- Estimated combined risk-based capital ("RBC") ratio of
approximately 420%; holding company liquid assets of $1.3
billion
- $350 million total subsidiary dividends paid to the holding
company in the fourth quarter of 2023
- The company repurchased $250 million of its common stock in
full year 2023, reducing shares outstanding relative to year-end
2022 by 7%; repurchased an additional approximately $30 million
year-to-date through February 9, 2024, resulting in approximately
$763 million remaining under its current share repurchase
authorizations
- Annuity sales for full year 2023 of $10.6 billion, driven by
strong sales of Shield Level annuities
- Life sales of $102 million for full year 2023
- Fourth quarter 2023 net loss available to shareholders of $942
million, or $14.70 per diluted share
- Fourth quarter 2023 adjusted earnings, less notable items*, of
$189 million, or $2.92 per diluted share
Brighthouse Financial, Inc. ("Brighthouse Financial" or the
"company") (Nasdaq: BHF) announced today its financial results for
the fourth quarter and full year ended December 31, 2023.
Fourth Quarter and Full Year 2023 Results
The company reported a net loss available to shareholders of
$942 million in the fourth quarter of 2023, or $14.70 per diluted
share, compared with net income available to shareholders of $110
million in the fourth quarter of 2022. During the quarter, as a
result of market performance, the value of the company's hedges
decreased, as expected. Under GAAP accounting, all variable annuity
guaranteed benefits classified as market risk benefits ("MRBs") are
accounted for on a fair value basis. The company anticipates
volatility in net income (loss) given the differences between GAAP
MRBs and its hedge target.
The company ended the fourth quarter of 2023 with common
stockholders' equity ("book value") of $3.2 billion, or $51.08 per
common share, and book value, excluding accumulated other
comprehensive income ("AOCI") of $8.5 billion, or $133.69 per
common share.
_________
* Information regarding the non-GAAP and
other financial measures included in this news release and a
reconciliation of such non-GAAP financial measures to the most
directly comparable GAAP measures are provided in the Non-GAAP and
Other Financial Disclosures discussion below, as well as in the
tables that accompany this news release and/or the Fourth Quarter
2023 Brighthouse Financial, Inc. Financial Supplement and/or the
Fourth Quarter and Full Year 2023 Brighthouse Financial, Inc.
Earnings Call Presentation (which are available on the Brighthouse
Financial Investor Relations webpage at
http://investor.brighthousefinancial.com). GAAP results reflect the
company's adoption, on January 1, 2023, of the provisions of FASB
ASU 2018-12, Targeted Improvements to the Accounting for
Long-Duration Contracts ("LDTI"), and any GAAP historical data
contained herein has been updated retrospectively. Additional
information regarding notable items can be found on the last page
of this news release.
For the fourth quarter of 2023, the company reported adjusted
earnings* of $177 million, or $2.73 per diluted share, compared
with adjusted earnings of $545 million, or $7.81 per diluted share,
in the fourth quarter of 2022.
Adjusted earnings for the quarter reflected a $12 million
unfavorable notable item, or $0.19 per diluted share, related to
legal matters.
Corporate expenses in the fourth quarter of 2023 were $244
million, compared with $243 million in the fourth quarter of 2022
and $210 million in the third quarter of 2023, all on a pre-tax
basis.
The company's annuity sales decreased 15% quarter-over-quarter
and 8% year-over-year, driven by lower fixed deferred annuity
sales, partially offset by strong Shield Annuity sales. Annuity
sales increased 5% sequentially, driven by higher fixed deferred
annuity sales. Life sales increased 32% quarter-over-quarter, 28%
year-over-year and 16% sequentially.
On a full year basis, the company reported a net loss available
to shareholders of $1,214 million in 2023, or $18.39 per diluted
share, compared with net income available to shareholders of $3,775
million in 2022, or $51.30 per diluted share. As a result of market
performance, the value of the company's hedges decreased, as
expected. Full year 2023 adjusted earnings, less notable items*,
were $930 million, or $13.99 per diluted share, compared with full
year 2022 adjusted earnings, less notable items, of $1,120 million,
or $15.22 per diluted share.
During the fourth quarter of 2023, the company repurchased $60
million of its common stock, and for the full year 2023 repurchased
$250 million of its common stock, reducing shares outstanding
relative to year-end 2022 by 7%. Year-to-date through February 9,
2024, the company has repurchased an additional approximately $30
million of its common stock, on a trade date basis, resulting in
approximately $763 million remaining under its current share
repurchase authorizations.
“Looking back on the year, I am proud of our many
accomplishments, including maintaining our target capitalization
and robust liquidity, generating strong sales results, further
strengthening our annuity and life insurance product suites and
returning additional capital to our shareholders through
repurchasing more of our common stock," said Eric Steigerwalt,
president and CEO, Brighthouse Financial.
"In the fourth quarter, we implemented a new statutory
requirement under which all future hedges must be reflected in
reserves and required capital," Steigerwalt continued. "While this
had a negative impact on statutory combined total adjusted capital
("TAC"), the new statutory requirement also led to a material
decrease in required capital. After paying $350 million of
subsidiary dividends to the holding company in the quarter, our
estimated combined RBC ratio remains strong at approximately 420%
and our holding company liquid assets increased to $1.3
billion."
"We believe that our strong balance sheet and liquidity, as well
as our achievements in 2023, position us well for the future,”
concluded Steigerwalt.
Key Metrics (Unaudited, dollars in millions except share and
per share amounts)
As of or For the Three Months
Ended
December 31, 2023
December 31, 2022
Total
Per share
Total
Per share
Net income (loss) available to
shareholders (1)
$(942)
$(14.70)
$110
$1.59
Adjusted earnings (1)
$177
$2.73
$545
$7.81
Adjusted earnings, less notable items
(1)
$189
$2.92
$282
$4.04
Weighted average common shares outstanding
- diluted (1)
64,820,914
N/A
69,765,118
N/A
Book value
$3,244
$51.08
$3,834
$56.15
Book value, excluding AOCI
$8,490
$133.69
$9,940
$145.58
Ending common shares outstanding
63,503,355
N/A
68,278,068
N/A
(1) Per share amounts are on a diluted
basis and may not recalculate due to rounding. For loss periods,
dilutive shares were not included in the calculation as inclusion
of such shares would have an anti-dilutive effect. See Non-GAAP and
Other Financial Disclosures discussion in this news release.
Results by Segment and Corporate & Other (Unaudited, in
millions)
For the Three Months
Ended
ADJUSTED EARNINGS
December 31,
2023
September 30,
2023
December 31,
2022
Annuities
$245
$319
$194
Life (1)
$4
$(73)
$17
Run-off (1)
$(50)
$95
$236
Corporate & Other (1)
$(22)
$(15)
$98
(1) The company uses the term “adjusted
loss” throughout this news release to refer to negative adjusted
earnings values.
Sales (Unaudited, in millions)
For the Three Months
Ended
December 31,
2023
September 30,
2023
December 31,
2022
Annuities (1)
$2,740
$2,600
$3,211
Life
$29
$25
$22
(1) Annuities sales include sales of a
fixed index annuity product, which represents 100% of gross sales
on directly written business and the proportion of assumed gross
sales under reinsurance agreements. Sales of this product were $45
million for the fourth quarter of 2023, $58 million for the third
quarter of 2023 and $161 million for the fourth quarter of
2022.
Annuities
Adjusted earnings in the Annuities segment were $245 million in
the current quarter, compared with adjusted earnings of $194
million in the fourth quarter of 2022 and adjusted earnings of $319
million in the third quarter of 2023.
There were no notable items in the current quarter. The fourth
quarter of 2022 included a $44 million unfavorable notable item and
the third quarter of 2023 included a $28 million favorable notable
item related to the annual actuarial review.
On a quarter-over-quarter basis, adjusted earnings, less notable
items, were relatively flat. On a sequential basis, adjusted
earnings, less notable items, reflect lower fees, higher expenses
and a lower underwriting margin.
As mentioned above, annuity sales decreased 15%
quarter-over-quarter and 8% year-over-year, driven by lower fixed
deferred annuity sales, partially offset by strong Shield Level
annuity sales. Annuity sales increased 5% sequentially, driven by
higher fixed deferred annuity sales.
Life
Adjusted earnings in the Life segment were $4 million in the
current quarter, compared with adjusted earnings of $17 million in
the fourth quarter of 2022 and an adjusted loss of $73 million in
the third quarter of 2023.
There were no notable items in the current quarter or the fourth
quarter of 2022. The third quarter of 2023 included a $71 million
unfavorable notable item related to the annual actuarial
review.
On a quarter-over-quarter basis, adjusted earnings, less notable
items, reflect a lower underwriting margin, partially offset by
higher net investment income and lower expenses. On a sequential
basis, adjusted earnings, less notable items, reflect a higher
underwriting margin, partially offset by lower net investment
income and higher expenses.
As mentioned above, life sales increased 32%
quarter-over-quarter, 28% year-over-year and 16% sequentially.
Run-off
The Run-off segment had an adjusted loss of $50 million in the
current quarter, compared with adjusted earnings of $236 million in
the fourth quarter of 2022 and adjusted earnings of $95 million in
the third quarter of 2023.
There were no notable items in the current quarter. The fourth
quarter of 2022 included a $271 million favorable notable item. The
third quarter of 2023 included a $94 million favorable notable item
related to the annual actuarial review.
On a quarter-over-quarter basis, the adjusted loss, less notable
items, reflects a lower underwriting margin, partially offset by
higher net investment income. On a sequential basis, the adjusted
loss, less notable items, reflects a lower underwriting margin and
lower net investment income.
Corporate & Other
Corporate & Other had an adjusted loss of $22 million in the
current quarter, compared with adjusted earnings of $98 million in
the fourth quarter of 2022 and an adjusted loss of $15 million in
the third quarter of 2023.
The current quarter included a $12 million unfavorable notable
item related to legal matters and the fourth quarter of 2022
included $36 million of favorable notable items. There were no
notable items in the third quarter of 2023.
On a quarter-over-quarter basis, the adjusted loss, less notable
items, reflects a lower tax benefit and higher expenses. On a
sequential basis, the adjusted loss, less notable items, reflects
lower expenses, partially offset by a lower tax benefit.
Net Investment Income and Adjusted Net Investment Income
(Unaudited, in millions)
For the Three Months
Ended
December 31,
2023
September 30,
2023
December 31,
2022
Net investment income
$1,207
$1,202
$1,049
Adjusted net investment income
$1,226
$1,227
$1,082
Net Investment Income
Net investment income was $1,207 million and adjusted net
investment income* was $1,226 million in the current quarter. On a
quarter-over-quarter basis, adjusted net investment income
increased $144 million, primarily driven by alternative investment
income, asset growth and higher interest rates. On a sequential
basis, adjusted net investment income was flat.
The net investment income yield was 4.16% during the
quarter.
Statutory Capital and Liquidity (Unaudited, in
billions)
As of
December 31,
2023 (1)
September 30,
2023
December 31,
2022
Statutory combined total adjusted
capital
$6.3
$7.3
$8.1
(1) Reflects preliminary statutory results
as of December 31, 2023.
Capitalization
As of December 31, 2023:
- TAC(1) decreased to approximately $6.3 billion, driven by the
impact from the new statutory requirement and subsidiary dividends
paid in the quarter
- Estimated combined RBC ratio(1) increased to approximately
420%, with a reduction in required capital associated with the new
statutory requirement providing an effective offset to the decline
in TAC
- Holding company liquid assets were $1.3 billion
_______________
(1) Reflects preliminary statutory results
as of December 31, 2023.
Earnings Conference Call
Brighthouse Financial will hold a conference call and audio
webcast to discuss its financial results for the fourth quarter and
full year 2023 at 8:00 a.m. Eastern Time on Tuesday, February 13,
2024. In connection with this call, the company has prepared a
presentation for use with investors and other members of the
investment community. This presentation is available on the
Brighthouse Financial Investor Relations webpage at
http://investor.brighthousefinancial.com.
To listen to the audio webcast via the internet and to access
the related presentation, please visit the Brighthouse Financial
Investor Relations webpage at
http://investor.brighthousefinancial.com. To join the conference
call via telephone as a participant, please register in advance at
https://register.vevent.com/register/BIf1641bbbff1d436f871280ce7989f769.
A replay of the conference call will be made available until
Friday, March 1, 2024, on the Brighthouse Financial Investor
Relations webpage at http://investor.brighthousefinancial.com.
About Brighthouse Financial, Inc.
Brighthouse Financial, Inc. (Brighthouse Financial) (Nasdaq:
BHF) is on a mission to help people achieve financial security. As
one of the largest providers of annuities and life insurance in the
U.S.,(1) we specialize in products designed to help people protect
what they've earned and ensure it lasts. Learn more at
brighthousefinancial.com.
(1) Ranked by 2022 admitted assets. Best's
Review®: Top 200 U.S. Life/Health Insurers. AM Best, 2023.
Note Regarding Forward-Looking Statements
This news release and other oral or written statements that we
make from time to time may contain information that includes or is
based upon forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve substantial risks and
uncertainties. We have tried, wherever possible, to identify such
statements using words such as "anticipate," "estimate," "expect,"
"project," "may," "will," "could," "intend," "goal," "target,"
"guidance," "forecast," "preliminary," "objective," "continue,"
"aim," "plan," "believe" and other words and terms of similar
meaning, or that are tied to future periods, in connection with a
discussion of future operating or financial performance. In
particular, these include, without limitation, statements relating
to future actions, prospective services or products, financial
projections, future performance or results of current and
anticipated services or products, sales efforts, expenses, the
outcome of contingencies such as legal proceedings, as well as
trends in operating and financial results.
Any or all forward-looking statements may turn out to be wrong.
They can be affected by inaccurate assumptions or by known or
unknown risks and uncertainties. Many such factors will be
important in determining the actual future results of Brighthouse
Financial. These statements are based on current expectations and
the current economic environment and involve a number of risks and
uncertainties that are difficult to predict. These statements are
not guarantees of future performance. Actual results could differ
materially from those expressed or implied in the forward-looking
statements due to a variety of known and unknown risks,
uncertainties and other factors. Although it is not possible to
identify all of these risks and factors, they include, among
others: differences between actual experience and actuarial
assumptions and the effectiveness of our actuarial models; higher
risk management costs and exposure to increased market risk due to
guarantees within certain of our products; the effectiveness of our
variable annuity exposure risk management strategy and the impact
of such strategy on volatility in our profitability measures and
negative effects on our statutory capital; material differences
between actual outcomes and the sensitivities calculated under
certain scenarios that we may utilize in connection with our
variable annuity risk management strategies; the impact of interest
rates on our future ULSG policyholder obligations and net income
volatility; the potential material adverse effect of changes in
accounting standards, practices or policies applicable to us,
including changes in the accounting for long-duration contracts;
loss of business and other negative impacts resulting from a
downgrade or a potential downgrade in our financial strength or
credit ratings; the availability of reinsurance and the ability of
the counterparties to our reinsurance or indemnification
arrangements to perform their obligations thereunder; heightened
competition, including with respect to service, product features,
scale, price, actual or perceived financial strength, claims-paying
ratings, credit ratings, e-business capabilities and name
recognition; our ability to market and distribute our products
through distribution channels; any failure of third parties to
provide services we need, any failure of the practices and
procedures of such third parties and any inability to obtain
information or assistance we need from third parties; the ability
of our subsidiaries to pay dividends to us, and our ability to pay
dividends to our shareholders and repurchase our common stock; the
risks associated with climate change; the adverse impact of public
health crises, extreme mortality events or similar occurrences on
our business and the economy in general; the impact of adverse
capital and credit market conditions, including with respect to our
ability to meet liquidity needs and access capital; the impact of
economic conditions in the capital markets and the U.S. and global
economy, as well as geopolitical events, military actions or
catastrophic events, on our profitability measures as well as our
investment portfolio, including on realized and unrealized losses
and impairments, net investment spread and net investment income;
the financial risks that our investment portfolio is subject to,
including credit risk, interest rate risk, inflation risk, market
valuation risk, liquidity risk, real estate risk, derivatives risk,
and other factors outside our control; the impact of changes in
regulation and in supervisory and enforcement policies or
interpretations thereof on our insurance business or other
operations; the potential material negative tax impact of potential
future tax legislation that could make some of our products less
attractive to consumers or increase our tax liability; the
effectiveness of our policies, procedures and processes in managing
risk; the loss or disclosure of confidential information, damage to
our reputation and impairment of our ability to conduct business
effectively as a result of any failure in cyber- or other
information security systems; whether all or any portion of the tax
consequences of our separation from MetLife, Inc. are not as
expected, leading to material additional taxes or material adverse
consequences to tax attributes that impact us; and other factors
described from time to time in documents that we file with the U.S.
Securities and Exchange Commission (the "SEC").
For the reasons described above, we caution you against relying
on any forward-looking statements, which should also be read in
conjunction with the other cautionary statements included and the
risks, uncertainties and other factors identified in our Annual
Report on Form 10-K for the year ended December 31, 2022,
particularly in the sections entitled "Risk Factors" and
"Quantitative and Qualitative Disclosures About Market Risk," as
well as in our other subsequent filings with the SEC. Further, any
forward-looking statement speaks only as of the date on which it is
made, and we undertake no obligation to update or revise any
forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the
occurrence of unanticipated events, except as otherwise may be
required by law.
Non-GAAP and Other Financial Disclosures
Our definitions of non-GAAP and other financial measures may
differ from those used by other companies.
Non-GAAP Financial Disclosures
We present certain measures of our performance that are not
calculated in accordance with accounting principles generally
accepted in the United States of America, also known as "GAAP." We
believe that these non-GAAP financial measures enhance the
understanding of our performance by the investor community by
highlighting the results of operations and the underlying
profitability drivers of our business.
The following non-GAAP financial measures should not be viewed
as substitutes for the most directly comparable financial measures
calculated in accordance with GAAP:
Non-GAAP financial
measures:
Most directly
comparable GAAP financial measures:
adjusted earnings
net income (loss) available to
shareholders (1)
adjusted earnings, less notable items
net income (loss) available to
shareholders (1)
adjusted revenues
revenues
adjusted expenses
expenses
adjusted earnings per common share
earnings per common share, diluted (1)
adjusted earnings per common share, less
notable items
earnings per common share, diluted (1)
adjusted return on common equity
return on common equity (2)
adjusted return on common equity, less
notable items
return on common equity (2)
adjusted net investment income
net investment income
__________________
(1) Brighthouse uses net income (loss)
available to shareholders to refer to net income (loss) available
to Brighthouse Financial, Inc.'s common shareholders, and earnings
per common share, diluted to refer to net income (loss) available
to shareholders per common share.
(2) Brighthouse uses return on common
equity to refer to return on Brighthouse Financial, Inc.'s common
stockholders' equity.
Reconciliations to the most directly comparable historical GAAP
measures are included for those measures which are presented
herein. Reconciliations of these non-GAAP financial measures to the
most directly comparable GAAP financial measures are not accessible
on a forward-looking basis because we believe it is not possible
without unreasonable efforts to provide other than a range of net
investment gains and losses and net derivative gains and losses,
which can fluctuate significantly within or outside the range and
from period to period and may have a material impact on net income
(loss) available to shareholders.
Adjusted Earnings, Adjusted Revenues and Adjusted Expenses
Adjusted earnings is a financial measure used by management to
evaluate performance and facilitate comparisons to industry
results. This financial measure, which may be positive or negative,
focuses on our primary businesses by excluding the impact of market
volatility, which could distort trends.
Adjusted earnings reflect adjusted revenues less (i) adjusted
expenses, (ii) provision for income tax expense (benefit), (iii)
net income (loss) attributable to noncontrolling interests and (iv)
preferred stock dividends. Provided below are the adjustments to
GAAP revenues and GAAP expenses used to calculate adjusted revenues
and adjusted expenses, respectively.
The following are significant items excluded from total revenues
in calculating the adjusted revenues component of adjusted
earnings:
- Net investment gains (losses); and
- Net derivative gains (losses) ("NDGL") except earned income and
amortization of premium on derivatives that are hedges of
investments or that are used to replicate certain investments, but
do not qualify for hedge accounting treatment ("Investment Hedge
Adjustments").
The following are significant items excluded from total expenses
in calculating the adjusted expenses component of adjusted
earnings:
- Change in market risk benefits; and
- Change in fair value of the crediting rate on experience-rated
contracts ("Market Value Adjustments").
The provision for income tax related to adjusted earnings is
calculated using the statutory tax rate of 21%, net of impacts
related to the dividends received deduction, tax credits and
current period non-recurring items.
Consistent with GAAP guidance for segment reporting, adjusted
earnings is also our GAAP measure of segment performance.
Adjusted Earnings per Common Share and Adjusted Return on Common
Equity
Adjusted earnings per common share and adjusted return on common
equity are measures used by management to evaluate the execution of
our business strategy and align such strategy with our
shareholders' interests.
Adjusted earnings per common share is defined as adjusted
earnings for the period divided by the weighted average number of
fully diluted shares of common stock outstanding for the period.
The weighted average common shares outstanding used to calculate
adjusted earnings per share will differ from such shares used to
calculate diluted net income (loss) available to shareholders per
common share when the inclusion of dilutive shares has an
anti-dilutive effect for one calculation but not for the other.
Adjusted return on common equity is defined as total annual
adjusted earnings on a four quarter trailing basis, divided by the
simple average of the most recent five quarters of total
Brighthouse Financial, Inc.'s common stockholders' equity,
excluding AOCI.
Adjusted Net Investment Income
We present adjusted net investment income to measure our
performance for management purposes, and we believe it enhances the
understanding of our investment portfolio results. Adjusted net
investment income represents GAAP net investment income plus
Investment Hedge Adjustments.
Other Financial Disclosures
Corporate Expenses
Corporate expenses includes functional department expenses,
public company expenses, certain investment expenses, retirement
funding and incentive compensation; and excludes establishment
costs.
Notable items
Certain of the non-GAAP measures described above may be
presented further adjusted to exclude notable items. Notable items
reflect the unfavorable (favorable) after-tax impact on our results
of certain unanticipated items and events, as well as certain items
and events that were anticipated, such as establishment costs. The
presentation of notable items and non-GAAP measures, less notable
items is intended to help investors better understand our results
and to evaluate and forecast those results.
Book Value per Common Share and Book Value per Common Share,
excluding AOCI
Brighthouse uses the term "book value" to refer to "Brighthouse
Financial, Inc.'s common stockholders' equity, including AOCI."
Book value per common share is defined as ending Brighthouse
Financial, Inc.'s common stockholders' equity, including AOCI,
divided by ending common shares outstanding. Book value per common
share, excluding AOCI, is defined as ending Brighthouse Financial,
Inc.'s common stockholders' equity, excluding AOCI, divided by
ending common shares outstanding.
CTE70
CTE70 is defined as the amount of assets required to satisfy
contract holder obligations across market environments in the
average of the worst thirty percent of a set of capital market
scenarios over the life of the contracts.
CTE98
CTE98 is defined as the amount of assets required to satisfy
contract holder obligations across market environments in the
average of the worst two percent of a set of capital market
scenarios over the life of the contracts.
Holding Company
Holding company means, collectively, Brighthouse Financial,
Inc., Brighthouse Holdings, LLC, and Brighthouse Services, LLC.
Holding Company Liquid Assets
Holding company liquid assets include liquid assets in
Brighthouse Financial, Inc., Brighthouse Holdings, LLC, and
Brighthouse Services, LLC. Liquid assets are comprised of cash and
cash equivalents, short-term investments and publicly-traded
securities, excluding assets that are pledged or otherwise
committed. Assets pledged or otherwise committed include assets
held in trust.
Total Adjusted Capital
Total adjusted capital primarily consists of statutory capital
and surplus, as well as the statutory asset valuation reserve. When
referred to as “combined,” represents that of our insurance
subsidiaries as a whole.
Sales
Life insurance sales consist of 100 percent of annualized new
premium for term life, first-year paid premium for whole life,
universal life, and variable universal life, and total paid premium
for indexed universal life. We exclude company-sponsored internal
exchanges, corporate-owned life insurance, bank-owned life
insurance, and private placement variable universal life.
Annuity sales consist of 100 percent of direct statutory
premiums, except for fixed index annuity sales, which represents
100 percent of gross sales on directly written business and the
proportion of assumed gross sales under reinsurance agreements.
Annuity sales exclude certain internal exchanges. These sales
statistics do not correspond to revenues under GAAP, but are used
as relevant measures of business activity.
Net Investment Income Yield
Similar to adjusted net investment income, we present net
investment income yields as a performance measure we believe
enhances the understanding of our investment portfolio results. Net
investment income yields are calculated on adjusted net investment
income as a percentage of average quarterly asset carrying values.
Asset carrying values exclude unrealized gains (losses), collateral
received in connection with our securities lending program,
freestanding derivative assets and collateral received from
derivative counterparties. Investment fee and expense yields are
calculated as a percentage of average quarterly asset estimated
fair values. Asset estimated fair values exclude collateral
received in connection with our securities lending program,
freestanding derivative assets and collateral received from
derivative counterparties.
Normalized Statutory Earnings (Loss)
Normalized statutory earnings (loss) is used by management to
measure our insurance companies’ ability to pay future
distributions and is reflective of whether our hedging program
functions as intended. Normalized statutory earnings (loss) is
calculated as statutory pre-tax net gain (loss) from operations
adjusted for the favorable or unfavorable impacts of (i) net
realized capital gains (losses), (ii) the change in total asset
requirement at CTE98, net of the change in our variable annuity
reserves, and (iii) unrealized gains (losses) associated with our
variable annuities and Shield hedging programs and other equity
risk management strategies. Normalized statutory earnings (loss)
may be further adjusted for certain unanticipated items that impact
our results in order to help management and investors better
understand, evaluate and forecast those results.
Risk-Based Capital Ratio
The risk-based capital ratio is a method of measuring an
insurance company’s capital, taking into consideration its relative
size and risk profile, in order to ensure compliance with minimum
regulatory capital requirements set by the National Association of
Insurance Commissioners. When referred to as “combined,” represents
that of our insurance subsidiaries as a whole. The reporting of our
combined risk-based capital ratio is not intended for the purpose
of ranking any insurance company or for use in connection with any
marketing, advertising or promotional activities.
Condensed Statements of Operations (Unaudited, in
millions)
For the Three Months
Ended
Revenues
December 31,
2023
September 30,
2023
December 31,
2022
Premiums
$226
$194
$167
Universal life and investment-type product
policy fees
546
542
549
Net investment income
1,207
1,202
1,049
Other revenues
135
125
100
Revenues before NIGL and NDGL
2,114
2,063
1,865
Net investment gains (losses)
(33)
(53)
(69)
Net derivative gains (losses)
(681)
(840)
(1,923)
Total revenues
$1,400
$1,170
$(127)
Expenses
Policyholder benefits and claims
$710
$590
$267
Interest credited to policyholder account
balances
525
426
401
Amortization of DAC and VOBA
152
155
155
Change in market risk benefits
663
(1,064)
(1,479)
Interest expense on debt
39
38
39
Other expenses
485
435
450
Total expenses
2,574
580
(167)
Income (loss) before provision for income
tax
(1,174)
590
40
Provision for income tax expense
(benefit)
(258)
109
(97)
Net income (loss)
(916)
481
137
Less: Net income (loss) attributable to
noncontrolling interests
1
2
1
Net income (loss) attributable to
Brighthouse Financial, Inc.
(917)
479
136
Less: Preferred stock dividends
25
26
26
Net income (loss) available to
Brighthouse Financial, Inc.’s common shareholders
$(942)
$453
$110
Condensed Balance Sheets (Unaudited, in millions)
As of
ASSETS
December 31,
2023
September 30,
2023
December 31,
2022
Investments:
Fixed maturity securities
available-for-sale
$80,991
$75,433
$75,577
Equity securities
102
90
89
Mortgage loans
22,508
22,682
22,936
Policy loans
1,331
1,311
1,282
Limited partnerships and limited liability
companies
4,946
4,931
4,775
Short-term investments
1,169
1,003
1,081
Other invested assets
4,409
3,210
2,852
Total investments
115,456
108,660
108,592
Cash and cash equivalents
3,851
3,839
4,115
Accrued investment income
1,183
1,143
885
Reinsurance recoverables
19,213
18,597
18,019
Premiums and other receivables
548
469
529
DAC and VOBA
4,872
4,919
5,084
Current income tax recoverable
27
31
38
Deferred income tax asset
1,893
2,121
1,736
Market risk benefit assets
656
694
483
Other assets
370
368
401
Separate account assets
88,271
82,675
84,965
Total assets
$236,340
$223,516
$224,847
LIABILITIES AND EQUITY
Liabilities
Future policy benefits
$32,569
$30,404
$31,497
Policyholder account balances
81,068
78,371
73,527
Market risk benefit liabilities
10,323
8,830
10,389
Other policy-related balances
3,836
3,806
4,098
Payables for collateral under securities
loaned and other transactions
3,670
3,941
4,560
Long-term debt
3,156
3,157
3,156
Other liabilities
8,439
8,198
7,057
Separate account liabilities
88,271
82,675
84,965
Total liabilities
231,332
219,382
219,249
Equity
Preferred stock, at par value
—
—
—
Common stock, at par value
1
1
1
Additional paid-in capital
14,004
14,022
14,075
Retained earnings (deficit)
(1,507)
(590)
(395)
Treasury stock
(2,309)
(2,248)
(2,042)
Accumulated other comprehensive income
(loss)
(5,246)
(7,116)
(6,106)
Total Brighthouse Financial, Inc.’s
stockholders’ equity
4,943
4,069
5,533
Noncontrolling interests
65
65
65
Total equity
5,008
4,134
5,598
Total liabilities and equity
$236,340
$223,516
$224,847
Reconciliation of Net Income (Loss) Available to Shareholders
to Adjusted Earnings and Adjusted Earnings, Less Notable Items, and
Reconciliation of Net Income (Loss) Available to Shareholders per
Common Share to Adjusted Earnings per Common Share and Adjusted
Earnings, Less Notable Items per Common Share (Unaudited, in
millions except per share data)
For the Three Months
Ended
ADJUSTED EARNINGS, LESS NOTABLE
ITEMS
December 31,
2023
September 30,
2023
December 31,
2022
Net income (loss) available to
shareholders
$(942)
$453
$110
Less: Net investment gains (losses)
(33)
(53)
(69)
Less: Net derivative gains (losses),
excluding investment hedge adjustments
(700)
(865)
(1,956)
Less: Change in market risk benefits
(663)
1,064
1,479
Less: Market value adjustments
(21)
15
(3)
Less: Provision for income tax (expense)
benefit on reconciling adjustments
298
(34)
114
Adjusted earnings
177
326
545
Less: Notable items
(12)
51
263
Adjusted earnings, less notable
items
$189
$275
$282
ADJUSTED EARNINGS, LESS NOTABLE ITEMS
PER COMMON SHARE (1)
Net income (loss) available to
shareholders per common share
$(14.70)
$6.89
$1.59
Less: Net investment gains (losses)
(0.51)
(0.81)
(0.99)
Less: Net derivative gains (losses),
excluding investment hedge adjustments
(10.92)
(13.16)
(28.04)
Less: Change in market risk benefits
(10.34)
16.18
21.20
Less: Market value adjustments
(0.33)
0.23
(0.04)
Less: Provision for income tax (expense)
benefit on reconciling adjustments
4.65
(0.52)
1.63
Less: Impact of inclusion of dilutive
shares
0.03
—
—
Adjusted earnings per common
share
2.73
4.97
7.81
Less: Notable items
(0.19)
0.78
3.77
Adjusted earnings, less notable items
per common share
$2.92
$4.18
$4.04
(1) Per share calculations are on a
diluted basis and may not recalculate or foot due to rounding. For
loss periods, dilutive shares were not included in the calculation
as inclusion of such shares would have an anti-dilutive effect. See
Non-GAAP and Other Financial Disclosures discussion in this news
release.
Reconciliation of Net Investment Income to Adjusted Net
Investment Income (Unaudited, in millions)
For the Three Months
Ended
December 31,
2023
September 30,
2023
December 31,
2022
Net investment income
$1,207
$1,202
$1,049
Less: Investment hedge adjustments
(19)
(25)
(33)
Adjusted net investment income
$1,226
$1,227
$1,082
Notable Items (Unaudited, in millions)
For the Three Months
Ended
NOTABLE ITEMS IMPACTING ADJUSTED
EARNINGS
December 31,
2023
September 30,
2023
December 31,
2022
Actuarial items and other insurance
adjustments
$—
$(51)
$(227)
Establishment costs
—
—
15
Debt repayment costs
—
—
—
Prior year tax matters
—
—
(51)
Legal matters
12
—
—
Total notable items (1)
$12
$(51)
$(263)
NOTABLE ITEMS BY SEGMENT AND CORPORATE
& OTHER
Annuities
$—
$(28)
$44
Life
—
71
—
Run-off
—
(94)
(271)
Corporate & Other
12
—
(36)
Total notable items (1)
$12
$(51)
$(263)
(1) See Non-GAAP and Other Financial
Disclosures discussion in this news release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240212153048/en/
FOR INVESTORS Dana Amante (980) 949-3073
damante@brighthousefinancial.com
FOR MEDIA Deon Roberts (980) 949-3071
deon.roberts@brighthousefinancial.com
Brighthouse Financial (NASDAQ:BHF)
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