SEC Comment Letter for Brighthouse Financial, (BHF) — Dec 20, 2016
Brighthouse Financial, Inc.
Date: Dec. 20, 2016 · CIK: 0001685040 · Accession: 0000000000-16-105771
AI Filing Summary & Sentiment
File numbers found in text: 001-37905
Letter
Mail Stop 4546 December 20, 2016 Anant Bhalla Chief Financial Officer Brighthouse Financial, Inc. Gragg Building 11225 North Community House Road Charlotte, N C 28277
Re: Brighthouse Financial, Inc. Amendment No. 1 to Form 10-12B Filed December 6, 2016 File No. 001-37905
Dear Mr. Bhalla :
We have reviewed your amended filing an d have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response and any amendment you may file in response to these comments , we may have additional comments. Unless we note otherwise, our references to prior comments are to comments in our November 3, 2016 letter .
Exhibit 99.1 – Information Statement
Summary
The Distribution, page 15
1. We note your responses to our prior comments two and four. Please revise your disclosure here and elsewhere, as appropriate, to provide information about the amount you will need to ensure that you have adequate liquidity, to achieve a 20% debt to capital ratio and to ensure that you have $3 billion in assets in excess of CTE95.
2. With respect to the “borrowings in excess of the amounts needed to satisfy the Company’s goals,” is it your intention to draw down the entire $5 billion available and
Anant Bhalla Brighthouse Financial, Inc. December 20 , 2016 Page 2
pay the excess to MetLife as a dividend or partial consideration for MetLife’s transfer of assets? What factors will you consider in determining whether the payment will be a dividend or consideration? If you consider this a dividend, will you still be obligated to pay MetLife consideration for the transfer of assets? Please quantify the consideration you are obligated to pay MetLife for the tran sfer of assets.
Risk Factors
We may experience difficulty in marketing and distributing products through our distribution channels, page 59
3. We note your revised disclosure in response to our prior comment six and reissue the comment in part. Please i dentify the significant distributor that has elected to suspend its distribution relationship with you.
The Separation and Distribution
Reasons for the Distribution, p age 71
4. We note your response to our prior comment seven . Please revise your disclosure to clarify your belief that the sale of the former Retail segment’s proprietary distribution channel to Massachusetts Mutual Life Insurance Company reduced the applicability of the vast majority of the DOL Fiduciary Rule prov isions. To the extent that there are any provisions that continue to apply, please provide further explanation of their potential impact on your business.
Material U.S. Federal Income Tax Consequences of the Distribution, page 76
5. We note your disclosur e on pages 18 and 66 that you could have an indemnification obligation to MetLife if certain steps that are part of the separation do not qualify for their intended tax treatment. Please clarify if you are referring to steps that are not covered by the pr ivate letter ruling from the IRS; the possibility that that you are unable to obtain a private letter ruling from the IRS; or the possibility that it is determined you are not in compliance with representations, assumptions and covenants. If the restructu ring transactions are not covered by the private letter ruling, please expand your discussion to explain that the private letter ruling does not apply to these restructuring transactions and discuss the expected tax treatment and potential liability. If you expect that the restructuring transactions are not taxable, provide the basis for your belief.
Anant Bhalla Brighthouse Financial, Inc. December 20 , 2016 Page 3
Formation of Brighthouse and the Restructuring
Brighthouse, page 86
6. We note your revised disclosure in response to our prior comment nine. Please quantif y the MetLife liabilities you intend to assume.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Summary of Critical Accounting Estimates
Liability for Future Policy Benefits, page 98
7. We continue to evaluate your re sponse to prior comment 11. In your response, you indicate that that the change in GMIB assumptions represents a change in accounting estimate pursuant to ASC 250 that results in a change in your accounting measurement model for GMIBs. Please:
Provide us a detailed explanation of how your accounting change meets each component of the definition of a change in estimate in ASC 250 -10-20. To the extent you have fully supported your accounting, revise your disclosure to characterize the change as a change in estimate and remove all references to an accounting shift.
Financial Statements
Notes to Combined Financial Statements
1.Business, Basis of Presentation, and Summary of Significant Accounting Policies, page F -12
8. We have reviewed your response to prior comment 18. Since Brighthouse was not incorporated until August 1, 2016, we do not believe it is appropriate, for periods as of or ended before August 1, 2016, to label the historical financial statements and notes as Brighthouse or including Brighthouse, or to refer to the historical financial results presented in the summary and sele cted combined financial data and MD&A as Brighthouse or including Brighthouse. Likewise, we do not believe Brighthouse should be referenced as a combined entity in your independent auditor’s report on page F - 5. Please revise accordingly.
We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
Anant Bhalla Brighthouse Financial, Inc. December 20 , 2016 Page 4
You may contact Bonnie Baynes at (202) 551 -4924 or Sharon Blume at (202) 551 -3474 if you have questions regarding comments on the financial statements and related matters. Please contact Irene Paik at (202) 551 -6553 or me at (202) 551-3675 with any other questions.
Sincerely,
/s/ Suzanne Hayes
Show Raw Text
Mail Stop 4546 December 20, 2016 Anant Bhalla Chief Financial Officer Brighthouse Financial, Inc. Gragg Building 11225 North Community House Road Charlotte, N C 28277 Re: Brighthouse Financial, Inc. Amendment No. 1 to Form 10-12B Filed December 6, 2016 File No. 001-37905 Dear Mr. Bhalla : We have reviewed your amended filing an d have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response and any amendment you may file in response to these comments , we may have additional comments. Unless we note otherwise, our references to prior comments are to comments in our November 3, 2016 letter . Exhibit 99.1 – Information Statement Summary The Distribution, page 15 1. We note your responses to our prior comments two and four. Please revise your disclosure here and elsewhere, as appropriate, to provide information about the amount you will need to ensure that you have adequate liquidity, to achieve a 20% debt to capital ratio and to ensure that you have $3 billion in assets in excess of CTE95. 2. With respect to the “borrowings in excess of the amounts needed to satisfy the Company’s goals,” is it your intention to draw down the entire $5 billion available and Anant Bhalla Brighthouse Financial, Inc. December 20 , 2016 Page 2 pay the excess to MetLife as a dividend or partial consideration for MetLife’s transfer of assets? What factors will you consider in determining whether the payment will be a dividend or consideration? If you consider this a dividend, will you still be obligated to pay MetLife consideration for the transfer of assets? Please quantify the consideration you are obligated to pay MetLife for the tran sfer of assets. Risk Factors We may experience difficulty in marketing and distributing products through our distribution channels, page 59 3. We note your revised disclosure in response to our prior comment six and reissue the comment in part. Please i dentify the significant distributor that has elected to suspend its distribution relationship with you. The Separation and Distribution Reasons for the Distribution, p age 71 4. We note your response to our prior comment seven . Please revise your disclosure to clarify your belief that the sale of the former Retail segment’s proprietary distribution channel to Massachusetts Mutual Life Insurance Company reduced the applicability of the vast majority of the DOL Fiduciary Rule prov isions. To the extent that there are any provisions that continue to apply, please provide further explanation of their potential impact on your business. Material U.S. Federal Income Tax Consequences of the Distribution, page 76 5. We note your disclosur e on pages 18 and 66 that you could have an indemnification obligation to MetLife if certain steps that are part of the separation do not qualify for their intended tax treatment. Please clarify if you are referring to steps that are not covered by the pr ivate letter ruling from the IRS; the possibility that that you are unable to obtain a private letter ruling from the IRS; or the possibility that it is determined you are not in compliance with representations, assumptions and covenants. If the restructu ring transactions are not covered by the private letter ruling, please expand your discussion to explain that the private letter ruling does not apply to these restructuring transactions and discuss the expected tax treatment and potential liability. If you expect that the restructuring transactions are not taxable, provide the basis for your belief. Anant Bhalla Brighthouse Financial, Inc. December 20 , 2016 Page 3 Formation of Brighthouse and the Restructuring Brighthouse, page 86 6. We note your revised disclosure in response to our prior comment nine. Please quantif y the MetLife liabilities you intend to assume. Management’s Discussion and Analysis of Financial Condition and Results of Operations Summary of Critical Accounting Estimates Liability for Future Policy Benefits, page 98 7. We continue to evaluate your re sponse to prior comment 11. In your response, you indicate that that the change in GMIB assumptions represents a change in accounting estimate pursuant to ASC 250 that results in a change in your accounting measurement model for GMIBs. Please: Provide us a detailed explanation of how your accounting change meets each component of the definition of a change in estimate in ASC 250 -10-20. To the extent you have fully supported your accounting, revise your disclosure to characterize the change as a change in estimate and remove all references to an accounting shift. Financial Statements Notes to Combined Financial Statements 1.Business, Basis of Presentation, and Summary of Significant Accounting Policies, page F -12 8. We have reviewed your response to prior comment 18. Since Brighthouse was not incorporated until August 1, 2016, we do not believe it is appropriate, for periods as of or ended before August 1, 2016, to label the historical financial statements and notes as Brighthouse or including Brighthouse, or to refer to the historical financial results presented in the summary and sele cted combined financial data and MD&A as Brighthouse or including Brighthouse. Likewise, we do not believe Brighthouse should be referenced as a combined entity in your independent auditor’s report on page F - 5. Please revise accordingly. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. Anant Bhalla Brighthouse Financial, Inc. December 20 , 2016 Page 4 You may contact Bonnie Baynes at (202) 551 -4924 or Sharon Blume at (202) 551 -3474 if you have questions regarding comments on the financial statements and related matters. Please contact Irene Paik at (202) 551 -6553 or me at (202) 551-3675 with any other questions. Sincerely, /s/ Suzanne Hayes Suzanne Hayes Assistant Director Office of Healthcare and Insurance cc: Benjamin Nixon Willkie Farr & Gallagher LLP