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ANNUAL 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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Title of each Class
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Name of exchange on which registered
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Common stock, $0.01 par value
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New York Stock Exchange
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Page
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•
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“AB” or “AllianceBernstein” means AB Holding and ABLP.
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•
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“AB Holding” means AllianceBernstein Holding L.P., a Delaware limited partnership.
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•
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“AB Holding Units” means units representing assignments of beneficial ownership of limited partnership interests in AB Holding.
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•
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“AB Units” means units of limited partnership interests in ABLP.
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“ABLP” means AllianceBernstein L.P., a Delaware limited partnership and the operating partnership for the AB business.
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“ACS Life” means AXA Corporate Solutions Life Reinsurance Company, a Delaware corporation and a wholly owned direct subsidiary of Holdings.
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“AXA” means AXA S.A., a société anonyme organized under the laws of France, our controlling stockholder. AXA owns approximately
59%
of our outstanding common stock.
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•
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“AXA Advisors” means AXA Advisors, LLC, a Delaware limited liability company, our retail broker/dealer for our retirement and protection businesses and a wholly owned indirect subsidiary of Holdings.
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•
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“AXA Distributors” means AXA Distributors, LLC, a Delaware limited liability company, our wholesale broker/dealer for our retirement and protection businesses and a wholly owned indirect subsidiary of Holdings.
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•
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“AXA Equitable FMG” means AXA Equitable Funds Management Group, LLC, a Delaware limited liability company and a wholly owned indirect subsidiary of Holdings.
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•
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“AXA Equitable L&A” means AXA Equitable Life and Annuity Company, a Colorado corporation and a wholly owned indirect subsidiary of Holdings.
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•
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“AEFS” means
AXA Equitable Financial Services, LLC, a Delaware corporation and
a wholly owned direct subsidiary Holdings.
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•
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“AXA Equitable Life” means AXA Equitable Life Insurance Company, a New York corporation, a life insurance company and a wholly owned subsidiary of AEFS.
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•
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“AXA Financial” means AXA Financial, Inc., a Delaware corporation and a wholly owned direct subsidiary of Holdings. On October 1, 2018, AXA Financial merged with and into Holdings, with Holdings assuming the obligations of AXA Financial
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•
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“AXA Network” means AXA Network, LLC, a Delaware limited liability company and wholly owned indirect subsidiary of Holdings, and its subsidiary, AXA Network of Puerto Rico, Inc.
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•
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“AXA Premier VIP Trust” means AXA Premier VIP Trust, a series trust that is a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as an open-end management investment company.
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•
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“AXA RE Arizona” means AXA RE Arizona Company, formerly an Arizona corporation and a wholly owned indirect subsidiary of Holdings, which merged with and into AXA Equitable Life in April 2018.
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•
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“AXA Tech” means AXA Technology Services America, Inc.
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•
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“CS Life RE” means CS Life RE Company, an Arizona corporation and a wholly owned indirect subsidiary of Holdings.
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•
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“EQAT” means EQ Advisors Trust, a series trust that is a Delaware statutory trust and is registered under the Investment Company Act as an open-end management investment company.
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“EQ AZ Life Re” means EQ AZ Life Re Company, an Arizona corporation and a wholly owned indirect subsidiary of Holdings.
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The “General Partner” means AllianceBernstein Corporation, a Delaware corporation and the general partner of AB Holding and ABLP.
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•
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“MLOA” means MONY Life Insurance Company of America, an Arizona corporation and a wholly owned indirect subsidiary of Holdings.
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“SCB LLC” means Sanford C. Bernstein & Co., LLC, a registered investment adviser and broker-dealer.
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“USFL” means U.S. Financial Life Insurance Company, an Ohio corporation and a wholly owned indirect subsidiary of Holdings.
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•
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Advice and solutions for helping Americans set and meet their retirement goals and protect and transfer their wealth across generations; and
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•
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A wide range of investment management insights, expertise and innovations to drive better investment decisions and outcomes for clients and institutional investors worldwide.
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•
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Individual Retirement
—We are a leading provider of variable annuity products, which primarily meet the needs of individuals saving for retirement or seeking retirement income by allowing them to invest in various markets through underlying investment options. As of
December 31, 2018
, we had more than
900,000
variable annuity policies in force, representing
$94.6 billion
of Account Value (“AV”).
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•
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Group Retirement
—We offer tax-deferred investment and retirement services or products to plans sponsored by educational entities, municipalities and not-
for
-profit entities, as well as small and medium-sized businesses. As of
December 31, 2018
, we had approximately
$32.4 billion
of AV. For the nine months ended September 30, 2018, we were the #1 provider by gross premiums of retirement plans to kindergarten, primary and secondary schools (the “K–12 education market”).
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•
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Investment Management and Research
—We are a leading provider of diversified investment management, research and related services to a broad range of clients around the world. As of
December 31, 2018
, our Investment Management and Research segment had
$516 billion
in assets under management (“AUM”) consisting of
36%
equities,
52%
fixed income and
12%
multi-asset class solutions, alternatives and other assets.
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•
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Protection Solutions
—
We focus on attractive protection segments such as variable universal life (“VUL”) insurance, where for 2017 we ranked fourth in sales overall and first in the retail channel and indexed universal life (“IUL”) insurance, where we ranked second in the retail channel in the same period, according to the Life Insurance Marketing and Research Association (“LIMRA”). As of
December 31, 2018
, we had approximately
900,000
outstanding policies with a face value of
$442 billion
. This business provides capital diversification benefits alongside the longevity profile of our retirement businesses.
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•
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Our affiliated retail sales force, AXA Advisors, which has over
4,700
licensed financial professionals who advise on retirement, protection and investment advisory solutions; and
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•
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More than
200
Bernstein Financial Advisors, who are responsible for the sale of investment products and solutions to Private Wealth Management clients
.
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•
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Distribution agreements with more than
1,000
third-party firms including broker-dealers, banks, insurance partners and brokerage general agencies, giving us access to more than
150,000
financial professionals to market our retirement, protection and investment solutions; and
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•
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An AB global distribution team of more than
500
professionals,
who engage with our approximately
4,900
retail distribution partners and more than
500
institutional clients.
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•
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In 2017, we increased the statutory capital and reserves of our retirement and protection businesses by approximately $2.3 billion, improving our ability to withstand adverse economic scenarios. Additionally, in April 2018, we effected an unwind of the reinsurance provided to AXA Equitable Life by AXA RE Arizona for certain variable annuities with GMxB features (the “GMxB Unwind”).
These positive impacts were offset by the changes to the RBC calculation adopted by the NAIC in 2018, including the C-3 Phase II Total Asset Requirement for variable annuities, to reflect the 21% corporate income tax rate in RBC, which resulted in a reduction to our Combined RBC Ratio.
As of December 31, 2018, our insurance company subsidiaries had statutory total adjusted capital (“TAC”) of approximately
$8.5 billion
, resulting in a Combined RBC Ratio of approximately
670%
;
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•
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We target maintaining an asset level for all variable annuities at or above a CTE98 level under most economic scenarios and an RBC ratio of 350–400% for non-variable annuity insurance liabilities, which, combined with the variable annuity capital, would result in a Combined RBC Ratio in excess of 500%; and
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•
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We have a diversified, high quality
$81.3 billion
investment portfolio as of December 31, 2018, including
$46.3 billion
in fixed maturities classified as available-for-sale, of which
97.3%
are investment grade rated.
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•
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For affluent and high net worth clients approaching retirement, our individual retirement products offer customers protection against market volatility and help instill confidence that their income needs will be satisfied in their retirement years.
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•
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In our Group Retirement business, we are the leading provider of retirement products and related solutions for the growing 403(b) K–12 education market. Our nationwide footprint of advisors provides valuable advisory services to a wide range of clients in the education market saving for retirement.
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•
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Shift our real estate footprint away from the New York metropolitan area to provide space efficiencies and lower labor costs and, where possible, take advantage of state and local tax incentives;
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•
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Replace costly technology infrastructure with more efficient and more up-to-date alternatives, including cloud-based solutions, and use lean management and agile practices to both enhance service and reduce infrastructure cost;
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•
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Leverage new technologies to further drive productivity, including accelerating our eDelivery, self-service and paperless initiatives to both improve service and reduce operating costs; and
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•
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Expand existing outsourcing arrangements (currently several hundred roles supporting service and finance) to further improve cost competitiveness.
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•
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Target asset level for all variable annuities at or above a CTE98 and an RBC ratio of 350-400% for our non-variable annuity insurance liabilities;
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•
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Return of capital to stockholders equal to at least 50-60% of our Non-GAAP Operating Earnings on an annualized basis starting in 2019, including payment of dividends and share repurchases; previously our target was 40-60%;
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•
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Target a compound annual growth rate in our Non-GAAP Operating Earnings of 5-7% through 2020, subject to market conditions; and
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•
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We expect that the target growth in Non-GAAP Operating Earnings combined with our target return of capital to stockholders will result in Non-GAAP Operating ROE in the mid-teens by 2020.
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•
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General Account Optimization
: We have begun to transition
$5 billion
of our General Account investment portfolio from U.S. Treasury bonds to high quality investment grade corporate bonds and
$2 billion
of our General Account investment portfolio from shorter duration, high quality investment grade corporate bonds to longer duration, high quality investment grade corporate bonds. We expect this transition to increase the yield on the reallocated portion of our investment portfolio. At current market rates and corporate spreads over U.S. Treasury bonds, once the transition and other investment actions are completed, we estimate an improvement to Non-GAAP Operating Earnings of approximately $160 million per annum on our General Account investments by 2020. We have thus far completed approximately
two-thirds
of the General Account optimization initiatives toward achieving our 2020 goal. We do not expect the change in our investment allocation to have a meaningful impact on our RBC ratio.
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•
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AB’s Margin Target Expansion
: AB previously adopted a goal of increasing AB’s consolidated adjusted operating margin to 30% by 2020. Significant declines in the equity and certain fixed income markets during the fourth quarter of 2018, most notably in December 2018, reduced AB’s AUM by $34.0 billion, or 6.2%, during the fourth quarter to $516.4 billion from $550.4 billion at the end of the third quarter of 2018. Given the impact AB expects this lower AUM will have on its ability to generate the level of investment advisory fee revenues AB initially forecast when establishing this goal, presently AB does not believe that achieving this goal by 2020 is likely. However, AB is taking additional actions to better align its expenses with these lower AUM and expected revenues. AB remains committed to achieving an adjusted operating margin of 30% in years subsequent to 2020 and will take continued actions in this regard, subject to prevailing market conditions and the evolution of its business mix.
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•
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Productivity Strategies
: We expect to continue to build upon our recent productivity improvements, through which we have delivered more than $350 million in efficiency improvements from 2012 through 2017. We have identified several additional initiatives, including reallocating some of our real estate footprint away from New York, replacing or updating less efficient legacy technology infrastructure and expanding existing outsourcing arrangements, that we believe will reduce costs and improve productivity. We anticipate that the savings from these strategies should offset any incremental ongoing expenses we incur as a standalone company and we expect these initiatives to improve our operating leverage, increasing our Non-GAAP Operating Earnings by approximately $75 million per annum by 2020.
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•
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Capital Optimization
: We plan to return capital to shareholders through dividends and share repurchases, which we expect, in aggregate, will represent at least 50-60% of our Non-GAAP Operating Earnings. We also plan to
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•
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Growth Strategies
: We plan to continue to grow our core business through further refinement of our product offerings, expansion of our third-party distribution network and our AXA Advisors affiliated salesforce and increased penetration of our target markets.
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•
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our amount of new sales of individual retirement, group retirement and protection solutions products;
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•
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net flows at AB and the amount of distributions from AB;
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•
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the absence of new regulation such as NAIC variable annuity reserve and capital reform;
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•
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effective tax rates lower than the federal statutory rate of 21%;
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•
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our degree of leverage, including indebtedness incurred in connection with the IPO;
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•
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limited differences between actual experience and existing actuarial assumptions, including assumptions for which existing experience is limited and experience will emerge over time;
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•
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the efficacy and maturity of existing actuarial models to appropriately reflect all aspects of our existing and in-force businesses;
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•
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the effectiveness and cost of our proposed hedging program, the timing of its implementation and the impact of our hedging strategy on net income volatility and possible negative effects on our statutory capital;
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•
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our ability to implement our business strategy, including optimizing our General Account portfolio and reducing expenses;
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•
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the successful implementation of our key initiatives outlined above;
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•
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our access to capital; and
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•
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general conditions of the markets in which our businesses operate.
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Years Ended December 31,
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2018
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2017
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2016
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(in millions)
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||||||||||
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Operating earnings (loss) by segment:
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||||||
Individual Retirement
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$
|
1,555
|
|
|
$
|
1,252
|
|
|
$
|
1,167
|
|
Group Retirement
|
389
|
|
|
283
|
|
|
167
|
|
|||
Investment Management and Research
|
381
|
|
|
211
|
|
|
161
|
|
|||
Protection Solutions
|
197
|
|
|
502
|
|
|
77
|
|
|||
Corporate and Other
|
(356
|
)
|
|
(213
|
)
|
|
(181
|
)
|
|||
Non-GAAP Operating Earnings
|
$
|
2,166
|
|
|
$
|
2,035
|
|
|
$
|
1,391
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
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(in millions)
|
||||||||||
Account Value
|
|
|
|
|
|
||||||
Non-GMxB
|
$
|
23,759
|
|
|
$
|
22,429
|
|
|
$
|
17,433
|
|
ROP Death Benefit Only
|
8,730
|
|
|
9,592
|
|
|
9,309
|
|
|||
Total Non-GMxB & ROP Death Benefit Only
|
$
|
32,489
|
|
|
$
|
32,021
|
|
|
$
|
26,742
|
|
Floating Rate GMxB
|
20,633
|
|
|
21,599
|
|
|
18,768
|
|
|||
Fixed Rate GMxB
|
41,467
|
|
|
49,803
|
|
|
48,094
|
|
|||
Total Variable Annuity AV
|
$
|
94,589
|
|
|
$
|
103,423
|
|
|
$
|
93,604
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Benefit Base
|
|
|
|
|
|
||||||
ROP Death Benefit Only
|
$
|
6,072
|
|
|
$
|
6,281
|
|
|
$
|
6,640
|
|
Floating Rate GMxB
|
|
|
|
|
|
||||||
GMDB
|
21,924
|
|
|
20,628
|
|
|
18,948
|
|
|||
GMIB
|
19,670
|
|
|
18,412
|
|
|
16,211
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|
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Fixed Rate GMxB
|
|
|
|
|
|
||||||
GMDB
|
61,220
|
|
|
62,702
|
|
|
63,926
|
|
|||
GMIB
|
63,431
|
|
|
64,673
|
|
|
66,310
|
|
•
|
The benefit base is defined to exclude the effects of a decline in the market value of the policyholder’s AV. Accordingly, actual claim payments to be made in the future to the policyholder will be determined without giving effect to market declines.
|
•
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The terms of the benefit base may allow it to increase at a guaranteed rate irrespective of the rate of return on the policyholder’s AV.
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•
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GMDBs provide that in the event of the death of the policyholder, the beneficiary will receive the higher of the current
contract account balance or the benefit base upon the death of the owner (or annuitant).
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•
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GMIBs provide, if elected by the policyholder after a stipulated waiting period from contract issuance, guaranteed minimum annual lifetime payments based on predetermined guaranteed annuity purchase factors that may exceed what the contract AV can purchase at then-current annuity purchase rates.
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•
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SCS.
Our index-linked variable annuity product allows the policyholder to invest in various investment options, whose performance is tied to one or more securities indices, commodities indices or exchange traded funds (“ETF”), subject to a performance cap, over a set period of time. The risks associated with such investment options are borne entirely by the policyholder, except the portion of any negative performance that we absorb (a buffer) upon investment maturity. This variable annuity does not offer GMxB features, other than an optional return of premium death benefit that we have introduced on some versions.
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•
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Retirement Cornerstone.
Our Retirement Cornerstone product offers two platforms: (i) RC Performance, which offers access to over 100 funds with annuitization benefits based solely on non-guaranteed account investment performance
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•
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Investment Edg
e. Our investment-only variable annuity is a wealth accumulation variable annuity that defers current taxes during accumulation and provides tax-efficient distributions on non-qualified assets through scheduled payments over a set period of time with a portion of each payment being a return of cost basis, thus excludable from taxes. Investment Edge does not offer any GMxB feature other than an optional return of premium death benefit.
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•
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Other products.
We offer other products which offer optional GMxB benefits. These other products do not contribute significantly to our sales.
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Evolution of Variable Annuity FYP
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Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
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(in millions)
|
|
|
||||||
FYP by Product
|
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|
|
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SCS
|
$
|
3,926
|
|
|
$
|
3,781
|
|
|
$
|
3,424
|
|
Retirement Cornerstone
|
2,479
|
|
|
2,522
|
|
|
3,042
|
|
|||
Investment Edge
|
537
|
|
|
418
|
|
|
408
|
|
|||
Other
|
366
|
|
|
374
|
|
|
470
|
|
|||
Total FYP
|
$
|
7,308
|
|
|
$
|
7,095
|
|
|
$
|
7,344
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
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(in millions)
|
|
|
||||||
FYP by Guarantee Feature
|
|
|
|
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|
||||||
Non-GMxB
|
$
|
4,640
|
|
|
$
|
4,622
|
|
|
$
|
4,265
|
|
ROP Death Benefit Only
|
496
|
|
|
276
|
|
|
271
|
|
|||
Total Non-GMxB & ROP Death Benefit Only
|
$
|
5,136
|
|
|
$
|
4,898
|
|
|
$
|
4,536
|
|
|
|
|
|
|
|
||||||
Floating Rate GMxB
|
2,124
|
|
|
2,108
|
|
|
2,600
|
|
|||
Fixed Rate GMxB
|
48
|
|
|
89
|
|
|
208
|
|
|||
Total GMxB
|
$
|
2,172
|
|
|
$
|
2,197
|
|
|
$
|
2,808
|
|
|
|
|
|
|
|
||||||
Total FYP
|
$
|
7,308
|
|
|
$
|
7,095
|
|
|
$
|
7,344
|
|
FYP by Distribution
|
•
|
we primarily offer floating (tied to interest rates), as opposed to fixed, roll-up rates;
|
•
|
we offer lower risk investment options, including passive investments and bond funds with reduced credit risk if certain optional guaranteed benefits are elected; and
|
•
|
we offer managed volatility funds, which seek to reduce the risk of large, sudden declines in AV during market downturns by managing the volatility or draw-down risk of the underlying fund holdings through re-balancing the fund holdings within certain guidelines or overlaying hedging strategies at the fund level.
|
•
|
Return of Premium Death Benefit.
This death benefit pays the greater of the AV at the time of a claim following the owner’s death or the total contributions to the contract (subject to adjustment for withdrawals). The charge for this benefit is usually included in the Mortality & Expense charge that is deducted daily from the net assets in each variable investment option.
|
•
|
RMD Wealthguard Death Benefit.
This death benefit features a benefit base that does not decrease by the amount of any IRS-mandated withdrawals, or “required minimum distributions” (“RMD”), from the contract. The benefit base automatically increases to equal the highest AV on the current or any prior contract anniversary until RMD withdrawals begin or until the owner reaches a specified maximum age, even if the AV is reduced by negative investment performance. The charges for this benefit are calculated based on the benefit base value and deducted annually from the AV.
|
•
|
Annual Ratchet (also referred to as Highest Anniversary Value).
This death benefit features a benefit base that is reset each year to equal the higher of total contributions to the contract or the highest AV on the current or any prior contract anniversary (subject to adjustment for withdrawals), even if the AV is reduced by negative investment performance. The charge for this benefit is calculated based on the benefit base value and deducted annually from the AV.
|
•
|
Roll-up Death Benefit.
This death benefit features a benefit base that increases (or “rolls up”) at a specified guaranteed annual rate (subject to adjustment for withdrawals), even if the AV is reduced by negative investment performance. The charge for this benefit is calculated based on the benefit base value and deducted annually from the AV. This GMxB feature was discontinued in 2003.
|
•
|
Greater of Roll-up or Annual Ratchet.
This death benefit features a benefit base that increases each year to equal the higher of the initial benefit base accumulated at a specified guaranteed rate or the highest AV on the current or any prior contract anniversary (subject to adjustment for withdrawals), even if the AV is reduced by negative investment performance. The charge for this benefit is calculated based on the benefit base value and deducted annually from the AV.
|
•
|
GWBL Standard Death Benefit.
This death benefit features a benefit base that is equal to total contributions to the contract less a deduction reflecting the amount of any withdrawals made.
|
•
|
GWBL Enhanced Death Benefit.
This death benefit features a benefit base that is equal to total contributions to the contract plus the amounts of any ratchets and deferral bonus, less a deduction reflecting the amount of any withdrawals made. This benefit was available for an additional fee.
|
|
As of December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Account
|
|
Benefit
|
|
Account
|
|
Benefit
|
|
Account
|
|
Benefit
|
||||||||||||
|
Value
|
|
Base
|
|
Value
|
|
Base
|
|
Value
|
|
Base
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
GMDB In-Force (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
ROP Death Benefit Only
|
$
|
8,730
|
|
|
$
|
6,072
|
|
|
$
|
9,592
|
|
|
$
|
6,281
|
|
|
$
|
9,309
|
|
|
$
|
6,640
|
|
Floating Rate GMDB
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Greater of Ratchet or Roll-up
|
6,310
|
|
|
7,665
|
|
|
6,880
|
|
|
7,332
|
|
|
6,175
|
|
|
6,821
|
|
||||||
All Other (2)
|
14,323
|
|
|
14,259
|
|
|
14,720
|
|
|
13,297
|
|
|
12,593
|
|
|
12,127
|
|
||||||
Total Floating Rate GMDB
|
$
|
20,633
|
|
|
$
|
21,924
|
|
|
$
|
21,600
|
|
|
$
|
20,629
|
|
|
$
|
18,768
|
|
|
$
|
18,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Rate GMDB
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Greater of Ratchet or Roll-up
|
$
|
24,242
|
|
|
$
|
43,422
|
|
|
$
|
29,061
|
|
|
$
|
43,750
|
|
|
$
|
27,858
|
|
|
$
|
43,790
|
|
All Other (2)
|
17,225
|
|
|
17,798
|
|
|
20,742
|
|
|
18,952
|
|
|
20,236
|
|
|
20,136
|
|
||||||
Total Fixed Rate GMDB
|
$
|
41,467
|
|
|
$
|
61,220
|
|
|
$
|
49,803
|
|
|
$
|
62,702
|
|
|
$
|
48,094
|
|
|
$
|
63,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total GMDB
|
$
|
70,830
|
|
|
$
|
89,216
|
|
|
$
|
80,995
|
|
|
$
|
89,612
|
|
|
$
|
76,171
|
|
|
$
|
89,514
|
|
(1)
|
See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of
December 31, 2018
,
2017
and
2016
under “—Net Amount at Risk.”
|
(2)
|
All Other includes individual variable annuity policies with Annual Ratchet or Roll-up GMDB, either stand-alone or in conjunction with a GMLB, or with ROP GMDB in conjunction with a GMLB.
|
•
|
GMIB.
GMIB is our largest block of living benefit guarantees based on in-force AV. Policyholders who purchase the GMIB rider will be eligible, at the end of a defined waiting period, to receive annuity payments for life that will never be less than a guaranteed minimum amount, regardless of the performance of their investment options prior to the first payment. During this waiting period, which is often referred to as the accumulation phase of the contract and is usually 10 years, policyholders can invest their contributions in a range of variable and guaranteed investment options to grow their AV on a tax-deferred basis while increasing the value of the GMIB benefit base that helps determine the minimum annuity payment amount. Policyholders may elect to continue the accumulation phase beyond the waiting period if they wish to maintain the ability to take withdrawals from their AV or continue to participate in the growth of both their AV and GMIB benefit base.
|
•
|
GWBL.
This benefit guarantees that a policyholder can take lifetime withdrawals from their contract up to a maximum amount per year without reducing their GWBL benefit base. The amount of each guaranteed annual withdrawal is based on the value of the GWBL benefit base. The GWBL benefit base is equal to the total initial contributions to the contract and will increase by subsequent contributions (where permitted), ratchets or deferral bonuses (if applicable), and will be reduced by any “excess withdrawals,” which are withdrawals that exceed the guaranteed annual withdrawal amount. The policyholder may elect one of our automated withdrawal plans or take ad hoc withdrawals. This benefit can be purchased on a single life or joint life basis. The charge for the GWBL is calculated based on the GWBL benefit base value and deducted annually from the AV. We ceased offering a stand-alone GWBL rider in 2008.
|
•
|
GMWB.
This benefit guarantees that the policyholder can take withdrawals from their contract up to the amount of their total contributions, even if the AV subsequently falls to zero, provided that during each contract year total withdrawals do not exceed annual GMWB withdrawal amount that is calculated under the terms of the contract. The policyholder may choose either a 5% GMWB Annual withdrawal option or a 7% GMWB Annual withdrawal option. Annual withdrawal amounts are not cumulative year over year. The charge for the GMWB is calculated based on the GMWB benefit base value and deducted annually from the AV. We ceased offering GMWB riders in 2008.
|
•
|
GMAB.
This benefit guarantees that the AV can never fall below a minimum amount for a set period, which can also include locking in capital market gains. This rider protects the policyholder from market fluctuations. Two options we offered were a 100% principal guarantee and a 125% principal guarantee. Each option limited the policyholder to specified investment options. The charge for the GMAB is calculated based on the GMAB benefit base value and deducted annually from the AV. We ceased offering GMAB riders in 2008.
|
•
|
GIB.
This benefit provides the policyholder with a guaranteed lifetime annuity based on predetermined annuity purchase rates applied to a GIB benefit base, with annuitization automatically triggered if and when the contract AV falls to zero. The charge for the GIB is calculated based on the GIB benefit base value and deducted annually from the AV. We ceased offering the GIB in 2012.
|
•
|
Lapse.
The policyholder may lapse or exit the contract, at which time the GMIB and any other GMxB guarantees are terminated. If the policyholder partially exits, the GMIB benefit base and any other GMxB benefit bases will be reduced in accordance with the contract terms.
|
•
|
Dollar-for-Dollar Withdrawals.
A policyholder may request a onetime withdrawal or take systematic withdrawals from his or her contract at any time. All withdrawals reduce a contract’s AV by the dollar amount of a withdrawal. However, the impact of withdrawals on the GMIB and any other guaranteed benefit bases may vary depending on the terms of the contract. Withdrawals will reduce guaranteed benefit bases on a dollar-for-dollar basis as long as the sum of withdrawals in a contract year is equal to or less than the dollar-for-dollar withdrawal threshold defined in the contract, beyond which all withdrawals are considered “excess withdrawals.” An excess withdrawal may reduce the guaranteed benefit bases on a pro rata basis, which can have a significantly adverse effect on their values. A policyholder wishing to take the maximum amount of dollar-for-dollar withdrawals on a systematic basis may sign up for our dollar-for-dollar withdrawal service at no additional charge. Withdrawals under this automated service will never result in a pro rata reduction of the guaranteed benefit bases, provided that no withdrawals are made outside the service. If making dollar-for-dollar withdrawals in combination with negative investment reduces the AV to zero, the contract may have a no-lapse guarantee that triggers the automatic exercise of the GMIB, providing the policyholder with a stream of lifetime annuity payments determined by the GMIB benefit base value, the age and gender of the annuitant and predetermined annuity purchase factors.
|
•
|
Voluntary Annuitization.
The policyholder may choose to annuitize their AV or exercise their GMIB (if eligible). GMIB annuitization entitles the policyholder to receive a stream of lifetime (with or without period certain) annuity payments determined by the GMIB benefit base value, the age and gender of the annuitant and predetermined annuity purchase factors. GMIB annuitization cannot be elected past the maximum GMIB exercise age as stated in the
|
•
|
Convert to a GWBL.
In some products, policyholders have the option to convert their GMIB into a GWBL to receive guaranteed income through a lifetime withdrawal feature. This choice can be made as an alternative to electing to annuitize at the maximum GMIB exercise age and may be appealing to policyholders who would prefer the ability to withdraw higher annual dollar-for-dollar amounts from their contract than permitted under the GMIB, for as long as their AV remains greater than zero.
|
•
|
Remain in Accumulation Phase.
If the policyholder chooses to remain in the contract’s accumulation phase past the maximum GMIB exercise age—that is, by not electing annuitization or converting to a GWBL—and as long as the AV has not fallen to zero, then the GMIB will terminate and the contract will continue until the contractual maturity date. In these circumstances, depending on the GMDB elected at issue (if any) and the terms of the contract, the benefit base for the GMDB may be equal to the GMIB benefit base at the time the GMIB was terminated, may no longer increase and will be reduced by future withdrawals.
|
|
As of December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Account
|
|
Benefit
|
|
Account
|
|
Benefit
|
|
Account
|
|
Benefit
|
||||||||||||
|
Value
|
|
Base
|
|
Value
|
|
Base
|
|
Value
|
|
Base
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
GMLB In-Force (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Floating Rate GMLB
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GMIB
|
$
|
16,728
|
|
|
$
|
19,670
|
|
|
$
|
17,840
|
|
|
$
|
18,412
|
|
|
$
|
15,039
|
|
|
$
|
16,211
|
|
Other (GIB)
|
3,581
|
|
|
4,214
|
|
|
3,439
|
|
|
3,664
|
|
|
3,478
|
|
|
3,829
|
|
||||||
Total Floating Rate GMLB
|
$
|
20,309
|
|
|
$
|
23,884
|
|
|
$
|
21,279
|
|
|
$
|
22,076
|
|
|
$
|
18,517
|
|
|
$
|
20,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Rate GMLB
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GMIB
|
$
|
36,326
|
|
|
$
|
63,431
|
|
|
$
|
43,900
|
|
|
$
|
64,673
|
|
|
$
|
43,106
|
|
|
$
|
66,310
|
|
All Other (e.g., GWBL / GMWB, GMAB, other) (2)
|
785
|
|
|
1,223
|
|
|
977
|
|
|
1,288
|
|
|
1,003
|
|
|
1,371
|
|
||||||
Total Fixed Rate GMLB
|
$
|
37,111
|
|
|
$
|
64,654
|
|
|
$
|
44,877
|
|
|
$
|
65,961
|
|
|
$
|
44,109
|
|
|
$
|
67,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total GMLB
|
$
|
57,420
|
|
|
$
|
88,538
|
|
|
$
|
66,156
|
|
|
$
|
88,037
|
|
|
$
|
62,626
|
|
|
$
|
87,721
|
|
(1)
|
See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of
December 31, 2018
,
2017
and
2016
under “—Net Amount at Risk.”
|
(2)
|
All Other includes individual variable annuity policies with stand-alone Annual Ratchet or stand-alone Roll-up GMDB.
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
NAR
|
|
Reserves
|
|
NAR
|
|
Reserves
|
|
NAR
|
|
Reserves
|
||||||||||||
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||
GMIB
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Floating Rate GMIB
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
91
|
|
|
$
|
—
|
|
|
$
|
190
|
|
Fixed Rate GMIB
|
8,572
|
|
|
7,307
|
|
|
5,980
|
|
|
6,919
|
|
|
6,348
|
|
|
7,159
|
|
||||||
Total
|
$
|
8,572
|
|
|
$
|
7,349
|
|
|
$
|
5,980
|
|
|
$
|
7,010
|
|
|
$
|
6,348
|
|
|
$
|
7,349
|
|
(1)
|
U.S. GAAP reserves for ROP death benefit only are not available, as U.S. GAAP reserve valuation basis applies on policy contracts grouped by issue year.
|
•
|
Guaranteed Interest Option (“GIO”)—Provides a fixed interest rate and guaranteed AV.
|
•
|
Structured Investment Option (“SIO”)—Provides upside market participation that tracks either the S&P 500, Russell 2000 or the MSCI EAFE index subject to a performance cap, with a downside buffer that limits losses in the investment over a one, three or five-year investment horizon. This option leverages our innovative SCS individual annuity offering, and we believe that we are the only provider that offers this type of guarantee in the defined contribution markets today.
|
•
|
Personal Income Benefit—An optional GMxB feature that enables participants to obtain a guaranteed withdrawal benefit for life for an additional fee.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Net Flows
|
|
|
|
|
|
||||||
Gross Premiums
|
$
|
3,383
|
|
|
$
|
3,205
|
|
|
$
|
3,137
|
|
Surrenders, Withdrawals and Benefits
|
(3,287
|
)
|
|
(2,938
|
)
|
|
(2,458
|
)
|
|||
Net Flows
|
$
|
96
|
|
|
$
|
267
|
|
|
$
|
679
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Gross Premiums by Market
|
|
|
|
|
|
||||||
Tax-Exempt
|
$
|
911
|
|
|
$
|
872
|
|
|
$
|
842
|
|
Corporate
|
479
|
|
|
470
|
|
|
497
|
|
|||
Other
|
38
|
|
|
40
|
|
|
34
|
|
|||
Total FYP
|
1,428
|
|
|
1,382
|
|
|
1,373
|
|
|||
|
|
|
|
|
|
||||||
Tax-Exempt
|
1,450
|
|
|
1,330
|
|
|
1,280
|
|
|||
Corporate
|
319
|
|
|
293
|
|
|
275
|
|
|||
Other
|
186
|
|
|
200
|
|
|
209
|
|
|||
Total Renewal Premiums
|
1,955
|
|
|
1,823
|
|
|
1,764
|
|
|||
Gross Premiums
|
$
|
3,383
|
|
|
$
|
3,205
|
|
|
$
|
3,137
|
|
•
|
Tax-exempt 403(b)/457(b)
. We primarily serve employees of public school systems and have access to clients in more than
9,000
public school plans. We serve more than
758,000
educators with access to approximately
3.2
million
|
•
|
Corporate 401(k).
We target small and medium-sized businesses with 401(k) plans that generally have under $20 million in assets. Our product offerings accommodate start up plans and plans with accumulated assets. Typically, our products appeal to companies with strong contribution flows and a smaller number of participants with relatively high average participant balances. Our corporate 401(k) business serves more than
4,600
employers and more than
74,000
participants. The under $20 million asset plan market is well aligned with our advisor distribution, which has a strong presence in the small and medium-sized business market, and complements our other products focused on this market (such as life insurance and employee benefits products aimed at this market).
|
•
|
Other.
Our other business includes an affinity-based direct marketing program where we offer retirement and individual products to employers that are members of industry or trade associations and various other sole proprietor and small business retirement accounts.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
FYP by Distribution
|
|
|
|
|
|
||||||
AXA Advisors
|
$
|
1,277
|
|
|
$
|
1,226
|
|
|
$
|
1,151
|
|
Third-Party
|
151
|
|
|
161
|
|
|
222
|
|
|||
Total
|
$
|
1,428
|
|
|
$
|
1,387
|
|
|
$
|
1,373
|
|
|
Total General
|
||
Guaranteed Minimum Interest Rate
|
Account AV
|
||
|
(in billions)
|
||
1 – < 2%
|
$
|
2.7
|
|
2 – < 3%
|
1.4
|
|
|
3%
|
6.9
|
|
|
4%
|
0.2
|
|
|
Total
|
$
|
11.2
|
|
•
|
Institutional Services—servicing its institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as AXA and its subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.
|
•
|
Retail Services—servicing its retail clients, primarily by means of retail mutual funds sponsored by AB or AXA Equitable FMG, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.
|
•
|
Private Wealth Management Services—servicing its private clients, including high net worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.
|
•
|
Bernstein Research Services—servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.
|
•
|
Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities
|
•
|
Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;
|
•
|
Passive management, including index and enhanced index strategies;
|
•
|
Alternative investments, including hedge funds, fund of funds, private equity (e.g., direct lending); and
|
•
|
Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds.
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Institutions
|
$
|
246.3
|
|
|
$
|
269.3
|
|
|
$
|
239.3
|
|
Retail
|
180.8
|
|
|
192.9
|
|
|
160.2
|
|
|||
Private Wealth Management
|
89.3
|
|
|
92.3
|
|
|
80.7
|
|
|||
Total
|
$
|
516.4
|
|
|
$
|
554.5
|
|
|
$
|
480.2
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Equity
|
|
|
|
|
|
||||||
Actively Managed
|
$
|
136.2
|
|
|
$
|
139.4
|
|
|
$
|
111.9
|
|
Passively Managed (1)
|
50.2
|
|
|
54.3
|
|
|
48.1
|
|
|||
Total Equity
|
186.4
|
|
|
193.7
|
|
|
160.0
|
|
|||
|
|
|
|
|
|
||||||
Fixed Income
|
|
|
|
|
|
||||||
Actively Managed
|
|
|
|
|
|
||||||
Taxable
|
219.7
|
|
|
247.9
|
|
|
220.9
|
|
|||
Tax-exempt
|
41.7
|
|
|
40.4
|
|
|
36.9
|
|
|||
Total Actively Managed
|
261.4
|
|
|
288.3
|
|
|
257.8
|
|
|||
Passively Managed (1)
|
9.4
|
|
|
9.9
|
|
|
11.1
|
|
|||
Total Fixed Income
|
270.8
|
|
|
298.2
|
|
|
268.9
|
|
|||
|
|
|
|
|
|
||||||
Other (2)
|
|
|
|
|
|
||||||
Actively Managed
|
58.3
|
|
|
61.9
|
|
|
$
|
50.8
|
|
||
Passively Managed (1)
|
0.9
|
|
|
0.7
|
|
|
0.5
|
|
|||
Total Other
|
59.2
|
|
|
62.6
|
|
|
51.3
|
|
|||
Total
|
$
|
516.4
|
|
|
$
|
554.5
|
|
|
$
|
480.2
|
|
(1)
|
Includes index and enhanced index services.
|
(2)
|
Includes certain multi-asset solutions and services and certain alternative investments.
|
|
Distribution Channel
|
||||||||||||||
|
Institutions
|
|
Retail
|
|
Private Wealth Management
|
|
Total
|
||||||||
|
(in billions)
|
||||||||||||||
Balance as of December 31, 2017
|
$
|
269.3
|
|
|
$
|
192.9
|
|
|
$
|
92.3
|
|
|
$
|
554.5
|
|
Long-term flows
|
|
|
|
|
|
|
|
||||||||
Sales/new accounts
|
26.1
|
|
|
54.2
|
|
|
13.5
|
|
|
93.8
|
|
||||
Redemptions/terminations
|
(30.1
|
)
|
|
(46.5
|
)
|
|
(11.0
|
)
|
|
(87.6
|
)
|
||||
Cash flow/unreinvested dividends
|
(6.0
|
)
|
|
(7.7
|
)
|
|
(0.6
|
)
|
|
(14.3
|
)
|
||||
Net long-term (outflows) inflows
|
(10.0
|
)
|
|
—
|
|
|
1.9
|
|
|
(8.1
|
)
|
||||
Transfers
|
0.2
|
|
|
0.2
|
|
|
(0.4
|
)
|
|
—
|
|
||||
Market depreciation
|
(13.2
|
)
|
|
(12.3
|
)
|
|
(4.5
|
)
|
|
(30.0
|
)
|
||||
Net change
|
(23.0
|
)
|
|
(12.1
|
)
|
|
(3.0
|
)
|
|
(38.1
|
)
|
||||
Balance as of December 31, 2018
|
$
|
246.3
|
|
|
$
|
180.8
|
|
|
$
|
89.3
|
|
|
$
|
516.4
|
|
|
Investment Services
|
||||||||||||||||||||||||||
|
Equity Actively Managed
|
|
Equity Passively Managed (1)
|
|
Fixed Income Actively Managed—Taxable
|
|
Fixed Income Actively Managed—Tax Exempt
|
|
Fixed Income Passively Managed (1)
|
|
Other (2)
|
|
Total
|
||||||||||||||
|
(in billions)
|
||||||||||||||||||||||||||
Balance as of December 31, 2017
|
$
|
139.4
|
|
|
$
|
54.3
|
|
|
$
|
247.9
|
|
|
$
|
40.4
|
|
|
$
|
9.9
|
|
|
$
|
62.6
|
|
|
$
|
554.5
|
|
Long-term flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales/new accounts
|
36.7
|
|
|
4.0
|
|
|
27.6
|
|
|
7.9
|
|
|
0.1
|
|
|
17.5
|
|
|
93.8
|
|
|||||||
Redemptions/terminations
|
(22.2
|
)
|
|
(0.6
|
)
|
|
(40.8
|
)
|
|
(6.7
|
)
|
|
(0.6
|
)
|
|
(16.7
|
)
|
|
(87.6
|
)
|
|||||||
Cash flow/unreinvested dividends
|
(3.7
|
)
|
|
(3.6
|
)
|
|
(6.2
|
)
|
|
(0.4
|
)
|
|
0.2
|
|
|
(0.6
|
)
|
|
(14.3
|
)
|
|||||||
Net long-term (outflows) inflows
|
10.8
|
|
|
(0.2
|
)
|
|
(19.4
|
)
|
|
0.8
|
|
|
(0.3
|
)
|
|
0.2
|
|
|
(8.1
|
)
|
|||||||
Market appreciation/depreciation
|
(14.0
|
)
|
|
(3.9
|
)
|
|
(8.8
|
)
|
|
0.5
|
|
|
(0.2
|
)
|
|
(3.6
|
)
|
|
(30.0
|
)
|
|||||||
Net change
|
(3.2
|
)
|
|
(4.1
|
)
|
|
(28.2
|
)
|
|
1.3
|
|
|
(0.5
|
)
|
|
(3.4
|
)
|
|
(38.1
|
)
|
|||||||
Balance as of December 31, 2018
|
$
|
136.2
|
|
|
$
|
50.2
|
|
|
$
|
219.7
|
|
|
$
|
41.7
|
|
|
$
|
9.4
|
|
|
$
|
59.2
|
|
|
$
|
516.4
|
|
(1)
|
Includes index and enhanced index services.
|
(2)
|
Includes certain multi-asset solutions and services and certain alternative investments.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Actively Managed
|
|
|
|
|
|
||||||
Equity
|
$
|
10.8
|
|
|
$
|
0.8
|
|
|
$
|
(7.6
|
)
|
Fixed Income
|
(18.6
|
)
|
|
14.7
|
|
|
9.0
|
|
|||
Other
|
(0.1
|
)
|
|
3.6
|
|
|
(9.5
|
)
|
|||
Total
|
$
|
(7.9
|
)
|
|
$
|
19.1
|
|
|
$
|
(8.1
|
)
|
|
|
|
|
|
|
||||||
Passively Managed
|
|
|
|
|
|
||||||
Equity
|
$
|
(0.2
|
)
|
|
$
|
(4.3
|
)
|
|
$
|
(2.5
|
)
|
Fixed Income
|
(0.3
|
)
|
|
(1.7
|
)
|
|
0.7
|
|
|||
Other
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
|||
Total
|
(0.2
|
)
|
|
(5.9
|
)
|
|
(1.7
|
)
|
|||
Total net long-term inflows (outflows)
|
$
|
(8.1
|
)
|
|
$
|
13.2
|
|
|
$
|
(9.8
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Distribution Channel:
|
|
|
|
|
|
||||||
Institutions
|
$
|
258.1
|
|
|
$
|
253.8
|
|
|
$
|
243.4
|
|
Retail
|
191.8
|
|
|
177.5
|
|
|
157.7
|
|
|||
Private Wealth Management
|
94.3
|
|
|
86.7
|
|
|
78.9
|
|
|||
Total
|
$
|
544.2
|
|
|
$
|
518.0
|
|
|
$
|
480.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Investment Service:
|
|
|
|
|
|
||||||
Equity Actively Managed
|
$
|
146.4
|
|
|
$
|
125.6
|
|
|
$
|
109.4
|
|
Equity Passively Managed (1)
|
53.8
|
|
|
50.8
|
|
|
46.5
|
|
|||
Fixed Income Actively Managed – Taxable
|
230.3
|
|
|
236.3
|
|
|
221.5
|
|
|||
Fixed Income Actively Managed – Tax-exempt
|
41.3
|
|
|
38.8
|
|
|
36.3
|
|
|||
Fixed Income Passively Managed (1)
|
9.8
|
|
|
10.3
|
|
|
11.0
|
|
|||
Other (2)
|
62.6
|
|
|
56.2
|
|
|
55.3
|
|
|||
Total
|
$
|
544.2
|
|
|
$
|
518.0
|
|
|
$
|
480.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
I
nvestment advisory and services fees:
|
|
|
|
|
|
||||||
Institutions
|
|
|
|
|
|
||||||
Base fees
|
$
|
445
|
|
|
$
|
430
|
|
|
$
|
404
|
|
Performance-based fees
|
33
|
|
|
45
|
|
|
17
|
|
|||
Total
|
478
|
|
|
475
|
|
|
421
|
|
|||
Retail
|
|
|
|
|
|
||||||
Base fees
|
992
|
|
|
923
|
|
|
806
|
|
|||
Performance-based fees
|
18
|
|
|
24
|
|
|
3
|
|
|||
Total
|
1,010
|
|
|
947
|
|
|
809
|
|
|||
Private Wealth Management
|
|
|
|
|
|
||||||
Base fees
|
807
|
|
|
754
|
|
|
692
|
|
|||
Performance-based fees
|
67
|
|
|
25
|
|
|
12
|
|
|||
Total
|
874
|
|
|
779
|
|
|
704
|
|
|||
Total
|
|
|
|
|
|
|
|||||
Base fees
|
2,244
|
|
|
2,107
|
|
|
1,902
|
|
|||
Performance-based fees
|
118
|
|
|
94
|
|
|
32
|
|
|||
Total
|
$
|
2,362
|
|
|
$
|
2,201
|
|
|
$
|
1,934
|
|
Bernstein Research Services
|
$
|
439
|
|
|
$
|
450
|
|
|
$
|
480
|
|
Distribution revenues
|
419
|
|
|
412
|
|
|
384
|
|
|||
Dividend and interest income
|
98
|
|
|
71
|
|
|
47
|
|
|||
Investment gains (losses)
|
3
|
|
|
92
|
|
|
93
|
|
|||
Other revenues
|
99
|
|
|
98
|
|
|
100
|
|
|||
Total revenues
|
3,420
|
|
|
3,324
|
|
|
3,038
|
|
|||
Less: Interest expense
|
53
|
|
|
25
|
|
|
9
|
|
|||
Net revenues
|
$
|
3,367
|
|
|
$
|
3,299
|
|
|
$
|
3,029
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Annualized Premium
|
|
|
|
|
|
||||||
Indexed Universal Life
|
$
|
81
|
|
|
$
|
82
|
|
|
$
|
90
|
|
Variable Universal Life
|
107
|
|
|
94
|
|
|
86
|
|
|||
Term
|
19
|
|
|
19
|
|
|
20
|
|
|||
Other (1)
|
3
|
|
|
3
|
|
|
4
|
|
|||
Total
|
$
|
210
|
|
|
$
|
198
|
|
|
$
|
200
|
|
(1)
|
For the individual life insurance in-force, other includes current assumption universal life insurance, whole life insurance and other products available for sale but not actively marketed.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
FYP by Product Line
|
|
|
|
|
|
||||||
Universal Life
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
5
|
|
Indexed Universal Life
|
216
|
|
|
219
|
|
|
267
|
|
|||
Variable Universal Life
|
176
|
|
|
163
|
|
|
148
|
|
|||
Term
|
19
|
|
|
19
|
|
|
20
|
|
|||
Other (1)
|
1
|
|
|
1
|
|
|
1
|
|
|||
Total
|
$
|
415
|
|
|
$
|
406
|
|
|
$
|
441
|
|
|
|
|
|
|
|
||||||
Renewals by Product Line
|
|
|
|
|
|
||||||
Universal Life
|
$
|
918
|
|
|
$
|
913
|
|
|
$
|
905
|
|
Indexed Universal Life
|
224
|
|
|
189
|
|
|
145
|
|
|||
Variable Universal Life
|
904
|
|
|
959
|
|
|
914
|
|
|||
Term
|
483
|
|
|
504
|
|
|
549
|
|
|||
Other (1)
|
24
|
|
|
27
|
|
|
39
|
|
|||
Total
|
$
|
2,553
|
|
|
$
|
2,592
|
|
|
$
|
2,552
|
|
|
|
|
|
|
|
||||||
Total Gross Premiums
|
$
|
2,968
|
|
|
$
|
2,998
|
|
|
$
|
2,993
|
|
(1)
|
For the individual life insurance in-force, other includes current assumption universal life insurance, whole life insurance and other products available for sale but not actively marketed.
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
In-force face amount by product: (1)
|
|
|
|
|
|
||||||
Universal Life (2)
|
$
|
55.9
|
|
|
$
|
59.0
|
|
|
$
|
61.7
|
|
Indexed Universal Life
|
22.9
|
|
|
20.5
|
|
|
18.5
|
|
|||
Variable Universal Life (3)
|
127.3
|
|
|
128.9
|
|
|
130.3
|
|
|||
Term
|
234.9
|
|
|
235.9
|
|
|
237.0
|
|
|||
Whole Life
|
1.4
|
|
|
1.6
|
|
|
1.7
|
|
|||
Total in-force face amount
|
$
|
442.4
|
|
|
$
|
445.9
|
|
|
$
|
449.2
|
|
|
As of December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
|
(in thousands)
|
|||||||
In-force Policy Count by Product (1)
|
|
|
|
|
|
|||
Universal Life (2)
|
177
|
|
|
188
|
|
|
199
|
|
Indexed Universal Life
|
52
|
|
|
45
|
|
|
38
|
|
Variable Universal Life (3)
|
307
|
|
|
316
|
|
|
326
|
|
Term
|
333
|
|
|
340
|
|
|
346
|
|
Whole Life
|
19
|
|
|
20
|
|
|
21
|
|
Total
|
888
|
|
|
909
|
|
|
930
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Protection Solutions Reserves (4)
|
|
|
|
|
|
||||||
General Account
|
$
|
17,562
|
|
|
$
|
17,296
|
|
|
$
|
17,713
|
|
Separate Accounts
|
11,393
|
|
|
12,643
|
|
|
11,251
|
|
|||
Total Protection Solutions Reserves
|
$
|
28,955
|
|
|
$
|
29,939
|
|
|
$
|
28,964
|
|
(1)
|
Does not include life insurance sold as part of our employee benefits business as it is a start-up business with a limited amount of in-force policies.
|
(2)
|
Universal life includes guaranteed universal life insurance products.
|
(3)
|
Variable universal life includes variable life insurance and corporate-owned life insurance.
|
(4)
|
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.
|
Shift in Product Sales (Annualized Premiums)
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Annualized Premium by Distribution
|
|
|
|
|
|
||||||
AXA Advisors
|
$
|
165
|
|
|
$
|
157
|
|
|
$
|
160
|
|
Third-Party Firms
|
45
|
|
|
41
|
|
|
40
|
|
|||
Total
|
$
|
210
|
|
|
$
|
198
|
|
|
$
|
200
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
ACS Life In-Force VA
|
|
|
|
|
|
||||||
GMDB
|
|
|
|
|
|
||||||
Policy Count (in thousands)
|
193
|
|
|
215
|
|
|
239
|
|
|||
Reinsured Account Value (in billions)
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
9
|
|
Net amount at risk (in millions)
|
$
|
1,040
|
|
|
$
|
637
|
|
|
$
|
912
|
|
Reserves (in millions)
|
$
|
82
|
|
|
$
|
95
|
|
|
$
|
121
|
|
|
|
|
|
|
|
||||||
GMIB
|
|
|
|
|
|
||||||
Policy Count (in thousands)
|
48
|
|
|
52
|
|
|
57
|
|
|||
Reinsured Account Value (in billions)
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Net amount at risk (in millions)
|
$
|
362
|
|
|
$
|
281
|
|
|
$
|
357
|
|
Reserves (in millions)
|
$
|
183
|
|
|
$
|
194
|
|
|
$
|
258
|
|
•
|
changes in interest rates may reduce the spread on some of our products between the amounts that we are required to pay under the contracts and the rate of return we are able to earn on our General Account investments supporting the contracts. When interest rates decline, we have to reinvest the cash income from our investments in lower yielding instruments, potentially reducing net investment income. Since many of our policies and contracts have guaranteed minimum interest or crediting rates or limit the resetting of interest rates, the spreads could decrease and potentially become negative. When interest rates rise, we may not be able to quickly replace the assets in our General Account with higher yielding assets needed to fund the higher crediting rates necessary to keep these products and contracts competitive, which may result in higher lapse rates;
|
•
|
when interest rates rise rapidly, policy loans and surrenders and withdrawals of annuity contracts and life insurance policies may increase as policyholders seek to buy products with perceived higher returns, requiring us to sell investment assets potentially resulting in realized investment losses, or requiring us to accelerate the amortization of DAC, which could reduce our net income;
|
•
|
a decline in interest rates accompanied by unexpected prepayments of certain investments may result in reduced investment income and a decline in our profitability. An increase in interest rates accompanied by unexpected extensions of certain lower yielding investments may result in a decline in our profitability;
|
•
|
changes in the relationship between long-term and short-term interest rates may adversely affect the profitability of some of our products;
|
•
|
changes in interest rates could result in changes to the fair value of our GMIB reinsurance contracts asset, which could increase the volatility of our earnings. Higher interest rates reduce the value of the GMIB reinsurance contract asset
|
•
|
changes in interest rates could result in changes to the fair value liability of our variable annuity GMxB business. Higher interest rates decrease the fair value liability of our GMxB variable annuity business, which increases our earnings; while lower interest rates increase the fair value liability of our GMxB variable annuity business, which decreases our earnings;
|
•
|
changes in interest rates may adversely impact our liquidity and increase our costs of financing and the cost of some of our hedges;
|
•
|
our mitigation efforts with respect to interest rate risk are primarily focused on maintaining an investment portfolio with diversified maturities that has a weighted average duration that is within an acceptable range of the duration of our estimated liability cash flow profile given our risk appetite. However, our estimate of the liability cash flow profile may turn out to be inaccurate. In addition, there are practical and capital market limitations on our ability to accomplish this objective. Due to these and other factors we may need to liquidate investments prior to maturity at a loss in order to satisfy liabilities or be forced to reinvest funds in a lower rate environment;
|
•
|
we may not be able to effectively mitigate, including through our hedging strategies, and we may sometimes choose based on economic considerations and other factors not to fully mitigate or to increase, the interest rate risk of our assets relative to our liabilities; and
|
•
|
for certain of our products, a delay between the time we make changes in interest rate and other assumptions used for product pricing and the time we are able to reflect these assumptions in products available for sale may negatively impact the long-term profitability of products sold during the intervening period.
|
•
|
the restatement of the annual financial statements for the year ended December 31, 2016, the restatements of the interim financial statements for the nine months ended September 30, 2017 and for the six months ended June 30, 2017, the revision of the annual financial statements for the year ended December 31, 2015 and the revision of the interim financial statements for the nine months ended September 30, 2016 and for the six months ended June 30, 2016, in each case that were reported in the preliminary prospectus included in the first amendment of our Form S-1 registration statement filed on February 14, 2018; and
|
•
|
the restatement of the interim financial statements for the six months ended June 30, 2017 and the revision of the annual financial statements for the years ended December 31, 2016, 2015 and 2014 and the interim financial statements for the six months ended June 30, 2016, in each case that were reported in the preliminary prospectus included in our initial Form S-1 registration statement filed on November 13, 2017.
|
•
|
adverse effects on our earnings;
|
•
|
additional demand on our existing employees;
|
•
|
unanticipated difficulties integrating operating facilities technologies and new technologies;
|
•
|
higher than anticipated costs related to integration;
|
•
|
existence of unknown liabilities or contingencies that arise after closing; and
|
•
|
potential disputes with counterparties.
|
•
|
we could experience long-term interruptions in our service and the services provided by our significant vendors due to the effects of catastrophic events. Some of our operational systems are not fully redundant, and our disaster recovery and business continuity planning cannot account for all eventualities. Additionally, unanticipated problems with our disaster recovery systems could further impede our ability to conduct business, particularly if those problems affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data;
|
•
|
the occurrence of a pandemic disease could have a material adverse effect on our liquidity and the operating results of our insurance business due to increased mortality and, in certain cases, morbidity rates;
|
•
|
the occurrence of any pandemic disease, natural disaster, terrorist attack or any other catastrophic event that results in our workforce being unable to be physically located at one of our facilities could result in lengthy interruptions in our service;
|
•
|
a localized catastrophic event that affects the location of one or more of our corporate-owned or employer sponsored life insurance customers could cause a significant loss due to the corresponding mortality claims; and
|
•
|
a terrorist attack in the United States could have long-term economic impacts that may have severe negative effects on our investment portfolio, including loss of AUM and losses due to significant volatility, and disrupt our business operations. Any continuous and heightened threat of terrorist attacks could also result in increased costs of reinsurance.
|
•
|
Market Factors.
Global equity markets were quite strong throughout 2018 before finishing the year dramatically lower. Markets sold off in the fourth quarter due to investor concerns over rising U.S. interest rates, a slowdown in European business confidence, weaker Chinese growth and rising geopolitical uncertainty, including Brexit implementation and ongoing trade tensions between the U.S. and China. Global fixed income markets were mixed for
|
•
|
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.
|
•
|
any merger, consolidation or similar transaction (or any amendment to or termination of an agreement to enter into such a transaction) involving us or any of our subsidiaries, on the one hand, and any other person, on the other hand, subject to certain specified exceptions;
|
•
|
any change in our authorized capital stock or the creation of any new class or series of our capital stock;
|
•
|
any issuance or acquisition of capital stock (including stock buy-backs, redemptions or other reductions of capital), or securities convertible into or exchangeable or exercisable for capital stock or equity-linked securities, subject to certain specified exceptions;
|
•
|
any issuance or acquisition of debt securities involving an aggregate principal amount exceeding $250 million;
|
•
|
any amendment (or approval or recommendation of any amendment) to our certificate of incorporation or by-laws; and
|
•
|
the election, appointment, hiring, dismissal or removal (other than for cause) of the Company’s CEO or CFO.
|
•
|
industry or general market conditions;
|
•
|
domestic and international economic factors unrelated to our performance;
|
•
|
changes in our customers’ preferences;
|
•
|
new regulatory pronouncements and changes in regulatory guidelines;
|
•
|
lawsuits, enforcement actions and other claims by third parties or governmental authorities;
|
•
|
adverse publicity related to us or another industry participant;
|
•
|
actual or anticipated fluctuations in our operating results;
|
•
|
changes in securities analysts’ estimates of our financial performance or lack of research coverage and reports by industry analysts;
|
•
|
action by institutional stockholders or other large stockholders (including AXA), including future sales of our common stock;
|
•
|
failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices;
|
•
|
announcements by us of significant impairment charges;
|
•
|
speculation in the press or investment community;
|
•
|
investor perception of us and our industry;
|
•
|
changes in market valuations or earnings of similar companies;
|
•
|
announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships;
|
•
|
war, terrorist acts and epidemic disease;
|
•
|
any future sales of our common stock or other securities;
|
•
|
additions or departures of key personnel; and
|
•
|
misconduct or other improper actions of our employees.
|
•
|
authorize the issuance of shares of our common stock to create voting impediments or to frustrate persons otherwise seeking to affect a takeover or gain control;
|
•
|
authorize the issuance of “blank check” preferred stock that could be issued by our Board to thwart a takeover attempt;
|
•
|
provide that vacancies on our Board, including vacancies resulting from an enlargement of our Board, may be filled only by a majority vote of directors then in office once AXA ceases to beneficially own at least 50% of the outstanding shares of our common stock;
|
•
|
prohibit stockholders from calling special meetings of stockholders if AXA ceases to beneficially own at least 50% of the outstanding shares of our common stock;
|
•
|
prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders, if AXA ceases to beneficially own at least 50% of the outstanding shares of our common stock;
|
•
|
establish advance notice requirements for nominations of candidates for election as directors or to bring other business before an annual meeting of our stockholders; and
|
•
|
require the approval of holders of at least 66
2
⁄
3
% of the outstanding shares of our common stock to amend our amended and restated by-laws and certain provisions of our amended and restated certificate of incorporation if AXA ceases to beneficially own at least 50% of the outstanding shares of our common stock.
|
•
|
the requirement that a majority of the Board consist of independent directors;
|
•
|
the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;
|
•
|
the requirement that our nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, or otherwise have director nominees selected by vote of a majority of the independent directors; and
|
•
|
the requirement for an annual performance evaluation of the nominating and governance and compensation committees.
|
•
|
any breach of the director’s duty of loyalty;
|
•
|
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law;
|
•
|
under Section 174 of the DGCL (unlawful dividends); or
|
•
|
any transaction from which the director derives an improper personal benefit.
|
Period
|
Total Number of Shares (or Units) Purchased
|
|
Average Price Paid per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Programs
|
|
Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Program (1)
|
||||||
Month #1 (October 1-31)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
443,499,479
|
|
Month #2 (November 1-30)
|
30,000,000
|
|
|
$
|
19.74
|
|
|
30,000,000
|
|
|
$
|
151,185,479
|
|
Month #3 (December 1-31)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
151,185,479
|
|
Total
|
30,000,000
|
|
|
|
|
30,000,000
|
|
|
|
(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. On November 9, 2018, Holdings’ Board of Directors approved a
$300 million
increase to Holdings’ share repurchase program, bringing the total authorization to
$800 million
.
|
|
May 14
|
|
Jun 30
|
|
Sep 30
|
|
Dec 31
|
||||||||
AXA Equitable Holdings, Inc.
|
$
|
100.00
|
|
|
$
|
96.35
|
|
|
$
|
100.86
|
|
|
$
|
78.71
|
|
S&P 500
|
100.00
|
|
|
99.93
|
|
|
107.63
|
|
|
93.08
|
|
||||
S&P 500 Financials
|
100.00
|
|
|
94.40
|
|
|
98.51
|
|
|
85.58
|
|
||||
S&P 500 Insurance
|
100.00
|
|
|
95.88
|
|
|
102.59
|
|
|
91.70
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||
|
(in millions except per share data)
|
|||||||||||||||||||
Statements of Income (Loss) Data:
|
|
|
|
|
|
|
|
|
|
|||||||||||
REVENUES
|
|
|
|
|
|
|
|
|
|
|||||||||||
Policy charges and fee income
|
$
|
3,824
|
|
|
$
|
3,693
|
|
|
$
|
3,729
|
|
|
$
|
3,628
|
|
|
$
|
3,472
|
|
|
Premiums
|
1,094
|
|
|
1,124
|
|
|
1,083
|
|
|
1,070
|
|
|
1,098
|
|
||||||
Net derivative gains (losses)
|
(231
|
)
|
|
214
|
|
|
(1,848
|
)
|
|
(1,404
|
)
|
|
760
|
|
||||||
Net investment income (loss)
|
2,693
|
|
|
3,082
|
|
|
2,665
|
|
|
2,450
|
|
|
3,395
|
|
||||||
Investment gains (losses), net:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total other-than-temporary impairment losses
|
(42
|
)
|
|
(15
|
)
|
|
(68
|
)
|
|
(42
|
)
|
|
(82
|
)
|
||||||
Other investment gains (losses), net
|
(44
|
)
|
|
(176
|
)
|
|
2,051
|
|
|
27
|
|
|
40
|
|
||||||
Total investment gains (losses), net
|
(86
|
)
|
|
(191
|
)
|
|
1,983
|
|
|
(15
|
)
|
|
(42
|
)
|
||||||
Investment management and service fees
|
4,268
|
|
|
4,093
|
|
|
3,749
|
|
|
3,895
|
|
|
3,892
|
|
||||||
Other income
|
516
|
|
|
445
|
|
|
402
|
|
|
419
|
|
|
420
|
|
||||||
Total revenues
|
$
|
12,078
|
|
|
$
|
12,460
|
|
|
$
|
11,763
|
|
|
$
|
10,043
|
|
|
$
|
12,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
|
|
|
|
|||||||||||
Policyholders’ benefits
|
$
|
2,915
|
|
|
$
|
4,366
|
|
|
$
|
3,342
|
|
|
$
|
3,501
|
|
|
$
|
4,366
|
|
|
Interest credited to policyholders’ account balances
|
1,090
|
|
|
995
|
|
|
967
|
|
|
934
|
|
|
913
|
|
||||||
Compensation and benefits
|
2,079
|
|
|
1,980
|
|
|
1,965
|
|
|
2,008
|
|
|
1,955
|
|
||||||
Commissions and distribution related payments
|
1,160
|
|
|
1,081
|
|
|
1,000
|
|
|
1,027
|
|
|
1,039
|
|
||||||
Interest expense
|
231
|
|
|
160
|
|
|
174
|
|
|
136
|
|
|
389
|
|
||||||
Amortization of deferred policy acquisition costs
|
333
|
|
|
503
|
|
|
779
|
|
|
431
|
|
|
350
|
|
||||||
Other operating costs and expenses
|
1,809
|
|
|
2,069
|
|
|
1,509
|
|
|
1,578
|
|
|
1,587
|
|
||||||
Total benefits and other deductions
|
9,617
|
|
|
$
|
11,154
|
|
|
9,736
|
|
|
9,615
|
|
|
10,599
|
|
|||||
Income (loss) from continuing operations, before income taxes
|
2,461
|
|
|
1,306
|
|
|
2,027
|
|
|
428
|
|
|
2,396
|
|
||||||
Income tax (expense) benefit
|
(307
|
)
|
|
(49
|
)
|
|
(378
|
)
|
|
222
|
|
|
(464
|
)
|
||||||
Net income (loss)
|
2,154
|
|
|
1,257
|
|
|
1,649
|
|
|
650
|
|
|
1,932
|
|
||||||
Less: net (income) loss attributable to the noncontrolling interest
|
(334
|
)
|
|
(423
|
)
|
|
(395
|
)
|
|
(325
|
)
|
|
(317
|
)
|
||||||
Net income (loss) attributable to Holdings
|
$
|
1,820
|
|
|
$
|
834
|
|
|
$
|
1,254
|
|
|
$
|
325
|
|
|
$
|
1,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
EARNINGS PER SHARE
|
|
|
|
|
|
|
|
|
|
|||||||||||
Earnings per share - common stock:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
$
|
3.27
|
|
|
$
|
1.49
|
|
|
$
|
2.24
|
|
|
$
|
0.58
|
|
|
$
|
2.88
|
|
|
Diluted
|
$
|
3.27
|
|
|
$
|
1.48
|
|
|
$
|
2.24
|
|
|
$
|
0.58
|
|
|
$
|
2.88
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
556.4
|
|
|
561.0
|
|
|
561.0
|
|
|
561.0
|
|
|
561.0
|
|
||||||
Diluted
|
556.5
|
|
|
561.0
|
|
|
561.0
|
|
|
561.0
|
|
|
561.0
|
|
||||||
Cash dividends declared per common share
|
$
|
0.26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance Sheet Data (at period end)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total investments
|
$
|
81,333
|
|
|
$
|
81,782
|
|
|
$
|
72,318
|
|
|
$
|
64,755
|
|
|
$
|
64,426
|
|
Separate Accounts assets
|
110,337
|
|
|
124,552
|
|
|
113,150
|
|
|
109,198
|
|
|
112,886
|
|
|||||
Total Assets
|
$
|
220,797
|
|
|
$
|
235,615
|
|
|
$
|
216,645
|
|
|
$
|
205,497
|
|
|
$
|
207,707
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholders’ account balances
|
$
|
49,923
|
|
|
$
|
47,171
|
|
|
$
|
41,956
|
|
|
$
|
35,821
|
|
|
$
|
34,530
|
|
Future policy benefits and other policyholders’ liabilities
|
30,998
|
|
|
30,330
|
|
|
30,357
|
|
|
29,992
|
|
|
28,476
|
|
|||||
Short-term and long-term debt
|
4,955
|
|
|
2,408
|
|
|
1,605
|
|
|
1,786
|
|
|
1,963
|
|
|||||
Loans from affiliates
|
—
|
|
|
3,622
|
|
|
2,904
|
|
|
4,665
|
|
|
5,447
|
|
|||||
Separate Account liabilities
|
110,337
|
|
|
124,552
|
|
|
113,150
|
|
|
109,198
|
|
|
112,886
|
|
|||||
Total Liabilities
|
205,178
|
|
|
218,471
|
|
|
201,693
|
|
|
191,969
|
|
|
193,621
|
|
|||||
Redeemable noncontrolling interest
|
187
|
|
|
626
|
|
|
403
|
|
|
13
|
|
|
17
|
|
|||||
Total equity attributable to Holdings
|
13,866
|
|
|
13,421
|
|
|
11,407
|
|
|
10,407
|
|
|
10,918
|
|
|||||
Total equity attributable to Holdings, excluding Accumulated other comprehensive income (loss)
|
15,262
|
|
|
13,529
|
|
|
12,328
|
|
|
11,084
|
|
|
10,680
|
|
|||||
Noncontrolling interest
|
1,566
|
|
|
3,097
|
|
|
3,142
|
|
|
3,108
|
|
|
3,151
|
|
|||||
Total equity
|
$
|
15,432
|
|
|
$
|
16,518
|
|
|
$
|
14,549
|
|
|
$
|
13,515
|
|
|
$
|
14,069
|
|
•
|
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. See “Business—Segment Information—Individual Retirement.”
|
•
|
GMIB reinsurance contracts.
Historically, GMIB reinsurance contracts were used to cede to 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
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Impact of assumption updates on Net income (loss):
|
|
|
|
|
|
||||||
Variable annuity product features related assumption updates
|
$
|
(366
|
)
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
All other assumption updates
|
206
|
|
|
728
|
|
|
(30
|
)
|
|||
Impact of assumption updates on Income (loss) from continuing operations, before income tax
|
(160
|
)
|
|
711
|
|
|
(30
|
)
|
|||
Income tax (expense) benefit on assumption updates
|
29
|
|
|
(249
|
)
|
|
10
|
|
|||
Net income (loss) impact of assumption updates
|
$
|
(131
|
)
|
|
$
|
462
|
|
|
$
|
(20
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
(in millions)
|
|
|
||||||
Impact of assumption updates by segment:
|
|
|
|
|
|
||||||
Individual Retirement
|
$
|
59
|
|
|
$
|
58
|
|
|
$
|
—
|
|
Group Retirement
|
43
|
|
|
47
|
|
|
—
|
|
|||
Protection Solutions
|
107
|
|
|
623
|
|
|
(30
|
)
|
|||
Impact of assumption updates on Corporate and Other
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Total impact on pre-tax Non-GAAP Operating Earnings
|
$
|
206
|
|
|
$
|
728
|
|
|
$
|
(30
|
)
|
•
|
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.
|
•
|
For the Individual Retirement and Group Retirement segments, the impacts primarily reflect favorable updates to the period over which DAC is amortized.
|
•
|
For the Protection Solutions segment, the impacts primarily reflect actuarial assumption updates and model changes, a maintenance expense assumption update, a mortality table update and loss recognition testing.
|
•
|
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 policies with comparatively high guaranteed rates longer (lower lapse rates) in a low interest rate environment. Conversely, a rise in average yield on our investment portfolio should positively impact earnings. Similarly, we expect policyholders would be less likely to hold policies with existing guaranteed rates (higher lapse rates) as interest rates rise.
|
•
|
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 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, as appropriate, regulatory issues resulting from variable annuity captive reinsurance transactions, including reforms that would improve the current statutory reserve and 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, expected to take effect January 2020, and which has now been referred to various other NAIC committees to develop the expected 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 DOL Rule, the SEC and NAIC as well as state regulators are currently considering whether to apply an impartial conduct standard similar to the DOL Rule to recommendations made in connection with certain annuities and, in one case, to life insurance policies. For example, the NAIC is actively working on a proposal to raise the advice standard for annuity sales and 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.
|
•
|
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”. Public comments were due by 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.
|
•
|
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 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.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Net income (loss) attributable to Holdings
|
$
|
1,820
|
|
|
$
|
834
|
|
|
$
|
1,254
|
|
Adjustments related to:
|
|
|
|
|
|
||||||
Variable annuity product features
|
(70
|
)
|
|
1,107
|
|
|
2,143
|
|
|||
Investment (gains) losses
|
86
|
|
|
191
|
|
|
(1,983
|
)
|
|||
Goodwill impairment
|
—
|
|
|
369
|
|
|
—
|
|
|||
Net actuarial (gains) losses related to pension and other postretirement benefit obligations
|
215
|
|
|
135
|
|
|
140
|
|
|||
Other adjustments (1)
|
299
|
|
|
119
|
|
|
(7
|
)
|
|||
Income tax expense (benefit) related to above adjustments
|
(111
|
)
|
|
(644
|
)
|
|
(93
|
)
|
|||
Non-recurring tax items
|
(73
|
)
|
|
(76
|
)
|
|
(63
|
)
|
|||
Non-GAAP Operating Earnings
|
$
|
2,166
|
|
|
$
|
2,035
|
|
|
$
|
1,391
|
|
(1)
|
“Other adjustments” includes separation costs of
$213 million
and
$93 million
in 2018 and 2017, respectively.
|
|
Individual Retirement
|
|
Group Retirement
|
|
Protection Solutions
|
||||||
|
(in millions)
|
||||||||||
Year Ended December 31, 2018
|
|
||||||||||
Operating earnings
|
$
|
1,555
|
|
|
$
|
389
|
|
|
$
|
197
|
|
Average capital (2)
|
$
|
6,921
|
|
|
$
|
1,227
|
|
|
$
|
2,656
|
|
Non-GAAP Operating ROC
|
22.5
|
%
|
|
31.7
|
%
|
|
7.4
|
%
|
|||
|
|
|
|
|
|
||||||
Year Ended December 31, 2017
|
|
|
|
|
|
||||||
Operating earnings (1)
|
$
|
1,252
|
|
|
$
|
283
|
|
|
$
|
502
|
|
Average capital (2)
|
$
|
6,912
|
|
|
$
|
1,154
|
|
|
$
|
2,761
|
|
Non-GAAP Operating ROC
|
18.1
|
%
|
|
24.5
|
%
|
|
18.2
|
%
|
(1)
|
Protection Solutions was favorably impacted by non-recurring items in 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).
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(per share amounts)
|
||||||||||
Net income (loss) attributable to Holdings
|
$
|
3.27
|
|
|
$
|
1.49
|
|
|
$
|
2.24
|
|
Adjustments related to:
|
|
|
|
|
|
||||||
Variable annuity product features
|
(0.13
|
)
|
|
1.97
|
|
|
3.82
|
|
|||
Investment (gains) losses
|
0.15
|
|
|
0.34
|
|
|
(3.53
|
)
|
|||
Goodwill impairment
|
—
|
|
|
0.66
|
|
|
—
|
|
|||
Net actuarial (gains) losses related to pension and other postretirement benefit obligations
|
0.39
|
|
|
0.24
|
|
|
0.25
|
|
|||
Other adjustments
|
0.54
|
|
|
0.22
|
|
|
(0.02
|
)
|
|||
Income tax expense (benefit) related to above adjustments
|
(0.20
|
)
|
|
(1.15
|
)
|
|
(0.17
|
)
|
|||
Non-recurring tax items
|
(0.13
|
)
|
|
(0.14
|
)
|
|
(0.11
|
)
|
|||
Non-GAAP Operating Earnings
|
$
|
3.89
|
|
|
$
|
3.63
|
|
|
$
|
2.48
|
|
(1)
|
“Other adjustments” includes separation costs of
$0.38
and
$0.17
in 2018 and 2017, respectively.
|
|
December 31,
|
||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||
|
Individual Retirement
|
|
Group Retirement
|
|
Protection Solutions
|
|
Consoli- dated
|
|
Individual Retirement
|
|
Group Retirement
|
|
Protection Solutions
|
|
Consoli- dated
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Reductions to expense line items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commissions and distribution plan payments
|
$
|
328
|
|
|
$
|
55
|
|
|
$
|
140
|
|
|
$
|
523
|
|
|
$
|
347
|
|
|
$
|
54
|
|
|
$
|
135
|
|
|
$
|
537
|
|
Compensation and benefits, interest expense, and other operating costs and expenses
|
73
|
|
|
31
|
|
|
60
|
|
|
164
|
|
|
74
|
|
|
28
|
|
|
58
|
|
|
160
|
|
||||||||
Total reductions
|
$
|
401
|
|
|
$
|
86
|
|
|
$
|
200
|
|
|
$
|
687
|
|
|
$
|
421
|
|
|
$
|
82
|
|
|
$
|
193
|
|
|
$
|
697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Increase to expense line item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of deferred policy acquisition costs
|
$
|
401
|
|
|
$
|
86
|
|
|
$
|
200
|
|
|
$
|
687
|
|
|
$
|
421
|
|
|
$
|
82
|
|
|
$
|
193
|
|
+
|
$
|
697
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions, except per share data)
|
||||||||||
REVENUES
|
|
|
|
|
|
||||||
Policy charges and fee income
|
$
|
3,824
|
|
|
$
|
3,693
|
|
|
$
|
3,729
|
|
Premiums
|
1,094
|
|
|
1,124
|
|
|
1,083
|
|
|||
Net derivative gains (losses)
|
(231
|
)
|
|
214
|
|
|
(1,848
|
)
|
|||
Net investment income (loss)
|
2,693
|
|
|
3,082
|
|
|
2,665
|
|
|||
Investment gains (losses), net:
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
|
(42
|
)
|
|
(15
|
)
|
|
(68
|
)
|
|||
Other investment gains (losses), net
|
(44
|
)
|
|
(176
|
)
|
|
2,051
|
|
|||
Total investment gains (losses), net
|
(86
|
)
|
|
(191
|
)
|
|
1,983
|
|
|||
Investment management and service fees
|
4,268
|
|
|
4,093
|
|
|
3,749
|
|
|||
Other income
|
516
|
|
|
445
|
|
|
402
|
|
|||
Total revenues
|
12,078
|
|
|
12,460
|
|
|
11,763
|
|
|||
|
|
|
|
|
|
||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
2,915
|
|
|
4,366
|
|
|
3,342
|
|
|||
Interest credited to policyholders’ account balances
|
1,090
|
|
|
995
|
|
|
967
|
|
|||
Compensation and benefits
|
2,079
|
|
|
1,980
|
|
|
1,965
|
|
|||
Commissions and distribution related payments
|
1,160
|
|
|
1,081
|
|
|
1,000
|
|
|||
Interest expense
|
231
|
|
|
160
|
|
|
174
|
|
|||
Amortization of deferred policy acquisition costs
|
333
|
|
|
503
|
|
|
779
|
|
|||
Other operating costs and expenses
|
1,809
|
|
|
2,069
|
|
|
1,509
|
|
|||
Total benefits and other deductions
|
9,617
|
|
|
11,154
|
|
|
9,736
|
|
|||
Income (loss) from continuing operations, before income taxes
|
2,461
|
|
|
1,306
|
|
|
2,027
|
|
|||
Income tax (expense) benefit
|
(307
|
)
|
|
(49
|
)
|
|
(378
|
)
|
|||
Net income (loss)
|
2,154
|
|
|
1,257
|
|
|
1,649
|
|
|||
Less: net (income) loss attributable to the noncontrolling interest
|
(334
|
)
|
|
(423
|
)
|
|
(395
|
)
|
|||
Net income (loss) attributable to Holdings
|
$
|
1,820
|
|
|
$
|
834
|
|
|
$
|
1,254
|
|
|
|
|
|
|
|
||||||
EARNINGS PER SHARE
|
|
|
|
|
|
||||||
Earnings per share - common stock:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.27
|
|
|
$
|
1.49
|
|
|
$
|
2.24
|
|
Diluted
|
$
|
3.27
|
|
|
$
|
1.48
|
|
|
$
|
2.24
|
|
Weighted average common shares outstanding (in millions):
|
|
|
|
|
|
||||||
Basic
|
556.4
|
|
|
561.0
|
|
|
561.0
|
|
|||
Diluted
|
556.5
|
|
|
561.0
|
|
|
561.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Non-GAAP Operating Earnings
|
$
|
2,166
|
|
|
$
|
2,035
|
|
|
$
|
1,391
|
|
|
|
|
|
|
|
||||||
NON-GAAP OPERATING EARNINGS PER SHARE
|
|
|
|
|
|
||||||
Non-GAAP Operating EPS - common stock:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.89
|
|
|
$
|
3.63
|
|
|
$
|
2.48
|
|
Diluted
|
$
|
3.89
|
|
|
$
|
3.63
|
|
|
$
|
2.48
|
|
•
|
Policyholders’ benefits decreased by $1,451 million mainly due to the favorable impact of assumption updates in 2018 compared to the unfavorable impact of assumption updates in 2017, combined with the favorable impact of rising interest rates, partially offset by the impact of equity market declines affecting our GMxB liabilities.
|
•
|
Revenue from fees and related items ("Fee-type revenue"), including Policy charges and fee income, Premiums, Investment Management service fees and Other income, increased by $347 million mainly driven by our Investment Management and Research segment, primarily due to higher base fees reflecting an increase in average AUM of 5.1% and an increase in performance fees. Fee-type revenue also increased due to higher average Separate Accounts AV in our Individual Retirement, Group Retirement and Protection Solutions segments and from a more unfavorable impact of assumption updates in 2017 compared to 2018, higher cost of insurance charges and premiums from our Protection Solutions segment.
|
•
|
Amortization of deferred policy acquisition costs decreased by $170 million mainly due to the favorable impact of assumption updates in 2018.
|
•
|
Compensation, benefits and other operating expenses decreased by $161 million mainly due to a non-recurring goodwill impairment charge in 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. Additionally, offsetting the decrease, Compensation and benefits increased due to the loss resulting from the annuity purchase transaction and partial settlement of the employee pension plan in 2018.
|
•
|
Total investment gains (losses), net increased by $105 million primarily due to the sale of fixed maturities.
|
•
|
Net derivative gains (losses) decreased by $445 million mainly due to the unfavorable impact of assumption updates in 2018 compared to the favorable impact of assumption updates in 2017.
|
•
|
Net investment income (loss) decreased by $389 million mainly due to a change in the market value of trading securities supporting our variable annuity products and AB securities due to higher interest rates.
|
•
|
Interest credited to policyholders’ account balances increased by $95 million primarily driven by higher SCS AV due to new business growth.
|
•
|
Commissions and distribution related payments increased by $79 million mainly driven by higher revenue from AXA Advisors' broker-dealer resulting from higher average AUA.
|
•
|
Interest expense increased by $71 million due to the incurrence of $3.8 billion of indebtedness in 2018 and higher repurchase agreement costs.
|
•
|
Income tax expense increased by $258 million driven by an increase in pre-tax income and a one-time tax benefit in 2017 related to the conclusion of an IRS audit for tax years 2008 and 2009, partially offset by a lower effective tax rate due to the Tax Reform Act as well as an impairment of goodwill in 2017.
|
•
|
Fee-type revenue increased by $426 million mainly due to our Investment Management and Research segment reflecting higher base fees resulting from an increase in average AUM of 5.1% from equity markets and the positive impact of adopting a new revenue recognition standard (ASC 606) in 2018, which accelerated the recognition of certain performance-based fees. Fee-type revenue also increased due to higher average Separate Accounts AV of our Individual and Group Retirement and Protection Solutions segments and a more unfavorable impact of assumption updates in 2017 compared to 2018, higher cost of insurance charges and premiums from our Protection Solutions segment.
|
•
|
Amortization of DAC decreased by $162 million mainly due to favorable impact of assumption updates in 2018.
|
•
|
Net investment income increased by $56 million mainly due to the General Account investment portfolio optimization and higher asset balances.
|
•
|
Income tax expense decreased by $297 million driven by a lower effective tax rate due to the Tax Reform Act as well as lower pre-tax income.
|
•
|
Investment gains (losses), net including derivative gains (losses) decreased by $418 million mainly due to a $457 million decrease in our Individual Retirement segment as interest rates rose in 2018.
|
•
|
Policyholders’ benefits increased by $130 million primarily due to the favorable impact from assumption updates and model changes in 2017 as compared to an unfavorable impact of assumption updates in 2018, combined with higher mortality experience in our Protection Solutions segment, partially offset by a decrease in our Individual Retirement segment and in Corporate and Other. The decrease in our Individual Retirement segment reflected an improvement in GMxB results, partially offset by a decrease in Investment gains (losses), net including derivative gains (losses) as interest rates rose in 2018.
|
•
|
Interest credited to policyholders’ account balances increased by $95 million mainly driven by our Individual Retirement segment, reflecting higher SCS AV due to growth in product sales.
|
•
|
Interest expense increased by $87 million due to the incurrence of $3.8 billion of indebtedness in 2018 and higher repurchase agreement costs.
|
•
|
Commissions and distribution related payments increased by $78 million mainly driven by higher revenue from AXA Advisors broker-dealer resulting from higher average AUA.
|
•
|
Compensation, benefits and other operating costs and expenses increased by $70 million mainly due to an increase in our Investment Management and Research segment driven by higher compensation resulting from higher fees, partially offset by a decrease of $9 million as a result of productivity initiatives.
|
•
|
Lower investment gains of
$2.2 billion
mainly due to a non-recurring
$1,857 million
realized gain on the sale of two real estate properties in New York City for the year ended 2016, and losses of
$200 million
in 2017 mainly due to the disposal of our commercial-mortgage backed securities portfolio and the sale of U.S. Treasury securities.
|
•
|
Increase in Policyholders’ benefits of
$1.0 billion
due to reserve
increases
of
$1.5 billion
for our Individual Retirement products mainly driven by policyholder behavior benefit ratio unlock adjustments, partially offset by
$491 million
in our Protection Solutions segment mainly driven by
$700 million
positive impact in 2017 from assumption updates and model changes compared to
$117 million
in 2016 and
$27 million
from other routine updates partially offset by a
$187 million
increase in net death claims. 2017 included the full reserve release of
$677 million
following assumption updates and model changes in the fourth quarter of 2017 and
$92 million
from a change in premium funding assumptions, partially offset by
$70 million
from a mortality table update. 2016 was mainly driven by a
$106 million
change in premium funding assumptions.
|
•
|
Increase in Compensation and benefits and Other operating costs and expenses of
$575 million
mainly reflecting the recognition of a goodwill impairment charge, reflected in Other operating costs and expenses, of
$369 million
due to the Company’s early adoption on January 1, 2017 of new accounting guidance for goodwill, and $165 million from our Investment Management and Research segment reflecting higher compensation and benefits, as well as higher operating expenses.
|
•
|
An increase in Net derivative gains (losses) of
$2.1 billion
mainly due to
$1.7 billion
of increased gains due to our GMxB liability carried at fair value, and
$400 million
from GMxB derivatives reflecting gains on Interest rate partially offset by higher equity return leading to higher losses.
|
•
|
Net investment income increased by
$417 million
primarily due to trading securities driven primarily by increased SCS holdings and AB trading activity.
|
•
|
Fee-type revenue increased by
$392 million
mainly driven by a
$283 million
increase in our Investment Management and Research segment primarily due to higher base fees reflecting an increase in average AUM and the impact of a shift in distribution channel mix from Institutions to Retail and Private Wealth Management, which generally have higher fees, and higher performance fees. In addition, our Individual and Group Retirement and Protection Solutions segments were positively impacted by higher average AV from net flows and higher equity markets, which was partially offset by the adverse impact of a change in mortality table and model updates in 2017 in our Protection Solutions segment.
|
•
|
Lower Amortization of DAC of
$276 million
in 2017 driven by a decrease across all segments. Our Protection Solutions segment decreased by
$177 million
mainly due to the impact of model changes and assumptions updates for
$224 million
(a
$23 million
decrease in 2017 compared to a
$201 million
increase in 2016). In 2017, the
$23 million
decrease included: (i)
$204 million
positive impact from a mortality table update; (ii)
$54 million
decrease from a maintenance expense assumption update to reflect actual experience, partially offset by; (iii) a
$245 million
DAC write-off related to our loss recognition testing of certain permanent life products due to low interest rates; and (iv)
$61 million
from the update of General Account spread and yield assumptions. In 2016, the
$201 million
increase included: (i)
$182 million
increase from lower interest rates; and (ii) a
$28 million
increase from an update in premium funding assumptions. Group Retirement was
$24 million
lower reflecting assumption updates to reflect higher persistency. Corporate and Other decreased by $48 million primarily driven by Closed Block amortization of DAC decreasing by
$36 million
, primarily reflecting reactivity to lower gross results in 2017.
|
•
|
Decrease of
$329 million
in income tax expense primarily driven by lower pre-tax income and the favorable settlement of an IRS audit for tax years 2008 and 2009 in 2017, partially offset by the impairment of goodwill in 2017.
|
•
|
Increase in Net derivative gains of
$346 million
primarily due to GMxB derivative gains due to decreasing interest rates in 2017 compared to 2016.
|
•
|
Fee-type revenue increased by
$391 million
mainly due to a
$283 million
increase in our Investment Management and Research segment due to higher base fees of
$205 million
reflecting an increase in average AUM and the impact of a shift in distribution channel mix from Institutions to Retail and Private Wealth Management, which generally have higher fees, and an increase in performance fees of
$62 million
, and an increase of
$229 million
in our Individual Retirement and Group Retirement segments mainly due to higher AV reflecting the impact of higher equity markets. This increase was partly offset by a decrease of
$159 million
in our Protection Solutions segment primarily due to the adverse impact of a change in mortality table and model updates in 2017.
|
•
|
Decrease in Amortization of DAC of
$280 million
in 2017 driven by a decrease across all segments. Our Protection Solutions segment decreased by
$184 million
. This decrease was mainly due to the impact of model changes and assumption updates of
$224 million
(a
$23 million
decrease in 2017 compared to a
$201 million
increase in 2016). In 2017, the
$23 million
decrease included: (i) the positive impact from a mortality table update; (ii) a decrease from a maintenance expense assumption update to reflect actual experience; partially offset by: (iii) a DAC write-off related to our loss recognition testing of certain permanent life products due to low interest rates; and (iv) the update of General Account spread and yield assumptions. In 2016, the
$201 million
increase was driven by lower interest rates, and an update in premium funding assumptions. Group Retirement was
$26 million
lower reflecting assumption updates to reflect higher persistency. Corporate and Other decreased by
$36 million
primarily driven by Closed Block amortization of DAC primarily reflecting reactivity to lower gross margin in 2017.
|
•
|
Net investment income increased by
$241 million
mainly due to higher equity method investments and higher asset base.
|
•
|
Policyholders’ benefits increased by
$155 million
mainly driven by a
$648 million
increase in GMxB policyholder benefits, partially offset by a
$491 million
decrease in our Protection Solutions segment. This decrease was mainly driven by a $700 million positive impact in 2017 from assumption updates and model changes (compared to $117 million in 2016) and from other routine updates, partially offset by adverse mortality experience. 2017 included a full reserve release following assumption updates and model changes in the fourth quarter and a change in premium funding assumptions, partially offset by the mortality table update. 2016 was mainly driven by a change in premium funding assumptions.
|
•
|
Compensation and benefits and Other operating costs and expenses increased by
$59 million
mainly driven by business growth in our Investment Management and Research segment.
|
•
|
Increase of
$237 million
in income tax expense primarily driven by higher pre-tax income.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Operating earnings (loss) by segment:
|
|
|
|
|
|
||||||
Individual Retirement
|
$
|
1,555
|
|
|
$
|
1,252
|
|
|
$
|
1,167
|
|
Group Retirement
|
389
|
|
|
283
|
|
|
167
|
|
|||
Investment Management and Research
|
381
|
|
|
211
|
|
|
161
|
|
|||
Protection Solutions
|
197
|
|
|
502
|
|
|
77
|
|
|||
Corporate and Other
|
(356
|
)
|
|
(213
|
)
|
|
(181
|
)
|
|||
Non-GAAP Operating Earnings
|
$
|
2,166
|
|
|
$
|
2,035
|
|
|
$
|
1,391
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Operating earnings
|
$
|
1,555
|
|
|
$
|
1,252
|
|
|
$
|
1,167
|
|
|
|
|
|
|
|
||||||
Key components of operating earnings are:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
REVENUES
|
|
|
|
|
|
||||||
Policy charges, fee income and premiums
|
$
|
2,124
|
|
|
$
|
2,116
|
|
|
$
|
1,981
|
|
Net investment income
|
981
|
|
|
865
|
|
|
696
|
|
|||
Investment gains (losses), net including derivative gains (losses)
|
197
|
|
|
654
|
|
|
326
|
|
|||
Investment management, service fees and other income
|
752
|
|
|
739
|
|
|
700
|
|
|||
Segment revenues
|
$
|
4,054
|
|
|
$
|
4,374
|
|
|
$
|
3,703
|
|
|
|
|
|
|
|
||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
||||||
Policyholders' benefits
|
$
|
1,073
|
|
|
$
|
1,667
|
|
|
$
|
1,019
|
|
Interest credited to policyholders' account balances
|
229
|
|
|
174
|
|
|
176
|
|
|||
Commissions and distribution related payments
|
291
|
|
|
281
|
|
|
260
|
|
|||
Amortization of deferred policy acquisition costs
|
186
|
|
|
108
|
|
|
140
|
|
|||
Compensation, benefits and other operating costs and expenses
|
415
|
|
|
450
|
|
|
481
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|||
Segment benefits and other deductions
|
$
|
2,194
|
|
|
$
|
2,680
|
|
|
$
|
2,076
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
AV
|
|
|
|
|
|
||||||
General Account
|
$
|
20,631
|
|
|
$
|
19,059
|
|
|
$
|
15,384
|
|
Separate Accounts
|
73,958
|
|
|
84,364
|
|
|
78,220
|
|
|||
Total AV
|
$
|
94,589
|
|
|
$
|
103,423
|
|
|
$
|
93,604
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Balance as of beginning of period
|
$
|
103,423
|
|
|
$
|
93,604
|
|
|
$
|
88,357
|
|
Gross premiums
|
7,893
|
|
|
7,786
|
|
|
7,960
|
|
|||
Surrenders, withdrawals and benefits
|
(9,091
|
)
|
|
(7,854
|
)
|
|
(6,780
|
)
|
|||
Net flows
|
(1,198
|
)
|
|
(68
|
)
|
|
1,180
|
|
|||
Investment performance, interest credited and policy charges
|
(7,636
|
)
|
|
9,887
|
|
|
4,067
|
|
|||
Balance as of end of period
|
$
|
94,589
|
|
|
$
|
103,423
|
|
|
$
|
93,604
|
|
•
|
Increase in Net investment income of $116 million resulting from higher asset balances mainly driven by higher SCS gross premiums and General Account investment portfolio optimization.
|
•
|
Improvement in GMxB results of
$76 million
primarily due to assumption updates in 2018 and 2017.
|
•
|
An increase in non-GMxB net derivative gains of
$65 million
primarily due to Separate Accounts fee hedge losses in 2017 that were not repeated in 2018.
|
•
|
Operating expense decreased by $35 million due to productivity initiatives.
|
•
|
Fee-type revenue increased by $29 million mainly due to higher average Separate Accounts AV.
|
•
|
Decrease in income tax expense of $130 million driven by a lower effective tax rate due to the Tax Reform Act, partially offset by higher pre-tax operating earnings.
|
•
|
Amortization of DAC increased by $78 million primarily due to the favorable impact of assumption updates in 2018.
|
•
|
Increase in Interest credited to policyholders’ account balances of $55 million primarily driven by higher SCS AV due to new business growth.
|
•
|
The
decrease
in AV of
$8.8 billion
in 2018 was due primarily to lower equity markets and net outflows in our older fixed-rate GMxB block.
|
•
|
Net outflows of
$1.2 billion
were
$1.1 billion
higher than in 2017, mainly driven
by
$4.1 billion
of outflows on our older fixed-rate GMxB block, which were partially offset by
$2.9 billion
of inflows on our newer, less capital-intensive products.
|
•
|
Increase in Fee-type revenue of
$174 million
due to higher AV from higher equity market performance in 2017, and higher premium income from payout annuities.
|
•
|
Increase in Net investment income of
$169 million
primarily due to equity method investments and higher assets.
|
•
|
Decrease in DAC amortization of
$32 million
due primarily to an update of our lapse and withdrawal assumptions for our variable annuity products with GMxB features in 2017.
|
•
|
Increase of
$40 million
in operating earnings due to higher SCS AV driven by higher gross premiums.
|
•
|
Decrease in operating expenses of
$31 million
due to company-wide efficiency actions.
|
•
|
Net decrease of
$320 million
in operating earnings, consisting of a
$648 million
increase in Policyholders’ benefits partially offset by a
$328 million
increase in derivative gains. 2016 Policyholders’ benefits were below normal levels due to: (i) an assumption update in our in-force block related to buyout offers that reduced future benefits; and (ii) favorable withdrawal activity relative to expectations that did not reoccur in 2016.
|
•
|
Net outflows of
$68 million
were
$1.2 billion
higher than in 2016, driven by a
$1.1 billion
increase
in surrenders, withdrawals and benefits mainly coming from our fixed-rate GMxB business, and a
$174 million
decrease
in gross premiums mainly due to the DOL Rule’s impact on sales by certain third-party firms.
|
•
|
Increase in AV of
$9.8 billion
year-over-year driven primarily by equity market performance.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Operating earnings
|
$
|
389
|
|
|
$
|
283
|
|
|
$
|
167
|
|
|
|
|
|
|
|
||||||
Key components of operating earnings are:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
REVENUES
|
|
|
|
|
|
||||||
Policy charges, fee income and premiums
|
$
|
271
|
|
|
$
|
248
|
|
|
$
|
217
|
|
Net investment income
|
552
|
|
|
528
|
|
|
444
|
|
|||
Investment gains (losses), net including derivative gains (losses)
|
2
|
|
|
(8
|
)
|
|
(10
|
)
|
|||
Investment management, service fees and other income
|
194
|
|
|
174
|
|
|
150
|
|
|||
Segment revenues
|
$
|
1,019
|
|
|
$
|
942
|
|
|
$
|
801
|
|
|
|
|
|
|
|
||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest credited to policyholders’ account balances
|
290
|
|
|
282
|
|
|
267
|
|
|||
Commissions and distribution related payments
|
42
|
|
|
38
|
|
|
38
|
|
|||
Amortization of deferred policy acquisition costs
|
(7
|
)
|
|
23
|
|
|
49
|
|
|||
Compensation, benefits and other operating costs and expenses
|
225
|
|
|
230
|
|
|
229
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|||
Segment benefits and other deductions
|
$
|
554
|
|
|
$
|
573
|
|
|
$
|
584
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
AV
|
|
|
|
|
|
||||||
General Account
|
$
|
11,619
|
|
|
$
|
11,319
|
|
|
$
|
10,999
|
|
Separate Accounts
|
20,782
|
|
|
22,587
|
|
|
19,139
|
|
|||
Total AV
|
$
|
32,401
|
|
|
$
|
33,906
|
|
|
$
|
30,138
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Balance as of beginning of period
|
$
|
33,906
|
|
|
$
|
30,138
|
|
|
$
|
27,757
|
|
Gross premiums
|
3,383
|
|
|
3,205
|
|
|
3,137
|
|
|||
Surrenders, withdrawals and benefits
|
(3,287
|
)
|
|
(2,938
|
)
|
|
(2,458
|
)
|
|||
Net flows
|
96
|
|
|
267
|
|
|
679
|
|
|||
Investment performance, interest credited and policy charges
|
(1,601
|
)
|
|
3,501
|
|
|
1,702
|
|
|||
Balance as of end of period
|
$
|
32,401
|
|
|
$
|
33,906
|
|
|
$
|
30,138
|
|
•
|
Fee-type revenue increased by $43 million mainly due to higher average Separate Accounts AV.
|
•
|
Amortization of DAC decreased by $30 million mainly due to the favorable impact of assumption updates in 2018 related to higher persistency.
|
•
|
Net investment income increased by $24 million primarily due to the positive impact of our GA investment portfolio optimization.
|
•
|
Increase in Investment gains (losses), net including derivative gains (losses) of $10 million was due to losses from derivatives in 2017 that were not repeated in 2018.
|
•
|
Decrease in income tax expense of $11 million driven by a lower effective tax rate due to the Tax Reform Act, partially 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 $12 million was primarily due to new business and AV growth.
|
•
|
The
decrease
in AV of
$1.5 billion
in 2018 was primarily due to lower equity markets.
|
•
|
Net inflows of
$96 million
were
$171 million
lower than in 2017, driven by
one-time plan de-conversions, partially offset by
an increase of
$183 million
in gross premiums, reflecting improved client engagement
.
|
•
|
Higher
Fee-type revenue of
$55 million
due to positive net flows of
$267 million
and higher equity markets in
2017
.
|
•
|
Increase
in Net investment income of
$84 million
due to higher income from alternative investments and higher assets.
|
•
|
Decrease
of
$26 million
in DAC amortization due to the adjustment of our assumptions for DAC amortization, lengthening the amortization period due to higher persistency.
|
•
|
Higher Interest credited to policyholder account balances of
$15 million
due to higher average General Account AV.
|
•
|
Higher
taxes of
$39 million
driven by higher pre-tax operating income.
|
•
|
Net inflows of
$267 million
were
$412 million
lower than in 2016, driven primarily by a
$475 million
increase in surrenders, withdrawals and benefits, partially offset by a
$63 million
increase in gross premiums in the 403(b) market through AXA Advisors’ distribution network.
|
•
|
Increase
in AV of
$3.8 billion
year-over-year driven primarily by higher equity markets.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Operating earnings
|
$
|
381
|
|
|
$
|
211
|
|
|
$
|
161
|
|
|
|
|
|
|
|
||||||
Key components of Operating Earnings are:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
REVENUES
|
|
|
|
|
|
||||||
Policy charges, fee income and premiums
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net investment income
|
(10
|
)
|
|
60
|
|
|
52
|
|
|||
Investment gains (losses), net including derivative gains (losses)
|
12
|
|
|
(24
|
)
|
|
(16
|
)
|
|||
Investment management, service fees and other income
|
3,409
|
|
|
3,180
|
|
|
2,897
|
|
|||
Segment revenues
|
$
|
3,411
|
|
|
$
|
3,216
|
|
|
$
|
2,933
|
|
|
|
|
|
|
|
||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest credited to policyholders’ account balances
|
—
|
|
|
—
|
|
|
—
|
|
|||
Commissions and distribution related payments
|
427
|
|
|
415
|
|
|
372
|
|
|||
Amortization of deferred policy acquisition costs
|
—
|
|
|
—
|
|
|
—
|
|
|||
Compensation, benefits and other operating costs and expenses
|
2,115
|
|
|
2,036
|
|
|
1,933
|
|
|||
Interest expense
|
8
|
|
|
6
|
|
|
3
|
|
|||
Segment benefits and other deductions
|
$
|
2,550
|
|
|
$
|
2,457
|
|
|
$
|
2,308
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Balance as of beginning of period
|
$
|
554.5
|
|
|
$
|
480.2
|
|
|
$
|
467.4
|
|
Long-term flows
|
|
|
|
|
|
||||||
Sales/new accounts
|
93.8
|
|
|
78.7
|
|
|
73.0
|
|
|||
Redemptions/terminations
|
(87.6
|
)
|
|
(60.7
|
)
|
|
(65.8
|
)
|
|||
Cash flow/unreinvested dividends
|
(14.3
|
)
|
|
(4.8
|
)
|
|
(17.0
|
)
|
|||
Net long-term (outflows) inflows
|
(8.1
|
)
|
|
13.2
|
|
|
(9.8
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Acquisition
|
—
|
|
|
—
|
|
|
2.5
|
|
|||
AUM adjustment (1)
|
—
|
|
|
—
|
|
|
(3.0
|
)
|
|||
Market appreciation (depreciation)
|
(30.0
|
)
|
|
61.1
|
|
|
23.1
|
|
|||
Net change
|
(38.1
|
)
|
|
74.3
|
|
|
12.8
|
|
|||
Balance as of end of period
|
$
|
516.4
|
|
|
$
|
554.5
|
|
|
$
|
480.2
|
|
(1)
|
During the second quarter of 2016, we removed
$3.0 billion
of Customized Retirement Solutions assets from AUM as our investment management services transitioned to consulting services. In addition, we previously made minor adjustments to reported AUM for reporting methodology changes that do not represent inflows or outflows.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
Distribution Channel:
|
|
|
|
|
|
||||||
Institutions
|
$
|
258.1
|
|
|
$
|
253.8
|
|
|
$
|
243.4
|
|
Retail
|
191.8
|
|
|
177.5
|
|
|
157.7
|
|
|||
Private Wealth Management
|
94.3
|
|
|
86.7
|
|
|
78.9
|
|
|||
Total
|
$
|
544.2
|
|
|
$
|
518.0
|
|
|
$
|
480.0
|
|
|
|
|
|
|
|
||||||
Investment Service:
|
|
|
|
|
|
||||||
Equity Actively Managed
|
$
|
146.4
|
|
|
$
|
125.6
|
|
|
$
|
109.4
|
|
Equity Passively Managed (1)
|
53.8
|
|
|
50.8
|
|
|
46.5
|
|
|||
Fixed Income Actively Managed – Taxable
|
230.3
|
|
|
236.3
|
|
|
221.5
|
|
|||
Fixed Income Actively Managed – Tax-exempt
|
41.3
|
|
|
38.8
|
|
|
36.3
|
|
|||
Fixed Income Passively Managed (1)
|
9.8
|
|
|
10.3
|
|
|
11.0
|
|
|||
Other (2)
|
62.6
|
|
|
56.2
|
|
|
55.3
|
|
|||
Total
|
$
|
544.2
|
|
|
$
|
518.0
|
|
|
$
|
480.0
|
|
(1)
|
Includes index and enhanced index services.
|
(2)
|
Includes multi-asset solutions and services, and certain alternative investments.
|
•
|
Increase in ownership of AB to a weighted average rate of approximately
61%
during 2018 compared to approximately
47%
during 2017.
|
•
|
Increase in Fee-type revenue of $229 million primarily due to higher base fees resulting from an 5.1% increase in average AUM and an increase in performance fees. Operating earnings included an increase in revenues of $78 million from the impact of adopting the new revenue recognition standard (ASC 606) in 2018, which accelerated the recognition of certain performance-based fees.
|
•
|
Investment gains (losses), net including derivative gains (losses) increased $36 million primarily due to higher derivative gains from seed capital and other investments.
|
•
|
Income tax expense decreased $17 million driven by lower effective tax rate due to the Tax Reform Act, partially offset by higher income tax expense due to an increase in pre-tax earnings.
|
•
|
Increase in Compensation, benefits, interest expense and other operating costs of $81 million, due to increased compensation resulting from higher revenues, including $43 million related to the impact of adoption of revenue recognition standard (ASC 606) in 2018.
|
•
|
Decrease in Net Investment income of $70 million due to lower investment income on company sponsored funds and lower unrealized on other investments.
|
•
|
Higher commissions and distribution related payments of $12 million due to higher payments to financial intermediaries for distribution of AB mutual funds.
|
•
|
Total AUM as of December 31, 2018 was
$516.4 billion
, down
$38.1 billion
, or
6.9%
, during 2018. The decrease was driven by market depreciation of
$30.0 billion
, and net outflows of
$8.1 billion
, due to Institutional outflows of
$10.0 billion
, partially offset by Private Wealth Management net inflows of
$1.9 billion
.
|
•
|
Increase
in investment management service fees and other income of
$283 million
primarily due to higher base fees of
$205 million
resulting from increases in Retail, Institutions and Private Wealth Management base fees due to a
7.9%
increase in average AUM and the impact of a shift in distribution channel mix from Institutions to Retail and Private Wealth Management, which generally have higher fees. Performance fees increased by
$62 million
.
|
•
|
Increase in investment advisory fees was partially offset by a decrease in Bernstein Research Services revenues of
$30 million
primarily due to a decline in our clients’ trading activity in the United States and a volume mix shift to electronic trading in Europe, partially offset by increased client activity in Asia.
|
•
|
Higher
compensation and benefit expenses of
$74 million
, primarily attributable to
higher
incentive compensation of
$68 million
, and
higher
base compensation of
$5 million
, which resulted from
higher
severance and
higher
commissions of
$5 million
.
|
•
|
Higher distribution plan payments of
$43 million
.
|
•
|
Higher other operating costs and expenses of
$41 million
. The increase is primarily due to a vendor termination payment of
$20 million
and higher expenses related to consolidated company-sponsored investment funds.
|
•
|
Increase
in income tax expense of
$15 million
due to an increase in pre-tax operating earnings.
|
•
|
Total AUM as of
December 31, 2017
was
$554.5 billion
, up
$74.3 billion
, or
15.5%
, during
2017
. The
increase
was driven by market appreciation of
$61.1 billion
and net flows of
$13.2 billion
, primarily due to Retail and Institutions inflows of
$8.9 billion
and
$3.6 billion
, respectively.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Operating earnings
|
$
|
197
|
|
|
$
|
502
|
|
|
$
|
77
|
|
|
|
|
|
|
|
||||||
Key components of operating earnings are:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
REVENUES
|
|
|
|
|
|
||||||
Policy charges, fee income and premiums
|
$
|
2,103
|
|
|
$
|
1,995
|
|
|
$
|
2,156
|
|
Net investment income
|
901
|
|
|
850
|
|
|
761
|
|
|||
Investment gains (losses), net including derivative gains (losses)
|
5
|
|
|
—
|
|
|
2
|
|
|||
Investment management, service fees and other income
|
223
|
|
|
212
|
|
|
210
|
|
|||
Segment revenues
|
$
|
3,232
|
|
|
$
|
3,057
|
|
|
$
|
3,129
|
|
|
|
|
|
|
|
||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
$
|
1,827
|
|
|
$
|
965
|
|
|
$
|
1,456
|
|
Interest credited to policyholders’ account balances
|
481
|
|
|
466
|
|
|
484
|
|
|||
Commissions and distribution related payments
|
142
|
|
|
134
|
|
|
150
|
|
|||
Amortization of deferred policy acquisition costs
|
166
|
|
|
373
|
|
|
557
|
|
|||
Compensation, benefits and other operating costs and expenses
|
380
|
|
|
383
|
|
|
386
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|||
Segment benefits and other deductions
|
$
|
2,996
|
|
|
$
|
2,321
|
|
|
$
|
3,033
|
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Protection Solutions Reserves (1)
|
|
|
|
|
|
||||||
General Account
|
$
|
17,562
|
|
|
$
|
17,296
|
|
|
$
|
17,713
|
|
Separate Accounts
|
11,393
|
|
|
12,643
|
|
|
11,251
|
|
|||
Total Protection Solutions Reserves
|
$
|
28,955
|
|
|
$
|
29,939
|
|
|
$
|
28,964
|
|
(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.
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in billions)
|
||||||||||
In-force face amount by product: (1)
|
|
|
|
|
|
||||||
Universal Life (2)
|
$
|
55.9
|
|
|
$
|
59.0
|
|
|
$
|
61.7
|
|
Indexed Universal Life
|
22.9
|
|
|
20.5
|
|
|
18.5
|
|
|||
Variable Universal Life (3)
|
127.3
|
|
|
128.9
|
|
|
130.3
|
|
|||
Term
|
234.9
|
|
|
235.9
|
|
|
237.0
|
|
|||
Whole Life
|
1.4
|
|
|
1.6
|
|
|
1.7
|
|
|||
Total in-force face amount
|
$
|
442.4
|
|
|
$
|
445.9
|
|
|
$
|
449.2
|
|
(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.
|
•
|
Increase in Policyholders’ benefits of $862 million mainly due to the favorable impact from assumption updates and model changes in 2017 as compared to an unfavorable impact of assumption updates in 2018 combined with higher mortality experience.
|
•
|
Interest credited to policyholders’ account balances increased by $15 million primarily due to higher average balances.
|
•
|
Commissions and distribution related payments increased by $8 million reflecting higher sales for both individual life and employee benefits products.
|
•
|
Amortization of DAC decreased by $207 million mainly driven by the favorable impact of assumption updates in 2018 compared to adverse assumption updates in 2017 and lower baseline amortization.
|
•
|
Fee-type revenue increased by $119 million primarily due to a more unfavorable impact of assumption updates in 2017 compared to 2018, higher cost of insurance charges and higher premiums as well as higher fees resulting from higher average Separate Accounts AV.
|
•
|
Net investment income increased by $51 million primarily due to higher asset balances and the positive impact of our General Account investment portfolio optimization.
|
•
|
Income tax expense decreased $193 million driven by lower pre-tax earnings and a lower effective tax rate due to the Tax Reform Act.
|
•
|
Decrease
of
$491 million
in policyholders’ benefits mainly driven by a decrease of
$700 million
positive impact in 2017 from assumption updates and model changes (compared to
$117 million
in 2016) and from other routine updates, partially offset by adverse mortality experience. 2017 included a full reserve release following assumption updates and model changes in the fourth quarter a change in premium funding assumptions, partially offset by the mortality table update. 2016 was mainly driven by a change in premium funding a
ssumptions.
|
•
|
Decrease of
$184 million
in amortization of DAC mainly due the impact of model changes and assumptions updates for
$224 million
(a
$23 million
decrease in 2017 compared to a
$201 million
increase in 2016). In 2017, the $23 million decrease included the positive impact of (i) the mortality table update, (ii) a maintenance expense
|
•
|
Increase in Net investment income of
$89 million
due to higher income on equity method investments and higher asset balances.
|
•
|
Decrease in Fee-type revenue of
$161 million
mainly driven by the adverse impact of a change in the mortality table, as well as model updates, compared to the positive impact of model updates in 2016, lower premiums primarily due to term products and the adverse impact of a maintenance expense assumption update.
|
•
|
Increase
in income tax expense of
$214 million
due to an increase in pre-tax operating earnings.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Operating earnings (loss)
|
$
|
(356
|
)
|
|
$
|
(213
|
)
|
|
$
|
(181
|
)
|
|
Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
Yield
|
|
Amount (2)
|
|
Yield
|
|
Amount (2)
|
|
Yield
|
|
Amount (2)
|
|||||||||
|
(Dollars in millions)
|
|||||||||||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss)
|
3.86
|
%
|
|
$
|
1,732
|
|
|
3.77%
|
|
|
$
|
1,628
|
|
|
4.17%
|
|
|
$
|
1,770
|
|
Ending assets
|
|
|
46,447
|
|
|
|
|
45,751
|
|
|
|
|
42,302
|
|
||||||
Mortgages:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss)
|
4.26
|
%
|
|
494
|
|
|
4.38%
|
|
|
454
|
|
|
5.52%
|
|
|
463
|
|
|||
Ending assets
|
|
|
11,835
|
|
|
|
|
10,952
|
|
|
|
|
9,729
|
|
||||||
Real Estate Held For the Production of Income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense and other
|
(5.29
|
)%
|
|
(6
|
)
|
|
1.30%
|
|
|
2
|
|
|
1.81%
|
|
|
1
|
|
|||
Ending assets
|
|
|
52
|
|
|
|
|
390
|
|
|
|
|
56
|
|
||||||
Other Equity Investments (1):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss)
|
10.08
|
%
|
|
133
|
|
|
14.37%
|
|
|
169
|
|
|
4.90%
|
|
|
62
|
|
|||
Ending assets
|
|
|
1,354
|
|
|
|
|
1,289
|
|
|
|
|
1,270
|
|
||||||
Policy Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss)
|
5.71
|
%
|
|
215
|
|
|
5.77%
|
|
|
221
|
|
|
5.90%
|
|
|
225
|
|
|||
Ending assets
|
|
|
3,779
|
|
|
|
|
3,819
|
|
|
|
|
3,823
|
|
||||||
Cash and Short-term Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss)
|
0.49
|
%
|
|
21
|
|
|
0.65%
|
|
|
32
|
|
|
0.41%
|
|
|
22
|
|
|||
Ending assets
|
|
|
3,332
|
|
|
|
|
4,539
|
|
|
|
|
4,679
|
|
||||||
Repurchase and funding agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense and other
|
|
|
(104
|
)
|
|
|
|
(71
|
)
|
|
|
|
(32
|
)
|
||||||
Ending assets (liabilities)
|
|
|
(4,561
|
)
|
|
|
|
(4,882
|
)
|
|
|
|
(4,230
|
)
|
||||||
Total Invested Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss)
|
4.06
|
%
|
|
2,485
|
|
|
4.12%
|
|
|
2,435
|
|
|
4.26%
|
|
|
2,511
|
|
|||
Ending Assets
|
|
|
62,238
|
|
|
|
|
61,858
|
|
|
|
|
57,629
|
|
||||||
Short Duration Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income (loss)
|
2.49
|
%
|
|
333
|
|
|
2.00%
|
|
|
206
|
|
|
1.56%
|
|
|
115
|
|
|||
Ending assets
|
|
|
14,818
|
|
|
|
|
11,945
|
|
|
|
|
8,504
|
|
||||||
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Investment income (loss)
|
3.78
|
%
|
|
2,818
|
|
|
3.81%
|
|
|
2,641
|
|
|
3.96%
|
|
|
2,626
|
|
|||
Less: investment fees
|
(0.08
|
)%
|
|
(62
|
)
|
|
(0.08
|
)%
|
|
(59
|
)
|
|
(0.10
|
)%
|
|
(54
|
)
|
|||
Investment Income, Net
|
3.70
|
%
|
|
$
|
2,756
|
|
|
3.73%
|
|
|
$
|
2,582
|
|
|
3.86%
|
|
|
$
|
2,572
|
|
Ending Net Assets
|
|
|
$
|
77,056
|
|
|
|
|
$
|
73,803
|
|
|
|
|
$
|
66,133
|
|
(1)
|
Includes, as of
December 31, 2018
,
2017
and
2016
respectively,
$211 million
,
$25 million
and
$34 million
of other invested assets.
|
(2)
|
Amount for fixed maturities and mortgages represents original cost, reduced by repayments, write-downs, adjusted amortization of premiums, accretion of discount and valuation allowances. Cost for equity securities represents original cost reduced by write-downs; cost for other limited partnership interests represents original cost adjusted for equity in earnings and reduced by distributions.
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Percentage of Total (%)
|
|||||||||
|
(in millions)
|
|
|
|||||||||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|||||||||
Corporate Securities:
|
|
|
|
|
|
|
|
|
|
|||||||||
Finance
|
$
|
6,343
|
|
|
$
|
77
|
|
|
$
|
124
|
|
|
$
|
6,296
|
|
|
14
|
%
|
Manufacturing
|
9,123
|
|
|
105
|
|
|
273
|
|
|
8,955
|
|
|
20
|
%
|
||||
Utilities
|
4,413
|
|
|
80
|
|
|
121
|
|
|
4,372
|
|
|
9
|
%
|
||||
Services
|
4,317
|
|
|
52
|
|
|
102
|
|
|
4,267
|
|
|
9
|
%
|
||||
Energy
|
2,347
|
|
|
40
|
|
|
75
|
|
|
2,312
|
|
|
5
|
%
|
||||
Retail and wholesale
|
2,163
|
|
|
19
|
|
|
49
|
|
|
2,133
|
|
|
5
|
%
|
||||
Transportation
|
1,357
|
|
|
29
|
|
|
54
|
|
|
1,332
|
|
|
3
|
%
|
||||
Other
|
171
|
|
|
4
|
|
|
2
|
|
|
173
|
|
|
—
|
%
|
||||
Total corporate securities
|
30,234
|
|
|
406
|
|
|
800
|
|
|
29,840
|
|
|
65
|
%
|
||||
U.S. government
|
13,989
|
|
|
295
|
|
|
470
|
|
|
13,814
|
|
|
30
|
%
|
||||
Residential mortgage-backed (2)
|
225
|
|
|
9
|
|
|
—
|
|
|
234
|
|
|
1
|
%
|
||||
Preferred stock
|
448
|
|
|
15
|
|
|
18
|
|
|
445
|
|
|
1
|
%
|
||||
State & municipal
|
415
|
|
|
48
|
|
|
1
|
|
|
462
|
|
|
1
|
%
|
||||
Foreign governments
|
524
|
|
|
19
|
|
|
13
|
|
|
530
|
|
|
1
|
%
|
||||
Asset-backed securities
|
612
|
|
|
1
|
|
|
12
|
|
|
601
|
|
|
1
|
%
|
||||
Total
|
$
|
46,447
|
|
|
$
|
793
|
|
|
$
|
1,314
|
|
|
$
|
45,926
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As of 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
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
|
|
|
(in millions)
|
||||||||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||
1................................
|
|
Aaa, Aa, A
|
|
$
|
30,805
|
|
|
$
|
587
|
|
|
$
|
835
|
|
|
$
|
30,557
|
|
2................................
|
|
Baa
|
|
14,541
|
|
|
202
|
|
|
437
|
|
|
14,306
|
|
||||
|
|
Investment grade
|
|
45,346
|
|
|
789
|
|
|
1,272
|
|
|
44,863
|
|
||||
3................................
|
|
Ba
|
|
589
|
|
|
1
|
|
|
18
|
|
|
572
|
|
||||
4................................
|
|
B
|
|
489
|
|
|
1
|
|
|
22
|
|
|
468
|
|
||||
5................................
|
|
Caa
|
|
18
|
|
|
1
|
|
|
1
|
|
|
18
|
|
||||
6................................
|
|
Ca, C
|
|
5
|
|
|
1
|
|
|
1
|
|
|
5
|
|
||||
|
|
Below investment grade
|
|
1,101
|
|
|
4
|
|
|
42
|
|
|
1,063
|
|
||||
Total Fixed Maturities
|
|
$
|
46,447
|
|
|
$
|
793
|
|
|
$
|
1,314
|
|
|
$
|
45,926
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of 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................................
|
|
Caa
|
|
20
|
|
|
1
|
|
|
—
|
|
|
21
|
|
||||
6................................
|
|
Ca, C
|
|
11
|
|
|
2
|
|
|
—
|
|
|
13
|
|
||||
|
|
Below investment grade
|
|
1,127
|
|
|
12
|
|
|
18
|
|
|
1,121
|
|
||||
Total Fixed Maturities
|
|
$
|
45,751
|
|
|
$
|
2,197
|
|
|
$
|
324
|
|
|
$
|
47,624
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Amortized
Cost
|
|
% of Total
|
|
Amortized
Cost
|
|
% of Total
|
||||||
|
(in millions)
|
||||||||||||
By Region:
|
|
|
|
|
|
|
|
||||||
U.S. Regions:
|
|
|
|
|
|
|
|
||||||
Pacific
|
$
|
3,288
|
|
|
27.7
|
%
|
|
$
|
3,264
|
|
|
29.8
|
%
|
Middle Atlantic
|
3,183
|
|
|
26.9
|
|
|
2,958
|
|
|
27.0
|
|
||
South Atlantic
|
1,207
|
|
|
10.2
|
|
|
1,096
|
|
|
10.0
|
|
||
East North Central
|
963
|
|
|
8.1
|
|
|
917
|
|
|
8.4
|
|
||
Mountain
|
1,014
|
|
|
8.6
|
|
|
800
|
|
|
7.3
|
|
||
West North Central
|
910
|
|
|
7.7
|
|
|
778
|
|
|
7.1
|
|
||
West South Central
|
578
|
|
|
4.9
|
|
|
499
|
|
|
4.5
|
|
||
New England
|
556
|
|
|
4.7
|
|
|
460
|
|
|
4.2
|
|
||
East South Central
|
143
|
|
|
1.2
|
|
|
188
|
|
|
1.7
|
|
||
Total Mortgage Loans
|
$
|
11,842
|
|
|
100.0
|
%
|
|
$
|
10,960
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||||
By Property Type:
|
|
|
|
|
|
|
|
||||||
Office
|
$
|
3,977
|
|
|
33.6
|
%
|
|
$
|
3,639
|
|
|
33.2
|
%
|
Multifamily
|
3,440
|
|
|
29.0
|
|
|
3,014
|
|
|
27.5
|
|
||
Agricultural loans
|
2,695
|
|
|
22.8
|
|
|
2,574
|
|
|
23.5
|
|
||
Retail
|
667
|
|
|
5.6
|
|
|
647
|
|
|
5.9
|
|
||
Industrial
|
333
|
|
|
2.8
|
|
|
326
|
|
|
3.0
|
|
||
Hospitality
|
384
|
|
|
3.3
|
|
|
417
|
|
|
3.8
|
|
||
Other
|
346
|
|
|
2.9
|
|
|
343
|
|
|
3.1
|
|
||
Total Mortgage Loans
|
$
|
11,842
|
|
|
100.0
|
%
|
|
$
|
10,960
|
|
|
100.0
|
%
|
Owner
|
Percentage Ownership
|
|
Holdings and its non-insurance subsidiaries
|
62.6
|
%
|
MLOA
|
1.0
|
|
AB Holding
|
35.6
|
|
Unaffiliated holders
|
0.8
|
|
Total
|
100.0
|
%
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Cash and Cash Equivalents, beginning of period
|
$
|
4,814
|
|
|
$
|
5,654
|
|
|
$
|
6,557
|
|
Net cash provided by (used in) operating activities
|
61
|
|
|
(243
|
)
|
|
(236
|
)
|
|||
Net cash provided by (used in) investing activities
|
(2,049
|
)
|
|
(9,689
|
)
|
|
(5,768
|
)
|
|||
Net cash provided by financing activities
|
1,655
|
|
|
9,070
|
|
|
5,111
|
|
|||
Net increase (decrease)
|
(333
|
)
|
|
(862
|
)
|
|
(893
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(12
|
)
|
|
$
|
22
|
|
|
$
|
(10
|
)
|
|
Cash and Cash Equivalents, end of period
|
$
|
4,469
|
|
|
$
|
4,814
|
|
|
$
|
5,654
|
|
|
As of December 31, 2018
|
||||||||||||||
|
Holdings
|
|
AXA Equitable Life
|
|
AB
|
|
Consolidated
|
||||||||
|
(in millions)
|
||||||||||||||
Short-term and long-term debt:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
521
|
|
|
$
|
521
|
|
AB Revolver
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||
Long-term debt
|
4,409
|
|
|
—
|
|
|
—
|
|
|
4,409
|
|
||||
Total short-term and long-term debt
|
4,409
|
|
|
—
|
|
|
546
|
|
|
4,955
|
|
||||
Loans from affiliates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total borrowings
|
$
|
4,409
|
|
|
$
|
—
|
|
|
$
|
546
|
|
|
$
|
4,955
|
|
|
As of December 31, 2017
|
||||||||||||||
|
Holdings
|
|
AXA Equitable Life (1)
|
|
AB
|
|
Consolidated
|
||||||||
|
(in millions)
|
||||||||||||||
Short-term and long-term debt:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
1,291
|
|
|
$
|
—
|
|
|
$
|
491
|
|
|
$
|
1,782
|
|
AB Revolver
|
—
|
|
|
—
|
|
|
75
|
|
|
75
|
|
||||
Long-term debt
|
349
|
|
|
202
|
|
|
—
|
|
|
551
|
|
||||
Total short-term and long-term debt
|
1,640
|
|
|
202
|
|
|
566
|
|
|
2,408
|
|
||||
Loans from affiliates
|
3,622
|
|
|
—
|
|
|
—
|
|
|
3,622
|
|
||||
Total borrowings
|
$
|
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
|
Financial Strength Ratings:
|
|
|
|
|
|
Last review date
|
December 17,
2018 |
|
December 11,
2018 |
|
September 18,
2018 |
AXA Equitable Life
|
A
|
|
A+
|
|
A2
|
MLOA
|
A
|
|
A+
|
|
A2
|
|
|
|
|
|
|
Credit Ratings:
|
|
|
|
|
|
Holdings
|
bbb+
|
|
BBB+
|
|
Baa2
|
AB (1)
|
—
|
|
A/Stable/A-1
|
|
A2
|
|
Estimated Payments Due by Year
|
|||||||||||||||||||||
|
Total
|
|
2019
|
|
2020-2022
|
|
2023-2024
|
|
2025 and thereafter
|
|||||||||||||
|
(in millions)
|
|||||||||||||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance liabilities (1)
|
$
|
105,043
|
|
|
$
|
1,873
|
|
|
$
|
5,232
|
|
|
$
|
6,955
|
|
|
$
|
90,983
|
|
|||
FHLBNY funding agreements
|
3,990
|
|
|
1,640
|
|
—
|
|
1,094
|
|
—
|
|
475
|
|
—
|
|
781
|
|
|||||
Interest on FHLBNY funding agreements
|
267
|
|
|
65
|
|
—
|
|
109
|
|
—
|
|
50
|
|
—
|
|
43
|
|
|||||
AB commercial paper
|
523
|
|
|
523
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
AB loan
|
25
|
|
|
25
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Operating leases
|
1,193
|
|
|
212
|
|
—
|
|
367
|
|
—
|
|
321
|
|
—
|
|
293
|
|
|||||
Long-term debt
|
4,450
|
|
|
—
|
|
—
|
|
300
|
|
—
|
|
800
|
|
—
|
|
3,350
|
|
|||||
Interest on long-term debt
|
3,232
|
|
|
208
|
|
—
|
|
407
|
|
—
|
|
376
|
|
—
|
|
2,241
|
|
|||||
Employee benefits
|
4,015
|
|
|
221
|
|
—
|
|
444
|
|
—
|
|
424
|
|
—
|
|
2,926
|
|
|||||
AB Funding Commitments
|
15
|
|
|
7
|
|
—
|
|
2
|
|
—
|
|
1
|
|
—
|
|
5
|
|
|||||
Total Contractual Obligations
|
$
|
122,753
|
|
|
$
|
4,774
|
|
|
$
|
7,955
|
|
|
$
|
9,402
|
|
|
$
|
100,622
|
|
(1)
|
Policyholders’ liabilities represent estimated cash flows out of the General Account related to the payment of death and disability claims, policy surrenders and withdrawals, annuity payments, minimum guarantees on Separate Account funded contracts, matured endowments, benefits under accident and health contracts, policyholder dividends and future renewal premium-based and fund-based commissions offset by contractual future premiums and deposits on in-force contracts. These estimated cash flows are based on mortality, morbidity and lapse assumptions comparable with the Company’s experience and assume market growth and interest crediting consistent with actuarial assumptions used in amortizing DAC. These amounts are undiscounted and, therefore, exceed the policyholders’ account balances and future policy benefits and other policyholder liabilities included in the consolidated balance sheet included elsewhere in this Annual Report on Form 10-K. They do not reflect projected recoveries from reinsurance agreements. Due to the use of assumptions, actual cash flows will differ from these estimates, see “— Summary of Critical Accounting Estimates — Liability for Future Policy Benefits.” Separate Accounts liabilities have been excluded as they are legally insulated from General Account obligations and will be funded by cash flows from Separate Accounts assets.
|
•
|
At year-end
2018
, AB had a
$256 million
accrual for compensation and benefits, of which
$171 million
is expected to be paid in 2019,
$50 million
in 2020 and 2021,
$15 million
in 2022-2023 and the rest thereafter. Further, AB expects to make contributions to its qualified profit-sharing plan of
$14 million
in each of the next four years.
|
•
|
In addition, the Company has obligations under contingent commitments at December 31, 2018, including: the AB Credit Facility and AB’s commercial paper program; the Company’s
$1,928 million
undrawn letters of credit; the Company’s
$952 million
and
$606 million
commitments under equity financing arrangements to certain limited partnership and existing mortgage loan agreements, respectively. Information on these contingent commitments can be found in Notes
11
,
17
and
18
to the Notes to the Consolidated Financial Statements.
|
•
|
During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (“Real Estate Fund”), AB committed to invest
$25 million
in the Real Estate Fund. As of December 31, 2018, we had funded
$22 million
of this commitment. During 2014, as general partner of AllianceBernstein U.S. Real Estate II L.P. (“Real Estate Fund II”), AB committed to invest
$28 million
, as amended in 2015, in the Real Estate Fund II. As of December 31, 2018, AB had funded
$15 million
of this commitment.
|
•
|
liabilities for future policy benefits;
|
•
|
accounting for reinsurance;
|
•
|
capitalization and amortization of DAC and policyholder bonus interest credits;
|
•
|
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.
|
•
|
Universal life (“UL”) and investment-type contract policyholder account balances are equal to the policy AV. The policy AV represent an accumulation of gross premium payments plus credited interest less expense and mortality charges and withdrawals.
|
•
|
Participating traditional life insurance future policy benefit liabilities are calculated using a net level premium method on the basis of actuarial assumptions equal to guaranteed mortality and dividend fund interest rates.
|
•
|
Non-participating traditional life insurance future policy benefit liabilities are estimated using a net level premium method on the basis of actuarial assumptions as to mortality, persistency and interest.
|
|
Increase/(Decrease) in
GMDB/GMIB Reserves
|
||
|
(in millions)
|
||
1% decrease in future rate of return
|
$
|
1,269
|
|
1% increase in future rate of return
|
$
|
(1,342
|
)
|
|
Increase/(Decrease)
in DAC
|
||
|
(in millions)
|
||
Decrease in future mortality by 1%
|
$
|
35
|
|
Increase in future mortality by 1%
|
$
|
(35
|
)
|
|
Increase/(Decrease)
in DAC
|
||
|
(in millions)
|
||
Decrease in future rate of return by 1%
|
$
|
(167
|
)
|
Increase in future rate of return by 1%
|
$
|
205
|
|
•
|
Loan-to-value ratio— Derived from current loan balance divided by the fair market value of the property. An allowance for credit loss is typically recommended when the loan-to-value ratio is in excess of 100%. In the case where the loan-to-value is in excess of 100%, the allowance for credit loss is derived by taking the difference between the fair market value (less cost of sale) and the current loan balance.
|
•
|
Debt service coverage ratio—Derived from actual Operating Earnings divided by annual debt service. If the ratio is below 1.0x, then the income from the property does not support the debt.
|
•
|
Occupancy—Criteria vary by property type but low or below market occupancy is an indicator of sub-par property performance.
|
•
|
Lease expirations—The percentage of leases expiring in the upcoming 12 to 36 months are monitored as a decline in rent and/or occupancy may negatively impact the debt service coverage ratio. In the case of single-tenant properties or properties with large tenant exposure, the lease expiration is a material risk factor.
|
•
|
Maturity—Mortgage loans that are not fully amortizing and have upcoming maturities within the next 12 to 24 months are monitored in conjunction with the capital markets to determine the borrower’s ability to refinance the debt and/or pay off the balloon balance.
|
•
|
Borrower/tenant related issues—Financial concerns, potential bankruptcy, or words or actions that indicate imminent default or abandonment of property.
|
•
|
Payment status - current vs. delinquent—A history of delinquent payments may be a cause for concern.
|
•
|
Property condition—Significant deferred maintenance observed during the lenders annual site inspections.
|
•
|
Other—Any other factors such as current economic conditions may call into question the performance of the loan.
|
|
Future policyholders’ benefits and other policyholders’ liabilities
|
||
|
(in billions)
|
||
100% increase in Holdings’ credit spread
|
$
|
3.9
|
|
As reported
|
$
|
5.6
|
|
50% decrease in Holdings’ credit spread
|
$
|
6.7
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Fair Value
|
|
Impact of +1% Change
|
|
Impact of -1% Change
|
|
Fair Value
|
|
Impact of +1% Change
|
|
Impact of -1% Change
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Fixed Income Investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed rate
|
$
|
44,379
|
|
|
$
|
(3,874
|
)
|
|
$
|
4,595
|
|
|
$
|
44,899
|
|
|
$
|
(4,375
|
)
|
|
$
|
5,293
|
|
Floating rate
|
1,547
|
|
|
(41
|
)
|
|
42
|
|
|
2,022
|
|
|
(2
|
)
|
|
2
|
|
||||||
Trading securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed rate
|
14,219
|
|
|
(368
|
)
|
|
355
|
|
|
11,404
|
|
|
(283
|
)
|
|
294
|
|
||||||
Floating rate
|
599
|
|
|
(1
|
)
|
|
1
|
|
|
541
|
|
|
(1
|
)
|
|
1
|
|
||||||
Mortgage loans
|
11,494
|
|
|
(658
|
)
|
|
572
|
|
|
10,912
|
|
|
(596
|
)
|
|
432
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Fair Value
|
|
Impact of+10% Equity Price Change
|
|
Impact of -10% Equity Price Change
|
|
Fair Value
|
|
Impact of+10% Equity Price Change
|
|
Impact of -10% Equity Price Change
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Equity Investments
|
$
|
12
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
190
|
|
|
$
|
16
|
|
|
$
|
(16
|
)
|
|
|
|
|
|
Interest Rate Sensitivity
|
||||||||||||
|
Notional
Amount
|
|
Weighted Average Term (Years)
|
|
Impact of -1% Change
|
|
Fair
Value
|
|
Impact of +1% Change
|
||||||||
|
(in millions, except for Weighted Average Term)
|
||||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||
Swaps
|
$
|
27,003
|
|
|
5
|
|
$
|
3,262
|
|
|
$
|
439
|
|
|
$
|
(1,857
|
)
|
Futures
|
11,792
|
|
|
|
|
590
|
|
|
—
|
|
|
(427
|
)
|
||||
Total
|
$
|
38,795
|
|
|
|
|
$
|
3,852
|
|
|
$
|
439
|
|
|
$
|
(2,284
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||
Swaps
|
$
|
26,675
|
|
|
6
|
|
$
|
3,443
|
|
|
$
|
411
|
|
|
$
|
(2,562
|
)
|
Futures
|
20,675
|
|
|
|
|
121
|
|
|
—
|
|
|
(91
|
)
|
||||
Total
|
$
|
47,350
|
|
|
|
|
$
|
3,564
|
|
|
$
|
411
|
|
|
$
|
(2,653
|
)
|
|
|
|
|
|
Equity Sensitivity
|
||||||||
|
Notional
Amount |
|
Weighted Average Term (Years)
|
|
Fair Value
|
|
Balance after -10% Equity Price Shift
|
||||||
|
(in millions, except for Weighted Average Term)
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||
Futures
|
$
|
10,995
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Swaps
|
7,697
|
|
|
1
|
|
(29
|
)
|
|
746
|
|
|||
Options
|
21,821
|
|
|
2
|
|
968
|
|
|
324
|
|
|||
Total
|
$
|
40,513
|
|
|
|
|
$
|
939
|
|
|
$
|
1,070
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||
Futures
|
$
|
6,552
|
|
|
|
|
$
|
—
|
|
|
$
|
621
|
|
Swaps
|
7,555
|
|
|
1
|
|
(197
|
)
|
|
652
|
|
|||
Options
|
22,223
|
|
|
2
|
|
1,999
|
|
|
1,452
|
|
|||
Total
|
$
|
36,330
|
|
|
|
|
$
|
1,802
|
|
|
$
|
2,725
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Fair Value
|
|
Balance After -1% Change
|
|
Balance After+1% Change
|
|
Fair Value
|
|
Balance After -1% Change
|
|
Balance After +1% Change
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Fixed Income Investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trading
|
$
|
435
|
|
|
$
|
467
|
|
|
$
|
406
|
|
|
$
|
137
|
|
|
$
|
147
|
|
|
$
|
128
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Fair Value
|
|
Balance After +10% Equity Price Change
|
|
Balance After -10% Equity Price Change
|
|
Fair Value
|
|
Balance After +10% Equity Price Change
|
|
Balance After -10% Equity Price Change
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Equity Investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trading
|
$
|
178
|
|
|
$
|
196
|
|
|
$
|
160
|
|
|
$
|
214
|
|
|
$
|
236
|
|
|
$
|
193
|
|
Other investments
|
101
|
|
|
111
|
|
|
91
|
|
|
92
|
|
|
102
|
|
|
83
|
|
Audited Consolidated Financial Statements
|
|
|
|
Audited Consolidated Financial Statement Schedules
|
|
|
|
|
2018
|
|
2017
|
||||
|
(in millions, except share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturities available for sale, at fair value (amortized cost of $46,801 and $45,068)
|
$
|
46,279
|
|
|
$
|
46,941
|
|
Mortgage loans on real estate (net of valuation allowance of $7 and $8)
|
11,835
|
|
|
10,952
|
|
||
Real estate held for production of income (1)
|
52
|
|
|
390
|
|
||
Policy loans
|
3,779
|
|
|
3,819
|
|
||
Other equity investments (1)
|
1,334
|
|
|
1,392
|
|
||
Trading securities, at fair value
|
16,017
|
|
|
14,170
|
|
||
Other invested assets (1)
|
2,037
|
|
|
4,118
|
|
||
Total investments
|
81,333
|
|
|
81,782
|
|
||
Cash and cash equivalents (1)
|
4,469
|
|
|
4,814
|
|
||
Cash and securities segregated, at fair value
|
1,170
|
|
|
825
|
|
||
Broker-dealer related receivables
|
2,209
|
|
|
2,158
|
|
||
Deferred policy acquisition costs
|
6,745
|
|
|
5,919
|
|
||
Goodwill and other intangible assets, net
|
4,780
|
|
|
4,824
|
|
||
Amounts due from reinsurers
|
4,895
|
|
|
5,023
|
|
||
Loans to affiliates
|
—
|
|
|
1,230
|
|
||
GMIB reinsurance contract asset, at fair value
|
1,732
|
|
|
1,894
|
|
||
Current and deferred income taxes
|
—
|
|
|
84
|
|
||
Other assets (1)
|
3,127
|
|
|
2,510
|
|
||
Separate Accounts assets
|
110,337
|
|
|
124,552
|
|
||
Total Assets
|
$
|
220,797
|
|
|
$
|
235,615
|
|
LIABILITIES
|
|
|
|
||||
Policyholders’ account balances
|
$
|
49,923
|
|
|
$
|
47,171
|
|
Future policy benefits and other policyholders' liabilities
|
30,998
|
|
|
30,330
|
|
||
Broker-dealer related payables
|
431
|
|
|
783
|
|
||
Securities sold under agreements to repurchase
|
573
|
|
|
1,887
|
|
||
Customer related payables
|
3,095
|
|
|
2,229
|
|
||
Amounts due to reinsurers
|
1,438
|
|
|
1,436
|
|
||
Short-term and long-term debt (1)
|
4,955
|
|
|
2,408
|
|
||
Loans from affiliates
|
—
|
|
|
3,622
|
|
||
Income taxes payable
|
68
|
|
|
—
|
|
||
Other liabilities (1)
|
3,360
|
|
|
4,053
|
|
||
Separate Accounts liabilities
|
110,337
|
|
|
124,552
|
|
||
Total Liabilities
|
$
|
205,178
|
|
|
$
|
218,471
|
|
Redeemable noncontrolling interest (1)
|
$
|
187
|
|
|
$
|
626
|
|
Commitments and contingent liabilities (Note 17)
|
|
|
|
||||
EQUITY
|
|
|
|
||||
Equity attributable to Holdings:
|
|
|
|
||||
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 561,000,000 shares issued, 528,861,758 and 561,000,000 shares outstanding, respectively
|
$
|
5
|
|
|
$
|
5
|
|
Capital in excess of par value
|
1,908
|
|
|
1,299
|
|
||
Treasury stock, at cost, 32,138,242 shares
|
(640
|
)
|
|
—
|
|
||
Retained earnings
|
13,989
|
|
|
12,225
|
|
||
Accumulated other comprehensive income (loss)
|
(1,396
|
)
|
|
(108
|
)
|
||
Total equity attributable to Holdings
|
13,866
|
|
|
13,421
|
|
||
Noncontrolling interest
|
1,566
|
|
|
3,097
|
|
||
Total Equity
|
15,432
|
|
|
16,518
|
|
||
Total Liabilities, Redeemable Noncontrolling Interest and Equity
|
$
|
220,797
|
|
|
$
|
235,615
|
|
(1)
|
See Note 2 for details of balances with variable interest entities.
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions, except per share data)
|
||||||||||
REVENUES
|
|
|
|
|
|
||||||
Policy charges and fee income
|
$
|
3,824
|
|
|
$
|
3,693
|
|
|
$
|
3,729
|
|
Premiums
|
1,094
|
|
|
1,124
|
|
|
1,083
|
|
|||
Net derivative gains (losses)
|
(231
|
)
|
|
214
|
|
|
(1,848
|
)
|
|||
Net investment income (loss)
|
2,693
|
|
|
3,082
|
|
|
2,665
|
|
|||
Investment gains (losses), net:
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
|
(42
|
)
|
|
(15
|
)
|
|
(68
|
)
|
|||
Other investment gains (losses), net
|
(44
|
)
|
|
(176
|
)
|
|
2,051
|
|
|||
Total investment gains (losses), net
|
(86
|
)
|
|
(191
|
)
|
|
1,983
|
|
|||
Investment management and service fees
|
4,268
|
|
|
4,093
|
|
|
3,749
|
|
|||
Other income
|
516
|
|
|
445
|
|
|
402
|
|
|||
Total revenues
|
12,078
|
|
|
12,460
|
|
|
11,763
|
|
|||
|
|
|
|
|
|
||||||
BENEFITS AND OTHER DEDUCTIONS
|
|
|
|
|
|
||||||
Policyholders’ benefits
|
2,915
|
|
|
4,366
|
|
|
3,342
|
|
|||
Interest credited to policyholders’ account balances
|
1,090
|
|
|
995
|
|
|
967
|
|
|||
Compensation and benefits
|
2,079
|
|
|
1,980
|
|
|
1,965
|
|
|||
Commissions and distribution related payments
|
1,160
|
|
|
1,081
|
|
|
1,000
|
|
|||
Interest expense
|
231
|
|
|
160
|
|
|
174
|
|
|||
Amortization of deferred policy acquisition costs
|
333
|
|
|
503
|
|
|
779
|
|
|||
Other operating costs and expenses
|
1,809
|
|
|
2,069
|
|
|
1,509
|
|
|||
Total benefits and other deductions
|
9,617
|
|
|
11,154
|
|
|
9,736
|
|
|||
Income (loss) from continuing operations, before income taxes
|
2,461
|
|
|
1,306
|
|
|
2,027
|
|
|||
Income tax (expense) benefit
|
(307
|
)
|
|
(49
|
)
|
|
(378
|
)
|
|||
Net income (loss)
|
2,154
|
|
|
1,257
|
|
|
1,649
|
|
|||
Less: net (income) loss attributable to the noncontrolling interest
|
(334
|
)
|
|
(423
|
)
|
|
(395
|
)
|
|||
Net income (loss) attributable to Holdings
|
$
|
1,820
|
|
|
$
|
834
|
|
|
$
|
1,254
|
|
|
|
|
|
|
|
||||||
EARNINGS PER SHARE
|
|
|
|
|
|
||||||
Earnings per share - common stock:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.27
|
|
|
$
|
1.49
|
|
|
$
|
2.24
|
|
Diluted
|
$
|
3.27
|
|
|
$
|
1.48
|
|
|
$
|
2.24
|
|
Weighted average common shares outstanding (in millions):
|
|
|
|
|
|
||||||
Basic
|
556.4
|
|
|
561.0
|
|
|
561.0
|
|
|||
Diluted
|
556.5
|
|
|
561.0
|
|
|
561.0
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
2,154
|
|
|
$
|
1,257
|
|
|
$
|
1,649
|
|
Other Comprehensive income (loss) net of income taxes:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(37
|
)
|
|
42
|
|
|
(18
|
)
|
|||
Change in unrealized gains (losses), net of reclassification adjustment
|
(1,329
|
)
|
|
690
|
|
|
(274
|
)
|
|||
Changes in defined benefit plan related items not yet recognized in periodic benefit cost, net of reclassification adjustment
|
189
|
|
|
100
|
|
|
34
|
|
|||
Total other comprehensive income (loss), net of income taxes
|
(1,177
|
)
|
|
832
|
|
|
(258
|
)
|
|||
Comprehensive income (loss)
|
977
|
|
|
2,089
|
|
|
1,391
|
|
|||
Less: Comprehensive (income) loss attributable to the noncontrolling interest
|
(349
|
)
|
|
(442
|
)
|
|
(381
|
)
|
|||
Comprehensive income (loss) attributable to Holdings
|
$
|
628
|
|
|
$
|
1,647
|
|
|
$
|
1,010
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Equity attributable to Holdings:
|
|
|
|
|
|
||||||
Common stock, at par value, beginning and end of year
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
|
|
|
|
|
||||||
Capital in excess of par value, beginning of year
|
$
|
1,299
|
|
|
$
|
932
|
|
|
$
|
941
|
|
Capital contribution from parent
|
695
|
|
|
—
|
|
|
—
|
|
|||
Purchase of AllianceBernstein Units from noncontrolling interest
|
17
|
|
|
—
|
|
|
—
|
|
|||
Stock Compensation and Other
|
(103
|
)
|
|
367
|
|
|
(9
|
)
|
|||
Capital in excess of par value, end of year
|
$
|
1,908
|
|
|
$
|
1,299
|
|
|
$
|
932
|
|
|
|
|
|
|
|
||||||
Treasury stock, beginning of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Purchase of treasury stock
|
(648
|
)
|
|
—
|
|
|
—
|
|
|||
Issuance of treasury stock
|
8
|
|
|
—
|
|
|
—
|
|
|||
Treasury stock, end of year
|
$
|
(640
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Retained earnings, beginning of year
|
$
|
12,225
|
|
|
$
|
11,391
|
|
|
$
|
10,137
|
|
Cumulative effect of adoption of revenue recognition standard ASC 606
|
13
|
|
|
—
|
|
|
—
|
|
|||
Cumulative effect of adoption of ASU 2018-02,
Reclassification of Certain Tax Effects
|
89
|
|
|
—
|
|
|
—
|
|
|||
Cumulative effect of adoption of ASU 2016-01,
Financial Instruments
|
7
|
|
|
—
|
|
|
—
|
|
|||
Net income (loss) attributable to Holdings
|
1,820
|
|
|
834
|
|
|
1,254
|
|
|||
Stockholder dividends (cash dividends declared per common share of $0.26 in 2018)
|
(157
|
)
|
|
—
|
|
|
—
|
|
|||
Issuance of treasury stock
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||
Retained earnings, end of year
|
$
|
13,989
|
|
|
$
|
12,225
|
|
|
$
|
11,391
|
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss), beginning of year
|
$
|
(108
|
)
|
|
$
|
(921
|
)
|
|
$
|
(677
|
)
|
Cumulative effect of adoption of ASU 2018-02,
Reclassification of Certain Tax Effects
|
(89
|
)
|
|
—
|
|
|
—
|
|
|||
Cumulative effect of adoption of ASU 2016-01,
Financial Instruments
|
(7
|
)
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss)
|
(1,192
|
)
|
|
813
|
|
|
(244
|
)
|
|||
Accumulated other comprehensive income (loss), end of year
|
$
|
(1,396
|
)
|
|
$
|
(108
|
)
|
|
$
|
(921
|
)
|
Total Holdings' equity, end of year
|
$
|
13,866
|
|
|
$
|
13,421
|
|
|
$
|
11,407
|
|
|
|
|
|
|
|
||||||
Equity attributable to the Noncontrolling Interest
|
|
|
|
|
|
||||||
Noncontrolling interest, beginning of year
|
$
|
3,097
|
|
|
$
|
3,142
|
|
|
$
|
3,108
|
|
Cumulative effect of adoption of revenue recognition standard ASC 606
|
19
|
|
|
—
|
|
|
—
|
|
|||
Repurchase of AB Holding units
|
(95
|
)
|
|
(121
|
)
|
|
(128
|
)
|
|||
Net earnings (loss) attributable to noncontrolling interest
|
316
|
|
|
370
|
|
|
369
|
|
|||
Dividends paid to noncontrolling interest
|
(346
|
)
|
|
(348
|
)
|
|
(294
|
)
|
|||
Purchase of AB Units by Holdings
|
(1,525
|
)
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss) attributable to noncontrolling interest
|
15
|
|
|
19
|
|
|
(14
|
)
|
|||
Other changes in noncontrolling interest
|
85
|
|
|
35
|
|
|
101
|
|
|||
Noncontrolling interest, end of year
|
$
|
1,566
|
|
|
$
|
3,097
|
|
|
$
|
3,142
|
|
Total Equity, End of Year
|
$
|
15,432
|
|
|
$
|
16,518
|
|
|
$
|
14,549
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Net income (loss)
|
$
|
2,154
|
|
|
$
|
1,257
|
|
|
$
|
1,649
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Interest credited to policyholders’ account balances
|
1,090
|
|
|
995
|
|
|
967
|
|
|||
Policy charges and fee income
|
(3,824
|
)
|
|
(3,693
|
)
|
|
(3,729
|
)
|
|||
Net derivative (gains) losses
|
231
|
|
|
(214
|
)
|
|
1,848
|
|
|||
Investment (gains) losses, net
|
86
|
|
|
191
|
|
|
(1,983
|
)
|
|||
Realized and unrealized (gains) losses on trading securities
|
237
|
|
|
(266
|
)
|
|
63
|
|
|||
Non-cash long term incentive compensation expense (1)
|
228
|
|
|
247
|
|
|
213
|
|
|||
Non-cash pension plan restructuring
|
109
|
|
|
—
|
|
|
—
|
|
|||
Amortization and depreciation (1)
|
257
|
|
|
399
|
|
|
758
|
|
|||
Change in goodwill
|
—
|
|
|
369
|
|
|
—
|
|
|||
Equity (income) loss from limited partnerships
|
(119
|
)
|
|
(155
|
)
|
|
(59
|
)
|
|||
Changes in:
|
|
|
|
|
|
||||||
Net broker-dealer and customer related receivables/payables
|
838
|
|
|
(278
|
)
|
|
608
|
|
|||
Reinsurance recoverable (1)
|
(191
|
)
|
|
124
|
|
|
24
|
|
|||
Segregated cash and securities, net
|
(345
|
)
|
|
130
|
|
|
(381
|
)
|
|||
Capitalization of deferred policy acquisition costs (1)
|
(702
|
)
|
|
(687
|
)
|
|
(697
|
)
|
|||
Future policy benefits
|
(399
|
)
|
|
1,097
|
|
|
272
|
|
|||
Current and deferred income taxes
|
633
|
|
|
(10
|
)
|
|
(217
|
)
|
|||
Other, net (1)
|
(222
|
)
|
|
251
|
|
|
428
|
|
|||
Net cash provided by (used in) operating activities
|
$
|
61
|
|
|
$
|
(243
|
)
|
|
$
|
(236
|
)
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale
|
$
|
10,631
|
|
|
$
|
11,339
|
|
|
$
|
8,606
|
|
Mortgage loans on real estate
|
768
|
|
|
934
|
|
|
676
|
|
|||
Trading account securities
|
9,340
|
|
|
11,231
|
|
|
7,841
|
|
|||
Real estate held for the production of income
|
—
|
|
|
—
|
|
|
1,828
|
|
|||
Real estate joint ventures
|
139
|
|
|
—
|
|
|
136
|
|
|||
Short term investments (1)
|
6,267
|
|
|
4,556
|
|
|
3,605
|
|
|||
Other
|
330
|
|
|
228
|
|
|
64
|
|
|||
Payment for the purchase/origination of:
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale
|
(12,794
|
)
|
|
(15,166
|
)
|
|
(10,688
|
)
|
|||
Mortgage loans on real estate
|
(1,642
|
)
|
|
(2,108
|
)
|
|
(3,278
|
)
|
|||
Trading account securities
|
(11,401
|
)
|
|
(13,328
|
)
|
|
(10,283
|
)
|
|||
Real estate
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Real estate joint ventures
|
—
|
|
|
—
|
|
|
(51
|
)
|
|||
Short term investments (1)
|
(5,058
|
)
|
|
(4,897
|
)
|
|
(4,090
|
)
|
|||
Other
|
(233
|
)
|
|
(296
|
)
|
|
(192
|
)
|
|||
Purchase of business, net of cash acquired
|
—
|
|
|
(130
|
)
|
|
(21
|
)
|
|||
Cash settlements related to derivative instruments
|
583
|
|
|
(2,166
|
)
|
|
(195
|
)
|
|||
Repayments of loans to affiliates
|
1,230
|
|
|
15
|
|
|
—
|
|
|||
Issuance of loans to affiliates
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||
Investment in capitalized software, leasehold improvements and EDP equipment
|
(123
|
)
|
|
(102
|
)
|
|
(97
|
)
|
|||
Other, net (1)
|
(86
|
)
|
|
201
|
|
|
384
|
|
|||
Net cash provided by (used in) investing activities
|
$
|
(2,049
|
)
|
|
$
|
(9,689
|
)
|
|
$
|
(5,768
|
)
|
|
|
|
|
|
|
||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Policyholders’ account balances:
|
|
|
|
|
|
||||||
Deposits
|
$
|
9,994
|
|
|
$
|
9,916
|
|
|
$
|
10,001
|
|
Withdrawals
|
(4,600
|
)
|
|
(4,010
|
)
|
|
(2,976
|
)
|
|||
Transfers (to) from Separate Accounts
|
1,724
|
|
|
1,486
|
|
|
1,432
|
|
|||
Proceeds from loans from affiliates
|
—
|
|
|
731
|
|
|
—
|
|
|||
Change in short-term financings
|
(1,310
|
)
|
|
600
|
|
|
(176
|
)
|
|||
Change in collateralized pledged assets
|
31
|
|
|
1,044
|
|
|
(991
|
)
|
|||
Change in collateralized pledged liabilities
|
(576
|
)
|
|
1,246
|
|
|
15
|
|
|||
(Decrease) increase in overdrafts payable
|
3
|
|
|
63
|
|
|
(85
|
)
|
|||
Repayment of loans from affiliates
|
(3,000
|
)
|
|
(56
|
)
|
|
(1,752
|
)
|
|||
Issuance of long-term debt
|
4,057
|
|
|
—
|
|
|
—
|
|
|||
Shareholder dividends paid
|
(157
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of AllianceBernstein Units
|
(1,340
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of AB Holding Units to fund long-term incentive compensation plan awards
|
(267
|
)
|
|
(220
|
)
|
|
(236
|
)
|
|||
Purchase of treasury shares
|
(648
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases (redemptions) of noncontrolling interests of consolidated
company-sponsored investment funds |
(472
|
)
|
|
120
|
|
|
(137
|
)
|
|||
Distribution to noncontrolling interest of consolidated subsidiaries
|
(346
|
)
|
|
(348
|
)
|
|
(294
|
)
|
|||
Increase (decrease) in securities sold under agreement to repurchase
|
(1,314
|
)
|
|
(1,706
|
)
|
|
227
|
|
|||
(Increase) decrease in securities purchased under agreement to resell
|
—
|
|
|
—
|
|
|
79
|
|
|||
Purchase of shares in consolidated subsidiaries
|
—
|
|
|
(55
|
)
|
|
—
|
|
|||
Capital contribution from parent company
|
8
|
|
|
318
|
|
|
—
|
|
|||
Other, net
|
(132
|
)
|
|
(59
|
)
|
|
4
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
1,655
|
|
|
$
|
9,070
|
|
|
$
|
5,111
|
|
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(12
|
)
|
|
$
|
22
|
|
|
$
|
(10
|
)
|
|
Change in cash and cash equivalents
|
(345
|
)
|
|
(840
|
)
|
|
(903
|
)
|
|||
Cash and cash equivalents, beginning of year
|
4,814
|
|
|
5,654
|
|
|
6,557
|
|
|||
Cash and cash equivalents, end of year
|
$
|
4,469
|
|
|
$
|
4,814
|
|
|
$
|
5,654
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
178
|
|
|
$
|
119
|
|
|
$
|
108
|
|
Income taxes (refunded) paid
|
$
|
57
|
|
|
$
|
31
|
|
|
$
|
(385
|
)
|
|
|
|
|
|
|
||||||
Non-cash transactions:
|
|
|
|
|
|
||||||
Capital contribution from parent company
|
$
|
622
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(Settlement) issuance of long-term debt
|
$
|
(202
|
)
|
|
$
|
202
|
|
|
$
|
—
|
|
Transfer of assets to reinsurer
|
$
|
(604
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Contribution of 0.5% minority interest in AXA Financial, Inc.
|
$
|
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 services or products to 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.
|
•
|
Loan-to-value ratio – Derived from current loan balance divided by the fair market value of the property. An allowance for credit loss is typically recommended when the loan-to-value ratio is in excess of 100%. In the case where the loan-to-value is in excess of 100%, the allowance for credit loss is derived by taking the difference between the fair market value (less cost of sale) and the current loan balance.
|
•
|
Debt service coverage ratio – Derived from actual operating earnings divided by annual debt service. If the ratio is below 1.0x, then the income from the property does not support the debt.
|
•
|
Occupancy – Criteria varies by property type but low or below market occupancy is an indicator of sub-par property performance.
|
•
|
Lease expirations – The percentage of leases expiring in the upcoming 12 to 36 months are monitored as a decline in rent and/or occupancy may negatively impact the debt service coverage ratio. In the case of single-tenant properties or properties with large tenant exposure, the lease expiration is a material risk factor.
|
•
|
Maturity – Mortgage loans that are not fully amortizing and have upcoming maturities within the next 12 to 24 months are monitored in conjunction with the capital markets to determine the borrower’s ability to refinance the debt and/or pay off the balloon balance.
|
•
|
Borrower/tenant related issues – Financial concerns, potential bankruptcy or words or actions that indicate imminent default or abandonment of property.
|
•
|
Payment status (current vs. delinquent) – A history of delinquent payments may be a cause for concern.
|
•
|
Property condition – Significant deferred maintenance observed during the lenders annual site inspections.
|
•
|
Other – Any other factors such as current economic conditions may call into question the performance of the loan.
|
|
Years Ended December 31,
|
||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||
|
Individual Retirement
|
|
Group Retirement
|
|
Protection Solutions
|
|
Consoli- dated
|
|
Individual Retirement
|
|
Group Retirement
|
|
Protection Solutions
|
|
Consoli- dated
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Reductions to expense line items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Compensation and benefits
|
$
|
71
|
|
|
$
|
30
|
|
|
$
|
56
|
|
|
$
|
157
|
|
|
$
|
72
|
|
|
$
|
28
|
|
|
$
|
54
|
|
|
$
|
154
|
|
Commissions and distribution plan payments
|
328
|
|
|
55
|
|
|
140
|
|
|
523
|
|
|
347
|
|
|
54
|
|
|
135
|
|
|
537
|
|
||||||||
Other operating costs and expenses
|
2
|
|
|
1
|
|
|
4
|
|
|
7
|
|
|
2
|
|
|
—
|
|
|
4
|
|
|
6
|
|
||||||||
Total reductions
|
$
|
401
|
|
|
$
|
86
|
|
|
$
|
200
|
|
|
$
|
687
|
|
|
$
|
421
|
|
|
$
|
82
|
|
|
$
|
193
|
|
|
$
|
697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Increase to expense line item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Amortization of deferred policy acquisition costs
|
$
|
401
|
|
|
$
|
86
|
|
|
$
|
200
|
|
|
$
|
687
|
|
|
$
|
421
|
|
|
$
|
82
|
|
|
$
|
193
|
|
|
$
|
697
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
OTTI in AOCI (4)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate (1)
|
$
|
30,572
|
|
|
$
|
406
|
|
|
$
|
800
|
|
|
$
|
30,178
|
|
|
$
|
—
|
|
U.S. Treasury, government and agency
|
14,004
|
|
|
295
|
|
|
470
|
|
|
13,829
|
|
|
—
|
|
|||||
States and political subdivisions
|
415
|
|
|
47
|
|
|
1
|
|
|
461
|
|
|
—
|
|
|||||
Foreign governments
|
524
|
|
|
19
|
|
|
13
|
|
|
530
|
|
|
—
|
|
|||||
Residential mortgage-backed (2)
|
225
|
|
|
10
|
|
|
1
|
|
|
234
|
|
|
—
|
|
|||||
Asset-backed (3)
|
612
|
|
|
1
|
|
|
12
|
|
|
601
|
|
|
2
|
|
|||||
Redeemable preferred stock
|
449
|
|
|
15
|
|
|
18
|
|
|
446
|
|
|
—
|
|
|||||
Total at December 31, 2018
|
$
|
46,801
|
|
|
$
|
793
|
|
|
$
|
1,315
|
|
|
$
|
46,279
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate (1)
|
$
|
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 (2)
|
797
|
|
|
22
|
|
|
1
|
|
|
818
|
|
|
—
|
|
|||||
Asset-backed (3)
|
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)
|
Corporate fixed maturities include both public and private issues.
|
(2)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(3)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
(4)
|
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)
|
||||||
December 31, 2018:
|
|
|
|
||||
Due in one year or less
|
$
|
2,598
|
|
|
$
|
2,603
|
|
Due in years two through five
|
9,396
|
|
|
9,444
|
|
||
Due in years six through ten
|
16,501
|
|
|
16,327
|
|
||
Due after ten years
|
17,020
|
|
|
16,624
|
|
||
Subtotal
|
45,515
|
|
|
44,998
|
|
||
Residential mortgage-backed securities
|
225
|
|
|
234
|
|
||
Asset-backed securities
|
612
|
|
|
601
|
|
||
Redeemable preferred stock
|
449
|
|
|
446
|
|
||
Total at December 31, 2018
|
$
|
46,801
|
|
|
$
|
46,279
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Proceeds from sales
|
$
|
8,523
|
|
|
$
|
8,213
|
|
|
$
|
5,036
|
|
Gross gains on sales
|
$
|
180
|
|
|
$
|
107
|
|
|
$
|
212
|
|
Gross losses on sales
|
$
|
(215
|
)
|
|
$
|
(259
|
)
|
|
$
|
(60
|
)
|
|
|
|
|
|
|
||||||
Total OTTI
|
$
|
(42
|
)
|
|
$
|
(15
|
)
|
|
$
|
(68
|
)
|
Non-credit losses recognized in OCI
|
—
|
|
|
—
|
|
|
—
|
|
|||
Credit losses recognized in net income (loss)
|
$
|
(42
|
)
|
|
$
|
(15
|
)
|
|
$
|
(68
|
)
|
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Balances at January 1,
|
$
|
(18
|
)
|
|
$
|
(239
|
)
|
Previously recognized impairments on securities that matured, paid, prepaid or sold
|
2
|
|
|
236
|
|
||
Recognized impairments on securities impaired to fair value this period (1)
|
—
|
|
|
—
|
|
||
Impairments recognized this period on securities not previously impaired
|
(42
|
)
|
|
(14
|
)
|
||
Additional impairments this period on securities previously impaired
|
—
|
|
|
(1
|
)
|
||
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 December 31,
|
$
|
(58
|
)
|
|
$
|
(18
|
)
|
(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.
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
AFS Securities:
|
|
|
|
||||
Fixed maturities:
|
|
|
|
||||
With OTTI loss
|
$
|
—
|
|
|
$
|
2
|
|
All other
|
(522
|
)
|
|
1,871
|
|
||
Equity securities
|
—
|
|
|
2
|
|
||
Net Unrealized Gains (Losses)
|
$
|
(522
|
)
|
|
$
|
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, January 1, 2018
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
Net investment gains (losses) arising during the period
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
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, December 31, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2017
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
(10
|
)
|
|
$
|
(4
|
)
|
|
$
|
6
|
|
Net investment gains (losses) arising during the period
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||||
Reclassification adjustment
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Excluded from Net income (loss) (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||
Balance, December 31, 2017
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
(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
|
$
|
1,871
|
|
|
$
|
(358
|
)
|
|
$
|
(238
|
)
|
|
$
|
(397
|
)
|
|
$
|
878
|
|
Net investment gains (losses) arising during the period
|
(2,470
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,470
|
)
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
77
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|||||
Excluded from Net income (loss) (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
458
|
|
|
—
|
|
|
—
|
|
|
458
|
|
|||||
Deferred income taxes (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
501
|
|
|
501
|
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
165
|
|
|
—
|
|
|
165
|
|
|||||
Balance, December 31, 2018
|
$
|
(522
|
)
|
|
$
|
100
|
|
|
$
|
(73
|
)
|
|
$
|
104
|
|
|
$
|
(391
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2017
|
$
|
528
|
|
|
$
|
(45
|
)
|
|
$
|
(192
|
)
|
|
$
|
(102
|
)
|
|
$
|
189
|
|
Net investment gains (losses) arising during the period
|
1,329
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,329
|
|
|||||
Reclassification adjustment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Included in Net income (loss)
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||
Excluded from Net income (loss) (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of net unrealized investment gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||||
DAC
|
—
|
|
|
(313
|
)
|
|
—
|
|
|
—
|
|
|
(313
|
)
|
|||||
Deferred income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(295
|
)
|
|
(295
|
)
|
|||||
Policyholders’ liabilities
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
|||||
Balance, December 31, 2017
|
$
|
1,871
|
|
|
$
|
(358
|
)
|
|
$
|
(238
|
)
|
|
$
|
(397
|
)
|
|
$
|
878
|
|
(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.
|
(2)
|
Includes a
$113 million
income tax benefit from the impact of adoption of ASU 2018-02.
|
|
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)
|
||||||||||||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate
|
$
|
8,964
|
|
|
$
|
313
|
|
|
$
|
8,244
|
|
|
$
|
487
|
|
|
$
|
17,208
|
|
|
$
|
800
|
|
U.S. Treasury, government and agency
|
1,077
|
|
|
53
|
|
|
4,306
|
|
|
417
|
|
|
5,383
|
|
|
470
|
|
||||||
States and political subdivisions
|
—
|
|
|
—
|
|
|
19
|
|
|
1
|
|
|
19
|
|
|
1
|
|
||||||
Foreign governments
|
109
|
|
|
3
|
|
|
76
|
|
|
10
|
|
|
185
|
|
|
13
|
|
||||||
Residential mortgage-backed
|
—
|
|
|
—
|
|
|
29
|
|
|
1
|
|
|
29
|
|
|
1
|
|
||||||
Asset-backed
|
563
|
|
|
11
|
|
|
13
|
|
|
1
|
|
|
576
|
|
|
12
|
|
||||||
Redeemable preferred stock
|
165
|
|
|
13
|
|
|
33
|
|
|
5
|
|
|
198
|
|
|
18
|
|
||||||
Total
|
$
|
10,878
|
|
|
$
|
393
|
|
|
$
|
12,720
|
|
|
$
|
922
|
|
|
$
|
23,598
|
|
|
$
|
1,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
|
|
Commercial Mortgage Loans
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Allowance for credit losses:
|
|
|
|
|
|
||||||
Beginning Balance, January 1
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
6
|
|
Charge-offs
|
—
|
|
|
—
|
|
|
—
|
|
|||
Recoveries
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Provision
|
—
|
|
|
—
|
|
|
4
|
|
|||
Ending Balance, December 31
|
$
|
7
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
|
|
|
|
|
||||||
Ending Balance, December 31
|
|
|
|
|
|
||||||
Individually Evaluated for Impairment
|
$
|
7
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
Debt Service Coverage Ratio (1)
|
|
Total Mortgage Loans
|
||||||||||||||||||||||||
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 |
|
|||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
797
|
|
|
$
|
21
|
|
|
$
|
247
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,089
|
|
50% - 70%
|
4,908
|
|
|
656
|
|
|
1,146
|
|
|
325
|
|
|
151
|
|
|
—
|
|
|
7,186
|
|
|||||||
70% - 90%
|
260
|
|
|
—
|
|
|
117
|
|
|
370
|
|
|
98
|
|
|
—
|
|
|
845
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Total Commercial Mortgage Loans
|
$
|
5,965
|
|
|
$
|
677
|
|
|
$
|
1,510
|
|
|
$
|
746
|
|
|
$
|
249
|
|
|
$
|
—
|
|
|
$
|
9,147
|
|
Agricultural Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
282
|
|
|
$
|
147
|
|
|
$
|
267
|
|
|
$
|
543
|
|
|
$
|
321
|
|
|
$
|
51
|
|
|
$
|
1,611
|
|
50% - 70%
|
112
|
|
|
46
|
|
|
246
|
|
|
379
|
|
|
224
|
|
|
31
|
|
|
1,038
|
|
|||||||
70% - 90%
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
27
|
|
|
—
|
|
|
46
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total Agricultural Mortgage Loans
|
$
|
394
|
|
|
$
|
193
|
|
|
$
|
513
|
|
|
$
|
941
|
|
|
$
|
572
|
|
|
$
|
82
|
|
|
$
|
2,695
|
|
Total Mortgage Loans
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
0% - 50%
|
$
|
1,079
|
|
|
$
|
168
|
|
|
$
|
514
|
|
|
$
|
567
|
|
|
$
|
321
|
|
|
$
|
51
|
|
|
$
|
2,700
|
|
50% - 70%
|
5,020
|
|
|
702
|
|
|
1,392
|
|
|
704
|
|
|
375
|
|
|
31
|
|
|
8,224
|
|
|||||||
70% - 90%
|
260
|
|
|
—
|
|
|
117
|
|
|
389
|
|
|
125
|
|
|
—
|
|
|
891
|
|
|||||||
90% plus
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Total Mortgage Loans
|
$
|
6,359
|
|
|
$
|
870
|
|
|
$
|
2,023
|
|
|
$
|
1,687
|
|
|
$
|
821
|
|
|
$
|
82
|
|
|
$
|
11,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
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)
|
||||||||||||||||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
9,120
|
|
|
$
|
9,147
|
|
|
$
|
—
|
|
Agricultural
|
18
|
|
|
8
|
|
|
42
|
|
|
68
|
|
|
2,627
|
|
|
2,695
|
|
|
40
|
|
|||||||
Total Mortgage Loans
|
$
|
18
|
|
|
$
|
8
|
|
|
$
|
69
|
|
|
$
|
95
|
|
|
$
|
11,747
|
|
|
$
|
11,842
|
|
|
$
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
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)
|
||||||||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial mortgage loans - other
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Agricultural mortgage loans
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
With related allowance recorded:
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial mortgage loans - other
|
$
|
27
|
|
|
$
|
31
|
|
|
$
|
(7
|
)
|
|
$
|
27
|
|
|
$
|
—
|
|
Agricultural mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
27
|
|
|
$
|
31
|
|
|
$
|
(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
|
|
|
$
|
31
|
|
|
$
|
(8
|
)
|
|
$
|
27
|
|
|
$
|
2
|
|
Agricultural mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
27
|
|
|
$
|
31
|
|
|
$
|
(8
|
)
|
|
$
|
27
|
|
|
$
|
2
|
|
(1)
|
Represents a five-quarter average of recorded amortized cost.
|
|
|
|
Fair Value
|
|
Gains (Losses) Reported In Earnings (Loss)
|
||||||||||
|
Notional Amount
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
|||||||||
|
(in millions)
|
||||||||||||||
Freestanding Derivatives (1) (6):
|
|
|
|
|
|
|
|
||||||||
Equity contracts:
|
|
|
|
|
|
|
|
||||||||
Futures
|
$
|
11,143
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
541
|
|
Swaps
|
7,796
|
|
|
143
|
|
|
168
|
|
|
715
|
|
||||
Options
|
21,821
|
|
|
2,133
|
|
|
1,164
|
|
|
(899
|
)
|
||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||||
Swaps
|
27,116
|
|
|
634
|
|
|
196
|
|
|
(656
|
)
|
||||
Futures
|
11,792
|
|
|
—
|
|
|
—
|
|
|
112
|
|
||||
Credit contracts:
|
|
|
|
|
|
|
|
||||||||
Credit default swaps
|
1,376
|
|
|
20
|
|
|
3
|
|
|
(2
|
)
|
||||
Other freestanding contracts:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
2,184
|
|
|
35
|
|
|
22
|
|
|
6
|
|
||||
Margin
|
—
|
|
|
18
|
|
|
5
|
|
|
—
|
|
||||
Collateral
|
—
|
|
|
8
|
|
|
1,581
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Embedded Derivatives:
|
|
|
|
|
|
|
|
||||||||
GMIB reinsurance contracts (6)
|
—
|
|
|
1,732
|
|
|
—
|
|
|
(162
|
)
|
||||
GMxB derivative features liability (3) (6)
|
—
|
|
|
—
|
|
|
5,614
|
|
|
(775
|
)
|
||||
SCS, SIO, MSO and IUL indexed features (5) (6)
|
—
|
|
|
—
|
|
|
715
|
|
|
889
|
|
||||
Net derivative investment gains (loss)
|
|
|
|
|
|
|
(231
|
)
|
|||||||
Cross currency swaps (2) (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Balances, December 31, 2018
|
$
|
83,228
|
|
|
$
|
4,725
|
|
|
$
|
9,471
|
|
|
$
|
(222
|
)
|
(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, SIO, MSO and IUL indexed features are reported in Policyholders’ account balances in the consolidated balance sheets.
|
(6)
|
Reported in Net derivative gains (losses) in the consolidated statements of income (loss).
|
|
|
|
Fair Value
|
|
Gains (Losses) Reported In Earnings (Loss)
|
||||||||||
|
Notional Amount
|
|
Asset Derivatives
|
|
Liability
Derivatives
|
|
|||||||||
|
(in millions)
|
||||||||||||||
Freestanding Derivatives (1) (6):
|
|
|
|
|
|
|
|
||||||||
Equity contracts:
|
|
|
|
|
|
|
|
||||||||
Futures
|
$
|
6,716
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
(1,297
|
)
|
Swaps
|
7,623
|
|
|
4
|
|
|
201
|
|
|
(1,413
|
)
|
||||
Options
|
22,223
|
|
|
3,456
|
|
|
1,457
|
|
|
1,265
|
|
||||
Interest rate contracts:
|
|
|
|
|
|
|
|
||||||||
Swaps
|
26,769
|
|
|
604
|
|
|
193
|
|
|
863
|
|
||||
Futures
|
20,675
|
|
|
—
|
|
|
—
|
|
|
293
|
|
||||
Credit contracts:
|
|
|
|
|
|
|
|
||||||||
Credit default swaps
|
2,131
|
|
|
35
|
|
|
3
|
|
|
19
|
|
||||
Other freestanding contracts:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
1,423
|
|
|
19
|
|
|
10
|
|
|
(39
|
)
|
||||
Margin
|
—
|
|
|
24
|
|
|
4
|
|
|
—
|
|
||||
Collateral
|
—
|
|
|
4
|
|
|
2,123
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Embedded Derivatives:
|
|
|
|
|
|
|
|
||||||||
GMIB reinsurance contracts (6)
|
—
|
|
|
1,894
|
|
|
—
|
|
|
174
|
|
||||
GMxB derivative features liability (3) (6)
|
—
|
|
|
—
|
|
|
4,451
|
|
|
1,652
|
|
||||
SCS, SIO, MSO and IUL indexed features (5) (6)
|
—
|
|
|
—
|
|
|
1,786
|
|
|
(1,303
|
)
|
||||
Net derivative gains (loss)
|
|
|
|
|
|
|
214
|
|
|||||||
Cross currency swaps (2) (4)
|
354
|
|
|
5
|
|
|
—
|
|
|
40
|
|
||||
Balances, December 31, 2017
|
$
|
87,914
|
|
|
$
|
6,046
|
|
|
$
|
10,230
|
|
|
$
|
254
|
|
(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, SIO, MSO and IUL indexed features are reported in Policyholders’ account balances in the consolidated balance sheets.
|
(6)
|
Reported in Net derivative gains (losses) in the consolidated statements of income (loss).
|
|
Gross Amount Recognized
|
|
Gross Amount Offset in the Balance Sheets
|
|
Net Amount Presented in the Balance Sheets
|
||||||
|
(in millions)
|
||||||||||
Assets
(1)
|
|
|
|
|
|
||||||
Total Derivatives
|
$
|
2,993
|
|
|
$
|
2,945
|
|
|
$
|
48
|
|
Other financial instruments
|
1,989
|
|
|
—
|
|
|
1,989
|
|
|||
Other invested assets
|
$
|
4,982
|
|
|
$
|
2,945
|
|
|
$
|
2,037
|
|
|
|
|
|
|
|
||||||
Liabilities (2)
|
|
|
|
|
|
||||||
Total Derivatives
|
$
|
3,142
|
|
|
$
|
2,945
|
|
|
$
|
197
|
|
Other financial liabilities
|
3,163
|
|
|
—
|
|
|
3,163
|
|
|||
Other liabilities
|
$
|
6,305
|
|
|
$
|
2,945
|
|
|
$
|
3,360
|
|
Securities sold under agreement to repurchase (3)
|
$
|
571
|
|
|
$
|
—
|
|
|
$
|
571
|
|
(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
$2 million
in securities sold under agreement to repurchase.
|
|
Net Amount Presented in the Balance Sheets
|
|
Collateral (Received)/Held
|
|
|
||||||||||
|
Financial
Instruments |
|
Cash
|
|
Net
Amount |
||||||||||
|
(in millions)
|
||||||||||||||
Assets (1)
|
|
|
|
|
|
|
|
||||||||
Total Derivatives
|
$
|
1,411
|
|
|
$
|
—
|
|
|
$
|
(1,363
|
)
|
|
$
|
48
|
|
Other financial instruments
|
1,989
|
|
|
—
|
|
|
—
|
|
|
1,989
|
|
||||
Other invested assets
|
$
|
3,400
|
|
|
$
|
—
|
|
|
$
|
(1,363
|
)
|
|
$
|
2,037
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities (2)
|
|
|
|
|
|
|
|
|
|||||||
Total Derivatives
|
$
|
197
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
197
|
|
Other financial liabilities
|
3,163
|
|
|
—
|
|
|
—
|
|
|
3,163
|
|
||||
Other liabilities
|
$
|
3,360
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,360
|
|
Securities sold under agreement to repurchase (3) (4) (5)
|
$
|
571
|
|
|
$
|
(588
|
)
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
(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
$2 million
in securities sold under agreement to repurchase.
|
(4)
|
US Treasury and agency securities are in fixed maturities available for sale on consolidated balance sheet.
|
(5)
|
Cash is in Cash and cash equivalents on consolidated balance sheet.
|
|
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
|
$
|
—
|
|
|
$
|
571
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
571
|
|
Total
|
$
|
—
|
|
|
$
|
571
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
571
|
|
(1)
|
Excludes expense of
$2 million
in securities sold under agreement to repurchase.
|
|
Gross Amount Recognized
|
|
Gross Amount Offset in the Balance Sheets
|
|
Net Amount Presented in the Balance Sheets
|
||||||
|
(in millions)
|
||||||||||
Assets (1)
|
|
|
|
|
|
||||||
Total Derivatives
|
$
|
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
|
|
|
|
|
|
|
|
||||||
Liabilities (2)
|
|
|
|
|
|
||||||
Total Derivatives
|
$
|
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
|
|
|
$
|
2,009
|
|
|
$
|
(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
included in Securities sold under agreements to repurchase on the consolidated balance sheets.
|
(4)
|
This amount is reflected in Other assets.
|
|
Net Amount Presented in the Balance Sheets
|
|
Collateral (Received)/Held
|
|
|
||||||||||
|
Financial
Instruments
|
|
Cash
|
|
Net
Amount
|
||||||||||
|
(in millions)
|
||||||||||||||
Assets (1)
|
|
|
|
|
|
|
|
||||||||
Total derivatives
|
$
|
2,253
|
|
|
$
|
—
|
|
|
$
|
(2,099
|
)
|
|
$
|
154
|
|
Other financial instruments
|
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.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Fixed maturities
|
$
|
1,725
|
|
|
$
|
1,629
|
|
|
$
|
1,723
|
|
Mortgage loans on real estate
|
494
|
|
|
454
|
|
|
397
|
|
|||
Real estate held for the production of income
|
(6
|
)
|
|
2
|
|
|
19
|
|
|||
Other equity investments
|
147
|
|
|
186
|
|
|
168
|
|
|||
Policy loans
|
215
|
|
|
221
|
|
|
225
|
|
|||
Repurchase agreements
|
—
|
|
|
—
|
|
|
1
|
|
|||
Trading securities
|
105
|
|
|
553
|
|
|
144
|
|
|||
Other investment income
|
85
|
|
|
109
|
|
|
67
|
|
|||
Gross investment income (loss)
|
2,765
|
|
|
3,154
|
|
|
2,744
|
|
|||
Investment expenses (1)
|
(72
|
)
|
|
(72
|
)
|
|
(79
|
)
|
|||
Net Investment Income (Loss)
|
$
|
2,693
|
|
|
$
|
3,082
|
|
|
$
|
2,665
|
|
|
Years Ended December, 31
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Net investment gains (losses) recognized during the period on securities held at the end of the period
|
$
|
(223
|
)
|
|
$
|
247
|
|
|
$
|
(51
|
)
|
Net investment gains (losses) recognized on securities sold during the period
|
(14
|
)
|
|
19
|
|
|
(12
|
)
|
|||
Unrealized and realized gains (losses) on trading securities
|
(237
|
)
|
|
266
|
|
|
(63
|
)
|
|||
Interest and dividend income from trading securities
|
342
|
|
|
287
|
|
|
207
|
|
|||
Net investment income (loss) from trading securities
|
$
|
105
|
|
|
$
|
553
|
|
|
$
|
144
|
|
|
Years ended December, 31
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Fixed maturities
|
$
|
(75
|
)
|
|
$
|
(194
|
)
|
|
$
|
83
|
|
Mortgage loans on real estate
|
—
|
|
|
2
|
|
|
(2
|
)
|
|||
Real estate held for the production of income
|
—
|
|
|
—
|
|
|
1,880
|
|
|||
Other equity investments
|
—
|
|
|
2
|
|
|
(2
|
)
|
|||
Other
|
(11
|
)
|
|
(1
|
)
|
|
24
|
|
|||
Investment gains (losses), net
|
$
|
(86
|
)
|
|
$
|
(191
|
)
|
|
$
|
1,983
|
|
|
Individual Retirement
|
|
Group Retirement
|
|
Protection Solutions
|
|
Corporate and Other
|
|
Subtotal
|
|
Investment Management and Research
|
|
Total
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Goodwill, beginning of year
|
$
|
53
|
|
|
$
|
122
|
|
|
$
|
139
|
|
|
$
|
55
|
|
|
$
|
369
|
|
|
$
|
4,548
|
|
|
$
|
4,917
|
|
Goodwill acquired during year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
22
|
|
|||||||
Impairment losses recognized during the year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Goodwill, end of year, net
|
$
|
53
|
|
|
$
|
122
|
|
|
$
|
139
|
|
|
$
|
55
|
|
|
$
|
369
|
|
|
$
|
4,570
|
|
|
$
|
4,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Goodwill acquired during year
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Impairment losses recognized during the year
|
(53
|
)
|
|
(122
|
)
|
|
(139
|
)
|
|
(55
|
)
|
|
(369
|
)
|
|
—
|
|
|
(369
|
)
|
|||||||
Goodwill, end of year, net
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,570
|
|
|
$
|
4,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Goodwill acquired during year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Impairment losses recognized during the year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Goodwill, end of year, net
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,570
|
|
|
$
|
4,570
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Closed Block Liabilities:
|
|
|
|
||||
Future policy benefits, policyholders’ account balances and other
|
$
|
6,709
|
|
|
$
|
6,958
|
|
Policyholders’ dividend obligation
|
—
|
|
|
19
|
|
||
Other liabilities
|
47
|
|
|
271
|
|
||
Total Closed Block liabilities
|
6,756
|
|
|
7,248
|
|
||
|
|
|
|
||||
Assets Designated To The Closed Block:
|
|
|
|
||||
Fixed maturities, available for sale, at fair value (amortized cost of $ 3,680 and $3,923)
|
3,672
|
|
|
4,070
|
|
||
Mortgage loans on real estate, net of valuation allowance of $- and $-
|
1,824
|
|
|
1,720
|
|
||
Policy loans
|
736
|
|
|
781
|
|
||
Cash and other invested assets
|
76
|
|
|
351
|
|
||
Other assets
|
179
|
|
|
182
|
|
||
Total assets designated to the Closed Block
|
6,487
|
|
|
7,104
|
|
||
|
|
|
|
||||
Excess of Closed Block liabilities over assets designated to the Closed Block
|
269
|
|
|
144
|
|
||
Amounts included in Accumulated other comprehensive income (loss):
|
|
|
|
||||
Net unrealized investment gains (losses), net of policyholders' dividend obligation of $- and $19
|
8
|
|
|
138
|
|
||
Maximum future income to be recognized from closed block assets and liabilities
|
$
|
277
|
|
|
$
|
282
|
|
|
Years ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Premiums and other income
|
$
|
194
|
|
|
$
|
224
|
|
|
$
|
212
|
|
Net investment income (loss)
|
291
|
|
|
314
|
|
|
349
|
|
|||
Investment gains (losses), net
|
(3
|
)
|
|
(20
|
)
|
|
(1
|
)
|
|||
Total revenues
|
482
|
|
|
518
|
|
|
560
|
|
|||
|
|
|
|
|
|
||||||
Benefits and Other Deductions:
|
|
|
|
|
|
||||||
Policyholders’ benefits and dividends
|
471
|
|
|
537
|
|
|
522
|
|
|||
Other operating costs and expenses
|
3
|
|
|
2
|
|
|
4
|
|
|||
Total benefits and other deductions
|
474
|
|
|
539
|
|
|
526
|
|
|||
Net income, before income taxes
|
8
|
|
|
(21
|
)
|
|
34
|
|
|||
Income tax (expense) benefit
|
(3
|
)
|
|
(36
|
)
|
|
(12
|
)
|
|||
Net income (losses)
|
$
|
5
|
|
|
$
|
(57
|
)
|
|
$
|
22
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Balance, beginning of year
|
$
|
19
|
|
|
$
|
52
|
|
Unrealized investment gains (losses)
|
(19
|
)
|
|
(33
|
)
|
||
Balance, end of year
|
$
|
—
|
|
|
$
|
19
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Balance, beginning of year
|
$
|
5,919
|
|
|
$
|
6,049
|
|
|
$
|
6,047
|
|
Capitalization of commissions, sales and issue expenses
|
701
|
|
|
687
|
|
|
697
|
|
|||
Amortization:
|
|
|
|
|
|
||||||
Impact of assumptions updates and model changes
|
286
|
|
|
112
|
|
|
(201
|
)
|
|||
All other
|
(619
|
)
|
|
(615
|
)
|
|
(578
|
)
|
|||
Total amortization
|
(333
|
)
|
|
(503
|
)
|
|
(779
|
)
|
|||
Change in unrealized investment gains and losses
|
458
|
|
|
(314
|
)
|
|
84
|
|
|||
Balance, end of year
|
$
|
6,745
|
|
|
$
|
5,919
|
|
|
$
|
6,049
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Balance, beginning of year
|
$
|
473
|
|
|
$
|
504
|
|
|
$
|
534
|
|
Policyholder bonus interest credits deferred
|
4
|
|
|
7
|
|
|
13
|
|
|||
Amortization charged to income
|
(51
|
)
|
|
(38
|
)
|
|
(43
|
)
|
|||
Balance, end of year
|
$
|
426
|
|
|
$
|
473
|
|
|
$
|
504
|
|
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 (1)
|
$
|
—
|
|
|
$
|
28,992
|
|
|
$
|
1,186
|
|
|
$
|
30,178
|
|
U.S. Treasury, government and agency
|
—
|
|
|
13,829
|
|
|
—
|
|
|
13,829
|
|
||||
States and political subdivisions
|
—
|
|
|
422
|
|
|
39
|
|
|
461
|
|
||||
Foreign governments
|
—
|
|
|
530
|
|
|
—
|
|
|
530
|
|
||||
Residential mortgage-backed (2)
|
—
|
|
|
234
|
|
|
—
|
|
|
234
|
|
||||
Asset-backed (3)
|
—
|
|
|
82
|
|
|
519
|
|
|
601
|
|
||||
Redeemable preferred stock
|
167
|
|
|
279
|
|
|
—
|
|
|
446
|
|
||||
Total fixed maturities, available-for-sale
|
167
|
|
|
44,368
|
|
|
1,744
|
|
|
46,279
|
|
||||
Other equity investments
|
11
|
|
|
—
|
|
|
74
|
|
|
85
|
|
||||
Trading securities
|
446
|
|
|
15,507
|
|
|
64
|
|
|
16,017
|
|
||||
Other invested assets:
|
|
|
|
|
|
|
|
|
|||||||
Short-term investments
|
—
|
|
|
515
|
|
|
—
|
|
|
515
|
|
||||
Assets of consolidated VIEs/VOEs
|
92
|
|
|
259
|
|
|
27
|
|
|
378
|
|
||||
Swaps
|
—
|
|
|
426
|
|
|
—
|
|
|
426
|
|
||||
Credit default swaps
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||
Futures
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Options
|
—
|
|
|
968
|
|
|
—
|
|
|
968
|
|
||||
Total other invested assets
|
91
|
|
|
2,185
|
|
|
27
|
|
|
2,303
|
|
||||
Cash equivalents
|
3,482
|
|
|
—
|
|
|
—
|
|
|
3,482
|
|
||||
Segregated securities
|
—
|
|
|
1,170
|
|
|
—
|
|
|
1,170
|
|
||||
GMIB reinsurance contracts asset
|
—
|
|
|
—
|
|
|
1,732
|
|
|
1,732
|
|
||||
Separate Accounts assets
|
106,994
|
|
|
2,747
|
|
|
374
|
|
|
110,115
|
|
||||
Total Assets
|
$
|
111,191
|
|
|
$
|
65,977
|
|
|
$
|
4,015
|
|
|
$
|
181,183
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
GMxB derivative features’ liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,614
|
|
|
$
|
5,614
|
|
SCS, SIO, MSO and IUL indexed features’ liability
|
—
|
|
|
715
|
|
|
—
|
|
|
715
|
|
||||
Liabilities of consolidated VIEs and VOEs
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||
Contingent payment arrangements
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
722
|
|
|
$
|
5,621
|
|
|
$
|
6,343
|
|
(1)
|
Corporate fixed maturities includes both public and private issues.
|
(2)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(3)
|
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 (1)
|
$
|
—
|
|
|
$
|
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 (2)
|
—
|
|
|
818
|
|
|
—
|
|
|
818
|
|
||||
Asset-backed (3)
|
—
|
|
|
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 (4)
|
—
|
|
|
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 contracts 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
|
|
|
|
|
|
|
|
||||||||
GMxB derivative features’ liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,451
|
|
|
$
|
4,451
|
|
SCS, SIO, MSO and IUL indexed features’ liability
|
—
|
|
|
1,786
|
|
|
—
|
|
|
1,786
|
|
||||
Liabilities of consolidated VIEs and VOEs
|
670
|
|
|
22
|
|
|
—
|
|
|
692
|
|
||||
Contingent payment arrangements
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||
Total Liabilities
|
$
|
670
|
|
|
$
|
1,808
|
|
|
$
|
4,466
|
|
|
$
|
6,944
|
|
(1)
|
Corporate fixed maturities includes both public and private issues.
|
(2)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(3)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
(4)
|
Reported in Other assets in the consolidated balance sheets.
|
|
Corporate
|
|
State and
Political Subdivisions |
|
Foreign
Governments |
|
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)
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Investment gains (losses), net
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Subtotal
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other comprehensive income (loss)
|
(21
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||||
Purchases
|
334
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Sales
|
(337
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||
Transfers into Level 3 (1)
|
89
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level 3 (1)
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2018
|
$
|
1,186
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
519
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2017
|
$
|
857
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
373
|
|
|
$
|
120
|
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net investment income (loss)
|
4
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||||
Investment gains (losses), net
|
1
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
15
|
|
|||||
Subtotal
|
5
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
15
|
|
|||||
Other comprehensive income (loss)
|
4
|
|
|
(1
|
)
|
|
—
|
|
|
78
|
|
|
(7
|
)
|
|||||
Purchases
|
615
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
434
|
|
|||||
Sales
|
(333
|
)
|
|
(1
|
)
|
|
—
|
|
|
(354
|
)
|
|
(21
|
)
|
|||||
Transfers into Level 3 (1)
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level 3 (1)
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2017
|
$
|
1,150
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
541
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, January 1, 2016
|
$
|
430
|
|
|
$
|
45
|
|
|
$
|
1
|
|
|
$
|
535
|
|
|
$
|
41
|
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment gains (losses), net
|
2
|
|
|
—
|
|
|
—
|
|
|
(71
|
)
|
|
—
|
|
|||||
Other comprehensive income (loss)
|
8
|
|
|
(2
|
)
|
|
—
|
|
|
14
|
|
|
1
|
|
|||||
Purchases
|
574
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|||||
Sales
|
(144
|
)
|
|
(1
|
)
|
|
—
|
|
|
(91
|
)
|
|
(9
|
)
|
|||||
Transfers into Level 3 (1)
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level 3 (1)
|
(38
|
)
|
|
—
|
|
|
(1
|
)
|
|
(14
|
)
|
|
(9
|
)
|
|||||
Balance, December 31, 2016
|
$
|
857
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
373
|
|
|
$
|
120
|
|
|
Redeem-
able Preferred Stock
|
|
Other Equity Invest- ments
|
|
GMIB Reinsur- ance
Asset
|
|
Separate Accounts Assets
|
|
GMxB Derivative Features Liability
|
|
Contingent Payment Arrange- ment
|
||||||||||||
|
(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:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment gains (losses), net
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
||||||
Net derivative gains (losses), excluding non-performance risk
|
—
|
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
(1,272
|
)
|
|
—
|
|
||||||
Non-performance risk (5)
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
497
|
|
|
—
|
|
||||||
Subtotal
|
—
|
|
|
(3
|
)
|
|
(164
|
)
|
|
26
|
|
|
(775
|
)
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchases (2)
|
—
|
|
|
62
|
|
|
46
|
|
|
5
|
|
|
(412
|
)
|
|
—
|
|
||||||
Sales (3)
|
(1
|
)
|
|
(3
|
)
|
|
(44
|
)
|
|
(1
|
)
|
|
24
|
|
|
—
|
|
||||||
Settlements (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
6
|
|
||||||
Change in estimate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Activity related to consolidated VIEs/VOEs
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers into Level 3 (1)
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3 (1)
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, December 31, 2018
|
$
|
—
|
|
|
$
|
165
|
|
|
$
|
1,732
|
|
|
$
|
374
|
|
|
$
|
(5,614
|
)
|
|
$
|
(7
|
)
|
Balance, January 1, 2017
|
$
|
1
|
|
|
$
|
88
|
|
|
$
|
1,735
|
|
|
$
|
313
|
|
|
$
|
(5,731
|
)
|
|
$
|
(25
|
)
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment gains (losses), net
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
—
|
|
||||||
Net derivative gains (losses), excluding non-performance risk
|
—
|
|
|
—
|
|
|
171
|
|
|
—
|
|
|
1,809
|
|
|
—
|
|
||||||
Non-performance risk (5)
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(157
|
)
|
|
—
|
|
||||||
Subtotal
|
—
|
|
|
—
|
|
|
174
|
|
|
29
|
|
|
1,652
|
|
|
—
|
|
||||||
Other comprehensive income(loss)
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchases (2)
|
—
|
|
|
22
|
|
|
48
|
|
|
13
|
|
|
(393
|
)
|
|
—
|
|
||||||
Sales (3)
|
—
|
|
|
(3
|
)
|
|
(63
|
)
|
|
(2
|
)
|
|
21
|
|
|
—
|
|
||||||
Settlements (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
10
|
|
||||||
Activity related to consolidated VIEs/VOEs
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers into Level 3 (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3 (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, December 31, 2017
|
$
|
1
|
|
|
$
|
99
|
|
|
$
|
1,894
|
|
|
$
|
349
|
|
|
$
|
(4,451
|
)
|
|
$
|
(15
|
)
|
|
Redeem-
able Preferred Stock
|
|
Other Equity Invest- ments
|
|
GMIB Reinsur- ance
Asset
|
|
Separate Accounts Assets
|
|
GMxB Derivative Features Liability
|
|
Contingent Payment Arrange- ment
|
||||||||||||
|
(in millions)
|
|
|
||||||||||||||||||||
Balance, January 1, 2016
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
1,829
|
|
|
$
|
313
|
|
|
$
|
(5,534
|
)
|
|
$
|
(31
|
)
|
Total gains (losses), realized and unrealized, included in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) as:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment gains (losses), net
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
||||||
Net derivative gains (losses), excluding non-performance risk
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|
417
|
|
|
—
|
|
||||||
Non-performance risk (5)
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(281
|
)
|
|
—
|
|
||||||
Subtotal
|
—
|
|
|
—
|
|
|
(77
|
)
|
|
19
|
|
|
136
|
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Purchases (2)
|
1
|
|
|
4
|
|
|
48
|
|
|
10
|
|
|
(356
|
)
|
|
(18
|
)
|
||||||
Sales (3)
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
23
|
|
|
—
|
|
||||||
Activity related to consolidated VIEs/VOEs
|
—
|
|
|
60
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
24
|
|
||||||
Transfers into Level 3 (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3 (1)
|
—
|
|
|
(56
|
)
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
||||||
Balance, December 31, 2016
|
$
|
1
|
|
|
$
|
88
|
|
|
$
|
1,735
|
|
|
$
|
313
|
|
|
$
|
(5,731
|
)
|
|
$
|
(25
|
)
|
(1)
|
Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
|
(2)
|
For the GMIB reinsurance contract asset, and GMxB derivative features liability, represents attributed fee.
|
(3)
|
For the GMIB reinsurance contract asset, represents recoveries from reinsurers and for GMxB derivative features liability represents benefits paid.
|
(4)
|
For contingent payment arrangements, it represents payments under the arrangement.
|
(5)
|
The Company’s non-performance risk is recorded through Net derivative gains (losses).
|
|
|
Earnings (Loss)
|
|
|
||||||||
|
|
Investment Gains
(Losses), Net |
|
Net Derivative Gains (Losses)
|
|
OCI
|
||||||
|
|
(in millions)
|
||||||||||
Held as of December 31, 2018:
|
|
|
|
|
|
|
||||||
Change in unrealized gains (losses):
|
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale
|
|
|
|
|
|
|
||||||
Corporate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
State and political subdivisions
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Commercial mortgage-backed
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Asset-backed
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||
Subtotal
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|||
GMIB reinsurance contracts
|
|
—
|
|
|
(164
|
)
|
|
—
|
|
|||
Separate Accounts assets (1)
|
|
26
|
|
|
—
|
|
|
—
|
|
|||
GMxB derivative features liability
|
|
—
|
|
|
(775
|
)
|
|
—
|
|
|||
Total
|
|
$
|
26
|
|
|
$
|
(939
|
)
|
|
$
|
(26
|
)
|
|
|
Earnings (Loss)
|
|
|
||||||||
|
|
Investment Gains
(Losses), Net |
|
Net Derivative Gains (Losses)
|
|
OCI
|
||||||
|
|
(in millions)
|
||||||||||
Held as of December 31, 2017:
|
|
|
|
|
|
|
||||||
Change in unrealized gains (losses):
|
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale
|
|
|
|
|
|
|
||||||
Corporate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
State and political subdivisions
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Commercial mortgage-backed
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Asset-backed
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Subtotal
|
|
—
|
|
|
—
|
|
|
5
|
|
|||
GMIB reinsurance contracts
|
|
—
|
|
|
174
|
|
|
—
|
|
|||
Separate Accounts assets (1)
|
|
29
|
|
|
—
|
|
|
—
|
|
|||
GMxB derivative features liability
|
|
—
|
|
|
1,652
|
|
|
—
|
|
|||
Total
|
|
$
|
29
|
|
|
$
|
1,826
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
||||||
Held as of December 31, 2016:
|
|
|
|
|
|
|
||||||
Change in unrealized gains (losses):
|
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale
|
|
|
|
|
|
|
||||||
Corporate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
State and political subdivisions
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Commercial mortgage-backed
|
|
—
|
|
|
—
|
|
|
10
|
|
|||
Asset-backed
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Subtotal
|
|
—
|
|
|
—
|
|
|
20
|
|
|||
GMIB reinsurance contracts
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
|||
Separate Accounts assets (1)
|
|
20
|
|
|
—
|
|
|
—
|
|
|||
GMxB derivative features liability
|
|
—
|
|
|
136
|
|
|
—
|
|
|||
Total
|
|
$
|
20
|
|
|
$
|
59
|
|
|
$
|
20
|
|
(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
|
|
$
|
99
|
|
|
Matrix pricing model
|
|
Spread over Benchmark
|
|
15 - 580 bps
|
|
109 bps
|
|
|
881
|
|
|
Market
comparable companies |
|
EBITDA multiples
Discount rate Cash flow multiples |
|
4.1x - 37.8x
6.4% - 16.5% 1.8x - 18.0x |
|
12.1x
10.7% 11.4x |
|
Other equity investments
|
|
35
|
|
|
Discounted cash flow
|
|
Earnings multiple
Discount factor Discount years |
|
9.4x
10.0% 12 |
|
|
|
Separate Accounts assets
|
|
352
|
|
|
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
|
|
248bps
5.1% |
|
|
|
GMIB reinsurance contract asset
|
|
1,732
|
|
|
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% - 6.27%
0% - 8% 0% - 16% 74 - 159 bps 10% - 34% 0.01% - 0.18% 0.07% - 0.54% 0.42% - 42.0% |
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||
GMIBNLG
|
|
5,341
|
|
|
Discounted cash flow
|
|
Non-performance risk
Lapse rates Withdrawal rates Annuitization Mortality rates (1): Ages 0 - 40 Ages 41 - 60 Ages 60 - 115 |
|
189 bps
0.8% - 26.2% 0.0% - 12.1% 0.0% - 100.0% 0.01% - 0.19% 0.06% - 0.53% 0.41% - 41.2% |
|
|
|
Assumed GMIB Reinsurance Contracts
|
|
183
|
|
|
Discounted cash flow
|
|
Lapse rates
Withdrawal rates (Age 0 - 85) Withdrawal rates (Age 86+) Utilization rates Non-performance risk Volatility rates - Equity |
|
1.1% - 11.2%
0.7% - 22.2% 1.3% - 100.0% 0.0% - 30.0% 1.1% to 2.4% 10.0% - 34.0% |
|
|
|
GWBL/GMWB
|
|
130
|
|
|
Discounted cash flow
|
|
Lapse rates
Withdrawal rates Utilization rates Volatility rates - Equity |
|
0.5% - 5.7%
0.0% - 7.0% 100% after delay 10.0% - 34.0% |
|
|
|
GIB
|
|
(48
|
)
|
|
Discounted cash flow
|
|
Lapse rates
Withdrawal rates Utilization rates Volatility rates - Equity |
|
0.5% - 5.7%
0.0% - 8.0% 0.0% - 16.0% 10.0% - 34.0% |
|
|
|
GMAB
|
|
7
|
|
|
Discounted cash flow
|
|
Lapse rates
Volatility rates - Equity |
|
0.5% - 11.0%
10.0% - 34.0% |
|
|
|
|
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% |
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||
GMIBNLG
|
|
4,149
|
|
|
Discounted cash flow
|
|
Non-performance risk
Lapse rates Withdrawal rates Utilization rates GMIBNLG 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% 0.55% - 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)
|
||||||||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage loans on real estate
|
$
|
11,835
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,494
|
|
|
$
|
11,494
|
|
Policyholders’ liabilities: Investment contracts
|
2,127
|
|
|
—
|
|
|
—
|
|
|
2,174
|
|
|
2,174
|
|
|||||
FHLBNY funding agreements
|
4,002
|
|
|
—
|
|
|
3,956
|
|
|
—
|
|
|
3,956
|
|
|||||
Short-term and long-term debt
|
4,955
|
|
|
—
|
|
|
4,749
|
|
|
—
|
|
|
4,749
|
|
|||||
Policy loans
|
3,779
|
|
|
—
|
|
|
—
|
|
|
4,183
|
|
|
4,183
|
|
|||||
Separate Accounts liabilities
|
7,406
|
|
|
—
|
|
|
—
|
|
|
7,406
|
|
|
7,406
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
•
|
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
|
||||||||||||||||
|
Direct
|
Assumed
|
Ceded
|
|
Direct
|
Assumed
|
Ceded
|
||||||||||||
|
(in millions)
|
||||||||||||||||||
Balance at January 1, 2016
|
$
|
2,969
|
|
$
|
135
|
|
$
|
(98
|
)
|
|
$
|
3,842
|
|
$
|
268
|
|
$
|
(1,829
|
)
|
Paid guarantee benefits
|
(357
|
)
|
(33
|
)
|
15
|
|
|
(281
|
)
|
(20
|
)
|
65
|
|
||||||
Other changes in reserve
|
552
|
|
19
|
|
(7
|
)
|
|
241
|
|
10
|
|
27
|
|
||||||
Balance at December 31, 2016
|
3,164
|
|
121
|
|
(90
|
)
|
|
3,802
|
|
258
|
|
(1,737
|
)
|
||||||
Paid guarantee benefits
|
(354
|
)
|
(21
|
)
|
14
|
|
|
(151
|
)
|
(59
|
)
|
63
|
|
||||||
Other changes in reserve
|
1,249
|
|
(5
|
)
|
(32
|
)
|
|
1,101
|
|
(4
|
)
|
(220
|
)
|
||||||
Balance at December 31, 2017
|
4,059
|
|
95
|
|
(108
|
)
|
|
4,752
|
|
195
|
|
(1,894
|
)
|
||||||
Paid guarantee benefits
|
(393
|
)
|
(24
|
)
|
16
|
|
|
(153
|
)
|
(12
|
)
|
44
|
|
||||||
Other changes in reserve
|
993
|
|
11
|
|
(21
|
)
|
|
(856
|
)
|
1
|
|
118
|
|
||||||
Balance at December 31, 2018
|
$
|
4,659
|
|
$
|
82
|
|
$
|
(113
|
)
|
|
$
|
3,743
|
|
$
|
184
|
|
$
|
(1,732
|
)
|
|
Guarantee Type
|
||||||||||||||||||
|
Return of Premium
|
|
Ratchet
|
|
Roll-Up
|
|
Combo
|
|
Total
|
||||||||||
|
(in millions, except age and interest rate)
|
||||||||||||||||||
Variable annuity contracts with GMDB features
|
|
|
|
|
|
|
|
|
|
||||||||||
Account Values invested in:
|
|
|
|
|
|
|
|
|
|
||||||||||
General Account
|
$
|
14,035
|
|
|
$
|
102
|
|
|
$
|
61
|
|
|
$
|
184
|
|
|
$
|
14,382
|
|
Separate Accounts
|
41,463
|
|
|
8,382
|
|
|
2,903
|
|
|
30,406
|
|
|
83,154
|
|
|||||
Total Account Values
|
$
|
55,498
|
|
|
$
|
8,484
|
|
|
$
|
2,964
|
|
|
$
|
30,590
|
|
|
$
|
97,536
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Amount at Risk, gross
|
$
|
418
|
|
|
$
|
791
|
|
|
$
|
2,291
|
|
|
$
|
20,587
|
|
|
$
|
24,087
|
|
Net Amount at Risk, net of amounts reinsured
|
$
|
418
|
|
|
$
|
772
|
|
|
$
|
1,615
|
|
|
$
|
20,587
|
|
|
$
|
23,392
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average attained age of policyholders (in years)
|
51.4
|
|
|
67.0
|
|
|
73.6
|
|
|
69.0
|
|
|
55.3
|
|
|||||
Percentage of policyholders over age 70
|
10.0
|
%
|
|
43.0
|
%
|
|
65.5
|
%
|
|
49.9
|
%
|
|
18.8
|
%
|
|||||
Range of contractually specified interest rates
|
N/A
|
|
N/A
|
|
3% - 6%
|
|
|
3% - 6.5%
|
|
|
3% - 6.5%
|
|
|
Guarantee Type
|
||||||||||||||||||
|
Return of Premium
|
|
Ratchet
|
|
Roll-Up
|
|
Combo
|
|
Total
|
||||||||||
|
(in millions, except age and interest rate)
|
||||||||||||||||||
Variable annuity contracts with GMIB features
|
|
|
|
|
|
|
|
|
|
||||||||||
Account Values invested in:
|
|
|
|
|
|
|
|
|
|
||||||||||
General Account
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
251
|
|
|
$
|
270
|
|
Separate Accounts
|
—
|
|
|
—
|
|
|
19,407
|
|
|
33,428
|
|
|
52,835
|
|
|||||
Total Account Values
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,426
|
|
|
$
|
33,679
|
|
|
$
|
53,105
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Amount at Risk, gross
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
994
|
|
|
$
|
9,156
|
|
|
$
|
10,150
|
|
Net Amount at Risk, net of amounts reinsured
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
309
|
|
|
$
|
8,268
|
|
|
$
|
8,577
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average attained age of policyholders (in years)
|
N/A
|
|
N/A
|
|
68.9
|
|
|
68.8
|
|
|
68.8
|
|
|||||||
Weighted average years remaining until annuitization
|
N/A
|
|
N/A
|
|
1.7
|
|
|
0.5
|
|
|
0.6
|
|
|||||||
Range of contractually specified interest rates
|
N/A
|
|
N/A
|
|
3% - 6%
|
|
|
3% - 6.5%
|
|
|
3% - 6.5%
|
|
|
Guarantee Type
|
||||||||||||||||||
|
Return of Premium
|
|
Ratchet
|
|
Roll-Up
|
|
Combo
|
|
Total
|
||||||||||
|
(in millions, except age and interest rates)
|
||||||||||||||||||
Variable annuity contracts with GMDB features
|
|
|
|
|
|
|
|
|
|
||||||||||
Reinsured Account Values
|
$
|
873
|
|
|
$
|
5,004
|
|
|
$
|
257
|
|
|
$
|
1,600
|
|
|
$
|
7,734
|
|
Net Amount at Risk assumed
|
$
|
10
|
|
|
$
|
608
|
|
|
$
|
26
|
|
|
$
|
397
|
|
|
$
|
1,041
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average attained age of policyholders (in years)
|
67
|
|
|
72
|
|
|
77
|
|
|
75
|
|
|
73
|
|
|||||
Percentage of policyholders over age 70
|
43.5
|
%
|
|
62.5
|
%
|
|
78.6
|
%
|
|
75.5
|
%
|
|
63.6
|
%
|
|||||
Range of contractually specified interest rates
|
N/A
|
|
N/A
|
|
3%-10%
|
|
|
5%-10%
|
|
|
3%-10%
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Variable annuity contracts with GMIB features
|
|
|
|
|
|
|
|
|
|
||||||||||
Reinsured Account Values
|
$
|
846
|
|
|
$
|
43
|
|
|
$
|
229
|
|
|
$
|
1,124
|
|
|
$
|
2,242
|
|
Net Amount at Risk assumed
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
46
|
|
|
$
|
313
|
|
|
$
|
362
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average attained age of policyholders (in years)
|
72
|
|
|
74
|
|
|
72
|
|
|
69
|
|
|
70
|
|
|||||
Percentage of policyholders over age 70
|
63.2
|
%
|
|
64.5
|
%
|
|
58.8
|
%
|
|
50.4
|
%
|
|
56.4
|
%
|
|||||
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 has now elapsed.
|
|
As of December 31,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
|
GMDB
|
GMIB
|
|
GMDB
|
GMIB
|
||||||||
|
(in millions)
|
||||||||||||
Investment type:
|
|
|
|
|
|
||||||||
Equity
|
$
|
35,541
|
|
$
|
15,759
|
|
|
$
|
41,658
|
|
$
|
19,676
|
|
Fixed income
|
5,173
|
|
2,812
|
|
|
5,469
|
|
3,110
|
|
||||
Balanced
|
41,588
|
|
33,974
|
|
|
46,577
|
|
38,398
|
|
||||
Other
|
852
|
|
290
|
|
|
968
|
|
314
|
|
||||
Total
|
$
|
83,154
|
|
$
|
52,835
|
|
|
$
|
94,672
|
|
$
|
61,498
|
|
|
Direct Liability (1)
|
||
|
(in millions)
|
||
Balance at January 1, 2016
|
$
|
1,247
|
|
Other changes in reserves
|
64
|
|
|
Balance at December 31, 2016
|
1,311
|
|
|
Paid guarantee benefits
|
(24
|
)
|
|
Other changes in reserves
|
(578
|
)
|
|
Balance at December 31, 2017
|
709
|
|
|
Paid guarantee benefits
|
(23
|
)
|
|
Other changes in reserves
|
126
|
|
|
Balance at December 31, 2018
|
$
|
812
|
|
(1)
|
There were no amounts of reinsurance ceded in any period presented.
|
|
Years ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Investment management, advisory and service fees:
|
|
|
|
|
|
||||||
Base fees
|
$
|
2,877
|
|
|
$
|
2,730
|
|
|
$
|
2,487
|
|
Performance-based fees
|
118
|
|
|
95
|
|
|
33
|
|
|||
Research services
|
439
|
|
|
450
|
|
|
480
|
|
|||
Distribution services
|
723
|
|
|
701
|
|
|
651
|
|
|||
Shareholder services
|
76
|
|
|
75
|
|
|
78
|
|
|||
Other
|
19
|
|
|
18
|
|
|
17
|
|
|||
Total investment management and service fees
|
$
|
4,252
|
|
|
$
|
4,069
|
|
|
$
|
3,746
|
|
|
|
|
|
|
|
||||||
Other income
|
$
|
479
|
|
|
$
|
423
|
|
|
$
|
385
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
(in millions)
|
|
|
||||||
Direct premiums
|
$
|
1,012
|
|
|
$
|
1,038
|
|
|
$
|
998
|
|
Reinsurance assumed
|
214
|
|
|
225
|
|
|
231
|
|
|||
Reinsurance ceded
|
(132
|
)
|
|
(139
|
)
|
|
(146
|
)
|
|||
Net premiums
|
$
|
1,094
|
|
|
$
|
1,124
|
|
|
$
|
1,083
|
|
Policy charges and fee income ceded
|
$
|
418
|
|
|
$
|
381
|
|
|
$
|
393
|
|
Policyholders’ benefits ceded
|
$
|
580
|
|
|
$
|
657
|
|
|
$
|
871
|
|
Interest credited to policyholders’ account balances ceded
|
$
|
50
|
|
|
$
|
46
|
|
|
$
|
51
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Short-term debt:
|
|
|
|
||||
AB revolving credit facility (with interest rates of 3.4% and 2.4%)
|
$
|
25
|
|
|
$
|
75
|
|
AB commercial paper (with interest rates of 2.7% and 1.6%)
|
521
|
|
|
491
|
|
||
AXA Financial commercial paper
|
—
|
|
|
1,291
|
|
||
Total short-term debt
|
546
|
|
|
1,857
|
|
||
|
|
|
|
||||
Long-term debt:
|
|
|
|
||||
Senior Notes (5.0%, due 2048)
|
1,480
|
|
|
—
|
|
||
Senior Notes (4.35%, due 2028)
|
1,486
|
|
|
—
|
|
||
Senior Notes (3.9%, due 2023)
|
794
|
|
|
—
|
|
||
Delayed Draw Term Loan (one-month LIBOR + 1.125%, due 2021)
|
300
|
|
|
—
|
|
||
Senior Debentures, 7.0%, due 2028
|
349
|
|
|
349
|
|
||
AXA Equitable non-recourse mortgage debt (with interest rate of 4.1%)
|
—
|
|
|
82
|
|
||
AXA Equitable non-recourse mortgage debt (with interest rate of 3.9%)
|
—
|
|
|
120
|
|
||
Total long-term debt
|
4,409
|
|
|
551
|
|
||
Total short-term and long-term debt
|
$
|
4,955
|
|
|
$
|
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
)
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Loans to Affiliates:
|
|
|
|
||||
Loans to AXA:
|
|
|
|
||||
2007 Senior Unsecured Note, 5.7%, due 2020
|
$
|
—
|
|
|
$
|
700
|
|
2008 Senior Unsecured Note, 5.4%, due 2020
|
—
|
|
|
200
|
|
||
Unsecured Loan to AXA IM Holding US, three-month LIBOR +1.5%, due 2025
|
—
|
|
|
185
|
|
||
Unsecured Loan to Colisée Re. 4.75%, due 2028
|
—
|
|
|
145
|
|
||
Total Loans to Affiliates
|
$
|
—
|
|
|
$
|
1,230
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Loans from Affiliates:
|
|
|
|
||||
AXA S.A. term loan, three- month LIBOR +1.06%, due 2024
|
$
|
—
|
|
|
$
|
1,007
|
|
AXA Japan Subordinated Notes, floating rate of LIBOR +1.20%, due 2020
|
—
|
|
|
770
|
|
||
AXA Belgium €300 million EURIBOR +0.06%, due 2018
|
—
|
|
|
391
|
|
||
AXA S.A. loan, LIBOR + 1.44%, due 2022
|
—
|
|
|
366
|
|
||
Coliseum Reinsurance Company, 4.75%, due 2028
|
—
|
|
|
387
|
|
||
AXA America Corporate Solutions, Inc., 1.85%, due 2018
|
—
|
|
|
110
|
|
||
Foreign Exchange impact of AXA Belgium loan
|
—
|
|
|
(31
|
)
|
||
AXA S.A. loan, LIBOR + 0.439%, due 2018
|
—
|
|
|
622
|
|
||
Total Loans From Affiliates
|
$
|
—
|
|
|
$
|
3,622
|
|
•
|
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).
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Investment management and services fees
|
$
|
1,207
|
|
|
$
|
1,148
|
|
|
$
|
999
|
|
Distribution revenues
|
404
|
|
|
398
|
|
|
372
|
|
|||
Other revenues - shareholder servicing fees
|
74
|
|
|
73
|
|
|
76
|
|
|||
Other revenues - other
|
7
|
|
|
7
|
|
|
6
|
|
|||
Total
|
$
|
1,692
|
|
|
$
|
1,626
|
|
|
$
|
1,453
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Expenses paid or accrued for:
|
|
|
|
|
|
||||||
General services provided by AXA affiliates
|
$
|
146
|
|
|
$
|
141
|
|
|
$
|
118
|
|
Investment management services provided by AXA IM, AXA REIM, and AXA Rosenberg
|
2
|
|
|
5
|
|
|
15
|
|
|||
Investment management services provided by AXA Strategic Ventures Corporation (“ASV Corp”)
|
2
|
|
|
2
|
|
|
2
|
|
|||
Guarantees and credit facility
|
1
|
|
|
9
|
|
|
12
|
|
|||
Total
|
$
|
151
|
|
|
$
|
157
|
|
|
$
|
147
|
|
|
|
|
|
|
|
||||||
Revenue received or accrued for:
|
|
|
|
|
|
||||||
Investment management and administrative services provided to EQAT, VIP Trust, 1290 Funds and Other AXA Trusts
|
$
|
727
|
|
|
$
|
720
|
|
|
$
|
674
|
|
General services provided to AXA affiliates
|
6
|
|
|
27
|
|
|
29
|
|
|||
Total
|
$
|
733
|
|
|
$
|
747
|
|
|
$
|
703
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Service cost
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
11
|
|
Interest cost
|
103
|
|
|
105
|
|
|
108
|
|
|||
Expected return on assets
|
(163
|
)
|
|
(173
|
)
|
|
(177
|
)
|
|||
Actuarial (gain) loss
|
1
|
|
|
1
|
|
|
1
|
|
|||
Net amortization
|
98
|
|
|
126
|
|
|
133
|
|
|||
Impact of settlement
|
109
|
|
|
—
|
|
|
—
|
|
|||
Net periodic pension expense
|
$
|
156
|
|
|
$
|
69
|
|
|
$
|
76
|
|
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Projected benefit obligation, beginning of year
|
$
|
3,455
|
|
|
$
|
3,442
|
|
Service cost
|
—
|
|
|
—
|
|
||
Interest cost
|
103
|
|
|
105
|
|
||
Actuarial (gains)/losses (1)
|
(204
|
)
|
|
144
|
|
||
Benefits paid
|
(190
|
)
|
|
(236
|
)
|
||
Plan amendments and curtailments
|
—
|
|
|
—
|
|
||
Settlements
|
(290
|
)
|
|
—
|
|
||
Projected benefit obligation, end of year
|
$
|
2,874
|
|
|
$
|
3,455
|
|
(1)
|
Actuarial gains and losses are a product of changes in the discount rate as shown below.
|
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Pension plan assets at fair value, beginning of year
|
$
|
2,839
|
|
|
$
|
2,679
|
|
Actual return on plan assets
|
(53
|
)
|
|
357
|
|
||
Contributions
|
5
|
|
|
4
|
|
||
Benefits paid
|
(184
|
)
|
|
(201
|
)
|
||
Annuity purchases
|
(266
|
)
|
|
—
|
|
||
Pension plan assets at fair value, end of year
|
2,341
|
|
|
2,839
|
|
||
PBO
|
2,874
|
|
|
3,455
|
|
||
Excess of PBO over pension plan assets, end of year
|
$
|
(533
|
)
|
|
$
|
(616
|
)
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Unrecognized net actuarial (gain) loss
|
$
|
1,123
|
|
|
$
|
1,315
|
|
Unrecognized prior service cost (credit)
|
1
|
|
|
1
|
|
||
Total
|
$
|
1,124
|
|
|
$
|
1,316
|
|
|
As of December 31,
|
||||
|
2018
|
|
2017
|
||
Fixed maturities
|
50.3
|
%
|
|
46.2
|
%
|
Equity securities
|
22.9
|
|
|
33.9
|
|
Equity real estate
|
17.7
|
|
|
13.9
|
|
Cash and short-term investments
|
3.4
|
|
|
1.4
|
|
Other
|
5.7
|
|
|
4.6
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
||||||||
Corporate
|
$
|
—
|
|
|
$
|
677
|
|
|
$
|
—
|
|
|
$
|
677
|
|
U.S. Treasury, government and agency
|
—
|
|
|
467
|
|
|
—
|
|
|
467
|
|
||||
States and political subdivisions
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||
Foreign governments
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Commercial mortgage-backed
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Common and preferred equity
|
424
|
|
|
78
|
|
|
—
|
|
|
502
|
|
||||
Mutual funds
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
||||
Private real estate investment trusts
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Cash and cash equivalents
|
34
|
|
|
—
|
|
|
—
|
|
|
34
|
|
||||
Short-term investments
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
||||
Total assets in the fair value hierarchy
|
512
|
|
|
1,269
|
|
|
1
|
|
|
1,782
|
|
||||
Investments measured at Net Asset Value
|
—
|
|
|
—
|
|
|
—
|
|
|
559
|
|
||||
Investments at fair value
|
$
|
512
|
|
|
$
|
1,269
|
|
|
$
|
1
|
|
|
$
|
2,341
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Fixed Maturities:
|
|
|
|
|
|
|
|
||||||||
Corporate
|
$
|
—
|
|
|
$
|
792
|
|
|
$
|
2
|
|
|
$
|
794
|
|
U.S. Treasury, government and agency
|
—
|
|
|
471
|
|
|
—
|
|
|
471
|
|
||||
States and political subdivisions
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||
Foreign governments
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Commercial mortgage-backed
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Common and preferred equity
|
730
|
|
|
98
|
|
|
—
|
|
|
828
|
|
||||
Mutual funds
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
||||
Commercial paper
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
||||
Private real estate investment trusts
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Cash and cash equivalents
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||
Short-term investments
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||
Total assets in the fair value hierarchy
|
843
|
|
|
1,463
|
|
|
3
|
|
|
2,309
|
|
||||
Investments measured at Net Asset Value
|
—
|
|
|
—
|
|
|
—
|
|
|
530
|
|
||||
Investments at fair value
|
$
|
843
|
|
|
$
|
1,463
|
|
|
$
|
3
|
|
|
$
|
2,839
|
|
Investment
|
Fair Value
|
|
Redemption Frequency
(If currently eligible)
|
|
Redemption Notice Period
|
|
Unfunded Commitments
|
||||
|
(in millions)
|
||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
||||
Private Equity Fund
|
$
|
64
|
|
|
N/A (1)(2)
|
|
N/A
|
|
$
|
33
|
|
Private Real Estate Investment Trust
|
402
|
|
|
Quarterly
|
|
One Quarter
|
|
—
|
|
||
Hedge Fund
|
93
|
|
|
Calendar Quarters (3)
|
|
Previous Quarter End
|
|
$
|
12
|
|
|
Total
|
$
|
559
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||||
December 31, 2017:
|
|
|
|
|
|
|
|
||||
Private Equity Fund
|
$
|
61
|
|
|
N/A (1)(2)
|
|
N/A
|
|
$
|
29
|
|
Private Real Estate Investment Trust
|
376
|
|
|
Quarterly
|
|
One Quarter
|
|
—
|
|
||
Hedge Fund
|
93
|
|
|
Calendar Quarters (3)
|
|
Previous Quarter End
|
|
$
|
34
|
|
|
Total
|
$
|
530
|
|
|
|
|
|
|
|
(1)
|
Cannot sell or transfer ownership interest without prior written consent to transfer, and by meeting several criteria (e.g., does not adversely affect other investors).
|
(2)
|
Cannot sell interest in the vehicle without prior written consent of the managing member.
|
(3)
|
March, June, September and December.
|
|
Private Real Estate Investment Trusts
|
|
Other Equity Investments
|
|
Fixed Maturities
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance, January 1, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
||||||||
Relating to assets still held at December 31, 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Relating to assets sold during 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Purchases/Issues
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Sales/Settlements
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Transfers into/out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance, December 31, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, January 1, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
5
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
||||||||
Relating to assets still held at December 31, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Relating to assets sold during 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Purchases/Issues
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Sales/Settlements
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Transfers into/out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance, December 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, January 1, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
8
|
|
Actual return on plan assets:
|
|
|
|
|
|
|
|
||||||||
Relating to assets still held at December 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Relating to assets sold during 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Purchases/Issues
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Sales/Settlements
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Transfers into/out of Level 3
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Balance, December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
As of December 31,
|
||
|
2018
|
|
2017
|
Discount rates:
|
|
|
|
AXA Equitable Life QP
|
4.07%
|
|
3.4%
|
AXA Equitable Excess Retirement Plan
|
4.01%
|
|
3.32%
|
MONY Life Retirement Income Security Plan for Employees
|
4.2%
|
|
3.5%
|
AB Qualified Retirement Plan
|
3.9%
|
|
4.55%
|
Other defined benefit plans
|
3.75%-4.10%
|
|
3.00%-3.43%
|
Periodic cost
|
3.00%-3.50%
|
|
3.17%-3.98%
|
Cash balance interest crediting rate for pre-April 1, 2012 accruals
|
4.00%
|
|
4.00%
|
Cash balance interest crediting rate for post-April 1, 2012 accruals
|
2.50%
|
|
1.25%
|
|
|
|
|
Rates of compensation increase:
|
|
|
|
Benefit obligation
|
5.99%
|
|
5.99%
|
Periodic cost
|
6.34%
|
|
6.38%
|
|
|
|
|
Expected long-term rates of return on pension plan assets (periodic cost)
|
6.75%
|
|
6.75%
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
16
|
|
|
16
|
|
|
16
|
|
|||
Net amortization
|
9
|
|
|
6
|
|
|
7
|
|
|||
Net Periodic Post-Retirement Benefits Costs
|
$
|
27
|
|
|
$
|
24
|
|
|
$
|
25
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Accumulated post-retirement benefits obligation, beginning of year
|
$
|
537
|
|
|
$
|
539
|
|
Service cost
|
2
|
|
|
2
|
|
||
Interest cost
|
16
|
|
|
16
|
|
||
Contributions and benefits paid
|
(46
|
)
|
|
(38
|
)
|
||
Actuarial (gains) losses
|
(18
|
)
|
|
18
|
|
||
Accumulated post-retirement benefits obligation, end of year
|
$
|
491
|
|
|
$
|
537
|
|
|
December 31,
|
||
|
2018
|
|
2017
|
Following year
|
10.2%
|
|
6.9%
|
Ultimate rate to which cost increase is assumed to decline
|
4.3%
|
|
4.2%
|
Year in which the ultimate trend rate is reached
|
2099
|
|
2097
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Unrecognized net actuarial (gains) losses
|
$
|
116
|
|
|
$
|
143
|
|
Unrecognized prior service (credit)
|
—
|
|
|
—
|
|
||
Total
|
$
|
116
|
|
|
$
|
143
|
|
|
December 31,
|
||
|
2018
|
|
2017
|
Discount rates:
|
|
|
|
Benefit obligation
|
3.52%-3.89%
|
|
2.80%-3.52%
|
Periodic cost
|
3.00%-3.50%
|
|
3.17%-3.98%
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net amortization
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|||
Net periodic post-employment benefits costs
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
|
|
Postretirement Benefits
|
||||||||||||||||
|
|
|
|
|
Health
|
||||||||||||||
|
Pension
Benefits
|
|
Life
Insurance
|
|
Gross
Estimate
Payment
|
|
Estimated
Medicare
Part D
Subsidy
|
|
Net Estimate
Payment
|
||||||||||
|
(in millions)
|
||||||||||||||||||
2019
|
$
|
221
|
|
|
$
|
26
|
|
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
13
|
|
2020
|
223
|
|
|
26
|
|
|
15
|
|
|
3
|
|
|
12
|
|
|||||
2021
|
220
|
|
|
26
|
|
|
14
|
|
|
3
|
|
|
11
|
|
|||||
2022
|
216
|
|
|
25
|
|
|
13
|
|
|
3
|
|
|
10
|
|
|||||
2023
|
209
|
|
|
25
|
|
|
12
|
|
|
3
|
|
|
9
|
|
|||||
Years 2024-2028
|
2,926
|
|
|
541
|
|
|
100
|
|
|
9
|
|
|
91
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Performance Shares (1)
|
$
|
11
|
|
|
$
|
45
|
|
|
$
|
37
|
|
Stock Options
|
2
|
|
|
1
|
|
|
1
|
|
|||
AXA Shareplan
|
—
|
|
|
13
|
|
|
19
|
|
|||
Restricted Stock Unit Awards (2)
|
215
|
|
|
185
|
|
|
154
|
|
|||
Other Compensation Plans (3)
|
—
|
|
|
3
|
|
|
2
|
|
|||
Total Compensation Expenses
|
$
|
228
|
|
|
$
|
247
|
|
|
$
|
213
|
|
(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
$24 million
adjustment for awards in 2018 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.
|
|
Options Outstanding
|
||||||||||||||||||||||||||
|
EQH Shares
|
|
AB Holding Units
|
|
AXA Ordinary Shares
|
|
AXA ADRs (2)
|
||||||||||||||||||||
|
Number
Outstanding
(In 000’s)
|
|
Weighted
Average
Exercise
Price
|
|
Number
Outstanding
(In 000’s)
|
|
Weighted
Average
Exercise
Price
|
|
Number
Outstanding (In 000’s) |
|
Weighted
Average Exercise Price |
|
Number
Outstanding (In 000’s) |
|
Weighted
Average Exercise Price |
||||||||||||
Options Outstanding at January 1, 2018
|
—
|
|
|
$
|
—
|
|
|
3,082
|
|
|
$
|
52.37
|
|
|
5,402
|
|
|
€
|
17.36
|
|
|
35
|
|
|
$
|
20.98
|
|
Options granted
|
1,035
|
|
|
$
|
21.34
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
€
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Options exercised
|
—
|
|
|
$
|
—
|
|
|
(889
|
)
|
|
$
|
18.66
|
|
|
(565
|
)
|
|
€
|
11.80
|
|
|
—
|
|
|
$
|
—
|
|
Options forfeited, net
|
(41
|
)
|
|
$
|
21.34
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
€
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Options expired
|
—
|
|
|
$
|
—
|
|
|
(1,522
|
)
|
|
$
|
85.09
|
|
|
(1,225
|
)
|
|
€
|
17.45
|
|
|
(10
|
)
|
|
$
|
35.25
|
|
Options Outstanding at December 31, 2018
|
994
|
|
|
$
|
21.34
|
|
|
671
|
|
|
$
|
22.83
|
|
|
3,612
|
|
|
€
|
18.20
|
|
|
25
|
|
|
$
|
15.37
|
|
Aggregate Intrinsic
Value (1)
|
|
|
$
|
—
|
|
|
|
|
$
|
3
|
|
|
|
|
€
|
2,383
|
|
|
|
|
$
|
151
|
|
||||
Weighted Average Remaining Contractual Term (in years)
|
9.16
|
|
|
|
|
1.60
|
|
|
|
|
4.50
|
|
|
|
|
0.58
|
|
|
|
||||||||
Options Exercisable at December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
635
|
|
|
$
|
22.84
|
|
|
2,147
|
|
|
€
|
15.27
|
|
|
25
|
|
|
$
|
15.37
|
|
Aggregate Intrinsic
Value (1)
|
|
|
$
|
—
|
|
|
|
|
$
|
3
|
|
|
|
|
€
|
7,698
|
|
|
|
|
$
|
151
|
|
||||
Weighted Average Remaining Contractual Term
(in years)
|
—
|
|
|
|
|
1.50
|
|
|
|
|
2.45
|
|
|
|
|
0.58
|
|
|
|
(1)
|
Aggregate intrinsic value, presented in thousands, is calculated as the excess of the closing market price on
December 31, 2018
of the respective underlying shares over the strike prices of the option awards. For awards with strike prices higher then market prices, intrinsic value is shown as zero.
|
(2)
|
AXA ordinary shares will be delivered to participants in lieu of AXA ADRs at exercise or maturity.
|
|
EQH Shares
|
|
AB Holding Units (1)
|
|
AXA Ordinary Shares (2)
|
||||||||||||||||
|
2018
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||
Dividend yield
|
2.44
|
%
|
|
NA
|
|
NA
|
|
7.10
|
%
|
|
NA
|
|
6.53
|
%
|
|
6.50
|
%
|
||||
Expected volatility
|
25.40
|
%
|
|
NA
|
|
NA
|
|
31.00
|
%
|
|
NA
|
|
25.05
|
%
|
|
26.6
|
%
|
||||
Risk-free interest rates
|
2.83
|
%
|
|
NA
|
|
NA
|
|
1.30
|
%
|
|
NA
|
|
0.59
|
%
|
|
0.33
|
%
|
||||
Expected life in years
|
9.7
|
|
|
NA
|
|
NA
|
|
6.0
|
|
|
NA
|
|
8.8
|
|
|
8.1
|
|
||||
Weighted average fair value per option at grant date
|
$
|
4.61
|
|
|
NA
|
|
NA
|
|
$
|
2.75
|
|
|
NA
|
|
$
|
2.01
|
|
|
$
|
2.06
|
|
(1)
|
There were no options to buy AB Holding Units awarded during 2018 and 2017. As such, the input assumptions for 2018 and 2017 are not applicable.
|
(2)
|
There were no options to buy AXA Ordinary Shares awarded during 2018. As such, the input assumptions for 2018 are not applicable.
|
|
Shares of Holdings Restricted Stock
|
|
Weighted Average Grant Date
Fair Value
|
|
Shares of AXA Restricted Stock
|
|
Weighted Average Grant Date
Fair Value
|
||||||
Unvested as of January 1, 2018
|
—
|
|
|
$
|
—
|
|
|
93,720
|
|
|
$
|
21.07
|
|
Granted
|
2,877,011
|
|
|
$
|
20.83
|
|
|
—
|
|
|
$
|
—
|
|
Cancelled
|
92,526
|
|
|
$
|
21.21
|
|
|
208
|
|
|
$
|
26.64
|
|
Vested
|
511,575
|
|
|
$
|
21.09
|
|
|
39,528
|
|
|
$
|
21.99
|
|
Unvested as of December 31, 2018
|
2,272,910
|
|
|
$
|
21.00
|
|
|
53,984
|
|
|
$
|
20.38
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Income tax (expense) benefit:
|
|
|
|
|
|
||||||
Current (expense) benefit
|
$
|
508
|
|
|
$
|
119
|
|
|
$
|
(169
|
)
|
Deferred (expense) benefit
|
(815
|
)
|
|
(168
|
)
|
|
(209
|
)
|
|||
Total
|
$
|
(307
|
)
|
|
$
|
(49
|
)
|
|
$
|
(378
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Expected income tax (expense) benefit
|
$
|
(516
|
)
|
|
$
|
(457
|
)
|
|
$
|
(710
|
)
|
Noncontrolling interest
|
54
|
|
|
138
|
|
|
125
|
|
|||
Non-taxable investment income (loss)
|
105
|
|
|
255
|
|
|
177
|
|
|||
Tax audit interest
|
(22
|
)
|
|
(14
|
)
|
|
(32
|
)
|
|||
State income taxes
|
(18
|
)
|
|
(16
|
)
|
|
(108
|
)
|
|||
Tax settlements/uncertain tax position release
|
—
|
|
|
228
|
|
|
181
|
|
|||
Change in tax law
|
104
|
|
|
(32
|
)
|
|
—
|
|
|||
Intangibles
|
(3
|
)
|
|
(138
|
)
|
|
(9
|
)
|
|||
Other
|
(11
|
)
|
|
(13
|
)
|
|
(2
|
)
|
|||
Income tax (expense) benefit
|
$
|
(307
|
)
|
|
$
|
(49
|
)
|
|
$
|
(378
|
)
|
•
|
An income tax benefit of
$69 million
from the revaluation of deferred tax assets and liabilities that existed at the time of enactment. The calculation of cumulative temporary differences has been refined.
|
•
|
An income tax expense of
$17 million
related to the decrease in federal tax benefit allowable for audit interest as a result of lower corporate tax rates.
|
•
|
An income tax benefit of
$35 million
to reverse the sequestration fee applied to a portion of accumulated minimum tax credits in the 2017 financial statements. The Internal Revenue Service has since clarified that refundable minimum tax credits are not subject to sequestration.
|
•
|
During the fourth quarter of 2018, the Company adopted the Internal Revenue Service’s directive related to the calculation of tax reserves for variable annuity contracts. As a result of adoption of the directive, the Company released audit interest accrued for uncertainties in the calculation of variable annuity tax reserves. Additionally, due to adoption of the directive, certain tax credits became unavailable for utilization. The impact on the Company’s financial statements was a benefit of
$17 million
.
|
|
As of December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||
|
(in millions)
|
||||||||||||||
Compensation and related benefits
|
$
|
312
|
|
|
$
|
—
|
|
|
$
|
328
|
|
|
$
|
—
|
|
Net operating loss
|
90
|
|
|
—
|
|
|
35
|
|
|
—
|
|
||||
Reserves and reinsurance
|
321
|
|
|
—
|
|
|
1,460
|
|
|
—
|
|
||||
DAC
|
—
|
|
|
1,175
|
|
|
—
|
|
|
850
|
|
||||
Unrealized investment gains (losses)
|
108
|
|
|
—
|
|
|
—
|
|
|
373
|
|
||||
Investments
|
124
|
|
|
—
|
|
|
—
|
|
|
891
|
|
||||
Tax credits
|
149
|
|
|
—
|
|
|
528
|
|
|
—
|
|
||||
Other
|
—
|
|
|
208
|
|
|
170
|
|
|
—
|
|
||||
Total
|
$
|
1,104
|
|
|
$
|
1,383
|
|
|
$
|
2,521
|
|
|
$
|
2,114
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Balance at January 1,
|
$
|
477
|
|
|
$
|
729
|
|
|
$
|
802
|
|
Additions for tax positions of prior years
|
91
|
|
|
28
|
|
|
99
|
|
|||
Reductions for tax positions of prior years
|
(29
|
)
|
|
(247
|
)
|
|
(172
|
)
|
|||
Additions for tax positions of current year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements with tax authorities
|
—
|
|
|
(33
|
)
|
|
—
|
|
|||
Balance at December 31,
|
$
|
539
|
|
|
$
|
477
|
|
|
$
|
729
|
|
|
|
|
|
|
|
||||||
Unrecognized tax benefits that, if recognized, would impact the effective rate
|
$
|
407
|
|
|
$
|
317
|
|
|
$
|
485
|
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Unrealized gains (losses) on investments (1) (3)
|
$
|
(394
|
)
|
|
$
|
830
|
|
|
$
|
140
|
|
Defined benefit pension plans (2)
|
(968
|
)
|
|
(955
|
)
|
|
(1,055
|
)
|
|||
Foreign currency translation adjustments
|
(72
|
)
|
|
(35
|
)
|
|
(77
|
)
|
|||
Total accumulated other comprehensive income (loss)
|
(1,434
|
)
|
|
(160
|
)
|
|
(992
|
)
|
|||
Less: Accumulated other comprehensive (income) loss attributable to the noncontrolling interest
|
38
|
|
|
52
|
|
|
71
|
|
|||
Accumulated other comprehensive income (loss) attributable to Holdings
|
$
|
(1,396
|
)
|
|
$
|
(108
|
)
|
|
$
|
(921
|
)
|
(1)
|
2018 includes a
$113 million
decrease to Accumulated other comprehensive loss from the impact of adoption of ASU 2018-02.
|
(2)
|
2018 includes a
$202 million
increase to Accumulated other comprehensive loss from the impact of adoption of ASU 2018-02.
|
(3)
|
2018 includes a $
7 million
decrease to Accumulated other comprehensive loss from the impact of adoption of ASU 2016-01.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Change in net unrealized gains (losses) on investments:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) arising during the year
|
$
|
(1,952
|
)
|
|
$
|
910
|
|
|
$
|
(227
|
)
|
(Gains) losses reclassified into net income (loss) during the year (1)
|
60
|
|
|
10
|
|
|
(55
|
)
|
|||
Net unrealized gains (losses) on investments
|
(1,892
|
)
|
|
920
|
|
|
(282
|
)
|
|||
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other
|
563
|
|
|
(230
|
)
|
|
8
|
|
|||
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of $(356), $262 and $(164))
|
(1,329
|
)
|
|
690
|
|
|
(274
|
)
|
|||
Change in defined benefit plans:
|
|
|
|
|
|
||||||
Less: Reclassification to Net income (loss) of amortization of net prior service credit included in net periodic cost (2)
|
189
|
|
|
100
|
|
|
34
|
|
|||
Change in defined benefit plans (net of deferred income tax expense (benefit) of $50, $51 and $19)
|
189
|
|
|
100
|
|
|
34
|
|
|||
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
Foreign currency translation gains (losses) arising during the year
|
(37
|
)
|
|
$
|
42
|
|
|
$
|
(18
|
)
|
|
(Gains) losses reclassified into net income (loss) during the year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustment
|
(37
|
)
|
|
42
|
|
|
(18
|
)
|
|||
Total other comprehensive income (loss), net of income taxes
|
(1,177
|
)
|
|
832
|
|
|
(258
|
)
|
|||
Less: Other comprehensive (income) loss attributable to noncontrolling interest
|
(15
|
)
|
|
(19
|
)
|
|
14
|
|
|||
Other comprehensive income (loss) attributable to Holdings
|
$
|
(1,192
|
)
|
|
$
|
813
|
|
|
$
|
(244
|
)
|
(1)
|
See “Reclassification adjustments” in
Note 3
. Reclassification amounts presented net of income tax expense (benefit) of
$13 million
,
$5 million
and
$29 million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
(2)
|
These AOCI components are included in the computation of net periodic costs (see “Employee Benefit Plans” in
Note 13
).
|
|
Calendar Year
|
||||||||||||||||||
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024 and thereafter
|
||||||||||
Long-term debt
|
$
|
—
|
|
|
$
|
300
|
|
|
$
|
—
|
|
|
$
|
800
|
|
|
$
|
3,350
|
|
|
Outstanding balance at end of period
|
|
Maturity of Outstanding balance
|
|
Issued during the period
|
|
Repaid during the period
|
||||||
|
(in millions)
|
||||||||||||
December 31, 2018:
|
|
|
|
|
|
|
|
||||||
Short-term FHLBNY funding agreements
|
$
|
1,490
|
|
|
Less than one month
|
|
$
|
7,980
|
|
|
$
|
6,990
|
|
Long-term FHLBNY funding agreements
|
1,621
|
|
|
Less than four years
|
|
—
|
|
|
—
|
|
|||
|
98
|
|
|
Less than five years
|
|
—
|
|
|
—
|
|
|||
|
781
|
|
|
Greater than five years
|
|
—
|
|
|
—
|
|
|||
Total long-term funding agreements
|
2,500
|
|
|
|
|
—
|
|
|
—
|
|
|||
Total FHLBNY funding agreements at December 31, 2018 (1)
|
$
|
3,990
|
|
|
|
|
$
|
7,980
|
|
|
$
|
6,990
|
|
|
|
|
|
|
|
|
|
||||||
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 four years
|
|
324
|
|
|
—
|
|
|||
|
377
|
|
|
Less than five years
|
|
303
|
|
|
—
|
|
|||
|
879
|
|
|
Greater than five years
|
|
135
|
|
|
—
|
|
|||
Total long-term funding agreements
|
2,500
|
|
|
|
|
762
|
|
|
—
|
|
|||
Total FHLBNY funding agreements at December 31, 2017 (1)
|
$
|
3,000
|
|
|
|
|
$
|
6,762
|
|
|
$
|
6,000
|
|
(1)
|
The
$11 million
and
$14 million
difference between the funding agreements carrying value shown in fair value table for
2018
and
2017
, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements borrowing rates.
|
•
|
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 services or products to 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 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 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.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Net income (loss) attributable to Holdings
|
$
|
1,820
|
|
|
$
|
834
|
|
|
$
|
1,254
|
|
Adjustments related to:
|
|
|
|
|
|
||||||
Variable annuity product features
|
(70
|
)
|
|
1,107
|
|
|
2,143
|
|
|||
Investment (gains) losses
|
86
|
|
|
191
|
|
|
(1,983
|
)
|
|||
Goodwill impairment
|
—
|
|
|
369
|
|
|
—
|
|
|||
Net actuarial (gains) losses related to pension and other postretirement benefit obligations
|
215
|
|
|
135
|
|
|
140
|
|
|||
Other adjustments (1)
|
299
|
|
|
119
|
|
|
(7
|
)
|
|||
Income tax expense (benefit) related to above adjustments
|
(111
|
)
|
|
(644
|
)
|
|
(93
|
)
|
|||
Non-recurring tax items
|
(73
|
)
|
|
(76
|
)
|
|
(63
|
)
|
|||
Non-GAAP Operating Earnings
|
$
|
2,166
|
|
|
$
|
2,035
|
|
|
$
|
1,391
|
|
Operating earnings (loss) by segment:
|
|
|
|
|
|
||||||
Individual Retirement
|
$
|
1,555
|
|
|
$
|
1,252
|
|
|
$
|
1,167
|
|
Group Retirement
|
389
|
|
|
283
|
|
|
167
|
|
|||
Investment Management and Research
|
381
|
|
|
211
|
|
|
161
|
|
|||
Protection Solutions
|
197
|
|
|
502
|
|
|
77
|
|
|||
Corporate and Other (2)
|
(356
|
)
|
|
(213
|
)
|
|
(181
|
)
|
(1)
|
Other adjustments include separation costs of
$213 million
in 2018 and
$93 million
in 2017.
|
(2)
|
Includes interest expense of
$223 million
,
$138 million
and
$161 million
, in
2018
,
2017
and
2016
, 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 investment income (loss) from certain derivative instruments, excluding derivative instruments used to hedge risks associated with interest margins on interest sensitive life and annuity contracts and freestanding and embedded derivatives associated with products with GMxB features.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Segment revenues:
|
|
|
|
|
|
||||||
Individual Retirement (1)
|
$
|
4,054
|
|
|
$
|
4,374
|
|
|
$
|
3,703
|
|
Group Retirement (1)
|
1,019
|
|
|
942
|
|
|
801
|
|
|||
Investment Management and Research (2)
|
3,411
|
|
|
3,216
|
|
|
2,933
|
|
|||
Protection Solutions (1)
|
3,232
|
|
|
3,057
|
|
|
3,129
|
|
|||
Corporate and Other (1)
|
1,148
|
|
|
1,212
|
|
|
1,256
|
|
|||
Adjustments:
|
|
|
|
|
|
||||||
Variable annuity product features
|
(643
|
)
|
|
(214
|
)
|
|
(2,132
|
)
|
|||
Investment gains (losses)
|
(86
|
)
|
|
(191
|
)
|
|
1,983
|
|
|||
Other adjustments to segment revenues
|
(57
|
)
|
|
64
|
|
|
90
|
|
|||
Total revenues
|
$
|
12,078
|
|
|
$
|
12,460
|
|
|
$
|
11,763
|
|
(1)
|
Includes investment expenses charged by AB of approximately
$67 million
,
$68 million
and
$60 million
for
2018
,
2017
and
2016
, respectively, for services provided to the Company.
|
(2)
|
Inter-segment investment management and other fees of approximately
$94 million
,
$96 million
and
$86 million
for
2018
,
2017
and
2016
, respectively, are included in segment revenues of the Investment Management and Research segment.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Total assets by segment:
|
|
|
|
||||
Individual Retirement (1)
|
$
|
105,532
|
|
|
$
|
121,824
|
|
Group Retirement (1)
|
38,874
|
|
|
38,419
|
|
||
Investment Management and Research
|
10,294
|
|
|
10,057
|
|
||
Protection Solutions (1)
|
44,633
|
|
|
43,205
|
|
||
Corporate and Other
|
21,464
|
|
|
22,110
|
|
||
Total assets
|
$
|
220,797
|
|
|
$
|
235,615
|
|
(1)
|
Amounts for December 31, 2017 as previously reported were: Individual Retirement of
$121,713 million
, Group Retirement of
$38,578 million
and Protection Solutions of
$43,157 million
.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Net income (loss) attributable to Holdings common shareholders:
|
|
|
|
|
|
||||||
Net income (loss) attributable to Holdings common shareholders (basic):
|
$
|
1,820
|
|
|
$
|
834
|
|
|
$
|
1,254
|
|
Less: Incremental dilution from AB (1)
|
—
|
|
|
1
|
|
|
—
|
|
|||
Net income (loss) attributable to Holdings common shareholders (diluted):
|
$
|
1,820
|
|
|
$
|
833
|
|
|
$
|
1,254
|
|
(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.
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
|
(in millions)
|
|||||||
Weighted Average Shares:
|
|
|
|
|
|
|||
Weighted average common stock outstanding for basic earnings per common share
|
556.4
|
|
|
561.0
|
|
|
561.0
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|||
Employee stock awards
|
0.1
|
|
|
—
|
|
|
—
|
|
Weighted average common stock outstanding for diluted earnings per common share
|
556.5
|
|
|
561.0
|
|
|
561.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in U.S. dollars per share)
|
||||||||||
Net income (loss) attributable to Holdings per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.27
|
|
|
$
|
1.49
|
|
|
$
|
2.24
|
|
Diluted
|
$
|
3.27
|
|
|
$
|
1.48
|
|
|
$
|
2.24
|
|
|
As Reported
|
|
Presentation Reclassifications
|
|
Revisions
|
|
As Revised
|
||||||||
|
Year Ended December 31, 2017
|
||||||||||||||
|
(in millions)
|
||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||||||
Non-cash long term incentive compensation expense
|
$
|
185
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
247
|
|
Amortization and depreciation
|
(104
|
)
|
|
503
|
|
|
—
|
|
|
399
|
|
||||
Distributions from joint ventures and limited partnerships
|
140
|
|
|
(140
|
)
|
|
—
|
|
|
—
|
|
||||
Equity (income) loss from limited partnerships
|
—
|
|
|
(155
|
)
|
|
—
|
|
|
(155
|
)
|
||||
Changes in:
|
|
|
|
|
|
|
—
|
|
|||||||
Reinsurance recoverable
|
—
|
|
|
124
|
|
|
|
|
124
|
|
|||||
Capitalization of deferred policy acquisition costs
|
(184
|
)
|
|
(503
|
)
|
|
—
|
|
|
(687
|
)
|
||||
Future policy benefits
|
1,599
|
|
|
—
|
|
|
(502
|
)
|
|
1,097
|
|
||||
Current and deferred income taxes
|
767
|
|
|
—
|
|
|
(777
|
)
|
|
(10
|
)
|
||||
Other, net
|
127
|
|
|
109
|
|
|
15
|
|
|
251
|
|
||||
Net cash provided by (used in) operating activities
|
$
|
1,021
|
|
|
$
|
—
|
|
|
$
|
(1,264
|
)
|
|
$
|
(243
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
|
|
|
|
||||||||
Short term investments
|
—
|
|
|
4,555
|
|
|
—
|
|
|
4,555
|
|
||||
Payment for the purchase/origination of:
|
|
|
|
|
|
|
|
|
|||||||
Short-term investments
|
—
|
|
|
(4,897
|
)
|
|
—
|
|
|
(4,897
|
)
|
||||
Change in short-term investments
|
(342
|
)
|
|
342
|
|
|
—
|
|
|
—
|
|
||||
Net cash provided by (used in) investing activities
|
$
|
(9,689
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9,689
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Policyholders’ account balances:
|
|
|
|
|
|
|
|
|
|||||||
Deposits
|
10,591
|
|
|
—
|
|
|
(675
|
)
|
|
9,916
|
|
||||
Withdrawals
|
(6,140
|
)
|
|
—
|
|
|
2,130
|
|
|
(4,010
|
)
|
||||
Transfers (to) from Separate Accounts
|
1,677
|
|
|
—
|
|
|
(191
|
)
|
|
1,486
|
|
||||
Net cash provided by (used in) financing activities
|
$
|
7,806
|
|
|
$
|
—
|
|
|
$
|
1,264
|
|
|
$
|
9,070
|
|
Change in cash and cash equivalents
|
$
|
(840
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(840
|
)
|
Cash and cash equivalents, end of year
|
$
|
4,814
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,814
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
(in millions)
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
2,874
|
|
|
$
|
2,966
|
|
|
$
|
1,083
|
|
|
$
|
5,155
|
|
Total benefits and other deductions
|
2,446
|
|
|
2,644
|
|
|
1,701
|
|
|
2,826
|
|
||||
Income (loss) before income taxes
|
428
|
|
|
322
|
|
|
(618
|
)
|
|
2,329
|
|
||||
Income tax (expense) benefit
|
(91
|
)
|
|
(61
|
)
|
|
175
|
|
|
(330
|
)
|
||||
Net income (loss)
|
337
|
|
|
261
|
|
|
(443
|
)
|
|
1,999
|
|
||||
Less: Net (income) loss attributable to the noncontrolling interest
|
(123
|
)
|
|
(97
|
)
|
|
(53
|
)
|
|
(61
|
)
|
||||
Net Income (Loss) Attributable to Holdings
|
$
|
168
|
|
|
$
|
164
|
|
|
$
|
(496
|
)
|
|
$
|
1,938
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share - common stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.30
|
|
|
$
|
0.29
|
|
|
$
|
(0.89
|
)
|
|
$
|
3.57
|
|
Diluted
|
$
|
0.30
|
|
|
$
|
0.29
|
|
|
$
|
(0.89
|
)
|
|
$
|
3.57
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
(in millions)
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
2,844
|
|
|
$
|
3,888
|
|
|
$
|
2,806
|
|
|
$
|
2,922
|
|
Total benefits and other deductions
|
2,991
|
|
|
3,258
|
|
|
2,759
|
|
|
2,146
|
|
||||
Income (loss) before income taxes
|
(147
|
)
|
|
630
|
|
|
47
|
|
|
776
|
|
||||
Income tax (expense) benefit
|
(37
|
)
|
|
78
|
|
|
59
|
|
|
(149
|
)
|
||||
Net income (loss)
|
(184
|
)
|
|
708
|
|
|
106
|
|
|
627
|
|
||||
Less: Net (income) loss attributable to the noncontrolling interest
|
(93
|
)
|
|
(90
|
)
|
|
(96
|
)
|
|
(144
|
)
|
||||
Net Income (Loss) Attributable to Holdings
|
$
|
(277
|
)
|
|
$
|
618
|
|
|
$
|
10
|
|
|
$
|
483
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share - common stock:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.49
|
)
|
|
$
|
1.10
|
|
|
$
|
0.02
|
|
|
$
|
0.86
|
|
Diluted
|
$
|
(0.50
|
)
|
|
$
|
1.10
|
|
|
$
|
0.02
|
|
|
$
|
0.86
|
|
|
As Previously Reported
|
|
Impact of Revisions
|
|
As Revised
|
||||||
|
(in millions)
|
||||||||||
Three Months Ended June 30, 2018
|
|
|
|
|
|
||||||
Total revenues
|
$
|
2,962
|
|
|
$
|
4
|
|
|
$
|
2,966
|
|
Total benefits and other deductions
|
2,648
|
|
|
(4
|
)
|
|
2,644
|
|
|||
Net income (loss)
|
$
|
255
|
|
|
$
|
6
|
|
|
$
|
261
|
|
|
|
|
|
|
|
||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
||||||
Total revenues
|
$
|
2,835
|
|
|
$
|
39
|
|
|
$
|
2,874
|
|
Total benefits and other deductions
|
2,465
|
|
|
(19
|
)
|
|
2,446
|
|
|||
Net income (loss)
|
$
|
291
|
|
|
$
|
46
|
|
|
$
|
337
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2017
|
|
|
|
|
|
||||||
Total revenues
|
$
|
3,882
|
|
|
$
|
6
|
|
|
$
|
3,888
|
|
Total benefits and other deductions
|
3,268
|
|
|
(10
|
)
|
|
3,258
|
|
|||
Net income (loss)
|
$
|
698
|
|
|
$
|
10
|
|
|
$
|
708
|
|
|
|
|
|
|
|
||||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
||||||
Total revenues
|
$
|
2,830
|
|
|
$
|
14
|
|
|
$
|
2,844
|
|
Total benefits and other deductions
|
2,997
|
|
|
(6
|
)
|
|
2,991
|
|
|||
Net income (loss)
|
$
|
(197
|
)
|
|
$
|
13
|
|
|
$
|
(184
|
)
|
|
As Reported
|
|
Presentation Reclassifications
|
|
Revisions
|
|
As Revised
|
||||||||
|
Three Months Ended March 31, 2018
|
||||||||||||||
|
(in millions)
|
||||||||||||||
Net income (loss)
|
$
|
291
|
|
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
337
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||||||
Interest credited to policyholders’ account balances
|
|
|
|
|
|
|
—
|
|
|||||||
Policy charges and fee income
|
(972
|
)
|
|
—
|
|
|
6
|
|
|
(966
|
)
|
||||
Net derivative (gains) losses
|
281
|
|
|
—
|
|
|
(45
|
)
|
|
236
|
|
||||
Amortization of deferred sales commission
|
7
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of reinsurance cost
|
5
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization and depreciation
|
(20
|
)
|
|
184
|
|
|
(5
|
)
|
|
159
|
|
||||
Distributions from joint ventures and limited partnerships
|
25
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
||||
Equity (income) loss from limited partnerships
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(38
|
)
|
||||
Changes in:
|
|
|
|
|
|
|
|
|
|||||||
Reinsurance recoverable
|
32
|
|
|
—
|
|
|
(3
|
)
|
|
29
|
|
||||
Capitalization of deferred policy acquisition costs
|
15
|
|
|
(172
|
)
|
|
—
|
|
|
(157
|
)
|
||||
Future policy benefits
|
(254
|
)
|
|
—
|
|
|
6
|
|
|
(248
|
)
|
||||
Current and deferred income taxes
|
103
|
|
|
—
|
|
|
12
|
|
|
115
|
|
||||
Other, net
|
(255
|
)
|
|
63
|
|
|
—
|
|
|
(192
|
)
|
||||
Net cash provided by (used in) operating activities
|
$
|
(264
|
)
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
(247
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
|
|
|
|
||||||||
Real estate joint ventures
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
140
|
|
|
$
|
140
|
|
Short-term investments
|
876
|
|
|
—
|
|
|
77
|
|
|
953
|
|
||||
Cash settlements related to derivative instruments
|
(54
|
)
|
|
—
|
|
|
(620
|
)
|
|
(674
|
)
|
||||
Other, net
|
(371
|
)
|
|
—
|
|
|
60
|
|
|
(311
|
)
|
||||
Net cash provided by (used in) investing activities
|
$
|
459
|
|
|
$
|
—
|
|
|
$
|
(343
|
)
|
|
$
|
116
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Policyholders’ account balances:
|
|
|
|
|
|
|
|
|
|||||||
Deposits
|
$
|
2,532
|
|
|
$
|
—
|
|
|
$
|
(491
|
)
|
|
$
|
2,041
|
|
Withdrawals
|
(1,384
|
)
|
|
—
|
|
|
284
|
|
|
(1,100
|
)
|
||||
Transfers (to) from Separate Accounts
|
(102
|
)
|
|
—
|
|
|
533
|
|
|
431
|
|
||||
Net cash provided by (used in) financing activities
|
$
|
1,074
|
|
|
$
|
—
|
|
|
$
|
326
|
|
|
$
|
1,400
|
|
|
|
|
|
|
|
|
|
||||||||
Change in cash and cash equivalents
|
$
|
1,277
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,277
|
|
Cash and Cash Equivalents, end of period
|
$
|
6,091
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,091
|
|
|
As Reported
|
|
Presentation Reclassifications
|
|
Revisions
|
|
As Revised
|
||||||||
|
Six Months Ended June 30, 2018
|
||||||||||||||
|
(in millions)
|
||||||||||||||
Net income (loss)
|
$
|
546
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
$
|
598
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||||||
Policy charges and fee income
|
$
|
(1,959
|
)
|
|
$
|
—
|
|
|
29
|
|
|
$
|
(1,930
|
)
|
|
Net derivative (gains) losses
|
354
|
|
|
—
|
|
|
(72
|
)
|
|
282
|
|
||||
Amortization of deferred sales commission
|
13
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of reinsurance cost
|
10
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization and depreciation
|
$
|
(32
|
)
|
|
$
|
380
|
|
|
$
|
11
|
|
|
$
|
359
|
|
Distributions from joint ventures and limited partnerships
|
44
|
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
||||
Equity (income) loss from limited partnerships
|
—
|
|
|
(59
|
)
|
|
—
|
|
|
(59
|
)
|
||||
Changes in:
|
|
|
|
|
|
|
|
|
|||||||
Reinsurance recoverable
|
20
|
|
|
—
|
|
|
9
|
|
|
29
|
|
||||
Capitalization of deferred policy acquisition costs
|
14
|
|
|
(357
|
)
|
|
—
|
|
|
(343
|
)
|
||||
Future policy benefits
|
(171
|
)
|
|
—
|
|
|
(15
|
)
|
|
(186
|
)
|
||||
Current and deferred income taxes
|
224
|
|
|
—
|
|
|
(42
|
)
|
|
182
|
|
||||
Other, net
|
(180
|
)
|
|
103
|
|
|
—
|
|
|
(77
|
)
|
||||
Net cash provided by (used in) operating activities
|
$
|
(314
|
)
|
|
$
|
—
|
|
|
$
|
(28
|
)
|
|
$
|
(342
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Real estate joint ventures
|
—
|
|
|
139
|
|
|
—
|
|
|
139
|
|
||||
Other
|
261
|
|
|
(139
|
)
|
|
—
|
|
|
122
|
|
||||
Cash settlements related to derivative instruments
|
$
|
(333
|
)
|
|
$
|
—
|
|
|
$
|
(637
|
)
|
|
$
|
(970
|
)
|
Other, net
|
419
|
|
|
—
|
|
|
61
|
|
|
480
|
|
||||
Net cash provided by (used in) investing activities
|
$
|
1,807
|
|
|
$
|
—
|
|
|
$
|
(576
|
)
|
|
$
|
1,231
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Policyholders’ account balances:
|
|
|
|
|
|
|
|
|
|||||||
Deposits
|
$
|
5,567
|
|
|
$
|
—
|
|
|
$
|
(1,141
|
)
|
|
$
|
4,426
|
|
Withdrawals
|
(2,750
|
)
|
|
—
|
|
|
572
|
|
|
(2,178
|
)
|
||||
Transfers (to) from Separate Accounts
|
(307
|
)
|
|
—
|
|
|
1,173
|
|
|
866
|
|
||||
Net cash provided by (used in) financing activities
|
$
|
532
|
|
|
$
|
—
|
|
|
$
|
604
|
|
|
$
|
1,136
|
|
|
|
|
|
|
|
|
|
||||||||
Change in cash and cash equivalents
|
2,019
|
|
|
—
|
|
|
—
|
|
|
2,019
|
|
||||
Cash and Cash Equivalents, end of period
|
$
|
6,833
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
6,833
|
|
|
As Reported
|
|
Presentation Reclassifications
|
|
Revisions
|
|
As Revised
|
||||||||
|
Nine Months Ended September 30, 2018
|
||||||||||||||
|
(in millions)
|
||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||||||
Amortization of deferred sales commission
|
$
|
18
|
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Amortization of reinsurance cost
|
17
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization and depreciation
|
(57
|
)
|
|
$
|
210
|
|
|
$
|
—
|
|
|
$
|
153
|
|
|
Distribution from joint ventures and limited partnerships
|
63
|
|
|
(63
|
)
|
|
—
|
|
|
—
|
|
||||
Equity (income) loss from limited partnerships
|
—
|
|
|
(82
|
)
|
|
—
|
|
|
(82
|
)
|
||||
Changes in:
|
|
|
|
|
|
|
|
||||||||
Reinsurance recoverable
|
92
|
|
|
—
|
|
|
(2
|
)
|
|
90
|
|
||||
Capitalization of deferred policy acquisition costs
|
(338
|
)
|
|
(175
|
)
|
|
—
|
|
|
(513
|
)
|
||||
Future policy benefits
|
(620
|
)
|
|
—
|
|
|
(44
|
)
|
|
(664
|
)
|
||||
Current and deferred income taxes
|
249
|
|
|
—
|
|
|
(56
|
)
|
|
193
|
|
||||
Other, net
|
(139
|
)
|
|
145
|
|
|
—
|
|
|
6
|
|
||||
Net cash provided by (used in) operating activities
|
$
|
(34
|
)
|
|
$
|
—
|
|
|
$
|
(102
|
)
|
|
$
|
(136
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Real estate joint ventures
|
$
|
—
|
|
|
$
|
139
|
|
|
$
|
—
|
|
|
$
|
139
|
|
Other
|
335
|
|
|
(139
|
)
|
|
—
|
|
|
196
|
|
||||
Cash settlements related to derivative instruments
|
$
|
(609
|
)
|
|
$
|
—
|
|
|
$
|
(668
|
)
|
|
$
|
(1,277
|
)
|
Other, net
|
319
|
|
|
—
|
|
|
(5
|
)
|
|
314
|
|
||||
Net cash provided by (used in) investing activities
|
$
|
(1,057
|
)
|
|
$
|
—
|
|
|
$
|
(673
|
)
|
|
$
|
(1,730
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Deposits
|
$
|
8,372
|
|
|
$
|
—
|
|
|
$
|
(1,719
|
)
|
|
$
|
6,653
|
|
Withdrawals
|
(4,170
|
)
|
|
—
|
|
|
846
|
|
|
(3,324
|
)
|
||||
Transfers (to) from Separate Accounts
|
(335
|
)
|
|
—
|
|
|
1,648
|
|
|
1,313
|
|
||||
Net cash provided by (used in) financing activities
|
$
|
1,063
|
|
|
$
|
—
|
|
|
$
|
775
|
|
|
$
|
1,838
|
|
|
|
|
|
|
|
|
|
||||||||
Change in cash and cash equivalents
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
||||
Cash and Cash Equivalents, end of period
|
$
|
4,777
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,777
|
|
|
As Reported
|
|
Presentation Reclassifications
|
|
Revisions
|
|
As Revised
|
||||||||
|
Three Months Ended March 31, 2017
|
||||||||||||||
|
(in millions)
|
||||||||||||||
Net income (loss)
|
$
|
(197
|
)
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
(184
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||||||
Policy charges and fee income
|
(956
|
)
|
|
—
|
|
|
17
|
|
|
(939
|
)
|
||||
(Income) loss related to derivative instruments
|
235
|
|
|
—
|
|
|
(31
|
)
|
|
204
|
|
||||
Amortization of deferred sales commission
|
9
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of reinsurance cost
|
5
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization and depreciation
|
(42
|
)
|
|
128
|
|
|
(4
|
)
|
|
82
|
|
||||
Equity (income) loss from limited partnerships
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
||||
Distributions from joint ventures and limited partnersh
|
26
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
||||
Changes in:
|
|
|
|
|
|
|
|
|
|||||||
Net broker-dealer and customer related receivables/payables
|
297
|
|
|
—
|
|
|
(10
|
)
|
|
287
|
|
||||
Reinsurance recoverable
|
27
|
|
|
—
|
|
|
3
|
|
|
30
|
|
||||
Capitalization of deferred policy acquisition costs
|
(55
|
)
|
|
(114
|
)
|
|
|
|
|
(169
|
)
|
||||
Future policy benefits
|
296
|
|
|
—
|
|
|
52
|
|
|
348
|
|
||||
Current and deferred income taxes
|
252
|
|
|
—
|
|
|
(256
|
)
|
|
(4
|
)
|
||||
Other, net
|
(71
|
)
|
|
66
|
|
|
—
|
|
|
(5
|
)
|
||||
Net cash provided by (used in) operating activities
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
(216
|
)
|
|
$
|
(144
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Change in short-term investments
|
573
|
|
|
—
|
|
|
(308
|
)
|
|
265
|
|
||||
Cash settlements related to derivative instruments
|
(1,400
|
)
|
|
—
|
|
|
22
|
|
|
(1,378
|
)
|
||||
Other, net
|
(191
|
)
|
|
—
|
|
|
76
|
|
|
(115
|
)
|
||||
Net cash provided by (used in) investing activities
|
$
|
(2,899
|
)
|
|
$
|
—
|
|
|
$
|
(210
|
)
|
|
$
|
(3,109
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Policyholders’ account balances:
|
|
|
|
|
|
|
—
|
|
|||||||
Deposits
|
2,790
|
|
|
—
|
|
|
(144
|
)
|
|
2,646
|
|
||||
Withdrawals
|
(1,342
|
)
|
|
—
|
|
|
376
|
|
|
(966
|
)
|
||||
Transfers (to) from Separate Accounts
|
186
|
|
|
—
|
|
|
194
|
|
|
380
|
|
||||
Net cash provided by (used in) financing activities
|
$
|
2,630
|
|
|
$
|
—
|
|
|
$
|
426
|
|
|
$
|
3,056
|
|
|
|
|
|
|
|
|
|
||||||||
Change in cash and cash equivalents
|
$
|
(189
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(189
|
)
|
Cash and cash equivalents, end of period
|
$
|
5,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,465
|
|
|
As Reported
|
|
Presentation Reclassifications
|
|
Revisions
|
|
As Revised
|
||||||||
|
Six Months Ended June 30, 2017
|
||||||||||||||
|
(in millions)
|
||||||||||||||
Net income (loss)
|
$
|
501
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
524
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||||||
Policy charges and fee income
|
$
|
(1,891
|
)
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
(1,857
|
)
|
Net derivative (gains) losses
|
(494
|
)
|
|
—
|
|
|
(54
|
)
|
|
(548
|
)
|
||||
Amortization of reinsurance cost
|
7
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of deferred sales commission
|
17
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization and depreciation
|
(60
|
)
|
|
203
|
|
|
(5
|
)
|
|
138
|
|
||||
Equity (income) loss from limited partnerships
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
(66
|
)
|
||||
Distribution from joint ventures and limited partnerships
|
53
|
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
||||
Changes in:
|
|
|
|
|
|
|
—
|
|
|||||||
Reinsurance recoverable
|
40
|
|
|
—
|
|
|
9
|
|
|
49
|
|
||||
Capitalization of deferred policy acquisition costs
|
(168
|
)
|
|
(179
|
)
|
|
—
|
|
|
(347
|
)
|
||||
Future policy benefits
|
1,516
|
|
|
—
|
|
|
(169
|
)
|
|
1,347
|
|
||||
Current and deferred income taxes
|
123
|
|
|
—
|
|
|
(210
|
)
|
|
(87
|
)
|
||||
Other, net
|
333
|
|
|
119
|
|
|
—
|
|
|
452
|
|
||||
Net cash provided by (used in) operating activities
|
$
|
666
|
|
|
$
|
—
|
|
|
$
|
(372
|
)
|
|
$
|
294
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Cash settlements related to derivative instruments
|
$
|
(1,537
|
)
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
(1,503
|
)
|
Other, net
|
179
|
|
|
—
|
|
|
(173
|
)
|
|
6
|
|
||||
Net cash provided by (used in) investing activities
|
$
|
(5,067
|
)
|
|
$
|
—
|
|
|
$
|
(139
|
)
|
|
$
|
(5,206
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Policyholders’ account balances:
|
|
|
|
|
|
|
|
|
|||||||
Deposits
|
$
|
4,401
|
|
|
—
|
|
|
$
|
766
|
|
|
$
|
5,167
|
|
|
Withdrawals
|
(1,724
|
)
|
|
—
|
|
|
(158
|
)
|
|
(1,882
|
)
|
||||
Transfers (to) from Separate Accounts
|
826
|
|
|
—
|
|
|
(97
|
)
|
|
729
|
|
||||
Net cash provided by (used in) financing activities
|
$
|
4,923
|
|
|
$
|
—
|
|
|
$
|
511
|
|
|
$
|
5,434
|
|
|
|
|
|
|
|
|
|
||||||||
Change in cash and cash equivalents
|
533
|
|
|
—
|
|
|
—
|
|
|
533
|
|
||||
Cash and Cash Equivalents, end of period
|
$
|
6,187
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,187
|
|
|
As Reported
|
|
Presentation Reclassifications
|
|
Revisions
|
|
As Revised
|
||||||||
|
Nine Months Ended September 30, 2017
|
||||||||||||||
|
(in millions)
|
||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||||||
Amortization of deferred sales commission
|
25
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of reinsurance cost
|
11
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization and depreciation
|
$
|
(121
|
)
|
|
$
|
399
|
|
|
$
|
—
|
|
|
$
|
278
|
|
Equity (income) loss from limited partnerships
|
—
|
|
|
(103
|
)
|
|
—
|
|
|
(103
|
)
|
||||
Distribution from joint ventures and limited partnerships
|
94
|
|
|
(94
|
)
|
|
—
|
|
|
—
|
|
||||
Changes in:
|
|
|
|
|
|
|
—
|
|
|||||||
Reinsurance recoverable
|
115
|
|
|
—
|
|
|
10
|
|
|
125
|
|
||||
Capitalization of deferred policy acquisition costs
|
(150
|
)
|
|
(363
|
)
|
|
—
|
|
|
(513
|
)
|
||||
Future policy benefits
|
1,587
|
|
|
—
|
|
|
(10
|
)
|
|
1,577
|
|
||||
Current and deferred income taxes
|
498
|
|
|
—
|
|
|
(546
|
)
|
|
(48
|
)
|
||||
Other, net
|
253
|
|
|
197
|
|
|
15
|
|
|
465
|
|
||||
Net cash provided by (used in) operating activities
|
$
|
1,044
|
|
|
$
|
—
|
|
|
$
|
(531
|
)
|
|
$
|
513
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||||||
Cash settlements related to derivative instruments
|
$
|
(1,722
|
)
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
(1,672
|
)
|
Other, net
|
(133
|
)
|
|
—
|
|
|
(230
|
)
|
|
(363
|
)
|
||||
Net cash provided by (used in) investing activities
|
$
|
(6,568
|
)
|
|
$
|
—
|
|
|
$
|
(180
|
)
|
|
$
|
(6,748
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
||||||||
Policyholders’ account balances:
|
|
|
|
|
|
|
|
|
|||||||
Deposits
|
$
|
6,135
|
|
|
$
|
—
|
|
|
$
|
1,283
|
|
|
$
|
7,418
|
|
Withdrawals
|
(2,765
|
)
|
|
—
|
|
|
(114
|
)
|
|
(2,879
|
)
|
||||
Transfers (to) from Separate Accounts
|
1,617
|
|
|
—
|
|
|
(458
|
)
|
|
1,159
|
|
||||
Net cash provided by (used in) financing activities
|
$
|
6,299
|
|
|
$
|
—
|
|
|
$
|
711
|
|
|
$
|
7,010
|
|
|
|
|
|
|
|
|
|
||||||||
Change in cash and cash equivalents
|
792
|
|
|
—
|
|
|
—
|
|
|
792
|
|
||||
Cash and Cash Equivalents, end of period
|
$
|
6,446
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,446
|
|
|
Cost (1)
|
|
Fair Value
|
|
Carrying
Value
|
||||||
|
(in millions)
|
||||||||||
Fixed Maturities:
|
|
|
|
|
|
||||||
U.S. government, agencies and authorities
|
$
|
14,004
|
|
|
$
|
13,829
|
|
|
$
|
14,004
|
|
State, municipalities and political subdivisions
|
415
|
|
|
461
|
|
|
415
|
|
|||
Foreign governments
|
524
|
|
|
530
|
|
|
524
|
|
|||
Public utilities
|
5,101
|
|
|
5,046
|
|
|
5,101
|
|
|||
All other corporate bonds
|
25,471
|
|
|
25,132
|
|
|
25,471
|
|
|||
Residential mortgage-backed
|
225
|
|
|
234
|
|
|
225
|
|
|||
Asset-backed
|
612
|
|
|
601
|
|
|
612
|
|
|||
Redeemable preferred stocks
|
449
|
|
|
446
|
|
|
449
|
|
|||
Total fixed maturities
|
46,801
|
|
|
46,279
|
|
|
46,801
|
|
|||
Mortgage loans on real estate (2)
|
11,842
|
|
|
11,494
|
|
|
11,835
|
|
|||
Real estate held for the production of income
|
52
|
|
|
52
|
|
|
52
|
|
|||
Policy loans
|
3,779
|
|
|
4,183
|
|
|
3,779
|
|
|||
Other equity investments
|
1,293
|
|
|
1,334
|
|
|
1,334
|
|
|||
Trading securities
|
16,211
|
|
|
16,017
|
|
|
16,017
|
|
|||
Other invested assets
|
2,037
|
|
|
2,037
|
|
|
2,037
|
|
|||
Total Investments
|
$
|
82,015
|
|
|
$
|
81,396
|
|
|
$
|
81,855
|
|
(1)
|
Cost for fixed maturities represents original cost, reduced by repayments and write-downs and adjusted for amortization of premiums or accretion of discount; cost for equity securities represents original cost reduced by write-downs; cost for other limited partnership interests represents original cost adjusted for equity in earnings and reduced by distributions.
|
(2)
|
Carrying value for mortgage loans on real estate represents original cost adjusted for amortization of premiums or accretion of discount and reduced by valuation allowance.
|
|
2018
|
|
2017
|
||||
|
(in millions, except share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Investment in consolidated subsidiaries
|
$
|
16,743
|
|
|
$
|
13,772
|
|
Fixed maturities available-for-sale, at fair value (amortized cost of $337)
|
336
|
|
|
—
|
|
||
Other equity investments
|
23
|
|
|
—
|
|
||
Other invested assets
|
80
|
|
|
—
|
|
||
Total investments
|
17,182
|
|
|
13,772
|
|
||
Cash and cash equivalents
|
407
|
|
|
44
|
|
||
Goodwill and other intangible assets, net
|
1,265
|
|
|
—
|
|
||
Loans to affiliates
|
572
|
|
|
1,045
|
|
||
Income taxes receivable
|
—
|
|
|
72
|
|
||
Other assets
|
766
|
|
|
1
|
|
||
Total Assets
|
$
|
20,192
|
|
|
$
|
14,934
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
||||
Short-term and long-term debt
|
4,408
|
|
|
—
|
|
||
Employee benefits liabilities
|
1,184
|
|
|
—
|
|
||
Loans from affiliates
|
600
|
|
|
1,484
|
|
||
Income taxes payable
|
16
|
|
|
—
|
|
||
Accrued liabilities
|
118
|
|
|
29
|
|
||
Total Liabilities
|
6,326
|
|
|
1,513
|
|
||
|
|
|
|
||||
EQUITY ATTRIBUTABLE TO HOLDINGS
|
|
|
|
||||
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 561,000,000 shares issued, 528,861,758 and 561,000,000 shares outstanding, respectively
|
5
|
|
|
5
|
|
||
Capital in excess of par value
|
1,908
|
|
|
1,299
|
|
||
Treasury stock, at cost, 32,138,242 shares
|
(640
|
)
|
|
—
|
|
||
Retained earnings
|
13,989
|
|
|
12,225
|
|
||
Accumulated other comprehensive income (loss)
|
(1,396
|
)
|
|
(108
|
)
|
||
Total equity attributable to Holdings
|
13,866
|
|
|
13,421
|
|
||
Total Liabilities and Equity Attributable to Holdings
|
$
|
20,192
|
|
|
$
|
14,934
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
REVENUES
|
|
|
|
|
|
||||||
Equity in income (losses) from continuing operations of consolidated subsidiaries
|
$
|
2,404
|
|
|
$
|
863
|
|
|
$
|
1,293
|
|
Net investment income (loss)
|
30
|
|
|
8
|
|
|
7
|
|
|||
Investment gains (losses), net
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||
Other income
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
2,425
|
|
|
871
|
|
|
1,300
|
|
|||
|
|
|
|
|
|
||||||
EXPENSES
|
|
|
|
|
|
||||||
Interest expense
|
214
|
|
|
31
|
|
|
27
|
|
|||
Other operating costs and expenses
|
123
|
|
|
22
|
|
|
26
|
|
|||
Total expenses
|
337
|
|
|
53
|
|
|
53
|
|
|||
Income (loss) from continuing operations, before income taxes
|
2,088
|
|
|
818
|
|
|
1,247
|
|
|||
Income tax (expense) benefit
|
(268
|
)
|
|
16
|
|
|
7
|
|
|||
Net income (loss) attributable to Holdings
|
1,820
|
|
|
834
|
|
|
1,254
|
|
|||
Other comprehensive income (loss)
|
(1,192
|
)
|
|
816
|
|
|
(276
|
)
|
|||
Total comprehensive income (loss) attributable to Holdings
|
$
|
628
|
|
|
$
|
1,647
|
|
|
$
|
1,010
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Net income (loss) attributable to Holdings
|
$
|
1,820
|
|
|
$
|
834
|
|
|
$
|
1,254
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Equity in net (earnings) loss of subsidiaries
|
(2,404
|
)
|
|
(863
|
)
|
|
(1,293
|
)
|
|||
Amortization and depreciation
|
—
|
|
|
—
|
|
|
—
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Current and deferred income taxes
|
111
|
|
|
(14
|
)
|
|
(6
|
)
|
|||
Dividends from subsidiaries
|
1,838
|
|
|
20
|
|
|
—
|
|
|||
Other, net
|
(264
|
)
|
|
24
|
|
|
27
|
|
|||
Net cash provided by (used in) operating activities
|
$
|
1,101
|
|
|
$
|
1
|
|
|
$
|
(18
|
)
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from the sale/maturity/prepayment of:
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale
|
18
|
|
|
—
|
|
|
—
|
|
|||
Short-term investments
|
1,038
|
|
|
|
|
|
|||||
Payment for the purchase/origination of:
|
|
|
|
|
|
||||||
Fixed maturities, available-for-sale
|
(355
|
)
|
|
—
|
|
|
—
|
|
|||
Short-term investments
|
(1,113
|
)
|
|
|
|
|
|||||
Other
|
(16
|
)
|
|
—
|
|
|
—
|
|
|||
Repayment of loans to affiliates
|
1,045
|
|
|
—
|
|
|
—
|
|
|||
Issuance of loans to affiliates
|
(572
|
)
|
|
(900
|
)
|
|
—
|
|
|||
Increase in cash and cash equivalents from merger of AXA Financial, Inc.
|
381
|
|
|
—
|
|
|
—
|
|
|||
Purchase of shares of consolidated subsidiaries
|
—
|
|
|
(55
|
)
|
|
—
|
|
|||
Other, net
|
(5
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
$
|
421
|
|
|
$
|
(955
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Issuance of long-term debt
|
4,057
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from loans from affiliates
|
800
|
|
|
731
|
|
|
—
|
|
|||
Repayments of loans from affiliates
|
(200
|
)
|
|
(56
|
)
|
|
—
|
|
|||
Shareholder dividends paid
|
(157
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of AllianceBernstein Units
|
(1,340
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of treasury shares
|
(648
|
)
|
|
—
|
|
|
—
|
|
|||
Capital contribution from parent company
|
8
|
|
|
318
|
|
|
—
|
|
|||
Capital contribution to subsidiaries
|
(3,679
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
(1,159
|
)
|
|
$
|
993
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Change in cash and cash equivalents
|
363
|
|
|
39
|
|
|
(18
|
)
|
|||
Cash and cash equivalents, beginning of year
|
44
|
|
|
5
|
|
|
23
|
|
|||
Cash and cash equivalents, end of year
|
$
|
407
|
|
|
$
|
44
|
|
|
$
|
5
|
|
|
|
|
|
|
|
||||||
Non-cash transactions:
|
|
|
|
|
|
||||||
Goodwill and intangible assets
|
$
|
1,079
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity investments
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other assets
|
$
|
774
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Settlement of long-term debt
|
$
|
(349
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Employee benefit plans
|
$
|
(1,168
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other liabilities
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of October 1, 2018
|
||||||
|
Assets
|
|
Liabilities
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
381
|
|
|
|
||
Goodwill and other intangibles assets, net
|
1,079
|
|
|
|
|||
Other equity investments
|
13
|
|
|
|
|||
Other assets
|
777
|
|
|
|
|||
Total Assets
|
$
|
2,250
|
|
|
|
||
|
|
|
|
||||
Employee benefit liabilities
|
|
|
$
|
1,168
|
|
||
Long-term debt
|
|
|
349
|
|
|||
Income taxes payable
|
|
|
2,106
|
|
|||
Other liabilities
|
|
|
20
|
|
|||
Total Liabilities
|
|
|
$
|
3,643
|
|
|
Individual Retirement
|
|
Group Retirement
|
|
Investment Management and Research
|
|
Protection Solutions
|
|
Corporate and Other
|
|
Total
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Deferred policy acquisition costs
|
$
|
3,229
|
|
|
$
|
657
|
|
|
$
|
—
|
|
|
$
|
2,706
|
|
|
$
|
153
|
|
|
$
|
6,745
|
|
Policyholders’ account balances
|
20,798
|
|
|
11,617
|
|
|
—
|
|
|
13,989
|
|
|
3,519
|
|
|
49,923
|
|
||||||
Future policy benefits and other policyholders' liabilities
|
16,076
|
|
|
6
|
|
|
—
|
|
|
4,556
|
|
|
10,360
|
|
|
30,998
|
|
||||||
Policy charges and premium revenue
|
2,124
|
|
|
271
|
|
|
—
|
|
|
2,103
|
|
|
420
|
|
|
4,918
|
|
||||||
Net investment income (loss) (1)
|
497
|
|
|
552
|
|
|
36
|
|
|
903
|
|
|
474
|
|
|
2,462
|
|
||||||
Policyholders’ benefits and interest credited
|
590
|
|
|
294
|
|
|
—
|
|
|
2,308
|
|
|
813
|
|
|
4,005
|
|
||||||
Amortization of deferred policy acquisition costs
|
183
|
|
|
(8
|
)
|
|
—
|
|
|
161
|
|
|
(3
|
)
|
|
333
|
|
||||||
All other operating expenses (2)
|
764
|
|
|
325
|
|
|
2,538
|
|
|
561
|
|
|
1,091
|
|
|
5,279
|
|
(1)
|
Net investment income (loss) is allocated to segments. Includes net derivative gains (losses).
|
(2)
|
Operating expenses are allocated to segments.
|
|
Individual Retirement
|
|
Group Retirement
|
|
Investment Management and Research
|
|
Protection Solutions
|
|
Corporate and Other
|
|
Total
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Deferred policy acquisition costs (1)
|
$
|
2,988
|
|
|
$
|
519
|
|
|
$
|
—
|
|
|
$
|
2,352
|
|
|
$
|
60
|
|
|
$
|
5,919
|
|
Policyholders’ account balances
|
19,414
|
|
|
11,318
|
|
|
—
|
|
|
13,908
|
|
|
2,531
|
|
|
47,171
|
|
||||||
Future policy benefits and other policyholders' liabilities
|
15,202
|
|
|
2
|
|
|
—
|
|
|
5,444
|
|
|
9,682
|
|
|
30,330
|
|
||||||
Policy charges and premium revenue
|
2,116
|
|
|
248
|
|
|
—
|
|
|
1,995
|
|
|
458
|
|
|
4,817
|
|
||||||
Net investment income (loss) (2)
|
1,292
|
|
|
523
|
|
|
118
|
|
|
850
|
|
|
513
|
|
|
3,296
|
|
||||||
Policyholders’ benefits and interest credited
|
2,728
|
|
|
282
|
|
|
—
|
|
|
1,432
|
|
|
919
|
|
|
5,361
|
|
||||||
Amortization of deferred policy acquisition costs
|
114
|
|
|
25
|
|
|
—
|
|
|
374
|
|
|
(10
|
)
|
|
503
|
|
||||||
All other operating expenses (3)
|
881
|
|
|
463
|
|
|
2,517
|
|
|
734
|
|
|
695
|
|
|
5,290
|
|
(1)
|
Amounts previously reported for Individual Retirement, Group Retirement and Protection Solutions were:
$2,877 million
,
$678 million
and
$2,304 million
, respectively.
|
(2)
|
Net investment income (loss) is allocated to segments. Includes net derivative gains (losses).
|
(3)
|
Operating expenses are allocated to segments.
|
|
Individual Retirement
|
|
Group Retirement
|
|
Investment Management and Research
|
|
Protection Solutions
|
|
Corporate and Other
|
|
Total
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Policy charges and premium revenue
|
$
|
1,980
|
|
|
$
|
217
|
|
|
$
|
—
|
|
|
$
|
2,156
|
|
|
$
|
459
|
|
|
$
|
4,812
|
|
Net investment income (loss) (1)
|
(1,060
|
)
|
|
431
|
|
|
133
|
|
|
763
|
|
|
550
|
|
|
817
|
|
||||||
Policyholders’ benefits and interest credited
|
1,195
|
|
|
268
|
|
|
—
|
|
|
1,940
|
|
|
906
|
|
|
4,309
|
|
||||||
Amortization of deferred policy acquisition costs
|
139
|
|
|
50
|
|
|
—
|
|
|
551
|
|
|
39
|
|
|
779
|
|
||||||
All other operating expenses (2)
|
818
|
|
|
296
|
|
|
2,306
|
|
|
600
|
|
|
628
|
|
|
4,648
|
|
(1)
|
Net investment income (loss) is allocated to segments. Includes net derivative gains (losses).
|
(2)
|
Operating expenses are allocated to segments.
|
|
Gross
Amount
|
|
Ceded to
Other
Companies
|
|
Assumed
from
Other
Companies
|
|
Net
Amount
|
|
Percentage
of Amount
Assumed
to Net
|
|||||||||
|
(in millions)
|
|||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in-force
|
$
|
488,431
|
|
|
$
|
69,255
|
|
|
$
|
31,249
|
|
|
$
|
450,425
|
|
|
6.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance and annuities
|
$
|
963
|
|
|
$
|
100
|
|
|
$
|
204
|
|
|
$
|
1,067
|
|
|
19.1
|
%
|
Accident and health
|
49
|
|
|
32
|
|
|
10
|
|
|
27
|
|
|
37.0
|
%
|
||||
Total Premiums
|
$
|
1,012
|
|
|
$
|
132
|
|
|
$
|
214
|
|
|
$
|
1,094
|
|
|
19.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in-force
|
$
|
483,010
|
|
|
$
|
73,049
|
|
|
$
|
31,886
|
|
|
$
|
441,847
|
|
|
7.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance and annuities
|
$
|
984
|
|
|
$
|
103
|
|
|
$
|
216
|
|
|
$
|
1,097
|
|
|
19.7
|
%
|
Accident and health
|
54
|
|
|
36
|
|
|
9
|
|
|
27
|
|
|
33.3
|
%
|
||||
Total Premiums
|
$
|
1,038
|
|
|
$
|
139
|
|
|
$
|
225
|
|
|
$
|
1,124
|
|
|
20.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in-force
|
$
|
485,888
|
|
|
$
|
77,306
|
|
|
$
|
30,688
|
|
|
$
|
439,270
|
|
|
7.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance and annuities
|
$
|
937
|
|
|
$
|
106
|
|
|
$
|
222
|
|
|
$
|
1,053
|
|
|
21.1
|
%
|
Accident and health
|
61
|
|
|
40
|
|
|
9
|
|
|
30
|
|
|
30.0
|
%
|
||||
Total Premiums
|
$
|
998
|
|
|
$
|
146
|
|
|
$
|
231
|
|
|
$
|
1,083
|
|
|
21.3
|
%
|
(1)
|
Includes amounts related to the discontinued group life and health business.
|
(i)
|
maintain effective controls to timely validate that actuarial models are properly configured to capture all relevant product features and provide reasonable assurance timely reviews of assumptions and data have occurred, and, as a result, errors were identified in future policyholders’ benefits and deferred policy acquisition costs balances; and
|
(ii)
|
maintain sufficient experienced personnel to prepare the Company’s consolidated financial statements and to verify consolidating and adjusting journal entries are completely and accurately recorded to the appropriate accounts or segments and, as a result, errors were identified in the consolidated financial statements, including in the presentation and disclosure between sections of the statements of cash flows.
|
(iv)
|
the restatements of the interim financial statements for the nine and six months ended September 30, 2017 and June 30, 2017, respectively, the restatement of the annual financial statements for the year ended December 31, 2016, the revision of the interim financial statements for the nine and six months ended September 30, 2016 and June 30, 2016, respectively, and the revision of the annual financial statements for the year ended December 31, 2015; and
|
(v)
|
the restatement of the interim financial statements for the six months ended June 30, 2017 and the revision of the annual financial statements for the years ended December 31, 2016, 2015 and 2014, respectively, and the interim financial statements for the six months ended June 30, 2016.
|
•
|
We have designed and implemented an enhanced model validation control framework, including a rotational schedule to periodically re-validate all U.S. GAAP models.
|
•
|
We have designed and implemented enhanced controls and governance processes for new model implementations.
|
•
|
We have designed and implemented enhanced controls for model changes.
|
•
|
We have designed and implemented enhanced controls over the annual assumption setting process, including a comprehensive master assumption inventory and risk framework.
|
•
|
We have completed a current state assessment of significant data flows feeding actuarial models and assumptions. We have initiated a validation review and a control design assessment of these data flows.
|
•
|
We are in the process of completing a comprehensive plan for enhancing the process and controls over the reliability of data feeding significant actuarial models.
|
•
|
With respect to insufficient personnel, we have strengthened our 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. We have conducted both specific job-related training and general training on SOX controls and U.S. GAAP related technical topics to new and existing staff.
|
•
|
To improve controls over journal entries, a less controlled secondary process that was used for consolidating certain entities, reflecting adjustments to prior periods, and generating the business segment disclosures has been eliminated. 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.
|
•
|
We have designed and implemented new management review controls within the period end financial reporting process that will operate at a level of precision sufficient to detect errors that could result in a material misstatement.
|
•
|
Implementation of an enhanced model validation control framework to periodically re-validate all U.S. GAAP models.
|
•
|
Design and implementation of new management review controls within the period-end financial reporting process that will operate at a level of precision sufficient to detect errors that could result in a material misstatement.
|
Name
|
Age
|
Position
|
Thomas Buberl
|
45
|
Chairman of the Board
|
Mark Pearson
|
60
|
Director; President and Chief Executive Officer
|
Gérald Harlin
|
63
|
Director
|
Daniel G. Kaye
|
64
|
Director
|
Ramon de Oliveira
|
64
|
Director
|
Bertrand Poupart-Lafarge
|
51
|
Director
|
Karima Silvent
|
45
|
Director
|
George Stansfield
|
58
|
Director
|
Charles G. T. Stonehill
|
61
|
Director
|
Seth Bernstein
|
57
|
President and Chief Executive Officer of AllianceBernstein Corporation
|
Dave S. Hattem
|
62
|
Senior Executive Vice President, General Counsel and Secretary
|
Jeffrey J. Hurd
|
52
|
Senior Executive Vice President and Chief Operating Officer
|
Nick Lane
|
45
|
Senior Executive Vice President and Head of U.S. Life, Retirement and Wealth Management
|
Anders Malmström
|
51
|
Senior Executive Vice President and Chief Financial Officer
|
•
|
the requirement that a majority of the Board consist of independent directors;
|
•
|
the requirement that we have a compensation committee that is composed entirely of independent directors
|
•
|
the requirement that our nominating and corporate governance committee be composed entirely of independent directors; and
|
•
|
the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees.
|
•
|
Mark Pearson, President and Chief Executive Officer
|
•
|
Anders Malmström, Senior Executive Vice President and Chief Financial Officer
|
•
|
Jeffrey Hurd, Senior Executive Vice President and Chief Operating Officer
|
•
|
Dave Hattem, Senior Executive Vice President, General Counsel and Secretary
|
•
|
Seth Bernstein, Senior Executive Vice President and Head of Investment Management and Research
|
•
|
providing total compensation opportunities competitive with the levels of total compensation available at the companies with which we most directly compete for talent;
|
•
|
making performance-based variable compensation the principal component of executive pay to ensure that the financial success of executives is based on corporate financial and operational success;
|
•
|
setting performance objectives and targets for variable compensation arrangements that provide individual executives with the opportunity to earn above-target compensation by achieving above-target results;
|
•
|
establishing equity-based arrangements that align executives’ financial interests with those of our shareholders by ensuring the executives have a material financial stake in Holdings’ common stock and
|
•
|
structuring compensation packages and outcomes to foster internal equity.
|
Compensation Peer Group
|
The Allstate Corporation
Ameriprise Financial, Inc.
Brighthouse Financial, Inc.
The Hartford Financial Services Group, Inc.
Lincoln National Corporation
Manulife Financial Corporation
Principal Financial Group, Inc.
Prudential Financial, Inc.
Sun Life Financial, Inc.
Unum Group
Voya Financial, Inc.
|
•
|
short-term incentive plan design,
|
•
|
long-term incentive plan design,
|
•
|
stock ownership guidelines,
|
•
|
perquisites,
|
•
|
claw-back policies,
|
•
|
severance practices and
|
•
|
retirement plan design
.
|
Target Pay Philosophy
|
To provide competitive compensation opportunities by setting total target direct compensation for executive positions at the median for total compensation with respect to the pay for comparable positions at our peer companies, taking into account certain individual factors such as the specific characteristics and responsibilities of a particular executive’s position as compared to similarly situated executives at our peer companies.
|
•
|
a broader group of diverse financial services companies with assets of $50 billion or more - this market data was used when reviewing compensation for positions for which the likely talent market is broader than the Compensation Peer Group and
|
•
|
a broad group of companies with revenues ranging from $6 billion to $20 billion - this market data was used when reviewing compensation for positions that could be sourced across industries.
|
•
|
reviewing and approving corporate goals and objectives relevant to the compensation of the executives,
|
•
|
evaluating the executives’ performance in light of those goals and objectives and determining their compensation level based on this evaluation and
|
•
|
reviewing and approving all compensation arrangements with executives.
|
Person/Entity
|
Role
|
Chief Executive Officer
|
As Chief Executive Officer of Holdings, Mr. Pearson assists the Compensation Committee in its review of executive compensation other than his own. Mr. Pearson provides the Compensation Committee with his assessment of executive performance relative to the corporate and individual goals and other expectations set for the executives. Based on these assessments, he then provides his recommendations for the executives’ total compensation and the appropriate goals for each in the upcoming year. However, the Compensation Committee is not bound by his recommendations.
|
Human Resources
|
Human Resources performs many of the organizational and administrative tasks that underlie the Compensation Committee’s review and determination process and makes presentations on various topics. As Chief Operating Officer, Mr. Hurd oversees this work.
|
Pay Governance
|
In addition to its work prior to the IPO as described above, Pay Governance regularly attends Compensation Committee meetings and assists and advises the committee in connection with its ongoing review of executive compensation policies and practices. The Compensation Committee considered and confirmed Pay Governance’s independence pursuant to the listing standards of the New York Stock Exchange in November 2018. Pay Governance does not perform any work for management.
|
Component
|
Description
|
Other Compensation and Benefits
|
|
Retirement, Health and other Plans and Programs
|
What is it?
A comprehensive program offering retirement savings, financial protection and other compensation and benefits. What is the purpose of it? Our compensation and benefits program is intended to attract and retain high caliber executives and other employees by offering programs that assist with their long-term financial support and security. |
Termination Benefits
|
|
Severance Benefits
|
What is it?
Temporary income payments and other benefits provided for certain types of terminations of employment.
What is the purpose of it?
Severance benefits are intended to treat employees fairly at termination and provide competitive total compensation packages.
|
Change-in-Control Benefits
|
What is it?
Benefits in the event of a termination related to a change in control.
What is the purpose of it?
Change-in-control benefits are intended to retain executives and incent efforts to maximize shareholder value during a change in control.
|
EQH Program Participant
|
Annual Rate of Base Salary Prior to Adjustment
|
Adjustment
|
2018 Annual Rate of Base Salary
|
||||||
Mr. Pearson
|
$
|
1,252,000
|
|
N/A
|
|
$
|
1,252,000
|
|
|
Mr. Malmström
|
$
|
660,000
|
|
$
|
50,000
|
|
$
|
710,000
|
|
Mr. Hurd
|
$
|
900,000
|
|
N/A
|
|
$
|
900,000
|
|
|
Mr. Hattem
|
$
|
609,000
|
|
$
|
91,000
|
|
$
|
700,000
|
|
2018 STIC Target
|
X
|
Final Funding Percentage
|
X
|
Individual Assessment Percentage
|
=
|
2018 STIC Program Award
|
EQH Program Participant
|
STIC Target Prior to Adjustment
|
Adjustment
|
Current 2018 STIC Target
|
||||||
Mr. Pearson
|
$
|
2,128,400
|
|
N/A
|
|
$
|
2,128,400
|
|
|
Mr. Malmström
|
$
|
800,000
|
|
$
|
200,000
|
|
$
|
1,000,000
|
|
Mr. Hurd
|
$
|
1,500,000
|
|
N/A
|
|
$
|
1,500,000
|
|
|
Mr. Hattem
|
$
|
650,000
|
|
$
|
100,000
|
|
$
|
750,000
|
|
•
|
Non-GAAP Operating Earnings - 50%
|
•
|
Premiums and Flows - 25%
|
•
|
Strategic Initiatives - 25%
|
Performance Objective
|
Floor
|
Target
|
Cap
|
Weight
|
Actual Results
|
Contribution to Initial Funding Percentage
|
|||||||||
Non-GAAP Operating Earnings
|
$
|
1,597
|
|
$
|
1,996
|
|
$
|
2,395
|
|
50
|
%
|
$
|
2,166
|
|
71%
|
|
|||||||||||||||
Premiums and Flows
|
|
|
|
|
|
|
|||||||||
IM&R
|
$
|
2,550
|
|
$
|
3,000
|
|
$
|
3,450
|
|
5
|
%
|
$
|
(8,168
|
)
|
—%
|
Individual Retirement
|
$
|
2,566
|
|
$
|
3,019
|
|
$
|
3,472
|
|
8.75
|
%
|
$
|
2,913
|
|
7%
|
Group Retirement
|
$
|
188
|
|
$
|
222
|
|
$
|
255
|
|
5
|
%
|
$
|
96
|
|
—%
|
Protection Solutions
|
$
|
213
|
|
$
|
251
|
|
$
|
289
|
|
5
|
%
|
$
|
246
|
|
4%
|
Advisors B/D
|
$
|
1,893
|
|
$
|
2,227
|
|
$
|
2,561
|
|
1.25
|
%
|
$
|
3,023
|
|
3%
|
|
|||||||||||||||
Strategic Initiatives
|
N/A
|
2018 goals met
|
N/A
|
25%
|
2018 goals met/ exceeded
|
35%
|
•
|
the General Account optimization initiative finished the year ahead of plan with investment income above its 2018 goal in spite of a flat yield curve;
|
•
|
the structuring and execution of the GMxB Unwind resulted in a more positive impact to the total company risk-based capital ratio than expected;
|
•
|
the execution of Holdings’ bond issuance enabled us to lock in lower cost over a longer period than peers; and
|
•
|
the actual payout ratio for 2018 exceeded guidance.
|
Mr. Pearson
|
||
Accomplishments
|
Ensured the Company met or exceeded its key core metrics, including:
|
|
|
•
|
delivered Non-GAAP Operating Earnings of $2,166 million with a Non-GAAP Operating Return on Equity of 14.9%, both ahead of target;
|
|
•
|
returned $791 million of capital to shareholders, including $649 million through our share repurchase program and $142 million in the form of dividends; and
|
|
•
|
delivered EPS of $3.89
|
|
Drove improved results for each business segment, including:
|
|
|
•
|
Individual Retirement operating earnings increased 24.2% to $1.6 billion;
|
|
•
|
Group Retirement operating earnings increased 37.5% to $389 million and net flows of $96 million marked the sixth straight year of positive flows;
|
|
•
|
Investment Management and Research adjusted operating margin increased by 140 basis points from 29%; and
|
|
•
|
Protection Solutions saw continued sales momentum as annualized premiums increased 8% year-over-year.
|
|
Provided overall leadership and direction for successful IPO and debut bond offering
|
|
|
Established public company leadership and corporate governance framework including recruitment of key hires and promotion of internal talent
|
|
|
Ensured on-track delivery of our strategic priorities including our general account optimization and productivity and growth initiatives
|
|
|
Established strong relationships with investor community
|
|
|
Continued to ensure a culture of inclusion, professional excellence and continuous learning, resulting in external recognitions for consecutive years from the Great Place to Work Institute and the Disability Equality Index
|
|
2018 STIC Program Award
|
$2,911,651
|
Mr. Malmström
|
|
Accomplishments
|
Provided leadership and direction for Finance activities related to the IPO, including preparation of historical financial statements, roadshow presentations, negotiations with underwriters and other parties
Effectively oversaw Finance activities related to the recapitalization of Holdings and GMxB Unwind, including execution of bond issuance and new credit facilities
Restructured the Finance organization, including streamlining the reporting structure, making key hires, creating new Investor Relations team and supporting the company’s efforts to reduce footprint in metro New York
Drove risk management strategy, including development and implementation of new hedging strategy, maintaining hedge efficiency ratio at high levels and establishing new economic model and risk framework to operationalize and produce results across segments
Established strong relationships with investor community, playing a key role in communications with investors, analysts and ratings agencies
|
2018 STIC Program Award
|
$1,299,600
|
Mr. Hurd
|
|
Accomplishments
|
Provided leadership and direction for the IPO, including the building of stand-alone public company capabilities throughout the organization
Implemented program to evaluate, enhance and continuously improve the end-to-end financial reporting process across the enterprise, focusing on people, process and technology Played a key role in recruitment and hiring of leaders in critical roles to augment and enhance the organization’s leadership capability Led planning and execution of activities around the separation from AXA Group, including management of the transition services agreement, development of critical IT capabilities and evaluation and amendment of critical third-party contracts Provided direction for the governance and oversight of the full portfolio of strategic company investments and projects, leading to $42 million in efficiency benefits on a target of $38 million Drove a refreshed strategy and approach to diversity and inclusion to ensure we reflect a trusting, inclusive and empowering culture with concrete actionable initiatives tailored to our organization |
2018 STIC Program Award
|
$2,080,000
|
Mr. Hattem
|
|
Accomplishments
|
Provided leadership and direction for Law Department activities related to the IPO, including drafting of registration statement and amendments, obtaining required regulatory approvals and implementing corporate restructuring
Effectively oversaw Law Department activities related to the recapitalization of Holdings, including negotiation of bond issuance and new credit facilities and approval of the New York State Department of Financial Services regarding the GMxB Unwind Played key role in establishment of public company corporate governance framework for Holdings and negotiation of shareholder and other agreements with AXA Supported company’s efforts to reallocate its real estate footprint by overseeing related legal work and moving legal positions to Charlotte while maintaining high-quality of legal advice Supported company’s diversity and inclusion efforts by actively participating in Tandem Sponsorship Program designed to increase the exposure and visibility of female employees to executive management and sponsoring Law Department initiatives designed to maintain the department’s diversity of experience, background, expertise and perspective |
2018 STIC Program Award
|
$1,040,000
|
•
|
annual equity-based awards that were granted to the EQH Program Participants by the Compensation Committee (and approved by a subcommittee of the Compensation Committee composed entirely of independent directors) after the IPO;
|
•
|
certain one-time equity-based awards (“Transaction Incentive Awards”) granted to the EQH Program Participants by the Board prior to the IPO; and
|
•
|
certain payouts Messrs. Pearson, Malmström and Hattem received in 2018 under a prior AXA equity-based award plan.
|
Vehicle
|
Description
|
Type
|
Payout Requirements
|
Allocation Percentage
|
EQH RSUs
|
Restricted stock units that will be settled in shares of Holdings’ common stock.
|
Full Value
|
Service
|
25%
|
EQH Stock Options
|
Stock options entitling the executives to purchase shares of Holdings common stock.
|
Appreciation Only
|
Service
|
25%
|
EQH Performance Shares
|
Performance shares that will be settled in shares of Holdings’ common stock.
|
Full Value
|
Service and Satisfaction of Performance Criteria
|
50%
|
•
|
ROE Performance Shares
EQH Performance Shares that may be earned based on the Company’s performance against certain targets for its Non-GAAP Operating Return on Equity (“Non-GAAP Operating ROE”) and
|
•
|
TSR Performance Shares
- EQH Performance Shares that may be earned based on Holdings’ total shareholder return relative to its performance peer group (“Relative TSR”).
|
If Non-GAAP Operating ROE for the applicable year equals….
|
The ROE Performance Factor for the applicable year will equal….
|
Maximum Amount (or greater)
|
200%
|
Target Amount
|
100%
|
Threshold Amount
|
25%
|
Below Threshold
|
0%
|
If Relative TSR for the TSR Performance Period is …
|
The TSR Performance Factor will equal…
|
87.5
th
percentile or greater (maximum)
|
200%
|
50
th
percentile (target)
|
100%
|
30
th
percentile (threshold)
|
25%
|
Below 30th percentile
|
0%
|
EQH Program Participant
|
Equity Target Prior to Adjustment
|
Adjustment
|
2018 Equity Target
|
Mr. Pearson
|
$2,350,000
|
$1,500,000
|
$3,850,000
|
Mr. Malmström
|
$800,000
|
$700,000
|
$1,500,000
|
Mr. Hurd
|
$1,800,000
|
N/A
|
$1,800,000
|
Mr. Hattem
|
$750,000
|
$250,000
|
$1,000,000
|
•
|
To determine the amount of EQH RSUs granted to each EQH Program Participant, 25% of his total award value was divided by the fair market value of Holdings’ common stock on the grant date.
|
•
|
To determine the amount of EQH Stock Options granted to each EQH Program Participant, 25% of his total award value was divided by the value of an EQH Stock Option on the grant date which was determined using a Black-Scholes pricing methodology based on assumptions which may differ from the assumptions used in determining the option’s grant date fair value based on FASB ASC Topic 718.
|
•
|
To determine the amount of ROE Performance Shares granted to each EQH Program Participant, 25% of his total award value was divided by the fair market value of Holdings’ common stock on the grant date.
|
•
|
To determine the amount of TSR Performance Shares granted to each EQH Program Participant, 25% of his total award value was divided by a price determined using a Monte Carlo valuation.
|
•
|
incentivize their performance in connection with the preparation and successful execution of the IPO;
|
•
|
encourage their retention during and after the IPO;
|
•
|
establish a meaningful stake in Holdings’ common stock for each executive; and
|
•
|
further align their interests with those of our shareholders.
|
EQH Program Participant
|
U.S. Dollar Award Value
|
||
Mr. Pearson
|
$
|
3,700,000
|
|
Mr. Malmström
|
$
|
1,480,000
|
|
Mr. Hurd
|
$
|
740,000
|
|
Mr. Hattem
|
$
|
1,480,000
|
|
Type Of Units
|
Vesting Requirements
|
Service Units
|
50% of the Service Units vested on November 14, 2018;
25% of the Service Units will vest on May 10, 2019; and
25% of the Service Units will vest on May 10, 2020.
|
Performance Units
|
Condition #1
- if, prior to May 10, 2020, the average closing price of a share of Holdings’ common stock for thirty consecutive days is at least equal to $26, all Performance Units will immediately vest;
Condition #2
- if Condition #1 is not met but, prior to May 10, 2023, the average closing price of a share of Holdings’ common stock for thirty consecutive days is at least equal to $30, all Performance Units will immediately vest; and
Condition #3
- if neither Condition #1 or Condition #2 is met, fifty percent of the Performance Units will vest on May 10, 2023. The remaining 50% of the Performance Units will be forfeited.
|
•
|
attract, motivate and retain highly-qualified executive talent;
|
•
|
reward prior year performance;
|
•
|
incentivize future performance;
|
•
|
recognize and support outstanding individual performance and behaviors that demonstrate and foster AB’s culture of “Relentless Ingenuity”, which includes the core competencies of relentlessness, ingeniousness, collaboration and accountability; and
|
•
|
align its executives’ long-term interests with those of its Unitholders and clients.
|
•
|
Eaton Vance Corporation
|
•
|
Invesco Ltd.
|
•
|
MFS Investment Management
|
•
|
Oppenheimer Funds Distributor, Inc.
|
•
|
T. Rowe Price Group, Inc.
|
•
|
Franklin Resources, Inc.
|
•
|
JPMorgan Asset Management Inc.
|
•
|
Morgan Stanley Investment Management Inc.
|
•
|
PIMCO LLC
|
•
|
TIAA Group / Nuveen Investments
|
•
|
Goldman Sachs Asset Management
|
•
|
Legg Mason, Inc.
|
•
|
Neuberger Berman LLC
|
•
|
Prudential Investments
|
•
|
The Vanguard Group, Inc.
|
•
|
Adjusted employee compensation and benefits expense is AB’s total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals, and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments.
|
•
|
Adjusted net revenues is a financial measure that is not computed in accordance with U.S. GAAP and makes certain adjustments to net revenues. Specifically, adjusted net revenues:
|
◦
|
excludes investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments;
|
◦
|
offsets distribution-related payments to third parties as well as amortization of deferred sales commissions against distribution revenues;
|
◦
|
excludes additional pass-through expenses incurred (primarily through AB’s transfer agent) that are reimbursed and recorded as fees in revenues; and
|
◦
|
eliminates the revenues of consolidated AB-sponsored investment funds but includes AB’s fees from such funds and AB’s investment gains and losses on its investments in such funds.
|
•
|
deliver differentiated return streams to clients;
|
•
|
commercialize and scale its suite of services; and
|
•
|
continue its rigorous focus on expense management.
|
•
|
permitted AB to recruit and retain a highly-qualified Chief Executive Officer;
|
•
|
aligned Mr. Bernstein’s long-term interests with those of AB’s Unitholders, our shareholders and clients;
|
•
|
were consistent with AXA’s and the AB Board’s expectations with respect to the manner in which AB and AB Holding would be operated during Mr. Bernstein’s tenure; and
|
•
|
were consistent with the AB Board’s expectations that Mr. Bernstein would not be terminated without cause and that no steps would be taken that would provide him with the ability to terminate the agreement for good reason.
|
•
|
if we are required to prepare an accounting restatement of our financial results due to material noncompliance with any financial reporting requirement under the securities laws caused by the fraud, misconduct or gross negligence of a current or former executive officer, we will use reasonable efforts to recover any incentive compensation paid to the executive officer that would not have been paid if the financial results had been properly reported; and
|
•
|
if a current or former executive officer commits fraudulent or other wrongful conduct that causes us business, financial or reputational harm, we may seek recovery of performance-based compensation with respect to the period of misconduct.
|
Executive
|
Requirement
|
Chief Executive Officer
|
6 x base salary
|
Other Management Committee Members
|
3 x base salary
|
•
|
Holdings common stock;
|
•
|
AB Holding Units (collectively with Holdings common stock, “Company Stock”); and
|
•
|
unvested restricted stock or restricted stock units linked to Company Stock that are subject only to service requirements.
|
•
|
be in writing and in a form acceptable to the Company,
|
•
|
acknowledged in writing by the General Counsel prior to becoming effective and
|
•
|
not be modified at any time when the insider is in possession of material non-public information.
|
Ramon de Oliveira (Chair)
|
Daniel Kaye
|
George Stansfield
|
Charles Stonehill
|
2018 SUMMARY COMPENSATION TABLE
|
|||||||||||||||||||||||||
Name and Principal Position
|
Fiscal Year
|
Salary
(1)
|
Bonus
(2)
|
Stock Awards
(3)
|
Option Awards
(4)
|
Non-Equity Incentive Compensation
(5)
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings (6)
|
All Other Compensation (7)
|
Total
|
||||||||||||||||
Mark Pearson
President and Chief Executive Officer
|
2018
|
$
|
1,250,114
|
|
$
|
—
|
|
$
|
6,587,516
|
|
$
|
962,503
|
|
$
|
2,911,651
|
|
$
|
—
|
|
$
|
426,779
|
|
$
|
12,138,563
|
|
2017
|
$
|
1,250,114
|
|
$
|
—
|
|
$
|
2,067,378
|
|
$
|
341,280
|
|
$
|
2,526,000
|
|
$
|
1,017,919
|
|
$
|
370,238
|
|
$
|
7,572,929
|
|
|
2016
|
$
|
1,250,744
|
|
$
|
—
|
|
$
|
2,010,449
|
|
$
|
382,419
|
|
$
|
2,164,000
|
|
$
|
393,441
|
|
$
|
389,201
|
|
$
|
6,590,254
|
|
|
Anders Malmström
Senior Executive Vice President and Chief Financial Officer
|
2018
|
$
|
688,915
|
|
$
|
—
|
|
$
|
2,605,048
|
|
$
|
375,000
|
|
$
|
1,299,600
|
|
$
|
114,890
|
|
$
|
186,171
|
|
$
|
5,269,624
|
|
2017
|
$
|
658,228
|
|
$
|
—
|
|
$
|
526,564
|
|
$
|
106,722
|
|
$
|
1,047,248
|
|
$
|
180,070
|
|
$
|
330,538
|
|
$
|
2,849,370
|
|
|
2016
|
$
|
658,228
|
|
$
|
—
|
|
$
|
496,993
|
|
$
|
116,089
|
|
$
|
850,000
|
|
$
|
280,596
|
|
$
|
172,895
|
|
$
|
2,574,801
|
|
|
Jeffrey Hurd
Senior Executive Vice President & Chief Operating Officer
|
2018
|
$
|
864,480
|
|
$
|
300,000
|
|
$
|
2,090,031
|
|
$
|
450,001
|
|
$
|
2,080,000
|
|
$
|
—
|
|
$
|
91,439
|
|
$
|
5,875,951
|
|
Dave Hattem
Senior Executive Vice President, General Counsel and Secretary
|
2018
|
$
|
665,182
|
|
$
|
—
|
|
$
|
2,230,032
|
|
$
|
250,000
|
|
$
|
1,040,000
|
|
$
|
—
|
|
$
|
160,812
|
|
$
|
4,346,026
|
|
2017
|
$
|
609,333
|
|
$
|
—
|
|
$
|
646,471
|
|
$
|
106,722
|
|
$
|
788,119
|
|
$
|
578,537
|
|
$
|
155,008
|
|
$
|
2,884,190
|
|
|
2016
|
$
|
599,893
|
|
$
|
—
|
|
$
|
648,443
|
|
$
|
123,348
|
|
$
|
750,000
|
|
$
|
238,250
|
|
$
|
134,224
|
|
$
|
2,494,158
|
|
|
Seth Bernstein
Senior Executive Vice President and Head of Investment Management and Research
|
2018
|
$
|
500,000
|
|
$
|
3,500,000
|
|
$
|
4,740,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
344,847
|
|
$
|
9,084,847
|
|
2017
|
$
|
334,615
|
|
$
|
3,000,000
|
|
$
|
3,500,003
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
148,274
|
|
$
|
6,982,892
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For the EQH Program Participants, the amounts in this column reflect actual salary paid in each year. Mr. Bernstein’s annual base salary
is $500,000.
|
(2)
|
No bonuses were paid to the EQH Program Participants in 2018, 2017 or 2016 other than Mr. Hurd’s sign-on bonus of $300,000 in 2018. For Mr. Bernstein, this column includes his annual cash incentive awards paid for performance in 2018 and 2017 respectively.
|
(3)
|
For the EQH Program Participants, the amounts reported in this column for 2018 represent the aggregate grant date fair value of EQH RSUs, EQH Performance Shares and Transaction Incentive Awards granted to them in 2018 in accordance with FASB ASC Topic 718, and the assumptions made in calculating them can be found in note 14 of the notes to Holdings’ consolidated financial statements for the year ended December 31, 2018. The EQH Performance Shares were valued at target which represents the probable outcome at grant date. A maximum payout for the EQH Performance Shares, valued at the grant date fair value, would result in values of:
|
AEL Named Executive Officer
|
Maximum Payout
|
||
Mr. Pearson
|
$
|
3,850,021
|
|
Mr. Malmström
|
$
|
1,500,054
|
|
Mr. Hurd
|
$
|
1,800,039
|
|
Mr. Hattem
|
$
|
1,000,036
|
|
(4)
|
The amounts reported in this column for 2018 represent the aggregate grant date fair value of EQH Stock Options granted in 2018
|
(5)
|
The amounts reported in this column represent the annual cash incentive awards paid for performance in 2018, 2017 and 2016, respectively.
|
(6)
|
The amounts reported represent the increase in the actuarial present value of accumulated pension benefits for the Named Executive
|
(7)
|
The following table provides additional details for the 2018 amounts in the All Other Compensation column.
|
Name
|
Auto
(a)
|
Excess Liability Insurance
(b)
|
Financial Advice
(c)
|
Profit Sharing/401k Plan Contributions
(d)
|
Excess 401(k) Contributions
(e)
|
Other Perquisites/ Benefits
(f)
|
Total
|
||||||||||||||
Mark Pearson
|
$
|
28,992
|
|
$
|
8,201
|
|
$
|
24,891
|
|
$
|
14,665
|
|
$
|
349,964
|
|
$
|
66
|
|
$
|
426,779
|
|
Anders Malmström
|
$
|
—
|
|
$
|
—
|
|
$
|
24,891
|
|
$
|
14,665
|
|
$
|
146,116
|
|
$
|
499
|
|
$
|
186,171
|
|
Jeffrey Hurd
|
$
|
—
|
|
$
|
—
|
|
$
|
17,535
|
|
$
|
14,665
|
|
$
|
58,806
|
|
$
|
433
|
|
$
|
91,439
|
|
Dave Hattem
|
$
|
—
|
|
$
|
—
|
|
$
|
15,000
|
|
$
|
14,665
|
|
$
|
128,329
|
|
$
|
2,818
|
|
$
|
160,812
|
|
Seth Bernstein
|
$
|
320,685
|
|
$
|
—
|
|
$
|
9,340
|
|
$
|
12,500
|
|
$
|
—
|
|
$
|
2,322
|
|
$
|
344,847
|
|
(a)
|
Pursuant to his employment agreement, Mr. Pearson is entitled to the business and personal use of a dedicated car and driver. The personal use of this vehicle was valued based on a formula considering the annual lease value of the vehicle, the compensation of the driver and the cost of fuel. For Mr. Bernstein, the amount listed includes auto lease costs ($16,689), driver compensation and other car-related expenses ($303,996).
|
(b)
|
AXA Equitable Life pays the premiums for excess liability insurance coverage for Mr. Pearson pursuant to his employment agreement. The amount in this column reflects the actual amount of premiums paid.
|
(c)
|
AXA Equitable Life paid for financial planning services for each of the EQH Program Participants in 2018. These payments have been discontinued for 2019 and future years for EQH Program Participants other than Mr. Pearson. This column also includes payments for expatriate tax services for Mr. Pearson and Mr. Malmström.
|
(d)
|
This column includes the amount of company contributions received by each EQH Program Participant under the 401(k) Plan and by Mr. Bernstein under the Profit Sharing Plan.
|
(e)
|
This column includes the amount of excess 401(k) contributions received by each EQH Program Participant under the Post-2004 Plan.
|
(f)
|
This column includes amounts related to guests accompanying the EQH Program Participants to company events. It also includes life insurance premiums for Mr. Bernstein and a $66 health premium refund for both Mr. Pearson and Mr. Malmström.
|
2018 GRANTS OF PLAN-BASED AWARDS
|
|||||||||||||||||||||
Name
|
Grant Date
|
Approval Date (1)
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2)
|
Estimated Future Payouts Under Equity Incentive Plan Awards (3)
|
All Other Stock Awards: Number of Shares of Stock or Units (#) (3)
|
All Other Option Awards: Number of Securities Underlying Options (#) (3)
|
Exercise or Base Price of Option Awards ($/Sh)
|
Grant Date Fair Value of Stock and Option Awards (4)
|
|||||||||||||
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
||||||||||||||||
($)
|
($)
|
($)
|
(#)
|
(#)
|
(#)
|
||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
Mark Pearson
|
|
|
$
|
—
|
|
$
|
2,128,400
|
|
$4,256,800
|
|
|
|
|
|
|
|
|||||
06/11/2018
|
05/16/2018
|
|
|
|
|
|
|
|
208,786
|
$
|
21.34
|
|
$
|
962,503
|
|
||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
|
|
44,396
|
|
|
$
|
962,505
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
41,541
|
83,082
|
|
|
|
$
|
962,505
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
44,396
|
88,792
|
|
|
|
$
|
962,505
|
|
||||||||
05/09/2018
|
04/25/2018
|
|
|
|
46,250
|
92,500
|
92,500
|
92,500
|
|
|
$
|
3,700,000
|
|
||||||||
Anders Malmström
|
|
|
$
|
—
|
|
$
|
1,000,000
|
|
$2,000,000
|
|
|
|
|
|
|
|
|||||
06/11/2018
|
05/16/2018
|
|
|
|
|
|
|
|
81,345
|
$
|
21.34
|
|
$
|
375,000
|
|
||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
|
|
17,298
|
|
|
$
|
375,021
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
16,185
|
32,370
|
|
|
|
$
|
375,006
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
17,298
|
34,596
|
|
|
|
$
|
375,021
|
|
||||||||
05/09/2018
|
04/25/2018
|
|
|
|
18,500
|
37,000
|
37,000
|
37,000
|
|
|
$
|
1,480,000
|
|
||||||||
Jeff Hurd
|
|
|
$
|
—
|
|
$
|
1,500,000
|
|
$3,000,000
|
|
|
|
|
|
|
|
|||||
06/11/2018
|
05/16/2018
|
|
|
|
|
|
|
|
97,614
|
$
|
21.34
|
|
$
|
450,001
|
|
||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
|
|
20,757
|
|
|
$
|
450,012
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
19,422
|
23,306
|
|
|
|
$
|
450,008
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
20,757
|
24,908
|
|
|
|
$
|
450,012
|
|
||||||||
05/09/2018
|
04/25/2018
|
|
|
|
9,250
|
18,500
|
18,500
|
18,500
|
|
|
$
|
740,000
|
|
||||||||
Dave Hattem
|
|
|
$
|
—
|
|
$
|
750,000
|
|
$1,500,000
|
|
|
|
|
|
|
|
|||||
06/11/2018
|
05/16/2018
|
|
|
|
|
|
|
|
54,230
|
$
|
21.34
|
|
$
|
250,000
|
|
||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
|
|
11,532
|
|
|
$
|
250,014
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
10,790
|
21,580
|
|
|
|
$
|
250,004
|
|
||||||||
05/17/2018
|
05/16/2018
|
|
|
|
|
11,532
|
23,064
|
|
|
|
$
|
250,014
|
|
||||||||
05/09/2018
|
04/25/2018
|
|
|
|
18,500
|
37,000
|
37,000
|
37,000
|
|
|
$
|
1,480,000
|
|
||||||||
Seth Bernstein
|
12/11/2018
|
12/11/2018
|
|
|
|
|
|
|
149,868
|
|
|
$
|
4,000,000
|
|
|||||||
05/09/2018
|
04/25/2018
|
|
|
|
9,250
|
18,500
|
18,500
|
18,500
|
|
|
$
|
740,000
|
|
(1)
|
On May 16, 2018, the Compensation Committee approved the grant of the EQH RSUs and EQH Performance Shares with a grant date of May 17, 2018 and the grant of the EQH Stock Options with a grant date of June 11, 2018. On April 25, 2018, the Board approved the grant of the Transaction Incentive Awards with a grant date of May 9, 2018. On December 11, 2018, the AB Compensation Committee approved the grant of the 2018 SB Award with a grant date of December 11, 2018.
|
(2)
|
For the EQH Program Participants, the target column shows the target award under the 2018 STIC Program assuming the plan was 100% funded. The actual awards paid to the EQH Program Participants are listed in the Non-Equity Incentive Compensation column of the Summary Compensation Table.
|
(3)
|
For the EQH Program Participants, the second row shows the EQH Stock Options granted on June 11, 2018. The third, fourth and fifth rows show the EQH RSUs, the TSR Performance Shares and the ROE Performance Shares granted on May 17, 2018, respectively. The sixth row shows the Transaction Incentive Awards granted on May 9, 2018. For Mr. Bernstein, the first row shows the 2018 SB Award granted on December 11, 2018 and the second row shows the Transaction Incentive Award granted on May 9, 2018.
|
(4)
|
The amounts in this column represent the aggregate grant date fair value of all equity-based awards granted to the Named Executive Officers in 2018 in accordance with ASC Topic 718. The EQH Performance Shares were valued at target which represents the probable outcome at grant date.
|
•
|
ROE Performance Shares - EQH Performance Shares that may be earned based on the Company’s performance against certain targets for its Non-GAAP Operating ROE and
|
•
|
TSR Performance Shares - EQH Performance Shares that may be earned based on Holdings’ Relative TSR.
|
If Non-GAAP Operating ROE for the applicable year equals....
|
The ROE Performance Factor for the applicable year will equal....
|
Maximum Amount (or greater)
|
200%
|
Target Amount
|
100%
|
Threshold Amount
|
25%
|
Below Threshold
|
0%
|
If Relative TSR for the TSR Performance Period is...
|
The TSR Performance Factor will equal…
|
87.5th percentile or greater (maximum)
|
200%
|
50th percentile (target)
|
100%
|
30th percentile (threshold)
|
25%
|
Below 30th percentile
|
0%
|
Type Of Units
|
Vesting Requirements
|
Service Units
(50% of award)
|
50% of the Service Units vested on November 14, 2018;
25% of the Service Units will vest on May 10, 2019; and
25% of the Service Units will vest on May 10, 2020.
|
Performance Units
(50% of award)
|
Condition #1
- if, prior to May 10, 2020, the average closing price of a share of Holdings’ common stock for thirty consecutive days is at least equal to $26, all Performance Units will immediately vest;
Condition #2
- if Condition #1 is not met but, prior to May 10, 2023, the average closing price of a share of Holdings’ common stock for thirty consecutive days is at least equal to $30, all Performance Units will immediately vest; and
Condition #3
- if neither Condition #1 or Condition #2 is met, fifty percent of the Performance Units will vest on May 10, 2023. The remaining 50% of the Performance Units will be forfeited.
|
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2018
|
||||||||||||||||||||
OPTION AWARDS
|
STOCK AWARDS
|
|||||||||||||||||||
Name
|
Number of Securities Underlying Unexercised Options (#) Exercisable (1)
|
Number of Securities Underlying Unexercised Options (#) Unexercisable (1)
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (1)
|
Option Exercise Price ($) (2)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested (#) (3)
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
|
|||||||||||
Mark Pearson
|
|
|
41,134
|
|
$
|
25.74
|
|
03/24/2024
|
182,967
|
|
$
|
3,500,876
|
|
426,303
|
|
$
|
8,099,120
|
|
||
48,486
|
|
|
96,972
|
|
$
|
26.12
|
|
06/19/2025
|
|
|
|
|
||||||||
|
|
186,069
|
|
$
|
24.00
|
|
06/06/2026
|
|
|
|
|
|||||||||
|
|
170,004
|
|
$
|
26.69
|
|
06/21/2027
|
|
|
|
|
|||||||||
|
208,786
|
|
|
$
|
21.34
|
|
03/01/2028
|
|
|
|
|
|||||||||
Anders Malmström
|
24,414
|
|
|
12,206
|
|
$
|
25.74
|
|
03/24/2024
|
59,395
|
|
$
|
1,104,837
|
|
150,435
|
|
$
|
2,812,649
|
|
|
12,393
|
|
12,393
|
|
12,393
|
|
$
|
26.12
|
|
06/19/2025
|
|
|
|
|
|||||||
|
37,656
|
|
18,828
|
|
$
|
24.00
|
|
06/06/2026
|
|
|
|
|
||||||||
|
35,442
|
|
17,720
|
|
$
|
26.69
|
|
06/21/2027
|
|
|
|
|
||||||||
|
81,345
|
|
|
$
|
21.34
|
|
03/01/2028
|
|
|
|
|
|||||||||
Jeff Hurd
|
|
97,614
|
|
|
$
|
21.34
|
|
03/01/2028
|
30,007
|
|
$
|
499,016
|
|
79,436
|
|
$
|
1,321,021
|
|
||
Dave Hattem
|
22,626
|
|
|
11,314
|
|
$
|
25.74
|
|
03/24/2024
|
53,629
|
|
$
|
1,008,948
|
|
135,525
|
|
$
|
2,574,705
|
|
|
12,393
|
|
12,393
|
|
12,393
|
|
$
|
26.12
|
|
06/19/2025
|
|
|
|
|
|||||||
|
40,012
|
|
20,004
|
|
$
|
24.00
|
|
06/06/2026
|
|
|
|
|
||||||||
|
35,442
|
|
17,720
|
|
$
|
26.69
|
|
06/21/2027
|
|
|
|
|
||||||||
|
54,230
|
|
|
$
|
21.34
|
|
03/01/2028
|
|
|
|
|
|||||||||
Seth Bernstein
|
|
|
|
|
|
9,250
|
|
$
|
153,828
|
|
18,500
|
|
$
|
307,655
|
|
|||||
|
|
|
|
|
273,398
|
|
$
|
7,469,243
|
|
|
|
(1)
|
All options with expiration dates prior to March 1, 2028 are AXA stock options. All AXA stock options have ten-year terms and a vesting schedule of five years, with one-third of the grant vesting on each of the third, fourth and fifth anniversaries of the grant; provided that the last third will vest only if the AXA ordinary share performs at least as well as the SXIP Index during a specified period (this condition applies to all AXA stock options granted to Mr. Pearson).
|
(2)
|
All AXA stock options have euro exercise prices. All euro exercise prices have been converted to U.S. dollars based on the euro to U.S. dollar exchange rate on the day prior to the grant date. The actual U.S. dollar equivalent of the exercise price will depend on the exchange rate at the date of exercise.
|
(3)
|
For the EQH Program Participants, this column reflects earned but unvested EQH RSUs granted in 2018, AXA performance shares granted in 2015 and the remaining unvested 50% of the Service Units received under their Transaction Incentive Awards as follows:
|
|
2015 AXA Performance Shares Vesting 6/19/19
|
2018 Transaction Incentive Awards - Service Units Vesting Ratably on 5/10/19 and 5/10/20
|
2018 EQH RSUs - Vesting Ratably on 3/1/19, 3/1/20 and 3/1/21
|
Mr. Pearson
|
92,321
|
46,250
|
44,396
|
Mr. Malmström
|
23,597
|
18,500
|
17,298
|
Mr. Hurd
|
|
9,250
|
20,757
|
Mr. Hattem
|
23,597
|
18,500
|
11,532
|
(4)
|
This column includes:
|
|
2016 AXA Performance Shares Vesting 6/6/20
|
2017 AXA Performance Shares Vesting 6/21/21
|
2018 EQH Performance Shares Vesting 3/1/21
|
2018 Transaction Incentive Awards - Performance Units
|
Mr. Pearson
|
106,326
|
97,144
|
TSR - 41,541
ROE - 88,792
|
92,500
|
Mr. Malmström
|
32,277
|
30,377
|
TSR - 16,185
ROE - 34,596
|
37,000
|
Mr. Hurd
|
—
|
—
|
TSR - 19,422
ROE - 41,514
|
18,500
|
Mr. Hattem
|
34,294
|
30,377
|
TSR - 10,790
ROE - 23,064
|
37,000
|
Mr. Bernstein
|
—
|
—
|
—
|
18,500
|
2018 OPTION EXERCISES AND STOCK VESTED
|
||||||||||
|
OPTION AWARDS
|
STOCK AWARDS
|
||||||||
Name
|
Number of Shares Acquired on Exercise (1)
|
Value Realized on Exercise (2)
|
Number of Shares Acquired on Vesting (3)
|
Value Realized on Vesting (4)
|
||||||
Mark Pearson
|
570,840
|
|
$
|
5,455,816
|
|
91,929
|
|
$
|
2,155,632
|
|
Anders Malmström
|
11,644
|
|
$
|
120,296
|
|
32,002
|
|
$
|
737,973
|
|
Jeffrey Hurd
|
—
|
|
$
|
—
|
|
9,302
|
|
$
|
194,418
|
|
Dave Hattem
|
—
|
|
$
|
—
|
|
31,019
|
|
$
|
712,357
|
|
Seth Bernstein
|
—
|
|
$
|
—
|
|
50,479
|
|
$
|
1,310,301
|
|
(1)
|
This column reflects the number of AXA stock options exercised in 2018 by Mr. Pearson and Mr. Malmström.
|
(2)
|
All shares acquired upon the option exercises were immediately sold. This column reflects the actual sale price received less the exercise price.
|
(3)
|
For Messrs. Pearson, Malmström and Hattem, this column reflects the vesting of the second tranche of their 2014 AXA performance shares in 2018. For all of the Named Executive Officers, this column reflects the vesting of a portion of their Transaction Incentive Awards (and related dividend equivalents) in November 2018. For Mr. Bernstein, this column also reflects the vesting of 41,177 of his 2017 AB Holding Units. The delivery of Mr. Bernstein’s 41,177 AB Holding Units (minus any AB Holding Units withheld to cover applicable taxes) is deferred pursuant to the terms of his employment agreement until May 1, 2021, subject to accelerated delivery upon circumstances set forth in his employment agreement. Mr. Bernstein will receive the cash distributions payable with respect to the vested but undelivered portion of his AB Holding Units on the same basis as cash distributions are paid to AB Holding Unitholders generally.
|
(4)
|
The value of the AXA performance shares that vested in 2018 was determined based on the average of the high and low AXA ordinary share price on the vesting date, converted to US dollars using the European Central Bank reference rate on the vesting date.
|
PENSION BENEFITS AS OF DECEMBER 31, 2018
|
|||||||||
Name
|
Plan Name (1)
|
Number of Years Credited Service (2)
|
Present Value of Accumulated Benefit
|
Payments during the last fiscal year
|
|||||
Mark Pearson
|
AXA Equitable Retirement Plan
|
3
|
|
$
|
70,561
|
|
$
|
—
|
|
AXA Equitable Excess Retirement Plan
|
3
|
|
$
|
696,507
|
|
$
|
—
|
|
|
AXA Equitable Executive Survivor Benefit Plan
|
24
|
|
$
|
3,591,990
|
|
$
|
—
|
|
|
Anders Malmström
|
AXA Equitable Retirement Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
AXA Equitable Excess Retirement Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
AXA Equitable Executive Survivor Benefit Plan
|
7
|
|
$
|
626,356
|
|
$
|
—
|
|
|
Jeffrey Hurd
|
AXA Equitable Retirement Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
AXA Equitable Excess Retirement Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
AXA Equitable Executive Survivor Benefit Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Dave Hattem
|
AXA Equitable Retirement Plan
|
19
|
|
$
|
526,399
|
|
$
|
—
|
|
AXA Equitable Excess Retirement Plan
|
19
|
|
$
|
1,090,680
|
|
$
|
—
|
|
|
AXA Equitable Executive Survivor Benefit Plan
|
25
|
|
$
|
2,206,955
|
|
$
|
—
|
|
|
Seth Bernstein
|
AXA Equitable Retirement Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
AXA Equitable Excess Retirement Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
AXA Equitable Executive Survivor Benefit Plan
|
—
|
|
$
|
—
|
|
$
|
—
|
|
(1)
|
The December 31, 2018 liabilities for the Retirement Plan, the Excess Plan, and the ESB Plan were calculated using the same participant data, plan provisions and actuarial methods and assumptions used for financial reporting purposes, except that a retirement age of 65 is assumed for all calculations. The assumptions used can be found in note 13 of the notes to Holdings’ consolidated financial statements for the year ended December 31, 2018.
|
(2)
|
Credited service for purposes of the Retirement Plan and the Excess Plan does not include an executive’s first year of service and does not include any service after the freeze of the plans on December 31, 2013. Pursuant to his employment agreement, Mr. Pearson’s credited service for purposes of the ESB Plan includes approximately 16 years of service with AXA Equitable Life affiliates. However, this additional credited service does not result in any benefit augmentation for Mr. Pearson.
|
•
|
Single life annuity;
|
•
|
Optional joint and survivor annuity of any whole percentage between 1% and 100%; and
|
•
|
Lump sum.
|
NON-QUALIFIED DEFERRED COMPENSATION AS OF DECEMBER 31, 2018
|
||||||||||||||||
Name
|
Plan Name
|
Executive Contributions in Last FY
|
Registrant Contributions in Last FY (1)
|
Aggregate Earnings in Last FY (2)
|
Aggregate Withdrawals/Distributions
|
Aggregate Balance at Last FYE (3)
|
||||||||||
Mark Pearson
|
The Post-2004 Variable Deferred Compensation Plan
|
$
|
—
|
|
$
|
349,964
|
|
$
|
(53,972
|
)
|
$
|
394,940
|
|
$
|
1,409,626
|
|
Anders Malmström
|
The Post-2004 Variable Deferred Compensation Plan
|
$
|
—
|
|
$
|
146,116
|
|
$
|
(23,655
|
)
|
$
|
—
|
|
$
|
574,495
|
|
Jeffrey Hurd
|
The Post-2004 Variable Deferred Compensation Plan
|
$
|
—
|
|
$
|
58,806
|
|
$
|
(1,939
|
)
|
$
|
—
|
|
$
|
56,867
|
|
Dave Hattem
|
The Post-2004 Variable Deferred Compensation Plan
|
$
|
—
|
|
$
|
128,329
|
|
$
|
(36,330
|
)
|
$
|
106,954
|
|
$
|
740,634
|
|
The Variable Deferred Compensation Plan
|
$
|
—
|
|
$
|
—
|
|
$
|
(73,060
|
)
|
$
|
—
|
|
$
|
1,259,141
|
|
|
Seth Bernstein (4)
|
2017 Equity Award
|
$
|
1,115,883
|
|
$
|
—
|
|
$
|
96,766
|
|
$
|
—
|
|
$
|
—
|
|
(1)
|
The amounts reported in this column are also reported in the “All Other Compensation” column of the 2018 Summary Compensation Table above.
|
(2)
|
The amounts reported in this column are not reported in the 2018 Summary Compensation Table.
|
(3)
|
The amounts in this column that were previously reported as compensation in the Summary Compensation Table included in AXA Equitable Life’s Forms 10-K for the years ended December 31, 2017, 2016, 2015 and 2014 are:
|
EQH Program Participant
|
Amount
|
||
Pearson
|
$
|
1,311,245
|
|
Malmström
|
$
|
366,469
|
|
Hattem
|
$
|
458,674
|
|
(4)
|
For Mr. Bernstein, the executive contributions column reflects the value of 41,177 restricted AB Holding Units that vested on May 1, 2018 and will not be delivered until May 1, 2021. The aggregate earnings in last fiscal year column reflects the change in the AB Holding Unit price between May 1 and December 1, 2018 and cash distributions received by Mr. Bernstein on the deferred units during this period. The grant date fair value of the AB Holding Units was reported in the Summary Compensation Table for 2017.
|
•
|
“AXA Equity Awards” means all AXA stock options and performance shares awarded to the EQH Program Participants;
|
•
|
“EQH Equity Awards” means the EQH RSUs, the EQH Performance Shares, the EQH Stock Options and Transaction Incentive Awards; and
|
•
|
hypothetical payments and benefits related to equity awards are calculated using the closing price of the AXA ordinary share on December 31, 2018, converted to U.S. dollars, or the closing price of the Holdings’ share on December 31, 2018 where applicable.
|
|
Temporary Income Payments
|
Lump Sum Payments
|
AXA Equity Awards
|
EQH Equity Awards
|
||||||||
Mr. Pearson
|
|
|
|
|
||||||||
Retirement
|
$
|
—
|
|
$
|
2,128,400
|
|
$
|
6,395,225
|
|
$
|
—
|
|
Good Reason Termination - no CIC
|
$
|
7,556,000
|
|
$
|
2,884,000
|
|
$
|
6,395,225
|
|
$
|
—
|
|
Involuntary Termination - no CIC
|
$
|
7,556,000
|
|
$
|
2,884,000
|
|
$
|
6,395,225
|
|
$
|
179,471
|
|
CIC w/o Termination
|
$
|
—
|
|
$
|
—
|
|
$
|
8,384
|
|
$
|
3,348,883
|
|
CIC w/ Involuntary or Good Reason Termination
|
$
|
7,556,000
|
|
$
|
2,884,000
|
|
$
|
6,395,225
|
|
$
|
3,348,883
|
|
Death
|
$
|
—
|
|
$
|
—
|
|
$
|
7,713,268
|
|
$
|
4,474,850
|
|
Disability
|
$
|
—
|
|
$
|
—
|
|
$
|
6,395,225
|
|
$
|
4,474,850
|
|
|
|
|
|
|
||||||||
Mr. Malmström
|
|
|
|
|
||||||||
Involuntary Termination - no CIC
|
$
|
2,633,013
|
|
$
|
1,040,000
|
|
$
|
—
|
|
$
|
71,792
|
|
CIC w/o Termination
|
$
|
—
|
|
$
|
—
|
|
$
|
2,488
|
|
$
|
1,328,770
|
|
Involuntary or Good Reason Termination - CIC
|
$
|
3,510,683
|
|
$
|
1,040,000
|
|
$
|
2,488
|
|
$
|
1,328,770
|
|
Death
|
$
|
—
|
|
$
|
—
|
|
$
|
2,270,749
|
|
$
|
1,767,453
|
|
Disability
|
$
|
—
|
|
$
|
—
|
|
$
|
1,862,367
|
|
$
|
1,767,453
|
|
|
|
|
|
|
||||||||
Mr. Hurd
|
|
|
|
|
||||||||
Involuntary Termination - no CIC
|
$
|
3,596,375
|
|
$
|
1,540,000
|
|
N/A
|
|
$
|
35,904
|
|
|
CIC w/o Termination
|
$
|
—
|
|
$
|
—
|
|
N/A
|
|
$
|
948,409
|
|
|
Involuntary or Good Reason Termination - CIC
|
$
|
4,795,167
|
|
$
|
1,540,000
|
|
N/A
|
|
$
|
948,409
|
|
|
Death
|
$
|
—
|
|
$
|
—
|
|
N/A
|
|
$
|
1,474,848
|
|
|
Disability
|
$
|
—
|
|
$
|
—
|
|
N/A
|
|
$
|
1,474,848
|
|
|
|
|
|
|
|
||||||||
Mr. Hattem
|
|
|
|
|
||||||||
Retirement
|
$
|
—
|
|
$
|
750,000
|
|
$
|
1,908,225
|
|
$
|
—
|
|
Involuntary Termination - no CIC
|
$
|
2,229,358
|
|
$
|
790,000
|
|
$
|
1,908,225
|
|
$
|
71,792
|
|
CIC w/o Termination
|
$
|
—
|
|
$
|
—
|
|
$
|
2,306
|
|
$
|
1,193,502
|
|
Involuntary or Good Reason Termination - CIC
|
$
|
2,972,478
|
|
$
|
790,000
|
|
$
|
1,908,225
|
|
$
|
1,193,502
|
|
Death
|
$
|
—
|
|
$
|
—
|
|
$
|
2,327,182
|
|
$
|
1,485,957
|
|
Disability
|
$
|
—
|
|
$
|
—
|
|
$
|
1,908,225
|
|
$
|
1,485,957
|
|
•
|
Their AXA stock options would have continued to vest and be exercisable until their expiration date, except in the case of misconduct for which the options would be forfeited. The table reflects the value at the Trigger Date of AXA stock options that would have vested after 2018.
|
•
|
They would have been treated as if they continued in the employ of the Company until the end of the vesting period for purposes of their AXA performance share awards. Accordingly, they would have received AXA performance share payouts at the same time and in the same amounts as they would have received such payouts if they had not retired. The estimated values of those payouts at the Trigger Date assume target performance, except for the 2015 performance shares for which actual performance is used.
|
•
|
temporary income payments equal to the sum of two years of salary and two times the greatest of: (a) his most recent annual cash incentive award, (b) the average of his last three annual cash incentive awards and (c) his STIC Target;
|
•
|
a lump sum payment equal to his STIC Target; and
|
•
|
a lump sum payment equal to the additional excess 401(k) contributions that he would have received if his temporary income payments were eligible for those contributions and were all paid on the Trigger Date.
|
•
|
an assignment of duties materially inconsistent with Mr. Pearson’s duties or authority or a material limitation of Mr. Pearson’s powers,
|
•
|
the removal of Mr. Pearson from his positions,
|
•
|
Mr. Pearson being required to be based at an office more than 75 miles from New York City,
|
•
|
a diminution of Mr. Pearson’s titles,
|
•
|
a material failure by the Company to comply with the agreement’s compensation provisions,
|
•
|
a failure of the company to secure a written assumption of the agreement by any successor company and
|
•
|
a CIC of Holdings as defined below under “Change in Control - EQH Equity Awards” (provided that Mr. Pearson delivers notice of termination within 180 days after the CIC).
|
•
|
temporary income payments equal to 78 weeks of base salary;
|
•
|
additional temporary income payments equal to 1.5 times the greatest of:
|
•
|
the most recent annual cash incentive award paid to the executive;
|
•
|
the average of the three most recent annual cash incentive awards paid to the executive; and
|
•
|
the executive’s STIC Target;
|
•
|
a lump sum payment equal to the sum of: (a) the executive’s STIC Target; and (b) $40,000.
|
•
|
any person other than AXA becomes the beneficial owner of 30% or more of Holdings’ common stock and the percentage owned is greater than the percentage held by AXA;
|
•
|
at any time that AXA holds less than 50% of Holdings’ voting securities, the individuals who constitute the Board at the date the ownership of the voting securities by AXA first drops below fifty percent cease for any reason to constitute at least a majority of the Board; and
|
•
|
the consummation of a business combination (e.g., a merger, reorganization or similar transaction involving the Company) unless, following the business combination, substantially all of the persons that were the beneficial owners of Holdings immediately prior to the business combination beneficially own 50% or more of the resulting entity from the business combination in substantially the same proportions as their ownership of Holdings immediately prior to the business combination.
|
•
|
temporary income payments equal to 104 weeks of base salary;
|
•
|
additional temporary income payments equal to two times the greatest of:
|
•
|
the most recent annual cash incentive award paid to the executive;
|
•
|
the average of the three most recent annual cash incentive awards paid to the executive and
|
•
|
the executive’s STIC Target and
|
•
|
a lump sum payment equal to the sum of: (a) the executive’s STIC Target and (b) $40,000.
|
•
|
a material diminution of the executive’s duties, authority or responsibilities;
|
•
|
a material reduction in the executive’s base compensation (other than in connection with, and substantially proportionate to, reductions by the company of the compensation of other similarly situated senior executives) and
|
•
|
a material change in the geographic location of the executive’s position.
|
•
|
All AXA stock options would have immediately vested and would have continued to be exercisable until the earlier of their expiration date and the six-month anniversary of the date of death.
|
•
|
The total number of AXA performance shares granted in 2016 and 2017 would have been multiplied by an assumed performance factor of 1.3 and the performance shares granted in 2015 would have been multiplied by the actual performance factor for that tranche. The performance shares would have been paid in AXA ordinary shares to the executive’s heirs within 90 days following death.
|
|
Acceleration of Award
|
||
Death
|
$
|
461,463
|
|
Disability
|
$
|
461,463
|
|
Involuntary Termination w/o Cause
|
$
|
35,904
|
|
CIC of Holdings
|
$
|
461,463
|
|
|
Cash Payments ($)
|
|
Acceleration of Restricted AB Holding Unit Awards ($)
|
|
Other Benefits ($)
|
|||||||
|
|
|
|
|
|
|||||||
CIC of AB (1)
|
$
|
—
|
|
|
$
|
3,374,826
|
|
|
$
|
13,610
|
|
|
Termination by Mr. Bernstein for good reason or by AB without cause (2)
|
$
|
3,500,000
|
|
|
$
|
3,374,826
|
|
|
$
|
13,610
|
|
|
Termination by Mr. Bernstein for good reason or by AB without cause and within 12 months of CIC of AB (3)
|
$
|
7,000,000
|
|
|
$
|
3,374,826
|
|
|
$
|
13,610
|
|
|
Termination by reason of non-extension of employment agreement (4)
|
$
|
—
|
|
|
$
|
3,374,826
|
|
|
$
|
13,610
|
|
|
Death or disability - Bernstein Employment Agreement (5)
|
$
|
—
|
|
|
$
|
3,374,826
|
|
|
$
|
13,610
|
|
|
Death or disability - 2018 SB Award (6)
|
$
|
—
|
|
|
$
|
4,094,417
|
|
$
|
—
|
|
||
Resignation (7)
|
$
|
—
|
|
|
$
|
4,094,417
|
|
$
|
—
|
|
(1)
|
Upon a change in control of AB as defined below, the equity award he was granted in May 2017 will immediately vest and AB Holding Units in respect of that award will be delivered to him (subject to any withholding obligations), regardless of whether Mr. Bernstein’s employment terminates.
|
(2)
|
If Mr. Bernstein’s employment is terminated without “cause” or he resigns for “good reason” (both as defined below) and he signs and does not revoke a waiver and release of claims, he will receive the following:
|
•
|
a cash payment equal to the sum of (a) his current base salary and (b) his bonus opportunity amount;
|
•
|
a pro rata bonus based on actual performance for the fiscal year in which the termination occurs;
|
•
|
immediate vesting of the outstanding portion of the equity award he was granted in May 2017 and delivery of the related AB Holding Units (subject to any withholding requirements);
|
•
|
monthly payments equal to the cost of COBRA coverage for the COBRA coverage period and
|
•
|
following the COBRA coverage period, access to participation in AB’s medical plans as in effect from time to time at Mr. Bernstein’s (or his spouse’s) sole expense.
|
(3)
|
If, during the 12 months following a change in control, Mr. Bernstein is terminated without cause or resigns for good reason, he will receive the amounts described in (2) above, except that the cash payment will equal two times the sum of (a) his current base salary and (b) his bonus opportunity amount.
|
(4)
|
In the event Mr. Bernstein’s employment terminates due to the non-renewal of the Bernstein Employment Agreement (other than for cause), the equity award he was granted in May 2017 will immediately vest and AB Holding Units in respect of that award will be delivered to him (subject to any withholding obligations). The 2018 SB Award would continue to vest subject to compliance with applicable agreements and restrictive covenants.
|
(5)
|
Upon termination of Mr. Bernstein’s employment due to death or disability, and after the COBRA period, AB will provide Mr. Bernstein and his spouse with access to participation in AB’s medical plans at Mr. Bernstein’s (or his spouse’s) sole expense based on a reasonably
|
(6)
|
The 2018 SB Award will immediately vest upon a termination due to death or disability. For purposes of the 2018 SB Award, “disability” is the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12 months, as determined by the carrier of the long-term disability insurance program maintained by AB or its affiliate that covers Mr. Bernstein.
|
(7)
|
In the event Mr. Bernstein voluntarily terminates employment and complies with applicable agreements and restrictive covenants, he will continue to vest in the 2018 SB Award.
|
•
|
the Company ceases to control the election of a majority of the AB Board or
|
•
|
AB Holding ceases to be publicly-traded.
|
2018 DIRECTOR COMPENSATION
|
||||||||||||
Name
|
Fees Earned or Paid in Cash
|
Stock Awards (1)
|
All Other Compensation (2)
|
Total
|
||||||||
Ramon De Oliveira
|
$
|
204,179
|
|
$
|
339,520
|
|
$
|
40
|
|
$
|
543,739
|
|
Daniel Kaye
|
$
|
266,119
|
|
$
|
339,520
|
|
$
|
1,152
|
|
$
|
606,791
|
|
George Stansfield
|
$
|
—
|
|
$
|
—
|
|
$
|
235,143
|
|
$
|
235,143
|
|
Charles Stonehill
|
$
|
108,456
|
|
$
|
169,520
|
|
$
|
40
|
|
$
|
278,016
|
|
(1)
|
The amounts reported in this column represent the aggregate grant date fair value of restricted and unrestricted stock awarded in 2018 in accordance with FASB ASC Topic 718, and the assumptions made in calculating them can be found in Note 14 of the Notes to the Consolidated Financial Statements.
|
|
Holdings Common Stock
|
Restricted AXA Ordinary Shares
|
AXA Ordinary Shares
|
Restricted AB Holding Units
|
Mr. Oliveira
|
105,000
|
45,000
|
19,520
|
170,000
|
Mr. Kaye
|
105,000
|
45,000
|
19,520
|
170,000
|
Mr. Stonehill
|
105,000
|
45,000
|
19,520
|
|
|
Restricted AXA Ordinary Shares
|
AXA Ordinary Share Options
|
Restricted AB Holding Units
|
Mr. Oliveira
|
5,263
|
4,361 (all vested)
|
9,850
|
Mr. Kaye
|
5,263
|
|
9,850
|
Mr. Stonehill
|
2,858, of which 1,429 were deferred
|
|
|
(2)
|
For all non-employee directors, this column includes premiums paid by the company for $125,000 of group life insurance coverage. For Mr. Kaye, this column also includes amounts paid for his spouse to accompany him to a company event.
For Mr. Stansfield, this column reflects payment for services performance as a Company employee.
|
•
|
Audit Committee - $30,000
|
•
|
Compensation Committee - $25,000
|
•
|
Nominating and Corporate Governance Committee - $20,000
|
•
|
Finance and Risk Committee - $20,000
|
•
|
$5,000 for participating in any meeting of the AB Board in excess of the six regularly scheduled Board meetings each year and
|
•
|
$2,000 for participating in any meeting of a committee of the AB Board in excess of the number of regularly scheduled committee meetings each year.
|
•
|
$25,000 for acting as Chair of the AB Audit Committee and
|
•
|
$6,000 for serving as a member of the AB Compensation Committee.
|
•
|
$6,000 for serving as a member of the AB Executive Committee;
|
•
|
$6,000 for serving as a member of the AB Compensation Committee.
|
•
|
board or committee meetings;
|
•
|
trips taken at our request; and
|
•
|
trips for which the director is compensated.
|
•
|
each person known to own beneficially more than five percent of our common stock;
|
•
|
each of our directors;
|
•
|
each of our named executive officers; and
|
•
|
all of our current executive officers and directors as a group.
|
Name of Beneficial Owner
|
Number of
Shares Owned
|
Percent
of Class (%)
|
AXA (1)
|
313,162,500
|
60.0
|
Thomas Buberl
|
—
|
—
|
Gérald Harlin
|
—
|
—
|
Daniel G. Kaye
|
10,844
|
*
|
Ramon de Oliveira
|
8,844
|
*
|
Mark Pearson (2)
|
198,097
|
*
|
Bertrand Poupart-Lafarge
|
—
|
—
|
Karima Silvent
|
—
|
—
|
George Stansfield
|
—
|
—
|
Charles G. T. Stonehill
|
5,844
|
*
|
Seth Bernstein
|
8,351
|
*
|
Dave Hattem (3)
|
49,159
|
*
|
Jeffrey Hurd (4)
|
78,859
|
*
|
Nick Lane
|
—
|
—
|
Anders Malmström (5)
|
77,066
|
*
|
All current directors and executive officers as a group (14 persons) (6)
|
437,064
|
*
|
(1)
|
Does not give effect to the up to 43,125,000 shares of our common stock that AXA would deliver upon exchange of the mandatorily exchangeable securities that AXA issued concurrently with the IPO. AXA continues to have the right to vote those shares until delivery. AXA’s principal place of business is 21-25 avenue Matignon, 75008 Paris, France.
|
(2)
|
Includes (i) 69,596 shares Mr. Pearson can acquire within 60 days under option plans, (ii) 85,937 shares of unvested EQH performance shares and (iii) 14,799 restricted stock units that will vest within 60 days.
|
(3)
|
Includes (i) 18,077 shares Mr. Hattem can acquire within 60 days under option plans and (ii) 22,322 shares of unvested EQH performance shares.
|
(4)
|
Includes (i) 32,538 shares Mr. Hurd can acquire within 60 days under option plans and (ii) 40,179 shares of unvested EQH performance shares.
|
(5)
|
Includes (i) 27,115 shares Mr. Malmström can acquire within 60 days under option plans, (ii) 33,483 shares of unvested EQH performance shares and (iii) 5,766 restricted stock units that will vest within 60 days.
|
(6)
|
Includes (i) 147,326 shares the directors and executive officers as a group can acquire within 60 days under option plans, (ii) 181,921 shares of unvested EQH performance shares and (iii) 20,565 restricted stock units that will vest within 60 days.
|
Name of Beneficial Owner
|
Number of Shares Owned
|
Percent of Class (%)
|
Thomas Buberl (2)
|
600,193
|
*
|
Gérald Harlin (3)
|
590,021
|
*
|
Daniel G. Kaye
|
11,634
|
*
|
Ramon de Oliveira (4)
|
38,536
|
*
|
Mark Pearson (5)
|
423,964
|
*
|
Bertrand Poupart-Lafarge (6)
|
148,313
|
*
|
Karima Silvent (7)
|
62,298
|
*
|
George Stansfield (8)
|
373,877
|
*
|
Charles G. T. Stonehill (9)
|
2,694
|
*
|
Seth Bernstein
|
—
|
—
|
Dave Hattem (10)
|
123,368
|
*
|
Jeffrey Hurd
|
—
|
—
|
Nick Lane (11)
|
351,437
|
*
|
Anders Malmström (12)
|
129,308
|
*
|
All current directors and executive officers as a group (14 persons) (13)
|
2,855,643
|
*
|
(1)
|
Holdings of AXA American Depositary Shares (“ADS”) are expressed as their equivalent in AXA ordinary shares. Each AXA ADS represents the right to receive one AXA ordinary share.
|
(2)
|
Includes (i) 16,267 shares Mr. Buberl can acquire within 60 days under option plans, (ii) 325,220 unvested AXA performance shares and (iii) 51,720 units in AXA employee shareholding plans.
|
(3)
|
Includes (i) 99,800 shares Mr. Harlin can acquire within 60 days under option plans, (ii) 122,830 unvested AXA performance shares and (iii) 72,256 units in AXA employee shareholding plans.
|
(4)
|
Includes 4,361 shares Mr. de Oliveira can acquire within 60 days under option plans.
|
(5)
|
Includes (i) 48,486 shares Mr. Pearson can acquire within 60 days under option plans and (ii) 203,470 unvested AXA performance shares.
|
(6)
|
Includes (i) 63,994 shares Mr. Poupart-Lafarge can acquire within 60 days under option plans, (ii) 53,891 unvested AXA performance shares and (iii) 18,272 units in AXA employee shareholding plans.
|
(7)
|
Includes (i) 4,539 shares Ms. Silvent can acquire within 60 days under option plans and (ii) 38,111 unvested AXA performance shares.
|
(8)
|
Includes (i) 32,268 shares Mr. Stansfield can acquire within 60 days under option plans, (ii) 157,724 unvested AXA performance shares and (iii) 123,436 units in AXA employee shareholding plans.
|
(9)
|
Includes 2,694 deferred stock units under The Equity Plan for Directors.
|
(10)
|
Includes (i) 35,019 shares Mr. Hattem can acquire within 60 days under option plans and (ii) 64,671 unvested AXA performance shares.
|
(11)
|
Includes (i) 108,337 shares Mr. Lane can acquire within 60 days under option plans (ii) 166,907 unvested AXA performance shares.
|
(12)
|
Includes (i) 36,807 shares Mr. Malmström can acquire within 60 days under option plans and (ii) 62,654 unvested AXA performance shares.
|
(13)
|
Includes (i) 449,878 shares the directors and executive officers as a group can acquire within 60 days under option plans, (ii) 1,195,478 unvested AXA performance shares and (iii) 265,684 units in AXA employee shareholding plans.
|
|
AllianceBernstein Holding L.P.
|
AllianceBernstein L.P.
|
||
Name of Beneficial Owner
|
Number of
Units Owned (1)
|
Percent of
Class (%)
|
Number of
Units Owned (1)
|
Percent of
Class (%)
|
Thomas Buberl
|
—
|
—
|
—
|
—
|
Gérald Harlin
|
—
|
—
|
—
|
—
|
Daniel G. Kaye
|
13,379
|
*
|
—
|
—
|
Ramon de Oliveira
|
13,379
|
*
|
—
|
—
|
Mark Pearson
|
—
|
—
|
—
|
—
|
Bertrand Poupart-Lafarge
|
—
|
—
|
—
|
—
|
Karima Silvent
|
—
|
—
|
—
|
—
|
George Stansfield
|
—
|
—
|
—
|
—
|
Charles G. T. Stonehill
|
—
|
—
|
—
|
—
|
Seth Bernstein (2)
|
314,574
|
*
|
—
|
—
|
Dave Hattem
|
—
|
—
|
—
|
—
|
Jeffrey Hurd
|
—
|
—
|
—
|
—
|
Nick Lane
|
—
|
—
|
—
|
—
|
Anders Malmström
|
—
|
—
|
—
|
—
|
All current directors and executive officers as a group (14 persons)
|
341,332
|
*
|
—
|
—
|
(1)
|
Excludes units beneficially owned by AXA and its subsidiaries.
|
(2)
|
Reflects 314,574 restricted AB Holding Units awarded to Mr. Bernstein pursuant to the CEO Employment Agreement that have not yet vested.
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
||||
|
(a)
|
|
(b)
|
|
(c)
|
||||
Equity compensation plans approved by security holders
|
|
|
|
|
|
||||
Omnibus Plan
|
3,604,733
|
|
(1)
|
$
|
21.34
|
|
(2)
|
6,936,010
|
|
Stock Purchase Plan (3)
|
|
|
|
|
7,932,780
|
|
|||
Equity compensation plans not approved by security holders
|
—
|
|
|
|
|
—
|
|
||
Total
|
3,604,733
|
|
|
|
|
14,868,790
|
|
(1)
|
Represents 994,001 outstanding Options, 1,787,644 outstanding Restricted Stock Units and 823,088 outstanding Performance Shares as of December 31, 2018 under the 2018 Omnibus Plan. Totals include dividend equivalents on Performance Shares of 4,846 and on Restricted Stock Units of 22,374. The number of Performance Shares represents the number of shares that would be received based on maximum performance, reduced for cancellations through December 31, 2018. The actual number of shares the Compensation Committee will award at the end of each performance period will range between 0% and 200% of the target number of units granted, based upon a measure of the reported performance of the Company relative to stated goals.
|
(2)
|
Represents the weighted average exercise price of the Options disclosed in column (a).
|
(3)
|
The AXA Equitable Holdings, Inc. Stock Purchase Plan is a non-qualified Employee Stock Purchase Plan to which up to 8,000,000 shares of Common Stock were authorized for issuance, all of which have been registered on Form S-8. Under the plan, eligible participants have the opportunity to receive a 15% match on EQH share purchases, up to a maximum of $3,750 per calendar year. Employer matching contributions will be used to purchase additional shares for the participant. Participants may not contribute
|
•
|
until the date on which AXA ceases to beneficially own more than 50% of our outstanding common stock (which is referred to as the “Majority Holder Date”), AXA is entitled to designate a majority of the directors on the Board, which such majority is initially five AXA Directors;
|
•
|
following the Majority Holder Date, and until and including the date on which AXA ceases to beneficially own at least 35% of our outstanding common stock (which is referred to as the “First Threshold Date”), AXA is entitled to designate three AXA Directors; and
|
•
|
following the First Threshold Date, and until and including the date on which AXA ceases to beneficially own at least 10% of our outstanding common stock (which is referred to as the “Fourth Threshold Date”), AXA is entitled to designate two AXA Directors.
|
•
|
until the earlier of the date immediately preceding May 9, 2019 and the Second Threshold Date, our Audit Committee shall consist of three Independent Directors and one AXA Director, who need not be an Independent Director; and afterwards the AXA Director shall resign from the Audit Committee and, thereafter, such committee shall consist of three Independent Directors;
|
•
|
if the Second Threshold Date occurs after May 9, 2019, then until the Second Threshold Date, AXA shall have the right to designate one Independent Director to the Audit Committee, so long as such Independent Director meets the NYSE standards for audit committee membership;
|
•
|
until the Majority Holder Date, AXA shall have the right to designate one AXA Director who shall be appointed by the Board to the Compensation Committee; and within 60 days after the Majority Holder Date, the AXA Director shall resign from the Compensation Committee and thereafter, the Compensation Committee shall consist of three Independent Directors; and after the Majority Holder Date and until the Second Threshold Date, AXA shall have the right to designate one Independent Director to the Compensation Committee;
|
•
|
until the Majority Holder Date, except for such matters as are reserved for approval by a subcommittee of qualified directors, our Compensation Committee may not act without the consent of a majority of the Compensation Committee, which majority must include an AXA Director;
|
•
|
until the Majority Holder Date, AXA shall have the right to designate one AXA Director who shall be appointed by the Board to the Nominating and Governance Committee; and within 60 days after the Majority Holder Date, the AXA Director shall resign from the Compensation Committee and thereafter, the Nominating and Governance Committee shall consist of three Independent Directors; and after the Majority Holder Date and until Holder Date, the AXA Director shall resign from the Compensation Committee and thereafter, the Nominating and Governance Committee
|
•
|
until the Majority Holder Date, two AXA Directors shall serve on the Executive Committee of the Board; following the Majority Holder Date but prior to the First Threshold Date, one AXA Director shall serve on the Executive Committee of the Board;
|
•
|
until the Majority Holder Date, our Executive Committee may not act without the consent of a majority of the Executive Committee, which majority must include an AXA Director;
|
•
|
until the Second Threshold Date, AXA shall have the right to designate one of the three Independent Directors who constitute our Finance and Risk Committee;
|
•
|
until the date on which AXA ceases to beneficially own at least 20% of our outstanding common stock (which is referred to as the “Third Threshold Date”), AXA is entitled to have one observer present at meetings of our Management Risk Committee and our Asset Liability Management Committee and to receive all materials, reports and other communications from such committees; and
|
•
|
our Board committees shall have the membership and responsibilities described under “Directors, Executive Officers and Corporate Governance-Corporate Governance-Board Committees.”
|
•
|
any merger, consolidation or similar transaction (or any amendment to or termination of an agreement to enter into such a transaction) involving us or any of our subsidiaries, on the one hand, and any other person, on the other hand; other than (A) an acquisition of 100% of the capital stock of such other person or (B) disposition of 100% of the capital stock of one of our subsidiaries, in each case involving consideration not exceeding $250 million;
|
•
|
any acquisition or disposition of securities, assets or liabilities (including through reinsurance transactions) involving consideration or book value greater than $250 million, other than transactions involving assets invested in our consolidated general account and approved in accordance with our established policies and procedures to monitor invested assets;
|
•
|
any change in our authorized capital stock or the creation of any new class or series of our capital stock;
|
•
|
any issuance or acquisition of capital stock (including stock buy-backs, redemptions or other reductions of capital), or securities convertible into or exchangeable or exercisable for capital stock or equity-linked securities, except (i) issuances of equity awards to directors or employees pursuant to an equity compensation plan approved by the Board; (ii) issuances or acquisitions of capital stock of one of our subsidiaries (except for acquisitions of AB Units or AB Holding Units) to or by one of our wholly-owned subsidiaries; (iii) issuances or acquisitions of capital stock that our Board determines are necessary to maintain compliance with covenants contained in any debt instrument; and (iv) acquisitions of capital stock in connection with the funding of equity awards or to prevent shareholder dilution from the issuance of equity awards;
|
•
|
any issuance or acquisition of debt securities to or from a third party involving an aggregate principal amount exceeding $250 million;
|
•
|
any other incurrence of a debt obligation to or from a third party by having a principal amount greater than $250 million, subject to specified exceptions;
|
•
|
entry into or termination of any joint venture or cooperation arrangements involving assets having a value exceeding $250 million;
|
•
|
listing or delisting of any securities on a securities exchange, other than the listing or delisting of debt securities on the NYSE or any other securities exchange located solely in the United States;
|
•
|
(A) the formation of, or delegation of authority to, any new committee, or subcommittee thereof, of the Board, (B) the delegation of authority to any existing committee or subcommittee thereof not set forth in the committee’s charter or authorized by the Board prior to the settlement of the IPO or (C) any amendments to the charter (or equivalent
|
•
|
any amendment (or approval or recommendation of any amendment) to our certificate of incorporation or by-laws;
|
•
|
any filing or petition under bankruptcy laws, admission of insolvency or similar actions by us or any of our subsidiaries, or our dissolution or winding-up;
|
•
|
any commencement or settlement of material litigation or any regulatory proceedings if such litigation or regulatory proceeding is material to AXA or could reasonably be expected to have a material adverse effect on AXA’s reputation;
|
•
|
entry into any material written agreement or settlement with, or any material written commitment to, a regulatory agency, or any settlement of a material enforcement action if such agreement, settlement or commitment is material to AXA or could reasonably be expected to have a material adverse effect on AXA’s reputation;
|
•
|
the election, appointment, hiring, dismissal or removal (other than for cause) of the Company’s CEO or CFO;
|
•
|
the entry into, termination of or material amendment of any material contract with a third party, subject to specified exceptions;
|
•
|
any material change to the nature or scope of the Company’s business immediately prior to the settlement of the IPO; or
|
•
|
any material change in hedging strategy.
|
•
|
services AXA or its subsidiaries (excluding us) receive pursuant to a contract with a third-party service provider, which AXA or its subsidiaries then provide to us on a pass-through basis;
|
•
|
services we receive pursuant to a contract with a third-party service provider, which we then provide to AXA or its subsidiaries (excluding us) on a pass-through basis;
|
•
|
certain services we receive directly from AXA or its subsidiaries (excluding us); and
|
•
|
certain services we provide directly to AXA or its subsidiaries (excluding us).
|
•
|
information technology services, including, without limitation, data processing, data transmission, various software applications and platforms including maintenance agreements, databases, services related to the management and operation of both a production data center and a disaster recovery center and other related pass-through services;
|
•
|
various services that support or relate to finance and risk management and actuarial functions, including, without limitation, consulting and other management and advisory services, risk management methodology and software, investment and asset liability management services such as risk modeling support and access to risk reports, frameworks, guidelines, tools and advice on investments, and other services related to tax matters;
|
•
|
human resources, such as third-party services (e.g., consulting arrangements) and services related to share plans, payroll and other administrative services, access to training programs and content and human resource analytical tools for planning purposes;
|
•
|
operations, including, without limitation, specialized internal audit and compliance resources;
|
•
|
marketing and public relations; for a description of the trademark license agreement that governs AXA’s licensing of its name and certain other AXA trademarks to us, see “-Trademark License Agreement”; and
|
•
|
various other miscellaneous services, including, without limitation, the maintenance and integration of various third-party services and access to certain corporate, environmental and social frameworks and initiatives.
|
Affiliate
|
Services
|
Amount Paid or Accrued for the Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in millions)
|
||||||||||
AXA US Holdings
|
AXA US Holdings provides TSA services related to global contracts and infrastructure and provides use, maintenance and development support for certain applications and technology solutions.
|
$
|
30.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
AXA Group Solutions Pvt. Ltd. (“AGS”)
|
AGS provides maintenance and development support for certain applications; global contracts, global international projects, security projects and certain strategic initiatives.
|
$
|
17.6
|
|
|
$
|
40.9
|
|
|
$
|
46.7
|
|
Affiliate
|
Services
|
Amount Paid or Accrued for Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(in millions)
|
||||||||||
AXA US Holdings
|
We provide TSA services related to contracts, workplace services and infrastructure hosting
|
$
|
4.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
AXA IM, AXA Liabilities Managers, AXA REIM, AXA Rosenberg Group LLC, AXA Insurance Company and AXA Strategic Ventures Corporation
|
We provide corporate services, including participation in employee benefit plans, finance and payroll services.
|
$
|
0.1
|
|
|
$
|
5.1
|
|
|
$
|
5.2
|
|
GIE
|
We administer the AXA Intranet site and provide other corporate services.
|
$
|
1.3
|
|
|
$
|
0.8
|
|
|
$
|
2.6
|
|
AXA Life Insurance Co., Ltd. (“AXA Life Japan”)
|
We provide mainframe platform services and global e-mail hosting and application support.
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.0
|
|
SAS
|
We host global security, transversal officers and big data infrastructure.
|
$
|
—
|
|
|
$
|
4.1
|
|
|
$
|
4.4
|
|
AXA Technology Services Mexico SA
|
We provide infrastructure hosting and support.
|
$
|
—
|
|
|
$
|
3.3
|
|
|
$
|
3.4
|
|
AXA
|
We host the AXA Lab business unit.
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
1.2
|
|
AGS
|
We host the AGS business unit.
|
$
|
—
|
|
|
$
|
1.6
|
|
|
$
|
0.7
|
|
AXA Liabilities Managers
|
We host AXA Global Network connectivity and disaster recovery platform services.
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
0.5
|
|
AXA Tech affiliates in: France, Switzerland, Germany, Belgium, UK, Spain, Colombia, Hong Kong, Italy, India, Indonesia, Asia, Portugal, Japan, Singapore, AXA Assistance US and
Other
|
We provide Airwatch global platform hosting and support services as well as technology strategy and support.
|
$
|
—
|
|
|
$
|
5.3
|
|
|
$
|
3.8
|
|
Name of Related Party
|
Amount Paid or Accrued for the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
AXA Business Service Private Ltd.
|
$
|
6.8
|
|
|
$
|
5.6
|
|
|
$
|
5.5
|
|
AXA Technology Services India Pvt. Ltd.
|
$
|
2.2
|
|
|
$
|
1.7
|
|
|
$
|
5.3
|
|
AXA XL Insurance
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
AXA Group Solutions Pvt. Ltd. (“AXA Solutions”)
|
$
|
1.0
|
|
|
$
|
0.9
|
|
|
$
|
1.1
|
|
GIE
|
$
|
0.4
|
|
|
$
|
0.7
|
|
|
$
|
0.4
|
|
AXA Wealth
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
0.9
|
|
Name of Related Party
|
Amount Received or Accrued for the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
AXA Life Japan
|
$
|
15.1
|
|
|
$
|
14.1
|
|
|
$
|
14.8
|
|
AXA France IARD S.A.
|
$
|
10.5
|
|
|
$
|
12.3
|
|
|
$
|
6.9
|
|
AXA Switzerland Life
|
$
|
8.9
|
|
|
$
|
10.4
|
|
|
$
|
9.6
|
|
AXA Insurance UK PLC Pensions Scheme
|
$
|
0.6
|
|
|
$
|
7.0
|
|
|
$
|
7.6
|
|
AXA Germany
|
$
|
5.6
|
|
|
$
|
5.0
|
|
|
$
|
3.0
|
|
AXA Belgium
|
$
|
3.1
|
|
|
$
|
3.4
|
|
|
$
|
2.2
|
|
AXA Hong Kong Life
|
$
|
2.4
|
|
|
$
|
1.6
|
|
|
$
|
6.7
|
|
AXA Mediterranean Holding S.A.U.
|
$
|
0.8
|
|
|
$
|
1.4
|
|
|
$
|
0.8
|
|
AXA Switzerland Property & Casualty
|
$
|
0.5
|
|
|
$
|
1.0
|
|
|
$
|
1.3
|
|
AIM Deutschland GmbH
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
AXA Investment Managers, Ltd. Paris
|
$
|
0.1
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
AXA Investment Managers Ltd.
|
$
|
0.1
|
|
|
$
|
0.4
|
|
|
$
|
0.2
|
|
AXA Winterthur
|
$
|
1.1
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
AXA MPS
|
$
|
0.2
|
|
|
$
|
0.4
|
|
|
$
|
0.1
|
|
AXA General Insurance Hong Kong Ltd.
|
$
|
0.3
|
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
AXA Insurance Company
|
$
|
0.2
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
AXA Life Singapore
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Coliseum Reinsurance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
|
Page Number
|
1.
|
||
2.
|
Financial Statement Schedules:
|
|
|
||
|
||
|
||
|
||
3.
|
Exhibits: See the accompanying
Exhibit Index
.
|
|
Account Value (“AV”)
|
Generally equals the aggregate policy account value of our retirement and protection products. General Account AV refers to account balances in investment options that are backed by the General Account while Separate Accounts AV refers to Separate Accounts investment assets.
|
|
|
Alternative investments
|
Investments in real estate and real estate joint ventures and other limited partnerships.
|
|
|
Assets under administration (“AUA”)
|
Includes non-insurance client assets that are invested in our savings and investment products or serviced by our AXA Advisors platform. We provide administrative services for these assets and generally record the revenues received as distribution fees.
|
|
|
Annualized Premium
|
100% of first year recurring premiums (up to target) and 10% of excess first year premiums or first year premiums from single premium products.
|
|
|
Assets under management (“AUM”)
|
Investment assets that are managed by one of our subsidiaries and includes: (i) assets managed by AB, (ii) the assets in our GAIA portfolio and (iii) the Separate Account assets of our retirement and protection businesses. Total AUM reflects exclusions between segments to avoid double counting.
|
|
|
Combined RBC Ratio
|
Calculated as the overall aggregate RBC ratio for the Company’s insurance subsidiaries including capital held for its life insurance and variable annuity liabilities and non-variable annuity insurance liabilities.
|
|
|
Conditional tail expectation (“CTE”)
|
Calculated as the average amount of total assets required to satisfy obligations over the life of the contract or policy in the worst x% of scenarios. Represented as CTE (100
less
x). Example: CTE95 represents the worst five percent of scenarios.
|
|
|
Deferred policy acquisition cost (“DAC”)
|
Represents the incremental costs related directly to the successful acquisition of new and certain renewal insurance policies and annuity contracts and which have been deferred on the balance sheet as an asset.
|
|
|
Deferred sales inducements (“DSI”)
|
Represent amounts that are credited to a policyholder’s account balance that are higher than the expected crediting rates on similar contracts without such an inducement and that are an incentive to purchase a contract and also meet the accounting criteria to be deferred as an asset that is amortized over the life of the contract.
|
|
|
Dividends Received Deduction (“DRD”)
|
A tax deduction under U.S. federal income tax law received by a corporation on the dividends it receives from other corporations in which it has an ownership stake.
|
|
|
Gross Premiums
|
FYP and Renewal premium and deposits.
|
Invested assets
|
Includes fixed maturity securities, equity securities, mortgage loans, policy loans, alternative investments and short-term investments.
|
|
|
P&C
|
Property and casualty.
|
|
|
Premium and deposits
|
Amounts a policyholder agrees to pay for an insurance policy or annuity contract that may be paid in one or a series of payments as defined by the terms of the policy or contract.
|
|
|
Protection Solutions Reserves
|
Equals the aggregate value of Policyholders’ account balances and Future policy benefits for policies in our Protection Solutions segment.
|
|
|
Reinsurance
|
Insurance policies purchased by insurers to limit the total loss they would experience from an insurance claim.
|
|
|
Renewal premium and deposits
|
Premiums and deposits after the first twelve months of the policy or contract.
|
|
|
Risk-based capital (“RBC”)
|
Rules to determine insurance company statutory capital requirements. It is based on rules published by the National Association of Insurance Commissioners (“NAIC”).
|
|
|
Total adjusted capital (“TAC”)
|
Primarily consists of capital and surplus, and the asset valuation reserve.
|
|
|
Value of business acquired (“VOBA”)
|
Present value of estimated future gross profits from in-force policies of acquired businesses.
|
|
|
Product Terms
|
|
|
|
401(k)
|
A tax-deferred retirement savings plan sponsored by an employer. 401(k) refers to the section of the Internal Revenue Code of 1986, as amended (the “Code”) pursuant to which these plans are established.
|
|
|
403(b)
|
A tax-deferred retirement savings plan available to certain employees of public schools and certain tax-exempt organizations. 403(b) refers to the section of the Code pursuant to which these plans are established.
|
|
|
457(b)
|
A deferred compensation plan that is available to governmental and certain non-governmental employers. 457(b) refers to the section of the Code pursuant to which these plans are established.
|
|
|
Accumulation phase
|
The phase of a variable annuity contract during which assets accumulate based on the policyholder’s lump sum or periodic deposits and reinvested interest, capital gains and dividends that are generally tax-deferred.
|
|
|
Affluent
|
Refers to individuals with $250,000 to $999,999 of investable assets.
|
|
|
Annuitant
|
The person who receives annuity payments or the person whose life expectancy determines the amount of variable annuity payments upon annuitization of an annuity to be paid for life.
|
|
|
Annuitization
|
The process of converting an annuity investment into a series of periodic income payments, generally for life.
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Benefit base
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A notional amount (not actual cash value) used to calculate the owner’s guaranteed benefits within an annuity contract. The death benefit and living benefit within the same contract may not have the same benefit base.
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Cash surrender value
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The amount an insurance company pays (minus any surrender charge) to the policyholder when the contract or policy is voluntarily terminated prematurely.
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Deferred annuity
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An annuity purchased with premiums paid either over a period of years or as a lump sum, for which savings accumulate prior to annuitization or surrender, and upon annuitization, such savings are exchanged for either a future lump sum or periodic payments for a specified length of time or for a lifetime.
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Dollar-for-dollar withdrawal
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A method of calculating the reduction of a variable annuity benefit base after a withdrawal in which the benefit is reduced by one dollar for every dollar withdrawn.
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Fixed annuity
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An annuity that guarantees a set annual rate of return with interest at rates we determine, subject to specified minimums. Credited interest rates are guaranteed not to change for certain limited periods of time.
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Fixed Rate GMxB
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Guarantees on our individual variable annuity products that are based on a rate that is fixed at issue.
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Floating Rate GMxB
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Guarantees on our individual variable annuity products that are based on a rate that varies with a specified index rate, subject to a cap and floor.
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Future policy benefits
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Future policy benefits for the annuities business are comprised mainly of liabilities for life-contingent income annuities, and liabilities for the variable annuity guaranteed minimum benefits accounted for as insurance.
Future policy benefits for the life business are comprised mainly of liabilities for traditional life and certain liabilities for universal and variable life insurance contracts (other than the Policyholders’ account balance).
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General Account Investment Portfolio
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Means the invested assets held in the General Account.
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Guaranteed minimum accumulation benefits (“GMAB”)
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An optional benefit (available for an additional cost) which entitles an annuitant to a minimum payment, typically in lump-sum, after a set period of time, typically referred to as the accumulation period. The minimum payment is based on the benefit base, which could be greater than the underlying AV.
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Guaranteed minimum death
benefits (“GMDB”)
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An optional benefit (available for an additional cost) that guarantees an annuitant’s beneficiaries are entitled to a minimum payment based on the benefit base, which could be greater than the underlying AV, upon the death of the annuitant.
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Guaranteed minimum income benefits (“GMIB”)
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An optional benefit (available for an additional cost) where an annuitant is entitled to annuitize the policy and receive a minimum payment stream based on the benefit base, which could be greater than the underlying AV.
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Guaranteed minimum living
benefits (“GMLB”)
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A reference to all forms of guaranteed minimum living benefits, including GMIBs, GMWBs and GMABs (does not include GMDBs).
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Guaranteed minimum withdrawal benefits (“GMWB”)
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An optional benefit (available for an additional cost) where an annuitant is entitled to withdraw a maximum amount of their benefit base each year, for which cumulative payments to the annuitant could be greater than the underlying AV.
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Guaranteed Universal Life (“GUL”)
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A universal life insurance offering with a lifetime no lapse guarantee rider, otherwise known as a guaranteed UL policy. With a GUL policy, the premiums are guaranteed to last the life of the policy.
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Guaranteed withdrawal benefit for life (“GWBL”)
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An optional benefit (available for an additional cost) where an annuitant is entitled to withdraw a maximum amount of their benefit base each year, for the duration of the policyholder’s life, regardless of account performance.
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High net worth
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Refers to individuals with $1,000,000 or more of investable assets.
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Index-linked annuities
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An annuity that provides for asset accumulation and asset distribution needs with an ability to share in the upside from certain financial markets such as equity indices, or an interest rate benchmark. With an index-linked annuity, the policyholder’s AV can grow or decline due to various external financial market indices performance.
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Indexed Universal Life (“IUL”)
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A permanent life insurance offering built on a universal life insurance framework that uses an equity-linked approach for generating policy investment returns.
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Living benefits
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Optional benefits (available at an additional cost) that guarantee that the policyholder will get back at least his original investment when the money is withdrawn.
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Mortality and expense risk fee (“M&E fee”)
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A fee charged by insurance companies to compensate for the risk they take by issuing life insurance and variable annuity contracts.
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Net flows
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Net change in customer account balances in a period including, but not limited to, gross premiums, surrenders, withdrawals and benefits. It excludes investment performance, interest credited to customer accounts and policy charges.
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Policyholder account balances
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Annuities
. Policyholder account balances are held for fixed deferred annuities, the fixed account portion of variable annuities and non-life contingent income annuities. Interest is credited to the policyholder’s account at interest rates we determine which are influenced by current market rates, subject to specified minimums.
Life Insurance Policies
. Policyholder account balances are held for retained asset accounts, universal life policies and the fixed account of universal variable life insurance policies. Interest is credited to the policyholder’s account at interest rates we determine which are influenced by current market rates, subject to specified minimums.
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Return of premium (“ROP”) death benefit
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This death benefit pays the greater of the account value at the time of a claim following the owner’s death or the total contributions to the contract (subject to adjustment for withdrawals). The charge for this benefit is usually included in the M&E fee that is deducted daily from the net assets in each variable investment option. We also refer to this death benefit as the Return of Principal death benefit.
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Rider
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An optional feature or benefit that a policyholder can purchase at an additional cost.
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Roll-up rate
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The guaranteed percentage that the benefit base increases by each year.
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Separate Account
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Refers to the separate account investment assets of our insurance subsidiaries excluding the assets held in those separate accounts on which we bear the investment risk.
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Surrender charge
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A fee paid by a contract owner for the early withdrawal of an amount that exceeds a specific percentage or for cancellation of the contract within a specified amount of time after purchase.
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Surrender rate
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Represents annualized surrenders and withdrawals as a percentage of average AV.
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Universal life (“UL”) products
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Life insurance products that provide a death benefit in return for payment of specified annual policy charges that are generally related to specific costs, which may change over time. To the extent that the policyholder chooses to pay more than the charges required in any given year to keep the policy in-force, the excess premium will be placed into the AV of the policy and credited with a stated interest rate on a monthly basis.
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Variable annuity
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A type of annuity that offers guaranteed periodic payments for a defined period of time or for life and gives purchasers the ability to invest in various markets though the underlying investment options, which may result in potentially higher, but variable, returns.
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Variable Universal Life (“VUL”)
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Universal life products where the excess amount paid over policy charges can be directed by the policyholder into a variety of Separate Account investment options. In the Separate Account investment options, the policyholder bears the entire risk and returns of the investment results.
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Whole Life (“WL”)
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A life insurance policy that is guaranteed to remain in-force for the policyholder’s lifetime, provided the required premiums are paid.
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Exhibit Number
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Exhibit Description
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Amended and Restated Certificate of Incorporation of AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 3.1 to AXA Equitable Holdings, Inc.’s Form 10-Q for the quarterly period ending March 31, 2018, as filed on June 20, 2018 (the “Q-1 2018 Form 10-Q”)).
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Amended and Restated By-laws of AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Q-1 2018 Form 10-Q).
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Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 of AXA Equitable Holdings, Inc., File No. 333-221521 (the “IPO Form S-1”)).
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Indenture, dated as of December 1, 1993 from AXA Financial, Inc. to The Bank of NY Mellon Trust Company, N.A. (formerly known as Chemical Bank), as Trustee (incorporated by reference to Exhibit 4.2 to the IPO Form S-1).
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Fourth Supplemental Indenture, dated April 1, 1998, from AXA Financial, Inc. to The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, together with forms of global Senior Note and global Senior Indenture (incorporated by reference to Exhibit 4.3 to the IPO Form S-1).
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Fifth Supplemental Indenture, dated October 1, 2018, among AXA Equitable Holdings, Inc. AXA Financial, Inc. and The Bank of NY Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K, filed on October 1, 2018).
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Indenture, dated as of April 20, 2018, among AXA Equitable Holdings, Inc., as issuer, Wilmington Saving Fund Society, FSB, as trustee, and Citibank, N.A., as security registrar and paying agent (incorporated by reference to Exhibit 4.4 to the IPO Form S-1).
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First Supplemental Indenture, dated as of April 20, 2018, among AXA Equitable Holdings, Inc., as issuer, Wilmington Saving Fund Society, FSB, as trustee, and Citibank, N.A., as security registrar and paying agent (incorporated by reference to Exhibit 4.5 to the IPO Form S-1).
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Second Supplemental Indenture, dated as of April 20, 2018, among AXA Equitable Holdings, Inc., as issuer, Wilmington Saving Fund Society, FSB, as trustee, and Citibank, N.A., as security registrar and paying agent (incorporated by reference to Exhibit 4.6 to the IPO Form S-1).
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Third Supplemental Indenture, dated as of April 20, 2018, among AXA Equitable Holdings, Inc., as issuer, Wilmington Saving Fund Society, FSB, as trustee, and Citibank, N.A., as security registrar and paying agent (incorporated by reference to Exhibit 4.7 to the IPO Form S-1).
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Registration Rights Agreement, dated as of April 20, 2018, among AXA Equitable Holdings, Inc. and the initial purchasers named therein of the 3.900% Senior Notes due 2023, the 4.350% Senior Notes due 2028 and the 5.000% Senior Notes due 2048 (incorporated by reference to Exhibit 4.9 to the Registration Statement on Form S-4 of AXA Equitable Holdings, Inc., File No. 333-228689).
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Shareholder Agreement, dated as of May 4, 2018, between AXA S.A. and AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Q-1 2018 Form 10-Q).
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Registration Rights Agreement, dated as of May 4, 2018, between AXA S.A. and AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 10.2 to the Q-1 2018 Form 10-Q).
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Tax Sharing Agreement, dated March 28, 2018, between AXA S.A., AXA Investment Managers S.A. and AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 10.3 to the IPO Form S-1).
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Transitional Services Agreement, dated as of May 4, 2018, between AXA S.A. and AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 10.4 to the Q-1 2018 Form 10-Q).
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Master Agreement, dated as of April 10, 2013, by and among AXA Equitable Financial Services, LLC, AXA Financial, Inc. and Protective Life Insurance Company (incorporated by reference to Exhibit 10.5 to the IPO Form S-1).
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Trademark License Agreement, dated as of May 4, 2018, among AXA S.A., AXA Equitable Holdings, Inc. and AXA Financial, Inc. (incorporated by reference to Exhibit 10.5 to the Q-1 2018 Form 10-Q).
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Employment Agreement, dated as of March 9, 2011, by and between AXA Financial, Inc. and Mark Pearson (incorporated by reference to Exhibit 10.7 to the IPO Form S-1).
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Letter Agreement, dated February 19, 2013, between AXA Financial, Inc., AXA Equitable Life Insurance Company and Mark Pearson (incorporated by reference to Exhibit 10.7.1 to the IPO Form S-1).
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Letter Agreement, dated May 14, 2015, between AXA Financial, Inc., AXA Equitable Life Insurance Company and Mark Pearson (incorporated by reference to Exhibit 10.7.2 to the IPO Form S-1).
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Letter Agreement, dated February 27, 2019, between AXA Equitable Holdings, Inc., AXA Equitable Life Insurance Company and Mark Pearson.
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Director Indemnification Agreement, dated May 4, 2018, between AXA Equitable Holdings, Inc. and each of its directors (incorporated by reference to Exhibit 10.6 to the Q-1 2018 Form 10-Q).
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Revolving Credit Agreement, dated as of December 1, 2016, with AllianceBernstein L.P. and SCB LLC as Borrowers, the Industrial and Commercial Bank of China as Administrative Agent and the other lending institutions that may be party thereto (incorporated by reference to Exhibit 10.01 to AB Holding’s Form 8-K, as filed December 5, 2016).
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Commercial Paper Dealer Agreement 4(a)(2) Program, dated as of June 1, 2015, between AllianceBernstein L.P., as Issuer, and Citigroup Global Markets Inc., as Dealer (incorporated by reference to Exhibit 10.08 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).
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Commercial Paper Dealer Agreement 4(a)(2) Program, dated as of June 1, 2015, between AllianceBernstein L.P., as Issuer, and Credit Suisse Securities (USA) LLC, as Dealer (incorporated by reference to Exhibit 10.09 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).
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Commercial Paper Dealer Agreement 4(a)(2) Program, dated as of June 1, 2015, between AllianceBernstein L.P., as Issuer, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer (incorporated by reference to Exhibit 10.10 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).
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Revolving Credit Agreement, dated as of December 9, 2010, Amended and Restated as of January 17, 2012, Further Amended and Restated as of October 22, 2014 and Further Amended and Restated as of September 27, 2018, among AllianceBernstein L.P. and SCB LLC, as Borrowers; Bank of America, N.A., as Administrative Agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citibank, N.A., J.P. Morgan Chase Bank, N.A., HSBC Securities (USA) Inc., Sumitomo Mitsui Banking Corporation and State Street Bank and Trust Company, as joint lead arrangers and joint book managers, and the other lending institutions party thereto (incorporated by reference to Exhibit 10.01 to AB Holding’s Form 8-K, as filed October 3, 2018).
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Extendible Commercial Notes Dealer Agreement, dated as of December 14, 1999 (incorporated by reference to Exhibit 10.10 to AB Holding’s Form 10-K for the fiscal year ended December 31, 1999, as filed March 28, 2000).
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Form of Award Agreement under Incentive Compensation Award Program, Deferred Cash Compensation Program and 2010 Long Term Incentive Plan (incorporated by reference to Exhibit 10.04 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2016, as filed February 14, 2017).
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Amendment to the Profit Sharing Plan for Employees of AllianceBernstein L.P., dated as of October 20, 2016 and effective as of January 1, 2017 (incorporated by reference to Exhibit 10.06 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2016, as filed February 14, 2017).
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Profit Sharing Plan for Employees of AllianceBernstein L.P., as amended and restated as of January 1, 2015 and as further amended as of January 1, 2017 (incorporated by reference to Exhibit 10.05 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).
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AllianceBernstein L.P. 2010 Long Term Incentive Plan, as amended (incorporated by reference to Exhibit 10.03 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2014, as filed February 12, 2015).
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Employment Agreement, dated as of April 28, 2017, among Seth Bernstein, AllianceBernstein Holding L.P., AllianceBernstein L.P. and AllianceBernstein Corporation (incorporated by reference to Exhibit 10.3 to AB Holding’s Form 8-K as filed May 1, 2017).
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AllianceBernstein L.P. 2017 Long Term Incentive Plan (incorporated by reference to Exhibit 10.06 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2017, as filed February 13, 2018).
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Revolving Credit Agreement by and among AXA Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto, the banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. (incorporated by reference to Exhibit 10.22 to the IPO Form S-1).
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Form of Performance Share Award Agreement under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.23 to the Q-1 2018 Form 10-Q).
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Term Loan Agreement by and among AXA Equitable Holdings, Inc., the banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.24 to the IPO Form S-1).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and Natixis, New York Branch (incorporated by reference to Exhibit 10.25 to the IPO Form S-1 ).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and HSBC Bank USA, National Association (incorporated by reference to Exhibit 10.26 to the IPO Form S-1).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and Citibank Europe PLC (incorporated by reference to Exhibit 10.27 to the IPO Form S-1).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and Credit Agricole Corporate and Investment Bank (incorporated by reference to Exhibit 10.28 to the IPO Form S-1).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and Barclays Bank PLC (incorporated by reference to Exhibit 10.29 to the IPO Form S-1).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and JPMorgan Chase Bank, N.A (incorporated by reference to Exhibit 10.30 to the IPO Form S-1).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and Landesbank Hessen-Thüringen Girozentrale, acting through its New York Branch (incorporated by reference to Exhibit 10.31 to the IPO Form S-1).
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Reimbursement Agreement by and among AXA Equitable Holdings, Inc. the Subsidiary Account Parties (as defined therein) party thereto and Commerzbank AG, New York Branch (incorporated by reference to Exhibit 10.32 to the IPO Form S-1).
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Waiver Letter Agreements with the lenders party to each of the agreements in Exhibit 10.21 and Exhibits 10.23 to 10.31 (incorporated by reference to Exhibit 10.33 to the IPO Form S-1).
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Letter Agreement between AXA Equitable Life Insurance Company and George Stansfield, dated June 30, 2015 (incorporated by reference to Exhibit 10.34 to the IPO Form S-1).
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Letter Agreement between AXA Equitable Life Insurance Company and Jeffrey Hurd, dated November 3, 2017 (incorporated by reference to Exhibit 10.35 to the IPO Form S-1).
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AXA Stock Option Plan for AXA Financial Employees and Associates (incorporated by reference to Exhibit 10.36 to the IPO Form S-1).
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Form of Option Grant Letter under the AXA Stock Option Plan for AXA Financial Employees and Associates (Mark Pearson) (incorporated by reference to Exhibit 10.37 to the IPO Form S-1).
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Form of Option Grant Letter under the AXA Stock Option Plan for AXA Financial Employees and Associates (Executive Officers) (incorporated by reference to Exhibit 10.38 to the IPO Form S-1).
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Form of Option Agreement under the AXA Stock Option Plan for AXA Financial Employees and Associates (incorporated by reference to Exhibit 10.39 to the IPO Form S-1).
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Rules of 2015 AXA International Performance Share Plan and Addendum for AXA Financial Participants (incorporated by reference to Exhibit 10.41 to the IPO Form S-1).
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Rules of 2016 AXA International Performance Share Plan and Addendum for AXA Financial Participants (incorporated by reference to Exhibit 10.42 to the IPO Form S-1).
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Rules of AXA 2017 International Performance Shares Plan and Addendum for AXA Financial Participants (incorporated by reference to Exhibit 10.43 to the IPO Form S-1).
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AXA Financial, Inc. Restricted Stock Unit Award Agreements (incorporated by reference to Exhibit 10.44 to the IPO Form S-1).
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AXA Equitable Severance Benefit Plan (incorporated by reference to Exhibit 10.45 to the IPO Form S-1).
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AXA Equitable Supplemental Severance Plan for Executives (incorporated by reference to Exhibit 10.25 to the Q-1 2018 Form 10-Q).
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AXA Equitable Executive Survivor Benefits Plan (incorporated by reference to Exhibit 10.47 to the IPO Form S-1).
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Amended and Restated Variable Deferred Compensation Plan for Executives (incorporated by reference to Exhibit 10.48 to the IPO Form S-1).
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Amended and Restated AXA Equitable Post-2004 Variable Deferred Compensation Plan for Executives (incorporated by reference to Exhibit 10.49 to the IPO Form S-1).
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AXA Equitable Excess Retirement Plan (incorporated by reference to Exhibit 10.50 to the IPO Form S-1).
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AXA Financial, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.51 to the IPO Form S-1).
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Form of Stock Option Agreement under the AXA Financial, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.52 to the IPO Form S-1).
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Form of Restricted Stock Agreement under the AXA Financial, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.53 to the IPO Form S-1).
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AXA Equitable Post-2004 Variable Deferred Compensation Plan for Directors (incorporated by reference to Exhibit 10.54 to the IPO Form S-1).
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AXA Financial, Inc. Charitable Award Program for Directors (incorporated by reference to Exhibit 10.55 to the IPO Form S-1).
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AXA Equitable Holdings, Inc. Short-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.56 to the IPO Form S-1).
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AXA Equitable Holdings, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.57 to the IPO Form S-1).
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Form of Transaction Incentive Award Agreement under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.21 to the Q-1 2018 Form 10-Q).
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Form of Restricted Stock Unit Award Agreement under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.22 to the Q-1 2018 Form 10-Q).
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Form of Stock Option Award Agreement under the 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.24 to the Q-1 2018 Form 10-Q).
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Share Repurchase Agreement between AXA S.A. and AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 10.61 to the Registration Statement on Form S-1 of AXA Equitable Holdings, Inc., File No. 333-228365 (the “November Form S-1”)).
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Confidential Agreement and General Release, dated August 13, 2018, between Brian Winikoff and AXA Equitable Life Insurance Company (incorporated by reference to Exhibit 10.1 to AXA Equitable Holdings, Inc.’s Form 10-Q for the quarterly period ending September 30, 2018, as filed on November 13, 2018).
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AXA Equitable Holdings, Inc. 2019 Omnibus Incentive Plan.
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AXA Equitable Holdings, Inc. Stock Purchase Plan.
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Amendment to Seth P. Bernstein's Employment Agreement (incorporated by reference to Exhibit 10.01 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).
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AllianceBernstein 2018 Incentive Compensation Award Program (incorporated by reference to Exhibit 10.02 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).
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AllianceBernstein 2018 Deferred Cash Compensation Program (incorporated by reference to Exhibit 10.03 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).
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Form of Award Agreement, dated as of December 31, 2018, under Incentive Compensation Award Program, Deferred Cash Compensation Program and AB 2017 Long Term Incentive Plan (incorporated by reference to Exhibit 10.04 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).
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Form of Award Agreement, dated as of May 15, 2018, under AB 2017 Long Term Incentive Plan relating to equity compensation awards to Eligible Directors (incorporated by reference to Exhibit 10.05 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).
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Amendment to the Profit Sharing Plan for Employees of AllianceBernstein L.P., dated as of April 1, 2018 (incorporated by reference to Exhibit 10.12 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).
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Amendment to the AXA Equitable Post-2004 Variable Deferred Compensation Plan for Executives, effective as of January 1, 2019.
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Form of Performance Shares Award Agreement under the 2018 Omnibus Incentive Plan, effective as of February 14, 2019.
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Form of Restricted Stock Unit Award Agreement under the 2018 Omnibus Incentive Plan, effective as of February 14, 2019.
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Form of Stock Option Award Agreement under the 2018 Omnibus Incentive Plan, effective as of February 14, 2019.
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List of Subsidiaries of AXA Equitable Holdings, Inc.
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Consent of PricewaterhouseCoopers LLP.
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Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Certification of the Registrant’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Certification of the Registrant’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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#
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Filed herewith.
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†
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Identifies each management contract or compensatory plan or arrangement.
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AXA EQUITABLE HOLDINGS, INC.
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By:
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/s/ Mark Pearson
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Name: Mark Pearson
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Title: President and Chief Executive Officer
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Signature
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Title
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/s/ Mark Pearson
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President and Chief Executive Officer; Director (Principal Executive Officer)
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Mark Pearson
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/s/ Anders Malmström
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Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)
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Anders B. Malmström
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/s/ William Eckert
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Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
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William Eckert
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/s/ Thomas Buberl
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Director
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Thomas Buberl
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/s/ Gérald Harlin
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Director
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Gérald Harlin
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/s/ George Stansfield
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Director
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George Stansfield
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/s/ Karima Silvent
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Director
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Karima Silvent
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/s/ Bertrand Poupart-Lafarge
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Director
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Bertrand Poupart-Lafarge
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/s/ Daniel G. Kaye
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Director
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Daniel G. Kaye
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/s/ Ramon de Oliveira
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Director
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Ramon de Oliveira
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/s/ Charles G. T. Stonehill
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Director
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Charles G. T. Stonehill
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(a)
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“Active” means actively performing services. For this purpose, an Agent or Employee is active if he or she is on short-term disability, military or family leave, but is not active if he or she is retired, on LTD Status, Severance Status or unpaid leave.
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(b)
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“Affiliate” means each of the Company’s and AXA S.A.’s direct or indirect majority-owned subsidiaries.
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(c)
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“Agent” means all Active financial professionals classified as full-time life insurance salespersons by an Employer who are exclusive agents of an Employer or derive more than 50% of their annual income from or one or more Employers.
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(d)
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“Board” means the Board of Directors of the Company.
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(e)
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“Company” means AXA Equitable Holdings, Inc., a Delaware corporation.
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(f)
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“Compensation” means compensation as determined under the AXA Equitable 401(k) Plan.
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(g)
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“Custodian” means Morgan Stanley Smith Barney or such other entity appointed by the Plan Administrator.
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(h)
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“Employees” means all Active, part-time benefits-eligible or full-time benefits-eligible common-law employees of an Employer. For this purpose, an Employee includes an Active, full-time common-law employee of an Affiliate who performs services for an Employer pursuant to an expatriate arrangement and an Active, full-time common-law employee of an Employer who performs services for AXA S.A. pursuant to an expatriate arrangement, provided in each case that the employee receives a regular paycheck from an Employer.
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(i)
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“Employer” means the Company and any of its wholly-owned subsidiaries.
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(j)
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“Employer Matching Contributions” means amounts contributed by an Employer pursuant to Section 5.3.
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(k)
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“Individual Account” means a separate account or accounts maintained by the Custodian for each Participant to which shall be credited the amount of any Payroll Contributions made by or on behalf of the Participant, and the number of Shares that are purchased on such Participant’s behalf, pursuant to the terms of the Plan.
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(l)
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“LTD Status” means long-term disability status, as determined in accordance with the otherwise applicable plans or policies of the applicable Employer.
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(m)
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“Participant” means an Agent or Employee who has enrolled in the Plan pursuant to Section 5.1.
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(n)
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“Payroll Contributions” means a Participant’s after-tax payroll contributions to his/her Individual Account pursuant to Section 5.2.
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(o)
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“Plan Administrator” means the Compensation Committee of the Board.
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(p)
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“Plan Year” means a period of twelve months commencing on January 1 and ending on the next December 31 except that the 2018 Plan Year shall begin on December 1, 2018 and shall end on December 31, 2018.
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(q)
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“Purchase Date” means the last Trading Day of each month or any other Trading Day designated by the Plan Administrator on which Shares will be purchased under the Plan.
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(r)
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“Purchase Funds” means the Payroll Contributions in the Individual’s Account as of the close of the third business day immediately preceding a Purchase Date or such other date as determined by the Plan Administrator and their related Employer Matching Contributions.
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(s)
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“Severance Status” means severance status as determined in accordance with the otherwise applicable plans or policies of the applicable Employer. Individuals whose jobs are eliminated under the AXA Equitable Severance Benefit Plan will be deemed to be in Severance Status as of their job elimination date as defined in that plan.
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(t)
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“Shares” means shares of the Company’s common stock, par value $0.01 per share, traded on the New York Stock Exchange.
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(u)
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“Trading Day” means any day on which the New York Stock Exchange is open for trading other than a day on which the trading session is scheduled to close before the normal weekday closing time.
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(i)
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the percentages, in whole percentages not greater than 50% (25% for Plan Years prior to 2019), by which the Commissions, Non-Proprietary Income, Base Salary, and/or Short-Term Incentive Compensation, as applicable, of such Eligible Employee earned during the Plan Year will be reduced,
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(ii)
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the whole percentage, up to 100%, by which any Restricted Stock Awards granted to the Eligible Employee during the immediately following Plan Year will be reduced, provided that no Restricted Stock Award deferrals shall be permitted for Plan Years after 2018,
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(iii)
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the whole percentage, up to 50%, by which the Eligible Employee’s Performance Unit Payout for the Plan Year will be reduced, provided that no Performance Unit Payout deferrals shall be permitted for Plan Years after 2013,
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(iv)
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the percentage by which the Eligible Employee’s Excess Plan Payment earned during the Plan Year will be reduced, provided that such percentage shall be either 0% or 100% and that no such deferrals shall be permitted for Plan Years after 2013 and
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(v)
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the Distribution Accounts to which such amounts will be credited and the time and manner of distribution of such accounts.
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(i)
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certain Eligible Employees designated by the Committee or its designee may elect to credit to their Distribution Accounts up to 100% of their Commissions, and/or Non-Proprietary Income earned during the Plan Year, provided that the Committee or its designee may, in its discretion, limit the amount of any such
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(ii)
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Eligible Employees for the 2005 Plan Year could elect, prior to February 2, 2005, the whole percentage not greater than 25% by which their Short-Term Incentive Compensation for 2004 would be reduced under the Plan,
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(iii)
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Eligible Employees for the 2005 Plan Year who were Employees on January 1, 2005 could elect, prior to June 30, 2005, the whole percentage not greater than 25% by which their Short-Term Incentive Compensation for 2005 would be reduced under the Plan,
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(iv)
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Eligible Employees for the 2005 Plan Year could elect the whole percentage, up to 100%, by which any Restricted Stock Awards granted to the Eligible Employee during the 2005 Plan Year would be reduced, and
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(v)
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in 2008, Former Retirement Plan Participants could elect the percentage by which their Affected Benefits otherwise scheduled to be paid in 2009 would be reduced under the Plan, provided that such percentage could be either 0% or 100%.
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(a)
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Excess 401(k) Contributions:
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(i)
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Each Excess 401(k) Contribution shall equal five percent (ten percent for Plan Years prior to 2019) of the Participant’s Compensation earned during the applicable payroll period that exceeds the Code Compensation Limit applicable for the Plan Year in which the payroll period ends (as such excess is determined by aggregating the Participant’s Compensation earned during the applicable payroll period with the Participant’s Compensation earned in the preceding payroll periods which end during the same Plan Year).
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(ii)
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To be eligible for an Excess 401(k) Contribution for a payroll period, a Participant must be (1) eligible to receive an Employer 401(k) Contribution under the 401(k) Plan for such payroll period, and (2) employed by an Employer or any of its Affiliates during such payroll period; provided, however, that if, during an applicable payroll period, a Participant separates from Service, dies or becomes Disabled while such
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(b)
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Catch-Up Excess 401(k) Contribution:
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(c)
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Excess 401(k) Matching Contributions.
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(i)
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Each Excess 401(k) Matching Contribution shall equal the amount of a Participant’s elective deferral to the Plan for a payroll period, provided that if the amount of the Participant’s elective deferral for a payroll period exceeds 3% of the Participant’s Compensation earned during that payroll period, the contribution shall equal 3% of the Participant’s Compensation for that payroll period.
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(ii)
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To be eligible for an Excess 401(k) Matching Contribution for a payroll period, a Participant must be (1) eligible to receive an Employer 401(k) Contribution under the 401(k) Plan for such payroll period, and (2) employed by an Employer or any of its Affiliates during such payroll period; provided, however, that if, during an applicable payroll period, a Participant separates from Service, dies or becomes Disabled while such Participant is an Employee of an Employer or any of its Affiliates, then such Participant shall receive his or her Excess 401(k) Matching Contribution for such payroll period based on his or her Compensation earned from the Employer making such Excess 401(k) Matching Contribution during such payroll period prior to the date he or she separated from Service, died or became Disabled, as applicable.
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(d)
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Subject to Section 4.5(e), a Participant’s Excess 401(k) Contributions, Catch- Up Excess 401(k) Contributions and Excess 401(k) Matching Contributions shall become vested in accordance with the following schedule:
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Periods of Service
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Vested Percentage
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Less than three years
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0%
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Three years or more
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100%
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(e)
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Notwithstanding Section 4.5(d) to the contrary, a Participant shall be 100% vested in his or her Excess 401(k) Contributions, Catch- Up Excess 401(k) Contributions and Excess 401(k) Matching Contributions upon the Participant’s death, Disability, or attainment of age 65 while the Participant is providing Service.
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(f)
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Any amount in a Participant’s 401(k) Distribution Account which is not vested upon the Participant’s Separation from Service shall be immediately forfeited.
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(a)
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Regular Distribution Accounts. A Participant who is not a retail sales manager may allocate deferrals of Commissions, Base Salary, Excess Plan Payments and/or Short-Term Incentive Compensation for a Plan Year to one existing Regular Distribution Account or to one new Regular Distribution Account. A Participant who is a retail sales manager may allocate deferrals of Non-Proprietary Income, and/or Commissions for a Plan Year to one existing or new Regular Distribution Account solely containing Non-Proprietary Income and/or Commissions and separately may allocate deferrals of Base Salary, Excess Plan Payments and/or Short- Term Incentive Compensation for a Plan Year to one existing or new Regular Distribution Account solely containing Base Salary, Excess Plan Payments and/or Short-Term Incentive Compensation.
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(b)
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Restricted Stock Distribution Accounts. A Participant may allocate the deferral of Restricted Stock Awards for a Plan Year to one existing Restricted Stock Distribution Account or to one new Restricted Stock Distribution Account.
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(c)
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Performance Unit Payout Distribution Accounts. A Participant must allocate the deferral of a Performance Unit Payout for a Plan Year to a new Performance Unit Payout Distribution Account.
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(d)
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Affected Benefits. Affected Benefits could be allocated to up to five Regular Distribution Accounts.
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(e)
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401(k) Distribution Accounts. A Participant’s Excess 401(k) Contributions, Catch-Up Excess 401(k) Contributions and Excess 401(k) Matching Contributions for a Plan Year shall be allocated to the Participant’s 401(k) Distribution Account established for such Plan Year.
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(i)
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The specific reason or reasons for the denial;
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(ii)
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Specific reference to pertinent Plan provisions on which the denial is based;
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(iii)
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A description of any additional material or information necessary for the claimant to submit to perfect the claim and an explanation of why such material or information is necessary; and
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(iv)
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A description of the claims review process (including the time limits applicable to such process and a statement of the claimant’s right to bring a civil action under ERISA following a further denial on review).
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(a)
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Timing.
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(1)
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Any "Action" (as defined below) that is filed by, or on behalf of, a Participant, or on the behalf of the Participant’s heirs, estate, spouse or Beneficiary against or with respect to the Plan, the Company, any of the Company's participating affiliates, any of the Company's Affiliates, their predecessors, successors or assigns, the Committee, the claims administrator, or their delegates, must be brought within two years of when the cause of action arose (the "Two-Year Period"); provided, however, that such individual may not bring any Action unless he or she has fully exhausted all of his or her actual or potential rights under the Plan's claims procedures set forth in Section 7.18. This exhaustion requirement is intended to be interpreted as broadly as possible to the extent permitted by law. An "Action" shall mean any claim or suit in court or in another forum that relates to the Plan, including without limitation, any eligibility, benefits, Plan interpretation, ERISA rights or any other matters related to the Plan; provided, that for purposes of applying the Two-Year Period and the Tolling Period described herein, an Action shall not include any claim or action that cannot be subject to contractual statute of limitations provisions under applicable laws.
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(2)
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The Two-Year Period shall be tolled (the "Tolling Period"), as follows:
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(i)
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The Tolling Period shall start upon the issuance, in writing, of the initial denial of the individual's claim or request for benefit, as applicable, by the Committee or its delegates in accordance with the Plan's claims procedures set forth in Section 7.18.
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(ii)
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The Tolling Period shall conclude when the decision on the individual's review is made in writing by the Committee or its delegates in accordance with the Plan's claims procedures set forth in Section 7.18; provided, however, that if the individual does not timely ask for a review of his or her denial (or does not meet any other timeliness requirements during the review), the Tolling Period shall end on the last day of the Plan's review period.
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(iii)
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The Tolling Period shall not be counted against the Two- Year Period. Once the Tolling Period ends, the Two-Year Period shall start running with the same amount of time remaining as such individual had for his or her Two-Year Period prior to having such period tolled.
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(3)
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Any Action brought after the end of the Two-Year Period shall be time- barred.
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(4)
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The Two-Year Period shall apply to any cause of action arising on or after January 1, 2012. Notwithstanding anything herein to the contrary, if the cause of action arose prior to January 1, 2012, the statute of limitations shall be the lesser of (i) the remaining amount of time, as determined as of December 31, 2011, under the applicable statute of limitations or (ii) the Two-Year Period beginning as of January 1, 2012.
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(5)
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The provisions of this paragraph (a) shall be severable. If any provision of this paragraph (a) is held illegal, void or invalid in its entirety, the remaining provisions of this section "Limitation on Actions" and any other provisions
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(b)
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Venue. Effective as of January 1, 2012, an Action not yet brought in court or in another forum may only be brought in the United States District Court of New Jersey. The designation of this court as the exclusive venue for any Action shall apply without any exception.
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(a)
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Vesting. Except as otherwise provided in this Section 2, the Unearned Performance Shares shall become earned and vested, if at all, in accordance with the terms and conditions of this Agreement (including the Performance Conditions in Exhibit A) and the Plan, subject to the continued employment of the Employee by the Company or any of its Affiliates through February 14, 2022 (the “Vesting Date”). Unearned Performance Shares that become earned and vested shall be settled as provided in Section 3 of this Agreement.
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(b)
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Effect of Termination of Employment. In the event of a termination of employment, the treatment of any unvested Performance Shares shall be governed by Article X of the Plan. For purposes of determining whether a termination is a “Qualifying Termination,” the Employee’s period of service shall not include any severance period or period during which the Employee is on a terminal leave of absence under The AXA Equitable Severance Benefit Plan or any similar benefit plan of the Company or one of its Subsidiaries.
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(c)
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Effect of a Change in Control. In the event of a Change in Control, the treatment of any unvested Performance Shares shall be governed by Article XI of the Plan.
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(d)
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Discretionary Acceleration. Notwithstanding anything contained in this Agreement to the contrary, the Administrator, in its sole discretion, may accelerate the vesting with respect to any Performance Shares under this Agreement, at such times and upon such terms and conditions as the Administrator shall determine.
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(a)
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Tax Withholding. The Company or one of its Affiliates shall require the Employee to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding obligations that may arise in connection with the vesting of any earned Performance Shares by retaining a number of Shares to be issued in respect of the Performance Shares then vesting that have an aggregate Fair Market Value as of the Settlement Date equal to the amount of such taxes required to be withheld (and the Employee shall thereupon be deemed to have satisfied his or her obligations under this Section 6(a)). The number of Shares to be issued in respect of the Performance Shares shall thereupon be reduced by the number of Shares so retained.
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(b)
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Dividend Equivalents. In the event that the Company pays any ordinary dividend in cash while the Employee has any outstanding Performance Shares, there shall be credited to the account of the Employee a dividend equivalent in the form of additional Performance Shares equal in value to the cash dividends that the Employee would have received if the Employee’s then outstanding Performance Shares represented actual Shares. The amount so credited shall be paid at the applicable Settlement Date of the Performance Shares in Shares proportionate to the amount of the Performance Shares, if any, that have been earned or vested. To the extent any Performance Shares are canceled, a proportionate amount of such dividend equivalents shall be forfeited.
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(c)
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Forfeiture of Awards. The Performance Shares granted hereunder (and gains earned or accrued in connection therewith) shall be subject to such generally applicable policies as to forfeiture and recoupment (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct or Competitive Activity) as may be adopted by the Administrator or the Board from time to time and communicated to the Employee or as required by applicable law, and are otherwise subject to forfeiture or disgorgement of profits as provided by the Plan.
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(d)
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Consent to Electronic Delivery. By entering into this Agreement and accepting the Performance Shares evidenced hereby, the Employee hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Employee pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, this Agreement and the Performance Shares via Company website or other electronic delivery.
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(e)
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Amendment. This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Employee and the Company.
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(f)
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Applicable Law. This Agreement shall be governed in all respects, including, but not limited to, as to validity, interpretation and effect, by the internal laws of the State of Delaware, without reference to principles of conflict of law that would require application of the law of another jurisdiction.
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(g)
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Acceptance of Performance Shares and Agreement. The Employee has indicated his or her consent and acknowledgment of the terms of this Agreement pursuant to the instructions provided to the Employee by or on behalf of the Company. The Employee acknowledges receipt of the Plan, represents to the Company that he or she has read and understood this Agreement and the Plan, and, as an express condition to the grant of the Performance Shares under this Agreement, agrees to be bound by the terms of both this Agreement and the Plan. The Employee and the Company each agrees and acknowledges that the use of electronic media (including, without limitation, a clickthrough button or checkbox on a website of the Company or a third-party administrator) to indicate the Employee’s confirmation, consent, signature, agreement and delivery of this Agreement and the Performance Shares is legally valid and has the same legal force and effect as if the Employee and the Company signed and executed this Agreement in paper form. The same use of electronic media may be used for any amendment or waiver of this Agreement.
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(h)
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Good Reason. In the event that the Employee is eligible for benefits under the AXA Equitable Supplemental Severance Plan for Executives (the “Severance Plan”) as of the date of his or her termination of employment, the term “Good Reason” shall have the meaning set forth in the Severance Plan as in effect on the date of termination.
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•
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the unearned performance share is “earned” as described below and
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•
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the earned performance share becomes “vested” as described in the Performance Shares Agreement.
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If the Company’s Non-GAAP Operating ROE for the applicable year equals….
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The ROE Performance Factor for the applicable year will equal….
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Maximum Amount (or greater)
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200%
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Target Amount
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100%
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Threshold Amount
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25%
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Below Threshold
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0%
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If the Company’s Total Shareholder Return Relative to its Peers for the Performance Period is …
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The TSR Performance Factor will equal…
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87.5
th
percentile or greater (maximum)
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200%
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50
th
percentile (target)
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100%
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30
th
percentile (threshold)
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25%
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Below 30
th
percentile
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0%
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TSR Peer Group
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AIG
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Ameriprise Financial
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Brighthouse Financial
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Lincoln Financial
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Metlife Financial
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Principal Financial
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Prudential Financial
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Sun Life Financial
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Torchmark
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Voya Financial
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•
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if a peer enters bankruptcy during the Performance Period, it will be assumed to have a negative 100% total shareholder return for the Performance Period;
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•
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if a peer is acquired by another peer and the transaction is completed as of the date that total shareholder return is calculated for the peer group, the acquiror will be included and the acquired company will be excluded from the peer group; and
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•
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if a peer is acquired by a non-peer and the transaction is completed as of the date that total shareholder return is calculated for the peer group, it will be excluded from the peer group.
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(a)
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Vesting. Except as otherwise provided in this Section 2, the Restricted Stock Units shall vest ratably in equal annual installments over a three-year period, on each of the first three anniversaries of the Grant Date (each, a “Vesting Date”), subject to the continued employment of the Employee by the Company or any of its Affiliates through such date. Vested Restricted Stock Units shall be settled as provided in Section 3 of this Agreement.
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(b)
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Effect of Termination of Employment. In the event of a termination of employment, the treatment of any unvested Restricted Stock Units shall be governed by Article X of the Plan; provided that, in the case of an involuntary termination without Cause on or after the first anniversary of the Grant Date, the employee shall retain the portion of the unvested Restricted Stock Units scheduled to vest:
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(c)
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Effect of a Change in Control. In the event of a Change in Control, the treatment of any unvested Restricted Stock Units shall be governed by Article XI of the Plan.
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(d)
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Discretionary Acceleration. Notwithstanding anything contained in this Agreement to the contrary, the Administrator, in its sole discretion, may accelerate the vesting with respect to any Restricted Stock Units under this Agreement, at such times and upon such terms and conditions as the Administrator shall determine.
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a.
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Tax Withholding. The Company or one of its Affiliates shall require the Employee to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding obligations that may arise in connection with the vesting of the Restricted Stock Units by retaining a number of Shares to be issued in respect of the Restricted Stock Units then vesting that have an aggregate Fair Market Value as of the Settlement Date equal to the amount of such taxes required to be withheld (and the Employee shall thereupon be deemed to have satisfied his or her obligations under this Section 6(a)). The number of Shares to be issued in respect of Restricted Stock Units shall thereupon be reduced by the number of Shares so retained.
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b.
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Dividend Equivalents. In the event that the Company pays any ordinary dividend in cash while the Employee has any outstanding Restricted Stock Units, there shall be credited to the account of the Employee a dividend equivalent in the form of additional Restricted Stock Units equal in value to the cash dividends that the Employee would have received if the Employee’s then outstanding Restricted Stock Units represented actual Shares. The Restricted Stock Units so credited shall be subject to the same vesting and other requirements applicable to the Restricted Stock Units with respect to which they are credited.
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c.
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Forfeiture of Awards. The Restricted Stock Units granted hereunder (and gains earned or accrued in connection therewith) shall be subject to such generally applicable policies as to forfeiture and recoupment (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct or Competitive Activity) as may be adopted by the Administrator or the Board from time to time and communicated to the Employee or as required by applicable law, and are otherwise subject to forfeiture or disgorgement of profits as provided by the Plan.
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d.
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Consent to Electronic Delivery. By entering into this Agreement and accepting the Restricted Stock Units evidenced hereby, the Employee hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Employee pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, this Agreement and the Restricted Stock Units via Company website or other electronic delivery.
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e.
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Amendment. This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Employee and the Company.
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f.
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Applicable Law. This Agreement shall be governed in all respects, including, but not limited to, as to validity, interpretation and effect, by the internal laws of the State of Delaware, without reference to principles of conflict of law that would require application of the law of another jurisdiction.
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g.
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Acceptance of Restricted Stock Units and Agreement. The Employee has indicated his or her consent and acknowledgment of the terms of this Agreement pursuant to the instructions provided to the Employee by or on behalf of the Company. The Employee acknowledges receipt of the Plan, represents to the Company that he or she has read and understood this Agreement and the Plan, and, as an express condition to the grant of the Restricted Stock Units under this Agreement, agrees to be bound by the terms of both this Agreement and the Plan. The Employee and the Company each agrees and acknowledges that the use of electronic media (including, without limitation, a clickthrough button or checkbox on a website of the Company or a third-party administrator) to indicate the Employee’s confirmation, consent, signature, agreement and delivery of this Agreement and the Restricted Stock Units is legally valid and has the same legal force and effect as if the Employee and the Company signed and executed this Agreement in paper form. The same use of electronic media may be used for any amendment or waiver of this Agreement.
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h.
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Good Reason. In the event that the Employee is eligible for benefits under the AXA Equitable Supplemental Severance Plan for Executives (the “Severance Plan”) as of the date of his or her termination of employment,
|
(a)
|
Vesting. Except as otherwise provided in this Section 2, the Options shall vest ratably in equal annual installments over a three-year period, on each of the first three anniversaries of the Grant Date (each, a “Vesting Date”), subject to the continued employment of the Employee by the Company or any Affiliate through such date. Vested Options may be exercised at any time and from time to time prior to February 14, 2029 and the provisions of Section 2 of this Agreement. Options may only be exercised with respect to whole Shares and must be exercised in accordance with Section 3 of this Agreement.
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(b)
|
Effect of Termination of Employment. In the event of a termination of employment, the treatment of any outstanding Options shall be governed by Article X of the Plan. For purposes of determining whether a termination is a “Qualifying Termination,” the Employee’s period of service shall not include any severance period or period during which the Employee is on a terminal leave of absence under The AXA Equitable Severance Benefit Plan or any similar benefit plan of the Company or one of its Subsidiaries.
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(c)
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Effect of a Change in Control. In the event of a Change in Control, the treatment of any outstanding Options shall be governed by Article XI of the Plan.
|
(d)
|
Discretionary Acceleration. Notwithstanding anything contained in this Agreement to the contrary, the Administrator, in its sole discretion, may accelerate the vesting with respect to any Options under this Agreement, at such times and upon such terms and conditions as the Administrator shall determine.
|
(a)
|
Withholding. The Company or one of its Affiliates shall require the Employee to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding or other similar charges or fees that may arise in connection with the grant, vesting or exercise of the Options.
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(b)
|
Forfeiture of Awards. The Options granted hereunder (and gains earned or accrued in connection therewith) shall be subject to such generally applicable policies as to forfeiture and recoupment (including, without limitation, upon the occurrence of material financial or accounting errors, financial or other misconduct or Competitive Activity) as may be adopted by the Administrator or the Board from time to time and communicated to the Employee or as required by applicable law, and are otherwise subject to forfeiture or disgorgement of profits as provided by the Plan.
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(c)
|
Consent to Electronic Delivery. By entering into this Agreement and accepting the Options evidenced hereby, the Employee hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Employee pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, this Agreement and the Options via Company website or other electronic delivery.
|
(d)
|
Amendment. This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Employee and the Company.
|
(e)
|
Applicable Law. This Agreement shall be governed in all respects, including, but not limited to, as to validity, interpretation and effect, by the internal laws of the State of Delaware, without reference to principles of conflict of law that would require application of the law of another jurisdiction.
|
(f)
|
Acceptance of Options and Agreement. The Employee has indicated his or her consent and acknowledgment of the terms of this Agreement pursuant to the instructions provided to the Employee by or on behalf of the Company. The Employee acknowledges receipt of the Plan, represents to the Company that he or she has read and understood this Agreement and the Plan, and, as an express condition to the grant of the Options under this Agreement, agrees to be bound by the terms of both this Agreement and the Plan. The Employee and the Company each agrees and acknowledges that the use of electronic media (including, without limitation, a clickthrough button or checkbox on a website of the Company or a third-party administrator) to indicate the Employee’s confirmation, consent, signature, agreement and delivery of this Agreement and the Options is legally valid and has the same legal force and effect as if the Employee and the Company signed and executed this Agreement in paper form. The same use of electronic media may be used for any amendment or waiver of this Agreement.
|
(g)
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Good Reason. In the event that the Employee is eligible for benefits under the AXA Equitable Supplemental Severance Plan for Executives (the “Severance Plan”) as of the date of his or her termination of employment, the term “Good Reason” shall have the meaning set forth in the Severance Plan as in effect on the date of termination.
|
/s/ Jeff Hurd
|
Jeff Hurd
|
Chief Operating Officer
|
AXA Equitable Holdings, Inc.
|
AXA Equitable Life Insurance Company
|
ACCEPTED AND AGREED TO:
|
|
/s/ Mark Pearson
|
Mark Pearson
|
AXA EQUITABLE HOLDINGS, INC
|
List of Subsidiaries
|
Entity Name
|
State or other jurisdiction of incorporation or organization
|
AXA Equitable Holdings, Inc.
|
DE
|
Alpha Units Holdings, Inc.
|
DE
|
AllianceBernstein Corporation
|
DE
|
SEE LISTING A
|
|
AXA Technology Services America, Inc.
|
DE
|
AXA Corporate Solutions Life Reinsurance Company
|
DE
|
CS Life Re Company
|
AZ
|
AXA-IM Holding US Inc.
|
DE
|
787 Holdings, LLC
|
DE
|
1285 Holdings, LLC
|
DE
|
AXA Strategic Ventures US, LLC
|
DE
|
AXA Equitable Financial Services, LLC
|
DE
|
EQ AZ Life Re Company
|
AZ
|
AXA Distribution Holding Corporation
|
DE
|
AXA Advisors, LLC
|
DE
|
AXA Network, LLC
|
DE
|
AXA Network of Puerto Rico, Inc.
|
P.R.
|
PlanConnect, LLC
|
DE
|
AXA Equitable Life Insurance Company
|
NY
|
ACMC, LLC
|
DE
|
AXA Equitable Funds Management Group LLC
|
DE
|
Broad Vista Partners, LLC
|
DE
|
Long Creek Club Partners, LLC
|
DE
|
Equitable Holdings, LLC
|
NY
|
Equitable Casualty Insurance Company
|
VT
|
AXA Distributors, LLC
|
DE
|
J.M.R. Realty Services, Inc.
|
DE
|
Equitable Structured Settlement Corp.
|
DE
|
Equitable Managed Assets, L.P.
|
DE
|
EVSA, Inc.
|
DE
|
Separate Account 166, LLC
|
DE
|
AXA Equitable Life and Annuity Company
|
CO
|
MONY International Holdings, LLC
|
DE
|
MONY International Life Insurance Co. Seguros de Vida S.A.
|
Argentina
|
MONY Financial Resources of the Americas Limited
|
Jamaica
|
MBT, Ltd.
|
Cayman Islands
|
MONY Consultoria e Corretagem de Seguros Ltda.
|
Brazil
|
MONY Life Insurance Company of the Americas, Ltd.
|
Cayman Islands
|
MONY Life Insurance Company of America
|
AZ
|
U.S. Financial Life Insurance Company
|
OH
|
MONY Financial Services, Inc.
|
DE
|
Financial Marketing Agency, Inc.
|
OH
|
1740 Advisers, Inc.
|
NY
|
Entity Name
|
State or other jurisdiction of incorporation or organization
|
LISTING A - AllianceBernstein Corporation
|
|
AXA Equitable Holdings, Inc.
|
|
Alpha Units Holdings, Inc.
|
|
AllianceBernstein Corporation
|
|
AllianceBernstein Holding L.P.
|
DE
|
AllianceBernstein L.P.
|
DE
|
AllianceBernstein Investments Taiwan Limited
|
Taiwan
|
AB Trust Company, LLC
|
NH
|
Alliance Capital Management LLC
|
DE
|
AllianceBernstein Real Estate Investments LLC
|
DE
|
AB Private Credit Investors LLC
|
DE
|
AB Custom Alternative Investments LLC
|
DE
|
Sanford C. Bernstein & Co., LLC
|
DE
|
Sanford C. Bernstein (Canada) Limited
|
Canada
|
AllianceBernstein International, LLC
|
DE
|
Sanford C. Bernstein (Schwiez) GmbH
|
Switzerland
|
Sanford C. Bernstein (Hong Kong) Limited
|
Hong Kong
|
Sanford C. Bernstein (Ireland) Limited
|
Ireland
|
AllianceBernstein Holdings Limited
|
U.K.
|
AllianceBernstein Corporation of Delaware
|
DE
|
ACAM Trust Company Private Ltd.
|
India
|
AllianceBernstein (Argentina) S.R.L.
|
Argentina
|
AllianceBernstein (Chile) SpA
|
Chile
|
AllianceBernstein Japan Ltd.
|
Japan
|
AllianceBernstein Invest. Manage. Australia Limited
|
Australia
|
AllianceBernstein Global Derivatives Corp.
|
DE
|
AllianceBernstein Administradora de Carteiras (Brasil) Ltda.
|
Brazil
|
AllianceBernstein Holdings (Cayman) Ltd.
|
Cayman Isles
|
AllianceBernstein Preferred Limited
|
U.K.
|
CPH Capital Fondsmaeglerselskab A/S
|
Denmark
|
AB Bernstein Israel Ltd.
|
Israel
|
AllianceBernstein Limited
|
U.K.
|
AB Europe GmbH
|
Germany
|
AllianceBernstein Services Limited
|
U.K.
|
AllianceBernstein Schweiz AG
|
Switzerland
|
AllianceBernstein (Luxembourg) S.a.r.l.
|
Lux.
|
AllianceBernstein (France) SAS
|
France
|
AllianceBernstein (Mexico) S. de R.L. de C.V.
|
Mexico
|
AllianceBernstein Australia Limited
|
Australia
|
AllianceBernstein Canada, Inc.
|
Canada
|
AllianceBernstein (Singapore) Ltd.
|
Singapore
|
Alliance Capital (Mauritius) Private Limited
|
Mauritius
|
AllianceBernstein Solutions (India) Private Limited
|
India
|
AllianceBernstein Invest. Res. & Man. (India) Private Ltd.
|
India
|
Sanford C. Bernstein (India) Limited
|
India
|
AllianceBernstein Oceanic Corporation
|
DE
|
AllianceBernstein Asset Management (Korea) Ltd.
|
South Korea
|
AllianceBernstein Investments, Inc.
|
DE
|
Entity Name
|
State or other jurisdiction of incorporation or organization
|
AllianceBernstein Investor Services, Inc.
|
DE
|
AllianceBernstein Hong Kong Limited
|
Hong Kong
|
AB (Shanghai) Investment Management Co., Ltd.
|
China
|
AB (Shanghai) overseas Investment Fund Management Co., Ltd.
|
China
|
Sanford C. Bernstein Limited
|
U.K.
|
Sanford C. Bernstein (CREST Nominees) Ltd.
|
U.K.
|
W.P. Stewart & Co., LLC.
|
DE
|
WPS Advisors, LLC.
|
DE
|
W.P. Stewart Asset Management LLC
|
DE
|
W.P. Stewart Securities LLC
|
DE
|
W.P. Stewart Asset Management (NA), LLC.
|
NY
|
W.P. Stewart Fund Management S.A.
|
Luxembourg
|
Date: March 8, 2019
|
|
/s/ Mark Pearson
|
Mark Pearson
|
President and Chief Executive Officer
|
Date: March 8, 2019
|
|
/s/ Anders Malmström
|
Anders Malmström
|
Senior Executive Vice President and
Chief Financial Officer |
Date: March 8, 2019
|
|
/s/ Mark Pearson
|
Mark Pearson
|
President and Chief Executive Officer
|
Date: March 8, 2019
|
|
/s/ Anders Malmström
|
Anders Malmström
|
Senior Executive Vice President and
Chief Financial Officer
|