~~0000733076us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-03-31~~0000733076bhl:IntercompanyLiquidityFacilitiesMemberbhl:BrighthouseLifeInsuranceCompanyMember2023-05-16

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File Number: 033-03094

Brighthouse Life Insurance Company

(Exact name of registrant as specified in its charter)

Delaware

06-0566090

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

11225 North Community House Road, Charlotte, North Carolina

28277

(Address of principal executive offices)

(Zip Code)

(980) 365-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None


Title of each class	Trading symbol(s)	Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of ~~August 10,~~November 9, 2023, 3,000 shares of the registrant’s common stock were outstanding, all of which were owned indirectly by Brighthouse Financial, Inc.

REDUCED DISCLOSURE FORMAT

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is, therefore, filing this Form 10-Q with the reduced disclosure format.

Table of Contents


		Page
Part I — Financial Information
Item 1.	Consolidated Financial Statements (at ~~June~~September 30, 2023 (Unaudited) and December 31, 2022 and for the Three Months and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)):
	Interim Condensed Consolidated Balance Sheets	2
	Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	3
	Interim Condensed Consolidated Statements of Equity	4
	Interim Condensed Consolidated Statements of Cash Flows	5
	Notes to the Interim Condensed Consolidated Financial Statements (Unaudited):
	Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies	6
	Note 2 — ASU 2018-12 Transition	10
	Note 3 — Segment Information	13
	Note 4 — Insurance	17
	Note 5 — Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles	2426
	Note 6 — Investments	2628
	Note 7 — Derivatives	3739
	Note 8 — Fair Value	4345
	Note 9 — Long-term and Short-term Debt	5255
	Note 10 — Equity	5255
	Note 11 — Other Revenues and Other Expenses	5557
	Note 12 — Contingencies, Commitments and Guarantees	5658
	Note 13 — Related Party Transactions	5962
	~~Note 1~~4 ~~— Subsequent Event~~	60
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6164
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7275
Item 4.	Controls and Procedures	7276

Part II — Other Information
Item 1.	Legal Proceedings	7376
Item 1A.	Risk Factors	7376
Item 5.	Other Information	7376
Item 6.	Exhibits	7477

Signature		7578

Table of Contents

Part I — Financial Information

Item 1. Financial Statements

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Consolidated Balance Sheets

~~June~~September 30, 2023 (Unaudited) and December 31, 2022

(In millions, except share and per share data)


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Investments:	Investments:					Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $84,599 and $83,395, respectively; allowance for credit losses of $11 and $6, respectively)		$	76,727	$	74,757
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $85,353 and $83,395, respectively; allowance for credit losses of $22 and $6, respectively)						Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $85,353 and $83,395, respectively; allowance for credit losses of $22 and $6, respectively)	$	74,571	$	74,757
Equity securities, at estimated fair value	Equity securities, at estimated fair value	61		66		Equity securities, at estimated fair value	61		66
Mortgage loans (net of allowance for credit losses of $145 and $119, respectively)		22,579		22,877
Mortgage loans (net of allowance for credit losses of $137 and $119, respectively)						Mortgage loans (net of allowance for credit losses of $137 and $119, respectively)	22,648		22,877
Policy loans	Policy loans	903		898		Policy loans	920		898
Limited partnerships and limited liability companies	Limited partnerships and limited liability companies	4,913		4,774		Limited partnerships and limited liability companies	4,931		4,774

Short-term investments, principally at estimated fair value	Short-term investments, principally at estimated fair value	507		299		Short-term investments, principally at estimated fair value	489		299
Other invested assets, principally at estimated fair value (net of allowance for credit losses of $13 and $13, respectively)	Other invested assets, principally at estimated fair value (net of allowance for credit losses of $13 and $13, respectively)	3,672		2,984		Other invested assets, principally at estimated fair value (net of allowance for credit losses of $13 and $13, respectively)	3,209		2,984
Total investments	Total investments	109,362		106,655		Total investments	106,829		106,655
Cash and cash equivalents	Cash and cash equivalents	3,311		3,752		Cash and cash equivalents	3,339		3,752
Accrued investment income	Accrued investment income	1,007		868		Accrued investment income	1,121		868
Premiums, reinsurance and other receivables (net of allowance for credit losses of $10 and $10, respectively)		18,853		18,145
Premiums, reinsurance and other receivables (net of allowance for credit losses of $13 and $10, respectively)						Premiums, reinsurance and other receivables (net of allowance for credit losses of $13 and $10, respectively)	18,698		18,145
Deferred policy acquisition costs and value of business acquired	Deferred policy acquisition costs and value of business acquired	4,555		4,642		Deferred policy acquisition costs and value of business acquired	4,520		4,642
Current income tax recoverable	Current income tax recoverable	23		18		Current income tax recoverable	24		18
Deferred income tax asset	Deferred income tax asset	1,848		1,673		Deferred income tax asset	2,037		1,673
Market risk benefit assets	Market risk benefit assets	602		483		Market risk benefit assets	694		483
Other assets	Other assets	304		322		Other assets	293		322
Separate account assets	Separate account assets	81,901		78,880		Separate account assets	76,602		78,880
Total assets	Total assets	$	221,766	$	215,438	Total assets	$	214,157	$	215,438
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Liabilities	Liabilities					Liabilities
Future policy benefits	Future policy benefits	$	31,559	$	31,146	Future policy benefits	$	29,924	$	31,146
Policyholder account balances	Policyholder account balances	77,742		72,602		Policyholder account balances	77,474		72,602
Market risk benefit liabilities	Market risk benefit liabilities	9,806		10,411		Market risk benefit liabilities	8,850		10,411
Other policy-related balances	Other policy-related balances	3,569		3,860		Other policy-related balances	3,569		3,860
Payables for collateral under securities loaned and other transactions	Payables for collateral under securities loaned and other transactions	4,111		4,547		Payables for collateral under securities loaned and other transactions	3,924		4,547
Long-term and short-term debt	Long-term and short-term debt	837		963		Long-term and short-term debt	837		963

Other liabilities	Other liabilities	6,232		6,515		Other liabilities	7,608		6,515
Separate account liabilities	Separate account liabilities	81,901		78,880		Separate account liabilities	76,602		78,880
Total liabilities	Total liabilities	215,757		208,924		Total liabilities	208,788		208,924
Contingencies, Commitments and Guarantees (Note 12)	Contingencies, Commitments and Guarantees (Note 12)					Contingencies, Commitments and Guarantees (Note 12)
Equity	Equity					Equity
Brighthouse Life Insurance Company’s stockholder’s equity:	Brighthouse Life Insurance Company’s stockholder’s equity:					Brighthouse Life Insurance Company’s stockholder’s equity:
Common stock, par value $25,000 per share; 4,000 shares authorized; 3,000 shares issued and outstanding	Common stock, par value $25,000 per share; 4,000 shares authorized; 3,000 shares issued and outstanding	75		75		Common stock, par value $25,000 per share; 4,000 shares authorized; 3,000 shares issued and outstanding	75		75
Additional paid-in capital	Additional paid-in capital	17,773		17,773		Additional paid-in capital	17,773		17,773
Retained earnings (deficit)	Retained earnings (deficit)	(6,153)		(5,418)		Retained earnings (deficit)	(5,627)		(5,418)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(5,701)		(5,931)		Accumulated other comprehensive income (loss)	(6,867)		(5,931)
Total Brighthouse Life Insurance Company’s stockholder’s equity	Total Brighthouse Life Insurance Company’s stockholder’s equity	5,994		6,499		Total Brighthouse Life Insurance Company’s stockholder’s equity	5,354		6,499
Noncontrolling interests	Noncontrolling interests	15		15		Noncontrolling interests	15		15
Total equity	Total equity	6,009		6,514		Total equity	5,369		6,514
Total liabilities and equity	Total liabilities and equity	$	221,766	$	215,438	Total liabilities and equity	$	214,157	$	215,438

See accompanying notes to the interim condensed consolidated financial statements.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the Three Months and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)

(In millions)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Revenues	Revenues									Revenues
Premiums	Premiums	$	206	$	161	$	396	$	322	Premiums	$	192	$	160	$	588	$	482
Universal life and investment-type product policy fees	Universal life and investment-type product policy fees	471		469		945		995		Universal life and investment-type product policy fees	411		461		1,356		1,456
Net investment income	Net investment income	1,172		1,044		2,207		2,179		Net investment income	1,174		857		3,381		3,036
Other revenues	Other revenues	110		104		197		218		Other revenues	108		110		305		328
Net investment gains (losses)	Net investment gains (losses)	(65)		(64)		(161)		(131)		Net investment gains (losses)	(52)		(40)		(213)		(171)
Net derivative gains (losses)	Net derivative gains (losses)	(1,825)		1,980		(2,413)		1,919		Net derivative gains (losses)	(838)		(590)		(3,251)		1,329
Total revenues	Total revenues	69		3,694		1,171		5,502		Total revenues	995		958		2,166		6,460
Expenses	Expenses									Expenses
Policyholder benefits and claims (including liability remeasurement gains (losses) of $0, $0, $0, and $0 respectively)		652		696		1,296		1,323
Policyholder benefits and claims (including liability remeasurement gains (losses) of ($233), $34, ($233) and $34, respectively)										Policyholder benefits and claims (including liability remeasurement gains (losses) of ($233), $34, ($233) and $34, respectively)	463		555		1,759		1,878
Interest credited to policyholder account balances	Interest credited to policyholder account balances	446		277		862		519		Interest credited to policyholder account balances	420		399		1,282		918
Amortization of deferred policy acquisition costs and value of business acquired	Amortization of deferred policy acquisition costs and value of business acquired	142		143		284		284		Amortization of deferred policy acquisition costs and value of business acquired	141		143		425		427
Change in market risk benefits	Change in market risk benefits	(1,299)		(63)		(1,101)		(1,643)		Change in market risk benefits	(1,064)		(982)		(2,165)		(2,625)
Other expenses	Other expenses	410		489		804		881		Other expenses	388		411		1,192		1,292
Total expenses	Total expenses	351		1,542		2,145		1,364		Total expenses	348		526		2,493		1,890
Income (loss) before provision for income tax	Income (loss) before provision for income tax	(282)		2,152		(974)		4,138		Income (loss) before provision for income tax	647		432		(327)		4,570
Provision for income tax expense (benefit)	Provision for income tax expense (benefit)	(73)		419		(240)		831		Provision for income tax expense (benefit)	121		78		(119)		909
Net income (loss)	Net income (loss)	(209)		1,733		(734)		3,307		Net income (loss)	526		354		(208)		3,661
Less: Net income (loss) attributable to noncontrolling interests	Less: Net income (loss) attributable to noncontrolling interests	1		1		1		1		Less: Net income (loss) attributable to noncontrolling interests	—		—		1		1
Net income (loss) attributable to Brighthouse Life Insurance Company	Net income (loss) attributable to Brighthouse Life Insurance Company	$	(210)	$	1,732	$	(735)	$	3,306	Net income (loss) attributable to Brighthouse Life Insurance Company	$	526	$	354	$	(209)	$	3,660
Comprehensive income (loss)	Comprehensive income (loss)	$	(772)	$	263	$	(504)	$	(550)	Comprehensive income (loss)	$	(640)	$	(2,389)	$	(1,144)	$	(2,939)
Less: Comprehensive income (loss) attributable to noncontrolling interests	Less: Comprehensive income (loss) attributable to noncontrolling interests	1		1		1		1		Less: Comprehensive income (loss) attributable to noncontrolling interests	—		—		1		1
Comprehensive income (loss) attributable to Brighthouse Life Insurance Company	Comprehensive income (loss) attributable to Brighthouse Life Insurance Company	$	(773)	$	262	$	(505)	$	(551)	Comprehensive income (loss) attributable to Brighthouse Life Insurance Company	$	(640)	$	(2,389)	$	(1,145)	$	(2,940)

See accompanying notes to the interim condensed consolidated financial statements.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Consolidated Statements of Equity

For the Three Months and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)

(In millions)


		Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Brighthouse Life Insurance Company’s Stockholder’s Equity		Noncontrolling Interests		Total Equity			Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Brighthouse Life Insurance Company’s Stockholder’s Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2022	Balance at December 31, 2022	$	75	$	17,773	$	(5,418)	$	(5,931)	$	6,499	$	15	$	6,514	Balance at December 31, 2022	$	75	$	17,773	$	(5,418)	$	(5,931)	$	6,499	$	15	$	6,514
Net income (loss)						(525)				(525)				(525)
Other comprehensive income (loss), net of income tax								793		793				793
Balance at March 31, 2023		75		17,773		(5,943)		(5,138)		6,767		15		6,782
Change in noncontrolling interests	Change in noncontrolling interests									—		(1)		(1)		Change in noncontrolling interests									—		(1)		(1)
Net income (loss)	Net income (loss)					(210)				(210)		1		(209)		Net income (loss)					(735)				(735)		1		(734)
Other comprehensive income (loss), net of income tax	Other comprehensive income (loss), net of income tax							(563)		(563)				(563)		Other comprehensive income (loss), net of income tax							230		230				230
Balance at June 30, 2023	Balance at June 30, 2023	$	75	$	17,773	$	(6,153)	$	(5,701)	$	5,994	$	15	$	6,009	Balance at June 30, 2023	75		17,773		(6,153)		(5,701)		5,994		15		6,009
Change in noncontrolling interests																Change in noncontrolling interests									—		—		—
Net income (loss)																Net income (loss)					526				526		—		526
Other comprehensive income (loss), net of income tax																Other comprehensive income (loss), net of income tax							(1,166)		(1,166)				(1,166)
Balance at September 30, 2023																Balance at September 30, 2023	$	75	$	17,773	$	(5,627)	$	(6,867)	$	5,354	$	15	$	5,369


		Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Brighthouse Life Insurance Company’s Stockholder’s Equity		Noncontrolling Interests		Total Equity			Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Brighthouse Life Insurance Company’s Stockholder’s Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2021	Balance at December 31, 2021	$	75	$	17,773	$	(9,128)	$	(199)	$	8,521	$	15	$	8,536	Balance at December 31, 2021	$	75	$	17,773	$	(9,128)	$	(199)	$	8,521	$	15	$	8,536
Net income (loss)						1,574				1,574				1,574
Other comprehensive income (loss), net of income tax								(2,387)		(2,387)				(2,387)
Balance at March 31, 2022		75		17,773		(7,554)		(2,586)		7,708		15		7,723
Change in noncontrolling interests	Change in noncontrolling interests									—		(1)		(1)		Change in noncontrolling interests									—		(1)		(1)
Net income (loss)	Net income (loss)					1,732				1,732		1		1,733		Net income (loss)					3,306				3,306		1		3,307
Other comprehensive income (loss), net of income tax	Other comprehensive income (loss), net of income tax							(1,470)		(1,470)				(1,470)		Other comprehensive income (loss), net of income tax							(3,857)		(3,857)				(3,857)
Balance at June 30, 2022	Balance at June 30, 2022	$	75	$	17,773	$	(5,822)	$	(4,056)	$	7,970	$	15	$	7,985	Balance at June 30, 2022	75		17,773		(5,822)		(4,056)		7,970		15		7,985
Net income (loss)																Net income (loss)					354				354		—		354
Other comprehensive income (loss), net of income tax																Other comprehensive income (loss), net of income tax							(2,743)		(2,743)				(2,743)
Balance at September 30, 2022																Balance at September 30, 2022	$	75	$	17,773	$	(5,468)	$	(6,799)	$	5,581	$	15	$	5,596

See accompanying notes to the interim condensed consolidated financial statements.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Consolidated Statements of Cash Flows

For the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 (Unaudited)

(In millions)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	(504)	$	227	Net cash provided by (used in) operating activities	$	(161)	$	(688)
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Sales, maturities and repayments of:	Sales, maturities and repayments of:					Sales, maturities and repayments of:
Fixed maturity securities	Fixed maturity securities	2,948		6,221		Fixed maturity securities	4,560		8,442
Equity securities	Equity securities	9		41		Equity securities	16		41
Mortgage loans	Mortgage loans	549		1,379		Mortgage loans	880		1,767
Limited partnerships and limited liability companies	Limited partnerships and limited liability companies	81		134		Limited partnerships and limited liability companies	136		180
Purchases of:	Purchases of:					Purchases of:
Fixed maturity securities	Fixed maturity securities	(4,142)		(10,603)		Fixed maturity securities	(6,528)		(14,255)
Equity securities	Equity securities	(2)		(14)		Equity securities	(3)		(14)
Mortgage loans	Mortgage loans	(342)		(3,098)		Mortgage loans	(659)		(4,060)
Limited partnerships and limited liability companies	Limited partnerships and limited liability companies	(254)		(432)		Limited partnerships and limited liability companies	(336)		(619)
Cash received in connection with freestanding derivatives	Cash received in connection with freestanding derivatives	2,625		2,723		Cash received in connection with freestanding derivatives	3,990		3,737
Cash paid in connection with freestanding derivatives	Cash paid in connection with freestanding derivatives	(3,018)		(2,220)		Cash paid in connection with freestanding derivatives	(4,634)		(3,395)
Receipts on loans to affiliate	Receipts on loans to affiliate	125		—		Receipts on loans to affiliate	125		—
Issuances of loans to affiliate	Issuances of loans to affiliate	—		(125)		Issuances of loans to affiliate	—		(125)
Net change in policy loans	Net change in policy loans	(5)		(17)		Net change in policy loans	(23)		(17)
Net change in short-term investments	Net change in short-term investments	(200)		555		Net change in short-term investments	(177)		384
Net change in other invested assets	Net change in other invested assets	(83)		(58)		Net change in other invested assets	(115)		(101)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(1,709)		(5,514)		Net cash provided by (used in) investing activities	(2,768)		(8,035)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Policyholder account balances:	Policyholder account balances:					Policyholder account balances:
Deposits	Deposits	11,431		13,892		Deposits	15,929		23,155
Withdrawals	Withdrawals	(9,035)		(8,438)		Withdrawals	(12,699)		(14,202)
Net change in payables for collateral under securities loaned and other transactions	Net change in payables for collateral under securities loaned and other transactions	(436)		403		Net change in payables for collateral under securities loaned and other transactions	(623)		265
Long-term and short-term debt issued	Long-term and short-term debt issued	—		125		Long-term and short-term debt issued	—		125
Long-term and short-term debt repaid	Long-term and short-term debt repaid	(126)		(1)		Long-term and short-term debt repaid	(126)		(2)

Financing element on certain derivative instruments and other derivative related transactions, net	Financing element on certain derivative instruments and other derivative related transactions, net	(61)		(112)		Financing element on certain derivative instruments and other derivative related transactions, net	36		(137)
Other, net	Other, net	(1)		(1)		Other, net	(1)		(1)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	1,772		5,868		Net cash provided by (used in) financing activities	2,516		9,203
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	(441)		581		Change in cash, cash equivalents and restricted cash	(413)		480
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	3,752		3,904		Cash, cash equivalents and restricted cash, beginning of period	3,752		3,904
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	3,311	$	4,485	Cash, cash equivalents and restricted cash, end of period	$	3,339	$	4,384
Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information					Supplemental disclosures of cash flow information
Net cash paid (received) for:	Net cash paid (received) for:					Net cash paid (received) for:
Interest	Interest	$	38	$	34	Interest	$	70	$	67
Income tax	Income tax	$	1	$	93	Income tax	$	1	$	93

See accompanying notes to the interim condensed consolidated financial statements.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business

“BLIC” and the “Company” refer to Brighthouse Life Insurance Company, a Delaware corporation originally incorporated in Connecticut in 1863, and its subsidiaries. Brighthouse Life Insurance Company is a wholly-owned subsidiary of Brighthouse Holdings, LLC (“BH Holdings”) and an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. (“BHF” and together with its subsidiaries, “Brighthouse Financial”). BLIC offers a range of annuity and life insurance products to individuals. The Company is organized into three segments: Annuities; Life; and Run-off. In addition, the Company reports certain of its results of operations in Corporate & Other.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.

Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Brighthouse Life Insurance Company and its subsidiaries, as well as partnerships and limited liability companies (“LLC”) that the Company controls. Intercompany accounts and transactions have been eliminated.

The Company uses the equity method of accounting for investments in limited partnerships and LLCs when it has more than a minor ownership interest or more than a minor influence over the investee’s operations. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. When the Company has virtually no influence over the investee’s operations, the investment is carried at fair value.

Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a standalone entity.

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2022 consolidated balance sheet data was derived from audited consolidated financial statements included in Brighthouse Life Insurance Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2022 Annual Report.

Reclassifications

Certain amounts in the prior year period’s interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the 2023 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements. See “— Adoption of New Accounting Pronouncements” for discussion of the adoption of new guidance on long-duration contracts in the first quarter of 2023, parts of which were retrospectively applied to prior periods presented in the interim condensed consolidated financial statements.

Summary of Significant Accounting Policies

In connection with the adoption of new guidance on long-duration insurance contracts, the Company updated its impacted accounting policies as described below. See Note 1 of the Notes to the Consolidated Financial Statements included in the 2022 Annual Report for a description of the Company’s accounting policies that did not change.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Insurance Contract Obligations

The Company has obligations under insurance contracts to pay benefits over an extended period of time. The Company establishes liabilities for future obligations under long-duration insurance contracts based on the accounting model appropriate for each type of contract or contract feature. Liabilities for insurance contract benefits are generally accrued over time as revenue is recognized, or established based on the balance that accrues to the contract holder. In addition, certain insurance contracts may contain features that are required to be measured at fair value separately from the base contracts, either as a market risk benefit or embedded derivative.

The discussion below provides an overview of the different accounting models for insurance contract obligations and the applicability of such models to the Company’s insurance products.

Liability for Future Policy Benefits

The Company establishes a liability for future policy benefits (“LFPB”) for non-participating term and whole life insurance and income annuities. LFPBs are accrued over time as revenue is recognized based on a net premium ratio. The net premium ratio is the portion of gross premiums required to provide for all future benefits. LFPBs are established using the Company’s current assumptions of future cash flows, discounted at a rate that approximates a single A corporate bond curve. The Company generally aggregates insurance contracts into groupings by issue year, product and segment for determining the net premium ratio and related LFPBs.

The Company reviews cash flow assumptions regularly, and if they change significantly, LFPBs are adjusted by determining a revised net premium ratio. The revised net premium ratio is calculated as of contract inception using both actual historical experience and updated future cash flow assumptions. The recalculated net premium ratio is applied to derive a remeasurement gain or loss recognized in the current period net income. For insurance policies in-force as of December 31, 2020, January 1, 2021 is considered the contract inception date. The net premium ratio is also updated quarterly for the difference between actual and expected experience.

The net premium ratio is not updated for changes in discount rate assumptions, as changes in the discount rate are updated quarterly and the impacts are reflected in other comprehensive income (loss) (“OCI”). The discount rate assumption is determined by developing a yield curve based on market observable yields for upper-medium grade fixed income instruments derived from an external index. The yield curve is applied to the expected future cash flows used in the measurement of LFPBs based on the duration characteristics of those liabilities.

The most significant cash flow assumptions used in the establishment of LFPBs are mortality, policy lapses and market interest rates. See Note 4 for more information on the effect of changes in assumptions on the measurement of LFPBs.

The Company also establishes an LFPB for participating term and whole life insurance using a net premium ratio and the Company’s current assumptions of future cash flows. Assumptions are determined at issuance of the policy and are not updated unless a premium deficiency exists. A premium deficiency exists when the LFPB plus the present value of expected future gross premiums are less than expected future benefits and expenses (based on current assumptions). When a premium deficiency exists, the Company will reduce any deferred acquisition costs and may also establish an additional liability to eliminate the deficiency. See Note 4 for more information on assumptions used in establishing LFPBs related to participating term and whole life insurance.

Policyholder Account Balances

The Company establishes a policyholder account balance liability for customer deposits on universal life insurance, universal life insurance with secondary guarantees (“ULSG”) and deferred annuity contracts. The policyholder account balance liability is equal to the sum of deposits, plus interest credited, less charges and withdrawals, excluding the impact of any applicable charge that may be incurred upon surrender. The Company also holds additional liabilities for certain product features including secondary guarantees on universal life insurance contracts and the crediting rates associated with index-linked annuities.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Additional Liabilities for ULSG

The Company establishes a liability in addition to the account balance for secondary guarantees on universal life insurance. These liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the contract period based on total expected assessments. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. The Company also maintains a liability for profits followed by losses on ULSG determined by projecting future earnings and establishing a liability to offset losses that are expected to occur in later years. Both ULSG liabilities are adjusted for the effects of unrealized investment gains and losses.

The Company reviews cash flow assumptions regularly, and, if they change significantly, the liability for secondary guarantees is adjusted by a cumulative charge or credit to net income. Liabilities for secondary guarantees are presented within future policy benefits with changes in the liabilities reported in policyholder benefits and claims, except for the effects of unrealized investment gains and losses, which are reported in OCI.

The most significant assumptions used in estimating liabilities for secondary guarantees are the general account rate of return, premium persistency, mortality and lapses. See Note 4 for more information on the effect of changes in assumptions on the measurement of liabilities for secondary guarantees.

Market Risk Benefits on Annuity Guarantees

Market risk benefits (“MRB”) are contracts or contract features that provide protection to the policyholder from capital markets risk by transferring such risks to the Company. MRBs are required to be separated from the deferred annuity host contract and measured at fair value. The Company establishes MRB assets and liabilities for guaranteed minimum benefits on variable annuity contracts including guaranteed minimum death benefits (“GMDB”), guaranteed minimum income benefits (“GMIB”), guaranteed minimum accumulation benefits (“GMAB”) and guaranteed minimum withdrawal benefits (“GMWB”). MRB assets are also established for reinsured benefits related to these guarantees. Certain index-linked annuity products may also have guaranteed minimum benefits classified as MRBs.

The measurement of fair value includes an adjustment for the risk that the Company fails to satisfy its obligations, which is referred to as nonperformance risk, as well as risk margin to capture the non-capital markets risks of the instrument, which represents the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. MRBs are measured at estimated fair value, with changes reported in change in MRBs on the consolidated statements of operations, except for the change due to nonperformance risk, which is reported in OCI.

See Note 4 for more information on the effect of changes in inputs and assumptions on the measurement of MRBs and Note 8 for more information on the determination of fair value of MRBs.

Embedded Derivatives on Index-Linked Annuities

The Company issues, and assumes through reinsurance, index-linked annuities which allow the policyholder to participate in returns from certain specified equity indices. The crediting rates associated with these features are classified as embedded derivatives and measured at estimated fair value, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

Embedded derivative liabilities are required to be separated from the deferred annuity host contract and measured at fair value. The estimated fair value is determined using a combination of an option pricing model and an option-budget approach. Under this approach, the Company estimates the cost of funding the crediting rate using option pricing and establishes that cost on the balance sheet as a reduction to the initial deposit amount. The estimate of fair value includes an adjustment for nonperformance risk, as well as a risk margin.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Actuarial assumptions are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income. Capital market inputs used in the measurement of index-linked crediting rate embedded derivatives are updated quarterly through net income. The reduction to the initial deposit is accreted back up to the initial deposit over the estimated life of the contract. Embedded derivatives related to index-linked annuities are presented within policyholder account balances while changes in the estimated fair value are reported in net derivative gains (losses).

For more information on the determination of estimated fair value of embedded derivatives, see Note 8.

Recognition of Revenues and Deposits on Insurance Contracts

Premiums related to traditional long-duration contracts are recognized as revenues when due from policyholders. When premiums for income annuities are due over a significantly shorter period than the period over which policyholder benefits are incurred, the Company establishes a deferred profit liability (“DPL”) for the excess of the gross premium over the net premium. DPLs are amortized into net income in proportion to the amount of expected future benefit payments. Assumptions used in the measurement of the DPL are updated at the same time as the related LFPBs, with the updated estimates used to recalculate the DPL as of contract inception. The remeasurement gain or loss from updating DPLs is recognized in current period net income along with the related change in LFPBs.

Deposits related to universal life insurance, deferred annuity contracts and investment contracts are credited to policyholder account balances. Revenues from such contracts consist of asset-based investment management fees, cost of insurance charges, risk charges, policy administration fees and surrender charges. These fees, which are included in universal life and investment-type product policy fees, are recognized when assessed to the contract holder, except for non-level insurance charges which are deferred by the establishment of an unearned revenue liability and amortized over the expected life of the contracts.

Premiums and policy fees are presented net of reinsurance.

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are directly related to the successful acquisition or renewal of insurance contracts are capitalized as deferred policy acquisition costs (“DAC”). These costs mainly consist of commissions and include the portion of employees’ compensation and benefits related to time spent selling, underwriting or processing the issuance of new insurance contracts. All other acquisition-related costs are expensed as incurred.

Value of business acquired (“VOBA”) is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity and investment-type contracts in-force as of the acquisition date.

The Company amortizes DAC and VOBA in a manner that approximates a straight-line basis over the expected life of the related contracts. For life insurance contracts, amortization is based on projections of amounts of insurance in-force, while projections of policy counts are used for deferred annuity contracts and expected future benefits payments for income annuities. These assumptions are reviewed at least annually, and if they change significantly, updates are recognized through changes to future amortization. VOBA balances are tested annually to determine if the balance is deemed unrecoverable from expected future profits. All changes in DAC and VOBA balances are recorded to net income.

Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of an existing contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If a modification is considered to have substantially changed the contract, the associated DAC or VOBA is written off immediately through net income and any new acquisition costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC or VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed.

The Company also has intangible assets representing deferred sales inducements (“DSI”), which are included in other assets, and unearned revenue liabilities, which are included in other policy-related balances. The Company defers sales inducements and unearned revenue and amortizes the balances using the same methodology and assumptions used to amortize DAC and VOBA.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Adoption of New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Except as noted below, there were no significant ASUs adopted during the period ended ~~June~~September 30, 2023.

In March 2022, the FASB issued new guidance on Troubled Debt Restructurings (“TDR”) (ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures). This ASU eliminates TDR recognition and measurement guidance and, instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. The Company adopted this guidance on January 1, 2023. This ASU was applied prospectively and did not have a material impact on the consolidated financial statements upon adoption but could change the future recognition and measurement of modified loans and other receivables.

In August 2018, the FASB issued new guidance on long-duration contracts (ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“LDTI”)). LDTI is effective for fiscal years beginning after January 1, 2023. LDTI resulted in significant changes to the measurement, presentation and disclosure requirements for long-duration insurance contracts. A summary of the most significant changes is provided below:

(1) Guaranteed benefits associated with variable annuity and certain fixed annuity contracts have been classified and presented separately on the consolidated balance sheets as MRBs. MRBs are now measured at estimated fair value through net income and reported separately on the consolidated statements of operations, except for nonperformance risk changes, which will be recognized in OCI.

(2) Cash flow assumptions used to measure LFPBs on traditional long-duration contracts (including term and non-participating whole life insurance and immediate annuities) have been updated on an annual basis using a retrospective method. The resulting remeasurement gain or loss is now reported separately on the consolidated statements of operations along with the remeasurement gain or loss on universal life-type contract liabilities.

(3) The discount rate assumption used to measure the liability for traditional long-duration contracts is now based on an upper-medium grade fixed income yield, updated quarterly, with changes recognized in OCI.

(4) DAC for all insurance products are required to be amortized on a constant-level basis over the expected term of the contracts, using amortization methods that are not a function of revenue or profit emergence. Changes in assumptions used to amortize DAC have been recognized as a revision to future amortization amounts.

(5) There was a significant increase in required disclosures, including disaggregated rollforwards of insurance contract assets and liabilities supplemented by qualitative and quantitative information regarding the cash flows, assumptions, methods and judgements used to measure those balances.

The transition date was January 1, 2021. MRB changes were required to be applied on a retrospective basis, while the changes for insurance liability assumption updates and DAC amortization were applied to existing carrying amounts on the transition date.

The cumulative effect, on an after-tax basis, of the adoption of ASU 2018-12 as of the transition date was a $5.2 billion decrease to retained earnings and a $3.9 billion decrease to accumulated other comprehensive income (loss) (“AOCI”). See Note 2 for more detailed information on the impacts of the ASU to the Company’s financial statements.

2. ASU 2018-12 Transition

The Company adopted ASU 2018-12 for LFPBs, DAC and other balances amortized on a basis consistent with DAC by applying the guidance to contracts in-force on the basis of their existing carrying amounts at the transition date. The Company adopted ASU 2018-12 for MRBs on a fully retrospective basis.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)

The effect of transition adjustments on stockholder’s equity at January 1, 2021 due to the adoption of ASU 2018-12 was as follows:


	Retained Earnings (Deficit)		AOCI
	(In millions)
Liability for future policy benefits	$	(434)	$	(2,053)
Market risk benefits and related adjustments	(5,971)		(3,452)
DAC and VOBA	—		494
Reinsurance recoverables	(141)		30
Deferred income tax asset	1,375		1,046
Total	$	(5,171)	$	(3,935)

For LFPBs, the transition adjustment to retained earnings relates to instances where net premiums exceed gross premiums resulting in LFPBs being increased to eliminate the premium deficiency. The premium deficiency primarily relates to structured settlement annuities. The transition adjustment related to AOCI represents the effect of the requirement to discount LFPBs based on an upper-medium grade fixed income rate as well as the removal of amounts previously recorded in AOCI for the effects of unrealized investment gains and losses.

For MRBs, the transition adjustment to AOCI relates to the cumulative effect of changes in the nonperformance risk between contract issue date and transition date. In aggregate, the additional spread applied to the risk-free rate decreased from contract inception to the transition date, which had a negative impact on equity. The remaining difference between the estimated fair value and carrying amount of MRBs at transition, excluding the amounts recorded in AOCI, was recorded as an adjustment to retained earnings as of the transition date.

For DAC and VOBA, the Company removed amounts previously recorded in AOCI for the effect of unrealized investment gains and losses.

For reinsurance, the adjustments to both retained earnings and AOCI were made to align the measurement of reinsurance recoverables with the related LFPBs.

The balances of and changes in LFPBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Term and Whole Life Insurance		Income Annuities		Structured Settlement and Pension Risk Transfer Annuities
	(In millions)
Balance at December 31, 2020	$	2,797	$	4,260	$	10,115
Removal of related balances in AOCI	—		(203)		(1,784)
Change in cash flow assumptions	13		(168)		200
Initial recognition of deferred profit liabilities	—		172		217
Change in discount rate assumptions	522		748		2,770
Adjusted balance at January 1, 2021	3,332		4,809		11,518
Less: Reinsurance recoverable	59		29		102
Adjusted balance at January 1, 2021, net of reinsurance	$	3,273	$	4,780	$	11,416

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)

The balance of and changes in liabilities classified as MRBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Variable Annuities
	(In millions)
Balance at December 31, 2020	$	8,622
Adjustment for the difference between carrying amount and estimated fair value, except for the difference due to nonperformance risk	6,347
Adjustment for cumulative effect of changes in nonperformance risk since issuance	3,452
Adjusted balance at January 1, 2021	18,421
Less: Reinsurance recoverable	169
Adjusted balance at January 1, 2021, net of reinsurance	$	18,252

The balances of and changes in DAC and VOBA on January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Variable Annuities		Fixed Rate Annuities		Index-Linked Annuities		Term and Whole Life Insurance		Universal Life Insurance
	(In millions)
DAC:
Balance at December 31, 2020	$	2,326	$	64	$	886	$	451	$	144
Removal of related amounts in AOCI	460		—		—		—		(37)
Adjusted balance at January 1, 2021	$	2,786	$	64	$	886	$	451	$	107
VOBA:
Balance at December 31, 2020	$	363	$	76	$	—	$	8	$	38
Removal of related amounts in AOCI	65		—		—		—		6
Adjusted balance at January 1, 2021	$	428	$	76	$	—	$	8	$	44

The following tables present amounts previously reported in 2022 and 2021, the effect on those amounts of the change due to the adoption of ASU 2018-12 as described in Note 1, and the currently reported amounts in the Unaudited Interim Consolidated Balance Sheets and Unaudited Interim Consolidated Statements of Operations and Comprehensive Income (Loss). See Notes 4 and 5 for more information.


	December 31, 2022						December 31, 2021
	As Previously Reported		Effect of Change		As Currently Reported		As Previously Reported		Effect of Change		As Currently Reported
	(In millions)
Total assets	$	216,151	$	(713)	$	215,438	$	247,255	$	2,476	$	249,731
Future policy benefits	$	41,105	$	(9,959)	$	31,146	$	43,589	$	(3,759)	$	39,830
Policyholder account balances	$	74,112	$	(1,510)	$	72,602	$	66,195	$	(1,905)	$	64,290
Market risk benefit liabilities	$	—	$	10,411	$	10,411	$	—	$	16,062	$	16,062
Total liabilities	$	209,287	$	(363)	$	208,924	$	231,144	$	10,051	$	241,195
Retained earnings (deficit)	$	(5,717)	$	299	$	(5,418)	$	(5,653)	$	(3,475)	$	(9,128)
Accumulated other comprehensive income (loss)	$	(5,282)	$	(649)	$	(5,931)	$	3,901	$	(4,100)	$	(199)
Total equity	$	6,864	$	(350)	$	6,514	$	16,111	$	(7,575)	$	8,536
Total liabilities and equity	$	216,151	$	(713)	$	215,438	$	247,255	$	2,476	$	249,731

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)


	Year Ended December 31, 2022						Year Ended December 31, 2021
	As Previously Reported		Effect of Change		As Currently Reported		As Previously Reported		Effect of Change		As Currently Reported
	(In millions)
Universal life and investment-type product policy fees	$	2,562	$	(686)	$	1,876	$	2,986	$	(666)	$	2,320
Net derivative gains (losses)	$	402	$	(987)	$	(585)	$	(2,359)	$	(1,627)	$	(3,986)
Total revenues	$	7,832	$	(1,670)	$	6,162	$	6,400	$	(2,290)	$	4,110
Policyholder benefits and claims	$	4,143	$	(1,957)	$	2,186	$	3,213	$	(728)	$	2,485
Change in market risk benefits	$	—	$	(4,105)	$	(4,105)	$	—	$	(4,142)	$	(4,142)
Total expenses	$	8,103	$	(6,447)	$	1,656	$	6,404	$	(4,436)	$	1,968
Net income (loss)	$	(63)	$	3,774	$	3,711	$	67	$	1,696	$	1,763

3. Segment Information

The Company is organized into three segments: Annuities; Life; and Run-off. In addition, the Company reports certain of its results of operations in Corporate & Other.

Annuities

The Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security.

Life

The Life segment consists of insurance products, including term, universal, whole and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be on a tax-advantaged basis.

Run-off

The Run-off segment consists of products that are no longer actively sold and are separately managed, including ULSG, structured settlements, pension risk transfer contracts, certain company-owned life insurance policies and certain funding agreements.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments and interest expense related to the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes long-term care business reinsured through 100% quota share reinsurance agreements and activities related to funding agreements associated with the Company’s institutional spread margin business.

In connection with the adoption of ASU 2018-12, the Company reclassified direct-to-consumer life insurance that is no longer sold from Corporate & Other to the Life segment. The segment information below reflects the direct-to consumer life insurance in the Life segment for all periods presented.

~~Financial Measures~~Liability for Future Policy Benefits

The Company establishes a liability for future policy benefits (“LFPB”) for non-participating term and ~~Segment Accounting Policies~~whole life insurance and income annuities. LFPBs are accrued over time as revenue is recognized based on a net premium ratio. The net premium ratio is the portion of gross premiums required to provide for all future benefits. LFPBs are established using the Company’s current assumptions of future cash flows, discounted at a rate that approximates a single A corporate bond curve. The Company generally aggregates insurance contracts into groupings by issue year, product and segment for determining the net premium ratio and related LFPBs.

~~Adjusted earnings~~The Company reviews cash flow assumptions regularly, and if they change significantly, LFPBs are adjusted by determining a revised net premium ratio. The revised net premium ratio is calculated as of contract inception using both actual historical experience and updated future cash flow assumptions. The recalculated net premium ratio is applied to derive a ~~financial measure used by management to evaluate performance and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings~~remeasurement gain or loss recognized in the current period net income. For insurance policies in-force as of December 31, 2020, January 1, 2021 is considered the contract inception date. The net premium ratio is also updated quarterly for the difference between actual and expected experience.

The net premium ratio is not updated for changes in discount rate assumptions, as changes in the discount rate are updated quarterly and the impacts are reflected in other comprehensive income (loss) (“OCI”). The discount rate assumption is determined by developing a yield curve based on market observable yields for upper-medium grade fixed income instruments derived from an external index. The yield curve is applied to the expected future cash flows used ~~to measure segment performance.~~ in the measurement of LFPBs based on the duration characteristics of those liabilities.

The Company ~~believes~~also establishes an LFPB for participating term and whole life insurance using a net premium ratio and the ~~presentation~~Company’s current assumptions of ~~adjusted earnings, as~~future cash flows. Assumptions are determined at issuance of the policy and are not updated unless a premium deficiency exists. A premium deficiency exists when the LFPB plus the present value of expected future gross premiums are less than expected future benefits and expenses (based on current assumptions). When a premium deficiency exists, the Company ~~measures it~~will reduce any deferred acquisition costs and may also establish an additional liability to eliminate the deficiency. See Note 4 for ~~management purposes, enhances~~more information on assumptions used in establishing LFPBs related to participating term and whole life insurance.

Policyholder Account Balances

The Company establishes a policyholder account balance liability for customer deposits on universal life insurance, universal life insurance with secondary guarantees (“ULSG”) and deferred annuity contracts. The policyholder account balance liability is equal to the ~~understanding~~sum of ~~its performance by the investor community by highlighting the results of operations~~deposits, plus interest credited, less charges and ~~the underlying profitability drivers of the business.~~

~~Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses by~~withdrawals, excluding the impact of ~~market volatility, which could distort trends.~~any applicable charge that may be incurred upon surrender. The Company also holds additional liabilities for certain product features including secondary guarantees on universal life insurance contracts and the crediting rates associated with index-linked annuities.

137

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

~~3. Segment Information~~1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Additional Liabilities for ULSG

The ~~following~~Company establishes a liability in addition to the account balance for secondary guarantees on universal life insurance. These liabilities are ~~significant items excluded from~~determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the contract period based on total ~~revenues~~expected assessments. The benefits used in calculating ~~adjusted earnings:~~

•~~Net investment gains (losses); and~~

•Net derivative gains (losses), excluding 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”).

~~The following are significant items excluded from total expenses in calculating adjusted earnings:~~

•~~Change in MRBs; and~~

•~~Change in fair value of~~ the ~~crediting rate on experience-rated contracts (“Market Value Adjustments”).~~

The provision for income tax related to adjusted earnings is calculated using the statutory tax rate of 21%, net of impacts related to the dividends received deduction, tax credits and current period non-recurring items.

~~The Company’s adjusted earnings definition and presentation has been updated for all periods presented to reflect the adoption of ASU 2018-12.~~

The segment accounting policies are the same as those used to prepare the Company’s interim condensed consolidated financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below.

~~Segment investment and capitalization targets are based on statutory oriented risk principles and metrics. Segment invested assets backing~~ liabilities are based on the average benefits payable over a range of scenarios. The Company also maintains a liability for profits followed by losses on ULSG determined by projecting future earnings and establishing a liability to offset losses that are expected to occur in later years. Both ULSG liabilities are adjusted for the effects of unrealized investment gains and losses.

The Company reviews cash flow assumptions regularly, and, if they change significantly, the liability for secondary guarantees is adjusted by a cumulative charge or credit to net ~~statutory~~income. Liabilities for secondary guarantees are presented within future policy benefits with changes in the liabilities ~~plus excess capital. For~~reported in policyholder benefits and claims, except for the effects of unrealized investment gains and losses, which are reported in OCI.

Market Risk Benefits on Annuity Guarantees

Market risk benefits (“MRB”) are contracts or contract features that provide protection to the policyholder from capital markets risk by transferring such risks to the Company. MRBs are required to be separated from the deferred annuity host contract and measured at fair value. The Company establishes MRB assets and liabilities for guaranteed minimum benefits on variable annuity ~~business,~~contracts including guaranteed minimum death benefits (“GMDB”), guaranteed minimum income benefits (“GMIB”), guaranteed minimum accumulation benefits (“GMAB”) and guaranteed minimum withdrawal benefits (“GMWB”). MRB assets are also established for reinsured benefits related to these guarantees. Certain index-linked annuity products may also have guaranteed minimum benefits classified as MRBs.

The measurement of fair value includes an adjustment for the ~~excess capital held~~risk that the Company fails to satisfy its obligations, which is ~~based on the target statutory total asset requirement consistent with the Company’s variable annuity~~referred to as nonperformance risk, management strategy. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets.

~~Operating results by segment,~~ as well as ~~Corporate & Other, were~~risk margin to capture the non-capital markets risks of the instrument, which represents the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. MRBs are measured at estimated fair value, with changes reported in change in MRBs on the consolidated statements of operations, except for the change due to nonperformance risk, which is reported in OCI.

See Note 4 for more information on the effect of changes in inputs and assumptions on the measurement of MRBs and Note 8 for more information on the determination of fair value of MRBs.

Embedded Derivatives on Index-Linked Annuities

The Company issues, and assumes through reinsurance, index-linked annuities which allow the policyholder to participate in returns from certain specified equity indices. The crediting rates associated with these features are classified as ~~follows:~~embedded derivatives and measured at estimated fair value, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

Three Months Ended June 30, 2023
Annuities Life Run-off Corporate
& Other Total
(In millions)
Pre-tax adjusted earnings $ 338 $ 33 $ (22) $ (21) $ 328
Provision for income tax expense (benefit) 63 7 (5) (11) 54
Post-tax adjusted earnings 275 26 (17) (10) 274
Less: Net income (loss) attributable to noncontrolling interests — — — 1 1
Adjusted earnings $ 275 $ 26 $ (17) $ (11) 273
Adjustments for:
Net investment gains (losses) (65)
Net derivative gains (losses), excluding investment hedge adjustments of $22 (1,847)
Change in market risk benefits 1,299
Market value adjustments 3
Provision for income tax (expense) benefit 127
Net income (loss) attributable to Brighthouse Life Insurance Company $ (210)
Interest revenue $ 630 $ 107 $ 317 $ 140
Interest expense $ — $ — $ — $ 18
Embedded derivative liabilities are required to be separated from the deferred annuity host contract and measured at fair value. The estimated fair value is determined using a combination of an option pricing model and an option-budget approach. Under this approach, the Company estimates the cost of funding the crediting rate using option pricing and establishes that cost on the balance sheet as a reduction to the initial deposit amount. The estimate of fair value includes an adjustment for nonperformance risk, as well as a risk margin.

148

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

~~3. Segment Information~~1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Three Months Ended June 30, 2022
Annuities Life Run-off Corporate
& Other Total
(In millions)
Pre-tax adjusted earnings $ 386 $ 23 $ (199) $ (59) $ 151
Provision for income tax expense (benefit) 73 5 (42) (38) (2)
Post-tax adjusted earnings 313 18 (157) (21) 153
Less: Net income (loss) attributable to noncontrolling interests — — — 1 1
Adjusted earnings $ 313 $ 18 $ (157) $ (22) 152
Adjustments for:
Net investment gains (losses) (64)
Net derivative gains (losses), excluding investment hedge adjustments of $9 1,971
Change in market risk benefits 63
Market value adjustments 31
Provision for income tax (expense) benefit (421)
Net income (loss) attributable to Brighthouse Life Insurance Company $ 1,732
Interest revenue $ 544 $ 103 $ 350 $ 56
Interest expense $ — $ — $ — $ 16
Actuarial assumptions are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income. Capital market inputs used in the measurement of index-linked crediting rate embedded derivatives are updated quarterly through net income. The reduction to the initial deposit is accreted back up to the initial deposit over the estimated life of the contract. Embedded derivatives related to index-linked annuities are presented within policyholder account balances while changes in the estimated fair value are reported in net derivative gains (losses).

For more information on the determination of estimated fair value of embedded derivatives, see Note 8.

Six Months Ended June 30, 2023
Annuities Life Run-off Corporate
& Other Total
(In millions)
Pre-tax adjusted earnings $ 700 $ 59 $ (155) $ (39) $ 565
Provision for income tax expense (benefit) 131 12 (33) (27) 83
Post-tax adjusted earnings 569 47 (122) (12) 482
Less: Net income (loss) attributable to noncontrolling interests — — — 1 1
Adjusted earnings $ 569 $ 47 $ (122) $ (13) 481
Adjustments for:
Net investment gains (losses) (161)
Net derivative gains (losses), excluding investment hedge adjustments of $61 (2,474)
Change in market risk benefits 1,101
Market value adjustments (5)
Provision for income tax (expense) benefit 323
Net income (loss) attributable to Brighthouse Life Insurance Company $ (735)
Interest revenue $ 1,222 $ 196 $ 571 $ 279
Interest expense $ — $ — $ — $ 36
Recognition of Revenues and Deposits on Insurance Contracts

Premiums and policy fees are presented net of reinsurance.

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

159

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

~~3. Segment Information~~1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Six Months Ended June 30, 2022
Annuities Life Run-off Corporate
& Other Total
(In millions)
Pre-tax adjusted earnings $ 814 $ 112 $ (169) $ (104) $ 653
Provision for income tax expense (benefit) 155 23 (36) (43) 99
Post-tax adjusted earnings 659 89 (133) (61) 554
Less: Net income (loss) attributable to noncontrolling interests — — — 1 1
Adjusted earnings $ 659 $ 89 $ (133) $ (62) 553
Adjustments for:
Net investment gains (losses) (131)
Net derivative gains (losses), excluding investment hedge adjustments of $15 1,904
Change in market risk benefits 1,643
Market value adjustments 69
Provision for income tax (expense) benefit (732)
Net income (loss) attributable to Brighthouse Life Insurance Company $ 3,306
Interest revenue $ 1,097 $ 249 $ 751 $ 97
Interest expense $ — $ — $ — $ 33
Adoption of New Accounting Pronouncements

~~Total revenues~~Changes to GAAP are established by ~~segment,~~the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Except as ~~well~~noted below, there were no significant ASUs adopted during the period ended September 30, 2023.

(1) Guaranteed benefits associated with variable annuity and certain fixed annuity contracts have been classified and presented separately on the consolidated balance sheets as ~~Corporate & Other,~~MRBs. MRBs are now measured at estimated fair value through net income and reported separately on the consolidated statements of operations, except for nonperformance risk changes, which will be recognized in OCI.

The cumulative effect, on an after-tax basis, of the adoption of ASU 2018-12 as ~~follows:~~of the transition date was a $5.2 billion decrease to retained earnings and a $3.9 billion decrease to accumulated other comprehensive income (loss) (“AOCI”). See Note 2 for more detailed information on the impacts of the ASU to the Company’s financial statements.

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
(In millions)
Annuities $ 1,133 $ 1,007 $ 2,191 $ 2,074
Life 258 236 506 536
Run-off 449 488 829 1,022
Corporate & Other 141 56 280 97
Adjustments (1,912) 1,907 (2,635) 1,773
Total $ 69 $ 3,694 $ 1,171 $ 5,502

~~Total assets~~2. ASU 2018-12 Transition

The Company adopted ASU 2018-12 for LFPBs, DAC and other balances amortized on a basis consistent with DAC by ~~segment, as well as Corporate & Other, were as follows at:~~

June 30, 2023 December 31, 2022
(In millions)
Annuities $ 154,551 $ 148,228
Life 17,732 17,214
Run-off 28,645 28,466
Corporate & Other 20,838 21,530
Total $ 221,766 $ 215,438
applying the guidance to contracts in-force on the basis of their existing carrying amounts at the transition date. The Company adopted ASU 2018-12 for MRBs on a fully retrospective basis.

1610

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)

4.The effect of transition adjustments on stockholder’s equity at January 1, 2021 due to the adoption of ASU 2018-12 was as follows:


	Retained Earnings (Deficit)		AOCI
	(In millions)
Liability for future policy benefits	$	(434)	$	(2,053)
Market risk benefits and related adjustments	(5,971)		(3,452)
DAC and VOBA	—		494
Reinsurance recoverables	(141)		30
Deferred income tax asset	1,375		1,046
Total	$	(5,171)	$	(3,935)

For DAC and VOBA, the Company removed amounts previously recorded in AOCI for the effect of unrealized investment gains and losses.

For reinsurance, the adjustments to both retained earnings and AOCI were made to align the measurement of reinsurance recoverables with the related LFPBs.

The balances of and changes in LFPBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Term and Whole Life Insurance		Income Annuities		Structured Settlement and Pension Risk Transfer Annuities
	(In millions)
Balance at December 31, 2020	$	2,797	$	4,260	$	10,115
Removal of related balances in AOCI	—		(203)		(1,784)
Change in cash flow assumptions	13		(168)		200
Initial recognition of deferred profit liabilities	—		172		217
Change in discount rate assumptions	522		748		2,770
Adjusted balance at January 1, 2021	3,332		4,809		11,518
Less: Reinsurance recoverable	59		29		102
Adjusted balance at January 1, 2021, net of reinsurance	$	3,273	$	4,780	$	11,416

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)

The balance of and changes in liabilities classified as MRBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Variable Annuities
	(In millions)
Balance at December 31, 2020	$	8,622
Adjustment for the difference between carrying amount and estimated fair value, except for the difference due to nonperformance risk	6,347
Adjustment for cumulative effect of changes in nonperformance risk since issuance	3,452
Adjusted balance at January 1, 2021	18,421
Less: Reinsurance recoverable	169
Adjusted balance at January 1, 2021, net of reinsurance	$	18,252

The balances of and changes in DAC and VOBA on January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Variable Annuities		Fixed Rate Annuities		Index-Linked Annuities		Term and Whole Life Insurance		Universal Life Insurance
	(In millions)
DAC:
Balance at December 31, 2020	$	2,326	$	64	$	886	$	451	$	144
Removal of related amounts in AOCI	460		—		—		—		(37)
Adjusted balance at January 1, 2021	$	2,786	$	64	$	886	$	451	$	107
VOBA:
Balance at December 31, 2020	$	363	$	76	$	—	$	8	$	38
Removal of related amounts in AOCI	65		—		—		—		6
Adjusted balance at January 1, 2021	$	428	$	76	$	—	$	8	$	44


	December 31, 2022						December 31, 2021
	As Previously Reported		Effect of Change		As Currently Reported		As Previously Reported		Effect of Change		As Currently Reported
	(In millions)
Total assets	$	216,151	$	(713)	$	215,438	$	247,255	$	2,476	$	249,731
Future policy benefits	$	41,105	$	(9,959)	$	31,146	$	43,589	$	(3,759)	$	39,830
Policyholder account balances	$	74,112	$	(1,510)	$	72,602	$	66,195	$	(1,905)	$	64,290
Market risk benefit liabilities	$	—	$	10,411	$	10,411	$	—	$	16,062	$	16,062
Total liabilities	$	209,287	$	(363)	$	208,924	$	231,144	$	10,051	$	241,195
Retained earnings (deficit)	$	(5,717)	$	299	$	(5,418)	$	(5,653)	$	(3,475)	$	(9,128)
Accumulated other comprehensive income (loss)	$	(5,282)	$	(649)	$	(5,931)	$	3,901	$	(4,100)	$	(199)
Total equity	$	6,864	$	(350)	$	6,514	$	16,111	$	(7,575)	$	8,536
Total liabilities and equity	$	216,151	$	(713)	$	215,438	$	247,255	$	2,476	$	249,731

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)


	Year Ended December 31, 2022						Year Ended December 31, 2021
	As Previously Reported		Effect of Change		As Currently Reported		As Previously Reported		Effect of Change		As Currently Reported
	(In millions)
Universal life and investment-type product policy fees	$	2,562	$	(686)	$	1,876	$	2,986	$	(666)	$	2,320
Net derivative gains (losses)	$	402	$	(987)	$	(585)	$	(2,359)	$	(1,627)	$	(3,986)
Total revenues	$	7,832	$	(1,670)	$	6,162	$	6,400	$	(2,290)	$	4,110
Policyholder benefits and claims	$	4,143	$	(1,957)	$	2,186	$	3,213	$	(728)	$	2,485
Change in market risk benefits	$	—	$	(4,105)	$	(4,105)	$	—	$	(4,142)	$	(4,142)
Total expenses	$	8,103	$	(6,447)	$	1,656	$	6,404	$	(4,436)	$	1,968
Net income (loss)	$	(63)	$	3,774	$	3,711	$	67	$	1,696	$	1,763

3. Segment Information

The Company is organized into three segments: Annuities; Life; and Run-off. In addition, the Company reports certain of its results of operations in Corporate & Other.

Annuities

Life

Run-off

Corporate & Other

Liability for Future Policy Benefits

~~Information regarding LFPBs~~The Company establishes a liability for future policy benefits (“LFPB”) for non-participating ~~traditional~~term and ~~limited-payment contracts was as follows:~~

Six Months Ended June 30,
2023 2022
Term and Whole Life Insurance Income Annuities Structured Settlement and Pension Risk Transfer Annuities Term and Whole Life Insurance Income Annuities Structured Settlement and Pension Risk Transfer Annuities
(Dollars in millions)
Present value of expected net premiums:
Balance, beginning of period $ 2,804 $ — $ — $ 3,212 $ — $ —
Beginning balance at original discount rate 3,146 — — 2,964 — —
Effect of model refinements — — — 121 — —
Effect of changes in cash flow assumptions — — — (1) — —
Effect of actual variances from expected experience (8) — — 109 — —
Adjusted beginning of period balance 3,138 — — 3,193 — —
Issuances 48 — — 37 — —
Interest accrual 53 — — 55 — —
Net premiums collected (179) — — (227) — —
Ending balance at original discount rate 3,060 — — 3,058 — —
Effect of changes in discount rate assumptions (317) — — (193) — —
Balance, end of period $ 2,743 $ — $ — $ 2,865 $ — $ —
Present value of expected future policy benefits:
Balance, beginning of period $ 5,172 $ 3,469 $ 6,793 $ 6,253 $ 4,283 $ 10,171
Beginning balance at original discount rate 5,816 3,848 7,410 5,682 3,817 8,165
Effect of model refinements — — — 134 — —
Effect of changes in cash flow assumptions — — — — — —
Effect of actual variances from expected experience (9) 8 (37) 125 (10) (37)
Adjusted beginning of period balance 5,807 3,856 7,373 5,941 3,807 8,128
Issuances 50 179 — 41 100 —
Interest accrual 104 72 158 106 72 174
Benefit payments (245) (189) (301) (364) (182) (315)
Ending balance at original discount rate 5,716 3,918 7,230 5,724 3,797 7,987
Effect of changes in discount rate assumptions (600) (350) (519) (357) (187) (212)
Balance, end of period $ 5,116 $ 3,568 $ 6,711 $ 5,367 $ 3,610 $ 7,775
Net liability for future policy benefits, end of period $ 2,373 $ 3,568 $ 6,711 $ 2,502 $ 3,610 $ 7,775
Less: Reinsurance recoverable, end of period 28 26 66 36 24 75
Net liability for future policy benefits, after reinsurance recoverable $ 2,345 $ 3,542 $ 6,645 $ 2,466 $ 3,586 $ 7,700
Weighted-average duration of liability 8.3 years 8.4 years 11.6 years 8.4 years 8.4 years 12.7 years
Weighted-average interest accretion rate 3.92 % 3.93 % 4.46 % 3.95 % 3.94 % 4.44 %
Gross premiums or assessments recognized during period $ 300 $ 214 $ — $ 325 $ 108 $ —
Expected future gross premiums, undiscounted $ 6,336 $ — $ — $ 6,557 $ — $ —
Expected future gross premiums, discounted $ 4,724 $ — $ — $ 4,891 $ — $ —
Expected future benefit payments, undiscounted $ 7,879 $ 5,519 $ 14,062 $ 7,886 $ 5,380 $ 16,886
Expected future benefit payments, discounted $ 5,716 $ 3,918 $ 7,230 $ 5,724 $ 3,797 $ 7,987

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~4. Insurance (continued)~~

~~Information regarding the additional insurance liabilities for universal life-type contracts with secondary guarantees was as follows:~~

Six Months Ended June 30,
2023 2022
(Dollars in millions)
Balance, beginning of period $ 6,935 $ 7,168
Beginning balance before the effect of unrealized gains and losses 7,175 6,731
Effect of changes in cash flow assumptions — —
Effect of actual variances from expected experience 60 108
Adjusted beginning of period balance 7,235 6,839
Interest accrual 175 164
Net assessments collected 206 231
Benefit payments (195) (268)
Effect of realized capital gains (losses) — —
Ending balance before the effect of unrealized gains and losses 7,421 6,966
Effect of unrealized gains and losses (211) (98)
Balance, end of period 7,210 6,868
Less: Reinsurance recoverable, end of period 1,414 1,354
Net additional liability, after reinsurance recoverable $ 5,796 $ 5,514
Weighted-average duration of liability 6.7 years 6.7 years
Weighted-average interest accretion rate 4.91 % 4.91 %
Gross premiums or assessments recognized during period $ — $ —

A reconciliation of the net LFPBs for nonparticipating traditional and limited-payment contracts and the additional insurance liabilities for universal life-type contracts with secondary guarantees reported in the preceding rollforward tables to LFPBs on the consolidated balance sheets was as follows at:

June 30,
2023 2022
(In millions)
Liabilities reported in the preceding rollforward tables $ 19,862 $ 20,755
Long-term care insurance (1) 5,606 6,093
ULSG liability for profits followed by losses 2,565 2,911
Participating whole life insurance (2) 2,775 2,589
Deferred profit liabilities 369 371
Other 382 346
Total liability for future policy benefits $ 31,559 $ 33,065

~~_______________~~

~~(1)Includes liabilities related to fully reinsured individual long-term care insurance. See Note 3.~~

~~(2)Participating~~ whole life insurance ~~uses~~and income annuities. LFPBs are accrued over time as revenue is recognized based on a net premium ratio. The net premium ratio is the portion of gross premiums required to provide for all future benefits. LFPBs are established using the Company’s current assumptions of future cash flows, discounted at a rate that approximates a single A corporate bond curve. The Company generally aggregates insurance contracts into groupings by issue year, product and segment for determining the net premium ratio and related LFPBs.

The net premium ratio is not updated for changes in discount rate assumptions, as changes in the discount rate are updated quarterly and the impacts are reflected in other comprehensive income (loss) (“OCI”). The discount rate assumption is determined by developing a yield curve based on market observable yields for upper-medium grade fixed income instruments derived from an ~~interest assumption~~external index. The yield curve is applied to the expected future cash flows used in the measurement of LFPBs based on the ~~non-forfeiture~~duration characteristics of those liabilities.

The most significant cash flow assumptions used in the establishment of LFPBs are mortality, policy lapses and market interest ~~rate, ranging from 3.5% to 4.0%,~~rates. See Note 4 for more information on the effect of changes in assumptions on the measurement of LFPBs.

The Company also establishes an LFPB for participating term and ~~mortality rates guaranteed in calculating the cash surrender values described in such contracts, and also includes a liability for terminal dividends. Participating~~ whole life insurance ~~represented 4%~~using a net premium ratio and the Company’s current assumptions of future cash flows. Assumptions are determined at issuance of the ~~Company’s~~policy and are not updated unless a premium deficiency exists. A premium deficiency exists when the LFPB plus the present value of expected future gross premiums are less than expected future benefits and expenses (based on current assumptions). When a premium deficiency exists, the Company will reduce any deferred acquisition costs and may also establish an additional liability to eliminate the deficiency. See Note 4 for more information on assumptions used in establishing LFPBs related to participating term and whole life ~~insurance in-force at both June 30, 2023 and 2022, and 41% of gross traditional life insurance premiums for both the six months ended June 30, 2023 and 2022.~~insurance.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~4. Insurance (continued)~~

~~Information regarding LFPBs for non-participating traditional and limited-payment contracts was as follows:~~

Years Ended December 31,
2022 2021
Term and Whole Life Insurance Income Annuities Structured Settlement and Pension Risk Transfer Annuities Term and Whole Life Insurance Income Annuities Structured Settlement and Pension Risk Transfer Annuities
(Dollars in millions)
Present value of expected net premiums:
Balance, beginning of year $ 3,212 $ — $ — $ 3,274 $ — $ —
Beginning balance at original discount rate 2,964 — — 2,868 — —
Effect of model refinements 121 — — — — —
Effect of changes in cash flow assumptions 159 — — 100 — —
Effect of actual variances from expected experience 114 — — 158 — —
Adjusted beginning of year balance 3,358 — — 3,126 — —
Issuances 93 — — 112 — —
Interest accrual 112 — — 107 — —
Net premiums collected (417) — — (381) — —
Ending balance at original discount rate 3,146 — — 2,964 — —
Effect of changes in discount rate assumptions (342) — — 248 — —
Balance, end of year $ 2,804 $ — $ — $ 3,212 $ — $ —
Present value of expected future policy benefits:
Balance, beginning of year $ 6,253 $ 4,283 $ 10,171 $ 6,606 $ 4,636 $ 11,301
Beginning balance at original discount rate 5,682 3,817 8,165 5,678 3,889 8,531
Effect of model refinements 134 — (278) — — —
Effect of changes in cash flow assumptions 179 55 (157) 100 (40) (41)
Effect of actual variances from expected experience 150 (21) (23) 158 (6) (16)
Adjusted beginning of year balance 6,145 3,851 7,707 5,936 3,843 8,474
Issuances 101 220 — 128 193 —
Interest accrual 216 144 327 214 149 359
Benefit payments (646) (367) (624) (596) (368) (668)
Ending balance at original discount rate 5,816 3,848 7,410 5,682 3,817 8,165
Effect of changes in discount rate assumptions (644) (379) (617) 571 466 2,006
Balance, end of year $ 5,172 $ 3,469 $ 6,793 $ 6,253 $ 4,283 $ 10,171
Net liability for future policy benefits, end of year $ 2,368 $ 3,469 $ 6,793 $ 3,041 $ 4,283 $ 10,171
Less: Reinsurance recoverable, end of year 32 25 68 42 28 93
Net liability for future policy benefits, after reinsurance recoverable $ 2,336 $ 3,444 $ 6,725 $ 2,999 $ 4,255 $ 10,078

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~4. Insurance (continued)~~

Policyholder Account Balances

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Additional Liabilities for ULSG

Market Risk Benefits on Annuity Guarantees

See Note 4 for more information on the effect of changes in inputs and assumptions on the measurement of MRBs and Note 8 for more information on the determination of fair value of MRBs.

Embedded Derivatives on Index-Linked Annuities

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

For more information on the determination of estimated fair value of embedded derivatives, see Note 8.

Recognition of Revenues and Deposits on Insurance Contracts

Premiums and policy fees are presented net of reinsurance.

Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Adoption of New Accounting Pronouncements

2. ASU 2018-12 Transition

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)

The effect of transition adjustments on stockholder’s equity at January 1, 2021 due to the adoption of ASU 2018-12 was as follows:


	Retained Earnings (Deficit)		AOCI
	(In millions)
Liability for future policy benefits	$	(434)	$	(2,053)
Market risk benefits and related adjustments	(5,971)		(3,452)
DAC and VOBA	—		494
Reinsurance recoverables	(141)		30
Deferred income tax asset	1,375		1,046
Total	$	(5,171)	$	(3,935)

For DAC and VOBA, the Company removed amounts previously recorded in AOCI for the effect of unrealized investment gains and losses.

For reinsurance, the adjustments to both retained earnings and AOCI were made to align the measurement of reinsurance recoverables with the related LFPBs.

The balances of and changes in LFPBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Term and Whole Life Insurance		Income Annuities		Structured Settlement and Pension Risk Transfer Annuities
	(In millions)
Balance at December 31, 2020	$	2,797	$	4,260	$	10,115
Removal of related balances in AOCI	—		(203)		(1,784)
Change in cash flow assumptions	13		(168)		200
Initial recognition of deferred profit liabilities	—		172		217
Change in discount rate assumptions	522		748		2,770
Adjusted balance at January 1, 2021	3,332		4,809		11,518
Less: Reinsurance recoverable	59		29		102
Adjusted balance at January 1, 2021, net of reinsurance	$	3,273	$	4,780	$	11,416

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)

The balance of and changes in liabilities classified as MRBs at January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Variable Annuities
	(In millions)
Balance at December 31, 2020	$	8,622
Adjustment for the difference between carrying amount and estimated fair value, except for the difference due to nonperformance risk	6,347
Adjustment for cumulative effect of changes in nonperformance risk since issuance	3,452
Adjusted balance at January 1, 2021	18,421
Less: Reinsurance recoverable	169
Adjusted balance at January 1, 2021, net of reinsurance	$	18,252

The balances of and changes in DAC and VOBA on January 1, 2021 due to the adoption of ASU 2018-12 were as follows:


	Variable Annuities		Fixed Rate Annuities		Index-Linked Annuities		Term and Whole Life Insurance		Universal Life Insurance
	(In millions)
DAC:
Balance at December 31, 2020	$	2,326	$	64	$	886	$	451	$	144
Removal of related amounts in AOCI	460		—		—		—		(37)
Adjusted balance at January 1, 2021	$	2,786	$	64	$	886	$	451	$	107
VOBA:
Balance at December 31, 2020	$	363	$	76	$	—	$	8	$	38
Removal of related amounts in AOCI	65		—		—		—		6
Adjusted balance at January 1, 2021	$	428	$	76	$	—	$	8	$	44


	December 31, 2022						December 31, 2021
	As Previously Reported		Effect of Change		As Currently Reported		As Previously Reported		Effect of Change		As Currently Reported
	(In millions)
Total assets	$	216,151	$	(713)	$	215,438	$	247,255	$	2,476	$	249,731
Future policy benefits	$	41,105	$	(9,959)	$	31,146	$	43,589	$	(3,759)	$	39,830
Policyholder account balances	$	74,112	$	(1,510)	$	72,602	$	66,195	$	(1,905)	$	64,290
Market risk benefit liabilities	$	—	$	10,411	$	10,411	$	—	$	16,062	$	16,062
Total liabilities	$	209,287	$	(363)	$	208,924	$	231,144	$	10,051	$	241,195
Retained earnings (deficit)	$	(5,717)	$	299	$	(5,418)	$	(5,653)	$	(3,475)	$	(9,128)
Accumulated other comprehensive income (loss)	$	(5,282)	$	(649)	$	(5,931)	$	3,901	$	(4,100)	$	(199)
Total equity	$	6,864	$	(350)	$	6,514	$	16,111	$	(7,575)	$	8,536
Total liabilities and equity	$	216,151	$	(713)	$	215,438	$	247,255	$	2,476	$	249,731

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

2. ASU 2018-12 Transition (continued)


	Year Ended December 31, 2022						Year Ended December 31, 2021
	As Previously Reported		Effect of Change		As Currently Reported		As Previously Reported		Effect of Change		As Currently Reported
	(In millions)
Universal life and investment-type product policy fees	$	2,562	$	(686)	$	1,876	$	2,986	$	(666)	$	2,320
Net derivative gains (losses)	$	402	$	(987)	$	(585)	$	(2,359)	$	(1,627)	$	(3,986)
Total revenues	$	7,832	$	(1,670)	$	6,162	$	6,400	$	(2,290)	$	4,110
Policyholder benefits and claims	$	4,143	$	(1,957)	$	2,186	$	3,213	$	(728)	$	2,485
Change in market risk benefits	$	—	$	(4,105)	$	(4,105)	$	—	$	(4,142)	$	(4,142)
Total expenses	$	8,103	$	(6,447)	$	1,656	$	6,404	$	(4,436)	$	1,968
Net income (loss)	$	(63)	$	3,774	$	3,711	$	67	$	1,696	$	1,763

3. Segment Information

The Company is organized into three segments: Annuities; Life; and Run-off. In addition, the Company reports certain of its results of operations in Corporate & Other.

Annuities

Life

Run-off

Corporate & Other

Financial Measures and Segment Accounting Policies

Adjusted earnings is a financial measure used by management to evaluate performance and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance. The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by the investor community by highlighting the results of operations and the underlying profitability drivers of the business.

Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses by excluding the impact of market volatility, which could distort trends.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

3. Segment Information (continued)

The following are significant items excluded from total revenues in calculating adjusted earnings:

•Net investment gains (losses); and

The following are significant items excluded from total expenses in calculating adjusted earnings:

•Change in MRBs; and

•Change in fair value of the crediting rate on experience-rated contracts (“Market Value Adjustments”).

The Company’s adjusted earnings definition and presentation has been updated for all periods presented to reflect the adoption of ASU 2018-12.

Segment investment and capitalization targets are based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company’s variable annuity risk management strategy. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital. Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets.

Operating results by segment, as well as Corporate & Other, were as follows:


	Three Months Ended September 30, 2023
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	386	$	2	$	120	$	(24)	$	484
Provision for income tax expense (benefit)	73		(1)		25		(11)		86
Post-tax adjusted earnings	313		3		95		(13)		398
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		—		—
Adjusted earnings	$	313	$	3	$	95	$	(13)	398
Adjustments for:
Net investment gains (losses)									(52)
Net derivative gains (losses), excluding investment hedge adjustments of $25									(863)
Change in market risk benefits									1,064
Market value adjustments									14
Provision for income tax (expense) benefit									(35)
Net income (loss) attributable to Brighthouse Life Insurance Company									$	526

Interest revenue	$	649	$	103	$	299	$	148
Interest expense	$	—	$	—	$	—	$	17

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

3. Segment Information (continued)


	Three Months Ended September 30, 2022
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	243	$	(91)	$	(19)	$	(50)	$	83
Provision for income tax expense (benefit)	43		(19)		(4)		(15)		5
Post-tax adjusted earnings	200		(72)		(15)		(35)		78
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		—		—
Adjusted earnings	$	200	$	(72)	$	(15)	$	(35)	78
Adjustments for:
Net investment gains (losses)									(40)
Net derivative gains (losses), excluding investment hedge adjustments of $23									(613)
Change in market risk benefits									982
Market value adjustments									20
Provision for income tax (expense) benefit									(73)
Net income (loss) attributable to Brighthouse Life Insurance Company									$	354

Interest revenue	$	545	$	67	$	168	$	100
Interest expense	$	—	$	—	$	—	$	18


	Nine Months Ended September 30, 2023
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	1,086	$	61	$	(35)	$	(63)	$	1,049
Provision for income tax expense (benefit)	204		11		(8)		(38)		169
Post-tax adjusted earnings	882		50		(27)		(25)		880
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		1		1
Adjusted earnings	$	882	$	50	$	(27)	$	(26)	879
Adjustments for:
Net investment gains (losses)									(213)
Net derivative gains (losses), excluding investment hedge adjustments of $86									(3,337)
Change in market risk benefits									2,165
Market value adjustments									9
Provision for income tax (expense) benefit									288
Net income (loss) attributable to Brighthouse Life Insurance Company									$	(209)

Interest revenue	$	1,871	$	299	$	870	$	427
Interest expense	$	—	$	—	$	—	$	53

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

3. Segment Information (continued)


	Nine Months Ended September 30, 2022
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	1,057	$	21	$	(188)	$	(154)	$	736
Provision for income tax expense (benefit)	198		4		(40)		(58)		104
Post-tax adjusted earnings	859		17		(148)		(96)		632
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		1		1
Adjusted earnings	$	859	$	17	$	(148)	$	(97)	631
Adjustments for:
Net investment gains (losses)									(171)
Net derivative gains (losses), excluding investment hedge adjustments of $38									1,291
Change in market risk benefits									2,625
Market value adjustments									89
Provision for income tax (expense) benefit									(805)
Net income (loss) attributable to Brighthouse Life Insurance Company									$	3,660

Interest revenue	$	1,642	$	316	$	919	$	197
Interest expense	$	—	$	—	$	—	$	51

Total revenues by segment, as well as Corporate & Other, were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Annuities	$	1,104	$	978	$	3,295	$	3,052
Life	246		220		752		756
Run-off	411		313		1,240		1,335
Corporate & Other	149		100		429		197
Adjustments	(915)		(653)		(3,550)		1,120
Total	$	995	$	958	$	2,166	$	6,460

Total assets by segment, as well as Corporate & Other, were as follows at:


	September 30, 2023		December 31, 2022
	(In millions)
Annuities	$	148,839	$	148,228
Life	17,342		17,214
Run-off	27,299		28,466
Corporate & Other	20,677		21,530
Total	$	214,157	$	215,438

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance

Liability for Future Policy Benefits

Information regarding LFPBs for non-participating traditional and limited-payment contracts was as follows:


	Nine Months Ended September 30,
	2023									2022
	Term and Whole Life Insurance			Income Annuities			Structured Settlement and Pension Risk Transfer Annuities			Term and Whole Life Insurance			Income Annuities			Structured Settlement and Pension Risk Transfer Annuities
	(Dollars in millions)
Present value of expected net premiums:
Balance, beginning of period	$	2,804		$	—		$	—		$	3,212		$	—		$	—
Beginning balance at original discount rate	3,146			—			—			2,964			—			—
Effect of model refinements	—			—			—			121			—			—
Effect of changes in cash flow assumptions	206			—			—			160			—			—
Effect of actual variances from expected experience	(36)			—			—			88			—			—
Adjusted beginning of period balance	3,316			—			—			3,333			—			—
Issuances	71			—			—			71			—			—
Interest accrual	80			—			—			85			—			—
Net premiums collected	(275)			—			—			(318)			—			—
Ending balance at original discount rate	3,192			—			—			3,171			—			—
Effect of changes in discount rate assumptions	(428)			—			—			(372)			—			—
Balance, end of period	$	2,764		$	—		$	—		$	2,799		$	—		$	—
Present value of expected future policy benefits:
Balance, beginning of period	$	5,172		$	3,469		$	6,793		$	6,253		$	4,283		$	10,171
Beginning balance at original discount rate	5,816			3,848			7,410			5,682			3,817			8,165
Effect of model refinements	—			—			—			134			—			—
Effect of changes in cash flow assumptions	296			—			—			181			—			—
Effect of actual variances from expected experience	(39)			18			(49)			117			(23)			(39)
Adjusted beginning of period balance	6,073			3,866			7,361			6,114			3,794			8,126
Issuances	74			277			—			78			165			—
Interest accrual	157			106			236			163			107			259
Benefit payments	(369)			(292)			(449)			(498)			(263)			(477)
Ending balance at original discount rate	5,935			3,957			7,148			5,857			3,803			7,908
Effect of changes in discount rate assumptions	(864)			(508)			(956)			(712)			(410)			(859)
Balance, end of period	$	5,071		$	3,449		$	6,192		$	5,145		$	3,393		$	7,049
Net liability for future policy benefits, end of period	$	2,307		$	3,449		$	6,192		$	2,346		$	3,393		$	7,049
Less: Reinsurance recoverable, end of period	26			30			—			33			24			69
Net liability for future policy benefits, after reinsurance recoverable	$	2,281		$	3,419		$	6,192		$	2,313		$	3,369		$	6,980
Weighted-average duration of liability	8.9 years			8.3 years			11.6 years			8.6 years			8.4 years			12.7 years
Weighted-average interest accretion rate	3.92		%	3.96		%	4.45		%	3.95		%	3.91		%	4.44		%
Current discount rate	5.87		%	5.87		%	5.91		%	5.46		%	5.45		%	5.46		%
Gross premiums or assessments recognized during period	$	439		$	339		$	—		$	473		$	186		$	—
Expected future gross premiums, undiscounted	$	6,079		$	—		$	—		$	6,641		$	—		$	—
Expected future gross premiums, discounted	$	4,598		$	—		$	—		$	4,948		$	—		$	—
Expected future benefit payments, undiscounted	$	8,194		$	5,570		$	13,909		$	8,093		$	5,365		$	16,721
Expected future benefit payments, discounted	$	5,935		$	3,957		$	7,148		$	5,857		$	3,803		$	7,908

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)

The measurement of LFPBs can be significantly impacted by changes in assumptions for policyholder behavior. As part of the 2023 and 2022 annual actuarial review (“AAR”), the Company updated assumptions regarding mortality and lapses for term and non-participating whole life insurance. The impact from changes in assumptions is presented in effect of changes in cash flow assumptions in the table above.

Information regarding the additional insurance liabilities for universal life-type contracts with secondary guarantees was as follows:


	Nine Months Ended September 30,
	2023			2022
	(Dollars in millions)
Balance, beginning of period	$	6,935		$	7,168
Beginning balance before the effect of unrealized gains and losses	7,175			6,731
Effect of changes in cash flow assumptions	52			(37)
Effect of actual variances from expected experience	75			157
Adjusted beginning of period balance	7,302			6,851
Interest accrual	265			248
Net assessments collected	309			324
Benefit payments	(289)			(369)
Effect of realized capital gains (losses)	—			—
Ending balance before the effect of unrealized gains and losses	7,587			7,054
Effect of unrealized gains and losses	(347)			(83)
Balance, end of period	7,240			6,971
Less: Reinsurance recoverable, end of period	1,409			1,393
Net additional liability, after reinsurance recoverable	$	5,831		$	5,578
Weighted-average duration of liability	6.7 years			6.7 years
Weighted-average interest accretion rate	4.92		%	4.90		%
Gross assessments recognized during period	$	798		$	834

The measurement of liabilities for secondary guarantees can be significantly impacted by changes in the expected general account rate of return, which is driven by the Company’s assumption for long-term treasury yields. The Company’s practice of projecting treasury yields uses a mean reversion approach that assumes that long-term interest rates are less influenced by short-term fluctuations and are only changed when sustained interim deviations are expected. As part of the 2023 AAR, the Company increased the long-term general account earned rate, driven by an increase in the mean reversion rate from 3.50% to 3.75%. The Company also updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawals and maintenance expenses. As part of the 2022 AAR, the Company increased the long-term general account earned rate, driven by an increase in the mean reversion rate from 3.00% to 3.50%. Both period assumption updates are reflected in the table above.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)


	September 30,
	2023		2022
	(In millions)
Liabilities reported in the preceding rollforward tables	$	19,188	$	19,759
Long-term care insurance (1)	5,276		5,632
ULSG liabilities, including liability for profits followed by losses	1,966		2,866
Participating whole life insurance (2)	2,802		2,639
Deferred profit liabilities	455		375
Other	237		309
Total liability for future policy benefits	$	29,924	$	31,580

_______________

(1)Includes liabilities related to fully reinsured individual long-term care insurance. See Note 3.

(2)Participating whole life insurance uses an interest assumption based on the non-forfeiture interest rate, ranging from 3.5% to 4.0%, and mortality rates guaranteed in calculating the cash surrender values described in such contracts, and also includes a liability for terminal dividends. Participating whole life insurance represented 3% of the Company’s life insurance in-force at both September 30, 2023 and 2022, and 40% and 41% of gross traditional life insurance premiums for the nine months ended September 30, 2023 and 2022, respectively.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)

Information regarding LFPBs for non-participating traditional and limited-payment contracts was as follows:


	Years Ended December 31,
	2022						2021
	Term and Whole Life Insurance		Income Annuities		Structured Settlement and Pension Risk Transfer Annuities		Term and Whole Life Insurance		Income Annuities		Structured Settlement and Pension Risk Transfer Annuities
	(Dollars in millions)
Present value of expected net premiums:
Balance, beginning of year	$	3,212	$	—	$	—	$	3,274	$	—	$	—
Beginning balance at original discount rate	2,964		—		—		2,868		—		—
Effect of model refinements	121		—		—		—		—		—
Effect of changes in cash flow assumptions	159		—		—		100		—		—
Effect of actual variances from expected experience	114		—		—		158		—		—
Adjusted beginning of year balance	3,358		—		—		3,126		—		—
Issuances	93		—		—		112		—		—
Interest accrual	112		—		—		107		—		—
Net premiums collected	(417)		—		—		(381)		—		—
Ending balance at original discount rate	3,146		—		—		2,964		—		—
Effect of changes in discount rate assumptions	(342)		—		—		248		—		—
Balance, end of year	$	2,804	$	—	$	—	$	3,212	$	—	$	—
Present value of expected future policy benefits:
Balance, beginning of year	$	6,253	$	4,283	$	10,171	$	6,606	$	4,636	$	11,301
Beginning balance at original discount rate	5,682		3,817		8,165		5,678		3,889		8,531
Effect of model refinements	134		—		(278)		—		—		—
Effect of changes in cash flow assumptions	179		55		(157)		100		(40)		(41)
Effect of actual variances from expected experience	150		(21)		(23)		158		(6)		(16)
Adjusted beginning of year balance	6,145		3,851		7,707		5,936		3,843		8,474
Issuances	101		220		—		128		193		—
Interest accrual	216		144		327		214		149		359
Benefit payments	(646)		(367)		(624)		(596)		(368)		(668)
Ending balance at original discount rate	5,816		3,848		7,410		5,682		3,817		8,165
Effect of changes in discount rate assumptions	(644)		(379)		(617)		571		466		2,006
Balance, end of year	$	5,172	$	3,469	$	6,793	$	6,253	$	4,283	$	10,171
Net liability for future policy benefits, end of year	$	2,368	$	3,469	$	6,793	$	3,041	$	4,283	$	10,171
Less: Reinsurance recoverable, end of year	32		25		68		42		28		93
Net liability for future policy benefits, after reinsurance recoverable	$	2,336	$	3,444	$	6,725	$	2,999	$	4,255	$	10,078

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)

Policyholder Account Balances

Information regarding policyholder account balances was as follows:


		Universal Life Insurance			Variable Annuities (1)			Index-linked Annuities			Fixed Rate Annuities			ULSG			Company-Owned Life Insurance (1)				Universal Life Insurance			Variable Annuities (1)			Index-linked Annuities			Fixed Rate Annuities			ULSG			Company-Owned Life Insurance (1)
		(Dollars in millions)																			(Dollars in millions)
Six Months Ended June 30, 2023
Nine Months Ended September 30, 2023																				Nine Months Ended September 30, 2023
Balance, beginning of period	Balance, beginning of period	$	2,100		$	4,664		$	33,897		$	14,274		$	5,307		$	641		Balance, beginning of period	$	2,100		$	4,664		$	33,897		$	14,274		$	5,307		$	641
Premiums and deposits	Premiums and deposits	103			43			3,390			1,479			339			—			Premiums and deposits	154			63			5,314			1,983			501			—
Surrenders and withdrawals	Surrenders and withdrawals	(74)			(303)			(1,613)			(874)			(12)			—			Surrenders and withdrawals	(114)			(455)			(2,588)			(1,518)			(17)			—
Benefit payments	Benefit payments	(39)			(54)			(117)			(203)			(55)			(4)			Benefit payments	(48)			(79)			(177)			(285)			(67)			(6)
Net transfers from (to) separate account	Net transfers from (to) separate account	7			9			—			—			—			—			Net transfers from (to) separate account	13			6			—			—			—			—
Interest credited	Interest credited	(3)			75			203			229			122			15			Interest credited	17			94			299			357			165			22
Policy charges	Policy charges	(100)			(13)			(4)			—			(513)			(6)			Policy charges	(150)			(18)			(6)			—			(764)			(7)
Changes related to embedded derivatives	Changes related to embedded derivatives	—			—			2,793			—			—			—			Changes related to embedded derivatives	—			—			1,880			—			—			—

Balance, end of period	Balance, end of period	$	1,994		$	4,421		$	38,549		$	14,905		$	5,188		$	646		Balance, end of period	$	1,972		$	4,275		$	38,619		$	14,811		$	5,125		$	650

Weighted-average crediting rate (2)	Weighted-average crediting rate (2)	(0.15)		%	1.65		%	0.66		%	1.57		%	2.33		%	2.33		%	Weighted-average crediting rate (2)	0.84		%	2.10		%	1.02		%	2.43		%	3.17		%	3.41		%
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022																				Nine Months Ended September 30, 2022
Balance, beginning of period	Balance, beginning of period	$	2,134		$	4,475		$	32,000		$	11,849		$	5,569		$	646		Balance, beginning of period	$	2,134		$	4,475		$	32,000		$	11,849		$	5,569		$	646
Premiums and deposits	Premiums and deposits	100			86			3,431			340			356			—			Premiums and deposits	149			126			5,081			2,181			529			—
Surrenders and withdrawals	Surrenders and withdrawals	(25)			(210)			(999)			(276)			(15)			—			Surrenders and withdrawals	(36)			(302)			(1,578)			(439)			(26)			—
Benefit payments	Benefit payments	(30)			(53)			(77)			(166)			(37)			(4)			Benefit payments	(45)			(81)			(123)			(255)			(58)			(5)
Net transfers from (to) separate account	Net transfers from (to) separate account	12			136			—			—			—			2			Net transfers from (to) separate account	18			155			—			—			—			(13)
Interest credited	Interest credited	18			79			149			150			107			11			Interest credited	37			115			301			243			152			16
Policy charges	Policy charges	(100)			(14)			(3)			—			(526)			(3)			Policy charges	(152)			(19)			(5)			—			(786)			(5)
Changes related to embedded derivatives	Changes related to embedded derivatives	—			—			(3,575)			—			—			—			Changes related to embedded derivatives	—			—			(4,086)			—			—			—

Balance, end of period	Balance, end of period	$	2,109		$	4,499		$	30,926		$	11,897		$	5,454		$	652		Balance, end of period	$	2,105		$	4,469		$	31,590		$	13,579		$	5,380		$	639

Weighted-average crediting rate (2)	Weighted-average crediting rate (2)	0.85		%	1.76		%	0.56		%	1.28		%	1.94		%	1.69		%	Weighted-average crediting rate (2)	1.75		%	2.57		%	0.84		%	1.98		%	2.77		%	2.47		%

_______________

(1)Includes liabilities related to separate account products where the contract holder elected a general account investment option.

(2)Excludes the effects of embedded derivatives related to index-linked crediting rates.

A reconciliation of policyholder account balances reported in the preceding rollforward table to the liability for policyholder account balances on the consolidated balance sheets was as follows at:


		June 30,					September 30,
		2023		2022			2023		2022
		(In millions)					(In millions)
Policyholder account balances reported in the preceding rollforward table	Policyholder account balances reported in the preceding rollforward table	$	65,703	$	55,537	Policyholder account balances reported in the preceding rollforward table	$	65,452	$	57,762
Funding agreements classified as investment contracts	Funding agreements classified as investment contracts	11,041		9,104		Funding agreements classified as investment contracts	11,052		9,959
Other investment contract liabilities	Other investment contract liabilities	998		1,122		Other investment contract liabilities	970		1,089
Total policyholder account balances	Total policyholder account balances	$	77,742	$	65,763	Total policyholder account balances	$	77,474	$	68,810

2021

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)

The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums was as follows at:

Range of Guaranteed Minimum Crediting Rate At Guaranteed Minimum 1 to 50 Basis Points Above 51 to 150 Basis Points Above Greater than 150 Basis Points Above Total
(In millions)
June 30, 2023
Annuities (1) (3):
Less than 2.00% $ 716 $ 253 $ 424 $ 7,147 $ 8,540
2.00% to 3.99% 4,489 4,777 701 9 9,976
Greater than 3.99% 447 — — — 447
Total $ 5,652 $ 5,030 $ 1,125 $ 7,156 $ 18,963
Life insurance (2) (3):
Less than 2.00% $ — $ — $ — $ 199 $ 199
2.00% to 3.99% — 452 49 145 646
Greater than 3.99% 1,105 — — — 1,105
Total $ 1,105 $ 452 $ 49 $ 344 $ 1,950
ULSG (3):
Less than 2.00% $ — $ — $ — $ — $ —
2.00% to 3.99% 1,179 1,526 1,692 262 4,659
Greater than 3.99% 517 — — — 517
Total $ 1,696 $ 1,526 $ 1,692 $ 262 $ 5,176
December 31, 2022
Annuities (1) (3):
Less than 2.00% $ 805 $ 293 $ 356 $ 5,805 $ 7,259
2.00% to 3.99% 5,224 4,871 594 8 10,697
Greater than 3.99% 470 — — — 470
Total $ 6,499 $ 5,164 $ 950 $ 5,813 $ 18,426
Life insurance (2) (3):
Less than 2.00% $ — $ — $ — $ 172 $ 172
2.00% to 3.99% — 462 87 150 699
Greater than 3.99% 1,148 — — — 1,148
Total $ 1,148 $ 462 $ 87 $ 322 $ 2,019
ULSG (3):
Less than 2.00% $ — $ — $ — $ — $ —
2.00% to 3.99% 1,224 1,581 1,729 266 4,800
Greater than 3.99% 527 — — — 527
Total $ 1,751 $ 1,581 $ 1,729 $ 266 $ 5,327


Range of Guaranteed Minimum Crediting Rate	At Guaranteed Minimum		1 to 50 Basis Points Above		51 to 150 Basis Points Above		Greater than 150 Basis Points Above		Total
	(In millions)
September 30, 2023
Annuities (1):
Less than 2.00%	$	668	$	236	$	468	$	7,164	$	8,536
2.00% to 3.99%	8,937		113		200		59		9,309
Greater than 3.99%	901		—		—		—		901
Total	$	10,506	$	349	$	668	$	7,223	$	18,746
Life insurance (2) (3):
Less than 2.00%	$	—	$	—	$	—	$	216	$	216
2.00% to 3.99%	—		438		49		132		619
Greater than 3.99%	1,092		—		—		—		1,092
Total	$	1,092	$	438	$	49	$	348	$	1,927
ULSG (3):
Less than 2.00%	$	—	$	—	$	—	$	—	$	—
2.00% to 3.99%	1,159		1,506		1,680		257		4,602
Greater than 3.99%	513		—		—		—		513
Total	$	1,672	$	1,506	$	1,680	$	257	$	5,115
December 31, 2022
Annuities (1):
Less than 2.00%	$	805	$	293	$	356	$	5,805	$	7,259
2.00% to 3.99%	5,224		4,871		594		8		10,697
Greater than 3.99%	470		—		—		—		470
Total	$	6,499	$	5,164	$	950	$	5,813	$	18,426
Life insurance (2) (3):
Less than 2.00%	$	—	$	—	$	—	$	172	$	172
2.00% to 3.99%	—		462		87		150		699
Greater than 3.99%	1,148		—		—		—		1,148
Total	$	1,148	$	462	$	87	$	322	$	2,019
ULSG (3):
Less than 2.00%	$	—	$	—	$	—	$	—	$	—
2.00% to 3.99%	1,224		1,581		1,729		266		4,800
Greater than 3.99%	527		—		—		—		527
Total	$	1,751	$	1,581	$	1,729	$	266	$	5,327

_______________

(1)Includes policyholder account balances for fixed rate annuities and the fixed account portion of variable annuities.

(2)Includes policyholder account balances for retained asset accounts, universal life policies and the fixed account portion of universal variable life insurance policies.

(3)Amounts are gross of policy ~~loans and net of excess interest reserves.~~loans.

2122

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)

Market Risk Benefits

Information regarding MRB assets and liabilities associated with variable annuities was as follows:


		Six Months Ended June 30,				Years Ended December 31,					Nine Months Ended September 30,				Years Ended December 31,
		2023		2022		2022		2021			2023		2022		2022		2021
		(Dollars in millions)									(Dollars in millions)
Balance, beginning of period	Balance, beginning of period	$	9,997	$	15,726	$	15,726	$	18,421	Balance, beginning of period	$	9,997	$	15,726	$	15,726	$	18,421
Balance, beginning of period, before effect of changes in nonperformance risk	Balance, beginning of period, before effect of changes in nonperformance risk	8,253		11,639		11,639		14,969		Balance, beginning of period, before effect of changes in nonperformance risk	8,253		11,639		11,639		14,969
Decrements	Decrements	(54)		39		16		(70)		Decrements	(114)		20		16		(70)
Effect of changes in future expected assumptions	Effect of changes in future expected assumptions	—		—		212		41		Effect of changes in future expected assumptions	259		212		212		41
Effect of actual different from expected experience	Effect of actual different from expected experience	170		(333)		(48)		(86)		Effect of actual different from expected experience	178		(333)		(48)		(86)
Effect of changes in interest rates	Effect of changes in interest rates	(146)		(5,940)		(8,397)		(1,831)		Effect of changes in interest rates	(2,360)		(8,396)		(8,397)		(1,831)
Effect of changes in fund returns	Effect of changes in fund returns	(1,529)		4,413		3,806		(2,578)		Effect of changes in fund returns	(669)		5,605		3,806		(2,578)

Issuances	Issuances	(5)		(16)		(47)		(96)		Issuances	(9)		(29)		(47)		(96)
Effect of changes in risk margin	Effect of changes in risk margin	(18)		(92)		(152)		(128)		Effect of changes in risk margin	(52)		(120)		(152)		(128)
Aging of the block and other	Aging of the block and other	712		618		1,224		1,418		Aging of the block and other	1,022		945		1,224		1,418
Balance, end of period, before effect of changes in nonperformance risk	Balance, end of period, before effect of changes in nonperformance risk	7,383		10,328		8,253		11,639		Balance, end of period, before effect of changes in nonperformance risk	6,508		9,543		8,253		11,639
Effect of changes in nonperformance risk	Effect of changes in nonperformance risk	1,867		1,708		1,744		4,087		Effect of changes in nonperformance risk	1,690		1,578		1,744		4,087
Balance, end of period	Balance, end of period	9,250		12,036		9,997		15,726		Balance, end of period	8,198		11,121		9,997		15,726
Less: Reinsurance recoverable, end of period	Less: Reinsurance recoverable, end of period	50		88		71		118		Less: Reinsurance recoverable, end of period	35		76		71		118
Balance, end of period, net of reinsurance (1)	Balance, end of period, net of reinsurance (1)	$	9,200	$	11,948	$	9,926	$	15,608	Balance, end of period, net of reinsurance (1)	$	8,163	$	11,045	$	9,926	$	15,608
Weighted-average attained age of contract holder	Weighted-average attained age of contract holder	72.6 years		71.5 years		71.8 years		71.1 years		Weighted-average attained age of contract holder	72.7 years		71.6 years		71.8 years		71.1 years

_______________

(1)Amounts represent the sum of MRB assets and MRB liabilities presented on the consolidated balance sheets at ~~June~~September 30, 2023 and 2022, with the exception of $4($7) million and $2 million, respectively, of index-linked annuities not included in this table, and at December 31, 2022 and 2021, with the exception of $2 million and $5 million, respectively, of index-linked annuities not included in this table.

Market conditions, including, but not limited to, changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital markets inputs, as well as changes in nonperformance risk, may result in significant fluctuations in the estimated fair value of the guarantees. As part of the AAR in 2023 and 2022, the Company updated assumptions regarding policyholder behavior, mortality, separate account fund allocations and volatility, which are reflected in the table above.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)

Separate Accounts

Information regarding separate account liabilities was as follows:


		Six Months Ended June 30,													Nine Months Ended September 30,
		2023						2022							2023						2022
		Variable Annuities		Universal Life Insurance		Company-Owned Life Insurance		Variable Annuities		Universal Life Insurance		Company-Owned Life Insurance			Variable Annuities		Universal Life Insurance		Company-Owned Life Insurance		Variable Annuities		Universal Life Insurance		Company-Owned Life Insurance
		(In millions)													(In millions)
Balance, beginning of period	Balance, beginning of period	$	74,845	$	1,970	$	1,919	$	101,108	$	2,577	$	2,367	Balance, beginning of period	$	74,845	$	1,970	$	1,919	$	101,108	$	2,576	$	2,367
Premiums and deposits	Premiums and deposits	406		42		—		792		45		—		Premiums and deposits	596		63		—		1,016		69		—
Surrenders and withdrawals	Surrenders and withdrawals	(2,877)		(38)		(7)		(3,057)		(30)		(11)		Surrenders and withdrawals	(4,398)		(53)		(11)		(4,450)		(46)		(12)
Benefit payments	Benefit payments	(719)		(11)		(16)		(692)		(9)		(17)		Benefit payments	(1,068)		(13)		(21)		(1,014)		(19)		(25)
Investment performance	Investment performance	6,906		253		212		(18,347)		(548)		(384)		Investment performance	3,981		174		175		(22,607)		(646)		(456)
Policy charges	Policy charges	(1,044)		(40)		(24)		(1,135)		(42)		(34)		Policy charges	(1,592)		(58)		(45)		(1,707)		(58)		(50)
Net transfers from (to) general account	Net transfers from (to) general account	(9)		(7)		—		(136)		(12)		(2)		Net transfers from (to) general account	(6)		(13)		—		(155)		(18)		13
Other	Other	(9)		—		(4)		34		3		6		Other	(2)		—		6		42		—		3
Balance, end of period	Balance, end of period	$	77,499	$	2,169	$	2,080	$	78,567	$	1,984	$	1,925	Balance, end of period	$	72,356	$	2,070	$	2,023	$	72,233	$	1,858	$	1,840

A reconciliation of separate account liabilities reported in the preceding rollforward table to the separate account liabilities balance on the consolidated balance sheets was as follows at:


	September 30,
	2023		2022
	(In millions)
Separate account liabilities reported in the preceding rollforward table	$	76,449	$	75,931
Variable income annuities	134		123
Pension risk transfer annuities	19		15
Total separate account liabilities	$	76,602	$	76,069

The aggregate estimated fair value of assets, by major investment asset category, supporting separate accounts was as follows at:



	September 30, 2023		December 31, 2022
	(In millions)
Equity securities	$	76,346	$	78,583

Fixed maturity securities	244		277
Cash and cash equivalents	6		9
Other assets	6		11
Total aggregate estimated fair value of assets	$	76,602	$	78,880

2224

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

4. Insurance (continued)

~~A reconciliation of separate account liabilities reported in the preceding rollforward table to the separate account liabilities balance on the consolidated balance sheets was as follows at:~~

June 30,
2023 2022
(In millions)
Separate account liabilities reported in the preceding rollforward table $ 81,748 $ 82,476
Variable income annuities 134 130
Pension risk transfer annuities 19 16
Total separate account liabilities $ 81,901 $ 82,622

~~The aggregate estimated fair value of assets, by major investment asset category, supporting separate accounts was as follows at:~~

June 30, 2023 December 31, 2022
(In millions)
Equity securities $ 81,636 $ 78,583
Fixed maturity securities 256 277
Cash and cash equivalents 1 9
Other assets 8 11
Total aggregate estimated fair value of assets $ 81,901 $ 78,880

Net Amount at Risk and Cash Surrender Values

Information regarding the net amount at risk and cash surrender value for insurance products was as follows at:


		Universal Life Insurance		Variable Annuities		Index-linked Annuities		Fixed Rate Annuities		ULSG		Company-Owned Life Insurance			Universal Life Insurance		Variable Annuities		Index-linked Annuities		Fixed Rate Annuities		ULSG		Company-Owned Life Insurance
		(In millions)													(In millions)
June 30, 2023
September 30, 2023														September 30, 2023
Account balances reported in the preceding rollforward tables:	Account balances reported in the preceding rollforward tables:													Account balances reported in the preceding rollforward tables:
Policyholder account balances	Policyholder account balances	$	1,994	$	4,421	$	38,549	$	14,905	$	5,188	$	646	Policyholder account balances	$	1,972	$	4,275	$	38,619	$	14,811	$	5,125	$	650
Separate account liabilities	Separate account liabilities	2,169		77,499		—		—		—		2,080		Separate account liabilities	2,070		72,356		—		—		—		2,023
Total account balances	Total account balances	$	4,163	$	81,920	$	38,549	$	14,905	$	5,188	$	2,726	Total account balances	$	4,042	$	76,631	$	38,619	$	14,811	$	5,125	$	2,673
Net amount at risk	Net amount at risk	$	22,941	$	13,560	N/A		N/A		$	69,602	$	2,633	Net amount at risk	$	22,618	$	15,989	N/A		N/A		$	69,277	$	2,611
Cash surrender value	Cash surrender value	$	3,949	$	81,633	$	35,860	$	14,281	$	6,160	$	2,512	Cash surrender value	$	3,826	$	76,355	$	36,164	$	14,189	$	6,121	$	2,456
June 30, 2022
September 30, 2022														September 30, 2022
Account balances reported in the preceding rollforward tables:	Account balances reported in the preceding rollforward tables:													Account balances reported in the preceding rollforward tables:
Policyholder account balances	Policyholder account balances	$	2,109	$	4,499	$	30,926	$	11,897	$	5,454	$	652	Policyholder account balances	$	2,105	$	4,469	$	31,590	$	13,579	$	5,380	$	639
Separate account liabilities	Separate account liabilities	1,984		78,567		—		—		—		1,925		Separate account liabilities	1,858		72,233		—		—		—		1,840
Total account balances	Total account balances	$	4,093	$	83,066	$	30,926	$	11,897	$	5,454	$	2,577	Total account balances	$	3,963	$	76,702	$	31,590	$	13,579	$	5,380	$	2,479
Net amount at risk	Net amount at risk	$	24,675	$	15,360	N/A		N/A		$	71,683	$	3,290	Net amount at risk	$	24,250	$	18,251	N/A		N/A		$	71,142	$	3,399
Cash surrender value	Cash surrender value	$	3,819	$	83,080	$	27,083	$	11,158	$	6,363	$	2,348	Cash surrender value	$	3,677	$	76,739	$	27,976	$	12,748	$	6,315	$	2,269

Products may contain both separate account and general account fund options; accordingly, net amount at risk and cash surrender value reported in the table above relate to the total account balance for each respective product grouping.

2325

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles

Deferred Policy Acquisition Costs and Value of Business Acquired

Information regarding DAC and VOBA was as follows:


		Variable Annuities		Fixed Rate Annuities		Index-linked Annuities		Term and Whole Life Insurance		Universal Life Insurance			Variable Annuities		Fixed Rate Annuities		Index-linked Annuities		Term and Whole Life Insurance		Universal Life Insurance
		(In millions)											(In millions)
Six Months Ended June 30, 2023
Nine Months Ended September 30, 2023												Nine Months Ended September 30, 2023
DAC:	DAC:											DAC:
Balance, beginning of period	Balance, beginning of period	$	2,414	$	107	$	1,213	$	347	$	115	Balance, beginning of period	$	2,414	$	107	$	1,213	$	347	$	115
Capitalization	Capitalization	19		7		165		—		6		Capitalization	29		9		255		1		9
Amortization	Amortization	(120)		(5)		(110)		(22)		(5)		Amortization	(178)		(8)		(167)		(33)		(7)
Balance, end of period	Balance, end of period	2,313		109		1,268		325		116		Balance, end of period	2,265		108		1,301		315		117
VOBA:	VOBA:											VOBA:
Balance, beginning of period	Balance, beginning of period	341		65		—		5		35		Balance, beginning of period	341		65		—		5		35
Amortization	Amortization	(17)		(2)		—		(1)		(2)		Amortization	(24)		(4)		—		(1)		(3)
Balance, end of period	Balance, end of period	324		63		—		4		33		Balance, end of period	317		61		—		4		32
Total DAC and VOBA:	Total DAC and VOBA:											Total DAC and VOBA:
Balance, end of period	Balance, end of period	$	2,637	$	172	$	1,268	$	329	$	149	Balance, end of period	$	2,582	$	169	$	1,301	$	319	$	149
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022												Nine Months Ended September 30, 2022
DAC:	DAC:											DAC:
Balance, beginning of period	Balance, beginning of period	$	2,614	$	88	$	1,081	$	397	$	114	Balance, beginning of period	$	2,614	$	88	$	1,081	$	397	$	114
Capitalization	Capitalization	37		11		170		(1)		5		Capitalization	48		20		253		(1)		8
Amortization	Amortization	(129)		(7)		(94)		(25)		(5)		Amortization	(193)		(10)		(145)		(37)		(7)
Balance, end of period	Balance, end of period	2,522		92		1,157		371		114		Balance, end of period	2,469		98		1,189		359		115
VOBA:	VOBA:											VOBA:
Balance, beginning of period	Balance, beginning of period	377		70		—		6		39		Balance, beginning of period	377		70		—		6		39
Amortization	Amortization	(18)		(3)		—		(1)		(2)		Amortization	(27)		(4)		—		(1)		(3)
Balance, end of period	Balance, end of period	359		67		—		5		37		Balance, end of period	350		66		—		5		36
Total DAC and VOBA:	Total DAC and VOBA:											Total DAC and VOBA:
Balance, end of period	Balance, end of period	$	2,881	$	159	$	1,157	$	376	$	151	Balance, end of period	$	2,819	$	164	$	1,189	$	364	$	151

2426

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

5. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued)


	Variable Annuities		Fixed Rate Annuities		Index-linked Annuities		Term and Whole Life Insurance		Universal Life Insurance
	(In millions)
DAC:
Adjusted balance at January 1, 2021 (1)	$	2,786	$	64	$	886	$	451	$	107
Capitalization	90		36		355		(3)		16
Amortization	(262)		(12)		(160)		(51)		(9)
Balance at December 31, 2021	2,614		88		1,081		397		114
Capitalization	54		31		330		(1)		10
Amortization	(254)		(12)		(198)		(49)		(9)
Balance at December 31, 2022	$	2,414	$	107	$	1,213	$	347	$	115
VOBA:
Adjusted balance at January 1, 2021 (1)	$	428	$	76	$	—	$	8	$	44
Amortization	(51)		(6)		—		(2)		(5)
Balance at December 31, 2021	377		70		—		6		39
Amortization	(36)		(5)		—		(1)		(4)
Balance at December 31, 2022	341		65		—		5		35
Total DAC and VOBA:
Balance at December 31, 2022	$	2,755	$	172	$	1,213	$	352	$	150
Balance at December 31, 2021	$	2,991	$	158	$	1,081	$	403	$	153

_______________

(1)Includes an adjustment to eliminate balances included in AOCI related to the adoption of ASU 2018-12 (see Note 2).

Deferred Sales Inducements

Information regarding DSI, included in other assets, was as follows:


		Six Months Ended June 30, 2023									Nine Months Ended September 30,
		2023				2022					2023				2022
		Variable Annuities		Fixed Rate Annuities		Variable Annuities		Fixed Rate Annuities			Variable Annuities		Fixed Rate Annuities		Variable Annuities		Fixed Rate Annuities
		(In millions)									(In millions)
Balance, beginning of period	Balance, beginning of period	$	233	$	9	$	259	$	10	Balance, beginning of period	$	233	$	9	$	259	$	10
Capitalization	Capitalization	—		—		1		—		Capitalization	—		—		1		—
Amortization	Amortization	(12)		(1)		(14)		(1)		Amortization	(18)		(1)		(20)		(1)
Balance, end of period	Balance, end of period	$	221	$	8	$	246	$	9	Balance, end of period	$	215	$	8	$	240	$	9

Unearned Revenue

Information regarding unearned revenue, included in other policy-related balances, was as follows:


		Six Months Ended June 30, 2023													Nine Months Ended September 30,
		2023						2022							2023						2022
		Universal Life Insurance		ULSG		Variable Annuities		Universal Life Insurance		ULSG		Variable Annuities			Universal Life Insurance		ULSG		Variable Annuities		Universal Life Insurance		ULSG		Variable Annuities
		(In millions)													(In millions)
Balance, beginning of period	Balance, beginning of period	$	143	$	488	$	73	$	118	$	344	$	79	Balance, beginning of period	$	143	$	488	$	73	$	118	$	344	$	79
Capitalization	Capitalization	18		88		—		18		91		1		Capitalization	27		131		—		26		137		1
Amortization	Amortization	(5)		(23)		(4)		(5)		(17)		(4)		Amortization	(8)		(36)		(6)		(7)		(26)		(6)
Balance, end of period	Balance, end of period	$	156	$	553	$	69	$	131	$	418	$	76	Balance, end of period	$	162	$	583	$	67	$	137	$	455	$	74

2527

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments

See Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2022 Annual Report for a description of the Company’s accounting policies for investments and the fair value hierarchy for investments and the related valuation methodologies.

Fixed Maturity Securities Available-for-sale

Fixed Maturity Securities by Sector

Fixed maturity securities by sector were as follows at:


		June 30, 2023												December 31, 2022																				September 30, 2023																	December 31, 2022
		Amortized Cost		Allowance for Credit Losses		Gross Unrealized				Estimated Fair Value				Amortized Cost				Allowance for Credit Losses				Gross Unrealized									Estimated Fair Value			Amortized Cost				Allowance for Credit Losses			Gross Unrealized							Estimated Fair Value			Amortized Cost			Allowance for Credit Losses			Gross Unrealized						Estimated Fair Value
						Gains		Losses												Gains				Losses						Gains											Losses					Gains											Losses
		(In millions)																																	(In millions)
U.S. corporate	U.S. corporate	$	37,213	$	4	$	233	$	4,170			$	33,272			$	36,399			$	1			$	200			$	4,436					$	32,162	U.S. corporate	$	37,780		$	15		$	82			$	5,354		$	32,493		$	36,399		$	1		$	200		$	4,436		$	32,162
Foreign corporate	Foreign corporate	12,491		—		44		1,709		10,826				12,368				1				37				1,912					10,492		Foreign corporate	12,612				—			20			2,033				10,599			12,368			1			37			1,912			10,492
U.S. government and agency	U.S. government and agency	8,214		—		336		541		8,009				8,195				—				299				596					7,898		U.S. government and agency	8,478				—			33			858				7,653			8,195			—			299			596			7,898
RMBS	RMBS	8,286		4		41		905		7,418				8,384				1				44				936					7,491		RMBS	8,138				5			31			1,198				6,966			8,384			1			44			936			7,491
CMBS	CMBS	7,116		3		1		729		6,385				7,239				3				—				699					6,537		CMBS	7,027				2			1			789				6,237			7,239			3			—			699			6,537
ABS	ABS	6,246		—		9		234		6,021				5,647				—				3				295					5,355		ABS	6,289				—			12			191				6,110			5,647			—			3			295			5,355
State and political subdivision	State and political subdivision	3,951		—		144		322		3,773				4,015				—				120				394					3,741		State and political subdivision	3,950				—			61			464				3,547			4,015			—			120			394			3,741
Foreign government	Foreign government	1,082		—		41		100		1,023				1,148				—				39				106					1,081		Foreign government	1,079				—			20			133				966			1,148			—			39			106			1,081
Total fixed maturity securities	Total fixed maturity securities	$	84,599	$	11	$	849	$	8,710	$	76,727			$	83,395			$	6			$	742			$	9,374				$	74,757	Total fixed maturity securities	$	85,353			$	22		$	260		$	11,020			$	74,571		$	83,395		$	6		$	742		$	9,374		$	74,757

The Company held non-income producing fixed maturity securities with an estimated fair value of ~~$14~~$12 million at ~~June~~September 30, 2023. The Company did not hold non-income producing fixed maturity securities at December 31, 2022.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at ~~June~~September 30, 2023:


		Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities (1)		Total Fixed Maturity Securities			Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities (1)		Total Fixed Maturity Securities
		(In millions)													(In millions)
Amortized cost	Amortized cost	$	2,026	$	15,046	$	15,753	$	30,126	$	21,648	$	84,599	Amortized cost	$	2,137	$	16,689	$	15,126	$	29,947	$	21,454	$	85,353
Estimated fair value	Estimated fair value	$	1,989	$	14,276	$	14,007	$	26,631	$	19,824	$	76,727	Estimated fair value	$	2,093	$	15,810	$	13,015	$	24,340	$	19,313	$	74,571

_______________

(1)Structured securities include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity.

2628

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Continuous Gross Unrealized Losses for Fixed Maturity Securities by Sector

The estimated fair value and gross unrealized losses of fixed maturity securities in an unrealized loss position, by sector and by length of time that the securities have been in a continuous unrealized loss position, were as follows at:


		June 30, 2023								December 31, 2022									September 30, 2023								December 31, 2022
		Less than 12 Months				12 Months or Greater				Less than 12 Months				12 Months or Greater					Less than 12 Months				12 Months or Greater				Less than 12 Months				12 Months or Greater
		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
		(Dollars in millions)																	(Dollars in millions)
U.S. corporate	U.S. corporate	$	10,391	$	759	$	18,176	$	3,411	$	24,163	$	3,279	$	3,915	$	1,157	U.S. corporate	$	8,741	$	879	$	21,120	$	4,475	$	24,163	$	3,279	$	3,915	$	1,157
Foreign corporate	Foreign corporate	2,980		161		6,974		1,548		8,219		1,407		1,560		505		Foreign corporate	2,032		164		7,962		1,869		8,219		1,407		1,560		505
U.S. government and agency	U.S. government and agency	862		27		3,209		514		3,037		259		1,146		337		U.S. government and agency	2,991		170		3,363		688		3,037		259		1,146		337
RMBS	RMBS	2,264		184		4,412		721		4,693		489		2,245		447		RMBS	1,112		115		5,367		1,083		4,693		489		2,245		447
CMBS	CMBS	2,130		188		4,131		541		5,524		534		961		165		CMBS	1,425		169		4,608		620		5,524		534		961		165
ABS	ABS	1,666		33		3,393		201		3,347		159		1,728		136		ABS	1,336		18		3,510		173		3,347		159		1,728		136
State and political subdivision	State and political subdivision	900		65		1,242		257		2,026		313		239		81		State and political subdivision	1,097		119		1,400		345		2,026		313		239		81
Foreign government	Foreign government	210		12		525		88		779		98		21		8		Foreign government	201		14		575		119		779		98		21		8
Total fixed maturity securities	Total fixed maturity securities	$	21,403	$	1,429	$	42,062	$	7,281	$	51,788	$	6,538	$	11,815	$	2,836	Total fixed maturity securities	$	18,935	$	1,648	$	47,905	$	9,372	$	51,788	$	6,538	$	11,815	$	2,836
Total number of securities in an unrealized loss position	Total number of securities in an unrealized loss position	3,349				6,162				7,261				2,018				Total number of securities in an unrealized loss position	2,921				6,939				7,261				2,018

Allowance for Credit Losses for Fixed Maturity Securities

Evaluation and Measurement Methodologies

For fixed maturity securities in an unrealized loss position, management first assesses whether the Company intends to sell, or whether it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to estimated fair value through net investment gains (losses). For fixed maturity securities that do not meet the aforementioned criteria, management evaluates whether the decline in estimated fair value has resulted from credit losses or other factors. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the allowance for credit loss evaluation process include, but are not limited to: (i) the extent to which estimated fair value is less than amortized cost; (ii) any changes to the rating of the security by a rating agency; (iii) adverse conditions specifically related to the security, industry or geographic area; and (iv) payment structure of the fixed maturity security and the likelihood of the issuer being able to make payments in the future or the issuer’s failure to make scheduled interest and principal payments. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss is deemed to exist and an allowance for credit losses is recorded, limited by the amount that the estimated fair value is less than the amortized cost basis, with a corresponding charge to net investment gains (losses). Any unrealized losses that have not been recorded through an allowance for credit losses are recognized in OCI.

Once a security specific allowance for credit losses is established, the present value of cash flows expected to be collected from the security continues to be reassessed. Any changes in the security specific allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in net investment gains (losses).

Fixed maturity securities are also evaluated to determine whether any amounts have become uncollectible. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses.

Accrued interest receivables are presented separate from the amortized cost basis of fixed maturity securities. An allowance for credit losses is not estimated on an accrued interest receivable, rather receivable balances 90-days past due are deemed uncollectible and are written off with a corresponding reduction to net investment income. The accrued interest receivable on fixed maturity securities totaled ~~$619~~$681 million and $595 million at ~~June~~September 30, 2023 and December 31, 2022, respectively, and is included in accrued investment income.

2729

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Fixed maturity securities are also evaluated to determine if they qualify as purchased financial assets with credit deterioration (“PCD”). To determine if the credit deterioration experienced since origination is more than insignificant, both (i) the extent of the credit deterioration and (ii) any rating agency downgrades are evaluated. For securities categorized as PCD assets, the present value of cash flows expected to be collected from the security are compared to the par value of the security. If the present value of cash flows expected to be collected is less than the par value, credit losses are embedded in the purchase price of the PCD asset. In this situation, both an allowance for credit losses and amortized cost gross-up is recorded, limited by the amount that the estimated fair value is less than the grossed-up amortized cost basis. Any difference between the purchase price and the present value of cash flows is amortized or accreted into net investment income over the life of the PCD asset. Any subsequent PCD asset allowance for credit losses is evaluated in a manner similar to the process described above for fixed maturity securities.

Current Period Evaluation

Based on the Company’s current evaluation of its fixed maturity securities in an unrealized loss position and the current intent or requirement to sell, the Company recorded an allowance for credit losses of ~~$11~~$22 million, relating to 1722 securities at ~~June~~September 30, 2023. Management concluded that for all other fixed maturity securities in an unrealized loss position, the unrealized loss was not due to issuer-specific credit-related factors and as a result was recognized in OCI. Where unrealized losses have not been recognized into income, it is primarily because the securities’ bond issuer(s) are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in estimated fair value is largely due to changes in interest rates and non-issuer specific credit spreads. These issuers continued to make timely principal and interest payments and the estimated fair value is expected to recover as the securities approach maturity.

Rollforward of the Allowance for Credit Losses for Fixed Maturity Securities by Sector

The changes in the allowance for credit losses for fixed maturity securities was $11 million and $6 million at June 30, 2023 and December 31, 2022, respectively. For both the six months ended June 30, 2023 and 2022, the change in the allowance for fixed maturity securities by sector ~~was not significant.~~ were as follows:


	U.S. Corporate		RMBS		Foreign Corporate		CMBS		Total
	(In millions)
Nine Months Ended September 30, 2023
Balance, beginning of period	$	1	$	1	$	1	$	3	$	6
Allowance on securities where credit losses were not previously recorded	14		4		—		—		18

Reductions for securities sold	—		—		—		(1)		(1)


Write-offs charged against allowance (1)	—		—		(1)		—		(1)
Balance, end of period	$	15	$	5	$	—	$	2	$	22
Nine Months Ended September 30, 2022
Balance, beginning of period	$	2	$	—	$	7	$	2	$	11
Allowance on securities where credit losses were not previously recorded	—		1		—		—		1

Reductions for securities sold	(1)		—		—		—		(1)


Write-offs charged against allowance (1)	—		—		(7)		—		(7)
Balance, end of period	$	1	$	1	$	—	$	2	$	4

_______________

(1)The Company recorded total write-offs of $7$8 million and $10 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

~~Mortgage Loans~~

~~Mortgage Loans by Portfolio Segment~~

~~Mortgage loans are summarized as follows at:~~

June 30, 2023 December 31, 2022
Carrying
Value % of
Total Carrying
Value % of
Total
(Dollars in millions)
Commercial $ 13,388 59.3 % $ 13,547 59.2 %
Agricultural 4,401 19.5 4,333 18.9
Residential 4,935 21.8 5,116 22.4
Total mortgage loans (1) 22,724 100.6 22,996 100.5
Allowance for credit losses (145) (0.6) (119) (0.5)
Total mortgage loans, net $ 22,579 100.0 % $ 22,877 100.0 %

~~_______________~~

~~(1)Purchases of mortgage loans from third parties were~~$0 and $32 million for the three months and six months ended June 30, 2023, respectively, and $415 million and $1.3 billion for the three months and six months ended June 30, 2022, respectively, and were primarily comprised of residential mortgage loans.

2830

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:


	September 30, 2023				December 31, 2022
	Carrying Value		% of Total		Carrying Value		% of Total
	(Dollars in millions)
Commercial	$	13,303	58.7	%	$	13,547	59.2	%
Agricultural	4,431		19.6		4,333		18.9
Residential	5,051		22.3		5,116		22.4
Total mortgage loans (1)	22,785		100.6		22,996		100.5
Allowance for credit losses	(137)		(0.6)		(119)		(0.5)
Total mortgage loans, net	$	22,648	100.0	%	$	22,877	100.0	%

_______________

(1)Purchases of mortgage loans from third parties were$224 million and $255 million for the three months and nine months ended September 30, 2023, respectively, and $387 million and $1.6 billion for the three months and nine months ended September 30, 2022, respectively, and were primarily comprised of residential mortgage loans.

Allowance for Credit Losses for Mortgage Loans

Evaluation and Measurement Methodologies

The allowance for credit losses is a valuation account that is deducted from the mortgage loan’s amortized cost basis to present the net amount expected to be collected on the mortgage loan. The loan balance, or a portion of the loan balance, is written-off against the allowance when management believes this amount is uncollectible.

Accrued interest receivables are presented separate from the amortized cost basis of mortgage loans. An allowance for credit losses is generally not estimated on an accrued interest receivable, rather when a loan is placed in nonaccrual status the associated accrued interest receivable balance is written off with a corresponding reduction to net investment income. The accrued interest receivable on mortgage loans is included in accrued investment income and totaled ~~$114~~$117 million and $115 million at ~~June~~September 30, 2023 and December 31, 2022, respectively.

The allowance for credit losses is estimated using relevant available information, from internal and external sources, relating to past events, current conditions, and a reasonable and supportable forecast. Historical credit loss experience provides the basis for estimating expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics and environmental conditions. A reasonable and supportable forecast period of two-years is used with an input reversion period of one-year.

Mortgage loans are evaluated in each of the three portfolio segments to determine the allowance for credit losses. The loan-level loss rates are determined using individual loan terms and characteristics, risk pools/internal ratings, national economic forecasts, prepayment speeds, and estimated default and loss severity.

The resulting loss rates are applied to the mortgage loan’s amortized cost to generate an allowance for credit losses. In certain situations, the allowance for credit losses is measured as the difference between the loan’s amortized cost and liquidation value of the collateral. These situations include collateral dependent loans, modifications, foreclosure probable loans, and loans with dissimilar risk characteristics.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Mortgage loans are also evaluated to determine if they qualify as PCD assets. To determine if the credit deterioration experienced since origination is more than insignificant, the extent of credit deterioration is evaluated. All re-performing/modified loan (“RPL”) pools purchased after December 31, 2019 are determined to have been acquired with evidence of more than insignificant credit deterioration since origination and are classified as PCD assets. RPLs are pools of residential mortgage loans acquired at a discount or premium which have both credit and non-credit components. For PCD mortgage loans, the allowance for credit losses is determined using a similar methodology described above, except the loss-rate is determined at the pool level instead of the individual loan level. The initial allowance for credit losses, determined on a collective basis, is then allocated to the individual loans. The initial amortized cost of the loan is grossed-up to reflect the sum of the loan’s purchase price and allowance for credit losses. The difference between the grossed-up amortized cost basis and the par value of the loan is a non-credit discount or premium, which is accreted or amortized into net investment income over the remaining life of the loan. Any subsequent PCD mortgage loan allowance for credit losses is evaluated in a manner similar to the process described above for each of the three portfolio segments.

Rollforward of the Allowance for Credit Losses for Mortgage Loans by Portfolio Segment

The changes in the allowance for credit losses by portfolio segment were as follows:


	Commercial		Agricultural		Residential		Total
	(In millions)
Nine Months Ended September 30, 2023
Balance, beginning of period	$	49	$	15	$	55	$	119
Current period provision	22		1		—		23
Charge-offs, net of recoveries	(4)		(1)		—		(5)

Balance, end of period	$	67	$	15	$	55	$	137
Nine Months Ended September 30, 2022
Balance, beginning of period	$	67	$	12	$	44	$	123
Current period provision	1		3		(5)		(1)
Charge-offs, net of recoveries	(23)		—		—		(23)

Balance, end of period	$	45	$	15	$	39	$	99

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Credit Quality of Mortgage Loans by Portfolio Segment

The amortized cost of mortgage loans by year of origination and credit quality indicator was as follows at:


	2023		2022		2021		2020		2019		Prior		Total
	(In millions)
September 30, 2023
Commercial mortgage loans
Loan-to-value ratios:
Less than 65%	$	161	$	1,876	$	2,515	$	224	$	1,289	$	2,824	$	8,889
65% to 75%	—		529		650		177		269		1,194		2,819
76% to 80%	—		12		50		39		209		508		818
Greater than 80%	—		—		—		—		95		682		777
Total commercial mortgage loans	161		2,417		3,215		440		1,862		5,208		13,303
Agricultural mortgage loans
Loan-to-value ratios:
Less than 65%	160		574		1,138		457		507		1,305		4,141
65% to 75%	—		128		107		6		31		18		290

Greater than 80%	—		—		—		—		—		—		—
Total agricultural mortgage loans	160		702		1,245		463		538		1,323		4,431
Residential mortgage loans
Performing	99		1,274		1,693		149		208		1,543		4,966
Nonperforming	—		20		20		1		2		42		85
Total residential mortgage loans	99		1,294		1,713		150		210		1,585		5,051
Total	$	420	$	4,413	$	6,173	$	1,053	$	2,610	$	8,116	$	22,785


	2022		2021		2020		2019		2018		Prior		Total
	(In millions)
December 31, 2022
Commercial mortgage loans
Loan-to-value ratios:
Less than 65%	$	1,916	$	2,819	$	405	$	1,493	$	888	$	3,624	$	11,145
65% to 75%	503		354		—		271		367		402		1,897
76% to 80%	—		18		40		90		65		48		261
Greater than 80%	—		—		—		25		57		162		244
Total commercial mortgage loans	2,419		3,191		445		1,879		1,377		4,236		13,547
Agricultural mortgage loans
Loan-to-value ratios:
Less than 65%	532		1,163		418		496		643		710		3,962
65% to 75%	148		90		59		56		1		16		370

Greater than 80%	—		—		—		—		1		—		1
Total agricultural mortgage loans	680		1,253		477		552		645		726		4,333
Residential mortgage loans
Performing	1,266		1,745		167		215		168		1,491		5,052
Nonperforming	4		8		—		2		1		49		64
Total residential mortgage loans	1,270		1,753		167		217		169		1,540		5,116
Total	$	4,369	$	6,197	$	1,089	$	2,648	$	2,191	$	6,502	$	22,996

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

~~Rollforward of the Allowance for Credit Losses for Mortgage Loans by Portfolio Segment~~

~~The changes in the allowance for credit losses by portfolio segment were as follows:~~

Commercial Agricultural Residential Total
(In millions)
Six Months Ended June 30, 2023
Balance, beginning of period $ 49 $ 15 $ 55 $ 119
Current period provision 26 — 1 27
Charge-offs, net of recoveries — (1) — (1)
Balance, end of period $ 75 $ 14 $ 56 $ 145
Six Months Ended June 30, 2022
Balance, beginning of period $ 67 $ 12 $ 44 $ 123
Current period provision �� 3 — 3
Charge-offs, net of recoveries (23) — — (23)
Balance, end of period $ 44 $ 15 $ 44 $ 103

~~Credit Quality of Mortgage Loans by Portfolio Segment~~

~~The amortized cost of mortgage loans by year of origination and credit quality indicator was as follows at:~~

2023 2022 2021 2020 2019 Prior Total
(In millions)
June 30, 2023
Commercial mortgage loans
Loan-to-value ratios:
Less than 65% $ 79 $ 1,877 $ 2,672 $ 225 $ 1,290 $ 2,963 $ 9,106
65% to 75% 50 529 523 178 269 1,155 2,704
76% to 80% — 11 18 39 210 536 814
Greater than 80% — — — — 96 668 764
Total commercial mortgage loans 129 2,417 3,213 442 1,865 5,322 13,388
Agricultural mortgage loans
Loan-to-value ratios:
Less than 65% 108 562 1,136 432 511 1,320 4,069
65% to 75% — 139 112 32 31 18 332
Greater than 80% — — — — — — —
Total agricultural mortgage loans 108 701 1,248 464 542 1,338 4,401
Residential mortgage loans
Performing 2 1,195 1,717 155 212 1,576 4,857
Nonperforming — 9 16 — 2 51 78
Total residential mortgage loans 2 1,204 1,733 155 214 1,627 4,935
Total $ 239 $ 4,322 $ 6,194 $ 1,061 $ 2,621 $ 8,287 $ 22,724

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~6. Investments (continued)~~

2022 2021 2020 2019 2018 Prior Total
(In millions)
December 31, 2022
Commercial mortgage loans
Loan-to-value ratios:
Less than 65% $ 1,916 $ 2,819 $ 405 $ 1,493 $ 888 $ 3,624 $ 11,145
65% to 75% 503 354 — 271 367 402 1,897
76% to 80% — 18 40 90 65 48 261
Greater than 80% — — — 25 57 162 244
Total commercial mortgage loans 2,419 3,191 445 1,879 1,377 4,236 13,547
Agricultural mortgage loans
Loan-to-value ratios:
Less than 65% 532 1,163 418 496 643 710 3,962
65% to 75% 148 90 59 56 1 16 370
Greater than 80% — — — — 1 — 1
Total agricultural mortgage loans 680 1,253 477 552 645 726 4,333
Residential mortgage loans
Performing 1,266 1,745 167 215 168 1,491 5,052
Nonperforming 4 8 — 2 1 49 64
Total residential mortgage loans 1,270 1,753 167 217 169 1,540 5,116
Total $ 4,369 $ 6,197 $ 1,089 $ 2,648 $ 2,191 $ 6,502 $ 22,996

The loan-to-value ratio is a measure commonly used to assess the quality of commercial and agricultural mortgage loans. The loan-to-value ratio compares the amount of the loan to the estimated fair value of the underlying property collateralizing the loan and is commonly expressed as a percentage. A loan-to-value ratio less than 100% indicates an excess of collateral value over the loan amount. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value. Performing status is a measure commonly used to assess the quality of residential mortgage loans. A loan is considered performing when the borrower makes consistent and timely payments.

The amortized cost of commercial mortgage loans by debt-service coverage ratio was as follows at:


		June 30, 2023				December 31, 2022					September 30, 2023				December 31, 2022
		Amortized Cost		% of Total		Amortized Cost		% of Total			Amortized Cost		% of Total		Amortized Cost		% of Total
		(Dollars in millions)									(Dollars in millions)
Debt-service coverage ratios:	Debt-service coverage ratios:									Debt-service coverage ratios:
Greater than 1.20x	Greater than 1.20x	$	12,460	93.1	%	$	12,132	89.6	%	Greater than 1.20x	$	12,272	92.2	%	$	12,132	89.6	%
1.00x - 1.20x	1.00x - 1.20x	431		3.2		589		4.3		1.00x - 1.20x	540		4.1		589		4.3
Less than 1.00x	Less than 1.00x	497		3.7		826		6.1		Less than 1.00x	491		3.7		826		6.1
Total	Total	$	13,388	100.0	%	$	13,547	100.0	%	Total	$	13,303	100.0	%	$	13,547	100.0	%

The debt-service coverage ratio compares a property’s net operating income to its debt-service payments. Debt-service coverage ratios less than 1.00 times indicate that property operations do not generate enough income to cover the loan’s current debt payments. A debt-service coverage ratio greater than 1.00 times indicates an excess of net operating income over the debt-service payments.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~6. Investments (continued)~~

Past Due Mortgage Loans by Portfolio Segment

The Company has a high-quality, well-performing mortgage loan portfolio, with over 99% of all mortgage loans classified as performing at both ~~June~~September 30, 2023 and December 31, 2022. Delinquency is defined consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days; and agricultural mortgage loans — 90 days.

The aging of the amortized cost of past due mortgage loans by portfolio segment was as follows at:


		June 30, 2023								December 31, 2022									September 30, 2023								December 31, 2022
		Commercial		Agricultural		Residential		Total		Commercial		Agricultural		Residential		Total			Commercial		Agricultural		Residential		Total		Commercial		Agricultural		Residential		Total
		(In millions)																	(In millions)
Current	Current	$	13,371	$	4,376	$	4,788	$	22,535	$	13,547	$	4,314	$	5,041	$	22,902	Current	$	13,286	$	4,409	$	4,890	$	22,585	$	13,547	$	4,314	$	5,041	$	22,902
30-59 days past due	30-59 days past due	—		3		69		72		—		—		11		11		30-59 days past due	—		—		76		76		—		—		11		11
60-89 days past due	60-89 days past due	—		—		21		21		—		—		16		16		60-89 days past due	—		—		30		30		—		—		16		16
90-179 days past due	90-179 days past due	17		22		25		64		—		3		31		34		90-179 days past due	—		—		23		23		—		3		31		34
180+ days past due	180+ days past due	—		—		32		32		—		16		17		33		180+ days past due	17		22		32		71		—		16		17		33
Total	Total	$	13,388	$	4,401	$	4,935	$	22,724	$	13,547	$	4,333	$	5,116	$	22,996	Total	$	13,303	$	4,431	$	5,051	$	22,785	$	13,547	$	4,333	$	5,116	$	22,996

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Mortgage Loans in Nonaccrual Status by Portfolio Segment

Mortgage loans are placed in a nonaccrual status if there are concerns regarding collectability of future payments or the loan is past due, unless the past due loan is well collateralized.

The amortized cost of mortgage loans in a nonaccrual status by portfolio segment was as follows at:


		Commercial		Agricultural		Residential (1)		Total			Commercial		Agricultural		Residential (1)		Total
		(In millions)									(In millions)
June 30, 2023		$	29	$	—	$	78	$	107
September 30, 2023										September 30, 2023	$	17	$	—	$	85	$	102
December 31, 2022	December 31, 2022	$	11	$	3	$	64	$	78	December 31, 2022	$	11	$	3	$	64	$	78

_______________

(1)The Company had no mortgage loans in nonaccrual status for which there was no related allowance for credit losses at both ~~June~~September 30, 2023 and December 31, 2022.

Current period investment income on mortgage loans in nonaccrual status was ~~less than~~ $1 million for both the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

Other Invested Assets

Over 75% of other invested assets is comprised of freestanding derivatives with positive estimated fair values. See Note 7 for information about freestanding derivatives with positive estimated fair values. Other invested assets also includes the Company’s investment in company-owned life insurance, Federal Home Loan Bank (“FHLB”) stock, the intercompany lending facility, tax credit and renewable energy partnerships and leveraged leases.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities and the effect on future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

The components of net unrealized investment gains (losses), included in AOCI, were as follows at:


	September 30, 2023		December 31, 2022
	(In millions)
Fixed maturity securities	$	(10,760)	$	(8,632)
Derivatives	501		628
Other	(5)		(7)
Subtotal	(10,264)		(8,011)
Amounts allocated from:
Future policy benefits	1,412		992
Deferred income tax benefit (expense)	1,859		1,474
Net unrealized investment gains (losses)	$	(6,993)	$	(5,545)

The changes in net unrealized investment gains (losses) were as follows:


	Nine Months Ended September 30, 2023
	(In millions)
Balance at December 31, 2022	$	(5,545)
Unrealized investment gains (losses) during the period	(2,253)
Unrealized investment gains (losses) relating to:
Future policy benefits	420
Deferred income tax benefit (expense)	385
Balance at September 30, 2023	$	(6,993)
Change in net unrealized investment gains (losses)	$	(1,448)

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

~~The components of net unrealized investment gains (losses), included in AOCI, were as follows at:~~

June 30, 2023 December 31, 2022
(In millions)
Fixed maturity securities $ (7,861) $ (8,632)
Derivatives 535 628
Other (6) (7)
Subtotal (7,332) (8,011)
Amounts allocated from:
Future policy benefits 860 992
Deferred income tax benefit (expense) 1,360 1,474
Net unrealized investment gains (losses) $ (5,112) $ (5,545)

~~The changes in net unrealized investment gains (losses) were as follows:~~


	~~Six Months Ended June 30, 2023~~
	~~(In millions)~~
~~Balance at December 31, 2022~~	$	~~(5,545)~~
~~Unrealized investment gains (losses) during the period~~	~~679~~
~~Unrealized investment gains (losses) relating to:~~
~~Future policy benefits~~	~~(132)~~
~~Deferred income tax benefit (expense)~~	~~(114)~~
~~Balance at June 30, 2023~~	$	~~(5,112)~~
~~Change in net unrealized investment gains (losses)~~	$	~~433~~

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both ~~June~~September 30, 2023 and December 31, 2022.

Securities Lending

Elements of the securities lending program are presented below at:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
		(In millions)					(In millions)
Securities on loan: (1)	Securities on loan: (1)					Securities on loan: (1)
Amortized cost	Amortized cost	$	3,582	$	3,995	Amortized cost	$	3,620	$	3,995
Estimated fair value	Estimated fair value	$	3,329	$	3,638	Estimated fair value	$	3,093	$	3,638
Cash collateral received from counterparties (2)	Cash collateral received from counterparties (2)	$	3,390	$	3,731	Cash collateral received from counterparties (2)	$	3,171	$	3,731

Reinvestment portfolio — estimated fair value	Reinvestment portfolio — estimated fair value	$	3,297	$	3,603	Reinvestment portfolio — estimated fair value	$	3,051	$	3,603

_______________

(1)Included in fixed maturity securities.

(2)Included in payables for collateral under securities loaned and other transactions.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~6. Investments (continued)~~

The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at:


		June 30, 2023						December 31, 2022						September 30, 2023						December 31, 2022
		Open (1)		1 Month or Less		1 to 6 Months		Total		Open (1)		1 Month or Less			1 to 6 Months		Total			Open (1)		1 Month or Less		1 to 6 Months		Total		Open (1)		1 Month or Less		1 to 6 Months		Total
		(In millions)												(In millions)

U.S. government and agency	U.S. government and agency	$	678	$	512	$	1,705	$	2,895	$	640	$	1,527		$	984	$	3,151	U.S. government and agency	$	714	$	1,064	$	996	$	2,774	$	640	$	1,527	$	984	$	3,151
U.S. corporate	U.S. corporate	—		321		—		321		2		410			—		412		U.S. corporate	—		253		27		280		2		410		—		412

Foreign corporate	Foreign corporate	—		166		—		166		—		152			—		152		Foreign corporate	—		99		8		107		—		152		—		152
Foreign government	Foreign government	—		8		—		8		—		16			—		16		Foreign government	—		4		6		10		—		16		—		16
Total	Total	$	678	$	1,007	$	1,705	$	3,390	$	642	$	2,105		$	984	$	3,731	Total	$	714	$	1,420	$	1,037	$	3,171	$	642	$	2,105	$	984	$	3,731

_______________

(1)The related loaned security could be returned to the Company on the next business day which would require the Company to immediately return the cash collateral.

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized in normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at ~~June~~September 30, 2023 was ~~$666~~$699 million, primarily comprised of U.S. government and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement.

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including ~~ABS,~~ agency RMBS, ABS, U.S. government and agency securities, U.S. and foreign corporate securities, non-agency RMBS and CMBS) with ~~54%~~58% invested in ~~agency RMBS,~~ U.S. government and agency securities, agency RMBS and cash and cash equivalents at ~~June~~September 30, 2023. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral at estimated fair value were as follows at:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
		(In millions)					(In millions)
Invested assets on deposit (regulatory deposits) (1)	Invested assets on deposit (regulatory deposits) (1)	$	8,265	$	7,996	Invested assets on deposit (regulatory deposits) (1)	$	7,860	$	7,996
Invested assets held in trust (reinsurance agreements) (2)	Invested assets held in trust (reinsurance agreements) (2)	5,659		5,592		Invested assets held in trust (reinsurance agreements) (2)	5,501		5,592
Invested assets pledged as collateral (3)	Invested assets pledged as collateral (3)	13,464		13,920		Invested assets pledged as collateral (3)	14,260		13,920
Total invested assets on deposit, held in trust and pledged as collateral	Total invested assets on deposit, held in trust and pledged as collateral	$	27,388	$	27,508	Total invested assets on deposit, held in trust and pledged as collateral	$	27,621	$	27,508

_______________

(1)The Company has assets, primarily fixed maturity securities, on deposit with governmental authorities relating to certain policyholder liabilities, of which ~~$60~~$94 million and $21 million of the assets on deposit represents restricted cash and cash equivalents at ~~June~~September 30, 2023 and December 31, 2022, respectively.

(2)The Company has assets, primarily fixed maturity securities, held in trust relating to certain reinsurance transactions, of which ~~$178~~$221 million and $233 million of the assets held in trust balance represents restricted cash and cash equivalents at ~~June~~September 30, 2023 and December 31, 2022, respectively.

(3)The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 3 of the Notes to the Consolidated Financial Statements included in the 2022 Annual Report) and derivative transactions (see Note 7).

See “— Securities Lending” for information regarding securities on loan. In addition, the Company’s investment in FHLB common stock, which is considered restricted until redeemed by the issuer, was ~~$216~~$247 million and $201 million at redemption value at ~~June~~September 30, 2023 and December 31, 2022, respectively.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~6. Investments (continued)~~

Variable Interest Entities

A variable interest entity (“VIE”) is a legal entity that does not have sufficient equity at risk to finance its activities or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity.

The Company enters into various arrangements with VIEs in the normal course of business and has invested in legal entities that are VIEs. VIEs are consolidated when it is determined that the Company is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both (i) the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In addition, the evaluation of whether a legal entity is a VIE and if the Company is a primary beneficiary includes a review of the capital structure of the VIE, the related contractual relationships and terms, the nature of the operations and purpose of the VIE, the nature of the VIE interests issued and the Company’s involvement with the entity.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either ~~June~~September 30, 2023 or December 31, 2022.

The carrying amount and maximum exposure to loss related to the VIEs for which the Company has concluded that it holds a variable interest, but is not the primary beneficiary, were as follows at:


		June 30, 2023				December 31, 2022					September 30, 2023				December 31, 2022
		Carrying Amount		Maximum Exposure to Loss		Carrying Amount		Maximum Exposure to Loss			Carrying Amount		Maximum Exposure to Loss		Carrying Amount		Maximum Exposure to Loss
		(In millions)									(In millions)
Fixed maturity securities	Fixed maturity securities	$	15,553	$	17,072	$	15,781	$	17,334	Fixed maturity securities	$	14,779	$	16,592	$	15,781	$	17,334
Limited partnerships and LLCs	Limited partnerships and LLCs	4,303		5,461		4,123		5,478		Limited partnerships and LLCs	4,345		5,531		4,123		5,478
Total	Total	$	19,856	$	22,533	$	19,904	$	22,812	Total	$	19,124	$	22,123	$	19,904	$	22,812

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

The Company’s investments in unconsolidated VIEs are described below.

Fixed Maturity Securities

The Company invests in U.S. corporate bonds, foreign corporate bonds and Structured Securities issued by VIEs. The Company is not obligated to provide any financial or other support to these VIEs, other than the original investment. The Company’s involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer, or investment manager, which are generally viewed as having the power to direct the activities that most significantly impact the economic performance of the VIE, nor does the Company function in any of these roles. The Company does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity; as a result, the Company has determined it is not the primary beneficiary, or consolidator, of the VIE. The Company’s maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See “— Fixed Maturity Securities Available-for-sale” for information on these securities.

Limited Partnerships and LLCs

The Company holds investments in certain limited partnerships and LLCs which are VIEs. These ventures include limited partnerships, LLCs, private equity funds, and, to a lesser extent, tax credit and renewable energy partnerships. The Company is not considered the primary beneficiary, or consolidator, when its involvement takes the form of a limited partner interest and is restricted to a role of a passive investor, as a limited partner’s interest does not provide the Company with any substantive kick-out or participating rights, nor does it provide the Company with the power to direct the activities of the fund. The Company’s maximum exposure to loss on these investments is limited to: (i) the amount invested in debt or equity of the VIE and (ii) commitments to the VIE, as described in Note 12.

Net Investment Income

The components of net investment income were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Investment income:
Fixed maturity securities	$	886	$	779	$	2,577	$	2,221
Equity securities	1		1		2		2
Mortgage loans	240		207		715		614
Policy loans	11		10		33		31
Limited partnerships and LLCs (1)	52		(106)		128		257
Cash, cash equivalents and short-term investments	50		17		133		22
Other	24		20		64		50
Total investment income	1,264		928		3,652		3,197
Less: Investment expenses	90		71		271		161
Net investment income	$	1,174	$	857	$	3,381	$	3,036

_______________

(1)Includes net investment income pertaining to other limited partnership interests of $64 million and $156 million for the three months and nine months ended September 30, 2023, respectively, and ($127) million and $178 million for the three months and nine months ended September 30, 2022, respectively.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

6. Investments (continued)

Net Investment ~~Income~~

~~The components of net investment income were as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
(In millions)
Investment income:
Fixed maturity securities $ 861 $ 733 $ 1,691 $ 1,442
Equity securities 1 1 1 1
Mortgage loans 237 205 475 407
Policy loans 13 12 22 21
Limited partnerships and LLCs (1) 89 122 76 363
Cash, cash equivalents and short-term investments 43 4 83 5
Other 18 16 40 30
Total investment income 1,262 1,093 2,388 2,269
Less: Investment expenses 90 49 181 90
Net investment income $ 1,172 $ 1,044 $ 2,207 $ 2,179

~~_______________~~

~~(1)~~Includes net investment income pertaining to other limited partnership interests of $93 million and $92 million for the three months and six months ended June 30, 2023, respectively, and $93 million and $305 million for the three months and six months ended June 30, 2022, respectively.

~~Net Investment~~ Gains (Losses)

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
		(In millions)									(In millions)
Fixed maturity securities	Fixed maturity securities	$	(55)	$	(60)	$	(129)	$	(101)	Fixed maturity securities	$	(54)	$	(37)	$	(183)	$	(138)
Equity securities	Equity securities	1		(4)		(4)		(10)		Equity securities	—		(1)		(4)		(11)
Mortgage loans	Mortgage loans	(10)		1		(27)		(3)		Mortgage loans	3		2		(24)		(1)
Limited partnerships and LLCs	Limited partnerships and LLCs	—		(1)		—		(17)		Limited partnerships and LLCs	—		(4)		—		(21)
Other	Other	(1)		—		(1)		—		Other	(1)		—		(2)		—
Total net investment gains (losses)	Total net investment gains (losses)	$	(65)	$	(64)	$	(161)	$	(131)	Total net investment gains (losses)	$	(52)	$	(40)	$	(213)	$	(171)

Gains (losses) from foreign currency transactions included within net investment gains (losses) were ~~less than $1~~$7 million for both the three months and ~~six~~nine months ended ~~June~~September 30, 2023, and ~~less than $1~~($3) million and ($~~16)~~19) million for the three months and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~6. Investments (continued)~~

Sales or Disposals of Fixed Maturity Securities

Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
		(In millions)									(In millions)
Proceeds	Proceeds	$	504	$	1,564	$	1,270	$	4,104	Proceeds	$	494	$	1,115	$	1,764	$	5,219
Gross investment gains	Gross investment gains	$	8	$	2	$	11	$	49	Gross investment gains	$	1	$	1	$	12	$	50
Gross investment losses	Gross investment losses	(56)		(60)		(127)		(146)		Gross investment losses	(44)		(37)		(171)		(183)
Net investment gains (losses)	Net investment gains (losses)	$	(48)	$	(58)	$	(116)	$	(97)	Net investment gains (losses)	$	(43)	$	(36)	$	(159)	$	(133)

7. Derivatives

Accounting for Derivatives

See Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2022 Annual Report for a description of the Company’s accounting policies for derivatives and the fair value hierarchy for derivatives.

Types of Derivative Instruments and Derivative Strategies

The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to minimize its exposure to various market risks. Commonly used derivative instruments include, but are not necessarily limited to:

•Interest rate derivatives: swaps, floors, caps, swaptions and forwards;

•Foreign currency exchange rate derivatives: forwards and swaps;

•Equity market derivatives: options, total return swaps and hybrid options; and

•Credit derivatives: single and index reference credit default swaps and swaptions.

For detailed information on these contracts and the related strategies, see Note 7 of the Notes to the Consolidated Financial Statements included in the 2022 Annual Report.

3739

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

7. Derivatives (continued)

Primary Risks Managed by Derivatives

The primary underlying risk exposure, gross notional amount and estimated fair value of derivatives, excluding embedded derivatives, held were as follows at:


			June 30, 2023						December 31, 2022								September 30, 2023						December 31, 2022
		Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value					Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
					Assets		Liabilities				Assets		Liabilities						Assets		Liabilities				Assets		Liabilities
			(In millions)														(In millions)
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:														Derivatives Designated as Hedging Instruments:

Cash flow hedges:	Cash flow hedges:														Cash flow hedges:
Interest rate forwards	Interest rate forwards	Interest rate	$	20	$	—	$	4	$	60	$	—	$	12	Interest rate forwards	Interest rate	$	—	$	—	$	—	$	60	$	—	$	12
Foreign currency swaps	Foreign currency swaps	Foreign currency exchange rate	3,909		499		20		3,981		584		8		Foreign currency swaps	Foreign currency exchange rate	3,898		462		14		3,981		584		8

Total qualifying hedges	Total qualifying hedges		3,929		499		24		4,041		584		20		Total qualifying hedges		3,898		462		14		4,041		584		20
Derivatives Not Designated or Not Qualifying as Hedging Instruments:	Derivatives Not Designated or Not Qualifying as Hedging Instruments:														Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps	Interest rate swaps	Interest rate	14,853		90		70		3,145		98		46		Interest rate swaps	Interest rate	30,527		168		280		3,145		98		46
Interest rate floors	Interest rate floors	Interest rate	3,000		4		1		3,250		12		3		Interest rate floors	Interest rate	3,000		2		1		3,250		12		3
Interest rate caps	Interest rate caps	Interest rate	5,800		94		34		6,350		137		43		Interest rate caps	Interest rate	5,800		80		27		6,350		137		43

Interest rate options	Interest rate options	Interest rate	31,680		43		208		28,688		22		232		Interest rate options	Interest rate	31,080		19		303		28,688		22		232

Interest rate forwards	Interest rate forwards	Interest rate	17,939		47		1,941		18,168		35		2,466		Interest rate forwards	Interest rate	16,441		178		2,867		18,168		35		2,466
Foreign currency swaps	Foreign currency swaps	Foreign currency exchange rate	765		126		—		810		147		—		Foreign currency swaps	Foreign currency exchange rate	759		124		—		810		147		—
Foreign currency forwards	Foreign currency forwards	Foreign currency exchange rate	309		—		—		295		1		1		Foreign currency forwards	Foreign currency exchange rate	312		—		1		295		1		1

Credit default swaps — written	Credit default swaps — written	Credit	1,530		24		1		1,757		18		2		Credit default swaps — written	Credit	1,530		21		1		1,757		18		2
Credit default swaptions	Credit default swaptions	Credit	—		—		—		100		—		—		Credit default swaptions	Credit	—		—		—		100		—		—

Equity index options	Equity index options	Equity market	15,528		626		495		17,229		697		351		Equity index options	Equity market	16,215		508		436		17,229		697		351

Equity total return swaps	Equity total return swaps	Equity market	46,739		1,438		1,113		32,909		520		747		Equity total return swaps	Equity market	56,332		931		1,061		32,909		520		747
Hybrid options	Hybrid options	Equity market	630		4		—		—		—		—		Hybrid options	Equity market	630		7		—		—		—		—
Total non-designated or non-qualifying derivatives	Total non-designated or non-qualifying derivatives		138,773		2,496		3,863		112,701		1,687		3,891		Total non-designated or non-qualifying derivatives		162,626		2,038		4,977		112,701		1,687		3,891
Total	Total		$	142,702	$	2,995	$	3,887	$	116,742	$	2,271	$	3,911	Total		$	166,524	$	2,500	$	4,991	$	116,742	$	2,271	$	3,911

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both ~~June~~September 30, 2023 and December 31, 2022. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and generally do not qualify for hedge accounting because they do not meet the criteria required under portfolio hedging rules; (ii) derivatives that economically hedge insurance liabilities and generally do not qualify for hedge accounting because they do not meet the criteria of being “highly effective” as outlined in Accounting Standards Codification 815 — Derivatives and Hedging; (iii) derivatives that economically hedge MRBs that do not qualify for hedge accounting because the changes in estimated fair value of the MRBs are already recorded in net income; and (iv) written credit default swaps that are used to create synthetic credit investments and that do not qualify for hedge accounting because they do not involve a hedging relationship.

3840

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

7. Derivatives (continued)

The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items reported in net derivative gains (losses) were as follows:


		Net Derivative Gains (Losses) Recognized for Derivatives		Net Derivative Gains (Losses) Recognized for Hedged Items		Net Investment Income			Amount of Gains (Losses) Deferred in AOCI			Net Derivative Gains (Losses) Recognized for Derivatives		Net Derivative Gains (Losses) Recognized for Hedged Items		Net Investment Income		Amount of Gains (Losses) Deferred in AOCI
		(In millions)						(In millions)
Three Months Ended June 30, 2023
Three Months Ended September 30, 2023											Three Months Ended September 30, 2023
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:										Derivatives Designated as Hedging Instruments:
Cash flow hedges:	Cash flow hedges:										Cash flow hedges:
Interest rate	Interest rate	$	(2)	$	—	$	1		$	—	Interest rate	$	—	$	—	$	1	$	(2)
Foreign currency exchange rate	Foreign currency exchange rate	5		(5)		12			(49)		Foreign currency exchange rate	1		(1)		13		(30)
Total cash flow hedges	Total cash flow hedges	3		(5)		13			(49)		Total cash flow hedges	1		(1)		14		(32)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:	Derivatives Not Designated or Not Qualifying as Hedging Instruments:										Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate	Interest rate	(551)		—		—			—		Interest rate	(1,481)		—		—		—
Foreign currency exchange rate	Foreign currency exchange rate	(9)		2		—			—		Foreign currency exchange rate	14		(6)		—		—
Credit	Credit	9		—		—			—		Credit	3		—		—		—
Equity market	Equity market	433		—		—			—		Equity market	(280)		—		—		—
Embedded	Embedded	(1,707)		—		—			—		Embedded	912		—		—		—
Total non-qualifying hedges	Total non-qualifying hedges	(1,825)		2		—			—		Total non-qualifying hedges	(832)		(6)		—		—
Total	Total	$	(1,822)	$	(3)	$	13		$	(49)	Total	$	(831)	$	(7)	$	14	$	(32)
Three Months Ended June 30, 2022
Three Months Ended September 30, 2022											Three Months Ended September 30, 2022
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:										Derivatives Designated as Hedging Instruments:

Cash flow hedges:	Cash flow hedges:										Cash flow hedges:
Interest rate	Interest rate	$	3	$	—	$	1		$	(20)	Interest rate	$	—	$	—	$	1	$	(8)
Foreign currency exchange rate	Foreign currency exchange rate	1		(1)		14			282		Foreign currency exchange rate	8		(7)		17		339
Total cash flow hedges	Total cash flow hedges	4		(1)		15			262		Total cash flow hedges	8		(7)		18		331
Derivatives Not Designated or Not Qualifying as Hedging Instruments:	Derivatives Not Designated or Not Qualifying as Hedging Instruments:										Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate	Interest rate	(1,307)		—		—			—		Interest rate	(1,233)		—		—		—
Foreign currency exchange rate	Foreign currency exchange rate	72		(8)		—			—		Foreign currency exchange rate	91		(12)		—		—
Credit	Credit	(25)		—		—			—		Credit	5		—		—		—
Equity market	Equity market	420		—		—			—		Equity market	40		—		—		—
Embedded	Embedded	2,825		—		—			—		Embedded	518		—		—		—
Total non-qualifying hedges	Total non-qualifying hedges	1,985		(8)		—			—		Total non-qualifying hedges	(579)		(12)		—		—
Total	Total	$	1,989	$	(9)	$	15		$	262	Total	$	(571)	$	(19)	$	18	$	331

3941

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

7. Derivatives (continued)


		Net Derivative Gains (Losses) Recognized for Derivatives		Net Derivative Gains (Losses) Recognized for Hedged Items		Net Investment Income			Amount of Gains (Losses) Deferred in AOCI			Net Derivative Gains (Losses) Recognized for Derivatives		Net Derivative Gains (Losses) Recognized for Hedged Items		Net Investment Income		Amount of Gains (Losses) Deferred in AOCI
		(In millions)						(In millions)
Six Months Ended June 30, 2023
Nine Months Ended September 30, 2023											Nine Months Ended September 30, 2023
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:										Derivatives Designated as Hedging Instruments:
Cash flow hedges:	Cash flow hedges:										Cash flow hedges:
Interest rate	Interest rate	$	(2)	$	—	$	2		$	—	Interest rate	$	(2)	$	—	$	3	$	(2)
Foreign currency exchange rate	Foreign currency exchange rate	4		(5)		26			(89)		Foreign currency exchange rate	5		(6)		39		(119)
Total cash flow hedges	Total cash flow hedges	2		(5)		28			(89)		Total cash flow hedges	3		(6)		42		(121)
Derivatives Not Designated or Not Qualifying as Hedging Instruments:	Derivatives Not Designated or Not Qualifying as Hedging Instruments:										Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate	Interest rate	59		—		—			—		Interest rate	(1,422)		—		—		—
Foreign currency exchange rate	Foreign currency exchange rate	(19)		4		—			—		Foreign currency exchange rate	(5)		(2)		—		—
Credit	Credit	19		—		—			—		Credit	22		—		—		—
Equity market	Equity market	324		—		—			—		Equity market	44		—		—		—
Embedded	Embedded	(2,797)		—		—			—		Embedded	(1,885)		—		—		—
Total non-qualifying hedges	Total non-qualifying hedges	(2,414)		4		—			—		Total non-qualifying hedges	(3,246)		(2)		—		—
Total	Total	$	(2,412)	$	(1)	$	28		$	(89)	Total	$	(3,243)	$	(8)	$	42	$	(121)
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022											Nine Months Ended September 30, 2022
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:										Derivatives Designated as Hedging Instruments:

Cash flow hedges:	Cash flow hedges:										Cash flow hedges:
Interest rate	Interest rate	$	4	$	—	$	2		$	(41)	Interest rate	$	4	$	—	$	3	$	(49)
Foreign currency exchange rate	Foreign currency exchange rate	1		(1)		24			323		Foreign currency exchange rate	9		(8)		41		662
Total cash flow hedges	Total cash flow hedges	5		(1)		26			282		Total cash flow hedges	13		(8)		44		613
Derivatives Not Designated or Not Qualifying as Hedging Instruments:	Derivatives Not Designated or Not Qualifying as Hedging Instruments:										Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate	Interest rate	(2,438)		—		—			—		Interest rate	(3,671)		—		—		—
Foreign currency exchange rate	Foreign currency exchange rate	82		(13)		—			—		Foreign currency exchange rate	173		(25)		—		—
Credit	Credit	(32)		—		—			—		Credit	(27)		—		—		—
Equity market	Equity market	728		—		—			—		Equity market	768		—		—		—
Embedded	Embedded	3,588		—		—			—		Embedded	4,106		—		—		—
Total non-qualifying hedges	Total non-qualifying hedges	1,928		(13)		—			—		Total non-qualifying hedges	1,349		(25)		—		—
Total	Total	$	1,933	$	(14)	$	26		$	282	Total	$	1,362	$	(33)	$	44	$	613

At ~~both June~~September 30, 2023, ~~and~~the Company held no qualified derivatives hedging exposure to future cash flows for forecasted asset purchases. At December 31, 2022, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions was less than one year.

At ~~June~~September 30, 2023 and December 31, 2022, the balance in AOCI associated with cash flow hedges was ~~$535~~$501 million and $628 million, respectively.

Credit Derivatives

In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation.

4042

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

7. Derivatives (continued)

The estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps were as follows at:


		June 30, 2023					December 31, 2022						September 30, 2023					December 31, 2022
Rating Agency Designation of Referenced Credit Obligations (1)	Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)
		(Dollars in millions)											(Dollars in millions)
Aaa/Aa/A	Aaa/Aa/A	$	7	$	544	1.7	$	7	$	544	2.2	Aaa/Aa/A	$	7	$	544	1.5	$	7	$	544	2.2
Baa	Baa	15		958		5.0	8		1,185		5.0	Baa	12		958		5.2	8		1,185		5.0
Ba	Ba	2		24		3.5	2		24		4.0	Ba	2		24		3.2	2		24		4.0
Caa and Lower	Caa and Lower	(1)		4		2.5	(1)		4		3.0	Caa and Lower	(1)		4		2.2	(1)		4		3.0
Total	Total	$	23	$	1,530	3.8	$	16	$	1,757	4.1	Total	$	20	$	1,530	3.8	$	16	$	1,757	4.1

_______________

(1)The Company has written credit protection on both single name and index references. The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s, S&P and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.

(2)The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.

Counterparty Credit Risk

The Company may be exposed to credit-related losses in the event of counterparty nonperformance on derivative instruments. Generally, the credit exposure is the fair value at the reporting date less any collateral received from the counterparty.

The Company manages its credit risk by: (i) entering into derivative transactions with creditworthy counterparties governed by master netting agreements; (ii) trading through regulated exchanges and central clearing counterparties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.

See Note 8 for a description of the impact of credit risk on the valuation of derivatives.

The estimated fair values of net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:


				Gross Amounts Not Offset on the Consolidated Balance Sheets													Gross Amounts Not Offset on the Consolidated Balance Sheets
		Gross Amount Recognized		Financial Instruments (1)		Collateral Received/Pledged (2)		Net Amount		Securities Collateral Received/Pledged (3)		Net Amount After Securities Collateral			Gross Amount Recognized		Financial Instruments (1)		Collateral Received/Pledged (2)		Net Amount		Securities Collateral Received/Pledged (3)		Net Amount After Securities Collateral
		(In millions)													(In millions)
June 30, 2023
September 30, 2023														September 30, 2023
Derivative assets	Derivative assets	$	2,851	$	(2,106)	$	(495)	$	250	$	(230)	$	20	Derivative assets	$	2,719	$	(2,028)	$	(672)	$	19	$	(6)	$	13
Derivative liabilities	Derivative liabilities	$	3,746	$	(2,106)	$	—	$	1,640	$	(1,640)	$	—	Derivative liabilities	$	5,214	$	(2,028)	$	—	$	3,186	$	(3,186)	$	—
December 31, 2022	December 31, 2022													December 31, 2022
Derivative assets	Derivative assets	$	2,295	$	(1,659)	$	(629)	$	7	$	(5)	$	2	Derivative assets	$	2,295	$	(1,659)	$	(629)	$	7	$	(5)	$	2
Derivative liabilities	Derivative liabilities	$	3,910	$	(1,659)	$	—	$	2,251	$	(2,251)	$	—	Derivative liabilities	$	3,910	$	(1,659)	$	—	$	2,251	$	(2,251)	$	—

_______________

(1)Represents amounts subject to an enforceable master netting agreement or similar agreement.

4143

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Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

7. Derivatives (continued)

(2)The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreement.

(3)Securities collateral received from counterparties is not reported on the consolidated balance sheets and may not be sold or re-pledged unless the counterparty is in default. Amounts do not include excess of collateral pledged or received.

The Company’s collateral arrangements generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. Certain of these arrangements also include credit-contingent provisions which permit the party with positive fair value to terminate the derivative at the current fair value or demand immediate full collateralization from the party in a net liability position, in the event that the financial strength or credit rating of the party in a net liability position falls below a certain level.

The aggregate estimated fair values of derivatives in a net liability position containing such credit-contingent provisions and the aggregate estimated fair value of assets posted as collateral for such instruments were as follows at:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
		(In millions)					(In millions)
Estimated fair value of derivatives in a net liability position (1)	Estimated fair value of derivatives in a net liability position (1)	$	1,640	$	2,251	Estimated fair value of derivatives in a net liability position (1)	$	3,186	$	2,251
Estimated fair value of collateral provided (2):	Estimated fair value of collateral provided (2):					Estimated fair value of collateral provided (2):
Fixed maturity securities	Fixed maturity securities	$	4,432	$	4,894	Fixed maturity securities	$	5,567	$	4,894

_______________

(1)After taking into consideration the existence of netting agreements.

(2)Substantially all of the Company’s collateral arrangements provide for daily posting of collateral for the full value of the derivative contract. As a result, if the credit-contingent provisions of derivative contracts in a net liability position were triggered, minimal additional assets would be required to be posted as collateral or needed to settle the instruments immediately. Additionally, the Company is required to pledge initial margin for certain new over-the-counter (“OTC”) bilateral contracts between two counterparties (“OTC-bilateral”) derivative transactions to third-party custodians.

4244

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value

Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy are presented in the tables below. Investments that do not have a readily determinable fair value and are measured at net asset value (or equivalent) as a practical expedient to estimated fair value are excluded from the fair value hierarchy.


		June 30, 2023									September 30, 2023
		Fair Value Hierarchy						Total Estimated Fair Value			Fair Value Hierarchy						Total Estimated Fair Value
		Level 1		Level 2		Level 3					Level 1		Level 2		Level 3
		(In millions)									(In millions)
Assets	Assets									Assets
Fixed maturity securities:	Fixed maturity securities:									Fixed maturity securities:
U.S. corporate	U.S. corporate	$	—	$	31,945	$	1,327	$	33,272	U.S. corporate	$	—	$	31,669	$	824	$	32,493
Foreign corporate	Foreign corporate	—		10,222		604		10,826		Foreign corporate	—		10,283		316		10,599
U.S. government and agency	U.S. government and agency	3,495		4,514		—		8,009		U.S. government and agency	3,605		4,048		—		7,653
RMBS	RMBS	—		7,404		14		7,418		RMBS	—		6,957		9		6,966
CMBS	CMBS	—		6,349		36		6,385		CMBS	—		6,201		36		6,237
ABS	ABS	—		5,700		321		6,021		ABS	—		5,810		300		6,110
State and political subdivision	State and political subdivision	—		3,773		—		3,773		State and political subdivision	—		3,547		—		3,547
Foreign government	Foreign government	—		985		38		1,023		Foreign government	—		933		33		966
Total fixed maturity securities	Total fixed maturity securities	3,495		70,892		2,340		76,727		Total fixed maturity securities	3,605		69,448		1,518		74,571
Equity securities	Equity securities	11		26		24		61		Equity securities	10		26		25		61
Short-term investments	Short-term investments	425		82		—		507		Short-term investments	367		122		—		489

Derivative assets: (1)	Derivative assets: (1)									Derivative assets: (1)
Interest rate	Interest rate	—		278		—		278		Interest rate	—		447		—		447
Foreign currency exchange rate	Foreign currency exchange rate	—		608		17		625		Foreign currency exchange rate	—		573		13		586
Credit	Credit	—		17		7		24		Credit	—		14		7		21
Equity market	Equity market	—		2,064		4		2,068		Equity market	—		1,439		7		1,446
Total derivative assets	Total derivative assets	—		2,967		28		2,995		Total derivative assets	—		2,473		27		2,500
Market risk benefit assets	Market risk benefit assets	—		—		602		602		Market risk benefit assets	—		—		694		694
Separate account assets	Separate account assets	10		81,891		—		81,901		Separate account assets	16		76,586		—		76,602
Total assets	Total assets	$	3,941	$	155,858	$	2,994	$	162,793	Total assets	$	3,998	$	148,655	$	2,264	$	154,917
Liabilities	Liabilities									Liabilities
Market risk benefit liabilities	Market risk benefit liabilities	$	—	$	—	$	9,806	$	9,806	Market risk benefit liabilities	$	—	$	—	$	8,850	$	8,850
Derivative liabilities: (1)	Derivative liabilities: (1)									Derivative liabilities: (1)
Interest rate	Interest rate	—		2,258		—		2,258		Interest rate	—		3,478		—		3,478
Foreign currency exchange rate	Foreign currency exchange rate	—		20		—		20		Foreign currency exchange rate	—		15		—		15
Credit	Credit	—		—		1		1		Credit	—		—		1		1
Equity market	Equity market	—		1,608		—		1,608		Equity market	—		1,497		—		1,497
Total derivative liabilities	Total derivative liabilities	—		3,886		1		3,887		Total derivative liabilities	—		4,990		1		4,991
Embedded derivatives on index-linked annuities (2)	Embedded derivatives on index-linked annuities (2)	—		—		6,886		6,886		Embedded derivatives on index-linked annuities (2)	—		—		6,031		6,031

Total liabilities	Total liabilities	$	—	$	3,886	$	16,693	$	20,579	Total liabilities	$	—	$	4,990	$	14,882	$	19,872

4345

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)


	December 31, 2022
	Fair Value Hierarchy						Total Estimated Fair Value
	Level 1		Level 2		Level 3
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	30,973	$	1,189	$	32,162
Foreign corporate	—		9,894		598		10,492
U.S. government and agency	3,507		4,391		—		7,898
RMBS	—		7,477		14		7,491
CMBS	—		6,504		33		6,537
ABS	—		5,037		318		5,355
State and political subdivision	—		3,741		—		3,741
Foreign government	—		1,043		38		1,081
Total fixed maturity securities	3,507		69,060		2,190		74,757
Equity securities	12		27		27		66
Short-term investments	206		93		—		299
Derivative assets: (1)
Interest rate	—		304		—		304
Foreign currency exchange rate	—		703		29		732
Credit	—		10		8		18
Equity market	—		1,217		—		1,217
Total derivative assets	—		2,234		37		2,271
Market risk benefit assets	—		—		483		483
Separate account assets	29		78,851		—		78,880
Total assets	$	3,754	$	150,265	$	2,737	$	156,756
Liabilities
Market risk benefit liabilities	$	—	$	—	$	10,411	$	10,411
Derivative liabilities: (1)
Interest rate	—		2,802		—		2,802
Foreign currency exchange rate	—		9		—		9
Credit	—		—		2		2
Equity market	—		1,098		—		1,098
Total derivative liabilities	—		3,909		2		3,911
Embedded derivatives on index-linked annuities (2)	—		—		3,932		3,932

Total liabilities	$	—	$	3,909	$	14,345	$	18,254

_______________

(1)Derivative assets are reported in other invested assets and derivative liabilities are reported in other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets.

(2)Embedded derivative liabilities on index-linked annuities are reported in policyholder account balances.

Valuation Controls and Procedures

The Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by its valuation service providers. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of Brighthouse Financial’s Board of Directors regarding compliance with fair value accounting standards.

4446

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)

The fair value of financial assets and financial liabilities is based on quoted market prices, where available. Prices received are assessed to determine if they represent a reasonable estimate of fair value. Several controls are performed, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as “consensus pricing,” are used for a non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments.

A formal process is also applied to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, the last available price will be used.

Additional controls are performed, such as, balance sheet analytics to assess reasonableness of period-to-period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the ~~six~~nine months ended ~~June~~September 30, 2023.

Determination of Fair Value

Fixed Maturity Securities

The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below.

U.S. corporate and foreign corporate securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues.

U.S. government and agency, state and political subdivision and foreign government securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker-dealer quotes, and comparable securities that are actively traded.

Structured Securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to, collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance.

Equity Securities and Short-term Investments

The fair value for actively traded equity securities and short-term investments are determined using quoted market prices and are classified as Level 1 assets. For financial instruments classified as Level 2 assets, fair values are determined using a market approach and are valued based on a variety of observable inputs as described below.

4547

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)

Equity securities and short-term investments: Fair value is determined using third-party commercial pricing services, with the primary input being quoted prices in markets that are not active.

Derivatives

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the OTC market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are OTC-bilateral.

The fair values for exchange-traded derivatives are determined using the quoted market prices and are classified as Level 1 assets. For OTC-bilateral derivatives and OTC-cleared derivatives classified as Level 2 assets or liabilities, fair values are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs.

The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.

Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.

Market Risk Benefits

MRBs principally include guaranteed minimum benefits on variable annuity contracts including benefits reinsured related to these guarantees.

The estimated fair value of variable annuity guarantees accounted for as MRBs is determined based on the present value of projected future benefits less the present value of projected future fees attributable to the guarantees. At policy inception, the Company determines an attributed fee ratio by solving for a percentage of projected future rider fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. To the extent the rider fees are insufficient, the Company may also include fees related to mortality and expense charges in the attributed fee ratio, provided the total fees included in the calculation do not exceed total contract fees and assessments collected from the contract holder. Any additional fees not included in the attributed fee ratio are considered revenue and reported in universal life and investment-type product policy fees. The attributed fee ratio is not updated in subsequent periods.

4648

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)

The Company updates the estimated fair value of variable annuity guarantees in subsequent periods by projecting future benefits using capital markets inputs and actuarial assumptions including expectations of policyholder behavior. A risk neutral valuation methodology is used to project the cash flows from the guarantees under multiple capital markets scenarios. The reported estimated fair value is then determined by taking the present value of these cash flows using a discount rate that incorporates a spread over the risk-free rate to reflect the Company’s nonperformance risk and adding a risk margin.

The valuation of MRBs includes an adjustment for the risk that the Company fails to satisfy its obligations, which is referred to as nonperformance risk. The nonperformance risk adjustment is captured as an additional spread applied to the risk-free rate in determining the rate to discount the cash flows of the liability. The spread over the risk-free rate is based on the Company’s creditworthiness taking into consideration publicly available information relating to spreads in the secondary market for Brighthouse Financial’s debt. These observable spreads are then adjusted, as necessary, to reflect the financial strength ratings of the issuing insurance subsidiaries as compared to the credit rating of Brighthouse Financial.

Risk margins are established to capture the non-capital markets risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. The establishment of risk margins requires the use of significant actuarial judgment, including assumptions of the amount needed to cover the guarantees.

Actuarial assumptions are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income. Capital market inputs used in the measurement of variable annuity guarantees are updated quarterly through net income, except for the change attributable to the Company’s nonperformance risk, which is reported in OCI.

Embedded Derivatives

Embedded derivatives include crediting rates associated with index-linked annuity contracts. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.

The crediting rates associated with these features are embedded derivatives which are measured at estimated fair value separately from the host fixed annuity contract. These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

The estimated fair value of crediting rates associated with index-linked annuities is determined using a combination of an option pricing model and an option-budget approach. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in nonperformance risk.

Actuarial assumptions including policyholder behavior and expectations for renewals at the end of the term period are reviewed at least annually, and if they change significantly, the estimated fair value is adjusted through net income. Capital market inputs used in the measurement of crediting rate embedded derivatives are updated quarterly through net income.

Transfers Into or Out of Level 3:

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

4749

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

Certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows at:


						June 30, 2023			December 31, 2022			Impact of Increase in Input on Estimated Fair Value						September 30, 2023			December 31, 2022			Impact of Increase in Input on Estimated Fair Value
		Valuation Techniques		Significant Unobservable Inputs		Range			Range					Valuation Techniques		Significant Unobservable Inputs		Range			Range
Market Risk Benefits	Market Risk Benefits												Market Risk Benefits
Variable annuity guaranteed minimum benefits	Variable annuity guaranteed minimum benefits	•	Option pricing techniques	•	Mortality rates	0.04%	-	12.90%	0.04%	-	12.90%	Decrease (1)	Variable annuity guaranteed minimum benefits	•	Option pricing techniques	•	Mortality rates	0.04%	-	12.90%	0.04%	-	12.90%	Decrease (1)
				•	Lapse rates	1.00%	-	24.11%	1.00%	-	24.11%	Decrease (2)				•	Lapse rates	1.00%	-	22.80%	1.00%	-	24.11%	Decrease (2)
				•	Utilization rates	0.00%	-	25.00%	0.00%	-	25.00%	Increase (3)				•	Utilization rates	0.00%	-	25.00%	0.00%	-	25.00%	Increase (3)
				•	Withdrawal rates	0.00%	-	10.00%	0.00%	-	10.00%	(4)				•	Withdrawal rates	0.00%	-	10.00%	0.00%	-	10.00%	(4)
				•	Long-term equity volatilities	12.52%	-	22.83%	19.99%	-	28.45%	Increase (5)				•	Long-term equity volatilities	15.27%	-	23.76%	19.99%	-	28.45%	Increase (5)
				•	Nonperformance risk spread	0.86%	-	2.08%	(2.73)%	-	4.52%	Decrease (6)				•	Nonperformance risk spread	0.85%	-	1.83%	(2.73)%	-	4.52%	Decrease (6)
Embedded Derivatives	Embedded Derivatives												Embedded Derivatives
Index-linked annuity crediting rates	Index-linked annuity crediting rates	•	Option pricing techniques	•	Mortality rates	0.03%	-	9.24%	0.03%	-	9.24%	Decrease (1)	Index-linked annuity crediting rates	•	Option pricing techniques	•	Mortality rates	0.03%	-	9.24%	0.03%	-	9.24%	Decrease (1)
				•	Lapse rates	1.00%	-	62.30%	1.00%	-	62.30%	Decrease (2)				•	Lapse rates	1.00%	-	62.30%	1.00%	-	62.30%	Decrease (2)

				•	Withdrawal rates	0.50%	-	9.00%	0.50%	-	9.00%	(4)				•	Withdrawal rates	0.50%	-	9.00%	0.50%	-	9.00%	(4)

				•	Nonperformance risk spread	0.54%	-	1.93%	0.00%	-	1.98%	Decrease (6)				•	Nonperformance risk spread	0.58%	-	1.77%	0.00%	-	1.98%	Decrease (6)

_______________

(1)Mortality rates vary by age and by demographic characteristics such as gender. The range shown reflects the mortality rate for policyholders between 35 and 90 years old. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement.

(2)The lapse rate range reflects base lapse rates for major product categories for duration 1-20. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. For variable annuity guarantees, a dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies.

(3)The utilization rate assumption for variable annuity guarantees estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder.

(4)The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For variable annuity GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For variable annuity GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(5)Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing MRBs.

4850

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)

(6)Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the MRB or embedded derivative.

The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value.

~~The changes in assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (excluding MRBs disclosed in Note 4) were summarized as follows:~~

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Fixed Maturity Securities
Corporate (1) Structured Securities Foreign
Government Equity
Securities Short-term
Investments Net
Derivatives (2) Embedded Derivatives on Index-Linked Annuities Separate
Account Assets (3)
(In millions)
Three Months Ended June 30, 2023
Balance, beginning of period $ 1,936 $ 350 $ 39 $ 25 $ — $ 33 $ (5,164) $ —
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) (4) — — (2) — (5) (1,703) —
Total realized/unrealized gains (losses) included in AOCI (22) (1) — — — — — —
Purchases (6) 68 36 — 1 — 9 — —
Sales (6) (42) (3) (1) — — — — —
Issuances (6) — — — — — — — —
Settlements (6) — — — — — — (19) —
Transfers into Level 3 (7) 26 2 — — — — — —
Transfers out of Level 3 (7) (31) (13) — — — (10) — —
Balance, end of period $ 1,931 $ 371 $ 38 $ 24 $ — $ 27 $ (6,886) $ —
Three Months Ended June 30, 2022
Balance, beginning of period $ 1,618 $ 194 $ 23 $ 13 $ — $ 30 $ (5,674) $ —
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) (6) — — 1 — (5) 2,825 —
Total realized/unrealized gains (losses) included in AOCI (110) 3 (5) — — 12 — —
Purchases (6) 330 201 — 13 — 1 — —
Sales (6) (56) (11) — — — — — —
Issuances (6) — — — — — — — —
Settlements (6) — — — — — — 18 —
Transfers into Level 3 (7) 90 34 22 — — — — —
Transfers out of Level 3 (7) (156) (76) — — — — — —
Balance, end of period $ 1,710 $ 345 $ 40 $ 27 $ — $ 38 $ (2,831) $ —
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2023 (8) $ (3) $ — $ — $ (2) $ — $ (5) $ (1,802) $ —
Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2023 (8) $ (24) $ (1) $ — $ — $ — $ — $ — $ —
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (8) $ — $ — $ — $ 1 $ — $ (5) $ 2,756 $ —
Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2022 (8) $ (117) $ 2 $ (5) $ — $ — $ 12 $ — $ —

4951

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Fixed Maturity Securities
Corporate (1) Structured Securities Foreign
Government Equity
Securities Short-term
Investments Net
Derivatives (2) Embedded Derivatives on Index-Linked Annuities Separate
Account Assets (3)
(In millions)
Six Months Ended June 30, 2023
Balance, beginning of period $ 1,787 $ 365 $ 38 $ 27 $ — $ 35 $ (3,932) $ —
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) (3) — — (4) — (5) (2,793) —
Total realized/unrealized gains (losses) included in AOCI 7 1 1 — — — — —
Purchases (6) 210 52 — 1 — 9 — —
Sales (6) (73) (7) (1) — — — — —
Issuances (6) — — — — — — — —
Settlements (6) — — — — — — (161) —
Transfers into Level 3 (7) 56 2 — — — — — —
Transfers out of Level 3 (7) (53) (42) — — — (12) — —
Balance, end of period $ 1,931 $ 371 $ 38 $ 24 $ — $ 27 $ (6,886) $ —
Six Months Ended June 30, 2022
Balance, beginning of period $ 1,399 $ 220 $ 26 $ 13 $ 2 $ 36 $ (6,641) $ —
Total realized/unrealized gains (losses) included in net income (loss) (4) (5) (6) — — 1 — (15) 3,588 (1)
Total realized/unrealized gains (losses) included in AOCI (216) (12) (9) — — 16 — —
Purchases (6) 648 229 5 13 — 1 — —
Sales (6) (140) (14) (1) — (2) — — —
Issuances (6) — — — — — — — —
Settlements (6) — — — — — — 222 —
Transfers into Level 3 (7) 148 23 19 — — — — 1
Transfers out of Level 3 (7) (123) (101) — — — — — —
Balance, end of period $ 1,710 $ 345 $ 40 $ 27 $ — $ 38 $ (2,831) $ —
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2023 (8) $ (2) $ (1) $ — $ (3) $ — $ (5) $ (2,968) $ —
Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2023 (8) $ 1 $ — $ 1 $ — $ — $ — $ — $ —
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (8) $ — $ — $ — $ 1 $ — $ (15) $ 3,443 $ —
Changes in unrealized gains (losses) included in OCI for the instruments still held at June 30, 2022 (8) $ (218) $ (12) $ (9) $ — $ — $ 16 $ — $ —
The changes in assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (excluding MRBs disclosed in Note 4) were summarized as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)		Structured Securities		Foreign Government		Equity Securities		Short-term Investments		Net Derivatives (2)		Embedded Derivatives on Index-Linked Annuities
	(In millions)
Three Months Ended September 30, 2023
Balance, beginning of period	$	1,931	$	371	$	38	$	24	$	—	$	27	$	(6,886)
Total realized/unrealized gains (losses) included in net income (loss) (3) (4)	(9)		—		—		1		—		2		913
Total realized/unrealized gains (losses) included in AOCI	(19)		(2)		(1)		—		—		(3)		—
Purchases (5)	32		17		—		—		—		—		—
Sales (5)	(56)		(11)		(1)		—		—		—		—
Issuances (5)	—		—		—		—		—		—		—
Settlements (5)	—		—		—		—		—		—		(58)
Transfers into Level 3 (6)	45		12		—		—		—		—		—
Transfers out of Level 3 (6)	(784)		(42)		(3)		—		—		—		—
Balance, end of period	$	1,140	$	345	$	33	$	25	$	—	$	26	$	(6,031)
Three Months Ended September 30, 2022
Balance, beginning of period	$	1,710	$	345	$	40	$	27	$	—	$	38	$	(2,831)
Total realized/unrealized gains (losses) included in net income (loss) (3) (4)	—		—		—		1		—		3		518
Total realized/unrealized gains (losses) included in AOCI	(108)		(11)		(4)		—		—		21		—
Purchases (5)	278		125		—		—		—		—		—
Sales (5)	(22)		(1)		(1)		—		—		—		—
Issuances (5)	—		—		—		—		—		—		—
Settlements (5)	—		—		—		—		—		—		(29)
Transfers into Level 3 (6)	16		19		—		—		—		—		—
Transfers out of Level 3 (6)	(319)		(138)		—		—		—		—		—
Balance, end of period	$	1,555	$	339	$	35	$	28	$	—	$	62	$	(2,342)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2023 (7)	$	(9)	$	—	$	—	$	1	$	—	$	3	$	785
Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2023 (7)	$	(25)	$	(3)	$	(1)	$	—	$	—	$	(3)	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2022 (7)	$	—	$	—	$	—	$	1	$	—	$	3	$	461
Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2022 (7)	$	(109)	$	(11)	$	(4)	$	—	$	—	$	21	$	—

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)		Structured Securities		Foreign Government		Equity Securities		Short-term Investments		Net Derivatives (2)		Embedded Derivatives on Index-Linked Annuities
	(In millions)
Nine Months Ended September 30, 2023
Balance, beginning of period	$	1,787	$	365	$	38	$	27	$	—	$	35	$	(3,932)
Total realized/unrealized gains (losses) included in net income (loss) (3) (4)	(12)		—		—		(3)		—		(3)		(1,880)
Total realized/unrealized gains (losses) included in AOCI	(11)		(2)		—		—		—		(3)		—
Purchases (5)	119		45		—		1		—		9		—
Sales (5)	(126)		(17)		(2)		—		—		—		—
Issuances (5)	—		—		—		—		—		—		—
Settlements (5)	—		—		—		—		—		—		(219)
Transfers into Level 3 (6)	101		10		—		—		—		—		—
Transfers out of Level 3 (6)	(718)		(56)		(3)		—		—		(12)		—
Balance, end of period	$	1,140	$	345	$	33	$	25	$	—	$	26	$	(6,031)
Nine Months Ended September 30, 2022
Balance, beginning of period	$	1,399	$	220	$	26	$	13	$	2	$	36	$	(6,641)
Total realized/unrealized gains (losses) included in net income (loss) (3) (4)	(6)		—		—		1		—		(11)		4,106
Total realized/unrealized gains (losses) included in AOCI	(286)		(23)		(13)		—		—		36		—
Purchases (5)	760		230		5		14		—		1		—
Sales (5)	(159)		(12)		(2)		—		(2)		—		—
Issuances (5)	—		—		—		—		—		—		—
Settlements (5)	—		—		—		—		—		—		193
Transfers into Level 3 (6)	31		25		19		—		—		—		—
Transfers out of Level 3 (6)	(184)		(101)		—		—		—		—		—
Balance, end of period	$	1,555	$	339	$	35	$	28	$	—	$	62	$	(2,342)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2023 (7)	$	(11)	$	—	$	—	$	(2)	$	—	$	(2)	$	(2,183)
Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2023 (7)	$	(20)	$	(3)	$	—	$	—	$	—	$	(3)	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at September 30, 2022 (7)	$	—	$	—	$	—	$	1	$	—	$	(4)	$	3,904
Changes in unrealized gains (losses) included in OCI for the instruments still held as of September 30, 2022 (7)	$	(288)	$	(23)	$	(13)	$	—	$	—	$	36	$	—

_______________

(1)Comprised of U.S. and foreign corporate securities.

(2)Freestanding derivative assets and liabilities are reported net for purposes of the rollforward.

(3)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contract holders within separate account liabilities. Therefore, such changes in estimated fair value are recorded in net investment gains (losses) and not net income (loss).

~~(4)~~Amortization of premium/accretion of discount is included in net investment income. Changes in the allowance for credit losses and direct write-offs are charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

5053

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)

~~(5)~~(4)Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

~~(6)~~(5)Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

~~(7)~~(6)Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and out of Level 3 in the same period are excluded from the rollforward.

~~(8)~~(7)Changes in unrealized gains (losses) included in net income (loss) for fixed maturities are reported in either net investment income or net investment gains (losses). Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

Fair Value of Financial Instruments Carried at Other Than Fair Value

The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income and payables for collateral under securities loaned and other transactions. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:


		June 30, 2023											September 30, 2023
				Fair Value Hierarchy											Fair Value Hierarchy
		Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value			Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
		(In millions)											(In millions)
Assets	Assets											Assets
Mortgage loans	Mortgage loans	$	22,579	$	—	$	—	$	20,420	$	20,420	Mortgage loans	$	22,648	$	—	$	—	$	19,980	$	19,980
Policy loans	Policy loans	$	903	$	—	$	465	$	474	$	939	Policy loans	$	920	$	—	$	468	$	453	$	921
Other invested assets	Other invested assets	$	231	$	—	$	216	$	15	$	231	Other invested assets	$	262	$	—	$	247	$	15	$	262
Premiums, reinsurance and other receivables	Premiums, reinsurance and other receivables	$	7,013	$	—	$	154	$	6,995	$	7,149	Premiums, reinsurance and other receivables	$	6,987	$	—	$	63	$	6,995	$	7,058
Liabilities	Liabilities											Liabilities
Policyholder account balances	Policyholder account balances	$	31,539	$	—	$	—	$	30,470	$	30,470	Policyholder account balances	$	31,393	$	—	$	—	$	30,358	$	30,358

Long-term debt	Long-term debt	$	837	$	—	$	27	$	697	$	724	Long-term debt	$	837	$	—	$	26	$	667	$	693
Other liabilities	Other liabilities	$	1,157	$	—	$	380	$	777	$	1,157	Other liabilities	$	1,129	$	—	$	362	$	767	$	1,129
Separate account liabilities	Separate account liabilities	$	1,133	$	—	$	1,133	$	—	$	1,133	Separate account liabilities	$	1,061	$	—	$	1,061	$	—	$	1,061

5154

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

8. Fair Value (continued)


	December 31, 2022
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	22,877	$	—	$	—	$	20,760	$	20,760
Policy loans	$	898	$	—	$	477	$	453	$	930
Other invested assets	$	341	$	—	$	201	$	140	$	341
Premiums, reinsurance and other receivables	$	5,915	$	—	$	77	$	5,988	$	6,065
Liabilities
Policyholder account balances	$	31,223	$	—	$	—	$	30,303	$	30,303
Short- term debt	$	125	$	—	$	—	$	125	$	125
Long-term debt	$	838	$	—	$	28	$	714	$	742
Other liabilities	$	1,009	$	—	$	212	$	797	$	1,009
Separate account liabilities	$	1,022	$	—	$	1,022	$	—	$	1,022

9. Long-term and Short-term Debt

Intercompany Liquidity Facilities

BHF has established an intercompany liquidity facility with certain of its insurance and non-insurance subsidiaries to provide short-term liquidity within and across the combined group of companies. Under the facility, which is comprised of a series of revolving loan agreements among BHF and its participating subsidiaries, each company may lend to or borrow from each other, subject to certain maximum limits for a term of up to 364 days, depending on the agreement.

On May 16, 2022, BH Holdings issued a $125 million promissory note to Brighthouse Life Insurance Company and Brighthouse Life Insurance Company of NY (“BHNY”) issued a $125 million promissory note to BH Holdings (the “May 2022 Promissory Notes”), in which both notes bore interest at a fixed rate of 2.5363%. Upon maturity on August 16, 2022, the May 2022 Promissory Notes were replaced by two new promissory notes which bore interest at a fixed rate of 4.0466% (the “August 2022 Promissory Notes”). Upon maturity on November 16, 2022, the August 2022 Promissory Notes were replaced by two new promissory notes which bore interest at a fixed rate of 5.7689% and 5.4504%, respectively (the “November 2022 Promissory Notes”). Upon maturity on February 16, 2023, the November 2022 Promissory Notes were replaced by two new promissory notes which bore interest at a fixed rate of 5.9966% and 5.9937%, respectively (the “May 2023 Promissory Notes”). On March 28, 2023, BHNY repaid to BH Holdings, and BH Holdings repaid to Brighthouse Life Insurance Company, each $50 million of principal plus accrued interest in cash on the respective May 2023 Promissory Notes. Upon maturity on May 16, 2023, the May 2023 Promissory Notes were replaced by two new $75 million promissory notes that bear interest at a fixed rate of 6.4433% and 6.2918%, respectively, and were both repaid on June 30, 2023.

Repurchase Facility

In July 2023, Brighthouse Life Insurance Company entered into an additional secured committed repurchase facility (the “Repurchase Facility”) under which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $500 million for a term of up to two years, which is available to Brighthouse Life Insurance Company under certain market conditions. Under the Repurchase Facility, Brighthouse Life Insurance Company may sell certain eligible securities at a purchase price based on the market value of the securities less an applicable margin based on the types of securities sold, with a concurrent agreement to repurchase such securities at a predetermined future date (up to three months) and at a price which represents the original purchase price plus interest. At September 30, 2023, there were no borrowings under the Repurchase Facility.

10. Equity

Capital Contribution

During the first quarter of 2023, Brighthouse Life Insurance Company paid a capital contribution in the form of invested assets of $100 million to Brighthouse Life Insurance Company of NY.

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Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

10. Equity (continued)

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI was as follows:


		Three Months Ended June 30, 2023													Three Months Ended September 30, 2023
		Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Changes in Nonperformance Risk on Market Risk Benefits		Changes in Discount Rates on the Liability for Future Policy Benefits		Foreign Currency Translation Adjustments		Total			Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Changes in Nonperformance Risk on Market Risk Benefits		Changes in Discount Rates on the Liability for Future Policy Benefits		Foreign Currency Translation Adjustments		Total
		(In millions)													(In millions)
Balance at March 31, 2023		$	(4,906)	$	464	$	(1,382)	$	705	$	(19)	$	(5,138)
Balance at June 30, 2023														Balance at June 30, 2023	$	(5,535)	$	423	$	(1,475)	$	902	$	(16)	$	(5,701)
OCI before reclassifications	OCI before reclassifications	(851)		(49)		(117)		250		4		(763)		OCI before reclassifications	(2,390)		(32)		175		742		(12)		(1,517)
Deferred income tax benefit (expense) (2)	Deferred income tax benefit (expense) (2)	179		11		24		(53)		(1)		160		Deferred income tax benefit (expense) (2)	501		7		(37)		(156)		3		318
AOCI before reclassifications, net of income tax	AOCI before reclassifications, net of income tax	(5,578)		426		(1,475)		902		(16)		(5,741)		AOCI before reclassifications, net of income tax	(7,424)		398		(1,337)		1,488		(25)		(6,900)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	55		(4)		—		—		—		51		Amounts reclassified from AOCI	44		(2)		—		—		—		42
Deferred income tax benefit (expense) (2)	Deferred income tax benefit (expense) (2)	(12)		1		—		—		—		(11)		Deferred income tax benefit (expense) (2)	(9)		—		—		—		—		(9)
Amounts reclassified from AOCI, net of income tax	Amounts reclassified from AOCI, net of income tax	43		(3)		—		—		—		40		Amounts reclassified from AOCI, net of income tax	35		(2)		—		—		—		33

Balance at June 30, 2023		$	(5,535)	$	423	$	(1,475)	$	902	$	(16)	$	(5,701)
Balance at September 30, 2023														Balance at September 30, 2023	$	(7,389)	$	396	$	(1,337)	$	1,488	$	(25)	$	(6,867)


	Three Months Ended September 30, 2022
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Changes in Nonperformance Risk on Market Risk Benefits		Changes in Discount Rates on the Liability for Future Policy Benefits		Foreign Currency Translation Adjustments		Total
	(In millions)
Balance at June 30, 2022	$	(3,638)	$	523	$	(1,348)	$	440	$	(33)	$	(4,056)
OCI before reclassifications	(4,988)		331		130		1,041		(24)		(3,510)
Deferred income tax benefit (expense) (2)	1,175		(197)		(27)		(218)		6		739
AOCI before reclassifications, net of income tax	(7,451)		657		(1,245)		1,263		(51)		(6,827)
Amounts reclassified from AOCI	45		(9)		—		—		—		36
Deferred income tax benefit (expense) (2)	(10)		2		—		—		—		(8)
Amounts reclassified from AOCI, net of income tax	35		(7)		—		—		—		28



Balance at September 30, 2022	$	(7,416)	$	650	$	(1,245)	$	1,263	$	(51)	$	(6,799)


	Nine Months Ended September 30, 2023
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Changes in Nonperformance Risk on Market Risk Benefits		Changes in Discount Rates on the Liability for Future Policy Benefits		Foreign Currency Translation Adjustments		Total
	(In millions)
Balance at December 31, 2022	$	(6,041)	$	496	$	(1,377)	$	1,016	$	(25)	$	(5,931)
OCI before reclassifications	(1,874)		(121)		51		598		—		(1,346)
Deferred income tax benefit (expense) (2)	393		26		(11)		(126)		—		282
AOCI before reclassifications, net of income tax	(7,522)		401		(1,337)		1,488		(25)		(6,995)
Amounts reclassified from AOCI	168		(6)		—		—		—		162
Deferred income tax benefit (expense) (2)	(35)		1		—		—		—		(34)
Amounts reclassified from AOCI, net of income tax	133		(5)		—		—		—		128



Balance at September 30, 2023	$	(7,389)	$	396	$	(1,337)	$	1,488	$	(25)	$	(6,867)

Three Months Ended June 30, 2022
Unrealized Investment
Gains
(Losses), Net
of Related
Offsets (1) Unrealized
Gains (Losses)
on Derivatives Changes in Nonperformance Risk on Market Risk Benefits Changes in Discount Rates on the Liability for Future Policy Benefits Foreign
Currency
Translation
Adjustments Total
(In millions)
Balance at March 31, 2022 $ 375 $ 321 $ (2,495) $ (774) $ (13) $ (2,586)
OCI before reclassifications (5,142) 262 1,452 1,537 (24) (1,915)
Deferred income tax benefit (expense) (2) 1,080 (55) (305) (323) 4 401
AOCI before reclassifications, net of income tax (3,687) 528 (1,348) 440 (33) (4,100)
Amounts reclassified from AOCI 61 (5) — — — 56
Deferred income tax benefit (expense) (2) (12) — — — — (12)
Amounts reclassified from AOCI, net of income tax 49 (5) — — — 44
Balance at June 30, 2022 $ (3,638) $ 523 $ (1,348) $ 440 $ (33) $ (4,056)

5356

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

10. Equity (continued)

Six Months Ended June 30, 2023
Unrealized Investment
Gains
(Losses), Net
of Related
Offsets (1) Unrealized
Gains (Losses)
on Derivatives Changes in Nonperformance Risk on Market Risk Benefits Changes in Discount Rates on the Liability for Future Policy Benefits Foreign
Currency
Translation
Adjustments Total
(In millions)
Balance at December 31, 2022 $ (6,041) $ 496 $ (1,377) $ 1,016 $ (25) $ (5,931)
OCI before reclassifications 516 (89) (124) (144) 12 171
Deferred income tax benefit (expense) (2) (108) 19 26 30 (3) (36)
AOCI before reclassifications, net of income tax (5,633) 426 (1,475) 902 (16) (5,796)
Amounts reclassified from AOCI 124 (4) — — — 120
Deferred income tax benefit (expense) (2) (26) 1 — — — (25)
Amounts reclassified from AOCI, net of income tax 98 (3) — — — 95
Balance at June 30, 2023 $ (5,535) $ 423 $ (1,475) $ 902 $ (16) $ (5,701)


		Six Months Ended June 30, 2022													Nine Months Ended September 30, 2022
		Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Changes in Nonperformance Risk on Market Risk Benefits		Changes in Discount Rates on the Liability for Future Policy Benefits		Foreign Currency Translation Adjustments		Total			Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Changes in Nonperformance Risk on Market Risk Benefits		Changes in Discount Rates on the Liability for Future Policy Benefits		Foreign Currency Translation Adjustments		Total
		(In millions)													(In millions)
Balance at December 31, 2021	Balance at December 31, 2021	$	4,996	$	233	$	(3,229)	$	(2,192)	$	(7)	$	(199)	Balance at December 31, 2021	$	4,996	$	233	$	(3,229)	$	(2,192)	$	(7)	$	(199)
OCI before reclassifications	OCI before reclassifications	(10,939)		282		2,381		3,332		(32)		(4,976)		OCI before reclassifications	(15,927)		613		2,511		4,373		(56)		(8,486)
Deferred income tax benefit (expense) (2)	Deferred income tax benefit (expense) (2)	2,224		14		(500)		(700)		6		1,044		Deferred income tax benefit (expense) (2)	3,399		(183)		(527)		(918)		12		1,783
AOCI before reclassifications, net of income tax	AOCI before reclassifications, net of income tax	(3,719)		529		(1,348)		440		(33)		(4,131)		AOCI before reclassifications, net of income tax	(7,532)		663		(1,245)		1,263		(51)		(6,902)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	102		(7)		—		—		—		95		Amounts reclassified from AOCI	147		(16)		—		—		—		131
Deferred income tax benefit (expense) (2)	Deferred income tax benefit (expense) (2)	(21)		1		—		—		—		(20)		Deferred income tax benefit (expense) (2)	(31)		3		—		—		—		(28)
Amounts reclassified from AOCI, net of income tax	Amounts reclassified from AOCI, net of income tax	81		(6)		—		—		—		75		Amounts reclassified from AOCI, net of income tax	116		(13)		—		—		—		103

Balance at June 30, 2022		$	(3,638)	$	523	$	(1,348)	$	440	$	(33)	$	(4,056)
Balance at September 30, 2022														Balance at September 30, 2022	$	(7,416)	$	650	$	(1,245)	$	1,263	$	(51)	$	(6,799)

_______________

(1)See Note 6 for information on offsets to investments related to future policy benefits.

(2)The effects of income taxes on amounts recorded to AOCI are also recognized in AOCI. These income tax effects are released from AOCI when the related activity is reclassified into results from operations.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~10. Equity (continued)~~

Information regarding amounts reclassified out of each component of AOCI was as follows:


AOCI Components	AOCI Components	Amounts Reclassified from AOCI								Consolidated Statements of Operations and Comprehensive Income (Loss) Locations	AOCI Components	Amounts Reclassified from AOCI								Consolidated Statements of Operations and Comprehensive Income (Loss) Locations
		Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022				2023		2022		2023		2022
		(In millions)										(In millions)
Net unrealized investment gains (losses):	Net unrealized investment gains (losses):										Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	Net unrealized investment gains (losses)	$	(48)	$	(58)	$	(116)	$	(97)	Net investment gains (losses)	Net unrealized investment gains (losses)	$	(43)	$	(36)	$	(159)	$	(133)	Net investment gains (losses)

Net unrealized investment gains (losses)	Net unrealized investment gains (losses)	(7)		(3)		(8)		(5)		Net derivative gains (losses)	Net unrealized investment gains (losses)	(1)		(9)		(9)		(14)		Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax	Net unrealized investment gains (losses), before income tax	(55)		(61)		(124)		(102)			Net unrealized investment gains (losses), before income tax	(44)		(45)		(168)		(147)
Income tax (expense) benefit	Income tax (expense) benefit	12		12		26		21			Income tax (expense) benefit	9		10		35		31
Net unrealized investment gains (losses), net of income tax	Net unrealized investment gains (losses), net of income tax	(43)		(49)		(98)		(81)			Net unrealized investment gains (losses), net of income tax	(35)		(35)		(133)		(116)
Unrealized gains (losses) on derivatives - cash flow hedges:	Unrealized gains (losses) on derivatives - cash flow hedges:										Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	Interest rate swaps	(2)		3		(2)		4		Net derivative gains (losses)	Interest rate swaps	—		—		(2)		4		Net derivative gains (losses)
Interest rate swaps	Interest rate swaps	1		1		2		2		Net investment income	Interest rate swaps	1		1		3		3		Net investment income

Foreign currency swaps	Foreign currency swaps	5		1		4		1		Net derivative gains (losses)	Foreign currency swaps	1		8		5		9		Net derivative gains (losses)

Gains (losses) on cash flow hedges, before income tax	Gains (losses) on cash flow hedges, before income tax	4		5		4		7			Gains (losses) on cash flow hedges, before income tax	2		9		6		16
Income tax (expense) benefit	Income tax (expense) benefit	(1)		—		(1)		(1)			Income tax (expense) benefit	—		(2)		(1)		(3)
Gains (losses) on cash flow hedges, net of income tax	Gains (losses) on cash flow hedges, net of income tax	3		5		3		6			Gains (losses) on cash flow hedges, net of income tax	2		7		5		13
Total reclassifications, net of income tax	Total reclassifications, net of income tax	$	(40)	$	(44)	$	(95)	$	(75)		Total reclassifications, net of income tax	$	(33)	$	(28)	$	(128)	$	(103)

11. Other Revenues and Other Expenses

Other Revenues

The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the “Funds”) whereby the Company is paid monthly or quarterly fees (“12b-1 fees”) for providing certain services to customers and distributors of the Funds. The 12b-1 fees are generally equal to a fixed percentage of the average daily balance of the customer’s investment in a fund. The percentage is specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

11. Other Revenues and Other Expenses (continued)

To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds and is used to recognize revenue associated with 12b-1 fees.

Other revenues consisted primarily of 12b-1 fees of $50 million and ~~$100~~$150 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, and ~~$54~~$53 million and ~~$115~~$168 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, of which substantially all were reported in the Annuities segment.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~11. Other Revenues and Other Expenses (continued)~~

Other Expenses

Information on other expenses was as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
		(In millions)									(In millions)
Compensation	Compensation	$	96	$	81	$	185	$	162	Compensation	$	93	$	85	$	278	$	247
Contracted services and other labor costs	Contracted services and other labor costs	72		60		134		110		Contracted services and other labor costs	67		65		201		175
Transition services agreements	Transition services agreements	7		1		18		27		Transition services agreements	6		15		24		42
Establishment costs	Establishment costs	—		11		—		25		Establishment costs	—		20		—		45
Premium and other taxes, licenses and fees	Premium and other taxes, licenses and fees	18		13		31		25		Premium and other taxes, licenses and fees	13		12		44		37
Volume related costs, excluding compensation, net of DAC capitalization	Volume related costs, excluding compensation, net of DAC capitalization	142		94		277		237		Volume related costs, excluding compensation, net of DAC capitalization	128		126		405		363
Interest expense on debt	Interest expense on debt	18		16		36		33		Interest expense on debt	17		18		53		51
Other	Other	57		213		123		262		Other	64		70		187		332
Total other expenses	Total other expenses	$	410	$	489	$	804	$	881	Total other expenses	$	388	$	411	$	1,192	$	1,292

Capitalization of DAC

See Note 5 for additional information on the capitalization of DAC.

Related Party Expenses

See Note 13 for a discussion of related party expenses included in the table above.

12. Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a number of litigation matters. In some of the matters, large or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

The Company also receives and responds to subpoenas or other inquiries seeking a broad range of information from various state and federal regulators, agencies and officials. The issues involved in information requests and regulatory matters vary widely, but can include inquiries or investigations concerning the Company’s compliance with applicable insurance and other laws and regulations. The Company cooperates in these inquiries.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

12. Contingencies, Commitments and Guarantees (continued)

Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is possible that some matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated at ~~June~~September 30, 2023.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~12. Contingencies, Commitments and Guarantees (continued)~~

Matters as to Which an Estimate Can Be Made

For some loss contingency matters, the Company is able to estimate a reasonably possible range of loss. For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. In addition to amounts accrued for probable and reasonably estimable losses, as of ~~June~~September 30, 2023, the Company estimates the aggregate range of reasonably possible losses to be up to approximately $10 million.

Matters as to Which an Estimate Cannot Be Made

For other matters, the Company is not currently able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

Sales Practices Claims

Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities or other products. The Company continues to defend vigorously against the claims in these matters. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters.

Cost of Insurance Class Actions

Richard A. Newton v. Brighthouse Life Insurance Company (U.S. District Court, Northern District of Georgia, Atlanta Division, filed May 8, 2020). Plaintiff has filed a purported class action lawsuit against Brighthouse Life Insurance Company. Plaintiff was the owner of a universal life insurance policy issued by Travelers Insurance Company, a predecessor to Brighthouse Life Insurance Company. Plaintiff seeks to certify a class of all persons who own or owned life insurance policies issued where the terms of the life insurance policy provide or provided, among other things, a guarantee that the cost of insurance rates would not be increased by more than a specified percentage in any contract year. Plaintiff also alleges that cost of insurance charges were based on improper factors and should have decreased over time due to improving mortality but did not. Plaintiff alleges, among other things, causes of action for breach of contract, fraud, suppression and concealment, and violation of the Georgia Racketeer Influenced and Corrupt Organizations Act. Plaintiff seeks to recover damages, including punitive damages, interest and treble damages, attorneys’ fees, and injunctive and declaratory relief. Brighthouse Life Insurance Company filed a motion to dismiss in June 2020, which was granted in part and denied in part in March 2021. Plaintiff was granted leave to amend the complaint. On January 18, 2023, the plaintiff filed a motion on consent to amend the second amended class action complaint to narrow the scope of the class sought to those persons who own or owned life insurance policies issued in Georgia. The motion was granted on January 23, 2023, and the third amended class action complaint was filed on January 23, 2023. The Company intends to vigorously defend this matter.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

12. Contingencies, Commitments and Guarantees (continued)

Lawrence Martin v. Brighthouse Life Insurance Company (U.S. District Court, Southern District of New York, filed April 6, 2021). Plaintiff has filed a purported class action lawsuit against Brighthouse Life Insurance Company. Plaintiff is the owner of a universal life insurance policy issued by Travelers Insurance Company, a predecessor to Brighthouse Life Insurance Company. Plaintiff seeks to certify a class of similarly situated owners of universal life insurance policies issued or administered by defendants and alleges that cost of insurance charges were based on improper factors and should have decreased over time due to improving mortality but did not. Plaintiff alleges, among other things, causes of action for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. Plaintiff seeks to recover compensatory damages, attorney’s fees, interest, and equitable relief including a constructive trust. Brighthouse Life Insurance Company filed a motion to dismiss in June 2021, which was denied in February 2022. Brighthouse Life Insurance Company of NY was initially named as a defendant when the lawsuit was filed, but was dismissed as a defendant, without prejudice, in April 2022. The Company intends to vigorously defend this matter.

57MOVEit Data Security Incident Litigation

~~Table~~Kennedy v. Progress Software Corporation, et al. (U.S. District Court, District of ~~Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary~~Massachusetts, filed October 3, 2023). BHF has been named as a defendant in a purported class action lawsuit. The action relates to a data security incident at an alleged third-party vendor, PBI Research Services (“PBI”), and allegedly involves the MOVEit file transfer system that PBI uses in its provision of ~~Brighthouse Financial, Inc.~~services (“MOVEit Incident”)

~~Notes~~. As it relates to BHF, plaintiff seeks to certify a subclass of persons whose private information was allegedly maintained by BHF and accessed or acquired in connection with the ~~Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~12. Contingencies, Commitments~~MOVEit Incident. Plaintiff alleges, among other things, that BHF negligently chose to utilize PBI to store and ~~Guarantees (continued)~~

transfer plaintiff’s and purported class members’ private information despite PBI’s use of the MOVEit software which plaintiff contends contained security vulnerabilities. The complaint asserts claims against BHF for negligence, negligence per se, and unjust enrichment, and plaintiff seeks declaratory and injunctive relief, damages, attorneys’ fees and prejudgment interest. BHF intends to vigorously defend this matter.

Summary

Various litigations, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations, it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.

Other Loss Contingencies

As with litigation and regulatory loss contingencies, the Company considers establishing liabilities for loss contingencies associated with disputes or other matters involving third parties, including counterparties to contractual arrangements entered into by the Company (e.g., third-party vendors and reinsurers), as well as with tax or other authorities (“other loss contingencies”). The Company establishes liabilities for such other loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In matters where it is not probable, but is reasonably possible that a loss will be incurred and the amount of loss can be reasonably estimated, such losses or range of losses are disclosed, and no accrual is made. In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual is made and no loss or range of loss is disclosed.

In the matters where the Company’s subsidiaries are acting as the reinsured or the reinsurer, such matters involve assertions by third parties primarily related to rates, fees or reinsured benefit calculations, and in certain of such matters, the counterparty has made a request to arbitrate.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

12. Contingencies, Commitments and Guarantees (continued)

On a quarterly basis, the Company reviews relevant information with respect to other loss contingencies and, when applicable, updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

As of ~~June~~September 30, 2023, the Company estimates the range of reasonably possible losses in excess of the amounts accrued for certain other loss contingencies to be from zero up to approximately $125 million, which are primarily associated with the reinsurance-related matters described above. For certain other matters, the Company may not currently be able to estimate the reasonably possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of such loss.

During the second quarter of 2022, the Company settled a reinsurance-related matter with a third party for $140 million, which is reported in other expenses.

Commitments

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $294 million and $247 million at ~~June~~September 30, 2023 and December 31, 2022, respectively.

Commitments to Fund Partnership Investments and Private Corporate Bond Investments

The Company commits to fund partnership investments and to lend funds under private corporate bond investments. The amounts of these unfunded commitments were ~~$1.5~~$1.4 billion and $1.9 billion at ~~June~~September 30, 2023 and December 31, 2022, respectively.

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~12. Contingencies, Commitments and Guarantees (continued)~~

Guarantees

In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from $6 million to $92 million, with a cumulative maximum of $98 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments.

In addition, the Company indemnifies its directors and officers as provided in its charters and bylaws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.

The Company’s recorded liabilities were $1 million at both ~~June~~September 30, 2023 and December 31, 2022 for indemnities, guarantees and commitments.

Table of Contents

Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

13. Related Party Transactions

The Company has related party debt and equity transactions (see Notes 9 and 10). Other material arrangements between the Company and its related parties not disclosed elsewhere are as follows:

Reinsurance Agreements

The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products and also as a provider of reinsurance for some insurance products issued by related parties. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth.

Information regarding the significant effects of assumed reinsurance with New England Life Insurance Company (“NELICO”), an affiliate, included on the interim condensed consolidated statements of operations and comprehensive income (loss) was as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
(In millions)
Premiums $ 1 $ — $ 3 $ —
Universal life and investment-type product policy fees $ — $ (1) $ — $ (1)
Other revenues $ 1 $ 1 $ 1 $ 1
Policyholder benefits and claims $ 14 $ 11 $ 32 $ 14
Change in market risk benefits $ (63) $ (19) $ (58) $ (100)
Other expenses $ (1) $ (1) $ (1) $ (3)

~~Table of Contents~~

~~Brighthouse Life Insurance Company~~

~~(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)~~

~~Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)~~

~~13. Related Party Transactions (continued)~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In millions)
Premiums	$	2	$	2	$	5	$	2


Universal life and investment-type product policy fees	$	(1)	$	—	$	(1)	$	(1)


Other revenues	$	—	$	—	$	1	$	1


Policyholder benefits and claims	$	3	$	2	$	35	$	16


Change in market risk benefits	$	(58)	$	(44)	$	(116)	$	(144)
Other expenses	$	1	$	(1)	$	—	$	(4)

Information regarding the significant effects of assumed reinsurance with NELICO included on the interim condensed consolidated balance sheets was as follows at:


		June 30, 2023		December 31, 2022	September 30, 2023			December 31, 2022
		(In millions)			(In millions)
Assets	Assets								Assets
Premiums, reinsurance and other receivables (net of allowance for credit losses)	Premiums, reinsurance and other receivables (net of allowance for credit losses)	$	28			$	29		Premiums, reinsurance and other receivables (net of allowance for credit losses)	$	29	$	29

Liabilities	Liabilities								Liabilities
Future policy benefits	Future policy benefits	$	45			$	31		Future policy benefits	$	45	$	31

Market risk benefit liabilities	Market risk benefit liabilities	$	379			$	428		Market risk benefit liabilities	$	308	$	428
Other policy-related balances	Other policy-related balances	$	22			$	11		Other policy-related balances	$	13	$	11
Other liabilities	Other liabilities	$	(1)			$	11		Other liabilities	$	(4)	$	11

Shared Services and Overhead Allocations

~~Brighthouse Services, LLC, an affiliate, currently provides~~The Company has entered into various agreements with affiliates regarding the ~~Company~~provision of certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting and information technology. Revenues received from an affiliate related to these agreements, recorded in universal life and investment-type product policy fees, were ~~$44~~$45 million and ~~$88~~$133 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, and ~~$48~~$47 million and ~~$102~~$149 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. Costs incurred under these arrangements were ~~$228~~$227 million and ~~$454~~$681 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, and ~~$202~~$246 million and ~~$425~~$671 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, and were recorded in other expenses.

The Company had net receivables from/(payables to) affiliates, related to the items discussed above, of ($~~152)~~167) million and ($188) million at ~~June~~September 30, 2023 and December 31, 2022, respectively.

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Brighthouse Life Insurance Company

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) (continued)

13. Related Party Transactions (continued)

Broker-Dealer Transactions

The related party expense for the Company was commissions paid on the sale of variable products and passed through to the broker-dealer affiliate. The related party revenue for the Company was fee income passed through the broker-dealer affiliate from trusts and mutual funds whose shares serve as investment options of policyholders of the Company. Fee income received related to these transactions and recorded in other revenues was $43 million and ~~$85~~$128 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, and ~~$47~~$44 million and ~~$99~~$143 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. Commission expenses incurred related to these transactions and recorded in other expenses was ~~$219~~$216 million and ~~$444~~$660 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, and ~~$226~~$240 million and ~~$456~~$696 million for the three months and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. The Company also had related party fee income receivables of $14 million at both ~~June~~September 30, 2023 and December 31, 2022.

~~14. Subsequent Event~~

~~Repurchase Facility~~

In July 2023, Brighthouse Life Insurance Company entered into an additional secured committed repurchase facility (the “Repurchase Facility”) under which Brighthouse Life Insurance Company may enter into repurchase transactions in an aggregate amount up to $500 million for a term of up to two years, which is available to the Company under certain market conditions. Under the Repurchase Facility, Brighthouse Life Insurance Company may sell certain eligible securities at a purchase price based on the market value of the securities less an applicable margin based on the types of securities sold, with a concurrent agreement to repurchase such securities at a predetermined future date (up to three months) and at a price which represents the original purchase price plus interest.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations


			Page
Overview			6265
Regulatory Developments			6366
Summary of Critical Accounting Estimates			6366
Non-GAAP Financial Disclosures			6467
Results of Operations			6568
Liquidity and Capital Resources			6973
Note Regarding Forward-Looking Statements			7174

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For purposes of this discussion, “BLIC,” the “Company,” “we,” “our” and “us” refer to Brighthouse Life Insurance Company and its subsidiaries, and “Brighthouse Life Insurance Company” refers solely to Brighthouse Life Insurance Company and not to any of its subsidiaries. Brighthouse Life Insurance Company is an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. (“BHF” and together with its subsidiaries, “Brighthouse Financial”). This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with (i) the Interim Condensed Consolidated Financial Statements and related notes included elsewhere herein; (ii) our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”) on March 1, ~~2023 (the “2022 Annual Report”);~~2023; (iii) our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “First Quarter Form 10-Q”) filed with the SEC on May 11, 2023; (iv) our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Second Quarter Form 10-Q” and, ~~(iv)~~together with the First Quarter Form 10-Q, the “Quarterly Reports”) filed with the SEC on August 10, 2023; and (v) our current reports on Form 8-K filed in 2023.

Overview

We offer a range of annuity and life insurance products to individuals and deliver our products through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners. Brighthouse Life Insurance Company, a Delaware corporation, is licensed to write business in all U.S. states (except New York), the District of Columbia, the Bahamas, Guam, Puerto Rico, the British Virgin Islands and the U.S. Virgin Islands. Brighthouse Life Insurance Company of NY (“BHNY”), a wholly-owned subsidiary of Brighthouse Life Insurance Company, is domiciled in New York and licensed to write business only in New York.

We are organized into three segments: (i) Annuities, (ii) Life and (iii) Run-off, which consists of products that are no longer actively sold and are separately managed. In addition, we report certain of our results of operations in Corporate & Other. See “Business — Segments and Corporate & Other” included in our 2022 Annual Report, as well as Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements for further information regarding our segments and Corporate & Other.

Financial and Economic Environment

Our business and results of operations are materially affected by conditions in the capital markets and the economy generally. Stressed conditions, volatility and disruptions in the capital markets or financial asset classes can have an adverse effect on us. Equity market performance can affect our profitability for variable annuities and other separate account products as a result of the effects it has on product demand, revenues, expenses, reserves and our risk management effectiveness. The level of long-term interest rates and the shape of the yield curve can have a negative effect on the profitability for variable annuities and the demand for, and the profitability of, spread-based products such as fixed annuities, index-linked annuities and universal life insurance. Low interest rates and risk premium, including credit spread, affect new money rates on invested assets and the cost of product guarantees. Insurance premium growth and demand for our products is impacted by the general health of U.S. economic activity. A sustained or material increase in inflation could also affect our business in several ways. During inflationary periods, the value of fixed income investments falls which could increase realized and unrealized losses. Interest rates have increased and may continue to increase due to central bank policy responses to combat inflation, which may positively impact our business in certain respects, but could also increase the risk of a recession or an equity market downturn and could negatively impact various portions of our business, including our investment portfolio. Inflation also increases our expenses (including, among others, for labor and third-party services), potentially putting pressure on profitability if such costs cannot be passed through to policyholders in our product prices. Prolonged and elevated inflation could adversely affect the financial markets and the economy generally and dispelling it may require governments to pursue a restrictive fiscal and monetary policy, which could constrain overall economic activity and inhibit revenue growth. Events involving limited liquidity, defaults, nonperformance or other adverse developments that affect financial institutions or the financial services industry generally, or concerns or rumors about events of these kinds or other similar risks, could adversely affect market-wide liquidity, which could increase the risk of a recession or an equity market downturn and negatively impact various portions of our business, including our investment portfolio. See “Risk Factors — Economic Environment and Capital Markets-Related Risks — If difficult conditions in the capital markets and the U.S. economy generally persist or are perceived to persist, they may materially adversely affect our business and results of operations” and “Risk Factors — Risks Related to our Investment Portfolio — Our investment portfolio is subject to significant financial risks both in the U.S. and global financial markets, including credit risk, interest rate risk, inflation risk, market valuation risk, liquidity risk, real estate risk, derivatives risk, and other factors outside our control, the occurrence of any of which could have a material adverse effect on our financial condition and results of operations” included in our 2022 Annual Report.

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We continue to closely monitor political and economic conditions that might contribute to market volatility and their impact on our business operations, investment portfolio and derivatives, such as global inflation, uncertainty and instability in certain asset classes (including commercial real estate), supply chain disruptions and recent geopolitical conflicts, including in Europe and the ~~Russia-Ukraine conflict.~~Middle East. See “Risk Factors — Economic Environment and Capital Markets-Related Risks” and “Risk Factors — Risks Related to our Investment Portfolio” included in our 2022 Annual Report for a detailed discussion of financial and economic impacts on our business, including the potential impacts of interest rate risk and inflation risk on our investments and overall business.

Regulatory Developments

We, including our insurance subsidiary, BHNY, and our reinsurance subsidiary, Brighthouse Reinsurance Company of Delaware, are regulated primarily at the state level, with some products and services also subject to federal regulation. In addition, Brighthouse Life Insurance Company and BHNY are subject to regulation under the insurance holding company laws of various U.S. jurisdictions. Furthermore, some of our operations, products and services are subject to the Employee Retirement Income Security Act of 1974, consumer protection laws, securities, broker-dealer and investment advisor regulations, as well as environmental and unclaimed property laws and regulations. See “Business — Regulation,” as well as “Risk Factors — Regulatory and Legal Risks” included in our 2022 Annual Report, as amended or supplemented by our subsequent Quarterly Reports under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Developments.”

Summary of Critical Accounting Estimates

The most critical estimates include those used in determining:

•liability for future policy ~~benefits (“LFPB”);~~benefits;

•estimated fair values of market risk benefits (“MRB”);

•estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation; and

•measurement of income taxes and the valuation of deferred tax assets.

In applying our accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our business and operations. Actual results could differ from these estimates.

In connection with the adoption of new guidance on long-duration contracts (Accounting Standards Update 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“LDTI”)), effective January 1, 2023, the Company updated its impacted critical accounting estimates. The impacted critical accounting estimates are described in our First Quarter Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and in Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” in the 2022 Annual Report for a description of income taxes and the valuation of deferred tax assets, which remain unchanged following the adoption of LDTI.

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Non-GAAP Financial Disclosures

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

Adjusted Earnings

In this report, we present adjusted earnings as a measure of our performance that is not calculated in accordance with GAAP. Adjusted earnings is used by management to evaluate performance and facilitate comparisons to industry results. We believe the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of our performance by the investor community and contract holders by highlighting the results of operations and the underlying profitability drivers of our business. Adjusted earnings should not be viewed as a substitute for net income (loss) attributable to Brighthouse Life Insurance Company, which is the most directly comparable financial measure calculated in accordance with GAAP. See “— Results of Operations” for a reconciliation of adjusted earnings to net income (loss) attributable to Brighthouse Life Insurance Company.

Adjusted earnings, which may be positive or negative, focuses on our primary businesses by excluding the impact of market volatility, which could distort trends.

The following are significant items excluded from total revenues in calculating adjusted earnings:

•Net investment gains (losses); and

The following are significant items excluded from total expenses in calculating adjusted earnings:

•Change in MRBs; and

•Change in fair value of the crediting rate on experience-rated contracts (“Market Value Adjustments”).

We present adjusted earnings in a manner consistent with management’s view of the primary business activities that drive the profitability of our core businesses. The following table illustrates how each component of adjusted earnings is calculated from the GAAP statements of operations line items:


Component of Adjusted Earnings		How Derived from GAAP (1)
(i)	Fee income	(i)	Universal life and investment-type product policy fees plus Other revenues.
(ii)	Net investment spread	(ii)	Net investment income plus Investment Hedge Adjustments reduced by Interest credited to policyholder account balances (excluding Market Value Adjustments) and interest on future policy benefits.
(iii)	Insurance-related activities	(iii)	Premiums less Policyholder benefits and claims, excluding interest on future policy benefits.
(iv)	Amortization of DAC and VOBA	(iv)	Amortization of deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”).
(v)	Other expenses	(v)	Other expenses.
(vi)	Provision for income tax expense (benefit)	(vi)	Tax impact of the above items, calculated using the statutory tax rate of 21%, net of impacts related to the dividends received deduction, tax credits and current period non-recurring items.

______________

(1)Italicized items indicate GAAP statements of operations line items.

Consistent with GAAP guidance for segment reporting, adjusted earnings is also our GAAP measure of segment performance. Accordingly, we report adjusted earnings by segment in Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements.

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Results of Operations

Annual Actuarial Review

We typically conduct our annual actuarial review (“AAR”) in the third quarter of each year. As part of the 2023 AAR, for our universal life insurance with secondary guarantees (“ULSG”) business, we increased the long-term general account earned rate, driven by an increase in the mean reversion rate from 3.50% to 3.75%. Also, with respect to our ULSG business, we updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses, withdrawals and maintenance expenses. For our variable annuity business, we updated our annuitization, mortality, lapses and withdrawals, as well as separate account assumptions, including fund fees, allocations and volatility. For term participating and non-participating whole life insurance, we updated assumptions regarding mortality and lapses.

Consolidated Results for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

Unless otherwise noted, all amounts in the following discussions of our results of operations are stated before income tax except for adjusted earnings, which are presented net of income tax.


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(In millions)					(In millions)
Revenues	Revenues					Revenues
Premiums	Premiums	$	396	$	322	Premiums	$	588	$	482
Universal life and investment-type product policy fees	Universal life and investment-type product policy fees	945		995		Universal life and investment-type product policy fees	1,356		1,456
Net investment income	Net investment income	2,207		2,179		Net investment income	3,381		3,036
Other revenues	Other revenues	197		218		Other revenues	305		328
Net investment gains (losses)	Net investment gains (losses)	(161)		(131)		Net investment gains (losses)	(213)		(171)
Net derivative gains (losses)	Net derivative gains (losses)	(2,413)		1,919		Net derivative gains (losses)	(3,251)		1,329
Total revenues	Total revenues	1,171		5,502		Total revenues	2,166		6,460
Expenses	Expenses					Expenses
Policyholder benefits and claims (including liability remeasurement gains (losses) of $0 and $0, respectively)		1,296		1,323
Policyholder benefits and claims (including liability remeasurement gains (losses) of ($233) and ($233), respectively)						Policyholder benefits and claims (including liability remeasurement gains (losses) of ($233) and ($233), respectively)	1,759		1,878
Interest credited to policyholder account balances	Interest credited to policyholder account balances	862		519		Interest credited to policyholder account balances	1,282		918
Amortization of DAC and VOBA	Amortization of DAC and VOBA	284		284		Amortization of DAC and VOBA	425		427
Change in market risk benefits	Change in market risk benefits	(1,101)		(1,643)		Change in market risk benefits	(2,165)		(2,625)
Interest expense on debt	Interest expense on debt	36		33		Interest expense on debt	53		51
Other expenses	Other expenses	768		848		Other expenses	1,139		1,241
Total expenses	Total expenses	2,145		1,364		Total expenses	2,493		1,890
Income (loss) before provision for income tax	Income (loss) before provision for income tax	(974)		4,138		Income (loss) before provision for income tax	(327)		4,570
Provision for income tax expense (benefit)	Provision for income tax expense (benefit)	(240)		831		Provision for income tax expense (benefit)	(119)		909
Net income (loss)	Net income (loss)	(734)		3,307		Net income (loss)	(208)		3,661
Less: Net income (loss) attributable to noncontrolling interests	Less: Net income (loss) attributable to noncontrolling interests	1		1		Less: Net income (loss) attributable to noncontrolling interests	1		1
Net income (loss) attributable to Brighthouse Life Insurance Company	Net income (loss) attributable to Brighthouse Life Insurance Company	$	(735)	$	3,306	Net income (loss) attributable to Brighthouse Life Insurance Company	$	(209)	$	3,660

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The components of net income (loss) were as follows:


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(In millions)					(In millions)
Change in market risk benefits	Change in market risk benefits	$	1,101	$	1,643	Change in market risk benefits	$	2,165	$	2,625
Net investment gains (losses)	Net investment gains (losses)	(161)		(131)		Net investment gains (losses)	(213)		(171)
Net derivative gains (losses), excluding investment hedge adjustments	Net derivative gains (losses), excluding investment hedge adjustments	(2,474)		1,904		Net derivative gains (losses), excluding investment hedge adjustments	(3,337)		1,291
Market value adjustments	Market value adjustments	(5)		69		Market value adjustments	9		89
Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	564		652		Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	1,048		735
Income (loss) attributable to Brighthouse Life Insurance Company before provision for income tax	Income (loss) attributable to Brighthouse Life Insurance Company before provision for income tax	(975)		4,137		Income (loss) attributable to Brighthouse Life Insurance Company before provision for income tax	(328)		4,569
Provision for income tax expense (benefit)	Provision for income tax expense (benefit)	(240)		831		Provision for income tax expense (benefit)	(119)		909
Net income (loss) attributable to Brighthouse Life Insurance Company	Net income (loss) attributable to Brighthouse Life Insurance Company	$	(735)	$	3,306	Net income (loss) attributable to Brighthouse Life Insurance Company	$	(209)	$	3,660

Change in Market Risk Benefits. The change in ~~market risk benefits~~MRBs reflects changes in the projected value of ~~variable~~ annuity guaranteed benefits discounted at current risk-free rates, plus a nonperformance risk spread that is locked-in at policy issuance.

Net Derivative Gains (Losses). We have derivative instruments for which changes in estimated fair value are recognized in net derivative gains (losses).

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Freestanding Derivatives. We have freestanding derivatives that economically hedge certain invested assets and insurance liabilities. The majority of this hedging activity is focused in the following areas:

•use of a proprietary mix of derivative instruments to hedge variable annuity guaranteed benefit riders against adverse changes in capital markets;

•as part of the Company’s macro interest rate hedging program, the use of interest rate swaps, swaptions and interest rate forwards in connection with our ~~universal life with secondary guarantees (“ULSG”)~~ULSG business;

•use of interest rate swaps when we have duration mismatches where suitable assets with maturities similar to those of our long-dated liabilities are not readily available in the market and use of interest rate forwards hedging reinvestment risk from maturing assets with higher yields than currently available in the market that support long-dated liabilities;

•use of foreign currency swaps when we hold fixed maturity securities denominated in foreign currencies that are matching insurance liabilities denominated in U.S. dollars; and

•use of equity index options to hedge index-linked annuity products against adverse changes in equity markets.

Embedded Derivatives. The changes in liability values of our fixed index-linked annuity and Shield® Level Annuity (“Shield”) products that result from changes in the underlying equity index are accounted for as embedded derivatives. In addition, certain ceded reinsurance agreements in our life and run-off businesses are written on a coinsurance with funds withheld basis. The funds withheld component is accounted for as an embedded derivative with changes in the estimated fair value recognized in net income (loss) in the period in which they occur.

Market value adjustments. See “— Non-GAAP Financial Disclosures — Adjusted Earnings.”

Pre-tax Adjusted Earnings. See “— Non-GAAP Financial Disclosures — Adjusted Earnings.”

~~Six~~Nine Months Ended ~~June~~September 30, 2023 Compared with the ~~Six~~Nine Months Ended ~~June~~September 30, 2022

Loss before provision for income tax was ~~$975~~$328 million ($~~735~~209 million, net of income tax), a decrease of ~~$5.1~~$4.9 billion ($~~4.0~~3.9 billion, net of income tax) from income before provision for income tax of ~~$4.1~~$4.6 billion ($~~3.3~~3.7 billion, net of income tax) in the prior period.

The decrease in income before provision for income tax was driven by ~~the following unfavorable items:~~

•losses from variable annuity guaranteed benefit riders, see “— Annuity Guaranteed Benefits and Shield Annuity Liabilities for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and ~~2022”; and~~2022.”

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•~~lower pre-tax adjusted earnings, as discussed in greater detail below.~~

The decrease in income before provision for income tax was partially offset by the following favorable items:

•the impact of long-term interest rates on interest rate derivatives used to manage interest rate exposure in our ULSG business, as the long-term interest rate ~~decreased~~increased less in the current period resulting in a ~~gain~~loss of ~~$57~~$443 million and increased more in the prior period resulting in a loss of ~~$1.2 billion.~~$1.7 billion; and

•higher pre-tax adjusted earnings, as discussed in greater detail below.

The provision for income tax, expressed as a percentage of income (loss) before provision for income tax, resulted in an effective tax rate of ~~25%~~36% in the current period compared to 20% in the prior period. The increase in the effective tax rate was driven by the decrease in income before provision for income tax as discussed above. Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction, tax credits and current period non-recurring items.

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Reconciliation of Net Income (Loss) to Adjusted Earnings

The reconciliation of net income (loss) attributable to Brighthouse Life Insurance Company to adjusted earnings was as follows:


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(In millions)					(In millions)
Net income (loss) attributable to Brighthouse Life Insurance Company	Net income (loss) attributable to Brighthouse Life Insurance Company	$	(735)	$	3,306	Net income (loss) attributable to Brighthouse Life Insurance Company	$	(209)	$	3,660
Add: Provision for income tax expense (benefit)	Add: Provision for income tax expense (benefit)	(240)		831		Add: Provision for income tax expense (benefit)	(119)		909
Income (loss) attributable to Brighthouse Life Insurance Company before provision for income tax	Income (loss) attributable to Brighthouse Life Insurance Company before provision for income tax	(975)		4,137		Income (loss) attributable to Brighthouse Life Insurance Company before provision for income tax	(328)		4,569
Less: Net investment gains (losses)	Less: Net investment gains (losses)	(161)		(131)		Less: Net investment gains (losses)	(213)		(171)
Less: Net derivative gains (losses), excluding investment hedge adjustments of $61 and $15, respectively		(2,474)		1,904
Less: Net derivative gains (losses), excluding investment hedge adjustments of $86 and $38, respectively						Less: Net derivative gains (losses), excluding investment hedge adjustments of $86 and $38, respectively	(3,337)		1,291
Less: Change in market risk benefits	Less: Change in market risk benefits	1,101		1,643		Less: Change in market risk benefits	2,165		2,625
Less: Market value adjustments	Less: Market value adjustments	(5)		69		Less: Market value adjustments	9		89
Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	564		652		Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	1,048		735
Less: Provision for income tax expense (benefit)	Less: Provision for income tax expense (benefit)	83		99		Less: Provision for income tax expense (benefit)	169		104
Adjusted earnings	Adjusted earnings	$	481	$	553	Adjusted earnings	$	879	$	631

Consolidated Results for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022 — Adjusted Earnings

The components of adjusted earnings were as follows:


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(In millions)					(In millions)
Fee income	Fee income	$	1,142	$	1,213	Fee income	$	1,661	$	1,784
Net investment spread	Net investment spread	1,367		1,565		Net investment spread	2,109		2,005
Insurance-related activities	Insurance-related activities	(856)		(960)		Insurance-related activities	(1,104)		(1,334)
Amortization of DAC and VOBA	Amortization of DAC and VOBA	(284)		(284)		Amortization of DAC and VOBA	(425)		(427)
Other expenses	Other expenses	(804)		(881)		Other expenses	(1,192)		(1,292)
Less: Net income (loss) attributable to noncontrolling interests	Less: Net income (loss) attributable to noncontrolling interests	1		1		Less: Net income (loss) attributable to noncontrolling interests	1		1
Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	564		652		Pre-tax adjusted earnings, less net income (loss) attributable to noncontrolling interests	1,048		735
Provision for income tax expense (benefit)	Provision for income tax expense (benefit)	83		99		Provision for income tax expense (benefit)	169		104
Adjusted earnings	Adjusted earnings	$	481	$	553	Adjusted earnings	$	879	$	631

~~Six~~Nine Months Ended ~~June~~September 30, 2023 Compared with the ~~Six~~Nine Months Ended ~~June~~September 30, 2022

Adjusted earnings were ~~$481~~$879 million in the current period, ~~a decrease~~an increase of ~~$72~~$248 million.

Key net ~~unfavorable~~favorable impacts were:

•lower net costs associated with insurance-related activities due to:

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◦lower liabilities in our ULSG business from the impact of new reinsurance agreements entered into in the prior period; and

◦lower paid claims, net of reinsurance in the current period;

partially offset by

◦a net increase in liability balances resulting from year-over-year changes made in connection with the AAR;

•higher net investment spread due to:

◦~~lower returns on other limited partnerships compared to~~higher average invested assets resulting from positive net flows in the ~~prior period;~~general account;

◦~~higher interest credited to policyholders consistent with higher account balances; and~~

◦~~lower returns on real estate limited partnerships and limited liability companies (“LLC”);~~

~~partially offset by~~

◦higher investment yields and average invested long-term assets from funding agreements issued in connection with our institutional spread margin business;

◦~~higher average invested assets resulting from positive net flows in the general account;~~

◦higher investment yields on our fixed income portfolio, as proceeds from maturing investments and the growth in the investment portfolio were invested at higher yields than the portfolio average; and

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◦higher returns from short-term investments;

partially offset by

◦lower returns on real estate limited partnerships and limited liability companies;

◦lower returns on other limited partnerships; and

◦higher interest credited to policyholders due to higher account balances, net of changes made in the prior period in connection with the AAR, and current period actuarial modeling improvements; and

•lower other expenses due to:

◦the settlement of a reinsurance-related matter in the prior period;

◦higher system conversion costs in the prior period;

◦lower asset-based variable annuity expenses resulting from lower average separate account balances, a portion of which is offset in fee income; and

◦lower transition services agreement expenses;

partially offset by

◦lower ceded cost of insurance expenses consistent with favorable equity market returns in our life business, which is offset in fee income; and

◦higher deferred compensation and operational expenses.

Key net unfavorable impacts were:

•lower net fee income due to:

◦lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses; and

◦a decline in the net cost of insurance fees driven by our aging in-force ULSG business;

partially offset by

◦lower ceded cost of insurance fees consistent with favorable equity market returns in our life business, which is mostly offset in other expenses.

~~Key net favorable impacts were:~~

•~~lower costs associated with insurance-related activities due to:~~

◦~~lower liabilities in our ULSG business from the impact of new reinsurance agreements entered into in the prior period;~~

~~partially offset by~~

◦~~higher paid claims, net of reinsurance in the current period; and~~

•~~lower other expenses due to:~~

◦~~the settlement of a reinsurance-related matter in the prior period; and~~

◦~~lower asset-based variable annuity expenses resulting from lower average separate account balances, a portion of which is offset in fee income;~~

~~partially offset by~~

◦~~lower ceded cost of insurance expenses consistent with favorable equity market returns in our life business, which is offset in fee income; and~~

◦~~higher deferred compensation expenses.~~

The provision for income tax, expressed as a percentage of pre-tax adjusted earnings, resulted in an effective tax rate of ~~15%~~16% in ~~both~~ the current period ~~and~~compared to 14% in the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction, tax credits and current period non-recurring items.

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Annuity Guaranteed Benefits and Shield Annuity Liabilities for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

The overall impact on income (loss) before provision for income tax from the performance of ~~variable~~ annuity guaranteed benefits and Shield annuity liabilities, which includes (i) changes in the fair value of liabilities and reinsurance, (ii) fees net of claims and (iii) the mark-to-market of hedges, was as follows:


		Six Months Ended June 30,						Nine Months Ended September 30,
			2023		2022				2023		2022
		(In millions)						(In millions)
Market risk benefits mark-to-market	Market risk benefits mark-to-market		$	870	$	1,312	Market risk benefits mark-to-market		$	1,759	$	2,096
Annuity guaranteed benefit rider fees, net of claims	Annuity guaranteed benefit rider fees, net of claims		255		364		Annuity guaranteed benefit rider fees, net of claims		444		574
Ceded reinsurance	Ceded reinsurance		(24)		(33)		Ceded reinsurance		(38)		(45)
Total changes attributable to annuity guaranteed benefits liabilities			1,101		1,643
Total changes attributable to annuity guaranteed benefits							Total changes attributable to annuity guaranteed benefits		2,165		2,625
Variable annuity hedges	Variable annuity hedges		292		(505)		Variable annuity hedges		(894)		(1,277)
Shield embedded derivatives	Shield embedded derivatives		(2,766)		3,453		Shield embedded derivatives		(1,993)		4,002
Total annuity guaranteed benefits and Shield annuity liabilities			$	(1,373)	$	4,591
Total							Total		$	(722)	$	5,350

Market Risk Benefits Mark-to-Market. Annuity guaranteed rider benefits are accounted for as MRBs. ~~Liabilities~~MRBs related to guaranteed rider benefits represent the current estimated fair value of the obligation to protect policyholders against the possibility that a downturn in the markets will reduce the specified benefits that can be claimed under the base annuity contract. Any periods of significant or sustained downturns in equity markets, increased equity volatility, or reduced interest

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rates could result in an increase in the valuation of these liabilities. An increase in these liabilities would result in a decrease to our net income (loss) available to shareholders, which could be significant.

Annuity Guaranteed Benefit Rider Fees, Net of Claims. We earn fees from the guaranteed rider benefits, which are calculated using the policyholder’s minimum return based on their initial deposit (the “Benefit Base”). Fees calculated based on the Benefit Base are more stable in market downturns, compared to fees based on the account value because the Benefit Base excludes the impact of a decline in the market value of the policyholder’s account value. We use the fees directly earned from the guarantee riders to fund the reserves, future claims and costs associated with the hedges of market risks inherent in these liabilities. The future fees are included in the estimated fair value of MRB liabilities, with changes recorded in MRBs.

Variable Annuity Hedges and Reinsurance. We enter into freestanding derivatives to hedge certain aspects of the annuity guaranteed benefits accounted for as MRBs and index-linked crediting rates accounted for as embedded derivatives. Generally, the same market factors that impact the estimated fair value of the annuity guaranteed benefits impact the value of the hedges, though in the opposite direction. However, the changes in value of MRBs and related hedges may not be symmetrical and the divergence could be significant due to certain factors, including unhedged risks within MRBs. We may also use reinsurance to manage our exposure related to MRBs.

Shield Embedded Derivatives. Shield Annuities provide the contract holder the ability to participate in the appreciation of certain financial markets up to a stated level, while offering protection from a portion of declines in the applicable indices or benchmark. Shield embedded derivatives represent the estimated fair value of these features. We believe that Shield Annuities provide us with a risk offset to liabilities related to guaranteed rider benefits.

~~Six~~Nine Months Ended ~~June~~September 30, 2023 Compared with the ~~Six~~Nine Months Ended ~~June~~September 30, 2022

Annuity guaranteed benefits and Shield annuity liabilities performance was unfavorable for the ~~six~~nine months ended ~~June~~September 30, 2023, primarily driven by:

•decreases in annuity guaranteed benefits liabilities due to increasing interest rates and equity ~~markets;~~markets, partially offset by changes made in connection with the AAR;

•~~favorable~~unfavorable changes in variable annuity hedges due to increasing ~~equity markets;~~long-term interest rates; and

•unfavorable changes in Shield embedded derivatives due to increasing equity markets.

Annuity guaranteed benefits and Shield annuity liabilities performance was favorable for the ~~six~~nine months ended ~~June~~September 30, 2022, primarily driven by:

•decreases in annuity guaranteed benefits liabilities due to increasing interest rates, partially offset by decreasing equity ~~markets;~~markets and changes made in connection with the AAR;

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•unfavorable changes in variable annuity hedges due to increasing long-term interest rates, partially offset by decreasing equity markets; and

•favorable changes in Shield embedded derivatives due to decreasing equity markets, partially offset by increasing interest rates.

Liquidity and Capital Resources

Our business and results of operations are materially affected by conditions in the global capital markets and the economy generally. Stressed conditions, volatility or disruptions in global capital markets, particular markets or financial asset classes can impact us adversely, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors. Changing conditions in the global capital markets and the economy may affect our financing costs and market interest rates for our debt issuances. For further information regarding market factors that could affect our ability to meet liquidity and capital needs, see “— Overview — Financial and Economic Environment,” as well as “Risk Factors — Economic Environment and Capital Markets-Related Risks” and “Risk Factors — Risks Related to Our Investment Portfolio” included in our 2022 Annual Report.

Sources and Uses of Liquidity and Capital

In addition to the summary description of liquidity and capital sources discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Sources and Uses of Liquidity and Capital” in our 2022 Annual Report, the following additional information is provided regarding our primary sources of liquidity and capital:

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Funding Agreements

Brighthouse Life Insurance Company issues funding agreements and uses the proceeds from such issuances for spread lending purposes in connection with our institutional spread margin business or to provide additional liquidity. The institutional spread margin business is comprised of funding agreements issued in connection with the programs described in more detail below. See Note 3 of the Notes to the Consolidated Financial Statements included in our 2022 Annual Report for additional information on funding agreements.

Funding Agreement-Backed Commercial Paper Program

In July 2021, Brighthouse Life Insurance Company established a funding agreement-backed commercial paper program (the “FABCP Program”) for spread lending purposes, pursuant to which a special purpose limited liability company (the “SPLLC”) may issue commercial paper and deposit the proceeds with Brighthouse Life Insurance Company under a funding agreement issued by Brighthouse Life Insurance Company to the SPLLC. The maximum aggregate principal amount permitted to be outstanding at any one time under the FABCP Program was increased from $3.0 billion to $5.0 billion in June 2023. Activity related to this funding agreement is reported in Corporate & Other.

Funding Agreement-Backed Notes Program

In April 2021, Brighthouse Life Insurance Company established a funding agreement-backed notes program (the “FABN Program”), pursuant to which Brighthouse Life Insurance Company may issue funding agreements to a special purpose statutory trust for spread lending purposes. The maximum aggregate principal amount permitted to be outstanding at any one time under the FABN Program is $7.0 billion. Activity related to these funding agreements is reported in Corporate & Other.

Federal Home Loan Bank Funding Agreements

Brighthouse Life Insurance Company is a member of the Federal Home Loan Bank (“FHLB”) of Atlanta, where we maintain a secured funding agreement program, under which funding agreements may be issued either (i) for spread lending purposes or (ii) to provide additional liquidity. Activity related to these funding agreements is reported in Corporate & Other.

Farmer Mac Funding Agreements

Brighthouse Life Insurance Company has a secured funding agreement program with the Federal Agricultural Mortgage Corporation and its affiliate Farmer Mac Mortgage Securities Corporation (“Farmer Mac”) with a term ending on December 1, 2026, pursuant to which the parties may enter into funding agreements in an aggregate amount of up to $750 million either (i) for spread lending purposes or (ii) to provide additional liquidity. Activity related to these funding agreements is reported in Corporate & Other.

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Information regarding funding agreements issued for spread lending purposes is as follows:


																					Aggregate Principal Amount Outstanding						Issuances				Repayments
		Aggregate Principal Amount Outstanding						Issuances						Repayments												Nine Months Ended September 30,
							Six Months Ended June 30,													September 30, 2023				December 31, 2022			2023		2022		2023		2022
				June 30, 2023			December 31, 2022			2023			2022			2023			2022				(In millions)
		(In millions)
FABCP Program	FABCP Program	$	2,954		$	2,097		$	4,332		$	5,015		$	3,475		$	5,142	FABCP Program		$	2,809		$	2,097		$	5,618	$	8,980	$	4,906	$	9,110
FABN Program	FABN Program	2,600			3,450			—			550			850			—		FABN Program		2,600			3,450			—		550		850		—
FHLB Funding Agreements	FHLB Funding Agreements	4,250			3,900			1,300			3,750			950			1,750		FHLB Funding Agreements		4,400			3,900			1,925		5,350		1,425		2,500
Farmer Mac Funding Agreements	Farmer Mac Funding Agreements	700			700			—			400			—			25		Farmer Mac Funding Agreements		700			700			—		400		—		25
Total	Total	$	10,504		$	10,147		$	5,632		$	9,715		$	5,275		$	6,917	Total		$	10,509		$	10,147		$	7,543	$	15,280	$	7,181	$	11,635

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Note Regarding Forward-Looking Statements

This report 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 BLIC. 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 between actual outcomes and the sensitivities calculated under certain scenarios 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 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 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, financial strength 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;

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•Brighthouse Life Insurance Company’s ability to pay dividends, as well as the ability of its subsidiaries to pay dividends or distributions to Brighthouse Life Insurance Company;

•the risks associated with climate change;

•the adverse impact of public health crises, extreme mortality events or similar occurrences on our business and the economy in general;

•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 geopolitical events, military actions or catastrophic events, on our profitability measures as well as our investment portfolio, including on realized and unrealized losses and impairments, net investment spread and net investment income;

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•the financial risks that our investment portfolio is subject to, including credit risk, interest rate risk, inflation risk, market valuation risk, liquidity risk, real estate risk, derivatives risk, and other factors outside our control;

•the impact of changes in regulation and in supervisory and enforcement policies or interpretations thereof 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 or increase our tax liability;

•the effectiveness of our policies, procedures and processes 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. (together with its subsidiaries and affiliates, “MetLife”) are not as expected, leading to material additional taxes or material adverse consequences to tax attributes that impact us; and

•other factors described in this report and from time to time in documents that we file with 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 2022 Annual Report, 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We regularly analyze our market risk exposure to interest rate, equity market price, credit spreads and foreign currency exchange rate risks. As a result of that analysis, we have determined that the estimated fair values of certain assets and liabilities are significantly exposed to changes in interest rates, and to a lesser extent, to changes in equity market prices and foreign currency exchange rates. We have exposure to market risk through our insurance and annuity operations and general account investment activities. For purposes of this discussion, “market risk” is defined as changes in estimated fair value resulting from changes in interest rates, equity market prices, credit spreads and foreign currency exchange rates. We may have additional financial impacts other than changes in estimated fair value, which are beyond the scope of this discussion. A description of our market risk exposures may be found under “Quantitative and Qualitative Disclosures About Market Risk” in our First Quarter Form 10-Q.

There have been no material changes to our market risk exposures from the market risk exposures previously disclosed in our First Quarter Form ~~10-Q.~~10-Q with the exception of sensitivity to changes in interest rates. Sensitivity to a 100 basis point rise in interest rates decreased by $979 million, or 18%, to $4.5 billion as of September 30, 2023 from $5.5 billion as of March 31, 2023 primarily as a result of the impact of higher interest rates on the estimated fair value of fixed maturity securities, in line with management expectations.

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Item 4. Controls and Procedures

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of ~~June~~September 30, 2023.

MetLife provides certain services to the Company on a transitional basis through services agreements. The Company continues to change business processes, implement systems and establish new third-party arrangements, as a subsidiary of Brighthouse Financial, Inc. We consider these in aggregate to be material changes in our internal control over financial reporting.

Other than as noted above, there were no changes to the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended ~~June~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.

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Part II — Other Information

Item 1. Legal Proceedings

See Note 12 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as “Legal Proceedings” in our First Quarter Form 10-Q.

Item 1A. Risk Factors

We discuss in this report, in our 2022 Annual Report and in our other filings with the SEC, various risks that may materially affect our business. In addition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Note Regarding Forward-Looking Statements” included herein. There have been no material changes to our risk factors from the risk factors previously disclosed in our 2022 Annual Report.

Item 5. Other Information

Director and Officer 10b5-1 Plans

All of Brighthouse Life Insurance Company’s common stock is held by Brighthouse Holdings, LLC. As such, during the three months ended ~~June~~September 30, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the ~~Securities~~ Exchange ~~Act of 1934)~~Act) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities ~~Acts~~Act of ~~1933)~~1933, as amended).

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Item 6. Exhibits

(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits herein, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about Brighthouse Life Insurance Company, its subsidiaries or affiliates or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about Brighthouse Life Insurance Company, its subsidiaries and affiliates may be found elsewhere herein and Brighthouse Life Insurance Company’s other public filings, which are available without charge through the U.S. Securities and Exchange Commission website at www.sec.gov.)


Exhibit No.						Description
31.1*						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.
104*						The cover page of Brighthouse Life Insurance Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2023, formatted in Inline XBRL (included within the Exhibit 101 attachments).

* Filed herewith.

** Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


BRIGHTHOUSE LIFE INSURANCE COMPANY

By:		/s/ Kristine H. Toscano
	Name:	Kristine H. Toscano
	Title:	Vice President and Chief Accounting Officer
		(Duly Authorized Officer and Principal Accounting Officer)

Date: ~~August 10,~~November 9, 2023

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