the trust accounts.
−Removed: In March 2023, the arbitration panel ruled that the trusts were funded in excess of the amount required and that such excess amounts were to be released from the trusts.
−Removed: We have complied with the arbitration panel’s ruling.
+Added: The financial strength rating as of December 31, 2024 for each of the Genworth reinsurers was C++ from A.M.
+Added: Best, and Citigroup’s credit ratings were A3 from Moody’s and BBB+ from S&P.
See “Risk Factors — Risks Related to Our Business — If the counterparties to our reinsurance or indemnification arrangements or to the derivatives we use to hedge our business risks default or fail to perform, we may be exposed to risks we had sought to mitigate, which could materially adversely affect our financial condition and results of operations.” Further, as disclosed in Genworth’s filings with the SEC, UFLIC has established trust accounts for the Genworth reinsurers’ benefit to secure UFLIC’s obligations under its arrangements with them concerning this block of long-term care insurance business, and GE has also agreed, under a capital maintenance agreement, to keep sufficient capital in UFLIC to maintain UFLIC’s risk-based capital (“RBC”) above a specified minimum level.
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Our SRMs serve as the principal contact for our largest annuity and life insurance distributors and coordinate the relationship between Brighthouse Financial and the distributor.
−Removed: SRMs provide an enhanced level of service to partners that require more resources to support their larger distribution network.
+Added: SRMs provide an enhanced level of service to partners that require more resources to support their larger distribution networks.
SRMs are responsible for tracking and providing certain key distributors with sales and activity data.
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National broker-dealers — % 2 % 3 % — % 5 %
−Removed: Other — % — % 4 % 1 % 5 %
Our top five distributors of annuity products produced 13%, 11%, 11%, 9% and 6% of our deposits of annuity products for the year ended December 31, 2024.
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State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose TAC does not meet or exceed certain RBC levels.
−Removed: See “Risk Factors — Regulatory and Legal Risks — A decrease in the RBC ratio of our insurance subsidiaries (as a result of a reduction in statutory capital and surplus or an increase in the required RBC capital charges), or a change in the rating agency proprietary capital models for our insurance subsidiaries, could result in increased scrutiny by insurance regulators and rating agencies and could have a material adverse effect on our financial condition and results of operations,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and Note 13 of the Notes to the Consolidated Financial Statements.
−Removed: In August 2022, the NAIC adopted changes to the RBC factors for life insurance contracts.
−Removed: These changes became effective on December 31, 2022, and, upon adoption, they did not have a material impact on our combined RBC ratio.
−Removed: In June 2021, the NAIC adopted changes to the RBC factors for bonds and real estate and created a new set of RBC charges for longevity risk.
−Removed: These changes became effective on December 31, 2021, and, upon adoption, they did not have a material impact on our combined RBC ratio.
+Added: See “Risk Factors — Regulatory and Legal Risks — A decrease in the RBC ratio of our insurance subsidiaries (as a result of a reduction in statutory capital and surplus or an increase in the required RBC capital charges), or a change in the rating agency proprietary capital models for our insurance subsidiaries, could result in increased scrutiny by insurance regulators and rating agencies or BHF contributing capital to its subsidiaries and could have a material adverse effect on our financial condition and results of operations,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and Note 12 of the Notes to the Consolidated Financial Statements.
+Added: The NAIC is currently reviewing asset-intensive reinsurance and, in March 2024, exposed a draft actuarial guideline that proposed broad changes to asset adequacy testing requirements for ceded reinsurance.
+Added: The NAIC has since refined the proposal with an initial focus on large transactions and transactions with related parties, and they determined that, for 2025, companies are required to comply with the actuarial guideline on a disclosure-only basis.
+Added: The NAIC plans to review the disclosures to identify concerns with insurers’ approaches to asset adequacy testing, with the possibility of making additional changes in the future that could lead to higher reserves for certain reinsurance agreements.
+Added: In March 2024, the NAIC adopted a new principles-based bond definition and related financial reporting changes, that became effective as of January 1, 2025.
+Added: The new guidance modifies the classification requirements for fixed income instruments, which could lead to changes in their measurement basis and RBC requirements.
In August 2018, the NAIC adopted the framework for variable annuity reserve and capital reform (“VA Reform”), which was adopted by Brighthouse Financial effective December 31, 2019.
The revisions, which resulted in substantial changes in reserves, statutory surplus and capital requirements, were designed to mitigate the incentive for insurers to engage in captive reinsurance transactions by making improvements to Actuarial Guideline 43 and the Life Risk Based Capital C3 Market Risk (“RBC C3 Market Risk”) capital requirements.
−Removed: VA Reform is intended to (i) mitigate the asset liability accounting mismatch between hedge instruments and statutory instruments and statutory liabilities, (ii) remove the non-economic volatility in statutory capital charges and the resulting solvency ratios and (iii) facilitate greater harmonization across insurers and their products for greater comparability.
In August 2022, the NAIC adopted amendments to the Valuation Manual that changed the requirements for reflecting hedge instruments in variable annuity reserves and RBC C3 Market Risk.
−Removed: The changes became effective on December 31, 2023, resulting in a decrease to our statutory capital and surplus and an insignificant change to our combined RBC ratio as of such date.
+Added: The changes became effective on December 31, 2023, which resulted in a decrease to our statutory capital and surplus and an insignificant change to our combined RBC ratio as of such date.
Further changes to VA Reform, including changes resulting from work currently underway by the NAIC to find a suitable replacement for the Economic Scenario Generators developed by the American Academy of Actuaries, could negatively impact our statutory surplus and required capital.
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Captive Reinsurer Regulation
−Removed: During 2014, the NAIC approved a regulatory framework applicable to the use of captive insurers in connection with Regulation XXX and Guideline AXXX transactions.
+Added: During 2014, the NAIC approved a framework applicable to the use of captive insurers in connection with Regulation XXX and Guideline AXXX transactions.
Among other things, the framework called for more disclosure of an insurer’s use of captives in its statutory financial statements and narrows the types of assets permitted to back statutory reserves that are required to support the insurer’s future obligations.
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Over the past several years, there have been no material adverse findings in connection with any examinations of us conducted by state insurance departments, although there can be no assurance that there will not be any material adverse findings in the future.
−Removed: Regulatory authorities in a small number of states, the Financial Industry Regulatory Authority, Inc.
−Removed: (“FINRA”) and, occasionally, the SEC, have conducted investigations or inquiries relating to sales or administration of individual life insurance policies, annuities or other products by our insurance subsidiaries.
+Added: State regulatory authorities, the Financial Industry Regulatory Authority, Inc.
+Added: (“FINRA”), and the SEC have conducted investigations or inquiries relating to sales or administration of individual life insurance policies, annuities or other products by our insurance subsidiaries.
These investigations have focused on the conduct of particular financial services representatives, the sale of unregistered or unsuitable products, the misuse of client assets, and sales and replacements of annuities and certain riders on such annuities.
Over the past several years, these and a number of investigations of our insurance subsidiaries by other regulatory authorities were resolved for monetary payments and certain other relief, including restitution payments.
−Removed: We may continue to receive, and may resolve, further investigations and actions on these matters in a similar manner.
+Added: We may continue to receive, and may resolve, further investigations and actions on these matters through monetary payments or other relief, including restitution payments.
In addition, insurance companies’ claims payment, abandoned property and escheatment practices have received increased scrutiny from regulators.
+Added: In addition, FINRA periodically conducts routine or special examinations of Brighthouse Securities, LLC (“Brighthouse Securities”).
+Added: These examinations focus on the regulation of Brighthouse Securities under FINRA rules and the federal securities laws.
+Added: Similarly, the SEC periodically conducts routine or special examinations of Brighthouse Advisers, the registered funds advised by Brighthouse Advisers, and the registered separate accounts through which Brighthouse issues variable contracts.
+Added: These examinations focus on the regulation of these entities under the federal securities laws.
+Added: Over the past several years, there have been no material adverse findings in connection with any examinations of us conducted by FINRA or the SEC, although there can be no assurance that there will not be any material adverse findings in the future.
Policy and Contract Reserve Adequacy Analysis
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The NAIC periodically reviews the statutory accounting and RBC requirements for investments and makes changes from time to time.
−Removed: For example, the NAIC is currently examining the risks associated with certain types of structured securities including Collateralized Loan Obligations and is considering modifications to the methodology used to assess credit risk and determine RBC requirements.
+Added: In 2023, the NAIC adopted an amendment to the Purposes and Procedures Manual, under which the NAIC Structured Securities Group would begin assigning risk weights to collateralized loan obligations based on its own financial modeling rather than credit ratings.
+Added: In August 2024, the NAIC adopted an amendment to the manual, requiring insurers to report the financially modeled NAIC designations for collateralized loan obligations with their year-end 2025 financial statement filings.
+Added: The new remodeling requirements could impact the RBC charges associated with these investments.
NYDFS Insurance Regulation 47
1 unchanged sentence
Certain sections of Regulation 47 became effective as of January 1, 2023, and the remainder became effective on January 1, 2024.
−Removed: The regulation is likely to open the New York market to new competitors and has impacted some components of our current product designs.
−Removed: We continue to assess the impact of these new factors on our sales in New York.
+Added: The regulation has opened the New York market to new competitors and has impacted some components of our current product designs.
+Added: We continue to assess the impacts of these new factors on our sales in New York.
See “Risk Factors — Risks Related to Our Business — Factors affecting our competitiveness may adversely affect our market share and profitability” and “Risk Factors — Risks Related to Our Business — We may experience difficulty in marketing and distributing products through our distribution channels.”
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As a result, we and the third parties who distribute our products are subject to U.S.
−Removed: federal and state privacy laws and regulations, including the Health Insurance Portability and Accountability Act as well as additional regulation, including those described below.
+Added: federal and state privacy laws and regulations, including the Health Insurance Portability and Accountability Act as well as additional regulations, including those described below.
These laws and regulations require that we implement and maintain certain policies and procedures to safeguard this information from improper use or disclosure and that we provide notice of our practices related to the collection and disclosure of such information.
1 unchanged sentence
Congress and many states have enacted privacy and information security laws and regulations that impose compliance obligations applicable to our business, including obligations to protect sensitive personal and creditworthiness information, as well as limitations on the use and sharing of such information.
−Removed: For example, the NYDFS’s Part 500 – Cybersecurity Regulation (the “NYDFS Cybersecurity Regulation”), which became effective in March 2017, requires companies to establish a cybersecurity program.
+Added: For example, the NYDFS’s Part 500 – Cybersecurity Regulation (the “NYDFS Cybersecurity Regulation”), which became effective in March 2017, requires companies to establish a cybersecurity risk management program.
In November 2023, the NYDFS announced amendments to the NYDFS Cybersecurity Regulation.
−Removed: The amended NYDFS Cybersecurity Regulation went into effect in phases beginning November 1, 2023 and continuing through December 2025, and it includes additional and new requirements regarding certification, governance, audit requirements, technology and business continuity, security control and training requirements, and notification obligations.
+Added: The amended NYDFS Cybersecurity Regulation went into effect in phases beginning November 1, 2023 and continuing through November 1, 2025, and it includes additional and new requirements regarding certification, governance, audit requirements, technology and business continuity, security control and training requirements, and notification obligations.
In addition, the California Consumer Privacy Act of 2018 (the “CCPA”), which became effective in January 2020, affords California residents expanded privacy protections and control over the collection, use and sharing of their personal information.
The CCPA requires companies to make certain disclosures to California consumers regarding personal information, among other privacy protective measures.
−Removed: The CCPA’s definition of “personal information” is more expansive than those found in other privacy laws in the United States applicable to us.
Failure to comply with the CCPA risks regulatory fines, and the CCPA grants a private right of action and statutory damages for an unauthorized access and exfiltration, theft, or disclosure of certain types of personal information resulting from the Company’s violation of a duty to maintain reasonable security procedures and practices.
−Removed: The CCPA, amended by the California Privacy Rights Act (the “CPRA”), effective as of January 1, 2023, and the implementing regulations require additional investment in compliance programs and potential modifications to business processes.
−Removed: Further, the CCPA, as amended, creates the California Privacy Protection Agency to enforce the statute as well as its regulations, and it imposes new requirements relating to additional consumer rights, data minimization, and other obligations.
+Added: The CCPA, as amended by the California Privacy Rights Act (the “CPRA”), effective as of January 1, 2023, and its implementing regulations require additional investment in compliance programs and potential modifications to business processes.
+Added: Further, the CCPA, as amended, creates the California Privacy Protection Agency to enforce the statute as well as its regulations, and imposes new requirements relating to additional consumer rights, data minimization, and other obligations.
The California legislature did not extend certain exemptions under the amended CCPA, specifically information collected in employment or business-to-business contexts, and such information therefore is now covered by the CCPA.
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states have enacted the Insurance Data Security Model Law or similar laws, and we expect more states to follow.
+Added: In June 2024, the NAIC released draft amendments to the Privacy of Consumer Financial and Health Information Regulation #672.
+Added: The NAIC is working with stakeholders to receive comments on each section of the draft amendment to Model Law #672.
+Added: The current draft of the amended Model Law #672 focuses on four key privacy principles:
+Added: (i) third-party arrangements;
+Added: (ii) the right to access, correct, and delete data;
+Added: (iii) the sale of personal information;
+Added: and (iv) the processing and handling of personal information.
+Added: Model Law #672 is still being exposed for comment to stakeholders and could undergo additional changes.
In July 2023, the SEC adopted the Risk Management, Strategy, Governance, and Incident Disclosure Final Rule (the “Cybersecurity Final Rule”) that enhances the disclosure requirements for registered companies covering cybersecurity risk and management.
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State legislatures and insurance regulators have shown increasing concern about the use of artificial intelligence (“AI”) and the potential for discrimination and bias in insurance practices.
−Removed: For example, on September 21, 2023, the Colorado Division of Insurance released its Final Governance and Risk Management Framework Requirements for Life Insurers’ Use of External Consumer Data and Information Sources (“ECDIS”), Algorithms, and Predictive Models, which requires life insurers authorized to do business in Colorado to implement AI governance and risk management measures that are reasonably designed to prevent unfair discrimination in the use of ECDIS, algorithms and predictive models.
−Removed: Additionally, on September 28, 2023, the Colorado Department of Insurance released its draft regulation on Quantitative Testing for Unfairly Discriminatory Outcomes for Algorithms and Predictive Models Used for Life Insurance Underwriting, which would require insurers to estimate the race and ethnicity of proposed insureds that have applied for life insurance coverage on or after the insurer’s initial adoption of the use of ECDIS, or algorithms and predictive models that used ECDIS.
+Added: In addition to certain state legislatures adopting their own regulations and guidance, in December 2023, the NAIC adopted the Model Bulletin on the Use of Artificial Intelligence Systems by Insurers (the “Model Bulletin”) which has been adopted in more than 20 states.
+Added: The Model Bulletin puts forth comprehensive guidance for the governance of AI systems that make or support decisions related to regulated insurance practices.
While we currently do not expect any of the existing regulations to have a material impact on our business, there can be no assurance that there will not be any material impacts in the future.
Other state legislatures and insurance regulators, as well as U.S.
−Removed: federal agencies, may also adopt regulations that govern the use of AI.
−Removed: Securities, Broker-Dealer and Investment Advisor Regulation
−Removed: Some of our activities in offering and selling variable insurance products, as well as certain fixed interest rate or index-linked contracts, are subject to extensive regulation under the federal securities laws administered by the SEC or state securities laws.
+Added: state and federal agencies, may also adopt regulations and guidance that govern the use of AI.
+Added: Securities, Broker-Dealer and Investment Adviser Regulation
+Added: Some of our activities in offering and selling variable insurance products, as well as certain fixed interest rate or index-linked contracts (“Securities Products”), are subject to extensive regulation under the federal securities laws administered by the SEC or state securities laws.
Federal and state securities laws and regulations treat variable insurance products and certain fixed interest rate or index-linked contracts as securities that must be registered with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), and distributed through broker-dealers registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
1 unchanged sentence
therefore, sales of these registered products are also subject to the requirements of FINRA rules.
−Removed: Our subsidiary, Brighthouse Securities, LLC (“Brighthouse Securities”) is registered with the SEC as a broker-dealer and is approved as a member of, and subject to regulation by, FINRA.
+Added: Our subsidiary, Brighthouse Securities, is registered with the SEC as a broker-dealer and is approved as a member of, and subject to regulation by, FINRA.
Brighthouse Securities is also registered as a broker-dealer in all applicable U.S.
−Removed: Its business is to serve as the principal underwriter and exclusive distributor of the registered products issued by its affiliates, and as the principal underwriter for the registered funds advised by its affiliated investment advisor, Brighthouse Advisers, and used to fund variable insurance products.
+Added: Its business is to serve as the principal underwriter and exclusive distributor of the registered products issued by its affiliates, and as the principal underwriter for the registered funds advised by its affiliated investment adviser, Brighthouse Advisers, and used to fund variable insurance products.
We issue variable insurance products through separate accounts that are registered with the SEC as investment companies under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
Each registered separate account is generally divided into subaccounts, each of which invests in an underlying fund which is itself a registered investment company under the Investment Company Act.
−Removed: Our subsidiary, Brighthouse Advisers is registered as an investment advisor with the SEC under the Investment Advisers Act of 1940, and its primary business is to serve as investment advisor to certain of the registered funds that underlie our variable annuity contracts and variable life insurance policies.
+Added: Our subsidiary, Brighthouse Advisers, is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and its primary business is to serve as investment adviser to certain of the registered funds that underlie our variable annuity contracts and variable life insurance policies.
Certain variable contract separate accounts sponsored by our insurance subsidiaries are exempt from registration under the Securities Act and the Investment Company Act but may be subject to other provisions of the federal securities laws.
3 unchanged sentences
Federal and state securities laws and regulations are primarily intended to ensure the integrity of the financial markets, to protect investors in the securities markets, and to protect investment advisory or brokerage clients, and generally grant regulatory agencies broad rulemaking and enforcement powers, including the power to limit or restrict the conduct of business for failure to comply with such laws and regulations.
+Added: Our offering and selling of Securities Products, including with respect to Brighthouse Securities and Brighthouse Advisers, may be impacted by SEC regulatory initiatives impacting the industry.
Department of Labor and ERISA Considerations
1 unchanged sentence
Also, a portion of our in-force life insurance products and annuity products are held by tax-qualified pension and retirement plans that are subject to ERISA or the Tax Code.
−Removed: While we currently believe manufacturers do not have as much exposure to ERISA and the Tax Code as distributors, certain activities are subject to the restrictions imposed by ERISA and the Tax Code, including restrictions on the provision of investment advice to ERISA qualified plans, plan participants and individual retirement annuity and individual retirement account
−Removed: (collectively, “IRAs”) owners if the investment recommendation results in fees paid to an individual advisor, the firm that employs the advisor or their affiliates.
−Removed: In June 2020, the Department of Labor (“DOL”) issued guidance that expands the definition of “investment advice.” In October 2023, the DOL issued a new proposed regulation that would further update the definition of “investment advice.” See “— Standard of Conduct Regulation — Department of Labor Fiduciary Advice Rule.”
−Removed: The DOL has issued a number of regulations that increase the level of disclosure that must be provided to plan sponsors and participants.
+Added: While we currently believe manufacturers do not have as much exposure to ERISA and the Tax Code as distributors, certain activities are subject to the restrictions imposed by ERISA and the Tax Code, including restrictions on the provision of investment advice to ERISA qualified plans, plan participants and individual retirement annuity and individual retirement account (collectively, “IRAs”) owners if the investment recommendation results in fees paid to an individual advisor, the firm that employs the advisor or their affiliates.
+Added: On April 23, 2024, the Department of Labor (“DOL”) issued a final regulation updating the definition of “investment advice.” See “— Standard of Conduct Regulation — Department of Labor Fiduciary Advice Rule” for additional details regarding the status of the DOL Fiduciary Advice Rule (as defined below).
+Added: The DOL has issued a number of regulations regarding disclosure that must be provided to plan sponsors and participants.
The participant disclosure regulations and the regulations which require service providers to disclose fee and other information to plan sponsors took effect in 2012.
−Removed: Our insurance subsidiaries have taken and continue to take steps designed to ensure compliance with these regulations as they apply to service providers.
+Added: Our insurance subsidiaries have taken and continue to take steps designed to ensure compliance with regulations requiring service providers to disclose fee and other information to plan sponsors.
In John Hancock Mutual Life Insurance Company v.
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A regulatory action by the DOL (the “Fiduciary Advice Rule”), which became effective on February 16, 2021, reinstated the text of the DOL’s 1975 investment advice regulation defining what constitutes fiduciary “investment advice” to ERISA Plans and IRAs and provides guidance interpreting such regulation.
−Removed: The guidance provided by the DOL broadens the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries under ERISA or the Tax Code.
−Removed: In particular, the DOL states that a recommendation to “roll over” assets from a qualified retirement plan to an IRA or from an IRA to another IRA, can be considered fiduciary investment advice if provided by someone with an existing relationship with the ERISA Plan or an IRA owner (or in anticipation of establishing such a relationship).
−Removed: This guidance reverses an earlier DOL interpretation suggesting that roll over advice does not constitute investment advice giving rise to a fiduciary relationship.
+Added: The guidance provided by the DOL broadened the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries under ERISA or the Tax Code.
+Added: In particular, the DOL stated that a recommendation to “roll over” assets from a qualified retirement plan to an IRA or from an IRA to another IRA, could be considered fiduciary investment advice if provided by someone with an existing relationship with the ERISA Plan or an IRA owner (or in anticipation of establishing such a relationship).
+Added: This guidance reversed an earlier DOL interpretation suggesting that roll over advice does not constitute investment advice giving rise to a fiduciary relationship.
+Added: The Fiduciary Advice Rule expands the definition of fiduciary “investment advice” to include, in many circumstances, providing one-time advice (including rollover advice) to ERISA Plans and IRAs, among other conduct.
Under the Fiduciary Advice Rule, individuals or entities providing investment advice would be considered fiduciaries under ERISA or the Tax Code, 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.
2 unchanged sentences
In order to be eligible for the exemption, among other conditions, the investment advice fiduciary is required to acknowledge its fiduciary status, refrain from putting its own interests ahead of the plan beneficiaries’ interests or making material misleading statements, act in accordance with ERISA’s “prudent person” standard of care and receive no more than reasonable compensation for the advice.
−Removed: Because we do not engage in direct distribution of retail products, including IRA products and retail annuities sold to ERISA Plan participants and to IRA owners, we believe that we have limited exposure to the Fiduciary Advice Rule.
−Removed: However, while we cannot predict the rule’s impact, the DOL’s interpretation of the ERISA fiduciary investment advice regulation could have an adverse effect on sales of annuity products through our independent distribution partners, as a significant portion of our annuity sales are as IRAs.
−Removed: The Fiduciary Advice Rule may also lead to changes to our compensation practices and product offerings as well as increase our litigation risk, any of which could adversely affect our financial condition and results of operations.
−Removed: We may also need to take certain additional actions in order to comply with, or assist our distributors in their compliance with, the Fiduciary Advice Rule.
−Removed: On October 31, 2023, the DOL announced a proposed regulation that would update the definition of an “investment advice fiduciary” under ERISA and amend related administrative PTEs, including PTE 2020-02.
−Removed: The proposed regulation would broaden the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries to ERISA plans and IRA investors.
−Removed: While we cannot predict whether the proposed regulation will be adopted or enacted in its proposed form, it could have further adverse effects on sales of our products through our independent distribution partners and may also lead to further changes to our product offerings and compensation practices, as well as increase our litigation risk, any of which could adversely affect our financial condition and results of operations.
+Added: On April 23, 2024, the DOL updated the Fiduciary Advice Rule that amended the definition of an “investment advice fiduciary” under ERISA and amended related administrative PTEs, including PTE 2020-02 and PTE 84-24 (together, the “PTE Amendments”).
+Added: As amended by the new Fiduciary Advice Rule, PTE 84-24 would be 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 a fiduciary relationship to an ERISA plan or IRA.
+Added: The Fiduciary Advice Rule broadens the circumstances under which financial institutions, including insurance companies, could be considered fiduciaries to ERISA plans and IRA investors.
+Added: We continue to assess 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.
+Added: We may also need to take certain additional actions to comply with, or assist our distributors in their compliance with, the Fiduciary Advice Rule.
+Added: On July 25, 2024, the U.S.
+Added: District Court for the Eastern District of Texas and, on July 26, 2024, the U.S.
+Added: 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.
+Added: In September 2024, the DOL appealed these rulings.
+Added: While we cannot predict whether the Fiduciary Advice Rule will take effect in its current form, if implemented, it could have adverse effects on sales of our products and may also lead to further changes to our product offerings and compensation practices, as well as increase our litigation risk, any of which could adversely affect our financial condition and results of operations.
We may also need to take certain additional actions to comply with, or assist our distributors in their compliance with, the regulation.
−Removed: We are assessing the potential impact of the proposed regulation and PTE amendments on our annuity and life insurance businesses and will continue to monitor developments regarding the proposal.
State Law Standard of Conduct Rules and Regulations
1 unchanged sentence
The NAIC SAT model standard requires producers to act in the best interest of the consumer when recommending annuities.
−Removed: Several states have adopted the NAIC SAT model, effective in 2021, and we expect that other states will also consider adopting the NAIC SAT model.
+Added: A majority of states have adopted the NAIC SAT model, effective in 2021, and we expect that other states will also continue to adopt the NAIC SAT model.
Additionally, certain regulators have issued proposals to impose a fiduciary duty on some investment professionals, and other states may be considering similar regulations.
8 unchanged sentences
SEC Rules Addressing Standards of Conduct for Broker-Dealers
−Removed: On June 5, 2019, the SEC adopted a comprehensive set of rules and interpretations for broker-dealers and investment advisers, including Regulation Best Interest.
+Added: On June 5, 2019, the SEC adopted a comprehensive set of rules and interpretations for broker-dealers and investment advisers, including Regulation Best Interest, which went into effect in June 2020.
Among other things, this regulatory package:
1 unchanged sentence
• clarifies the nature of the fiduciary obligations owed by registered investment advisers to their clients;
−Removed: • imposes new requirements on broker-dealers and investment advisers to deliver Form CRS relationship summaries designed to assist customers in understanding key facts regarding their relationships with their investment professionals and differences between the broker-dealer and investment adviser business models;
+Added: • imposes requirements on broker-dealers and investment advisers to deliver Form CRS relationship summaries designed to assist customers in understanding key facts regarding their relationships with their investment professionals and differences between the broker-dealer and investment adviser business models;
• restricts broker-dealers and their financial professionals from using certain compensation practices and the terms “adviser” or “advisor.”
The intent of Regulation Best Interest is to impose an enhanced standard of care on broker-dealers and their financial professionals which is more similar to that of an investment adviser.
−Removed: Among other things, this would require broker-dealers to mitigate conflicts of interest arising from transaction-based financial arrangements for their employees.
+Added: Among other things, this requires broker-dealers to mitigate conflicts of interest arising from transaction-based financial arrangements for their employees.
Regulation Best Interest may change the way broker-dealers sell securities such as variable annuities to their retail customers as well as their associated costs.
Moreover, it may impact broker-dealer sales of other annuity products that are not securities because it could be difficult for broker-dealers to differentiate their sales practices by product.
−Removed: Broker-dealers were required to comply with the requirements of Regulation Best Interest beginning June 30, 2020.
In addition, individual states and their securities regulators may adopt their own enhanced conduct standards for broker-dealers that may further impact their practices, and it is uncertain to what extent they would be preempted by Regulation Best Interest.
2 unchanged sentences
The Inflation Reduction Act establishes a 15% corporate alternative minimum tax (the “CAMT”) for corporations whose average annual adjusted financial statement income for any consecutive three–tax year period ending after December 31, 2021 and preceding the tax year exceeds $1.0 billion.
−Removed: Based on limited guidance issued by the U.S.
−Removed: Department of Treasury to date, the Company does not currently expect to be subject to the CAMT for the year ended December 31, 2023.
−Removed: However, the Company will assess the applicability of the CAMT on an annual basis and may be subject to the CAMT in future years.
+Added: Based on guidance issued by the U.S.
+Added: Department of Treasury (the “U.S.
+Added: Treasury”) and the Internal Revenue Service (“IRS”) to date, the Company was not subject to the CAMT for the year ended December 31, 2023 and does not currently expect to be subject to the CAMT for the year ended December 31, 2024.
+Added: However, the Company will continue to assess the applicability of the CAMT on an annual basis and may be subject to the CAMT in future years.
+Added: On September 12, 2024, the IRS and the U.S.
+Added: Treasury issued proposed regulations which are generally effective for years ending after the date of the proposed regulations.
+Added: The proposed regulations are subject to uncertain application and there can be no assurance that final regulations will be adopted in their currently proposed form.
+Added: The Company is currently assessing the impact of the proposed regulations, including the impact on the applicability of the CAMT.
In addition, the Inflation Reduction Act also establishes a one percent excise tax on stock repurchases made by publicly-traded U.S.
corporations.
−Removed: Both provisions are effective for tax years beginning after December 31, 2022.
Regulation of Over-the-Counter Derivatives
2 unchanged sentences
Our costs of risk mitigation have increased under Dodd-Frank.
−Removed: For example, Dodd-Frank imposes requirements for (i) the mandatory clearing of certain OTC derivatives transactions that must be cleared and settled through central clearing counterparties (“OTC-cleared”), and (ii) the mandatory exchange of margin for OTC in-scope derivatives transactions that are bilateral contracts between two counterparties (“OTC-bilateral” or “uncleared”) entered into after the applicable phase-in period.
+Added: For example, Dodd-Frank imposes requirements for (i) the mandatory clearing of certain OTC derivatives transactions that must be cleared and settled through central clearing counterparties (“OTC-cleared”), and (ii) the mandatory exchange of margin for OTC in-scope derivatives transactions that are bilateral contracts between two counterparties (“OTC-bilateral” or “uncleared”).
The initial margin requirements for OTC-bilateral derivatives transactions, which requires the collecting and posting of collateral to reduce future exposure to a given counterparty, became applicable to us in September 2021.
−Removed: The increased margin requirements, combined with increased capital charges for our counterparties and central clearinghouses with respect to non-cash collateral, will likely require increased holdings of cash and highly liquid securities with lower yields causing a reduction in income and less favorable pricing for cleared and OTC-bilateral derivatives transactions.
+Added: The increased margin requirements, combined with increased capital charges for our counterparties and central clearinghouses with respect to non-cash collateral, may result in increased holdings of cash and highly liquid securities with lower yields causing a reduction in income and less favorable pricing for cleared and OTC-bilateral derivatives transactions.
Centralized clearing of certain derivatives also exposes us to the risk of a default by a clearing member or clearinghouse with respect to our cleared derivatives transactions.
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life insurance industry is made up of 719 companies with sales and operations across the country and U.S.
−Removed: We compete with major, well-established stock and mutual life insurance companies and non-insurance financial services companies (e.g., banks, broker-dealers and asset managers) in all of our product offerings, including certain of our distributors that currently manufacture competing products or may manufacture competing products in the future.
+Added: We compete with major, well-established stock and mutual life insurance companies and non-insurance financial services companies (e.g., banks, private equity firms, broker-dealers and asset managers) in all of our product offerings, including certain of our distributors that currently manufacture competing products or may manufacture competing products in the future.
Our Annuities segment also faces competition from other financial service providers that focus on retirement products and advice.
14 unchanged sentences
the Company’s efforts to attract, engage and retain talent;
−Removed: and the development and execution of the Company’s strategy to advance its diversity, equity and inclusion (“DEI”) objectives.
−Removed: Such objectives include increasing representation of underrepresented populations across the Company, by seeking a diverse slate of candidates for open positions and through other efforts, strengthening our inclusive culture, promoting the development of an inclusive pipeline for supplier and vendor opportunities, supporting the communities we serve and working with educational institutions and other organizations to help create more opportunities for individuals from underrepresented groups.
+Added: and the development and execution of the Company’s inclusion and belonging strategy.
Our Culture, Values and Ethics
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We place a high value on employee feedback, which we believe is critical to our efforts to continue to strengthen our culture.
−Removed: We collect employee feedback on an ongoing basis in multiple ways, including through periodic surveys, coaching and feedback discussions, exit surveys and interviews, employee network groups (discussed below), listening and learning sessions and leader-led office hours.
+Added: We collect employee feedback on an ongoing basis in multiple ways, including through periodic surveys, coaching and feedback discussions, exit surveys and interviews, and employee network groups (discussed below).
Our culture is also built on our deep commitment to ethics and integrity, and we recognize that the continued success of the Company is dependent upon the trust of our employees, distribution partners, customers and stockholders.
We strive to adhere to the highest standards of business conduct at all times and put honesty, fairness and trustworthiness at the center of all that we do.
−Removed: To help maintain a safe and productive workplace, we establish and oversee programs to build awareness and train employees on important standards, policies and procedures, as required by applicable regulations, Company policy or best practices.
−Removed: As part of our commitment to ethics and integrity, we require all employees to review and certify compliance with our code of conduct for employees on an annual basis, as well as complete more extensive training on the code of conduct on a biennial basis.
−Removed: In addition, we help to ensure that employees are well informed of the Company’s reporting and escalation process, including options for anonymous whistleblower reporting, through regular communications.
+Added: To help maintain a safe and productive workplace, we establish and oversee programs to build awareness of and train employees on important standards, policies and procedures, as required by applicable regulations, Company policy or best practices.
+Added: As part of our commitment to ethics and integrity, we require all employees to review and certify compliance with our employee code of conduct on an annual basis, as well as complete more extensive training on the employee code of conduct on a biennial basis.
+Added: In addition, through regular communications, we help to ensure that employees are well-informed of the Company’s reporting and escalation process, including options for anonymous whistleblower reporting.
Attracting, Engaging, Developing and Retaining Talent
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These efforts include, among other things, seeking to support our employees with competitive and equitable pay and benefits and to provide our employees with training and other learning and development opportunities.
−Removed: In addition, we continue to operate under a flexible, hybrid work model, which has enabled us to expand our recruiting strategy.
−Removed: We offer all of our employees benefits programs that are designed to help meet their financial, physical and mental needs.
+Added: In addition, we continue to operate under a flexible, hybrid work model, which we believe makes us an attractive employer and aids our recruitment and retention strategy.
+Added: Compensation and Benefits
+Added: We offer employees benefits programs that are designed to help meet their financial, physical and mental health needs.
All employees are eligible to participate in our 401(k) savings plan, to which we make matching and annual nondiscretionary contributions, and in our Employee Stock Purchase Plan, through which employees can purchase BHF stock at a discounted price.
−Removed: We offer competitive health care benefits options for medical, dental and vision coverage, as well as health care and dependent care flexible spending accounts.
−Removed: We offer all employees paid time off, holidays and volunteer and study time off to help promote healthier work-life balance and other well-being benefits, including paid parental and family leave for new parents.
−Removed: In addition, we conduct annual pay equity reviews to help ensure that individual compensation is determined exclusively based on performance, experience, job level and other neutral factors.
+Added: We offer competitive health care benefits options for medical, dental and vision coverage, as well as flexible spending accounts for health care and dependent care.
+Added: We offer all employees paid time off, as well as time off for Company holidays and volunteer and study activities and other well-being benefits, including paid parental and family leave for new parents, to help promote a healthier work-life balance.
+Added: In addition, we conduct annual pay equity reviews to help ensure that individual compensation is determined exclusively based on performance, experience, job level and other legitimate non-discriminatory factors.
+Added: Developing Talent
Our talent management and development strategies are built on continuous coaching and feedback, learning, training, collaboration and inclusivity.
We provide employees with many opportunities and resources to learn and develop, including a curated set of courses designed to help employees achieve their personal and professional goals.
−Removed: In addition, we offer all employees access to optional monthly learning sessions designed to further enhance their understanding of our corporate strategy and culture, as well as to provide the opportunity to build and enhance skills.
−Removed: We also offer a mentorship program designed to provide professional development opportunities through engagement with leaders across the Company.
−Removed: As noted above, we collect employee feedback on an ongoing basis, which facilitates our efforts to understand and optimize our employees’ experiences at the Company and assists us in attracting, engaging, developing and retaining talent.
−Removed: To further help our employees remain engaged and well connected to the Company and each other, we hold a variety of events and issue a wide range of communications throughout the year, including town hall meetings, podcasts from our CEO, companywide discussions with members of our leadership team, intranet articles and a weekly newsletter highlighting events and news from around the Company.
−Removed: Diversity, Equity and Inclusion
−Removed: We are committed to providing an inclusive workplace where employees can trust that their unique backgrounds and perspectives will be recognized, respected and celebrated.
+Added: In addition, throughout the year, we offer all employees access to education sessions designed to further their understanding of our corporate strategy and culture, as well as provide the opportunity to build and enhance skills.
+Added: We also offer a mentorship program designed to provide our employees with professional development opportunities through engagement with leaders across the Company.
+Added: In order to facilitate our efforts to understand and optimize our employees’ experiences at the Company and assist us in attracting, engaging, developing and retaining talent, we collect employee feedback on an ongoing basis.
+Added: To further help our employees remain engaged and connected to the Company and each other, we hold a variety of employee events and distribute a wide range of communications throughout the year, including town hall meetings, podcasts from our Chief Executive Officer, company-wide discussions with members of our leadership team, intranet articles and a weekly newsletter highlighting events and news from around the Company.
+Added: We also strive to retain talent in many ways, including through our compensation and benefits programs, robust talent-development programs and other initiatives to provide employees with opportunities to have fulfilling careers.
+Added: Fostering an Inclusive Workplace
+Added: We are an equal opportunity employer committed to providing an inclusive workplace where employees can trust that their unique backgrounds and perspectives will be recognized, respected and celebrated.
We believe that by building such a workplace, we are better able to attract and retain talent and provide valuable products that meet the needs of our distribution partners and the financial professionals who sell our products, as well as their clients.
−Removed: We seek to attract and retain talent that reflects the diversity of our communities, and we remain focused on maintaining strong representation of underrepresented groups across the Company.
−Removed: Our varied approach to attracting and recruiting talent includes efforts to diversify candidate slates for open positions, diversify interview teams to reduce bias and build partnerships with diverse professional organizations and universities.
−Removed: In recognition of the importance of DEI to Brighthouse Financial, in 2021, the Compensation and Human Capital Committee began to incorporate into its assessment of our senior leaders’ individual performance, in connection with the approval of their short-term incentive awards, their efforts with respect to advancing the Company’s DEI strategy.
−Removed: We employ a multifaceted approach to advancing DEI across the Company that includes various programs and initiatives.
−Removed: One such initiative is our DEI Council which is comprised of representatives from across Brighthouse Financial.
−Removed: The DEI Council creates and sponsors programs and development opportunities with the aim of further embedding DEI within the Company and continuously enhancing our Company’s culture.
−Removed: In 2022, we launched our Company’s employee network groups, which are open to all employees and provide a forum for employees across various dimensions of diversity to discuss relevant professional and personal topics, learn from one another, find support and allyship, expand their networks and deepen their level of compassion and understanding.
−Removed: In addition, to continue fostering our inclusive workplace, the Company requires all employees to complete annual DEI training.
−Removed: The Company also has developed a supplier diversity program designed to advance the building of an inclusive pipeline of talent for supplier and vendor opportunities.
−Removed: The Company further seeks to deliver on its commitment to DEI through its own charitable organizations and through strategic partnerships with community organizations, educational institutions and industry peers.
−Removed: The Brighthouse Financial Foundation (the “Foundation”), a non-profit organization, was established in 2017 with the mission to improve the financial security, culture and opportunities afforded to communities in which the Company’s employees live and work by providing resources and support to other tax-exempt organizations which further that mission.
−Removed: In addition, through Brighthouse Scholar Connections, Inc., a non-profit organization established in 2022, scholarships are provided to expand educational opportunities for students who are members of historically underrepresented or disadvantaged populations due to race, ethnicity, socioeconomic status or other factors.
+Added: We seek to provide equal opportunity and inclusivity in the attraction and retention of talent and the opportunities provided to all employees to grow and develop at the Company.
+Added: Our varied approach to attracting and recruiting talent includes efforts to reduce bias and to build partnerships with professional organizations and universities to promote equal opportunity.
+Added: Our approach to providing an inclusive workplace includes the efforts of a cross-functional committee of employees who help management create and sponsor programs and development opportunities with the aim of further enhancing our employees’ sense of belonging and our Company’s culture.
+Added: In 2022, we launched our Company’s employee network groups, which are open to all employees and provide a forum for employees to discuss relevant professional and personal topics, learn from one another, find support and allyship, expand their networks and deepen their level of compassion and understanding.
+Added: Supporting our Communities
+Added: The Company seeks to support the communities in which we live and work through its own charitable organizations and through strategic partnerships with community organizations, educational institutions and industry peers.
+Added: The Brighthouse Financial Foundation, a non-profit organization, was established in 2017 with the mission to improve the financial security, culture and opportunities afforded to the communities in which the Company’s employees live and work by providing resources and support to other tax-exempt organizations which further that mission.
+Added: In addition, through Brighthouse Scholar Connections, Inc., a non-profit organization established in 2022, scholarships are provided to expand educational opportunities for students who are members of historically underrepresented or disadvantaged populations.
Brighthouse Financial employees have the opportunity to serve as mentors for students who have been awarded scholarships by this organization.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.