Brighthouse Financial, Inc.
This presentation contains information that includes or is based upon forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of
1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or
current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning, or are tied to future
periods, in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, statements regarding the
separation and distribution, including the timing and expected benefits thereof, the formation of Brighthouse and the recapitalization actions, including receiving required
regulatory approvals and the timing and expected benefits thereof, future performance or results of current and anticipated services or products, sales efforts, expenses, the
outcome of contingencies such as legal proceedings, trends in operations and financial results.
Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such
factors will be important in determining the actual future results of Brighthouse, its subsidiaries and affiliates. These statements are based on current expectations and the current
economic environment. They 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: risks relating to the formation of Brighthouse and our recapitalization; the timing of the
separation and the distribution, whether the conditions to the distribution will be met, whether the separation and the distribution will be completed, and whether the distribution
will qualify for non-recognition treatment for U.S. federal income tax purposes and potential indemnification to MetLife if the distribution does not so qualify; the impact of the
separation on our business and profitability due to MetLife’s strong brand and reputation, the increased costs related to replacing arrangements with MetLife with those of third-
parties and incremental costs as a public company; whether the operational, strategic and other benefits of the separation can be achieved, and our ability to implement our
business strategy; our degree of leverage following the separation due to indebtedness incurred in connection with the separation; differences between actual experience and
actuarial assumptions and the effectiveness of our actuarial models; higher risk management costs and exposure to increased counterparty risk due to guarantees within certain
of our products; the effectiveness of our proposed exposure management strategy, and the timing of its implementation and the impact of such strategy on net income volatility
and negative effects on our statutory capital; the additional reserves we will be required to hold against our variable annuities as a result of actuarial guidelines; a sustained
period of low equity market prices and interest rates that are lower than those we assumed when we issued our variable annuity products; the effect adverse capital and credit
market conditions may have on our ability to meet liquidity needs and our access to capital; the impact of regulatory, legislative or tax changes on our insurance business or other
operations; the effectiveness of our risk management policies and procedures; the availability of reinsurance and the ability of our counterparties to our reinsurance or
indemnification arrangements to perform their obligations thereunder; heightened competition, including with respect to service, product features, scale, price, actual or perceived
financial strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition; changes in accounting standards, practices and/or policies applicable to us;
the ability of our insurance subsidiaries to pay dividends to us, and our ability to pay dividends to our shareholders; our ability to market and distribute our products through
distribution channels; and our ability to attract and retain key personnel.
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. Please consult
any further disclosures Brighthouse Financial, Inc. makes on related subjects in amendments to its registration statement on Form 10 and subsequent reports to the U.S.
Securities and Exchange Commission.
2
This presentation also contains measures that are not calculated based on accounting principles generally accepted in the United States of America, also known as GAAP.
Additional discussion of non-GAAP financial information is included in the Appendix to these slides.
Note regarding forward-looking statements
Non-GAAP financial information
Key members of senior management
3
Eric Steigerwalt
Chief Executive Officer
31 years experience
Select Experience
• Head of MetLife U.S.
Retail from 2012 to
2016
• CFO of MetLife U.S.
from 2009 to 2011
• Treasurer of MetLife
from 2007 to 2009
Anant Bhalla
Chief Financial Officer
17 years experience
Select Experience
• Senior Managing
Director and Head of
Global Portfolio
Management of
MetLife from 2011 to
2016
• Head of Core
Securities of MetLife
from 2004 to 2011
• Co-Head of Fixed
Income & Equity of
MetLife from
2000 to 2004
Select Experience
• Chief Accounting
Officer of MetLife from
2009 to 2017
• Deputy Controller of
Wells Fargo in 2009
• Controller of Wachovia
from 2006 to 2008
• Senior level accounting
& finance roles at
Wachovia from 2002 to
2006
• Certified Public
Accountant
Pete Carlson
Chief Operating Officer
30 years experience
Select Experience
• CFO of MetLife U.S.
Retail from 2014 to
2016
• CRO of AIG Global
Consumer from 2012
to 2014
• Treasurer and CRO of
Lincoln from 2009 to
2011
– Similar capacity at
Ameriprise,
including leading
spin-off from AXP
John Rosenthal
Chief Investment Officer
33 years experience
4
Major industry player with large in-force book of business providing
immediate scale
1
Separation creates a more focused, nimble U.S. Retail franchise that can
favorably adapt to market dynamics
2
Strong capital base and financial flexibility3
Robust risk management framework focused on protecting statutory capital4
Cash flow approach to managing in-force Variable Annuity exposure5
Brighthouse: A large insurance business with a well
established retail platform
$134
$205
$216
$217
$2194
$224
$225
$230
$235
$251
$251
$267
$318
$500
$797
$915
Aflac
Nationwide Mutual
Jackson
VOYA
Mass Mutual
Hartford
John Hancock
Principal
Northwestern Mutual
State Farm Group
Lincoln
New York Life
AIG
Prudential
MetLife
Brighthouse is one of the largest U.S. life insurance
companies
5
1
$11.2B
Shareholders’ net investment
(ex. AOCI)
$219B
Total assets
$195B
Total AUM
2.8M
Policies and contracts in-force
Select U.S. insurance companies by assets ($B)1
$6963
2
2
2
2
Select BHF metrics
2
4
4
Note: Company filings, data as of 3/31/2017 unless otherwise noted
1. Source: Company filings, SNL financial
2. As of 12/31/2016
3. MetLife excluding BHF has $696B in assets
4. Pro forma for transactions associated with the separation of BHF including the unwinding of financings, completed and prospective financing transactions, reinsurance
recapture transactions, legal entity adjustments and assumed cash distributions to MetLife
14%
61%
6%
19%
6
Diverse in-force book and policyholder base to drive
relevance, scale and growth
~$195B assets under management1
Life
• Term, Whole, UL and VUL
Variable annuities
• GMIB, GMWB, GMAB, GMDB
– Ceased new GMIB in February 2016
Run-off
• Includes ULSGFixed & index-linked annuities
• Fixed, income, index-linked annuities
1
1. As of 3/31/2017; includes $3.7B of assets under management from Corporate & Other; assets under management defined as sum of general account investments and
separate account assets
7
Significant fee-based revenues1
Fee income ($B)
$4.3
$4.1
$4.3
2014 2015 2016
Annuities
55%
Life
14%
Run-off
26%
Corporate & other
5%
~$9.0B operating revenues for 2016
Operating revenues
¹ Includes approximately $0.3B higher fee income related to recaptures of single premium deferred annuity blocks in 2016
¹
Brighthouse – a more focused, nimble U.S. retail franchise
8
2
• Focused on target market segments
• Simpler product suite focused on generating statutory cash flow
• Independent and diverse distribution network
• Emphasis on operating cost and flexibility
Attractive target markets
9
Brighthouse target markets represent ~45% of U.S. population
Diverse
and protected
8%
Middle-aged
strivers
Secure
seniors
Drives
disciplined
product
design
% of
U.S.
population
Select
attributes
• Diverse segment;
relatively lower
income and
investable assets
• Early to late stage
family formation;
diverse across
investable assets, life
stage, age
• Nearing or in
retirement, with
investable assets
>$500K
23% 15%
Product
focus
• Life…annuities in
future
• Protection…wealth,
retirement in future • Financial security
2
Disciplined approach to future sales drives diversification
10
ANP – AnnuitiesKey highlights
$0.6B for 2015
$0.5B for 2016
Shield Level
Selector
15%
GMDB only
12%
GMAB2
9%
GMWB2
32%
GMIB1
8%
GMWB2
29%
Shield Level
Selector
36%
GMDB only
13%
GMIB1
15%
Fixed Annuities
18%
GMAB²
1%
Fixed Annuities
13%
2
1. Ceased issuing GMIBs for new purchase in February 2016
2. The decline in sales of GMWBs and GMABs reflects the sales suspension by a significant distributor in 2016
• Primarily an annuity manufacturer
diversifying into fixed / indexed
• $0.4B+ annualized new premiums
(“ANP”) by 2020
• Strong traction with Shield Level
SelectorSM (SLS) – indexed annuity
– Risk offset to GMIB
– No living benefit guarantees
• Selectively originate life insurance
Shield Level SelectorSM, our top selling product
11
• Broad distribution adoption
• Strong profitability and risk profile
• Risk offset for in-force book
• No living benefit guarantees
• Maintain spread through rate-setting
-40%
-20%
0%
20%
40%
60%
80%
100%
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4
0
%
-
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0
%
-
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0
%
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0
%
8
0
%
9
0
%
1
0
0
%
S&P 500 Shield 10
Shield 10 protects
clients against the first
10% of market losses
Market gains capped
at a specified level
I
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a
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Market Gains / Losses
Key highlights Shield Level SelectorSM illustration1
2
1. Reflects illustrative Shield Level SelectorSM that provides a policyholder i) first 10% downside protection and ii) 70% capped upside for S&P index returns over a 6 year
contract term
Diverse independent distribution network improves
profitability and capital efficiency
12
• 400+ independent partners, including brokerages, banks and other financial institutions and
independent financial planners
• Successfully built third-party distribution relationships since 2001
Other
11% Banks/
Financial Institutions
19%
National
Brokerage Firms
8%
Regional
Brokerage Firms
17% Independent Financial
Planners
45%
Regional
Brokerage Firms
79%
National Brokerage
Firms
11%
Banks/Financial
Institutions
4%
Independent
Financial
Planners
6%
2
2016 distribution channels (% of ANP)
Annuities1 Life
1. Includes variable, fixed and index-linked products
Lean, flexible, cost-competitive operator post-separation
13
2
• History of expense discipline
̶ Current management team cut $200M in expenses through 2015
̶ Sale of career agency to MassMutual; resulting in 5,900 reduction in employee base
̶ Consolidating 13+ support systems into 1 through multi-year outsourcing arrangement
• Transition focus
̶ TSAs with MetLife in place effective as of 1/1/2017
̶ Migrate off TSAs by end of 2019
̶ Streamline / simplify operating processes
• Continued cost savings discipline
̶ Focus on flexible, lean operations
̶ Expected reduction of $150M in corporate expenses compared to our first year as a
separate independent company
14
Pre Separation
• Reflects operating model and
partially-allocated expense
structure of larger scaled
organization
Allocated
Direct Direct
Direct
Full Transition
• Run-rate slightly above 2016 levels,
absorbing new public company costs
̶ Reflects re-engineered operations
̶ ~$150M below initial year level
• Continued cost optimization
Post Separation
• Reflects TSA and new public
company costs
• Cost effective wind-down of
TSAs by end of 2019
• ~$175-$225M over 2016
levels
Continued cost management discipline
Corporate expense1 transition
2
1. Includes public company expenses, functional department expenses, and retirement funding, and incentive compensation
2016 Initial Year As A Public Co. 2020
Allocated
Direct Direct
New Public Co.$0.84B
~$1.1B
~$0.9B
TSAs
15
Relationship with MetLife post-separation2
• “Established by MetLife” tagline
̶ Continue to use endorsement language for up to 18 months from separation date
̶ Positive feedback from distribution
• Transition services agreements
̶ Transitional period up to 36 months
̶ Migrate off TSAs by end of 2019
̶ Covers certain functional, operations call center and technology support services
• Investment management agreements
̶ Brighthouse teams will manage the asset allocation process
̶ Investment portfolio will be managed by MetLife on a day-to-day basis for 18 months
following the separation
• At separation, MetLife will own ≤ 19.9% stake in Brighthouse
16
Robust financial management strategy3
• Transparent risk appetite and target assets backing reserves & risk capital
• On balance sheet invested assets to fund target asset levels
• Hedging to protect target assets across market cycles
• Strategies that deliver sustained, long term statutory distributable earnings
• New business profile that diversifies risks of the in-force business
• Moderate financial leverage
Delivering sustained, long-term
shareholder value, i.e. cash flows
17
Pro forma capitalization of Brighthouse13
Sources
Uses
• $3.0 billion senior note offering (10 & 30 year) – historic debut life deal
• $0.5 billion 3 year term loan
• Formation of life captive reinsurer (BRCD2)
• $2.0 billion back up credit revolver facility
• Strengthened Brighthouse Life Insurance Company capitalization
by ~$2 billion in 2Q17
̶ Managing variable annuity business to CTE 95 across market cycles
̶ Expect to be at $2.3 billion of assets above CTE95 at separation
• Initial holding company3 cash and liquid assets of ~$700 million
• Proceeds to MetLife of $3.4 billion (~$2.3 billion at separation)
1. As presented in Brighthouse Financial Inc.’s registration statement on Form 10, as amended (the “Form 10”)
2. Brighthouse Reinsurance Company of Delaware
3. Includes cash and liquid assets in Brighthouse Financial, Inc., Brighthouse Holdings, LLC and Brighthouse Securities, LLC
18
Strong balance sheet fundamentals
RBC ratios – CAL¹
Leverage (ex. AOCI)3
3
Source: Company filings, SNL financial
1. As of 12/31/2016; reflects Combined Company Action Level (2 x Authorized Control Level) RBC
2. Pro forma as of 12/31/2016, includes ~$2B increase in total adjusted capital from the formation of BRCD and other restructuring and separation related transactions,
including a capital contribution to Brighthouse Life Insurance Company
3. Leverage = financial debt / total capital as of 3/31/2017; Brighthouse figure represents expected leverage
4. As of 12/31/2016
YE 2016; 525% Pro forma for 12/31/2016 including
all separation activities, ~650+%680%
527% 508% 489% 483% 481% 441% 424% 321%
Pacific Life BHF PRU VOYA LNC Jackson AXA US Aegon US PFG TMK
650+%²
19% 22%
24% 24% ~25% 27% 27%
Pacific Life PFG LNC VOYA BHF PRU TMK
4
Robust risk management framework
19
• Continue strong ERM program leveraging controls and practices from MetLife
• Focus on protecting statutory capital across severe and extended stress environments
4
Primary risks Mitigation actions
Market risks in VA Robust total asset adequacy
Market risks in ULSG Hedge exposure to down markets
Credit risk in General Account Well diversified, high quality investment portfolio
Defeased downside interest rate risk for run-off ULSG
block, retained potential for upside
20
4
$0.1
($0.1)
$0.0
$0.5
$1.3
($0.5)
$0.0
$0.5
$1.0
$1.5
$2.0
A
s
s
e
t
s
a
b
o
v
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U
S
L
G
t
a
r
g
e
t
Run-off ULSG assets vs. target – statutory basis ($B)
(2.0%) (1.0%) 1.0%Base 2.0%
Change in long-term interest rates
Note: As of 12/31/2016
Normal Market
Cycle
Across Market
Cycles
Peak requirement
year
CTE95 + $2-$3B
(approximately CTE98 to
CTE99)
CTE95 2026
Company A CTE98 Not disclosed Not disclosed
Company B CTE95 Not disclosed Not disclosed
Company C CTE97 Not disclosed Not disclosed
21
Strong VA capital management approach across
market cycles
• Target CTE95 across markets; additional $2.3B assets in excess of CTE95 pro forma for the
separation, approximately CTE98
• Transparent VA capital and metrics across market cycles
Source: Company public filings
4
Variable annuity exposure management
22
VA Funding
Target
VA Hedging
Strategy
Objective of the strategy is to protect statutory capitalization and
maximize distributable cash flows
$2-$3B assets in
excess of CTE95 to
absorb modest
market downturns
Hedging focused on
mitigating the risk
from larger downturns
in capital markets
Retain meaningful
upside from favorable
movements in capital
markets
Funding level increase funded through revenues, net of expenses and
commitments, primarily from the existing VA block
Base Case2
VA Funding
Level Funding level at
86% of peak
2016
Funding level at
92% of peak
2021
Funding level at
peak
2026
CTE951 total asset requirement (TAR) across market cycles
4
1. CTE95 defined as the average amount of assets required to satisfy contract holder obligations across market environments in the worst 5% of 1,000 capital market
scenarios over the life of the contracts
2. Separate account return of 6.5% and mean reversion of 10 year UST to 4.25% over 10 years
$1.5
$1.4
$2.3
$3.2
$4.7
$2.3
$3.0
$1.0
$2.0
$3.0
$4.0
$5.0
(40%) (10%) Base 10% 40% (100 bps) 100 bps
V
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9
5
Protection of statutory capital in market shocks
23
Variable annuity assets above target funding level of CTE95 TAR ($B)
Equity market (S&P 500) Change in 10 year UST
4
Note: As of 12/31/2016, except derivatives portfolio which is as of 3/31/2017
Sensitivity to down markets further mitigated
with derivatives added post-3/31/2017
Positive VA cash flows over time under variety of
market scenarios
24
SA return
10 year UST
6.5%2 9.0% 4.0%
Mean reversion3 Mean reversion3 Forward curve4
(25)% shock
to equities, then
6.5% SA return
Drop to 1%,
then forward
curve5
Base Case Upside Downside Shock
Present value of lifetime cash flows of our in-force variable annuity block ($B)1
4
1. See the Form 10 for additional information on market scenarios and the present value presentation; the market scenarios presented here match with the Form 10
scenarios as follows: Base Case – Scenario 1, Upside – Scenario 2, Downside – Scenario 4, Shock – Scenario 5
2. Blended separate account return of 6.5% implies illustrative equity market return of 8.5% and illustrative fixed income return of 3.5%, gross of fees
3. 10 year UST to 4.25% over 10 years
4. 10 year UST follows the forward U.S. Treasury and swap interest rate curve as of 12/31/2016
5. 10 year UST drops to 1.0%, then follows the implied forward curve
6. Corporate includes taxes, debt, and other holding company costs
Only represents cash flows and value from VA in-force business; excludes value of other in-force, all new
business, and corporate6
$9.8
$14.4
$2.7 $1.1
25
32%
53%
15%
Non-variable annuity statutory capital and earnings
Primary drivers of non-VA
distributable earnings
• Investment earnings on the capital
• Earnings on ~$18B of fixed and
income annuities general account
assets
Total non-VA capital1
4
Corporate & other
Fixed and income
annuities
Life
~$4.0 billion
1. As of 12/31/16
5 Cash flow focused approach to managing in-force VA
exposure
26
• Required hedge payoff to meet risk targets
to reduce over time…
– Decreasing sensitivity of CTE95
– Increasing use of VA assets above
CTE95 for loss absorption
Variable annuity management strategy focused on protecting statutory capital
and retaining upside for shareholders
• …Consequently, driving lower hedge
program costs
– Less protection purchased
– Further out-of-the-money instruments
utilized
Emergence of distributable cash flow
Expected reduction in required hedge payoff…
27
$5.6
$4.3
$2.9
2017 2021 2026
Impact of market shock on
CTE95 (-25% equity market,
-50bps interest rates)
5
$4.6
$1.3
$0.0
2017 2021 2026
Hedge payoff required to
cover market shock
Dramatic
reductions in
expected
hedge costs
under Base
Case
assumptions
No hedges required
Target funding much less
sensitive to severe shocks
as in-force seasons
Assets above CTE95
increasingly cover remaining
risk, reducing need for
hedges
$B $B
…Results in improvement in distributable cash flow in
the medium term
28
5
Note: Represents cash flows in Base Case scenario
1. Net VA Fees and Investment Income reflects the net impact of Fees, Rider Fees, Surrender Charges, Benefits and Expenses and Investment Income
$0.1
$2.3
($1.8)
($0.4)
($0.2) $0.2
Years 1-3
Average
Annual
Cash Flows
Years 4
and 5
Average
Annual
Cash Flows
$0.8
$2.0 ($0.8)
($0.4)
$0.0 $0.0
Net VA Fees and
Investment
Income1
Increase in
CTE95 / CARVM
Assets
Hedge Gain /
(Loss)
Increase in
Excess Assets
Above CTE95
Taxes/Other VA Distributable
Earnings
Average annual distributable free cash flow from VA in-force ($B)
29
Changes in operating earnings profile since 2015
No longer actively selling run-off products (e.g.
ULSG and institutional spread lending)
2015 = $468 million after-tax (average ~$120
million/quarter)
1Q17 = $49 million after-tax
Senior note and term loan interest expense 2015 = ~$70 million before taxes
Annual = ~$145 million before taxes
Public company / stand-alone expenses 2015 = no impact
Initial year post separation = $175 to 225 million
before taxes
2015 2016 1Q17
$1.5 billion $0.7 billion $0.3 billion
Operating
Earnings
Earnings driver Impact on earnings
30
Investment strategy
• Generate competitive returns during normal periods
• Outperform in stress environments
• Well-diversified portfolio
• High credit quality
• Sufficient liquidity
• Strong ALM management
• Focus on privately sourced assets
• Disciplined risk management culture
• Team of seasoned professionals responsible for
investment process
• Assets directly managed by MetLife under IMAs
• Longer term – likely use several external managers and
potentially in-source select asset classes
Objective
Investment
Philosophy
Investment
Process
31
Highly diversified investment portfolio
Note: MetLife Investment Advisors, LLC, a subsidiary of MetLife, Inc., will manage the investment of assets for Brighthouse Financial, Inc.
post-separation with an initial term of 18 months
Portfolio composition as of 3/31/2017
• $79B general account assets as of
3/31/2017
• Over 76% fixed maturities
• Approximately 36% in corporate credit
Key highlights
U.S. Corporate
28%
U.S.
government
and agency
17%
RMBS
10%
Foreign
corporate
8%
State and
political
subdivision
5%
ABS
3%
Mortgage
loans
13%
Policy loans
2%
Other limited
partnership
2% Other
5%
CMBS
4%
Short-term
investments
1%
Real estate
<1%
Foreign government
2%
Equity
<1%
Fixed maturity
Over 76%
32
High quality fixed maturities portfolio
Note: MetLife Investment Advisors, LLC, a subsidiary of MetLife, Inc., will manage the investment of assets for Brighthouse Financial, Inc.
post-separation with an initial term of 18 months
High quality fixed maturities portfolio as of 3/31/2017
• $61B general account assets as
of 3/31/2017
• Over 95% investment grade
Key highlights
AAA
33%
AA
9%
A
28%
BAA
25%
BA
4%
B or Beloiw
1%
33
Diversified corporate credit portfolio
Industrial
31%
Consumer
25%
Finance
19%
Utility
14%
Corp Other
3%
Sector Diversification (3/31/17)
Communications
8%
• $28.7B portfolio of which approximately 91% is investment grade
• Diversified by sector
• Approximately 34% of private placement exposure
AAA
2% AA
7%
A
32%
BAA
50%
BA
7%
B or Below
2%
Quality Distribution (3/31/17)
Note: MetLife Investment Advisors, LLC, a subsidiary of MetLife, Inc., will manage the investment of assets for Brighthouse Financial, Inc.
post-separation with an initial term of 18 months
34
Strong structured finance portfolio
• $13.7B portfolio with 96% rated A or better
• ABS includes CLOs, consumer loans, and auto loans
• CMBS average credit enhancement of approximately 29%
RMBS
58%
CMBS
25%
ABS
17%
Sector Diversification (3/31/17)
AAA
43%
AA
5%
A
48%
BAA
3%
BA
1%
B or Below
<1%
Credit Rating (3/31/17)
Note: MetLife Investment Advisors, LLC, a subsidiary of MetLife, Inc., will manage the investment of assets for Brighthouse Financial, Inc.
post-separation with an initial term of 18 months
35
High quality mortgage loan portfolio
• Diversified portfolio of commercial ($6.8B), agricultural ($2.1B) and residential mortgages
($1.0B)
• Average LTV of 49% and debt service coverage of 2.3x for commercial mortgage portfolio
• Average LTV of 40% for agricultural loans
• Portfolios diversified by sector and geography
Office
46%
Retail
29%
Apartments
10%
Hotel
9%
Industrial
5%
Others
1%
Commercial Property (3/31/17)
Annual
Crops
32%
Timber
31%
Permanent
Crops
24%
Agribusiness
9%
Livestock
Production
4%
Agricultural Sectors (3/31/17)
Note: MetLife Investment Advisors, LLC, a subsidiary of MetLife, Inc., will manage the investment of assets for Brighthouse Financial, Inc.
post-separation with an initial term of 18 months
36
Private equity biased alternative investments portfolio
$1.6B in alternative investments as of 3/31/17
• $1 billion in private equity / leveraged
buyouts
• Geographically diverse with over 44%
in global and non-US funds
• High quality general partners
Key highlights
Leveraged
Buyouts
63%
Venture
Capital
12%
Hedge
Funds
7%
Mezzanine
7%
Distressed
7%
Special
Situations
4%
Note: MetLife Investment Advisors, LLC, a subsidiary of MetLife, Inc., will manage the investment of assets for Brighthouse Financial, Inc.
post-separation with an initial term of 18 months
High quality retail exposure
37
1. Total CMBS portfolio
$4.5B exposure to retail sector as of 3/31/17
Commercial Mortgages
• $1.9B, 29% of total commercial mortgage
exposure
• Class A, well-occupied dominant centers
• Average 49% LTV and 2.2x DSCR
Corporate Credit
• $1.6B, 4.7% of total credit exposure
• 93% investment grade, 7% ($111 million)
below IG
CMBS
• $1.0B, 7.5% of total structured finance
exposure / 30% of CMBS
• AA1 / AA2 average rating1
Key highlights
Commercial
Mortgages, $1.9 B
Corporate Credit,
$1.6 B
CMBS, $1.0 B
Note: MetLife Investment Advisors, LLC, a subsidiary of MetLife, Inc., will manage the investment of assets for Brighthouse Financial, Inc.
post-separation with an initial term of 18 months
Targets focus on cash generation and operating
earnings with concrete drivers
38
Operating EPS growth
Operating ROE
Cash flow conversion
(cash flow to shareholders)
• Mid-to-high single digits annual growth
• Approximately 9% at separation and stable over time
• 50-70%+ of operating earnings by approximately 2020
VA capital management
Holding company cash &
liquid assets
• Managing to CTE95 + $2-3B assets
• ~$700mm at separation, >2.0x annual fixed charges over time
39
Major industry player with large in-force book of business providing
immediate scale
1
Separation creates a more focused, nimble U.S. Retail franchise that can
favorably adapt to market dynamics
2
Strong capital base and financial flexibility3
Robust risk management framework focused on protecting statutory capital4
Cash flow approach to managing in-force Variable Annuity exposure5
Brighthouse: A large insurance business with a well
established retail platform
Appendix
Explanatory Note on Non-GAAP Financial Information
41
Non-GAAP and other Financial Disclosures
In this presentation, we present certain measures of our performance that are not calculated in accordance with accounting principles generally accepted in the United States of
America (“GAAP”). We believe that these non-GAAP financial measures enhance the understanding of our performance by highlighting the results of operations and the
underlying profitability drivers of our business. The following non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial
measures calculated in accordance with GAAP:
Non-GAAP financial measures: Comparable GAAP financial measures:
(i) operating earnings (i) net income(loss)
(ii) operating ROE (ii) return on equity
(iii) operating EPS (iii) earnings per share
(iv) operating revenues (iv) total revenues
A reconciliation of operating earnings to net income (loss) is included in this Appendix. Operating ROE and operating EPS are only presented in these materials as future
financial targets post-separation. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is not accessible on a forward-looking basis
because we believe it is not possible without unreasonable efforts to provide other than a range of net investment gains and losses and net derivative gains and losses, which
can fluctuate significantly within or outside the range and from period to period and may have a material impact on net income (loss).
Our definitions of the non-GAAP and other financial measures discussed in this presentation may differ from those used by other companies. For example, as indicated below,
we exclude guaranteed minimum income benefits (“GMIB“) revenues and related embedded derivatives gains (losses) as well as GMIB benefits and associated DAC and VOBA
offsets from operating earnings, thereby excluding substantially all guaranteed minimum living benefits (“GMLB”) activity from operating earnings.
Operating earnings and operating revenues
Operating earnings is a measure used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. This financial measure
focuses on our primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and
divested businesses and certain entities required to be consolidated under GAAP. Also, this measure excludes results of discontinued operations and other businesses that
have been or will be sold or exited by the us and are referred to as divested businesses.
The following are excluded from total revenues in calculating operating earnings, and referred to in this presentation as operating revenues:
• Net investment gains (losses);
• Net derivative gains (losses) except: (i) earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate
certain investments, but do not qualify for hedge accounting treatment (“Investment Hedge Adjustments”), and (ii) earned income on derivatives and amortization of premium on
derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment (“PAB Adjustments”);
• Other adjustments:
• Amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees (“GMIB Fees”);
• Certain amounts related to securitization entities that are variable interest entities (“VIEs”) consolidated under GAAP; and
• Revenues from divested businesses.
42
Explanatory Note on Non-GAAP Financial Information
(cont’d)
The following are excluded from total expenses in calculating operating earnings:
• Amounts associated with benefits and hedging costs related to GMIBs (“GMIB Costs”);
• Amortization of DAC and VOBA related to net investment gains (losses) and net derivative gains (losses);
• Recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business
combination accounting guidance;
• Expenses of divested businesses;
• Amounts related to securitization entities that are VIEs consolidated under GAAP;
• Goodwill impairment;
• Costs related to: (i) implementation of new insurance regulatory requirements and (ii) acquisition and integration costs; and
• Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated
with surrenders or terminations of contracts (“Market Value Adjustments”).
The tax impact of the adjustments mentioned is calculated net of the U.S. statutory tax rate, which could differ from our effective tax rate.
Consistent with GAAP guidance for segment reporting, operating earnings is also our measure of segment performance.
Operating return on equity and operating earnings per share
Operating return on equity and operating earnings per share are measures used by management to evaluate the execution of our business strategy and align such strategy
with our shareholders’ interests. Operating return on equity is defined as total annual operating earnings on a four quarter trailing basis divided by the simple average of the
most recent five quarters of total stockholders’ equity, excluding AOCI. Operating earnings per share is defined as total annual operating earnings on a four quarter trailing
basis divided by the weighted average number of fully diluted shares of common stock outstanding for the period.
Explanatory Note on Non-GAAP Financial Information
(cont’d)
43
We present operating earnings in a manner consistent with management’s view of the primary business activities that drive the profitability of our core businesses. The table
below illustrates how each component of operating earnings is calculated from the GAAP statement of operations line items:
Component of Operating Earnings How Derived from GAAP (1)(2)
(i) Fee income (i) Universal life and investment-type policy fees (excluding (a) unearned revenue
adjustments related to net investment gains (losses) and net derivative gains (losses)
and (b) GMIB fees) plus Other revenues (excluding other revenues related to
affiliated reinsurance) and amortization of deferred gain on reinsurance.
(ii) Net investment spread (ii) Net investment income (excluding securitization entities income) plus Investment
Hedge Adjustments, PAB Adjustments and interest received on ceded fixed annuity
reinsurance deposit funds reduced by Interest credited to policyholder account balances and
interest on future policy benefits.
(iii) Insurance-related activities (iii) Premiums less Policyholder benefits and claims (excluding (a) GMIB costs, (b)
Market Value Adjustments, (c) interest on future policy benefits, and (d)
amortization of deferred gain on reinsurance) plus the pass through of performance of
ceded separate accounts.
(iv) Amortization of DAC and VOBA (iv) Amortization of DAC and VOBA (excluding amounts related to (a) net investment
gains (losses), (b) net derivative gains (losses), (c) GMIB fees, (d) GMIB costs and (e)
Market Value Adjustments.
(v) Other expenses, net of DAC capitalization (v) Other expenses reduced by capitalization of DAC and securitization entities expense.
(vi) Provision for income tax expense (benefit) (vi) Tax impact of the above items.
(1) Amounts related to divested business are excluded from all components of operating earnings.
(2) Italicized items indicate GAAP statement of operations line items.
Other Financial Disclosures
The following additional information is relevant to an understanding of our performance results:
• We sometimes refer to sales activity for various products. Statistical sales information for Life sales are calculated using the LIMRA definition of sales for core direct sales,
excluding company-sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placement variable universal life insurance.
Annuity sales consist of 10% of direct statutory premiums, excluding company sponsored internal exchanges. These sales statistics do not correspond to revenues under
GAAP, but are used as relevant measures of business activity.
• Allocated equity is defined as the portion of total shareholder’s net investment that management allocates to each of its segments and sub-segments.
• Cash flow to shareholders refers to distributions to shareholders, as well as common stock repurchases.
Brighthouse select combined financial data
44Source: Form 10
FY
2014
FY
2015
FY
2016
1Q
2017
Fee income $4.3 $4.1 $4.3 $1.0
Operating earnings 1.6 1.5 0.7 0.3
Net income (loss) 1.2 1.1 (2.9) (0.3)
As of December 31, March 31,
2014 2015 2016 2017
Total assets $231.6 $226.7 $221.9 $223.2
Policyholder liabilities 70.0 71.9 73.9 73.6
Variable annuities liabilities 8.2 10.4 15.2 14.8
Non-variable annuities liabilities 61.8 61.5 58.8 58.8
Total shareholder's net investment, ex. AOCI 14.8 15.3 13.6 13.6
GAAP balance sheet metrics ($B)
Results from operations ($B)
45
Reconciliation of net income to operating earnings
Source: Form 10
($B) FY2015
FY
2016
1Q
2017
Net income (loss) $1.1 $(2.9) $(0.3)
Add: Provision for income tax expense (benefit) 0.4 (1.8) (0.3)
Net income (loss) before provision for income
tax $1.5 $(4.7) $(0.6)
Less: GMLB Riders (0.5) (3.2) (0.6)
Less: Other derivative instruments (0.1) (2.0) (0.3)
Less: Net investment gains (losses) 0.0 (0.1) (0.1)
Less: Other adjustments 0.0 (0.3) 0.0
Operating earnings before provision for
income tax $2.1 $0.9 $0.4
Less: Provision for income tax expense 0.6 0.2 0.1
Operating earnings $1.5 $0.7 $0.3
2016 Net income (loss) includes:
• Derivative gains (losses)
• Actuarial assumption review /
model update (VA and ULSG)
• ULSG re-segmentation to run-off
• Separation-related activities
including SPDA recapture
Reconciliation of total revenues to operating revenues
46Source: Form 10
($M) FY2015
FY
2016
1Q
2017
Total revenues $8,891 $3,018 $965
Less: Net investment gains (losses) 7 (78) (55)
Less: Net derivative gains (losses) (326) (5,851) (965)
Less: Other adjustments 62 (4) (7)
Operating revenues $9,148 $8,951 $1,992
47
• On January 12, 2016, MetLife announced the plan to pursue separation of a substantial portion of its U.S. Retail business,
later named Brighthouse Financial
• On August 4, 2017, MetLife, Inc. will distribute at least 80.1% of the shares of Brighthouse’s common stock
Today
MetLife
provides
temporary
guarantee to
holders (on
issuances only)
that terminates
when at least
80.1% of BHF
stock is
distributed
Brighthouse
Holdings, LLC
("BHI")
MetLife, Inc.
(“MetLife”)
100%
Other MetLife
subsidiaries
Brighthouse
Life Insurance
Company
New England
Life Insurance
Company
Other
Brighthouse
Entities
Various
Brighthouse
Entities1
Brighthouse
Life Insurance
Company of NY
(BHF borrower
of TL / RC and
issuer of senior
notes)
Brighthouse
Financial, Inc.
("BHF")
Pro forma for separation
Brighthouse
Life Insurance
Company
Various
Brighthouse
Entities1
Brighthouse
Life Insurance
Company of
NY
Brighthouse
Financial, Inc.
("BHF")
New England
Life Insurance
Company
Other
Brighthouse
Entities
MetLife, Inc.
(“MetLife”)
<19.9%
(BHF borrower
of TL / RC and
issuer of
senior notes)
Brighthouse
Holdings, LLC
("BHI")
Unrelated third
party purchased
BHI preferred
interests from
MetLife Other MetLife
Subsidiaries
Organizational structure
1. Includes Brighthouse Reinsurance Company of Delaware and various Brighthouse entities
