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BHF Brighthouse Financial

Filed: 5 Aug 21, 4:24pm
PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Exhibit 99.1
FOR IMMEDIATE RELEASE
Brighthouse Financial Announces Second Quarter 2021 Results
Announced a new repurchase authorization of up to an additional $1 billion of common stock
The company repurchased $246 million of its common stock year-to-date through August 4, 2021
Estimated combined risk-based capital ("RBC") ratio between 480% and 500%; holding company liquid assets of $1.6 billion
$250 million subsidiary ordinary dividend paid to the holding company in the second quarter of 2021
Regulatory approval for $600 million dividend from Brighthouse Reinsurance Company of Delaware to Brighthouse Life Insurance Company received in July 2021
Annuity sales increased 25% over the second quarter of 2020
Life sales increased 117% over the second quarter of 2020
Second quarter 2021 net income available to shareholders of $10 million, or $0.11 per diluted share
Second quarter 2021 adjusted earnings, less notable items*, of $458 million, or $5.32 per diluted share

CHARLOTTE, NC, August 5, 2021 — Brighthouse Financial, Inc. ("Brighthouse Financial" or the "company") (Nasdaq: BHF) announced today its financial results for the second quarter ended June 30, 2021.
Second Quarter 2021 Results
The company reported net income available to shareholders of $10 million in the second quarter of 2021, or $0.11 per diluted share, compared with a net loss available to shareholders of $1,998 million in the second quarter of 2020. During the quarter, as a result of market performance, the value of our hedges decreased, as expected. Due to being accounted for as insurance liabilities as required under U.S. GAAP, certain corresponding liabilities are less sensitive to market movements and, therefore, did not fully offset the decrease in the value of our hedges.
The company ended the second quarter of 2021 with common stockholders' equity ("book value") of $14.8 billion, or $175.19 per common share, and book value, excluding accumulated other comprehensive income ("AOCI") of $10.2 billion, or $120.62 per common share.

_______________
* Information regarding the non-GAAP and other financial measures included in this news release and a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures are provided in the Non-GAAP and Other Financial Disclosures discussion below, as well as in the tables that accompany this news release and/or the Second Quarter 2021 Brighthouse Financial, Inc. Financial Supplement and/or the Second Quarter 2021 Brighthouse Financial, Inc. Earnings Call Presentation (which are available on the Brighthouse Financial Investor Relations webpage at http://investor.brighthousefinancial.com). Additional information regarding notable items can be found on the last page of this news release.
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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For the second quarter of 2021, the company reported adjusted earnings* of $435 million, or $5.05 per diluted share, compared with adjusted earnings of $11 million, or $0.11 per diluted share, in the second quarter of 2020.
Adjusted earnings for the quarter reflected a $23 million after tax unfavorable notable item, or $0.27 per diluted share, for establishment costs related to planned technology and other expenses associated with the company's separation from its former parent company.
Corporate expenses in the second quarter of 2021 were $218 million, up from $203 million in the first quarter of 2021, both on a pre-tax basis.
Annuity sales increased 25% quarter-over-quarter and 8% sequentially, driven by record sales of Shield Level annuities and variable annuities with FlexChoice Access. Life sales increased 117% quarter-over-quarter and 13% sequentially, driven by sales of SmartCare.

During the second quarter of 2021, the company repurchased $125 million of its common stock, with an additional $53 million of its common stock repurchased, on a trade date basis, through August 4, 2021. Since the announcement of its first stock repurchase authorization in August 2018, the company has repurchased $1,266 million of its common stock, on a trade date basis, through August 4, 2021. The company also announced today a new repurchase authorization of up to $1 billion of its common stock. This stock repurchase authorization is in addition to the $200 million stock repurchase authorization the company announced in February 2021, under which $34 million remains as of August 4, 2021.

"Brighthouse Financial delivered another quarter of strong results," said Eric Steigerwalt, president and CEO, Brighthouse Financial. "We maintained balance sheet strength, grew sales, prudently managed our expenses and repurchased more of our common stock. In addition, we are very pleased to announce today our new stock repurchase program, which positions us to achieve our goal of returning $1.5 billion to our shareholders by the end of this year and supports our ongoing commitment to return capital to our shareholders."


Key Metrics (Unaudited, dollars in millions except share and per share amounts)
As of or For the Three Months Ended
June 30, 2021June 30, 2020
TotalPer shareTotalPer share
Net income (loss) available to shareholders (1)$10$0.11$(1,998)$(21.10)
Adjusted earnings (1)$435$5.05$11$0.11
Adjusted earnings, less notable items (1)$458$5.32$39$0.41
Weighted average common shares outstanding - diluted (1)86,065,150N/A94,837,492N/A
Book value$14,755$175.19$20,107$216.25
Book value, excluding AOCI$10,159$120.62$15,142$162.85
Ending common shares outstanding84,223,669N/A92,979,854N/A
(1) Per share amounts are on a diluted basis and may not recalculate 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. See Non-GAAP and Other Financial Disclosures discussion in this news release.

2



PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Results by Segment and Corporate & Other (Unaudited, in millions)
For the Three Months Ended
ADJUSTED EARNINGSJune 30,
2021
March 31,
2021
June 30,
2020
Annuities$338$336$171
Life$68$42$48
Run-off (1)$122$76$(115)
Corporate & Other (1)$(93)$(69)$(93)
(1) The company uses the term “adjusted loss” throughout this news release to refer to negative adjusted earnings values.

Sales (Unaudited, in millions)
For the Three Months Ended
June 30,
2021
March 31,
2021
June 30,
2020
Annuities (1)$2,299$2,132$1,838
Life$26$23$12
(1) Annuities sales include sales of a fixed index annuity product sold by Massachusetts Mutual Life Insurance Company, representing 90% of gross sales of that product. Sales of this product were $173 million for the second quarter of 2021, $182 million for the first quarter of 2021, and $309 million for the second quarter of 2020.
Annuities
Adjusted earnings in the Annuities segment were $338 million in the current quarter, compared with adjusted earnings of $171 million in the second quarter of 2020 and adjusted earnings of $336 million in the first quarter of 2021.
There were no notable items in the current quarter or the comparison quarters.
On a quarter-over-quarter basis, adjusted earnings reflect higher net investment income, higher fees, lower deferred acquisition costs ("DAC") amortization and lower reserves, partially offset by higher expenses. On a sequential basis, adjusted earnings reflect lower reserves, partially offset by higher expenses and lower net investment income.
As mentioned above, annuity sales increased 25% quarter-over-quarter and 8% sequentially, driven by record sales of Shield Level annuities and variable annuities with FlexChoice Access.
Life
Adjusted earnings in the Life segment were $68 million in the current quarter, compared with adjusted earnings of $48 million in the second quarter of 2020 and adjusted earnings of $42 million in the first quarter of 2021.
There were no notable items in the current quarter or the comparison quarters.
On a quarter-over-quarter basis, adjusted earnings reflect higher net investment income, partially offset by a lower underwriting margin. On a sequential basis, adjusted earnings reflect lower DAC amortization, a higher underwriting margin and higher net investment income.
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

bhf-20191104_g1a.jpg
As mentioned above, life sales increased 117% quarter-over-quarter and 13% sequentially, driven by sales of SmartCare.
Run-off
Adjusted earnings in the Run-off segment were $122 million in the current quarter, compared with an adjusted loss of $115 million in the second quarter of 2020 and adjusted earnings of $76 million in the first quarter of 2021.
There were no notable items in the current quarter or the second quarter of 2020. The first quarter of 2021 included a $29 million unfavorable notable item.
On both a quarter-over-quarter basis and sequential basis, adjusted earnings, less notable items, reflect higher net investment income, partially offset by a lower underwriting margin.
Corporate & Other
Corporate & Other had an adjusted loss of $93 million in the current quarter, compared with an adjusted loss of $93 million in the second quarter of 2020 and an adjusted loss of $69 million in the first quarter of 2021.
The current quarter and the comparison quarters each included an unfavorable notable item related to establishment costs of $23 million, $28 million and $14 million for the second quarter of 2021, the second quarter of 2020 and the first quarter of 2021, respectively.
On a quarter-over-quarter basis, the adjusted loss, less notable items, reflects higher total preferred stock dividends, partially offset by lower expenses. On a sequential basis, the adjusted loss, less notable items, reflects higher expenses and a lower tax benefit, partially offset by lower total preferred stock dividends.

Net Investment Income and Adjusted Net Investment Income (Unaudited, in millions)
For the Three Months Ended
June 30,
2021
March 31,
2021
June 30,
2020
Net investment income$1,212$1,187$652
Adjusted net investment income$1,217$1,192$656

Net Investment Income
Net investment income was $1,212 million and adjusted net investment income* was $1,217 million in the current quarter. Adjusted net investment income increased $561 million on a quarter-over-quarter basis, primarily driven by higher alternative investment income. On a sequential basis, adjusted net investment income increased $25 million primarily driven by asset growth and higher alternative investment income.
The net investment income yield was 5.08% during the quarter.
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Statutory Capital and Liquidity (Unaudited, in billions)
As of
June 30,
2021 (1)
March 31,
2021
June 30,
2020
Statutory combined total adjusted capital$9.4$9.4$7.7
(1) Reflects preliminary statutory results as of June 30, 2021.

Capitalization

At June 30, 2021:

Estimated combined RBC ratio between 480% and 500%

Holding company liquid assets were approximately $1.6 billion

Combined statutory total adjusted capital on a preliminary basis of approximately $9.4 billion, consistent with the prior quarter, driven by positive market factors, offset by a $250 million subsidiary ordinary dividend paid to the holding company
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Earnings Conference Call

Brighthouse Financial will hold a conference call and audio webcast to discuss its financial results for the second quarter of 2021 at 8:00 a.m. Eastern Time on Friday, August 6, 2021. In connection with this call, the company has prepared a presentation for use with investors and other members of the investment community. This presentation is available on the Brighthouse Financial Investor Relations webpage at http://investor.brighthousefinancial.com.

To listen to the audio webcast via the internet and to access the related presentation, please visit the Brighthouse Financial Investor Relations webpage at http://investor.brighthousefinancial.com. To join the conference call via telephone, please dial (844) 358-9117 (+1 (209) 905-5952 from outside the U.S.) and use conference ID 6540909.

A replay of the conference call will be made available until Friday, August 27, 2021, on the Brighthouse Financial Investor Relations webpage at http://investor.brighthousefinancial.com.



About Brighthouse Financial, Inc.

Brighthouse Financial, Inc. (Brighthouse Financial) (Nasdaq: BHF) is on a mission to help people achieve financial security. As one of the largest providers of annuities and life insurance in the U.S.,(1) we specialize in products designed to help people protect what they've earned and ensure it lasts. Learn more at brighthousefinancial.com.

(1) Ranked by 2020 admitted assets. Best's Review®: Top 200 U.S. Life/Health Insurers. A.M. Best, 2021.

CONTACT
FOR INVESTORS
David Rosenbaum
(980) 949-3326
david.rosenbaum@brighthousefinancial.com

FOR MEDIA
Deon Roberts
(980) 949-3071
deon.roberts@brighthousefinancial.com

Dana Amante
(980) 949-3073
damante@brighthousefinancial.com

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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Note Regarding Forward-Looking Statements

This news release 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: 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; material differences from actual outcomes compared to the sensitivities calculated under certain scenarios and sensitivities that we may utilize in connection with our variable annuity risk management strategies; the impact of interest rates on our future ULSG policyholder obligations and net income volatility; the impact of the ongoing worldwide COVID-19 pandemic; the potential material adverse effect of changes in accounting standards, practices or policies applicable to us, including changes in the accounting for long-duration contracts; loss of business and other negative impacts resulting from a downgrade or a potential downgrade in our financial strength or credit ratings; the availability of reinsurance and the ability of the 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; 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 such third parties and any inability to obtain information or assistance we need from third parties; the ability of our subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders and repurchase our common stock; the adverse impact on liabilities for policyholder claims as a result of extreme mortality events; 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 economic conditions in the capital markets and the U.S. and global economy, as well as geo-political or catastrophic events, on our investment portfolio, including on realized and unrealized losses and impairments, net investment spread and net investment income; the impact of events that adversely affect issuers, guarantors or collateral relating to our investments or our derivatives counterparties, on impairments, valuation allowances, reserves, net investment income and changes in unrealized gain or loss positions; the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations; the potential material negative tax impact of potential future tax legislation that could make some of our products less attractive to consumers; the effectiveness of our policies and procedures in managing risk; the loss or disclosure of confidential information, damage to our reputation and impairment of our ability to conduct business effectively as a result of any failure in cyber- or other information security systems; 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; and other factors described from time to time in documents that we file with the U.S. Securities and Exchange Commission (the "SEC").
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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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, 2020, 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.


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 accounting principles generally accepted in the United States of America, also known as "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:
adjusted earningsnet income (loss) available to shareholders (1)
adjusted earnings, less notable itemsnet income (loss) available to shareholders (1)
adjusted revenuesrevenues
adjusted expensesexpenses
adjusted earnings per common shareearnings per common share, diluted (1)
adjusted earnings per common share, less notable itemsearnings per common share, diluted (1)
adjusted return on common equityreturn on common equity (2)
adjusted return on common equity, less notable itemsreturn on common equity (2)
adjusted net investment incomenet 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.

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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

bhf-20191104_g1a.jpg
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.

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) ("NDGL"), 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 value of business acquired ("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
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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(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.

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.

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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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Holding Company Liquid Assets

Holding company liquid assets include liquid assets in Brighthouse Financial, Inc., Brighthouse Holdings, LLC, and Brighthouse Services, LLC. Liquid assets are comprised of 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 assets held in trust.

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.

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.

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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

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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.
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

bhf-20191104_g1a.jpg
Condensed Statements of Operations (Unaudited, in millions)
For the Three Months Ended
RevenuesJune 30,
2021
March 31,
2021
June 30,
2020
Premiums$162$184$193
Universal life and investment-type product policy fees919930827
Net investment income1,2121,187652
Other revenues10112793
Revenues before NIGL and NDGL2,3942,4281,765
Net investment gains (losses)(34)14(34)
Net derivative gains (losses)(684)(1,504)(2,653)
Total revenues$1,676$938$(922)
Expenses
Interest credited to policyholder account balances$287$297$276
Policyholder benefits and claims752756839
Amortization of DAC and VOBA891(92)
Interest expense on debt404145
Other expenses568521532
Total expenses1,6551,7061,600
Income (loss) before provision for income tax21(768)(2,522)
Provision for income tax expense (benefit)(10)(185)(531)
Net income (loss)31(583)(1,991)
Less: Net income (loss) attributable to noncontrolling interests2
Net income (loss) attributable to Brighthouse Financial, Inc.31(585)(1,991)
Less: Preferred stock dividends21257
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders$10$(610)$(1,998)




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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

bhf-20191104_g1a.jpg
Condensed Balance Sheets (Unaudited, in millions)
As of
ASSETSJune 30,
2021
March 31,
2021
June 30,
2020
Investments:
Fixed maturity securities available-for-sale$84,785$78,971$76,796
Equity securities91106129
Mortgage loans16,73215,69015,791
Policy loans1,2551,2451,201
Limited partnerships and limited liability companies3,5463,2192,354
Short-term investments1,2931,6734,537
Other invested assets2,8632,2676,364
Total investments110,565103,171107,172
Cash and cash equivalents4,8824,0257,325
Accrued investment income827734664
Reinsurance recoverables15,29015,25714,359
Premiums and other receivables837872859
DAC and VOBA5,1225,1484,856
Current income tax recoverable1
Other assets494506532
Separate account assets115,839112,22499,599
Total assets$253,856$241,937$235,367
LIABILITIES AND EQUITY
Liabilities
Future policy benefits$43,427$42,426$41,841
Policyholder account balances60,30055,15250,338
Other policy-related balances3,3563,3553,152
Payables for collateral under securities loaned and other transactions5,1434,2817,876
Long-term debt3,4363,4353,979
Current income tax payable150152
Deferred income tax liability1,1098122,567
Other liabilities4,9165,0185,041
Separate account liabilities115,839112,22499,599
Total liabilities237,676226,855214,393
Equity
Preferred stock, at par value
Common stock, at par value111
Additional paid-in capital13,84213,85813,307
Retained earnings (deficit)(1,088)(1,119)3,523
Treasury stock(1,236)(1,112)(887)
Accumulated other comprehensive income (loss)4,5963,3894,965
Total Brighthouse Financial, Inc.’s stockholders’ equity16,11515,01720,909
Noncontrolling interests656565
Total equity16,18015,08220,974
Total liabilities and equity$253,856$241,937$235,367
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PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

bhf-20191104_g1a.jpg
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 ITEMSJune 30,
2021
March 31,
2021
June 30,
2020
Net income (loss) available to shareholders$10$(610)$(1,998)
Less: Net investment gains (losses)(34)14(34)
Less: Net derivative gains (losses), excluding investment hedge adjustments(689)(1,509)(2,657)
Less: GMIB Fees and GMIB Costs75122(125)
Less: Amortization of DAC and VOBA12884249
Less: Market value adjustments and other(19)3124
Less: Provision for income tax (expense) benefit on reconciling adjustments114263534
Adjusted earnings43538511
Less: Notable items(23)(43)(28)
Adjusted earnings, less notable items$458$428$39
ADJUSTED EARNINGS, LESS NOTABLE ITEMS PER COMMON SHARE (1)
Net income (loss) available to shareholders per common share$0.11$(6.96)$(21.10)
Less: Net investment gains (losses)(0.40)0.16(0.36)
Less: Net derivative gains (losses), excluding investment hedge adjustments(8.01)(17.23)(28.06)
Less: GMIB Fees and GMIB Costs0.871.39(1.32)
Less: Amortization of DAC and VOBA1.490.962.63
Less: Market value adjustments and other(0.22)0.350.25
Less: Provision for income tax (expense) benefit on reconciling adjustments1.323.005.64
Less: Impact of inclusion of dilutive shares0.03
Adjusted earnings per common share5.054.360.11
Less: Notable items(0.27)(0.49)(0.30)
Adjusted earnings, less notable items per common share$5.32$4.86$0.41
(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. See Non-GAAP and Other Financial Disclosures discussion in this news release.

15



PUBLIC RELATIONS

Brighthouse Financial, Inc.
11225 N. Community House Rd.
Charlotte, NC 28277

bhf-20191104_g1a.jpg
Reconciliation of Net Investment Income to Adjusted Net Investment Income (Unaudited, in millions)
For the Three Months Ended
June 30,
2021
March 31,
2021
June 30,
2020
Net investment income$1,212$1,187$652
Less: Investment hedge adjustments(5)(5)(4)
Adjusted net investment income$1,217$1,192$656


Notable Items (Unaudited, in millions)
For the Three Months Ended
NOTABLE ITEMS IMPACTING ADJUSTED EARNINGSJune 30,
2021
March 31,
2021
June 30,
2020
Actuarial items and other insurance adjustments$—$29$—
Establishment costs231428
Total notable items (1)$23$43$28
NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER
Annuities$—$—$—
Life
Run-off29
Corporate & Other231428
Total notable items (1)$23$43$28
(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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