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AM Best Affirms Credit Ratings of Brighthouse Financial, Inc. and Its Subsidiaries

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AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a+" of Brighthouse Life Insurance Company (Wilmington, DE), the largest operating entity for the Brighthouse group of companies, New England Life Insurance Company (Boston, MA) and Brighthouse Life Insurance Company of NY (New York, NY), the New York-based insurance subsidiary. These entities collectively are referred to as Brighthouse and are operating insurance subsidiaries of Brighthouse Financial, Inc. (Brighthouse Financial) (headquartered in Charlotte, NC) (NASDAQ:BHF). The outlook of these Credit Ratings (rating) is stable.

Concurrently, AM Best has affirmed the Long-Term ICR of "bbb+" and the Long-Term Issue Credit Ratings (Long-Term IR) of Brighthouse Financial. Additionally, AM Best has affirmed the Long-Term ICR of "bbb+" and the Long-Term IR of Brighthouse Holdings, LLC, Brighthouse Financial's intermediate holding company. The outlook of these ratings is stable. (See below for a detailed listing of the Long-Term IRs.)

The ratings reflect Brighthouse's balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Brighthouse maintains a strong level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Model. Absolute capital has been growing on a GAAP and a statutory basis. There is also good liquidity within the Brighthouse organization with access to the parent company's revolving credit facility, in addition to operating company access to a repurchase facility, as well as funding agreement programs with the Federal Home Loan Bank and Federal Agricultural Mortgage Corporation.

Brighthouse has maintained good operating profitability on a statutory, GAAP and adjusted earnings basis despite some earnings volatility over the past three years due to activities related to the separation from MetLife, Inc. These activities include a re-segmentation charge in its universal life with secondary guarantee line of business, establishment costs associated with transitioning to an independent public company and net derivative mark-to-market accounting. While overall premiums have been impacted negatively by Brighthouse's run-off blocks of legacy life and annuity business, the company's flagship Shield Annuity product line has grown meaningfully over the past several years and Brighthouse has become a major player in the registered index-linked annuities space.

Partially offsetting these positive rating factors is the continued high level of exposure to interest rate and/or equity market sensitivities. Furthermore, a substantial amount of Brighthouse's annuity business is past the surrender charge period. However, AM Best acknowledges that the economic risks associated with interest rate and equity market movements are well-hedged in many stress scenarios. In addition, Brighthouse's ERM program is well-developed and designed to assess and manage exposures on a consolidated, company-wide basis.

The following Long-Term IRs have been affirmed with stable outlooks:

Brighthouse Financial, Inc.

-- "bbb+" on $1.5 billion 3.7% senior unsecured notes due 2027

-- "bbb+" on $1.5 billion 4.7% senior unsecured notes due 2047

-- "bbb-" on $375 million 6.25% junior subordinated debentures due 2058

-- "bbb-" on $425 million 6.6% non-cumulative preferred stock, Series A

Brighthouse Holdings, LLC

-- "bbb-" on $50 million fixed rate cumulative preferred units, Series A

The following Long-Term IR has been affirmed with a stable outlook:

Brighthouse Financial Institutional Funding I, LLC — "a+" program rating

-- "a+" rating on the notes issued hereunder

The following indicative Long-Term IRs have been affirmed with stable outlooks:

Brighthouse Financial, Inc.

-- "bbb+" on senior unsecured debt

-- "bbb" on subordinated debt

-- "bbb-" on preferred stock

-- "bbb-" on junior subordinated debt

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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