Brighthouse Financial(BHF) - 2023 Q2 - Quarterly Report

Part I — Financial Information Item 1. Consolidated Financial Statements 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 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 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] - 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][199] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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] - 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - 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] Part II — Other Information Item 1. Legal Proceedings 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] - The company is defending against several purported class action lawsuits related to cost of insurance charges on universal life policies[222] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 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]