Brighthouse Life Insurance Earnings 2019-09-30

BHL 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
FWLAF	0	0	1	0	0	-0	-0	0		-0.6
BHL	0	209,908	191,553	7,577	0	-391	-1,209	-2,582	0%	2.1	-0%
PRKR	0	5	33	0	-1	-16	-15	3	-1,984%	-0.2	-340%
MADI	0	0	0	0	0	-0	-0	0		-0.7	-1,007%
CEC	0	2,214	1,959	912	780	-11	174	861	86%	4.9	-1%
DD	0	101,837	32,002	6,288	2,053	89	727	2,044	33%	2.8	0%
DTH	0	719	808	2,032	265	61	172	236	13%	1.4	8%
CPN	0	16,209	12,756	10,591	3,478	712	2,213	10,118	33%	4.6	4%
USCI	0	361	1	18	0	17	17	-365	0%	-21.0	5%
EWD	0	183	41	21	0	-0	9	-25	0%	-2.8	-0%

Document

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 September 30, 2019



☐	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	þ	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 November 6, 2019, 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 September 30, 2019 (Unaudited) and December 31, 2018 and for the Three Months and Nine Months Ended September 30, 2019 and 2018 (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 — Segment Information	7
	Note 3 — Insurance	11
	Note 4 — Investments	12
	Note 5 — Derivatives	22
	Note 6 — Fair Value	30
	Note 7 — Long-term Debt	39
	Note 8 — Equity	39
	Note 9 — Other Revenues and Other Expenses	41
	Note 10 — Contingencies, Commitments and Guarantees	42
	Note 11 — Related Party Transactions	44
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 4.	Controls and Procedures	57

Part II — Other Information
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 6.	Exhibits	58

Signatures		59

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

September 30, 2019 (Unaudited) and December 31, 2018

(In millions, except share and per share data)



	September 30, 2019			December 31, 2018
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $62,138 and $59,672, respectively)	$	69,676		$	61,348
Equity securities, at estimated fair value	148			140
Mortgage loans (net of valuation allowances of $64 and $56, respectively)	15,269			13,596
Policy loans	915			1,001
Real estate limited partnerships and limited liability companies	458			451
Other limited partnership interests	1,894			1,839
Short-term investments, principally at estimated fair value	1,483			—
Other invested assets, principally at estimated fair value	4,738			3,037
Total investments	94,581			81,412
Cash and cash equivalents	3,720			3,494
Accrued investment income	709			704
Premiums, reinsurance and other receivables	13,847			13,113
Deferred policy acquisition costs and value of business acquired	4,711			5,086
Current income tax recoverable	21			1
Other assets	476			509
Separate account assets	96,782			91,511
Total assets	$	214,847		$	195,830
Liabilities and Equity
Liabilities
Future policy benefits	$	39,232		$	35,588
Policyholder account balances	44,325			39,330
Other policy-related balances	2,778			2,728
Payables for collateral under securities loaned and other transactions	5,271			5,047
Long-term debt	845			434
Current income tax payable	—			2
Deferred income tax liability	1,680			944
Other liabilities	4,112			3,455
Separate account liabilities	96,782			91,511
Total liabilities	195,025			179,039
Contingencies, Commitments and Guarantees (Note 10)
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	75			75
Additional paid-in capital	19,073			19,073
Retained earnings (deficit)	(2,873		)	(3,090		)
Accumulated other comprehensive income (loss)	3,532			718
Total Brighthouse Life Insurance Company’s stockholder’s equity	19,807			16,776
Noncontrolling interests	15			15
Total equity	19,822			16,791
Total liabilities and equity	$	214,847		$	195,830

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 Nine Months Ended September 30, 2019 and 2018 (Unaudited)

(In millions)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019			2018
Revenues
Premiums	$	206	$	218		$	649		$	653
Universal life and investment-type product policy fees	725		826			2,190			2,447
Net investment income	904		828			2,610			2,400
Other revenues	68		73			199			222
Net investment gains (losses)	14		(42		)	60			(120		)
Net derivative gains (losses)	984		(665		)	(218		)	(1,230		)
Total revenues	2,901		1,238			5,490			4,372
Expenses
Policyholder benefits and claims	1,282		805			2,836			2,312
Interest credited to policyholder account balances	263		265			771			785
Amortization of deferred policy acquisition costs and value of business acquired	184		66			358			582
Other expenses	464		509			1,353			1,353
Total expenses	2,193		1,645			5,318			5,032
Income (loss) before provision for income tax	708		(407		)	172			(660		)
Provision for income tax expense (benefit)	99		(108		)	(46		)	(195		)
Net income (loss)	609		(299		)	218			(465		)
Less: Net income (loss) attributable to noncontrolling interests	—		—			1			—
Net income (loss) attributable to Brighthouse Life Insurance Company	$	609	$	(299	)	$	217		$	(465	)
Comprehensive income (loss)	$	1,467	$	(554	)	$	3,032		$	(1,663	)
Less: Comprehensive income (loss) attributable to noncontrolling interests	—		—			1			—
Comprehensive income (loss) attributable to Brighthouse Life Insurance Company	$	1,467	$	(554	)	$	3,031		$	(1,663	)

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 Nine Months Ended September 30, 2019 and 2018 (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
Balance at December 31, 2018	$	75	$	19,073	$	(3,090	)	$	718	$	16,776		$	15		$	16,791
Change in noncontrolling interests										—			(1		)	(1		)
Net income (loss)					(392		)			(392		)	1			(391		)
Other comprehensive income (loss), net of income tax								1,956		1,956						1,956
Balance at June 30, 2019	75		19,073		(3,482		)	2,674		18,340			15			18,355
Net income (loss)					609					609						609
Other comprehensive income (loss), net of income tax								858		858						858
Balance at September 30, 2019	$	75	$	19,073	$	(2,873	)	$	3,532	$	19,807		$	15		$	19,822



	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, 2017	$	75	$	19,073	$	(4,132	)	$	1,837		$	16,853		$	15	$	16,868
Cumulative effect of change in accounting principle and other, net of income tax					75			(79		)	(4		)			(4		)
Balance at January 1, 2018	75		19,073		(4,057		)	1,758			16,849			15		16,864
Net income (loss)					(166		)				(166		)			(166		)
Other comprehensive income (loss), net of income tax								(943		)	(943		)			(943		)
Balance at June 30, 2018	75		19,073		(4,223		)	815			15,740			15		15,755
Net income (loss)					(299		)				(299		)			(299		)
Other comprehensive income (loss), net of income tax								(255		)	(255		)			(255		)
Balance at September 30, 2018	$	75	$	19,073	$	(4,522	)	$	560		$	15,186		$	15	$	15,201

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 Nine Months Ended September 30, 2019 and 2018 (Unaudited)

(In millions)



	Nine Months Ended September 30,
	2019			2018
Net cash provided by (used in) operating activities	$	1,643		$	1,960
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	11,160			11,533
Equity securities	29			15
Mortgage loans	924			443
Real estate limited partnerships and limited liability companies	2			87
Other limited partnership interests	203			137
Purchases of:
Fixed maturity securities	(12,982		)	(11,802		)
Equity securities	(3		)	(1		)
Mortgage loans	(2,625		)	(2,771		)
Real estate limited partnerships and limited liability companies	(13		)	(31		)
Other limited partnership interests	(308		)	(194

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	0	$0

10-Q	2019-11-06	Quarter: 2019-09-30
10-Q	2019-08-07	Quarter: 2019-06-30
10-Q	2019-05-08	Quarter: 2019-03-31
10-K	2019-03-05	Annual: 2018-12-31
10-Q	2018-11-07	Quarter: 2018-09-30
10-Q	2018-08-08	Quarter: 2018-06-30
10-Q	2018-05-10	Quarter: 2018-03-31
10-K	2018-03-22	Annual: 2017-12-31
10-Q	2017-11-13	Quarter: 2017-09-30
10-Q	2017-08-11	Quarter: 2017-06-30
10-Q	2017-05-11	Quarter: 2017-03-31
10-K	2017-03-28	Annual: 2016-12-31
10-Q	2016-11-09	Quarter: 2016-09-30
10-Q	2016-08-12	Quarter: 2016-06-30
10-Q	2016-05-12	Quarter: 2016-03-31
10-K	2016-03-25	Annual: 2015-12-31
10-Q	2015-11-12	Quarter: 2015-09-30
10-Q	2015-08-12	Quarter: 2015-06-30
10-Q	2015-05-13	Quarter: 2015-03-31
10-K	2015-03-30	Annual: 2014-12-31
10-Q	2014-11-12	Quarter: 2014-09-30
10-Q	2014-08-13	Quarter: 2014-06-30
10-Q	2014-05-14	Quarter: 2014-03-31
10-K	2014-03-31	Annual: 2013-12-31
10-Q	2013-11-13	Quarter: 2013-09-30
10-Q	2013-08-12	Quarter: 2013-06-30
10-Q	2013-05-10	Quarter: 2013-03-31
10-K	2013-03-22	Annual: 2012-12-31
10-Q	2012-11-13	Quarter: 2012-09-30
10-Q	2012-08-10	Quarter: 2012-06-30
10-Q	2012-05-10	Quarter: 2012-03-31
10-K	2012-03-22	Annual: 2011-12-31
10-Q	2011-11-10	Quarter: 2011-09-30
10-Q	2011-08-12	Quarter: 2011-06-30
10-Q	2011-05-12	Quarter: 2011-03-31
10-K	2011-03-23	Annual: 2010-12-31
10-Q	2010-11-12	Quarter: 2010-09-30
10-Q	2010-08-13	Quarter: 2010-06-30
10-Q	2010-05-12	Quarter: 2010-03-31
10-K	2010-03-24	Annual: 2009-12-31

EX-31.1	bhinsurance-20190930xe311.htm
EX-31.2	bhinsurance-20190930xe312.htm
EX-32.1	bhinsurance-20190930xe321.htm
EX-32.2	bhinsurance-20190930xe322.htm