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  • Brighthouse Financial Announces Second Quarter 2019 Results

    August 6, 2019 by Brighthouse Financial

    CHARLOTTE, N.C.–(BUSINESS WIRE)–Brighthouse Financial, Inc. (“Brighthouse Financial” or the “company”) (Nasdaq: BHF) announced today its financial results for the second quarter ended June 30, 2019.

    Second Quarter 2019 Results

    The company reported net income available to shareholders of $377 million in the second quarter of 2019, or $3.27 on a per diluted share basis, compared to a net loss available to shareholders of $239 million in the second quarter of 2018. The company ended the second quarter of 2019 with common stockholders’ equity (“book value”) of $15.9 billion, or $140.83 on a per common share basis, and book value, excluding accumulated other comprehensive income (“AOCI”) of $13.2 billion, or $116.85 on a per common share basis.

    For the second quarter of 2019, the company reported adjusted earnings* of $254 million, or $2.19 on a per diluted share basis.

    The adjusted earnings for the quarter reflected $42 million after-tax of unfavorable notable items, or $0.36 on a per diluted share basis, including:

    • $30 million after-tax in establishment costs related to planned technology and branding expenses associated with the company’s separation from its former parent company; and
    • $12 million after-tax impact related to reinsurance.

    Corporate expenses in the second quarter of 2019 were $242 million pre-tax, up from $225 million pre-tax in the first quarter of 2019.

    ______________________
    * 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 is 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 2019 Brighthouse Financial, Inc. Financial Supplement and/or the Second Quarter 2019 Brighthouse Financial, Inc. Earnings Call Presentation (which are available on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com). Additional information regarding notable items can be found on the last page of this news release.

    Annuity sales increased 34 percent quarter-over-quarter and 11 percent sequentially.

    During the second quarter of 2019, the company repurchased approximately $136 million of its common stock, with an additional $43 million of its common stock repurchased in July 2019. Since the announcement of the company’s first repurchase authorization in August 2018, the company has repurchased a total of $336 million of its common stock through July 2019.

    “We continued to execute our strategy during the second quarter of 2019 and are very pleased with our results. We delivered strong annuity sales, completed the repositioning of our investment portfolio and continued to repurchase our common stock,” said Eric Steigerwalt, president and CEO, Brighthouse Financial. “As we approach the second anniversary of becoming an independent, publicly-traded company, we remain focused on growing life and annuity sales, reducing expenses, effectively managing our capital and driving long-term shareholder value.”

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

    As of or For the Three Months Ended

    June 30, 2019

    June 30, 2018

    Total

    Per share

    Total

    Per share

    Net income (loss) available to shareholders (1)

    $377

    $3.27

    $(239)

    $(2.01)

    Adjusted earnings (1)

    $254

    $2.19

    $153

    $1.27

    Weighted average common shares outstanding – diluted

    115,536,654

    N/A

    120,200,149

    N/A

    Book value

    $15,864

    $140.83

    $13,435

    $112.17

    Book value, excluding AOCI

    $13,162

    $116.85

    $12,620

    $105.37

    Ending common shares outstanding

    112,644,952

    N/A

    119,773,106

    N/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.

    Results by Business Segment and Corporate & Other (Unaudited, in millions)

    For the Three Months Ended

    Adjusted earnings

    June 30,
    2019

    March 31,
    2019

    June 30,
    2018

    Annuities

    $265

    $295

    $221

    Life

    $58

    $25

    $37

    Run-off (1)

    $2

    $(36)

    $(6)

    Corporate & Other (1)

    $(71)

    $(52)

    $(99)

    (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,
    2019

    March 31,
    2019

    June 30,
    2018

    Annuities (1)

    $1,890

    $1,707

    $1,412

    Life

    $1

    $1

    $2

    (1) Annuities sales include sales of a fixed indexed annuity product sold by Massachusetts Mutual Life Insurance Company, representing 90% of gross sales of that product. Sales of this product were $291 million for the second quarter of 2019, $281 million for the first quarter of 2019, and $272 million for the second quarter of 2018.

    Annuities

    Adjusted earnings in the Annuities segment were $265 million in the current quarter, compared to adjusted earnings of $221 million in the second quarter of 2018 and adjusted earnings of $295 million in the first quarter of 2019.

    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 and lower expenses, partially offset by lower fees. On a sequential basis, adjusted earnings reflect higher deferred acquisition costs (“DAC”) amortization, as well as higher reserves and expenses, partially offset by higher net investment income and higher fees.

    As mentioned above, annuity sales increased 34 percent quarter-over-quarter and 11 percent sequentially.

    Life

    Adjusted earnings in the Life segment were $58 million in the current quarter, compared to adjusted earnings of $37 million in the second quarter of 2018 and adjusted earnings of $25 million in the first quarter of 2019.

    There were no notable items in the current quarter or the comparison quarters.

    On a quarter-over-quarter basis, adjusted earnings reflect lower expenses partially offset by lower fees. On a sequential basis, adjusted earnings reflect higher net investment income and lower claims driven by higher reinsurance recoveries, partially offset by higher DAC amortization.

    Run-off

    The Run-off segment had adjusted earnings of $2 million in the current quarter, compared to an adjusted loss of $6 million in the second quarter of 2018 and an adjusted loss of $36 million in the first quarter of 2019.

    The current quarter included a $12 million unfavorable reinsurance notable item. There were no notable items in the second quarter of 2018 or the first quarter of 2019.

    On a quarter-over-quarter basis, adjusted earnings, less notable items, reflect higher net investment income and lower expenses, partially offset by higher claims. On a sequential basis, adjusted earnings, less notable items, reflect higher net investment income.

    Corporate & Other

    Corporate & Other had an adjusted loss of $71 million in the current quarter, compared to an adjusted loss of $99 million in the second quarter of 2018 and an adjusted loss of $52 million in the first quarter of 2019.

    The current quarter includes a $30 million unfavorable notable item related to establishment costs, as described above. The second quarter of 2018 included a $44 million unfavorable notable item and the first quarter of 2019 included a $27 million unfavorable notable item, both also related to establishment costs.

    On a quarter-over-quarter basis, the adjusted loss, less notable items, reflects lower expenses and higher net investment income, partially offset by higher interest expense. On a sequential basis, the adjusted loss, less notable items, reflects higher expenses.

    Net Investment Income and Adjusted Net Investment Income (Unaudited, in millions)

    For the Three Months Ended

    June 30,
    2019

    March 31,
    2019

    June 30,
    2018

    Net investment income

    $942

    $811

    $806

    Adjusted net investment income*

    $942

    $811

    $812

    Net Investment Income

    Net investment income and adjusted net investment income for the second quarter of 2019 were each $942 million. On a quarter-over-quarter and sequential basis, adjusted net investment income increased $130 million and $131 million, respectively. The quarter-over-quarter results were primarily driven by asset growth, higher alternative investment income and prepayments, and repositioning of the investment portfolio. On a sequential basis, the results were primarily driven by higher alternative investment income and prepayments, as well as asset growth.

    The net investment income yield was 4.67 percent during the quarter.

    Statutory Capital and Liquidity (Unaudited, in billions)

    As of

    June 30,
    2019 (1)

    March 31,
    2019

    June 30,
    2018

    Statutory combined total adjusted capital

    $6.9

    $6.3

    $6.0

    (1) Reflects preliminary statutory results as of June 30, 2019.

    Capitalization

    Holding company liquid assets were approximately $0.9 billion at June 30, 2019.

    Statutory combined total adjusted capital on a preliminary basis increased to approximately $6.9 billion at June 30, 2019, driven primarily by net derivative mark-to-market gains.

    Variable annuity assets were approximately $1.5 billion above the CTE98 level at June 30, 2019.

    Earnings Conference Call

    Brighthouse Financial will hold a conference call and audio webcast to discuss its financial results for the second quarter of 2019 at 8:00 a.m. Eastern Time on Tuesday, August 6, 2019.

    To listen to the audio webcast via the internet and to access the related presentation, please visit the Brighthouse Financial Investor Relations web page 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 7656195.

    A replay of the conference call will be made available until Friday, August 23, 2019 on the Brighthouse Financial Investor Relations web page at http://investor.brighthousefinancial.com.

    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, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operating and financial results, as well as statements regarding the expected benefits of the separation (the “Separation”) from MetLife, Inc. (“MetLife”).

    Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of Brighthouse Financial. These statements are based on current expectations and the current economic environment and involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others: differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models; higher risk management costs and exposure to increased market and counterparty risk due to guarantees within certain of our products; the effectiveness of our variable annuity exposure management strategy and the impact of such strategy on net income volatility and negative effects on our statutory capital; the reserves we are required to hold against our variable annuities as a result of actuarial guidelines; a sustained period of low equity market prices and interest rates that are lower than those we assumed when we issued our variable annuity products; the potential material adverse effect of changes in accounting standards, practices and/or policies applicable to us, including changes in the accounting for long-duration contracts; our degree of leverage due to indebtedness; the effect adverse capital and credit market conditions may have on our ability to meet liquidity needs and our access to capital; the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations; the effectiveness of our risk management policies and procedures; the availability of reinsurance and the ability of our counterparties to our reinsurance or indemnification arrangements to perform their obligations thereunder; heightened competition, including with respect to service, product features, scale, price, actual or perceived financial strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition; the ability of our insurance subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders; our ability to market and distribute our products through distribution channels; any failure of third parties to provide services we need, any failure of the practices and procedures of these third parties and any inability to obtain information or assistance we need from third parties, including MetLife; whether all or any portion of the tax consequences of the Separation are not as expected, leading to material additional taxes or material adverse consequences to tax attributes that impact us; the uncertainty of the outcome of any disputes with MetLife over tax-related or other matters and agreements, including the potential of outcomes adverse to us that could cause us to owe MetLife material tax reimbursements or payments, or disagreements regarding MetLife’s or our obligations under our other agreements; the impact on our business structure, profitability, cost of capital and flexibility due to restrictions we have agreed to that preserve the tax-free treatment of certain parts of the Separation; the potential material negative tax impact of potential future tax legislation that could decrease the value of our tax attributes and cause other cash expenses, such as reserves, to increase materially and make some of our products less attractive to consumers; whether the Separation will qualify for non-recognition treatment for federal income tax purposes and potential indemnification to MetLife if the Separation does not so qualify; the impact of the Separation on our business and profitability due to MetLife’s strong brand and reputation, the increased costs related to replacing arrangements with MetLife with those of third parties and incremental costs as a public company; whether the operational, strategic and other benefits of the Separation can be achieved, and our ability to implement our business strategy; our ability to attract and retain key personnel; and other factors described from time to time in documents that we file with the U.S. Securities and Exchange Commission (the “SEC”).

    For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements included and the risks, uncertainties and other factors identified in our Annual Report on Form 10-K for the year ended December 31, 2018 and our subsequent Quarterly Reports on Form 10-Q, particularly in the sections entitled “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk,” as well as in our other subsequent filings with the SEC. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

    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 earnings

    net income (loss) available to shareholders (1)

    adjusted earnings, less notable items

    net income (loss) available to shareholders (1)

    adjusted revenues

    revenues

    adjusted expenses

    expenses

    adjusted earnings per common share

    earnings per common share, diluted (1)

    adjusted earnings per common share, less notable items

    earnings per common share, diluted (1)

    adjusted return on common equity

    return on common equity (2)

    adjusted return on common equity, less notable items

    return on common equity (2)

    adjusted net investment income

    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.

    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 on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment (“Investment Hedge Adjustments”); and
    • Certain variable annuity GMIB fees (“GMIB Fees”) and amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses).

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

    • Amounts associated with benefits and hedging costs 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.

    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.

    Holding Company Liquid Assets

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

    Sales

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

    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.

    Adjusted Statutory Earnings

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

    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., we specialize in products designed to help people protect what they’ve earned and ensure it lasts. Learn more at brighthousefinancial.com.

    Condensed Statements of Operations (Unaudited, in millions)

    For the Three Months Ended

    Revenues

    June 30,
    2019

    March 31,
    2019

    June 30,
    2018

    Premiums

    $232

    $227

    $223

    Universal life and investment-type product policy fees

    888

    875

    962

    Net investment income

    942

    811

    806

    Other revenues

    96

    92

    98

    Revenues before NIGL and NDGL

    2,158

    2,005

    2,089

    Net investment gains (losses)

    63

    (11)

    (75)

    Net derivative gains (losses)

    149

    (1,303)

    (312)

    Total revenues

    $2,370

    $691

    $1,702

    Expenses

    Interest credited to policyholder account balances

    $265

    $258

    $269

    Policyholder benefits and claims

    845

    772

    813

    Amortization of DAC and VOBA

    170

    22

    246

    Interest expense on debt

    48

    47

    36

    Other expenses

    573

    545

    655

    Total expenses

    1,901

    1,644

    2,019

    Income (loss) before provision for income tax

    469

    (953)

    (317)

    Provision for income tax expense (benefit)

    85

    (218)

    (79)

    Net income (loss)

    384

    (735)

    (238)

    Less: Net income (loss) attributable to noncontrolling interests

    2

    1

    Net income (loss) attributable to Brighthouse Financial, Inc.

    384

    (737)

    (239)

    Less: Preferred stock dividends

    7

    Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders

    $377

    $(737)

    $(239)

    Condensed Balance Sheets (Unaudited, in millions)

    As of

    ASSETS

    June 30,
    2019

    March 31,
    2019

    June 30,
    2018

    Investments:

    Fixed maturity securities available-for-sale

    $67,211

    $64,847

    $62,343

    Equity securities

    153

    150

    153

    Mortgage loans, net

    15,078

    14,504

    12,337

    Policy loans

    1,342

    1,385

    1,458

    Real estate limited partnerships and limited liability companies

    462

    453

    449

    Other limited partnership interests

    1,834

    1,800

    1,706

    Short-term investments

    793

    799

    177

    Other invested assets

    3,064

    2,302

    2,305

    Total investments

    89,937

    86,240

    80,928

    Cash and cash equivalents

    3,981

    3,864

    2,135

    Accrued investment income

    747

    791

    607

    Reinsurance recoverables

    13,366

    13,098

    12,745

    Premiums and other receivables

    865

    928

    848

    DAC and VOBA

    5,492

    5,680

    5,968

    Current income tax recoverable

    814

    Other assets

    610

    618

    580

    Separate account assets

    106,214

    105,211

    111,587

    Total assets

    $221,212

    $216,430

    $216,212

    LIABILITIES AND EQUITY

    Liabilities

    Future policy benefits

    $38,280

    $37,157

    $35,816

    Policyholder account balances

    42,941

    41,177

    38,407

    Other policy-related balances

    3,041

    3,005

    2,941

    Payables for collateral under securities loaned and other transactions

    4,094

    3,990

    4,265

    Long-term debt

    4,365

    4,364

    3,607

    Current income tax payable

    14

    19

    Deferred income tax liability

    1,364

    1,005

    684

    Other liabilities

    4,558

    5,438

    5,405

    Separate account liabilities

    106,214

    105,211

    111,587

    Total liabilities

    204,871

    201,366

    202,712

    Equity

    Preferred Stock, at par value

    Common stock, at par value

    1

    1

    1

    Additional paid-in capital

    12,893

    12,889

    12,444

    Retained earnings (deficit)

    986

    609

    175

    Treasury stock

    (306)

    (170)

    Accumulated other comprehensive income (loss)

    2,702

    1,670

    815

    Total Brighthouse Financial, Inc.’s stockholders’ equity

    16,276

    14,999

    13,435

    Noncontrolling interests

    65

    65

    65

    Total equity

    16,341

    15,064

    13,500

    Total liabilities and equity

    $221,212

    $216,430

    $216,212

    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

    June 30,
    2019

    March 31,
    2019

    June 30,
    2018

    Net income (loss) available to shareholders

    $377

    $(737)

    $(239)

    Adjustments from net income (loss) available to shareholders to adjusted earnings:

    Less: Net investment gains (losses)

    63

    (11)

    (75)

    Less: Net derivative gains (losses), excluding investment hedge adjustments

    149

    (1,303)

    (316)

    Less: GMIB Fees and GMIB Costs

    (22)

    35

    (19)

    Less: Amortization of DAC and VOBA

    (17)

    75

    (96)

    Less: Market value adjustments

    (16)

    (23)

    8

    Less: Other

    1

    Less: Provision for income tax (expense) benefit on reconciling adjustments

    (34)

    258

    105

    Adjusted earnings

    254

    232

    153

    Less: Notable items

    (42)

    (27)

    (44)

    Adjusted earnings, less notable items

    $296

    $259

    $197

    ADJUSTED EARNINGS, LESS NOTABLE ITEMS PER COMMON SHARE (1)

    Net income (loss) available to shareholders per common share

    $3.27

    $(6.31)

    $(2.01)

    Less: Net investment gains (losses)

    0.55

    (0.09)

    (0.64)

    Less: Net derivative gains (losses), excluding investment hedge adjustments

    1.29

    (11.16)

    (2.64)

    Less: GMIB Fees and GMIB Costs

    (0.19)

    0.30

    (0.16)

    Less: Amortization of DAC and VOBA

    (0.15)

    0.64

    (0.80)

    Less: Market value adjustments

    (0.14)

    (0.20)

    0.07

    Less: Other

    0.01

    Less: Provision for income tax (expense) benefit on reconciling adjustments

    (0.29)

    2.21

    0.88

    Less: Impact of inclusion of dilutive shares

    0.01

    Adjusted earnings per common share

    2.19

    1.98

    1.27

    Less: Notable items

    (0.36)

    (0.23)

    (0.37)

    Adjusted earnings, less notable items per common share

    $2.56

    $2.21

    $1.64

    (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.

    Reconciliation of Net Investment Income to Adjusted Net Investment Income (Unaudited, in millions)

    For the Three Months Ended

    June 30,
    2019

    March 31,
    2019

    June 30,
    2018

    Net investment income

    $942

    $811

    $806

    Less: Investment hedge adjustments

    (3)

    Less: Other incremental net investment income

    (3)

    Adjusted net investment income

    $942

    $811

    $812

    Notable Items (Unaudited, in millions)

    For the Three Months Ended

    NOTABLE ITEMS IMPACTING ADJUSTED EARNINGS

    June 30,
    2019

    March 31,
    2019

    June 30,
    2018

    Actuarial items and other insurance adjustments

    $12

    $—

    $—

    Establishment costs

    30

    27

    44

    Total notable items (1)

    $42

    $27

    $44

    NOTABLE ITEMS BY SEGMENT AND CORPORATE & OTHER

    Annuities

    $—

    $—

    $—

    Life

    Run-off

    12

    Corporate & Other

    30

    27

    44

    Total notable items (1)

    $42

    $27

    $44

    (1) Notable items reflect the negative (positive) after-tax impact to adjusted earnings of certain unanticipated items and events, as well as certain items and events that were anticipated, such as establishment costs. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.

     

    Contacts

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

    FOR MEDIA 
    Meghan Lantier
    (980) 949-4142
    mlantier@brighthousefinancial.com

    Originally Posted at Business Wire on August 5, 2019 by Brighthouse Financial.

    Categories: Industry Articles
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