Correspondence 0001193125-23-088087 from BRIGHTHOUSE LIFE INSURANCE Co (CIK 0000733076)
BRIGHTHOUSE LIFE INSURANCE Co (CIK 0000733076)
Date: March 31, 2023 · CIK: 0000733076 · Accession: 0001193125-23-088087
AI Filing Summary & Sentiment
File numbers found in text: 333-268618
Referenced dates: February 15, 2023
Letter
VIA EDGAR Washington, DC 20549 Re: Brighthouse Life Insurance Company Brighthouse SmartGuard Plus Registration Statement on Form S-3
Dear Commissioners:
On behalf of Brighthouse Life Insurance Company (the “Company,” the “Registrant,” “Brighthouse” or “BLIC”), we are responding to the comments of the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) provided to us by letter dated February 15, 2023 with regard to the registration statement on Form S-3 (the “Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”) with the Commission on November 30, 2022, relating to a flexible premium adjustable life insurance policy (the “Policy”), referred to as Brighthouse SmartGuard Plus. Capitalized terms used but not otherwise defined herein have the meanings set forth in the Policy’s prospectus included within the Registration Statement.
For convenience, the Staff’s comments are repeated below, followed by the Company’s response.
General
1. Comment: Please confirm that all missing information, including all appendices, exhibits and financial statements, will be filed in a pre-effective amendment to the registration statement. We may have further comments when Brighthouse supplies the omitted information. Per Item 12(a)(2) of Form S-3, also incorporate by reference all other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report cited.
Response: The Company confirms.
2. Comment: Supplementally, please inform us whether there are any types of guarantees or support agreements with third parties to support any Contract features or benefits, or whether Brighthouse will be solely responsible for any benefits or features associated with the Contract.
Response: The Company confirms that Company will be solely responsible for any benefits or features associated with the Policy.
3. Comment: As is noted below, the prospectus uses a large number of defined terms, a considerable number of which are simply derivations of other defined terms. We believe
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an excessive use of terms that are derived from other defined terms may impede an understanding of the terms and features of the Policy. We ask that Brighthouse consider carefully minimizing the number of these defined terms where possible, in a manner consistent with plain English principles, in order to avoid investor confusion.
Response: The Company has made the requested revisions.
Cover Page
4. Comment: The cover page summarizes the advantages of the GDR. Please briefly summarize here the limitations (i.e., noting that Distribution Payments cannot exceed a specified annual amount and that a minimum amount of premiums must be paid into the policy to avoid termination of the rider).
Response: The Company has made the requested revisions. However, Distribution Payments are not always an annual amount. For clarification, the Company has revised the disclosure to state that each Distribution Payment cannot exceed a specified amount.
5. Comment: The cover page notes the minimum amount of Policy Proceeds, but it is not clear what Policy Proceeds are without reference to the body of the prospectus. Please clarify that Policy Proceeds are the death benefit under the Policy, modified for certain adjustments.
Response: The Company has removed the reference to Policy Proceeds and revised the disclosure to state that the GDR guarantees a minimum death benefit amount.
6. Comment: The cover page notes investment losses could be greater if the investor “request[s] certain transactions before the Segment Maturity Date because of the Interim Segment Value calculation.” It is not clear what these terms mean without reference to the body of the prospectus. Please revise to summarize briefly and in plain English the effect of transactions taken before the end of a Segment.
Response: The Company has omitted the Cover Page reference to transactions, which not inconsistent with appropriate Cover Page disclosures nor with our suite of index-linked annuity contract prospectuses.
7. Comment: The cover page notes the Interim Segment Value calculation can result in a loss of Cash Value even if the Segment Index Performance has been positive. The prospectus discloses that Interim Segment Value is reduced for transactions, deductions and market changes on a dollar for dollar value, so it is not clear how Cash Value could be reduced even if Segment Index Performance is positive. Please revise to clarify what is intended.
Response: The Company has deleted the disclosure. The Interim Segment Value calculation will not result in a loss of Cash Value when the Segment Index Performance is positive.
Special Terms
8. Comment: In “Accrued Buffer Rate,” please revise the last sentence to make clear that that buffer is lower for purposes of determining Interim Segment Value the sooner in the Segment the determination of that value is made. Please also revise the last sentence of the definition for Accrued Cap Rate as appropriate to conform to this comment, and make conforming changes in the rest of the prospectus as appropriate.
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Response: The Company has made the requested revisions.
9. Comment: The second sentence of the Accrued Index Return states it “is determined using the Segment Index Performance.” The prospectus indicates the only adjustment to Accrued Index Return from the Segment Index Performance is the application of the reduced buffer and cap rates. Please clarify supplementally whether the Accrued Index Return in fact equals the Segment Index Performance as adjusted for those reduced buffer and cap rates. If so, please revise this definition accordingly, and make corresponding changes elsewhere in the prospectus as appropriate.
Response: The Company revised the definition of Accrued Index Return to clarify that it is equal to the Segment Value (on the date of Interim Segment Value calculation) multiplied by the Segment Performance Rate (formerly referred to as the Segment Index-Linked Credit Rate).
10. Comment: Delete “if applicable” at the end of “Annual Deduction” because the GDR charge always applies.
Response: Respectfully, the Company declines to make this change because the disclosure is accurate as is. The GDR Charge will not be deducted after Distributions Payments terminate or the GDR terminates. As a result, the Company determined that the phrase “as applicable” is necessary.
11. Comment: In “Annual Lapse Prevention Premiums,” please consider describing in some general way the relationship between these premiums and the Face Amount.
Response: The Company has made the requested revisions.
12. Comment: In “Annual Indexed Account Charge,” please provide a brief description of the purpose for the charge.
Response: The Company has removed this term from the Special Terms section.
13. Comment: Combine the definitions of “BLIC” and “We, Us, Our and the Company.”
Response: The Company has made the requested revisions.
14. Comment: In “Excess Loan,” please note the occurrence of an Excess Loan may suspend the protection of the Lifetime Lapse Prevention Benefit.
Response: The Company has revised the definition of “Excess Loan” to note that an Excess Loan will terminate the Lifetime Lapse Prevention Benefit.
15. Comment: The definition of “Good Order” runs approximately 14 lines, with details that could be briefly summarized (e.g., required identifying details, sufficient information to permit allocations of amounts contributed). Please revise accordingly, including a cross reference to a section that would contain the details currently provided in the definition.
Response: The Company has made the requested revisions.
16. Comment: Please revise the definition of “Holding Account” to clarify what is meant by “associated Indexed Account,” e.g., the Indexed Account to which the investor intends to have the Net Premium allocated. Please also note here the Holding Account is a fixed interest account.
Response: The Company has made the requested revisions.
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17. Comment: “Indexed Account Cash Value” refers, in part, to the Segment Value on the Start Date and Maturity Date. Therefore, in “Segment Value,” please better distinguish the Segment Value on the Start Date and the Maturity Date where the latter should also reflect Segment Index-Linked Credit Rate.
Response: The Company has made the requested revisions.
18. Comment: In “Interim Segment Value,” add Accelerated Death Benefit and Distribution Payments under the GDR as additional transactions that utilize the Interim Segment Value, and reconcile the list of such transactions here with list of events under “Interim Segment Value” on page 14. In addition, please make clear here, and throughout the prospectus as appropriate, that the Interim Segment Value is adjusted for transactions, deductions and credits resulting from the Accrued Interest Rate on a dollar for dollar basis.
Response: The Company has made the requested revisions.
19. Comment: Understanding the “Excess Loan” condition to the Lifetime Lapse Benefit requires reference to the definitions of Excess Loan and Policy Loan Balance. Please revise here and in the Summary to describe briefly the condition in plain English (e.g., there must be some unloaned Cash Value).
Response: The Company has made the requested revisions.
20. Comment: The definition for “Policy Deduction Method” states that deductions are taken proportionally from the Fixed Account, Holding Accounts and Indexed Accounts, and that the sum of values in an Indexed Account and its associated Holding Account “is considered one proportion.” For clarity, please note instead that deductions are taken proportionally from each Indexed Account and its associated Holding Account, considered together, and the Fixed Account.
Response: The Company has made the requested revisions.
21. Comment: Please revise Segment Index Performance definition to clarify it is the Segment Index- Linked Credit Rate at the end of a Segment, as adjusted by the applicable cap or buffer. Please also consider revising this term to connote it more clearly as a rate.
Response: The Company believes the Staff’s comment inadvertently referred to the definition of Segment Index Performance but meant to refer to the definition of Segment Index-Linked Credit Rate. As a result, the Company has made the requested revisions to Segment Performance Rate (formerly referred to as the Segment Index-Linked Credit Rate).
22. Comment: Given the terms Segment Maturity Cash Value and Interim Cash Value, it is unclear from the definition of Segment Value what is its purpose. Please clarify this supplementally.
Response: For clarity, the Company has removed the term “Segment Maturity Cash Value” from the prospectus, and, where applicable, replaced with the phrase “Segment Value on a Segment Maturity Date.” The remaining terms, Segment Value and Interim Segment Value, are two distinct terms under the Policy, although on certain days during a term they are equal. Simply put, the Segment Value is the investment amount allocated at the start of the Segment, which is subsequently reduced over the course of the Segment Term for any loans or payments applied to an Accelerated Death Benefit by the same percentage that such loans or payments reduce the Interim Value. Interim
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Segment Value is the value we assign to each Indexed Account on any Business Day prior to the Segment Maturity Date.
Summary (page 9)
23. Comment: If not on the front cover page, then please briefly describe the Free Look in the Summary.
Response: The Company has made the requested revisions.
24. Comment: In the second paragraph, please note here that this guarantee is conditional and add a brief summary of what those conditions are. Also, please note here and throughout the prospectus as appropriate that these payments are in effect loans and summarize what is the potential effect of Distribution Payments in excess of Cash Value on Policy Proceeds. In addition, please make the discussion its own paragraph separate from the rest of the current paragraph.
Response: The Company has made the requested revisions.
25. Comment: In the third paragraph:
a. Please revise the second sentence to indicate that investors may receive positive interest based on an Index’s positive returns.
b. Please revise the second sentence to reference various Buffer Rates, i.e., each protects its own specified level of negative return.
Response: The Company has made the requested revisions.
26. Comment: In the fourth paragraph, the prospectus notes the Buffer Rates associated with each Indexed Account. Please clarify the extent to which these rates will be offered throughout the term of the Policy.
Response: The Company has made the requested revisions.
27. Comment: In the fifth paragraph, please apply a Cap Rate that is lower than the Segment Index Performance to better illustrate the impact of the Cap Rate.
Response: The Company has made the requested revisions.
28. Comment: In the sixth paragraph, please clarify when investors have to provide reallocation instructions and how they should provide those instructions.
Response: The Company has made the requested revisions.
29. Comment: In the ninth paragraph, please supplement the reference to Cap Rates and Buffer Rates not being “fully accrued” to make clear here and throughout the prospectus that these are lower the earlier in the Segment Term that Segment Value and Interim Segment Value are calculated. Please also address any pro-rata reduction of amounts remaining after Segment Value is calculated that could reduce Segment Value on more than a dollar for dollar basis if the Accrued Index Rate is negative at the time of the calculation.
Response: The Company has made the requested revisions.
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30. Comment: Since the tenth paragraph discusses the purposes for which Interim Segment Value is used, please consider moving the paragraph ahead of the immediately preceding paragraph, which discusses how Interim Segment Value is calculated. In addition, this and the immediately preceding paragraph use many defined terms, which forces the reader to make multiple cross references to the Special Terms section to understand what is being said. To avoid this result, please consider revising these paragraphs of the Summary as well as others using multiple defined terms to convey in plain English what is intended.
Response: The Company has moved the tenth paragraph as suggested and revised for plain English.
31. Comment: In the Indexed Account row of the Key Features table, please add Index and Buffer to the list in the last sentence.
Response: The Company has revised the disclosure in the Indexed Account row.
32. Comment: In the Guaranteed Distribution Rider row of the Key Features table, please summarize briefly what “modified endowment contract” means in plain English. In addition, please provide some examples of the circumstances under which this could happen in the section on GDR or in a se
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CORRESP 1 filename1.htm SEC Response 333-268618 Eversheds Sutherland (US) LLP 1114 Avenue of the Americas, 40th Floor New York, NY 10036-7703 D: +1 212.389.5080 F: +1 212.389.5099 dodiekent@ eversheds-sutherland.com March 31, 2023 VIA EDGAR U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Brighthouse Life Insurance Company Brighthouse SmartGuard Plus Registration Statement on Form S-3 Dear Commissioners: On behalf of Brighthouse Life Insurance Company (the “Company,” the “Registrant,” “Brighthouse” or “BLIC”), we are responding to the comments of the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) provided to us by letter dated February 15, 2023 with regard to the registration statement on Form S-3 (the “Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”) with the Commission on November 30, 2022, relating to a flexible premium adjustable life insurance policy (the “Policy”), referred to as Brighthouse SmartGuard Plus. Capitalized terms used but not otherwise defined herein have the meanings set forth in the Policy’s prospectus included within the Registration Statement. For convenience, the Staff’s comments are repeated below, followed by the Company’s response. General 1. Comment: Please confirm that all missing information, including all appendices, exhibits and financial statements, will be filed in a pre-effective amendment to the registration statement. We may have further comments when Brighthouse supplies the omitted information. Per Item 12(a)(2) of Form S-3, also incorporate by reference all other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report cited. Response: The Company confirms. 2. Comment: Supplementally, please inform us whether there are any types of guarantees or support agreements with third parties to support any Contract features or benefits, or whether Brighthouse will be solely responsible for any benefits or features associated with the Contract. Response: The Company confirms that Company will be solely responsible for any benefits or features associated with the Policy. 3. Comment: As is noted below, the prospectus uses a large number of defined terms, a considerable number of which are simply derivations of other defined terms. We believe Eversheds Sutherland (US) LLP is part of a global legal practice, operating through various separate and distinct legal entities, under Eversheds Sutherland. For a full description of the structure and a list of offices, please visit www.eversheds-sutherland.com. U.S. Securities and Exchange Commission Page 2 an excessive use of terms that are derived from other defined terms may impede an understanding of the terms and features of the Policy. We ask that Brighthouse consider carefully minimizing the number of these defined terms where possible, in a manner consistent with plain English principles, in order to avoid investor confusion. Response: The Company has made the requested revisions. Cover Page 4. Comment: The cover page summarizes the advantages of the GDR. Please briefly summarize here the limitations (i.e., noting that Distribution Payments cannot exceed a specified annual amount and that a minimum amount of premiums must be paid into the policy to avoid termination of the rider). Response: The Company has made the requested revisions. However, Distribution Payments are not always an annual amount. For clarification, the Company has revised the disclosure to state that each Distribution Payment cannot exceed a specified amount. 5. Comment: The cover page notes the minimum amount of Policy Proceeds, but it is not clear what Policy Proceeds are without reference to the body of the prospectus. Please clarify that Policy Proceeds are the death benefit under the Policy, modified for certain adjustments. Response: The Company has removed the reference to Policy Proceeds and revised the disclosure to state that the GDR guarantees a minimum death benefit amount. 6. Comment: The cover page notes investment losses could be greater if the investor “request[s] certain transactions before the Segment Maturity Date because of the Interim Segment Value calculation.” It is not clear what these terms mean without reference to the body of the prospectus. Please revise to summarize briefly and in plain English the effect of transactions taken before the end of a Segment. Response: The Company has omitted the Cover Page reference to transactions, which not inconsistent with appropriate Cover Page disclosures nor with our suite of index-linked annuity contract prospectuses. 7. Comment: The cover page notes the Interim Segment Value calculation can result in a loss of Cash Value even if the Segment Index Performance has been positive. The prospectus discloses that Interim Segment Value is reduced for transactions, deductions and market changes on a dollar for dollar value, so it is not clear how Cash Value could be reduced even if Segment Index Performance is positive. Please revise to clarify what is intended. Response: The Company has deleted the disclosure. The Interim Segment Value calculation will not result in a loss of Cash Value when the Segment Index Performance is positive. Special Terms 8. Comment: In “Accrued Buffer Rate,” please revise the last sentence to make clear that that buffer is lower for purposes of determining Interim Segment Value the sooner in the Segment the determination of that value is made. Please also revise the last sentence of the definition for Accrued Cap Rate as appropriate to conform to this comment, and make conforming changes in the rest of the prospectus as appropriate. U.S. Securities and Exchange Commission Page 3 Response: The Company has made the requested revisions. 9. Comment: The second sentence of the Accrued Index Return states it “is determined using the Segment Index Performance.” The prospectus indicates the only adjustment to Accrued Index Return from the Segment Index Performance is the application of the reduced buffer and cap rates. Please clarify supplementally whether the Accrued Index Return in fact equals the Segment Index Performance as adjusted for those reduced buffer and cap rates. If so, please revise this definition accordingly, and make corresponding changes elsewhere in the prospectus as appropriate. Response: The Company revised the definition of Accrued Index Return to clarify that it is equal to the Segment Value (on the date of Interim Segment Value calculation) multiplied by the Segment Performance Rate (formerly referred to as the Segment Index-Linked Credit Rate). 10. Comment: Delete “if applicable” at the end of “Annual Deduction” because the GDR charge always applies. Response: Respectfully, the Company declines to make this change because the disclosure is accurate as is. The GDR Charge will not be deducted after Distributions Payments terminate or the GDR terminates. As a result, the Company determined that the phrase “as applicable” is necessary. 11. Comment: In “Annual Lapse Prevention Premiums,” please consider describing in some general way the relationship between these premiums and the Face Amount. Response: The Company has made the requested revisions. 12. Comment: In “Annual Indexed Account Charge,” please provide a brief description of the purpose for the charge. Response: The Company has removed this term from the Special Terms section. 13. Comment: Combine the definitions of “BLIC” and “We, Us, Our and the Company.” Response: The Company has made the requested revisions. 14. Comment: In “Excess Loan,” please note the occurrence of an Excess Loan may suspend the protection of the Lifetime Lapse Prevention Benefit. Response: The Company has revised the definition of “Excess Loan” to note that an Excess Loan will terminate the Lifetime Lapse Prevention Benefit. 15. Comment: The definition of “Good Order” runs approximately 14 lines, with details that could be briefly summarized (e.g., required identifying details, sufficient information to permit allocations of amounts contributed). Please revise accordingly, including a cross reference to a section that would contain the details currently provided in the definition. Response: The Company has made the requested revisions. 16. Comment: Please revise the definition of “Holding Account” to clarify what is meant by “associated Indexed Account,” e.g., the Indexed Account to which the investor intends to have the Net Premium allocated. Please also note here the Holding Account is a fixed interest account. Response: The Company has made the requested revisions. U.S. Securities and Exchange Commission Page 4 17. Comment: “Indexed Account Cash Value” refers, in part, to the Segment Value on the Start Date and Maturity Date. Therefore, in “Segment Value,” please better distinguish the Segment Value on the Start Date and the Maturity Date where the latter should also reflect Segment Index-Linked Credit Rate. Response: The Company has made the requested revisions. 18. Comment: In “Interim Segment Value,” add Accelerated Death Benefit and Distribution Payments under the GDR as additional transactions that utilize the Interim Segment Value, and reconcile the list of such transactions here with list of events under “Interim Segment Value” on page 14. In addition, please make clear here, and throughout the prospectus as appropriate, that the Interim Segment Value is adjusted for transactions, deductions and credits resulting from the Accrued Interest Rate on a dollar for dollar basis. Response: The Company has made the requested revisions. 19. Comment: Understanding the “Excess Loan” condition to the Lifetime Lapse Benefit requires reference to the definitions of Excess Loan and Policy Loan Balance. Please revise here and in the Summary to describe briefly the condition in plain English (e.g., there must be some unloaned Cash Value). Response: The Company has made the requested revisions. 20. Comment: The definition for “Policy Deduction Method” states that deductions are taken proportionally from the Fixed Account, Holding Accounts and Indexed Accounts, and that the sum of values in an Indexed Account and its associated Holding Account “is considered one proportion.” For clarity, please note instead that deductions are taken proportionally from each Indexed Account and its associated Holding Account, considered together, and the Fixed Account. Response: The Company has made the requested revisions. 21. Comment: Please revise Segment Index Performance definition to clarify it is the Segment Index- Linked Credit Rate at the end of a Segment, as adjusted by the applicable cap or buffer. Please also consider revising this term to connote it more clearly as a rate. Response: The Company believes the Staff’s comment inadvertently referred to the definition of Segment Index Performance but meant to refer to the definition of Segment Index-Linked Credit Rate. As a result, the Company has made the requested revisions to Segment Performance Rate (formerly referred to as the Segment Index-Linked Credit Rate). 22. Comment: Given the terms Segment Maturity Cash Value and Interim Cash Value, it is unclear from the definition of Segment Value what is its purpose. Please clarify this supplementally. Response: For clarity, the Company has removed the term “Segment Maturity Cash Value” from the prospectus, and, where applicable, replaced with the phrase “Segment Value on a Segment Maturity Date.” The remaining terms, Segment Value and Interim Segment Value, are two distinct terms under the Policy, although on certain days during a term they are equal. Simply put, the Segment Value is the investment amount allocated at the start of the Segment, which is subsequently reduced over the course of the Segment Term for any loans or payments applied to an Accelerated Death Benefit by the same percentage that such loans or payments reduce the Interim Value. Interim U.S. Securities and Exchange Commission Page 5 Segment Value is the value we assign to each Indexed Account on any Business Day prior to the Segment Maturity Date. Summary (page 9) 23. Comment: If not on the front cover page, then please briefly describe the Free Look in the Summary. Response: The Company has made the requested revisions. 24. Comment: In the second paragraph, please note here that this guarantee is conditional and add a brief summary of what those conditions are. Also, please note here and throughout the prospectus as appropriate that these payments are in effect loans and summarize what is the potential effect of Distribution Payments in excess of Cash Value on Policy Proceeds. In addition, please make the discussion its own paragraph separate from the rest of the current paragraph. Response: The Company has made the requested revisions. 25. Comment: In the third paragraph: a. Please revise the second sentence to indicate that investors may receive positive interest based on an Index’s positive returns. b. Please revise the second sentence to reference various Buffer Rates, i.e., each protects its own specified level of negative return. Response: The Company has made the requested revisions. 26. Comment: In the fourth paragraph, the prospectus notes the Buffer Rates associated with each Indexed Account. Please clarify the extent to which these rates will be offered throughout the term of the Policy. Response: The Company has made the requested revisions. 27. Comment: In the fifth paragraph, please apply a Cap Rate that is lower than the Segment Index Performance to better illustrate the impact of the Cap Rate. Response: The Company has made the requested revisions. 28. Comment: In the sixth paragraph, please clarify when investors have to provide reallocation instructions and how they should provide those instructions. Response: The Company has made the requested revisions. 29. Comment: In the ninth paragraph, please supplement the reference to Cap Rates and Buffer Rates not being “fully accrued” to make clear here and throughout the prospectus that these are lower the earlier in the Segment Term that Segment Value and Interim Segment Value are calculated. Please also address any pro-rata reduction of amounts remaining after Segment Value is calculated that could reduce Segment Value on more than a dollar for dollar basis if the Accrued Index Rate is negative at the time of the calculation. Response: The Company has made the requested revisions. U.S. Securities and Exchange Commission Page 6 30. Comment: Since the tenth paragraph discusses the purposes for which Interim Segment Value is used, please consider moving the paragraph ahead of the immediately preceding paragraph, which discusses how Interim Segment Value is calculated. In addition, this and the immediately preceding paragraph use many defined terms, which forces the reader to make multiple cross references to the Special Terms section to understand what is being said. To avoid this result, please consider revising these paragraphs of the Summary as well as others using multiple defined terms to convey in plain English what is intended. Response: The Company has moved the tenth paragraph as suggested and revised for plain English. 31. Comment: In the Indexed Account row of the Key Features table, please add Index and Buffer to the list in the last sentence. Response: The Company has revised the disclosure in the Indexed Account row. 32. Comment: In the Guaranteed Distribution Rider row of the Key Features table, please summarize briefly what “modified endowment contract” means in plain English. In addition, please provide some examples of the circumstances under which this could happen in the section on GDR or in a se