Part I — Financial Information [Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Brighthouse Financial's consolidated statements show total assets decreased to $228.2 billion by June 2022, with Q2 2022 net income rising to $983 million due to net derivative gains Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$228,211** | **$259,840** | | Total Investments | $110,435 | $118,225 | | Separate Account Assets | $88,843 | $114,464 | | **Total Liabilities** | **$217,955** | **$243,633** | | Future Policy Benefits | $41,142 | $43,807 | | Policyholder Account Balances | $68,293 | $66,851 | | Separate Account Liabilities | $88,843 | $114,464 | | **Total Equity** | **$10,256** | **$16,207** | Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$3,797** | **$1,676** | **$6,537** | **$2,614** | | Net Derivative Gains (Losses) | $1,733 | $(684) | $2,246 | $(2,188) | | Net Investment Income | $1,061 | $1,212 | $2,212 | $2,399 | | **Total Expenses** | **$2,584** | **$1,655** | **$4,517** | **$3,361** | | **Net Income (Loss) Available to Common Shareholders** | **$957** | **$10** | **$1,570** | **$(600)** | | **Diluted EPS** | **$12.77** | **$0.11** | **$20.62** | **$(6.93)** | Consolidated Statement of Cash Flows Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $18 | $69 | | Net Cash from Investing Activities | $(5,019) | $(4,412) | | Net Cash from Financing Activities | $5,598 | $5,117 | | **Change in Cash and Cash Equivalents** | **$597** | **$774** | [Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201%20%E2%80%94%20Business%2C%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Brighthouse Financial, a major U.S. annuities and life insurance provider, prepares statements under U.S. GAAP, with ASU 2018-12 expected to materially impact future financial reporting by requiring fair value measurement of variable annuity guarantees - The company operates through three segments: Annuities, Life, and Run-off, and is one of the largest providers of annuity and life insurance products in the U.S.[17](index=17&type=chunk) - The upcoming adoption of ASU 2018-12 is expected to have a significant impact, notably reclassifying variable annuity guarantees as market risk benefits (MRBs) measured at fair value. This is anticipated to cause a **material decrease in stockholders' equity** upon adoption, with the impact being **highly sensitive to interest rates**[21](index=21&type=chunk)[23](index=23&type=chunk) [Note 2 — Segment Information](index=9&type=section&id=Note%202%20%E2%80%94%20Segment%20Information) The company evaluates performance via three segments and Corporate & Other using adjusted earnings, which sharply declined to $24 million in Q2 2022, with Annuities remaining the largest segment despite overall asset decreases Adjusted Earnings by Segment (in millions) | Segment | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Annuities | $204 | $338 | $515 | $674 | | Life | $23 | $68 | $49 | $110 | | Run-off | $(164) | $122 | $(148) | $198 | | Corporate & Other | $(39) | $(93) | $(98) | $(162) | | **Total Adjusted Earnings** | **$24** | **$435** | **$318** | **$820** | Total Assets by Segment (in millions) | Segment | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Annuities | $153,186 | $178,700 | | Life | $21,854 | $24,514 | | Run-off | $30,888 | $37,055 | | Corporate & Other | $22,283 | $19,571 | | **Total Assets** | **$228,211** | **$259,840** | [Note 3 — Insurance](index=13&type=section&id=Note%203%20%E2%80%94%20Insurance) The company's insurance liabilities include significant variable annuity guarantees, with total account value decreasing to $86.4 billion and net amount at risk for death benefits increasing to $15.5 billion by June 2022 due to market downturns Variable Annuity Guarantee Exposure (in millions) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Account Value (Death Benefit) | $86,438 | $109,968 | | Net Amount at Risk (Death Benefit) | $15,537 | $6,361 | | Total Account Value (Annuitization) | $46,478 | $59,735 | | Net Amount at Risk (Annuitization) | $6,390 | $5,240 | Life Insurance Secondary Guarantee Exposure (in millions) | Contract Type | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | | Universal Life | Total Account Value | $5,391 | $5,518 | | | Net Amount at Risk | $66,379 | $67,248 | | Variable Life | Total Account Value | $3,864 | $4,785 | | | Net Amount at Risk | $18,609 | $18,857 | [Note 4 — Investments](index=14&type=section&id=Note%204%20%E2%80%94%20Investments) The investment portfolio decreased to $110.4 billion by June 2022, with fixed maturity securities experiencing $6.7 billion in unrealized losses due to rising rates, while net investment income declined from lower limited partnership returns Fixed Maturity Securities Available-for-Sale by Sector (Fair Value, in millions) | Sector | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | U.S. corporate | $33,472 | $39,081 | | Foreign corporate | $10,547 | $11,706 | | U.S. government and agency | $9,607 | $9,307 | | RMBS | $8,343 | $9,259 | | CMBS | $6,714 | $7,282 | | Other | $9,923 | $10,929 | | **Total** | **$78,606** | **$87,582** | - Fixed maturity securities had gross unrealized losses of **$6.7 billion** as of June 30, 2022, a significant increase from **$0.5 billion** at December 31, 2021, largely due to changes in interest rates and credit spreads[40](index=40&type=chunk)[47](index=47&type=chunk) Mortgage Loans by Portfolio Segment (Carrying Value, in millions) | Segment | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Commercial | $13,046 | $12,187 | | Agricultural | $4,144 | $4,163 | | Residential | $4,421 | $3,623 | | **Total Mortgage Loans (Gross)** | **$21,611** | **$19,973** | - The mortgage loan portfolio remains high-quality, with over **99%** of all loans classified as performing at June 30, 2022[60](index=60&type=chunk) Components of Net Investment Income (in millions) | Source | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Fixed maturity securities | $742 | $703 | $1,460 | $1,393 | | Mortgage loans | $205 | $167 | $408 | $331 | | Limited partnerships and LLCs | $122 | $350 | $363 | $688 | | Other | $42 | $22 | $71 | $54 | | **Total Investment Income** | **$1,111** | **$1,247** | **$2,303** | **$2,469** | | Less: Investment expenses | $(50) | $(35) | $(91) | $(70) | | **Net Investment Income** | **$1,061** | **$1,212** | **$2,212** | **$2,399** | [Note 5 — Derivatives](index=26&type=section&id=Note%205%20%E2%80%94%20Derivatives) The company uses $98.9 billion in derivatives to manage market risks, generating $1.73 billion in net gains in Q2 2022, a significant reversal from prior-year losses, primarily due to embedded and equity market derivatives Derivative Fair Value by Risk Exposure (in millions) | Primary Underlying Risk | Assets (June 30, 2022) | Liabilities (June 30, 2022) | Assets (Dec 31, 2021) | Liabilities (Dec 31, 2021) | | :--- | :--- | :--- | :--- | :--- | | Interest Rate | $416 | $1,757 | $1,094 | $130 | | Foreign Currency | $697 | $6 | $328 | $47 | | Credit | $7 | $7 | $39 | $1 | | Equity Market | $1,975 | $1,664 | $1,665 | $1,466 | | Embedded Derivatives | $132 | $4,577 | $186 | $8,496 | | **Total** | **$3,227** | **$8,011** | **$3,312** | **$10,140** | - Net derivative gains were **$1,733 million** in Q2 2022, compared to net losses of **$684 million** in Q2 2021. The gain was primarily driven by a **$2,582 million gain on embedded derivatives**[9](index=9&type=chunk)[90](index=90&type=chunk) [Note 6 — Fair Value](index=32&type=section&id=Note%206%20%E2%80%94%20Fair%20Value) The company measures $171.7 billion in assets at fair value, with 95.6% as Level 2, while Level 3 assets were $2.3 billion and Level 3 liabilities, mainly embedded derivatives, decreased to $4.6 billion by June 2022 Assets and Liabilities Measured at Fair Value (in millions) | Category | Level 1 | Level 2 | Level 3 | Total Fair Value (June 30, 2022) | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Fixed maturity securities | $4,687 | $71,824 | $2,095 | $78,606 | | Separate account assets | $30 | $88,813 | $0 | $88,843 | | Derivative assets | $0 | $3,052 | $43 | $3,095 | | Other | $518 | $471 | $159 | $1,148 | | **Total Assets** | **$5,235** | **$164,160** | **$2,297** | **$171,692** | | **Liabilities** | | | | | | Derivative liabilities | $0 | $3,429 | $5 | $3,434 | | Embedded derivatives | $0 | $0 | $4,577 | $4,577 | | **Total Liabilities** | **$0** | **$3,429** | **$4,582** | **$8,011** | - The balance of Level 3 net embedded derivative liabilities decreased from **$(8,310) million** at the beginning of H1 2022 to **$(4,445) million** at June 30, 2022, primarily due to **$3,911 million** in total realized/unrealized gains included in net income[123](index=123&type=chunk) [Note 8 — Equity](index=41&type=section&id=Note%208%20%E2%80%94%20Equity) Stockholders' equity decreased to $10.3 billion by June 2022, primarily due to a $7.2 billion AOCI reduction from unrealized investment losses, while the company repurchased 5.2 million shares for $259 million - The company repurchased **5,152,415 shares** of its common stock for **$259 million** during the six months ended June 30, 2022[134](index=134&type=chunk) - As of June 30, 2022, **$522 million** remained available under the common stock repurchase program[134](index=134&type=chunk) - Accumulated Other Comprehensive Income (AOCI) decreased significantly from a gain of **$4.2 billion** at Dec 31, 2021 to a loss of **$3.1 billion** at June 30, 2022, mainly due to unrealized losses on investments[135](index=135&type=chunk)[138](index=138&type=chunk) [Note 11 — Contingencies, Commitments and Guarantees](index=46&type=section&id=Note%2011%20%E2%80%94%20Contingencies%2C%20Commitments%20and%20Guarantees) The company faces litigation with possible losses up to $10 million and other contingencies up to $125 million, while holding $2.4 billion in unfunded commitments for partnership investments and other facilities - The company faces several purported class action lawsuits related to cost of insurance (COI) charges on universal life policies, which it intends to vigorously defend[153](index=153&type=chunk) - As of June 30, 2022, the estimated aggregate range of reasonably possible losses for litigation contingencies is up to approximately **$10 million**[149](index=149&type=chunk) - The estimated range of reasonably possible losses for other contingencies, mainly reinsurance-related disputes, is up to approximately **$125 million** as of June 30, 2022. This is a reduction following a **$140 million settlement** of a reinsurance matter in Q2 2022[155](index=155&type=chunk) - The company had unfunded commitments of **$2.4 billion** at June 30, 2022, primarily to fund partnership investments, bank credit facilities, and private corporate bond investments[156](index=156&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2022 net income of $957 million to favorable GMLB rider fair value changes, despite adjusted earnings falling to $24 million due to market downturns, while maintaining strong liquidity and continuing share repurchases [Executive Summary](index=50&type=section&id=Executive%20Summary) Brighthouse reported Q2 2022 net income of $957 million, driven by favorable GMLB rider fair value changes, while adjusted earnings decreased to $24 million due to lower equity markets and rising interest rates Financial Performance Summary (in millions) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Available to Shareholders | $957 | $10 | $1,570 | $(600) | | Adjusted Earnings | $24 | $435 | $318 | $820 | - The increase in Q2 2022 net income was primarily driven by net favorable changes in the estimated fair value of GMLB Riders due to market factors, including lower equity markets and rising interest rates[167](index=167&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Consolidated adjusted earnings for Q2 2022 fell to $24 million due to higher insurance costs, lower investment spread, and reduced fee income, with GMLB riders providing a $2.8 billion favorable pre-tax income impact - Q2 2022 adjusted earnings decreased by **$411 million** year-over-year, primarily due to higher net costs from insurance-related activities, lower net investment spread, and lower fee income[195](index=195&type=chunk) - The Annuities segment's adjusted earnings decreased by **$134 million** in Q2 2022, driven by higher GMDB costs, lower asset-based fees, and higher DAC amortization due to unfavorable market performance[204](index=204&type=chunk) - The Run-off segment's adjusted earnings decreased by **$286 million** in Q2 2022, swinging to a loss, mainly due to lower investment spread, a reinsurance settlement, and higher ULSG liabilities[212](index=212&type=chunk) - The performance of GMLB Riders resulted in a favorable pre-tax income impact of **$1.8 billion** in Q2 2022, a **$2.8 billion** positive swing from the **$933 million loss** in Q2 2021, mainly due to favorable changes in Shield liabilities from lower equity markets[220](index=220&type=chunk) [Investments](index=67&type=section&id=Investments) The company's investment strategy manages credit, interest rate, and market valuation risks, with 96% of its $78.6 billion fixed maturity securities portfolio being investment grade and the commercial mortgage loan portfolio remaining well-diversified - Primary investment risks include credit risk, interest rate risk, and market valuation risk, which are managed through diversification and ALM strategies[224](index=224&type=chunk)[225](index=225&type=chunk) - As of June 30, 2022, **96.0%** of the fixed maturity securities portfolio was rated investment grade, compared to **95.4%** at year-end 2021[239](index=239&type=chunk) - The commercial mortgage loan portfolio had an average loan-to-value ratio of **58%** and an average debt-service coverage ratio of **2.2x** as of June 30, 2022, indicating a strong collateral position[256](index=256&type=chunk) [Policyholder Liabilities](index=78&type=section&id=Policyholder%20Liabilities) Policyholder liabilities are significantly impacted by variable annuity guarantees, with the total Net Amount at Risk for death benefits increasing to $15.5 billion by June 2022, managed by a comprehensive derivatives hedging program Variable Annuity Net Amount at Risk (NAR) by Benefit Type (in millions) | Benefit Type | Death Benefit NAR (June 30, 2022) | Living Benefit NAR (June 30, 2022) | Death Benefit NAR (Dec 31, 2021) | Living Benefit NAR (Dec 31, 2021) | | :--- | :--- | :--- | :--- | :--- | | GMIB | $5,368 | $5,923 | $1,809 | $5,056 | | GMWB | $1,626 | $888 | $139 | $680 | | Other Guarantees | $8,543 | $401 | $4,413 | $185 | | **Total** | **$15,537** | **$7,296** | **$6,361** | **$5,921** | Variable Annuity Reserves by Type (in millions) | Benefit Type | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | GMIB | $5,147 | $5,161 | | GMIB Max | $1,158 | $931 | | GMWB | $335 | $424 | | GMDB | $1,712 | $1,535 | | Other | $(10) | $0 | | **Total** | **$8,342** | **$8,051** | [Liquidity and Capital Resources](index=82&type=section&id=Liquidity%20and%20Capital%20Resources) Brighthouse maintains strong liquidity with $4.0 billion in short-term assets, targets a 25% debt-to-capital ratio and 400-450% RBC ratio, and continues share repurchases, with the parent company relying on subsidiary dividends - The company maintained a short-term liquidity position of **$4.0 billion** and total liquid assets of **$46.1 billion** at June 30, 2022[281](index=281&type=chunk) - Capital management targets include a debt-to-capital ratio of approximately **25%** and a combined risk-based capital (RBC) ratio between **400%** and **450%** in normal market conditions[282](index=282&type=chunk)[283](index=283&type=chunk) - Through August 2, 2022, the company has repurchased an additional **$52 million** of its common stock, subsequent to the **$259 million** repurchased in H1 2022[297](index=297&type=chunk) - The parent holding company, BHF, is largely dependent on cash flows from its insurance subsidiaries to meet its obligations. BHF held **$1.2 billion** in liquid assets at June 30, 2022[303](index=303&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=88&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposures remain consistent with prior disclosures, except for a $1.0 billion decrease in interest rate sensitivity to $7.9 billion by June 2022 due to higher prevailing rates - The company's sensitivity to a 100 basis point rise in interest rates decreased by **$1.0 billion**, from **$8.9 billion** at year-end 2021 to **$7.9 billion** at June 30, 2022[318](index=318&type=chunk) [Controls and Procedures](index=89&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2022, noting ongoing changes from the MetLife transition as material to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of June 30, 2022[320](index=320&type=chunk) - Ongoing changes related to the separation from MetLife, including new systems and third-party arrangements, are considered **material changes** to internal control over financial reporting[321](index=321&type=chunk) Part II — Other Information [Legal Proceedings](index=90&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with detailed information available in Note 11 of the financial statements - For details on legal proceedings, refer to Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements[324](index=324&type=chunk) [Risk Factors](index=90&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since the 2021 Annual Report on Form 10-K - There have been **no material changes** to the company's risk factors from those disclosed in the 2021 Annual Report[325](index=325&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, Brighthouse Financial repurchased 2,753,779 common shares, with approximately $522 million remaining for future repurchases under the program Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining (in millions) | | :--- | :--- | :--- | :--- | | April 2022 | 776,371 | $52.59 | $613 | | May 2022 | 881,749 | $48.50 | $570 | | June 2022 | 1,095,659 | $43.77 | $522 | | **Total Q2** | **2,753,779** | **N/A** | **$522** | [Exhibits](index=91&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the 10-Q report, including the new Revolving Credit Agreement, CEO and CFO certifications, and XBRL data files - Key exhibits filed include a new Revolving Credit Agreement from April 2022, Sarbanes-Oxley certifications by the CEO and CFO, and XBRL interactive data files[329](index=329&type=chunk)

Brighthouse Financial, Inc. First Quarter 2022 Earnings Call Presentation Note regarding forward-looking statements This presentation 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 s ...

Brighthouse Financial, Inc. (NASDAQ:BHF) Q1 2022 Results Earnings Conference Call May 10, 2022 8:00 AM ET Company Participants Dana Amante - Head, Investor Relations Eric Steigerwalt - President and Chief Executive Officer Ed Spehar - Chief Financial Officer Myles Lambert - Head, Marketing Conference Call Participants Ryan Krueger - KBW Elyse Greenspan - Wells Fargo Erik Bass - Autonomous Research Tracy Benguigui - Barclays Alex Scott - Goldman Sachs Tom Gallagher - Evercore Suneet Kamath - Jefferies Operat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number: 001-37905 Brighthouse Financial, Inc. (Exact name of registrant as specified in its charter) Delaware 81-3846992 (State or other juris ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________ FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number: 001-37905 Brighthouse Financial, Inc. (Exact name of registrant as specified in its charter) Delaware 81-3846992 ...

Brighthouse Financial, Inc. Fourth Quarter and Full Year 2021 Earnings Call Presentation Note regarding forward-looking statements This presentation 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 statement ...

Brighthouse Financial, Inc. (NASDAQ:BHF) Q4 2021 Earnings Conference Call February 11, 2022 8:00 AM ET Company Participants Dana Amante - Head, Investor Relations Eric Steigerwalt - President and Chief Executive Officer Ed Spehar - Chief Financial Officer Myles Lambert - Head, Marketing Conference Call Participants Tom Gallagher - Evercore Tracy Benguigui - Barclays Ryan Krueger - KBW Alex Scott - Goldman Sachs Elyse Greenspan - Wells Fargo John Barnidge - Piper Sandler Humphrey Lee - Dowling & Partners Eri ...

Brighthouse Financial, Inc. (NASDAQ:BHF) Q3 2021 Earnings Conference Call November 5, 2021 8:00 AM ET Company Participants Dana Amante - Head of Investor Relations Eric Steigerwalt - President and Chief Executive Officer Edward Spehar - Executive Vice President and Chief Financial Officer Myles Lambert - Executive Vice President and Chief Distribution and Marketing Officer Conor Murphy - Executive Vice President and Chief Operating Officer Conference Call Participants Elyse Greenspan - Wells Fargo Erik Bas ...

Brighthouse Financial, Inc. Third Quarter 2021 Earnings Call Presentation Note regarding forward-looking statements This presentation 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 s ...

Part I — Financial Information [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Brighthouse Financial, Inc.'s unaudited interim condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on accounting policies, segments, investments, and derivatives [Interim Condensed Consolidated Balance Sheets](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $254.7 billion, driven by investments, while total equity decreased to $16.1 billion due to AOCI and share repurchases Consolidated Balance Sheet Highlights (in millions) | Metric | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$254,691** | **$247,869** | | Total Investments | $115,320 | $109,531 | | Separate Account Assets | $112,361 | $111,969 | | **Total Liabilities** | **$238,595** | **$229,781** | | Policyholder Account Balances | $63,748 | $54,508 | | Separate Account Liabilities | $112,361 | $111,969 | | **Total Equity** | **$16,096** | **$18,088** | [Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Net income significantly improved to $383 million in Q3 2021 from a $2.995 billion loss in Q3 2020, driven by derivative gains, though the nine-month net loss widened Key Operating Results (in millions, except per share data) | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$2,512** | **$309** | **$5,126** | **$8,372** | | Net Derivative Gains (Losses) | $56 | $(1,857) | $(2,132) | $2,392 | | **Net Income (Loss) Attributable to BHF** | **$383** | **$(2,995)** | **$(171)** | **$(29)** | | **Diluted EPS** | **$4.34** | **$(32.49)** | **$(2.80)** | **$(0.61)** | [Interim Condensed Consolidated Statements of Equity](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Equity) Total equity decreased from $18.1 billion to $16.1 billion, primarily due to $341 million in treasury stock acquisitions, a $171 million net loss, and a $1.4 billion AOCI decrease - Treasury stock acquired through share repurchases totaled **$341 million** for the nine months ended September 30, 2021[14](index=14&type=chunk) - Accumulated other comprehensive income (AOCI) decreased from **$5.7 billion** at year-end 2020 to **$4.3 billion** at September 30, 2021[14](index=14&type=chunk) [Interim Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was $644 million, while investing activities used $9.7 billion, and financing activities provided $9.0 billion for the nine months ended September 30, 2021 Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $644 | $515 | | Net Cash from Investing Activities | $(9,665) | $(4,184) | | Net Cash from Financing Activities | $9,021 | $6,981 | | **Change in Cash** | **$0** | **$3,312** | [Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes detail accounting policies, business segments, insurance liabilities, investment portfolio, derivative instruments, equity components, and outstanding contingencies [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition and operations, covering executive summary, industry trends, accounting estimates, non-GAAP measures, and detailed performance analysis [Executive Summary](index=51&type=section&id=Executive%20Summary) Q3 2021 saw net income of $361 million and adjusted earnings of $450 million, a significant improvement from Q3 2020 losses, driven by favorable market conditions and actuarial review Financial Performance Summary (in millions) | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) Available to Shareholders | $361 | $(3,012) | $(239) | $(60) | | Adjusted Earnings (Non-GAAP) | $450 | $(689) | $1,270 | $(467) | [Results of Operations](index=56&type=section&id=Results%20of%20Operations) The 2021 annual actuarial review had a $147 million unfavorable pre-tax impact, a significant improvement from 2020, with Q3 income increasing due to lower GMLB Rider losses and higher adjusted earnings Pre-Tax Impact of Annual Actuarial Review (in millions) | Category | 2021 | 2020 | | :--- | :--- | :--- | | GMLBs | $(42) | $(1,431) | | Included in pre-tax adjusted earnings | $(105) | $(1,367) | | **Total Impact on Income** | **$(147)** | **$(2,798)** | - The increase in Q3 2021 income before tax of **$4.3 billion** was primarily driven by lower losses from GMLB Riders, higher pre-tax adjusted earnings, and gains on other derivative instruments[194](index=194&type=chunk) [Investments](index=68&type=section&id=Investments) The company's investment portfolio, valued at $87.1 billion for fixed maturity securities (95.3% investment grade) and $18.4 billion for mortgage loans, aims to optimize risk-adjusted net investment income while managing market risks - The adjusted net investment income yield for Q3 2021 was **5.16%**, up from **4.42%** in Q3 2020, primarily driven by higher returns on other limited partnerships[238](index=238&type=chunk)[239](index=239&type=chunk) - At September 30, 2021, **95.3%** of the fixed maturity securities portfolio was rated investment grade, with a total estimated fair value of **$83.0 billion**[243](index=243&type=chunk) - The commercial mortgage loan portfolio had an average loan-to-value ratio of **59%** and an average debt-service coverage ratio of **2.3x** as of September 30, 2021[260](index=260&type=chunk) [Policyholder Liabilities](index=80&type=section&id=Policyholder%20Liabilities) This section details policyholder liabilities, including variable annuity guarantees, with living benefit NAR at **$6.9 billion** and death benefit NAR at **$6.8 billion**, and total variable annuity reserves at **$8.4 billion** Variable Annuity Net Amount at Risk (NAR) (in millions) | Metric | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Account Value | $108,297 | $108,424 | | Death Benefit NAR | $6,792 | $6,438 | | Living Benefit NAR | $6,919 | $7,562 | Variable Annuity Reserve Balances (in millions) | Reserve Type | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Future Policy Benefits | $6,216 | $6,016 | | Policyholder Account Balances | $2,214 | $2,920 | | **Total Reserves** | **$8,430** | **$8,936** | [Liquidity and Capital Resources](index=84&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$3.8 billion** in short-term liquidity and **$55.2 billion** in total liquid assets, targeting a **25%** debt-to-capital ratio and continuing its stock repurchase program - The company maintained a short-term liquidity position of **$3.8 billion** at September 30, 2021, down from **$4.5 billion** at year-end 2020[287](index=287&type=chunk) - On August 2, 2021, the company authorized an additional **$1.0 billion** for its common stock repurchase program[289](index=289&type=chunk) - The parent company, BHF, held **$1.5 billion** in short-term liquidity and **$1.5 billion** in liquid assets as of September 30, 2021[314](index=314&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=93&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk exposures, except for interest rate sensitivity, have occurred since the 2020 Annual Report - There have been no material changes to the company's market risk exposures from those disclosed in the 2020 Annual Report, with the exception of sensitivity to changes in interest rates[328](index=328&type=chunk) [Item 4. Controls and Procedures](index=93&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2021, noting ongoing material changes related to business processes and MetLife transition services - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[329](index=329&type=chunk)[330](index=330&type=chunk) Part II — Other Information [Item 1. Legal Proceedings](index=95&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 of the financial statements for details on legal proceedings - For details on legal proceedings, the report refers to Note 10 of the financial statements[334](index=334&type=chunk) [Item 1A. Risk Factors](index=95&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the 2020 Annual Report on Form 10-K - There have been no material changes to the company's risk factors since the 2020 Annual Report[335](index=335&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=95&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased approximately **3.3 million** common shares in Q3 2021, with **$939 million** remaining available under repurchase programs as of September 30, 2021 Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid | Approx. Dollar Value Remaining for Repurchase | | :--- | :--- | :--- | :--- | | July 2021 | 984,430 | $43.21 | $45 million | | August 2021 | 1,109,103 | $46.25 | $994 million | | September 2021 | 1,197,634 | $45.88 | $939 million | | **Total Q3** | **3,291,167** | | | - On August 2, 2021, an additional **$1.0 billion** was authorized for the stock repurchase program[336](index=336&type=chunk) [Item 6. Exhibits](index=96&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files