Segment Information

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment Information

2. 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 and services, including term, universal, whole and variable life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided 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 structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, certain funding agreements and universal life with secondary guarantees.

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 and workers’ compensation business reinsured through 100% quota share reinsurance agreements, activities related to funding agreements associated with the Company’s institutional spread margin business, as well as direct-to-consumer life insurance that is no longer actively sold.

Financial Measures and Segment Accounting Policies

Adjusted earnings is a financial measure used by management to evaluate performance, allocate resources 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 principally 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);

•Net derivative gains (losses) except earned income and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment; and

•Certain variable annuity guaranteed minimum income benefits (“GMIB”) fees (“GMIB Fees”).

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

•Amounts associated with benefits related to GMIBs (“GMIB Costs”);

•Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and

•Amortization of DAC and value of business acquired (“VOBA”) related to: (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments.

The tax impact of the adjustments discussed above is calculated net of the statutory tax rate, which could differ from the Company’s effective tax rate.

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 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, 2021
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	481	$	141	$	42	$	(63)	$	601
Provision for income tax expense (benefit)	96		31		4		(4)		127
Post-tax adjusted earnings	385		110		38		(59)		474
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		2		2
Less: Preferred stock dividends	—		—		—		22		22
Adjusted earnings	$	385	$	110	$	38	$	(83)	450
Adjustments for:
Net investment gains (losses)									(16)
Net derivative gains (losses)									56
Other adjustments to net income (loss)									(151)
Provision for income tax (expense) benefit									22
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	361
Interest revenue	$	567	$	183	$	505	$	32
Interest expense	$	—	$	—	$	—	$	41

	Three Months Ended September 30, 2020
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	479	$	94	$	(1,443)	$	(32)	$	(902)
Provision for income tax expense (benefit)	92		18		(304)		(38)		(232)
Post-tax adjusted earnings	387		76		(1,139)		6		(670)
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		2		2
Less: Preferred stock dividends	—		—		—		17		17
Adjusted earnings	$	387	$	76	$	(1,139)	$	(13)	(689)
Adjustments for:
Net investment gains (losses)									5
Net derivative gains (losses)									(1,857)
Other adjustments to net income (loss)									(1,089)
Provision for income tax (expense) benefit									618
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	(3,012)
Interest revenue	$	469	$	131	$	383	$	18
Interest expense	$	—	$	—	$	—	$	47

	Nine Months Ended September 30, 2021
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	1,312	$	278	$	267	$	(206)	$	1,651
Provision for income tax expense (benefit)	253		58		31		(33)		309
Post-tax adjusted earnings	1,059		220		236		(173)		1,342
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		4		4
Less: Preferred stock dividends	—		—		—		68		68
Adjusted earnings	$	1,059	$	220	$	236	$	(245)	1,270
Adjustments for:
Net investment gains (losses)									(36)
Net derivative gains (losses)									(2,132)
Other adjustments to net income (loss)									260
Provision for income tax (expense) benefit									399
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	(239)
Interest revenue	$	1,650	$	517	$	1,466	$	63
Interest expense	$	—	$	—	$	—	$	122

	Nine Months Ended September 30, 2020
	Annuities		Life		Run-off		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	1,073	$	167	$	(1,679)	$	(189)	$	(628)
Provision for income tax expense (benefit)	199		32		(355)		(72)		(196)
Post-tax adjusted earnings	874		135		(1,324)		(117)		(432)
Less: Net income (loss) attributable to noncontrolling interests	—		—		—		4		4
Less: Preferred stock dividends	—		—		—		31		31
Adjusted earnings	$	874	$	135	$	(1,324)	$	(152)	(467)
Adjustments for:
Net investment gains (losses)									(48)
Net derivative gains (losses)									2,392
Other adjustments to net income (loss)									(1,829)
Provision for income tax (expense) benefit									(108)
Net income (loss) available to Brighthouse Financial, Inc.’s common shareholders									$	(60)
Interest revenue	$	1,334	$	316	$	873	$	54
Interest expense	$	—	$	—	$	—	$	139

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In millions)
Annuities	$	1,351	$	1,157	$	3,906	$	3,360
Life	345		350		1,138		989
Run-off	670		553		1,960		1,378
Corporate & Other	51		39		122		118
Adjustments	95		(1,790)		(2,000)		2,527
Total	$	2,512	$	309	$	5,126	$	8,372

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

	September 30, 2021		December 31, 2020
	(In millions)
Annuities	$	175,695	$	172,233
Life	24,130		23,809
Run-off	36,379		38,366
Corporate & Other	18,487		13,461
Total	$	254,691	$	247,869