Brighthouse Financial(BHF) - 2024 Q2 - Quarterly Report

Part I — Financial Information This part presents the company's unaudited interim condensed consolidated financial statements and accompanying detailed notes Item 1. Consolidated Financial Statements This section presents the unaudited interim condensed consolidated financial statements for the period ended June 30, 2024 Interim Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's financial position at the end of the reporting period Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Total Assets | $237,438 | $236,340 | | Total Liabilities | $233,232 | $231,332 | | Total Equity | $4,206 | $5,008 | | Brighthouse Financial, Inc.'s Stockholders' Equity | $4,141 | $4,943 | - Total assets increased by $1,098 million from December 31, 2023, to June 30, 2024, primarily driven by an increase in cash and cash equivalents and market risk benefit assets[5] - Total equity decreased by $802 million from December 31, 2023, to June 30, 2024, mainly due to a decrease in retained earnings and accumulated other comprehensive income (loss)[5] Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This statement details the company's revenues, expenses, and resulting net income or loss over the reporting period Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Total Revenues | $1,427 | $263 | $1,501 | $1,547 | | Net Income (Loss) | $34 | $(175) | $(457) | $(672) | | Net Income (Loss) available to Brighthouse Financial, Inc.'s common shareholders | $9 | $(200) | $(510) | $(725) | | Basic EPS | $0.12 | $(3.01) | $(8.17) | $(10.77) | | Diluted EPS | $0.12 | $(3.01) | $(8.17) | $(10.77) | - For the three months ended June 30, 2024, total revenues significantly increased to $1,427 million from $263 million in the prior year, primarily due to a substantial reduction in net derivative losses[7] - Net income available to common shareholders improved to $9 million for the three months ended June 30, 2024, compared to a net loss of $200 million in the same period last year[7] Interim Condensed Consolidated Statements of Equity This statement shows changes in the company's equity accounts over the reporting period Consolidated Statements of Equity Highlights (in millions) | Metric | Balance at December 31, 2023 | Balance at June 30, 2024 | |:---|:---|:---| | Total Brighthouse Financial, Inc.'s Stockholders' Equity | $4,943 | $4,141 | | Retained Earnings (Deficit) | $(1,507) | $(1,966) | | Accumulated Other Comprehensive Income (Loss) | $(5,246) | $(5,419) | - Brighthouse Financial, Inc.'s stockholders' equity decreased from $4,943 million at December 31, 2023, to $4,141 million at June 30, 2024, primarily due to net loss and treasury stock acquisitions[10] - Treasury stock acquired in connection with share repurchases amounted to $126 million for the six months ended June 30, 2024[10][140] Interim Condensed Consolidated Statements of Cash Flows This statement reports the company's cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Net cash provided by (used in) operating activities | $(196) | $(628) | | Net cash provided by (used in) investing activities | $(1,707) | $(1,659) | | Net cash provided by (used in) financing activities | $2,493 | $1,909 | | Change in cash, cash equivalents and restricted cash | $590 | $(378) | | Cash, cash equivalents and restricted cash, end of period | $4,441 | $3,737 | - Net cash used in operating activities decreased significantly from $(628) million in 2023 to $(196) million in 2024 for the six months ended June 30[13] - Net cash provided by financing activities increased to $2,493 million in 2024 from $1,909 million in 2023, primarily driven by higher policyholder account balance deposits[13] Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) This section provides detailed notes offering crucial context for the interim condensed consolidated financial statements Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies This note describes the company's business, basis of financial statement presentation, and key accounting policies - Brighthouse Financial, Inc is a holding company operating as one of the largest providers of annuity and life insurance products in the U.S. through three segments: Annuities, Life, and Run-off, plus Corporate & Other[15] - The financial statements are unaudited and prepared in conformity with GAAP, reflecting all necessary adjustments for fair presentation, with interim results not necessarily indicative of full-year performance[17] - The company is evaluating the impact of new FASB guidance on Income Tax Disclosures (ASU 2023-09) and Segment Reporting Disclosures (ASU 2023-07)[19][21] Note 2 — Segment Information This note provides financial information for the company's operating segments - Brighthouse Financial operates through three segments: Annuities, Life, and Run-off, with Corporate & Other covering unallocated capital and certain expenses[22][23][24][25] - Adjusted earnings, a non-GAAP measure, is used to evaluate segment performance by excluding market volatility impacts[26] Pre-tax Adjusted Earnings (Loss) by Segment (in millions) | Segment | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Annuities | $410 | $357 | $795 | $744 | | Life | $52 | $18 | $6 | $18 | | Run-off | $(37) | $(21) | $(469) | $(155) | | Corporate & Other | $18 | $5 | $29 | $10 | | Total | $443 | $359 | $361 | $617 | Note 3 — Insurance Liabilities This note details the company's obligations related to its insurance and annuity products Net Liability for Future Policy Benefits (LFPB) (in millions) | Product Type | June 30, 2024 | June 30, 2023 | |:---|:---|:---| | Term Life and Whole Insurance | $2,352 | $2,371 | | Income Annuities | $3,668 | $3,575 | | Structured Settlement and Pension Risk Transfer Annuities | $6,164 | $6,645 | | Total LFPB (after reinsurance recoverable) | $12,184 | $12,591 | Policyholder Account Balances (in millions) | Product Type | June 30, 2024 | June 30, 2023 | |:---|:---|:---| | Universal Life Insurance | $2,566 | $2,559 | | Variable Annuities | $4,044 | $4,639 | | Index-linked Annuities | $46,089 | $38,549 | | Fixed Rate Annuities | $14,726 | $14,905 | | ULSG | $4,914 | $5,188 | | Company-Owned Life Insurance | $659 | $646 | | Total Policyholder Account Balances | $85,865 | $78,643 | - The weighted-average duration of liability for Term Life and Whole Insurance was 8.7 years at June 30, 2024, with a weighted-average interest accretion rate of 3.95%[38] Note 4 — Market Risk Benefits This note provides details on liabilities for guaranteed benefits associated with variable annuity products Market Risk Benefit (MRB) Assets and Liabilities (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Balance, beginning of period | $9,701 | $9,974 | | Balance, end of period (net of reinsurance) | $7,792 | $9,178 | | Weighted-average attained age of contract holder | 73.4 years | 72.5 years | - MRB assets and liabilities associated with variable annuities decreased by $1,909 million (net of reinsurance) for the six months ended June 30, 2024, primarily due to the effect of changes in interest rates and fund returns[47] Note 5 — Separate Accounts This note describes the assets and liabilities related to separate accounts for variable insurance and annuity products Separate Account Liabilities (in millions) | Metric | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Total Separate Account Liabilities | $88,260 | $88,392 | | Aggregate Estimated Fair Value of Assets | $88,260 | $88,271 | | - Equity securities | $87,996 | $87,999 | | - Fixed maturity securities | $253 | $258 | Net Amount at Risk (NAR) and Cash Surrender Values (in millions) at June 30, 2024 | Product Type | Total Account Balances | Net Amount at Risk | Cash Surrender Value | |:---|:---|:---|:---| | Universal Life Insurance | $8,797 | $34,485 | $8,224 | | Variable Annuities | $83,566 | $12,642 | $83,155 | | Index-linked Annuities | $46,089 | N/A | $43,846 | | Fixed Rate Annuities | $14,726 | N/A | $14,063 | | ULSG | $4,914 | $64,450 | $4,414 | | Company-Owned Life Insurance | $2,926 | $2,675 | $2,598 | Note 6 — Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles This note details intangible assets such as deferred policy acquisition costs and the value of business acquired Deferred Policy Acquisition Costs (DAC) and Value of Business Acquired (VOBA) (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Total DAC and VOBA, end of period | $4,791 | $4,746 | | - Variable Annuities | $2,500 | $2,727 | | - Fixed Rate Annuities | $170 | $172 | | - Index-linked Annuities | $1,402 | $1,267 | | - Term Life and Whole Insurance | $334 | $382 | | - Universal Life Insurance | $385 | $420 | - Total DAC and VOBA decreased by $136 million from December 31, 2023, to June 30, 2024, primarily due to amortization exceeding capitalization[53] Deferred Sales Inducements (in millions) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Balance, end of period | $216 | $240 | | - Variable Annuities | $209 | $232 | | - Fixed Rate Annuities | $7 | $8 | Note 7 — Investments This note provides a detailed breakdown of the company's investment portfolio and related income Total Investments (in millions) | Metric | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Fixed maturity securities available-for-sale | $80,581 | $80,991 | | Mortgage loans (net) | $22,641 | $22,508 | | Limited partnerships and LLCs | $4,938 | $4,946 | | Total Investments | $115,299 | $115,456 | Net Investment Income (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Total investment income | $1,394 | $1,288 | $2,734 | $2,438 | | Less: Investment expenses | $87 | $92 | $173 | $183 | | Net investment income | $1,307 | $1,196 | $2,561 | $2,255 | Net Investment Gains (Losses) (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Total net investment gains (losses) | $(120) | $(64) | $(162) | $(160) | | - Fixed maturity securities | $(97) | $(55) | $(135) | $(131) | | - Mortgage loans | $(22) | $(10) | $(27) | $(27) | Note 8 — Derivatives This note discloses the company's use of derivative instruments for hedging and risk management purposes - The Company uses derivatives to manage exposure to various market risks, with a substantial portion not designated or not qualifying for hedge accounting[93][95] Gross Notional Amount and Estimated Fair Value of Derivatives (in millions) | Metric | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Total Gross Notional Amount | $197,677 | $173,236 | | Total Estimated Fair Value (Assets) | $3,306 | $3,714 | | Total Estimated Fair Value (Liabilities) | $4,129 | $5,088 | Net Derivative Gains (Losses) (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Total Net Derivative Gains (Losses) | $(662) | $(1,811) | $(2,583) | $(2,386) | | - Non-designated or non-qualifying derivatives | $(656) | $(1,803) | $(2,576) | $(2,387) | Note 9 — Fair Value This note provides information about how the company measures and discloses the fair value of its financial instruments - The Company measures assets and liabilities at fair value on a recurring basis, categorizing them into a three-level hierarchy based on the observability of inputs[108][118] Assets Measured at Estimated Fair Value (in millions) at June 30, 2024 | Asset Category | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | |:---|:---|:---|:---|:---| | Fixed maturity securities | $2,798 | $75,891 | $1,892 | $80,581 | | Equity securities | $52 | $9 | $24 | $85 | | Short-term investments | $779 | $611 | $0 | $1,390 | | Derivative assets | $0 | $3,296 | $10 | $3,306 | | Market risk benefit assets | $0 | $0 | $916 | $916 | | Separate account assets | $21 | $88,239 | $0 | $88,260 | | Total Assets | $3,650 | $168,046 | $2,880 | $174,576 | Liabilities Measured at Estimated Fair Value (in millions) at June 30, 2024 | Liability Category | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | |:---|:---|:---|:---|:---| | Market risk benefit liabilities | $0 | $0 | $8,708 | $8,708 | | Derivative liabilities | $0 | $4,129 | $0 | $4,129 | | Embedded derivatives on index-linked annuities | $0 | $0 | $10,621 | $10,621 | | Total Liabilities | $0 | $4,129 | $19,329 | $23,458 | Note 10 — Equity This note details components of stockholders' equity, including share repurchases and comprehensive income Preferred Stock Dividends Declared (in millions) | Series | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |:---|:---|:---| | Series A | $7 | $14 | | Series B | $7 | $14 | | Series C | $7 | $15 | | Series D | $4 | $8 | | Total | $25 | $51 | - During the six months ended June 30, 2024, BHF repurchased 2,634,041 shares of its common stock for $126 million, with $667 million remaining under its common stock repurchase program[140] Accumulated Other Comprehensive Income (Loss) (AOCI) (in millions) | Component | Balance at December 31, 2023 | Balance at June 30, 2024 | |:---|:---|:---| | Net unrealized investment gains (losses), net of related offsets | $(4,317) | $(5,245) | | Unrealized gains (losses) on derivatives | $277 | $350 | | Changes in Nonperformance Risk on Market Risk Benefits | $(1,881) | $(1,624) | | Changes in Discount Rates on the Liability for Future Policy Benefits | $720 | $1,153 | | Other | $(45) | $(53) | | Total AOCI | $(5,246) | $(5,419) | Note 11 — Other Revenues and Other Expenses This note provides a breakdown of other revenue and expense items not classified elsewhere - Other revenues primarily consisted of 12b-1 fees, totaling $69 million for the three months and $136 million for the six months ended June 30, 2024, largely reported in the Annuities segment[146] Other Expenses (in millions) | Expense Category | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Compensation | $101 | $106 | $212 | $204 | | Contracted services and other labor costs | $70 | $79 | $133 | $148 | | Transition services agreements | $5 | $8 | $12 | $19 | | Separate account fees | $91 | $92 | $183 | $184 | | Volume related costs, excluding compensation, net of DAC capitalization | $138 | $143 | $285 | $280 | | Interest expense on debt | $38 | $38 | $76 | $76 | | Total other expenses | $468 | $502 | $975 | $980 | Note 12 — Earnings Per Common Share This note explains the calculation of basic and diluted earnings per common share Earnings Per Common Share (EPS) Calculation | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Net income (loss) available to Brighthouse Financial, Inc.'s common shareholders (in millions) | $9 | $(200) | $(510) | $(725) | | Weighted average common shares outstanding — basic | 61,956,829 | 66,722,046 | 62,496,801 | 67,294,437 | | Basic EPS | $0.12 | $(3.01) | $(8.17) | $(10.77) | | Diluted EPS | $0.12 | $(3.01) | $(8.17) | $(10.77) | - Diluted EPS for the three months ended June 30, 2024, was $0.12, a significant improvement from $(3.01) in the prior year, reflecting the increase in net income available to common shareholders[150] - For periods with a net loss, basic loss per common share equaled diluted loss per common share, as the inclusion of dilutive shares would have an antidilutive effect[151] Note 13 — Contingencies, Commitments and Guarantees This note discloses potential liabilities from litigation, commitments, and financial guarantees - The Company is involved in various litigation and regulatory matters, with an estimated aggregate range of reasonably possible losses up to approximately $10 million for matters where an estimate can be made as of June 30, 2024[152][154] - For other loss contingencies, including tax-related and reinsurance matters, the estimated range of reasonably possible losses in excess of accrued amounts is up to approximately $75 million as of June 30, 2024[162] Commitments (in millions) | Commitment Type | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Mortgage Loan Commitments | $307 | $377 | | Commitments to Fund Partnership Investments, Bank Credit Facilities and Private Corporate Bond Investments | $1,400 | $1,400 | Part II — Other Information This part includes management's discussion and analysis, risk disclosures, and other required regulatory information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's comprehensive analysis of the company's financial condition and results of operations Introduction This section provides an overview of the Management's Discussion and Analysis (MD&A) - This Management's Discussion and Analysis (MD&A) aims to help readers understand Brighthouse Financial's results of operations, financial condition, and cash flows, to be read in conjunction with the Interim Condensed Consolidated Financial Statements and the 2023 Annual Report[168][169] Executive Summary This section summarizes the company's business, key financial results, and performance highlights - Brighthouse Financial is a leading provider of annuity and life insurance products in the U.S., organized into Annuities, Life, and Run-off segments, plus Corporate & Other[171] Net Income (Loss) Available to Shareholders and Adjusted Earnings (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Net income (loss) available to shareholders | $9 | $(200) | $(510) | $(725) | | Adjusted earnings (loss) | $346 | $271 | $248 | $466 | - Net income available to shareholders for the three months ended June 30, 2024, was $9 million, a significant improvement from a $200 million net loss in the prior year, driven by favorable pre-tax adjusted earnings and lower variable annuity guaranteed benefit rider losses[175] Industry Trends and Uncertainties This section discusses key industry trends and economic uncertainties affecting the company's business - The company's business is materially affected by capital market and economic conditions, including equity market performance, long-term interest rates, inflation, and geopolitical conflicts[180] - Regulatory developments, such as the Department of Labor's Fiduciary Advice Rule and related PTE Amendments, could impact the company's operations[181][183] - Increased interest rates in 2023 contributed to net unrealized losses on fixed maturity securities, and the company monitors commercial real estate exposure due to market focus[231][232] Summary of Critical Accounting Estimates This section outlines the most significant accounting estimates that require management judgment - Critical accounting estimates involve significant management judgment, particularly for future policy benefits, market risk benefits, derivatives, and income taxes[184][185] Non-GAAP Financial Disclosures This section defines and explains the non-GAAP financial measures used by the company - Adjusted earnings is a key non-GAAP financial measure used by management to evaluate performance, excluding market volatility impacts to highlight underlying profitability drivers[188] - Adjusted net investment income and adjusted net investment income yield are presented to enhance understanding of investment portfolio results[190] Results of Operations This section provides a detailed analysis of the company's consolidated results of operations Consolidated Net Income (Loss) Available to Shareholders (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Net income (loss) available to shareholders | $9 | $(200) | $(510) | $(725) | | Pre-tax adjusted earnings (loss) | $418 | $334 | $308 | $564 | - For the three months ended June 30, 2024, net income available to shareholders improved by $209 million (net of income tax) compared to the prior year, driven by lower losses from variable annuity guaranteed benefit riders and higher pre-tax adjusted earnings[196] - Adjusted earnings for the three months ended June 30, 2024, increased by $75 million to $346 million, primarily due to higher net investment spread and lower other expenses[207] - Adjusted earnings for the six months ended June 30, 2024, decreased by $218 million to $248 million, mainly due to higher net costs associated with insurance-related activities and lower net fee income[208] Investments This section discusses the company's investment portfolio, strategies, and performance - The company manages investment risks through asset allocation, diversification, risk limits, and ALM strategies, including the use of derivatives[229][230] Adjusted Net Investment Income and Yield | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Adjusted net investment income (in millions) | $1,316 | $1,219 | $2,583 | $2,316 | | Adjusted net investment income yield | 4.39% | 4.21% | 4.31% | 4.01% | Fixed Maturity Securities Available-For-Sale (Estimated Fair Value in millions) | Type | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Publicly-traded | $66,880 | $67,056 | | Privately-placed | $13,701 | $13,935 | | Total | $80,581 | $80,991 | | Percentage of cash and invested assets | 67.3% | 67.9% | Mortgage Loans by Portfolio Segment (Amortized Cost in millions) | Segment | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Commercial | $13,130 | $13,193 | | Agricultural | $4,533 | $4,445 | | Residential | $5,133 | $5,007 | | Total | $22,796 | $22,645 | | Allowance for credit losses | $155 | $137 | Derivatives This section details the company's use of derivative financial instruments for risk management - The company uses derivatives to manage interest rate, foreign currency, credit, and equity market risks, with a significant portion not qualifying for hedge accounting[260] - Level 3 derivatives, which involve significant unobservable inputs and management judgment, include credit default swaps, equity hybrid options, and foreign currency swaps[261] Credit Default Swaps (in millions) | Metric | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Gross Notional Amount (Written) | $1,096 | $1,405 | | Estimated Fair Value (Written) | $20 | $27 | Policyholder Liabilities This section analyzes the liabilities related to the company's insurance and annuity products - Policyholder liabilities include actuarially determined amounts for future policy benefits, policyholder account balances, and market risk benefits (MRBs) for variable annuity guarantees[266][267][268][269] Variable Annuity Account Value and Net Amount at Risk (NAR) by GMxB Type (in millions) at June 30, 2024 | GMxB Type | Account Value | Death Benefit NAR | Living Benefit NAR | |:---|:---|:---|:---| | GMIB | $31,522 | $3,727 | $3,718 | | GMWB | $19,749 | $314 | $234 | | GMDB only | $17,172 | $973 | N/A | | Total | $83,566 | $12,642 | $4,703 | Variable Annuity MRBs by Type of GMxB (in millions) | GMxB Type | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | GMIB | $7,987 | $9,485 | | GMWB | $8 | $41 | | GMDB | $709 | $788 | | Total | $8,704 | $10,314 | Liquidity and Capital Resources This section describes the company's sources and uses of liquidity and its capital management strategies - Brighthouse Financial maintains sufficient liquidity and capital, with short-term liquidity of $4.3 billion and liquid assets of $48.5 billion at June 30, 2024[278] - The company manages its capital position to maintain financial strength and credit ratings, targeting a combined risk-based capital (RBC) ratio of 400% to 450% in normal market conditions[280] Sources and Uses of Liquidity and Capital (in millions) for Six Months Ended June 30 | Category | 2024 | 2023 | |:---|:---|:---| | Total Sources | $2,859 | $2,584 | | Total Uses | $2,269 | $2,962 | | Net increase (decrease) in cash and cash equivalents | $590 | $(378) | - Primary funding sources include various funding agreements totaling $10,956 million outstanding at June 30, 2024, and debt/equity issuances[287][289][290][291] - Primary uses of liquidity include debt-service obligations, preferred stock dividends, capital contributions to subsidiaries, common stock repurchases ($126 million for six months ended June 30, 2024), and operating expenses[294][295][297] Note Regarding Forward-Looking Statements This section provides cautionary language regarding statements that are not historical facts - The report contains forward-looking statements subject to substantial risks and uncertainties, including differences between actual experience and actuarial assumptions, market risk exposure, and regulatory changes[307][308] - Readers are cautioned against relying on forward-looking statements, as actual results may differ materially due to known and unknown risks[308][310] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's exposure to market risk from fluctuations in financial market variables - Brighthouse Financial is exposed to market risk from insurance operations and general account investment activities, primarily from changes in interest rates[312] - There have been no material changes to the company's market risk exposures compared to those previously disclosed in the 2023 Annual Report[313] Item 4. Controls and Procedures This section contains management's conclusions on the effectiveness of the company's disclosure controls and procedures - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[315] - Material changes in internal control over financial reporting are ongoing due to the company's transition from MetLife's services[315] Item 1. Legal Proceedings This section refers to the financial statement notes for details on legal proceedings - Information regarding legal proceedings is detailed in Note 13 of the Notes to the Interim Condensed Consolidated Financial Statements[317] Item 1A. Risk Factors This section notes any material changes to the company's previously disclosed risk factors - There have been no material changes to the company's risk factors from those previously disclosed in its 2023 Annual Report[318] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during the reporting period Issuer Purchases of Equity Securities (Three Months Ended June 30, 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | |:---|:---|:---|:---| | April 1 — April 30, 2024 | 444,121 | $49.51 | $709 | | May 1 — May 31, 2024 | 515,699 | $46.08 | $686 | | June 1 — June 30, 2024 | 426,910 | $42.76 | $667 | | Total | 1,386,730 | | | - As of June 30, 2024, Brighthouse Financial had $667 million remaining under its common stock repurchase program, which was authorized on November 16, 2023[319][320] Item 5. Other Information This section discloses any other information required that was not previously reported - None of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2024[319] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q report - Exhibits include certifications from the CEO and CFO, XBRL instance and taxonomy documents, and the Employee Stock Purchase Plan[321] - A note clarifies that agreements included as exhibits are for informational purposes and not intended as factual disclosures[322] Signature This section contains the signature of the authorized officer certifying the report - The report was signed by Edward A. Spehar, Executive Vice President and Chief Financial Officer of Brighthouse Financial, Inc., on August 8, 2024[325][326]