Brighthouse Financial, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report. Brighthouse is a U.S. life insurer and annuity provider, organized into Annuities, Life and Run-off segments, plus Corporate & Other.
Key financial results
| Metric | 2022 | 2021 |
|---|---|---|
| Total revenue | $8.473 billion | $7.142 billion |
| Net income (loss) available to common shareholders | $(99) million | $(197) million |
| Adjusted earnings, non-GAAP | $657 million | $1.593 billion |
| Net cash from operating activities | $(1.151) billion | $746 million |
| Net cash used in investing activities | $(8.276) billion | $(12.238) billion |
| Net cash from financing activities | $9.068 billion | $11.858 billion |
- Adjusted net investment income yield was 3.82%, down from 5.00%; adjusted net investment income was $4.209 billion versus $4.902 billion. Net investment spread, a non-GAAP measure, declined to $2.054 billion from $2.858 billion.
- Total assets were $225.6 billion, down from $259.8 billion. Total equity fell to $6.0 billion from $16.2 billion, primarily reflecting a $9.6 billion after-tax decline in other comprehensive income, largely from unrealized investment losses amid rising interest rates.
- Long-term debt was $3.156 billion. The company reported $3.6 billion of short-term liquidity and $40.8 billion of liquid assets. Parent-company liquid assets were $1.0 billion.
- Insurance subsidiaries had combined statutory total adjusted capital of approximately $8.1 billion and a combined RBC ratio of approximately 440% at year-end.
Material changes versus 2021
- Adjusted earnings fell by $936 million, driven by lower investment spread and fee income, higher DAC/VOBA amortization, and higher insurance-related costs. Run-off adjusted earnings shifted from $191 million income to a $289 million loss; Annuities declined to $926 million from $1.449 billion, and Life declined to $22 million from $287 million.
- GAAP net loss narrowed by $98 million. The primary favorable change was a $1.028 billion gain from guaranteed minimum living benefit (GMLB) riders, compared with a $2.166 billion loss in 2021. This was partly offset by unfavorable interest-rate derivative results related to ULSG, lower adjusted earnings and investment losses.
- Separate-account assets fell to $85.0 billion from $114.5 billion. Variable-annuity separate-account balances declined to $77.8 billion, reflecting unfavorable investment performance and negative net flows.
- Fixed maturity securities’ estimated fair value declined to $75.6 billion from $87.6 billion; gross unrealized losses were $9.5 billion at year-end.
Outlook, risks and unusual items
- Management states a target combined RBC ratio of 400%–450% under normal market conditions and intends to maintain variable-annuity supporting assets at or above CTE98. This is a capital objective, not earnings guidance; the filing provides no specific 2023 earnings forecast.
- The company reported no plans to pay common-stock dividends. It repurchased $488 million of common stock in 2022, with $293 million remaining under its authorization at year-end.
- Long-duration targeted improvements (LDTI) became effective January 1, 2023. Management expected significant changes to reported equity and earnings patterns, particularly because variable-annuity guarantees move to fair-value market-risk-benefit accounting. The filing’s estimated transition impacts are highly market-sensitive.
- Major risks include sensitivity of annuity guarantees and ULSG liabilities to equity markets and interest rates; hedge effectiveness and derivative collateral needs; credit, liquidity and unrealized-loss risks in the investment portfolio; dependence on reinsurers and subsidiary dividends; and policyholder behavior, actuarial assumptions, regulation and cybersecurity.
- A dispute with Genworth reinsurers over access to trust assets securing a $6.5 billion long-term-care reinsurance block remained in arbitration, with no decision reported. The company also disclosed up to approximately $10 million of reasonably possible litigation losses and up to approximately $125 million of reasonably possible losses on certain other contingencies beyond accrued amounts. A reinsurance-related matter settled in 2022 for $140 million.
- Unusual disclosure: the company revised its previously furnished year-end 2022 financial supplement and news release after determining future policy benefits had been overstated by $647 million. The revision increased reported year-end equity to $6.038 billion from $5.527 billion and book value per common share to $62.60 from $55.11. The filing states the updated amounts are reflected in the audited statements.
Important facts for investors to verify
- Reconcile the $647 million future-policy-benefit correction to the revised balance sheet and updated financial supplement.
- Review LDTI adoption disclosures in subsequent 2023 filings, including the transition impact on equity, earnings volatility and capital or rating metrics.
- Track statutory capital, RBC ratio, dividend capacity from insurance subsidiaries and parent-company liquidity—not just consolidated cash and assets.
- Monitor the Genworth arbitration, collateral sufficiency and counterparty concentration, as well as other reinsurance-related contingencies.
- Assess whether investment income, fee income and annuity account balances recover, and how interest rates, equity markets and hedging results affect adjusted and GAAP earnings.