Table of Contents | ||
Financial Results | ||
Key Metrics | ||
Condensed Statements of Operations | ||
Balance Sheets | ||
Earnings and Select Metrics from Business Segments and Corporate & Other | ||
Statements of Adjusted Earnings by Segment and Corporate & Other | ||
Annuities — Statements of Adjusted Earnings | ||
Annuities — Select Operating Metrics | ||
Life — Statements of Adjusted Earnings | ||
Life — Select Operating Metrics | ||
Run-off — Statements of Adjusted Earnings | ||
Run-off — Select Operating Metrics | ||
Corporate & Other — Statements of Adjusted Earnings | ||
Other Information | ||
DAC and VOBA and Net Derivative Gains (Losses) | ||
Notable Items | ||
Variable Annuity Separate Account Returns and Allocations | ||
Summary of Investments | ||
Select Actual and Preliminary Statutory Financial Results | ||
Appendix | ||
Non-GAAP and Other Financial Disclosures | ||
Acronyms | ||
Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings and Reconciliation of Net Income (Loss) Available to Shareholders per Common Share to Adjusted Earnings per Common Share | ||
Reconciliation of Return on Equity to Adjusted Return on Equity | ||
Reconciliation of Total Revenues to Adjusted Revenues and Reconciliation of Total Expenses to Adjusted Expenses | ||
Investment Reconciliation Details |
Financial Supplement | 1 |
As of or For the Three Months Ended | ||||||||||
Financial Results and Metrics | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Net income (loss) available to shareholders (1) | $(239) | $(67) | $668 | $(943) | $246 | |||||
Adjusted earnings (1) (2) | $153 | $283 | $992 | $(676) | $324 | |||||
Total corporate expenses (3) | $288 | $230 | $287 | $241 | $226 | |||||
Stockholders' Equity (4) | ||||||||||
Ending Brighthouse Financial, Inc.’s stockholders’ equity | $13,435 | $13,608 | $14,515 | $13,766 | $16,415 | |||||
Ending AOCI (5) | 815 | 801 | 1,676 | 1,308 | 1,894 | |||||
Ending Brighthouse Financial, Inc.’s stockholders’ equity, excluding AOCI (5) | $12,620 | $12,807 | $12,839 | $12,458 | $14,521 | |||||
Pro forma ending Brighthouse Financial, Inc.’s stockholders’ equity, excluding AOCI (6) | N/A | N/A | N/A | N/A | $12,170 | |||||
Return on Equity | ||||||||||
Return on equity | (4.0)% | (0.7)% | (2.5)% | (17.9)% | (12.2)% | |||||
Return on equity, excluding AOCI (2) | (4.5)% | (0.7)% | (2.8)% | (20.1)% | (13.8)% | |||||
Adjusted return on equity (2) | 5.8% | 7.0% | 6.9% | (1.0)% | 5.9% | |||||
Per Diluted Common Share | ||||||||||
Net income (loss) available to shareholders per common share (7) | $(2.01) | $(0.56) | $5.58 | $(7.87) | N/A | |||||
Adjusted earnings per common share (2) | $1.27 | $2.36 | $8.28 | $(5.64) | N/A | |||||
Weighted average common shares outstanding (7) | 120,200,149 | 119,773,106 | 119,773,106 | 119,773,106 | N/A | |||||
Book value per common share (2) | $112.17 | $113.61 | $121.19 | $114.93 | N/A | |||||
Book value per common share, excluding AOCI (2) | $105.37 | $106.93 | $107.19 | $104.01 | N/A | |||||
Ending common shares outstanding | 119,773,106 | 119,773,106 | 119,773,106 | 119,773,106 | N/A | |||||
(1) The Company recorded a non-cash tax expense of $1.1 billion in the third quarter of 2017 related to a tax obligation triggered prior to the separation, recognized by the Company’s former parent. This tax expense had no impact on the book value of Brighthouse. | ||||||||||
(2) See definitions for non-GAAP and other financial disclosures in the appendix beginning on Page A-2. | ||||||||||
(3) Includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs. | ||||||||||
(4) For periods ending prior to the separation, stockholders’ equity was previously reported as shareholder’s net investment. | ||||||||||
(5) Ending AOCI and Ending Brighthouse Financial, Inc.'s stockholders' equity, excluding AOCI, have been recast as of December 31, 2017 to conform to amounts presented in Brighthouse Financial, Inc.'s annual report on Form 10-K for the year ended December 31, 2017. The change was made as a result of the adoption of accounting guidance related to the accounting for deferred taxes that was issued subsequent to the filing of the Q4 2017 Financial Supplement. | ||||||||||
(6) Ending Brighthouse Financial, Inc.’s stockholders’ equity, excluding AOCI, as of June 30, 2017 has been adjusted for subsequent separation transactions, including the distribution to MetLife, Inc. of $1.8 billion and a tax separation liability of $600 million. | ||||||||||
(7) Diluted net income (loss) available to shareholders per common share was calculated using 119,773,106 weighted average shares outstanding for the period ended June 30, 2018. The diluted shares are not currently utilized in the per share calculation of net income (loss) available to shareholders, as inclusion would have an anti-dilutive effect to a loss position. |
Financial Supplement | 2 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
Revenues | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Premiums | $223 | $229 | $233 | $236 | $218 | $452 | $394 | |||||||
Universal life and investment-type product policy fees | 962 | 1,002 | 963 | 1,025 | 957 | 1,964 | 1,910 | |||||||
Net investment income | 806 | 817 | 769 | 761 | 766 | 1,623 | 1,548 | |||||||
Other revenues | 98 | 105 | 322 | 93 | 162 | 203 | 236 | |||||||
Revenues before NIGL and NDGL | 2,089 | 2,153 | 2,287 | 2,115 | 2,103 | 4,242 | 4,088 | |||||||
Net investment gains (losses) | (75) | (4) | 6 | 21 | — | (79) | (55) | |||||||
Net derivative gains (losses) | (312) | (334) | (413) | (164) | (78) | (646) | (1,043) | |||||||
Total revenues | $1,702 | $1,815 | $1,880 | $1,972 | $2,025 | $3,517 | $2,990 | |||||||
Expenses | ||||||||||||||
Interest credited to policyholder account balances | $269 | $267 | $273 | $279 | $284 | $536 | $559 | |||||||
Policyholder benefits and claims | 813 | 738 | 904 | 1,083 | 785 | 1,551 | 1,649 | |||||||
Amortization of DAC and VOBA | 246 | 305 | 231 | 123 | 21 | 551 | (127) | |||||||
Interest expense on debt | 36 | 37 | 37 | 34 | 37 | 73 | 82 | |||||||
Other expenses | 655 | 581 | 657 | 577 | 577 | 1,236 | 1,096 | |||||||
Total expenses | 2,019 | 1,928 | 2,102 | 2,096 | 1,704 | 3,947 | 3,259 | |||||||
Income (loss) before provision for income tax | (317) | (113) | (222) | (124) | 321 | (430) | (269) | |||||||
Provision for income tax expense (benefit) | (79) | (48) | (890) | 819 | 75 | (127) | (166) | |||||||
Net income (loss) | (238) | (65) | 668 | (943) | 246 | (303) | (103) | |||||||
Less: Net income (loss) attributable to noncontrolling interests | 1 | 2 | — | — | — | 3 | — | |||||||
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders | $(239) | $(67) | $668 | $(943) | $246 | $(306) | $(103) | |||||||
Financial Supplement | 3 |
As of | ||||||||||
ASSETS | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Investments: | ||||||||||
Fixed maturity securities available-for-sale | $62,343 | $63,178 | $64,991 | $63,565 | $63,507 | |||||
Equity securities (1) | 153 | 160 | 161 | 195 | 206 | |||||
Mortgage loans, net | 12,337 | 11,308 | 10,742 | 10,431 | 10,263 | |||||
Policy loans | 1,458 | 1,517 | 1,523 | 1,522 | 1,513 | |||||
Real estate joint ventures | 449 | 441 | 433 | 407 | 302 | |||||
Other limited partnership interests | 1,706 | 1,700 | 1,669 | 1,654 | 1,623 | |||||
Short-term investments | 177 | 293 | 312 | 1,149 | 1,286 | |||||
Other invested assets (1) | 2,305 | 2,452 | 2,507 | 2,736 | 3,109 | |||||
Total investments | 80,928 | 81,049 | 82,338 | 81,659 | 81,809 | |||||
Cash and cash equivalents | 2,135 | 1,888 | 1,857 | 1,698 | 4,443 | |||||
Accrued investment income | 607 | 640 | 601 | 641 | 608 | |||||
Reinsurance recoverables | 12,745 | 12,746 | 12,763 | 12,727 | 12,732 | |||||
Premiums and other receivables | 848 | 781 | 762 | 864 | 683 | |||||
DAC and VOBA | 5,968 | 6,083 | 6,286 | 6,414 | 6,464 | |||||
Current income tax recoverable | 814 | 832 | 740 | 1,772 | 1,423 | |||||
Other assets | 580 | 593 | 588 | 647 | 600 | |||||
Separate account assets | 111,587 | 114,385 | 118,257 | 116,857 | 115,566 | |||||
Total assets | $216,212 | $218,997 | $224,192 | $223,279 | $224,328 | |||||
LIABILITIES AND EQUITY | ||||||||||
Liabilities | ||||||||||
Future policy benefits | $35,816 | $36,223 | $36,616 | $36,035 | $34,352 | |||||
Policyholder account balances | 38,407 | 37,940 | 37,783 | 37,298 | 37,296 | |||||
Other policy-related balances | 2,941 | 2,991 | 2,985 | 2,964 | 2,985 | |||||
Payables for collateral under securities loaned and other transactions | 4,265 | 4,244 | 4,169 | 4,569 | 7,121 | |||||
Long-term debt | 3,607 | 3,609 | 3,612 | 3,615 | 3,016 | |||||
Deferred income tax liability | 684 | 752 | 927 | 2,116 | 2,337 | |||||
Other liabilities | 5,405 | 5,180 | 5,263 | 5,994 | 5,190 | |||||
Separate account liabilities | 111,587 | 114,385 | 118,257 | 116,857 | 115,566 | |||||
Total liabilities | 202,712 | 205,324 | 209,612 | 209,448 | 207,863 | |||||
Equity | ||||||||||
Common stock | 1 | 1 | 1 | 1 | — | |||||
Additional paid-in capital | 12,444 | 12,432 | 12,432 | 12,418 | — | |||||
Retained earnings | 175 | 374 | 406 | 39 | — | |||||
Shareholder’s net investment | — | — | — | — | 14,521 | |||||
Accumulated other comprehensive income (loss) | 815 | 801 | 1,676 | 1,308 | 1,894 | |||||
Total Brighthouse Financial, Inc.’s stockholders’ equity | 13,435 | 13,608 | 14,515 | 13,766 | 16,415 | |||||
Noncontrolling interests | 65 | 65 | 65 | 65 | 50 | |||||
Total equity | 13,500 | 13,673 | 14,580 | 13,831 | 16,465 | |||||
Total liabilities and equity | $216,212 | $218,997 | $224,192 | $223,279 | $224,328 | |||||
(1) The Company reclassified $71 million as of December 31, 2017, $70 million as of September 30, 2017, and $72 million as of June 30, 2017 of FHLB common stock from equity securities to other invested assets, principally at estimated fair value, to conform to current presentation. |
Financial Supplement | 5 |
For the Three Months Ended June 30, 2018 | ||||||||||
Adjusted revenues | Annuities | Life | Run-off | Corporate & Other | Total | |||||
Premiums | $48 | $151 | $— | $24 | $223 | |||||
Universal life and investment-type product policy fees | 632 | 76 | 189 | (4) | 893 | |||||
Net investment income | 376 | 111 | 314 | 11 | 812 | |||||
Other revenues | 90 | 1 | 7 | — | 98 | |||||
Total adjusted revenues | $1,146 | $339 | $510 | $31 | $2,026 | |||||
Adjusted expenses | ||||||||||
Interest credited to policyholder account balances | $148 | $28 | $92 | $— | $268 | |||||
Policyholder benefits and claims | 181 | 168 | 365 | 19 | 733 | |||||
Amortization of DAC and VOBA | 124 | 23 | — | 3 | 150 | |||||
Interest expense on debt | — | — | — | 37 | 37 | |||||
Other operating costs | 427 | 74 | 61 | 96 | 658 | |||||
Total adjusted expenses | 880 | 293 | 518 | 155 | 1,846 | |||||
Adjusted earnings before provision for income tax | 266 | 46 | (8) | (124) | 180 | |||||
Provision for income tax expense (benefit) | 45 | 9 | (2) | (26) | 26 | |||||
Adjusted earnings after provision for income tax | 221 | 37 | (6) | (98) | 154 | |||||
Less: Net income (loss) attributable to noncontrolling interests | — | — | — | 1 | 1 | |||||
Adjusted earnings | $221 | $37 | $(6) | $(99) | $153 | |||||
For the Three Months Ended June 30, 2017 | ||||||||||
Adjusted revenues | Annuities | Life | Run-off | Corporate & Other | Total | |||||
Premiums | $48 | $142 | $1 | $27 | $218 | |||||
Universal life and investment-type product policy fees | 639 | 75 | 175 | (3) | 886 | |||||
Net investment income | 311 | 69 | 354 | 58 | 792 | |||||
Other revenues | 128 | 19 | 15 | — | 162 | |||||
Total adjusted revenues | $1,126 | $305 | $545 | $82 | $2,058 | |||||
Adjusted expenses | ||||||||||
Interest credited to policyholder account balances | $152 | $40 | $91 | $— | $283 | |||||
Policyholder benefits and claims | 163 | 169 | 288 | 17 | 637 | |||||
Amortization of DAC and VOBA | 112 | 7 | — | 6 | 125 | |||||
Interest expense on debt | — | — | 8 | 28 | 36 | |||||
Other operating costs | 386 | 66 | 79 | 20 | 551 | |||||
Total adjusted expenses | 813 | 282 | 466 | 71 | 1,632 | |||||
Adjusted earnings before provision for income tax | 313 | 23 | 79 | 11 | 426 | |||||
Provision for income tax expense (benefit) | 87 | 11 | 27 | (23) | 102 | |||||
Adjusted earnings after provision for income tax | 226 | 12 | 52 | 34 | 324 | |||||
Less: Net income (loss) attributable to noncontrolling interests | — | — | — | — | — | |||||
Adjusted earnings | $226 | $12 | $52 | $34 | $324 |
Financial Supplement | 6 |
For the Six Months Ended June 30, 2018 | ||||||||||
Adjusted revenues | Annuities | Life | Run-off | Corporate & Other | Total | |||||
Premiums | $93 | $309 | $— | $50 | $452 | |||||
Universal life and investment-type product policy fees | 1,272 | 179 | 388 | (7) | 1,832 | |||||
Net investment income | 739 | 219 | 657 | 22 | 1,637 | |||||
Other revenues | 189 | 1 | 13 | — | 203 | |||||
Total adjusted revenues | $2,293 | $708 | $1,058 | $65 | $4,124 | |||||
Adjusted expenses | ||||||||||
Interest credited to policyholder account balances | $294 | $59 | $182 | $— | $535 | |||||
Policyholder benefits and claims | 361 | 333 | 712 | 33 | 1,439 | |||||
Amortization of DAC and VOBA | 267 | 52 | — | 8 | 327 | |||||
Interest expense on debt | — | — | — | 74 | 74 | |||||
Other operating costs | 833 | 137 | 109 | 160 | 1,239 | |||||
Total adjusted expenses | 1,755 | 581 | 1,003 | 275 | 3,614 | |||||
Adjusted earnings before provision for income tax | 538 | 127 | 55 | (210) | 510 | |||||
Provision for income tax expense (benefit) | 91 | 24 | 11 | (55) | 71 | |||||
Adjusted earnings after provision for income tax | 447 | 103 | 44 | (155) | 439 | |||||
Less: Net income (loss) attributable to noncontrolling interests | — | — | — | 3 | 3 | |||||
Adjusted earnings | $447 | $103 | $44 | $(158) | $436 | |||||
For the Six Months Ended June 30, 2017 | ||||||||||
Adjusted revenues | Annuities | Life | Run-off | Corporate & Other | Total | |||||
Premiums | $98 | $242 | $1 | $53 | $394 | |||||
Universal life and investment-type product policy fees | 1,270 | 158 | 348 | (6) | 1,770 | |||||
Net investment income | 638 | 176 | 712 | 124 | 1,650 | |||||
Other revenues | 194 | 19 | 23 | — | 236 | |||||
Total adjusted revenues | $2,200 | $595 | $1,084 | $171 | $4,050 | |||||
Adjusted expenses | ||||||||||
Interest credited to policyholder account balances | $304 | $68 | $185 | $— | $557 | |||||
Policyholder benefits and claims | 323 | 316 | 587 | 27 | 1,253 | |||||
Amortization of DAC and VOBA | 206 | 52 | 6 | 11 | 275 | |||||
Interest expense on debt | — | — | 23 | 58 | 81 | |||||
Other operating costs | 744 | 151 | 130 | 41 | 1,066 | |||||
Total adjusted expenses | 1,577 | 587 | 931 | 137 | 3,232 | |||||
Adjusted earnings before provision for income tax | 623 | 8 | 153 | 34 | 818 | |||||
Provision for income tax expense (benefit) | 169 | 3 | 52 | (10) | 214 | |||||
Adjusted earnings after provision for income tax | 454 | 5 | 101 | 44 | 604 | |||||
Less: Net income (loss) attributable to noncontrolling interests | — | — | — | — | — | |||||
Adjusted earnings | $454 | $5 | $101 | $44 | $604 |
Financial Supplement | 7 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
Adjusted revenues | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Premiums | $48 | $45 | $33 | $44 | $48 | $93 | $98 | |||||||
Universal life and investment-type product policy fees | 632 | 640 | 645 | 629 | 639 | 1,272 | 1,270 | |||||||
Net investment income | 376 | 363 | 329 | 310 | 311 | 739 | 638 | |||||||
Other revenues | 90 | 99 | 93 | 87 | 128 | 189 | 194 | |||||||
Total adjusted revenues | $1,146 | $1,147 | $1,100 | $1,070 | $1,126 | $2,293 | $2,200 | |||||||
Adjusted expenses | ||||||||||||||
Interest credited to policyholder account balances | $148 | $146 | $148 | $153 | $152 | $294 | $304 | |||||||
Policyholder benefits and claims | 181 | 180 | 153 | 258 | 163 | 361 | 323 | |||||||
Amortization of DAC and VOBA | 124 | 143 | 102 | (228) | 112 | 267 | 206 | |||||||
Interest expense on debt | — | — | — | — | — | — | — | |||||||
Other operating costs | 427 | 406 | 422 | 399 | 386 | 833 | 744 | |||||||
Total adjusted expenses | 880 | 875 | 825 | 582 | 813 | 1,755 | 1,577 | |||||||
Adjusted earnings before provision for income tax | 266 | 272 | 275 | 488 | 313 | 538 | 623 | |||||||
Provision for income tax expense (benefit) | 45 | 46 | 67 | 133 | 87 | 91 | 169 | |||||||
Adjusted earnings | $221 | $226 | $208 | $355 | $226 | $447 | $454 |
Financial Supplement | 8 |
For the Three Months Ended | ||||||||||
VARIABLE & SHIELD ANNUITIES ACCOUNT VALUE (1) | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Account value, beginning of period | $117,178 | $120,333 | $118,574 | $116,830 | $115,920 | |||||
Deposits | 1,129 | 1,074 | 1,128 | 981 | 965 | |||||
Withdrawals, surrenders and contract benefits | (2,877) | (2,853) | (2,799) | (2,402) | (2,689) | |||||
Net flows | (1,748) | (1,779) | (1,671) | (1,421) | (1,724) | |||||
Investment performance (2) | 1,568 | (695) | 4,129 | 3,873 | 3,330 | |||||
Policy charges and other | (715) | (681) | (699) | (708) | (696) | |||||
Account value, end of period | $116,283 | $117,178 | $120,333 | $118,574 | $116,830 | |||||
FIXED ANNUITIES ACCOUNT VALUE | ||||||||||
Account value, beginning of period | $13,036 | $13,062 | $13,123 | $13,230 | $13,369 | |||||
Deposits | 305 | 205 | 232 | 113 | 47 | |||||
Withdrawals, surrenders and contract benefits | (308) | (320) | (374) | (331) | (298) | |||||
Net flows | (3) | (115) | (142) | (218) | (251) | |||||
Interest credited | 105 | 105 | 106 | 111 | 112 | |||||
Other | (26) | (16) | (25) | — | — | |||||
Account value, end of period | $13,112 | $13,036 | $13,062 | $13,123 | $13,230 | |||||
INCOME ANNUITIES (1) | ||||||||||
Income annuity insurance liabilities | $4,547 | $4,541 | $4,544 | $4,544 | $4,531 | |||||
(1) Includes general account and separate account. | ||||||||||
(2) Includes imputed interest on indexed annuities and the interest credited on the general account investment option of variable products. |
Financial Supplement | 9 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
VARIABLE & INDEXED ANNUITY SALES | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Shield Annuities (1) | $723 | $729 | $794 | $653 | $570 | $1,452 | $1,028 | |||||||
GMWB/GMAB | 237 | 183 | 173 | 190 | 215 | 420 | 449 | |||||||
GMDB only | 96 | 92 | 94 | 92 | 107 | 188 | 222 | |||||||
GMIB | 33 | 32 | 36 | 25 | 43 | 65 | 94 | |||||||
Total variable & indexed annuity sales | $1,089 | $1,036 | $1,097 | $960 | $935 | $2,125 | $1,793 | |||||||
FIXED ANNUITY SALES | ||||||||||||||
Fixed indexed annuities (2) | $272 | $173 | $203 | $69 | $— | $445 | $— | |||||||
Fixed deferred annuities | 36 | 34 | 32 | 37 | 47 | 70 | 96 | |||||||
Single premium immediate annuities | 13 | 9 | 6 | 7 | 8 | 22 | 20 | |||||||
Other fixed annuities | 2 | 4 | 3 | 1 | 5 | 6 | 17 | |||||||
Total fixed annuity sales | $323 | $220 | $244 | $114 | $60 | $543 | $133 | |||||||
(1) Shield Annuities refers to our suite of structured annuities consisting of products marketed under various names. | ||||||||||||||
(2) Represents 90% of gross sales assumed via reinsurance agreement. |
Financial Supplement | 10 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
Adjusted revenues | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Premiums | $151 | $158 | $172 | $164 | $142 | $309 | $242 | |||||||
Universal life and investment-type product policy fees | 76 | 103 | 81 | 134 | 75 | 179 | 158 | |||||||
Net investment income | 111 | 108 | 79 | 87 | 69 | 219 | 176 | |||||||
Other revenues | 1 | — | 1 | 2 | 19 | 1 | 19 | |||||||
Total adjusted revenues | $339 | $369 | $333 | $387 | $305 | $708 | $595 | |||||||
Adjusted expenses | ||||||||||||||
Interest credited to policyholder account balances | $28 | $31 | $48 | $40 | $40 | $59 | $68 | |||||||
Policyholder benefits and claims | 168 | 165 | 187 | 161 | 169 | 333 | 316 | |||||||
Amortization of DAC and VOBA | 23 | 29 | 33 | 138 | 7 | 52 | 52 | |||||||
Interest expense on debt | — | — | — | — | — | — | — | |||||||
Other operating costs | 74 | 63 | 58 | 56 | 66 | 137 | 151 | |||||||
Total adjusted expenses | 293 | 288 | 326 | 395 | 282 | 581 | 587 | |||||||
Adjusted earnings before provision for income tax | 46 | 81 | 7 | (8) | 23 | 127 | 8 | |||||||
Provision for income tax expense (benefit) | 9 | 15 | 2 | (14) | 11 | 24 | 3 | |||||||
Adjusted earnings | $37 | $66 | $5 | $6 | $12 | $103 | $5 |
Financial Supplement | 11 |
For the Three Months Ended | ||||||||||
LIFE ACCOUNT VALUE: GENERAL ACCOUNT | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Variable universal and universal life account value, beginning of period | $2,763 | $2,775 | $2,800 | $2,818 | $2,823 | |||||
Premiums and deposits (1) | 62 | 66 | 66 | 64 | 76 | |||||
Surrenders and contract benefits | (44) | (43) | (49) | (49) | (36) | |||||
Net flows | 18 | 23 | 17 | 15 | 40 | |||||
Net transfers from (to) separate account | 17 | 14 | 7 | 14 | 17 | |||||
Interest credited | 29 | 26 | 30 | 29 | 19 | |||||
Policy charges and other | (69) | (75) | (79) | (76) | (81) | |||||
Variable universal and universal life account value, end of period | $2,758 | $2,763 | $2,775 | $2,800 | $2,818 | |||||
LIFE ACCOUNT VALUE: SEPARATE ACCOUNT | ||||||||||
Variable universal life account value, beginning of period | $5,174 | $5,250 | $5,107 | $4,977 | $4,886 | |||||
Premiums and deposits | 59 | 62 | 60 | 65 | 70 | |||||
Surrenders and contract benefits | (67) | (68) | (69) | (58) | (71) | |||||
Net flows | (8) | (6) | (9) | 7 | (1) | |||||
Investment performance | 133 | (2) | 215 | 196 | 171 | |||||
Net transfers from (to) general account | (17) | (14) | (7) | (14) | (17) | |||||
Policy charges and other | (60) | (54) | (56) | (59) | (62) | |||||
Variable universal life account value, end of period | $5,222 | $5,174 | $5,250 | $5,107 | $4,977 | |||||
(1) Includes premiums and sales directed to the general account investment option of variable products. |
Financial Supplement | 12 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
LIFE SALES | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Whole life | $1 | $— | $— | $1 | $5 | $1 | $14 | |||||||
Term life | 1 | 1 | 1 | 2 | 3 | 2 | 9 | |||||||
Variable universal life | — | — | — | — | 2 | — | 3 | |||||||
Universal life without secondary guarantees | — | 1 | 2 | 2 | 1 | 1 | 2 | |||||||
Total life sales | $2 | $2 | $3 | $5 | $11 | $4 | $28 |
As of | ||||||||||
LIFE INSURANCE IN-FORCE | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Whole Life | ||||||||||
Life Insurance in-force, before reinsurance | $22,467 | $22,890 | $23,204 | $23,532 | $23,881 | |||||
Life Insurance in-force, net of reinsurance | $3,713 | $3,764 | $3,820 | $3,747 | $3,827 | |||||
Term Life | ||||||||||
Life Insurance in-force, before reinsurance | $443,532 | $448,431 | $453,804 | $459,001 | $464,872 | |||||
Life Insurance in-force, net of reinsurance | $335,524 | $338,841 | $342,487 | $329,833 | $333,685 | |||||
Universal and Variable Universal Life | ||||||||||
Life Insurance in-force, before reinsurance | $58,837 | $59,625 | $60,514 | $61,408 | $62,142 | |||||
Life Insurance in-force, net of reinsurance | $41,146 | $41,601 | $42,009 | $40,183 | $39,909 | |||||
Financial Supplement | 13 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
Adjusted revenues | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Premiums | $— | $— | $— | $— | $1 | $— | $1 | |||||||
Universal life and investment-type product policy fees | 189 | 199 | 169 | 196 | 175 | 388 | 348 | |||||||
Net investment income | 314 | 343 | 339 | 348 | 354 | 657 | 712 | |||||||
Other revenues | 7 | 6 | 8 | 3 | 15 | 13 | 23 | |||||||
Total adjusted revenues | $510 | $548 | $516 | $547 | $545 | $1,058 | $1,084 | |||||||
Adjusted expenses | ||||||||||||||
Interest credited to policyholder account balances | $92 | $90 | $76 | $86 | $91 | $182 | $185 | |||||||
Policyholder benefits and claims | 365 | 347 | 493 | 287 | 288 | 712 | 587 | |||||||
Amortization of DAC and VOBA | — | — | 1 | — | — | — | 6 | |||||||
Interest expense on debt | — | — | — | — | 8 | — | 23 | |||||||
Other operating costs | 61 | 48 | 71 | 55 | 79 | 109 | 130 | |||||||
Total adjusted expenses | 518 | 485 | 641 | 428 | 466 | 1,003 | 931 | |||||||
Adjusted earnings before provision for income tax | (8) | 63 | (125) | 119 | 79 | 55 | 153 | |||||||
Provision for income tax expense (benefit) | (2) | 13 | (45) | 36 | 27 | 11 | 52 | |||||||
Adjusted earnings | $(6) | $50 | $(80) | $83 | $52 | $44 | $101 |
Financial Supplement | 14 |
For the Three Months Ended | ||||||||||
UNIVERSAL LIFE WITH SECONDARY GUARANTEES ACCOUNT VALUE | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Account value, beginning of period | $6,235 | $6,285 | $6,292 | $6,282 | $6,258 | |||||
Premiums and deposits (1) | 202 | 197 | 199 | 200 | 215 | |||||
Surrenders and contract benefits | (44) | (69) | (27) | (17) | (30) | |||||
Net flows | 158 | 128 | 172 | 183 | 185 | |||||
Interest credited | 58 | 59 | 59 | 61 | 76 | |||||
Policy charges and other | (247) | (237) | (238) | (234) | (237) | |||||
Account value, end of period | $6,204 | $6,235 | $6,285 | $6,292 | $6,282 |
As of | ||||||||||
LIFE INSURANCE IN-FORCE | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Universal Life with Secondary Guarantees | ||||||||||
Life Insurance in-force, before reinsurance | $81,479 | $82,126 | $82,747 | $83,325 | $83,645 | |||||
Life Insurance in-force, net of reinsurance | $36,619 | $36,870 | $37,133 | $35,243 | $35,356 | |||||
(1) Includes premiums and sales directed to the general account investment option of variable products. |
Financial Supplement | 15 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
Adjusted revenues | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Premiums | $24 | $26 | $28 | $28 | $27 | $50 | $53 | |||||||
Universal life and investment-type product policy fees | (4) | (3) | (3) | (4) | (3) | (7) | (6) | |||||||
Net investment income | 11 | 11 | 33 | 35 | 58 | 22 | 124 | |||||||
Other revenues | — | — | 222 | — | — | — | — | |||||||
Total adjusted revenues | $31 | $34 | $280 | $59 | $82 | $65 | $171 | |||||||
Adjusted expenses | ||||||||||||||
Interest credited to policyholder account balances | $— | $— | $— | $— | $— | $— | $— | |||||||
Policyholder benefits and claims | 19 | 14 | 14 | 21 | 17 | 33 | 27 | |||||||
Amortization of DAC and VOBA | 3 | 5 | 5 | 4 | 6 | 8 | 11 | |||||||
Interest expense on debt | 37 | 37 | 38 | 36 | 28 | 74 | 58 | |||||||
Other operating costs | 96 | 64 | 105 | 93 | 20 | 160 | 41 | |||||||
Total adjusted expenses | 155 | 120 | 162 | 154 | 71 | 275 | 137 | |||||||
Adjusted earnings before provision for income tax | (124) | (86) | 118 | (95) | 11 | (210) | 34 | |||||||
Provision for income tax expense (benefit) | (26) | (29) | (741) | 1,025 | (23) | (55) | (10) | |||||||
Adjusted earnings after provision for income tax | (98) | (57) | 859 | (1,120) | 34 | (155) | 44 | |||||||
Less: Net income (loss) attributable to noncontrolling interests | 1 | 2 | — | — | — | 3 | — | |||||||
Adjusted earnings | $(99) | $(59) | $859 | $(1,120) | $34 | $(158) | $44 |
Financial Supplement | 17 |
For the Three Months Ended | ||||||||||
DAC AND VOBA ROLLFORWARD | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Balance, beginning of period | $6,083 | $6,286 | $6,414 | $6,464 | $6,500 | |||||
Capitalization | 76 | 76 | 73 | 72 | 47 | |||||
Amortization: | ||||||||||
Related to net investment gains (losses) and net derivative gains (losses) (1) | (96) | (128) | (90) | (209) | 105 | |||||
Notable items, included in adjusted expenses | — | — | — | 229 | — | |||||
Other amortization, included in adjusted expenses | (150) | (177) | (140) | (143) | (125) | |||||
Total amortization | (246) | (305) | (230) | (123) | (20) | |||||
Unrealized investment gains (losses) | 55 | 26 | 29 | 1 | (63) | |||||
Other | — | — | — | — | — | |||||
Balance, end of period | $5,968 | $6,083 | $6,286 | $6,414 | $6,464 | |||||
As of | ||||||||||
DAC AND VOBA BY SEGMENT AND CORPORATE & OTHER | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Annuities | $4,783 | $4,873 | $5,046 | $5,142 | $5,076 | |||||
Life | 1,061 | 1,082 | 1,106 | 1,134 | 1,248 | |||||
Run-off | 5 | 5 | 6 | 6 | 2 | |||||
Corporate & Other | 119 | 123 | 128 | 132 | 138 | |||||
Total DAC and VOBA | $5,968 | $6,083 | $6,286 | $6,414 | $6,464 |
For the Three Months Ended | ||||||||||
NET DERIVATIVE GAINS (LOSSES) | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Net derivative gains (losses): | ||||||||||
Variable annuity embedded derivatives (2) | $196 | $503 | $190 | $579 | $212 | |||||
Variable annuity hedges | (510) | (371) | (548) | (730) | (471) | |||||
ULSG hedges | (63) | (448) | (43) | (9) | 267 | |||||
Other hedges and embedded derivatives | 62 | (26) | (23) | (22) | (113) | |||||
Subtotal | (315) | (342) | (424) | (182) | (105) | |||||
Investment hedge adjustments | 3 | 8 | 11 | 18 | 27 | |||||
Total net derivative gains (losses) | $(312) | $(334) | $(413) | $(164) | $(78) | |||||
(1) Includes amounts related to GMIB fees and GMIB costs that are also included as an adjustment from net income (loss) to adjusted earnings. | ||||||||||
(2) Beginning with the period ended September 30, 2017, in connection with the transition to our new variable annuity hedge program, the change in value of embedded derivative liabilities associated with Shield Annuities is included in and presented with variable annuity embedded derivatives. |
Financial Supplement | 18 |
For the Three Months Ended | ||||||||||
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGS | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Actuarial items and other insurance adjustments | $— | $(32) | $91 | $(134) | $— | |||||
Establishment costs | 44 | 37 | 47 | 31 | — | |||||
Separation related transactions | — | — | 14 | 1,073 | (42) | |||||
Tax reform adjustment (1) | — | — | (947) | — | — | |||||
Other | — | — | — | — | — | |||||
Total notable items (2) | $44 | $5 | $(795) | $970 | $(42) | |||||
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER | ||||||||||
Annuities | $— | $— | $— | $(142) | $(25) | |||||
Life | — | (16) | — | 17 | (12) | |||||
Run-off | — | (16) | 91 | (9) | (5) | |||||
Corporate & Other | 44 | 37 | (886) | 1,104 | — | |||||
Total notable items (2) | $44 | $5 | $(795) | $970 | $(42) | |||||
(1) The notable item for the three months ended December 31, 2017 includes a reduction of $222 million in a tax-related obligation to our former parent, MetLife, Inc. | ||||||||||
(2) Notable items reflect the negative (positive) after-tax impact to adjusted earnings of certain unanticipated items and events, as well as certain items and events that were anticipated, such as establishment costs. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results. |
Financial Supplement | 19 |
For the Three Months Ended | ||||||||||
VARIABLE ANNUITY SEPARATE ACCOUNT RETURNS | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Total Quarterly VA separate account gross returns | 1.54% | (0.72)% | 3.81% | 3.61% | 3.11% | |||||
TOTAL VARIABLE ANNUITY SEPARATE ACCOUNT ALLOCATIONS | ||||||||||
Percent allocated to equity funds | 25.61% | 25.24% | 25.28% | 25.10% | 24.99% | |||||
Percent allocated to bond funds/other funds | 8.14% | 8.26% | 8.16% | 8.33% | 8.45% | |||||
Percent allocated to target volatility funds | 22.74% | 22.69% | 22.71% | 22.48% | 22.31% | |||||
Percent allocated to balanced funds | 43.51% | 43.81% | 43.85% | 44.09% | 44.25% | |||||
Financial Supplement | 20 |
June 30, 2018 | December 31, 2017 | |||||||
Amount | % of Total | Amount | % of Total | |||||
Fixed maturity securities: | ||||||||
U.S. corporate securities | $23,504 | 28.30% | $22,957 | 27.27% | ||||
U.S. government and agency securities | 12,458 | 15.00% | 16,292 | 19.35% | ||||
Residential mortgage-backed securities | 7,859 | 9.46% | 7,977 | 9.47% | ||||
Foreign corporate securities | 6,964 | 8.38% | 7,023 | 8.34% | ||||
State and political subdivision securities | 4,077 | 4.91% | 4,181 | 4.97% | ||||
Commercial mortgage-backed securities | 4,023 | 4.84% | 3,423 | 4.07% | ||||
Asset-backed securities | 2,083 | 2.51% | 1,829 | 2.17% | ||||
Foreign government securities | 1,375 | 1.66% | 1,309 | 1.55% | ||||
Total fixed maturity securities | 62,343 | 75.06% | 64,991 | 77.19% | ||||
Equity securities (1) | 153 | 0.18% | 161 | 0.19% | ||||
Mortgage loans: | ||||||||
Commercial mortgage loans | 8,085 | 9.73% | 7,260 | 8.62% | ||||
Agricultural mortgage loans | 2,630 | 3.17% | 2,276 | 2.70% | ||||
Residential mortgage loans | 1,577 | 1.90% | 1,138 | 1.35% | ||||
Valuation allowances | (51) | (0.06)% | (47) | (0.06)% | ||||
Commercial mortgage loans held by CSEs | 96 | 0.11% | 115 | 0.14% | ||||
Total mortgage loans, net | 12,337 | 14.85% | 10,742 | 12.75% | ||||
Policy loans | 1,458 | 1.76% | 1,523 | 1.81% | ||||
Real estate joint ventures | 449 | 0.54% | 433 | 0.51% | ||||
Other limited partnership interests | 1,706 | 2.05% | 1,669 | 1.98% | ||||
Cash, cash equivalents and short-term investments | 2,312 | 2.78% | 2,169 | 2.58% | ||||
Other invested assets: | ||||||||
Derivatives: | ||||||||
Interest rate | 763 | 0.92% | 1,112 | 1.32% | ||||
Equity market | 1,077 | 1.30% | 937 | 1.11% | ||||
Foreign currency exchange rate | 187 | 0.23% | 165 | 0.20% | ||||
Credit | 28 | 0.03% | 40 | 0.05% | ||||
Total derivatives | 2,055 | 2.48% | 2,254 | 2.68% | ||||
FHLB common stock (1) | 72 | 0.09% | 71 | 0.09% | ||||
Other | 178 | 0.21% | 182 | 0.22% | ||||
Total other invested assets (1) | 2,305 | 2.78% | 2,507 | 2.99% | ||||
Total investments and cash and cash equivalents | $83,063 | 100.00% | $84,195 | 100.00% |
For the Three Months Ended | ||||||||||
June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | ||||||
Net investment income yield (2) | 4.37% | 4.50% | 4.30% | 4.32% | 4.40% | |||||
(1) The Company reclassified $71 million as of December 31, 2017 of FHLB common stock from equity securities to other invested assets, principally at estimated fair value, to conform to current presentation. | ||||||||||
(2) Yields are calculated on investment income as a percent of average quarterly asset carrying values. Investment income includes investment hedge adjustments, excludes recognized gains and losses and reflects the GAAP adjustments described beginning on page A-1 of the Appendix hereto. Asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, freestanding derivative assets, collateral received from derivative counterparties and the effects of consolidating under GAAP certain VIEs that are treated as CSEs. |
Financial Supplement | 21 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
REVENUES AND EXPENSES | June 30, 2018 (2) | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 (2) | June 30, 2017 | |||||||
Total revenues (Line 9) | $3,000 | $2,846 | $2,834 | $2,647 | $3,194 | $5,800 | $12,083 | |||||||
Total benefits and expenses before dividends to policyholders (Line 28) | $2,800 | $2,211 | $2,012 | $1,763 | $2,501 | $5,000 | $11,747 | |||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||
NET INCOME (LOSS) | June 30, 2018 (2) | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 (2) | June 30, 2017 | |||||||
Gain (loss) from operations net of taxes (Line 33) | $200 | $704 | $822 | $686 | $114 | $900 | $(165) | |||||||
Net realized capital gains (losses), net of federal income tax and transfers to interest maintenance reserve (Line 34) | (300) | (1,019) | (578) | (403) | (234) | (1,300) | (697) | |||||||
Net income (loss) (Line 35) | $(100) | $(315) | $244 | $283 | $(120) | $(400) | $(862) | |||||||
As of | ||||||||||||||
COMBINED TOTAL ADJUSTED CAPITAL | June 30, 2018 (2) | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||||||
Combined total adjusted capital | $6,000 | $6,469 | $6,625 | $6,648 | $6,377 | |||||||||
(1) Combined statutory results for Brighthouse Life Insurance Company, Brighthouse Life Insurance Company of NY and New England Life Insurance Company. | ||||||||||||||
(2) Reflects preliminary statutory results for the three months and six months ended June 30, 2018. |
Financial Supplement | A-1 |
Financial Supplement | A-2 |
Non-GAAP financial measures: | Most directly comparable GAAP financial measures: | |||
(i) | adjusted earnings | (i) | net income (loss) available to shareholders (1) | |
(ii) | adjusted earnings, less notable items | (ii) | net income (loss) available to shareholders (1) | |
(iii) | adjusted revenues | (iii) | revenues | |
(iv) | adjusted expenses | (iv) | expenses | |
(v) | adjusted earnings per common share | (v) | earnings per common share, diluted (1) | |
(vi) | adjusted earnings per common share, less notable items | (vi) | earnings per common share, diluted (1) | |
(vii) | adjusted return on equity | (vii) | return on equity | |
(viii) | adjusted return on equity, less notable items | (viii) | return on equity | |
(ix) | adjusted net investment income | (ix) | net investment income | |
__________________ | ||||
(1) Brighthouse uses net income (loss) available to shareholders to refer to net income (loss) available to Brighthouse Financial, Inc.'s common shareholders, and net income (loss) available to shareholders per common share to refer to earnings per common share, diluted. |
Financial Supplement | A-3 |
• | Net derivative gains (losses), except earned income on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment (“Investment Hedge Adjustments”); and |
• | Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and |
Financial Supplement | A-4 |
Financial Supplement | A-5 |
Financial Supplement | A-6 |
AOCI | Accumulated other comprehensive income (loss) |
CSE | Consolidated securitization entity |
CTE | Conditional tail expectations |
DAC | Deferred policy acquisition costs |
FHLB | Federal Home Loan Bank |
GAAP | Accounting principles generally accepted in the United States of America |
GMAB | Guaranteed minimum accumulation benefits |
GMDB | Guaranteed minimum death benefits |
GMIB | Guaranteed minimum income benefits |
GMWB | Guaranteed minimum withdrawal benefits |
LIMRA | Life Insurance Marketing and Research Association |
NCI | Noncontrolling interests |
NDGL | Net derivative gains (losses) |
NIGL | Net investment gains (losses) |
ULSG | Universal life insurance with secondary guarantees |
VA | Variable annuity |
VIE | Variable interest entity |
VOBA | Value of business acquired |
Financial Supplement | A-7 |
For the Three Months Ended | ||||||||||
June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | ||||||
Net income (loss) available to shareholders | $(239) | $(67) | $668 | $(943) | $246 | |||||
Adjustments from net income (loss) available to shareholders to adjusted earnings: | ||||||||||
Less: Net investment gains (losses) | (75) | (4) | 6 | 21 | — | |||||
Less: Net derivative gains (losses) | (316) | (342) | (424) | (182) | (105) | |||||
Less: GMIB adjustments (1) | (38) | 6 | (35) | (416) | (88) | |||||
Less: Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses) | (77) | (130) | (37) | (78) | 124 | |||||
Less: Market value adjustments | 8 | 31 | (3) | (1) | (11) | |||||
Less: Other (1) | 1 | (4) | (4) | 28 | (25) | |||||
Less: Provision for income tax (expense) benefit on reconciling adjustments | 105 | 93 | 173 | 361 | 27 | |||||
Adjusted earnings | $153 | $283 | $992 | $(676) | $324 | |||||
Net income (loss) available to shareholders per common share | $(2.01) | $(0.56) | $5.58 | $(7.87) | N/A | |||||
Less: Net investment gains (losses) | (0.64) | (0.03) | 0.05 | 0.18 | N/A | |||||
Less: Net derivative gains (losses) | (2.64) | (2.86) | (3.54) | (1.52) | N/A | |||||
Less: GMIB adjustments (1) | (0.32) | 0.05 | (0.29) | (3.47) | N/A | |||||
Less: Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses) | (0.64) | (1.09) | (0.31) | (0.65) | N/A | |||||
Less: Market value adjustments | 0.07 | 0.26 | (0.02) | (0.01) | N/A | |||||
Less: Other (1) | 0.01 | (0.03) | (0.03) | 0.23 | N/A | |||||
Less: Provision for income tax (expense) benefit on reconciling adjustments | 0.88 | 0.78 | 1.44 | 3.01 | N/A | |||||
Adjusted earnings per common share | $1.27 | $2.36 | $8.28 | $(5.64) | N/A | |||||
(1) Certain amounts in the prior periods have been reclassified to conform to the current period presentation. |
Financial Supplement | A-8 |
Four Quarters Cumulative Trailing Basis | ||||||||||
ADJUSTED EARNINGS | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Net income (loss) available to shareholders | $(581) | $(96) | $(378) | $(2,811) | $(2,026) | |||||
Adjustments from net income (loss) available to shareholders to adjusted earnings: | ||||||||||
Less: Net investment gains (losses) | (52) | 23 | (28) | (97) | (92) | |||||
Less: Net derivative gains (losses) | (1,264) | (1,053) | (1,752) | (4,095) | (4,490) | |||||
Less: GMIB adjustments (1) | (483) | (533) | (655) | (737) | (457) | |||||
Less: Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses) | (322) | (121) | 249 | 611 | 817 | |||||
Less: Market value adjustments | 35 | 16 | (21) | 16 | 15 | |||||
Less: Other (1) | 21 | (5) | (5) | (33) | (247) | |||||
Less: Provision for income tax (expense) benefit on reconciling adjustments | 732 | 654 | 914 | 1,658 | 1,557 | |||||
Adjusted earnings | $752 | $923 | $920 | $(134) | $871 | |||||
Five Quarters Average Stockholders' Equity Basis | ||||||||||
BRIGHTHOUSE FINANCIAL, INC.’S STOCKHOLDERS’ EQUITY, EXCLUDING AOCI | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Brighthouse Financial, Inc.’s stockholders’ equity | $14,348 | $14,684 | $14,935 | $15,666 | $16,605 | |||||
Accumulated other comprehensive income (loss) (AOCI) | 1,299 | 1,437 | 1,530 | 1,682 | 1,947 | |||||
Brighthouse Financial, Inc.’s stockholders’ equity, excluding AOCI | $13,049 | $13,247 | $13,405 | $13,983 | $14,658 | |||||
Five Quarters Average Stockholders' Equity Basis | ||||||||||
ADJUSTED RETURN ON EQUITY | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Return on equity | (4.0)% | (0.7)% | (2.5)% | (17.9)% | (12.2)% | |||||
Return on AOCI | (44.7)% | (6.7)% | (24.7)% | (167.1)% | (104.1)% | |||||
Return on equity, excluding AOCI | (4.5)% | (0.7)% | (2.8)% | (20.1)% | (13.8)% | |||||
Return on adjustments from net income (loss) available to shareholders to adjusted earnings: | ||||||||||
Less: Return on net investment gains (losses) | (0.4)% | 0.2% | (0.2)% | (0.7)% | (0.6)% | |||||
Less: Return on net derivative gains (losses) | (9.8)% | (8.0)% | (13.0)% | (29.3)% | (30.6)% | |||||
Less: Return on GMIB adjustments (1) | (3.7)% | (4.0)% | (4.9)% | (5.3)% | (3.1)% | |||||
Less: Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses) | (2.5)% | (0.9)% | 1.8% | 4.4% | 5.6% | |||||
Less: Return on market value adjustments | 0.3% | 0.1% | (0.2)% | 0.1% | 0.1% | |||||
Less: Return on other (1) | 0.2% | —% | —% | (0.2)% | (1.7)% | |||||
Less: Return on provision for income tax (expense) benefit on reconciling adjustments | 5.6% | 4.9% | 6.8% | 11.9% | 10.6% | |||||
Adjusted return on equity | 5.8% | 7.0% | 6.9% | (1.0)% | 5.9% | |||||
(1) Certain amounts in the prior periods have been reclassified to conform to the current period presentation. |
Financial Supplement | A-9 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||
Total revenues | $1,702 | $1,815 | $1,880 | $1,972 | $2,025 | $3,517 | $2,990 | |||||||
Less: Net investment gains (losses) | (75) | (4) | 6 | 21 | — | (79) | (55) | |||||||
Less: Net derivative gains (losses) | (312) | (334) | (413) | (164) | (78) | (646) | (1,043) | |||||||
Less: Other GMIB adjustments: | ||||||||||||||
GMIB fees | 69 | 67 | 71 | 70 | 70 | 136 | 139 | |||||||
Investment hedge adjustments | (3) | (8) | (11) | (19) | (27) | (11) | (103) | |||||||
Other | (3) | (4) | (2) | 1 | 2 | (7) | 2 | |||||||
Total adjusted revenues | $2,026 | $2,098 | $2,229 | $2,063 | $2,058 | $4,124 | $4,050 | |||||||
Total expenses | $2,019 | $1,928 | $2,102 | $2,096 | $1,704 | $3,947 | $3,259 | |||||||
Less: Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses) | 77 | 130 | 37 | 78 | (124) | 207 | (364) | |||||||
Less: Other adjustments to expenses: | ||||||||||||||
GMIB costs and amortization of DAC and VOBA related to GMIB fees and GMIB costs | 107 | 61 | 106 | 486 | 158 | 168 | 343 | |||||||
Other | (11) | (31) | 5 | (1) | 12 | (42) | 18 | |||||||
Less: Divested business | — | — | — | (26) | 26 | — | 30 | |||||||
Total adjusted expenses | $1,846 | $1,768 | $1,954 | $1,559 | $1,632 | $3,614 | $3,232 |
Financial Supplement | A-10 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||
NET INVESTMENT GAINS (LOSSES) | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||
Investment portfolio gains (losses) | $(68) | $2 | $13 | $23 | $4 | $(66) | $(47) | |||||||
Investment portfolio writedowns | (2) | (3) | (6) | (1) | (3) | (5) | (7) | |||||||
Total net investment portfolio gains (losses) | (70) | (1) | 7 | 22 | 1 | (71) | (54) | |||||||
Net investment gains (losses) related to CSEs | (5) | (3) | (1) | (1) | (1) | (8) | (1) | |||||||
Other | — | — | — | — | — | — | — | |||||||
Net investment gains (losses) | $(75) | $(4) | $6 | $21 | $— | $(79) | $(55) |
For the Three Months Ended | ||||||||||
NET INVESTMENT INCOME YIELD | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | |||||
Investment income yield (1) | 4.53% | 4.65% | 4.46% | 4.47% | 4.55% | |||||
Investment fees and expenses | (0.16)% | (0.15)% | (0.16)% | (0.15)% | (0.15)% | |||||
Net investment income yield (1) | 4.37% | 4.50% | 4.30% | 4.32% | 4.40% | |||||
(1) Yields are calculated on investment income as a percent of average quarterly asset carrying values. Investment income includes investment hedge adjustments, excludes recognized gains and losses and reflects the GAAP adjustments described beginning on page A-1 of the Appendix hereto. Asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, freestanding derivative assets, collateral received from derivative counterparties and the effects of consolidating under GAAP certain VIEs that are treated as CSEs. |