EX-99.2 3 bhffinancialsupplement.htm EX-99.2 Document



Exhibit 99.2








Brighthouse Financial, Inc.
Financial Supplement

Third Quarter 2019















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Table of ContentsFinancial Results
Earnings and Select Metrics from Business Segments and Corporate & Other
Other Information
Appendix
A-2
A-6
A-7
A-8
A-9
A-10



Note: See the Appendix for non-GAAP financial information, definitions and reconciliations. Financial information, unless otherwise noted, is rounded to millions. Some financial information, therefore, may not sum to the corresponding total.

As used in this financial supplement, “Brighthouse Financial,” “Brighthouse,” the “Company,” “we,” “our” and “us” refer to Brighthouse Financial, Inc.

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Financial Results
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Financial Supplement
1



Key Metrics (Unaudited, dollars in millions except per share amounts)

As of or For the Three Months Ended
Financial Results and MetricsSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Net income (loss) available to shareholders (1)$676  $377  $(737) $1,442  $(271) 
Adjusted earnings (1)$(169) $254  $232  $186  $270  
Adjusted earnings, less notable items (1), (2)$260  $296  $259  $199  $314  
Total corporate expenses (3)$248  $242  $225  $233  $242  
Stockholders' Equity
Brighthouse Financial, Inc.’s stockholders’ equity$17,695  $16,276  $14,999  $14,418  $12,884  
Less: Preferred stock, net412  412  412  —  —  
Brighthouse Financial, Inc.’s common stockholders’ equity, including AOCI$17,283  $15,864  $14,587  $14,418  $12,884  
Less: AOCI3,567  2,702  1,670  716  552  
Brighthouse Financial, Inc.’s common stockholders’ equity, excluding AOCI $13,716  $13,162  $12,917  $13,702  $12,332  
Return on Common Equity
Return on common equity (1)11.7%  5.7%  1.4%  6.3%  0.7%  
Return on common equity, excluding AOCI (1)13.4%  6.3%  1.5%  6.7%  0.7%  
Adjusted return on common equity (1)3.8%  7.3%  6.5%  6.9%  13.5%  
Earnings Per Common Share, Diluted
Net income (loss) available to shareholders per common share (1), (4)$6.06  $3.27  $(6.31) $12.14  $(2.26) 
Adjusted earnings per common share (1), (4)$(1.52) $2.19  $1.98  $1.56  $2.23  
Adjusted earnings, less notable items per common share (1)$2.33  $2.56  $2.21  $1.68  $2.60  
Weighted average common shares outstanding111,527,480  115,536,654  117,229,854  118,685,082  120,641,572  
Book Value Per Common Share
Book value per common share (1)$158.18  $140.83  $125.55  $122.67  $108.45  
Book value per common share, excluding AOCI (1)$125.53  $116.85  $111.18  $116.58  $103.80  
Ending common shares outstanding109,264,305  112,644,952  116,182,687  117,532,336  118,800,611  
(1) See definitions for Non-GAAP and Other Financial Disclosures in the Appendix beginning on page A-2.
(2) See additional information regarding notable items on page 18.
(3) Includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs.
(4) For loss periods, dilutive shares were not included in the calculation of net income (loss) available to shareholders per common share or adjusted earnings per common share as inclusion of such shares would have an anti-dilutive effect.

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Financial Supplement
2



Condensed Statements of Operations (Unaudited, in millions)

For the Three Months EndedFor the Nine Months Ended
RevenuesSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Premiums$214  $232  $227  $223  $225  $673  $677  
Universal life and investment-type product policy fees867  888  875  899  972  2,630  2,936  
Net investment income928  942  811  862  853  2,681  2,476  
Other revenues94  96  92  89  105  282  308  
Revenues before NIGL and NDGL2,103  2,158  2,005  2,073  2,155  6,266  6,397  
Net investment gains (losses)27  63  (11) (86) (42) 79  (121) 
Net derivative gains (losses)1,057  149  (1,303) 2,039  (691) (97) (1,337) 
Total revenues$3,187  $2,370  $691  $4,026  $1,422  $6,248  $4,939  
Expenses
Interest credited to policyholder account balances$272  $265  $258  $270  $273  $795  $809  
Policyholder benefits and claims1,319  845  772  899  822  2,936  2,373  
Amortization of DAC and VOBA181  170  22  469  30  373  581  
Interest expense on debt49  48  47  45  40  144  113  
Other expenses562  573  545  556  625  1,680  1,861  
Total expenses2,383  1,901  1,644  2,239  1,790  5,928  5,737  
Income (loss) before provision for income tax804  469  (953) 1,787  (368) 320  (798) 
Provision for income tax expense (benefit)119  85  (218) 345  (99) (14) (226) 
Net income (loss)685  384  (735) 1,442  (269) 334  (572) 
Less: Net income (loss) attributable to noncontrolling interests —   —     
Net income (loss) attributable to Brighthouse Financial, Inc.683  384  (737) 1,442  (271) 330  (577) 
Less: Preferred stock dividends  —  —  —  14  —  
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders$676  $377  $(737) $1,442  $(271) $316  $(577) 

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Financial Supplement
3



Balance Sheets (Unaudited, in millions)
As of
ASSETSSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Investments:
Fixed maturity securities available-for-sale$70,723  $67,211  $64,847  $62,608  $62,279  
Equity securities148  153  150  140  150  
Mortgage loans, net15,359  15,078  14,504  13,694  13,033  
Policy loans1,332  1,342  1,385  1,421  1,443  
Real estate limited partnerships and limited liability companies458  462  453  451  444  
Other limited partnership interests1,895  1,834  1,800  1,840  1,765  
Short-term investments1,985  793  799  —  116  
Other invested assets4,734  3,064  2,302  3,027  2,099  
Total investments96,634  89,937  86,240  83,181  81,329  
Cash and cash equivalents4,289  3,981  3,864  4,145  2,144  
Accrued investment income732  747  791  724  675  
Reinsurance recoverables13,412  13,366  13,098  12,929  12,683  
Premiums and other receivables973  865  928  768  868  
DAC and VOBA5,317  5,492  5,680  5,717  6,050  
Current income tax recoverable14  —  —   878  
Other assets577  610  618  573  583  
Separate account assets103,928  106,214  105,211  98,256  111,736  
Total assets$225,876  $221,212  $216,430  $206,294  $216,946  
LIABILITIES AND EQUITY
Liabilities
Future policy benefits$39,846  $38,280  $37,157  $36,209  $35,748  
Policyholder account balances44,919  42,941  41,177  40,054  39,446  
Other policy-related balances3,079  3,041  3,005  3,000  2,907  
Payables for collateral under securities loaned and other transactions5,291  4,094  3,990  5,057  4,043  
Long-term debt4,365  4,365  4,364  3,963  3,966  
Current income tax payable—  14  19  15  —  
Deferred income tax liability1,749  1,364  1,005  972  576  
Other liabilities4,939  4,558  5,438  4,285  5,575  
Separate account liabilities103,928  106,214  105,211  98,256  111,736  
Total liabilities208,116  204,871  201,366  191,811  203,997  
Equity
Preferred Stock, at par value—  —  —  —  —  
Common stock, at par value     
Additional paid-in capital12,897  12,893  12,889  12,473  12,469  
Retained earnings (deficit)1,662  986  609  1,346  (96) 
Treasury stock(432) (306) (170) (118) (42) 
Accumulated other comprehensive income (loss)3,567  2,702  1,670  716  552  
Total Brighthouse Financial, Inc.’s stockholders’ equity17,695  16,276  14,999  14,418  12,884  
Noncontrolling interests65  65  65  65  65  
Total equity17,760  16,341  15,064  14,483  12,949  
Total liabilities and equity$225,876  $221,212  $216,430  $206,294  $216,946  


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Earnings and Select
Metrics from
Business Segments and Corporate & Other

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Financial Supplement
5



Statements of Adjusted Earnings by Segment and Corporate & Other (Unaudited, in millions)
  For the Three Months Ended September 30, 2019
Adjusted revenuesAnnuitiesLifeRun-offCorporate & OtherTotal
Premiums$48  $143  $—  $23  $214  
Universal life and investment-type product policy fees596  53  150  —  799  
Net investment income461  117  327  23  928  
Other revenues79     94  
Total adjusted revenues$1,184  $320  $484  $47  $2,035  
Adjusted expenses
Interest credited to policyholder account balances$149  $30  $92  $—  $271  
Policyholder benefits and claims152  179  885  18  1,234  
Amortization of DAC and VOBA211  (31) —   183  
Interest expense on debt—  —  —  49  49  
Other operating costs417  51  50  44  562  
Total adjusted expenses929  229  1,027  114  2,299  
Adjusted earnings before provision for income tax255  91  (543) (67) (264) 
Provision for income tax expense (benefit)52  18  (117) (57) (104) 
Adjusted earnings after provision for income tax203  73  (426) (10) (160) 
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends—  —  —    
Adjusted earnings$203  $73  $(426) $(19) $(169) 
  For the Three Months Ended September 30, 2018
Adjusted revenuesAnnuitiesLifeRun-offCorporate & OtherTotal
Premiums$48  $152  $—  $25  $225  
Universal life and investment-type product policy fees625  77  208  (3) 907  
Net investment income399  115  322  16  852  
Other revenues88     105  
Total adjusted revenues$1,160  $346  $536  $47  $2,089  
Adjusted expenses
Interest credited to policyholder account balances$152  $29  $92  $—  $273  
Policyholder benefits and claims72  169  532  15  788  
Amortization of DAC and VOBA40   —   53  
Interest expense on debt—  —  —  39  39  
Other operating costs409  62  46  105  622  
Total adjusted expenses673  268  670  164  1,775  
Adjusted earnings before provision for income tax487  78  (134) (117) 314  
Provision for income tax expense (benefit)86  17  (29) (32) 42  
Adjusted earnings after provision for income tax401  61  (105) (85) 272  
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends —  —  —    
Adjusted earnings$401  $61  $(105) $(87) $270  

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Financial Supplement
6



Statements of Adjusted Earnings by Segment and Corporate & Other (Cont.) (Unaudited, in millions)
  For the Nine Months Ended September 30, 2019
Adjusted revenuesAnnuitiesLifeRun-offCorporate & OtherTotal
Premiums$166  $438  $1  $68  $673  
Universal life and investment-type product policy fees1,741  170  525  (5) 2,431  
Net investment income1,352  330  942  57  2,681  
Other revenues236  15  19  12  282  
Total adjusted revenues$3,495  $953  $1,487  $132  $6,067  
Adjusted expenses
Interest credited to policyholder account balances$433  $79  $282  $—  $794  
Policyholder benefits and claims475  529  1,645  45  2,694  
Amortization of DAC and VOBA421   —  11  433  
Interest expense on debt—  —  —  144  144  
Other operating costs1,227  150  147  156  1,680  
Total adjusted expenses2,556  759  2,074  356  5,745  
Adjusted earnings before provision for income tax939  194  (587) (224) 322  
Provision for income tax expense (benefit)176  38  (127) (100) (13) 
Adjusted earnings after provision for income tax763  156  (460) (124) 335  
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends—  —  —  18  18  
Adjusted earnings$763  $156  $(460) $(142) $317  
  For the Nine Months Ended September 30, 2018
Adjusted revenuesAnnuitiesLifeRun-offCorporate & OtherTotal
Premiums$141  $461  $—  $75  $677  
Universal life and investment-type product policy fees1,897  256  596  (10) 2,739  
Net investment income1,138  334  979  38  2,489  
Other revenues277   19   308  
Total adjusted revenues$3,453  $1,054  $1,594  $112  $6,213  
Adjusted expenses
Interest credited to policyholder account balances$446  $88  $274  $—  $808  
Policyholder benefits and claims433  502  1,244  48  2,227  
Amortization of DAC and VOBA307  60  —  13  380  
Interest expense on debt—  —  —  113  113  
Other operating costs1,242  199  155  265  1,861  
Total adjusted expenses2,428  849  1,673  439  5,389  
Adjusted earnings before provision for income tax1,025  205  (79) (327) 824  
Provision for income tax expense (benefit)177  41  (18) (87) 113  
Adjusted earnings after provision for income tax848  164  (61) (240) 711  
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends—  —  —    
Adjusted earnings$848  $164  $(61) $(245) $706  

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Financial Supplement
7



Annuities — Statements of Adjusted Earnings (Unaudited, in millions)

  For the Three Months EndedFor the Nine Months Ended
Adjusted revenuesSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Premiums$48  $60  $58  $44  $48  $166  $141  
Universal life and investment-type product policy fees596  584  561  594  625  1,741  1,897  
Net investment income461  470  421  398  399  1,352  1,138  
Other revenues79  80  77  78  88  236  277  
Total adjusted revenues$1,184  $1,194  $1,117  $1,114  $1,160  $3,495  $3,453  
Adjusted expenses
Interest credited to policyholder account balances$149  $147  $137  $147  $152  $433  $446  
Policyholder benefits and claims152  180  143  174  72  475  433  
Amortization of DAC and VOBA211  128  82  198  40  421  307  
Interest expense on debt—  —  —  —  —  —  —  
Other operating costs417  416  394  387  409  1,227  1,242  
Total adjusted expenses929  871  756  906  673  2,556  2,428  
Adjusted earnings before provision for income tax255  323  361  208  487  939  1,025  
Provision for income tax expense (benefit)52  58  66  33  86  176  177  
Adjusted earnings$203  $265  $295  $175  $401  $763  $848  

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Financial Supplement
8



Annuities — Select Operating Metrics (Unaudited, in millions)

  For the Three Months Ended
VARIABLE & SHIELD ANNUITIES ACCOUNT VALUE (1)September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Account value, beginning of period$114,041  $112,247  $105,089  $116,985  $116,283  
Deposits1,490  1,511  1,327  1,295  1,243  
Withdrawals, surrenders and contract benefits(2,667) (2,716) (2,479) (2,789) (2,754) 
Net flows (2)(1,177) (1,205) (1,152) (1,494) (1,511) 
Investment performance (3)650  3,687  8,971  (9,711) 2,953  
Policy charges and other(807) (688) (661) (691) (740) 
Account value, end of period$112,707  $114,041  $112,247  $105,089  $116,985  
FIXED ANNUITIES ACCOUNT VALUE (4)
Account value, beginning of period$12,900  $12,734  $12,770  $13,225  $13,112  
Deposits355  410  416  439  330  
Withdrawals, surrenders and contract benefits(250) (312) (521) (963) (296) 
Net flows (2)105  98  (105) (524) 34  
Interest credited92  87  90  94  105  
Other(28) (19) (21) (25) (26) 
Account value, end of period$13,069  $12,900  $12,734  $12,770  $13,225  
INCOME ANNUITIES (1)
Income annuity insurance liabilities$4,590  $4,515  $4,541  $4,517  $4,561  
(1) Includes general account and separate account.
(2) Deposits and withdrawals include policy exchanges.
(3) Includes imputed interest on indexed annuities and the interest credited on the general account investment option of variable products.
(4) Includes fixed indexed annuities.
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Financial Supplement
9



Annuities — Select Operating Metrics (Cont.) (Unaudited, in millions)

For the Three Months EndedFor the Nine Months Ended
VARIABLE & SHIELD ANNUITY SALESSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Shield Annuities (1)$1,137  $1,140  $985  $924  $867  $3,262  $2,319  
GMWB/GMAB223  227  198  220  218  648  638  
GMDB only72  80  78  81  84  230  272  
GMIB18  26  23  20  22  67  87  
Total variable & shield annuity sales$1,450  $1,473  $1,284  $1,245  $1,191  $4,207  $3,316  
FIXED ANNUITY SALES
Fixed indexed annuities (2)$296  $291  $281  $368  $302  $868  $747  
Fixed deferred annuities55  114  133  73  28  302  98  
Single premium immediate annuities    16  19  38  
Other fixed annuities      10  
Total fixed annuity sales$358  $417  $423  $453  $350  $1,198  $893  
(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 agreements.

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Financial Supplement
10



Life — Statements of Adjusted Earnings (Unaudited, in millions)

For the Three Months EndedFor the Nine Months Ended
Adjusted revenuesSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Premiums$143  $150  $145  $155  $152  $438  $461  
Universal life and investment-type product policy fees53  59  58  61  77  170  256  
Net investment income117  116  97  115  115  330  334  
Other revenues     15   
Total adjusted revenues$320  $330  $303  $335  $346  $953  $1,054  
Adjusted expenses
Interest credited to policyholder account balances$30  $24  $25  $25  $29  $79  $88  
Policyholder benefits and claims179  169  181  153  169  529  502  
Amortization of DAC and VOBA(31) 21  11  35    60  
Interest expense on debt—  —  —  —  —  —  —  
Other operating costs51  44  55  42  62  150  199  
Total adjusted expenses229  258  272  255  268  759  849  
Adjusted earnings before provision for income tax91  72  31  80  78  194  205  
Provision for income tax expense (benefit)18  14   16  17  38  41  
Adjusted earnings$73  $58  $25  $64  $61  $156  $164  

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Financial Supplement
11



Life — Select Operating Metrics (Unaudited, in millions)

  For the Three Months Ended
LIFE ACCOUNT VALUE: GENERAL ACCOUNTSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Variable universal and universal life account value, beginning of period$2,707  $2,727  $2,747  $2,753  $2,758  
Premiums and deposits (1)62  58  65  64  58  
Surrenders and contract benefits(42) (49) (52) (31) (29) 
Net flows20   13  33  29  
Net transfers from (to) separate account17  18  13   12  
Interest credited26  26  25  27  28  
Policy charges and other (71) (73) (71) (74) (74) 
Variable universal and universal life account value, end of period$2,699  $2,707  $2,727  $2,747  $2,753  
LIFE ACCOUNT VALUE: SEPARATE ACCOUNT
Variable universal life account value, beginning of period$5,269  $5,138  $4,679  $5,351  $5,222  
Premiums and deposits54  55  59  59  57  
Surrenders and contract benefits(63) (63) (69) (63) (67) 
Net flows(9) (8) (10) (4) (10) 
Investment performance15  212  539  (603) 207  
Net transfers from (to) general account(17) (18) (15) (8) (12) 
Policy charges and other(58) (55) (55) (57) (56) 
Variable universal life account value, end of period$5,200  $5,269  $5,138  $4,679  $5,351  
(1) Includes premiums and sales directed to the general account investment option of variable products.
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Financial Supplement
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Life — Select Operating Metrics (Cont.) (Unaudited, in millions)

For the Three Months EndedFor the Nine Months Ended
LIFE SALESSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Total life sales$2  $1  $1  $1  $2  $4  $6  

As of
LIFE INSURANCE IN-FORCESeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Whole Life
Life Insurance in-force, before reinsurance$20,954  $21,212  $21,518  $21,804  $22,127  
Life Insurance in-force, net of reinsurance$3,150  $3,172  $3,638  $3,648  $3,690  
Term Life
Life Insurance in-force, before reinsurance$415,478  $421,507  $427,239  $433,058  $438,564  
Life Insurance in-force, net of reinsurance$317,274  $321,285  $324,941  $328,876  $332,204  
Universal and Variable Universal Life
Life Insurance in-force, before reinsurance$54,892  $55,628  $56,378  $56,882  $58,108  
Life Insurance in-force, net of reinsurance$38,543  $39,139  $39,844  $40,052  $41,279  

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Financial Supplement
13



Run-off — Statements of Adjusted Earnings (Unaudited, in millions)

  For the Three Months EndedFor the Nine Months Ended
Adjusted revenuesSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Premiums$—  $—  $1  $1  $—  $1  $—  
Universal life and investment-type product policy fees150  182  193  180  208  525  596  
Net investment income327  339  276  331  322  942  979  
Other revenues     19  19  
Total adjusted revenues$484  $527  $476  $518  $536  $1,487  $1,594  
Adjusted expenses
Interest credited to policyholder account balances$92  $94  $96  $98  $92  $282  $274  
Policyholder benefits and claims885  380  380  351  532  1,645  1,244  
Amortization of DAC and VOBA—  —  —  —  —  —  —  
Interest expense on debt—  —  —  —  —  —  —  
Other operating costs50  51  46  47  46  147  155  
Total adjusted expenses1,027  525  522  496  670  2,074  1,673  
Adjusted earnings before provision for income tax(543)  (46) 22  (134) (587) (79) 
Provision for income tax expense (benefit)(117) —  (10)  (29) (127) (18) 
Adjusted earnings$(426) $2  $(36) $18  $(105) $(460) $(61) 

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Financial Supplement
14



Run-off — Select Operating Metrics (Unaudited, in millions)

  For the Three Months Ended
UNIVERSAL LIFE WITH SECONDARY GUARANTEES ACCOUNT VALUESeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Account value, beginning of period$6,084  $6,110  $6,154  $6,185  $6,204  
Premiums and deposits (1)184  191  187  190  189  
Surrenders and contract benefits(18) (27) (39) (38) (26) 
Net flows166  164  148  152  163  
Interest credited58  58  57  60  60  
Policy charges and other(250) (248) (249) (243) (242) 
Account value, end of period$6,058  $6,084  $6,110  $6,154  $6,185  

As of
LIFE INSURANCE IN-FORCESeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Universal Life with Secondary Guarantees
Life Insurance in-force, before reinsurance$78,722  $79,243  $79,817  $80,356  $80,963  
Life Insurance in-force, net of reinsurance$36,698  $36,945  $37,233  $37,601  $37,029  
(1) Includes premiums and sales directed to the general account investment option of variable products.

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Financial Supplement
15



Corporate & Other — Statements of Adjusted Earnings (Unaudited, in millions)

  For the Three Months EndedFor the Nine Months Ended
Adjusted revenuesSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Premiums$23  $22  $23  $23  $25  $68  $75  
Universal life and investment-type product policy fees—  (2) (3) (3) (3) (5) (10) 
Net investment income23  17  17  19  16  57  38  
Other revenues     12   
Total adjusted revenues$47  $42  $43  $40  $47  $132  $112  
Adjusted expenses
Interest credited to policyholder account balances$—  $—  $—  $—  $—  $—  $—  
Policyholder benefits and claims18  13  14  16  15  45  48  
Amortization of DAC and VOBA     11  13  
Interest expense on debt49  48  47  45  39  144  113  
Other operating costs44  62  50  80  105  156  265  
Total adjusted expenses114  127  115  144  164  356  439  
Adjusted earnings before provision for income tax(67) (85) (72) (104) (117) (224) (327) 
Provision for income tax expense (benefit)(57) (21) (22) (33) (32) (100) (87) 
Adjusted earnings after provision for income tax(10) (64) (50) (71) (85) (124) (240) 
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends
   —   18   
Adjusted earnings$(19) $(71) $(52) $(71) $(87) $(142) $(245) 


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Other
Information

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Financial Supplement
17



DAC and VOBA and Net Derivative Gains (Losses) (Unaudited, in millions)

For the Three Months Ended
DAC AND VOBA ROLLFORWARDSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Balance, beginning of period$5,492  $5,680  $5,717  $6,050  $5,968  
Capitalization93  96  86  87  83  
Amortization:
Included in adjusted earnings, excluding notable items(162) (153) (97) (236) (148) 
Related to notable items, included in adjusted expenses(21) —  —  —  96  
Related to items not included in adjusted expenses (17) 75  (233) 22  
Total amortization(181) (170) (22) (469) (30) 
Unrealized investment gains (losses)(87) (114) (101) 49  29  
Other—  —  —  —  —  
Balance, end of period$5,317  $5,492  $5,680  $5,717  $6,050  
As of
DAC AND VOBA BY SEGMENT AND CORPORATE & OTHERSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Annuities$4,191  $4,382  $4,534  $4,550  $4,874  
Life1,021  1,001  1,034  1,051  1,056  
Run-off     
Corporate & Other100  104  107  111  115  
Total DAC and VOBA$5,317  $5,492  $5,680  $5,717  $6,050  

For the Three Months Ended
NET DERIVATIVE GAINS (LOSSES)September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Net derivative gains (losses):
Variable annuity embedded derivatives$(530) $(439) $(194) $(146) $(40) 
Variable annuity hedges948  245  (1,245) 1,844  (591) 
ULSG hedges656  312  122  217  (130) 
Other hedges and embedded derivatives(17) 31  14  123  68  
Subtotal1,057  149  (1,303) 2,038  (693) 
Investment hedge adjustments—  —  —    
Total net derivative gains (losses)$1,057  $149  $(1,303) $2,039  $(691) 

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Financial Supplement
18



Notable Items (Unaudited, in millions)

For the Three Months Ended
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGSSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Actuarial items and other insurance adjustments$442  $12  $—  $(26) $(25) 
Establishment costs10  30  27  39  69  
Separation-related transactions(23) —  —  —  —  
Total notable items (1)$429  $42  $27  $13  $44  
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER
Annuities$30  $—  $—  $(12) $(154) 
Life(19) —  —  —  (11) 
Run-off431  12  —  (14) 140  
Corporate & Other(13) 30  27  39  69  
Total notable items (1)$429  $42  $27  $13  $44  
(1) 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.

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Financial Supplement
19



Variable Annuity Separate Account Returns and Allocations (Unaudited)

  For the Three Months Ended
VARIABLE ANNUITY SEPARATE ACCOUNT RETURNSSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Total Quarterly VA separate account gross returns0.83%  3.84%  10.02%  (9.23)% 3.02%  
TOTAL VARIABLE ANNUITY SEPARATE ACCOUNT ALLOCATIONS
Percent allocated to equity funds25.52%  25.04%  25.72%  24.83%  26.06%  
Percent allocated to bond funds/other funds8.50%  8.23%  8.30%  8.79%  8.02%  
Percent allocated to target volatility funds23.51%  24.11%  22.97%  23.05%  22.62%  
Percent allocated to balanced funds42.47%  42.62%  43.01%  43.33%  43.30%  

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Financial Supplement
20



Summary of Investments (Unaudited, dollars in millions)
September 30, 2019December 31, 2018
Amount% of TotalAmount% of Total
Fixed maturity securities:
U.S. corporate securities$30,902  30.62%  $24,473  28.02%  
U.S. government and agency securities7,746  7.67%  9,095  10.41%  
Residential mortgage-backed securities9,215  9.13%  8,547  9.79%  
Foreign corporate securities9,650  9.56%  8,026  9.19%  
Commercial mortgage-backed securities5,579  5.53%  5,248  6.01%  
State and political subdivision securities3,989  3.95%  3,597  4.12%  
Asset-backed securities1,917  1.90%  2,126  2.44%  
Foreign government securities1,725  1.71%  1,496  1.71%  
Total fixed maturity securities70,723  70.07%  62,608  71.69%  
Equity securities148  0.15%  140  0.16%  
Mortgage loans:
Commercial mortgage loans9,473  9.39%  8,529  9.77%  
Agricultural mortgage loans3,291  3.26%  2,946  3.37%  
Residential mortgage loans2,659  2.63%  2,276  2.61%  
Valuation allowances(64) (0.06)% (57) (0.07)% 
Total mortgage loans, net15,359  15.22%  13,694  15.68%  
Policy loans1,332  1.32%  1,421  1.63%  
Real estate limited partnerships and limited liability companies458  0.45%  451  0.52%  
Other limited partnership interests1,895  1.88%  1,840  2.11%  
Cash, cash equivalents and short-term investments6,274  6.22%  4,145  4.75%  
Other invested assets:
Derivatives:
Interest rate3,114  3.09%  717  0.82%  
Equity market902  0.89%  1,732  1.98%  
Foreign currency exchange rate468  0.46%  313  0.36%  
Credit31  0.03%  16  0.02%  
Total derivatives4,515  4.47%  2,778  3.18%  
FHLB common stock50  0.05%  64  0.07%  
Other169  0.17%  185  0.21%  
Total other invested assets4,734  4.69%  3,027  3.46%  
Total investments and cash and cash equivalents$100,923  100.00%  $87,326  100.00%  

For the Three Months Ended
September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Net investment income yield (1), (2)4.52%  4.67%  4.10%  4.48%  4.50%  
(1) Yields are calculated on investment income as a percent of average quarterly asset carrying values. Investment income includes investment hedge adjustments, excludes realized 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 and collateral received from derivative counterparties.
(2) Investment fee and expense yields are calculated as investment fees and expenses as a percent of average quarterly asset estimated fair values. Asset estimated fair values exclude collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties.

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Financial Supplement
21



Select Actual and Preliminary Statutory Financial Results (Unaudited, in millions)

For the Three Months EndedFor the Nine Months Ended
REVENUES AND EXPENSES (1)September 30,
2019 (2)
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019 (2)
September 30,
2018
Total revenues (Line 9)$3,400  $3,436  $2,393  $4,333  $2,921  $9,229  $8,677  
Total benefits and expenses before dividends to policyholders (Line 28)
$3,000  $2,839  $2,429  $4,830  $2,383  $8,268  $7,358  
For the Three Months EndedFor the Nine Months Ended
NET INCOME (LOSS) (1)September 30,
2019 (2)
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019 (2)
September 30,
2018
Gain (loss) from operations net of taxes and dividends to
     policyholders (Line 33)
$300  $597  $(43) $(493) $582  $854  $1,461  
Net realized capital gains (losses), net of taxes and certain transfers to interest maintenance reserve (Line 34)
200  (701) (147) (203) (388) (648) (1,720) 
Net income (loss) (Line 35)$500  $(104) $(190) $(696) $194  $206  $(259) 
As of
COMBINED TOTAL ADJUSTED CAPITALSeptember 30,
2019 (2)
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Combined total adjusted capital$8,400  $6,897  $6,314  $7,354  $6,004  
(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 nine months ended September 30, 2019.


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Appendix

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Financial Supplement
A-1



Note Regarding Forward-Looking Statements

This financial supplement 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 such as “anticipate,” “estimate,” “expect,” “project,” “may,” “will,” “could,” “intend,” “goal,” “target,” “guidance,” “forecast,” “preliminary,” “objective,” “continue,” “aim,” “plan,” “believe” and other words and terms of similar meaning, or that are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include, without limitation, statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operating and financial results, as well as statements regarding the expected benefits of the separation (the “Separation”) from MetLife, Inc. (“MetLife”).
Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of Brighthouse Financial. These statements are based on current expectations and the current economic environment and involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others: differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models; higher risk management costs and exposure to increased market and counterparty risk due to guarantees within certain of our products; the effectiveness of our variable annuity exposure management strategy and the impact of such strategy on net income volatility and negative effects on our statutory capital; the reserves we are required to hold against our variable annuities as a result of actuarial guidelines; a sustained period of low equity market prices and interest rates that are lower than those we assumed when we issued our variable annuity products; the potential material adverse effect of changes in accounting standards, practices and/or policies applicable to us, including changes in the accounting for long-duration contracts; our degree of leverage due to indebtedness; the effect adverse capital and credit market conditions may have on our ability to meet liquidity needs and our access to capital; the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations; the effectiveness of our risk management policies and procedures; the availability of reinsurance and the ability of our counterparties to our reinsurance or indemnification arrangements to perform their obligations thereunder; heightened competition, including with respect to service, product features, scale, price, actual or perceived financial strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition; the ability of our insurance subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders; our ability to market and distribute our products through distribution channels; any failure of third parties to provide services we need, any failure of the practices and procedures of these third parties and any inability to obtain information or assistance we need from third parties, including MetLife; whether all or any portion of the tax consequences of the Separation are not as expected, leading to material additional taxes or material adverse consequences to tax attributes that impact us; the uncertainty of the outcome of any disputes with MetLife over tax-related or other matters and agreements, including the potential of outcomes adverse to us that could cause us to owe MetLife material tax reimbursements or payments, or disagreements regarding MetLife’s or our obligations under our other agreements; the impact on our business structure, profitability, cost of capital and flexibility due to restrictions we have agreed to that preserve the tax-free treatment of certain parts of the Separation; the potential material negative tax impact of potential future tax legislation that could decrease the value of our tax attributes and cause other cash expenses, such as reserves, to increase materially and make some of our products less attractive to consumers; whether the Separation will qualify for non-recognition treatment for federal income tax purposes and potential indemnification to MetLife if the Separation does not so qualify; the impact of the Separation on our business and profitability due to MetLife's strong brand and reputation, the increased costs related to replacing arrangements with MetLife with those of third parties and incremental costs as a public company; whether the operational, strategic and other benefits of the Separation can be achieved, and our ability to implement our business strategy; our ability to attract and retain key personnel; and other factors described from time to time in documents that we file with the U.S. Securities and Exchange Commission (the “SEC”).
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements included and the risks, uncertainties and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2018 and our subsequent Quarterly Reports on Form 10-Q, particularly in the sections entitled “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk,” as well as in our other subsequent filings with the SEC. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

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Financial Supplement
A-2



Non-GAAP and Other Financial Disclosures

Our definitions of the non-GAAP and other financial measures may differ from those used by other companies.

Non-GAAP Financial Disclosures

We present certain measures of our performance that are not calculated in accordance with GAAP. We believe that these non-GAAP financial measures highlight our results of operations and the underlying profitability drivers of our business, as well as enhance the understanding of our performance by the investor community.

The following non-GAAP financial measures, previously referred to as operating measures, should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:
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 common equity(vii)return on common equity (2)
(viii)adjusted return on common equity, less notable items(viii)return on common equity (2)
(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 earnings per common share, diluted to refer to net income (loss) available to shareholders per common share.
(2) Brighthouse uses return on common equity to refer to return on Brighthouse Financial, Inc.'s common stockholders' equity.

Reconciliations to the most directly comparable historical GAAP measures are included for those measures which are presented herein. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are not accessible on a forward-looking basis because we believe it is not possible without unreasonable efforts to provide other than a range of net investment gains and losses and net derivative gains and losses, which can fluctuate significantly within or outside the range and from period to period and may have a material impact on net income (loss) available to shareholders.

Adjusted Earnings, Adjusted Revenues and Adjusted Expenses

Adjusted earnings, which may be positive or negative, is used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. This financial measure focuses on our primary businesses principally by excluding the impact of market volatility, which could distort trends.

Adjusted earnings reflects adjusted revenues less adjusted expenses, both net of income tax, and excludes net income (loss) attributable to noncontrolling interests and preferred stock dividends. Provided below are the adjustments to GAAP revenues and GAAP expenses used to calculate adjusted revenues and adjusted expenses, respectively.

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Financial Supplement
A-3



Non-GAAP and Other Financial Disclosures (Cont.)


The following are significant items excluded from total revenues, net of income tax, in calculating the adjusted revenues component of adjusted earnings:

Net investment gains (losses);

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

Certain variable annuity GMIB fees (“GMIB Fees”) and amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses).

The following are significant items excluded from total expenses, net of income tax, in calculating the adjusted expenses component of adjusted earnings:

Amounts associated with benefits related to GMIBs (“GMIB Costs”);

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

Amortization of DAC and VOBA related to (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments.

The tax impact of the adjustments mentioned is calculated net of the statutory tax rate, which could differ from our effective tax rate.

Consistent with GAAP guidance for segment reporting, adjusted earnings is also our GAAP measure of segment performance.


Adjusted Earnings per Common Share and Adjusted Return on Common Equity

Adjusted earnings per common share and adjusted return on common equity are measures used by management to evaluate the execution of our business strategy and align such strategy with our shareholders’ interests.

Adjusted earnings per common share is defined as adjusted earnings for the period divided by the weighted average number of fully diluted shares of common stock outstanding for the period.

Adjusted return on common equity is defined as total annual adjusted earnings on a four quarter trailing basis, divided by the simple average of the most recent five quarters of total Brighthouse Financial, Inc.'s common stockholders’ equity, excluding AOCI.

Adjusted Net Investment Income

We present adjusted net investment income to measure our performance for management purposes, and we believe it enhances the understanding of our investment portfolio results. Adjusted net investment income represents net investment income including investment hedge adjustments.

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Financial Supplement
A-4



Non-GAAP and Other Financial Disclosures (Cont.)


Other Financial Disclosures

Corporate Expenses

Corporate expenses includes functional department expenses, public company expenses, certain investment expenses, retirement funding and incentive compensation; and excludes establishment costs.

Notable items

Certain of the non-GAAP measures described above may be presented further adjusted to exclude notable items. Notable items reflect the impact on our results 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 and non-GAAP measures, less notable items is intended to help investors better understand our results and to evaluate and forecast those results.

Book Value per Common Share and Book Value per Common Share, excluding AOCI

Brighthouse uses the term “book value” to refer to “Brighthouse Financial, Inc.'s common stockholders’ equity, including AOCI.” Book value per common share is defined as ending Brighthouse Financial, Inc.'s common stockholders’ equity, including AOCI, divided by ending common shares outstanding. Book value per common share, excluding AOCI, is defined as ending Brighthouse Financial, Inc.'s common stockholders’ equity, excluding AOCI, divided by ending common shares outstanding.

CTE95

CTE95 is defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst five percent of a set of capital market scenarios over the life of the contracts.

CTE98

CTE98 is defined as the amount of assets required to satisfy contract holder obligations across market environments in the average of the worst two percent of a set of capital market scenarios over the life of the contracts.

Holding Company Liquid Assets

Holding company liquid assets include liquid assets in Brighthouse Financial, Inc., Brighthouse Holdings, LLC, and Brighthouse Services, LLC. Liquid assets include cash and cash equivalents, short-term investments and publicly traded securities excluding assets that are pledged or otherwise committed. Assets pledged or otherwise committed include amounts received in connection with derivatives and collateral financing arrangements.

Sales

Statistical sales information for life sales is calculated using the LIMRA definition of sales for core direct sales, excluding company-sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placement variable universal life insurance. Annuity sales consist of 100 percent of direct statutory premiums, except for fixed indexed annuity sales distributed through MassMutual that consist of 90 percent of gross sales. Annuity sales exclude company sponsored internal exchanges. These sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity.

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Financial Supplement
A-5



Non-GAAP and Other Financial Disclosures (Cont.)


Net Investment Income Yield

Similar to adjusted net investment income, we present net investment income yields as a performance measure we believe enhances the understanding of our investment portfolio results. Net investment income yields are calculated on adjusted net investment income as a percent of average quarterly asset carrying values. Asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties. Investment fee and expense yields are calculated as investment fees and expenses as a percent of average quarterly asset estimated fair values. Asset estimated fair values exclude collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties.

Adjusted Statutory Earnings

Adjusted statutory earnings is a measure of our insurance companies' ability to pay future distributions and are reflective of whether our hedging program functions as intended. Adjusted statutory earnings is calculated as statutory pre-tax income less the change in the variable annuities reserve methodology (Actuarial Guideline 43) while including the change in both the reserve and capital methodology based CTE95 calculation, as well as unrealized gains (losses) associated with the variable annuities risk management strategy. Adjusted statutory earnings may be further adjusted for certain unanticipated items that impacted our results in order to help management and investors better understand, evaluate and forecast those results.

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Financial Supplement
A-6



Acronyms

AOCIAccumulated other comprehensive income (loss)
CTEConditional tail expectations
DACDeferred policy acquisition costs
FHLBFederal Home Loan Bank
GAAPAccounting principles generally accepted in the United States of America
GMABGuaranteed minimum accumulation benefits
GMDBGuaranteed minimum death benefits
GMIBGuaranteed minimum income benefits
GMWBGuaranteed minimum withdrawal benefits
LIMRALife Insurance Marketing and Research Association
NDGLNet derivative gains (losses)
NIGLNet investment gains (losses)
ULSGUniversal life insurance with secondary guarantees
VAVariable annuity
VOBAValue of business acquired

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Financial Supplement
A-7



Reconciliation of Net Income (Loss) Available to Shareholders to Adjusted Earnings and Adjusted Earnings, Less Notable Items, and Reconciliation of Net Income (Loss) Available to Shareholders per Common Share to Adjusted Earnings per Common Share and Adjusted Earnings, Less Notable Items per Common Share (Unaudited, in millions except per share data)

For the Three Months Ended
ADJUSTED EARNINGS, LESS NOTABLE ITEMSSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Net income (loss) available to shareholders$676  $377  $(737) $1,442  $(271) 
Adjustments from net income (loss) available to shareholders to adjusted earnings:
Less: Net investment gains (losses)27  63  (11) (86) (42) 
Less: Net derivative gains (losses), excluding investment hedge adjustments1,057  149  (1,303) 2,038  (693) 
Less: GMIB Fees and GMIB Costs(4) (22) 35  (137) 28  
Less: Amortization of DAC and VOBA (17) 75  (233) 22  
Less: Market value adjustments(14) (16) (23) (1)  
Less: Other—  —  —  —  (4) 
Less: Provision for income tax (expense) benefit on reconciling adjustments(223) (34) 258  (325) 141  
Adjusted earnings(169) 254  232  186  270  
Less: Notable items(429) (42) (27) (13) (44) 
Adjusted earnings, less notable items$260  $296  $259  $199  $314  
ADJUSTED EARNINGS, LESS NOTABLE ITEMS PER COMMON SHARE (1)
Net income (loss) available to shareholders per common share$6.06  $3.27  $(6.31) $12.14  $(2.26) 
Less: Net investment gains (losses)0.24  0.55  (0.09) (0.73) (0.35) 
Less: Net derivative gains (losses), excluding investment hedge adjustments9.48  1.29  (11.16) 17.17  (5.79) 
Less: GMIB Fees and GMIB Costs(0.04) (0.19) 0.30  (1.15) 0.24  
Less: Amortization of DAC and VOBA0.02  (0.15) 0.64  (1.96) 0.18  
Less: Market value adjustments(0.13) (0.14) (0.20) (0.01) 0.06  
Less: Other—  —  —  —  (0.03) 
Less: Provision for income tax (expense) benefit on reconciling adjustments(2.00) (0.29) 2.21  (2.74) 1.18  
Less: Impact of inclusion of dilutive shares—  —  0.01  —  0.02  
Adjusted earnings per common share(1.52) 2.19  1.98  1.56  2.23  
Less: Notable items(3.85) (0.36) (0.23) (0.11) (0.36) 
Adjusted earnings, less notable items per common share$2.33  $2.56  $2.21  $1.68  $2.60  
(1) Per share calculations are on a diluted basis and may not recalculate or foot due to rounding. For loss periods, dilutive shares were not included in the calculation as inclusion of such shares would have an anti-dilutive effect.

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Financial Supplement
A-8



Reconciliation of Return on Common Equity to Adjusted Return on Common Equity (Unaudited, dollars in millions)

Four Quarters Cumulative Trailing Basis
ADJUSTED EARNINGSSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Net income (loss) available to shareholders$1,758  $811  $195  $865  $91  
Adjustments from net income (loss) available to shareholders to adjusted earnings:
Less: Net investment gains (losses)(7) (76) (214) (207) (115) 
Less: Net derivative gains (losses), excluding investment hedge adjustments1,941  191  (274) 687  (1,775) 
Less: GMIB Fees and GMIB Costs(128) (96) (93) (124) 31  
Less: Amortization of DAC and VOBA(173) (153) (232) (435) (292) 
Less: Market value adjustments(54) (33) (9) 45  43  
Less: Other—  (4) (3) (7) (11) 
Less: Provision for income tax (expense) benefit on reconciling adjustments(324) 40  179  14  512  
Adjusted earnings$503  $942  $841  $892  $1,698  
Five Quarters Average Stockholders' Equity Basis
BRIGHTHOUSE FINANCIAL, INC.’S COMMON STOCKHOLDERS’ EQUITY, EXCLUDING AOCISeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Brighthouse Financial, Inc.’s stockholders’ equity$15,254  $14,402  $13,864  $13,767  $13,637  
Less: Preferred stock, net247  165  82  —  —  
Brighthouse Financial, Inc.’s common stockholders’ equity15,007  14,237  13,782  13,767  13,637  
Less: AOCI1,841  1,291  898  899  1,018  
Brighthouse Financial, Inc.’s common stockholders’ equity, excluding AOCI$13,166  $12,946  $12,884  $12,868  $12,619  
Five Quarters Average Common Stockholders' Equity Basis
ADJUSTED RETURN ON COMMON EQUITYSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Return on common equity11.7%  5.7%  1.4%  6.3%  0.7%  
Return on AOCI95.5%  62.8%  21.7%  96.2%  8.9%  
Return on common equity, excluding AOCI13.4%  6.3%  1.5%  6.7%  0.7%  
Return on adjustments from net income (loss) available to shareholders to adjusted earnings:
Less: Return on net investment gains (losses)—%  (0.6)% (1.7)% (1.6)% (0.9)% 
Less: Return on net derivative gains (losses), excluding investment hedge adjustments14.7%  1.5%  (2.1)% 5.4%  (14.1)% 
Less: Return on GMIB Fees and GMIB Costs(0.9)% (0.7)% (0.7)% (1.0)% 0.2%  
Less: Return on amortization of DAC and VOBA(1.3)% (1.2)% (1.8)% (3.4)% (2.2)% 
Less: Return on market value adjustments(0.4)% (0.3)% (0.1)% 0.3%  0.3%  
Less: Return on other—%  —%  —%  —%  (0.1)% 
Less: Return on provision for income tax (expense) benefit on reconciling adjustments(2.5)% 0.3%  1.4%  0.1%  4.0%  
Adjusted return on common equity3.8%  7.3%  6.5%  6.9%  13.5%  

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Financial Supplement
A-9



Reconciliation of Total Revenues to Adjusted Revenues and Reconciliation of Total Expenses to Adjusted Expenses (Unaudited, in millions)

For the Three Months EndedFor the Nine Months Ended
September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Total revenues$3,187  $2,370  $691  $4,026  $1,422  $6,248  $4,939  
Less: Net investment gains (losses)27  63  (11) (86) (42) 79  (121) 
Less: Net derivative gains (losses)1,057  149  (1,303) 2,039  (691) (97) (1,337) 
Less: GMIB Fees67  65  66  67  68  198  204  
Less: Investment hedge adjustments—  —  —  (1) (2) —  (13) 
Less: Other —  —  —  —   (7) 
Total adjusted revenues$2,035  $2,093  $1,939  $2,007  $2,089  $6,067  $6,213  
Total expenses$2,383  $1,901  $1,644  $2,239  $1,790  $5,928  $5,737  
Less: Amortization of DAC and VOBA(2) 17  (75) 233  (22) (60) 202  
Less: GMIB Costs71  87  31  204  40  189  191  
Less: Other15  16  23   (3) 54  (45) 
Total adjusted expenses$2,299  $1,781  $1,665  $1,801  $1,775  $5,745  $5,389  

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Financial Supplement
A-10



Investment Reconciliation Details (Unaudited, dollars in millions)

For the Three Months EndedFor the Nine Months Ended
NET INVESTMENT GAINS (LOSSES)September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Investment portfolio gains (losses)$30  $68  $(8) $(55) $(35) $90  $(101) 
Investment portfolio writedowns(3) (5) (3) (2) (4) (11) (9) 
Total net investment portfolio gains (losses)27  63  (11) (57) (39) 79  (110) 
Other incremental net investment income—  —  —  (29) (3) —  (11) 
Net investment gains (losses)$27  $63  $(11) $(86) $(42) $79  $(121) 


For the Three Months Ended
NET INVESTMENT INCOME YIELDSeptember 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
Investment income yield (1)4.62%  4.79%  4.24%  4.62%  4.67%  
Investment fees and expenses (2)(0.10)% (0.12)% (0.14)% (0.14)% (0.17)% 
Net investment income yield4.52%  4.67%  4.10%  4.48%  4.50%  
(1) Yields are calculated on investment income as a percent of average quarterly asset carrying values. Investment income includes investment hedge adjustments, excludes realized gains and losses and reflects the GAAP adjustments described beginning on page A-1 of this Appendix. Asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties.
(2) Investment fee and expense yields are calculated as investment fees and expenses as a percent of average quarterly asset estimated fair values. Asset estimated fair values exclude collateral received in connection with our securities lending program, freestanding derivative assets and collateral received from derivative counterparties.

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