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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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90-0226248
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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1290 Avenue of the Americas, New York, New York
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10104
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(Address of principal executive offices)
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(Zip Code)
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Page
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PART I
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Item 1.
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•
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•
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•
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•
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•
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•
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Item 2.
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Item 3.
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Item 4.
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PART II
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OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2018 |
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December 31,
2017 |
||||
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(Unaudited)
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||||
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(in millions, except share amounts)
|
||||||
ASSETS
|
|
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|
||||
Investments:
|
|
||||||
Fixed maturities available for sale, at fair value (amortized cost of $44,574 and $45,068)
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$
|
43,779
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$
|
46,941
|
|
Mortgage loans on real estate (net of valuation allowance of $7 and $8)
|
12,070
|
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|
10,952
|
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||
Real estate held for production of income
(1)
|
54
|
|
|
390
|
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||
Policy loans
|
3,739
|
|
|
3,819
|
|
||
Other equity investments
(1)
|
1,387
|
|
|
1,392
|
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||
Trading securities, at fair value
|
14,993
|
|
|
14,170
|
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||
Other invested assets
(1)
|
2,920
|
|
|
4,118
|
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||
Total investments
|
78,942
|
|
|
81,782
|
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||
Cash and cash equivalents
(1)
|
4,777
|
|
|
4,814
|
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||
Cash and securities segregated, at fair value
|
1,263
|
|
|
825
|
|
||
Broker-dealer related receivables
|
2,224
|
|
|
2,158
|
|
||
Deferred policy acquisition costs
|
6,736
|
|
|
5,919
|
|
||
Goodwill and other intangible assets, net
|
4,791
|
|
|
4,824
|
|
||
Amounts due from reinsurers
|
4,909
|
|
|
5,023
|
|
||
Loans to affiliates
|
—
|
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1,230
|
|
||
GMIB reinsurance contract asset, at fair value
|
1,375
|
|
|
1,894
|
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Current and deferred income taxes
|
321
|
|
|
84
|
|
||
Other assets
(1)
|
3,124
|
|
|
2,510
|
|
||
Separate Accounts assets
|
125,989
|
|
|
124,552
|
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Total Assets
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$
|
234,451
|
|
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$
|
235,615
|
|
|
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LIABILITIES
|
|
|
|
||||
Policyholders’ account balances
|
$
|
50,066
|
|
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$
|
47,171
|
|
Future policy benefits and other policyholders liabilities
|
29,504
|
|
|
30,330
|
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||
Broker-dealer related payables
|
491
|
|
|
783
|
|
||
Securities sold under agreements to repurchase
|
1,900
|
|
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1,887
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Customer related payables
|
2,781
|
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2,229
|
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||
Amounts due to reinsurers
|
1,415
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|
1,436
|
|
||
Short-term and long-term debt
(1)
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4,806
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2,408
|
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||
Loans from affiliates
|
—
|
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3,622
|
|
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Other liabilities
(1)
|
3,485
|
|
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4,053
|
|
||
Separate Accounts liabilities
|
125,989
|
|
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124,552
|
|
||
Total liabilities
|
$
|
220,437
|
|
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$
|
218,471
|
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|
September 30,
2018 |
|
December 31,
2017 |
||||
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(Unaudited)
|
|
|
||||
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(in millions, except share amounts)
|
||||||
Redeemable noncontrolling interest
(1)
|
$
|
143
|
|
|
$
|
626
|
|
Commitments and contingent liabilities
|
|
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|
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EQUITY
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Equity attributable to Holdings:
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|
||||
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 561,000,000 shares issued and 558,526,870 shares outstanding
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$
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6
|
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$
|
6
|
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Capital in excess of par value
|
2,025
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|
1,298
|
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||
Treasury stock, at cost, 2,473,130 shares
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(56
|
)
|
|
—
|
|
||
Retained earnings
|
12,031
|
|
|
12,225
|
|
||
Accumulated other comprehensive income (loss)
|
(1,595
|
)
|
|
(108
|
)
|
||
Total equity attributable to Holdings
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12,411
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|
|
13,421
|
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||
Noncontrolling interest
|
1,460
|
|
|
3,097
|
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||
Total equity
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13,871
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16,518
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Total Liabilities, Redeemable Noncontrolling Interest and Equity
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$
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234,451
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$
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235,615
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2018
|
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2017
|
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2018
|
|
2017
(as restated) |
||||||||
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(in millions, except earnings per share amounts)
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||||||||||||||
REVENUES
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Policy charges and fee income
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$
|
951
|
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$
|
953
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$
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2,881
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$
|
2,810
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Premiums
|
269
|
|
|
267
|
|
|
823
|
|
|
825
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|
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Net derivative gains (losses)
|
(2,006
|
)
|
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(316
|
)
|
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(2,288
|
)
|
|
232
|
|
||||
Net investment income (loss)
|
681
|
|
|
794
|
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1,868
|
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|
2,377
|
|
||||
Investment gains (losses), net:
|
|
|
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|
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||||||||
Total other-than-temporary impairment losses
|
(4
|
)
|
|
(1
|
)
|
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(4
|
)
|
|
(15
|
)
|
||||
Other investment gains (losses), net
|
(31
|
)
|
|
(11
|
)
|
|
49
|
|
|
(17
|
)
|
||||
Total investment gains (losses), net
|
(35
|
)
|
|
(12
|
)
|
|
45
|
|
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(32
|
)
|
||||
Investment management and service fees
|
1,088
|
|
|
1,018
|
|
|
3,218
|
|
|
2,970
|
|
||||
Other income
|
135
|
|
|
102
|
|
|
376
|
|
|
356
|
|
||||
Total revenues
|
1,083
|
|
|
2,806
|
|
|
6,923
|
|
|
9,538
|
|
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BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
318
|
|
|
1,077
|
|
|
1,812
|
|
|
3,900
|
|
||||
Interest credited to policyholders’ account balances
|
278
|
|
|
255
|
|
|
817
|
|
|
743
|
|
||||
Compensation and benefits (includes $42, $41, $122 and $123 of deferred policy acquisition costs, respectively)
|
548
|
|
|
524
|
|
|
1,726
|
|
|
1,609
|
|
||||
Commissions and distribution related payments (includes $138, $121, $390 and $391 of deferred policy acquisition costs, respectively)
|
425
|
|
|
388
|
|
|
1,254
|
|
|
1,183
|
|
||||
Interest expense
|
65
|
|
|
42
|
|
|
171
|
|
|
115
|
|
||||
Amortization of deferred policy acquisition costs (net of capitalization of $180, $162, $512 and $514 of deferred policy acquisition costs, respectively)
|
(363
|
)
|
|
23
|
|
|
(338
|
)
|
|
(150
|
)
|
||||
Other operating costs and expenses (includes $1, $2, $3 and $6 of deferred policy acquisition costs, respectively)
|
430
|
|
|
450
|
|
|
1,349
|
|
|
1,608
|
|
||||
Total benefits and other deductions
|
1,701
|
|
|
2,759
|
|
|
6,791
|
|
|
9,008
|
|
||||
Income (loss) from continuing operations, before income taxes
|
(618
|
)
|
|
47
|
|
|
132
|
|
|
530
|
|
||||
Income tax (expense) benefit
|
175
|
|
|
59
|
|
|
23
|
|
|
100
|
|
||||
Net income (loss)
|
(443
|
)
|
|
106
|
|
|
155
|
|
|
630
|
|
||||
Less: net (income) loss attributable to the noncontrolling interest
|
(53
|
)
|
|
(96
|
)
|
|
(273
|
)
|
|
(279
|
)
|
||||
Net income (loss) attributable to Holdings
|
$
|
(496
|
)
|
|
$
|
10
|
|
|
$
|
(118
|
)
|
|
$
|
351
|
|
|
|
|
|
|
|
|
|
||||||||
EARNINGS PER SHARE
|
|
|
|
|
|
|
|
||||||||
Earnings per share - Common stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.89
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.63
|
|
Diluted
|
$
|
(0.89
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.63
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
560.3
|
|
|
561.0
|
|
|
560.8
|
|
|
561.0
|
|
||||
Diluted
|
560.3
|
|
|
561.0
|
|
|
560.8
|
|
|
561.0
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
(as restated) |
||||||||
|
(in millions)
|
||||||||||||||
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(443
|
)
|
|
$
|
106
|
|
|
$
|
155
|
|
|
$
|
630
|
|
Other comprehensive income (loss) net of income taxes:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
10
|
|
|
7
|
|
|
(4
|
)
|
|
32
|
|
||||
Change in unrealized gains (losses), net of reclassification adjustment
|
(362
|
)
|
|
(33
|
)
|
|
(1,670
|
)
|
|
502
|
|
||||
Changes in defined benefit plan related items not yet recognized in periodic benefit cost, net of reclassification adjustment
|
68
|
|
|
17
|
|
|
202
|
|
|
60
|
|
||||
Total other comprehensive income (loss), net of income taxes
|
(284
|
)
|
|
(9
|
)
|
|
(1,472
|
)
|
|
594
|
|
||||
Comprehensive income (loss)
|
(727
|
)
|
|
97
|
|
|
(1,317
|
)
|
|
1,224
|
|
||||
Less: Comprehensive (income) loss attributable to noncontrolling interest
|
(54
|
)
|
|
(99
|
)
|
|
(288
|
)
|
|
(297
|
)
|
||||
Comprehensive income (loss) attributable to Holdings
|
$
|
(781
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1,605
|
)
|
|
$
|
927
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
(as restated) |
||||
|
(in millions)
|
||||||
Equity attributable to Holdings:
|
|
|
|
||||
Common stock, at par value, beginning and end of period
|
$
|
6
|
|
|
$
|
6
|
|
|
|
|
|
||||
Capital in excess of par value, beginning of year
|
$
|
1,298
|
|
|
$
|
931
|
|
Capital contribution from parent
|
695
|
|
|
—
|
|
||
Purchase of AllianceBernstein Units from noncontrolling interest
|
17
|
|
|
—
|
|
||
Changes in capital in excess of par value
|
15
|
|
|
67
|
|
||
Capital in excess of par value, end of period
|
$
|
2,025
|
|
|
$
|
998
|
|
|
|
|
|
||||
Treasury stock, beginning of year
|
$
|
—
|
|
|
$
|
—
|
|
Purchase of treasury stock
|
(57
|
)
|
|
—
|
|
||
Issuance of treasury stock
|
1
|
|
|
—
|
|
||
Treasury stock, end of period
|
$
|
(56
|
)
|
|
$
|
—
|
|
|
|
|
|
||||
Retained earnings, beginning of year
|
$
|
12,225
|
|
|
$
|
11,391
|
|
Impact of adoption of revenue recognition standard ASC 606
|
13
|
|
|
—
|
|
||
Net income (loss) attributable to Holdings
|
(118
|
)
|
|
351
|
|
||
Stockholder dividends
|
(88
|
)
|
|
—
|
|
||
Issuance of treasury stock
|
(1
|
)
|
|
—
|
|
||
Retained earnings, end of period
|
$
|
12,031
|
|
|
$
|
11,742
|
|
|
|
|
|
||||
Accumulated other comprehensive income (loss), beginning of year
|
$
|
(108
|
)
|
|
$
|
(921
|
)
|
Other comprehensive income (loss)
|
(1,487
|
)
|
|
576
|
|
||
Accumulated other comprehensive income (loss), end of period
|
$
|
(1,595
|
)
|
|
$
|
(345
|
)
|
Total Holdings' equity, end of period
|
$
|
12,411
|
|
|
$
|
12,401
|
|
|
|
|
|
||||
Equity attributable to the Noncontrolling Interest
|
|
|
|
||||
Noncontrolling interest, beginning of year
|
$
|
3,097
|
|
|
$
|
3,142
|
|
Impact of adoption of revenue recognition standard ASC 606
|
19
|
|
|
—
|
|
||
Repurchase of AB Holding units
|
(29
|
)
|
|
(73
|
)
|
||
Net earnings (loss) attributable to noncontrolling interest
|
251
|
|
|
237
|
|
||
Dividends paid to noncontrolling interest
|
(284
|
)
|
|
(265
|
)
|
||
Purchase of AB Units by Holdings
|
(1,521
|
)
|
|
—
|
|
||
Other comprehensive income (loss) attributable to noncontrolling interest
|
15
|
|
|
18
|
|
||
Other changes in noncontrolling interest
|
(88
|
)
|
|
(49
|
)
|
||
Noncontrolling interest, end of period
|
$
|
1,460
|
|
|
$
|
3,010
|
|
Total Equity, End of Period
|
$
|
13,871
|
|
|
$
|
15,411
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
(as restated) |
||||
|
(in millions)
|
||||||
Net income (loss)
|
$
|
155
|
|
|
$
|
630
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Interest credited to policyholders’ account balances
|
817
|
|
|
743
|
|
||
Policy charges and fee income
|
(2,881
|
)
|
|
(2,810
|
)
|
||
(Income) loss related to derivative instruments
|
2,288
|
|
|
(232
|
)
|
||
Investment (gains) losses, net
|
(45
|
)
|
|
32
|
|
||
Realized and unrealized (gains) losses on trading securities
|
266
|
|
|
(269
|
)
|
||
Non-cash Pension restructuring
|
105
|
|
|
27
|
|
||
Amortization of deferred cost of reinsurance asset
|
18
|
|
|
11
|
|
||
Amortization of deferred sales commission
|
17
|
|
|
25
|
|
||
Other depreciation and amortization
|
(57
|
)
|
|
(121
|
)
|
||
Changes in goodwill
|
—
|
|
|
370
|
|
||
Distribution from joint ventures and limited partnerships
|
63
|
|
|
94
|
|
||
Changes in:
|
|
|
|
|
|||
Net broker-dealer and customer related receivables/payables
|
415
|
|
|
84
|
|
||
Reinsurance recoverable
|
92
|
|
|
115
|
|
||
Segregated cash and securities, net
|
(438
|
)
|
|
157
|
|
||
Deferred policy acquisition costs
|
(338
|
)
|
|
(150
|
)
|
||
Future policy benefits
|
(620
|
)
|
|
1,587
|
|
||
Current and deferred income taxes
|
249
|
|
|
498
|
|
||
Other, net
|
(139
|
)
|
|
253
|
|
||
Net cash provided by (used in) operating activities
|
$
|
(33
|
)
|
|
$
|
1,044
|
|
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
||||
Fixed maturities, available for sale
|
$
|
7,476
|
|
|
$
|
4,495
|
|
Mortgage loans on real estate
|
375
|
|
|
696
|
|
||
Trading account securities
|
6,937
|
|
|
6,938
|
|
||
Other
|
335
|
|
|
172
|
|
||
Payment for the purchase/origination of:
|
|
|
|
||||
Fixed maturities, available for sale
|
(7,513
|
)
|
|
(4,901
|
)
|
||
Mortgage loans on real estate
|
(1,485
|
)
|
|
(1,535
|
)
|
||
Trading account securities
|
(8,103
|
)
|
|
(9,660
|
)
|
||
Other
|
(166
|
)
|
|
(207
|
)
|
||
Purchase of business, net of cash acquired
|
—
|
|
|
(132
|
)
|
||
Cash settlements related to derivative instruments
|
(609
|
)
|
|
(1,722
|
)
|
||
Decrease in loans to affiliates
|
1,230
|
|
|
—
|
|
||
Change in short-term investments
|
232
|
|
|
(512
|
)
|
||
Investment in capitalized software, leasehold improvements and EDP equipment
|
(84
|
)
|
|
(67
|
)
|
||
Other, net
|
319
|
|
|
(133
|
)
|
||
Net cash provided by (used in) investing activities
|
$
|
(1,056
|
)
|
|
$
|
(6,568
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
(as restated) |
||||
|
(in millions)
|
||||||
Cash flows from financing activities:
|
|
|
|
||||
Policyholders’ account balances:
|
|
|
|
||||
Deposits
|
$
|
8,372
|
|
|
$
|
6,135
|
|
Withdrawals
|
(4,170
|
)
|
|
(2,765
|
)
|
||
Transfer (to) from Separate Accounts
|
(335
|
)
|
|
1,617
|
|
||
Change in short-term financings
|
(1,458
|
)
|
|
125
|
|
||
Issuance of long-term debt
|
4,057
|
|
|
—
|
|
||
Repayment of loans from affiliates
|
(3,000
|
)
|
|
(56
|
)
|
||
Proceeds from loans from affiliates
|
—
|
|
|
109
|
|
||
Change in collateralized pledged assets
|
(31
|
)
|
|
1,037
|
|
||
Change in collateralized pledged liabilities
|
36
|
|
|
815
|
|
||
Increase (decrease) in overdrafts payable
|
(39
|
)
|
|
66
|
|
||
Cash contribution from parent
|
8
|
|
|
—
|
|
||
Shareholder dividend paid
|
(88
|
)
|
|
—
|
|
||
Purchase of AB Units by Holdings
|
(1,330
|
)
|
|
—
|
|
||
Purchase of treasury shares
|
(57
|
)
|
|
—
|
|
||
Purchase of shares in consolidated subsidiaries
|
—
|
|
|
(24
|
)
|
||
Repurchase of AB Holding units from noncontrolling interest
|
(29
|
)
|
|
—
|
|
||
Redemption of noncontrolling interests of consolidated VIEs, net
|
(519
|
)
|
|
(52
|
)
|
||
Distribution to noncontrolling interests in consolidated subsidiaries
|
(284
|
)
|
|
(265
|
)
|
||
Increase (decrease) in securities sold under agreement to repurchase
|
13
|
|
|
(309
|
)
|
||
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net
|
(83
|
)
|
|
(134
|
)
|
||
Other, net
|
(2
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
$
|
1,061
|
|
|
$
|
6,299
|
|
Effect of exchange rate changes on cash and cash equivalents
|
(9
|
)
|
|
17
|
|
||
Change in cash and cash equivalents
|
(37
|
)
|
|
792
|
|
||
Cash and cash equivalents, beginning of year
|
4,814
|
|
|
5,654
|
|
||
Cash and cash equivalents, end of period
|
$
|
4,777
|
|
|
$
|
6,446
|
|
|
|
|
|
||||
Non-cash transactions during the period
|
|
|
|
||||
Capital contribution from Parent
|
$
|
622
|
|
|
$
|
—
|
|
(Settlement) issuance of long-term debt
|
$
|
(202
|
)
|
|
$
|
202
|
|
Transfer of assets to reinsurer
|
$
|
(604
|
)
|
|
$
|
—
|
|
Contribution of 0.5% minority interest in AXA Financial
|
$
|
65
|
|
|
$
|
—
|
|
Repayment of loans from affiliates
|
$
|
(622
|
)
|
|
$
|
—
|
|
•
|
The Individual Retirement segment offers a diverse suite of variable annuity products which are primarily sold to affluent and high net worth individuals saving for retirement or seeking retirement income.
|
•
|
The Group Retirement segment offers tax-deferred investment and retirement plans sponsored by educational entities, municipalities and not-for-profit entities as well as small and medium-sized businesses.
|
•
|
The Investment Management and Research segment provides diversified investment management, research and related solutions globally to a broad range of clients through
three
main client channels—Institutional, Retail and Private Wealth Management—and distributes its institutional research products and solutions through Bernstein Research Services. The Investment Management and Research segment reflects the business of AllianceBernstein Holding L.P. (“AB Holding”), AllianceBernstein L.P. (“ABLP”) and their subsidiaries (collectively, “AB”).
|
•
|
The Protection Solutions segment includes the Company’s life insurance and group employee benefits businesses. The life insurance business offers a variety of variable universal life, indexed universal life and term life products to help affluent and high net worth individuals, as well as small and medium-sized business owners, with their wealth protection, wealth transfer and corporate needs. Our group employee benefits business offers a suite of life, short- and long-term disability, dental and vision insurance products to small
and medium-size businesses across the United States.
|
Standard
|
Description
|
Effect on the Financial Statement or Other Significant Matters
|
ASU 2014-09
Revenue from Contracts with Customers (Topic 606)
|
This ASU contains new guidance that clarifies the principles for recognizing revenue arising from contracts with customers and develops a common revenue standard for U.S. GAAP and IFRS.
|
On January 1, 2018, the Company adopted the new revenue recognition guidance on a modified retrospective basis. Adoption did not change the amounts or timing of the Company’s revenue recognition for base investment management and advisory fees, distribution revenues, shareholder servicing revenues, and broker-dealer revenues. Some performance-based fees and carried-interest distributions that were recognized prior to adoption when no risk of reversal remained, in certain instances may now be recognized earlier if it is probable that significant reversal will not occur.
On January 1, 2018, the Company recognized a cumulative effect adjustment, net of tax, to increase opening equity attributable to Holdings and the noncontrolling interest by approximately $13 million and $19 million, respectively, reflecting the impact of carried-interest distributions previously received by AB of approximately $78 million, net of revenue sharing payments to investment team members of approximately $43 million, for which it is probable that significant reversal will not occur and for which incremental tax is provided at Holdings.
|
Standard
|
Description
|
Effective Date and Method of Adoption
|
Effect on the Financial Statement or Other Significant Matters
|
ASU 2018-14
Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)
|
This ASU improves the effectiveness of disclosures related to defined benefit plans in the notes to the financial statements. Amendments in ASU 2018-14 remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosures, and add new, relevant disclosure requirements.
|
Effective for fiscal years ending after December 15, 2020, for public business entities. Early adoption is permitted. Amendments should be applied on a retrospective basis to all periods presented.
|
Management currently is evaluating the impact of the guidance on the Company’s financial statement disclosures but has concluded that this guidance will not impact the Company’s consolidated financial position or results of operations.
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
OTTI in AOCI
(3)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
September 30, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate
|
$
|
28,327
|
|
|
$
|
416
|
|
|
$
|
693
|
|
|
$
|
28,050
|
|
|
$
|
—
|
|
U.S. Treasury, government and agency
|
14,052
|
|
|
137
|
|
|
732
|
|
|
13,457
|
|
|
—
|
|
|||||
States and political subdivisions
|
417
|
|
|
43
|
|
|
1
|
|
|
459
|
|
|
—
|
|
|||||
Foreign governments
|
440
|
|
|
18
|
|
|
10
|
|
|
448
|
|
|
—
|
|
|||||
Residential mortgage-backed
(1)
|
234
|
|
|
9
|
|
|
1
|
|
|
242
|
|
|
—
|
|
|||||
Asset-backed
(2)
|
624
|
|
|
2
|
|
|
6
|
|
|
620
|
|
|
2
|
|
|||||
Redeemable preferred stock
|
480
|
|
|
31
|
|
|
8
|
|
|
503
|
|
|
—
|
|
|||||
Total at September 30, 2018
|
$
|
44,574
|
|
|
$
|
656
|
|
|
$
|
1,451
|
|
|
$
|
43,779
|
|
|
$
|
2
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
OTTI in AOCI
(3)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate
|
$
|
24,480
|
|
|
$
|
1,031
|
|
|
$
|
65
|
|
|
$
|
25,446
|
|
|
$
|
—
|
|
U.S. Treasury, government and agency
|
17,759
|
|
|
1,000
|
|
|
251
|
|
|
18,508
|
|
|
—
|
|
|||||
States and political subdivisions
|
422
|
|
|
67
|
|
|
—
|
|
|
489
|
|
|
—
|
|
|||||
Foreign governments
|
395
|
|
|
29
|
|
|
5
|
|
|
419
|
|
|
—
|
|
|||||
Residential mortgage-backed
(1)
|
797
|
|
|
22
|
|
|
1
|
|
|
818
|
|
|
—
|
|
|||||
Asset-backed
(2)
|
745
|
|
|
5
|
|
|
1
|
|
|
749
|
|
|
2
|
|
|||||
Redeemable preferred stock
|
470
|
|
|
43
|
|
|
1
|
|
|
512
|
|
|
—
|
|
|||||
Total Fixed Maturities
|
45,068
|
|
|
2,197
|
|
|
324
|
|
|
46,941
|
|
|
2
|
|
|||||
Equity securities
|
188
|
|
|
2
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|||||
Total at December 31, 2017
|
$
|
45,256
|
|
|
$
|
2,199
|
|
|
$
|
324
|
|
|
$
|
47,131
|
|
|
$
|
2
|
|
(1)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
(3)
|
Amounts represent OTTI losses in AOCI, which were not included in income (loss) in accordance with current accounting guidance.
|
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(in millions)
|
||||||
Due in one year or less
|
$
|
2,182
|
|
|
$
|
2,192
|
|
Due in years two through five
|
9,092
|
|
|
9,142
|
|
||
Due in years six through ten
|
15,022
|
|
|
14,680
|
|
||
Due after ten years
|
16,940
|
|
|
16,400
|
|
||
Subtotal
|
43,236
|
|
|
42,414
|
|
||
Residential mortgage-backed securities
|
234
|
|
|
242
|
|
||
Asset-backed securities
|
624
|
|
|
620
|
|
||
Redeemable preferred stock
|
480
|
|
|
503
|
|
||
Total
|
$
|
44,574
|
|
|
$
|
43,779
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Proceeds from sales
|
$
|
1,030
|
|
|
$
|
1,311
|
|
|
$
|
6,054
|
|
|
$
|
1,896
|
|
Gross gains on sales
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
178
|
|
|
$
|
40
|
|
Gross losses on sales
|
$
|
(31
|
)
|
|
$
|
(10
|
)
|
|
$
|
(119
|
)
|
|
$
|
(41
|
)
|
|
|
|
|
|
|
|
|
||||||||
Total OTTI
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(15
|
)
|
Non-credit losses recognized in OCI
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Credit losses recognized in net income (loss)
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(15
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Balances, beginning of period
|
$
|
(17
|
)
|
|
$
|
(144
|
)
|
|
$
|
(18
|
)
|
|
$
|
(239
|
)
|
Previously recognized impairments on securities that matured, paid, prepaid or sold
|
—
|
|
|
31
|
|
|
1
|
|
|
140
|
|
||||
Recognized impairments on securities impaired to fair value this period
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Impairments recognized this period on securities not previously impaired
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
(14
|
)
|
||||
Additional impairments this period on securities previously impaired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Increases due to passage of time on previously recorded credit losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Accretion of previously recognized impairments due to increases in expected cash flows
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balances at September 30
|
$
|
(21
|
)
|
|
$
|
(113
|
)
|
|
$
|
(21
|
)
|
|
$
|
(113
|
)
|
(1)
|
Represents circumstances where the Company determined in the current period that it intends to sell the security, or it is more likely than not that it will be required to sell the security before recovery of the security’s amortized cost.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
AFS Securities:
|
|
|
|
||||
Fixed maturities:
|
|
|
|
||||
With OTTI loss
|
$
|
1
|
|
|
$
|
2
|
|
All other
|
(796
|
)
|
|
1,871
|
|
||
Equity securities
|
—
|
|
|
2
|
|
||
Net Unrealized Gains (Losses)
|
$
|
(795
|
)
|
|
$
|
1,875
|
|
|
Net Unrealized Gains (Losses) on
Investments |
|
DAC
|
|
Policyholders’ Liabilities
|
|
Deferred Income Tax Asset (Liability)
|
|
AOCI Gain (Loss) Related to Net Unrealized Investment Gains (Losses)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance, July 1, 2018
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
Net investment gains (losses) arising during the period
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Balance, September 30, 2018
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Balance, July 1, 2017
|
(17
|
)
|
|
2
|
|
|
1
|
|
|
4
|
|
|
(10
|
)
|
|||||
Net investment gains (losses) arising during the period
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Balance, September 30, 2017
|
$
|
(11
|
)
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
(6
|
)
|
(1)
|
Represents “transfers in” related to the portion of OTTI losses recognized during the period that were not recognized in income (loss) for securities with no prior OTTI loss.
|
|
Net Unrealized Gains (Losses) on
Investments |
|
DAC
|
|
Policyholders’ Liabilities
|
|
Deferred Income Tax Asset (Liability)
|
|
AOCI Gain (Loss) Related to Net Unrealized
Investment Gains (Losses) |
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance, January 1, 2018
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
Net investment gains (losses) arising during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Balance, September 30, 2018
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Balance, January 1, 2017
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
(10
|
)
|
|
$
|
(4
|
)
|
|
$
|
6
|
|
Net investment gains (losses) arising during the period
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Balance, September 30, 2017
|
$
|
(11
|
)
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
(6
|
)
|
(1)
|
Represents “transfers in” related to the portion of OTTI losses recognized during the period that were not recognized in income (loss) for securities with no prior OTTI loss.
|
|
Net Unrealized Gains (Losses) on Investments
|
|
DAC
|
|
Policyholders’
Liabilities |
|
Deferred
Income Tax Asset (Liability) |
|
AOCI Gain (Loss) Related to Net Unrealized
Investment Gains (Losses) |
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance, July 1, 2018
|
$
|
(268
|
)
|
|
$
|
34
|
|
|
$
|
(132
|
)
|
|
$
|
(52
|
)
|
|
$
|
(418
|
)
|
Net investment gains (losses) arising during the period
|
(564
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(564
|
)
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|
104
|
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
(54
|
)
|
|
—
|
|
|
(54
|
)
|
|||||
Balance, September 30, 2018
|
$
|
(796
|
)
|
|
$
|
123
|
|
|
$
|
(186
|
)
|
|
$
|
52
|
|
|
$
|
(807
|
)
|
|
Net Unrealized Gains (Losses) on Investments
|
|
DAC
|
|
Policyholders’
Liabilities |
|
Deferred
Income Tax Asset (Liability) |
|
AOCI Gain (Loss) Related to Net Unrealized
Investment Gains (Losses) |
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance, July 1, 2017
|
$
|
1,432
|
|
|
$
|
(140
|
)
|
|
$
|
(204
|
)
|
|
$
|
(381
|
)
|
|
$
|
707
|
|
Net investment gains (losses) arising during the period
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|||||
Policyholders’ liabilities
|
|
|
|
|
|
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
|||||
Balance, September 30, 2017
|
$
|
1,447
|
|
|
$
|
(187
|
)
|
|
$
|
(232
|
)
|
|
$
|
(360
|
)
|
|
$
|
668
|
|
(1)
|
Represents “transfers out” related to the portion of OTTI losses during the period that were not recognized in income (loss) for securities with no prior OTTI loss.
|
|
Net Unrealized Gains (Losses) on Investments
|
|
DAC
|
|
Policyholders’
Liabilities |
|
Deferred
Income Tax Asset (Liability) |
|
AOCI Gain (Loss) Related to Net Unrealized Investment Gains (Losses)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance, January 1, 2018
|
$
|
1,871
|
|
|
$
|
(358
|
)
|
|
$
|
(238
|
)
|
|
$
|
(397
|
)
|
|
$
|
878
|
|
Net investment gains (losses) arising during the period
|
(2,613
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,613
|
)
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
(54
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
481
|
|
|
—
|
|
|
—
|
|
|
481
|
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
449
|
|
|
449
|
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|||||
Balance, September 30, 2018
|
$
|
(796
|
)
|
|
$
|
123
|
|
|
$
|
(186
|
)
|
|
$
|
52
|
|
|
$
|
(807
|
)
|
Balance, January 1, 2017
|
$
|
529
|
|
|
$
|
(45
|
)
|
|
$
|
(192
|
)
|
|
$
|
(102
|
)
|
|
$
|
190
|
|
Net investment gains (losses) arising during the period
|
854
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
854
|
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
64
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|||||
Excluded from Net income (loss)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(258
|
)
|
|
(258
|
)
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
|||||
Balance, September 30, 2017
|
$
|
1,447
|
|
|
$
|
(187
|
)
|
|
$
|
(232
|
)
|
|
$
|
(360
|
)
|
|
$
|
668
|
|
(1)
|
Represents “transfers out” related to the portion of OTTI losses during the period that were not recognized in income (loss) for securities with no prior OTTI loss.
|
|
Less Than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate
|
$
|
14,535
|
|
|
$
|
539
|
|
|
$
|
2,672
|
|
|
$
|
154
|
|
|
$
|
17,207
|
|
|
$
|
693
|
|
U.S. Treasury, government and agency
|
4,449
|
|
|
180
|
|
|
3,822
|
|
|
552
|
|
|
8,271
|
|
|
732
|
|
||||||
States and political subdivisions
|
19
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
1
|
|
||||||
Foreign governments
|
68
|
|
|
2
|
|
|
73
|
|
|
8
|
|
|
141
|
|
|
10
|
|
||||||
Residential mortgage-backed
|
34
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
1
|
|
||||||
Asset-backed
|
120
|
|
|
5
|
|
|
6
|
|
|
1
|
|
|
126
|
|
|
6
|
|
||||||
Redeemable preferred stock
|
184
|
|
|
7
|
|
|
12
|
|
|
1
|
|
|
196
|
|
|
8
|
|
||||||
Total
|
$
|
19,409
|
|
|
$
|
735
|
|
|
$
|
6,585
|
|
|
$
|
716
|
|
|
$
|
25,994
|
|
|
$
|
1,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate
|
$
|
2,903
|
|
|
$
|
23
|
|
|
$
|
1,331
|
|
|
$
|
42
|
|
|
$
|
4,234
|
|
|
$
|
65
|
|
U.S. Treasury, government and agency
|
2,718
|
|
|
6
|
|
|
4,506
|
|
|
245
|
|
|
7,224
|
|
|
251
|
|
||||||
States and political subdivisions
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
||||||
Foreign governments
|
11
|
|
|
—
|
|
|
73
|
|
|
5
|
|
|
84
|
|
|
5
|
|
||||||
Residential mortgage-backed
|
62
|
|
|
—
|
|
|
76
|
|
|
1
|
|
|
138
|
|
|
1
|
|
||||||
Asset-backed
|
15
|
|
|
1
|
|
|
12
|
|
|
—
|
|
|
27
|
|
|
1
|
|
||||||
Redeemable preferred stock
|
10
|
|
|
—
|
|
|
13
|
|
|
1
|
|
|
23
|
|
|
1
|
|
||||||
Total
|
$
|
5,739
|
|
|
$
|
30
|
|
|
$
|
6,011
|
|
|
$
|
294
|
|
|
$
|
11,750
|
|
|
$
|
324
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net investment gains (losses) recognized during the period on securities held at the end of the period
|
$
|
(35
|
)
|
|
$
|
42
|
|
|
$
|
(255
|
)
|
|
$
|
231
|
|
Net investment gains (losses) recognized on securities sold during the period
|
6
|
|
|
11
|
|
|
(11
|
)
|
|
38
|
|
||||
Unrealized and realized gains (losses) on trading securities arising during the period
|
(29
|
)
|
|
53
|
|
|
(266
|
)
|
|
269
|
|
||||
Interest and dividend income from trading securities
|
84
|
|
|
80
|
|
|
243
|
|
|
197
|
|
||||
Net investment income (loss) from trading securities
|
$
|
55
|
|
|
$
|
133
|
|
|
$
|
(23
|
)
|
|
$
|
466
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Allowance for credit losses:
|
|
||||||
Beginning balance, January 1,
|
$
|
8
|
|
|
$
|
8
|
|
Charge-offs
|
—
|
|
|
—
|
|
||
Recoveries
|
(1
|
)
|
|
—
|
|
||
Provision
|
—
|
|
|
—
|
|
||
Ending balance, September 30,
|
$
|
7
|
|
|
$
|
8
|
|
|
|
|
|
||||
September 30, Individually Evaluated for Impairment
|
$
|
7
|
|
|
$
|
8
|
|
|
Debt Service Coverage Ratio
(1)
|
|
|
||||||||||||||||||||||||
Loan-to-Value Ratio:
(2)
|
Greater than 2.0x
|
|
1.8x to 2.0x
|
|
1.5x to 1.8x
|
|
1.2x to 1.5x
|
|
1.0x to 1.2x
|
|
Less than 1.0x
|
|
Total Mortgage
Loans
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Commercial Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
823
|
|
|
$
|
21
|
|
|
$
|
351
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,219
|
|
50% - 70%
|
4,739
|
|
|
649
|
|
|
1,192
|
|
|
603
|
|
|
151
|
|
|
—
|
|
|
7,334
|
|
|||||||
70% - 90%
|
221
|
|
|
110
|
|
|
169
|
|
|
298
|
|
|
27
|
|
|
—
|
|
|
825
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Total Commercial Mortgage Loans
|
$
|
5,783
|
|
|
$
|
780
|
|
|
$
|
1,739
|
|
|
$
|
925
|
|
|
$
|
178
|
|
|
$
|
—
|
|
|
$
|
9,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Agricultural Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
271
|
|
|
$
|
142
|
|
|
$
|
257
|
|
|
$
|
555
|
|
|
$
|
322
|
|
|
$
|
33
|
|
|
$
|
1,580
|
|
50% - 70%
|
127
|
|
|
53
|
|
|
231
|
|
|
378
|
|
|
235
|
|
|
49
|
|
|
1,073
|
|
|||||||
70% - 90%
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total Agricultural Mortgage Loans
|
$
|
398
|
|
|
$
|
195
|
|
|
$
|
488
|
|
|
$
|
952
|
|
|
$
|
557
|
|
|
$
|
82
|
|
|
$
|
2,672
|
|
|
Debt Service Coverage Ratio
(1)
|
|
|
||||||||||||||||||||||||
Loan-to-Value Ratio:
(2)
|
Greater than 2.0x
|
|
1.8x to 2.0x
|
|
1.5x to 1.8x
|
|
1.2x to 1.5x
|
|
1.0x to 1.2x
|
|
Less than 1.0x
|
|
Total Mortgage
Loans
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Total Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
1,094
|
|
|
$
|
163
|
|
|
$
|
608
|
|
|
$
|
579
|
|
|
$
|
322
|
|
|
$
|
33
|
|
|
$
|
2,799
|
|
50% - 70%
|
4,866
|
|
|
702
|
|
|
1,423
|
|
|
981
|
|
|
386
|
|
|
49
|
|
|
8,407
|
|
|||||||
70% - 90%
|
221
|
|
|
110
|
|
|
169
|
|
|
317
|
|
|
27
|
|
|
—
|
|
|
844
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Total Mortgage Loans
|
$
|
6,181
|
|
|
$
|
975
|
|
|
$
|
2,227
|
|
|
$
|
1,877
|
|
|
$
|
735
|
|
|
$
|
82
|
|
|
$
|
12,077
|
|
(1)
|
The debt service coverage ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service.
|
(2)
|
The loan-to-value ratio is derived from current loan balance divided by the fair market value of the property. The fair market value of the underlying commercial properties is updated annually.
|
|
Debt Service Coverage Ratio
(1)
|
|
|
||||||||||||||||||||||||
Loan-to-Value Ratio:
(2)
|
Greater than 2.0x
|
|
1.8x to 2.0x
|
|
1.5x to 1.8x
|
|
1.2x to 1.5x
|
|
1.0x to 1.2x
|
|
Less than 1.0x
|
|
Total Mortgage Loans
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Commercial Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
759
|
|
|
$
|
—
|
|
|
$
|
320
|
|
|
$
|
74
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,153
|
|
50% - 70%
|
4,088
|
|
|
682
|
|
|
1,066
|
|
|
428
|
|
|
145
|
|
|
—
|
|
|
6,409
|
|
|||||||
70% - 90%
|
169
|
|
|
110
|
|
|
196
|
|
|
272
|
|
|
50
|
|
|
—
|
|
|
797
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Total Commercial Mortgage Loans
|
$
|
5,016
|
|
|
$
|
792
|
|
|
$
|
1,609
|
|
|
$
|
774
|
|
|
$
|
195
|
|
|
$
|
—
|
|
|
$
|
8,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Agricultural Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
272
|
|
|
$
|
149
|
|
|
$
|
275
|
|
|
$
|
515
|
|
|
$
|
316
|
|
|
$
|
30
|
|
|
$
|
1,557
|
|
50% - 70%
|
111
|
|
|
46
|
|
|
227
|
|
|
359
|
|
|
221
|
|
|
49
|
|
|
1,013
|
|
|||||||
70% - 90%
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total Agricultural Mortgage Loans
|
$
|
383
|
|
|
$
|
195
|
|
|
$
|
502
|
|
|
$
|
878
|
|
|
$
|
537
|
|
|
$
|
79
|
|
|
$
|
2,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
1,031
|
|
|
$
|
149
|
|
|
$
|
595
|
|
|
$
|
589
|
|
|
$
|
316
|
|
|
$
|
30
|
|
|
$
|
2,710
|
|
50% - 70%
|
4,199
|
|
|
728
|
|
|
1,293
|
|
|
787
|
|
|
366
|
|
|
49
|
|
|
7,422
|
|
|||||||
70% - 90%
|
169
|
|
|
110
|
|
|
196
|
|
|
276
|
|
|
50
|
|
|
—
|
|
|
801
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Total Mortgage Loans
|
$
|
5,399
|
|
|
$
|
987
|
|
|
$
|
2,111
|
|
|
$
|
1,652
|
|
|
$
|
732
|
|
|
$
|
79
|
|
|
$
|
10,960
|
|
(1)
|
The debt service coverage ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service.
|
(2)
|
The loan-to-value ratio is derived from current loan balance divided by the fair market value of the property. The fair market value of the underlying commercial properties is updated annually.
|
|
30-59 Days
|
|
60-89 Days
|
|
90 Days or More
|
|
Total
|
|
Current
|
|
Total Financing Receivables
|
|
Recorded Investment 90 Days or More and Accruing
|
||||||||||||||
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
9,378
|
|
|
$
|
9,405
|
|
|
$
|
—
|
|
Agricultural
|
5
|
|
|
12
|
|
|
57
|
|
|
74
|
|
|
2,598
|
|
|
2,672
|
|
|
57
|
|
|||||||
Total Mortgage Loans
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
84
|
|
|
$
|
101
|
|
|
$
|
11,976
|
|
|
$
|
12,077
|
|
|
$
|
57
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
8,359
|
|
|
$
|
8,386
|
|
|
$
|
—
|
|
Agricultural
|
49
|
|
|
3
|
|
|
22
|
|
|
74
|
|
|
2,500
|
|
|
2,574
|
|
|
22
|
|
|||||||
Total Mortgage Loans
|
$
|
76
|
|
|
$
|
3
|
|
|
$
|
22
|
|
|
$
|
101
|
|
|
$
|
10,859
|
|
|
$
|
10,960
|
|
|
$
|
22
|
|
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related Allowance
|
|
Average Recorded Investment
(1)
|
|
Interest Income Recognized
|
||||||||||
|
(in millions)
|
||||||||||||||||||
September 30, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial mortgage loans - other
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Agricultural mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
With related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial mortgage loans - other
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
(7
|
)
|
|
$
|
27
|
|
|
$
|
—
|
|
Agricultural mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
(7
|
)
|
|
$
|
27
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial mortgage loans - other
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Agricultural mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
With related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial mortgage loans - other
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
(8
|
)
|
|
$
|
27
|
|
|
$
|
2
|
|
Agricultural mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
(8
|
)
|
|
$
|
27
|
|
|
$
|
2
|
|
(1)
|
Represents a three-quarter average of recorded amortized cost.
|
|
At September 30, 2018
|
|
Gains (Losses) Reported In Net Earnings (Loss) Nine Months Ended September 30, 2018
|
||||||||||||
|
|
|
Fair Value
|
|
|||||||||||
|
Notional
Amount
|
|
Asset
Derivatives
|
|
Liability
Derivatives
|
|
|||||||||
|
(in millions)
|
||||||||||||||
Freestanding derivatives:
|
|
|
|
|
|
|
|
||||||||
Equity contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Futures
|
$
|
7,863
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
(508
|
)
|
Swaps
|
7,900
|
|
|
12
|
|
|
189
|
|
|
(455
|
)
|
||||
Options
|
24,723
|
|
|
4,187
|
|
|
1,632
|
|
|
701
|
|
||||
Interest rate contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Swaps
|
25,761
|
|
|
330
|
|
|
653
|
|
|
(1,212
|
)
|
||||
Futures
|
17,498
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||
Credit contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Credit default swaps
|
1,935
|
|
|
28
|
|
|
3
|
|
|
3
|
|
||||
Other freestanding contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
2,110
|
|
|
75
|
|
|
9
|
|
|
60
|
|
||||
Margin
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
||||
Collateral
|
—
|
|
|
65
|
|
|
2,189
|
|
|
—
|
|
||||
Embedded derivatives:
|
|
|
|
|
|
|
|
||||||||
GMIB reinsurance contracts
(6)
|
—
|
|
|
1,375
|
|
|
—
|
|
|
(522
|
)
|
||||
GMxB derivative features liability
(3,6)
|
—
|
|
|
—
|
|
|
4,294
|
|
|
452
|
|
||||
SCS, SIO, MSO and IUL indexed features
(5,6)
|
—
|
|
|
—
|
|
|
2,458
|
|
|
(850
|
)
|
||||
Net derivative investment gains (loss)
|
|
|
|
|
|
|
(2,288
|
)
|
|||||||
Cross currency swaps
(2,4)
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Total
|
$
|
87,790
|
|
|
$
|
6,111
|
|
|
$
|
11,428
|
|
|
$
|
(2,279
|
)
|
(1)
|
Reported in Other invested assets in the consolidated balance sheets.
|
(2)
|
Reported in Other assets or Other liabilities in the consolidated balance sheets.
|
(3)
|
Reported in Future policy benefits and other policyholders’ liabilities in the consolidated balance sheets.
|
(4)
|
Reported in Other income in the consolidated statements of income (loss).
|
(5)
|
SCS and SIO indexed features are reported in Policyholders’ account balances; MSO and IUL indexed features are reported in the Future policyholders’ benefits and other policyholders’ liabilities in the consolidated balance sheets.
|
(6)
|
Reported in Net derivative gains (losses) in the consolidated statements of income (loss).
|
|
At December 31, 2017
|
|
Gains (Losses)
Reported In Net Earnings (Loss) Nine Months Ended September 30, 2017 |
||||||||||||
|
|
|
Fair Value
|
|
|||||||||||
|
Notional
Amount
|
|
Asset
Derivatives
|
|
Liability
Derivatives
|
|
|||||||||
|
(in millions)
|
||||||||||||||
Freestanding derivatives:
|
|
|
|
|
|
|
|
||||||||
Equity contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Futures
|
$
|
6,716
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
(965
|
)
|
Swaps
|
7,623
|
|
|
4
|
|
|
201
|
|
|
(996
|
)
|
||||
Options
|
22,223
|
|
|
3,456
|
|
|
1,457
|
|
|
873
|
|
||||
Interest rate contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Swaps
|
26,769
|
|
|
604
|
|
|
193
|
|
|
661
|
|
||||
Futures
|
20,675
|
|
|
—
|
|
|
—
|
|
|
100
|
|
||||
Credit contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Credit default swaps
|
2,131
|
|
|
35
|
|
|
3
|
|
|
16
|
|
||||
Other freestanding contracts:
(1,6)
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
1,423
|
|
|
19
|
|
|
10
|
|
|
(40
|
)
|
||||
Margin
|
—
|
|
|
24
|
|
|
4
|
|
|
—
|
|
||||
Collateral
|
—
|
|
|
4
|
|
|
2,123
|
|
|
—
|
|
||||
Embedded derivatives:
|
|
|
|
|
|
|
|
||||||||
GMIB reinsurance contracts
(6)
|
—
|
|
|
1,894
|
|
|
—
|
|
|
286
|
|
||||
GMxB derivative features liability
(3,6)
|
—
|
|
|
—
|
|
|
4,451
|
|
|
1,210
|
|
||||
SCS, SIO, MSO and IUL indexed features
(5,6)
|
—
|
|
|
—
|
|
|
1,786
|
|
|
(913
|
)
|
||||
Net derivative investment gains (loss)
|
|
|
|
|
|
|
232
|
|
|||||||
Cross currency swaps
(2,4)
|
354
|
|
|
5
|
|
|
—
|
|
|
(39
|
)
|
||||
Total
|
$
|
87,914
|
|
|
$
|
6,046
|
|
|
$
|
10,230
|
|
|
$
|
193
|
|
(1)
|
Reported in Other invested assets in the consolidated balance sheets.
|
(2)
|
Reported in Other assets or Other liabilities in the consolidated balance sheets.
|
(3)
|
Reported in Future policy benefits and other policyholders’ liabilities in the consolidated balance sheets.
|
(4)
|
Reported in Other income in the consolidated statements of income (loss).
|
(5)
|
SCS and SIO indexed features are reported in Policyholders’ account balances; MSO and IUL indexed features are reported in the Future policyholders’ benefits and other policyholders’ liabilities in the consolidated balance sheets.
|
(6)
|
Reported in Net derivative gains (losses) in the consolidated statements of income (loss).
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheets
|
|
Net Amounts Presented in the Balance Sheets
|
||||||
|
(in millions)
|
||||||||||
ASSETS
(1)
|
|
|
|
|
|
||||||
Description
|
|
|
|
|
|
||||||
Derivatives:
|
|
|
|
|
|
||||||
Equity contracts
|
$
|
4,200
|
|
|
$
|
1,821
|
|
|
$
|
2,379
|
|
Interest rate contracts
|
330
|
|
|
653
|
|
|
(323
|
)
|
|||
Credit contracts
|
28
|
|
|
3
|
|
|
25
|
|
|||
Currency
|
75
|
|
|
9
|
|
|
66
|
|
|||
Margin
|
38
|
|
|
—
|
|
|
38
|
|
|||
Collateral
|
65
|
|
|
2,189
|
|
|
(2,124
|
)
|
|||
Total Derivatives, subject to an ISDA Master Agreement
|
$
|
4,736
|
|
|
$
|
4,675
|
|
|
$
|
61
|
|
Other financial instruments
|
2,859
|
|
|
—
|
|
|
2,859
|
|
|||
Other invested assets
|
$
|
7,595
|
|
|
$
|
4,675
|
|
|
$
|
2,920
|
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheets
|
|
Net Amounts Presented in the Balance Sheets
|
||||||
|
(in millions)
|
||||||||||
LIABILITIES
(2)
|
|
|
|
|
|
||||||
Description
|
|
|
|
|
|
||||||
Derivatives:
|
|
|
|
|
|
||||||
Equity contracts
|
$
|
1,821
|
|
|
$
|
1,821
|
|
|
$
|
—
|
|
Interest rate contracts
|
653
|
|
|
653
|
|
|
—
|
|
|||
Credit contracts
|
3
|
|
|
3
|
|
|
—
|
|
|||
Currency
|
9
|
|
|
9
|
|
|
—
|
|
|||
Margin
|
—
|
|
|
—
|
|
|
—
|
|
|||
Collateral
|
2,189
|
|
|
2,189
|
|
|
—
|
|
|||
Total Derivatives, subject to an ISDA Master Agreement
|
4,675
|
|
|
4,675
|
|
|
—
|
|
|||
Other financial liabilities
|
3,485
|
|
|
—
|
|
|
3,485
|
|
|||
Other liabilities
|
$
|
8,160
|
|
|
$
|
4,675
|
|
|
$
|
3,485
|
|
Securities sold under agreement to repurchase
(3)
|
$
|
1,891
|
|
|
$
|
—
|
|
|
$
|
1,891
|
|
(1)
|
Excludes Investment Management and Research segment’s derivative assets of consolidated VIEs/VOEs.
|
(2)
|
Excludes Investment Management and Research segment’s derivative liabilities of consolidated VIEs/VOEs.
|
(3)
|
Excludes expense of
$9 million
in securities sold under agreement to repurchase.
|
|
Net Amounts Presented in the Balance Sheets
|
|
Collateral (Received)/Held
|
|
|
||||||||||
|
Financial Instruments
|
|
Cash
|
|
Net Amounts
|
||||||||||
|
(in millions)
|
||||||||||||||
Assets
(1)
|
|
|
|
|
|
|
|||||||||
Total derivatives
|
$
|
2,146
|
|
|
$
|
—
|
|
|
$
|
(2,085
|
)
|
|
$
|
61
|
|
Other financial instruments
|
2,859
|
|
|
—
|
|
|
—
|
|
|
2,859
|
|
||||
Other invested assets
|
$
|
5,005
|
|
|
$
|
—
|
|
|
$
|
(2,085
|
)
|
|
$
|
2,920
|
|
Liabilities:
(2)
|
|
|
|
|
|
|
|
||||||||
Securities sold under agreement to repurchase
(3)(4)(5)
|
$
|
1,891
|
|
|
$
|
(1,891
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Excludes Investment Management and Research segment’s derivative assets of consolidated VIEs/VOEs.
|
(2)
|
Excludes Investment Management and Research segment’s derivative liabilities of consolidated VIEs/VOEs.
|
(3)
|
Excludes expense of $
9
million included in Securities sold under agreements to repurchase on the consolidated balance sheets.
|
(4)
|
U.S. Treasury and agency securities are included in Fixed maturities available for sale on the consolidated balance sheets.
|
(5)
|
Cash is reported in Cash and cash equivalents on the consolidated balance sheets.
|
|
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||
|
Overnight and
Continuous
|
|
Up to 30
days
|
|
30–90
days
|
|
Greater Than
90 days
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Securities sold under agreement to repurchase
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency securities
|
$
|
—
|
|
|
$
|
1,891
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,891
|
|
Total
|
$
|
—
|
|
|
$
|
1,891
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,891
|
|
(1)
|
Excludes expense accrual of $
9
million included in securities sold under agreements to repurchase on the consolidated balance sheets.
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheets
|
|
Net Amounts Presented in the Balance Sheets
|
||||||
|
(in millions)
|
||||||||||
ASSETS
(1)
|
|
|
|
|
|
||||||
Description
|
|
|
|
|
|
||||||
Derivatives:
|
|
|
|
|
|
||||||
Equity contracts
|
$
|
3,461
|
|
|
$
|
1,660
|
|
|
$
|
1,801
|
|
Interest rate contracts
|
604
|
|
|
193
|
|
|
411
|
|
|||
Credit contracts
|
35
|
|
|
3
|
|
|
32
|
|
|||
Currency
|
19
|
|
|
10
|
|
|
9
|
|
|||
Collateral
|
4
|
|
|
2,123
|
|
|
(2,119
|
)
|
|||
Margin
|
24
|
|
|
4
|
|
|
20
|
|
|||
Total Derivatives, subject to an ISDA Master Agreement
|
$
|
4,147
|
|
|
$
|
3,993
|
|
|
$
|
154
|
|
Other financial instruments
|
3,964
|
|
|
—
|
|
|
3,964
|
|
|||
Other invested assets
|
$
|
8,111
|
|
|
$
|
3,993
|
|
|
$
|
4,118
|
|
Total Derivatives, not subject to an ISDA Master Agreement
(4)
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheets
|
|
Net Amounts Presented in the Balance Sheets
|
||||||
|
(in millions)
|
||||||||||
LIABILITIES
(2)
|
|
|
|
|
|
||||||
Derivatives:
|
|
|
|
|
|
||||||
Equity contracts
|
$
|
1,660
|
|
|
$
|
1,660
|
|
|
$
|
—
|
|
Interest rate contracts
|
193
|
|
|
193
|
|
|
—
|
|
|||
Credit contracts
|
3
|
|
|
3
|
|
|
—
|
|
|||
Currency
|
10
|
|
|
10
|
|
|
—
|
|
|||
Collateral
|
2,123
|
|
|
2,123
|
|
|
—
|
|
|||
Margin
|
4
|
|
|
4
|
|
|
—
|
|
|||
Total Derivatives, subject to an ISDA Master Agreement
|
$
|
3,993
|
|
|
$
|
3,993
|
|
|
$
|
—
|
|
Other financial liabilities
|
4,053
|
|
|
—
|
|
|
4,053
|
|
|||
Other liabilities
|
$
|
8,046
|
|
|
$
|
3,993
|
|
|
$
|
4,053
|
|
Securities sold under agreement to repurchase
(3)
|
$
|
1,882
|
|
|
$
|
—
|
|
|
$
|
1,882
|
|
(1)
|
Excludes Investment Management and Research segment’s derivative assets of consolidated VIEs/VOEs.
|
(2)
|
Excludes Investment Management and Research segment’s derivative liabilities of consolidated VIEs/VOEs.
|
(3)
|
Excludes expense of $
5
million included in Securities sold under agreements to repurchase on the consolidated balance sheets.
|
(4)
|
This amount is reflected in Other assets.
|
|
Net Amounts Presented in the Balance Sheets
|
|
Collateral (Received)/Held
|
|
|
||||||||||
|
Financial Instruments
|
|
Cash
|
|
Net Amounts
|
||||||||||
|
(in millions)
|
||||||||||||||
Assets
(1)
|
|
|
|
|
|
|
|
||||||||
Total Derivatives
|
$
|
2,253
|
|
|
$
|
—
|
|
|
$
|
(2,099
|
)
|
|
$
|
154
|
|
Other financial assets
|
3,964
|
|
|
—
|
|
|
—
|
|
|
3,964
|
|
||||
Other invested assets
|
$
|
6,217
|
|
|
$
|
—
|
|
|
$
|
(2,099
|
)
|
|
$
|
4,118
|
|
Liabilities:
(2)
|
|
|
|
|
|
|
|
||||||||
Other financial liabilities
|
$
|
4,053
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,053
|
|
Other liabilities
|
$
|
4,053
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,053
|
|
|
|
|
|
|
|
|
|
||||||||
Securities sold under agreement to repurchase
(3)(4)(5)
|
$
|
1,882
|
|
|
$
|
(1,988
|
)
|
|
$
|
(21
|
)
|
|
$
|
(127
|
)
|
(1)
|
Excludes Investment Management and Research segment’s derivative assets of consolidated VIEs/VOEs.
|
(2)
|
Excludes Investment Management and Research segment’s derivative liabilities of consolidated VIEs/VOEs.
|
(3)
|
Excludes expense of
$5 million
in securities sold under agreement to repurchase.
|
(4)
|
U.S. Treasury and agency securities are in fixed maturities available for sale on consolidated balance sheets.
|
(5)
|
Cash is included in cash and cash equivalents on consolidated balance sheets.
|
|
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||
|
Overnight and Continuous
|
|
Up to 30 days
|
|
30–90 days
|
|
Greater Than 90 days
|
|
Total
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Securities sold under agreement to repurchase
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency securities
|
$
|
—
|
|
|
$
|
1,882
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,882
|
|
Total
|
$
|
—
|
|
|
$
|
1,882
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,882
|
|
(1)
|
Excludes expense of
$5 million
in securities sold under agreements to repurchase on the consolidated balance sheets.
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
CLOSED BLOCK LIABILITIES:
|
|
|
|
||||
Future policy benefits, policyholders’ account balances and other
|
$
|
6,788
|
|
|
$
|
6,958
|
|
Policyholder dividend obligation
|
—
|
|
|
19
|
|
||
Other liabilities
|
48
|
|
|
271
|
|
||
Total Closed Block liabilities
|
6,836
|
|
|
7,248
|
|
||
|
|
|
|
||||
ASSETS DESIGNATED TO THE CLOSED BLOCK:
|
|
|
|
||||
Fixed maturities, available for sale, at fair value (amortized cost of $3,681 and $3,923)
|
3,669
|
|
|
4,070
|
|
||
Mortgage loans on real estate
|
1,902
|
|
|
1,720
|
|
||
Policy loans
|
745
|
|
|
781
|
|
||
Cash and other invested assets
|
39
|
|
|
351
|
|
||
Other assets
|
187
|
|
|
182
|
|
||
Total assets designated to the Closed Block
|
6,542
|
|
|
7,104
|
|
||
Excess of Closed Block liabilities over assets designated to the Closed Block
|
294
|
|
|
144
|
|
||
Amounts included in accumulated other comprehensive income (loss):
|
|
|
|
||||
Net unrealized investment gains (losses), net of policyholder dividend obligation of $0 and $19
|
(2
|
)
|
|
138
|
|
||
Maximum Future Earnings To Be Recognized From Closed Block Assets and Liabilities
|
$
|
292
|
|
|
$
|
282
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
REVENUES:
|
|
|
|
|
|
|
|
||||||||
Premiums and other income
|
$
|
44
|
|
|
$
|
52
|
|
|
$
|
144
|
|
|
$
|
167
|
|
Net investment income (loss)
|
72
|
|
|
82
|
|
|
218
|
|
|
244
|
|
||||
Net investment gains (losses)
|
—
|
|
|
(2
|
)
|
|
1
|
|
|
(18
|
)
|
||||
Total revenues
|
116
|
|
|
132
|
|
|
363
|
|
|
393
|
|
||||
|
|
|
|
|
|
|
|
||||||||
BENEFITS AND OTHER DEDUCTIONS:
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits and dividends
|
123
|
|
|
132
|
|
|
372
|
|
|
416
|
|
||||
Other operating costs and expenses
|
1
|
|
|
1
|
|
|
3
|
|
|
2
|
|
||||
Total benefits and other deductions
|
124
|
|
|
133
|
|
|
375
|
|
|
418
|
|
||||
Net revenues (loss) before income taxes
|
(8
|
)
|
|
(1
|
)
|
|
(12
|
)
|
|
(25
|
)
|
||||
Income tax (expense) benefit
|
2
|
|
|
1
|
|
|
2
|
|
|
9
|
|
||||
Net revenues (losses)
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
(16
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Balances, beginning of year
|
$
|
19
|
|
|
$
|
52
|
|
Unrealized investment gains (losses), net of DAC
|
(19
|
)
|
|
(5
|
)
|
||
Balances, end of period
|
$
|
—
|
|
|
$
|
47
|
|
•
|
Return of Premium: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals);
|
•
|
Ratchet: the benefit is the greatest of current account value, premiums paid (adjusted for withdrawals), or the highest account value on any anniversary up to contractually specified ages (adjusted for withdrawals);
|
•
|
Roll-Up: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified interest rates up to specified ages;
|
•
|
Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit, which may include either a five year or an annual reset; or
|
•
|
Withdrawal: the withdrawal is guaranteed up to a maximum amount per year for life.
|
|
GMDB
|
|
GMIB
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Balance at January 1, 2018
|
$
|
4,059
|
|
|
$
|
4,752
|
|
|
$
|
8,811
|
|
Paid guarantee benefits
|
(291
|
)
|
|
(108
|
)
|
|
(399
|
)
|
|||
Other changes in reserve
|
755
|
|
|
(1,038
|
)
|
|
(283
|
)
|
|||
Balance at September 30, 2018
|
$
|
4,523
|
|
|
$
|
3,606
|
|
|
$
|
8,129
|
|
|
|
|
|
|
|
||||||
Balance at January 1, 2017
|
$
|
3,164
|
|
|
$
|
3,809
|
|
|
$
|
6,973
|
|
Paid guarantee benefits
|
(272
|
)
|
|
(102
|
)
|
|
(374
|
)
|
|||
Other changes in reserve
|
1,070
|
|
|
747
|
|
|
1,817
|
|
|||
Balance at September 30, 2017
|
$
|
3,962
|
|
|
$
|
4,454
|
|
|
$
|
8,416
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Balance, beginning of year
|
$
|
108
|
|
|
$
|
85
|
|
Paid guarantee benefits
|
(13
|
)
|
|
(11
|
)
|
||
Other changes in reserve
|
14
|
|
|
30
|
|
||
Balance, end of period
|
$
|
109
|
|
|
$
|
104
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Balance, beginning of year
|
$
|
95
|
|
|
$
|
121
|
|
Paid guarantee benefits
|
(18
|
)
|
|
(16
|
)
|
||
Premiums
|
16
|
|
|
18
|
|
||
Other changes in reserve
|
(10
|
)
|
|
(34
|
)
|
||
Balance, end of Period
|
$
|
83
|
|
|
$
|
89
|
|
|
September 30, 2018
|
||||||||||||||||||
|
Return of
Premium
|
|
Ratchet
|
|
Roll-Up
|
|
Combo
|
|
Total
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||
GMDB:
|
|
|
|
|
|
|
|
|
|
||||||||||
Account values invested in:
|
|
|
|
|
|
|
|
|
|
||||||||||
General Account
|
$
|
14,046
|
|
|
$
|
102
|
|
|
$
|
62
|
|
|
$
|
188
|
|
|
$
|
14,398
|
|
Separate Accounts
|
$
|
47,293
|
|
|
$
|
9,522
|
|
|
$
|
3,418
|
|
|
$
|
35,066
|
|
|
$
|
95,299
|
|
Net amount at risk, gross
|
$
|
162
|
|
|
$
|
53
|
|
|
$
|
1,892
|
|
|
$
|
16,098
|
|
|
$
|
18,205
|
|
Net amount at risk, net of amounts reinsured
|
$
|
162
|
|
|
$
|
50
|
|
|
$
|
1,305
|
|
|
$
|
16,098
|
|
|
$
|
17,615
|
|
Average attained age of policyholders
|
51.6
|
|
66.8
|
|
73.4
|
|
68.8
|
|
55.5
|
||||||||||
Percentage of policyholders over age 70
|
9.9
|
%
|
|
42.2
|
%
|
|
64.9
|
%
|
|
49.1
|
%
|
|
18.7
|
%
|
|||||
Range of contractually specified interest rates
|
N/A
|
|
|
N/A
|
|
|
3% - 6%
|
|
|
3% - 6.5%
|
|
|
3% - 6.5%
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
GMIB:
|
|
|
|
|
|
|
|
|
|
||||||||||
Account values invested in:
|
|
|
|
|
|
|
|
|
|
||||||||||
General Account
|
N/A
|
|
|
N/A
|
|
|
$
|
21
|
|
|
$
|
273
|
|
|
$
|
294
|
|
||
Separate Accounts
|
N/A
|
|
|
N/A
|
|
|
$
|
21,549
|
|
|
$
|
39,730
|
|
|
$
|
61,279
|
|
||
Net amount at risk, gross
|
N/A
|
|
|
N/A
|
|
|
$
|
753
|
|
|
$
|
5,793
|
|
|
$
|
6,546
|
|
||
Net amount at risk, net of amounts reinsured
|
N/A
|
|
|
N/A
|
|
|
$
|
236
|
|
|
$
|
5,272
|
|
|
$
|
5,508
|
|
||
Average attained age of policyholders
|
N/A
|
|
|
N/A
|
|
|
70.5
|
|
|
69.1
|
|
|
69.2
|
||||||
Weighted average years remaining until annuitization
|
N/A
|
|
|
N/A
|
|
|
1.6
|
|
|
0.6
|
|
|
0.6
|
|
|||||
Range of contractually specified interest rates
|
N/A
|
|
|
N/A
|
|
|
3% - 6%
|
|
|
3% - 6.5%
|
|
|
3% - 6.5%
|
|
|
September 30, 2018
|
||||||||||||||
|
Return of
Premium
|
Ratchet
|
Roll-Up
|
Combo
|
Total
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||
GMDB:
|
|
|
|
|
|
||||||||||
Reinsured account values
|
$
|
1,008
|
|
$
|
5,763
|
|
$
|
294
|
|
$
|
1,847
|
|
$
|
8,912
|
|
Net amount at risk assumed
|
$
|
6
|
|
$
|
270
|
|
$
|
21
|
|
$
|
265
|
|
$
|
562
|
|
Average attained age of policyholders
|
67.0
|
|
71.9
|
|
76.8
|
|
75.1
|
|
72.2
|
|
|||||
Percentage of policyholders over age 70
|
42.0
|
%
|
61.3
|
%
|
77.5
|
%
|
74.6
|
%
|
62.4
|
%
|
|||||
Range of contractually specified interest rates
|
N/A
|
|
N/A
|
|
3%-10%
|
|
5%-10%
|
|
3%-10%
|
|
|||||
|
|
|
|
|
|
||||||||||
GMIB:
|
|
|
|
|
|
||||||||||
Reinsured account values
|
$
|
967
|
|
$
|
50
|
|
$
|
266
|
|
$
|
1,314
|
|
$
|
2,597
|
|
Net amount at risk assumed
|
$
|
1
|
|
$
|
—
|
|
$
|
33
|
|
$
|
183
|
|
$
|
217
|
|
Average attained age of policyholders
|
71.3
|
|
73.8
|
|
71.4
|
|
68.5
|
|
70.0
|
|
|||||
Percentage of policyholders over age 70
|
62.2
|
%
|
64.3
|
%
|
57.4
|
%
|
48.8
|
%
|
55.0
|
%
|
|||||
Range of contractually specified interest rates
(1)
|
N/A
|
|
N/A
|
|
3.3%-6.5%
|
|
6%-6%
|
|
3.3%-6.5%
|
|
(1)
|
In general, for policies with the highest contractual interest rate shown (
10%
), the rate applied only for the first
10
years after issue, which have now elapsed.
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
GMDB:
|
|
|
|
||||
Equity
|
$
|
42,675
|
|
|
$
|
41,658
|
|
Fixed income
|
5,274
|
|
|
5,469
|
|
||
Balanced
|
46,504
|
|
|
46,577
|
|
||
Other
|
846
|
|
|
968
|
|
||
Total
|
$
|
95,299
|
|
|
$
|
94,672
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
GMIB:
|
|
|
|
||||
Equity
|
$
|
19,512
|
|
|
$
|
19,928
|
|
Fixed income
|
2,924
|
|
|
3,150
|
|
||
Balanced
|
38,540
|
|
|
38,890
|
|
||
Other
|
303
|
|
|
318
|
|
||
Total
|
$
|
61,279
|
|
|
$
|
62,286
|
|
|
Direct Liability
(1)
|
||
|
(in millions)
|
||
Balance at January 1, 2018
|
$
|
709
|
|
Paid Guaranteed Benefits
|
(13
|
)
|
|
Other changes in reserves
|
80
|
|
|
Balance at September 30, 2018
|
$
|
776
|
|
|
|
||
Balance at January 1, 2017
|
$
|
1,294
|
|
Other changes in reserves
|
107
|
|
|
Balance at September 30, 2017
|
$
|
1,401
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Short-term debt:
|
|
|
|
||||
AB commercial paper (with interest rates of 2.2% and 1.6%)
|
$
|
398
|
|
|
$
|
491
|
|
AB revolving credit facility (with interest rate of 2.4%)
|
—
|
|
|
75
|
|
||
AXA Financial commercial paper (with interest rates of 0% and 1.6%)
|
—
|
|
|
1,290
|
|
||
Total short-term debt
|
398
|
|
|
1,856
|
|
||
|
|
|
|
||||
Long-term debt:
|
|
|
|
||||
Senior Notes (5.00%, due 2048)
|
1,480
|
|
|
—
|
|
||
Senior Notes (4.35%, due 2028)
|
1,486
|
|
|
—
|
|
||
Senior Notes (3.90%, due 2023)
|
793
|
|
|
—
|
|
||
Delayed Draw Term Loan (3 month LIBOR + 1.125%, due 2021)
|
300
|
|
|
—
|
|
||
AXA Financial Senior Debentures, 7.0%, due 2028
|
349
|
|
|
349
|
|
||
AXA Equitable non-recourse mortgage debt (with interest rates of 4.1%)
|
—
|
|
|
82
|
|
||
AXA Equitable non-recourse mortgage debt (with interest rates of 3.9%)
|
—
|
|
|
121
|
|
||
Total long-term debt
|
4,408
|
|
|
552
|
|
||
Total short-term and long-term debt
|
$
|
4,806
|
|
|
$
|
2,408
|
|
•
|
JP Morgan Chase Bank, N.A. (
$150 million
)
|
•
|
Citibank Europe PLC (
$175 million
)
|
•
|
Barclays Bank PLC (
$150 million
)
|
•
|
HSBC Bank USA, National Association (
$150 million
)
|
•
|
Credit Agricole Corporate and Investment Bank (
$400 million
)
|
•
|
Landesbank Hessen-Thuringen Girozentrale (
$300 million
)
|
•
|
Commerzbank AG, New York Branch (
$325 million
)
|
•
|
Natixis, New York Branch (
$250 million
)
|
Level 1
|
Unadjusted quoted prices for identical instruments in active markets. Level 1 fair values generally are supported by market transactions that occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data.
|
Level 3
|
Unobservable inputs supported by little or no market activity and often requiring significant management judgment or estimation, such as an entity’s own assumptions about the cash flows or other significant components of value that market participants would use in pricing the asset or liability.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
|
|
|
|
|
|
||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Corporate
|
$
|
—
|
|
|
$
|
26,908
|
|
|
$
|
1,142
|
|
|
$
|
28,050
|
|
U.S. Treasury, government and agency
|
—
|
|
|
13,457
|
|
|
—
|
|
|
13,457
|
|
||||
States and political subdivisions
|
—
|
|
|
420
|
|
|
39
|
|
|
459
|
|
||||
Foreign governments
|
—
|
|
|
448
|
|
|
—
|
|
|
448
|
|
||||
Residential mortgage-backed
(1)
|
—
|
|
|
242
|
|
|
—
|
|
|
242
|
|
||||
Asset-backed
(2)
|
—
|
|
|
83
|
|
|
537
|
|
|
620
|
|
||||
Redeemable preferred stock
|
176
|
|
|
327
|
|
|
—
|
|
|
503
|
|
||||
Total fixed maturities, available-for-sale
|
$
|
176
|
|
|
$
|
41,885
|
|
|
$
|
1,718
|
|
|
$
|
43,779
|
|
Other equity investments
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
53
|
|
|
$
|
65
|
|
Trading securities
|
537
|
|
|
14,420
|
|
|
36
|
|
|
14,993
|
|
||||
Other invested assets:
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
—
|
|
|
1,499
|
|
|
—
|
|
|
1,499
|
|
||||
Assets of consolidated VIEs/VOEs
|
86
|
|
|
214
|
|
|
28
|
|
|
328
|
|
||||
Swaps
|
—
|
|
|
(433
|
)
|
|
—
|
|
|
(433
|
)
|
||||
Credit Default Swaps
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
||||
Futures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Options
|
—
|
|
|
2,554
|
|
|
—
|
|
|
2,554
|
|
||||
Total other invested assets
|
$
|
86
|
|
|
$
|
3,859
|
|
|
$
|
28
|
|
|
$
|
3,973
|
|
Cash equivalents
|
$
|
3,849
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,849
|
|
Segregated securities
|
—
|
|
|
1,263
|
|
|
—
|
|
|
1,263
|
|
||||
GMIB reinsurance contract asset
|
—
|
|
|
—
|
|
|
1,375
|
|
|
1,375
|
|
||||
Separate Accounts assets
|
122,634
|
|
|
2,720
|
|
|
367
|
|
|
125,721
|
|
||||
Total Assets
|
$
|
127,294
|
|
|
$
|
64,147
|
|
|
$
|
3,577
|
|
|
$
|
195,018
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Other invested liabilities
|
|
|
|
|
|
|
|
||||||||
GMxB derivative features’ liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,294
|
|
|
$
|
4,294
|
|
SCS, SIO, MSO and IUL indexed features’ liability
|
—
|
|
|
2,458
|
|
|
—
|
|
|
2,458
|
|
||||
Liabilities of consolidated VIEs/VOEs
|
1
|
|
|
3
|
|
|
—
|
|
|
4
|
|
||||
Contingent payment arrangements
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
||||
Total Liabilities
|
$
|
1
|
|
|
$
|
2,461
|
|
|
$
|
4,306
|
|
|
$
|
6,768
|
|
(1)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
|
|
|
|
|
|
||||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Corporate
|
$
|
—
|
|
|
$
|
24,296
|
|
|
$
|
1,150
|
|
|
$
|
25,446
|
|
U.S. Treasury, government and agency
|
—
|
|
|
18,508
|
|
|
—
|
|
|
18,508
|
|
||||
States and political subdivisions
|
—
|
|
|
449
|
|
|
40
|
|
|
489
|
|
||||
Foreign governments
|
—
|
|
|
419
|
|
|
—
|
|
|
419
|
|
||||
Residential mortgage-backed
(1)
|
—
|
|
|
818
|
|
|
—
|
|
|
818
|
|
||||
Asset-backed
(2)
|
—
|
|
|
208
|
|
|
541
|
|
|
749
|
|
||||
Redeemable preferred stock
|
184
|
|
|
327
|
|
|
1
|
|
|
512
|
|
||||
Total fixed maturities, available-for-sale
|
$
|
184
|
|
|
$
|
45,025
|
|
|
$
|
1,732
|
|
|
$
|
46,941
|
|
Other equity investments
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
47
|
|
Trading securities
|
485
|
|
|
13,647
|
|
|
38
|
|
|
14,170
|
|
||||
Other invested assets:
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
—
|
|
|
1,730
|
|
|
—
|
|
|
1,730
|
|
||||
Assets of consolidated VIEs/VOEs
|
1,060
|
|
|
215
|
|
|
27
|
|
|
1,302
|
|
||||
Swaps
|
—
|
|
|
222
|
|
|
—
|
|
|
222
|
|
||||
Credit Default Swaps
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
||||
Futures
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Foreign currency contract
(3)
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Options
|
—
|
|
|
1,999
|
|
|
—
|
|
|
1,999
|
|
||||
Total other invested assets
|
$
|
1,058
|
|
|
$
|
4,204
|
|
|
$
|
27
|
|
|
$
|
5,289
|
|
Cash equivalents
|
3,608
|
|
|
—
|
|
|
—
|
|
|
3,608
|
|
||||
Segregated securities
|
—
|
|
|
825
|
|
|
—
|
|
|
825
|
|
||||
GMIB reinsurance contract asset
|
—
|
|
|
—
|
|
|
1,894
|
|
|
1,894
|
|
||||
Separate Accounts’ assets
|
121,000
|
|
|
2,997
|
|
|
349
|
|
|
124,346
|
|
||||
Total Assets
|
$
|
126,348
|
|
|
$
|
66,698
|
|
|
$
|
4,074
|
|
|
$
|
197,120
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Other invested liabilities
|
|
|
|
|
|
|
|
||||||||
GMxB derivative features’ liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,451
|
|
|
$
|
4,451
|
|
SCS, SIO, MSO and IUL indexed features’ liability
|
—
|
|
|
1,786
|
|
|
—
|
|
|
1,786
|
|
||||
Liabilities of consolidated VIEs/VOEs
|
670
|
|
|
22
|
|
|
—
|
|
|
692
|
|
||||
Contingent payment arrangements
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||
Total Liabilities
|
$
|
670
|
|
|
$
|
1,808
|
|
|
$
|
4,466
|
|
|
$
|
6,944
|
|
(1)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
(3)
|
Reported in Other assets in the consolidated balance sheets.
|
|
Corporate
|
|
State and
Political
Sub-
divisions
|
|
Commercial
Mortgage-
backed
|
|
Asset-
backed
|
||||||||
|
(in millions)
|
||||||||||||||
Balance, July 1, 2018
|
$
|
1,160
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
538
|
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
||||||||
Net investment income (loss)
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Investment gains (losses), net
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Subtotal
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Purchases
|
37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Sales
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transfers into Level 3
(1)
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Transfers out of Level 3
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance, September 30, 2018
|
$
|
1,142
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
537
|
|
Balance, July 1, 2017
|
$
|
1,089
|
|
|
$
|
42
|
|
|
$
|
501
|
|
|
$
|
513
|
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
||||||||
Net investment income (loss)
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Investment gains (losses), net
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
||||
Subtotal
|
2
|
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
||||
Other comprehensive income (loss)
|
7
|
|
|
—
|
|
|
28
|
|
|
(1
|
)
|
||||
Purchases
|
198
|
|
|
—
|
|
|
(196
|
)
|
|
(1
|
)
|
||||
Sales
|
(121
|
)
|
|
—
|
|
|
(25
|
)
|
|
(1
|
)
|
||||
Transfers into Level 3
(1)
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transfers out of Level 3
(1)
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Balance, September 30, 2017
|
$
|
1,168
|
|
|
$
|
42
|
|
|
$
|
257
|
|
|
$
|
510
|
|
(1)
|
Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
|
|
Corporate
|
|
State and
Political Sub- divisions |
|
Commercial
Mortgage- backed |
|
Asset-
backed |
||||||||
|
(in millions)
|
||||||||||||||
Balance, January 1, 2018
|
$
|
1,150
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
541
|
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
||||||||
Net investment income (loss)
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Investment gains (losses), net
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Subtotal
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
(15
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Purchases
|
237
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Sales
|
(271
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transfers into Level 3
(1)
|
65
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Transfers out of Level 3
(1)
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance, September 30, 2018
|
$
|
1,142
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
537
|
|
Balance, January 1, 2017
|
$
|
857
|
|
|
$
|
42
|
|
|
$
|
373
|
|
|
$
|
120
|
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
||||||||
Net investment income (loss)
|
6
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Investment gains (losses), net
|
(1
|
)
|
|
—
|
|
|
(68
|
)
|
|
15
|
|
||||
Subtotal
|
5
|
|
|
—
|
|
|
(67
|
)
|
|
15
|
|
||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
47
|
|
|
(8
|
)
|
||||
Purchases
|
531
|
|
|
—
|
|
|
—
|
|
|
404
|
|
||||
Sales
|
(226
|
)
|
|
—
|
|
|
(94
|
)
|
|
(20
|
)
|
||||
Transfers into Level 3
(1)
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transfers out of Level 3
(1)
|
(5
|
)
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
||||
Balance, September 30, 2017
|
$
|
1,168
|
|
|
$
|
42
|
|
|
$
|
257
|
|
|
$
|
510
|
|
(1)
|
Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
|
|
Redeemable
Preferred
Stock
|
|
Other
Equity
Investments
(2)
|
|
GMIB
Reinsurance
Contract Asset
|
|
Separate
Accounts
Assets
|
|
GMxB derivative features liability
|
|
Contingent
Payment
Arrangement
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Balance, July 1, 2018
|
$
|
—
|
|
|
$
|
111
|
|
|
$
|
1,636
|
|
|
$
|
361
|
|
|
$
|
(3,692
|
)
|
|
$
|
(13
|
)
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Investment gains (losses), net
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
||||||
Net derivative gains (losses), excluding non-performance risk
|
—
|
|
|
—
|
|
|
(269
|
)
|
|
—
|
|
|
(188
|
)
|
|
—
|
|
||||||
Non-performance risk
(5)
|
—
|
|
|
—
|
|
|
7
|
|
|
|
|
(323
|
)
|
|
—
|
|
|||||||
Subtotal
|
—
|
|
|
—
|
|
|
(262
|
)
|
|
6
|
|
|
(511
|
)
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchases
(2)
|
—
|
|
|
14
|
|
|
12
|
|
|
1
|
|
|
(99
|
)
|
|
—
|
|
||||||
Sales
(3)
|
—
|
|
|
(1
|
)
|
|
(11
|
)
|
|
—
|
|
|
8
|
|
|
—
|
|
||||||
Settlements
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
||||||
Activity related to consolidated VIEs
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers into Level 3
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, September 30, 2018
|
$
|
—
|
|
|
$
|
117
|
|
|
$
|
1,375
|
|
|
$
|
367
|
|
|
$
|
(4,294
|
)
|
|
$
|
(12
|
)
|
Balance, July 1, 2017
|
$
|
1
|
|
|
$
|
61
|
|
|
$
|
2,091
|
|
|
$
|
334
|
|
|
(5,122
|
)
|
|
$
|
(24
|
)
|
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income (loss)
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Investment gains (losses), net
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||||
Net derivative gains (losses), excluding non-performance risk
|
—
|
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
476
|
|
|
—
|
|
||||||
Non-performance risk
(5)
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
|
|
(63
|
)
|
|
—
|
|
|||||||
Subtotal
|
—
|
|
|
(8
|
)
|
|
(81
|
)
|
|
4
|
|
|
413
|
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchases
(2)
|
—
|
|
|
6
|
|
|
12
|
|
|
1
|
|
|
(105
|
)
|
|
—
|
|
||||||
Sales
(3)
|
—
|
|
|
(3
|
)
|
|
(11
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
||||||
Settlements
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
5
|
|
||||||
Activity related to consolidated VIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers into Level 3
(1)
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, September 30, 2017
|
$
|
1
|
|
|
$
|
59
|
|
|
$
|
2,011
|
|
|
$
|
338
|
|
|
(4,807
|
)
|
|
$
|
(19
|
)
|
(1)
|
Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
|
(2)
|
For the GMIB reinsurance contract asset and the GMxB derivative features liability, represents attributed fee.
|
(3)
|
For the GMIB reinsurance contract asset, represents recoveries from reinsurers and for the GMxB derivative features liability, represents benefits paid.
|
(4)
|
For contingent payment arrangements, represents payments under the arrangement.
|
(5)
|
The Company’s non-performance risk is recorded through Net derivative gains (losses).
|
|
Redeemable
Preferred Stock |
|
Other
Equity Investments (2) |
|
GMIB
Reinsurance Contract Asset |
|
Separate
Accounts Assets |
|
GMxB Derivative Features Liability
|
|
Contingent
Payment Arrangement |
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Balance, January 1, 2018
|
$
|
1
|
|
|
$
|
99
|
|
|
$
|
1,894
|
|
|
$
|
349
|
|
|
$
|
(4,451
|
)
|
|
$
|
(15
|
)
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Investment gains (losses), net
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
||||||
Net derivative gains (losses), excluding non-performance risk
|
—
|
|
|
—
|
|
|
(524
|
)
|
|
—
|
|
|
657
|
|
|
—
|
|
||||||
Non-performance risk
(5)
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(205
|
)
|
|
—
|
|
||||||
Subtotal
|
—
|
|
|
(1
|
)
|
|
(522
|
)
|
|
19
|
|
|
452
|
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchases
(2)
|
—
|
|
|
24
|
|
|
34
|
|
|
4
|
|
|
(313
|
)
|
|
—
|
|
||||||
Sales
(3)
|
(1
|
)
|
|
(3
|
)
|
|
(31
|
)
|
|
(1
|
)
|
|
18
|
|
|
—
|
|
||||||
Settlements
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
3
|
|
||||||
Activity related to consolidated VIEs
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers into Level 3
(1)
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3
(1)
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, September 30, 2018
|
$
|
—
|
|
|
$
|
117
|
|
|
$
|
1,375
|
|
|
$
|
367
|
|
|
$
|
(4,294
|
)
|
|
$
|
(12
|
)
|
Balance, January 1, 2017
|
$
|
1
|
|
|
$
|
48
|
|
|
$
|
1,735
|
|
|
$
|
313
|
|
|
$
|
(5,731
|
)
|
|
$
|
(25
|
)
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Investment gains (losses), net
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
||||||
Net derivative gains (losses), excluding non-performance risk
|
—
|
|
|
—
|
|
|
287
|
|
|
—
|
|
|
1,288
|
|
|
—
|
|
||||||
Non-performance risk
(5)
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
||||||
Subtotal
|
—
|
|
|
(4
|
)
|
|
286
|
|
|
22
|
|
|
1,211
|
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchases
(2)
|
—
|
|
|
20
|
|
|
36
|
|
|
7
|
|
|
(303
|
)
|
|
—
|
|
||||||
Sales
(3)
|
—
|
|
|
(3
|
)
|
|
(46
|
)
|
|
(1
|
)
|
|
16
|
|
|
—
|
|
||||||
Settlements
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
6
|
|
||||||
Activity related to consolidated VIEs
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers into Level 3
(1)
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, September 30, 2017
|
1
|
|
|
59
|
|
|
2,011
|
|
|
338
|
|
|
(4,807
|
)
|
|
(19
|
)
|
(1)
|
Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
|
(2)
|
For the GMIB reinsurance contract asset and the GMxB derivative features liability, represents attributed fee.
|
(3)
|
For the GMIB reinsurance contract asset, represents recoveries from reinsurers and for the GMxB derivative features liability, represents benefits paid.
|
(4)
|
For contingent payment arrangements, represents payments under the arrangement.
|
(5)
|
The Company’s non-performance risk is recorded through Net derivative gains (losses).
|
|
Income (Loss)
|
|
|||||||||
|
Investment Gains (Losses), Net
|
|
Net Derivative Gains (losses)
|
|
OCI
|
||||||
|
(in millions)
|
||||||||||
Level 3 Instruments
|
|
|
|
|
|
||||||
Nine Months Ended September 30, 2018
|
|
|
|
|
|
||||||
Held at September 30, 2018:
|
|
|
|
|
|
||||||
Change in unrealized gains (losses):
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
||||||
Corporate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
State and political subdivisions
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Subtotal
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||
GMIB reinsurance contracts
|
—
|
|
|
(524
|
)
|
|
—
|
|
|||
Separate Accounts assets
(1)
|
19
|
|
|
—
|
|
|
—
|
|
|||
GMxB derivative features' liability
|
—
|
|
|
657
|
|
|
—
|
|
|||
Total
|
$
|
19
|
|
|
$
|
134
|
|
|
$
|
(16
|
)
|
(1)
|
There is an investment expense that offsets this investment gain (loss).
|
|
Income (Loss)
|
|
|
||||||||
|
Investment Gains (Losses), Net
|
|
Net Derivative Gains (losses)
|
|
OCI
|
||||||
|
(in millions)
|
||||||||||
Level 3 Instruments
|
|
|
|
|
|
||||||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
||||||
Held at September 30, 2017:
|
|
|
|
|
|
||||||
Change in unrealized gains (losses):
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
||||||
Commercial mortgage-backed
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24
|
|
State and political subdivisions
|
—
|
|
|
—
|
|
|
1
|
|
|||
Asset-backed
|
—
|
|
|
—
|
|
|
2
|
|
|||
Subtotal
|
—
|
|
|
—
|
|
|
27
|
|
|||
GMIB reinsurance contracts
|
—
|
|
|
287
|
|
|
—
|
|
|||
Separate Accounts assets
(1)
|
22
|
|
|
—
|
|
|
—
|
|
|||
GMxB derivative features liability
|
—
|
|
|
1,288
|
|
|
—
|
|
|||
Total
|
$
|
22
|
|
|
$
|
1,575
|
|
|
$
|
27
|
|
(1)
|
There is an investment expense that offsets this investment gain (loss).
|
|
Fair
Value |
|
Valuation
Technique |
|
Significant
Unobservable Input |
|
Range
|
|
Weighted Average
|
||
|
(in millions)
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||
Investments:
|
|
|
|
|
|
|
|
|
|
||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
||
Corporate
|
$
|
39
|
|
|
Matrix pricing model
|
|
Spread over the industry-specific benchmark yield curve
|
|
50 - 565 bps
|
|
194 bps
|
|
755
|
|
|
Market
comparable companies |
|
EBITDA multiples
Discount rate Cash flow multiples |
|
4.2x - 37.3x 7.2% - 16.5% 9.0x - 17.7x
|
|
13.8x 11.1% 13.1x
|
|
Other equity investments
|
36
|
|
|
Discounted cash flow
|
|
Earnings Multiple
Discounts factor Discount years |
|
10.8x
10.0% 12 |
|
10.8x
|
|
Separate Accounts’ assets
|
345
|
|
|
Third party appraisal
|
|
Capitalization Rate
Exit capitalization Rate Discount Rate |
|
4.4%
5.6% 6.5% |
|
|
|
|
1
|
|
|
Discounted cash flow
|
|
Spread over U.S. Treasury curve
Discount factor |
|
228 bps
4.8% |
|
|
|
GMIB reinsurance contract asset
|
1,375
|
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates Utilization Rates Non-performance risk Volatility rates - Equity Mortality Rates (1) : Ages 0-40 Ages 41-60 Ages 60-115 |
|
1.0% - 6.3%
0.0 - 8.0% 0.0% - 16.0% 0.5% - 1.3% 6.0% - 31.0%
0.01% - 0.18%
0.07% - 0.54%
0.42% - 42.0%
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||
GMIBNLG
|
4,163
|
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates
Utilization Rates
Non-performance risk
NLG Forfeiture Rates
Long-term equity Volatility
Mortality Rates
(1)
:
Ages 0-40
Ages 41-60
Ages 60-115
|
|
0.8% - 26.2%
0.0% - 12.4%
0.0% - 100.0%
0.0% - 1.4%
0.8% - 1.2%
20.0%
0.01% - 0.19%
0.06% - 0.53%
0.41% - 41.2%
|
|
|
|
Assumed GMIB Reinsurance Contracts
|
137
|
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates (Age 0-85) Withdrawal Rates (Age 86+) Utilization Rates Non-performance risk Volatility rates - Equity |
|
0.7% - 13.4%
0.1% - 22.7% 1.3% - 100.0% 0.0% - 27.3% 0.7% to 1.7% 10.0%-30.0% |
|
|
|
GWBL/GMWB
|
77
|
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates Utilization Rates Volatility rates - Equity |
|
0.5% - 5.7%
0.0% - 7.0% 100% after delay 6.0% - 31.0% |
|
|
|
GIB
|
(84
|
)
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates Utilization Rates Volatility rates - Equity |
|
0.5% - 5.7%
0.0% - 8.0% 0.0% - 38.0% 6.0% - 31.0% |
|
|
|
GMAB
|
1
|
|
|
Discounted cash flow
|
|
Lapse Rates
Volatility rates - Equity |
|
0.5% - 11.0%
6.0% - 31.0% |
|
|
|
|
Fair
Value |
|
Valuation
Technique |
|
Significant
Unobservable Input |
|
Range
|
|
Weighted Average
|
||
|
|
(in millions)
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||
Investments:
|
|
|
|
|
|
|
|
|
|
|
||
Fixed maturities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
||
Corporate
|
|
$
|
53
|
|
|
Matrix pricing model
|
|
Spread over the industry-specific benchmark yield curve
|
|
0 bps-565 bps
|
|
125 bps
|
|
|
789
|
|
|
Market comparable companies
|
|
EBITDA multiples
Discount Rate Cash flow Multiples |
|
5.3x - 27.9x
7.2% - 17.0%
9.0x - 17.7x
|
|
12.9x
11.1% 13.1x |
|
Other equity investments
|
|
38
|
|
|
Discounted cash flow
|
|
Earnings Multiple
Discounts factor Discount years |
|
10.8x
10.0% 12 |
|
|
|
Separate Accounts’ assets
|
|
326
|
|
|
Third party appraisal
|
|
Capitalization Rate
Exit capitalization Rate Discount Rate |
|
4.6%
5.6% 6.6% |
|
|
|
|
|
1
|
|
|
Discounted cash flow
|
|
Spread over U.S. Treasury curve
Discount factor |
|
243 bps
4.409% |
|
|
|
GMIB reinsurance contract asset
|
|
1,894
|
|
|
Discounted Cash flow
|
|
Lapse Rates
Withdrawal Rates Utilization Rates Non-performance risk Volatility rates - Equity
Mortality Rates
(1)
:
Ages 0-40
Ages 41-60
Ages 60-115
|
|
1.0% - 6.3%
0.0% - 8.0% 0.0% - 16.0% 5bps - 10bps 9.9% - 30.9%
0.01% - 0.18%
0.07% - 0.54%
0.42% - 42.0%
|
|
|
|
|
Fair
Value |
|
Valuation
Technique |
|
Significant
Unobservable Input |
|
Range
|
|
Weighted Average
|
||
|
|
(in millions)
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||
GMIBNLG
|
|
4,149
|
|
|
Discounted cash flow
|
|
Non-performance risk
Lapse Rates Withdrawal Rates Utilization Rates NLG Forfeiture Rates Long-term Equity Volatility
Mortality Rates
(1)
:
Ages 0-40
Ages 41-60
Ages 60-115
|
|
1.0%
0.8% - 26.2% 0.0% - 12.4% 0.0% - 16.0% 0.6% - 2.1% 20.0%
0.01% - 0.19%
0.06% - 0.53%
0.41% - 41.2%
|
|
|
|
Assumed GMIB Reinsurance Contracts
|
|
194
|
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates (Age 0-85)
Withdrawal Rates (Age 86+) Utilization Rates Non-performance Risk Volatility Rates - Equity |
|
1.1% - 13.3%
0.7% - 22.2% 1.3% - 100% 0 - 30% 1.3% 9.9% - 30.9% |
|
|
|
GWBL/GMWB
|
|
130
|
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates Utilization Rates Volatility rates - Equity |
|
0.9% - 5.7%
0.0% - 7.0% 100% after delay 9.9% - 30.9% |
|
|
|
GIB
|
|
(27
|
)
|
|
Discounted cash flow
|
|
Lapse Rates
Withdrawal Rates Utilization Rates Volatility rates - Equity |
|
0.9% - 5.7%
0.0% - 7.0% 0.0% - 16.0% 9.9% - 30.9% |
|
|
|
GMAB
|
|
5
|
|
|
Discounted cash flow
|
|
Lapse Rates
Volatility rates - Equity |
|
0.5% - 11.0%
9.9% - 30.9% |
|
|
|
Carrying Value
|
|
Fair Value
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
|
(in millions)
|
||||||||||||||||||
September 30, 2018:
|
|
|
|
|
|
|
|
|
|||||||||||
Mortgage loans on real estate
|
$
|
12,070
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,675
|
|
|
$
|
11,675
|
|
Policyholders’ liabilities: Investment contracts
|
2,180
|
|
|
—
|
|
|
—
|
|
|
2,212
|
|
|
2,212
|
|
|||||
FHLBNY Funding Agreements
|
3,012
|
|
|
—
|
|
|
2,926
|
|
|
—
|
|
|
2,926
|
|
|||||
Short term and long-term debt
|
4,806
|
|
|
—
|
|
|
4,701
|
|
|
—
|
|
|
4,701
|
|
|||||
Policy loans
|
3,739
|
|
|
—
|
|
|
—
|
|
|
4,192
|
|
|
4,192
|
|
|||||
Separate Accounts liabilities
|
8,231
|
|
|
—
|
|
|
—
|
|
|
8,231
|
|
|
8,231
|
|
|||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage loans on real estate
|
$
|
10,952
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,912
|
|
|
$
|
10,912
|
|
Loans to affiliates
|
1,230
|
|
|
—
|
|
|
1,230
|
|
|
—
|
|
|
1,230
|
|
|||||
Policyholders’ liabilities: Investment contracts
|
2,224
|
|
|
—
|
|
|
—
|
|
|
2,329
|
|
|
2,329
|
|
|||||
FHLBNY Funding Agreements
|
3,014
|
|
|
—
|
|
|
3,020
|
|
|
—
|
|
|
3,020
|
|
|||||
Short term and long-term debt
|
2,408
|
|
|
—
|
|
|
2,500
|
|
|
—
|
|
|
2,500
|
|
|||||
Loans from affiliates
|
3,622
|
|
|
—
|
|
|
3,622
|
|
|
—
|
|
|
3,622
|
|
|||||
Policy loans
|
3,819
|
|
|
—
|
|
|
—
|
|
|
4,754
|
|
|
4,754
|
|
|||||
Separate Accounts liabilities
|
7,537
|
|
|
—
|
|
|
—
|
|
|
7,537
|
|
|
7,537
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Investment management, advisory and service fees:
|
|
|
|
|
|
|
|
||||||||
Base fees
|
$
|
734
|
|
|
$
|
697
|
|
|
$
|
2,178
|
|
|
$
|
2,010
|
|
Performance-based fees
|
42
|
|
|
4
|
|
|
83
|
|
|
25
|
|
||||
Research services
|
103
|
|
|
109
|
|
|
324
|
|
|
331
|
|
||||
Distribution services
|
184
|
|
|
178
|
|
|
547
|
|
|
515
|
|
||||
Other revenues:
|
|
|
|
|
|
|
|
||||||||
Shareholder services
|
20
|
|
|
19
|
|
|
58
|
|
|
56
|
|
||||
Other
|
5
|
|
|
5
|
|
|
16
|
|
|
13
|
|
||||
Total investment management and service fees
|
$
|
1,088
|
|
|
$
|
1,012
|
|
|
$
|
3,206
|
|
|
$
|
2,950
|
|
|
|
|
|
|
|
|
|
||||||||
Other income
|
$
|
120
|
|
|
$
|
105
|
|
|
$
|
354
|
|
|
$
|
309
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net Periodic Pension Expense:
|
|
|
|
|
|
|
|
||||||||
(Qualified and Non-qualified Plans)
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
8
|
|
Interest cost
|
27
|
|
|
25
|
|
|
77
|
|
|
78
|
|
||||
Expected return on assets
|
(39
|
)
|
|
(43
|
)
|
|
(123
|
)
|
|
(130
|
)
|
||||
Net amortization
|
24
|
|
|
30
|
|
|
76
|
|
|
94
|
|
||||
Partial settlement
|
5
|
|
|
—
|
|
|
106
|
|
|
—
|
|
||||
Total
|
$
|
19
|
|
|
$
|
15
|
|
|
$
|
142
|
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
||||||||
Net Postretirement Benefits Costs:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
4
|
|
|
4
|
|
|
12
|
|
|
12
|
|
||||
Net amortization
|
3
|
|
|
2
|
|
|
7
|
|
|
5
|
|
||||
Total
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
20
|
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
||||||||
Net Postemployment Benefits Costs:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net amortization
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Total
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Performance Shares
(1)
|
$
|
9.7
|
|
|
$
|
8.9
|
|
|
$
|
14.1
|
|
|
$
|
42.9
|
|
Stock Options
|
0.9
|
|
|
0.4
|
|
|
1.4
|
|
|
1.2
|
|
||||
Restricted Stock Unit Awards
(2)
|
19.5
|
|
|
5.6
|
|
|
29.6
|
|
|
26.9
|
|
||||
Other Compensation Plans
(3)
|
0.9
|
|
|
2.0
|
|
|
2.4
|
|
|
2.4
|
|
||||
Total Compensation Expenses
|
$
|
31.0
|
|
|
$
|
16.9
|
|
|
$
|
47.5
|
|
|
$
|
73.4
|
|
(1)
|
Reflects change to performance share retirement rules. Specifically, individuals who retire at any time after the grant date will continue to vest in their 2017 performance shares while individuals who retire prior to March 1, 2019 will forfeit all 2018 performance shares.
|
(2)
|
Reflects a
$10.9 million
adjustment for awards with graded vesting, service-only conditions from the graded to the straight-line attribution method.
|
(3)
|
Includes Stock Appreciation Rights and Employee Stock Purchase Plans.
|
•
|
services AXA or its subsidiaries (other than the Company) receive pursuant to a contract with a third-party service provider, which AXA or its subsidiaries then provide to the Company on a pass-through basis;
|
•
|
services the Company receives pursuant to a contract with a third-party service provider, which the Company then provides to AXA or its subsidiaries (excluding the Company) on a pass-through basis;
|
•
|
certain services the Company receives directly from AXA or its subsidiaries (excluding the Company); and
|
•
|
certain services the Company provides directly to AXA or its subsidiaries (excluding the Company).
|
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Unrealized gains (losses) on investments
|
$
|
(841
|
)
|
|
$
|
642
|
|
Foreign currency translation adjustments
|
(39
|
)
|
|
(45
|
)
|
||
Defined benefit pension plans
|
(752
|
)
|
|
(995
|
)
|
||
Total accumulated other comprehensive income (loss)
|
(1,632
|
)
|
|
(398
|
)
|
||
Less: Accumulated other comprehensive (income) loss attributable to noncontrolling interest
|
37
|
|
|
53
|
|
||
Accumulated other comprehensive income (loss) attributable to Holdings
|
$
|
(1,595
|
)
|
|
$
|
(345
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gains (losses) arising during the period
|
$
|
10
|
|
|
$
|
7
|
|
|
$
|
(4
|
)
|
|
$
|
32
|
|
(Gains) losses reclassified into net income (loss) during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency translation adjustment
|
10
|
|
|
7
|
|
|
(4
|
)
|
|
32
|
|
||||
Net unrealized gains (losses) on investments:
|
|
|
|
|
|
|
|
||||||||
Net unrealized gains (losses) arising during the period
|
(445
|
)
|
|
(1
|
)
|
|
(2,064
|
)
|
|
549
|
|
||||
(Gains) losses reclassified into net income (loss) during the period
(1)
|
27
|
|
|
17
|
|
|
(43
|
)
|
|
29
|
|
||||
Net unrealized gains (losses) on investments
|
(418
|
)
|
|
16
|
|
|
(2,107
|
)
|
|
578
|
|
||||
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other
|
56
|
|
|
(49
|
)
|
|
437
|
|
|
(76
|
)
|
||||
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of $(96), $(18), $(444) and $270)
|
(362
|
)
|
|
(33
|
)
|
|
(1,670
|
)
|
|
502
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Change in defined benefit plans:
|
|
|
|
|
|
|
|
||||||||
Less: reclassification adjustments to net income (loss) for:
|
|
|
|
|
|
|
|
||||||||
Amortization of net actuarial (gains) losses included in:
|
|
|
|
|
|
|
|
||||||||
Amortization of net prior service cost included in net periodic cost
|
68
|
|
|
17
|
|
|
202
|
|
|
60
|
|
||||
Change in defined benefit plans (net of deferred income tax expense (benefit) of $18, $9, $54 and $32)
|
68
|
|
|
17
|
|
|
202
|
|
|
60
|
|
||||
Total other comprehensive income (loss), net of income taxes
|
(284
|
)
|
|
(9
|
)
|
|
(1,472
|
)
|
|
594
|
|
||||
Less: Other comprehensive (income) loss attributable to noncontrolling interest
|
—
|
|
|
(3
|
)
|
|
(15
|
)
|
|
(18
|
)
|
||||
Other comprehensive income (loss) attributable to Holdings
|
$
|
(284
|
)
|
|
$
|
(12
|
)
|
|
$
|
(1,487
|
)
|
|
$
|
576
|
|
(1)
|
See “Reclassification adjustments” in
Note 3
. Reclassification amounts presented net of income tax expense (benefit) of $
7
million, $
(11)
million, $
9
million and $
16
million for the
three and nine months ended September 30, 2018 and 2017
, respectively.
|
|
Nine Months Ended
September 30, |
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Leases
|
|
|
|
||||
Balance, beginning of year
|
$
|
165
|
|
|
$
|
170
|
|
Expense incurred
|
7
|
|
|
29
|
|
||
Deferred rent
|
2
|
|
|
10
|
|
||
Payments made
|
(40
|
)
|
|
(48
|
)
|
||
Interest accretion
|
3
|
|
|
4
|
|
||
Balance, end of period
|
$
|
137
|
|
|
$
|
165
|
|
|
Outstanding balance at end of period
|
|
Maturity of Outstanding balance
|
|
Issued during the period
|
|
Repaid during the period
|
||||||
|
(in millions)
|
||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||
Short-term FHLBNY funding agreements
|
$
|
500
|
|
|
less than one month
|
|
$
|
4,500
|
|
|
$
|
4,500
|
|
Long-term FHLBNY funding agreements
|
1,621
|
|
|
less than 4 years
|
|
—
|
|
|
—
|
|
|||
|
98
|
|
|
Less than 5 years
|
|
—
|
|
|
—
|
|
|||
|
781
|
|
|
Greater than 5 years
|
|
—
|
|
|
—
|
|
|||
Total long-term funding agreements
|
2,500
|
|
|
|
|
$
|
—
|
|
|
—
|
|
||
Total FHLBNY funding agreements at September 30, 2018
|
$
|
3,000
|
|
|
|
|
$
|
4,500
|
|
|
$
|
4,500
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017:
|
|
|
|
|
|
|
|
||||||
Short-term FHLBNY funding agreements
|
$
|
500
|
|
|
Less than one month
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
Long-term FHLBNY funding agreements
|
1,244
|
|
|
Less than 4 years
|
|
324
|
|
|
—
|
|
|||
|
377
|
|
|
Less than 5 years
|
|
303
|
|
|
—
|
|
|||
|
879
|
|
|
Greater than 5 years
|
|
135
|
|
|
—
|
|
|||
Total long-term funding agreements
|
2,500
|
|
|
|
|
762
|
|
|
—
|
|
|||
Total FHLBNY funding agreements at December 31, 2017
|
$
|
3,000
|
|
|
|
|
$
|
6,762
|
|
|
$
|
6,000
|
|
•
|
The Individual Retirement segment offers a diverse suite of variable annuity products which are primarily sold to affluent and high net worth individuals saving for retirement or seeking retirement income.
|
•
|
The Group Retirement segment offers tax-deferred investment and retirement plans to be sponsored by educational entities, municipalities and not-for-profit entities as well as small and medium-sized businesses.
|
•
|
The Investment Management and Research segment provides diversified investment management, research and related solutions globally to a broad range of clients through
three
main client channels- Institutional, Retail and Private Wealth Management and distributes its institutional research products and solutions through Bernstein Research Services.
|
•
|
The Protection Solutions segment includes our life insurance and group employee benefits businesses. Our life insurance business offers a variety of variable universal life, universal life and term life products to help affluent and high net worth individuals, as well as small and medium-sized business owners, with their wealth protection, wealth transfer and corporate needs. Our group employee benefits business offers a suite of dental, vision, life, and short- and long-term disability and other insurance products to small and medium-size businesses across the United States.
|
•
|
Items related to Variable annuity product features which include certain changes in the fair value of the derivatives and other securities we use to hedge these features, the effect of benefit ratio unlock adjustments and changes in the fair value of the embedded derivatives reflected within Variable annuity products’ net derivative results
;
|
•
|
Investment (gains) losses, which includes other-than-temporary impairments of securities, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
|
•
|
Goodwill impairment, which includes a write-down of goodwill in the first quarter of 2017.
|
•
|
Net actuarial (gains) losses, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period related to pension, other postretirement benefit obligations, and the one-time impact of the settlement of the defined benefit obligation;
|
•
|
Other adjustments, which includes restructuring costs related to severance, lease write-offs related to non-recurring restructuring activities and separation costs; and
|
•
|
Income tax expense (benefit) related to the above items and non-recurring tax items, which includes the effect of uncertain tax positions for a given audit period, permanent differences due to goodwill impairment, and the Tax Reform Act.
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
|||||||||||||
Net income (loss) attributable to Holdings
|
$
|
(496
|
)
|
|
$
|
10
|
|
$
|
(118
|
)
|
|
$
|
351
|
|
Adjustments related to:
|
|
|
|
|
|
|
||||||||
Variable annuity product features
|
1,403
|
|
|
507
|
|
1,829
|
|
|
738
|
|
||||
Investment (gains) losses
|
36
|
|
|
11
|
|
(44
|
)
|
|
32
|
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
—
|
|
|
369
|
|
||||
Net actuarial (gains) losses related to pension and other postretirement benefit obligations
|
24
|
|
|
34
|
|
182
|
|
|
101
|
|
||||
Other adjustments
|
51
|
|
|
56
|
|
229
|
|
|
61
|
|
||||
Income tax expense (benefit) related to above adjustments
|
(409
|
)
|
|
(35
|
)
|
(461
|
)
|
|
(446
|
)
|
||||
Non-recurring tax items
|
84
|
|
|
(183
|
)
|
45
|
|
|
(92
|
)
|
||||
Non-GAAP Operating Earnings
|
$
|
693
|
|
|
$
|
400
|
|
$
|
1,662
|
|
|
$
|
1,114
|
|
|
|
|
|
|
|
|
||||||||
Operating earnings (loss) by segment:
|
|
|
|
|
|
|
||||||||
Individual Retirement
|
$
|
434
|
|
|
$
|
326
|
|
$
|
1,207
|
|
|
$
|
844
|
|
Group Retirement
|
134
|
|
|
85
|
|
287
|
|
|
193
|
|
||||
Investment Management and Research
|
96
|
|
|
45
|
|
274
|
|
|
138
|
|
||||
Protection Solutions
|
137
|
|
|
(3
|
)
|
160
|
|
|
54
|
|
||||
Corporate and Other
(1)
|
(108
|
)
|
|
(53
|
)
|
(266
|
)
|
|
(115
|
)
|
(1)
|
Includes interest expense of
$65 million
,
$31 million
,
$171 million
and
$104 million
, for the
three and nine months ended September 30, 2018 and 2017
, respectively.
|
•
|
Items related to variable annuity product features, which include certain changes in the fair value of the derivatives and other securities we use to hedge these features and changes in the fair value of the embedded derivatives reflected within the net derivative results of variable annuity product features;
|
•
|
Investment gains (losses), which include other-than-temporary impairments of securities, sales or disposals of securities/investments, realized capital gains/losses, and valuation allowances; and
|
•
|
Other adjustments, which includes the impact of adoption of revenue recognition standard ASC 606.
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
|||||||||||||
Segment revenues:
|
|
|
|
|
|
|
||||||||
Individual Retirement
(1)
|
$
|
1,070
|
|
|
$
|
998
|
|
$
|
2,873
|
|
|
$
|
3,058
|
|
Group Retirement
(1)
|
262
|
|
|
248
|
|
745
|
|
|
685
|
|
||||
Investment Management and Research
(2)
|
851
|
|
|
792
|
|
2,602
|
|
|
2,307
|
|
||||
Protection Solutions
(1)
|
774
|
|
|
798
|
|
2,378
|
|
|
2,330
|
|
||||
Corporate and Other
(1)
|
280
|
|
|
288
|
|
861
|
|
|
965
|
|
||||
Adjustments related to:
|
|
|
|
|
|
|
||||||||
Variable annuity product features
|
(2,125
|
)
|
|
(326
|
)
|
(2,539
|
)
|
|
162
|
|
||||
Investment gains (losses)
|
(36
|
)
|
|
(11
|
)
|
44
|
|
|
(32
|
)
|
||||
Other adjustments to segment revenues
|
7
|
|
|
19
|
|
(41
|
)
|
|
63
|
|
||||
Total revenues
|
$
|
1,083
|
|
|
$
|
2,806
|
|
$
|
6,923
|
|
|
$
|
9,538
|
|
(1)
|
Includes investment expenses charged by AB of approximately
$13 million
,
$15 million
,
$49 million
and
$46 million
for the
three and nine months ended September 30, 2018 and 2017
, respectively, for services provided to the Company.
|
(2)
|
Inter-segment investment management and other fees of approximately
$25 million
,
$22 million
,
$75 million
and
$67 million
for the
three and nine months ended September 30, 2018 and 2017
, respectively, are included in total revenues of the Investment Management and Research segment.
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
|
(in millions)
|
||||||
Total assets by segment:
|
|
|
|
||||
Individual Retirement
|
$
|
111,890
|
|
|
$
|
121,713
|
|
Group Retirement
|
43,398
|
|
|
38,578
|
|
||
Investment Management and Research
(1)
|
10,038
|
|
|
10,057
|
|
||
Protection Solutions
(1)
|
48,124
|
|
|
43,157
|
|
||
Corporate and Other
(1)
|
21,001
|
|
|
22,110
|
|
||
Total assets
|
$
|
234,451
|
|
|
$
|
235,615
|
|
(1)
|
Amounts for December 31, 2017 as previously reported were: Investment Management and Research of
$8,297 million
, Protection Solutions of
$43,116 million
and Corporate and Other of
$23,934 million
.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net income (loss) attributable to Holdings common shareholders:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Holdings common shareholders (basic):
|
$
|
(496
|
)
|
|
$
|
10
|
|
|
$
|
(118
|
)
|
|
$
|
351
|
|
Less: Incremental dilution from AB
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income (loss) attributable to Holdings common shareholders (diluted):
|
$
|
(496
|
)
|
|
$
|
10
|
|
|
$
|
(118
|
)
|
|
$
|
351
|
|
(1)
|
The incremental dilution from AB represents the impact of AB’s dilutive units on the Company’s diluted earnings per share and is calculated based on the Company’s proportionate ownership interest in AB.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||||||
Weighted Average Shares:
|
|
|
|
|
|
|
|
||||
Weighted average common stock outstanding for basic earnings per common share
|
560.3
|
|
|
561.0
|
|
|
560.8
|
|
|
561.0
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||
Employee stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average common stock outstanding for diluted earnings per common share
|
560.3
|
|
|
561.0
|
|
|
560.8
|
|
|
561.0
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(dollars per share)
|
||||||||||||||
Net income (loss) attributable to Holdings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.89
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.63
|
|
Diluted
|
$
|
(0.89
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.63
|
|
|
June 30, 2018
|
||||||||||
Balance Sheet:
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|||
Deferred policy acquisition costs
|
$
|
6,346
|
|
|
$
|
(61
|
)
|
|
$
|
6,285
|
|
Amounts due from reinsurers
|
4,963
|
|
|
(9
|
)
|
|
4,954
|
|
|||
Current and deferred income taxes
|
47
|
|
|
5
|
|
|
52
|
|
|||
Total Assets
|
231,012
|
|
|
(65
|
)
|
|
230,947
|
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Future policy benefits and other policyholders’ liabilities
|
29,351
|
|
|
(53
|
)
|
|
29,298
|
|
|||
Total Liabilities
|
216,003
|
|
|
(53
|
)
|
|
215,950
|
|
|||
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
||||||
Retained earnings
|
12,613
|
|
|
(12
|
)
|
|
12,601
|
|
|||
Total equity attributable to Holdings
|
13,376
|
|
|
(12
|
)
|
|
13,364
|
|
|||
Total Equity
|
14,863
|
|
|
(12
|
)
|
|
14,851
|
|
|||
Total Liabilities, redeemable noncontrolling interest and equity
|
$
|
231,012
|
|
|
$
|
(65
|
)
|
|
$
|
230,947
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Income (Loss):
|
|
|
|
|
|
|
|
|
|||
Revenues:
|
|
|
|
|
|
|
|
|
|||
Policy charges and fee income
|
$
|
987
|
|
|
$
|
(23
|
)
|
|
$
|
964
|
|
Net derivative gains (losses)
|
(73
|
)
|
|
27
|
|
|
(46
|
)
|
|||
Total revenues
|
2,962
|
|
|
4
|
|
|
2,966
|
|
|||
|
|
|
|
|
|
||||||
Benefits and Other Deductions
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
920
|
|
|
(20
|
)
|
|
900
|
|
|||
Amortization of deferred policy acquisition costs, net
|
(1
|
)
|
|
16
|
|
|
15
|
|
|||
Total benefits and other deductions
|
2,648
|
|
|
(4
|
)
|
|
2,644
|
|
|||
Income (loss) from continuing operations, before income taxes
|
314
|
|
|
8
|
|
|
322
|
|
|||
Income tax (expense) benefit
|
(59
|
)
|
|
(2
|
)
|
|
(61
|
)
|
|||
Net income (loss)
|
255
|
|
|
6
|
|
|
261
|
|
|||
Net income (loss) attributable to Holdings
|
$
|
158
|
|
|
$
|
6
|
|
|
$
|
164
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Comprehensive Income (Loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
255
|
|
|
$
|
6
|
|
|
$
|
261
|
|
Comprehensive income (loss)
|
(101
|
)
|
|
6
|
|
|
(95
|
)
|
|||
Comprehensive income (loss) attributable to Holdings
|
$
|
(206
|
)
|
|
$
|
6
|
|
|
$
|
(200
|
)
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Income (Loss):
|
|
|
|
|
|
|
|
|
|||
Revenues:
|
|
|
|
|
|
|
|
|
|||
Policy charges and fee income
|
$
|
1,959
|
|
|
$
|
(29
|
)
|
|
$
|
1,930
|
|
Net derivative gains (losses)
|
(354
|
)
|
|
72
|
|
|
(282
|
)
|
|||
Total revenues
|
5,797
|
|
|
43
|
|
|
5,840
|
|
|||
|
|
|
|
|
|
||||||
Benefits and Other Deductions:
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
1,528
|
|
|
(34
|
)
|
|
1,494
|
|
|||
Amortization of deferred policy acquisition costs, net
|
14
|
|
|
11
|
|
|
25
|
|
|||
Total benefits and other deductions
|
5,113
|
|
|
(23
|
)
|
|
5,090
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) from continuing operations, before income taxes
|
684
|
|
|
66
|
|
|
750
|
|
|||
Income tax (expense) benefit
|
(138
|
)
|
|
(14
|
)
|
|
(152
|
)
|
|||
Net income (loss)
|
546
|
|
|
52
|
|
|
598
|
|
|||
Net income (loss) attributable to Holdings
|
$
|
326
|
|
|
$
|
52
|
|
|
$
|
378
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Comprehensive Income (Loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
546
|
|
|
$
|
52
|
|
|
$
|
598
|
|
Comprehensive income (loss)
|
(642
|
)
|
|
52
|
|
|
(590
|
)
|
|||
Comprehensive income (loss) attributable to Holdings
|
$
|
(876
|
)
|
|
$
|
52
|
|
|
$
|
(824
|
)
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Equity:
|
|
|
|
|
|
||||||
Retained earnings, beginning of year
|
$
|
12,289
|
|
|
$
|
(64
|
)
|
|
$
|
12,225
|
|
Net income (loss) attributable to Holdings
|
326
|
|
|
52
|
|
|
378
|
|
|||
Retained earnings, end of period
|
12,613
|
|
|
(12
|
)
|
|
12,601
|
|
|||
Total Holdings’ equity, end of period
|
13,376
|
|
|
(12
|
)
|
|
13,364
|
|
|||
Total equity, end of period
|
$
|
14,863
|
|
|
$
|
(12
|
)
|
|
$
|
14,851
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Cash Flows:
|
|
|
|
|
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
546
|
|
|
$
|
52
|
|
|
$
|
598
|
|
Policy charges and fee income
|
(1,959
|
)
|
|
29
|
|
|
(1,930
|
)
|
|||
Net derivative (gains) loss
|
354
|
|
|
(72
|
)
|
|
282
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
14
|
|
|
11
|
|
|
25
|
|
|||
Future policy benefits
|
(171
|
)
|
|
(34
|
)
|
|
(205
|
)
|
|||
Current and deferred income taxes
|
224
|
|
|
14
|
|
|
238
|
|
|||
Net cash provided by (used in) operating activities
|
$
|
(314
|
)
|
|
$
|
—
|
|
|
$
|
(314
|
)
|
|
March 31, 2018
|
||||||||||
Balance Sheet
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|||
Deferred policy acquisition costs
|
$
|
6,288
|
|
|
$
|
(45
|
)
|
|
$
|
6,243
|
|
Current and deferred income taxes
|
225
|
|
|
7
|
|
|
232
|
|
|||
Total Assets
|
232,294
|
|
|
(38
|
)
|
|
232,256
|
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Future policy benefits and other policyholders’ liabilities
|
29,586
|
|
|
(20
|
)
|
|
29,566
|
|
|||
Total Liabilities
|
214,670
|
|
|
(20
|
)
|
|
214,650
|
|
|||
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
||||||
Retained earnings
|
12,455
|
|
|
(18
|
)
|
|
12,437
|
|
|||
Total equity attributable to Holdings
|
13,565
|
|
|
(18
|
)
|
|
13,547
|
|
|||
Total Equity
|
16,600
|
|
|
(18
|
)
|
|
16,582
|
|
|||
Total Liabilities, redeemable noncontrolling interest and equity
|
$
|
232,294
|
|
|
$
|
(38
|
)
|
|
$
|
232,256
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Income (Loss):
|
|
|
|
|
|
|
|
||||
Revenues:
|
|
|
|
|
|
|
|
||||
Policy charges and fee income
|
$
|
972
|
|
|
$
|
(6
|
)
|
|
$
|
966
|
|
Net derivative gains (losses)
|
(281
|
)
|
|
45
|
|
|
(236
|
)
|
|||
Total revenues
|
2,835
|
|
|
39
|
|
|
2,874
|
|
|||
|
|
|
|
|
|
||||||
Benefits and Other Deductions
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
608
|
|
|
(14
|
)
|
|
594
|
|
|||
Amortization of deferred policy acquisition costs, net
|
15
|
|
|
(5
|
)
|
|
10
|
|
|||
Total benefits and other deductions
|
2,465
|
|
|
(19
|
)
|
|
2,446
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) from continuing operations, before income taxes
|
370
|
|
|
58
|
|
|
428
|
|
|||
Income tax (expense) benefit
|
(79
|
)
|
|
(12
|
)
|
|
(91
|
)
|
|||
Net income (loss)
|
291
|
|
|
46
|
|
|
337
|
|
|||
Net income (loss) attributable to Holdings
|
$
|
168
|
|
|
$
|
46
|
|
|
$
|
214
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Comprehensive Income (Loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
291
|
|
|
$
|
46
|
|
|
$
|
337
|
|
Comprehensive income (loss)
|
(541
|
)
|
|
46
|
|
|
(495
|
)
|
|||
Comprehensive income (loss) attributable to Holdings
|
$
|
(670
|
)
|
|
$
|
46
|
|
|
$
|
(624
|
)
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Equity:
|
|
|
|
|
|
||||||
Retained earnings, beginning of year
|
$
|
12,289
|
|
|
$
|
(64
|
)
|
|
$
|
12,225
|
|
Net income (loss) attributable to Holdings
|
168
|
|
|
46
|
|
|
214
|
|
|||
Retained earnings, end of period
|
12,455
|
|
|
(18
|
)
|
|
12,437
|
|
|||
Total Holdings’ equity, end of period
|
13,565
|
|
|
(18
|
)
|
|
13,547
|
|
|||
Total equity, end of period
|
$
|
16,600
|
|
|
$
|
(18
|
)
|
|
$
|
16,582
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Cash Flows:
|
|
|
|
|
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
291
|
|
|
$
|
46
|
|
|
$
|
337
|
|
Policy charges and fee income
|
(972
|
)
|
|
6
|
|
|
(966
|
)
|
|||
Net derivative (gains) loss
|
281
|
|
|
(45
|
)
|
|
236
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Deferred Policy Acquisition costs
|
15
|
|
|
(5
|
)
|
|
10
|
|
|||
Future policy benefits
|
(254
|
)
|
|
(14
|
)
|
|
(268
|
)
|
|||
Current and deferred income taxes
|
103
|
|
|
12
|
|
|
115
|
|
|||
Net cash provided by (used in) operating activities
|
$
|
(264
|
)
|
|
$
|
—
|
|
|
$
|
(264
|
)
|
|
December 31, 2017
|
||||||||||
Balance Sheet:
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
$
|
5,969
|
|
|
$
|
(50
|
)
|
|
$
|
5,919
|
|
Current and deferred income taxes
|
67
|
|
|
17
|
|
|
84
|
|
|||
Total Assets
|
235,648
|
|
|
(33
|
)
|
|
235,615
|
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Future policy benefits and other policyholders’ liabilities
|
30,299
|
|
|
31
|
|
|
30,330
|
|
|||
Total Liabilities
|
218,440
|
|
|
31
|
|
|
218,471
|
|
|||
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
||||||
Retained earnings
|
12,289
|
|
|
(64
|
)
|
|
12,225
|
|
|||
Total equity attributable to Holdings
|
13,485
|
|
|
(64
|
)
|
|
13,421
|
|
|||
Total Equity
|
16,582
|
|
|
(64
|
)
|
|
16,518
|
|
|||
Total Liabilities, redeemable noncontrolling interest and equity
|
$
|
235,648
|
|
|
$
|
(33
|
)
|
|
$
|
235,615
|
|
|
Year ended December 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statement of Income (Loss):
|
|
|
|||||||||
Revenues:
|
|
|
|
|
|
||||||
Policy charges and fee income
|
$
|
3,733
|
|
|
$
|
(40
|
)
|
|
$
|
3,693
|
|
Net derivative gains (losses)
|
228
|
|
|
(14
|
)
|
|
214
|
|
|||
Total revenues
|
12,514
|
|
|
(54
|
)
|
|
12,460
|
|
|||
|
|
|
|
|
|
||||||
Benefits and other deductions:
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
4,354
|
|
|
12
|
|
|
4,366
|
|
|||
Interest credited to Policyholder’s account balances
|
1,108
|
|
|
(113
|
)
|
|
995
|
|
|||
Amortization of deferred policy acquisition costs
|
(239
|
)
|
|
55
|
|
|
(184
|
)
|
|||
Total benefits and other deductions
|
11,200
|
|
|
(46
|
)
|
|
11,154
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) from operations, before income taxes
|
1,314
|
|
|
(8
|
)
|
|
1,306
|
|
|||
Income tax (expense) benefit
|
(41
|
)
|
|
(8
|
)
|
|
(49
|
)
|
|||
Net income (loss)
|
1,273
|
|
|
(16
|
)
|
|
1,257
|
|
|||
Net income (loss) attributable to Holdings
|
$
|
850
|
|
|
$
|
(16
|
)
|
|
$
|
834
|
|
|
Year ended December 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Comprehensive Income (Loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
1,273
|
|
|
$
|
(16
|
)
|
|
$
|
1,257
|
|
Comprehensive income (loss)
|
2,105
|
|
|
(16
|
)
|
|
2,089
|
|
|||
Comprehensive income (loss) attributable to Holdings
|
$
|
1,663
|
|
|
$
|
(16
|
)
|
|
$
|
1,647
|
|
|
Year ended December 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Adjustments
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Equity:
|
|
|
|
|
|
||||||
Retained earnings, beginning of year
|
$
|
11,439
|
|
|
$
|
(48
|
)
|
|
$
|
11,391
|
|
Net income (loss) attributable to Holdings
|
850
|
|
|
(16
|
)
|
|
834
|
|
|||
Retained earnings, end of period
|
12,289
|
|
|
(64
|
)
|
|
12,225
|
|
|||
Total Holdings’ equity, end of year
|
13,485
|
|
|
(64
|
)
|
|
13,421
|
|
|||
Total equity, end of year
|
$
|
16,582
|
|
|
$
|
(64
|
)
|
|
$
|
16,518
|
|
|
Year ended December 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Consolidated Statement of Cash Flows:
|
|
|
|
|
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
1,273
|
|
|
$
|
(16
|
)
|
|
$
|
1,257
|
|
Policy charges and fee income
|
(3,733
|
)
|
|
40
|
|
|
(3,693
|
)
|
|||
Interest credited to policyholders’ account balances
|
1,108
|
|
|
(113
|
)
|
|
995
|
|
|||
Net derivative (gains) loss
|
(228
|
)
|
|
14
|
|
|
(214
|
)
|
|||
Deferred Policy Acquisition costs
|
(239
|
)
|
|
55
|
|
|
(184
|
)
|
|||
Changes in:
|
|
|
|
|
|
||||||
Future policy benefits
|
1,587
|
|
|
12
|
|
|
1,599
|
|
|||
Current and deferred income taxes
|
759
|
|
|
8
|
|
|
767
|
|
|||
Net cash provided by (used in) operating activities
|
$
|
1,021
|
|
|
$
|
—
|
|
|
$
|
1,021
|
|
|
September 30, 2017
|
|
June 30, 2017
|
||||||||||||||||
Balance Sheet:
|
As Previously Reported
|
Impact of Adjustments
|
As Restated
|
|
As Previously Reported
|
Impact of Adjustments
|
As Revised
|
||||||||||||
|
(in millions)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
$
|
5,933
|
|
$
|
157
|
|
$
|
6,090
|
|
|
$
|
6,101
|
|
$
|
10
|
|
$
|
6,111
|
|
Loans to affiliates
|
1,245
|
|
(11
|
)
|
1,234
|
|
|
1,235
|
|
—
|
|
1,235
|
|
||||||
Current and deferred income taxes
|
339
|
|
(71
|
)
|
268
|
|
|
298
|
|
13
|
|
311
|
|
||||||
Total Assets
|
230,825
|
|
93
|
|
230,918
|
|
|
226,689
|
|
23
|
|
226,712
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||||||
Future policy benefits and other policyholders’ liabilities
|
31,179
|
|
(97
|
)
|
31,082
|
|
|
31,029
|
|
48
|
|
31,077
|
|
||||||
Total Liabilities
|
215,164
|
|
(97
|
)
|
215,067
|
|
|
210,890
|
|
48
|
|
210,938
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Equity:
|
|
|
|
|
|
|
|
||||||||||||
Capital in excess of par value
(1)
|
1,007
|
|
(9
|
)
|
998
|
|
|
955
|
|
—
|
|
955
|
|
||||||
Retained earnings
|
11,548
|
|
194
|
|
11,742
|
|
|
11,757
|
|
(25
|
)
|
11,732
|
|
||||||
Accumulated other comprehensive income (loss)
|
(350
|
)
|
5
|
|
(345
|
)
|
|
(333
|
)
|
—
|
|
(333
|
)
|
||||||
Total equity attributable to Holdings
|
12,211
|
|
190
|
|
12,401
|
|
|
12,385
|
|
(25
|
)
|
12,360
|
|
||||||
Total Equity
|
15,221
|
|
190
|
|
15,411
|
|
|
15,438
|
|
(25
|
)
|
15,413
|
|
||||||
Total Liabilities, redeemable noncontrolling interest and equity
|
$
|
230,825
|
|
$
|
93
|
|
$
|
230,918
|
|
|
$
|
226,689
|
|
$
|
23
|
|
$
|
226,712
|
|
(1)
|
Previously reported amounts have been adjusted to give retrospective effect to the
459.4752645
-for-1 stock split effected on April 24, 2018.
|
|
Nine Months Ended September 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||
|
As Previously Reported
|
Impact of Adjustments
(1)
|
As Restated
|
|
As Previously Reported
|
Impact of Adjustments
|
As Revised
|
||||||||||||
|
(in millions)
|
||||||||||||||||||
Statements of Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Policy charges and fee income
|
$
|
2,853
|
|
$
|
(43
|
)
|
$
|
2,810
|
|
|
$
|
1,891
|
|
$
|
(34
|
)
|
$
|
1,857
|
|
Premiums
|
805
|
|
20
|
|
825
|
|
|
558
|
|
—
|
|
558
|
|
||||||
Net derivative gains (losses)
|
166
|
|
66
|
|
232
|
|
|
494
|
|
54
|
|
548
|
|
||||||
Total revenues
|
9,495
|
|
43
|
|
9,538
|
|
|
6,712
|
|
20
|
|
6,732
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Benefits and Other Deductions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
3,909
|
|
(9
|
)
|
3,900
|
|
|
2,834
|
|
(11
|
)
|
2,823
|
|
||||||
Interest credited to policyholders’ account balances
|
794
|
|
(51
|
)
|
743
|
|
|
488
|
|
—
|
|
488
|
|
||||||
Amortization of deferred policy acquisition costs, net
|
(31
|
)
|
(119
|
)
|
(150
|
)
|
|
(168
|
)
|
(5
|
)
|
(173
|
)
|
||||||
Total benefits and other deductions
|
9,187
|
|
(179
|
)
|
9,008
|
|
|
6,265
|
|
(16
|
)
|
6,249
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations, before income taxes
|
308
|
|
222
|
|
530
|
|
|
447
|
|
36
|
|
483
|
|
||||||
Income tax (expense) benefit
|
163
|
|
(63
|
)
|
100
|
|
|
54
|
|
(13
|
)
|
41
|
|
||||||
Net income (loss)
|
471
|
|
159
|
|
630
|
|
|
501
|
|
23
|
|
524
|
|
||||||
Net income (loss) attributable to Holdings
|
$
|
192
|
|
$
|
159
|
|
$
|
351
|
|
|
$
|
318
|
|
$
|
23
|
|
$
|
341
|
|
(1)
|
As discussed in Note 2, the restated financial statements correct for the additional errors identified during the third quarter of 2018. The additional errors included in this column had the following impact (in millions): (a) Income (loss) from continuing operations, before income taxes
$71
; (b) Net income (loss)
$39
; and (c) Comprehensive income (loss)
$2
.
|
|
Nine Months Ended September 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||
|
As Previously Reported
|
Impact of Adjustments
(1)
|
As Restated
|
|
As Previously Reported
|
Impact of Adjustments
|
As Revised
|
||||||||||||
|
(in millions)
|
||||||||||||||||||
Statements of Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
$
|
471
|
|
$
|
159
|
|
$
|
630
|
|
|
$
|
501
|
|
$
|
23
|
|
$
|
524
|
|
Change in unrealized gains (losses), net of reclassification
|
519
|
|
(17
|
)
|
502
|
|
|
535
|
|
—
|
|
535
|
|
||||||
Total other comprehensive income (loss), net of income taxes
|
611
|
|
(17
|
)
|
594
|
|
|
603
|
|
—
|
|
603
|
|
||||||
Comprehensive income (loss)
|
1,082
|
|
142
|
|
1,224
|
|
|
1,104
|
|
23
|
|
1,127
|
|
||||||
Comprehensive income (loss) attributable to Holdings
|
$
|
785
|
|
$
|
142
|
|
$
|
927
|
|
|
$
|
906
|
|
$
|
23
|
|
$
|
929
|
|
(1)
|
As discussed in Note 2, the restated financial statements correct for the additional errors identified during the third quarter of 2018. The additional errors included in this column had the following impact in millions: (a) Income
|
|
Nine Months Ended September 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||
|
As Previously Reported
|
Impact of Adjustments
|
As Restated
|
|
As Previously Reported
|
Impact of Adjustments
|
As Revised
|
||||||||||||
|
(in millions)
|
||||||||||||||||||
Statements of Equity:
|
|
|
|
|
|
|
|
||||||||||||
Capital in excess of par value, beginning of year
(1)
|
$
|
942
|
|
$
|
(11
|
)
|
$
|
931
|
|
|
$
|
931
|
|
$
|
—
|
|
$
|
931
|
|
Changes in capital in excess of par value
|
65
|
|
2
|
|
67
|
|
|
24
|
|
—
|
|
24
|
|
||||||
Capital in excess of par value, end of period
(1)
|
1,007
|
|
(9
|
)
|
998
|
|
|
955
|
|
—
|
|
955
|
|
||||||
Retained earnings, beginning of year
|
11,356
|
|
35
|
|
11,391
|
|
|
11,439
|
|
(48
|
)
|
11,391
|
|
||||||
Net income (loss) attributable to Holdings
|
192
|
|
159
|
|
351
|
|
|
318
|
|
23
|
|
341
|
|
||||||
Retained earnings, end of period
|
11,548
|
|
194
|
|
11,742
|
|
|
11,757
|
|
(25
|
)
|
11,732
|
|
||||||
Accumulated other comprehensive income (loss), beginning of year
|
(943
|
)
|
22
|
|
(921
|
)
|
|
(921
|
)
|
—
|
|
(921
|
)
|
||||||
Other comprehensive income (loss)
|
593
|
|
(17
|
)
|
576
|
|
|
588
|
|
—
|
|
588
|
|
||||||
Accumulated other comprehensive income (loss), end of year
|
(350
|
)
|
5
|
|
(345
|
)
|
|
(333
|
)
|
—
|
|
(333
|
)
|
||||||
Total Holdings’ equity, end of period
|
12,211
|
|
190
|
|
12,401
|
|
|
12,385
|
|
(25
|
)
|
12,360
|
|
||||||
Total equity, end of period
|
$
|
15,221
|
|
$
|
190
|
|
$
|
15,411
|
|
|
$
|
15,438
|
|
$
|
(25
|
)
|
$
|
15,413
|
|
(1)
|
Previously reported amounts have been adjusted to give retrospective effect to the
459.4752645
-for-1 stock split effected on April 24, 2018.
|
|
Nine Months Ended September 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||
|
As Previously Reported
|
Impact of Adjustments
|
As Restated
|
|
As Previously Reported
|
Impact of Adjustments
|
As Revised
|
||||||||||||
|
(in millions)
|
||||||||||||||||||
Statements of Cash Flows:
|
|
|
|
|
|
|
|
||||||||||||
Cash flow from operating activities:
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
$
|
471
|
|
$
|
159
|
|
$
|
630
|
|
|
$
|
501
|
|
$
|
23
|
|
$
|
524
|
|
Policy charges and fee income
|
(2,853
|
)
|
43
|
|
(2,810
|
)
|
|
(1,891
|
)
|
34
|
|
(1,857
|
)
|
||||||
Interest credited to policyholders’ account balances
|
794
|
|
(51
|
)
|
743
|
|
|
488
|
|
—
|
|
488
|
|
||||||
Net derivative (gains) loss
|
(166
|
)
|
(66
|
)
|
(232
|
)
|
|
(494
|
)
|
(54
|
)
|
(548
|
)
|
||||||
Changes in:
|
|
|
|
|
|
|
|
||||||||||||
Reinsurance Recoverable
|
—
|
|
115
|
|
115
|
|
|
40
|
|
—
|
|
40
|
|
||||||
Deferred policy acquisition costs
|
(31
|
)
|
(119
|
)
|
(150
|
)
|
|
(168
|
)
|
(5
|
)
|
(173
|
)
|
||||||
Future policy benefits
|
1,616
|
|
(29
|
)
|
1,587
|
|
|
1,516
|
|
(11
|
)
|
1,505
|
|
||||||
Current and deferred income taxes
|
435
|
|
63
|
|
498
|
|
|
123
|
|
13
|
|
136
|
|
||||||
Other, net
|
368
|
|
(115
|
)
|
253
|
|
|
333
|
|
—
|
|
333
|
|
||||||
Net cash provided by (used in) operating activities
|
$
|
1,044
|
|
$
|
—
|
|
$
|
1,044
|
|
|
$
|
666
|
|
$
|
—
|
|
$
|
666
|
|
|
March 31, 2017
|
||||||||||
Balance Sheet:
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|||
Deferred policy acquisition costs
|
$
|
6,026
|
|
|
$
|
9
|
|
|
$
|
6,035
|
|
Current and deferred income taxes
|
440
|
|
|
18
|
|
|
458
|
|
|||
Total Assets
|
223,564
|
|
|
27
|
|
|
223,591
|
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Future policy benefits and other policyholders’ liabilities
|
30,171
|
|
|
62
|
|
|
30,233
|
|
|||
Total Liabilities
|
208,737
|
|
|
62
|
|
|
208,799
|
|
|||
|
|
|
|
|
|
|
|||||
Equity:
|
|
|
|
|
|
||||||
Retained earnings
|
11,149
|
|
|
(35
|
)
|
|
11,114
|
|
|||
Total equity attributable to Holdings
|
11,306
|
|
|
(35
|
)
|
|
11,271
|
|
|||
Total Equity
|
14,411
|
|
|
(35
|
)
|
|
14,376
|
|
|||
Total Liabilities, redeemable noncontrolling interest and equity
|
$
|
223,564
|
|
|
$
|
27
|
|
|
$
|
223,591
|
|
|
Three Months Ended March 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Income (Loss):
|
|
|
|
|
|
|
|
|
|||
Revenues:
|
|
|
|
|
|
|
|
|
|||
Policy charges and fee income
|
$
|
956
|
|
|
$
|
(17
|
)
|
|
$
|
939
|
|
Net derivative gains (losses)
(2)
|
(235
|
)
|
|
31
|
|
|
(204
|
)
|
|||
Total revenues
|
2,830
|
|
|
14
|
|
|
2,844
|
|
|||
|
|
|
|
|
|
||||||
Benefits and Other Deductions:
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
1,093
|
|
|
(2
|
)
|
|
1,091
|
|
|||
Amortization of deferred policy acquisition costs, net
|
(55
|
)
|
|
(4
|
)
|
|
(59
|
)
|
|||
Total benefits and other deductions
|
2,997
|
|
|
(6
|
)
|
|
2,991
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) from continuing operations, before income taxes
|
(167
|
)
|
|
20
|
|
|
(147
|
)
|
|||
Income tax (expense) benefit
|
(30
|
)
|
|
(7
|
)
|
|
(37
|
)
|
|||
Net income (loss)
|
(197
|
)
|
|
13
|
|
|
(184
|
)
|
|||
Net income (loss) attributable to Holdings
|
$
|
(290
|
)
|
|
$
|
13
|
|
|
$
|
(277
|
)
|
|
Three Months Ended March 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Comprehensive Income (Loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(197
|
)
|
|
$
|
13
|
|
|
$
|
(184
|
)
|
Comprehensive income (loss)
|
(60
|
)
|
|
13
|
|
|
(47
|
)
|
|||
Comprehensive income (loss) attributable to Holdings
|
$
|
(160
|
)
|
|
$
|
13
|
|
|
$
|
(147
|
)
|
|
Three Months Ended March 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Equity:
|
|
|
|
|
|
||||||
Retained earnings, beginning of year
|
11,439
|
|
|
(48
|
)
|
|
11,391
|
|
|||
Net income (loss) attributable to Holdings
|
(290
|
)
|
|
13
|
|
|
(277
|
)
|
|||
Retained earnings, end of period
|
11,149
|
|
|
(35
|
)
|
|
11,114
|
|
|||
Total Holdings’ equity, end of period
|
11,306
|
|
|
(35
|
)
|
|
11,271
|
|
|||
Total equity, end of period
|
$
|
14,411
|
|
|
$
|
(35
|
)
|
|
$
|
14,376
|
|
|
Three Months Ended March 31, 2017
|
||||||||||
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Statements of Cash Flows:
|
|
|
|
|
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(197
|
)
|
|
$
|
13
|
|
|
$
|
(184
|
)
|
Policy charges and fee income
|
(956
|
)
|
|
17
|
|
|
(939
|
)
|
|||
Interest credited to policyholders’ account balances
|
246
|
|
|
—
|
|
|
246
|
|
|||
Net derivative (gains) loss
|
235
|
|
|
(31
|
)
|
|
204
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Deferred Policy Acquisition costs
|
(55
|
)
|
|
(4
|
)
|
|
(59
|
)
|
|||
Future policy benefits
|
296
|
|
|
(2
|
)
|
|
294
|
|
|||
Current and deferred income taxes
|
252
|
|
|
7
|
|
|
259
|
|
|||
Net cash provided by (used in ) operating activities
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
72
|
|
•
|
fee income derived from our retirement and protection products and our investment management and research services;
|
•
|
premiums from our traditional life insurance and annuity products; and
|
•
|
investment income from our General Account investment portfolio
|
•
|
policyholders’ benefits and interest credited to policyholders’ account balances;
|
•
|
sales commissions and compensation paid to intermediaries and advisors that distribute our products and services; and
|
•
|
compensation and benefits provided to our employees and other operating expenses.
|
•
|
Variable annuity hedging programs. We use a dynamic hedging program (within this program, generally, we reevaluate our economic exposure at least daily and rebalance our hedge positions accordingly) to mitigate certain risks associated with the GMxB features that are embedded in our liabilities for our variable annuity products. This program utilizes various derivative instruments that are managed in an effort to reduce the economic impact of unfavorable changes in GMxB features’ exposures attributable to movements in the equity markets and interest rates. Although this program is designed to provide a measure of economic protection against the impact of adverse market conditions, it does not qualify for hedge accounting treatment. Accordingly, changes in value of the derivatives will be recognized in the period in which they occur with offsetting changes in reserves partially recognized in the current period, resulting in net income volatility. In addition to our dynamic hedging program, in the fourth quarter of 2017 and the first quarter of 2018, we implemented a new hedging program using static hedge positions (derivative positions intended to be held to maturity with less frequent re-balancing) to protect our statutory capital against stress scenarios. The implementation of this new program in addition to our dynamic hedge program is expected to increase the size of our derivative positions, resulting in an increase in net income volatility. The impacts are most pronounced for variable annuity products in our Individual Retirement segment.
|
•
|
GMIB reinsurance contracts. Historically, GMIB reinsurance contracts were used to cede to affiliated and non-affiliated reinsurers a portion of our exposure to variable annuity products that offer a GMIB feature. We account for the GMIB reinsurance contracts as derivatives and report them at fair value. Gross reserves for GMIB reserves are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts. Accordingly, our gross reserves will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts. Because changes in the fair value of the GMIB reinsurance contracts are recorded in the period in which they occur and a majority of the changes in gross reserves for GMIB are recognized over time, net income will be more volatile.
|
•
|
Our General Account investment portfolio consists predominantly of fixed income investments. In the near term, and absent further material change in yields available on investments, we expect the yield we earn on new investments will be lower than the yields we earn on maturing investments, which were generally purchased in environments where interest rates were higher than current levels. If interest rates were to rise, we expect the yield on our new money investments would also rise and gradually converge toward the yield of those maturing assets.
|
•
|
Certain of our variable annuity and life insurance products pay guaranteed minimum interest crediting rates. We are required to pay these guaranteed minimum rates even if earnings on our investment portfolio decline, with the resulting investment margin compression negatively impacting earnings. In addition, we expect more policyholders to hold
|
•
|
A prolonged low interest rate environment also may subject us to increased hedging costs or an increase in the amount of statutory reserves that our insurance subsidiaries are required to hold for GMxB features, lowering their statutory surplus, which would adversely affect their ability to pay dividends to us. In addition, it may also increase the perceived value of GMxB features to our policyholders, which in turn may lead to a higher rate of annuitization and higher persistency of those products over time. Finally, low interest rates may continue to cause an acceleration of deferred acquisition costs (“DAC”) amortization or reserve increase due to loss recognition for interest sensitive products, primarily for our Protection Solutions segment.
|
•
|
National Association of Insurance Commissioners (“NAIC”). In 2015, the NAIC Financial Condition (E) Committee established a working group to study and address regulatory issues resulting from variable annuity captive reinsurance transactions, including reforms that would improve the current statutory reserve and risk-based capital (“RBC”) framework for insurance companies that sell variable annuity products. In August 2018, the NAIC adopted the new framework developed and proposed by this working group, to take effect January 2020, and which has now been referred to various other NAIC committees to develop the full implementation details. Among other changes, the new framework includes new prescriptions for reflecting hedge effectiveness, investment returns, interest rates, mortality and policyholder behavior in calculating statutory reserves and RBC. Once effective, it could materially change the level of variable annuity reserves and RBC requirements as well as their sensitivity to capital markets including interest rate, equity markets, volatility and credit spreads. Overall, we believe the NAIC reform is moving variable annuity capital standards towards an economic framework and is consistent with how we manage our business.
|
•
|
Fiduciary Rules/“Best Interest” Standards of Conduct. In the wake of the March 2018 federal appeals court decision to vacate the Department of Labor’s 2016 fiduciary rulemaking (the “Rule”), the SEC and NAIC as well as state regulators are currently considering whether to apply an impartial conduct standard similar to the Rule to recommendations made in connection with certain annuities and, in one case, to life insurance policies. For example, in July 2018, the NYDFS issued a final version of Regulation 187 that adopts a “best interest” standard for recommendations regarding the sale of life insurance and annuity products in New York. Regulation 187 takes effect on August 1, 2019 with respect to annuity sales and February 1, 2020 for life insurance sales and is applicable to sales of life insurance and annuity products in New York. We are currently assessing Regulation 187 to determine the impact it may have on our business. Beyond the New York regulation, the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
|
•
|
In April 2018, the SEC released a set of proposed rules that would, among other things, enhance the existing standard of conduct for broker-dealers to require them to act in the best interest of their clients; clarify the nature of the fiduciary obligations owed by registered investment advisers to their clients; impose new disclosure requirements aimed at ensuring investors understand the nature of their relationship with their investment professionals; and restrict certain broker-dealers and their financial professionals from using the terms “adviser” or “advisor”. The SEC accepted public comments on its rulemaking through August 7, 2018. Although the full impact of the proposed rules can only be measured when the implementing regulations are adopted, the intent of this provision is to authorize the SEC to impose on broker-dealers’ fiduciary duties to their customers similar to those that apply to investment advisers under existing law. We are currently assessing these proposed rules to determine the impact they may have on our business.
|
•
|
New York Insurance Regulation 210. State regulators are currently considering whether to apply regulatory standards to the determination and/or readjustment of non-guaranteed elements (“NGEs”) within life insurance policies and annuity contracts that may be adjusted at the insurer’s discretion, such as the cost of insurance for universal life insurance policies and interest crediting rates for life insurance policies and annuity contracts. For example, in March 2018, Insurance Regulation 210 went into effect in New York. That regulation establishes standards for the determination and any readjustment of NGEs, including a prohibition on increasing profit margins on existing business or recouping past losses on such business, and requires advance notice of any adverse change in a NGE to both the NYDFS as well as to affected policyholders. We are continuing to assess the impact of Regulation 210 on our business. Beyond the New York regulation, the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
|
•
|
Items related to Variable annuity product features, which include certain changes in the fair value of the derivatives and other securities we use to hedge these features, the effect of benefit ratio unlock adjustments and changes in the fair value of the embedded derivatives reflected within Variable annuity products’ net derivative results;
|
•
|
Investment (gains) losses, which includes other-than-temporary impairments of securities, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
|
•
|
Goodwill impairment, which includes a write-down of goodwill in the first quarter of 2017.
|
•
|
Net actuarial (gains) losses, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period related to pension, other postretirement benefit obligations, and the one-time impact of the settlement of the defined benefit obligation;
|
•
|
Other adjustments, which includes restructuring costs related to severance, lease write-offs related to non-recurring restructuring activities, and separation costs; and
|
•
|
Income tax expense (benefit) related to the above items and non-recurring tax items, which includes the effect of uncertain tax positions for a given audit period, permanent differences due to goodwill impairment, and the Tax Reform Act.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net income (loss) attributable to Holdings
|
$
|
(496
|
)
|
|
$
|
10
|
|
|
$
|
(118
|
)
|
|
$
|
351
|
|
Adjustments related to:
|
|
|
|
|
|
|
|
||||||||
Variable annuity product features
(1)
|
1,403
|
|
|
507
|
|
|
1,829
|
|
|
738
|
|
||||
Investment (gains) losses
|
36
|
|
|
11
|
|
|
(44
|
)
|
|
32
|
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
369
|
|
||||
Net actuarial (gains) losses related to pension and other postretirement benefit obligations
|
24
|
|
|
34
|
|
|
182
|
|
|
101
|
|
||||
Other adjustments
|
51
|
|
|
56
|
|
|
229
|
|
|
61
|
|
||||
Income tax expense (benefit) related to above adjustments
|
(409
|
)
|
|
(35
|
)
|
|
(461
|
)
|
|
(446
|
)
|
||||
Non-recurring tax items
|
84
|
|
|
(183
|
)
|
|
45
|
|
|
(92
|
)
|
||||
Non-GAAP Operating Earnings
|
$
|
693
|
|
|
$
|
400
|
|
|
$
|
1,662
|
|
|
$
|
1,114
|
|
(1)
|
This reconciling item was previously referred to as “GMxB product features”, but is now referred to more broadly as “Variable annuity product features.” See
Note 16
to the Notes to Consolidated Financial Statements for details of adjustments related to Variable annuity product features.
|
|
Trailing Twelve Months Ended September 30, 2018
|
||||||||||
|
Individual Retirement
|
|
Group Retirement
|
|
Protection Solutions
|
||||||
|
(in millions)
|
||||||||||
Operating earnings
(1)
|
$
|
1,615
|
|
|
$
|
377
|
|
|
$
|
608
|
|
Average capital
(2)
|
7,043
|
|
|
1,210
|
|
|
2,607
|
|
|||
Non-GAAP Operating ROC
|
22.9
|
%
|
|
31.2
|
%
|
|
23.3
|
%
|
(1)
|
Protection Solutions was favorably impacted by non-recurring items in the fourth quarter of 2017.
|
(2)
|
For average capital amounts by segment, capital components pertaining directly to specific segments such as DAC along with targeted capital are directly attributed to these segments. Targeted capital for each segment is established using assumptions supporting statutory capital adequacy levels (including CTE98) under most economic scenarios.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(per share amounts)
|
||||||||||||||
Net income (loss) attributable to Holdings
|
$
|
(0.89
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.63
|
|
Adjustments related to:
|
|
|
|
|
|
|
|
||||||||
Variable annuity product features
(1)
|
2.50
|
|
|
0.90
|
|
|
3.26
|
|
|
1.32
|
|
||||
Investment (gains) losses
|
0.06
|
|
|
0.02
|
|
|
(0.08
|
)
|
|
0.06
|
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
0.66
|
|
||||
Net actuarial (gains) losses related to pension and other postretirement benefit obligations
|
0.04
|
|
|
0.06
|
|
|
0.32
|
|
|
0.18
|
|
||||
Other adjustments
|
0.10
|
|
|
0.10
|
|
|
0.41
|
|
|
0.10
|
|
||||
Income tax expense (benefit) related to above adjustments
|
(0.73
|
)
|
|
(0.06
|
)
|
|
(0.82
|
)
|
|
(0.80
|
)
|
||||
Non-recurring tax items
|
0.15
|
|
|
(0.33
|
)
|
|
0.08
|
|
|
(0.16
|
)
|
||||
Non-GAAP Operating Earnings per share
|
$
|
1.23
|
|
|
$
|
0.71
|
|
|
$
|
2.96
|
|
|
$
|
1.99
|
|
(1)
|
This reconciling item was previously referred to as “GMxB product features”, but is now referred to more broadly as “Variable annuity product features.” See
Note 16
to the Notes to Consolidated Financial Statements for details of adjustments related to Variable annuity product features.
|
|
For the Three and Nine months ended September 30, 2018
|
||
|
(in millions)
|
||
Impact of assumption updates on Net income (loss):
|
|
||
Variable annuity product features related assumption updates
|
$
|
(366
|
)
|
All other assumption updates
|
206
|
|
|
Impact of assumption updates on Income (loss) from continuing operations, before income tax
|
(160
|
)
|
|
Income tax (expense) benefit on assumption updates
|
29
|
|
|
Net income (loss) impact of assumption updates
|
$
|
(131
|
)
|
|
For the Three and Nine months ended September 30, 2018
|
|||||||||||
|
Segment Revenues
|
Benefits and Other Deductions
|
Corporate and Other
|
Net
|
||||||||
|
|
(in millions)
|
|
|
||||||||
Impact of assumption updates by segment:
|
|
|
|
|
||||||||
Individual Retirement
|
$
|
—
|
|
$
|
59
|
|
$
|
—
|
|
$
|
59
|
|
Group Retirement
|
—
|
|
43
|
|
—
|
|
43
|
|
||||
Protection Solutions
|
(24
|
)
|
131
|
|
—
|
|
107
|
|
||||
Impact of assumption updates on Corporate and Other
|
—
|
|
—
|
|
(3
|
)
|
(3
|
)
|
||||
Total
|
|
|
|
$
|
206
|
|
•
|
For the Individual Retirement segment, the impacts primarily reflect favorable updates to DAC amortization from primarily lower annuitization assumptions and other policyholder behavior updates.
|
•
|
For the Group Retirement segment, the impacts primarily reflect a favorable update reflecting lower withdrawal rates.
|
•
|
For the Protection Solutions segment, the results primarily reflect favorable updates to surrender rates, expenses and general account investment yields, partially offset by an increase in mortality assumptions. As a result of these changes, the variable and interest sensitive products in the Protection Solutions segment are no longer in loss recognition.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except earnings per share amounts)
|
||||||||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Policy charges and fee income
|
$
|
951
|
|
|
$
|
953
|
|
|
$
|
2,881
|
|
|
$
|
2,810
|
|
Premiums
|
269
|
|
|
267
|
|
|
823
|
|
|
825
|
|
||||
Net derivative gains (losses)
|
(2,006
|
)
|
|
(316
|
)
|
|
(2,288
|
)
|
|
232
|
|
||||
Net investment income (loss)
|
681
|
|
|
794
|
|
|
1,868
|
|
|
2,377
|
|
||||
Total investment gains (losses), net
|
(35
|
)
|
|
(12
|
)
|
|
45
|
|
|
(32
|
)
|
||||
Investment management and service fees
|
1,088
|
|
|
1,018
|
|
|
3,218
|
|
|
2,970
|
|
||||
Other income
|
135
|
|
|
102
|
|
|
376
|
|
|
356
|
|
||||
Total revenues
|
1,083
|
|
|
2,806
|
|
|
6,923
|
|
|
9,538
|
|
||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
318
|
|
|
1,077
|
|
|
1,812
|
|
|
3,900
|
|
||||
Interest credited to policyholders’ account balances
|
278
|
|
|
255
|
|
|
817
|
|
|
743
|
|
||||
Compensation and benefits (includes $42, $41, $122 and $123 of deferred policy acquisition costs, respectively)
|
548
|
|
|
524
|
|
|
1,726
|
|
|
1,609
|
|
||||
Commissions and distribution related payments (includes $138, $121, $390 and $391 of deferred policy acquisition costs, respectively)
|
425
|
|
|
388
|
|
|
1,254
|
|
|
1,183
|
|
||||
Interest expense
|
65
|
|
|
42
|
|
|
171
|
|
|
115
|
|
||||
Amortization of deferred policy acquisition costs (net of capitalization of $180, $162, $512 and $514 of deferred policy acquisition costs, respectively)
|
(363
|
)
|
|
23
|
|
|
(338
|
)
|
|
(150
|
)
|
||||
Other operating costs and expenses (includes $1, $2, $3 and $6 of deferred policy acquisition costs, respectively)
|
430
|
|
|
450
|
|
|
1,349
|
|
|
1,608
|
|
||||
Total benefits and other deductions
|
1,701
|
|
|
2,759
|
|
|
6,791
|
|
|
9,008
|
|
||||
Income (loss) from continuing operations, before income taxes
|
(618
|
)
|
|
47
|
|
|
132
|
|
|
530
|
|
||||
Income tax (expense) benefit
|
175
|
|
|
59
|
|
|
23
|
|
|
100
|
|
||||
Net income (loss)
|
(443
|
)
|
|
106
|
|
|
155
|
|
|
630
|
|
||||
Less: net (income) loss attributable to the noncontrolling interest
|
(53
|
)
|
|
(96
|
)
|
|
(273
|
)
|
|
(279
|
)
|
||||
Net income (loss) attributable to Holdings
|
$
|
(496
|
)
|
|
$
|
10
|
|
|
$
|
(118
|
)
|
|
$
|
351
|
|
|
|
|
|
|
|
|
|
||||||||
EARNINGS PER SHARE
|
|
|
|
|
|
|
|
||||||||
Earnings per share - Common stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.89
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.63
|
|
Diluted
|
$
|
(0.89
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.63
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
560.3
|
|
|
561.0
|
|
|
560.8
|
|
|
561.0
|
|
||||
Diluted
|
560.3
|
|
|
561.0
|
|
|
560.8
|
|
|
561.0
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except earnings per share amounts)
|
||||||||||||||
Non-GAAP Operating Earnings
|
$
|
693
|
|
|
$
|
400
|
|
|
$
|
1,662
|
|
|
$
|
1,114
|
|
Non-GAAP Operating Earnings per share, Basic
|
$
|
1.24
|
|
|
$
|
0.71
|
|
|
$
|
2.96
|
|
|
$
|
1.99
|
|
Non-GAAP Operating Earnings per share, Diluted
|
$
|
1.23
|
|
|
$
|
0.71
|
|
|
$
|
2.96
|
|
|
$
|
1.99
|
|
•
|
Net derivative losses
increased
by
$1,690 million
mainly due to assumption
updates in the third quarter of 2018 and increases in interest rates and equity markets.
|
•
|
Net investment income
decreased
by
$113 million
mainly due to a change in the market value of trading securities primarily driven by higher interest rates.
|
•
|
Commissions and distribution related payments
increased
by
$37 million
mainly driven by higher sales and assets in our Individual Retirement segment and higher revenues from AXA Advisors broker dealer AUA due to higher equity markets and net inflows
.
|
•
|
Investment losses
increased
by
$23 million
primarily due to losses on the sale of fixed maturities, mainly U.S. Treasury securities.
|
•
|
Interest credited to policyholders’ account balances
increased
by
$23 million
mainly due to higher SCS AV driven by new business growth
.
|
•
|
Interest expense
increased
by
$23 million
due to the issuance of $4.1 billion of debt in the second quarter of 2018
.
|
•
|
Policyholders’ benefits
decreased
by
$759 million
, mainly due to
the favorable
impact of assumption updates in the third quarter
of
2018
.
|
•
|
Amortization of DAC, net
decreased
by
$386 million
mainly due to the favorable
impact of assumption updates in the third quarter
of
2018
.
|
•
|
Revenues from fees and related items, including Policy charges and fee income, Premiums, Investment management and service fees, and Other income, increased by $103 million mainly due to our Investment Management and Research
|
•
|
Income tax benefit
increased
by
$116 million
primarily due to a pre-tax loss in 2018.
|
•
|
Net income attributable to the noncontrolling interest
decreased
by
$37 million
due to an increase in economic interest in AB from 47% to 65%, partially offset by an increase in AB’s Net income.
|
•
|
Amortization of DAC, net
decreased
by
$377 million
, mainly due to the favorable
impact of assumption updates in the third quarter
of
2018
.
|
•
|
Revenue from fees and related items (“Fee-type revenue”), including Policy charges, fee income and premiums and Investment management, service fees and other income
increased
by
$103 million
mainly due to our Investment Management and Research segment reflecting higher base fees resulting from an increase in average AUM of
4%
and an increase in performance fees, as well as higher average AV from net flows and higher equity markets in other segments.
|
•
|
Net investment income
increased
by
$15 million
mainly due to the General Account portfolio optimization and higher asset balances.
|
•
|
Income tax expense decreased by
$25 million
driven by the impact of a lower effective tax rate due to the Tax Reform Act, partially offset by higher pre-tax earnings.
|
•
|
Policyholders’ benefits
increased
by
$126 million
primarily due to the unfavorable
impact of assumption updates in the third quarter
of
2018
and higher mortality experience.
|
•
|
Commissions and distribution related payments increased by
$37 million
mainly driven by higher sales and assets in our Individual Retirement segment and higher revenues from AXA Advisors broker dealer AUA due to higher equity markets and net inflows
.
|
•
|
Interest expense increased by
$34 million
due to the issuance of $4.1 billion of debt in the second quarter of 2018
.
|
•
|
Other operating costs and expenses increased by $30 million mainly due to our Investment Management and Research segment driven by higher compensation resulting from higher fee income.
|
•
|
Interest credited to policyholders’ account balances
increased
by
$22 million
mainly driven by Individual Retirement reflecting higher SCS AV due to higher sales.
|
•
|
Net derivative losses
increased
by
$2,520 million
mainly due t
o the unfavorable
impact of assumption updates in the third quarter
of
2018
compared to the favorable impact of assumption updates in the first nine months of 2017.
|
•
|
Decrease
in
Net investment income
of
$509 million
, mainly due to a change in the market value of trading securities supporting our Individual Retirement products due to higher interest rates.
|
•
|
Compensation and benefits
increased
by
$117 million
mainly due to
the loss resulting from the annuity purchase transaction and partial
settlement
of the employee pension plan
in the first quarter of 2018.
|
•
|
Interest credited to policyholders’ account balances
increased
by
$74 million
, mainly driven by higher SCS AV due to new business growth.
|
•
|
Increase in Interest expense of
$56 million
due to the issuance of $4.1 billion of debt in the second quarter of 2018
.
|
•
|
Income tax benefit
decreased
by
$78 million
driven by a decrease in pre-tax earnings, and the tax benefit in 2017 related to the conclusion of an IRS audit for tax years 2008 and 2009 in the first nine months of 2017, partially offset by a lower effective tax rate due to the Tax Reform Act, as well as the permanent differences of a one-time goodwill impairment in the first nine months of 2017.
|
•
|
Policyholder’s benefits
decreased
by
$2,088 million
mainly due to the
favorable
impact of assumption updates in the third quarter
of
2018
compared to the unfavorable impact of assumption updates in the first nine months of 2017.
|
•
|
Revenue from fees and related items, including Policy charges and fee income, Premiums, Investment management and service fees, and Other income
increased
by
$337 million
mainly driven by our Investment Management and Research segment, primarily due to higher base fees reflecting an increase in average AUM of
8%
and an increase in performance fees, as well as higher average AV from net flows and higher equity markets.
|
•
|
Other operating costs and expenses
decreased
by
$259 million
mainly due to a non-recurring goodwill impairment charge in the first six months of 2017 resulting from the Company’s adoption of new accounting guidance for goodwill on January 1, 2017, partially offset by higher IPO related separation costs.
|
•
|
Amortization of DAC, net
decreased
by
$188 million
mainly due to the favorable
impact of assumption updates in the third quarter
of
2018
.
|
•
|
Net investment gains
increased
by
$77 million
, primarily due to the sale of fixed maturities.
|
•
|
Policyholders’ benefits
decreased
by
$493 million
primarily due to a decrease in our Individual Retirement segment reflecting an improvement in GMxB margins, mainly driven by a reserve strengthening in the second quarter of 2017 (the decrease in Policyholders’ benefits was partially offset by a $362 million decrease in derivative gains mainly in Individual Retirement).
|
•
|
Fee-type revenue
increased
by
$415 million
mainly due to our Investment Management and Research segment reflecting higher base fees resulting from an increase in average AUM of
8%
from equity markets and the positive impact of adopting a new revenue recognition standard (ASC 606) in 2018, which allows the recognition of certain performance based fees. Insurance segments also increased as a result of higher equity markets.
|
•
|
Amortization of DAC, net
decreased
by
$201
million, mainly due to the favorable
impact of assumption updates in the third quarter
of
2018
.
|
•
|
Net investment income
increased
by
$62 million
mainly due to the General Account portfolio optimization and higher asset balances.
|
•
|
Income tax expense
decreased
by
$61 million
driven by a lower effective tax rate due to the Tax Reform Act, partially offset by tax expense on higher pre-tax earnings.
|
•
|
Other operating costs and expenses
increased
by
$89 million
mainly due to an increase in our Investment
Management and Research segment driven by higher compensation resulting from higher fees. Excluding Investment Management and Research, expenses were down
$9 million
due to productivity initiatives.
|
•
|
Interest credited to policyholders’ account balances
increased
by
$74 million
mainly driven by Individual Retirement reflecting higher SCS AV due to growth in product sales.
|
•
|
Commissions and distribution related payments increased by
$71 million
mainly driven by higher revenue from AXA Advisors broker dealer AUA due to equity markets and net inflows
.
|
•
|
Interest expense increased by
$67 million
due to the issuance of $4.1 billion of debt in the second quarter of 2018
.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating earnings (loss):
|
|
|
|
|
|
|
|
||||||||
Individual Retirement
|
$
|
434
|
|
|
$
|
326.0
|
|
|
$
|
1,207
|
|
|
$
|
844
|
|
Group Retirement
|
134
|
|
|
85.0
|
|
|
287
|
|
|
193
|
|
||||
Investment Management and Research
|
96
|
|
|
45.0
|
|
|
274
|
|
|
138
|
|
||||
Protection Solutions
|
137
|
|
|
(3.0
|
)
|
|
160
|
|
|
54
|
|
||||
Corporate and Other
|
(108
|
)
|
|
(53.0
|
)
|
|
(266
|
)
|
|
(115
|
)
|
||||
Non-GAAP Operating Earnings
|
$
|
693
|
|
|
$
|
400
|
|
|
$
|
1,662
|
|
|
$
|
1,114
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating earnings
|
$
|
434
|
|
|
$
|
326
|
|
|
$
|
1,207
|
|
|
$
|
844
|
|
|
|
|
|
|
|
|
|
||||||||
Key components of Operating earnings are:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Policy charges, fee income and premiums
|
$
|
560
|
|
|
$
|
531
|
|
|
$
|
1,619
|
|
|
$
|
1,560
|
|
Net investment income
|
247
|
|
|
211
|
|
|
733
|
|
|
609
|
|
||||
Investment gains (losses), net including derivative gains (losses)
|
69
|
|
|
73
|
|
|
(52
|
)
|
|
340
|
|
||||
Investment management, service fees and other income
|
194
|
|
|
183
|
|
|
573
|
|
|
549
|
|
||||
Segment revenues
|
1,070
|
|
|
998
|
|
|
2,873
|
|
|
3,058
|
|
||||
|
|
|
|
|
|
|
|
||||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
312
|
|
|
272
|
|
|
608
|
|
|
1,082
|
|
||||
Interest credited to policyholders’ account balances
|
63
|
|
|
49
|
|
|
176
|
|
|
126
|
|
||||
Commissions and distribution related payments
(1)
|
166
|
|
|
144
|
|
|
462
|
|
|
458
|
|
||||
Amortization of deferred policy acquisition costs, net
(2)
|
(102
|
)
|
|
(49
|
)
|
|
(196
|
)
|
|
(195
|
)
|
||||
Compensation and benefits and other operating costs and expenses
(3)
|
122
|
|
|
131
|
|
|
367
|
|
|
405
|
|
||||
Interest expense
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||
Segment benefits and other deductions
|
$
|
561
|
|
|
$
|
540
|
|
|
$
|
1,417
|
|
|
$
|
1,876
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Balance as of beginning of period
|
$
|
103,114
|
|
|
$
|
98,570
|
|
|
$
|
103,423
|
|
|
$
|
93,604
|
|
Gross premiums
|
1,991
|
|
|
1,749
|
|
|
5,834
|
|
|
5,850
|
|
||||
Surrenders, withdrawals and benefits
|
(2,249
|
)
|
|
(1,893
|
)
|
|
(6,703
|
)
|
|
(5,604
|
)
|
||||
Net flows
|
(258
|
)
|
|
(144
|
)
|
|
(869
|
)
|
|
246
|
|
||||
Investment performance, interest credited and policy charges
|
2,889
|
|
|
2,510
|
|
|
3,191
|
|
|
7,086
|
|
||||
Balance as of end of period
|
$
|
105,745
|
|
|
$
|
100,936
|
|
|
$
|
105,745
|
|
|
$
|
100,936
|
|
|
|
|
|
|
|
|
|
||||||||
General Account
|
$
|
21,404
|
|
|
$
|
18,297
|
|
|
$
|
21,404
|
|
|
$
|
18,297
|
|
Separate Accounts
|
84,341
|
|
|
82,639
|
|
|
84,341
|
|
|
82,639
|
|
||||
Total AV
|
$
|
105,745
|
|
|
$
|
100,936
|
|
|
$
|
105,745
|
|
|
$
|
100,936
|
|
•
|
Amortization of DAC, net
decreased
by
$53 million
primarily driven by the favorable impact of the assumption updates in the third quarter of 2018 which reflect lower client annuitization generating higher base product fees over the life of the contract.
|
•
|
Increase
in Net investment income of
$36 million
, resulting from higher asset balances mainly driven by SCS sales and General Account portfolio optimization.
|
•
|
Fee-type revenue
increased
by
$41 million
due to higher Separate Account AV from higher equity market performance.
|
•
|
Decrease
in Income tax expense of
$55 million
was driven by a lower effective tax rate due to the Tax Reform Act, partially offset by higher pre-tax operating earnings.
|
•
|
Net decrease of $54 million in operating earnings from our GMxB block, primarily due to higher claims.
|
•
|
Increase
in Commissions and distribution related payments of
$22 million
due to higher sales and assets.
|
•
|
Interest credited to policyholders’ account balances increased by
$14 million
primarily due to SCS products.
|
•
|
The increase in AV of
$4.8 billion
was due to higher equity markets offsetting net outflows in the Company’s older fixed-rate GMxB block.
|
•
|
Net outflows were
$258 million
,
driven by surrenders in the Company’s older fixed rate GMxB block partially offset by higher deposits. Deposits were
$242 million
higher driven by September 2018 sales being stronger than 2017 sales.
|
•
|
Increase
in Net investment income of
$124 million
resulting from higher asset balances mainly driven by SCS sales and General Account portfolio optimization.
|
•
|
Fee-type revenue
increased by
$84 million
due to higher Separate Accounts AV from higher equity market performance and higher premium income from payout annuities.
|
•
|
Improvement in GMxB results of $66 million primarily due to an assumption update in the second quarter of 2017 resulting in higher reserves.
|
•
|
Operating expenses decreased by $37 million due to lower acquisition expenses and productivity initiatives.
|
•
|
Decrease
in Income tax expense of
$85 million
driven by a lower effective tax rate due to the Tax Reform Act, partially offset by higher pre-tax operating earnings.
|
•
|
Increase
in Interest credited to policyholders’ account balances of
$50 million
primarily due to SCS products.
|
•
|
Increase in AV of
$4.8 billion
was due to higher equity markets offset by outflows in the Company’s older fixed-rate GMxB block.
|
•
|
Net outflows of
$869 million
primarily driven by $3.1 billion of outflows on the Company’s older fixed-rate GMxB block, which were partially offset by $2.2 billion of net inflows on our newer less capital intensive products.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating earnings
|
$
|
134
|
|
|
$
|
85
|
|
|
$
|
287
|
|
|
$
|
193
|
|
|
|
|
|
|
|
|
|
||||||||
Key components of Operating earnings are:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Policy charges, fee income and premiums
|
$
|
70
|
|
|
$
|
51
|
|
|
$
|
204
|
|
|
$
|
171
|
|
Net investment income
|
140
|
|
|
150
|
|
|
395
|
|
|
391
|
|
||||
Investment gains (losses), net including derivative gains (losses)
|
—
|
|
|
2
|
|
|
1
|
|
|
(6
|
)
|
||||
Investment management, service fees and other income
|
52
|
|
|
45
|
|
|
145
|
|
|
129
|
|
||||
Segment revenues
|
262
|
|
|
248
|
|
|
745
|
|
|
685
|
|
||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Interest credited to policyholders’ account balances
|
72
|
|
|
71
|
|
|
216
|
|
|
211
|
|
||||
Commissions and distribution related payments
(1)
|
22
|
|
|
20
|
|
|
72
|
|
|
67
|
|
||||
Amortization of deferred policy acquisition costs, net
(2)
|
(56
|
)
|
|
(23
|
)
|
|
(82
|
)
|
|
(53
|
)
|
||||
Compensation and benefits and other operating costs and expenses
(3)
|
63
|
|
|
62
|
|
|
191
|
|
|
193
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Segment benefits and other deductions
|
$
|
104
|
|
|
$
|
130
|
|
|
$
|
400
|
|
|
$
|
418
|
|
(1)
|
Includes
$14 million
,
$15 million
,
$42 million
and
$45 million
of deferred policy acquisition costs.
|
(2)
|
Net of capitalization of
$21 million
,
$21 million
,
$65 million
and
$61 million
.
|
(3)
|
Includes
$8 million
,
$6 million
,
$23 million
and
$16 million
of deferred policy acquisition costs.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Balance as of beginning of period
|
$
|
34,649
|
|
|
$
|
31,982
|
|
|
$
|
33,906
|
|
|
$
|
30,138
|
|
Gross premiums
|
744
|
|
|
673
|
|
|
2,466
|
|
|
2,345
|
|
||||
Surrenders, withdrawals and benefits
|
(844
|
)
|
|
(677
|
)
|
|
(2,314
|
)
|
|
(2,098
|
)
|
||||
Net flows
|
(100
|
)
|
|
(4
|
)
|
|
152
|
|
|
247
|
|
||||
Investment performance, interest credited and policy charges
|
1,027
|
|
|
879
|
|
|
1,518
|
|
|
2,472
|
|
||||
Balance as of end of period
|
$
|
35,576
|
|
|
$
|
32,857
|
|
|
$
|
35,576
|
|
|
$
|
32,857
|
|
|
|
|
|
|
|
|
|
||||||||
General Account
|
$
|
11,587
|
|
|
$
|
11,316
|
|
|
$
|
11,587
|
|
|
$
|
11,316
|
|
Separate Accounts
|
23,989
|
|
|
21,541
|
|
|
23,989
|
|
|
21,541
|
|
||||
Total AV
|
$
|
35,576
|
|
|
$
|
32,857
|
|
|
$
|
35,576
|
|
|
$
|
32,857
|
|
•
|
Increase
in fee-type revenue of
$27 million
due to an 11% increase in the separate accounts AV reflecting higher equity markets.
|
•
|
Amortization of DAC, net
decreased
by
$33 million
mainly due to the favorable impact of the third quarter of 2018 assumption updates related to higher persistency reflecting client engagement.
|
•
|
Net investment income
decreased
by
$10 million
mainly driven by 2017 non-repeating gains in alternative investments.
|
•
|
The increase in AV of
$2.7 billion
was primarily due to higher equity markets.
|
•
|
Net outflows were
$100 million
, mainly driven by seasonality in the tax-exempt market.
|
•
|
Fee-type revenue increased by
$50 million
mainly due to an increase in Separate Accounts AV reflecting higher equity markets.
|
•
|
Amortization of DAC, net
decreased
by
$29 million
mainly due to the favorable
impact of assumption updates in the third quarter
of
2018
related to higher persistency.
|
•
|
Increase
in Investment gains (losses), net including derivative gains (losses) of
$7 million
was due to a 2017 non-repeating loss on derivatives.
|
•
|
Decrease
in Income tax expense of
$15 million
driven by lower effective tax rate due to the Tax Reform Act, partly offset by higher pre-tax operating earnings.
|
•
|
Increase
in the total of Interest credited to policyholders’ account balances and Commissions and distribution related payments of
$10 million
was primarily due to new business and AV growth.
|
•
|
The increase in AV of
$2.7 billion
was primarily due to higher equity markets and positive net flows.
|
•
|
Net flows were
$152 million
, driven by growth in inflows and continuous improved client engagement.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating earnings
|
$
|
96
|
|
|
$
|
45
|
|
|
$
|
274
|
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
||||||||
Key components of Operating earnings are:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Policy charges, fee income and premiums
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net investment income
|
7
|
|
|
9
|
|
|
14
|
|
|
32
|
|
||||
Investment gains (losses), net including derivative gains (losses)
|
(6
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|
(20
|
)
|
||||
Investment management, service fees and other income
|
850
|
|
|
788
|
|
|
2,592
|
|
|
2,295
|
|
||||
Segment revenues
|
851
|
|
|
792
|
|
|
2,602
|
|
|
2,307
|
|
||||
|
|
|
|
|
|
|
|
||||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest credited to policyholders’ account balances
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Commissions and distribution related payments
|
107
|
|
|
106
|
|
|
323
|
|
|
305
|
|
||||
Amortization of deferred policy acquisition costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Compensation and benefits and other operating costs and expenses
(3)
|
539
|
|
|
510
|
|
|
1,614
|
|
|
1,516
|
|
||||
Interest expense
|
3
|
|
|
2
|
|
|
7
|
|
|
5
|
|
||||
Segment benefits and other deductions
|
$
|
649
|
|
|
$
|
618
|
|
|
$
|
1,944
|
|
|
$
|
1,826
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in billions)
|
||||||||||||||
Balance as of beginning of period
|
$
|
539.8
|
|
|
$
|
516.6
|
|
|
$
|
554.5
|
|
|
$
|
480.2
|
|
Long-term flows:
|
|
|
|
|
|
|
|
||||||||
Sales/new accounts
|
19.3
|
|
|
20.0
|
|
|
72.6
|
|
|
59.4
|
|
||||
Redemptions/terminations
|
(13.3
|
)
|
|
(13.9
|
)
|
|
(67.9
|
)
|
|
(46.7
|
)
|
||||
Cash flow/unreinvested dividends
|
(4.7
|
)
|
|
(1.6
|
)
|
|
(13.5
|
)
|
|
(3.7
|
)
|
||||
Net long-term (outflows) inflows
|
1.3
|
|
|
4.5
|
|
|
(8.8
|
)
|
|
9.0
|
|
||||
Market appreciation (depreciation)
|
9.3
|
|
|
13.8
|
|
|
4.7
|
|
|
45.7
|
|
||||
Net change
|
10.6
|
|
|
18.3
|
|
|
(4.1
|
)
|
|
54.7
|
|
||||
Balance as of end of period
|
$
|
550.4
|
|
|
$
|
534.9
|
|
|
$
|
550.4
|
|
|
$
|
534.9
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in billions)
|
||||||||||||||
Distribution Channel:
|
|
|
|
|
|
|
|
||||||||
Institutions
|
$
|
256.6
|
|
|
$
|
257.1
|
|
|
$
|
261.1
|
|
|
$
|
250.1
|
|
Retail
|
194.0
|
|
|
181.7
|
|
|
193.4
|
|
|
173.4
|
|
||||
Private Wealth Management
|
96.3
|
|
|
87.8
|
|
|
95.0
|
|
|
85.3
|
|
||||
Total
|
$
|
546.9
|
|
|
$
|
526.6
|
|
|
$
|
549.5
|
|
|
$
|
508.8
|
|
Investment Service:
|
|
|
|
|
|
|
|
||||||||
Equity Actively Managed
|
$
|
152.4
|
|
|
$
|
128.0
|
|
|
$
|
147.3
|
|
|
$
|
121.9
|
|
Equity Passively Managed
(1)
|
55.3
|
|
|
51.1
|
|
|
54.3
|
|
|
49.9
|
|
||||
Fixed Income Actively Managed – Taxable
|
225.5
|
|
|
240.7
|
|
|
233.4
|
|
|
233.4
|
|
||||
Fixed Income Actively Managed – Tax-exempt
|
41.9
|
|
|
39.6
|
|
|
41.2
|
|
|
38.5
|
|
||||
Fixed Income Passively Managed
(1)
|
10.0
|
|
|
9.9
|
|
|
10.0
|
|
|
10.4
|
|
||||
Other
(2)
|
61.8
|
|
|
57.3
|
|
|
63.3
|
|
|
54.7
|
|
||||
Total
|
$
|
546.9
|
|
|
$
|
526.6
|
|
|
$
|
549.5
|
|
|
$
|
508.8
|
|
(1)
|
Includes index and enhanced index services.
|
(2)
|
Includes multi-asset solutions and services, and certain alternative investments.
|
•
|
Increase in ownership of AB from a blended rate of approximately
65%
for the
three months ended September 30, 2018
compared to approximately
46%
during the
three months ended September 30, 2017
.
|
•
|
Increase
in fee-type revenue of
$62 million
primarily due to higher base fees resulting from a
4%
increase in average AUM and an increase in performance fees.
|
•
|
Higher Segment benefits and other deductions of
$32 million
due to higher compensation and benefits offset by lower general and administrative expenses.
|
•
|
Total AUM as of
September 30, 2018
was
$550.4 billion
, with a net change of
$10.6 billion
, or
2%
, compared to June 30, 2018,
$15.5 billion
or
3%
, compared to September 30, 2017. During the
third quarter
of 2018, AUM increased as a result of market appreciation of
$9.3 billion
, and net inflows of
$1.3 billion
(net inflows of
$1.2 billion
and
$0.3 billion
for Retail and Private Wealth Management, respectively, offset by Institutional net outflows of
$0.2 billion
).
|
•
|
Increase in ownership of AB from a blended rate of approximately
57%
for the
first nine months of 2018
compared to approximately 46% during the
first nine months of 2017
.
|
•
|
Increase
in fee-type revenue of
$297 million
primarily due to higher base fees resulting from a
8%
increase in average AUM and additionally an increase in performance fees. Operating earnings includes an increase in revenues of
$78 million
from the impact of adopting the new revenue recognition standard (ASC 606) in 2018 which allows the recognition of certain performance based fees.
|
•
|
Decrease
in Net Investment income of
$18 million
due to
lower investment income on company sponsored funds.
|
•
|
Higher
Compensation, benefits, interest expense and other operating costs of
$98 million
, including $43 million related to the impact of adoption of revenue recognition standard (ASC 606) in 2018.
|
•
|
Higher
commissions and distribution related payments of
$18 million
.
|
•
|
Income tax expense
increased
$13 million
driven by higher pre-tax earnings offset by a lower effective tax rate due to the Tax
Reform Act.
|
•
|
Total AUM as of
September 30, 2018
was
$550.4 billion
, down
$4.1 billion
, or
1%
, compared to December 31,2017. During the nine months ended
September 30, 2018
, AUM decreased as a result of net outflows of
$8.8 billion
(Institutional net outflows of
$11.0 billion
, and Retail net outflows of
$0.7 billion
, offset by net inflows of
$2.9 billion
for Private Wealth Management) offset by market appreciation of
$4.7 billion
.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating earnings
|
$
|
137
|
|
|
$
|
(3
|
)
|
|
$
|
160
|
|
|
$
|
54
|
|
|
|
|
|
|
|
|
|
||||||||
Key components of Operating earnings are:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Policy charges, fee income and premiums
|
$
|
485
|
|
|
$
|
518
|
|
|
$
|
1,562
|
|
|
$
|
1,559
|
|
Net investment income
|
233
|
|
|
226
|
|
|
647
|
|
|
607
|
|
||||
Investment gains (losses), net including derivative gains (losses)
|
2
|
|
|
3
|
|
|
4
|
|
|
4
|
|
||||
Investment management, service fees and other income
|
55
|
|
|
51
|
|
|
165
|
|
|
160
|
|
||||
Segment Revenues
|
775
|
|
|
798
|
|
|
2,378
|
|
|
2,330
|
|
||||
|
|
|
|
|
|
|
|
||||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
|
|
||||||||
Policyholders’ benefits
|
515
|
|
|
432
|
|
|
1,343
|
|
|
1,265
|
|
||||
Interest credited to policyholders’ account balances
|
117
|
|
|
119
|
|
|
359
|
|
|
355
|
|
||||
Commissions and distribution related payments
(1)
|
66
|
|
|
65
|
|
|
207
|
|
|
201
|
|
||||
Amortization of deferred policy acquisition costs, net
(2)
|
(192
|
)
|
|
90
|
|
|
(47
|
)
|
|
113
|
|
||||
Compensation and benefits and other operating costs and expenses
(3)
|
104
|
|
|
104
|
|
|
324
|
|
|
331
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Segment benefits and other deductions
|
$
|
610
|
|
|
$
|
810
|
|
|
$
|
2,186
|
|
|
$
|
2,265
|
|
(1)
|
Includes
$36 million
,
$33 million
,
$106 million
and
$103 million
of deferred policy acquisition costs.
|
(2)
|
Net of capitalization of
$51 million
,
$49 million
,
$152 million
and
$148 million
.
|
(3)
|
Includes
$15 million
,
$15 million
,
$46 million
and
$45 million
of deferred policy acquisition costs.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Protection Solutions Reserves
(1)
|
|
|
|
||||
General Account
|
$
|
16,372
|
|
|
$
|
16,101
|
|
Separate Accounts
|
13,055
|
|
|
12,643
|
|
||
Total Protection Solutions Reserves
|
$
|
29,427
|
|
|
$
|
28,744
|
|
(1)
|
Does not include Protection Solutions Reserves for our employee benefits business as it is a start-up business and therefore has immaterial in-force policies.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in billions)
|
||||||
In-force Face Amounts for Protection Solutions
(1)
|
|
|
|
||||
Universal life
(2)
|
$
|
56.8
|
|
|
$
|
59.8
|
|
Indexed universal life
|
22.2
|
|
|
19.8
|
|
||
Variable universal life
(3)
|
128.1
|
|
|
128.9
|
|
||
Term
|
234.2
|
|
|
235.3
|
|
||
Whole life
|
1.5
|
|
|
1.6
|
|
||
Total in-force face amount
|
$
|
442.8
|
|
|
$
|
445.4
|
|
(1)
|
Includes individual life insurance and does not include employee benefits as it is a start-up business and therefore has immaterial in-force policies.
|
(2)
|
Universal Life includes Guaranteed Universal Life.
|
(3)
|
Variable Universal Life includes VL and COLI.
|
•
|
Amortization of DAC, net
decreased
by
$282 million
driven by a
$279 million
decrease in DAC amortization before capitalization. This decrease was mainly driven by the favorable impact of the assumption updates in the third quarter of 2018 and lower baseline amortization.
|
•
|
Policyholders’ benefits increased by
$83 million
mainly due to the unfavorable impact of the assumption updates in the third quarter of 2018, combined with higher mortality experience and higher reserve accrual.
|
•
|
Fee-type revenue
decreased by
$29 million
mainly due to the unfavorable impact of assumption updates in the third quarter of 2018.
|
•
|
Income tax expense increased by
$37 million
driven by higher pre-tax earnings, partially offset by the impact of a lower effective tax rate due to the Tax Reform Act.
|
•
|
Amortization of DAC, net
decreased
by
$160 million
driven by a
$156 million
decrease in DAC amortization before capitalization. This decrease was mainly driven by the favorable
impact of assumption updates in the third quarter
of
2018
and lower baseline amortization.
|
•
|
Net investment income increased by
$40 million
primarily due to higher asset balances and the positive impact of our General Account portfolio optimization.
|
•
|
Increase
of
$8 million
in fee-type r
evenue
was mainly due to higher Separate Accounts AV.
|
•
|
Increase
of
$78 million
in Policyholders’ benefits mainly due to the unfavorable
impact of assumption updates in the third quarter
of
2018
and higher mortality experience.
|
•
|
Commissions and related payments increased by
$6 million
reflecting growing sales of our employee benefits products.
|
•
|
Income tax expense increased by
$21 million
driven by higher pre-tax earnings, partially offset by the impact of a lower effective tax rate due to the Tax Reform Act.
|
|
Three Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
||||||
|
(Dollars in millions)
|
||||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
||||||
Income (loss)
|
3.85
|
%
|
|
$
|
428
|
|
|
3.49
|
%
|
|
$
|
370
|
|
Ending assets
|
|
|
44,212
|
|
|
|
|
42,616
|
|
||||
Mortgages:
|
|
|
|
|
|
|
|
||||||
Income (loss)
|
4.30
|
%
|
|
124
|
|
|
4.36
|
%
|
|
112
|
|
||
Ending assets
|
|
|
12,070
|
|
|
|
|
10,623
|
|
|
Nine Months Ended September 30,
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
2018
|
|
2017
|
|
|||||||||||||
|
Yield
|
|
Amount
|
|
Yield
|
|
Amount
|
|
|||||||||
Real Estate Held for Production of Income:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense and other
|
(4.35
|
)%
|
|
(6
|
)
|
|
(2.99
|
)%
|
|
(3
|
)
|
|
2
|
|
|||
Ending assets (liabilities)
|
|
|
54
|
|
|
|
|
394
|
|
|
390
|
|
|||||
Other Equity Investments
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss)
|
8.69
|
%
|
|
85
|
|
|
13.09
|
%
|
|
123
|
|
|
169
|
|
|||
Ending assets
|
|
|
1,325
|
|
|
|
|
1,280
|
|
|
1,289
|
|
|||||
Policy Loans:
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss)
|
5.62
|
%
|
|
159
|
|
|
5.74
|
%
|
|
165
|
|
|
221
|
|
|||
Ending assets
|
|
|
3,739
|
|
|
|
|
3,824
|
|
|
3,819
|
|
|||||
Cash and Short-term Investments:
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss)
|
0.72
|
%
|
|
25
|
|
|
0.63
|
%
|
|
24
|
|
|
32
|
|
|||
Ending assets
|
|
|
3,788
|
|
|
|
|
5,570
|
|
|
4,539
|
|
|||||
Repurchase and Funding agreements:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense and other
|
|
|
(76
|
)
|
|
|
|
(50
|
)
|
|
(71
|
)
|
|||||
Ending assets (liabilities)
|
|
|
(4,891
|
)
|
|
|
|
(4,550
|
)
|
|
(4,882
|
)
|
|||||
Total Invested Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss)
|
3.99
|
%
|
|
1,829
|
|
|
4.20
|
%
|
|
1,829
|
|
|
2,436
|
|
|||
Ending assets
|
|
|
60,297
|
|
|
|
|
59,757
|
|
|
61,858
|
|
|||||
Short Duration VA:
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss)
|
2.35
|
%
|
|
229
|
|
|
1.91
|
%
|
|
142
|
|
|
206
|
|
|||
Ending assets
|
|
|
14,084
|
|
|
|
|
11,352
|
|
|
11,945
|
|
|||||
Total:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment Income (loss)
|
3.71
|
%
|
|
2,058
|
|
|
3.86
|
%
|
|
1,971
|
|
|
2,642
|
|
|||
Less: investment fees
|
(0.08
|
)%
|
|
(44
|
)
|
|
(0.08
|
)%
|
|
(40
|
)
|
|
(59
|
)
|
|||
Investment Income, Net
|
3.63
|
%
|
|
$
|
2,014
|
|
|
3.78
|
%
|
|
$
|
1,932
|
|
|
$
|
2,583
|
|
Ending Net Assets
|
|
|
$
|
74,381
|
|
|
|
|
$
|
71,109
|
|
|
$
|
73,803
|
|
(1)
|
Includes other invested assets of
$169 million
as of
September 30, 2018
,
$33 million
as of
September 30, 2017
and
$25 million
as of
December 31, 2017
.
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Percentage of Total (%)
|
|||||||||
|
(in millions)
|
|||||||||||||||||
At September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
|
|||||||||
Finance
|
$
|
5,990
|
|
|
$
|
75
|
|
|
$
|
125
|
|
|
$
|
5,940
|
|
|
14
|
%
|
Manufacturing
|
8,624
|
|
|
108
|
|
|
230
|
|
|
8,502
|
|
|
20
|
%
|
||||
Utilities
|
4,324
|
|
|
87
|
|
|
127
|
|
|
4,284
|
|
|
10
|
%
|
||||
Services
|
3,853
|
|
|
54
|
|
|
88
|
|
|
3,819
|
|
|
9
|
%
|
||||
Energy
|
2,143
|
|
|
47
|
|
|
44
|
|
|
2,146
|
|
|
5
|
%
|
||||
Retail and wholesale
|
1,676
|
|
|
14
|
|
|
35
|
|
|
1,655
|
|
|
4
|
%
|
||||
Transportation
|
1,240
|
|
|
28
|
|
|
43
|
|
|
1,225
|
|
|
3
|
%
|
||||
Other
|
130
|
|
|
3
|
|
|
—
|
|
|
133
|
|
|
—
|
%
|
||||
Total corporate securities
|
27,980
|
|
|
416
|
|
|
692
|
|
|
27,704
|
|
|
64
|
%
|
||||
U.S. government and agency
|
14,037
|
|
|
137
|
|
|
732
|
|
|
13,442
|
|
|
31
|
%
|
||||
Residential mortgage-backed
(2)
|
234
|
|
|
9
|
|
|
1
|
|
|
242
|
|
|
1
|
%
|
||||
Preferred stock
|
480
|
|
|
31
|
|
|
8
|
|
|
503
|
|
|
1
|
%
|
||||
State & municipal
|
417
|
|
|
43
|
|
|
1
|
|
|
459
|
|
|
1
|
%
|
||||
Foreign governments
|
440
|
|
|
18
|
|
|
10
|
|
|
448
|
|
|
1
|
%
|
||||
Asset-backed securities
|
624
|
|
|
2
|
|
|
6
|
|
|
620
|
|
|
1
|
%
|
||||
Total
|
$
|
44,212
|
|
|
$
|
656
|
|
|
$
|
1,450
|
|
|
$
|
43,418
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
At December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
|
|||||||||
Finance
|
$
|
5,824
|
|
|
$
|
200
|
|
|
$
|
7
|
|
|
$
|
6,017
|
|
|
13
|
%
|
Manufacturing
|
7,546
|
|
|
289
|
|
|
15
|
|
|
7,820
|
|
|
17
|
%
|
||||
Utilities
|
4,032
|
|
|
210
|
|
|
13
|
|
|
4,229
|
|
|
9
|
%
|
||||
Services
|
3,307
|
|
|
130
|
|
|
15
|
|
|
3,422
|
|
|
7
|
%
|
||||
Energy
|
1,980
|
|
|
101
|
|
|
9
|
|
|
2,072
|
|
|
4
|
%
|
||||
Retail and wholesale
|
1,404
|
|
|
36
|
|
|
3
|
|
|
1,437
|
|
|
3
|
%
|
||||
Transportation
|
957
|
|
|
58
|
|
|
3
|
|
|
1,012
|
|
|
2
|
%
|
||||
Other
|
128
|
|
|
7
|
|
|
—
|
|
|
135
|
|
|
—
|
%
|
||||
Total corporate securities
|
25,178
|
|
|
1,031
|
|
|
65
|
|
|
26,144
|
|
|
55
|
%
|
||||
U.S. government and agency
|
17,744
|
|
|
1,000
|
|
|
251
|
|
|
18,493
|
|
|
39
|
%
|
||||
Residential mortgage-backed
(2)
|
797
|
|
|
22
|
|
|
1
|
|
|
818
|
|
|
2
|
%
|
||||
Preferred stock
|
470
|
|
|
43
|
|
|
1
|
|
|
512
|
|
|
1
|
%
|
||||
State & municipal
|
422
|
|
|
67
|
|
|
—
|
|
|
489
|
|
|
1
|
%
|
||||
Foreign governments
|
395
|
|
|
29
|
|
|
5
|
|
|
419
|
|
|
1
|
%
|
||||
Asset-backed securities
|
745
|
|
|
5
|
|
|
1
|
|
|
749
|
|
|
1
|
%
|
||||
Total
|
$
|
45,751
|
|
|
$
|
2,197
|
|
|
$
|
324
|
|
|
$
|
47,624
|
|
|
100
|
%
|
(1)
|
Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.
|
(2)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
NAIC Designation
|
Rating Agency Equivalent
|
|
Amortized Costs
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|||||||||
|
|
|
(in millions)
|
|||||||||||||||
At September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|||||||||
1
|
Aaa, Aa, A
|
|
$
|
29,971
|
|
|
$
|
412
|
|
|
$
|
1,098
|
|
|
$
|
29,285
|
|
|
2
|
Baa
|
|
13,161
|
|
|
238
|
|
|
332
|
|
|
13,067
|
|
|||||
|
Investment grade
|
|
43,132
|
|
|
650
|
|
|
1,430
|
|
|
42,352
|
|
|||||
3
|
Ba
|
|
532
|
|
|
2
|
|
|
6
|
|
|
528
|
|
|||||
4
|
B
|
|
526
|
|
|
2
|
|
|
13
|
|
|
515
|
|
|||||
5
|
C and lower
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
6
|
In or near default
|
|
5
|
|
|
2
|
|
|
1
|
|
|
6
|
|
|||||
|
Below investment grade
|
|
1,080
|
|
|
6
|
|
|
20
|
|
|
1,066
|
|
|||||
Total Fixed Maturities
|
|
$
|
44,212
|
|
|
$
|
656
|
|
|
$
|
1,450
|
|
|
$
|
43,418
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||||
At December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||||||||
1
|
Aaa, Aa, A
|
|
$
|
33,493
|
|
|
$
|
1,628
|
|
|
$
|
286
|
|
|
$
|
34,835
|
|
|
2
|
Baa
|
|
11,131
|
|
|
557
|
|
|
20
|
|
|
11,668
|
|
|||||
|
Investment grade
|
|
44,624
|
|
|
2,185
|
|
|
306
|
|
|
46,503
|
|
|||||
3
|
Ba
|
|
662
|
|
|
7
|
|
|
10
|
|
|
659
|
|
|||||
4
|
B
|
|
434
|
|
|
2
|
|
|
8
|
|
|
428
|
|
|||||
5
|
C and lower
|
|
20
|
|
|
1
|
|
|
—
|
|
|
21
|
|
|||||
6
|
In or near default
|
|
11
|
|
|
2
|
|
|
—
|
|
|
13
|
|
|||||
|
Below investment grade
|
|
1,127
|
|
|
12
|
|
|
18
|
|
|
1,121
|
|
|||||
Total Fixed Maturities
|
|
|
$
|
45,751
|
|
|
$
|
2,197
|
|
|
$
|
324
|
|
|
$
|
47,624
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Amortized Cost
|
|
% of Total
|
|
Amortized Cost
|
|
% of Total
|
||||||
|
(Dollars in millions)
|
||||||||||||
By Region:
|
|
|
|
|
|
|
|
||||||
U.S. Regions:
|
|
|
|
|
|
|
|
||||||
Pacific
|
$
|
3,376
|
|
|
28.0
|
%
|
|
$
|
3,264
|
|
|
29.8
|
%
|
Middle Atlantic
|
3,185
|
|
|
26.3
|
|
|
2,958
|
|
|
27.0
|
|
||
South Atlantic
|
1,266
|
|
|
10.5
|
|
|
1,096
|
|
|
10.0
|
|
||
East North Central
|
958
|
|
|
7.9
|
|
|
917
|
|
|
8.4
|
|
||
Mountain
|
1,013
|
|
|
8.4
|
|
|
800
|
|
|
7.3
|
|
||
West North Central
|
829
|
|
|
6.9
|
|
|
778
|
|
|
7.1
|
|
||
West South Central
|
577
|
|
|
4.8
|
|
|
499
|
|
|
4.5
|
|
||
New England
|
703
|
|
|
5.8
|
|
|
460
|
|
|
4.2
|
|
||
East South Central
|
170
|
|
|
1.4
|
|
|
188
|
|
|
1.7
|
|
||
Total Mortgage Loans
|
$
|
12,077
|
|
|
100.0
|
%
|
|
$
|
10,960
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
By Property Type:
|
|
|
|
|
|
|
|
||||||
Office
|
$
|
4,259
|
|
|
35.3
|
%
|
|
$
|
3,639
|
|
|
33.2
|
%
|
Multifamily
|
3,393
|
|
|
28.1
|
|
|
3,014
|
|
|
27.5
|
|
||
Agricultural loans
|
2,672
|
|
|
22.1
|
|
|
2,574
|
|
|
23.5
|
|
||
Retail
|
694
|
|
|
5.7
|
|
|
647
|
|
|
5.9
|
|
||
Industrial
|
326
|
|
|
2.7
|
|
|
326
|
|
|
3.0
|
|
||
Hospitality
|
386
|
|
|
3.2
|
|
|
417
|
|
|
3.8
|
|
||
Other
|
347
|
|
|
2.9
|
|
|
343
|
|
|
3.1
|
|
||
Total Mortgage Loans
|
$
|
12,077
|
|
|
100.0
|
%
|
|
$
|
10,960
|
|
|
100.0
|
%
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Cash and Cash Equivalents, beginning of period
|
$
|
4,814
|
|
|
$
|
5,654
|
|
Net cash provided by (used in) operating activities
|
(33
|
)
|
|
1,044
|
|
||
Net cash provided by (used in) investing activities
|
(1,056
|
)
|
|
(6,568
|
)
|
||
Net cash provided by financing activities
|
1,061
|
|
|
6,299
|
|
||
Effect of exchange rates
|
(9
|
)
|
|
17
|
|
||
Net increase (decrease)
|
(37
|
)
|
|
792
|
|
||
Cash and Cash Equivalents, end of period
|
$
|
4,777
|
|
|
$
|
6,446
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Holdings and AXA Financial
|
|
AXA
Equitable
Life
|
|
AB
|
|
Consolidated
|
|
Holdings and AXA Financial
|
|
AXA
Equitable
Life
(1)
|
|
AB
|
|
Consolidated
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Short-term and long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Commercial paper
|
|
|
|
|
|
|
398
|
|
|
$
|
398
|
|
|
$
|
1,291
|
|
|
$
|
—
|
|
|
$
|
491
|
|
|
$
|
1,782
|
|
|||
AB Revolver
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|
75
|
|
||||||||
Long-term debt
|
4,408
|
|
|
|
|
|
|
|
4,408
|
|
|
349
|
|
|
202
|
|
|
—
|
|
|
551
|
|
|||||||||
Total short-term and long-term debt
|
4,408
|
|
|
—
|
|
|
398
|
|
|
4,806
|
|
|
1,640
|
|
|
202
|
|
|
566
|
|
|
2,408
|
|
||||||||
Loans from affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Loans from affiliates
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
3,622
|
|
|
—
|
|
|
—
|
|
|
3,622
|
|
||||||||
Total borrowings
|
$
|
4,408
|
|
|
$
|
—
|
|
|
$
|
398
|
|
|
$
|
4,806
|
|
|
$
|
5,262
|
|
|
$
|
202
|
|
|
$
|
566
|
|
|
$
|
6,030
|
|
(1)
|
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 the $202 million long-term debt shown in this column.
|
|
AM Best
|
|
S&P
|
|
Moody’s
|
Last review date
|
3/7/2018
|
|
3/6/2018
|
|
4/11/2018
|
Financial Strength Ratings:
|
|
|
|
|
|
AXA Equitable Life
|
A
|
|
A+
|
|
A2
|
MLOA
|
A
|
|
A+
|
|
A2
|
|
|
|
|
|
|
Credit Ratings:
|
|
|
|
|
|
Holdings
|
—
|
|
BBB+
|
|
Baa2
|
AXA Financial
|
bbb+
|
|
BBB+
|
|
Baa2
|
|
|
|
|
|
|
Last Review Date
|
|
|
11/9/2018
|
|
10/05/2018
|
AB
|
—
|
|
A/Stable/A-1
|
|
A2
|
•
|
liabilities for future policy benefits;
|
•
|
accounting for reinsurance;
|
•
|
capitalization and amortization of DAC;
|
•
|
estimated fair values of investments in the absence of quoted market values and investment impairments;
|
•
|
estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation;
|
•
|
goodwill and related impairment;
|
•
|
measurement of income taxes and the valuation of deferred tax assets; and
|
•
|
liabilities for litigation and regulatory matters.
|
•
|
We have developed a three-year rotational schedule to baseline all U.S. GAAP models.
|
•
|
We have designed enhanced controls and governance processes for the introduction of new models during the three months ended September 30, 2018.
|
•
|
We have implemented enhanced documentation and controls for quarterly model changes and inadvertent change testing during the three months ended September 30, 2018.
|
•
|
We have developed a comprehensive master assumption inventory risk framework.
|
•
|
We have developed and implemented enhanced documentation and control procedures over the assumption review and update process during the three months ended September 30, 2018.
|
•
|
We are developing a comprehensive plan for enhancing the process and controls over the reliability of data and inputs into the actuarial models.
|
•
|
With respect to insufficient personnel, we have strengthened the finance team by adding approximately 25 employees to the Accounting and Financial Reporting areas. Of these additional resources, eleven have a CPA license, eight have worked at a “Big 4” public accounting firm and the remainder have worked in a finance area within a public company.
|
•
|
To improve controls over journal entries, we have eliminated the secondary process used for consolidating certain entities, reflecting adjustments to prior periods, and generating the business segment disclosures. Beginning with third quarter 2018, all journal entries are recorded in the Company’s general ledger and the secondary process is no longer necessary.
|
•
|
We have enhanced the controls over journal entries through the implementation of new standards designed to ensure effective review and approval of journal entries with sufficient supporting documentation during the three months ended September 30, 2018.
|
•
|
We are designing new management review controls that will operate at a level of precision sufficient to detect errors that could result in a material misstatement.
|
•
|
Market Factors
. Uncertainties were prevalent throughout 2017. Although U.S. equity markets have advanced to record levels and fixed income risk assets, such as high yield and other credit instruments, have continued to be strong, geopolitical tensions with North Korea, severe hurricanes in the United States and U.S. territories, and new terror attacks in Europe and the United States have kept investors on edge. Many investors are concerned that the U.S. markets are nearly overvalued and are watching closely for Federal Reserve action.
|
•
|
Client Preferences
. Generally, AB’s clients may withdraw their assets at any time and on short notice. Also, changing market dynamics and investment trends, particularly with respect to sponsors of defined benefit plans choosing to invest in less risky investments and the ongoing shift to lower-fee passive services described below, may continue to reduce interest in some of the investment products AB offers, or clients and prospects may continue to seek investment products that AB may not currently offer. Loss of, or decreases in, AUM reduces AB’s investment advisory and services fees and revenues.
|
•
|
AB’s Investment Performance
. AB’s ability to achieve investment returns for clients that meet or exceed investment returns for comparable asset classes and competing investment services is a key consideration when clients decide to keep their assets with AB or invest additional assets, and when a prospective client is deciding whether to invest with AB. Poor investment performance, both in absolute terms or relative to peers and stated benchmarks, may result in clients withdrawing assets and in prospective clients choosing to invest with competitors.
|
•
|
Investing Trends
. AB’s fee rates vary significantly among the various investment products and services AB offers to its clients. For example, AB generally earns higher fees from assets invested in its actively-managed equity services than in its actively-managed fixed income services or passive services. Also, AB often earns higher fees from global and international services than AB does from U.S. services. An adverse mix shift would reduce AB’s investment advisory and services fees and revenues.
|
•
|
Service Changes
. AB may be required to reduce its fee levels, restructure the fees it charges or adjust the services it offers to its clients because of, among other things, regulatory initiatives (whether industry-wide or specifically targeted), changing technology in the asset management business (including algorithmic strategies and emerging financial technology), court decisions and competitive considerations. A reduction in fees would reduce AB’s revenues.
|
Period
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
|
||||||
7/1/18 through 7/31/18
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
500,000,000
|
|
8/1/18 through 8/31/18
|
1,233,509
|
|
|
$
|
22.63
|
|
|
1,233,509
|
|
|
$
|
472,085,581
|
|
9/1/18 through 9/30/18
|
1,268,685
|
|
|
$
|
22.53
|
|
|
1,268,685
|
|
|
$
|
471,413,898
|
|
Total
|
2,502,194
|
|
|
$
|
22.58
|
|
|
2,502,194
|
|
|
$
|
443,499,479
|
|
(1)
|
In August 2018, Holdings’ Board of Directors authorized Holdings to repurchase up to $500 million of its outstanding common stock during the period from August 16, 2018 through March 31, 2019.
|
Number
|
Description and Method of Filing
|
|
|
Confidential Agreement and General Release between Brian Winikoff and AXA Equitable Life Insurance Company, dated August 13, 2018.
|
|
Amended and Restated Revolving Credit Agreement, dated as of September 27, 2018, with AllianceBernstein L.P. and Sanford C. Bernstein & Co., LLC as Borrowers, the financial institutions that may be party there to and Bank of America, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.01 to AB Holding’s Form 8-K, as filed October 3, 2018).
|
|
31.1
#
|
Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
#
|
Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
#
|
Certification of the Registrant’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
#
|
Certification of the Registrant’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
Date: November 13, 2018
|
AXA Equitable Holdings, Inc.
|
|||
|
|
|
||
|
|
By:
|
/s/ Anders Malmström
|
|
|
|
|
Name:
|
Anders Malmström
|
|
|
|
Title:
|
Senior Executive Vice President
|
|
|
|
|
and Chief Financial Officer
|
|
|
|
|
|
Date: November 13, 2018
|
|
|
/s/ William Eckert
|
|
|
|
|
Name:
|
William Eckert
|
|
|
|
Title:
|
Senior Vice President,
|
|
|
|
|
Chief Accounting Officer and Controller
|
(i)
|
Severance totaling $2,512,113 payable in biweekly installments through February 2019 and the balance paid in a lump sum on March 1, 2019. For this purpose, the amount of the bi-weekly installments will be determined as if the total severance amount was to be paid over a 52-week period.
|
(ii)
|
A lump sum payment in the amount of $940,000, comprised of (x) $900,000, representing Executive’s annual short-term incentive compensation for 2018 and (y) $40,000, payable 90 days following Executive’s separation from employment.
|
(iii)
|
A lump sum termination payment of $767,887 payable six months following Executive’s separation from employment.
|
(iv)
|
If Executive elects COBRA following Executive’s separation from employment, subsidized COBRA coverage for 3 months beginning immediately following Executive’s separation from employment resulting in costs to Executive based on the cost applicable to active employees who elect the same option level of coverage under the AXA Equitable Health Plan.
|
(v)
|
Outplacement services for 12 months following Executive’s separation from employment at AXA Equitable’s expense in the same manner and level as is provided for employees at Executive’s level.
|
(vi)
|
None of the consideration set forth above in this paragraph 1 (c) will be provided prior to Executive’s execution of the Second Agreement and the expiration of the revocation period set forth therein. In no event will the consideration in paragraph 1 (c) be provided sooner than the end of Executive’s Notification Period as set forth in the Plan. No portion of monetary payments set forth in paragraph 1 (c) shall be considered compensation for any AXA Equitable benefit plan or program.
|
(b)
|
(i) to Executive's financial and tax advisors so long as such financial and tax advisors agree in writing to be bound by the confidential nature of this Agreement,
|
1.
|
In consideration for signing this Agreement and in exchange for the
|
(a)
|
Severance totaling $2,512,113 payable in biweekly installments through February 2019 and the balance paid in a lump sum on March 1, 2019. For this purpose, the amount of the bi-weekly installments will be determined as if the total severance amount was to be paid over a 52-week period.
|
(b)
|
A lump sum payment in the amount of $940,000, comprised of (x) $900,000, representing Executive’s annual short-term incentive compensation for 2018 and (y) $40,000, payable 90 days following Executive’s separation from employment.
|
(c)
|
A lump sum termination payment of $767,887 payable six months following Executive’s separation from employment.
|
(d)
|
If Executive elects COBRA following Executive’s separation from employment, subsidized COBRA coverage for 3 months beginning immediately following Executive’s separation from employment resulting in costs to Executive based on the cost applicable to active employees who elect the same option level of coverage under the AXA Equitable Health Plan.
|
(e)
|
Outplacement services for 12 months following Executive’s separation from employment at AXA Equitable’s expense in the same manner and level as is provided for employees at Executive’s level.
|
Date: November 13, 2018
|
|
/s/ Mark Pearson
|
Mark Pearson
|
President and Chief Executive Officer
|
Date: November 13, 2018
|
|
/s/ Anders Malmström
|
Anders Malmström
|
Senior Executive Vice President and
|
Chief Financial Officer
|
Date: November 13, 2018
|
|
/s/ Mark Pearson
|
Mark Pearson
|
President and Chief Executive Officer
|
Date: November 13, 2018
|
|
/s/ Anders Malmström
|
Anders Malmström
|
Senior Executive Vice President and
|
Chief Financial Officer
|