EX-99.3 4 q42020bhffinancialsuppleme.htm EX-99.3

Exhibit 99.3

Brighthouse Financial, Inc.

Financial Supplement

Fourth Quarter 2020

    

---

Table of Contents			Financial Results
			1			Key Metrics
			2			GAAP Statements of Operations
			3			GAAP Balance Sheets
			Earnings and Select Metrics from Business Segments and Corporate & Other
			5			Statements of Adjusted Earnings by Segment and Corporate & Other
			7			Annuities — Statements of Adjusted Earnings
			8			Annuities — Select Operating Metrics
			10			Life — Statements of Adjusted Earnings
			11			Life — Select Operating Metrics
			13			Run-off — Statements of Adjusted Earnings
			14			Run-off — Select Operating Metrics
			15			Corporate & Other — Statements of Adjusted Earnings
			Other Information
			17			DAC and VOBA and Net Derivative Gains (Losses)
			18			Notable Items
			19			Variable Annuity Separate Account Returns and Allocations
			20			Summary of Investments
			21			Statutory Statement of Operations Information
			22			Statutory Balance Sheet and Surplus Information
			Appendix
			A-1			Note Regarding Forward-Looking Statements
			A-2			Non-GAAP and Other Financial Disclosures
			A-6			Acronyms
			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
			A-8			Reconciliation of Return on Common Equity to Adjusted Return on Common Equity
			A-9			Reconciliation of Total Revenues to Adjusted Revenues and Reconciliation of Total Expenses to Adjusted Expenses
			A-10			Investment Reconciliation Details

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.

    

---

Financial Results

    

---

Financial Supplement

1

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

						As of or For the Three Months Ended
Financial Results and Metrics (1)						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Net income (loss) available to shareholders						$(1,045)						$(3,012)						$(1,998)						$4,950						$(1,077)
Adjusted earnings						$189						$(689)						$11						$211						$282
Adjusted earnings, less notable items (2)						$272						$388						$39						$273						$265
Total corporate expenses (3)						$236						$204						$210						$214						$283
Combined total adjusted capital (4)						$8,600						$8,432						$7,724						$7,217						$9,694
Combined risk-based capital ratio (5)						~485%						525%-545%						515%-535%						515%-535%						552%
Stockholders' Equity
Brighthouse Financial, Inc.’s stockholders’ equity						$18,023						$18,266						$20,909						$20,374						$16,172
Less: Preferred stock, net						1,360						802						802						412						412
Brighthouse Financial, Inc.’s common stockholders’ equity, including AOCI						$16,663						$17,464						$20,107						$19,962						$15,760
Less: AOCI						5,716						5,381						4,965						2,647						3,240
Brighthouse Financial, Inc.’s common stockholders’ equity, excluding AOCI						$10,947						$12,083						$15,142						$17,315						$12,520
Return on Common Equity (1)
Return on common equity						(6.1)%						(6.3)%						14.3%						29.5%						(4.9)%
Return on common equity, excluding AOCI						(8.1)%						(8.0)%						17.8%						35.4%						(5.8)%
Adjusted return on common equity						(2.0)%						(1.3)%						2.3%						4.2%						4.5%
Earnings Per Common Share, Diluted (1), (6)
Net income (loss) available to shareholders per common share						$(11.69)						$(32.49)						$(21.10)						$47.11						$(10.02)
Adjusted earnings per common share						$2.10						$(7.43)						$0.11						$2.01						$2.61
Adjusted earnings, less notable items per common share						$3.03						$4.19						$0.41						$2.60						$2.46
Weighted average common shares outstanding						89,890,162						92,693,188						94,837,492						105,093,515						107,840,324
Book Value Per Common Share
Book value per common share (1)						$188.90						$191.58						$216.25						$198.62						$148.64
Book value per common share, excluding AOCI (1)						$124.10						$132.55						$162.85						$172.28						$118.08
Ending common shares outstanding						88,211,618						91,158,927						92,979,854						100,502,488						106,027,301
(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) Reflects preliminary statutory results for the three months ended December 31, 2020. See additional information on page 22.
(5) The RBC ratio is reported as a preliminary range on the quarters.
(6) 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.

    

---

Financial Supplement

2

GAAP Statements of Operations (Unaudited, in millions)

						For the Three Months Ended																														For the Year Ended
Revenues						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Premiums						$191						$184						$193						$198						$209						$766						$882
Universal life and investment-type product policy fees						868						882						827						886						950						3,463						3,580
Net investment income						1,037						996						652						916						898						3,601						3,579
Other revenues						119						99						93						102						107						413						389
Revenues before NIGL and NDGL						2,215						2,161						1,765						2,102						2,164						8,243						8,430
Net investment gains (losses)						326						5						(34)						(19)						33						278						112
Net derivative gains (losses)						(2,410)						(1,857)						(2,653)						6,902						(1,891)						(18)						(1,988)
Total revenues						$131						$309						$(922)						$8,985						$306						$8,503						$6,554
Expenses
Interest credited to policyholder account balances						$276						$281						$276						$259						$268						$1,092						$1,063
Policyholder benefits and claims						638						3,047						839						1,187						734						5,711						3,670
Amortization of DAC and VOBA						(156)						244						(92)						770						9						766						382
Interest expense on debt						45						47						45						47						47						184						191
Other expenses						634						533						532						470						620						2,169						2,300
Total expenses						1,437						4,152						1,600						2,733						1,678						9,922						7,606
Income (loss) before provision for income tax						(1,306)						(3,843)						(2,522)						6,252						(1,372)						(1,419)						(1,052)
Provision for income tax expense (benefit)						(275)						(850)						(531)						1,293						(303)						(363)						(317)
Net income (loss)						(1,031)						(2,993)						(1,991)						4,959						(1,069)						(1,056)						(735)
Less: Net income (loss) attributable to noncontrolling interests						1						2						—						2						1						5						5
Net income (loss) attributable to Brighthouse Financial, Inc.						(1,032)						(2,995)						(1,991)						4,957						(1,070)						(1,061)						(740)
Less: Preferred stock dividends						13						17						7						7						7						44						21
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders						$(1,045)						$(3,012)						$(1,998)						$4,950						$(1,077)						$(1,105)						$(761)

    

---

Financial Supplement

3

GAAP Balance Sheets (Unaudited, in millions)

						As of
ASSETS						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Investments:
Fixed maturity securities available-for-sale						$82,495						$79,338						$76,796						$71,302						$71,036
Equity securities						138						117						129						122						147
Mortgage loans						15,808						15,746						15,791						15,547						15,753
Policy loans						1,291						1,289						1,201						1,250						1,292
Limited partnerships and limited liability companies						2,810						2,562						2,354						2,505						2,380
Short-term investments						3,242						4,239						4,537						4,348						1,958
Other invested assets						3,747						5,038						6,364						9,658						3,216
Total investments						109,531						108,329						107,172						104,732						95,782
Cash and cash equivalents						4,108						6,189						7,325						8,930						2,877
Accrued investment income						676						781						664						868						684
Reinsurance recoverables						15,338						15,052						14,359						14,220						13,990
Premiums and other receivables						820						1,035						859						774						770
DAC and VOBA						4,911						4,664						4,856						4,862						5,448
Current income tax recoverable						—						—						1						9						17
Other assets						516						447						532						550						584
Separate account assets						111,969						103,184						99,599						89,008						107,107
Total assets						$247,869						$239,681						$235,367						$223,953						$227,259
LIABILITIES AND EQUITY
Liabilities
Future policy benefits						$44,448						$44,537						$41,841						$40,653						$39,686
Policyholder account balances						54,508						52,798						50,338						47,288						45,771
Other policy-related balances						3,411						3,088						3,152						3,169						3,111
Payables for collateral under securities loaned and other transactions						5,252						6,989						7,876						10,988						4,391
Long-term debt						3,436						3,979						3,979						4,365						4,365
Current income tax payable						126						72						—						—						—
Deferred income tax liability						1,620						1,816						2,567						2,482						1,355
Other liabilities						5,011						4,887						5,041						5,561						5,236
Separate account liabilities						111,969						103,184						99,599						89,008						107,107
Total liabilities						229,781						221,350						214,393						203,514						211,022
Equity
Preferred stock, at par value						—						—						—						—						—
Common stock, at par value						1						1						1						1						1
Additional paid-in capital						13,878						13,314						13,307						12,911						12,908
Retained earnings (deficit)						(534)						511						3,523						5,521						585
Treasury stock						(1,038)						(941)						(887)						(706)						(562)
Accumulated other comprehensive income (loss)						5,716						5,381						4,965						2,647						3,240
Total Brighthouse Financial, Inc.’s stockholders’ equity						18,023						18,266						20,909						20,374						16,172
Noncontrolling interests						65						65						65						65						65
Total equity						18,088						18,331						20,974						20,439						16,237
Total liabilities and equity						$247,869						$239,681						$235,367						$223,953						$227,259

    

---

Earnings and Select

Metrics from

Business Segments and Corporate & Other

    

---

Financial Supplement

5

Statements of Adjusted Earnings by Segment and Corporate & Other (Unaudited, in millions)

						For the Three Months Ended December 31, 2020
Adjusted revenues						Annuities						Life						Run-off						Corporate & Other						Total
Premiums						$38						$131						$2						$20						$191
Universal life and investment-type product policy fees						588						62						155						—						805
Net investment income						486						144						396						16						1,042
Other revenues						91						8						7						2						108
Total adjusted revenues						$1,203						$345						$560						$38						$2,146
Adjusted expenses
Interest credited to policyholder account balances						$165						$27						$82						$1						$275
Policyholder benefits and claims						153						246						405						16						820
Amortization of DAC and VOBA						118						3						—						3						124
Interest expense on debt						—						—						—						45						45
Other operating costs						407						54						49						116						626
Total adjusted expenses						843						330						536						181						1,890
Adjusted earnings before provision for income tax						360						15						24						(143)						256
Provision for income tax expense (benefit)						67						2						(1)						(15)						53
Adjusted earnings after provision for income tax						293						13						25						(128)						203
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends						—						—						—						14						14
Adjusted earnings						$293						$13						$25						$(142)						$189
						For the Three Months Ended December 31, 2019
Adjusted revenues						Annuities						Life						Run-off						Corporate & Other						Total
Premiums						$32						$154						$1						$22						$209
Universal life and investment-type product policy fees						585						109						191						—						885
Net investment income						457						106						323						18						904
Other revenues						79						6						7						4						96
Total adjusted revenues						$1,153						$375						$522						$44						$2,094
Adjusted expenses
Interest credited to policyholder account balances						$151						$26						$91						$—						$268
Policyholder benefits and claims						134						190						371						14						709
Amortization of DAC and VOBA						95						4						—						3						102
Interest expense on debt						—						—						—						47						47
Other operating costs						449						61						53						57						620
Total adjusted expenses						829						281						515						121						1,746
Adjusted earnings before provision for income tax						324						94						7						(77)						348
Provision for income tax expense (benefit)						59						19						1						(21)						58
Adjusted earnings after provision for income tax						265						75						6						(56)						290
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends						—						—						—						8						8
Adjusted earnings						$265						$75						$6						$(64)						$282

    

---

Financial Supplement

6

Statements of Adjusted Earnings by Segment and Corporate & Other (Cont.) (Unaudited, in millions)

						For the Year Ended December 31, 2020
Adjusted revenues						Annuities						Life						Run-off						Corporate & Other						Total
Premiums						$147						$533						$2						$84						$766
Universal life and investment-type product policy fees						2,250						315						639						—						3,204
Net investment income						1,820						460						1,269						70						3,619
Other revenues						346						26						28						2						402
Total adjusted revenues						$4,563						$1,334						$1,938						$156						$7,991
Adjusted expenses
Interest credited to policyholder account balances						$651						$106						$329						$3						$1,089
Policyholder benefits and claims						530						763						3,078						57						4,428
Amortization of DAC and VOBA						440						107						—						(9)						538
Interest expense on debt						—						—						—						184						184
Other operating costs						1,509						176						186						253						2,124
Total adjusted expenses						3,130						1,152						3,593						488						8,363
Adjusted earnings before provision for income tax						1,433						182						(1,655)						(332)						(372)
Provision for income tax expense (benefit)						266						34						(356)						(87)						(143)
Adjusted earnings after provision for income tax						1,167						148						(1,299)						(245)						(229)
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends						—						—						—						49						49
Adjusted earnings						$1,167						$148						$(1,299)						$(294)						$(278)
						For the Year Ended December 31, 2019
Adjusted revenues						Annuities						Life						Run-off						Corporate & Other						Total
Premiums						$198						$592						$2						$90						$882
Universal life and investment-type product policy fees						2,326						279						716						(5)						3,316
Net investment income						1,809						436						1,265						75						3,585
Other revenues						315						21						26						16						378
Total adjusted revenues						$4,648						$1,328						$2,009						$176						$8,161
Adjusted expenses
Interest credited to policyholder account balances						$584						$105						$373						$—						$1,062
Policyholder benefits and claims						609						719						2,016						59						3,403
Amortization of DAC and VOBA						516						5						—						14						535
Interest expense on debt						—						—						—						191						191
Other operating costs						1,676						211						200						213						2,300
Total adjusted expenses						3,385						1,040						2,589						477						7,491
Adjusted earnings before provision for income tax						1,263						288						(580)						(301)						670
Provision for income tax expense (benefit)						235						57						(126)						(121)						45
Adjusted earnings after provision for income tax						1,028						231						(454)						(180)						625
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends						—						—						—						26						26
Adjusted earnings						$1,028						$231						$(454)						$(206)						$599

    

---

Financial Supplement

7

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

						For the Three Months Ended																														For the Year Ended
Adjusted revenues						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Premiums						$38						$34						$40						$35						$32						$147						$198
Universal life and investment-type product policy fees						588						569						527						566						585						2,250						2,326
Net investment income						486						469						405						460						457						1,820						1,809
Other revenues						91						85						80						90						79						346						315
Total adjusted revenues						$1,203						$1,157						$1,052						$1,151						$1,153						$4,563						$4,648
Adjusted expenses
Interest credited to policyholder account balances						$165						$169						$162						$155						$151						$651						$584
Policyholder benefits and claims						153						9						164						204						134						530						609
Amortization of DAC and VOBA						118						127						157						38						95						440						516
Interest expense on debt						—						—						—						—						—						—						—
Other operating costs						407						373						364						365						449						1,509						1,676
Total adjusted expenses						843						678						847						762						829						3,130						3,385
Adjusted earnings before provision for income tax						360						479						205						389						324						1,433						1,263
Provision for income tax expense (benefit)						67						92						34						73						59						266						235
Adjusted earnings						$293						$387						$171						$316						$265						$1,167						$1,028

    

---

Financial Supplement

8

Annuities — Select Operating Metrics (Unaudited, in millions)

						For the Three Months Ended
VARIABLE AND SHIELD LEVEL ANNUITIES ACCOUNT VALUE (1)						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Account value, beginning of period						$115,111						$110,993						$100,691						$116,426						$112,707
Deposits						1,838						1,428						1,319						1,607						1,608
Withdrawals, surrenders and contract benefits						(2,593)						(1,958)						(1,827)						(2,656)						(2,826)
Net flows (2)						(755)						(530)						(508)						(1,049)						(1,218)
Investment performance (3)						10,663						5,404						11,496						(14,066)						5,693
Policy charges and other						(792)						(756)						(686)						(620)						(756)
Account value, end of period						$124,227						$115,111						$110,993						$100,691						$116,426
FIXED ANNUITIES ACCOUNT VALUE (4)
Account value, beginning of period						$14,443						$13,660						$13,313						$13,113						$13,069
Deposits						1,159						946						548						402						314
Withdrawals, surrenders and contract benefits						(332)						(242)						(291)						(272)						(332)
Net flows (2)						827						704						257						130						(18)
Interest credited						89						98						92						89						88
Other						(1)						(19)						(2)						(19)						(26)
Account value, end of period						$15,358						$14,443						$13,660						$13,313						$13,113
INCOME ANNUITIES (1)
Income annuity insurance liabilities						$4,817						$4,798						$4,587						$4,565						$4,588
(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 index annuities.

    

---

Financial Supplement

9

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

						For the Three Months Ended																														For the Year Ended
VARIABLE AND SHIELD LEVEL ANNUITY SALES						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Shield Level Annuities (1)						$1,359						$934						$905						$1,140						$1,197						$4,338						$4,459
GMWB/GMAB						332						350						277						322						264						1,281						912
GMDB only						81						87						82						87						80						337						310
GMIB						23						19						22						19						17						83						84
Total variable and Shield Level annuity sales						$1,795						$1,390						$1,286						$1,568						$1,558						$6,039						$5,765
FIXED AND INCOME ANNUITY SALES
Fixed index annuities (2)						$253						$234						$309						$208						$261						$1,004						$1,129
Fixed deferred annuities						902						709						239						191						49						2,041						351
Single premium immediate annuities						—						1						4						1						3						6						22
Other fixed and income annuities						1						1						—						1						—						3						9
Total fixed and income annuity sales						$1,156						$945						$552						$401						$313						$3,054						$1,511
(1) Shield Level Annuities refers to our suite of structured annuities consisting of products marketed under various names.
(2) Represents 100% of gross sales on directly written business and the proportion of assumed gross sales under reinsurance agreements.

    

---

Financial Supplement

10

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

						For the Three Months Ended																														For the Year Ended
Adjusted revenues						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Premiums						$131						$129						$132						$141						$154						$533						$592
Universal life and investment-type product policy fees						62						83						77						93						109						315						279
Net investment income						144						131						69						116						106						460						436
Other revenues						8						7						7						4						6						26						21
Total adjusted revenues						$345						$350						$285						$354						$375						$1,334						$1,328
Adjusted expenses
Interest credited to policyholder account balances						$27						$27						$25						$27						$26						$106						$105
Policyholder benefits and claims						246						132						148						237						190						763						719
Amortization of DAC and VOBA						3						50						(4)						58						4						107						5
Interest expense on debt						—						—						—						—						—						—						—
Other operating costs						54						47						56						19						61						176						211
Total adjusted expenses						330						256						225						341						281						1,152						1,040
Adjusted earnings before provision for income tax						15						94						60						13						94						182						288
Provision for income tax expense (benefit)						2						18						12						2						19						34						57
Adjusted earnings						$13						$76						$48						$11						$75						$148						$231

    

---

Financial Supplement

11

Life — Select Operating Metrics (Unaudited, in millions)

						For the Three Months Ended
LIFE ACCOUNT VALUE: GENERAL ACCOUNT						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Universal and variable universal life account value, beginning of period						$2,670						$2,674						$2,691						$2,682						$2,699
Premiums and deposits (1)						69						65						67						74						62
Surrenders and contract benefits						(43)						(38)						(43)						(33)						(37)
Net flows						26						27						24						41						25
Net transfers from (to) separate account						25						16						11						19						12
Interest credited						26						26						25						25						26
Policy charges and other						(73)						(73)						(77)						(76)						(80)
Universal and variable universal life account value, end of period						$2,674						$2,670						$2,674						$2,691						$2,682
LIFE ACCOUNT VALUE: SEPARATE ACCOUNT
Variable universal life account value, beginning of period						$5,582						$5,261						$4,478						$5,493						$5,200
Premiums and deposits						50						50						51						52						54
Surrenders and contract benefits						(54)						(49)						(44)						(65)						(60)
Net flows						(4)						1						7						(13)						(6)
Investment performance						733						390						839						(928)						366
Net transfers from (to) general account						(25)						(16)						(11)						(19)						(12)
Policy charges and other						(56)						(54)						(52)						(55)						(55)
Variable universal life account value, end of period						$6,230						$5,582						$5,261						$4,478						$5,493
(1) Includes premiums and sales directed to the general account investment option of variable products.

    

---

Financial Supplement

12

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

For the Three Months Ended

For the Year Ended

LIFE SALES

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Total life sales

$15

$13

$12

$16

$12

$56

$25

						As of
LIFE INSURANCE IN-FORCE						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Whole Life
Life Insurance in-force, before reinsurance						$19,585						$19,762						$20,094						$20,298						$20,602
Life Insurance in-force, net of reinsurance						$3,313						$3,371						$3,088						$3,105						$3,163
Term Life
Life Insurance in-force, before reinsurance						$388,298						$391,583						$395,391						$402,720						$409,427
Life Insurance in-force, net of reinsurance						$301,731						$303,232						$304,758						$309,500						$314,034
Universal and Variable Universal Life
Life Insurance in-force, before reinsurance						$50,922						$52,377						$52,796						$53,009						$54,269
Life Insurance in-force, net of reinsurance						$38,490						$39,258						$39,482						$39,466						$40,461

    

---

Financial Supplement

13

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

						For the Three Months Ended																														For the Year Ended
Adjusted revenues						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Premiums						$2						$—						$—						$—						$1						$2						$2
Universal life and investment-type product policy fees						155						163						159						162						191						639						716
Net investment income						396						383						166						324						323						1,269						1,265
Other revenues						7						7						7						7						7						28						26
Total adjusted revenues						$560						$553						$332						$493						$522						$1,938						$2,009
Adjusted expenses
Interest credited to policyholder account balances						$82						$82						$88						$77						$91						$329						$373
Policyholder benefits and claims						405						1,870						349						454						371						3,078						2,016
Amortization of DAC and VOBA						—						—						—						—						—						—						—
Interest expense on debt						—						—						—						—						—						—						—
Other operating costs						49						44						41						52						53						186						200
Total adjusted expenses						536						1,996						478						583						515						3,593						2,589
Adjusted earnings before provision for income tax						24						(1,443)						(146)						(90)						7						(1,655)						(580)
Provision for income tax expense (benefit)						(1)						(304)						(31)						(20)						1						(356)						(126)
Adjusted earnings						$25						$(1,139)						$(115)						$(70)						$6						$(1,299)						$(454)

    

---

Financial Supplement

14

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

						For the Three Months Ended
UNIVERSAL LIFE WITH SECONDARY GUARANTEES ACCOUNT VALUE						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Account value, beginning of period						$5,865						$5,930						$5,979						$6,018						$6,058
Premiums and deposits (1)						181						176						181						180						186
Surrenders and contract benefits						(23)						(40)						(31)						(24)						(34)
Net flows						158						136						150						156						152
Interest credited						51						51						57						57						59
Policy charges and other						(251)						(252)						(256)						(252)						(251)
Account value, end of period						$5,823						$5,865						$5,930						$5,979						$6,018

						As of
LIFE INSURANCE IN-FORCE						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Universal Life with Secondary Guarantees
Life Insurance in-force, before reinsurance						$76,745						$76,342						$76,872						$77,428						$78,008
Life Insurance in-force, net of reinsurance						$37,044						$36,842						$37,126						$37,481						$37,740
(1) Includes premiums and sales directed to the general account investment option of variable products.

    

---

Financial Supplement

15

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

						For the Three Months Ended																														For the Year Ended
Adjusted revenues						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Premiums						$20						$21						$21						$22						$22						$84						$90
Universal life and investment-type product policy fees						—						—						—						—						—						—						(5)
Net investment income						16						18						16						20						18						70						75
Other revenues						2						—						—						—						4						2						16
Total adjusted revenues						$38						$39						$37						$42						$44						$156						$176
Adjusted expenses
Interest credited to policyholder account balances						$1						$1						$1						$—						$—						$3						$—
Policyholder benefits and claims						16						10						14						17						14						57						59
Amortization of DAC and VOBA						3						(19)						4						3						3						(9)						14
Interest expense on debt						45						47						45						47						47						184						191
Other operating costs						116						32						71						34						57						253						213
Total adjusted expenses						181						71						135						101						121						488						477
Adjusted earnings before provision for income tax						(143)						(32)						(98)						(59)						(77)						(332)						(301)
Provision for income tax expense (benefit)						(15)						(38)						(12)						(22)						(21)						(87)						(121)
Adjusted earnings after provision for income tax						(128)						6						(86)						(37)						(56)						(245)						(180)
Less: Net income (loss) attributable to noncontrolling interests and preferred stock dividends						14						19						7						9						8						49						26
Adjusted earnings						$(142)						$(13)						$(93)						$(46)						$(64)						$(294)						$(206)

    

---

Other

Information

    

---

Financial Supplement

17

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

						For the Three Months Ended
DAC AND VOBA ROLLFORWARD						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Balance, beginning of period						$4,664						$4,856						$4,862						$5,448						$5,317
Capitalization						128						90						92						98						95
Amortization:
Included in adjusted earnings, excluding notable items						(124)						(121)						(157)						(99)						(137)
Related to notable items, included in adjusted expenses						—						(37)						—						—						35
Related to items not included in adjusted expenses						280						(86)						249						(671)						93
Total amortization						156						(244)						92						(770)						(9)
Unrealized investment gains (losses)						(37)						(38)						(190)						86						45
Balance, end of period						$4,911						$4,664						$4,856						$4,862						$5,448
						As of
DAC AND VOBA BY SEGMENT AND CORPORATE & OTHER						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Annuities						$3,829						$3,574						$3,733						$3,745						$4,327
Life						971						976						1,027						1,018						1,019
Run-off						5						5						5						5						5
Corporate & Other						106						109						91						94						97
Total DAC and VOBA						$4,911						$4,664						$4,856						$4,862						$5,448

						For the Three Months Ended
NET DERIVATIVE GAINS (LOSSES)						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Net derivative gains (losses):
Variable annuity hedges and embedded derivatives, net						$(2,092)						$(1,688)						$(2,576)						$5,181						$(1,419)
ULSG hedges						(291)						(97)						(64)						1,583						(446)
Other hedges and embedded derivatives						(32)						(77)						(17)						134						(32)
Subtotal						(2,415)						(1,862)						(2,657)						6,898						(1,897)
Investment hedge adjustments						5						5						4						4						6
Total net derivative gains (losses)						$(2,410)						$(1,857)						$(2,653)						$6,902						$(1,891)

    

---

Financial Supplement

18

Notable Items (Unaudited, in millions)

						For the Three Months Ended
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGS						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Actuarial items and other insurance adjustments						$17						$1,062						$—						$48						$(42)
Establishment costs						32						15						28						14						25
Debt repayment costs						34						—						—						—						—
Total notable items (1)						$83						$1,077						$28						$62						$(17)
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER
Annuities						$—						$(102)						$—						$—						$(42)
Life						17						11						—						—						—
Run-off						—						1,172						—						48						—
Corporate & Other						66						(4)						28						14						25
Total notable items (1)						$83						$1,077						$28						$62						$(17)
(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.

    

---

Financial Supplement

19

Variable Annuity Separate Account Returns and Allocations (Unaudited)

						For the Three Months Ended
VARIABLE ANNUITY SEPARATE ACCOUNT RETURNS						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Total Quarterly VA separate account gross returns						11.48%						6.04%						14.11%						(14.31)%						6.14%
TOTAL VARIABLE ANNUITY SEPARATE ACCOUNT ALLOCATIONS
Percent allocated to equity funds						27.88%						26.85%						26.31%						24.11%						26.19%
Percent allocated to bond funds/other funds						8.43%						8.82%						8.73%						9.59%						8.23%
Percent allocated to target volatility funds						21.69%						22.38%						22.85%						24.41%						23.10%
Percent allocated to balanced funds						42.00%						41.95%						42.11%						41.89%						42.48%

    

---

Financial Supplement

20

Summary of Investments (Unaudited, dollars in millions)

						December 31, 2020												December 31, 2019
						Amount						% of Total						Amount						% of Total
Fixed maturity securities:
U.S. corporate securities						$37,906						33.36%						$31,160						31.58%
Foreign corporate securities						11,511						10.13%						9,844						9.98%
U.S. government and agency securities						8,638						7.60%						7,396						7.50%
Residential mortgage-backed securities						8,294						7.30%						9,118						9.24%
Commercial mortgage-backed securities						6,790						5.98%						5,755						5.83%
State and political subdivision securities						4,640						4.08%						4,057						4.11%
Asset-backed securities						2,884						2.54%						1,955						1.98%
Foreign government securities						1,832						1.60%						1,751						1.78%
Total fixed maturity securities						82,495						72.59%						71,036						72.00%
Equity securities						138						0.12%						147						0.15%
Mortgage loans:
Commercial mortgage loans						9,714						8.55%						9,721						9.85%
Agricultural mortgage loans						3,538						3.11%						3,388						3.44%
Residential mortgage loans						2,650						2.33%						2,708						2.74%
Allowance for credit losses						(94)						(0.08)%						(64)						(0.06)%
Total mortgage loans, net						15,808						13.91%						15,753						15.97%
Policy loans						1,291						1.14%						1,292						1.31%
Limited partnerships and limited liability companies						2,810						2.47%						2,380						2.41%
Cash, cash equivalents and short-term investments						7,350						6.47%						4,835						4.90%
Other invested assets:
Derivatives:
Interest rate						2,094						1.84%						1,778						1.80%
Equity market						1,227						1.08%						921						0.93%
Foreign currency exchange rate						220						0.19%						286						0.29%
Credit						41						0.04%						36						0.04%
Total derivatives						3,582						3.15%						3,021						3.06%
FHLB common stock						39						0.04%						39						0.04%
Other						126						0.11%						156						0.16%
Total other invested assets						3,747						3.30%						3,216						3.26%
Total investments and cash and cash equivalents						$113,639						100.00%						$98,659						100.00%

For the Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

Net investment income yield (1), (2)

4.56%

4.42%

2.98%

4.30%

4.32%

(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-2 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.

    

---

Financial Supplement

21

Statutory Statement of Operations Information (Unaudited, in millions except Normalized Statutory Earnings (Loss))

						For the Three Months Ended																														For the Year Ended
COMBINED REVENUES AND EXPENSES (1)						PRELIMINARY December 31, 2020 (2)						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						PRELIMINARY December 31, 2020 (2)						December 31, 2019
Total revenues (Line 9)						$3,500						$2,904						$1,421						$5,740						$2,086						$13,565						$11,358
Total benefits and expenses before dividends to policyholders (Line 28)						$1,400						$1,351						$(1,401)						$13,045						$1,008						$14,395						$9,323
COMBINED NET INCOME (LOSS) (1)
Gain (loss) from operations net of taxes and dividends to policyholders (Line 33)						$2,100						$1,519						$2,817						$(7,305)						$1,089						$(869)						$1,957
Net realized capital gains (losses), net of taxes and certain transfers to interest maintenance reserve (Line 34)						(400)						(1,253)						741						483						(297)						(429)						(960)
Net income (loss) (Line 35)						$1,700						$266						$3,558						$(6,822)						$792						$(1,298)						$997
																																				For the Year Ended
NORMALIZED STATUTORY EARNINGS (LOSS) (3), (4)																																				PRELIMINARY December 31, 2020 (2)						December 31, 2019
																																				(In billions)
Statutory net gain (loss) from operations, pre-tax																																				$(0.5)						$2.2
Add: net realized capital gains (losses)																																				(0.4)						(0.9)
Add: change in total asset requirement at CTE95, net of the change in VA reserves																																				(0.6)						1.2
Add: unrealized gains (losses) on VA hedging program																																				1.4						(0.8)
Add: impact of NAIC VA capital reform and actuarial assumption update																																				(0.6)						0.1
Add: other adjustments, net																																				0.3						0.1
Normalized statutory earnings (loss)																																				$(0.4)						$1.9
(1) Combined statutory results are 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 year ended December 31, 2020.
(3) See definitions for Non-GAAP and Other Financial Disclosures in the Appendix beginning on page A-2.
(4) Normalized statutory earnings (loss), presented in billions, is for Brighthouse Life Insurance Company and New England Life Insurance Company.

    

---

Financial Supplement

22

Statutory Balance Sheet and Surplus Information (Unaudited, in millions)

						As of
COMBINED ASSETS, LIABILITIES, AND CAPITAL AND SURPLUS (1)						PRELIMINARY December 31, 2020 (2)						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Total assets (Line 28)						$197,900						$192,215						$189,871						$184,996						$186,564
Total liabilities (Line 28)						$190,300						$184,709						$182,938						$178,673						$177,702
Total capital and surplus (Line 38)						$7,600						$7,506						$6,933						$6,323						$8,862
COMBINED TAC AND RBC RATIO (1), (3)
Combined total adjusted capital						$8,600						$8,432						$7,724						$7,217						$9,694
Combined risk-based capital ratio (4)						~485%						525%-545%						515%-535%						515%-535%						552%
						As of
COMBINED ORDINARY DIVIDEND CAPACITY (1)						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Dividends paid to Holding Company						$511						$—						$500						$300						$131
Remaining ordinary dividend capacity (5)						$816						$1,327						$1,327						$1,827						$798
(1) Combined statutory results are for Brighthouse Life Insurance Company and New England Life Insurance Company.
(2) Reflects preliminary statutory results as of December 31, 2020.
(3) See definitions for Non-GAAP and Other Financial Disclosures in the Appendix beginning on page A-2.
(4) The RBC ratio is reported as a preliminary range on the quarters.
(5) Reflects remaining dividend amounts that may be paid at one or more points in time during the respective calendar year without prior regulatory approval.

    

---

Appendix

    

---

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, financial projections, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, as well as trends in operating and financial results.

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: the impact of the ongoing COVID-19 pandemic; differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models; higher risk management costs and exposure to increased market risk due to guarantees within certain of our products; the effectiveness of our variable annuity exposure risk management strategy and the impact of such strategy on volatility in our profitability measures and negative effects on our statutory capital; the reserves we are required to hold against our variable annuities as a result of actuarial guidelines; 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 impact of adverse capital and credit market conditions, including with respect to our ability to meet liquidity needs and access capital; the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations; the availability of reinsurance and the ability of the counterparties to our reinsurance or indemnification arrangements to perform their obligations thereunder; the adverse impact to liabilities for policyholder claims as a result of extreme mortality events; 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; any failure of third parties to provide services we need, any failure of the practices and procedures of such third parties and any inability to obtain information or assistance we need from third parties; the ability of our insurance subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders and repurchase our common stock; the effectiveness of our policies and procedures in managing risk; our ability to market and distribute our products through distribution channels; whether all or any portion of the tax consequences of our separation from MetLife, Inc. (“MetLife”) 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 or disagreements regarding MetLife’s or our obligations under our other agreements; the potential material negative tax impact of potential future tax legislation that could make some of our products less attractive to consumers; 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, 2019, 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.

    

---

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.

    

---

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 and amortization of premium 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”).

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. The weighted average common shares outstanding used to calculate adjusted earnings per share will differ from such shares used to calculate diluted net income (loss) available to shareholders per common share when the inclusion of dilutive shares has an anti-dilutive effect for one calculation but not for the other.

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.

    

---

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.

Total Adjusted Capital

Total adjusted capital primarily consists of statutory capital and surplus, as well as the statutory asset valuation reserve. When referred to as “combined,” represents that of our insurance subsidiaries as a whole.

    

---

Financial Supplement

A-5

Non-GAAP and Other Financial Disclosures (Cont.)

Other Financial Disclosures (cont.)

Sales

Life insurance sales consist of 100 percent of annualized new premium for term life, first-year paid premium for whole life, universal life, and variable universal life, and total paid premium for indexed universal life. We exclude company-sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placement variable universal life.

Annuity sales consist of 100 percent of direct statutory premiums, except for fixed index annuity sales distributed through MassMutual that consist of 90 percent of gross sales. Annuity sales exclude certain internal exchanges. These sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity.

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.

Normalized Statutory Earnings (Loss)

Normalized statutory earnings (loss) is used by management to measure our insurance companies’ ability to pay future distributions and is reflective of whether our hedging program functions as intended. Normalized statutory earnings (loss) is calculated as statutory pre-tax net gain from operations adjusted for the favorable or unfavorable impacts of (i) net realized capital gains (losses), (ii) the change in total asset requirement at CTE95, net of the change in our variable annuity reserves, and (iii) unrealized gains (losses) associated with our variable annuities risk management strategy. Normalized statutory earnings (loss) 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.

Risk-Based Capital Ratio

The risk-based capital ratio is a method of measuring an insurance company’s capital, taking into consideration its relative size and risk profile, in order to ensure compliance with minimum regulatory capital requirements set by the National Association of Insurance Commissioners. When referred to as “combined,” represents that of our insurance subsidiaries as a whole. The reporting of our combined risk-based capital ratio is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.

    

---

Financial Supplement

A-6

Acronyms

AOCI			Accumulated other comprehensive income (loss)
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
NDGL			Net derivative gains (losses)
NIGL			Net investment gains (losses)
RBC			Risk-based capital
TAC			Total adjusted capital
ULSG			Universal life insurance with secondary guarantees
VA			Variable annuity
VOBA			Value of business acquired

    

---

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 ITEMS						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Net income (loss) available to shareholders						$(1,045)						$(3,012)						$(1,998)						$4,950						$(1,077)
Less: Net investment gains (losses)						326						5						(34)						(19)						33
Less: Net derivative gains (losses), excluding investment hedge adjustments						(2,415)						(1,862)						(2,657)						6,898						(1,897)
Less: GMIB Fees and GMIB Costs						236						(957)						(125)						(166)						34
Less: Amortization of DAC and VOBA						280						(86)						249						(671)						93
Less: Market value adjustments and other						11						(41)						24						(43)						17
Less: Provision for income tax (expense) benefit on reconciling adjustments						328						618						534						(1,260)						361
Adjusted earnings						189						(689)						11						211						282
Less: Notable items						(83)						(1,077)						(28)						(62)						17
Adjusted earnings, less notable items						$272						$388						$39						$273						$265
ADJUSTED EARNINGS, LESS NOTABLE ITEMS PER COMMON SHARE (1), (2)
Net income (loss) available to shareholders per common share						$(11.69)						$(32.49)						$(21.10)						$47.11						$(10.02)
Less: Net investment gains (losses)						3.65						0.05						(0.36)						(0.18)						0.31
Less: Net derivative gains (losses), excluding investment hedge adjustments						(27.03)						(20.09)						(28.06)						65.64						(17.65)
Less: GMIB Fees and GMIB Costs						2.64						(10.32)						(1.32)						(1.58)						0.32
Less: Amortization of DAC and VOBA						3.13						(0.93)						2.63						(6.38)						0.87
Less: Market value adjustments and other						0.12						(0.44)						0.25						(0.41)						0.16
Less: Provision for income tax (expense) benefit on reconciling adjustments						3.67						6.67						5.64						(11.99)						3.36
Less: Impact of inclusion of dilutive shares						0.02						—						—						—						0.01
Adjusted earnings per common share						2.10						(7.43)						0.11						2.01						2.61
Less: Notable items						(0.92)						(11.62)						(0.30)						(0.59)						0.16
Adjusted earnings, less notable items per common share						$3.03						$4.19						$0.41						$2.60						$2.46
(1) See definitions for Non-GAAP and Other Financial Disclosures in this Appendix.
(2) 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.

    

---

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 EARNINGS						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Net income (loss) available to shareholders						$(1,105)						$(1,137)						$2,551						$4,926						$(761)
Less: Net investment gains (losses)						278						(15)						7						104						112
Less: Net derivative gains (losses), excluding investment hedge adjustments						(36)						482						3,401						6,207						(1,994)
Less: GMIB Fees and GMIB Costs						(1,012)						(1,214)						(261)						(158)						43
Less: Amortization of DAC and VOBA						(228)						(415)						(327)						(593)						153
Less: Market value adjustments and other						(49)						(43)						(16)						(56)						(36)
Less: Provision for income tax (expense) benefit on reconciling adjustments						220						253						(588)						(1,156)						362
Adjusted earnings						$(278)						$(185)						$335						$578						$599
						Five Quarters Average Stockholders' Equity Basis
BRIGHTHOUSE FINANCIAL, INC.’S COMMON STOCKHOLDERS’ EQUITY, EXCLUDING AOCI						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Brighthouse Financial, Inc.’s stockholders’ equity						$18,749						$18,683						$18,285						$17,103						$15,912
Less: Preferred stock, net						758						568						490						412						330
Brighthouse Financial, Inc.’s common stockholders’ equity						17,991						18,115						17,795						16,691						15,582
Less: AOCI						4,390						3,960						3,424						2,765						2,379
Brighthouse Financial, Inc.’s common stockholders’ equity, excluding AOCI						$13,601						$14,155						$14,371						$13,926						$13,203
						Five Quarters Average Common Stockholders' Equity Basis
ADJUSTED RETURN ON COMMON EQUITY						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Return on common equity						(6.1)%						(6.3)%						14.3%						29.5%						(4.9)%
Return on AOCI						(25.2)%						(28.7)%						74.5%						178.2%						(32.0)%
Return on common equity, excluding AOCI						(8.1)%						(8.0)%						17.8%						35.4%						(5.8)%
Less: Return on net investment gains (losses)						2.1%						(0.1)%						—%						0.7%						0.8%
Less: Return on net derivative gains (losses), excluding investment hedge adjustments						(0.3)%						3.4%						23.7%						44.6%						(15.1)%
Less: Return on GMIB Fees and GMIB Costs						(7.4)%						(8.6)%						(1.8)%						(1.1)%						0.3%
Less: Return on amortization of DAC and VOBA						(1.7)%						(2.9)%						(2.3)%						(4.3)%						1.2%
Less: Return on market value adjustments and other						(0.4)%						(0.3)%						—%						(0.4)%						(0.2)%
Less: Return on provision for income tax (expense) benefit on reconciling adjustments						1.6%						1.8%						(4.1)%						(8.3)%						2.7%
Adjusted return on common equity						(2.0)%						(1.3)%						2.3%						4.2%						4.5%

    

---

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 Ended																														For the Year Ended
						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Total revenues						$131						$309						$(922)						$8,985						$306						$8,503						$6,554
Less: Net investment gains (losses)						326						5						(34)						(19)						33						278						112
Less: Net derivative gains (losses)						(2,410)						(1,857)						(2,653)						6,902						(1,891)						(18)						(1,988)
Less: GMIB Fees						63						68						63						65						66						259						264
Less: Investment hedge adjustments						(5)						(5)						(4)						(4)						(6)						(18)						(6)
Less: Other						11						(1)						—						1						10						11						11
Total adjusted revenues						$2,146						$2,099						$1,706						$2,040						$2,094						$7,991						$8,161
Total expenses						$1,437						$4,152						$1,600						$2,733						$1,678						$9,922						$7,606
Less: Amortization of DAC and VOBA						(280)						86						(249)						671						(93)						228						(153)
Less: GMIB Costs						(173)						1,025						188						231						32						1,271						221
Less: Other						—						40						(24)						44						(7)						60						47
Total adjusted expenses						$1,890						$3,001						$1,685						$1,787						$1,746						$8,363						$7,491

    

---

Financial Supplement

A-10

Investment Reconciliation Details (Unaudited, dollars in millions)

						For the Three Months Ended																														For the Year Ended
NET INVESTMENT GAINS (LOSSES)						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019						December 31, 2020						December 31, 2019
Investment portfolio gains (losses)						$329						$2						$(13)						$2						$43						$320						$133
Investment portfolio writedowns						(3)						3						(21)						(21)						(10)						(42)						(21)
Net investment gains (losses)						$326						$5						$(34)						$(19)						$33						$278						$112

						For the Three Months Ended
NET INVESTMENT INCOME YIELD						December 31, 2020						September 30, 2020						June 30, 2020						March 31, 2020						December 31, 2019
Investment income yield (1)						4.70%						4.56%						3.11%						4.44%						4.43%
Investment fees and expenses (2)						(0.14)%						(0.14)%						(0.13)%						(0.14)%						(0.11)%
Net investment income yield						4.56%						4.42%						2.98%						4.30%						4.32%
(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-2 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.