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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 March 31, 2022


☐			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: 000-55705

Brighthouse Life Insurance Company of NY

(Exact name of registrant as specified in its charter)

New York

13-3690700

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

285 Madison Avenue, 14th Floor, New York, New York

10017

(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

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 May 12, 2022, 200,000 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.	Financial Statements (at March 31, 2022 (Unaudited) and December 31, 2021 and for the Three Months Ended March 31, 2022 and 2021 (Unaudited)):
	Interim Condensed Balance Sheets	2
	Interim Condensed Statements of Operations and Comprehensive Income (Loss)	3
	Interim Condensed Statements of Stockholder’s Equity	4
	Interim Condensed Statements of Cash Flows	5
	Notes to the Interim Condensed Financial Statements (Unaudited):
	Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies	6
	Note 2 — Segment Information	7
	Note 3 — Insurance	9
	Note 4 — Investments	11
	Note 5 — Derivatives	19
	Note 6 — Fair Value	22

	Note 7 — Equity	31
	Note 8 — Other Revenues and Other Expenses	32
	Note 9 — Contingencies, Commitments and Guarantees	33
	Note 10 — Related Party Transactions	34
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 4.	Controls and Procedures	43

Part II — Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 6.	Exhibits	45

Signature		46

Table of Contents

Part I — Financial Information

Item 1. Financial Statements

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Balance Sheets

March 31, 2022 (Unaudited) and December 31, 2021

(In millions, except share and per share data)


	March 31, 2022		December 31, 2021
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $4,290 and $4,464, respectively; allowance for credit losses of $0 and $0, respectively)	$	4,166	$	4,697
Equity securities, at estimated fair value	3		3
Mortgage loans (net of allowance for credit losses of $4 and $2, respectively)	1,075		811



Short-term investments, principally at estimated fair value	—		13
Other invested assets, principally at estimated fair value	328		342
Total investments	5,572		5,866
Cash and cash equivalents	574		535
Accrued investment income	33		56
Premiums, reinsurance and other receivables	1,027		1,122
Deferred policy acquisition costs	272		224


Other assets	24		26
Separate account assets	4,722		5,149
Total assets	$	12,224	$	12,978
Liabilities and Stockholder’s Equity
Liabilities
Future policy benefits	$	814	$	846
Policyholder account balances	4,463		4,360
Other policy-related balances	19		12
Payables for collateral under derivative transactions	301		331

Current income tax payable	69		35
Deferred income tax liability	5		107
Other liabilities	936		987
Separate account liabilities	4,722		5,149
Total liabilities	11,329		11,827
Contingencies, Commitments and Guarantees (Note 9)
Stockholder’s Equity
Common stock, par value $10 per share; 200,000 shares authorized, issued and outstanding	2		2
Additional paid-in capital	491		491
Retained earnings (deficit)	494		523
Accumulated other comprehensive income (loss)	(92)		135
Total stockholder’s equity	895		1,151
Total liabilities and stockholder’s equity	$	12,224	$	12,978

See accompanying notes to the interim condensed financial statements.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Statements of Operations and Comprehensive Income (Loss)

For the Three Months Ended March 31, 2022 and 2021 (Unaudited)

(In millions)


	Three Months Ended March 31,
		2022		2021
Revenues
Premiums		$	3	$	5
Universal life and investment-type product policy fees		25		25
Net investment income		43		37
Other revenues		(23)		(23)
Net investment gains (losses)		(7)		1




Net derivative gains (losses)		(40)		(85)
Total revenues		1		(40)
Expenses
Policyholder benefits and claims		7		(6)
Interest credited to policyholder account balances		12		13
Amortization of deferred policy acquisition costs		1		(3)
Other expenses		19		19
Total expenses		39		23
Income (loss) before provision for income tax		(38)		(63)
Provision for income tax expense (benefit)		(9)		(14)
Net income (loss)		$	(29)	$	(49)
Comprehensive income (loss)		$	(256)	$	(183)

See accompanying notes to the interim condensed financial statements.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Statements of Stockholder’s Equity

For the Three Months Ended March 31, 2022 and 2021 (Unaudited)

(In millions)


	Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholder’s Equity
Balance at December 31, 2021	$	2	$	491	$	523	$	135	$	1,151
Net income (loss)					(29)				(29)
Other comprehensive income (loss), net of income tax							(227)		(227)
Balance at March 31, 2022	$	2	$	491	$	494	$	(92)	$	895


	Common Stock		Additional Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholder’s Equity
Balance at December 31, 2020	$	2	$	491	$	541	$	258	$	1,292
Net income (loss)					(49)				(49)
Other comprehensive income (loss), net of income tax							(134)		(134)
Balance at March 31, 2021	$	2	$	491	$	492	$	124	$	1,109

See accompanying notes to the interim condensed financial statements.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Interim Condensed Statements of Cash Flows

For the Three Months Ended March 31, 2022 and 2021 (Unaudited)

(In millions)


	Three Months Ended March 31,
	2022		2021
Net cash provided by (used in) operating activities	$	18	$	2
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	499		105
Mortgage loans	10		23
Purchases of:
Fixed maturity securities	(314)		(402)
Mortgage loans	(274)		(11)
Cash received in connection with freestanding derivatives	27		172
Cash paid in connection with freestanding derivatives	(112)		(45)
Net change in short-term investments	13		39


Net cash provided by (used in) investing activities	(151)		(119)
Cash flows from financing activities
Policyholder account balances:
Deposits	224		237
Withdrawals	(22)		(26)
Net change in payables for collateral under derivative transactions	(30)		28



Net cash provided by (used in) financing activities	172		239
Change in cash, cash equivalents and restricted cash	39		122
Cash, cash equivalents and restricted cash, beginning of period	535		275
Cash, cash equivalents and restricted cash, end of period	$	574	$	397

See accompanying notes to the interim condensed financial statements.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business

“BHNY” and the “Company” refer to Brighthouse Life Insurance Company of NY, a New York domiciled life insurance company. Brighthouse Life Insurance Company of NY is a wholly-owned subsidiary of Brighthouse Life Insurance Company, which is an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. (“BHF” and together with its subsidiaries, “Brighthouse Financial”). The Company is licensed to transact business in the state of New York.

The Company markets or administers a range of annuity and life insurance products to individuals. The Company is organized into two segments: Annuities and Life. In addition, the Company reports certain of its results of operations in Corporate & Other.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.

Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a standalone entity.

The accompanying interim condensed financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2021 balance sheet data was derived from audited financial statements included in Brighthouse Life Insurance Company of NY’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed financial statements should be read in conjunction with the financial statements of the Company included in the 2021 Annual Report.

Adoption of New Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASU”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. There were no significant ASUs adopted during the period ended March 31, 2022.

Future Adoption of New Accounting Pronouncements

In August 2018, the FASB issued new guidance on long-duration contracts (ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts). This new guidance is effective for fiscal years beginning after January 1, 2023. The amendments to Topic 944 will result in significant changes to the measurement, presentation and disclosure requirements for long-duration insurance contracts. A summary of the most significant changes is provided below:

(1) Guaranteed benefits associated with variable annuity and certain fixed annuity contracts will be classified and presented separately on the balance sheets as market risk benefits (“MRB”). MRBs will be measured at fair value through net income and reported separately on the statements of operations, except for instrument-specific credit risk changes, which will be recognized in other comprehensive income (loss) (“OCI”).

(2) Cash flow assumptions used to measure the liability for future policy benefits on traditional long-duration contracts (including term life insurance and immediate annuities) will be updated on an annual basis using a retrospective method. The resulting remeasurement gain or loss will be reported separately on the statements of operations along with the remeasurement gain or loss on universal life-type contract liabilities.

(3) The discount rate assumption used to measure the liability for traditional long-duration contracts will be based on an upper-medium grade fixed income yield, updated quarterly, with changes recognized in OCI.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

(4) Deferred policy acquisition costs (“DAC”) for all insurance products are required to be amortized on a constant-level basis over the expected term of the contracts, using amortization methods that are not a function of revenue or profit emergence. Changes in assumptions used to amortize DAC will be recognized as a revision to future amortization amounts.

(5) There will be a significant increase in required disclosures, including disaggregated rollforwards of insurance contract assets and liabilities supplemented by qualitative and quantitative information regarding the cash flows, assumptions, methods and judgements used to measure those balances.

The amendments to Topic 944 will be applied to the earliest period presented in the financial statements, making the transition date January 1, 2021. The MRB guidance is required to be applied on a retrospective basis, while the guidance for insurance liability assumption updates and DAC amortization will be applied to existing carrying amounts on the transition date.

The new guidance will have a significant impact on the Company’s financial statements upon adoption, and will change the pattern and market sensitivity of the Company’s earnings after the transition date. The most significant impact will be the requirement that all variable annuity guarantees be considered MRBs and measured at fair value, because a significant amount of variable annuity guarantees are classified as insurance liabilities under current guidance. The impacts to the financial statements at adoption are highly dependent on market conditions, especially interest rates. The Company is, therefore, unable to currently estimate the ultimate impact of the new guidance on the financial statements; however, at prevailing interest rate levels at the end of 2021, the Company expects the new guidance, upon adoption, would likely result in a material decrease in stockholder’s equity.

2. Segment Information

The Company is organized into two segments: Annuities and Life. 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, mainly term life insurance, designed to address policyholders’ needs for financial security and protected wealth transfer, which may be on a tax-advantaged basis.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments and expenses associated with certain legal proceedings and income tax audit issues.

Financial Measures and Segment Accounting Policies

Adjusted earnings is a financial measure used by management to evaluate performance 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 contract holders 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 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”).

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

2. Segment Information (continued)

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

•Amortization of DAC related to (i) net investment gains (losses), (ii) net derivative gains (losses) and (iii) GMIB Fees and GMIB Costs.

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 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 March 31, 2022
	Annuities		Life		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	—	$	1	$	—	$	1
Provision for income tax expense (benefit)	—		—		—		—
Adjusted earnings	$	—	$	1	$	—	1
Adjustments for:
Net investment gains (losses)							(7)
Net derivative gains (losses)							(40)
Other adjustments to net income (loss)							8
Provision for income tax (expense) benefit							9
Net income (loss)							$	(29)

Interest revenue	$	34	$	9	$	—

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

2. Segment Information (continued)


	Three Months Ended March 31, 2021
	Annuities		Life		Corporate & Other		Total
	(In millions)
Pre-tax adjusted earnings	$	(8)	$	5	$	—	$	(3)
Provision for income tax expense (benefit)	(2)		1		—		(1)
Adjusted earnings	$	(6)	$	4	$	—	(2)
Adjustments for:
Net investment gains (losses)							1
Net derivative gains (losses)							(85)
Other adjustments to net income (loss)							24
Provision for income tax (expense) benefit							13
Net income (loss)							$	(49)

Interest revenue	$	28	$	9	$	—

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


	Three Months Ended March 31,
		2022		2021
		(In millions)
Annuities		$	34	$	29
Life		11		12
Corporate & Other		—		—
Adjustments		(44)		(81)
Total		$	1	$	(40)

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


	March 31, 2022		December 31, 2021
	(In millions)
Annuities	$	10,119	$	10,745
Life	1,768		1,863
Corporate & Other	337		370
Total	$	12,224	$	12,978

3. Insurance

Guarantees

As discussed in Notes 1 and 3 of the Notes to the Financial Statements included in the 2021 Annual Report, the Company issues variable annuity contracts with guaranteed minimum benefits. Guaranteed minimum death benefits, the life contingent portion of guaranteed minimum withdrawal benefits (“GMWB”) and certain portions of GMIBs are accounted for as insurance liabilities in future policyholder benefits, while other guarantees are accounted for in whole or in part as embedded derivatives in policyholder account balances and are further discussed in Note 5.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

3. Insurance (continued)

Information regarding the Company’s guarantee exposure was as follows at:


	March 31, 2022						December 31, 2021
	In the Event of Death			At Annuitization			In the Event of Death			At Annuitization
	(Dollars in millions)
Annuity Contracts (1), (2)
Variable Annuity Guarantees
Total account value (3)	$	4,728		$	3,455		$	5,154		$	3,799
Separate account value	$	4,719		$	3,452		$	5,146		$	3,796
Net amount at risk	$	100	(4)	$	323	(5)	$	4	(4)	$	319	(5)
Average attained age of contract holders	70 years			70 years			70 years			69 years

_______________

(1)The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.

(2)Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 of the Notes to the Financial Statements included in the 2021 Annual Report for a discussion of guaranteed minimum benefits which have been reinsured.

(3)Includes the contract holder’s investments in the general account and separate account, if applicable.

(4)Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.

(5)Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments

See Notes 1 and 8 of the Notes to the Financial Statements included in the 2021 Annual Report for a description of the Company’s accounting policies for investments and the fair value hierarchy for investments and the related valuation methodologies.

Fixed Maturity Securities Available-for-sale

Fixed Maturity Securities by Sector

Fixed maturity securities by sector were as follows at:


	March 31, 2022										December 31, 2021
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized				Estimated Fair Value		Amortized Cost		Allowance for Credit Losses		Gross Unrealized				Estimated Fair Value
					Gains		Losses								Gains		Losses
	(In millions)
U.S. corporate	$	2,177	$	—	$	27	$	103	$	2,101	$	2,315	$	—	$	143	$	15	$	2,443
Foreign corporate	661		—		5		36		630		669		—		31		7		693
CMBS	333		—		3		10		326		333		—		18		2		349
ABS	301		—		—		5		296		312		—		1		—		313
State and political subdivision	297		—		6		21		282		290		—		15		2		303
U.S. government and agency	224		—		15		1		238		252		—		40		—		292
RMBS	280		—		5		8		277		270		—		11		2		279
Foreign government	17		—		—		1		16		23		—		2		—		25
Total fixed maturity securities	$	4,290	$	—	$	61	$	185	$	4,166	$	4,464	$	—	$	261	$	28	$	4,697

The Company held non-income producing fixed maturity securities with an estimated fair value of $2 million at March 31, 2022. The Company did not hold any non-income producing fixed maturity securities at December 31, 2021.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at March 31, 2022:


	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities (1)		Total Fixed Maturity Securities
	(In millions)
Amortized cost	$	65	$	772	$	1,425	$	1,114	$	914	$	4,290
Estimated fair value	$	65	$	764	$	1,355	$	1,083	$	899	$	4,166

_______________

(1)Structured securities include residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”).

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments (continued)

Continuous Gross Unrealized Losses for Fixed Maturity Securities by Sector

The estimated fair value and gross unrealized losses of fixed maturity securities in an unrealized loss position, by sector and by length of time that the securities have been in a continuous unrealized loss position, were as follows at:


	March 31, 2022								December 31, 2021
	Less than 12 Months				12 Months or Greater				Less than 12 Months				12 Months or Greater
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(Dollars in millions)
U.S. corporate	$	1,186	$	85	$	111	$	18	$	583	$	13	$	21	$	2
Foreign corporate	401		32		24		4		193		5		11		2
CMBS	149		5		42		5		72		2		10		—
ABS	261		4		10		1		138		—		2		—
State and political subdivision	212		20		4		1		107		2		—		—
U.S. government and agency	129		1		—		—		—		—		—		—
RMBS	122		5		38		3		114		2		—		—
Foreign government	7		1		—		—		6		—		2		—
Total fixed maturity securities	$	2,467	$	153	$	229	$	32	$	1,213	$	24	$	46	$	4




Total number of securities in an unrealized loss position	1,172				133				602				20

Allowance for Credit Losses for Fixed Maturity Securities

Evaluation and Measurement Methodologies

For fixed maturity securities in an unrealized loss position, management first assesses whether the Company intends to sell, or whether it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to estimated fair value through net investment gains (losses). For fixed maturity securities that do not meet the aforementioned criteria, management evaluates whether the decline in estimated fair value has resulted from credit losses or other factors. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the allowance for credit loss evaluation process include, but are not limited to: (i) the extent to which estimated fair value is less than amortized cost; (ii) any changes to the rating of the security by a rating agency; (iii) adverse conditions specifically related to the security, industry or geographic area; and (iv) payment structure of the fixed maturity security and the likelihood of the issuer being able to make payments in the future or the issuer’s failure to make scheduled interest and principal payments. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss is deemed to exist and an allowance for credit losses is recorded, limited by the amount that the estimated fair value is less than the amortized cost basis, with a corresponding charge to net investment gains (losses). Any unrealized losses that have not been recorded through an allowance for credit losses are recognized in OCI.

Once a security specific allowance for credit losses is established, the present value of cash flows expected to be collected from the security continues to be reassessed. Any changes in the security specific allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense in net investment gains (losses).

Fixed maturity securities are also evaluated to determine whether any amounts have become uncollectible. When all, or a portion, of a security is deemed uncollectible, the uncollectible portion is written-off with an adjustment to amortized cost and a corresponding reduction to the allowance for credit losses.

Accrued interest receivables are presented separate from the amortized cost basis of fixed maturity securities. An allowance for credit losses is not estimated on an accrued interest receivable, rather receivable balances 90-days past due are deemed uncollectible and are written off with a corresponding reduction to net investment income. The accrued interest receivable on fixed maturity securities totaled $28 million and $30 million at March 31, 2022 and December 31, 2021, respectively, and is included in accrued investment income.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments (continued)

Fixed maturity securities are also evaluated to determine if they qualify as purchased financial assets with credit deterioration (“PCD”). To determine if the credit deterioration experienced since origination is more than insignificant, both (i) the extent of the credit deterioration and (ii) any rating agency downgrades are evaluated. For securities categorized as PCD assets, the present value of cash flows expected to be collected from the security are compared to the par value of the security. If the present value of cash flows expected to be collected is less than the par value, credit losses are embedded in the purchase price of the PCD asset. In this situation, both an allowance for credit losses and amortized cost gross-up is recorded, limited by the amount that the estimated fair value is less than the grossed-up amortized cost basis. Any difference between the purchase price and the present value of cash flows is amortized or accreted into net investment income over the life of the PCD asset. Any subsequent PCD asset allowance for credit losses is evaluated in a manner similar to the process described above for fixed maturity securities.

Current Period Evaluation

Based on the Company’s current evaluation of its fixed maturity securities in an unrealized loss position and the current intent or requirement to sell, the Company recorded an allowance for credit losses of less than $1 million on one fixed maturity security at March 31, 2022. Management concluded that for fixed maturity securities in an unrealized loss position, the unrealized loss was not due to issuer specific credit-related factors and as a result was recognized in OCI. Where unrealized losses have not been recognized into income, it is primarily because the securities’ bond issuer(s) are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in estimated fair value is largely due to changes in interest rates and non-issuer-specific credit spreads. These issuers continued to make timely principal and interest payments and the estimated fair value is expected to recover as the securities approach maturity.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:


	March 31, 2022				December 31, 2021
	Carrying Value		% of Total		Carrying Value		% of Total
	(Dollars in millions)
Commercial	$	847	78.8	%	$	593	73.1	%
Agricultural	232		21.6		220		27.1

Total mortgage loans	1,079		100.4		813		100.2
Allowance for credit losses	(4)		(0.4)		(2)		(0.2)
Total mortgage loans, net	$	1,075	100.0	%	$	811	100.0	%

As of December 31, 2021, the forbearance period granted on all COVID-19 pandemic impacted loans have ended and all impacted loans were in good standing.

Allowance for Credit Losses for Mortgage Loans

Evaluation and Measurement Methodologies

The allowance for credit losses is a valuation account that is deducted from the mortgage loan’s amortized cost basis to present the net amount expected to be collected on the mortgage loan. The loan balance, or a portion of the loan balance, is written-off against the allowance when management believes this amount is uncollectible.

Accrued interest receivables are presented separate from the amortized cost basis of mortgage loans. An allowance for credit losses is generally not estimated on an accrued interest receivable, rather when a loan is placed in nonaccrual status the associated accrued interest receivable balance is written off with a corresponding reduction to net investment income. The accrued interest receivable on mortgage loans is included in accrued investment income and totaled $4 million at both March 31, 2022 and December 31, 2021.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments (continued)

The allowance for credit losses is estimated using relevant available information, from internal and external sources, relating to past events, current conditions, and a reasonable and supportable forecast. Historical credit loss experience provides the basis for estimating expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics and environmental conditions. A reasonable and supportable forecast period of two-years is used with an input reversion period of one-year.

Mortgage loans are evaluated in both portfolio segments to determine the allowance for credit losses. The loan-level loss rates are determined using individual loan terms and characteristics, risk pools/internal ratings, national economic forecasts, prepayment speeds, and estimated default and loss severity. The resulting loss rates are applied to the mortgage loan’s amortized cost to generate an allowance for credit losses. In certain situations, the allowance for credit losses is measured as the difference between the loan’s amortized cost and liquidation value of the collateral. These situations include collateral dependent loans, expected troubled debt restructurings (“TDR”), foreclosure probable loans, and loans with dissimilar risk characteristics.

Rollforward of the Allowance for Credit Losses for Mortgage Loans by Portfolio Segment

The changes in the allowance for credit losses by portfolio segment were as follows:


	Commercial		Agricultural		Total
	(In millions)
Three Months Ended March 31, 2022
Balance, beginning of period	$	1	$	1	$	2
Current period provision	2		—		2
Balance, end of period	$	3	$	1	$	4
Three Months Ended March 31, 2021
Balance, beginning of period	$	1	$	1	$	2
Current period provision	—		—		—
Balance, end of period	$	1	$	1	$	2

Credit Quality of Mortgage Loans by Portfolio Segment

The amortized cost of mortgage loans by year of origination and credit quality indicator was as follows at:


	2022		2021		2020		2019		2018		Prior		Total
	(In millions)
March 31, 2022
Commercial mortgage loans
Loan-to-value ratios:
Less than 65%	$	218	$	121	$	31	$	100	$	16	$	170	$	656
65% to 75%	37		50		—		52		13		23		175
76% to 80%	—		—		—		—		—		1		1
Greater than 80%	—		—		—		—		5		10		15
Total commercial mortgage loans	255		171		31		152		34		204		847
Agricultural mortgage loans
Loan-to-value ratios:
Less than 65%	19		41		44		32		16		38		190
65% to 75%	—		34		—		7		1		—		42

Total agricultural mortgage loans	19		75		44		39		17		38		232
Total	$	274	$	246	$	75	$	191	$	51	$	242	$	1,079

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments (continued)


	2021		2020		2019		2018		2017		Prior		Total
	(In millions)
December 31, 2021
Commercial mortgage loans
Loan-to-value ratios:
Less than 65%	$	121	$	31	$	100	$	16	$	13	$	158	$	439
65% to 75%	50		—		52		13		7		16		138
76% to 80%	—		—		—		—		—		1		1
Greater than 80%	—		—		—		5		—		10		15
Total commercial mortgage loans	171		31		152		34		20		185		593
Agricultural mortgage loans
Loan-to-value ratios:
Less than 65%	42		45		33		17		6		35		178
65% to 75%	34		—		7		1		—		—		42

Total agricultural mortgage loans	76		45		40		18		6		35		220
Total	$	247	$	76	$	192	$	52	$	26	$	220	$	813

The loan-to-value ratio is a measure commonly used to assess the quality of commercial and agricultural mortgage loans. The loan-to-value ratio compares the amount of the loan to the estimated fair value of the underlying property collateralizing the loan and is commonly expressed as a percentage. A loan-to-value ratio less than 100% indicates an excess of collateral value over the loan amount. Loan-to-value ratios greater than 100% indicate that the loan amount exceeds the collateral value.

The amortized cost of commercial mortgage loans by debt-service coverage ratio was as follows at:


	March 31, 2022				December 31, 2021
	Amortized Cost		% of Total		Amortized Cost		% of Total
	(Dollars in millions)
Debt-service coverage ratios:
Greater than 1.20x	$	713	84.2	%	$	510	86.0	%
1.00x - 1.20x	46		5.4		46		7.8
Less than 1.00x	88		10.4		37		6.2
Total	$	847	100.0	%	$	593	100.0	%

The debt-service coverage ratio compares a property’s net operating income to its debt-service payments. Debt-service coverage ratios less than 1.00 times indicate that property operations do not generate enough income to cover the loan’s current debt payments. A debt-service coverage ratio greater than 1.00 times indicates an excess of net operating income over the debt-service payments.

Past Due Mortgage Loans by Portfolio Segment

The Company has a high-quality, well performing mortgage loan portfolio, with over 99% of all mortgage loans classified as performing at March 31, 2022 and with all mortgage loans classified as performing at December 31, 2021. Delinquency is defined consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans — 60 days; and agricultural mortgage loans — 90 days. The Company had one agricultural mortgage loan past due with an amortized cost of $2 million at March 31, 2022. The Company did not have any mortgage loans past due at December 31, 2021.

Mortgage Loans in Nonaccrual Status by Portfolio Segment

Mortgage loans are placed in a nonaccrual status if there are concerns regarding collectability of future payments or the loan is past due, unless the past due loan is well collateralized. The Company did not have any mortgage loans in a nonaccrual status at either March 31, 2022 or December 31, 2021.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments (continued)

Modified Mortgage Loans by Portfolio Segment

Under certain circumstances, modifications are granted to nonperforming mortgage loans. Each modification is evaluated to determine if a TDR has occurred. A modification is a TDR when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the amount of debt owed, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company did not have any mortgage loans modified in a TDR during both the three months ended March 31, 2022 and 2021.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities and the effect on DAC, deferred sales inducements (“DSI”) and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in accumulated other comprehensive income (loss) (“AOCI”).

The components of net unrealized investment gains (losses), included in AOCI, were as follows at:


	March 31, 2022		December 31, 2021
	(In millions)
Fixed maturity securities	$	(124)	$	233



Derivatives	8		7

Subtotal	(116)		240
Amounts allocated from:
Future policy benefits	—		(35)

DAC and DSI	1		(34)
Subtotal	1		(69)
Deferred income tax benefit (expense)	24		(36)
Net unrealized investment gains (losses)	$	(91)	$	135

The changes in net unrealized investment gains (losses) were as follows:


	Three Months Ended March 31, 2022
	(In millions)
Balance at December 31, 2021	$	135

Unrealized investment gains (losses) during the period	(356)
Unrealized investment gains (losses) relating to:
Future policy benefits	35

DAC and DSI	35

Deferred income tax benefit (expense)	60
Balance at March 31, 2022	$	(91)
Change in net unrealized investment gains (losses)	$	(226)

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both March 31, 2022 and December 31, 2021.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments (continued)

Invested Assets on Deposit and Pledged as Collateral

Invested assets on deposit and pledged as collateral at estimated fair value were as follows at:


	March 31, 2022		December 31, 2021
	(In millions)
Invested assets on deposit (regulatory deposits)	$	2	$	2
Invested assets pledged as collateral (1)	275		161
Total invested assets on deposit and pledged as collateral (2)	$	277	$	163

_______________

(1)The Company has pledged invested assets in connection with derivative transactions (see Note 5).

(2)The Company did not hold any restricted cash and cash equivalents at either March 31, 2022 or December 31, 2021.

Variable Interest Entities

A variable interest entity (“VIE”) is a legal entity that does not have sufficient equity at risk to finance its activities or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity.

The Company has invested in legal entities that are VIEs. VIEs are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both (i) the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

There were no material VIEs for which the Company has concluded that it is the primary beneficiary at either March 31, 2022 or December 31, 2021.

The carrying amount and maximum exposure to loss related to the VIEs for which the Company has concluded that it holds a variable interest, but is not the primary beneficiary, were as follows at:


	March 31, 2022				December 31, 2021
	Carrying Amount		Maximum Exposure to Loss		Carrying Amount		Maximum Exposure to Loss
	(In millions)
Fixed maturity securities	$	326	$	326	$	326	$	308

The Company’s investments in unconsolidated VIEs are described below.

Fixed Maturity Securities

The Company invests in U.S. corporate bonds, foreign corporate bonds, and Structured Securities issued by VIEs. The Company is not obligated to provide any financial or other support to these VIEs, other than the original investment. The Company’s involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the servicer, special servicer, or investment manager, which are generally viewed as having the power to direct the activities that most significantly impact the economic performance of the VIE, nor does the Company function in any of these roles. The Company does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity; as a result, the Company has determined it is not the primary beneficiary, or consolidator, of the VIE. The Company’s maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See “— Fixed Maturity Securities Available-for-sale” for information on these securities.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

4. Investments (continued)

Net Investment Income

The components of net investment income were as follows:


	Three Months Ended March 31,
		2022		2021
		(In millions)
Investment income:
Fixed maturity securities		$	36	$	32

Mortgage loans		8		6




Other		1		—
Total investment income		45		38
Less: Investment expenses		2		1
Net investment income		$	43	$	37

Net Investment Gains (Losses)

Components of Net Investment Gains (Losses)

The components of net investment gains (losses) were as follows:


	Three Months Ended March 31,
		2022		2021
		(In millions)
Fixed maturity securities		$	(6)	$	1
Mortgage loans		(1)		—


Total net investment gains (losses)		$	(7)	$	1

Sales or Disposals of Fixed Maturity Securities

Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as follows:


	Three Months Ended March 31,
		2022		2021
		(In millions)
Proceeds		$	402	$	35
Gross investment gains		$	6	$	1
Gross investment losses		(12)		—
Net investment gains (losses)		$	(6)	$	1

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

5. Derivatives

Accounting for Derivatives

See Notes 1 and 8 of the Notes to the Financial Statements included in the 2021 Annual Report for a description of the Company’s accounting policies for derivatives and the fair value hierarchy for derivatives.

Types of Derivative Instruments and Derivative Strategies

The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to minimize its exposure to various market risks. Commonly used derivative instruments include, but are not necessarily limited to:

•Interest rate caps;

•Foreign currency swaps; and

•Equity market derivatives: options and total return swaps.

For detailed information on these contracts and the related strategies, see Note 7 of the Notes to the Financial Statements included in the 2021 Annual Report.

Primary Risks Managed by Derivatives

The primary underlying risk exposure, gross notional amount and estimated fair value of derivatives held were as follows at:


		March 31, 2022						December 31, 2021
	Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments:


Cash flow hedges:


Foreign currency swaps	Foreign currency exchange rate	$	136	$	8	$	1	$	125	$	7	$	1

Total qualifying hedges		136		8		1		125		7		1
Derivatives Not Designated or Not Qualifying as Hedging Instruments:


Interest rate caps	Interest rate	800		4		—		800		2		—


Foreign currency swaps	Foreign currency exchange rate	16		4		—		16		4		—




Equity index options	Equity market	2,628		257		111		2,576		268		137

Equity total return swaps	Equity market	2,088		55		9		2,089		61		3
Total non-designated or non-qualifying derivatives		5,532		320		120		5,481		335		140
Embedded derivatives:
Ceded guaranteed minimum income benefits	Other	N/A		294		—		N/A		351		—
Direct guaranteed minimum benefits	Other	N/A		—		(35)		N/A		—		(30)
Direct index-linked annuities	Other	N/A		—		703		N/A		—		792
Total embedded derivatives	Other	N/A		294		668		N/A		351		762
Total		$	5,668	$	622	$	789	$	5,606	$	693	$	903

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

The amount and location of gains (losses), including earned income, recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses) were as follows:


	Net Derivative Gains (Losses) Recognized for Derivatives		Net Derivative Gains (Losses) Recognized for Hedged Items		Net Investment Income		Amount of Gains (Losses) Deferred in AOCI
	(In millions)
Three Months Ended March 31, 2022
Derivatives Designated as Hedging Instruments:



Cash flow hedges:

Foreign currency exchange rate	$	—	$	—	$	—	$	1
Total cash flow hedges	—		—		—		1
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate	2		—		—		—
Foreign currency exchange rate	—		—		—		—

Equity market	(85)		—		—		—
Embedded	43		—		—		—
Total non-qualifying hedges	(40)		—		—		—
Total	$	(40)	$	—	$	—	$	1
Three Months Ended March 31, 2021
Derivatives Designated as Hedging Instruments:



Cash flow hedges:

Foreign currency exchange rate	$	—	$	—	$	—	$	—
Total cash flow hedges	—		—		—		—
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate	3		—		—		—
Foreign currency exchange rate	(1)		—		—		—

Equity market	97		—		—		—
Embedded	(184)		—		—		—
Total non-qualifying hedges	(85)		—		—		—
Total	$	(85)	$	—	$	—	$	—

At March 31, 2022 and December 31, 2021, the balance in AOCI associated with cash flow hedges was $8 million and $7 million, respectively.

Counterparty Credit Risk

The Company may be exposed to credit-related losses in the event of counterparty nonperformance on derivative instruments. Generally, the credit exposure is the fair value at the reporting date less any collateral received from the counterparty.

The Company manages its credit risk by: (i) entering into derivative transactions with creditworthy counterparties governed by master netting agreements; (ii) trading through regulated exchanges and central clearing counterparties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single party credit exposures which are subject to periodic management review.

See Note 6 for a description of the impact of credit risk on the valuation of derivatives.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

5. Derivatives (continued)

The estimated fair values of net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:


			Gross Amounts Not Offset on the Balance Sheets
	Gross Amount Recognized		Financial Instruments (1)		Collateral Received/Pledged (2)		Net Amount		Securities Collateral Received/Pledged (3)		Net Amount After Securities Collateral
	(In millions)
March 31, 2022
Derivative assets	$	328	$	(16)	$	(285)	$	27	$	(27)	$	—
Derivative liabilities	$	122	$	(16)	$	—	$	106	$	(106)	$	—
December 31, 2021
Derivative assets	$	342	$	(33)	$	(305)	$	4	$	(3)	$	1
Derivative liabilities	$	141	$	(33)	$	—	$	108	$	(108)	$	—

_______________

(1)Represents amounts subject to an enforceable master netting agreement or similar agreement.

(2)The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreement.

(3)Securities collateral received from counterparties is not reported on the balance sheets and may not be sold or re-pledged unless the counterparty is in default. Amounts do not include excess of collateral pledged or received.

The Company’s collateral arrangements generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the amount owed by that counterparty reaches a minimum transfer amount. Certain of these arrangements also include credit-contingent provisions which permit the party with positive fair value to terminate the derivative at the current fair value or demand immediate full collateralization from the party in a net liability position, in the event that the financial strength or credit rating of the party in a net liability position falls below a certain level.

The aggregate estimated fair values of derivatives in a net liability position containing such credit-contingent provisions and the aggregate estimated fair value of assets posted as collateral for such instruments were as follows at:


	March 31, 2022		December 31, 2021
	(In millions)
Estimated fair value of derivatives in a net liability position (1)	$	106	$	108
Estimated Fair Value of Collateral Provided (2):
Fixed maturity securities	$	275	$	162

_______________

(1)After taking into consideration the existence of netting agreements.

(2)Substantially all of the Company’s collateral arrangements provide for daily posting of collateral for the full value of the derivative contract. As a result, if the credit-contingent provisions of derivative contracts in a net liability position were triggered, minimal additional assets would be required to be posted as collateral or needed to settle the instruments immediately.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value

Considerable judgment is often required in interpreting market data to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy are presented in the tables below. Investments that do not have a readily determinable fair value and are measured at net asset value (or equivalent) as a practical expedient to estimated fair value are excluded from the fair value hierarchy.


	March 31, 2022
	Fair Value Hierarchy						Total Estimated Fair Value
	Level 1		Level 2		Level 3
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	2,072	$	29	$	2,101
Foreign corporate	—		617		13		630
CMBS	—		323		3		326
ABS	—		285		11		296
State and political subdivision	—		282		—		282
U.S. government and agency	175		63		—		238
RMBS	—		276		1		277
Foreign government	—		14		2		16
Total fixed maturity securities	175		3,932		59		4,166
Equity securities:	—		—		3		3
Short-term investments	—		—		—		—


Derivative assets: (1)
Interest rate	—		4		—		4
Foreign currency exchange rate	—		12		—		12

Equity market	—		312		—		312
Total derivative assets	—		328		—		328
Embedded derivatives within asset host contracts (2)	—		—		294		294
Separate account assets	—		4,722		—		4,722
Total assets	$	175	$	8,982	$	356	$	9,513
Liabilities
Derivative liabilities: (1)

Foreign currency exchange rate	$	—	$	1	$	—	$	1

Equity market	—		120		—		120
Total derivative liabilities	—		121		—		121
Embedded derivatives within liability host contracts (2)	—		—		668		668


Total liabilities	$	—	$	121	$	668	$	789

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)


	December 31, 2021
	Fair Value Hierarchy						Total Estimated Fair Value
	Level 1		Level 2		Level 3
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	2,422	$	21	$	2,443
Foreign corporate	—		679		14		693
CMBS	—		349		—		349
ABS	—		303		10		313
State and political subdivision	—		303		—		303
U.S. government and agency	148		144		—		292
RMBS	—		279		—		279
Foreign government	—		23		2		25
Total fixed maturity securities	148		4,502		47		4,697
Equity securities:	—		—		3		3
Short-term investments	13		—		—		13

Derivative assets: (1)

Interest rate	—		2		—		2
Foreign currency exchange rate	—		11		—		11

Equity market	—		329		—		329
Total derivative assets	—		342		—		342
Embedded derivatives within asset host contracts (2)	—		—		351		351
Separate account assets	—		5,149		—		5,149
Total assets	$	161	$	9,993	$	401	$	10,555
Liabilities
Derivative liabilities: (1)

Foreign currency exchange rate	$	—	$	1	$	—	$	1

Equity market	—		140		—		140
Total derivative liabilities	—		141		—		141
Embedded derivatives within liability host contracts (2)	—		—		762		762
Total liabilities	$	—	$	141	$	762	$	903

_______________

(1)Derivative assets are presented within other invested assets on the balance sheets and derivative liabilities are presented within other liabilities on the balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the balance sheets.

(2)Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables on the balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the balance sheets.

Valuation Controls and Procedures

The Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by its valuation service providers. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of Brighthouse Financial’s Board of Directors regarding compliance with fair value accounting standards.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

The fair value of financial assets and financial liabilities is based on quoted market prices, where available. Prices received are assessed to determine if they represent a reasonable estimate of fair value. Several controls are performed, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as “consensus pricing,” are used for a non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments.

A formal process is also applied to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, the last available price will be used.

Additional controls are performed, such as, balance sheet analytics to assess reasonableness of period-to-period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the three months ended March 31, 2022.

Determination of Fair Value

Fixed Maturity Securities

The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below.

U.S. corporate and foreign corporate securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues.

U.S. government and agency, state and political subdivision and foreign government securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker-dealer quotes, and comparable securities that are actively traded.

Structured Securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to, collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance.

Equity Securities and Short-term Investments

The fair value for actively traded equity securities and short-term investments are determined using quoted market prices and are classified as Level 1 assets. For financial instruments classified as Level 2 assets, fair values are determined using a market approach and are valued based on a variety of observable inputs as described below.

Equity securities and short-term investments: Fair value is determined using third-party commercial pricing services, with the primary input being quoted prices in markets that are not active.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

Derivatives

Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates and/or financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. The Company’s OTC derivatives are settled bilateral contracts between two counterparties (“OTC-bilateral”).

The fair values for OTC-bilateral derivatives classified as Level 2 assets or liabilities are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs.

The significant inputs to the pricing models for most OTC-bilateral derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.

Most inputs for OTC-bilateral derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.

Embedded Derivatives

Embedded derivatives principally include certain direct variable annuity guarantees and certain affiliated ceded reinsurance agreements related to such variable annuity guarantees, and equity crediting rates within index-linked annuity contracts. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.

The Company issues variable annuity products with guaranteed minimum benefits. Guaranteed minimum accumulation benefits (“GMAB”), the non-life contingent portion of GMWBs and certain portions of GMIBs are accounted for as embedded derivatives and measured at estimated fair value separately from the host variable annuity contract. These embedded derivatives are classified within policyholder account balances on the balance sheets, with changes in estimated fair value reported in net derivative gains (losses).

The Company determines the fair value of these embedded derivatives by estimating the present value of projected future benefits minus the present value of projected future fees using actuarial and capital markets assumptions including expectations of policyholder behavior. The calculation is based on in-force business and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates. The percentage of fees included in the initial fair value measurement is not updated in subsequent periods.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

Capital markets assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly-traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience.

The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital markets inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for BHF’s debt. These observable spreads are then adjusted to reflect the priority of these liabilities and claims-paying ability of the issuing insurance subsidiaries as compared to BHF’s overall financial strength.

Risk margins are established to capture the non-capital markets risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees.

Transfers Into or Out of Level 3:

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

Certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows at:


					March 31, 2022			December 31, 2021			Impact of Increase in Input on Estimated Fair Value
	Valuation Techniques		Significant Unobservable Inputs		Range			Range
Embedded derivatives
Direct, assumed and ceded guaranteed minimum benefits		Option pricing techniques	•	Mortality rates	0.03%	-	12.62%	0.03%	-	12.62%	Decrease (1)
			•	Lapse rates	0.30%	-	14.50%	0.30%	-	14.50%	Decrease (2)
			•	Utilization rates	0.00%	-	25.00%	0.00%	-	25.00%	Increase (3)
			•	Withdrawal rates	0.25%	-	10.00%	0.25%	-	10.00%	(4)
			•	Long-term equity volatilities	16.44%	-	22.16%	16.44%	-	22.16%	Increase (5)
			•	Nonperformance risk spread	0.10%	-	1.74%	(0.38)%	-	1.49%	Decrease (6)

_______________

(1)Mortality rates vary by age and by demographic characteristics such as gender. The range shown reflects the mortality rate for policyholders between 35 and 90 years old, which represents the majority of the business with living benefits. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement.

(2)The range shown reflects base lapse rates for major product categories for duration 1-20, which represents majority of business with living benefit riders. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

(3)The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder.

(4)The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(5)Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(6)Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.

The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

The changes in assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3) were summarized as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	Corporate (1)		Structured Securities		Foreign Government		Equity Securities		Net Embedded Derivatives (2)
	(In millions)
Three Months Ended March 31, 2022
Balance, beginning of period	$	35	$	10	$	2	$	3	$	(411)
Total realized/unrealized gains (losses) included in net income (loss) (3) (4)	—		—		—		—		43
Total realized/unrealized gains (losses) included in AOCI	(2)		—		—		—		—
Purchases (5)	6		5		—		—		—
Sales (5)	(1)		—		—		—		—
Issuances (5)	—		—		—		—		—
Settlements (5)	—		—		—		—		(6)
Transfers into Level 3 (6)	10		—		—		—		—
Transfers out of Level 3 (6)	(6)		—		—		—		—
Balance, end of period	$	42	$	15	$	2	$	3	$	(374)
Three Months Ended March 31, 2021
Balance, beginning of period	$	26	$	6	$	—	$	—	$	70
Total realized/unrealized gains (losses) included in net income (loss) (3) (4)	—		—		—		—		(184)
Total realized/unrealized gains (losses) included in AOCI	(1)		—		—		—		—
Purchases (5)	—		—		—		—		—
Sales (5)	—		—		—		—		—
Issuances (5)	—		—		—		—		—
Settlements (5)	—		—		—		—		(17)
Transfers into Level 3 (6)	—		—		—		—		—
Transfers out of Level 3 (6)	(3)		(1)		—		—		—
Balance, end of period	$	22	$	5	$	—	$	—	$	(131)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2022 (7)	$	—	$	—	$	—	$	—	$	34
Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at March 31, 2022 (7)	$	(3)	$	—	$	—	$	—	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2021 (7)	$	—	$	—	$	—	$	—	$	(200)
Changes in unrealized gains (losses) included in other comprehensive income for the instruments still held at March 31, 2021 (7)	$	(1)	$	—	$	—	$	—	$	—

_______________

(1)Comprised of U.S. and foreign corporate securities.

(2)Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

(3)Amortization of premium/accretion of discount is included within net investment income. Changes in the allowance for credit losses and direct write-offs are charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses).

(4)Interest accruals, as well as cash interest coupons received, are excluded from the rollforward.

(5)Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

(6)Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.

(7)Changes in unrealized gains (losses) included in net income (loss) for fixed maturities are reported in either net investment income or net investment gains (losses). Substantially all changes in unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses).

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

6. Fair Value (continued)

Fair Value of Financial Instruments Carried at Other Than Fair Value

The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income and payables for collateral under derivative transactions. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:


	March 31, 2022
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	1,075	$	—	$	—	$	1,041	$	1,041



Premiums, reinsurance and other receivables	$	445	$	—	$	—	$	445	$	445
Liabilities
Policyholder account balances	$	843	$	—	$	—	$	822	$	822

Other liabilities	$	459	$	—	$	25	$	434	$	459


	December 31, 2021
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	811	$	—	$	—	$	839	$	839



Premiums, reinsurance and other receivables	$	448	$	—	$	3	$	445	$	448
Liabilities
Policyholder account balances	$	853	$	—	$	—	$	845	$	845

Other liabilities	$	438	$	—	$	2	$	436	$	438

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

7. Equity

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI was as follows:


	Three Months Ended March 31, 2022
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Total
	(In millions)
Balance at December 31, 2021	$	128	$	7	$	135
OCI before reclassifications	(294)		1		(293)
Deferred income tax benefit (expense) (2)	61		—		61
AOCI before reclassifications, net of income tax	(105)		8		(97)
Amounts reclassified from AOCI	6		—		6
Deferred income tax benefit (expense) (2)	(1)		—		(1)
Amounts reclassified from AOCI, net of income tax	5		—		5



Balance at March 31, 2022	$	(100)	$	8	$	(92)


	Three Months Ended March 31, 2021
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Total
	(In millions)
Balance at December 31, 2020	$	256	$	2	$	258
OCI before reclassifications	(168)		—		(168)
Deferred income tax benefit (expense) (2)	35		—		35
AOCI before reclassifications, net of income tax	123		2		125
Amounts reclassified from AOCI	(1)		—		(1)
Deferred income tax benefit (expense) (2)	—		—		—
Amounts reclassified from AOCI, net of income tax	(1)		—		(1)



Balance at March 31, 2021	$	122	$	2	$	124

_______________

(1)See Note 4 for information on offsets to investments related to future policy benefits, DAC and DSI.

(2)The effects of income taxes on amounts recorded to AOCI are also recognized in AOCI. These income tax effects are released from AOCI when the related activity is reclassified into results from operations.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

7. Equity (continued)

Information regarding amounts reclassified out of each component of AOCI was as follows:


AOCI Components		Amounts Reclassified from AOCI				Statements of Operations and Comprehensive Income (Loss) Location
	Three Months Ended March 31,
		2022		2021
		(In millions)
Net unrealized investment gains (losses):

Net unrealized investment gains (losses)		$	(6)	$	1	Net investment income

Net unrealized investment gains (losses), before income tax		(6)		1
Income tax (expense) benefit		1		—
Net unrealized investment gains (losses), net of income tax		(5)		1











Total reclassifications, net of income tax		$	(5)	$	1

8. Other Revenues and Other Expenses

Other Revenues

The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the “Funds”) whereby the Company is paid monthly or quarterly fees (“12b-1 fees”) for providing certain services to customers and distributors of the Funds. The 12b-1 fees are generally equal to a fixed percentage of the average daily balance of the customer’s investment in a fund. The percentage is specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees.

To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds and is used to recognize revenue associated with 12b-1 fees.

Direct other revenues consisted primarily of 12b-1 fees of $3 million and $4 million for the three months ended March 31, 2022 and 2021, respectively, of which all were reported in the Annuities segment.

Other Expenses

Information on other expenses was as follows:


	Three Months Ended March 31,
		2022		2021
		(In millions)
Compensation		$	6	$	6
Contracted services and other labor costs		4		3
Transition services agreements		1		2
Establishment costs		1		1
Premium and other taxes, licenses and fees		1		1
Volume related costs, excluding compensation, net of DAC capitalization		6		6

Total other expenses		$	19	$	19

Related Party Expenses

See Note 10 for a discussion of related party expenses included in the table above.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

9. Contingencies, Commitments and Guarantees

Contingencies

Litigation

Sales Practices Claims

Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities or other products. The Company continues to defend vigorously against the claims in these matters. The Company believes adequate provision has been made in its financial statements for all probable and reasonably estimable losses for sales practices matters.

Summary

Various litigations, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, investor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations, it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s net income or cash flows in particular quarterly or annual periods.

Other Loss Contingencies

The Company considers establishing liabilities for loss contingencies associated with disputes or other matters involving third parties, including counterparties to contractual arrangements entered into by the Company (e.g., third-party vendors and reinsurers), as well as with tax authorities (“other loss contingencies”). The Company establishes liabilities for such other loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In matters where it is not probable, but is reasonably possible that a loss will be incurred and the amount of loss can be reasonably estimated, such losses or range of losses are disclosed, and no accrual is made. In the absence of sufficient information to support an assessment of the reasonably possible loss or range of loss, no accrual is made and no loss or range of loss is disclosed.

On a quarterly basis, the Company reviews relevant information with respect to other loss contingencies and, when applicable, updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

Commitments

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $127 million and $161 million at March 31, 2022 and December 31, 2021, respectively.

Commitments to Fund Private Corporate Bond Investments

The Company commits to lend funds under private corporate bond investments. The amounts of these unfunded commitments were $12 million and $16 million at March 31, 2022 and December 31, 2021, respectively.

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

9. Contingencies, Commitments and Guarantees (continued)

Guarantees

In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments.

In addition, the Company indemnifies its directors and officers as provided in its charters and bylaws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.

The Company did not have a liability for indemnities, guarantees and commitments at either March 31, 2022 or December 31, 2021.

10. Related Party Transactions

The Company has various existing arrangements with its Brighthouse Financial affiliates and had previous arrangements with MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”) for services necessary to conduct its activities. Certain of the MetLife services have continued, however, MetLife ceased to be a related party in June 2018. See Note 8 for amounts related to continuing transition services. Other material arrangements between the Company and its related parties not disclosed elsewhere are as follows:

Reinsurance Agreements

The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth.

Information regarding the significant effects of ceded related party reinsurance included on the interim condensed statements of operations and comprehensive income (loss) was as follows:


	Three Months Ended March 31,
		2022		2021
		(In millions)
Premiums		$	(11)	$	(11)
Universal life and investment-type product policy fees		$	(1)	$	(1)
Other revenues		$	(26)	$	(27)
Policyholder benefits and claims		$	(18)	$	(24)
Other expenses		$	(2)	$	(2)

Table of Contents

Brighthouse Life Insurance Company of NY

(An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.)

Notes to the Interim Condensed Financial Statements (Unaudited) (continued)

10. Related Party Transactions (continued)

Information regarding the significant effects of ceded related party reinsurance included on the interim condensed balance sheets was as follows at:


	March 31, 2022		December 31, 2021
	(In millions)
Assets
Premiums, reinsurance and other receivables	$	544	$	637
Liabilities
Other liabilities	$	295	$	347

The Company cedes risks to Brighthouse Life Insurance Company related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in the estimated fair value are included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were $294 million and $351 million at March 31, 2022 and December 31, 2021, respectively. Net derivative gains (losses) associated with the embedded derivatives were ($58) million and ($142) million for the three months ended March 31, 2022 and 2021, respectively.

Shared Services and Overhead Allocations

Brighthouse Services, LLC, an affiliate, currently provides the Company certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting and information technology. Revenues received from an affiliate related to these agreements, recorded in universal life and investment-type product policy fees, were $3 million for both the three months ended March 31, 2022 and 2021. Costs incurred under these arrangements were $12 million for both the three months ended March 31, 2022 and 2021, and were recorded in other expenses.

The Company had net receivables from/(payables to) affiliates, related to the items discussed above, of ($22) million and ($18) million at March 31, 2022 and December 31, 2021, respectively.

Broker-Dealer Transactions

The related party expense for the Company was commissions paid on the sale of variable products and passed through to the broker-dealer affiliate. The related party revenue for the Company was fee income passed through the broker-dealer affiliate from trusts and mutual funds whose shares serve as investment options of policyholders of the Company. Fee income received related to these transactions and recorded in other revenues was $3 million for both the three months ended March 31, 2022 and 2021. Commission expenses incurred related to these transactions and recorded in other expenses was $21 million and $22 million for the three months ended March 31, 2022 and 2021, respectively. The Company also had related party fee income receivables of $1 million at both March 31, 2022 and December 31, 2021.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations


			Page
Overview			36
Regulatory Developments			37
Summary of Critical Accounting Estimates			38
Non-GAAP Financial Disclosures			38
Results of Operations			40
Note Regarding Forward-Looking Statements			42

Table of Contents

For purposes of this discussion, “BHNY,” the “Company,” “we,” “our” and “us” refer to Brighthouse Life Insurance Company of NY. BHNY is an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. (“BHF” and together with its subsidiaries, “Brighthouse Financial”). This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with (i) the Interim Condensed Financial Statements and related notes included elsewhere herein; (ii) our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 3, 2022 (the “2021 Annual Report”); and (iii) our current reports on Form 8-K filed in 2022.

Overview

BHNY is a New York stock life insurance company licensed to do business only in the state of New York. We market or administer a range of annuity and life insurance products to individuals and deliver our products through multiple independent distribution channels and marketing arrangements with a diverse network of distribution partners. We are organized into two segments: Annuities and Life. In addition, we report certain of our results of operations in Corporate & Other. See “Business — Segments and Corporate & Other” included in our 2021 Annual Report, as well as Note 2 of the Notes to the Interim Condensed Financial Statements for further information regarding our segments and Corporate & Other.

COVID-19 Pandemic

We continue to closely monitor developments related to the COVID-19 pandemic, which has negatively impacted us in certain respects. At this time, it continues to not be possible to estimate (i) the severity or duration of the pandemic, including the severity, duration and frequency of any additional “waves” or emerging variants of COVID-19 or (ii) the efficacy or utilization of any therapeutic treatments and vaccines for COVID-19 or variants thereof. It likewise remains not possible to predict or estimate the longer-term effects of the pandemic, or any actions taken to contain or address the pandemic, on the economy at large and on our business, financial condition, results of operations and prospects, including the impact on our investment portfolio and our ratings, or the need for us in the future to revisit or revise any targets we may provide to the markets or any aspects of our business model. See “Business — Regulation,” “Risk Factors — Risks Related to Our Business — The ongoing COVID-19 pandemic could materially adversely affect our business, financial condition and results of operations, including our capitalization and liquidity” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — COVID-19 Pandemic” included in our 2021 Annual Report, as well as Note 4 of the Notes to the Interim Condensed Financial Statements.

Regulatory Developments

We are domiciled in New York and regulated by the New York State Department of Financial Services. We are regulated primarily at the state level, with some products and services also subject to federal regulation. In addition, BHNY is subject to regulation under the insurance holding company laws of various U.S. jurisdictions. Furthermore, some of our operations, products and services are subject to the Employee Retirement Income Security Act of 1974, consumer protection laws, securities, broker-dealer and investment advisor regulations, as well as environmental and unclaimed property laws and regulations. See “Business — Regulation,” as well as “Risk Factors — Regulatory and Legal Risks” included in our 2021 Annual Report, as amended or supplemented by our subsequent Quarterly Reports under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Developments.”

Transition from LIBOR

On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was signed into law, which provided a replacement framework for outstanding financial contracts tied to LIBOR once LIBOR ceases to be published. The LIBOR Act is substantially similar to the law passed in New York in April 2021 that aimed at ensuring legal clarity for legacy contracts governed by New York law. The LIBOR Act provides a statutory mechanism and safe harbor that applies on a nationwide basis to replace LIBOR with a benchmark rate, selected by the Federal Reserve Board based on a secured overnight funding rate, for certain contracts that reference LIBOR and contain no or insufficient fallback provisions. The LIBOR Act preempts and supersedes any state or local law, statute, rule, regulation or standard relating to the selection or use of a benchmark replacement or related changes and allows parties that already have effective fallback provisions to opt out of the legislation. See “Business — Regulation — Transition from LIBOR” and “Risk Factors — Economic Environment and Capital Markets-Related Risks — We are exposed to significant financial and capital markets risks which may adversely affect our financial condition, results of operations and liquidity, and may cause our net investment income and our profitability measures to vary from period to period — Changes to LIBOR” included in our 2021 Annual Report, as amended or supplemented herein.

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Summary of Critical Accounting Estimates

The most critical estimates include those used in determining:

•liabilities for future policy benefits;

•amortization of deferred policy acquisition costs (“DAC”);

•estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation; and

•measurement of income taxes and the valuation of deferred tax assets.

In applying our accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our business and operations. Actual results could differ from these estimates.

The above critical accounting estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and Note 1 of the Notes to the Financial Statements included in our 2021 Annual Report.

Non-GAAP Financial Disclosures

Our definitions of non-GAAP financial measures may differ from those used by other companies.

Adjusted Earnings

In this report, we present adjusted earnings as a measure of our performance that is not calculated in accordance with GAAP. Adjusted earnings is used by management to evaluate performance and facilitate comparisons to industry results. We believe the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of our performance by contract holders by highlighting the results of operations and the underlying profitability drivers of our business. Adjusted earnings should not be viewed as a substitute for net income (loss), which is the most directly comparable financial measure calculated in accordance with GAAP. See “— Results of Operations” for a reconciliation of adjusted earnings to net income (loss).

Adjusted earnings, which may be positive or negative, focuses on our primary businesses 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);

•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 (“Market Value Adjustments”); and

•Amortization of DAC related to (i) net investment gains (losses), (ii) net derivative gains (losses) and (iii) GMIB Fees and GMIB Costs.

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

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We present adjusted earnings in a manner consistent with management’s view of the primary business activities that drive the profitability of our core businesses. The following table illustrates how each component of adjusted earnings is calculated from the GAAP statement of operations line items:


Component of Adjusted Earnings		How Derived from GAAP (1)
(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 and amortization of deferred gain on reinsurance.
(ii)	Net investment spread	(ii)	Net investment income plus Investment Hedge 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 account assets.
(iv)	Amortization of DAC	(iv)	Amortization of DAC (excluding amounts related to (a) net investment gains (losses), (b) net derivative gains (losses) and (c) GMIB Fees and GMIB Costs).
(v)	Other expenses, net of DAC capitalization	(v)	Other expenses reduced by capitalization of DAC.
(vi)	Provision for income tax expense (benefit)	(vi)	Tax impact of the above items.

_______________

(1)Italicized items indicate GAAP statement of operations line items.

Consistent with GAAP guidance for segment reporting, adjusted earnings is also our GAAP measure of segment performance. Accordingly, we report adjusted earnings by segment in Note 2 of the Notes to the Interim Condensed Financial Statements.

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Results of Operations

Results for the Three Months Ended March 31, 2022 and 2021

Unless otherwise noted, all amounts in the following discussions of our results of operations are stated before income tax except for adjusted earnings, which are presented net of income tax.


	Three Months Ended March 31,
	2022		2021
	(In millions)
Revenues
Premiums	$	3	$	5
Universal life and investment-type product policy fees	25		25
Net investment income	43		37
Other revenues	(23)		(23)
Net investment gains (losses)	(7)		1
Net derivative gains (losses)	(40)		(85)
Total revenues	1		(40)
Expenses
Policyholder benefits and claims	7		(6)
Interest credited to policyholder account balances	12		13
Capitalization of DAC	(13)		(14)
Amortization of DAC	1		(3)
Other expenses	32		33
Total expenses	39		23
Income (loss) before provision for income tax	(38)		(63)
Provision for income tax expense (benefit)	(9)		(14)
Net income (loss)	$	(29)	$	(49)

The components of net income (loss) were as follows:


	Three Months Ended March 31,
	2022		2021
	(In millions)
GMLB Riders	$	(34)	$	(64)
Other derivative instruments	2		3
Net investment gains (losses)	(7)		1

Pre-tax adjusted earnings	1		(3)
Income (loss) before provision for income tax	(38)		(63)
Provision for income tax expense (benefit)	(9)		(14)
Net income (loss)	$	(29)	$	(49)

Three Months Ended March 31, 2022 Compared with the Three Months Ended March 31, 2021

Loss before provision for income tax was $38 million ($29 million, net of income tax), a lower loss of $25 million ($20 million, net of income tax) from a loss before provision for income tax of $63 million ($49 million, net of income tax) in the prior period.

The increase in income before provision for income tax was driven by the following net favorable items:

•a net favorable change in guaranteed minimum living benefits (“GMLB”) riders (“GMLB Riders”) from lower relative equity markets and higher interest rates resulting in:

◦favorable changes to the estimated fair value of the embedded derivative liabilities associated with Shield Level Annuities (“Shield”); and

◦a favorable change in ceded reinsurance;

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partially offset by

◦unfavorable changes to the estimated fair value of our GMLB hedges;

◦an unfavorable change to the estimated fair value of variable annuity liability reserves; and

◦an unfavorable change to GMLB DAC; and

•higher pre-tax adjusted earnings, as discussed in greater detail below.

The increase in income before provision for income tax was partially offset by net investment losses reflecting current period net losses on sales of fixed maturity securities compared to prior period net gains.

The provision for income tax resulted in an effective tax rate of 24% in the current period compared to 22% in the prior period. The increase in the effective tax rate was driven by higher pre-tax adjusted earnings, as discussed in greater detail below. Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction and tax credits.

Reconciliation of Net Income (Loss) to Adjusted Earnings

The reconciliation of net income (loss) to adjusted earnings was as follows:


	Three Months Ended March 31,
	2022		2021
	(In millions)
Net income (loss)	$	(29)	$	(49)
Add: Provision for income tax expense (benefit)	(9)		(14)
Income (loss) before provision for income tax	(38)		(63)
Less: GMLB Riders	(34)		(64)
Less: Other derivative instruments	2		3
Less: Net investment gains (losses)	(7)		1

Pre-tax adjusted earnings	1		(3)
Less: Provision for income tax expense (benefit)	—		(1)
Adjusted earnings	$	1	$	(2)

Results for the Three Months Ended March 31, 2022 and 2021 — Adjusted Earnings

The components of adjusted earnings were as follows:


	Three Months Ended March 31,
	2022		2021
	(In millions)
Fee income	$	32	$	34
Net investment spread	26		19
Insurance-related activities	(29)		(24)
Amortization of DAC	(9)		(13)
Other expenses, net of DAC capitalization	(19)		(19)
Pre-tax adjusted earnings	1		(3)
Provision for income tax expense (benefit)	—		(1)
Adjusted earnings	$	1	$	(2)

Three Months Ended March 31, 2022 Compared with the Three Months Ended March 31, 2021

Adjusted earnings were $1 million in the current period, an increase of $3 million.

Key favorable impacts were:

•higher net investment spread due to higher average invested assets resulting from positive net flows in the general account; and

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•lower amortization of DAC driven by a decrease in equity market performance resulting in favorable changes to our Shield business.

Key unfavorable impacts were:

•higher costs associated with insurance-related activities driven by higher paid claims, net of reinsurance; and

•lower asset-based fees resulting from lower average separate account balances, a portion of which is offset in other expenses.

The increase in pre-tax adjusted earnings resulted in a lower effective tax rate in the current period compared to the prior period. Our effective tax rate differs from the statutory tax rate primarily due to the impacts of the dividends received deduction and tax credits.

Note Regarding Forward-Looking Statements

This report and other oral or written statements that we make from time to time may contain information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve substantial risks and uncertainties. We have tried, wherever possible, to identify such statements using words such as “anticipate,” “estimate,” “expect,” “project,” “may,” “will,” “could,” “intend,” “goal,” “target,” “guidance,” “forecast,” “preliminary,” “objective,” “continue,” “aim,” “plan,” “believe” and other words and terms of similar meaning, or that are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include, without limitation, statements relating to future actions, prospective services or products, financial projections, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, as well as trends in operating 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 BHNY. These statements are based on current expectations and the current economic environment and 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:

•differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models;

•the impact on earnings, capitalization and statutory capital and greater volatility of our results due to guarantees within certain of our products;

•the impact of the ongoing COVID-19 pandemic;

•the potential material adverse effect of changes in accounting standards, practices or policies applicable to us, including changes in the accounting for long-duration contracts;

•loss of business and other negative impacts resulting from a downgrade or a potential downgrade in our financial strength ratings;

•the availability of reinsurance and the ability of the 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, financial strength ratings, e-business capabilities and name recognition;

•our ability to market and distribute our products through distribution channels;

•any failure of third parties to provide services we need, any failure of the practices and procedures of such third parties and any inability to obtain information or assistance we need from third parties;

•the risks associated with climate change;

•the adverse impact on liabilities for policyholder claims as a result of extreme mortality events;

•the impact of adverse capital and credit market conditions, including with respect to our ability to meet liquidity needs and access capital;

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•the impact of economic conditions in the capital markets and the U.S. and global economy, as well as geo-political events, military actions or catastrophic events, on our investment portfolio, including on realized and unrealized losses and impairments, net investment spread and net investment income;

•the impact of events that adversely affect issuers, guarantors or collateral relating to our investments or our derivatives counterparties, on impairments, valuation allowances, reserves, net investment income and changes in unrealized gain or loss positions;

•the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations;

•the potential material negative tax impact of potential future tax legislation that could make some of our products less attractive to consumers;

•the effectiveness of our policies and procedures in managing risk;

•the loss or disclosure of confidential information, damage to our reputation and impairment of our ability to conduct business effectively as a result of any failure in cyber- or other information security systems;

•whether all or any portion of the tax consequences of our separation from MetLife, Inc. (together with its subsidiaries and affiliates, “MetLife”) are not as expected, leading to material additional taxes or material adverse consequences to tax attributes that impact us;

•the uncertainty of the outcome of any disputes with MetLife over tax-related or other matters and agreements or disagreements regarding MetLife’s or our obligations under our other agreements; and

•other factors described in this report and from time to time in documents that we file with the SEC.

For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements included and the risks, uncertainties and other factors identified in our 2021 Annual Report, particularly in the sections entitled “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk,” as well as in our other subsequent filings with the SEC. Further, 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.

Item 4. Controls and Procedures

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of March 31, 2022.

MetLife provides certain services to the Company on a transitional basis through services agreements. The Company continues to change business processes, implement systems and establish new third-party arrangements, as a subsidiary of Brighthouse Financial, Inc. We consider these in aggregate to be material changes in our internal control over financial reporting.

Other than as noted above, there were no changes to the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.

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Part II — Other Information

Item 1. Legal Proceedings

See Note 9 of the Notes to the Interim Condensed Financial Statements.

Item 1A. Risk Factors

We discuss in this report, in our 2021 Annual Report and in our other filings with the SEC, various risks that may materially affect our business. In addition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Note Regarding Forward-Looking Statements” included herein. There have been no material changes to our risk factors from the risk factors previously disclosed in our 2021 Annual Report.

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Item 6. Exhibits

(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits herein, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about Brighthouse Life Insurance Company of NY, its affiliates or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about Brighthouse Life Insurance Company of NY and its affiliates may be found elsewhere herein and Brighthouse Life Insurance Company of NY’s other public filings, which are available without charge through the U.S. Securities and Exchange Commission website at www.sec.gov.)


Exhibit No.						Description
31.1*						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.
104*						The cover page of Brighthouse Life Insurance Company of NY’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (included within the Exhibit 101 attachments).

* Filed herewith.

** Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


BRIGHTHOUSE LIFE INSURANCE COMPANY OF NY

By:		/s/ Kristine H. Toscano
	Name:	Kristine H. Toscano
	Title:	Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

Date: May 12, 2022

BRIGHTHOUSE LIFE INSURANCE Co OF NY 10-Q