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Brighthouse Financial Global Funding -- Moody’s rates Brighthouse Financial Global Funding program (P)A3; stable outlook

·13 min read
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Rating Action:

Moody’s rates Brighthouse Financial Global Funding

program (P)A3; stable outlook

5 April 2021

New York, April 5, 2021 – Moody’s Investors Service, (“Moody’s”) has assigned a rating of (P)A3

to the $5 billion funding agreement-backed global note (FABN) issuance program of Brighthouse

Financial Global Funding. Brighthouse Financial Global Funding is a newly organized, unaffiliated

special purpose statutory trust organized under the laws of the State of Delaware. The notes issued

by Brighthouse Financial Global Funding will be secured by funding agreement contract obligations

issued by Brighthouse Life Insurance Company (BLIC; insurance financial strength (IFS) of A3

stable). The payments made to BLIC by Brighthouse Financial Global Funding in connection with

each funding agreement will be maintained in BLIC’s general account. The outlook on Brighthouse

Financial Global Funding is stable.
RATINGS RATIONALE
This is Brighthouse’s first FABN program as an independent company. The notes will be offered

in separate series, the proceeds of which will be used by Brighthouse Financial Global Funding to

purchase a funding agreement from BLIC. The funding agreement will secure the notes and mirror

the notes in interest payments, amortization, and repayment, etc. In establishing the FABN program,

BLIC obtained the opinion of outside counsel that claims under funding agreements would be treated

pari passu with claims under insurance policies and annuities, supporting the pass-through of BLIC’s

A3 IFS rating.
The FABN program may issue notes in US dollars and other currencies to third party investors in

both US and foreign capital markets. The repayment will be in the same currency as the notes,

eliminating currency risk to the noteholder. The rating agency noted that it intends to rate subsequent

draw-downs under the FABN program individually, since the terms of the program's individual notes

may affect their credit characteristics and rating.
Moody’s would expect BLIC to manage the size of its institutional investment product exposure

relative to other general account liabilities; to keep the asset quality of its FABN segment in line with

its existing general account investment profile; and to maintain strong ALM and liquidity, with cash

matching in the year before maturities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating on Brighthouse Financial Global Funding’s FABN program is dependent on BLIC's IFS

rating.
The following factors could lead to an upgrade of the ratings: 1) run-rate statutory capital generation

in excess of $500 million; 2) shift in the business mix towards more protection-oriented products

(e.g., life insurance); and 3) earnings and cash flow coverage above 6x and 4x, respectively.

Conversely, the following factors could lead to a downgrade of the ratings: 1) organic capital

generation diminishes and GAAP return on capital less than 5%; 2) earnings and cash flow coverage

below 4x and 2x, respectively; 3) adjusted financial leverage (excluding AOCI) above 30%.
The following rating was assigned with a stable outlook:

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Brighthouse Financial Global Funding – senior secured MTN rating at (P)A3.
The principal methodology used in this rating was Life Insurers Methodology published in

November 2019 and available at

https://www.moodys.com/researchdocumentcontentpage.aspx?

docid=PBC_1187348

. Alternatively, please see the Rating Methodologies page on www.moodys.com

for a copy of this methodology.
Brighthouse is headquartered in Charlotte, North Carolina. As of December 31, 2020, Brighthouse

reported total assets of $248 billion and total equity of $18.1 billion.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see

the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure

form. Moody’s Rating Symbols and Definitions can be found at:

https://www.moodys.com/

researchdocumentcontentpage.aspx?docid=PBC_79004

.

For ratings issued on a program, series, category/class of debt or security this announcement

provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or

note of the same series, category/class of debt, security or pursuant to a program for which the

ratings are derived exclusively from existing ratings in accordance with Moody's rating practices.

For ratings issued on a support provider, this announcement provides certain regulatory disclosures

in relation to the credit rating action on the support provider and in relation to each particular credit

rating action for securities that derive their credit ratings from the support provider's credit rating.

For provisional ratings, this announcement provides certain regulatory disclosures in relation to the

provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent

to the final issuance of the debt, in each case where the transaction structure and terms have not

changed prior to the assignment of the definitive rating in a manner that would have affected the

rating. For further information please see the ratings tab on the issuer/entity page for the respective

issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies)

of this credit rating action, and whose ratings may change as a result of this credit rating action, the

associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach

exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated

entity, Disclosure from rated entity.
The rating has been disclosed to the rated entity or its designated agent(s) and issued with no

amendment resulting from that disclosure.
This rating is solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited

Credit Ratings available on its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the

related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our

credit analysis can be found at

https://www.moodys.com/researchdocumentcontentpage.aspx?

docid=PBC_1243406

.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s

affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt

am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No

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1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the

Moody’s office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s

affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada

Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK.

Further information on the UK endorsement status and on the Moody’s office that issued the credit

rating is available on www.moodys.com.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the

Moody's legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory

disclosures for each credit rating.
Michael Fruchter, CFA

VP-Sr Credit Officer

Financial Institutions Group

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Scott Robinson, CFA

Associate Managing Director

Financial Institutions Group

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Releasing Office:

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653

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