Brighthouse Financial, Inc. Third Quarter 2023 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 ...

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued) Table of Contents (4) Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward. September 30, 2023 Brighthouse Financial, Inc. 9. Long-term Debt Preferred Stock Table of Contents The per share and aggregate dividends declared for BHF's preferred stock by series were as follows: During the nine months ended September 30, 2023 and 2022, BHF repurchased 3,96 ...

Financial Data and Key Metrics - The company's estimated combined risk-based capital (RBC) ratio was between 430% and 450%, down from 460% to 480% at March 31, primarily driven by the annuity business, particularly the variable annuity book impacted by basis risk and market volatility [8] - Adjusted earnings for the annuity segment were $291 million in the quarter, driven by higher reserves and expenses, partially offset by higher fees and net investment income [9] - The life insurance segment reported adjusted earnings of $15 million, with higher net investment income being the primary driver [9] - The holding company's cash position was $900 million as of June 30, down from $1.1 billion at March 31, due to timing of interest expenses, subsidiary dividends, and share repurchases [35] Business Line Performance - Annuity sales, particularly Shield annuities, totaled $3.2 billion year-to-date, a 5% increase compared to the first half of 2022 [78] - Fixed deferred annuity sales reached $1.5 billion in the first half of 2023, reflecting the complementary nature of the annuity product portfolio [78] - Life insurance sales increased by 23% in the first half of 2023 compared to the same period in 2022, driven by the launch of new products like SmartGuard Plus [6][89] Market and Competitive Dynamics - The company launched SmartGuard Plus, a registered index-linked universal life insurance product, in July 2023, offering guaranteed distribution payments and a death benefit [6] - The company is working on a new fixed indexed annuity product, expected to launch later in 2023, targeting a broader market with sales of $80 billion in 2022 and $50 billion year-to-date in 2023 [44][116] - The competitive landscape for buffer annuities has expanded, with 19 carriers in the market and more expected to enter, driving product enhancements and increased competition [130] Strategic Direction and Industry Competition - The company is focused on shifting its business mix toward higher cash flow, lower-risk products, with Shield and fixed annuities now representing 40% of total annuity account value, up from 25% in 2016 [61][79] - The company plans to optimize capital through a reinsurance agreement between Brighthouse Life Insurance Company (BLIC) and its New York affiliate, expected to reverse $200 million of the second-quarter decline in total adjusted capital (TAC) [91] - The company is enhancing its Shield product offerings, including the launch of Shield Level Pay Plus in August 2022, which has been well-received in the market [48][109] Management Commentary on Operating Environment and Outlook - Management expects continued growth in Shield annuity sales in the second half of 2023, driven by product enhancements and a competitive market environment [120] - The company remains focused on maintaining a robust capital position, with an RBC ratio at the upper end of its target range (400% to 450%) and a strong liquidity position [90] - Management highlighted the importance of managing basis risk and optimizing hedging strategies, particularly in the variable annuity business, to protect the statutory balance sheet [31][38] Other Key Information - The company repurchased $152 million of common stock year-to-date through August 4, 2023, as part of its active and opportunistic share repurchase program [117] - The company plans to release updated long-term free cash flow projections in September 2023, providing further clarity on its capital generation and distribution strategy [81] Q&A Session Summary Question: Shield Sales and Competitive Conditions - Management expects Shield sales to remain strong in the second half of 2023, with no significant changes in the competitive environment [12][36] Question: Dividend Timing and Share Repurchases - The company reaffirmed its expectation to take a $300 million dividend from BLIC in the second half of 2023, with no specific timing provided [16][118] - Share repurchases are not directly linked to the timing of subsidiary dividends [83] Question: Normalized Statutory Earnings - Management noted that normalized statutory earnings can vary by hundreds of millions of dollars quarterly due to equity and interest rate movements, making it difficult to predict a run rate [39] Question: Basis Risk and Hedging Performance - Basis risk was a significant driver of the $200 million normalized statutory loss in the quarter, primarily related to the variable annuity book [41] - The company manages its hedging strategy to protect the statutory balance sheet, with net income expected to remain volatile [31] Question: Office Exposure Reduction - The company has reduced its office exposure to 24% of the portfolio and expects further reductions as the portfolio rolls off, with no specific target level [26][45] Question: Reinsurance Transaction Impact - The internal reinsurance transaction is expected to reverse $200 million of the second-quarter decline in TAC, with no additional impacts anticipated [108] Question: Fixed Indexed Annuity Product Launch - The company is developing a new fixed indexed annuity product, targeting a handful of distribution partners for its initial launch later in 2023 [44][116] Question: Competitive Dynamics in Buffer Annuities - The buffer annuity market is highly competitive, with 19 carriers and more expected to enter, driving product enhancements and increased competition [130]

Financial Performance - The company's estimated combined risk-based capital (RBC) ratio is between 430% and 450%[5, 13] - The company's holding company liquid assets stand at $0.9 billion[5, 14] - The statutory combined total adjusted capital (TAC) is $7.6 billion[5, 13] - The company had an adjusted earnings of $271 million in 2Q 2023[5, 6] Stock Repurchases - The company repurchased $64 million of common stock in 2Q 2023[5, 15] - An additional approximately $26 million was repurchased through August 4, 2023[5] Annuities Segment - Annuities sales were $2473 million[9] - Net flows for annuities were $(919) million[9] - The account value for annuities was $137495 million[9] Life Insurance Segment - Life insurance sales were $25 million[11] - The account value for life insurance was $8265 million[11] - Adjusted earnings, less notable items for life insurance were $15 million[11] Run-off Segment - Adjusted earnings, less notable items for the Run-off segment were $(16) million[12] Investment Portfolio - The company has approximately $119 billion in total investments[16] - Approximately $86 billion is in fixed maturity securities, with 97% being investment grade[16]

Part I — Financial Information [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Presents Brighthouse Financial's unaudited interim condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and key accounting notes [Interim Condensed Consolidated Financial Statements](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) Unaudited financial statements for June 30, 2023, report total assets of **$231.5 billion**, equity of **$5.0 billion**, a **$725 million net loss**, and **$628 million** net cash used in operating activities Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Investments | $111,286 | $108,592 | | Total Assets | $231,545 | $224,847 | | Total Liabilities | $226,573 | $219,249 | | Total Equity | $4,972 | $5,598 | Consolidated Statement of Operations Highlights (in millions) | Income Statement Item | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Total Revenues | $1,547 | $5,879 | | Total Expenses | $2,437 | $1,699 | | Net Income (Loss) | $(672) | $3,332 | | Net Income (Loss) Available to Common Shareholders | $(725) | $3,277 | Consolidated Statement of Cash Flows Highlights (in millions) | Cash Flow Item | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(628) | $(40) | | Net cash provided by (used in) investing activities | $(1,659) | $(5,019) | | Net cash provided by (used in) financing activities | $1,909 | $5,656 | [Notes to the Interim Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, LDTI adoption, segment performance, insurance liabilities, investment portfolio, and derivative usage - The company is organized into three segments: Annuities, Life, and Run-off, with certain results also reported in Corporate & Other[13](index=13&type=chunk) - The adoption of ASU 2018-12 (LDTI) on January 1, 2023, significantly changed accounting for long-duration insurance contracts, resulting in a **$5.4 billion decrease** in retained earnings and a **$3.9 billion decrease** in AOCI upon transition on January 1, 2021[22](index=22&type=chunk)[199](index=199&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=64&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **$725 million net loss** for H1 2023, driven by market impacts, contrasting with **$466 million** adjusted earnings, and details segment performance, investments, derivatives, liquidity, and capital management Financial Performance Summary (in millions) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net Income (Loss) Available to Shareholders | $(725) | $3,277 | | Adjusted Earnings | $466 | $524 | - The net loss in 2023 was primarily driven by net unfavorable changes in the estimated fair value of variable annuity guaranteed benefit riders due to market factors and net investment losses[232](index=232&type=chunk) - The company uses adjusted earnings as a non-GAAP measure to evaluate performance by excluding the impact of market volatility, focusing on primary business activities that drive profitability[259](index=259&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=103&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk exposures, including interest rate, equity, credit, and foreign currency risks, from prior disclosures - The company determined there were no material changes to its market risk exposures from those disclosed in the First Quarter Form 10-Q[650](index=650&type=chunk) [Item 4. Controls and Procedures](index=103&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[474](index=474&type=chunk) - No material changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls over financial reporting[461](index=461&type=chunk) Part II — Other Information [Item 1. Legal Proceedings](index=103&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 12 for details on ongoing legal proceedings, including cost of insurance class actions, with estimated possible losses up to **$10 million** - For information on legal proceedings, the report refers to Note 12 of the financial statements[690](index=690&type=chunk) - The company is defending against several purported class action lawsuits related to cost of insurance charges on universal life policies[222](index=222&type=chunk) [Item 1A. Risk Factors](index=103&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors from those previously disclosed in its 2022 Annual Report on Form 10-K - There have been no material changes to the company's risk factors from those disclosed in the 2022 Annual Report[462](index=462&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=104&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2023, Brighthouse Financial repurchased approximately **1.49 million shares** at an average of **$42.99 per share**, with **$167 million** remaining for repurchases Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining ($ millions) | | :--- | :--- | :--- | :--- | | April 2023 | 450,365 | $42.99 | $211 | | May 2023 | 559,830 | $41.43 | $188 | | June 2023 | 475,734 | $44.09 | $167 | | **Total** | **1,485,929** | **-** | **-** | [Item 6. Exhibits](index=105&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including corporate governance amendments, compensation plans, and required CEO/CFO certifications - The report includes several exhibits, such as amendments to the Certificate of Incorporation and Bylaws, amendments to executive compensation plans, and CEO/CFO certifications[479](index=479&type=chunk)

Financial Data and Key Metrics Changes - In Q1 2023, total annuity sales reached $2.8 billion, a 35% increase compared to Q1 2022 [10] - Life insurance sales were $23 million, up 15% from Q1 2022, marking the highest quarterly sales since Q4 2021 [11] - Adjusted earnings for Q1 2023 were $195 million, down from $411 million in Q1 2022 and $282 million in Q4 2022 [16] - The estimated combined risk-based capital (RBC) ratio was between 460% and 480%, an increase from 441% at year-end 2022 [15] Business Line Data and Key Metrics Changes - The Annuities segment reported adjusted earnings of $314 million, reflecting higher fees driven by a 5.8% return on variable annuity separate accounts [39] - The Life segment had adjusted earnings of $1 million, while the Runoff segment reported an adjusted loss of $106 million, both affected by lower underwriting margins [40] Market Data and Key Metrics Changes - The company repositioned approximately $2 billion from lower quality to higher-quality assets, reducing the below-investment-grade portion of its credit portfolio by about 20% [34] - Office exposure within the commercial real estate loan portfolio was reduced from 40% in 2019 to 25% as of March 31, 2023 [34] Company Strategy and Development Direction - The company aims to shift its business mix towards lower risk, higher return products, moving away from legacy variable annuities [10] - Plans to introduce a new life insurance product later in the year to diversify and strengthen the Life product suite [32] - The focus remains on maintaining balance sheet strength to support distribution and business growth [33] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious view on the market and economic environment while highlighting a strong cash and capital position [5] - The company believes it is well-positioned to weather challenging environments due to a robust balance sheet and high-quality investment portfolio [13] - Management anticipates fluctuations in underwriting margins due to seasonal factors and variability in claims [17] Other Important Information - The company repurchased $62 million of common stock in Q1 2023, with an additional $27 million repurchased through May 5 [12] - The liquidity position remains strong with $1.1 billion of holding company liquid assets as of March 31 [37] Q&A Session Summary Question: What caused the compression in underwriting margins this quarter? - Management noted that the quarter experienced higher mortality claims than typical, with direct claims exceeding normal expectations [20] Question: Have you conducted a commercial real estate stress test? - Management confirmed that various stress scenarios were run on the commercial mortgage loan portfolio, with manageable impacts observed [44] Question: What is the outlook for surrender activity? - The company expects slightly higher outflows this year compared to historical levels, consistent with pricing assumptions [60] Question: Can you quantify the new business strain in the current quarter? - Management indicated that normal capital usage for growth is about 5 RBC points per quarter, with expectations of downward pressure on the RBC ratio due to growth [70]

Table of Contents 5 Brighthouse Financial, Inc. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are ...

time potentially impact stockholders' equity. See "Risk Factors — Risks Related to Our Business — Our variable annuity exposure risk management strategy may not be effective, may result in significant volatility in our profitability measures and may negatively affect our statutory capital" and "— Summary of Critical Accounting Estimates." The gross notional amount and estimated fair value of the derivatives held in our variable annuity hedging program, as well as the interest rate hedges allocated from our ...

Financial Data and Key Metrics - The RBC ratio for the year decreased from $500 million to $440 million, with approximately 50 points of the 60-point decline expected to reverse over time [1] - The MRP impact was $250 million to $300 million negative in 2022, but it is reversing with a 25 basis points increase in Q1 2023 and another 50-75 basis points increase expected in 2024 and 2025 [2] - Normalized statutory earnings were approximately $500 million in Q4 2022, bringing full-year normalized statutory earnings to approximately $1 billion [10] - The combined total adjusted capital (TAC) was $8.1 billion at December 31, compared to $8 billion at September 30 [7] Business Line Data and Key Metrics - Fixed deferred annuity and Shield annuity products saw strong sales in Q4 2022, with total annuity sales reaching $3.2 billion, a 36% increase compared to Q4 2021 [9][38] - Life insurance sales in Q4 2022 were $22 million, down year-over-year due to economic headwinds, but the company remains confident in its life insurance strategy [57] - The Annuities segment reported adjusted earnings of $286 million in Q4 2022, driven by higher VA separate account returns and lower DAC amortization [64] Market Data and Key Metrics - The company benefited from a significant increase in interest rates in 2022, with rates up over 230 basis points as measured by the 10-year U.S. Treasury [8] - The mortgage loan exposure in the investment portfolio grew from 16% to 20% over the last year, with commercial mortgage loans making up the majority at $13.5 billion [97] Company Strategy and Industry Competition - The company plans to resume dividends from BLIC to the holding company in 2023 and continues to focus on maintaining a strong balance sheet [10][116] - A new life insurance product is planned for 2023 to diversify and strengthen the life product suite, with a focus on expanding distribution footprint [22] - The company is cautious about capital return due to macroeconomic uncertainty but remains committed to returning capital to shareholders through share repurchases [114][123] Management Commentary on Operating Environment and Future Outlook - The company expects the business mix to evolve towards higher cash flow generation and less capital-intensive business as older, less profitable business is run off [9] - The company is focused on protecting its distribution franchise and maintaining a strong balance sheet under a multiyear, multi-scenario framework [59][65] - The company is optimistic about the Shield annuity product suite, with a new Shield Level Pay Plus product launched in 2022 to meet retirement income needs [37] Other Important Information - The company completed major system conversions in 2022, marking the end of establishment costs and allowing increased focus on growth and business mix evolution [133] - The company repurchased $488 million of common stock in 2022, reducing the number of shares outstanding by 43% since the repurchase program began in 2018 [56] Q&A Session Summary Question: Reinsurance recapture in the runoff segment - The reinsurance recapture in the runoff segment had a $24 million unfavorable impact, but it made economic sense for the company to recapture the business [73] Question: Capital return and macroeconomic environment - The company is cautious about capital return due to macroeconomic uncertainty but continues to repurchase shares, with $27 million repurchased year-to-date through February 7 [39][123] Question: New business strain and growth - The company experienced higher-than-typical new business strain in 2022, with around 30 points of strain for the full year, driven by strong sales growth [88] Question: Fixed annuity spreads and growth opportunities - Fixed annuity spreads were strong in Q4 2022, and the company expects most growth in 2023 to come from Shield annuity products [81][103] Question: Corporate expenses and outlook - Corporate expenses were elevated in 2022, but the company expects to see some cleanup costs in 2023, with no large-scale expense initiatives planned [18][93] Question: Impact of accounting changes on adjusted earnings - The impact of accounting changes on adjusted earnings is expected to be modest, with some fee income moving below the line but offset by other adjustments [31]

Financial Data and Key Metrics Changes - The estimated combined risk-based capital (RBC) ratio was between 450% and 470%, above the target of 400% to 450% in normal markets, but down from 470% to 490% at June 30 [9][19] - Normalized statutory earnings for the year-to-date were approximately $500 million, benefiting from a substantial increase in interest rates [18] - Adjusted earnings for Q3 were close to breakeven at a loss of $3 million, compared to $247 million in Q2 2022 and $514 million in Q3 2021 [30] Business Line Data and Key Metrics Changes - Record annuity sales of $3.7 billion in Q3, a 50% sequential increase, driven by fixed deferred annuities and Shield Level annuities [11][12] - Life insurance sales remained flat at $19 million sequentially, with management confident in the life insurance strategy despite economic headwinds [13] - The annuities segment reported adjusted earnings of $170 million, impacted by lower variable annuity separate account returns [34] Market Data and Key Metrics Changes - Interest rates increased significantly in Q3, up over 80 basis points as measured by the 10-year US Treasury [8] - The decline in the equity market resulted in variable annuity separate account returns of negative 5.4%, leading to actuarial adjustments and higher reserves [33] Company Strategy and Development Direction - The company is shifting its business mix towards lower risk, higher return products, moving away from legacy variable annuities [19][20] - Management is focused on protecting the balance sheet and optimizing distributable earnings while supporting growth through various market scenarios [16][36] - The company plans to introduce a new life insurance product next year and expand distribution [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate the uncertain market environment while remaining disciplined in financial and risk management [8] - The company anticipates continued strong annuity sales and is monitoring growth trends to decide on potential dividends [54][55] - The implementation of LDTI is expected to have a negative impact on total equity, but the rise in interest rates may improve the overall impact [28][29] Other Important Information - The company returned $136 million in capital to shareholders through stock repurchases in Q3, with a total of $447 million year-to-date [14] - The holding company ended the quarter with $1.1 billion in cash and liquid assets, with no debt maturities until 2027 [21] Q&A Session Summary Question: Implications of moving to a more strategic interest rate hedging program - Management indicated that the goal is to raise the floor for distributable earnings and narrow expected outcomes [38][39] Question: Details on variable annuity policyholder behavior updates - Management provided insights on changes in GAAP assumptions and the impact of mortality and lapse rates [46][47] Question: Growth expectations for the fourth quarter - Management stated that growth is the primary reason for considering a dividend from Brighthouse Life Insurance Company [50] Question: Insights on life sales trends - Management noted that the environment for long-term care sales is challenging, but they are focused on executing their strategy [56] Question: Underwriting margin outlook - Management acknowledged higher severity claims this quarter but indicated that underwriting fluctuations are normal [60] Question: Impact of LDTI on adjusted earnings - Management expects adjusted earnings to be somewhat lower under LDTI compared to current GAAP accounting [67] Question: Capital allocation and growth capital considerations - Management feels confident about the statutory position and does not envision the need to inject additional capital into the operating company [69] Question: Fixed annuity sales and pricing confidence - Management expressed confidence in the profitability of the fixed annuity business written this year [100][101]