Exhibit 99.1

THE REORGANIZATION TRANSACTIONS

Summary of Reorganization

In connection with the initial public offering (the “IPO”) of the common stock of AXA Equitable Holdings, Inc. (“Holdings,” and together with its consolidated subsidiaries, “we,” “us,” “our” or the “Company”), we undertook the Reorganization (as defined below). The Reorganization’s primary goals were to ensure that (i) we held, at the time of the IPO, all of the U.S. retirement and protection businesses of AXA S.A., a société anonyme organized under the laws of France (“AXA”), and AXA’s interests in AllianceBernstein Holding L.P., a Delaware limited partnership (“AB Holding”) and AllianceBernstein L.P., a Delaware limited partnership and the operating partnership for the AllianceBernstein business (“ABLP,” and together with AB Holding, “AB” or “AllianceBernstein”), and (ii) certain AXA U.S. P&C business was extracted from us and held by AXA outside of us. As part of the Reorganization Transactions, we also effected an unwind of the reinsurance provided to AXA Equitable Life Insurance Company, a New York corporation (“AXA Equitable Life”), by AXA RE Arizona Company, formerly an Arizona corporation (“AXA RE Arizona”), for certain variable annuities with GMxB features (the “GMxB Reinsurance”).

“Reorganization” means the transactions described under the following headings: “—Transfer of AXA Financial Shares,” “—Extraction of U.S. Property and Casualty Insurance Business,” and “—Transfer of AXA’s Interests in AB,” but does not include the AXF Merger (as defined in “—Transfer of AXA Financial Shares”).

“Reorganization Transactions” means the Reorganization, the GMxB Unwind, as defined in “—Unwind of GMxB Reinsurance” and the Recapitalization, as defined in “Recapitalization,” collectively.

The Reorganization was subject to approval from various state insurance regulators. All required regulatory approvals were received.

In April 2018, we completed the Reorganization.

Transfer of AXA Financial Shares

On October 1, 2018, AXA Financial, Inc., a Delaware corporation (“AXA Financial”), merged with and into Holdings (the “AXF Merger”). Prior to the AXF Merger, AXA Financial indirectly owned a number of subsidiaries that comprised our retirement and protection businesses and Holdings owned 100% of the shares in AXA Financial. Until January 2018, approximately 0.5% of AXA Financial was held by Coliseum Reinsurance Company, an indirect subsidiary of AXA (“Coliseum Re”), and AXA Belgium S.A., an indirect subsidiary of AXA (“AXA Belgium”). As part of the Reorganization, AXA Belgium transferred its approximate 0.47% interest in AXA Financial to AXA in January 2018 and Coliseum Re transferred its approximate 0.03% interest in AXA Financial to AXA in March 2018. AXA then contributed the entire approximate 0.5% interest to Holdings (the “AXA Financial Transfer”) in March 2018.

Extraction of U.S. Property and Casualty Insurance Business

Holdings formerly held 78.99% of the shares of AXA America Corporate Solutions, Inc. (“AXA CS”), which holds certain AXA U.S. P&C business. As part of the Reorganization, Holdings sold its shares of AXA CS to AXA so that AXA CS and its subsidiaries are no longer a part of the Company. Holdings’ repayment obligation to AXA in respect of a $622 million loan made by AXA to Holdings in December 2017 was set off against AXA’s payment obligation to Holdings with respect to the sale of AXA CS shares and AXA paid Holdings the balance of the purchase price in cash. Note that AXA CS and its subsidiaries have been excluded from the historical financial statements of Holdings because their businesses (i) are demonstrably distinct from the other business of Holdings, (ii) have been managed and financed historically autonomously, (iii) have no more than incidental common facilities and costs with the other business of Holdings, (iv) are operated and financed autonomously following the disposition and (v) do not have material financial commitments, guarantees or contingent liabilities to or from Holdings following the disposition.

Transfer of AXA’s Interests in AB

Prior to the Reorganization, AXA’s interests in AB consisted of (i) approximately 15% held by AXA-IM Holding U.S. Inc., a wholly owned, indirect subsidiary of AXA (“AXA IM Holding US”), approximately 3% held by Coliseum Re and approximately 47% currently held by the Company and (ii) AllianceBernstein Corporation, a Delaware corporation and the general partner of AB Holding and ABLP (the “General Partner”), 100% of which is held by us. As part of the Reorganization, in April 2018 Holdings acquired (i) 100% of the shares of AXA IM Holding US for approximately $873 million, representing the fair value of AXA IM Holding US’s interests in AB, net of other transferred assets and liabilities of AXA IM Holding US (AXA IM Holding US did not carry on any substantive business activity at the time of the transfer), and (ii) all of the units of limited partnership interests in ABLP (the “AB Units”) held by Coliseum Re for approximately $217 million, so that all of AXA’s interests in AB were held entirely by the Company. See “Unaudited Pro Forma Condensed Financial Information.”

Unwind of GMxB Reinsurance

In April 2018, AXA Equitable Life effected an unwind of the GMxB Reinsurance (the “GMxB Unwind”) to mitigate the impact of any restrictions on the use of captive reinsurers to reinsure variable annuities that could be adopted by insurance regulators by reducing its use of such reinsurance. In addition, AXA Equitable Life undertook the GMxB Unwind in response to its agreement with the New York Department of Financial Services (the “NYDFS”) that required us to provide the NYDFS with notice and the opportunity to disapprove any ordinary shareholder dividend until AXA Equitable Life fully implemented a plan with respect to the management of its variable annuity business ceded to AXA RE Arizona. We expect that the GMxB Unwind will provide increased transparency relative to our variable annuity risk management. The GMxB Unwind had no impact on our financial position or results of operations because the GMxB Reinsurance was between two wholly owned subsidiaries and was therefore eliminated in our U.S. GAAP consolidated financial statements. As of December 31, 2018, our insurance company subsidiaries had statutory TAC of approximately $8.5 billion, resulting in a Combined RBC Ratio of approximately 670%.

The GMxB Unwind was accomplished by AXA RE Arizona first transferring certain risks that are not part of the GMxB Unwind to a newly formed subsidiary, EQ AZ Life Re Company, an Arizona corporation and a wholly owned indirect subsidiary of Holdings (“EQ AZ Life Re”). Following the transfer of that business to EQ AZ Life Re, AXA RE Arizona merged with and into AXA Equitable Life to complete the GMxB Unwind. Following AXA RE Arizona’s merger with and into AXA Equitable Life, the GMxB Business is not subject to any new internal or third-party reinsurance arrangements, though in the future AXA Equitable Life may reinsure the GMxB Business with third parties. For more detail regarding the risks associated with the GMxB Unwind, see “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Our Reinsurance and Hedging Programs—Our reinsurance arrangements with affiliated captives may be adversely impacted by changes to policyholder behavior assumptions under the reinsured contracts, the performance of their hedging program, their liquidity needs, their overall financial results and changes in regulatory requirements regarding the use of captives” in our Annual Report on Form 10-K for the fiscal period ended December 31, 2018 (our “Annual Report on Form 10-K”).

 

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Exhibit 99.2

RECAPITALIZATION

Capitalized terms used but not defined herein have the meanings assigned to such terms in “The Reorganization Transactions.”

Prior to the IPO, we operated with a capital structure that reflected our status as a wholly owned subsidiary of AXA. To prepare for the IPO and operation as a stand-alone public company, we undertook various recapitalization initiatives to align our capital structure—both at Holdings and on a consolidated basis—more closely with other U.S. public companies (the “Recapitalization”). In undertaking the Recapitalization, we focused on several goals:

 

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Maintaining and strengthening our credit ratings;

 

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Maintaining a mid-20s debt-to-capital ratio going forward;

 

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Maintaining our target asset level for all variable annuities at or above a CTE98 level under most economic scenarios and an RBC ratio of 350-400% for our non-variable annuity insurance liabilities;

 

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Replacing financing that was provided or guaranteed by AXA and its affiliates with financing that is supported solely on the basis of our stand-alone credit, and entering into new financing arrangements only on that basis;

 

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Purchasing AB Units from AXA as described in “The Reorganization Transactions”; and

 

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Maintaining a cash position of approximately $500 million at Holdings.

On December 8, 2017, we received (i) a capital contribution of $318 million and (ii) a short-term loan of $622 million from AXA, which was set off against AXA’s payment obligation to Holdings with respect to the sale of AXA CS shares. See “The Reorganization Transactions” and “Unaudited Pro Forma Condensed Financial Information.”

In February 2018, we entered into credit facilities consisting of a $500 million three-year senior unsecured delayed draw term loan agreement and a $2.5 billion five-year senior unsecured revolving credit facility with a syndicate of banks (together, the “Credit Facilities”). The revolving credit facility provides for borrowings of up to $2.5 billion or the issuance of letters of credit within a sublimit of $1.5 billion to support our life insurance business reinsured to EQ AZ Life Re following the GMxB Unwind and to support the third-party GMxB variable annuity business reinsured by CS Life RE Company, an Arizona corporation and a wholly owned indirect subsidiary of Holdings. The revolving credit facility is available for general corporate purposes. In May 2018, we borrowed $300 million under the three-year term loan agreement for general corporate purposes, including to replace financing that was provided by or guaranteed by AXA and its affiliates and terminated the remaining $200 million capacity. In addition to the Credit Facilities, we entered into letter of credit facilities with an aggregate principal amount of approximately $1.9 billion, primarily used to support our life insurance business reinsured to EQ AZ Life Re following the GMxB Unwind.

In order to finance the Reorganization Transactions, on April 20, 2018, we issued $800 million aggregate principal amount of 3.900% Senior Notes due 2023 (the “2023 Notes”), $1.5 billion aggregate principal amount of 4.350% Senior Notes due 2028 (the “2028 Notes”) and $1.5 billion aggregate principal amount of 5.000% Senior Notes due 2048 (the “2048 Notes, and collectively with the 2023 Notes and the 2028 Notes, the “Notes”). In April 2018, we used the net proceeds from the sale of the Notes, together with an intercompany loan of $800 million from AXA Equitable Life, to (i) repay financing provided by AXA and its affiliates, (ii) purchase 100% of the shares of AXA IM Holding US and (iii) purchase the AB Units held by Coliseum Re. The remaining proceeds, together with $300 million borrowed under our three-year term loan agreement, were used to repay the outstanding commercial paper program of AXA Financial that was guaranteed by AXA. On January 22, 2019, we completed the exchange offer of 99.89% of the 2023 Notes, 99.97% of the 2028 Notes and 99.96% of the 2048 Notes for like principal amounts of new 3.900% Senior Notes due 2023, new 4.350% Senior Notes due 2028 and new 5.000% Senior Notes due 2048, respectively, which have been registered under the Securities Act of 1933, as amended.

In March 2018, AXA Equitable Life sold its interest in two real estate joint ventures to AXA France for a total purchase price of approximately $143 million, which resulted in the elimination of $203 million of long-term debt on Holdings’ consolidated balance sheet for the first quarter of 2018 and a corresponding reduction of our debt-to-capital ratio.

In June 2009, AXA Financial and AXA initiated a $2 billion commercial paper program on a private placement basis under which AXA Financial or AXA could issue short-term unsecured notes. As a result of AXA Financial’s merger into Holdings on October 1, 2018, Holdings replaced AXA Financial as an issuer under the program. Holdings was subsequently removed as an issuer under the program in October 2018.

 

 

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Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

The unaudited pro forma condensed financial information consists of the unaudited pro forma condensed statement of income (loss) for the year ended December 31, 2018 and the notes thereto. The unaudited pro forma condensed financial information should be read in conjunction with the information included under “The Reorganization Transactions” and “Recapitalization” attached as Exhibits 99.1 and 99.2, respectively, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the annual financial statements included in our Annual Report on Form 10-K. An unaudited pro forma balance sheet is not presented because all of the Reorganization Transactions occurred prior to December 31, 2018 and are fully reflected in the audited balance sheet as of December 31, 2018 included in the annual financial statements included in our Annual Report on Form 10-K. The unaudited pro forma condensed financial information presented below is useful to investors because it provides a view of our results of operations for the periods presented giving effect to the Reorganization Transactions as if the Reorganization Transactions had occurred at the beginning of such period. Capitalized terms used but not defined herein have the meanings ascribed to such terms in “The Reorganization Transactions” and “Recapitalization.”

The unaudited pro forma condensed statement of income (loss) for the year ended December 31, 2018 has been prepared to give effect to certain of the Reorganization Transactions described below as if these transactions had occurred on January 1, 2018. The pro forma adjustments that were made represent only those transactions which are directly attributable to the IPO, factually supportable and expected to have a continuing impact on our results of operations.

The unaudited pro forma condensed financial information is presented for informational purposes only, and does not purport to represent our financial condition or our results of operations had these transactions occurred on or as of the dates noted above or to project the results for any future date or period. The unaudited pro forma condensed financial information has been prepared in accordance with Regulation S-X. Actual results may differ from the pro forma adjustments.

The pro forma adjustments include the following items:

Legal entity and capital adjustments. As part of the Reorganization Transactions, AXA Belgium transferred its approximate 0.47% interest in AXA Financial to AXA in January 2018. Also, in March 2018 Coliseum Re transferred its approximate 0.03% interest in AXA Financial to AXA. AXA then contributed the entire approximate 0.5% minority interest in AXA Financial to Holdings in March 2018. As a result of the AXA Financial Transfer, AXA Financial became a direct wholly owned subsidiary of Holdings before being merged into Holdings on October 1, 2018. As part of the Reorganization Transactions, Holdings sold its shares of AXA CS to AXA so that AXA CS and its subsidiaries, which have been excluded from our historical financial statements, are no longer a part of the Company. To anticipate the funding of this transfer AXA made a short-term loan of $622 million to Holdings in fourth quarter of 2017. Holdings’ repayment obligation to AXA in respect of this loan was set off against AXA’s payment obligation to Holdings with respect to the sale of AXA CS shares and AXA paid Holdings the balance of the purchase price in cash.

AB Transfer. As part of the Reorganization Transactions, in April 2018 we acquired for fair value the AB Units held by AXA IM Holding US and Coliseum Re such that AXA’s interests in AB are now held entirely by the Company. As part of the transfer of the AB Units held by AXA IM Holding US, Holdings acquired AXA IM Holding US, a holding entity without any other substantive business for approximately $873 million. Therefore, the pro forma adjustments also reflect the transfer of the other assets and liabilities of AXA IM Holding US which mainly include an income tax payable of approximately $57 million and a loan from AXA Financial for an amount of $185 million which was transferred to Holdings in July 2018 and subsequently forgiven.

Unwind of financing with AXA. As part of the Recapitalization, we settled all the current outstanding financing balances with AXA and its affiliates, and we removed AXA’s guarantee of AXA Financial’s obligations under AXA Financial’s commercial paper program. In June 2009, AXA Financial and AXA initiated a $2 billion commercial paper program on a private placement basis under which AXA Financial or AXA could issue short-term unsecured notes. As a result of AXA Financial’s merger into Holdings on October 1, 2018, Holdings replaced AXA Financial as an issuer under the program. Holdings was removed as an issuer under the program in October 2018. Other borrowings from external parties remain in place.

New external financing. As part of the Recapitalization, we incurred $3.8 billion of new indebtedness through the issuance of the Notes which the Company has used to repay current financing and fund the Reorganization, and $300 million of term loan borrowings.

The unaudited pro forma condensed statement of income (loss) for the year ended December 31, 2018 has been prepared as though the transactions described above had occurred on January 1, 2018.

 

For the year ended December 31, 2018		As Reported				Legal Entity and Capital Adjustments				AB Transfer				Unwind of Current Financing				New External Financing				Pro Forma
		(in millions)
Policy charges and fee income		$	3,824			$	—			$	—			$	—			$	—			$	3,824
Premiums			1,094				—				—				—				—				1,094
Net investment income (loss) and Net derivative gains (losses)			2,462				—				(2	) [B1]			(14	) [C1]			—				2,446
Total investment gains (losses), net			(86	)			—				—				—				—				(86	)
Investment management fees and other income			4,784				—				—				—				—				4,784
Total revenues			12,078				—				(2	)			(14	)			—				12,062
Policyholders’ benefits			2,915				—				—				—				—				2,915
Interest credited to policyholders’ account balances			1,090				—				—				—				—				1,090
Compensation and benefits			2,079				—				—				—				—				2,079
Commissions and distribution-related payments			1,160				—				—				—				—				1,160
Other operating costs and expenses			1,809				—				—				—				—				1,809
Amortization of DAC			333				—				—				—				—				333
Interest expense			231				(3	)			—				(35	) [C2]			56	[D1]			249
Total benefits and other deductions			9,617				(3	)			—				(35	)			56				9,635
Income (loss) from operations, before income taxes			2,461				3				(2	)			21				(56	)			2,427
Income tax (expense) benefit			(307	)			(1	)			(13	)			(4	)			12				(313	)
Net income (loss)			2,154				2				(15	)			17				(44	)			2,114
Less: Net income (loss) attributable to the noncontrolling interest			334				(1	) [A1]			(48	) [B2]			—				—				285
Net income (loss) attributable to Holdings		$	1,820			$	3			$	33			$	17			$	(44	)		$	1,829

Notes to the Unaudited Pro Forma Condensed Financial Information

 

[A1]	Represents the decrease in net income attributable to noncontrolling interest following the transfer of AXA Financial shares.

 

[B1]	Represents the elimination of the interest earned on the loan from AXA Financial to AXA IM Holding US due to the elimination of this loan on the consolidated financial statements of Holdings after the purchase by Holdings of AXA IM Holding US.

 

[B2]	Represents the decrease in net income attributable to noncontrolling interest following the transfer of AB Units.

 

[C1]	Represents the decrease in investment income due to the settlement of existing loans by AXA and its affiliates to Holdings and its affiliates prior to the settlement of the IPO.

 

[C2]	Represents the decrease in interest expense due to (i) the settlement of AXA Financial’s commercial paper program and guaranteed by AXA; and (ii) the settlement of existing loans by Holdings and its affiliates to AXA and its affiliates prior to the settlement of the IPO.

 

[D1]

Represents an annualized interest expense of $182 million, including approximately $171 million interest expense related to our $3.8 billion aggregate principal amount of Notes issued in April 2018 and approximately $10 million of estimated interest expense on $300 million term loan borrowings under our three-year term loan agreement.

 

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		For the Year Ended December 31, 2018
		(in millions; except per share data)
Net income (loss), as reported		$	2,154
Adjustments:
Pro forma adjustments before income tax			(34	)
Income tax impact			(6	)
Pro forma adjustments, net of income tax			(40	)
Pro forma net income (loss)		$	2,114
Less: Pro forma net income (loss) attributable to the noncontrolling interest			285
Pro forma net income (loss) attributable to Holdings		$	1,829
Net income (loss) attributable to Holdings common shareholders per common share:
Basic		$	3.27
Diluted		$	3.27
Pro forma net income (loss) attributable to Holdings common shareholders per common share:
Pro forma earnings per share—basic		$	3.29
Pro forma earnings per share—diluted		$	3.29
Weighted average common shares outstanding:
Basic			556.4
Diluted			556.5

 

 

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