0001333986eqh:DiscountedCashFlowValuationTechniqueMemberus-gaap:MeasurementInputMortalityRateMembereqh:GuaranteedMinimumInsuranceBenefitsnoLapseGuaranteeMembereqh:RangeThreeMemberus-gaap:FairValueInputsLevel3Membersrt:MinimumMember2021-12-31

Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————————————
FORM 10-K
(Mark One)
x

☒		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20182021 
OR
or
¨

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

Commission File No. 001-38469
————————————————
eqh-20211231_g1.jpg
AXA Equitable Holdings, Inc.
(Exact name of registrant as specified in its charter) 
Delaware90-0226248
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)(I.R.S. Employer Identification No.)
1290 Avenue of the Americas, New York, New York                 New York10104
(Address of principal executive offices)(Zip Code)
(Address of principal executive offices) (Zip Code)

(212) 554-1234
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassclassTrading symbolName of each exchange on which registered
Common stock, $0.01 par valueStockEQHNew York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series AEQH PR ANew York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a share of Fixed Rate Noncumulative Perpetual Preferred Stock, Series CEQH PR CNew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ¨☒No x☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes ¨☐No x☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x☒    No ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x☒    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an “emerging growth company”. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨☒Accelerated filer¨☐
Non-accelerated filerx☐Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ¨o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨  ☐No x☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at June 29, 201830, 2021 was approximately $3.3$11.9 billion.
As of March 7, 2019, 521,187,924February 20, 2022, 389,557,860 shares of the registrant’s Common Stock, $0.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement relating to the 20192022 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 20182021 (the “2019“2022 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.


Table of Contents

TABLE OF CONTENTS
Page

4
Page
Item 1.1A.
754
Segment Information
16
Regulation
48
Employees
59
Available Information
59
Risk Factors
60
Item 1B.
10469
10469
10570
10570
10670
10872
11072
162122
166126
290239
290239
292240
240
292240
299240
344241
348242
362242
362242
362242
363242
246
372249
372253



Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
Certain of the statements included or incorporated by reference in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “intends,” “seeks,” “aims,” “plans,” “assumes,” “estimates,” “projects,” “should,” “would,” “could,” “may,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon AXA Equitable Holdings, Inc. (“Holdings”) and its consolidated subsidiaries. “We,” “us” and “our” refer to Holdings and its consolidated subsidiaries, unless the context refers only to Holdings as a corporate entity. There can be no assurance that future developments affecting Holdings will be those anticipated by management. Forward-looking statements include, without limitation, all matters that are not historical facts.
These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (i) conditions in the financial markets and economy, including the impact of COVID-19 and related economic conditions, equity market declines and volatility, interest rate fluctuations, impacts on our goodwill and changes in liquidity and access to and cost of capital; (ii) operational factors, including reliance on the payment of dividends to Holdings by its subsidiaries, remediation of our material weaknesses, fulfilling our obligations related to being a public company, indebtedness, elements of our business strategy not being effective in accomplishing our objectives, protection of confidential customer information or proprietary business information, information systems failingoperational failures by us or being compromisedour service providers, and strong industry competition;catastrophic events, such as the outbreak of pandemic diseases including COVID-19; (iii) credit, counterparties and investments, including counterparty default on derivative contracts, failure of financial institutions, defaults errors or omissions by third parties and affiliates and gross unrealized losses on fixed maturityeconomic downturns, defaults and equity securities;other events adversely affecting our investments; (iv) our reinsurance and hedging programs; (v) our products, structure and product distribution, including variable annuity guaranteed benefits features within certain of our products, complex regulation and administration of our products, variations in statutory capital requirements, financial strength and claims-paying ratings, state insurance laws limiting the ability of our insurance subsidiaries to pay dividends and key product distribution relationships; (vi) estimates, assumptions and valuations, including risk management policies and procedures, potential inadequacy of reserves actual mortality, longevity and morbidity experience differing from pricing expectations, or reserves, amortization of deferred acquisition costs and financial models; (vii) our Investment Management and Research segment, including fluctuations in assets under management and the industry-wide shift from actively-managed investment services to passive services and potential termination of investment advisory agreements;services; (viii) legal and regulatory risks, including federal and state legislation affecting financial institutions, insurance regulation and tax reform; (ix) risks related to our controlling stockholder, including conflicts of interest, waiver of corporate opportunities and costs associated with separation and rebranding; and (x) risks related to our common stock and future offerings,(x) general risks, including the market price forstrong industry competition, information systems failing or being compromised and protecting our common stock being volatile and potential stock price declines due to future sales of shares by existing stockholders.intellectual property.
You should read this Annual Report on Form 10-K completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Annual Report on Form 10-K are qualified by these cautionary statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.
Other risks, uncertainties and factors, including those discussed under “Risk Factors,” could cause our actual results to differ materially from those projected in any forward-looking statements we make. Readers should read carefully the factors described in “Risk Factors” to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

CERTAIN IMPORTANT TERMS

As used inThroughout this Annual Report on Form 10-K “we” “us,” “our” use certain defined terms and abbreviations, which are defined or summarized in the “Company” mean AXA Equitable Holdings, Inc.“Glossary” and its consolidated subsidiaries, unless the context refers only to AXA Equitable Holdings, Inc. (which we refer to as “Holdings”) as a corporate entity. We also use the following capitalized terms:“Acronyms” sections.
“AB” or “AllianceBernstein” means AB Holding and ABLP.
“AB Holding” means AllianceBernstein Holding L.P., a Delaware limited partnership.
“AB Holding Units” means units representing assignments of beneficial ownership of limited partnership interests in AB Holding.
“AB Units” means units of limited partnership interests in ABLP.
“ABLP” means AllianceBernstein L.P., a Delaware limited partnership and the operating partnership for the AB business.
“ACS Life” means AXA Corporate Solutions Life Reinsurance Company, a Delaware corporation and a wholly owned direct subsidiary of Holdings.
“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.
“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.
“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.
“AXA Equitable FMG” means AXA Equitable Funds Management Group, LLC, a Delaware limited liability company and a wholly owned indirect subsidiary of Holdings.
“AXA Equitable L&A” means AXA Equitable Life and Annuity Company, a Colorado corporation and a wholly owned indirect subsidiary of Holdings.
“AEFS” means AXA Equitable Financial Services, LLC, a Delaware corporation and a wholly owned direct subsidiary Holdings.
3
“AXA Equitable Life” means AXA Equitable Life Insurance Company, a New York corporation, a life insurance company and a wholly owned subsidiary
Table of AEFS.Contents
“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
“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.
“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.
“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.
“AXA Tech” means AXA Technology Services America, Inc.
“CS Life RE” means CS Life RE Company, an Arizona corporation and a wholly owned indirect subsidiary of Holdings.
“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.
“EQ AZ Life Re” means EQ AZ Life Re Company, an Arizona corporation and a wholly owned indirect subsidiary of Holdings.
The “General Partner” means AllianceBernstein Corporation, a Delaware corporation and the general partner of AB Holding and ABLP.

“MLOA” means MONY Life Insurance Company of America, an Arizona corporation and a wholly owned indirect subsidiary of Holdings.
“SCB LLC” means Sanford C. Bernstein & Co., LLC, a registered investment adviser and broker-dealer.
“USFL” means U.S. Financial Life Insurance Company, an Ohio corporation and a wholly owned indirect subsidiary of Holdings.
For definitions of selected financial and product-related terms used herein, please refer to “Glossary.”

Part I, Item 1.
BUSINESS
Overview
We are one of America’s leading financial services companies and have helped clients prepare for their financial future with confidence since 1859. Our approximately 12,50012,200 employees and advisors are entrusted with more than $600$900 billion of assets under managementAUM through two complementary and well-established principal franchises, AXA Equitable Life and AllianceBernstein, providing:
•Advice and solutions for helping Americans set and meet their retirement goals and protect and transfer their wealth across generations; and
•A wide range of investment management insights, expertise and innovations to drive better investment decisions and outcomes for clients and institutional investors worldwide.
We aim to be a trusted partner to our clients by providing advice, products and services that help them navigate complex financial decisions. Our financial strength and the quality of our people, their ingenuity and the service they provide help us build relationships of trust with our clients.
We believe that the growing and aging U.S. population, shift of responsibility for retirement planning from employers to individuals and overall growth in total investable assets will drive significant demand for our products and services going forward. Throughout our long history, we have embraced change and looked to the future, and we continue to see significant opportunities to find new solutions and new ways to deliver service to clients within our target markets.
We have a leading position at the intersection of advice, asset management, retirement and financial protection that we believe provides our clients with products and solutions that meet their long-term financial needs and our stockholders with attractive growth prospects. We have market-leading positions in our four segments:
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”).
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”).
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.
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.
We manage our segments in a complementary way. We strive to create value for our clients and stockholders by pricing and managing risks on the liability side of our balance sheet and by generating attractive risk-adjusted investment returns on the asset side. We leverage our underwriting, risk management and investment management skills across our segments, General Account and Separate Accounts.

Solutions.
We distribute our products through a premier affiliated and third-party distribution platform, with a successful track record of marketing our innovative and less capital-intensive products and solutions allowing us to respond to our clients’ evolving needs and manage our capital and risks responsibly, consisting of:
Affiliated Distribution:
•Our affiliated retail sales force, AXAEquitable Advisors, which has over 4,700approximately 4,400 licensed financial professionals who advise on retirement, protection and investment advisory solutions; and
•More than 200 Bernstein Financial Advisors, who are responsible for the sale of investment products and solutions to Private Wealth Management clients.
Third-Party Distribution:
•Distribution agreements with more than 1,000500 third-party firms including broker-dealers, banks, insurance partners and brokerage general agencies, giving us access to more than 150,000145,000 financial professionals to market our retirement, protection and investment solutions; and
•An AB global distribution team of more than 500 professionals, who engage with our approximately 4,900more than 5,000 retail distribution partners and more than 500 institutional clients.
Our product approach is to ensure that design characteristics are attractive to both our customers and our stockholders. We currently focus on products across our businesses that expose us to less market and customer behavior risk, are more easily hedged and, overall, are less capital intensive than many traditional products. For example, in our Individual Retirement segment, we have evolved our variable annuity products to promote products with only a return
4
Table of premium death benefit (such as index-linked and investment only annuities) and have restructured products that provide variable annuity guaranteed benefits (“GMxB features”). We believe these efforts have been successful with our customers—approximately 63% of our variable annuity product sales in 2018 had no GMxB feature—and for our stockholders—we hold less capital and reserves and do less hedging than would be needed when compared with variable annuity products with GMxB features. Many of our other products, such as those sold in our Group Retirement and Investment Management and Research segments, by their very nature, require little to no incremental capital over the product lifecycle. We also apply this approach to our most capital-intensive segment—Protection Solutions. We do so by focusing on products such as VUL and IUL insurance (which collectively accounted for 82% of our 2018 sales in the Protection Solutions segment), which require substantially less up-front capital relative to other types of life insurance (such as whole life insurance and traditional universal life insurance). In addition, by providing diversification to our more market-oriented products, the Protection Solutions segment helps improve our overall capital efficiency.Contents
We are confident that our market leading positions, premier distribution platform, competitive products and investment expertise position us well to continue to generate a diversified and growing stream of earnings, maintain stability through market cycles and generate attractive returns and strong cash flows for our stockholders.
Our HistoryOrganizational Structure
We are a majority-owned subsidiaryholding company that operates our business through a number of AXA, a worldwide leader in life, propertydirect and casualtyindirect subsidiaries. Our two principal franchises include Equitable and health insurance and asset management. AXA is headquartered in France, with operations in 62 countries and approximately 160,000 employees and distributors. AXA operates primarily in Europe, North America,AllianceBernstein. The following organizational chart presents the Asia/Pacific region and, to a lesser extent, in other regions including the Middle East, Africa and Latin America. Neither AXA nor any affiliateownership of AXA has any obligation to provide additional capital or credit support to us.our principal subsidiaries as of December 31, 2021
Founded in 1859, our retirement and protection businesses distribute products to individuals and business owners through our affiliated distribution channel, AXA Advisors, and to the financial services market through our wholesalers serving third-party firms.eqh-20211231_g2.jpg
 Our business also includes AB, of which we

(1)We own an approximate 65% economic interest.interest in AB through various wholly-owned subsidiaries. Our economic interest consists of approximately 64%63% of the AB Units, and approximately 4% of the AB Holding Units (representing an approximate 1% economic interest in ABLP)., and 1% of the AB Units held by the GP. Our indirect, wholly ownedwholly-owned subsidiary, AllianceBernstein Corporation, is the General Partner of AB with the authority to manage and control AB, and accordingly, AB is consolidated in our financial statements. AB has been in the investment management and research business for more than 50 years. ABLP is the operating partnership for the AB business, and AB Holding’s activities consist of owning AB Units and engaging in related activities. AB Holding Units trade on the NYSE under the ticker symbol “AB”. AB Units do not trade publicly.

Venerable Transaction
Our Organizational StructureOn June 1, 2021, we completed the sale (the “ Venerable Transaction”) of CS Life, to Venerable Insurance and Annuity Company, an insurance company domiciled in Iowa (“VIAC”), pursuant to the Master Transaction Agreement, dated October 27, 2020 (the “Master Transaction Agreement”), among the Company, VIAC and, solely with respect to Article XIV thereof, Venerable Holdings, Inc., a Delaware corporation (“Venerable”).
AXA holds approximately 59%Pursuant to the Master Transaction Agreement, immediately prior to the closing of our common stock. Asthe Venerable Transaction, CS Life effected the recapture of all of the business that was ceded to CS Life Re Company, a result, we arewholly owned subsidiary of CS Life (“Reinsurance Subsidiary”), and sold 100% of the equity of the Reinsurance Subsidiary to another wholly owned subsidiary of the Company. Immediately following the closing of the Venerable Transaction, CS Life and Equitable Financial entered into a “controlled company” withincoinsurance and modified coinsurance agreement (the “Reinsurance Agreement”), pursuant to which Equitable Financial ceded to CS Life, on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit guarantees. In addition, upon the meaningcompletion of NYSE rules. This status allows usthe Venerable Transaction, EIMG acquired an approximate 9.09% equity interest in Venerable’s parent holding company, VA Capital Company LLC. In connection with such investment, EIMG designated a member to rely on exemptions from certain corporate governance requirements otherwise applicablethe Board of Managers of VA Capital Company LLC.
For additional information regarding the Venerable Transaction, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Summary—Reinsurance of Legacy Variable Annuity Block and Sale of Runoff Variable Annuity Reinsurance Entity”and Note 1 of the Notes to NYSE-listed companies for so long as AXA continues to hold more than 50%these Consolidated Financial Statements.
5
Table of our common stock and a transition period after it ceases to do so.Contents
Segment Information
We are organized into four segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. We report certain activities and items that are not included in our segments in Corporate and Other.
•Individual Retirement—We are a holding company incorporatedleading 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 Delaware in May 2003. various markets through underlying investment options.
•Group Retirement—We operateoffer 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.
•Investment Management and Research—We are a leading provider of diversified investment management, research and related services to a broad range of clients globally.
•Protection Solutions—We focus our businesses through a number of direct and indirect subsidiaries.
Market Opportunities
Global asset accumulation markets continued their strong recent growth trend with total AUM reaching $93.8 trillion, up 15.6% year over year, including in the North American market, where total AUM increased by 15.1% year-over-year to $54.5 trillion as of December 31, 2017, according to Willis Towers Watson. In addition, the United States has experienced a decline in the traditional employer-based defined benefit retirement plan system which has raised concerns about the sustainability of safety nets historically provided by governmentslife insurance products on attractive protection segments such as Social SecurityVUL insurance and employer-sponsored defined benefit plans. These trends have increasedIUL insurance and our employee benefits business on small and medium-sized businesses.
For financial information on segments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment” and Note 1 of the need for AmericansNotes to prepare and plan for their own long-term financial security. these Consolidated Financial Statements.
Individual Retirement
Our complementary businessesIndividual Retirement segment is a leading provider of individual variable annuity products, which are designedprimarily sold to provide affluent and high net worth Americans with the guidance, products and solutions they need to achieve their wealth accumulation and retirement income goals. We believe the following long-term trends will continue to favorably impact our business over time.
Continued rapid growth in the retirement-aged U.S. population. Technological advances and improvements in healthcare are projected to continue to contribute to increasing average life expectancy, and aging individuals must be prepared to fund retirement periods that will last longer than previously anticipated. The U.S. Census Bureau estimated that approximately 15% of the population was 65 years of age or older in 2017, compared to approximately 9% in 1960. This segment of the population is estimated to double from approximately 48 million in 2017 to more than 98 million by 2060, and it is expected to represent approximately 24% of the overall population, as the youngest members of the “baby boomer” generation continue to reach retirement age.
Shifting retirement savings landscape. Only 14% of millennial households (those under 36 years old) will have access to a defined benefit plan pension, compared to 52% of households of those 71 years old or older, according to LIMRA’s analysis of the Federal Reserve Board’s 2016 Survey of Consumer Finances. Increased life expectancy coupled with this transition away from defined benefit plans has shifted the responsibilitysaving for retirement savings and income planning from employers to individuals.or seeking guaranteed retirement income. We expect that this shift in responsibility will drive demand for our products and services including wealth accumulation, income producing investments and financial advice.
Expected growth in retirement assets. U.S. retirement assets are estimated to increase by 4.3% per year from 2018 through 2023 to $32.4 trillion with assets in the not-for-profit/governmental defined contribution sector projected to grow slightly faster at 5.7% for the same period, according to Cerulli’s 2018 U.S. Retirement Markets report. We believe that our retirement focused asset accumulation business will continue to benefit from this trend.
Strong need for financial planning advice. According to the 2018 Insurance Barometer Study by LIMRA, 69% of consumers said that meeting with an agent or advisor before buying life insurance was important to them. We believe that due to the complexity of financial planning, many consumers will continue to seek advice in connection with the purchase of these products, providing companies with broad distribution platforms and in-house advice capabilities a competitive advantage.
We believe that these trends, together with our competitive strengths and strategy discussed below, provide us an opportunity to increase the value of our business.
Our Competitive Strengths
Our two well-established principal franchises, AXA Equitable Life and AllianceBernstein, have a history of agility and innovation. At a time of significant challenges for investors—increased regulation, new technologies and a likely continued low yield environment—the ability to develop new creative solutions is critical for meeting clients’ needs and growing our businesses. Our company has a long history of developing innovative solutions, including introducing variable life insurance to the U.S. market, beinginnovation, as one of the pioneersfirst companies, in performance fees for actively managed funds and launching our Structured Capital Strategies (“SCS”) product. Through Bernstein Research, we have a strong reputation for demonstrating that deeper research results1968, to enter the variable annuity market, as the first company, in greater investment value.

Our strong balance sheet provides confidence for the future. We believe the strength of our balance sheet and the statutory capitalization of our insurance companies1996, to provide confidence to our clients and business partners and help position us for continued growth. In particular:
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 byliving benefits, and as the changesfirst company, in 2010, to the RBC calculation adopted by the NAIC in 2018, including the C-3 Phase II Total Asset Requirement for variable annuities,bring 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%;
We target maintainingmarket 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 theindex-linked variable annuity capital, would result in a Combined RBC Ratio in excessproduct. Our Individual Retirement business is an important source of 500%;earnings and
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.
Our business generates significant cash flow for our company, and we have in placebelieve our hedging strategy preserves a hedging program to protect oursubstantial portion of these cash flows even in adverse economic scenarios. Our two principal operating companies are well established and have been generating, and are expected to continue to generate, significant cash, enabling us to pay dividends, provide capital needed to support our business and service our debt over time. From 2014 to 2016, Holdings received net distributions from our subsidiaries of $2.6 billion. In 2017, in accordance with an agreement with the New York Department of Financial Services (the “NYDFS”) and in preparation for the initial public offering of our common stock (the “IPO”), Holdings made $2.3 billion in aggregate capital contributions to AXA Equitable Life and AXA RE Arizona. In 2018, Holdings received net distributions from its subsidiaries of $1.4 billion. In addition, we have implemented a hedging program intended to protect our variable annuity assets and statutory capital in the event of adverse economic scenarios.
In addition, on December 31, 2018, Holdings and certain of its subsidiaries executed a series of transactions that transferred all of the interests in AB held by AXA Equitable Life to a wholly-owned non-insurance company subsidiary of Holdings. These transactions were undertaken in order to simplify Holdings’ corporate structure and streamline Holdings’ cash flow and capital management.
Our leading retirement businesses are well-positioned to grow. There is a growing need for financial products that provide retirement income as well as a measure of protection against equity market volatility. In both the affluent and high net worth markets and in the K–12 education market, we believe that we are well-positioned to benefit from the growing and aging U.S. population and the continued shift away from defined benefit plans.
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.
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 toacross a wide range of clients in the education market savingrisk scenarios. The primary sources of revenue for retirement.
our Individual Retirement segment include fee revenue and investment income.
Our Investment Management and Research business is strategically positioned to grow. We believe our Investment Management and Research business is well-positioned to navigate an evolving environment in which growth in passive strategies is pressuring fees for many active asset managers. We sellprincipally focus on selling three variable annuity products, and solutions that are difficult to replicate through passive mechanisms, including many of our credit, multi-asset and alternative strategies. We are present in markets worldwide, manyeach of which have been less affected by the growth of passive investment options, such as parts of Asia. Additionally, a significant majority ofprovides policyholders with distinct benefits, features and return profiles. We continue to innovate our active equityoffering, periodically updating our product benefits and fixed income assets are in services that regularly exceed their benchmarks for the three-year performance period. AB’s full year results reflect its sustained investment in active equities, which grew at an organic rate of nearly 8%, and the growth of its equities and alternatives services drove an improvement of 1% in its average fee rate.
Our Protection Solutions business is well established and has growth potential in select segments. We are one of the leading life insurance providers in the United States, specifically with respectintroducing new variable annuity products to VUL and IUL, and are committed to

disciplined underwriting. Our in-force portfolio provides diversification on our statutory capital base and attractive cash flows. Over the years, much of this market has become commoditized, and we now selectively focus on the less capital-intensive VUL and IUL accumulation segments of the market.
Our focus on less capital-intensive fee-based products results in lower capital needs. Our ability to create less capital-intensive products and solutions that meet the evolving needs of our clients while still achievingmanaging the risk and return of these variable annuity products to our risk-adjustedcompany. Due to our innovation, our product mix has evolved considerably since 2008. The majority of our sales in 2021 consisted of products without variable annuity guarantee benefits features (“GMxB features”) (other than the ROP death benefit), and less than 1% of 2021 FYP was attributable to products with fixed rate guarantees. To further our growth, we plan to continue to innovate our product portfolio, expand and deepen our distribution channels and effectively manage risk in our business.
Products
We primarily sell three variable annuity products each providing policyholders with distinct features and return targets,profiles. Our current primary product offering, ordered below according to sales volume for the year ended December 31, 2021, includes:
•Structured Capital Strategies. 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 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. Prior to November 2021, this variable annuity did not offer GMxB features, other than an optional return of premium death benefit that we had introduced on some versions. In November 2021, we introduced a new version of this variable annuity offering a GMxB feature.
•Retirement Cornerstone. Our Retirement Cornerstone product offers two platforms: (i) RC Performance, which offers access to a broad selection of funds with annuitization benefits based solely on non-guaranteed account investment performance and (ii) RC Protection, which offers access to a focused selection of funds and an optional floating-rate GMxB feature providing guaranteed income for life.
•Investment Edge. 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.In
6
Table of Contents
2021, we introduced an optional SIO feature that allows the policyholder to invest in various investment options whose performance is tied to one or more securities indices, subject to a performance cap, with some downside protection over a set period of time. This optional SIO feature leverages our innovative SCS offering.Investment Edge does not offer any GMxB feature other than an optional return of premium death benefit.
•Other products. We offer other products which offer optional GMxB benefits. These other products do not contribute significantly to our sales.
 Our variable annuity portfolio is mature. Since 2008, we shifted our business from selling variable annuity products with GMxB features with fixed roll-up rates, to predominantly (i) variable annuity products without GMxB features (other than the return of premium death benefit in some cases) and (ii) variable annuity products with GMxB features with floating roll-up rates. Based on FYP, we have shifted our portfolio from 90% fixed rate GMxB products in 2008 to 94% floating rate GMxB products and non-GMxB products in 2021. In addition, AV has allowedshifted from 77% Fixed Rate GMxB products in 2008 to 27% in 2021.
Evolution of Variable Annuity FYP
eqh-20211231_g3.jpgeqh-20211231_g4.jpg
The following tables present the relative contribution to FYP of each of the above products and GMxB features for the years ended December 31, 2021, 2020 and 2019.
Year Ended December 31,
202120202019
(in millions)
FYP by Product
SCS$7,627 $4,891 $5,138 
Retirement Cornerstone1,951 1,506 2,156 
Investment Edge1,048 448 548 
Other357 328 349 
Total FYP$10,983 $7,173 $8,191 

7
Table of Contents
Year Ended December 31,
202120202019
(in millions)
FYP by Guarantee Feature
Non-GMxB$8,648 $5,342 $5,728 
ROP Death Benefit Only703 532 551 
Total Non-GMxB & ROP Death Benefit Only$9,351 $5,874 $6,279 
Floating Rate GMxB$1,623 $1,278 $1,864 
Fixed Rate GMxB3 21 48 
Total GMxB$1,626 $1,299 $1,912 
Other6 — — 
Total FYP$10,983 $7,173 $8,191 

Our sales for the years ended December 31, 2021, 2020 and 2019 further demonstrate the result of our product sales evolution, as 79%, 74% and 70% of FYP, respectively, came from variable annuity products that do not contain GMxB riders, and of the GMxB riders sold, they overwhelmingly featured floating, as opposed to fixed, roll-up rates.
Our Individual Retirement segment works with EIMG to identify and include appropriate underlying investment options in its products, as well as to control the costs of these options and increase profitability of the products. For a discussion of EIMG, see below “—Equitable Investment Management.”
Variable Annuities Policy Feature Overview
Variable annuities allow the policyholder to make deposits into accounts offering variable investment options. For deposits allocated to Separate Accounts, the risks associated with the investment options are borne entirely by the policyholder, except where the policyholder elects GMxB features in certain variable annuities, for which additional fees are charged. Additionally, certain variable annuity products permit policyholders to allocate a portion of their account to investment options backed by the General Account and are credited with interest rates that we determine, subject to certain limitations. As of December 31, 2021, the total AV of our variable annuity products was $111.9 billion, consisting of $74.2 billion of Separate Accounts AV and $37.7 billion of General Account AV.
Certain variable annuity products offer one or more GMxB features in addition to the standard return of premium death benefit guarantee. GMxB features (other than the return of premium death benefit guarantee) provide the policyholder a minimum return based on their initial deposit adjusted for withdrawals (i.e., the benefit base), thus guarding against a downturn in the markets. The rate of this return may increase the specified benefit base at a guaranteed minimum rate (i.e., a fixed roll-up rate) or may increase the benefit base at a rate tied to interest rates (i.e., a floating roll-up rate). GMxB riders must be chosen by the policyholder no later than at the issuance of the contract.
The following table presents our variable annuity AV by GMxB feature for our variable annuity business in our Individual Retirement segment as of December 31, 2021, 2020 and 2019:
December 31,
202120202019
(in millions)
Account Value
Non-GMxB$43,843 $36,162 $30,694 
ROP Death Benefit Only (1)11,438 10,438 9,620 
Total Non-GMxB & ROP Death Benefit Only55,281 46,600 40,314 
Floating Rate GMxB26,486 25,168 23,891 
Fixed Rate GMxB (1)30,137 45,622 44,717 
Total Variable Annuity AV$111,904 $117,390 $108,922 
8
Table of Contents
(1) AV is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements.
The following table presents our variable annuity benefit base by GMxB feature for the Individual Retirement segment as of December 31, 2021, 2020 and 2019. Many of our variable annuity contracts offer more than one type of GMxB feature such that the amounts listed below are not mutually exclusive. Thus, the benefit base cannot be totaled.
December 31,
202120202019
(in millions)
Benefit Base
ROP Death Benefit Only (1)$6,444 $6,141 $6,048 
Floating Rate GMxB
GMDB$23,574 $23,095 $22,793 
GMIB$24,123 $23,029 $22,108 
Fixed Rate GMxB
GMDB (1)$34,017 $58,028 $59,365 
GMIB (1)$34,719 $60,695 $61,775 
(1) Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements.
The guaranteed benefit received by a policyholder pursuant to a GMxB feature is calculated based on the benefit base. The benefit base is defined as a hypothetical amount (i.e., not actual cash value) used to calculate the policyholder’s optional benefits within a variable annuity. A benefit base cannot be withdrawn for cash and is used solely to calculate the variable annuity’s optional guarantee values. Generally, the benefit base is not subject to a cap on the value. However, the benefit base stops increasing after a defined time period or at a maximum age, usually age 85 or 95, as defined in the contract.
The calculation of the benefit base varies by benefit type and may differ in value from the policyholder’s AV for the following reasons:
•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.
•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.
We currently offer GMxB riders. Their principal features are as follows:
•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).
•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.
For a detailed discussion of GMxB riders, see “—Overview of GMxB Features.”
Markets
For our Individual Retirement segment, we target sales of our products to affluent and high net worth individuals and families saving for retirement or seeking retirement income. As the retirement age population in the United States continues to grow and employers continue to shift away from defined benefit plans, we expect the need for these retirement savings and income products to expand.
Our customers can prioritize certain features based on their life-stage and investment needs. In addition, our products offer features designed to serve different market conditions. SCS serves clients with investable assets who want exposure to equity markets, but also want to guard against a market correction. Retirement Cornerstone serves clients who want growth potential
9
Table of Contents
and guaranteed income with increases in a rising interest rate environment. Investment Edge serves clients concerned about rising taxes.
Distribution
We distribute our variable annuity products through Equitable Advisors, and through third-party distribution channels. For the year ended December 31, 2021, Equitable Advisors represented 35% of our variable annuity FYP in this segment, while our third-party distribution channel represented 65% of our variable annuity FYP in this segment. We employ over 150 external and internal wholesalers who distribute our variable annuity products across both channels.
Affiliated Distribution. We offer our variable annuity products on a retail basis through our affiliated retail sales force of financial professionals, Equitable Advisors. These financial professionals have access to and offer a broad array of variable annuity, life insurance, employee benefits and investment products and services from affiliated and unaffiliated insurers and other financial service providers.
Third-Party Distribution. We have shifted the focus of our third-party distribution significantly over the last decade, growing our distribution in the bank, broker-dealer and insurance partner channels. For example, in 2011, we began distributing our variable annuity products to insurance partners. Today, we work with some of the country’s largest insurance partners and our sales through this channel have grown to comprise 10% of our total FYP for the year ended December 31, 2021.
The table below presents the contributions to and percentage of FYP of our variable annuity products by distribution channel for the year ended December 31, 2021.
FYP by Distribution
eqh-20211231_g5.jpg
Other than Equitable Advisors, no single distribution firm contributed more than 10% of our sales in 2021.
Competition
Our Individual Retirement business competes with traditional life insurers, as well as banks, mutual fund companies and other investment managers. The variable annuities market is highly competitive, with no single provider dominating the market across products. The main factors that distinguish competitors to clients include product features, access to capital, access to diversified sources of distribution, financial and claims-paying ratings, investment options, brand recognition, quality of service, technological capabilities and tax-favored status of certain products. It is difficult to provide unique variable annuities products because, once such products are made available to the public, they often are reproduced and offered by our competitors. Competition may affect, among other matters, both the growth of our business and the pricing and features of our products.
10
Table of Contents
Underwriting and Pricing
We generally do not underwrite our variable annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience, volatility of expected earnings on our AV, and the expected time to retirement. Our product pricing models also take into account capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of GMxB and other features we offer. We have previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our clients, the economic environment and our risk appetite evolve.
Fees on AV, Fund Assets, Benefit Base and Investment Income
We earn various types of fee revenue based on AV, fund assets and benefit base. In general, fees from GMxB features that are calculated based on the benefit base are more stable compared to fees calculated based on the AV.
Mortality & Expense, Administrative Charges and Distribution Charges. We deduct a daily charge from the net assets in each variable investment option to compensate us in recent years to capture increased market share, particularly infor mortality risks, administrative expenses and a portion of our sales expenses under the variable annuity market.contract. These charges are calculated based on the portion of the policyholder’s AV allocated to the Separate Accounts and are expressed as an annual percentage.
Withdrawal Charges. Some variable annuity contracts may also impose charges on withdrawals for a period after the purchase, and in certain products for a period after each subsequent contribution, also known as the withdrawal charge period. A withdrawal charge is calculated as a percentage of the contributions withdrawn. The percentage of the withdrawal charge that applies to each contribution depends on how long each contribution had been invested in the contract. Withdrawal charges generally decline gradually over the withdrawal charge period. Contracts may also specify circumstances when no surrender charges apply (for example, upon payment of a death benefit or due to disability, terminal illness or confinement to a nursing home).
Investment Management Fees. We charge investment management fees for the proprietary funds managed by EIMG that are offered as investments under the variable annuities. Investment management fees are also paid on the non-proprietary funds managed by investment advisers unaffiliated with us to the unaffiliated investment advisers. Investment management fees differ by fund. A portion of the investment management fees charged on funds managed by sub-advisers unaffiliated with us are paid by us to the sub-advisers. Investment management fees reduce the net returns on the variable annuity investments.
12b-1 Fees and Other Revenue. 12b-1 fees are paid by the mutual funds which our policyholders choose to invest in and are calculated based on the net assets of the funds allocated to our sub-accounts. These fees reduce the returns policyholders earn from these funds. Additionally, mutual fund companies with funds that are available to policyholders through the variable annuity sub-accounts pay us fees consistent with the terms of administrative service agreements. These fees are funded from the fund companies’ net revenues.
Death Benefit Rider Charges. We deduct a charge annually from the policyholders’ AV on each contract date anniversary for most of our optional death benefits. This charge is in addition to the base mortality and expense charge for promising to pay the GMDB. The charges earned vary by generation and rider type. For some death benefits, the charges are calculated based on AV, but for enhanced death benefits, the charges are normally calculated based on the benefit base.
Living Benefit Riders Charges. We deduct a charge annually from the policyholders’ AV on each contract date anniversary. We earn these fees for promising to pay guaranteed benefits while the policyholder is alive, such as for any type of GMLB (including GMIB, GWBL, GMWB and GMAB). The fees earned vary by generation and rider type and are calculated based on the benefit base.
Investment Income. We earn revenue from investment income on our General Account investments.
11
Table of Contents
Risk Management
We approach risk management of our variable annuity products: (i) prospectively, by assessing, and from time to time, modifying our current product offerings to manage our risk and (ii) retrospectively, by implementing actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts.
Current GMxB Product Strategy
Since 2008, we redesigned our variable annuity product offering by introducing new variable annuities without GMxB features, discontinuing the offering of certain GMxB features and adding or adjusting other features to better enable us to manage the risk associated with these products. Through the increase in sales of our products without GMxB features, sales of our variable annuity contracts with GMxB features have decreased significantly as a percentage of our total sales. We continue to offer certain GMxB features to meet evolving consumer demand while maintaining attractive risk-adjusted returns and effectively managing our risk.
 Some of the features of our GMxB products have been redesigned over the past several years to better manage our risk and to meet customer demand. For example:
•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.
To further manage our risk, features in our current GMxB products provide us with the right to make adjustments post-sale, including the ability to increase benefit charges. For more information on GMxB features contained in our current and in-force products, see below “—Overview of GMxB Features.”
In-force Variable Annuity Management
Since the financial crisis, we have implemented several actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts while ensuring policyholder rights are fully respected. We manage the risks associated with our in-force variable annuity business through our dynamic hedging program, reinsurance and product design. The dynamic hedging program was implemented in the early 2000s. In addition, we use reinsurance for the GMxB riders on our older variable annuity products (generally issued 1996-2004). We have also introduced several other risk management programs, some of which are described in this section below.
To actively manage and protect against the economic risks associated with our in-force variable annuity products, our management team has taken a multi-pronged approach. Our in-force variable annuity risk management programs include:
Hedging
We use a dynamic hedging strategy supplemented by static hedges to offset changes in our economic liability from changes in equity markets and interest rates. In addition to our dynamic hedging strategy, we have static hedge positions to maintain a target asset level for all variable annuities. A wide range of derivatives contracts are used in these hedging programs, such as futures and total return swaps (both equity and fixed income), options and variance swaps, as well as, to a lesser extent, bond investments and repurchase agreements. For GMxB features, we retain certain risks including basis, credit spread, and some volatility risk and risk associated with actual versus expected assumptions for mortality, lapse and surrender, withdrawal and contract-holder election rates, among other things.
Reinsurance
We have used reinsurance to mitigate a portion of the risks that we face in certain of our variable annuity products with regard to a portion of the GMxB features. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. We evaluate the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. Also, we ensure that we obtain collateral to mitigate our risk of loss.
12
Table of Contents
Non-affiliate Reinsurance. We have reinsured to non-affiliated reinsurers a portion of our exposure on variable annuity products that offer a GMxB feature issued through February 2005. As of December 31, 2021, we had reinsured to non-affiliated reinsurers, subject to certain maximum amounts or caps in any one period, approximately 59.8% of our NAR resulting from the GMIB feature and approximately 47.6% of our NAR to the GMDB obligation on variable annuity contracts in force as of December 31, 2021.
In June 2021, as part of the Venerable Transaction, Equitable Financial ceded to CS Life on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008, comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. For additional information regarding the Venerable Transaction, see “—Overview—Venerable Transaction” and Note 1 of the Notes to these Consolidated Financial Statements.

Captive Reinsurance. In addition to non-affiliated reinsurance, Equitable Financial has ceded to its affiliate, EQ AZ Life RE, a captive reinsurance company, a 100% quota share of all liabilities for variable annuities with GMIB riders issued on or after May 1, 1999 through August 31, 2005 in excess of the liability assumed by two unaffiliated reinsurers, which are subject to certain maximum amounts or limitations on aggregate claims. We use captive reinsurance as part of our capital management strategy. For additional information regarding our use of captives, see “—Regulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance Company.”
Other Programs
We have introduced several other programs that reduced gross reserves and reduced the risk in our in-force block and, in many cases, offered a benefit to our clients by offering liquidity or flexibility:
Investment Option Changes. We made several changes to our investment options within our variable annuity products over the years to manage risk, employ more passive strategies and offer our clients attractive risk-adjusted investment returns. To reduce the differential between hedging instruments performance and fund performance, we added many passive investment strategies and reduced the credit risk of some of the bond portfolios, which is designed to provide a better risk adjusted return to clients. We also introduced managed volatility funds in 2009. Our volatility management strategy seeks to reduce the portfolio’s equity exposure during periods when certain market indicators indicate that market volatility is above specific thresholds set for the portfolio. Historically when market volatility is high, equity markets generally are trending down, and therefore this strategy is intended to reduce the clients’ overall risk of investing in the portfolio.
Optional Buyouts. We have implemented several successful buyout programs on contracts issued between 2002 and 2009 that benefited clients whose needs had changed since buying the initial contract and reduced our exposure to certain types of GMxB features.
Premium Suspension Programs. We have suspended the acceptance of subsequent premiums to certain GMxB contracts.
Lump Sum Option. We have provided certain policyholders with the optional benefit to receive a one-time lump sum payment rather than systematic lifetime payments if their AV falls to zero. This option provides the same advantages as a buyout. However, because the availability of this option is contingent on future events, their actual effectiveness will only be known over a long-term horizon.
 Overview of GMxB Features
We have historically offered a variety of variable annuity benefit features, including GMxB features, to our policyholders in our Individual Retirement segment.
Guaranteed Minimum Death Benefits Summary
We have historically offered GMDB features in isolation or together with GMLB features, including the following (with no additional charge unless noted):
•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
13
Table of Contents
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 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.
In addition, we offered two guaranteed minimum death benefits with our GWBL rider, available at issue.
•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.
The following table presents the AV and benefit base by type of guaranteed minimum death benefit. Because variable annuity contracts with GMDB features may also offer GMLB features, the GMDB amounts listed are not mutually exclusive from the GMLB amounts provided in the table below.
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMDB In-Force (1)
ROP Death Benefit Only (3)$11,437 $6,443 $10,437 $6,141 $9,620 $6,048 
Floating Rate GMDB
Greater of Ratchet or Roll-up$7,105 $7,867 $7,121 $7,995 $7,017 $7,891 
All Other (2)19,381 15,707 18,047 15,100 16,874 14,902 
     Total Floating Rate GMDB$26,486 $23,574 $25,168 $23,095 $23,891 $22,793 
Fixed Rate GMDB
Greater of Ratchet or Roll-up (3)$14,748 $21,518 $26,800 $42,521 $26,239 $42,896 
All Other (2) (3)15,390 12,689 18,822 15,507 18,478 16,469 
     Total Fixed Rate GMDB$30,138 $34,207 $45,622 $58,028 $44,717 $59,365 
Total GMDB$68,061 $64,224 $81,227 $87,264 $78,228 $88,206 
______________
14
Table of Contents
(1)    See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 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.
(3)    AV and Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to the Consolidated Financial Statements.
Guaranteed Living Benefits Summary
We have historically offered a variety of guaranteed living benefits to our policyholders in our Individual Retirement segment. Our block of variable annuities includes four types of guaranteed living benefit riders: GMIB, GWBL/GMWB, GMAB and GIB. Based on total AV, approximately 51% of our variable annuity block included living benefit guarantees as of December 31, 2021.
•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, 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.
The second phase of the contract starts when the policyholder annuitizes the contract, either by exercising the GMIB or through the contract’s standard annuitization provisions. Upon exercise of their GMIB, policyholders receive guaranteed lifetime income payments that are calculated as the higher of: (i) application of their GMIB benefit base to the GMIB guaranteed annuity purchase factors specified in the contract; or (ii) application of their AV to our then current or guaranteed annuity purchase factors. Beginning in 2005 we started offering a no-lapse guarantee on our GMIB riders that provides for the automatic exercise of the GMIB in the event that the policyholder’s AV falls to zero and provided no “excess withdrawals” (as defined in the contract) have been taken.
The charge for the GMIB is calculated based on the GMIB benefit base value and deducted annually from the AV.
•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.
•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.
Below are examples of policyholder benefit utilization choices that can affect benefit payment patterns and reserves:
15
Table of Contents
•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 contract, generally age 85 or 95. The policyholder may otherwise annuitize the AV and choose one of several payout options.
•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.
The likelihood of a policyholder choosing a particular option cannot be predicted with certainty at the time of contract issuance. Accordingly, we make assumptions as to policyholder benefit elections and resulting benefit payments at the time of issuance and while it is in-force based on our experience. The incidents and timing of benefit elections and the amounts of resulting benefit payments may materially differ from those we anticipate at that time. As we observe actual policyholder behavior, we update our assumptions at least annually with respect to future policyholder activity and take appropriate action with respect to the amount of the reserves we establish for the future payment of such benefits. Additionally, upon the death of a policyholder (or annuitant), if the sole beneficiary is a surviving spouse, they can choose to continue the contract and benefits subject to age restrictions.
The following table presents the AV and benefit base by type of guaranteed living benefit. Because variable annuity contracts with GMLB features may also offer GMDB features, the GMLB amounts listed are not mutually exclusive from the GMDB amounts provided in the table above.
16
Table of Contents
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMLB In-Force (1)
Floating Rate GMLB
GMIB$23,435 $24,123 $22,002 $23,029 $20,699 $22,108 
Other (GIB)2,623 2,796 2,762 2,978 2,812 3,128 
Total Floating Rate GMLB$26,058 $26,919 $24,764 $26,007 $23,511 $25,236 
Fixed Rate GMLB
GMIB$40,065 $59,341 $39,369 $60,695 $38,846 $61,775 
All Other (e.g., GWBL / GMWB, GMAB, other) (2)846 1,153 830 1,165 806 1,175 
Total Fixed Rate GMLB$40,911 $60,494 $40,199 $61,860 $39,652 $62,950 
Total GMLB$66,969 $87,413 $64,963 $87,867 $63,163 $88,186 
______________
(1)See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 under “—Net Amount at Risk.”
(2)    All Other includes individual variable annuity policies with stand-alone Annual Ratchet or stand-alone Roll-up GMDB.
Net Amount at Risk
The NAR for the GMDB is the amount of death benefits payable in excess of the total AV (if any) as of the balance sheet date, net of reinsurance. It represents the amount of the claim we would incur if death claims were made on all contracts with a GMDB on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.
The NAR for the GMIB is the amount (if any) that would be required to be added to the total AV to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the GMIB. This amount represents our potential economic exposure to such guarantees in the event all policyholders were to annuitize on the balance sheet date, even though the guaranteed amount under the contracts may not be annuitized until after the waiting period of the contract.
The NAR for the GWBL, GMWB and GMAB is the actuarial present value in excess of the AVs (if any) as of the balance sheet date. The NAR assumes utilization of benefits by all policyholders as of the balance sheet date. For the GMWB and GWBL benefits, only a small portion of the benefit base is available for withdrawal on an annual basis. For the GMAB, the NAR would not be available until the GMAB maturity date.
NAR reflects the difference between the benefit base (as adjusted, in some cases, as described above) and the AV. We believe that NAR alone provides an inadequate presentation of the risk exposure of our in-force variable annuity portfolio. NAR does not take into consideration the aggregate amount of reserves and capital that we hold against our variable annuity portfolio.
The NAR and reserves of contract owners by type of GMxB feature for variable annuity contracts are summarized below as of December 31, 2021, 2020 and 2019. Many of our variable annuity contracts offer more than one type of guarantee such that the GMIB amounts are not mutually exclusive to the amounts in the GMDB table.
17
Table of Contents
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMDB
ROP Death Benefit Only (1) (2)$75 N/A$84 N/A$95 N/A
Floating Rate GMDB851 377 943 332 904 272 
Fixed Rate GMDB (2)8,061 2,360 17,244 4,674 18,123 4,402 
Total$8,987 $2,737 $18,271 $5,006 $19,122 $4,674 
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMIB
Floating Rate GMIB$— $172 $— $136 $— $91 
Fixed Rate GMIB (2)3,910 4,441 10,461 14,110 8,746 10,573 
Total$3,910 $4,613 $10,461 $14,246 $8,746 $10,664 
______________
(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.
(2) NAR is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction.
18
Table of Contents
Group Retirement
Our 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. We operate in the 403(b), 457(b) and 401(k) markets where we sell variable annuity and mutual fund-based products. RBG, is the primary distributor of our products and related solutions to individuals in the K-12 education market with more than 1,000 advisors dedicated to helping educators prepare for retirement as of December 31, 2021.
The tax-exempt 403(b)/457(b) market, which includes our 403(b) K–12 education market business, accounted for 71% of sales within the Group Retirement business for the year ended December 31, 2021. The corporate 401(k) market accounts for 22% and the remaining 7% is Other as of December 31, 2021.
The recurring nature of the revenues from our Group Retirement business makes this segment an important and stable contributor of earnings and cash flow to our business. The primary sources of revenue for the Group Retirement business include fee revenue and investment income.
Products
Our products offer educators, municipal employees and corporate employees a savings opportunity that provides tax-deferred wealth accumulation. Our innovative product offerings address all retirement phases with diverse investment options.
Variable Annuities
Our variable annuities offer defined contribution plan record-keeping, as well as administrative and participant services combined with a variety of proprietary and non-proprietary investment options. Our variable annuity investment lineup mostly consists of proprietary variable investment options that are managed by EIMG, which provides discretionary investment management services for these investment options that include developing and executing asset allocation strategies and providing rigorous oversight of sub-advisors for the investment options. This helps to ensure that we retain high quality managers and that we leverage our scale across both the Individual Retirement and Group Retirement products. In addition, our variable annuity products offer the following features:
•Guaranteed Investment Option (GIO) —Provides a fixed interest rate and guarantee of principal.
•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 period. This option leverages our innovative SCS individual annuity offering, and we believe that we are the only provider that offers this type of offering combined in a variable annuity offering in the defined contribution market today.
•Personal Income Benefit—An optional GMxB feature that enables participants to obtain a guaranteed withdrawal benefit for life for an additional fee.
While GMxB features provide differentiation in the market, only approximately $9 million, or 0.02%, of our total AV is invested in products with GMxB features (other than ROP death benefits) as of December 31, 2021, and based on current utilization, we do not expect significant flows into these types of GMxB features.
Open Architecture Mutual Fund Platform
We also offer a mutual fund-based product to complement our variable annuity products. This platform provides a similar service offering to our variable annuities. The program allows plan sponsors to select from thousands of mutual funds. The platform also offers a group fixed annuity that operates very similarly to the GIO as an available investment option on this platform. In January 2021 we launched the successor product to our existing mutual fund based product.
Services
Both our variable annuity and open architecture mutual fund products offer a suite of tools and services to enable plan participants to obtain education and guidance on their contributions and investment decisions and plan fiduciary services. Education and guidance are available online or in person from a team of plan relationship and enrollment specialists and/or the advisor that sold the product. Our clients’ retirement contributions come through payroll deductions, which contribute significantly to stable and recurring sources of renewals.
19
Table of Contents
The chart below illustrates our net flows for the years ended December 31, 2021, 2020 and 2019.
Year Ended December 31,
202120202019
(in millions)
Net Flows
Gross Premiums$3,623 $3,343 $3,533 
Surrenders, Withdrawals and Benefits(3,929)(3,047)(3,266)
Net Flows$(306)$296 $267 
The following table presents the gross premiums for each of our markets for the periods specified.
Year Ended December 31,
202120202019
(in millions)
Gross Premiums by Market
Tax-Exempt$809 $724 $902 
Corporate435 392 537 
Other62 60 49 
Total FYP1,306 1,176 1,488 
Tax-Exempt1,757 1,632 1,531 
Corporate369 342 330 
Other191 193 184 
Total Renewal Premiums2,317 2,167 2,045 
Gross Premiums$3,623 $3,343 $3,533 
Markets
We primarily operate in the tax-exempt 403(b)/457(b), corporate 401(k) and other markets.
•Tax-exempt 403(b)/457(b). We primarily serve individual employees of public school systems. To a lesser extent, we also market to government entities that sponsor 457(b) plans.
Overall, the 403(b) and 457(b) markets represent 62% of FYP in the Group Retirement segment for the year ended December 31, 2021. We seek to grow in these markets by increasing our presence in the school districts where we currently operate and also by potentially growing our presence in school districts where we currently do not have access.
•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. 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.
The following table presents the relative contribution of each of our markets to AV as of the dates indicated.
20
Table of Contents
December 31,
202120202019
(in millions)
AV by Market
Tax-Exempt$37,072 $32,586 $28,895 
Corporate5,367 4,920 4,387 
Other4,914 4,953 4,598 
AV$47,353 $42,459 $37,880 
Distribution
We primarily distribute our products and services to this market through Equitable Advisors and third-party distribution firms. For the year ended December 31, 2021, these channels represented approximately 88% and 12% of our sales, respectively. We also distribute through direct online sales. We employ internal and external wholesalers to exclusively market our products through Equitable Advisors and third-party firms that are licensed to sell our products.
Equitable Advisors, through RBG, is the primary distribution channel for our products. The cornerstone of the RBG model is a repeatable and scalable advisor recruiting and training model that we believe is more effective than the overall industry model. RBG advisors complete several levels of training that are specific to the education market and give them the requisite skills to assess the educators’ retirement needs and how our products can help to address those needs. Equitable Advisors also accounted for 98% of our 403(b) sales in 2021.
Group Retirement products are also distributed through third-party firms and directly to customers online. We have a digital engagement strategy to supplement our traditional advisor-based model. This includes engaging existing clients to increase contributions online. The program uses data analysis combined with digital media to engage educators, teach them about their retirement needs and increase awareness of our products and services. Due to effects of the COVID-19 pandemic, we accelerated our digital adoption programs, leading to improved outcomes for clients, advisors, and the Company. We developed digital tools and enhanced our remote engagement with our educator clients, which is resulting in improved retention and increases in retirement plan contributions.
The following table presents first year premium by distribution channel for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
FYP by Distribution
Equitable Advisors$1,155 $1,078 $1,341 
Third-Party151 98 147 
Total$1,306 $1,176 $1,488 
Competition
We compete with select insurance companies, asset managers, record keepers and diversified financial institutions that target similar market segments. Competition varies in all market segments with no one company dominating. In the K–12 public education market, competitors are primarily insurance-based providers that focus on school districts. In the small and medium-sized business market, the primary competitors are insurance-based providers and mutual fund companies. The main features that distinguish our offering to clients include our RBG distribution model, the product features we offer to clients, including guarantees, and our financial strength.
Underwriting and Pricing
We generally do not underwrite our annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience, volatility of expected earnings on our AV, and the expected time to retirement. Our product pricing models also take into account capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
21
Table of Contents
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of guarantees and other features we offer. We have previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our clients, the economic environment and our risk appetite evolve.
Fees
We earn various types of fee revenue based on AV, fund assets and benefit base. Fees that we collect include mortality & expense, administrative charges and distribution charges; withdrawal charges; investment management fees, 12b-1 fees, death benefit rider charges, and living benefit riders charges. For a more detailed description of these types of fees, see “—Individual Retirement—Fees on AV, Fund Assets, Benefit Base and Investment Income.”
Risk Management
We design our Group Retirement products with the goal of providing attractive features to clients that also minimize risks to us. To mitigate risks to our General Account from fluctuations in interest rates, we apply a variety of techniques that align well with a given product type. We designed our GIO to comply with the NAIC minimum rate (1.0% for new issues), and our 403(b) products that we currently sell include a contractual provision that enables us to limit transfers into the GIO. As most defined contribution plans allow participants to borrow against their accounts, we have made changes to our loan repayment processes to minimize participant loan defaults and to facilitate loan repayments to the participant’s current investment allocation as opposed to requiring repayments only to the GIO. In the 401(k) and 457(b) markets, we may charge a market value adjustment on the assets of the GIO when a plan sponsor terminates its agreement with us. We also prohibit direct transfers to fixed income products that compete with the GIO, which protects the principal in the General Account in a rising interest rate environment.
In the Tax-Exempt market, the benefits include a minimum guaranteed interest rate on our GIO, return of premium death benefits and limited optional GMxB features. The utilization of GMxB features is low. In the Corporate market, the products that we sell today do not offer death benefits in excess of the AV.
As of December 31, 2021, approximately 59% of our General Account AV has a minimum guaranteed rate of 3-4%. Given the growth in net flows to our newer products and the slowing in flows to older blocks due to retirement, we expect that guarantees at a rate over 3% will continue to diminish as a percentage of our overall General Account AV. The table below illustrates the guaranteed minimum rates applicable to our General Account AV for products with the GIO, as of December 31, 2021.
Total General
Guaranteed Minimum Interest RateAccount AV
(in billions)
1 – < 2%$3.7 
2 – < 3%1.4 
3%7.1 
4%0.2 
Total$12.4 
We use a committee of subject matter experts and business leaders that meet periodically to set crediting rates for our guaranteed interest options. The committee evaluates macroeconomic and business factors to determine prudent interest rates in excess of the contract minimum when appropriate.
We also monitor the behavior of our clients who have the ability to transfer assets between the GIO and various Separate Accounts investment options. We have not historically observed a material shift of assets moving into guarantees during times of higher market volatility.
Hedging
We hedge crediting rates to mitigate certain risks associated with the SIO. In order to support the returns associated with the SIO, we enter into derivatives contracts whose payouts, in combination with fixed income investments, emulate those of the S&P 500, Russell 2000 or MSCI EAFE index, subject to caps and buffers.
22
Table of Contents
Investment Management and Research
Our Investment Management and Research segments’ earnings are predominantly fee-based.
Our premier affiliated retailbusiness provides diversified investment management, research and institutional distribution platform differentiates us from competitors. We benefit fromrelated services globally to a broad reach across affiliatedrange of clients through AB’s three buy-side distribution channels: Institutions, Retail and third-party channels. Private Wealth Management, and AB’s sell-side business, Bernstein Research Services. AB Holding is a master limited partnership publicly listed on the NYSE. We own an approximate 65% economic interest in AB. As the general partner of AB, we have the authority to manage and control its business, and accordingly, this segment reflects AB’s consolidated financial results.
Our affiliated retail distribution platform consists of over 4,700 licensed AXA Advisors as well as a direct network of more than 200 Bernstein Financial Advisors servingInvestment Management and Research business had approximately 15,000 high net worth clients$778.6 billion in AUM as of December 31, 2018. The2021, composed of 46% equities, 41% fixed income and 13% multi-asset class solutions, alternatives and other assets. By distribution channel, institutional platform in our retirement and protection segments is broad with more than 1,000 third-party relationships providing access to an additional approximately 150,000 financial professionals,clients represented 43% of AUM, while AB’s global distribution team of more than 500 professionals reach approximately 4,900 distribution partners and more than 500 institutional clients. We believe that our close alignment with our affiliated distribution platform, in conjunction with our extensive and growing network of third-party relationships, differentiates us from our competitors and allows us to effectively distribute our products and write high-quality new business.
Our disciplined risk management framework protects our balance sheet. We have well-developed technical risk management capabilities which are embedded throughout our business. Our decisions are driven by an internal economic model designed to ensure that we protect our solvency, honor our obligations to our clients and provide attractive risk-adjusted returns for our stockholders. For example, our variable annuity hedging strategy is focused on protecting the economic value of our liabilities while allowing us to return cash to our stockholders through dividends and share repurchases across a variety of economic scenarios.
Our highly experienced management team brings strong capabilities. We are led by well-respected industry veterans who bring diverse U.S. and global experiences with long-standing experience in the financial services industry.
Our Strategy
Our overarching objective is to position the Company as the most trusted partner to clients by providing advice, products and services that help them navigate complex financial situations. We believe we are well-positioned to use our competitive strengths to grow our earnings base, actively manage our capital and generate attractive risk-adjusted returns for our stockholders. We have identified specific initiatives that are designed to grow our business, enhance productivity and optimize our capital. Underpinning this strategy is our commitment to disciplined risk management and a sound people strategy.
Growth Strategies
Deliver organic growth by focusing on attractive market segments. We intend to continue to innovate across our businesses, enhancing existing products and creating new products to service the needs of our retail and institutional clients.
Individual Retirement. We plan to further build on our market-leading position in the variable annuity market through continued innovation in our product portfolio to address evolving customer preferencesprivate wealth management clients represented 41% and will seek opportunities to continue to expand our distribution network by deepening relationships with existing partners and developing relationships with new partners and channels. A key component of our strategy is to ensure that we maintain an “all-weather” portfolio to meet the needs and risk appetites of consumers through different market cycles. An example of this is the significant success we have had with SCS, which is designed to meet consumers’ preference for some downside protection while sharing in the potential for market upside.
Group Retirement. We will take advantage of our market-leading position in the K–12 education market where we expect attractive growth prospects through approximately 1,000 dedicated advisors serving clients in more than 9,000 public school plans16% respectively, as of December 31, 2018. We see further growth opportunities through expansion of our distribution capabilities and plan to use our new mutual fund platform to retain existing clients and expand our client base. We will continue to leverage technology through our direct marketing and online enrollment program, which provides an omni-channel capability to augment our proven advisor model.2021.

Investment Management and Research. We will continue to build on AB’s heritage of research excellence and ingenuity to develop new actively managed solutions for which investors see value and are willing to pay a price premium over passively managed alternatives. AB has a suite of actively managed, differentiated equity and fixed income services, delivering strong risk-adjusted returns. For instance, 90%72% of ourAB’s fixed income services and 62%49% of ourAB’s equity services have outperformed their benchmarks over the three-year period ended December 31, 2018. In addition, our Multi-Asset Solutions group develops outcome-oriented2021. Additionally, at year-end 2021, 76% of AB’s U.S. Fund assets and 59% of AB’s Non-U.S. Fund assets were rated either 4 or 5-stars by Morningstar.
Bernstein Research Services has received top Institutional Investor rankings and Private Wealth Management ranks among the top 20 wealth management firms in the United States, according to Barron’s.
We are AB’s largest client. We represented 17% of AB’s total AUM as of December 31, 2021 and 3% of AB’s net revenues for the year ended December 31, 2021.
AB provides research, diversified investment management and related services forglobally to a broad range of clients. Its principal services include:
•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 Holdings 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 EIMG, 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 innovative offeringshigh 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 our multi-managerpension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM.
Products and Services
Investment Services
AB provides a broad range of investment services with expertise in:
•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;
•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;
23
Table of Contents
•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and
•Some passive management, including index and enhanced index strategies.
Research
AB’s high-quality, in-depth research is the foundation of its business. AB believes that its global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives it a competitive advantage in achieving investment success for its clients. AB also has experts focused on multi-asset strategies, wealth management, ESG, and alternative investments.
Custody
AB’s U.S.-based broker-dealer subsidiary acts as custodian for the majority of AB’s Private Wealth Management AUM and some of its Institutional AUM. Other custodian arrangements, directed by clients, include banks, trust companies, brokerage firms and other financial institutions.
For additional information about AB’s investment advisory fees, including performance-based fees, see “Risk Factors—Risks Relating to Our Investment Management and Research Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—Investment Management and Research.”
Markets
AB operates in major markets around the world, including the United States, EMEA (Europe, the Middle East and Africa) and Asia. Our AUM is disbursed as follows:
By Investment Service ($ in billions):
eqh-20211231_g6.jpgeqh-20211231_g7.jpgeqh-20211231_g8.jpg
24
Table of Contents
By Client Domicile ($ in billions):
eqh-20211231_g9.jpgeqh-20211231_g10.jpgeqh-20211231_g11.jpg
Distribution Channels
AB distributes its products and solutions through three main client channels: Institutional, Retail and Private Wealth Management.
Institutional
AB offers to its institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and Holdings and its subsidiaries, separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”).
AB manages the assets of its institutional clients pursuant to written investment management agreements or other arrangements, which generally are terminable at any time or upon relatively short notice by either party. In general, AB’s written investment management agreements may not be assigned without the client’s consent.
Retail
AB provides investment management and related services to a wide variety of individual retail investors globally through retail mutual funds AB sponsors, mutual fund sub-advisory relationships, separately-managed account programs and other investment vehicles (“Retail Products and Services”).
AB distributes its Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act or (ii) not registered under the Investment Company Act and generally not offered to U.S. persons. They also include separately-managed account programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. In addition, AB provides distribution, shareholder servicing, transfer agency services and administrative services for its Retail Products and Services.
Private Wealth Management
AB partners with its clients, embracing innovation and independent research to address increasingly complex challenges. AB’s clients include high net worth individuals and families who have created generational wealth as successful business owners, athletes, entertainers, corporate executives and private practice owners. AB also provides investment and wealth advice to foundations and endowments, family offices and other entities. AB’s flexible investment platform offers a range of solutions, including separately-managed accounts, hedge funds, mutual funds and other investment vehicles, tailored to meet each distinct client’s needs. AB’s investment platform is complimented with a wealth platform that includes complex tax and estate planning, pre-IPO and pre-transaction planning, multi-generational family engagement, and philanthropic advice in addition to tailored approaches to meeting the unique needs of emerging wealth and multi-cultural demographics.
AB manages these accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any authorized party, and may not be assigned without the client’s consent.
25
Table of Contents
Competition
AB competes in all aspects of its business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations and other financial institutions that often provide investment products with similar features and objectives as those AB offers. AB’s competitors offer a wide range of financial services to the same customers that AB seeks to serve.
To grow its business, AB believes it must be able to compete effectively for AUM. Key competitive factors include: (i) AB’s investment performance for clients; (ii) AB’s commitment to place the interests of its clients first; (iii) the quality of AB’s research; (iv) AB’s ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; (v) the array of investment products AB offers; (vi) the fees AB charges; (vii) Morningstar/Lipper rankings for the AB Funds; (viii) AB’s ability to sell its actively-managed investment services despite the fact that many investors favor passive services; (ix) AB’s operational effectiveness; (x) AB’s ability to further develop and market its brand; and (xi) AB’s global presence.
AUM
AUM by distribution channel were as follows:
December 31,
202120202019
(in billions)
Institutions$337.1 $315.6 $282.7 
Retail319.9 265.3 239.2 
Private Wealth Management121.6 105.0 101.0 
Total$778.6 $685.9 $622.9 

AUM by investment service were as follows:
December 31,
202120202019
(in billions)
Equity
Actively Managed$287.6 $217.8 $177.2 
Passively Managed (1)71.6 64.5 60.1 
Total Equity359.2 282.3 237.3 
Fixed Income
Actively Managed
Taxable246.3 263.2 258.3 
Tax-exempt57.1 50.3 47.1 
Total Actively Managed303.4 313.5 305.4 
Passively Managed (1)13.2 8.5 9.3 
Total Fixed Income316.6 322.0 314.7 
Alternatives/Multi-Asset Solutions (2)
Actively Managed97.3 79.1 69.3 
Passively Managed (1)5.5 2.5 1.6 
Total Other102.8 81.6 70.9 
Total$778.6 $685.9 $622.9 
_____________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our hedge fund replication strategies.Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
26
Table of Contents
Changes in AUM for the years ended December 31, 2021 and 2020 are as follows:
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
Long-term flows:
Sales/new accounts31.7 100.0 18.3 150.0 
Redemptions/terminations(23.4)(65.1)(15.3)(103.8)
Cash flow/unreinvested dividends(6.0)(14.1)— (20.1)
Net long-term inflows (outflows) (1)2.3 20.8 3.0 26.1 
Transfers(0.2)0.2 — — 
Market appreciation (depreciation)19.4 33.6 13.6 66.6 
Net change21.5 54.6 16.6 92.7 
Balance, December 31, 2021$337.1 $319.9 $121.6 $778.6 
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2019$282.7 $239.2 $101.0 $622.9 
Long-term flows:
Sales/new accounts30.9 78.9 14.3 124.1 
Redemptions/terminations(23.3)(69.5)(16.5)(109.3)
Cash flow/unreinvested dividends(6.6)(11.0)0.2 (17.4)
Net long-term inflows (outflows) (1)1.0 (1.6)(2.0)(2.6)
Acquisitions— 0.2 — 0.2 
Transfers1.4 (0.6)(0.8)— 
Market appreciation30.5 28.1 6.8 65.4 
Net change32.9 26.1 4.0 63.0 
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
______________
(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

27
Table of Contents
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
Long-term flows:
Sales/new accounts72.9 1.4 44.9 13.5 4.6 12.7 150.0 
Redemptions/terminations(39.6)(1.1)(52.6)(7.8)(0.4)(2.3)(103.8)
Cash flow/unreinvested dividends(11.4)(7.8)(2.2)0.3 0.8 0.2 (20.1)
Net long-term inflows (outflows) (3)21.9 (7.5)(9.9)6.0 5.0 10.6 26.1 
Market appreciation (depreciation)47.9 14.6 (7.0)0.8 (0.3)10.6 66.6 
Net change69.8 7.1 (16.9)6.8 4.7 21.2 92.7 
Balance, December 31, 2021$287.6 $71.6 $246.3 $57.1 $13.2 $102.8 $778.6 
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2019$177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 
Long-term flows:
Sales/new accounts51.4 1.7 54.3 10.3 — 6.4 124.1 
Redemptions/terminations(36.7)(1.9)(58.3)(9.5)(0.3)(2.6)(109.3)
Cash flow/unreinvested dividends(7.3)(4.4)(5.8)0.2 (1.3)1.2 (17.4)
Net long-term inflows (outflows) (3)7.4 (4.6)(9.8)1.0 (1.6)5.0 (2.6)
Acquisitions— — — — — 0.2 0.2 
Market appreciation33.2 9.0 14.7 2.2 0.8 5.5 65.4 
Net change40.6 4.4 4.9 3.2 (0.8)10.7 63.0 
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
______________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
(3)Fixed income – taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.
Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows:
Year Ended December 31,
202120202019
(in billions)
Actively Managed
Equity$21.9 $7.4 $4.0 
Fixed Income(3.9)(8.8)21.7 
Alternatives/Multi-Asset Solutions8.3 4.5 4.0 
26.3 3.1 29.7 
28
Table of Contents
Year Ended December 31,
202120202019
(in billions)
Passively Managed
Equity$(7.5)$(4.6)$(4.1)
Fixed Income5.0 (1.6)(0.9)
Alternatives/Multi-Asset Solutions2.3 0.5 0.5 
(0.2)(5.7)(4.5)
Total net long-term inflows (outflows)$26.1 $(2.6)$25.2 

Average AUM by distribution channel and investment service were as follows:
 Year Ended December 31,
 202120202019
(in billions)
Distribution Channel:
Institutions$325.7 $285.9 $265.4 
Retail291.0 236.5 212.3 
Private Wealth Management114.1 97.1 96.5 
Total$730.8 $619.5 $574.2 
Investment Service:
Equity Actively Managed$252.2 $179.8 $158.4 
Equity Passively Managed (1)68.7 57.1 56.4 
Fixed Income Actively Managed – Taxable253.1 254.4 239.7 
Fixed Income Actively Managed – Tax-exempt53.8 47.9 44.6 
Fixed Income Passively Managed (1)9.6 9.4 9.4 
Alternatives/Multi-Asset Solutions (2)93.4 70.9 65.7 
Total$730.8 $619.5 $574.2 
___________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
Fees
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM. Bernstein Research Services revenue consists principally of commissions received for providing equity research and brokerage-related services to institutional investors. The components of net revenues are as follows and are prior to intercompany eliminations:
Year Ended December 31,
202120202019
(in millions)
Investment advisory and services fees:
Institutions:
Base fees$540 $458 $451 
Performance-based fees46 53 28 
586 511 479 
Retail:
Base fees1,442 1,187 1,076 
Performance-based fees51 2423
1,493 1,211 1,099 
29
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Private Wealth Management:
Base fees967 818 845 
Performance-based fees149 55 49 
1,116 873 894 
Total:

Base fees2,949 2,463 2,372 
Performance-based fees246 132 100 
3,195 2,595 2,472 
Bernstein Research Services452 460 408 
Distribution revenues652 530 455 
Dividend and interest income39 51 104 
Investment (losses) gains(1)(16)39 
Other revenues108 105 98 
Total revenues4,445 3,725 3,576 
Less: Interest expense4 16 57 
Net revenues$4,441 $3,709 $3,519 
30
Table of Contents
Protection Solutions
Our Protection Solutions segment includes our life insurance and employee benefits businesses. We also have a diverse offeringlong history of alternative strategies with strong emerging track records that we expectproviding life insurance products to commercializehelp affluent and grow overhigh net worth individuals and small and medium-sized business owners protect and transfer their wealth. We are currently focused on the next three years.
Protection Solutions. We will focus our strategy onrelatively less capital-intensive asset accumulation segments thatof the market, with leading offerings in the VUL market.
We offer a targeted range of life insurance products aimed at serving the financial needs of our clients throughout their lives. Our product offerings include VUL, IUL and term life products, which represented 80%, 12% and 8% of our total life insurance annualized premium, respectively, for the year ended December 31, 2021. Our products are distributed through Equitable Advisors and select third-party firms. We benefit from a long-term, stable distribution relationship with Equitable Advisors, with Equitable Advisors representing approximately 77% of our total life insurance sales for the year ended December 31, 2021.
In 2015, we entered the employee benefits market focusing on small and medium-sized businesses, a target market for our life insurance and Group Retirement 401(k) businesses. Our core products consist of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability and Long-Term Disability. In 2020, we launched our voluntary products including Critical Illness and Accident. Our Employee Benefits’ solutions are distributed through the traditional broker channel, strategic partnerships (medical partners, professional employer associations (PEOs), and associations), General Agencies, TPAs and Retail Equitable Advisors. We believe our EB360 technology platform is a differentiator and will further augment our solutions for small and medium-sized businesses.

Our Protection Solutions segment provides strong cash flows generated by our in-force book and capital diversification benefits. The primary sources of revenue are premiums, investment income, asset-based fees (investment management and 12b-1 fees), and policy charges (expense loads, surrender charges and mortality charges), as well as fees collected from Equitable Advisors non-proprietary sales through Equitable Network.
Life Insurance
We have been serving the financial needs of our clients and their families since 1859. We have an established reputation in product innovation by pioneering the VUL market in 1976 and continuing today with our range of innovative product offerings.
Products
Our life insurance products are primarily designed to help individuals and small and medium-sized businesses with protection, wealth accumulation and transfer of wealth at death, as well as corporate planning solutions including non-qualified deferred compensation, succession planning and key person insurance . We target select segments of the life insurance market: permanent life insurance, including IUL and VUL products and term insurance. In recent years, we have refocused our product offering and distribution towards less capital-intensive, such as VULcapital intensive, higher return accumulation and protection products. For example, in January 2021, we discontinued offering our most interest rate sensitive IUL insurance which offer attractive risk-adjusted returns.product (“IUL Protect”). We plan to improvegrow our performanceoperating earnings over time through earnings generated from sales of our repositioned product portfolio and by proactively managing and optimizing our in-force book.

Permanent Life Insurance. Our permanent life insurance offerings are built on the premise that all clients expect to receive a benefit from the policy. The benefit may take the form of a life insurance death benefit paid at time of death or access while living to cash that has accumulated in the policy on a tax-favored basis. In 2015,each case, the value to the client comes from access to a broad spectrum of equity or fixed interest investments that accumulate the policy value at rates of return consistent with the market.
We have three permanent life insurance offerings built upon a UL insurance framework: IUL, VUL and COLI targeting the small and medium-sized business market. UL policies offer flexible premiums, and generally offer the policyholder the ability to choose one of two death benefit options: a level benefit equal to the policy’s original face amount or a variable benefit equal to the original face amount plus any existing policy AV. Our insurance products include single-life and second-to-die (i.e., survivorship) products.
IUL. IUL uses an equity-linked approach for generating policy investment returns. The equity linked options provide upside return based on an external equity-based index (e.g., S&P 500) subject to a cap. In exchange for this cap on investment returns, the policy provides downside protection in that annual investment returns are floored at zero, protecting the policyholder in the event of a market movement down. As noted above, the performance of any UL insurance policy also depends on the level of policy charges. For further discussion, see “—Pricing and Fees.”
31
Table of Contents
VUL. VUL uses a series of investment options to generate the investment return allocated to the cash value. The sub-accounts are similar to retail mutual funds: a policyholder can invest policy values in one or more underlying investment options offering varying levels of risk and growth potential. These provide long-term growth opportunities, tax-deferred earnings and the ability to make tax-free transfers among the various sub-accounts. In addition, the policyholder can invest premiums in a guaranteed interest option, as well as an investment option we enteredcall the MSO, which provides downside protection from losses in the index up to a specified percentage. Our COLI product is a VUL insurance product tailored specifically to support executive benefits in the small business market.
We work with employees of EIMG to identify and include appropriate underlying investment options in our variable life products, as well as to control the costs of these options.
Term Life. Term life provides basic life insurance protection for a specified period of time and is typically a client’s first life insurance purchase due to its simple design providing basic income protection. Life insurance benefits are paid if death occurs during the term period, as long as required premiums have been paid. The required premiums are guaranteed not to increase during the term period, otherwise known as a level pay or fixed premium. Our term products include conversion features that allow the policyholder to convert their term life insurance policy to permanent life insurance within policy limits.
Other Benefits. We offer a portfolio of riders to provide clients with additional flexibility to protect the value of their investments and overcome challenges. Our Long-Term Care Services Rider provides an acceleration of the policy death benefit in the event of a chronic illness and has been elected on 28% of all eligible policies and elected on 21% of all new policies sold during the year ended December 31, 2021. The MSO, referred to above and offered via a policy rider on our variable life products, provides policyholders with the opportunity to manage volatility.
The following table presents individual life insurance annualized premiums for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
Annualized Premium
Indexed Universal Life$25 $60 $77 
Variable Universal Life169 91 107 
Term16 18 20 
Other (1)— — 2 
Total$210 $169 $206 
______________
(1)For the individual life insurance in-force, other includes current assumption universal life insurance, whole life insurance and other products available for sale but not actively marketed.
The following table presents individual life insurance FYP and renewals by product and total gross premiums for the periods indicated:
32
Table of Contents
Year Ended December 31,
202120202019
(in millions)
FYP by Product Line
Universal Life$— $— $2 
Indexed Universal Life45 144 203 
Variable Universal Life287 144 181 
Term16 18 20 
Other (1)1 1 1 
Total$349 $307 $407 
Renewals by Product Line
Universal Life$824 $845 $895 
Indexed Universal Life310 276 248 
Variable Universal Life968 947 921 
Term379 375 498 
Other (1)19 19 22 
Total$2,500 $2,462 $2,584 
Total Gross Premiums$2,849 $2,769 $2,991 
______________
(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.
Our in-force book spans three insurance companies, Equitable Financial, Equitable America and Equitable L&A. Equitable L&A is closed for new business. Certain term products and permanent products riders from Equitable America and Equitable Financial have been reinsured to our captive reinsurer EQ AZ Life Re. Our in-force portfolio is made up of core product offerings as described above, as well as past generation product offerings that include current assumption universal life insurance, whole life insurance and other products.
The following table presents our in-force face amount and Protection Solutions Reserves as of the dates indicated, respectively, for the individual life insurance products we offer:
December 31,
202120202019
(in billions)
In-force face amount by product: (1)
Universal Life (2)$45.9 $48.7 $53.3 
Indexed Universal Life27.9 27.7 25.8 
Variable Universal Life (3)132.8 127.7 127.5 
Term (4)215.4 215.2 234.9 
Whole Life1.2 1.3 1.4 
Total in-force face amount$423.2 $420.6 $442.9 
December 31,
202120202019
(in millions)
Protection Solutions Reserves (5)
General Account$18,625 $18,905 $17,300 
Separate Accounts17,012 14,771 13,616 
Total Protection Solutions Reserves$35,637 $33,676 $30,916 
______________
33
Table of Contents
(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)UL includes guaranteed universal life insurance products.
(3)VUL includes variable life insurance and COLI.
(4)Decrease from 2019 to 2020 was driven by the sale of USFL.
(5)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.

In order to optimize our capital efficiency and improve the profitability of new business, in 2009, we made a strategic decision to exit the GUL insurance and 30-year term life insurance markets. In recent years, we have refocused our product offering and distribution towards less capital intensive, higher return accumulation and protection products. For example, in January 2021, we discontinued offering our most interest sensitive IUL product (IUL Protect). The following chart shows this shift in our product sales (annualized premiums) from 2008 to 2021:
Shift in Product Sales (Annualized Premiums)
eqh-20211231_g12.jpgeqh-20211231_g13.jpg
(1) UL includes GUL insurance products.
As part of our in-force management function, we monitor the performance of our life insurance portfolio against our expectations at the time of pricing of the products. It is our objective to align the performance of our portfolio to pricing expectations and take in-force actions where appropriate, in accordance with our contracts, applicable law and our governance processes.
Markets
We focus on certain segments of the life insurance market, particularly affluent and high net worth individuals, as well as small and medium-sized businesses. We focus on creating value for our customers through the differentiated features and benefits we offer on our products. We distribute these products through retail advisors and third-party firms who demonstrate the value of life insurance in helping clients to accumulate wealth and protect their assets.
Distribution
We primarily distribute life insurance through two channels: Equitable Advisors and third-party firms. We are shifting our third-party distribution focus in 2021 to bypass intermediaries by working directly with broker dealers and registered investment advisors that assist clients. This shift will allow us to build stronger distribution by aligning directly with experienced life producers and by providing digital, transactional capabilities to non-life experts, such as investment advisors. As part of this restructuring, we have aligned our Retail and Third-Party wholesalers into one Omni Channel.
The following table presents individual life insurance annualized premium by distribution channel for the periods indicated:
34
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Annualized Premium by Distribution
Equitable Advisors$162 $126 $157 
Third-Party Firms48 42 49 
Total$210 $168 $206 
Competition
The life insurance industry consists of many companies with no single company dominating the market for all products. We selectively compete with large, well-established life insurance companies in a mature market, where product features, price and service are key drivers. We primarily compete with others based on these drivers as well as distribution channel relationships, brand recognition, financial strength ratings of our insurance subsidiaries and financial stability. We are selective in our markets of interest and will continue to focus deeply in those areas that align to our offering.
Underwriting
Our underwriting process, built around extensive underwriting guidelines, is designed to assign prospective insureds to risk classes in a manner that is consistent with our business and financial objectives, including our risk appetite and pricing expectations.
As part of making an underwriting decision, our underwriters evaluate information disclosed as part of the application process as well as information obtained from other sources after the application. This information includes, but is not limited to, the insured’s age and sex, results from medical exams and financial information.
We continue to research and develop guideline changes to increase the efficiency of our underwriting process (e.g., through the use of predictive models), both from an internal cost perspective and our customer experience perspective. For example due to effects of the COVID-19 pandemic, we modified our underwriting policies to offer a fluid-less, touchless process to help more clients access the protection they need.
We manage changes to our underwriting guidelines though a robust governance process that ensures that our underwriting decisions continue to align with our business and financial objectives, including risk appetite and pricing expectations.
Our team of underwriters and medical directors is dedicated to making accurate, timely and competitive underwriting decisions. Our line underwriters are empowered to make decisions and receive support of underwriting managers and medical directors when needed.
Our financial due diligence team combines legal, financial and investigative expertise to support the financial underwriting of complex cases, assist in case design and plays an important role in fraud prevention. We continuously monitor our underwriting decisions through internal audits and other quality control processes, to ensure accurate and consistent application of our underwriting guidelines.
We use reinsurance to manage our mortality risk and volatility. Our reinsurer partners regularly review our underwriting practices and mortality and lapse experience through audits and experience studies, the outcome of which have consistently validated the high-quality underwriting process and decisions.
Pricing and Fees
Life insurance products are priced based upon assumptions including, but not limited to, expected future premium payments, surrender rates, mortality and morbidity rates, investment returns, hedging costs, equity returns, expenses and inflation and capital requirements. The primary source of revenue from our life insurance business is premiums, investment income, asset-based fees (including investment management and 12b-1 fees) and policy charges (expense loads, surrender charges, mortality charges and other policy charges).
35
Table of Contents
Risk Management
Reinsurance
We use reinsurance to mitigate a portion of our risk and optimize the capital efficiency and operating returns of our life insurance portfolio. As part of our risk management function, we continuously monitor the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. In addition, effective April 1, 2020, we reinsured a material portion of our inforce term block. In most cases, amounts in excess of $2 million are reinsured.
Non-affiliate Reinsurance. We generally obtain reinsurance for the portion of a life insurance policy that exceeds $10 million. We have set up reinsurance pools with highly rated unaffiliated reinsurers that obligate the pool participants to pay death claim amounts in excess of our retention limits for an agreed-upon premium.
Captive Reinsurance. EQ AZ Life Re Company reinsures a 90% quota share of level premium term insurance issued by Equitable Financial on or after March 1, 2003 through December 31, 2008 and 90% of the risk of the lapse protection riders under UL insurance policies issued by Equitable Financial on or after June 1, 2003 through June 30, 2007 and those issued by Equitable America on or after June 1, 2003 through June 30, 2007 on a 90% quota share basis as well as excess claims relating to certain variable annuities with GMIB riders issued by Equitable Financial. We use captive reinsurance as part of our capital management strategy. For additional information regarding our use of captives, see “—Regulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance Company.”
Hedging
We hedge the exposure contained in our IUL products and the MSO rider we offer on our VUL products. These products and riders allow the policyholder to participate in the performance of an index price movement up to certain caps and/or protect the policyholder in a movement down for a set period of time. In order to support our obligations under these investment options, we enter into derivatives contracts whose payouts, in combination with returns from the underlying fixed income investments, seek to replicate those of the index price, subject to prescribed caps and buffers.
Employee Benefits
Our employee benefits business focuses on serving small and medium-sized businesses, a priority segment for us, offering these businesses a differentiated technology platform and competitive suite of group insurance products. Leveraging our innovative technology platform, we have formed strategic partnerships with large insurance and health carriers as their primary group benefits provider. As a new entrant in the employee benefits market we were able to build a platform from the ground up, without reliance on legacy systems. This puts us in a position to embrace industry shifts quickly and have beenprovides us with an advantage over many competitors.
Products
Our products are designed to provide valuable protection for employees as well as help employers attract employees and control costs. We currently offer a suite of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability, Long-Term Disability, Critical Illness and Accident insurance products.

The following table presents employee benefits gross premiums and annualized premium for the periods indicated:
36
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Employee Benefits Gross Premiums
Group life insurance sales$82 $64 $53 
Short-term disability44 25 17 
Long-term disability43 30 21 
Dental40 28 15 
Vision6 4 — 
Other (1)1 — — 
Total$216 $151 $106 
Annualized premium$76 $52 $52 
_______________
(1) Other includes Critical Illness and Accident insurance products.
Markets
Our employee benefit product suite is focused on growing our capabilities. Using our strong presence in the small and medium-sized businesses seeking simple, technology-driven employee benefits management. We built the employee benefits business based on feedback from brokers and employers, ensuring the business’ relevance to the market we have developedaddress. We are committed to continuously evolving our product suite and technology platform to meet market needs.
Distribution
Our Employee Benefits’ solutions are distributed through the traditional broker channel, strategic partnerships (medical partners, PEOs, and associations), General Agencies, TPAs and Equitable Advisors.
Competition
The employee benefits space is a differentiated value proposition for employers where margins remain attractive.competitive environment. The main factors of competition include price, quality of customer service and claims management, technological capabilities, quality of distribution and financial strength ratings. In this market, we compete with several companies offering similar products. In addition, there is competition in attracting brokers to actively market our products. Key competitive factors in attracting brokers include product offerings and features, financial strength, support services and compensation.
ContinueUnderwriting
We manage the underwriting process to expandfacilitate quality sales and deepenserve the needs of our distribution channels. Over the last three years, we have had strong sales growthcustomers, while maintaining attractive risk-adjusted returns. The combination of a strong affiliated sales force, symbiotic third-party relationships,supporting our financial strength and innovative product design has allowed usbusiness objectives. The application of our underwriting guidelines is continuously monitored through internal underwriting controls and audits to achieve this while shiftinghigh standards of underwriting and consistency.
Pricing and Fees
Employee benefits pricing reflects the claims experience and the risk characteristics of each group. We set appropriate plans for the group based on demographic information and, for larger groups, also evaluate the experience of the group. The claims experience is reviewed at the time of policy issuance and during the renewal timeframes, resulting in periodic pricing adjustments at the group level.
Reinsurance
We reinsure our mixgroup life, disability, critical illness, and accident products. These treaties include both quota share reinsurance and excess of loss. Specifics of each treaty vary by product and support our risk management objectives.
Corporate and Other
Corporate and Other includes certain of our financing and investment expenses. It also includes: the Equitable Advisors broker-dealer business, Closed Block, run-off group pension business, run-off health business, benefit plans for our employees and certain unallocated items, including capital and related investments, interest expense and corporate expense. AB’s results of
37
Table of Contents
operations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.
Equitable Advisors Broker-Dealer Business
Equitable Advisors provides financial planning and advice, insurance and savings solutions, as well as full-service brokerage services through our financial advisors who have access to a broad selection of both affiliated and non-affiliated products to help clients meet their financial needs. While the revenue from retirement and protection products sold through Equitable Advisors is recognized within the Individual Retirement, Group Retirement and Protection Solutions segments, Corporate and Other includes revenue from the AUA of the Equitable Advisors broker-dealer business. As of December 31, 2021, the Equitable Advisors broker-dealer business included $83 billion in AUA.
Closed Block
In connection with the demutualization of Equitable Financial in 1992, the Closed Block was established for the benefit of certain classes of individual participating policies for which Equitable Financial had a dividend scale payable in 1991 and which were in force on that date. Assets were allocated to the Closed Block in an amount which, together with anticipated revenues from policies included in the Closed Block, was reasonably expected to be sufficient to support such business, including provisions for the payment of claims, certain expenses and taxes, and for the continuation of dividend scales payable in 1991, assuming the experience underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the holders of policies included in the Closed Block and will not revert to the benefit of the Company. The plan of demutualization prohibits the reallocation, transfer, borrowing or lending of assets between the Closed Block and other portions of the General Account, any of our Separate Accounts or to any affiliate of ours without the approval of the NYDFS. Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the General Account. The excess of Closed Block liabilities over Closed Block assets represents the expected future post-tax contribution from the Closed Block which would be recognized in income over the period the policies and contracts in the Closed Block remain in force.
For additional information on the Closed Block, see Note 6 of the Notes to these Consolidated Financial Statements.
Equitable Investment Management
EIMG is the investment manager and formerly the administrator for our proprietary variable funds. On June 22, 2021, Equitable Holdings completed the formation of Equitable Investment Management, LLC, (“EIM”, and collectively with EIMG, “Equitable Investment Management”), a wholly owned indirect subsidiary of Holdings. Effective August 1, 2021, the Board of Trustees of EQAT, EQ Premier VIP and 1290 Funds (each, a “Trust” and collectively, the “Trusts”) terminated EIMG as administrator of the Trusts, and EIM entered into certain administrative agreements with each Trust. In addition, on October 1, 2021, Equitable Financial entered into an investment advisory and management agreement by which EIM became the investment manager for the Equitable Financial’s general account portfolio.
Equitable Investment Management supports each of our retirement and protection businesses. Accordingly, Equitable Investment Management results are embedded in the Individual Retirement, Group Retirement and Protection Solutions segments. EIMG helps add value and marketing appeal to our retirement and protection solutions products by bringing investment management expertise and specialized strategies to the underlying investment lineup of each product. In addition, by advising on an attractive array of proprietary investment portfolios (each, a “Portfolio,” and together, the “Portfolios”), EIMG brings investment acumen, financial controls and economies of scale to the construction of underlying investment options for our products.
EIMG provides investment management to proprietary investment vehicles sponsored by the Company, including investment companies that are underlying investment options for our variable insurance and annuity products. EIMG is registered as an investment adviser under the Investment Advisers Act. EIMG serves as the investment adviser to each Trust —and to two private investment trusts established in the Cayman Islands. Each Trust and private investment trusts is a “series” type of trust with multiple Portfolios. EIMG provides discretionary investment management services to the Portfolios, including, among other things, (1) portfolio management services for the Portfolios; (2) selecting, monitoring and overseeing investment sub-advisers; and (3) developing and executing asset allocation strategies for multi-advised Portfolios and Portfolios structured as funds-of-funds. EIMG is further charged with ensuring that the other parts of the Company that interact with the Trusts, such as product management, the distribution system and the financial organization, have a specific point of contact.
38
Table of Contents
EIMG has a variety of responsibilities for the management of its investment company clients. One of EIMG’s primary responsibilities is to provide clients with portfolio management and investment advisory services, principally by reviewing whether to appoint, dismiss or replace sub-advisers to each Portfolio, and thereafter monitoring and reviewing each sub-adviser’s performance through qualitative and quantitative analysis, as well as periodic in-person, telephonic and written consultations with the sub-advisers. Currently, EIMG has entered into sub-advisory agreements with more than 45 different sub-advisers, including AB. Another primary responsibility of EIMG is to develop and monitor the investment program of each Portfolio, including Portfolio investment objectives, policies and asset allocations for the Portfolios, select investments for Portfolios (or portions thereof) for which it provides direct investment selection services, and ensure that investments and asset allocations are consistent with the guidelines that have been approved by clients.
EIM provides administrative services to the Portfolios effective August 1, 2021. The administrative services that EIM provides to the Portfolios include, among others, coordination of each Portfolio’s audit, financial statements and tax returns; expense management and budgeting; legal administrative services and compliance monitoring; portfolio accounting services, including daily net asset value accounting; risk management; oversight of proxy voting procedures and an anti-money laundering program.
EIM also provides investment management services to the Equitable Financial’s General Account portfolio. EIM provides non-discretionary investment advisory and asset management services including, but not limited to, providing investment advice on strategic investment management activities, asset strategies through affiliated and unaffiliated asset managers, strategic oversight of the General Account portfolio, portfolio management, yield/duration optimization, asset liability management, asset allocation, liquidity and close alignment to business strategies, as well as advising on other services in accordance with the investment advisory and management agreement. Subject to oversight and supervision by EIM, EIM may delegate any of its duties with respect to some or all of the assets of the General Account to a sub-adviser.
Regulation
Insurance Regulation
Our insurance subsidiaries are licensed to transact insurance business and are subject to extensive regulation and supervision by insurance regulators, in all 50 states of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and nine of Canada’s thirteen provinces and territories. The primary regulator of an insurance company, however, is located in its state of domicile. Equitable Financial is domiciled in New York and is primarily regulated by the superintendent of the NYDFS. Equitable America and EQ AZ Life Re are domiciled in Arizona and are primarily regulated by the Director of Insurance of the Arizona Department of Insurance and Financial Institutions. Equitable L&A is domiciled in Colorado and is primarily regulated by the Commissioner of Insurance of the Colorado Division of Insurance. The extent of regulation by jurisdiction varies, but most jurisdictions have laws and regulations governing the financial aspects and business conduct of insurers. State laws in the United States grant insurance regulatory authorities broad administrative powers with respect to, among other things, licensing companies to transact business, sales practices, establishing statutory capital and reserve requirements and solvency standards, reinsurance and hedging, protecting privacy, regulating advertising, restricting the payment of dividends and other transactions between affiliates, permitted types and concentrations of investments and business conduct to be maintained by insurance companies as well as agent and insurance producer licensing, and, to the extent applicable to the particular type of insurance, approval or filing of policy forms and rates. Insurance regulators have the discretionary authority to limit or prohibit new issuances of business towardsto policyholders within their jurisdictions when, in their judgment, such regulators determine that the issuing company is not maintaining adequate statutory surplus or capital. Additionally, the New York Insurance Law limits sales commissions and certain other marketing expenses that Equitable Financial may incur.
Supervisory agencies in each of the jurisdictions in which we do business may conduct regular or targeted examinations of our operations and accounts and make requests for particular information from us. For example, periodic financial examinations of the books, records, accounts and business practices of insurers domiciled in their states are generally conducted by such supervisory agencies every three to five years. From time to time, regulators raise issues during examinations or audits of us that could, if determined adversely, have a material adverse effect on us. In addition, the interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact, particularly in areas such as accounting or statutory reserve requirements. In addition to oversight by state insurance regulators in recent years, the insurance industry has seen an increase in inquiries from state attorneys general and other state officials regarding compliance with certain state insurance, securities and other applicable laws. We have received and responded to such inquiries from time to time. For additional information on legal and regulatory risks, see “Risk Factors—Legal and Regulatory Risks.”
39
Table of Contents
Each of our insurance subsidiaries is required to file detailed annual and, with the exception of EQ AZ Life Re, quarterly financial statements, prepared on a statutory accounting basis or in accordance with other accounting practices prescribed or permitted by the applicable regulator, with supervisory agencies in each of the jurisdictions in which such subsidiary does business. The NAIC has approved a series of uniform SAP that has been adopted by all state insurance regulators, in some cases with certain modifications. As a basis of accounting, SAP was developed to monitor and regulate the solvency of insurance companies. In developing SAP, insurance regulators were primarily concerned with ensuring an insurer’s ability to pay all its current and future obligations to policyholders. As a result, statutory accounting focuses on conservatively valuing the assets and liabilities of insurers, generally in accordance with standards specified by the insurer’s domiciliary state. The values for assets, liabilities and equity reflected in financial statements prepared in accordance with U.S. GAAP are usually different from those reflected in financial statements prepared under SAP. See Note 18 of the Notes to these Consolidated Financial Statements.
Holding Company and Shareholder Dividend Regulation
All states regulate transactions between an insurer and its affiliates under insurance holding company acts. The insurance holding company laws and regulations vary from jurisdiction to jurisdiction, but generally require that all transactions affecting insurers within a holding company system be fair and reasonable and, in many cases, require prior notice and approval or non-disapproval by the state’s insurance regulator.
The insurance holding company laws and regulations generally also require a controlled insurance company (i.e., an insurer that is a subsidiary of an insurance holding company) to register and file with state insurance regulatory authorities certain reports, including information concerning its capital structure, ownership, financial condition, certain intercompany transactions and general business operations. States generally require the ultimate controlling person of a U.S. insurer to file an annual enterprise risk report with the lead state of the insurance holding company system identifying risks likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.
State insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance company subsidiaries to their parent companies, as well as on transactions between an insurer and its affiliates. Under the New York insurance laws, which are applicable to Equitable Financial, a domestic stock life insurer may not, without prior approval of the NYDFS, pay an ordinary dividend to its stockholders exceeding an amount calculated based on a statutory formula (“Ordinary Dividend”). Dividends in excess of this amount require the insurer to file a notice of its intent to declare the dividends with the NYDFS and obtain prior approval or non-disapproval from the NYDFS with respect to such dividends (“Extraordinary Dividend”). Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any Ordinary Dividend that exceeds the Ordinary Dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).
Other states have limitations on dividends similar to New York’s, providing that dividends in excess of prescribed limits, based on prior year’s earnings and surplus of the insurance company, established by applicable state regulation, are considered to be extraordinary dividends and require explicit approval from the applicable state regulator. In addition, the insurance laws of some states require that any dividend to a domestic insurance company’s stockholders be paid from the insurer’s earned surplus or that prior approval or non-disapproval be obtained from the state’s domiciliary insurance regulator for any dividend that would be paid from other than the insurer’s earned surplus. As a holding company, we depend on dividends from our subsidiaries to meet our obligations. For additional information on shareholder dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
State insurance holding company laws and regulations also regulate changes in control. State laws generally provide that no person, corporation or other entity may acquire control of a domestic insurance company, or any parent company of such insurance company, without the prior approval of the insurance company’s domiciliary state insurance regulator. Generally, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired “control” of the company. This statutory presumption may be rebutted by a showing that control does not exist in fact. State insurance regulators, however, may find that “control” exists in circumstances in which a person owns or controls, directly or indirectly, less capital-intensive products.than 10% of the voting securities.
We see opportunitiesThe laws and regulations regarding acquisition of control transactions may discourage potential acquisition proposals and may delay or prevent a change of control involving us, including through unsolicited transactions that some of our shareholders might consider desirable.
40
Table of Contents
NAIC
The mandate of the NAIC is to benefit state insurance regulatory authorities and consumers by promulgating model insurance laws and regulations for continued growthadoption by expanding our affiliated and third-party distribution channels. We plan to expand our third-party distribution footprint with select partners and grow our footprintthe states. The NAIC has established statutory accounting principles set forth in its Manual. However, a state may have adopted or in the fee-based registeredfuture may adopt statutory accounting principles that differ from the Manual. Changes to the Manual or states’ adoption of prescribed differences to the Manual may impact the statutory capital and surplus of our U.S. insurance companies.
The NAIC’s Risk Management and Own Risk and Solvency Assessment Model Act (“ORSA”), which has been enacted by our insurance subsidiaries’ domiciliary states requires insurers to maintain a risk management framework and conduct an internal risk and solvency assessment of the insurer’s material risks in normal and stressed environments. The assessment is documented in a confidential annual ORSA summary report, a copy of which must be made available to regulators as required or upon request.
The NAIC adopted the Corporate Governance Annual Disclosure Model Act, which has been adopted by our insurance subsidiaries’ domiciliary states, requires insurers to annually file detailed information regarding their corporate governance policies.
The NAIC amended the Standard Valuation Law to require a principle-based approach to reserving for life and annuity contracts, which resulted in corresponding amendments to the NAIC’s Valuation Manual (the “Valuation Manual”). Principle-based reserving is designed to better address reserving for life insurance and annuity products. It became effective on January 1, 2017 in the states where the amended Standard Valuation Law and Valuation Manual had been adopted, which was followed by a three-year phase-in period that ended on January 1, 2020. Principle-based reserving has been adopted by our insurance subsidiaries’ domiciliary states, although in New York, principle-based reserving became effective with the adoption of Regulation 213, which differs from the NAIC Standard Valuation Law, as discussed further below.
The NAIC has been focused on a macro-prudential initiative since 2017, that is intended to enhance risk identification efforts by building on the state-based regulation system through proposed potential enhancements in supervisory practices related to liquidity, recovery and resolution, capital stress testing and counterparty exposure concentrations for life insurers. In December 2020, the NAIC adopted amendments to the Model Holding Company Act and Regulation that implement requirements related to a liquidity stress-testing framework for certain large U.S. life insurers and insurance groups (based on amounts of certain types of business written or material exposure to certain investment adviser channel. We have a track record in building new channelstransactions, such as selling retirement productsderivatives and securities lending) that will be used as a regulatory tool. These amendments have to be adopted by state legislatures to become effective, including our insurance subsidiaries’ domiciliary states. We cannot predict whether state legislatures will adopt the amendments or what impact they would have on the Company.
The NAIC has also developed a group capital calculation tool using an RBC aggregation methodology for all entities within the insurance holding company system, including non-U.S. entities. The group capital calculation will provide U.S. solvency regulators with an additional analytical tool for conducting group-wide supervision. The NAIC’s amendments to the Model Holding Company Act and Regulation in 2020 also implement the Group Capital Calculation Template and Instructions as well as the annual filing requirement for the group capital calculation. These amendments have to be adopted by state legislatures to become effective, as discussed above.
Captive Reinsurance Regulation and Variable Annuity Capital Standards
We use an affiliated captive reinsurer as part of our capital management strategy. During the last few years, the NAIC and certain state regulators, including the NYDFS, have been scrutinizing insurance companies’ use of affiliated captive reinsurers or offshore entities.
The NAIC adopted a revised preamble to the NAIC accreditation standards (the “Standard”), effective as of January 1, 2016, that applies the Standard to captive insurers which assume level premium term life insurance (“XXX”) business and universal life with secondary guarantees (“AXXX”) business. The NAIC also approved a regulatory framework, the XXX/AXXX Reinsurance Framework, for XXX/AXXX transactions. The framework requires more disclosure of an insurer’s use of captives in its statutory financial statements and narrows the types of assets permitted to back statutory reserves that are required to support the insurer’s future obligations. The XXX/AXXX Reinsurance Framework was implemented through an actuarial guideline (“AG 48”), which requires the actuary of the ceding insurer that opines on the insurer’s reserves to issue a qualified opinion if the framework is not followed. AG 48 applies prospectively, so that XXX/AXXX captives are not subject to AG 48 if reinsured policies were issued prior to January 1, 2015 and ceded so that they were part of a reinsurance arrangement as of December 31, 2014, as is the case for the XXX business and AXXX business reinsured by our Arizona
41
Table of Contents
captive. The Standard is satisfied if the applicable reinsurance transaction satisfies the XXX/AXXX Reinsurance Framework requirements. The NAIC also adopted the Term and Universal Life Insurance Reserving Financing Model Regulation which contains the same substantive requirements as AG 48, as amended by the NAIC, and it establishes uniform, national standards governing reserve financing arrangements pertaining to the term life and universal life insurance partners,policies with secondary guarantees. The model regulation has not yet been adopted by our insurance subsidiaries’ domiciliary states, although it will become an NAIC accreditation standard as of September 1, 2022.
The NAIC adopted a new framework for variable annuity captive reinsurance transactions that became operational in 2020, which commencedincludes reforms that improve the statutory reserve and RBC framework for insurance companies that sell variable annuity products. Among other changes, the framework includes new prescriptions for reflecting hedge effectiveness, investment returns, interest rates, mortality and policyholder behavior in 2011calculating statutory reserves and accounted for approximately $810 million of first year premiumRBC. Overall, we believe the NAIC reform has moved variable annuity capital standards towards an economic framework which is consistent with how we manage our business. The Company adopted the NAIC reserve and deposits (“FYP”)capital framework for the year ended December 31, 2018.2019.
As noted above, New York’s Regulation 213, which was adopted in 2019 and subsequently amended by the NYDFS, differs from the NAIC’s variable annuity reserve and capital framework described above. Regulation 213 does not materially affect Holdings’ GAAP financial condition, results of operations or stockholders’ equity. However, absent management action, Regulation 213 will require Holdings’ principal insurance subsidiary, Equitable Financial, to carry statutory basis reserves for its variable annuity contract obligations equal to the greater of those required under (i) the NAIC standard or (ii) a revised version of the NYDFS requirement in effect prior to the adoption of the regulation’s first amendment for contracts issued prior to January 1, 2020, and for policies issued after that date a new standard that we believe is more conservative than the NAIC standard. Absent management action, Regulation 213 will (i) negatively impact Equitable Financial’s surplus level and RBC ratio and (ii) materially and adversely affect Equitable Financial’s dividend capacity from 2021 and moving forward. These impacts would be more adverse in periods of rising equity and/or interest rate markets and they were exacerbated upon closing of the Venerable Transaction. As a holding company, Holdings relies on dividends and other payments from its subsidiaries and, accordingly, any material limitation on Equitable Financial’s dividend capacity could materially affect Holdings’ ability to return capital to stockholders through dividends and stock repurchases. Equitable Financial was granted a permitted practice by the NYDFS which partially mitigates the Regulation 213 impact of the Venerable Transaction to make the regulation’s application to Equitable Financial more consistent with the NAIC reserve and capital framework. Equitable Financial also entered into a reinsurance agreement with Swiss Re Life & Health America Inc. (“Swiss Re”), effective October 1, 2021, and we completed certain internal restructurings that increase cash flows to Holdings from non-life insurance entities, which further mitigate the impacts from Regulation 213. The Company is considering additional management actions intended to reduce the impact of Regulation 213 which could include seeking further amendment of Regulation 213 or exemptive relief therefrom, changing our underwriting practices to emphasize issuing variable annuity products out of affiliates which are not domiciled in New York, increasing the use of reinsurance and pursuing other corporate transactions. There can be no assurance that any management action individually or collectively will fully mitigate the impact of Regulation 213. Other state insurance regulators may also propose and adopt standards that differ from the NAIC framework. See Note 18 of the Notes to these Consolidated Financial Statements for additional detail on the permitted practice granted by the NYDFS.
We plancannot predict what revisions, if any, will be made to enhancethe model laws and regulations relating to the use of captives. Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance and applies retroactively, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our financial condition or results of operations. For additional information on our use of a captive reinsurance company, see “Risk Factors—Legal and Regulatory Risks.”
Surplus and Capital; Risk Based Capital
Insurers are required to maintain their capital and surplus at or above minimum levels. Regulators have discretionary authority, in connection with the continued licensing of insurance companies, to limit or prohibit an insurer’s sales deliveryto policyholders if, in their judgment, the regulators determine that such insurer has not maintained the minimum surplus or capital or that the further transaction of business will be hazardous to policyholders. We report our RBC based on a formula calculated by applying factors to various asset, premium and statutory reserve items, as well as taking into account the risk characteristics of the insurer. The major categories of risk involved are asset risk, insurance risk, interest rate risk, market risk and business risk. The formula is used as a regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose RBC ratio does not meet or exceed certain RBC levels. The NAIC has approved RBC revisions for corporate bonds, real estate equity and longevity risk that took effect at year-end 2021 and are expected to have a modest net positive RBC impact on our insurance subsidiaries. As of the date of the most
42
Table of Contents
recent annual statutory financial statements filed with insurance regulators, the RBC of each of our insurance subsidiaries was in excess of each of those RBC levels.
Guaranty Associations and Similar Arrangements
Each of the states in which we are admitted to transact business require life insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay certain contractual insurance benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. The laws are designed to protect policyholders from losses under insurance policies issued by insurance companies that become impaired or insolvent. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer is engaged. Some states permit member insurers to recover assessments paid through investments in automation, analytics and digital capabilities. full or partial premium tax offsets.
During each of the past five years, the assessments levied against us have not been material.
New York Insurance Regulation 210
In recent years, state regulators have considered whether to apply regulatory standards to the determination and/or readjustment of non-guaranteed elements (“NGEs”) within life insurance policies and annuity contracts that may be adjusted at the insurer’s discretion, such as the cost of insurance for universal life insurance policies and interest crediting rates for life insurance policies and annuity contracts. For example, in March 2018, Insurance Regulation 210 went into effect in New York. That regulation establishes standards for the determination and any readjustment of NGEs, including a prohibition on increasing profit margins on existing business or recouping past losses on such business, and requires advance notice of any adverse change in a NGE to both the NYDFS as well as to affected policyholders. We have developed policies and procedures designed to comply with Regulation 210 and to date, have not seen adverse effects on our business. It is possible, however, that Regulation 210 could adversely impact management’s ability to determine and/or readjust NGEs in the future. Beyond the New York regulation and similar rules enacted in California (that took effect on July 1, 2019) and Texas (that took effect on January 1, 2021), the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
Broker-Dealer and Securities Regulation and Commodities Regulation
We and certain policies and contracts offered by us are subject to regulation under the Federal securities laws administered by the SEC, self-regulatory organizations and under certain state securities laws. These regulators may conduct examinations of our operations, and from time to time make requests for particular information from us.
Certain of our subsidiaries, including Equitable Advisors, Equitable Distributors, SCB LLC and AllianceBernstein Investments, Inc., are registered as broker-dealers (collectively, the “Broker-Dealers”) under the Exchange Act. The Broker-Dealers are subject to extensive regulation by the SEC and are members of, and subject to regulation by, FINRA, a self-regulatory organization subject to SEC oversight. The Broker-Dealers are subject to the capital requirements of the SEC and FINRA, which specify minimum levels of capital (“net capital”) that the Broker-Dealers are required to maintain and also limit the amount of leverage that the Broker-Dealers are able to employ in their businesses. The SEC and FINRA also regulate the sales practices of the Broker-Dealers. In June 2020, Regulation Best Interest (“Regulation BI”) went into effect with respect to recommendation of securities and accounts to “retail customers,” defined generally as natural persons and their investment vehicles. Regulation BI requires the Broker-Dealers, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer to provide specified disclosures and act solely in the retail customer’s best interest. Moreover, in recent years, the SEC and FINRA have intensified their scrutiny of sales practices relating to variable annuities, variable life insurance and alternative investments, among other products. In addition, the Broker-Dealers are also subject to regulation by state securities administrators in those states in which they conduct business, who may also conduct examinations and direct inquiries to the Broker-Dealers.

Certain of our Separate Accounts are registered as investment companies under the Investment Company Act. Separate Accounts interests under certain annuity contracts and insurance policies issued by us are also registered under the Securities Act. EQAT, EQ Premier VIP Trust and 1290 Funds are registered as investment companies under the Investment Company Act and shares offered by these investment companies are also registered under the Securities Act. Many of the investment companies managed by AB, including a variety of mutual funds and other pooled investment vehicles, are registered with the SEC under the Investment Company Act, and, if appropriate, shares of these entities are registered under the Securities Act.
Certain subsidiaries including EIMG, Equitable Advisors and AB and certain of its subsidiaries are registered as investment advisers under the Investment Advisers Act. The investment advisory activities of such registered investment
43
Table of Contents
advisers are subject to various federal and state laws and regulations and to the laws in those foreign countries in which they conduct business. These laws and regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations.
EIMG is registered with the CFTC as a commodity pool operator with respect to certain portfolios and is also a member of the NFA. AB and certain of its subsidiaries are also separately registered with the CFTC as commodity pool operators and commodity trading advisers; SCB LLC is also registered with the CFTC as a commodity introducing broker. The CFTC is a federal independent agency that is responsible for, among other things, the regulation of commodity interests and enforcement of the CEA. The NFA is a self-regulatory organization to which the CFTC has delegated, among other things, the administration and enforcement of commodity regulatory registration requirements and the regulation of its members. As such, EIMG is subject to regulation by the NFA and CFTC and is subject to certain legal requirements and restrictions in the CEA and in the rules and regulations of the CFTC and the rules and by-laws of the NFA on behalf of itself and any commodity pools that it operates, including investor protection requirements and anti-fraud prohibitions, and is subject to periodic inspections and audits by the CFTC and NFA. EIMG is also subject to certain CFTC-mandated disclosure, reporting and record-keeping obligations.
Regulators, including the SEC, FINRA, the CFTC, NFA and state attorneys general, continue to focus attention on various practices in or affecting the investment management and/or mutual fund industries, including portfolio management, valuation, fee break points, and the use of fund assets for distribution.
We and certain of our subsidiaries have provided, and in certain cases continue to provide, information and documents to the SEC, FINRA, the CFTC, NFA, state attorneys general, the NYDFS and other state insurance regulators, and other regulators regarding our compliance with insurance, securities and other laws and regulations regarding the conduct of our businesses. For additional information on regulatory matters, see Note 18 of the Notes to these Consolidated Financial Statements.
The SEC, FINRA, the CFTC and other governmental regulatory authorities may institute administrative or judicial proceedings that may result in censure, fines, the issuance of cease-and-desist orders, trading prohibitions, the suspension or expulsion of a broker-dealer, commodity pool operator, or other type of regulated entity, or member, its officers, registered representatives or employees or other similar sanctions.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Currently, the U.S. federal government does not directly regulate the business of insurance. While the Dodd-Frank Act does not remove primary responsibility for the supervision and regulation of insurance from the states, Title V of the Dodd-Frank Act establishes the FIO within the U.S. Treasury Department and reforms the regulation of the non-admitted property and casualty insurance market and the reinsurance market. The Dodd-Frank Act also established the FSOC, which is authorized to subject non-bank financial companies, including insurers, to supervision by the Federal Reserve and enhanced prudential standards if the FSOC determines that a non-bank financial institution could pose a threat to U.S. financial stability. The FSOC modified the designation process by adopting an activities-based approach for identifying and addressing potential risks to financial stability, and it enhanced the analytical process, engagement and transparency of the designation process.
The FIO has authority that extends to all lines of insurance except health insurance, crop insurance and (unless included with life or annuity components) long-term care insurance. Under the Dodd-Frank Act, the FIO is charged with monitoring all aspects of the insurance industry (including identifying gaps in regulation that could contribute to a systemic crisis), recommending to the FSOC the designation of any insurer and its affiliates as a non-bank financial company subject to oversight by the Board of Governors of the Federal Reserve System (including the administration of stress testing on capital), assisting the Treasury Secretary in negotiating “covered agreements” with non-U.S. governments or regulatory authorities, and, with respect to state insurance laws and regulation, determining whether state insurance measures are pre-empted by such covered agreements.
In addition, the FIO is empowered to request and collect data (including financial data) on and from the insurance industry and insurers (including reinsurers) and their affiliates. In such capacity, the FIO may require an insurer or an affiliate of an insurer to submit such data or information as the FIO may reasonably require. In addition, the FIO’s approval is required to subject a financial company whose largest U.S. subsidiary is an insurer to the special orderly liquidation process outside the federal bankruptcy code, administered by the FDIC pursuant to the Dodd-Frank Act. U.S. insurance subsidiaries of any such financial company, however, would be subject to rehabilitation and liquidation proceedings under state insurance law. The Dodd-Frank Act also reforms the regulation of the non-admitted property/casualty insurance market (commonly referred to as
44
Table of Contents
excess and surplus lines) and the reinsurance markets, including prohibiting the ability of non-domiciliary state insurance regulators to deny credit for reinsurance when recognized by the ceding insurer’s domiciliary state regulator.
Other aspects of our operations could also be affected by the Dodd-Frank Act, including:
Heightened Standards and Safeguards
The FSOC may recommend that state insurance regulators or other regulators apply new or heightened standards and safeguards for activities or practices we and other insurers or other financial services companies engage in if the FSOC determines that those activities or practices could create or increase the risk that significant liquidity, credit or other problems spread among financial companies. We cannot predict whether any such recommendations will be made or their effect on our business, consolidated results of operations or financial condition.
Over-The-Counter Derivatives Regulation
The Dodd-Frank Act includes a framework of regulation for the OTC derivatives markets, which gives authority to the CFTC to regulate “swaps” and the SEC to regulate “security-based swaps.” Swaps include, among other things, OTC derivatives on interest rates, commodities, broad-based securities indexes and currency. Security-based swaps include, among other things, OTC derivatives on single securities, baskets of securities, narrow-based indexes or loans.
The Dodd-Frank Act authorized the SEC and the CFTC to mandate that a substantial portion of OTC derivatives must be executed in regulated markets and be submitted for clearing to regulated clearinghouses and directed the CFTC and SEC to establish documentation, recordkeeping and registration requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap participants for swaps, security-based swaps and specified other derivatives that continued to trade on the OTC market. The Dodd-Frank Act also directed the SEC, CFTC, the Office of the Comptroller of the Currency, the Federal Reserve Board, the FDIC, the Farm Credit Administration, and the Federal Housing Finance Agency (collectively, the “Prudential Regulators”), with respect to the respective entities they regulate, to develop margin rules for OTC derivatives and capital rules for regulated dealers and major participants. The Prudential Regulators completed substantially all of the required regulations by 2017, and the CFTC finalized one of its last remaining rules – the capital rules for swap dealers in July 2020. In December 2019 the SEC finalized and adopted the final set of rules related to security-based swaps, and the rules, including registration of dealers in security-based swaps, became effective on or prior to November 1, 2021.
As a result of the CFTC regulations, several types of CFTC-regulated swaps are required to be traded on swap execution facilities and cleared through a regulated DCO. Swaps and security-based swaps submitted for clearing are subject to minimum initial and variation margin requirements set by the relevant DCO or security-based swap clearing organization. Both swaps and security-based swaps are subject to transaction-reporting requirements.
Under the CFTC’s and SEC’s regulations, swaps and security-based swaps traded by a non-banking entity are currently subject to variation margin requirements as well as, for most entities, initial margin, as mandated by the CFTC and SEC. Under regulations adopted by the Prudential Regulators, both swaps and security-based swaps traded by banking entities are currently subject to variation margin requirements and, for most entities, initial margin requirements as well. Initial margin requirements imposed by the CFTC, the SEC and the Prudential Regulators are being phased in over a period of time. As a result, initial margin requirements took effect in September 2021 (which is the applicable date for us) and for smaller counterparties will take effect beginning September 2022. The CFTC regulations require us to post and collect variation margin (comprised of specified liquid instruments and subject to a required haircut) in connection with trading of swaps with CFTC-regulated swap dealers, and the regulations adopted by the Prudential Regulators require us to post and collect variation margin when trading either swaps or security-based swaps with a dealer regulated by the Prudential Regulators. SEC regulations require posting and collection of variation margin by both us and our counterparty but require posting of initial margin only by the entity facing the broker-dealer or security-based swap dealer but not the broker-dealer or security-based swap dealer itself.
In addition, regulations adopted by the Prudential Regulators that became effective in 2019 require certain bank-regulated counterparties and certain of their affiliates to include in qualified financial contracts, including many derivatives contracts, repurchase agreements and securities lending agreements, terms that delay or restrict the rights of counterparties, such as us, to terminate such contracts, foreclose upon collateral, exercise other default rights or restrict transfers of affiliate credit enhancements (such as guarantees) in the event that the bank-regulated counterparty and/or its affiliates are subject to certain types of resolution or insolvency proceedings. It is possible that these requirements in the market, could adversely affect our ability to terminate existing derivatives agreements or to realize amounts to be received under such agreements. The Dodd-Frank Act and related federal regulations and foreign derivatives requirements expose us to operational, compliance, execution and other risks, including central counterparty insolvency risk.
45
Table of Contents
We use derivatives to mitigate a wide range of risks in connection with our business, including the impact of increased benefit exposures from certain variable annuity products that offer GMxB features. We have always been subject to the risk that our hedging and other management procedures might prove ineffective in reducing the risks to which insurance policies expose us or that unanticipated policyholder behavior or mortality, combined with adverse market events, could produce economic losses beyond the scope of the risk management techniques employed. Any such losses could be increased by higher costs of writing derivatives (including customized derivatives) and the reduced availability of customized derivatives that might result from the enactment and implementation of new regulations.
Broker-Dealer Regulation
The Dodd-Frank Act authorized the SEC to promulgate rules to provide that the standard of conduct for all broker-dealers, when providing personalized investment advice about securities to retail customers. In response, the SEC adopted Regulation BI, which became effective on June 30, 2020. Regulation BI also requires registered broker dealers and investment advisers to retail customers to file a client relationship summary (“Form CRS”) with the SEC and deliver copies of Form CRS to their retail customers. Form CRS provides disclosures from the broker-dealer or investment adviser about the applicable standard of conduct and conflicts of interest. The intent of these rules is to impose on broker-dealers an enhanced duty of care to their customers similar to that which applies to investment advisers under existing law. We have developed systems and processes and put in place policies and procedures to ensure that we are in compliance with Regulation Best Interest. In addition, FINRA and the SEC are currently focusing on examining compliance efforts with Regulation BI by broker-dealers.
Investment Adviser Regulation
Changes to the marketing requirements for registered investment advisers were adopted in December 2020 and become effective in November 2022. The changes amend existing Rule 206(4)-1 under the Investment Advisers Act and incorporate aspects of Investment Advisers Act Rule 206(4)-3, which the SEC simultaneously rescinded in its entirety. The amended rules impose a number of new requirements that will affect marketing of certain advisory products, including, in particular, private funds. We are currently working diligently to implement policies and procedures on or prior to the effective date for the amended rule.
Fiduciary Rules / “Best Interest” Standards of Conduct
We provide certain products and services to employee benefit plans that are subject to ERISA and certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”). As such, our activities are subject to the restrictions imposed by ERISA and the Code, including the requirement that fiduciaries must perform their duties solely in the interests of plan participants and beneficiaries, and fiduciaries may not cause or permit a covered plan to engage in certain prohibited transactions with persons (parties-in-interest) who have certain relationships with respect to such plans. The applicable provisions of ERISA and the Code are subject to enforcement by the DOL, the IRS, and the Pension Benefit Guaranty Corporation.
In the wake of the March 2018 federal appeals court decision to vacate the 2016 DOL Fiduciary Rule, the DOL announced its intention to issue revised fiduciary investment advice regulations. In December 2020, the DOL finalized a “best interest” prohibited transaction exemption (“PTE 2020-02”) for investment advice fiduciaries under ERISA, and the Code, which now has an enforcement date of January 31, 2022. PTE 2020-02 includes the DOL’s interpretation of the five-part test under ERISA and the Code for determining fiduciary status that was in effect prior to the 2016 DOL Fiduciary Rule, although the scope of PTE 2020-02 extends to rollover transactions if they constitute “investment advice” under the five-part test. If fiduciary status is triggered, PTE 2020-02 prescribes a set of impartial conduct standards and disclosure obligations that are intended to be consistent with the SEC’s Regulation Best Interest. We have devoted significant time and resources towards coming into compliance with PTE 2020-02, which became effective on February 16, 2021, but do not expect the new rules to have a material impact on our business. However, in June 2021 the DOL updated its formal regulatory agenda to include issuance of a proposed rule-making by year-end 2021 that would further amend its fiduciary regulations, including PTE 2020-02 and, possibly, other existing prohibited transaction exemptions.

In addition, in January 2020, the NAIC revised the Suitability in Annuity Transactions Model Regulation to apply a best interest of the consumer standard on insurance producers’ annuity recommendations and to require that insurers supervise such recommendations. Several state regulators have adopted the revised regulation, including in one of our insurance subsidiaries’ domiciliary states, while others are currently considering doing so or instead issuing standalone impartial conduct standards applicable to annuity and, in some cases, life insurance transactions. For example, the NYDFS amended Regulation 187 - Suitability and Best Interests in Life Insurance and Annuity Transactions (“Regulation 187”) to add a “best interest” standard for recommendations regarding the sale of life insurance and annuity products in New York. In April 2021, the Appellate
46
Table of Contents
Division of the NYS Supreme Court, Third Department, overturned Regulation 187 for being unconstitutionally vague. The NYDFS has appealed this ruling to the New York State Court of Appeals, which automatically granted a stay, meaning that Regulation 187 remains in effect pending a decision by the Court of Appeals. We have developed our compliance framework for Regulation 187 with respect to annuity sales as well as our life insurance business. Meanwhile, state regulators and legislatures in Nevada and Maryland have proposed measures that would make broker-dealers, sales agents, and investment advisers and their representatives subject to a fiduciary duty when providing products and services to customers, including pension plans and IRAs. Massachusetts has adopted such a regulation applying a fiduciary duty standard to broker-dealers and their agents which, although not applying to insurance product (including variable annuity) sales, did require us to make changes to certain policies and procedures to ensure compliance. Beyond the New York and Massachusetts regulations, the likelihood of enactment of any such other standalone state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.

In the approximately 18 months since adoption of Regulation BI, the SEC staff has published guidance regarding Regulation BI, including recent guidance indicating that recommendations of instruments having LIBOR-linked exposure (and using as an example, a fixed income mutual fund). In March 2021, the SEC’s Division of Examinations indicated that compliance with Regulation BI is at the top of its list of 2021 examination priorities. We continue to monitor our compliance with Regulation BI.
Climate Risks
The topic of climate risk has come under increased scrutiny by insurance regulators. In September 2020, the NYDFS announced that it expects New York domestic and foreign authorized insurers, which applies to Equitable Financial, to integrate financial risks from climate change into their governance frameworks, risk management processes, and business strategies.
In addition, the NYDFS issued guidance on November 15, 2021 regarding its expectations for New York domestic insurers, such as Equitable Financial, related to the management of financial risks from climate change. Insurers are expected to manage these risks by outlining actions that are proportionate to the nature, scale and complexity of their businesses. For instance, the guidance states that an insurer should: (i) incorporate climate risk into its financial risk management (e.g., a company’s ORSA should address climate risk); (ii) manage climate risk through its enterprise risk management functions and ensure that its organizational structure clearly defines roles and responsibilities related to managing such risk; (iii) use scenario analysis when developing business strategies and identifying risks; and (iv) incorporate the management of climate risk into its corporate governance structure at the group or insurer entity level (i.e., an insurer’s board of directors should understand climate risk and oversee the team responsible for managing such risk). In terms of timing, a company must have specific plans to implement the NYDFS’s expectations related to board governance and organizational structure by August 15, 2022, and the NYDFS intends to issue additional guidance on the timing for implementing the more complex expectations.
The NYDFS also adopted an amendment to the regulation that governs enterprise risk management, effective as of August 13, 2021, that requires certain additional risks, including climate change risk, to be included in an insurance group’s enterprise risk management function.
NYDFS Guidance on Diversity and Corporate Governance
In March 2021, the NYDFS issued a circular letter which states that the NYDFS expects the insurers that it regulates, such as Equitable Financial, to make diversity of their leadership a business priority and a key element of their corporate governance. During the summer of 2021, the NYDFS collected data from insurers that met certain premium thresholds in New York, including Equitable Financial, regarding the diversity of their corporate boards and management. The NYDFS plans to publish this data on an aggregate basis in order to measure progress in the industry, and it will include diversity-related questions in its examination process starting in 2022. We are considering the NYDFS’ guidance as part of our commitment to diversity and inclusion.
International Regulation
Many of AB’s subsidiaries are subject to the oversight of regulatory authorities in jurisdictions outside of the United States in which they operate, including the Ontario Securities Commission, the Investment Industry Regulatory Organization of Canada, the European Securities and Markets Authority, the Financial Conduct Authority in the U.K., the CSSF in Luxembourg, the Financial Services Agency in Japan, the Securities & Futures Commission in Hong Kong, the Monetary Authority of Singapore, the Financial Services Commission in South Korea, the Financial Supervisory Commission in Taiwan and the Securities and Exchange Board of India. While these regulatory requirements often may be comparable to the requirements of the SEC and other U.S. regulators, they are sometimes more restrictive and may cause AB to incur substantial expenditures of time and money related to AB’s compliance efforts.
47
Table of Contents
Federal Tax Legislation, Regulation and Administration
Although we cannot predict what legislative, regulatory, or administrative changes may or may not occur with respect to the federal tax law, we nevertheless endeavor to consider the possible ramifications of such changes on the profitability of our business and the attractiveness of our products to consumers. In this regard, we analyze multiple streams of information, including those described below.
Transition from LIBOR
Global regulators have indicated that publication of LIBOR is expected to cease after June 2023. Publication of one week and two-month USD LIBOR settings terminated at the end of December 2021 as did publication of non-USD LIBOR. Publication of the remaining USD LIBOR settings (overnight and one, three, six and 12 month USD LIBOR) is expected to continue until the end of June 2023. U.S. bank regulators have requested all U.S. regulated banks to stop extending USD LIBOR loans after the end of 2021.
The New York legislature passed legislation in 2021 that provides a fallback of the Secured Overnight Financing Rate (“SOFR”) for contracts governed by New York law and for which a fallback is not otherwise specified. The U.S. House of Representatives passed a similar bill governing instruments that may not apply New York law. That bill has been sent to the U.S. Senate.
Recent guidance from the SEC staff noted that, in light of the now-certain transition away from LIBOR, financial professionals and financial services companies must: consider the implications for portfolio holdings and hedges, including the presence of a robust fallback rate; disclosure with respect to the transition and the likely impact that the LIBOR transition will have on valuation measurements using LIBOR as an input; and operational complexities that the LIBOR transaction is likely to introduce, including required IT system changes.
We have exposure to USD LIBOR through loans, derivatives, investments and financing operations and there are references to LIBOR in certain product prospectuses. We have evaluated our existing credit agreements, portfolio holdings, derivatives and other investments and identified all contracts for which there is not a robust fallback rate specified and have either identified replacement rates, including SOFR, as an adequate fallback for these instruments or are in the process of addressing the lack of the fallback by seeking to dispose of the instrument or negotiate fallback terms.As a general matter we include fallback terms in all new agreements entered into by us and products we issue that replace LIBOR with a replacement rate, including SOFR, upon discontinuation of LIBOR. Existing contract fallback provisions, and whether, how, and when we and others develop and adopt alternative reference rates, will influence the effect of any changes to or discontinuation of LIBOR on us and our subsidiaries and affiliates. Discontinuation of LIBOR could have a materially adverse impact on us depending upon how the transition evolves. We continue to monitor both market and regulatory changes in order to prepare for the discontinuation of the LIBOR benchmark.
Enacted Legislation
At present, the federal tax laws generally permit certain holders of life insurance and annuity products to defer taxation on the build-up of value within such products (commonly referred to as “inside build-up”) until payments are made to the policyholders or other beneficiaries. From time to time, Congress considers legislation that could enhance or reduce (or eliminate) the benefit of tax deferral on some life insurance and annuity products. The modification or elimination of this tax-favored status could also reduce demand for our products. In addition, if the treatment of earnings accrued inside an annuity contract was changed prospectively, and the tax-favored status of existing contracts was grandfathered, holders of existing contracts would be less likely to surrender or rollover their contracts. These changes could reduce our earnings and negatively impact our business.
Regulatory and Other Administrative Guidance from the Treasury Department and the IRS
Regulatory and other administrative guidance from the Treasury Department and the IRS also could impact the amount of federal tax that we pay. For example, the adoption of “principles based” approaches for calculating statutory reserves may lead the Treasury Department and the IRS to issue guidance that changes the way that deductible insurance reserves are determined, potentially reducing future tax deductions for us.
Privacy and Security of Customer Information and Cybersecurity Regulation
We are subject to federal and state laws and regulations that require financial institutions to protect the security and confidentiality of customer information, and to notify customers about their policies and practices relating to their collection
48
Table of Contents
and disclosure of customer information and their practices related to protecting the security and confidentiality of that information. We maintain, and we require our third-party service providers to maintain, security controls designed to ensure the integrity, confidentiality, and availability of our systems and the confidential and sensitive information we maintain and process. We have adopted a privacy policy outlining the Company’s procedures and practices relating to the collection, maintenance, disclosure, disposal, and protection of customer information, including personal information. As required by law, subject to certain exceptions, a copy of the privacy policy is mailed to customers on an annual basis. Federal and state laws generally require that we provide notice to affected individuals, law enforcement, regulators and/or potentially others if there is a situation in which customer information is disclosed to and/or accessed or acquired by unauthorized third parties. Federal regulations require financial institutions to implement programs to protect against unauthorized access to this customer information, and to detect, prevent and mitigate identity theft. Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail or fax messages to both consumers and customers, and also regulate the permissible uses of certain categories of customer information.
The violation of data privacy and data protection laws and regulations or the failure to implement and maintain reasonable and effective cybersecurity programs may result in significant fines, remediation costs and regulatory enforcement actions. Moreover, a cybersecurity incident that disrupts critical operations and customer services could expose the Company to litigation, losses, and reputational damage. As cyber threats continue to evolve, regulators continue to develop new requirements to account for risk exposure, including specific cybersecurity safeguards and program oversight. As such, it may be expected that legislation considered by either the U.S. Congress and/or state legislatures could create additional and/or more burdensome obligations relating to the use and protection of customer information.
We are subject to the rules and regulations of the NYDFS which adopted a cybersecurity regulation for financial services institutions, including banking and insurance entities, under its jurisdiction. The regulation requires these entities to, among other things, assess risks associated with their information systems and establish and maintain a cybersecurity program reasonably designed to protect such systems and consumers’ private data. We have adopted a cybersecurity policy outlining our policies and procedures for the protection of our information systems and information stored on those systems that comports with the regulation. In addition to New York’s cybersecurity regulation, the NAIC adopted the Insurance Data Security Model Law in October 2017, establishing standards for data security and for the investigation and notification of insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information. Certain states have adopted the model law, although it has not been adopted by our insurance subsidiaries’ domiciliary states. We expect that additional states will also adopt the model law, even though it is not an NAIC accreditation standard, but we cannot predict whether or not, or in what form or when, they will do so. Under the model law, companies that are compliant with the NYDFS cybersecurity regulation are deemed also to be compliant with the model law.
Under the California Consumer Privacy Act (“CCPA”), California residents enjoy the right to know what information a business has collected from them, the sourcing and sharing of that information, and the right to limit certain uses. CCPA also establishes a private right of action with potentially significant statutory damages, whereby businesses that fail to implement reasonable security measures to protect against breaches of personal information could be liable to affected consumers. Certain data processing which is otherwise regulated, including under the Gramm-Leach-Bliley Act, is excluded from the CCPA; however, this is not an entity-wide exclusion. We expect a significant portion of our business will be excepted from the requirements of the CCPA. The California Privacy Rights Act (“CPRA”) amends the CCPA and will come into effect in January 2023. Virginia and Colorado have adopted similar laws, which come into effect in January 2023 and July 2023, respectively, and additional states are considering, and may enact, similar laws or regulations in the near future.

State and federal regulators are increasingly focused on cybersecurity and several have established specific and potentially burdensome requirements. For instance, in October 2021, the Federal Trade Commission announced significant amendments to the Standards for Safeguarding Customer Information Rule (the “Safeguards Rule”) that require financial institutions to implement specific data security measures within their formal information security measures. Failure to comply with new regulation or requirements may result in enforcement action, fines and/or other operational or reputational harms.
Environmental Considerations
Federal, state and local environmental laws and regulations apply to our ownership and operation of real property. Inherent in owning and operating real property are the risk of environmental liabilities and the costs of any required clean-up. Under the laws of certain states, contamination of a property may give rise to a lien on the property to secure recovery of the costs of clean-up, which could adversely affect our mortgage lending business. In some states, this lien may have priority over the lien of an existing mortgage against such property. In addition, in some states and under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA, we may be liable, in certain circumstances, as an “owner” or “operator,” for costs of cleaning-up releases or threatened releases of hazardous substances at a property
49
Table of Contents
mortgaged to us. We also risk environmental liability when we foreclose on a property mortgaged to us. However, federal legislation provides for a safe harbor from CERCLA liability for secured lenders, provided that certain requirements are met. Application of various other federal and state environmental laws could also result in the imposition of liability on us for costs associated with environmental hazards.
We routinely conduct environmental assessments prior to making a mortgage loan or taking title to real estate, whether through acquisition for investment or through foreclosure on real estate collateralizing mortgages. We cannot provide assurance that unexpected environmental liabilities will not arise. However, based on information currently available to us, we believe that any costs associated with compliance with environmental laws and regulations or any clean-up of properties would not have a material adverse effect on our consolidated results of operations.
Intellectual Property
We rely on a combination of copyright, trademark, patent and trade secret laws to establish and protect our intellectual property rights. We regard our intellectual property as valuable assets and protect them against infringement.
Human Capital Management
As of December 31, 2021, we had approximately 7,800 full time employees. Of these, approximately 4,100 were employed full-time by AB.
Equitable
To execute our business plan successfully, we need not only a sound business strategy but an equally well-developed people strategy. In addition to ensuring strong alignment across our organization to our goals and strategies, we maintain a long-standing commitment to building a culture of inclusion, professional excellence and continuous learning. We have been recognized as a “Great Place to Work” by the Great Place to Work® Institute, an independent workplace authority, each year since 2016. We have been awarded a 100% rating by the Human Rights Foundation’s Campaign Corporate Equality Index since 2014.
Looking ahead, we know our clients will continue to face new opportunities and challenges. To meet those needs, and to be able to fully realize our ambitious strategic aspirations, we have upgradedadopted a new operating model and mindset that remain uniquely Equitable: our New Ways of Working. Our reasons for embracing this new way forward are clear: we want to innovate and grow, we want to attract the best talent and build a strong pipeline for employee advancement, and we want to better serve our clients. Our New Ways of Working equips us to evolve in ways that enhance innovation, efficiency, client satisfaction and employee engagement by drawing upon five time-tested methodologies: Adaptive Leadership; Outcomes, Objectives & Key Results; Dynamic Enablers; Enterprise Agile; and Design Thinking. It fundamentally changes the way we deliver value and grow as employees and as a company.

Employee Development
Attracting, developing and retaining the best people is crucial to our long-term success and strategy. Accordingly, we offer a number of tools and resources to empower our people to grow and to perform to the best of their abilities. Our tools and resources include educational opportunities such as digital and classroom-style courses on topics ranging from communication skills to product knowledge to inclusive leadership immersion. We also provide tuition reimbursement programs to defray the cost of degree programs. In 2021 we retooled our career models to provide us with a consistent and transparent way to help our people grow, develop and uncover new career opportunities. Under our new career models, each employee’s skills are at the forefront. They can clearly see how their skills are transferrable across the organization so they can shape the career they want. And they can find opportunities — or have opportunities find them — based on the skills they have to contribute. We believe these models will help our employees grow and nurture their own unique skills as they develop a specific career roadmap for the future.
We also support promotion within Equitable, which provides further opportunities for employees to learn, grow and advance in their careers. Among the open positions at Equitable, about 46% on average are filled by internal candidates.
Health and Family Resources
50
Table of Contents
We are committed to the health and safety of our employees, financial professionals and their families. With respect to COVID-19, since the onset of the pandemic, we have been working with employees to provide as much flexibility as possible. All of our locations are open at this time but, with the exception of those considered essential, employees have the option to work remotely or from the office. A large number of our employees and financial professionals continue to work remotely. We continue to monitor the health and safety conditions of all of our corporate locations, and use guidance provided by the CDC to create policies and practices to ensure the safety of our people as we move through the pandemic, including re-entering the workplace, travel, in-person meeting, encouraging vaccinations, masking and social distancing. We have enhanced our listening strategy, broadened our benefits offerings, and developed a synchronized hybrid work model which will be fully implemented when all employees return to work from our office. We also created a centralized location to share the latest updates on health and safety with our employees and financial professionals, and our Chief Medical Director hosted a series of videos that provided COVID updates and answered employees’ questions. We opened a COVID-19 specific hotline with our expert second medical opinion service provider to intake health questions and provide local referrals for Equitable employees, financial professionals and family members.
We offered complimentary membership to an online tutoring service during the school year and hosted a series of interactive employee engagement activities to create connections, support our culture and combat burnout associated with the virtual working environment. We also provide resources to support employees in their family life, including child and elder care support through Bright Horizons, College Coach, financial wellness, adoption support, family and medical leave and paid parental leave of between 8 and 16 weeks. We also introduced Sanvello, an app for stress, anxiety, and depression based on cognitive-behavioral therapy, mindfulness, and wellness. Our Employee Assistance Program provides resources to help employees overcome challenges at home or at work and help them reach their professional and personal goals. This includes six complimentary confidential counseling sessions annually.

Compensation
Rewarding performance is the cornerstone of our “Total Rewards” program. Total Rewards include access to comprehensive benefits programs and the opportunity to share in company results through equity awards. Our benefits portfolio allows eligible employees and financial professionals to elect the right coverage for health needs, to build their wealth and to provide protection for themselves and their families from the unexpected events that might occur along the way. Our Total Rewards package includes, among other things, market-competitive pay, equity award programs and bonuses, healthcare benefits, retirement savings plans, paid time off and family leave, flexible work schedules, an educational assistance program and an employee assistance program and other mental health services.

Diversity, Equity and Inclusion
We believe a more diverse workforce enriches our people’s work experience, helps us better serve clients, and creates a more understanding and inclusive work environment. To drive lasting change, we must deeply understand the issues facing the diverse communities in our company. We are taking an intentional and iterative approach to diversity, equity and inclusion (DEI), listening and applying our learnings as we go.
To build a more inclusive culture, Equitable has developed integrated programs through keynote speakers, events and learning experiences. This effort helps reset behavioral expectations and understanding of DEI-related matters in the workplace. With our courageous conversations, we now have a model where we can talk about race, gender and other topics to support both personal growth and team building. We have hosted conversations about race and racism in America, violence against the Asian American and Pacific Islander (AAPI) community and issues facing our LGBTQ+ colleagues, and have forthcoming conversations planned regarding religious tolerance.
We are committed to transparency when it comes to sharing the diverse composition of our workforce. This commitment is underscored by the public release of Equitable Holdings' EEO-1 Report. We have multiple programs underway to increase employee and financial professional diverse representation. We are focused on creating a support structure to accelerate career advancement opportunities for our diverse colleagues. To do this, we identify opportunities and challenges and create programs to help our underrepresented communities overcome barriers.

51
Table of Contents
Our 11 Employee Resource Groups and 5 Field Advisory Councils play a key role in serving as a community voice to leadership, driving important policy changes and helping to build and shape our DEI strategy. They also create development opportunities for our people, with members working collaboratively to address business challenges and share ideas.
In 2020, we established the CEO Taskforce to Advance Racial Equity. The mission of the Taskforce is to make Equitable the most sought-after employer for Black professionals by building an environment that supports and invests in the careers and well-being of our Black employees and financial professionals. While the Taskforce is currently focused on Black colleagues, the models created are being used to benefit other underrepresented groups.
We're holding ourselves accountable by leveraging our compensation and rewards systems to drive our DE&I goals. Today, DE&I is incorporated into our company STIC metrics through our corporate strategic initiatives, and each of our senior leaders have incorporated DE&I aspirations into their annual goals. For Equitable Advisors, a portion of Executive Vice President compensation is tied to advancing diverse representation.
While we have made progress, we recognize this is long-term journey.

Equitable Foundation
The Equitable Foundation directs the Company’s philanthropic and volunteer activities. The Equitable Foundation gives our employees and financial professionals an opportunity to commit their time and effort to organizations they believe in, as well as supports their efforts through charitable grants and through our company volunteer program, Equitable in Action.
Equitable Foundation has established three key focus areas to guide our social impact efforts, which reflect our broader ESG aspirations and align to enterprise objectives. These areas include: i) advancing racial equity and social justice, ii) building healthy and vibrant communities, and iii) supporting underserved students in the journey to and through secondary education and, ultimately, advancing their career aspirations.
Equitable Excellence, a scholarship program for high school seniors, is the flagship program of Equitable Foundation. In alignment with Equitable’s own mission of helping people achieve financial security so that they can face the future with confidence, the Equitable Excellence Scholarship places an emphasis on empowering students’ future plans so that they can continue to have positive impacts in their community.
Through our matching gifts program, we double the impact of the charitable contributions made by our employees and financial professionals. Eligible donations of $50 or more are matched up to $2,000 per year, per individual. In 2021, Equitable Foundation matched $1.3 million in contributions made to nonprofit organizations nationwide.
AllianceBernstein
As a leading global investment-management and research firm, AB brings together a wide range of insights, expertise and innovations to advance the interests of clients around the world. The intellectual capital of AB’s employees is collectively its most important asset, so the long-term sustainability of AB is heavily dependent on its people. AB is keenly focused on:
•fostering an inclusive culture by incorporating diversity and inclusion in all levels of AB’s business;
•encouraging innovation;
•developing, retaining and recruiting high quality talent; and
•aligning employees’ incentives and risk taking with those of AB.

Talent Acquisition
AB seeks to achieve excellence in business and investment performance by recruiting and hiring a workforce with diversity of thought, backgrounds and experiences. AB believes that diverse and inclusive teams generate better ideas and reach more balanced decisions. AB seeks to leverage the unique backgrounds of its employees to meet the needs of a broad range of clients and engage with the communities in which AB operates. AB engages several external organizations to assist in attracting and recruiting top talent at all levels, with a particular focus on attracting diverse talent. AB has a sizable group of internal human capital associates focused on recruiting, and AB has implemented various human capital initiatives to develop and provide for a balanced workforce.
Employee Engagement
52
Table of Contents
AB believes a workforce is most productive, effective and highly engaged when they feel connected to AB’s business and culture. AB seeks to provide diverse work experiences, professional development opportunities, competitive compensation and benefits, an inclusive and diverse culture and social engagement projects to keep its employees motivated, connected to AB and engaged throughout their careers. AB strives to create a culture of intellectual curiosity and collaboration, creating an environment where its employees can thrive and do their best work. AB fosters growth and advancement through different training avenues to develop skill sets, create opportunities for networking, both internally and externally, and AB encourages internal mobility as a part of its employees' career trajectory. It is important that AB’s employees are not only connected to AB’s business but also to the communities in which AB operates. As such, AB offers many opportunities for its employees to volunteer in the communities in which AB serves.
Diversity and Inclusion
AB continues to believe that diverse and inclusive teams generate better ideas and best serve the needs of its clients. The events of the last two years have provided an unforeseen yet unique opportunity to reflect, adapt and broaden AB’s Diversity & Inclusion (“D&I”) strategy. D&I continues to be a key strategic priority for AB and its ongoing commitment to embed it across all facets of the firm has further reinforced AB’s company values. It has also allowed for a more purposeful approach to engagement with AB’s people, clients, and the communities in which it operates.
Community engagement efforts have been further integrated under the D&I umbrella. Under the new structure, AB is better able to streamline and formalize the process for assessing corporate partnerships and philanthropic giving through the lens of D&I, allowing for a more cohesive overall strategy.
AB has enhanced its talent attraction and retention approach to position itself as an employer of choice and invest in the development of its people. AB has developed a diverse talent strategy with a goal of developing a deeper understanding of the needs of diverse talent and also equipping managers with the necessary tools to effectively manage an increasingly more diverse workforce. The strategy includes incorporating the concept of inclusive leadership into the firm wide leadership development curriculum and enhancing AB’s exit interview process for diverse talent by conducting in-person interviews which will better enable AB to detect trends and mitigate attrition.
AB’s people remain its top priority especially during these times of uncertainty. Over the course of the last year, there has been a continued focus on education and deepening engagement across all pillars of its strategy to include Employee Resource Groups (ERGs), corporate partnerships, and the overall experience at AB. ERGs have been a major proponent of these efforts by cultivating spaces for courageous conversations, encouraging professional development, personal wellness, and raising awareness for various underrepresented communities.
As AB continues to seek out opportunities to further its commitment to diversity, equity, and inclusion, AB is leveraging best practices from industry peers. AB’s D&I journey continues to evolve, addressing racial and gender equity, more effective access to diverse talent and monitoring client trends remain top priorities.

Compensation and Benefits
AB has demonstrated a history of investing in its workforce by offering competitive compensation. AB utilizes a variety of compensation elements, including base salaries, annual short-term compensation awards (i.e., cash bonuses) and, for those of AB’s employees who earn more than $300,000 annually, a long-term compensation award program. Long-term incentive compensation awards generally are denominated in restricted AB Holding Units. AB utilizes this structure to foster a stronger sense of ownership and align the interests of its employees directly with the interests of AB unitholders and indirectly with the interests of AB’s clients, as strong performance for its clients generally contributes directly to increases in AUM and improved financial performance for the firm. Furthermore, AB offers to all eligible employees health and welfare, 401(k) profit-sharing and other benefits programs.
Health and Safety
AB’s ongoing response to the COVID-19 global pandemic demonstrates how highly AB values the health and safety of its employees. At the initial onset of COVID-19 during the first quarter of 2020, AB quickly responded in the various jurisdictions where AB operates. AB implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in AB’s offices was considered critical), which lasted through the second quarter of 2021. Since then, working in the office generally has been voluntary, with mandatory in-office participation occurring only at certain times when COVID-19 has ebbed
53
Table of Contents
significantly in the communities in which AB operates. AB also instituted a confidential notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep AB’s employees safe and advise of key developments.
Executive Officers
See Part III, Item 10 “Directors, Executive Officers and Corporate Governance” for information with respect to our executive officers, which is incorporated by reference herein.
Available Information
We maintain a public website at https://equitableholdings.com. We use our website as a routine channel for distribution of important information, including news releases, analyst presentations, financial information and corporate governance information. We post filings on our website as soon as practicable after they are electronically filed with, or furnished to, the SEC, including our annual and quarterly reports on Forms 10-K and 10-Q and current reports on Form 8-K; our proxy statements; and any amendments to those reports or statements. All such postings and filings are available on the “Investors” section of our website free of charge. The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
We may use our website as a means of disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures are included on our website in the “Investors” section. Accordingly, investors should monitor this portion of our website, in addition to following our news releases, SEC filings, public conference calls and webcasts. The information contained on or connected to our website is not a part of this Form 10-K.

Part I, Item 1A.
RISK FACTORS
You should read and consider all of the risks described below, as well as other information set forth in this Annual Report on Form 10-K. The risks described below are not the only ones we face. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our businesses, results of operations, financial condition or liquidity.
Risks Relating to Our Consolidated Business
Risks Relating to Conditions in the Financial Markets and Economy
The coronavirus (COVID-19) pandemic.
The COVID-19 pandemic has negatively impacted the U.S. and global economies. A wide variety of factors continue to impact financial and economic conditions, including, among others, volatility in the financial markets, rising inflation rates, supply chain disruptions, continued low interest rates and changes in fiscal or monetary policy. Efforts to prevent the spread of COVID-19 have affected our business directly in a number of ways, including through the temporary closures of many businesses and schools and the institution of social distancing requirements in many states and local communities. Businesses or schools that have reopened have restricted or limited access for the foreseeable future and may do so on a permanent or episodic basis. As a result, our ability to sell products through our regular channels and the demand for our products and services has been significantly impacted.
While we have implemented risk management and contingency plans with respect to the COVID-19 pandemic, such measures may not adequately protect our business from the full impacts of the pandemic. Currently, most of our employees and advisors are continuing to work remotely. Extended periods of remote work arrangements could introduce additional operational risk including, but not limited to, cybersecurity risks, and impair our ability to effectively manage our business. We also outsource a variety of functions to third parties whose business continuity strategies are largely outside our control.
Economic uncertainty resulting from the COVID-19 pandemic may have an adverse effect on product sales and result in existing policyholders withdrawing at greater rates. COVID-19 could have an adverse effect on our insurance business due to increased mortality and morbidity rates. The cost of reinsurance to us for these policies could increase, and we may encounter
54
Table of Contents
decreased availability of such reinsurance. If policyholder lapse and surrender rates or premium waivers significantly exceed our expectations, we may need to change our assumptions, models or reserves.
Our investment portfolio has been, and may continue to be, adversely affected by the COVID-19 pandemic. Our investments in mortgages and commercial mortgage-backed securities have been, and could continue to be, negatively affected by delays or failures of borrowers to make payments of principal and interest when due. In some jurisdictions, local governments have imposed delays or moratoriums on many forms of enforcement actions. Furthermore, declines in equity markets and interest rates, reduced liquidity or a continued slowdown in the U.S. or in global economic conditions may also adversely affect the values and cash flows of investments. For additional information on the effects of COVID-19 on our mortgage loans, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—General Account Investment Portfolio.” Market volatility also caused significant increases in credit spreads, and any continued volatility may increase our borrowing costs and decrease product fee income. Further, severe market volatility may leave us unable to react to market events in a prudent manner consistent with our historical investment practices.
The extent of the COVID-19 pandemic’s impact on us will depend on future developments that are still highly uncertain, including the severity and duration of the pandemic, actions taken by governments and other third parties in response to the pandemic and the availability and efficacy of vaccines against COVID-19 and its variants.
Conditions in the global capital markets and the economy.
Our business, results of operations or financial condition are materially affected by conditions in the global capital markets and the economy. A wide variety of factors affect economic conditions and consumer confidence, including the COVID-19 pandemic and government reactions thereto, the pace of economic growth in the U.S., equity market performance, low interest rates and potential changes in fiscal or monetary policy. Given our interest rate and equity market exposure in our investment and derivatives portfolios and many of our products, these factors could have a material adverse effect on us. The value of our investments and derivatives portfolios may also be adversely affected by reductions in price transparency, changes in the assumptions or methodology we use to estimate fair value and changes in investor confidence or preferences, which could potentially result in higher realized or unrealized losses. Market volatility may also make it difficult to transact in or to value certain of our securities if trading becomes less frequent.
In an economic downturn, the demand for our products and our investment returns could be materially and adversely affected. The profitability of many of our products depends in part on the value of the assets supporting them, which may fluctuate substantially depending on various market conditions. In addition, a change in market conditions could cause a change in consumer sentiment and adversely affect sales and could cause the actual persistency of these products to vary from their anticipated persistency and adversely affect profitability. Our policyholders may choose to defer paying insurance premiums or stop paying insurance premiums altogether. In addition, market conditions may adversely affect the availability and cost of reinsurance protections and the availability and performance of hedging instruments.
Equity market declines and volatility.
Declines or volatility in the equity markets can negatively impact our business, results of operations or financial condition. For example, equity market declines or volatility could decrease the AV of our annuity and variable life contracts which, in turn, would reduce the amount of revenue we derive from fees charged on those account and asset values. Our variable annuity business is particularly sensitive to equity markets, and sustained weakness or stagnation in equity markets could decrease its revenues and earnings. At the same time, for variable annuity contracts that include GMxB features, equity market declines increase the amount of our potential obligations related to such GMxB features and could increase the cost of executing GMxB-related hedges beyond what was anticipated in the pricing of the products being hedged. This could result in an increase in claims and reserves related to those contracts, net of any reinsurance reimbursements or proceeds from our hedging programs. Equity market declines and volatility may also influence policyholder behavior, which may adversely impact the levels of surrenders, withdrawals and amounts of withdrawals of our annuity and variable life contracts or cause policyholders to reallocate a portion of their account balances to more conservative investment options (which may have lower fees), which could negatively impact our future profitability or increase our benefit obligations particularly if they were to remain in such options during an equity market increase. Market volatility can negatively impact the value of equity securities we hold for investment which could in turn reduce the statutory capital of certain of our insurance subsidiaries. In addition, equity market volatility could reduce demand for variable products relative to fixed products, lead to changes in estimates underlying our calculations of DAC that, in turn, could accelerate our DAC amortization and reduce our current earnings and result in changes to the fair value of our GMIB reinsurance contracts and GMxB liabilities, which could increase the volatility of our earnings. Lastly, periods of high market volatility or adverse conditions could decrease the availability or increase the cost of derivatives.
Interest rate fluctuations or prolonged periods of low interest rates.
55
Table of Contents
Some of our retirement and protection products and certain of our investment products, and our investment returns, are sensitive to interest rate fluctuations, and changes in interest rates and interest rate benchmarks may adversely affect our investment returns and results of operations, including in the following respects:
•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 rise rapidly, policy loans and surrenders and withdrawals of annuity contracts and life insurance policies may increase, 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;
•changes in interest rates could result in changes to the fair value liability of our variable annuity GMxB business;
•changes in interest rates may adversely impact our liquidity and increase our costs of financing and hedges;
•we may not be able to effectively mitigate and we may sometimes choose not to fully mitigate or to increase, the interest rate risk of our assets relative to our liabilities; and
•the 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 such changes in assumptions in products available for sale may negatively impact the long-term profitability of certain products sold during the intervening period.

A prolonged period during which interest rates remain low may result in greater costs associated with our variable annuity products with GMxB features; higher costs for some derivative instruments used to hedge certain of our product risks; or shortfalls in investment income on assets supporting policy obligations as our portfolio earnings decline over time, each of which may require us to record charges to increase reserves. In addition, an extended period of declining or low interest rates may also cause us to change our long-term view of the interest rates that we can earn on our investments. Such a change in our view would cause us to change the long-term interest rate that we assume in our calculation of insurance assets and liabilities under U.S. GAAP. Any future revision would result in increased reserves, accelerated amortization of DAC and other unfavorable consequences. In addition, certain statutory capital and reserve requirements are based on formulas or models that consider interest rates, and an extended period of low interest rates may increase the statutory capital we are required to hold and the amount of assets we must maintain to support statutory reserves. Furthermore, such an environment may cause certain policies to remain in force for longer periods than we anticipated in our pricing, potentially resulting in greater claims costs than we expected and resulting in lower overall returns on business in force. Widening credit spreads, if not offset by equal or greater declines in the risk-free interest rate, would also cause the total interest rate payable on newly issued securities to increase, and thus would have the same effect as an increase in underlying interest rates.
Market conditions and other factors could materially and adversely affect our goodwill.
Business and market conditions may impact the amount of goodwill we carry in our consolidated balance sheet related to the Investment Management and Research segment. To the extent that securities valuations are depressed for prolonged periods of time or market conditions deteriorate, or that AB experiences significant net redemptions, its AUM, revenues, profitability and unit price will be adversely affected. This may result in the need to recognize an impairment of goodwill which could adversely affect our business, results of operations or financial condition.
Adverse capital and credit market conditions.
Volatility and disruption in the capital and credit markets may exert downward pressure on the availability of liquidity and credit capacity. We need liquidity to pay our operating expenses (including potential hedging losses), interest expenses and any distributions on our capital stock and to capitalize our insurance subsidiaries. Without sufficient liquidity, we could be required to curtail our operations and our business would suffer. While we expect that our future liquidity needs will be satisfied primarily through cash generated by our operations, borrowings from third parties and dividends and distributions from our subsidiaries, it is possible that we will not be able to meet our anticipated short-term and long-term benefit and expense payment obligations. If current resources are insufficient to satisfy our needs, we may access financing sources such as bank debt or the capital markets. These services may not be available during times of stress or may only be available on unfavorable terms. If we are unable to access capital markets to issue new debt, refinance existing debt or sell additional shares as needed, or
56
Table of Contents
if we are unable to obtain such financing on acceptable terms, our business could be adversely impacted. Volatility in the capital markets may also consume liquidity as we pay hedge losses and meet collateral requirements related to market movements. We expect these hedging programs to incur losses in certain market scenarios, creating a need to pay cash settlements or post collateral to counterparties. Although our liabilities will also be reduced in these scenarios, this reduction is not immediate, and so in the short term, hedging losses will reduce available liquidity.
Disruptions, uncertainty or volatility in the capital and credit markets may limit our ability to raise additional capital to support business growth, or to counter-balance the consequences of losses or increased regulatory reserves and rating agency capital requirements. This could force us to: (i) delay raising capital; (ii) miss payments on our debt or reduce or eliminate dividends paid on our capital stock; (iii) issue capital of different types or under different terms than we would otherwise; or (iv) incur a higher cost of capital than would prevail in a more stable market environment. Ratings agencies may change our credit ratings, and any downgrade is likely to increase our borrowing costs and limit our access to the capital markets and could be detrimental to our business relationships with distribution partners. Our business, results of operations, financial condition, liquidity, statutory capital or rating agency capital position could be materially and adversely affected by disruptions in the capital and credit markets.
Risks Relating to Our Operations
Holdings depends on the ability of its subsidiaries to transfer funds to it to meet its obligations.
Dividends and other distributions from Holdings’ subsidiaries are the principal sources of funds available to Holdings to pay principal and interest on its outstanding indebtedness, to pay corporate operating expenses, to pay any stockholder dividends, to repurchase stock and to meet its other obligations. The inability to receive dividends from our subsidiaries could have a material adverse effect on our business, results of operations or financial condition. The ability of our insurance subsidiaries to pay dividends and make other distributions to Holdings will depend on their earnings, tax considerations, covenants contained in any financing or other agreements and applicable regulatory restrictions and receipt of regulatory approvals. If the ability of our insurance or non-insurance subsidiaries to pay dividends or make other distributions or payments to Holdings is materially restricted by these or other factors, we may be required to raise cash through the incurrence of debt, the issuance of equity or the sale of assets. However, there is no assurance that we would be able to raise sufficient cash by these means. This could materially and adversely affect our ability to pay our obligations.
Failure to protect the confidentiality of customer information or proprietary business information.
We and certain of our vendors retain confidential information (including customer transactional data and personal information about our customers, the employees and customers of our customers, and our own employees). The privacy of this information may be compromised, including as a result of an information security breach. We have implemented a formal, risk-based data security program; however, failure to implement and maintain effective cybersecurity programs, or any compromise of the security of our information systems, or those of our vendors, or the cloud-based systems we use, through cyber-attacks or for any other reason that results in unauthorized access, use, disclosure or destruction of personally identifiable information or customer information, or the disruption of critical operations and services, could damage our reputation, deter people from purchasing our products, subject us to significant civil and criminal liability and require us to incur significant technical, legal and other expenses any of which could have a material adverse effect on our business, results of operations or financial condition.
Our operational failures or those of service providers on which we rely.
Weaknesses or failures in our internal processes or systems or those of our vendors could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Our business is highly dependent on our ability to process large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal and regulatory standards. If we make a mistake in performing our services that causes financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, business, results of operations or financial condition.
The occurrence of a catastrophe, including natural or man-made disasters.
Any catastrophic event, such as pandemic diseases like COVID-19, terrorist attacks, accidents, floods, severe storms or hurricanes or cyber-terrorism, could have a material and adverse effect on our business. We could experience long-term interruptions in our service and the services provided by our significant vendors. 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
57
Table of Contents
those problems affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. We could experience a material adverse effect on our liquidity, financial condition and the operating results of our insurance business due to increased mortality and, in certain cases, morbidity rates and/or its impact on the economy and financial markets. Our workforce may be unable to be physically located at one of our facilities, which could result in lengthy interruptions in our service. A catastrophe may affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. Climate change may increase the frequency and severity of weather-related disasters and pandemics.

Our ability to recruit, motivate and retain key employees and experienced and productive financial professionals.
Our business depends on our ability to recruit, motivate and retain highly skilled, technical, investment, managerial and executive personnel, and there is no assurance that we will be able to do so. Our financial professionals and our key employees are key factors driving our sales. Intense competition exists among insurers and other financial services companies for financial professionals and key employees. We cannot provide assurances that we will be successful in our respective efforts to recruit, motivate and retain key employees and top financial professionals and the loss of such employees and professionals could have a material adverse effect on our business, results of operations or financial condition.
Misconduct by our employees or financial professionals.
Misconduct by our employees, financial professionals, agents, intermediaries, representatives of our broker-dealer subsidiaries or employees of our vendors could result in violations of law by us or our subsidiaries, regulatory sanctions or serious reputational or financial harm. We employ controls and procedures designed to monitor employees’ and financial professionals’ business decisions and to prevent them from taking excessive or inappropriate risks, including with respect to information security, but employees may take such risks regardless of such controls and procedures. If our employees or financial professionals take excessive or inappropriate risks, those risks could harm our reputation, subject us to significant civil or criminal liability and require us to incur significant technical, legal and other expenses.
Potential strategic transactions.
We may consider potential strategic transactions, including acquisitions, dispositions, mergers, joint ventures and similar transactions. These transactions may not be effective and could result in decreased earnings and harm to our competitive position. In addition, these transactions, if undertaken, may involve a number of risks and present financial, managerial and operational challenges. Furthermore, strategic transactions may require us to increase our leverage or, if we issue shares to fund an acquisition, would dilute the holdings of the existing stockholders. Any of the above could cause us to fail to realize the benefits anticipated from any such transaction.
Changes in accounting standards.
Our consolidated financial statements are prepared in accordance with U.S. GAAP, the principles of which are revised from time to time. Accordingly, from time to time we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board (“FASB”). We may not be able to predict or assess the effects of these new accounting pronouncements or new interpretations of existing accounting pronouncements, and they may have material adverse effects on our business, results of operations or financial condition. For a discussion of accounting pronouncements and their potential impact on our business, including Accounting Standards Update 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, see Note 2 of the Notes to these Consolidated Financial Statements.

Our investment advisory agreements with clients, and our selling and distribution agreements with various financial intermediaries and consultants, are subject to termination or non-renewal on short notice.
AB derives most of its revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds and private wealth clients, and selling and distribution agreements with financial intermediaries that distribute AB funds.. In addition, as part of our variable annuity products, EIMG enters into written investment management agreements (or other arrangements) with mutual funds. Generally, these investment management agreements (and other arrangements) are terminable without penalty at any time or upon relatively short notice by either party. In addition, the investment management agreements pursuant to which AB and EIMG manage an SEC-registered investment company (a “RIC”) must be renewed and approved by the RIC’s boards of directors (including a majority of the independent directors) annually. Consequently, there can be no assurance that the board of directors of each RIC will approve the investment management agreement each year or will not condition its approval on revised terms that may be adverse to us.
58
Table of Contents
Similarly, we enter into selling and distribution agreements with various financial intermediaries that are terminable by either party upon notice (generally 60 days) and do not obligate the financial intermediary to sell any specific amount of our products. These intermediaries generally offer their clients investment products that compete with our products. In addition, certain institutional investors rely on consultants to advise them about choosing an investment adviser and some of AB’s services may not be considered among the best choices by these consultants. As a result, investment consultants may advise their clients to move their assets invested with AB to other investment advisers, which could result in significant net outflows.
The replacement of LIBOR may affect our cost of capital and net investment income.
It is anticipated that LIBOR will be discontinued no later than June 2023 As a result, existing loans, investments and other contracts relying on a LIBOR benchmark will need to designate a replacement rate. In addition, derivatives and other contracts used to hedge those contracts will generally need to be conformed to provide a similar alternative rate to that being hedged. In addition, because it is anticipated that banks will no longer extend loans based on LIBOR, new lines of credit we enter into will need to be benchmarked to a new benchmark rate. In light of the LIBOR transition, we anticipate a valuation risk around the potential discontinuation event as well as potential risks relating to hedging interest-rate risk. Additionally, the elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates may adversely affect the amount of interest payable or interest receivable on certain of our investments. These changes may also impact the market liquidity and market value of these investments. Any changes to LIBOR or any alternative rate, or any further uncertainty in relation to the timing and manner of implementation of such changes, could have an adverse effect on the value of investments in our investment portfolio, derivatives we use for hedging, or other indebtedness, securities or commercial contracts. We have inventoried all aspects of our business that utilize a LIBOR benchmark and, for those instruments that currently do not have an appropriate fallback rate, we are in the process of either disposing of the instrument or negotiating a fallback rate. There is no assurance that we will complete this process by the transition date or that the alternative rate we negotiate will not be materially less favorable than the previous, LIBOR-based rate.
Climate change may adversely affect our investment portfolio and investor sentiment.
Climate change could pose a systemic risk to the financial system. Disasters related to climate change and regulation related to climate change may affect the entities in which we invest, our willingness to continue to invest and the value of, and return from, our investments. It may also affect our counterparties, including reinsurers and derivatives counterparties. We cannot predict the long-term impacts to our business from climate change or related regulation. Climate change may also influence investor sentiment with respect to the Company and investments in our portfolio. A failure to identify and address these issues could have a material adverse effect on our business, results of operations or financial condition.
Risks Relating to Credit, Counterparties and Investments
Our counterparties’ requirements to pledge collateral related to declines in estimated fair value of derivative contracts.
We use derivatives and other instruments to help us mitigate various business risks. Our transactions with financial and other institutions generally specify the circumstances under which the parties are required to pledge collateral related to any decline in the market value of the derivatives contracts. If our counterparties fail or refuse to honor their obligations under these contracts, we could face significant losses to the extent collateral agreements do not fully offset our exposures and our hedges of the related risk will be ineffective. Such failure could have a material adverse effect on our business, results of operations or financial condition.
Changes in the actual or perceived soundness or condition of other financial institutions and market participants.
A default by any financial institution or by a sovereign could lead to additional defaults by other market participants. Such failures could disrupt securities markets or clearance and settlement systems and lead to a chain of defaults, because the commercial and financial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. Even the perceived lack of creditworthiness of a financial institution may lead to market-wide liquidity problems and losses or defaults by us or by other institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries with which we interact on a daily basis. Systemic risk could have a material adverse effect on our ability to raise new funding and on our business, results of operations or financial condition. In addition, such a failure could impact future product sales as a potential result of reduced confidence in the financial services industry.
Losses due to defaults by third parties and affiliates, including outsourcing relationships.
We depend on third parties and affiliates that owe us money, securities or other assets to pay or perform under their obligations. Defaults by one or more of these parties could have a material adverse effect on our business, results of operations
59
Table of Contents
or financial condition. Moreover, as a result of contractual provisions certain swap dealers require us to add to derivatives documentation and to agreements, we may not be able to exercise default rights or enforce transfer restrictions against certain counterparties which may limit our ability to recover amounts due to us upon a counterparty’s default. We rely on various counterparties and other vendors to augment our existing investment, operational, financial and technological capabilities, but the use of a vendor does not diminish our responsibility to ensure that client and regulatory obligations are met. Disruptions in the financial markets and other economic
challenges may cause our counterparties and other vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs and impair our ability to conduct business. We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. The deterioration or perceived deterioration in the credit quality of third parties whose securities or obligations we hold could result in losses or adversely affect our ability to use those securities or obligations for liquidity purposes.
Economic downturns, defaults and other events may adversely affect our investments.
The occurrence of a major economic downturn, acts of corporate malfeasance, widening credit risk spreads, ratings downgrades or other events that adversely affect the issuers or guarantors of securities we own or the underlying collateral of structured securities we own could cause the estimated fair value of our fixed maturity securities portfolio and corresponding earnings to decline and cause the default rate of the fixed maturity securities in our investment portfolio to increase. We may have to hold more capital to support our securities to maintain our insurance companies’ RBC levels, should securities we hold suffer a ratings downgrade. Levels of write-downs or impairments are impacted by intent to sell, or our assessment of the likelihood that we will be required to sell, fixed maturity securities, as well as our intent and ability to hold equity securities which have declined in value until recovery. Realized losses or impairments on these securities may have a material adverse effect on our business, results of operations, liquidity or financial condition in, or at the end of, any quarterly or annual period.
Some of our investments are relatively illiquid and may be difficult to sell.
We hold certain investments that may lack liquidity, such as privately placed fixed maturity securities, mortgage loans, commercial mortgage backed securities and alternative investments. In the past, even some of our very high quality investments experienced reduced liquidity during periods of market volatility or disruption. If we were required to liquidate these investments on short notice or were required to post or return collateral, we may have difficulty doing so and be forced to sell them for less than we otherwise would have been able to realize. The reported values of our relatively illiquid types of investments do not necessarily reflect the current market price for the asset. If we were forced to sell certain of our assets in the current market, there can be no assurance that we would be able to sell them for the prices at which we have recorded them and we might be forced to sell them at significantly lower prices, which could have a material adverse effect on our business, results of operations, liquidity or financial condition.
Defaults on our mortgage loans and volatility in performance.
A portion of our investment portfolio consists of mortgage loans on commercial and agricultural real estate. Although we manage credit risk and market valuation risk for our commercial and agricultural real estate assets through geographic, property type and product type diversification and asset allocation, general economic conditions in the commercial and agricultural real estate sectors will continue to influence the performance of these investments. These factors, which are beyond our control, could have a material adverse effect on our business, results of operations, liquidity or financial condition. An increase in the default rate of our mortgage loan investments or fluctuations in their performance could have a material adverse effect on our business, results of operations, liquidity or financial condition. For information on the effects of the COVID-19 pandemic on our mortgage loans, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—General Account Investment Portfolio.”
Risks Relating to Our Retirement and Protection Businesses
Risks Relating to Reinsurance and Hedging
Our reinsurance and hedging programs.
We seek to mitigate some risks associated with the GMxB features or minimum crediting rate contained in certain of our retirement and protection products through our hedging and reinsurance programs. (As of December 31, 2021, 61% of the variable annuity AV in our Individual Retirement segment was attributable to products that included GMxB features.) However, these programs cannot eliminate all of the risks, and no assurance can be given as to the extent to which such programs will be completely effective in reducing such risks.
60
Table of Contents
Reinsurance—We use reinsurance to mitigate a portion of the risks that we face, principally in certain of our in-force annuity and life insurance products. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. The inability or unwillingness of a reinsurer to meet its obligations to us, or the inability to collect under our reinsurance treaties for any other reason, could have a material adverse impact on our business, results of operations or financial condition. Prolonged or severe adverse mortality or morbidity experience could result in increased reinsurance costs, and ultimately may reduce the availability of reinsurance for future life insurance sales. If, for new sales, we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient, we would either have to be willing to accept an increase in our net exposures, revise our pricing to reflect higher reinsurance premiums or limit the amount of new business written on any individual life. If this were to occur, we may be exposed to reduced profitability and cash flow strain or we may not be able to price new business at competitive rates. The premium rates and other fees that we charge are based, in part, on the assumption that reinsurance will be available at a certain cost. If a reinsurer raises the rates that it charges on a block of in-force business, we may not be able to pass the increased costs onto our customers and our profitability will be negatively impacted. Additionally, such a rate increase could result in our recapturing of the business, which may result in a need to maintain additional reserves, reduce reinsurance receivables and expose us to greater risks.
Hedging Programs—We use a hedging program to mitigate a portion of the unreinsured risks we face in, among other areas, the GMxB features of our variable annuity products and minimum crediting rates on our variable annuity and life products from unfavorable changes in benefit exposures due to movements in the capital markets. In certain cases, however, we may not be able to effectively apply these techniques because the derivatives markets in question may not be of sufficient size or liquidity or there could be an operational error in the application of our hedging strategy or for other reasons. The operation of our hedging programs is based on models involving numerous estimates and assumptions. There can be no assurance that ultimate actual experience will not differ materially from our assumptions, particularly, but not only, during periods of high market volatility, which could adversely impact our business, results of operations or financial condition. For example, in the past, due to, among other things, levels of volatility in the equity and interest rate markets above our assumptions as well as deviations between actual and assumed surrender and withdrawal rates, gains from our hedging programs did not fully offset the economic effect of the increase in the potential net benefits payable under the GMxB features offered in certain of our products. If these circumstances were to re-occur in the future or if, for other reasons, results from our hedging programs in the future do not correlate with the economic effect of changes in benefit exposures to customers, we could experience economic losses which could have a material adverse impact on our business, results of operations or financial condition. Additionally, our strategies may result in under or over-hedging our liability exposure, which could result in an increase in our hedging losses and greater volatility in our earnings and have a material adverse effect on our business, results of operations or financial condition. For further discussion, see ��—Risks Relating to Estimates, Assumptions and Valuations—Our risk management policies and procedures.”
Our reinsurance arrangement with an affiliated captive.
The reinsurance arrangement with EQ AZ Life Re Company (the “Affiliated Captive”) provides important capital management benefits to Equitable Financial and Equitable America (collectively, the “Affiliated Cedants”). Under applicable statutory accounting rules, the Affiliated Cedants are currently, and will in the future be, entitled to a credit in their calculations of reserves for amounts reinsured to the Affiliated Captive, to the extent the Affiliated Captive hold assets in trust or provide letters of credit or other financing acceptable to the respective domestic regulators of the Affiliated Cedants. The level of assets required to be maintained in the trust fluctuates based on market and interest rate movements, age of the policies, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust or securing additional letters of credit, which could impact the liquidity of the Affiliated Captive.
Risks Relating to the Our Products, Our Structure and Product Distribution
GMxB features within certain of our products.
Certain of the variable annuity products we offer and certain in-force variable annuity products we offered historically, and certain variable annuity risks we assumed historically through reinsurance, include GMxB features. We also offer index-linked variable annuities with guarantees against a defined floor on losses. GMxB features are designed to offer protection to policyholders against changes in equity markets and interest rates. Any such periods of significant and sustained negative or low Separate Accounts returns, increased equity volatility or reduced interest rates will result in an increase in the valuation of our liabilities associated with those products. In addition, if the Separate Account assets consisting of fixed income securities, which support the guaranteed index-linked return feature, are insufficient to reflect a period of sustained growth in the equity-index on which the product is based, we may be required to support such Separate Accounts with assets from our General
61
Table of Contents
Account and increase our liabilities. An increase in these liabilities would result in a decrease in our net income and depending on the magnitude of any such increase, could materially and adversely affect our financial planning tool softwarecondition, including our capitalization, as well as the financial strength ratings which are necessary to support our product sales.
Additionally, we make assumptions regarding policyholder behavior at the time of pricing and in selecting and using the GMxB features inherent within our products. An increase in the valuation of the liability could result to the extent emerging and actual experience deviates from these policyholder option use assumptions. If we update our assumptions based on our actuarial assumption review, we could be required to increase the liabilities we record for future policy benefits and claims to a level that may materially and adversely affect our advisersbusiness, results of operations or financial condition which, in certain circumstances, could impair our solvency. In addition, we have in the past updated our assumptions on policyholder behavior, which has negatively impacted our net income, and built new distribution capabilities alongsidethere can be no assurance that similar updates will not be required in the future.
In addition, hedging instruments may not effectively offset the costs of GMxB features or may otherwise be insufficient in relation to our affiliated sales force such as our outbound customer relations unit.
At AB,obligations. Furthermore, we are investingsubject to the risk that changes in policyholder behavior or mortality, combined with adverse market events, could produce economic losses not addressed by our risk management techniques. These factors, individually or collectively, may have a material adverse effect on our business, results of operations, including net income, capitalization, financial condition or liquidity including our ability to receive dividends from our insurance subsidiaries.
The amount of statutory capital that we have and the amount of statutory capital we must hold to meet our statutory capital requirements and our financial strength and credit ratings can vary significantly.
In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors. Additionally, state insurance regulators have significant leeway in how to interpret existing regulations, which could further impact the amount of statutory capital or reserves that we must maintain. Equitable Financial is primarily regulated by the NYDFS, which from time to time has taken more stringent positions than other state insurance regulators on matters affecting, among other things, statutory capital or reserves. In certain circumstances, particularly those involving significant market declines, the effect of these more stringent positions may be that our financial condition appears to be worse than competitors who are not subject to the same stringent standards, which could have a material adverse impact on our business, results of operations or financial condition. Moreover, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of capital our insurance subsidiaries must hold in order to maintain their current ratings. To the extent that our statutory capital resources are deemed to be insufficient to maintain a particular rating by one or more rating agencies, our insurance subsidiaries’ financial strength and credit ratings might be downgraded by one or more rating agencies. There can be no assurance that any of our insurance subsidiaries will be able to maintain its current RBC ratio in the future or that its RBC ratio will not fall to a level that could have a material adverse effect on our business, results of operations or financial condition.
The failure of any of our insurance subsidiaries to meet its applicable RBC requirements or minimum capital and surplus requirements could subject it to further examination or corrective action imposed by insurance regulators, including limitations on its ability to write additional business, supervision by regulators, rehabilitation, or seizure or liquidation. Any corrective action imposed could have a material adverse effect on our business, results of operations or financial condition. A decline in RBC ratios may limit the ability of an insurance subsidiary to make dividends or distributions to us, could result in a loss of customers or new business, and could be a factor in causing ratings agencies to downgrade the insurer’s financial strength ratings, each of which could have a material adverse effect on our business, results of operations or financial condition.
A downgrade in our financial strength and claims-paying ratings.
Claims-paying and financial strength ratings are important factors in establishing the competitive position of insurance companies. They indicate the rating agencies’ opinions regarding an insurance company’s ability to meet policyholder obligations and are important to maintaining public confidence in our products and our competitive position. A downgrade of our ratings or those of Equitable Financial, Equitable America or Holdings could adversely affect our business, results of operations or financial condition by, among other things, reducing new sales of our products, increasing surrenders and withdrawals from our existing contracts, possibly requiring us to reduce prices or take other actions for many of our products and services to remain competitive, or adversely affecting our ability to obtain reinsurance or obtain reasonable pricing on reinsurance. A downgrade in our ratings may also adversely affect our cost of raising capital or limit our access to capital.
State insurance laws limit the ability of our insurance subsidiaries to pay dividends and other distributions to Holdings.
The payment of dividends and other distributions to Holdings by its insurance subsidiaries, including its captive reinsurer, is regulated by state insurance laws and regulations. These restrictions may limit or prevent our insurance subsidiaries from making dividend or other payments to Holdings. These restrictions are based, in part, on earned surplus and the prior year’s
62
Table of Contents
statutory income and policyholder surplus. In general, dividends may be paid only from earned surplus (typically defined as available or unassigned surplus, subject to possible adjustments) which is derived from realized net profits on the company’s business. Dividends up to specified levels are generally considered ordinary and generally may be made without prior regulatory approval. Meanwhile, dividends paid from sources other than earned surplus or in larger amounts, often called “extraordinary dividends,” are generally subject to approval by the insurance commissioner of the relevant state of domicile. In addition, certain states may prohibit the payment of dividends from other than the insurance company’s earned surplus. If any of our insurance subsidiaries subject to the positive earned surplus requirement do not succeed in building up sufficient positive earned surplus to have ordinary dividend capacity in future years, such subsidiary would be unable to pay dividends or distributions to our holding company, in certain cases, absent prior approval of its domiciliary insurance regulator. For further information on state insurance laws related to payments of dividends, see “Business—Regulation—Insurance Regulation—Holding Company and Shareholder Dividend Regulation.”
From time to time, the NAIC and various state insurance regulators have considered, and may in the future consider, proposals to further limit dividend payments that an insurance company may make without regulatory approval. For example, the NYDFS enacted Regulation 213. Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any ordinary dividend that exceeds the ordinary dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice. If more stringent restrictions on dividend payments are adopted by jurisdictions in which our insurance subsidiaries are domiciled, such restrictions could have the effect of significantly reducing dividends or other amounts payable to Holdings by its insurance subsidiaries without prior approval by regulatory authorities. The ability of our insurance subsidiaries to pay dividends or make other distributions is also limited by our need to maintain the financial strength ratings assigned to such subsidiaries by the rating agencies. These ratings depend to a large extent on the capitalization levels of our insurance subsidiaries.

A loss of, or significant change in, key product distribution relationships.
We distribute certain products under agreements with third-party distributors and other members of the financial services industry that are not affiliated with us. We compete with other financial institutions to attract and retain commercial relationships in each of these channels. An interruption or significant change in certain key relationships could materially and adversely affect our ability to market our products and could have a material adverse effect on our business, results of operation or financial condition. Distributors may elect to alter, reduce or terminate their distribution relationships with us, including for such reasons as changes in our distribution capabilitiesstrategy, adverse developments in our business, adverse rating agency actions or concerns about market-related risks. Alternatively, we may terminate one or more distribution agreements due to, for example, a loss of confidence in, or a change in control of, one of the third-party distributors, which could reduce sales.
We are also at risk that key distribution partners may merge or change their business models in ways that affect how our products are sold, either in response to changing business priorities or as a result of shifts in regulatory supervision or potential changes in state and federal laws and regulations regarding standards of conduct applicable to third-party distributors when providing investment advice to retail and other customers. Our key distribution relationships may also be adversely impacted by regulatory changes that increase the costs associated with marketing, or restrict the ability of distribution partners to receive sales and promotion related charges.
Risks Relating to Estimates, Assumptions and Valuations
Our risk management policies and procedures.
Our policies and procedures, including hedging programs, to identify, monitor and manage risks may not be adequate or fully effective. Many of our methods of managing risk and exposures are based upon our use of historical market behavior or statistics based on historical models. As a result, these methods may not predict future exposures, which could be significantly greater than the historical measures indicate. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record and verify large numbers of transactions and events. These policies and procedures may not be fully effective.
We employ various strategies to mitigate risks inherent in our business and operations. These risks include current or future changes in the fair value of our assets and liabilities, current or future changes in cash flows, the effect of interest rates, equity markets and credit spread changes, the occurrence of credit defaults and changes in mortality and longevity. We seek to control these risks by, among other things, entering into reinsurance contracts and through our hedging programs. Developing an effective strategy for dealing with these risks is complex, and no strategy can completely insulate us from such risks. Our
63
Table of Contents
hedging strategies also rely on assumptions and projections that may prove to be incorrect or prove to be inadequate. Moreover definitions used in our derivatives contracts may differ from those used in the contract being hedged. For example, swap documents typically use SOFR as a fallback to LIBOR whereas corporate or municipal bonds or loans held by us may use different fallback rates. Accordingly, our hedging activities may not have the desired beneficial impact on our business, results of operations or financial condition. As U.S. GAAP accounting differs from the methods used to determine regulatory reserves and rating agency capital requirements, our hedging program tends to create earnings volatility in our U.S. GAAP financial statements. Further, the nature, timing, design or execution of our hedging transactions could actually increase our risks and losses. Our hedging strategies and the derivatives that we use, or may use in the future, may not adequately mitigate or offset the hedged risk and our hedging transactions may result in losses, including both losses based on the risk being hedged as well as losses based on the derivative. The terms of the derivatives and other instruments used to hedge the stated risks may not match those of the instruments they are hedging which could cause unpredictability in results.
Our reserves could be inadequate and product profitability could decrease due to differences between our actual experience and management’s estimates and assumptions.
Our reserve requirements for our direct and reinsurance assumed business are calculated based on a number of estimates and assumptions, including estimates and assumptions related to future mortality, morbidity, longevity, persistency, interest rates, future equity performance, reinvestment rates, claims experience and policyholder elections (i.e., the exercise or non-exercise of rights by policyholders under the contracts). The assumptions and estimates used in connection with the reserve estimation process are inherently uncertain and involve the exercise of significant judgment. We review the appropriateness of reserves and the underlying assumptions at least annually and, if necessary, update our assumptions as additional information becomes available. We cannot, however, determine with precision the amounts that we will pay for, or the timing of payment of, actual benefits and claims or whether the assets supporting the policy liabilities will grow to the level assumed prior to payment of benefits or claims. Our claim costs could increase significantly, and our reserves could be inadequate if actual results differ significantly from our estimates and assumptions. If so, we will be required to increase reserves or reduce DAC, which could materially and adversely impact our business, results of operations or financial condition. Future reserve increases in connection with experience updates could be material and adverse to the results of operations or financial condition of the Company. Future changes as a result of future assumptions reviews could require us to make material additional capital contributions to one or more of our insurance company subsidiaries or could otherwise materially and adversely impact our business, results of operations or financial condition and may negatively and materially impact our stock price.
Significant deviations in actual experience from our pricing assumptions could have an adverse effect on the profitability of our products. If actual persistency is significantly different from that assumed in our current reserving assumptions, our reserves for future policy benefits may prove to be inadequate. Although some of our variable annuity and life insurance products permit us to increase premiums or adjust other charges and credits during the life of the policy or contract, the adjustments permitted under the terms of the policies or contracts may not be sufficient to maintain profitability. Many of our variable annuity and life insurance products do not permit us to increase premiums or adjust other charges and credits or limit those adjustments during the life of the policy or contract. Even if we are permitted under the contract to increase premiums or adjust other charges and credits, we may not be able to do so due to litigation, point of sale disclosures, regulatory reputation and market risk or due to actions by our competitors. In addition, the development of a secondary market for life insurance could adversely affect the profitability of existing business and our pricing assumptions for new business.
We may be required to accelerate the amortization of DAC.
DAC represents policy acquisition costs that have been capitalized. Capitalized costs associated with DAC are amortized in proportion to actual and estimated gross profits, gross premiums or gross revenues depending on the type of contract. On an ongoing basis, we test the DAC recorded on our balance sheets to determine if the amount is recoverable under current assumptions. In addition, we regularly review the estimates and assumptions underlying DAC. The projection of estimated gross profits, gross premiums or gross revenues requires the use of certain assumptions, principally related to Separate Accounts fund returns in excess of amounts credited to policyholders, policyholder behavior such as surrender, lapse and annuitization rates, interest margin, expense margin, mortality, future impairments and hedging costs. Estimating future gross profits, gross premiums or gross revenues is a complex process requiring considerable judgment and the forecasting of events well into the future. If these assumptions prove to be inaccurate, if an estimation technique used to estimate future gross profits, gross premiums or gross revenues is changed, or if significant or sustained equity market declines occur or persist, we could be required to accelerate the amortization of DAC, which would result in a charge to earnings. Such adjustments could have a material adverse effect on our business, results of operations or financial condition.
Our financial models rely on estimates, assumptions and projections.
We use models in our hedging programs and many other aspects of our operations including, but not limited to, product
64
Table of Contents
development and pricing, capital management, the estimation of actuarial reserves, the amortization of DAC, the fair value of the GMIB reinsurance contracts and the valuation of certain other assets and liabilities. These models rely on estimates, assumptions and projections that are inherently uncertain and involve the exercise of significant judgment. Due to the complexity of such models, it is possible that errors in the models could exist and our controls could fail to detect such errors. Failure to detect such errors could materially and adversely impact our business, results of operations or financial condition.
Subjectivity of the determination of the amount of allowances and impairments taken on our investments.
The determination of the amount of allowances and impairments varies by investment type and is based upon our evaluation of known and inherent risks associated with the respective asset class. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. There can be no assurance that management’s judgments, as reflected in our financial statements, will ultimately prove to be an accurate estimate of the actual diminution in realized value. Historical trends may not be indicative of future impairments or allowances. Additional impairments may need to be taken or allowances provided for in the future that could have a material adverse effect on our business, results of operations or financial condition. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within our financial statements and the period-to-period changes in estimated fair value could vary significantly. Decreases in the estimated fair value of securities we hold may have a material adverse effect on our business, results of operations or financial condition.
Risks Relating to Our Investment Management and Research Business
AB’s revenues and results of operations depend on the market value and composition of AB’s AUM.
AB derives most of its revenues from investment advisory and services fees, which typically are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of the account and the total amount of assets AB manages for a particular client. The value and composition of AB’s AUM can be adversely affected by several factors, including market factors, client preferences, AB’s investment performance, investing trends and service changes, including fee reductions. A decrease in the value of AB’s AUM, a decrease in the amount of AUM AB manages, an adverse mix shift in its AUM and/or a reduction in the level of fees AB charges would adversely affect AB’s investment advisory fees and revenues. A reduction in revenues, without a commensurate reduction in expenses, adversely affects AB’s and our business, results of operations or financial condition.
The industry-wide shift from actively-managed investment services to passive services.
AB’s competitive environment has become increasingly difficult over the past decade, as active managers, which invest based on individual security selection, have, on average, consistently underperformed passive services, which invest based on market indices. In this environment, organic growth through positive net inflows is difficult to achieve for active managers, such as AB, and requires taking market share from other active managers. The significant shift from active services to passive services adversely affects Bernstein Research Services revenues as well. Institutional global market trading volumes continue to be pressured (notwithstanding the heightened market volatility and trading volume predominately relating to COVID-19 in the first half of well-performing2020) by persistent active equity outflows and passive equity inflows. As a result, portfolio turnover has declined, and investors hold fewer shares that are actively traded by managers.
AB’s reputation could suffer if it is unable to deliver consistent, competitive investment performance.
AB’s business is based on the trust and confidence of its clients. Damage to AB’s reputation, resulting from poor or inconsistent investment performance, among other factors, can reduce substantially AB’s AUM and impair its ability to maintain or grow its business.
Performance-based fee arrangements with AB’s clients cause greater fluctuations in its net revenues.
AB sometimes charges its clients performance-based fees, whereby it charges a base advisory fee and is eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account under-performs relative to its performance target (whether in absolute terms or relative to a specified benchmark), it must gain back such under-performance before AB can collect future performance-based fees. Therefore, if AB fails to achieve the performance target for a particular period, AB will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, AB’s ability to earn future performance-based fees will be impaired.
The revenues generated by Bernstein Research Services and AB’s broker-dealers may be adversely affected by
65
Table of Contents
circumstances beyond our control.
Electronic, or “low-touch,” trading represents a significant percentage of buy-side trading activity and typically produces transaction fees that are significantly lower than the price of traditional full service fee rates. As a result, blended pricing throughout our industry is lower now than it was historically, and price declines may continue. In addition, fee rates we charge and charged by other brokers for brokerage services have historically experienced price pressure, and we expect these trends to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may not continue. In addition, the failure or inability of any of AB’s broker-dealer’s significant counterparties to perform could expose AB to substantial expenditures and adversely affect its revenues. For example, SCB LLC, as a member of clearing and settlement organizations, would be required to settle open trades of any non-performing counterparty. This exposes AB to the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Also, AB’s ability to access liquidity in such situations may be limited by what its funding relationships are able to offer us at such times.
AB’s seed capital investments are subject to market risk.
AB has a seed investment program for the purpose of building track records and assisting with the marketing initiatives pertaining to its new products. These seed capital investments are subject to market risk. AB’s risk management team oversees a seed hedging program that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, and in those cases AB is exposed to market risk. In addition, AB may be subject to basis risk in that it cannot always hedge with precision its market exposure and, as a result, AB may be subject to relative spreads between market sectors. As a result, volatility in the capital markets may cause significant changes in its period-to-period financial and operating results.
AB uses various derivative instruments in conjunction with its seed hedging program. While in most cases broad market risks are hedged, AB’s hedges are imperfect, and some market risk remains. In addition, AB’s use of derivatives results in counterparty risk (i.e., the risk that AB may be exposed to credit-related losses in the event of non-performance by counterparties to these derivative instruments), regulatory risk (e.g., short selling restrictions) and cash/synthetic basis risk (i.e., the risk that underlying positions do not move identically to the related derivative instruments).
AB may not accurately value the securities it holds on behalf of its clients or its company investments.
In accordance with applicable regulatory requirements, contractual obligations or client direction, AB employs procedures for the pricing and valuation of securities and other positions held in client accounts or for company investments. AB has established a valuation committee, which oversees pricing controls and valuation processes. If market quotations for a security are not readily available, the valuation committee determines a fair value for the security.
Extraordinary volatility in financial markets, significant liquidity constraints or AB’s failure to adequately consider one or more factors when determining the fair value of a security based on information with limited market observability could result in AB failing to properly value securities AB holds for its clients or investments accounted for on its balance sheet. Improper valuation likely would result in AB basing fee calculations on inaccurate AUM figures, striking incorrect net asset values for company-sponsored mutual funds or hedge funds or, in the case of company investments, inaccurately calculating and reporting AB’s financial condition and operating results. Although the overall percentage of AB’s AUM that it fair values based on information with limited market observability is not significant, inaccurate fair value determinations can harm AB’s clients, create regulatory issues and damage its reputation.
AB may not have sufficient information to confirm or review the accuracy of valuations provided to it by underlying external managers for the funds in which certain of its alternative investment products invest.
Certain of AB’s alternative investment services invest in funds managed by external managers (“External Managers”) rather than investing directly in securities and other instruments. As a result, AB’s ability will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete, accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, AB may not have sufficient information to confirm or review the accuracy of valuations provided to it by External Managers. In addition, AB will be required to rely on External Managers’ compliance with any applicable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or to provide accurate information with respect to the investment could subject AB’s alternative investment products to losses and cause damage to its reputation.
The quantitative and systematic models AB uses in certain of its investment services may contain errors.
AB uses quantitative and systematic models in a variety of its investment services, generally in combination with
66
Table of Contents
fundamental research. These models are developed by senior quantitative professionals and typically are implemented by IT professionals. AB’s model risk oversight committee oversees the model governance framework and associated model review activities, which are then executed by AB’s model risk team. However, due to the complexity and large data dependency of such models, it is possible that errors in the models could exist and AB’s controls could fail to detect such errors. Failure to detect errors could result in client losses and reputational damage.
AB may not successfully manage actual and potential conflicts of interest that arise in its business.
Increasingly, AB must manage actual and potential conflicts of interest, including situations where its services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect AB’s reputation, results of operations and business prospects. AB’s reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if AB fails, or appears to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.
Changes in the partnership structure of AB Holding and ABLP or changes in the tax law governing partnerships would have significant tax ramifications.
AB Holding is a publicly traded partnership (“PTP”) for federal income tax purposes. In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management seeks to ensure that AB Holding does not directly or indirectly (through ABLP) enter into a substantial new line of business. A “new line of business” includes any business that is not closely related to AB’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or directly uses more than 15% of its total assets (by value) in, the new line of business.
ABLP is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. In order to preserve ABLP’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. If such units were to be considered readily tradable, ABLP would become subject to federal and state corporate income tax on its net income. If AB Holding and ABLP were to become subject to corporate income tax as set forth above, their net income and quarterly distributions to holders of their units would be materially reduced.
Legal and Regulatory Risks
We are heavily regulated.
We are heavily regulated, and regulators continue to increase their oversight over financial services companies. The adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will continue to affect, our business, including making our efforts to comply more expensive and time-consuming. For additional information on regulatory developments and the risks we face, including the Dodd-Frank Act and regulation by the NAIC, see “Business—Regulation”.
Our retirement and protection business is subject to a complex and extensive array of state and federal tax, securities, insurance and employee benefit plan laws and regulations, which are administered and enforced by a number of different governmental and self-regulatory authorities, including, among others, state insurance regulators, state securities administrators, state banking authorities, the SEC, FINRA, the DOL and the IRS. Failure to administer our retirement and protections products in accordance with contract provisions or applicable law, or to meet any of these complex tax, securities or insurance requirements could subject us to administrative penalties imposed by a governmental or self-regulatory authority, unanticipated costs associated with remedying such failure or other claims, litigation, harm to our reputation or interruption of our operations.
Certain of our insurance subsidiaries are required to file periodic and other reports within certain time periods imposed by U.S. federal securities laws, rules and European retail channels. regulations. Failure to file such reports within the designated time period or failure to accurately report our financial condition or results of operations could require these insurance subsidiaries to curtail or cease sales of certain of our products or delay the launch of new products or new features, which could cause a significant disruption in the business of our insurance subsidiaries. If our affiliated and third-party distribution platforms are required to curtail or cease sales of our products, we may lose shelf space for our products indefinitely, even once we are able to resume sales.
We currently use a captive reinsurer as part of our capital management strategy. Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance and applies retroactively, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our financial condition or results of operations.
67
Table of Contents
Virtually all aspects of our investment management and research business are buildingsubject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws and regulations certain foreign jurisdictions in which we conduct business. If we violate these laws or regulations, we could be subject to civil liability, criminal liability or sanction, including restriction or revocation of our institutional sales capabilityprofessional licenses or registrations or our ability to driveserve as an investment adviser to registered investment companies or as a qualified professional asset manager for employee benefit plans, revocation of the licenses of our employees, censures, fines, restrictions from relying on the issuance safe harbor of Regulation D under the Securities Act when issuing securities or causing our clients not to be able to rely on Regulation D if we act as an investment adviser, placement agent or promoter for the client or to refers clients to private funds or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a material adverse effect on our business, results of operations or financial condition. A regulatory proceeding could require substantial expenditures of time and money, trigger termination or default rights under contracts to which we are a party and could potentially damage our reputation.
In addition, regulators have imposed and may continue to impose new requirements or issue new guidance aimed at addressing or mitigating climate change-related risks. These emerging regulatory initiatives, or any policies adopted by investors to address changing societal perceptions on climate change, could result in increased penetrationcompliance cost to our businesses and changes to our corporate governance and risk management practices.

Changes in U.S. tax laws and regulations or interpretations thereof.
Changes in tax laws and regulations or interpretations of Multi-Asset Solutionssuch laws, including U.S. tax reform, could increase our corporate taxes and alternativesreduce our earnings. Changes may increase our effective tax rate or have implications that make our products less attractive to consumers. Tax authorities may enact laws, change regulations to increase existing taxes, or add new types of taxes and deploying digital technologiesauthorities who have not imposed taxes in the past, may impose additional taxes. Any such changes may harm our business, results of operations or financial condition.
Legal proceedings and regulatory actions.
A number of lawsuits and regulatory inquiries have been filed or commenced against us and other financial services companies in the jurisdictions in which we do business. Some of these matters have resulted in the award of substantial fines and judgments, including material amounts of punitive damages, or in substantial settlements. We face a significant risk of, and from time to accelerate growthtime we are involved in, such actions and proceedings, including class action lawsuits. The frequency of large damage awards, including large punitive damage awards and regulatory fines that bear little or no relation to actual economic damages incurred, continues to create the potential for an unpredictable judgment in any given matter. In addition, investigations or examinations by federal and state regulators and other governmental and self-regulatory agencies could result in legal proceedings (including securities class actions and stockholder derivative litigation), adverse publicity, sanctions, fines and other costs. A substantial legal liability or a significant federal, state or other regulatory action against us, as well as regulatory inquiries or investigations, may divert management’s time and attention, could create adverse publicity and harm our reputation, result in material fines or penalties, result in significant expense, including legal and settlement costs, and otherwise have a material adverse effect on our business, results of operations or financial condition. For information regarding legal proceedings pending against us, see Note 17 of the Notes to these Consolidated Financial Statements.
Risks Relating to Our Common Stock
Certain provisions in our Private Wealth Management division. In addition,amended and restated certificate of incorporation and amended and restated by-laws.
Our amended and restated certificate of incorporation and our amended and restated by-laws include a number of provisions that may discourage, delay or prevent a change in our management or prevent a takeover attempt that stockholders may consider favorable. These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered in a takeover context or may even adversely affect the price of our common stock if the provisions discourage takeover attempts. Our amended and restated certificate of incorporation and amended and restated by-laws may also make it difficult for stockholders to replace or remove our management.
We have designated a sole and exclusive forum for certain litigation that may be initiated by our stockholders.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is, to the fullest extent permitted by law, be the sole and exclusive forum for a number of actions. Notwithstanding the foregoing, the exclusive provision shall not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Exchange Act or the Securities Act or the respective rules and regulations promulgated thereunder.
General Risks
68
Table of Contents
Competition from other insurance companies, banks, asset managers and other financial institutions.
We face strong competition from others offering the types of products and services we provide. It is difficult to provide unique retirement and protection or asset management products because, once such products are made available to the public, they often are reproduced and offered by our competitors. If competitors charge lower fees for similar products or services, we may decide to reduce the fees on our own products or services in order to retain or attract customers.
Competition may adversely impact our market share and profitability. Many of our competitors are large and well-established and some have greater market share or breadth of distribution, offer a broader range of products, services or features, assume a greater level of risk, have greater financial resources, have higher claims-paying or credit ratings, have better brand recognition or have more established relationships with clients than we do. We also face competition from new market entrants or non-traditional or online competitors, many of whom are leveraging digital technology that may challenge the position of traditional financial service companies. Due to the competitive nature of the financial services industry, there can be no assurance that we will continue to leverage effectively compete within the industry or that competition will not materially and adversely impact our business, results of operations or financial condition.
Our information systems may fail or their security may be compromised.
Our business is highly dependent upon the effective operation of our information systems and those of our vendors on which our business operations rely. Although we have implemented a formal, risk-based data security and cybersecurity program to mitigate potential risk, our information systems and those of our vendors and service providers may nevertheless be vulnerable to physical or cyber-attacks, computer viruses and malicious code, or other computer related attacks, programming errors and similar disruptive problems which may not be immediately detected. The failure of these systems could cause significant interruptions to our operations, which could result in a material adverse effect on our business, results of operations or financial condition or reputational harm. In addition, a failure of these systems could lead to the possibility of litigation or regulatory investigations or actions, including regulatory actions by state and federal governmental authorities.
Protecting our intellectual property.
We rely on a combination of contractual rights, copyright, trademark and trade secret laws to establish and protect our intellectual property. Third parties may infringe or misappropriate our intellectual property. The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could have a material adverse effect on our business and our ability to compete. Third parties may have, or may eventually be issued, patents or other protections that could be infringed by our products, methods, processes or services or could limit our ability to offer certain product features. If we were found to have infringed or misappropriated a third-party patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from using and benefiting from certain patents, copyrights, trademarks, trade secrets or licenses. Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative. Any of these scenarios could harm our reputation and have a material adverse effect on our business, results of operations or financial condition.
Part I, Item 1B.
UNRESOLVED STAFF COMMENTS
None.

Part I, Item 2.
PROPERTIES
Our principal executive offices at 1290 Avenue of the Americas, New York, New York are occupied pursuant to a lease that extends to 2023. We have entered into a 15-year lease agreement in New York, New York at 1345 Avenue of the Americas that is expected to commence in 2023. We also have the following significant office space leases in Syracuse, NY, under a lease that expires in 2023, which was amended to extend a portion of the space through 2028; Jersey City, NJ, under a lease that expires in 2023, and Charlotte, NC, under a lease that expires in 2028.
AB’s principal executive offices at 501 Commerce Street, Nashville, TN are occupied pursuant to a 15-year lease that commenced during the fourth quarter of 2020. In addition, AB leases office space at 1345 Avenue of the Americas, New York, NY pursuant to a lease expiring in 2024. Also, AB entered into a 20-year lease agreement in New York, NY at 66 Hudson
69
Table of Contents
Boulevard that is expected to commence in 2024. AB also leases space in San Antonio, TX under a lease expiring in 2029. In addition, AB leases modest space in 23 other cities in the United States and AB’s subsidiaries lease space in 30 cities outside the United States, the most significant of which are in London and Hong Kong.




Part I, Item 3.

LEGAL PROCEEDINGS

For information regarding certain legal proceedings pending against us, see Note 17 of the Notes to these Consolidated Financial Statements. See “Risk Factors—Legal and Regulatory Risks—Legal proceedings and regulatory actions.”

Part I, Item 4.

MINE SAFETY DISCLOSURES
Not Applicable.

Part II, Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
General
Our common stock, par value $0.01 per share, began trading on the NYSE under the symbol “EQH” on May 10, 2018. As of January 31, 2022, there were nine shareholders of record, which differs from the number of beneficial owners of our common stock.
Dividends
The declaration, payment and amount of future dividends is subject to the discretion of our Board of Directors and depends on our financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by Holdings’ insurance subsidiaries and other factors deemed relevant by the Board. The payment of dividends will be substantially restricted in the event that we do not declare and pay (or set aside) dividends on the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, for the last proceeding dividend period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dividends Declared and Paid” for further information regarding common stock dividends.
Purchases of Equity Securities by the Issuer
The following table summarizes Holdings’ repurchases of its common stock during the three months ended December 31, 2021.
PeriodTotal Number of Shares (or Units) PurchasedAverage Price Paid per Share (or Unit)Total Number of Shares (or Units) Purchased as Part of Publicly Announced ProgramsApproximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Program (1)
Month #1 (October 1-31)— $— — $461,592,672 
Month #2 (November 1-30)6,479,103 $33.44 6,479,103 $263,707,822 
Month #3 (December 1-31)7,134,993 $32.30 7,134,993 $5,243,868 
Total13,614,096 $32.84 13,614,096 $5,243,868 

_____________
(1)See Note 20 of the Notes to these Consolidated Financial Statements for the Share Repurchase program.


Table of Contents
Holdings may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate Holdings to purchase any particular number of shares. During the three months ended December 31, 2021, the Company repurchased approximately $14 million shares of its common stock, at a total cost of approximately $447 million. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets.
Stock Performance Graph
The graph and table below present Holdings’ cumulative total shareholder return relative to the performance of: (1) the Standard & Poor’s 500 Index; (2) the Standard & Poor’s 500 Insurance Index; and (3) the Standard & Poor’s 500 Financials Index, respectively, for the year ended December 31, 2021, commencing May 14, 2018 (our initial day of “regular-way” trading on the NYSE). All values assume a $100 initial investment in the Holdings’ common stock on the NYSE and data for each of the Standard & Poor’s 500 Index, the Standard & Poor’s 500 Insurance Index and the Standard & Poor’s 500 Financials Index assume all dividends were reinvested on the date paid. The points on the graph and the values in the table represent quarter-end values based on the last trading day of each quarter. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.
eqh-20211231_g14.jpg
May 14, 2018Jun 30, 2018Sep 30, 2018Dec 31, 2018Mar 31, 2019Jun 30, 2019Sep 30, 2019Dec 31, 2019
 Equitable Holdings, Inc.$100.00 $96.35 $100.86 $78.71 $95.93 $100.28 $107.11 $120.53 
S&P 500$100.00 $99.93 $107.63 $93.08 $105.79 $110.34 $112.21 $122.39 
S&P 500 Financials$100.00 $94.40 $98.51 $85.59 $92.92 $100.35 $102.37 $113.09 
S&P 500 Insurance$100.00 $95.88 $102.59 $91.70 $103.47 $115.60 $117.15 $118.64 
71
Table of Contents
Mar 31,
2020		Jun 30,
2020		Sep 30,
2020		Dec 31,
2020		Mar 31,
2021		Jun 30,
2021		Sep 30,
2021		Dec 31,
2021
Equitable Holdings, Inc.$70.48 $94.93 $90.47 $127.79 $163.81 $153.77 $150.52 $169.33 
S&P 500$98.30 $118.49 $129.07 $144.74 $153.66 $166.80 $167.77 $183.22 
S&P 500 Financials$85.03 $97.50 $100.52 $118.38 $130.98 $137.90 $144.64 $155.02 
S&P 500 Insurance$76.98 $86.37 $90.21 $111.13 $128.80 $139.58 $143.40 $150.98 
Part II, Item 6. RESERVED

Part II, Item 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Financial Data” and our annual financial statements included elsewhere herein. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. Factors that could or do contribute to these differences include those factors discussed below and elsewhere in this Form 10-K, particularly under the captions “Risk Factors” and “Note Regarding Forward-Looking Statements and Information.”
Executive Summary
Overview
We are one of America’s leading positionfinancial services companies, providing: (i) advice and solutions for helping Americans set and meet their retirement goals and protect and transfer their wealth across generations; and (ii) a wide range of investment management insights, expertise and innovations to drive better investment decisions and outcomes for clients worldwide.
We manage our business through four segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. We report certain activities and items that are not included in these segments in Corporate and Other. See Note 19 of the Notes to these Consolidated Financial Statements for further information on our segments.
We benefit from our complementary mix of businesses. This business mix provides diversity in our earnings sources, which helps offset fluctuations in market conditions and variability in business results, while offering growth opportunities.
Reinsurance of Legacy Variable Annuity Block and Sale of Runoff Variable Annuity Reinsurance Entity
On June 1, 2021, Holdings completed the sale of CS Life to VIAC pursuant to the Master Transaction Agreement, among the Company, VIAC and, solely with respect to Article XIV thereof, Venerable.
Pursuant to the Master Transaction Agreement, immediately prior to the closing of the Venerable Transaction, CS Life effected the recapture of all of the business that was ceded to the Reinsurance Subsidiary, and sold 100% of the equity of the Reinsurance Subsidiary to another wholly owned subsidiary of the Company. Immediately following the closing of the Venerable Transaction, CS Life and Equitable Financial entered into a the Reinsurance Agreement, pursuant to which Equitable Financial ceded to CS Life, on a combined coinsurance and modified coinsurance basis the Block, comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit guarantees.
In addition, upon the completion of the Venerable Transaction, EIMG acquired an approximate 9.09% equity interest in Venerable’s parent holding company, VA Capital Company LLC. In connection with such investment, EIMG designated a member to the Board of Managers of VA Capital Company LLC.

COVID-19 Impact
We continue to closely monitor developments related to the COVID-19 pandemic. The COVID-19 pandemic has negatively impacted the U.S. and global economies and financial markets continue to experience significant volatility as the pandemic evolves. As a financial services company, factors such as the volatility and strength of equity markets, interest rates,
72
Table of Contents
consumer spending, and government debt and spending all affect the business and economic environment and, ultimately, the amount and profitability of our business. The ongoing economic impact and the potential for continued volatility and declines in the capital markets could have a significant adverse effect on our business, results of operations and financial condition, particularly if economic activity and financial markets do not recover or recover slowly.
The pandemic and related economic impacts could adversely affect demand for our products and services and our investment returns. The profitability of many of our retirement, protection and investment products depends in part on the value of the AUM supporting them, which could decline substantially depending on any of the foregoing conditions. In addition, the growing number of COVID-19 related deaths could have an adverse effect on our insurance business due to increased mortality and morbidity rates. To date, COVID-19 related impacts, including adverse mortality experience, have been manageable and below initial expectations.
Efforts to prevent the spread of COVID-19 have affected our business directly in a number of ways, including through the temporary closures of many businesses and schools and the institution of social distancing requirements in many states and local communities. In response to the pandemic, we have adapted our processes to meet client needs. For example, we modified our underwriting policies to offer a fluid-less, touchless process to help more clients access the protection they need. In addition, we accelerated our digital adoption programs, leading to improved outcomes for clients, advisors, and the Company. Given the challenges over the last year our advisors have faced in engaging with our educator clients, we have developed digital tools and enhanced our remote engagement, which is resulting in improved retention and increases in retirement plan contributions.
While the COVID-19 pandemic significantly affected the capital markets and economy, we believe the actions we have previously taken help assure that our economic balance sheet is protected from interest rate and equity declines. These actions include redesigning our product portfolio to concentrate on offering less capital intensive products and implementing a hedging strategy that manages and protects against the economic risks associated with our in-force GMxB products. In addition to our hedging strategy, we employ various other methods to manage the risks of our in-force variable annuity products, including reinsurance, asset-liability matching, volatility management tools within the Separate Accounts and an active in-force management program, including buyout offers for certain Asian marketsproducts. Due to the General Account’s exposure to U.S. government bonds and credit quality of the portfolio, we feel that our balance sheet is well positioned to withstand the extreme volatility in the capital markets.
While the COVID-19 pandemic has negatively impacted our business and financial results, the extent and nature of its full financial impact cannot reasonably be estimated at this time due to developments that are still highly uncertain, including the severity and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic and the availability and efficacy of vaccines against COVID-19 and its variants. For additional information regarding the potential impacts of the COVID-19 pandemic, see “Risk Factors—Risks Relating to Conditions in the Financial Markets and Economy—The coronavirus (COVID-19) pandemic.”
Revenues
Our revenues come from three principal sources:
•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.
Our fee income varies directly in relation to the amount of the underlying AV or benefit base of our retirement and protection products and the amount of AUM of our Investment Management and Research business. AV and AUM, each as defined in “Key Operating Measures,” are influenced by changes in economic conditions, primarily equity market returns, as well as net flows. Our premium income is driven by the growth in new policies written and the persistency of our in-force policies, both of which are influenced by a combination of factors, including our efforts to attract and retain customers and market conditions that influence demand for our products. Our investment income is driven by the yield on our General Account investment portfolio and is impacted by the prevailing level of interest rates as we reinvest cash associated with maturing investments and net flows to the portfolio.
73
Table of Contents
Benefits and Other Deductions
Our primary expenses are:
•policyholders’ benefits and interest credited to policyholders’ account balances;
•sales commissions and compensation paid to intermediaries and advisors that distribute our differentiatedproducts and services; and
•compensation and benefits provided to our employees and other operating expenses.
Policyholders’ benefits are driven primarily by mortality, customer withdrawals, and benefits which change in response to changes in capital market conditions. In addition, some of our policyholders’ benefits are directly tied to the AV and benefit base of our variable annuity products. Interest credited to policyholders varies in relation to the amount of the underlying AV or benefit base. Sales commissions and compensation paid to intermediaries and advisors vary in relation to premium and fee income generated from these sources, whereas compensation and benefits to our employees are more constant and impacted by market wages and decline with increases in efficiency. Our ability to manage these expenses across various economic cycles and products is critical to the profitability of our company.
Net Income Volatility
We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. Changes in the values of the derivatives associated with these programs due to equity market and interest rate movements are recognized in the periods in which they occur while corresponding changes in offsetting liabilities not measured at fair value are recognized over time. This results in net income volatility as further described below. See “—Significant Factors Impacting Our Results—Impact of Hedging and GMxB Reinsurance on Results.”
In addition to our dynamic hedging strategy, we have static hedge positions designed to mitigate the adverse impact of changing market conditions on our statutory capital. We believe this program will continue to preserve the economic value of our variable annuity contracts and better protect our target variable annuity asset level. However, these static hedge positions increase the size of our derivative positions and may result in higher net income volatility on a period-over-period basis.
Due to the impacts on our net income of equity market and interest rate movements and other items that are not part of the underlying profitability drivers of our business, we evaluate and manage our business performance using Non-GAAP Operating Earnings, a non-GAAP financial measure that is intended to remove these impacts from our results. See “—Key Operating Measures—Non-GAAP Operating Earnings.”
Significant Factors Impacting Our Results
The following significant factors have impacted, and may in the future impact, our financial condition, results of operations or cash flows.
Impact of Hedging and GMxB Reinsurance on Results
We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. These programs include:
•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, we have a hedging program using static hedge positions (derivative positions intended to be HTM with less frequent re-balancing) to protect our
74
Table of Contents
statutory capital against stress scenarios. This program in addition to our dynamic hedge program has increased 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.
•GMxB 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 GMIB reserves are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts. Accordingly, our gross reserves will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts. Because changes in the fair value of the GMIB reinsurance contracts are recorded in the period in which they occur and a majority of the changes in gross reserves for GMIB are recognized over time, net income will be more volatile. In addition, on June 1, 2021, we ceded legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. As this contract provides full risk transfer and thus has the same risk attributes as the underlying direct contracts, the benefits of this treaty are accounted for in the same manner as the underlying gross reserves.
Effect of Assumption Updates on Operating Results
During the third quarter of each year, we conduct our annual review of the assumptions underlying the valuation of DAC, deferred sales inducement assets, unearned revenue liabilities, liabilities for future policyholder benefits and embedded derivatives for our Individual Retirement, Group Retirement, and Protection Solution segments (assumption reviews are not relevant for the Investment Management and Research segment). Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgment and reflect our best estimate as of the date of the applicable financial statements.
Most of the variable annuity products, variable universal life insurance and universal life insurance products we offer maintain policyholder deposits that are reported as liabilities and classified within either Separate Accounts liabilities or policyholder account balances. Our products and riders also impact liabilities for future policyholder benefits and unearned revenues and assets for DAC and DSI. The valuation of these assets and liabilities (other than deposits) are based on differing accounting methods depending on the product, each of which requires numerous assumptions and considerable judgment. The accounting guidance applied in the valuation of these assets and liabilities includes, but is not limited to, the following: (i) traditional life insurance products for which assumptions are locked in at inception; (ii) universal life insurance and variable life insurance secondary guarantees for which benefit liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments; (iii) certain product guarantees for which benefit liabilities are accrued over the life of the contract in proportion to actual and future expected policy assessments; and (iv) certain product guarantees reported as embedded derivatives at fair value.
For further details of our accounting policies and related judgments pertaining to assumption updates, see Note 2 of the Notes to these Consolidated Financial Statements and “—Summary of Critical Accounting Estimates—Liability for Future Policy Benefits”.
Assumption Updates and Model Changes
We conduct our annual review of our assumptions and models during the third quarter of each year. We also update our assumptions as needed in the event we become aware of economic conditions or events that could require a change in our assumptions that we believe may have a significant impact to the carrying value of product liabilities and assets and consequently materially impact our earnings in the period of the change.
Impact of Assumption Updates and Model Changes on Income from Continuing Operations before income solutions.taxes and Net income (loss)
The table below presents the impact of our actuarial assumption update during 2021, 2020 and 2019 to our income (loss) from continuing operations, before income taxes and net income (loss).
75
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Impact of assumption update on Net income (loss):
Variable annuity product features related assumption update$(91)$(1,531)$(1,467)
Assumption updates for other business(17)(1,060)76 
Impact of assumption updates on Income (loss) from continuing operations, before income tax(108)(2,591)(1,391)
Income tax benefit on assumption update23 544 292 
Net income (loss) impact of assumption update$(85)$(2,047)$(1,099)
2021 Assumption Updates
The impact of the assumption update during 2021 was a decrease of $108 million to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $85 million. As part of this annual update completed as of September 30, 2021, the reference interest rate utilized in our GAAP fair value calculations was updated from the LIBOR swap curve to the US Treasury curve, which represents a reasonable proxy of the cost of funding the derivative positions backing our GMxB liabilities. Concurrently, our GAAP fair value liability risk margins were increased. which when considered with the change from LIBOR, resulted in an immaterial impact to overall valuation as our view regarding market participant pricing of our guarantees has not changed at the time of this update.
The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $108 million consisted of a decrease in policy charges and fee income of $28 million, a decrease in policyholders’ benefits of $62 million, an increase in net derivative losses of $200 million and a decrease in the amortization of DAC of $58 million.
2020 Assumption Updates
Our annual review in 2020 resulted in the removal of the credit risk adjustment from our fair value scenario calibration to reflect our revised view of market participant practices, offset by updates to our mortality and policyholder behavior assumptions to reflect emerging experience.
In 2020, in addition to the annual review, we updated our assumptions in the first quarter due to the extraordinary economic conditions driven by the COVID-19 pandemic. The first quarter update included an update to the interest rate assumption to grade from the current interest rate environment at that time to an ultimate five-year historical average over a 10-year period. As such, the 10-year U.S. Treasury yield grades from the current level to an ultimate 5-year average of 2.25%.
The low interest rate environment and update to the interest rate assumption caused a loss recognition event for our life interest-sensitive products, as well as to certain run-off business included in Corporate and Other. This loss recognition event caused an acceleration of DAC amortization on our life interest-sensitive products and an increase in the premium deficiency reserve on the run-off business in the first quarter of 2020.
The net impact of assumption changes during 2020 was an increase in policy charges and fee income of $23 million, an increased policyholders’ benefits by $1.6 billion, decreased interest credited to policyholders’ account balances by $1 million, increased net derivative gains (losses) by $112 million and increased amortization of DAC by $1.1 billion. This resulted in a decrease in income (loss) from operations, before income taxes of $2.6 billion and decreased net income (loss) by $2.0 billion. The 2020 impacts related to assumption updates were primarily driven by the first quarter updates.
2019 Assumption Updates
The impact of assumption updates in 2019 was a decrease of $1.4 billion to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $1.1 billion. This includes a $1.5 billion unfavorable impact on the reserves for our variable annuity product features as a result of unfavorable updates to our: (i) interest rate assumptions; and (ii) policyholder behavior, primarily lapse and withdrawal assumptions, further magnified by low interest rates.
The net impact of these assumption updates on income (loss) from continuing operations, before income taxes of $1.4 billion consisted of an increase in policy charges and fee income of $3 million, an increase in policyholders’ benefits of $875
76
Table of Contents
million, a decrease in interest credited to policyholders’ account balances of $13 million, a decrease in net derivative gains (losses) of $578 million and a decrease in the amortization of DAC of $46 million.
2021 and 2019 Model Changes
There was no material impact to our income (loss) from continuing operations, before income taxes or net income (loss) from model changes during 2021 and 2019.
2020 Model Changes
In the first quarter of 2020, we adopted a new economic scenario generator to calculate the fair value of the GMIB reinsurance contract asset and GMxB derivative features liability, eliminating reliance on AXA for scenario production. The new economic scenario generator allows for a tighter calibration of U.S. indices, better reflecting our actual portfolio. The net impact of the new economic scenario generator resulted in an increase in income (loss) from continuing operations, before income taxes of $201 million, and an increase to net income (loss) of $159 million for the year ended December 31,2020. There were no other model changes that made a material impact to our income (loss) from continuing operations, before income taxes or net income (loss).
Impact of Assumption Updates and Model Changes on Pre-tax Non-GAAP Operating Earnings Adjustments
The table below presents the impact on pre-tax Non-GAAP Operating Earnings of our actuarial assumption updates during 2021, 2020 and 2019 by segment and Corporate and Other.
Year Ended December 31,
202120202019
(in million)
Impact of assumption updates by segment:
Individual Retirement$(47)$(28)$104 
Group Retirement35 (3)3 
Protection Solutions20 4 (4)
Impact of assumption updates on Corporate and Other— (12)(27)
Total impact on pre-tax Non-GAAP Operating Earnings$8 $(39)$76 
2021 Assumption Updates
The impact of our 2021 annual review on Non-GAAP Operating Earnings was favorable by $8 million before taking into consideration the tax impacts or $6 million after tax. For Individual Retirement segment, the impacts primarily reflect updated mortality on our older payout business. For Group Retirement segment, the impacts reflect updated economic assumptions. The annual update for Protection Solutions segment reflects favorable economic conditions and surrenders primarily on the VUL line. This, in turn, creates future profits and lowers the accrual on our PFBL reserve.
The net impact of assumption changes on Non-GAAP Operating Earnings in the third quarter of 2021 decreased Policy charges and fee income by $28 million, increased Policyholders’ benefits by $22 million, and decreased Amortization of DAC by $58 million. Non-GAAP Operating Earnings excludes items related to Variable annuity product features, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments.
2020 Assumption Updates
The impact of our 2020 annual review on Non-GAAP Operating Earnings was unfavorable by $39 million before taking into consideration the tax impacts or $31 million after tax. For the Individual Retirement segment, the impacts primarily reflect higher surrenders at the end of the surrender charge period on Retirement Cornerstone policies. The impact of our 2020 annual review was not material for our Group Retirement and Protection Solutions segments.
The net impact of assumption changes on Non-GAAP Operating Earnings in the third quarter of 2020 decreased Policy charges and fee income by $23 million, increased Policyholders’ benefits by $46 million, increased Interest credited to policyholders’ account balances by $5 million and decreased Amortization of DAC by $35 million. Non-GAAP Operating Earnings excludes items related to Variable annuity product features and the impact of COVID-19, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments.
77
Table of Contents
2019 Assumption Updates
The impact of our 2019 annual review on Non-GAAP Operating Earnings was favorable by $60 million, or $76 million before taking into consideration the tax impacts.
•For the Individual Retirement segment, the impacts primarily reflect favorable updates to amortization of DAC from lower lapse assumptions.
•For the Group Retirement segment, the impacts primarily reflect a favorable update to maintenance expenses.
•For the Protection Solutions segment, the results primarily reflect unfavorable updates to mortality and economic assumptions, partially offset by a favorable update to maintenance expenses.
Non-GAAP Operating Earnings excludes items related to variable annuity product features, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments. The net impact of assumption changes on Non-GAAP Operating Earnings in the third quarter of 2019 increased policy charges and fee income by $3 million, decreased policyholder’ benefits by $15 million, decreased interest credited to policyholders’ account balances by $13 million and decreased amortization of DAC by $46 million.
Impact of the First Quarter 2020 Assumption Update, and COVID-19 Impacts on Pre-tax Non-GAAP Operating Earnings Adjustments
The unprecedented and rapid spread of COVID-19 and the related restrictions and social distancing measures implemented throughout the world caused severe, lasting turmoil in the financial markets during the first six months of 2020.
The Company’s accounting policy governing its Non-GAAP Operating Earnings measure permits adjustments to Non-GAAP Operating Earnings if certain criteria are met, which include if the proposed adjustment relates to a non-recurring event or transaction. Management concluded that all impacts on the Company from the COVID-19 pandemic and its effects on the economy meet the indicators of a non-recurring event. Therefore, management has determined that the items set forth in the table below should be included as adjustments to the Non-GAAP Operating Earnings measure so that investors can more clearly see the delineation between the operating results of the Company’s core operations and the impact of the items specific to the current COVID-19 pandemic crisis.
The table below presents the COVID-19 pandemic related impacts on income (loss) from continuing operations, before income taxes by segment and Corporate and Other, and the COVID-19 pandemic related adjustments included in the reconciliation of Net Income (loss) attributable to Holdings to Non-GAAP Operating Earnings:
Year Ended December 31, 2020
COVID-19 Impacts
Interest Rate Assumption UpdateImpacts other than Interest Rate Assumption
Update (1)		Total
(in millions)
Net income (loss) from continuing operations, before income taxes by Segment and Corporate and Other:
Individual Retirement$(1,417)$(43)$(1,460)
Group Retirement(51)— (51)
Protection Solutions(1,016)(75)(1,091)
Corporate and Other(33)(3)(36)
Net income (loss) from continuing operations, before income taxes$(2,517)$(121)$(2,638)



COVID-19-related adjustments included in Reconciliation of Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings:
Variable annuities product features$(1,468)$(35)$(1,503)
Other adjustments(1,049)(86)(1,135)
Net income (loss) from continuing operations, before income taxes$(2,517)$(121)$(2,638)
78
Table of Contents
_______________
(1)Includes adjustments to Non-GAAP Operating Earnings primarily due to non-variable annuity hedging impacts resulting from unprecedented volatility in equity markets and accelerated amortization of DAC due to loss recognition in the first half of 2020 resulting from first quarter 2020 interest rate assumption update.
Adjustments related to the Individual Retirement and Group Retirement segments are primarily included in the “Variable annuities product features” in the reconciliation of Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings. All other adjustments are included in “Other”. This impact has been more than offset by hedging gains.
Macroeconomic and Industry Trends
Our business and consolidated results of operations are significantly affected by economic conditions and consumer confidence, conditions in the global capital markets and the interest rate environment.
Financial and Economic Environment
A wide variety of factors continue to impact global financial and economic conditions, including, among others, the COVID-19 pandemic, volatility in financial markets, rising inflation rates, continued low interest rates, changes in fiscal or monetary policy and supply chain disruptions.
Stressed conditions, volatility and disruptions in the capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors, including changes in interest rates, which are anticipated to occur in 2022 based on statements of members of the Board of Governors of the Federal Reserve System. An increase in market volatility could continue to affect our business, including through effects on the yields we earn on invested assets, changes in required reserves and capital and fluctuations in the value of our AUM, AV or AUA from which we derive our fee income. These effects could be exacerbated by uncertainty about future fiscal policy, changes in tax policy, the scope of potential deregulation and levels of global trade.
The potential for increased volatility, coupled with prevailing interest rates falling and/or remaining below historical averages, could pressure sales and reduce demand for our products as consumers consider purchasing alternative products to meet their objectives. In addition, this environment could make it difficult to consistently develop products that are attractive to customers. Financial performance can be adversely affected by market volatility and equity market declines as fees driven by AV and AUM fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows.
We monitor the behavior of our customers and other factors, including mortality rates, morbidity rates, annuitization rates and lapse and surrender rates, which change in response to changes in capital market conditions, to ensure that our products and solutions remain attractive and profitable. For additional information on our sensitivity to interest rates and capital market prices, see “Quantitative and Qualitative Disclosures About Market Risk.”
Interest Rate Environment
We believe the interest rate environment will continue to impact our business and financial performance in the future for several reasons, including the following:
•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.
79
Table of Contents
For a discussion on derivatives we used to hedge interest rates, see Note 4 of the Notes to these Consolidated Financial Statements in this Form 10-K.
Regulatory Developments
Our life insurance subsidiaries are regulated primarily at the state level, with some policies and products also subject to federal regulation. In addition, Holdings and its insurance subsidiaries are subject to regulation under the insurance holding company laws of various U.S. jurisdictions. Furthermore, on an ongoing basis, regulators refine capital requirements and introduce new reserving standards. Regulations recently adopted or currently under review can potentially impact our statutory reserve, capital requirements and profitability of the industry and result in increased regulation and oversight for the industry. For additional information on regulatory developments and the risks we face, see “Business—Regulation” and “Risk Factors—Legal and Regulatory Risks.”
Separation Costs
In connection with our separation from AXA, we have incurred expenses of $722 million of which $82 million, $108 million, and $222 million was incurred in 2021, 2020 and 2019, respectively. These expenses primarily relate to information technology, compliance, internal audit, finance, risk management, procurement, client service, human resources, rebranding and other support services. We have successfully completed our separation from AXA and do not expect to incur any additional expense related to the separation from AXA.
Productivity StrategiesVariable Annuities Policy Feature Overview
Enhance profitability through diligent focusVariable annuities allow the policyholder to make deposits into accounts offering variable investment options. For deposits allocated to Separate Accounts, the risks associated with the investment options are borne entirely by the policyholder, except where the policyholder elects GMxB features in certain variable annuities, for which additional fees are charged. Additionally, certain variable annuity products permit policyholders to allocate a portion of their account to investment options backed by the General Account and are credited with interest rates that we determine, subject to certain limitations. As of December 31, 2021, the total AV of our variable annuity products was $111.9 billion, consisting of $74.2 billion of Separate Accounts AV and $37.7 billion of General Account AV.
Certain variable annuity products offer one or more GMxB features in addition to the standard return of premium death benefit guarantee. GMxB features (other than the return of premium death benefit guarantee) provide the policyholder a minimum return based on managing expenses while still deliveringtheir initial deposit adjusted for withdrawals (i.e., the benefit base), thus guarding against a best-in-class customer experience. From 2012 through 2017 we delivereddownturn in the markets. The rate of this return may increase the specified benefit base at a guaranteed minimum rate (i.e., a fixed roll-up rate) or may increase the benefit base at a rate tied to interest rates (i.e., a floating roll-up rate). GMxB riders must be chosen by the policyholder no later than at the issuance of the contract.
The following table presents our variable annuity AV by GMxB feature for our variable annuity business in our Individual Retirement segment as of December 31, 2021, 2020 and 2019:
December 31,
202120202019
(in millions)
Account Value
Non-GMxB$43,843 $36,162 $30,694 
ROP Death Benefit Only (1)11,438 10,438 9,620 
Total Non-GMxB & ROP Death Benefit Only55,281 46,600 40,314 
Floating Rate GMxB26,486 25,168 23,891 
Fixed Rate GMxB (1)30,137 45,622 44,717 
Total Variable Annuity AV$111,904 $117,390 $108,922 
8
Table of Contents
(1) AV is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements.
The following table presents our variable annuity benefit base by GMxB feature for the Individual Retirement segment as of December 31, 2021, 2020 and 2019. Many of our variable annuity contracts offer more than $350 millionone type of GMxB feature such that the amounts listed below are not mutually exclusive. Thus, the benefit base cannot be totaled.
December 31,
202120202019
(in millions)
Benefit Base
ROP Death Benefit Only (1)$6,444 $6,141 $6,048 
Floating Rate GMxB
GMDB$23,574 $23,095 $22,793 
GMIB$24,123 $23,029 $22,108 
Fixed Rate GMxB
GMDB (1)$34,017 $58,028 $59,365 
GMIB (1)$34,719 $60,695 $61,775 
(1) Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements.
The guaranteed benefit received by a policyholder pursuant to a GMxB feature is calculated based on the benefit base. The benefit base is defined as a hypothetical amount (i.e., not actual cash value) used to calculate the policyholder’s optional benefits within a variable annuity. A benefit base cannot be withdrawn for cash and is used solely to calculate the variable annuity’s optional guarantee values. Generally, the benefit base is not subject to a cap on the value. However, the benefit base stops increasing after a defined time period or at a maximum age, usually age 85 or 95, as defined in productivitythe contract.
The calculation of the benefit base varies by benefit type and efficiency gains, principally through right-sizing our organization, selectively outsourcing certain functions, reducing our real estate footprint and implementing information technology productivity measures. We see additional opportunities to improve profitability across our businesses through operating expense reductions, without impacting our ability to serve our existing clients and grow our businesses. In particular, we plan to:
Shift our real estate footprint awaymay differ in value from the New York metropolitan areapolicyholder’s AV for the following reasons:
•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.
•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.
We currently offer GMxB riders. Their principal features are as follows:
•GMDBs provide space efficiencies and lower labor costs and, where possible, take advantagethat in the event of state and local tax incentives;
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).
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;
•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.
For a detailed discussion of GMxB riders, see “—Overview of GMxB Features.”
Leverage new technologies to further drive productivity, including acceleratingMarkets
For our eDelivery, self-service and paperless initiatives to both improve service and reduce operating costs; and
Expand existing outsourcing arrangements (currently several hundred roles supporting service and finance) to further improve cost competitiveness.

Capital Optimization
Optimize our General Account investment portfolio. Prior to 2018,Individual Retirement segment, we had an outsized position in U.S. Treasury bonds when compared to manytarget sales of our principal competitorsproducts to affluent and high net worth individuals and families saving for retirement or seeking retirement income. As the retirement age population in the United States continues to grow and employers continue to shift away from defined benefit plans, we expect the need for these retirement savings and income products to expand.
Our customers can prioritize certain features based on their life-stage and investment needs. In addition, our products offer features designed to serve different market conditions. SCS serves clients with investable assets who want exposure to equity markets, but also want to guard against a market correction. Retirement Cornerstone serves clients who want growth potential
9
Table of Contents
and guaranteed income with increases in a rising interest rate environment. Investment Edge serves clients concerned about rising taxes.
Distribution
We distribute our variable annuity products through Equitable Advisors, and through third-party distribution channels. For the year ended December 31, 2021, Equitable Advisors represented 35% of our variable annuity FYP in this segment, while our third-party distribution channel represented 65% of our variable annuity FYP in this segment. We employ over 150 external and internal wholesalers who distribute our variable annuity products across both channels.
Affiliated Distribution. We offer our variable annuity products on a retail basis through our affiliated retail sales force of financial professionals, Equitable Advisors. These financial professionals have access to and offer a broad array of variable annuity, life insurance, employee benefits and investment products and services from affiliated and unaffiliated insurers and other financial service providers.
Third-Party Distribution. We have shifted the focus of our third-party distribution significantly over the last decade, growing our distribution in the bank, broker-dealer and insurance partner channels. For example, in 2011, we began distributing our variable annuity products to insurance partners. Today, we work with some of the country’s largest insurance partners and our sales through this channel have grown to comprise 10% of our total FYP for the year ended December 31, 2021.
The table below presents the contributions to and percentage of FYP of our variable annuity products by distribution channel for the year ended December 31, 2021.
FYP by Distribution
eqh-20211231_g5.jpg
Other than Equitable Advisors, no single distribution firm contributed more than 10% of our sales in 2021.
Competition
Our Individual Retirement business competes with traditional life insurers, as well as banks, mutual fund companies and other investment managers. The variable annuities market is highly competitive, with no single provider dominating the market across products. The main factors that distinguish competitors to clients include product features, access to capital, access to diversified sources of distribution, financial and claims-paying ratings, investment options, brand recognition, quality of service, technological capabilities and tax-favored status of certain products. It is difficult to provide unique variable annuities products because, once such products are made available to the public, they often are reproduced and offered by our competitors. Competition may affect, among other matters, both the growth of our business and the pricing and features of our products.
10
Table of Contents
Underwriting and Pricing
We generally do not underwrite our variable annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience, volatility of expected earnings on our AV, and the expected time to retirement. Our product pricing models also take into account capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of GMxB and other features we offer. We have previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our clients, the economic environment and our risk appetite evolve.
Fees on AV, Fund Assets, Benefit Base and Investment Income
We earn various types of fee revenue based on AV, fund assets and benefit base. In general, fees from GMxB features that are calculated based on the benefit base are more stable compared to fees calculated based on the AV.
Mortality & Expense, Administrative Charges and Distribution Charges. We deduct a daily charge from the net assets in each variable investment option to compensate us for mortality risks, administrative expenses and a relatively shortportion of our sales expenses under the variable annuity contract. These charges are calculated based on the portion of the policyholder’s AV allocated to the Separate Accounts and are expressed as an annual percentage.
Withdrawal Charges. Some variable annuity contracts may also impose charges on withdrawals for a period after the purchase, and in certain products for a period after each subsequent contribution, also known as the withdrawal charge period. A withdrawal charge is calculated as a percentage of the contributions withdrawn. The percentage of the withdrawal charge that applies to each contribution depends on how long each contribution had been invested in the contract. Withdrawal charges generally decline gradually over the withdrawal charge period. Contracts may also specify circumstances when no surrender charges apply (for example, upon payment of a death benefit or due to disability, terminal illness or confinement to a nursing home).
Investment Management Fees. We charge investment management fees for the proprietary funds managed by EIMG that are offered as investments under the variable annuities. Investment management fees are also paid on the non-proprietary funds managed by investment advisers unaffiliated with us to the unaffiliated investment advisers. Investment management fees differ by fund. A portion of the investment management fees charged on funds managed by sub-advisers unaffiliated with us are paid by us to the sub-advisers. Investment management fees reduce the net returns on the variable annuity investments.
12b-1 Fees and Other Revenue. 12b-1 fees are paid by the mutual funds which our policyholders choose to invest in and are calculated based on the net assets of the funds allocated to our sub-accounts. These fees reduce the returns policyholders earn from these funds. Additionally, mutual fund companies with funds that are available to policyholders through the variable annuity sub-accounts pay us fees consistent with the terms of administrative service agreements. These fees are funded from the fund companies’ net revenues.
Death Benefit Rider Charges. We deduct a charge annually from the policyholders’ AV on each contract date anniversary for most of our optional death benefits. This charge is in addition to the base mortality and expense charge for promising to pay the GMDB. The charges earned vary by generation and rider type. For some death benefits, the charges are calculated based on AV, but for enhanced death benefits, the charges are normally calculated based on the benefit base.
Living Benefit Riders Charges. We deduct a charge annually from the policyholders’ AV on each contract date anniversary. We earn these fees for promising to pay guaranteed benefits while the policyholder is alive, such as for any type of GMLB (including GMIB, GWBL, GMWB and GMAB). The fees earned vary by generation and rider type and are calculated based on the benefit base.
Investment Income. We earn revenue from investment income on our General Account investments.
11
Table of Contents
Risk Management
We approach risk management of our variable annuity products: (i) prospectively, by assessing, and from time to time, modifying our current product offerings to manage our risk and (ii) retrospectively, by implementing actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts.
Current GMxB Product Strategy
Since 2008, we redesigned our variable annuity product offering by introducing new variable annuities without GMxB features, discontinuing the offering of certain GMxB features and adding or adjusting other features to better enable us to manage the risk associated with these products. Through the increase in sales of our products without GMxB features, sales of our variable annuity contracts with GMxB features have decreased significantly as a percentage of our total sales. We continue to offer certain GMxB features to meet evolving consumer demand while maintaining attractive risk-adjusted returns and effectively managing our risk.
 Some of the features of our GMxB products have been redesigned over the past several years to better manage our risk and to meet customer demand. For example:
•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 portfolio duration. We have begunrisk if certain optional guaranteed benefits are elected; and
•we offer managed volatility funds, which seek to gradually transitionreduce 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.
To further manage our portfoliorisk, features in our current GMxB products provide us with the right to bemake adjustments post-sale, including the ability to increase benefit charges. For more information on GMxB features contained in line with our economic liabilitiescurrent and better optimize our capital under a U.S. framework. Principally,in-force products, see below “—Overview of GMxB Features.”
In-force Variable Annuity Management
Since the financial crisis, we have begunimplemented several actions to reduce our exposure and manage the transition of our investment portfolio from U.S. Treasury bonds to high quality investment grade bonds and have extended our investment portfolio’s credit duration.risks associated with in-force variable annuity contracts while ensuring policyholder rights are fully respected. We expect this transition to contribute a meaningful increase in net investment income when complete.
Proactively manage our business portfolio. One of our primary objectives is to improve our financial performance. In addition to driving operating earnings, we plan to continue to proactively manage our in-force portfolio to ensure we optimize equity invested in our businesses. This includes market transactions, reinsurance and exercising contractual rights as appropriate. Underpinning this is our strong experience in managing our various portfolios through actions such as buyouts, fund substitutions and portfolio sales.
Return capital to stockholders. We will focus on returning excess capital to stockholders actively and prudently. Our expected sources of excess capital generation over the course of the next several years include cash flow generated by earningsrisks associated with our diverse, seasoned portfolio of retirement and protection businesses and quarterly unitholder distributions from our economic interest in AB, of which, as of December 31, 2018, nearly all is held outside of our insurance company subsidiaries.
Risk Management Strategy
Maintain risk management discipline. The goal of our risk management strategy is to protect capital, enable growth and achieve profitable results across various market cycles. For ourin-force variable annuity business through our dynamic hedging program, reinsurance and product design. The dynamic hedging program was implemented in the early 2000s. In addition, we use reinsurance for the GMxB riders on our older variable annuity products (generally issued 1996-2004). We have also introduced several other risk management programs, some of which are described in this section below.
To actively manage and protect against the economic risks associated with our in-force variable annuity products, our management team has taken a multi-pronged approach. Our in-force variable annuity risk management programs include:
Hedging
We use a dynamic hedging strategy supplemented by static hedges to offset changes in theour economic liability of our GMxB features due tofrom changes in equity markets and interest rates. In addition to our dynamic hedging strategy, in the fourth quarter of 2017 and the first quarter of 2018, we implementedhave static hedge positions to maintain a target asset level for all variable annuities. A wide range of derivatives contracts are used in these hedging programs, such as futures and total return swaps (both equity and fixed income), options and variance swaps, as well as, to a lesser extent, bond investments and repurchase agreements. For GMxB features, we retain certain risks including basis, credit spread, and some volatility risk and risk associated with actual versus expected assumptions for mortality, lapse and surrender, withdrawal and contract-holder election rates, among other things.
Reinsurance
We have used reinsurance to mitigate a portion of the risks that we face in certain of our variable annuity products with regard to a portion of the GMxB features. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. We evaluate the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. Also, we ensure that we obtain collateral to mitigate our risk of loss.
12
Table of Contents
Non-affiliate Reinsurance. We have reinsured to non-affiliated reinsurers a portion of our exposure on variable annuity products that offer a GMxB feature issued through February 2005. As of December 31, 2021, we had reinsured to non-affiliated reinsurers, subject to certain maximum amounts or caps in any one period, approximately 59.8% of our NAR resulting from the GMIB feature and approximately 47.6% of our NAR to the GMDB obligation on variable annuity contracts in force as of December 31, 2021.
In June 2021, as part of the Venerable Transaction, Equitable Financial ceded to CS Life on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008, comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. For additional information regarding the Venerable Transaction, see “—Overview—Venerable Transaction” and Note 1 of the Notes to these Consolidated Financial Statements.

Captive Reinsurance. In addition to non-affiliated reinsurance, Equitable Financial has ceded to its affiliate, EQ AZ Life RE, a captive reinsurance company, a 100% quota share of all liabilities for variable annuities with GMIB riders issued on or after May 1, 1999 through August 31, 2005 in excess of the liability assumed by two unaffiliated reinsurers, which are subject to certain maximum amounts or limitations on aggregate claims. We use captive reinsurance as part of our capital management strategy. For additional information regarding our use of captives, see “—Regulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance Company.”
Other Programs
We have introduced several other programs that reduced gross reserves and reduced the risk in our in-force block and, in many cases, offered a benefit to our clients by offering liquidity or flexibility:
Investment Option Changes. We made several changes to our investment options within our variable annuity products over the years to manage risk, employ more passive strategies and offer our clients attractive risk-adjusted investment returns. To reduce the differential between hedging instruments performance and fund performance, we added many passive investment strategies and reduced the credit risk of some of the bond portfolios, which is designed to provide a better risk adjusted return to clients. We also introduced managed volatility funds in 2009. Our volatility management strategy seeks to reduce the portfolio’s equity exposure during periods when certain market indicators indicate that market volatility is above specific thresholds set for the portfolio. Historically when market volatility is high, equity markets generally are trending down, and therefore this strategy is intended to reduce the clients’ overall risk of investing in the portfolio.
Optional Buyouts. We have implemented several successful buyout programs on contracts issued between 2002 and 2009 that benefited clients whose needs had changed since buying the initial contract and reduced our exposure to certain types of GMxB features.
Premium Suspension Programs. We have suspended the acceptance of subsequent premiums to certain GMxB contracts.
Lump Sum Option. We have provided certain policyholders with the optional benefit to receive a one-time lump sum payment rather than systematic lifetime payments if their AV falls to zero. This option provides the same advantages as a buyout. However, because the availability of this option is contingent on future events, their actual effectiveness will only be known over a long-term horizon.
 Overview of GMxB Features
We have historically offered a variety of variable annuity benefit features, including GMxB features, to our policyholders in our Individual Retirement segment.
Guaranteed Minimum Death Benefits Summary
We have historically offered GMDB features in isolation or together with GMLB features, including the following (with no additional charge unless noted):
•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 abovethe total contributions to the contract (subject to adjustment for withdrawals). The charge for this
13
Table of Contents
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 CTE98 levelbenefit base that does not decrease by the amount of any IRS-mandated withdrawals, or 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.
In addition, we offered two guaranteed minimum death benefits with our GWBL rider, available at issue.
•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.
The following table presents the AV and benefit base by type of guaranteed minimum death benefit. Because variable annuity contracts with GMDB features may also offer GMLB features, the GMDB amounts listed are not mutually exclusive from the GMLB amounts provided in the table below.
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMDB In-Force (1)
ROP Death Benefit Only (3)$11,437 $6,443 $10,437 $6,141 $9,620 $6,048 
Floating Rate GMDB
Greater of Ratchet or Roll-up$7,105 $7,867 $7,121 $7,995 $7,017 $7,891 
All Other (2)19,381 15,707 18,047 15,100 16,874 14,902 
     Total Floating Rate GMDB$26,486 $23,574 $25,168 $23,095 $23,891 $22,793 
Fixed Rate GMDB
Greater of Ratchet or Roll-up (3)$14,748 $21,518 $26,800 $42,521 $26,239 $42,896 
All Other (2) (3)15,390 12,689 18,822 15,507 18,478 16,469 
     Total Fixed Rate GMDB$30,138 $34,207 $45,622 $58,028 $44,717 $59,365 
Total GMDB$68,061 $64,224 $81,227 $87,264 $78,228 $88,206 
______________
14
Table of Contents
(1)    See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 under most economic scenarios,“—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.
(3)    AV and Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to the Consolidated Financial Statements.
Guaranteed Living Benefits Summary
We have historically offered a variety of guaranteed living benefits to our policyholders in our Individual Retirement segment. Our block of variable annuities includes four types of guaranteed living benefit riders: GMIB, GWBL/GMWB, GMAB and GIB. Based on total AV, approximately 51% of our variable annuity block included living benefit guarantees as of December 31, 2021.
•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, 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.
The second phase of the contract starts when the policyholder annuitizes the contract, either by exercising the GMIB or through the contract’s standard annuitization provisions. Upon exercise of their GMIB, policyholders receive guaranteed lifetime income payments that are calculated as the higher of: (i) application of their GMIB benefit base to the GMIB guaranteed annuity purchase factors specified in the contract; or (ii) application of their AV to our then current or guaranteed annuity purchase factors. Beginning in 2005 we started offering a CTE95no-lapse guarantee on our GMIB riders that provides for the automatic exercise of the GMIB in the event that the policyholder’s AV falls to zero and provided no “excess withdrawals” (as defined in the contract) have been taken.
The charge for the GMIB is calculated based on the GMIB benefit base value and deducted annually from the AV.
•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.
•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.
Below are examples of policyholder benefit utilization choices that can affect benefit payment patterns and reserves:
15
Table of Contents
•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 contract, generally age 85 or 95. The policyholder may otherwise annuitize the AV and choose one of several payout options.
•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.
The likelihood of a policyholder choosing a particular option cannot be predicted with certainty at the time of contract issuance. Accordingly, we make assumptions as to policyholder benefit elections and resulting benefit payments at the time of issuance and while it is in-force based on our experience. The incidents and timing of benefit elections and the amounts of resulting benefit payments may materially differ from those we anticipate at that time. As we observe actual policyholder behavior, we update our assumptions at least annually with respect to future policyholder activity and take appropriate action with respect to the amount of the reserves we establish for the future payment of such benefits. Additionally, upon the death of a policyholder (or annuitant), if the sole beneficiary is a surviving spouse, they can choose to continue the contract and benefits subject to age restrictions.
The following table presents the AV and benefit base by type of guaranteed living benefit. Because variable annuity contracts with GMLB features may also offer GMDB features, the GMLB amounts listed are not mutually exclusive from the GMDB amounts provided in the table above.
16
Table of Contents
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMLB In-Force (1)
Floating Rate GMLB
GMIB$23,435 $24,123 $22,002 $23,029 $20,699 $22,108 
Other (GIB)2,623 2,796 2,762 2,978 2,812 3,128 
Total Floating Rate GMLB$26,058 $26,919 $24,764 $26,007 $23,511 $25,236 
Fixed Rate GMLB
GMIB$40,065 $59,341 $39,369 $60,695 $38,846 $61,775 
All Other (e.g., GWBL / GMWB, GMAB, other) (2)846 1,153 830 1,165 806 1,175 
Total Fixed Rate GMLB$40,911 $60,494 $40,199 $61,860 $39,652 $62,950 
Total GMLB$66,969 $87,413 $64,963 $87,867 $63,163 $88,186 
______________
(1)See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 under “—Net Amount at Risk.”
(2)    All Other includes individual variable annuity policies with stand-alone Annual Ratchet or stand-alone Roll-up GMDB.
Net Amount at Risk
The NAR for the GMDB is the amount of death benefits payable in excess of the total AV (if any) as of the balance sheet date, net of reinsurance. It represents the amount of the claim we would incur if death claims were made on all contracts with a GMDB on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.
The NAR for the GMIB is the amount (if any) that would be required to be added to the total AV to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the GMIB. This amount represents our potential economic exposure to such guarantees in the event all policyholders were to annuitize on the balance sheet date, even though the guaranteed amount under the contracts may not be annuitized until after the waiting period of the contract.
The NAR for the GWBL, GMWB and GMAB is the actuarial present value in excess of the AVs (if any) as of the balance sheet date. The NAR assumes utilization of benefits by all policyholders as of the balance sheet date. For the GMWB and GWBL benefits, only a small portion of the benefit base is available for withdrawal on an annual basis. For the GMAB, the NAR would not be available until the GMAB maturity date.
NAR reflects the difference between the benefit base (as adjusted, in some cases, as described above) and the AV. We believe that NAR alone provides an inadequate presentation of the risk exposure of our in-force variable annuity portfolio. NAR does not take into consideration the aggregate amount of reserves and capital that we hold against our variable annuity portfolio.
The NAR and reserves of contract owners by type of GMxB feature for variable annuity contracts are summarized below as of December 31, 2021, 2020 and 2019. Many of our variable annuity contracts offer more than one type of guarantee such that the GMIB amounts are not mutually exclusive to the amounts in the GMDB table.
17
Table of Contents
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMDB
ROP Death Benefit Only (1) (2)$75 N/A$84 N/A$95 N/A
Floating Rate GMDB851 377 943 332 904 272 
Fixed Rate GMDB (2)8,061 2,360 17,244 4,674 18,123 4,402 
Total$8,987 $2,737 $18,271 $5,006 $19,122 $4,674 
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMIB
Floating Rate GMIB$— $172 $— $136 $— $91 
Fixed Rate GMIB (2)3,910 4,441 10,461 14,110 8,746 10,573 
Total$3,910 $4,613 $10,461 $14,246 $8,746 $10,664 
______________
(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.
(2) NAR is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction.
18
Table of Contents
Group Retirement
Our 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. We operate in the 403(b), 457(b) and 401(k) markets where we sell variable annuity and mutual fund-based products. RBG, is the primary distributor of our products and related solutions to individuals in the K-12 education market with more than 1,000 advisors dedicated to helping educators prepare for retirement as of December 31, 2021.
The tax-exempt 403(b)/457(b) market, which includes our 403(b) K–12 education market business, accounted for 71% of sales within the Group Retirement business for the year ended December 31, 2021. The corporate 401(k) market accounts for 22% and the remaining 7% is Other as of December 31, 2021.
The recurring nature of the revenues from our Group Retirement business makes this segment an important and stable contributor of earnings and cash flow to our business. The primary sources of revenue for the Group Retirement business include fee revenue and investment income.
Products
Our products offer educators, municipal employees and corporate employees a savings opportunity that provides tax-deferred wealth accumulation. Our innovative product offerings address all retirement phases with diverse investment options.
Variable Annuities
Our variable annuities offer defined contribution plan record-keeping, as well as administrative and participant services combined with a variety of proprietary and non-proprietary investment options. Our variable annuity investment lineup mostly consists of proprietary variable investment options that are managed by EIMG, which provides discretionary investment management services for these investment options that include developing and executing asset allocation strategies and providing rigorous oversight of sub-advisors for the investment options. This helps to ensure that we retain high quality managers and that we leverage our scale across both the Individual Retirement and Group Retirement products. In addition, our variable annuity products offer the following features:
•Guaranteed Investment Option (GIO) —Provides a fixed interest rate and guarantee of principal.
•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 period. This option leverages our innovative SCS individual annuity offering, and we believe that we are the only provider that offers this type of offering combined in a variable annuity offering in the defined contribution market today.
•Personal Income Benefit—An optional GMxB feature that enables participants to obtain a guaranteed withdrawal benefit for life for an additional fee.
While GMxB features provide differentiation in the market, only approximately $9 million, or 0.02%, of our total AV is invested in products with GMxB features (other than ROP death benefits) as of December 31, 2021, and based on current utilization, we do not expect significant flows into these types of GMxB features.
Open Architecture Mutual Fund Platform
We also offer a mutual fund-based product to complement our variable annuity products. This platform provides a similar service offering to our variable annuities. The program allows plan sponsors to select from thousands of mutual funds. The platform also offers a group fixed annuity that operates very similarly to the GIO as an available investment option on this platform. In January 2021 we launched the successor product to our existing mutual fund based product.
Services
Both our variable annuity and open architecture mutual fund products offer a suite of tools and services to enable plan participants to obtain education and guidance on their contributions and investment decisions and plan fiduciary services. Education and guidance are available online or in person from a team of plan relationship and enrollment specialists and/or the advisor that sold the product. Our clients’ retirement contributions come through payroll deductions, which contribute significantly to stable and recurring sources of renewals.
19
Table of Contents
The chart below illustrates our net flows for the years ended December 31, 2021, 2020 and 2019.
Year Ended December 31,
202120202019
(in millions)
Net Flows
Gross Premiums$3,623 $3,343 $3,533 
Surrenders, Withdrawals and Benefits(3,929)(3,047)(3,266)
Net Flows$(306)$296 $267 
The following table presents the gross premiums for each of our markets for the periods specified.
Year Ended December 31,
202120202019
(in millions)
Gross Premiums by Market
Tax-Exempt$809 $724 $902 
Corporate435 392 537 
Other62 60 49 
Total FYP1,306 1,176 1,488 
Tax-Exempt1,757 1,632 1,531 
Corporate369 342 330 
Other191 193 184 
Total Renewal Premiums2,317 2,167 2,045 
Gross Premiums$3,623 $3,343 $3,533 
Markets
We primarily operate in the tax-exempt 403(b)/457(b), corporate 401(k) and other markets.
•Tax-exempt 403(b)/457(b). We primarily serve individual employees of public school systems. To a lesser extent, we also market to government entities that sponsor 457(b) plans.
Overall, the 403(b) and 457(b) markets represent 62% of FYP in the Group Retirement segment for the year ended December 31, 2021. We seek to grow in these markets by increasing our presence in the school districts where we currently operate and also by potentially growing our presence in school districts where we currently do not have access.
•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. 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.
The following table presents the relative contribution of each of our markets to AV as of the dates indicated.
20
Table of Contents
December 31,
202120202019
(in millions)
AV by Market
Tax-Exempt$37,072 $32,586 $28,895 
Corporate5,367 4,920 4,387 
Other4,914 4,953 4,598 
AV$47,353 $42,459 $37,880 
Distribution
We primarily distribute our products and services to this market through Equitable Advisors and third-party distribution firms. For the year ended December 31, 2021, these channels represented approximately 88% and 12% of our sales, respectively. We also distribute through direct online sales. We employ internal and external wholesalers to exclusively market our products through Equitable Advisors and third-party firms that are licensed to sell our products.
Equitable Advisors, through RBG, is the primary distribution channel for our products. The cornerstone of the RBG model is a repeatable and scalable advisor recruiting and training model that we believe is more effective than the overall industry model. RBG advisors complete several levels of training that are specific to the education market and give them the requisite skills to assess the educators’ retirement needs and how our products can help to address those needs. Equitable Advisors also accounted for 98% of our 403(b) sales in 2021.
Group Retirement products are also distributed through third-party firms and directly to customers online. We have a digital engagement strategy to supplement our traditional advisor-based model. This includes engaging existing clients to increase contributions online. The program uses data analysis combined with digital media to engage educators, teach them about their retirement needs and increase awareness of our products and services. Due to effects of the COVID-19 pandemic, we accelerated our digital adoption programs, leading to improved outcomes for clients, advisors, and the Company. We developed digital tools and enhanced our remote engagement with our educator clients, which is resulting in improved retention and increases in retirement plan contributions.
The following table presents first year premium by distribution channel for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
FYP by Distribution
Equitable Advisors$1,155 $1,078 $1,341 
Third-Party151 98 147 
Total$1,306 $1,176 $1,488 
Competition
We compete with select insurance companies, asset managers, record keepers and diversified financial institutions that target similar market segments. Competition varies in all market segments with no one company dominating. In the K–12 public education market, competitors are primarily insurance-based providers that focus on school districts. In the small and medium-sized business market, the primary competitors are insurance-based providers and mutual fund companies. The main features that distinguish our offering to clients include our RBG distribution model, the product features we offer to clients, including guarantees, and our financial strength.
Underwriting and Pricing
We generally do not underwrite our annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience, volatility of expected earnings on our AV, and the expected time to retirement. Our product pricing models also take into account capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
21
Table of Contents
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level even in extreme scenarios.of guarantees and other features we offer. We expect to adjusthave previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our static equity hedge positions to maintainclients, the economic environment and our target levelrisk appetite evolve.
Fees
We earn various types of CTE protection over time.fee revenue based on AV, fund assets and benefit base. Fees that we collect include mortality & expense, administrative charges and distribution charges; withdrawal charges; investment management fees, 12b-1 fees, death benefit rider charges, and living benefit riders charges. For a more detailed description of these types of fees, see “—Individual Retirement—Fees on AV, Fund Assets, Benefit Base and Investment Income.”
Risk Management
We design our non-variable annuity insurance businesses, we aim to maintain a 350–400% RBC ratio, which, combinedGroup Retirement products with the variable annuity capital, would resultgoal of providing attractive features to clients that also minimize risks to us. To mitigate risks to our General Account from fluctuations in interest rates, we apply a variety of techniques that align well with a given product type. We designed our GIO to comply with the NAIC minimum rate (1.0% for new issues), and our 403(b) products that we currently sell include a contractual provision that enables us to limit transfers into the GIO. As most defined contribution plans allow participants to borrow against their accounts, we have made changes to our loan repayment processes to minimize participant loan defaults and to facilitate loan repayments to the participant’s current investment allocation as opposed to requiring repayments only to the GIO. In the 401(k) and 457(b) markets, we may charge a market value adjustment on the assets of the GIO when a plan sponsor terminates its agreement with us. We also prohibit direct transfers to fixed income products that compete with the GIO, which protects the principal in the General Account in a Combined RBC Ratiorising interest rate environment.
In the Tax-Exempt market, the benefits include a minimum guaranteed interest rate on our GIO, return of premium death benefits and limited optional GMxB features. The utilization of GMxB features is low. In the Corporate market, the products that we sell today do not offer death benefits in excess of 500%.the AV.
In addition, we expect that our diverse, seasoned in-force book of business should continue to generate statutory earnings further bolstering our statutory capital position.
As of December 31, 2018,2021, approximately 59% of our debt-to-capital ratio excluding AccumulatedGeneral Account AV has a minimum guaranteed rate of 3-4%. Given the growth in net flows to our newer products and the slowing in flows to older blocks due to retirement, we expect that guarantees at a rate over 3% will continue to diminish as a percentage of our overall General Account AV. The table below illustrates the guaranteed minimum rates applicable to our General Account AV for products with the GIO, as of December 31, 2021.
Total General
Guaranteed Minimum Interest RateAccount AV
(in billions)
1 – < 2%$3.7 
2 – < 3%1.4 
3%7.1 
4%0.2 
Total$12.4 
We use a committee of subject matter experts and business leaders that meet periodically to set crediting rates for our guaranteed interest options. The committee evaluates macroeconomic and business factors to determine prudent interest rates in excess of the contract minimum when appropriate.
We also monitor the behavior of our clients who have the ability to transfer assets between the GIO and various Separate Accounts investment options. We have not historically observed a material shift of assets moving into guarantees during times of higher market volatility.
Hedging
We hedge crediting rates to mitigate certain risks associated with the SIO. In order to support the returns associated with the SIO, we enter into derivatives contracts whose payouts, in combination with fixed income investments, emulate those of the S&P 500, Russell 2000 or MSCI EAFE index, subject to caps and buffers.
22
Table of Contents
Investment Management and Research
Our Investment Management and Research business provides diversified investment management, research and related services globally to a broad range of clients through AB’s three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and AB’s sell-side business, Bernstein Research Services. AB Holding is a master limited partnership publicly listed on the NYSE. We own an approximate 65% economic interest in AB. As the general partner of AB, we have the authority to manage and control its business, and accordingly, this segment reflects AB’s consolidated financial results.
Our Investment Management and Research business had approximately $778.6 billion in AUM as of December 31, 2021, composed of 46% equities, 41% fixed income and 13% multi-asset class solutions, alternatives and other assets. By distribution channel, institutional clients represented 43% of AUM, while retail and private wealth management clients represented 41% and 16% respectively, as of December 31, 2021.
AB has a suite of actively managed, differentiated equity and fixed income services, delivering strong risk-adjusted returns. For instance, 72% of AB’s fixed income services and 49% of AB’s equity services have outperformed their benchmarks over the three-year period ended December 31, 2021. Additionally, at year-end 2021, 76% of AB’s U.S. Fund assets and 59% of AB’s Non-U.S. Fund assets were rated either 4 or 5-stars by Morningstar.
Bernstein Research Services has received top Institutional Investor rankings and Private Wealth Management ranks among the top 20 wealth management firms in the United States, according to Barron’s.
We are AB’s largest client. We represented 17% of AB’s total AUM as of December 31, 2021 and 3% of AB’s net revenues for the year ended December 31, 2021.
AB provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include:
•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 Holdings 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 EIMG, 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.
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM.
Products and Services
Investment Services
AB provides a broad range of investment services with expertise in:
•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;
•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;
23
Table of Contents
•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and
•Some passive management, including index and enhanced index strategies.
Research
AB’s high-quality, in-depth research is the foundation of its business. AB believes that its global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives it a competitive advantage in achieving investment success for its clients. AB also has experts focused on multi-asset strategies, wealth management, ESG, and alternative investments.
Custody
AB’s U.S.-based broker-dealer subsidiary acts as custodian for the majority of AB’s Private Wealth Management AUM and some of its Institutional AUM. Other Comprehensive Incomecustodian arrangements, directed by clients, include banks, trust companies, brokerage firms and other financial institutions.
For additional information about AB’s investment advisory fees, including performance-based fees, see “Risk Factors—Risks Relating to Our Investment Management and Research Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—Investment Management and Research.”
Markets
AB operates in major markets around the world, including the United States, EMEA (Europe, the Middle East and Africa) and Asia. Our AUM is disbursed as follows:
By Investment Service ($ in billions):
eqh-20211231_g6.jpgeqh-20211231_g7.jpgeqh-20211231_g8.jpg
24
Table of Contents
By Client Domicile ($ in billions):
eqh-20211231_g9.jpgeqh-20211231_g10.jpgeqh-20211231_g11.jpg
Distribution Channels
AB distributes its products and solutions through three main client channels: Institutional, Retail and Private Wealth Management.
Institutional
AB offers to its institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and Holdings and its subsidiaries, separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“AOCI”Institutional Services”).
AB manages the assets of its institutional clients pursuant to written investment management agreements or other arrangements, which generally are terminable at any time or upon relatively short notice by either party. In general, AB’s written investment management agreements may not be assigned without the client’s consent.
Retail
AB provides investment management and related services to a wide variety of individual retail investors globally through retail mutual funds AB sponsors, mutual fund sub-advisory relationships, separately-managed account programs and other investment vehicles (“Retail Products and Services”).
AB distributes its Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act or (ii) not registered under the Investment Company Act and generally not offered to U.S. persons. They also include separately-managed account programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. In addition, AB provides distribution, shareholder servicing, transfer agency services and administrative services for its Retail Products and Services.
Private Wealth Management
AB partners with its clients, embracing innovation and independent research to address increasingly complex challenges. AB’s clients include high net worth individuals and families who have created generational wealth as successful business owners, athletes, entertainers, corporate executives and private practice owners. AB also provides investment and wealth advice to foundations and endowments, family offices and other entities. AB’s flexible investment platform offers a range of solutions, including separately-managed accounts, hedge funds, mutual funds and other investment vehicles, tailored to meet each distinct client’s needs. AB’s investment platform is complimented with a wealth platform that includes complex tax and estate planning, pre-IPO and pre-transaction planning, multi-generational family engagement, and philanthropic advice in addition to tailored approaches to meeting the unique needs of emerging wealth and multi-cultural demographics.
AB manages these accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any authorized party, and may not be assigned without the client’s consent.
25
Table of Contents
Competition
AB competes in all aspects of its business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations and other financial institutions that often provide investment products with similar features and objectives as those AB offers. AB’s competitors offer a wide range of financial services to the same customers that AB seeks to serve.
To grow its business, AB believes it must be able to compete effectively for AUM. Key competitive factors include: (i) AB’s investment performance for clients; (ii) AB’s commitment to place the interests of its clients first; (iii) the quality of AB’s research; (iv) AB’s ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; (v) the array of investment products AB offers; (vi) the fees AB charges; (vii) Morningstar/Lipper rankings for the AB Funds; (viii) AB’s ability to sell its actively-managed investment services despite the fact that many investors favor passive services; (ix) AB’s operational effectiveness; (x) AB’s ability to further develop and market its brand; and (xi) AB’s global presence.
AUM
AUM by distribution channel were as follows:
December 31,
202120202019
(in billions)
Institutions$337.1 $315.6 $282.7 
Retail319.9 265.3 239.2 
Private Wealth Management121.6 105.0 101.0 
Total$778.6 $685.9 $622.9 

AUM by investment service were as follows:
December 31,
202120202019
(in billions)
Equity
Actively Managed$287.6 $217.8 $177.2 
Passively Managed (1)71.6 64.5 60.1 
Total Equity359.2 282.3 237.3 
Fixed Income
Actively Managed
Taxable246.3 263.2 258.3 
Tax-exempt57.1 50.3 47.1 
Total Actively Managed303.4 313.5 305.4 
Passively Managed (1)13.2 8.5 9.3 
Total Fixed Income316.6 322.0 314.7 
Alternatives/Multi-Asset Solutions (2)
Actively Managed97.3 79.1 69.3 
Passively Managed (1)5.5 2.5 1.6 
Total Other102.8 81.6 70.9 
Total$778.6 $685.9 $622.9 
_____________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
26
Table of Contents
Changes in AUM for the years ended December 31, 2021 and 2020 are as follows:
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
Long-term flows:
Sales/new accounts31.7 100.0 18.3 150.0 
Redemptions/terminations(23.4)(65.1)(15.3)(103.8)
Cash flow/unreinvested dividends(6.0)(14.1)— (20.1)
Net long-term inflows (outflows) (1)2.3 20.8 3.0 26.1 
Transfers(0.2)0.2 — — 
Market appreciation (depreciation)19.4 33.6 13.6 66.6 
Net change21.5 54.6 16.6 92.7 
Balance, December 31, 2021$337.1 $319.9 $121.6 $778.6 
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2019$282.7 $239.2 $101.0 $622.9 
Long-term flows:
Sales/new accounts30.9 78.9 14.3 124.1 
Redemptions/terminations(23.3)(69.5)(16.5)(109.3)
Cash flow/unreinvested dividends(6.6)(11.0)0.2 (17.4)
Net long-term inflows (outflows) (1)1.0 (1.6)(2.0)(2.6)
Acquisitions— 0.2 — 0.2 
Transfers1.4 (0.6)(0.8)— 
Market appreciation30.5 28.1 6.8 65.4 
Net change32.9 26.1 4.0 63.0 
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
______________
(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

27
Table of Contents
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
Long-term flows:
Sales/new accounts72.9 1.4 44.9 13.5 4.6 12.7 150.0 
Redemptions/terminations(39.6)(1.1)(52.6)(7.8)(0.4)(2.3)(103.8)
Cash flow/unreinvested dividends(11.4)(7.8)(2.2)0.3 0.8 0.2 (20.1)
Net long-term inflows (outflows) (3)21.9 (7.5)(9.9)6.0 5.0 10.6 26.1 
Market appreciation (depreciation)47.9 14.6 (7.0)0.8 (0.3)10.6 66.6 
Net change69.8 7.1 (16.9)6.8 4.7 21.2 92.7 
Balance, December 31, 2021$287.6 $71.6 $246.3 $57.1 $13.2 $102.8 $778.6 
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2019$177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 
Long-term flows:
Sales/new accounts51.4 1.7 54.3 10.3 — 6.4 124.1 
Redemptions/terminations(36.7)(1.9)(58.3)(9.5)(0.3)(2.6)(109.3)
Cash flow/unreinvested dividends(7.3)(4.4)(5.8)0.2 (1.3)1.2 (17.4)
Net long-term inflows (outflows) (3)7.4 (4.6)(9.8)1.0 (1.6)5.0 (2.6)
Acquisitions— — — — — 0.2 0.2 
Market appreciation33.2 9.0 14.7 2.2 0.8 5.5 65.4 
Net change40.6 4.4 4.9 3.2 (0.8)10.7 63.0 
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
______________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
(3)Fixed income – taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.
Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows:
Year Ended December 31,
202120202019
(in billions)
Actively Managed
Equity$21.9 $7.4 $4.0 
Fixed Income(3.9)(8.8)21.7 
Alternatives/Multi-Asset Solutions8.3 4.5 4.0 
26.3 3.1 29.7 
28
Table of Contents
Year Ended December 31,
202120202019
(in billions)
Passively Managed
Equity$(7.5)$(4.6)$(4.1)
Fixed Income5.0 (1.6)(0.9)
Alternatives/Multi-Asset Solutions2.3 0.5 0.5 
(0.2)(5.7)(4.5)
Total net long-term inflows (outflows)$26.1 $(2.6)$25.2 

Average AUM by distribution channel and investment service were as follows:
 Year Ended December 31,
 202120202019
(in billions)
Distribution Channel:
Institutions$325.7 $285.9 $265.4 
Retail291.0 236.5 212.3 
Private Wealth Management114.1 97.1 96.5 
Total$730.8 $619.5 $574.2 
Investment Service:
Equity Actively Managed$252.2 $179.8 $158.4 
Equity Passively Managed (1)68.7 57.1 56.4 
Fixed Income Actively Managed – Taxable253.1 254.4 239.7 
Fixed Income Actively Managed – Tax-exempt53.8 47.9 44.6 
Fixed Income Passively Managed (1)9.6 9.4 9.4 
Alternatives/Multi-Asset Solutions (2)93.4 70.9 65.7 
Total$730.8 $619.5 $574.2 
___________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
Fees
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM. Bernstein Research Services revenue consists principally of commissions received for providing equity research and brokerage-related services to institutional investors. The components of net revenues are as follows and are prior to intercompany eliminations:
Year Ended December 31,
202120202019
(in millions)
Investment advisory and services fees:
Institutions:
Base fees$540 $458 $451 
Performance-based fees46 53 28 
586 511 479 
Retail:
Base fees1,442 1,187 1,076 
Performance-based fees51 2423
1,493 1,211 1,099 
29
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Private Wealth Management:
Base fees967 818 845 
Performance-based fees149 55 49 
1,116 873 894 
Total:

Base fees2,949 2,463 2,372 
Performance-based fees246 132 100 
3,195 2,595 2,472 
Bernstein Research Services452 460 408 
Distribution revenues652 530 455 
Dividend and interest income39 51 104 
Investment (losses) gains(1)(16)39 
Other revenues108 105 98 
Total revenues4,445 3,725 3,576 
Less: Interest expense4 16 57 
Net revenues$4,441 $3,709 $3,519 
30
Table of Contents
Protection Solutions
Our Protection Solutions segment includes our life insurance and employee benefits businesses. We have a long history of providing life insurance products to help affluent and high net worth individuals and small and medium-sized business owners protect and transfer their wealth. We are currently focused on the relatively less capital-intensive asset accumulation segments of the market, with leading offerings in the VUL market.
We offer a targeted range of life insurance products aimed at serving the financial needs of our clients throughout their lives. Our product offerings include VUL, IUL and term life products, which represented 80%, 12% and 8% of our total life insurance annualized premium, respectively, for the year ended December 31, 2021. Our products are distributed through Equitable Advisors and select third-party firms. We benefit from a long-term, stable distribution relationship with Equitable Advisors, with Equitable Advisors representing approximately 25%77% of our total life insurance sales for the year ended December 31, 2021.
In 2015, we entered the employee benefits market focusing on small and medium-sized businesses, a target market for our life insurance and Group Retirement 401(k) businesses. Our core products consist of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability and Long-Term Disability. In 2020, we launched our voluntary products including Critical Illness and Accident. Our Employee Benefits’ solutions are distributed through the traditional broker channel, strategic partnerships (medical partners, professional employer associations (PEOs), and associations), General Agencies, TPAs and Retail Equitable Advisors. We believe our EB360 technology platform is a differentiator and will further augment our solutions for small and medium-sized businesses.

Our Protection Solutions segment provides strong cash flows generated by our in-force book and capital diversification benefits. The primary sources of revenue are premiums, investment income, asset-based fees (investment management and 12b-1 fees), and policy charges (expense loads, surrender charges and mortality charges), as well as fees collected from Equitable Advisors non-proprietary sales through Equitable Network.
Life Insurance
We have been serving the financial needs of our clients and their families since 1859. We have an established reputation in product innovation by pioneering the VUL market in 1976 and continuing today with our range of innovative product offerings.
Products
Our life insurance products are primarily designed to help individuals and small and medium-sized businesses with protection, wealth accumulation and transfer of wealth at death, as well as corporate planning solutions including non-qualified deferred compensation, succession planning and key person insurance . We target select segments of the life insurance market: permanent life insurance, including IUL and VUL products and term insurance. In recent years, we have refocused our product offering and distribution towards less capital intensive, higher return accumulation and protection products. For example, in January 2021, we discontinued offering our most interest rate sensitive IUL product (“IUL Protect”). We plan to grow our operating earnings over time through earnings generated from sales of our repositioned product portfolio and by proactively managing and optimizing our in-force book.

Permanent Life Insurance. Our permanent life insurance offerings are built on the premise that all clients expect to receive a benefit from the policy. The benefit may take the form of a life insurance death benefit paid at time of death or access while living to cash that has accumulated in the policy on a tax-favored basis. In each case, the value to the client comes from access to a broad spectrum of equity or fixed interest investments that accumulate the policy value at rates of return consistent with the market.
We have three permanent life insurance offerings built upon a UL insurance framework: IUL, VUL and COLI targeting the small and medium-sized business market. UL policies offer flexible premiums, and generally offer the policyholder the ability to choose one of two death benefit options: a level benefit equal to the policy’s original face amount or a variable benefit equal to the original face amount plus any existing policy AV. Our insurance products include single-life and second-to-die (i.e., survivorship) products.
IUL. IUL uses an equity-linked approach for generating policy investment returns. The equity linked options provide upside return based on an external equity-based index (e.g., S&P 500) subject to a cap. In exchange for this cap on investment returns, the policy provides downside protection in that annual investment returns are floored at zero, protecting the policyholder in the event of a market movement down. As noted above, the performance of any UL insurance policy also depends on the level of policy charges. For further discussion, see “—Pricing and Fees.”
31
Table of Contents
VUL. VUL uses a series of investment options to generate the investment return allocated to the cash value. The sub-accounts are similar to retail mutual funds: a policyholder can invest policy values in one or more underlying investment options offering varying levels of risk and growth potential. These provide long-term growth opportunities, tax-deferred earnings and the ability to make tax-free transfers among the various sub-accounts. In addition, the policyholder can invest premiums in a guaranteed interest option, as well as an investment option we call the MSO, which provides downside protection from losses in the index up to a specified percentage. Our COLI product is a VUL insurance product tailored specifically to support executive benefits in the small business market.
We work with employees of EIMG to identify and include appropriate underlying investment options in our variable life products, as well as to control the costs of these options.
Term Life. Term life provides basic life insurance protection for a specified period of time and is typically a client’s first life insurance purchase due to its simple design providing basic income protection. Life insurance benefits are paid if death occurs during the term period, as long as required premiums have been paid. The required premiums are guaranteed not to increase during the term period, otherwise known as a level pay or fixed premium. Our term products include conversion features that allow the policyholder to convert their term life insurance policy to permanent life insurance within policy limits.
Other Benefits. We offer a portfolio of riders to provide clients with additional flexibility to protect the value of their investments and overcome challenges. Our Long-Term Care Services Rider provides an acceleration of the policy death benefit in the event of a chronic illness and has been elected on 28% of all eligible policies and elected on 21% of all new policies sold during the year ended December 31, 2021. The MSO, referred to above and offered via a policy rider on our variable life products, provides policyholders with the opportunity to manage volatility.
The following table presents individual life insurance annualized premiums for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
Annualized Premium
Indexed Universal Life$25 $60 $77 
Variable Universal Life169 91 107 
Term16 18 20 
Other (1)— — 2 
Total$210 $169 $206 
______________
(1)For the individual life insurance in-force, other includes current assumption universal life insurance, whole life insurance and other products available for sale but not actively marketed.
The following table presents individual life insurance FYP and renewals by product and total gross premiums for the periods indicated:
32
Table of Contents
Year Ended December 31,
202120202019
(in millions)
FYP by Product Line
Universal Life$— $— $2 
Indexed Universal Life45 144 203 
Variable Universal Life287 144 181 
Term16 18 20 
Other (1)1 1 1 
Total$349 $307 $407 
Renewals by Product Line
Universal Life$824 $845 $895 
Indexed Universal Life310 276 248 
Variable Universal Life968 947 921 
Term379 375 498 
Other (1)19 19 22 
Total$2,500 $2,462 $2,584 
Total Gross Premiums$2,849 $2,769 $2,991 
______________
(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.
Our in-force book spans three insurance companies, Equitable Financial, Equitable America and Equitable L&A. Equitable L&A is closed for new business. Certain term products and permanent products riders from Equitable America and Equitable Financial have been reinsured to our captive reinsurer EQ AZ Life Re. Our in-force portfolio is made up of core product offerings as described above, as well as past generation product offerings that include current assumption universal life insurance, whole life insurance and other products.
The following table presents our in-force face amount and Protection Solutions Reserves as of the dates indicated, respectively, for the individual life insurance products we believe supports strongoffer:
December 31,
202120202019
(in billions)
In-force face amount by product: (1)
Universal Life (2)$45.9 $48.7 $53.3 
Indexed Universal Life27.9 27.7 25.8 
Variable Universal Life (3)132.8 127.7 127.5 
Term (4)215.4 215.2 234.9 
Whole Life1.2 1.3 1.4 
Total in-force face amount$423.2 $420.6 $442.9 
December 31,
202120202019
(in millions)
Protection Solutions Reserves (5)
General Account$18,625 $18,905 $17,300 
Separate Accounts17,012 14,771 13,616 
Total Protection Solutions Reserves$35,637 $33,676 $30,916 
______________
33
Table of Contents
(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)UL includes guaranteed universal life insurance products.
(3)VUL includes variable life insurance and COLI.
(4)Decrease from 2019 to 2020 was driven by the sale of USFL.
(5)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.

In order to optimize our capital efficiency and improve the profitability of new business, in 2009, we made a strategic decision to exit the GUL insurance and 30-year term life insurance markets. In recent years, we have refocused our product offering and distribution towards less capital intensive, higher return accumulation and protection products. For example, in January 2021, we discontinued offering our most interest sensitive IUL product (IUL Protect). The following chart shows this shift in our product sales (annualized premiums) from 2008 to 2021:
Shift in Product Sales (Annualized Premiums)
eqh-20211231_g12.jpgeqh-20211231_g13.jpg
(1) UL includes GUL insurance products.
As part of our in-force management function, we monitor the performance of our life insurance portfolio against our expectations at the time of pricing of the products. It is our objective to align the performance of our portfolio to pricing expectations and take in-force actions where appropriate, in accordance with our contracts, applicable law and our governance processes.
Markets
We focus on certain segments of the life insurance market, particularly affluent and high net worth individuals, as well as small and medium-sized businesses. We focus on creating value for our customers through the differentiated features and benefits we offer on our products. We distribute these products through retail advisors and third-party firms who demonstrate the value of life insurance in helping clients to accumulate wealth and protect their assets.
Distribution
We primarily distribute life insurance through two channels: Equitable Advisors and third-party firms. We are shifting our third-party distribution focus in 2021 to bypass intermediaries by working directly with broker dealers and registered investment advisors that assist clients. This shift will allow us to build stronger distribution by aligning directly with experienced life producers and by providing digital, transactional capabilities to non-life experts, such as investment advisors. As part of this restructuring, we have aligned our Retail and Third-Party wholesalers into one Omni Channel.
The following table presents individual life insurance annualized premium by distribution channel for the periods indicated:
34
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Annualized Premium by Distribution
Equitable Advisors$162 $126 $157 
Third-Party Firms48 42 49 
Total$210 $168 $206 
Competition
The life insurance industry consists of many companies with no single company dominating the market for all products. We selectively compete with large, well-established life insurance companies in a mature market, where product features, price and service are key drivers. We primarily compete with others based on these drivers as well as distribution channel relationships, brand recognition, financial strength ratings of our insurance subsidiaries and financial stability. We are selective in our markets of interest and will continue to focus deeply in those areas that align to our offering.
Underwriting
Our underwriting process, built around extensive underwriting guidelines, is designed to assign prospective insureds to risk classes in a manner that is consistent with our business and financial objectives, including our risk appetite and pricing expectations.
As part of making an underwriting decision, our underwriters evaluate information disclosed as part of the application process as well as information obtained from other sources after the application. This information includes, but is not limited to, the insured’s age and sex, results from medical exams and financial information.
We continue to research and develop guideline changes to increase the efficiency of our underwriting process (e.g., through the use of predictive models), both from an internal cost perspective and our customer experience perspective. For example due to effects of the COVID-19 pandemic, we expectmodified our underwriting policies to offer a fluid-less, touchless process to help more clients access the protection they need.
We manage changes to our underwriting guidelines though a robust governance process that ensures that our underwriting decisions continue to align with our business and financial objectives, including risk appetite and pricing expectations.
Our team of underwriters and medical directors is dedicated to making accurate, timely and competitive underwriting decisions. Our line underwriters are empowered to make decisions and receive support of underwriting managers and medical directors when needed.
Our financial due diligence team combines legal, financial and investigative expertise to support the financial underwriting of complex cases, assist in case design and plays an important role in fraud prevention. We continuously monitor our underwriting decisions through internal audits and other quality control processes, to ensure accurate and consistent application of our underwriting guidelines.
We use reinsurance to manage our mortality risk and volatility. Our reinsurer partners regularly review our underwriting practices and mortality and lapse experience through audits and experience studies, the outcome of which have consistently validated the high-quality underwriting process and decisions.
Pricing and Fees
Life insurance products are priced based upon assumptions including, but not limited to, expected future premium payments, surrender rates, mortality and morbidity rates, investment returns, hedging costs, equity returns, expenses and inflation and capital requirements. The primary source of revenue from our life insurance business is premiums, investment income, asset-based fees (including investment management and 12b-1 fees) and policy charges (expense loads, surrender charges, mortality charges and other policy charges).
35
Table of Contents
Risk Management
Reinsurance
We use reinsurance to mitigate a portion of our risk and optimize the capital efficiency and operating returns of our life insurance portfolio. As part of our risk management function, we continuously monitor the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. In addition, effective April 1, 2020, we reinsured a material portion of our inforce term block. In most cases, amounts in excess of $2 million are reinsured.
Non-affiliate Reinsurance. We generally obtain reinsurance for the portion of a life insurance policy that exceeds $10 million. We have set up reinsurance pools with highly rated unaffiliated reinsurers that obligate the pool participants to pay death claim amounts in excess of our retention limits for an agreed-upon premium.
Captive Reinsurance. EQ AZ Life Re Company reinsures a 90% quota share of level premium term insurance issued by Equitable Financial on or after March 1, 2003 through December 31, 2008 and 90% of the risk of the lapse protection riders under UL insurance policies issued by Equitable Financial on or after June 1, 2003 through June 30, 2007 and those issued by Equitable America on or after June 1, 2003 through June 30, 2007 on a 90% quota share basis as well as excess claims relating to certain variable annuities with GMIB riders issued by Equitable Financial. We use captive reinsurance as part of our capital management strategy. For additional information regarding our use of captives, see “—Regulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance Company.”
Hedging
We hedge the exposure contained in our IUL products and the MSO rider we offer on our VUL products. These products and riders allow the policyholder to participate in the performance of an index price movement up to certain caps and/or protect the policyholder in a movement down for a set period of time. In order to support our obligations under these investment options, we enter into derivatives contracts whose payouts, in combination with returns from the underlying fixed income investments, seek to replicate those of the index price, subject to prescribed caps and buffers.
Employee Benefits
Our employee benefits business focuses on serving small and medium-sized businesses, a priority segment for us, offering these businesses a differentiated technology platform and competitive suite of group insurance products. Leveraging our innovative technology platform, we have formed strategic partnerships with large insurance and health carriers as their primary group benefits provider. As a new entrant in the employee benefits market we were able to build a platform from the ground up, without reliance on legacy systems. This puts us in a position to embrace industry shifts quickly and provides us with an advantage over many competitors.
Products
Our products are designed to provide valuable protection for employees as well as help employers attract employees and control costs. We currently offer a suite of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability, Long-Term Disability, Critical Illness and Accident insurance products.

The following table presents employee benefits gross premiums and annualized premium for the periods indicated:
36
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Employee Benefits Gross Premiums
Group life insurance sales$82 $64 $53 
Short-term disability44 25 17 
Long-term disability43 30 21 
Dental40 28 15 
Vision6 4 — 
Other (1)1 — — 
Total$216 $151 $106 
Annualized premium$76 $52 $52 
_______________
(1) Other includes Critical Illness and Accident insurance products.
Markets
Our employee benefit product suite is focused on small and medium-sized businesses seeking simple, technology-driven employee benefits management. We built the employee benefits business based on feedback from brokers and employers, ensuring the business’ relevance to the market we address. We are committed to continuously evolving our product suite and technology platform to meet market needs.
Distribution
Our Employee Benefits’ solutions are distributed through the traditional broker channel, strategic partnerships (medical partners, PEOs, and associations), General Agencies, TPAs and Equitable Advisors.
Competition
The employee benefits space is a competitive environment. The main factors of competition include price, quality of customer service and claims management, technological capabilities, quality of distribution and financial strength ratings. In this market, we compete with several companies offering similar products. In addition, there is competition in attracting brokers to actively market our products. Key competitive factors in attracting brokers include product offerings and features, financial strength, support services and compensation.
Underwriting
We manage the underwriting process to facilitate quality sales and serve the needs of our customers, while supporting our financial strength and business objectives. The application of our underwriting guidelines is continuously monitored through internal underwriting controls and audits to achieve high standards of underwriting and consistency.
Pricing and Fees
Employee benefits pricing reflects the claims experience and the risk characteristics of each group. We set appropriate plans for the group based on demographic information and, for larger groups, also evaluate the experience of the group. The claims experience is reviewed at the time of policy issuance and during the renewal timeframes, resulting in periodic pricing adjustments at the group level.
Reinsurance
We reinsure our group life, disability, critical illness, and accident products. These treaties include both quota share reinsurance and excess of loss. Specifics of each treaty vary by product and support our risk management objectives.
Corporate and Other
Corporate and Other includes certain of our financing and investment expenses. It also includes: the Equitable Advisors broker-dealer business, Closed Block, run-off group pension business, run-off health business, benefit plans for our employees and certain unallocated items, including capital and related investments, interest expense and corporate expense. AB’s results of
37
Table of Contents
operations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.
Equitable Advisors Broker-Dealer Business
Equitable Advisors provides financial planning and advice, insurance and savings solutions, as well as full-service brokerage services through our financial advisors who have access to a broad selection of both affiliated and non-affiliated products to help clients meet their financial needs. While the revenue from retirement and protection products sold through Equitable Advisors is recognized within the Individual Retirement, Group Retirement and Protection Solutions segments, Corporate and Other includes revenue from the AUA of the Equitable Advisors broker-dealer business. As of December 31, 2021, the Equitable Advisors broker-dealer business included $83 billion in AUA.
Closed Block
In connection with the demutualization of Equitable Financial in 1992, the Closed Block was established for the benefit of certain classes of individual participating policies for which Equitable Financial had a dividend scale payable in 1991 and which were in force on that date. Assets were allocated to the Closed Block in an amount which, together with anticipated revenues from policies included in the Closed Block, was reasonably expected to be sufficient to support such business, including provisions for the payment of claims, certain expenses and taxes, and for the continuation of dividend scales payable in 1991, assuming the experience underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the holders of policies included in the Closed Block and will not revert to the benefit of the Company. The plan of demutualization prohibits the reallocation, transfer, borrowing or lending of assets between the Closed Block and other portions of the General Account, any of our Separate Accounts or to any affiliate of ours without the approval of the NYDFS. Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the General Account. The excess of Closed Block liabilities over Closed Block assets represents the expected future post-tax contribution from the Closed Block which would be recognized in income over the period the policies and contracts in the Closed Block remain in force.
For additional information on the Closed Block, see Note 6 of the Notes to these Consolidated Financial Statements.
Equitable Investment Management
EIMG is the investment manager and formerly the administrator for our proprietary variable funds. On June 22, 2021, Equitable Holdings completed the formation of Equitable Investment Management, LLC, (“EIM”, and collectively with EIMG, “Equitable Investment Management”), a wholly owned indirect subsidiary of Holdings. Effective August 1, 2021, the Board of Trustees of EQAT, EQ Premier VIP and 1290 Funds (each, a “Trust” and collectively, the “Trusts”) terminated EIMG as administrator of the Trusts, and EIM entered into certain administrative agreements with each Trust. In addition, on October 1, 2021, Equitable Financial entered into an investment advisory and management agreement by which EIM became the investment manager for the Equitable Financial’s general account portfolio.
Equitable Investment Management supports each of our retirement and protection businesses. Accordingly, Equitable Investment Management results are embedded in the Individual Retirement, Group Retirement and Protection Solutions segments. EIMG helps add value and marketing appeal to our retirement and protection solutions products by bringing investment management expertise and specialized strategies to the underlying investment lineup of each product. In addition, by advising on an attractive array of proprietary investment portfolios (each, a “Portfolio,” and together, the “Portfolios”), EIMG brings investment acumen, financial controls and economies of scale to the construction of underlying investment options for our products.
EIMG provides investment management to proprietary investment vehicles sponsored by the Company, including investment companies that are underlying investment options for our variable insurance and annuity products. EIMG is registered as an investment adviser under the Investment Advisers Act. EIMG serves as the investment adviser to each Trust —and to two private investment trusts established in the Cayman Islands. Each Trust and private investment trusts is a “series” type of trust with multiple Portfolios. EIMG provides discretionary investment management services to the Portfolios, including, among other things, (1) portfolio management services for the Portfolios; (2) selecting, monitoring and overseeing investment sub-advisers; and (3) developing and executing asset allocation strategies for multi-advised Portfolios and Portfolios structured as funds-of-funds. EIMG is further charged with ensuring that the other parts of the Company that interact with the Trusts, such as product management, the distribution system and the financial organization, have a specific point of contact.
38
Table of Contents
EIMG has a variety of responsibilities for the management of its investment company clients. One of EIMG’s primary responsibilities is to provide clients with portfolio management and investment advisory services, principally by reviewing whether to appoint, dismiss or replace sub-advisers to each Portfolio, and thereafter monitoring and reviewing each sub-adviser’s performance through qualitative and quantitative analysis, as well as periodic in-person, telephonic and written consultations with the sub-advisers. Currently, EIMG has entered into sub-advisory agreements with more than 45 different sub-advisers, including AB. Another primary responsibility of EIMG is to develop and monitor the investment program of each Portfolio, including Portfolio investment objectives, policies and asset allocations for the Portfolios, select investments for Portfolios (or portions thereof) for which it provides direct investment selection services, and ensure that investments and asset allocations are consistent with the guidelines that have been approved by clients.
EIM provides administrative services to the Portfolios effective August 1, 2021. The administrative services that EIM provides to the Portfolios include, among others, coordination of each Portfolio’s audit, financial statements and tax returns; expense management and budgeting; legal administrative services and compliance monitoring; portfolio accounting services, including daily net asset value accounting; risk management; oversight of proxy voting procedures and an anti-money laundering program.
EIM also provides investment management services to the Equitable Financial’s General Account portfolio. EIM provides non-discretionary investment advisory and asset management services including, but not limited to, providing investment advice on strategic investment management activities, asset strategies through affiliated and unaffiliated asset managers, strategic oversight of the General Account portfolio, portfolio management, yield/duration optimization, asset liability management, asset allocation, liquidity and close alignment to business strategies, as well as advising on other services in accordance with the investment advisory and management agreement. Subject to oversight and supervision by EIM, EIM may delegate any of its duties with respect to some or all of the assets of the General Account to a sub-adviser.
Regulation
Insurance Regulation
Our insurance subsidiaries are licensed to transact insurance business and are subject to extensive regulation and supervision by insurance regulators, in all 50 states of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and nine of Canada’s thirteen provinces and territories. The primary regulator of an insurance company, however, is located in its state of domicile. Equitable Financial is domiciled in New York and is primarily regulated by the superintendent of the NYDFS. Equitable America and EQ AZ Life Re are domiciled in Arizona and are primarily regulated by the Director of Insurance of the Arizona Department of Insurance and Financial Institutions. Equitable L&A is domiciled in Colorado and is primarily regulated by the Commissioner of Insurance of the Colorado Division of Insurance. The extent of regulation by jurisdiction varies, but most jurisdictions have laws and regulations governing the financial aspects and business conduct of insurers. State laws in the United States grant insurance regulatory authorities broad administrative powers with respect to, among other things, licensing companies to transact business, sales practices, establishing statutory capital and reserve requirements and solvency standards, reinsurance and hedging, protecting privacy, regulating advertising, restricting the payment of dividends and other transactions between affiliates, permitted types and concentrations of investments and business conduct to be maintained by insurance companies as well as agent and insurance producer licensing, and, to the extent applicable to the particular type of insurance, approval or filing of policy forms and rates. Insurance regulators have the discretionary authority to limit or prohibit new issuances of business to policyholders within their jurisdictions when, in their judgment, such regulators determine that the issuing company is not maintaining adequate statutory surplus or capital. Additionally, the New York Insurance Law limits sales commissions and certain other marketing expenses that Equitable Financial may incur.
Supervisory agencies in each of the jurisdictions in which we do business may conduct regular or targeted examinations of our operations and accounts and make requests for particular information from us. For example, periodic financial examinations of the books, records, accounts and business practices of insurers domiciled in their states are generally conducted by such supervisory agencies every three to five years. From time to time, regulators raise issues during examinations or audits of us that could, if determined adversely, have a material adverse effect on us. In addition, the interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact, particularly in areas such as accounting or statutory reserve requirements. In addition to oversight by state insurance regulators in recent years, the insurance industry has seen an increase in inquiries from state attorneys general and other state officials regarding compliance with certain state insurance, securities and other applicable laws. We have received and responded to such inquiries from time to time. For additional information on legal and regulatory risks, see “Risk Factors—Legal and Regulatory Risks.”
39
Table of Contents
Each of our insurance subsidiaries is required to file detailed annual and, with the exception of EQ AZ Life Re, quarterly financial statements, prepared on a statutory accounting basis or in accordance with other accounting practices prescribed or permitted by the applicable regulator, with supervisory agencies in each of the jurisdictions in which such subsidiary does business. The NAIC has approved a series of uniform SAP that has been adopted by all state insurance regulators, in some cases with certain modifications. As a basis of accounting, SAP was developed to monitor and regulate the solvency of insurance companies. In developing SAP, insurance regulators were primarily concerned with ensuring an insurer’s ability to pay all its current and future obligations to policyholders. As a result, statutory accounting focuses on conservatively valuing the assets and liabilities of insurers, generally in accordance with standards specified by the insurer’s domiciliary state. The values for assets, liabilities and equity reflected in financial statements prepared in accordance with U.S. GAAP are usually different from those reflected in financial statements prepared under SAP. See Note 18 of the Notes to these Consolidated Financial Statements.
Holding Company and Shareholder Dividend Regulation
All states regulate transactions between an insurer and its affiliates under insurance holding company acts. The insurance holding company laws and regulations vary from jurisdiction to jurisdiction, but generally require that all transactions affecting insurers within a holding company system be fair and reasonable and, in many cases, require prior notice and approval or non-disapproval by the state’s insurance regulator.
The insurance holding company laws and regulations generally also require a controlled insurance company (i.e., an insurer that is a subsidiary of an insurance holding company) to register and file with state insurance regulatory authorities certain reports, including information concerning its capital structure, ownership, financial condition, certain intercompany transactions and general business operations. States generally require the ultimate controlling person of a U.S. insurer to file an annual enterprise risk report with the lead state of the insurance holding company system identifying risks likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.
State insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance company subsidiaries to their parent companies, as well as on transactions between an insurer and its affiliates. Under the New York insurance laws, which are applicable to Equitable Financial, a domestic stock life insurer may not, without prior approval of the NYDFS, pay an ordinary dividend to its stockholders exceeding an amount calculated based on a statutory formula (“Ordinary Dividend”). Dividends in excess of this amount require the insurer to file a notice of its intent to declare the dividends with the NYDFS and obtain prior approval or non-disapproval from the NYDFS with respect to such dividends (“Extraordinary Dividend”). Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any Ordinary Dividend that exceeds the Ordinary Dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).
Other states have limitations on dividends similar to New York’s, providing that dividends in excess of prescribed limits, based on prior year’s earnings and surplus of the insurance company, established by applicable state regulation, are considered to be extraordinary dividends and require explicit approval from the applicable state regulator. In addition, the insurance laws of some states require that any dividend to a domestic insurance company’s stockholders be paid from the insurer’s earned surplus or that prior approval or non-disapproval be obtained from the state’s domiciliary insurance regulator for any dividend that would be paid from other than the insurer’s earned surplus. As a holding company, we depend on dividends from our subsidiaries to meet our obligations. For additional information on shareholder dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
State insurance holding company laws and regulations also regulate changes in control. State laws generally provide that no person, corporation or other entity may acquire control of a domestic insurance company, or any parent company of such insurance company, without the prior approval of the insurance company’s domiciliary state insurance regulator. Generally, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired “control” of the company. This statutory presumption may be rebutted by a showing that control does not exist in fact. State insurance regulators, however, may find that “control” exists in circumstances in which a person owns or controls, directly or indirectly, less than 10% of the voting securities.
The laws and regulations regarding acquisition of control transactions may discourage potential acquisition proposals and may delay or prevent a change of control involving us, including through unsolicited transactions that some of our shareholders might consider desirable.
40
Table of Contents
NAIC
The mandate of the NAIC is to benefit state insurance regulatory authorities and consumers by promulgating model insurance laws and regulations for adoption by the states. The NAIC has established statutory accounting principles set forth in its Manual. However, a state may have adopted or in the future may adopt statutory accounting principles that differ from the Manual. Changes to the Manual or states’ adoption of prescribed differences to the Manual may impact the statutory capital and surplus of our U.S. insurance companies.
The NAIC’s Risk Management and Own Risk and Solvency Assessment Model Act (“ORSA”), which has been enacted by our insurance subsidiaries’ domiciliary states requires insurers to maintain a mid-20s% debt-to-capital ratio going forward.risk management framework and conduct an internal risk and solvency assessment of the insurer’s material risks in normal and stressed environments. The assessment is documented in a confidential annual ORSA summary report, a copy of which must be made available to regulators as required or upon request.
The NAIC adopted the Corporate Governance Annual Disclosure Model Act, which has been adopted by our insurance subsidiaries’ domiciliary states, requires insurers to annually file detailed information regarding their corporate governance policies.
The NAIC amended the Standard Valuation Law to require a principle-based approach to reserving for life and annuity contracts, which resulted in corresponding amendments to the NAIC’s Valuation Manual (the “Valuation Manual”). Principle-based reserving is designed to better address reserving for life insurance and annuity products. It became effective on January 1, 2017 in the states where the amended Standard Valuation Law and Valuation Manual had been adopted, which was followed by a three-year phase-in period that ended on January 1, 2020. Principle-based reserving has been adopted by our insurance subsidiaries’ domiciliary states, although in New York, principle-based reserving became effective with the adoption of Regulation 213, which differs from the NAIC Standard Valuation Law, as discussed further below.
The NAIC has been focused on a macro-prudential initiative since 2017, that is intended to enhance risk identification efforts by building on the state-based regulation system through proposed potential enhancements in supervisory practices related to liquidity, recovery and resolution, capital stress testing and counterparty exposure concentrations for life insurers. In December 2020, the NAIC adopted amendments to the Model Holding Company Act and Regulation that implement requirements related to a liquidity stress-testing framework for certain large U.S. life insurers and insurance groups (based on amounts of certain types of business written or material exposure to certain investment transactions, such as derivatives and securities lending) that will be used as a regulatory tool. These amendments have to be adopted by state legislatures to become effective, including our insurance subsidiaries’ domiciliary states. We cannot predict whether state legislatures will adopt the amendments or what impact they would have enhancedon the Company.
The NAIC has also developed a group capital calculation tool using an RBC aggregation methodology for all entities within the insurance holding company system, including non-U.S. entities. The group capital calculation will provide U.S. solvency regulators with an additional analytical tool for conducting group-wide supervision. The NAIC’s amendments to the Model Holding Company Act and Regulation in 2020 also implement the Group Capital Calculation Template and Instructions as well as the annual filing requirement for the group capital calculation. These amendments have to be adopted by state legislatures to become effective, as discussed above.
Captive Reinsurance Regulation and Variable Annuity Capital Standards
We use an affiliated captive reinsurer as part of our internalcapital management strategy. During the last few years, the NAIC and certain state regulators, including the NYDFS, have been scrutinizing insurance companies’ use of affiliated captive reinsurers or offshore entities.
The NAIC adopted a revised preamble to the NAIC accreditation standards (the “Standard”), effective as of January 1, 2016, that applies the Standard to captive insurers which assume level premium term life insurance (“XXX”) business and universal life with secondary guarantees (“AXXX”) business. The NAIC also approved a regulatory framework, the XXX/AXXX Reinsurance Framework, for XXX/AXXX transactions. The framework requires more disclosure of an insurer’s use of captives in its statutory financial statements and narrows the types of assets permitted to back statutory reserves that are required to support the insurer’s future obligations. The XXX/AXXX Reinsurance Framework was implemented through an actuarial guideline (“AG 48”), which requires the actuary of the ceding insurer that opines on the insurer’s reserves to issue a qualified opinion if the framework is not followed. AG 48 applies prospectively, so that XXX/AXXX captives are not subject to AG 48 if reinsured policies were issued prior to January 1, 2015 and ceded so that they were part of a reinsurance arrangement as of December 31, 2014, as is the case for the XXX business and AXXX business reinsured by our Arizona
41
Table of Contents
captive. The Standard is satisfied if the applicable reinsurance transaction satisfies the XXX/AXXX Reinsurance Framework requirements. The NAIC also adopted the Term and Universal Life Insurance Reserving Financing Model Regulation which contains the same substantive requirements as AG 48, as amended by the NAIC, and it establishes uniform, national standards governing reserve financing arrangements pertaining to the term life and universal life insurance policies with secondary guarantees. The model regulation has not yet been adopted by our insurance subsidiaries’ domiciliary states, although it will become an NAIC accreditation standard as of September 1, 2022.
The NAIC adopted a new framework for variable annuity captive reinsurance transactions that became operational in 2020, which includes reforms that improve the statutory reserve and RBC framework for insurance companies that sell variable annuity products. Among other changes, the framework includes new prescriptions for reflecting hedge effectiveness, investment returns, interest rates, mortality and policyholder behavior in calculating statutory reserves and RBC. Overall, we believe the NAIC reform has moved variable annuity capital standards towards an economic model to orientframework which is consistent with how we manage our business. The Company adopted the company more toward U.S. regulatoryNAIC reserve and capital frameworksframework for the year ended December 31, 2019.
As noted above, New York’s Regulation 213, which was adopted in 2019 and awaysubsequently amended by the NYDFS, differs from the European Solvency II framework. Product pricing, new portfolio investmentsNAIC’s variable annuity reserve and capital distribution decisionsframework described above. Regulation 213 does not materially affect Holdings’ GAAP financial condition, results of operations or stockholders’ equity. However, absent management action, Regulation 213 will require Holdings’ principal insurance subsidiary, Equitable Financial, to carry statutory basis reserves for its variable annuity contract obligations equal to the greater of those required under (i) the NAIC standard or (ii) a revised version of the NYDFS requirement in effect prior to the adoption of the regulation’s first amendment for contracts issued prior to January 1, 2020, and for policies issued after that date a new standard that we believe is more conservative than the NAIC standard. Absent management action, Regulation 213 will (i) negatively impact Equitable Financial’s surplus level and RBC ratio and (ii) materially and adversely affect Equitable Financial’s dividend capacity from 2021 and moving forward. These impacts would be more adverse in periods of rising equity and/or interest rate markets and they were exacerbated upon closing of the Venerable Transaction. As a holding company, Holdings relies on dividends and other payments from its subsidiaries and, accordingly, any material limitation on Equitable Financial’s dividend capacity could materially affect Holdings’ ability to return capital to stockholders through dividends and stock repurchases. Equitable Financial was granted a permitted practice by the NYDFS which partially mitigates the Regulation 213 impact of the Venerable Transaction to make the regulation’s application to Equitable Financial more consistent with the NAIC reserve and capital framework. Equitable Financial also entered into a reinsurance agreement with Swiss Re Life & Health America Inc. (“Swiss Re”), effective October 1, 2021, and we completed certain internal restructurings that increase cash flows to Holdings from non-life insurance entities, which further mitigate the impacts from Regulation 213. The Company is considering additional management actions intended to reduce the impact of Regulation 213 which could include seeking further amendment of Regulation 213 or exemptive relief therefrom, changing our underwriting practices to emphasize issuing variable annuity products out of affiliates which are drivennot domiciled in New York, increasing the use of reinsurance and pursuing other corporate transactions. There can be no assurance that any management action individually or collectively will fully mitigate the impact of Regulation 213. Other state insurance regulators may also propose and adopt standards that differ from the NAIC framework. See Note 18 of the Notes to these Consolidated Financial Statements for additional detail on the permitted practice granted by this economicthe NYDFS.
We cannot predict what revisions, if any, will be made to the model laws and regulations relating to the use of captives. Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance and applies retroactively, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our financial condition or results of operations. For additional information on our use of a captive reinsurance company, see “Risk Factors—Legal and Regulatory Risks.”
Surplus and Capital; Risk Based Capital
Insurers are required to maintain their capital and surplus at or above minimum levels. Regulators have discretionary authority, in connection with the continued licensing of insurance companies, to limit or prohibit an insurer’s sales to policyholders if, in their judgment, the regulators determine that such insurer has not maintained the minimum surplus or capital or that the further transaction of business will be hazardous to policyholders. We report our RBC based on a formula calculated by applying factors to various asset, premium and statutory reserve items, as well as taking into account the risk characteristics of the insurer. The major categories of risk involved are asset risk, insurance risk, interest rate risk, market risk and business risk. The formula is used as a regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose RBC ratio does not meet or exceed certain RBC levels. The NAIC has approved RBC revisions for corporate bonds, real estate equity and longevity risk that took effect at year-end 2021 and are expected to have a modest net positive RBC impact on our insurance subsidiaries. As of the date of the most
42
Table of Contents
recent annual statutory financial statements filed with insurance regulators, the RBC of each of our insurance subsidiaries was in excess of each of those RBC levels.
Guaranty Associations and Similar Arrangements
Each of the states in which we are admitted to transact business require life insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay certain contractual insurance benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. The laws are designed to protect policyholders from losses under insurance policies issued by insurance companies that become impaired or insolvent. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer is engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets.
During each of the past five years, the assessments levied against us have not been material.
New York Insurance Regulation 210
In recent years, state regulators have considered whether to apply regulatory standards to the determination and/or readjustment of non-guaranteed elements (“NGEs”) within life insurance policies and annuity contracts that may be adjusted at the insurer’s discretion, such as the cost of insurance for universal life insurance policies and interest crediting rates for life insurance policies and annuity contracts. For example, in March 2018, Insurance Regulation 210 went into effect in New York. That regulation establishes standards for the determination and any readjustment of NGEs, including a prohibition on increasing profit margins on existing business or recouping past losses on such business, and requires advance notice of any adverse change in a NGE to both the NYDFS as well as to affected policyholders. We have developed policies and procedures designed to comply with Regulation 210 and to date, have not seen adverse effects on our business. It is possible, however, that Regulation 210 could adversely impact management’s ability to determine and/or readjust NGEs in the future. Beyond the New York regulation and similar rules enacted in California (that took effect on July 1, 2019) and Texas (that took effect on January 1, 2021), the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
Broker-Dealer and Securities Regulation and Commodities Regulation
We and certain policies and contracts offered by us are subject to regulation under the Federal securities laws administered by the SEC, self-regulatory organizations and under certain state securities laws. These regulators may conduct examinations of our operations, and from time to time make requests for particular information from us.
Certain of our subsidiaries, including Equitable Advisors, Equitable Distributors, SCB LLC and AllianceBernstein Investments, Inc., are registered as broker-dealers (collectively, the “Broker-Dealers”) under the Exchange Act. The Broker-Dealers are subject to extensive regulation by the SEC and are members of, and subject to regulation by, FINRA, a self-regulatory organization subject to SEC oversight. The Broker-Dealers are subject to the capital requirements of the SEC and FINRA, which specify minimum levels of capital (“net capital”) that the Broker-Dealers are required to maintain and also limit the amount of leverage that the Broker-Dealers are able to employ in their businesses. The SEC and FINRA also regulate the sales practices of the Broker-Dealers. In June 2020, Regulation Best Interest (“Regulation BI”) went into effect with respect to recommendation of securities and accounts to “retail customers,” defined generally as natural persons and their investment vehicles. Regulation BI requires the Broker-Dealers, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer to provide specified disclosures and act solely in the retail customer’s best interest. Moreover, in recent years, the SEC and FINRA have intensified their scrutiny of sales practices relating to variable annuities, variable life insurance and alternative investments, among other products. In addition, the Broker-Dealers are also subject to regulation by state securities administrators in those states in which they conduct business, who may also conduct examinations and direct inquiries to the Broker-Dealers.

Certain of our Separate Accounts are registered as investment companies under the Investment Company Act. Separate Accounts interests under certain annuity contracts and insurance policies issued by us are also registered under the Securities Act. EQAT, EQ Premier VIP Trust and 1290 Funds are registered as investment companies under the Investment Company Act and shares offered by these investment companies are also registered under the Securities Act. Many of the investment companies managed by AB, including a variety of mutual funds and other pooled investment vehicles, are registered with the SEC under the Investment Company Act, and, if appropriate, shares of these entities are registered under the Securities Act.
Certain subsidiaries including EIMG, Equitable Advisors and AB and certain of its subsidiaries are registered as investment advisers under the Investment Advisers Act. The investment advisory activities of such registered investment
43
Table of Contents
advisers are subject to various federal and state laws and regulations and to the laws in those foreign countries in which they conduct business. These laws and regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations.
EIMG is registered with the CFTC as a commodity pool operator with respect to certain portfolios and is also a member of the NFA. AB and certain of its subsidiaries are also separately registered with the CFTC as commodity pool operators and commodity trading advisers; SCB LLC is also registered with the CFTC as a commodity introducing broker. The CFTC is a federal independent agency that is responsible for, among other things, the regulation of commodity interests and enforcement of the CEA. The NFA is a self-regulatory organization to which the CFTC has delegated, among other things, the administration and enforcement of commodity regulatory registration requirements and the regulation of its members. As such, EIMG is subject to regulation by the NFA and CFTC and is subject to certain legal requirements and restrictions in the CEA and in the rules and regulations of the CFTC and the rules and by-laws of the NFA on behalf of itself and any commodity pools that it operates, including investor protection requirements and anti-fraud prohibitions, and is subject to periodic inspections and audits by the CFTC and NFA. EIMG is also subject to certain CFTC-mandated disclosure, reporting and record-keeping obligations.
Regulators, including the SEC, FINRA, the CFTC, NFA and state attorneys general, continue to focus attention on various practices in or affecting the investment management and/or mutual fund industries, including portfolio management, valuation, fee break points, and the use of fund assets for distribution.
We and certain of our subsidiaries have provided, and in certain cases continue to provide, information and documents to the SEC, FINRA, the CFTC, NFA, state attorneys general, the NYDFS and other state insurance regulators, and other regulators regarding our compliance with insurance, securities and other laws and regulations regarding the conduct of our businesses. For additional information on regulatory matters, see Note 18 of the Notes to these Consolidated Financial Statements.
The SEC, FINRA, the CFTC and other governmental regulatory authorities may institute administrative or judicial proceedings that may result in censure, fines, the issuance of cease-and-desist orders, trading prohibitions, the suspension or expulsion of a broker-dealer, commodity pool operator, or other type of regulated entity, or member, its officers, registered representatives or employees or other similar sanctions.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Currently, the U.S. federal government does not directly regulate the business of insurance. While the Dodd-Frank Act does not remove primary responsibility for the supervision and regulation of insurance from the states, Title V of the Dodd-Frank Act establishes the FIO within the U.S. Treasury Department and reforms the regulation of the non-admitted property and casualty insurance market and the reinsurance market. The Dodd-Frank Act also established the FSOC, which is authorized to subject non-bank financial companies, including insurers, to supervision by the Federal Reserve and enhanced prudential standards if the FSOC determines that a non-bank financial institution could pose a threat to U.S. financial stability. The FSOC modified the designation process by adopting an activities-based approach for identifying and addressing potential risks to financial stability, and it enhanced the analytical process, engagement and transparency of the designation process.
The FIO has authority that extends to all lines of insurance except health insurance, crop insurance and (unless included with life or annuity components) long-term care insurance. Under the Dodd-Frank Act, the FIO is charged with monitoring all aspects of the insurance industry (including identifying gaps in regulation that could contribute to a systemic crisis), recommending to the FSOC the designation of any insurer and its affiliates as a non-bank financial company subject to oversight by the Board of Governors of the Federal Reserve System (including the administration of stress testing on capital), assisting the Treasury Secretary in negotiating “covered agreements” with non-U.S. governments or regulatory authorities, and, with respect to state insurance laws and regulation, determining whether state insurance measures are pre-empted by such covered agreements.
In addition, the FIO is empowered to request and collect data (including financial data) on and from the insurance industry and insurers (including reinsurers) and their affiliates. In such capacity, the FIO may require an insurer or an affiliate of an insurer to submit such data or information as the FIO may reasonably require. In addition, the FIO’s approval is required to subject a financial company whose largest U.S. subsidiary is an insurer to the special orderly liquidation process outside the federal bankruptcy code, administered by the FDIC pursuant to the Dodd-Frank Act. U.S. insurance subsidiaries of any such financial company, however, would be subject to rehabilitation and liquidation proceedings under state insurance law. The Dodd-Frank Act also reforms the regulation of the non-admitted property/casualty insurance market (commonly referred to as
44
Table of Contents
excess and surplus lines) and the reinsurance markets, including prohibiting the ability of non-domiciliary state insurance regulators to deny credit for reinsurance when recognized by the ceding insurer’s domiciliary state regulator.
Other aspects of our operations could also be affected by the Dodd-Frank Act, including:
Heightened Standards and Safeguards
The FSOC may recommend that state insurance regulators or other regulators apply new or heightened standards and safeguards for activities or practices we and other insurers or other financial services companies engage in if the FSOC determines that those activities or practices could create or increase the risk that significant liquidity, credit or other problems spread among financial companies. We cannot predict whether any such recommendations will be made or their effect on our business, consolidated results of operations or financial condition.
Over-The-Counter Derivatives Regulation
The Dodd-Frank Act includes a framework of regulation for the OTC derivatives markets, which gives authority to the CFTC to regulate “swaps” and the SEC to regulate “security-based swaps.” Swaps include, among other things, OTC derivatives on interest rates, commodities, broad-based securities indexes and currency. Security-based swaps include, among other things, OTC derivatives on single securities, baskets of securities, narrow-based indexes or loans.
The Dodd-Frank Act authorized the SEC and the CFTC to mandate that a substantial portion of OTC derivatives must be executed in regulated markets and be submitted for clearing to regulated clearinghouses and directed the CFTC and SEC to establish documentation, recordkeeping and registration requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap participants for swaps, security-based swaps and specified other derivatives that continued to trade on the OTC market. The Dodd-Frank Act also directed the SEC, CFTC, the Office of the Comptroller of the Currency, the Federal Reserve Board, the FDIC, the Farm Credit Administration, and the Federal Housing Finance Agency (collectively, the “Prudential Regulators”), with respect to the respective entities they regulate, to develop margin rules for OTC derivatives and capital rules for regulated dealers and major participants. The Prudential Regulators completed substantially all of the required regulations by 2017, and the CFTC finalized one of its last remaining rules – the capital rules for swap dealers in July 2020. In December 2019 the SEC finalized and adopted the final set of rules related to security-based swaps, and the rules, including registration of dealers in security-based swaps, became effective on or prior to November 1, 2021.
As a result of the CFTC regulations, several types of CFTC-regulated swaps are required to be traded on swap execution facilities and cleared through a regulated DCO. Swaps and security-based swaps submitted for clearing are subject to minimum initial and variation margin requirements set by the relevant DCO or security-based swap clearing organization. Both swaps and security-based swaps are subject to transaction-reporting requirements.
Under the CFTC’s and SEC’s regulations, swaps and security-based swaps traded by a non-banking entity are currently subject to variation margin requirements as well as, for most entities, initial margin, as mandated by the CFTC and SEC. Under regulations adopted by the Prudential Regulators, both swaps and security-based swaps traded by banking entities are currently subject to variation margin requirements and, for most entities, initial margin requirements as well. Initial margin requirements imposed by the CFTC, the SEC and the Prudential Regulators are being phased in over a period of time. As a result, initial margin requirements took effect in September 2021 (which is the applicable date for us) and for smaller counterparties will take effect beginning September 2022. The CFTC regulations require us to post and collect variation margin (comprised of specified liquid instruments and subject to a required haircut) in connection with trading of swaps with CFTC-regulated swap dealers, and the regulations adopted by the Prudential Regulators require us to post and collect variation margin when trading either swaps or security-based swaps with a dealer regulated by the Prudential Regulators. SEC regulations require posting and collection of variation margin by both us and our counterparty but require posting of initial margin only by the entity facing the broker-dealer or security-based swap dealer but not the broker-dealer or security-based swap dealer itself.
In addition, regulations adopted by the Prudential Regulators that became effective in 2019 require certain bank-regulated counterparties and certain of their affiliates to include in qualified financial contracts, including many derivatives contracts, repurchase agreements and securities lending agreements, terms that delay or restrict the rights of counterparties, such as us, to terminate such contracts, foreclose upon collateral, exercise other default rights or restrict transfers of affiliate credit enhancements (such as guarantees) in the event that the bank-regulated counterparty and/or its affiliates are subject to certain types of resolution or insolvency proceedings. It is possible that these requirements in the market, could adversely affect our ability to terminate existing derivatives agreements or to realize amounts to be received under such agreements. The Dodd-Frank Act and related federal regulations and foreign derivatives requirements expose us to operational, compliance, execution and other risks, including central counterparty insolvency risk.
45
Table of Contents
We use derivatives to mitigate a wide range of risks in connection with our business, including the impact of increased benefit exposures from certain variable annuity products that offer GMxB features. We have always been subject to the risk that our hedging and other management procedures might prove ineffective in reducing the risks to which insurance policies expose us or that unanticipated policyholder behavior or mortality, combined with adverse market events, could produce economic solvency, honorlosses beyond the scope of the risk management techniques employed. Any such losses could be increased by higher costs of writing derivatives (including customized derivatives) and the reduced availability of customized derivatives that might result from the enactment and implementation of new regulations.
Broker-Dealer Regulation
The Dodd-Frank Act authorized the SEC to promulgate rules to provide that the standard of conduct for all broker-dealers, when providing personalized investment advice about securities to retail customers. In response, the SEC adopted Regulation BI, which became effective on June 30, 2020. Regulation BI also requires registered broker dealers and investment advisers to retail customers to file a client relationship summary (“Form CRS”) with the SEC and deliver copies of Form CRS to their retail customers. Form CRS provides disclosures from the broker-dealer or investment adviser about the applicable standard of conduct and conflicts of interest. The intent of these rules is to impose on broker-dealers an enhanced duty of care to their customers similar to that which applies to investment advisers under existing law. We have developed systems and processes and put in place policies and procedures to ensure that we are in compliance with Regulation Best Interest. In addition, FINRA and the SEC are currently focusing on examining compliance efforts with Regulation BI by broker-dealers.
Investment Adviser Regulation
Changes to the marketing requirements for registered investment advisers were adopted in December 2020 and become effective in November 2022. The changes amend existing Rule 206(4)-1 under the Investment Advisers Act and incorporate aspects of Investment Advisers Act Rule 206(4)-3, which the SEC simultaneously rescinded in its entirety. The amended rules impose a number of new requirements that will affect marketing of certain advisory products, including, in particular, private funds. We are currently working diligently to implement policies and procedures on or prior to the effective date for the amended rule.
Fiduciary Rules / “Best Interest” Standards of Conduct
We provide certain products and services to employee benefit plans that are subject to ERISA and certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”). As such, our activities are subject to the restrictions imposed by ERISA and the Code, including the requirement that fiduciaries must perform their duties solely in the interests of plan participants and beneficiaries, and fiduciaries may not cause or permit a covered plan to engage in certain prohibited transactions with persons (parties-in-interest) who have certain relationships with respect to such plans. The applicable provisions of ERISA and the Code are subject to enforcement by the DOL, the IRS, and the Pension Benefit Guaranty Corporation.
In the wake of the March 2018 federal appeals court decision to vacate the 2016 DOL Fiduciary Rule, the DOL announced its intention to issue revised fiduciary investment advice regulations. In December 2020, the DOL finalized a “best interest” prohibited transaction exemption (“PTE 2020-02”) for investment advice fiduciaries under ERISA, and the Code, which now has an enforcement date of January 31, 2022. PTE 2020-02 includes the DOL’s interpretation of the five-part test under ERISA and the Code for determining fiduciary status that was in effect prior to the 2016 DOL Fiduciary Rule, although the scope of PTE 2020-02 extends to rollover transactions if they constitute “investment advice” under the five-part test. If fiduciary status is triggered, PTE 2020-02 prescribes a set of impartial conduct standards and disclosure obligations that are intended to be consistent with the SEC’s Regulation Best Interest. We have devoted significant time and resources towards coming into compliance with PTE 2020-02, which became effective on February 16, 2021, but do not expect the new rules to have a material impact on our business. However, in June 2021 the DOL updated its formal regulatory agenda to include issuance of a proposed rule-making by year-end 2021 that would further amend its fiduciary regulations, including PTE 2020-02 and, possibly, other existing prohibited transaction exemptions.

In addition, in January 2020, the NAIC revised the Suitability in Annuity Transactions Model Regulation to apply a best interest of the consumer standard on insurance producers’ annuity recommendations and to require that insurers supervise such recommendations. Several state regulators have adopted the revised regulation, including in one of our insurance subsidiaries’ domiciliary states, while others are currently considering doing so or instead issuing standalone impartial conduct standards applicable to annuity and, in some cases, life insurance transactions. For example, the NYDFS amended Regulation 187 - Suitability and Best Interests in Life Insurance and Annuity Transactions (“Regulation 187”) to add a “best interest” standard for recommendations regarding the sale of life insurance and annuity products in New York. In April 2021, the Appellate
46
Table of Contents
Division of the NYS Supreme Court, Third Department, overturned Regulation 187 for being unconstitutionally vague. The NYDFS has appealed this ruling to the New York State Court of Appeals, which automatically granted a stay, meaning that Regulation 187 remains in effect pending a decision by the Court of Appeals. We have developed our compliance framework for Regulation 187 with respect to annuity sales as well as our life insurance business. Meanwhile, state regulators and legislatures in Nevada and Maryland have proposed measures that would make broker-dealers, sales agents, and investment advisers and their representatives subject to a fiduciary duty when providing products and services to customers, including pension plans and IRAs. Massachusetts has adopted such a regulation applying a fiduciary duty standard to broker-dealers and their agents which, although not applying to insurance product (including variable annuity) sales, did require us to make changes to certain policies and procedures to ensure compliance. Beyond the New York and Massachusetts regulations, the likelihood of enactment of any such other standalone state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.

In the approximately 18 months since adoption of Regulation BI, the SEC staff has published guidance regarding Regulation BI, including recent guidance indicating that recommendations of instruments having LIBOR-linked exposure (and using as an example, a fixed income mutual fund). In March 2021, the SEC’s Division of Examinations indicated that compliance with Regulation BI is at the top of its list of 2021 examination priorities. We continue to monitor our compliance with Regulation BI.
Climate Risks
The topic of climate risk has come under increased scrutiny by insurance regulators. In September 2020, the NYDFS announced that it expects New York domestic and foreign authorized insurers, which applies to Equitable Financial, to integrate financial risks from climate change into their governance frameworks, risk management processes, and business strategies.
In addition, the NYDFS issued guidance on November 15, 2021 regarding its expectations for New York domestic insurers, such as Equitable Financial, related to the management of financial risks from climate change. Insurers are expected to manage these risks by outlining actions that are proportionate to the nature, scale and complexity of their businesses. For instance, the guidance states that an insurer should: (i) incorporate climate risk into its financial risk management (e.g., a company’s ORSA should address climate risk); (ii) manage climate risk through its enterprise risk management functions and ensure that its organizational structure clearly defines roles and responsibilities related to managing such risk; (iii) use scenario analysis when developing business strategies and identifying risks; and (iv) incorporate the management of climate risk into its corporate governance structure at the group or insurer entity level (i.e., an insurer’s board of directors should understand climate risk and oversee the team responsible for managing such risk). In terms of timing, a company must have specific plans to implement the NYDFS’s expectations related to board governance and organizational structure by August 15, 2022, and the NYDFS intends to issue additional guidance on the timing for implementing the more complex expectations.
The NYDFS also adopted an amendment to the regulation that governs enterprise risk management, effective as of August 13, 2021, that requires certain additional risks, including climate change risk, to be included in an insurance group’s enterprise risk management function.
NYDFS Guidance on Diversity and Corporate Governance
In March 2021, the NYDFS issued a circular letter which states that the NYDFS expects the insurers that it regulates, such as Equitable Financial, to make diversity of their leadership a business priority and a key element of their corporate governance. During the summer of 2021, the NYDFS collected data from insurers that met certain premium thresholds in New York, including Equitable Financial, regarding the diversity of their corporate boards and management. The NYDFS plans to publish this data on an aggregate basis in order to measure progress in the industry, and it will include diversity-related questions in its examination process starting in 2022. We are considering the NYDFS’ guidance as part of our commitment to diversity and inclusion.
International Regulation
Many of AB’s subsidiaries are subject to the oversight of regulatory authorities in jurisdictions outside of the United States in which they operate, including the Ontario Securities Commission, the Investment Industry Regulatory Organization of Canada, the European Securities and Markets Authority, the Financial Conduct Authority in the U.K., the CSSF in Luxembourg, the Financial Services Agency in Japan, the Securities & Futures Commission in Hong Kong, the Monetary Authority of Singapore, the Financial Services Commission in South Korea, the Financial Supervisory Commission in Taiwan and the Securities and Exchange Board of India. While these regulatory requirements often may be comparable to the requirements of the SEC and other U.S. regulators, they are sometimes more restrictive and may cause AB to incur substantial expenditures of time and money related to AB’s compliance efforts.
47
Table of Contents
Federal Tax Legislation, Regulation and Administration
Although we cannot predict what legislative, regulatory, or administrative changes may or may not occur with respect to the federal tax law, we nevertheless endeavor to consider the possible ramifications of such changes on the profitability of our business and the attractiveness of our products to consumers. In this regard, we analyze multiple streams of information, including those described below.
Transition from LIBOR
Global regulators have indicated that publication of LIBOR is expected to cease after June 2023. Publication of one week and two-month USD LIBOR settings terminated at the end of December 2021 as did publication of non-USD LIBOR. Publication of the remaining USD LIBOR settings (overnight and one, three, six and 12 month USD LIBOR) is expected to continue until the end of June 2023. U.S. bank regulators have requested all U.S. regulated banks to stop extending USD LIBOR loans after the end of 2021.
The New York legislature passed legislation in 2021 that provides a fallback of the Secured Overnight Financing Rate (“SOFR”) for contracts governed by New York law and for which a fallback is not otherwise specified. The U.S. House of Representatives passed a similar bill governing instruments that may not apply New York law. That bill has been sent to the U.S. Senate.
Recent guidance from the SEC staff noted that, in light of the now-certain transition away from LIBOR, financial professionals and financial services companies must: consider the implications for portfolio holdings and hedges, including the presence of a robust fallback rate; disclosure with respect to the transition and the likely impact that the LIBOR transition will have on valuation measurements using LIBOR as an input; and operational complexities that the LIBOR transaction is likely to introduce, including required IT system changes.
We have exposure to USD LIBOR through loans, derivatives, investments and financing operations and there are references to LIBOR in certain product prospectuses. We have evaluated our existing credit agreements, portfolio holdings, derivatives and other investments and identified all contracts for which there is not a robust fallback rate specified and have either identified replacement rates, including SOFR, as an adequate fallback for these instruments or are in the process of addressing the lack of the fallback by seeking to dispose of the instrument or negotiate fallback terms.As a general matter we include fallback terms in all new agreements entered into by us and products we issue that replace LIBOR with a replacement rate, including SOFR, upon discontinuation of LIBOR. Existing contract fallback provisions, and whether, how, and when we and others develop and adopt alternative reference rates, will influence the effect of any changes to or discontinuation of LIBOR on us and our subsidiaries and affiliates. Discontinuation of LIBOR could have a materially adverse impact on us depending upon how the transition evolves. We continue to monitor both market and regulatory changes in order to prepare for the discontinuation of the LIBOR benchmark.
Enacted Legislation
At present, the federal tax laws generally permit certain holders of life insurance and annuity products to defer taxation on the build-up of value within such products (commonly referred to as “inside build-up”) until payments are made to the policyholders or other beneficiaries. From time to time, Congress considers legislation that could enhance or reduce (or eliminate) the benefit of tax deferral on some life insurance and annuity products. The modification or elimination of this tax-favored status could also reduce demand for our products. In addition, if the treatment of earnings accrued inside an annuity contract was changed prospectively, and the tax-favored status of existing contracts was grandfathered, holders of existing contracts would be less likely to surrender or rollover their contracts. These changes could reduce our earnings and negatively impact our business.
Regulatory and Other Administrative Guidance from the Treasury Department and the IRS
Regulatory and other administrative guidance from the Treasury Department and the IRS also could impact the amount of federal tax that we pay. For example, the adoption of “principles based” approaches for calculating statutory reserves may lead the Treasury Department and the IRS to issue guidance that changes the way that deductible insurance reserves are determined, potentially reducing future tax deductions for us.
Privacy and Security of Customer Information and Cybersecurity Regulation
We are subject to federal and state laws and regulations that require financial institutions to protect the security and confidentiality of customer information, and to notify customers about their policies and practices relating to their collection
48
Table of Contents
and disclosure of customer information and their practices related to protecting the security and confidentiality of that information. We maintain, and we require our third-party service providers to maintain, security controls designed to ensure the integrity, confidentiality, and availability of our systems and the confidential and sensitive information we maintain and process. We have adopted a privacy policy outlining the Company’s procedures and practices relating to the collection, maintenance, disclosure, disposal, and protection of customer information, including personal information. As required by law, subject to certain exceptions, a copy of the privacy policy is mailed to customers on an annual basis. Federal and state laws generally require that we provide notice to affected individuals, law enforcement, regulators and/or potentially others if there is a situation in which customer information is disclosed to and/or accessed or acquired by unauthorized third parties. Federal regulations require financial institutions to implement programs to protect against unauthorized access to this customer information, and to detect, prevent and mitigate identity theft. Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail or fax messages to both consumers and customers, and also regulate the permissible uses of certain categories of customer information.
The violation of data privacy and data protection laws and regulations or the failure to implement and maintain reasonable and effective cybersecurity programs may result in significant fines, remediation costs and regulatory enforcement actions. Moreover, a cybersecurity incident that disrupts critical operations and customer services could expose the Company to litigation, losses, and reputational damage. As cyber threats continue to evolve, regulators continue to develop new requirements to account for risk exposure, including specific cybersecurity safeguards and program oversight. As such, it may be expected that legislation considered by either the U.S. Congress and/or state legislatures could create additional and/or more burdensome obligations relating to the use and protection of customer information.
We are subject to the rules and regulations of the NYDFS which adopted a cybersecurity regulation for financial services institutions, including banking and insurance entities, under its jurisdiction. The regulation requires these entities to, among other things, assess risks associated with their information systems and establish and maintain a cybersecurity program reasonably designed to protect such systems and consumers’ private data. We have adopted a cybersecurity policy outlining our policies and procedures for the protection of our information systems and information stored on those systems that comports with the regulation. In addition to New York’s cybersecurity regulation, the NAIC adopted the Insurance Data Security Model Law in October 2017, establishing standards for data security and for the investigation and notification of insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information. Certain states have adopted the model law, although it has not been adopted by our insurance subsidiaries’ domiciliary states. We expect that additional states will also adopt the model law, even though it is not an NAIC accreditation standard, but we cannot predict whether or not, or in what form or when, they will do so. Under the model law, companies that are compliant with the NYDFS cybersecurity regulation are deemed also to be compliant with the model law.
Under the California Consumer Privacy Act (“CCPA”), California residents enjoy the right to know what information a business has collected from them, the sourcing and sharing of that information, and the right to limit certain uses. CCPA also establishes a private right of action with potentially significant statutory damages, whereby businesses that fail to implement reasonable security measures to protect against breaches of personal information could be liable to affected consumers. Certain data processing which is otherwise regulated, including under the Gramm-Leach-Bliley Act, is excluded from the CCPA; however, this is not an entity-wide exclusion. We expect a significant portion of our business will be excepted from the requirements of the CCPA. The California Privacy Rights Act (“CPRA”) amends the CCPA and will come into effect in January 2023. Virginia and Colorado have adopted similar laws, which come into effect in January 2023 and July 2023, respectively, and additional states are considering, and may enact, similar laws or regulations in the near future.

State and federal regulators are increasingly focused on cybersecurity and several have established specific and potentially burdensome requirements. For instance, in October 2021, the Federal Trade Commission announced significant amendments to the Standards for Safeguarding Customer Information Rule (the “Safeguards Rule”) that require financial institutions to implement specific data security measures within their formal information security measures. Failure to comply with new regulation or requirements may result in enforcement action, fines and/or other operational or reputational harms.
Environmental Considerations
Federal, state and local environmental laws and regulations apply to our clientsownership and operation of real property. Inherent in owning and operating real property are the risk of environmental liabilities and the costs of any required clean-up. Under the laws of certain states, contamination of a property may give rise to a lien on the property to secure recovery of the costs of clean-up, which could adversely affect our mortgage lending business. In some states, this lien may have priority over the lien of an existing mortgage against such property. In addition, in some states and under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA, we may be liable, in certain circumstances, as an “owner” or “operator,” for costs of cleaning-up releases or threatened releases of hazardous substances at a property
49
Table of Contents
mortgaged to us. We also risk environmental liability when we foreclose on a property mortgaged to us. However, federal legislation provides for a safe harbor from CERCLA liability for secured lenders, provided that certain requirements are met. Application of various other federal and state environmental laws could also result in the imposition of liability on us for costs associated with environmental hazards.
We routinely conduct environmental assessments prior to making a mortgage loan or taking title to real estate, whether through acquisition for investment or through foreclosure on real estate collateralizing mortgages. We cannot provide attractive risk-adjusted returns forassurance that unexpected environmental liabilities will not arise. However, based on information currently available to us, we believe that any costs associated with compliance with environmental laws and regulations or any clean-up of properties would not have a material adverse effect on our stockholders.consolidated results of operations.
People Strategy
Raising likelihoodIntellectual Property
We rely on a combination of success throughcopyright, trademark, patent and trade secret laws to establish and protect our people strategy. intellectual property rights. We understand that toregard our intellectual property as valuable assets and protect them against infringement.
Human Capital Management
As of December 31, 2021, we had approximately 7,800 full time employees. Of these, approximately 4,100 were employed full-time by AB.
Equitable
To execute our business plan successfully, we need not only a sound business strategy but an equally well-developed people strategy. In addition to ensuring strong alignment across our organization to our goals and strategies, we will continue ourmaintain a long-standing commitment to building a culture of inclusion, professional excellence and continuous learning. We are very pleased to have been recognized as a “Great Place to Work” in 2016, 2017 and 2018 by the Great Place to Work®Work® Institute, an independent workplace authority. Professionalauthority, each year since 2016. We have been awarded a 100% rating by the Human Rights Foundation’s Campaign Corporate Equality Index since 2014.
Looking ahead, we know our clients will continue to face new opportunities and challenges. To meet those needs, and to be able to fully realize our ambitious strategic aspirations, we have adopted a new operating model and mindset that remain uniquely Equitable: our New Ways of Working. Our reasons for embracing this new way forward are clear: we want to innovate and grow, we want to attract the best talent and build a strong pipeline for employee advancement, and we want to better serve our clients. Our New Ways of Working equips us to evolve in ways that enhance innovation, efficiency, client satisfaction and employee engagement by drawing upon five time-tested methodologies: Adaptive Leadership; Outcomes, Objectives & Key Results; Dynamic Enablers; Enterprise Agile; and Design Thinking. It fundamentally changes the way we deliver value and grow as employees and as a company.

Employee Development
Attracting, developing and retaining the best people is crucial to our long-term success and strategy. Accordingly, we offer a number of tools and resources to empower our people to grow and to perform to the best of their abilities. Our tools and resources include educational opportunities such as digital and classroom-style courses on topics ranging from communication skills to product knowledge to inclusive leadership immersion. We also provide tuition reimbursement programs to defray the cost of degree programs. In 2021 we retooled our career models to provide us with a consistent and transparent way to help our people grow, develop and uncover new career opportunities. Under our new career models, each employee’s skills are at the forefront. They can clearly see how their skills are transferrable across the organization so they can shape the career they want. And they can find opportunities — or have opportunities find them — based on the skills they have to contribute. We believe these models will help our employees grow and nurture their own unique skills as they develop a specific career roadmap for the future.
We also support promotion within Equitable, which provides further opportunities for employees to learn, grow and advance in their careers. Among the open positions at Equitable, about 46% on average are filled by internal candidates.
Health and Family Resources
50
Table of Contents
We are committed to the health and safety of our employees, financial professionals and their families. With respect to COVID-19, since the onset of the pandemic, we have been working with employees to provide as much flexibility as possible. All of our locations are open at this time but, with the exception of those considered essential, employees have the option to work remotely or from the office. A large number of our employees and financial professionals continue to work remotely. We continue to monitor the health and safety conditions of all of our corporate locations, and use guidance provided by the CDC to create policies and practices to ensure the safety of our people as we move through the pandemic, including re-entering the workplace, travel, in-person meeting, encouraging vaccinations, masking and social distancing. We have enhanced our listening strategy, broadened our benefits offerings, and developed a synchronized hybrid work model which will be fully implemented when all employees return to work from our office. We also created a centralized location to share the latest updates on health and safety with our employees and financial professionals, and our Chief Medical Director hosted a series of videos that provided COVID updates and answered employees’ questions. We opened a COVID-19 specific hotline with our expert second medical opinion service provider to intake health questions and provide local referrals for Equitable employees, financial professionals and family members.
We offered complimentary membership to an online tutoring service during the school year and hosted a series of interactive employee engagement activities to create connections, support our culture and combat burnout associated with the virtual working environment. We also provide resources to support employees in their family life, including child and elder care support through Bright Horizons, College Coach, financial wellness, adoption support, family and medical leave and paid parental leave of between 8 and 16 weeks. We also introduced Sanvello, an app for stress, anxiety, and depression based on cognitive-behavioral therapy, mindfulness, and wellness. Our Employee Assistance Program provides resources to help employees overcome challenges at home or at work and help them reach their professional and personal goals. This includes six complimentary confidential counseling sessions annually.

Compensation
Rewarding performance is the cornerstone of our “Total Rewards” program. Total Rewards include access to comprehensive benefits programs and the opportunity to share in company results through equity awards. Our benefits portfolio allows eligible employees and financial professionals to elect the right coverage for health needs, to build their wealth and to provide protection for themselves and their families from the unexpected events that might occur along the way. Our Total Rewards package includes, among other things, market-competitive pay, equity award programs and bonuses, healthcare benefits, retirement savings plans, paid time off and family leave, flexible work schedules, an educational assistance program and an employee assistance program and other mental health services.

Diversity, Equity and Inclusion
We believe a more diverse workforce enriches our people’s work experience, helps us better serve clients, and creates a more understanding and inclusive work environment. To drive lasting change, we must deeply understand the issues facing the diverse communities in our company. We are taking an intentional and iterative approach to diversity, equity and inclusion (DEI), listening and applying our learnings as we go.
To build a more inclusive culture, Equitable has developed integrated programs through keynote speakers, events and learning experiences. This effort helps reset behavioral expectations and understanding of DEI-related matters in the workplace. With our courageous conversations, we now have a model where we can talk about race, gender and other topics to support both personal growth and team building. We have hosted conversations about race and racism in America, violence against the Asian American and Pacific Islander (AAPI) community and issues facing our LGBTQ+ colleagues, and have forthcoming conversations planned regarding religious tolerance.
We are committed to transparency when it comes to sharing the diverse composition of our workforce. This commitment is underscored by the public release of Equitable Holdings' EEO-1 Report. We have multiple programs underway to increase employee and financial professional diverse representation. We are focused on creating a support structure to accelerate career advancement opportunities for our diverse colleagues. To do this, we identify opportunities and challenges and create programs to help our underrepresented communities overcome barriers.

51
Table of Contents
Our 11 Employee Resource Groups and 5 Field Advisory Councils play a key role in serving as a community voice to leadership, driving important policy changes and helping to build and shape our DEI strategy. They also create development opportunities for our people, with members working collaboratively to address business challenges and share ideas.
In 2020, we established the CEO Taskforce to Advance Racial Equity. The mission of the Taskforce is to make Equitable the most sought-after employer for Black professionals by building an environment that supports and invests in the careers and well-being of our Black employees and financial professionals. While the Taskforce is currently focused on Black colleagues, the models created are being used to benefit other underrepresented groups.
We're holding ourselves accountable by leveraging our compensation and rewards systems to drive our DE&I goals. Today, DE&I is incorporated into our company STIC metrics through our corporate strategic initiatives, and each of our senior leaders have incorporated DE&I aspirations into their annual goals. For Equitable Advisors, a portion of Executive Vice President compensation is tied to advancing diverse representation.
While we have made progress, we recognize this is long-term journey.

Equitable Foundation
The Equitable Foundation directs the Company’s philanthropic and volunteer activities. The Equitable Foundation gives our employees and financial professionals an opportunity to commit their time and effort to organizations they believe in, as well as supports their efforts through charitable grants and through our company volunteer program, Equitable in Action.
Equitable Foundation has alwaysestablished three key focus areas to guide our social impact efforts, which reflect our broader ESG aspirations and align to enterprise objectives. These areas include: i) advancing racial equity and social justice, ii) building healthy and vibrant communities, and iii) supporting underserved students in the journey to and through secondary education and, ultimately, advancing their career aspirations.
Equitable Excellence, a scholarship program for high school seniors, is the flagship program of Equitable Foundation. In alignment with Equitable’s own mission of helping people achieve financial security so that they can face the future with confidence, the Equitable Excellence Scholarship places an emphasis on empowering students’ future plans so that they can continue to have positive impacts in their community.
Through our matching gifts program, we double the impact of the charitable contributions made by our employees and financial professionals. Eligible donations of $50 or more are matched up to $2,000 per year, per individual. In 2021, Equitable Foundation matched $1.3 million in contributions made to nonprofit organizations nationwide.
AllianceBernstein
As a leading global investment-management and research firm, AB brings together a wide range of insights, expertise and innovations to advance the interests of clients around the world. The intellectual capital of AB’s employees is collectively its most important asset, so the long-term sustainability of AB is heavily dependent on its people. AB is keenly focused on:
•fostering an inclusive culture by incorporating diversity and inclusion in all levels of AB’s business;
•encouraging innovation;
•developing, retaining and recruiting high quality talent; and
•aligning employees’ incentives and risk taking with those of AB.

Talent Acquisition
AB seeks to achieve excellence in business and investment performance by recruiting and hiring a workforce with diversity of thought, backgrounds and experiences. AB believes that diverse and inclusive teams generate better ideas and reach more balanced decisions. AB seeks to leverage the unique backgrounds of its employees to meet the needs of a broad range of clients and engage with the communities in which AB operates. AB engages several external organizations to assist in attracting and recruiting top talent at all levels, with a particular focus on attracting diverse talent. AB has a sizable group of internal human capital associates focused on recruiting, and AB has implemented various human capital initiatives to develop and provide for a balanced workforce.
Employee Engagement
52
Table of Contents
AB believes a workforce is most productive, effective and highly engaged when they feel connected to AB’s business and culture. AB seeks to provide diverse work experiences, professional development opportunities, competitive compensation and benefits, an inclusive and diverse culture and social engagement projects to keep its employees motivated, connected to AB and engaged throughout their careers. AB strives to create a culture of intellectual curiosity and collaboration, creating an environment where its employees can thrive and do their best work. AB fosters growth and advancement through different training avenues to develop skill sets, create opportunities for networking, both internally and externally, and AB encourages internal mobility as a part of its employees' career trajectory. It is important that AB’s employees are not only connected to AB’s business but also to the communities in which AB operates. As such, AB offers many opportunities for its employees to volunteer in the communities in which AB serves.
Diversity and Inclusion
AB continues to believe that diverse and inclusive teams generate better ideas and best serve the needs of its clients. The events of the last two years have provided an unforeseen yet unique opportunity to reflect, adapt and broaden AB’s Diversity & Inclusion (“D&I”) strategy. D&I continues to be a key strategic priority for AB and its ongoing commitment to embed it across all facets of the firm has further reinforced AB’s company values. It has also allowed for a more purposeful approach to engagement with AB’s people, clients, and the communities in which it operates.
Community engagement efforts have been further integrated under the D&I umbrella. Under the new structure, AB is better able to streamline and formalize the process for assessing corporate partnerships and philanthropic giving through the lens of D&I, allowing for a more cohesive overall strategy.
AB has enhanced its talent attraction and retention approach to position itself as an employer of choice and invest in the development of its people. AB has developed a diverse talent strategy with a goal of developing a deeper understanding of the needs of diverse talent and also equipping managers with the necessary tools to effectively manage an increasingly more diverse workforce. The strategy includes incorporating the concept of inclusive leadership into the firm wide leadership development curriculum and enhancing AB’s exit interview process for diverse talent by conducting in-person interviews which will better enable AB to detect trends and mitigate attrition.
AB’s people remain its top priority especially during these times of uncertainty. Over the course of the last year, there has been a continued focus on education and deepening engagement across all pillars of its strategy to include Employee Resource Groups (ERGs), corporate partnerships, and the overall experience at AB. ERGs have been a major proponent of these efforts by cultivating spaces for courageous conversations, encouraging professional development, personal wellness, and raising awareness for various underrepresented communities.
As AB continues to seek out opportunities to further its commitment to diversity, equity, and inclusion, AB is leveraging best practices from industry peers. AB’s D&I journey continues to evolve, addressing racial and gender equity, more effective access to diverse talent and monitoring client trends remain top priorities.

Compensation and Benefits
AB has demonstrated a history of investing in its workforce by offering competitive compensation. AB utilizes a variety of compensation elements, including base salaries, annual short-term compensation awards (i.e., cash bonuses) and, for those of AB’s employees who earn more than $300,000 annually, a long-term compensation award program. Long-term incentive compensation awards generally are denominated in restricted AB Holding Units. AB utilizes this structure to foster a stronger sense of ownership and align the interests of its employees directly with the interests of AB unitholders and indirectly with the interests of AB’s clients, as strong performance for its clients generally contributes directly to increases in AUM and improved financial performance for the firm. Furthermore, AB offers to all eligible employees health and welfare, 401(k) profit-sharing and other benefits programs.
Health and Safety
AB’s ongoing response to the COVID-19 global pandemic demonstrates how highly AB values the health and safety of its employees. At the initial onset of COVID-19 during the first quarter of 2020, AB quickly responded in the various jurisdictions where AB operates. AB implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in AB’s offices was considered critical), which lasted through the second quarter of 2021. Since then, working in the office generally has been voluntary, with mandatory in-office participation occurring only at certain times when COVID-19 has ebbed
53
Table of Contents
significantly in the communities in which AB operates. AB also instituted a confidential notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep AB’s employees safe and advise of key developments.
Executive Officers
See Part III, Item 10 “Directors, Executive Officers and Corporate Governance” for information with respect to our executive officers, which is incorporated by reference herein.
Available Information
We maintain a public website at https://equitableholdings.com. We use our website as a routine channel for distribution of important information, including news releases, analyst presentations, financial information and corporate governance information. We post filings on our website as soon as practicable after they are electronically filed with, or furnished to, the SEC, including our annual and quarterly reports on Forms 10-K and 10-Q and current reports on Form 8-K; our proxy statements; and any amendments to those reports or statements. All such postings and filings are available on the “Investors” section of our website free of charge. The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
We may use our website as a means of disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures are included on our website in the “Investors” section. Accordingly, investors should monitor this portion of our website, in addition to following our news releases, SEC filings, public conference calls and webcasts. The information contained on or connected to our website is not a part of this Form 10-K.

Part I, Item 1A.
RISK FACTORS
You should read and consider all of the risks described below, as well as other information set forth in this Annual Report on Form 10-K. The risks described below are not the only ones we face. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our businesses, results of operations, financial condition or liquidity.
Risks Relating to Our Consolidated Business
Risks Relating to Conditions in the Financial Markets and Economy
The coronavirus (COVID-19) pandemic.
The COVID-19 pandemic has negatively impacted the U.S. and global economies. A wide variety of factors continue to impact financial and economic conditions, including, among others, volatility in the financial markets, rising inflation rates, supply chain disruptions, continued low interest rates and changes in fiscal or monetary policy. Efforts to prevent the spread of COVID-19 have affected our business directly in a number of ways, including through the temporary closures of many businesses and schools and the institution of social distancing requirements in many states and local communities. Businesses or schools that have reopened have restricted or limited access for the foreseeable future and may do so on a permanent or episodic basis. As a result, our ability to sell products through our regular channels and the demand for our products and services has been significantly impacted.
While we have implemented risk management and contingency plans with respect to the COVID-19 pandemic, such measures may not adequately protect our business from the full impacts of the pandemic. Currently, most of our employees and advisors are continuing to work remotely. Extended periods of remote work arrangements could introduce additional operational risk including, but not limited to, cybersecurity risks, and impair our ability to effectively manage our business. We also outsource a variety of functions to third parties whose business continuity strategies are largely outside our control.
Economic uncertainty resulting from the COVID-19 pandemic may have an adverse effect on product sales and result in existing policyholders withdrawing at greater rates. COVID-19 could have an adverse effect on our insurance business due to increased mortality and morbidity rates. The cost of reinsurance to us for these policies could increase, and we may encounter
54
Table of Contents
decreased availability of such reinsurance. If policyholder lapse and surrender rates or premium waivers significantly exceed our expectations, we may need to change our assumptions, models or reserves.
Our investment portfolio has been, and may continue to be, adversely affected by the COVID-19 pandemic. Our investments in mortgages and commercial mortgage-backed securities have been, and could continue to be, negatively affected by delays or failures of borrowers to make payments of principal and interest when due. In some jurisdictions, local governments have imposed delays or moratoriums on many forms of enforcement actions. Furthermore, declines in equity markets and interest rates, reduced liquidity or a continued slowdown in the U.S. or in global economic conditions may also adversely affect the values and cash flows of investments. For additional information on the effects of COVID-19 on our mortgage loans, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—General Account Investment Portfolio.” Market volatility also caused significant increases in credit spreads, and any continued volatility may increase our borrowing costs and decrease product fee income. Further, severe market volatility may leave us unable to react to market events in a prudent manner consistent with our historical investment practices.
The extent of the COVID-19 pandemic’s impact on us will depend on future developments that are still highly uncertain, including the severity and duration of the pandemic, actions taken by governments and other third parties in response to the pandemic and the availability and efficacy of vaccines against COVID-19 and its variants.
Conditions in the global capital markets and the economy.
Our business, results of operations or financial condition are materially affected by conditions in the global capital markets and the economy. A wide variety of factors affect economic conditions and consumer confidence, including the COVID-19 pandemic and government reactions thereto, the pace of economic growth in the U.S., equity market performance, low interest rates and potential changes in fiscal or monetary policy. Given our interest rate and equity market exposure in our investment and derivatives portfolios and many of our products, these factors could have a material adverse effect on us. The value of our investments and derivatives portfolios may also be adversely affected by reductions in price transparency, changes in the assumptions or methodology we use to estimate fair value and changes in investor confidence or preferences, which could potentially result in higher realized or unrealized losses. Market volatility may also make it difficult to transact in or to value certain of our securities if trading becomes less frequent.
In an economic downturn, the demand for our products and our investment returns could be materially and adversely affected. The profitability of many of our products depends in part on the value of the assets supporting them, which may fluctuate substantially depending on various market conditions. In addition, a change in market conditions could cause a change in consumer sentiment and adversely affect sales and could cause the actual persistency of these products to vary from their anticipated persistency and adversely affect profitability. Our policyholders may choose to defer paying insurance premiums or stop paying insurance premiums altogether. In addition, market conditions may adversely affect the availability and cost of reinsurance protections and the availability and performance of hedging instruments.
Equity market declines and volatility.
Declines or volatility in the equity markets can negatively impact our business, results of operations or financial condition. For example, equity market declines or volatility could decrease the AV of our annuity and variable life contracts which, in turn, would reduce the amount of revenue we derive from fees charged on those account and asset values. Our variable annuity business is particularly sensitive to equity markets, and sustained weakness or stagnation in equity markets could decrease its revenues and earnings. At the same time, for variable annuity contracts that include GMxB features, equity market declines increase the amount of our potential obligations related to such GMxB features and could increase the cost of executing GMxB-related hedges beyond what was anticipated in the pricing of the products being hedged. This could result in an increase in claims and reserves related to those contracts, net of any reinsurance reimbursements or proceeds from our hedging programs. Equity market declines and volatility may also influence policyholder behavior, which may adversely impact the levels of surrenders, withdrawals and amounts of withdrawals of our annuity and variable life contracts or cause policyholders to reallocate a portion of their account balances to more conservative investment options (which may have lower fees), which could negatively impact our future profitability or increase our benefit obligations particularly if they were to remain in such options during an equity market increase. Market volatility can negatively impact the value of equity securities we hold for investment which could in turn reduce the statutory capital of certain of our insurance subsidiaries. In addition, equity market volatility could reduce demand for variable products relative to fixed products, lead to changes in estimates underlying our calculations of DAC that, in turn, could accelerate our DAC amortization and reduce our current earnings and result in changes to the fair value of our GMIB reinsurance contracts and GMxB liabilities, which could increase the volatility of our earnings. Lastly, periods of high market volatility or adverse conditions could decrease the availability or increase the cost of derivatives.
Interest rate fluctuations or prolonged periods of low interest rates.
55
Table of Contents
Some of our retirement and protection products and certain of our investment products, and our investment returns, are sensitive to interest rate fluctuations, and changes in interest rates and interest rate benchmarks may adversely affect our investment returns and results of operations, including in the following respects:
•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 rise rapidly, policy loans and surrenders and withdrawals of annuity contracts and life insurance policies may increase, 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;
•changes in interest rates could result in changes to the fair value liability of our variable annuity GMxB business;
•changes in interest rates may adversely impact our liquidity and increase our costs of financing and hedges;
•we may not be able to effectively mitigate and we may sometimes choose not to fully mitigate or to increase, the interest rate risk of our assets relative to our liabilities; and
•the 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 such changes in assumptions in products available for sale may negatively impact the long-term profitability of certain products sold during the intervening period.

A prolonged period during which interest rates remain low may result in greater costs associated with our variable annuity products with GMxB features; higher costs for some derivative instruments used to hedge certain of our product risks; or shortfalls in investment income on assets supporting policy obligations as our portfolio earnings decline over time, each of which may require us to record charges to increase reserves. In addition, an extended period of declining or low interest rates may also cause us to change our long-term view of the interest rates that we can earn on our investments. Such a change in our view would cause us to change the long-term interest rate that we assume in our calculation of insurance assets and liabilities under U.S. GAAP. Any future revision would result in increased reserves, accelerated amortization of DAC and other unfavorable consequences. In addition, certain statutory capital and reserve requirements are based on formulas or models that consider interest rates, and an extended period of low interest rates may increase the statutory capital we are required to hold and the amount of assets we must maintain to support statutory reserves. Furthermore, such an environment may cause certain policies to remain in force for longer periods than we anticipated in our pricing, potentially resulting in greater claims costs than we expected and resulting in lower overall returns on business in force. Widening credit spreads, if not offset by equal or greater declines in the risk-free interest rate, would also cause the total interest rate payable on newly issued securities to increase, and thus would have the same effect as an increase in underlying interest rates.
Market conditions and other factors could materially and adversely affect our goodwill.
Business and market conditions may impact the amount of goodwill we carry in our consolidated balance sheet related to the Investment Management and Research segment. To the extent that securities valuations are depressed for prolonged periods of time or market conditions deteriorate, or that AB experiences significant net redemptions, its AUM, revenues, profitability and unit price will be adversely affected. This may result in the need to recognize an impairment of goodwill which could adversely affect our business, results of operations or financial condition.
Adverse capital and credit market conditions.
Volatility and disruption in the capital and credit markets may exert downward pressure on the availability of liquidity and credit capacity. We need liquidity to pay our operating expenses (including potential hedging losses), interest expenses and any distributions on our capital stock and to capitalize our insurance subsidiaries. Without sufficient liquidity, we could be required to curtail our operations and our business would suffer. While we expect that our future liquidity needs will be satisfied primarily through cash generated by our operations, borrowings from third parties and dividends and distributions from our subsidiaries, it is possible that we will not be able to meet our anticipated short-term and long-term benefit and expense payment obligations. If current resources are insufficient to satisfy our needs, we may access financing sources such as bank debt or the capital markets. These services may not be available during times of stress or may only be available on unfavorable terms. If we are unable to access capital markets to issue new debt, refinance existing debt or sell additional shares as needed, or
56
Table of Contents
if we are unable to obtain such financing on acceptable terms, our business could be adversely impacted. Volatility in the capital markets may also consume liquidity as we pay hedge losses and meet collateral requirements related to market movements. We expect these hedging programs to incur losses in certain market scenarios, creating a need to pay cash settlements or post collateral to counterparties. Although our liabilities will also be reduced in these scenarios, this reduction is not immediate, and so in the short term, hedging losses will reduce available liquidity.
Disruptions, uncertainty or volatility in the capital and credit markets may limit our ability to raise additional capital to support business growth, or to counter-balance the consequences of losses or increased regulatory reserves and rating agency capital requirements. This could force us to: (i) delay raising capital; (ii) miss payments on our debt or reduce or eliminate dividends paid on our capital stock; (iii) issue capital of different types or under different terms than we would otherwise; or (iv) incur a higher cost of capital than would prevail in a more stable market environment. Ratings agencies may change our credit ratings, and any downgrade is likely to increase our borrowing costs and limit our access to the capital markets and could be detrimental to our business relationships with distribution partners. Our business, results of operations, financial condition, liquidity, statutory capital or rating agency capital position could be materially and adversely affected by disruptions in the capital and credit markets.
Risks Relating to Our Operations
Holdings depends on the ability of its subsidiaries to transfer funds to it to meet its obligations.
Dividends and other distributions from Holdings’ subsidiaries are the principal sources of funds available to Holdings to pay principal and interest on its outstanding indebtedness, to pay corporate operating expenses, to pay any stockholder dividends, to repurchase stock and to meet its other obligations. The inability to receive dividends from our subsidiaries could have a material adverse effect on our business, results of operations or financial condition. The ability of our insurance subsidiaries to pay dividends and make other distributions to Holdings will depend on their earnings, tax considerations, covenants contained in any financing or other agreements and applicable regulatory restrictions and receipt of regulatory approvals. If the ability of our insurance or non-insurance subsidiaries to pay dividends or make other distributions or payments to Holdings is materially restricted by these or other factors, we may be required to raise cash through the incurrence of debt, the issuance of equity or the sale of assets. However, there is no assurance that we would be able to raise sufficient cash by these means. This could materially and adversely affect our ability to pay our obligations.
Failure to protect the confidentiality of customer information or proprietary business information.
We and certain of our vendors retain confidential information (including customer transactional data and personal information about our customers, the employees and customers of our customers, and our own employees). The privacy of this information may be compromised, including as a result of an information security breach. We have implemented a formal, risk-based data security program; however, failure to implement and maintain effective cybersecurity programs, or any compromise of the security of our information systems, or those of our vendors, or the cloud-based systems we use, through cyber-attacks or for any other reason that results in unauthorized access, use, disclosure or destruction of personally identifiable information or customer information, or the disruption of critical operations and services, could damage our reputation, deter people from purchasing our products, subject us to significant civil and criminal liability and require us to incur significant technical, legal and other expenses any of which could have a material adverse effect on our business, results of operations or financial condition.
Our operational failures or those of service providers on which we rely.
Weaknesses or failures in our internal processes or systems or those of our vendors could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Our business is highly dependent on our ability to process large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal and regulatory standards. If we make a mistake in performing our services that causes financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, business, results of operations or financial condition.
The occurrence of a catastrophe, including natural or man-made disasters.
Any catastrophic event, such as pandemic diseases like COVID-19, terrorist attacks, accidents, floods, severe storms or hurricanes or cyber-terrorism, could have a material and adverse effect on our business. We could experience long-term interruptions in our service and the services provided by our significant vendors. 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
57
Table of Contents
those problems affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. We could experience a material adverse effect on our liquidity, financial condition and the operating results of our insurance business due to increased mortality and, in certain cases, morbidity rates and/or its impact on the economy and financial markets. Our workforce may be unable to be physically located at one of our facilities, which could result in lengthy interruptions in our service. A catastrophe may affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. Climate change may increase the frequency and severity of weather-related disasters and pandemics.

Our ability to recruit, motivate and retain key employees and experienced and productive financial professionals.
Our business depends on our ability to recruit, motivate and retain highly skilled, technical, investment, managerial and executive personnel, and there is no assurance that we will be able to do so. Our financial professionals and our key employees are key factors driving our sales. Intense competition exists among insurers and other financial services companies for financial professionals and key employees. We cannot provide assurances that we will be successful in our respective efforts to recruit, motivate and retain key employees and top financial professionals and the loss of such employees and professionals could have a material adverse effect on our business, results of operations or financial condition.
Misconduct by our employees or financial professionals.
Misconduct by our employees, financial professionals, agents, intermediaries, representatives of our broker-dealer subsidiaries or employees of our vendors could result in violations of law by us or our subsidiaries, regulatory sanctions or serious reputational or financial harm. We employ controls and procedures designed to monitor employees’ and financial professionals’ business decisions and to prevent them from taking excessive or inappropriate risks, including with respect to information security, but employees may take such risks regardless of such controls and procedures. If our employees or financial professionals take excessive or inappropriate risks, those risks could harm our reputation, subject us to significant civil or criminal liability and require us to incur significant technical, legal and other expenses.
Potential strategic transactions.
We may consider potential strategic transactions, including acquisitions, dispositions, mergers, joint ventures and similar transactions. These transactions may not be effective and could result in decreased earnings and harm to our competitive position. In addition, these transactions, if undertaken, may involve a number of risks and present financial, managerial and operational challenges. Furthermore, strategic transactions may require us to increase our leverage or, if we issue shares to fund an acquisition, would dilute the holdings of the existing stockholders. Any of the above could cause us to fail to realize the benefits anticipated from any such transaction.
Changes in accounting standards.
Our consolidated financial statements are prepared in accordance with U.S. GAAP, the principles of which are revised from time to time. Accordingly, from time to time we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board (“FASB”). We may not be able to predict or assess the effects of these new accounting pronouncements or new interpretations of existing accounting pronouncements, and they may have material adverse effects on our business, results of operations or financial condition. For a discussion of accounting pronouncements and their potential impact on our business, including Accounting Standards Update 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, see Note 2 of the Notes to these Consolidated Financial Statements.

Our investment advisory agreements with clients, and our selling and distribution agreements with various financial intermediaries and consultants, are subject to termination or non-renewal on short notice.
AB derives most of its revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds and private wealth clients, and selling and distribution agreements with financial intermediaries that distribute AB funds.. In addition, as part of our philosophy. For example, we were a founding partnervariable annuity products, EIMG enters into written investment management agreements (or other arrangements) with The American College of Financial Services in developing the Chartered Life Underwriter designation, which remains the industry standard.mutual funds. Generally, these investment management agreements (and other arrangements) are terminable without penalty at any time or upon relatively short notice by either party. In addition, the investment management agreements pursuant to investingwhich AB and EIMG manage an SEC-registered investment company (a “RIC”) must be renewed and approved by the RIC’s boards of directors (including a majority of the independent directors) annually. Consequently, there can be no assurance that the board of directors of each RIC will approve the investment management agreement each year or will not condition its approval on revised terms that may be adverse to us.
58
Table of Contents
Similarly, we enter into selling and distribution agreements with various financial intermediaries that are terminable by either party upon notice (generally 60 days) and do not obligate the financial intermediary to sell any specific amount of our products. These intermediaries generally offer their clients investment products that compete with our products. In addition, certain institutional investors rely on consultants to advise them about choosing an investment adviser and some of AB’s services may not be considered among the best choices by these consultants. As a result, investment consultants may advise their clients to move their assets invested with AB to other investment advisers, which could result in significant net outflows.
The replacement of LIBOR may affect our cost of capital and net investment income.
It is anticipated that LIBOR will be discontinued no later than June 2023 As a result, existing loans, investments and other contracts relying on a LIBOR benchmark will need to designate a replacement rate. In addition, derivatives and other contracts used to hedge those contracts will generally need to be conformed to provide a similar alternative rate to that being hedged. In addition, because it is anticipated that banks will no longer extend loans based on LIBOR, new lines of credit we enter into will need to be benchmarked to a new benchmark rate. In light of the LIBOR transition, we anticipate a valuation risk around the potential discontinuation event as well as potential risks relating to hedging interest-rate risk. Additionally, the elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates may adversely affect the amount of interest payable or interest receivable on certain of our investments. These changes may also impact the market liquidity and market value of these investments. Any changes to LIBOR or any alternative rate, or any further uncertainty in relation to the timing and manner of implementation of such changes, could have an adverse effect on the value of investments in our people’s development,investment portfolio, derivatives we continually lookuse for opportunitieshedging, or other indebtedness, securities or commercial contracts. We have inventoried all aspects of our business that utilize a LIBOR benchmark and, for those instruments that currently do not have an appropriate fallback rate, we are in the process of either disposing of the instrument or negotiating a fallback rate. There is no assurance that we will complete this process by the transition date or that the alternative rate we negotiate will not be materially less favorable than the previous, LIBOR-based rate.
Climate change may adversely affect our investment portfolio and investor sentiment.
Climate change could pose a systemic risk to bringthe financial system. Disasters related to climate change and regulation related to climate change may affect the entities in fresh talentwhich we invest, our willingness to continue to invest and the value of, and return from, our investments. It may also affect our counterparties, including reinsurers and derivatives counterparties. We cannot predict the long-term impacts to our business from climate change or related regulation. Climate change may also influence investor sentiment with respect to the Company and investments in our portfolio. A failure to identify and address these issues could have a material adverse effect on our business, results of operations or financial condition.
Risks Relating to Credit, Counterparties and Investments
Our counterparties’ requirements to pledge collateral related to declines in estimated fair value of derivative contracts.
We use derivatives and other instruments to help us mitigate various business risks. Our transactions with financial and other institutions generally specify the circumstances under which the parties are required to pledge collateral related to any decline in the market value of the derivatives contracts. If our counterparties fail or refuse to honor their obligations under these contracts, we could face significant losses to the extent collateral agreements do not fully offset our exposures and our hedges of the related risk will be ineffective. Such failure could have a material adverse effect on our business, results of operations or financial condition.
Changes in the actual or perceived soundness or condition of other financial institutions and market participants.
A default by any financial institution or by a sovereign could lead to additional defaults by other market participants. Such failures could disrupt securities markets or clearance and settlement systems and lead to a chain of defaults, because the commercial and financial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. Even the perceived lack of creditworthiness of a financial institution may lead to market-wide liquidity problems and losses or defaults by us or by other institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries with which we interact on a daily basis. Systemic risk could have a material adverse effect on our ability to raise new funding and on our business, results of operations or financial condition. In addition, such a failure could impact future product sales as a potential result of reduced confidence in the financial services industry.
Losses due to defaults by third parties and affiliates, including outsourcing relationships.
We depend on third parties and affiliates that owe us money, securities or other assets to pay or perform under their obligations. Defaults by one or more of these parties could have a material adverse effect on our business, results of operations
59
Table of Contents
or financial condition. Moreover, as a result of contractual provisions certain swap dealers require us to add to derivatives documentation and to agreements, we may not be able to exercise default rights or enforce transfer restrictions against certain counterparties which may limit our ability to recover amounts due to us upon a counterparty’s default. We rely on various counterparties and other vendors to augment our team.existing investment, operational, financial and technological capabilities, but the use of a vendor does not diminish our responsibility to ensure that client and regulatory obligations are met. Disruptions in the financial markets and other economic
challenges may cause our counterparties and other vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs and impair our ability to conduct business. We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. The deterioration or perceived deterioration in the credit quality of third parties whose securities or obligations we hold could result in losses or adversely affect our ability to use those securities or obligations for liquidity purposes.
Economic downturns, defaults and other events may adversely affect our investments.
The occurrence of a major economic downturn, acts of corporate malfeasance, widening credit risk spreads, ratings downgrades or other events that adversely affect the issuers or guarantors of securities we own or the underlying collateral of structured securities we own could cause the estimated fair value of our fixed maturity securities portfolio and corresponding earnings to decline and cause the default rate of the fixed maturity securities in our investment portfolio to increase. We may have to hold more capital to support our securities to maintain our insurance companies’ RBC levels, should securities we hold suffer a ratings downgrade. Levels of write-downs or impairments are impacted by intent to sell, or our assessment of the likelihood that we will be required to sell, fixed maturity securities, as well as our intent and ability to hold equity securities which have declined in value until recovery. Realized losses or impairments on these securities may have a material adverse effect on our business, results of operations, liquidity or financial condition in, or at the end of, any quarterly or annual period.
Some of our investments are relatively illiquid and may be difficult to sell.
We hold certain investments that may lack liquidity, such as privately placed fixed maturity securities, mortgage loans, commercial mortgage backed securities and alternative investments. In the past, even some of our very high quality investments experienced reduced liquidity during periods of market volatility or disruption. If we were required to liquidate these investments on short notice or were required to post or return collateral, we may have difficulty doing so and be forced to sell them for less than we otherwise would have been able to realize. The reported values of our relatively illiquid types of investments do not necessarily reflect the current market price for the asset. If we were forced to sell certain of our assets in the current market, there can be no assurance that we would be able to sell them for the prices at which we have recorded them and we might be forced to sell them at significantly lower prices, which could have a material adverse effect on our business, results of operations, liquidity or financial condition.
Defaults on our mortgage loans and volatility in performance.
A portion of our investment portfolio consists of mortgage loans on commercial and agricultural real estate. Although we manage credit risk and market valuation risk for our commercial and agricultural real estate assets through geographic, property type and product type diversification and asset allocation, general economic conditions in the commercial and agricultural real estate sectors will continue to influence the performance of these investments. These factors, which are beyond our control, could have a material adverse effect on our business, results of operations, liquidity or financial condition. An increase in the default rate of our mortgage loan investments or fluctuations in their performance could have a material adverse effect on our business, results of operations, liquidity or financial condition. For information on the effects of the COVID-19 pandemic on our mortgage loans, see “Management’s Discussion and Analysis of Financial GoalsCondition and Results of Operations—General Account Investment Portfolio.”
Risks Relating to Our Retirement and Protection Businesses
Risks Relating to Reinsurance and Hedging
Our reinsurance and hedging programs.
We seek to mitigate some risks associated with the GMxB features or minimum crediting rate contained in certain of our retirement and protection products through our hedging and reinsurance programs. (As of December 31, 2021, 61% of the variable annuity AV in our Individual Retirement segment was attributable to products that included GMxB features.) However, these programs cannot eliminate all of the risks, and no assurance can be given as to the extent to which such programs will be completely effective in reducing such risks.
60
Table of Contents
Reinsurance—We use reinsurance to mitigate a portion of the risks that we face, principally in certain of our in-force annuity and life insurance products. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. The inability or unwillingness of a reinsurer to meet its obligations to us, or the inability to collect under our reinsurance treaties for any other reason, could have a material adverse impact on our business, results of operations or financial condition. Prolonged or severe adverse mortality or morbidity experience could result in increased reinsurance costs, and ultimately may reduce the availability of reinsurance for future life insurance sales. If, for new sales, we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient, we would either have to be willing to accept an increase in our net exposures, revise our pricing to reflect higher reinsurance premiums or limit the amount of new business written on any individual life. If this were to occur, we may be exposed to reduced profitability and cash flow strain or we may not be able to price new business at competitive rates. The premium rates and other fees that we charge are based, in part, on the assumption that reinsurance will be available at a certain cost. If a reinsurer raises the rates that it charges on a block of in-force business, we may not be able to pass the increased costs onto our customers and our profitability will be negatively impacted. Additionally, such a rate increase could result in our recapturing of the business, which may result in a need to maintain additional reserves, reduce reinsurance receivables and expose us to greater risks.
Hedging Programs—We use a hedging program to mitigate a portion of the unreinsured risks we face in, among other areas, the GMxB features of our variable annuity products and minimum crediting rates on our variable annuity and life products from unfavorable changes in benefit exposures due to movements in the capital markets. In certain cases, however, we may not be able to effectively apply these techniques because the derivatives markets in question may not be of sufficient size or liquidity or there could be an operational error in the application of our hedging strategy or for other reasons. The operation of our hedging programs is based on models involving numerous estimates and assumptions. There can be no assurance that ultimate actual experience will not differ materially from our assumptions, particularly, but not only, during periods of high market volatility, which could adversely impact our business, results of operations or financial condition. For example, in the past, due to, among other things, levels of volatility in the equity and interest rate markets above our assumptions as well as deviations between actual and assumed surrender and withdrawal rates, gains from our hedging programs did not fully offset the economic effect of the increase in the potential net benefits payable under the GMxB features offered in certain of our products. If these circumstances were to re-occur in the future or if, for other reasons, results from our hedging programs in the future do not correlate with the economic effect of changes in benefit exposures to customers, we could experience economic losses which could have a material adverse impact on our business, results of operations or financial condition. Additionally, our strategies may result in under or over-hedging our liability exposure, which could result in an increase in our hedging losses and greater volatility in our earnings and have a material adverse effect on our business, results of operations or financial condition. For further discussion, see ��—Risks Relating to Estimates, Assumptions and Valuations—Our risk management policies and procedures.”
Our reinsurance arrangement with an affiliated captive.
The reinsurance arrangement with EQ AZ Life Re Company (the “Affiliated Captive”) provides important capital management benefits to Equitable Financial and Equitable America (collectively, the “Affiliated Cedants”). Under applicable statutory accounting rules, the Affiliated Cedants are currently, and will in the future be, entitled to a credit in their calculations of reserves for amounts reinsured to the Affiliated Captive, to the extent the Affiliated Captive hold assets in trust or provide letters of credit or other financing acceptable to the respective domestic regulators of the Affiliated Cedants. The level of assets required to be maintained in the trust fluctuates based on market and interest rate movements, age of the policies, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust or securing additional letters of credit, which could impact the liquidity of the Affiliated Captive.
Risks Relating to the Our Products, Our Structure and Product Distribution
GMxB features within certain of our products.
Certain of the variable annuity products we offer and certain in-force variable annuity products we offered historically, and certain variable annuity risks we assumed historically through reinsurance, include GMxB features. We also offer index-linked variable annuities with guarantees against a defined floor on losses. GMxB features are designed to offer protection to policyholders against changes in equity markets and interest rates. Any such periods of significant and sustained negative or low Separate Accounts returns, increased equity volatility or reduced interest rates will result in an increase in the valuation of our liabilities associated with those products. In addition, if the Separate Account assets consisting of fixed income securities, which support the guaranteed index-linked return feature, are insufficient to reflect a period of sustained growth in the equity-index on which the product is based, we may be required to support such Separate Accounts with assets from our General
61
Table of Contents
Account and increase our liabilities. An increase in these liabilities would result in a decrease in our net income and depending on the magnitude of any such increase, could materially and adversely affect our financial goalscondition, including our capitalization, as well as the financial strength ratings which are necessary to support our product sales.
Additionally, we make assumptions regarding policyholder behavior at the time of pricing and in selecting and using the GMxB features inherent within our products. An increase in the valuation of the liability could result to the extent emerging and actual experience deviates from these policyholder option use assumptions. If we update our assumptions based on our actuarial assumption review, we could be required to increase the liabilities we record for future policy benefits and claims to a level that may materially and adversely affect our business, results of operations or financial condition which, in certain circumstances, could impair our solvency. In addition, we have in the past updated our assumptions on policyholder behavior, which has negatively impacted our net income, and there can be no assurance that similar updates will not be required in the future.
In addition, hedging instruments may not effectively offset the costs of GMxB features or may otherwise be insufficient in relation to our obligations. Furthermore, we are subject to the risk that changes in policyholder behavior or mortality, combined with adverse market events, could produce economic losses not addressed by our risk management techniques. These factors, individually or collectively, may have a material adverse effect on our business, results of operations, including net income, capitalization, financial condition or liquidity including our ability to receive dividends from our insurance subsidiaries.
The amount of statutory capital that we have and the amount of statutory capital we must hold to meet our statutory capital requirements and our financial strength and credit ratings can vary significantly.
In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors. Additionally, state insurance regulators have significant leeway in how to interpret existing regulations, which could further impact the amount of statutory capital or reserves that we must maintain. Equitable Financial is primarily regulated by the NYDFS, which from time to time has taken more stringent positions than other state insurance regulators on matters affecting, among other things, statutory capital or reserves. In certain circumstances, particularly those involving significant market declines, the effect of these more stringent positions may be that our financial condition appears to be worse than competitors who are not subject to the same stringent standards, which could have a material adverse impact on our business, results of operations or financial condition. Moreover, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of capital our insurance subsidiaries must hold in order to maintain their current ratings. To the extent that our statutory capital resources are deemed to be insufficient to maintain a strong balance sheet while delivering disciplined profitable growth. We have established the followingparticular rating by one or more rating agencies, our insurance subsidiaries’ financial goals which we believe best measure the executionstrength and credit ratings might be downgraded by one or more rating agencies. There can be no assurance that any of our business strategy and align with our stockholders’ interests:

Target asset level for all variable annuities at or above a CTE98 and aninsurance subsidiaries will be able to maintain its current RBC ratio in the future or that its RBC ratio will not fall to a level that could have a material adverse effect on our business, results of 350-400% for our non-variable annuity insurance liabilities;
operations or financial condition.
ReturnThe failure of capital to stockholders equal to at least 50-60%any of our Non-GAAP Operating Earningsinsurance subsidiaries to meet its applicable RBC requirements or minimum capital and surplus requirements could subject it to further examination or corrective action imposed by insurance regulators, including limitations on its ability to write additional business, supervision by regulators, rehabilitation, or seizure or liquidation. Any corrective action imposed could have a material adverse effect on our business, results of operations or financial condition. A decline in RBC ratios may limit the ability of an annualized basis startinginsurance subsidiary to make dividends or distributions to us, could result in 2019, includinga loss of customers or new business, and could be a factor in causing ratings agencies to downgrade the insurer’s financial strength ratings, each of which could have a material adverse effect on our business, results of operations or financial condition.
A downgrade in our financial strength and claims-paying ratings.
Claims-paying and financial strength ratings are important factors in establishing the competitive position of insurance companies. They indicate the rating agencies’ opinions regarding an insurance company’s ability to meet policyholder obligations and are important to maintaining public confidence in our products and our competitive position. A downgrade of our ratings or those of Equitable Financial, Equitable America or Holdings could adversely affect our business, results of operations or financial condition by, among other things, reducing new sales of our products, increasing surrenders and withdrawals from our existing contracts, possibly requiring us to reduce prices or take other actions for many of our products and services to remain competitive, or adversely affecting our ability to obtain reinsurance or obtain reasonable pricing on reinsurance. A downgrade in our ratings may also adversely affect our cost of raising capital or limit our access to capital.
State insurance laws limit the ability of our insurance subsidiaries to pay dividends and other distributions to Holdings.
The payment of dividends and share repurchases; previouslyother distributions to Holdings by its insurance subsidiaries, including its captive reinsurer, is regulated by state insurance laws and regulations. These restrictions may limit or prevent our target was 40-60%; insurance subsidiaries from making dividend or other payments to Holdings. These restrictions are based, in part, on earned surplus and the prior year’s
62
Table of Contents
statutory income and policyholder surplus. In general, dividends may be paid only from earned surplus (typically defined as available or unassigned surplus, subject to possible adjustments) which is derived from realized net profits on the company’s business. Dividends up to specified levels are generally considered ordinary and generally may be made without prior regulatory approval. Meanwhile, dividends paid from sources other than earned surplus or in larger amounts, often called “extraordinary dividends,” are generally subject to approval by the insurance commissioner of the relevant state of domicile. In addition, certain states may prohibit the payment of dividends from other than the insurance company’s earned surplus. If any of our insurance subsidiaries subject to the positive earned surplus requirement do not succeed in building up sufficient positive earned surplus to have ordinary dividend capacity in future years, such subsidiary would be unable to pay dividends or distributions to our holding company, in certain cases, absent prior approval of its domiciliary insurance regulator. For further information on state insurance laws related to payments of dividends, see “Business—Regulation—Insurance Regulation—Holding Company and Shareholder Dividend Regulation.”
TargetFrom time to time, the NAIC and various state insurance regulators have considered, and may in the future consider, proposals to further limit dividend payments that an insurance company may make without regulatory approval. For example, the NYDFS enacted Regulation 213. Due to a compound annual growth ratepermitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any ordinary dividend that exceeds the ordinary dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice. If more stringent restrictions on dividend payments are adopted by jurisdictions in which our insurance subsidiaries are domiciled, such restrictions could have the effect of significantly reducing dividends or other amounts payable to Holdings by its insurance subsidiaries without prior approval by regulatory authorities. The ability of our insurance subsidiaries to pay dividends or make other distributions is also limited by our need to maintain the financial strength ratings assigned to such subsidiaries by the rating agencies. These ratings depend to a large extent on the capitalization levels of our insurance subsidiaries.

A loss of, or significant change in, key product distribution relationships.
We distribute certain products under agreements with third-party distributors and other members of the financial services industry that are not affiliated with us. We compete with other financial institutions to attract and retain commercial relationships in each of these channels. An interruption or significant change in certain key relationships could materially and adversely affect our ability to market our products and could have a material adverse effect on our business, results of operation or financial condition. Distributors may elect to alter, reduce or terminate their distribution relationships with us, including for such reasons as changes in our Non-GAAP Operating Earningsdistribution strategy, adverse developments in our business, adverse rating agency actions or concerns about market-related risks. Alternatively, we may terminate one or more distribution agreements due to, for example, a loss of 5-7%confidence in, or a change in control of, one of the third-party distributors, which could reduce sales.
We are also at risk that key distribution partners may merge or change their business models in ways that affect how our products are sold, either in response to changing business priorities or as a result of shifts in regulatory supervision or potential changes in state and federal laws and regulations regarding standards of conduct applicable to third-party distributors when providing investment advice to retail and other customers. Our key distribution relationships may also be adversely impacted by regulatory changes that increase the costs associated with marketing, or restrict the ability of distribution partners to receive sales and promotion related charges.
Risks Relating to Estimates, Assumptions and Valuations
Our risk management policies and procedures.
Our policies and procedures, including hedging programs, to identify, monitor and manage risks may not be adequate or fully effective. Many of our methods of managing risk and exposures are based upon our use of historical market behavior or statistics based on historical models. As a result, these methods may not predict future exposures, which could be significantly greater than the historical measures indicate. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record and verify large numbers of transactions and events. These policies and procedures may not be fully effective.
We employ various strategies to mitigate risks inherent in our business and operations. These risks include current or future changes in the fair value of our assets and liabilities, current or future changes in cash flows, the effect of interest rates, equity markets and credit spread changes, the occurrence of credit defaults and changes in mortality and longevity. We seek to control these risks by, among other things, entering into reinsurance contracts and through 2020,our hedging programs. Developing an effective strategy for dealing with these risks is complex, and no strategy can completely insulate us from such risks. Our
63
Table of Contents
hedging strategies also rely on assumptions and projections that may prove to be incorrect or prove to be inadequate. Moreover definitions used in our derivatives contracts may differ from those used in the contract being hedged. For example, swap documents typically use SOFR as a fallback to LIBOR whereas corporate or municipal bonds or loans held by us may use different fallback rates. Accordingly, our hedging activities may not have the desired beneficial impact on our business, results of operations or financial condition. As U.S. GAAP accounting differs from the methods used to determine regulatory reserves and rating agency capital requirements, our hedging program tends to create earnings volatility in our U.S. GAAP financial statements. Further, the nature, timing, design or execution of our hedging transactions could actually increase our risks and losses. Our hedging strategies and the derivatives that we use, or may use in the future, may not adequately mitigate or offset the hedged risk and our hedging transactions may result in losses, including both losses based on the risk being hedged as well as losses based on the derivative. The terms of the derivatives and other instruments used to hedge the stated risks may not match those of the instruments they are hedging which could cause unpredictability in results.
Our reserves could be inadequate and product profitability could decrease due to differences between our actual experience and management’s estimates and assumptions.
Our reserve requirements for our direct and reinsurance assumed business are calculated based on a number of estimates and assumptions, including estimates and assumptions related to future mortality, morbidity, longevity, persistency, interest rates, future equity performance, reinvestment rates, claims experience and policyholder elections (i.e., the exercise or non-exercise of rights by policyholders under the contracts). The assumptions and estimates used in connection with the reserve estimation process are inherently uncertain and involve the exercise of significant judgment. We review the appropriateness of reserves and the underlying assumptions at least annually and, if necessary, update our assumptions as additional information becomes available. We cannot, however, determine with precision the amounts that we will pay for, or the timing of payment of, actual benefits and claims or whether the assets supporting the policy liabilities will grow to the level assumed prior to payment of benefits or claims. Our claim costs could increase significantly, and our reserves could be inadequate if actual results differ significantly from our estimates and assumptions. If so, we will be required to increase reserves or reduce DAC, which could materially and adversely impact our business, results of operations or financial condition. Future reserve increases in connection with experience updates could be material and adverse to the results of operations or financial condition of the Company. Future changes as a result of future assumptions reviews could require us to make material additional capital contributions to one or more of our insurance company subsidiaries or could otherwise materially and adversely impact our business, results of operations or financial condition and may negatively and materially impact our stock price.
Significant deviations in actual experience from our pricing assumptions could have an adverse effect on the profitability of our products. If actual persistency is significantly different from that assumed in our current reserving assumptions, our reserves for future policy benefits may prove to be inadequate. Although some of our variable annuity and life insurance products permit us to increase premiums or adjust other charges and credits during the life of the policy or contract, the adjustments permitted under the terms of the policies or contracts may not be sufficient to maintain profitability. Many of our variable annuity and life insurance products do not permit us to increase premiums or adjust other charges and credits or limit those adjustments during the life of the policy or contract. Even if we are permitted under the contract to increase premiums or adjust other charges and credits, we may not be able to do so due to litigation, point of sale disclosures, regulatory reputation and market risk or due to actions by our competitors. In addition, the development of a secondary market for life insurance could adversely affect the profitability of existing business and our pricing assumptions for new business.
We may be required to accelerate the amortization of DAC.
DAC represents policy acquisition costs that have been capitalized. Capitalized costs associated with DAC are amortized in proportion to actual and estimated gross profits, gross premiums or gross revenues depending on the type of contract. On an ongoing basis, we test the DAC recorded on our balance sheets to determine if the amount is recoverable under current assumptions. In addition, we regularly review the estimates and assumptions underlying DAC. The projection of estimated gross profits, gross premiums or gross revenues requires the use of certain assumptions, principally related to Separate Accounts fund returns in excess of amounts credited to policyholders, policyholder behavior such as surrender, lapse and annuitization rates, interest margin, expense margin, mortality, future impairments and hedging costs. Estimating future gross profits, gross premiums or gross revenues is a complex process requiring considerable judgment and the forecasting of events well into the future. If these assumptions prove to be inaccurate, if an estimation technique used to estimate future gross profits, gross premiums or gross revenues is changed, or if significant or sustained equity market declines occur or persist, we could be required to accelerate the amortization of DAC, which would result in a charge to earnings. Such adjustments could have a material adverse effect on our business, results of operations or financial condition.
Our financial models rely on estimates, assumptions and projections.
We use models in our hedging programs and many other aspects of our operations including, but not limited to, product
64
Table of Contents
development and pricing, capital management, the estimation of actuarial reserves, the amortization of DAC, the fair value of the GMIB reinsurance contracts and the valuation of certain other assets and liabilities. These models rely on estimates, assumptions and projections that are inherently uncertain and involve the exercise of significant judgment. Due to the complexity of such models, it is possible that errors in the models could exist and our controls could fail to detect such errors. Failure to detect such errors could materially and adversely impact our business, results of operations or financial condition.
Subjectivity of the determination of the amount of allowances and impairments taken on our investments.
The determination of the amount of allowances and impairments varies by investment type and is based upon our evaluation of known and inherent risks associated with the respective asset class. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. There can be no assurance that management’s judgments, as reflected in our financial statements, will ultimately prove to be an accurate estimate of the actual diminution in realized value. Historical trends may not be indicative of future impairments or allowances. Additional impairments may need to be taken or allowances provided for in the future that could have a material adverse effect on our business, results of operations or financial condition. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within our financial statements and the period-to-period changes in estimated fair value could vary significantly. Decreases in the estimated fair value of securities we hold may have a material adverse effect on our business, results of operations or financial condition.
Risks Relating to Our Investment Management and Research Business
AB’s revenues and results of operations depend on the market value and composition of AB’s AUM.
AB derives most of its revenues from investment advisory and services fees, which typically are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of the account and the total amount of assets AB manages for a particular client. The value and composition of AB’s AUM can be adversely affected by several factors, including market factors, client preferences, AB’s investment performance, investing trends and service changes, including fee reductions. A decrease in the value of AB’s AUM, a decrease in the amount of AUM AB manages, an adverse mix shift in its AUM and/or a reduction in the level of fees AB charges would adversely affect AB’s investment advisory fees and revenues. A reduction in revenues, without a commensurate reduction in expenses, adversely affects AB’s and our business, results of operations or financial condition.
The industry-wide shift from actively-managed investment services to passive services.
AB’s competitive environment has become increasingly difficult over the past decade, as active managers, which invest based on individual security selection, have, on average, consistently underperformed passive services, which invest based on market indices. In this environment, organic growth through positive net inflows is difficult to achieve for active managers, such as AB, and requires taking market share from other active managers. The significant shift from active services to passive services adversely affects Bernstein Research Services revenues as well. Institutional global market trading volumes continue to be pressured (notwithstanding the heightened market volatility and trading volume predominately relating to COVID-19 in the first half of 2020) by persistent active equity outflows and passive equity inflows. As a result, portfolio turnover has declined, and investors hold fewer shares that are actively traded by managers.
AB’s reputation could suffer if it is unable to deliver consistent, competitive investment performance.
AB’s business is based on the trust and confidence of its clients. Damage to AB’s reputation, resulting from poor or inconsistent investment performance, among other factors, can reduce substantially AB’s AUM and impair its ability to maintain or grow its business.
Performance-based fee arrangements with AB’s clients cause greater fluctuations in its net revenues.
AB sometimes charges its clients performance-based fees, whereby it charges a base advisory fee and is eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account under-performs relative to its performance target (whether in absolute terms or relative to a specified benchmark), it must gain back such under-performance before AB can collect future performance-based fees. Therefore, if AB fails to achieve the performance target for a particular period, AB will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, AB’s ability to earn future performance-based fees will be impaired.
The revenues generated by Bernstein Research Services and AB’s broker-dealers may be adversely affected by
65
Table of Contents
circumstances beyond our control.
Electronic, or “low-touch,” trading represents a significant percentage of buy-side trading activity and typically produces transaction fees that are significantly lower than the price of traditional full service fee rates. As a result, blended pricing throughout our industry is lower now than it was historically, and price declines may continue. In addition, fee rates we charge and charged by other brokers for brokerage services have historically experienced price pressure, and we expect these trends to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may not continue. In addition, the failure or inability of any of AB’s broker-dealer’s significant counterparties to perform could expose AB to substantial expenditures and adversely affect its revenues. For example, SCB LLC, as a member of clearing and settlement organizations, would be required to settle open trades of any non-performing counterparty. This exposes AB to the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Also, AB’s ability to access liquidity in such situations may be limited by what its funding relationships are able to offer us at such times.
AB’s seed capital investments are subject to market conditions;risk.
AB has a seed investment program for the purpose of building track records and
assisting with the marketing initiatives pertaining to its new products. These seed capital investments are subject to market risk. AB’s risk management team oversees a seed hedging program that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, and in those cases AB is exposed to market risk. In addition, AB may be subject to basis risk in that it cannot always hedge with precision its market exposure and, as a result, AB may be subject to relative spreads between market sectors. As a result, volatility in the capital markets may cause significant changes in its period-to-period financial and operating results.
We expectAB uses various derivative instruments in conjunction with its seed hedging program. While in most cases broad market risks are hedged, AB’s hedges are imperfect, and some market risk remains. In addition, AB’s use of derivatives results in counterparty risk (i.e., the risk that AB may be exposed to credit-related losses in the target growthevent of non-performance by counterparties to these derivative instruments), regulatory risk (e.g., short selling restrictions) and cash/synthetic basis risk (i.e., the risk that underlying positions do not move identically to the related derivative instruments).
AB may not accurately value the securities it holds on behalf of its clients or its company investments.
In accordance with applicable regulatory requirements, contractual obligations or client direction, AB employs procedures for the pricing and valuation of securities and other positions held in Non-GAAP Operating Earnings combinedclient accounts or for company investments. AB has established a valuation committee, which oversees pricing controls and valuation processes. If market quotations for a security are not readily available, the valuation committee determines a fair value for the security.
Extraordinary volatility in financial markets, significant liquidity constraints or AB’s failure to adequately consider one or more factors when determining the fair value of a security based on information with our target return of capital to stockholders willlimited market observability could result in Non-GAAP Operating ROEAB failing to properly value securities AB holds for its clients or investments accounted for on its balance sheet. Improper valuation likely would result in AB basing fee calculations on inaccurate AUM figures, striking incorrect net asset values for company-sponsored mutual funds or hedge funds or, in the mid-teenscase of company investments, inaccurately calculating and reporting AB’s financial condition and operating results. Although the overall percentage of AB’s AUM that it fair values based on information with limited market observability is not significant, inaccurate fair value determinations can harm AB’s clients, create regulatory issues and damage its reputation.
AB may not have sufficient information to confirm or review the accuracy of valuations provided to it by 2020. underlying external managers for the funds in which certain of its alternative investment products invest.
Certain of AB’s alternative investment services invest in funds managed by external managers (“External Managers”) rather than investing directly in securities and other instruments. As a result, AB’s ability will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete, accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, AB may not have sufficient information to confirm or review the accuracy of valuations provided to it by External Managers. In addition, AB will be required to rely on External Managers’ compliance with any applicable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or to provide accurate information with respect to the investment could subject AB’s alternative investment products to losses and cause damage to its reputation.
The quantitative and systematic models AB uses in certain of its investment services may contain errors.
AB uses quantitative and systematic models in a variety of its investment services, generally in combination with
66
Table of Contents
fundamental research. These models are developed by senior quantitative professionals and typically are implemented by IT professionals. AB’s model risk oversight committee oversees the model governance framework and associated model review activities, which are then executed by AB’s model risk team. However, due to the complexity and large data dependency of such models, it is possible that errors in the models could exist and AB’s controls could fail to detect such errors. Failure to detect errors could result in client losses and reputational damage.
AB may not successfully manage actual and potential conflicts of interest that arise in its business.
Increasingly, AB must manage actual and potential conflicts of interest, including situations where its services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect AB’s reputation, results of operations and business prospects. AB’s reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if AB fails, or appears to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.
Changes in the partnership structure of AB Holding and ABLP or changes in the tax law governing partnerships would have significant tax ramifications.
AB Holding is a publicly traded partnership (“PTP”) for federal income tax purposes. In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management seeks to ensure that AB Holding does not directly or indirectly (through ABLP) enter into a substantial new line of business. A “new line of business” includes any business that is not closely related to AB’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or directly uses more than 15% of its total assets (by value) in, the new line of business.
ABLP is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. In order to preserve ABLP’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. If such units were to be considered readily tradable, ABLP would become subject to federal and state corporate income tax on its net income. If AB Holding and ABLP were to become subject to corporate income tax as set forth above, their net income and quarterly distributions to holders of their units would be materially reduced.
Legal and Regulatory Risks
We focusare heavily regulated.
We are heavily regulated, and regulators continue to increase their oversight over financial services companies. The adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will continue to affect, our business, including making our efforts to comply more expensive and time-consuming. For additional information on Non-GAAP Operating ROE,regulatory developments and the risks we face, including the Dodd-Frank Act and regulation by the NAIC, see “Business—Regulation”.
Our retirement and protection business is subject to a complex and extensive array of state and federal tax, securities, insurance and employee benefit plan laws and regulations, which isare administered and enforced by a measurenumber of different governmental and self-regulatory authorities, including, among others, state insurance regulators, state securities administrators, state banking authorities, the SEC, FINRA, the DOL and the IRS. Failure to administer our retirement and protections products in accordance with contract provisions or applicable law, or to meet any of these complex tax, securities or insurance requirements could subject us to administrative penalties imposed by a governmental or self-regulatory authority, unanticipated costs associated with remedying such failure or other claims, litigation, harm to our reputation or interruption of our Non-GAAP Operating Earnings dividedoperations.
Certain of our insurance subsidiaries are required to file periodic and other reports within certain time periods imposed by U.S. federal securities laws, rules and regulations. Failure to file such reports within the designated time period or failure to accurately report our financial condition or results of operations could require these insurance subsidiaries to curtail or cease sales of certain of our products or delay the launch of new products or new features, which could cause a significant disruption in the business of our insurance subsidiaries. If our affiliated and third-party distribution platforms are required to curtail or cease sales of our products, we may lose shelf space for our products indefinitely, even once we are able to resume sales.
We currently use a captive reinsurer as part of our capital management strategy. Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance and applies retroactively, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our financial condition or results of operations.
67
Table of Contents
Virtually all aspects of our investment management and research business are subject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws and regulations certain foreign jurisdictions in which we conduct business. If we violate these laws or regulations, we could be subject to civil liability, criminal liability or sanction, including restriction or revocation of our professional licenses or registrations or our ability to serve as an investment adviser to registered investment companies or as a qualified professional asset manager for employee benefit plans, revocation of the licenses of our employees, censures, fines, restrictions from relying on the issuance safe harbor of Regulation D under the Securities Act when issuing securities or causing our clients not to be able to rely on Regulation D if we act as an investment adviser, placement agent or promoter for the client or to refers clients to private funds or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a material adverse effect on our business, results of operations or financial condition. A regulatory proceeding could require substantial expenditures of time and money, trigger termination or default rights under contracts to which we are a party and could potentially damage our reputation.
In addition, regulators have imposed and may continue to impose new requirements or issue new guidance aimed at addressing or mitigating climate change-related risks. These emerging regulatory initiatives, or any policies adopted by investors to address changing societal perceptions on climate change, could result in increased compliance cost to our businesses and changes to our corporate governance and risk management practices.

Changes in U.S. tax laws and regulations or interpretations thereof.
Changes in tax laws and regulations or interpretations of such laws, including U.S. tax reform, could increase our corporate taxes and reduce our earnings. Changes may increase our effective tax rate or have implications that make our products less attractive to consumers. Tax authorities may enact laws, change regulations to increase existing taxes, or add new types of taxes and authorities who have not imposed taxes in the past, may impose additional taxes. Any such changes may harm our business, results of operations or financial condition.
Legal proceedings and regulatory actions.
A number of lawsuits and regulatory inquiries have been filed or commenced against us and other financial services companies in the jurisdictions in which we do business. Some of these matters have resulted in the award of substantial fines and judgments, including material amounts of punitive damages, or in substantial settlements. We face a significant risk of, and from time to time we are involved in, such actions and proceedings, including class action lawsuits. The frequency of large damage awards, including large punitive damage awards and regulatory fines that bear little or no relation to actual economic damages incurred, continues to create the potential for an unpredictable judgment in any given matter. In addition, investigations or examinations by federal and state regulators and other governmental and self-regulatory agencies could result in legal proceedings (including securities class actions and stockholder derivative litigation), adverse publicity, sanctions, fines and other costs. A substantial legal liability or a significant federal, state or other regulatory action against us, as well as regulatory inquiries or investigations, may divert management’s time and attention, could create adverse publicity and harm our reputation, result in material fines or penalties, result in significant expense, including legal and settlement costs, and otherwise have a material adverse effect on our business, results of operations or financial condition. For information regarding legal proceedings pending against us, see Note 17 of the Notes to these Consolidated Financial Statements.
Risks Relating to Our Common Stock
Certain provisions in our amended and restated certificate of incorporation and amended and restated by-laws.
Our amended and restated certificate of incorporation and our amended and restated by-laws include a number of provisions that may discourage, delay or prevent a change in our management or prevent a takeover attempt that stockholders may consider favorable. These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered in a takeover context or may even adversely affect the price of our common stock if the provisions discourage takeover attempts. Our amended and restated certificate of incorporation and amended and restated by-laws may also make it difficult for stockholders to replace or remove our management.
We have designated a sole and exclusive forum for certain litigation that may be initiated by our Total equity attributablestockholders.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to Holdings, excluding AOCI, asthe selection of an alternative forum, the Court of Chancery of the State of Delaware is, to the fullest extent permitted by law, be the sole and exclusive forum for a key measurenumber of profitabilityactions. Notwithstanding the foregoing, the exclusive provision shall not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Exchange Act or the Securities Act or the respective rules and regulations promulgated thereunder.
General Risks
68
Table of Contents
Competition from other insurance companies, banks, asset managers and other financial institutions.
We face strong competition from others offering the types of products and services we provide. It is difficult to provide unique retirement and protection or asset management products because, once such products are made available to the public, they often are reproduced and offered by our Company.competitors. If competitors charge lower fees for similar products or services, we may decide to reduce the fees on our own products or services in order to retain or attract customers.
Competition may adversely impact our market share and profitability. Many of our competitors are large and well-established and some have greater market share or breadth of distribution, offer a broader range of products, services or features, assume a greater level of risk, have greater financial resources, have higher claims-paying or credit ratings, have better brand recognition or have more established relationships with clients than we do. We also face competition from new market entrants or non-traditional or online competitors, many of whom are leveraging digital technology that may challenge the position of traditional financial service companies. Due to the competitive nature of the financial services industry, there can be no assurance that we will continue to effectively compete within the industry or that competition will not materially and adversely impact our business, results of operations or financial condition.
Our information systems may fail or their security may be compromised.
Our business is highly dependent upon the effective operation of our information systems and those of our vendors on which our business operations rely. Although we have implemented a formal, risk-based data security and cybersecurity program to mitigate potential risk, our information systems and those of our vendors and service providers may nevertheless be vulnerable to physical or cyber-attacks, computer viruses and malicious code, or other computer related attacks, programming errors and similar disruptive problems which may not be immediately detected. The failure of these systems could cause significant interruptions to our operations, which could result in a material adverse effect on our business, results of operations or financial condition or reputational harm. In addition, a failure of these systems could lead to the possibility of litigation or regulatory investigations or actions, including regulatory actions by state and federal governmental authorities.
Protecting our intellectual property.
We rely on a combination of contractual rights, copyright, trademark and trade secret laws to establish and protect our intellectual property. Third parties may infringe or misappropriate our intellectual property. The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could have a material adverse effect on our business and our ability to compete. Third parties may have, or may eventually be issued, patents or other protections that could be infringed by our products, methods, processes or services or could limit our ability to offer certain product features. If we were found to have infringed or misappropriated a third-party patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from using and benefiting from certain patents, copyrights, trademarks, trade secrets or licenses. Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative. Any of these scenarios could harm our reputation and have a material adverse effect on our business, results of operations or financial condition.
Part I, Item 1B.
UNRESOLVED STAFF COMMENTS
None.

Part I, Item 2.
PROPERTIES
Our principal executive offices at 1290 Avenue of the Americas, New York, New York are occupied pursuant to a lease that extends to 2023. We have entered into a 15-year lease agreement in New York, New York at 1345 Avenue of the Americas that is expected to commence in 2023. We also have the following significant office space leases in Syracuse, NY, under a lease that expires in 2023, which was amended to extend a portion of the space through 2028; Jersey City, NJ, under a lease that expires in 2023, and Charlotte, NC, under a lease that expires in 2028.
AB’s principal executive offices at 501 Commerce Street, Nashville, TN are occupied pursuant to a 15-year lease that commenced during the fourth quarter of 2020. In addition, AB leases office space at 1345 Avenue of the Americas, New York, NY pursuant to a lease expiring in 2024. Also, AB entered into a 20-year lease agreement in New York, NY at 66 Hudson
69
Table of Contents
Boulevard that is expected to commence in 2024. AB also leases space in San Antonio, TX under a lease expiring in 2029. In addition, AB leases modest space in 23 other cities in the United States and AB’s subsidiaries lease space in 30 cities outside the United States, the most significant of which are in London and Hong Kong.




Part I, Item 3.

LEGAL PROCEEDINGS

For information regarding certain legal proceedings pending against us, see Note 17 of the Notes to these Consolidated Financial Statements. See “Risk Factors—Legal and Regulatory Risks—Legal proceedings and regulatory actions.”

Part I, Item 4.

MINE SAFETY DISCLOSURES
Not Applicable.

Part II, Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
General
Our common stock, par value $0.01 per share, began trading on the NYSE under the symbol “EQH” on May 10, 2018. As of January 31, 2022, there were nine shareholders of record, which differs from the number of beneficial owners of our common stock.
Dividends
The declaration, payment and amount of future dividends is subject to the discretion of our Board of Directors and depends on our financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by Holdings’ insurance subsidiaries and other factors deemed relevant by the Board. The payment of dividends will be substantially restricted in the event that we do not declare and pay (or set aside) dividends on the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, for the last proceeding dividend period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating Measures—Non-GAAP Operating ROELiquidity and Non-GAAP Operating ROCCapital Resources—Dividends Declared and Paid” for further information regarding common stock dividends.
Purchases of Equity Securities by Segment”.the Issuer
The Tax Reform Act reducedfollowing table summarizes Holdings’ repurchases of its common stock during the three months ended December 31, 2021.
PeriodTotal Number of Shares (or Units) PurchasedAverage Price Paid per Share (or Unit)Total Number of Shares (or Units) Purchased as Part of Publicly Announced ProgramsApproximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Program (1)
Month #1 (October 1-31)— $— — $461,592,672 
Month #2 (November 1-30)6,479,103 $33.44 6,479,103 $263,707,822 
Month #3 (December 1-31)7,134,993 $32.30 7,134,993 $5,243,868 
Total13,614,096 $32.84 13,614,096 $5,243,868 

_____________
(1)See Note 20 of the Notes to these Consolidated Financial Statements for the Share Repurchase program.


Table of Contents
Holdings may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate Holdings to purchase any particular number of shares. During the three months ended December 31, 2021, the Company repurchased approximately $14 million shares of its common stock, at a total cost of approximately $447 million. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets.
Stock Performance Graph
The graph and table below present Holdings’ cumulative total shareholder return relative to the performance of: (1) the Standard & Poor’s 500 Index; (2) the Standard & Poor’s 500 Insurance Index; and (3) the Standard & Poor’s 500 Financials Index, respectively, for the year ended December 31, 2021, commencing May 14, 2018 (our initial day of “regular-way” trading on the NYSE). All values assume a $100 initial investment in the Holdings’ common stock on the NYSE and data for each of the Standard & Poor’s 500 Index, the Standard & Poor’s 500 Insurance Index and the Standard & Poor’s 500 Financials Index assume all dividends were reinvested on the date paid. The points on the graph and the values in the table represent quarter-end values based on the last trading day of each quarter. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our effective tax rate on Non-GAAP Operating Earnings, which resultedcommon stock.
eqh-20211231_g14.jpg
May 14, 2018Jun 30, 2018Sep 30, 2018Dec 31, 2018Mar 31, 2019Jun 30, 2019Sep 30, 2019Dec 31, 2019
 Equitable Holdings, Inc.$100.00 $96.35 $100.86 $78.71 $95.93 $100.28 $107.11 $120.53 
S&P 500$100.00 $99.93 $107.63 $93.08 $105.79 $110.34 $112.21 $122.39 
S&P 500 Financials$100.00 $94.40 $98.51 $85.59 $92.92 $100.35 $102.37 $113.09 
S&P 500 Insurance$100.00 $95.88 $102.59 $91.70 $103.47 $115.60 $117.15 $118.64 
71
Table of Contents
Mar 31,
2020		Jun 30,
2020		Sep 30,
2020		Dec 31,
2020		Mar 31,
2021		Jun 30,
2021		Sep 30,
2021		Dec 31,
2021
Equitable Holdings, Inc.$70.48 $94.93 $90.47 $127.79 $163.81 $153.77 $150.52 $169.33 
S&P 500$98.30 $118.49 $129.07 $144.74 $153.66 $166.80 $167.77 $183.22 
S&P 500 Financials$85.03 $97.50 $100.52 $118.38 $130.98 $137.90 $144.64 $155.02 
S&P 500 Insurance$76.98 $86.37 $90.21 $111.13 $128.80 $139.58 $143.40 $150.98 
Part II, Item 6. RESERVED

Part II, Item 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in an improvement to Non-GAAP Operating Earnings.conjunction with “Selected Financial Data” and our annual financial statements included elsewhere herein. In addition to the favorable change in tax rate, we anticipatehistorical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that the following key initiatives will assist us in increasing our Non-GAAP Operating ROE to our stated goal:
General Account Optimization: We have begun to transition $5 billion of our General Account investment portfolioinvolve risks, uncertainties and assumptions. Actual results may differ materially 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.
AB’s Margin Target Expansion: AB previously adopted a goal of increasing AB’s consolidated adjusted operating margin to 30% by 2020. Significant declinesthose discussed 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.
AB’s adjusted operating margin is a financial measure that is not comparable to our Non-GAAP Operating Earnings measure. Adjusted operating margin is a non-GAAP financial measure used by AB’s management in evaluating AB’s financial performance on a standalone basis and to compare its performance, as reported by AB, in its periodic reports. In setting this goal, AB made a number of significant assumptions, including with respect to levels of positive net flows into its investment services, the growth in its alternative products business, rates of increase in fixed costs as well as transitional costs associated with establishing its headquarters in Nashville, TN, including employee relocation, severance, recruitment and duplicative occupation and occupancy costs, and the timing of such costs, its success in achieving planned cost reductions and the timing of such cost reductions, investments it makes in its business and general market conditions.
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.
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

opportunistically manage our in-force portfolio through potential market transactions, reinsurance and the exercise of our contractual rights.
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.
These goals are based on our baseline business plan scenario, developed at the time of our IPO, which we refer to as our “Base Case Scenario.” Our Base Case Scenario assumes 6.25% annual equity market returns, the yield on the 10-year U.S. Treasury note rising ratably over the next 10 years to 2.8% and policyholder behavior based on our current best estimate assumptions which include dynamic variables to reflect the impact of a change in market levels. Actual results related to these targets may vary depending on various factors, including actual capital market outcomes, changes in actuarial models or emergence of actual experience, changes in regulation as well as other risks and factors discussed in “Risk Factors.” Non-GAAP Operating ROE and Non-GAAP Operating Earnings are non-GAAP financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating Measures” for a discussion of our non-GAAP financial measures.
In setting the targets described above, we have made significant assumptions with respect to, among other things:
our amount of new sales of individual retirement, group retirement and protection solutions products;
net flows at AB and the amount of distributions from AB;
the absence of new regulation such as NAIC variable annuity reserve and capital reform;
effective tax rates lower than the federal statutory rate of 21%;
our degree of leverage, including indebtedness incurred in connection with the IPO;
limited differences between actual experience and existing actuarial assumptions, including assumptions for which existing experience is limited and experience will emerge over time;
the efficacy and maturity of existing actuarial models to appropriately reflect all aspects of our existing and in-force businesses;
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;
our ability to implement our business strategy, including optimizing our General Account portfolio and reducing expenses;
the successful implementation of our key initiatives outlined above;
our access to capital; and
general conditions of the markets in which our businesses operate.
While these targets are presented with numerical specificity, and we believe such targets to be reasonable as of the date of this Annual Report on Form 10-K, given the uncertainties surrounding such assumptions, there are significant risks that these assumptions may not be realized andforward-looking statements as a result the financial goals may not be achieved. In calculatingof various factors. Factors that could or do contribute to these goals, we exclude several significant impacts to our Protection Solutions segment in 2017 including actuarial assumption updates and model changes, a maintenance expense assumption update, a mortality table update and loss recognition testing. For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—Protection Solutions.” We also exclude the anticipated beneficial impact of tax reform on Non-GAAP Operating Earnings. Accordingly, our actual results may differ from these financial goals and the differences may be material and adverse, particularly if actual events adversely differ from one or more of our key assumptions. The financial goals and their underlying assumptions are forward-looking statements and can be affected by any of theinclude those factors discussed below and elsewhere in this Form 10-K, particularly under the captions “Risk Factors” and “Note Regarding Forward-Looking Statements and Information.” We strongly caution investors not to place undue reliance on any of these assumptions or financial goals. Except as may be required by applicable securities laws, we are not under any obligation and expressly disclaim any obligation to update or alter any assumptions, estimates, financial goals, projections or other related statements that we may make.

Segment Information
Executive Summary
Overview
We are organized intoone of America’s leading financial services companies, providing: (i) advice and solutions for helping Americans set and meet their retirement goals and protect and transfer their wealth across generations; and (ii) a wide range of investment management insights, expertise and innovations to drive better investment decisions and outcomes for clients worldwide.
We manage our business through four segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. We report certain activities and items that are not included in ourthese segments in Corporate and Other.
 The following table presents operating earnings (loss) by segment and Corporate and Other for the years ended December 31, 2018, 2017 and 2016:
 Years Ended December 31,
 2018 2017 2016
 (in millions)
      
Operating earnings (loss) by segment:     
Individual Retirement$1,555
 $1,252
 $1,167
Group Retirement389
 283
 167
Investment Management and Research381
 211
 161
Protection Solutions197
 502
 77
Corporate and Other(356) (213) (181)
Non-GAAP Operating Earnings$2,166
 $2,035
 $1,391
For additional financial information on segments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment” and See Note 19 of the Notes to thethese Consolidated Financial Statements.Statements for further information on our segments.
We benefit from our complementary mix of businesses. This business mix provides diversity in our earnings sources, which helps offset fluctuations in market conditions and variability in business results, while offering growth opportunities.
Individual Retirement
Our Individual Retirement segment is a leading providerReinsurance of individual variable annuity products, which are primarily soldLegacy Variable Annuity Block and Sale of Runoff Variable Annuity Reinsurance Entity
On June 1, 2021, Holdings completed the sale of CS Life to affluentVIAC pursuant to the Master Transaction Agreement, among the Company, VIAC and, high net worth individuals saving for retirement or seeking guaranteed retirement income. We have a long history of innovation, as onesolely with respect to Article XIV thereof, Venerable.
Pursuant to the Master Transaction Agreement, immediately prior to the closing of the first companies,Venerable Transaction, CS Life effected the recapture of all of the business that was ceded to the Reinsurance Subsidiary, and sold 100% of the equity of the Reinsurance Subsidiary to another wholly owned subsidiary of the Company. Immediately following the closing of the Venerable Transaction, CS Life and Equitable Financial entered into a the Reinsurance Agreement, pursuant to which Equitable Financial ceded to CS Life, on a combined coinsurance and modified coinsurance basis the Block, comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit guarantees.
In addition, upon the completion of the Venerable Transaction, EIMG acquired an approximate 9.09% equity interest in 1968,Venerable’s parent holding company, VA Capital Company LLC. In connection with such investment, EIMG designated a member to enter the variable annuity market, as the first company, in 1996, to provide variable annuities with living benefits, and as the first company, in 2010, to bring to market an index-linked variable annuity product. Our Individual Retirement business is an important sourceBoard of earnings and cash flow for our company, and we believe our hedging strategy preserves a substantial portionManagers of these cash flows across a wide range of risk scenarios. The primary sources of revenue for our Individual Retirement segment include fee revenue and investment income. As of December 31, 2018, we had more than 900,000 variable annuity contracts in force, representing approximately $94.6 billion of AV.VA Capital Company LLC.
We principally focus on selling three variable annuity products, each of which provides policyholders with distinct benefits, features and return profiles.
COVID-19 Impact
We continue to innovateclosely monitor developments related to the COVID-19 pandemic. The COVID-19 pandemic has negatively impacted the U.S. and global economies and financial markets continue to experience significant volatility as the pandemic evolves. As a financial services company, factors such as the volatility and strength of equity markets, interest rates,
72
Table of Contents
consumer spending, and government debt and spending all affect the business and economic environment and, ultimately, the amount and profitability of our offering, periodically updatingbusiness. The ongoing economic impact and the potential for continued volatility and declines in the capital markets could have a significant adverse effect on our product benefitsbusiness, results of operations and introducing new variable annuityfinancial condition, particularly if economic activity and financial markets do not recover or recover slowly.
The pandemic and related economic impacts could adversely affect demand for our products and services and our investment returns. The profitability of many of our retirement, protection and investment products depends in part on the value of the AUM supporting them, which could decline substantially depending on any of the foregoing conditions. In addition, the growing number of COVID-19 related deaths could have an adverse effect on our insurance business due to increased mortality and morbidity rates. To date, COVID-19 related impacts, including adverse mortality experience, have been manageable and below initial expectations.
Efforts to prevent the spread of COVID-19 have affected our business directly in a number of ways, including through the temporary closures of many businesses and schools and the institution of social distancing requirements in many states and local communities. In response to the pandemic, we have adapted our processes to meet client needs. For example, we modified our underwriting policies to offer a fluid-less, touchless process to help more clients access the evolving needs ofprotection they need. In addition, we accelerated our digital adoption programs, leading to improved outcomes for clients, while managingadvisors, and the riskCompany. Given the challenges over the last year our advisors have faced in engaging with our educator clients, we have developed digital tools and return of these variable annuity products toenhanced our company. Due to our innovation, our product mix has evolved considerably sinceremote engagement, which is resulting in improved retention and increases in retirement plan contributions.
While the financial crisis. The majority of our sales in 2018 consisted of products without GMxB features (other thanCOVID-19 pandemic significantly affected the return of premium (“ROP”) death benefit),capital markets and 1% of 2018 FYP was attributable to products with fixed rate guarantees. Weeconomy, we believe the actions we have previously taken help assure that our current portfolio of less capital-intensive products offers a range of solutions for our clientseconomic balance sheet is protected from interest rate and provides us with attractive risk-adjusted returns.
We sell our variable annuity products through AXA Advisors and a wide network of over 600 third-party firms, including banks, broker-dealers and insurance partners, reaching more than 100,000 advisors. This differentiated distribution network, along with our diverse product portfolio, has enabled us to rank among the industry leaders in sales of variable annuity products. As of December 31, 2017, we ranked third in variable annuity market share based on sales, according to Morningstar, Inc. (“Morningstar”), and our wholesalers serving third-party firms ranked second in variable annuity sales productivity in the third-party channel, according to Market Metrics. As of December 31, 2017, our in-force block ranked fifth based on variable annuity net assets, according to Morningstar.
We believe that our current portfolio of less capital-intensive products offers a range of solutions for our clients and provides us with attractive risk-adjusted returns. To further our growth, we plan to continue to innovateequity declines. These actions include redesigning our product portfolio expandto concentrate on offering less capital intensive products and deepen our distribution channelsimplementing a hedging strategy that manages and effectively manage risk in our business.
Product Innovation. We have created a diverse portfolio of variable annuity products that are designed to be attractive in different market scenarios and economic conditions. We will seek opportunities to expand our product line-up in new segments

of the individual variable annuity market that leverage our product design, risk management and distribution capabilities and provide additional growth opportunities with favorable risk-adjusted returns. For affluent and high net worth clients approaching retirement, our individual retirement products offer customers protectionprotects against market volatility and help instill confidence that their income needs will be satisfied in their retirement years.
Distribution Expansion. We have a large and differentiated distribution network that includes AXA Advisors and a wide range of financial services firms including broker-dealers, banks, insurance partners and brokerage general agencies. We have had considerable success in evolving our third-party distribution network by growing in the bank, broker-dealer and insurance partner channels and will seek opportunities to continue to expand our distribution network by deepening relationships with existing partners and developing relationships with new partners and channels.
Risk Management. We have taken a multi-pronged approach to actively manage the economic risks associated with our in-force variable annuityGMxB products. We use a dynamic hedging strategy to offset changes in the economic liability of our GMxB features due to changes in equity markets and interest rates (within this strategy we reevaluate our economic exposure at least daily and rebalance our hedge positions accordingly). In the fourth quarter of 2017 and the first quarter of 2018, we supplemented this dynamic strategy with additional static hedge positions (derivatives positions intended to be held to maturity with less frequent re-balancing) to maintain a target asset level for all variable annuities at a CTE98 level under most economic scenarios, and to maintain a CTE95 level even in extreme scenarios. In addition to theseour hedging strategies,strategy, we employ various other methods to manage the risks of our in-force variable annuity products, including reinsurance, asset-liability matching, volatility management tools within the Separate Accounts and an active in-force management program, including buyout offers.offers for certain products. Due to the General Account’s exposure to U.S. government bonds and credit quality of the portfolio, we feel that our balance sheet is well positioned to withstand the extreme volatility in the capital markets.
While the COVID-19 pandemic has negatively impacted our business and financial results, the extent and nature of its full financial impact cannot reasonably be estimated at this time due to developments that are still highly uncertain, including the severity and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic and the availability and efficacy of vaccines against COVID-19 and its variants. For additional information regarding the potential impacts of the COVID-19 pandemic, see “Risk Factors—Risks Relating to Conditions in the Financial Markets and Economy—The coronavirus (COVID-19) pandemic.”
Revenues
Our revenues come from three principal sources:
•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.
Our fee income varies directly in relation to the amount of the underlying AV or benefit base of our retirement and protection products and the amount of AUM of our Investment Management and Research business. AV and AUM, each as defined in “Key Operating Measures,” are influenced by changes in economic conditions, primarily equity market returns, as well as net flows. Our premium income is driven by the growth in new policies written and the persistency of our in-force policies, both of which are influenced by a combination of factors, including our efforts to attract and retain customers and market conditions that influence demand for our products. Our investment income is driven by the yield on our General Account investment portfolio and is impacted by the prevailing level of interest rates as we reinvest cash associated with maturing investments and net flows to the portfolio.
73
Table of Contents
Benefits and Other Deductions
Our primary expenses are:
•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.
Policyholders’ benefits are driven primarily by mortality, customer withdrawals, and benefits which change in response to changes in capital market conditions. In addition, some of our policyholders’ benefits are directly tied to the AV and benefit base of our variable annuity products. Interest credited to policyholders varies in relation to the amount of the underlying AV or benefit base. Sales commissions and compensation paid to intermediaries and advisors vary in relation to premium and fee income generated from these sources, whereas compensation and benefits to our employees are more constant and impacted by market wages and decline with increases in efficiency. Our ability to manage these expenses across various economic cycles and products is critical to the profitability of our company.
Net Income Volatility
We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. Changes in the values of the derivatives associated with these programs due to equity market and interest rate movements are recognized in the periods in which they occur while corresponding changes in offsetting liabilities not measured at fair value are recognized over time. This results in net income volatility as further described below. See “—Significant Factors Impacting Our Results—Impact of Hedging and GMxB Reinsurance on Results.”
In addition to our dynamic hedging strategy, we have static hedge positions designed to mitigate the adverse impact of changing market conditions on our statutory capital. We believe this program will continue to preserve the economic value of our variable annuity contracts and better protect our target variable annuity asset level. However, these static hedge positions increase the size of our derivative positions and may result in higher net income volatility on a period-over-period basis.
Due to the impacts on our net income of equity market and interest rate movements and other items that are not part of the underlying profitability drivers of our business, we evaluate and manage our business performance using Non-GAAP Operating Earnings, a non-GAAP financial measure that is intended to remove these impacts from our results. See “—Key Operating Measures—Non-GAAP Operating Earnings.”
Significant Factors Impacting Our Results
The following significant factors have impacted, and may in the future impact, our financial condition, results of operations or cash flows.
Impact of Hedging and GMxB Reinsurance on Results
We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. These programs include:
•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, we have a hedging program using static hedge positions (derivative positions intended to be HTM with less frequent re-balancing) to protect our
74
Table of Contents
statutory capital against stress scenarios. This program in addition to our dynamic hedge program has increased 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.
•GMxB 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 GMIB reserves are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts. Accordingly, our gross reserves will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts. Because changes in the fair value of the GMIB reinsurance contracts are recorded in the period in which they occur and a majority of the changes in gross reserves for GMIB are recognized over time, net income will be more volatile. In addition, on June 1, 2021, we ceded legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. As this contract provides full risk transfer and thus has the same risk attributes as the underlying direct contracts, the benefits of this treaty are accounted for in the same manner as the underlying gross reserves.
Effect of Assumption Updates on Operating Results
During the third quarter of each year, we conduct our annual review of the assumptions underlying the valuation of DAC, deferred sales inducement assets, unearned revenue liabilities, liabilities for future policyholder benefits and embedded derivatives for our Individual Retirement, Group Retirement, and Protection Solution segments (assumption reviews are not relevant for the Investment Management and Research segment). Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgment and reflect our best estimate as of the date of the applicable financial statements.
Most of the variable annuity products, variable universal life insurance and universal life insurance products we offer maintain policyholder deposits that are reported as liabilities and classified within either Separate Accounts liabilities or policyholder account balances. Our products and riders also impact liabilities for future policyholder benefits and unearned revenues and assets for DAC and DSI. The valuation of these assets and liabilities (other than deposits) are based on differing accounting methods depending on the product, each of which requires numerous assumptions and considerable judgment. The accounting guidance applied in the valuation of these assets and liabilities includes, but is not limited to, the following: (i) traditional life insurance products for which assumptions are locked in at inception; (ii) universal life insurance and variable life insurance secondary guarantees for which benefit liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments; (iii) certain product guarantees for which benefit liabilities are accrued over the life of the contract in proportion to actual and future expected policy assessments; and (iv) certain product guarantees reported as embedded derivatives at fair value.
For further details of our accounting policies and related judgments pertaining to assumption updates, see Note 2 of the Notes to these Consolidated Financial Statements and “—Summary of Critical Accounting Estimates—Liability for Future Policy Benefits”.
Assumption Updates and Model Changes
We conduct our annual review of our assumptions and models during the third quarter of each year. We also update our assumptions as needed in the event we become aware of economic conditions or events that could require a change in our assumptions that we believe may have a significant impact to the carrying value of product liabilities and assets and consequently materially impact our earnings in the period of the change.
Impact of Assumption Updates and Model Changes on Income from Continuing Operations before income taxes and Net income (loss)
The table below presents the impact of our actuarial assumption update during 2021, 2020 and 2019 to our income (loss) from continuing operations, before income taxes and net income (loss).
75
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Impact of assumption update on Net income (loss):
Variable annuity product features related assumption update$(91)$(1,531)$(1,467)
Assumption updates for other business(17)(1,060)76 
Impact of assumption updates on Income (loss) from continuing operations, before income tax(108)(2,591)(1,391)
Income tax benefit on assumption update23 544 292 
Net income (loss) impact of assumption update$(85)$(2,047)$(1,099)
2021 Assumption Updates
The impact of the assumption update during 2021 was a decrease of $108 million to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $85 million. As part of this annual update completed as of September 30, 2021, the reference interest rate utilized in our GAAP fair value calculations was updated from the LIBOR swap curve to the US Treasury curve, which represents a reasonable proxy of the cost of funding the derivative positions backing our GMxB liabilities. Concurrently, our GAAP fair value liability risk margins were increased. which when considered with the change from LIBOR, resulted in an immaterial impact to overall valuation as our view regarding market participant pricing of our guarantees has not changed at the time of this update.
The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $108 million consisted of a decrease in policy charges and fee income of $28 million, a decrease in policyholders’ benefits of $62 million, an increase in net derivative losses of $200 million and a decrease in the amortization of DAC of $58 million.
2020 Assumption Updates
Our annual review in 2020 resulted in the removal of the credit risk adjustment from our fair value scenario calibration to reflect our revised view of market participant practices, offset by updates to our mortality and policyholder behavior assumptions to reflect emerging experience.
In 2020, in addition to the annual review, we updated our assumptions in the first quarter due to the extraordinary economic conditions driven by the COVID-19 pandemic. The first quarter update included an update to the interest rate assumption to grade from the current interest rate environment at that time to an ultimate five-year historical average over a 10-year period. As such, the 10-year U.S. Treasury yield grades from the current level to an ultimate 5-year average of 2.25%.
The low interest rate environment and update to the interest rate assumption caused a loss recognition event for our life interest-sensitive products, as well as to certain run-off business included in Corporate and Other. This loss recognition event caused an acceleration of DAC amortization on our life interest-sensitive products and an increase in the premium deficiency reserve on the run-off business in the first quarter of 2020.
The net impact of assumption changes during 2020 was an increase in policy charges and fee income of $23 million, an increased policyholders’ benefits by $1.6 billion, decreased interest credited to policyholders’ account balances by $1 million, increased net derivative gains (losses) by $112 million and increased amortization of DAC by $1.1 billion. This resulted in a decrease in income (loss) from operations, before income taxes of $2.6 billion and decreased net income (loss) by $2.0 billion. The 2020 impacts related to assumption updates were primarily driven by the first quarter updates.
2019 Assumption Updates
The impact of assumption updates in 2019 was a decrease of $1.4 billion to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $1.1 billion. This includes a $1.5 billion unfavorable impact on the reserves for our variable annuity product features as a result of unfavorable updates to our: (i) interest rate assumptions; and (ii) policyholder behavior, primarily lapse and withdrawal assumptions, further magnified by low interest rates.
The net impact of these assumption updates on income (loss) from continuing operations, before income taxes of $1.4 billion consisted of an increase in policy charges and fee income of $3 million, an increase in policyholders’ benefits of $875
76
Table of Contents
million, a decrease in interest credited to policyholders’ account balances of $13 million, a decrease in net derivative gains (losses) of $578 million and a decrease in the amortization of DAC of $46 million.
2021 and 2019 Model Changes
There was no material impact to our income (loss) from continuing operations, before income taxes or net income (loss) from model changes during 2021 and 2019.
2020 Model Changes
In the first quarter of 2020, we adopted a new economic scenario generator to calculate the fair value of the GMIB reinsurance contract asset and GMxB derivative features liability, eliminating reliance on AXA for scenario production. The new economic scenario generator allows for a tighter calibration of U.S. indices, better reflecting our actual portfolio. The net impact of the new economic scenario generator resulted in an increase in income (loss) from continuing operations, before income taxes of $201 million, and an increase to net income (loss) of $159 million for the year ended December 31,2020. There were no other model changes that made a material impact to our income (loss) from continuing operations, before income taxes or net income (loss).
Impact of Assumption Updates and Model Changes on Pre-tax Non-GAAP Operating Earnings Adjustments
The table below presents the impact on pre-tax Non-GAAP Operating Earnings of our actuarial assumption updates during 2021, 2020 and 2019 by segment and Corporate and Other.
Year Ended December 31,
202120202019
(in million)
Impact of assumption updates by segment:
Individual Retirement$(47)$(28)$104 
Group Retirement35 (3)3 
Protection Solutions20 4 (4)
Impact of assumption updates on Corporate and Other— (12)(27)
Total impact on pre-tax Non-GAAP Operating Earnings$8 $(39)$76 
2021 Assumption Updates
The impact of our 2021 annual review on Non-GAAP Operating Earnings was favorable by $8 million before taking into consideration the tax impacts or $6 million after tax. For Individual Retirement segment, the impacts primarily reflect updated mortality on our older payout business. For Group Retirement segment, the impacts reflect updated economic assumptions. The annual update for Protection Solutions segment reflects favorable economic conditions and surrenders primarily on the VUL line. This, in turn, creates future profits and lowers the accrual on our PFBL reserve.
The net impact of assumption changes on Non-GAAP Operating Earnings in the third quarter of 2021 decreased Policy charges and fee income by $28 million, increased Policyholders’ benefits by $22 million, and decreased Amortization of DAC by $58 million. Non-GAAP Operating Earnings excludes items related to Variable annuity product features, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments.
2020 Assumption Updates
The impact of our 2020 annual review on Non-GAAP Operating Earnings was unfavorable by $39 million before taking into consideration the tax impacts or $31 million after tax. For the Individual Retirement segment, the impacts primarily reflect higher surrenders at the end of the surrender charge period on Retirement Cornerstone policies. The impact of our 2020 annual review was not material for our Group Retirement and Protection Solutions segments.
The net impact of assumption changes on Non-GAAP Operating Earnings in the third quarter of 2020 decreased Policy charges and fee income by $23 million, increased Policyholders’ benefits by $46 million, increased Interest credited to policyholders’ account balances by $5 million and decreased Amortization of DAC by $35 million. Non-GAAP Operating Earnings excludes items related to Variable annuity product features and the impact of COVID-19, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments.
77
Table of Contents
2019 Assumption Updates
The impact of our 2019 annual review on Non-GAAP Operating Earnings was favorable by $60 million, or $76 million before taking into consideration the tax impacts.
•For the Individual Retirement segment, the impacts primarily reflect favorable updates to amortization of DAC from lower lapse assumptions.
•For the Group Retirement segment, the impacts primarily reflect a favorable update to maintenance expenses.
•For the Protection Solutions segment, the results primarily reflect unfavorable updates to mortality and economic assumptions, partially offset by a favorable update to maintenance expenses.
Non-GAAP Operating Earnings excludes items related to variable annuity product features, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments. The net impact of assumption changes on Non-GAAP Operating Earnings in the third quarter of 2019 increased policy charges and fee income by $3 million, decreased policyholder’ benefits by $15 million, decreased interest credited to policyholders’ account balances by $13 million and decreased amortization of DAC by $46 million.
Impact of the First Quarter 2020 Assumption Update, and COVID-19 Impacts on Pre-tax Non-GAAP Operating Earnings Adjustments
The unprecedented and rapid spread of COVID-19 and the related restrictions and social distancing measures implemented throughout the world caused severe, lasting turmoil in the financial markets during the first six months of 2020.
The Company’s accounting policy governing its Non-GAAP Operating Earnings measure permits adjustments to Non-GAAP Operating Earnings if certain criteria are met, which include if the proposed adjustment relates to a non-recurring event or transaction. Management concluded that all impacts on the Company from the COVID-19 pandemic and its effects on the economy meet the indicators of a non-recurring event. Therefore, management has determined that the items set forth in the table below should be included as adjustments to the Non-GAAP Operating Earnings measure so that investors can more clearly see the delineation between the operating results of the Company’s core operations and the impact of the items specific to the current COVID-19 pandemic crisis.
The table below presents the COVID-19 pandemic related impacts on income (loss) from continuing operations, before income taxes by segment and Corporate and Other, and the COVID-19 pandemic related adjustments included in the reconciliation of Net Income (loss) attributable to Holdings to Non-GAAP Operating Earnings:
Year Ended December 31, 2020
COVID-19 Impacts
Interest Rate Assumption UpdateImpacts other than Interest Rate Assumption
Update (1)		Total
(in millions)
Net income (loss) from continuing operations, before income taxes by Segment and Corporate and Other:
Individual Retirement$(1,417)$(43)$(1,460)
Group Retirement(51)— (51)
Protection Solutions(1,016)(75)(1,091)
Corporate and Other(33)(3)(36)
Net income (loss) from continuing operations, before income taxes$(2,517)$(121)$(2,638)



COVID-19-related adjustments included in Reconciliation of Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings:
Variable annuities product features$(1,468)$(35)$(1,503)
Other adjustments(1,049)(86)(1,135)
Net income (loss) from continuing operations, before income taxes$(2,517)$(121)$(2,638)
78
Table of Contents
_______________
(1)Includes adjustments to Non-GAAP Operating Earnings primarily due to non-variable annuity hedging impacts resulting from unprecedented volatility in equity markets and accelerated amortization of DAC due to loss recognition in the first half of 2020 resulting from first quarter 2020 interest rate assumption update.
Adjustments related to the Individual Retirement and Group Retirement segments are primarily included in the “Variable annuities product features” in the reconciliation of Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings. All other adjustments are included in “Other”. This impact has been more than offset by hedging gains.
Macroeconomic and Industry Trends
Our business and consolidated results of operations are significantly affected by economic conditions and consumer confidence, conditions in the global capital markets and the interest rate environment.
Financial and Economic Environment
A wide variety of factors continue to impact global financial and economic conditions, including, among others, the COVID-19 pandemic, volatility in financial markets, rising inflation rates, continued low interest rates, changes in fiscal or monetary policy and supply chain disruptions.
Stressed conditions, volatility and disruptions in the capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors, including changes in interest rates, which are anticipated to occur in 2022 based on statements of members of the Board of Governors of the Federal Reserve System. An increase in market volatility could continue to affect our business, including through effects on the yields we earn on invested assets, changes in required reserves and capital and fluctuations in the value of our AUM, AV or AUA from which we derive our fee income. These effects could be exacerbated by uncertainty about future fiscal policy, changes in tax policy, the scope of potential deregulation and levels of global trade.
The potential for increased volatility, coupled with prevailing interest rates falling and/or remaining below historical averages, could pressure sales and reduce demand for our products as consumers consider purchasing alternative products to meet their objectives. In addition, this environment could make it difficult to consistently develop products that are attractive to customers. Financial performance can be adversely affected by market volatility and equity market declines as fees driven by AV and AUM fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows.
We monitor the behavior of our customers and other factors, including mortality rates, morbidity rates, annuitization rates and lapse and surrender rates, which change in response to changes in capital market conditions, to ensure that our products and solutions remain attractive and profitable. For additional information on our sensitivity to interest rates and capital market prices, see “Quantitative and Qualitative Disclosures About Market Risk.”
Interest Rate Environment
We believe the interest rate environment will continue to impact our business and financial performance in the future for several reasons, including the following:
•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.
79
Table of Contents
For a discussion on derivatives we used to hedge interest rates, see Note 4 of the Notes to these Consolidated Financial Statements in this Form 10-K.
Regulatory Developments
Our life insurance subsidiaries are regulated primarily at the state level, with some policies and products also subject to federal regulation. In addition, Holdings and its insurance subsidiaries are subject to regulation under the insurance holding company laws of various U.S. jurisdictions. Furthermore, on an ongoing basis, regulators refine capital requirements and introduce new reserving standards. Regulations recently adopted or currently under review can potentially impact our statutory reserve, capital requirements and profitability of the industry and result in increased regulation and oversight for the industry. For additional information on regulatory developments and the risks we face, see “Business—Regulation” and “Risk Factors—Legal and Regulatory Risks.”
Separation Costs
In connection with our separation from AXA, we have incurred expenses of $722 million of which $82 million, $108 million, and $222 million was incurred in 2021, 2020 and 2019, respectively. These expenses primarily relate to information technology, compliance, internal audit, finance, risk management, procurement, client service, human resources, rebranding and other support services. We have successfully completed our separation from AXA and do not expect to incur any additional expense related to the separation from AXA.
Variable Annuities Policy Feature Overview
Variable annuities allow the policyholder to make deposits into accounts offering variable investment options. For deposits allocated to Separate Accounts, the risks associated with the investment options are borne entirely by the policyholder, except where the policyholder elects GMxB features in certain variable annuities, for which additional fees are charged. Additionally, certain variable annuity products permit policyholders to allocate a portion of their account to investment options backed by the General Account and are credited with interest rates that we determine, subject to certain limitations. As of December 31, 2018,2021, the total AV of our variable annuity products was $94.6$111.9 billion,, consisting of $74.0$74.2 billion of Separate AccountAccounts AV and $20.6$37.7 billion of General Account AV.
Certain variable annuity products offer one or more GMxB features in addition to the standard return of premium death benefit guarantee. GMxB features (other than the return of premium death benefit guarantee) provide the policyholder a minimum return based on their initial deposit adjusted for withdrawals (i.e.(i.e., the benefit base), thus guarding against a downturn in the markets. The rate of this return may increase the specified benefit base at a guaranteed minimum rate (i.e.(i.e., a fixed roll-up rate) or may increase the benefit base at a rate tied to interest rates (i.e.(i.e., a floating roll-up rate). GMxB riders must be chosen by the policyholder no later than at the issuance of the contract.
The following table presents our variable annuity AV by GMxB feature for our variable annuity business in our Individual Retirement segment as of December 31, 2018, 20172021, 2020 and 2016:2019:
December 31,
202120202019
(in millions)
Account Value
Non-GMxB$43,843 $36,162 $30,694 
ROP Death Benefit Only (1)11,438 10,438 9,620 
Total Non-GMxB & ROP Death Benefit Only55,281 46,600 40,314 
Floating Rate GMxB26,486 25,168 23,891 
Fixed Rate GMxB (1)30,137 45,622 44,717 
Total Variable Annuity AV$111,904 $117,390 $108,922 
8
Table of Contents
 As of December 31,
 2018 2017 2016
 (in millions)
Account Value     
Non-GMxB$23,759
 $22,429
 $17,433
ROP Death Benefit Only8,730
 9,592
 9,309
Total Non-GMxB & ROP Death Benefit Only$32,489
 $32,021
 $26,742
Floating Rate GMxB20,633
 21,599
 18,768
Fixed Rate GMxB41,467
 49,803
 48,094
Total Variable Annuity AV$94,589
 $103,423
 $93,604

(1) AV is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements.
The following table presents our variable annuity benefit base by GMxB feature for the Individual Retirement segment as of December 31, 2018, 20172021, 2020 and 2016.2019. Many of our variable annuity contracts offer more than one type of GMxB feature such that the amounts listed below are not mutually exclusive. Thus, the benefit base cannot be totaled.
December 31,
202120202019
(in millions)
Benefit Base
ROP Death Benefit Only (1)$6,444 $6,141 $6,048 
Floating Rate GMxB
GMDB$23,574 $23,095 $22,793 
GMIB$24,123 $23,029 $22,108 
Fixed Rate GMxB
GMDB (1)$34,017 $58,028 $59,365 
GMIB (1)$34,719 $60,695 $61,775 
 As of December 31,
 2018 2017 2016
 (in millions)
Benefit Base     
ROP Death Benefit Only$6,072
 $6,281
 $6,640
Floating Rate GMxB     
GMDB21,924
 20,628
 18,948
GMIB19,670
 18,412
 16,211
Fixed Rate GMxB     
GMDB61,220
 62,702
 63,926
GMIB63,431
 64,673
 66,310
(1) Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements.
The guaranteed benefit received by a policyholder pursuant to a GMxB feature is calculated based on the benefit base. The benefit base is defined as a hypothetical amount (i.e.(i.e., not actual cash value) used to calculate the policyholder’s optional benefits within a variable annuity. A benefit base cannot be withdrawn for cash and is used solely to calculate the variable annuity’s optional guarantees.guarantee values. Generally, the benefit base is not subject to a cap on the value. However, the benefit base stops increasing after a defined time period or at a maximum age, usually age 85 or 95, as defined in the contract.
The calculation of the benefit base varies by benefit type and may differ in value from the policyholder’s AV for the following reasons:
•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.
•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.
We currently offer GMxB riders. Their principal features are as follows:
•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).
•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.
For a detailed discussion of GMxB riders, see “—Overview of GMxB Features.”
Products
We primarily sell three variable annuity products, each providing policyholders with distinct features and return profiles. We believe these products offer us attractive risk-adjusted returns. Our current primary product offering, ordered below according to sales volume for the year ended December 31, 2018, includes:
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.
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

and (ii) RC Protection, which offers access to a focused selection of funds and an optional floating-rate GMxB feature providing guaranteed income for life, with a choice between two floating roll-up rate options.
Investment Edge. 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.
Other products. We offer other products which offer optional GMxB benefits. These other products do not contribute significantly to our sales.
 Our variable annuity portfolio is mature with gross premiums for our fixed rate GMxB products, ranging from $8.5 billion to $11.3 billion from 2005 to 2008. Since 2009, gross premiums for these products have decreased substantially. Over this period, we shifted our business from selling variable annuity products with GMxB features with fixed roll-up rates, to predominantly (i) variable annuity products without GMxB features (other than the return of premium death benefit in some cases) and (ii) variable annuity products with GMxB features with floating roll-up rates. We had a total of $11 billion of FYP for our entire variable annuity portfolio in 2008. Based on FYP, we have shifted our portfolio from 90% fixed rate GMxB products in 2008 to 93% floating rate GMxB products and non-GMxB products in 2018. In addition, AV has shifted from 77% Fixed Rate GMxB products in 2008 to 44% in 2018.
Evolution of Variable Annuity FYP
chart-56eeb7ab13a05407872.jpgchart-81cb10229af865069c5.jpg
The following tables present the relative contribution to FYP of each of the above products and GMxB features for the years ended December 31, 2018, 2017 and 2016.
 Years Ended December 31,
 2018 2017 2016
   (in millions)  
FYP by Product     
SCS$3,926
 $3,781
 $3,424
Retirement Cornerstone2,479
 2,522
 3,042
Investment Edge537
 418
 408
Other366
 374
 470
Total FYP$7,308
 $7,095
 $7,344

 Years Ended December 31,
 2018 2017 2016
   (in millions)  
FYP by Guarantee Feature     
Non-GMxB$4,640
 $4,622
 $4,265
ROP Death Benefit Only496
 276
 271
Total Non-GMxB & ROP Death Benefit Only$5,136
 $4,898
 $4,536


 
 
Floating Rate GMxB2,124
 2,108
 2,600
Fixed Rate GMxB48
 89
 208
Total GMxB$2,172
 $2,197
 $2,808


 
 
Total FYP$7,308
 $7,095
 $7,344
Our sales for the years ended December 31, 2018, 2017 and 2016 further demonstrate the result of our product sales evolution, as 63%, 65% and 58% of FYP, respectively, came from variable annuity products that do not contain GMxB riders, and of the GMxB riders sold, they overwhelmingly featured floating, as opposed to fixed, roll-up rates.
Our Individual Retirement segment works with AXA Equitable FMG to identify and include appropriate underlying investment options in its products, as well as to control the costs of these options and increase profitability of the products. For a discussion of AXA Equitable FMG, see below “—AXA Equitable FMG.”
Markets
For our Individual Retirement segment, we target sales of our products to affluent and high net worth individuals and families saving for retirement or seeking retirement income. As the retirement age population in the United States continues to grow and employers continue to shift away from defined benefit plans, we expect the need for these retirement savings and income products to expand.
Within our target customer base,Our customers can prioritize certain features based on their life-stage and investment needs. In addition, our products offer features designed to serve different market conditions. SCS targetsserves clients with investable assets who want exposure to equity markets, but also want to guard against a market correction. Retirement Cornerstone targetsserves clients who want growth potential
9
Table of Contents
and guaranteed income with increases in a rising interest rate environment. Investment Edge targetsserves clients concerned about rising taxes.
Distribution
We distribute our variable annuity products through AXAEquitable Advisors, and through third-party distribution channels. For the year ended December 31, 2018, AXA2021, Equitable Advisors represented 38%35% of our variable annuity FYP in this segment, while our third-party distribution channel represented 62%65% of our variable annuity FYP in this segment. We employ over 150 external and internal wholesalers who distribute our variable annuity products across both channels. Our wholesalers serving third-party firms ranked second in third-party variable annuity wholesale productivity for the year ended December 31, 2017, according to Market Metrics.
Affiliated Distribution. We offer our variable annuity products on a retail basis through our affiliated retail sales force of financial professionals, AXAEquitable Advisors. These financial professionals have access to and offer a broad array of variable annuity, life insurance, employee benefits and investment products and services from affiliated and unaffiliated insurers and other financial service providers.
Third-Party Distribution. We have shifted the focus of our third-party distribution significantly over the last decade, growing our distribution in the bank, broker-dealer and insurance partner channels and providing us access to more than 100,000 financial professionals.channels. For example, in 2011, we began distributing our variable annuity products to insurance partners. Today, we work with some of the country’s largest insurance partners and our sales through this channel have grown to comprise 11%10% of our total FYP for the year ended December 31, 2018.2021.

The table below presents the contributions to and percentage of FYP of our variable annuity products by distribution channel for the year ended December 31, 2018.
2021.
FYP by Distribution
chart-de6e5969c63a20836fd.jpgeqh-20211231_g5.jpg
Other than AXAEquitable Advisors, no single distribution firm contributed more than 10% of our sales in 2018.2021.
Competition
Our Individual Retirement business competes with traditional life insurers, as well as banks, mutual fund companies and other investment managers. The variable annuities market is highly competitive, with no single provider dominating the market across products. The main factors that distinguish competitors to clients include product features, access to capital, access to diversified sources of distribution, financial and claims-paying ratings, investment options, brand recognition, quality of service, technological capabilities and tax-favored status of certain products. It is difficult to provide unique variable annuities products because, once such products are made available to the public, they often are reproduced and offered by our competitors. Competition may affect, among other matters, both the growth of our business and the pricing and features of our products.
10
Table of Contents
Underwriting and Pricing
We generally do not underwrite our variable annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience. We price annuities by analyzing longevity and persistency risk,experience, volatility of expected earnings on our AV, and the expected time to retirement. Our product pricing models also take into account capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of GMxB and other features we offer. We have previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our clients, the economic environment and our risk appetite evolve.
Fees on AV, Fund Assets, Benefit Base and Investment Income
We earn various types of fee revenue based on AV, fund assets and benefit base. In general, fees from GMxB features that are calculated based on the benefit base are more stable compared to fees calculated based on the AV.
Mortality & Expense, Administrative Charges and Distribution Charges. We deduct a daily charge from the net assets in each variable investment option to compensate us for mortality risks, administrative expenses and a portion of our sales expenses under the variable annuity contract. These charges are calculated based on the portion of the policyholder’s AV allocated to the Separate Accounts and are expressed as an annual percentage.
Withdrawal Charges. Some variable annuity contracts may also impose charges on withdrawals for a period after the purchase, and in certain products for a period after each subsequent contribution, also known as the withdrawal charge period. A withdrawal charge is calculated as a percentage of the contributions withdrawn. The percentage of the withdrawal charge that applies to each contribution depends on how long each contribution had been invested in the contract. Withdrawal charges generally decline gradually over the withdrawal charge period, which can range from zero to 12 years depending on the product

and share class. Our variable annuity contracts typically permit policyholders to withdraw up to 10% of their AV each year without any withdrawal charge, although their guarantees may be significantly negatively impacted by such withdrawals.period. Contracts may also specify circumstances when no surrender charges apply (for example, upon payment of a death benefit or due to disability, terminal illness or confinement to a nursing home).
Investment Management Fees. We charge investment management fees for the proprietary funds managed by AXA Equitable FMGEIMG that are offered as investments under the variable annuities. Investment management fees are also paid on the non-proprietary funds managed by investment advisers unaffiliated with us to the unaffiliated investment advisers. Investment management fees differ by fund. A portion of the investment management fees charged on funds managed by sub-advisers unaffiliated with us are paid by us to the sub-advisers. Investment management fees reduce the net returns on the variable annuity investments.
12b-1 Fees and Other Revenue. 12b-1 fees are paid by the mutual funds which our policyholders chosechoose to invest in and are calculated based on the net assets of the funds allocated to our sub-accounts. These fees reduce the returns policyholders earn from these funds. Additionally, mutual fund companies with funds that are available to policyholders through the variable annuity sub-accounts pay us fees consistent with the terms of administrative service agreements. These fees are funded from the fund companies’ net revenues.
Death Benefit Rider Charges. We deduct a charge annually from the policyholders’ AV on each contract date anniversary for most of our optional death benefits. This charge is in addition to the base mortality and expense charge for promising to pay the GMDB. The charges earned vary by generation and rider type. For some death benefits, the charges are calculated based on AV, but for enhanced death benefits, the charges are normally calculated based on the benefit base.
Living Benefit Riders Charges. We deduct a charge annually from the policyholders’ AV on each contract date anniversary. We earn these fees for promising to pay guaranteed benefits while the policyholder is alive, such as for any type of GMLB (including GMIB, GWBL, GMWB and GMAB). The fees earned vary by generation and rider type and are calculated based on the benefit base.
Investment Income. We earn revenue from investment income on our General Account investments.
11
Table of Contents
Risk Management
We approach risk management of our variable annuity products: (i) prospectively, by assessing, and from time to time, modifying our current product offerings to manage our risk and (ii) retrospectively, by implementing actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts.
Current GMxB Product Strategy
Over the last decade,Since 2008, we have redesigned our variable annuity product offering by introducing new variable annuities without GMxB features, discontinuing the offering of certain GMxB features and adding or adjusting other features to better enable us to manage the risk associated with these products. Through the increase in sales of our products without GMxB features, sales of our variable annuity contracts with GMxB features have decreased significantly as a percentage of our total sales. We continue to offer certain GMxB features to meet evolving consumer demand while maintaining attractive risk-adjusted returns and effectively managing our risk.
 Some of the features of our GMxB products have been redesigned over the past several years to better manage our risk and to meet customer demand. For example:
•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.
To further manage our risk, features in our current GMxB products provide us with the right to make adjustments post-sale, including the ability to increase benefit charges. For more information on GMxB features contained in our current and in-force products, see below “—Overview of GMxB Features.”

In-force Variable Annuity Management
Since the financial crisis, we have implemented several actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts while ensuring policyholder rights are fully respected. We manage the risks associated with our in-force variable annuity business through our dynamic hedging program, reinsurance and product design. The dynamic hedging program was implemented in the early 2000s and today is managed by a dedicated team focused on managing our total variable annuity assets to a CTE level consistent with our financial goals.2000s. In addition, we use reinsurance for the GMxB riders on our older variable annuity products (generally issued 1996-2004). We have also introduced several other risk management programs, some of which are described in this section below.
To actively manage and protect against the economic risks associated with our in-force variable annuity products, our managementmanagement team has taken a multi-pronged approach. Our in-force variable annuity risk management programs include:
Hedging
We use a dynamic hedging strategy supplemented by static hedges to offset changes in our economic liability from changes in equity markets and interest rates. In addition to our dynamic hedging strategy, in the fourth quarter of 2017 and the first quarter of 2018, we implementedhave static hedge positions to maintain a target asset level for all variable annuities at to maintain a target asset level for all variable annuities atannuities. A wide range of derivatives contracts are used in these hedging programs, such as futures and total return swaps (both equity and fixed income), options and variance swaps, as well as, to a lesser extent, bond investments and repurchase agreements. For GMxB features, we retain certain risks including basis, credit spread, and some volatility risk and risk associated with actual versus expected assumptions for mortality, lapse and surrender, withdrawal and contract-holder election rates, among other things.
Reinsurance
We have used reinsurance to mitigate a portion of the risks that we face in certain of our variable annuity products with regard to a portion of the GMxB features. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. We evaluate the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. Also, we ensure that we obtain collateral to mitigate our risk of loss.
12
Table of Contents
Non-affiliate Reinsurance. We have reinsured to non-affiliated reinsurers a portion of our exposure on variable annuity products that offer a GMxB feature issued through February 2005. AtAs of December 31, 2018,2021, we had reinsured to non-affiliated reinsurers, subject to certain maximum amounts or caps in any one period, approximately 15.5%59.8% of our net amount at risk (“NAR”)NAR resulting from the GMIB feature and approximately 2.9%47.6% of our NAR to the GMDB obligation on variable annuity contracts in force as of December 31, 2018.2021.
In June 2021, as part of the Venerable Transaction, Equitable Financial ceded to CS Life on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008, comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. For additional information regarding the Venerable Transaction, see “—Overview—Venerable Transaction” and Note 1 of the Notes to these Consolidated Financial Statements.

Captive Reinsurance. In addition to non-affiliated reinsurance, AXA Equitable LifeFinancial has ceded to AXAits affiliate, EQ AZ Life RE, Arizona, a captive reinsurance company, a 100% quota share of all liabilities for variable annuities with GMxB riders other than return of premium death benefit issued on or after January 1, 2006 and in-force on September 30, 2008 and a 100% quota share of all liabilities for variable annuities with GMIB riders issued on or after May 1, 1999 through August 31, 2005 in excess of the liability assumed by two unaffiliated reinsurers, which are subject to certain maximum amounts or limitations on aggregate claims (the “Excess Risks”). On April 12, 2018, we effected the GMxB Unwind. As a result of the GMxB Unwind, AXA Equitable Life assumed all of the liabilities of the GMxB Business that were previously ceded to AXA RE Arizona and the Excess Risks were novated to a newly formedclaims. We use captive reinsurance company.as part of our capital management strategy. For additional information on the GMxB Unwind,regarding our use of captives, see “—UnwindRegulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance of GMxB Business with a Captive Reinsurer.Company.”
Other Programs
We have introduced several other programs that reduced gross reserves and reduced the risk in our in-force block and, in many cases, offered a benefit to our clients by offering liquidity or flexibility:
Investment Option Changes. We made several changes to our investment options within our variable annuity products over the years to manage risk, employ more passive strategies and offer our clients attractive risk-adjusted investment returns. To reduce the differential between hedging instruments performance and fund performance, we added many passive investment strategies and reduced the credit risk of some of the bond portfolios, which is designed to provide a better risk adjusted return to clients. We also introduced managed volatility funds in 2009. As a result, the investment strategy mix of our in-force variable

annuity products with GMxB features shifted from 90% active based on AV as of December 31, 2008 to 81% passive based on AV as of December 31, 2018. Our volatility management strategy seeks to reduce the portfolio’s equity exposure during periods when certain market indicators indicate that market volatility is above specific thresholds set for the portfolio. Historically when market volatility is high, equity markets generally are trending down, and therefore this strategy is intended to reduce the clients’ overall risk of investing in the portfolio for clients. As of December 31, 2018, 57% of our in-force variable annuity products with GMxB features were invested in managed volatility assets based on AV. Coupled with our shift towards passive strategies, as of December 31, 2018, 91% of our in-force variable annuity products with GMxB features were invested in passive and/or managed volatility assets based on AV.portfolio.
Optional Buyouts. Since 2012, weWe have implemented several successful buyout programs on contracts issued between 2002 and 2009 that benefited clients whose needs had changed since buying the initial contract and reduced our exposure to certain types of GMxB features. We have executed buyout programs since 2012, offering buyouts to contracts issued between 2002 and 2009.
Premium Suspension Programs. We have suspended the acceptance of subsequent premiums to certain GMxB contracts.
Lump Sum Option.Since 2015, we We have provided certain policyholders with the optional benefit to receive a one-time lump sum payment rather than systematic lifetime payments if their AV falls to zero. This option provides the same advantages as a buyout. However, because the availability of this option is contingent on future events, their actual effectiveness will only be known over a long-term horizon.
 Overview of GMxB Features
We have historically offered a variety of variable annuity benefit features, including GMxB features, to our policyholders in our Individual Retirement segment.
Guaranteed Minimum Death Benefits Summary
We have historically offered GMDB features in isolation or together with GMLB features, including the following (with no additional charge unless noted):
•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
13
Table of Contents
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”),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.

In addition, we offered two guaranteed minimum death benefits with our GWBL rider, available at issue.
•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.
The following table presents the AV and benefit base by type of guaranteed minimum death benefit. Because variable annuity contracts with GMDB features may also offer GMLB features, the GMDB amounts listed are not mutually exclusive from the GMLB amounts provided in the table below.
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMDB In-Force (1)
ROP Death Benefit Only (3)$11,437 $6,443 $10,437 $6,141 $9,620 $6,048 
Floating Rate GMDB
Greater of Ratchet or Roll-up$7,105 $7,867 $7,121 $7,995 $7,017 $7,891 
All Other (2)19,381 15,707 18,047 15,100 16,874 14,902 
     Total Floating Rate GMDB$26,486 $23,574 $25,168 $23,095 $23,891 $22,793 
Fixed Rate GMDB
Greater of Ratchet or Roll-up (3)$14,748 $21,518 $26,800 $42,521 $26,239 $42,896 
All Other (2) (3)15,390 12,689 18,822 15,507 18,478 16,469 
     Total Fixed Rate GMDB$30,138 $34,207 $45,622 $58,028 $44,717 $59,365 
Total GMDB$68,061 $64,224 $81,227 $87,264 $78,228 $88,206 
______________
14
Table of Contents
 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-up6,310
 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, 2021, 2020 and 2019 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.
(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.
(3)    AV and Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to the Consolidated Financial Statements.
Guaranteed Living Benefits Summary
We have historically offered a variety of guaranteed living benefits to our policyholders in our Individual Retirement segment. Our block of variable annuities includes four types of guaranteed living benefit riders: GMIB, GWBL/GMWB, GMAB and GIB. Based on total AV, approximately 66%51% of our variable annuity block included living benefit guarantees as of December 31, 2018.2021.
•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.
The second phase of the contract starts when the policyholder annuitizes the contract, either by exercising the GMIB or through the contract’s standard annuitization provisions. Upon exercise of their GMIB, policyholders receive guaranteed lifetime income payments that are calculated as the higher ofof: (i) application of their GMIB benefit base to

the GMIB guaranteed annuity purchase factors specified in the contractcontract; or (ii) application of their AV to our then current or guaranteed annuity purchase factors. Beginning in 2005 we started offering a no-lapse guarantee on our GMIB riders that provides for the automatic exercise of the GMIB in the event that the policyholder’s AV falls to zero and provided no “excess withdrawals” (as defined in the contract) have been taken.
The charge for the GMIB is calculated based on the GMIB benefit base value and deducted annually from the AV.
GWBL.•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.•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. •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.
Below are examples of policyholder benefit utilization choices that can affect benefit payment patterns and reserves:
15
Table of Contents
•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

contract, generally age 85 or 95. The policyholder may otherwise annuitize the AV and choose one of several payout options.
•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.
The likelihood of a policyholder choosing a particular option cannot be predicted with certainty at the time of contract issuance. Accordingly, we make assumptions as to policyholder benefit elections and resulting benefit payments at the time of issuance and while it is in-force based on our experience. The incidents and timing of benefit elections and the amounts of resulting benefit payments may materially differ from those we anticipate at that time. As we observe actual policyholder behavior, we update our assumptions at least annually with respect to future policyholder activity and take appropriate action with respect to the amount of the reserves we establish for the future payment of such benefits. Additionally, upon the death of a policyholder (or annuitant), if the sole beneficiary is a surviving spouse, they can choose to continue the contract and benefits subject to age restrictions.
The following table presents the AV and benefit base by type of guaranteed living benefit. Because variable annuity contracts with GMLB features may also offer GMDB features, the GMLB amounts listed are not mutually exclusive from the GMDB amounts provided in the table above.
16
Table of Contents
As of December 31,December 31,
2018 2017 2016202120202019
Account Benefit Account Benefit Account BenefitAccountBenefitAccountBenefitAccountBenefit
Value Base Value Base Value BaseValueBaseValueBaseValueBase
(in millions)(in millions)
GMLB In-Force (1)           GMLB In-Force (1)
Floating Rate GMLB           Floating Rate GMLB
GMIB$16,728
 $19,670
 $17,840
 $18,412
 $15,039
 $16,211
GMIB$23,435 $24,123 $22,002 $23,029 $20,699 $22,108 
Other (GIB)3,581
 4,214
 3,439
 3,664
 3,478
 3,829
Other (GIB)2,623 2,796 2,762 2,978 2,812 3,128 
Total Floating Rate GMLB$20,309
 $23,884
 $21,279
 $22,076
 $18,517
 $20,040
Total Floating Rate GMLB$26,058 $26,919 $24,764 $26,007 $23,511 $25,236 
           
Fixed Rate GMLB           Fixed Rate GMLB
GMIB$36,326
 $63,431
 $43,900
 $64,673
 $43,106
 $66,310
GMIB$40,065 $59,341 $39,369 $60,695 $38,846 $61,775 
All Other (e.g., GWBL / GMWB, GMAB, other) (2)785
 1,223
 977
 1,288
 1,003
 1,371
All Other (e.g., GWBL / GMWB, GMAB, other) (2)846 1,153 830 1,165 806 1,175 
Total Fixed Rate GMLB$37,111
 $64,654
 $44,877
 $65,961
 $44,109
 $67,681
Total Fixed Rate GMLB$40,911 $60,494 $40,199 $61,860 $39,652 $62,950 
           
Total GMLB$57,420
 $88,538
 $66,156
 $88,037
 $62,626
 $87,721
Total GMLB$66,969 $87,413 $64,963 $87,867 $63,163 $88,186 
____________________
(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)
(1)See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 under “—Net Amount at Risk.”
(2)    All Other includes individual variable annuity policies with stand-alone Annual Ratchet or stand-alone Roll-up GMDB.

Net Amount at Risk
The NAR for the GMDB is the amount of death benefits payable in excess of the total AV (if any) as of the balance sheet date, net of reinsurance. It represents the amount of the claim we would incur if death claims were made on all contracts with a GMDB on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.

The NAR for the GMIB is the amount (if any) that would be required to be added to the total AV to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the GMIB. This amount represents our potential economic exposure to such guarantees in the event all policyholders were to annuitize on the balance sheet date, even though the guaranteed amount under the contracts may not be annuitized until after the waiting period of the contract.
The NAR for the GWBL, GMWB and GMAB is the actuarial present value in excess of the AVs (if any) as of the balance sheet date. The NAR assumes utilization of benefits by all policyholders as of the balance sheet date. For the GMWB and GWBL benefits, only a small portion of the benefit base is available for withdrawal on an annual basis. For the GMAB, the NAR would not be available until the GMAB maturity date.
NAR reflects the difference between the benefit base (as adjusted, in some cases, as described above) and the AV. We believe that NAR alone provides an inadequate presentation of the risk exposure of our in-force variable annuity portfolio. NAR does not take into consideration the aggregate amount of reserves and capital that we hold against our variable annuity portfolio, particularly the target asset level for all variable annuities at a CTE98 level under most economic scenarios. Additionally, the NAR calculation includes a number of assumptions that are not reflective of our actual or expected experience of the assumptions related to the reserves we hold on our variable annuity portfolio.
The NAR and reserves of contract owners by type of GMxB feature for variable annuity contracts are summarized below as of December 31, 2018, 20172021, 2020 and 2016.2019. Many of our variable annuity contracts offer more than one type of guarantee such that the GMIB amounts are not mutually exclusive to the amounts in the GMDB table.
17
Table of Contents
As of December 31,December 31,
2018 2017 2016202120202019
NAR Reserves NAR Reserves NAR ReservesNARReservesNARReservesNARReserves
(in millions)(in millions)
GMDB           GMDB
ROP Death Benefit Only (1)$320
 N/A
 $119
 N/A
 $177
 N/A
ROP Death Benefit Only (1) (2)ROP Death Benefit Only (1) (2)$75 N/A$84 N/A$95 N/A
Floating Rate GMDB1,621
 $178
 519
 $160
 695
 $123
Floating Rate GMDB851 377 943 332 904 272 
Fixed Rate GMDB21,332
 4,367
 16,237
 3,787
 17,647
 2,976
Fixed Rate GMDB (2)Fixed Rate GMDB (2)8,061 2,360 17,244 4,674 18,123 4,402 
Total$23,273
 $4,545
 $16,875
 $3,947
 $18,519
 $3,099
Total$8,987 $2,737 $18,271 $5,006 $19,122 $4,674 
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMIB
Floating Rate GMIB$— $172 $— $136 $— $91 
Fixed Rate GMIB (2)3,910 4,441 10,461 14,110 8,746 10,573 
Total$3,910 $4,613 $10,461 $14,246 $8,746 $10,664 
______________
(1)    U.S. GAAP reserves for ROP death benefit only are not available, as U.S. GAAP reserve valuation basis applies on policy contracts grouped by issue year.
(2) NAR is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction.
18
 Years Ended December 31,
 2018 2017 2016
 NAR Reserves NAR Reserves NAR Reserves
     (in millions)    
GMIB           
Floating Rate GMIB$—
 $42
 $—
 $91
 $—
 $190
Fixed Rate GMIB8,572
 7,307
 5,980
 6,919
 6,348
 7,159
Total$8,572
 $7,349
 $5,980
 $7,010
 $6,348
 $7,349
____________
Table of Contents
(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.

Group Retirement
Our 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. We operate in the 403(b), 401(k)457(b) and 457(b)401(k) markets where we sell variable annuity and mutual fund-based products. As of December 31, 2018, we had relationships with approximately 26,000 employers and served more than one million participants, of which approximately 758,000 were educators. A specialized division of AXA Advisors, the Retirement Benefits Group (“RBG”),RBG, is the primary distributor of our products and related solutions to individuals in the K-12 education market with more than 1,000 advisors dedicated to helping educators prepare for retirement as of December 31, 2018.2021.
In Group Retirement, for the nine months ended September 30, 2018, we were the #1 provider by gross premiums of retirement plans to the K–12 education market, according to LIMRA. The tax-exempt 403(b)/457(b) market, which includes

our 403(b) K–12 education market business, accounted for the majority71% of sales within the Group Retirement business for the year ended December 31, 20182021. The corporate 401(k) market accounts for 22% and represented 76% of Group Retirement AV,the remaining 7% is Other as of December 31, 2018.2021.
The recurring nature of the revenues from our Group Retirement business makes this segment an important and stable contributor of earnings and cash flow to our business. The primary sources of revenue for the Group Retirement business include fee revenue and investment income.
To further growth of our Group Retirement segment, we plan to generate new sales by innovating our products and expanding our distribution footprint and to optimize participant contributions and client retention by providing superior client service.
Product Innovation. We continuously seek to improve our products by offering several product features that differentiate us from our competition including our index-linked investment, guaranteed income and fixed interest rate features. More recently, we launched a mutual fund-based product to complement our variable annuity products, which will enable us to accelerate growth in certain segments of the market.
Distribution Expansion. We believe that RBG is a strategic differentiator in the 403(b) market. Our nationwide footprint of advisors provides valuable services to a wide range of clients in the education market saving for retirement. For 401(k) products, we primarily focus on the under $20 million plan market, which is attractive to us because it is aligned with our affiliated advisor distribution focus on small businesses and business owners and because of the relatively high level of new plan creation and takeover opportunities in this market. We seek to grow our distribution footprint through hiring and developing new RBG advisors and expanding third-party distribution relationships.
In-force Client Engagement. Through our RBG advisors and direct education efforts, such as direct mail and email, we regularly provide our in-force clients with information to keep them on track for a secure retirement. Through this interactive client engagement model, many of our clients choose to increase the amount of contributions into our retirement plans to achieve their retirement goals.
Client Retention. Our strong retention rate in the 403(b) market, driven by our interactive client engagement model and strong customer service, places us among the top companies in the industry. We had a retention rate of 92.0% for 2018. Our Group Retirement business customer service team has won the DALBAR Annuity Service Award for seven straight years from 2011 to 2017. In addition to engaging with our clients through advisors as noted above, we also engage our customers digitally with our learning lab and education platform. In 2017, we launched additional retirement income readiness tools that leverage peer benchmarking and other behavioral economics strategies to drive increased contributions from existing participants in all markets. The overall objective of this and our other client retention programs is to maintain a high level of customer engagement and satisfaction and limit asset outflows.
Products
Our products offer teachers,educators, municipal employees and corporate employees a savings opportunity that provides tax-deferred wealth accumulation coupled with industry award-winning customer service.accumulation. Our innovative product offerings address all retirement phases with diverse investment options.
Variable Annuities
Our variable annuities offer defined contribution plan record-keeping, as well as administrative and participant services combined with a variety of proprietary and non-proprietary investment options. Our variable annuity investment lineup mostly consists of proprietary variable investment options that are managed by AXA Equitable FMG. AXA Equitable FMGEIMG, which provides discretionary investment management services for these investment options that include developing and executing asset allocation strategies and providing rigorous oversight of sub-advisors for the investment options. This helps to ensure that we retain high quality managers and that we leverage our scale across both the Individual Retirement and Group Retirement products. In addition, our variable annuity products offer the following features:
•Guaranteed InterestInvestment Option (“GIO”)—Provides(GIO) —Provides a fixed interest rate and guaranteed AV.guarantee of principal.
•Structured Investment Option (“SIO”)—Provides(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.period. This option leverages our innovative SCS individual annuity offering, and we believe that we are the only provider that offers this type of guaranteeoffering combined in a variable annuity offering in the defined contribution marketsmarket today.

•Personal Income Benefit—An optional GMxB feature that enables participants to obtain a guaranteed withdrawal benefit for life for an additional fee.
While GMxB features provide differentiation in the market, only approximately $45$9 million,, or 0.1%0.02%, of our total AV is invested in products with GMxB features (other than ROP death benefits) as of December 31, 2018,2021, and based on current utilization, we do not expect significant flows into these types of GMxB features.
Open Architecture Mutual Fund Platform
We recently launchedalso offer a mutual fund-based product to complement our variable annuity products. This platform provides a similar service offering to our variable annuities from the same award-winning service team.annuities. The program allows plan sponsors to select from approximately 15,000thousands of mutual funds. The platform also offers a group fixed annuity that operates very similarly to the GIO as an available investment option on this platform. In January 2021 we launched the successor product to our existing mutual fund based product.
Services
Both our variable annuity and open architecture mutual fund products offer a suite of tools and services to enable plan participants to obtain education and guidance on their contributions and investment decisions and plan fiduciary services. Education and guidance are available on-lineonline or in person from a team of plan relationship and enrollment specialists and/or the advisor that sold the product. Our clients’ retirement contributions come through payroll deductions, which contribute significantly to stable and recurring sources of renewals.
19
Table of Contents
The chart below illustrates our net flows for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.
Years Ended December 31,Year Ended December 31,
2018 2017 2016202120202019
(in millions)(in millions)
Net Flows     Net Flows
Gross Premiums$3,383
 $3,205
 $3,137
Gross Premiums$3,623 $3,343 $3,533 
Surrenders, Withdrawals and Benefits(3,287) (2,938) (2,458)Surrenders, Withdrawals and Benefits(3,929)(3,047)(3,266)
Net Flows$96
 $267
 $679
Net Flows$(306)$296 $267 
The following table presents the gross premiums for each of our markets for the periods specified.
Years Ended December 31,Year Ended December 31,
2018 2017 2016202120202019
(in millions)(in millions)
Gross Premiums by Market     Gross Premiums by Market
Tax-Exempt$911
 $872
 $842
Tax-Exempt$809 $724 $902 
Corporate479
 470
 497
Corporate435 392 537 
Other38
 40
 34
Other62 60 49 
Total FYP1,428
 1,382
 1,373
Total FYP1,306 1,176 1,488 
     
Tax-Exempt1,450
 1,330
 1,280
Tax-Exempt1,757 1,632 1,531 
Corporate319
 293
 275
Corporate369 342 330 
Other186
 200
 209
Other191 193 184 
Total Renewal Premiums1,955
 1,823
 1,764
Total Renewal Premiums2,317 2,167 2,045 
Gross Premiums$3,383
 $3,205
 $3,137
Gross Premiums$3,623 $3,343 $3,533 
Markets
We primarily operate in the tax-exempt 403(b)/457(b), corporate 401(k) and other markets.
•Tax-exempt 403(b)/457(b). We primarily serve individual 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

educators in the plans where we are an approved provider.systems. To a lesser extent, we also market to 1,100 government entities that sponsor 457(b) plans.
Overall, the 403(b) and 457(b) markets represent 64%62% of FYP in the Group Retirement segment for the year ended December 31, 2018.2021. We seek to grow in these markets by increasing our presence in the school districts where we currently operate and also by potentially growing our presence in school districts where we currently do not have access.
•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.
The following table presents the relative contribution of each of our markets to AV as of the dates indicated.
20
Table of Contents
As of December 31,December 31,
2018 2017 2016202120202019
(in millions)(in millions)
AV by Market     AV by Market
Tax-Exempt$24,639
 $25,383
 $22,454
Tax-Exempt$37,072 $32,586 $28,895 
Corporate3,634
 3,959
 3,422
Corporate5,367 4,920 4,387 
Other4,128
 4,564
 4,262
Other4,914 4,953 4,598 
AV$32,401
 $33,906
 $30,138
AV$47,353 $42,459 $37,880 
Distribution
We primarily distribute our products and services to this market through AXAEquitable Advisors and third-party distribution firms. For the year ended December 31, 2018,2021, these channels represented 89%approximately 88% and 11%12% of our sales, respectively. We also distribute through direct online sales. We employ more than 50 internal and external wholesalers to exclusively market our products through AXAEquitable Advisors and third-party firms.firms that are licensed to sell our products.
AXAEquitable Advisors, through RBG, is the primary distribution channel for our products. RBG has a group of more than 1,000 advisors dedicated to helping educators prepare for retirement as of December 31, 2018. The cornerstone of the RBG model is a repeatable and scalable advisor recruiting and training model that we believe is more effective than the overall industry model. RBG advisors complete several levels of training that are specific to the education market and give them the requisite skills to assess the educators’ retirement needs and how our products can help to address those needs. AXAEquitable Advisors also accounted for 94%98% of our 403(b) sales in 2018.2021.
Group Retirement products are also distributed through third-party firms and directly to customers online. Beginning in 2015, we createdWe have a digital engagement strategy to supplement our traditional advisor-based model. This includes engaging existing clients to increase contributions online. The program uses data analysis combined with digital media to engage educators, teach them about their retirement needs and increase awareness of our products and services. Educators can then completeDue to effects of the processCOVID-19 pandemic, we accelerated our digital adoption programs, leading to enrollimproved outcomes for clients, advisors, and the Company. We developed digital tools and enhanced our remote engagement with our educator clients, which is resulting in a 403(b) product fully online, through a phone conversation or face-to-face with an advisor.

improved retention and increases in retirement plan contributions.
The following table presents first year premium by distribution channel for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
FYP by Distribution
Equitable Advisors$1,155 $1,078 $1,341 
Third-Party151 98 147 
Total$1,306 $1,176 $1,488 
 Years Ended December 31,
 2018 2017 2016
 (in millions)
FYP by Distribution     
AXA Advisors$1,277
 $1,226
 $1,151
Third-Party151
 161
 222
Total$1,428
 $1,387
 $1,373
Competition
We compete with select insurance companies, asset managers, record keepers and diversified financial institutions that target similar market segments. Competition varies in all market segments with no one company dominating across all market segments.dominating. In the K–12 public education market, competitors are primarily insurance-based providers that focus on school districts. In the small and medium-sized business market, the primary competitors are insurance-based providers and mutual fund companies. The main features that distinguish our offering to clients include our RBG distribution model;model, the product features we offer to clients, including guarantees;guarantees, and our financial strength and our award-winning customer service.strength.
Underwriting and Pricing
We generally do not underwrite our annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience. We price variable annuities by analyzing longevity and persistency risk,experience, volatility of expected earnings on our AV, and the expected time to retirement. Our product pricing models also take into account capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
21
Table of Contents
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of guarantees and other features we offer. We have previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our clients, the economic environment and our risk appetite evolve.
Fees
We earn various types of fee revenue based on AV, fund assets and benefit base. Fees that we collect include mortality & expense, administrative charges and distribution charges; withdrawal charges; investment management fees;fees, 12b-1 fees;fees, death benefit rider charges;charges, and living benefit riders charges. For a more detailed description of these types of fees, see “—Individual Retirement—Fees on AV, Fund Assets, Benefit Base and Investment Income.”
Risk Management
We design our Group Retirement products with the goal of providing attractive features to clients that also minimize risks to us. To mitigate risks to our General Account from fluctuations in interest rates, we apply a variety of techniques that align well with a given product type. We designed our GIO to comply with the National Association of Insurance Commissioners (the “NAIC”)NAIC minimum rate (1.75%(1.0% for new issues), and our 403(b) products that we currently sell include a contractual provision that enables us to limit transfers into the GIO. As most defined contribution plans allow participants to borrow against their accounts, we have made changes to our loan repayment processes to minimize participant loan defaults and to facilitate loan repayments to the participant’s current investment allocation as opposed to requiring repayments only to the GIO. In the 401(k) and 457(b) markets, we may charge a market value adjustment on the assets of the GIO when a plan sponsor terminates its agreement with us. We also prohibit direct transfers to fixed income products that compete with the GIO, which protects the principal in the General Account in a rising interest rate environment.
In the Tax-Exempt market, the benefits include a minimum guaranteed interest rate on our GIO, return of premium death benefits and limited optional GMxB features. The utilization of GMxB features is low. In the Corporate market, the products that we sell today do not offer death benefits in excess of the AV.
 

As of December 31, 2018,2021, approximately 63%59% of our General Account AV has a minimum guaranteed rate of 3-4%. Given the growth in net flows to our newer products and the slowing in flows to older blocks due to retirement, we expect that guarantees at a rate over 3% will continue to diminish as a percentage of our overall General Account AV. The table below illustrates the guaranteed minimum rates applicable to our General Account AV for products with the GIO, as of December 31, 2018.2021.
Total GeneralTotal General
Guaranteed Minimum Interest RateAccount AVGuaranteed Minimum Interest RateAccount AV
(in billions)(in billions)
1 – < 2%$2.7
1 – < 2%$3.7 
2 – < 3%1.4
2 – < 3%1.4 
3%6.9
3%7.1 
4%0.2
4%0.2 
Total$11.2
Total$12.4 
We use a committee of subject matter experts and business leaders that meet periodically to set crediting rates for our guaranteed interest options. The committee evaluates macroeconomic and business factors to determine prudent interest rates in excess of the contract minimum when appropriate.
We also monitor the behavior of our clients who have the ability to transfer assets between the GIO and various Separate Accounts investment options. We have not historically observed a material shift of assets moving into guarantees during times of higher market volatility.
Hedging
We hedge crediting rates to mitigate certain risks associated with the SIO. In order to support the returns associated with the SIO, we enter into derivatives contracts whose payouts, in combination with fixed income investments, emulate those of the S&P 500, Russell 2000 or MSCI EAFE index, subject to caps and buffers.
22
Table of Contents
Investment Management and Research
Our global Investment Management and Research business provides diversified investment management, research and related solutionsservices globally to a broad range of clients around the world. We distribute our investment management products and solutions through AB’s three main client channels—Institutional,buy-side distribution channels: Institutions, Retail and Bernstein Private Wealth Management—Management, and distribute our institutional research products and solutions throughAB’s sell-side business, Bernstein Research Services. AB Holding is a master limited partnership publicly listed on the NYSE. We own an approximate 65% economic interest in AB. As the general partner of AB, we have the authority to manage and control its business, and accordingly, this segment reflects AB’s consolidated financial results.
Our Investment Management and Research business had approximately $516.4$778.6 billion in AUM as of December 31, 2018,2021, composed of 36%46% equities, 52%41% fixed income and 12%13% multi-asset class solutions, alternatives and other assets. By distribution channel, institutional clients represented 48%43% of AUM, while retail and private wealth management clients represented 35%41% and 17%16% respectively, as of December 31, 2018.2021.
AB has a suite of actively managed, differentiated equity and fixed income services, delivering strong risk-adjusted returns. For instance, 90%72% of ourAB’s fixed income services and 62%49% of ourAB’s equity services have outperformed their benchmarks over the three-year period ended December 31, 2018. In addition, 80%2021. Additionally, at year-end 2021, 76% of AB’s rated U.S. retailFund assets and 59% of AB’s Non-U.S. Fund assets were invested in funds rated foureither 4 or five stars5-stars by Morningstar as of December 31, 2018.Morningstar.
Bernstein Research Services has received top Institutional Investor rankings and Bernstein Private Wealth Management ranks among the top 20 wealth management firms in the United States, according to Barron’s.
AB has a strong global distribution footprint. For the year ended December 31, 2018, 42.4% of AB’s revenues came from outside the United States, with a significant portion derived from retail fixed income sales in the Asia region (excluding Japan). We have strong market positions in many of the region’s largest markets. As of December 31, 2018, we had a 13.9%market share of total retail assets for global managers in Taiwan, and our market share was 13.2% in Hong Kong, 8.4% in Singapore, and 5.8% in Korea.

Additionally, over the past several years AB has significantly broadened and strengthened its product portfolio, introducing more than 100 new and enhanced offerings since 2009. These services account for approximately 30% of AB’s AUM as of December 31, 2018. Examples include our Select Equities and U.S. and Global Concentrated Equity services, our middle markets private lending service and our real estate private equity and debt service.
We and other AXA affiliates, collectively, are AB’s largest client. We represented 24%17% of AB’s total AUM as of December 31, 20182021 and 5%3% of AB’s net revenues for the year ended December 31, 2018. AXA and its affiliates other than us represented 6% of AB’s total AUM as of December 31, 2018 and 2% of AB’s net revenues for the year ended December 31, 2018. Additionally, AXA and its affiliates (including us) have made seed investments in various AB investment services. By letter dated March 31, 2018, AXA advised AB of its current intention to continue using AB for the foreseeable future as a preferred provider of asset management services and to continue making commercial and seed investments that suit AXA from an investment perspective, in each case: (i) consistent with past practice; (ii) subject to investment performance/returns; and (iii) subject to applicable fiduciary duties.2021.
AB provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include:
•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 AXAHoldings 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,EIMG, 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.
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM.
Products and Services
Investment Services
AB provides a broad range of investment services with expertise in:
•Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equitiesequities;
•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, direct lending, real estate and private equity (e.g., direct lending); andequity;
23
Table of Contents
•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds.funds; and
AB’s services span various investment disciplines,•Some passive management, including market capitalization (e.g., large-, mid-index and small-cap equities), term (e.g., long-, intermediate- and short-duration debt securities) and geographic location (e.g., U.S., international, global, emerging markets, regional and local), in major markets around the world.

enhanced index strategies.
Research
AB’s high-quality, in-depth research is the foundation of its business. AB believes that its global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives it a competitive advantage in achieving investment success for its clients. AB also has experts focused on multi-asset strategies, wealth management, ESG, and alternative investments.
Custody
AB’s U.S.-based broker-dealer subsidiary acts as custodian for the majority of AB’s Private Wealth Management AUM and some of its InstitutionsInstitutional AUM. Other custodialcustodian arrangements, are maintaineddirected by client-designatedclients, include banks, trust companies, brokerage firms or custodians.and other financial institutions.
For additional information about AB’s investment advisory fees, including performance-based fees, see “Risk Factors—Risks Relating to Our Investment Management and Research Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—Investment Management and Research.”
Markets
AB operates in major markets around the world, including the United States, EMEA (Europe, the Middle East and Africa) and Asia. Our AUM is disbursed as follows:
By Investment Service ($ in billions):
chart-b04900abd113373848e.jpgchart-dd57f6ab6503c402fc7.jpgchart-73b2391cfaa8dc25b5d.jpgeqh-20211231_g6.jpgeqh-20211231_g7.jpgeqh-20211231_g8.jpg

24
Table of Contents
By Client Domicile ($ in billions):
chart-9a6589c0c4b5a8cb777.jpgchart-ecfed5787b40973c249.jpgchart-7904931fb4ed0280e2c.jpgeqh-20211231_g9.jpgeqh-20211231_g10.jpgeqh-20211231_g11.jpg
Distribution Channels
We distribute ourAB distributes its products and solutions through three main client channels: Institutional, Retail and Bernstein Private Wealth Management.

Institutional
AB offers to its institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, various of AB’s AXA affiliates,and Holdings and its subsidiaries, separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”).
AB manages the assets of its institutional clients pursuant to written investment management agreements or other arrangements, which generally are terminable at any time or upon relatively short notice by either party. In general, AB’s written investment management agreements may not be assigned without the client’s consent.
Retail
AB provides investment management and related services to a wide variety of individual retail investors both in the United States and internationally,globally through retail mutual funds AB sponsors, mutual fund sub-advisory relationships, separately-managed account programs and other investment vehicles (“Retail Products and Services”).
AB distributes its Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act or (ii) not registered under the Investment Company Act and generally not offered to U.S. persons. They also include separately-managed account programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. In addition, AB provides distribution, shareholder servicing, transfer agency services and administrative services for its Retail Products and Services.
Private Wealth Management
AB offerspartners with its clients, embracing innovation and independent research to its privateaddress increasingly complex challenges. AB’s clients which include high net worth individuals and families trustswho have created generational wealth as successful business owners, athletes, entertainers, corporate executives and estates, charitableprivate practice owners. AB also provides investment and wealth advice to foundations partnerships, private and endowments, family corporationsoffices and other entities,entities. AB’s flexible investment platform offers a range of solutions, including separately-managed accounts, hedge funds, mutual funds and other investment vehicles, (“Private Wealth Services”).tailored to meet each distinct client’s needs. AB’s investment platform is complimented with a wealth platform that includes complex tax and estate planning, pre-IPO and pre-transaction planning, multi-generational family engagement, and philanthropic advice in addition to tailored approaches to meeting the unique needs of emerging wealth and multi-cultural demographics.
AB manages these accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any authorized party, and may not be assigned without the client’s consent.
25
Table of Contents
Competition
AB competes in all aspects of its business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations and other financial institutions that often provide investment products that havewith similar features and objectives as those AB offers. AB’s competitors offer a wide range of financial services to the same customers that AB seeks to serve.
To grow its business, AB believes it must be able to compete effectively for AUM. Key competitive factors includeinclude: (i) AB’s investment performance for clients; (ii) AB’s commitment to place the interests of its clients first; (iii) the quality of AB’s research; (iv) AB’s ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; (v) the array of investment products AB offers; (vi) the fees AB charges; (vii) Morningstar/Lipper rankings for the AB Funds; (viii) AB’s ability to sell its actively-managed investment services despite the fact that many investors favor passive services; (ix) AB’s operational effectiveness; (x) AB’s ability to further develop and market its brand; and (xi) AB’s global presence.
AUM
AUM by distribution channel were as follows:
As of December 31,December 31,
2018 2017 2016202120202019
(in billions)(in billions)
Institutions$246.3
 $269.3
 $239.3
Institutions$337.1 $315.6 $282.7 
Retail180.8
 192.9
 160.2
Retail319.9 265.3 239.2 
Private Wealth Management89.3
 92.3
 80.7
Private Wealth Management121.6 105.0 101.0 
Total$516.4
 $554.5
 $480.2
Total$778.6 $685.9 $622.9 


AUM by investment service were as follows:
 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 Equity186.4
 193.7
 160.0
      
Fixed Income     
Actively Managed     
Taxable219.7
 247.9
 220.9
Tax-exempt41.7
 40.4
 36.9
Total Actively Managed261.4
 288.3
 257.8
Passively Managed (1)9.4
 9.9
 11.1
Total Fixed Income270.8
 298.2
 268.9
      
Other (2)     
Actively Managed58.3
 61.9
 $50.8
Passively Managed (1)0.9
 0.7
 0.5
Total Other59.2
 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.

December 31,
202120202019
(in billions)
Equity
Actively Managed$287.6 $217.8 $177.2 
Passively Managed (1)71.6 64.5 60.1 
Total Equity359.2 282.3 237.3 
Fixed Income
Actively Managed
Taxable246.3 263.2 258.3 
Tax-exempt57.1 50.3 47.1 
Total Actively Managed303.4 313.5 305.4 
Passively Managed (1)13.2 8.5 9.3 
Total Fixed Income316.6 322.0 314.7 
Alternatives/Multi-Asset Solutions (2)
Actively Managed97.3 79.1 69.3 
Passively Managed (1)5.5 2.5 1.6 
Total Other102.8 81.6 70.9 
Total$778.6 $685.9 $622.9 
_____________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
26
Table of Contents
Changes in AUM for the yearyears ended December 31, 20182021 and 2020 are as follows:
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
Long-term flows:
Sales/new accounts31.7 100.0 18.3 150.0 
Redemptions/terminations(23.4)(65.1)(15.3)(103.8)
Cash flow/unreinvested dividends(6.0)(14.1)— (20.1)
Net long-term inflows (outflows) (1)2.3 20.8 3.0 26.1 
Transfers(0.2)0.2 — — 
Market appreciation (depreciation)19.4 33.6 13.6 66.6 
Net change21.5 54.6 16.6 92.7 
Balance, December 31, 2021$337.1 $319.9 $121.6 $778.6 
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2019$282.7 $239.2 $101.0 $622.9 
Long-term flows:
Sales/new accounts30.9 78.9 14.3 124.1 
Redemptions/terminations(23.3)(69.5)(16.5)(109.3)
Cash flow/unreinvested dividends(6.6)(11.0)0.2 (17.4)
Net long-term inflows (outflows) (1)1.0 (1.6)(2.0)(2.6)
Acquisitions— 0.2 — 0.2 
Transfers1.4 (0.6)(0.8)— 
Market appreciation30.5 28.1 6.8 65.4 
Net change32.9 26.1 4.0 63.0 
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
______________
(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

27
Table of Contents
 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 accounts26.1
 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)
Transfers0.2
 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 ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
Long-term flows:
Sales/new accounts72.9 1.4 44.9 13.5 4.6 12.7 150.0 
Redemptions/terminations(39.6)(1.1)(52.6)(7.8)(0.4)(2.3)(103.8)
Cash flow/unreinvested dividends(11.4)(7.8)(2.2)0.3 0.8 0.2 (20.1)
Net long-term inflows (outflows) (3)21.9 (7.5)(9.9)6.0 5.0 10.6 26.1 
Market appreciation (depreciation)47.9 14.6 (7.0)0.8 (0.3)10.6 66.6 
Net change69.8 7.1 (16.9)6.8 4.7 21.2 92.7 
Balance, December 31, 2021$287.6 $71.6 $246.3 $57.1 $13.2 $102.8 $778.6 

Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2019$177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 
Long-term flows:
Sales/new accounts51.4 1.7 54.3 10.3 — 6.4 124.1 
Redemptions/terminations(36.7)(1.9)(58.3)(9.5)(0.3)(2.6)(109.3)
Cash flow/unreinvested dividends(7.3)(4.4)(5.8)0.2 (1.3)1.2 (17.4)
Net long-term inflows (outflows) (3)7.4 (4.6)(9.8)1.0 (1.6)5.0 (2.6)
Acquisitions— — — — — 0.2 0.2 
Market appreciation33.2 9.0 14.7 2.2 0.8 5.5 65.4 
Net change40.6 4.4 4.9 3.2 (0.8)10.7 63.0 
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
______________
 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 accounts36.7
 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) inflows10.8
 (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.
___________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.

(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
(3)Fixed income – taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.
Net long-term inflows (outflows) for actively-managedactively managed investment services as compared to passively managed investment services for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively, are as follows:
Year Ended December 31,
202120202019
(in billions)
Actively Managed
Equity$21.9 $7.4 $4.0 
Fixed Income(3.9)(8.8)21.7 
Alternatives/Multi-Asset Solutions8.3 4.5 4.0 
26.3 3.1 29.7 
28
Table of Contents
Year Ended December 31,
Years Ended December 31,202120202019
2018 2017 2016(in billions)
(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     Passively Managed
Equity$(0.2) $(4.3) $(2.5)Equity$(7.5)$(4.6)$(4.1)
Fixed Income(0.3) (1.7) 0.7
Fixed Income5.0 (1.6)(0.9)
Other0.3
 0.1
 0.1
Total(0.2) (5.9) (1.7)
Alternatives/Multi-Asset SolutionsAlternatives/Multi-Asset Solutions2.3 0.5 0.5 
(0.2)(5.7)(4.5)
Total net long-term inflows (outflows)$(8.1) $13.2
 $(9.8)Total net long-term inflows (outflows)$26.1 $(2.6)$25.2 

Average AUM by distribution channel and investment service were as follows:
 Year Ended December 31,
 202120202019
(in billions)
Distribution Channel:
Institutions$325.7 $285.9 $265.4 
Retail291.0 236.5 212.3 
Private Wealth Management114.1 97.1 96.5 
Total$730.8 $619.5 $574.2 
Investment Service:
Equity Actively Managed$252.2 $179.8 $158.4 
Equity Passively Managed (1)68.7 57.1 56.4 
Fixed Income Actively Managed – Taxable253.1 254.4 239.7 
Fixed Income Actively Managed – Tax-exempt53.8 47.9 44.6 
Fixed Income Passively Managed (1)9.6 9.4 9.4 
Alternatives/Multi-Asset Solutions (2)93.4 70.9 65.7 
Total$730.8 $619.5 $574.2 
 Years Ended December 31,
 2018 2017 2016
 (in billions)
Distribution Channel:     
Institutions$258.1
 $253.8
 $243.4
Retail191.8
 177.5
 157.7
Private Wealth Management94.3
 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 – Taxable230.3
 236.3
 221.5
Fixed Income Actively Managed – Tax-exempt41.3
 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 certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and certain alternative investments.

Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
Fees
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM. Bernstein Research Services revenue consists principally of commissions received for providing equity research and brokerage-related services to institutional investors. The components of net revenues are as follows:follows and are prior to intercompany eliminations:
Year Ended December 31,
202120202019
(in millions)
Investment advisory and services fees:
Institutions:
Base fees$540 $458 $451 
Performance-based fees46 53 28 
586 511 479 
Retail:
Base fees1,442 1,187 1,076 
Performance-based fees51 2423
1,493 1,211 1,099 
29
Table of Contents
Year Ended December 31,
Years Ended December 31,202120202019
2018 2017 2016(in millions)
(in millions)
Investment advisory and services fees:
     
Institutions     
Private Wealth Management:Private Wealth Management:
Base fees$445
 $430
 $404
Base fees967 818 845 
Performance-based fees33
 45
 17
Performance-based fees149 55 49 
Total478
 475
 421
Retail     
1,116 873 894 
Total:Total:

Base fees992
 923
 806
Base fees2,949 2,463 2,372 
Performance-based fees18
 24
 3
Performance-based fees246 132 100 
Total1,010
 947
 809
Private Wealth Management     
Base fees807
 754
 692
Performance-based fees67
 25
 12
Total874
 779
 704
Total
 

 
Base fees2,244
 2,107
 1,902
Performance-based fees118
 94
 32
Total$2,362
 $2,201
 $1,934
3,195 2,595 2,472 
Bernstein Research Services$439
 $450
 $480
Bernstein Research Services452 460 408 
Distribution revenues419
 412
 384
Distribution revenues652 530 455 
Dividend and interest income98
 71
 47
Dividend and interest income39 51 104 
Investment gains (losses)3
 92
 93
Investment (losses) gainsInvestment (losses) gains(1)(16)39 
Other revenues99
 98
 100
Other revenues108 105 98 
Total revenues3,420
 3,324
 3,038
Total revenues4,445 3,725 3,576 
Less: Interest expense53
 25
 9
Less: Interest expense4 16 57 
Net revenues$3,367
 $3,299
 $3,029
Net revenues$4,441 $3,709 $3,519 
30
Table of Contents

Protection Solutions
Our Protection Solutions segment includes our life insurance and employee benefits businesses. We have a long history of providing life insurance products to help affluent and high net worth individuals and small and medium-sized business markets.owners protect and transfer their wealth. We are currently focused on the relatively less capital-intensive asset accumulation segments of the market, with leading offerings in the VUL and IUL markets.market.
We offer a targeted range of life insurance products aimed at serving the financial needs of our clients throughout their lives. Specifically, our products are designed to help affluent and high net worth individuals as well as small and medium-sized business owners protect and transfer their wealth. Our product offerings include VUL, IUL and term life products, which represented 51%80%, 39%12% and 9%8% of our total life insurance annualized premium, respectively, for the year ended December 31, 2018.2021. Our products are distributed through AXAEquitable Advisors and select third-party firms. We benefit from a long-term, stable distribution relationship with AXAEquitable Advisors, with AXAEquitable Advisors representing approximately 79%77% of our total life insurance sales for the year ended December 31, 2018.
As of December 31, 2018, we had approximately 900,000 outstanding life insurance policies with a face value of $442 billion. In 2017, our VUL sales ranked fourth in the total U.S. market and first in the retail channel, and our IUL sales ranked second in the retail channel, according to LIMRA.2021.
In 2015, we entered the employee benefits market focusing on small and medium-sized businesses, a target market for our life insurance business and Group Retirement 401(k) market. We currently offer a suitebusinesses. Our core products consist of employee benefitsGroup Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability and Long-Term Disability. In 2020, we launched our voluntary products including life, short-Critical Illness and long-term disability, dentalAccident. Our Employee Benefits’ solutions are distributed through the traditional broker channel, strategic partnerships (medical partners, professional employer associations (PEOs), and vision insurance products.associations), General Agencies, TPAs and Retail Equitable Advisors. We believe our employee benefits businessEB360 technology platform is a differentiator and will further augment our solutions for small and medium-sized businesses and is differentiated by a high-quality technology platform. We sell our employee benefit products through AXA Advisors and third-party distributors, including regional, national and local brokers.businesses.

Our Protection Solutions segment provides strong cash flows generated by our in-force book and capital diversification benefits. The primary sources of revenue are premiums, investment income, asset-based fees (investment management and 12b-1 fees), and policy charges (expense loads, surrender charges mortality charges and other policymortality charges), as well as fees collected from AXAEquitable Advisors non-proprietary sales through AXAEquitable Network.
To grow our Protection Solutions segment, we remain focused on the accumulation segment of the market supported by our VUL and IUL products and are expanding our commitment to the small and medium-sized business market through our employee benefits offerings. We plan to grow our distribution footprint by maintaining our presence through AXA Advisors, and opportunistically growing our relationship with targeted third-party firms. We plan to improve our performance over time through earnings generated from sales of our repositioned product portfolio and by proactively managing and optimizing our in-force book.
Life InsuranceRisk Management
We approach risk management of our variable annuity products: (i) prospectively, by assessing, and from time to time, modifying our current product offerings to manage our risk and (ii) retrospectively, by implementing actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts.
Current GMxB Product Strategy
Since 2008, we redesigned our variable annuity product offering by introducing new variable annuities without GMxB features, discontinuing the offering of certain GMxB features and adding or adjusting other features to better enable us to manage the risk associated with these products. Through the increase in sales of our products without GMxB features, sales of our variable annuity contracts with GMxB features have decreased significantly as a percentage of our total sales. We continue to offer certain GMxB features to meet evolving consumer demand while maintaining attractive risk-adjusted returns and effectively managing our risk.
 Some of the features of our GMxB products have been serving the financial needs of our clients and their families since 1859. We have an established reputation in product innovation by pioneering the VUL market in 1976 and continuing today with our range of innovative IUL offerings. As of December 31, 2018, we had approximately 900,000 outstanding policies and $442 billion of life insurance face amount in-force. As of December 31, 2018, Protection Solutions Reserves for our life insurance products accounted for $11 billion in Separate Accounts and $18 billion in the General Account.
Products
Our life insurance products are primarily designed to help individuals and small and medium-sized businesses with protection, wealth accumulation and transfer, as well as corporate planning solutions. We target select segments of the life insurance market: permanent life insurance, including IUL and VUL products and term insurance. As part of a strategic shiftredesigned over the past several years to better manage our risk and to meet customer demand. For example:
•we evolved our product designprimarily offer floating (tied to be less capital-intensiveinterest rates), as opposed to fixed, roll-up rates;
•we offer lower risk investment options, including passive investments and more accumulation-focused.bond funds with reduced credit risk if certain optional guaranteed benefits are elected; and
Permanent Life Insurance. Our permanent life insurance offerings are built on•we offer managed volatility funds, which seek to reduce the premise that all clients expect to receive a benefit fromrisk of large, sudden declines in AV during market downturns by managing the policy. The benefit may take the form of a life insurance death benefit paid at time of death no matter the agevolatility or durationdraw-down risk of the policyunderlying fund holdings through re-balancing the fund holdings within certain guidelines or overlaying hedging strategies at the form of accessfund level.
To further manage our risk, features in our current GMxB products provide us with the right to cash that has accumulated in the policy on a tax-favored basis. In each case, the value to the client comes from access to a broad spectrum of investments that accumulate the policy value at attractive rates of return.

We have three permanent life insurance offerings built upon a UL insurance framework: IUL, VUL and corporate-owned life insurance targeting the small and medium-sized business market, which is a subset of VUL products. Universal life policies offer flexible premiums, and generally offer the policyholdermake adjustments post-sale, including the ability to choose oneincrease benefit charges. For more information on GMxB features contained in our current and in-force products, see below “—Overview of two death benefit options: a level benefit equalGMxB Features.”
In-force Variable Annuity Management
Since the financial crisis, we have implemented several actions to reduce our exposure and manage the policy’s original face amount or arisks associated with in-force variable benefit equal toannuity contracts while ensuring policyholder rights are fully respected. We manage the original face amount plus any existing policy AV. Our universal life insurance products include single-life productsrisks associated with our in-force variable annuity business through our dynamic hedging program, reinsurance and second-to-die (i.e., survivorship) products, which pay death benefits followingproduct design. The dynamic hedging program was implemented in the death of both insureds.
IUL. IUL uses an equity-linked approach for generating policy investment returns. The equity linked options provide upside return based on an external equity-based index (e.g., S&P 500) subject to a cap. In exchange for this cap on investment returns, the policy provides downside protection in that annual investment returns are guaranteed to never be less than zero, even if the relevant index is down.early 2000s. In addition, there is an optionwe use reinsurance for the GMxB riders on our older variable annuity products (generally issued 1996-2004). We have also introduced several other risk management programs, some of which are described in this section below.
To actively manage and protect against the economic risks associated with our in-force variable annuity products, our management team has taken a multi-pronged approach. Our in-force variable annuity risk management programs include:
Hedging
We use a dynamic hedging strategy supplemented by static hedges to receive a higher cap on certain investment returnsoffset changes in exchange for a fee. As noted above, the performance of any universal life insurance policy also depends on the level of policy charges. For further discussion, see “—Pricingour economic liability from changes in equity markets and Fees.”
VUL. VUL uses a series of investment options to generate the investment return allocated to the cash value. The sub-accounts are similar to retail mutual funds: a policyholder can invest premiums in one or more underlying investment options offering varying levels of risk and growth potential. These provide long-term growth opportunities, tax-deferred earnings and the ability to make tax-free transfers among the various sub-accounts.interest rates. In addition the policyholder can invest premiumsto our dynamic hedging strategy, we have static hedge positions to maintain a target asset level for all variable annuities. A wide range of derivatives contracts are used in a guaranteed interest option,these hedging programs, such as well as an investment option we call the Market Stabilizer Option (“MSO”)futures and total return swaps (both equity and fixed income), which provides downside protection from losses in the index up to a specified percentage. We also offer corporate-owned life insurance, which is a VUL insurance product tailored specifically to support executive benefits in the small business market.
We work with AXA Equitable FMG to identifyoptions and include appropriate underlying investment options in our variable life products,variance swaps, as well as, to controla lesser extent, bond investments and repurchase agreements. For GMxB features, we retain certain risks including basis, credit spread, and some volatility risk and risk associated with actual versus expected assumptions for mortality, lapse and surrender, withdrawal and contract-holder election rates, among other things.
Reinsurance
We have used reinsurance to mitigate a portion of the costsrisks that we face in certain of our variable annuity products with regard to a portion of the GMxB features. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. We evaluate the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. Also, we ensure that we obtain collateral to mitigate our risk of loss.
12
Table of Contents
Non-affiliate Reinsurance. We have reinsured to non-affiliated reinsurers a portion of our exposure on variable annuity products that offer a GMxB feature issued through February 2005. As of December 31, 2021, we had reinsured to non-affiliated reinsurers, subject to certain maximum amounts or caps in any one period, approximately 59.8% of our NAR resulting from the GMIB feature and approximately 47.6% of our NAR to the GMDB obligation on variable annuity contracts in force as of December 31, 2021.
In June 2021, as part of the Venerable Transaction, Equitable Financial ceded to CS Life on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008, comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. For additional information regarding the Venerable Transaction, see “—Overview—Venerable Transaction” and Note 1 of the Notes to these options.Consolidated Financial Statements.
Term Life. Term life provides basic life insurance protection for a specified period of time and is typically a client’s first life insurance purchase due
Captive Reinsurance. In addition to non-affiliated reinsurance, Equitable Financial has ceded to its relatively low cost.affiliate, EQ AZ Life insurance benefitsRE, a captive reinsurance company, a 100% quota share of all liabilities for variable annuities with GMIB riders issued on or after May 1, 1999 through August 31, 2005 in excess of the liability assumed by two unaffiliated reinsurers, which are paid if death occurs duringsubject to certain maximum amounts or limitations on aggregate claims. We use captive reinsurance as part of our capital management strategy. For additional information regarding our use of captives, see “—Regulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance Company.”
Other Programs
We have introduced several other programs that reduced gross reserves and reduced the term period, as long as required premiums have been paid. The required premiums are guaranteed notrisk in our in-force block and, in many cases, offered a benefit to increase duringour clients by offering liquidity or flexibility:
Investment Option Changes. We made several changes to our investment options within our variable annuity products over the term period, otherwise known as a level pay or fixed premium. Our term products include competitive conversion features that allowyears to manage risk, employ more passive strategies and offer our clients attractive risk-adjusted investment returns. To reduce the policyholder to convert their term life insurance policy to permanent life insurance within policy limitsdifferential between hedging instruments performance and fund performance, we added many passive investment strategies and reduced the ability to add certain riders. Our term life portfolio includes 1, 10, 15 and 20-year term products.
Other Benefits. We offer a portfoliocredit risk of riderssome of the bond portfolios, which is designed to provide clients with additional flexibilitya better risk adjusted return to protectclients. We also introduced managed volatility funds in 2009. Our volatility management strategy seeks to reduce the valueportfolio’s equity exposure during periods when certain market indicators indicate that market volatility is above specific thresholds set for the portfolio. Historically when market volatility is high, equity markets generally are trending down, and therefore this strategy is intended to reduce the clients’ overall risk of their investments and overcome challenges. Our Long Term Care Services Rider provides an acceleration of the policy death benefitinvesting in the eventportfolio.
Optional Buyouts. We have implemented several successful buyout programs on contracts issued between 2002 and 2009 that benefited clients whose needs had changed since buying the initial contract and reduced our exposure to certain types of a chronic illness and has been elected on 36%GMxB features.
Premium Suspension Programs. We have suspended the acceptance of all eligible policies and elected on 31% of all new policies sold during the year ended December 31, 2018. The MSO, referredsubsequent premiums to above and offered via a policy rider on our variable life products, providescertain GMxB contracts.
Lump Sum Option. We have provided certain policyholders with the opportunityoptional benefit to manage volatility. The returnreceive a one-time lump sum payment rather than systematic lifetime payments if their AV falls to zero. This option provides the same advantages as a buyout. However, because the availability of premium rider providesthis option is contingent on future events, their actual effectiveness will only be known over a guarantee thatlong-term horizon.
 Overview of GMxB Features
We have historically offered a variety of variable annuity benefit features, including GMxB features, to our policyholders in our Individual Retirement segment.
Guaranteed Minimum Death Benefits Summary
We have historically offered GMDB features in isolation or together with GMLB features, including the following (with no additional charge unless noted):
•Return of Premium Death Benefit. This death benefit payable will be no less thanpays 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
13
Table of Contents
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 investedof any IRS-mandated withdrawals, or 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 policy.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.
In addition, we offered two guaranteed minimum death benefits with our GWBL rider, available at issue.
•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.
The following table presents the AV and benefit base by type of guaranteed minimum death benefit. Because variable annuity contracts with GMDB features may also offer GMLB features, the GMDB amounts listed are not mutually exclusive from the GMLB amounts provided in the table below.
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMDB In-Force (1)
ROP Death Benefit Only (3)$11,437 $6,443 $10,437 $6,141 $9,620 $6,048 
Floating Rate GMDB
Greater of Ratchet or Roll-up$7,105 $7,867 $7,121 $7,995 $7,017 $7,891 
All Other (2)19,381 15,707 18,047 15,100 16,874 14,902 
     Total Floating Rate GMDB$26,486 $23,574 $25,168 $23,095 $23,891 $22,793 
Fixed Rate GMDB
Greater of Ratchet or Roll-up (3)$14,748 $21,518 $26,800 $42,521 $26,239 $42,896 
All Other (2) (3)15,390 12,689 18,822 15,507 18,478 16,469 
     Total Fixed Rate GMDB$30,138 $34,207 $45,622 $58,028 $44,717 $59,365 
Total GMDB$68,061 $64,224 $81,227 $87,264 $78,228 $88,206 
______________
14
Table of Contents
(1)    See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 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.
(3)    AV and Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to the Consolidated Financial Statements.
Guaranteed Living Benefits Summary
We have historically offered a variety of guaranteed living benefits to our policyholders in our Individual Retirement segment. Our block of variable annuities includes four types of guaranteed living benefit riders: GMIB, GWBL/GMWB, GMAB and GIB. Based on total AV, approximately 51% of our variable annuity block included living benefit guarantees as of December 31, 2021.
•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 insurance annualized premiumsthat 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, 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.
The second phase of the contract starts when the policyholder annuitizes the contract, either by exercising the GMIB or through the contract’s standard annuitization provisions. Upon exercise of their GMIB, policyholders receive guaranteed lifetime income payments that are calculated as the higher of: (i) application of their GMIB benefit base to the GMIB guaranteed annuity purchase factors specified in the contract; or (ii) application of their AV to our then current or guaranteed annuity purchase factors. Beginning in 2005 we started offering a no-lapse guarantee on our GMIB riders that provides for the periods indicated:automatic exercise of the GMIB in the event that the policyholder’s AV falls to zero and provided no “excess withdrawals” (as defined in the contract) have been taken.
The charge for the GMIB is calculated based on the GMIB benefit base value and deducted annually from the AV.
•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.
•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.
Below are examples of policyholder benefit utilization choices that can affect benefit payment patterns and reserves:
15
Table of Contents
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Annualized Premium     
Indexed Universal Life$81
 $82
 $90
Variable Universal Life107
 94
 86
Term19
 19
 20
Other (1)3
 3
 4
Total$210
 $198
 $200
•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.
(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.

•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 contract, generally age 85 or 95. The policyholder may otherwise annuitize the AV and choose one of several payout options.
•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.
The likelihood of a policyholder choosing a particular option cannot be predicted with certainty at the time of contract issuance. Accordingly, we make assumptions as to policyholder benefit elections and resulting benefit payments at the time of issuance and while it is in-force based on our experience. The incidents and timing of benefit elections and the amounts of resulting benefit payments may materially differ from those we anticipate at that time. As we observe actual policyholder behavior, we update our assumptions at least annually with respect to future policyholder activity and take appropriate action with respect to the amount of the reserves we establish for the future payment of such benefits. Additionally, upon the death of a policyholder (or annuitant), if the sole beneficiary is a surviving spouse, they can choose to continue the contract and benefits subject to age restrictions.
The following table presents the AV and benefit base by type of guaranteed living benefit. Because variable annuity contracts with GMLB features may also offer GMDB features, the GMLB amounts listed are not mutually exclusive from the GMDB amounts provided in the table above.
16
Table of Contents
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMLB In-Force (1)
Floating Rate GMLB
GMIB$23,435 $24,123 $22,002 $23,029 $20,699 $22,108 
Other (GIB)2,623 2,796 2,762 2,978 2,812 3,128 
Total Floating Rate GMLB$26,058 $26,919 $24,764 $26,007 $23,511 $25,236 
Fixed Rate GMLB
GMIB$40,065 $59,341 $39,369 $60,695 $38,846 $61,775 
All Other (e.g., GWBL / GMWB, GMAB, other) (2)846 1,153 830 1,165 806 1,175 
Total Fixed Rate GMLB$40,911 $60,494 $40,199 $61,860 $39,652 $62,950 
Total GMLB$66,969 $87,413 $64,963 $87,867 $63,163 $88,186 
______________
(1)See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 under “—Net Amount at Risk.”
(2)    All Other includes individual life insurance FYP and renewals by product and total gross premiumsvariable annuity policies with stand-alone Annual Ratchet or stand-alone Roll-up GMDB.
Net Amount at Risk
The NAR for the periods indicated:

 Years Ended December 31,
 2018 2017 2016
 (in millions)
FYP by Product Line     
Universal Life$3
 $4
 $5
Indexed Universal Life216
 219
 267
Variable Universal Life176
 163
 148
Term19
 19
 20
Other (1)1
 1
 1
Total$415
 $406
 $441
      
Renewals by Product Line     
Universal Life$918
 $913
 $905
Indexed Universal Life224
 189
 145
Variable Universal Life904
 959
 914
Term483
 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.

Our in-force book spans four insurance companies, AXA Equitable Life, MLOA, USFL and AXA Equitable L&A. USFL and AXA Equitable L&A are closed for new business. Certain term products and permanent products riders from MLOA, USFL and AXA Equitable Life have been reinsured to our captive reinsurer EQ AZ Life Re and, prior toGMDB is the GMxB Unwind, AXA RE Arizona. Our in-force portfolio is made upamount of core product offerings as described above, as well as past generation product offerings that include current assumption universal life insurance, whole life insurance and other products.
The following table presents our in-force face amount, policy counts and Protection Solutions Reservesdeath benefits payable in excess of the total AV (if any) as of the dates indicated, respectively,balance sheet date, net of reinsurance. It represents the amount of the claim we would incur if death claims were made on all contracts with a GMDB on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.
The NAR for the individual life insurance products we offer:
 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 Life22.9
 20.5
 18.5
Variable Universal Life (3)127.3
 128.9
 130.3
Term234.9
 235.9
 237.0
Whole Life1.4
 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 Life52
 45
 38
Variable Universal Life (3)307
 316
 326
Term333
 340
 346
Whole Life19
 20
 21
Total888
 909
 930

 As of December 31,
 2018 2017 2016
 (in millions)
Protection Solutions Reserves (4)     
General Account$17,562
 $17,296
 $17,713
Separate Accounts11,393
 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.

In orderGMIB is the amount (if any) that would be required to optimizebe added to the total AV to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the GMIB. This amount represents our capital efficiency and improvepotential economic exposure to such guarantees in the profitability of new business, in 2009, we made a strategic decisionevent all policyholders were to exitannuitize on the balance sheet date, even though the guaranteed universal life (“GUL”) insurance and 30-year term life insurance markets. Overamount under the past decade, we have refocused our offering to less capital-intensive segmentscontracts may not be annuitized until after the waiting period of the market. contract.
The following chart shows this shiftNAR for the GWBL, GMWB and GMAB is the actuarial present value in our product sales (annualized premiums) from 2008 to 2018:excess of the AVs (if any) as of the balance sheet date. The NAR assumes utilization of benefits by all policyholders as of the balance sheet date. For the GMWB and GWBL benefits, only a small portion of the benefit base is available for withdrawal on an annual basis. For the GMAB, the NAR would not be available until the GMAB maturity date.
Shift in Product Sales (Annualized Premiums)
chart-a19d39b008eb79fe3cd.jpgchart-49648012bc759c74497.jpg
(1) UL includes GUL insurance products.
As partNAR reflects the difference between the benefit base (as adjusted, in some cases, as described above) and the AV. We believe that NAR alone provides an inadequate presentation of the risk exposure of our in-force management function,variable annuity portfolio. NAR does not take into consideration the aggregate amount of reserves and capital that we monitor the performancehold against our variable annuity portfolio.
The NAR and reserves of contract owners by type of GMxB feature for variable annuity contracts are summarized below as of December 31, 2021, 2020 and 2019. Many of our life insurance portfolio against our expectations atvariable annuity contracts offer more than one type of guarantee such that the timeGMIB amounts are not mutually exclusive to the amounts in the GMDB table.
17
Table of pricingContents
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMDB
ROP Death Benefit Only (1) (2)$75 N/A$84 N/A$95 N/A
Floating Rate GMDB851 377 943 332 904 272 
Fixed Rate GMDB (2)8,061 2,360 17,244 4,674 18,123 4,402 
Total$8,987 $2,737 $18,271 $5,006 $19,122 $4,674 
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMIB
Floating Rate GMIB$— $172 $— $136 $— $91 
Fixed Rate GMIB (2)3,910 4,441 10,461 14,110 8,746 10,573 
Total$3,910 $4,613 $10,461 $14,246 $8,746 $10,664 
______________
(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.
(2) NAR is net of amounts ceded to Venerable during 2021. See Note 1 of the products. It is our objectiveNotes to align the performance of our portfolio to pricing expectations and take in-force actions where appropriate, in accordance with our contracts, applicable law and our governance processes. For example, in 2016, we increased the cost of insurance rates on certain universal life policies sold between 2004 and 2007 which have both issue ages of 70 and above and a current face value amount of $1 million and above. We have also increased administrative fees and have lowered interest crediting rates and persistency bonusthese Consolidated Financial Statements for certain classes of our portfolio.
Markets

We are focused on targeted segmentsdetails of the market, particularly affluentVenerable Transaction.
18
Table of Contents
Group Retirement
Our Group Retirement segment offers tax-deferred investment and high net worth individuals,retirement services or products to plans sponsored by educational entities, municipalities and not-for-profit entities, as well as small and medium-sized businesses. We focusoperate in the 403(b), 457(b) and 401(k) markets where we sell variable annuity and mutual fund-based products. RBG, is the primary distributor of our products and related solutions to individuals in the K-12 education market with more than 1,000 advisors dedicated to helping educators prepare for retirement as of December 31, 2021.
The tax-exempt 403(b)/457(b) market, which includes our 403(b) K–12 education market business, accounted for 71% of sales within the Group Retirement business for the year ended December 31, 2021. The corporate 401(k) market accounts for 22% and the remaining 7% is Other as of December 31, 2021.
The recurring nature of the revenues from our Group Retirement business makes this segment an important and stable contributor of earnings and cash flow to our business. The primary sources of revenue for the Group Retirement business include fee revenue and investment income.
Products
Our products offer educators, municipal employees and corporate employees a savings opportunity that provides tax-deferred wealth accumulation. Our innovative product offerings address all retirement phases with diverse investment options.
Variable Annuities
Our variable annuities offer defined contribution plan record-keeping, as well as administrative and participant services combined with a variety of proprietary and non-proprietary investment options. Our variable annuity investment lineup mostly consists of proprietary variable investment options that are managed by EIMG, which provides discretionary investment management services for these investment options that include developing and executing asset allocation strategies and providing rigorous oversight of sub-advisors for the investment options. This helps to ensure that we retain high quality managers and that we leverage our scale across both the Individual Retirement and Group Retirement products. In addition, our variable annuity products offer the following features:
•Guaranteed Investment Option (GIO) —Provides a fixed interest rate and guarantee of principal.
•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 period. This option leverages our innovative SCS individual annuity offering, and we believe that we are the only provider that offers this type of offering combined in a variable annuity offering in the defined contribution market today.
•Personal Income Benefit—An optional GMxB feature that enables participants to obtain a guaranteed withdrawal benefit for life for an additional fee.
While GMxB features provide differentiation in the market, only approximately $9 million, or 0.02%, of our total AV is invested in products with GMxB features (other than ROP death benefits) as of December 31, 2021, and based on creating valuecurrent utilization, we do not expect significant flows into these types of GMxB features.
Open Architecture Mutual Fund Platform
We also offer a mutual fund-based product to complement our variable annuity products. This platform provides a similar service offering to our variable annuities. The program allows plan sponsors to select from thousands of mutual funds. The platform also offers a group fixed annuity that operates very similarly to the GIO as an available investment option on this platform. In January 2021 we launched the successor product to our existing mutual fund based product.
Services
Both our variable annuity and open architecture mutual fund products offer a suite of tools and services to enable plan participants to obtain education and guidance on their contributions and investment decisions and plan fiduciary services. Education and guidance are available online or in person from a team of plan relationship and enrollment specialists and/or the advisor that sold the product. Our clients’ retirement contributions come through payroll deductions, which contribute significantly to stable and recurring sources of renewals.
19
Table of Contents
The chart below illustrates our net flows for the years ended December 31, 2021, 2020 and 2019.
Year Ended December 31,
202120202019
(in millions)
Net Flows
Gross Premiums$3,623 $3,343 $3,533 
Surrenders, Withdrawals and Benefits(3,929)(3,047)(3,266)
Net Flows$(306)$296 $267 
The following table presents the gross premiums for each of our customers throughmarkets for the differentiated featuresperiods specified.
Year Ended December 31,
202120202019
(in millions)
Gross Premiums by Market
Tax-Exempt$809 $724 $902 
Corporate435 392 537 
Other62 60 49 
Total FYP1,306 1,176 1,488 
Tax-Exempt1,757 1,632 1,531 
Corporate369 342 330 
Other191 193 184 
Total Renewal Premiums2,317 2,167 2,045 
Gross Premiums$3,623 $3,343 $3,533 
Markets
We primarily operate in the tax-exempt 403(b)/457(b), corporate 401(k) and other markets.
•Tax-exempt 403(b)/457(b). We primarily serve individual employees of public school systems. To a lesser extent, we also market to government entities that sponsor 457(b) plans.
Overall, the 403(b) and 457(b) markets represent 62% of FYP in the Group Retirement segment for the year ended December 31, 2021. We seek to grow in these markets by increasing our presence in the school districts where we currently operate and also by potentially growing our presence in school districts where we currently do not have access.
•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. 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 onretirement and individual products to employers that are members of industry or trade associations and various other sole proprietor and small business retirement accounts.
The following table presents the relative contribution of each of our products. We distribute these products through retail advisors and third-party firms who demonstratemarkets to AV as of the valuedates indicated.
20
Table of life insurance in helping clients to accumulate wealth and protect their assets.Contents
December 31,
202120202019
(in millions)
AV by Market
Tax-Exempt$37,072 $32,586 $28,895 
Corporate5,367 4,920 4,387 
Other4,914 4,953 4,598 
AV$47,353 $42,459 $37,880 
Distribution
We primarily distribute life insuranceour products and services to this market through two channels: AXAEquitable Advisors and third-party distribution firms. AXAFor the year ended December 31, 2021, these channels represented approximately 88% and 12% of our sales, respectively. We also distribute through direct online sales. We employ internal and external wholesalers to exclusively market our products through Equitable Advisors has been a long-term, stableand third-party firms that are licensed to sell our products.
Equitable Advisors, through RBG, is the primary distribution partnerchannel for our life insurance business, ranking first in VULproducts. The cornerstone of the RBG model is a repeatable and scalable advisor recruiting and training model that we believe is more effective than the overall industry model. RBG advisors complete several levels of training that are specific to the education market and give them the requisite skills to assess the educators’ retirement needs and how our products can help to address those needs. Equitable Advisors also accounted for 98% of our 403(b) sales in the retail channel and second in IUL sales in the retail channel for 2017, according to LIMRA.2021.
To supplement our sales through AXA Advisors, distributionGroup Retirement products are also distributed through third-party firms provides efficient accessand directly to independent producers oncustomers online. We have a largely variable cost basis. Brokerage general agencies, producer groups, banks, warehouses, independent broker-dealersdigital engagement strategy to supplement our traditional advisor-based model. This includes engaging existing clients to increase contributions online. The program uses data analysis combined with digital media to engage educators, teach them about their retirement needs and registered investment advisers are all important partners who distributeincrease awareness of our products today.and services. Due to effects of the COVID-19 pandemic, we accelerated our digital adoption programs, leading to improved outcomes for clients, advisors, and the Company. We also have a competitive strength serving specialty markets including professional athletes, entertainersdeveloped digital tools and foreign national residents.enhanced our remote engagement with our educator clients, which is resulting in improved retention and increases in retirement plan contributions.
The following table presents individual life insurance annualizedfirst year premium by distribution channel for the periods indicated:
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Annualized Premium by Distribution     
AXA Advisors$165
 $157
 $160
Third-Party Firms45
 41
 40
Total$210
 $198
 $200
Year Ended December 31,
202120202019
(in millions)
FYP by Distribution
Equitable Advisors$1,155 $1,078 $1,341 
Third-Party151 98 147 
Total$1,306 $1,176 $1,488 
Competition
The lifeWe compete with select insurance industry consists of many companies, asset managers, record keepers and diversified financial institutions that target similar market segments. Competition varies in all market segments with no singleone company dominatingdominating. In the K–12 public education market, for all products. We selectively compete with large, well-established life insurance companies in a maturecompetitors are primarily insurance-based providers that focus on school districts. In the small and medium-sized business market, wherethe primary competitors are insurance-based providers and mutual fund companies. The main features that distinguish our offering to clients include our RBG distribution model, the product features pricewe offer to clients, including guarantees, and service are key drivers. We primarily compete with others based on these drivers as well as distribution channel relationships, brand recognition,our financial strength ratings of our insurance subsidiariesstrength.
Underwriting and financial stability. We are selective in our markets of interest and will continue to focus deeply in those areas that align to our offering.
Underwriting
Our underwriting process, built around extensive underwriting guidelines, is designed to assign prospective insureds to risk classes in a manner that is consistent with our business and financial objectives, including our risk appetite and pricing expectations.
As part of making an underwriting decision, our underwriters evaluate information disclosed as part of the application process as well as information obtained from other sources after the application. This information includes, but is not limited to, the insured’s age and sex, results from medical exams and financial information.Pricing
We continuegenerally do not underwrite our annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience, volatility of expected earnings on our AV, and the expected time to researchretirement. Our product pricing models also take into account capital requirements, hedging costs and develop guideline changes to increase the efficiency of our underwriting process (e.g., through the use of predictive models), both from an internal cost perspective and our customer experience perspective.
We manage changes to our underwriting guidelines though a robust governance process that ensures that our underwriting decisions continue to align with our business and financial objectives, including risk appetite and pricing expectations.
With an average of more than 15 years of industry underwriting experience, our team of approximately 100 underwriters and four medical directors is dedicated to making accurate, timely and competitive underwriting decisions. Our line underwriters are empowered to make decisions and receive support of underwriting managers and medical directors when needed.
Our financial due diligence team, with more than 50 years of combined insurance experience, combines legal, financial and investigative expertise to support the financial underwriting of complex cases, assist in case design and plays an important in

fraud prevention. We continuously monitor our underwriting decisions through internal audits and other quality control processes, to ensure accurate and consistent application of our underwriting guidelines.
We use reinsurance to manage our mortality risk and volatility. Our reinsurer partners regularly review our underwriting practices and mortality and lapse experience through audits and experience studies, the outcome of which have consistently validated the high-quality underwriting process and decisions.
Pricing and Fees
Life insuranceoperating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
21
Table of Contents
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of guarantees and other features we offer. We have previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our clients, the economic environment and our risk appetite evolve.
Fees
We earn various types of fee revenue based on AV, fund assets and benefit base. Fees that we collect include mortality & expense, administrative charges and distribution charges; withdrawal charges; investment management fees, 12b-1 fees, death benefit rider charges, and living benefit riders charges. For a more detailed description of these types of fees, see “—Individual Retirement—Fees on AV, Fund Assets, Benefit Base and Investment Income.”
Risk Management
We design our Group Retirement products with the goal of providing attractive features to clients that also minimize risks to us. To mitigate risks to our General Account from fluctuations in interest rates, we apply a variety of techniques that align well with a given product type. We designed our GIO to comply with the NAIC minimum rate (1.0% for new issues), and our 403(b) products that we currently sell include a contractual provision that enables us to limit transfers into the GIO. As most defined contribution plans allow participants to borrow against their accounts, we have made changes to our loan repayment processes to minimize participant loan defaults and to facilitate loan repayments to the participant’s current investment allocation as opposed to requiring repayments only to the GIO. In the 401(k) and 457(b) markets, we may charge a market value adjustment on the assets of the GIO when a plan sponsor terminates its agreement with us. We also prohibit direct transfers to fixed income products that compete with the GIO, which protects the principal in the General Account in a rising interest rate environment.
In the Tax-Exempt market, the benefits include a minimum guaranteed interest rate on our GIO, return of premium death benefits and limited optional GMxB features. The utilization of GMxB features is low. In the Corporate market, the products that we sell today do not offer death benefits in excess of the AV.
As of December 31, 2021, approximately 59% of our General Account AV has a minimum guaranteed rate of 3-4%. Given the growth in net flows to our newer products and the slowing in flows to older blocks due to retirement, we expect that guarantees at a rate over 3% will continue to diminish as a percentage of our overall General Account AV. The table below illustrates the guaranteed minimum rates applicable to our General Account AV for products with the GIO, as of December 31, 2021.
Total General
Guaranteed Minimum Interest RateAccount AV
(in billions)
1 – < 2%$3.7 
2 – < 3%1.4 
3%7.1 
4%0.2 
Total$12.4 
We use a committee of subject matter experts and business leaders that meet periodically to set crediting rates for our guaranteed interest options. The committee evaluates macroeconomic and business factors to determine prudent interest rates in excess of the contract minimum when appropriate.
We also monitor the behavior of our clients who have the ability to transfer assets between the GIO and various Separate Accounts investment options. We have not historically observed a material shift of assets moving into guarantees during times of higher market volatility.
Hedging
We hedge crediting rates to mitigate certain risks associated with the SIO. In order to support the returns associated with the SIO, we enter into derivatives contracts whose payouts, in combination with fixed income investments, emulate those of the S&P 500, Russell 2000 or MSCI EAFE index, subject to caps and buffers.
22
Table of Contents
Investment Management and Research
Our Investment Management and Research business provides diversified investment management, research and related services globally to a broad range of clients through AB’s three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and AB’s sell-side business, Bernstein Research Services. AB Holding is a master limited partnership publicly listed on the NYSE. We own an approximate 65% economic interest in AB. As the general partner of AB, we have the authority to manage and control its business, and accordingly, this segment reflects AB’s consolidated financial results.
Our Investment Management and Research business had approximately $778.6 billion in AUM as of December 31, 2021, composed of 46% equities, 41% fixed income and 13% multi-asset class solutions, alternatives and other assets. By distribution channel, institutional clients represented 43% of AUM, while retail and private wealth management clients represented 41% and 16% respectively, as of December 31, 2021.
AB has a suite of actively managed, differentiated equity and fixed income services, delivering strong risk-adjusted returns. For instance, 72% of AB’s fixed income services and 49% of AB’s equity services have outperformed their benchmarks over the three-year period ended December 31, 2021. Additionally, at year-end 2021, 76% of AB’s U.S. Fund assets and 59% of AB’s Non-U.S. Fund assets were rated either 4 or 5-stars by Morningstar.
Bernstein Research Services has received top Institutional Investor rankings and Private Wealth Management ranks among the top 20 wealth management firms in the United States, according to Barron’s.
We are AB’s largest client. We represented 17% of AB’s total AUM as of December 31, 2021 and 3% of AB’s net revenues for the year ended December 31, 2021.
AB provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include:
•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 Holdings 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 EIMG, 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.
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM.
Products and Services
Investment Services
AB provides a broad range of investment services with expertise in:
•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;
•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;
23
Table of Contents
•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and
•Some passive management, including index and enhanced index strategies.
Research
AB’s high-quality, in-depth research is the foundation of its business. AB believes that its global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives it a competitive advantage in achieving investment success for its clients. AB also has experts focused on multi-asset strategies, wealth management, ESG, and alternative investments.
Custody
AB’s U.S.-based broker-dealer subsidiary acts as custodian for the majority of AB’s Private Wealth Management AUM and some of its Institutional AUM. Other custodian arrangements, directed by clients, include banks, trust companies, brokerage firms and other financial institutions.
For additional information about AB’s investment advisory fees, including performance-based fees, see “Risk Factors—Risks Relating to Our Investment Management and Research Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—Investment Management and Research.”
Markets
AB operates in major markets around the world, including the United States, EMEA (Europe, the Middle East and Africa) and Asia. Our AUM is disbursed as follows:
By Investment Service ($ in billions):
eqh-20211231_g6.jpgeqh-20211231_g7.jpgeqh-20211231_g8.jpg
24
Table of Contents
By Client Domicile ($ in billions):
eqh-20211231_g9.jpgeqh-20211231_g10.jpgeqh-20211231_g11.jpg
Distribution Channels
AB distributes its products and solutions through three main client channels: Institutional, Retail and Private Wealth Management.
Institutional
AB offers to its institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and Holdings and its subsidiaries, separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”).
AB manages the assets of its institutional clients pursuant to written investment management agreements or other arrangements, which generally are terminable at any time or upon assumptionsrelatively short notice by either party. In general, AB’s written investment management agreements may not be assigned without the client’s consent.
Retail
AB provides investment management and related services to a wide variety of individual retail investors globally through retail mutual funds AB sponsors, mutual fund sub-advisory relationships, separately-managed account programs and other investment vehicles (“Retail Products and Services”).
AB distributes its Retail Products and Services through financial intermediaries, including butbroker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act or (ii) not limitedregistered under the Investment Company Act and generally not offered to expected future premium payments, surrender rates, mortalityU.S. persons. They also include separately-managed account programs, which are sponsored by financial intermediaries and morbidity rates,generally charge an all-inclusive fee covering investment returns, hedging costs,management, trade execution, asset allocation, and custodial and administrative services. In addition, AB provides distribution, shareholder servicing, transfer agency services and administrative services for its Retail Products and Services.
Private Wealth Management
AB partners with its clients, embracing innovation and independent research to address increasingly complex challenges. AB’s clients include high net worth individuals and families who have created generational wealth as successful business owners, athletes, entertainers, corporate executives and private practice owners. AB also provides investment and wealth advice to foundations and endowments, family offices and other entities. AB’s flexible investment platform offers a range of solutions, including separately-managed accounts, hedge funds, mutual funds and other investment vehicles, tailored to meet each distinct client’s needs. AB’s investment platform is complimented with a wealth platform that includes complex tax and estate planning, pre-IPO and pre-transaction planning, multi-generational family engagement, and philanthropic advice in addition to tailored approaches to meeting the unique needs of emerging wealth and multi-cultural demographics.
AB manages these accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any authorized party, and may not be assigned without the client’s consent.
25
Table of Contents
Competition
AB competes in all aspects of its business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations and other financial institutions that often provide investment products with similar features and objectives as those AB offers. AB’s competitors offer a wide range of financial services to the same customers that AB seeks to serve.
To grow its business, AB believes it must be able to compete effectively for AUM. Key competitive factors include: (i) AB’s investment performance for clients; (ii) AB’s commitment to place the interests of its clients first; (iii) the quality of AB’s research; (iv) AB’s ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; (v) the array of investment products AB offers; (vi) the fees AB charges; (vii) Morningstar/Lipper rankings for the AB Funds; (viii) AB’s ability to sell its actively-managed investment services despite the fact that many investors favor passive services; (ix) AB’s operational effectiveness; (x) AB’s ability to further develop and market its brand; and (xi) AB’s global presence.
AUM
AUM by distribution channel were as follows:
December 31,
202120202019
(in billions)
Institutions$337.1 $315.6 $282.7 
Retail319.9 265.3 239.2 
Private Wealth Management121.6 105.0 101.0 
Total$778.6 $685.9 $622.9 

AUM by investment service were as follows:
December 31,
202120202019
(in billions)
Equity
Actively Managed$287.6 $217.8 $177.2 
Passively Managed (1)71.6 64.5 60.1 
Total Equity359.2 282.3 237.3 
Fixed Income
Actively Managed
Taxable246.3 263.2 258.3 
Tax-exempt57.1 50.3 47.1 
Total Actively Managed303.4 313.5 305.4 
Passively Managed (1)13.2 8.5 9.3 
Total Fixed Income316.6 322.0 314.7 
Alternatives/Multi-Asset Solutions (2)
Actively Managed97.3 79.1 69.3 
Passively Managed (1)5.5 2.5 1.6 
Total Other102.8 81.6 70.9 
Total$778.6 $685.9 $622.9 
_____________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity returns, expensesor fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and inflationMulti-Asset Solutions services, we updated the investment service line to "Alternatives and capital requirements.Multi-Asset Solutions."
26
Table of Contents
Changes in AUM for the years ended December 31, 2021 and 2020 are as follows:
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
Long-term flows:
Sales/new accounts31.7 100.0 18.3 150.0 
Redemptions/terminations(23.4)(65.1)(15.3)(103.8)
Cash flow/unreinvested dividends(6.0)(14.1)— (20.1)
Net long-term inflows (outflows) (1)2.3 20.8 3.0 26.1 
Transfers(0.2)0.2 — — 
Market appreciation (depreciation)19.4 33.6 13.6 66.6 
Net change21.5 54.6 16.6 92.7 
Balance, December 31, 2021$337.1 $319.9 $121.6 $778.6 
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2019$282.7 $239.2 $101.0 $622.9 
Long-term flows:
Sales/new accounts30.9 78.9 14.3 124.1 
Redemptions/terminations(23.3)(69.5)(16.5)(109.3)
Cash flow/unreinvested dividends(6.6)(11.0)0.2 (17.4)
Net long-term inflows (outflows) (1)1.0 (1.6)(2.0)(2.6)
Acquisitions— 0.2 — 0.2 
Transfers1.4 (0.6)(0.8)— 
Market appreciation30.5 28.1 6.8 65.4 
Net change32.9 26.1 4.0 63.0 
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
______________
(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

27
Table of Contents
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
Long-term flows:
Sales/new accounts72.9 1.4 44.9 13.5 4.6 12.7 150.0 
Redemptions/terminations(39.6)(1.1)(52.6)(7.8)(0.4)(2.3)(103.8)
Cash flow/unreinvested dividends(11.4)(7.8)(2.2)0.3 0.8 0.2 (20.1)
Net long-term inflows (outflows) (3)21.9 (7.5)(9.9)6.0 5.0 10.6 26.1 
Market appreciation (depreciation)47.9 14.6 (7.0)0.8 (0.3)10.6 66.6 
Net change69.8 7.1 (16.9)6.8 4.7 21.2 92.7 
Balance, December 31, 2021$287.6 $71.6 $246.3 $57.1 $13.2 $102.8 $778.6 
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2019$177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 
Long-term flows:
Sales/new accounts51.4 1.7 54.3 10.3 — 6.4 124.1 
Redemptions/terminations(36.7)(1.9)(58.3)(9.5)(0.3)(2.6)(109.3)
Cash flow/unreinvested dividends(7.3)(4.4)(5.8)0.2 (1.3)1.2 (17.4)
Net long-term inflows (outflows) (3)7.4 (4.6)(9.8)1.0 (1.6)5.0 (2.6)
Acquisitions— — — — — 0.2 0.2 
Market appreciation33.2 9.0 14.7 2.2 0.8 5.5 65.4 
Net change40.6 4.4 4.9 3.2 (0.8)10.7 63.0 
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
______________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
(3)Fixed income – taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.
Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows:
Year Ended December 31,
202120202019
(in billions)
Actively Managed
Equity$21.9 $7.4 $4.0 
Fixed Income(3.9)(8.8)21.7 
Alternatives/Multi-Asset Solutions8.3 4.5 4.0 
26.3 3.1 29.7 
28
Table of Contents
Year Ended December 31,
202120202019
(in billions)
Passively Managed
Equity$(7.5)$(4.6)$(4.1)
Fixed Income5.0 (1.6)(0.9)
Alternatives/Multi-Asset Solutions2.3 0.5 0.5 
(0.2)(5.7)(4.5)
Total net long-term inflows (outflows)$26.1 $(2.6)$25.2 

Average AUM by distribution channel and investment service were as follows:
 Year Ended December 31,
 202120202019
(in billions)
Distribution Channel:
Institutions$325.7 $285.9 $265.4 
Retail291.0 236.5 212.3 
Private Wealth Management114.1 97.1 96.5 
Total$730.8 $619.5 $574.2 
Investment Service:
Equity Actively Managed$252.2 $179.8 $158.4 
Equity Passively Managed (1)68.7 57.1 56.4 
Fixed Income Actively Managed – Taxable253.1 254.4 239.7 
Fixed Income Actively Managed – Tax-exempt53.8 47.9 44.6 
Fixed Income Passively Managed (1)9.6 9.4 9.4 
Alternatives/Multi-Asset Solutions (2)93.4 70.9 65.7 
Total$730.8 $619.5 $574.2 
___________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
Fees
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM. Bernstein Research Services revenue consists principally of commissions received for providing equity research and brokerage-related services to institutional investors. The primary sourcecomponents of revenue fromnet revenues are as follows and are prior to intercompany eliminations:
Year Ended December 31,
202120202019
(in millions)
Investment advisory and services fees:
Institutions:
Base fees$540 $458 $451 
Performance-based fees46 53 28 
586 511 479 
Retail:
Base fees1,442 1,187 1,076 
Performance-based fees51 2423
1,493 1,211 1,099 
29
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Private Wealth Management:
Base fees967 818 845 
Performance-based fees149 55 49 
1,116 873 894 
Total:

Base fees2,949 2,463 2,372 
Performance-based fees246 132 100 
3,195 2,595 2,472 
Bernstein Research Services452 460 408 
Distribution revenues652 530 455 
Dividend and interest income39 51 104 
Investment (losses) gains(1)(16)39 
Other revenues108 105 98 
Total revenues4,445 3,725 3,576 
Less: Interest expense4 16 57 
Net revenues$4,441 $3,709 $3,519 
30
Table of Contents
Protection Solutions
Our Protection Solutions segment includes our life insurance and employee benefits businesses. We have a long history of providing life insurance products to help affluent and high net worth individuals and small and medium-sized business owners protect and transfer their wealth. We are currently focused on the relatively less capital-intensive asset accumulation segments of the market, with leading offerings in the VUL market.
We offer a targeted range of life insurance products aimed at serving the financial needs of our clients throughout their lives. Our product offerings include VUL, IUL and term life products, which represented 80%, 12% and 8% of our total life insurance annualized premium, respectively, for the year ended December 31, 2021. Our products are distributed through Equitable Advisors and select third-party firms. We benefit from a long-term, stable distribution relationship with Equitable Advisors, with Equitable Advisors representing approximately 77% of our total life insurance sales for the year ended December 31, 2021.
In 2015, we entered the employee benefits market focusing on small and medium-sized businesses, a target market for our life insurance and Group Retirement 401(k) businesses. Our core products consist of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability and Long-Term Disability. In 2020, we launched our voluntary products including Critical Illness and Accident. Our Employee Benefits’ solutions are distributed through the traditional broker channel, strategic partnerships (medical partners, professional employer associations (PEOs), and associations), General Agencies, TPAs and Retail Equitable Advisors. We believe our EB360 technology platform is a differentiator and will further augment our solutions for small and medium-sized businesses.

Our Protection Solutions segment provides strong cash flows generated by our in-force book and capital diversification benefits. The primary sources of revenue are premiums, investment income, asset-based fees (including investment(investment management and 12b-1 fees), and policy charges (expense loads, surrender charges and mortality charges and other policy charges)., as well as fees collected from Equitable Advisors non-proprietary sales through Equitable Network.
Risk Management
We approach risk management of our variable annuity products: (i) prospectively, by assessing, and from time to time, modifying our current product offerings to manage our risk and (ii) retrospectively, by implementing actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts.
Current GMxB Product Strategy
Since 2008, we redesigned our variable annuity product offering by introducing new variable annuities without GMxB features, discontinuing the offering of certain GMxB features and adding or adjusting other features to better enable us to manage the risk associated with these products. Through the increase in sales of our products without GMxB features, sales of our variable annuity contracts with GMxB features have decreased significantly as a percentage of our total sales. We continue to offer certain GMxB features to meet evolving consumer demand while maintaining attractive risk-adjusted returns and effectively managing our risk.
 Some of the features of our GMxB products have been redesigned over the past several years to better manage our risk and to meet customer demand. For example:
•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.
To further manage our risk, features in our current GMxB products provide us with the right to make adjustments post-sale, including the ability to increase benefit charges. For more information on GMxB features contained in our current and in-force products, see below “—Overview of GMxB Features.”
In-force Variable Annuity Management
Since the financial crisis, we have implemented several actions to reduce our exposure and manage the risks associated with in-force variable annuity contracts while ensuring policyholder rights are fully respected. We manage the risks associated with our in-force variable annuity business through our dynamic hedging program, reinsurance and product design. The dynamic hedging program was implemented in the early 2000s. In addition, we use reinsurance for the GMxB riders on our older variable annuity products (generally issued 1996-2004). We have also introduced several other risk management programs, some of which are described in this section below.
To actively manage and protect against the economic risks associated with our in-force variable annuity products, our management team has taken a multi-pronged approach. Our in-force variable annuity risk management programs include:
Hedging
We use a dynamic hedging strategy supplemented by static hedges to offset changes in our economic liability from changes in equity markets and interest rates. In addition to our dynamic hedging strategy, we have static hedge positions to maintain a target asset level for all variable annuities. A wide range of derivatives contracts are used in these hedging programs, such as futures and total return swaps (both equity and fixed income), options and variance swaps, as well as, to a lesser extent, bond investments and repurchase agreements. For GMxB features, we retain certain risks including basis, credit spread, and some volatility risk and risk associated with actual versus expected assumptions for mortality, lapse and surrender, withdrawal and contract-holder election rates, among other things.
Reinsurance
We have used reinsurance to mitigate a portion of the risks that we face in certain of our variable annuity products with regard to a portion of the GMxB features. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. We evaluate the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. Also, we ensure that we obtain collateral to mitigate our risk of loss.
12
Table of Contents
Non-affiliate Reinsurance. We have reinsured to non-affiliated reinsurers a portion of our exposure on variable annuity products that offer a GMxB feature issued through February 2005. As of December 31, 2021, we had reinsured to non-affiliated reinsurers, subject to certain maximum amounts or caps in any one period, approximately 59.8% of our NAR resulting from the GMIB feature and approximately 47.6% of our NAR to the GMDB obligation on variable annuity contracts in force as of December 31, 2021.
In June 2021, as part of the Venerable Transaction, Equitable Financial ceded to CS Life on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008, comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. For additional information regarding the Venerable Transaction, see “—Overview—Venerable Transaction” and Note 1 of the Notes to these Consolidated Financial Statements.

Captive Reinsurance. In addition to non-affiliated reinsurance, Equitable Financial has ceded to its affiliate, EQ AZ Life RE, a captive reinsurance company, a 100% quota share of all liabilities for variable annuities with GMIB riders issued on or after May 1, 1999 through August 31, 2005 in excess of the liability assumed by two unaffiliated reinsurers, which are subject to certain maximum amounts or limitations on aggregate claims. We use captive reinsurance as part of our capital management strategy. For additional information regarding our use of captives, see “—Regulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance Company.”
Other Programs
We have introduced several other programs that reduced gross reserves and reduced the risk in our in-force block and, in many cases, offered a benefit to our clients by offering liquidity or flexibility:
Investment Option Changes. We made several changes to our investment options within our variable annuity products over the years to manage risk, employ more passive strategies and offer our clients attractive risk-adjusted investment returns. To reduce the differential between hedging instruments performance and fund performance, we added many passive investment strategies and reduced the credit risk of some of the bond portfolios, which is designed to provide a better risk adjusted return to clients. We also introduced managed volatility funds in 2009. Our volatility management strategy seeks to reduce the portfolio’s equity exposure during periods when certain market indicators indicate that market volatility is above specific thresholds set for the portfolio. Historically when market volatility is high, equity markets generally are trending down, and therefore this strategy is intended to reduce the clients’ overall risk of investing in the portfolio.
Optional Buyouts. We have implemented several successful buyout programs on contracts issued between 2002 and 2009 that benefited clients whose needs had changed since buying the initial contract and reduced our exposure to certain types of GMxB features.
Premium Suspension Programs. We have suspended the acceptance of subsequent premiums to certain GMxB contracts.
Lump Sum Option. We have provided certain policyholders with the optional benefit to receive a one-time lump sum payment rather than systematic lifetime payments if their AV falls to zero. This option provides the same advantages as a buyout. However, because the availability of this option is contingent on future events, their actual effectiveness will only be known over a long-term horizon.
 Overview of GMxB Features
We have historically offered a variety of variable annuity benefit features, including GMxB features, to our policyholders in our Individual Retirement segment.
Guaranteed Minimum Death Benefits Summary
We have historically offered GMDB features in isolation or together with GMLB features, including the following (with no additional charge unless noted):
•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
13
Table of Contents
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 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.
In addition, we offered two guaranteed minimum death benefits with our GWBL rider, available at issue.
•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.
The following table presents the AV and benefit base by type of guaranteed minimum death benefit. Because variable annuity contracts with GMDB features may also offer GMLB features, the GMDB amounts listed are not mutually exclusive from the GMLB amounts provided in the table below.
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMDB In-Force (1)
ROP Death Benefit Only (3)$11,437 $6,443 $10,437 $6,141 $9,620 $6,048 
Floating Rate GMDB
Greater of Ratchet or Roll-up$7,105 $7,867 $7,121 $7,995 $7,017 $7,891 
All Other (2)19,381 15,707 18,047 15,100 16,874 14,902 
     Total Floating Rate GMDB$26,486 $23,574 $25,168 $23,095 $23,891 $22,793 
Fixed Rate GMDB
Greater of Ratchet or Roll-up (3)$14,748 $21,518 $26,800 $42,521 $26,239 $42,896 
All Other (2) (3)15,390 12,689 18,822 15,507 18,478 16,469 
     Total Fixed Rate GMDB$30,138 $34,207 $45,622 $58,028 $44,717 $59,365 
Total GMDB$68,061 $64,224 $81,227 $87,264 $78,228 $88,206 
______________
14
Table of Contents
(1)    See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 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.
(3)    AV and Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to the Consolidated Financial Statements.
Guaranteed Living Benefits Summary
We have historically offered a variety of guaranteed living benefits to our policyholders in our Individual Retirement segment. Our block of variable annuities includes four types of guaranteed living benefit riders: GMIB, GWBL/GMWB, GMAB and GIB. Based on total AV, approximately 51% of our variable annuity block included living benefit guarantees as of December 31, 2021.
•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, 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.
The second phase of the contract starts when the policyholder annuitizes the contract, either by exercising the GMIB or through the contract’s standard annuitization provisions. Upon exercise of their GMIB, policyholders receive guaranteed lifetime income payments that are calculated as the higher of: (i) application of their GMIB benefit base to the GMIB guaranteed annuity purchase factors specified in the contract; or (ii) application of their AV to our then current or guaranteed annuity purchase factors. Beginning in 2005 we started offering a no-lapse guarantee on our GMIB riders that provides for the automatic exercise of the GMIB in the event that the policyholder’s AV falls to zero and provided no “excess withdrawals” (as defined in the contract) have been taken.
The charge for the GMIB is calculated based on the GMIB benefit base value and deducted annually from the AV.
•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.
•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.
Below are examples of policyholder benefit utilization choices that can affect benefit payment patterns and reserves:
15
Table of Contents
•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 contract, generally age 85 or 95. The policyholder may otherwise annuitize the AV and choose one of several payout options.
•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.
The likelihood of a policyholder choosing a particular option cannot be predicted with certainty at the time of contract issuance. Accordingly, we make assumptions as to policyholder benefit elections and resulting benefit payments at the time of issuance and while it is in-force based on our experience. The incidents and timing of benefit elections and the amounts of resulting benefit payments may materially differ from those we anticipate at that time. As we observe actual policyholder behavior, we update our assumptions at least annually with respect to future policyholder activity and take appropriate action with respect to the amount of the reserves we establish for the future payment of such benefits. Additionally, upon the death of a policyholder (or annuitant), if the sole beneficiary is a surviving spouse, they can choose to continue the contract and benefits subject to age restrictions.
The following table presents the AV and benefit base by type of guaranteed living benefit. Because variable annuity contracts with GMLB features may also offer GMDB features, the GMLB amounts listed are not mutually exclusive from the GMDB amounts provided in the table above.
16
Table of Contents
December 31,
202120202019
AccountBenefitAccountBenefitAccountBenefit
ValueBaseValueBaseValueBase
(in millions)
GMLB In-Force (1)
Floating Rate GMLB
GMIB$23,435 $24,123 $22,002 $23,029 $20,699 $22,108 
Other (GIB)2,623 2,796 2,762 2,978 2,812 3,128 
Total Floating Rate GMLB$26,058 $26,919 $24,764 $26,007 $23,511 $25,236 
Fixed Rate GMLB
GMIB$40,065 $59,341 $39,369 $60,695 $38,846 $61,775 
All Other (e.g., GWBL / GMWB, GMAB, other) (2)846 1,153 830 1,165 806 1,175 
Total Fixed Rate GMLB$40,911 $60,494 $40,199 $61,860 $39,652 $62,950 
Total GMLB$66,969 $87,413 $64,963 $87,867 $63,163 $88,186 
______________
(1)See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December 31, 2021, 2020 and 2019 under “—Net Amount at Risk.”
(2)    All Other includes individual variable annuity policies with stand-alone Annual Ratchet or stand-alone Roll-up GMDB.
Net Amount at Risk
The NAR for the GMDB is the amount of death benefits payable in excess of the total AV (if any) as of the balance sheet date, net of reinsurance. It represents the amount of the claim we would incur if death claims were made on all contracts with a GMDB on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.
The NAR for the GMIB is the amount (if any) that would be required to be added to the total AV to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the GMIB. This amount represents our potential economic exposure to such guarantees in the event all policyholders were to annuitize on the balance sheet date, even though the guaranteed amount under the contracts may not be annuitized until after the waiting period of the contract.
The NAR for the GWBL, GMWB and GMAB is the actuarial present value in excess of the AVs (if any) as of the balance sheet date. The NAR assumes utilization of benefits by all policyholders as of the balance sheet date. For the GMWB and GWBL benefits, only a small portion of the benefit base is available for withdrawal on an annual basis. For the GMAB, the NAR would not be available until the GMAB maturity date.
NAR reflects the difference between the benefit base (as adjusted, in some cases, as described above) and the AV. We believe that NAR alone provides an inadequate presentation of the risk exposure of our in-force variable annuity portfolio. NAR does not take into consideration the aggregate amount of reserves and capital that we hold against our variable annuity portfolio.
The NAR and reserves of contract owners by type of GMxB feature for variable annuity contracts are summarized below as of December 31, 2021, 2020 and 2019. Many of our variable annuity contracts offer more than one type of guarantee such that the GMIB amounts are not mutually exclusive to the amounts in the GMDB table.
17
Table of Contents
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMDB
ROP Death Benefit Only (1) (2)$75 N/A$84 N/A$95 N/A
Floating Rate GMDB851 377 943 332 904 272 
Fixed Rate GMDB (2)8,061 2,360 17,244 4,674 18,123 4,402 
Total$8,987 $2,737 $18,271 $5,006 $19,122 $4,674 
December 31,
202120202019
NARReservesNARReservesNARReserves
(in millions)
GMIB
Floating Rate GMIB$— $172 $— $136 $— $91 
Fixed Rate GMIB (2)3,910 4,441 10,461 14,110 8,746 10,573 
Total$3,910 $4,613 $10,461 $14,246 $8,746 $10,664 
______________
(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.
(2) NAR is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction.
18
Table of Contents
Group Retirement
Our 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. We operate in the 403(b), 457(b) and 401(k) markets where we sell variable annuity and mutual fund-based products. RBG, is the primary distributor of our products and related solutions to individuals in the K-12 education market with more than 1,000 advisors dedicated to helping educators prepare for retirement as of December 31, 2021.
The tax-exempt 403(b)/457(b) market, which includes our 403(b) K–12 education market business, accounted for 71% of sales within the Group Retirement business for the year ended December 31, 2021. The corporate 401(k) market accounts for 22% and the remaining 7% is Other as of December 31, 2021.
The recurring nature of the revenues from our Group Retirement business makes this segment an important and stable contributor of earnings and cash flow to our business. The primary sources of revenue for the Group Retirement business include fee revenue and investment income.
Products
Our products offer educators, municipal employees and corporate employees a savings opportunity that provides tax-deferred wealth accumulation. Our innovative product offerings address all retirement phases with diverse investment options.
Variable Annuities
Our variable annuities offer defined contribution plan record-keeping, as well as administrative and participant services combined with a variety of proprietary and non-proprietary investment options. Our variable annuity investment lineup mostly consists of proprietary variable investment options that are managed by EIMG, which provides discretionary investment management services for these investment options that include developing and executing asset allocation strategies and providing rigorous oversight of sub-advisors for the investment options. This helps to ensure that we retain high quality managers and that we leverage our scale across both the Individual Retirement and Group Retirement products. In addition, our variable annuity products offer the following features:
•Guaranteed Investment Option (GIO) —Provides a fixed interest rate and guarantee of principal.
•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 period. This option leverages our innovative SCS individual annuity offering, and we believe that we are the only provider that offers this type of offering combined in a variable annuity offering in the defined contribution market today.
•Personal Income Benefit—An optional GMxB feature that enables participants to obtain a guaranteed withdrawal benefit for life for an additional fee.
While GMxB features provide differentiation in the market, only approximately $9 million, or 0.02%, of our total AV is invested in products with GMxB features (other than ROP death benefits) as of December 31, 2021, and based on current utilization, we do not expect significant flows into these types of GMxB features.
Open Architecture Mutual Fund Platform
We also offer a mutual fund-based product to complement our variable annuity products. This platform provides a similar service offering to our variable annuities. The program allows plan sponsors to select from thousands of mutual funds. The platform also offers a group fixed annuity that operates very similarly to the GIO as an available investment option on this platform. In January 2021 we launched the successor product to our existing mutual fund based product.
Services
Both our variable annuity and open architecture mutual fund products offer a suite of tools and services to enable plan participants to obtain education and guidance on their contributions and investment decisions and plan fiduciary services. Education and guidance are available online or in person from a team of plan relationship and enrollment specialists and/or the advisor that sold the product. Our clients’ retirement contributions come through payroll deductions, which contribute significantly to stable and recurring sources of renewals.
19
Table of Contents
The chart below illustrates our net flows for the years ended December 31, 2021, 2020 and 2019.
Year Ended December 31,
202120202019
(in millions)
Net Flows
Gross Premiums$3,623 $3,343 $3,533 
Surrenders, Withdrawals and Benefits(3,929)(3,047)(3,266)
Net Flows$(306)$296 $267 
The following table presents the gross premiums for each of our markets for the periods specified.
Year Ended December 31,
202120202019
(in millions)
Gross Premiums by Market
Tax-Exempt$809 $724 $902 
Corporate435 392 537 
Other62 60 49 
Total FYP1,306 1,176 1,488 
Tax-Exempt1,757 1,632 1,531 
Corporate369 342 330 
Other191 193 184 
Total Renewal Premiums2,317 2,167 2,045 
Gross Premiums$3,623 $3,343 $3,533 
Markets
We primarily operate in the tax-exempt 403(b)/457(b), corporate 401(k) and other markets.
•Tax-exempt 403(b)/457(b). We primarily serve individual employees of public school systems. To a lesser extent, we also market to government entities that sponsor 457(b) plans.
Overall, the 403(b) and 457(b) markets represent 62% of FYP in the Group Retirement segment for the year ended December 31, 2021. We seek to grow in these markets by increasing our presence in the school districts where we currently operate and also by potentially growing our presence in school districts where we currently do not have access.
•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. 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.
The following table presents the relative contribution of each of our markets to AV as of the dates indicated.
20
Table of Contents
December 31,
202120202019
(in millions)
AV by Market
Tax-Exempt$37,072 $32,586 $28,895 
Corporate5,367 4,920 4,387 
Other4,914 4,953 4,598 
AV$47,353 $42,459 $37,880 
Distribution
We primarily distribute our products and services to this market through Equitable Advisors and third-party distribution firms. For the year ended December 31, 2021, these channels represented approximately 88% and 12% of our sales, respectively. We also distribute through direct online sales. We employ internal and external wholesalers to exclusively market our products through Equitable Advisors and third-party firms that are licensed to sell our products.
Equitable Advisors, through RBG, is the primary distribution channel for our products. The cornerstone of the RBG model is a repeatable and scalable advisor recruiting and training model that we believe is more effective than the overall industry model. RBG advisors complete several levels of training that are specific to the education market and give them the requisite skills to assess the educators’ retirement needs and how our products can help to address those needs. Equitable Advisors also accounted for 98% of our 403(b) sales in 2021.
Group Retirement products are also distributed through third-party firms and directly to customers online. We have a digital engagement strategy to supplement our traditional advisor-based model. This includes engaging existing clients to increase contributions online. The program uses data analysis combined with digital media to engage educators, teach them about their retirement needs and increase awareness of our products and services. Due to effects of the COVID-19 pandemic, we accelerated our digital adoption programs, leading to improved outcomes for clients, advisors, and the Company. We developed digital tools and enhanced our remote engagement with our educator clients, which is resulting in improved retention and increases in retirement plan contributions.
The following table presents first year premium by distribution channel for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
FYP by Distribution
Equitable Advisors$1,155 $1,078 $1,341 
Third-Party151 98 147 
Total$1,306 $1,176 $1,488 
Competition
We compete with select insurance companies, asset managers, record keepers and diversified financial institutions that target similar market segments. Competition varies in all market segments with no one company dominating. In the K–12 public education market, competitors are primarily insurance-based providers that focus on school districts. In the small and medium-sized business market, the primary competitors are insurance-based providers and mutual fund companies. The main features that distinguish our offering to clients include our RBG distribution model, the product features we offer to clients, including guarantees, and our financial strength.
Underwriting and Pricing
We generally do not underwrite our annuity products on an individual-by-individual basis. Instead, we price our products based upon our expected investment returns and assumptions regarding mortality, longevity and persistency for our policyholders collectively, while taking into account historical experience, volatility of expected earnings on our AV, and the expected time to retirement. Our product pricing models also take into account capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.
21
Table of Contents
Our variable annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of guarantees and other features we offer. We have previously changed the nature and pricing of the features we offer and will likely do so from time to time in the future as the needs of our clients, the economic environment and our risk appetite evolve.
Fees
We earn various types of fee revenue based on AV, fund assets and benefit base. Fees that we collect include mortality & expense, administrative charges and distribution charges; withdrawal charges; investment management fees, 12b-1 fees, death benefit rider charges, and living benefit riders charges. For a more detailed description of these types of fees, see “—Individual Retirement—Fees on AV, Fund Assets, Benefit Base and Investment Income.”
Risk Management
We design our Group Retirement products with the goal of providing attractive features to clients that also minimize risks to us. To mitigate risks to our General Account from fluctuations in interest rates, we apply a variety of techniques that align well with a given product type. We designed our GIO to comply with the NAIC minimum rate (1.0% for new issues), and our 403(b) products that we currently sell include a contractual provision that enables us to limit transfers into the GIO. As most defined contribution plans allow participants to borrow against their accounts, we have made changes to our loan repayment processes to minimize participant loan defaults and to facilitate loan repayments to the participant’s current investment allocation as opposed to requiring repayments only to the GIO. In the 401(k) and 457(b) markets, we may charge a market value adjustment on the assets of the GIO when a plan sponsor terminates its agreement with us. We also prohibit direct transfers to fixed income products that compete with the GIO, which protects the principal in the General Account in a rising interest rate environment.
In the Tax-Exempt market, the benefits include a minimum guaranteed interest rate on our GIO, return of premium death benefits and limited optional GMxB features. The utilization of GMxB features is low. In the Corporate market, the products that we sell today do not offer death benefits in excess of the AV.
As of December 31, 2021, approximately 59% of our General Account AV has a minimum guaranteed rate of 3-4%. Given the growth in net flows to our newer products and the slowing in flows to older blocks due to retirement, we expect that guarantees at a rate over 3% will continue to diminish as a percentage of our overall General Account AV. The table below illustrates the guaranteed minimum rates applicable to our General Account AV for products with the GIO, as of December 31, 2021.
Total General
Guaranteed Minimum Interest RateAccount AV
(in billions)
1 – < 2%$3.7 
2 – < 3%1.4 
3%7.1 
4%0.2 
Total$12.4 
We use a committee of subject matter experts and business leaders that meet periodically to set crediting rates for our guaranteed interest options. The committee evaluates macroeconomic and business factors to determine prudent interest rates in excess of the contract minimum when appropriate.
We also monitor the behavior of our clients who have the ability to transfer assets between the GIO and various Separate Accounts investment options. We have not historically observed a material shift of assets moving into guarantees during times of higher market volatility.
Hedging
We hedge crediting rates to mitigate certain risks associated with the SIO. In order to support the returns associated with the SIO, we enter into derivatives contracts whose payouts, in combination with fixed income investments, emulate those of the S&P 500, Russell 2000 or MSCI EAFE index, subject to caps and buffers.
22
Table of Contents
Investment Management and Research
Our Investment Management and Research business provides diversified investment management, research and related services globally to a broad range of clients through AB’s three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and AB’s sell-side business, Bernstein Research Services. AB Holding is a master limited partnership publicly listed on the NYSE. We own an approximate 65% economic interest in AB. As the general partner of AB, we have the authority to manage and control its business, and accordingly, this segment reflects AB’s consolidated financial results.
Our Investment Management and Research business had approximately $778.6 billion in AUM as of December 31, 2021, composed of 46% equities, 41% fixed income and 13% multi-asset class solutions, alternatives and other assets. By distribution channel, institutional clients represented 43% of AUM, while retail and private wealth management clients represented 41% and 16% respectively, as of December 31, 2021.
AB has a suite of actively managed, differentiated equity and fixed income services, delivering strong risk-adjusted returns. For instance, 72% of AB’s fixed income services and 49% of AB’s equity services have outperformed their benchmarks over the three-year period ended December 31, 2021. Additionally, at year-end 2021, 76% of AB’s U.S. Fund assets and 59% of AB’s Non-U.S. Fund assets were rated either 4 or 5-stars by Morningstar.
Bernstein Research Services has received top Institutional Investor rankings and Private Wealth Management ranks among the top 20 wealth management firms in the United States, according to Barron’s.
We are AB’s largest client. We represented 17% of AB’s total AUM as of December 31, 2021 and 3% of AB’s net revenues for the year ended December 31, 2021.
AB provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include:
•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 Holdings 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 EIMG, 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.
AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM.
Products and Services
Investment Services
AB provides a broad range of investment services with expertise in:
•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;
•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;
23
Table of Contents
•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and
•Some passive management, including index and enhanced index strategies.
Research
AB’s high-quality, in-depth research is the foundation of its business. AB believes that its global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives it a competitive advantage in achieving investment success for its clients. AB also has experts focused on multi-asset strategies, wealth management, ESG, and alternative investments.
Custody
AB’s U.S.-based broker-dealer subsidiary acts as custodian for the majority of AB’s Private Wealth Management AUM and some of its Institutional AUM. Other custodian arrangements, directed by clients, include banks, trust companies, brokerage firms and other financial institutions.
For additional information about AB’s investment advisory fees, including performance-based fees, see “Risk Factors—Risks Relating to Our Investment Management and Research Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations by Segment—Investment Management and Research.”
Markets
AB operates in major markets around the world, including the United States, EMEA (Europe, the Middle East and Africa) and Asia. Our AUM is disbursed as follows:
By Investment Service ($ in billions):
eqh-20211231_g6.jpgeqh-20211231_g7.jpgeqh-20211231_g8.jpg
24
Table of Contents
By Client Domicile ($ in billions):
eqh-20211231_g9.jpgeqh-20211231_g10.jpgeqh-20211231_g11.jpg
Distribution Channels
AB distributes its products and solutions through three main client channels: Institutional, Retail and Private Wealth Management.
Institutional
AB offers to its institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and Holdings and its subsidiaries, separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”).
AB manages the assets of its institutional clients pursuant to written investment management agreements or other arrangements, which generally are terminable at any time or upon relatively short notice by either party. In general, AB’s written investment management agreements may not be assigned without the client’s consent.
Retail
AB provides investment management and related services to a wide variety of individual retail investors globally through retail mutual funds AB sponsors, mutual fund sub-advisory relationships, separately-managed account programs and other investment vehicles (“Retail Products and Services”).
AB distributes its Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act or (ii) not registered under the Investment Company Act and generally not offered to U.S. persons. They also include separately-managed account programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. In addition, AB provides distribution, shareholder servicing, transfer agency services and administrative services for its Retail Products and Services.
Private Wealth Management
AB partners with its clients, embracing innovation and independent research to address increasingly complex challenges. AB’s clients include high net worth individuals and families who have created generational wealth as successful business owners, athletes, entertainers, corporate executives and private practice owners. AB also provides investment and wealth advice to foundations and endowments, family offices and other entities. AB’s flexible investment platform offers a range of solutions, including separately-managed accounts, hedge funds, mutual funds and other investment vehicles, tailored to meet each distinct client’s needs. AB’s investment platform is complimented with a wealth platform that includes complex tax and estate planning, pre-IPO and pre-transaction planning, multi-generational family engagement, and philanthropic advice in addition to tailored approaches to meeting the unique needs of emerging wealth and multi-cultural demographics.
AB manages these accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any authorized party, and may not be assigned without the client’s consent.
25
Table of Contents
Competition
AB competes in all aspects of its business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations and other financial institutions that often provide investment products with similar features and objectives as those AB offers. AB’s competitors offer a wide range of financial services to the same customers that AB seeks to serve.
To grow its business, AB believes it must be able to compete effectively for AUM. Key competitive factors include: (i) AB’s investment performance for clients; (ii) AB’s commitment to place the interests of its clients first; (iii) the quality of AB’s research; (iv) AB’s ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; (v) the array of investment products AB offers; (vi) the fees AB charges; (vii) Morningstar/Lipper rankings for the AB Funds; (viii) AB’s ability to sell its actively-managed investment services despite the fact that many investors favor passive services; (ix) AB’s operational effectiveness; (x) AB’s ability to further develop and market its brand; and (xi) AB’s global presence.
AUM
AUM by distribution channel were as follows:
December 31,
202120202019
(in billions)
Institutions$337.1 $315.6 $282.7 
Retail319.9 265.3 239.2 
Private Wealth Management121.6 105.0 101.0 
Total$778.6 $685.9 $622.9 

AUM by investment service were as follows:
December 31,
202120202019
(in billions)
Equity
Actively Managed$287.6 $217.8 $177.2 
Passively Managed (1)71.6 64.5 60.1 
Total Equity359.2 282.3 237.3 
Fixed Income
Actively Managed
Taxable246.3 263.2 258.3 
Tax-exempt57.1 50.3 47.1 
Total Actively Managed303.4 313.5 305.4 
Passively Managed (1)13.2 8.5 9.3 
Total Fixed Income316.6 322.0 314.7 
Alternatives/Multi-Asset Solutions (2)
Actively Managed97.3 79.1 69.3 
Passively Managed (1)5.5 2.5 1.6 
Total Other102.8 81.6 70.9 
Total$778.6 $685.9 $622.9 
_____________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
26
Table of Contents
Changes in AUM for the years ended December 31, 2021 and 2020 are as follows:
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
Long-term flows:
Sales/new accounts31.7 100.0 18.3 150.0 
Redemptions/terminations(23.4)(65.1)(15.3)(103.8)
Cash flow/unreinvested dividends(6.0)(14.1)— (20.1)
Net long-term inflows (outflows) (1)2.3 20.8 3.0 26.1 
Transfers(0.2)0.2 — — 
Market appreciation (depreciation)19.4 33.6 13.6 66.6 
Net change21.5 54.6 16.6 92.7 
Balance, December 31, 2021$337.1 $319.9 $121.6 $778.6 
Distribution Channel
InstitutionsRetailPrivate Wealth ManagementTotal
(in billions)
Balance, December 31, 2019$282.7 $239.2 $101.0 $622.9 
Long-term flows:
Sales/new accounts30.9 78.9 14.3 124.1 
Redemptions/terminations(23.3)(69.5)(16.5)(109.3)
Cash flow/unreinvested dividends(6.6)(11.0)0.2 (17.4)
Net long-term inflows (outflows) (1)1.0 (1.6)(2.0)(2.6)
Acquisitions— 0.2 — 0.2 
Transfers1.4 (0.6)(0.8)— 
Market appreciation30.5 28.1 6.8 65.4 
Net change32.9 26.1 4.0 63.0 
Balance, December 31, 2020$315.6 $265.3 $105.0 $685.9 
______________
(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

27
Table of Contents
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
Long-term flows:
Sales/new accounts72.9 1.4 44.9 13.5 4.6 12.7 150.0 
Redemptions/terminations(39.6)(1.1)(52.6)(7.8)(0.4)(2.3)(103.8)
Cash flow/unreinvested dividends(11.4)(7.8)(2.2)0.3 0.8 0.2 (20.1)
Net long-term inflows (outflows) (3)21.9 (7.5)(9.9)6.0 5.0 10.6 26.1 
Market appreciation (depreciation)47.9 14.6 (7.0)0.8 (0.3)10.6 66.6 
Net change69.8 7.1 (16.9)6.8 4.7 21.2 92.7 
Balance, December 31, 2021$287.6 $71.6 $246.3 $57.1 $13.2 $102.8 $778.6 
Investment Services
Equity Actively ManagedEquity Passively Managed (1)Fixed Income Actively Managed—TaxableFixed Income Actively Managed—Tax ExemptFixed Income Passively Managed (1)
Alternatives
/Multi-Asset
Solutions (2)
Total
(in billions)
Balance, December 31, 2019$177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 
Long-term flows:
Sales/new accounts51.4 1.7 54.3 10.3 — 6.4 124.1 
Redemptions/terminations(36.7)(1.9)(58.3)(9.5)(0.3)(2.6)(109.3)
Cash flow/unreinvested dividends(7.3)(4.4)(5.8)0.2 (1.3)1.2 (17.4)
Net long-term inflows (outflows) (3)7.4 (4.6)(9.8)1.0 (1.6)5.0 (2.6)
Acquisitions— — — — — 0.2 0.2 
Market appreciation33.2 9.0 14.7 2.2 0.8 5.5 65.4 
Net change40.6 4.4 4.9 3.2 (0.8)10.7 63.0 
Balance, December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
______________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
(3)Fixed income – taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.
Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows:
Year Ended December 31,
202120202019
(in billions)
Actively Managed
Equity$21.9 $7.4 $4.0 
Fixed Income(3.9)(8.8)21.7 
Alternatives/Multi-Asset Solutions8.3 4.5 4.0 
26.3 3.1 29.7 
28
Table of Contents
Year Ended December 31,
202120202019
(in billions)
Passively Managed
Equity$(7.5)$(4.6)$(4.1)
Fixed Income5.0 (1.6)(0.9)
Alternatives/Multi-Asset Solutions2.3 0.5 0.5 
(0.2)(5.7)(4.5)
Total net long-term inflows (outflows)$26.1 $(2.6)$25.2 

Average AUM by distribution channel and investment service were as follows:
 Year Ended December 31,
 202120202019
(in billions)
Distribution Channel:
Institutions$325.7 $285.9 $265.4 
Retail291.0 236.5 212.3 
Private Wealth Management114.1 97.1 96.5 
Total$730.8 $619.5 $574.2 
Investment Service:
Equity Actively Managed$252.2 $179.8 $158.4 
Equity Passively Managed (1)68.7 57.1 56.4 
Fixed Income Actively Managed – Taxable253.1 254.4 239.7 
Fixed Income Actively Managed – Tax-exempt53.8 47.9 44.6 
Fixed Income Passively Managed (1)9.6 9.4 9.4 
Alternatives/Multi-Asset Solutions (2)93.4 70.9 65.7 
Total$730.8 $619.5 $574.2 
___________
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."
Fees
Generally, AB is compensated for its investment services on the basis of investment advisory and services fees calculated as a percentage of AUM. Bernstein Research Services revenue consists principally of commissions received for providing equity research and brokerage-related services to institutional investors. The components of net revenues are as follows and are prior to intercompany eliminations:
Year Ended December 31,
202120202019
(in millions)
Investment advisory and services fees:
Institutions:
Base fees$540 $458 $451 
Performance-based fees46 53 28 
586 511 479 
Retail:
Base fees1,442 1,187 1,076 
Performance-based fees51 2423
1,493 1,211 1,099 
29
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Private Wealth Management:
Base fees967 818 845 
Performance-based fees149 55 49 
1,116 873 894 
Total:

Base fees2,949 2,463 2,372 
Performance-based fees246 132 100 
3,195 2,595 2,472 
Bernstein Research Services452 460 408 
Distribution revenues652 530 455 
Dividend and interest income39 51 104 
Investment (losses) gains(1)(16)39 
Other revenues108 105 98 
Total revenues4,445 3,725 3,576 
Less: Interest expense4 16 57 
Net revenues$4,441 $3,709 $3,519 
30
Table of Contents
Protection Solutions
Our Protection Solutions segment includes our life insurance and employee benefits businesses. We have a long history of providing life insurance products to help affluent and high net worth individuals and small and medium-sized business owners protect and transfer their wealth. We are currently focused on the relatively less capital-intensive asset accumulation segments of the market, with leading offerings in the VUL market.
We offer a targeted range of life insurance products aimed at serving the financial needs of our clients throughout their lives. Our product offerings include VUL, IUL and term life products, which represented 80%, 12% and 8% of our total life insurance annualized premium, respectively, for the year ended December 31, 2021. Our products are distributed through Equitable Advisors and select third-party firms. We benefit from a long-term, stable distribution relationship with Equitable Advisors, with Equitable Advisors representing approximately 77% of our total life insurance sales for the year ended December 31, 2021.
In 2015, we entered the employee benefits market focusing on small and medium-sized businesses, a target market for our life insurance and Group Retirement 401(k) businesses. Our core products consist of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability and Long-Term Disability. In 2020, we launched our voluntary products including Critical Illness and Accident. Our Employee Benefits’ solutions are distributed through the traditional broker channel, strategic partnerships (medical partners, professional employer associations (PEOs), and associations), General Agencies, TPAs and Retail Equitable Advisors. We believe our EB360 technology platform is a differentiator and will further augment our solutions for small and medium-sized businesses.

Our Protection Solutions segment provides strong cash flows generated by our in-force book and capital diversification benefits. The primary sources of revenue are premiums, investment income, asset-based fees (investment management and 12b-1 fees), and policy charges (expense loads, surrender charges and mortality charges), as well as fees collected from Equitable Advisors non-proprietary sales through Equitable Network.
Life Insurance
We have been serving the financial needs of our clients and their families since 1859. We have an established reputation in product innovation by pioneering the VUL market in 1976 and continuing today with our range of innovative product offerings.
Products
Our life insurance products are primarily designed to help individuals and small and medium-sized businesses with protection, wealth accumulation and transfer of wealth at death, as well as corporate planning solutions including non-qualified deferred compensation, succession planning and key person insurance . We target select segments of the life insurance market: permanent life insurance, including IUL and VUL products and term insurance. In recent years, we have refocused our product offering and distribution towards less capital intensive, higher return accumulation and protection products. For example, in January 2021, we discontinued offering our most interest rate sensitive IUL product (“IUL Protect”). We plan to grow our operating earnings over time through earnings generated from sales of our repositioned product portfolio and by proactively managing and optimizing our in-force book.

Permanent Life Insurance. Our permanent life insurance offerings are built on the premise that all clients expect to receive a benefit from the policy. The benefit may take the form of a life insurance death benefit paid at time of death or access while living to cash that has accumulated in the policy on a tax-favored basis. In each case, the value to the client comes from access to a broad spectrum of equity or fixed interest investments that accumulate the policy value at rates of return consistent with the market.
We have three permanent life insurance offerings built upon a UL insurance framework: IUL, VUL and COLI targeting the small and medium-sized business market. UL policies offer flexible premiums, and generally offer the policyholder the ability to choose one of two death benefit options: a level benefit equal to the policy’s original face amount or a variable benefit equal to the original face amount plus any existing policy AV. Our insurance products include single-life and second-to-die (i.e., survivorship) products.
IUL. IUL uses an equity-linked approach for generating policy investment returns. The equity linked options provide upside return based on an external equity-based index (e.g., S&P 500) subject to a cap. In exchange for this cap on investment returns, the policy provides downside protection in that annual investment returns are floored at zero, protecting the policyholder in the event of a market movement down. As noted above, the performance of any UL insurance policy also depends on the level of policy charges. For further discussion, see “—Pricing and Fees.”
31
Table of Contents
VUL. VUL uses a series of investment options to generate the investment return allocated to the cash value. The sub-accounts are similar to retail mutual funds: a policyholder can invest policy values in one or more underlying investment options offering varying levels of risk and growth potential. These provide long-term growth opportunities, tax-deferred earnings and the ability to make tax-free transfers among the various sub-accounts. In addition, the policyholder can invest premiums in a guaranteed interest option, as well as an investment option we call the MSO, which provides downside protection from losses in the index up to a specified percentage. Our COLI product is a VUL insurance product tailored specifically to support executive benefits in the small business market.
We work with employees of EIMG to identify and include appropriate underlying investment options in our variable life products, as well as to control the costs of these options.
Term Life. Term life provides basic life insurance protection for a specified period of time and is typically a client’s first life insurance purchase due to its simple design providing basic income protection. Life insurance benefits are paid if death occurs during the term period, as long as required premiums have been paid. The required premiums are guaranteed not to increase during the term period, otherwise known as a level pay or fixed premium. Our term products include conversion features that allow the policyholder to convert their term life insurance policy to permanent life insurance within policy limits.
Other Benefits. We offer a portfolio of riders to provide clients with additional flexibility to protect the value of their investments and overcome challenges. Our Long-Term Care Services Rider provides an acceleration of the policy death benefit in the event of a chronic illness and has been elected on 28% of all eligible policies and elected on 21% of all new policies sold during the year ended December 31, 2021. The MSO, referred to above and offered via a policy rider on our variable life products, provides policyholders with the opportunity to manage volatility.
The following table presents individual life insurance annualized premiums for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
Annualized Premium
Indexed Universal Life$25 $60 $77 
Variable Universal Life169 91 107 
Term16 18 20 
Other (1)— — 2 
Total$210 $169 $206 
______________
(1)For the individual life insurance in-force, other includes current assumption universal life insurance, whole life insurance and other products available for sale but not actively marketed.
The following table presents individual life insurance FYP and renewals by product and total gross premiums for the periods indicated:
32
Table of Contents
Year Ended December 31,
202120202019
(in millions)
FYP by Product Line
Universal Life$— $— $2 
Indexed Universal Life45 144 203 
Variable Universal Life287 144 181 
Term16 18 20 
Other (1)1 1 1 
Total$349 $307 $407 
Renewals by Product Line
Universal Life$824 $845 $895 
Indexed Universal Life310 276 248 
Variable Universal Life968 947 921 
Term379 375 498 
Other (1)19 19 22 
Total$2,500 $2,462 $2,584 
Total Gross Premiums$2,849 $2,769 $2,991 
______________
(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.
Our in-force book spans three insurance companies, Equitable Financial, Equitable America and Equitable L&A. Equitable L&A is closed for new business. Certain term products and permanent products riders from Equitable America and Equitable Financial have been reinsured to our captive reinsurer EQ AZ Life Re. Our in-force portfolio is made up of core product offerings as described above, as well as past generation product offerings that include current assumption universal life insurance, whole life insurance and other products.
The following table presents our in-force face amount and Protection Solutions Reserves as of the dates indicated, respectively, for the individual life insurance products we offer:
December 31,
202120202019
(in billions)
In-force face amount by product: (1)
Universal Life (2)$45.9 $48.7 $53.3 
Indexed Universal Life27.9 27.7 25.8 
Variable Universal Life (3)132.8 127.7 127.5 
Term (4)215.4 215.2 234.9 
Whole Life1.2 1.3 1.4 
Total in-force face amount$423.2 $420.6 $442.9 
December 31,
202120202019
(in millions)
Protection Solutions Reserves (5)
General Account$18,625 $18,905 $17,300 
Separate Accounts17,012 14,771 13,616 
Total Protection Solutions Reserves$35,637 $33,676 $30,916 
______________
33
Table of Contents
(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)UL includes guaranteed universal life insurance products.
(3)VUL includes variable life insurance and COLI.
(4)Decrease from 2019 to 2020 was driven by the sale of USFL.
(5)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.

In order to optimize our capital efficiency and improve the profitability of new business, in 2009, we made a strategic decision to exit the GUL insurance and 30-year term life insurance markets. In recent years, we have refocused our product offering and distribution towards less capital intensive, higher return accumulation and protection products. For example, in January 2021, we discontinued offering our most interest sensitive IUL product (IUL Protect). The following chart shows this shift in our product sales (annualized premiums) from 2008 to 2021:
Shift in Product Sales (Annualized Premiums)
eqh-20211231_g12.jpgeqh-20211231_g13.jpg
(1) UL includes GUL insurance products.
As part of our in-force management function, we monitor the performance of our life insurance portfolio against our expectations at the time of pricing of the products. It is our objective to align the performance of our portfolio to pricing expectations and take in-force actions where appropriate, in accordance with our contracts, applicable law and our governance processes.
Markets
We focus on certain segments of the life insurance market, particularly affluent and high net worth individuals, as well as small and medium-sized businesses. We focus on creating value for our customers through the differentiated features and benefits we offer on our products. We distribute these products through retail advisors and third-party firms who demonstrate the value of life insurance in helping clients to accumulate wealth and protect their assets.
Distribution
We primarily distribute life insurance through two channels: Equitable Advisors and third-party firms. We are shifting our third-party distribution focus in 2021 to bypass intermediaries by working directly with broker dealers and registered investment advisors that assist clients. This shift will allow us to build stronger distribution by aligning directly with experienced life producers and by providing digital, transactional capabilities to non-life experts, such as investment advisors. As part of this restructuring, we have aligned our Retail and Third-Party wholesalers into one Omni Channel.
The following table presents individual life insurance annualized premium by distribution channel for the periods indicated:
34
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Annualized Premium by Distribution
Equitable Advisors$162 $126 $157 
Third-Party Firms48 42 49 
Total$210 $168 $206 
Competition
The life insurance industry consists of many companies with no single company dominating the market for all products. We selectively compete with large, well-established life insurance companies in a mature market, where product features, price and service are key drivers. We primarily compete with others based on these drivers as well as distribution channel relationships, brand recognition, financial strength ratings of our insurance subsidiaries and financial stability. We are selective in our markets of interest and will continue to focus deeply in those areas that align to our offering.
Underwriting
Our underwriting process, built around extensive underwriting guidelines, is designed to assign prospective insureds to risk classes in a manner that is consistent with our business and financial objectives, including our risk appetite and pricing expectations.
As part of making an underwriting decision, our underwriters evaluate information disclosed as part of the application process as well as information obtained from other sources after the application. This information includes, but is not limited to, the insured’s age and sex, results from medical exams and financial information.
We continue to research and develop guideline changes to increase the efficiency of our underwriting process (e.g., through the use of predictive models), both from an internal cost perspective and our customer experience perspective. For example due to effects of the COVID-19 pandemic, we modified our underwriting policies to offer a fluid-less, touchless process to help more clients access the protection they need.
We manage changes to our underwriting guidelines though a robust governance process that ensures that our underwriting decisions continue to align with our business and financial objectives, including risk appetite and pricing expectations.
Our team of underwriters and medical directors is dedicated to making accurate, timely and competitive underwriting decisions. Our line underwriters are empowered to make decisions and receive support of underwriting managers and medical directors when needed.
Our financial due diligence team combines legal, financial and investigative expertise to support the financial underwriting of complex cases, assist in case design and plays an important role in fraud prevention. We continuously monitor our underwriting decisions through internal audits and other quality control processes, to ensure accurate and consistent application of our underwriting guidelines.
We use reinsurance to manage our mortality risk and volatility. Our reinsurer partners regularly review our underwriting practices and mortality and lapse experience through audits and experience studies, the outcome of which have consistently validated the high-quality underwriting process and decisions.
Pricing and Fees
Life insurance products are priced based upon assumptions including, but not limited to, expected future premium payments, surrender rates, mortality and morbidity rates, investment returns, hedging costs, equity returns, expenses and inflation and capital requirements. The primary source of revenue from our life insurance business is premiums, investment income, asset-based fees (including investment management and 12b-1 fees) and policy charges (expense loads, surrender charges, mortality charges and other policy charges).
35
Table of Contents
Risk Management
Reinsurance
We use reinsurance to mitigate a portion of our risk and optimize the capital efficiency and operating returns of our life insurance portfolio. As part of our risk management function, we continuously monitor the financial condition of our reinsurers in an effort to minimize our exposure to significant losses from reinsurer insolvencies. In addition, effective April 1, 2020, we reinsured a material portion of our inforce term block. In most cases, amounts in excess of $2 million are reinsured.
Non-affiliate Reinsurance. We generally obtain reinsurance for the portion of a life insurance policy that exceeds $10 million. We have set up reinsurance pools with highly rated unaffiliated reinsurers that obligate the pool participants to pay death claim amounts in excess of our retention limits for an agreed-upon premium.
Captive Reinsurance. EQ AZ Life Re Company reinsures a 90% quota share of level premium term insurance issued by AXA Equitable LifeFinancial on or after March 1, 2003 through December 31, 2008 a 100% quota share of level term insurance issued by USFL on or after December 31, 2004, and 90% of the risk of the lapse protection riders under UL insurance policies issued by AXA Equitable LifeFinancial on or after June 1, 2003 through June 30, 2007 and those issued by MLOAEquitable America on or after June 1, 2003 through June 30, 2007 on a 90% quota share basis as well as excess claims relating to certain variable annuities with GMIB riders issued by AXA Equitable Life.Financial. We use captive reinsurance as part of our capital management strategy. For additional information regarding our use of captives, see “—Regulation—Insurance Regulation—Captive Reinsurance Regulation and Variable Annuity Capital Standards”, “Risk Factors—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Reinsurance and Hedging—Our reinsurance arrangement with an affiliated captive” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Captive Reinsurance Company.”
Hedging
We hedge the exposure contained in our IUL products and the MSO rider we offer on our VUL products. These products and riders allow the policyholder to participate in the performance of an index price movement up to certain caps and/or protect the policyholder in a movement down to a certain buffer for a set period of time. In order to support our obligations under these investment options, we enter into derivatives contracts whose payouts, in combination with returns from the underlying fixed income investments, seek to replicate those of the index price, subject to prescribed caps and buffers.
Employee Benefits
Our employee benefits business focuses on serving small and medium-sized businesses, a priority segment for us, offering these businesses a differentiated technology platform and competitive suite of group insurance products. Though we only entered the market in 2015, we now offer coverage nationally and have more than 261,000 covered employees as of December 31, 2018. Leveraging our innovative technology platform, we have formed strategic partnerships with large insurance and health carriers as their primary group benefits provider. As a new entrant in the employee benefits market we were able to build a platform from the ground up, without reliance on legacy systems. This puts us in a position to embrace industry shifts quickly and provides us with an advantage over many competitors.
Products
Our products are designed to provide valuable protection for employees as well as help employers attract employees and control costs. We currently offer a suite of life, short-Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability, Long-Term Disability, Critical Illness and long-term disability, dental and visionAccident insurance products.
For the year ended December 31, 2018,
The following table presents employee benefits gross premiums amounted to $60 million, mainly driven by group lifeand annualized premium for the periods indicated:
36
Table of Contents
Year Ended December 31,
202120202019
(in millions)
Employee Benefits Gross Premiums
Group life insurance sales$82 $64 $53 
Short-term disability44 25 17 
Long-term disability43 30 21 
Dental40 28 15 
Vision6 4 — 
Other (1)1 — — 
Total$216 $151 $106 
Annualized premium$76 $52 $52 
_______________
(1) Other includes Critical Illness and Accident insurance sales ($30 million), short- and long-term disability ($22 million) and dental ($7 million). For the year ended December 31, 2018, annualized premiums amounted to $36 million.

products.
Markets
Our employee benefit product suite is targeted tofocused on small and medium-sized businesses seeking simple, technology-driven employee benefits management. We built the employee benefits business from the ground up based on feedback from brokers and employers, ensuring the business’ relevance to the market we address. We are committed to continuously evolving our product suite and technology platform to meet market demand.needs.
Distribution
We distribute our employee benefits productsOur Employee Benefits’ solutions are distributed through AXA Advisorsthe traditional broker channel, strategic partnerships (medical partners, PEOs, and through a growing network of third-party firms, including private exchanges, health plansassociations), General Agencies, TPAs and professional employer organizations.Equitable Advisors.
Competition
The employee benefits marketplacespace is a fast-moving, competitive environment. The main factors of competition include price, quality of customer service and claims management, technological capabilities, quality of distribution and financial strength ratings. In this market, we compete with several companies offering similar products. In addition, there is competition in attracting brokers to actively market our products. Key competitive factors in attracting brokers include product offerings and features, financial strength, support services and compensation.
Underwriting
We manage the underwriting process to facilitate quality sales and serve the needs of our customers, while supporting our financial strength and business objectives. The application of our underwriting guidelines is continuously monitored through internal underwriting controls and audits to achieve high standards of underwriting and consistency.
Pricing and Fees
Employee benefits pricing reflects the claims experience and the risk characteristics of each group. We set appropriate plans for the group based on demographic information and, for larger groups, also evaluate the experience of the group. The claims experience is reviewed at the time of policy issuance and during the renewal timeframes, resulting in periodic pricing adjustments at the group level.
Reinsurance
Group Reinsurance Plus provides reinsurance onWe reinsure our shortgroup life, disability, critical illness, and long-term disabilityaccident products. Our current arrangement providesThese treaties include both quota share reinsurance at 50% for disability products.and excess of loss. Specifics of each treaty vary by product and support our risk management objectives.
Corporate and Other
Corporate and Other includes certain of our financing and investment expenses. It also includes: the AXAEquitable Advisors broker-dealer business, Closed Block, run-off variable annuity reinsurance business, run-off group pension business, run-off health business, benefit plans for our employees and certain unallocated items, including capital and related investments, interest expense and corporate expense. AB’s results of
37
Table of Contents
operations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.
AXAEquitable Advisors Broker-Dealer Business
AXAEquitable Advisors provides financial planning and advice, insurance and savings solutions, as well as full-service brokerage services through our financial advisors who have access to a broad selection of both affiliated and non-affiliated products to help clients meet their financial needs. While the revenue from retirement and protection products sold through AXAEquitable Advisors is recognized within the Individual Retirement, Group Retirement and Protection Solutions segments, Corporate and Other includes revenue from the assets under administration (“AUA”)AUA of the AXAEquitable Advisors broker-dealer business. As of December 31, 2018,2021, the AXAEquitable Advisors broker-dealer business included $44$83 billion in AUA.
Closed Block
In connection with the demutualization of AXA Equitable LifeFinancial in 1992, the Closed Block was established for the benefit of certain classes of individual participating policies for which AXA Equitable LifeFinancial had a dividend scale payable in 1991 and which were in force on that date. Assets were allocated to the Closed Block in an amount which, together with anticipated revenues from policies included in the Closed Block, was reasonably expected to be sufficient to support such business,

including provisions for the payment of claims, certain expenses and taxes, and for the continuation of dividend scales payable in 1991, assuming the experience underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the holders of policies included in the Closed Block and will not revert to the benefit of the Company. The plan of demutualization prohibits the reallocation, transfer, borrowing or lending of assets between the Closed Block and other portions of the General Account, any of our Separate Accounts or to any affiliate of ours without the approval of the NYDFS. Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the General Account. The excess of Closed Block liabilities over Closed Block assets represents the expected future post-tax contribution from the Closed Block which would be recognized in income over the period the policies and contracts in the Closed Block remain in force.
For additional information on the Closed Block, see Note 56 of the Notes to thethese Consolidated Financial Statements.
ACS Life
ACS LifeEquitable Investment Management
EIMG is the investment manager and formerly the administrator for our proprietary variable funds. On June 22, 2021, Equitable Holdings completed the formation of Equitable Investment Management, LLC, (“EIM”, and collectively with EIMG, “Equitable Investment Management”), a reinsurer that has been in run-off since 2002. It predominantly wrote reinsurance treaties on variable annuity GMxB riders for third parties,wholly owned indirect subsidiary of Holdings. Effective August 1, 2021, the Board of Trustees of EQAT, EQ Premier VIP and 1290 Funds (each, a “Trust” and collectively, the “Trusts”) terminated EIMG as well as a limited amountadministrator of ordinary life, structured settlementsthe Trusts, and long-term disability. All open treaties were closed to new business by December 31, 2004. Depending on the benefit reinsured, these treaties generally contain limitations on the individual and aggregate annual claims.EIM entered into certain administrative agreements with each Trust. In addition, GMIB claims are cash settledon October 1, 2021, Equitable Financial entered into an investment advisory and management agreement by which EIM became the settlement formulas are all subject to minimum interest rates. These features, together with a dynamic hedging program, serve to protectinvestment manager for the capital allocated to the business, particularly in adverse market scenarios.Equitable Financial’s general account portfolio.
A summary of ACS Life’s exposures to GMxB features is provided in the table below.
 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

To achieve better alignment between statutory capital requirements and economic hedging program objectives, ACS Life retrocedes a 100% quota share of its GMDB and GMIB liabilities to its captive subsidiary CS Life RE. ACS Life is entitled to a credit in its calculation of statutory reserves for amounts reinsured to CS Life RE, to the extent CS Life RE holds assets in an irrevocable trust, letters of credit or other financing acceptable to the Delaware Department of Insurance. CS Life RE meets this requirement in part through letters of credit.
CS Life RE employs a dynamic hedging program in order to mitigate the economic risks associated with its GMDB and GMIB reinsurance contracts. CS Life RE seeks to hedge its economic exposure to both equity markets and interest rates through the use of exchange traded equity index futures and U.S. Treasury futures as well by holding long-term bonds.
AXA Equitable FMG
AXA Equitable FMG oversees our variable funds andInvestment Management supports each of our retirement and protection businesses. Accordingly, AXA Equitable FMG’sInvestment Management results are embedded in the Individual Retirement, Group Retirement and Protection Solutions segments. AXA Equitable FMGEIMG helps add value and marketing appeal to our retirement and protection solutions products by bringing investment management expertise and specialized strategies to the underlying investment lineup of each product. In addition, by advising on an attractive array of proprietary investment portfolios (each, a “Portfolio,” and together, the

“Portfolios” “Portfolios”), AXA Equitable FMGEIMG brings investment acumen, financial controls and economies of scale to the construction of high-quality, economical underlying investment options for our products. Finally, AXA Equitable FMG is able to negotiate favorable terms for investment services, operations, trading and administrative functions for the Portfolios.
AXA Equitable FMGEIMG provides investment management and administrative services to proprietary investment vehicles sponsored by the Company, including investment companies that are underlying investment options for our variable insurance and annuity products. AXA Equitable FMGEIMG is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”). AXA Equitable FMGAct. EIMG serves as the investment adviser to three investment companies that are registered under the Investment Company Act of 1940, as amended—EQAT, AXA Premier VIPeach Trust and 1290 Funds (each, a “Trust” and collectively, the “Trusts”)—and—and to two private investment trusts established in the Cayman Islands. Each of the investment companiesTrust and private investment trusts is a “series” type of trust with multiple Portfolios. AXA Equitable FMGEIMG provides discretionary investment management services to the Portfolios, including, among other things, (1) portfolio management services for the Portfolios; (2) selecting, monitoring and overseeing investment sub-adviserssub-advisers; and (3) developing and executing asset allocation strategies for multi-advised Portfolios and Portfolios structured as funds-of-funds. AXA Equitable FMG also provides administrative services to the Portfolios. AXA Equitable FMGEIMG is further charged with ensuring that the other parts of the Company that interact with the Trusts, such as product management, the distribution system and the financial organization, have a specific point of contact.
AXA Equitable FMG
38
Table of Contents
EIMG has a variety of responsibilities for the general management and administration of its investment company clients. One of AXA Equitable FMG’sEIMG’s primary responsibilities is to provide clients with portfolio management and investment advisory evaluation services, principally by reviewing whether to appoint, dismiss or replace sub-advisers to each Portfolio, and thereafter monitoring and reviewing each sub-adviser’s performance through qualitative and quantitative analysis, as well as periodic in-person, telephonic and written consultations with the sub-advisers. Currently, AXA Equitable FMGEIMG has entered into sub-advisory agreements with more than 4045 different sub-advisers, including AB and other AXA affiliates.AB. Another primary responsibility of AXA Equitable FMGEIMG is to develop and monitor the investment program of each Portfolio, including Portfolio investment objectives, policies and asset allocations for the Portfolios, select investments for Portfolios (or portions thereof) for which it provides direct investment selection services, and ensure that investments and asset allocations are consistent with the guidelines that have been approved by clients.
EIM provides administrative services to the Portfolios effective August 1, 2021. The administrative services that AXA Equitable FMGEIM provides to the Portfolios include, among others, coordination of each Portfolio’s audit, financial statements and tax returns; expense management and budgeting; legal administrative services and compliance monitoring; portfolio accounting services, including daily net asset value accounting; risk management; and oversight of proxy voting procedures and an anti-money laundering program.
EIM also provides investment management services to the Equitable Financial’s General Account portfolio. EIM provides non-discretionary investment advisory and asset management services including, but not limited to, providing investment advice on strategic investment management activities, asset strategies through affiliated and unaffiliated asset managers, strategic oversight of the General Account portfolio, portfolio management, yield/duration optimization, asset liability management, asset allocation, liquidity and close alignment to business strategies, as well as advising on other services in accordance with the investment advisory and management agreement. Subject to oversight and supervision by EIM, EIM may delegate any of its duties with respect to some or all of the assets of the General Account to a sub-adviser.
Regulation
Insurance Regulation
Our insurance subsidiaries are licensed to transact insurance business and are subject to extensive regulation and supervision by insurance regulators, in all 50 states of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and nine of Canada’s thirteen provinces and territories. The primary regulator of an insurance company, however, is located in its state of domicile. AXA Equitable LifeFinancial is domiciled in New York and is primarily regulated by the superintendent of the NYDFS. ACS Life is domiciled in DelawareEquitable America and is primarily regulated by the Commissioner of the Delaware Department of Insurance. MLOA, EQ AZ Life Re and CS Life RE are domiciled in Arizona and are primarily regulated by the Director of Insurance of the Arizona Department of Insurance. AXAInsurance and Financial Institutions. Equitable L&A is domiciled in Colorado and is primarily regulated by the Commissioner of Insurance of the Colorado Division of Insurance. USFL is domiciled in Ohio and is primarily regulated by the Director of Insurance of the Ohio Department of Insurance. The extent of regulation by jurisdiction varies, but most jurisdictions have laws and regulations governing the financial aspects and business conduct of insurers. State laws in the United States grant insurance regulatory authorities broad administrative powers with respect to, among other things, licensing companies to transact business, sales practices, establishing statutory capital and reserve requirements and solvency standards, reinsurance and hedging, protecting privacy, regulating advertising, restricting the payment of dividends and other transactions between affiliates, permitted types and concentrations of investments and business conduct to be maintained by insurance companies as well as agent and insurance producer licensing, approval of policy forms and, for certain linesto the extent applicable to the particular type of insurance, approval or filing of policy forms and rates. Insurance regulators have the discretionary authority to limit or prohibit new issuances of business to policyholders within their jurisdictions when, in their judgment, such regulators determine that the issuing company is not maintaining adequate statutory surplus or capital. Additionally, the New York Insurance Law limits sales commissions and certain other marketing expenses that weEquitable Financial may incur. For additional information on Insurance Supervision, see “Risk Factors.”
Supervisory agencies in each of the jurisdictions in which we do business may conduct regular or targeted examinations of our operations and accounts and make requests for particular information from us. PeriodicFor example, periodic financial examinations of the books,

records, accounts and business practices of insurers domiciled in their states are generally conducted by such supervisory agencies every three to five years. From time to time, regulators raise issues during examinations or audits of us that could, if determined adversely, have a material adverse effect on us. In addition, the interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact, particularly in areas such as accounting or statutory reserve requirements. In addition to oversight by state insurance regulators in recent years, the insurance industry has seen an increase in inquiries from state attorneys general and other state officials regarding compliance with certain state insurance, securities and other applicable laws. We have received and responded to such inquiries from time to time. For additional information on legal and regulatory risk,risks, see “Risk Factors—Legal and Regulatory Risks.”
39
Table of Contents
Each of our insurance subsidiaries areis required to file detailed annual and, with the exception of EQ AZ Life Re, quarterly financial statements, prepared on a statutory accounting basis or in accordance with other accounting practices prescribed or permitted by the applicable regulator, with supervisory agencies in each of the jurisdictions in which we dosuch subsidiary does business. The NAIC has approved a series of uniform statutory accounting principles (“SAP”)SAP that havehas been adopted by all state insurance regulators, in some cases with minor modifications, by all state insurance regulators.certain modifications. As a basis of accounting, SAP was developed to monitor and regulate the solvency of insurance companies. In developing SAP, the insurance regulators were primarily concerned with assuringensuring an insurer’s ability to pay all its current and future obligations to policyholders. As a result, statutory accounting focuses on conservatively valuing the assets and liabilities of insurers, generally in accordance with standards specified by the insurer’s domiciliary state. The values for assets, liabilities and equity reflected in financial statements prepared in accordance with U.S. GAAP are usually different from those reflected in financial statements prepared under SAP. See Note 18of the Notes to thethese Consolidated Financial Statements.Statements.
Holding Company and Shareholder Dividend Regulation
MostAll states including Arizona, Colorado, Delaware, New York and Ohio, regulate transactions between an insurer and its affiliates under insurance holding company acts. The insurance holding company laws and regulations vary from jurisdiction to jurisdiction, but generally require that all transactions affecting insurers within a holding company system be fair and reasonable and, if material, typicallyin many cases, require prior notice and approval or non-disapproval by the state’s insurance regulator.
The insurance holding company laws and regulations generally also require a controlled insurance company (insurers(i.e., an insurer that are subsidiariesis a subsidiary of an insurance holding companies)company) to register and file with state insurance regulatory authorities and to file with those authorities certain reports, including information concerning its capital structure, ownership, financial condition, certain intercompany transactions and general business operations. States generally require the ultimate controlling person of a U.S. insurer to file an annual enterprise risk report with the lead state of the insurance holding company system identifying risks likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.
State insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance company subsidiaries to their parent companies, as well as on transactions between an insurer and its affiliates. Under the New York insurance lawlaws, which are applicable to AXA Equitable Life,Financial, a domestic stock life insurer may not, without prior approval of the NYDFS, pay aan ordinary dividend to its stockholders exceeding an amount calculated under one of two standards. The first standard allows payment of an ordinary dividend out of the insurer’s earned surplus (as reportedbased on the insurer’s most recent annual statement) up to a limit calculated pursuant to a statutory formula provided that the NYDFS is given notice and opportunity to disapprove the dividend if certain qualitative tests are not met (the “Earned Surplus Standard”). The second standard allows payment of an ordinary dividend up to a limit calculated pursuant to a different statutory formula without regard to the insurer’s earned surplus (the “Alternative Standard”(“Ordinary Dividend”). Dividends exceeding these prescribed limitsin excess of this amount require the insurer to file a notice of its intent to declare the dividends with the NYDFS and obtain prior approval or non-disapproval from the NYDFS.NYDFS with respect to such dividends (“Extraordinary Dividend”). Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any Ordinary Dividend that exceeds the Ordinary Dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).
Other states have limitations on dividends similar to New York’s, providing that dividends in excess of prescribed limits, based on prior year’s earnings and surplus of the insurance company, established by applicable state regulation, are considered to be extraordinary dividends and require explicit approval from the applicable state regulator. In addition, the insurance laws of some states require that any dividend to a domestic insurance company’s stockholders be paid from the insurer’s earned surplus or that prior approval or non-disapproval be obtained from the state’s domiciliary insurance regulator for any dividend that would be paid from other than the insurer’s earned surplus. As a holding company, we depend on dividends from our subsidiaries to meet our obligations. For additional information on shareholder dividends, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
State insurance holding company laws and regulations also regulate changes in control. State laws generally provide that no person, corporation or other entity may acquire control of ana domestic insurance company, or a controlling interest in any parent company of ansuch insurance company, without the prior approval of suchthe insurance company’s domiciliary state insurance regulator. Generally, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired “control” of the company. This statutory presumption may be rebutted by a showing that control does not exist in fact.

State insurance regulators, however, may find that “control” exists in circumstances in which a person owns or controls, directly or indirectly, less than 10% of the voting securities.
The laws and regulations regarding acquisition of control transactions may discourage potential acquisition proposals and may delay or prevent a change of control involving us, including through unsolicited transactions that some of our shareholders might consider desirable.
40
Table of Contents
NAIC
The mandate of the NAIC is to benefit state insurance regulatory authorities and consumers by promulgating model insurance laws and regulations for adoption by the states. The NAIC provides standardized insurance industry accounting and reporting guidance through its Accounting Practices and Procedures Manual (the “Manual”). However,has established statutory accounting principles set forth in its Manual. However, a state may have been,adopted or in the future may be, modified by individual state laws, regulations and permitted practices.adopt statutory accounting principles that differ from the Manual. Changes to the Manual or modifications bystates’ adoption of prescribed differences to the various state insurance departmentsManual may impact the statutory capital and surplus of our U.S. insurance companies.
In September 2012, the NAIC adopted theThe NAIC’s Risk Management and Own Risk and Solvency Assessment Model Act (“ORSA”), which has been enacted by New York and our otherinsurance subsidiaries’ domiciliary states. ORSAstates requires that insurers to maintain a risk management framework and conduct an internal risk and solvency assessment of the insurer’s material risks in normal and stressed environments. The assessment is documented in a confidential annual ORSA summary report, a copy of which must be made available to regulators as required or upon request.
In December 2012,The NAIC adopted the Corporate Governance Annual Disclosure Model Act, which has been adopted by our insurance subsidiaries’ domiciliary states, requires insurers to annually file detailed information regarding their corporate governance policies.
The NAIC approvedamended the Standard Valuation Law to require a new valuation manual containing a principles-basedprinciple-based approach to reserving for life insurance company reserves. Principles-basedand annuity contracts, which resulted in corresponding amendments to the NAIC’s Valuation Manual (the “Valuation Manual”). Principle-based reserving is designed to better address reserving for products, including the current generation of products for which the current formulaic basis for reserve determination does not work effectively. The principles-based reserving approachlife insurance and annuity products. It became effective for new business on January 1, 2017 in the states where itthe amended Standard Valuation Law and Valuation Manual had been adopted, which was followed by a three-year phase-in period that ended on January 1, 2020. Principle-based reserving has been adopted with a three-year phase-in period. Theby our insurance subsidiaries’ domiciliary states, although in New York, Legislature enacted legislation adopting principles-basedprinciple-based reserving became effective with the adoption of Regulation 213, which differs from the NAIC Standard Valuation Law, as discussed further below.
The NAIC has been focused on a macro-prudential initiative since 2017, that is intended to enhance risk identification efforts by building on the state-based regulation system through proposed potential enhancements in June 2018, which was signed into lawsupervisory practices related to liquidity, recovery and resolution, capital stress testing and counterparty exposure concentrations for life insurers. In December 2020, the NAIC adopted amendments to the Model Holding Company Act and Regulation that implement requirements related to a liquidity stress-testing framework for certain large U.S. life insurers and insurance groups (based on amounts of certain types of business written or material exposure to certain investment transactions, such as derivatives and securities lending) that will be used as a regulatory tool. These amendments have to be adopted by the Governor in December 2018. Also in December 2018, the NYDFS promulgated an emergency regulation to begin implementation of principle-based reserving,state legislatures to become effective, including our insurance subsidiaries’ domiciliary states. We cannot predict whether state legislatures will adopt the amendments or what impact they would have on January 1, 2020.the Company.
The NAIC has also developed a group capital calculation tool using an RBC aggregation methodology for all entities within the insurance holding company system, including non-U.S. entities. The group capital calculation will provide U.S. solvency regulators with an additional analytical tool for conducting group-wide supervision. The NAIC’s amendments to the Model Holding Company Act and Regulation in 2020 also implement the Group Capital Calculation Template and Instructions as well as the annual filing requirement for the group capital calculation. These amendments have to be adopted by state legislatures to become effective, as discussed above.
Captive ReinsurerReinsurance Regulation and Variable Annuity Capital Standards
As described above, weWe use an affiliated captive reinsurersreinsurer as part of our capital management strategy. During the last few years, the NAIC and certain state regulators, including the NYDFS, have been scrutinizing insurance companies’ use of affiliated captive reinsurers or offshore entities.
In 2014, theThe NAIC considered a proposal to require states to apply NAIC accreditation standards, applicable to traditional insurers, to captive reinsurers. In 2015, the NAIC adopted such a proposal, in the form of a revised preamble to the NAIC accreditation standards (the “Standard”), with an effective dateas of January 1, 2016, for application ofthat applies the Standard to captives thatcaptive insurers which assume level premium term life insurance (“XXX”) business and universal life with secondary guarantees (“AXXX”) business. During 2014, theThe NAIC also approved a new regulatory framework, the XXX/AXXX Reinsurance Framework, applicable tofor XXX/AXXX transactions. The framework requires more disclosure of an insurer’s use of captives in its statutory financial statements and narrows the types of assets permitted to back statutory reserves that are required to support the insurer’s future obligations. The NAICXXX/AXXX Reinsurance Framework was implemented the framework through an actuarial guideline (“AG 48”), which requires the actuary of the ceding insurer that opines on the insurer’s reserves to issue a qualified opinion if the framework is not followed. AG 48 applies prospectively, so that XXX/AXXX captives willare not be subject to AG 48 if reinsured policies were issued prior to January 1, 2015 and ceded so that they were part of a reinsurance arrangement as of December 31, 2014, as is the case for the XXX business and AXXX business reinsured by our Arizona captives. Regulation
41
Table of XXX/AXXX captivesContents
captive. The Standard is deemed to satisfy the Standardsatisfied if the applicable reinsurance transaction satisfies the XXX/AXXX Reinsurance Framework requirements adopted by the NAIC.requirements. The NAIC also adopted a revised Credit for Reinsurance Model Law in January 2016 and the Term and Universal Life Insurance Reserving Financing Model Regulation in December 2016which contains the same substantive requirements as AG 48, as amended by the NAIC, and it establishes uniform, national standards governing reserve financing arrangements pertaining to replace AG 48.the term life and universal life insurance policies with secondary guarantees. The model regulation has not yet been adopted by our insurance subsidiaries’ domiciliary states, although it will generally replace AG 48 in a state upon the state’s adoptionbecome an NAIC accreditation standard as of the model regulation. September 1, 2022.
The NAIC leftadopted a new framework for future action the application of the Standard to captives that assume variable annuity business.
During 2015, the NAIC Financial Condition Committee (the “NAIC E Committee”) established the Variable Annuities Issues E Working Group (“VAIWG”) to oversee the NAIC’s efforts to study and address, as appropriate, regulatory issues resulting in variable annuity captive reinsurance transactions. In November 2015, upontransactions that became operational in 2020, which includes reforms that improve the recommendation ofstatutory reserve and RBC framework for insurance companies that sell variable annuity products. Among other changes, the VAIWG,framework includes new prescriptions for reflecting hedge effectiveness, investment returns, interest rates, mortality and policyholder behavior in calculating statutory reserves and RBC. Overall, we believe the NAIC E Committeereform has moved variable annuity capital standards towards an economic framework which is consistent with how we manage our business. The Company adopted the Framework for Change which recommends charges for NAIC working groups to adjust the variable annuity statutory framework applicable to all insurers that have written or are writing variable annuity business. The Framework for Change contemplates a holistic set of reforms that would improve the current reserve and capital framework andfor the year ended December 31, 2019.

address root cause issues that resultAs noted above, New York’s Regulation 213, which was adopted in 2019 and subsequently amended by the use of captive arrangements but would not necessarily mandate recapture by insurers of VA cessions to captives. In November 2015, VAIWG engaged Oliver Wyman (“OW”) to conduct a quantitative impact study (the “QIS”) involving industry participants includingNYDFS, differs from the Company, of various reforms outlined in the Framework for Change. OW completed the QIS in July of 2016 and reported its initial findings to the VAIWG in late August 2016. The OW report proposed certain revisions to the current VA reserve and capital framework, which focused on (i) mitigating the asset-liability accounting mismatch between hedge instruments and statutory instruments and statutory liabilities, (ii) removing the non-economic volatility in statutory capital charges and the resulting solvency ratios and (iii) facilitating greater harmonization across insurers and products for greater compatibility, and recommended a second quantitative impact study to be conducted so that testing can inform the proper calibration for certain conceptual and/or preliminary parameters set out in the OW proposal. Following a fourth quarter 2016 public comment period and several meetings on the OW proposal, the VAIWG determined that a second quantitative impact study (the “QIS2”) involving industry participants, including us, will be conducted by OW. The QIS2 began in February 2017 and OW issued its recommendations in December 2017. In 2018, the VAIWG held multiple public conference calls to discuss and refine the proposed recommendations. By the end of July 2018, both the VAIWG and the NAIC E Committee adopted the proposed recommendations with modifications reflecting input from all stakeholders. After adopting the Framework for Change, other NAIC working groups and task forces will consider specific revisions to the capital requirements for variable annuities to implement the recommendations in the framework. The changes to theNAIC’s variable annuity reserve and capital framework are expecteddescribed above. Regulation 213 does not materially affect Holdings’ GAAP financial condition, results of operations or stockholders’ equity. However, absent management action, Regulation 213 will require Holdings’ principal insurance subsidiary, Equitable Financial, to become effectivecarry statutory basis reserves for its variable annuity contract obligations equal to the greater of those required under (i) the NAIC standard or (ii) a revised version of the NYDFS requirement in effect prior to the adoption of the regulation’s first amendment for contracts issued prior to January 1, 2020, and for policies issued after that date a new standard that we believe is more conservative than the NAIC standard. Absent management action, Regulation 213 will (i) negatively impact Equitable Financial’s surplus level and RBC ratio and (ii) materially and adversely affect Equitable Financial’s dividend capacity from 2021 and moving forward. These impacts would be more adverse in periods of rising equity and/or interest rate markets and they were exacerbated upon closing of the Venerable Transaction. As a holding company, Holdings relies on dividends and other payments from its subsidiaries and, accordingly, any material limitation on Equitable Financial’s dividend capacity could materially affect Holdings’ ability to return capital to stockholders through dividends and stock repurchases. Equitable Financial was granted a permitted practice by the NYDFS which partially mitigates the Regulation 213 impact of the Venerable Transaction to make the regulation’s application to Equitable Financial more consistent with the NAIC reserve and capital framework. Equitable Financial also entered into a suggested three-year phase-in period, but exact timingreinsurance agreement with Swiss Re Life & Health America Inc. (“Swiss Re”), effective October 1, 2021, and we completed certain internal restructurings that increase cash flows to Holdings from non-life insurance entities, which further mitigate the impacts from Regulation 213. The Company is considering additional management actions intended to reduce the impact of Regulation 213 which could include seeking further amendment of Regulation 213 or exemptive relief therefrom, changing our underwriting practices to emphasize issuing variable annuity products out of affiliates which are not domiciled in New York, increasing the use of reinsurance and pursuing other corporate transactions. There can be no assurance that any management action individually or collectively will fully mitigate the impact of Regulation 213. Other state insurance regulators may also propose and adopt standards that differ from the NAIC framework. See Note 18 of the Notes to these Consolidated Financial Statements for implementation of changes remains subject to change.additional detail on the permitted practice granted by the NYDFS.
We cannot predict what revisions, if any, will be made to the model laws and regulations relating to XXX/AXXX transactions, or to the Standard, if adopted for variable annuity captives, as states consider their adoption or undertake their implementation, or how the Framework for Change proposal may be implemented as a resultuse of ongoing NAIC work. It is also unclear whether the Standard or other proposals will be adopted by the NAIC or how the NYDFS will implement the Framework for Change, or what additional actions and regulatory changes will result from the continued captives scrutiny and reform efforts by the NAIC and other regulatory bodies.captives. Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance and applies retroactively, including, if the Standard is adopted as proposed, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our financial condition or results of operations. For additional information on our use of a captive reinsurance company, see “Risk Factors.Factors—Legal and Regulatory Risks.”
Surplus and Capital; Risk Based Capital
Insurers are required to maintain their capital and surplus at or above minimum levels. Regulators have discretionary authority, in connection with the continued licensing of insurance companies, to limit or prohibit an insurer’s sales to policyholders if, in their judgment, the regulators determine that such insurer has not maintained the minimum surplus or capital or that the further transaction of business will be hazardous to policyholders. We report our RBC based on a formula calculated by applying factors to various asset, premium and statutory reserve items, as well as taking into account the risk characteristics of the insurer. The major categories of risk involved are asset risk, insurance risk, interest rate risk, market risk and business risk. The formula is used as a regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose RBC ratio does not meet or exceed certain RBC levels. The NAIC has approved RBC revisions for corporate bonds, real estate equity and longevity risk that took effect at year-end 2021 and are expected to have a modest net positive RBC impact on our insurance subsidiaries. As of the date of the most
42
Table of Contents
recent annual statutory financial statements filed with insurance regulators, the RBC of each of our insurance subsidiaries was in excess of each of those RBC levels.
Guaranty Associations and Similar Arrangements
Each of the states in which we are admitted to transact business require life insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay certain contractual insurance benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. The laws are designed to protect policyholders from losses under insurance policies issued by insurance companies that become impaired or insolvent. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer is engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets.
During each of the past five years, the assessments levied against us have not been material.
New York Insurance Regulation 210
StateIn recent years, state regulators are currently consideringhave considered whether to apply regulatory standards to the determination and/or readjustment of non-guaranteed elements (“NGEs”) within life insurance policies and annuity contracts that may be adjusted at the insurer’s

discretion, such as the cost of insurance for universal life insurance policies and interest crediting rates for life insurance policies and annuity contracts. For example, in March 2018, Insurance Regulation 210 went into effect in New York. That regulation establishes standards for the determination and any readjustment of NGEs, including a prohibition on increasing profit margins on existing business or recouping past losses on such business, and requires advance notice of any adverse change in a NGE to both the NYDFS as well as to affected policyholders. We are continuinghave developed policies and procedures designed to assess the impact ofcomply with Regulation 210 and to date, have not seen adverse effects on our business. It is possible, however, that Regulation 210 could adversely impact management’s ability to determine and/or readjust NGEs in the future. Beyond the New York regulation and a similar rule recentlyrules enacted in California that takes(that took effect on July 1, 20192019) and Texas (that took effect on January 1, 2021), the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
Broker-Dealer and Securities Regulation and Commodities Regulation
We and certain policies and contracts offered by us are subject to regulation under the Federal securities laws administered by the U.S. Securities and Exchange Commission (the “SEC”),SEC, self-regulatory organizations and under certain state securities laws. These regulators may conduct examinations of our operations, and from time to time make requests for particular information from us.
Certain of our subsidiaries, including AXAEquitable Advisors, AXAEquitable Distributors, SCB LLC and AllianceBernstein Investments, Inc. and Sanford C. Bernstein & Co., LLC (“SCB LLC”), are registered as broker-dealers (collectively, the “Broker-Dealers”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Act. The Broker-Dealers are subject to extensive regulation by the SEC and are members of, and subject to regulation by, the Financial Industry Regulatory Authority, Inc. (“FINRA”),FINRA, a self-regulatory organization subject to SEC oversight. The Broker-Dealers are subject to the capital requirements of the SEC and/orand FINRA, which specify minimum levels of capital (“net capital”) that the Broker-Dealers are required to maintain and also limit the amount of leverage that the Broker-Dealers are able to employ in their businesses. The SEC and FINRA also regulate the sales practices of the Broker-Dealers. In June 2020, Regulation Best Interest (“Regulation BI”) went into effect with respect to recommendation of securities and accounts to “retail customers,” defined generally as natural persons and their investment vehicles. Regulation BI requires the Broker-Dealers, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer to provide specified disclosures and act solely in the retail customer’s best interest. Moreover, in recent years, the SEC and FINRA have intensified their scrutiny of sales practices relating to variable annuities, variable life insurance and alternative investments, among other products. In addition, the Broker-Dealers are also subject to regulation by state securities administrators in those states in which they conduct business, who may also conduct examinations and direct inquiries to the Broker-Dealers.

Certain of our Separate Accounts are registered as investment companies under the Investment Company Act. Separate AccountAccounts interests under certain annuity contracts and insurance policies issued by us are also registered under the Securities Act. EQAT, AXAEQ Premier VIP Trust and 1290 Funds are registered as investment companies under the Investment Company Act and shares offered by these investment companies are also registered under the Securities Act. Many of the investment companies managed by AB, including a variety of mutual funds and other pooled investment vehicles, are registered with the SEC under the Investment Company Act, and, if appropriate, shares of these entities are registered under the Securities Act.
Certain subsidiaries including AXAEIMG, Equitable FMG, AXA Advisors and AB and certain of its subsidiaries and affiliates are registered as investment advisers under the Investment Advisers Act. The investment advisory activities of such registered investment
43
Table of Contents
advisers are subject to various federal and state laws and regulations and to the laws in those foreign countries in which they conduct business. These laws and regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations.
AXA Equitable FMGEIMG is registered with the U.S. Commodity Futures Trading Commission (“CFTC”)CFTC as a commodity pool operator with respect to certain portfolios and is also a member of the National Futures Association (“NFA”).NFA. AB and certain of its subsidiaries are also separately registered with the CFTC as commodity pool operators and commodity trading advisers; SCB LLC is also registered with the CFTC as a commodity introducing broker. The CFTC is a federal independent agency that is responsible for, among other things, the regulation of commodity interests and enforcement of the Commodity Exchange Act (“CEA”).CEA. The NFA is a self-regulatory organization to which the CFTC has delegated, among other things, the administration and enforcement of commodity regulatory registration requirements and the regulation of its members. As such, AXA Equitable FMGEIMG is subject to regulation by the NFA and CFTC and is subject to certain legal requirements and restrictions in the CEA and in the rules and regulations of the CFTC and the rules and by-laws of the NFA on behalf of itself and any commodity pools that it operates, including investor protection requirements and anti-fraud prohibitions, and is subject to periodic inspections and audits by the CFTC and NFA. AXA Equitable FMGEIMG is also subject to certain CFTC-mandated disclosure, reporting and record-keeping obligations.
Regulators, including the SEC, FINRA, the CFTC, NFA and state attorneys general, continue to focus attention on various practices in or affecting the investment management and/or mutual fund industries, including portfolio management, valuation, fee break points, and the use of fund assets for distribution.

We and certain of our subsidiaries have provided, and in certain cases continue to provide, information and documents to the SEC, FINRA, the CFTC, NFA, state attorneys general, the NYDFS and other state insurance regulators, and other regulators regarding our compliance with insurance, securities and other laws and regulations regarding the conduct of our businesses. For example, we have responded to inquiries from the SEC requesting information with regard to contract language and accompanying disclosure for certain variable annuity contracts. For additional information on regulatory matters, see Note 18 of the Notes to thethese Consolidated Financial Statements.Statements.
The SEC, FINRA, the CFTC and other governmental regulatory authorities may institute administrative or judicial proceedings that may result in censure, fines, the issuance of cease-and-desist orders, trading prohibitions, the suspension or expulsion of a broker-dealer, commodity pool operator, or other type of regulated entity, or member, its officers, registered representatives or employees or other similar sanctions.
AB Holding is an NYSE-listed company and, accordingly, is subject to the applicable regulations promulgated by the NYSE. We are also subject to the applicable regulations of the NYSE.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Currently, the U.S. federal government does not directly regulate the business of insurance. While the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) does not remove primary responsibility for the supervision and regulation of insurance from the states, Title V of the Dodd-Frank Act establishes the Federal Insurance Office (“FIO”)FIO within the U.S. Treasury Department and reforms the regulation of the non-admitted property and casualty insurance market and the reinsurance market. The Dodd-Frank Act also established the Financial Stability Oversight Council (“FSOC”),FSOC, which is authorized to subject non-bank financial companies, including insurers, to supervision by the Federal Reserve and enhanced prudential standards if the FSOC determines that a non-bank financial institution could pose a threat to U.S. financial stability. The FSOC modified the designation process by adopting an activities-based approach for identifying and addressing potential risks to financial stability, and it enhanced the analytical process, engagement and transparency of the designation process.
The FIO has authority that extends to all lines of insurance except health insurance, crop insurance and (unless included with life or annuity components) long-term care insurance. Under the Dodd-Frank Act, the FIO is charged with monitoring all aspects of the insurance industry (including identifying gaps in regulation that could contribute to a systemic crisis), recommending to the FSOC the designation of any insurer and its affiliates (potentially including AXA and its affiliates) as a non-bank financial company subject to oversight by the Board of Governors of the Federal Reserve System (including the administration of stress testing on capital), assisting the Treasury Secretary in negotiating “covered agreements” with non-U.S. governments or regulatory authorities, and, with respect to state insurance laws and regulation, determining whether state insurance measures are pre-empted by such covered agreements.
In addition, the FIO is empowered to request and collect data (including financial data) on and from the insurance industry and insurers (including reinsurers) and their affiliates. In such capacity, the FIO may require an insurer or an affiliate of an insurer to submit such data or information as the FIO may reasonably require. In addition, the FIO’s approval will beis required to subject a financial company whose largest U.S. subsidiary is an insurer to the special orderly liquidation process outside the federal bankruptcy code, administered by the Federal Deposit Insurance Corporation (the “FDIC”)FDIC pursuant to the Dodd-Frank Act. U.S. insurance subsidiaries of any such financial company, however, would be subject to rehabilitation and liquidation proceedings under state insurance law. The Dodd-Frank Act also reforms the regulation of the non-admitted property/casualty insurance market (commonly referred to as
44
Table of Contents
excess and surplus lines) and the reinsurance markets, including prohibiting the ability of non-domiciliary state insurance regulators to deny credit for reinsurance when recognized by the ceding insurer’s domiciliary state regulator.
Other aspects of our operations could also be affected by the Dodd-Frank Act. These include:Act, including:
Heightened Standards and Safeguards
The FSOC may recommend that state insurance regulators or other regulators apply new or heightened standards and safeguards for activities or practices we and other insurers or other financial services companies engage in if the FSOC determines that those activities or practices could create or increase the risk that significant liquidity, credit or other problems spread among financial companies. We cannot predict whether any such recommendations will be made or their effect on our business, consolidated results of operations or financial condition.
Over-The-Counter Derivatives Regulation
The Dodd-Frank Act includes a framework of regulation for the OTC derivatives markets, which gives authority to the CFTC to regulate “swaps” and the SEC to regulate “security-based swaps.” Swaps include, among other things, OTC derivatives on interest rates, commodities, broad-based securities indexes and currency. Security-based swaps include, among other things, OTC derivatives on single securities, baskets of securities, narrow-based indexes or loans.
The Dodd-Frank Act authorized the SEC and the CFTC to mandate that a substantial portion of OTC derivatives must be executed in regulated markets and be submitted for clearing to regulated clearinghouses and directed the CFTC and SEC to establish documentation, recordkeeping and registration requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap participants for swaps, security-based swaps and specified other derivatives that continued to trade on the OTC market. The Dodd-Frank Act also directed the SEC, CFTC, the Office of the over-the-counter (“OTC”) derivatives markets. Regulations approved to date require clearingComptroller of previously uncleared transactionsthe Currency, the Federal Reserve Board, the FDIC, the Farm Credit Administration, and will require clearing of additional OTC transactions in the future. In addition, regulations approved pursuantFederal Housing Finance Agency (collectively, the “Prudential Regulators”), with respect to the Dodd-Frank Act imposerespective entities they regulate, to develop margin requirementsrules for OTC derivatives and capital rules for regulated dealers and major participants. The Prudential Regulators completed substantially all of the required regulations by 2017, and the CFTC finalized one of its last remaining rules – the capital rules for swap dealers in July 2020. In December 2019 the SEC finalized and adopted the final set of rules related to security-based swaps, and the rules, including registration of dealers in security-based swaps, became effective on OTC transactions not requiredor prior to be cleared. November 1, 2021.
As a result of thesethe CFTC regulations, our costsseveral types of risk mitigation haveCFTC-regulated swaps are required to be traded on swap execution facilities and may continuecleared through a regulated DCO. Swaps and security-based swaps submitted for clearing are subject to

increase under the Dodd-Frank Act. For example, minimum initial and variation margin requirements includingset by the requirementrelevant DCO or security-based swap clearing organization. Both swaps and security-based swaps are subject to pledgetransaction-reporting requirements.
Under the CFTC’s and SEC’s regulations, swaps and security-based swaps traded by a non-banking entity are currently subject to variation margin requirements as well as, for most entities, initial margin, for OTC cleared transactions entered into after June 10, 2013as mandated by the CFTC and SEC. Under regulations adopted by the Prudential Regulators, both swaps and security-based swaps traded by banking entities are currently subject to variation margin requirements and, for OTC uncleared transactions entered into aftermost entities, initial margin requirements as well. Initial margin requirements imposed by the phase-inCFTC, the SEC and the Prudential Regulators are being phased in over a period which would beof time. As a result, initial margin requirements took effect in September 2021 (which is the applicable date for us) and for smaller counterparties will take effect beginning September 2022. The CFTC regulations require us to post and collect variation margin (comprised of specified liquid instruments and subject to a required haircut) in connection with trading of swaps with CFTC-regulated swap dealers, and the regulations adopted by the Prudential Regulators require us in 2020, have increased. to post and collect variation margin when trading either swaps or security-based swaps with a dealer regulated by the Prudential Regulators. SEC regulations require posting and collection of variation margin by both us and our counterparty but require posting of initial margin only by the entity facing the broker-dealer or security-based swap dealer but not the broker-dealer or security-based swap dealer itself.
In addition, restrictions onregulations adopted by the Prudential Regulators that became effective in 2019 require certain bank-regulated counterparties and certain of their affiliates to include in qualified financial contracts, including many derivatives contracts, repurchase agreements and securities lending agreements, terms that will qualifydelay or restrict the rights of counterparties, such as eligible collateral will require increased holdings of cash and highly liquid securities with lower yields causing a reduction in income. Centralized clearing of certain OTC derivatives exposes us, to terminate such contracts, foreclose upon collateral, exercise other default rights or restrict transfers of affiliate credit enhancements (such as guarantees) in the riskevent that the bank-regulated counterparty and/or its affiliates are subject to certain types of a default by a clearing memberresolution or clearinghouse with respectinsolvency proceedings. It is possible that these requirements in the market, could adversely affect our ability to our clearedterminate existing derivatives transactions. agreements or to realize amounts to be received under such agreements. The Dodd-Frank Act and related federal regulations and foreign derivatives requirements expose us to operational, compliance, execution and other risks, including central counterparty insolvency risk.
45
Table of Contents
We use derivatives to mitigate a wide range of risks in connection with our business, including the impact of increased benefit exposures from certain variable annuity products that offer GMxB features. We have always been subject to the risk that our hedging and other management procedures might prove ineffective in reducing the risks to which insurance policies expose us or that unanticipated policyholder behavior or mortality, combined with adverse market events, could produce economic losses beyond the scope of the risk management techniques employed. Any such losses could be increased by higher costs of writing derivatives (including customized derivatives) and the reduced availability of customized derivatives that might result from the enactment and implementation of the Dodd-Frank Act.new regulations.
Broker-Dealer Regulation
The Dodd-Frank Act provides thatauthorized the SEC mayto promulgate rules to provide that the standard of conduct for all broker-dealers, when providing personalized investment advice about securities to retail customers (and any other customers ascustomers. In response, the SEC may by rule provide) will beadopted Regulation BI, which became effective on June 30, 2020. Regulation BI also requires registered broker dealers and investment advisers to retail customers to file a client relationship summary (“Form CRS”) with the same asSEC and deliver copies of Form CRS to their retail customers. Form CRS provides disclosures from the broker-dealer or investment adviser about the applicable standard of conduct applicable to an investment adviser under the Investment Advisers Act. On April 18, 2018, the SEC released a setand conflicts 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, theinterest. The intent of this provisionthese rules is to authorize the SEC to impose on broker-dealers fiduciary dutiesan enhanced duty of care to their customers similar to whatthat which applies to investment advisers under existing law. We have developed systems and processes and put in place policies and procedures to ensure that we are currently assessing these proposed rules to determine the impact they may have on our business.in compliance with Regulation Best Interest. In addition, FINRA is alsoand the SEC are currently focusing on how broker-dealers identifyexamining compliance efforts with Regulation BI by broker-dealers.
Investment Adviser Regulation
Changes to the marketing requirements for registered investment advisers were adopted in December 2020 and manage conflicts of interest.
Although many ofbecome effective in November 2022. The changes amend existing Rule 206(4)-1 under the regulations implementing portions of the Dodd-Frank Act have been promulgated, we are still unable to predict how this legislation may be interpreted and enforced or the full extent to which implementing regulations and policies may affect us. Also, the Trump administration and Congress have indicated that the Dodd-Frank Act will be under further scrutiny and some of the provisions of the Dodd-Frank Act may be revised, repealed or amended. For example, President Trump has issued an executive order that calls for a comprehensive review of the Dodd-FrankInvestment Advisers Act and requiresincorporate aspects of Investment Advisers Act Rule 206(4)-3, which the SecretarySEC simultaneously rescinded in its entirety. The amended rules impose a number of the Treasury to consult with the heads of the member agencies of FSOC to identify any laws, regulations ornew requirements that inhibit federal regulationwill affect marketing of the financial systemcertain advisory products, including, in a manner consistent with the core principles identified in the executive order. In addition,particular, private funds. We are currently working diligently to implement policies and procedures on June 8, 2017, the U.S. House of Representatives passed the Financial CHOICE Act of 2017, which proposes to amend or repeal various sections of the Dodd-Frank Act. There is considerable uncertainty with respectprior to the impacteffective date for the Trump administration and Congress may have, if any, on the Dodd-Frank Act, and any changes likely will take time to unfold. We cannot predict the ultimate content, timing or effectamended rule.
Fiduciary Rules / “Best Interest” Standards of any reform legislation or the impact of potential legislation on us.
ERISA ConsiderationsConduct
We provide certain products and services to employee benefit plans that are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”)ERISA and certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”). As such, our activities are subject to the restrictions imposed by ERISA and the Code, including the requirement that fiduciaries must perform their duties solely in the interests of plan participants and beneficiaries, and fiduciaries may not cause or permit a covered plan to engage in certain prohibited transactions with persons (parties-in-interest) who have certain relationships with respect to such plans. The applicable provisions of ERISA and the Code are subject to enforcement by the U.S. Department of Labor (the “DOL”),DOL, the Internal Revenue Service (the “IRS”)IRS, and the Pension Benefit Guaranty Corporation.
In April 2016, the DOL issued a rule (the “DOL Rule”), which significantly expanded the range of activities considered to be fiduciary investment advice under ERISA when our advisors and our employees provide investment-related information and support to retirement plan sponsors, participants and IRA holders. In the wake of the March 2018 federal appeals court decision to vacate the 2016 DOL Fiduciary Rule, the SECDOL announced its intention to issue revised fiduciary investment advice regulations. In December 2020, the DOL finalized a “best interest” prohibited transaction exemption (“PTE 2020-02”) for investment advice fiduciaries under ERISA, and the Code, which now has an enforcement date of January 31, 2022. PTE 2020-02 includes the DOL’s interpretation of the five-part test under ERISA and the Code for determining fiduciary status that was in effect prior to the 2016 DOL Fiduciary Rule, although the scope of PTE 2020-02 extends to rollover transactions if they constitute “investment advice” under the five-part test. If fiduciary status is triggered, PTE 2020-02 prescribes a set of impartial conduct standards and disclosure obligations that are intended to be consistent with the SEC’s Regulation Best Interest. We have devoted significant time and resources towards coming into compliance with PTE 2020-02, which became effective on February 16, 2021, but do not expect the new rules to have a material impact on our business. However, in June 2021 the DOL updated its formal regulatory agenda to include issuance of a proposed rule-making by year-end 2021 that would further amend its fiduciary regulations, including PTE 2020-02 and, possibly, other existing prohibited transaction exemptions.

In addition, in January 2020, the NAIC as well asrevised the Suitability in Annuity Transactions Model Regulation to apply a best interest of the consumer standard on insurance producers’ annuity recommendations and to require that insurers supervise such recommendations. Several state regulators have adopted the revised regulation, including in one of our insurance subsidiaries’ domiciliary states, while others are currently considering whether to apply andoing so or instead issuing standalone impartial conduct standard similarstandards applicable to the DOL Rule to recommendations made in connection with certain annuitiesannuity and, in one case, tosome cases, life insurance policies.transactions. 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 ofamended Regulation 187 that adopts- Suitability and Best Interests in Life Insurance and Annuity Transactions (“Regulation 187”) to add a “best interest” standard for

recommendations regarding the sale of life insurance and annuity products in New York. In April 2021, the Appellate
46
Table of Contents
Division of the NYS Supreme Court, Third Department, overturned Regulation 187 takesfor being unconstitutionally vague. The NYDFS has appealed this ruling to the New York State Court of Appeals, which automatically granted a stay, meaning that Regulation 187 remains in effect on August 1, 2019pending a decision by the Court of Appeals. We have developed our compliance framework for Regulation 187 with respect to annuity sales and February 1, 2020 foras well as our life insurance business. Meanwhile, state regulators and legislatures in Nevada and Maryland have proposed measures that would make broker-dealers, sales agents, and is applicableinvestment advisers and their representatives subject to a fiduciary duty when providing products and services to customers, including pension plans and IRAs. Massachusetts has adopted such a regulation applying a fiduciary duty standard to broker-dealers and their agents which, although not applying to insurance product (including variable annuity) sales, of life insurancedid require us to make changes to certain policies and annuity products in New York. We are currently assessing Regulation 187procedures to determine the impact it may have on our business. In November 2018, the three primary agent groups in New York launched a legal challenge against the NYDFS over the adoption of Regulation 187. It is not possible to predict whether this challenge will be successful.ensure compliance. Beyond the New York regulation,and Massachusetts regulations, the likelihood of enactment of any such federal orother standalone state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
International
In the approximately 18 months since adoption of Regulation BI, the SEC staff has published guidance regarding Regulation BI, including recent guidance indicating that recommendations of instruments having LIBOR-linked exposure (and using as an example, a fixed income mutual fund). In March 2021, the SEC’s Division of Examinations indicated that compliance with Regulation BI is at the top of its list of 2021 examination priorities. We continue to monitor our compliance with Regulation BI.
RegulatorsClimate Risks
The topic of climate risk has come under increased scrutiny by insurance regulators. In September 2020, the NYDFS announced that it expects New York domestic and lawmakersforeign authorized insurers, which applies to Equitable Financial, to integrate financial risks from climate change into their governance frameworks, risk management processes, and business strategies.
In addition, the NYDFS issued guidance on November 15, 2021 regarding its expectations for New York domestic insurers, such as Equitable Financial, related to the management of financial risks from climate change. Insurers are expected to manage these risks by outlining actions that are proportionate to the nature, scale and complexity of their businesses. For instance, the guidance states that an insurer should: (i) incorporate climate risk into its financial risk management (e.g., a company’s ORSA should address climate risk); (ii) manage climate risk through its enterprise risk management functions and ensure that its organizational structure clearly defines roles and responsibilities related to managing such risk; (iii) use scenario analysis when developing business strategies and identifying risks; and (iv) incorporate the management of climate risk into its corporate governance structure at the group or insurer entity level (i.e., an insurer’s board of directors should understand climate risk and oversee the team responsible for managing such risk). In terms of timing, a company must have specific plans to implement the NYDFS’s expectations related to board governance and organizational structure by August 15, 2022, and the NYDFS intends to issue additional guidance on the timing for implementing the more complex expectations.
The NYDFS also adopted an amendment to the regulation that governs enterprise risk management, effective as of August 13, 2021, that requires certain additional risks, including climate change risk, to be included in non-U.S. jurisdictions are engagedan insurance group’s enterprise risk management function.
NYDFS Guidance on Diversity and Corporate Governance
In March 2021, the NYDFS issued a circular letter which states that the NYDFS expects the insurers that it regulates, such as Equitable Financial, to make diversity of their leadership a business priority and a key element of their corporate governance. During the summer of 2021, the NYDFS collected data from insurers that met certain premium thresholds in addressingNew York, including Equitable Financial, regarding the causesdiversity of the financial crisistheir corporate boards and means of avoiding such crisesmanagement. The NYDFS plans to publish this data on an aggregate basis in order to measure progress in the future. On July 18, 2013,industry, and it will include diversity-related questions in its examination process starting in 2022. We are considering the International Association of Insurance Supervisors (“IAIS”) published an initial assessment methodology for designating global systemically important insurers (“GSIIs”),NYDFS’ guidance as part of the global initiative launched by the G20 with the assistance of the Financial Stability Board (“FSB”)our commitment to identify those insurers whose distress or disorderly failure, because of their size, complexitydiversity and interconnectedness, would cause significant disruption to the global financial system and economic activity.inclusion.
On July 18, 2013, the FSB published its initial list of nine GSIIs, which included AXA. The GSII list was originally intended to be updated annually following consultation with the IAIS and respective national supervisory authorities. AXA remained on the list as updated in November 2014, 2015 and 2016. However, the FSB announced in November 2017 that it, in consultation with the IAIS and national authorities, has decided not to publish a new list of GSIIs for 2017. On November 14, 2018, the FSB announced that, in light of IAIS progress in developing a proposed holistic framework for the assessment and mitigation of potential systemic risk in the insurance sector, the FSB has decided not to engage in an identification of G-SIIs in 2018. In its public consultation on the holistic framework, issued on November 14, 2018, the IAIS recommended that the implementation of its proposed holistic framework should obviate the need for the FSB's annual G-SII identification process. The FSB subsequently stated that it will assess the IAIS's recommendation to suspend G-SII identification from 2020, once the holistic framework is finalized in November 2019, and, in November 2022, based on the initial implementation of the holistic framework, review the need to either discontinue or reestablish an annual identification of G-SIIs.International Regulation
The policy measures for GSIIs, published by the IAIS in July 2013, include (i) the introduction of new capital requirements; a “basic” capital requirement (“BCR”) applicable to all GSII activities which is intended to serve as a basis for an additional level of capital, called “Higher Loss Absorbency” (“HLA”) required from GSIIs in relation to their systemic activities, (ii) greater regulatory oversight over holding companies, (iii) various measures to promote the structural and financial “self-sufficiency” of group companies and reduce group interdependencies including restrictions on intra-group financing and other arrangements and (iv) in general, a greater level of regulatory scrutiny for GSIIs (including a requirement to establish a Systemic Risk Management Plan (“SRMP”), a Liquidity Risk Management Plan (“LRMP”) and a Recovery and Resolution Plan (“RRP”) which have entailed significant new processes, reporting and compliance burdens and costs for AXA. The contemplated policy measures include the constitution of a Crisis Management Group by the group-wide supervisor, the preparation of the above-mentioned documents (SRMP, LRMP and RRP) and the development and implementation of the BCR in 2014, while other measures are to be phased in more gradually, such as the HLA (the first version of which was endorsed by the FSB in October 2015 but which is expected to be revised before its implementation in at least 2019).
On June 16, 2016, the IAIS published an updated assessment methodology, applicable to the 2016 designation process, which is yet to be endorsed by the FSB. To support some adjustments proposed by the revised assessment methodology, the IAIS also published a paper on June 16, 2016, describing the “Systemic Features Framework” that the IAIS intends to employ in assessing whether certain contractual features and other factors are likely to expose an insurer to a greater degree of systemic risk, focusing specifically on two sets of risks: macroeconomic exposure and substantial liquidity risk. Also, the IAIS stated that the 2016 assessment methodology, along with the Systemic Features Framework, will lead to a change in HLA design and calibration. In addition, the IAIS is in the process of developing an activities-based approach to systemic risk in the insurance sector and published a consultation paper on this approach in December 2017. The development of this activities-based approach may have significant implications for the identification of GSIIs and the policy measures to which they are expected to be subject.
As part of its efforts to create a common framework for the supervision of internationally active insurance groups (“IAIGs”), the IAIS has also been developing a comprehensive, group-wide international insurance capital standard (the “ICS”) to be applied to both GSIIs and IAIGs, although it is not expected to be finalized until 2019 at the earliest, and is not expected to be fully implemented, if at all, until at least five years thereafter. AXA currently meets the parameters set forth to define an IAIG. Although the BCR and HLA are more developed than the ICS at present, the IAIS has stated that it intends to revisit both standards following development and refinement of the ICS, and that the BCR will eventually be replaced by the ICS. The

NAIC plans to develop an “aggregation method” for group capital. Although the aggregation method will not be part of ICS, the IAIS aims to make a determination whether the aggregated approach provides substantially the same outcome as the ICS, in which case it could be incorporated into the ICS as an outcome-equivalent approach.
Although the standards issued by the FSB and/or the IAIS are not binding on the United States or other jurisdictions around the world unless and until the appropriate local governmental bodies or regulators adopt appropriate laws and regulations, these measures could have far reaching regulatory and competitive implications for AXA in the event they are implemented by its group supervisors, which in turn, to the extent we are deemed to be controlled by AXA at the time the measures are implemented, or we independently meet the criteria for being an IAIG and the measures are adopted by U.S. group supervisors, could materially affect our competitive position, consolidated results of operations, financial condition, liquidity and how we operate our business.
In addition, manyMany of AB’s subsidiaries are subject to the oversight of regulatory authorities in jurisdictions outside of the United States in which they operate, including the Ontario Securities Commission, the Investment Industry Regulatory Organization of Canada, the European Securities and Markets Authority, the Financial Conduct Authority in the U.K., the CSSF in Luxembourg, the Financial Services Agency in Japan, the Securities & Futures Commission in Hong Kong, the Monetary Authority of Singapore, the Financial Services Commission in South Korea, and the Financial Supervisory Commission in Taiwan.Taiwan and the Securities and Exchange Board of India. While these regulatory requirements often may be comparable to the requirements of the SEC and other U.S. regulators, they are sometimes more restrictive and may cause AB to incur substantial expenditures of time and money related to AB’s compliance efforts.
47
Table of Contents
Federal Tax Legislation, Regulation and Administration
Although we cannot predict what legislative, regulatory, or administrative changes may or may not occur with respect to the federal tax law, we nevertheless endeavor to consider the possible ramifications of such changes on the profitability of our business and the attractiveness of our products to consumers. In this regard, we analyze multiple streams of information, including those described below.
Transition from LIBOR
Global regulators have indicated that publication of LIBOR is expected to cease after June 2023. Publication of one week and two-month USD LIBOR settings terminated at the end of December 2021 as did publication of non-USD LIBOR. Publication of the remaining USD LIBOR settings (overnight and one, three, six and 12 month USD LIBOR) is expected to continue until the end of June 2023. U.S. bank regulators have requested all U.S. regulated banks to stop extending USD LIBOR loans after the end of 2021.
The New York legislature passed legislation in 2021 that provides a fallback of the Secured Overnight Financing Rate (“SOFR”) for contracts governed by New York law and for which a fallback is not otherwise specified. The U.S. House of Representatives passed a similar bill governing instruments that may not apply New York law. That bill has been sent to the U.S. Senate.
Recent guidance from the SEC staff noted that, in light of the now-certain transition away from LIBOR, financial professionals and financial services companies must: consider the implications for portfolio holdings and hedges, including the presence of a robust fallback rate; disclosure with respect to the transition and the likely impact that the LIBOR transition will have on valuation measurements using LIBOR as an input; and operational complexities that the LIBOR transaction is likely to introduce, including required IT system changes.
We have exposure to USD LIBOR through loans, derivatives, investments and financing operations and there are references to LIBOR in certain product prospectuses. We have evaluated our existing credit agreements, portfolio holdings, derivatives and other investments and identified all contracts for which there is not a robust fallback rate specified and have either identified replacement rates, including SOFR, as an adequate fallback for these instruments or are in the process of addressing the lack of the fallback by seeking to dispose of the instrument or negotiate fallback terms.As a general matter we include fallback terms in all new agreements entered into by us and products we issue that replace LIBOR with a replacement rate, including SOFR, upon discontinuation of LIBOR. Existing contract fallback provisions, and whether, how, and when we and others develop and adopt alternative reference rates, will influence the effect of any changes to or discontinuation of LIBOR on us and our subsidiaries and affiliates. Discontinuation of LIBOR could have a materially adverse impact on us depending upon how the transition evolves. We continue to monitor both market and regulatory changes in order to prepare for the discontinuation of the LIBOR benchmark.
Enacted Legislation
At present, the federal tax laws generally permit certain holders of life insurance and annuity products to defer taxation on the build-up of value within such products (commonly referred to as “inside build-up”) until payments are made to the policyholders or other beneficiaries. From time to time, Congress considers legislation that could enhance or reduce (or eliminate) the benefit of tax deferral on some life insurance and annuity products. As an example, the American Taxpayer’s Relief Act increased individual tax rates for higher-income taxpayers. Higher tax rates increase the benefits of tax deferral on inside build-up and, correspondingly, tend to enhance the attractiveness of life insurance and annuity products to consumers that are subject to those higher tax rates. The Tax Reform Act reduced individual tax rates, which could reduce demand for our products. The modification or elimination of this tax-favored status could also reduce demand for our products. In addition, if the treatment of earnings accrued inside an annuity contract was changed prospectively, and the tax-favored status of existing contracts was grandfathered, holders of existing contracts would be less likely to surrender or rollover their contracts. These changes could reduce our earnings and negatively impact our business.
The Tax Reform Act
The Tax Reform Act overhauled the U.S. Internal Revenue Code and changed long-standing provisions governing the taxation of U.S. corporations, including life insurance companies. While the Tax Reform Act had a net positive economic impact on us, it contained measures which could have adverse or uncertain impacts on some aspects of our business, results of operations or financial condition. We continue to monitor regulations and interpretations of the Tax Reform Act that could impact our business, results of operations and financial condition. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Macroeconomic and Industry Trends—Impact of the Tax Reform Act.”
Future Changes in U.S. Tax Laws
We anticipate that, following the Tax Reform Act, we will continue deriving tax benefits from certain items, including but not limited to the DRD, tax credits, insurance reserve deductions and interest expense deductions. However, there is a risk that interpretations of the Tax Reform Act, regulations promulgated thereunder, or future changes to federal, state or other tax laws could reduce or eliminate the tax benefits from these or other items and result in our incurring materially higher taxes.
Regulatory and Other Administrative Guidance from the Treasury Department and the IRS

Regulatory and other administrative guidance from the Treasury Department and the IRS also could impact the amount of federal tax that we pay. For example, the adoption of “principles based” approaches for calculating statutory reserves may lead the Treasury Department and the IRS to issue guidance that changes the way that deductible insurance reserves are determined, potentially reducing future tax deductions for us.
Privacy and Security of Customer Information and Cybersecurity Regulation
We are subject to federal and state laws and regulations that require financial institutions to protect the security and confidentiality of customer information, and to notify customers about their policies and practices relating to their collection
48
Table of Contents
and disclosure of customer information and their practices relatingrelated to protecting the security and confidentiality of that information. We maintain, and we require our third-party service providers to maintain, security controls designed to ensure the integrity, confidentiality, and availability of our systems and the confidential and sensitive information we maintain and process. We have adopted a privacy policy outlining the Company’s procedures and practices to be followed by members of the Company relating to the collection, maintenance, disclosure, disposal, and protection of customer information, including personal information. As required by law, subject to certain exceptions, a copy of the privacy policy is mailed to customers on an annual basis. Federal and state laws generally require that we provide notice to affected individuals, law enforcement, regulators and/or potentially others if there is a situation in which customer information is intentionally or accidentally disclosed to and/or accessed or acquired by unauthorized third parties. Federal regulations require financial institutions to implement programs to protect against unauthorized access to this customer information, and to detect, prevent and mitigate identity theft. Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail or fax messages to both consumers and customers, and also regulate the permissible uses of certain categories of customer information. Violation
The violation of thesedata privacy and data protection laws and regulations or the failure to implement and maintain reasonable and effective cybersecurity programs may result in significant fines, remediation costs and remediation costs. Itregulatory enforcement actions. Moreover, a cybersecurity incident that disrupts critical operations and customer services could expose the Company to litigation, losses, and reputational damage. As cyber threats continue to evolve, regulators continue to develop new requirements to account for risk exposure, including specific cybersecurity safeguards and program oversight. As such, it may be expected that legislation considered by either the U.S. Congress and/or state legislatures could create additional and/or more detailedburdensome obligations relating to the use and protection of customer information.
On February 16, 2017,We are subject to the rules and regulations of the NYDFS announced the adoption ofwhich adopted a new cybersecurity regulation for financial services institutions, including banking and insurance entities, under its jurisdiction. The new regulation became effective on March 1, 2017 and is being implemented in stages that commenced on August 28, 2017 and will be fully implemented by March 1, 2019. This new regulation requires these entities to, among other things, assess risks associated with their information systems and establish and maintain a cybersecurity policyprogram reasonably designed to protect such systems and consumers’ private data. We have adopted a cybersecurity policy outlining our policies and procedures for the protection of our information systems and information stored on those systems that comports with the regulation. In addition to New York’s cybersecurity regulation, the NAIC adopted the Insurance Data Security Model Law in October 2017. Under the model law, companies that are compliant with the NYDFS cybersecurity regulation are deemed also to be in compliance with the model law. The purpose of the model law is to establish2017, establishing standards for data security and for the investigation and notification of insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information. Certain states have adopted the model law, and wealthough it has not been adopted by our insurance subsidiaries’ domiciliary states. We expect that additional states will also adopt the model law, althougheven though it is not an NAIC accreditation standard, but we cannot be predictedpredict whether or not, or in what form or when, they will do so. Under the model law, companies that are compliant with the NYDFS cybersecurity regulation are deemed also to be compliant with the model law.
Under the California Consumer Privacy Act (“CCPA”), California residents enjoy the right to know what information a business has collected from them, the sourcing and sharing of that information, and the right to limit certain uses. CCPA also establishes a private right of action with potentially significant statutory damages, whereby businesses that fail to implement reasonable security measures to protect against breaches of personal information could be liable to affected consumers. Certain data processing which is otherwise regulated, including under the Gramm-Leach-Bliley Act, is excluded from the CCPA; however, this is not an entity-wide exclusion. We expect a significant portion of our business will be excepted from the requirements of the CCPA. The California Privacy Rights Act (“CPRA”) amends the CCPA and will come into effect in January 2023. Virginia and Colorado have adopted similar laws, which come into effect in January 2023 and July 2023, respectively, and additional states are considering, and may enact, similar laws or regulations in the near future.

State and federal regulators are increasingly focused on cybersecurity and several have established specific and potentially burdensome requirements. For instance, in October 2021, the Federal Trade Commission announced significant amendments to the Standards for Safeguarding Customer Information Rule (the “Safeguards Rule”) that require financial institutions to implement specific data security measures within their formal information security measures. Failure to comply with new regulation or requirements may result in enforcement action, fines and/or other operational or reputational harms.
Environmental Considerations
Federal, state and local environmental laws and regulations apply to our ownership and operation of real property. Inherent in owning and operating real property are the risk of environmental liabilities and the costs of any required clean-up. Under the laws of certain states, contamination of a property may give rise to a lien on the property to secure recovery of the costs of clean-up, which could adversely affect our mortgage lending business. In some states, this lien may have priority over the lien of an existing mortgage against such property. In addition, in some states and under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA, we may be liable, in certain circumstances, as an “owner” or “operator,” for costs of cleaning-up releases or threatened releases of hazardous substances at a property
49
Table of Contents
mortgaged to us. We also risk environmental liability when we foreclose on a property mortgaged to us. However, federal legislation provides for a safe harbor from CERCLA liability for secured lenders, provided that certain requirements are met. Application of various other federal and state environmental laws could also result in the imposition of liability on us for costs associated with environmental hazards.
We routinely conduct environmental assessments prior to making a mortgage loan or taking title to real estate, whether through acquisition for investment or through foreclosure on real estate collateralizing mortgages. We cannot provide assurance that unexpected environmental liabilities will not arise. However, based on information currently available to us, we believe that any costs associated with compliance with environmental laws and regulations or any clean-up of properties would not have a material adverse effect on our consolidated results of operations.
Intellectual Property
We rely on a combination of copyright, trademark, patent and trade secret laws to establish and protect our intellectual property rights. Holdings has entered into a licensing arrangement with AXA concerning the use by the Company of the “AXA”

name. We also have an extensive portfolio of trademarks and service marks that we consider important in the marketing of our products and services. We regard our intellectual property as valuable assets and protect them against infringement.
AB has also registered a number of service marks with the U.S. Patent and Trademark Office and various foreign trademark offices, including the mark “AllianceBernstein.” The [A/B] logo and “Ahead of Tomorrow” are service marks of AB. In January 2015, AB established two new brand identities. Although the legal names of AB did not change, the corporate entity, and its Institutions and Retail businesses now are referred to as “AB”. Private Wealth
Human Capital Management and Bernstein Research Services now are referred to as “AB Bernstein”. Also, AB adopted the [A/B] logo and “Ahead of Tomorrow” service marks described above. AB has acquired all of the rights and title in, and to, the Bernstein service marks, including the mark “Bernstein” and the W.P. Stewart & Co., Ltd. services marks, including the logo “WPSTEWART”.
Iran Threat Reduction and Syria Human Rights Act

Holdings and its subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and Syria Human Rights Act (“Iran Act”), nor were they involved in the AXA Group matters described immediately below.

The non-U.S. based subsidiaries of AXA operate in compliance with applicable laws and regulations of the various jurisdictions in which they operate, including applicable international (United Nations and European Union) laws and regulations. While AXA Group companies based and operating outside the United States generally are not subject to U.S. law, as an international group, AXA has in place policies and standards (including the AXA Group International Sanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law.

AXA has informed us that AXA Konzern AG, an AXA insurance subsidiary organized under the laws of Germany, provides car, accident and health insurance to diplomats based at the Iranian Embassy in Berlin, Germany. The total annual premium of these policies is approximately $139,700 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $24,272.

AXA also has informed us that AXA Belgium, an AXA insurance subsidiary organized under the laws of Belgium, has two policies providing for car insurance for Global Trading NV, which was designated on May 17, 2018 under (E.O.) 13224, and subsequently changed its name to Energy Engineers & Construction on August 20, 2018. The total annual premium of these policies is approximately $6,559 before tax and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $983.

In addition, AXA has informed us that AXA Insurance Ireland, an AXA insurance subsidiary, provides statutorily required car insurance under four separate policies to the Iranian Embassy in Dublin, Ireland. AXA has informed us that compliance with the Declined Cases Agreement of the Irish Government prohibits the cancellation of these policies unless another insurer is willing to assume the coverage. The total annual premium for these policies is approximately $7,115 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $853.

Also, AXA has informed us that AXA Sigorta, a subsidiary of AXA organized under the laws of the Republic of Turkey, provides car insurance coverage for vehicle pools of the Iranian General Consulate and the Iranian Embassy in Istanbul, Turkey. Motor liability insurance coverage is compulsory in Turkey and cannot be canceled unilaterally. The total annual premium in respect of these policies is approximately $3,150 and the annual net profit, which is difficult to calculate with precision, is estimated to be $473.

Additionally, AXA has informed us that AXA Winterthur, an AXA insurance subsidiary organized under the laws of Switzerland, provides Naftiran Intertrade, a wholly-owned subsidiary of the Iranian state-owned National Iranian Oil Company, with life, disability and accident coverage for its employees. In addition, AXA Winterthur also provides car and property insurance coverage for the Iranian Embassy in Bern. The provision of these forms of coverage is mandatory in Switzerland. The total annual premium of these policies is approximately $396,597 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $59,489.

Also, AXA has informed us that AXA Egypt, an AXA insurance subsidiary organized under the laws of Egypt, provides the Iranian state-owned Iran Development Bank, two life insurance contracts, covering individuals who have loans with the bank. The total annual premium of these policies is approximately $19,839 and annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $2,000.

Furthermore, AXA has informed us that AXA XL, which AXA acquired during the third quarter of 2018, through various non-U.S. subsidiaries, provides insurance to marine policyholders located outside of the U.S. or reinsurance coverage to non-

U.S. insurers of marine risks as well as mutual associations of ship owners that provide their members with protection and liability coverage. The provision of these coverages may involve entities or activities related to Iran, including transporting crude oil, petrochemicals and refined petroleum products. AXA XL’s non-U.S. subsidiaries insure or reinsure multiple voyages and fleets containing multiple ships, so they are unable to attribute gross revenues and net profits from such marine policies to activities with Iran. As the activities of these insureds and re-insureds are permitted under applicable laws and regulations, AXA XL intends for its non-U.S. subsidiaries to continue providing such coverage to its insureds and re-insureds to the extent permitted by applicable law.

Lastly, a non-U.S. subsidiary of AXA XL provided accident & health insurance coverage to the diplomatic personnel of the Embassy of Iran in Brussels, Belgium during the third quarter of 2018. AXA XL’s non-U.S. subsidiary received aggregate payments for this insurance from inception through December 31, 2018 of approximately $73,451. Benefits of approximately $2,994 were paid to beneficiaries during 2018. These activities are permitted pursuant to applicable law. The policy has been canceled and is no longer in force.

The aggregate annual premium for the above-referenced insurance policies is approximately $646,411, representing approximately 0.0006% of AXA’s 2018 consolidated revenues, which exceed $100 billion. The related net profit, which is difficult to calculate with precision, is estimated to be $88,070, representing approximately 0.001% of AXA’s 2018 aggregate net profit.
Employees
As of December 31, 2018,2021, we had approximately 7,800 full time employees. Of these, approximately 3,6004,100 were employed full-time by AB.
Equitable
To execute our business plan successfully, we need not only a sound business strategy but an equally well-developed people strategy. In addition to ensuring strong alignment across our organization to our goals and strategies, we maintain a long-standing commitment to building a culture of inclusion, professional excellence and continuous learning. We have been recognized as a “Great Place to Work” by the Great Place to Work® Institute, an independent workplace authority, each year since 2016. We have been awarded a 100% rating by the Human Rights Foundation’s Campaign Corporate Equality Index since 2014.
Looking ahead, we know our clients will continue to face new opportunities and challenges. To meet those needs, and to be able to fully realize our ambitious strategic aspirations, we have adopted a new operating model and mindset that remain uniquely Equitable: our New Ways of Working. Our reasons for embracing this new way forward are clear: we want to innovate and grow, we want to attract the best talent and build a strong pipeline for employee advancement, and we want to better serve our clients. Our New Ways of Working equips us to evolve in ways that enhance innovation, efficiency, client satisfaction and employee engagement by drawing upon five time-tested methodologies: Adaptive Leadership; Outcomes, Objectives & Key Results; Dynamic Enablers; Enterprise Agile; and Design Thinking. It fundamentally changes the way we deliver value and grow as employees and as a company.

Employee Development
Attracting, developing and retaining the best people is crucial to our long-term success and strategy. Accordingly, we offer a number of tools and resources to empower our people to grow and to perform to the best of their abilities. Our tools and resources include educational opportunities such as digital and classroom-style courses on topics ranging from communication skills to product knowledge to inclusive leadership immersion. We also provide tuition reimbursement programs to defray the cost of degree programs. In 2021 we retooled our career models to provide us with a consistent and transparent way to help our people grow, develop and uncover new career opportunities. Under our new career models, each employee’s skills are at the forefront. They can clearly see how their skills are transferrable across the organization so they can shape the career they want. And they can find opportunities — or have opportunities find them — based on the skills they have to contribute. We believe these models will help our employees grow and nurture their own unique skills as they develop a specific career roadmap for the future.
We also support promotion within Equitable, which provides further opportunities for employees to learn, grow and advance in their careers. Among the open positions at Equitable, about 46% on average are filled by internal candidates.
Health and Family Resources
50
Table of Contents
We are committed to the health and safety of our employees, financial professionals and their families. With respect to COVID-19, since the onset of the pandemic, we have been working with employees to provide as much flexibility as possible. All of our locations are open at this time but, with the exception of those considered essential, employees have the option to work remotely or from the office. A large number of our employees and financial professionals continue to work remotely. We continue to monitor the health and safety conditions of all of our corporate locations, and use guidance provided by the CDC to create policies and practices to ensure the safety of our people as we move through the pandemic, including re-entering the workplace, travel, in-person meeting, encouraging vaccinations, masking and social distancing. We have enhanced our listening strategy, broadened our benefits offerings, and developed a synchronized hybrid work model which will be fully implemented when all employees return to work from our office. We also created a centralized location to share the latest updates on health and safety with our employees and financial professionals, and our Chief Medical Director hosted a series of videos that provided COVID updates and answered employees’ questions. We opened a COVID-19 specific hotline with our expert second medical opinion service provider to intake health questions and provide local referrals for Equitable employees, financial professionals and family members.
We offered complimentary membership to an online tutoring service during the school year and hosted a series of interactive employee engagement activities to create connections, support our culture and combat burnout associated with the virtual working environment. We also provide resources to support employees in their family life, including child and elder care support through Bright Horizons, College Coach, financial wellness, adoption support, family and medical leave and paid parental leave of between 8 and 16 weeks. We also introduced Sanvello, an app for stress, anxiety, and depression based on cognitive-behavioral therapy, mindfulness, and wellness. Our Employee Assistance Program provides resources to help employees overcome challenges at home or at work and help them reach their professional and personal goals. This includes six complimentary confidential counseling sessions annually.

Compensation
Rewarding performance is the cornerstone of our “Total Rewards” program. Total Rewards include access to comprehensive benefits programs and the opportunity to share in company results through equity awards. Our benefits portfolio allows eligible employees and financial professionals to elect the right coverage for health needs, to build their wealth and to provide protection for themselves and their families from the unexpected events that might occur along the way. Our Total Rewards package includes, among other things, market-competitive pay, equity award programs and bonuses, healthcare benefits, retirement savings plans, paid time off and family leave, flexible work schedules, an educational assistance program and an employee assistance program and other mental health services.

Diversity, Equity and Inclusion
We believe a more diverse workforce enriches our people’s work experience, helps us better serve clients, and creates a more understanding and inclusive work environment. To drive lasting change, we must deeply understand the issues facing the diverse communities in our company. We are taking an intentional and iterative approach to diversity, equity and inclusion (DEI), listening and applying our learnings as we go.
To build a more inclusive culture, Equitable has developed integrated programs through keynote speakers, events and learning experiences. This effort helps reset behavioral expectations and understanding of DEI-related matters in the workplace. With our courageous conversations, we now have a model where we can talk about race, gender and other topics to support both personal growth and team building. We have hosted conversations about race and racism in America, violence against the Asian American and Pacific Islander (AAPI) community and issues facing our LGBTQ+ colleagues, and have forthcoming conversations planned regarding religious tolerance.
We are committed to transparency when it comes to sharing the diverse composition of our workforce. This commitment is underscored by the public release of Equitable Holdings' EEO-1 Report. We have multiple programs underway to increase employee and financial professional diverse representation. We are focused on creating a support structure to accelerate career advancement opportunities for our diverse colleagues. To do this, we identify opportunities and challenges and create programs to help our underrepresented communities overcome barriers.

51
Table of Contents
Our 11 Employee Resource Groups and 5 Field Advisory Councils play a key role in serving as a community voice to leadership, driving important policy changes and helping to build and shape our DEI strategy. They also create development opportunities for our people, with members working collaboratively to address business challenges and share ideas.
In 2020, we established the CEO Taskforce to Advance Racial Equity. The mission of the Taskforce is to make Equitable the most sought-after employer for Black professionals by building an environment that supports and invests in the careers and well-being of our Black employees and financial professionals. While the Taskforce is currently focused on Black colleagues, the models created are being used to benefit other underrepresented groups.
We're holding ourselves accountable by leveraging our compensation and rewards systems to drive our DE&I goals. Today, DE&I is incorporated into our company STIC metrics through our corporate strategic initiatives, and each of our senior leaders have incorporated DE&I aspirations into their annual goals. For Equitable Advisors, a portion of Executive Vice President compensation is tied to advancing diverse representation.
While we have made progress, we recognize this is long-term journey.

Equitable Foundation
The Equitable Foundation directs the Company’s philanthropic and volunteer activities. The Equitable Foundation gives our employees and financial professionals an opportunity to commit their time and effort to organizations they believe in, as well as supports their efforts through charitable grants and through our company volunteer program, Equitable in Action.
Equitable Foundation has established three key focus areas to guide our social impact efforts, which reflect our broader ESG aspirations and align to enterprise objectives. These areas include: i) advancing racial equity and social justice, ii) building healthy and vibrant communities, and iii) supporting underserved students in the journey to and through secondary education and, ultimately, advancing their career aspirations.
Equitable Excellence, a scholarship program for high school seniors, is the flagship program of Equitable Foundation. In alignment with Equitable’s own mission of helping people achieve financial security so that they can face the future with confidence, the Equitable Excellence Scholarship places an emphasis on empowering students’ future plans so that they can continue to have positive impacts in their community.
Through our matching gifts program, we double the impact of the charitable contributions made by our employees and financial professionals. Eligible donations of $50 or more are matched up to $2,000 per year, per individual. In 2021, Equitable Foundation matched $1.3 million in contributions made to nonprofit organizations nationwide.
AllianceBernstein
As a leading global investment-management and research firm, AB brings together a wide range of insights, expertise and innovations to advance the interests of clients around the world. The intellectual capital of AB’s employees is collectively its most important asset, so the long-term sustainability of AB is heavily dependent on its people. AB is keenly focused on:
•fostering an inclusive culture by incorporating diversity and inclusion in all levels of AB’s business;
•encouraging innovation;
•developing, retaining and recruiting high quality talent; and
•aligning employees’ incentives and risk taking with those of AB.

Talent Acquisition
AB seeks to achieve excellence in business and investment performance by recruiting and hiring a workforce with diversity of thought, backgrounds and experiences. AB believes that diverse and inclusive teams generate better ideas and reach more balanced decisions. AB seeks to leverage the unique backgrounds of its employees to meet the needs of a broad range of clients and engage with the communities in which AB operates. AB engages several external organizations to assist in attracting and recruiting top talent at all levels, with a particular focus on attracting diverse talent. AB has a sizable group of internal human capital associates focused on recruiting, and AB has implemented various human capital initiatives to develop and provide for a balanced workforce.
Employee Engagement
52
Table of Contents
AB believes a workforce is most productive, effective and highly engaged when they feel connected to AB’s business and culture. AB seeks to provide diverse work experiences, professional development opportunities, competitive compensation and benefits, an inclusive and diverse culture and social engagement projects to keep its employees motivated, connected to AB and engaged throughout their careers. AB strives to create a culture of intellectual curiosity and collaboration, creating an environment where its employees can thrive and do their best work. AB fosters growth and advancement through different training avenues to develop skill sets, create opportunities for networking, both internally and externally, and AB encourages internal mobility as a part of its employees' career trajectory. It is important that AB’s employees are not only connected to AB’s business but also to the communities in which AB operates. As such, AB offers many opportunities for its employees to volunteer in the communities in which AB serves.
Diversity and Inclusion
AB continues to believe that diverse and inclusive teams generate better ideas and best serve the needs of its clients. The events of the last two years have provided an unforeseen yet unique opportunity to reflect, adapt and broaden AB’s Diversity & Inclusion (“D&I”) strategy. D&I continues to be a key strategic priority for AB and its ongoing commitment to embed it across all facets of the firm has further reinforced AB’s company values. It has also allowed for a more purposeful approach to engagement with AB’s people, clients, and the communities in which it operates.
Community engagement efforts have been further integrated under the D&I umbrella. Under the new structure, AB is better able to streamline and formalize the process for assessing corporate partnerships and philanthropic giving through the lens of D&I, allowing for a more cohesive overall strategy.
AB has enhanced its talent attraction and retention approach to position itself as an employer of choice and invest in the development of its people. AB has developed a diverse talent strategy with a goal of developing a deeper understanding of the needs of diverse talent and also equipping managers with the necessary tools to effectively manage an increasingly more diverse workforce. The strategy includes incorporating the concept of inclusive leadership into the firm wide leadership development curriculum and enhancing AB’s exit interview process for diverse talent by conducting in-person interviews which will better enable AB to detect trends and mitigate attrition.
AB’s people remain its top priority especially during these times of uncertainty. Over the course of the last year, there has been a continued focus on education and deepening engagement across all pillars of its strategy to include Employee Resource Groups (ERGs), corporate partnerships, and the overall experience at AB. ERGs have been a major proponent of these efforts by cultivating spaces for courageous conversations, encouraging professional development, personal wellness, and raising awareness for various underrepresented communities.
As AB continues to seek out opportunities to further its commitment to diversity, equity, and inclusion, AB is leveraging best practices from industry peers. AB’s D&I journey continues to evolve, addressing racial and gender equity, more effective access to diverse talent and monitoring client trends remain top priorities.

Compensation and Benefits
AB has demonstrated a history of investing in its workforce by offering competitive compensation. AB utilizes a variety of compensation elements, including base salaries, annual short-term compensation awards (i.e., cash bonuses) and, for those of AB’s employees who earn more than $300,000 annually, a long-term compensation award program. Long-term incentive compensation awards generally are denominated in restricted AB Holding Units. AB utilizes this structure to foster a stronger sense of ownership and align the interests of its employees directly with the interests of AB unitholders and indirectly with the interests of AB’s clients, as strong performance for its clients generally contributes directly to increases in AUM and improved financial performance for the firm. Furthermore, AB offers to all eligible employees health and welfare, 401(k) profit-sharing and other benefits programs.
Health and Safety
AB’s ongoing response to the COVID-19 global pandemic demonstrates how highly AB values the health and safety of its employees. At the initial onset of COVID-19 during the first quarter of 2020, AB quickly responded in the various jurisdictions where AB operates. AB implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in AB’s offices was considered critical), which lasted through the second quarter of 2021. Since then, working in the office generally has been voluntary, with mandatory in-office participation occurring only at certain times when COVID-19 has ebbed
53
Table of Contents
significantly in the communities in which AB operates. AB also instituted a confidential notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep AB’s employees safe and advise of key developments.
Executive Officers
See Part III, Item 10 “Directors, Executive Officers and Corporate Governance—Executive Officers”Governance” for information with respect to our executive officers, which is incorporated by reference herein.
Available Information
We maintain a public website at https://axaequitableholdings.com.equitableholdings.com. We use our website as a routine channel for distribution of important information, including news releases, analyst presentations, financial information and corporate governance information. We post filings on our website as soon as practicable after they are electronically filed with, or furnished to, the SEC, including our annual and quarterly reports on Forms 10-K and 10-Q and current reports on Form 8-K; our proxy statements; and any amendments to those reports or statements. All such postings and filings are available on the “Investors” section of our website free of charge. The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
We may use our website as a means of disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures are included on our website in the “Investors” section. Accordingly, investors should monitor this portion of our website, in addition to following our news releases, SEC filings, public conference calls and webcasts. The information contained on or connected to our website is not a part of this Form 10-K. We file periodic and current reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information may be obtained through the SEC’s website (www.sec.gov).



Part I, Item 1A.
RISK FACTORS
You should considerread and read carefullyconsider all of the risks and uncertainties described below, as well as other information set forth in this Annual Report on Form 10-K.10-K. The risks described below are not the only ones facing us. Thewe face. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of anycertain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the followingimpact of these risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affecton our business, financial position,businesses, results of operations, financial condition or cash flows. This Annual Report on Form 10-K also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.liquidity.
Risks Relating to Our Consolidated Business
Risks Relating to Conditions in the Financial Markets and Economy
The coronavirus (COVID-19) pandemic.
The COVID-19 pandemic has negatively impacted the U.S. and global economies. A wide variety of factors continue to impact financial and economic conditions, including, among others, volatility in the financial markets, rising inflation rates, supply chain disruptions, continued low interest rates and changes in fiscal or monetary policy. Efforts to prevent the spread of COVID-19 have affected our business directly in a number of ways, including through the temporary closures of many businesses and schools and the institution of social distancing requirements in many states and local communities. Businesses or schools that have reopened have restricted or limited access for the foreseeable future and may do so on a permanent or episodic basis. As a result, our ability to sell products through our regular channels and the demand for our products and services has been significantly impacted.
While we have implemented risk management and contingency plans with respect to the COVID-19 pandemic, such measures may not adequately protect our business from the full impacts of the pandemic. Currently, most of our employees and advisors are continuing to work remotely. Extended periods of remote work arrangements could introduce additional operational risk including, but not limited to, cybersecurity risks, and impair our ability to effectively manage our business. We also outsource a variety of functions to third parties whose business continuity strategies are largely outside our control.
Economic uncertainty resulting from the COVID-19 pandemic may have an adverse effect on product sales and result in existing policyholders withdrawing at greater rates. COVID-19 could have an adverse effect on our insurance business due to increased mortality and morbidity rates. The cost of reinsurance to us for these policies could increase, and we may encounter
54
Table of Contents
decreased availability of such reinsurance. If policyholder lapse and surrender rates or premium waivers significantly exceed our expectations, we may need to change our assumptions, models or reserves.
Our investment portfolio has been, and may continue to be, adversely affected by the COVID-19 pandemic. Our investments in mortgages and commercial mortgage-backed securities have been, and could continue to be, negatively affected by delays or failures of borrowers to make payments of principal and interest when due. In some jurisdictions, local governments have imposed delays or moratoriums on many forms of enforcement actions. Furthermore, declines in equity markets and interest rates, reduced liquidity or a continued slowdown in the U.S. or in global economic conditions may also adversely affect the values and cash flows of investments. For additional information on the effects of COVID-19 on our mortgage loans, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—General Account Investment Portfolio.” Market volatility also caused significant increases in credit spreads, and any continued volatility may increase our borrowing costs and decrease product fee income. Further, severe market volatility may leave us unable to react to market events in a prudent manner consistent with our historical investment practices.
The extent of the COVID-19 pandemic’s impact on us will depend on future developments that are still highly uncertain, including the severity and duration of the pandemic, actions taken by governments and other third parties in response to the pandemic and the availability and efficacy of vaccines against COVID-19 and its variants.
Conditions in the global capital markets and the economy could materially and adversely affect our business, results of operations or financial condition.economy.
Our business, results of operations or financial condition are materially affected by conditions in the global capital markets and the economy generally.economy. A wide variety of factors continue to impactaffect economic conditions and consumer confidence. These factors include, among others, concerns overconfidence, including the COVID-19 pandemic and government reactions thereto, the pace of economic growth in the United States,U.S., equity market performance, continued low interest rates uncertainty regarding the U.S. Federal Reserve’s plans to further raise short-term interest rates, the strength of the U.S. dollar, uncertainty created by actions the Trump administration and Congress may pursue, global trade wars, global economic factors including quantitative easingpotential changes in fiscal or similar programs by major central banks or the unwinding of quantitative easing or similar programs, the United Kingdom’s vote to exit (“Brexit”) from the European Union (the “EU”) and other geopolitical issues.monetary policy. Given our interest rate and equity market exposure in our investment and derivatives portfolios and many of our products, these factors could have a material adverse effect on us. Our revenues may decline, our profit margins could erode, and we could incur significant losses. The value of our investments and derivatives portfolios may also be impactedadversely affected by reductions in price transparency, changes in the assumptions or methodology we use to estimate fair value and changes in investor confidence or preferences, which could potentially result in higher realized or unrealized losses and have a material adverse effect on our business, results of operations or financial condition.losses. Market volatility may also make it difficult to transact in or to value certain of our securities if trading becomes less frequent.
Factors such as consumer spending, business investment, government debt and spending, the volatility and strength of the equity markets, interest rates, deflation and inflation all affect the business and economic environment and, ultimately, the amount and profitability of our business. In an economic downturn, characterized by higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending, the demand for our retirement, protection or investment products and our investment returns could be materially and adversely affected. The profitability of many of our retirement, protection and investment products depends in part on the value of the General Account and Separate Accountsassets supporting them, which may fluctuate substantially depending on any of the foregoingvarious market conditions. In addition, a change in market conditions could cause a change in consumer sentiment and adversely affect sales and could cause the actual persistency of these products to vary from their anticipated persistency (the probability that a product will remain in force from one period to the next) and adversely affect profitability. Changing economic conditions or adverse public perception of financial institutions can influence customer behavior, which can result in, among other things, an increase or decrease in the levels of claims, lapses, deposits, surrenders and withdrawals in certain products, any of which could adversely affect profitability. Our policyholders may choose to defer paying insurance premiums or stop paying insurance premiums altogether. In addition, market conditions may adversely affect the availability and cost of reinsurance protections and the availability and performance of hedging instruments in ways that could materially and adversely affect our profitability.
Accordingly, both market and economic factors may affect our business results by adversely affecting our business volumes, profitability, cash flow, capitalization and overall financial condition. Disruptions in one market or asset class can also spread to other markets or asset classes. Upheavals and stagnation in the financial markets could also materially affect our financial condition (including our liquidity and capital levels) as a result of the impact of such events on our assets and liabilities.

instruments.
Equity market declines and volatility may materially and adversely affect our business, results of operations or financial condition.volatility.
Declines or volatility in the equity markets, such as that which we experienced during the fourth quarter of 2018, can negatively impact our investment returns as well as our business, results of operations or financial condition. For example, equity market declines or volatility could among other things, decrease the AV of our annuity and variable life contracts which, in turn, would reduce the amount of revenue we derive from fees charged on those account and asset values. Our variable annuity business in particular is highlyparticularly sensitive to equity markets, and a sustained weakness or stagnation in equity markets could decrease ourits revenues and earnings with respect to those products.earnings. At the same time, for variable annuity contracts that include GMxB features, equity market declines increase the amount of our potential obligations related to such GMxB features and could increase the cost of executing GMxB-related hedges beyond what was anticipated in the pricing of the products being hedged. This could result in an increase in claims and reserves related to those contracts, net of any reinsurance reimbursements or proceeds from our hedging programs. 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 the equity market volatility of our portfolio. Equity market declines and volatility may also influence policyholder behavior, which may adversely impact the levels of surrenders, withdrawals and amounts of withdrawals of our annuity and variable life contracts or cause policyholders to reallocate a portion of their account balances to more conservative investment options (which may have lower fees), which could negatively impact our future profitability or increase our benefit obligations particularly if they were to remain in such options during an equity market increase. Market volatility can negatively impact the value of equity securities we hold for investment which could in turn reduce the statutory capital of certain of our insurance subsidiaries. In addition, equity market volatility could reduce demand for variable products relative to fixed products, lead to changes in estimates underlying our calculations of DAC that, in turn, could accelerate our DAC amortization and reduce our current earnings and result in changes to the fair value of our GMIB reinsurance contracts and GMxB liabilities, which could increase the volatility of our earnings. Lastly, periods of high market volatility or adverse conditions could decrease the availability or increase the cost of derivatives.
Interest rate fluctuations or prolonged periods of low interest rates may materially and adversely impact our business, consolidated resultsrates.
55
Table of operations or financial condition.Contents
We are affected by the monetary policies of the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) and the Federal Reserve Bank of New York (collectively, with the Federal Reserve Board, the “Federal Reserve”) and other major central banks, including the unwinding of quantitative easing programs, as such policies may adversely impact the level of interest rates and, as discussed below, the income we earn on our investments or the level of product sales.  Some of our retirement and protection products and certain of our investment products, and our investment returns, are sensitive to interest rate fluctuations, and changes in interest rates and interest rate benchmarks may adversely affect our investment returns and results of operations, including in the following respects:
•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;contracts;
•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 assetearnings;

which reduces our earnings, while lower interest rates increase the value of the GMIB reinsurance contract asset which increases our earnings;
•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;business;
•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•the 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 thesesuch changes in assumptions in products available for sale may negatively impact the long-term profitability of certain products sold during the intervening period.

Recent periods have been characterized by low interest rates relative to historical levels. A prolonged period during which interest rates remain low may result in greater costs associated with our variable annuity products with GMxB features; higher costs for some derivative instruments used to hedge certain of our product risks; or shortfalls in investment income on assets supporting policy obligations as our portfolio earnings decline over time, each of which may require us to record charges to increase reserves. In addition, an extended period of declining interest rates or a prolonged period of low interest rates may also cause us to change our long-term view of the interest rates that we can earn on our investments. Such a change in our view would cause us to change the long-term interest rate that we assume in our calculation of insurance assets and liabilities under U.S. GAAP. Any future revision would result in increased reserves, accelerated amortization of DAC and other unfavorable consequences. In addition, certain statutory capital and reserve requirements are based on formulas or models that consider interest rates, and an extended period of low interest rates may increase the statutory capital we are required to hold and the amount of assets we must maintain to support statutory reserves. In addition to compressing spreads and reducing net investment income,Furthermore, such an environment may cause certain policies to remain in force for longer periods than we anticipated in our pricing, potentially resulting in greater claims costs than we expected and resulting in lower overall returns on business in force.
We manage interest rate risk as part of our asset and liability management strategies, which include (i) 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 and (ii) our hedging programs. For certain of our liability portfolios, it is not possible to invest assets to the full liability duration, thereby creating some asset/liability mismatch. Where a liability cash flow may exceed the maturity of available assets, as is the case with certain retirement products, we may support such liabilities with equity investments, derivatives or interest rate mismatch strategies. We take measures to manage the economic risks of investing in a changing interest rate environment, but we may not be able to mitigate the interest rate risk of our fixed income investments relative to our interest sensitive liabilities. Widening credit spreads, if not offset by equal or greater declines in the risk-free interest rate, would also cause the total interest rate payable on newly issued securities to increase, and thus would have the same effect as an increase in underlying interest rates.
Market conditions and other factors could materially and adversely affect our goodwill, which in turn could materially and adversely affect our business, results of operations or financial condition.goodwill.
Business and market conditions may impact the amount of goodwill we carry in our consolidated balance sheet related to the Investment Management and Research segment. To the extent that securities valuations are depressed for prolonged periods of time or market conditions deteriorate, or that AB experiences significant net redemptions, its AUM, revenues, profitability and unit price will be adversely affected. Although the price of an AB Holding Unit is just one factor in the calculation of fair value of AB Holding Units and AB Units, if AB Holding Unit price levels were to decline significantly, reaching the conclusion that fair value exceeds carrying value will, over time, become more difficult. In addition, control premiums, industry earnings

multiples and discount rates are impacted by economic conditions. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and future cash flow projections andThis may result in the need to recognize an impairment of goodwill. An impairment may result in a material charge to our earnings,goodwill which would materially andcould adversely affect our business, results of operations or financial condition.
Because the value of certain of our businesses is significantly impacted by such factors as the state of the financial markets and ongoing operating performance, significant deterioration or prolonged weakness in the financial markets or economy generally, or our failure to meet financial and operating targets, could adversely impact goodwill impairment testing and also may require more frequent testing for impairment. Any impairment would reduce the recorded goodwill amount with a corresponding charge to earnings, which could be material.
Adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs, our access to capitalconditions.
Volatility and our cost of capital.
Thedisruption in the capital and credit markets may experience, and have experienced, varying degrees of volatility and disruption. In some cases, the markets have exertedexert downward pressure on the availability of liquidity and credit capacity for certain issuers.capacity. We need liquidity to pay our operating expenses (including potential hedging losses), interest expenses and any distributions on our capital stock and to capitalize our insurance subsidiaries. Without sufficient liquidity, we could be required to curtail our operations and our business would suffer. In addition, AXA does not guarantee the indebtedness we issue or borrow or provide intra-company financing, and we must rely on the capital markets and third-party lenders for our liquidity needs.
While we expect that our future liquidity needs will be satisfied primarily through cash generated by our operations, borrowings from third parties and dividends and distributions from our subsidiaries, it is possible that the level of cash and securities we maintain when combined with expected cash inflows from investments and operations will not be adequateable to meet our anticipated short-term and long-term benefit and expense payment obligations. If current resources are insufficient to satisfy our needs, we may access financing sources such as bank debt or the capital markets. The availabilityThese services may not be available during times of additional financing would dependstress or may only be available on a variety of factors, such as market conditions, the general availability of credit, the volume of trading activities, the overall availability of credit to the financial services industry, interest rates, credit spreads, our credit ratings and credit capacity, as well as the possibility that our stockholders, customers or lenders could develop a negative perception of our long- or short-term financial prospects if we incur large investment losses or if the level of our business activity decreases due to a market downturn. Similarly, our access to funds may be rendered more costly or impaired if rating agencies downgrade our ratings or if regulatory authorities take certain actions against us.unfavorable terms. If we are unable to access capital markets to issue new debt, refinance existing debt or sell additional shares as needed, or
56
Table of Contents
if we are unable to obtain such financing on acceptable terms, our business could be adversely impacted.
Volatility in the capital markets may also consume liquidity as we pay hedge losses and meet collateral requirements related to market movements. Our subsidiaries maintain hedging programs to reduce their net economic exposure under long-term liabilities to risks such as interest rates and equity market levels. We expect these hedging programs to incur losses in certain market scenarios, creating a need to pay cash settlements or post collateral to counterparties. Although our liabilities will also be reduced in these scenarios, this reduction is not immediate, and so in the short term, hedging losses will reduce available liquidity. Liquidity may also be consumed by increased required contributions to captive reinsurance trusts. For more details, see “—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Our Reinsurance and Hedging Programs—Our reinsurance arrangements with affiliated captives may be adversely impacted by changes to policyholder behavior assumptions under the reinsured contracts, the performance of their hedging program, their liquidity needs, their overall financial results and changes in regulatory requirements regarding the use of captives.”
Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital. Such market conditions may in the future limit our ability to raise additional capital to support business growth, or to counter-balance the consequences of losses or increased regulatory reserves and rating agency capital requirements. This could force us toto: (i) delay raising capital,capital; (ii) miss payments on our debt or reduce or eliminate dividends paid on our capital stock,stock; (iii) issue capital of different types or under different terms than we would otherwiseotherwise; or (iv) incur a higher cost of capital than would prevail in a more stable market environment. This would have the potential to decrease both our profitability and our financial flexibility. Our business, results of operations, financial condition, liquidity, statutory capital or rating agency capital position could be materially and adversely affected by disruptions in the financial markets.
Future changes inRatings agencies may change our credit ratings, are possible, and any downgrade to our ratings is likely to increase our borrowing costs and limit our access to the capital markets and could be detrimental to our business relationships with distribution partners. If this occurs, we may be forced to incur unanticipated costs or revise our strategic plans, which could materially and adversely affect ourOur business, results of operations, financial condition, liquidity, statutory capital or financial condition.rating agency capital position could be materially and adversely affected by disruptions in the capital and credit markets.

Risks Relating to Our Operations
As a holding company, Holdings depends on the ability of its subsidiaries to transfer funds to it to meet its obligations.
Holdings is the holding company for all of our operations and is a legal entity separate from its subsidiaries. Dividends and other distributions from Holdings’ subsidiaries are the principal sources of funds available to Holdings to pay principal and interest on its outstanding indebtedness, to pay corporate operating expenses, to pay any stockholder dividends, to repurchase stock and to meet its other obligations. The inability to receive dividends from our subsidiaries could have a material adverse effect on our business, results of operations or financial condition.
The subsidiaries of Holdings have no obligation to pay amounts due on the debt of Holdings or to make funds available to Holdings for such payments. For our insurance and other subsidiaries, the principal sources of liquidity are fee income, insurance premiums and investment income. The ability of our insurance subsidiaries to pay dividends orand make other distributions to Holdings in the future will depend on their earnings, tax considerations, covenants contained in any financing or other agreements and applicable regulatory restrictions. In addition, such payments may be limited as a resultrestrictions and receipt of claims against our subsidiaries by their creditors, including suppliers, vendors, lessors and employees. The ability of our insurance subsidiaries to pay dividends and make other distributions to Holdings will further depend on their ability to meet applicable regulatory standards and receive regulatory approvals, as discussed below under “—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to the Products We Offer, Our Structure and Product Distribution—The ability of our insurance subsidiaries to pay dividends and other distributions to Holdings is limited by state insurance laws, and our insurance subsidiaries may not generate sufficient statutory earnings or have sufficient statutory surplus to enable them to pay ordinary dividends.”
approvals. If the ability of our insurance or non-insurance subsidiaries to pay dividends or make other distributions or payments to Holdings is materially restricted by regulatory requirements, other cash needs, bankruptcy or insolvency, or our need to maintain the financial strength ratings of our insurance subsidiaries, or is limited due to operating resultsthese or other factors, we may be required to raise cash through the incurrence of debt, the issuance of equity or the sale of assets. However, there is no assurance that we would be able to raise sufficient cash by these means. This could materially and adversely affect our ability to pay our obligations.
Our historical consolidated financial data are not necessarily representative of the results we would have achieved as a stand-alone company and may not be a reliable indicator of our future results.
Our historical consolidated financial data included in this Annual Report on Form 10-K do not necessarily reflect the financial condition, results of operations or cash flows we would have achieved as a stand-alone company during the periods presented or those we will achieve in the future. For example, we recently adjusted our capital structure to more closely align with peer U.S. public companies. As a result, financial metrics that are influenced by our capital structure, such as interest expense, Non-GAAP Operating ROE and Non-GAAP Operating ROC by segment, are not necessarily indicative of the performance we may achieve as a stand-alone company. (Non-GAAP Operating ROE and Non-GAAP Operating ROC by segment are non-GAAP financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating Measures.”) In addition, significant increases in our cost structure have occurred as a result of the IPO including costs related to public company reporting, investor relations and compliance with the Sarbanes-Oxley Act of 2002. As a result of these matters, among others, it may be difficult for investors to compare our future results to historical results or to evaluate our relative performance or trends in our business.
During the course of preparing our U.S. GAAP financial statements for the IPO, our management identified two material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, we may not be able to report our financial condition or results of operations accurately or on a timely basis, which could materially and adversely affect investor confidence in us and, as a result, the price of our common stock.
As a public company, we are required to maintain and assess internal control over financial reporting and disclosure controls and procedures and, after a transition period, publicly report on the effectiveness of our internal control over financial reporting in accordance with the rules of the SEC under the Exchange Act. Following a transition period, our independent registered public accounting firm will be required to provide an attestation report on the effectiveness of our internal control over financial reporting pursuant to SEC rules under the Exchange Act.
During the course of preparing our U.S. GAAP financial statements for the IPO and preparing for public company control requirements, our management identified two material weaknesses in the design and operation of our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial

reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Our management consequently concluded that we do not: (1) maintain effective controls to timely validate that actuarial models are properly configured to capture all relevant product features and to provide reasonable assurance that 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 (2) maintain sufficient experienced personnel to prepare Holdings’ consolidated financial statements and to verify that consolidating and adjusting journal entries were 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 statement of cash flows. These material weaknesses resulted in misstatements in our previously issued annual and interim financial statements and resulted in:
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.
In addition, during the preparation of our quarterly report on Form 10-Q for the six months ended June 30, 2018, management identified a misclassification error between interest credited and net derivative gains/losses, which resulted in misstatements in the consolidated statements of income (loss) and statements of cash flows that were not considered material. Accordingly, we: (i) revised the annual financial statements for the year ended December 31, 2017; (ii) amended the restated annual financial statements for the year ended December 31, 2016; and (iii) amended the restated interim financial statements for the nine months ended September 30, 2017 and for the six months ended June 30, 2017, in each case that were reported in the IPO prospectus.
Further, in connection with preparing our quarterly report on Form 10-Q for the nine months ended September 30, 2018, management identified errors primarily related to the calculation of policyholders’ benefit reserves for our life and annuity products and the calculation of net derivative gains (losses) and DAC amortization for certain variable and interest sensitive life products. Accordingly, we: (i) amended the restated interim financial statements for the nine months ended September 30, 2017 and the six months ended June 30, 2017 from the previously reported interim financial statements; (ii) revised the interim financial statements for the six months ended June 30, 2018 and the three months ended March 31, 2018 and 2017 from the previously reported interim financial statements; (iii) revised the annual financial statements for the years ended December 31, 2017 from the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018; (iv) amended the restated annual financial statements for the year ended December 31, 2016 from the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2018 and June 30, 2018; and (v) revised the annual financial statements for the year ended December 31, 2015, 2014 and 2013 from the IPO prospectus.
Lastly, in connection with preparing our annual report on Form 10-K for the year ended December 31, 2018, management identified certain cash flows that were incorrectly classified in the Company’s historical consolidated statements of cash flows. The impact of these misclassifications was not considered material. Accordingly, the Company revised the interim financial statements for the three, six, and nine months ended March 31, June 30 and September 30, 2018 and 2017 and the annual financial statements for the year ended December 31, 2017.
The changes necessary to correct the identified misstatements in our previously reported historical results have been appropriately reflected in our consolidated annual financial statements included elsewhere in this Annual Report on Form 10-K. Until remedied, these material weaknesses could result in a misstatement of our consolidated financial statements or disclosures that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected.
Since identifying the two material weaknesses, we have been, and are currently in the process of, remediating each material weakness. Although we plan to complete the remediation process as quickly as possible for each material weakness, we cannot at this time estimate when the remediation will be completed. For additional information, see “Controls and Procedures—Remediation Status of Material Weaknesses.”

If we fail to remediate effectively these material weaknesses or if we identify additional material weaknesses in our internal control over financial reporting, we may be unable to report our financial condition or financial results accurately or to report them within the timeframes required by the SEC. If this were the case, we could become subject to sanctions or investigations by the SEC or other regulatory authorities. Furthermore, failure to report our insurance subsidiaries’ financial condition or financial results accurately or report them within the timeframes required by the SEC could cause our insurance subsidiaries to curtail or cease sales of certain variable insurance products. In addition, if we are unable to determine that our internal control over financial reporting or our disclosure controls and procedures are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, when required, investors may lose confidence in the accuracy and completeness of our financial reports, we may face reduced ability to obtain financing and restricted access to the capital markets, we may be required to curtail or cease sales of our products, and the price of our common stock may be materially and adversely affected.
Fulfilling our obligations incident to being a public company, including with respect to the requirements of and related rules under the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” and the Dodd-Frank Act, is expensive and time-consuming, and any delays or difficulties in satisfying these obligations could have a material adverse effect on our future results of operations.
We are subject to the reporting, accounting and corporate governance requirements under the listing standards of the NYSE, the Sarbanes-Oxley Act, the Dodd-Frank Act and the Exchange Act that apply to issuers of listed equity, which imposes compliance requirements, costs and obligations upon us. The changes necessitated by publicly listing our equity require a significant commitment of additional resources and management oversight which has increased our operating costs. Further, to comply with the requirements of being a public company, we have undertaken and continue to undertake various actions, such as implementing new or enhanced internal controls and procedures and hiring additional accounting or internal audit staff.
The expenses associated with being a public company include increases in auditing, accounting and legal fees and expenses, investor relations’ expenses, increased directors’ fees, director and officer liability insurance costs, registrar and transfer agent fees, and listing fees, as well as other expenses. As a public company, we are required, among other things, to prepare and file periodic and current reports, and distribute other stockholder communications, in compliance with the federal securities laws and NYSE rules, define and expand the roles and the duties of our Board and its committees, and institute more comprehensive compliance and investor relations functions. Our ability to successfully implement our strategy and comply with the Exchange Act and the SEC’s rules thereunder requires us to be able to prepare timely and accurate financial statements. During the course of preparing our U.S. GAAP financial statements for the IPO and preparing for public company control requirements, our management identified two material weaknesses in the design and operation of our internal control over financial reporting.
We cannot assure you that we will not discover additional misstatements in our previously issued financial statements in the future. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, including any delay in the remediation of our existing material weaknesses, or if we are unable to comply with the demands that have been placed on us as a public company, including the requirements of the Exchange Act and the SEC’s rules thereunder, could cause our business, results of operations or financial condition to be materially and adversely impacted.
As a public company there is an increased burden on our accounting and internal audit staff because Holdings is an additional company subject to the reporting requirements of the U.S. federal securities laws in addition to our subsidiaries that were already subject to such requirements. These additional burdens increase the risk that we will not be able to timely file our or our subsidiaries periodic and other reports with the SEC. The failure to report our insurance subsidiaries’ financial condition or financial results accurately or report them within the timeframes required by the SEC could cause our insurance subsidiaries to halt sales of certain variable insurance products and delay or prevent us from launching new products or new product features. See “—Risks Relating to the Products We Offer, Our Structure and Product Distribution—Our retirement and protection products contain numerous features and are subject to extensive regulation and failure to administer or meet any of the complex product requirements may adversely impact our business, results of operations or financial condition.”
Our indebtedness and the degree to which we are leveraged could materially and adversely affect our business, results of operations or financial condition.
As of December 31, 2018, we had $5 billion of indebtedness (including $3.8 billion of indebtedness from the issuance in April 2018 of $800 million aggregate principal amount of 3.900% Senior Notes due 2023, $1.5 billion aggregate principal amount of 4.350% Senior Notes due 2028 and $1.5 billion aggregate principal amount of 5.000% Senior Notes due 2048 (together, the “Notes”) and $300 million of term loan borrowings). Prior to the IPO, we historically relied upon AXA for financing and for other financial support functions. We are not able to rely on AXA’s earnings, assets or cash flow, and we are

responsible for servicing our own indebtedness. In addition, despite our indebtedness levels, we may be able to incur substantially more indebtedness under the terms of our debt agreements. We may also, from time to time, enter into additional bank or other financing arrangements, including public or private debt, structured facilities and contingent capital arrangements, under which we could incur substantial additional indebtedness. Any such incurrence of additional indebtedness may increase the risks created by our level of indebtedness.
In February 2018, we entered into a $500 million three-year senior unsecured delayed draw term loan agreement (the “three-year term loan agreement”) and a $2.5 billion five-year senior unsecured revolving credit facility (the “revolving credit facility” and, together with the three-year term loan agreement, the “Credit Facilities”). The Credit Facilities contain certain administrative, reporting, legal and financial covenants, including requirements to maintain a specified minimum consolidated net worth and to maintain a ratio of indebtedness to total capitalization not in excess of a specified percentage, and limitations on the dollar amount of indebtedness that may be incurred by our subsidiaries and the dollar amount of secured indebtedness that may be incurred by the Company, which could restrict our operations and use of funds. In May 2018, we borrowed $300 million under the three-year term loan agreement. In April 2018, we also issued the Notes to third party investors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
The right to borrow funds under the Credit Facilities is subject to the fulfillment of certain conditions, including compliance with all covenants, and the ability to borrow thereunder is also subject to the continued ability of the lenders that are or will be parties to the Credit Facilities to provide funds. Failure to comply with the covenants in the Credit Facilities or fulfill the conditions to borrowings, or the failure of lenders to fund their lending commitments (whether due to insolvency, illiquidity or other reasons) in the amounts provided for under the terms of the Credit Facilities, would restrict the ability to access the Credit Facilities when needed and, consequently, could have a material adverse effect on our business, results of operations or financial condition.
Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future from operations, financing or asset sales. Our ability to generate cash to meet our debt obligations in the future is sensitive to capital market returns, primarily due to our variable annuity business.
Overall, our ability to generate cash is subject to general economic, financial market, competitive, legislative, regulatory, client behavior and other factors that are beyond our control. We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations. If we are not able to repay or refinance our debt as it becomes due, we may be forced to take unfavorable actions, including significant business and legal entity restructuring, limited new business investment, selling assets or dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness. In addition, our ability to withstand competitive pressures and to react to changes in the insurance industry could be impaired. In the event we default, the lenders who hold our debt could also accelerate amounts due, which could potentially trigger a default or acceleration of the maturity of our other debt.
In addition, the level of our indebtedness could put us at a competitive disadvantage compared to our competitors that are less leveraged than us. These competitors could have greater financial flexibility to pursue strategic acquisitions and secure additional financing for their operations. The level of our indebtedness could also impede our ability to withstand downturns in our industry or the economy in general.
A violation or breach of the representations, warranties or covenants contained in any of our Credit Facilities or letter of credit facilities, or in other indebtedness we may incur, could result in a default or event of default, which would require a waiver or amendment with the consent of our lenders. The failure to obtain any such waiver or amendment would have a material adverse effect on our business, results of operations or financial condition.
In April 2018, we entered into waiver letter agreements with the lenders under each of our Credit Facilities and the letter of credit facilities, pursuant to which the lenders waived certain defaults or events of default under such facilities resulting from the restatement of our annual financial statements for the year ended December 31, 2016, the restatement of our interim financial statements for the nine months ended September 30, 2017 and for the six months ended June 30, 2017, the failure to furnish audited financial statements for the year ended December 31, 2017 on a timely basis as required by such facilities and related matters. There can be no assurance that our lenders will provide such waivers in the future. For a discussion of the material weaknesses in our internal control over financial reporting, see “—During the course of preparing our U.S. GAAP financial statements for the IPO, our management identified two material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, we may not be able to report our financial condition or results of operations accurately or on a timely basis, which could materially and adversely affect investor confidence in us and, as a result, the price of our common stock.”

Representations and warranties that prove to be incorrect when made or a breach of any of the covenants under any of the agreements under which AXA Equitable Life conducts its derivative transactions (its “Derivatives Agreements”) could result in an event of default under such agreements. Generally, if an event of default were to occur and be continuing under a Derivatives Agreements, the counterparty may designate an early termination date in respect of all outstanding transactions under the Derivatives Agreements. If an early termination date were designated by a substantial majority of AXA Equitable Life’s counterparties, AXA Equitable Life would have to implement changes to its hedging program. AXA Equitable Life restated its annual financial statements for the year ended December 31, 2016 and sought waiver letter agreements with the counterparties to its Derivatives Agreements to waive any events of default resulting from such restatement. AXA Equitable Life has obtained all such waivers.
Representations and warranties that prove to be incorrect when made or a breach of any of the covenants under any of our Credit Facilities or letter of credit facilities or any of our subsidiaries’ credit facilities or their Derivatives Agreements could result in a future default or event of default under such facilities. If a default or event of default were to occur and be continuing, we would not be permitted to borrow under our Credit Facilities or letter of credit facilities and our subsidiaries would not be permitted to borrow under their credit facilities or execute transactions under their Derivatives Agreements. In addition, until an event of default is cured or waived, the administrative agent under our Credit Facilities or our subsidiaries’ credit facilities, the lenders under the letter of credit facilities or the counterparties to the Derivatives Agreements would be entitled to take various actions, including the acceleration of amounts due under such agreements and the termination of commitments to extend credit. If our indebtedness were accelerated, we could not be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all. A default or event of default under one of our Credit Facilities or letter of credit facilities or one of our subsidiaries’ credit facilities or Derivatives Agreements could also result in a cross-default under other material agreements. The inability to borrow under our Credit Facilities or letter of credit facilities, the inability of any of our subsidiaries to borrow under its credit facilities or execute derivatives transactions, the acceleration of indebtedness outstanding thereunder, or a cross-default could have a material adverse effect on our business, results of operations or financial condition.
Elements of our business strategy are new and may not be effective in accomplishing our objectives, and we may not be able to achieve our financial goals.
We intend to use our competitive strengths to grow our earnings base and actively manage our capital with the goal of generating attractive risk-adjusted returns for our stockholders. We will seek to achieve this growth by increasing sales through organic growth, by diversifying our product offerings and leveraging and expanding our distribution platform, executing on expense optimization initiatives, optimizing our General Account investment portfolio, actively managing risk to protect capital and returning capital to our stockholders. See “Business—Our Strategy.”
There can be no assurance that our strategy will be successful, as it may not adequately alleviate the risks relating to volatility of, and capital requirements with respect to, variable annuities and the risk of loss with respect to the use of derivatives in hedging transactions. We may not be able to reduce our operating expenses to the extent we expect or without impacting our ability to serve our clients and grow our businesses. In addition, we may not be successful in increasing the return on our General Account meaningfully or at all. Moreover, our ability to pay dividends or repurchase shares is subject to certain restrictions and limitations, including as a result of regulatory requirements, which may prevent us from returning the expected or any capital to our stockholders for the indefinite future. For these reasons, no assurances can be given that we will be able to execute our strategy or that our strategy will achieve our objectives, including our financial goals.
We have established certain financial goals that we believe measure the execution of our strategy, as set forth in “Business—Financial Goals.” These goals are based on a number of important assumptions, including, among other things, assumptions regarding interest rates and market performance. Actual results related to these goals may vary depending on various factors, including actual capital market outcomes, changes in actuarial models or emergence of actual experience, changes in regulation as well as other risks and factors discussed in “Business—Financial Goals.” There can be no assurance that we will achieve those financial goals.
Failure to protect the confidentiality of customer information or proprietary business information could adversely affect our reputation and have a material adverse effect on our business, results of operations or financial condition.
Our businesses and relationships with customers are dependent upon our ability to maintain the confidentiality of our and our customers’ proprietary business and confidential information (including customer transactional data and personal data about our employees, our customers and the employees and customers of our customers). Pursuant to federal laws, various federal regulatory and law enforcement agencies have established rules protecting the privacy and security of personal information. In

addition, most states, including New York and Arizona, have enacted laws, which vary significantly from jurisdiction to jurisdiction, to safeguard the privacy and security of personal information.
We and certain of our vendors retain confidential information in our information systems and in cloud-based systems (including customer transactional data and personal information about our customers, the employees and customers of our customers, and our own employees). The privacy of this information may be compromised, including as a result of an information security breach. We rely on commercial technologieshave implemented a formal, risk-based data security program; however, failure to implement and third parties to maintain the security of those systems. Anyone who is able to circumvent our security measures and penetrate our information systems,effective cybersecurity programs, or those of our vendors, or the cloud-based systems we use, could access, view, misappropriate, alter or delete any information in the systems, including personally identifiable customer information and proprietary business information. It is possible that an employee, contractor or representative could, intentionally or unintentionally, disclose or misappropriate personal information or other confidential information. Our employees, distribution partners and other vendors may use portable computers or mobile devices which may contain similar information to that in our information systems, and these devices have been and can be lost, stolen or damaged. In addition, an increasing number of states require that customers be notified if a security breach results in the inappropriate disclosure of personally identifiable customer information. Any compromise of the security of our information systems, or those of our vendors, or the cloud-based systems we use, through cyber-attacks or for any other reason that results in inappropriateunauthorized access, use, disclosure or destruction of personally identifiable information or customer information, or the disruption of critical operations and services, could damage our reputation, in the marketplace, deter people from purchasing our products, subject us to significant civil and criminal liability and require us to incur significant technical, legal and other expenses any of which could have a material adverse effect on our reputation, business, results of operations or financial condition.
For example, in November 2018, we were notified by one of our third-party vendors of an incident involving unauthorized access to confidential information of certain of our customers, as well as customer information of a number of other institutions. In accordance with applicable law and regulations, we have notified the appropriate regulators and our affected customers. We have also conducted a thorough investigation of this security breach and believe it has been resolved. However, we cannot provide assurances that all potential causes of the incident have been identified and remediated or that a similar incident will not occur again.
Our own operational failures or those of service providers on which we rely, including failures arising out of human error, could disrupt our business, damage our reputation and have a material adverse effect on our business, results of operations or financial condition.rely.
Weaknesses or failures in our internal processes or systems or those of our vendors could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Our business is highly dependent on our ability to process on a daily basis, large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal and regulatory standards.
Weaknesses or failures within a vendor’s internal processes or systems, or inadequate business continuity plans, can materially disrupt our business operations. In addition, vendors may lack the necessary infrastructure or resources to effectively safeguard our confidential data. If we are unable to effectively manage the risks associated with such third-party relationships, we may suffer fines, disciplinary action and reputational damage.
Our obligations to clients require us to exercise skill, care and prudence in performing our services. The large number of transactions we process makes it highly likely that errors will occasionally occur. If we make a mistake in performing our services that causes financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, business, results of operations or financial condition.
Our information systems may failThe occurrence of a catastrophe, including natural or their security may be compromised, whichman-made disasters.
Any catastrophic event, such as pandemic diseases like COVID-19, terrorist attacks, accidents, floods, severe storms or hurricanes or cyber-terrorism, could materiallyhave a material and adversely impactadverse effect on our business, results of operations or financial condition.
Our business is highly dependent uponbusiness. We could experience long-term interruptions in our service and the effective operationservices provided by our significant vendors. Some of our information systems. We also have arrangements in placeoperational systems are not fully redundant, and our disaster recovery and business continuity planning cannot account for all eventualities. Additionally, unanticipated problems with outside vendorsour disaster recovery systems could further impede our ability to conduct business, particularly if
57
Table of Contents
those problems affect our computer-based data processing, transmission, storage and other service providers through which we share and receive information. We rely on these systems throughout our business for a variety of functions, including processing claims and applications, providing information to customers and third-party distribution firms, performing actuarial analyses and modeling, hedging, performing operational tasks (e.g., processing transactions and calculating net asset value) and maintaining financial records. Our informationretrieval systems and those of our outside vendors and service providers may be vulnerable to physical or cyber-attacks, computer viruses or other computer related attacks, programming errors and similar disruptive problems. In some cases, such physical and electronic break-ins, cyber-attacks or other security breaches may not be immediately detected. In addition, wedestroy valuable data. We could experience a failure of one or these systems, our employees or agents could fail to monitor and implement enhancements or

other modifications to a system in a timely and effective manner, or our employees or agents could fail to complete all necessary data reconciliation or other conversion controls when implementing a new software system or implementing modifications to an existing system. The failure of these systems for any reason could cause significant interruptions to our operations, which could result in a material adverse effect on our business,liquidity, financial condition and the operating results of operations our insurance business due to increased mortality and, in certain cases, morbidity rates and/or its impact on the economy and financial condition. In addition, a failure of these systems could leadmarkets. Our workforce may be unable to the possibility of litigation or regulatory investigations or actions, including regulatory actions by state and federal governmental authorities. While we take preventative measures to avoid cyber-attacks and other security breaches, we cannot guarantee that such measures will successfully prevent an attack or breach.
Many of the software applications that we use in our business are licensed from, and supported, upgraded and maintained by, vendors. A suspension or termination of certain of these licenses or the related support, upgrades and maintenance could cause temporary system delays or interruptions. Additionally, technology rapidly evolves and we cannot guarantee that our competitors may not implement more advanced technology platforms for their products and services, which may place usbe physically located at a competitive disadvantage and materially and adversely affect our results of operations and business prospects.
Our service providers, including service providers to whom we outsource certainone of our functions, are also subject to the risks outlined above, any one offacilities, which could result in lengthy interruptions in our incurring substantial costsservice. A catastrophe may affect our computer-based data processing, transmission, storage and other negative consequences, including a material adverse effect on our business, results of operations or financial condition.
On February 16, 2017, the NYDFS issued final Cybersecurity Requirements for Financial Services Companies that require banks, insurance companies and other financial services institutions regulated by the NYDFS, including us, to, among other things, establish and maintain a cybersecurity policy “designed to protect consumers and ensure the safety and soundness of New York State’s financial services industry.” The regulation went into effect on March 1, 2017 and has transition periods ranging from 180 days to two years. We have a cybersecurity policy in place outlining our policies and procedures for the protection of our informationretrieval systems and information stored on those systems that comports withdestroy valuable data. Climate change may increase the regulation. In accordance with the regulation, our Chief Information Security Officer reports to the Board. In addition to New York’s cybersecurity regulation, the NAIC adopted the Insurance Data Security Model Law in October 2017. Under the model law, companies that are compliant with the NYDFS cybersecurity regulation are deemed also to be in compliance with the model law. The purposefrequency and severity of the model law is to establish standards for data securityweather-related disasters and for the investigation and notification of insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information. Certain states have adopted the model law, and we expect that additional states will begin adopting the model law, although it cannot be predicted whether or not, or in what form or when, they will do so. We are currently evaluating these regulations and their potential impact on our operations, and, with respect to the NYDFS regulations, have begun implementing compliance procedures for those portions of the regulation that are in effect. Depending on our assessment of these and other potential implementation requirements, we and other financial services companies may be required to incur significant expense in order to comply with these regulatory mandates.pandemics.
Central banks in Europe and Japan have in recent years begun to pursue negative interest rate policies, and the Federal Open Market Committee has not ruled out the possibility that the Federal Reserve would adopt a negative interest rate policy for the United States, at some point in the future, if circumstances so warranted. Because negative interest rates are largely unprecedented, there is uncertainty as to whether the technology used by financial institutions, including us, could operate correctly in such a scenario. Should negative interest rates emerge, our hardware or software, or the hardware or software used by our contractual counterparties and financial services providers, may not function as expected or at all. In such a case, our business, results of operations or financial condition could be materially and adversely affected.
We face competition from other insurance companies, banks, asset managers and other financial institutions, which may adversely impact our market share and consolidated results of operations.
There is strong competition among insurers, banks, asset managers, brokerage firms and other financial institutions and financial services providers seeking clients for the types of products and services we provide. Competition is intense among a broad range of financial institutions and other financial service providers for retirement and other savings dollars. As a result, this competition makes it especially difficult to provide unique retirement and protection or asset management products because, once such products are made available to the public, they often are reproduced and offered by our competitors. As with any highly competitive market, competitive pricing structures are important. If competitors charge lower fees for similar products or strategies, we may decide to reduce the fees on our own products or strategies (either directly on a gross basis or on a net basis through fee waivers) in order to retain or attract customers. Such fee reductions, or other effects of competition, could have a material adverse effect on our business, results of operations or financial condition.
Competition may adversely impact our market share and profitability. Many of our competitors are large and well-established and some have greater market share or breadth of distribution, offer a broader range of products, services or

features, assume a greater level of risk, have greater financial resources, have higher claims-paying or credit ratings, have better brand recognition or have more established relationships with clients than we do. We may also face competition from new market entrants or non-traditional or online competitors, which may have a material adverse effect on our business.
Our ability to compete is dependent on numerous factors including, among others, the successful implementation of our strategy; our financial strength as evidenced, in part, by our financial and claims-paying ratings; new regulations or different interpretations of existing regulations; our access to diversified sources of distribution; our size and scale; our product quality, range, features/functionality and price; our ability to bring customized products to the market quickly; our technological capabilities; our ability to explain complicated products and features to our distribution channels and customers; crediting rates on our fixed products; the visibility, recognition and understanding of our brands in the marketplace; our reputation and quality of service; the tax-favored status certain of our products receive under current federal and state laws; and, with respect to variable annuity and insurance products, mutual funds and other investment products, investment options, flexibility and investment management performance.
Many of our competitors also have been able to increase their distribution systems through mergers, acquisitions, partnerships or other contractual arrangements. Furthermore, larger competitors may have lower operating costs and have an ability to absorb greater risk, while maintaining financial strength ratings, allowing them to price products more competitively. These competitive pressures could result in increased pressure on the pricing of certain of our products and services and could harm our ability to maintain or increase profitability. In addition, if our financial strength and credit ratings are lower than our competitors, we may experience increased surrenders or a significant decline in sales. The competitive landscape in which we operate may be further affected by government sponsored programs or regulatory changes in the United States and similar governmental actions outside of the United States. Competitors that receive governmental financing, guarantees or other assistance, or that are not subject to the same regulatory constraints, may have or obtain pricing or other competitive advantages. Due to the competitive nature of the financial services industry, there can be no assurance that we will continue to effectively compete within the industry or that competition will not materially and adversely impact our business, results of operations or financial condition.
We may also face competition from new entrants into our markets, many of whom are leveraging digital technology that may challenge the position of traditional financial service companies, including us, by providing new services or creating new distribution channels.
Our inability to recruit, motivate and retain key employees and experienced and productive financial professionals may have a material adverse effect on our business, results of operations or financial condition.professionals.
Our business depends on our ability to attract,recruit, motivate and retain highly skilled, and often highly specialized, technical, investment, managerial and executive personnel, and there is no assurance that we will be able to do so. FinancialOur financial professionals associated with AXA Advisors, AXA Network and Bernstein financial advisors and our key employees are key factors driving our sales. AB’s professionals often maintain strong, personal relationships with investors in AB’s products and other members of the business community so their departure may cause AB to lose client accounts or result in fewer opportunities to win new business. Intense competition exists among insurers and other financial services companies for financial professionals and key employees. Companies compete for financial professionals principally with respect to compensation policies, products and sales support. Competition is particularly intense in the hiring and retention of experienced financial professionals. Our ability to incentivize our employees and financial professionals may be adversely affected by tax reform. We cannot provide assurances that we will be successful in our respective efforts to recruit, motivate and retain key employees and top financial professionals and the loss of such employees and professionals could have a material adverse effect on our business, results of operations or financial condition.
We also rely upon the knowledge and experience of employees involved in functions that require technical expertise in order to provide for sound operational controls for our overall enterprise, including the accurate and timely preparation of required regulatory filings and U.S. GAAP and statutory financial statements and operation of internal controls. A loss of such employees, including as a result of shifting our real estate footprint away from the New York metropolitan area, could adversely impact our ability to execute key operational functions and could adversely affect our operational controls, including internal control over financial reporting.
Misconduct by our employees or financial professionals could expose us to significant legal liability and reputational harm.professionals.
Past or future misconductMisconduct by our employees, financial professionals, agents, intermediaries, representatives of our broker-dealer subsidiaries or employees of our vendors could result in violations of law by us or our subsidiaries, regulatory sanctions

or serious reputational or financial harm and the precautions we take to prevent and detect this activity may not be effective in all cases.harm. We employ controls and procedures designed to monitor employees’ and financial professionals’ business decisions and to prevent usthem from taking excessive or inappropriate risks, including with respect to information security, but employees may take such risks regardless of such controls and procedures. Our compensation policies and practices are reviewed by us as part of our overall risk management program, but it is possible that such compensation policies and practices could inadvertently incentivize excessive or inappropriate risk taking. If our employees or financial professionals take excessive or inappropriate risks, those risks could harm our reputation, subject us to significant civil or criminal liability and require us to incur significant technical, legal and other expenses.
We may engage inPotential strategic transactions that could pose risks and present financial, managerial and operational challenges.transactions.
We may from time to time, consider potential strategic transactions, including acquisitions, dispositions, mergers, consolidations, joint ventures and similar transactions, some of which may be material.transactions. These transactions may not be effective and could result in decreased earnings and harm to our competitive position. In addition, these transactions, if undertaken, may involve a number of risks and present financial, managerial and operational challenges, including:
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.
Acquisitions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. Additionally, the loss of investment personnel poses the risk that we may lose the AUM we expected to manage, which could materially and adversely affect our business, results of operations or financial condition.challenges. Furthermore, strategic transactions may require us to increase our leverage or, if we issue shares to fund an acquisition, would dilute the holdings of the existing stockholders. Any of the above could cause us to fail to realize the benefits anticipated from any such transaction.
Our business could be materially and adversely affected by the occurrence of a catastrophe, including natural or man-made disasters.
Any catastrophic event, such as pandemic diseases, terrorist attacks, floods, severe storms or hurricanes or computer cyber-terrorism, could have a material and adverse effect on our business in several respects:
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.    
In the event of a disaster, such as a natural catastrophe, epidemic, industrial accident, blackout, computer virus, terrorist attack, cyber-attack or war, unanticipated problems with our disaster recovery systems could have a material adverse impact on

our ability to conduct business and on our results of operations and financial position, particularly if those problems affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. Our ability to conduct business may be adversely affected by a disruption in the infrastructure that supports our operations and the communities in which they are located. This may include a disruption involving electrical, communications, transportation or other services we may use or third parties with which we conduct business. If a disruption occurs in one location and our employees in that location are unable to occupy our offices or communicate with or travel to other locations, our ability to conduct business with and on behalf of our clients may suffer, and we may not be able to successfully implement contingency plans that depend on communication or travel. Furthermore, unauthorized access to our systems as a result of a security breach, the failure of our systems, or the loss of data could give rise to legal proceedings or regulatory penalties under laws protecting the privacy of personal information, disrupt operations and damage our reputation.
Our operations require experienced, professional staff. Loss of a substantial number of such persons or an inability to provide properly equipped places for them to work may, by disrupting our operations, adversely affect our business, results of operations or financial condition. In addition, our property and business interruption insurance may not be adequate to compensate us for all losses, failures or breaches that may occur. 
We may not be able to protect our intellectual property and may be subject to infringement claims by a third party.
We rely on a combination of contractual rights, copyright, trademark and trade secret laws to establish and protect our intellectual property. Third parties may infringe or misappropriate our intellectual property. The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could have a material adverse effect on our business and our ability to compete. Third parties may have, or may eventually be issued, patents or other protections that could be infringed by our products, methods, processes or services or could limit our ability to offer certain product features. In recent years, there has been increasing intellectual property litigation in the financial services industry challenging, among other things, product designs and business processes. If we were found to have infringed or misappropriated a third-party patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from using and benefiting from certain patents, copyrights, trademarks, trade secrets or licenses. Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative. Any of these scenarios could harm our reputation and have a material adverse effect on our business, results of operations or financial condition.
The insurance that we maintain may not fully cover all potential exposures.
We maintain property, business interruption, cyber, casualty and other types of insurance, but such insurance may not cover all risks associated with the operation of our business. Our coverage is subject to exclusions and limitations, including higher self-insured retentions or deductibles and maximum limits and liabilities covered. In addition, from time to time, various types of insurance may not be available on commercially acceptable terms or, in some cases, at all. We are potentially at additional risk if one or more of our insurance carriers fail. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both the availability of appropriate insurance coverage and its cost. In the future, we may not be able to obtain coverage at current levels, if at all, and our premiums may increase significantly on coverage that we maintain. We can make no assurance that a claim or claims will be covered by our insurance policies or, if covered, will not exceed the limits of available insurance coverage, or that our insurers will remain solvent and meet their obligations.
Changes in accounting standards could have a material adverse effect on our business, results of operations or financial condition.standards.
Our consolidated financial statements are prepared in accordance with U.S. GAAP, the principles of which are revised from time to time. Accordingly, from time to time we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board (“FASB”). InWe may not be able to predict or assess the future,effects of these new accounting pronouncements as well asor new interpretations of existing accounting pronouncements, and they may have material adverse effects on our business, results of operations or financial condition.
FASB has issued several accounting standards updates which have resulted in significant changes in U.S. GAAP, including how we account for our financial instruments and how our financial statements are presented. The changes to U.S. GAAP could affect the way we account for and report significant areas For a discussion of our business, could impose special demands on us in the areas of governance, employee training, internal controls and disclosure and will likely affect how we manage our business. In August 2018, the FASB issued ASU 2018-12, Financial Services—Insurance (Topic 944), which applies to all insurance entities that issue long-duration contracts and revises elements of the measurement models for traditional nonparticipating long-duration

and limited payment insurance liabilities and recognition and amortization model for DAC for most long-duration contracts. The new accounting standard also requires product features that have other-than-nominal credit risk, or market risk benefits (“MRBs”), to be measured at fair value. ASU 2018-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the impact that the adoption of this guidance will have on our consolidated financial statements.
In addition, AXA, our controlling stockholder, prepares consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”). From time to time, AXA may be required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the International Accounting Standards Board. In the future, new accounting pronouncements as well as new interpretations of existing accounting pronouncements, may have material adverse effects on AXA’s business, results of operations or financial condition which couldand their potential impact the way we conduct our business (including, for example, which products we offer), our competitive position, our hedging program and the way we manage capital.
Certain of our administrative operations and offices are located internationally, subjecting us to various international risks and increased compliance and regulatory risks and costs.
We have various offices in other countries and certain of our administrative operations are located in India. In the future, we may seek to expand operations in India or other countries. As a result of these operations, we may be exposed to economic, operating, regulatory and political risks in those countries, such as foreign investment restrictions, substantial fluctuations in economic growth, high levels of inflation, volatile currency exchange rates and instability, including civil unrest, terrorist acts or acts of war, which could have an adverse effect on our business, financial condition or results of operations. The political or regulatory climate inincluding Accounting Standards Update 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the United States could also change such that it would no longer be lawful or practicalAccounting for us to use international operations in the manner in which they are currently conducted. If we had to curtail or cease operations in India and transfer some or all of these operations to another geographic area, we would incur significant transition costs as well as higher future overhead costs that could adversely affect us.
In many foreign countries, particularly in those with developing economies, it may be common to engage in business practices that are prohibited by laws and regulations applicable to us, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and similar anti-bribery laws. Any violationsLong-Duration Contracts, see Note 2 of the FCPA or other anti-bribery laws by us, our employees, subsidiaries or local agents, could have a material adverse effect on our business and reputation and result in substantial financial penalties or other sanctions.Notes to these Consolidated Financial Statements.

Our investment advisory agreements with clients, and our selling and distribution agreements with various financial intermediaries and consultants, are subject to termination or non-renewal on short notice.
AB derives most of its revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds and private wealth clients.clients, and selling and distribution agreements with financial intermediaries that distribute AB funds.. In addition, as part of our variable annuity products, AXA Equitable FMGEIMG enters into written investment management agreements (or other arrangements) with mutual funds.
Generally, these investment management agreements including AB’s agreements with AXA and its subsidiaries (AB’s largest client),(and other arrangements) are terminable without penalty at any time or upon relatively short notice by either party. For example, an investment management contract with an SEC-registered investment company (a “RIC”) may be terminated at any time, without payment of any penalty, byIn addition, the RIC’s board of directors or by vote of a majority of the outstanding voting securities of the RIC on not more than 60 days’ notice. The investment management agreements pursuant to which AB and AXA Equitable FMGEIMG manage RICsan SEC-registered investment company (a “RIC”) must be renewed and approved by the RICs’RIC’s boards of directors (including a majority of the independent directors) annually. A significant majority of the directors are independent. Consequently, there can be no assurance that the board of directors of each RIC will approve the investment management agreement each year or will not condition its approval on revised terms that may be adverse to us.
Also, as required by the Investment Company Act, each investment advisory agreement with a RIC automatically terminates upon its assignment, although new investment advisory agreements may be approved by the RIC’s board
58
Table of directors or trustees and stockholders. An “assignment” includes a sale of a control block of the voting stock of the investment adviser or its parent company. In the event of a future sale by AXA to a third party of a controlling interest in our common stock or if future sales by AXA of our common stock were deemed to be an actual or constructive assignment, these termination provisions could be triggered, which may adversely affect AB’s and AXA Equitable FMG’s ability to realize the value of their respective investment advisory agreements. In addition, the actual or constructive transfer of our general partnership interest in AB would constitute an assignment.Contents

The Investment Advisers Act may also require approval or consent of advisory contracts by clients in the event of an “assignment” of the contract (including a sale of a control block of the voting stock of the investment adviser or its parent company) or a change in control of the investment adviser. Were the sale of our common stock by AXA or another transaction to result in an assignment or change in control, the inability to obtain consent or approval from clients or stockholders of RICs or other clients could result in a material reduction in advisory fees.
AXA has announced its intention to sell all of its interest in the Company over time, subject to any lock-up periods and market conditions. Prior to when such sales trigger an assignment as described above, we need to seek requisite consents or approvals for such assignment. As of December 31, 2018, we had obtained shareholder approvals for the 1290 Funds, certain EQAT and AXA Premier VIP Trusts with a record date of June 30, 2018 and the vast majority of AB’s funds. We are in the process of obtaining shareholder approvals for seventeen EQAT funds that commenced operations in the fourth quarter of 2018 and nine AB funds.  We may not be successful in obtaining such consents or approvals which would result in terminations of the relevant contracts. Such terminations could have a material adverse effect on our business, results of operations or financial condition.
Similarly, we enter into selling and distribution agreements with securities firms, brokers, banks and othervarious financial intermediaries that are terminable by either party upon notice (generally 60 days) and do not obligate the financial intermediary to sell any specific amount of our products. These intermediaries generally offer their clients investment products that compete with our products. In addition, certain institutional investors rely on consultants to advise them about choosing an investment adviser and some of AB’s services may not be considered among the best choices by these consultants. As a result, investment consultants may advise their clients to move their assets invested with AB to other investment advisers, which could result in significant net outflows.
Finally, AB’s Private Wealth Services relies on referrals from financial planners, registered investment advisers and other professionals. We cannot be certain that we will continue to have access to, or receive referrals from, these third parties.
Changes in the method for determining the London Inter-Bank Offered Rate (“LIBOR”) and the potentialThe replacement of LIBOR may affect our cost of capital and net investment income.
As a result of concerns about the accuracy of the calculation of LIBOR, a number of British Bankers’ Association (“BBA”) member banks entered into settlements with certain regulators and law enforcement agencies with respect to the alleged manipulation of LIBOR. As a consequence of such events, itIt is anticipated that LIBOR will be discontinued by the end of 2021no later than June 2023 As a result, existing loans, investments and another contracts relying on a LIBOR benchmark will need to designate a replacement rate. In addition, derivatives and other contracts used to hedge those contracts will generally need to be conformed to provide a similar alternative rate to that being hedged. In addition, because it is anticipated that banks will no longer extend loans based on LIBOR, new lines of credit we enter into will need to be used for derivatives contracts, debt investments, intercompany and third party loans and other typesbenchmarked to a new benchmark rate. In light of commercial contracts. Wethe LIBOR transition, we anticipate a valuation risk around the potential discontinuation event. It is not possibleevent as well as potential risks relating to predict what ratehedging interest-rate risk. Additionally, the elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates may become accepted alternatives to LIBORadversely affect the amount of interest payable or interest receivable on certain of our investments. These changes may also impact the effect of any such alternatives on themarket liquidity and market value of LIBOR-linked securities.these investments. Any changes to LIBOR or any alternative rate, or any further uncertainty in relation to the timing and manner of implementation of such changes, could have an adverse effect on the value of investments in our investment portfolio, derivatives we use for hedging, or other indebtedness, securities or commercial contracts. We have inventoried all aspects of our business that utilize a LIBOR benchmark and, for those instruments that currently do not have an appropriate fallback rate, we are in the process of either disposing of the instrument or negotiating a fallback rate. There is no assurance that we will complete this process by the transition date or that the alternative rate we negotiate will not be materially less favorable than the previous, LIBOR-based rate.
Climate change may adversely affect our investment portfolio and investor sentiment.
Climate change could pose a systemic risk to the financial system. Disasters related to climate change and regulation related to climate change may affect the entities in which we invest, our willingness to continue to invest and the value of, and return from, our investments. It may also affect our counterparties, including reinsurers and derivatives counterparties. We cannot predict the long-term impacts to our business from climate change or related regulation. Climate change may also influence investor sentiment with respect to the Company and investments in our portfolio. A failure to identify and address these issues could have a material adverse effect on our business, results of operations or financial condition.
Risks Relating to Credit, Counterparties and Investments
Our counterparties’ requirements to pledge collateral or make payments related to declines in estimated fair value of derivative contracts exposes us to counterparty credit risk and may adversely affect our liquidity.contracts.
We use derivatives and other instruments to help us mitigate various business risks. Our transactions with financial and other institutions generally specify the circumstances under which the parties are required to pledge collateral related to any decline in the market value of the derivatives contracts. If our counterparties fail or refuse to honor their obligations under these contracts, we could face significant losses to the extent collateral agreements do not fully offset our exposures and our hedges of the related risk will be ineffective. Such failure could have a material adverse effect on our business, results of operations or financial condition. Additionally, the implementation of the Dodd-Frank Act and other regulations may increase the need for liquidity and for the amount of collateral assets in excess of current levels.
We may be materially and adversely affected by changesChanges in the actual or perceived soundness or condition of other financial institutions and market participants.
A default by any financial institution or by a sovereign could lead to additional defaults by other market participants. The failure of any financial institutionSuch failures could disrupt securities markets or clearance and settlement systems and lead to a chain of defaults, because the commercial and financial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. Even the perceived lack of creditworthiness of a financial institution may lead to

market-wide liquidity problems and losses or defaults by us or by other institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries such as clearing agencies, clearing houses, banks, securities firms and exchanges with which we interact on a daily basis. Systemic risk could have a material adverse effect on our ability to raise new funding and on our business, results of operations or financial condition. In addition, such a failure could impact future product sales as a potential result of reduced confidence in the financial services industry. Regulatory changes implemented to address systemic risk could also cause market participants to curtail their participation in certain market activities, which could decrease market liquidity and increase trading and other costs.
Losses due to defaults errors or omissions by third parties and affiliates, including outsourcing relationships, could materially and adversely impact our business, results of operations or financial condition.relationships.
We depend on third parties and affiliates that owe us money, securities or other assets to pay or perform under their obligations. These parties include the issuers whose securities we hold in our investment portfolios, borrowers under the mortgage loans we make, customers, trading counterparties, counterparties under swap and other derivatives contracts, reinsurers, clearing agents, exchanges, clearing houses and other financial intermediaries. Defaults by one or more of these parties on their obligations to us due to bankruptcy, lack of liquidity, downturns in the economy or real estate values, operational failure or other factors, or even rumors about potential defaults by one or more of these parties could have a material adverse effect on our business, results of operations
59
Table of Contents
or financial condition.
We also depend on third parties Moreover, as a result of contractual provisions certain swap dealers require us to add to derivatives documentation and affiliates in other contexts, including as distribution partners. For example, in establishing the amount of the liabilities and reserves associated with the risks assumed in connection with reinsurance pools and arrangements,to agreements, we rely on the accuracy and timely delivery of data and other information from ceding companies. In addition, as investment manager and administrator of several mutual funds, we rely on various affiliated and unaffiliated sub-advisersmay not be able to provide day-to-day portfolio management services for each investment portfolio.
exercise default rights or enforce transfer restrictions against certain counterparties which may limit our ability to recover amounts due to us upon a counterparty’s default. We rely on various counterparties and other vendors to augment our existing investment, operational, financial and technological capabilities, but the use of a vendor does not diminish our responsibility to ensure that client and regulatory obligations are met. Default rates, credit downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress. Disruptions in the financial markets and other economic
challenges may cause our counterparties and other vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs and impair our ability to conduct business.
Losses associated with defaults or other failures by these third parties and outsourcing partners upon whom we rely could materially adversely impact our business, results of operations or financial condition.
We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. The deterioration or perceived deterioration in the credit quality of third parties whose securities or obligations we hold could result in losses or adversely affect our ability to use those securities or obligations for liquidity purposes. While in many cases we are permitted to require additional collateral from counterparties that experience financial difficulty, disputes
Economic downturns, defaults and other events may arise as to the amount of collateral we are entitled to receive and the value of pledged assets. Our credit risk may also be exacerbated when the collateral we hold cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivatives exposure that is due to us, which is most likely to occur during periods of illiquidity and depressed asset valuations, such as those experienced during the financial crisis. The termination of contracts and the foreclosure on collateral may subject us to claims for the improper exercise of rights under the contracts. Bankruptcies, downgrades and disputes with counterparties as to the valuation of collateral tend to increase in times of market stress and illiquidity.
Gross unrealized losses on fixed maturity and equity securities may be realized or result in future impairments, resulting in a reduction inadversely affect our net earnings.
Fixed maturity securities classified as available-for-sale are reported at fair value. Unrealized gains or losses on available-for-sale securities are recognized as a component of other comprehensive income (loss) and are, therefore, excluded from net earnings. The accumulated change in estimated fair value of these available-for-sale securities is recognized in net earnings when the gain or loss is realized upon the sale of the security or in the event that the decline in estimated fair value is determined to be other-than-temporary and an impairment charge to earnings is taken. Realized losses or impairments may have a material adverse effect on our net earnings in a particular quarterly or annual period.investments.
The occurrence of a major economic downturn, acts of corporate malfeasance, widening credit risk spreads, ratings downgrades or other events that adversely affect the issuers or guarantors of securities we own or the underlying collateral of structured securities we own could cause the estimated fair value of our fixed maturity securities portfolio and corresponding earnings to decline and cause

the default rate of the fixed maturity securities in our investment portfolio to increase. A ratings downgrade affecting issuers or guarantors of particular securities weWe may have to hold or similar trends that could worsen the credit quality of issuers, such as the corporate issuers of securities in our investment portfolio, could also have a similar effect. With economic uncertainty, credit quality of issuers or guarantors could be adversely affected. Similarly, a ratings downgrade affecting a security we hold could indicate the credit quality of that security has deteriorated and could increase themore capital we must hold to support that securityour securities to maintain our insurance companies’ RBC levels.levels, should securities we hold suffer a ratings downgrade. Levels of write-downs or impairments are impacted by intent to sell, or our assessment of the likelihood that we will be required to sell, fixed maturity securities, as well as our intent and ability to hold equity securities which have declined in value until recovery. Realized losses or impairments on these securities may have a material adverse effect on our business, results of operations, liquidity or financial condition in, or at the end of, any quarterly or annual period.
Some of our investments are relatively illiquid and may be difficult to sell, or to sell in significant amounts at acceptable prices, to generate cash to meet our needs.sell.
We hold certain investments that may lack liquidity, such as privately placed fixed maturity securities, mortgage loans, commercial mortgage backed securities and alternative investments. In the past, even some of our very high quality investments experienced reduced liquidity during periods of market volatility or disruption. Although we seek to adjust our cash and short-term investment positions to minimize the likelihood that we would need to sell illiquid investments, ifIf we were required to liquidate these investments on short notice or were required to post or return collateral, we may have difficulty doing so and be forced to sell them for less than we otherwise would have been able to realize.
The reported values of our relatively illiquid types of investments do not necessarily reflect the current market price for the asset. If we were forced to sell certain of our assets in the current market, there can be no assurance that we would be able to sell them for the prices at which we have recorded them and we might be forced to sell them at significantly lower prices, which could have a material adverse effect on our business, results of operations, liquidity or financial condition.
Defaults on our mortgage loans and volatility in performance may adversely affect our profitability.performance.
A portion of our investment portfolio consists of mortgage loans on commercial and agricultural real estate. Our exposure to this risk stems from various factors, including the supply and demand of leasable commercial space, creditworthiness of tenants and partners, capital markets volatility, interest rate fluctuations, agricultural prices and farm incomes, which have recently been declining. Although we manage credit risk and market valuation risk for our commercial and agricultural real estate assets through geographic, property type and product type diversification and asset allocation, general economic conditions in the commercial and agricultural real estate sectors will continue to influence the performance of these investments. These factors, which are beyond our control, could have a material adverse effect on our business, results of operations, liquidity or financial condition.
Our mortgage loans face default risk and are principally collateralized by commercial and agricultural properties. We establish valuation allowances for estimated impairments, which are based on loan risk characteristics, historical default rates and loss severities, real estate market fundamentals, such as property prices and unemployment, and economic outlooks, as well as other relevant factors (for example, local economic conditions). In addition, substantially all of our commercial and agricultural mortgage loans held-for-investment have balloon payment maturities. An increase in the default rate of our mortgage loan investments or fluctuations in their performance could have a material adverse effect on our business, results of operations, liquidity or financial condition.
Further, any geographic or property type concentration For information on the effects of the COVID-19 pandemic on our mortgage loans, may have adverse effects on our investment portfoliosee “Management’s Discussion and consequently on our business, resultsAnalysis of operations, liquidity or financial condition. While we seek to mitigate this risk by having a broadly diversified portfolio, events or developments that have a negative effect on any particular geographic region or sector may have a greater adverse effect on our investment portfolio to the extent that the portfolio is concentrated. Moreover, our ability to sell assets relating to a groupFinancial Condition and Results of related assets may be limited if other market participants are seeking to sell at the same time.Operations—General Account Investment Portfolio.”
Risks Relating to Our Retirement and Protection Businesses
Risks Relating to Our Reinsurance and Hedging Programs


Our reinsurance and hedging programs may be inadequate to protect us against the full extent of the exposure or losses weprograms.
We seek to mitigate.
Certainmitigate some risks associated with the GMxB features or minimum crediting rate contained in certain of our retirement and protection products contain GMxB features or minimum crediting rates. Asthrough our hedging and reinsurance programs. (As of December 31, 2018, 75%2021, 61% of the variable annuity AV in our Individual Retirement segment was attributable to products that included GMxB features. Downturns in equity markets or reduced interest rates could result in an increase in the valuation of liabilities associated with such products, resulting in increases in reserves and reductions in net income. In the normal course of business, we seek to mitigate some of these risks to which our business is subject through our hedging and reinsurance programs.) However, these programs cannot eliminate all of the risks, and no assurance can be given as to the extent to which such programs will be completely effective in reducing such risks. For example, in the event that reinsurers, derivatives or other counterparties or central clearinghouses do not pay balances due or do not post the required amount
60
Table of collateral as required under our agreements, we still remain liable for the guaranteed benefits.Contents
Reinsurance—Reinsurance—We use reinsurance to mitigate a portion of the risks that we face, principally in certain of our in-force annuity and life insurance products with regard to mortality, and in certain of our annuity products with regard to a portion of the GMxB features.products. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. The inability or unwillingness of a reinsurer to meet its obligations to us, or the inability to collect under our reinsurance treaties for any other reason, could have a material adverse impact on our business, results of operations or financial condition.
We are continuing to use reinsurance to mitigate a portion of our risk on certain new life insurance sales. Prolonged or severe adverse mortality or morbidity experience could result in increased reinsurance costs, and ultimately may reduce the availability of reinsurance for future life insurance sales. If, for new sales, we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient, we would either have to be willing to accept an increase in our net exposures, revise our pricing to reflect higher reinsurance premiums or limit the amount of new business written on any individual life. If this were to occur, we may be exposed to reduced profitability and cash flow strain or we may not be able to price new business at competitive rates.
The premium rates and other fees that we charge are based, in part, on the assumption that reinsurance will be available at a certain cost. Some of our reinsurance contracts contain provisions that limit the reinsurer’s ability to increase rates on in-force business; however, some do not. If a reinsurer raises the rates that it charges on a block of in-force business, in some instances, we willmay not be able to pass the increased costs onto our customers and our profitability will be negatively impacted. Additionally, such a rate increase could result in our recapturing of the business, which may result in a need to maintain additional reserves, reduce reinsurance receivables and expose us to greater risks. While in recent years, we have faced a number of rate increase actions on in-force business, to date they have not had a material effect on our business, results of operations or financial condition. However, there can be no assurance that the outcome of future rate increase actions would have no material effect. In addition, market conditions beyond our control determine the availability and cost of reinsurance for new business. If reinsurers raise the rates that they charge on new business, we may be forced to raise our premiums, which could have a negative impact on our competitive position.
Hedging Programs—Programs—We use a hedging program to mitigate a portion of the unreinsured risks we face in, among other areas, the GMxB features of our variable annuity products and minimum crediting rates on our variable annuity and life products from unfavorable changes in benefit exposures due to movements in the capital markets. In certain cases, however, we may not be able to effectively apply these techniques to effectively hedge these risks because the derivatives markets in question may not be of sufficient size or liquidity or there could be an operational error in the application of our hedging strategy or for other reasons. The operation of our hedging programs is based on models involving numerous estimates and assumptions, including, among others, mortality, lapse, surrender and withdrawal rates and amounts of withdrawals, election rates, fund performance, equity market returns and volatility, interest rate levels and correlation among various market movements.assumptions. There can be no assurance that ultimate actual experience will not differ materially from our assumptions, particularly, but not only, during periods of high market volatility, which could adversely impact our business, results of operations or financial condition. For example, in the past, due to, among other things, levels of volatility in the equity and interest rate markets above our assumptions as well as deviations between actual and assumed surrender and withdrawal rates, gains from our hedging programs did not fully offset the economic effect of the increase in the potential net benefits payable under the GMxB features offered in certain of our products. If these circumstances were to re-occur in the future or if, for other reasons, results from our hedging programs in the future do not correlate with the economic effect of changes in benefit exposures to customers, we could experience economic losses which could have a material adverse impact on our business, results of operations or financial condition. Additionally, our strategies may result in under or over-hedging our liability exposure, which could result in an

increase in our hedging losses and greater volatility in our earnings and have a material adverse effect on our business, results of operations or financial condition.
For further discussion, see below “—��—Risks Relating to Estimates, Assumptions and Valuations—Our risk management policies and procedures may not be adequate to identify, monitor and manage risks, which may leave us exposed to unidentified or unanticipated risks, which could negatively affect our businesses, results of operations or financial condition.procedures.”
Our reinsurance arrangementsarrangement with an affiliated captives may be adversely impacted by changes to policyholder behavior assumptions under the reinsured contracts, the performance of their hedging program, their liquidity needs, their overall financial results and changes in regulatory requirements regarding the use of captives.
ACS Life reinsures to its wholly owned direct subsidiary CS Life RE a 100% quota share of all the GMxB riders historically assumed by ACS Life from various unaffiliated insurers and reinsurers.captive.
The reinsurance arrangementsarrangement with CS Life RE and EQ AZ Life Re Company (collectively, the(the “Affiliated Captives”Captive”) provideprovides important capital management benefits to AXA Equitable Life, MLOA, USFLFinancial and ACS LifeEquitable America (collectively, the “Affiliated Cedants”). Under applicable statutory accounting rules, the Affiliated Cedants are currently, and will in the future be, entitled to a credit in their calculations of reserves for amounts reinsured to the Affiliated Captives,Captive, to the extent the Affiliated CaptivesCaptive hold assets in trust or provide letters of credit or other financing acceptable to the respective domestic regulators of the Affiliated Cedants. Under the reinsurance documentation, the Affiliated Captives are required to or will be permitted to transfer assets from the trusts under certain circumstances. The level of assets required to be maintained in the trust fluctuates based on market and interest rate movements, age of the policies, mortality experience and policyholder behavior (i.e., the exercise or non-exercise of rights by policyholders under the contracts including, but not limited to, lapses and surrenders, withdrawal rates and amounts and contributions).behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust or securing additional letters of credit, which could impact the liquidity of the Affiliated Captives.
In addition, like AXA Equitable Life, CS Life RE employs a hedging strategy that uses derivatives contracts and fixed income investments that are collectively managed to help reduce the economic impact of unfavorable market-driven changes to reserves. The terms of these contracts require CS Life RE to post initial margin to a clearinghouse and cash settle hedges when there is a decline in the estimated fair value of specified instruments. This would occur, for example, as interest rates or equity markets rise. When this happens, the terms of the reinsurance agreement may not always allow CS Life RE to restore liquidity by withdrawing assets from the trust.
While management believes that CS Life RE has and will have adequate liquidity and credit facilities to deal with a range of market scenarios and increasing reserve requirements, larger market movements, including but not limited to a significant increase in interest rates, could require CS Life RE to post more collateral or cash settle more hedges than its own resources would permit. While management of CS Life RE intends to take all reasonable steps to maintain adequate sources of liquidity to meet its obligations, there can be no assurance that such sources will be available in all market scenarios. The potential inability of CS Life RE to post such collateral or cash settle such hedges could cause CS Life RE to reduce the size of its hedging programs, which could ultimately adversely impact CS Life RE’s ability to perform under the reinsurance arrangements and ACS Life’s ability to obtain full statutory reserve credit for the reinsurance arrangements.
In 2014, the NAIC considered a proposal to require states to apply NAIC accreditation standards, applicable to traditional insurers, to captive reinsurers. In 2015, the NAIC adopted such a proposal, in the form of a revised preamble to the NAIC accreditation standards (the “Standard”), with an effective date of January 1, 2016 for application of the Standard to captives that assume level premium term life insurance (“XXX”) business and universal life with secondary guarantees (“AXXX”) business. The Standard applies prospectively, so that XXX/AXXX captives will not be subject to the Standard if reinsured policies were issued prior to January 1, 2015 and ceded so that they were part of a reinsurance arrangement as of December 31, 2014, as is the case for the XXX business and AXXX business reinsured by our Affiliated Captives. The NAIC left for future action the application of the Standard to captives that assume variable annuity business. See “—Legal and Regulatory Risks—Our retirement and protection businesses are heavily regulated, and changes in regulation and in supervisory and enforcement policies may limit our growth and have a material adverse effect on our business, results of operations or financial condition.”
We cannot predict what revisions, if any, will be made to the Standard, if adopted for variable annuity captives, or how the Framework for Change (the “Framework for Change”) adopted by the NAIC with respect to reserve and capital requirements for variable annuity business will be implemented, after ongoing NAIC work to effectuate the Framework for Change and as states consider their adoption or undertake their implementation. It is also unclear whether the Standard or other proposals will be adopted by the NAIC or whether or how the NYDFS will implement the Framework for Change, or what additional actions and regulatory changes will result from the continued scrutiny and reform efforts by the NAIC and regulatory bodies with

respect to captive reinsurance. Any regulatory action that limits our ability to achieve desired benefits from the use of, or materially increases our cost of using, captive reinsurance and applies retroactively, including, if the Standard is adopted as proposed, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our business, results of operations or financial condition.
In addition, a number of lawsuits have been filed against insurance companies, including AXA Equitable Life, over the use of captive reinsurers. The outcome of this litigation could have a material adverse effect on our business, results of operations or financial condition.
The inability to secure additional required capital or liquidity in the circumstances described above could have a material adverse effect on our business, results of operations or financial condition.Captive.
Risks Relating to the Our Products, We Offer, Our Structure and Product Distribution
GMxB features within certain of our products may decrease our earnings, decrease our capitalization, increase the volatility of our results, result in higher risk management costs and expose us to increased counterparty risk.products.
Certain of the variable annuity products we offer and certain in-force variable annuity products we offered historically, and certain variable annuity risks we assumed historically through reinsurance, include GMxB features. As of December 31, 2018, 75% of the variable annuity AV in our Individual Retirement segment was attributable to products that included GMxB features. We also offer index-linked variable annuities with guarantees against a defined floor on losses. GMxB features are designed to offer protection to policyholders against changes in equity markets and interest rates. Any such periods of significant and sustained negative or low Separate AccountAccounts returns, increased equity volatility or reduced interest rates will result in an increase in the valuation of our liabilities associated with those products. In addition, if the Separate Account assets consisting of fixed income securities, which support the guaranteed index-linked return feature, are insufficient to reflect a period of sustained growth in the equity-index on which the product is based, we may be required to support such Separate Accounts with assets from our General
61
Table of Contents
Account and increase our liabilities. An increase in these liabilities would result in a decrease in our net income and depending on the magnitude of any such increase, could materially and adversely affect our financial condition, including our capitalization, as well as the financial strength ratings which are necessary to support our product sales.
Additionally, we make assumptions regarding policyholder behavior at the time of pricing and in selecting and using the GMxB features inherent within our products (e.g., use of option to annuitize within a GMIB product).products. An increase in the valuation of the liability could result to the extent emerging and actual experience deviates from these policyholder option use assumptions. We review our actuarial assumptions at least annually, including those assumptions relating to policyholder behavior, and update assumptions when appropriate. If we update our assumptions based on our actuarial assumption review, in future years, we could be required to increase the liabilities we record for future policy benefits and claims to a level that may materially and adversely affect our business, results of operations or financial condition which, in certain circumstances, could impair our solvency. In addition, we have in the past updated our assumptions on policyholder behavior, which has negatively impacted our net income, and there can be no assurance that similar updates will not be required in the future. For additional information on the impacts of our assumption updates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Significant Factors Impacting Our Results”
In addition, capital markets hedging instruments may not effectively offset the costs of GMxB features or may otherwise be insufficient in relation to our obligations. Furthermore, we are subject to the risk that changes in policyholder behavior or mortality, combined with adverse market events, could produce economic losses not addressed by theour risk management techniques employed.techniques. These factors, individually or collectively, may have a material adverse effect on our business, results of operations, including net income, capitalization, financial condition or liquidity including our ability to receive dividends from our insurance operating companies.
Our retirement and protection products contain numerous features and are subject to extensive regulation and failure to administer or meet any of the complex product requirements may adversely impact our business, results of operations or financial condition.
Our retirement and protection products are subject to a complex and extensive array of state and federal tax, securities, insurance and employee benefit plan laws and regulations, which are administered and enforced by a number of different governmental and self-regulatory authorities, including, among others, state insurance regulators, state securities administrators, state banking authorities, the SEC, FINRA, the DOL and the IRS.

For example, U.S. federal income tax law imposes requirements relating to annuity and insurance product design, administration and investments that are conditions for beneficial tax treatment of such products under the Code. Additionally, state and federal securities and insurance laws impose requirements relating to annuity and insurance product design, offering and distribution, and administration. Failure to administer product features in accordance with contract provisions or applicable law, or to meet any of these complex tax, securities or insurance requirements could subject us to administrative penalties imposed by a particular governmental or self-regulatory authority, unanticipated costs associated with remedying such failure or other claims, litigation, harm to our reputation or interruption of our operations. If this were to occur, it could adversely impact our business, results of operations or financial condition.
We and certain of our subsidiaries are required to file periodic and other reports within certain time periods imposed by U.S. federal securities laws, rules and regulations. Failure to file such reports within the designated time period, failure to accurately report our financial condition or results of operations, or restatements of historical financial statements could require our insurance subsidiaries, including AXA Equitable Life and MLOA, to curtail or cease sales of certain of our variable annuity products and other variable insurance products or delay the launch of new products or new features, which could cause a significant disruption in the business of our insurance subsidiaries. If our affiliated and third-party distribution platforms are required to curtail or cease sales of our products, we may lose shelf space for our products indefinitely, even once we are able to resume sales. For example, AXA Equitable Life failed to timely file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 and required an extension of the due date under Rule 12b-25 for its Annual Report on Form 10-K for the year ended December 31, 2017. If AXA Equitable Life were to fail to file any future periodic or other report with the SEC on a timely basis, it would be required to cease sales of SEC-registered variable annuity products until such time that new registration statements could be filed with the SEC and declared effective. Any curtailment or cessation of sales of our variable insurance products could have a material adverse effect on our business, results of operations or financial condition.
Many of our products and services are complex and are frequently sold through intermediaries. In particular, our insurance business is reliant on intermediaries to describe and explain their products to potential customers. The intentional or unintentional misrepresentation of our products and services in advertising materials or other external communications, or inappropriate activities by our personnel or an intermediary, could adversely affect our reputation and business, as well as lead to potential regulatory actions or litigation.
The amount of statutory capital that we have and the amount of statutory capital we must hold to meet our statutory capital requirements and our financial strength and credit ratings can vary significantly from time to time.
Statutory accounting standards and capital and reserve requirements for our insurance subsidiaries are prescribed by the applicable state insurance regulators and the NAIC. State insurance regulators have established regulations that govern reserving requirements and provide minimum capitalization requirements based on RBC ratios for life insurance companies. This RBC formula establishes capital requirements relating to insurance, business, asset and interest rate risks, including equity, interest rate and expense recovery risks associated with variable annuities and group annuities that contain death benefits or certain living benefits.significantly.
In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors, including but not limited to the amount of statutory income or losses we generate (which itself is sensitive to equity market and credit market conditions), changes in interest rates, changes to existing RBC formulas, changes in reserves, the amount of additional capital we must hold to support business growth, changes in equity market levels and the value and credit rating of certain fixed income and equity securities in our investment portfolio, including our investment in AB, which could in turn reduce the statutory capital of certain of our insurance subsidiaries.factors. Additionally, state insurance regulators have significant leeway in how to interpret existing regulations, which could further impact the amount of statutory capital or reserves that we must maintain. AXA Equitable LifeFinancial is primarily regulated by the NYDFS, which from time to time has taken more stringent positions than other state insurance regulators on matters affecting, among other things, statutory capital or reserves. In certain circumstances, particularly those involving significant market declines, the effect of these more stringent positions may be that our financial condition appears to be worse than competitors who are not subject to the same stringent standards, which could have a material adverse impact on our business, results of operations or financial condition. Moreover, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of capital our insurance subsidiaries must hold in order to maintain their current ratings. To the extent that our statutory capital resources are deemed to be insufficient to maintain a particular rating by one or more rating agencies, our insurance subsidiaries’ financial strength and credit ratings might be downgraded by one or more rating agencies. There can be no assurance that any of our insurance subsidiaries will be able to maintain its current RBC ratio in the future or that its RBC ratio will not fall to a level that could have a material adverse effect on our business, results of operations or financial condition.

The failure of any of our insurance subsidiaries to meet its applicable RBC requirements or minimum capital and surplus requirements could subject it to further examination or corrective action imposed by insurance regulators, including limitations on its ability to write additional business, supervision by regulators, rehabilitation, or seizure or liquidation. Any corrective action imposed could have a material adverse effect on our business, results of operations or financial condition. A decline in RBC ratios whether or not it results in a failure to meet applicable RBC requirements, may still limit the ability of an insurance subsidiary to make dividends or distributions to us, could result in a loss of customers or new business, and could be a factor in causing ratings agencies to downgrade the insurer’s financial strength ratings, each of which could have a material adverse effect on our business, results of operations or financial condition.
Changes in statutory reserve or other requirements or the impact of adverse market conditions could result in changes to our product offerings that could materially and adversely impact our business, results of operations or financial condition.
Changes in statutory reserve or other requirements, increased costs of hedging, other risk mitigation techniques and financing and other adverse market conditions could result in certain products becoming less profitable or unprofitable. These circumstances may cause us to modify or eliminate certain features of various products or cause the suspension or cessation of sales of certain products in the future. Any modifications to products that we may make could result in certain of our products being less attractive or competitive. This could adversely impact sales, which could negatively impact AXA Advisors’ ability to retain its sales personnel and our ability to maintain our distribution relationships. This, in turn, may materially and adversely impact our business, results of operations or financial condition.
A downgrade in our financial strength and claims-paying ratings could adversely affect our business, results of operations or financial condition.ratings.
Claims-paying and financial strength ratings are important factors in establishing the competitive position of insurance companies. They indicate the rating agencies’ opinions regarding an insurance company’s ability to meet policyholder obligations and are important to maintaining public confidence in our products and our competitive position. A downgrade of our ratings or those of AXA Equitable Life, MLOAFinancial, Equitable America or Holdings could adversely affect our business, results of operations or financial condition by, among other things, reducing new sales of our products, increasing surrenders and withdrawals from our existing contracts, possibly requiring us to reduce prices or take other actions for many of our products and services to remain competitive, or adversely affecting our ability to obtain reinsurance or obtain reasonable pricing on reinsurance. A downgrade in our ratings may also adversely affect our cost of raising capital or limit our access to sources of capital. Upon announcement of AXA’s plan to pursue the IPO, AXA Equitable Life’s and Holdings’ ratings were downgraded by AM Best, S&P and Moody’s. We may face additional downgrades as a result of future sales of our common stock by AXA.
As rating agencies continue to evaluateState insurance laws limit the financial services industry, it is possible that rating agencies will heighten the level of scrutiny that they apply to financial institutions, increase the frequency and scope of their credit reviews, request additional information from the companies that they rate and potentially adjust upward the capital and other requirements employed in the rating agency models for maintenance of certain ratings levels. It is possible that the outcome of any such review of us would have additional adverse ratings consequences, which could have a material adverse effect on our business, results of operations or financial condition. We may need to take actions in response to changing standards or capital requirements set by any of the rating agencies which could cause our business and operations to suffer. We cannot predict what additional actions rating agencies may take, or what actions we may take in response to the actions of rating agencies.
The ability of our insurance subsidiaries to pay dividends and other distributions to Holdings is limited by state insurance laws, and our insurance subsidiaries may not generate sufficient statutory earnings or have sufficient statutory surplus to enable them to pay ordinary dividends.Holdings.
The payment of dividends and other distributions to Holdings by its insurance subsidiaries, including its captive reinsurers,reinsurer, is regulated by state insurance laws and regulations. These restrictions may limit or prevent our insurance subsidiaries from making dividend or other payments to Holdings and, as discussed above in “—Risks Relating to Our Consolidated Business—Risks Relating to Our Operations—As a holding company, Holdings depends on the ability of its subsidiaries to transfer funds to it to meet its obligations,” may limit or prevent Holdings from making payments to third parties, stockholder dividends and share repurchases.
The jurisdictions in which our insurance subsidiaries are domiciled impose certain restrictions on the ability to pay dividends to their respective parents.Holdings. These restrictions are based, in part, on earned surplus and the prior year’s
62
Table of Contents
statutory income and policyholder surplus. In general, dividends may be paid only from earned surplus (typically defined as available or unassigned surplus, subject to possible adjustments) which is derived from realized net profits on the company’s business.

Dividends up to specified levels are generally considered ordinary and generally may be made without prior regulatory approval. Meanwhile, dividends paid from sources other than earned surplus or in larger amounts, often called “extraordinary dividends,” are generally subject to approval by the insurance commissioner of the relevant state of domicile.
Under New York insurance law applicable to AXA Equitable Life, a domestic stock life insurer may not, without prior approval of the NYDFS, pay a dividend to its stockholders exceeding an amount calculated under either the Earned Surplus Standard or the Alternative Standard. Dividends exceeding these prescribed limits require the insurer to file a notice of its intent to declare the dividends with the NYDFS and prior approval or non-disapproval from the NYDFS. Also, in 2016, the NYDFS issued a circular letter to its regulated insurance companies stating that ordinary dividends which exceed an insurer’s positive unassigned funds (as reported on the insurer’s most recent annual statement) may fail one of the qualitative tests imposed by the Earned Surplus Standard. Given the circular letter, it is possible that the NYDFS could limit the amount of ordinary dividends declared by AXA Equitable Life under the Earned Surplus Standard to the amount of AXA Equitable Life’s positive unassigned funds.
AXA Equitable Life paid a cash dividend of $1.1 billion in July 2018 to its direct parent which subsequently distributed such amount to Holdings. Also, in December 2018, AXA Equitable Life transferred its interests in ABLP, AB Holding and the General Partner to a newly formed subsidiary and distributed the shares of that subsidiary to its direct parent which subsequently distributed such shares to Holdings (the “AB Ownership Transfer”). In connection with the AB Ownership Transfer, AXA Equitable Life paid an extraordinary cash dividend of $572 million and issued a surplus note to Holdings in the same amount. AXA Equitable Life repaid the outstanding principal balance of the surplus note in March 2019.
Applying the formulas under the dividend standards above, AXA Equitable Life could pay ordinary dividends up to approximately $1.0 billion during 2019 or, if the amount under the Earned Surplus Standard was limited to the amount of AXA Equitable Life’s positive unassigned funds as reported on its 2019 annual statement, $2.1 billion. However, in connection with the AB Ownership Transfer, AXA Equitable Life agreed with the NYDFS that it would not seek a dividend of greater than $1.0 billion under the Earned Surplus Standard during 2019.
Under the insurance laws applicable to our life insurance subsidiaries domiciled in Arizona and Colorado, an extraordinary dividend or distribution is defined as a dividend or distribution that, together with other dividends and distributions made within the preceding twelve months, exceeds the lesser of: (1) 10% of the insurer’s policyholder surplus as of the preceding December 31; or (2) the insurer’s net gain from operations for the twelve-month period ended the preceding December 31, in each case determined in accordance with statutory accounting principles. Under insurance laws applicable to our life insurance subsidiaries domiciled in Delaware and Ohio, an extraordinary dividend or distribution is defined as one that, together with other dividends and distributions made within the preceding twelve months, exceeds the greater of (1) and (2) above. As a result, under applicable domiciliary insurance regulations, certain of our life insurance subsidiaries must deduct any distributions or dividends paid in the preceding twelve months in calculating dividend capacity. In addition, although prior regulatory approvalcertain states may not be required by law forprohibit the payment of dividends upfrom other than the insurance company’s earned surplus. If any of our insurance subsidiaries subject to the limitations described above,positive earned surplus requirement do not succeed in practice, thebuilding up sufficient positive earned surplus to have ordinary dividend capacity in future years, such subsidiary would be unable to pay dividends or distributions to our holding company, in certain cases, absent prior approval of its domiciliary insurance subsidiaries would typically discuss any dividendregulator. For further information on state insurance laws related to payments with the applicable regulatory authority prior to payment.of dividends, see “Business—Regulation—Insurance Regulation—Holding Company and Shareholder Dividend Regulation.”
From time to time, the NAIC and various state insurance regulators have considered, and may in the future consider, proposals to further limit dividend payments that an insurance company may make without regulatory approval. MoreFor example, the NYDFS enacted Regulation 213. Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any ordinary dividend that exceeds the ordinary dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice. If more stringent restrictions on dividend payments may beare adopted from time to time by jurisdictions in which our insurance subsidiaries are domiciled, and such restrictions could have the effect under certain circumstances, of significantly reducing dividends or other amounts payable to Holdings by its insurance subsidiaries without prior approval by regulatory authorities. We may also choose to change the domicile of one or more of our insurance subsidiaries or captive insurance subsidiaries, in which case we would be subject to the restrictions imposed under the laws of that new domicile, which could be more restrictive than those to which we are currently subject. In addition, in the future, we may become subject to debt instruments or other agreements that limit the ability of our insurance subsidiaries to pay dividends or make other distributions. The ability of our insurance subsidiaries to pay dividends or make other distributions is also limited by our need to maintain the financial strength ratings assigned to such subsidiaries by the rating agencies. These ratings depend to a large extent on the capitalization levels of our insurance subsidiaries.
AXA Equitable Life had ordinary dividend capacity of $1.2 billion for 2018 and paid ordinary dividends to Holdings of $1.1 billion in 2018. Our insurance subsidiaries domiciled in Arizona, Colorado, Ohio and Delaware do not have capacity at this time to make ordinary dividend payments to Holdings without domiciliary regulatory approval, which can be granted or withheld in the discretion of the regulator.

If any of our insurance subsidiaries subject to the positive earned surplus requirement do not succeed in building up sufficient positive earned surplus to have ordinary dividend capacity in future years, such subsidiary would be unable to pay dividends or distributions to our holding company absent prior approval of its domiciliary insurance regulator, which can be granted or withheld in the discretion of the regulator. In addition, we may seek extraordinary dividends or distributions, but there can be no assurance that our insurance subsidiaries will receive approval for extraordinary distribution payments in the future.
The payment of dividends by our current and future captive reinsurance subsidiaries is regulated by their respective governing licensing orders, and in no event may the dividends decrease the capital of the captive below the minimum capital requirement applicable to it, and, after giving effect to the dividends, the assets of the captive paying the dividend must be sufficient to satisfy its domiciliary insurance regulator, the Arizona Department of Insurance, that it can meet its obligations.
The ability of financial professionals associated with us to sell our competitors’ products could result in reduced sales of our products and revenues.
Most of the financial professionals associated with AXA Advisors and AXA Network are permitted to sell products from competing unaffiliated insurance companies. If our competitors offer products that are more attractive than ours or pay higher commission rates to the sales representatives than we do, these representatives may concentrate their efforts in selling our competitor’s products instead of ours. To the extent the financial professionals sell our competitors’ products rather than our products, we may experience reduced sales and revenues.
A loss of, or significant change in, key product distribution relationships could materially and adversely affect sales.relationships.
We distribute certain products under agreements with third-party distributors and other members of the financial services industry that are not affiliated with us. We compete with other financial institutions to attract and retain commercial relationships in each of these channels, and our success in competing for sales through these distribution intermediaries depends upon factors such as the amount of sales commissions and fees we pay, the breadth of our product offerings, the strength of our brand, our perceived stability and financial strength ratings, and the marketing and services we provide to, and the strength of the relationships we maintain with, individual third-party distributors.channels. An interruption or significant change in certain key relationships could materially and adversely affect our ability to market our products and could have a material adverse effect on our business, results of operation or financial condition. Distributors may elect to alter, reduce or terminate their distribution relationships with us, including for such reasons as changes in our distribution strategy, adverse developments in our business, adverse rating agency actions or concerns about market-related risks. Alternatively, we may terminate one or more distribution agreements due to, for example, a loss of confidence in, or a change in control of, one of the third-party distributors, which could reduce sales.
Furthermore, an interruption in certain key relationships could materially and adversely affect our ability to market our products and could have a material adverse effect on our business, results of operations or financial condition. The future sale of shares by AXA could prompt some third parties to re-price, modify or terminate their distribution or vendor relationships with us due to a perceived uncertainty related to such offering or our business. An interruption or significant change in certain key relationships could materially and adversely affect our ability to market our products and could have a material adverse effect on our business, results of operations or financial condition. Distributors may elect to suspend, alter, reduce or terminate their distribution relationships with us for various reasons, including uncertainty related to offerings of our common stock, changes in our distribution strategy, adverse developments in our business, adverse rating agency actions or concerns about market-related risks.
We are also at risk that key distribution partners may merge or change their business models in ways that affect how our products are sold, either in response to changing business priorities or as a result of shifts in regulatory supervision or potential changes in state and federal laws and regulations regarding standards of conduct applicable to third-party distributors when providing investment advice to retail and other customers.
Because our products are distributed through unaffiliated firms, we may not be able to monitor or control the manner of their Our key distribution despite our training and compliance programs. If our products are distributed by such firms in an inappropriate manner, or to customers for whom they are unsuitable, we may suffer reputational and other harm to our business.

Consolidation of third-party distributors of retirement and protection products may adversely affect the insurance industry and the profitability of our business.
The insurance industry distributes many of its products through other financial institutions such as banks and broker-dealers. An increase in the consolidation activity of bank and other financial services companies may create firms with even stronger competitive positions, negatively impact the industry’s sales, increase competition for access to third-party distributors, result in greater distribution expenses and impair our ability to market retirement and protection products to our current customer base or expand our customer base. Werelationships may also face competition from new market entrants or non-traditional or online competitors, which may have a material adverse effect on our business. Consolidation of third-party distributors or other industrybe adversely impacted by regulatory changes may alsothat increase the likelihood that third-party distributors will trycosts associated with marketing, or restrict the ability of distribution partners to renegotiate the terms of any existing selling agreements to terms less favorable to us.receive sales and promotion related charges.
Risks Relating to Estimates, Assumptions and Valuations

Our risk management policies and procedures may not be adequate to identify, monitor and manage risks, which may leave us exposed to unidentified or unanticipated risks, which could negatively affect our businesses, results of operations or financial condition.procedures.
Our policies and procedures, including hedging programs, to identify, monitor and manage risks may not be adequate or fully effective. Many of our methods of managing risk and exposures are based upon our use of historical market behavior or statistics based on historical models. As a result, these methods willmay not predict future exposures, which could be significantly greater than the historical measures indicate, such as the risk of terrorism or pandemics causing a large number of deaths.indicate. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record and verify large numbers of transactions and events. These policies and procedures may not be fully effective.
We employ various strategies including hedging and reinsurance, with the objective of mitigatingto mitigate risks inherent in our business and operations. These risks include current or future changes in the fair value of our assets and liabilities, current or future changes in cash flows, the effect of interest rates, equity markets and credit spread changes, the occurrence of credit defaults and changes in mortality and longevity. We seek to control these risks by, among other things, entering into reinsurance contracts and through our various hedging programs. Developing an effective strategy for dealing with these risks is complex, and no strategy can completely insulate us from such risks. Our
63
Table of Contents
hedging strategies also rely on assumptions and projections regarding our assets, liabilities, general market factors and the creditworthiness of our counterparties that may prove to be incorrect or prove to be inadequate. Moreover definitions used in our derivatives contracts may differ from those used in the contract being hedged. For example, swap documents typically use SOFR as a fallback to LIBOR whereas corporate or municipal bonds or loans held by us may use different fallback rates. Accordingly, our hedging activities may not have the desired beneficial impact on our business, results of operations or financial condition. As U.S. GAAP accounting differs from the methods used to determine regulatory reserves and rating agency capital requirements, our hedging program tends to create earnings volatility in our U.S. GAAP financial statements. Further, the nature, timing, design or execution of our hedging transactions could actually increase our risks and losses. Our hedging strategies and the derivatives that we use, or may use in the future, may not adequately mitigate or offset the hedged risk and our hedging transactions may result in losses.losses, including both losses based on the risk being hedged as well as losses based on the derivative. The terms of the derivatives and other instruments used to hedge the stated risks may not match those of the instruments they are hedging which could cause unpredictability in results.
Our reserves could be inadequate and product profitability could decrease due to differences between our actual experience and management’s estimates and assumptions.
We establish and carry reserves to pay future policyholder benefits and claims. Our reserve requirements for our direct and reinsurance assumed business are calculated based on a number of estimates and assumptions, including estimates and assumptions related to future mortality, morbidity, longevity, persistency, interest rates, future equity performance, reinvestment rates, persistency, claims experience and policyholder elections (i.e., the exercise or non-exercise of rights by policyholders under the contracts). Examples of policyholder elections include, but are not limited to, lapses and surrenders, withdrawals and amounts of withdrawals, and contributions and the allocation thereof. The assumptions and estimates used in connection with the reserve estimation process are inherently uncertain and involve the exercise of significant judgment. We review the appropriateness of reserves and the underlying assumptions and update assumptions during the third quarter of each yearat least annually and, if necessary, update our assumptions as additional information becomes available. For example, in 2018 we updated certain assumptions, resulting in increases and decreases in the carrying values of these product liabilities and assets. The net impact of assumption changes in 2018 decreased Policy charges and fee income by $24 million, decreased Policyholders’ benefits by $673 million, increased Net derivative losses by $1,095 million, and decreased Amortization of DAC by $286 million. This resulted in a decrease in Income (loss) from operations before income taxes of $160 million and decreased Net income (loss) by approximately $131 million. We cannot, however, determine with precision the amounts that we will pay for, or the timing of payment of, actual benefits and claims or whether the assets supporting the policy liabilities will grow to the level assumed prior to payment of benefits or

claims. Our claim costs could increase significantly, and our reserves could be inadequate if actual results differ significantly from our estimates and assumptions. If so, we will be required to increase reserves or reduce DAC, which could materially and adversely impact our business, results of operations or financial condition.
Future reserve increases in connection with experience updates could be material and adverse to the results of operations or financial condition of the Company. Future changes as a result of future assumptions reviews could require us to make material additional capital contributions to one or more of our insurance company subsidiaries or could otherwise materially and adversely impact our business, results of operations or financial condition and may negatively and materially impact our stock price.
Our profitability may decline if mortality, longevity or persistency or other experience differ significantly from our pricing expectations or reserve assumptions.
We set prices for many of our retirement and protection products based upon expected claims and payment patterns, using assumptions for mortality rates of our policyholders. In addition to the potential effect of natural or man-made disasters, significant changes in mortality, longevity and morbidity could emerge gradually over time due to changes in the natural environment, the health habits of the insured population, technologies and treatments for disease or disability, the economic environment or other factors. The long-term profitability of our retirement and protection products depends upon how our actual mortality rates, and to a lesser extent actual morbidity rates, compare to our pricing assumptions. In addition, prolonged or severe adverse mortality or morbidity experience could result in increased reinsurance costs, and ultimately, reinsurers might not offer coverage at all. If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient, we would have to accept an increase in our net risk exposures, revise our pricing to reflect higher reinsurance premiums, or otherwise modify our product offering.
Pricing of our retirement and protection products is also based in part upon expected persistency of these products, which is the probability that a policy or contract will remain in force from one period to the next. Persistency within our variable annuity products may be significantly and adversely impacted by the value of GMxB features contained in many of our variable annuity products being higher than current AV in light of poor equity market performance or extended periods of low interest rates as well as other factors. Results may also vary based on differences between actual and expected premium deposits and withdrawals for these products. Persistency within our life insurance products may be significantly impacted by, among other things, conditions in the capital markets, the changing needs of our policyholders, the manner in which a product is marketed or illustrated and competition, including the availability of new products and policyholder perception of us, which may be negatively impacted by adverse publicity.
Significant deviations in actual experience from our pricing assumptions could have an adverse effect on the profitability of our products. For example, if policyholder elections differ from the assumptions we use in our pricing, our profitability may decline. Actual persistency that is lower than our persistency assumptions could have an adverse effect on profitability, especially in the early years of a policy, primarily because we would be required to accelerate the amortization of expenses we defer in connection with the acquisition of the policy. Actual persistency that is higher than our persistency assumptions could have an adverse effect on profitability in the later years of a block of business because the anticipated claims experience is higher in these later years. If actual persistency is significantly different from that assumed in our current reserving assumptions, our reserves for future policy benefits may prove to be inadequate. Although some of our variable annuity and life insurance products permit us to increase premiums or adjust other charges and credits during the life of the policy or contract, the adjustments permitted under the terms of the policies or contracts may not be sufficient to maintain profitability. Many of our variable annuity and life insurance products do not permit us to increase premiums or adjust other charges and credits or limit those adjustments during the life of the policy or contract. Even if we are permitted under the contract to increase premiums or adjust other charges and credits, we may not be able to do so due to litigation, point of sale disclosures, regulatory reputation and market risk or due to actions by our competitors. In addition, the development of a secondary market for life insurance including life settlements or “viaticals” and investor owned life insurance, and to a lesser extent third-party investor strategies in the variable annuity market, could adversely affect the profitability of existing business and our pricing assumptions for new business.
We may be required to accelerate the amortization of DAC, which could adversely affect our business, results of operations or financial condition.DAC.
DAC represents policy acquisition costs that have been capitalized. Capitalized costs associated with DAC are amortized in proportion to actual and estimated gross profits, gross premiums or gross revenues depending on the type of contract. On an ongoing basis, we test the DAC recorded on our balance sheets to determine if the amount is recoverable under current assumptions. In addition, we regularly review the estimates and assumptions underlying DAC. The projection of estimated

gross profits, gross premiums or gross revenues requires the use of certain assumptions, principally related to Separate AccountAccounts fund returns in excess of amounts credited to policyholders, policyholder behavior such as surrender, lapse and annuitization rates, interest margin, expense margin, mortality, future impairments and hedging costs. Estimating future gross profits, gross premiums or gross revenues is a complex process requiring considerable judgment and the forecasting of events well into the future. If these assumptions prove to be inaccurate, if an estimation technique used to estimate future gross profits, gross premiums or gross revenues is changed, or if significant or sustained equity market declines occur or persist, we could be required to accelerate the amortization of DAC, which would result in a charge to earnings. Such adjustments could have a material adverse effect on our business, results of operations or financial condition.
We useOur financial models that rely on a number of estimates, assumptions and projections that are inherently uncertain and which may contain errors.projections.
We use models in our hedging programs and many other aspects of our operations including, but not limited to, product
64
Table of Contents
development and pricing, capital management, the estimation of actuarial reserves, the amortization of DAC, the fair value of the GMIB reinsurance contracts and the valuation of certain other assets and liabilities. These models rely on estimates, assumptions and projections that are inherently uncertain and involve the exercise of significant judgment. Due to the complexity of such models, it is possible that errors in the models could exist and our controls could fail to detect such errors. Failure to detect such errors could materially and adversely impact our business, results of operations or financial condition.
TheSubjectivity of the determination of the amount of allowances and impairments taken on our investments is subjective and could materially impact our business, results of operations or financial condition.investments.
The determination of the amount of allowances and impairments varyvaries by investment type and is based upon our evaluation and assessment of known and inherent risks associated with the respective asset class. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. There can be no assurance that management’s judgments, as reflected in our financial statements, will ultimately prove to be an accurate estimate of the actual and eventual diminution in realized value. Historical trends may not be indicative of future impairments or allowances. Furthermore, additionalAdditional impairments may need to be taken or allowances provided for in the future that could have a material adverse effect on our business, results of operations or financial condition.
We define fair value generally as the price that would be received to sell an asset or paid to transfer a liability. When available, the estimated fair value of securities is based on quoted prices in active markets that are readily and regularly obtainable; these generally are the most liquid holdings and their valuation does not involve management judgment. When quoted prices in active markets are not available, we estimate fair value based on market standard valuation methodologies, including discounted cash flow methodologies, matrix pricing, or other similar techniques. For securities with reasonable price transparency, the significant inputs to these valuation methodologies either are observable in the market or can be derived principally from or corroborated by observable market data. When the volume or level of activity results in little or no price transparency, significant inputs no longer can be supported by reference to market observable data but instead must be based on management’s estimation and judgment. Valuations may result in estimated fair values which vary significantly from the amount at which the investments may ultimately be sold. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within our financial statements and the period-to-period changes in estimated fair value could vary significantly. Decreases in the estimated fair value of securities we hold may have a material adverse effect on our business, results of operations or financial condition.
Risks Relating to Our Investment Management and Research Business
AB’s revenues and results of operations depend on the market value and composition of AB’s AUM, which can fluctuate significantly based on various factors, including many factors outsideAUM.
AB derives most of its control.
We derive most of our revenues related to AB’s business from investment advisory and services fees, which typically are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of the account and the total amount of assets AB manages for a particular client. The value and composition of AB’s AUM can be adversely affected by several factors, including:
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

the year, with higher returns for less-risky government bonds and negative credit market returns. In the U.S., while tax cuts enacted at the end of 2017 helped spur growth and corporate earnings in 2018, the benefit is unlikely to continue in 2019, and investors are focused on the length of the economic cycle. The U.S. Federal Reserve announced its fourth interest rate increase in December, as expected, but revised its guidance on the number of rate increases in 2019 from three to two. Oil prices fell sharply in the fourth quarter which, when combined with higher U.S. interest rates and slowing growth, could impact the economies of some emerging markets. In Europe, the Central Bank ended its quantitative easing program in December despite the slowdown in growth, and ongoing uncertainty around Brexit negotiations weighed on business and consumer confidence in the U.K. In China, monetary policy is easing in response to slowing growth and U.S. trade tariff headwinds. These factors, and the market volatility they cause, may adversely affect AB’s AUM and revenues.
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 reducesclient preferences, AB’s investment advisoryperformance, investing trends 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’sservice changes, including 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.
reductions. A decrease in the value of AB’s AUM, a decrease in the amount of AUM AB manages, an adverse mix shift in its AUM and/or a reduction in the level of fees AB charges would adversely affect AB’s investment advisory fees and revenues. A reduction in revenues, without a commensurate reduction in expenses, adversely affects AB’s and our business, results of operations or financial condition.
The industry-wide shift from actively-managed investment services to passive services has adversely affected AB’s investment advisory and services fees, revenues and results of operations, and this trend may continue.services.
AB’s competitive environment has become increasingly difficult over the past decade, as active managers, which invest based on individual security selection, have, on average, consistently underperformed passive services, which invest based on market indices. While the weak and volatile market environment in 2018 provided ample opportunities for stock selection, it was another challenging year for active equity fund managers. Only 42% of active managers beat their benchmarks for the full year, with varied results among growth, value and core managers. Despite the more volatile markets, demand for passive strategies persisted, albeit at a slower pace, and active managers struggled to attract net new assets. In the U.S., total industry-wide active mutual fund inflows of $67 billion in 2017 reversed to net outflows of $302 billion in 2018. Active equity U.S. mutual fund outflows of $259 billion in 2018 increased by 33% year-over-year as the pace of outflows accelerated in the fourth quarter, particularly in December. Further, after $221 billion of active fixed income U.S. mutual fund inflows in 2017, flows slowed dramatically in 2018 to $13 billion. Meanwhile, total industry-wide passive mutual fund inflows of $451 billion were down 35% from last year’s record $692 billion. The most recent data available for U.S. institutions (through September 30, 2018) is more negative. Total industry active equity and fixed income net outflows for the year-to-date through September 30, 2018 were $254 billion, triple the total for 2017. In this environment, organic growth through positive net inflows is difficult to achieve for active managers, such as AB, and requires taking market share from other active managers.
The significant shift from active services to passive services adversely affects Bernstein Research Services revenues as well. GlobalInstitutional global market trading volumes have declinedcontinue to be pressured (notwithstanding the heightened market volatility and trading volume predominately relating to COVID-19 in recent years, and we expect this to continue, fueledthe first half of 2020) by the steady rise inpersistent active

equity outflows and passive equity inflows. As a result, portfolio turnover has decreased,declined, and investors hold fewer shares that are actively traded by managers.
We and AXA and its affiliates provide a significant amount of AB’s AUM and fund a significant portion of AB’s seed investments, and, if we or they choose to terminate their investment advisory agreements or withdraw capital support, it could have a material adverse effect on AB’s business, results of operations or financial condition.
We and other AXA affiliates, collectively, are AB’s largest clients. We represented 24% of AB’s total AUM as of December 31, 2018 and 5% of AB’s net revenues for the year ended December 31, 2018. AXA and its affiliates other than us represented 6% of AB’s total AUM as of December 31, 2018 and 2% of AB’s net revenues for the year ended December 31, 2018. AB’s investment management agreements with us and AXA and its affiliates are terminable at any time or on short notice by either party, and neither we nor AXA and its affiliates are under any obligation to maintain any level of AUM with AB. If we or AXA and its affiliates were to terminate their investment management agreements with AB, it could have a material adverse effect on AB’s business, results of operations or financial condition.
Further, while we cannot at this time predict the eventual impact, if any, on AB of any offering of our common stock, it could include a reduction in the support AXA has provided to AB in the past with respect to AB’s investment management business, resulting in a decrease to AB’s revenues and ability to initiate new investment services. Also, AB relies on AXA, including its subsidiary AXA Business Services, for a number of significant services and benefits from its affiliation with AXA in certain common vendor relationships. These arrangements may change with possible negative financial implications for AB.
The process of relocating AB’s headquarters may not be executed as envisioned.
On May 2, 2018, AB announced that it will establish its corporate headquarters in and relocate approximately 1,050 jobs located in the New York metropolitan area to Nashville, TN. Although the eventual impact on AB from this process is not yet known, the uncertainty created by these circumstances could have a significant adverse effect on AB’s ability to motivate and retain current employees. Further significant managerial and operational challenges could arise, such as ineffective transfer of institutional knowledge from current employees to newly-hired employees, if AB experiences significantly greater attrition among current employees than the firm anticipates in connection with the relocation and/or if the firm encounters more difficulty than expected in hiring qualified employees to help staff its Nashville headquarters.
Additionally, AB’s estimates for both the transition costs and the corresponding expense savings relating to its headquarters relocation are based on our current assumptions of employee relocation costs, severance and overlapping compensation and occupancy costs. If these assumptions turn out to be inaccurate, our business, results of operations or financial condition could be adversely affected.
AB’s reputation could suffer if it is unable to deliver consistent, competitive investment performance.
AB’s business is based on the trust and confidence of its clients. Poor investment performance on an absolute basis or as compared to third-party benchmarks or competitor products could lead to a decrease in sales and stimulate higher redemptions, thereby lowering the amount of AUM and reducing the investment advisory fees AB earns. The effects of poor performance on AB could be magnified where assets or customers are concentrated in certain strategies, products, asset classes or sectors. Damage to AB’s reputation, resulting from poor or inconsistent investment performance, among other factors, can reduce substantially AB’s AUM and impair its ability to maintain or grow its business.
Performance-based fee arrangements with AB’s clients cause greater fluctuations in its and in turn our, net revenues.
AB sometimes charges its clients performance-based fees, whereby it charges a base advisory fee and is eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account under-performs relative to its performance target (whether in absolute terms or relative to a specified benchmark), it must gain back such under-performance before AB can collect future performance-based fees. Therefore, if AB fails to achieve the performance target for a particular period, AB will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, AB’s ability to earn future performance-based fees will be impaired.
If theThe revenues generated by Bernstein Research Services and AB’s broker-dealers may be adversely affected by
65
Table of Contents
circumstances beyond our control.
Electronic, or “low-touch,” trading represents a significant percentage of buy-side trading activity and typically produces transaction fees that are significantly lower than the price of traditional full service fee rates. As a result, blended pricing throughout our industry is lower now than it was historically, and price declines may continue. In addition, fee rates we charge and charged by other brokers for brokerage services have historically experienced price pressure, and we expect these trends to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may not continue. In addition, the failure or inability of any of AB’s AUM subjectbroker-dealer’s significant counterparties to performance-based fees grows, seasonalityperform could expose AB to substantial expenditures and volatilityadversely affect its revenues. For example, SCB LLC, as a member of revenueclearing and earningssettlement organizations, would be required to settle open trades of any non-performing counterparty. This exposes AB to the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Also, AB’s ability to access liquidity in such situations may be limited by what its funding relationships are likelyable to become more significant. AB’s performance-based fees in 2018, 2017 and 2016 were $118 million, $95 million and $33 million, respectively.

offer us at such times.
AB’s seed capital investments are subject to market risk. While AB enters into various futures, forwards, swap and option contracts to economically hedge many of these investments, AB also may be exposed to market risk and credit-related losses in the event of non-performance by counterparties to these derivative instruments.
AB has a seed investment program for the purpose of building track records and assisting with the marketing initiatives pertaining to its new products. These seed capital investments are subject to market risk. AB’s risk management team oversees a seed hedging program that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, and in those cases AB is exposed to market risk. In addition, AB may be subject to basis risk in that it cannot always hedge with precision its market exposure and, as a result, AB may be subject to relative spreads between market sectors. As a result, volatility in the capital markets may cause significant changes in its period-to-period financial and operating results.
AB uses various derivative instruments including futures, forwards, swap and option contracts, in conjunction with its seed hedging program. While in most cases broad market risks are hedged, AB’s hedges are imperfect, and some market risk remains. In addition, AB’s use of derivatives results in counterparty risk (i.e., the risk of exposurethat AB may be exposed to credit-related losses in the event of non-performance by counterparties to these derivative instruments), regulatory risk (e.g., short selling restrictions) and cash/synthetic basis risk (i.e., the risk that the underlying positions do not move identically to the related derivative instruments).
The revenues generated by Bernstein Research Services may be adversely affected by circumstances beyond our control, including declines in brokerage transaction rates, declines in global market volumes, failure to settle our trades by significant counterparties and the effects of MiFID II (as defined below).
Electronic, or “low-touch,” trading represents a significant percentage of buy-side trading activity and typically produces transaction fees that are significantly lower than traditional full service fee rates. As a result, blended pricing throughout our industry is lower now than it was historically, and price declines may continue. In addition, fee rates we charge and charged by other brokers for brokerage services have historically experienced price pressure, and we expect these trends to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may not continue.
In addition, the failure or inability of any of AB’s broker-dealer’s significant counterparties to perform could expose AB to substantial expenditures and adversely affect its revenues. For example, Sanford C. Bernstein & Co., LLC (“SCB LLC”), as a member of clearing and settlement organizations, would be required to settle open trades of any non-performing counterparty. This exposes AB to the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Lastly, AB’s ability to access liquidity in such situations may be limited by what its funding relationships are able to offer us at such times.
The second installment of the Markets in Financial Instruments Directive II (“MiFID II”), which became effective on January 3, 2018, makes significant modifications to the manner in which European broker-dealers can be compensated for research. The ultimate impact of MiFID II on payments for research globally is not yet certain.
AB may not accurately value the securities it holds on behalf of its clients or its company investments.
In accordance with applicable regulatory requirements, contractual obligations or client direction, AB employs procedures for the pricing and valuation of securities and other positions held in client accounts or for company investments. AB has established a valuation committee, composed of senior officers and employees, which oversees pricing controls and valuation processes. If market quotations for a security are not readily available, the valuation committee determines a fair value for the security.
Extraordinary volatility in financial markets, significant liquidity constraints or ourAB’s failure to adequately consider one or more factors when determining the fair value of a security based on information with limited market observability could result in AB failing to properly value securities AB holds for its clients or investments accounted for on its balance sheet. Improper valuation likely would result in itsAB basing fee calculations on inaccurate AUM figures, its striking incorrect net asset values for company-sponsored mutual funds or hedge funds or, in the case of company investments, its inaccurately calculating and reporting AB’s business, financial condition and operating results. Although the overall percentage of AB’s AUM that it fair values based on information with limited market observability is not significant, inaccurate fair value determinations can harm AB’s clients, create regulatory issues and damage its reputation.

AB may not have sufficient information to confirm or review the accuracy of valuations provided to it by underlying external managers for the funds in which certain of its alternative investment products invest.
Certain of AB’s alternative investment services invest in funds managed by external managers (“External Managers”) rather than investing directly in securities and other instruments. As a result, AB’s ability will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete, accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, AB may not have sufficient information to confirm or review the accuracy of valuations provided to it by External Managers. In addition, AB will be required to rely on External Managers’ compliance with any applicable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or to provide accurate information with respect to the investment could subject AB’s alternative investment products to losses and cause damage to its reputation.
The quantitative and systematic models AB uses in certain of its investment services may contain errors, resulting in imprecise risk assessments and unintended output.errors.
AB uses quantitative and systematic models in a variety of its investment services, generally in combination with
66
Table of Contents
fundamental research. These models are developed by senior quantitative professionals and typically are implemented by IT professionals. AB’s model risk oversight committee oversees the model governance framework and associated model review activities, which are then executed by AB’s model risk team. However, due to the complexity and large data dependency of such models, it is possible that errors in the models could exist and AB’s controls could fail to detect such errors. Failure to detect errors could result in client losses and reputational damage.
AB may not always successfully manage actual and potential conflicts of interest that arise in its business.
Increasingly, AB must manage actual and potential conflicts of interest, including situations where its services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect ourAB’s reputation, results of operations and business prospects.
AB has procedures and controls that are designed to identify and mitigate conflicts of interest, including those designed to prevent the improper sharing of information. However, appropriately managing conflicts of interest is complex. AB’s reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if AB fails, or appears to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.
The inability to access clients through intermediaries could have a material adverse effect on AB’s business.
AB’s ability to market investment products is highly dependent on access to the various distribution systems of national and regional securities dealer firms, which generally offer competing products that could limit the distribution of AB’s investment products. There can be no assurance that AB will be able to retain access to these intermediaries. The inability to have such access could have a material adverse effect on AB’s and, in turn, our business. To the extent that existing or potential customers, including securities broker-dealers, decide to invest in or broaden distribution relationships with AB’s competitors, the sales of its products as well as its market share, revenue and net income could decline. Certain intermediaries with which AB conducts business charge AB fees to maintain access to their distribution networks. If AB chooses not to pay such fees, its ability to distribute through those intermediaries would be limited.
AB’s clients can withdraw the assets it manages on short notice, making its future client and revenue base unpredictable.
AB’s open-end fund clients generally may redeem their investments in these funds each business day without prior notice. While not subject to daily redemption, closed-end funds that AB manages may shrink in size due to repurchases of shares in open-market transactions or pursuant to tender offers, or in connection with distributions in excess of realized returns. Institutional and individual Separate Account clients can terminate their relationships with AB generally at any time. In a declining stock market, the pace of open-end fund redemptions could accelerate. Poor performance relative to other asset management firms can result in decreased purchases of open-end fund shares, increased redemptions of open-end fund shares, and the loss of institutional or individual Separate Accounts. The decrease in revenue that could result from any of these events could have a material adverse effect on AB’s and, in turn, our business.

Fluctuations in the exchange rates between the U.S. dollar and various other currencies can adversely affect AB’s AUM, revenues and results of operations.
Although significant portions of AB’s net revenues and expenses, as well as AB’s AUM, presently are denominated in U.S. dollars, AB has subsidiaries and clients outside of the United States with functional currencies other than the U.S. dollar. Weakening of these currencies relative to the U.S. dollar adversely affects the value in U.S. dollar terms of AB’s revenues and our AUM denominated in these other currencies. Accordingly, fluctuations in U.S. dollar exchange rates affect our AUM, revenues and reported financial results from one period to the next.
Investments in other countries are subject to operational, regulatory, compliance and reputational risks, including changes in applicable laws and regulatory requirements; difficulties in staffing and managing foreign operations; difficulties in collecting investment management fees receivable; different, and in some cases less stringent, legal, regulatory and accounting regimes; political instability; fluctuations in currency exchange rates; expatriation controls; expropriation risks; and potential adverse tax consequences.
AB may not be successful in its efforts to hedge its exposure to such fluctuations, which could negatively impact its revenues and reported financial results.
Changes in the partnership structure of AB Holding and ABLP or changes in the tax law governing partnerships would have significant tax ramifications.
AB Holding having elected under Section 7704(g) of the Code to be subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business, is a “grandfathered” publicly traded partnership (“PTP”) for federal income tax purposes. AB Holding is also subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB. In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management seeks to ensure that AB Holding does not directly or indirectly (through ABLP) enter into a substantial new line of business. A “new line of business” includes any business that is not closely related to AB’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or directly uses more than 15% of its total assets (by value) in, the new line of business.
ABLP is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, ABLP is subject to the 4.0% UBT. Domestic corporate subsidiaries of ABLP, which are subject to federal, state and local income taxes, generally are included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Foreign corporate subsidiaries generally are subject to taxes in the foreign jurisdiction where they are located. If ABLP’s business increasingly operates in countries other than the United States, ABLP’s effective tax rate may increase because its international subsidiaries are subject to corporate taxes in the jurisdictions where they are located.
In order to preserve ABLP’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. If such units were to be considered readily tradable, ABLP would become subject to federal and state corporate income tax on its net income. Furthermore, as noted above, should ABLP enter into a substantial new line of business, AB Holding, by virtue of its ownership of ABLP, would lose its status as a grandfathered PTP and would become subject to federal and state corporate income tax on its net income. If AB Holding and ABLP were to become subject to corporate income tax as set forth above, their net income and quarterly distributions to holders of AB Holding Units or AB Unitstheir units would be materially reduced.
The Tax Cuts and Jobs Act, enacted on December 22, 2017 (the “Tax Reform Act”), reduced the federal corporate income tax rate applicable to AB’s U.S. subsidiaries to 21%. The Tax Reform Act also imposed a one-time transitional tax on some of the accumulated earnings of AB’s foreign subsidiaries. The earnings of AB’s foreign subsidiaries are now taxed on a current basis. These and other changes in the Tax Reform Act could adversely affect AB’s business, results of operations or financial condition.

Legal and Regulatory Risks
We may be materially and adversely impacted by U.S. federal and state legislative and regulatory action affecting financial institutions.are heavily regulated.
Regulatory changes, and other reforms globally, could lead to business disruptions, could adversely impact the value of assets we have invested on behalf of clients and policyholders and could make it more difficult for us to conduct certain business activities or distinguish ourselves from competitors. Any of these factors could materially and adversely affect our business, results of operations or financial condition.
Dodd-Frank Act—The Dodd-Frank Act established the FSOC, which has the authority to designate non-bank systemically important financial institutions (“SIFIs”), thereby subjecting them to enhanced prudential standards and supervision by the Federal Reserve Board, including enhanced risk-based capital requirements, leverage limits, liquidity requirements, single counterparty exposure limits, governance requirements for risk management, capital planning and stress test requirements, special debt-to-equity limits for certain companies, early remediation procedures and recovery and resolution planning. If the FSOC were to determine that Holdings is a non-bank SIFI, we would become subject to certain of these enhanced prudential standards. Other regulators, such as state insurance regulators, may also determine to adopt new or heightened regulatory safeguards as a result of actions taken by the Federal Reserve Board in connection with its supervision of non-bank SIFIs. There can be no assurance that Holdings will not be designated as a non-bank SIFI, that such new or enhanced regulation will not apply to Holdings in the future, or, to the extent such regulation is adopted, that it would not have a material impact on our operations.
In addition, if Holdings were designated a SIFI, it could potentially be subject to capital charges or other restrictions with respect to activities it engages in that are limited by Section 619 of the Dodd-Frank Act, commonly referred to as the “Volcker Rule,” which places limitations on the ability of banks and their affiliates to engage in proprietary trading and limits the sponsorship of, and investment in, covered funds by banking entities and their affiliates.
Title II of the Dodd-Frank Act provides that certain financial companies, including Holdings, may be subject to a special resolution regime outside the federal bankruptcy code, which is administered by the Federal Deposit Insurance Corporation as receiver, and is applied to a covered financial company upon a determination that the company presents a risk to U.S. financial stability. U.S. insurance subsidiaries of any such covered financial company, however, would be subject to rehabilitation and liquidation proceedings under state insurance law. We cannot predict how rating agencies, or our creditors, will evaluate this potential or whether it will impact our financing or hedging costs.
The Dodd-Frank Act also established the FIO within the U.S. Department of the Treasury, which has the authority, on behalf of the United States, to participate in the negotiation of “covered agreements” with foreign governments or regulators, as well as to collect information and monitor about the insurance industry. While not having a general supervisory or regulatory authority over the business of insurance, the director of the FIO will perform various functions with respect to insurance, including serving as a non-voting member of the FSOC and making recommendations to the FSOC regarding insurers to be designated for more stringent regulation.
While the Trump administration has indicated its intent to modify various aspects of the Dodd-Frank Act, it is unclear whether or how such modifications will be implemented or the impact any such modifications would have on our businesses.
Title VII of the Dodd-Frank Act creates a new framework for regulation of the OTC derivatives markets. As a result of the adoption of final rules by federal banking regulators and the CFTC in 2015 establishing margin requirements for non-centrally cleared derivatives, the amount of collateral we may be required to pledge in support of such transactions may increase under certain circumstances and will increase as a result of the requirement to pledge initial margin on non-centrally cleared derivatives commencing in 2020. Notwithstanding the broad categories of non-cash collateral permitted under the rules, higher capital charges on non-cash collateral applicable to our bank counterparties may significantly increase pricing of derivatives and restrict or eliminate certain types of eligible collateral that we have available to pledge, which could significantly increase our hedging costs, adversely affect the liquidity and yield of our investments, affect the profitability of our products or their attractiveness to our customers, or cause us to alter our hedging strategy or change the composition of the risks we do not hedge.
Regulation of Broker-Dealers—The Dodd-Frank Act provides that the SEC may promulgate rules to provide that the standard of conduct for all broker-dealers, when providing personalized investment advice about securities to retail customers (and any other customers as the SEC may by rule provide) will be the same as the standard of conduct applicable to an

investment adviser under the Investment Advisers Act. For a discussion of the SEC’s recent set of proposed rules, see “Business—Regulation—Broker-Dealer and Securities Regulation—Broker-Dealer Regulation.”
General—From time to time, regulators raise issues during examinations or audits of us and regulated subsidiaries that could, if determined adversely, have a material impact on us. In addition, the interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact, particularly in areas such as accounting or statutory reserve requirements. We are also subject to other regulations and may in the future become subject to additional regulations. Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on our business, results of operations or financial condition.
Our retirement and protection businesses are heavily regulated, and changes in regulation and in supervisory and enforcement policies may limit our growth and have a material adverse effect on our business, results of operations or financial condition.
We are subjectregulators continue to a wide variety of insurance and other laws and regulations. State insurance laws regulate most aspects of our retirement and protection businesses, and our insurance subsidiaries are regulated by the insurance departments of the states in which they are domiciled and the states in which they are licensed. Notably, AXA Equitable Life is domiciled in New York and is primarily regulated by the NYDFS. The primary purpose of state regulation is to protect policyholders, and not necessarily to protect creditors and investors.
State insurance guaranty associations have the right to assess insurance companies doing business in their state in order to help pay the obligations of insolvent insurance companies to policyholders and claimants. Because the amount and timing of an assessment is beyond our control, liabilities we have currently established for these potential assessments may not be adequate.
State insurance regulators, the NAIC and other regulatory bodies regularly reexamine existing laws and regulations applicable to insurance companies and their products. 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. Regulation 187 takes effect on August 1, 2019 with respect to annuity sales and February 1, 2020 for life insurance sales and is applicable to sales of life insurance and annuity products in New York. In November 2018, the three primary agent groups in New York launched a legal challenge against the NYDFS over the adoption of Regulation 187. It is not possible to predict whether this challenge will be successful. We are currently assessing Regulation 187 to determine the impact it may have on our business. Beyond the New York regulation, the likelihood of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations. Generally, changes in laws and regulations, or in interpretations thereof, including potentially rescinding prior product approvals, are often made for the benefit of the consumer at the expense of the insurer and could materially and adversely affect our business, results of operations or financial condition.
We currently use captive reinsurance subsidiaries primarily to reinsure: (i) term life insurance and universal life insurance with secondary guarantees; (ii) excess claims relating to variable annuities with GMIB riders which are subject to reinsurance treaties with unaffiliated third parties; and (iii) to retrocede reinsurance of variable annuity guaranteed minimum benefits assumed from unaffiliated third parties. Uncertainties associated with continued use of captive reinsurance are primarily related to potential regulatory changes. See “—Risks Relating to Our Retirement and Protection Businesses—Risks Relating to Our Reinsurance and Hedging Programs.”
Insurance regulators have implemented or begun to implement significant changes in the way in which insurers must determine statutory reserves and capital, particularly for products with contractual guarantees, such as variable annuities and universal life policies, and are considering further potentially significant changes in these requirements. The NAIC’s principle-based reserves (“PBR”) approach for life insurance policies became effective on January 1, 2017 and has a three-year phase-in period. Additionally, the New York legislature enacted legislation adopting principles-based reserving in June 2018, which was signed into law by the Governor in December 2018. Also, in December 2018, the NYDFS promulgated an emergency regulation to begin implementation of principles-based reserving, to become effective on January 1, 2020. We are currently assessing the impact of, and appropriate implementation plan for, the PBR approach for life policies. The timing and extent of further changes to statutory reserves and reporting requirements are uncertain.

During 2015, the NAIC E Committee established the VAIWG to oversee the NAIC’s efforts to study and address, as appropriate, regulatory issues resulting in variable annuity captive reinsurance transactions. In November 2015, upon the recommendation of the VAIWG, the NAIC E Committee adopted the Framework for Change which recommends charges for NAIC working groups to adjust the variable annuity statutory framework applicable to all insurers that have written or are writing variable annuity business and therefore has broader implications beyond captive reinsurance transactions. The Framework for Change contemplates a holistic set of reforms that would improve the current reserve and capital framework for insurers that write variable annuity business. In November 2015, VAIWG engaged Oliver Wyman (“OW”) to conduct a QIS involving industry participants, including the Company, of various reforms outlined in the Framework for Change. OW completed the QIS in July of 2016 and reported its initial findings to the VAIWG in late August. The OW report proposed certain revisions to the current variable annuity reserve and capital framework and recommended a second quantitative impact study be conducted so that testing can inform the proper calibration for certain conceptual and/or preliminary parameters set out in the OW proposal. Following a fourth quarter 2016 public comment period and several meetings on the OW proposal, the VAIWG determined that a QIS2 involving industry participants including us, will be conducted by OW. The QIS2 was initiated in February 2017 and OW issued its recommendation in December 2017. In 2018, the VAIWG held multiple public conference calls to discuss and refine the proposed recommendations. By the end of July 2018, both the VAIWG and the NAIC E Committee adopted the proposed recommendations with modifications reflecting input from all stakeholders. After adopting the Framework for Change, other NAIC working groups and task forces will consider specific revisions to the capital requirements for variable annuities to implement the recommendations in the framework. The changes to the variable annuity reserve and capital framework are expected to become effective January 1, 2020 with a suggested three-year phase-in period, but exact timing for implementation of changes remains subject to change.
We are currently assessing the impact on the Company of the implementation of the NAIC proposed changes to the reserve and capital framework requirements currently applicable to our variable annuity business and we cannot predict how the Framework for Change proposal may be implemented as a result of ongoing NAIC deliberations. Additionally, we cannot predict how the NYDFS will implement the final Framework for Change. As a result, the timing and extent of any necessary changes to reserves and capital requirements for our variable annuity business resulting from the work of the NAIC VAIWG are uncertain.
In addition, state regulators are currently considering whether to apply regulatory standards to the determination and/or readjustment of non-guaranteed elements (“NGEs”) within life insurance policies and annuity contracts that may be adjusted at the insurer’s discretion, such as the cost of insurance for universal life insurance policies and interest crediting rates for life insurance policies and annuity contracts. For example, in March 2018, Insurance Regulation 210 went into effect in New York. That regulation establishes standards for the determination and any readjustment of NGEs, including a prohibition on increasing profit margins on existing business or recouping past losses on such business, and requires advance notice of any adverse change in a NGE to both the NYDFS as well as to affected policyholders. We are continuing to assess the impact of Regulation 210 on our business. Beyond the New York regulation and a similar rule recently enacted in California that takes effect on July 1, 2019, the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
Our investment management and research business is heavily regulated, and changes in regulation and in supervisory and enforcement policies may limit our growth and have a material adverse effect on our business, results of operations or financial condition.
Virtually all aspects of our investment management and research business are subject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws and regulations in the foreign jurisdictions in which our subsidiaries conduct business. If we violate these laws or regulations, we could be subject to civil liability, criminal liability or sanction, including restriction or revocation of our professional licenses or registrations, revocation of the licenses of our employees, censures, fines, or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a material adverse effect on our business, results of operations or financial condition. A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanction, could require substantial expenditures of time and money and could potentially damage our reputation.
Over the past decade, global regulators have substantially increasedincrease their oversight ofover financial services. Some of the newly-adopted and proposed regulations are focused on investment management services. Others, while more broadly focused, nonetheless impact our business. Moreover, theservices companies. The adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will continue to affect, our business, including making our efforts to comply more expensive and time-consuming. For additional information on regulatory developments and the risks we face, including the Dodd-Frank Act and regulation by the NAIC, see “Business—Regulation”.

For example, the Financial Supervisory Commission in Taiwan (“FSC”) implemented, asOur retirement and protection business is subject to a complex and extensive array of January 1, 2015, new limits on the degree to which local investors can own an offshore investment product. While certain exemptions have been available to us, should we not continue to qualify, the FSC’s rules could force some of our local resident investors to redeem their investments in our funds sold in Taiwan (or prevent further sales of those funds in Taiwan), some of which funds have local ownership levels substantially above the FSC limits. This could lead to significant declines in our investment advisorystate and services feesfederal tax, securities, insurance and revenues earned from these funds.
In Europe, MiFID II, which became effective on January 3, 2018, makes significant modifications to the manner in which European broker-dealers can be compensated for research. These modifications have reduced, and are believed to have significantly reduced, the overall research spend by European buy-side firms, which has decreased the revenues we derive from our European clients. Our European clients may continue to reduce their research budgets, which could result in a significant decline in our sell-side revenues.
Also, while MiFID II is not applicable to firms operating outside of Europe, competitive and client pressures may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions. If that occurs, we would expect that research budgets from those clients will decrease further, which could result in an additional significant decline in our sell-side revenues. Additionally, these competitive and client pressures may result in our buy-side operation paying for research out of our own resources instead of through bundled trading commissions, which could increase our firm’s expenses and decrease our operating income.
Lastly, it also is uncertain how regulatory trends will evolve under the current U.S. President’s administration and abroad. For example, in June 2016, a narrow majority of voters in a U.K. referendum voted to exit the European Union (“EU”), but it remains unclear exactly how the U.K.’s status in relation to the European Union will change if and when it ultimately leaves. Accordingly, our U.K.-based buy-side and sell-side subsidiaries are implementing alternative arrangements in EU jurisdictions in order to ensure continued operations in the Eurozone, including our continued ability to market and sell various investment products in the Eurozone. In addition, any other changes in the composition of the EU’s member states may add further complexity to our global risks and operations.
Future changes in U.S. taxemployee benefit plan laws and regulations, which are administered and enforced by a number of different governmental and self-regulatory authorities, including, among others, state insurance regulators, state securities administrators, state banking authorities, the SEC, FINRA, the DOL and the IRS. Failure to administer our retirement and protections products in accordance with contract provisions or interpretationsapplicable law, or to meet any of these complex tax, securities or insurance requirements could subject us to administrative penalties imposed by a governmental or self-regulatory authority, unanticipated costs associated with remedying such failure or other claims, litigation, harm to our reputation or interruption of our operations.
Certain of our insurance subsidiaries are required to file periodic and other reports within certain time periods imposed by U.S. federal securities laws, rules and regulations. Failure to file such reports within the Tax Reform Act could reducedesignated time period or failure to accurately report our earnings and negatively impact our business,financial condition or results of operations could require these insurance subsidiaries to curtail or cease sales of certain of our products or delay the launch of new products or new features, which could cause a significant disruption in the business of our insurance subsidiaries. If our affiliated and third-party distribution platforms are required to curtail or cease sales of our products, we may lose shelf space for our products indefinitely, even once we are able to resume sales.
We currently use a captive reinsurer as part of our capital management strategy. Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance and applies retroactively, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our financial condition including by making our products less attractive to consumers.or results of operations.
On December 22, 2017, President Trump signed into law the Tax Reform Act, a broad overhaul
67
Table of the U.S. Internal Revenue Code that changed long-standing provisions governing the taxation of U.S. corporations, including life insurance companies. While the Tax Reform Act had a net positive economic impact on us, it contained measures which could have adverse or uncertain impacts on someContents
Virtually all aspects of our investment management and research business resultsare subject to federal and state laws and regulations, rules of operationssecurities regulators and exchanges, and laws and regulations certain foreign jurisdictions in which we conduct business. If we violate these laws or financial condition.
In August 2018,regulations, we could be subject to civil liability, criminal liability or sanction, including restriction or revocation of our professional licenses or registrations or our ability to serve as an investment adviser to registered investment companies or as a qualified professional asset manager for employee benefit plans, revocation of the NAIC adopted changes to the RBC calculation, including the C-3 Phase II Total Asset Requirement for variable annuities, to reflect the 21% corporate income tax rate in RBC reported at year-end 2018, which resulted in a reduction tolicenses of our Combined RBC Ratio. These revisions could also have a negative impactemployees, censures, fines, restrictions from relying on the CTE calculationsissuance safe harbor of Regulation D under the Securities Act when issuing securities or causing our insurance company subsidiaries, which could cause usclients not to revise our target RBC and CTE levels,be able to rely on Regulation D if we act as appropriate. Future changes in U.S. tax lawsan investment adviser, placement agent or promoter for the client or to refers clients to private funds or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a material adverse effect on our business, results of operations or financial condition. We anticipate that, following the Tax Reform Act,A regulatory proceeding could require substantial expenditures of time and money, trigger termination or default rights under contracts to which we willare a party and could potentially damage our reputation.
In addition, regulators have imposed and may continue derivingto impose new requirements or issue new guidance aimed at addressing or mitigating climate change-related risks. These emerging regulatory initiatives, or any policies adopted by investors to address changing societal perceptions on climate change, could result in increased compliance cost to our businesses and changes to our corporate governance and risk management practices.

Changes in U.S. tax benefits from certain items, including but not limited to the DRD,laws and regulations or interpretations thereof.
Changes in tax credits, insurance reserve deductionslaws and interest expense deductions. However, there is a risk thatregulations or interpretations of the Tax Reform Act, regulations promulgated thereunder, or future changes to federal, state or othersuch laws, including U.S. tax lawsreform, could reduce or eliminate the tax benefits from these or other itemsincrease our corporate taxes and result in our incurring materially higher taxes.
Many of the products that we sell benefit from one or more forms of tax-favored status under current federal and state income tax regimes. For example, life insurance and annuity contracts currently allow policyholders to defer the recognition of taxable income earned within the contract. While the Tax Reform Act does not change these rules, a future change in law that modifies or eliminates this tax-favored status could reduce demand for our products. Also, if the treatment of earnings accrued inside an annuity contract was changed prospectively, and the tax-favored status of existing contracts was grandfathered, holders of existing contracts would be less likely to surrender or rollover their contracts. Each of these changes could reduce our earningsearnings. Changes may increase our effective tax rate or have implications that make our products less attractive to consumers. Tax authorities may enact laws, change regulations to increase existing taxes, or add new types of taxes and negatively impactauthorities who have not imposed taxes in the past, may impose additional taxes. Any such changes may harm our business.

Legal and regulatory actions could have a material adverse effect on our reputation, business, results of operations or financial condition.
Legal proceedings and regulatory actions.
A number of lawsuits claims, assessments and regulatory inquiries have been filed or commenced against us and other life and health insurers and asset managersfinancial services companies in the jurisdictions in which we do business. These actions and proceedings involve, among other things, insurers’ sales practices, alleged agent misconduct, alleged failure to properly supervise agents, contract administration, product design, features and accompanying disclosure, cost of insurance increases, the use of captive reinsurers, payment of death benefits and the reporting and escheatment of unclaimed property, alleged breach of fiduciary duties, discrimination, alleged mismanagement of client funds and other general business-related matters. Some of these matters have resulted in the award of substantial fines and judgments, including material amounts of punitive damages, or in substantial settlements. In some states, juries have substantial discretion in awarding punitive damages.
We face a significant risk of, and from time to time we are involved in, such actions and proceedings, including class action lawsuits. Our consolidated results of operations or financial position could be materially and adversely affected by defense and settlement costs and any unexpected material adverse outcomes in such matters, as well as in other material actions and proceedings pending against us. The frequency of large damage awards, including large punitive damage awards and regulatory fines that bear little or no relation to actual economic damages incurred, continues to create the potential for an unpredictable judgment in any given matter. For instance, we are a defendant in a number of lawsuits related to cost of insurance increases, including class actions in federal and state court alleging breach of contract and other claims under UL policies. For information regarding these and others legal proceedings pending against us, see Note 17 of the Notes to the Consolidated Financial Statements.
In addition, investigations or examinations by federal and state regulators and other governmental and self-regulatory agencies including, among others, the SEC, FINRA, the CFTC, the National Futures Association (the “NFA”), state attorneys general, the NYDFS and other state insurance regulators, and other regulators could result in legal proceedings (including securities class actions and stockholder derivative litigation), adverse publicity, sanctions, fines and other costs. We have provided and, in certain cases, continue to provide information and documents to the SEC, FINRA, the CFTC, the NFA, state attorneys general, the NYDFS and other state insurance regulators, and other regulators on a wide range of issues. On March 30, 2018, we received a copy of an anonymous letter containing general allegations relating to the preparation of our financial statements. The audit committee of AXA Equitable Life, with the assistance of independent outside counsel, has reviewed these matters and concluded that the allegations were not substantiated and accordingly did not present any issue material to our financial statements. At this time, management cannot predict what actions the SEC, FINRA, the CFTC, the NFA, state attorneys general, the NYDFS and other state insurance regulators, or other regulators may take or what the impact of such actions might be.
A substantial legal liability or a significant federal, state or other regulatory action against us, as well as regulatory inquiries or investigations, may divert management’s time and attention, could create adverse publicity and harm our reputation, result in material fines or penalties, result in significant expense, including legal and settlement costs, and otherwise have a material adverse effect on our business, results of operations or financial condition.
We are required to disclose in our periodic reports filed with the SEC specified activities engaged in by our “affiliates.”
The Exchange Act requires companies subject to SEC reporting obligations to disclose in their periodic reports specified dealings or transactions involving Iran or other individuals and entities targeted by certain Office of Foreign Assets Control sanctions engaged in by the reporting company or any of its affiliates during the period covered by the relevant periodic report. In some cases, companies are required to disclose these types of transactions even if they would otherwise be permissible under U.S. law. Reporting companies are required to separately file with the SEC a notice that such activities have been disclosed in the relevant periodic report, and the SEC is required to post this notice of disclosure on its website and send the report to the U.S. President and certain U.S. Congressional committees. The U.S. President thereafter is required to initiate an investigation and, within 180 days of initiating such an investigation, to determine whether sanctions should be imposed. Under the Exchange Act, we are required to report if we or any of our “affiliates” knowingly engaged in certain specified activities during the period covered by the report. Because the SEC defines the term “affiliate” broadly, it includes any entity controlled by For information regarding legal proceedings pending against us, as well as any person or entity that controls us or is under common control with us. Because we continue to be controlled by AXA, we are required to disclose certain activities undertaken by AXA and its affiliates with Iranian counterparties. Disclosure of such activities, even if such activities are not subject to sanctions under applicable law, and any sanctions actually imposed on us or our affiliates as a result of these activities, could harm our reputation and have a negative impact on our business.

Risks Relating to Our Controlling Stockholder
AXA continues to control us, and AXA may have conflicts of interest with other stockholders. Conflicts of interest may arise because affiliates of our controlling stockholder have continuing agreements and business relationships with us.
AXA owns approximately 59% of our outstanding common stock. As a result, AXA will continue to be able to control the election of our directors, determine our corporate and management policies and determine, without the consent of our other stockholders, the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. AXA will also have sufficient voting power to amend our organizational documents. In addition, under the provisionssee Note 17 of the Shareholder Agreement (as defined in “Certain Relationships and Related Party Transactions”), AXA will have consent rights with respect to certain corporate and business activities that we may undertake, including during periods where AXA holds less than a majority of our common stock. Specifically, the Shareholder Agreement provides that, until the date on which AXA ceases to beneficially own at least 30% of our outstanding common stock, AXA’s prior written consent is required before we may take certain corporate and business actions, whether directly or indirectly through a subsidiary, including, among others, the following:
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.
As a result of these consent rights, AXA maintains significant control over our corporate and business activities until such rights cease. Although AXA has announced that it intends to sell all of its interest in Holdings over time, AXA is under no obligation to do so and retains the sole discretion to determine the timing of any future sales of shares of our common stock.
Our amended and restated certificate of incorporation and our amended and restated by-laws will also include a number of provisions that may discourage, delay or prevent a change in our management or control for so long as AXA owns specified percentages of our common stock. These provisions not only could have a negative impact on the trading price of our common stock but could also allow AXA to delay or prevent a corporate transaction of which the public stockholders approve.
Conflicts of interest may arise between our controlling stockholder and us. Affiliates of our controlling stockholder engage in transactions with us. Further, AXA may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us, and they may either directly, or through affiliates, also maintain business relationships with companies that may directly compete with us. In general, AXA or its affiliates could pursue business interests or exercise their voting power as stockholders in ways that are detrimental to us but beneficial to themselves or to other companies in which they invest or with whom they have a material relationship. Conflicts of interest could also arise with respect to business opportunities that could be advantageous to AXA, and they may pursue acquisition opportunities that may be complementary to our business. As a result, those acquisition opportunities may not be available to us. Under the terms of our amended and restated certificate of incorporation, AXA has no obligation to offer us corporate opportunities. See “—Our amended and restated certificate of incorporation provides that we waive any interest or expectancy in corporate opportunities presented to AXA.” In addition, changes to IFRS could impact the way we conduct our business (including, for example, which products we offer), our competitive position, our hedging program and the way we manage capital. See “—Risks Relating to Our Consolidated Business—Risks Relating to Our Operations—Changes in accounting standards could have a material adverse effect on our business, results of operations or financial condition.”
AXA and its affiliates other than us are among AB’s largest clients. AXA and its affiliates other than us represented 6% of AB’s total AUM as of December 31, 2018 and 1% of AB’s net revenues for the year ended December 31, 2018. AB’s investment management agreements with AXA and its affiliates are terminable at any time or on short notice by either party and AXA and its affiliates are under no obligation to maintain any level of AUM with AB. If AXA and its affiliates were to terminate their investment management agreements with AB, it could have a materially adverse effect on AB’s business, results of operations or financial condition.

As a result of these relationships, the interests of AXA may not coincide with our interests or the interests of the other holders of our common stock. So long as AXA continues to control a significant amount of the outstanding shares of our common stock, AXA will continue to be able to strongly influence or effectively control our decisions, including potential mergers or acquisitions, asset sales and other significant corporate transactions.
Our amended and restated certificate of incorporation provides that we waive any interest or expectancy in corporate opportunities presented to AXA.
Our amended and restated certificate of incorporation provides that we, on our behalf and on behalf of our subsidiaries, renounce and waive any interest or expectancy in, or in being offered an opportunity to participate in, corporate opportunities that are from time to time presented to AXA, or their respective officers, directors, agents, stockholders, members, partners, affiliates or subsidiaries, even if the opportunity is one that we or our subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. None of AXA or its agents, stockholders, members, partners, affiliates or subsidiaries will generally be liable to us or any of our subsidiaries for breach of any fiduciary or other duty, as a director or otherwise, by reason of the fact that such person pursues, acquires or participates in such corporate opportunity, directs such corporate opportunity to another person or fails to present such corporate opportunity, or information regarding such corporate opportunity, to us or our subsidiaries unless, in the case of any such person who is a director or officer, such corporate opportunity is expressly offered to such director or officer in writing solely in his or her capacity as a director or officer. This provision allows AXA to compete with us. Strong competition for investment opportunities could result in fewer such opportunities for us. We likely will not always be able to compete successfully with our competitors and competitive pressures or other factors may also result in significant price competition, particularly during industry downturns, which could have a material adverse effect on our business, results of operations or financial condition.
If AXA sells a controlling interest in our company to a third party in a private transaction, we may become subject to the control of a presently unknown third party.
AXA has the ability, should it choose to do so, to sell some or all of its shares of our common stock in a privately negotiated transaction. If such a transaction were to be sufficient in size, it could result in a change of control of Holdings. If AXA privately sells a significant equity interest in us, we may become subject to the control of a presently unknown third party. Such third party may have conflicts of interest with the interests of other stockholders.
We may fail to replicate or replace functions, systems and infrastructure provided by AXA or certain of its affiliates (including through shared service contracts) or lose benefits from AXA’s global contracts, and AXA and its affiliates may fail to perform the services provided for in the Transitional Services Agreement.
Historically, we have received services from AXA and have provided services to AXA, including information technology services, services that support financial transactions and budgeting, risk management and compliance services, human resources services, insurance, operations and other support services, primarily through shared services contracts with various third-party service providers. AXA and its affiliates continue to provide or procure certain services to us pursuant to the Transitional Services Agreement. Certain contracts and services between us and AXA are not covered by the Transitional Services Agreement and continue pursuant to the terms of such contracts. Under the Transitional Services Agreement, AXA agrees to continue to provide us with certain services currently provided to us by or through AXA, either directly or on a pass-through basis, and we agree to continue to provide, or arrange to provide, AXA with certain services currently provided to them, either directly or on a pass-through basis. The Transitional Services Agreement will not continue indefinitely.
We are working to replicate or replace the services that we will continue to need in the operation of our business that are provided currently by AXA or its affiliates through shared service contracts they have with various third-party providers and that will continue to be provided under the Transitional Services Agreement for applicable transitional periods. We cannot assure you that we will be able to obtain the services at the same or better levels or at the same or lower costs directly from third-party providers. As a result, when AXA or its affiliates cease providing these services to us, either as a result of the termination of the Transitional Services Agreement or individual services thereunder or a failure by AXA or its affiliates to perform their respective obligations under the Transitional Services Agreement, our costs of procuring these services or comparable replacement services may increase, and the cessation of such services may result in service interruptions and divert management attention from other aspects of our operations.
There is a risk that an increase in the costs associated with replicating and replacing the services provided to us under the Transitional Services Agreement and the diversion of management’s attentionNotes to these matters could have a material adverse effect on our business, results of operations or financial condition. We may fail to replicate the services we currently receive from AXA on a timely basis or at all. Additionally, we may not be able to operate effectively if the quality of replacement

services is inferior to the services we are currently receiving. Furthermore, once we are no longer an affiliate of AXA, we will no longer receive certain group discounts and reduced fees that we are eligible to receive as an affiliate of AXA. The loss of these discounts and reduced fees could increase our expenses and have a material adverse effect on our business, results of operations or financial condition.
In connection with preparing for the IPO and operating as a stand-alone public company following the IPO, we have incurred and expect to continue to incur one-time and recurring expenses. These expenses primarily relate to information technology, compliance, internal audit, finance, risk management, procurement, client service, human resources and other support services. We estimate that the aggregate amount of these one-time expenses will be between approximately $300 million and $350 million, of which $213 million and $93 million were incurred in 2018 and 2017, respectively. Furthermore, additional one-time expenses will be incurred when AXA ceases to own at least a majority of our outstanding common stock. These expenses, any recurring expenses, including under the Transitional Services Agreement, and any additional one-time expenses, including as a result of rebranding, we may incur may be material.
Costs associated with any rebranding that we expect to undertake after AXA ceases to own at least a majority of our outstanding common stock could be significant.
Prior to the IPO, as a wholly-owned subsidiary of AXA, we marketed our products and services using the “AXA” brand name and logo together with the “Equitable” brand. We expect to continue to use the “AXA” brand name and logo at least until such time AXA ceases to beneficially own more than 50% of our common stock. We have benefited, and will continue to benefit for a limited time as set forth in the Trademark License Agreement, from trademarks licensed in connection with the AXA brand. We believe the association with AXA provides us with preferred status among our customers, vendors and other persons due to AXA’s globally recognized brand, reputation for high quality products and services and strong capital base and financial strength. Any rebranding we undertake could adversely affect our ability to attract and retain customers, which could result in reduced sales of our products. We cannot accurately predict the effect that any rebranding we undertake will have on our business, customers or employees. We expect to incur significant costs, including marketing expenses, in connection with any rebranding of our business. Any adverse effect on our ability to attract and retain customers and any costs could have a material adverse effect on our business, results of operations or financial condition.
Certain of our directors may have actual or potential conflicts of interest because of their AXA equity ownership or their current or former AXA positions.
A number of our directors have been, and are, AXA officers, directors or employees and, thus, have professional relationships with AXA’s executive officers, directors or employees. In addition, because of their current or former AXA positions, certain of our directors and executive officers own AXA common stock, American Depository Shares, deferred stock units, performance shares or options to acquire shares of AXA common stock, and, for some of these individuals, their individual holdings may be significant compared to their total assets. These relationships and financial interests may create, or may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for AXA and us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between AXA and us regarding the terms of the agreements governing our relationship with AXA.
We have indemnification obligations in favor of AXA.
We and AXA have entered into certain agreements, including a Shareholder Agreement, Registration Rights Agreement, Transitional Services Agreement, Trademark License Agreement and a Tax Sharing Agreement (each as defined in “Certain Relationships and Related Party Transactions”), that govern our and AXA’s obligations to each other following the IPO in respect of, among other things, taxes and transition services and their respective indemnification obligations. The amounts payable by us pursuant to such indemnification obligations could be significant.
We may be subject to ongoing regulation as a result of AXA’s ownership of us and for as long as we are an affiliate of AXA.
Regulators and lawmakers across the world are engaged in addressing the causes of the financial crisis and means of avoiding such crises in the future. For example, theConsolidated Financial Stability Board has identified nine GSIIs, which include AXA. While the precise implications of being designated a GSII are still developing, it could have far reaching regulatory and competitive implications for AXA and adversely impact AXA’s capital requirements, profitability, the fungibility of AXA’s capital and ability to provide capital/financial support for AXA companies, including potentially AXA Equitable Life, AXA’s ability to grow through future acquisitions, internal governance and could change the way AXA conducts its business and adversely impact AXA’s overall competitive position versus insurance groups that are not designated GSIIs. The multiplicity ofStatements.

different regulatory regimes, capital standards and reporting requirements could increase AXA’s operational complexity and costs. All of these possibilities, if they occurred, could affect the way we conduct our business (including, for example, which products we offer) and manage capital, and may require us to satisfy increased capital requirements, all of which in turn could materially affect our business, results of operations or financial condition.
AXA is subject to Solvency II, the European directive which, together with its associated regulations and guidelines, establishes capital adequacy, risk management and regulatory reporting requirements for groups with a parent company established in the European Union. Among other things, as a member of a group subject to Solvency II, we may be required to hold more capital than the levels required under local law and incur costs necessary to comply with its requirements. In addition, because AXA is subject to Solvency II, it may impact the types of investments in, and the duration of, our General Account investment portfolio. It is possible that the requirements imposed on Solvency II groups, or the regulatory interpretation of those requirements, may change over time, increasing our capital requirements or costs.
Risks Relating to Our Common Stock
Future sales of shares by existing stockholders could cause our stock price to decline.
Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
We have filed registration statements on Form S-8 under the Securities Act to register the shares of common stock to be issued under our equity compensation plans and, as a result, all shares of common stock acquired upon exercise of stock options granted under our plans will also be freely tradable under the Securities Act, subject to the terms of the lock-up agreements, unless purchased by our affiliates. As of December 31, 2018, 5.5 million shares of our common stock are reserved for future issuances under our equity incentive plans.
Furthermore, subject to the expiration or waiver any lock up agreements, AXA has the right to require us to register shares of common stock for resale in some circumstances pursuant to the Registration Rights Agreement we entered into with AXA.
In the future, we may issue additional shares of common stock or other equity or debt securities convertible into or exercisable or exchangeable for shares of our common stock in connection with a financing, strategic investment, litigation settlement or employee arrangement or otherwise. Any of these issuances could result in substantial dilution to our existing stockholders and could cause the trading price of our common stock to decline.
The market price of our common stock may be volatile and could decline.
The market price of our common stock has fluctuated, and may continue to fluctuate, significantly. Among the factors that could affect our stock price are:
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.
Stock markets have experienced extreme volatility in recent years that has been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against the affected company. Any litigation of this type brought against us could result in substantial costs and a diversion of our management’s attention and resources, which could materially and adversely affect our business, results of operations or financial condition.
If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have, and may never obtain, research coverage for our common stock. If there is no research coverage of our common stock, the trading price for our common stock may be negatively impacted. In the event we obtain research coverage for our common stock, if one or more of the analysts downgrades our stock or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of the analysts ceases coverage of our common stock or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our common stock price or trading volume to decline.
Future offerings of debt or equity securities which would rank senior to our common stock may adversely affect the market price of our common stock.
If, in the future, we decide to issue debt or equity securities that rank senior to our common stock, it is likely that such securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. We and, indirectly, our stockholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us.
Anti-takeoverCertain provisions in our amended and restated certificate of incorporation and amended and restated by-laws and Delaware law could discourage, delay or prevent a change of control of our company and may affect the trading price of our common stock.by-laws.
Our amended and restated certificate of incorporation and our amended and restated by-laws include a number of provisions that may discourage, delay or prevent a change in our management or control over usprevent a takeover attempt that stockholders may consider favorable. For example, our amended and restated certificate of incorporation and amended and restated by-laws collectively:
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.
These provisions may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisionscontext or may even adversely affect the prevailing market price of our common stock if the provisions are viewed as discouragingdiscourage takeover attempts in the future.
attempts. Our amended and restated certificate of incorporation and amended and restated by-laws may also make it difficult for stockholders to replace or remove our management. Furthermore, the existence of the foregoing provisions, as well as the significant amount of common stock that AXA owns, could limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders.
We arehave designated a “controlled company” within the meaning of the NYSE rules and, as a result, we qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.
AXA controls a majority of the voting power of our outstanding common stock. Accordingly, we qualify as a “controlled company” within the meaning of the NYSE corporate governance standards. Under NYSE rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NYSE corporate governance standards, including:
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.
We intend to use these exemptions. As a result, we will not have a majority of independent directors, our compensation and our nominating and governance committees will not consist entirely of independent directors, and such committees may not be subject to annual performance evaluations. Additionally, we are only required to have all independent audit committee members within one year from the date of listing. Consequently, you will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance rules and requirements. Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price.
Our amended and restated certificate of incorporation includes provisions limiting the personal liability of our directors for breaches of fiduciary duty under the Delaware General Corporation Law.
Our amended and restated certificate of incorporation contains provisions permitted under the action asserting a claim arising under the General Corporation Law of the State of Delaware, or the “DGCL,” relating to the liability of directors. These provisions eliminate a director’s personal liability to the fullest extent permitted by the DGCL for monetary damages resulting from a breach of fiduciary duty, except in circumstances involving:
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.
The principal effect of the limitation on liability provision is that a stockholder will be unable to prosecute an action for monetary damages against a director unless the stockholder can demonstrate a basis for liability for which indemnification is not available under the DGCL. These provisions, however, should not limit or eliminate our rights or any stockholder’s rights to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s fiduciary duty. These provisions will not alter a director’s liability under federal securities laws. The inclusion of this provision in our amended and restated certificate of incorporation may discourage or deter stockholders or management from bringing a lawsuit against directors for a breach of their fiduciary duties, even though such an action, if successful, might otherwise have benefited us and our stockholders.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or stockholders.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative actiona number of actions. Notwithstanding the foregoing, the exclusive provision shall not preclude or proceedingcontract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Exchange Act or the Securities Act or the respective rules and regulations promulgated thereunder.
General Risks
68
Table of Contents
Competition from other insurance companies, banks, asset managers and other financial institutions.
We face strong competition from others offering the types of products and services we provide. It is difficult to provide unique retirement and protection or asset management products because, once such products are made available to the public, they often are reproduced and offered by our competitors. If competitors charge lower fees for similar products or services, we may decide to reduce the fees on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owedown products or services in order to usretain or attract customers.
Competition may adversely impact our stockholders by anymarket share and profitability. Many of our directors, officers, other employees, agentscompetitors are large and well-established and some have greater market share or stockholders, (iii) any action assertingbreadth of distribution, offer a claim arising outbroader range of products, services or underfeatures, assume a greater level of risk, have greater financial resources, have higher claims-paying or credit ratings, have better brand recognition or have more established relationships with clients than we do. We also face competition from new market entrants or non-traditional or online competitors, many of whom are leveraging digital technology that may challenge the DGCL, or asposition of traditional financial service companies. Due to which the DGCL confers jurisdiction on the Court of Chancerycompetitive nature of the State of Delaware (including, without limitation, any action asserting a claim arising out offinancial services industry, there can be no assurance that we will continue to effectively compete within the industry or pursuant to our amended and restated certificate of incorporation or our amended and restated by-laws) or (iv) any action asserting a claim that is governed by the internal affairs doctrine. By becoming a stockholder in our company, youcompetition will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum. The choice of forum provision in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or any of our directors, officers, other employees, agents or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which couldnot materially and adversely affectimpact our business, results of operations or financial condition.
Our information systems may fail or their security may be compromised.
Our business is highly dependent upon the effective operation of our information systems and those of our vendors on which our business operations rely. Although we have implemented a formal, risk-based data security and cybersecurity program to mitigate potential risk, our information systems and those of our vendors and service providers may nevertheless be vulnerable to physical or cyber-attacks, computer viruses and malicious code, or other computer related attacks, programming errors and similar disruptive problems which may not be immediately detected. The failure of these systems could cause significant interruptions to our operations, which could result in a material adverse effect on our business, results of operations or financial condition or reputational harm. In addition, a failure of these systems could lead to the possibility of litigation or regulatory investigations or actions, including regulatory actions by state and federal governmental authorities.
Protecting our intellectual property.
We rely on a combination of contractual rights, copyright, trademark and trade secret laws to establish and protect our intellectual property. Third parties may infringe or misappropriate our intellectual property. The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could have a material adverse effect on our business and our ability to compete. Third parties may have, or may eventually be issued, patents or other protections that could be infringed by our products, methods, processes or services or could limit our ability to offer certain product features. If we were found to have infringed or misappropriated a third-party patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from using and benefiting from certain patents, copyrights, trademarks, trade secrets or licenses. Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative. Any of these scenarios could harm our reputation and have a material adverse effect on our business, results of operations or financial condition.
Part I, Item 1B.
UNRESOLVED STAFF COMMENTS
None.

Part I, Item 2.
PROPERTIES
Our principal executive offices at 1290 Avenue of the Americas, New York, New York are occupied pursuant to a lease that extends to 2023. We have entered into a 15-year lease agreement in New York, New York at 1345 Avenue of the Americas that is expected to commence in 2023. We also have the following significant office space leases in:in Syracuse, NY, under a lease that expires in 2023;2023, which was amended to extend a portion of the space through 2028; Jersey City, NJ, under a lease that expires in 2023, and Charlotte, NC, under a lease that expires in 2028; and Secaucus, NJ, under a lease that expires in 2020.2028.
AB’s principal executive offices at 501 Commerce Street, Nashville, TN are occupied pursuant to a 15-year lease that commenced during the fourth quarter of 2020. In addition, AB leases office space at 1345 Avenue of the Americas, New York, New York are occupiedNY pursuant to a lease expiring in 2024. Also, AB entered into a 20-year lease agreement in New York, NY at 66 Hudson
69
Table of Contents
Boulevard that is expected to commence in 2024. AB also leases space at one other location in New York City under a lease expiring at the end of 2019. In addition, AB leases office space in White Plains, NY under a lease expiring in 2021 with options to extend to 2031 and in San Antonio, TX under a lease expiring in 2019 (with options to extend to 2029).2029. In addition, AB entered into a new lease agreement in Nashville, TN, that is expected to start in January of 2020 and expire in 2035. AB also entered into a short-term lease for officeleases modest space in Nashville, TN, which it will vacate upon completion of its new corporate headquarters. AB also leases space in 2123 other cities in the United States and AB’s subsidiaries lease space in 2830 cities outside the United States, the most significant of which are in London and Hong Kong.





Part I, Item 3.

LEGAL PROCEEDINGS

For information regarding certain legal proceedings pending against us, see Note 17 of the Notes to thethese Consolidated Financial Statements.Statements. See “Risk Factors—Legal and Regulatory Risks—Legal proceedings and regulatory actions could have a material adverse effect on our reputation, business, results of operations or financial condition.actions.”

Part I, Item 4.

MINE SAFETY DISCLOSURES
Not Applicable.



Part II, Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
General
Our common stock, par value $0.01 per share, began trading on the NYSE under the symbol “EQH” on May 10, 2018. As of February 1, 2019,January 31, 2022, there were eightnine shareholders of record, which differs from the number of beneficial owners of our common stock.
Dividends
On August 10, 2018, our Board of Directors declared a cash dividend on Holdings’ common stock of $0.13 per share, payable on August 30, 2018 to shareholders of record on August 23, 2018.
On November 9, 2018, our Board of Directors declared a cash dividend on Holdings’ common stock of $0.13 per share, payable on December 3, 2018 to shareholders of record on November 26, 2018.
The declaration, payment and amount of future dividends is subject to the discretion of our Board of Directors and depends on our financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by Holdings’ insurance subsidiaries and other factors deemed relevant by the Board. The payment of dividends will be substantially restricted in the event that we do not declare and pay (or set aside) dividends on the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, for the last proceeding dividend period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dividends Declared and Paid” for further information regarding common stock dividends.
Purchases of Equity Securities by the Issuer
The following table summarizes Holdings’ repurchases of its common stock during the three months ended December 31, 2018.2021.
PeriodTotal Number of Shares (or Units) PurchasedAverage Price Paid per Share (or Unit)Total Number of Shares (or Units) Purchased as Part of Publicly Announced ProgramsApproximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Program (1)
Month #1 (October 1-31)— $— — $461,592,672 
Month #2 (November 1-30)6,479,103 $33.44 6,479,103 $263,707,822 
Month #3 (December 1-31)7,134,993 $32.30 7,134,993 $5,243,868 
Total13,614,096 $32.84 13,614,096 $5,243,868 

_____________
(1)See Note 20 of the Notes to these Consolidated Financial Statements for the Share Repurchase program.


PeriodTotal 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
Total30,000,000
   30,000,000
  
Table of Contents
___________
(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.

Holdings may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate Holdings to purchase any particular number of shares. As ofDuring the three months ended December 31, 2018,2021, the Company has repurchased approximately 32.5$14 million shares of its common stock, including 30 million shares from AXA and the remainder through open market transactions, at a total cost of approximately $649$447 million. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets.
Stock Performance Graph
The graph and table below present Holdings’ cumulative total shareholder return relative to the performance of: (1) the Standard & Poor’s 500 Index; (2) the Standard & Poor’s 500 Insurance Index; and (3) the Standard & Poor’s 500 Financials Index, respectively, for the year ended December 31, 2018,2021, commencing May 14, 2018 (our initial day of “regular-way” trading on the NYSE). All values assume a $100 initial investment atin the opening price of Holdings’ common stock on the NYSE and data for each of the Standard & Poor’s 500 Index, the Standard & Poor’s 500 Insurance Index and the Standard & Poor’s 500 Financials Index assume all dividends were reinvested on the date paid. The points on the graph and the values in the table represent quarter-end values based on the last trading day of each quarter. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.

eqh-20211231_g14.jpg

May 14, 2018Jun 30, 2018Sep 30, 2018Dec 31, 2018Mar 31, 2019Jun 30, 2019Sep 30, 2019Dec 31, 2019
 Equitable Holdings, Inc.$100.00 $96.35 $100.86 $78.71 $95.93 $100.28 $107.11 $120.53 
S&P 500$100.00 $99.93 $107.63 $93.08 $105.79 $110.34 $112.21 $122.39 
S&P 500 Financials$100.00 $94.40 $98.51 $85.59 $92.92 $100.35 $102.37 $113.09 
S&P 500 Insurance$100.00 $95.88 $102.59 $91.70 $103.47 $115.60 $117.15 $118.64 
chart-119551aea3ad207b060.jpg
71
Table of Contents
Mar 31,
2020		Jun 30,
2020		Sep 30,
2020		Dec 31,
2020		Mar 31,
2021		Jun 30,
2021		Sep 30,
2021		Dec 31,
2021
May 14 Jun 30 Sep 30 Dec 31
AXA Equitable Holdings, Inc.$100.00
 $96.35
 $100.86
 $78.71
Equitable Holdings, Inc.Equitable Holdings, Inc.$70.48 $94.93 $90.47 $127.79 $163.81 $153.77 $150.52 $169.33 
S&P 500100.00
 99.93
 107.63
 93.08
S&P 500$98.30 $118.49 $129.07 $144.74 $153.66 $166.80 $167.77 $183.22 
S&P 500 Financials100.00
 94.40
 98.51
 85.58
S&P 500 Financials$85.03 $97.50 $100.52 $118.38 $130.98 $137.90 $144.64 $155.02 
S&P 500 Insurance100.00
 95.88
 102.59
 91.70
S&P 500 Insurance$76.98 $86.37 $90.21 $111.13 $128.80 $139.58 $143.40 $150.98 




Part II, Item 6. RESERVED
SELECTED FINANCIAL DATA
The selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and accompanying notes included elsewhere herein.
 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
Premiums1,094
 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 fees4,268
 4,093
 3,749
 3,895
 3,892
Other income516
 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 balances1,090
 995
 967
 934
 913
Compensation and benefits2,079
 1,980
 1,965
 2,008
 1,955
Commissions and distribution related payments1,160
 1,081
 1,000
 1,027
 1,039
Interest expense231
 160
 174
 136
 389
Amortization of deferred policy acquisition costs333
 503
 779
 431
 350
Other operating costs and expenses1,809
 2,069
 1,509
 1,578
 1,587
Total benefits and other deductions9,617
 $11,154
 9,736
 9,615
 10,599
Income (loss) from continuing operations, before income taxes2,461
 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:         
Basic556.4
 561.0
 561.0
 561.0
 561.0
Diluted556.5
 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 assets110,337
 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’ liabilities30,998
 30,330
 30,357
 29,992
 28,476
Short-term and long-term debt4,955
 2,408
 1,605
 1,786
 1,963
Loans from affiliates—
 3,622
 2,904
 4,665
 5,447
Separate Account liabilities110,337
 124,552
 113,150
 109,198
 112,886
Total Liabilities205,178
 218,471
 201,693
 191,969
 193,621
Redeemable noncontrolling interest187
 626
 403
 13
 17
Total equity attributable to Holdings13,866
 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 interest1,566
 3,097
 3,142
 3,108
 3,151
Total equity$15,432
 $16,518
 $14,549
 $13,515
 $14,069



Part II, Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Financial Data” and our annual financial statements included elsewhere herein. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors. Factors that could or do contribute to these differences include those factors discussed below and elsewhere in this Form 10-K, particularly under the captions “Risk Factors” and “Note Regarding Forward-Looking Statements and Information.”
Executive Summary
Overview
We are one of America’s leading financial services companies, providingproviding: (i) advice and solutions for helping Americans set and meet their retirement goals and protect and transfer their wealth across generationsgenerations; and (ii) a wide range of investment management insights, expertise and innovations to drive better investment decisions and outcomes for clients worldwide.
We manage our business through four segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. We report certain activities and items that are not included in these segments in Corporate and Other. See Note 19 of the Notes to these Consolidated Financial Statements for further information on the Company’sour segments.
We benefit from our complementary mix of businesses. This business mix provides diversity in our earnings sources, which helps offset fluctuations in market conditions and variability in business results, while offering growth opportunities.
Reinsurance of Legacy Variable Annuity Block and Sale of Runoff Variable Annuity Reinsurance Entity
On June 1, 2021, Holdings completed the sale of CS Life to VIAC pursuant to the Master Transaction Agreement, among the Company, VIAC and, solely with respect to Article XIV thereof, Venerable.
Pursuant to the Master Transaction Agreement, immediately prior to the closing of the Venerable Transaction, CS Life effected the recapture of all of the business that was ceded to the Reinsurance Subsidiary, and sold 100% of the equity of the Reinsurance Subsidiary to another wholly owned subsidiary of the Company. Immediately following the closing of the Venerable Transaction, CS Life and Equitable Financial entered into a the Reinsurance Agreement, pursuant to which Equitable Financial ceded to CS Life, on a combined coinsurance and modified coinsurance basis the Block, comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit guarantees.
In addition, upon the completion of the Venerable Transaction, EIMG acquired an approximate 9.09% equity interest in Venerable’s parent holding company, VA Capital Company LLC. In connection with such investment, EIMG designated a member to the Board of Managers of VA Capital Company LLC.

COVID-19 Impact
We continue to closely monitor developments related to the COVID-19 pandemic. The COVID-19 pandemic has negatively impacted the U.S. and global economies and financial markets continue to experience significant volatility as the pandemic evolves. As a financial services company, factors such as the volatility and strength of equity markets, interest rates,
72
Table of Contents
consumer spending, and government debt and spending all affect the business and economic environment and, ultimately, the amount and profitability of our business. The ongoing economic impact and the potential for continued volatility and declines in the capital markets could have a significant adverse effect on our business, results of operations and financial condition, particularly if economic activity and financial markets do not recover or recover slowly.
The pandemic and related economic impacts could adversely affect demand for our products and services and our investment returns. The profitability of many of our retirement, protection and investment products depends in part on the value of the AUM supporting them, which could decline substantially depending on any of the foregoing conditions. In addition, the growing number of COVID-19 related deaths could have an adverse effect on our insurance business due to increased mortality and morbidity rates. To date, COVID-19 related impacts, including adverse mortality experience, have been manageable and below initial expectations.
Efforts to prevent the spread of COVID-19 have affected our business directly in a number of ways, including through the temporary closures of many businesses and schools and the institution of social distancing requirements in many states and local communities. In response to the pandemic, we have adapted our processes to meet client needs. For example, we modified our underwriting policies to offer a fluid-less, touchless process to help more clients access the protection they need. In addition, we accelerated our digital adoption programs, leading to improved outcomes for clients, advisors, and the Company. Given the challenges over the last year our advisors have faced in engaging with our educator clients, we have developed digital tools and enhanced our remote engagement, which is resulting in improved retention and increases in retirement plan contributions.
While the COVID-19 pandemic significantly affected the capital markets and economy, we believe the actions we have previously taken help assure that our economic balance sheet is protected from interest rate and equity declines. These actions include redesigning our product portfolio to concentrate on offering less capital intensive products and implementing a hedging strategy that manages and protects against the economic risks associated with our in-force GMxB products. In addition to our hedging strategy, we employ various other methods to manage the risks of our in-force variable annuity products, including reinsurance, asset-liability matching, volatility management tools within the Separate Accounts and an active in-force management program, including buyout offers for certain products. Due to the General Account’s exposure to U.S. government bonds and credit quality of the portfolio, we feel that our balance sheet is well positioned to withstand the extreme volatility in the capital markets.
While the COVID-19 pandemic has negatively impacted our business and financial results, the extent and nature of its full financial impact cannot reasonably be estimated at this time due to developments that are still highly uncertain, including the severity and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic and the availability and efficacy of vaccines against COVID-19 and its variants. For additional information regarding the potential impacts of the COVID-19 pandemic, see “Risk Factors—Risks Relating to Conditions in the Financial Markets and Economy—The coronavirus (COVID-19) pandemic.”
Revenues
Our revenues come from three principal sources:
•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.
Our fee income varies directly in relation to the amount of the underlying AV or benefit base of our retirement and protection products and the amount of AUM of our Investment Management and Research business. AV and AUM, each as defined in “—Key“Key Operating Measures,” are influenced by changes in economic conditions, primarily equity market returns, as well as net flows. Our premium income is driven by the growth in new policies written and the persistency of our in-force policies, both of which are influenced by a combination of factors, including our efforts to attract and retain customers and market conditions that influence demand for our products. Our investment income is driven by the yield on our General Account investment portfolio and is impacted by the prevailing level of interest rates as we reinvest cash associated with maturing investments and net flows to the portfolio.
73
Table of Contents
Benefits and Other Deductions
Our primary expenses are:
•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.
Policyholders’ benefits are driven primarily by mortality, customer withdrawals, and benefits which change in response to changes in capital market conditions. In addition, some of our policyholders’ benefits are directly tied to the AV and benefit

base of our variable annuity products. Interest credited to policyholders varies in relation to the amount of the underlying AV or benefit base. Sales commissions and compensation paid to intermediaries and advisors vary in relation to premium and fee income generated from these sources, whereas compensation and benefits to our employees are more constant and impacted by market wages and decline with increases in efficiency. Our ability to manage these expenses across various economic cycles and products is critical to the profitability of our company.
Net Income Volatility
We have offered and continue to offer variable annuity products with variable annuity guaranteed benefits (“GMxB”)GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. Changes in the values of the derivatives associated with these programs due to equity market and interest rate movements are recognized in the periods in which they occur while corresponding changes in offsetting liabilities not measured at fair value are recognized over time. This results in net income volatility as further described below. See “—Significant Factors Impacting Our Results—Impact of Hedging and GMIBGMxB Reinsurance on Results.”
In addition to our dynamic hedging strategy, we have recently implemented static hedge positions designed to mitigate the adverse impact of changing market conditions on our statutory capital. We believe this program will continue to preserve the economic value of our variable annuity contracts and better protect our target variable annuity asset level. However, these new static hedge positions increase the size of our derivative positions and may result in higher net income volatility on a period-over-period basis.
Due to the impacts on our net income of equity market and interest rate movements and other items that are not part of the underlying profitability drivers of our business, we evaluate and manage our business performance using Non-GAAP Operating Earnings, a non-GAAP financial measure that is intended to remove these impacts from our results. See “—Key Operating Measures—Non-GAAP Operating Earnings.”
Significant Factors Impacting Our Results
The following significant factors have impacted, and may in the future impact, our financial condition, results of operations or cash flows.
Impact of Hedging and GMIBGMxB Reinsurance on Results
We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. These programs include:
•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 implementedhave a new hedging program using static hedge positions (derivative positions intended to be held to maturityHTM with less frequent re-balancing) to protect our
74
Table of Contents
statutory capital against stress scenarios. The implementation of this newThis program in addition to our dynamic hedge program is expected to increasehas increased 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•GMxB 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

capital market or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts. Because changes in the fair value of the GMIB reinsurance contracts are recorded in the period in which they occur and a majority of the changes in gross reserves for GMIB are recognized over time, net income will be more volatile. In addition, on June 1, 2021, we ceded legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. As this contract provides full risk transfer and thus has the same risk attributes as the underlying direct contracts, the benefits of this treaty are accounted for in the same manner as the underlying gross reserves.
Effect of Assumption Updates on Operating Results
During the third quarter of each year, we conduct our annual review of the assumptions underlying the valuation of DAC, deferred sales inducement assets, unearned revenue liabilities, liabilities for future policyholder benefits and embedded derivatives for our Individual Retirement, Group Retirement, and Protection Solution segments (assumption reviews are not relevant for the Investment Management and Research segment). Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgment and reflect our best estimate as of the date of the applicable financial statements.
Most of the variable annuity products, variable universal life insurance and universal life insurance products we offer maintain policyholder deposits that are reported as liabilities and classified within either Separate AccountAccounts liabilities or policyholder account balances. Our products and riders also impact liabilities for future policyholder benefits and unearned revenues and assets for DAC and deferred sales inducements (“DSI”).DSI. The valuation of these assets and liabilities (other than deposits) are based on differing accounting methods depending on the product, each of which requires numerous assumptions and considerable judgment. The accounting guidance applied in the valuation of these assets and liabilities includes, but is not limited to, the following: (i) traditional life insurance products for which assumptions are locked in at inception; (ii) universal life insurance and variable life insurance secondary guarantees for which benefit liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments; (iii) certain product guarantees for which benefit liabilities are accrued over the life of the contract in proportion to actual and future expected policy assessments; and (iv) certain product guarantees reported as embedded derivatives at fair value.
Our actuaries oversee the valuation of these product liabilities and assets and review underlying inputs and assumptions. We comprehensively review the actuarial assumptions underlying these valuations and update assumptions during the third quarter of each year. Assumptions are based on a combination of company experience, industry experience, management actions and expert judgment and reflect our best estimate as of the date of each financial statement. Changes in assumptions can result in a significant change to the carrying value of product liabilities and assets and, consequently, the impact could be material to earnings in the period of the change. For further details of our accounting policies and related judgments pertaining to assumption updates, see Note 2 of the Notes to thethese Consolidated Financial Statements and “—Summary of Critical Accounting Estimates—Liability for Future Policy Benefits.”Benefits”.
Assumption Updates and Model Changes
In 2018, we began conductingWe conduct our annual review of our assumptions and models during the third quarter consistent with industry practice for public companiesof each year. We also update our assumptions as needed in the event we become aware of economic conditions or events that could require a change in our peer group.
Our annual review encompasses assumptions underlying the valuation of unearned revenue liabilities, embedded derivatives for our insurance business, liabilities for future policyholder benefits, DAC and DSI assets. Asthat we believe may have a result of this review, some assumptions were updated, resulting in increases and decreases insignificant impact to the carrying valuesvalue of these product liabilities and assets.assets and consequently materially impact our earnings in the period of the change.
Impact of Assumption Updates and Model Changes on Income from Continuing Operations before income taxes and Net income (loss)
The table below presents the impact of our actuarial assumption updatesupdate during 2018, 20172021, 2020 and 20162019 to our Incomeincome (loss) from continuing operations, before income taxes and Netnet income (loss):.
75
Table of Contents
 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 updates206
 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
 $(20)
Year Ended December 31,
202120202019
(in millions)
Impact of assumption update on Net income (loss):
Variable annuity product features related assumption update$(91)$(1,531)$(1,467)
Assumption updates for other business(17)(1,060)76 
Impact of assumption updates on Income (loss) from continuing operations, before income tax(108)(2,591)(1,391)
Income tax benefit on assumption update23 544 292 
Net income (loss) impact of assumption update$(85)$(2,047)$(1,099)

2021 Assumption Updates
2018The impact of the assumption update during 2021 was a decrease of $108 million to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $85 million. As part of this annual update completed as of September 30, 2021, the reference interest rate utilized in our GAAP fair value calculations was updated from the LIBOR swap curve to the US Treasury curve, which represents a reasonable proxy of the cost of funding the derivative positions backing our GMxB liabilities. Concurrently, our GAAP fair value liability risk margins were increased. which when considered with the change from LIBOR, resulted in an immaterial impact to overall valuation as our view regarding market participant pricing of our guarantees has not changed at the time of this update.
The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $108 million consisted of a decrease in policy charges and fee income of $28 million, a decrease in policyholders’ benefits of $62 million, an increase in net derivative losses of $200 million and a decrease in the amortization of DAC of $58 million.
2020 Assumption Updates
Our annual review in 2020 resulted in the removal of the credit risk adjustment from our fair value scenario calibration to reflect our revised view of market participant practices, offset by updates to our mortality and policyholder behavior assumptions to reflect emerging experience.
In 2020, in addition to the annual review, we updated our assumptions in the first quarter due to the extraordinary economic conditions driven by the COVID-19 pandemic. The first quarter update included an update to the interest rate assumption to grade from the current interest rate environment at that time to an ultimate five-year historical average over a 10-year period. As such, the 10-year U.S. Treasury yield grades from the current level to an ultimate 5-year average of 2.25%.
The low interest rate environment and update to the interest rate assumption caused a loss recognition event for our life interest-sensitive products, as well as to certain run-off business included in Corporate and Other. This loss recognition event caused an acceleration of DAC amortization on our life interest-sensitive products and an increase in the premium deficiency reserve on the run-off business in the first quarter of 2020.
The net impact of assumption changes during 2020 was an increase in policy charges and fee income of $23 million, an increased policyholders’ benefits by $1.6 billion, decreased interest credited to policyholders’ account balances by $1 million, increased net derivative gains (losses) by $112 million and increased amortization of DAC by $1.1 billion. This resulted in a decrease in income (loss) from operations, before income taxes of $2.6 billion and decreased net income (loss) by $2.0 billion. The 2020 impacts related to assumption updates were primarily driven by the first quarter updates.
2019 Assumption Updates
The impact of assumption updates in 2018 on Income2019 was a decrease of $1.4 billion to income (loss) from continuing operations, before income taxes was a decrease of $160 million and a decrease to Netnet income (loss) of $131 million.$1.1 billion. This includes a $366 million$1.5 billion unfavorable impact on the reserves for our Variablevariable annuity product features as a result of unfavorable updates to our: (i) interest rate assumptions; and (ii) policyholder behavior, primarily annuitizationlapse and withdrawal assumptions, partially offsetfurther magnified by favorable updates to economic assumptions.low interest rates.
The assumption changes during 2018 consisted of a decrease in Policy charges and fee income of $24 million, a decrease in Policyholders’ benefits of $673 million, an increase in Net derivative losses of $1,095 million, and a decrease in the Amortization of DAC of $286 million.
2017 Assumption Updates
Thenet impact of thethese assumption updates in 2017 on Incomeincome (loss) from continuing operations, before income taxes was an increase of $711 million and an increase to Net income (loss) of approximately $462 million. This includes a $17 million unfavorable impact on the reserves for our Variable annuity product features as a result of unfavorable updates to policyholder behavior assumptions.
The assumption changes during 2017$1.4 billion consisted of an increase in Policyholders’ benefits of $277 million, a decrease in Amortization of DAC of $112 million, a decrease in Policypolicy charges and fee income of $85$3 million, an increase in policyholders’ benefits of $875
76
Table of Contents
million, a decrease in interest credited to policyholders’ account balances of $13 million, a decrease in net derivative gains (losses) of $578 million and a decrease in Net derivative losses by $961 million.the amortization of DAC of $46 million.
2016 Assumption Updates2021 and 2019 Model Changes
TheThere was no material impact of the assumption updates in 2016 on Incometo our income (loss) from continuing operations, before income taxes was a decrease of $30 million and a decrease to Netor net income (loss) of approximately $20 million. The decrease was related to our Protection Solutions segment and was primarily the result of adverse mortality assumption updates and declines in the GA portfolio earned rates.
The assumptionfrom model changes during 2016 consisted2021 and 2019.
2020 Model Changes
In the first quarter of 2020, we adopted a decreasenew economic scenario generator to calculate the fair value of the GMIB reinsurance contract asset and GMxB derivative features liability, eliminating reliance on AXA for scenario production. The new economic scenario generator allows for a tighter calibration of U.S. indices, better reflecting our actual portfolio. The net impact of the new economic scenario generator resulted in Policyholders’ benefits of $117 million, an increase in the Amortization of DACincome (loss) from continuing operations, before income taxes of $201 million, and an increase in Policy charges and feeto net income (loss) of $54 million.$159 million for the year ended December 31,2020. There were no other model changes that made a material impact to our income (loss) from continuing operations, before income taxes or net income (loss).
Impact of Assumption Updates and Model Changes on Pre-tax Non-GAAP Operating Earnings Adjustments
The table below presents the impact on pre-tax Non-GAAP Operating earningsEarnings of our actuarial assumption updates during 2018, 20172021, 2020 and 20162019 by segment and Corporate and Other:Other.
Year Ended December 31,
202120202019
(in million)
Impact of assumption updates by segment:
Individual Retirement$(47)$(28)$104 
Group Retirement35 (3)3 
Protection Solutions20 4 (4)
Impact of assumption updates on Corporate and Other— (12)(27)
Total impact on pre-tax Non-GAAP Operating Earnings$8 $(39)$76 
 Years Ended December 31,
 2018 2017 2016
   (in millions)  
Impact of assumption updates by segment:     
Individual Retirement$59
 $58
 $—
Group Retirement43
 47
 —
Protection Solutions107
 623
 (30)
Impact of assumption updates on Corporate and Other

(3) —
 —
Total impact on pre-tax Non-GAAP Operating Earnings$206
 $728
 $(30)
20182021 Assumption Updates
The impact of our 2021 annual review on Non-GAAP Operating earnings in 2018Earnings was favorable by $169 million, or $206$8 million before taking into consideration the tax impacts.
impacts or $6 million after tax. For the Individual Retirement segment, the impacts primarily reflect favorable updates to DAC amortization from primarily lower annuitization assumptions and other policyholder behavior updates.
updated mortality on our older payout business. For the Group Retirement segment, the impacts primarily reflect a favorableupdated economic assumptions. The annual update reflecting lower withdrawal rates.

For thefor Protection Solutions segment reflects favorable economic conditions and surrenders primarily on the results primarily reflect favorable updates to surrender rates, expensesVUL line. This, in turn, creates future profits and General Account investment yields, partially offset by an increase in mortality assumptions. As a resultlowers the accrual on our PFBL reserve.
The net impact of theseassumption changes the variable and interest sensitive productson Non-GAAP Operating Earnings in the Protection Solutions segment are no longer in loss recognition.
third quarter of 2021 decreased Policy charges and fee income by $28 million, increased Policyholders’ benefits by $22 million, and decreased Amortization of DAC by $58 million. Non-GAAP Operating Earnings excludes items related to Variable annuity product features, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments. Accordingly,
2020 Assumption Updates
The impact of our 2020 annual review on Non-GAAP Operating Earnings was unfavorable by $39 million before taking into consideration the $366tax impacts or $31 million unfavorable impact to Net income (loss) mentioned above for 2018, comprised of a $1,095 million increase in after tax. For the fair valueIndividual Retirement segment, the impacts primarily reflect higher surrenders at the end of the GMIBNLG liabilitysurrender charge period on Retirement Cornerstone policies. The impact of our 2020 annual review was not material for our Group Retirement and a $729 million decrease in Policyholders’ benefits reflected in Net income (loss) are excluded from Non-GAAP Operating Earnings. After excluding these items, theProtection Solutions segments.
The net impact of assumption changes on Non-GAAP Operating Earnings in 2018the third quarter of 2020 decreased Policy charges and fee income by $24$23 million,, increased Policyholder’Policyholders’ benefits by $56$46 million,, increased Interest credited to policyholders’ account balances by $5 million and decreased Amortization of DAC by $286 million.$35 million. Non-GAAP Operating Earnings excludes items related to Variable annuity product features and the impact of COVID-19, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments.
2017
77
Table of Contents
2019 Assumption Updates
The impact of our assumption updates2019 annual review on Non-GAAP Operating Earnings in 2017 was favorable by $473$60 million, or $728$76 million before taking into consideration the tax impacts.
•For the Individual Retirement segment, the impacts primarily reflect favorable updates to amortization of DAC from lower lapse assumptions.
•For the Group Retirement segment, the impacts primarily reflect a favorable update to maintenance expenses.
•For the Protection Solutions segment, the results primarily reflect unfavorable updates to mortality and economic assumptions, partially offset by a favorable update to maintenance expenses.
Non-GAAP Operating Earnings excludes items related to variable annuity product features, such as changes in the fair value of the embedded derivatives associated with the GMIBNLG liability and the effect of benefit ratio unlock adjustments. The net impact of assumption changes on Non-GAAP Operating Earnings in the third quarter of 2019 increased policy charges and fee income by $3 million, decreased policyholder’ benefits by $15 million, decreased interest credited to policyholders’ account balances by $13 million and decreased amortization of DAC by $46 million.
Impact of the First Quarter 2020 Assumption Update, and COVID-19 Impacts on Pre-tax Non-GAAP Operating Earnings Adjustments
The unprecedented and rapid spread of COVID-19 and the related restrictions and social distancing measures implemented throughout the world caused severe, lasting turmoil in the financial markets during the first six months of 2020.
The Company’s accounting policy governing its Non-GAAP Operating Earnings measure permits adjustments to Non-GAAP Operating Earnings if certain criteria are met, which include if the proposed adjustment relates to a non-recurring event or transaction. Management concluded that all impacts on the Company from the COVID-19 pandemic and its effects on the economy meet the indicators of a non-recurring event. Therefore, management has determined that the items set forth in the table below should be included as adjustments to the Non-GAAP Operating Earnings measure so that investors can more clearly see the delineation between the operating results of the Company’s core operations and the impact of the items specific to the current COVID-19 pandemic crisis.
The table below presents the COVID-19 pandemic related impacts on income (loss) from continuing operations, before income taxes by segment and Corporate and Other, and the COVID-19 pandemic related adjustments included in the reconciliation of Net Income (loss) attributable to Holdings to Non-GAAP Operating Earnings:
Year Ended December 31, 2020
COVID-19 Impacts
Interest Rate Assumption UpdateImpacts other than Interest Rate Assumption
Update (1)		Total
(in millions)
Net income (loss) from continuing operations, before income taxes by Segment and Corporate and Other:
Individual Retirement$(1,417)$(43)$(1,460)
Group Retirement(51)— (51)
Protection Solutions(1,016)(75)(1,091)
Corporate and Other(33)(3)(36)
Net income (loss) from continuing operations, before income taxes$(2,517)$(121)$(2,638)



COVID-19-related adjustments included in Reconciliation of Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings:
Variable annuities product features$(1,468)$(35)$(1,503)
Other adjustments(1,049)(86)(1,135)
Net income (loss) from continuing operations, before income taxes$(2,517)$(121)$(2,638)
78
Table of Contents
_______________
(1)Includes adjustments to Non-GAAP Operating Earnings primarily due to non-variable annuity hedging impacts resulting from unprecedented volatility in equity markets and accelerated amortization of DAC due to loss recognition in the first half of 2020 resulting from first quarter 2020 interest rate assumption update.
Adjustments related to the Individual Retirement and Group Retirement segments are primarily included in the impacts primarily reflect favorable updates to“Variable annuities product features” in 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.
The Variable annuity product features reflected inreconciliation of Net income (loss) and excluded fromattributable to Holdings to Non-GAAP Operating Earnings had an unfavorableEarnings. All other adjustments are included in “Other”. This impact of $17 million, comprised of a $978 million increase in Policyholders’ benefitshas been more than offset by a $504 million increase in the fair value of the GMIB reinsurance contract asset and a $457 million decrease in the fair value of the GMIBNLG liability. After excluding these items, the net impact of assumption changes on Non-GAAP Operating Earnings in 2017 decreased Policy charges and fee income by $85 million, decreased Policyholder’ benefits by $701 million, and decreased Amortization of DAC by $112 million.hedging gains.
2016 Assumption Updates
The impact of our assumption updates on Non-GAAP Operating Earnings in 2016 was unfavorable by $20 million, or $30 million before taking into consideration the tax impacts. The updates were all related to our Protection Solutions segment and were primarily the result of adverse mortality assumption updates and declines in the GA portfolio earned rates. There were no differences between our U.S. GAAP and Non-GAAP Operating Earnings as a result of these assumption updates.
Macroeconomic and Industry Trends
Our business and consolidated results of operations are significantly affected by economic conditions and consumer confidence, conditions in the global capital markets and the interest rate environment.
Financial and Economic Environment
A wide variety of factors continue to impact global financial and economic conditions. These factors include,conditions, including, among others, concerns over economic growththe COVID-19 pandemic, volatility in the United States,financial markets, rising inflation rates, continued low interest rates, falling unemployment rates, the U.S. Federal Reserve’s potential plans to further raise short-term interest rates, fluctuations in the strength of the U.S. dollar, the uncertainty created by what actions the current administration may pursue, concerns over global trade wars, changes in taxfiscal or monetary policy global economic factors including programs by the European Central Bank and the United Kingdom’s vote to exit from the European Union and other geopolitical issues. Additionally, many of the products and solutions we sell are tax-advantaged or tax-deferred. If U.S. tax laws were to change, such that our products and solutions are no longer tax-advantaged or tax-deferred, demand for our products could materially decrease. See “Risk Factors—Legal and Regulatory Risks—Future changes in the U.S. tax laws and regulations or interpretations of the Tax Reform Act could reduce our earnings and negatively impact our business, results of operations or financial condition, including by making our products less attractive to consumers.supply chain disruptions.
Stressed conditions, volatility and disruptions in the capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors.factors, including changes in interest rates, which are anticipated to occur in 2022 based on statements of members of the Board of Governors of the Federal Reserve System. An increase in market volatility could continue to affect our business, including through effects on the

yields we earn on invested assets, changes in required reserves and capital and fluctuations in the value of our AUM, AV or AUA.AUA from which we derive our fee income. These effects could be exacerbated by uncertainty about future fiscal policy, changes in tax policy, the scope of potential deregulation and levels of global trade.
In the short- to medium-term, theThe potential for increased volatility, coupled with prevailing interest rates falling and/or remaining below historical averages, could pressure sales and reduce demand for our products as consumers consider purchasing alternative products to meet their objectives. In addition, this environment could make it difficult to consistently develop products that are attractive to customers. Financial performance can be adversely affected by market volatility and equity market declines as fees driven by AV and AUM fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows.
We monitor the behavior of our customers and other factors, including mortality rates, morbidity rates, annuitization rates and lapse and surrender rates, which change in response to changes in capital market conditions, to ensure that our products and solutions remain attractive and profitable. For additional information on our sensitivity to interest rates and capital market prices, Seesee “Quantitative and Qualitative Disclosures About Market Risk.”
Interest Rate Environment
We believe the interest rate environment will continue to impact our business and financial performance in the future for several reasons, including the following:
•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.

79
Table of Contents
For a discussion on derivatives we used to hedge interest rates, see Note 4 of the Notes to these Consolidated Financial Statements in this Form 10-K.
Regulatory Developments
Our life insurance subsidiaries are regulated primarily at the state level, with some policies and products also subject to federal regulation. OnIn addition, Holdings and its insurance subsidiaries are subject to regulation under the insurance holding company laws of various U.S. jurisdictions. Furthermore, on an ongoing basis, regulators refine capital requirements and introduce new reserving standards. Regulations recently adopted or currently under review can potentially impact our statutory reserve, capital requirements and capital requirements.
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 wakeprofitability of the March 2018 federal appeals court decision to vacateindustry and result in increased regulation and oversight for 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. industry. For example, the NAIC is actively workingadditional information 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.

Regulation 187 takes effect on August 1, 2019 with respect to annuity sales and February 1, 2020 for life insurance sales and is applicable to sales of life insurance and annuity products in New York. In November 2018, the primary agent groups in New York launched a legal challenge against the NYDFS over the adoption of Regulation 187. It is not possible to predict whether this challenge will be successful. We are currently assessing Regulation 187 to determine the impact it may have on our business. Beyond the New York regulation, the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
In April 2018, the SEC released a set of proposed rules that would, among other things, enhance the existing standard of conduct for broker-dealers to require them to act in the best interest of their clients; clarify the nature of the fiduciary obligations owed by registered investment advisers to their clients; impose new disclosure requirements aimed at ensuring investors understand the nature of their relationship with their investment professionals; and restrict certain broker-dealers and their financial professionals from using the terms “adviser” or “advisor”. 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.
Impact of the Tax Reform Act
On December 22, 2017, President Trump signed into law the Tax Reform Act, a broad overhaul of the U.S. Internal Revenue Code that changed long-standing provisions governing the taxation of U.S. corporations, including life insurance companies.
The Tax Reform Act reduced the federal corporate income tax rate to 21% and repealed the corporate Alternative Minimum Tax (“AMT”) while keeping existing AMT credits. It also contained measures affecting our insurance companies, including changes to the DRD, insurance reserves and tax DAC, and measures affecting our international operations. As a result of the Tax Reform Act, our Net Income and Non-GAAP Operating Earnings has improvedregulatory developments and the tax liability on the earnings of our foreign subsidiaries has decreased.
In August 2018, the NAIC adopted changes to the RBC calculation, 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.
Overall, the Tax Reform Act had a net positive economic impact on usrisks we face, see “Business—Regulation” and we continue to monitor regulations related to this reform.“Risk Factors—Legal and Regulatory Risks.”
Separation Costs
In connection with the IPO and transitioning to operating as a stand-alone public company,our separation from AXA, we have incurred expenses of $722 million of which $82 million, $108 million, and expect to continue to incur one-time$222 million was incurred in 2021, 2020 and recurring expenses.2019, respectively. These expenses primarily relate to information technology, compliance, internal audit, finance, risk management, procurement, client service, human resources, rebranding and other support services. The process of replicating and replacing functions, systems and infrastructure provided by AXA or certain of its affiliates in order to operate on a stand-alone basis is currently underway.
We estimate that the aggregate amount of the one-time expenses described above will be between approximately $300 million and $350 million, of which $213 million and $93 millionwas incurred in 2018 and 2017, respectively. Furthermore, additional one-time expenses will be incurred when AXA ceases to own at least a majority ofhave successfully completed our outstanding common stock. See “Risk Factors—Risks Relating to Our Controlling Stockholder—We may fail to replicate or replace functions, systems and infrastructure provided by AXA or certain of its affiliates (including through shared service contracts) or lose benefitsseparation from AXA’s global contracts, and AXA and its affiliates may fail to perform the services provided for in the Transitional Services Agreement” and “Risk Factors—Risks Relating to Our Controlling Stockholder—Costs associated with any rebranding that wedo not expect to undertake after AXA ceasesincur any additional expense related to own at least a majority of our outstanding common stock could be significant.”

the separation from AXA.
Productivity Strategies
Retirement and Protection Businesses
We continueAs part of our continuing efforts to build upon ourdrive productivity improvements, throughon January 2021, we began a new program expected to achieve $80 million of targeted run-rate expense savings by 2023, of which we have delivered more than $350$31 million was achieved in efficiency improvements from 2012 through 2017. Our productivity strategy includes several initiatives, including relocating some of2021. We expect to achieve these saving by shifting our workforce into an agile working model, leveraging technology-enabled capabilities, optimizing our real estate footprint, away from the New York metropolitan area, replacing or updating less efficient legacy technology infrastructure and expanding existing outsourcing arrangements, which we believe will reduce costs and improve productivity.continuing to realize a portion of COVID-19 related savings.
We anticipate that the savings from these initiatives will offset any incremental ongoing expenses that 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 pre-tax per annum by 2020.
Investment Management and Research Business
As previously announced, AB has announced that it will establishestablished its corporate headquarters in Nashville, Tennessee and relocaterelocated approximately 1,0501,250 jobs located infrom the New York metro area to, Nashville, Tennessee. For more detail on the costs andarea. Beginning in 2025, AB estimates ongoing annual expense savings AB expectsof approximately $75 million to incur as$80 million, which will result from a resultcombination of this relocation, see AB’s Annual Report on Form 10-K for the year ended December 31, 2018.occupancy and compensation-related savings.
80
Table of Contents
Key Operating Measures
In addition to our results presented in accordance with U.S. GAAP, we report Non-GAAP Operating Earnings, Non-GAAP Operating ROE, Non-GAAP Operating ROC by segment for our Individual Retirement, Group Retirement and Protection Solutions segments, and Non-GAAP Operating Earnings per share,operating common EPS, each of which is a measure that is not determined in accordance with U.S. GAAP. Management principally uses these non-GAAP financial measures in evaluating performance because they present a clearer picture of our operating performance and they allow management to allocate resources. Similarly, management believes that the use of these non-GAAPNon-GAAP financial measures, together with relevant U.S. GAAP measures, providesprovide investors with a better understanding of our results of operations and the underlying profitability drivers and trends of our business. These non-GAAP financial measures are intended to remove from our results of operations the impact of market changes (where there is mismatch in the valuation of assets and liabilities) as well as certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results that are presented in accordance with U.S. GAAP and should not be viewed as a substitute for the U.S. GAAP measures. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Consequently, our non-GAAP financial measures may not be comparable to similar measures used by other companies.
We also discuss certain operating measures, including AUM, AUA, AV, Protection Solutions Reserves and certain other operating measures, which management believes provide useful information about our businesses and the operational factors underlying our financial performance.
Non-GAAP Operating Earnings
Non-GAAP Operating Earnings is an after-tax non-GAAP financial measure used to evaluate our financial performance on a consolidated basis that is determined by making certain adjustments to our consolidated after-tax net income attributable to Holdings. The most significant of such adjustments relates to our derivative positions, which protect economic value and statutory capital, and are more sensitive to changes in market conditions than the variable annuity product liabilities as valued under U.S. GAAP. This is a large source of volatility in net income.
In the first quarter of 2018, the Company revised its Non-GAAP Operating Earnings definition as it relates to the treatment of certain elements of the profitability of its variable annuity products with indexed-linked features to align to the treatment of its variable annuity products with GMxB features. In addition, adjustments for variable annuity products with index-linked features previously included within Other adjustments in the calculation of Non-GAAP Operating Earnings are now included with the adjustments for variable annuity products with GMxB features in the broader adjustment category, Variable annuity product features. The presentation of Non-GAAP Operating Earnings in prior periods was revised to reflect this change in definition.
Non-GAAP Operating Earnings equals our consolidated after-tax net income attributable to Holdings adjusted to eliminate the impact of the following items:

•Items related to Variablevariable annuity product features, which includeinclude: (i) certain changes in the fair value of the derivatives and other securities we use to hedge these features,features; (ii) the effect of benefit ratio unlock adjustments, including extraordinary economic conditions or events such as COVID-19; and (iii) changes in the fair value of the embedded derivatives reflected within variable annuity products’ net derivative results;
results and the impact of these items on DAC amortization on our SCS product;
•Investment (gains) losses, which includes other-than-temporarycredit loss impairments of securities,securities/investments, 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 includesprimarily include restructuring costs related to severance lease write-offs related to non-recurring restructuring activities, and separation, costs;COVID-19 related impacts, net derivative gains (losses) on certain Non-GMxB derivatives, net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments, unrealized gain/losses associated with equity securities and
certain legal accruals; 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.
period.
Because Non-GAAP Operating Earnings excludes the foregoing items that can be distortive or unpredictable, management believes that this measure enhances the understanding of the Company’s underlying drivers of profitability and trends in our business, thereby allowing management to make decisions that will positively impact our business.
We use ourthe prevailing corporate federal income tax rate of 21%, 35% and 35% in 2018, 2017 and 2016, respectively, while taking into account any non-recurring differences for events recognized differently in our financial statements and federal income tax returns as well as partnership income taxed at lower rates when reconciling Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings.
81
Table of Contents
The table below presents a reconciliation of Netnet income (loss) attributable to Holdings to Non-GAAP Operating Earnings for the years ended December 31, 2018, 20172021, 2020 and 2016:2019:
Years Ended December 31,Year Ended December 31,
2018 2017 2016202120202019
(in millions)(in millions)
Net income (loss) attributable to Holdings$1,820
 $834
 $1,254
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Adjustments related to:     Adjustments related to:
Variable annuity product features(70) 1,107
 2,143
Variable annuity product features (1)Variable annuity product features (1)4,145 3,912 4,863 
Investment (gains) losses86
 191
 (1,983)Investment (gains) losses(867)(744)(73)
Goodwill impairment—
 369
 —
Net actuarial (gains) losses related to pension and other postretirement benefit obligations215
 135
 140
Net actuarial (gains) losses related to pension and other postretirement benefit obligations120 109 99 
Other adjustments (1)299
 119
 (7)
Income tax expense (benefit) related to above adjustments(111) (644) (93)
Non-recurring tax items(73) (76) (63)
Other adjustments (2) (3) (4) (5)Other adjustments (2) (3) (4) (5)717 952 395 
Income tax expense (benefit) related to above adjustments (6)Income tax expense (benefit) related to above adjustments (6)(864)(888)(1,097)
Non-recurring tax items (7)Non-recurring tax items (7)13 (391)(66)
Non-GAAP Operating Earnings$2,166
 $2,035
 $1,391
Non-GAAP Operating Earnings$2,825 $2,302 $2,357 
___________
(1)“Other adjustments” includes separation costs of $213 million and $93 million in 2018 and 2017, respectively.

(1)Includes COVID-19 impact on Variable annuity product features due to a first quarter 2020 assumption update of $1.5 billion and other COVID-19 related impacts of $35 million for the year ended December 31, 2020.
(2)Includes COVID-19 impact on Other adjustments due to a first quarter 2020 assumption update of $1.0 billion and other COVID-19 related impacts of $86 million for the year ended December 31, 2020.
(3)Other adjustments includes separation costs of $82 million,$108 million, and $222 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(4)Includes Non-GMxB related derivative hedge losses of $65 million, ($404) million and $36 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(5)Includes certain legal accruals related to the cost of insurance litigation of $207 million for the year ended December 31, 2021.
(6)Includes income taxes of ($554) million for the above related COVID-19 items for the year ended December 31, 2020.
(7)Includes a reduction in the reserve for uncertain tax positions resulting from the completion of an IRS examination in the year ended December 31, 2020.
Non-GAAP Operating ROE and Non-GAAP Operating ROC by Segment
We plan to report Non-GAAP Operating ROE beginning in the second quarter 2019, and we currently report Non-GAAP Operating ROC by segment for our Individual Retirement, Group Retirement and Protection Solutions segments, each of which is a Non-GAAP financial measure used to evaluate our recurrent profitability on a consolidated basis and by segment, respectively.
We calculate Non-GAAP Operating ROE by dividing Non-GAAP Operating Earningsoperating earnings for the previous twelve calendar months by consolidated average equity attributable to Holdings,Holdings’ common shareholders, excluding Accumulated Other Comprehensive Income (“AOCI”) and Non-controlling interest (“NCI”).AOCI. We calculate Non-GAAP Operating ROC by segment by dividing operatingOperating earnings (loss) on a segment basis for the previous twelve calendar months by

average capital on a segment basis, excluding AOCI, and NCI, as described below. AOCI fluctuates period-to-period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our available for sale (“AFS”)AFS securities.
Therefore, we believe excluding AOCI is more effective for analyzing the trends of our operations. We do not calculate Non-GAAP Operating ROC by segment for our Investment Management &and Research segment because we do not manage that segment from a return of capital perspective. Instead, we use metrics more directly applicable to an asset management business, such as AUM, to evaluate and manage that segment.
For Non-GAAP Operating ROC 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).reflecting the NAIC RBC framework adopted as of year-end 2019. To enhance the ability to analyze these measures across periods, interim periods are annualized. Non-GAAP Operating ROE and Non-GAAP Operating ROC by segment should not be used as substitutes for ROE.
The following table sets forthpresents return on average equity attributable to Holdings’ common shareholders, excluding AOCI and Non-GAAP Operating ROE for the year ended December 31, 2021.
82
Table of Contents
Year Ended December 31, 2021
(in millions)
Net income (loss) available to Holdings’ common shareholders$(518)
Average equity attributable to Holdings’ common shareholders, excluding AOCI$8,193
Return on average equity attributable to Holdings’ common shareholders, excluding AOCI(6.3)%
Non-GAAP Operating Earnings available to Holdings’ common shareholders$2,746
Average equity attributable to Holdings’ common shareholders, excluding AOCI$8,193
Non-GAAP Operating ROE33.5%

The following table presents Non-GAAP Operating ROC by segment for our Individual Retirement, Group Retirement and Protection Solutions segments for the years ended December 31, 20182021, 2020 and 2017.2019.
Individual RetirementGroup RetirementProtection Solutions
(in millions)
Year Ended December 31, 2021
Operating earnings$1,444 $631 $317 
Average capital (1)$6,350 $1,154 $2,154 
Non-GAAP Operating ROC22.8 %54.6 %14.7 %
Year Ended December 31, 2020
Operating earnings$1,536 $491 $146 
Average capital (1)$6,352 $1,073 $2,170 
Non-GAAP Operating ROC24.2 %45.8 %6.7 %
Year Ended December 31, 2019
Operating earnings$1,598 $390 $336 
Average capital (1)$7,357 $1,333 $2,998 
Non-GAAP Operating ROC21.7 %29.3 %11.2 %
 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 ROC22.5% 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 ROC18.1% 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).

(1)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).
Non-GAAP Operating Earnings Per ShareCommon EPS
Non-GAAP Operating Earnings Per Share (“Non-GAAP EPS”)operating common EPS is calculated by dividing Non-GAAP Operating Earnings by diluted common shares outstanding. The following table sets forth Non-GAAP Operatingoperating common EPS for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.
83
Table of Contents
Year Ended December 31,
Years Ended December 31,202120202019
2018 2017 2016(per share amounts)
(per share amounts)
Net income (loss) attributable to Holdings$3.27
 $1.49
 $2.24
Net income (loss) attributable to Holdings (1)Net income (loss) attributable to Holdings (1)(1.05)(1.44)(3.57)
Less: Preferred stock dividendsLess: Preferred stock dividends0.19 0.12 — 
Net income (loss) available to Holdings’ common shareholdersNet income (loss) available to Holdings’ common shareholders(1.24)(1.56)(3.57)
Adjustments related to:     Adjustments related to:
Variable annuity product features(0.13) 1.97
 3.82
Variable annuity product features (2)Variable annuity product features (2)9.93 8.68 9.85 
Investment (gains) losses0.15
 0.34
 (3.53)Investment (gains) losses(2.08)(1.65)(0.15)
Goodwill impairment—
 0.66
 —
Net actuarial (gains) losses related to pension and other postretirement benefit obligations0.39
 0.24
 0.25
Net actuarial (gains) losses related to pension and other postretirement benefit obligations0.29 0.24 0.20 
Other adjustments0.54
 0.22
 (0.02)
Other adjustments (3) (4) (5) (6)Other adjustments (3) (4) (5) (6)1.72 2.12 0.80 
Income tax expense (benefit) related to above adjustments(7)(0.20) (1.15) (0.17)(2.07)(1.97)(2.22)
Non-recurring tax items(8)(0.13) (0.14) (0.11)0.03 (0.87)(0.13)
Non-GAAP Operating Earnings$3.89
 $3.63
 $2.48
Non-GAAP operating earningsNon-GAAP operating earnings$6.58 $4.99 $4.78 

______________
___________(1)For periods presented with a net loss, basic shares was used for the years ended December 31, 2021, 2020 and 2019.
(1)
“Other adjustments” includes separation costs of $0.38 and $0.17 in 2018 and 2017, respectively.

(2)Includes COVID-19 impact on Variable annuity product features due to a first quarter 2020 assumption update of $3.26 and other COVID-19 related impacts of $0.08 for the year ended December 31, 2020.
(3)Includes COVID-19 impact on Other adjustments due to a first quarter 2020 assumption update of $2.33 for the year ended December 31, 2020 and other COVID-19 related impacts of $0.19 for the year ended December 31, 2020.
(4)Includes separation costs of $0.20, $0.24 and $0.45 for the years ended December 31, 2021, 2020 and 2019, respectively.
(5)Includes Non-GMxB related derivative hedge losses of $0.14,($0.90), and $0.08 for the years ended December 31, 2021, 2020 and 2019, respectively.
(6)Includes certain legal accruals related to the cost of insurance litigation of $0.50 for the year ended December 31, 2021. No adjustments were made to prior period non-GAAP operating EPS as the impact was immaterial.
(7)Includes income taxes of $(1.23) for the above related COVID-19 items for the year ended December 31, 2020.
(8)Includes a reduction in the reserve for uncertain tax positions resulting from the completion of an IRS examination in the year ended December 31, 2020.
Assets Under Management
AUM means investment assets that are managed by one of our subsidiaries and includes: (i) assets managed by AB; (ii) the assets in our General Account investment portfolio; and (iii) the Separate AccountAccounts assets of our Individual Retirement, Group Retirement and Protection Solutions businesses. Total AUM reflects exclusions between segments to avoid double counting.
Assets Under Administration
AUA includes non-insurance client assets that are invested in our savings and investment products or serviced by our AXAEquitable Advisors platform. We provide administrative services for these assets and generally record the revenues received as distribution fees.
Account Value
AV generally equals the aggregate policy account value of our retirement 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.assets
Protection Solutions Reserves
Protection Solutions Reservesreserves equals the aggregate value of Policyholders’policyholders’ account balances and Futurefuture policy benefits for policies in our Protection Solutions segment.
Consolidated Results of Operations
Our consolidated results of operations are significantly affected by conditions in the capital markets and the economy because we offer market sensitive products. These products have been a significant driver of our results of operations. Because the future claims exposure on these products is sensitive to movements in the equity markets and interest rates, we have in place various hedging and reinsurance programs that are designed to mitigate the economic risks of movements in the equity markets and interest rates. The volatility in Net income attributable to Holdings for the periods presented below results from the mismatch between: (i) the change in carrying value of the reserves for GMDB and certain GMIB features that do not fully and immediately reflect the impact of equity and interest market fluctuations; and (ii) the change in fair value of products with the GMIB feature that has a no-lapse guarantee, and our hedging and reinsurance programs.
Reclassification of DAC Capitalization
During the fourth quarter of 2018, we revised our presentation of the capitalization of deferred acquisition costs (“DAC”) in the consolidated statements of income for all prior periods presented herein by netting the capitalized amounts within the applicable expense line items, such as Compensation and benefits, Commissions and distribution plan payments, and Other operating costs and expenses. Previously, the capitalized amounts were netted within the Amortization of deferred acquisition costs. There was no impact on Net income (loss) or Non-GAAP Operating Earnings of this reclassification.
The reclassification adjustments for the years ended December 31, 2017 and 2016 are presented in the table below. Capitalization of DAC reclassified to Compensation and benefits, Commissions and distribution plan payments, and Other operating costs and expenses reduced the amounts previously reported in those expense line items, whereas the capitalization of DAC reclassified from the Amortization of deferred policy acquisition costs line item increases that expense line item.

84
 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 expenses73
 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
Ownership and Consolidation
Table of AllianceBernsteinContents
Our indirect, wholly owned subsidiary, AllianceBernstein Corporation, is the General Partner of AB. Accordingly, AB is consolidated in our financial statements, and its results are fully reflected in our consolidated financial statements.
As of December 31, 2018, 2017 and 2016, our economic interest in AB was approximately 65%, 47% and 46%, respectively. On April 23, 2018, Holdings purchased: (i) 8,160,000 AB Units from Coliseum Reinsurance Company; and (ii) all of the issued and outstanding shares of common stock of AXA IM Holding US, which owns 41,934,582 AB Units. In 2018 and 2017, Holdings purchased 254,675 and 2,312,163 AB Holdings units, respectively, from a former AB executive.
Consolidated Results of Operations
Our consolidated results of operations are significantly affected by conditions in the capital markets and the economy because we offer market sensitive products. These products have been a significant driver of our results of operations. Because the future claims exposure on these products is sensitive to movements in the equity markets and interest rates, we have in place various hedging and reinsurance programs that are designed to mitigate the economic risk of movements in the equity markets and interest rates. The volatility in net income attributable to Holdings for the periods presented below results from the mismatch between: (i) the change in carrying value of the reserves for GMDB and certain GMIB features that do not fully and immediately reflect the impact of equity and interest market fluctuations; (ii) the change in fair value of products with the GMIB feature that have a no-lapse guarantee; and (iii) our hedging and reinsurance programs.
Ownership and Consolidation of AllianceBernstein
Our indirect, wholly-owned subsidiary, AllianceBernstein Corporation, is the General Partner of AB. Accordingly, AB’s results are fully reflected in our consolidated financial statements.
Our economic interest in AB was approximately 65% during the years ended December 31, 2021, 2020 and 2019.
Consolidated Results of Operations
The following table summarizes our consolidated statements of income (loss) for the years ended December 31, 2018, 20172021, 2020 and 2016:2019:

Consolidated Statement of Income (Loss)
Year Ended December 31,
202120202019
(in millions, except per share data)
REVENUES
Policy charges and fee income$3,637 $3,735 $3,778 
Premiums960 997 1,147 
Net derivative gains (losses)(4,465)(1,722)(4,012)
Net investment income (loss)3,846 3,477 3,699 
Investment gains (losses), net:
Credit losses on available-for-sale debt securities and loans2 (58)— 
Other investment gains (losses), net866 802 73 
Total investment gains (losses), net868 744 73 
Investment management and service fees5,395 4,608 4,380 
Other income795 576 554 
Total revenues11,036 12,415 9,619 
85
Table of Contents
Year Ended December 31,
Years Ended December 31,202120202019
2018 2017 2016
(in millions, except per share data)
REVENUES     
Policy charges and fee income$3,824
 $3,693
 $3,729
Premiums1,094
 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 fees4,268
 4,093
 3,749
Other income516
 445
 402
Total revenues12,078
 12,460
 11,763
     (in millions, except per share data)
BENEFITS AND OTHER DEDUCTIONS     BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits2,915
 4,366
 3,342
Policyholders’ benefits3,218 5,326 4,385 
Interest credited to policyholders’ account balances1,090
 995
 967
Interest credited to policyholders’ account balances1,219 1,222 1,263 
Compensation and benefits2,079
 1,980
 1,965
Compensation and benefits2,360 2,096 2,081 
Commissions and distribution related payments1,160
 1,081
 1,000
Commissions and distribution-related paymentsCommissions and distribution-related payments1,662 1,351 1,242 
Interest expense231
 160
 174
Interest expense244 200 221 
Amortization of deferred policy acquisition costs333
 503
 779
Amortization of deferred policy acquisition costs393 1,613 597 
Other operating costs and expenses1,809
 2,069
 1,509
Other operating costs and expenses2,109 1,700 1,890 
Total benefits and other deductions9,617
 11,154
 9,736
Total benefits and other deductions11,205 13,508 11,679 
Income (loss) from continuing operations, before income taxes2,461
 1,306
 2,027
Income (loss) from continuing operations, before income taxes(169)(1,093)(2,060)
Income tax (expense) benefit(307) (49) (378)Income tax (expense) benefit145 744 593 
Net income (loss)2,154
 1,257
 1,649
Net income (loss)(24)(349)(1,467)
Less: net (income) loss attributable to the noncontrolling interest(334) (423) (395)
Less: Net income (loss) attributable to the noncontrolling interestLess: Net income (loss) attributable to the noncontrolling interest415 299 297 
Net income (loss) attributable to Holdings$1,820
 $834
 $1,254
Net income (loss) attributable to Holdings(439)(648)$(1,764)
Less: Preferred stock dividendsLess: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings’ common shareholdersNet income (loss) available to Holdings’ common shareholders$(518)$(701)$(1,764)
     
EARNINGS PER SHARE     
Earnings per share - common stock:     
EARNINGS PER COMMON SHAREEARNINGS PER COMMON SHARE
Net income (loss) applicable to Holdings’ common shareholders per common share:Net income (loss) applicable to Holdings’ common shareholders per common share:
Basic$3.27
 $1.49
 $2.24
Basic$(1.24)$(1.56)$(3.57)
Diluted$3.27
 $1.48
 $2.24
Diluted$(1.24)$(1.56)$(3.57)
Weighted average common shares outstanding (in millions):     Weighted average common shares outstanding (in millions):
Basic556.4
 561.0
 561.0
Basic417.4 450.4 493.6 
Diluted556.5
 561.0
 561.0
Diluted417.4 450.4 493.6 
Year Ended December 31,
202120202019
(in millions)
Non-GAAP Operating Earnings$2,825 $2,302 $2,357 

The following table summarizes our Non-GAAP Operating EPSEarnings per common share for the years ended December 31, 2018, 20172021, 2020 and 2016:
2019:
 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
Year Ended December 31,
202120202019
Non-GAAP operating earnings per common share:
Basic$6.58 $4.99 $4.78 
Diluted$6.58 $4.99 $4.78 
The following discussion compares the results for the year ended December 31, 2018 to the year ended December 31, 2017 and the results for the year ended December 31, 2017 to the year ended December 31, 2016.

Year Ended December 31, 20182021 Compared to the Year Ended December 31, 20172020
Net Income Attributable to Holdings
Net income (loss)loss attributable to Holdings increased decreased by $986$209 million to $1,820a net loss of $439 million during 2018for the year ended December 31, 2021 from $834a net loss of $648 million in 2017 primarily driven byfor the year ended December 31, 2020. The following notable items:items were the primary drivers for the change in net income (loss):
Favorable items included:
86
Table of Contents
•Policyholders’ benefits decreased by $1,451 million$2.1 billion mainly due to the favorable impactnon-recurrence of the interest rate assumption updatesupdate in 2018 compared to the unfavorable impactfirst quarter of assumption updates2020 and equity markets appreciation in 2017, combined with the favorable impact of rising interest rates,year ended December 31, 2021. This was partially offset by an increase in death claims.
•Amortization of DAC decreased by $1.2 billion mainly due to the impactinterest rate assumption update in the first quarter of equity market declines affecting our GMxB liabilities.2020 as a result of the extraordinary economic conditions driven by COVID-19. As a result of the lower interest rate assumption, Protection Solutions segment entered into loss recognition resulting in an acceleration of DAC amortization in 2020.
Revenue from fees and related items ("Fee-type revenue"), including Policy charges and fee income, Premiums, Investment Management service fees and Other income,•Fee revenue increased by $347$871 million mainly driven by higher base fees, performance fees and distribution revenues in our Investment Management and& Research segment primarily due toas a result of higher base fees reflecting an increase in average AUM of 5.1%revenues and an increasehigher fees in performance fees. Fee-type revenue also increased due toour Group Retirement segment as a result of 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.broker-dealer related revenues.
Amortization of deferred policy acquisition costs decreased•Investment gains increased by $170$124 million mainly due to rebalancing of the favorable impact of assumption updatesVenerable assets and the rebalancing program to extend duration.
•Net investment income increased by $369 million mainly due to higher income from our alternative investment portfolio and higher prepayments, partially offset by lower assets related to the Venerable Transaction.
These were partially offset by the following unfavorable items:
•Net derivative gains decreased by $2.7 billion driven by an increase in 2018.interest rates during 2021 compared to a decrease in interest rates during 2020 and greater equity market appreciation in 2021, partially offset by widening non-performance risk spreads during 2021 compared to contracting spreads in 2020.
•Compensation, benefits and other operating expenses decreasedincreased by $161$673 million mainly due to a non-recurring goodwill impairment charge in 2017 resulting fromhigher litigation reserve accruals, including 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.
Partially offsetting this increase were the following notable items:
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.
See “Assumption Updates and Model Changes” for more information regarding assumption updates.
Non-GAAP Operating Earnings
Non-GAAP Operating Earnings increased by $131 million to $2,166 million during 2018 from $2,035 million in 2017 primarily driven by the following notable items:
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.
Partially offsetting this increase were the following notable items:
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.
See “Assumption Updates and Model Changes” for more information regarding assumption updates.
Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016
Net Income Attributable to Holdings
The $420 million decrease in net income attributable to Holdings to $834 million during 2017 from $1,254 million in 2016 primarily driven by the following notable items:
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.


Partially offsetting this decrease were the following notable items:
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.COI litigation. In addition, our Individual and Group Retirement and Protection Solutions segments were positively impacted bywe experienced 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.
Non-GAAP Operating Earnings
Our consolidated Non-GAAP Operating Earnings was favorably impacted during 2017 by several discrete actuarial assumption updates and model changes in our Protection Solutions segment.
Non-GAAP Operating Earnings increased $644 million to $2,035 million during 2017 from $1,391 million in 2016 primarily driven by the following notable items:
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 increaseemployee compensation expenses in our Investment Management and Research segment due to higher base fees of $205 million reflecting an increase in average AUMrevenues.
•Commissions 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 millionlower 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 incomedistribution-related payments increased by $241$311 million mainly due to higher equity method investments and higher asset base.
Partially offsetting this increase were the following notable items:
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 growthdistribution-related payments in our Investment Management and Research segment.and Individual Retirement segments based on higher average AUM and Separate Account AV balances, as well as the growth in broker dealer sales.
Increase of $237•Net income attributable to noncontrolling interest increased by $116 million mainly due to higher AB pre-tax income and higher consolidated VIE income.
•Income tax benefit decreased by $599 million primarily due to the 2020 audit close and a decrease in income tax expense primarily driven by higher pre-tax income.loss in the year ended December 31, 2021 compared to the year ended December 31, 2020.
See “—Significant Factors Impacting Our Results—Assumption Updates and Model Changes” for more information regarding assumption updates.
Non-GAAP Operating Earnings
Non-GAAP Operating Earnings increased by $523 million to $2.8 billion for the year ended December 31, 2021 from $2.3 billion in the year ended December 31, 2020. The following notable items were the primary drivers for the change in Non-GAAP Operating Earnings.
Favorable items included:
•Fee-type revenue increased by $914 million mainly due to higher base fees, performance-based fees and distribution revenues in our Investment Management & Research segment as a result of higher average AUM revenues, and higher fees in our Group Retirement segment as a result of higher average Separate Accounts AV and higher broker-dealer related revenues.
•Net investment income increased by $566 million mainly due to higher income from our alternative investment portfolio and higher prepayments, partially offset by lower assets related to the Venerable Transaction.
•Policyholders’ benefits decreased by $545 million mainly due to equity market appreciation (offset in Net Derivative gains), partially offset by higher ongoing reserves resulting from assumption updates in 2020 and higher death claims in 2021.
87
Table of Contents
•Amortization of DAC decreased by $9 million mainly due to favorable assumption updates in 2021 compared to 2020, partially offset by higher amortization due to growth of SCS.
These were partially offset by the following unfavorable items:
•Net derivative gains decreased by $485 million mainly due to equity market appreciation in 2021, which was offset in Policyholder’s benefits, and inflation related hedging losses on TIPS in the General Account.
•Compensation, benefits and other operating costs and expenses increased by $424 million mainly due to higher employee compensation in our Investment Management and Research segment due to higher revenues and increased expenses in Corporate and Other related to unfavorable COLI death claims and general incremental compensation increases.
•Commissions and distribution-related payments increased by $311 million mainly due to higher distribution-related payments in our Investment Management and Research and Individual Retirement segments based on higher average AUM and Separate Account AV balances, as well as the growth in broker dealer sales.
•Earnings attributable to the noncontrolling interest increased by $114 million mainly due to higher AB Operating earnings in our Investment Management and Research segment.
•Income tax expense increased by $164 million primarily due to higher pre-tax earnings.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
Net Income Attributable to Holdings
For discussion that compares results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”).
Non-GAAP Operating Earnings
For discussion that compares results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our 2020 Form 10-K.
Results of Operations by Segment
We manage our business through the following four segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. We report certain activities and items that are not included in our four segments in Corporate and Other. The following section presents our discussion of operating earnings (loss) by segment and AUM, AV and Protection Solutions Reserves by segment, as applicable. Consistent with U.S. GAAP guidance for segment reporting, operating earnings (loss) is our U.S. GAAP measure of segment performance. See Note 19 of the Notes to thethese Consolidated Financial Statements for further information on the Company’sour segments.
The following table summarizes operating earnings (loss) by segmenton our segments and Corporate and Other for the years ended December 31, 2018, 20172021, 2020 and 2016:2019:
Year Ended December 31,
202120202019
(in millions)
Operating earnings (loss) by segment:
Individual Retirement$1,444 $1,536 $1,598 
Group Retirement631 491 390 
Investment Management and Research564 432 381 
Protection Solutions317 146 336 
Corporate and Other(131)(303)(348)
Non-GAAP Operating Earnings$2,825 $2,302 $2,357 
88
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Operating earnings (loss) by segment:     
Individual Retirement$1,555
 $1,252
 $1,167
Group Retirement389
 283
 167
Investment Management and Research381
 211
 161
Protection Solutions197
 502
 77
Corporate and Other(356) (213) (181)
Non-GAAP Operating Earnings$2,166
 $2,035
 $1,391
Table of Contents
Effective Tax Rates by Segment
For 2018,2021, 2020 and 2019 Income tax expense was allocated to the Company’s business segments using a 17%, 16% and 17%effective tax rate (“ETR”), respectively, for our retirement and protection businesses (Individual Retirement, Group Retirement, and Protection Solutions) and a 24%27%, 27% and 28% ETR for Investment Management and Research. While additional tax benefits in 2018 lowered the ETR for our retirement and protection businesses, we continue to expect the ETR for these segments to be 18% in the future. We anticipate that the Investment Management and Research segment will have an ETR of approximately 27% in the future due to an increase in state income taxes.

Individual Retirement
The Individual Retirement segment includes our variable annuity products which primarily meet the needs of individuals saving for retirement or seeking retirement income.

The following table summarizes operating earnings of our Individual Retirement segment for the periods presented:
 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 income981
 865
 696
Investment gains (losses), net including derivative gains (losses)197
 654
 326
Investment management, service fees and other income752
 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 balances229
 174
 176
Commissions and distribution related payments291
 281
 260
Amortization of deferred policy acquisition costs186
 108
 140
Compensation, benefits and other operating costs and expenses415
 450
 481
Interest expense—
 —
 —
Segment benefits and other deductions
$2,194
 $2,680
 $2,076
Year Ended December 31,
202120202019
(in millions)
Operating earnings$1,444 $1,536 $1,598 


Key components of operating earnings are:
Year Ended December 31,
202120202019
(in millions)
REVENUES
Policy charges, fee income and premiums$1,867 $2,034 $2,085 
Net investment income1,287 1,246 1,148 
Net derivative gains (losses)(128)331 362 
Investment management, service fees and other income759 700 730 
Segment revenues$3,785 $4,311 $4,325 
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits$720 $1,207 $1,184 
Interest credited to policyholders’ account balances276 312 310 
Commissions and distribution-related payments328 281 281 
Amortization of deferred policy acquisition costs303 299 181 
Compensation, benefits and other operating costs and expenses411 382 435 
Interest expense— — — 
Segment benefits and other deductions$2,038 $2,481 $2,391 

The following table summarizes AV for our Individual Retirement segment as of the dates indicated:
December 31,
20212020
(in millions)
AV (1)
General Account$37,698 $30,783 
Separate Accounts74,206 86,607 
     Total AV$111,904 $117,390 
(1) AV presented are net of reinsurance
89
Table of Contents
 As of December 31,
 2018 2017 2016
 (in millions)
AV     
General Account$20,631
 $19,059
 $15,384
Separate Accounts73,958
 84,364
 78,220
     Total AV$94,589
 $103,423
 $93,604
The following table summarizes a roll-forward of AV for our Individual Retirement segment for the periods indicated:
presented:
Years Ended December 31,Year Ended December 31,
2018 2017 2016202120202019
(in millions)(in millions)
Balance as of beginning of period$103,423
 $93,604
 $88,357
Balance as of beginning of period$117,390 $108,922 $94,589 
Gross premiums7,893
 7,786
 7,960
Gross premiums11,249 7,493 8,572 
Surrenders, withdrawals and benefits(9,091) (7,854) (6,780)Surrenders, withdrawals and benefits(12,143)(8,622)(9,071)
Net flows(1,198)
(68)
1,180
Investment performance, interest credited and policy charges(7,636) 9,887
 4,067
Net flows (1) Net flows (1)(894)(1,129)(499)
Investment performance, interest credited and policy charges (3)Investment performance, interest credited and policy charges (3)12,316 9,606 15,290 
Ceded to Venerable (2)Ceded to Venerable (2)(16,927)— — 
Reclassified to Liabilities held for saleReclassified to Liabilities held for sale— (3)— 
Other (3) (4) (5) (6)Other (3) (4) (5) (6)19 (6)(458)
Balance as of end of period$94,589
 $103,423

$93,604
Balance as of end of period$111,904 $117,390 $— $108,922 

______________

(1) For the year ended December 31, 2021, net flows of $(830) million and investment performance, interest credited and policy charges of $589 million, respectively, are excluded as these amounts are related to ceded AV to Venerable.
(2) Effective June 1, 2021, AV excludes activity related to ceded AV to Venerable. In addition, the roll-forward reflects the AV ceded to Venerable as of the transaction date. For additional information on the Venerable Transaction see Note 1 of the Notes to these Consolidated Financial Statements.
(3) For the year ended December 31, 2021, amounts reflect $(38) million transfer of policyholders account balances to future policyholder benefits and other policyholders liabilities related to structured settlement contracts.
(4) For the year ended December 31, 2021 amounts reflect $57 million of AV transfer of a closed block of GMxB business from GR to IR.
(5) For the year ended December 31, 2020, amounts are primarily related to our fixed income annuity (“FIA”) contracts which were previously reported as Policyholders’ account balances in the consolidated balance sheets and therefore included in our definition of “Account Value”. Effective January 1, 2020, FIAs are reported as future policy benefits and other policyholders’ liabilities in the consolidated balance sheets and accordingly were excluded from Account Value.
(6) Transfer to Corporate and Other represents the placement of an Individual Retirement product in run-off effective for the second quarter of 2019.

Year Ended December 31, 20182021 Compared to the Year Ended December 31, 2017 for the Individual Retirement Segment
Operating earnings
Operating earnings increased $303 million to $1,555 million during 2018 from $1,252 million in 2017 primarily attributable to the following:
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.
The increase was partially offset by:
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.
See “—Significant Factors Impacting Our Results—Assumption Updates and Model Changes” for more information regarding assumption updates.
Net Flows and AV
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.
Year Ended December 31, 2017 Compared to the Year Ended December 31, 20162020 for the Individual Retirement Segment
Operating earnings
Operating earnings increased $85decreased $92 million to $1,252 million$1.4 billion during 2017the year ended December 31, 2021 from $1,167 million$1.5 billion in 2016 primarily attributable to the following:year ended December 31, 2020. The following notable items were the primary drivers of the change in operating earnings:
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 Unfavorable items included:

•Net investment income of $169GMxB results decreased by $86 million primarily due to equity method investmentsongoing higher reserve accruals resulting from assumption updates in 2020 and higher assets.claims, partially offset by higher fees and the impact of the Venerable Transaction.
Decrease in DAC amortization of $32•Commissions and distribution-related payments increased by $47 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 earningsmainly due to higher SCS AV drivenaverage asset balances, gross of Venerable, offset by an increase in commission reimbursements in Fee-type revenue.
•Compensation, benefits and other operating costs and expenses increased by $29 million primarily due to higher incremental compensation expense and higher investment management sub-advisory fees, partially off set by higher gross premiums.SA fees.
Decrease in operating expenses of $31These were partially offset by the following favorable items:
•Net investment income increased by $41 million mainly due to company-wide efficiency actions.higher income from our alternative investment portfolio, higher average asset balances, prepayments and General Account portfolio optimization.
90
Table of Contents
•Interest credited to policyholders’ account balances decreased by $36 million mainly due to the impact of equity market appreciation on our SCS product features.
•Fee-type revenue increased by $19 million mainly due to higher average Separate Accounts AV as a result of equity market appreciation in 2021 from market lows in 2020, and inflows from our current product offering. The increase in Fee-type revenue was partially offset by:
Net decreaseby the impacts of $320 million in operating earnings, consisting of a $648 million increase in Policyholders’ benefitsfee-income ceded to Venerable, partially offset by a $328 million increasecommission reimbursements 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;Commissions and (ii) favorable withdrawal activity relative to expectations that did not reoccur in 2016.

distributions-related payments.
Net Flows and AV
•The decline in AV of $5.5 billion in the year ended December 31, 2021 was driven by $16.9 billion of AV ceded to Venerable and net outflows of $894 million partially offset by an increase in investments performance and interest credited to account balances, net of policy charges of $12.3 billion as a result of equity market appreciation in 2021.
•Net outflows of $68$894 million were $1.2 billion$235 million higher than in 2016,the year ended December 31, 2020, mainly driven by a $1.1$3.5 billion increase in surrenders, withdrawals and benefits mainly coming fromof outflows on our older fixed-rate GMxB business, and a $174 million decrease in gross premiums mainly dueblock, partially offset by $2.6 billion of inflows on our newer, less capital-intensive products.
Year Ended December 31, 2020 Compared to the DOL Rule’s impactYear Ended December 31, 2019 for the Individual Retirement Segment
Operating earnings
For discussion that compares results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our 2020 Form 10-K.
Net Flows and AV
For discussion on sales by certain third-party firms.net flows and AV comparative results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our 2020 Form 10-K.
Increase in AV of $9.8 billion year-over-year driven primarily by equity market performance.
Group Retirement
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 following table summarizes operating earnings of our Group Retirement segment for the periods presented:
Year Ended December 31,
202120202019
(in millions)
Operating earnings$631 $491 $390 
Key components of operating earnings are:
Year Ended December 31,
202120202019
(in millions)
REVENUES
Policy charges, fee income and premiums$371 $295 $279 
Net investment income752 641 590 
Net derivative gains (losses)(19)1 4 
Investment management, service fees and other income268 211 204 
Segment revenues$1,372 $1,148 $1,077 
91
Table of Contents
 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 income552
 528
 444
Investment gains (losses), net including derivative gains (losses)2
 (8) (10)
Investment management, service fees and other income194
 174
 150
Segment revenues$1,019
 $942
 $801
      
BENEFITS AND OTHER DEDUCTIONS     
Policyholders’ benefits$4
 $—
 $1
Interest credited to policyholders’ account balances290
 282
 267
Commissions and distribution related payments42
 38
 38
Amortization of deferred policy acquisition costs(7) 23
 49
Compensation, benefits and other operating costs and expenses225
 230
 229
Interest expense—
 —
 —
Segment benefits and other deductions$554
 $573
 $584
Year Ended December 31,
202120202019
(in millions)
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits$— $2 $2 
Interest credited to policyholders’ account balances303 303 302 
Commissions and distribution-related payments56 45 42 
Amortization of deferred policy acquisition costs— 21 35 
Compensation, benefits and other operating costs and expenses248 192 224 
Interest expense— — — 
Segment benefits and other deductions$607 $563 $605 
The following tables summarizetable summarizes AV for our Group Retirement segment as of the dates indicated:
As of December 31,December 31,
2018 2017 201620212020
(in millions)(in millions)
AV     AV
General Account$11,619
 $11,319
 $10,999
General Account$13,046 $12,826 
Separate Accounts20,782
 22,587
 19,139
Separate Accounts34,307 29,633 
Total AV$32,401
 $33,906
 $30,138
Total AV$47,353 $42,459 

The following table summarizes a roll-forward of AV for our Group Retirement segment for the periods indicated:
Year Ended December 31,
202120202019
(in millions)
Balance as of beginning of period$42,459 $37,880 $32,401 
Gross premiums3,623 3,343 3,533 
Surrenders, withdrawals and benefits(3,929)(3,047)(3,266)
Net flows(306)296 267 
Investment performance, interest credited and policy charges5,257 4,283 5,212 
Other (1)(57)— — 
Balance as of end of period$47,353 $42,459 $37,880 
____________
(1)For the year ended December 31, 2021, amounts reflect AV transfer of GMxB closed block business from GR to IR.
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Balance as of beginning of period$33,906
 $30,138
 $27,757
Gross premiums3,383
 3,205
 3,137
Surrenders, withdrawals and benefits(3,287) (2,938) (2,458)
Net flows96

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
Year Ended December 31, 20182021 Compared to the Year Ended December 31, 2017 for the Group Retirement Segment
Operating earnings
Operating earnings increased $106 million to $389 million during 2018 from $283 million in 2017.
The increase is primarily attributable to the following:
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.

This increase was partially offset by the following:
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.
See “—Significant Factors Impacting Our Results—Assumption Updates and Model Changes” for more information regarding assumption updates.
Net Flows and AV
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.
Year Ended December 31, 2017 Compared to the Year Ended December 31, 20162020 for the Group Retirement Segment
Operating earnings
Operating earnings increased by $116$140 million to $283$631 million during 2017the year ended December 31, 2021 from $167$491 million during the year ended December 31, 2020. The following notable items were the primary drivers of the change in 2016. The increase was primarily attributable to the following:operating earnings:
Favorable items included:
Higher •Fee-type revenue of $55increased by $133 million due to positive net flows of $267 million and higher average Separate Accounts AV, driven by equity markets in 2017.
market appreciation.
Increase in •Net investment income of $84increased by $111 million due to higher income from our alternative investmentsinvestment portfolio, higher average assets balances, prepayments and higher assets.General Account portfolio optimization.
Decrease
92
Table of $26Contents
•Amortization of DAC decreased by $21 million in DAC amortizationmainly due to the adjustmentfavorable impact of our assumptions for DACassumption updates in 2021, partially offset by higher amortization lengthening the amortization period due tofrom higher persistency.revenue.
This increase was
These were partially offset by the following:following unfavorable items:

•Compensation, benefits and other operating costs and expenses increased by $56 million mainly due to a litigation expense related to the 403(b) business.
Higher Interest credited to policyholder account balances of $15•Net derivative gains decreased by $20 million due to inflation related hedging loss offset on TIPS in the General Account.
•Commissions and distribution-related payments increased by $11 million mainly due to a higher average General Account AV.asset base.
Higher taxes of $39•Income tax expense increased by $40 million driven byprimarily due to higher pre-tax operating income.earnings.
Net Flows and AV
Net inflows of $267 million were $412 million lower than in 2016, driven primarily by a $475 million•The increase in surrenders, withdrawals and benefits,AV of $4.9 billion in the year ended December 31, 2021 was primarily due to strong equity markets partially offset by a $63net outflows of $306 million.
•Net inflows decreased $602 million increase in gross premiums in the 403(b) market through AXA Advisors’ distribution network.
Increase into outflows of $306 million due to higher surrender from higher AV, of $3.8 billion year-over-year driven primarilypartially offset by higher equity markets.sales and renewals.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019 for the Group Retirement Segment
Operating earnings
For discussion that compares results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our 2020 Form 10-K.
Net Flows and AV
For discussion on net flows and AV comparative results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our 2020 Form 10-K.
93
Table of Contents

Investment Management and Research
The Investment Management and Research segment provides diversified investment management, research and related services to a broad range of clients around the world. Operating earnings (loss), net of tax, presented here represents our economic interest in AB of approximately 65%. during the years ended December 31, 2021, 2020 and 2019.
The following table summarizes
Year Ended December 31,
202120202019
(in millions)
Operating earnings$564 $432 $381 

Key components of operating earnings of our Investment Management and Research segment for the periods presented.
are:
Year Ended December 31,
Years Ended December 31,202120202019
2018 2017 2016(in millions)
REVENUESREVENUES
(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
Net investment income$13 $31 $57 
Investment gains (losses), net including derivative gains (losses)12
 (24) (16)
Net derivative gains (losses)Net derivative gains (losses)(13)(36)(38)
Investment management, service fees and other income3,409
 3,180
 2,897
Investment management, service fees and other income4,430 3,708 3,460 
Segment revenues$3,411
 $3,216
 $2,933
Segment revenues$4,430 $3,703 $3,479 
     
BENEFITS AND OTHER DEDUCTIONS     BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits$—
 $—
 $—
Interest credited to policyholders’ account balances—
 —
 —
Commissions and distribution related payments427
 415
 372
Commissions and distribution related payments$708 $569 $488 
Amortization of deferred policy acquisition costs—
 —
 —
Compensation, benefits and other operating costs and expenses2,115
 2,036
 1,933
Compensation, benefits and other operating costs and expenses2,507 2,211 2,174 
Interest expense8
 6
 3
Interest expense5 6 10 
Segment benefits and other deductions$2,550
 $2,457
 $2,308
Segment benefits and other deductions$3,220 $2,786 $2,672 

Changes in AUM in the Investment Management and Research segment for the periods presented were as follows:
Year Ended December 31,
202120202019
 (in billions)
Balance as of beginning of period$685.9 $622.9 $516.4 
Long-term flows
Sales/new accounts150.0 124.1 103.7 
Redemptions/terminations(103.8)(109.3)(68.4)
Cash flow/unreinvested dividends(20.1)(17.4)(10.1)
Net long-term inflows (outflows) (1)26.1 (2.6)25.2 
Acquisition— 0.2 — 
AUM adjustment (2)— — (0.9)
Market appreciation (depreciation)66.6 65.4 82.2 
Net change92.7 63.0 106.5 
Balance as of end of period$778.6 $685.9 $622.9 
 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 accounts93.8
 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)
______________

(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.
(2)Approximately $900 million of non-investment management fee earning taxable and tax-exempt money market assets were removed from assets under management during the second quarter of 2019.
 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
94
_______________
(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.

Table of Contents
Average AUM in the Investment Management and Research segment for the periods presented by distribution channel and investment services were as follows:
 Year Ended December 31,
 202120202019
(in billions)
Distribution Channel:
Institutions$325.7 $285.9 $265.4 
Retail291.0 236.5 212.3 
Private Wealth Management114.1 97.1 96.5 
Total$730.8 $619.5 $574.2 
Investment Service:
Equity Actively Managed$252.2 $179.8 $158.4 
Equity Passively Managed (1)68.7 57.1 56.4 
Fixed Income Actively Managed – Taxable253.1 254.4 239.7 
Fixed Income Actively Managed – Tax-exempt53.8 47.9 44.6 
Fixed Income Passively Managed (1)9.6 9.4 9.4 
Alternatives/Multi-Asset Solutions (2)93.4 70.9 65.7 
Total$730.8 $619.5 $574.2 
 Years Ended December 31,
 2018 2017 2016
 (in billions)
Distribution Channel:     
Institutions$258.1
 $253.8
 $243.4
Retail191.8
 177.5
 157.7
Private Wealth Management94.3
 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 – Taxable230.3
 236.3
 221.5
Fixed Income Actively Managed – Tax-exempt41.3
 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.
(1)Includes index and enhanced index services.
(2)Includes multi-asset solutions and services, and certain alternative investments.

(2)Includes multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as “Other.” In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to “Alternatives and Multi-Asset Solutions."
95
Table of Contents
Year Ended December 31, 20182021 Compared to the Year Ended December 31, 2017 for the Investment Management and Research Segment
Operating earnings
Operating earnings increased $170 million during 2018 to $381 million from $211 million in 2017 primarily attributable to the following:
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.
This increase was partially offset by the following:
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.
Long-Term Net Flows and AUM
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.
Year Ended December 31, 2017 Compared to the Year Ended December 31, 20162020 for the Investment Management and Research Segment
Operating earnings
Operating earnings increased $50$132 million to $564 million during 2017 to $211 millionthe year ended December 31, 2021 from $161$432 million in 2016 primarily attributable to the following:year ended December 31, 2020. The following notable items were the primary drivers of the change in operating earnings:
Increase in investment management service fees and other income of $283Favorable items included:
•Fee-type revenue increased by $722 million primarily due to higher investment advisory base fees, of $205 million resulting from increases in Retail, Institutionsperformance based fees and Private Wealth Management base feesdistribution revenues, driven by higher average AUM due to a 7.9% increase in average AUMmarket appreciation 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 wasnet inflows. This is partially offset by a decrease inlower Bernstein Research Services revenues of $30 million primarily due to a decline in our clients’lower trading activity driven by lower global market volatility as compared to the COVID-19 related volatility in the United States and a volume mix shiftyear ended December 31, 2020.
•Net investment income, net of derivative gains, was favorable by $5 million. Net investment income decreased by $18 million mainly due to electronic trading in Europe, partially offset by increased client activity in Asia.
This increase in operating earnings was partiallylower gains on the seed capital investments subject to market risk, offset by an increase in total segmentNet derivative gains of $23 million mainly due to lower losses from economically hedging the seed capital investments.
These were partially offset by the following unfavorable items:
•Compensation, benefits, interest expense and other deductions of $149 million due to:
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 primarilyincreased by $295 million mainly due to a vendor termination paymenthigher employee compensation attributed to higher revenues.
•Commissions and distribution-related payments increased by $139 million mainly due to higher payments to financial intermediaries for the distribution of $20 million and higher expenses relatedAB mutual funds, primarily resulting from increased average AUM of these mutual funds.
•Earnings attributable to consolidated company-sponsored investment funds.
Increase in income tax expense of $15noncontrolling interest increased by $114 million due to an increase inhigher pre-tax operating earnings.
•Income tax expense increased by $47 million due to higher pre-tax earnings.
Long-Term Net Flows and AUM
•Total AUM as of December 31, 20172021 was $554.5$778.6 billion up $74.3$92.7 billion, or 15.5%13.5%, during 2017. compared to December 31, 2020. The increase was driven primarily by market appreciation of $61.1$66.6 billion and net flows of $13.2 billion, primarily due to Retail and Institutions inflows of $8.9$26.1 billion (reflecting Retail net inflows of $20.8 billion, Private Wealth Management net inflows of $3.0 billion and Institutional net inflows of $2.3 billion).
•Excluding AXA’s redemption of low-fee fixed income mandates of $1.3 billion and $3.6$11.8 billion, respectively.AB generated net inflows of $27.4 billion and $9.2 billion during the twelve months ended December 31, 2021 and 2020, respectively. As previously disclosed, AB expects additional redemptions by AXA of low-fee retail AUM in the first half of 2022 of approximately $5 billion.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019 for the Investment Management and Research Segment
Operating earnings
For discussion that compares results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our 2020 Form 10-K.
Net Flows and AUM
For discussion that compares results for the year ended December 31, 2020 to the year ended December 31, 2019 refer to the MD&A section in our 2020 Form 10-K.
Protection Solutions
The Protection Solutions segment includes our life insurance and employee benefits businesses. We provide a targeted range of products aimed at serving the financial needs of our clients throughout their lives, including VUL, IUL and term life

products. In 2015, we entered the employee benefits market and currently offer a suite of dental, vision, life, as well as short- and long-term disability insurance products to small and medium-size businesses.
Our Protection Solutions segment was impacted during the period by several discrete items, including actuarial assumption updates and model changes, a maintenance expense assumption update, a mortality table update and loss recognition testing.
96
Table of Contents
In recent years, we have refocused our product offering and distribution towards less capital-intensive,capital intensive, higher return accumulation and protection products. Excluding the non-recurring items noted above,For example, in January 2021, we discontinued offering our most interest sensitive IUL product (“IUL Protect”). We plan to improve our operating earnings over time through earnings generated from sales of our repositioned product portfolio and by proactively managing and optimizing our in-force book.
The following table summarizes operating earnings (loss) of our Protection Solutions segment for the periods presented:
 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 income901
 850
 761
Investment gains (losses), net including derivative gains (losses)5
 —
 2
Investment management, service fees and other income223
 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 balances481
 466
 484
Commissions and distribution related payments142
 134
 150
Amortization of deferred policy acquisition costs166
 373
 557
Compensation, benefits and other operating costs and expenses380
 383
 386
Interest expense—
 —
 —
Segment benefits and other deductions$2,996
 $2,321
 $3,033
Year Ended December 31,
202120202019
(in millions)
Operating earnings (loss)$317 $146 $336 
Key components of operating earnings (loss) are:
Year Ended December 31,
202120202019
(in millions)
REVENUES
Policy charges, fee income and premiums$2,016 $1,970 $2,148 
Net investment income1,102 944 967 
Net derivative gains (losses)(20)5 10 
Investment management, service fees and other income260 225 241 
Segment revenues$3,358 $3,144 $3,366 
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits$1,850 $1,875 $1,655 
Interest credited to policyholders’ account balances516 514 520 
Commissions and distribution related payments170 160 166 
Amortization of deferred policy acquisition costs93 84 275 
Compensation, benefits and other operating costs and expenses345 337 347 
Interest expense— — — 
Segment benefits and other deductions$2,974 $2,970 $2,963 
The following table summarizes Protection Solutions Reserves for our Protection Solutions segment as of the dates presented:

As of December 31,

2018
2017
2016

(in millions)
Protection Solutions Reserves (1)




General Account$17,562

$17,296

$17,713
Separate Accounts11,393

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.
December 31,
20212020
(in millions)
Protection Solutions Reserves (1)
General Account$18,625 $18,905 
Separate Accounts17,012 14,771 
Total Protection Solutions Reserves$35,637 $33,676 
_______________
(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.
The following table presents our in-force face amounts for the periods indicated, respectively, for our individual life insurance products:


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 Life22.9

20.5

18.5
Variable Universal Life (3)127.3

128.9

130.3
Term234.9

235.9

237.0
Whole Life1.4

1.6

1.7
Total in-force face amount$442.4

$445.9

$449.2
97
(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.
Table of Contents
December 31,
20212020
(in billions)
In-force face amount by product: (1)
Universal Life (2)$45.9 $48.7 
Indexed Universal Life27.9 27.7 
Variable Universal Life (3)132.8 127.7 
Term215.4 215.2 
Whole Life1.2 1.3 
Total in-force face amount$423.2 $420.6 
_______________
(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)UL includes GUL.
(3)VUL includes VL and COLI.
Year Ended December 31, 20182021 Compared to the Year Ended December 31, 20172020 for the Protection Solutions Segment
Operating earnings decreased $305
Operating earnings increased $171 million to $197$317 million during 2018the year ended December 31, 2021 from $502$146 million in 2017 primarily attributable to the following:year ended December 31, 2020. The following notable items were the primary drivers of the change in operating earnings:
Increase in Policyholders’ benefits of $862Favorable items included:
•Net investment income increased by $158 million mainly due to higher income from our alternative investment portfolio, higher average assets balances, prepayments and General Account portfolio optimization.
•Fee-type revenue increased by $81 million mainly driven by higher premiums due to growth in Employee Benefits and higher investment management and service fees.
•Policyholders’ benefits decreased by $25 million mainly due to a favorable assumption update, and lower claims on traditional products due to the sale of the USFL and MLICA blocks in April 2020, offset by unfavorable mortality driven by COVID-19 claims and older block claims. Employee Benefits’ reserves continue to grow in line with the block size.
These were partially offset by the following unfavorable items:
•Net derivative gains decreased by $25 million mainly due to inflation related hedging loss offset on TIPS in the General Account.
•Commissions and distribution-related payments increased by $10 million mainly due to higher sales.
•Amortization of DAC increased by $9 million mainly due to more 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.2020 vs 2021, offset by lower VISL baseline amortization following the DAC write-off in first half of 2020.
Interest credited to policyholders’ account balances•Income tax expense increased by $15$39 million primarily due to higher average balances.pre-tax earnings.
Commissions and distribution related payments increased by $8 million reflecting higher sales for both individual life and employee benefits products.
This decrease was partially offset by the following:
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.
See “—Significant Factors Impacting Our Results—Assumption Updates and Model Changes” for more information regarding assumption updates.
Year Ended December 31, 20172020 Compared to the Year Ended December 31, 20162019 for the Protection Solutions Segment
Operating earnings increased $425 million to $502 million during 2017 from $77 million in 2016 primarily attributableFor discussion that compares results for the year ended December 31, 2020 to the following:
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 assumptions.
Decrease of $184 millionin 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

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.
Increase in Net investment income of $89 milliondue to higher income on equity method investments and higher asset balances.
This increase was partially offset by the following:
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, comparedyear ended December 31, 2019 refer to the positive impactMD&A section in our 2020 Form 10-K.
98
Table of model updates in 2016, lower premiums primarily due to term products and the adverse impact of a maintenance expense assumption update.Contents
Increase in income tax expense of $214 million due to an increase in pre-tax operating earnings.
See “—Significant Factors Impacting Our Results—Assumption Updates and Model Changes” for more information regarding assumption updates.
Corporate and Other
Corporate and Other includes certainsome of our financing and investment expenses. It also includes: AXAEquitable Advisors broker-dealer business, the Closed Block, run-off variable annuity reinsurance business, run-off group pension business, run-off health business, benefit plans for our employees, certain strategic investments and certain unallocated items, including capital and related investments, interest expense and financing fees and corporate expense. AB’s results of operations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.
The following table summarizes Operatingoperating earnings (loss) of Corporate and Other for the periods presented:
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Operating earnings (loss)$(356) $(213) $(181)
Year Ended December 31,
202120202019
(in millions)
Operating earnings (loss)$(131)$(303)$(348)
Operating loss increased $143 million to an operating loss of $356 million during 2018 from an operating loss of $213 million in 2017, primarily attributable to higher interest expense and lower net investment income.

General Account Investment Portfolio
The General Account investment portfolio supports the insurance and annuity liabilities of our Individual Retirement, Group Retirement and Protection Solutions businesses. Our General Account investment portfolio investment strategy seeks to achieve sustainable risk-adjusted returns by focusing on principal preservation, investment return, duration and liquidity requirements by product class and the diversification of risks. Investment activities are undertaken according to investment policy statements that contain internally established guidelines and are required to comply with applicable laws and insurance regulations. Risk tolerances are established for credit risk, market risk, liquidity risk and concentration risk across types of issuers and asset classes that seek to mitigate the impact of cash flow variability arising from these risks. The impact of COVID-19 continues to be assessed for potential negative impacts to the performance of mortgage loans and fixed maturities.
The General Account investment portfolio consists largely of investment grade fixed maturities, short-term investments, commercial and agricultural mortgage loans, alternative investments and other financial instruments. Fixed maturities include publicly issued corporate bonds, government bonds, privately placed notes and bonds, bonds issued by states and municipalities, mortgage-backed securities and asset-backed securities. The General Account investment portfolio also includes credit derivatives to replicate exposure to individual securities or pools of securities as a means of achieving credit exposure similar to bonds of the underlying issuer(s) more efficiently. In addition, from time to time we use derivatives for hedging purposes to reduce our exposure to equity markets, interest rates and credit spreads. As part of a yield enhancement strategy, the General Account has diversified into more asset and sub-asset classes including higher yielding commercial mortgage investments.
As part of our asset and liability management strategies, we maintain a weighted average duration for our General Account investment portfolio that is within an acceptable range of the estimated duration of our liabilities given our risk appetite and hedging programs. Our asset and liability management strategies are applied to portfolio duration groups within the General Account investment portfolio. For example, we maintain a “short duration” group comprised primarily of investment grade fixed maturity securities that are aligned with the duration of product liabilities with an average duration of less than six years (e.g., our SCS product). As of December 31, 2018 and 2017, 69% and 73% of the fixed maturities in the short duration group were rated NAIC 1, and 31% and 27% were rated NAIC 2, respectively.
Investment portfolios are primarily managed by legal entity with dedicated portfolios for certain blocks of business. For portfolios that back multiple product groups, investment results are allocated to business segments.
Our investment philosophy is driven by our long-term commitments to clients, robust risk management and strategic asset allocation. In executing the activities of our General Account investment portfolio, we incorporate ESG factors into the investment processes for a significant portion of our portfolio. As investors with a long-term horizon, we believe that companies with sustainable practices are better positioned to deliver value to stakeholders over an extended period, thereby enhancing the quality of our portfolio. These companies are more likely to increase sales through sustainable products, reduce energy costs and attract and retain talent. This belief underpins our approach to sustainable investing, where we seek to enhance the sustainability of our investment portfolio by integrating ESG factors into our investment decision process.
The General Account investment portfolio reflects certain differences from the presentation of the U.S. GAAP Consolidated Financial Statements. This presentation is consistent with how we manage the General Account investment portfolio. For further investment information, please refer to Note 3 and Note 4 of the Notes to these Consolidated Financial Statements.
99
Table of Contents
Investment Results of the General Account Investment Portfolio
The following table summarizes the General Account investment portfolio results with Non-GAAP Operating Earnings adjustments by asset category for the periods indicated. This presentation is consistent with how we measure investment performance for management purposes.

.
 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, Net3.70 % $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.

Year Ended December 31,
 202120202019
 YieldAmount (2)YieldAmount (2)YieldAmount (2)
(Dollars in millions)
Fixed Maturities:
Income (loss)3.40 %$2,429 3.46 %$2,318 3.68 %$2,019 
Ending assets72,545 71,738 62,687 
Mortgages:
Income (loss)4.08 %547 4.13 %517 4.47 %541 
Ending assets14,033 13,159 12,107 
Other Equity Investments: (1) (4)
Income (loss)20.45 %534 6.14 %95 5.96 %86 
Ending assets2,901 1,621 1,507 
Policy Loans:
Income (loss)5.01 %203 5.28 %204 5.59 %210 
Ending assets4,024 4,118 3,735 
Cash and Short-term Investments:
Income (loss)(0.13)%(2)0.03 %1 (0.15)%(4)
Ending assets1,662 2,095 1,856 
Funding agreements:
Interest expense and other(56)(75)(110)
Ending assets (liabilities)(6,647)(6,897)(6,909)
Total Invested Assets:
Income (loss)4.28 %3,655 3.72 %3,060 3.92 %2,742 
Ending Assets88,518 85,834 74,983 
Short Duration Fixed Maturities:
Income (loss)4.48 %78 3.39 %184 3.15 %312 
Ending assets142 4,704 6,173 
Total:
Investment income (loss)4.28 %3,733 3.70 %3,244 3.83 %3,054 
Less: investment fees (3)(0.14)%(118)(0.12)%(107)(0.13)%(103)
Investment Income, Net4.15 %3,615 3.57 %3,137 3.70 %2,951 
Ending Net Assets$88,660 $90,538 $81,156 
_____________
(1)Includes, as of December 31, 2021, December 31, 2020 and December 31, 2019 respectively, $319 million, $333 million and $365 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 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.
(3)Investment fees are inclusive of investment management fees paid to AB.
(4)Effective January 1, 2021, certain preferred stock have been reclassified to other equity investments (see Note 2 of the Notes to these Consolidated Financial Statements- Investments).




100
Table of Contents

Fixed Maturities
The fixed maturity portfolio consists largely of investment grade corporate debt securities and includes significant amounts of U.S. government and agency obligations. The limited below investment grade securities in the General Account investment portfolio consist of “fallen angels,” originally purchased as investment grade, as well as short duration public high yield securities and loans to middle market companies.

Fixed Maturities by Industry
The following table sets forth these fixed maturities by industry category asmaturity portfolio consists largely of the dates indicated along with their associated gross unrealized gains and losses.
Fixed Maturities by Industry (1)
 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%
Manufacturing9,123
 105
 273
 8,955
 20%
Utilities4,413
 80
 121
 4,372
 9%
Services4,317
 52
 102
 4,267
 9%
Energy2,347
 40
 75
 2,312
 5%
Retail and wholesale2,163
 19
 49
 2,133
 5%
Transportation1,357
 29
 54
 1,332
 3%
Other171
 4
 2
 173
 —%
Total corporate securities30,234
 406
 800
 29,840
 65%
U.S. government13,989
 295
 470
 13,814
 30%
Residential mortgage-backed (2)225
 9
 —
 234
 1%
Preferred stock448
 15
 18
 445
 1%
State & municipal415
 48
 1
 462
 1%
Foreign governments524
 19
 13
 530
 1%
Asset-backed securities612
 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%
Manufacturing7,546
 289
 15
 7,820
 17%
Utilities4,032
 210
 13
 4,229
 9%
Services3,307
 130
 15
 3,422
 7%
Energy1,980
 101
 9
 2,072
 4%
Retail and wholesale1,404
 36
 3
 1,437
 3%
Transportation957
 58
 3
 1,012
 2%
Other128
 7
 —
 135
 —%
Total corporate securities25,178
 1,031
 65
 26,144
 55%
U.S. government and agency17,744
 1,000
 251
 18,493
 39%
Residential mortgage-backed (2)797
 22
 1
 818
 2%
Preferred stock470
 43
 1
 512
 1%
State & municipal422
 67
 —
 489
 1%
Foreign governments395
 29
 5
 419
 1%
Asset-backed securities745
 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.

Fixed Maturities Credit Quality
The Securities Valuation Office (“SVO”) of the National Association of Insurance Commissioners (“NAIC”), evaluates the investments of insurers for regulatory reporting purposes and assigns fixed maturities to one of six categories (“NAIC Designations”). NAIC Designations of “1” or “2” include fixed maturities considered investment grade which includecorporate debt securities rated Baa3 or higher by Moody’s or BBB- or higher by Standard & Poor’s. NAIC Designationsand includes significant amounts of “3” through “6” are referred to asU.S. government and agency obligations. The limited below investment grade which include securities rated Ba1 or lower by Moody’s and BB+ or lower by Standard & Poor’s. As a result of time lags between the funding of investments and the completion of the SVO filing process, the fixed maturity portfolio typically includes securities that have not yet been rated by the SVO as of each balance sheet date. Pending receipt of SVO ratings, the categorization of these securities by NAIC designation is based on the expected ratings indicated by internal analysis.
The following table sets forthin the General Account’s fixed maturitiesAccount investment portfolio by NAIC rating at the dates indicated.consist of “fallen angels,” originally purchased as investment grade, as well as short duration public high yield securities and loans to middle market companies.
Fixed Maturities
The fixed maturity portfolio consists largely of investment grade corporate debt securities and includes significant amounts of U.S. government and agency obligations. The limited below investment grade securities in the General Account investment portfolio consist of “fallen angels,” originally purchased as investment grade, as well as short duration public high yield securities and loans to middle market companies.
Fixed Maturities by Industry
The following table sets forth these fixed maturities by industry category as of the dates indicated along with their associated gross unrealized gains and losses.
Fixed Maturities by Industry (1)
Amortized CostAllowance for Credit LossesGross Unrealized GainsGross Unrealized LossesFair ValuePercentage of Total (%)
(in millions)
As of December 31, 2021
Corporate Securities:
Finance$12,954 $— $545 $59 $13,440 17 %
Manufacturing12,212 1 775 39 12,947 17 %
Utilities6,446 — 351 36 6,761 9 %
Services8,191 21 380 50 8,500 11 %
Energy3,854 — 174 17 4,011 5 %
Retail and wholesale3,390 — 218 18 3,590 5 %
Transportation2,181 — 156 10 2,327 3 %
Other60 — 2 — 62 — %
Total corporate securities49,288 22 2,601 229 51,638 67 %
U.S. government13,056 — 2,344 15 15,385 20 %
Residential mortgage-backed (2)90 — 8 — 98 — %
Preferred stock (4)41 — 12 — 53 — %
State & political586 — 78 3 661 1 %
Foreign governments1,124 — 42 14 1,152 1 %
Commercial mortgage-backed2,427 — 19 25 2,421 3 %
Asset-backed securities5,933 — 21 20 5,934 8 %
Total$72,545 $22 $5,125 $306 $77,342 100 %
101
Table of Contents
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
As of December 31, 2020: (3)
Corporate Securities:
Finance$14,411 $— $1,112 $9 $15,514 19 %
Manufacturing13,040 — 1,520 18 14,542 18 %
Utilities6,352 — 681 6 7,027 9 %
Services7,830 13 680 27 8,470 11 %
Energy4,084 — 364 23 4,425 6 %
Retail and wholesale3,747 — 435 3 4,179 5 %
Transportation2,424 — 301 4 2,721 3 %
Other157 — 7 2 162 — %
Total corporate securities52,045 13 5,100 92 57,040 71 %
U.S. government12,660 — 3,448 5 16,103 20 %
Residential mortgage-backed (2)130 — 13 — 143 — %
Preferred stock621 — 48 3 666 1 %
State & political536 — 100 — 636 1 %
Foreign governments1,011 — 98 6 1,103 1 %
Commercial mortgage-backed1,148 — 55 — 1,203 2 %
Asset-backed securities3,587 — 29 5 3,611 4 %
Total$71,738 $13 $8,891 $111 $80,505 100 %
______________
(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.
(3)Excludes amounts reclassified as HFS.
(4)Effective January 1, 2021, certain preferred stock have been reclassified to other equity investments (see Note 2 of the Notes to these Consolidated Financial Statements- Investments).

Fixed Maturities Credit Quality
The SVO of the NAIC evaluates the investments of insurers for regulatory reporting purposes and assigns fixed maturities to one of six categories (“NAIC Designations”). NAIC Designations of “1” or “2” include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moody’s or BBB- or higher by Standard & Poor’s. NAIC Designations of “3” through “6” are referred to as below investment grade, which include securities rated Ba1 or lower by Moody’s and BB+ or lower by Standard & Poor’s. As a result of time lags between the funding of investments and the completion of the SVO filing process, the fixed maturity portfolio typically includes securities that have not yet been rated by the SVO as of each balance sheet date. Pending receipt of SVO ratings, the categorization of these securities by NAIC designation is based on the expected ratings indicated by internal analysis.
The following table sets forth the General Account’s fixed maturities portfolio by NAIC rating at the dates indicated.
102
Table of Contents
Fixed Maturities
NAIC DesignationRating Agency Equivalent
Amortized
Cost
Allowance for Credit Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
  (in millions)
As of December 31, 2021
1................................Aaa, Aa, A$44,653 $— $3,734 $158 $48,229 
2................................Baa25,141 — 1,357 127 26,371 
Investment grade69,794 — 5,091 285 74,600 
3................................Ba1,601 1 22 14 1,608 
4................................B992 19 8 5 976 
5................................Caa130 2 4 1 131 
6................................Ca, C28 — — 1 27 
Below investment grade2,751 22 34 21 2,742 
Total Fixed Maturities$72,545 $22 $5,125 $306 $77,342 
As of December 31, 2020: (1)
1................................Aaa, Aa, A$44,146 $— $6,227 $32 $50,341 
2................................Baa25,285 — 2,621 26 27,880 
Investment grade69,431 — 8,848 58 78,221 
3................................Ba1,436 — 33 19 1,450 
4................................B769 13 7 28 735 
5................................Caa92 — 3 5 90 
6................................Ca, C10 — — 1 9 
Below investment grade2,307 13 43 53 2,284 
Total Fixed Maturities$71,738 $13 $8,891 $111 $80,505 
______________
(1)Excludes amounts reclassified as HFS.

103
Table of Contents
Mortgage Loans
The mortgage portfolio primarily consists of commercial and agricultural mortgage loans. The investment strategy for the mortgage loan portfolio emphasizes diversification by property type and geographic location with a primary focus on asset quality. The tables below show the breakdown of the amortized cost of the General Account’s investments in mortgage loans by geographic region and property type as of the dates indicated.

Mortgage Loans by Region and Property Type
 December 31, 2021December 31, 2020
 
Amortized
Cost
% of Total
Amortized
Cost
% of Total
(in millions)
By Region:
U.S. Regions:
Pacific$4,297 30 %$3,912 30 %
Middle Atlantic3,441 24 3,662 28 
South Atlantic1,982 14 1,290 10 
East North Central1,103 8 1,122 8 
Mountain978 7 1,026 8 
West North Central834 6 875 7 
West South Central609 5 690 5 
New England579 4 511 3 
East South Central146 1 152 1 
Total U.S.$13,969 99 %$13,240 100 %
Other Regions:
Europe$126 1 %$— — %
Total Other$126 1 $— — 
Total Mortgage Loans$14,095 100 %$13,240 100 %
By Property Type:
Office$3,944 28 %$4,131 31 %
Multifamily4,694 33 4,027 30 
Agricultural loans2,644 19 2,732 21 
Retail728 5 742 6 
Industrial1,204 9 787 6 
Hospitality410 3 477 4 
Other471 3 344 2 
Total Mortgage Loans$14,095 100 %$13,240 100 %
104
 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 Atlantic3,183
 26.9
 2,958
 27.0
South Atlantic1,207
 10.2
 1,096
 10.0
East North Central963
 8.1
 917
 8.4
Mountain1,014
 8.6
 800
 7.3
West North Central910
 7.7
 778
 7.1
West South Central578
 4.9
 499
 4.5
New England556
 4.7
 460
 4.2
East South Central143
 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%
Multifamily3,440
 29.0
 3,014
 27.5
Agricultural loans2,695
 22.8
 2,574
 23.5
Retail667
 5.6
 647
 5.9
Industrial333
 2.8
 326
 3.0
Hospitality384
 3.3
 417
 3.8
Other346
 2.9
 343
 3.1
Total Mortgage Loans$11,842
 100.0% $10,960
 100.0%
Table of Contents
The General Account investment portfolio reflects certain differences from the presentation of the U.S. GAAP Consolidated Financial Statements. This presentation is consistent with how we manage the General Account investment portfolio. For further Investment information, please refer to Note 3 in the Notes to the Consolidated Financial Statements.

Liquidity and Capital Resources
Liquidity refers to our ability to generate adequate amounts of cash from our operating, investment and financing activities to meet our cash requirements with a prudent margin of safety. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital is dependent on the profitability of our businesses, timing of cash flows related to our investments and products, our ability to access the capital markets, general economic conditions and the alternative sources of liquidity and capital described herein. When considering our liquidity and cash flows, it is important towe distinguish between the needs of Holdings and the needs of our insurance and non-insurance subsidiaries. We also distinguish and separately manage the liquidity and capital resources of our retirement and protection businesses including our(our Individual Retirement, Group Retirement and Protection Solutions segments,segments) and our Investment Management and Research segment.
Sources and Uses of Liquidity and Capital Position
The Company has sufficient cash flows from operations to satisfy liquidity requirements in 2022.
Cash Flows of Holdings
As a holding company with no business operations of its own, Holdings primarily derives cash flows from dividends from its subsidiaries and distributions related to its economic interest in AB, nearly all of which is currently held outside our insurance company subsidiaries. These principal sources of liquidity are augmented by cash and short-term investments held by Holdings and access to bank lines of credit and the capital markets. The main uses of liquidity for Holdings are interest payments and debt repayment, payment of dividends and other distributions to stockholders which(which may include stock repurchases,repurchases) loans and capital contributions, if needed, to our insurance subsidiaries. Our principal sources of liquidity and our capital position are described in the following paragraphs.

Historical Sources and Uses of Holding Company Highly Liquid Assets
The following table sets forth Holdings’ principal sources and uses of highly liquid assets for the periods indicated.
Year Ended December 31,
20212020
(in millions)
Highly Liquid Assets, beginning of period$3,088 $1,589 
Dividends from subsidiaries792 2,877 
Capital contributions to subsidiaries(815)(350)
M&A Activity215 — 
Income taxes payable— — 
Total Business Capital Activity192 2,527 
Purchase of treasury shares(1,637)(430)
Shareholder dividends paid(296)(297)
Total Share Repurchases, Dividends and Acquisition Activity(1,933)(727)
Issuance of preferred stock293 494 
     Preferred stock dividend(79)(53)
Total Preferred Stock Activity214 441 
Issuance of long-term debt— — 
Repayment of long-term debt(280)— 
Total External Debt Activity(280)— 
Repayments of loans from affiliates— (300)
Proceeds from loans from affiliates1,000 — 
Repayment of loans to affiliates— — 
105
Table of Contents
Year Ended December 31,
20212020
(in millions)
Issuance of loans to affiliates— — 
Net decrease (increase) in loans to affiliates(80)(115)
Total Affiliated Debt Activity920 (415)
Interest paid on external debt and P-Caps(233)(220)
Others, net(226)(107)
Total Other Activity(459)(327)
Net increase (decrease) in highly liquid assets(1,346)1,499 
Highly Liquid Assets, end of period$1,742 $3,088 

Capital Contribution to Our Subsidiaries
In June 2021, Holdings made a $750 million cash capital contribution to facilitate a corporate restructuring involving administrative services for Equitable Financial’s Separate Accounts.
Loans from Our Subsidiaries
In June 2021, Equitable Financial made a $1.0 billion 10-year term loan to Holdings for generic liquidity management purpose. The loan has an interest rate of 3.23% and matures in June 2031.
Cash Distributions from Our Subsidiaries
From 2014 to 2016,In 2021, Holdings and AXA Financialcertain of its subsidiaries received netpretax cash distributions from our subsidiariesAB of $2.6 billion. These net cash distributions comprised dividends and principal payments on surplus notes from our insurance subsidiaries ($1.2 billion, $1.0 billion and $1.1 billion in 2014, 2015 and 2016, respectively), distributions from AB ($70$677 million, $72EIM of $61 million and $85$140 million in 2014, 2015 and 2016, respectively) and distributions from AXA Advisors ($30 million, $30 million and $33 million in 2014, 2015 and 2016, respectively), partially offset by a contribution by AXA Financial to AXA RE Arizona to enhance its balance sheet and liquidity position. In addition, AXA Financial also received dividends of $85 million in 2015 related to certain real estate assets. During this period, we also received $1.9 billion of net proceeds from the sale of certain real estate assets by AXA Financial.
In 2017, in accordance with an agreement with the NYDFS and in preparation for the IPO, Holdings and AXA Financial collectively made $2.3 billion in aggregate capital contributions to AXA Equitable Life and AXA RE Arizona, and AXA Financial received a $124 million distribution on AB Units and a $74 million distribution from AXA Advisors and USFL.
In 2018, Holdings received net cash distributions from subsidiaries of $1.4 billion. These net cash distributions comprised $1.1 billion in dividends from our insurance subsidiaries, $255 million in distributions from AB and $45 million in distributions from AXAEquitable Advisors. In addition, AXA Financial received dividends of $45 million related to certain real estate assets.
Distributions from Insurance Subsidiaries
Our insurance companies are subject to limitations on the payment of dividends and other transfers of funds to Holdings and other affiliates under applicable insurance law and regulation. Also, more generally, the ability of our insurance subsidiaries to pay dividends can be affected by market conditions and other factors beyond our control.
Under New York insurance law applicable to AXA Equitable Life,Financial, a domestic stock life insurer may not, without prior approval of the NYDFS, pay a dividend to its stockholders exceeding an amount calculated under either the Earned Surplus Standard or the Alternative Standard.Ordinary Dividend. Extraordinary Dividends exceeding these prescribed limits require the insurer to file a notice of its intent to declare the dividends with the NYDFS and prior approval or non-disapproval from the NYDFS. Also, in 2016,Due to a permitted statutory accounting practice agreed to with the NYDFS, issued a circular letter to its regulated insurance companies stating that ordinary dividends which exceed an insurer’s positive unassigned funds (as reported onEquitable Financial will need the insurer’s most recent annual statement) may fail oneprior approval of the qualitative tests imposed by the Earned Surplus Standard. Given the circular letter, it is possible that the NYDFS could limit the amount of ordinary dividends declared by AXA Equitable Life under the Earned Surplus Standard to the amount of AXA Equitable Life’s positive unassigned funds.
AXA Equitable Life paidpay a cash dividend of $1.1 billion in July 2018 to its direct parent which subsequently distributed such amount to Holdings. Also, in December 2018, AXA Equitable Life transferred its interests in ABLP, AB Holding and the General Partner to a newly formed subsidiary and distributed the shares of that subsidiary to its direct parent which subsequently distributed such shares to Holdings (the “AB Ownership Transfer”). In connection with the AB Ownership Transfer, AXA Equitable Life paid an extraordinary cash dividend of $572 million and issued a surplus note to Holdings in the same amount. AXA Equitable Life repaid the outstanding principal balance of the surplus note in March 2019.
Permitted Practice Ordinary Dividend. Applying the formulas under the dividend standards above, AXA Equitable LifeFinancial could pay ordinary dividendsan Ordinary Dividend of up to approximately $1.0 billion during 2019 or, if the amount under the Earned Surplus Standard was limited to the amount of AXA Equitable Life’s positive unassigned funds as reported on its 2019 annual statement, $2.1 billion. However,$865 million in connection with the AB Ownership Transfer, AXA Equitable Life agreed with the NYDFS that it would not seek a dividend of greater than $1.0 billion under the Earned Surplus Standard during 2019. 2022.
The repayment of the $572 million surplus note and the full utilization of the $1 billion dividend capacity as agreed with the NYDFS would result in a total cash payout from AXA Equitable Life of approximately $1.6 billion in 2019.  Accordingly, we believe that our agreement with the NYDFS will not impact Holdings’ ability to meet its liquidity needs, dividend and share repurchases capacity or target payout range of Non-GAAP Operating Earnings for 2019.
Distributions from AllianceBernstein
ABLP is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Partnership Agreement of ABLP, to the holders of AB Units and to the General Partner. Available Cash Flow is defined as the cash flow received by ABLP from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by ABLP for use in its business, or plus such amounts as the General Partner determines, in its sole discretion, should

be released from previously retained cash flow. Distributions by ABLP are made 1% to the General Partner and 99% among the limited partners.
Typically, Available Cash Flow has been the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management of AB anticipates that Available Cash Flow will be based on adjusted diluted net income per unit, unless management of AB determines, with the concurrence of the Board of Directors of AB, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation.
106
Table of Contents
AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding, to holders of AB Holding Units pro rata in accordance with their percentage interest in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from ABLP minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. AB Holding is dependent on the quarterly cash distributions it receives from ABLP, which is subject to the performance of capital markets and other factors beyond our control. Distributions from AB Holding are made pro rata based on the holder’s percentage ownership interest in AB Holding.
Following the AB Ownership Transfer,As of December 31, 2021, Holdings and its non-insurance company subsidiaries now hold approximately 167.5170.1 million AB Units, 4.04.1 million AB Holding Units and the 1% General Partnership interest in ABLP, while 2.6 million AB Units continue to be held by MLOA. Because MLOA is subject to regulatory restrictions on the amount of dividends it may pay, distributions it receives from AB may not be distributable to Holdings.ABLP.
As of December 31, 2018,2021, the ownership structure of ABLP, including AB Units outstanding as well as the general partner’s 1% interest, was as follows:
OwnerPercentage Ownership
HoldingsEQH and its non-insurance subsidiaries62.663.0 %
MLOAAB Holding1.036.2 
%
AB HoldingUnaffiliated holders35.60.8 
%
Unaffiliated holdersTotal0.8100.0 
Total100.0%
Including both the general partnership and limited partnership interests in AB Holding and ABLP, Holdings and its subsidiaries had an approximate 65% economic interest in AB as of December 31, 2018.2021.

Holdings Credit Facilities
On June 24, 2021, Holdings entered into the Amended and Restated Revolving Credit Agreement with respect to a five-year senior unsecured revolving credit facility (the “Credit Facility”), which lowered the facility amount to $1.5 billion and extended the maturity date to June 24, 2026, among other changes. The Amended and Restated Revolving Credit Agreement amends the Revolving Credit Agreement entered into by Holdings on February 16, 2018, as amended on March 22, 2021.
The Credit Facility may provide significant support to our liquidity position when alternative sources of credit are limited. In addition to the Credit Facility, we have letter of credit facilities with an aggregate principal amount of approximately $1.9 billion (the “LOC Facilities”), primarily to be used to support our life insurance business reinsured to EQ AZ Life Re in April 2018. In June 2021, Holdings entered into amendments with each of the issuers of its bilateral letter of credit facilities to effect changes similar to those effected in the amended and restated revolving credit agreement. The respective facility limits of the bilateral letter of credit facilities remained unchanged.
The Credit Facility and LOC Facilities contain certain administrative, reporting, legal and financial covenants, including requirements to maintain a specified minimum consolidated net worth and to maintain a ratio of indebtedness to total capitalization not in excess of a specified percentage, and limitations on the dollar amount of indebtedness that may be incurred by our subsidiaries and the dollar amount of secured indebtedness that may be incurred by us, which could restrict our operations and use of funds. The right to borrow funds under the Credit Facility and LOC Facilities is subject to the fulfillment of certain conditions, including compliance with all covenants, and the ability to borrow thereunder is also subject to the continued ability of the lenders that are or will be parties to the facilities to provide funds. As of December 31, 2021, we were in compliance with these covenants”.
Contingent Funding Arrangements
For information regarding activity pertaining to our contingent funding arrangements and other off-balance sheet commitments, see “Commitments and Contingent Liabilities in ” Note 17 of the Notes to these Consolidated Financial Statements in this Form 10-K.
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
For information pertaining to our Series A, Series B and Series C Preferred Stock see Note 20 of the Notes to these Consolidated Financial Statements.
107
Table of Contents
Capital Position of Holdings
We manage our capital position to maintain financial strength and credit ratings that facilitate the distribution of our products and provide our desired level of access to the bank and public financingcapital markets. Our capital position is supported by the ability of our subsidiaries to generate cash flows and distribute cash to us and our ability to effectively manage the risk of our businesses and to borrow funds and raise capital to meet our operating and growth needs.

Capital Management
Our Board and senior management are directly involved in the development of our capital management policies. Accordingly, capital actions, including proposed changes to the annual capital plan, capital targets and capital policies, are approved by the Board.
DividendDividends Declared and Paid
On August 10, 2018, our Board of Directors declared a cash dividend on EQH common stock of $0.13 per share, payable on August 30, 2018 to shareholders of record on August 23, 2018.
On November 9, 2018, our Board of Directors declared a dividend on our common stock of $0.13 per share, which was paid on December 3, 2018 to shareholders of record on November 26, 2018.

On February 14, 2019, Holdings’ Board of Directors declared a quarterly cash dividend of $0.13 per share of common stock, payable on March 15, 2019 to all stockholders of based on fourth quarter earnings record as of the close of business on March 5, 2019.
The declaration and payment of future dividends is subject to the discretion of our Board of Directors and depends on our financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by Holdings’ insurance subsidiaries and other factors deemed relevant by the Board. 
Share Repurchase Program
On August 10, 2018, our BoardThe payment of Directors authorized a share repurchase program. Under the program, we may purchase up to $500 million of our common stock beginning August 16, 2018 and expiring on March 31, 2019 (unless extended). On November 9, 2018, our Board of Directors authorized an increase of $300 milliondividends will be substantially restricted in the share repurchase program to $800 million before taking into account any repurchases during 2018 underevent that we do not declare and pay (or set aside) dividends on the share repurchase program. The repurchase program does not obligate us to purchase any shares. Subject to market conditions, Holdings may, from time to time, purchase shares of its common stock through various means, including open market transactions, privately negotiated transactions (including share repurchases from AXA), forward, derivative, accelerated repurchase, or automatic repurchase transactions, or tender offers. The Board of Directors may terminate, increase or decreaseSeries A, Series B and Series C Preferred Stock for the share repurchase program at any time. As of December 31, 2018, we repurchased 32.5 million shares of our common stock, including $30 million from AXA and the remainder through open market transactions.last proceeding dividend period. For additional information on our preferred stock, see “—Series A, Series B and Series C Preferred Stock”.
For information regarding activity pertaining to common and preferred dividends declared and paid, see Note 20 of the Notes to these Consolidated Financial Statements.
Share Repurchase Programs
For information regarding activity pertaining to share repurchase program,programs, see “—Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer PurchasesNote 20 of Equity Securities”.the Notes to these Consolidated Financial Statements.
On February 27, 2019, Holdings’ Board of Directors authorized a $800 million share repurchase program. Under this authorization, Holdings, may, from time to time through December 31, 2019, purchase shares of its common stock through various means. Holdings may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate Holdings to purchase any particular number of shares.
Accelerated Share Repurchase Agreement
In January 2019, Holdings entered into an Accelerated Share Repurchase agreement (the “ASR”) with a third-party financial institution to repurchase an aggregate of $150 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $150 million and received initial delivery of 6,956,522 shares. The ASR is scheduled to terminate during the first quarter of 2019, at which time additional shares may be delivered or returned depending on the daily volume-weighted average price of Holdings’ common stock.
Sources and Uses of Liquidity of Our Insurance Subsidiaries
The principal sources of liquidity for our insurance subsidiaries are premiums, investment and fee income, deposits associated with our insurance and annuity operations, cash and invested assets, as well as internal borrowings. The principal uses of that liquidity include benefits, claims and dividends paid to policyholders and payments to policyholders in connection with surrenders and withdrawals. Other uses of liquidity include commissions, general and administrative expenses, purchases of investments, the payment of dividends to Holdings and hedging activity. Certain of our insurance subsidiaries’ principal sources and uses of liquidity are described in the paragraphs that follow.
We manage the liquidity of our insurance subsidiaries with the objective of ensuring that they are able tocan meet payment obligations linked to our Individual Retirement, Group Retirement and Protection Solutions businesses and to their outstanding debt and derivative positions, including in our hedging programs, without support from Holdings. We employ an asset/liability management approach specific to the requirements of each of our insurance businesses. We measure liquidity against internally-developed benchmarks that consider the characteristics of our asset portfolio and the liabilities that it supports.supports in both the short-term (the next 12 months) and long-term (beyond the next 12 months). We consider attributes of the various categories of our liquid assets (for example, type of asset and credit quality) in calculating internal liquidity indicators for our insurance and reinsurance operations. Our liquidity benchmarks are established for various stress scenarios and durations, including company-specific and market-wide events. The scenarios we use to evaluate the liquidity of our subsidiaries are defined to allow operating entities to operate without support from Holdings.
Liquid Assets
The investment portfolios of our insurance subsidiaries are a significant component of our overall liquidity. Liquid assets include cash and cash equivalents, short-term investments, U.S. Treasury fixed maturities, fixed maturities that are not designated as held-to-maturityHTM and public equity securities. We believe that our business operations and the liquidity profile of our assets provide sufficient liquidity under reasonably foreseeable stress scenarios for each of our insurance subsidiaries.

See “—General Account Investment Portfolio” and Note 3 and Note 4 of the Notes to these Consolidated Financial Statements for a description of our retirement and protection businesses’ portfolio of liquid assets.
Hedging Activities
108
Table of Contents
Because the future claims exposure on our insurance products, and in particular our variable annuity products with GMxB features, is sensitive to movements in the equity markets and interest rates, we have in place various hedging and reinsurance programs that are designed to mitigate the economic risks of movements in the equity markets and interest rates. We use derivatives as part of our overall asset/liability risk management program primarily to reduce exposures to equity market and interest rate risks. In addition, we use credit derivatives to replicate exposure to individual securities or pools of securities as a means of achieving credit exposure similar to bonds of the underlying issuer(s) more efficiently. The derivative contracts are an integral part of our risk management program, especially for the management of our variable annuities program, and are collectively managed to reduce the economic impact of unfavorable movements in capital markets. These derivative transactions require liquidity to meet payment obligations such as payments for periodic settlements, purchases, maturities and terminations as well as liquid assets pledged as collateral related to any decline in the net estimated fair value. Collateral calls represent one of our biggest drivers for liquidity needs for our insurance subsidiaries. Historically, we have managed our liquidity needs related to our derivative portfolio at Holdings and AXA RE Arizona on a combined basis. Due to the limited size of the AXA RE Arizona investment portfolio, we historically supported its collateral funding needs through AXA Financial’s commercial paper program. Following the GMxB Unwind, which was effected on April 12, 2018, ourOur derivatives contracts reside primarily within AXA Equitable Life. As AXA Equitable LifeFinancial, which has a significantly largerlarge investment portfolio than AXA RE Arizona had, we have reduced the need for overall liquidity going forward.portfolio.
FHLBNYFHLB Membership
AXA Equitable Life is a memberFinancial and Equitable America are members of the Federal Home Loan Bank of New York (“FHLBNY”),FHLB, which provides AXA Equitable Life with access to collateralized borrowings and other FHLBNYFHLB products. At December 31, 2018, we had $1.5 billion
See Note 17 of outstanding short-termthe Notes to these Consolidated Financial Statements for further description of our FHLB program.
FABN
Under the FABN program, Equitable Financial may issue funding agreements and $2.5 billion of long-term outstanding funding agreements issued to the FHLBNY and had posted $6.1 billion securities as collateral for funding agreements. In addition, AXA Equitable Life implemented a hedge to lock in the funding agreements borrowing rate, and $11 million of hedge impact was reported as funding agreement carrying value. MLOA also became a memberU.S. dollar or other foreign currencies.
See Note 17 of the Federal Home Loan BankNotes to these Consolidated Financial Statements for further description of San Francisco in February 2018.our FABN program.
Sources and Uses of Liquidity of our Investment Management and Research Segment
The principal sources of liquidity for our Investment Management and Research business include investment management fees and borrowings under its revolving credit facilityfacilities and commercial paper program. The principal uses of liquidity include general and administrative expenses, business financing and distributions to holders of AB Units and AB Holding Units plus interest and debt service. The primary liquidity risk for our fee-based Investment Management and Research business is its profitability, which is impacted by market conditions and our investment management performance.
On September 27, 2018, For information regarding our Investment Management and Research credit facilities and commercial paper program with external parties, see Note 12 of the Notes to these Consolidated Financial Statements.
EQH Facility
AB amended and restated the existing $1.0 billionhas a $900 million committed, unsecured senior revolving credit facility (the “AB Credit“EQH Facility”) with a group of commercial banks. The EQH Facility matures on November 4, 2024 and other lenders, reducing the principal amount to $800 million and extending the maturity to September 27, 2023. The credit facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $200 million. Any such increase is subject to the consent of the affected lenders. The AB Credit Facility is available for AB and SCB LLC, forAB’s general business purposes, includingpurposes. Borrowings under the support of AB’sEQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper program. Both AB and SCB LLC can draw directly under the AB Credit Facility and AB management expects to draw on the AB Credit Facility from time to time. AB has agreed to guarantee the obligations of SCB LLC under the AB Credit Facility.rates.
The AB CreditEQH Facility contains affirmative, negative and financial covenants which are customary for facilities of this type, including, among other things, restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of December 31, 2018, AB wassubstantially similar to those in compliance with these covenants.AB’s committed bank facilities. The AB CreditEQH Facility also includes customary events of default (with customary grace periods, as applicable),substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitmentscommitment may be terminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable
Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by AB Credit Facility would automatically becomefrom time to time until the maturity of the facility. AB or Holdings may reduce or terminate the commitment at any time without penalty upon proper notice. Holdings also may terminate the facility immediately due and payable, and the lender’s commitments would automatically terminate.

upon a change of control of AB’s general partner.
As of December 31, 20182021 and 2017,2020, AB had $755 million and SCB LLC had no amounts$675 million outstanding under the EQH Facility, in each case with an interest rate of approximately 0.2%. Average daily borrowing of the EQH Facility during 2021 and 2020 were $405 million and $471 million, respectively, with a weighted average interest rate of approximately 0.2% and 0.5% respectively.
EQH Uncommitted Facility
109
Table of Contents
In addition to the EQH Facility, on September 1, 2020, AB Credit Facility. During the years ended December 31, 2018 and 2017, AB and SCB LLC did not draw upon the AB Credit Facility.
On November 16, 2018, AB amended and restated its existed $200established a new $300 million committed,uncommitted, unsecured senior revolving credit facility (the “AB Revolver”“EQH Uncommitted Facility”) with a leading international bank, extending the maturity date from November 28, 2018 to November 16, 2021. There were no other material changes included in the amendment.EQH. The AB RevolverEQH Uncommitted Facility matures on September 1, 2024 and is available for AB’s and SCB LLC’sgeneral business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC’s operations. Both AB and SCB LLC can draw directlypurposes. Borrowings under the AB Revolver and management expects to drawEQH Uncommitted Facility bear generally interest at a rate per annum based on the AB Revolver from time to time. AB has agreed to guarantee the obligations of SCB LLC under the AB Revolver.prevailing overnight commercial paper rates. The AB RevolverEQH Uncommitted Facility contains affirmative, negative and financial covenants, thatwhich are identicalsubstantially similar to those ofin the AB CreditEQH Facility.
As of December 31, 20182021 and 2017,2020, AB had $25 million and $75 millionno outstanding underbalance on the AB Revolver, respectively. Average daily borrowing ofEQH Uncommitted Facility. During the AB Revolver during the yearsperiods ended December 31, 20182021 and 2017 were $19 million and $21 million, respectively, with weighted average interest rates of approximately 2.8% and 2.0%, respectively.2020, AB did not draw upon the EQH Uncommitted Facility.
In addition, SCB LLC also has three uncommitted lines of credit with three financial institutions. Two of these lines of credit permit us to borrow up to an aggregate of $175 million, with AB named as an additional borrower, while the other line has no stated limit. As of December 31, 2018 and 2017, SCB LLC had no bank loans outstanding. Average daily borrowings of bank loans during the years ended December 31, 2018 and 2017 were $3 million and $5 million, respectively, with weighted average interest rates of approximately 1.6% and 1.4%, respectively.
Consolidated Cash Flow Analysis
We believe that cash flows from our operations on a consolidated basis are adequate to satisfy current liquidity requirements. The continued adequacy of our liquidity will depend upon factors such as future market conditions, changes in interest rate levels, policyholder perceptions of our financial strength, policyholder behavior, the effectiveness of our hedging programs, catastrophic events and the relative safety and attractiveness of competing products. Changes in any of these factors may result in reduced or increased cash outflows. Our insurance subsidiaries’ cash flows from investment activities result from repayments of principal, proceeds from maturities and sales of invested assets and investment income, net of amounts reinvested. The primary liquidity risks with respect to these cash flows are the risk of default by debtors or bond insurers, our counterparties’ willingness to extend repurchase agreements, commitments to invest and market volatility. We closely manage these risks through our asset/liability management process and regular monitoring of our liquidity position.
 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

Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017
Cash and cash equivalents at December 31, 2018 were $4,469 million, a decrease of $345 million from cash and cash equivalents of $4,814 million at December 31, 2017.
Cash inflows from operating activities were $61 million in 2018 and cash ouflows from operating activities were $243 million in 2017. Cash flows from operating activities include such sources as premiums, investment management and advisory fees and investment income offset by such uses as life insurance benefit payments, policyholder dividends, compensation payments, other cash expenditures and tax payments.
Net cash used in investing activities were $2,049 million in 2018, a decrease of approximately $7,640 million from 2017, primarily related to $2,749 million lower cash outflows from cash settlements related to derivative instruments, a $2,372 million decrease in payments for fixed maturities, a $1,550 million increase in cash from net proceeds of short-term investments and a $1,215 million decrease from loans to affiliates.

Net cash provided by financing activities were $1,655 million in 2018, a decrease of $7,416 million from 2017, primarily driven by $2,944 million higher cash outflows for repayments of loans from affiliates, a $2,835 million change in collateralized pledged assets and liabilities, a $1,910 million decrease in cash from short-term financings, purchase of AB Units of $1,340 million, decrease in proceeds from loans from affiliates of $731 million, and purchase of treasury shares of $648 million partially offset by $4,057 million additional long-term debt.
Year Ended December 31, 2017 Compared to Year Ended December 31, 2016
Cash and cash equivalents at December 31, 2017 were $4,814 million, a decrease of $840 million from cash and cash equivalents of $5,654 million at December 31, 2016.
Cash outflows from operating activities were $243 million in 2017 and cash outflows from operating activities were $236 million in 2016.
Net cash used in investing activities were $9,689 million in 2017, an increase of $3,921 million from 2016, primarily related to $7,212 million higher cash payments for the purchase/origination of investments mainly to support net deposits to policyholders’ account balances and $1,971 million higher cash outflow from the settlement of derivatives, which was partially offset by an increase of $5,532 million of proceeds from the sale/maturity/prepayment of investments.
Net cash provided by financing activities were $9,070 million in 2017, an increase of $3,959 million from 2016. The increase was primarily driven by $2,427 million lower cash outflows from net repayments of loans from affiliates (net proceeds of $675 million in 2017 compared to net repayments of $1,752 million in 2016), $3,266 million change in collateralized pledged assets and liabilities, and partially offset by $85 million lower deposits to policyholders’ account balances ( $9,916 million in 2017 compared to $10,001 million in 2016) and $1,933 million decrease in securities sold under agreement to repurchase.
Statutory Capital of Our Insurance Subsidiaries
Our capital management framework for our insurance subsidiaries is primarily based on statutory RBC standards and the CTE asset standard for our variable annuity business.
RBC requirements are used as minimum capital requirements by the NAIC and the state insurance departments to evaluate the capital condition of regulated insurance companies. RBC is based on a formula calculated by applying factors to various asset, premium, claim, expense and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk, market risk and business risk and is calculated on a quarterly basis and made public on an annual basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. These rules apply to our insurance company subsidiaries and not to Holdings. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. At the date of the most recent annual statutory financial statements filed with insurance regulators, the total adjusted capital of each of these insurance company subsidiaries subject to these requirements was in excess of each of those RBC levels.
CTE is a statistical measure of tail risk which quantifies the total asset requirement to sustain a loss if an event outside a given probability level has occurred. In the case of our analysis of variable annuity guarantees, CTE98 denotes the financial resources a company would need to cover the averagePlease see Note 20 of the worst 2% of scenarios.Notes to these Consolidated Financial Statements for additional information relating to Permitted Statutory Accounting practices and its impact on our statutory surplus.
We target to maintain an asset level for all variable annuity products at or above a CTE98 level. For our non-variable annuity insurance liabilities, we target to maintain a RBC ratio of 350%-400%.
Captive Reinsurance CompaniesCompany
We use a captive reinsurance companiescompany to more effectively manage our reserves and capital on an economic basis and to enable the aggregation and transfer of risks. Our captive reinsurance companies assumecompany assumes business from affiliates only and areis closed to new business. All of ourOur captive reinsurance companies are wholly ownedcompany is a wholly-owned subsidiaries and are located in the United States. In addition to state insurance regulation, our captives arecaptive is subject to internal policies governing theirits activities. We continue to analyze the use of our existing captive reinsurance structures,structure, as well as additional third-party reinsurance arrangements. On April 12, 2018, we effected an unwind of one of our existing captive reinsurance structures as described below.

Unwind of Reinsurance of GMxB Business with a Captive Reinsurer
On April 12, 2018, we effected an unwind of our existing captive reinsurance structure between AXA Equitable Life, AXA RE Arizona, an indirectly wholly owned subsidiary of Holdings. Prior to the unwind AXA RE Arizona reinsured a 100% quota share of all liabilities for variable annuities with GMxB riders issued on or after January 1, 2006 and in-force on September 30, 2008 (the “GMxB Business”) and a 100% quota share of all liabilities for variable annuities with GMIB riders issued on or after May 1, 1999 through August 31, 2005 in excess of the liability assumed by two unaffiliated reinsurers, which are subject to certain maximum amounts or limitations on aggregate claims. AXA RE Arizona also reinsured a 90% quota share of level premium term insurance issued by AXA Equitable Life on or after March 1, 2003 through December 31, 2008 and lapse protection riders under certain series of universal life insurance policies issued by AXA Equitable Life on or after June 1, 2003 through June 30, 2007.Borrowings
In connection with the GMxB Unwind, all of the business previously reinsured to AXA RE Arizona, with the exception of the GMxB Business, was novated on April 12, 2018 to EQ AZ Life Re, a newly formed captive insurance company organized under the laws of Arizona, an indirectly and wholly owned by Holdings. Following the novation of business to EQ AZ Life Re, AXA RE Arizona, holding only the GMxB Business, was merged with and into AXA Equitable Life. As a result of the merger, the reinsurance by AXA RE Arizona of the GMxB Business is no longer in place. Following AXA RE Arizona’s merger with and into AXA Equitable Life, the GMxB Business is not subject to any new internal or third-party reinsurance arrangements, though in the future AXA Equitable Life may reinsure the GMxB Business with third parties.
Description of Certain Indebtedness
Historically, our insurance companies have relied on AXA for most of our financing, either through internal loans or guarantees. In connection with the IPO, we have put in place a stand-alone financing strategy at Holdings targeting an overall indebtedness level in line with our U.S. public company peers. AB historically has been self-reliant for its financing, and we expect AB will remain so in its financing activities going forward. As of December 31, 2018 and 2017, our total short-term and long-term external debt on a consolidated basis was $5.0 billion and $2.4 billion, respectively.
The following table sets forth our total consolidated borrowings as of the dates indicated. Our financial strategy going forward will remain subject to market conditions and other factors. For example, we may from time to time enter into additional bank or other financing arrangements, including public or private debt, structured facilities and contingent capital arrangements, under which we could incur additional indebtedness.
 As of December 31, 2018
 Holdings AXA Equitable Life AB Consolidated
 (in millions)
Short-term and long-term debt:       
Commercial paper$—
 $—
 $521
 $521
AB Revolver—
 —
 25
 25
Long-term debt4,409
 —
 —
 4,409
Total short-term and long-term debt4,409
 —
 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 debt349
 202
 —
 551
Total short-term and long-term debt1,640
 202
 566
 2,408
Loans from affiliates3,622
 —
 —
 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.

In February 2018, we entered into a $2.5 billion five-year senior unsecured revolving credit facility (the “Revolver”), which may provide significant supportFor information regarding activity pertaining to our liquidity position when alternative sources of credit are limited.  In May 2018, we borrowed $300 million under a $500 million three-year senior unsecured delayed draw term loan agreement (the “DDTL”) and terminated the remaining $200 million capacity. The Revolver and DDTL contain certain administrative, reporting, legal and financial covenants, including requirements to maintain a specified minimumtotal consolidated net worth and to maintain a ratio of indebtedness to total capitalization not in excess of a specified percentage, and limitations on the dollar amount of indebtedness that may be incurred by our subsidiaries and the dollar amount of secured indebtedness that may be incurred by the Company, which could restrict our operations and use of funds. 
In addition to the Revolver and DDTL, we entered into letter of credit facilities with an aggregate principal amount of approximately $1.9 billion (the “LOC Facilities”), primarily to be used to support our life insurance business reinsured to EQ AZ Life Re following the GMxB Unwind. In April 2018, we issued $3.8 billion in aggregate principal amount of notes (consisting of $800 million aggregate principal amount of 3.9% Senior Notes due 2023, $1.5 billion aggregate principal amount of 4.35% Senior Notes due 2028 and $1.5 billion aggregate principal amount of 5.0% Senior Notes due 2048) to third party investors.
The right to borrow funds under the Revolver, DDTL and LOC Facilities is subject to the fulfillment of certain conditions, including compliance with all covenants, and the ability to borrow thereunder is also subject to the continued abilityborrowings, see Note 12 of the lenders that are or will be partiesNotes to the facilities to provide funds. For additional information regarding the covenants in the facilities and the conditions to borrowing thereunder, see “Risk Factors”.these Consolidated Financial Statements.
Ratings
Financial strength ratings (which are sometimes referred to as “claims-paying” ratings) and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Our credit ratings are also important for our ability to raise capital through the issuance of debt and for the cost of such financing.
A downgrade of our debt ratings could affect our ability to raise additional debt with terms and conditions similar to our current debt, and accordingly, likely increase our cost of capital. In addition, a downgrade of these ratings could make it more difficult to raise capital to refinance any maturing debt obligations, to support business growth at our insurance subsidiaries and to maintain or improve the current financial strength ratings of our principal insurance subsidiaries. Upon announcement of AXA’s plan to pursue the IPO and the filing of our initial Form S-1 on November 13, 2017 related to the IPO, AXA Equitable Life’s and AXA Financial’s ratings were downgraded by AM Best, S&P and Moody’s. Those downgrades to reflect the removal of the uplift associated with assumed financial support from AXA have since been changed to stable.
Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. The following table summarizes the ratings for Holdings and certain of its subsidiaries. AM Best and S&P and Moody’s financial strength and credit ratings have a stable outlook while AM Best ratings are currently under review with developing implications.

Moody’s has a positive outlook.
110
Table of Contents
AM BestS&PMoody’s
Last review dateJan '22Nov '21Aug '21
Financial Strength Ratings:


Equitable Financial Life Insurance CompanyAA+A2
Equitable Financial Life Insurance Company of AmericaAA+A2
Credit Ratings:
Equitable Holdings, Inc.BBB+Baa2
Last review dateDecember 17,
2018		December 11,
2018Sep '21		September 18,
2018Dec '21
AXA Equitable LifeAllianceBernstein L.P.AA+AA2
MLOAAA+A2




Credit Ratings:


Holdingsbbb+BBB+Baa2
AB (1)—A/Stable/A-1A2
_______________
(1) Last review dates: S&P was as of November 9, 2018 and Moody’s was of May 17, 2017.
Contractual ObligationsMaterial Cash Requirements
The table below summarizes the future estimatedmaterial short and long-term cash paymentsrequirements related to certain contractual and other obligations as of December 31, 2018. The estimated payments reflected in this table2021. Short-term cash requirements are based on management’s estimatesconsidered to requirements within the next 12 months and assumptions about these obligations. Because these estimates and assumptionslong-term cash requirements are necessarily subjective,considered to be beyond the actual cash outflows in future periods will vary, possibly materially, from those reflected in the table. In addition, wenext 12 months. We do not believe that our cash flow requirements can be adequately assessed based solely upon an analysis of these obligations, as the table below does not contemplate all aspects of our cash inflows, such as the level of cash flow generated by certain of our investments, nor all aspects of our cash outflows.
Estimated Payments Due by Year
Total20222023-20242025-20262027 and thereafter
(in millions)
Material Cash Requirements:
Insurance liabilities (1)$107,485 $1,509 $4,671 $6,426 $94,879 
FHLB Funding Agreements6,643 5,353 644 646 — 
Interest on FHLB Funding Agreements100 29 48 23 — 
FABN Funding Agreements6,759 — 2,500 2,100 2,159 
Interest on FABN Funding Agreements372 74 137 105 56 
Operating leases, net of sublease commitments1,106 153 234 149 570 
Long-term debt3,870 — 520 — 3,350 
Interest on long-term debt2,602 185 340 330 1,747 
Interest on P-Caps394 24 47 47 276 
Employee benefits3,498 211 451 383 2,453 
Funding Commitments2,118 520 832 766 — 
Total Material Cash Requirements$134,947 $8,058 $10,424 $10,975 $105,490 
 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 agreements3,990
 1,640
—
1,094
—
475
—
781
Interest on FHLBNY funding agreements267
 65
—
109
—
50
—
43
AB commercial paper523
 523
—
—
—
—
—
—
AB loan25
 25
—
—
—
—
—
—
Operating leases1,193
 212
—
367
—
321
—
293
Long-term debt4,450
 —
—
300
—
800
—
3,350
Interest on long-term debt3,232
 208
—
407
—
376
—
2,241
Employee benefits4,015
 221
—
444
—
424
—
2,926
AB Funding Commitments15
 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.(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. 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.

Unrecognized tax benefits of $539$323 million, including $4$3 million related to AB were not included in the above table because it is not possible to make reasonably reliable estimates of the occurrence or timing of cash settlements with the respective taxing authorities.
In addition, the below items are included as part of AB’s aggregate contractual obligations:

111
Table of Contents
At year-end 2018,•As of December 31, 2021, AB had a $256$354 million accrual for compensation and benefits, of which $171$9 million is expected to be paid in 2019, $50 million in 2020 and 2021,2022, $15 million in 2022-20232023-2024, $18 million in 2025-2026 and the rest$46 million in 2027 and thereafter. Further, AB expects to make contributions to its qualified profit-sharing plan of $14$16 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$25 million in the Real Estate Fund. As of December 31, 2018, we had2021, AB funded $22$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$27 million as amended in 2015,2020, in the Real Estate Fund II. As of December 31, 2018,2021, AB had funded $15$21 million of this commitment.

Off-Balance Sheet Arrangements
At December 31, 2018, the Company was not a party to any off-balance sheet transactions other than those guarantees and commitments described in Note 11 and Note 17 of the Notes to the Consolidated Financial Statements.
Summary of Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in our consolidated financial statements included elsewhere herein. For a discussion of our significant accounting policies, see Note 2 of the Notes to thethese Consolidated Financial Statements. The most critical estimates include those used in determining:
•liabilities for future policy benefits;
•accounting for reinsurance;
•capitalization and amortization of DAC and policyholder bonus interest credits;DAC;
•estimated fair values of investments in the absence of quoted market values and investment impairments;
•estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation;
•goodwill and related impairment;
•measurement of income taxes and the valuation of deferred tax assets; and
•liabilities for litigation and regulatory matters.
In applying our accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries while others are specific to our business and operations. Actual results could differ from these estimates.
Liability for Future Policy Benefits
We establish reserves for future policy benefits to, or on behalf of, policyholders in the same period in which the policy is issued or acquired, using methodologies prescribed by U.S. GAAP. The assumptions used in establishing reserves are generally based on the our experience, industry experience or other factors, as applicable. At least annually we review our actuarial assumptions, such as mortality, morbidity, retirement and policyholder behavior assumptions, and update assumptions when appropriate. Generally, we do not expect trends to change significantly in the short-term and, to the extent these trends may change, we expect such changes to be gradual over the long-term.
The reserving methodologies used include the following:
Universal life (“UL”)•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.
For most long-duration contracts, we utilize best estimate assumptions as of the date the policy is issued or acquired with provisions for the risk of adverse deviation, as appropriate. After the liabilities are initially established, we perform premium deficiency tests using best estimate assumptions as of the testing date without provisions for adverse deviation. If the liabilities determined based on these best estimate assumptions are greater than the net reserves (i.e., U.S. GAAP reserves net of any
112
Table of Contents
DAC or DSI), the existing net reserves are adjusted by first reducing the DAC or DSI by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than these asset balances for insurance contracts, we then increase the net reserves by the excess, again through a charge to current period earnings. If a premium deficiency is recognized, the assumptions as of the premium deficiency test date are locked in and used in subsequent valuations and the net reserves continue to be subject to premium deficiency testing.
For certain reserves, such as those related to GMDB and GMIB features, we use current best estimate assumptions in establishing reserves. The reserves are subject to adjustments based on periodic reviews of assumptions and quarterly adjustments for experience, including market performance, and the reserves may be adjusted through a benefit or charge to current period earnings.
For certain GMxB features in our Individual Retirement segment, the benefits are accounted for as embedded derivatives, with fair values calculated as the present value of expected future benefit payments to contractholderscontract holders less the present value of assessed rider fees attributable to the embedded derivative feature. Under U.S. GAAP, the fair values of these benefit features are based on assumptions a market participant would use in valuing these embedded derivatives. Changes in the fair value of the embedded derivatives are recorded quarterly through a benefit or charge to current period earnings.
The assumptions used in establishing reserves are generally based on our experience, industry experience and/or other factors, as applicable. We typically update our actuarial assumptions, such as mortality, morbidity, retirement and policyholder behavior assumptions, annually, unless a material change is observed in an interim period that we feel is indicative of a long-term trend. Generally, we do not expect trends to change significantly in the short-term and, to the extent these trends may change, we expect such changes to be gradual over the long-term. In a sustained low interest rate environment, there is an increased likelihood that the reserves determined based on best estimate assumptions may be greater than the net liabilities.
See Note 82 of the Notes to thethese Consolidated Financial Statements for additional information on our accounting policy relating to GMxB features and liability for future policy benefits and Note 29 of the Notes to thethese Consolidated Financial Statements for future policyholder benefit liabilities.
Sensitivity of Future Rate of Return Assumptions on GMDB/GMIB Reserves
The Separate Account future rate of return assumptions that are used in establishing reserves for GMxB features are set using a long term-view of expected average market returns by applying a reversion to the mean approach, consistent with that used for DAC amortization. For additional information regarding the future expected rate of return assumptions and the reversion to the mean approach, see, “—DAC and Policyholder Bonus Interest Credits”.Credits.”
The GMDB/GMIB reserve balance before reinsurance ceded was $8.5$10.8 billion atas of December 31, 2018.2021. The following table provides the sensitivity of the reserves GMxB features related to variable annuity contracts relative to the future rate of return assumptions by quantifying the adjustments to these reserves that would be required assuming both a 1% increase and decrease in the future rate of return. This sensitivity considers only the direct effect of changes in the future rate of return on operating results due to the change in the reserve balance before reinsurance ceded and not changes in any other assumptions such as persistency, mortality, or expenses included in the evaluation of the reserves, or any changes on DAC or other balances including hedging derivatives and the GMIB reinsurance asset.

GMDB/GMIB Reserves
Sensitivity - Rate of Return
December 31, 20182021
 
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
GMDB/GMIB Reserves    
(in millions)
1% decrease in future rate of return$1,363 
1% increase in future rate of return$(1,667)
Traditional Annuities
The reserves for future policy benefits for annuities include group pension and payout annuities, and, during the accumulation period, are equal to accumulated policyholders’ fund balances and, after annuitization, are equal to the present value of expected future payments based on assumptions as to mortality, retirement, maintenance expense, and interest rates.
113
Table of Contents
Interest rates used in establishing such liabilities range from 1.6%1.5% to 5.5%5.4% (weighted average of 4.8%3.5%). If reserves determined based on these assumptions are greater than the existing reserves, the existing reserves are adjusted to the greater amount.
Health
Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest.
Reinsurance
Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risk with respect to reinsurance receivables. We periodically review actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluate the financial strength of counterparties to our reinsurance agreements using criteria similar to those evaluated in our security impairment process. See “—Estimated Fair Value of Investments.” Additionally, for each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. We review all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. If we determine that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, we record the agreement using the deposit method of accounting.
For reinsurance contracts other than those covering GMIB exposure, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities. GMIB reinsurance contracts are used to cede affiliated and non-affiliated reinsurers a portion of the exposure on variable annuity products that offer the GMIB feature. The GMIB reinsurance contracts are accounted for as derivatives and are reported at fair value. Gross reserves for GMIB, on the other hand, are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts, therefore, will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market and/or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts.
See Note 1011 of the Notes to thethese Consolidated Financial Statements for additional information on our reinsurance agreements.reinsurance.
DAC and Policyholder Bonus Interest Credits
We incur significant costs in connection with acquiring new and renewal insurance business. Costs that relate directly to the successful acquisition or renewal of insurance contracts, are deferred as DAC. In addition to commissions, certain direct-response advertising expenses and other direct costs, other deferrable costs include the portion of an employee’s total compensation and benefits related to time spent selling, underwriting or processing the issuance of new and renewal insurance business only with respect to actual policies acquired or renewed. We utilize various techniques to estimate the portion of an employee’s time spent on qualifying acquisition activities that result in actual sales, including surveys, interviews, representative time studies and other methods. These estimates include assumptions that are reviewed and updated on a periodic basis or more frequently to reflect significant changes in processes or distribution methods.

Amortization Methodologies
Participating Traditional Life Policies
For participating traditional life policies (substantially all of which are in the Closed Block), DAC is amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield.
AtAs of December 31, 2018,2021, the average investment yields assumed (excluding policy loans) were 4.7%4.5% grading to 4.3% in 2024.2026. Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends. The effect on the accumulated amortization of DAC of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date. Many of the factors that affect gross margins are included in
114
Table of Contents
the determination of the Company’s dividends to these policyholders. DAC adjustments related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in “Policyholders’ dividends,” for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.
Non-participating Traditional Life Insurance Policies
DAC associated with non-participating traditional life policies areis amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts. Deviations from estimated experience are reflected in earnings (loss) in the period such deviations occur. For these contracts, the amortization periods generally are for the total life of the policy.
Universal Life and Investment-type Contracts
DAC associated with certain variable annuity products is amortized based on estimated assessments, with the remainder of variable annuity products, UL and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Account fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, updated at the end of each accounting period. When estimated gross profits are expected to be negative for multiple years of a contract life, DAC is amortized using the present value of estimated assessments. The effect on the amortization of DAC of revisions to estimated gross profits or assessments is reflected in net income (loss) in the period such estimated gross profits or assessments are revised. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
Quarterly adjustments to the DAC balance are made for current period experience and market performance related adjustments, and the impact of reviews of estimated total gross profits. The quarterly adjustments for current period experience reflect the impact of differences between actual and previously estimated expected gross profits for a given period. Total estimated gross profits include both actual experience and estimates of gross profits for future periods. To the extent each period’s actual experience differs from the previous estimate for that period, the assumed level of total gross profits may change. In these cases, cumulative adjustment to all previous periods’ costs is recognized.
During each accounting period, the DAC balances are evaluated and adjusted with a corresponding charge or credit to current period earnings for the effects of the Company’s actual gross profits and changes in the assumptions regarding estimated future gross profits. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
For the variable and UL policies a significant portion of the gross profits is derived from mortality margins and therefore, are significantly influenced by the mortality assumptions used. Mortality assumptions represent our expected claims experience over the life of these policies and are based on a long-term average of actual company experience. This assumption is updated periodically to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC amortization. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization.

Loss Recognition Testing
After the initial establishment of reserves, loss recognition tests are performed using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), loss recognition accounting is triggered and DAC is first written off, and thereafter a premium deficiency reserve is established by a charge to earnings.
In 2018 and 2017,2020, we determined that we had a loss recognition in certain of our variable interest-sensitive life insurance products triggered loss recognition accounting due to the release of life reserves and low interest rates. As of December 31, 2018rates and 2017, we wrote off $118reduced DAC by $945 million and $245 million, respectively, of the DAC balance through accelerated amortization. We did not have a loss recognition event in 2021 or 2019.
115
Table of Contents
Additionally, in certain policyholder liability balances for a particular line of business may not be deficient in the aggregate to trigger loss recognition;recognition accounting; however, the pattern of earnings may be such that annual profits are expected to be recognized in earlier years and then followed by losses in later years. This pattern of profits followed by losses is exhibited in our VISL business and has caused us to increase policyholder liability balances by an amount that accounts for losses in future years. This pattern is generatedcaused by the cost structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy account value to cover the monthly deductions and charges. We accrue for these Profits Followed by Losses ("PFBL")estimate the PFBL accrual using a dynamic approach that changes over time as the projection and timing of future losses change.
In addition, we are required to analyze the impacts fromhow net unrealized investment gains and losses on our available-for-saleAFS investment securities backing insurance liabilities affects product profitability,, as if those unrealized investment gains and losses were realized. This may result in the recognition of unrealized gains and losses on related insurance assets and liabilities in a manner consistent with the recognition of the unrealized gains and losses on available-for-saleAFS investment securities within the statements of comprehensive income and changes in equity. Changes to net unrealized investment (gains) losses may increase or decrease the ending DAC balance.DAC. Similar to a loss recognition event, whenif the DAC balance is reduced to zero, additional insurance liabilities are established if necessary.established. Unlike a loss recognition event, which is based on changes in net unrealized investment (gains) losses, these adjustments may reverse from period to period. In 2017, due primarily to the release of life reserves, we recorded an unrealized loss in Other comprehensive income (loss). There was no impact to Net income (loss).
Sensitivity of DAC to Changes in Future Mortality Assumptions
The following table demonstrates the sensitivity of the DAC balance relative to future mortality assumptions by quantifying the adjustments that would be required, assuming an increase and decrease in the future mortality rate by 1.0%. This information considers only the direct effect of changes in the mortality assumptions on the DAC balance and not changes in any other assumptions used in the measurement of the DAC balance and does not assume changes in reserves.
DAC Sensitivity - Mortality
December 31, 20182021
 
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 mortality by 1%$          17 
Increase in future mortality by 1%$(16)
Sensitivity of DAC to Changes in Future Rate of Return Assumptions
A significant assumption in the amortization of DAC on variable annuity products and, to a lesser extent, on variable and interest-sensitive life insurance relates to projected future Separate Accounts performance. Management sets estimated future gross profit or assessment assumptions related to Separate Account performance using a long-term view of expected average market returns by applying a Reversion to the Mean (“RTM”)RTM approach, a commonly used industry practice. This future return approach influences the projection of fees earned, as well as other sources of estimated gross profits. Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned resulting in higher expected future gross profits and lower DAC amortization for the period. The opposite occurs when returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance. In second quarter 2015, based upon management’s then-current expectations of interest rates and future fund growth, we updated our reversion to

the mean assumption from 9.0% to 7.0%. The average gross long-term return measurement start date was also updated to December 31, 2014. Management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. AtAs of December 31, 2018, 2021, the average gross short-term and long-term annual return estimate on variable and interest-sensitive life insurance and variable annuity products was 7.0% (4.7% net of product weighted average Separate Accounts fees), and 0.0% ((2.3)%the gross maximum and minimum short-term annual rate of return limitations were 15.0% (12.7% net of product weighted average Separate Accounts fees and Investment Advisory fees) and 0.0% ((2.3%) net of product weighted average Separate Account fees and Investment Advisory fees), respectively. The maximum duration over which these rate limitations may be applied is five years. This approach will continue to be applied in future periods. These assumptions of long-term growth are subject to assessment of the reasonableness of resulting estimates of future return assumptions.
If actual market returns continue at levels that would result in assuming future market returns of 15.0% for more than five years in order to reach the average gross long-term return estimate, the application of the five-year maximum duration
116
Table of Contents
limitation would result in an acceleration of DAC amortization. Conversely, actual market returns resulting in assumed future market returns of 0.0% for more than five years would result in a required deceleration of DAC amortization. AtAs of December 31, 2018, 2021, current projections of future average gross market returns assume a 1.6%0.0% annualized return for the next twonine quarters followed bygrading to a reversion to the mean of 7.0% thereafter.in nineteen quarters.
 Other significant assumptions underlying gross profit estimates for UL and investment type products relate to contract persistency and General Account investment spread.
The following table provides an example of the sensitivity of the DAC balance of variable annuity products and variable and interest-sensitive life insurance relative to future return assumptions by quantifying the adjustments to the DAC balance that would be required assuming both an increase and decrease in the future rate of return by 1.0%. This information considers only the effect of changes in the future Separate Accounts rate of return and not changes in any other assumptions used in the measurement of the DAC balance.
DAC Sensitivity - Rate of Return
December 31, 2018
2021
 
Increase/(Decrease)
in DAC
 (in millions)
Decrease in future rate of return by 1%$(167)
Increase in future rate of return by 1%$205
Increase/(Decrease)
in DAC
(in millions)
Decrease in future rate of return by 1%$(115)
Increase in future rate of return by 1%$139 
Estimated Fair Value of Investments
The Company’s investment portfolio principally consists of public and private fixed maturities, mortgage loans, equity securities and derivative financial instruments, including exchange traded equity, currency and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts, swaptions, variance swaps, as well as equity options used to manage various risks relating to its business operations.
Fair Value Measurements
Investments reported at fair value in the consolidated balance sheets of the Company include fixed maturity securities classified as available-for-sale,AFS, equity and trading securities and certain other invested assets, such as freestanding derivatives. In addition, reinsurance contracts covering GMIB exposure and the liabilities in the SCS variable annuity products, SIO in the EQUI-VEST variable annuity product series, MSO in the variable life insurance products, IUL insurance products and the GMAB, GIB, GMWB and GWBL feature in certain variable annuity products issued by the Company are considered embedded derivatives and reported at fair value.
When available, the estimated fair value of securities is based on quoted prices in active markets that are readily and regularly obtainable; these generally are the most liquid holdings and their valuation does not involve management judgment. When quoted prices in active markets are not available, we estimate fair value based on market standard valuation methodologies. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment. For securities with reasonable price transparency, the significant inputs to these valuation methodologies either are observable in the market or can be derived principally from or corroborated by observable market data. When the volume or level of activity results in little or no price transparency, significant inputs no longer can be supported by reference to market observable data but instead must be based on

management’s estimation and judgment. Substantially the same approach is used by us to measure the fair values of freestanding and embedded derivatives with exception for consideration of the effects of master netting agreements and collateral arrangements as well as incremental value or risk ascribed to changes in own or counterparty credit risk.
As required by the accounting guidance, we categorize our assets and liabilities measured at fair value into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique, giving the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For additional information regarding the key estimates and assumptions surrounding the determinations of fair value measurements, see Note 78 of the Notes to thethese Consolidated Financial Statements.Statements.
117
Table of Contents
Impairments and Valuation Allowances
The assessmentcarrying values of whether OTTIs have occurred is performed quarterly by our Investments Under Surveillance (“IUS”) Committee, withfixed maturities classified as AFS are reported at fair value. Changes in fair value are reported in OCI, net of allowance for credit losses, policy related amounts and deferred income taxes. With the adoption of the Financial Instruments-Credit Losses standard, changes in credit losses are recognized in investment gains (losses), net.
With the assistance of itsour investment advisors, on a security-by-security basis for each available-for-sale fixed maturitywe evaluate AFS debt securities that has experiencedexperience a decline in fair value for purpose of evaluating the underlying reasons. The analysis begins with a review of gross unrealized losses by the following categories of securities: (i) all investment grade and below investment grade fixed maturities for which fair value has declined and remained below amortized cost by 20% or more and (ii) below-investment-grade fixed maturities for which fair value has declined and remained below amortized cost for a period greater than 12 months.credit losses which are evaluated in accordance with the financial instruments credit losses guidance. The remainder of the unrealized loss related to other factors, if any, is recognized in OCI. Integral to the analysisthis review is an assessment made each quarter, on a security-by-security basis, by our IUS Committee, of various indicators of credit deterioration to determine whether the investment security has experienced a credit loss. This assessment includes, but is expected to recover, including, but not limited to, consideration of the duration and severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity and continued viability of the issuer and,issuer.
We recognize an allowance for equitycredit losses on AFS debt securities only,with a corresponding adjustment to earnings rather than a direct write down that reduces the intent and ability to holdcost basis of the investment, until recovery, resultingand credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Any improvements in identificationestimated credit losses on AFS debt securities are recognized immediately in earnings. We do not use the length of specific securities for which OTTI is recognized.time a security has been in an unrealized loss position as a factor, either by itself or in combination with other factors, to conclude that a credit loss does not exist, as was permitted to do prior to January 1, 2020.
If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting OTTIallowance is recognized in earningsincome (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries. These assumptions and estimates require use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage-mortgage and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.
Write-offs of AFS debt securities are recorded when all or a portion of a financial asset is deemed uncollectible. Full or partial write-offs are recorded as reductions to the amortized cost basis of the AFS debt security and deducted from the allowance in the period in which the financial assets are deemed uncollectible. We elected to reverse accrued interest deemed uncollectible as a reversal of interest income. In instances where we collect cash that has previously been written off, the recovery will be recognized through earnings or as a reduction of the amortized cost basis for interest and principal, respectively.
Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and valuation allowances. ValuationFor collectively evaluated mortgages, the Company estimates the allowance for credit losses based on the amortized cost basis of its mortgages over their expected life using a PD / LGD model. For individually evaluated mortgages, the Company continues to recognize valuation allowances are based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value if the loan is collateral dependent. However, if foreclosure is or becomes probable, the collateral value measurement method is used.
For commercial and agricultural mortgage loans, an allowance for credit loss is typically recommended when management believes it is probable that principal and interest will not be collected according to the contractual terms. Factors that influence management’s judgment in determining allowance for credit losses include the following:
Loan-to-value•LTV 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-valueLTV ratio is in excess of 100%. In the case where the loan-to-valueLTV 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•DSC ratio—Derived from actual Operating Earningsoperating 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.
118
Table of Contents
•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.
Mortgage loans alsothat do not share similar risk characteristics with other loans in the portfolio are individually evaluated quarterly by the IUS Committee for impairment on a loan-by-loan basis, including an assessment of related collateral value. Commercial mortgages 60 days or more past due and agricultural mortgages 90 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgages. Based on its monthly monitoring of mortgages, a class of potential problem mortgages also is identified, consisting of mortgage loans not currently classified as problems but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being restructured. The decision whether to classify a performing mortgage loan as a potential problem involves significant subjective judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
For problem mortgage loans a valuation allowance is established to provide for the risk of credit losses inherent in the lending process. The allowance includes loan specific reserves for loans determined to be non-performing as a result of the loan review process. A non-performing loan is defined as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. The loan specific portion of the loss allowance is based on our assessment as to ultimate collectability of loan principal and interest. Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. The valuation allowance for mortgage loans can increase or decrease from period to period based on such factors.
Impaired mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows. Changes in the present value attributable to changes in the amount or timing of expected cash flows are reported as investment gains or losses.
Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is doubtful. Once mortgage loans are classified as nonaccrual mortgage loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan on real estate has been restructured to where the collection of interest is considered likely.
See Notes 2 and 3 of the Notes to thethese Consolidated Financial Statements for additional information relating to our determination of the amount of allowances and impairments.
Derivatives
We use freestanding derivative instruments to hedge various capital market risks in our products, including: (i) certain guarantees, some of which are reported as embedded derivatives; (ii) current or future changes in the fair value of our assets and liabilities; and (iii) current or future changes in cash flows. All derivatives, whether freestanding or embedded, are required to be carried on the balance sheet at fair value with changes reflected in either net income (loss) or in other comprehensive income,OCI, depending on the type of hedge. Below is a summary of critical accounting estimates by type of derivative.

119
Table of Contents
Freestanding Derivatives
The determination of the estimated fair value of freestanding derivatives, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. See Note 78 of the Notes to thethese Consolidated Financial Statements for additional details on significant inputs into the OTC derivative pricing models and credit risk adjustment.
Embedded Derivatives
We issue variable annuity products with guaranteed minimum benefits, some of which are embedded derivatives measured at estimated fair value separately from the host variable annuity product, with changes in estimated fair value reported in net derivative gains (losses). We also have assumed from an affiliate the risk associated with certain guaranteed minimum benefits, which are accounted for as embedded derivatives measured at estimated fair value. The estimated fair values of these embedded derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees attributable to the guarantee. The projections of future benefits and future fees require capital markets and actuarial assumptions, including expectations concerning policyholder behavior. A risk-neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates.
Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital market inputs, as well as changes in our nonperformance risk adjustment may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. Changes to actuarial assumptions, principally related to contract holder behavior such as annuitization utilization and withdrawals associated with GMIB riders, can result in a change of expected future cash outflows of a guarantee between the accrual-based model for insurance liabilities and the fair-value based model for embedded derivatives. See Note 2 of the Notes to thethese Consolidated Financial Statements for additional information relating to the determination of the accounting model. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. For direct liabilities, risk margins are applied to non-capital market risk assumptions, while for reinsurance asset risk margins are based on the cost of capital a theoretical market participant would require to assume the risks. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees.
With respect to assumptions regarding policyholder behavior, we have recorded charges, and in some cases benefits, in prior years as a result of the availability of sufficient and credible data at the conclusion of each review.
We ceded the risk associated with certain of the variable annuity products with GMxB features described in the preceding paragraphs. The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by us with the exception of the input for nonperformance risk that reflects the credit of the reinsurer. However, because certain of the reinsured guarantees do not meet the definition of an embedded derivative and, thus are not accounted for at fair value, significant fluctuations in net income may occur when the change in the fair value of the reinsurance recoverable is recorded in net income without a corresponding and offsetting change in fair value of the directly written guaranteed liability.
Nonperformance Risk Adjustment
The valuation of our embedded derivatives includes an adjustment for the risk that we fail to satisfy our obligations, which we refer to as our nonperformance risk. The nonperformance risk adjustment, which is captured as a spread over the risk-free rate in determining the discount rate to discount the cash flows of the liability, is determined by taking into consideration publicly available information relating to spreads on corporate bonds in the secondary market comparable to Holdings’ financial strength rating.
The table below illustrates the impact that a range of reasonably likely variances in credit spreads would have on our consolidated balance sheet, excluding the effect of income tax, related to the embedded derivative valuation on certain variable annuity products measured at estimated fair value. Even when credit spreads do not change, the impact of the nonperformance risk adjustment on fair value will change when the cash flows within the fair value measurement change. The table only reflects the impact of changes in credit spreads on our consolidated financial statements included elsewhere herein and not these other potential changes. In determining the ranges, we have considered current market conditions, as well as the market level of
120
Table of Contents
spreads that can reasonably be anticipated over the near term. The ranges do not reflect extreme market conditions such as those experienced during the 2008–2009 Financial Crisisfinancial crisis as we do not consider those to be reasonably likely events in the near future.

Future policyholders’ benefits and other policyholders’ liabilities
(before reinsurance ceded)
(in billions)
100% increase in Holdings’ credit spread$7.2 
As reported$8.5 
50% decrease in Holdings’ credit spread$9.4 
 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

See Note 34 of the Notes to the Consolidated Financial Statements for additional information on our derivatives and hedging programs.
Goodwill
Goodwill represents the excess of purchase price over the estimated fair value of identifiable net assets acquired in a business combination. We test goodwill for recoverability each annual reporting period at December 31 and at interim periods if facts or circumstances are indicative of potential impairment. As further described in Notes 2 and 4 of the Notes to the Consolidated Financial Statements, we early adopted Accounting Standards Update No. 2017-04 (“ASU 2017-04”), Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance eliminates Step 2 goodwill impairment testing that requires a hypothetical purchase price allocation to assess goodwill recoverability when the carrying value of a reporting unit exceeds its fair value and continues to limit the measure of impairment loss to the total amount of goodwill allocated to the reporting unit. Our early adoption of ASU 2017-04 resulted in recognition of an impairment loss of $369 million during first quarter 2017, representing all of the goodwill attributed to its Financial/Advisory Insurance segment. As application of the new guidance is required prospectively, prior reporting periods were not restated for the impact of adoption. As further described in Notes 4 and 19 of the Notes to the Consolidated Financial Statements, in the fourth quarter of 2017, we recast its operating segments to align with the reorganization of its reporting structure, thereby resulting in identification of new reporting units and the reassignment of goodwill related to those affected. At December 31, 2018,2021, our goodwill of $4.6 billion results solely from itsour investment in AB and is attributed to the Investment Management and Research segment, also deemed a reporting unit for purpose of assessing the recoverability of that goodwill.
Estimating the fair value of reporting units for the purpose of goodwill impairment testing is a subjective process that involves the use of significant judgements by management. Estimates of fair value are inherently uncertain and represent management’s reasonable expectation regarding future developments, giving consideration to internal strategic plans and general market and economic forecasts. We use a discounted cash flowOn an annual basis, or when circumstances warrant, goodwill is tested for impairment utilizing the market approach, as its primary valuation methodology and validateswhere the fair value to market comparables and industry metrics. Determining estimated fair value using a discounted cash flow valuation technique consists of applying business growth rate assumptions over the estimated life of the goodwill assetreporting unit is based on its adjusted market valuation assuming a control premium.
Litigation and then discounting the resulting expected cash flows using an estimated weighted average cost of capital of market participants to arrive at a present value amount that approximates fair value. Key inputs and assumptions include projected cash flows, the level of economic capital required to support the business mix, growth of the existing business, projections of renewed business and margins on such business, interest rates, credit spreads, equity market levels, and the discount rate.
LitigationRegulatory Contingencies
We are a party to a number of legal actions and are involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on our financial position.position, results of operations and cash flows.
Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. On a quarterly and annual basis, we review relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in our consolidated financial statements included elsewhere herein. See Note 17 of the Notes to the Consolidated Financial Statements for information regarding our assessment of litigation contingencies.
Income Taxes
Income taxes represent the net amount of income taxes that we expect to pay to or receive from various taxing jurisdictions in connection with its operations. We provide for Federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryforward periods under the tax law in the applicable jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets

will not be realized. Management considers all available evidence including past operating results, the existence of cumulative losses in the most recent years, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. Our accounting for income taxes represents management’s best estimate of the tax consequences of various events and transactions.
Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities, and in evaluating our tax positions including evaluating uncertainties under the guidance for Accounting for Uncertainty in Income taxes.Taxes. Under the guidance, we determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial
121
Table of Contents
statements. Tax positions are then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.
Our tax positions are reviewed quarterly, and the balances are adjusted as new information becomes available.
Adoption of New Accounting Pronouncements
See Note 2 of the Notes to thethese Consolidated Financial Statements for a complete discussion of newly issued accounting pronouncements.

Part II, Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our businesses are subject to financial, market, political and economic risks, as well as to risks inherent in our business operations. The discussion that follows provides additional information on market risks arising from our insurance asset/liability management and investment management activities. Such risks are evaluated and managed by each business on a decentralized basis. Primary market risk exposure results from interest rate fluctuations, equity price movements and changes in credit quality.
Individual Retirement, Group Retirement and Protection Solutions Segments
Our results significantly depend on profit margins or “spreads” between investment results from assets held in the General Account investment portfolio and interest credited on individual insurance and annuity products. Management believes its fixed rate liabilities should be supported by a portfolio principally composed of fixed rate investments that generate predictable, steady rates of return. Although these assets are purchased for long-term investment, the portfolio management strategy considers them available for saleAFS in response to changes in market interest rates, changes in prepayment risk, changes in relative values of asset sectors and individual securities and loans, changes in credit quality outlook and other relevant factors. See the “Investments” section of Note 2 toof the Notes to thethese Consolidated Financial Statements for the accounting policies for the investment portfolios. The objective of portfolio management is to maximize returns, taking into account interest rate and credit risks. Insurance asset/liability management includes strategies to minimize exposure to loss as interest rates and economic and market conditions change. As a result, the fixed maturity portfolio has modest exposure to call and prepayment risk and the vast majority of mortgage holdings are fixed rate mortgages that carry yield maintenance and prepayment provisions.
Investments with Interest Rate Risk – Fair Value
Assets with interest rate risk include available-for-saleAFS and trading fixed maturities and mortgage loans that make up 84.9%83.7% and 80.6%86.5% of the carryingfair value of the General Account investment portfolio atas of December 31, 20182021 and 2017,2020, respectively. As part of our asset/liability management, quantitative analyses are used to model the impact various changes in interest rates have on assets with interest rate risk. The table that follows shows the impact an immediate one percent increase/decrease in interest rates atas of December 31, 20182021 and 20172020 would have on the fair value of fixed maturities and mortgage loans:
Interest Rate Risk Exposure
122
Table of Contents
Interest Rate Risk ExposureInterest Rate Risk Exposure
December 31, 2018 December 31, 2017 December 31, 2021December 31, 2020
Fair Value Impact of +1% Change Impact of -1% Change Fair Value Impact of +1% Change Impact of -1% Change Fair ValueImpact of +1% ChangeImpact of -1% ChangeFair ValueImpact of +1% ChangeImpact of -1% Change
(in millions)(in millions)
Fixed Income Investments:           Fixed Income Investments:
Available-for-sale:           
AFS securities:AFS securities:
Fixed rate$44,379
 $(3,874) $4,595
 $44,899
 $(4,375) $5,293
Fixed rate$70,242 $(7,166)$8,657 $75,375 $(7,185)$8,636 
Floating rate1,547
 (41) 42
 2,022
 (2) 2
Floating rate$7,100 $(77)$83 $5,130 $(55)$83 
Trading securities:           Trading securities:
Fixed rate14,219
 (368) 355
 11,404
 (283) 294
Fixed rate$145 $(2)$2 $4,852 $(99)$102 
Floating rate599
 (1) 1
 541
 (1) 1
Floating rate$— $— $— $117 $— $— 
Mortgage loans11,494
 (658) 572
 10,912
 (596) 432
Mortgage loans$14,308 $(743)$314 $13,491 $(521)$376 
A one percent increase/decrease in interest rates is a hypothetical rate scenario used to demonstrate potential risk; it does not represent management’s view of future market changes. While these fair value measurements provide a representation of interest rate sensitivity of fixed maturities and mortgage loans, they are based on various portfolio exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to management’s assessment of changing market conditions and available investment opportunities.

Investments with Equity Price Risk – Fair Value
The investment portfolios also have direct holdings of public and private equity securities. The following table shows the potential exposure from those equity security investments, measured in terms of fair value, to an immediate 10% increase/decrease in equity prices from those prevailing atas of December 31, 20182021 and 2017:2020:
Equity Price Risk Exposure
Equity Price Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueImpact of+10% Equity Price ChangeImpact of -10% Equity Price ChangeFair ValueImpact of+10% Equity Price ChangeImpact of -10% Equity Price Change
(in millions)
Equity Investments$817 $82 $(82)$15 $1 $(1)
 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)

A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent management’s view of future market changes. The fair value measurements shown are based on the equity securities portfolio exposures at a particular point in time and these exposures will change as a result of ongoing portfolio activities in response to management’s assessment of changing market conditions and available investment opportunities.
Liabilities with Interest Rate Risk – Fair Value
AtAs of December 31, 20182021 and 2017,2020, the aggregate carrying values of insurance contracts with interest rate risk were $5.7$15.4 billion and $5.1$11.0 billion, respectively. The aggregate fair value of such liabilities atas of December 31, 20182021 and 20172020 were $6.0$15.4 billion and $5.2$11.4 billion, respectively. The impact of a relative 1% decrease in interest rates would be an increase in the fair value of those liabilities of $0.3 billion$355 million and $0.2 billion,$281 million, respectively. While these fair value measurements provide a representation of the interest rate sensitivity of insurance liabilities, they are based on the composition of such liabilities at a particular point in time and may not be representative of future results.
Asset/liability management is integrated into many aspects of the Individual Retirement, Group Retirement and Protection Solutions segments’ operations, including investment decisions, product development and determination of crediting rates. As part of our risk management process, numerous economic scenarios are modeled, including cash flow testing required for insurance regulatory purposes, to determine if existing assets would be sufficient to meet projected liability cash flows. Key variables include policyholder behavior, such as persistency, under differing crediting rate strategies.
123
Table of Contents
Derivatives and Interest Rate and Equity Risks – Fair Value
We primarily use derivative contracts for asset/liability risk management, to mitigate our exposure to equity market decline and interest rate risks and for hedging individual securities. In addition, we periodically enter into forward, exchange-traded futures and interest rate swap, swaptions and floor contracts to reduce the economic impact of movements in the equity and fixed income markets, including the program to hedge certain risks associated with the GMxB features. As more fully described in notesNote 2 and 3Note 4 of the Notes to the notes to thethese Consolidated Financial Statements, various traditional derivative financial instruments are used to achieve these objectives. To minimize credit risk exposure associated with its derivative transactions, each counterparty’s credit is appraised and approved, and risk control limits and monitoring procedures are applied. Credit limits are established and monitored on the basis of potential exposures that take into consideration current market values and estimates of potential future movements in market values given potential fluctuations in market interest rates. To reduce credit exposures in OTC derivative transactions, we enter into master agreements that provide for a netting of financial exposures with the counterparty and allow for collateral arrangements. We further control and minimize counterparty exposure through a credit appraisal and approval process. Under the ISDA Master Agreement, we have executed a Credit Support Annex (“CSA”)CSA with each of our OTC derivative counterparties that require both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities or those issued by government agencies.
Mark to market exposure is a point-in-time measure of the value of a derivative contract in the open market. A positive value indicates existence of credit risk for us because the counterparty would owe money to us if the contract were closed. Alternatively, a negative value indicates we would owe money to the counterparty if the contract were closed. If there is more than one derivative transaction outstanding with a counterparty, a master netting arrangement exists with the counterparty. In that case, the market risk represents the net of the positive and negative exposures with the single counterparty. In management’s view, the net potential exposure is the better measure of credit risk. AtAs of December 31, 20182021 and 2017,2020, the net fair values of our derivatives were $48$1,602 million and $154$995 million, respectively.

The tables below show the interest rate or equity sensitivities of those derivatives, measured in terms of fair value. These exposures will change as a result of ongoing portfolio and risk management activities.
Derivative Financial Instruments
   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, 2021
Swaps$2,831 11$(111)$(440)$(693)
Futures12,598 —1,150 — (908)
Swaptions— —— — — 
Total$15,429 $1,039 $(440)$(1,601)
December 31, 2020
Swaps$23,773 3$4,622 $(102)$(3,857)
Futures18,564 —1,477 — (1,264)
Swaptions— —— — — 
Total$42,337 $6,099 $(102)$(5,121)
124
Table of Contents
  Equity Sensitivity
    Interest Rate Sensitivity Notional
Amount		Weighted Average Term (Years)Fair ValueBalance after -10% Equity Price Shift
Notional
Amount    
 Weighted Average Term (Years) Impact of -1% Change 
Fair
Value
 Impact of +1% Change(in millions, except for Weighted Average Term)
(in millions, except for Weighted Average Term)
December 31, 2018       
December 31, 2021December 31, 2021
FuturesFutures$2,484 —$— $93 
Swaps$27,003
 5 $3,262
 $439
 $(1,857)Swaps13,310 15 1,336 
Futures11,792
 590
 —
 (427)
OptionsOptions48,439 26,959 5,381 
Total$38,795
 $3,852
 $439
 $(2,284)Total$64,233 $6,964 $6,810 
       
December 31, 2017       
December 31, 2020December 31, 2020
FuturesFutures$4,745 —$— $138 
Swaps$26,675
 6 $3,443
 $411
 $(2,562)Swaps22,404 —6 2,119 
Futures20,675
 121
 —
 (91)
OptionsOptions35,846 24,672 3,488 
Total$47,350
 $3,564
 $411
 $(2,653)Total$62,995 $4,678 $5,745 
     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
   $—
 $—
Swaps7,697
 1 (29) 746
Options21,821
 2 968
 324
Total$40,513
   $939
 $1,070
        
December 31, 2017       
Futures$6,552
   $—
 $621
Swaps7,555
 1 (197) 652
Options22,223
 2 1,999
 1,452
Total$36,330
   $1,802
 $2,725
In addition to the freestanding derivatives discussed above, we have entered into reinsurance contracts to mitigate the risk associated with the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts. These reinsurance contracts are considered derivatives under the guidance on derivatives and hedging andhedging. GMIB reinsurance contract assets were reported at their fair values of $1.7$1.8 billion and $1.9$2.5 billion atas of December 31, 20182021 and 2017,2020, respectively. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing atas of December 31, 20182021 and 2017,2020, respectively, would increase the balances of the reinsurance contract asset by $146$169 million and $161$169 million. The Amounts due from Reinsurers was $5.8 billion at December 31, 2021. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 is $447 million.
Also, the GMxB feature’s liability associated with certain annuity contracts is similarly considered to be a derivative for accounting purposes and was reported at its fair value. The liability for embedded derivative liability features was $5.6$8.5 billion and $4.5$11.1 billion atas of December 31, 20182021 and 2017,2020, respectively. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 20182021 and 2017,2020, respectively, would be to increase the liability balance by $801$990 million billion and $700 million.$1.1 billion.
Investment Management and Research
The investments of our Investment Management and Research segment consist of trading and available-for-saleAFS investments and other investments. AB’s trading and available-for-saleAFS investments include U.S. Treasury bills and equity and fixed income mutual funds’ investments. Trading investments are purchased for short-term investment, principally to fund liabilities related to deferred compensation plans and to seed new investment services. Although available-for-saleAFS investments

are purchased for long-term investment, the portfolio strategy considers them available-for-saleAFS from time to time due to changes in market interest rates, equity prices and other relevant factors. Other investments include investments in hedge funds sponsored by AB and other private investment vehicles.
Investments with Interest Rate Risk – Fair Value
The table below provides AB’s potential exposure with respect to its fixed income investments, measured in terms of fair value, to an immediate 1% increase in interest rates at all maturities from the levels prevailing atas of December 31, 20182021 and December 31, 2017:2020:
Interest Rate Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueBalance After -1% ChangeBalance After +1% ChangeFair ValueBalance After -1% ChangeBalance After +1% Change
(in millions)
Fixed Income Investments:
Trading$101 $109 $94 $36 $38 $33 

125
 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
Table of Contents
Such a fluctuation in interest rates is a hypothetical rate scenario used to calibrate potential risk and does not represent AB management’s view of future market changes. Although these fair value measurements provide a representation of interest rate sensitivity of its investments in fixed income mutual funds and fixed income hedge funds, they are based on AB’s exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments in response to AB management’s assessment of changing market conditions and available investment opportunities.
Investments with Equity Price Risk – Fair Value
AB’s investments include investments in equity mutual funds and equity hedge funds. The following table presents AB’s potential exposure from its equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing atas of December 31, 20182021 and December 31, 2017:2020:
Equity Price Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueBalance After +10% Equity Price ChangeBalance After -10% Equity Price ChangeFair ValueBalance After +10% Equity Price ChangeBalance After -10% Equity Price Change
(in millions)
Equity Investments:
Trading$86 $94 $77 $138 $151 $124 
Other investments$87 $96 $78 $80 $88 $72 
 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 investments101
 111
 91
 92
 102
 83

A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent AB management’s view of future market changes. While these fair value measurements provide a representation of equity price sensitivity of AB’s investments in equity mutual funds and equity hedge funds, they are based on AB’s exposure at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to AB management’s assessment of changing market conditions and available investment opportunities.


Part II, Item 8. Financial Statements and Supplementary Data
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

126
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm(PricewaterhouseCoopers LLP, New York, New York, PCAOB ID: 238)
167128
168132
169133
170134
171135
172136
Notes to Consolidated Financial Statements
Note 1 - Organization
175138
Note 2 - Significant Accounting Policies
175139
Note 3 - Investments
194157
Note 4 - Derivatives
168
Note 5 - Goodwill and Other Intangible Assets
211174
Note 56 - Closed Block
213175
Note 67 - DAC and Policyholder Bonus Interest Credits
215177
Note 78 - Fair Value Disclosures
215177
Note 8 - Insurance Liabilities
229
Note 9 - Revenue RecognitionInsurance Liabilities
232193
Note 10 - Reinsurance AgreementsLeases
233196
Note 11 - Reinsurance
199
Note 12 - Short-term and Long-term Debt
234201
Note 1213 - Related Party Transactions
237203
Note 1314 - Employee Benefit Plans
242204
Note 1415 - Share-Based and Other Compensation Programs
250212
Note 15 - Income Taxes
258
Note 16 - Accumulated Other Comprehensive Income (Loss)Taxes
260217
Note 17 - Commitments and Contingent Liabilities
261219
Note 18 - Insurance Group Statutory Financial Information
265222
Note 19 - Business Segment Information
266224
Note 20 - Equity
270227
Note 21 - Earnings Per Share
270231
Note 22 - Redeemable Noncontrolling Interest
231
Note 22 -Revision of Prior Period Financial Statements
270
Note 23 - Quarterly Financial Information (Unaudited)Held-For-Sale
271231
Note 2424 - Subsequent Events
279232
Audited Consolidated Financial Statement Schedules
281232
234
282238
287
Schedule IV - Reinsurance, Years Ended December 31, 2018, 20172021, 2020 and 20162019
289239
127
Table of Contents


Report of Independent Registered Public Accounting Firm


Tothe Board of Directors and ShareholdersStockholders of AXA Equitable Holdings, Inc.

OpinionOpinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidatedbalance sheets financial statements, including the related notes and financial statement schedules, of AXA Equitable Holdings, Inc. and its subsidiaries (the Company)“Company”) as of December 31, 2018 and 2017, and the related consolidatedstatements of income (loss), comprehensive income (loss), equity and cash flowsfor each of the three years in the period ended December 31, 2018, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the consolidated“consolidated financial statements)statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of the Companyas ofDecember 31, 20182021 and 2017,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20182021, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions
Change in Accounting Principle

As discussed in Note 2 to theThe Company's management is responsible for these consolidated financial statements, the Company changed in 2018 the manner in which it accounts for certain income tax effects originally recognized in accumulated other comprehensive income.

Basismaintaining effective internal control over financial reporting, and for Opinion

These consolidatedfinancial statements are the responsibilityits assessment of the Company’s management.effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinionopinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidatedfinancial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding offraud, and whether effective internal control over financial reporting but not for the purpose of expressing an opinion on the effectivenesswas maintained in all material respects.
Our audits of the Company's internal control overconsolidated financial reporting. Accordingly, we express no such opinion.

Our auditsstatements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion.opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

128
Table of Contents

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Amortization and Valuation of Deferred Policy Acquisition Costs (“DAC”) related to Variable and Interest Sensitive Life Products and Variable Annuity Products with Guaranteed Minimum Benefits
As described in Note 2 to the consolidated financial statements, DAC represents acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business that are deferred. A significant portion of the $5.5 billion of DAC as of December 31, 2021, is associated with the variable and interest sensitive life and variable annuity products with guaranteed minimum benefits. DAC associated with certain variable annuity products is amortized based on estimated assessments, with DAC on the remainder of variable annuities, Universal Life and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. The DAC amortization and valuation estimates for these products are determined using models and significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread.
The principal considerations for our determination that performing procedures relating to the amortization and valuation of DAC related to variable and interest sensitive life products and variable annuity products with guaranteed minimum benefits is a critical audit matter are (i) the significant judgment by management when determining the amortization and valuation estimates, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the relevant models and significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the amortization and valuation of DAC related to variable and interest sensitive life products and variable annuity products with guaranteed minimum benefits, including controls over the relevant models and development of the significant assumptions. These procedures also included, among others, testing management’s process for determining the amortization and valuation estimates of DAC, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant assumptions, (ii) testing that significant assumptions are accurately reflected in the relevant models, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the relevant models and the reasonableness of the significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.
Valuation of Guaranteed Minimum Benefit Features related to Certain Life and Annuity Contracts included within Future Policy Benefits and Other Policyholders’ Liabilities and Amounts Due From Reinsurers
As described in Note 2 to the consolidated financial statements, future policy benefits and other policyholders’ liabilities of $36.7 billion as of December 31, 2021, includes reserves related to guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefit (“GMIB”) features for certain life and annuity contracts, other than those accounted for as embedded derivatives. Amounts due from reinsurers of $14.7 billion as of December 31, 2021, includes reinsurance recoverables related to GMDB and GMIB features for certain life and annuity contracts ceded under reinsurance contracts other than those accounted for as embedded derivatives. For certain contracts with guaranteed minimum benefit features, the benefits are accounted for as reserves and determined by estimating the
129
Table of Contents
expected value of death or income benefits in excess of the projected contract accumulation value and recognizing the excess over the estimated life based on expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. The determination of this estimated liability is based on models that involve numerous assumptions and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates. Amounts due from reinsurers, other than those accounted for as embedded derivatives, are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities.
The principal considerations for our determination that performing procedures relating to the valuation of guaranteed minimum benefit features related to certain life and annuity contracts included within future policy benefits and other policyholders’ liabilities and amounts due from reinsurers is a critical audit matter are (i) the significant judgment by management when determining the valuation of these guaranteed minimum benefit features, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the relevant models and significant assumptions of expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates (collectively referred to as “the significant assumptions”), and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to valuation of guaranteed minimum benefit features related to certain life and annuity contracts, including controls over the relevant models and development of the significant assumptions. These procedures also included, among others, testing management’s process for determining the valuation of the guaranteed minimum benefit features, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant assumptions, (ii) testing that significant assumptions are accurately reflected in the relevant models, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the relevant models and the reasonableness of the significant assumptions based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.
Valuation of GMIB Features accounted for as Derivatives included within Future Policy Benefits and Other Policyholders’ Liabilities, GMIB Reinsurance Contract Asset, at fair value and Amounts Due from Reinsurers
As described in Notes 2 and 8 to the consolidated financial statements, the Company issues certain annuity contracts that contain GMIB features that are accounted for as embedded derivatives, recorded at fair value and presented within policy benefits and other policyholders’ liabilities. The reinsurance of certain of these GMIB features are accounted for as embedded derivatives and are presented at fair value within amounts due from reinsurers. Additionally, there are ceded reinsurance contracts that are net settled, accounted for as a derivative at fair value and presented within GMIB reinsurance contract asset, at fair value. As of December 31, 2021, the fair value of the GMIB features accounted for as embedded derivatives and presented within future policy benefits and other policyholders’ liabilities was $8.5 billion, GMIB reinsurance contract asset, at fair value was $1.8 billion, and amounts due from reinsurers was $5.8 billion. Management determined the fair values the of the GMIB features presented as embedded derivatives using a discounted cash flow valuation technique that incorporates significant unobservable inputs with respect to (i) non-performance risk, lapse rates, withdrawal rates, annuitization rates, and mortality rates for future policy benefits and other policyholders’ liabilities, and (ii) non-performance risk, lapse rates, withdrawal rates, utilization rates, volatility rates, and mortality rates for the GMIB reinsurance contract asset, at fair value and the amounts due from reinsurers.
The principal considerations for our determination that performing procedures relating to the valuation of GMIB features accounted for as derivatives and included within future policy benefits and other policyholders’ liabilities, GMIB reinsurance contract asset, at fair value, and amounts due from reinsurers is a critical audit matter are (i) the significant judgment by management when determining the fair values of the GMIB features accounted for as derivatives, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the valuation technique and significant unobservable inputs with related to non-performance risk, lapse rates, withdrawal rates, annuitization rates, and mortality rates for the reinsurance contract asset and the amounts due from reinsurers, and non-performance risk, lapse rates, withdrawal rates, annuitization rates and mortality rates for future policyholders’ liabilities (collectively referred to as “the significant unobservable inputs”), and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
130
Table of Contents
controls relating to determining the fair value of the GMIB features accounted for as derivatives included within future policy benefits and other policyholders’ liabilities, GMIB reinsurance contract asset, at fair value, and amounts due from reinsurers, including controls over the valuation technique and determination of significant unobservable inputs. These procedures also included, among others, testing management’s process for determining the fair value of the GMIB features accounted for as derivatives, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant unobservable inputs, (ii) testing that significant unobservable inputs are accurately reflected in the relevant valuation technique, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the valuation technique and the reasonableness of the significant unobservable inputs based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.




/s/PricewaterhouseCoopers LLP
New York, NYNew York
March 8, 2019

February 22, 2022
We have served as the Company'sCompany’s auditor since 1993.




131
Table of Contents

AXA EQUITABLE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETSConsolidated Balance Sheets
DECEMBERDecember 31, 2018 AND 2017
2021 and 2020
December 31,
2018 201720212020
(in millions, except share amounts)(in millions, except share data)
ASSETS   ASSETS
Investments:   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
Fixed maturities available-for-sale, at fair value (amortized cost of $73,429 and $72,867) (allowance for credit losses of $22 and $13)Fixed maturities available-for-sale, at fair value (amortized cost of $73,429 and $72,867) (allowance for credit losses of $22 and $13)$78,216 $81,638 
Fixed maturities, at fair value using the fair value option (1)Fixed maturities, at fair value using the fair value option (1)1,641 389 
Mortgage loans on real estate (net of allowance for credit losses of $62 and $81) (1)Mortgage loans on real estate (net of allowance for credit losses of $62 and $81) (1)14,033 13,159 
Policy loans3,779
 3,819
Policy loans4,024 4,118 
Other equity investments (1)1,334
 1,392
Other equity investments (1)2,975 1,502 
Trading securities, at fair value16,017
 14,170
Trading securities, at fair value631 5,553 
Other invested assets (1)2,037
 4,118
Other invested assets (1)3,591 2,728 
Total investments81,333
 81,782
Total investments105,111 109,087 
Cash and cash equivalents (1)4,469
 4,814
Cash and cash equivalents (1)5,188 6,179 
Cash and securities segregated, at fair value1,170
 825
Cash and securities segregated, at fair value1,504 1,753 
Broker-dealer related receivables2,209
 2,158
Broker-dealer related receivables2,599 2,223 
Deferred policy acquisition costs6,745
 5,919
Deferred policy acquisition costs5,491 4,243 
Goodwill and other intangible assets, net4,780
 4,824
Goodwill and other intangible assets, net4,728 4,737 
Amounts due from reinsurers4,895
 5,023
Loans to affiliates—
 1,230
Amounts due from reinsurers (allowance for credit losses of $5 and $5) (includes amounts accounted for at fair value of $5,813 and $—) (3)Amounts due from reinsurers (allowance for credit losses of $5 and $5) (includes amounts accounted for at fair value of $5,813 and $—) (3)14,679 4,566 
GMIB reinsurance contract asset, at fair value1,732
 1,894
GMIB reinsurance contract asset, at fair value1,848 2,488 
Current and deferred income taxes—
 84
Current and deferred income taxes195 — 
Other assets (1)3,127
 2,510
Other assets (1)3,613 3,701 
Assets held-for-saleAssets held-for-sale— 470 
Separate Accounts assets110,337
 124,552
Separate Accounts assets147,306 135,950 
Total Assets$220,797
 $235,615
Total Assets$292,262 $275,397 
LIABILITIES   LIABILITIES
Policyholders’ account balances$49,923
 $47,171
Policyholders’ account balances$79,357 $66,820 
Future policy benefits and other policyholders' liabilities30,998
 30,330
Future policy benefits and other policyholders' liabilities36,717 39,881 
Broker-dealer related payables431
 783
Broker-dealer related payables1,283 1,443 
Securities sold under agreements to repurchase573
 1,887
Customer related payables3,095
 2,229
Customer related payables3,600 3,417 
Amounts due to reinsurers1,438
 1,436
Amounts due to reinsurers1,381 1,381 
Short-term and long-term debt (1)4,955
 2,408
Loans from affiliates—
 3,622
Income taxes payable68
 —
Short-term and long-term debtShort-term and long-term debt3,931 4,115 
Current and deferred income taxesCurrent and deferred income taxes— 749 
Notes issued by consolidated variable interest entities, at fair value using the fair value option (1)Notes issued by consolidated variable interest entities, at fair value using the fair value option (1)1,191 313 
Other liabilities (1)3,360
 4,053
Other liabilities (1)3,933 3,686 
Liabilities held-for-saleLiabilities held-for-sale— 322 
Separate Accounts liabilities110,337
 124,552
Separate Accounts liabilities147,306 135,950 
Total Liabilities$205,178
 $218,471
Total Liabilities$278,699 $258,077 
Redeemable noncontrolling interest (1)$187
 $626
Redeemable noncontrolling interest (1) (2)Redeemable noncontrolling interest (1) (2)$468 $143 
Commitments and contingent liabilities (Note 17)   Commitments and contingent liabilities (Note 17)00
EQUITY   EQUITY
Equity attributable to Holdings:   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 value1,908
 1,299
Treasury stock, at cost, 32,138,242 shares(640) —
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preferencePreferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preference$1,562 $1,269 
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 520,918,331 and 552,896,328 shares issued, respectively; 391,290,224 and 440,776,011 shares outstanding, respectivelyCommon stock, $0.01 par value, 2,000,000,000 shares authorized; 520,918,331 and 552,896,328 shares issued, respectively; 391,290,224 and 440,776,011 shares outstanding, respectively4 5 
Additional paid-in capitalAdditional paid-in capital1,919 1,985 
Treasury stock, at cost, 129,628,107 and 112,120,317 shares, respectivelyTreasury stock, at cost, 129,628,107 and 112,120,317 shares, respectively(2,850)(2,245)
Retained earnings13,989
 12,225
Retained earnings8,880 10,699 
Accumulated other comprehensive income (loss)(1,396) (108)Accumulated other comprehensive income (loss)2,004 3,863 
Total equity attributable to Holdings13,866
 13,421
Total equity attributable to Holdings11,519 15,576 
Noncontrolling interest1,566
 3,097
Noncontrolling interest1,576 1,601 
Total Equity15,432
 16,518
Total Equity13,095 17,177 
Total Liabilities, Redeemable Noncontrolling Interest and Equity$220,797
 $235,615
Total Liabilities, Redeemable Noncontrolling Interest and Equity$292,262 $275,397 
____________
(1)See Note 2 for details of balances with variable interest entities.

(1) See Note 2 of the Notes to these Consolidated Financial Statements for details of balances with VIEs.
(2) See Note 22 of the Notes to these Consolidated Financial Statements for details of redeemable noncontrolling interest.
(3) Represents the fair value of the ceded reserves to Venerable. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction and Note 8 of the Notes to these Consolidated Financial Statements .
See Notes to Consolidated Financial Statements.

132
AXA
EQUITABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)Consolidated Statements of Income (Loss)
YEARS ENDED DECEMBERYears Ended December 31, 2018, 2017 AND 2016
2021, 2020 and 2019
 2018 2017 2016
 (in millions, except per share data)
REVENUES     
Policy charges and fee income$3,824
 $3,693
 $3,729
Premiums1,094
 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 fees4,268
 4,093
 3,749
Other income516
 445
 402
Total revenues12,078
 12,460
 11,763
      
BENEFITS AND OTHER DEDUCTIONS     
Policyholders’ benefits2,915
 4,366
 3,342
Interest credited to policyholders’ account balances1,090
 995
 967
Compensation and benefits2,079
 1,980
 1,965
Commissions and distribution related payments1,160
 1,081
 1,000
Interest expense231
 160
 174
Amortization of deferred policy acquisition costs333
 503
 779
Other operating costs and expenses1,809
 2,069
 1,509
Total benefits and other deductions9,617
 11,154
 9,736
Income (loss) from continuing operations, before income taxes2,461
 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):     
Basic556.4
 561.0
 561.0
Diluted556.5
 561.0
 561.0

Year Ended December 31,
202120202019
(in millions, except per share data)
REVENUES
Policy charges and fee income$3,637 $3,735 $3,778 
Premiums960 997 1,147 
Net derivative gains (losses)(4,465)(1,722)(4,012)
Net investment income (loss)3,846 3,477 3,699 
Investment gains (losses), net:
Credit losses on available-for-sale debt securities and loans2 (58)— 
Other investment gains (losses), net866 802 73 
Total investment gains (losses), net868 744 73 
Investment management and service fees5,395 4,608 4,380 
Other income795 576 554 
Total revenues11,036 12,415 9,619 
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits3,218 5,326 4,385 
Interest credited to policyholders’ account balances1,219 1,222 1,263 
Compensation and benefits2,360 2,096 2,081 
Commissions and distribution-related payments1,662 1,351 1,242 
Interest expense244 200 221 
Amortization of deferred policy acquisition costs393 1,613 597 
Other operating costs and expenses2,109 1,700 1,890 
Total benefits and other deductions11,205 13,508 11,679 
Income (loss) from continuing operations, before income taxes(169)(1,093)(2,060)
Income tax (expense) benefit145 744 593 
Net income (loss)(24)(349)(1,467)
Less: Net income (loss) attributable to the noncontrolling interest415 299 297 
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings’ common shareholders$(518)$(701)$(1,764)
EARNINGS PER COMMON SHARE
Net income (loss) applicable to Holdings’ common shareholders per common share:
Basic$(1.24)$(1.56)$(3.57)
Diluted$(1.24)$(1.56)$(3.57)
Weighted average common shares outstanding (in millions):
Basic417.4 450.4 493.6 
Diluted417.4 450.4 493.6 


See Notes to Consolidated Financial Statements.

133
AXA

EQUITABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)Consolidated Statements of Comprehensive Income (Loss)
YEARS ENDED DECEMBERYears Ended December 31, 2018, 2017 AND 2016
2021, 2020 and 2019
Year Ended December 31,
2018 2017 2016202120202019
(in millions)(in millions)
COMPREHENSIVE INCOME (LOSS)     COMPREHENSIVE INCOME (LOSS)
Net income (loss)$2,154
 $1,257
 $1,649
Net income (loss)$(24)$(349)$(1,467)
Other Comprehensive income (loss) net of income taxes:     
Foreign currency translation adjustment(37) 42
 (18)
Other comprehensive income (loss) net of income taxes:Other comprehensive income (loss) net of income taxes:
Change in unrealized gains (losses), net of reclassification adjustment(1,329) 690
 (274)Change in unrealized gains (losses), net of reclassification adjustment(2,113)2,956 2,258 
Changes in defined benefit plan related items not yet recognized in periodic benefit cost, net of reclassification adjustment189
 100
 34
Changes in defined benefit plan related items not yet recognized in periodic benefit cost, net of reclassification adjustment266 48 (15)
Foreign currency translation adjustmentForeign currency translation adjustment(11)22 5 
Total other comprehensive income (loss), net of income taxes(1,177) 832
 (258)Total other comprehensive income (loss), net of income taxes(1,858)3,026 2,248 
Comprehensive income (loss)977
 2,089
 1,391
Comprehensive income (loss)(1,882)2,677 781 
Less: Comprehensive (income) loss attributable to the noncontrolling interest(349) (442) (381)
Less: Comprehensive income (loss) attributable to the noncontrolling interestLess: Comprehensive income (loss) attributable to the noncontrolling interest416 306 293 
Comprehensive income (loss) attributable to Holdings$628
 $1,647
 $1,010
Comprehensive income (loss) attributable to Holdings$(2,298)$2,371 $488 

See Notes to Consolidated Financial Statements.

134
AXA
EQUITABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
YEARS ENDED DECEMBERYears Ended December 31, 2018, 2017 AND 2016
2021, 2020 and 2019
 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 parent695
 —
 —
Purchase of AllianceBernstein Units from noncontrolling interest17
 —
 —
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$—
 $—
 $—
Purchase of treasury stock(648) —
 —
Issuance of treasury stock8
 —
 —
Treasury stock, end of year$(640) $—
 $—
      
Retained earnings, beginning of year$12,225
 $11,391
 $10,137
Cumulative effect of adoption of revenue recognition standard ASC 60613
 —
 —
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 Holdings1,820
 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 60619
 —
 —
Repurchase of AB Holding units(95) (121) (128)
Net earnings (loss) attributable to noncontrolling interest316
 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 interest15
 19
 (14)
Other changes in noncontrolling interest85
 35
 101
Noncontrolling interest, end of year$1,566
 $3,097
 $3,142
Total Equity, End of Year$15,432
 $16,518
 $14,549
Year Ended December 31,
Equity Attributable to Holdings
Preferred Stock and Additional Paid-In CapitalCommon StockAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Holdings EquityNon-controlling InterestTotal Equity
(in millions)
January 1, 2021$1,269 $5 $1,985 $(2,245)$10,699 $3,863 $15,576 $1,601 $17,177 
Stock compensation— — 15 51 — — 66 220 286 
Purchase of treasury stock— (1)(27)(1,610)— — (1,638)— (1,638)
Reissuance of treasury stock— — — — (51)— (51)— (51)
Retirement of common stock— — — 954 (954)— — — — 
Repurchase of AB Holding units— — — — — — — (262)(262)
Dividends paid to noncontrolling interest— — — — — — — (393)(393)
Dividends on common stock (cash dividends declared per common share of $0.71)— — — — (296)— (296)— (296)
Dividends on preferred stock— — — — (79)— (79)— (79)
Issuance of preferred stock293 — — — — — 293 — 293 
Net income (loss)— — — — (439)— (439)410 (29)
Other comprehensive income (loss)— — — — — (1,859)(1,859)1 (1,858)
Other— — (54)— — — (54)(1)(55)
December 31, 2021$1,562 $4 $1,919 $(2,850)$8,880 $2,004 $11,519 $1,576 $13,095 
January 1, 2020$775 $5 $1,920 $(1,832)$11,744 $844 $13,456 $1,591 $15,047 
Cumulative effect of adoption of ASU 2016-03, Current Expected Credit Loss— — — — (30)— (30)— (30)
Stock compensation— — 27 17 — — 44 69 113 
Purchase of treasury stock— — — (430)— — (430)— (430)
Reissuance of treasury stock— — — — (17)— (17)— (17)
Repurchase of AB Holding units— — (48)— — — (48)(53)(101)
Dividends paid to noncontrolling interest— — — — — — — (305)(305)
Dividends on common stock (cash dividends declared per common share of $0.66)— — — — (297)— (297)— (297)
Dividends on preferred stock— — — — (53)— (53)— (53)
Issuance of preferred stock494 — — — — — 494 — 494 
Net income (loss)— — — — (648)— (648)302 (346)
Other comprehensive income (loss)— — — — — 3,019 3,019 7 3,026 
Other— — 86 — — — 86 (10)76 
December 31, 2020$1,269 $5 $1,985 $(2,245)$10,699 $3,863 $15,576 $1,601 $17,177 
January 1, 2019$— $5 $1,908 $(640)$13,937 $(1,408)$13,802 $1,566 $15,368 
Stock compensation— — 152 9 — — 161 77 238 
Purchase of treasury stock— — — (1,343)(2)— (1,345)— (1,345)
Retirement of common stock— — — 142 (142)— — — — 
Repurchase of AB Holding units— — (112)— — — (112)(61)(173)
Dividends paid to noncontrolling interest— — — — — — — (256)(256)
Dividends on common stock (cash dividends declared per common share of $0.58)— — — — (285)— (285)— (285)
Issuance of preferred stock775 — — — — — 775 — 775 
Net income (loss)— — — — (1,764)— (1,764)263 (1,501)
Other comprehensive income (loss)— — — — — 2,252 2,252 (4)2,248 
Other— — (28)— — — (28)6 (22)
December 31, 2019$775 $5 $1,920 $(1,832)$11,744 $844 $13,456 $1,591 $15,047 


See Notes to Consolidated Financial Statements.

135
AXA

EQUITABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSConsolidated Statements of Cash Flows
YEARS ENDED DECEMBERYears Ended December 31, 2018, 2017 AND 20162021, 2020 and 2019





Year Ended December 31,
202120202019
(in millions)
Cash flows from operating activities:
Net income (loss)$(24)$(349)$(1,467)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Interest credited to policyholders’ account balances1,219 1,222 1,263 
Policy charges and fee income(3,637)(3,735)(3,778)
Net derivative (gains) losses4,465 1,722 4,012 
Credit losses on AFS debt securities and loans(2)58 — 
Investment (gains) losses, net(863)(872)(206)
(Gains) losses on businesses HFS(3)69 133 
Realized and unrealized (gains) losses on trading securities26 (170)(502)
Non-cash long term incentive compensation expense226 210 278 
Amortization and depreciation497 1,757 675 
Equity (income) loss from limited partnerships(553)(83)(92)
Changes in:
Net broker-dealer and customer related receivables/payables(131)667 (403)
Reinsurance recoverable (1)(1,077)(401)(146)
Segregated cash and securities, net250 (659)75 
Capitalization of deferred policy acquisition costs(875)(670)(754)
Future policy benefits(299)1,953 962 
Current and deferred income taxes(451)(571)(102)
Other, net476 (209)(164)
Net cash provided by (used in) operating activities$(756)$(61)$(216)
Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale$34,434 $18,986 $13,327 
Fixed maturities, at fair value using the fair value option763 7 — 
Mortgage loans on real estate1,696 630 952 
Trading account securities5,159 2,162 10,717 
Real estate joint ventures— 55 5 
Short term investments87 1,497 2,643 
Other1,716 1,005 306 
Payment for the purchase/origination of:
Fixed maturities, available-for-sale(43,344)(28,197)(29,610)
Fixed maturities, at fair value using the fair value option(1,792)(311)— 
Mortgage loans on real estate(2,546)(1,747)(1,240)
Trading account securities(244)(708)(1,123)
Short term investments(18)(1,098)(2,776)
Other(2,553)(1,167)(430)
Cash from the sale of business, net of cash sold215 164 — 
Cash settlements related to derivative instruments(5,937)1,166 (954)
Repayments of loans to affiliates— — — 
Investment in capitalized software, leasehold improvements and EDP equipment(120)(107)(93)
Other, net(205)(160)(220)
Net cash provided by (used in) investing activities$(12,689)$(7,823)$(8,496)

 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 balances1,090
 995
 967
Policy charges and fee income(3,824) (3,693) (3,729)
Net derivative (gains) losses231
 (214) 1,848
Investment (gains) losses, net86
 191
 (1,983)
Realized and unrealized (gains) losses on trading securities237
 (266) 63
Non-cash long term incentive compensation expense (1)228
 247
 213
Non-cash pension plan restructuring109
 —
 —
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/payables838
 (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 taxes633
 (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
 $8,606
Mortgage loans on real estate768
 934
 676
Trading account securities9,340
 11,231
 7,841
Real estate held for the production of income—
 —
 1,828
Real estate joint ventures139
 —
 136
Short term investments (1)6,267
 4,556
 3,605
Other330
 228
 64
Payment for the purchase/origination of:     
Fixed maturities, available-for-sale(12,794) (15,166) (10,688)
Mortgage loans on real estate(1,642) (2,108) (3,278)
Trading account securities(11,401) (13,328) (10,283)
Real estate—
 —
 (1)
Real estate joint ventures—
 —
 (51)
Short term investments (1)(5,058) (4,897) (4,090)
Other(233) (296) (192)
Purchase of business, net of cash acquired—
 (130) (21)
Cash settlements related to derivative instruments583
 (2,166) (195)
Repayments of loans to affiliates1,230
 15
 —
Issuance of loans to affiliates—
 —
 (12)
Investment in capitalized software, leasehold improvements and EDP equipment(123) (102) (97)
Other, net (1)(86) 201
 384
Net cash provided by (used in) investing activities$(2,049) $(9,689) $(5,768)

_______________
(1) Prior period amounts have been reclassified to conform to current period presentation. See Note 23 for further information.

172








Table of Contents

AXA EQUITABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016
(CONTINUED)
      
 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 Accounts1,724
 1,486
 1,432
Proceeds from loans from affiliates—
 731
 —
Change in short-term financings(1,310) 600
 (176)
Change in collateralized pledged assets31
 1,044
 (991)
Change in collateralized pledged liabilities(576) 1,246
 15
(Decrease) increase in overdrafts payable3
 63
 (85)
Repayment of loans from affiliates(3,000) (56) (1,752)
Issuance of long-term debt4,057
 —
 —
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 company8
 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 year4,814
 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) $—
 $—


See Notes to Consolidated Financial Statements.

136


173









AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSConsolidated Statements of Cash Flows

Years Ended December 31, 2021, 2020 and 2019






Year Ended December 31,
202120202019
(in millions)
Cash flows from financing activities:
Policyholders’ account balances:
Deposits$17,521 $11,446 12,843 
Withdrawals(7,069)(4,332)(4,619)
Transfers (to) from Separate Accounts1,985 2,452 1,769 
Change in short-term financings92 — (546)
Change in collateralized pledged assets34 (139)(71)
Change in collateralized pledged liabilities1,413 848 1,361 
(Decrease) increase in overdrafts payable16 (13)(60)
Repayment of long-term debt(280)— (300)
Proceeds from notes issued by consolidated VIEs873 313 — 
Dividends paid on common stock(296)(297)(285)
Dividends paid on preferred stock(79)(53)— 
Issuance of preferred stock293 494 775 
Purchases of AB Holding Units to fund long-term incentive compensation plan awards(262)(149)(172)
Purchase of treasury shares(1,637)(430)(1,350)
Purchases (redemptions) of noncontrolling interests of consolidated
company-sponsored investment funds		346 (210)169 
Distribution to noncontrolling interest of consolidated subsidiaries(392)(304)(256)
Increase (decrease) in securities sold under agreement to repurchase— — (573)
Other, net(47)48 20 
Net cash provided by (used in) financing activities$12,511 $9,674 $8,705 
Effect of exchange rate changes on cash and cash equivalents$(18)$23 $8 
Change in cash and cash equivalents(952)1,813 1 
Cash and cash equivalents, beginning of year6,179 4,405 4,469 
Change in cash of businesses held-for-sale(39)(39)(65)
Cash and cash equivalents, end of year$5,188 $6,179 $4,405 
Supplemental cash flow information:
Interest paid215 215 273 
Income taxes (refunded) paid$305 $(173)$(506)
Non-cash transactions from investing and financing activities:
Transfer of assets to reinsurer$(9,023)$— $— 
__________
(1) Amount includes cash paid for Venerable Transaction of $494 million (see Note 1 of the Notes to these Consolidated Financial Statements).






See Notes to Consolidated Financial Statements.
137
Table of Contents
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements (Unaudited)

1)    ORGANIZATION
AXA Equitable Holdings, Inc. (“Holdings” and, collectively with its consolidated subsidiaries, the “Company”) is the holding company for a diversified financial services organization. Prior to the closing of the initial public offering of shares of Holdings’ common stock on May 14, 2018 (the “IPO”), Holdings was a wholly-owned subsidiary of AXA S.A. (“AXA”), a French holding company for the AXA Group, a worldwide leader in life, property and casualty, and health insurance and asset management. AXA sold 157,837,500 of Holdings common stock to the public in the IPO. On November 20, 2018, AXA sold an additional 60,000,000 shares of Holdings common stock to the public through a secondary offering, and concurrently Holdings repurchased 30,000,000 shares of its common stock from AXA. As of December 31, 2018, AXA owns approximately 59% of the outstanding common stock of Holdings.
The Company conducts operations in four4 segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. The Company’s management evaluates the performance of each of these segments independently.
•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 AllianceBernsteinAB Holding L.P. (“AB Holding”), AllianceBernstein L.P. (“ABLP”)and ABLP and their subsidiaries (collectively, “AB”)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 lifeVUL, IUL 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.
The Company reports certain activities and items that are not included in our segments in Corporate and Other. Corporate and Other includes certain of our financing and investment expenses. It also includes: the AXAEquitable Advisors broker-dealer business, closed block of life insurance (the “Closed Block”), run-off variable annuity reinsurance business, run-off group pension business, run-off health business, benefit plans for our employees, certain strategic investments and certain unallocated items, including capital and related investments, interest expense and corporate expense. AB’s results of operations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.
On April 23, 2018, Holdings purchased 8,160,000 units of limited partnership in ABLP (“AB Units”) from Coliseum Reinsurance Company (“Coliseum Re”), an affiliate. In addition, Holdings acquired AXA-IM Holding US Inc., which owns 41,934,582 AB Units. As a result of these two transactions, the Company’s economic interest in AB increased to approximately 65% as of December 31, 2018. As of December 31, 20172021 and December 31, 2020 the Company’s economic interest in AB was approximately 47%.65% for both periods. The general partnerGeneral Partner of AB AllianceBernstein Corporation (the “General Partner”), is a wholly-owned subsidiary of the Company. Because the General Partner has the authority to manage and control the business of AB, AB is consolidated in the Company’s financial statements for all periods.periods presented.
PriorOn June 1, 2021, Holdings completed the sale (the “Venerable Transaction”) of CS Life, to March 2018,Venerable Insurance and Annuity Company, an insurance company domiciled in Iowa (“VIAC”), pursuant to the Master Transaction Agreement, dated October 27, 2020 (the “Master Transaction Agreement”), among the Company, VIAC and, solely with respect to Article XIV thereof, Venerable Holdings, owned 99.5% of AXA Financial, Inc., a Delaware corporation (“AXA Financial”Venerable”). In March 2018, AXA contributed
Pursuant to the 0.5% minority interest in AXA Financial, Inc. (“AXA Financial”)Master Transaction Agreement, immediately prior to Holdings, increasing Holdings’ ownership of AXA Financial to 100%. On October 1, 2018, AXA Financial merged with and into its direct parent, Holdings, with Holdings continuing as the surviving entity (the “AXA Financial Merger”). As a resultclosing of the AXA Financial Merger, Holdings assumedVenerable Transaction, CS Life effected the recapture of all of AXA Financial’s liabilities, including its obligations under the $349business that was ceded to CS Life Re Company, a wholly owned subsidiary of CS Life (“Reinsurance Subsidiary”), and sold 100% of the equity of the Reinsurance Subsidiary to another wholly owned subsidiary of the Company.
VIAC paid the Company a cash purchase price of $215 million for CS Life at closing. The post-closing true-up adjustment was immaterial. VIAC also issued a surplus note in aggregate principal amount of 7.0% Senior Debentures due 2028$60 million, to Equitable Financial Life Insurance Company, a New York-domiciled life insurance company and a wholly owned subsidiary of Holdings, for cash consideration.
Immediately following the closing of the Venerable Transaction, CS Life and Equitable Financial entered into a coinsurance and modified coinsurance agreement (the “Senior Debentures”“Reinsurance Agreement”), two assumption agreements underpursuant to which it legally assumed primary liability for certain

Equitable Financial ceded to CS Life, on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit
174
138








AXA Table of Contents
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes to Consolidated Financial Statements (Unaudited), Continued

employee benefit plansguarantees. At the closing of AXA Equitablethe Transaction, CS Life Insurance Company (“AXA Equitable Life”) and various guarantees for its subsidiaries. Holdings also replaced AXA Financial as a partydeposited assets supporting the general account liabilities relating to the $2 billion commercial paper program initiated by AXA and AXABlock into a trust account for the benefit of Equitable Financial, in June 2009. Holdings was removed as an issuerwhich assets will secure its obligations to Equitable Financial under the programReinsurance Agreement. At the closing of the Transaction, AllianceBernstein L.P., a subsidiary of the Company (“AB”), entered into an investment advisory agreement with CS Life pursuant to which AB will serve as the preferred investment manager of the general account assets transferred to the trust account. The Company transferred assets of $9.5 billion, including primarily available for sale securities and cash, to a collateral trust account as the consideration for the reinsurance transaction. In addition, the Company recorded $9.6 billion of direct insurance liabilities ceded under the reinsurance contract, of which $5.3 billion is accounted at fair value, as the reinsurance of GMxB with no lapse guarantee riders are embedded derivatives. Additionally, $16.9 billion of Separate Account liabilities were ceded under a modified coinsurance portion of the agreement.
In addition, upon the completion of the Venerable Transaction, EIMG acquired an approximate 9.09% equity interest in October 2018.Venerable’s parent holding company, VA Capital Company LLC. In connection with such investment, EIMG designated a member to the Board of Managers of VA Capital Company LLC.

2)     SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)U.S. GAAP requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.
The accompanying consolidated financial statements present the consolidated results of operations, financial condition, and cash flows of the Company and its subsidiaries and those investment companies, partnerships and joint ventures in which the Company has control and a majority economic interest as well as those variable interest entities (“VIEs”)VIEs that meet the requirements for consolidation.
Financial results in the historical consolidated financial statements may not be indicative of the results of operations, comprehensive income (loss), financial position, equity or cash flows that would have been achieved had we operated as a separate, standalone entity during the reporting periods presented. We believe that the consolidated financial statements include all adjustments necessary for a fair presentation of the results of operations of the Company.
On April 24, 2018, the Company filed a Certificate of Amendment to amend its Certificate of Incorporation, authorizing the issuance of 2 billion shares of common stock, par value $0.01 per share, and effecting a 459.4752645-for-1 common stock split, resulting in 561 million shares of common stock issued and outstanding. Prior to the Company’s IPO, all 561 million shares of the Company’s common stock were held by AXA. The accompanying Consolidated Financial Statements and Notes to the Consolidated Financial Statements give retroactive effect to the stock split for all periods presented.
All significant intercompany transactions and balances have been eliminated in consolidation. The years “2018”“2021”, “2017”“2020” and “2016”“2019” refer to the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
Adoption of New Accounting Pronouncements
DescriptionEffect on the Financial Statement or Other Significant Matters
ASU 2014-09
Revenue from Contracts with Customers2019-12: Income Taxes (Topic 606)740): Simplifying the Accounting for Income Taxes
This ASU contains new guidance that clarifiessimplifies the accounting for income taxes by removing certain exceptions to the general principles for recognizing revenue arising from contracts with customersin Topic 740, as well as clarifying and develops a common revenue standard for U.S. GAAP.amending existing guidance.On January 1, 2018,2021, the Company adopted the new revenue recognition guidance on a modified retrospective basis. Adoption did not change the amounts or timing of the Company’s revenue recognition for base investment management and advisory fees, distribution revenues, shareholder servicing revenues or broker-dealer revenues. Some performance-based fees and carried-interest distributions that were recognized prior to adoption when no risk of reversal remained, in certain instances may now be recognized earlier if it is probable that significant reversal will not occur.

On January 1, 2018, the Company recognized a cumulative effect adjustment, net of tax, to increase opening equity attributable to Holdings and the noncontrolling interest by approximately $13 million and $19 million, respectively, reflecting the impact of carried-interest distributions previously received by AB of approximately $78 million, net of revenue sharing payments to investment team members of approximately $43 million, for which it is probable that significant reversal will not occur and for which incremental tax is provided at Holdings.

175








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


DescriptionEffect on the Financial Statement or Other Significant Matters
ASU 2016-01
Financial Instruments - Overall (Subtopic 825-10)
This ASU provides new guidance related to the recognition and measurement of financial assets and financial liabilities.accounting standards update. The new guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and presentation and disclosure requirements for financial instruments. The FASB also clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on AFS debt securities. The new guidance requires equity investments in unconsolidated entities, except those accounted for under the equity method, to be measured at fair value through earnings, thereby eliminating the AFS classification for equity securities with readily determinable fair values for which changes in fair value were reported in AOCI.On January 1, 2018, the Company adopted the new recognition requirementswas applied either on a retrospective, modified retrospective or prospective basis for changes inbased on the fair value of AFS equity securities, resulting in a reclassification adjustment of $7 million from AOCIitems to opening retained earnings forwhich the net unrealized gains, net of tax, related to approximately $46 million common stock securities and eliminated their designation as AFS equity securities.amendments relate. The Company does not currently report any of its financial liabilities under the fair value option.
ASU 2016-15
Statement of Cash Flows (Topic 230)
This ASU provides new guidance to simplify elements of cash flow classification. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance requires application of a retrospective transition method.Adoption of this guidance on January 1, 2018,adoption did not have a material impact on the Company’s consolidated financial statements.position, results of operations and cash flows as of the adoption date.
ASU 2017-07
Compensation - Retirement Benefits (Topic 715)
This ASU provides new guidance on the presentation of net periodic pension and post-retirement benefit costs that requires retrospective disaggregation of the service cost component from the other components of net benefit costs on the income statement.On January 1, 2018, the Company adopted the change in the income statement presentation utilizing the practical expedient for determining the historical components of net benefit costs, resulting in no material impact to the consolidated financial statements. In addition, no changes to the Company’s capitalization policies with respect to benefit costs resulted from the adoption of the new guidance.
ASU 2017-09
Compensation - Stock Compensation (Topic 718)
This ASU provides clarity and reduces both 1) diversity in practice and 2) cost and complexity when applying guidance in Topic 718, Compensation - Stock Compensation, to a change to the terms or conditions of a share-based payment award.Adoption of this amendment on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.
ASU 2018-02
Income Statement - Reporting Comprehensive Income
This ASU contains new guidance that permits entities to reclassify to retained earnings tax effects “stranded” in AOCI resulting from the change in federal tax rate enacted by the Tax Cuts and Jobs Act (the “Tax Reform Act”) on December 22, 2017. If elected, the stranded tax effects for all items must be reclassified in AOCI, including, but not limited to, AFS securities and employee benefits.The company early adopted the ASU effective October 1, 2018 and recognized the impact in the period of adoption. As a result, the company reclassified stranded effects resulting from the Tax Act of 2017 by increasing AOCI and decreasing retained earnings by $89 million.
ASU 2018-14
Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)
This ASU improves the effectiveness of disclosures related to defined benefit plans in the notes to the financial statements. The amendments in this ASU remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosures, and add new, relevant disclosure requirements.Effective for the year ended December 31, 2018, the Company early adopted new guidance that amends the disclosure guidance for employee benefit plans, applied on a retrospective basis to all periods presented. See Note 13 for additional information regarding the Company’s employee benefit plans.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Future Adoption of New Accounting Pronouncements
Description
Future Adoption of New Accounting Pronouncements
Description
Effective Date and Method of Adoption
Effect on the Financial Statement or Other Significant Matters
ASU 2018-17
Consolidation2018-12: Financial Services - Insurance (Topic 810)944); ASU 2020-11: Financial Services - Insurance (Topic 944): Targeted Improvements to Related Party Guidance for Variable Interest Entities
This ASU provides guidance requiring that indirect interests held through related parties in common control arrangements be considered on a proportional basis for determining whether fees paid to decision makersEffective Date and service providers are variable interests.

Effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. All entities are required to apply the amendments in this update retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented.
Management currently is evaluating the impact that adoption of this guidance will have on the Company’s consolidated financial statements and related disclosures.
ASU 2018-13
Fair Value Measurement (Topic 820)
This ASU improves the effectiveness of fair value disclosures in the notes to financial statements. Amendments in this ASU impact the disclosure requirements in Topic 820, including the removal, modification and addition to existing disclosure requirements.Effective for fiscal years beginning after December 15, 2019. Early adoption is permitted, with the option to early adopt amendments to remove or modify disclosures, with full adoption of additional disclosure requirements delayed until the stated effective date. Amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively. All other amendments should be applied retrospectively.Management currently is evaluating the impact of the guidance on the Company’s financial statement disclosures but has concluded that this guidance will not impact the Company’s consolidated financial position or results of operations.Application
AXA

139
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,


continued
Description
Effective Date and Method of Adoption
Effect on the Financial Statement or Other Significant Matters
ASU 2018-12
Financial Services - Insurance (Topic 944)
This ASU provides targeted improvements to existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity. The ASU primarily impacts four key areas, including:
1. Measurement of the liability for future policy benefits for traditional and limited payment contracts. The ASU requires companies to review, and if necessary, update cash flow assumptions at least annually for non-participating traditional and limited-payment insurance contracts. Interest ratesThe ASU also prescribes the discount rate to be used to discountin measuring the liability will need to be updated quarterly using an upper medium grade (low credit risk) fixed-income instrument yield.for future policy benefits for traditional and limited payment long-duration contracts.


2. Measurement of market risk benefits (“MRBs”).MRBs. MRBs, as defined under the ASU, will encompass certain GMxB features associated with variable annuity products and other general account annuities with other than nominal market risk. The ASU requires MRBs to be measured at fair value with changes in value attributable to changes in instrument-specific credit risk recognized in OCI.

3. Amortization of deferred acquisition costs. The ASU simplifies the amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins, requiring such balances to be amortized on a constant level basis over the expected term of the contracts. Deferred costs will be required to be written off for unexpected contract terminations but will not be subject to impairment testing.


 4. Expanded footnote disclosures. The ASU requires additional disclosures including disaggregated roll-forwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, MRBs, separate account liabilities and deferred acquisition costs. Companies will also be required to disclose information about significant inputs, judgements, assumptions and methods used in measurement.
measurement
EffectiveIn November 2020, the FASB issued ASU 2020-11 which deferred the effective date of the amendments in ASU 2018-12 for public business entitiesall insurance entities. ASU 2018-12 is effective for fiscal years, and interim periods withwithin those fiscal years, beginning after December 31, 2020.15, 2022. Early adoption is permitted.
allowed.

For the liability for future policyholder benefits for traditional and limited payment contracts, companies can elect one of two adoption methods. Companies can either elect a modified retrospective transition method applied to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or a full retrospective transition method using actual historical experience information as of contract inception. The same adoption method must be used for deferred policy acquisition costs.


For MRBs, the ASU should be applied retrospectively as of the earliest period presented by a retrospective application to all prior periods.
For deferred acquisition costs, companies can elect one of two adoption methods. Companies can either elect a modified retrospective transition method applied to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or a full retrospective transition method using actual historical experience information as of contract inception. The same adoption method must be used for the liability for future policyholder benefits for traditional and limited payment contracts.
presented.		Management currently is evaluating the impact that adoption of this guidance will have on the Company’s consolidated financial statements and related disclosures. The Company has formed a projectcontinues to progress with implementation team to work on compiling all significant information needed to assess the impact of the new guidance, including changes to system requirements and internal controls. The Company expects adoption of the ASU will have a significant impact on its consolidated financial condition, results of operations, cash flows and required disclosures, as well as processes and controls.
ASU 2018-07
Compensation - Stock Compensation (Topic 718)
This ASU contains new guidance that largely aligns the accounting for share-based payment awards issued to employees and non-employees.Effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods, with early adoption permitted.The Company has granted share-based payment awards only to employees as defined by accounting guidance and does not expect this guidance will have a material impact on its consolidated financial statements.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


DescriptionEffective Date and Method of AdoptionEffect on the Financial Statement or Other Significant Matters
ASU 2017-12
Derivatives and Hedging (Topic 815)
The amendments in this ASU better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationshipsefforts and the presentationevaluation of hedge results.Effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption.Management does not expect this guidance will have a material impact on the Company’s consolidated financial statements.
ASU 2017-08
Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20)
This ASU requires certain premiums on callable debt securities to be amortized to the earliest call date and is intended to better align interest income recognition with the manner in which market participants price these instruments.Effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted and is to be applied on a modified retrospective basis.Management does not expect this guidance will have a material impact on the Company’s consolidated financial statements.
ASU 2016-13
Financial Instruments - Credit Losses (Topic 326)
This ASU contains new guidance which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.Effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. These amendments should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.Management currently is evaluating the impact that adoption of this guidance will have on the Company’s consolidated financial statements. Although earlyDue to its extensive nature, the adoption of the ASU is permitted, the Company expectsexpected to adopt ASU 2016-13 when it becomes effective for the Company on January 1, 2020.
ASU 2016-02
Leases (Topic 842)
This ASU contains revised guidance to lease accounting that will require lessees to recognizehave a significant impact on the balance sheet a “right-of-use” asset and a lease liability for virtually all lease arrangements, including those embedded in other contracts. Lessor accounting will remain substantially unchanged from the current model but has been updated to align with certain changes made to the lessee model.Effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for public business entities. Early application is permitted. Lessees and lessors are required to apply a modified retrospective transition approach, which includes optional practical expedients that entities may elect to apply. In July 2018, the FASB issued ASU 2018-11 which allows for an additional transition method. The Company will adopt the standard utilizing the additional transition method, which allows entities to initially apply the new leases standard at the adoption date.
The Company will adopt ASU 2016-02,Company’s consolidated financial statements, as well as other related clarificationssystems, processes and interpretive guidance issued by the FASB effectivecontrols. Effective January 1, 2019. 2023, the new guidance will be adopted using the modified retrospective approach, except for MRBs which will use the full retrospective approach.

The Company has identified its significant existing leases, which primarily include real estate leases for office space, that will be impacted by the new guidance. The Company’screated a governance framework and implementation plan to ensure timely adoption of the guidance. In preparation for implementation, the Company continues to refine key accounting policy decisions, modernize processes and update internal controls. These changes include modifications of actuarial valuation systems, data sourcing, analytical procedures and reporting processes.

The impact on total equity of applying this guidanceASU is estimated to be less than the current amount of reported AOCI as of December 31, 2021. The majority of the total equity impact as of December 31, 2021 is expected to resultbe reflected in AOCI due to decreases in the Company’s estimate of its non-performance risk on variable annuity guarantees accounted for as MRBs for the first time under the guidance. The estimated impact to the retained earnings element of total equity as of December 31, 2021, due to accounting for variable annuity guarantees as MRBs that are not currently measured at fair value, is mitigated by the Company’s present use of a material impactnear industry low interest rate assumption of 2.25% on GMIB business. Because movements in equity markets, interest rates and credit spreads are unpredictable and at times volatile, it is possible that the estimated effects of adoption could change materially between December 31, 2021 and January 1, 2023.
140
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Description
Effective Date and Method of Adoption
Effect on the consolidated balance sheets, however it will not have a materialFinancial Statement or Other Significant Matters
ASU2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
The amendments in this ASU provide optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.  The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.This ASU is effective as of March 12, 2020 through December 31, 2022. On December 15, 2021, the FASB tentatively approved deferring the sunset date of the guidance in Topic 848 to December 31, 2024.The Company is currently assessing the applicability of the optional expedients and exceptions provided under the ASU. Management is evaluating the impact onthat the Consolidated Statement of Income (Loss). The Company’s adoption of this guidance will result inhave on the recognition, as of January 1, 2019, of additional right of use (RoU) operating lease assets ranging from $750 million to $850 million and operating lease liabilities ranging from $950 million to $1.1 billion, respectively, for operating leases.
The adoption of this standard will not have a significant impact on opening retained earnings.

Company’s consolidated financial statements.
Investments
The carrying values of fixed maturities classified as available-for-sale (“AFS”)AFS are reported at fair value. Changes in fair value are reported in other comprehensive income (“OCI”),OCI, net of allowance for credit losses, policy related amounts and deferred income taxes. The amortized cost of fixed maturities is adjusted for impairmentsChanges in value deemed to be other than temporary whichcredit losses are recognized in Investment gains (losses), net. The redeemable preferred stock investments that are reported in fixed maturities include real estate investment trusts (“REIT”),REIT, perpetual preferred stock and
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


redeemable preferred stock. These securities may not have a stated maturity, may not be cumulative and do not provide for mandatory redemption by the issuer.Effective January 1, 2021, the Company began classifying certain preferred stock as equity securities to better reflect the economics and nature of these securities. These preferred stock securities are reported in other equity investments.
The Company determines the fair values of fixed maturities and equity securities based upon quoted prices in active markets, when available, or through the use of alternative approaches when market quotes are not readily accessible or available. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment.
The Company’s management, with the assistance of its investment advisors, monitorsevaluates AFS debt securities that experienced a decline in fair value below amortized cost for credit losses which are evaluated in accordance with the investment performance of its portfolio and reviews AFS securities with unrealizednew financial instruments credit losses for other-than-temporary impairments (“OTTI”).guidance. Integral to this review is an assessment made each quarter, on a security-by-security basis, by the Company’s Investments Under Surveillance (“IUS”)IUS Committee, of various indicators of credit deterioration to determine whether the investment security is expected to recover.has experienced a credit loss. This assessment includes, but is not limited to, consideration of the duration and severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, and the financial strength, liquidity and continued viability of the issuer.
The Company recognizes an allowance for credit losses on AFS debt securities with a corresponding adjustment to earnings rather than a direct write down that reduces the cost basis of the investment, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Any improvements in estimated credit losses on AFS debt securities are recognized immediately in earnings. Management does not use the length of time a security has been in an unrealized loss position as a factor, either by itself or in combination with other factors, to conclude that a credit loss does not exist.
When the Company determines that there is more than 50% likelihood that it is not going to recover the principal and interest cash flows related to an AFS debt security, the security is placed on nonaccrual status and the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in a timely reversal of accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.

If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting OTTIallowance is recognized in income (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries. These assumptions and estimates require use of management
141
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.value.
Real estate held forWrite-offs of AFS debt securities are recorded when all or a portion of a financial asset is deemed uncollectible. Full or partial write-offs are recorded as reductions to the production of income is stated at depreciatedamortized cost less valuation allowances.
Depreciation of real estate held for production of income is computed using the straight-line method over the estimated useful livesbasis of the properties,AFS debt security and deducted from the allowance in the period in which generally range from 40the financial assets are deemed uncollectible. The Company elected to 50 years.reverse accrued interest deemed uncollectible as a reversal of interest income. In instances where the Company collects cash that it has previously written off, the recovery will be recognized through earnings or as a reduction of the amortized cost basis for interest and principal, respectively.
Policy loans represent funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.
Partnerships, investment companies and joint venture interests that the Company has control of and has an economic interest in or those that meet the requirements for consolidation under accounting guidance for consolidation of VIEs are consolidated. Those that the Company does not have control of and does not have a majority economic interest in and those that do not meet the VIE requirements for consolidation are reported on the equity method of accounting and are reported in other equity investments. The Company records its interests in certain of these partnerships on a month or one quarter lag.lag.
Trading securities, which include equity securities and fixed maturities, are carried at fair value based on quoted market prices, with realized and unrealized gains (losses) reported in net investment income (loss) in the consolidated statements of Net income (loss).
Corporate owned life insurance (“COLI”)The carrying values of certain fixed maturities are reported at fair value where the fair value option has been elected. The fair value option allows the Company to elect fair value as an alternative measurement for selected financial assets and financial liabilities not otherwise reported at fair value. Such elections have been made to help mitigate volatility in earnings that result from different measurement attributes. Electing the fair value option also allows the consistent accounting in net investment income (loss) for certain assets and liabilities. Changes in fair value of fixed maturities that have elected the fair value option are reflected in realized and unrealized gains (losses) reported in net investment income (loss) in the consolidated statements of income (loss).
Notes issued by consolidated variable interest entities represent notes issued by certain asset-backed investment vehicles, primarily CLOs, which we are required to consolidate. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs. The Company has elected the fair value option for the majority of these notes and has based the fair value on the corresponding debt security collateral. Changes in fair value are reported in net investment income (loss).
COLI has been purchased by the Company and certain subsidiaries on the lives of certain key employees and the Company and these subsidiaries are named as beneficiaries under these policies. COLI is carried at the cash surrender value of the policies. AtAs of December 31, 2018, 20172021 and 2016,2020, the carrying value of COLI was $872 million, $918 million$1.0 billion and $889$992 million, respectively, and is reported in Otherother invested assets in the consolidated balance sheets.
Cash and cash equivalents includes cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid debt instruments purchased with an original maturity of three months or less. Due to the short-term nature of these investments, the recorded value is deemed to approximate fair value. Cash and securities
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


segregated primarily includes U.S. Treasury Bills segregated by AB in a special reserve bank custody account for the exclusive benefit of its brokerage customers under Rule 15c3-3 of the Exchange Act.
All securities owned, including U.S. government and agency securities, mortgage-backed securities, futures and forwards transactions, are reported in the consolidated financial statements on a trade date basis.
142
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Derivatives
Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by the Company include equity, currency, and interest rate futures, total return and/or other equity swaps, interest rate swaps and floors, swaptions, variance swaps and equity options, all of which may be exchange-traded or contracted in the over-the-counterOTC market. All derivative positions are carried in the consolidated balance sheets at fair value, generally by obtaining quoted market prices or through the use of valuation models.
Freestanding derivative contracts are reported in the consolidated balance sheets either as assets within “Other“other invested assets” or as liabilities within “Other liabilities”.“other liabilities.” The Company nets the fair value of all derivative financial instruments with counterparties for which an ISDA Master Agreement and related Credit Support Annex (“CSA”)CSA have been executed. The Company uses derivatives to manage asset/liability risk and has designated some of those economic relationships under the criteria to qualify for hedge accounting treatment. All changes in the fair value of the Company’s freestanding derivative positions not designated to hedge accounting relationships, including net receipts and payments, are included in “Net“net derivative gains (losses)” without considering changes in the fair value of the economically associated assets or liabilities.
The Company has designated certain derivatives it uses to economically manage asset/liability risk in relationships which qualify for hedge accounting. To qualify for hedge accounting, we formally document our designation at inception of the hedge relationship as a cash flow, fair value or net investment hedge. This documentation includes our risk management objective and strategy for undertaking the hedging transaction. The Company identifies how the hedging instrument is expected to offset the designated risks related to the hedged item and the method that will be used to retrospectively and prospectively assess the hedge effectiveness. To qualify for hedge accounting, a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed and documented at inception and periodically throughout the life of the hedge accounting relationship.
The Company does not exclude any components of the hedging instrument from the effectiveness assessments and therefore does not separately measure or account for any excluded components of the hedging instrument.
While in cash flow hedge relationships, any periodic net receipts and payments from the hedging instrument are included in the income or expense line that the hedged item’s periodic income or expense is recognized. Other changes in the fair value of the hedging instrument while in a cash flow hedging relationship are reported within OCI. These amounts are deferred in AOCI until they are reclassified to Net income (loss). The reclassified amount offsets the effect of the cash flows on Net income (loss) in the same period when the hedged item affects earnings and on the same line as the hedged item.
We discontinue cash flow hedge accounting prospectively when the Company determines: (1) the hedging instrument is no longer highly effective in offsetting changes in the cash flow from the hedged risk, (2) the hedged item is no longer probable of occurring within two months of their forecast, or (3) the hedging instrument is otherwise redesignated from the hedging relationship. Changes in the fair value of the derivative after discontinuation of cash flow hedge accounting are accounted for as freestanding derivative positions not designated to hedge accounting relationships unless and until the derivative is redesignated to a hedge accounting relationship. When cash flow hedge accounting is discontinued the amounts deferred in AOCI during the hedge relationship continue to be deferred in AOCI, as long as the hedged items continue to be probable of occurring within two months of their forecast, until the hedged item affects Net income (loss). Any amount deferred in AOCI for hedged items which are no longer probable of occurring within two months of their forecast will be reclassified to “net derivative gains (losses)” at that time.
The Company is a party to financial instruments and other contracts that contain “embedded” derivative instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are “clearly and closely related” to the economic characteristics of the remaining component of the “host contract” and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. WhenOnce those criteria are satisfied,met the resulting embedded derivative is bifurcated from the host contract, carried in the consolidated balance sheets at fair value, and changes in its fair value are recognized immediately and captioned in the consolidated statements of income (loss) according to the nature of the related host contract. For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company instead may elect to carry the entire instrument at fair value.
Securities Repurchase and Reverse Repurchase Agreements
143
EQUITABLE HOLDINGS, INC.
Securities repurchase and reverse repurchase transactions involve the temporary exchange of securities for cash or other collateral of equivalent value, with agreement to redeliver a like quantity of the same or similar securities at a future date prior to maturity at a fixed and determinable price. Transfers of securities under these agreements to repurchase or resell are evaluated by the Company to determine whether they satisfy the criteria for accounting treatment as secured borrowing or lending arrangements. Agreements not meeting the criteria would require recognition of the transferred securities as sales or purchases with related forward repurchase or resale commitments. All of the Company’s securities repurchase transactions are accounted for as collateralized borrowings with the related obligations distinctly captioned in the consolidated balance sheets. Earnings from investing activities related to the cash received under the Company’s securities repurchase arrangements are reported in the consolidated statements of income (loss) as “Net investment income” and the associated borrowing cost is reported as “Interest expense.” The Company has not actively engaged in securities reverse repurchase transactions.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Commercial and Agricultural Mortgage Loans on Real Estate
Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and the allowance for credit losses. The Company calculates the allowance for credit losses in accordance with the CECL model in order to provide for the risk of credit losses in the lending process.
Expected credit losses for loans with similar risk characteristics are estimated on a collective (i.e., pool) basis in order to meet CECL’s risk of loss concept which requires the Company to consider possibilities of loss, even if remote.
For collectively evaluated mortgages, the Company estimates the allowance for credit losses based on the amortized cost basis of its mortgages over their expected life using a PD / LGD model. The PD/LGD model incorporates the Company’s reasonable and supportable forecast of macroeconomic information over a specified period. The length of the reasonable and supportable forecast period is reassessed on a quarterly basis and may be adjusted as appropriate over time to be consistent with macroeconomic conditions and the environment as of the reporting date. For periods beyond the reasonable and supportable forecast period, the model reverts to historical loss information. The PD and LGD are estimated at the loan-level based on loans’ current and forecasted risk characteristics as well as macroeconomic forecasts. The PD is estimated using both macroeconomic conditions as well as individual loan risk characteristics including LTV ratios, DSC ratios, seasoning, collateral type, geography, and underlying credit. The LGD is driven primarily by the type and value of collateral, and secondarily by expected liquidation costs and time to recovery.
For individually evaluated mortgages, the Company continues to recognize a valuation allowances. Valuation allowances are basedallowance on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value if the loanvalue.
The CECL model is collateral dependent. However, if foreclosure is or becomes probable, the collateral value measurement method is used.
For commercial and agricultural mortgage loans, an allowance for credit loss is typically recommended when management believes it is probable that principal and interest will not be collected accordingconfigured to the contractual
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


terms. Factors that influence management’s judgmentCompany’s specifications and takes into consideration the detailed risk attributes of each discrete loan in determining allowance for credit lossesthe mortgage portfolio which include, but are not limited to the following:
Loan-to-value•LTV 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-valueLTV 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. indicates an underwater mortgage.
Debt service coverage•DSC 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 maturity, borrower/tenant related issues, payment status, property condition, or current economic conditions may call into question the performance of the loan.
Mortgage loans alsothat do not share similar risk characteristics with other loans in the portfolio are individually evaluated quarterly by the Company’s IUS Committee. The allowance for credit losses on these individually evaluated mortgages is a loan-specific reserve as a result of the loan review process that is recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral. The individually assessed allowance for mortgage loans can increase or decrease from period to period based on such factors.
Individually assessed loans may include, but are not limited to, mortgages that have deteriorated in credit quality such as a TDR and reasonably expected TDRs, mortgages for which foreclosure is probable, and mortgages which have been classified as “potential problem” or “problem” loans within the Company’s IUS Committee for impairment, including an assessment of related collateral value. Commercialprocesses as described below.
Within the IUS process, commercial mortgages 60 days or more past due and agricultural mortgages 90 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgages.mortgage loans. Based on its monthly monitoring of mortgages, a class of potential problem mortgagesmortgage loans are also identified, consisting of mortgage loans not currently classified as problem mortgagesmortgage loans but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being restructured.modified. The decision whether to classify a performing mortgage loan as a potential problem
144
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
involves significant subjective judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
For problem mortgage loans, a valuation allowance is established to provide for the risk of credit losses inherent in the lending process. The allowance includes loan specific reserves for mortgage loans determined to be non-performing as a result of the loan review process. A non-performing loan is defined as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. The loan-specific portion of the loss allowance is based on the Company’s assessment as to ultimate collectability of loan principal and interest. Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. The valuation allowance for mortgage loans can increase or decrease from period to period based on such factors.
ImpairedIndividually assessed mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows. Changes in the present value attributable to changes in the amount or timing of expected cash flows are reported as investment gains or losses.
Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is doubtful.not probable. Once mortgage loans are classified as nonaccrual mortgage loans, interest income is recognized under the
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan has been restructured to where the collection of interest is considered likely. The Company charges off loan balances and accrued interest that are deemed uncollectible.
The components of amortized cost for mortgage loans on the consolidated balance sheets excludes accrued interest amounts because the Company presents accrued interest receivables within other assets. Once mortgage loans are placed on nonaccrual status, the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in the timely reversal of accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.
Troubled Debt Restructuring
The Company invests in commercial and agricultural mortgage loans included in the balance sheet as mortgage loans on real estate and privately negotiated fixed maturities included in the balance sheet as fixed maturities AFS. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a TDR has occurred. A modification is a TDR when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific credit allowance recorded in connection with the TDR. A credit allowance may have been recorded prior to the period when the loan is modified in a TDR. Accordingly, the carrying value (net of the allowance) before and after modification through a TDR may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.
Net Investment Income (Loss), Investment Gains (Losses), Net and Unrealized Investment Gains (Losses)
Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of revenue. Changes in the valuation allowancesallowance for credit losses are included in Investmentinvestment gains (losses), net.
Realized and unrealized holding gains (losses) on trading and equity securities are reflected in Netnet investment income (loss).
Unrealized investment gains (losses) on fixed maturities designated as AFS held by the Company are accounted for as a separate component of AOCI, net of related deferred income taxes, as are amounts attributable to certain pension operations, Closed Block’s policyholders’ dividend obligation, insurance liability loss recognition, DAC related to UL policies, investment-type products and participating traditional life policies.
Changes in unrealized gains (losses) reflect changes in fair value of only those fixed maturities classified as AFS and do not reflect any change in fair value of policyholders’ account balances and future policy benefits.
Fair Value of Financial Instruments
Fair value is defined asSee Note 8 of the exchange price that would be received for an asset or paidNotes to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. See Note 7these Consolidated Financial Statements for additional information regarding determining the fair value of financial instruments.
Recognition of Insurance Income and Related Expenses
Deposits related to universal life (“UL”)UL and investment-type contracts are reported as deposits to policyholders’ account balances. Revenues from these contracts consist of fees assessed during the period against policyholders’ account balances for mortality charges, policy administration charges and surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policyholders’ account balances.
145
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Premiums from participating and non-participating traditional life and annuity policies with life contingencies generally are recognized in income when due. Benefits and expenses are matched with such income so as to result in the recognition of profits over the life of the contracts. This match is accomplished by means of the provision for liabilities for future policy benefits and the deferral and subsequent amortization of DAC.
For contracts with a single premium or a limited number of premium payments due over a significantly shorter period than the total period over which benefits are provided, premiums are recorded as revenue when due with any excess profit deferred and recognized in income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over the period to which the premiums relate in proportion to the amount of insurance protection provided.
DAC
Acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business, reflecting incremental direct costs of contract acquisition with independent third parties or employees that are essential to the contract transaction, as well as the portion of employee compensation, including payroll fringe benefits and other costs directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts including commissions, underwriting, agency and policy issue expenses, are deferred.In each reporting period, DAC is amortized to Amortization of deferred policy acquisition costsamortization, net of the accrual of imputed interest on DAC balances. balances, is recorded to amortization of deferred policy acquisition costs. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. The determination of DAC, including amortization and recoverability estimates, is based on models that involve numerous assumptions and subjective judgments, including those regarding policyholder behavior, surrender and withdrawal rates, mortality experience, and other inputs including financial market volatility and market rates of return.
After the initial establishment of reserves, premium deficiency and loss recognition tests are performed each period end using best estimate assumptions as of the testing date without provisions for adverse deviation. When the
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to earnings.earnings.
Amortization Policy
In accordance with the guidance for the accounting and reporting by insurance enterprises for certain long-duration contracts and participating contracts and for realized gains and losses from the sale of investments, current and expected future profit margins for products covered by this guidance are examined regularly in determining the amortization of DAC.
DAC associated with certain variable annuity products is amortized based on estimated assessments, with DAC on the remainder of variable annuities, UL and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Accounts fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, embedded derivatives and changes in the reserve of products that have indexed features such as SCS IUL and MSO, updated at the end of each accounting period. When estimated gross profits are expected to be negative for multiple years of a contract life, DAC is amortized using the present value of estimated assessments. The effect on the amortization of DAC of revisions to estimated gross profits or assessments is reflected in earnings (loss) in the period such estimated gross profits or assessments are revised. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
A significant assumption in the amortization of DAC on variable annuities and, to a lesser extent, on variable and interest-sensitive life insurance relates to projected future separate account performance. Management sets estimated future gross profit or assessment assumptions related to separate account performance using a long-term view of expected average market returns by applying a Reversion to the Mean (“RTM”)RTM approach, a commonly used industry practice. This future return approach influences the projection of fees earned, as well as other sources of estimated gross profits. Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned
146
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
resulting in higher expected future gross profits and lower DAC amortization for the period. The opposite occurs when returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance. Management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. AtAs of December 31, 2018,2021, the average gross short-term and long-term annual return estimate on variable and interest-sensitive life insurance and variable annuities was 7.0% (4.7% net of product weighted average Separate Accounts fees), and the gross maximum and minimum short-term annual rate of return limitations were 15.0% (12.7% net of product weighted average Separate Accounts fees and Investment Advisory fees) and 0.0% ((2.3)%((2.3%) net of product weighted average Separate Accounts fees and Investment Advisory fees), respectively. The maximum duration over which these rate limitations may be applied is five years. This approach will continue to be applied in future periods. These assumptions of long-term growth are subject to assessment of the reasonableness of resulting estimates of future return assumptions.
In addition, projections of future mortality assumptions related to variable and interest-sensitive life products are based on a long-term average of actual experience. This assumption is updated periodically to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC amortization. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization.
Other significant assumptions underlying gross profit estimates for UL and investment type products relate to contract persistency and General Account investment spread.
For participating traditional life policies (substantially all of which are in the Closed Block), DAC is amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield. AtAs of December 31, 2018,2021, the average rate of assumed investment yields, excluding policy loans, for the Company was 4.7%4.5% grading to 4.3% over six years.in 2026. Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


annual policyholder dividends. The effect on the accumulated amortization of DAC of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date. Many of the factors that affect gross margins are included in the determination of the Company’s dividends to these policyholders. DAC adjustments related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in “Policyholders’ dividends,”policyholders’ benefits for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.
DAC associated with non-participating traditional life policies are amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts. Deviations from estimated experience are reflected in income (loss) in the period such deviations occur. For these contracts, the amortization periods generally are for the total life of the policy. DAC related to these policies are subject to recoverability testing as part of the Company’s premium deficiency testing. If a premium deficiency exists, DAC are reduced by the amount of the deficiency or to zero through a charge to current period earnings (loss). If the deficiency exceeds the DAC balance, the reserve for future policy benefits is increased by the excess, reflected in earnings (loss) in the period such deficiency occurs.
For some products, policyholders can elect to modify product benefits, features, rights or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. These transactions are known as internal replacements. If such modification substantially changes the contract, the associated DAC is written off immediately through income and any new deferrable costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed.expensed.
Reinsurance
For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Cessions under
147
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
reinsurance agreements do not discharge the Company’s obligations as the primary insurer. The Company reviews all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims.
For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid (received), and the liabilities ceded (assumed) related to the underlying contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is recorded as an adjustment to DAC and recognized as a component of other expenses on a basis consistent with the way the acquisition costs on the underlying reinsured contracts would be recognized. Subsequent amounts paid (received) on the reinsurance of in-force blocks, as well as amounts paid (received) related to new business, are recorded as Premiumspremiums ceded (assumed); andAmounts amounts due from reinsurers (Amounts(amounts due to reinsurers)are established.
Amounts currently recoverable under reinsurance agreements are included inAmounts due from reinsurersand amounts currently payable are included inAmounts due to reinsurers. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance.
Premiums, Policypolicy charges and fee income, and Policyholders’policyholders’ benefits include amounts assumed under reinsurance agreements and are net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in other revenues. With respect to GMIBs, a portion of the directly written GMIBs are accounted for as insurance liabilities, but the associated reinsurance agreements contain embedded derivatives.derivatives as they are net settled. These embedded derivatives are included inGMIB reinsurance contract asset, at fair valuewith changes in estimated fair value reported in Netnet derivative gains (losses). Separate Account liabilities that have been ceded on a Modified coinsurance (Modco) basis, receivable and payable have been recognized on a net basis as right of offset exists.
If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in Otherother liabilities and deposits made are included within premiums, reinsurance
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


and other receivables.assets. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenuesincome or other operating costs and expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate.
For reinsurance contracts other than those accounted for as derivatives, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities.
Policyholder Bonus Interest Credits
Policyholder bonus interest credits are offered on certain deferred annuity products in the form of either immediate bonus interest credited or enhanced interest crediting rates for a period of time. The interest crediting expense associated with these policyholder bonus interest credits is deferred and amortized over the lives of the underlying contracts in a manner consistent with the amortization of DAC. Unamortized balances are included in Otherother assets in the consolidated balance sheets and amortization is included in Interestinterest credited to policyholders’ account balances in the consolidated statements of income (loss).
Policyholders’ Account Balances and Future Policy Benefits and Other Policyholders’ Liabilities
Policyholders’ account balances relate to contracts or contract features where the Company has no significant insurance risk. This liability represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date.
For participating traditional life insurance policies, future policy benefit liabilities are calculated using a net level premium method on the basis of actuarial insurance assumptions equal to guaranteed mortality and dividend fund interest rates. The liability for annual dividends represents the accrual of annual dividends earned. Terminal dividends are accrued in proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy benefit liabilities are estimated using a net level premium method on the basis of actuarial assumptions as to mortality, persistency and interest established at policy issue. Assumptions established at policy issue as to mortality and persistency are based on the Company’s experience
148
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
that, together with interest and expense assumptions, includes a margin for adverse deviation. Benefit liabilities for traditional annuities during the accumulation period are equal to accumulated policyholders’ fund balances and, after annuitization, are equal to the present value of expected future payments. Interest rates used in establishing such liabilities range from 5.0%3.5% to 6.3%7.3% (weighted average of 5.1%5.0%) for approximately 99.1%99.4% of life insurance liabilities and from 1.6%1.5% to 5.5%5.4% (weighted average of 4.8%3.5%) for annuity liabilities.
Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. While management believes its disability income (“DI”)DI reserves have been calculated on a reasonable basis and are adequate, there can be no assurance reserves will be sufficient to provide for future liabilities.
When the liabilities for future policy benefits plus the present value of expected future gross premiums for a product are insufficient to provide for expected future policy benefits and expenses for that product, DAC is written off and thereafter, if required, a premium deficiency reserve is established by a charge to earnings.
FundingObligations arising from funding agreements are also reported in Policyholders’policyholders’ account balances in the consolidated balance sheets. As a member of the Federal Home Loan Bank of New York (“FHLBNY”),FHLB, the Company has access to collateralized borrowings. The Company may also issue funding agreements to the FHLBNY.FHLB. Both the collateralized borrowings and funding agreements would require the Company to pledge qualified mortgage-backed assets and/or government securities as collateral.
The Company has issued and continues to offer certain variable annuity products with guaranteed minimum death benefits (“GMDB”)GMDB and/or contain a guaranteed minimum living benefit (“GMLB” and together with GMDB, (collectively, the “GMxB features”) which, if elected by the policyholder after a stipulated waiting period from contract issuance, guarantees a minimum lifetime annuity based on predetermined annuity purchase rates that may be in excess of what the contract account value can purchase at then-current annuity purchase rates. This minimum lifetime annuity is based on predetermined annuity purchase rates applied to a guaranteed minimum income benefit (“GMIB”)GMIB base. The Company previously issued certain variable annuity products with GIB, GWBL, GMWB, and guaranteed income
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


benefit (“GIB”) features, guaranteed withdrawal benefit for life (“GWBL”), guaranteed minimum withdrawal benefit (“GMWB”) and guaranteed minimum accumulation benefit (“GMAB”)GMAB features. The Company has also assumed reinsurance for products with GMxB features.
Reserves for products that have GMIB features, but do not have no-lapse guarantee features, and products with GMDB features are determined by estimating the expected value of death or income benefits in excess of the projected contract accumulation value and recognizing the excess over the estimated life based on expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. These reserves are recorded within future policy benefits and other policyholders’ liabilities. The determination of this estimated future policy benefits liability is based on models that involve numerous estimatesassumptions and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates. Assumptions regarding separate account performance used for purposes of this calculation are set using a long-term view of expected average market returns by applying a RTM approach, consistent with that used for DAC amortization. There can be no assurance that actual experience will be consistent with management’s estimates.
Products that have a GMIB feature with a no-lapse guarantee rider (“GMIBNLG”), GIB, GWBL, GMWB and GMAB features and the assumed products with GMIB features (collectively “GMxB derivative features”) are considered either freestanding or embedded derivatives and discussed below under (“Embedded and Freestanding Insurance Derivatives”).
After the initial establishment of reserves, premium deficiency and loss recognition tests are performed each period end using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to earnings. Premium deficiency reserves have beenare recorded for the group single premium annuity business, certain interest-sensitive life contracts, structured settlements, individual disability income and major medical. Additionally, in certain instances the policyholder liability for a particular line of business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years. This pattern of profits followed by losses is exhibited in our VISL business and is generated by the cost structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges. We accrue for these Profits Followed by Losses ("PFBL")PFBL using a dynamic approach that changes over time as the projection of future losses change.
149
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Policyholders’ Dividends
The amount of policyholders’ dividends to be paid (including dividends on policies included in the Closed Block) is determined annually by the board of directors of the issuing insurance company. The aggregate amount of policyholders’ dividends is related to actual interest, mortality, morbidity and expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by the Company.
Embedded and Freestanding Insurance Derivatives
Reserves for products or features within products that are considered either embedded or freestanding derivatives are measured at estimated fair value separately from the host variable annuity product, with changes in estimated fair value reported in Netnet derivative gains (losses). The estimated fair values of these derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees attributable to the guarantee. The projections of future benefits and future fees require capital markets and actuarial assumptions, including expectations concerning policyholder behavior. A risk-neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates.
Additionally, the Company cedes and assumes reinsurance of products with GMxB features, which are considered either an embedded or freestanding derivative, and measured at fair value. The GMxB reinsurance contract asset and liabilities’ fair values reflect the present value of reinsurance premiums, andnet of recoveries, and risk margins over a range of market-consistent economic scenarios.
Changes in the fair value of embedded and freestanding derivatives are reported in Netnet derivative gains (losses). Embedded derivatives in direct and assumed reinsurance contracts are reported in Futurefuture policyholders’ benefits and other policyholders’ liabilities andliabilities. Amounts due from reinsurers contains the reinsurance of underlying GMIB contracts that are embedded derivatives, in cededso the reinsurance has the same risk attributes as the underlying contracts and is an embedded derivatives carried at fair value. There are also embedded derivatives reported in the GMIB reinsurance contract asset related to ceded reinsurance contracts that are net settled, recorded at fair value in the consolidated balance sheets.sheets.
Embedded and freestanding insurance derivatives fair values are determined based on the present value of projected future benefits minus the present value of projected future fees. At policy inception, a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits is attributed to the embedded derivative. The percentage of fees included in the fair value
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


measurement is locked-in at inception. Fees above those amounts represent “excess” fees and are reported in Policypolicy charges and fee income.
Policyholders’ Dividends
The amount of policyholders’ dividends to be paid (including dividends on policies included in the Closed Block) is determined annually by the board of directors of the issuing insurance company. The aggregate amount of policyholders’ dividends is related to actual interest, mortality, morbidity and expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by the Company.
Separate Accounts
Generally, Separate Accounts established under New York State and Arizona State Insurance Law are not chargeable with liabilities that arise from any other business of the Company. Separate Accounts assets are subject to General Account claims only to the extent Separate Accounts assets exceed separate accounts liabilities. Assets and liabilities of the Separate Account represent the net deposits and accumulated net investment earnings (loss) less fees, held primarily for the benefit of policyholders, and for which the Company does not bear the investment risk. Separate Accounts assets and liabilities are shown on separate lines in the consolidated balance sheets. Assets held in Separate Accounts are reported at quoted market values or, where quoted values are not readily available or accessible for these securities, their fair value measures most often are determined through the use of model pricing that effectively discounts prospective cash flows to present value using appropriate sector-adjusted credit spreads commensurate with the security’s duration, also taking into consideration issuer-specific credit quality and liquidity. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to policyholders of such Separate Accounts are offset within the same line in the consolidated statements of income (loss). For 2018, 2017 and 2016, investment results of such Separate Accounts were losses of $7.3 billion, and gains of $17.0 billion and $8.3 billion, respectively.
Deposits to Separate Accounts are reported as increases in Separate Accounts assets and liabilities and are not reported in revenues or expenses.the consolidated statements of income (loss). Mortality, policy administration and surrender charges on all policies including those funded by Separate Accounts are included in revenues.
The Company reports the General Account’s interests in Separate Accounts as Other trading securities, at fair value, in the consolidated balance sheets.
150
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Leases
The Company does not record leases with an initial term of 12 months or less in its consolidated balance sheets, but instead recognizes lease expense for these leases on a straight-line basis over the lease term. For leases with a term greater than one year, the Company records in its consolidated balance sheets at the time of lease commencement or modification a RoU operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the consolidated statements of income (loss) over the lease term on a straight-line basis. RoU operating lease assets represent the Company’s right to use an underlying asset for the lease term and RoU operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Broker-Dealer Revenues, Receivables and Payables
AXAEquitable Advisors and certain of the Company’s other subsidiaries provide investment management, brokerage and distribution services for affiliates and third parties. Third-party revenues earned from these services are reported in Otherother income in the Company’s consolidated statement of income (loss).
Receivables from and payables to clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral for receivables; such collateral is not reflected in the consolidated financial statements.
Goodwill and Other Intangible Assets
Goodwill recorded by the Company represents the excess of purchase price over the estimated fair value of identifiable net assets of companies acquired in a business combination and relates principally to the acquisition of SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc. (“Bernstein Acquisition”) and the purchase of units of the limited partnership interest in ABLP (“AB Units”).Units. The Company tests goodwill for recoverability each annual reporting period at December 31 and at interim periods if facts or circumstances are indicative of potential impairment.
Effective January 1, 2017,Starting as of June 30, 2020, the Company early-adopted new guidance that eliminated Step 2 testing from the goodwill impairment model and continued to limit thechanged its measurement of any goodwill impairmentthe fair value of its Investment Management and Research reporting unit from a discounted cash flow valuation technique to a market valuation approach. Under the carryingmarket valuation approach, the fair value of the reporting unit’s goodwill.unit is based on its adjusted market valuation assuming a control premium. The Company determined that this valuation technique provided a more exact determination of fair value for the reporting unit and was applied during its annual testing for goodwill recoverability at December 31, 2021 and 2020.
The Company’s intangible assets primarily relate to the Bernstein Acquisition and purchases of AB Units and reflect amounts assigned to acquired investment management contracts based on their estimated fair values at the time of acquisition, less accumulated amortization. These intangible assets generally are amortized on a straight-
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


linestraight-line basis over their estimated useful life, ranging from six to twenty years. All intangible assets are periodically reviewed for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value exceeds fair value, impairment tests are performed to measure the amount of the impairment loss, if any.
Internal-use SoftwareDeferred Sales Commissions, Net
Commissions paid to financial intermediaries in connection with the sale of shares of open-end AB sponsored mutual funds sold without a front-end sales charge (“back-end load shares”) are capitalized as deferred sales commissions and amortized over periods not exceeding five and one-half years for U.S. fund shares and four years for non-U.S. fund shares, the periods of time during which the deferred sales commissions are generally recovered. These commissions are recovered from distribution services fees received from those funds and from CDSC received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions of unamortized deferred sales commissions when received. Since January 31, 2009, AB sponsored U.S. mutual funds have not offered back-end load shares to new investors.
Management periodically reviews the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If these factors indicate impairment in value, a comparison is made of the carrying value to the undiscounted cash flows expected to be generated by the asset over its remaining life. If it is determined the deferred sales commission asset is not fully recoverable, the asset will be deemed impaired and a loss will be recorded in the amount by which the recorded amount of the asset exceeds its estimated fair value.
151
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2021 and 2020, respectively, net deferred sales commissions from AB totaled $75 million and $64 million and are included within other assets in the consolidated balance sheets. The estimated amortization expense of deferred sales commissions, based on the December 31, 2021 net asset balance for each of the next four years is $35 million, $26 million, $13 million and $1 million. The Company tests the deferred sales commission asset for impairment quarterly by comparing undiscounted future cash flows to the recorded value, net of accumulated amortization. Each quarter, significant assumptions used to estimate the future cash flows are updated to reflect management’s consideration of current market conditions on expectations made with respect to future market levels and redemption rates. As of December 31, 2021 and 2020, the Company determined that the deferred sales commission asset was not impaired.
Capitalized Computer Software and Hosting Arrangements
Capitalized computer software and hosting arrangements include certain internal and external costs used to implement internal-use software and cloud computing hosting arrangements. These capitalized computer costs are included in Otherother assets in the consolidated balance sheets isand amortized on a straight-line basis over the estimated useful life of the software or term of the hosting arrangement that ranges between three and five years. Capitalized amounts are periodically tested for impairment in accordance with the guidance on impairment of long-lived assets. An immediate charge to earnings is recognized if capitalized softwarecomputer costs no longer are deemed to be recoverable. In addition, service potential is periodically reassessed to determine whether facts and circumstances have compressed the software’s useful life or a significant change in the term of the hosting arrangement such that acceleration of amortization over a shorter period than initially determined would be required.
Capitalized computer software and hosting arrangements, net of accumulated amortization, amounted to $193 million and $191 million as of December 31, 2021 and 2020, respectively. Amortization of capitalized computer software and hosting arrangements in 2021, 2020 and 2019 was $57 million, $60 million and $52 million, respectively, recorded in other operating costs and expenses in the consolidated statements of income (loss).
Short-term and Long-term Debt
Liabilities for short-term and long-term debt are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium and debt issue costs. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Interest expense is generally presented within Interestinterest expense in the consolidated statements of income (loss). Short-term debt represents debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. See Note 1112 of the Notes to these Consolidated Financial Statements for additional information regarding short-term and long-term debt.
Income Taxes
The Company and certain of its consolidated subsidiaries and affiliates file a consolidated federal income tax return. The Company provides for federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income tax assets and liabilities are recognized based on the difference between financial statement carrying amounts and income tax bases of assets and liabilities using enacted income tax rates and laws. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets will not be realized.
Under accounting for uncertainty in income taxes guidance, the Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the consolidated financial statements. Tax positions are then measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement.
ABLP is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, ABLP is subject to a 4.0% New York City unincorporated business tax (“UBT”).tax. AB Holding is subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. Domestic corporate subsidiaries of AB are subject to federal, state and local income taxes. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located. The Company provides federal and state income taxes on the undistributed earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are permanently invested outside the United States.
152
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Recognition of Investment Management and Service Fees and Related Expenses
Investment management, advisory and service fees
Investment management and service fees principally include the Investment Management and Research segment’s investment advisory and service fees, distribution revenues and institutional research services revenue. Investment advisory and service base fees, generally calculated as a percentage, referred to as basis points (“BPs”),BPs, of assets under management, are recorded as revenue as the related services are performed. Certain investment advisory contracts, including those associated with hedge funds, provide for a performance-based fee, in addition to or in lieu of a base fee which is calculated as either a percentage of absolute investment results or a percentage of the investment results in excess of a stated benchmark over a specified period of time.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Investment management and administrative service fees are also earned by AXA Equitable Funds Management Group, LLC (“AXA Equitable FMG”)EIM and EIMG and reported in the Individual Retirement, Group Retirement and Protection Solutions segmentsas well as certain asset-based fees associated with insurance contracts.
AB provides asset management services bymanaging customer assets and seeking todeliver returns to investors. Similarly, AXA Equitable FMGEIM and EIMG provides investment management and administrative services, such as fund accounting and compliance services, to AXAEQ Premier VIP Trust, (“VIP Trust”), EQ Advisors Trust (“EQAT”)EQAT and 1290 Funds as well as two private investment trusts established in the Cayman Islands, AXA Allocation Funds Trust and AXA Offshore Multimanager Funds Trust (collectively, the “Other AXA Trusts”). The contracts supporting these revenue streams create a distinct, separately identifiable performance obligation for each day the assets are managed for the performance of a series of servicesthat are substantially the same and have the same pattern of transfer to the customer. Accordingly, these investment management, advisory, and administrative service base fees are recorded over time as services are performed and entitle the Company to variable consideration. Base fees, generally calculated as a percentage of assets under management (“AUM”),AUM, are recognized as revenue at month-end when the transaction price no longer is variable and the value of the consideration is determined. These fees are not subject to claw back and there is minimal probability that a significant reversal of the revenue recorded will occur.
Certain investment advisory contracts of AB, including those associated with hedge funds or other alternative investments, provide for a performance-based fee (including carried interest), in addition to a base advisory fee, calculated either as a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. These performance-based fees are forms of variable consideration and, therefore, are excluded from the transaction price until it becomes probable there will not be significant reversal of the cumulative revenue recognized. At each reporting date, the Company evaluates constraining factors surrounding the variable consideration to determine the extent to which, if any, revenues associated with the performance-based fee can be recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include contractual claw-back provisions, the length of time of the uncertainty, the number and range of possible amounts, the probability of significant fluctuations in the fund’s market value and the level in which the fund’s value exceeds the contractual threshold required to earn such a fee and the materiality of the amount being evaluated. Prior to adoption of the new revenue recognition guidance on January 1, 2018, the Company recognized performance-based fees at the end of the applicable measurement period when no risk of reversal remained and carried-interest distributions received as deferred revenues until no risk of reversal remained.
Sub-advisory and sub-administrative expenses associated with these services are calculated and recorded as the related services are performed in Otherother operating costs and expense in the consolidated statements of income (loss) as the Company is acting in a principal capacity in these transactions and, as such, reflects these revenues and expenses on a gross basis.
Research services
Research services revenue principally consists of brokerage transaction charges received by Sanford C. Bernstein & Co.SCB LLC, (“SCB LLC”), Sanford C. Bernstein Limited (“SCBL”)SCBL and AB’s other sell side subsidiaries for providing equity research services to institutional clients. Brokerage commissions for trade execution services and related expenses are recorded on a trade-date basis when the performance obligations are satisfied. Generally, the transaction price is agreed upon at the point of each trade and based upon the number of shares traded or the value of the consideration traded. Research revenues are recognized when the transaction price is quantified, collectability is assured and significant reversal of such revenue is not probable.
Distribution services
Revenues from distribution services include fees received as partial reimbursement of expenses incurred in connection with the sale of certain AB sponsored mutual funds and the 1290 Funds and for the distribution primarily of EQAT and EQ Premier VIP Trust shares to separate accounts in connection with the sale of variable life and annuity contracts. The amount and timing of revenues recognized from performance of these distribution services often is
153
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
dependent upon the contractual arrangements with the customer and the specific product sold as further described below.
Most open-end management investment companies, such as U.S. funds and the EQAT and EQ Premier VIP Trusts and the 1290 Funds, have adopted a plan under Rule 12b-1 of the Investment Company Act that allows for certain share classes to pay out of assets, distribution and service fees for the distribution and sale of its shares (“12b-1 Fees”). These
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


open-end management investment companies have such agreements with the Company, and the Company has selling and distribution agreements pursuant to which it pays sales commissions to the financial intermediaries that distribute the shares. These agreements may be terminated by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of shares.
The Company records 12b-1 fees monthly based upon a percentage of the net asset value (“NAV”)NAV of the funds. At month-end, the variable consideration of the transaction price is no longer constrained as the NAV can be calculated and the value of consideration is determined. These services are separate and distinct from other asset management services as the customer can benefit from these services independently of other services. The Company accrues the corresponding 12b-1 fees paid to sub-distributors monthly as the expenses are incurred. The Company is acting in a principal capacity in these transactions; as such, these revenues and expenses are recorded on a gross basis in the consolidated statements of income (loss).
AB sponsored mutual funds offer back-end load shares in limited instances and charge the investor a contingent deferred sales charge (“CDSC”)CDSC if the investment is redeemed within a certain period. The variable consideration for these contracts is contingent upon the timing of the redemption by the investor and the value of the sales proceeds. Due to these constraining factors, the Company excludes the CDSC fee from the transaction price until the investor redeems the investment. Upon redemption, the cash consideration received for these contractual arrangements is recorded as a reduction of unamortized deferred sales commissions.
AB’s Luxembourg subsidiary, the management company for most of its non-U.S. funds, earns a management fee which is accrued daily and paid monthly, at an annual rate, based on the average daily net assets of the fund. With respect to certain share classes, the management fee also may contain a component paid to distributors and other financial intermediaries and service providers to cover shareholder servicing and other administrative expenses (also referred to as an “All-in-Fee”). Based on the conclusion that asset management is distinct from distribution, the Company allocates a portion of the investment and advisory fee to distribution revenues for the servicing component based on standalone selling prices.
Other revenues
Also reported as Investmentinvestment management and service fees in the Company’s consolidated statements of income (loss) are other revenues from contracts with customers, primarily consisting of shareholder servicing fees, mutual fund reimbursements and other brokerage income.
Shareholder services, including transfer agency, administration and record-keeping are provided by AB to company-sponsored mutual funds. The consideration for these services is based on a percentage of the NAV of the fund or a fixed-fee based on the number of shareholder accounts being serviced. The revenues are recorded at month-end when the constraining factors involved with determining NAV or the numbers of shareholders’ accounts are resolved.
Other income
Revenues from contracts with customers reported as Other Incomeother income in the Company’s consolidated statements of income (loss) primarily consist of advisory account fees and brokerage commissions from the Company’s subsidiary broker-dealer operations and sales commissions from the Company’s general agentagents for the distribution of non-affiliate insurers’ life insurance and annuity products. These revenues are recognized at month-end when constraining factors, such as AUM and product mix, are resolved and the transaction pricing no longer is variable such that the value of consideration can be determined.
Deferred Sales Commissions, Net
Commissions paid to financial intermediaries in connection with the sale of shares of open-end AB sponsored mutual funds sold without a front-end sales charge (“back-end load shares”) are capitalized as deferred sales commissions and amortized over periods not exceeding five and one-half years for U.S. fund shares and four years for non-U.S. fund shares, the periods of time during which the deferred sales commissions are generally recovered. These commissions are recovered from distribution services fees received from those funds and from contingent deferred sales commissions (“CDSC”) received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions of unamortized deferred sales commissions when received. Since January 31, 2009, AB sponsored U.S. mutual funds have not offered back-end load shares to new investors. Likewise, as of December 31, 2016, AB sponsored Non-U.S. Funds are no longer offering back-end load shares, except in isolated instances.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Management periodically reviews the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If these factors indicate impairment in value, a comparison is made of the carrying value to the undiscounted cash flows expected to be generated by the asset over its remaining life. If it is determined the deferred sales commission asset is not fully recoverable, the asset will be deemed impaired and a loss will be recorded in the amount by which the recorded amount of the asset exceeds its estimated fair value.
AccountingMortgage Loans
The mortgage portfolio primarily consists of commercial and Consolidationagricultural mortgage loans. The investment strategy for the mortgage loan portfolio emphasizes diversification by property type and geographic location with a primary focus on asset quality. The tables below show the breakdown of VIEsthe amortized cost of the General Account’s investments in mortgage loans by geographic region and property type as of the dates indicated.
ForMortgage Loans by Region and Property Type
 December 31, 2021December 31, 2020
 
Amortized
Cost
% of Total
Amortized
Cost
% of Total
(in millions)
By Region:
U.S. Regions:
Pacific$4,297 30 %$3,912 30 %
Middle Atlantic3,441 24 3,662 28 
South Atlantic1,982 14 1,290 10 
East North Central1,103 8 1,122 8 
Mountain978 7 1,026 8 
West North Central834 6 875 7 
West South Central609 5 690 5 
New England579 4 511 3 
East South Central146 1 152 1 
Total U.S.$13,969 99 %$13,240 100 %
Other Regions:
Europe$126 1 %$— — %
Total Other$126 1 $— — 
Total Mortgage Loans$14,095 100 %$13,240 100 %
By Property Type:
Office$3,944 28 %$4,131 31 %
Multifamily4,694 33 4,027 30 
Agricultural loans2,644 19 2,732 21 
Retail728 5 742 6 
Industrial1,204 9 787 6 
Hospitality410 3 477 4 
Other471 3 344 2 
Total Mortgage Loans$14,095 100 %$13,240 100 %
104
Table of Contents

Liquidity and Capital Resources
Liquidity refers to our ability to generate adequate amounts of cash from our operating, investment and financing activities to meet our cash requirements with a prudent margin of safety. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital is dependent on the profitability of our businesses, timing of cash flows related to our investments and products, our ability to access the capital markets, general economic conditions and the alternative sources of liquidity and capital described herein. When considering our liquidity and cash flows, we distinguish between the needs of Holdings and the needs of our insurance and non-insurance subsidiaries. We also distinguish and separately manage the liquidity and capital resources of our retirement and protection businesses (our Individual Retirement, Group Retirement and Protection Solutions segments) and our Investment Management and Research segment.
Sources and Uses of Liquidity
The Company has sufficient cash flows from operations to satisfy liquidity requirements in 2022.
Cash Flows of Holdings
As a holding company with no business operations of its own, Holdings primarily derives cash flows from dividends from its subsidiaries and distributions related to its economic interest in AB, nearly all new investment productsof which is currently held outside our insurance company subsidiaries. These principal sources of liquidity are augmented by cash and entities developedshort-term investments held by Holdings and access to bank lines of credit and the capital markets. The main uses of liquidity for Holdings are interest payments and debt repayment, payment of dividends and other distributions to stockholders (which may include stock repurchases) loans and capital contributions, if needed, to our insurance subsidiaries. Our principal sources of liquidity and our capital position are described in the following paragraphs.
Sources and Uses of Holding Company (other than Collateralized Debt Obligations (“CDOs”)),Highly Liquid Assets
The following table sets forth Holdings’ principal sources and uses of highly liquid assets for the Company first determines whetherperiods indicated.
Year Ended December 31,
20212020
(in millions)
Highly Liquid Assets, beginning of period$3,088 $1,589 
Dividends from subsidiaries792 2,877 
Capital contributions to subsidiaries(815)(350)
M&A Activity215 — 
Income taxes payable— — 
Total Business Capital Activity192 2,527 
Purchase of treasury shares(1,637)(430)
Shareholder dividends paid(296)(297)
Total Share Repurchases, Dividends and Acquisition Activity(1,933)(727)
Issuance of preferred stock293 494 
     Preferred stock dividend(79)(53)
Total Preferred Stock Activity214 441 
Issuance of long-term debt— — 
Repayment of long-term debt(280)— 
Total External Debt Activity(280)— 
Repayments of loans from affiliates— (300)
Proceeds from loans from affiliates1,000 — 
Repayment of loans to affiliates— — 
105
Table of Contents
Year Ended December 31,
20212020
(in millions)
Issuance of loans to affiliates— — 
Net decrease (increase) in loans to affiliates(80)(115)
Total Affiliated Debt Activity920 (415)
Interest paid on external debt and P-Caps(233)(220)
Others, net(226)(107)
Total Other Activity(459)(327)
Net increase (decrease) in highly liquid assets(1,346)1,499 
Highly Liquid Assets, end of period$1,742 $3,088 

Capital Contribution to Our Subsidiaries
In June 2021, Holdings made a $750 million cash capital contribution to facilitate a corporate restructuring involving administrative services for Equitable Financial’s Separate Accounts.
Loans from Our Subsidiaries
In June 2021, Equitable Financial made a $1.0 billion 10-year term loan to Holdings for generic liquidity management purpose. The loan has an interest rate of 3.23% and matures in June 2031.
Cash Distributions from Our Subsidiaries
In 2021, Holdings and certain of its subsidiaries received pretax cash distributions from AB of $677 million, EIM of $61 million and $140 million in dividends from Equitable Advisors.
Distributions from Insurance Subsidiaries
Our insurance companies are subject to limitations on the entitypayment of dividends and other transfers of funds to Holdings and other affiliates under applicable insurance law and regulation. Also, more generally, the ability of our insurance subsidiaries to pay dividends can be affected by market conditions and other factors beyond our control.
Under New York insurance law applicable to Equitable Financial, a domestic stock life insurer may not, without prior approval of the NYDFS, pay an Ordinary Dividend. Extraordinary Dividends require the insurer to file a notice of its intent to declare the dividends with the NYDFS and prior approval or non-disapproval from the NYDFS. Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay a Permitted Practice Ordinary Dividend. Applying the formulas above, Equitable Financial could pay an Ordinary Dividend of up to approximately $865 million in 2022.
Distributions from AllianceBernstein
ABLP is a VIE, which involves determining an entity’s variabilityrequired to distribute all of its Available Cash Flow, as defined in the Amended and variable interests, identifyingRestated Partnership Agreement of ABLP, to the holders of AB Units and to the equity investment at riskGeneral Partner. Available Cash Flow is defined as the cash flow received by ABLP from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by ABLP for use in its business, or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. Distributions by ABLP are made 1% to the General Partner and assessing99% among the five characteristics of a VIE. Once an entitylimited partners.
Typically, Available Cash Flow has been determined to be a VIE, the Company then identifiesadjusted diluted net income per unit for the primary beneficiaryquarter multiplied by the number of general and limited partnership interests at the end of the VIE. Ifquarter. In future periods, management of AB anticipates that Available Cash Flow will be based on adjusted diluted net income per unit, unless management of AB determines, with the Company is deemed to be the primary beneficiaryconcurrence of the VIE, thenBoard of Directors of AB, that one or more adjustments that are made for adjusted net income should not be made with respect to the Company consolidates the entity.Available Cash Flow calculation.
Management
106
Table of the Company reviews quarterly its investment management agreements and its investments in, and other financial arrangements with, certain entities that hold client assets under management (“AUM”) to determine the entities that the CompanyContents
AB Holding is required to consolidate under this guidance. These entities include certain mutual fund products, hedge funds, structured products, group trusts, collective investment trustsdistribute all of its Available Cash Flow, as defined in the Amended and limited partnerships.
The analysis performedRestated Agreement of Limited Partnership of AB Holding, to identify variable interests held, determine whether entities are VIEs or VOEs, and evaluate whether the Company has a controlling financialholders of AB Holding Units pro rata in accordance with their percentage interest in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from ABLP minus such entities requiresamounts as the exerciseGeneral Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of judgmenttaxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. AB Holding is dependent on the quarterly cash distributions it receives from ABLP, which is subject to the performance of capital markets and is updated on a continuous basis as circumstances change or new entitiesother factors beyond our control. Distributions from AB Holding are developed. The primary beneficiary evaluation generally is performed qualitativelymade pro rata based on all factsthe holder’s percentage ownership interest in AB Holding.
As of December 31, 2021, Holdings and circumstances,its non-insurance company subsidiaries hold approximately 170.1 million AB Units, 4.1 million AB Holding Units and the 1% General Partnership interest in ABLP.
As of December 31, 2021, the ownership structure of ABLP, including consideration of economic interests in the VIE held directly and indirectly through related parties and entities under common control,AB Units outstanding as well as quantitatively,the general partner’s 1% interest, was as appropriate.follows:
At
OwnerPercentage Ownership
EQH and its subsidiaries63.0 %
AB Holding36.2 %
Unaffiliated holders0.8 %
Total100.0 %
Including both the general partnership and limited partnership interests in AB Holding and ABLP, Holdings and its subsidiaries had an approximate 65% economic interest in AB as of December 31, 20182021.

Holdings Credit Facilities
On June 24, 2021, Holdings entered into the Amended and 2017Restated Revolving Credit Agreement with respect to a five-year senior unsecured revolving credit facility (the “Credit Facility”), respectively,which lowered the Company held approximately $1.2facility amount to $1.5 billion and $1.1extended the maturity date to June 24, 2026, among other changes. The Amended and Restated Revolving Credit Agreement amends the Revolving Credit Agreement entered into by Holdings on February 16, 2018, as amended on March 22, 2021.
The Credit Facility may provide significant support to our liquidity position when alternative sources of credit are limited. In addition to the Credit Facility, we have letter of credit facilities with an aggregate principal amount of approximately $1.9 billion (the “LOC Facilities”), primarily to be used to support our life insurance business reinsured to EQ AZ Life Re in April 2018. In June 2021, Holdings entered into amendments with each of investment assetsthe issuers of its bilateral letter of credit facilities to effect changes similar to those effected in the formamended and restated revolving credit agreement. The respective facility limits of equity interests issuedthe bilateral letter of credit facilities remained unchanged.
The Credit Facility and LOC Facilities contain certain administrative, reporting, legal and financial covenants, including requirements to maintain a specified minimum consolidated net worth and to maintain a ratio of indebtedness to total capitalization not in excess of a specified percentage, and limitations on the dollar amount of indebtedness that may be incurred by non-corporate legal entities determinedour subsidiaries and the dollar amount of secured indebtedness that may be incurred by us, which could restrict our operations and use of funds. The right to borrow funds under the guidanceCredit Facility and LOC Facilities is subject to the fulfillment of certain conditions, including compliance with all covenants, and the ability to borrow thereunder is also subject to the continued ability of the lenders that are or will be VIEs,parties to the facilities to provide funds. As of December 31, 2021, we were in compliance with these covenants”.
Contingent Funding Arrangements
For information regarding activity pertaining to our contingent funding arrangements and other off-balance sheet commitments, see “Commitments and Contingent Liabilities in ” Note 17 of the Notes to these Consolidated Financial Statements in this Form 10-K.
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
For information pertaining to our Series A, Series B and Series C Preferred Stock see Note 20 of the Notes to these Consolidated Financial Statements.
107
Table of Contents
Capital Position of Holdings
We manage our capital position to maintain financial strength and credit ratings that facilitate the distribution of our products and provide our desired level of access to the bank and capital markets. Our capital position is supported by the ability of our subsidiaries to generate cash flows and distribute cash to us and our ability to effectively manage the risk of our businesses and to borrow funds and raise capital to meet our operating and growth needs.
Our Board and senior management are directly involved in the development of our capital management policies. Accordingly, capital actions, including proposed changes to the annual capital plan, capital targets and capital policies, are approved by the Board.
Dividends Declared and Paid
The declaration and payment of future dividends is subject to the discretion of our Board of Directors and depends on our financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by Holdings’ insurance subsidiaries and other factors deemed relevant by the Board. 
The payment of dividends will be substantially restricted in the event that we do not declare and pay (or set aside) dividends on the Series A, Series B and Series C Preferred Stock for the last proceeding dividend period. For additional information on our preferred stock, see “—Series A, Series B and Series C Preferred Stock”.
For information regarding activity pertaining to common and preferred dividends declared and paid, see Note 20 of the Notes to these Consolidated Financial Statements.
Share Repurchase Programs
For information regarding activity pertaining to share repurchase programs, see Note 20 of the Notes to these Consolidated Financial Statements.
Sources and Uses of Liquidity of Our Insurance Subsidiaries
The principal sources of liquidity for our insurance subsidiaries are premiums, investment and fee income, deposits associated with our insurance and annuity operations, cash and invested assets, as well as internal borrowings. The principal uses of that liquidity include benefits, claims and dividends paid to policyholders and payments to policyholders in connection with surrenders and withdrawals. Other uses of liquidity include commissions, general and administrative expenses, purchases of investments, the payment of dividends to Holdings and hedging activity. Certain of our insurance subsidiaries’ principal sources and uses of liquidity are described in the paragraphs that follow.
We manage the liquidity of our insurance subsidiaries with the objective of ensuring that they can meet payment obligations linked to our Individual Retirement, Group Retirement and Protection Solutions businesses and to their outstanding debt and derivative positions, including in our hedging programs, without support from Holdings. We employ an asset/liability management approach specific to the requirements of each of our insurance businesses. We measure liquidity against internally-developed benchmarks that consider the characteristics of our asset portfolio and the liabilities that it supports in both the short-term (the next 12 months) and long-term (beyond the next 12 months). We consider attributes of the various categories of our liquid assets (for example, type of asset and credit quality) in calculating internal liquidity indicators for our insurance and reinsurance operations. Our liquidity benchmarks are established for various stress scenarios and durations, including company-specific and market-wide events. The scenarios we use to evaluate the liquidity of our subsidiaries are defined to allow operating entities to operate without support from Holdings.
Liquid Assets
The investment portfolios of our insurance subsidiaries are a significant component of our overall liquidity. Liquid assets include cash and cash equivalents, short-term investments, U.S. Treasury fixed maturities, fixed maturities that are not designated as HTM and public equity securities. We believe that our business operations and the liquidity profile of our assets provide sufficient liquidity under reasonably foreseeable stress scenarios for each of our insurance subsidiaries.
See “—General Account Investment Portfolio” and Note 3 and Note 4 of the Notes to these Consolidated Financial Statements for a description of our retirement and protection businesses’ portfolio of liquid assets.
Hedging Activities
108
Table of Contents
Because the future claims exposure on our insurance products, and in particular our variable annuity products with GMxB features, is sensitive to movements in the equity markets and interest rates, we have in place various hedging and reinsurance programs that are designed to mitigate the economic risks of movements in the equity markets and interest rates. We use derivatives as part of our overall asset/liability risk management program primarily to reduce exposures to equity market and interest rate risks. In addition, we use credit derivatives to replicate exposure to individual securities or pools of securities as a means of achieving credit exposure similar to bonds of the underlying issuer(s) more efficiently. The derivative contracts are an integral part of our risk management program, especially for the management of our variable annuities program, and are collectively managed to reduce the economic impact of unfavorable movements in capital markets. These derivative transactions require liquidity to meet payment obligations such as limited partnershipspayments for periodic settlements, purchases, maturities and limited liability companies,terminations as well as liquid assets pledged as collateral related to any decline in the net estimated fair value. Collateral calls represent one of our biggest drivers for liquidity needs for our insurance subsidiaries. Our derivatives contracts reside primarily within Equitable Financial, which has a significantly large investment portfolio.
FHLB Membership
Equitable Financial and Equitable America are members of the FHLB, which provides access to collateralized borrowings and other FHLB products.
See Note 17 of the Notes to these Consolidated Financial Statements for further description of our FHLB program.
FABN
Under the FABN program, Equitable Financial may issue funding agreements in U.S. dollar or other foreign currencies.
See Note 17 of the Notes to these Consolidated Financial Statements for further description of our FABN program.
Sources and Uses of Liquidity of our Investment Management and Research Segment
The principal sources of liquidity for our Investment Management and Research business include investment management fees and borrowings under its credit facilities and commercial paper program. The principal uses of liquidity include general and administrative expenses, business financing and distributions to holders of AB Units and AB Holding Units plus interest and debt service. The primary liquidity risk for our fee-based Investment Management and Research business is its profitability, which is impacted by market conditions and our investment management performance.
For information regarding our Investment Management and Research credit facilities and commercial paper program with external parties, see Note 12 of the Notes to these Consolidated Financial Statements.
EQH Facility
AB has a $900 million committed, unsecured senior credit facility (the “EQH Facility”). The EQH Facility matures on November 4, 2024 and is available for AB’s general business purposes. Borrowings under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates.
The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including hedge funds, private equity fundsprovisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated.
Amounts under the EQH Facility may be borrowed, repaid and real estate-related funds. re-borrowed by AB from time to time until the maturity of the facility. AB or Holdings may reduce or terminate the commitment at any time without penalty upon proper notice. Holdings also may terminate the facility immediately upon a change of control of AB’s general partner.
As of December 31, 2021 and 2020, AB had $755 million and $675 million outstanding under the EQH Facility, in each case with an equity investor,interest rate of approximately 0.2%. Average daily borrowing of the CompanyEQH Facility during 2021 and 2020 were $405 million and $471 million, respectively, with a weighted average interest rate of approximately 0.2% and 0.5% respectively.
EQH Uncommitted Facility
109
Table of Contents
In addition to the EQH Facility, on September 1, 2020, AB established a new $300 million uncommitted, unsecured senior credit facility (the “EQH Uncommitted Facility”) with EQH. The EQH Uncommitted Facility matures on September 1, 2024 and is consideredavailable for AB’s general business purposes. Borrowings under the EQH Uncommitted Facility bear generally interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Uncommitted Facility contains affirmative, negative and financial covenants, which are substantially similar to havethose in the EQH Facility.
As of December 31, 2021 and 2020, AB had no outstanding balance on the EQH Uncommitted Facility. During the periods ended December 31, 2021 and 2020, AB did not draw upon the EQH Uncommitted Facility.
Statutory Capital of Our Insurance Subsidiaries
Our capital management framework for our insurance subsidiaries is primarily based on statutory RBC standards and the CTE asset standard for our variable annuity business.
RBC requirements are used as minimum capital requirements by the NAIC and the state insurance departments to evaluate the capital condition of regulated insurance companies. RBC is based on a variableformula calculated by applying factors to various asset, premium, claim, expense and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest inrate risk, market risk and business risk and is calculated on a quarterly basis and made public on an annual basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. These rules apply to our insurance company subsidiaries and not to Holdings. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. At the date of the most recent annual statutory financial statements filed with insurance regulators, the total adjusted capital of each of these VIEsinsurance company subsidiaries subject to these requirements was in excess of each of those RBC levels.
Please see Note 20 of the Notes to these Consolidated Financial Statements for additional information relating to Permitted Statutory Accounting practices and its impact on our statutory surplus.
Captive Reinsurance Company
We use a captive reinsurance company to more effectively manage our reserves and capital on an economic basis and to enable the aggregation and transfer of risks. Our captive reinsurance company assumes business from affiliates only and is closed to new business. Our captive reinsurance company is a wholly-owned subsidiaries located in the United States. In addition to state insurance regulation, our captive is subject to internal policies governing its activities. We continue to analyze the use of our existing captive reinsurance structure, as a resultwell as additional third-party reinsurance arrangements.
Borrowings
Our financial strategy going forward will remain subject to market conditions and other factors. For example, we may from time to time enter into additional bank or other financing arrangements, including public or private debt, structured facilities and contingent capital arrangements, under which we could incur additional indebtedness.
For information regarding activity pertaining to our total consolidated borrowings, see Note 12 of the Notes to these Consolidated Financial Statements.
Ratings
Financial strength ratings (which are sometimes referred to as “claims-paying” ratings) and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Our credit ratings are also important for our ability to raise capital through the issuance of debt and for the cost of such financing.
Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. The following table summarizes the ratings for Holdings and certain of its participation insubsidiaries. AM Best and S&P have a stable outlook while Moody’s has a positive outlook.
110
Table of Contents
AM BestS&PMoody’s
Last review dateJan '22Nov '21Aug '21
Financial Strength Ratings:
Equitable Financial Life Insurance CompanyAA+A2
Equitable Financial Life Insurance Company of AmericaAA+A2
Credit Ratings:
Equitable Holdings, Inc.BBB+Baa2
Last review dateSep '21Dec '21
AllianceBernstein L.P.AA2

Material Cash Requirements
The table below summarizes the risks and/or rewards these funds were designedmaterial short and long-term cash requirements related to create by their defined portfolio objectivescontractual and strategies. Primarily through qualitative assessment, including considerationother obligations as of related party interests or other financial arrangements, if any,December 31, 2021. Short-term cash requirements are considered to requirements within the Company wasnext 12 months and long-term cash requirements are considered to be beyond the next 12 months. We do not identified as primary beneficiary of anybelieve that our cash flow requirements can be adequately assessed based solely upon an analysis of these VIEs, largely dueobligations, as the table below does not contemplate all aspects of our cash inflows, such as the level of cash flow generated by certain of our investments, nor all aspects of our cash outflows.
Estimated Payments Due by Year
Total20222023-20242025-20262027 and thereafter
(in millions)
Material Cash Requirements:
Insurance liabilities (1)$107,485 $1,509 $4,671 $6,426 $94,879 
FHLB Funding Agreements6,643 5,353 644 646 — 
Interest on FHLB Funding Agreements100 29 48 23 — 
FABN Funding Agreements6,759 — 2,500 2,100 2,159 
Interest on FABN Funding Agreements372 74 137 105 56 
Operating leases, net of sublease commitments1,106 153 234 149 570 
Long-term debt3,870 — 520 — 3,350 
Interest on long-term debt2,602 185 340 330 1,747 
Interest on P-Caps394 24 47 47 276 
Employee benefits3,498 211 451 383 2,453 
Funding Commitments2,118 520 832 766 — 
Total Material Cash Requirements$134,947 $8,058 $10,424 $10,975 $105,490 
______________
(1) Policyholders’ liabilities represent estimated cash flows out of the General Account related to its inability to direct the activities that most significantly impact their economic performance. Consequently,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 continues to reflect these equity interestsCompany’s experience and assume market growth and interest crediting consistent with actuarial assumptions. 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 Other equitythey are legally insulated from General Account obligations and will be funded by cash flows from Separate Accounts assets.
Unrecognized tax benefits of $323 million, including $3 million related to AB were not included in the above table because it is not possible to make reasonably reliable estimates of the occurrence or timing of cash settlements with the respective taxing authorities.
In addition, the below items are included as part of AB’s aggregate contractual obligations:
111
Table of Contents
•As of December 31, 2021, AB had a $354 million accrual for compensation and benefits, of which $9 million is expected to be paid in 2022, $15 million in 2023-2024, $18 million in 2025-2026 and $46 million in 2027 and thereafter. Further, AB expects to make contributions to its qualified profit-sharing plan of $16 million in each of the next four years.
•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, 2021, AB 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 $27 million as amended in 2020, in the Real Estate Fund II. As of December 31, 2021, AB had funded $21 million of this commitment.

Summary of Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in our consolidated financial statements included elsewhere herein. For a discussion of our significant accounting policies, see Note 2 of the Notes to these Consolidated Financial Statements. The most critical estimates include those used in determining:
•liabilities for future policy benefits;
•accounting for reinsurance;
•capitalization and amortization of DAC;
•estimated fair values of investments in the absence of quoted market values and investment impairments;
•estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation;
•goodwill and related impairment;
•measurement of income taxes and the valuation of deferred tax assets; and
•liabilities for litigation and regulatory matters.
In applying our accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries while others are specific to our business and operations. Actual results could differ from these estimates.
Liability for Future Policy Benefits
We establish reserves for future policy benefits to, or on behalf of, policyholders in the same period in which the policy is issued or acquired, using methodologies prescribed by U.S. GAAP. The assumptions used in establishing reserves are generally based on our experience, industry experience or other factors, as applicable. At least annually we review our actuarial assumptions, such as mortality, morbidity, retirement and policyholder behavior assumptions, and update assumptions when appropriate. Generally, we do not expect trends to change significantly in the short-term and, to the extent these trends may change, we expect such changes to be gradual over the long-term. The reserving methodologies used include the following:
•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.
For most long-duration contracts, we utilize best estimate assumptions as of the date the policy is issued or acquired with provisions for the risk of adverse deviation, as appropriate. After the liabilities are initially established, we perform premium deficiency tests using best estimate assumptions as of the testing date without provisions for adverse deviation. If the liabilities determined based on these best estimate assumptions are greater than the net reserves (i.e., U.S. GAAP reserves net of any
112
Table of Contents
DAC or DSI), the existing net reserves are adjusted by first reducing the DAC or DSI by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than these asset balances for insurance contracts, we then increase the net reserves by the excess, again through a charge to current period earnings. If a premium deficiency is recognized, the assumptions as of the premium deficiency test date are locked in and used in subsequent valuations and the net reserves continue to be subject to premium deficiency testing.
For certain reserves, such as those related to GMDB and GMIB features, we use current best estimate assumptions in establishing reserves. The reserves are subject to adjustments based on periodic reviews of assumptions and quarterly adjustments for experience, including market performance, and the reserves may be adjusted through a benefit or charge to current period earnings.
For certain GMxB features in our Individual Retirement segment, the benefits are accounted for as embedded derivatives, with fair values calculated as the present value of expected future benefit payments to contract holders less the present value of assessed rider fees attributable to the embedded derivative feature. Under U.S. GAAP, the fair values of these benefit features are based on assumptions a market participant would use in valuing these embedded derivatives. Changes in the fair value of the embedded derivatives are recorded quarterly through a benefit or charge to current period earnings.
The assumptions used in establishing reserves are generally based on our experience, industry experience and/or other factors, as applicable. We typically update our actuarial assumptions, such as mortality, morbidity, retirement and policyholder behavior assumptions, annually, unless a material change is observed in an interim period that we feel is indicative of a long-term trend. Generally, we do not expect trends to change significantly in the short-term and, to the extent these trends may change, we expect such changes to be gradual over the long-term. In a sustained low interest rate environment, there is an increased likelihood that the reserves determined based on best estimate assumptions may be greater than the net liabilities.
See Note 2 of the Notes to these Consolidated Financial Statements for additional information on our accounting policy relating to GMxB features and liability for future policy benefits and Note 9 of the Notes to these Consolidated Financial Statements for future policyholder benefit liabilities.
Sensitivity of Future Rate of Return Assumptions on GMDB/GMIB Reserves
The Separate Account future rate of return assumptions that are used in establishing reserves for GMxB features are set using a long term-view of expected average market returns by applying a reversion to the mean approach, consistent with that used for DAC amortization. For additional information regarding the future expected rate of return assumptions and the reversion to the mean approach, see, “—DAC and Policyholder Bonus Interest Credits.”
The GMDB/GMIB reserve balance before reinsurance ceded was $10.8 billion as of December 31, 2021. The following table provides the sensitivity of the reserves GMxB features related to variable annuity contracts relative to the future rate of return assumptions by quantifying the adjustments to these reserves that would be required assuming both a 1% increase and decrease in the future rate of return. This sensitivity considers only the direct effect of changes in the future rate of return on operating results due to the change in the reserve balance before reinsurance ceded and not changes in any other assumptions such as persistency, mortality, or expenses included in the evaluation of the reserves, or any changes on DAC or other balances including hedging derivatives and the GMIB reinsurance asset.
GMDB/GMIB Reserves
Sensitivity - Rate of Return
December 31, 2021
Increase/(Decrease) in
GMDB/GMIB Reserves    
(in millions)
1% decrease in future rate of return$1,363 
1% increase in future rate of return$(1,667)
Traditional Annuities
The reserves for future policy benefits for annuities include group pension and payout annuities, and, during the accumulation period, are equal to accumulated policyholders’ fund balances and, after annuitization, are equal to the present value of expected future payments based on assumptions as to mortality, retirement, maintenance expense, and interest rates.
113
Table of Contents
Interest rates used in establishing such liabilities range from 1.5% to 5.4% (weighted average of 3.5%). If reserves determined based on these assumptions are greater than the existing reserves, the existing reserves are adjusted to the greater amount.
Health
Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest.
Reinsurance
Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risk with respect to reinsurance receivables. We periodically review actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluate the financial strength of counterparties to our reinsurance agreements using criteria similar to those evaluated in our security impairment process. See “—Estimated Fair Value of Investments.” Additionally, for each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. We review all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. If we determine that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, we record the agreement using the deposit method of accounting.
For reinsurance contracts other than those covering GMIB exposure, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities. GMIB reinsurance contracts are used to cede affiliated and non-affiliated reinsurers a portion of the exposure on variable annuity products that offer the GMIB feature. The GMIB reinsurance contracts are accounted for as derivatives and are reported at fair value. Gross reserves for GMIB, on the other hand, are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts, therefore, will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market and/or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts.
See Note 11 of the Notes to these Consolidated Financial Statements for additional information on our reinsurance.
DAC
We incur significant costs in connection with acquiring new and renewal insurance business. Costs that relate directly to the successful acquisition or renewal of insurance contracts, are deferred as DAC. In addition to commissions, certain direct-response advertising expenses and other direct costs, other deferrable costs include the portion of an employee’s total compensation and benefits related to time spent selling, underwriting or processing the issuance of new and renewal insurance business only with respect to actual policies acquired or renewed. We utilize various techniques to estimate the portion of an employee’s time spent on qualifying acquisition activities that result in actual sales, including surveys, interviews, representative time studies and other methods. These estimates include assumptions that are reviewed and updated on a periodic basis or more frequently to reflect significant changes in processes or distribution methods.
Amortization Methodologies
Participating Traditional Life Policies
For participating traditional life policies (substantially all of which are in the Closed Block), DAC is amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield.
As of December 31, 2021, the average investment yields assumed (excluding policy loans) were 4.5% grading to 4.3% in 2026. Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends. The effect on the accumulated amortization of DAC of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date. Many of the factors that affect gross margins are included in
114
Table of Contents
the determination of the Company’s dividends to these policyholders. DAC adjustments related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in “Policyholders’ dividends,” for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.
Non-participating Traditional Life Insurance Policies
DAC associated with non-participating traditional life policies is amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts. Deviations from estimated experience are reflected in earnings (loss) in the period such deviations occur. For these contracts, the amortization periods generally are for the total life of the policy.
Universal Life and Investment-type Contracts
DAC associated with certain variable annuity products is amortized based on estimated assessments, with the remainder of variable annuity products, UL and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Account fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, updated at the end of each accounting period. When estimated gross profits are expected to be negative for multiple years of a contract life, DAC is amortized using the present value of estimated assessments. The effect on the amortization of DAC of revisions to estimated gross profits or assessments is reflected in net income (loss) in the period such estimated gross profits or assessments are revised. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
Quarterly adjustments to the DAC balance are made for current period experience and market performance related adjustments, and the impact of reviews of estimated total gross profits. The quarterly adjustments for current period experience reflect the impact of differences between actual and previously estimated expected gross profits for a given period. Total estimated gross profits include both actual experience and estimates of gross profits for future periods. To the extent each period’s actual experience differs from the previous estimate for that period, the assumed level of total gross profits may change. In these cases, cumulative adjustment to all previous periods’ costs is recognized.
During each accounting period, the DAC balances are evaluated and adjusted with a corresponding charge or credit to current period earnings for the effects of the Company’s actual gross profits and changes in the assumptions regarding estimated future gross profits. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
For the variable and UL policies a significant portion of the gross profits is derived from mortality margins and therefore, are significantly influenced by the mortality assumptions used. Mortality assumptions represent our expected claims experience over the life of these policies and are based on a long-term average of actual company experience. This assumption is updated periodically to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC amortization. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization.
Loss Recognition Testing
After the initial establishment of reserves, loss recognition tests are performed using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), loss recognition accounting is triggered and DAC is first written off, and thereafter a premium deficiency reserve is established by a charge to earnings.
In 2020, we determined that certain of our variable interest-sensitive life insurance products triggered loss recognition accounting due to low interest rates and we reduced DAC by $945 million through accelerated amortization. We did not have a loss recognition event in 2021 or 2019.
115
Table of Contents
Additionally, policyholder liability balances for a particular line of business may not be deficient in the aggregate to trigger loss recognition accounting; however, the pattern of earnings may be such that annual profits are expected to be recognized in earlier years and then followed by losses in later years. This pattern of profits followed by losses is exhibited in our VISL business and has caused us to increase policyholder liability balances by an amount that accounts for losses in future years. This pattern is caused by the cost structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate even if there is insufficient policy account value to cover the monthly deductions and charges. We estimate the PFBL accrual using a dynamic approach that changes over time as the projection and timing of future losses change.
In addition, we are required to analyze how net unrealized investment gains and losses on our AFS investment securities backing insurance liabilities affects product profitability,, as if those unrealized investment gains and losses were realized. This may result in the recognition of unrealized gains and losses on related insurance assets and liabilities in a manner consistent with the recognition of the unrealized gains and losses on AFS investment securities within the statements of comprehensive income and changes in equity. Changes to net unrealized investment (gains) losses may increase or decrease DAC. Similar to a loss recognition event, if the DAC balance is reduced to zero, additional insurance liabilities are established. Unlike a loss recognition event, these adjustments may reverse from period to period.
Sensitivity of DAC to Changes in Future Mortality Assumptions
The following table demonstrates the sensitivity of the DAC balance relative to future mortality assumptions by quantifying the adjustments that would be required, assuming an increase and decrease in the future mortality rate by 1.0%. This information considers only the direct effect of changes in the mortality assumptions on the DAC balance and not changes in any other assumptions used in the measurement of the DAC balance and does not assume changes in reserves.
DAC Sensitivity - Mortality
December 31, 2021
Increase/(Decrease)
in DAC
(in millions)
Decrease in future mortality by 1%$          17 
Increase in future mortality by 1%$(16)
Sensitivity of DAC to Changes in Future Rate of Return Assumptions
A significant assumption in the amortization of DAC on variable annuity products and, to a lesser extent, on variable and interest-sensitive life insurance relates to projected future Separate Accounts performance. Management sets estimated future gross profit or assessment assumptions related to Separate Account performance using a long-term view of expected average market returns by applying a RTM approach, a commonly used industry practice. This future return approach influences the projection of fees earned, as well as other sources of estimated gross profits. Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned resulting in higher expected future gross profits and lower DAC amortization for the period. The opposite occurs when returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance. In second quarter 2015, based upon management’s then-current expectations of interest rates and future fund growth, we updated our reversion to the mean assumption from 9.0% to 7.0%. The average gross long-term return measurement start date was also updated to December 31, 2014. Management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. As of December 31, 2021, the average gross short-term and long-term annual return estimate on variable and interest-sensitive life insurance and variable annuity products was 7.0% (4.7% net of product weighted average Separate Accounts fees), and the gross maximum and minimum short-term annual rate of return limitations were 15.0% (12.7% net of product weighted average Separate Accounts fees and Investment Advisory fees) and 0.0% ((2.3%) net of product weighted average Separate Account fees and Investment Advisory fees), respectively. The maximum duration over which these rate limitations may be applied is five years. This approach will continue to be applied in future periods. These assumptions of long-term growth are subject to assessment of the reasonableness of resulting estimates of future return assumptions.
If actual market returns continue at levels that would result in assuming future market returns of 15.0% for more than five years in order to reach the average gross long-term return estimate, the application of the five-year maximum duration
116
Table of Contents
limitation would result in an acceleration of DAC amortization. Conversely, actual market returns resulting in assumed future market returns of 0.0% for more than five years would result in a required deceleration of DAC amortization. As of December 31, 2021, current projections of future returns assume a 0.0% annualized return for the next nine quarters grading to a reversion to the mean of 7.0% in nineteen quarters.
 Other significant assumptions underlying gross profit estimates for UL and investment type products relate to contract persistency and General Account investment spread.
The following table provides an example of the sensitivity of the DAC balance of variable annuity products and variable and interest-sensitive life insurance relative to future return assumptions by quantifying the adjustments to the DAC balance that would be required assuming both an increase and decrease in the future rate of return by 1.0%. This information considers only the effect of changes in the future Separate Accounts rate of return and not changes in any other assumptions used in the measurement of the DAC balance.
DAC Sensitivity - Rate of Return
December 31, 2021
Increase/(Decrease)
in DAC
(in millions)
Decrease in future rate of return by 1%$(115)
Increase in future rate of return by 1%$139 
Estimated Fair Value of Investments
The Company’s investment portfolio principally consists of public and private fixed maturities, mortgage loans, equity securities and derivative financial instruments, including exchange traded equity, currency and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts, swaptions, variance swaps, as well as equity options used to manage various risks relating to its business operations.
Fair Value Measurements
Investments reported at fair value in the consolidated balance sheets of the Company include fixed maturity securities classified as AFS, equity and trading securities and certain other invested assets, such as freestanding derivatives. In addition, reinsurance contracts covering GMIB exposure and the liabilities in the SCS variable annuity products, SIO in the EQUI-VEST variable annuity product series, MSO in the variable life insurance products, IUL insurance products and the GMAB, GIB, GMWB and GWBL feature in certain variable annuity products issued by the Company are considered embedded derivatives and reported at fair value.
When available, the estimated fair value of securities is based on quoted prices in active markets that are readily and regularly obtainable; these generally are the most liquid holdings and their valuation does not involve management judgment. When quoted prices in active markets are not available, we estimate fair value based on market standard valuation methodologies. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment. For securities with reasonable price transparency, the significant inputs to these valuation methodologies either are observable in the market or can be derived principally from or corroborated by observable market data. When the volume or level of activity results in little or no price transparency, significant inputs no longer can be supported by reference to market observable data but instead must be based on management’s estimation and judgment. Substantially the same approach is used by us to measure the fair values of freestanding and embedded derivatives with exception for consideration of the effects of master netting agreements and collateral arrangements as well as incremental value or risk ascribed to changes in own or counterparty credit risk.
As required by the accounting guidance, we categorize our assets and liabilities measured at fair value into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique, giving the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For additional information regarding the key estimates and assumptions surrounding the determinations of fair value measurements, see Note 8 of the Notes to these Consolidated Financial Statements.
117
Table of Contents
Impairments and Valuation Allowances
The carrying values of fixed maturities classified as AFS are reported at fair value. Changes in fair value are reported in OCI, net of allowance for credit losses, policy related amounts and deferred income taxes. With the adoption of the Financial Instruments-Credit Losses standard, changes in credit losses are recognized in investment gains (losses), net.
With the assistance of our investment advisors, we evaluate AFS debt securities that experience a decline in fair value below amortized cost for credit losses which are evaluated in accordance with the financial instruments credit losses guidance. The remainder of the unrealized loss related to other factors, if any, is recognized in OCI. Integral to this review is an assessment made each quarter, on a security-by-security basis, by our IUS Committee, of various indicators of credit deterioration to determine whether the investment security has experienced a credit loss. This assessment includes, but is not limited to, consideration of the severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity and continued viability of the issuer.
We recognize an allowance for credit losses on AFS debt securities with a corresponding adjustment to earnings rather than a direct write down that reduces the cost basis of the investment, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Any improvements in estimated credit losses on AFS debt securities are recognized immediately in earnings. We do not use the length of time a security has been in an unrealized loss position as a factor, either by itself or in combination with other factors, to conclude that a credit loss does not exist, as was permitted to do prior to January 1, 2020.
If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting allowance is recognized in income (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries. These assumptions and estimates require use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.
Write-offs of AFS debt securities are recorded when all or a portion of a financial asset is deemed uncollectible. Full or partial write-offs are recorded as reductions to the amortized cost basis of the AFS debt security and deducted from the allowance in the period in which the financial assets are deemed uncollectible. We elected to reverse accrued interest deemed uncollectible as a reversal of interest income. In instances where we collect cash that has previously been written off, the recovery will be recognized through earnings or as a reduction of the amortized cost basis for interest and principal, respectively.
Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and valuation allowances. For collectively evaluated mortgages, the Company estimates the allowance for credit losses based on the amortized cost basis of its mortgages over their expected life using a PD / LGD model. For individually evaluated mortgages, the Company continues to recognize valuation allowances based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value if the loan is collateral dependent.
For commercial and agricultural mortgage loans, an allowance for credit loss is typically recommended when management believes it is probable that principal and interest will not be collected according to the contractual terms. Factors that influence management’s judgment in determining allowance for credit losses include the following:
•LTV 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 LTV ratio is in excess of 100%. In the case where the LTV 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.
•DSC 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.
118
Table of Contents
•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.
Mortgage loans that do not share similar risk characteristics with other loans in the portfolio are individually evaluated quarterly by the IUS Committee for impairment on a loan-by-loan basis, including an assessment of related collateral value. Commercial mortgages 60 days or more past due and agricultural mortgages 90 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgages. Based on its monthly monitoring of mortgages, a class of potential problem mortgages also is identified, consisting of mortgage loans not currently classified as problems but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being restructured. The decision whether to classify a performing mortgage loan as a potential problem involves significant subjective judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
For problem mortgage loans a valuation allowance is established to provide for the risk of credit losses inherent in the lending process. The allowance includes loan specific reserves for loans determined to be non-performing as a result of the loan review process. A non-performing loan is defined as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. The loan specific portion of the loss allowance is based on our assessment as to ultimate collectability of loan principal and interest. Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. The valuation allowance for mortgage loans can increase or decrease from period to period based on such factors.
Impaired mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows. Changes in the present value attributable to changes in the amount or timing of expected cash flows are reported as investment gains or losses.
Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is doubtful. Once mortgage loans are classified as nonaccrual mortgage loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan on real estate has been restructured to where the collection of interest is considered likely.
See Notes 2 and 3 of the Notes to these Consolidated Financial Statements for additional information relating to our determination of the amount of allowances and impairments.
Derivatives
We use freestanding derivative instruments to hedge various capital market risks in our products, including: (i) certain guarantees, some of which are reported as embedded derivatives; (ii) current or future changes in the fair value of our assets and liabilities; and (iii) current or future changes in cash flows. All derivatives, whether freestanding or embedded, are required to be carried on the balance sheet at fair value with changes reflected in either net income (loss) or in OCI, depending on the type of hedge. Below is a summary of critical accounting estimates by type of derivative.
119
Table of Contents
Freestanding Derivatives
The determination of the estimated fair value of freestanding derivatives, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. See Note 8 of the Notes to these Consolidated Financial Statements for additional details on significant inputs into the OTC derivative pricing models and credit risk adjustment.
Embedded Derivatives
We issue variable annuity products with guaranteed minimum benefits, some of which are embedded derivatives measured at estimated fair value separately from the host variable annuity product, with changes in estimated fair value reported in net derivative gains (losses). The estimated fair values of these embedded derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees attributable to the guarantee. The projections of future benefits and future fees require capital markets and actuarial assumptions, including expectations concerning policyholder behavior. A risk-neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates.
Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital market inputs, as well as changes in our nonperformance risk adjustment may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. Changes to actuarial assumptions, principally related to contract holder behavior such as annuitization utilization and withdrawals associated with GMIB riders, can result in a change of expected future cash outflows of a guarantee between the accrual-based model for insurance liabilities and the fair-value based model for embedded derivatives. See Note 2 of the Notes to these Consolidated Financial Statements for additional information relating to the determination of the accounting model. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. For direct liabilities, risk margins are applied to non-capital market risk assumptions, while for reinsurance asset risk margins are based on the cost of capital a theoretical market participant would require to assume the risks. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees.
With respect to assumptions regarding policyholder behavior, we have recorded charges, and in some cases benefits, in prior years as a result of the availability of sufficient and credible data at the conclusion of each review.
We ceded the risk associated with certain of the variable annuity products with GMxB features described in the preceding paragraphs. The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by us with the exception of the input for nonperformance risk that reflects the credit of the reinsurer. However, because certain of the reinsured guarantees do not meet the definition of an embedded derivative and, thus are not accounted for at fair value, significant fluctuations in net income may occur when the change in the fair value of the reinsurance recoverable is recorded in net income without a corresponding and offsetting change in fair value of the directly written guaranteed liability.
Nonperformance Risk Adjustment
The valuation of our embedded derivatives includes an adjustment for the risk that we fail to satisfy our obligations, which we refer to as our nonperformance risk. The nonperformance risk adjustment, which is captured as a spread over the risk-free rate in determining the discount rate to discount the cash flows of the liability, is determined by taking into consideration publicly available information relating to spreads on corporate bonds in the secondary market comparable to Holdings’ financial strength rating.
The table below illustrates the impact that a range of reasonably likely variances in credit spreads would have on our consolidated balance sheet, excluding the effect of income tax, related to the embedded derivative valuation on certain variable annuity products measured at estimated fair value. Even when credit spreads do not change, the impact of the nonperformance risk adjustment on fair value will change when the cash flows within the fair value measurement change. The table only reflects the impact of changes in credit spreads on our consolidated financial statements included elsewhere herein and not these other potential changes. In determining the ranges, we have considered current market conditions, as well as the market level of
120
Table of Contents
spreads that can reasonably be anticipated over the near term. The ranges do not reflect extreme market conditions such as those experienced during the 2008–2009 financial crisis as we do not consider those to be reasonably likely events in the near future.
Future policyholders’ benefits and other policyholders’ liabilities
(before reinsurance ceded)
(in billions)
100% increase in Holdings’ credit spread$7.2 
As reported$8.5 
50% decrease in Holdings’ credit spread$9.4 

See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our derivatives and hedging programs.
Goodwill
Goodwill represents the excess of purchase price over the estimated fair value of identifiable net assets acquired in a business combination. We test goodwill for recoverability each annual reporting period at December 31 and at interim periods if facts or circumstances are indicative of potential impairment. As of December 31, 2021, our goodwill of $4.6 billion results solely from our investment in AB and is attributed to the Investment Management and Research segment, also deemed a reporting unit for purpose of assessing the recoverability of that goodwill.
Estimating the fair value of reporting units for the purpose of goodwill impairment testing is a subjective process that involves the use of significant judgements by management. Estimates of fair value are inherently uncertain and represent management’s reasonable expectation regarding future developments, giving consideration to internal strategic plans and general market and economic forecasts. On an annual basis, or when circumstances warrant, goodwill is tested for impairment utilizing the market approach, where the fair value of the reporting unit is based on its adjusted market valuation assuming a control premium.
Litigation and Regulatory Contingencies
We are a party to a number of legal actions and are involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on our financial position, results of operations and cash flows.
Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. On a quarterly and annual basis, we review relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in our consolidated financial statements included elsewhere herein. See Note 17 of the Notes to the Consolidated Financial Statements for information regarding our assessment of litigation contingencies.
Income Taxes
Income taxes represent the net amount of income taxes that we expect to pay to or receive from various taxing jurisdictions in connection with its operations. We provide for Federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryforward periods under the tax law in the applicable jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets will not be realized. Management considers all available evidence including past operating results, the existence of cumulative losses in the most recent years, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. Our accounting for income taxes represents management’s best estimate of the tax consequences of various events and transactions.
Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities, and in evaluating our tax positions including evaluating uncertainties under the guidance for Accounting for Uncertainty in Income Taxes. Under the guidance, we determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial
121
Table of Contents
statements. Tax positions are then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.
Our tax positions are reviewed quarterly, and the balances are adjusted as new information becomes available.
Adoption of New Accounting Pronouncements
See Note 2 of the Notes to these Consolidated Financial Statements for a complete discussion of newly issued accounting pronouncements.
Part II, Item 7A.
        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our businesses are subject to financial, market, political and economic risks, as well as to risks inherent in our business operations. The discussion that follows provides additional information on market risks arising from our insurance asset/liability management and investment management activities. Such risks are evaluated and managed by each business on a decentralized basis. Primary market risk exposure results from interest rate fluctuations, equity price movements and changes in credit quality.
Individual Retirement, Group Retirement and Protection Solutions Segments
Our results significantly depend on profit margins or “spreads” between investment results from assets held in the General Account investment portfolio and interest credited on individual insurance and annuity products. Management believes its fixed rate liabilities should be supported by a portfolio principally composed of fixed rate investments that generate predictable, steady rates of return. Although these assets are purchased for long-term investment, the portfolio management strategy considers them AFS in response to changes in market interest rates, changes in prepayment risk, changes in relative values of asset sectors and individual securities and loans, changes in credit quality outlook and other relevant factors. See the “Investments” section of Note 2 of the Notes to these Consolidated Financial Statements for the accounting policies for the investment portfolios. The objective of portfolio management is to maximize returns, taking into account interest rate and credit risks. Insurance asset/liability management includes strategies to minimize exposure to loss as interest rates and economic and market conditions change. As a result, the fixed maturity portfolio has modest exposure to call and prepayment risk and the vast majority of mortgage holdings are fixed rate mortgages that carry yield maintenance and prepayment provisions.
Investments with Interest Rate Risk – Fair Value
Assets with interest rate risk include AFS and trading fixed maturities and mortgage loans that make up 83.7% and 86.5% of the fair value of the General Account investment portfolio as of December 31, 2021 and 2020, respectively. As part of our asset/liability management, quantitative analyses are used to model the impact various changes in interest rates have on assets with interest rate risk. The table that follows shows the impact an immediate one percent increase/decrease in interest rates as of December 31, 2021 and 2020 would have on the fair value of fixed maturities and mortgage loans:
122
Table of Contents
Interest Rate Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueImpact of +1% ChangeImpact of -1% ChangeFair ValueImpact of +1% ChangeImpact of -1% Change
(in millions)
Fixed Income Investments:
AFS securities:
Fixed rate$70,242 $(7,166)$8,657 $75,375 $(7,185)$8,636 
Floating rate$7,100 $(77)$83 $5,130 $(55)$83 
Trading securities:
Fixed rate$145 $(2)$2 $4,852 $(99)$102 
Floating rate$— $— $— $117 $— $— 
Mortgage loans$14,308 $(743)$314 $13,491 $(521)$376 
A one percent increase/decrease in interest rates is a hypothetical rate scenario used to demonstrate potential risk; it does not represent management’s view of future market changes. While these fair value measurements provide a representation of interest rate sensitivity of fixed maturities and mortgage loans, they are based on various portfolio exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to management’s assessment of changing market conditions and available investment opportunities.
Investments with Equity Price Risk – Fair Value
The investment portfolios also have direct holdings of public and private equity securities. The following table shows the potential exposure from those equity security investments, measured in terms of fair value, to an immediate 10% increase/decrease in equity prices from those prevailing as of December 31, 2021 and 2020:
Equity Price Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueImpact of+10% Equity Price ChangeImpact of -10% Equity Price ChangeFair ValueImpact of+10% Equity Price ChangeImpact of -10% Equity Price Change
(in millions)
Equity Investments$817 $82 $(82)$15 $1 $(1)

A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent management’s view of future market changes. The fair value measurements shown are based on the equity methodsecurities portfolio exposures at a particular point in time and these exposures will change as a result of accounting for these positions. The net assetsongoing portfolio activities in response to management’s assessment of these nonconsolidated VIEs are approximately $166.1changing market conditions and available investment opportunities.
Liabilities with Interest Rate Risk – Fair Value
As of December 31, 2021 and 2020, the aggregate carrying values of insurance contracts with interest rate risk were $15.4 billion and $160.2$11.0 billion, respectively. The aggregate fair value of such liabilities as of December 31, 2021 and 2020 were $15.4 billion and $11.4 billion, respectively. The impact of a relative 1% decrease in interest rates would be an increase in the fair value of those liabilities of $355 million and $281 million, respectively. While these fair value measurements provide a representation of the interest rate sensitivity of insurance liabilities, they are based on the composition of such liabilities at a particular point in time and may not be representative of future results.
Asset/liability management is integrated into many aspects of the Individual Retirement, Group Retirement and Protection Solutions segments’ operations, including investment decisions, product development and determination of crediting rates. As part of our risk management process, numerous economic scenarios are modeled, including cash flow testing required for insurance regulatory purposes, to determine if existing assets would be sufficient to meet projected liability cash flows. Key variables include policyholder behavior, such as persistency, under differing crediting rate strategies.
123
Table of Contents
Derivatives and Interest Rate and Equity Risks – Fair Value
We primarily use derivative contracts for asset/liability risk management, to mitigate our exposure to equity market decline and interest rate risks and for hedging individual securities. In addition, we periodically enter into forward, exchange-traded futures and interest rate swap, swaptions and floor contracts to reduce the economic impact of movements in the equity and fixed income markets, including the program to hedge certain risks associated with the GMxB features. As more fully described in Note 2 and Note 4 of the Notes to these Consolidated Financial Statements, various traditional derivative financial instruments are used to achieve these objectives. To minimize credit risk exposure associated with its derivative transactions, each counterparty’s credit is appraised and approved, and risk control limits and monitoring procedures are applied. Credit limits are established and monitored on the basis of potential exposures that take into consideration current market values and estimates of potential future movements in market values given potential fluctuations in market interest rates. To reduce credit exposures in OTC derivative transactions, we enter into master agreements that provide for a netting of financial exposures with the counterparty and allow for collateral arrangements. We further control and minimize counterparty exposure through a credit appraisal and approval process. Under the ISDA Master Agreement, we have executed a CSA with each of our OTC derivative counterparties that require both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities or those issued by government agencies.
Mark to market exposure is a point-in-time measure of the value of a derivative contract in the open market. A positive value indicates existence of credit risk for us because the counterparty would owe money to us if the contract were closed. Alternatively, a negative value indicates we would owe money to the counterparty if the contract were closed. If there is more than one derivative transaction outstanding with a counterparty, a master netting arrangement exists with the counterparty. In that case, the market risk represents the net of the positive and negative exposures with the single counterparty. In management’s view, the net potential exposure is the better measure of credit risk. As of December 31, 2021 and 2020, the net fair values of our derivatives were $1,602 million and $995 million, respectively.
The tables below show the interest rate or equity sensitivities of those derivatives, measured in terms of fair value. These exposures will change as a result of ongoing portfolio and risk management activities.
Derivative Financial Instruments
   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, 2021
Swaps$2,831 11$(111)$(440)$(693)
Futures12,598 —1,150 — (908)
Swaptions— —— — — 
Total$15,429 $1,039 $(440)$(1,601)
December 31, 2020
Swaps$23,773 3$4,622 $(102)$(3,857)
Futures18,564 —1,477 — (1,264)
Swaptions— —— — — 
Total$42,337 $6,099 $(102)$(5,121)
124
Table of Contents
   Equity Sensitivity
 Notional
Amount		Weighted Average Term (Years)Fair ValueBalance after -10% Equity Price Shift
(in millions, except for Weighted Average Term)
December 31, 2021
Futures$2,484 —$— $93 
Swaps13,310 15 1,336 
Options48,439 26,959 5,381 
Total$64,233 $6,964 $6,810 
December 31, 2020
Futures$4,745 —$— $138 
Swaps22,404 —6 2,119 
Options35,846 24,672 3,488 
Total$62,995 $4,678 $5,745 
In addition to the freestanding derivatives discussed above, we have entered into reinsurance contracts to mitigate the risk associated with the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts. These reinsurance contracts are considered derivatives under the guidance on derivatives and hedging. GMIB reinsurance contract assets were reported at their fair values of $1.8 billion and $2.5 billion as of December 31, 2021 and 2020, respectively. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 and 2020, respectively, would increase the balances of the reinsurance contract asset by $169 million and $169 million. The Amounts due from Reinsurers was $5.8 billion at December 31, 20182021. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 is $447 million.
Also, the GMxB feature’s liability associated with certain annuity contracts is similarly considered to be a derivative for accounting purposes and 2017,was reported at its fair value. The liability for embedded derivative liability features was $8.5 billion and $11.1 billion as of December 31, 2021 and 2020, respectively. The Company’s maximumpotential fair value exposure to lossan immediate 10% drop in equity prices from those prevailing as of December 31, 2021 and 2020, respectively, would be to increase the liability balance by $990 million and $1.1 billion.
Investment Management and Research
The investments of our Investment Management and Research segment consist of trading and AFS investments and other investments. AB’s trading and AFS investments include U.S. Treasury bills and equity and fixed income mutual funds’ investments. Trading investments are purchased for short-term investment, principally to fund liabilities related to deferred compensation plans and to seed new investment services. Although AFS investments are purchased for long-term investment, the portfolio strategy considers them AFS from time to time due to changes in market interest rates, equity prices and other relevant factors. Other investments include investments in hedge funds sponsored by AB and other private investment vehicles.
Investments with Interest Rate Risk – Fair Value
The table below provides AB’s potential exposure with respect to its fixed income investments, measured in terms of fair value, to an immediate 1% increase in interest rates at all maturities from the levels prevailing as of December 31, 2021 and 2020:
Interest Rate Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueBalance After -1% ChangeBalance After +1% ChangeFair ValueBalance After -1% ChangeBalance After +1% Change
(in millions)
Fixed Income Investments:
Trading$101 $109 $94 $36 $38 $33 

125
Table of Contents
Such a fluctuation in interest rates is a hypothetical rate scenario used to calibrate potential risk and does not represent AB management’s view of future market changes. Although these fair value measurements provide a representation of interest rate sensitivity of its investments in fixed income mutual funds and fixed income hedge funds, they are based on AB’s exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments in response to AB management’s assessment of changing market conditions and available investment opportunities.
Investments with Equity Price Risk – Fair Value
AB’s investments include investments in equity mutual funds and equity hedge funds. The following table presents AB’s potential exposure from its equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 and 2020:
Equity Price Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueBalance After +10% Equity Price ChangeBalance After -10% Equity Price ChangeFair ValueBalance After +10% Equity Price ChangeBalance After -10% Equity Price Change
(in millions)
Equity Investments:
Trading$86 $94 $77 $138 $151 $124 
Other investments$87 $96 $78 $80 $88 $72 

A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent AB management’s view of future market changes. While these fair value measurements provide a representation of equity price sensitivity of AB’s investments in equity mutual funds and equity hedge funds, they are based on AB’s exposure at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to AB management’s assessment of changing market conditions and available investment opportunities.
Item 8. Financial Statements and Supplementary Data

126
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm(PricewaterhouseCoopers LLP, New York, New York, PCAOB ID: 238)
128
132
133
134
135
136
Notes to Consolidated Financial Statements
Note 1 - Organization
138
Note 2 - Significant Accounting Policies
139
Note 3 - Investments
157
Note 4 - Derivatives
168
Note 5 - Goodwill and Other Intangible Assets
174
Note 6 - Closed Block
175
Note 7 - DAC and Policyholder Bonus Interest Credits
177
Note 8 - Fair Value Disclosures
177
Note 9 - Insurance Liabilities
193
Note 10 - Leases
196
Note 11 - Reinsurance
199
Note 12 - Short-term and Long-term Debt
201
Note 13 - Related Party Transactions
203
Note 14 - Employee Benefit Plans
204
Note 15 - Share-Based and Other Compensation Programs
212
Note 16 - Income Taxes
217
Note 17 - Commitments and Contingent Liabilities
219
Note 18 - Insurance Group Statutory Financial Information
222
Note 19 - Business Segment Information
224
Note 20 - Equity
227
Note 21 - Earnings Per Share
231
Note 22 - Redeemable Noncontrolling Interest
231
Note 23 - Held-For-Sale
231
Note 24 - Subsequent Events
232
Audited Consolidated Financial Statement Schedules
232
234
238
239
127
Table of Contents
Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Equitable Holdings, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the consolidated financial statements, including the related notes and financial statement schedules, of Equitable Holdings, Inc. and its subsidiaries (the “Company”) as listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
128
Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Amortization and Valuation of Deferred Policy Acquisition Costs (“DAC”) related to Variable and Interest Sensitive Life Products and Variable Annuity Products with Guaranteed Minimum Benefits
As described in Note 2 to the consolidated financial statements, DAC represents acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business that are deferred. A significant portion of the $5.5 billion of DAC as of December 31, 2021, is associated with the variable and interest sensitive life and variable annuity products with guaranteed minimum benefits. DAC associated with certain variable annuity products is amortized based on estimated assessments, with DAC on the remainder of variable annuities, Universal Life and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. The DAC amortization and valuation estimates for these products are determined using models and significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread.
The principal considerations for our determination that performing procedures relating to the amortization and valuation of DAC related to variable and interest sensitive life products and variable annuity products with guaranteed minimum benefits is a critical audit matter are (i) the significant judgment by management when determining the amortization and valuation estimates, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the relevant models and significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the amortization and valuation of DAC related to variable and interest sensitive life products and variable annuity products with guaranteed minimum benefits, including controls over the relevant models and development of the significant assumptions. These procedures also included, among others, testing management’s process for determining the amortization and valuation estimates of DAC, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant assumptions, (ii) testing that significant assumptions are accurately reflected in the relevant models, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the relevant models and the reasonableness of the significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.
Valuation of Guaranteed Minimum Benefit Features related to Certain Life and Annuity Contracts included within Future Policy Benefits and Other Policyholders’ Liabilities and Amounts Due From Reinsurers
As described in Note 2 to the consolidated financial statements, future policy benefits and other policyholders’ liabilities of $36.7 billion as of December 31, 2021, includes reserves related to guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefit (“GMIB”) features for certain life and annuity contracts, other than those accounted for as embedded derivatives. Amounts due from reinsurers of $14.7 billion as of December 31, 2021, includes reinsurance recoverables related to GMDB and GMIB features for certain life and annuity contracts ceded under reinsurance contracts other than those accounted for as embedded derivatives. For certain contracts with guaranteed minimum benefit features, the benefits are accounted for as reserves and determined by estimating the
129
Table of Contents
expected value of death or income benefits in excess of the projected contract accumulation value and recognizing the excess over the estimated life based on expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. The determination of this estimated liability is based on models that involve numerous assumptions and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates. Amounts due from reinsurers, other than those accounted for as embedded derivatives, are calculated using methodologies and assumptions that are consistent with those used to calculate the direct involvementliabilities.
The principal considerations for our determination that performing procedures relating to the valuation of guaranteed minimum benefit features related to certain life and annuity contracts included within future policy benefits and other policyholders’ liabilities and amounts due from reinsurers is a critical audit matter are (i) the significant judgment by management when determining the valuation of these guaranteed minimum benefit features, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the relevant models and significant assumptions of expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates (collectively referred to as “the significant assumptions”), and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to valuation of guaranteed minimum benefit features related to certain life and annuity contracts, including controls over the relevant models and development of the significant assumptions. These procedures also included, among others, testing management’s process for determining the valuation of the guaranteed minimum benefit features, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant assumptions, (ii) testing that significant assumptions are accurately reflected in the relevant models, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the relevant models and the reasonableness of the significant assumptions based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.
Valuation of GMIB Features accounted for as Derivatives included within Future Policy Benefits and Other Policyholders’ Liabilities, GMIB Reinsurance Contract Asset, at fair value and Amounts Due from Reinsurers
As described in Notes 2 and 8 to the consolidated financial statements, the Company issues certain annuity contracts that contain GMIB features that are accounted for as embedded derivatives, recorded at fair value and presented within policy benefits and other policyholders’ liabilities. The reinsurance of certain of these VIEsGMIB features are accounted for as embedded derivatives and are presented at fair value within amounts due from reinsurers. Additionally, there are ceded reinsurance contracts that are net settled, accounted for as a derivative at fair value and presented within GMIB reinsurance contract asset, at fair value. As of December 31, 2021, the fair value of the GMIB features accounted for as embedded derivatives and presented within future policy benefits and other policyholders’ liabilities was $8.5 billion, GMIB reinsurance contract asset, at fair value was $1.8 billion, and amounts due from reinsurers was $5.8 billion. Management determined the fair values the of the GMIB features presented as embedded derivatives using a discounted cash flow valuation technique that incorporates significant unobservable inputs with respect to (i) non-performance risk, lapse rates, withdrawal rates, annuitization rates, and mortality rates for future policy benefits and other policyholders’ liabilities, and (ii) non-performance risk, lapse rates, withdrawal rates, utilization rates, volatility rates, and mortality rates for the GMIB reinsurance contract asset, at fair value and the amounts due from reinsurers.
The principal considerations for our determination that performing procedures relating to the valuation of GMIB features accounted for as derivatives and included within future policy benefits and other policyholders’ liabilities, GMIB reinsurance contract asset, at fair value, and amounts due from reinsurers is a critical audit matter are (i) the significant judgment by management when determining the fair values of the GMIB features accounted for as derivatives, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the valuation technique and significant unobservable inputs with related to non-performance risk, lapse rates, withdrawal rates, annuitization rates, and mortality rates for the reinsurance contract asset and the amounts due from reinsurers, and non-performance risk, lapse rates, withdrawal rates, annuitization rates and mortality rates for future policyholders’ liabilities (collectively referred to as “the significant unobservable inputs”), and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
130
Table of Contents
controls relating to determining the fair value of the GMIB features accounted for as derivatives included within future policy benefits and other policyholders’ liabilities, GMIB reinsurance contract asset, at fair value, and amounts due from reinsurers, including controls over the valuation technique and determination of significant unobservable inputs. These procedures also included, among others, testing management’s process for determining the fair value of the GMIB features accounted for as derivatives, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant unobservable inputs, (ii) testing that significant unobservable inputs are accurately reflected in the relevant valuation technique, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the valuation technique and the reasonableness of the significant unobservable inputs based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.




/s/ PricewaterhouseCoopers LLP
New York, New York
February 22, 2022
We have served as the Company’s auditor since 1993.


131
EQUITABLE HOLDINGS, INC.
Consolidated Balance Sheets
December 31, 2021 and 2020
December 31,
20212020
(in millions, except share data)
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost of $73,429 and $72,867) (allowance for credit losses of $22 and $13)$78,216 $81,638 
Fixed maturities, at fair value using the fair value option (1)1,641 389 
Mortgage loans on real estate (net of allowance for credit losses of $62 and $81) (1)14,033 13,159 
Policy loans4,024 4,118 
Other equity investments (1)2,975 1,502 
Trading securities, at fair value631 5,553 
Other invested assets (1)3,591 2,728 
Total investments105,111 109,087 
Cash and cash equivalents (1)5,188 6,179 
Cash and securities segregated, at fair value1,504 1,753 
Broker-dealer related receivables2,599 2,223 
Deferred policy acquisition costs5,491 4,243 
Goodwill and other intangible assets, net4,728 4,737 
Amounts due from reinsurers (allowance for credit losses of $5 and $5) (includes amounts accounted for at fair value of $5,813 and $—) (3)14,679 4,566 
GMIB reinsurance contract asset, at fair value1,848 2,488 
Current and deferred income taxes195 — 
Other assets (1)3,613 3,701 
Assets held-for-sale— 470 
Separate Accounts assets147,306 135,950 
Total Assets$292,262 $275,397 
LIABILITIES
Policyholders’ account balances$79,357 $66,820 
Future policy benefits and other policyholders' liabilities36,717 39,881 
Broker-dealer related payables1,283 1,443 
Customer related payables3,600 3,417 
Amounts due to reinsurers1,381 1,381 
Short-term and long-term debt3,931 4,115 
Current and deferred income taxes— 749 
Notes issued by consolidated variable interest entities, at fair value using the fair value option (1)1,191 313 
Other liabilities (1)3,933 3,686 
Liabilities held-for-sale— 322 
Separate Accounts liabilities147,306 135,950 
Total Liabilities$278,699 $258,077 
Redeemable noncontrolling interest (1) (2)$468 $143 
Commitments and contingent liabilities (Note 17)00
EQUITY
Equity attributable to Holdings:
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preference$1,562 $1,269 
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 520,918,331 and 552,896,328 shares issued, respectively; 391,290,224 and 440,776,011 shares outstanding, respectively4 5 
Additional paid-in capital1,919 1,985 
Treasury stock, at cost, 129,628,107 and 112,120,317 shares, respectively(2,850)(2,245)
Retained earnings8,880 10,699 
Accumulated other comprehensive income (loss)2,004 3,863 
Total equity attributable to Holdings11,519 15,576 
Noncontrolling interest1,576 1,601 
Total Equity13,095 17,177 
Total Liabilities, Redeemable Noncontrolling Interest and Equity$292,262 $275,397 
____________
(1) See Note 2 of the Notes to these Consolidated Financial Statements for details of balances with VIEs.
(2) See Note 22 of the Notes to these Consolidated Financial Statements for details of redeemable noncontrolling interest.
(3) Represents the fair value of the ceded reserves to Venerable. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction and Note 8 of the Notes to these Consolidated Financial Statements .
See Notes to Consolidated Financial Statements.
132
EQUITABLE HOLDINGS, INC.
Consolidated Statements of Income (Loss)
Years Ended December 31, 2021, 2020 and 2019

Year Ended December 31,
202120202019
(in millions, except per share data)
REVENUES
Policy charges and fee income$3,637 $3,735 $3,778 
Premiums960 997 1,147 
Net derivative gains (losses)(4,465)(1,722)(4,012)
Net investment income (loss)3,846 3,477 3,699 
Investment gains (losses), net:
Credit losses on available-for-sale debt securities and loans2 (58)— 
Other investment gains (losses), net866 802 73 
Total investment gains (losses), net868 744 73 
Investment management and service fees5,395 4,608 4,380 
Other income795 576 554 
Total revenues11,036 12,415 9,619 
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits3,218 5,326 4,385 
Interest credited to policyholders’ account balances1,219 1,222 1,263 
Compensation and benefits2,360 2,096 2,081 
Commissions and distribution-related payments1,662 1,351 1,242 
Interest expense244 200 221 
Amortization of deferred policy acquisition costs393 1,613 597 
Other operating costs and expenses2,109 1,700 1,890 
Total benefits and other deductions11,205 13,508 11,679 
Income (loss) from continuing operations, before income taxes(169)(1,093)(2,060)
Income tax (expense) benefit145 744 593 
Net income (loss)(24)(349)(1,467)
Less: Net income (loss) attributable to the noncontrolling interest415 299 297 
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings’ common shareholders$(518)$(701)$(1,764)
EARNINGS PER COMMON SHARE
Net income (loss) applicable to Holdings’ common shareholders per common share:
Basic$(1.24)$(1.56)$(3.57)
Diluted$(1.24)$(1.56)$(3.57)
Weighted average common shares outstanding (in millions):
Basic417.4 450.4 493.6 
Diluted417.4 450.4 493.6 


See Notes to Consolidated Financial Statements.
133

EQUITABLE HOLDINGS, INC.
Consolidated Statements of Comprehensive Income (Loss)
Years Ended December 31, 2021, 2020 and 2019
Year Ended December 31,
202120202019
(in millions)
COMPREHENSIVE INCOME (LOSS)
Net income (loss)$(24)$(349)$(1,467)
Other comprehensive income (loss) net of income taxes:
Change in unrealized gains (losses), net of reclassification adjustment(2,113)2,956 2,258 
Changes in defined benefit plan related items not yet recognized in periodic benefit cost, net of reclassification adjustment266 48 (15)
Foreign currency translation adjustment(11)22 5 
Total other comprehensive income (loss), net of income taxes(1,858)3,026 2,248 
Comprehensive income (loss)(1,882)2,677 781 
Less: Comprehensive income (loss) attributable to the noncontrolling interest416 306 293 
Comprehensive income (loss) attributable to Holdings$(2,298)$2,371 $488 

See Notes to Consolidated Financial Statements.
134
EQUITABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
Years Ended December 31, 2021, 2020 and 2019
Year Ended December 31,
Equity Attributable to Holdings
Preferred Stock and Additional Paid-In CapitalCommon StockAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Holdings EquityNon-controlling InterestTotal Equity
(in millions)
January 1, 2021$1,269 $5 $1,985 $(2,245)$10,699 $3,863 $15,576 $1,601 $17,177 
Stock compensation— — 15 51 — — 66 220 286 
Purchase of treasury stock— (1)(27)(1,610)— — (1,638)— (1,638)
Reissuance of treasury stock— — — — (51)— (51)— (51)
Retirement of common stock— — — 954 (954)— — — — 
Repurchase of AB Holding units— — — — — — — (262)(262)
Dividends paid to noncontrolling interest— — — — — — — (393)(393)
Dividends on common stock (cash dividends declared per common share of $0.71)— — — — (296)— (296)— (296)
Dividends on preferred stock— — — — (79)— (79)— (79)
Issuance of preferred stock293 — — — — — 293 — 293 
Net income (loss)— — — — (439)— (439)410 (29)
Other comprehensive income (loss)— — — — — (1,859)(1,859)1 (1,858)
Other— — (54)— — — (54)(1)(55)
December 31, 2021$1,562 $4 $1,919 $(2,850)$8,880 $2,004 $11,519 $1,576 $13,095 
January 1, 2020$775 $5 $1,920 $(1,832)$11,744 $844 $13,456 $1,591 $15,047 
Cumulative effect of adoption of ASU 2016-03, Current Expected Credit Loss— — — — (30)— (30)— (30)
Stock compensation— — 27 17 — — 44 69 113 
Purchase of treasury stock— — — (430)— — (430)— (430)
Reissuance of treasury stock— — — — (17)— (17)— (17)
Repurchase of AB Holding units— — (48)— — — (48)(53)(101)
Dividends paid to noncontrolling interest— — — — — — — (305)(305)
Dividends on common stock (cash dividends declared per common share of $0.66)— — — — (297)— (297)— (297)
Dividends on preferred stock— — — — (53)— (53)— (53)
Issuance of preferred stock494 — — — — — 494 — 494 
Net income (loss)— — — — (648)— (648)302 (346)
Other comprehensive income (loss)— — — — — 3,019 3,019 7 3,026 
Other— — 86 — — — 86 (10)76 
December 31, 2020$1,269 $5 $1,985 $(2,245)$10,699 $3,863 $15,576 $1,601 $17,177 
January 1, 2019$— $5 $1,908 $(640)$13,937 $(1,408)$13,802 $1,566 $15,368 
Stock compensation— — 152 9 — — 161 77 238 
Purchase of treasury stock— — — (1,343)(2)— (1,345)— (1,345)
Retirement of common stock— — — 142 (142)— — — — 
Repurchase of AB Holding units— — (112)— — — (112)(61)(173)
Dividends paid to noncontrolling interest— — — — — — — (256)(256)
Dividends on common stock (cash dividends declared per common share of $0.58)— — — — (285)— (285)— (285)
Issuance of preferred stock775 — — — — — 775 — 775 
Net income (loss)— — — — (1,764)— (1,764)263 (1,501)
Other comprehensive income (loss)— — — — — 2,252 2,252 (4)2,248 
Other— — (28)— — — (28)6 (22)
December 31, 2019$775 $5 $1,920 $(1,832)$11,744 $844 $13,456 $1,591 $15,047 


See Notes to Consolidated Financial Statements.
135

EQUITABLE HOLDINGS, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2021, 2020 and 2019





Year Ended December 31,
202120202019
(in millions)
Cash flows from operating activities:
Net income (loss)$(24)$(349)$(1,467)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Interest credited to policyholders’ account balances1,219 1,222 1,263 
Policy charges and fee income(3,637)(3,735)(3,778)
Net derivative (gains) losses4,465 1,722 4,012 
Credit losses on AFS debt securities and loans(2)58 — 
Investment (gains) losses, net(863)(872)(206)
(Gains) losses on businesses HFS(3)69 133 
Realized and unrealized (gains) losses on trading securities26 (170)(502)
Non-cash long term incentive compensation expense226 210 278 
Amortization and depreciation497 1,757 675 
Equity (income) loss from limited partnerships(553)(83)(92)
Changes in:
Net broker-dealer and customer related receivables/payables(131)667 (403)
Reinsurance recoverable (1)(1,077)(401)(146)
Segregated cash and securities, net250 (659)75 
Capitalization of deferred policy acquisition costs(875)(670)(754)
Future policy benefits(299)1,953 962 
Current and deferred income taxes(451)(571)(102)
Other, net476 (209)(164)
Net cash provided by (used in) operating activities$(756)$(61)$(216)
Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale$34,434 $18,986 $13,327 
Fixed maturities, at fair value using the fair value option763 7 — 
Mortgage loans on real estate1,696 630 952 
Trading account securities5,159 2,162 10,717 
Real estate joint ventures— 55 5 
Short term investments87 1,497 2,643 
Other1,716 1,005 306 
Payment for the purchase/origination of:
Fixed maturities, available-for-sale(43,344)(28,197)(29,610)
Fixed maturities, at fair value using the fair value option(1,792)(311)— 
Mortgage loans on real estate(2,546)(1,747)(1,240)
Trading account securities(244)(708)(1,123)
Short term investments(18)(1,098)(2,776)
Other(2,553)(1,167)(430)
Cash from the sale of business, net of cash sold215 164 — 
Cash settlements related to derivative instruments(5,937)1,166 (954)
Repayments of loans to affiliates— — — 
Investment in capitalized software, leasehold improvements and EDP equipment(120)(107)(93)
Other, net(205)(160)(220)
Net cash provided by (used in) investing activities$(12,689)$(7,823)$(8,496)



See Notes to Consolidated Financial Statements.
136

EQUITABLE HOLDINGS, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2021, 2020 and 2019





Year Ended December 31,
202120202019
(in millions)
Cash flows from financing activities:
Policyholders’ account balances:
Deposits$17,521 $11,446 12,843 
Withdrawals(7,069)(4,332)(4,619)
Transfers (to) from Separate Accounts1,985 2,452 1,769 
Change in short-term financings92 — (546)
Change in collateralized pledged assets34 (139)(71)
Change in collateralized pledged liabilities1,413 848 1,361 
(Decrease) increase in overdrafts payable16 (13)(60)
Repayment of long-term debt(280)— (300)
Proceeds from notes issued by consolidated VIEs873 313 — 
Dividends paid on common stock(296)(297)(285)
Dividends paid on preferred stock(79)(53)— 
Issuance of preferred stock293 494 775 
Purchases of AB Holding Units to fund long-term incentive compensation plan awards(262)(149)(172)
Purchase of treasury shares(1,637)(430)(1,350)
Purchases (redemptions) of noncontrolling interests of consolidated
company-sponsored investment funds		346 (210)169 
Distribution to noncontrolling interest of consolidated subsidiaries(392)(304)(256)
Increase (decrease) in securities sold under agreement to repurchase— — (573)
Other, net(47)48 20 
Net cash provided by (used in) financing activities$12,511 $9,674 $8,705 
Effect of exchange rate changes on cash and cash equivalents$(18)$23 $8 
Change in cash and cash equivalents(952)1,813 1 
Cash and cash equivalents, beginning of year6,179 4,405 4,469 
Change in cash of businesses held-for-sale(39)(39)(65)
Cash and cash equivalents, end of year$5,188 $6,179 $4,405 
Supplemental cash flow information:
Interest paid215 215 273 
Income taxes (refunded) paid$305 $(173)$(506)
Non-cash transactions from investing and financing activities:
Transfer of assets to reinsurer$(9,023)$— $— 
__________
(1) Amount includes cash paid for Venerable Transaction of $494 million (see Note 1 of the Notes to these Consolidated Financial Statements).






See Notes to Consolidated Financial Statements.
137
Table of Contents
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements (Unaudited)

1)    ORGANIZATION
Equitable Holdings, Inc. is the carrying valueholding company for a diversified financial services organization. The Company conducts operations in 4 segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. The Company’s management evaluates the performance of each of these segments independently.
•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 AB Holding and 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 VUL, IUL 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.
The Company reports certain activities and items that are not included in our segments in Corporate and Other. Corporate and Other includes certain of our financing and investment expenses. It also includes: Equitable Advisors broker-dealer business, closed block of$1.2 billion and$1.1 billion life insurance (the “Closed Block”), run-off variable annuity reinsurance business, run-off group pension business, run-off health business, benefit plans for our employees, certain strategic investments and approximately $940 millioncertain unallocated items, including capital and $769 millionrelated investments, interest expense and corporate expense. AB’s results of unfunded commitments atoperations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.
As of December 31, 20182021 and 2017, respectively. The Company has no furtherDecember 31, 2020 the Company’s economic interest in these VIEsAB was approximately 65% for both periods. The General Partner of AB is a wholly-owned subsidiary of the Company. Because the General Partner has the authority to manage and control the business of AB, AB is consolidated in the formCompany’s financial statements for all periods presented.
On June 1, 2021, Holdings completed the sale (the “Venerable Transaction”) of guarantees, derivatives, credit enhancements or similar instrumentsCS Life, to Venerable Insurance and obligations.
At December 31, 2018,Annuity Company, an insurance company domiciled in Iowa (“VIAC”), pursuant to the Master Transaction Agreement, dated October 27, 2020 (the “Master Transaction Agreement”), among the Company, consolidated one real estate joint ventureVIAC and, solely with respect to Article XIV thereof, Venerable Holdings, Inc., a Delaware corporation (“Venerable”).
Pursuant to the Master Transaction Agreement, immediately prior to the closing of the Venerable Transaction, CS Life effected the recapture of all of the business that was ceded to CS Life Re Company, a wholly owned subsidiary of CS Life (“Reinsurance Subsidiary”), and sold 100% of the equity of the Reinsurance Subsidiary to another wholly owned subsidiary of the Company.
VIAC paid the Company a cash purchase price of $215 million for which itCS Life at closing. The post-closing true-up adjustment was identified as primary beneficiary under the VIE model. The consolidated entity is jointly owned by AXAimmaterial. VIAC also issued a surplus note in aggregate principal amount of $60 million, to Equitable Financial Life Insurance Company, (“AXAa New York-domiciled life insurance company and a wholly owned subsidiary of Holdings, for cash consideration.
Immediately following the closing of the Venerable Transaction, CS Life and Equitable Life”)Financial entered into a coinsurance and AXA Francemodified coinsurance agreement (the “Reinsurance Agreement”), pursuant to which Equitable Financial ceded to CS Life, on a combined coinsurance and holdsmodified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit
138
Table of Contents
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements (Unaudited), Continued
guarantees. At the closing of the Transaction, CS Life deposited assets supporting the general account liabilities relating to the Block into a trust account for the benefit of Equitable Financial, which assets will secure its obligations to Equitable Financial under the Reinsurance Agreement. At the closing of the Transaction, AllianceBernstein L.P., a subsidiary of the Company (“AB”), entered into an investment in a real estate venture. Included inadvisory agreement with CS Life pursuant to which AB will serve as the Company’s consolidated balance sheet at December 31, 2018, are totalpreferred investment manager of the general account assets transferred to the trust account. The Company transferred assets of $36 million related$9.5 billion, including primarily available for sale securities and cash, to this VIE, primarily resulting froma collateral trust account as the consideration for the reinsurance transaction. In addition, the Company recorded $9.6 billion of direct insurance liabilities ceded under the reinsurance contract, of which $5.3 billion is accounted at fair value, as the reinsurance of GMxB with no lapse guarantee riders are embedded derivatives. Additionally, $16.9 billion of Separate Account liabilities were ceded under a modified coinsurance portion of the agreement.
In addition, upon the completion of the Venerable Transaction, EIMG acquired an approximate 9.09% equity interest in Venerable’s parent holding company, VA Capital Company LLC. In connection with such investment, EIMG designated a member to the Board of Managers of VA Capital Company LLC.

2)     SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated presentationfinancial statements and the reported amounts of $36 millionrevenues and expenses during the reporting periods. Actual results could differ from these estimates.
The accompanying consolidated financial statements present the consolidated results of Real estate held for productionoperations, financial condition, and cash flows of income. In addition, Real estate held for production of income reflects $16 million as related to two non-consolidated joint ventures at December 31, 2018.
At December 31, 2017, the Company consolidated three real estate joint ventures for which it was identified as primary beneficiary under the VIE model. Two of the joint ventures are owned 95% by the Company and 5% byits subsidiaries and those investment companies, partnerships and joint ventures in which the venture partner. The third consolidated entity is jointly owned by AXA EquitableCompany has control and AXA France and holds an investment in a real estate venture. Includedmajority economic interest as well as those VIEs that meet the requirements for consolidation.
Financial results in the Company’shistorical consolidated balance sheets atfinancial statements may not be indicative of the results of operations, comprehensive income (loss), financial position, equity or cash flows that would have been achieved had we operated as a separate, standalone entity during the reporting periods presented. We believe that the consolidated financial statements include all adjustments necessary for a fair presentation of the results of operations of the Company.
All significant intercompany transactions and balances have been eliminated in consolidation. The years “2021”, “2020” and “2019” refer to the years ended December 31, 2017 are total assets2021, 2020 and 2019, respectively.
Adoption of $393 million related to these VIEs, primarily resulting from the consolidated presentationNew Accounting Pronouncements
DescriptionEffect on the Financial Statement or Other Significant Matters
ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, as well as clarifying and amending existing guidance.On January 1, 2021, the Company adopted the new accounting standards update. The new guidance was applied either on a retrospective, modified retrospective or prospective basis based on the items to which the amendments relate. The adoption did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows as of the adoption date.
Future Adoption of $372 million of real estate held for production of income. Also resulting from the Company’s consolidated presentation of these VIEs are total liabilities of $229 million at December 31, 2017 including long term debt in the amount ofNew Accounting Pronouncements
Description
Effective Date and Method of Adoption
Effect on the Financial Statement or Other Significant Matters
ASU 2018-12: Financial Services - Insurance (Topic 944); ASU 2020-11: Financial Services - Insurance (Topic 944): Effective Date and Early Application
AXA

139
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

$203 million. In addition, Real estate held for production of income reflects $18 million as related to two non-consolidated joint ventures at December 31, 2017.
Included in the Company’s consolidated balance sheet at December 31, 2018 and 2017, respectively, are assets of $236 million and $1.5 billion, liabilities of $5 million and $696 million, and redeemable non-controlling interests of $118 million and $596 million associated with the consolidation of AB-sponsored investment funds under the VIE model. Also included in the Company’s consolidated balance sheets are assets of $152 million and $58 million, liabilities of $17 million and $2 million, and redeemable non-controlling interests of $28 million and $0 million from consolidation of AB-sponsored investment funds under the VOE model. The assets of these consolidated funds are presented within Other invested assets and cash and cash equivalents, and liabilities of these consolidated funds are presented with other liabilities on the face of the Company’s consolidated balance sheet at December 31, 2018; ownership interests not held by the Company relating to consolidated VIEs and VOEs are presented either as redeemable or non-redeemable noncontrolling interest, as appropriate. The Company is not required to provide financial support to these company-sponsored investment funds, and only the assets of such funds are available to settle each fund’s own liabilities.
As of December 31, 2018, the net assets of investment products sponsored by AB that are non-consolidated VIEs are approximately $44.3 billion and the Company’s maximum exposure to loss from its direct involvement with these VIEs is its investment of $6 million at December 31, 2018. The Company has no further commitments to or economic interest in these VIEs.
Assumption Updates and Model Changes
In 2018, the Company began conducting its annual review of our assumptions and models during the third quarter, consistent with industry practice. The annual review encompasses assumptions underlying the valuation of unearned revenue liabilities, embedded derivatives for our insurance business, liabilities for future policyholder benefits, DAC and deferred sales inducement assets (“DSI”). As a result of this review, some assumptions were updated, resulting in increases and decreases in the carrying values of these product liabilities and assets.
The net impact of assumption changes in the third quarter of 2018 decreased Policy charges and fee income by $24 million, decreased Policyholders’ benefits by $673 million, increased Net derivative losses by $1.1 billion and decreased the Amortization of DAC by $286 million. This resulted in a decrease in the third quarter of 2018 in Income (loss) from operations, before income taxes of $160 million and decreased Net income (loss) by approximately $131 million.
In 2017, the Company made several assumption updates and model changes, including the following: (1) updated the expectation of long-term Separate Accounts volatility used in estimating policyholders’ benefits for variable annuities with GMDB and GMIB guarantees and variable universal life contracts with secondary guarantees; (2) updated the estimated duration used to calculate policyholders’ benefits for variable annuities with GMDB and GMIB guarantees and the period over which DAC is amortized; (3) updated policyholder behavior assumptions based on emerging experience, including expectations of long-term lapse and partial withdrawal rates for variable annuities with GMxB features; (4) updated premium funding assumptions for certain universal life and variable universal life products with secondary guarantees; (5) completed its periodic review and updated its long term mortality assumption for universal, variable universal and traditional life products; (6) updated the assumption for long term General Account spread and yield assumptions in the DAC amortization and loss recognition testing calculations for universal life, variable universal life and deferred annuity business lines; (7) updated our maintenance expense assumption for universal life and variable universal life products; and (8) implemented other actuarial assumption updates and model changes, resulting in the full release of the reserve. The net impact of assumption changes in 2017 increased Policyholders’ benefits by $277 million, decreased Amortization of DAC by $112 million, decreased Policy charges and fee income by $85 million, increased the fair value of our GMIB reinsurance asset by $504 million and decreased the fair value of the GMIBNLG liability by $457 million. This resulted in an increase in Income (loss) from operations, before income taxes of $711 million and increased Net income by approximately $462 million.
In 2016, the Company made several assumption updates and model changes, including the following: (1) updated the premium funding assumption used in setting variable life policyholder benefit reserves; (2) made changes in the model used in calculating premium loads, which increased interest sensitive life policyholder benefit reserves; (3) updated its mortality assumption for certain variable interest-sensitive life (“VISL”) products as a result of favorable mortality experience for some of its older products and unfavorable mortality experience on some of its newer products; and (4) updated the General Account spread and yield assumptions for certain VISL products to reflect lower expected investment yields. The net impact of assumption updates and model changes in 2016 decreased Policyholders’ benefits

by $117 million, increased the Amortization of DAC by $201 million, increased Policy charges and fee income by $54 million, decreased Income (loss) from operations, before income taxes of $30 million and decreased Net income by approximately $20 million.
Revision of Prior Year Financial Statements
During the fourth quarter of 2018, the Company identified certain cash flows that were incorrectly classified in the Company’s consolidated statements of cash flows. The Company has determined that these mis-classifications were not material to the financial statements of any period. However, in order to improve the consistency and comparability of the financial statements, management revised the consolidated statements of cash flows for the year ended December 31, 2017. See Note 23 for further information.
Reclassification of DAC Capitalization
During the fourth quarter of 2018, the Company revised the presentation of the capitalization of deferred policy acquisition costs (“DAC”) in the consolidated statements of income for all prior periods presented herein by netting the capitalized amounts within the applicable expense line items, such as Compensation and benefits, Commissions and distribution plan payments and Other operating costs and expenses. Previously, the Company had netted the capitalized amounts within the Amortization of deferred acquisition costs. There was no impact on Net income (loss) or Comprehensive income of this reclassification.
The reclassification adjustments for the years ended December 31, 2017 and 2016 are presented in the table below. Capitalization of DAC reclassified to Compensation and benefits, Commissions and distribution plan payments, and Other operating costs and expenses reduced the amounts previously reported in those expense line items, while the capitalization of DAC reclassified from the Amortization of deferred policy acquisition costs line item increases that expense line item.
Description
Effective Date and Method of Adoption
Effect on the Financial Statement or Other Significant Matters
This ASU provides targeted improvements to existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity. The ASU primarily impacts four key areas, including:
1. Measurement of the liability for future policy benefits for traditional and limited payment contracts. The ASU requires companies to review, and if necessary, update cash flow assumptions at least annually for non-participating traditional and limited-payment insurance contracts. The ASU also prescribes the discount rate to be used in measuring the liability for future policy benefits for traditional and limited payment long-duration contracts.

2. Measurement of MRBs. MRBs, as defined under the ASU, will encompass certain GMxB features associated with variable annuity products and other general account annuities with other than nominal market risk.

3. Amortization of deferred acquisition costs. The ASU simplifies the amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins, requiring such balances to be amortized on a constant level basis over the expected term of the contracts.

 4. Expanded footnote disclosures. The ASU requires additional disclosures including information about significant inputs, judgements, assumptions and methods used in measurement
In November 2020, the FASB issued ASU 2020-11 which deferred the effective date of the amendments in ASU 2018-12 for all insurance entities. ASU 2018-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is allowed.

For the liability for future policyholder benefits for traditional and limited payment contracts, companies can elect one of two adoption methods. Companies can either elect a modified retrospective transition method applied to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or a full retrospective transition method using actual historical experience information as of contract inception. The same adoption method must be used for deferred policy acquisition costs.

For MRBs, the ASU should be applied retrospectively as of the beginning of the earliest period presented.		The Company continues to progress with implementation efforts and the evaluation of the impact that adoption of this guidance will have on the Company’s consolidated financial statements. Due to its extensive nature, the adoption of the ASU is expected to have a significant impact on the Company’s consolidated financial statements, as well as systems, processes and controls. Effective January 1, 2023, the new guidance will be adopted using the modified retrospective approach, except for MRBs which will use the full retrospective approach.

The Company has created a governance framework and implementation plan to ensure timely adoption of the guidance. In preparation for implementation, the Company continues to refine key accounting policy decisions, modernize processes and update internal controls. These changes include modifications of actuarial valuation systems, data sourcing, analytical procedures and reporting processes.

The impact on total equity of applying this ASU is estimated to be less than the current amount of reported AOCI as of December 31, 2021. The majority of the total equity impact as of December 31, 2021 is expected to be reflected in AOCI due to decreases in the Company’s estimate of its non-performance risk on variable annuity guarantees accounted for as MRBs for the first time under the guidance. The estimated impact to the retained earnings element of total equity as of December 31, 2021, due to accounting for variable annuity guarantees as MRBs that are not currently measured at fair value, is mitigated by the Company’s present use of a near industry low interest rate assumption of 2.25% on GMIB business. Because movements in equity markets, interest rates and credit spreads are unpredictable and at times volatile, it is possible that the estimated effects of adoption could change materially between December 31, 2021 and January 1, 2023.
140
 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 payments328
 55
 140
 523
 347
 54
 135
 537
Other operating costs and expenses2
 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

3)    INVESTMENTS
Fixed Maturities
The following tables provide information relating to fixed maturities classified as AFS. As a result of the adoption of “Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01) on January 1, 2018 (see Note 2), equity securities are no longer classified and accounted for as available-for-sale securities.

194








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Available-for-Sale Securities by Classification
 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 agency14,004
 295
 470
 13,829
 —
States and political subdivisions415
 47
 1
 461
 —
Foreign governments524
 19
 13
 530
 —
Residential mortgage-backed (2)225
 10
 1
 234
 —
Asset-backed (3)612
 1
 12
 601
 2
Redeemable preferred stock449
 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 agency17,759
 1,000
 251
 18,508
 —
States and political subdivisions422
 67
 —
 489
 —
Foreign governments395
 29
 5
 419
 —
Residential mortgage-backed (2)797
 22
 1
 818
 —
Asset-backed (3)745
 5
 1
 749
 2
Redeemable preferred stock470
 43
 1
 512
 —
Total Fixed Maturities45,068
 2,197
 324
 46,941
 2
Equity securities188
 2
 —
 190
 —
Total at December 31, 2017$45,256
 $2,199
 $324
 $47,131
 $2
_____________
(1)Description
Corporate fixed maturities include both publicEffective Date and private issues.
Method of Adoption
Effect on the Financial Statement or Other Significant Matters
(2)Includes publicly traded agency pass-through securities and collateralized obligations.
ASU2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
(3)Includes credit-tranched securities collateralized by sub-prime mortgagesThe amendments in this ASU provide optional expedients and exceptions to contracts, hedging relationships, and other asset typestransactions affected by reference rate reform if certain criteria are met.  The amendments in this ASU apply only to contracts, hedging relationships, and credit tenant loans.other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.This ASU is effective as of March 12, 2020 through December 31, 2022. On December 15, 2021, the FASB tentatively approved deferring the sunset date of the guidance in Topic 848 to December 31, 2024.The Company is currently assessing the applicability of the optional expedients and exceptions provided under the ASU. Management is evaluating the impact that the adoption of this guidance will have on the Company’s consolidated financial statements.
(4)Amounts represent OTTI losses in AOCI, which were not included in income (loss) in accordance with current accounting guidance.

Investments
The carrying values of fixed maturities classified as AFS are reported at fair value. Changes in fair value are reported in OCI, net of allowance for credit losses, policy related amounts and deferred income taxes. Changes in credit losses are recognized in Investment gains (losses), net. The redeemable preferred stock investments that are reported in fixed maturities include REIT, perpetual preferred stock and redeemable preferred stock. These securities may not have a stated maturity, may not be cumulative and do not provide for mandatory redemption by the issuer.Effective January 1, 2021, the Company began classifying certain preferred stock as equity securities to better reflect the economics and nature of these securities. These preferred stock securities are reported in other equity investments.
The contractual maturitiesCompany determines the fair values of AFS fixed maturities and equity securities based upon quoted prices in active markets, when available, or through the use of alternative approaches when market quotes are not readily accessible or available. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment. The Company’s management, with the assistance of its investment advisors, evaluates AFS debt securities that experienced a decline in fair value below amortized cost for credit losses which are evaluated in accordance with the new financial instruments credit losses guidance. Integral to this review is an assessment made each quarter, on a security-by-security basis, by the IUS Committee, of various indicators of credit deterioration to determine whether the investment security has experienced a credit loss. This assessment includes, but is not limited to, consideration of the severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, and the financial strength, liquidity and continued viability of the issuer.
The Company recognizes an allowance for credit losses on AFS debt securities with a corresponding adjustment to earnings rather than a direct write down that reduces the cost basis of the investment, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Any improvements in estimated credit losses on AFS debt securities are recognized immediately in earnings. Management does not use the length of time a security has been in an unrealized loss position as a factor, either by itself or in combination with other factors, to conclude that a credit loss does not exist.
When the Company determines that there is more than 50% likelihood that it is not going to recover the principal and interest cash flows related to an AFS debt security, the security is placed on nonaccrual status and the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in a timely reversal of accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.

If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting allowance is recognized in income (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at December 31, 2018 are shownthe effective interest rate implicit in the table below. Bonds not duedebt security at a single maturitythe date have been included inof acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the table in the final yearamount and timing of maturity. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.recoveries. These assumptions and estimates require use of management
AXA
141
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.
Contractual MaturitiesWrite-offs of Available-for-Sale Fixed MaturitiesAFS debt securities are recorded when all or a portion of a financial asset is deemed uncollectible. Full or partial write-offs are recorded as reductions to the amortized cost basis of the AFS debt security and deducted from the allowance in the period in which the financial assets are deemed uncollectible. The Company elected to reverse accrued interest deemed uncollectible as a reversal of interest income. In instances where the Company collects cash that it has previously written off, the recovery will be recognized through earnings or as a reduction of the amortized cost basis for interest and principal, respectively.
Policy loans represent funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.
 Amortized Cost Fair Value
 (in millions)
December 31, 2018:   
Due in one year or less$2,598
 $2,603
Due in years two through five9,396
 9,444
Due in years six through ten16,501
 16,327
Due after ten years17,020
 16,624
Subtotal45,515
 44,998
Residential mortgage-backed securities225
 234
Asset-backed securities612
 601
Redeemable preferred stock449
 446
Total at December 31, 2018$46,801
 $46,279
Partnerships, investment companies and joint venture interests that the Company has control of and has an economic interest in or those that meet the requirements for consolidation under accounting guidance for consolidation of VIEs are consolidated. Those that the Company does not have control of and does not have a majority economic interest in and those that do not meet the VIE requirements for consolidation are reported on the equity method of accounting and are reported in other equity investments. The Company records its interests in certain of these partnerships on a month or one quarter lag.
Trading securities, which include equity securities and fixed maturities, are carried at fair value based on quoted market prices, with realized and unrealized gains (losses) reported in net investment income (loss) in the consolidated statements of income (loss).
The following table shows proceedscarrying values of certain fixed maturities are reported at fair value where the fair value option has been elected. The fair value option allows the Company to elect fair value as an alternative measurement for selected financial assets and financial liabilities not otherwise reported at fair value. Such elections have been made to help mitigate volatility in earnings that result from sales, grossdifferent measurement attributes. Electing the fair value option also allows the consistent accounting in net investment income (loss) for certain assets and liabilities. Changes in fair value of fixed maturities that have elected the fair value option are reflected in realized and unrealized gains (losses) from sales and OTTI for AFS fixed maturitiesreported in net investment income (loss) in the consolidated statements of income (loss).
Notes issued by consolidated variable interest entities represent notes issued by certain asset-backed investment vehicles, primarily CLOs, which we are required to consolidate. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs. The Company has elected the fair value option for the years ended December 31, 2018, 2017majority of these notes and 2016:has based the fair value on the corresponding debt security collateral. Changes in fair value are reported in net investment income (loss).
 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)
The following table sets forth the amount of credit loss impairments on AFS fixed maturities heldCOLI has been purchased by the Company and certain subsidiaries on the lives of certain key employees and the Company and these subsidiaries are named as beneficiaries under these policies. COLI is carried at the dates indicatedcash surrender value of the policies. As of December 31, 2021 and 2020, the corresponding changescarrying value of COLI was $1.0 billion and $992 million, respectively, and is reported in such amounts:
Fixed Maturities - Credit Loss Impairments
 2018 2017
 (in millions)
Balances at January 1,$(18) $(239)
Previously recognized impairments on securities that matured, paid, prepaid or sold2
 236
Recognized impairments on securities impaired to fair value this period (1)—
 —
Impairments recognized this period on securities not previously impaired(42) (14)
Additional impairments this period on securities previously impaired—
 (1)
Increases due to passage of time on previously recorded credit losses—
 —
Accretion of previously recognized impairments due to increases in expected cash flows—
 —
Balances at December 31,$(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.

Net unrealized investment gains (losses) on fixed maturities and equity securities classified as AFS are includedother invested assets in the consolidated balance sheets assheets.
Cash and cash equivalents includes cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid debt instruments purchased with an original maturity of three months or less. Due to the short-term nature of these investments, the recorded value is deemed to approximate fair value. Cash and securities segregated primarily includes U.S. Treasury Bills segregated by AB in a componentspecial reserve bank custody account for the exclusive benefit of AOCI. The table below presents these amounts asits brokerage customers under Rule 15c3-3 of the dates indicated:Exchange Act.
AXA
142
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Derivatives
Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by the Company include equity, currency, and interest rate futures, total return and/or other equity swaps, interest rate swaps and floors, swaptions, variance swaps and equity options, all of which may be exchange-traded or contracted in the OTC market. All derivative positions are carried in the consolidated balance sheets at fair value, generally by obtaining quoted market prices or through the use of valuation models.
 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
ChangesFreestanding derivative contracts are reported in the consolidated balance sheets either as assets within “other invested assets” or as liabilities within “other liabilities.” The Company nets the fair value of all derivative financial instruments with counterparties for which an ISDA Master Agreement and related CSA have been executed. All changes in the fair value of the Company’s freestanding derivative positions not designated to hedge accounting relationships, including net unrealized investmentreceipts and payments, are included in “net derivative gains (losses) recognized” without considering changes in the fair value of the economically associated assets or liabilities.
The Company has designated certain derivatives it uses to economically manage asset/liability risk in relationships which qualify for hedge accounting. To qualify for hedge accounting, we formally document our designation at inception of the hedge relationship as a cash flow, fair value or net investment hedge. This documentation includes our risk management objective and strategy for undertaking the hedging transaction. The Company identifies how the hedging instrument is expected to offset the designated risks related to the hedged item and the method that will be used to retrospectively and prospectively assess the hedge effectiveness. To qualify for hedge accounting, a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed and documented at inception and periodically throughout the life of the hedge accounting relationship.
The Company does not exclude any components of the hedging instrument from the effectiveness assessments and therefore does not separately measure or account for any excluded components of the hedging instrument.
While in cash flow hedge relationships, any periodic net receipts and payments from the hedging instrument are included in the income or expense line that the hedged item’s periodic income or expense is recognized. Other changes in the fair value of the hedging instrument while in a cash flow hedging relationship are reported within OCI. These amounts are deferred in AOCI include reclassification adjustmentsuntil they are reclassified to reflect amounts realized in Net income (loss). The reclassified amount offsets the effect of the cash flows on Net income (loss) in the same period when the hedged item affects earnings and on the same line as the hedged item.
We discontinue cash flow hedge accounting prospectively when the Company determines: (1) the hedging instrument is no longer highly effective in offsetting changes in the cash flow from the hedged risk, (2) the hedged item is no longer probable of occurring within two months of their forecast, or (3) the hedging instrument is otherwise redesignated from the hedging relationship. Changes in the fair value of the derivative after discontinuation of cash flow hedge accounting are accounted for as freestanding derivative positions not designated to hedge accounting relationships unless and until the current period that had been part of OCI in earlier periods. The tables that follow below presentderivative is redesignated to a roll-forward of net unrealized investment gains (losses) recognizedhedge accounting relationship. When cash flow hedge accounting is discontinued the amounts deferred in AOCI split between amountsduring the hedge relationship continue to be deferred in AOCI, as long as the hedged items continue to be probable of occurring within two months of their forecast, until the hedged item affects Net income (loss). Any amount deferred in AOCI for hedged items which are no longer probable of occurring within two months of their forecast will be reclassified to “net derivative gains (losses)” at that time.
The Company is a party to financial instruments and other contracts that contain “embedded” derivative instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are “clearly and closely related” to the economic characteristics of the remaining component of the “host contract” and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. Once those criteria are met the resulting embedded derivative is bifurcated from the host contract, carried in the consolidated balance sheets at fair value, and changes in its fair value are recognized immediately and captioned in the consolidated statements of income (loss) according to the nature of the related host contract. For certain financial instruments that contain an embedded derivative that otherwise would need to fixed maturities on which an OTTI loss has been recognized,be bifurcated and all other:
Net Unrealized Gains (Losses) on Fixed Maturities with OTTI Lossesreported at fair value, the Company instead may elect to carry the entire instrument at fair value.
143
 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.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Mortgage Loans on Real Estate
All Other Net Unrealized Investment Gains (Losses)Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and the allowance for credit losses. The Company calculates the allowance for credit losses in AOCIaccordance with the CECL model in order to provide for the risk of credit losses in the lending process.
Expected credit losses for loans with similar risk characteristics are estimated on a collective (i.e., pool) basis in order to meet CECL’s risk of loss concept which requires the Company to consider possibilities of loss, even if remote.
 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 period1,329
 —
 —
 —
 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
For collectively evaluated mortgages, the Company estimates the allowance for credit losses based on the amortized cost basis of its mortgages over their expected life using a PD / LGD model. The PD/LGD model incorporates the Company’s reasonable and supportable forecast of macroeconomic information over a specified period. The length of the reasonable and supportable forecast period is reassessed on a quarterly basis and may be adjusted as appropriate over time to be consistent with macroeconomic conditions and the environment as of the reporting date. For periods beyond the reasonable and supportable forecast period, the model reverts to historical loss information. The PD and LGD are estimated at the loan-level based on loans’ current and forecasted risk characteristics as well as macroeconomic forecasts. The PD is estimated using both macroeconomic conditions as well as individual loan risk characteristics including LTV ratios, DSC ratios, seasoning, collateral type, geography, and underlying credit. The LGD is driven primarily by the type and value of collateral, and secondarily by expected liquidation costs and time to recovery.
______________
(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.

For individually evaluated mortgages, the Company continues to recognize a valuation allowance on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value.
The following tables discloseCECL model is configured to the Company’s specifications and takes into consideration the detailed risk attributes of each discrete loan in the mortgage portfolio which include, but are not limited to the following:
•LTV ratio – Derived from current loan balance divided by the fair values and gross unrealized lossesmarket value of the 1,700property. An LTV ratio in excess of 100% indicates an underwater mortgage.
•DSC 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.
•Other – Any other factors such as maturity, borrower/tenant related issues, payment status, property condition, or current economic conditions may call into question the performance of the loan.
Mortgage loans that do not share similar risk characteristics with other loans in the portfolio are individually evaluated quarterly by the Company’s IUS Committee. The allowance for credit losses on these individually evaluated mortgages is a loan-specific reserve as a result of the loan review process that is recorded based on the present value of expected future cash flows discounted at December 31, 2018 and the 752 issues at December 31, 2017loan’s effective interest rate or based on the fair value of fixed maturities thatthe collateral. The individually assessed allowance for mortgage loans can increase or decrease from period to period based on such factors.
Individually assessed loans may include, but are not deemedlimited to, be other-than-temporarily impaired, aggregated by investment categorymortgages that have deteriorated in credit quality such as a TDR and length of time that individual securitiesreasonably expected TDRs, mortgages for which foreclosure is probable, and mortgages which have been classified as “potential problem” or “problem” loans within the Company’s IUS Committee processes as described below.
Within the IUS process, commercial mortgages 60 days or more past due and agricultural mortgages 90 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgage loans. Based on its monthly monitoring of mortgages, a continuous unrealized loss positionclass of potential problem mortgage loans are also identified, consisting of mortgage loans not currently classified as problem mortgage loans but for which management has doubts as to the specified periods atability of the dates indicated:borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being modified. The decision whether to classify a performing mortgage loan as a potential problem
AXA
144
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

involves judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
 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 agency1,077
 53
 4,306
 417
 5,383
 470
States and political subdivisions—
 —
 19
 1
 19
 1
Foreign governments109
 3
 76
 10
 185
 13
Residential mortgage-backed—
 —
 29
 1
 29
 1
Asset-backed563
 11
 13
 1
 576
 12
Redeemable preferred stock165
 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 agency2,718
 6
 4,506
 245
 7,224
 251
States and political subdivisions20
 —
 —
 —
 20
 —
Foreign governments11
 —
 73
 5
 84
 5
Residential mortgage-backed62
 —
 76
 1
 138
 1
Asset-backed15
 1
 12
 —
 27
 1
Redeemable preferred stock10
 —
 13
 1
 23
 1
Total$5,739
 $30
 $6,011
 $294
 $11,750
 $324
The Company’s investments in fixed maturities do not include concentrations of credit risk of any single issuer greater than 10%Individually assessed mortgage loans without provision for losses are mortgage loans where the fair value of the consolidated equitycollateral or the net present value of the Company, other than securitiesexpected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the U.S. government, U.S. government agencies, and certain securities guaranteed byloan at the U.S. government. The Company maintains a diversified portfoliointerest rate used to discount the cash flows.
Mortgage loans are placed on nonaccrual status once management believes the collection of corporate securities across industries and issuers and doesaccrued interest is not have exposure to any single issuer in excess of 0.7% of total investments. The largest exposures to a single issuer of corporate securities held at December 31, 2018 and 2017 were $226 million and $207 million, respectively.
Corporate high yield securities, consisting primarily of public high yield bonds,probable. Once mortgage loans are classified as other than investment grade bynonaccrual mortgage loans, interest income is recognized under the various rating agencies, i.e., a rating below Baa3/BBB-cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the National Associationmortgage loan has been restructured to where the collection of Insurance Commissioners (“NAIC”) designationinterest is considered likely. The Company charges off loan balances and accrued interest that are deemed uncollectible.
The components of 3 (medium investment grade), 4amortized cost for mortgage loans on the consolidated balance sheets excludes accrued interest amounts because the Company presents accrued interest receivables within other assets. Once mortgage loans are placed on nonaccrual status, the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in the timely reversal of accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.
Troubled Debt Restructuring
The Company invests in commercial and agricultural mortgage loans included in the balance sheet as mortgage loans on real estate and privately negotiated fixed maturities included in the balance sheet as fixed maturities AFS. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a TDR has occurred. A modification is a TDR when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or 5 (below investment grade) or 6 (in or near default). At December 31, 2018 and 2017, respectively, approximately $1,268 million and $1,372 million, or 2.7% and 3.0%,maturity amount of the $46,801 milliondebt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and $45,068 million aggregate amortized costextent of the concession granted in determining any impairment or changes in the specific credit allowance recorded in connection with the TDR. A credit allowance may have been recorded prior to the period when the loan is modified in a TDR. Accordingly, the carrying value (net of the allowance) before and after modification through a TDR may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.
Net Investment Income (Loss), Investment Gains (Losses) Net and Unrealized Investment Gains (Losses)
Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of revenue. Changes in the allowance for credit losses are included in investment gains (losses), net.
Realized and unrealized holding gains (losses) on trading and equity securities are reflected in net investment income (loss).
Unrealized investment gains (losses) on fixed maturities designated as AFS held by the Company were consideredare accounted for as a separate component of AOCI, net of related deferred income taxes, as are amounts attributable to be other than investment grade. These securities had netcertain pension operations, Closed Block’s policyholders’ dividend obligation, insurance liability loss recognition, DAC related to UL policies, investment-type products and participating traditional life policies.
Changes in unrealized gains (losses) reflect changes in fair value of only those fixed maturities classified as AFS and gainsdo not reflect any change in fair value of $(31) millionpolicyholders’ account balances and $5 million at December 31, 2018 and 2017, respectively.future policy benefits.
AtDecember 31, 2018 and 2017, respectively, the $922 million and $294 millionFair Value of gross unrealized losses of twelve months or more were concentrated in corporate and U.S. Treasury, government and agency securities.In accordance with the policy described inFinancial Instruments
See Note 2, the Company concluded that an adjustment to income for OTTI for these securities was not warranted at either December 31, 2018 or 2017. At December 31, 2018, the Company did not intend to sell the securities nor will it likely be required to dispose8 of the securities beforeNotes to these Consolidated Financial Statements for additional information regarding determining the anticipated recoveryfair value of their remaining amortized cost basis.financial instruments.
The Company does not originate, purchase or warehouse residential mortgagesRecognition of Insurance Income and is notRelated Expenses
Deposits related to UL and investment-type contracts are reported as deposits to policyholders’ account balances. Revenues from these contracts consist of fees assessed during the period against policyholders’ account balances for mortality charges, policy administration charges and surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the mortgage servicing business.
At December 31, 2018, the carrying valueperiod in excess of fixed maturities that were non-income producing for the twelve months preceding that date was $2 million.related policyholders’ account balances.
AXA
145
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Premiums from participating and non-participating traditional life and annuity policies with life contingencies generally are recognized in income when due. Benefits and expenses are matched with such income so as to result in the recognition of profits over the life of the contracts. This match is accomplished by means of the provision for liabilities for future policy benefits and the deferral and subsequent amortization of DAC.
AtFor contracts with a single premium or a limited number of premium payments due over a significantly shorter period than the total period over which benefits are provided, premiums are recorded as revenue when due with any excess profit deferred and recognized in income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over the period to which the premiums relate in proportion to the amount of insurance protection provided.
DAC
Acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business, reflecting incremental direct costs of contract acquisition with independent third parties or employees that are essential to the contract transaction, as well as the portion of employee compensation, including payroll fringe benefits and other costs directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts including commissions, underwriting, agency and policy issue expenses, are deferred. In each reporting period, DAC amortization, net of the accrual of imputed interest on DAC balances, is recorded to amortization of deferred policy acquisition costs. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. The determination of DAC, including amortization and recoverability estimates, is based on models that involve numerous assumptions and subjective judgments, including those regarding policyholder behavior, surrender and withdrawal rates, mortality experience, and other inputs including financial market volatility and market rates of return.
After the initial establishment of reserves, premium deficiency and loss recognition tests are performed each period end using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to earnings.
Amortization Policy
In accordance with the guidance for the accounting and reporting by insurance enterprises for certain long-duration contracts and participating contracts and for realized gains and losses from the sale of investments, current and expected future profit margins for products covered by this guidance are examined regularly in determining the amortization of DAC.
DAC associated with certain variable annuity products is amortized based on estimated assessments, with DAC on the remainder of variable annuities, UL and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Accounts fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, embedded derivatives and changes in the reserve of products that have indexed features such as SCS IUL and MSO, updated at the end of each accounting period. When estimated gross profits are expected to be negative for multiple years of a contract life, DAC is amortized using the present value of estimated assessments. The effect on the amortization of DAC of revisions to estimated gross profits or assessments is reflected in earnings (loss) in the period such estimated gross profits or assessments are revised. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
A significant assumption in the amortization of DAC on variable annuities and, to a lesser extent, on variable and interest-sensitive life insurance relates to projected future separate account performance. Management sets estimated future gross profit or assessment assumptions related to separate account performance using a long-term view of expected average market returns by applying a RTM approach, a commonly used industry practice. This future return approach influences the projection of fees earned, as well as other sources of estimated gross profits. Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned
146
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
resulting in higher expected future gross profits and lower DAC amortization for the period. The opposite occurs when returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance. Management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. As of December 31, 20182021, the average gross short-term and 2017, respectively,long-term annual return estimate on variable and interest-sensitive life insurance and variable annuities was 7.0% (4.7% net of product weighted average Separate Accounts fees), and the gross maximum and minimum short-term annual rate of return limitations were 15.0% (12.7% net of product weighted average Separate Accounts fees and Investment Advisory fees) and 0.0% ((2.3%) net of product weighted average Separate Accounts fees and Investment Advisory fees), respectively. The maximum duration over which these rate limitations may be applied is five years. This approach will continue to be applied in future periods. These assumptions of long-term growth are subject to assessment of the reasonableness of resulting estimates of future return assumptions.
In addition, projections of future mortality assumptions related to variable and interest-sensitive life products are based on a long-term average of actual experience. This assumption is updated periodically to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC amortization. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization.
Other significant assumptions underlying gross profit estimates for UL and investment type products relate to contract persistency and General Account investment spread.
For participating traditional life policies (substantially all of which are in the Closed Block), DAC is amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield. As of December 31, 2021, the average rate of assumed investment yields, excluding policy loans, for the Company was 4.5% grading to 4.3% in 2026. Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends. The effect on the accumulated amortization of DAC of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date. Many of the factors that affect gross margins are included in the determination of the Company’s dividends to these policyholders. DAC adjustments related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in policyholders’ benefits for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.
DAC associated with non-participating traditional life policies are amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts. Deviations from estimated experience are reflected in income (loss) in the period such deviations occur. For these contracts, the amortization periods generally are for the total life of the policy. DAC related to these policies are subject to recoverability testing as part of the Company’s premium deficiency testing. If a premium deficiency exists, DAC are reduced by the amount of the deficiency or to zero through a charge to current period earnings (loss). If the deficiency exceeds the DAC balance, the reserve for future policy benefits is increased by the excess, reflected in earnings (loss) in the period such deficiency occurs.
For some products, policyholders can elect to modify product benefits, features, rights or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. These transactions are known as internal replacements. If such modification substantially changes the contract, the associated DAC is written off immediately through income and any new deferrable costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed.
Reinsurance
For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Cessions under
147
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
reinsurance agreements do not discharge the Company’s obligations as the primary insurer. The Company reviews all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims.
For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid (received), and the liabilities ceded (assumed) related to the underlying contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is recorded as an adjustment to DAC and recognized as a component of other expenses on a basis consistent with the way the acquisition costs on the underlying reinsured contracts would be recognized. Subsequent amounts paid (received) on the reinsurance of in-force blocks, as well as amounts paid (received) related to new business, are recorded as premiums ceded (assumed); and amounts due from reinsurers (amounts due to reinsurers) are established.
Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance.
Premiums, policy charges and fee income, and policyholders’ benefits include amounts assumed under reinsurance agreements and are net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in other revenues. With respect to GMIBs, a portion of the directly written GMIBs are accounted for as insurance liabilities, but the associated reinsurance agreements contain embedded derivatives as they are net settled. These embedded derivatives are included in GMIB reinsurance contract asset, at fair value with changes in estimated fair value reported in net derivative gains (losses). Separate Account liabilities that have been ceded on a Modified coinsurance (Modco) basis, receivable and payable have been recognized on a net basis as right of offset exists.
If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within other assets. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other income or other operating costs and expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate.
For reinsurance contracts other than those accounted for as derivatives, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities.
Policyholder Bonus Interest Credits
Policyholder bonus interest credits are offered on certain deferred annuity products in the form of either immediate bonus interest credited or enhanced interest crediting rates for a period of time. The interest crediting expense associated with these policyholder bonus interest credits is deferred and amortized over the lives of the underlying contracts in a manner consistent with the amortization of DAC. Unamortized balances are included in other assets in the consolidated balance sheets and amortization is included in interest credited to policyholders’ account balances in the consolidated statements of income (loss).
Policyholders’ Account Balances and Future Policy Benefits and Other Policyholders’ Liabilities
Policyholders’ account balances relate to contracts or contract features where the Company has no significant insurance risk. This liability represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date.
For participating traditional life insurance policies, future policy benefit liabilities are calculated using a net level premium method on the basis of actuarial insurance assumptions equal to guaranteed mortality and dividend fund interest rates. The liability for annual dividends represents the accrual of annual dividends earned. Terminal dividends are accrued in proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy benefit liabilities are estimated using a net level premium method on the basis of actuarial assumptions as to mortality, persistency and interest established at policy issue. Assumptions established at policy issue as to mortality and persistency are based on the Company’s experience
148
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
that, together with interest and expense assumptions, includes a margin for adverse deviation. Benefit liabilities for traditional annuities during the accumulation period are equal to accumulated policyholders’ fund balances and, after annuitization, are equal to the present value of expected future payments. Interest rates used in establishing such liabilities range from 3.5% to 7.3% (weighted average of 5.0%) for approximately 99.4% of life insurance liabilities and from 1.5% to 5.4% (weighted average of 3.5%) for annuity liabilities.
Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. While management believes its DI reserves have been calculated on a reasonable basis and are adequate, there can be no assurance reserves will be sufficient to provide for future liabilities.
Obligations arising from funding agreements are also reported in policyholders’ account balances in the consolidated balance sheets. As a member of the FHLB, the Company has access to collateralized borrowings. The Company may also issue funding agreements to the FHLB. Both the collateralized borrowings and funding agreements would require the Company to pledge qualified mortgage-backed assets and/or government securities as collateral.
The Company has issued and continues to offer certain variable annuity products with GMDB and/or contain a GMLB (collectively, the “GMxB features”) which, if elected by the policyholder after a stipulated waiting period from contract issuance, guarantees a minimum lifetime annuity based on predetermined annuity purchase rates that may be in excess of what the contract account value can purchase at then-current annuity purchase rates. This minimum lifetime annuity is based on predetermined annuity purchase rates applied to a GMIB base. The Company previously issued certain variable annuity products with GIB, GWBL, GMWB, and GMAB features. The Company has also assumed reinsurance for products with GMxB features.
Reserves for products that have GMIB features, but do not have no-lapse guarantee features, and products with GMDB features are determined by estimating the expected value of death or income benefits in excess of the projected contract accumulation value and recognizing the excess over the estimated life based on expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. These reserves are recorded within future policy benefits and other policyholders’ liabilities. The determination of this estimated future policy benefits liability is based on models that involve numerous assumptions and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates. Assumptions regarding separate account performance used for purposes of this calculation are set using a long-term view of expected average market returns by applying a RTM approach, consistent with that used for DAC amortization. There can be no assurance that actual experience will be consistent with management’s estimates.
Products that have a GMIB feature with a no-lapse guarantee rider (“GMIBNLG”), GIB, GWBL, GMWB and GMAB features and the assumed products with GMIB features (collectively “GMxB derivative features”) are considered either freestanding or embedded derivatives and discussed below under (“Embedded and Freestanding Insurance Derivatives”).
After the initial establishment of reserves, premium deficiency and loss recognition tests are performed each period end using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to earnings. Premium deficiency reserves are recorded for the group single premium annuity business, certain interest-sensitive life contracts, structured settlements, individual disability income and major medical. Additionally, in certain instances the policyholder liability for a particular line of business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years. This pattern of profits followed by losses is exhibited in our VISL business and is generated by the cost structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges. We accrue for these PFBL using a dynamic approach that changes over time as the projection of future losses change.
149
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Policyholders’ Dividends
The amount of policyholders’ dividends to be paid (including dividends on policies included in the Closed Block) is determined annually by the board of directors of the issuing insurance company. The aggregate amount of policyholders’ dividends is related to actual interest, mortality, morbidity and expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by the Company.
Embedded and Freestanding Insurance Derivatives
Reserves for products or features within products that are considered either embedded or freestanding derivatives are measured at estimated fair value separately from the host variable annuity product, with changes in estimated fair value reported in net derivative gains (losses). The estimated fair values of these derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees attributable to the guarantee. The projections of future benefits and future fees require capital markets and actuarial assumptions, including expectations concerning policyholder behavior. A risk-neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates.
Additionally, the Company cedes and assumes reinsurance of products with GMxB features, which are considered either an embedded or freestanding derivative, and measured at fair value. The GMxB reinsurance contract asset and liabilities’ fair values reflect the present value of reinsurance premiums, net of recoveries, and risk margins over a range of market-consistent economic scenarios.
Changes in the fair value of embedded and freestanding derivatives are reported in net derivative gains (losses). Embedded derivatives in direct and assumed reinsurance contracts are reported in future policyholders’ benefits and other policyholders’ liabilities. Amounts due from reinsurers contains the reinsurance of underlying GMIB contracts that are embedded derivatives, so the reinsurance has the same risk attributes as the underlying contracts and is an embedded derivatives carried at fair value. There are also embedded derivatives reported in the GMIB reinsurance contract asset related to ceded reinsurance contracts that are net settled, recorded at fair value in the consolidated balance sheets.
Embedded derivatives fair values are determined based on the present value of projected future benefits minus the present value of projected future fees. At policy inception, a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits is attributed to the embedded derivative. The percentage of fees included in the fair value measurement is locked-in at inception. Fees above those amounts represent “excess” fees and are reported in policy charges and fee income.
Separate Accounts
Generally, Separate Accounts established under New York State and Arizona State Insurance Law are not chargeable with liabilities that arise from any other business of the Company. Separate Accounts assets are subject to General Account claims only to the extent Separate Accounts assets exceed separate accounts liabilities. Assets and liabilities of the Separate Account represent the net deposits and accumulated net investment earnings (loss) less fees, held primarily for the benefit of policyholders, and for which the Company does not bear the investment risk. Separate Accounts assets and liabilities are shown on separate lines in the consolidated balance sheets. Assets held in Separate Accounts are reported at quoted market values or, where quoted values are not readily available or accessible for these securities, their fair value measures most often are determined through the use of model pricing that effectively discounts prospective cash flows to present value using appropriate sector-adjusted credit spreads commensurate with the security’s duration, also taking into consideration issuer-specific credit quality and liquidity. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to policyholders of such Separate Accounts are offset within the same line in the consolidated statements of income (loss).
Deposits to Separate Accounts are reported as increases in Separate Accounts assets and liabilities and are not reported in the consolidated statements of income (loss). Mortality, policy administration and surrender charges on all policies including those funded by Separate Accounts are included in revenues.
The Company reports the General Account’s interests in Separate Accounts as trading securities, at fair value, in the consolidated balance sheets.
150
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Leases
The Company does not record leases with an initial term of 12 months or less in its consolidated balance sheets, but instead recognizes lease expense for these leases on a straight-line basis over the lease term. For leases with a term greater than one year, the Company records in its consolidated balance sheets at the time of lease commencement or modification a RoU operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the consolidated statements of income (loss) over the lease term on a straight-line basis. RoU operating lease assets represent the Company’s right to use an underlying asset for the lease term and RoU operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Broker-Dealer Revenues, Receivables and Payables
Equitable Advisors and certain of the Company’s other subsidiaries provide investment management, brokerage and distribution services for affiliates and third parties. Third-party revenues earned from these services are reported in other income in the Company’s consolidated statement of income (loss).
Receivables from and payables to clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral for receivables; such collateral is not reflected in the consolidated financial statements.
Goodwill and Other Intangible Assets
Goodwill recorded by the Company represents the excess of purchase price over the estimated fair value of identifiable net assets of companies acquired in a business combination and relates principally to the acquisition of SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc. (“Bernstein Acquisition”) and the purchase of AB Units. The Company tests goodwill for recoverability each annual reporting period at December 31 and at interim periods if facts or circumstances are indicative of potential impairment.
Starting as of June 30, 2020, the Company changed its measurement of the fair value of its Investment Management and Research reporting unit from a discounted cash flow valuation technique to a market valuation approach. Under the market valuation approach, the fair value of the Company’s trading account securitiesreporting unit is based on its adjusted market valuation assuming a control premium. The Company determined that this valuation technique provided a more exact determination of fair value for the reporting unit and was $16,017 million and $14,170 million. Alsoapplied during its annual testing for goodwill recoverability at December 31, 20182021 and 2017,2020.
The Company’s intangible assets primarily relate to the Bernstein Acquisition and purchases of AB Units and reflect amounts assigned to acquired investment management contracts based on their estimated fair values at the time of acquisition, less accumulated amortization. These intangible assets generally are amortized on a straight-line basis over their estimated useful life, ranging from six to twenty years. All intangible assets are periodically reviewed for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value exceeds fair value, impairment tests are performed to measure the amount of the impairment loss, if any.
Deferred Sales Commissions, Net
Commissions paid to financial intermediaries in connection with the sale of shares of open-end AB sponsored mutual funds sold without a front-end sales charge (“back-end load shares”) are capitalized as deferred sales commissions and amortized over periods not exceeding five and one-half years for U.S. fund shares and four years for non-U.S. fund shares, the periods of time during which the deferred sales commissions are generally recovered. These commissions are recovered from distribution services fees received from those funds and from CDSC received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions of unamortized deferred sales commissions when received. Since January 31, 2009, AB sponsored U.S. mutual funds have not offered back-end load shares to new investors.
Management periodically reviews the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If these factors indicate impairment in value, a comparison is made of the carrying value to the undiscounted cash flows expected to be generated by the asset over its remaining life. If it is determined the deferred sales commission asset is not fully recoverable, the asset will be deemed impaired and a loss will be recorded in the amount by which the recorded amount of the asset exceeds its estimated fair value.
151
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2021 and 2020, respectively, trading account securities included the General Account’s investment in Separate Accounts which had carrying values of $49net deferred sales commissions from AB totaled $75 million and $50$64 million and are included within other assets in the consolidated balance sheets. The estimated amortization expense of deferred sales commissions, based on the December 31, 2021 net asset balance for each of the next four years is $35 million, $26 million, $13 million and $1 million. The Company tests the deferred sales commission asset for impairment quarterly by comparing undiscounted future cash flows to the recorded value, net of accumulated amortization. Each quarter, significant assumptions used to estimate the future cash flows are updated to reflect management’s consideration of current market conditions on expectations made with respect to future market levels and redemption rates. As of December 31, 2021 and 2020, the Company determined that the deferred sales commission asset was not impaired.
Capitalized Computer Software and Hosting Arrangements
Capitalized computer software and hosting arrangements include certain internal and external costs used to implement internal-use software and cloud computing hosting arrangements. These capitalized computer costs are included in other assets in the consolidated balance sheets and amortized on a straight-line basis over the estimated useful life of the software or term of the hosting arrangement that ranges between three and five years. Capitalized amounts are periodically tested for impairment in accordance with the guidance on impairment of long-lived assets. An immediate charge to earnings is recognized if capitalized computer costs no longer are deemed to be recoverable. In addition, service potential is periodically reassessed to determine whether facts and circumstances have compressed the software’s useful life or a significant change in the term of the hosting arrangement such that acceleration of amortization over a shorter period than initially determined would be required.
Capitalized computer software and hosting arrangements, net of accumulated amortization, amounted to $193 million and $191 million as of December 31, 2021 and 2020, respectively. Amortization of capitalized computer software and hosting arrangements in 2021, 2020 and 2019 was $57 million, $60 million and $52 million, respectively, recorded in other operating costs and expenses in the consolidated statements of income (loss).
Short-term and Long-term Debt
Liabilities for short-term and long-term debt are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium and debt issue costs. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Interest expense is generally presented within interest expense in the consolidated statements of income (loss). Short-term debt represents debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. See Note 12 of the Notes to these Consolidated Financial Statements for additional information regarding short-term and long-term debt.
Income Taxes
The Company and certain of its consolidated subsidiaries and affiliates file a consolidated federal income tax return. The Company provides for federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income tax assets and liabilities are recognized based on the difference between financial statement carrying amounts and income tax bases of assets and liabilities using enacted income tax rates and laws. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets will not be realized.
Under accounting for uncertainty in income taxes guidance, the Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the consolidated financial statements. Tax positions are then measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement.
ABLP is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, ABLP is subject to a 4.0% New York City unincorporated business tax. AB Holding is subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. Domestic corporate subsidiaries of AB are subject to federal, state and local income taxes. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located.
152
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Recognition of Investment Management and Service Fees and Related Expenses
Investment management, advisory and service fees
Investment management and service fees principally include the Investment Management and Research segment’s investment advisory and service fees, distribution revenues and institutional research services revenue. Investment advisory and service base fees, generally calculated as a percentage, referred to as BPs, of assets under management, are recorded as revenue as the related services are performed. Certain investment advisory contracts, including those associated with hedge funds, provide for a performance-based fee, in addition to or in lieu of a base fee which is calculated as either a percentage of absolute investment results or a percentage of the investment results in excess of a stated benchmark over a specified period of time.
Investment management and administrative service fees are also earned by EIM and EIMG and reported in the Individual Retirement, Group Retirement and Protection Solutions segments as well as certain asset-based fees associated with insurance contracts.
AB provides asset management services by managing customer assets and seeking to deliver returns to investors. Similarly, EIM and EIMG provides investment management and administrative services, such as fund accounting and compliance services, to EQ Premier VIP Trust, EQAT and 1290 Funds as well as two private investment trusts established in the Cayman Islands, AXA Allocation Funds Trust and AXA Offshore Multimanager Funds Trust (collectively, the “Other AXA Trusts”). The contracts supporting these revenue streams create a distinct, separately identifiable performance obligation for each day the assets are managed for the performance of a series of services that are substantially the same and have the same pattern of transfer to the customer. Accordingly, these investment management, advisory, and administrative service base fees are recorded over time as services are performed and entitle the Company to variable consideration. Base fees, generally calculated as a percentage of AUM, are recognized as revenue at month-end when the transaction price no longer is variable and the value of the consideration is determined. These fees are not subject to claw back and there is minimal probability that a significant reversal of the revenue recorded will occur.
Certain investment advisory contracts of AB, including those associated with hedge funds or other alternative investments, provide for a performance-based fee (including carried interest), in addition to a base advisory fee, calculated either as a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. These performance-based fees are forms of variable consideration and, therefore, are excluded from the transaction price until it becomes probable there will not be significant reversal of the cumulative revenue recognized. At each reporting date, the Company evaluates constraining factors surrounding the variable consideration to determine the extent to which, if any, revenues associated with the performance-based fee can be recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include contractual claw-back provisions, the length of time of the uncertainty, the number and range of possible amounts, the probability of significant fluctuations in the fund’s market value and the level in which the fund’s value exceeds the contractual threshold required to earn such a fee and the materiality of the amount being evaluated.
Sub-advisory and sub-administrative expenses associated with these services are calculated and recorded as the related services are performed in other operating costs and expense in the consolidated statements of income (loss) as the Company is acting in a principal capacity in these transactions and, as such, reflects these revenues and expenses on a gross basis.
Research services
Research services revenue principally consists of brokerage transaction charges received by SCB LLC, SCBL and AB’s other sell side subsidiaries for providing equity research services to institutional clients. Brokerage commissions for trade execution services and related expenses are recorded on a trade-date basis when the performance obligations are satisfied. Generally, the transaction price is agreed upon at the point of each trade and based upon the number of shares traded or the value of the consideration traded. Research revenues are recognized when the transaction price is quantified, collectability is assured and significant reversal of such revenue is not probable.
Distribution services
Revenues from distribution services include fees received as partial reimbursement of expenses incurred in connection with the sale of certain AB sponsored mutual funds and the 1290 Funds and for the distribution primarily of EQAT and EQ Premier VIP Trust shares to separate accounts in connection with the sale of variable life and annuity contracts. The amount and timing of revenues recognized from performance of these distribution services often is
153
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
dependent upon the contractual arrangements with the customer and the specific product sold as further described below.
Most open-end management investment companies, such as U.S. funds and the EQAT and EQ Premier VIP Trusts and the 1290 Funds, have adopted a plan under Rule 12b-1 of the Investment Company Act that allows for certain share classes to pay out of assets, distribution and service fees for the distribution and sale of its shares (“12b-1 Fees”). These open-end management investment companies have such agreements with the Company, and the Company has selling and distribution agreements pursuant to which it pays sales commissions to the financial intermediaries that distribute the shares. These agreements may be terminated by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of shares.
The Company records 12b-1 fees monthly based upon a percentage of the NAV of the funds. At month-end, the variable consideration of the transaction price is no longer constrained as the NAV can be calculated and the value of consideration is determined. These services are separate and distinct from other asset management services as the customer can benefit from these services independently of other services. The Company accrues the corresponding 12b-1 fees paid to sub-distributors monthly as the expenses are incurred. The Company is acting in a principal capacity in these transactions; as such, these revenues and expenses are recorded on a gross basis in the consolidated statements of income (loss).
AB sponsored mutual funds offer back-end load shares in limited instances and charge the investor a CDSC if the investment is redeemed within a certain period. The variable consideration for these contracts is contingent upon the timing of the redemption by the investor and the value of the sales proceeds. Due to these constraining factors, the Company excludes the CDSC fee from the transaction price until the investor redeems the investment. Upon redemption, the cash consideration received for these contractual arrangements is recorded as a reduction of unamortized deferred sales commissions.
AB’s Luxembourg subsidiary, the management company for most of its non-U.S. funds, earns a management fee which is accrued daily and paid monthly, at an annual rate, based on the average daily net assets of the fund. With respect to certain share classes, the management fee also may contain a component paid to distributors and other financial intermediaries and service providers to cover shareholder servicing and other administrative expenses (also referred to as an “All-in-Fee”). Based on the conclusion that asset management is distinct from distribution, the Company allocates a portion of the investment and advisory fee to distribution revenues for the servicing component based on standalone selling prices.
Other revenues
Also reported as investment management and service fees in the Company’s consolidated statements of income (loss) are other revenues from contracts with customers, primarily consisting of shareholder servicing fees, mutual fund reimbursements and other brokerage income.
Shareholder services, including transfer agency, administration and record-keeping are provided by AB to company-sponsored mutual funds. The consideration for these services is based on a percentage of the NAV of the fund or a fixed-fee based on the number of shareholder accounts being serviced. The revenues are recorded at month-end when the constraining factors involved with determining NAV or the numbers of shareholders’ accounts are resolved.
Other income
Revenues from contracts with customers reported as other income in the Company’s consolidated statements of income (loss) primarily consist of advisory account fees and brokerage commissions from the Company’s broker-dealer operations and sales commissions from the Company’s general agents for the distribution of non-affiliate insurers’ life insurance and annuity products. These revenues are recognized at month-end when constraining factors, such as AUM and product mix, are resolved and the transaction pricing no longer is variable such that the value of consideration can be determined.
Mortgage Loans
The payment termsmortgage portfolio primarily consists of commercial and agricultural mortgage loans. The investment strategy for the mortgage loan portfolio emphasizes diversification by property type and geographic location with a primary focus on asset quality. The tables below show the breakdown of the amortized cost of the General Account’s investments in mortgage loans by geographic region and property type as of the dates indicated.
Mortgage Loans by Region and Property Type
 December 31, 2021December 31, 2020
 
Amortized
Cost
% of Total
Amortized
Cost
% of Total
(in millions)
By Region:
U.S. Regions:
Pacific$4,297 30 %$3,912 30 %
Middle Atlantic3,441 24 3,662 28 
South Atlantic1,982 14 1,290 10 
East North Central1,103 8 1,122 8 
Mountain978 7 1,026 8 
West North Central834 6 875 7 
West South Central609 5 690 5 
New England579 4 511 3 
East South Central146 1 152 1 
Total U.S.$13,969 99 %$13,240 100 %
Other Regions:
Europe$126 1 %$— — %
Total Other$126 1 $— — 
Total Mortgage Loans$14,095 100 %$13,240 100 %
By Property Type:
Office$3,944 28 %$4,131 31 %
Multifamily4,694 33 4,027 30 
Agricultural loans2,644 19 2,732 21 
Retail728 5 742 6 
Industrial1,204 9 787 6 
Hospitality410 3 477 4 
Other471 3 344 2 
Total Mortgage Loans$14,095 100 %$13,240 100 %
104
Table of Contents

Liquidity and Capital Resources
Liquidity refers to our ability to generate adequate amounts of cash from our operating, investment and financing activities to meet our cash requirements with a prudent margin of safety. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital is dependent on the profitability of our businesses, timing of cash flows related to our investments and products, our ability to access the capital markets, general economic conditions and the alternative sources of liquidity and capital described herein. When considering our liquidity and cash flows, we distinguish between the needs of Holdings and the needs of our insurance and non-insurance subsidiaries. We also distinguish and separately manage the liquidity and capital resources of our retirement and protection businesses (our Individual Retirement, Group Retirement and Protection Solutions segments) and our Investment Management and Research segment.
Sources and Uses of Liquidity
The Company has sufficient cash flows from operations to satisfy liquidity requirements in 2022.
Cash Flows of Holdings
As a holding company with no business operations of its own, Holdings primarily derives cash flows from dividends from its subsidiaries and distributions related to its economic interest in AB, nearly all of which is currently held outside our insurance company subsidiaries. These principal sources of liquidity are augmented by cash and short-term investments held by Holdings and access to bank lines of credit and the capital markets. The main uses of liquidity for Holdings are interest payments and debt repayment, payment of dividends and other distributions to stockholders (which may include stock repurchases) loans and capital contributions, if needed, to our insurance subsidiaries. Our principal sources of liquidity and our capital position are described in the following paragraphs.
Sources and Uses of Holding Company Highly Liquid Assets
The following table sets forth Holdings’ principal sources and uses of highly liquid assets for the periods indicated.
Year Ended December 31,
20212020
(in millions)
Highly Liquid Assets, beginning of period$3,088 $1,589 
Dividends from subsidiaries792 2,877 
Capital contributions to subsidiaries(815)(350)
M&A Activity215 — 
Income taxes payable— — 
Total Business Capital Activity192 2,527 
Purchase of treasury shares(1,637)(430)
Shareholder dividends paid(296)(297)
Total Share Repurchases, Dividends and Acquisition Activity(1,933)(727)
Issuance of preferred stock293 494 
     Preferred stock dividend(79)(53)
Total Preferred Stock Activity214 441 
Issuance of long-term debt— — 
Repayment of long-term debt(280)— 
Total External Debt Activity(280)— 
Repayments of loans from affiliates— (300)
Proceeds from loans from affiliates1,000 — 
Repayment of loans to affiliates— — 
105
Table of Contents
Year Ended December 31,
20212020
(in millions)
Issuance of loans to affiliates— — 
Net decrease (increase) in loans to affiliates(80)(115)
Total Affiliated Debt Activity920 (415)
Interest paid on external debt and P-Caps(233)(220)
Others, net(226)(107)
Total Other Activity(459)(327)
Net increase (decrease) in highly liquid assets(1,346)1,499 
Highly Liquid Assets, end of period$1,742 $3,088 

Capital Contribution to Our Subsidiaries
In June 2021, Holdings made a $750 million cash capital contribution to facilitate a corporate restructuring involving administrative services for Equitable Financial’s Separate Accounts.
Loans from Our Subsidiaries
In June 2021, Equitable Financial made a $1.0 billion 10-year term loan to Holdings for generic liquidity management purpose. The loan has an interest rate of 3.23% and matures in June 2031.
Cash Distributions from Our Subsidiaries
In 2021, Holdings and certain of its subsidiaries received pretax cash distributions from AB of $677 million, EIM of $61 million and $140 million in dividends from Equitable Advisors.
Distributions from Insurance Subsidiaries
Our insurance companies are subject to limitations on the payment of dividends and other transfers of funds to Holdings and other affiliates under applicable insurance law and regulation. Also, more generally, the ability of our insurance subsidiaries to pay dividends can be affected by market conditions and other factors beyond our control.
Under New York insurance law applicable to Equitable Financial, a domestic stock life insurer may not, without prior approval of the NYDFS, pay an Ordinary Dividend. Extraordinary Dividends require the insurer to file a notice of its intent to declare the dividends with the NYDFS and prior approval or non-disapproval from the NYDFS. Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay a Permitted Practice Ordinary Dividend. Applying the formulas above, Equitable Financial could pay an Ordinary Dividend of up to approximately $865 million in 2022.
Distributions from AllianceBernstein
ABLP is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Partnership Agreement of ABLP, to the holders of AB Units and to the General Partner. Available Cash Flow is defined as the cash flow received by ABLP from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by ABLP for use in its business, or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. Distributions by ABLP are made 1% to the General Partner and 99% among the limited partners.
Typically, Available Cash Flow has been the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management of AB anticipates that Available Cash Flow will be based on adjusted diluted net income per unit, unless management of AB determines, with the concurrence of the Board of Directors of AB, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation.
106
Table of Contents
AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding, to holders of AB Holding Units pro rata in accordance with their percentage interest in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from ABLP minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. AB Holding is dependent on the quarterly cash distributions it receives from ABLP, which is subject to the performance of capital markets and other factors beyond our control. Distributions from AB Holding are made pro rata based on the holder’s percentage ownership interest in AB Holding.
As of December 31, 2021, Holdings and its non-insurance company subsidiaries hold approximately 170.1 million AB Units, 4.1 million AB Holding Units and the 1% General Partnership interest in ABLP.
As of December 31, 2021, the ownership structure of ABLP, including AB Units outstanding as well as the general partner’s 1% interest, was as follows:
OwnerPercentage Ownership
EQH and its subsidiaries63.0 %
AB Holding36.2 %
Unaffiliated holders0.8 %
Total100.0 %
Including both the general partnership and limited partnership interests in AB Holding and ABLP, Holdings and its subsidiaries had an approximate 65% economic interest in AB as of December 31, 2021.

Holdings Credit Facilities
On June 24, 2021, Holdings entered into the Amended and Restated Revolving Credit Agreement with respect to a five-year senior unsecured revolving credit facility (the “Credit Facility”), which lowered the facility amount to $1.5 billion and extended the maturity date to June 24, 2026, among other changes. The Amended and Restated Revolving Credit Agreement amends the Revolving Credit Agreement entered into by Holdings on February 16, 2018, as amended on March 22, 2021.
The Credit Facility may provide significant support to our liquidity position when alternative sources of credit are limited. In addition to the Credit Facility, we have letter of credit facilities with an aggregate principal amount of approximately $1.9 billion (the “LOC Facilities”), primarily to be used to support our life insurance business reinsured to EQ AZ Life Re in April 2018. In June 2021, Holdings entered into amendments with each of the issuers of its bilateral letter of credit facilities to effect changes similar to those effected in the amended and restated revolving credit agreement. The respective facility limits of the bilateral letter of credit facilities remained unchanged.
The Credit Facility and LOC Facilities contain certain administrative, reporting, legal and financial covenants, including requirements to maintain a specified minimum consolidated net worth and to maintain a ratio of indebtedness to total capitalization not in excess of a specified percentage, and limitations on the dollar amount of indebtedness that may be incurred by our subsidiaries and the dollar amount of secured indebtedness that may be incurred by us, which could restrict our operations and use of funds. The right to borrow funds under the Credit Facility and LOC Facilities is subject to the fulfillment of certain conditions, including compliance with all covenants, and the ability to borrow thereunder is also subject to the continued ability of the lenders that are or will be parties to the facilities to provide funds. As of December 31, 2021, we were in compliance with these covenants”.
Contingent Funding Arrangements
For information regarding activity pertaining to our contingent funding arrangements and other off-balance sheet commitments, see “Commitments and Contingent Liabilities in ” Note 17 of the Notes to these Consolidated Financial Statements in this Form 10-K.
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
For information pertaining to our Series A, Series B and Series C Preferred Stock see Note 20 of the Notes to these Consolidated Financial Statements.
107
Table of Contents
Capital Position of Holdings
We manage our capital position to maintain financial strength and credit ratings that facilitate the distribution of our products and provide our desired level of access to the bank and capital markets. Our capital position is supported by the ability of our subsidiaries to generate cash flows and distribute cash to us and our ability to effectively manage the risk of our businesses and to borrow funds and raise capital to meet our operating and growth needs.
Our Board and senior management are directly involved in the development of our capital management policies. Accordingly, capital actions, including proposed changes to the annual capital plan, capital targets and capital policies, are approved by the Board.
Dividends Declared and Paid
The declaration and payment of future dividends is subject to the discretion of our Board of Directors and depends on our financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by Holdings’ insurance subsidiaries and other factors deemed relevant by the Board. 
The payment of dividends will be substantially restricted in the event that we do not declare and pay (or set aside) dividends on the Series A, Series B and Series C Preferred Stock for the last proceeding dividend period. For additional information on our preferred stock, see “—Series A, Series B and Series C Preferred Stock”.
For information regarding activity pertaining to common and preferred dividends declared and paid, see Note 20 of the Notes to these Consolidated Financial Statements.
Share Repurchase Programs
For information regarding activity pertaining to share repurchase programs, see Note 20 of the Notes to these Consolidated Financial Statements.
Sources and Uses of Liquidity of Our Insurance Subsidiaries
The principal sources of liquidity for our insurance subsidiaries are premiums, investment and fee income, deposits associated with our insurance and annuity operations, cash and invested assets, as well as internal borrowings. The principal uses of that liquidity include benefits, claims and dividends paid to policyholders and payments to policyholders in connection with surrenders and withdrawals. Other uses of liquidity include commissions, general and administrative expenses, purchases of investments, the payment of dividends to Holdings and hedging activity. Certain of our insurance subsidiaries’ principal sources and uses of liquidity are described in the paragraphs that follow.
We manage the liquidity of our insurance subsidiaries with the objective of ensuring that they can meet payment obligations linked to our Individual Retirement, Group Retirement and Protection Solutions businesses and to their outstanding debt and derivative positions, including in our hedging programs, without support from Holdings. We employ an asset/liability management approach specific to the requirements of each of our insurance businesses. We measure liquidity against internally-developed benchmarks that consider the characteristics of our asset portfolio and the liabilities that it supports in both the short-term (the next 12 months) and long-term (beyond the next 12 months). We consider attributes of the various categories of our liquid assets (for example, type of asset and credit quality) in calculating internal liquidity indicators for our insurance and reinsurance operations. Our liquidity benchmarks are established for various stress scenarios and durations, including company-specific and market-wide events. The scenarios we use to evaluate the liquidity of our subsidiaries are defined to allow operating entities to operate without support from Holdings.
Liquid Assets
The investment portfolios of our insurance subsidiaries are a significant component of our overall liquidity. Liquid assets include cash and cash equivalents, short-term investments, U.S. Treasury fixed maturities, fixed maturities that are not designated as HTM and public equity securities. We believe that our business operations and the liquidity profile of our assets provide sufficient liquidity under reasonably foreseeable stress scenarios for each of our insurance subsidiaries.
See “—General Account Investment Portfolio” and Note 3 and Note 4 of the Notes to these Consolidated Financial Statements for a description of our retirement and protection businesses’ portfolio of liquid assets.
Hedging Activities
108
Table of Contents
Because the future claims exposure on our insurance products, and in particular our variable annuity products with GMxB features, is sensitive to movements in the equity markets and interest rates, we have in place various hedging and reinsurance programs that are designed to mitigate the economic risks of movements in the equity markets and interest rates. We use derivatives as part of our overall asset/liability risk management program primarily to reduce exposures to equity market and interest rate risks. In addition, we use credit derivatives to replicate exposure to individual securities or pools of securities as a means of achieving credit exposure similar to bonds of the underlying issuer(s) more efficiently. The derivative contracts are an integral part of our risk management program, especially for the management of our variable annuities program, and are collectively managed to reduce the economic impact of unfavorable movements in capital markets. These derivative transactions require liquidity to meet payment obligations such as payments for periodic settlements, purchases, maturities and terminations as well as liquid assets pledged as collateral related to any decline in the net estimated fair value. Collateral calls represent one of our biggest drivers for liquidity needs for our insurance subsidiaries. Our derivatives contracts reside primarily within Equitable Financial, which has a significantly large investment portfolio.
FHLB Membership
Equitable Financial and Equitable America are members of the FHLB, which provides access to collateralized borrowings and other FHLB products.
See Note 17 of the Notes to these Consolidated Financial Statements for further description of our FHLB program.
FABN
Under the FABN program, Equitable Financial may issue funding agreements in U.S. dollar or other foreign currencies.
See Note 17 of the Notes to these Consolidated Financial Statements for further description of our FABN program.
Sources and Uses of Liquidity of our Investment Management and Research Segment
The principal sources of liquidity for our Investment Management and Research business include investment management fees and borrowings under its credit facilities and commercial paper program. The principal uses of liquidity include general and administrative expenses, business financing and distributions to holders of AB Units and AB Holding Units plus interest and debt service. The primary liquidity risk for our fee-based Investment Management and Research business is its profitability, which is impacted by market conditions and our investment management performance.
For information regarding our Investment Management and Research credit facilities and commercial paper program with external parties, see Note 12 of the Notes to these Consolidated Financial Statements.
EQH Facility
AB has a $900 million committed, unsecured senior credit facility (the “EQH Facility”). The EQH Facility matures on November 4, 2024 and is available for AB’s general business purposes. Borrowings under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates.
The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated.
Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by AB from time to time until the maturity of the facility. AB or Holdings may reduce or terminate the commitment at any time without penalty upon proper notice. Holdings also may terminate the facility immediately upon a change of control of AB’s general partner.
As of December 31, 2021 and 2020, AB had $755 million and $675 million outstanding under the EQH Facility, in each case with an interest rate of approximately 0.2%. Average daily borrowing of the EQH Facility during 2021 and 2020 were $405 million and $471 million, respectively, with a weighted average interest rate of approximately 0.2% and 0.5% respectively.
EQH Uncommitted Facility
109
Table of Contents
In addition to the EQH Facility, on September 1, 2020, AB established a new $300 million uncommitted, unsecured senior credit facility (the “EQH Uncommitted Facility”) with EQH. The EQH Uncommitted Facility matures on September 1, 2024 and is available for AB’s general business purposes. Borrowings under the EQH Uncommitted Facility bear generally interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Uncommitted Facility contains affirmative, negative and financial covenants, which are substantially similar to those in the EQH Facility.
As of December 31, 2021 and 2020, AB had no outstanding balance on the EQH Uncommitted Facility. During the periods ended December 31, 2021 and 2020, AB did not draw upon the EQH Uncommitted Facility.
Statutory Capital of Our Insurance Subsidiaries
Our capital management framework for our insurance subsidiaries is primarily based on statutory RBC standards and the CTE asset standard for our variable annuity business.
RBC requirements are used as minimum capital requirements by the NAIC and the state insurance departments to evaluate the capital condition of regulated insurance companies. RBC is based on a formula calculated by applying factors to various asset, premium, claim, expense and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk, market risk and business risk and is calculated on a quarterly basis and made public on an annual basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. These rules apply to our insurance company subsidiaries and not to Holdings. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. At the date of the most recent annual statutory financial statements filed with insurance regulators, the total adjusted capital of each of these insurance company subsidiaries subject to these requirements was in excess of each of those RBC levels.
Please see Note 20 of the Notes to these Consolidated Financial Statements for additional information relating to Permitted Statutory Accounting practices and its impact on our statutory surplus.
Captive Reinsurance Company
We use a captive reinsurance company to more effectively manage our reserves and capital on an economic basis and to enable the aggregation and transfer of risks. Our captive reinsurance company assumes business from affiliates only and is closed to new business. Our captive reinsurance company is a wholly-owned subsidiaries located in the United States. In addition to state insurance regulation, our captive is subject to internal policies governing its activities. We continue to analyze the use of our existing captive reinsurance structure, as well as additional third-party reinsurance arrangements.
Borrowings
Our financial strategy going forward will remain subject to market conditions and other factors. For example, we may from time to time be restructuredenter into additional bank or modified.other financing arrangements, including public or private debt, structured facilities and contingent capital arrangements, under which we could incur additional indebtedness.
AtFor information regarding activity pertaining to our total consolidated borrowings, see Note 12 of the Notes to these Consolidated Financial Statements.
Ratings
Financial strength ratings (which are sometimes referred to as “claims-paying” ratings) and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Our credit ratings are also important for our ability to raise capital through the issuance of debt and for the cost of such financing.
Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy. Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. The following table summarizes the ratings for Holdings and certain of its subsidiaries. AM Best and S&P have a stable outlook while Moody’s has a positive outlook.
110
Table of Contents
AM BestS&PMoody’s
Last review dateJan '22Nov '21Aug '21
Financial Strength Ratings:
Equitable Financial Life Insurance CompanyAA+A2
Equitable Financial Life Insurance Company of AmericaAA+A2
Credit Ratings:
Equitable Holdings, Inc.BBB+Baa2
Last review dateSep '21Dec '21
AllianceBernstein L.P.AA2

Material Cash Requirements
The table below summarizes the material short and long-term cash requirements related to contractual and other obligations as of December 31, 20182021. Short-term cash requirements are considered to requirements within the next 12 months and 2017,long-term cash requirements are considered to be beyond the next 12 months. We do not believe that our cash flow requirements can be adequately assessed based solely upon an analysis of these obligations, as the table below does not contemplate all aspects of our cash inflows, such as the level of cash flow generated by certain of our investments, nor all aspects of our cash outflows.
Estimated Payments Due by Year
Total20222023-20242025-20262027 and thereafter
(in millions)
Material Cash Requirements:
Insurance liabilities (1)$107,485 $1,509 $4,671 $6,426 $94,879 
FHLB Funding Agreements6,643 5,353 644 646 — 
Interest on FHLB Funding Agreements100 29 48 23 — 
FABN Funding Agreements6,759 — 2,500 2,100 2,159 
Interest on FABN Funding Agreements372 74 137 105 56 
Operating leases, net of sublease commitments1,106 153 234 149 570 
Long-term debt3,870 — 520 — 3,350 
Interest on long-term debt2,602 185 340 330 1,747 
Interest on P-Caps394 24 47 47 276 
Employee benefits3,498 211 451 383 2,453 
Funding Commitments2,118 520 832 766 — 
Total Material Cash Requirements$134,947 $8,058 $10,424 $10,975 $105,490 
______________
(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. 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.
Unrecognized tax benefits of $323 million, including $3 million related to AB were not included in the above table because it is not possible to make reasonably reliable estimates of the occurrence or timing of cash settlements with the respective taxing authorities.
In addition, the below items are included as part of AB’s aggregate contractual obligations:
111
Table of Contents
•As of December 31, 2021, AB had a $354 million accrual for compensation and benefits, of which $9 million is expected to be paid in 2022, $15 million in 2023-2024, $18 million in 2025-2026 and $46 million in 2027 and thereafter. Further, AB expects to make contributions to its qualified profit-sharing plan of $16 million in each of the next four years.
•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, 2021, AB 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 $27 million as amended in 2020, in the Real Estate Fund II. As of December 31, 2021, AB had funded $21 million of this commitment.

Summary of Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in our consolidated financial statements included elsewhere herein. For a discussion of our significant accounting policies, see Note 2 of the Notes to these Consolidated Financial Statements. The most critical estimates include those used in determining:
•liabilities for future policy benefits;
•accounting for reinsurance;
•capitalization and amortization of DAC;
•estimated fair values of investments in the absence of quoted market values and investment impairments;
•estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation;
•goodwill and related impairment;
•measurement of income taxes and the valuation of deferred tax assets; and
•liabilities for litigation and regulatory matters.
In applying our accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries while others are specific to our business and operations. Actual results could differ from these estimates.
Liability for Future Policy Benefits
We establish reserves for future policy benefits to, or on behalf of, policyholders in the same period in which the policy is issued or acquired, using methodologies prescribed by U.S. GAAP. The assumptions used in establishing reserves are generally based on our experience, industry experience or other factors, as applicable. At least annually we review our actuarial assumptions, such as mortality, morbidity, retirement and policyholder behavior assumptions, and update assumptions when appropriate. Generally, we do not expect trends to change significantly in the short-term and, to the extent these trends may change, we expect such changes to be gradual over the long-term. The reserving methodologies used include the following:
•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.
For most long-duration contracts, we utilize best estimate assumptions as of the date the policy is issued or acquired with provisions for the risk of adverse deviation, as appropriate. After the liabilities are initially established, we perform premium deficiency tests using best estimate assumptions as of the testing date without provisions for adverse deviation. If the liabilities determined based on these best estimate assumptions are greater than the net reserves (i.e., U.S. GAAP reserves net of any
112
Table of Contents
DAC or DSI), the existing net reserves are adjusted by first reducing the DAC or DSI by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than these asset balances for insurance contracts, we then increase the net reserves by the excess, again through a charge to current period earnings. If a premium deficiency is recognized, the assumptions as of the premium deficiency test date are locked in and used in subsequent valuations and the net reserves continue to be subject to premium deficiency testing.
For certain reserves, such as those related to GMDB and GMIB features, we use current best estimate assumptions in establishing reserves. The reserves are subject to adjustments based on periodic reviews of assumptions and quarterly adjustments for experience, including market performance, and the reserves may be adjusted through a benefit or charge to current period earnings.
For certain GMxB features in our Individual Retirement segment, the benefits are accounted for as embedded derivatives, with fair values calculated as the present value of expected future benefit payments to contract holders less the present value of assessed rider fees attributable to the embedded derivative feature. Under U.S. GAAP, the fair values of these benefit features are based on assumptions a market participant would use in valuing these embedded derivatives. Changes in the fair value of the embedded derivatives are recorded quarterly through a benefit or charge to current period earnings.
The assumptions used in establishing reserves are generally based on our experience, industry experience and/or other factors, as applicable. We typically update our actuarial assumptions, such as mortality, morbidity, retirement and policyholder behavior assumptions, annually, unless a material change is observed in an interim period that we feel is indicative of a long-term trend. Generally, we do not expect trends to change significantly in the short-term and, to the extent these trends may change, we expect such changes to be gradual over the long-term. In a sustained low interest rate environment, there is an increased likelihood that the reserves determined based on best estimate assumptions may be greater than the net liabilities.
See Note 2 of the Notes to these Consolidated Financial Statements for additional information on our accounting policy relating to GMxB features and liability for future policy benefits and Note 9 of the Notes to these Consolidated Financial Statements for future policyholder benefit liabilities.
Sensitivity of Future Rate of Return Assumptions on GMDB/GMIB Reserves
The Separate Account future rate of return assumptions that are used in establishing reserves for GMxB features are set using a long term-view of expected average market returns by applying a reversion to the mean approach, consistent with that used for DAC amortization. For additional information regarding the future expected rate of return assumptions and the reversion to the mean approach, see, “—DAC and Policyholder Bonus Interest Credits.”
The GMDB/GMIB reserve balance before reinsurance ceded was $10.8 billion as of December 31, 2021. The following table provides the sensitivity of the reserves GMxB features related to variable annuity contracts relative to the future rate of return assumptions by quantifying the adjustments to these reserves that would be required assuming both a 1% increase and decrease in the future rate of return. This sensitivity considers only the direct effect of changes in the future rate of return on operating results due to the change in the reserve balance before reinsurance ceded and not changes in any other assumptions such as persistency, mortality, or expenses included in the evaluation of the reserves, or any changes on DAC or other balances including hedging derivatives and the GMIB reinsurance asset.
GMDB/GMIB Reserves
Sensitivity - Rate of Return
December 31, 2021
Increase/(Decrease) in
GMDB/GMIB Reserves    
(in millions)
1% decrease in future rate of return$1,363 
1% increase in future rate of return$(1,667)
Traditional Annuities
The reserves for future policy benefits for annuities include group pension and payout annuities, and, during the accumulation period, are equal to accumulated policyholders’ fund balances and, after annuitization, are equal to the present value of expected future payments based on assumptions as to mortality, retirement, maintenance expense, and interest rates.
113
Table of Contents
Interest rates used in establishing such liabilities range from 1.5% to 5.4% (weighted average of 3.5%). If reserves determined based on these assumptions are greater than the existing reserves, the existing reserves are adjusted to the greater amount.
Health
Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest.
Reinsurance
Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risk with respect to reinsurance receivables. We periodically review actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluate the financial strength of counterparties to our reinsurance agreements using criteria similar to those evaluated in our security impairment process. See “—Estimated Fair Value of Investments.” Additionally, for each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. We review all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. If we determine that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, we record the agreement using the deposit method of accounting.
For reinsurance contracts other than those covering GMIB exposure, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities. GMIB reinsurance contracts are used to cede affiliated and non-affiliated reinsurers a portion of the exposure on variable annuity products that offer the GMIB feature. The GMIB reinsurance contracts are accounted for as derivatives and are reported at fair value. Gross reserves for GMIB, on the other hand, are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts, therefore, will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market and/or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts.
See Note 11 of the Notes to these Consolidated Financial Statements for additional information on our reinsurance.
DAC
We incur significant costs in connection with acquiring new and renewal insurance business. Costs that relate directly to the successful acquisition or renewal of insurance contracts, are deferred as DAC. In addition to commissions, certain direct-response advertising expenses and other direct costs, other deferrable costs include the portion of an employee’s total compensation and benefits related to time spent selling, underwriting or processing the issuance of new and renewal insurance business only with respect to actual policies acquired or renewed. We utilize various techniques to estimate the portion of an employee’s time spent on qualifying acquisition activities that result in actual sales, including surveys, interviews, representative time studies and other methods. These estimates include assumptions that are reviewed and updated on a periodic basis or more frequently to reflect significant changes in processes or distribution methods.
Amortization Methodologies
Participating Traditional Life Policies
For participating traditional life policies (substantially all of which are in the Closed Block), DAC is amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield.
As of December 31, 2021, the average investment yields assumed (excluding policy loans) were 4.5% grading to 4.3% in 2026. Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends. The effect on the accumulated amortization of DAC of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date. Many of the factors that affect gross margins are included in
114
Table of Contents
the determination of the Company’s dividends to these policyholders. DAC adjustments related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in “Policyholders’ dividends,” for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.
Non-participating Traditional Life Insurance Policies
DAC associated with non-participating traditional life policies is amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts. Deviations from estimated experience are reflected in earnings (loss) in the period such deviations occur. For these contracts, the amortization periods generally are for the total life of the policy.
Universal Life and Investment-type Contracts
DAC associated with certain variable annuity products is amortized based on estimated assessments, with the remainder of variable annuity products, UL and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Account fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, updated at the end of each accounting period. When estimated gross profits are expected to be negative for multiple years of a contract life, DAC is amortized using the present value of estimated assessments. The effect on the amortization of DAC of revisions to estimated gross profits or assessments is reflected in net income (loss) in the period such estimated gross profits or assessments are revised. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
Quarterly adjustments to the DAC balance are made for current period experience and market performance related adjustments, and the impact of reviews of estimated total gross profits. The quarterly adjustments for current period experience reflect the impact of differences between actual and previously estimated expected gross profits for a given period. Total estimated gross profits include both actual experience and estimates of gross profits for future periods. To the extent each period’s actual experience differs from the previous estimate for that period, the assumed level of total gross profits may change. In these cases, cumulative adjustment to all previous periods’ costs is recognized.
During each accounting period, the DAC balances are evaluated and adjusted with a corresponding charge or credit to current period earnings for the effects of the Company’s actual gross profits and changes in the assumptions regarding estimated future gross profits. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
For the variable and UL policies a significant portion of the gross profits is derived from mortality margins and therefore, are significantly influenced by the mortality assumptions used. Mortality assumptions represent our expected claims experience over the life of these policies and are based on a long-term average of actual company experience. This assumption is updated periodically to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC amortization. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization.
Loss Recognition Testing
After the initial establishment of reserves, loss recognition tests are performed using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), loss recognition accounting is triggered and DAC is first written off, and thereafter a premium deficiency reserve is established by a charge to earnings.
In 2020, we determined that certain of our variable interest-sensitive life insurance products triggered loss recognition accounting due to low interest rates and we reduced DAC by $945 million through accelerated amortization. We did not have a loss recognition event in 2021 or 2019.
115
Table of Contents
Additionally, policyholder liability balances for a particular line of business may not be deficient in the aggregate to trigger loss recognition accounting; however, the pattern of earnings may be such that annual profits are expected to be recognized in earlier years and then followed by losses in later years. This pattern of profits followed by losses is exhibited in our VISL business and has caused us to increase policyholder liability balances by an amount that accounts for losses in future years. This pattern is caused by the cost structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate even if there is insufficient policy account value to cover the monthly deductions and charges. We estimate the PFBL accrual using a dynamic approach that changes over time as the projection and timing of future losses change.
In addition, we are required to analyze how net unrealized investment gains and losses on our AFS investment securities backing insurance liabilities affects product profitability,, as if those unrealized investment gains and losses were realized. This may result in the recognition of unrealized gains and losses on related insurance assets and liabilities in a manner consistent with the recognition of the unrealized gains and losses on AFS investment securities within the statements of comprehensive income and changes in equity. Changes to net unrealized investment (gains) losses may increase or decrease DAC. Similar to a loss recognition event, if the DAC balance is reduced to zero, additional insurance liabilities are established. Unlike a loss recognition event, these adjustments may reverse from period to period.
Sensitivity of DAC to Changes in Future Mortality Assumptions
The following table demonstrates the sensitivity of the DAC balance relative to future mortality assumptions by quantifying the adjustments that would be required, assuming an increase and decrease in the future mortality rate by 1.0%. This information considers only the direct effect of changes in the mortality assumptions on the DAC balance and not changes in any other assumptions used in the measurement of the DAC balance and does not assume changes in reserves.
DAC Sensitivity - Mortality
December 31, 2021
Increase/(Decrease)
in DAC
(in millions)
Decrease in future mortality by 1%$          17 
Increase in future mortality by 1%$(16)
Sensitivity of DAC to Changes in Future Rate of Return Assumptions
A significant assumption in the amortization of DAC on variable annuity products and, to a lesser extent, on variable and interest-sensitive life insurance relates to projected future Separate Accounts performance. Management sets estimated future gross profit or assessment assumptions related to Separate Account performance using a long-term view of expected average market returns by applying a RTM approach, a commonly used industry practice. This future return approach influences the projection of fees earned, as well as other sources of estimated gross profits. Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned resulting in higher expected future gross profits and lower DAC amortization for the period. The opposite occurs when returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance. In second quarter 2015, based upon management’s then-current expectations of interest rates and future fund growth, we updated our reversion to the mean assumption from 9.0% to 7.0%. The average gross long-term return measurement start date was also updated to December 31, 2014. Management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. As of December 31, 2021, the average gross short-term and long-term annual return estimate on variable and interest-sensitive life insurance and variable annuity products was 7.0% (4.7% net of product weighted average Separate Accounts fees), and the gross maximum and minimum short-term annual rate of return limitations were 15.0% (12.7% net of product weighted average Separate Accounts fees and Investment Advisory fees) and 0.0% ((2.3%) net of product weighted average Separate Account fees and Investment Advisory fees), respectively. The maximum duration over which these rate limitations may be applied is five years. This approach will continue to be applied in future periods. These assumptions of long-term growth are subject to assessment of the reasonableness of resulting estimates of future return assumptions.
If actual market returns continue at levels that would result in assuming future market returns of 15.0% for more than five years in order to reach the average gross long-term return estimate, the application of the five-year maximum duration
116
Table of Contents
limitation would result in an acceleration of DAC amortization. Conversely, actual market returns resulting in assumed future market returns of 0.0% for more than five years would result in a required deceleration of DAC amortization. As of December 31, 2021, current projections of future returns assume a 0.0% annualized return for the next nine quarters grading to a reversion to the mean of 7.0% in nineteen quarters.
 Other significant assumptions underlying gross profit estimates for UL and investment type products relate to contract persistency and General Account investment spread.
The following table provides an example of the sensitivity of the DAC balance of variable annuity products and variable and interest-sensitive life insurance relative to future return assumptions by quantifying the adjustments to the DAC balance that would be required assuming both an increase and decrease in the future rate of return by 1.0%. This information considers only the effect of changes in the future Separate Accounts rate of return and not changes in any other assumptions used in the measurement of the DAC balance.
DAC Sensitivity - Rate of Return
December 31, 2021
Increase/(Decrease)
in DAC
(in millions)
Decrease in future rate of return by 1%$(115)
Increase in future rate of return by 1%$139 
Estimated Fair Value of Investments
The Company’s investment portfolio principally consists of public and private fixed maturities, mortgage loans, equity securities and derivative financial instruments, including exchange traded equity, currency and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts, swaptions, variance swaps, as well as equity options used to manage various risks relating to its business operations.
Fair Value Measurements
Investments reported at fair value in the consolidated balance sheets of the Company include fixed maturity securities classified as AFS, equity and trading securities and certain other invested assets, such as freestanding derivatives. In addition, reinsurance contracts covering GMIB exposure and the liabilities in the SCS variable annuity products, SIO in the EQUI-VEST variable annuity product series, MSO in the variable life insurance products, IUL insurance products and the GMAB, GIB, GMWB and GWBL feature in certain variable annuity products issued by the Company are considered embedded derivatives and reported at fair value.
When available, the estimated fair value of securities is based on quoted prices in active markets that are readily and regularly obtainable; these generally are the most liquid holdings and their valuation does not involve management judgment. When quoted prices in active markets are not available, we estimate fair value based on market standard valuation methodologies. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment. For securities with reasonable price transparency, the significant inputs to these valuation methodologies either are observable in the market or can be derived principally from or corroborated by observable market data. When the volume or level of activity results in little or no price transparency, significant inputs no longer can be supported by reference to market observable data but instead must be based on management’s estimation and judgment. Substantially the same approach is used by us to measure the fair values of freestanding and embedded derivatives with exception for consideration of the effects of master netting agreements and collateral arrangements as well as incremental value or risk ascribed to changes in own or counterparty credit risk.
As required by the accounting guidance, we categorize our assets and liabilities measured at fair value into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique, giving the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For additional information regarding the key estimates and assumptions surrounding the determinations of fair value measurements, see Note 8 of the Notes to these Consolidated Financial Statements.
117
Table of Contents
Impairments and Valuation Allowances
The carrying values of fixed maturities classified as AFS are reported at fair value. Changes in fair value are reported in OCI, net of allowance for credit losses, policy related amounts and deferred income taxes. With the adoption of the Financial Instruments-Credit Losses standard, changes in credit losses are recognized in investment gains (losses), net.
With the assistance of our investment advisors, we evaluate AFS debt securities that experience a decline in fair value below amortized cost for credit losses which are evaluated in accordance with the financial instruments credit losses guidance. The remainder of the unrealized loss related to other factors, if any, is recognized in OCI. Integral to this review is an assessment made each quarter, on a security-by-security basis, by our IUS Committee, of various indicators of credit deterioration to determine whether the investment security has experienced a credit loss. This assessment includes, but is not limited to, consideration of the severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity and continued viability of the issuer.
We recognize an allowance for credit losses on AFS debt securities with a corresponding adjustment to earnings rather than a direct write down that reduces the cost basis of the investment, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Any improvements in estimated credit losses on AFS debt securities are recognized immediately in earnings. We do not use the length of time a security has been in an unrealized loss position as a factor, either by itself or in combination with other factors, to conclude that a credit loss does not exist, as was permitted to do prior to January 1, 2020.
If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting allowance is recognized in income (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries. These assumptions and estimates require use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.
Write-offs of AFS debt securities are recorded when all or a portion of a financial asset is deemed uncollectible. Full or partial write-offs are recorded as reductions to the amortized cost basis of the AFS debt security and deducted from the allowance in the period in which the financial assets are deemed uncollectible. We elected to reverse accrued interest deemed uncollectible as a reversal of interest income. In instances where we collect cash that has previously been written off, the recovery will be recognized through earnings or as a reduction of the amortized cost basis for interest and principal, respectively.
Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and valuation allowances. For collectively evaluated mortgages, the Company estimates the allowance for credit losses based on the amortized cost basis of its mortgages over their expected life using a PD / LGD model. For individually evaluated mortgages, the Company continues to recognize valuation allowances based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value if the loan is collateral dependent.
For commercial and agricultural mortgage loans, an allowance for credit loss is typically recommended when management believes it is probable that principal and interest will not be collected according to the contractual terms. Factors that influence management’s judgment in determining allowance for credit losses include the following:
•LTV 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 LTV ratio is in excess of 100%. In the case where the LTV 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.
•DSC 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.
118
Table of Contents
•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.
Mortgage loans that do not share similar risk characteristics with other loans in the portfolio are individually evaluated quarterly by the IUS Committee for impairment on a loan-by-loan basis, including an assessment of related collateral value. Commercial mortgages 60 days or more past due and agricultural mortgages 90 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgages. Based on its monthly monitoring of mortgages, a class of potential problem mortgages also is identified, consisting of mortgage loans not currently classified as problems but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being restructured. The decision whether to classify a performing mortgage loan as a potential problem involves significant subjective judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
For problem mortgage loans a valuation allowance is established to provide for the risk of credit losses inherent in the lending process. The allowance includes loan specific reserves for loans determined to be non-performing as a result of the loan review process. A non-performing loan is defined as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement will not be collected. The loan specific portion of the loss allowance is based on our assessment as to ultimate collectability of loan principal and interest. Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent. The valuation allowance for mortgage loans can increase or decrease from period to period based on such factors.
Impaired mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows. Changes in the present value attributable to changes in the amount or timing of expected cash flows are reported as investment gains or losses.
Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is doubtful. Once mortgage loans are classified as nonaccrual mortgage loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan on real estate has been restructured to where the collection of interest is considered likely.
See Notes 2 and 3 of the Notes to these Consolidated Financial Statements for additional information relating to our determination of the amount of allowances and impairments.
Derivatives
We use freestanding derivative instruments to hedge various capital market risks in our products, including: (i) certain guarantees, some of which are reported as embedded derivatives; (ii) current or future changes in the fair value of our assets and liabilities; and (iii) current or future changes in cash flows. All derivatives, whether freestanding or embedded, are required to be carried on the balance sheet at fair value with changes reflected in either net income (loss) or in OCI, depending on the type of hedge. Below is a summary of critical accounting estimates by type of derivative.
119
Table of Contents
Freestanding Derivatives
The determination of the estimated fair value of freestanding derivatives, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. See Note 8 of the Notes to these Consolidated Financial Statements for additional details on significant inputs into the OTC derivative pricing models and credit risk adjustment.
Embedded Derivatives
We issue variable annuity products with guaranteed minimum benefits, some of which are embedded derivatives measured at estimated fair value separately from the host variable annuity product, with changes in estimated fair value reported in net derivative gains (losses). The estimated fair values of these embedded derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees attributable to the guarantee. The projections of future benefits and future fees require capital markets and actuarial assumptions, including expectations concerning policyholder behavior. A risk-neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates.
Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and variations in actuarial assumptions, including policyholder behavior, mortality and risk margins related to non-capital market inputs, as well as changes in our nonperformance risk adjustment may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. Changes to actuarial assumptions, principally related to contract holder behavior such as annuitization utilization and withdrawals associated with GMIB riders, can result in a change of expected future cash outflows of a guarantee between the accrual-based model for insurance liabilities and the fair-value based model for embedded derivatives. See Note 2 of the Notes to these Consolidated Financial Statements for additional information relating to the determination of the accounting model. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties in certain actuarial assumptions. For direct liabilities, risk margins are applied to non-capital market risk assumptions, while for reinsurance asset risk margins are based on the cost of capital a theoretical market participant would require to assume the risks. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees.
With respect to assumptions regarding policyholder behavior, we have recorded charges, and in some cases benefits, in prior years as a result of the availability of sufficient and credible data at the conclusion of each review.
We ceded the risk associated with certain of the variable annuity products with GMxB features described in the preceding paragraphs. The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by us with the exception of the input for nonperformance risk that reflects the credit of the reinsurer. However, because certain of the reinsured guarantees do not meet the definition of an embedded derivative and, thus are not accounted for at fair value, significant fluctuations in net income may occur when the change in the fair value of the reinsurance recoverable is recorded in net income without a corresponding and offsetting change in fair value of the directly written guaranteed liability.
Nonperformance Risk Adjustment
The valuation of our embedded derivatives includes an adjustment for the risk that we fail to satisfy our obligations, which we refer to as our nonperformance risk. The nonperformance risk adjustment, which is captured as a spread over the risk-free rate in determining the discount rate to discount the cash flows of the liability, is determined by taking into consideration publicly available information relating to spreads on corporate bonds in the secondary market comparable to Holdings’ financial strength rating.
The table below illustrates the impact that a range of reasonably likely variances in credit spreads would have on our consolidated balance sheet, excluding the effect of income tax, related to the embedded derivative valuation on certain variable annuity products measured at estimated fair value. Even when credit spreads do not change, the impact of the nonperformance risk adjustment on fair value will change when the cash flows within the fair value measurement change. The table only reflects the impact of changes in credit spreads on our consolidated financial statements included elsewhere herein and not these other potential changes. In determining the ranges, we have considered current market conditions, as well as the market level of
120
Table of Contents
spreads that can reasonably be anticipated over the near term. The ranges do not reflect extreme market conditions such as those experienced during the 2008–2009 financial crisis as we do not consider those to be reasonably likely events in the near future.
Future policyholders’ benefits and other policyholders’ liabilities
(before reinsurance ceded)
(in billions)
100% increase in Holdings’ credit spread$7.2 
As reported$8.5 
50% decrease in Holdings’ credit spread$9.4 

See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our derivatives and hedging programs.
Goodwill
Goodwill represents the excess of purchase price over the estimated fair value of identifiable net assets acquired in a business combination. We test goodwill for recoverability each annual reporting period at December 31 and at interim periods if facts or circumstances are indicative of potential impairment. As of December 31, 2021, our goodwill of $4.6 billion results solely from our investment in AB and is attributed to the Investment Management and Research segment, also deemed a reporting unit for purpose of assessing the recoverability of that goodwill.
Estimating the fair value of reporting units for the purpose of goodwill impairment testing is a subjective process that involves the use of significant judgements by management. Estimates of fair value are inherently uncertain and represent management’s reasonable expectation regarding future developments, giving consideration to internal strategic plans and general market and economic forecasts. On an annual basis, or when circumstances warrant, goodwill is tested for impairment utilizing the market approach, where the fair value of the reporting unit is based on its adjusted market valuation assuming a control premium.
Litigation and Regulatory Contingencies
We are a party to a number of legal actions and are involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on our financial position, results of operations and cash flows.
Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. On a quarterly and annual basis, we review relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in our consolidated financial statements included elsewhere herein. See Note 17 of the Notes to the Consolidated Financial Statements for information regarding our assessment of litigation contingencies.
Income Taxes
Income taxes represent the net amount of income taxes that we expect to pay to or receive from various taxing jurisdictions in connection with its operations. We provide for Federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryforward periods under the tax law in the applicable jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets will not be realized. Management considers all available evidence including past operating results, the existence of cumulative losses in the most recent years, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. Our accounting for income taxes represents management’s best estimate of the tax consequences of various events and transactions.
Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities, and in evaluating our tax positions including evaluating uncertainties under the guidance for Accounting for Uncertainty in Income Taxes. Under the guidance, we determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial
121
Table of Contents
statements. Tax positions are then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.
Our tax positions are reviewed quarterly, and the balances are adjusted as new information becomes available.
Adoption of New Accounting Pronouncements
See Note 2 of the Notes to these Consolidated Financial Statements for a complete discussion of newly issued accounting pronouncements.
Part II, Item 7A.
        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our businesses are subject to financial, market, political and economic risks, as well as to risks inherent in our business operations. The discussion that follows provides additional information on market risks arising from our insurance asset/liability management and investment management activities. Such risks are evaluated and managed by each business on a decentralized basis. Primary market risk exposure results from interest rate fluctuations, equity price movements and changes in credit quality.
Individual Retirement, Group Retirement and Protection Solutions Segments
Our results significantly depend on profit margins or “spreads” between investment results from assets held in the General Account investment portfolio and interest credited on individual insurance and annuity products. Management believes its fixed rate liabilities should be supported by a portfolio principally composed of fixed rate investments that generate predictable, steady rates of return. Although these assets are purchased for long-term investment, the portfolio management strategy considers them AFS in response to changes in market interest rates, changes in prepayment risk, changes in relative values of asset sectors and individual securities and loans, changes in credit quality outlook and other relevant factors. See the “Investments” section of Note 2 of the Notes to these Consolidated Financial Statements for the accounting policies for the investment portfolios. The objective of portfolio management is to maximize returns, taking into account interest rate and credit risks. Insurance asset/liability management includes strategies to minimize exposure to loss as interest rates and economic and market conditions change. As a result, the fixed maturity portfolio has modest exposure to call and prepayment risk and the vast majority of mortgage holdings are fixed rate mortgages that carry yield maintenance and prepayment provisions.
Investments with Interest Rate Risk – Fair Value
Assets with interest rate risk include AFS and trading fixed maturities and mortgage loans that make up 83.7% and 86.5% of the fair value of the General Account investment portfolio as of December 31, 2021 and 2020, respectively. As part of our asset/liability management, quantitative analyses are used to model the impact various changes in interest rates have on assets with interest rate risk. The table that follows shows the impact an immediate one percent increase/decrease in interest rates as of December 31, 2021 and 2020 would have on the fair value of fixed maturities and mortgage loans:
122
Table of Contents
Interest Rate Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueImpact of +1% ChangeImpact of -1% ChangeFair ValueImpact of +1% ChangeImpact of -1% Change
(in millions)
Fixed Income Investments:
AFS securities:
Fixed rate$70,242 $(7,166)$8,657 $75,375 $(7,185)$8,636 
Floating rate$7,100 $(77)$83 $5,130 $(55)$83 
Trading securities:
Fixed rate$145 $(2)$2 $4,852 $(99)$102 
Floating rate$— $— $— $117 $— $— 
Mortgage loans$14,308 $(743)$314 $13,491 $(521)$376 
A one percent increase/decrease in interest rates is a hypothetical rate scenario used to demonstrate potential risk; it does not represent management’s view of future market changes. While these fair value measurements provide a representation of interest rate sensitivity of fixed maturities and mortgage loans, they are based on various portfolio exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to management’s assessment of changing market conditions and available investment opportunities.
Investments with Equity Price Risk – Fair Value
The investment portfolios also have direct holdings of public and private equity securities. The following table shows the potential exposure from those equity security investments, measured in terms of fair value, to an immediate 10% increase/decrease in equity prices from those prevailing as of December 31, 2021 and 2020:
Equity Price Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueImpact of+10% Equity Price ChangeImpact of -10% Equity Price ChangeFair ValueImpact of+10% Equity Price ChangeImpact of -10% Equity Price Change
(in millions)
Equity Investments$817 $82 $(82)$15 $1 $(1)

A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent management’s view of future market changes. The fair value measurements shown are based on the equity securities portfolio exposures at a particular point in time and these exposures will change as a result of ongoing portfolio activities in response to management’s assessment of changing market conditions and available investment opportunities.
Liabilities with Interest Rate Risk – Fair Value
As of December 31, 2021 and 2020, the aggregate carrying values of insurance contracts with interest rate risk were $15.4 billion and $11.0 billion, respectively. The aggregate fair value of such liabilities as of December 31, 2021 and 2020 were $15.4 billion and $11.4 billion, respectively. The impact of a relative 1% decrease in interest rates would be an increase in the fair value of those liabilities of $355 million and $281 million, respectively. While these fair value measurements provide a representation of the interest rate sensitivity of insurance liabilities, they are based on the composition of such liabilities at a particular point in time and may not be representative of future results.
Asset/liability management is integrated into many aspects of the Individual Retirement, Group Retirement and Protection Solutions segments’ operations, including investment decisions, product development and determination of crediting rates. As part of our risk management process, numerous economic scenarios are modeled, including cash flow testing required for insurance regulatory purposes, to determine if existing assets would be sufficient to meet projected liability cash flows. Key variables include policyholder behavior, such as persistency, under differing crediting rate strategies.
123
Table of Contents
Derivatives and Interest Rate and Equity Risks – Fair Value
We primarily use derivative contracts for asset/liability risk management, to mitigate our exposure to equity market decline and interest rate risks and for hedging individual securities. In addition, we periodically enter into forward, exchange-traded futures and interest rate swap, swaptions and floor contracts to reduce the economic impact of movements in the equity and fixed income markets, including the program to hedge certain risks associated with the GMxB features. As more fully described in Note 2 and Note 4 of the Notes to these Consolidated Financial Statements, various traditional derivative financial instruments are used to achieve these objectives. To minimize credit risk exposure associated with its derivative transactions, each counterparty’s credit is appraised and approved, and risk control limits and monitoring procedures are applied. Credit limits are established and monitored on the basis of potential exposures that take into consideration current market values and estimates of potential future movements in market values given potential fluctuations in market interest rates. To reduce credit exposures in OTC derivative transactions, we enter into master agreements that provide for a netting of financial exposures with the counterparty and allow for collateral arrangements. We further control and minimize counterparty exposure through a credit appraisal and approval process. Under the ISDA Master Agreement, we have executed a CSA with each of our OTC derivative counterparties that require both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities or those issued by government agencies.
Mark to market exposure is a point-in-time measure of the value of a derivative contract in the open market. A positive value indicates existence of credit risk for us because the counterparty would owe money to us if the contract were closed. Alternatively, a negative value indicates we would owe money to the counterparty if the contract were closed. If there is more than one derivative transaction outstanding with a counterparty, a master netting arrangement exists with the counterparty. In that case, the market risk represents the net of the positive and negative exposures with the single counterparty. In management’s view, the net potential exposure is the better measure of credit risk. As of December 31, 2021 and 2020, the net fair values of our derivatives were $1,602 million and $995 million, respectively.
The tables below show the interest rate or equity sensitivities of those derivatives, measured in terms of fair value. These exposures will change as a result of ongoing portfolio and risk management activities.
Derivative Financial Instruments
   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, 2021
Swaps$2,831 11$(111)$(440)$(693)
Futures12,598 —1,150 — (908)
Swaptions— —— — — 
Total$15,429 $1,039 $(440)$(1,601)
December 31, 2020
Swaps$23,773 3$4,622 $(102)$(3,857)
Futures18,564 —1,477 — (1,264)
Swaptions— —— — — 
Total$42,337 $6,099 $(102)$(5,121)
124
Table of Contents
   Equity Sensitivity
 Notional
Amount		Weighted Average Term (Years)Fair ValueBalance after -10% Equity Price Shift
(in millions, except for Weighted Average Term)
December 31, 2021
Futures$2,484 —$— $93 
Swaps13,310 15 1,336 
Options48,439 26,959 5,381 
Total$64,233 $6,964 $6,810 
December 31, 2020
Futures$4,745 —$— $138 
Swaps22,404 —6 2,119 
Options35,846 24,672 3,488 
Total$62,995 $4,678 $5,745 
In addition to the freestanding derivatives discussed above, we have entered into reinsurance contracts to mitigate the risk associated with the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts. These reinsurance contracts are considered derivatives under the guidance on derivatives and hedging. GMIB reinsurance contract assets were reported at their fair values of $1.8 billion and $2.5 billion as of December 31, 2021 and 2020, respectively. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 and 2020, respectively, would increase the balances of the reinsurance contract asset by $169 million and $169 million. The Amounts due from Reinsurers was $5.8 billion at December 31, 2021. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 is $447 million.
Also, the GMxB feature’s liability associated with certain annuity contracts is similarly considered to be a derivative for accounting purposes and was reported at its fair value. The liability for embedded derivative liability features was $8.5 billion and $11.1 billion as of December 31, 2021 and 2020, respectively. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 and 2020, respectively, would be to increase the liability balance by $990 million and $1.1 billion.
Investment Management and Research
The investments of our Investment Management and Research segment consist of trading and AFS investments and other investments. AB’s trading and AFS investments include U.S. Treasury bills and equity and fixed income mutual funds’ investments. Trading investments are purchased for short-term investment, principally to fund liabilities related to deferred compensation plans and to seed new investment services. Although AFS investments are purchased for long-term investment, the portfolio strategy considers them AFS from time to time due to changes in market interest rates, equity prices and other relevant factors. Other investments include investments in hedge funds sponsored by AB and other private investment vehicles.
Investments with Interest Rate Risk – Fair Value
The table below provides AB’s potential exposure with respect to its fixed income investments, measured in terms of fair value, to an immediate 1% increase in interest rates at all maturities from the levels prevailing as of December 31, 2021 and 2020:
Interest Rate Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueBalance After -1% ChangeBalance After +1% ChangeFair ValueBalance After -1% ChangeBalance After +1% Change
(in millions)
Fixed Income Investments:
Trading$101 $109 $94 $36 $38 $33 

125
Table of Contents
Such a fluctuation in interest rates is a hypothetical rate scenario used to calibrate potential risk and does not represent AB management’s view of future market changes. Although these fair value measurements provide a representation of interest rate sensitivity of its investments in fixed income mutual funds and fixed income hedge funds, they are based on AB’s exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments in response to AB management’s assessment of changing market conditions and available investment opportunities.
Investments with Equity Price Risk – Fair Value
AB’s investments include investments in equity mutual funds and equity hedge funds. The following table presents AB’s potential exposure from its equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing as of December 31, 2021 and 2020:
Equity Price Risk Exposure
 December 31, 2021December 31, 2020
 Fair ValueBalance After +10% Equity Price ChangeBalance After -10% Equity Price ChangeFair ValueBalance After +10% Equity Price ChangeBalance After -10% Equity Price Change
(in millions)
Equity Investments:
Trading$86 $94 $77 $138 $151 $124 
Other investments$87 $96 $78 $80 $88 $72 

A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent AB management’s view of future market changes. While these fair value measurements provide a representation of equity price sensitivity of AB’s investments in equity mutual funds and equity hedge funds, they are based on AB’s exposure at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to AB management’s assessment of changing market conditions and available investment opportunities.
Item 8. Financial Statements and Supplementary Data

126
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm(PricewaterhouseCoopers LLP, New York, New York, PCAOB ID: 238)
128
132
133
134
135
136
Notes to Consolidated Financial Statements
Note 1 - Organization
138
Note 2 - Significant Accounting Policies
139
Note 3 - Investments
157
Note 4 - Derivatives
168
Note 5 - Goodwill and Other Intangible Assets
174
Note 6 - Closed Block
175
Note 7 - DAC and Policyholder Bonus Interest Credits
177
Note 8 - Fair Value Disclosures
177
Note 9 - Insurance Liabilities
193
Note 10 - Leases
196
Note 11 - Reinsurance
199
Note 12 - Short-term and Long-term Debt
201
Note 13 - Related Party Transactions
203
Note 14 - Employee Benefit Plans
204
Note 15 - Share-Based and Other Compensation Programs
212
Note 16 - Income Taxes
217
Note 17 - Commitments and Contingent Liabilities
219
Note 18 - Insurance Group Statutory Financial Information
222
Note 19 - Business Segment Information
224
Note 20 - Equity
227
Note 21 - Earnings Per Share
231
Note 22 - Redeemable Noncontrolling Interest
231
Note 23 - Held-For-Sale
231
Note 24 - Subsequent Events
232
Audited Consolidated Financial Statement Schedules
232
234
238
239
127
Table of Contents
Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Equitable Holdings, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the consolidated financial statements, including the related notes and financial statement schedules, of Equitable Holdings, Inc. and its subsidiaries (the “Company”) as listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
128
Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Amortization and Valuation of Deferred Policy Acquisition Costs (“DAC”) related to Variable and Interest Sensitive Life Products and Variable Annuity Products with Guaranteed Minimum Benefits
As described in Note 2 to the consolidated financial statements, DAC represents acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business that are deferred. A significant portion of the $5.5 billion of DAC as of December 31, 2021, is associated with the variable and interest sensitive life and variable annuity products with guaranteed minimum benefits. DAC associated with certain variable annuity products is amortized based on estimated assessments, with DAC on the remainder of variable annuities, Universal Life and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. The DAC amortization and valuation estimates for these products are determined using models and significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread.
The principal considerations for our determination that performing procedures relating to the amortization and valuation of DAC related to variable and interest sensitive life products and variable annuity products with guaranteed minimum benefits is a critical audit matter are (i) the significant judgment by management when determining the amortization and valuation estimates, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the relevant models and significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the amortization and valuation of DAC related to variable and interest sensitive life products and variable annuity products with guaranteed minimum benefits, including controls over the relevant models and development of the significant assumptions. These procedures also included, among others, testing management’s process for determining the amortization and valuation estimates of DAC, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant assumptions, (ii) testing that significant assumptions are accurately reflected in the relevant models, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the relevant models and the reasonableness of the significant assumptions related to projected future separate account performance, mortality, contract persistency, and general account investment spread based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.
Valuation of Guaranteed Minimum Benefit Features related to Certain Life and Annuity Contracts included within Future Policy Benefits and Other Policyholders’ Liabilities and Amounts Due From Reinsurers
As described in Note 2 to the consolidated financial statements, future policy benefits and other policyholders’ liabilities of $36.7 billion as of December 31, 2021, includes reserves related to guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefit (“GMIB”) features for certain life and annuity contracts, other than those accounted for as embedded derivatives. Amounts due from reinsurers of $14.7 billion as of December 31, 2021, includes reinsurance recoverables related to GMDB and GMIB features for certain life and annuity contracts ceded under reinsurance contracts other than those accounted for as embedded derivatives. For certain contracts with guaranteed minimum benefit features, the benefits are accounted for as reserves and determined by estimating the
129
Table of Contents
expected value of death or income benefits in excess of the projected contract accumulation value and recognizing the excess over the estimated life based on expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. The determination of this estimated liability is based on models that involve numerous assumptions and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates. Amounts due from reinsurers, other than those accounted for as embedded derivatives, are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities.
The principal considerations for our determination that performing procedures relating to the valuation of guaranteed minimum benefit features related to certain life and annuity contracts included within future policy benefits and other policyholders’ liabilities and amounts due from reinsurers is a critical audit matter are (i) the significant judgment by management when determining the valuation of these guaranteed minimum benefit features, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the relevant models and significant assumptions of expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates (collectively referred to as “the significant assumptions”), and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to valuation of guaranteed minimum benefit features related to certain life and annuity contracts, including controls over the relevant models and development of the significant assumptions. These procedures also included, among others, testing management’s process for determining the valuation of the guaranteed minimum benefit features, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant assumptions, (ii) testing that significant assumptions are accurately reflected in the relevant models, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the relevant models and the reasonableness of the significant assumptions based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.
Valuation of GMIB Features accounted for as Derivatives included within Future Policy Benefits and Other Policyholders’ Liabilities, GMIB Reinsurance Contract Asset, at fair value and Amounts Due from Reinsurers
As described in Notes 2 and 8 to the consolidated financial statements, the Company issues certain annuity contracts that contain GMIB features that are accounted for as embedded derivatives, recorded at fair value and presented within policy benefits and other policyholders’ liabilities. The reinsurance of certain of these GMIB features are accounted for as embedded derivatives and are presented at fair value within amounts due from reinsurers. Additionally, there are ceded reinsurance contracts that are net settled, accounted for as a derivative at fair value and presented within GMIB reinsurance contract asset, at fair value. As of December 31, 2021, the fair value of the GMIB features accounted for as embedded derivatives and presented within future policy benefits and other policyholders’ liabilities was $8.5 billion, GMIB reinsurance contract asset, at fair value was $1.8 billion, and amounts due from reinsurers was $5.8 billion. Management determined the fair values the of the GMIB features presented as embedded derivatives using a discounted cash flow valuation technique that incorporates significant unobservable inputs with respect to (i) non-performance risk, lapse rates, withdrawal rates, annuitization rates, and mortality rates for future policy benefits and other policyholders’ liabilities, and (ii) non-performance risk, lapse rates, withdrawal rates, utilization rates, volatility rates, and mortality rates for the GMIB reinsurance contract asset, at fair value and the amounts due from reinsurers.
The principal considerations for our determination that performing procedures relating to the valuation of GMIB features accounted for as derivatives and included within future policy benefits and other policyholders’ liabilities, GMIB reinsurance contract asset, at fair value, and amounts due from reinsurers is a critical audit matter are (i) the significant judgment by management when determining the fair values of the GMIB features accounted for as derivatives, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the valuation technique and significant unobservable inputs with related to non-performance risk, lapse rates, withdrawal rates, annuitization rates, and mortality rates for the reinsurance contract asset and the amounts due from reinsurers, and non-performance risk, lapse rates, withdrawal rates, annuitization rates and mortality rates for future policyholders’ liabilities (collectively referred to as “the significant unobservable inputs”), and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
130
Table of Contents
controls relating to determining the fair value of the GMIB features accounted for as derivatives included within future policy benefits and other policyholders’ liabilities, GMIB reinsurance contract asset, at fair value, and amounts due from reinsurers, including controls over the valuation technique and determination of significant unobservable inputs. These procedures also included, among others, testing management’s process for determining the fair value of the GMIB features accounted for as derivatives, which included (i) testing the completeness and accuracy of the historical data used by management to develop and update the significant unobservable inputs, (ii) testing that significant unobservable inputs are accurately reflected in the relevant valuation technique, and (iii) the use of professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the valuation technique and the reasonableness of the significant unobservable inputs based on consideration of the Company’s experience, industry trends, and market conditions, as applicable.




/s/ PricewaterhouseCoopers LLP
New York, New York
February 22, 2022
We have served as the Company’s auditor since 1993.


131
EQUITABLE HOLDINGS, INC.
Consolidated Balance Sheets
December 31, 2021 and 2020
December 31,
20212020
(in millions, except share data)
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost of $73,429 and $72,867) (allowance for credit losses of $22 and $13)$78,216 $81,638 
Fixed maturities, at fair value using the fair value option (1)1,641 389 
Mortgage loans on real estate (net of allowance for credit losses of $62 and $81) (1)14,033 13,159 
Policy loans4,024 4,118 
Other equity investments (1)2,975 1,502 
Trading securities, at fair value631 5,553 
Other invested assets (1)3,591 2,728 
Total investments105,111 109,087 
Cash and cash equivalents (1)5,188 6,179 
Cash and securities segregated, at fair value1,504 1,753 
Broker-dealer related receivables2,599 2,223 
Deferred policy acquisition costs5,491 4,243 
Goodwill and other intangible assets, net4,728 4,737 
Amounts due from reinsurers (allowance for credit losses of $5 and $5) (includes amounts accounted for at fair value of $5,813 and $—) (3)14,679 4,566 
GMIB reinsurance contract asset, at fair value1,848 2,488 
Current and deferred income taxes195 — 
Other assets (1)3,613 3,701 
Assets held-for-sale— 470 
Separate Accounts assets147,306 135,950 
Total Assets$292,262 $275,397 
LIABILITIES
Policyholders’ account balances$79,357 $66,820 
Future policy benefits and other policyholders' liabilities36,717 39,881 
Broker-dealer related payables1,283 1,443 
Customer related payables3,600 3,417 
Amounts due to reinsurers1,381 1,381 
Short-term and long-term debt3,931 4,115 
Current and deferred income taxes— 749 
Notes issued by consolidated variable interest entities, at fair value using the fair value option (1)1,191 313 
Other liabilities (1)3,933 3,686 
Liabilities held-for-sale— 322 
Separate Accounts liabilities147,306 135,950 
Total Liabilities$278,699 $258,077 
Redeemable noncontrolling interest (1) (2)$468 $143 
Commitments and contingent liabilities (Note 17)00
EQUITY
Equity attributable to Holdings:
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preference$1,562 $1,269 
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 520,918,331 and 552,896,328 shares issued, respectively; 391,290,224 and 440,776,011 shares outstanding, respectively4 5 
Additional paid-in capital1,919 1,985 
Treasury stock, at cost, 129,628,107 and 112,120,317 shares, respectively(2,850)(2,245)
Retained earnings8,880 10,699 
Accumulated other comprehensive income (loss)2,004 3,863 
Total equity attributable to Holdings11,519 15,576 
Noncontrolling interest1,576 1,601 
Total Equity13,095 17,177 
Total Liabilities, Redeemable Noncontrolling Interest and Equity$292,262 $275,397 
____________
(1) See Note 2 of the Notes to these Consolidated Financial Statements for details of balances with VIEs.
(2) See Note 22 of the Notes to these Consolidated Financial Statements for details of redeemable noncontrolling interest.
(3) Represents the fair value of the ceded reserves to Venerable. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction and Note 8 of the Notes to these Consolidated Financial Statements .
See Notes to Consolidated Financial Statements.
132
EQUITABLE HOLDINGS, INC.
Consolidated Statements of Income (Loss)
Years Ended December 31, 2021, 2020 and 2019

Year Ended December 31,
202120202019
(in millions, except per share data)
REVENUES
Policy charges and fee income$3,637 $3,735 $3,778 
Premiums960 997 1,147 
Net derivative gains (losses)(4,465)(1,722)(4,012)
Net investment income (loss)3,846 3,477 3,699 
Investment gains (losses), net:
Credit losses on available-for-sale debt securities and loans2 (58)— 
Other investment gains (losses), net866 802 73 
Total investment gains (losses), net868 744 73 
Investment management and service fees5,395 4,608 4,380 
Other income795 576 554 
Total revenues11,036 12,415 9,619 
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits3,218 5,326 4,385 
Interest credited to policyholders’ account balances1,219 1,222 1,263 
Compensation and benefits2,360 2,096 2,081 
Commissions and distribution-related payments1,662 1,351 1,242 
Interest expense244 200 221 
Amortization of deferred policy acquisition costs393 1,613 597 
Other operating costs and expenses2,109 1,700 1,890 
Total benefits and other deductions11,205 13,508 11,679 
Income (loss) from continuing operations, before income taxes(169)(1,093)(2,060)
Income tax (expense) benefit145 744 593 
Net income (loss)(24)(349)(1,467)
Less: Net income (loss) attributable to the noncontrolling interest415 299 297 
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings’ common shareholders$(518)$(701)$(1,764)
EARNINGS PER COMMON SHARE
Net income (loss) applicable to Holdings’ common shareholders per common share:
Basic$(1.24)$(1.56)$(3.57)
Diluted$(1.24)$(1.56)$(3.57)
Weighted average common shares outstanding (in millions):
Basic417.4 450.4 493.6 
Diluted417.4 450.4 493.6 


See Notes to Consolidated Financial Statements.
133

EQUITABLE HOLDINGS, INC.
Consolidated Statements of Comprehensive Income (Loss)
Years Ended December 31, 2021, 2020 and 2019
Year Ended December 31,
202120202019
(in millions)
COMPREHENSIVE INCOME (LOSS)
Net income (loss)$(24)$(349)$(1,467)
Other comprehensive income (loss) net of income taxes:
Change in unrealized gains (losses), net of reclassification adjustment(2,113)2,956 2,258 
Changes in defined benefit plan related items not yet recognized in periodic benefit cost, net of reclassification adjustment266 48 (15)
Foreign currency translation adjustment(11)22 5 
Total other comprehensive income (loss), net of income taxes(1,858)3,026 2,248 
Comprehensive income (loss)(1,882)2,677 781 
Less: Comprehensive income (loss) attributable to the noncontrolling interest416 306 293 
Comprehensive income (loss) attributable to Holdings$(2,298)$2,371 $488 

See Notes to Consolidated Financial Statements.
134
EQUITABLE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
Years Ended December 31, 2021, 2020 and 2019
Year Ended December 31,
Equity Attributable to Holdings
Preferred Stock and Additional Paid-In CapitalCommon StockAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Holdings EquityNon-controlling InterestTotal Equity
(in millions)
January 1, 2021$1,269 $5 $1,985 $(2,245)$10,699 $3,863 $15,576 $1,601 $17,177 
Stock compensation— — 15 51 — — 66 220 286 
Purchase of treasury stock— (1)(27)(1,610)— — (1,638)— (1,638)
Reissuance of treasury stock— — — — (51)— (51)— (51)
Retirement of common stock— — — 954 (954)— — — — 
Repurchase of AB Holding units— — — — — — — (262)(262)
Dividends paid to noncontrolling interest— — — — — — — (393)(393)
Dividends on common stock (cash dividends declared per common share of $0.71)— — — — (296)— (296)— (296)
Dividends on preferred stock— — — — (79)— (79)— (79)
Issuance of preferred stock293 — — — — — 293 — 293 
Net income (loss)— — — — (439)— (439)410 (29)
Other comprehensive income (loss)— — — — — (1,859)(1,859)1 (1,858)
Other— — (54)— — — (54)(1)(55)
December 31, 2021$1,562 $4 $1,919 $(2,850)$8,880 $2,004 $11,519 $1,576 $13,095 
January 1, 2020$775 $5 $1,920 $(1,832)$11,744 $844 $13,456 $1,591 $15,047 
Cumulative effect of adoption of ASU 2016-03, Current Expected Credit Loss— — — — (30)— (30)— (30)
Stock compensation— — 27 17 — — 44 69 113 
Purchase of treasury stock— — — (430)— — (430)— (430)
Reissuance of treasury stock— — — — (17)— (17)— (17)
Repurchase of AB Holding units— — (48)— — — (48)(53)(101)
Dividends paid to noncontrolling interest— — — — — — — (305)(305)
Dividends on common stock (cash dividends declared per common share of $0.66)— — — — (297)— (297)— (297)
Dividends on preferred stock— — — — (53)— (53)— (53)
Issuance of preferred stock494 — — — — — 494 — 494 
Net income (loss)— — — — (648)— (648)302 (346)
Other comprehensive income (loss)— — — — — 3,019 3,019 7 3,026 
Other— — 86 — — — 86 (10)76 
December 31, 2020$1,269 $5 $1,985 $(2,245)$10,699 $3,863 $15,576 $1,601 $17,177 
January 1, 2019$— $5 $1,908 $(640)$13,937 $(1,408)$13,802 $1,566 $15,368 
Stock compensation— — 152 9 — — 161 77 238 
Purchase of treasury stock— — — (1,343)(2)— (1,345)— (1,345)
Retirement of common stock— — — 142 (142)— — — — 
Repurchase of AB Holding units— — (112)— — — (112)(61)(173)
Dividends paid to noncontrolling interest— — — — — — — (256)(256)
Dividends on common stock (cash dividends declared per common share of $0.58)— — — — (285)— (285)— (285)
Issuance of preferred stock775 — — — — — 775 — 775 
Net income (loss)— — — — (1,764)— (1,764)263 (1,501)
Other comprehensive income (loss)— — — — — 2,252 2,252 (4)2,248 
Other— — (28)— — — (28)6 (22)
December 31, 2019$775 $5 $1,920 $(1,832)$11,744 $844 $13,456 $1,591 $15,047 


See Notes to Consolidated Financial Statements.
135

EQUITABLE HOLDINGS, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2021, 2020 and 2019





Year Ended December 31,
202120202019
(in millions)
Cash flows from operating activities:
Net income (loss)$(24)$(349)$(1,467)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Interest credited to policyholders’ account balances1,219 1,222 1,263 
Policy charges and fee income(3,637)(3,735)(3,778)
Net derivative (gains) losses4,465 1,722 4,012 
Credit losses on AFS debt securities and loans(2)58 — 
Investment (gains) losses, net(863)(872)(206)
(Gains) losses on businesses HFS(3)69 133 
Realized and unrealized (gains) losses on trading securities26 (170)(502)
Non-cash long term incentive compensation expense226 210 278 
Amortization and depreciation497 1,757 675 
Equity (income) loss from limited partnerships(553)(83)(92)
Changes in:
Net broker-dealer and customer related receivables/payables(131)667 (403)
Reinsurance recoverable (1)(1,077)(401)(146)
Segregated cash and securities, net250 (659)75 
Capitalization of deferred policy acquisition costs(875)(670)(754)
Future policy benefits(299)1,953 962 
Current and deferred income taxes(451)(571)(102)
Other, net476 (209)(164)
Net cash provided by (used in) operating activities$(756)$(61)$(216)
Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale$34,434 $18,986 $13,327 
Fixed maturities, at fair value using the fair value option763 7 — 
Mortgage loans on real estate1,696 630 952 
Trading account securities5,159 2,162 10,717 
Real estate joint ventures— 55 5 
Short term investments87 1,497 2,643 
Other1,716 1,005 306 
Payment for the purchase/origination of:
Fixed maturities, available-for-sale(43,344)(28,197)(29,610)
Fixed maturities, at fair value using the fair value option(1,792)(311)— 
Mortgage loans on real estate(2,546)(1,747)(1,240)
Trading account securities(244)(708)(1,123)
Short term investments(18)(1,098)(2,776)
Other(2,553)(1,167)(430)
Cash from the sale of business, net of cash sold215 164 — 
Cash settlements related to derivative instruments(5,937)1,166 (954)
Repayments of loans to affiliates— — — 
Investment in capitalized software, leasehold improvements and EDP equipment(120)(107)(93)
Other, net(205)(160)(220)
Net cash provided by (used in) investing activities$(12,689)$(7,823)$(8,496)



See Notes to Consolidated Financial Statements.
136

EQUITABLE HOLDINGS, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2021, 2020 and 2019





Year Ended December 31,
202120202019
(in millions)
Cash flows from financing activities:
Policyholders’ account balances:
Deposits$17,521 $11,446 12,843 
Withdrawals(7,069)(4,332)(4,619)
Transfers (to) from Separate Accounts1,985 2,452 1,769 
Change in short-term financings92 — (546)
Change in collateralized pledged assets34 (139)(71)
Change in collateralized pledged liabilities1,413 848 1,361 
(Decrease) increase in overdrafts payable16 (13)(60)
Repayment of long-term debt(280)— (300)
Proceeds from notes issued by consolidated VIEs873 313 — 
Dividends paid on common stock(296)(297)(285)
Dividends paid on preferred stock(79)(53)— 
Issuance of preferred stock293 494 775 
Purchases of AB Holding Units to fund long-term incentive compensation plan awards(262)(149)(172)
Purchase of treasury shares(1,637)(430)(1,350)
Purchases (redemptions) of noncontrolling interests of consolidated
company-sponsored investment funds		346 (210)169 
Distribution to noncontrolling interest of consolidated subsidiaries(392)(304)(256)
Increase (decrease) in securities sold under agreement to repurchase— — (573)
Other, net(47)48 20 
Net cash provided by (used in) financing activities$12,511 $9,674 $8,705 
Effect of exchange rate changes on cash and cash equivalents$(18)$23 $8 
Change in cash and cash equivalents(952)1,813 1 
Cash and cash equivalents, beginning of year6,179 4,405 4,469 
Change in cash of businesses held-for-sale(39)(39)(65)
Cash and cash equivalents, end of year$5,188 $6,179 $4,405 
Supplemental cash flow information:
Interest paid215 215 273 
Income taxes (refunded) paid$305 $(173)$(506)
Non-cash transactions from investing and financing activities:
Transfer of assets to reinsurer$(9,023)$— $— 
__________
(1) Amount includes cash paid for Venerable Transaction of $494 million (see Note 1 of the Notes to these Consolidated Financial Statements).






See Notes to Consolidated Financial Statements.
137
Table of Contents
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements (Unaudited)

1)    ORGANIZATION
Equitable Holdings, Inc. is the holding company for a diversified financial services organization. The Company conducts operations in 4 segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. The Company’s management evaluates the performance of each of these segments independently.
•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 AB Holding and 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 VUL, IUL 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.
The Company reports certain activities and items that are not included in our segments in Corporate and Other. Corporate and Other includes certain of our financing and investment expenses. It also includes: Equitable Advisors broker-dealer business, closed block of life insurance (the “Closed Block”), run-off variable annuity reinsurance business, run-off group pension business, run-off health business, benefit plans for our employees, certain strategic investments and certain unallocated items, including capital and related investments, interest expense and corporate expense. AB’s results of operations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.
As of December 31, 2021 and December 31, 2020 the Company’s economic interest in AB was approximately 65% for both periods. The General Partner of AB is a wholly-owned subsidiary of the Company. Because the General Partner has the authority to manage and control the business of AB, AB is consolidated in the Company’s financial statements for all periods presented.
On June 1, 2021, Holdings completed the sale (the “Venerable Transaction”) of CS Life, to Venerable Insurance and Annuity Company, an insurance company domiciled in Iowa (“VIAC”), pursuant to the Master Transaction Agreement, dated October 27, 2020 (the “Master Transaction Agreement”), among the Company, VIAC and, solely with respect to Article XIV thereof, Venerable Holdings, Inc., a Delaware corporation (“Venerable”).
Pursuant to the Master Transaction Agreement, immediately prior to the closing of the Venerable Transaction, CS Life effected the recapture of all of the business that was ceded to CS Life Re Company, a wholly owned subsidiary of CS Life (“Reinsurance Subsidiary”), and sold 100% of the equity of the Reinsurance Subsidiary to another wholly owned subsidiary of the Company.
VIAC paid the Company a cash purchase price of $215 million for CS Life at closing. The post-closing true-up adjustment was immaterial. VIAC also issued a surplus note in aggregate principal amount of $60 million, to Equitable Financial Life Insurance Company, a New York-domiciled life insurance company and a wholly owned subsidiary of Holdings, for cash consideration.
Immediately following the closing of the Venerable Transaction, CS Life and Equitable Financial entered into a coinsurance and modified coinsurance agreement (the “Reinsurance Agreement”), pursuant to which Equitable Financial ceded to CS Life, on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit
138
Table of Contents
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements (Unaudited), Continued
guarantees. At the closing of the Transaction, CS Life deposited assets supporting the general account liabilities relating to the Block into a trust account for the benefit of Equitable Financial, which assets will secure its obligations to Equitable Financial under the Reinsurance Agreement. At the closing of the Transaction, AllianceBernstein L.P., a subsidiary of the Company (“AB”), entered into an investment advisory agreement with CS Life pursuant to which AB will serve as the preferred investment manager of the general account assets transferred to the trust account. The Company transferred assets of $9.5 billion, including primarily available for sale securities and cash, to a collateral trust account as the consideration for the reinsurance transaction. In addition, the Company recorded $9.6 billion of direct insurance liabilities ceded under the reinsurance contract, of which $5.3 billion is accounted at fair value, as the reinsurance of GMxB with no lapse guarantee riders are embedded derivatives. Additionally, $16.9 billion of Separate Account liabilities were ceded under a modified coinsurance portion of the agreement.
In addition, upon the completion of the Venerable Transaction, EIMG acquired an approximate 9.09% equity interest in Venerable’s parent holding company, VA Capital Company LLC. In connection with such investment, EIMG designated a member to the Board of Managers of VA Capital Company LLC.

2)     SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.
The accompanying consolidated financial statements present the consolidated results of operations, financial condition, and cash flows of the Company and its subsidiaries and those investment companies, partnerships and joint ventures in which the Company has control and a majority economic interest as well as those VIEs that meet the requirements for consolidation.
Financial results in the historical consolidated financial statements may not be indicative of the results of operations, comprehensive income (loss), financial position, equity or cash flows that would have been achieved had we operated as a separate, standalone entity during the reporting periods presented. We believe that the consolidated financial statements include all adjustments necessary for a fair presentation of the results of operations of the Company.
All significant intercompany transactions and balances have been eliminated in consolidation. The years “2021”, “2020” and “2019” refer to the years ended December 31, 2021, 2020 and 2019, respectively.
Adoption of New Accounting Pronouncements
DescriptionEffect on the Financial Statement or Other Significant Matters
ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, as well as clarifying and amending existing guidance.On January 1, 2021, the Company adopted the new accounting standards update. The new guidance was applied either on a retrospective, modified retrospective or prospective basis based on the items to which the amendments relate. The adoption did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows as of the adoption date.
Future Adoption of New Accounting Pronouncements
Description
Effective Date and Method of Adoption
Effect on the Financial Statement or Other Significant Matters
ASU 2018-12: Financial Services - Insurance (Topic 944); ASU 2020-11: Financial Services - Insurance (Topic 944): Effective Date and Early Application

139
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Description
Effective Date and Method of Adoption
Effect on the Financial Statement or Other Significant Matters
This ASU provides targeted improvements to existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity. The ASU primarily impacts four key areas, including:
1. Measurement of the liability for future policy benefits for traditional and limited payment contracts. The ASU requires companies to review, and if necessary, update cash flow assumptions at least annually for non-participating traditional and limited-payment insurance contracts. The ASU also prescribes the discount rate to be used in measuring the liability for future policy benefits for traditional and limited payment long-duration contracts.

2. Measurement of MRBs. MRBs, as defined under the ASU, will encompass certain GMxB features associated with variable annuity products and other general account annuities with other than nominal market risk.

3. Amortization of deferred acquisition costs. The ASU simplifies the amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins, requiring such balances to be amortized on a constant level basis over the expected term of the contracts.

 4. Expanded footnote disclosures. The ASU requires additional disclosures including information about significant inputs, judgements, assumptions and methods used in measurement
In November 2020, the FASB issued ASU 2020-11 which deferred the effective date of the amendments in ASU 2018-12 for all insurance entities. ASU 2018-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is allowed.

For the liability for future policyholder benefits for traditional and limited payment contracts, companies can elect one of two adoption methods. Companies can either elect a modified retrospective transition method applied to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or a full retrospective transition method using actual historical experience information as of contract inception. The same adoption method must be used for deferred policy acquisition costs.

For MRBs, the ASU should be applied retrospectively as of the beginning of the earliest period presented.		The Company continues to progress with implementation efforts and the evaluation of the impact that adoption of this guidance will have on the Company’s consolidated financial statements. Due to its extensive nature, the adoption of the ASU is expected to have a significant impact on the Company’s consolidated financial statements, as well as systems, processes and controls. Effective January 1, 2023, the new guidance will be adopted using the modified retrospective approach, except for MRBs which will use the full retrospective approach.

The Company has created a governance framework and implementation plan to ensure timely adoption of the guidance. In preparation for implementation, the Company continues to refine key accounting policy decisions, modernize processes and update internal controls. These changes include modifications of actuarial valuation systems, data sourcing, analytical procedures and reporting processes.

The impact on total equity of applying this ASU is estimated to be less than the current amount of reported AOCI as of December 31, 2021. The majority of the total equity impact as of December 31, 2021 is expected to be reflected in AOCI due to decreases in the Company’s estimate of its non-performance risk on variable annuity guarantees accounted for as MRBs for the first time under the guidance. The estimated impact to the retained earnings element of total equity as of December 31, 2021, due to accounting for variable annuity guarantees as MRBs that are not currently measured at fair value, is mitigated by the Company’s present use of a near industry low interest rate assumption of 2.25% on GMIB business. Because movements in equity markets, interest rates and credit spreads are unpredictable and at times volatile, it is possible that the estimated effects of adoption could change materially between December 31, 2021 and January 1, 2023.
140
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Description
Effective Date and Method of Adoption
Effect on the Financial Statement or Other Significant Matters
ASU2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
The amendments in this ASU provide optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.  The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.This ASU is effective as of March 12, 2020 through December 31, 2022. On December 15, 2021, the FASB tentatively approved deferring the sunset date of the guidance in Topic 848 to December 31, 2024.The Company is currently assessing the applicability of the optional expedients and exceptions provided under the ASU. Management is evaluating the impact that the adoption of this guidance will have on the Company’s consolidated financial statements.
Investments
The carrying values of fixed maturities classified as AFS are reported at fair value. Changes in fair value are reported in OCI, net of allowance for credit losses, policy related amounts and deferred income taxes. Changes in credit losses are recognized in Investment gains (losses), net. The redeemable preferred stock investments that are reported in fixed maturities include REIT, perpetual preferred stock and redeemable preferred stock. These securities may not have a stated maturity, may not be cumulative and do not provide for mandatory redemption by the issuer.Effective January 1, 2021, the Company began classifying certain preferred stock as equity securities to better reflect the economics and nature of these securities. These preferred stock securities are reported in other equity investments.
The Company determines the fair values of fixed maturities and equity securities based upon quoted prices in active markets, when available, or through the use of alternative approaches when market quotes are not readily accessible or available. These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities. More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment. The Company’s management, with the assistance of its investment advisors, evaluates AFS debt securities that experienced a decline in fair value below amortized cost for credit losses which are evaluated in accordance with the new financial instruments credit losses guidance. Integral to this review is an assessment made each quarter, on a security-by-security basis, by the IUS Committee, of various indicators of credit deterioration to determine whether the investment security has experienced a credit loss. This assessment includes, but is not limited to, consideration of the severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, and the financial strength, liquidity and continued viability of the issuer.
The Company recognizes an allowance for credit losses on AFS debt securities with a corresponding adjustment to earnings rather than a direct write down that reduces the cost basis of the investment, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Any improvements in estimated credit losses on AFS debt securities are recognized immediately in earnings. Management does not use the length of time a security has been in an unrealized loss position as a factor, either by itself or in combination with other factors, to conclude that a credit loss does not exist.
When the Company determines that there is more than 50% likelihood that it is not going to recover the principal and interest cash flows related to an AFS debt security, the security is placed on nonaccrual status and the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in a timely reversal of accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.

If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting allowance is recognized in income (loss) and the remainder of the fair value loss is recognized in OCI. The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security. The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security at the date of acquisition. Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries. These assumptions and estimates require use of management
141
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security. For mortgage and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.
Write-offs of AFS debt securities are recorded when all or a portion of a financial asset is deemed uncollectible. Full or partial write-offs are recorded as reductions to the amortized cost basis of the AFS debt security and deducted from the allowance in the period in which the financial assets are deemed uncollectible. The Company elected to reverse accrued interest deemed uncollectible as a reversal of interest income. In instances where the Company collects cash that it has previously written off, the recovery will be recognized through earnings or as a reduction of the amortized cost basis for interest and principal, respectively.
Policy loans represent funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.
Partnerships, investment companies and joint venture interests that the Company has control of and has an economic interest in or those that meet the requirements for consolidation under accounting guidance for consolidation of VIEs are consolidated. Those that the Company does not have control of and does not have a majority economic interest in and those that do not meet the VIE requirements for consolidation are reported on the equity method of accounting and are reported in other equity investments. The Company records its interests in certain of these partnerships on a month or one quarter lag.
Trading securities, which include equity securities and fixed maturities, are carried at fair value based on quoted market prices, with realized and unrealized gains (losses) reported in net investment income (loss) in the consolidated statements of income (loss).
The carrying values of certain fixed maturities are reported at fair value where the fair value option has been elected. The fair value option allows the Company to elect fair value as an alternative measurement for selected financial assets and financial liabilities not otherwise reported at fair value. Such elections have been made to help mitigate volatility in earnings that result from different measurement attributes. Electing the fair value option also allows the consistent accounting in net investment income (loss) for certain assets and liabilities. Changes in fair value of fixed maturities that have elected the fair value option are reflected in realized and unrealized gains (losses) reported in net investment income (loss) in the consolidated statements of income (loss).
Notes issued by consolidated variable interest entities represent notes issued by certain asset-backed investment vehicles, primarily CLOs, which we are required to consolidate. The creditors of these VIEs do not have recourse to the Company in excess of the assets contained within the VIEs. The Company has elected the fair value option for the majority of these notes and has based the fair value on the corresponding debt security collateral. Changes in fair value are reported in net investment income (loss).
COLI has been purchased by the Company and certain subsidiaries on the lives of certain key employees and the Company and these subsidiaries are named as beneficiaries under these policies. COLI is carried at the cash surrender value of the policies. As of December 31, 2021 and 2020, the carrying value of COLI was $1.0 billion and $992 million, respectively, and is reported in other invested assets in the consolidated balance sheets.
Cash and cash equivalents includes cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid debt instruments purchased with an original maturity of three months or less. Due to the short-term nature of these investments, the recorded value is deemed to approximate fair value. Cash and securities segregated primarily includes U.S. Treasury Bills segregated by AB in a special reserve bank custody account for the exclusive benefit of its brokerage customers under Rule 15c3-3 of the Exchange Act.
142
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Derivatives
Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, values of securities or commodities, credit spreads, market volatility, expected returns and liquidity. Values can also be affected by changes in estimates and assumptions, including those related to counterparty behavior and non-performance risk used in valuation models. Derivative financial instruments generally used by the Company include equity, currency, and interest rate futures, total return and/or other equity swaps, interest rate swaps and floors, swaptions, variance swaps and equity options, all of which may be exchange-traded or contracted in the OTC market. All derivative positions are carried in the consolidated balance sheets at fair value, generally by obtaining quoted market prices or through the use of valuation models.
Freestanding derivative contracts are reported in the consolidated balance sheets either as assets within “other invested assets” or as liabilities within “other liabilities.” The Company nets the fair value of all derivative financial instruments with counterparties for which an ISDA Master Agreement and related CSA have been executed. All changes in the fair value of the Company’s freestanding derivative positions not designated to hedge accounting relationships, including net receipts and payments, are included in “net derivative gains (losses)” without considering changes in the fair value of the economically associated assets or liabilities.
The Company has designated certain derivatives it uses to economically manage asset/liability risk in relationships which qualify for hedge accounting. To qualify for hedge accounting, we formally document our designation at inception of the hedge relationship as a cash flow, fair value or net investment hedge. This documentation includes our risk management objective and strategy for undertaking the hedging transaction. The Company identifies how the hedging instrument is expected to offset the designated risks related to the hedged item and the method that will be used to retrospectively and prospectively assess the hedge effectiveness. To qualify for hedge accounting, a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed and documented at inception and periodically throughout the life of the hedge accounting relationship.
The Company does not exclude any components of the hedging instrument from the effectiveness assessments and therefore does not separately measure or account for any excluded components of the hedging instrument.
While in cash flow hedge relationships, any periodic net receipts and payments from the hedging instrument are included in the income or expense line that the hedged item’s periodic income or expense is recognized. Other changes in the fair value of the hedging instrument while in a cash flow hedging relationship are reported within OCI. These amounts are deferred in AOCI until they are reclassified to Net income (loss). The reclassified amount offsets the effect of the cash flows on Net income (loss) in the same period when the hedged item affects earnings and on the same line as the hedged item.
We discontinue cash flow hedge accounting prospectively when the Company determines: (1) the hedging instrument is no longer highly effective in offsetting changes in the cash flow from the hedged risk, (2) the hedged item is no longer probable of occurring within two months of their forecast, or (3) the hedging instrument is otherwise redesignated from the hedging relationship. Changes in the fair value of the derivative after discontinuation of cash flow hedge accounting are accounted for as freestanding derivative positions not designated to hedge accounting relationships unless and until the derivative is redesignated to a hedge accounting relationship. When cash flow hedge accounting is discontinued the amounts deferred in AOCI during the hedge relationship continue to be deferred in AOCI, as long as the hedged items continue to be probable of occurring within two months of their forecast, until the hedged item affects Net income (loss). Any amount deferred in AOCI for hedged items which are no longer probable of occurring within two months of their forecast will be reclassified to “net derivative gains (losses)” at that time.
The Company is a party to financial instruments and other contracts that contain “embedded” derivative instruments. At inception, the Company assesses whether the economic characteristics of the embedded instrument are “clearly and closely related” to the economic characteristics of the remaining component of the “host contract” and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. Once those criteria are met the resulting embedded derivative is bifurcated from the host contract, carried in the consolidated balance sheets at fair value, and changes in its fair value are recognized immediately and captioned in the consolidated statements of income (loss) according to the nature of the related host contract. For certain financial instruments that contain an embedded derivative that otherwise would need to be bifurcated and reported at fair value, the Company instead may elect to carry the entire instrument at fair value.
143
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Mortgage Loans on Real Estate
Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and the allowance for credit losses. The Company calculates the allowance for credit losses in accordance with the CECL model in order to provide for the risk of credit losses in the lending process.
Expected credit losses for loans with similar risk characteristics are estimated on a collective (i.e., pool) basis in order to meet CECL’s risk of loss concept which requires the Company to consider possibilities of loss, even if remote.
For collectively evaluated mortgages, the Company estimates the allowance for credit losses based on the amortized cost basis of its mortgages over their expected life using a PD / LGD model. The PD/LGD model incorporates the Company’s reasonable and supportable forecast of macroeconomic information over a specified period. The length of the reasonable and supportable forecast period is reassessed on a quarterly basis and may be adjusted as appropriate over time to be consistent with macroeconomic conditions and the environment as of the reporting date. For periods beyond the reasonable and supportable forecast period, the model reverts to historical loss information. The PD and LGD are estimated at the loan-level based on loans’ current and forecasted risk characteristics as well as macroeconomic forecasts. The PD is estimated using both macroeconomic conditions as well as individual loan risk characteristics including LTV ratios, DSC ratios, seasoning, collateral type, geography, and underlying credit. The LGD is driven primarily by the type and value of collateral, and secondarily by expected liquidation costs and time to recovery.
For individually evaluated mortgages, the Company continues to recognize a valuation allowance on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value.
The CECL model is configured to the Company’s specifications and takes into consideration the detailed risk attributes of each discrete loan in the mortgage portfolio which include, but are not limited to the following:
•LTV ratio – Derived from current loan balance divided by the fair market value of the property. An LTV ratio in excess of 100% indicates an underwater mortgage.
•DSC 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.
•Other – Any other factors such as maturity, borrower/tenant related issues, payment status, property condition, or current economic conditions may call into question the performance of the loan.
Mortgage loans that do not share similar risk characteristics with other loans in the portfolio are individually evaluated quarterly by the Company’s IUS Committee. The allowance for credit losses on these individually evaluated mortgages is a loan-specific reserve as a result of the loan review process that is recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral. The individually assessed allowance for mortgage loans can increase or decrease from period to period based on such factors.
Individually assessed loans may include, but are not limited to, mortgages that have deteriorated in credit quality such as a TDR and reasonably expected TDRs, mortgages for which foreclosure is probable, and mortgages which have been classified as “potential problem” or “problem” loans within the Company’s IUS Committee processes as described below.
Within the IUS process, commercial mortgages 60 days or more past due and agricultural mortgages 90 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgage loans. Based on its monthly monitoring of mortgages, a class of potential problem mortgage loans are also identified, consisting of mortgage loans not currently classified as problem mortgage loans but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being modified. The decision whether to classify a performing mortgage loan as a potential problem
144
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
involves judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
Individually assessed mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows.
Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is not probable. Once mortgage loans are classified as nonaccrual mortgage loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan has been restructured to where the collection of interest is considered likely. The Company charges off loan balances and accrued interest that are deemed uncollectible.
The components of amortized cost for mortgage loans on the consolidated balance sheets excludes accrued interest amounts because the Company presents accrued interest receivables within other assets. Once mortgage loans are placed on nonaccrual status, the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in the timely reversal of accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.
Troubled Debt Restructuring
The Company invests in commercial and agricultural mortgage loans included in the balance sheet as mortgage loans on real estate that had been classified as non-accrual loans were $19 million and $19 million, respectively.
Valuation Allowances for Mortgage Loans:
The changeprivately negotiated fixed maturities included in the valuationbalance sheet as fixed maturities AFS. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a TDR has occurred. A modification is a TDR when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific credit allowance recorded in connection with the TDR. A credit allowance may have been recorded prior to the period when the loan is modified in a TDR. Accordingly, the carrying value (net of the allowance) before and after modification through a TDR may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.
Net Investment Income (Loss), Investment Gains (Losses) Net and Unrealized Investment Gains (Losses)
Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of revenue. Changes in the allowance for credit losses are included in investment gains (losses), net.
Realized and unrealized holding gains (losses) on trading and equity securities are reflected in net investment income (loss).
Unrealized investment gains (losses) on fixed maturities designated as AFS held by the Company are accounted for commercial mortgageas a separate component of AOCI, net of related deferred income taxes, as are amounts attributable to certain pension operations, Closed Block’s policyholders’ dividend obligation, insurance liability loss recognition, DAC related to UL policies, investment-type products and participating traditional life policies.
Changes in unrealized gains (losses) reflect changes in fair value of only those fixed maturities classified as AFS and do not reflect any change in fair value of policyholders’ account balances and future policy benefits.
Fair Value of Financial Instruments
See Note 8 of the Notes to these Consolidated Financial Statements for additional information regarding determining the fair value of financial instruments.
Recognition of Insurance Income and Related Expenses
Deposits related to UL and investment-type contracts are reported as deposits to policyholders’ account balances. Revenues from these contracts consist of fees assessed during the period against policyholders’ account balances for mortality charges, policy administration charges and surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policyholders’ account balances.
145
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Premiums from participating and non-participating traditional life and annuity policies with life contingencies generally are recognized in income when due. Benefits and expenses are matched with such income so as to result in the recognition of profits over the life of the contracts. This match is accomplished by means of the provision for liabilities for future policy benefits and the deferral and subsequent amortization of DAC.
For contracts with a single premium or a limited number of premium payments due over a significantly shorter period than the total period over which benefits are provided, premiums are recorded as revenue when due with any excess profit deferred and recognized in income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over the period to which the premiums relate in proportion to the amount of insurance protection provided.
DAC
Acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business, reflecting incremental direct costs of contract acquisition with independent third parties or employees that are essential to the contract transaction, as well as the portion of employee compensation, including payroll fringe benefits and other costs directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts including commissions, underwriting, agency and policy issue expenses, are deferred. In each reporting period, DAC amortization, net of the accrual of imputed interest on DAC balances, is recorded to amortization of deferred policy acquisition costs. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. The determination of DAC, including amortization and recoverability estimates, is based on models that involve numerous assumptions and subjective judgments, including those regarding policyholder behavior, surrender and withdrawal rates, mortality experience, and other inputs including financial market volatility and market rates of return.
After the initial establishment of reserves, premium deficiency and loss recognition tests are performed each period end using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to earnings.
Amortization Policy
In accordance with the guidance for the accounting and reporting by insurance enterprises for certain long-duration contracts and participating contracts and for realized gains and losses from the sale of investments, current and expected future profit margins for products covered by this guidance are examined regularly in determining the amortization of DAC.
DAC associated with certain variable annuity products is amortized based on estimated assessments, with DAC on the remainder of variable annuities, UL and investment-type products amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Accounts fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, embedded derivatives and changes in the reserve of products that have indexed features such as SCS IUL and MSO, updated at the end of each accounting period. When estimated gross profits are expected to be negative for multiple years of a contract life, DAC is amortized using the present value of estimated assessments. The effect on the amortization of DAC of revisions to estimated gross profits or assessments is reflected in earnings (loss) in the period such estimated gross profits or assessments are revised. A decrease in expected gross profits or assessments would accelerate DAC amortization. Conversely, an increase in expected gross profits or assessments would slow DAC amortization. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date.
A significant assumption in the amortization of DAC on variable annuities and, to a lesser extent, on variable and interest-sensitive life insurance relates to projected future separate account performance. Management sets estimated future gross profit or assessment assumptions related to separate account performance using a long-term view of expected average market returns by applying a RTM approach, a commonly used industry practice. This future return approach influences the projection of fees earned, as well as other sources of estimated gross profits. Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned
146
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
resulting in higher expected future gross profits and lower DAC amortization for the period. The opposite occurs when returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance. Management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. As of December 31, 2021, the average gross short-term and long-term annual return estimate on variable and interest-sensitive life insurance and variable annuities was 7.0% (4.7% net of product weighted average Separate Accounts fees), and the gross maximum and minimum short-term annual rate of return limitations were 15.0% (12.7% net of product weighted average Separate Accounts fees and Investment Advisory fees) and 0.0% ((2.3%) net of product weighted average Separate Accounts fees and Investment Advisory fees), respectively. The maximum duration over which these rate limitations may be applied is five years. This approach will continue to be applied in future periods. These assumptions of long-term growth are subject to assessment of the reasonableness of resulting estimates of future return assumptions.
In addition, projections of future mortality assumptions related to variable and interest-sensitive life products are based on a long-term average of actual experience. This assumption is updated periodically to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC amortization. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization.
Other significant assumptions underlying gross profit estimates for UL and investment type products relate to contract persistency and General Account investment spread.
For participating traditional life policies (substantially all of which are in the Closed Block), DAC is amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield. As of December 31, 2021, the average rate of assumed investment yields, excluding policy loans, for the Company was 4.5% grading to 4.3% in 2026. Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends. The effect on the accumulated amortization of DAC of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised. The effect on the DAC assets that would result from realization of unrealized gains (losses) is recognized with an offset to AOCI in consolidated equity as of the balance sheet date. Many of the factors that affect gross margins are included in the determination of the Company’s dividends to these policyholders. DAC adjustments related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in policyholders’ benefits for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.
DAC associated with non-participating traditional life policies are amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts. Deviations from estimated experience are reflected in income (loss) in the period such deviations occur. For these contracts, the amortization periods generally are for the total life of the policy. DAC related to these policies are subject to recoverability testing as part of the Company’s premium deficiency testing. If a premium deficiency exists, DAC are reduced by the amount of the deficiency or to zero through a charge to current period earnings (loss). If the deficiency exceeds the DAC balance, the reserve for future policy benefits is increased by the excess, reflected in earnings (loss) in the period such deficiency occurs.
For some products, policyholders can elect to modify product benefits, features, rights or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. These transactions are known as internal replacements. If such modification substantially changes the contract, the associated DAC is written off immediately through income and any new deferrable costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed.
Reinsurance
For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Cessions under
147
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
reinsurance agreements do not discharge the Company’s obligations as the primary insurer. The Company reviews all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims.
For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid (received), and the liabilities ceded (assumed) related to the underlying contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is recorded as an adjustment to DAC and recognized as a component of other expenses on a basis consistent with the way the acquisition costs on the underlying reinsured contracts would be recognized. Subsequent amounts paid (received) on the reinsurance of in-force blocks, as well as amounts paid (received) related to new business, are recorded as premiums ceded (assumed); and amounts due from reinsurers (amounts due to reinsurers) are established.
Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance.
Premiums, policy charges and fee income, and policyholders’ benefits include amounts assumed under reinsurance agreements and are net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in other revenues. With respect to GMIBs, a portion of the directly written GMIBs are accounted for as insurance liabilities, but the associated reinsurance agreements contain embedded derivatives as they are net settled. These embedded derivatives are included in GMIB reinsurance contract asset, at fair value with changes in estimated fair value reported in net derivative gains (losses). Separate Account liabilities that have been ceded on a Modified coinsurance (Modco) basis, receivable and payable have been recognized on a net basis as right of offset exists.
If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within other assets. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other income or other operating costs and expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate.
For reinsurance contracts other than those accounted for as derivatives, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities.
Policyholder Bonus Interest Credits
Policyholder bonus interest credits are offered on certain deferred annuity products in the form of either immediate bonus interest credited or enhanced interest crediting rates for a period of time. The interest crediting expense associated with these policyholder bonus interest credits is deferred and amortized over the lives of the underlying contracts in a manner consistent with the amortization of DAC. Unamortized balances are included in other assets in the consolidated balance sheets and amortization is included in interest credited to policyholders’ account balances in the consolidated statements of income (loss).
Policyholders’ Account Balances and Future Policy Benefits and Other Policyholders’ Liabilities
Policyholders’ account balances relate to contracts or contract features where the Company has no significant insurance risk. This liability represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date.
For participating traditional life insurance policies, future policy benefit liabilities are calculated using a net level premium method on the basis of actuarial insurance assumptions equal to guaranteed mortality and dividend fund interest rates. The liability for annual dividends represents the accrual of annual dividends earned. Terminal dividends are accrued in proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy benefit liabilities are estimated using a net level premium method on the basis of actuarial assumptions as to mortality, persistency and interest established at policy issue. Assumptions established at policy issue as to mortality and persistency are based on the Company’s experience
148
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
that, together with interest and expense assumptions, includes a margin for adverse deviation. Benefit liabilities for traditional annuities during the accumulation period are equal to accumulated policyholders’ fund balances and, after annuitization, are equal to the present value of expected future payments. Interest rates used in establishing such liabilities range from 3.5% to 7.3% (weighted average of 5.0%) for approximately 99.4% of life insurance liabilities and from 1.5% to 5.4% (weighted average of 3.5%) for annuity liabilities.
Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. While management believes its DI reserves have been calculated on a reasonable basis and are adequate, there can be no assurance reserves will be sufficient to provide for future liabilities.
Obligations arising from funding agreements are also reported in policyholders’ account balances in the consolidated balance sheets. As a member of the FHLB, the Company has access to collateralized borrowings. The Company may also issue funding agreements to the FHLB. Both the collateralized borrowings and funding agreements would require the Company to pledge qualified mortgage-backed assets and/or government securities as collateral.
The Company has issued and continues to offer certain variable annuity products with GMDB and/or contain a GMLB (collectively, the “GMxB features”) which, if elected by the policyholder after a stipulated waiting period from contract issuance, guarantees a minimum lifetime annuity based on predetermined annuity purchase rates that may be in excess of what the contract account value can purchase at then-current annuity purchase rates. This minimum lifetime annuity is based on predetermined annuity purchase rates applied to a GMIB base. The Company previously issued certain variable annuity products with GIB, GWBL, GMWB, and GMAB features. The Company has also assumed reinsurance for products with GMxB features.
Reserves for products that have GMIB features, but do not have no-lapse guarantee features, and products with GMDB features are determined by estimating the expected value of death or income benefits in excess of the projected contract accumulation value and recognizing the excess over the estimated life based on expected assessments (i.e., benefit ratio). The liability equals the current benefit ratio multiplied by cumulative assessments recognized to date, plus interest, less cumulative excess payments to date. These reserves are recorded within future policy benefits and other policyholders’ liabilities. The determination of this estimated future policy benefits liability is based on models that involve numerous assumptions and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates. Assumptions regarding separate account performance used for purposes of this calculation are set using a long-term view of expected average market returns by applying a RTM approach, consistent with that used for DAC amortization. There can be no assurance that actual experience will be consistent with management’s estimates.
Products that have a GMIB feature with a no-lapse guarantee rider (“GMIBNLG”), GIB, GWBL, GMWB and GMAB features and the assumed products with GMIB features (collectively “GMxB derivative features”) are considered either freestanding or embedded derivatives and discussed below under (“Embedded and Freestanding Insurance Derivatives”).
After the initial establishment of reserves, premium deficiency and loss recognition tests are performed each period end using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC would first be written off and thereafter, if required, a premium deficiency reserve would be established by a charge to earnings. Premium deficiency reserves are recorded for the group single premium annuity business, certain interest-sensitive life contracts, structured settlements, individual disability income and major medical. Additionally, in certain instances the policyholder liability for a particular line of business may not be deficient in the aggregate to trigger loss recognition, but the pattern of earnings may be such that profits are expected to be recognized in earlier years followed by losses in later years. This pattern of profits followed by losses is exhibited in our VISL business and is generated by the cost structure of the product or secondary guarantees in the contract. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges. We accrue for these PFBL using a dynamic approach that changes over time as the projection of future losses change.
149
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Policyholders’ Dividends
The amount of policyholders’ dividends to be paid (including dividends on policies included in the Closed Block) is determined annually by the board of directors of the issuing insurance company. The aggregate amount of policyholders’ dividends is related to actual interest, mortality, morbidity and expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by the Company.
Embedded and Freestanding Insurance Derivatives
Reserves for products or features within products that are considered either embedded or freestanding derivatives are measured at estimated fair value separately from the host variable annuity product, with changes in estimated fair value reported in net derivative gains (losses). The estimated fair values of these derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees attributable to the guarantee. The projections of future benefits and future fees require capital markets and actuarial assumptions, including expectations concerning policyholder behavior. A risk-neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates.
Additionally, the Company cedes and assumes reinsurance of products with GMxB features, which are considered either an embedded or freestanding derivative, and measured at fair value. The GMxB reinsurance contract asset and liabilities’ fair values reflect the present value of reinsurance premiums, net of recoveries, and risk margins over a range of market-consistent economic scenarios.
Changes in the fair value of embedded and freestanding derivatives are reported in net derivative gains (losses). Embedded derivatives in direct and assumed reinsurance contracts are reported in future policyholders’ benefits and other policyholders’ liabilities. Amounts due from reinsurers contains the reinsurance of underlying GMIB contracts that are embedded derivatives, so the reinsurance has the same risk attributes as the underlying contracts and is an embedded derivatives carried at fair value. There are also embedded derivatives reported in the GMIB reinsurance contract asset related to ceded reinsurance contracts that are net settled, recorded at fair value in the consolidated balance sheets.
Embedded derivatives fair values are determined based on the present value of projected future benefits minus the present value of projected future fees. At policy inception, a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits is attributed to the embedded derivative. The percentage of fees included in the fair value measurement is locked-in at inception. Fees above those amounts represent “excess” fees and are reported in policy charges and fee income.
Separate Accounts
Generally, Separate Accounts established under New York State and Arizona State Insurance Law are not chargeable with liabilities that arise from any other business of the Company. Separate Accounts assets are subject to General Account claims only to the extent Separate Accounts assets exceed separate accounts liabilities. Assets and liabilities of the Separate Account represent the net deposits and accumulated net investment earnings (loss) less fees, held primarily for the benefit of policyholders, and for which the Company does not bear the investment risk. Separate Accounts assets and liabilities are shown on separate lines in the consolidated balance sheets. Assets held in Separate Accounts are reported at quoted market values or, where quoted values are not readily available or accessible for these securities, their fair value measures most often are determined through the use of model pricing that effectively discounts prospective cash flows to present value using appropriate sector-adjusted credit spreads commensurate with the security’s duration, also taking into consideration issuer-specific credit quality and liquidity. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to policyholders of such Separate Accounts are offset within the same line in the consolidated statements of income (loss).
Deposits to Separate Accounts are reported as increases in Separate Accounts assets and liabilities and are not reported in the consolidated statements of income (loss). Mortality, policy administration and surrender charges on all policies including those funded by Separate Accounts are included in revenues.
The Company reports the General Account’s interests in Separate Accounts as trading securities, at fair value, in the consolidated balance sheets.
150
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Leases
The Company does not record leases with an initial term of 12 months or less in its consolidated balance sheets, but instead recognizes lease expense for these leases on a straight-line basis over the lease term. For leases with a term greater than one year, the Company records in its consolidated balance sheets at the time of lease commencement or modification a RoU operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the consolidated statements of income (loss) over the lease term on a straight-line basis. RoU operating lease assets represent the Company’s right to use an underlying asset for the lease term and RoU operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Broker-Dealer Revenues, Receivables and Payables
Equitable Advisors and certain of the Company’s other subsidiaries provide investment management, brokerage and distribution services for affiliates and third parties. Third-party revenues earned from these services are reported in other income in the Company’s consolidated statement of income (loss).
Receivables from and payables to clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral for receivables; such collateral is not reflected in the consolidated financial statements.
Goodwill and Other Intangible Assets
Goodwill recorded by the Company represents the excess of purchase price over the estimated fair value of identifiable net assets of companies acquired in a business combination and relates principally to the acquisition of SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc. (“Bernstein Acquisition”) and the purchase of AB Units. The Company tests goodwill for recoverability each annual reporting period at December 31 and at interim periods if facts or circumstances are indicative of potential impairment.
Starting as of June 30, 2020, the Company changed its measurement of the fair value of its Investment Management and Research reporting unit from a discounted cash flow valuation technique to a market valuation approach. Under the market valuation approach, the fair value of the reporting unit is based on its adjusted market valuation assuming a control premium. The Company determined that this valuation technique provided a more exact determination of fair value for the reporting unit and was applied during its annual testing for goodwill recoverability at December 31, 2021 and 2020.
The Company’s intangible assets primarily relate to the Bernstein Acquisition and purchases of AB Units and reflect amounts assigned to acquired investment management contracts based on their estimated fair values at the time of acquisition, less accumulated amortization. These intangible assets generally are amortized on a straight-line basis over their estimated useful life, ranging from six to twenty years. All intangible assets are periodically reviewed for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value exceeds fair value, impairment tests are performed to measure the amount of the impairment loss, if any.
Deferred Sales Commissions, Net
Commissions paid to financial intermediaries in connection with the sale of shares of open-end AB sponsored mutual funds sold without a front-end sales charge (“back-end load shares”) are capitalized as deferred sales commissions and amortized over periods not exceeding five and one-half years for U.S. fund shares and four years for non-U.S. fund shares, the periods of time during which the deferred sales commissions are generally recovered. These commissions are recovered from distribution services fees received from those funds and from CDSC received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions of unamortized deferred sales commissions when received. Since January 31, 2009, AB sponsored U.S. mutual funds have not offered back-end load shares to new investors.
Management periodically reviews the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If these factors indicate impairment in value, a comparison is made of the carrying value to the undiscounted cash flows expected to be generated by the asset over its remaining life. If it is determined the deferred sales commission asset is not fully recoverable, the asset will be deemed impaired and a loss will be recorded in the amount by which the recorded amount of the asset exceeds its estimated fair value.
151
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2021 and 2020, respectively, net deferred sales commissions from AB totaled $75 million and $64 million and are included within other assets in the consolidated balance sheets. The estimated amortization expense of deferred sales commissions, based on the December 31, 2021 net asset balance for each of the next four years is $35 million, $26 million, $13 million and $1 million. The Company tests the deferred sales commission asset for impairment quarterly by comparing undiscounted future cash flows to the recorded value, net of accumulated amortization. Each quarter, significant assumptions used to estimate the future cash flows are updated to reflect management’s consideration of current market conditions on expectations made with respect to future market levels and redemption rates. As of December 31, 2021 and 2020, the Company determined that the deferred sales commission asset was not impaired.
Capitalized Computer Software and Hosting Arrangements
Capitalized computer software and hosting arrangements include certain internal and external costs used to implement internal-use software and cloud computing hosting arrangements. These capitalized computer costs are included in other assets in the consolidated balance sheets and amortized on a straight-line basis over the estimated useful life of the software or term of the hosting arrangement that ranges between three and five years. Capitalized amounts are periodically tested for impairment in accordance with the guidance on impairment of long-lived assets. An immediate charge to earnings is recognized if capitalized computer costs no longer are deemed to be recoverable. In addition, service potential is periodically reassessed to determine whether facts and circumstances have compressed the software’s useful life or a significant change in the term of the hosting arrangement such that acceleration of amortization over a shorter period than initially determined would be required.
Capitalized computer software and hosting arrangements, net of accumulated amortization, amounted to $193 million and $191 million as of December 31, 2021 and 2020, respectively. Amortization of capitalized computer software and hosting arrangements in 2021, 2020 and 2019 was $57 million, $60 million and $52 million, respectively, recorded in other operating costs and expenses in the consolidated statements of income (loss).
Short-term and Long-term Debt
Liabilities for short-term and long-term debt are primarily carried at an amount equal to unpaid principal balance, net of unamortized discount or premium and debt issue costs. Original-issue discount or premium and debt-issue costs are recognized as a component of interest expense over the period the debt is expected to be outstanding, using the interest method of amortization. Interest expense is generally presented within interest expense in the consolidated statements of income (loss). Short-term debt represents debt coming due in the next twelve months, including that portion of debt otherwise classified as long-term. See Note 12 of the Notes to these Consolidated Financial Statements for additional information regarding short-term and long-term debt.
Income Taxes
The Company and certain of its consolidated subsidiaries and affiliates file a consolidated federal income tax return. The Company provides for federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities. Current federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income tax assets and liabilities are recognized based on the difference between financial statement carrying amounts and income tax bases of assets and liabilities using enacted income tax rates and laws. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred tax assets will not be realized.
Under accounting for uncertainty in income taxes guidance, the Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the consolidated financial statements. Tax positions are then measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement.
ABLP is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, ABLP is subject to a 4.0% New York City unincorporated business tax. AB Holding is subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. Domestic corporate subsidiaries of AB are subject to federal, state and local income taxes. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located.
152
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Recognition of Investment Management and Service Fees and Related Expenses
Investment management, advisory and service fees
Investment management and service fees principally include the Investment Management and Research segment’s investment advisory and service fees, distribution revenues and institutional research services revenue. Investment advisory and service base fees, generally calculated as a percentage, referred to as BPs, of assets under management, are recorded as revenue as the related services are performed. Certain investment advisory contracts, including those associated with hedge funds, provide for a performance-based fee, in addition to or in lieu of a base fee which is calculated as either a percentage of absolute investment results or a percentage of the investment results in excess of a stated benchmark over a specified period of time.
Investment management and administrative service fees are also earned by EIM and EIMG and reported in the Individual Retirement, Group Retirement and Protection Solutions segments as well as certain asset-based fees associated with insurance contracts.
AB provides asset management services by managing customer assets and seeking to deliver returns to investors. Similarly, EIM and EIMG provides investment management and administrative services, such as fund accounting and compliance services, to EQ Premier VIP Trust, EQAT and 1290 Funds as well as two private investment trusts established in the Cayman Islands, AXA Allocation Funds Trust and AXA Offshore Multimanager Funds Trust (collectively, the “Other AXA Trusts”). The contracts supporting these revenue streams create a distinct, separately identifiable performance obligation for each day the assets are managed for the performance of a series of services that are substantially the same and have the same pattern of transfer to the customer. Accordingly, these investment management, advisory, and administrative service base fees are recorded over time as services are performed and entitle the Company to variable consideration. Base fees, generally calculated as a percentage of AUM, are recognized as revenue at month-end when the transaction price no longer is variable and the value of the consideration is determined. These fees are not subject to claw back and there is minimal probability that a significant reversal of the revenue recorded will occur.
Certain investment advisory contracts of AB, including those associated with hedge funds or other alternative investments, provide for a performance-based fee (including carried interest), in addition to a base advisory fee, calculated either as a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. These performance-based fees are forms of variable consideration and, therefore, are excluded from the transaction price until it becomes probable there will not be significant reversal of the cumulative revenue recognized. At each reporting date, the Company evaluates constraining factors surrounding the variable consideration to determine the extent to which, if any, revenues associated with the performance-based fee can be recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include contractual claw-back provisions, the length of time of the uncertainty, the number and range of possible amounts, the probability of significant fluctuations in the fund’s market value and the level in which the fund’s value exceeds the contractual threshold required to earn such a fee and the materiality of the amount being evaluated.
Sub-advisory and sub-administrative expenses associated with these services are calculated and recorded as the related services are performed in other operating costs and expense in the consolidated statements of income (loss) as the Company is acting in a principal capacity in these transactions and, as such, reflects these revenues and expenses on a gross basis.
Research services
Research services revenue principally consists of brokerage transaction charges received by SCB LLC, SCBL and AB’s other sell side subsidiaries for providing equity research services to institutional clients. Brokerage commissions for trade execution services and related expenses are recorded on a trade-date basis when the performance obligations are satisfied. Generally, the transaction price is agreed upon at the point of each trade and based upon the number of shares traded or the value of the consideration traded. Research revenues are recognized when the transaction price is quantified, collectability is assured and significant reversal of such revenue is not probable.
Distribution services
Revenues from distribution services include fees received as partial reimbursement of expenses incurred in connection with the sale of certain AB sponsored mutual funds and the 1290 Funds and for the distribution primarily of EQAT and EQ Premier VIP Trust shares to separate accounts in connection with the sale of variable life and annuity contracts. The amount and timing of revenues recognized from performance of these distribution services often is
153
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
dependent upon the contractual arrangements with the customer and the specific product sold as further described below.
Most open-end management investment companies, such as U.S. funds and the EQAT and EQ Premier VIP Trusts and the 1290 Funds, have adopted a plan under Rule 12b-1 of the Investment Company Act that allows for certain share classes to pay out of assets, distribution and service fees for the distribution and sale of its shares (“12b-1 Fees”). These open-end management investment companies have such agreements with the Company, and the Company has selling and distribution agreements pursuant to which it pays sales commissions to the financial intermediaries that distribute the shares. These agreements may be terminated by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of shares.
The Company records 12b-1 fees monthly based upon a percentage of the NAV of the funds. At month-end, the variable consideration of the transaction price is no longer constrained as the NAV can be calculated and the value of consideration is determined. These services are separate and distinct from other asset management services as the customer can benefit from these services independently of other services. The Company accrues the corresponding 12b-1 fees paid to sub-distributors monthly as the expenses are incurred. The Company is acting in a principal capacity in these transactions; as such, these revenues and expenses are recorded on a gross basis in the consolidated statements of income (loss).
AB sponsored mutual funds offer back-end load shares in limited instances and charge the investor a CDSC if the investment is redeemed within a certain period. The variable consideration for these contracts is contingent upon the timing of the redemption by the investor and the value of the sales proceeds. Due to these constraining factors, the Company excludes the CDSC fee from the transaction price until the investor redeems the investment. Upon redemption, the cash consideration received for these contractual arrangements is recorded as a reduction of unamortized deferred sales commissions.
AB’s Luxembourg subsidiary, the management company for most of its non-U.S. funds, earns a management fee which is accrued daily and paid monthly, at an annual rate, based on the average daily net assets of the fund. With respect to certain share classes, the management fee also may contain a component paid to distributors and other financial intermediaries and service providers to cover shareholder servicing and other administrative expenses (also referred to as an “All-in-Fee”). Based on the conclusion that asset management is distinct from distribution, the Company allocates a portion of the investment and advisory fee to distribution revenues for the servicing component based on standalone selling prices.
Other revenues
Also reported as investment management and service fees in the Company’s consolidated statements of income (loss) are other revenues from contracts with customers, primarily consisting of shareholder servicing fees, mutual fund reimbursements and other brokerage income.
Shareholder services, including transfer agency, administration and record-keeping are provided by AB to company-sponsored mutual funds. The consideration for these services is based on a percentage of the NAV of the fund or a fixed-fee based on the number of shareholder accounts being serviced. The revenues are recorded at month-end when the constraining factors involved with determining NAV or the numbers of shareholders’ accounts are resolved.
Other income
Revenues from contracts with customers reported as other income in the Company’s consolidated statements of income (loss) primarily consist of advisory account fees and brokerage commissions from the Company’s broker-dealer operations and sales commissions from the Company’s general agents for the distribution of non-affiliate insurers’ life insurance and annuity products. These revenues are recognized at month-end when constraining factors, such as AUM and product mix, are resolved and the transaction pricing no longer is variable such that the value of consideration can be determined.
Accounting and Consolidation of VIEs
For all new investment products and entities developed by the Company, the Company first determines whether the entity is a VIE, which involves determining an entity’s variability and variable interests, identifying the holders of the equity investment at risk and assessing the five characteristics of a VIE. Once an entity has been determined to be a VIE, the Company then determines whether it is the primary beneficiary of the VIE based on its beneficial interests. If the Company is deemed to be the primary beneficiary of the VIE, then the Company consolidates the entity.
154
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Management of the Company reviews quarterly its investment management agreements and its investments in, and other financial arrangements with, certain entities that hold client AUM to determine the entities that the Company is required to consolidate under this guidance. These entities include certain mutual fund products, hedge funds, structured products, group trusts, collective investment trusts and limited partnerships.
The analysis performed to identify variable interests held, determine whether entities are VIEs or VOEs, and evaluate whether the Company has a controlling financial interest in such entities requires the exercise of judgment and is updated on a continuous basis as circumstances change or new entities are developed. The primary beneficiary evaluation generally is performed qualitatively based on all facts and circumstances, including consideration of economic interests in the VIE held directly and indirectly through related parties and entities under common control, as well as quantitatively, as appropriate.
Consolidated VIEs
Consolidated CLOs
The Company is the investment manager of certain asset-backed investment vehicles, commonly referred to as CLOs, and certain other vehicles for which the Company earns fee income for investment management services. The Company may sell or syndicate investments through these vehicles, principally as part of the strategic investing activity as part of its investment management businesses. Additionally, the Company may invest in securities issued by these vehicles which are eliminated in consolidation of the CLOs.
As of December 31, 2021 and December 31, 2020, respectively, Equitable Financial holds $109 million and $38 million of equity interests in the CLOs. The Company consolidated the CLOs as of December 31, 2021 and December 31, 2020 as it is the primary beneficiary due to the combination of both its equity interest held by Equitable Financial and the majority ownership of AB, which functions as the CLOs loan manager. The assets of the CLOs are legally isolated from the Company’s creditors and can only be used to settle obligations of the CLOs. The liabilities of the CLOs are non-recourse to the Company and the Company has no obligation to satisfy the liabilities of the CLOs. As of December 31, 2021, Equitable Financial holds $58 million of equity interests in a newly formed SPE established to purchase loans from the market in anticipation of a new CLO transaction. The Company consolidated the SPE as of December 31, 2021 as it is the primary beneficiary due to the combination of both its equity interest held by Equitable Financial and the majority ownership of AB, which functions as the SPE loan manager.
Resulting from this consolidation in the Company’s consolidated balance sheets are fixed maturities, at fair value using the fair value option with total assets of $1,641 million and $389 million notes issued by consolidated variable interest entities, at fair value using the fair value option with total liabilities of $1,191 million and $313 million at December 31, 2021 and December 31, 2020, respectively. The unpaid outstanding principal balance of the notes and short-term borrowing is $1.3 billion and $362 million at December 31, 2021 and December 31, 2020.
Consolidated Limited Partnerships and LLCs
As of December 31, 2021 and December 31, 2020 the Company consolidated limited partnerships and LLCs for which it was identified as the primary beneficiary under the VIE model. Included in Other invested assets, Mortgage loans on real estate and Other equity investments in the Company’s consolidated balance sheets at December 31, 2021 and December 31, 2020 are total assets of $219 million and $12 million, respectively related to these VIEs.

Consolidated AB-Sponsored Investment Funds
Included in the Company’s consolidated balance sheet as of December 31, 2021 and December 31, 2020 are assets of $734 million and $284 million, liabilities of $87 million and $8 million, and redeemable noncontrolling interests of $421 million and $83 million, respectively, associated with the consolidation of AB-sponsored investment funds under the VIE model. Also included in the Company’s consolidated balance sheets as of December 31, 2021 and December 31, 2020 are assets of $0 million and $68 million, liabilities of $0 million and $23 million, and redeemable noncontrolling interests of $0 million and $20 million, respectively, from consolidation of AB-sponsored investment funds under the VOE model. The assets of these consolidated funds are presented within other invested assets and cash and cash equivalents, and liabilities of these consolidated funds are presented with other liabilities in the Company’s consolidated balance sheets; ownership interests not held by the Company relating to consolidated VIEs and VOEs are presented either as redeemable or non-redeemable noncontrolling interests, as appropriate. Redeemable noncontrolling interests are presented in mezzanine equity and non-redeemable noncontrolling interests are presented within
155
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
permanent equity. The Company is not required to provide financial support to these AB-sponsored investment funds, and only the assets of such funds are available to settle each fund’s own liabilities.
Non-Consolidated VIEs
As of December 31, 2021 and December 31, 2020 respectively, the Company held approximately $2.1 billion and $1.4 billion of investment assets in the form of equity interests issued by non-corporate legal entities determined under the guidance to be VIEs, such as limited partnerships and limited liability companies, including CLOs, hedge funds, private equity funds and real estate-related funds. As an equity investor, the Company is considered to have a variable interest in each of these VIEs as a result of its participation in the risks and/or rewards these funds were designed to create by their defined portfolio objectives and strategies. Primarily through qualitative assessment, including consideration of related party interests or other financial arrangements, if any, the Company was not identified as primary beneficiary of any of these VIEs, largely due to its inability to direct the activities that most significantly impact their economic performance. Consequently, the Company continues to reflect these equity interests in the consolidated balance sheets as other equity investments and applies the equity method of accounting for these positions. The net assets of these non-consolidated VIEs are approximately $245.6 billion and $165.9 billion as of December 31, 2021 and December 31, 2020 respectively. The Company’s maximum exposure to loss from its direct involvement with these VIEs is the carrying value of its investment of $2.1 billion and $1.4 billion and approximately $1.2 billion and $1.2 billion of unfunded commitments as of December 31, 2021 and December 31, 2020, respectively. The Company has no further economic interest in these VIEs in the form of guarantees, derivatives, credit enhancements or similar instruments and obligations.
Non-Consolidated AB-Sponsored Investment Products
As of December 31, 2021 and December 31, 2020, the net assets of investment products sponsored by AB that are non-consolidated VIEs are approximately $68.9 billion and $73.4 billion, respectively. The Company’s maximum exposure to loss from its direct involvement with these VIEs is its investment of $9 million and $7 million as of December 31, 2021 and December 31, 2020. The Company has no further commitments to or economic interest in these VIEs.
Assumption Updates and Model Changes
The Company conducts its annual review of its assumptions and models during the third quarter of each year. The annual review encompasses assumptions underlying the valuation of unearned revenue liabilities, embedded derivatives for our insurance business, liabilities for future policyholder benefits, DAC and DSI assets.
However, the Company updates its assumptions as needed in the event it becomes aware of economic conditions or events that could require a change in assumptions that it believes may have a significant impact to the carrying value of product liabilities and assets and consequently materially impact its earnings in the period of the change.
Due to the extraordinary economic conditions driven by the COVID-19 pandemic in the first quarter of 2020, the Company updated its interest rate assumption to grade from the current interest rate environment to an ultimate five-year historical average over a 10-year period. As such, the 10-year U.S. Treasury yield grades from the current level to an ultimate 5-year average of 2.25%.
The low interest rate environment and update to the interest rate assumption caused a loss recognition event for the Company’s life interest-sensitive products, as well as to certain run-off business. This loss recognition event caused an acceleration of DAC amortization on the life interest-sensitive products and an increase in the premium deficiency reserve on the run-off business in the first quarter of 2020.
Impact of Assumption Updates
The net impact of assumption changes during 2021 decreased policy charges and fee income by $28 million, decreased policyholders’ benefits by $62 million, increased net derivative losses by $200 million and decreased amortization of DAC by $58 million. This resulted in a decrease in income (loss) from operations, before income taxes of $108 million and decreased net income (loss) by $85 million. As part of this annual update completed as of September 30, 2021, the reference interest rate utilized in our GAAP fair value calculations was updated from the LIBOR swap curve to the US Treasury curve, which represents a reasonable proxy of the cost of funding the derivative positions backing our GMxB liabilities. Concurrently, our GAAP fair value liability risk margins were increased. which when considered with the change from LIBOR, resulted in an immaterial impact to overall valuation as our view regarding market participant pricing of our guarantees has not changed at the time of this update.
156
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The net impact of assumption changes during 2020 was an increase in policy charges and fee income of $23 million, an increased policyholders’ benefits by $1.6 billion, decreased interest credited to policyholders’ account balances by $1 million, increased net derivative gains by $112 million and increased amortization of DAC by $1.1 billion. This resulted in a decrease in income (loss) from operations, before income taxes of $2.6 billion and decreased net income (loss) by $2.0 billion.
The 2020 impacts related to assumption updates were primarily driven by the first quarter updates. The updates in the first quarter resulted in an increase in policy charges and fee income of $46 million, an increase in policyholders’ benefits of $1.4 billion, a decrease in interest credited to policyholders’ account balances of $6��million, and an increase of $1.1 billion in DAC amortization.
The net impact of assumption changes during 2019 was an increase in policy charges and fee income by $3 million, increased policyholders’ benefits by $875 million, decreased interest credited to policyholders’ account balances by $13 million, decreased net derivative gains (losses) by $578 million and decreased amortization of DAC by $46 million. This resulted in a decrease in income (loss) from operations, before income taxes of $1.4 billion and decreased net income (loss) by $1.1 billion.
Model Changes
There were no material model changes in 2021 and 2019.

In the first quarter of 2020, the Company adopted a new economic scenario generator to calculate the fair value of the GMIB reinsurance contract asset and GMxB derivative features liability, eliminating reliance on AXA for scenario production. The new economic scenario generator allows for a tighter calibration of U.S. indices, better reflecting the Company’s actual portfolio. The net impact of the new economic scenario generator resulted in an increase in income (loss) from continuing operations, before income taxes of $201 million, and an increase to net income (loss) of $159 million during 2020.

3)    INVESTMENTS
Fixed Maturities AFS
The components of fair value and amortized cost for fixed maturities classified as AFS on the consolidated balance sheets excludes accrued interest receivable because the Company elected to present accrued interest receivable within other assets. Accrued interest receivable on AFS fixed maturities as of December 31, 2021 and 2020 was $506 million and $538 million, respectively. There was no accrued interest written off for AFS fixed maturities for the years ended December 31, 2018, 20172021 and 2016 was as follows:
 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
There were no allowances for credit losses for agricultural mortgage loans in 2018, 2017 and 2016.2020.
The following tables provide information relating to the loan-to-value and debt service coverage ratios for commercial and agricultural mortgage loans at December 31, 2018 and 2017. The values used in these ratio calculations were developedCompany’s fixed maturities classified as part of the periodic review of the commercial and agricultural mortgage loan portfolio, which includes an evaluation of the underlying collateral value.AFS.

AFS Fixed Maturities by Classification
 Amortized CostAllowance for Credit LossesGross Unrealized GainsGross Unrealized LossesFair Value
  (in millions)
December 31, 2021
Fixed Maturities:
Corporate (1)$50,172 $22 $2,601 $240 $52,511 
U.S. Treasury, government and agency13,056 — 2,344 15 15,385 
States and political subdivisions586 — 78 2 662 
Foreign governments1,124 — 42 14 1,152 
Residential mortgage-backed (2)90 — 8 — 98 
Asset-backed (3)5,933 — 21 20 5,934 
Commercial mortgage-backed2,427 — 19 25 2,421 
Redeemable preferred stock (5)41 — 12 — 53 
Total at December 31, 2021$73,429 $22 $5,125 $316 $78,216 
AXA
157
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Mortgage Loans by Loan-to-Value and Debt Service Coverage Ratios
 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
 Amortized CostAllowance for Credit LossesGross Unrealized GainsGross Unrealized LossesFair Value
  (in millions)
December 31, 2020: (4)
Fixed Maturities:
Corporate (1)$53,160 $13 $5,104 $92 $58,159 
U.S. Treasury, government and agency12,675 — 3,448 5 16,118 
States and political subdivisions535 — 100 — 635 
Foreign governments1,011 — 98 6 1,103 
Residential mortgage-backed (2)130 — 13 — 143 
Asset-backed (3)3,587 — 29 5 3,611 
Commercial mortgage-backed1,148 — 55 — 1,203 
Redeemable preferred stock621 — 48 3 666 
Total at December 31, 2020$72,867 $13 $8,895 $111 $81,638 
______________
(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.

(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, credit risk transfer securities and other asset types.
(4)Excludes amounts reclassified as HFS.
(5)Effective January 1, 2021, certain preferred stock have been reclassified to other equity investments (see Note 2 of the Notes to these Consolidated Financial Statements- Investments).

The contractual maturities of AFS fixed maturities as of December 31, 2021 are shown in the table below. Bonds not due at a single maturity date have been included in the table in the final year of maturity. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Contractual Maturities of AFS Fixed Maturities
 Amortized Cost (Less Allowance for Credit Losses)Fair Value
 (in millions)
December 31, 2021
Contractual maturities:
Due in one year or less$1,117 $1,120 
Due in years two through five15,452 16,002 
Due in years six through ten18,189 19,104 
Due after ten years30,158 33,484 
Subtotal64,916 69,710 
Residential mortgage-backed90 98 
Asset-backed5,933 5,934 
Commercial mortgage-backed2,427 2,421 
Redeemable preferred stock41 53 
Total at December 31, 2021$73,407 $78,216 

The following table shows proceeds from sales, gross gains (losses) from sales and credit losses for AFS fixed maturities for the years ended December 31, 2021, 2020 and 2019:
AXA

158
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Proceeds from Sales, Gross Gains (Losses) from Sales and Credit Losses for AFS Fixed Maturities

 Year Ended December 31,
 202120202019
 (in millions)
Proceeds from sales$27,363 $12,903 $8,972 
Gross gains on sales$1,152 $862 $234 
Gross losses on sales$(195)$(41)$(32)
Credit losses$(16)$(13)$— 


The following table sets forth the amount of credit loss impairments on AFS fixed maturities held by the Company at the dates indicated and the corresponding changes in such amounts.
AFS Fixed Maturities - Credit Loss Impairments
Year Ended December 31,
202120202019
Balance, beginning of period$32 $21 $58 
Previously recognized impairments on securities that matured, paid, prepaid or sold(4)(2)(37)
Recognized impairments on securities impaired to fair value this period (1)— — — 
Credit losses recognized this period on securities for which credit losses were not previously recognized9 6 — 
Additional credit losses this period on securities previously impaired7 7 — 
Increases due to passage of time on previously recorded credit losses— — — 
Accretion of previously recognized impairments due to increases in expected cash flows (for OTTI securities 2019 and prior)— — — 
Balance at December 31,$44 $32 $21 
______________
(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.
The tables that follow below present a roll-forward of net unrealized investment gains (losses) recognized in AOCI.
Net Unrealized Gains (Losses) on AFS Fixed Maturities


Net Unrealized Gains (Losses) on InvestmentsDACPolicyholders’ LiabilitiesDeferred Income Tax Asset (Liability)AOCI Gain (Loss) Related to Net Unrealized Investment Gains (Losses)
(in millions)
Balance, January 1, 2021$8,811 $(1,548)$(1,065)$(1,302)$4,896 
Net investment gains (losses) arising during the period(3,122)— — — (3,122)
Reclassification adjustment:
Included in net income (loss)(846)— — — (846)
Excluded from net income (loss)— — — — — 
Other (1)(33)— — — (33)
Impact of net unrealized investment gains (losses)— 767 648 544 1,959 

159
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Net unrealized investment gains (losses) excluding credit losses4,810 (781)(417)(758)2,854 
Net unrealized investment gains (losses) with credit losses(1)(1)(1)1 (2)
Balance, December 31, 2021$4,809 $(782)$(418)$(757)$2,852 
Balance, January 1, 2020$3,453 $(894)$(189)$(497)$1,873 
Net investment gains (losses) arising during the period6,192 — — — 6,192 
Reclassification adjustment:
Included in net income (loss)(828)— — — (828)
Excluded from net income (loss)— — — — — 
Impact of net unrealized investment gains (losses)0(655)(877)(806)(2,338)
Net unrealized investment gains (losses) excluding credit losses8,817 (1,549)(1,066)(1,303)4,899 
Net unrealized investment gains (losses) with credit losses(6)1 1 1 (3)
Balance, December 31, 2020$8,811 $(1,548)$(1,065)$(1,302)$4,896 
Balance, January 1, 2019$(522)$100 $(88)$104 $(406)
Net investment gains (losses) arising during the period4,188 — — — 4,188 
Reclassification adjustment:— — — — — 
Included in net income (loss)(213)— — — (213)
Excluded from net income (loss)— — — — — 
Impact of net unrealized investment gains (losses)— (994)(101)(601)(1,696)
Net unrealized investment gains (losses) excluding credit losses3,453 (894)(189)(497)1,873 
Net unrealized investment gains (losses) with credit losses— — — — — 
Balance, December 31, 2019$3,453 $(894)$(189)$(497)$1,873 
______________
(1)Effective January 1, 2021, certain preferred stock have been reclassified to other equity investments (see Note 2 of the Notes to these Consolidated Financial Statements- Investments).
The following tables disclose the fair values and gross unrealized losses of the 2,060 issues as of December 31, 2021 and the 565 issues as of December 31, 2020 that are not deemed to have credit losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the specified periods at the dates indicated.
AFS Fixed Maturities in an Unrealized Loss Position for Which No Allowance Is Recorded
Less Than 12 Months12 Months or LongerTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
(in millions)
December 31, 2021
Fixed Maturities:
Corporate$10,571 $163 $1,633 $75 $12,204 $238 
U.S. Treasury, government and agency993 11 105 4 1,098 15 
States and political subdivisions120 2 11 — 131 2 
Foreign governments349 6 92 8 441 14 

160
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Less Than 12 Months12 Months or LongerTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
(in millions)
Asset-backed3,865 20 38 — 3,903 20 
Commercial mortgage-backed1,527 21 96 4 1,623 25 
Total at December 31, 2021$17,425 $223 $1,975 $91 $19,400 $314 
December 31, 2020: (1)
Fixed Maturities:
Corporate$2,990 $53 $337 $33 $3,327 $86 
U.S. Treasury, government and agency885 5 — — 885 5 
Foreign governments153 2 21 4 174 6 
Asset-backed809 4 76 1 885 5 
Redeemable preferred stock53 1 11 2 64 3 
Total at December 31, 2020$4,890 $65 $445 $40 $5,335 $105 
______________
(1)Excludes amounts reclassified as HFS.

The Company’s investments in fixed maturities do not include concentrations of credit risk of any single issuer greater than 10% of the consolidated equity of the Company, other than securities of the U.S. government, U.S. government agencies, and certain securities guaranteed by the U.S. government. The Company maintains a diversified portfolio of corporate securities across industries and issuers and does not have exposure to any single issuer in excess of 0.6% of total corporate securities. The largest exposures to a single issuer of corporate securities held as of December 31, 2021 and December 31, 2020 were $322 million and $391 million, respectively, representing 2.5% and 2.3% of the consolidated equity of the Company.
Corporate high yield securities, consisting primarily of public high yield bonds, are classified as other than investment grade by the various rating agencies, i.e., a rating below Baa3/BBB- or the NAIC designation of 3 (medium investment grade), 4 or 5 (below investment grade) or 6 (in or near default). As of December 31, 2021 and December 31, 2020, respectively, approximately $2.9 billion and $2.5 billion, or 3.9% and 3.4%, of the $73.4 billion and $72.9 billion aggregate amortized cost of fixed maturities held by the Company were considered to be other than investment grade. These securities had gross unrealized losses of $18 million and $49 million as of December 31, 2021 and December 31, 2020, respectively.
As of December 31, 2021 and December 31, 2020, respectively, the $91 million and $40 million of gross unrealized losses of twelve months or more were primarily concentrated in corporate securities. In accordance with the policy described in Note 2 to the Notes to these Consolidated Financial Statements, the Company concluded that an adjustment to allowance for credit losses for these securities was not warranted at either December 31, 2021 or December 31, 2020. As of December 31, 2021 and December 31, 2020, the Company did not intend to sell the securities nor will it likely be required to dispose of the securities before the anticipated recovery of their remaining amortized cost basis.
Based on the Company’s evaluation both qualitatively and quantitatively of the drivers of the decline in fair value of fixed maturity securities as of December 31, 2021, the Company determined that the unrealized loss was primarily due to increases in credit spreads and changes in credit ratings.
Mortgage Loans on Real Estate
Accrued interest receivable on commercial and agricultural mortgage loans as of December 31, 2021 and 2020 was $57 million and $58 million, respectively. There was no accrued interest written off for commercial and agricultural mortgage loans for the years ended December 31, 2021 and 2020.
As of December 31, 2021, the Company had no loans for which foreclosure was probable included within the individually assessed mortgage loans, and accordingly had no associated allowance for credit losses.
Allowance for Credit Losses on Mortgage Loans

161
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The change in the allowance for credit losses for commercial mortgage loans and agricultural mortgage loans during the years ended December 31, 2021 and 2020 were as follows:
Year Ended December 31,
20212020
(in millions)
Allowance for credit losses on mortgage loans:
Commercial mortgages:
Balance, beginning of period$77 $33 
Current-period provision for expected credit losses(20)44 
Write-offs charged against the allowance— — 
Recoveries of amounts previously written off— — 
Net change in allowance(20)44 
Balance, end of period$57 $77 
Agricultural mortgages:
Balance, beginning of period$4 $3 
Current-period provision for expected credit losses1 1 
Write-offs charged against the allowance— — 
Recoveries of amounts previously written off— — 
Net change in allowance1 1 
Balance, end of period$5 $4 
Total allowance for credit losses$62 $81 


The change in the allowance for credit losses is attributable to:
•increases/decreases in the loan balance due to new originations, maturing mortgages, and loan amortization;
•changes in credit quality; and
•changes in market assumptions primarily related to COVID-19 driven economic changes.
Credit Quality Information
The following tables summarize the Company’s mortgage loans segregated by risk rating exposure as of December 31, 2021 and December 31, 2020.

LTV Ratios (1)
December 31, 2021
Amortized Cost Basis by Origination Year
20212020201920182017PriorTotal
(in millions)
Mortgage loans:
Commercial:
0% - 50%$— $— $— $184 $293 $1,009 $1,486 
50% - 70%1,967 1,334 407 619 491 2,533 7,351 
70% - 90%190 236 412 415 276 972 2,501 
90% plus— — — 35 5 73 113 
Total commercial$2,157 $1,570 $819 $1,253 $1,065 $4,587 $11,451 
Agricultural:

162
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
December 31, 2021
Amortized Cost Basis by Origination Year
20212020201920182017PriorTotal
(in millions)
0% - 50%$180 $212 $128 $129 $119 $738 $1,506 
50% - 70%200 268 102 126 87 338 1,121 
70% - 90%— — — — — 17 17 
90% plus— — — — — — — 
Total agricultural$380 $480 $230 $255 $206 $1,093 $2,644 
Total mortgage loans:
0% - 50%$180 $212 $128 $313 $412 $1,747 $2,992 
50% - 70%2,167 1,602 509 745 578 2,871 8,472 
70% - 90%190 236 412 415 276 989 2,518 
90% plus— — — 35 5 73 113 
Total mortgage loans$2,537 $2,050 $1,049 $1,508 $1,271 $5,680 $14,095 


Debt Service Coverage Ratios (2)
December 31, 2021
Amortized Cost Basis by Origination Year
20212020201920182017PriorTotal
(in millions)
Mortgage loans:
Commercial:
Greater than 2.0x$1,143 $1,243 $210 $772 $485 $2,235 $6,088 
1.8x to 2.0x185 135 250 46 161 372 1,149 
1.5x to 1.8x275 97 284 211 166 919 1,952 
1.2x to 1.5x264 95 75 101 253 701 1,489 
1.0x to 1.2x290 — — 88 — 287 665 
Less than 1.0x— — — 35 — 73 108 
Total commercial$2,157 $1,570 $819 $1,253 $1,065 $4,587 $11,451 
Agricultural:
Greater than 2.0x$49 $64 $25 $22 $24 $210 $394 
1.8x to 2.0x52 37 25 14 14 70 212 
1.5x to 1.8x43 113 28 22 41 193 440 
1.2x to 1.5x161 179 112 116 72 355 995 
1.0x to 1.2x75 83 31 77 54 226 546 
Less than 1.0x— 4 9 4 1 39 57 
Total agricultural$380 $480 $230 $255 $206 $1,093 $2,644 
Total mortgage loans:
Greater than 2.0x$1,192 $1,307 $235 $794 $509 $2,445 $6,482 
1.8x to 2.0x237 172 275 60 175 442 1,361 
1.5x to 1.8x318 210 312 233 207 1,112 2,392 
1.2x to 1.5x425 274 187 217 325 1,056 2,484 
1.0x to 1.2x365 83 31 165 54 513 1,211 
Less than 1.0x— 4 9 39 1 112 165 
Total mortgage loans$2,537 $2,050 $1,049 $1,508 $1,271 $5,680 $14,095 
______________

163
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(1)The LTV ratio is derived from current loan balance divided by the fair value of the property. The fair value of the underlying commercial properties is updated annually for each mortgage loan.
(2)The DSC ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service.
LTV Ratios (1)
December 31, 2020
Amortized Cost Basis by Origination Year
20202019201820172016PriorTotal
(in millions)
Mortgage loans:
Commercial:
0% - 50%$— $— $— $324 $187 $505 $1,016 
50% - 70%1,294 357 803 656 2,190 1,697 6,997 
70% - 90%321 457 452 219 203 538 2,190 
90% plus— — 12 5 — 288 305 
Total commercial$1,615 $814 $1,267 $1,204 $2,580 $3,028 $10,508 
Agricultural:
0% - 50%$218 $135 $169 $157 $236 $652 $1,567 
50% - 70%277 129 161 102 124 351 1,144 
70% - 90%— — 3 — — 18 21 
90% plus— — — — — — — 
Total agricultural$495 $264 $333 $259 $360 $1,021 $2,732 
Total mortgage loans:
0% - 50%$218 $135 $169 $481 $423 $1,157 $2,583 
50% - 70%1,571 486 964 758 2,314 2,048 8,141 
70% - 90%321 457 455 219 203 556 2,211 
90% plus— — 12 5 — 288 305 
Total mortgage loans$2,110 $1,078 $1,600 $1,463 $2,940 $4,049 $13,240 


Debt Service Coverage Ratios (2)
December 31, 2020
Amortized Cost Basis by Origination Year
20202019201820172016PriorTotal
(in millions)
Mortgage loans:
Commercial:
Greater than 2.0x$1,230 $492 $772 $268 $1,959 $1,230 $5,951 
1.8x to 2.0x227 83 118 378 184 329 1,319 
1.5x to 1.8x98 138 187 479 437 616 1,955 
1.2x to 1.5x60 57 154 79 — 658 1,008 
1.0x to 1.2x— 44 — — — 123 167 
Less than 1.0x— — 36 — — 72 108 
Total commercial$1,615 $814 $1,267 $1,204 $2,580 $3,028 $10,508 

164
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Agricultural:
Greater than 2.0x$67 $26 $36 $38 $71 $167 $405 
1.8x to 2.0x38 35 14 15 20 82 204 
1.5x to 1.8x117 38 41 45 52 209 502 
1.2x to 1.5x183 120 141 90 142 313 989 
1.0x to 1.2x86 35 93 70 57 233 574 
Less than 1.0x4 10 8 1 18 17 58 
Total agricultural$495 $264 $333 $259 $360 $1,021 $2,732 
Total mortgage loans:
Greater than 2.0x$1,297 $518 $808 $306 $2,030 $1,397 $6,356 
1.8x to 2.0x265 118 132 393 204 411 1,523 
1.5x to 1.8x215 176 228 524 489 825 2,457 
1.2x to 1.5x243 177 295 169 142 971 1,997 
1.0x to 1.2x86 79 93 70 57 356 741 
Less than 1.0x4 10 44 1 18 89 166 
Total mortgage loans$2,110 $1,078 $1,600 $1,463 $2,940 $4,049 $13,240 
______________
(1)The LTV ratio is derived from current loan balance divided by the fair value of the property. The fair value of the underlying commercial properties is updated annually for each mortgage loan.
(2)The DSC ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service.
Past-Due and Nonaccrual Mortgage Loan Status
The following table provides information relating to the aging analysis of past duepast-due mortgage loans atas of December 31, 20182021 and 2017,2020, respectively.
Age Analysis of Past Due Mortgage Loans (1)
Accruing LoansNon-accruing LoansTotal LoansNon-accruing Loans with No AllowanceInterest Income on Non-accruing Loans
Past DueCurrentTotal
30-59 Days60-89 Days90 Days or MoreTotal
(in millions)
December 31, 2021:
Mortgage loans:
Commercial$— $— $— $— $11,451 $11,451 $— $11,451 $— $— 
Agricultural1 1 25 27 2,601 2,628 16 2,644 — — 
Total$1 $1 $25 $27 $14,052 $14,079 $16 $14,095 $— $— 
December 31, 2020:
Mortgage loans:
Commercial$162 $— $— $162 $10,346 $10,508 $— $10,508 $— $— 
Agricultural76 7 29 112 2,620 2,732 — 2,732 — — 
Total$238 $7 $29 $274 $12,966 $13,240 $— $13,240 $— $— 
_______________
(1)Amounts presented at amortized cost basis.
As of December 31, 2021 and December 31, 2020, the carrying values of problem mortgage loans that had been classified as non-accrual loans were $14 million and $0 million, respectively.
Troubled Debt Restructuring

165
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
 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
 $—
Agricultural18
 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
 $—
Agricultural49
 3
 22
 74
 2,500
 2,574
 22
Total Mortgage Loans$76

$3

$22

$101

$10,859

$10,960

$22
During the years ended December 31, 2021 and 2020, the Company identified an immaterial amount of TDRs.
Equity Securities
The table below presents a breakdown of unrealized and realized gains and (losses) on equity securities during the year ended December 31, 2021.
Unrealized and Realized Gains (Losses) from Equity Securities (1)
Year Ended December 31,
2021
(in millions)
Net investment gains (losses) recognized during the period on securities held at the end of the period$(19)
Net investment gains (losses) recognized on equity securities sold during the period45
Unrealized and realized gains (losses) on equity securities$26
______________
(1)Effective January 1, 2021, certain preferred stock have been reclassified to other equity investments (see Note 2 of the Notes to these Consolidated Financial Statements- Investments).
Trading Securities
As of December 31, 2021 and December 31, 2020, respectively, the fair value of the Company’s trading securities was $631 million and $5.6 billion. As of December 31, 2021 and December 31, 2020, respectively, trading securities included the General Account’s investment in Separate Accounts which had carrying values of$45 million and $44 million.
The table below shows a breakdown of net investment income (loss) from trading securities during the years ended December 31, 2021, 2020 and 2019.
Net Investment Income (Loss) from Trading Securities
Year Ended December 31,
202120202019
(in millions)
Net investment gains (losses) recognized during the period on securities held at the end of the period$(274)$128 $487 
Net investment gains (losses) recognized on securities sold during the period248 42 15 
Unrealized and realized gains (losses) on trading securities(26)170 502 
Interest and dividend income from trading securities99 217 294 
Net investment income (loss) from trading securities$73 $387 $796 

Fixed maturities, at fair value using the fair value option
The table below shows a breakdown of net investment income (loss) from fixed maturities, at fair value using the fair value option during the year ended December 31, 2021.


166
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Net Investment Income (Loss) from Fixed Maturities, at Fair Value using the Fair Value Option
Year Ended December 31,
2021
(in millions)
Net investment gains (losses) recognized during the period on securities held at the end of the period$12
Net investment gains (losses) recognized on securities sold during the period4
Unrealized and realized gains (losses) from fixed maturities16
Interest and dividend income from fixed maturities19
Net investment income (loss) from fixed maturities$35

Net Investment Income (Loss)
The following table provides information relating to impaired mortgage loans at breaks out net investment income (loss) by asset category:
Year Ended December 31,
202120202019
(in millions)
Fixed maturities$2,440 $2,341 $2,060 
Mortgage loans on real estate546 516 541 
Other equity investments609 67 140 
Policy loans203 204 211 
Trading securities73 387 796 
Other investment income17 33 24 
Fixed maturities, at fair value using the fair value option35 1 — 
Gross investment income (loss)3,923 3,549 3,772 
Investment expenses(77)(72)(73)
Net investment income (loss)$3,846 $3,477 $3,699 
Investment Gains (Losses), Net
Investment gains (losses), net, including changes in the valuation allowances and credit losses are as follows:
Year Ended December 31,
202120202019
(in millions)
Fixed maturities$847 $828 $205 
Mortgage loans on real estate19 (45)(1)
Other equity investments (1)— 30 2 
Other2 (69)(133)
Investment gains (losses), net$868 $744 $73 
(1) Investment gains (losses), net of Other equity investments includes Real Estate Held for production during the years ended
December 31, 20182020 and 2017, respectively.December 31, 2019.
Impaired Mortgage Loans
For the years ended December 31, 2021, 2020, and 2019, respectively, investment results passed through to certain participating group annuity contracts as interest credited to policyholders’ account balances totaled $2 million, $2 million and $2 million.

167
 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 loans2
 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
EQUITABLE HOLDINGS, INC.
___________NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(1)Represents a five-quarter average of recorded amortized cost.

Derivatives and Offsetting Assets and Liabilities4)     DERIVATIVES
The Company uses derivatives as part of its overall asset/liability risk management primarily to reduce exposures to equity market and interest rate risks. Derivative hedging strategies are designed to reduce these risks from an economic
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


perspective and are all executed within the framework of a “Derivative Use Plan” approved by applicable states’ insurance law. Derivatives are generally not accounted for using hedge accounting, with the exception of Treasury Inflation-Protected Securities (“TIPS”),TIPS and cash flow hedges, which is discussed further below. Operation of these hedging programs is based on models involving numerous estimates and assumptions, including, among others, mortality, lapse, surrender and withdrawal rates, election rates, fund performance, market volatility and interest rates. A wide range of derivative contracts are used in these hedging programs, including exchange traded equity, currency and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts, bond and bond-index total return swaps, swaptions, variance swaps and equity options, credit and foreign exchange derivatives, as well as bond and repo transactions to support the hedging. The derivative contracts are collectively managed in an effort to reduce the economic impact of unfavorable changes in guaranteed benefits’ exposures attributable to movements in capital markets. In addition, as part of its hedging strategy, the Company targets an asset level for all variable annuity products at or above a CTE98 level under most economic scenarios (CTE is a statistical measure of tail risk which quantifies the total asset requirement to sustain a loss if an event outside a given probability level has occurred. CTE98 denotes the financial resources a company would need to cover the average of the worst 2% of scenarios.)
Derivatives utilizedUtilized to hedge exposureHedge Exposure to Variable Annuities with Guarantee Features
The Company has issued and continues to offer variable annuity products with GMxB features. The risk associated with the GMDB feature is that under-performance of the financial markets could result in GMDB benefits, in the event of death, being higher than what accumulated policyholders’ account balances would support. The risk associated with the GMIB feature is that under-performance of the financial markets could result in the present value of GMIB, in the event of annuitization, being higher than what accumulated policyholders’ account balances would support, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. The risk associated with products that have a GMxB derivative features liability is that under-performance of the financial markets could result in the GMxB derivative features’ benefits being higher than what accumulated policyholders’ account balances would support.
For GMxB features, the Company retains certain risks including basis, credit spread and some volatility risk and risk associated with actual experience versus expected actuarial assumptions for mortality, lapse and surrender, withdrawal and policyholder election rates, among other things. The derivative contracts are managed to correlate with changes in the value of the GMxB features that result from financial markets movements. A portion of exposure to realized equity volatility is hedged using equity options and variance swaps and a portion of exposure to credit risk is hedged using total return swaps on fixed income indices. Additionally, the Company is party to total return swaps for which the reference U.S. Treasury securities are contemporaneously purchased from the market and sold to the swap counterparty. As these transactions result in a transfer of control of the U.S. Treasury securities to the swap counterparty, the Company derecognizes these securities with consequent gain or loss from the sale. The Company has also purchased reinsurance contracts to mitigate the risks associated with GMDB features and the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts issued by the Company. The reinsurance of the GMIB features is accounted for as a derivative. In addition, on June 1, 2021, we ceded legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees. As this contract provides full risk transfer and thus has the same risk attributes as the underlying direct contracts, the benefits of this treaty are accounted for in the same manner as the underlying gross reserves and therefore the Amounts Due from Reinsurers related to the GMIB with NLG are accounted for as an embedded derivative.
The Company has in place an economic hedge program using interest rate swaps and U.S. Treasury futures to partially protect the overall profitability of future variable annuity sales against declining interest rates.
Derivatives utilizedUtilized to hedge crediting rate exposureHedge Crediting Rate Exposure on SCS, SIO, MSO and IUL products/investment optionsProducts/Investment Options
The Company hedges crediting rates in the Structured Capital Strategies (“SCS”)SCS variable annuity, Structured Investment OptionSIO in the EQUI-VEST variable annuity series, (“SIO”), Market Stabilizer Option (“MSO”)MSO in the variable life insurance products and Indexed Universal Life (“IUL”)IUL insurance products. These products permit the contract owner to participate in the performance of an index, ETF or commodity price movement up to a cap for a set period of time. They also contain a protection feature, in which the Company will absorb, up to a certain percentage, the loss of value in an index, ETF or commodity price, which varies by product segment.

168
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
In order to support the returns associated with these features, the Company enters into derivative contracts whose payouts, in combination with fixed income investments, emulate those of the index, ETF or commodity price, subject to caps and buffers, without any basis risk due to market exposures, thereby substantially reducing any exposure to market-related earnings volatility.
Derivatives usedUsed to Hedge Equity Market Risks Associated with the General Account’s Seed Money Investments in Retail Mutual Funds
The Company’s General Account seed money investments in retail mutual funds expose us to market risk, including equity market risk which is partially hedged through equity-index futures contracts to minimize such risk.
Derivatives Used for General Account Investment Portfolio
The Company maintains a strategy in its General Account investment portfolio to replicate the credit exposure of fixed maturity securities otherwise permissible for investment under its investment guidelines through the sale of credit default swaps (“CDSs”).CDS. Under the terms of these swaps, the Company receives quarterly fixed premiums that, together with any initial amount paid or received at trade inception, replicate the credit spread otherwise currently obtainable by purchasing the referenced entity’s bonds of similar maturity. These credit derivatives generally have remaining terms of five years or less and are recorded at fair value with changes in fair value, including the yield component that emerges from initial
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


amounts paid or received, reported in Net investment income (loss)net derivative gains (losses).
The Company manages its credit exposure taking into consideration both cash and derivatives based positions and selects the reference entities in its replicated credit exposures in a manner consistent with its selection of fixed maturities. In addition, the Company generally transacts the sale of CDSsCDS in single name reference entities of investment grade credit quality and with counterparties subject to collateral posting requirements. If there is an event of default by the reference entity or other such credit event as defined under the terms of the swap contract, the Company is obligated to perform under the credit derivative and, at the counterparty’sits option, either pay the referenced amount of the contract less an auction-determined recovery amount or pay the referenced amount of the contract and receive in return the defaulted or similar security of the reference entity for recovery by sale at the contract settlement auction. The Company purchased CDS to mitigate its exposure to a reference entity through cash positions. These positions do not replicate credit spreads.
To date, there have been no events of default or circumstances indicative of a deterioration in the credit quality of the named referenced entities to require or suggest that the Company will have to perform under these CDSs.the CDS that it sold. The maximum potential amount of future payments the Company could be required to make under thesethe credit derivatives sold is limited to the par value of the referenced securities which is the dollar or euro-equivalent of the derivativederivative’s notional amount. The Standard North American CDS Contract (“SNAC”) or Standard European Corporate Contract (“STEC”) under which the Company executes these CDS sales transactions does not contain recourse provisions for recovery of amounts paid under the credit derivative.
The Company purchased 30-year TIPS and other sovereign bonds, both inflation linked and non-inflation linked, as General Account investments and enters into asset or cross-currency basis swaps, to result in payment of the given bond’s coupons and principal at maturity in the bond’s specified currency to the swap counterparty in return for fixed dollar amounts. These swaps, when considered in combination with the bonds, together result in a net position that is intended to replicate a dollar-denominated fixed-coupon cash bond with a yield higher than a term-equivalent U.S. Treasury bond.
Derivatives Utilized to Hedge Exposure to Foreign Currency Denominated Cash Flows
The Company implemented a strategy to hedge a portion ofpurchases private placement debt securities and issues funding agreements in the credit exposureFABN program in currencies other than its General Account investment portfolio by buying protection through a swap. These arefunctional US dollar currency. The Company enters into cross currency swaps on the “super senior tranche” of the investment grade CDX index. Under the terms of these swaps, the Company pays quarterly fixed premiums that, together with any initial amount paid or received at trade inception, serve as premiums paidexternal counterparties to hedge the risk arisingexposure of the foreign currency denominated cash flows of these instruments. The foreign currency received from multiple defaults of bonds referencedor paid to the cross currency swap counterparty is exchanged for fixed US dollar amounts with improved net investment yields or net product costs over equivalent US dollar denominated instruments issued at that time. The transactions are accounted for as cash flow hedges when they are designated in hedging relationships and qualify for hedge accounting. The first cross currency swap hedges were designated and applied hedge accounting during the CDX index. quarter ended June 30, 2021.
These credit derivatives have terms of five years or lesscross currency swaps are for the period the foreign currency denominated private placement debt securities and funding agreement are recorded at fair valueoutstanding, with changesthe longest cross currency swap expiring in fair value, including the yield component that emerges from initial amounts paid or received, reported2033. Since designation and qualification as cash flow hedges, cross currency swap interest accruals are recognized in Net derivative gains (losses).investment income and in Interest credited to policyholders’ account balances.
In 2016, the Company implemented a program to mitigate its duration gap using total return swaps for which the reference U.S. Treasury securities are sold to the swap counterparty under arrangements economically similar to repurchase agreements. As these transactions result in a transfer of control of the U.S. Treasury securities to the swap counterparty, the Company derecognizes these securities with consequent gain or loss from the sale. Under this program, the Company derecognized approximately $3,905 million of U.S. Treasury securities for which the Company received proceeds of approximately $3,905 million at inception of the total return swap contract. Under the terms of these swaps, the Company retains ongoing exposure to the total returns of the underlying U.S. Treasury securities in exchange for a financing cost. At December 31, 2018, the aggregate fair value of U.S. Treasury securities derecognized under this program was approximately $3,690 million. Reported in Other invested assets in the Company’s balance sheet at December 31, 2018 is approximately $24 million, representing the fair value of the total return swap contracts.

Derivatives used to hedge currency fluctuations on affiliated loans169
EQUITABLE HOLDINGS, INC.
The Company uses foreign exchange derivatives to reduce exposure to currency fluctuations that may arise from non-U.S.-dollar denominated financial instruments. The Company had a currency swap contract with AXA to hedge foreign exchange exposure from affiliated loans, which matured in March 2018.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The tables below present quantitative disclosures about the Company’s derivative instruments designated in hedging relationships and derivative instruments which have not been designated in hedging relationships, including those embedded in other contracts required to be accounted for as derivative instruments.
The following table presents the gross notional amount and estimated fair value of the Company’s derivatives:
AXA
Derivative Instruments by Category
December 31, 2021December 31, 2020
  Fair ValueFair Value
  Notional Amount Derivative Assets Derivative LiabilitiesNotional AmountDerivative AssetsDerivative Liabilities
(in millions)
Derivatives: Designated for Hedge accounting (1)
 Cash Flow Hedges:
 Currency Swaps$921 $7 $42 $— $— $— 
 Interest Swaps955 — 395 957 — 219 
 Total: Designated for Hedge accounting1,876 7 437 957 — 219 
Derivatives: Not designated for Hedge accounting (1)
Equity contracts:
Futures (5)2,640 — 1 4,881 — 2 
Swaps (5)13,378 6 4 22,456 6 2 
Options48,489 12,024 5,065 35,848 8,396 3,726 
Interest rate contracts:
Futures (5)12,575 — — 18,571 — — 
Swaps (5)1,889 — 46 22,877 553 437 
Swaptions— — — — — — 
Credit contracts:
Credit default swaps774 9 10 1,087 19 14 
Currency
Currency Swaps541 1 — 411 9 9 
Currency forwards79 8 7 — — — 
Other freestanding contracts:
Margin— 125 — — 49 66 
Collateral— 178 6,160 — 212 3,839 
Total: Not designated for Hedge accounting80,365 12,351 11,293 106,131 9,244 8,095 
Embedded Derivatives:
Amounts due from reinsurers (6)— 5,813 — — — — 
GMIB reinsurance contracts (2)— 1,848 — — 2,488 — 
GMxB derivative features liability (3)— — 8,525 — — 11,131 
SCS, SIO, MSO and IUL indexed features (4)— — 6,773 — — 4,509 
Total Embedded Derivatives— 7,661 15,298 — 2,488 15,640 
Total derivative instruments$82,241 $20,019 $27,028 $107,088 $11,732 $23,954 
___________
(1)Reported in other invested assets in the consolidated balance sheets.
(2) Reported in GMIB reinsurance contract asset in the consolidated balance sheets.
(3)    Reported in future policy benefits and other policyholders’ liabilities in the consolidated balance sheets.
(4)    Reported in policyholders’ account balances in the consolidated balance sheets.
(5)    Decrease in futures and swaps notional as of December 31, 2021 is primarily due to Venerable Transaction (see Note 1 of the Notes to these Consolidated Financial Statements).
(6)    Represents GMIB NLG ceded related to the Venerable Transaction.

170
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued





The following table presents the effects of derivative instruments on the consolidated statements of income and comprehensive income (loss).

Derivative Instruments by Category
At December 31, 2018

171
   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
Swaps7,796
 143
 168
 715
Options21,821
 2,133
 1,164
 (899)
Interest rate contracts:       
Swaps27,116
 634
 196
 (656)
Futures11,792
 —
 —
 112
Credit contracts:       
Credit default swaps1,376
 20
 3
 (2)
Other freestanding contracts:       
Foreign currency contracts2,184
 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).
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Year Ended December 31, 2021Year Ended December 31, 2020Year Ended December 31, 2019
Net Derivatives Gain(Losses) (1)Interest Credited To Policyholder Account BalancesAOCINet Derivatives Gain(Losses) (1)Interest Credited To Policyholder Account BalancesAOCINet Derivatives Gain(Losses) (1)Interest Credited To Policyholder Account BalancesAOCI
(in millions)
Derivatives: Designated for Hedge accounting
Cash Flow Hedges:
Currency Swaps$(2)$(45)$5 $— $— $— $— $— $— 
Interest Swaps(69)— (87)(9)— (87)4 — (28)
Total: Designated for Hedge accounting(71)(45)(82)(9)— (87)4 — (28)
Derivatives: Not Designated for Hedge accounting
Equity contracts
Futures(567)— — (1,011)— — (1,311)— — 
Swaps(3,614)— — (3,368)— — (2,426)— — 
Options3,886 — — 1,663 — — 2,229 — — 
Interest Rate contracts
Futures(728)— — 1,740 — — 145 — — 
Swaps(2,317)— — 2,832 — — 2,033 — — 
Swaptions— — — 9 — — (35)— — 
Credit contracts
Credit Default Swaps(2)— — — — — 9 — — 
Currency contracts
Currency Swaps3 — — (4)— — (9)— — 
Currency forwards2 — — — — — — — — 
Other
Margin— — — — — — — — — 
Collateral— — — — — — — — — 
Total: Not Designated for Hedge accounting(3,337)— — 1,861 — — 635 — — 
Embedded Derivatives
Amounts due from reinsurers517 — — — — — — — — 
GMIB reinsurance contracts(625)— — 417 — — 433 — — 
GMxB derivative features liability (2)2,841 — — (2,253)— — (2,442)— — 
SCS, SIO,MSO and IUL indexed features(3,835)— — (1,738)— — (2,642)— — 
Total Embedded Derivatives(1,102)— — (3,574)— — (4,651)— — 
 Total Derivatives$(4,510)$(45)$(82)$(1,722)$— $(87)$(4,012)$— $(28)


Derivative Instruments by Category

At172
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

(1)Reported in net derivative gains (losses) in the consolidated statements of income (loss).
(2)Excludes settlement fees of $45 million on CS Life reinsurance contract for the year ended December 31, 20172021 .


The table that follow below present a roll-forward of cash flow hedges recognized in AOCI.
   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)
Swaps7,623
 4
 201
 (1,413)
Options22,223
 3,456
 1,457
 1,265
Interest rate contracts:       
Swaps26,769
 604
 193
 863
Futures20,675
 —
 —
 293
Credit contracts:       
Credit default swaps2,131
 35
 3
 19
Other freestanding contracts:       
Foreign currency contracts1,423
 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
Roll-forward of Cash flow hedges in AOCI
_________________
(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).

Year Ended December 31,
202120202019
(in millions)
Balance, beginning of period$(126)$(38)$(10)
Amount recorded in AOCI
Currency Swaps(35)— — 
Interest Swaps(183)(108)(45)
Total Amount recorded in AOCI(218)(108)(45)
Amount reclassified from AOCI to income
Currency Swaps40 — — 
Interest Swaps96 20 17 
Total Amount reclassified from AOCI to income136 20 17 
Ending Balance, December 31 (1)$(208)$(126)$(38)
_______________
(1) The Company does not estimate the amount of the deferred losses in AOCI at years ended December 31, 2021, 2020 and 2019 which will be released and reclassified into Net income (loss) over the next 12 months as the amounts cannot be reasonably estimated.
Equity-Based and Treasury Futures Contracts Margin
All outstanding equity-based and treasury futures contracts atas of December 31, 20182021 and December 31, 2020 are exchange-traded and net settled daily in cash. AtAs of December 31, 2018,2021 and December 31, 2020, respectively, the Company had open exchange-traded futures positions on: (i) the S&P 500, Nasdaq, Russell 2000 and Emerging Market indices, having initial margin requirements of $279$109 million and $307 million, (ii) the 2-year, 5-year and 10-year U.S. Treasury Notes on U.S. Treasury bonds and ultra-long bonds, having initial margin requirements of $71$200 million and $264 million, and (iii) the Euro Stoxx, FTSE 100, Topix, ASX 200 and European, Australasia, and Far East (“EAFE”)EAFE indices as well as corresponding currency futures on the Euro/U.S. dollar, Pound/U.S. dollar, Australian dollar/U.S. dollar, and Yen/U.S. dollar, having initial margin requirements of $25$16 million and $35 million.
Collateral Arrangements
The Company generally has executed a Credit Support Annex (“CSA”)CSA under the International Swaps and Derivatives AssociationISDA Master Agreement (“ISDA Master Agreement”) it maintains with each of its over-the-counter (“OTC”)OTC derivative counterparties that requires both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities, U.S. government and government agency securities and investment grade corporate bonds. The Company nets the fair value of all derivative financial instruments with counterparties for which an
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ISDA Master Agreement and related CSA have been executed. AtAs of December 31, 20182021 and 2017,December 31, 2020, respectively, the Company held $1,581 million$6.2 billion and $2,123 million$3.8 billion in cash and securities collateral delivered by trade counterparties, representing the fair value of the related derivative agreements. The unrestricted cash collateral is reported in Otherother invested assets. The Company posted collateral of $8$178 million and $4$212 million atas of December 31, 20182021 and 2017,December 31, 2020, respectively, in the normal operation of its collateral arrangements.
Securities Repurchase and Reverse Repurchase Transactions
Securities repurchase and reverse repurchase transactions are conducted by the Company under a standardized securities industry master agreement, amended to suit the requirements of each respective counterparty. The Company’s securities repurchase and reverse repurchase agreements are accounted for as secured borrowing or lending arrangements, respectively and are reported in the consolidated balance sheets on a gross basis. At December 31, 2018 and 2017, the balance outstanding under securities repurchase transactions was $573 million and $1,887 million, respectively. The Company utilized these repurchase and reverse repurchase agreements for asset liability and cash management purposes. For other instruments used for asset liability management purposes, see “Obligations under Funding Agreements” in Note 17 - Commitments and Contingent Liabilities.
The following tabletables presents information about the Company’s offsetting of financial assets and liabilities and derivative instruments atas of December 31, 2018:2021 and December 31, 2020:

Offsetting of Financial Assets and Liabilities and Derivative Instruments
At

173


As of December 31, 20182021
 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 instruments1,989
 —
 1,989
Other invested assets$4,982
 $2,945
 $2,037
      
Liabilities (2)     
Total Derivatives$3,142
 $2,945
 $197
Other financial liabilities3,163
 —
 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.


The following table presents information about the Company’s gross collateral amounts that are not offset in the
Gross Amount RecognizedGross Amount Offset in the Balance SheetsNet Amount Presented in the Balance SheetsGross Amount not Offset in the Balance Sheets (3)Net Amount
(in millions)
Assets:
Derivative assets (1)$12,358 $10,756 $1,602 $(961)$641 
Other financial assets1,989 — 1,989 — 1,989 
Other invested assets$14,347 $10,756 $3,591 $(961)$2,630 
Liabilities:
Derivative liabilities (2)$10,770 $10,756 $14 $— $14 
Other financial liabilities3,919 — 3,919 — 3,919 
Other liabilities$14,689 $10,756 $3,933 $— $3,933 
______________
(1)Excludes Investment Management and Research segment’s derivative assets of consolidated balance sheets atVIEs/VOEs.
(2)Excludes Investment Management and Research segment’s derivative liabilities of consolidated VIEs/VOEs.
(3)Financial instruments sent (held).
As of December 31, 2018:2020
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Collateral Amounts Not Offset in the Consolidated Balance Sheets
At December 31, 2018
 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 instruments1,989
 —
 —
 1,989
Other invested assets$3,400
 $—
 $(1,363) $2,037
        
Liabilities (2)      

Total Derivatives$197
 $—
 $—
 $197
Other financial liabilities3,163
 —
 —
 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.

The following table presents information about repurchase agreements accounted for as secured borrowings in the consolidated balance sheets at December 31, 2018:
Repurchase Agreement Accounted for as Secured Borrowings
December 31, 2018
 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.

The following table presents information about the Company’s offsetting of financial assets and liabilities and derivative instruments at December 31, 2017:
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Offsetting of Financial Assets and Liabilities and Derivative Instruments
At December 31, 2017
 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 instruments3,964
 —
 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 liabilities4,053
 —
 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.

The following table presents information about the Company’s gross collateral amounts that are not offset in the consolidated balance sheets at December 31, 2017:
Collateral Amounts Not Offset in the Consolidated Balance Sheets
At December 31, 2017
 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 instruments3,964
 —
 —
 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.

The following table presents information about repurchase agreements accounted for as secured borrowings in the consolidated balance sheets at December 31, 2017.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Repurchase Agreement Accounted for as Secured Borrowings
At December 31, 2017
 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.

Net Investment Income (Loss)
The following table breaks out Net investment income (loss) by asset category:
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Fixed maturities$1,725
 $1,629
 $1,723
Mortgage loans on real estate494
 454
 397
Real estate held for the production of income(6) 2
 19
Other equity investments147
 186
 168
Policy loans215
 221
 225
Repurchase agreements—
 —
 1
Trading securities105
 553
 144
Other investment income85
 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
Gross Amount RecognizedGross Amount Offset in the Balance SheetsNet Amount Presented in the Balance SheetsGross Amount not Offset in the Balance Sheets (3)Net Amount
(in millions)
Assets:
Derivative assets (1)$9,244 $8,249 $995 $(53)$942 
Other financial assets1,733 — 1,733 — 1,733 
Other invested assets$10,977 $8,249 $2,728 $(53)$2,675 
Liabilities:
Derivative liabilities (2)$8,261 $8,249 $12 $— $12 
Other financial liabilities3,674 — 3,674 — 3,674 
Other liabilities$11,935 $8,249 $3,686 $— $3,686 
______________
(1)Excludes Investment expenses includes expenses related to the managementManagement and Research segment’s derivative assets of the two buildings sold in 2016.consolidated VIEs/VOEs.

(2)Excludes Investment Management and Research segment’s derivative liabilities of consolidated VIEs/VOEs.
Net unrealized and realized gains (losses) on trading account equity securities are included in Net investment income (loss) in the consolidated statements of income (loss)(3)Financial instruments sent (held). The table below shows a breakdown of Net investment income from trading account securities during the years ended December 31, 2018, 2017 and 2016:
Net Investment Income (Loss) from Trading Securities
5)    GOODWILL
 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 securities342
 287
 207
Net investment income (loss) from trading securities$105
 $553
 $144

Investment Gains (Losses), Net
Investment gains (losses), net including changes in the valuation allowances and OTTI are as follows:
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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

For the years ended December 31, 2018, 2017, and 2016, respectively, investment results passed through to certain participating group annuity contracts as Interest credited to policyholders’ account balances totaled $3 million, $3 million and $4 million.
4)    GOODWILL AND OTHER INTANGIBLE ASSETSGoodwill
Goodwill represents the excess of purchase price over the estimated fair value of identifiable net assets acquired in a business combination. The Company tests goodwill for recoverability each annual reporting period at December 31 and at interim periods if facts or circumstances are indicative of potential impairment. The Company managed its business under two operating segments through third quarter 2017, each deemed to be reporting units for purpose of its goodwill impairment assessments. Effective January 1, 2017, the Company early adopted the new goodwill guidance that eliminates Step 2 from the impairment model and continues to limit the measure of goodwill impairment to the carrying amount of the reporting unit’s goodwill. As a result, the Company recognized an impairment loss of $369 million during first quarter 2017, representing all of the goodwill assigned to its Financial Advisory/Insurance reporting unit for which recoverability previously had been supported by a Step 2 assessment.
The carrying value of goodwill assigned tofrom the Company’s Investment Management reporting unit totaled $4,570 million$4.6 billion at both December 31, 20182021 and 2017,2020, resulting from its investment in AB as well as direct strategic acquisitions of AB, including its purchase of Sanford C. Bernstein, Inc. For purpose
As of testing this goodwill for impairment, the Company applied a discounted cash flow valuation technique to measure the fair value of the reporting unit, sourcing the underlying cash flows and assumptions from AB’s current business plan projections and adjusting the result to reflect the noncontrolling interest in AB as well as incremental taxes at the Company level as related to the form and structure of its investment in AB. At December 31, 20182021 and 2017,2020, the Company’s annual testing resulted in no impairment of this goodwill, as the fair value of the reporting unit exceeded its carrying amount at each respective date.
In the fourth quarter 2017, the Company recast its Financial Advisory/Insurance segment into multiple operating segments as described in Note 19, Business Segment Information. Accordingly, goodwill previously attributed to the Financial Advisory/Insurance segment in reporting periods prior thereto was reassigned to the reporting units affected using a relative fair value allocation approach in accordance with the relevant accounting guidance. Goodwill resulting from the Company’s investment in AB was reassigned to the Company’s Investment Management and Research segment and the resulting reporting unit redefined. Immediately prior thereto, the Company determined there were no indications of potential goodwill impairment that would require quantitative assessment prior to its annual testing.
Information regarding goodwill by reporting segment and Corporate and Other is as follows:Intangible Assets
AXA

174
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

 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
At December 31, 2018The Company’s intangible assets primarily relate to the Bernstein Acquisition and 2017, respectively, net deferred sales commissions frompurchases of AB totaled $17 millionUnits and $30 million and are included within other assets. The estimated amortization expense of deferred sales commissions,reflect amounts assigned to acquired investment management contracts based on their estimated fair values at the December 31, 2018 net asset balance for eachtime of the next five years is $10 million, $5 million, $3 million, $0 million and $0 million. The Company tests the deferred sales commission asset for impairment quarterly by comparing undiscounted future cash flows to the recorded value, net ofacquisition, less accumulated amortization. Each quarter, significant assumptions used to estimate the future cash flows are updated to reflect management’s consideration of current market conditions on expectations made with respect to future market levels and redemption rates. As of December 31, 2018 and 2017, the Company determined that the deferred sales commission asset was not impaired.
The gross carrying amount of AB-related intangible assets was $909$932 million at bothas of December 31, 20182021 and 2017,$926 million as of December 31, 2020, and the accumulated amortization of these intangible assets was $702$809 million and $659$786 million atas of December 31, 20182021 and 2017,2020, respectively. Amortization expense for AB-related intangible assets totaled $43$21 million , $37 million, and $44 million for 2021, 2020 and $42 million for 2018, 2017 and 2016,2019, respectively. Estimated annual amortization expense for each of the next five years is approximately $43 million, $36 million, $20 million, $19$18 million, $18 million, $17 million and $16$15 million,, respectively.
On June 20, 2014, AB acquired an 81.7% ownership interest in CPH, Capital Fondsmaeglerselskab A/S (“CPH”), a Danish asset management firm that managed approximately $3,000 million inmanages global core equity assets for institutional investors, for a cash payment of $64 million and a contingent consideration payable of $9 million based on projected assets under management levels over a three-year measurement period. Also recognized on the date of acquisition were $58 million of goodwill, $24 million of finite-lived intangible assets related to separately-managed account relationships, and $4 million of indefinite-lived intangible assets related to an acquired fund’s investment contract. Redeemable noncontrolling interest of $17 million was recorded as related to the fair value of CPH not purchased by AB. During 2017 and 2018,investors. AB subsequently purchased additional shares of CPH bringing its ownership interest to 96.8%100% as of December 31, 2018.
2019. AB ownership interest in CPH is 100% as of December 31, 2021. The acquisitions described above did not have a significant impact on the Company’s consolidated revenues or net income. As a result, supplemental pro forma information has not been provided. Additional information regarding the contingent payment obligations associated with these and other acquisitions made by AB is included in Note 7, Fair Value Disclosures.8 of the Notes to these Consolidated Financial Statements.
Capitalized Software
Capitalized software, net of accumulated amortization, amounted to $181 million and $162 million at December 31, 2018 and 2017, respectively, and is recorded in Other assets. Amortization of capitalized software in 2018, 2017 and
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2016 was $49 million, $51 million and $56 million, respectively, recorded in other Operating costs and expenses in the consolidated statements of income (loss).
5)6)    CLOSED BLOCK
As a result of demutualization, the Company’s Closed Block was established in 1992 for the benefit of certain individual participating policies that were in force on that date. Assets, liabilities and earnings of the Closed Block are specifically identified to support its participating policyholders.
Assets allocated to the Closed Block inure solely to the benefit of the Closed Block policyholders and will not revert to the benefit of the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of the Company’s General Account, any of its Separate Accounts or any affiliate of the Company without the approval of the New York State Department of Financial Services (the “NYDFS”).NYDFS. Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the General Account.
The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in AOCI) represents the expected maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. As of January 1, 2001, the Company has developed an actuarial calculation of the expected timing of the Closed Block’s earnings.
If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.
Many expenses related to Closed Block operations, including amortization of DAC, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block.
Summarized financial information for the Company’s Closed Block is as follows:
December 31,
 20212020
(in millions)
Closed Block Liabilities:
Future policy benefits, policyholders’ account balances and other$5,928 $6,201 
AXA
175
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

December 31,
 20212020
Policyholder dividend obligation— 160 
Other liabilities39 39 
Total Closed Block liabilities5,967 6,400 
Assets Designated to the Closed Block:
Fixed maturities AFS, at fair value (amortized cost of $3,185 and $3,359) (allowance for credit losses of $0 and $0)3,390 3,718 
Mortgage loans on real estate (net of allowance for credit losses of $4 and $6)1,771 1,773 
Policy loans602 648 
Cash and other invested assets63 28 
Other assets90 169 
Total assets designated to the Closed Block5,916 6,336 
Excess of Closed Block liabilities over assets designated to the Closed Block51 64 
Amounts included in AOCI:
Net unrealized investment gains (losses), net of policyholders’ dividend obligation: $0 and $160; and net of income tax: $(43) and $(42)172 167 
Maximum future earnings to be recognized from Closed Block assets and liabilities$223 $231 

 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 liabilities47
 271
Total Closed Block liabilities6,756
 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 loans736
 781
Cash and other invested assets76
 351
Other assets179
 182
Total assets designated to the Closed Block6,487
 7,104
    
Excess of Closed Block liabilities over assets designated to the Closed Block269
 144
Amounts included in Accumulated other comprehensive income (loss):   
Net unrealized investment gains (losses), net of policyholders' dividend obligation of $- and $198
 138
Maximum future income to be recognized from closed block assets and liabilities$277
 $282
The Company’s Closed Block revenues and expenses follow:were as follows:
Year Ended December 31,
202120202019
(in millions)
Revenues:
Premiums and other income$144 $157 $182 
Net investment income (loss)237 251 278 
Investment gains (losses), net4 — (1)
Total revenues385 408 459 
Benefits and Other Deductions:
Policyholders’ benefits and dividends372 399 439 
Other operating costs and expenses3 1 2 
Total benefits and other deductions375 400 441 
Net income (loss), before income taxes10 8 18 
Income tax (expense) benefit(2)(2)(2)
Net income (loss)$8 $6 $16 
 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 revenues482
 518
 560
      
Benefits and Other Deductions:     
Policyholders’ benefits and dividends471
 537
 522
Other operating costs and expenses3
 2
 4
Total benefits and other deductions474
 539
 526
Net income, before income taxes8
 (21) 34
Income tax (expense) benefit(3) (36) (12)
Net income (losses)$5
 $(57) $22

A reconciliation of the Company’s policyholders’policyholder dividend obligation follows:
Year Ended December 31,
202120202019
(in millions)
Beginning balance$160 $2 $— 
Unrealized investment gains (losses)(160)158 2 
Ending balance$— $160 $2 

176
 December 31,
 2018 2017
 (in millions)
Balance, beginning of year$19
 $52
Unrealized investment gains (losses)(19) (33)
Balance, end of year$—
 $19
EQUITABLE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
6)7)    DAC AND POLICYHOLDER BONUS INTEREST CREDITS
Changes in the deferred policy acquisition costDAC asset for the years ended December 31, 2018, 20172021, 2020 and 20162019 were as follows:
December 31,
 202120202019
(in millions)
Balance, beginning of year (1)$4,243 $5,840 $6,705 
Capitalization of commissions, sales and issue expenses875 669 754 
Amortization:
Impact of assumptions updates and model changes58 (1,109)46 
All other(451)(504)(643)
     Total amortization(393)(1,613)(597)
Change in unrealized investment gains and losses766 (654)(994)
Reclassified to assets HFS— 1 (31)
Balance, end of year$5,491 $4,243 $5,837 
 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 expenses701
 687
 697
Amortization:     
Impact of assumptions updates and model changes286
 112
 (201)
All other(619) (615) (578)
Total amortization(333) (503) (779)
Change in unrealized investment gains and losses458
 (314) 84
Balance, end of year$6,745
 $5,919
 $6,049
______________
Changes(1) December 31, 2020 DAC beginning balance is $3 million more than December 31, 2019 ending balance due to impact of CECL.
The deferred asset for policyholder bonus interest credits is reported in other assets in the consolidated balance sheets and changes in the deferred asset for policyholder bonus interest credits forare reported in Interest credited to policyholders’ account balances. For the years ended December 31, 2018, 20172021, 2020 and 20162019 changes were as follows:
Year Ended December 31,
 202120202019
(in millions)
Balance, beginning of year$404 $430 $448 
Amortization charged to income(31)(26)(18)
Balance, end of year$373 $404 $430 
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Balance, beginning of year$473
 $504
 $534
Policyholder bonus interest credits deferred4
 7
 13
Amortization charged to income(51) (38) (43)
Balance, end of year$426
 $473
 $504

7)8)    FAIR VALUE DISCLOSURES
The accounting guidanceU.S. GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, and identifies three levels of inputs that may be used to measure fair value:
Level 1Unadjusted 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 2Observable 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 3Unobservable 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    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.
The Company uses unadjusted quoted market prices to measure fair value for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are measured using present value or other valuation techniques. The fair value determinations are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such adjustments do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value cannot be substantiated by direct comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument.

215177








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued


Management is responsible for the determination of the value of investments carried at fair value and the supporting methodologies and assumptions. Under the terms of various service agreements, the Company often utilizes independent valuation service providers to gather, analyze, and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual securities. These independent valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested. As further described below with respect to specific asset classes, these inputs include, but are not limited to, market prices for recent trades and transactions in comparable securities, benchmark yields, interest rate yield curves, credit spreads, quoted prices for similar securities, and other market-observable information, as applicable. Specific attributes of the security being valued also are considered, including its term, interest rate, credit rating, industry sector, and when applicable, collateral quality and other security- or issuer-specific information. When insufficient market observable information is available upon which to measure fair value, the Company either will request brokers knowledgeable about these securities to provide a non-binding quote or will employ internal valuation models. Fair values received from independent valuation service providers and brokers and those internally modeled or otherwise estimated are assessed for reasonableness.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Fair value measurements are required on a non-recurring basis for certain assets only when an impairment or other events occur. For the periods ended December 31, 2021 and December 31, 2020, the Company recognized impairment adjustments and impairment losses, respectively, to adjust the carrying value of held-for-sale asset and liabilities to their fair value less cost to sell. The value is measured on a nonrecurring basis and categorized within Level 3 of the fair value hierarchy. The fair value was determined using a market approach, estimated based on the negotiated value of the asset and liabilities. See Note 23 of the Notes to these Consolidated Financial Statements for additional details of the Held-for-Sale assets and liabilities.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below. At
Fair Value Measurements as of December 31, 20182021
178
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Level 1Level 2Level 3Total
 (in millions)
Assets
Investments
Fixed maturities, AFS:
Corporate (1)$— $51,007 $1,504 $52,511 
U.S. Treasury, government and agency— 15,385 — 15,385 
States and political subdivisions— 627 35 662 
Foreign governments— 1,152 — 1,152 
Residential mortgage-backed (2)— 98 — 98 
Asset-backed (3)— 5,926 8 5,934 
Commercial mortgage-backed— 2,401 20 2,421 
Redeemable preferred stock— 53 — 53 
Total fixed maturities, AFS— 76,649 1,567 78,216 
Fixed maturities, at fair value using the fair value option— 1,440 201 1,641 
Other equity investments (7)322 457 5 784 
Trading securities340 226 65 631 
Other invested assets:
Short-term investments— 30 — 30 
Assets of consolidated VIEs/VOEs166 450 11 627 
Swaps— (473)— (473)
Credit default swaps— (1)— (1)
Futures(1)— — (1)
Options— 6,959 — 6,959 
Total other invested assets165 6,965 11 7,141 
Cash equivalents3,275 293 — 3,568 
Segregated securities— 1,504 — 1,504 
Amounts due from reinsurer (6)— — 5,813 5,813 
GMIB reinsurance contracts asset— — 1,848 1,848 
Separate Accounts assets (4)144,124 2,572 1 146,697 
Total Assets$148,226 $90,106 $9,511 $247,843 
Liabilities
Notes issued by consolidated VIE’s, at fair value using the fair value option (5)$— $1,277 $— $1,277 
GMxB derivative features’ liability— — 8,525 8,525 
SCS, SIO, MSO and IUL indexed features’ liability— 6,773 — 6,773 
Liabilities of consolidated VIEs and VOEs16 2 — 18 
Contingent payment arrangements— — 38 38 
Total Liabilities$16 $8,052 $8,563 $16,631 
______________
(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, credit risk transfer securities and other asset types.
(4)Separate Accounts assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate. As of December 31, 2017, no assets were2021, the fair value of such investments was $404 million.
(5)Includes CLO short-term debt of $92 million, which is inclusive as fair valued within Notes issued by consolidated VIE’s, at fair value using the fair value option Accrued interest payable of $6 million is reported in Notes issued by consolidated VIE’s, at fair value using the fair value option in the consolidated balance sheets, which is not required to be measured at fair value on a non-recurringrecurring basis. Fair value measurements are required on a non-recurring basis for certain assets, including goodwill and mortgage loans on real estate, only when an OTTI or other event occurs. When such fair value measurements are recorded, they must be classified and disclosed within
(6)This represents GMIB NLG ceded reserves related to the fair value hierarchy.The Company recognizes transfers between valuation levels at the beginningVenerable Transaction. See Note 1 of the reporting period.
Fair Value Measurements at December 31, 2018Notes to these Consolidated Financial Statements for details of the Venerable Transaction.
179
 Level 1 Level 2 Level 3 Total
 (in millions)
Assets       
Investments       
Fixed maturities, available-for-sale:       
Corporate (1)$—
 $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 stock167
 279
 —
 446
Total fixed maturities, available-for-sale167
 44,368
 1,744
 46,279
Other equity investments11
 —
 74
 85
Trading securities446
 15,507
 64
 16,017
Other invested assets:      

Short-term investments—
 515
 —
 515
Assets of consolidated VIEs/VOEs92
 259
 27
 378
Swaps—
 426
 —
 426
Credit default swaps—
 17
 —
 17
Futures(1) —
 —
 (1)
Options—
 968
 —
 968
Total other invested assets91
 2,185
 27
 2,303
Cash equivalents3,482
 —
 —
 3,482
Segregated securities—
 1,170
 —
 1,170
GMIB reinsurance contracts asset—
 —
 1,732
 1,732
Separate Accounts assets106,994
 2,747
 374
 110,115
Total Assets$111,191
 $65,977
 $4,015
 $181,183
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

(7)Includes short position equity securities of $33 million that are reported in other liabilities.

 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.
Fair Value Measurements atas of December 31, 20172020 (1)
Level 1Level 2Level 3Total
 (in millions)
Assets
Investments
Fixed maturities, AFS:
Corporate (2)$— $56,457 $1,702 $58,159 
U.S. Treasury, government and agency— 16,118 ��� 16,118 
States and political subdivisions— 596 39 635 
Foreign governments— 1,103 — 1,103 
Residential mortgage-backed (3)— 143 — 143 
Asset-backed (4)— 3,591 20 3,611 
Commercial mortgage-backed (3)— 1,203 — 1,203 
Redeemable preferred stock404 262 — 666 
Total fixed maturities, AFS404 79,473 1,761 81,638 
Fixed maturities, at fair value using the fair value option— 309 80 389 
Other equity investments13 — 71 84 
Trading securities441 5,073 39 5,553 
Other invested assets:

Short-term investments— 101 1 102 
Assets of consolidated VIEs/VOEs74 231 13 318 
Swaps— (99)— (99)
Credit default swaps— 5 — 5 
Futures(2)— — (2)
Options— 4,670 — 4,670 
Swaptions— — — — 
Total other invested assets72 4,908 14 4,994 
Cash equivalents4,309 297 — 4,606 
Segregated securities— 1,753 — 1,753 
GMIB reinsurance contracts asset— — 2,488 2,488 
Separate Accounts assets (5)132,698 2,674 1 135,373 
Total Assets$137,937 $94,487 $4,454 $236,878 
Liabilities
Notes issued by consolidated VIE’s, at fair value using the fair value option (6)$— $312 $— $312 
GMxB derivative features’ liability— — 11,131 11,131 
SCS, SIO, MSO and IUL indexed features’ liability— 4,509 — 4,509 
Liabilities of consolidated VIEs and VOEs2 6 — 8 
Contingent payment arrangements— — 28 28 
Total Liabilities$2 $4,827 $11,159 $15,988 
______________
(1)Excludes amounts reclassified as HFS.
(2)Corporate fixed maturities includes both public and private issues.
(3)Includes publicly traded agency pass-through securities and collateralized obligations.
(4)Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
180
 Level 1 Level 2 Level 3 Total
 (in millions)
Assets       
Investments       
Fixed maturities, available-for-sale:       
Corporate (1)$—
 $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 stock184
 327
 1
 512
Total fixed maturities, available-for-sale184
 45,025
 1,732
 46,941
Other equity investments13
 —
 34
 47
Trading securities485
 13,647
 38
 14,170
Other invested assets      

Short-term investments—
 1,730
 —
 1,730
Assets of consolidated VIEs/VOEs1,060
 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 assets1,058
 4,204
 27
 5,289
Cash equivalents3,608
 —
 —
 3,608
Segregated securities—
 825
 —
 825
GMIB reinsurance contracts asset—
 —
 1,894
 1,894
Separate Accounts assets121,000
 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 VOEs670
 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.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

(5)Separate Accounts assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate and commercial mortgages. As of December 31, 2020, the fair value of such investments was $356 million.
(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.

(6)Accrued interest payable of $1 million is reported in Notes issued by consolidated VIE’s, at fair value using the fair value option in the consolidated balance sheets, which is not required to be measured at fair value on a recurring basis.
Public Fixed Maturities
The fair values of the Company’s public fixed maturities, including those accounted for using the fair value option are generally based on prices obtained from independent valuation service providers and for which the Company maintains a vendor hierarchy by asset type based on historical pricing experience and vendor expertise. Although each security generally is priced by multiple independent valuation service providers, the Company ultimately uses the price received from the independent valuation service provider highest in the vendor hierarchy based on the respective asset type, with limited exception. To validate reasonableness, prices also are internally reviewed by those with relevant expertise through comparison with directly observed recent market trades. Consistent with the fair value hierarchy, public fixed maturities validated in this manner generally are reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If the pricing information received from independent valuation service providers is not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process in accordance with the terms of the respective independent valuation service provider agreement. If as a result it is determined that the independent valuation service provider is able to reprice the security in a manner agreed as more consistent with current market observations, the security remains within Level 2. Alternatively, a Level 3 classification may result if the pricing information then is sourced from another vendor, non-binding broker quotes, or internally-developed valuations for which the Company’s own assumptions about market-participant inputs would be used in pricing the security.
Private Fixed Maturities
The fair values of the Company’s private fixed maturities, including those accounted for using the fair value option are determined from prices obtained from independent valuation service providers. Prices not obtained from an independent valuation service provider are determined by using a discounted cash flow model or a market comparable company valuation technique. In certain cases, these models use observable inputs with a discount rate based upon the average of spread surveys collected from private market intermediaries who are active in both primary and secondary transactions, taking into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Generally, these securities have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model or a market comparable company valuation technique may also incorporate unobservable inputs, which reflect the Company’s own assumptions about the inputs market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the fair value measurement of a security, a Level 3 classification generally is made.
Notes issued by consolidated VIE’s, at fair value using the fair value option
These notes are based on the fair values of corresponding fixed maturity collateral. The CLO liabilities are also reduced by the fair value of the beneficial interests the Company retains in the CLO and the carrying value of any beneficial interests that represent compensation for services. As the notes are valued based on the reference collateral, they are classified as Level 2 or 3. See “Fair Value Option” below for additional information.
Freestanding Derivative Positions
The net fair value of the Company’s freestanding derivative positions as disclosed in Note 34 of the Notes to these Consolidated Financial Statements are generally based on prices obtained either from independent valuation service providers or derived by applying market inputs from recognized vendors into industry standard pricing models. The majority of these derivative contracts are traded in the OTC derivative market and are classified in Level 2. The fair values of derivative assets and liabilities traded in the OTC market are determined using quantitative models that require use of the contractual terms of the derivative instruments and multiple market inputs, including interest rates, prices, and indices to generate continuous yield or pricing curves, including overnight index swap (“OIS”) curves, and volatility factors, which then are applied to value the positions. The predominance of market inputs is actively quoted and can be validated through external sources or reliably interpolated if less observable. If the pricing information received from independent valuation service providers is not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process in accordance with the terms
Level Classifications of the respective independent valuation service provider agreement. IfCompany’s Financial Instruments
Financial Instruments Classified as a result it is determined that the independent valuation service provider is able to reprice the derivative instrument in a manner agreed as more consistent with current market observations, the position remains within Level 2. Alternatively, a Level 3 classification may result if the pricing information then is sourced from another vendor, non-binding broker quotes, or internally-developed valuations for which the Company’s own assumptions about market-participant inputs would be used in pricing the security.1
Investments classified as Level 1 primarily include redeemable preferred stock, trading securities, cash equivalents and Separate AccountAccounts assets. Fair value measurements classified as Level 1 include exchange-traded prices of fixed maturities, equity securities and derivative contracts, and net asset values for transacting subscriptions and redemptions of mutual fund shares held by Separate Accounts. Cash equivalents classified as Level 1 include money market accounts, overnight commercial paper and highly liquid debt instruments purchased with an original maturity of three months or less and are carried at cost as a proxy for fair value measurement due to their short-term nature.
181
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Financial Instruments Classified as Level 2
Investments classified as Level 2 are measured at fair value on a recurring basis and primarily include U.S. government and agency securities, and certain corporate debt securities and financial assets and liabilities accounted for using the fair value option, such as public and private fixed maturities.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


As market quotes generally are not readily available or accessible for these securities, their fair value measures are determined utilizing relevant information generated by market transactions involving comparable securities and often are based on model pricing techniques that effectively discount prospective cash flows to present value using appropriate sector-adjusted credit spreads commensurate with the security’s duration, also taking into consideration issuer-specific credit quality and liquidity. Segregated securities classified as Level 2 are U.S. Treasury bills segregated by AB in a special reserve bank custody account for the exclusive benefit of brokerage customers, as required by Rule 15c3-3 of the Exchange Act and for which fair values are based on quoted yields in secondary markets.
Observable inputs generally used to measure the fair value of securities classified as Level 2 include benchmark yields, reported secondary trades, issuer spreads, benchmark securities and other reference data. Additional observable inputs are used when available, and as may be appropriate, for certain security types, such as prepayment, default, and collateral information for the purpose of measuring the fair value of mortgage- and asset-backed securities. The Company’s AAA-rated mortgage- and asset-backed securities are classified as Level 2 for which the observability of market inputs to their pricing models is supported by sufficient, albeit more recently contracted, market activity in these sectors.
Certain Company products, such as the SCS, and EQUI-VEST variable annuity products, IUL and in the MSO fund available in some life contracts, offer investment options which permit the contract owner to participate in the performance of an index, ETF or commodity price. These investment options, which depending on the product and on the index selected, can currently have 1, 3, 5,one, three, five or 6-yearsix year terms, provide for participation in the performance of specified indices, ETF or commodity price movement up to a segment-specific declared maximum rate. Under certain conditions that vary by product, e.g., holding these segments for the full term, these segments also shield policyholders from some or all negative investment performance associated with these indices, ETF or commodity prices. These investment options have defined formulaic liability amounts, and the current values of the option component of these segment reserves are accounted forclassified as Level 2 embedded derivatives. The fair values of these embedded derivatives are based on data obtained from independent valuation service providers.
Financial Instruments Classified as Level 3
The Company’s investments classified as Level 3 primarily include corporate debt securities and financial assets and liabilities accounted for using the fair value option, such as private fixed maturities.maturities and asset-backed securities. Determinations to classify fair value measures within Level 3 of the valuation hierarchy generally are based upon the significance of the unobservable factors to the overall fair value measurement. Included in the Level 3 classification are fixed maturities with indicative pricing obtained from brokers that otherwise could not be corroborated to market observable data. The Company applies various due diligence procedures, as considered appropriate, to validate these non-binding broker quotes for reasonableness, based on its understanding of the markets, including use of internally-developed assumptions about inputs a market participant would use to price the security. In addition, asset-backed securities are classified as Level 3.
The Company also issues certain benefits on its variable annuity products that are accounted for as derivatives and are also considered Level 3. The GMIBNLG feature allows the policyholder to receive guaranteed minimum lifetime annuity payments based on predetermined annuity purchase rates applied to the contract’s benefit base if and when the contract account value is depleted and the GMIBNLGNLG feature is activated. The GMWB feature allows the policyholder to withdraw at minimum, over the life of the contract, an amount based on the contract’s benefit base. The GWBL feature allows the policyholder to withdraw, each year for the life of the contract, a specified annual percentage of an amount based on the contract’s benefit base. The GMAB feature increases the contract account value at the end of a specified period to a GMAB base. The GIB feature provides a lifetime annuity based on predetermined annuity purchase rates if and when the contract account value is depleted. This lifetime annuity is based on predetermined annuity purchase rates applied to a GIB base.
Level 3 also includes the GMIB reinsurance contract assets, which are accounted for as derivative contracts. The GMIB reinsurance contract asset and liabilities’ fair value reflects the present value of reinsurance premiums, andnet of recoveries, and risk margins over a range of market consistent economic scenarios while GMxB derivative features liability reflects the present value of expected future payments (benefits) less fees, adjusted for risk margins and nonperformance risk, attributable to GMxB derivative features’ liability over a range of market-consistent economic scenarios. 
182
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Also included are the Amounts due from Reinsurers related to the GMIB NLG product features (GMIB NLG Reinsurance). The fair value reflects the present value of reinsurance premiums, net of recoveries, adjusted for risk margins and nonperformance risk over a range of market consistent economic scenarios.
The valuations of the GMIB reinsurance contract asset, GMIB NLG Reinsurance and GMxB derivative features liability incorporate significant non-observable assumptions related to policyholder behavior, risk margins and projections of equity separate accountSeparate Accounts funds. The credit risks of the counterparty and of the Company are considered in determining the fair values of its GMIB reinsurance contract asset, GMIB NLG Reinsurance and GMxB derivative features liability positions, respectively, after taking into account the effects of collateral arrangements. Incremental adjustment to the swapUS Treasury curve for non-
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


performancenon-performance risk is made to the fair values of the GMIB reinsurance contract asset, and liabilitiesGMIB NLG Reinsurance and GMIBNLG feature to reflect the claims-paying ratings of counterparties and the Company. Equity and fixed income volatilities were modeled to reflect current market volatilities. Due to the unique, long duration of the GMIBNLG feature and GMIB NLG Reinsurance , adjustments were made to the equity volatilities to remove the illiquidity bias associated with the longer tenors and risk margins were applied to the non-capital markets inputs to the GMIBNLG valuations.
After giving consideration to collateral arrangements, the Company reducedimpact to the fair value of its GMIB reinsurance contract asset by $112was a decrease of $107 million and $8$102 million atas of December 31, 20182021 and 2017,December 31, 2020, respectively, to recognize incremental counterparty non-performance risk and reducedthe impact to the fair value of its GMIB reinsurance contract liabilities by $41was a decrease of $15 million and $24$19 million atas of December 31, 20182021 and 2017,December 31, 2020, respectively, to recognize its own incremental non-performance risk.
After giving consideration to collateral arrangements, the impact to the fair value of its Amounts due from Reinsurers was a decrease of $210 million at December 31, 2021 to recognize incremental counterparty non-performance risk.
Lapse rates are adjusted at the contract level based on a comparison of the actuariallyactuarial calculated guaranteed values and the current policyholder account value, which include other factors such as considering surrender charges. Generally, lapse rates are assumed to be lower in periods when a surrender charge applies. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the moneyin-the-money contracts are less likely to lapse. For valuing the embedded derivative, lapse rates vary throughout the period over which cash flows are projected.
The Company’s Level 3 liabilities include contingent payment arrangements associated with acquisitions in 2010, 20142016 and 20162019 by AB. At each reporting date, AB estimates the fair values of the contingent consideration expected to be paid based upon revenue and discount rate projections, using unobservable market data inputs, which are included in Level 3 of the valuation hierarchy. The Company’s Level 3 liabilities also include contingent payment arrangements associated with a Renewal Rights Agreement (the “Renewal Rights Agreement”) that transitions certain group employee benefits policies beginning January 1, 2017 from an insurer exiting such business to MONY Life Insurance Company of America (“MLOA”). The fair value of the contingent payments liability associated with this transaction is measured and adjusted each reporting period through final settlement using projected premiums from these policies, net of potential surrenders and terminations, and applying a risk-adjusted discount factor (8.6% at December 31, 2018) to the resulting cash flows. 
The Company’s consolidated VIEs/VOEs hold investments that are classified as Level 3, and primarily consist of corporate bonds that are vendor priced with no ratings available, bank loans, non-agency collateralized mortgage obligations and asset-backed securities.
In 2018, AFSTransfers of Financial Instruments Between Levels 2 and 3
During the year ended December 31, 2021, fixed maturities with fair values of $28$785 million were transferred out of Level 3 and into Level 2 principally due to the availability of trading activity and/or market observable inputs to measure and validate their fair values. In addition, AFS fixed maturities with fair value of $89$27 million were transferred from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately 0.8%6.2% of total equity atas of December 31, 2018.2021.
In 2017, AFSDuring the year ended December 31, 2020, fixed maturities with fair values of $5$103 million were transferred out of Level 3 and into Level 2 principally due to the availability of trading activity and/or market observable inputs to measure and validate their fair values. In addition, AFS fixed maturities with fair value of $7$189 million were transferred from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately 0.1%1.7% of total equity atas of December 31, 2017.2020.
The tabletables below presents a reconciliationpresent reconciliations for all Level 3 assets and liabilities atand changes in unrealized gains (losses) for the years ended December 31, 2018, 20172021, 2020 and 2016 respectively:2019, respectively.



AXA
183
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued


Level 3 Instruments - Fair Value Measurements
CorporateState and Political SubdivisionsAsset-backedCMBSTrading Securities, at Fair ValueFixed maturities, at FVO
Corporate State and
Political
Subdivisions		 Foreign
Governments		 Commercial
Mortgage-
backed		 Asset-
backed		(in millions)
(in millions)
Balance, January 1, 2018$1,150
 $40
 $—
 $—
 $541
Total gains (losses), realized and unrealized, included in:         
Income (loss) as:         
Balance, January 1, 2021Balance, January 1, 2021$1,702 $39 $20 $— $39 $80 
Total gains and (losses), realized and unrealized, included in:Total gains and (losses), realized and unrealized, included in:
Net income (loss) as:Net income (loss) as:
Net investment income (loss)8
 —
 —
 —
 —
Net investment income (loss)5 — — — — 5 
Investment gains (losses), net(9) —
 —
 —
 —
Investment gains (losses), net(16)— — — 26 — 
Subtotal(1) —
 —
 —
 —
Subtotal(11)— — — 26 5 
Other comprehensive income (loss)(21) (1) —
 —
 (9)Other comprehensive income (loss)34 (2)— — — 0
Purchases334
 —
 —
 —
 17
Purchases938 — 6 20 — 211 
Sales(337) (1) —
 —
 (30)Sales(473)(2)(18)— — (23)
Activity related to consolidated VIEs/VOEsActivity related to consolidated VIEs/VOEs— — — — — 0
Transfers into Level 3 (1)89
 1
 —
 —
 —
Transfers into Level 3 (1)27 — — — — — 
Transfers out of Level 3 (1)(28) —
 —
 —
 —
Transfers out of Level 3 (1)(713)— — — — (72)
Balance, December 31, 2018$1,186
 $39
 $—
 $—
 $519
Balance, December 31, 2021Balance, December 31, 2021$1,504 $35 $8 $20 $65 $201 
Change in unrealized gains or losses for the period included in earnings for instruments held at the end of the reporting period (2)Change in unrealized gains or losses for the period included in earnings for instruments held at the end of the reporting period (2)$— $— $— $— $26 $5 
Change in unrealized gains or losses for the period included in other comprehensive income for instruments held at the end of the reporting period (2)Change in unrealized gains or losses for the period included in other comprehensive income for instruments held at the end of the reporting period (2)$28 $(2)$— $— $— $— 
         
Balance, January 1, 2017$857
 $42
 $—
 $373
 $120
Total gains (losses), realized and unrealized, included in:         
Income (loss) as:         
Balance, January 1, 2020Balance, January 1, 2020$1,257 $39 $100 $— $36 $— 
Total gains and (losses), realized and unrealized, included in:Total gains and (losses), realized and unrealized, included in:
Net income (loss) as:Net income (loss) as:
Net investment income (loss)4
 —
 —
 (2) —
Net investment income (loss)4 — — — — — 
Investment gains (losses), net1
 —
 —
 (95) 15
Investment gains (losses), net(16)— — — 3 — 
Subtotal5
 —
 —
 (97) 15
Subtotal(12)— — — 3 — 
Other comprehensive income (loss)4
 (1) —
 78
 (7)Other comprehensive income (loss)(17)2 — — — — 
Purchases615
 —
 —
 —
 434
Purchases514 — 20 — — 81 
Sales(333) (1) —
 (354) (21)Sales(226)(2)— — — (1)
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), net2
 —
 —
 (71) —
Other comprehensive income (loss)8
 (2) —
 14
 1
Purchases574
 —
 —
 —
 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
AXA
184
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

CorporateState and Political SubdivisionsAsset-backedCMBSTrading Securities, at Fair ValueFixed maturities, at FVO
(in millions)
Activity related to consolidated VIEs/VOEs— 000— 0
Transfers into Level 3 (1)189 — — — — — 
Transfers out of Level 3 (1)(3)— (100)— — — 
Balance, December 31, 2020$1,702 $39 $20 $— $39 $80 
Change in unrealized gains or losses for the period included in earnings for instruments held at the end of the reporting period (2)$— $— $— $— $3 $— 
Change in unrealized gains or losses for the period included in other comprehensive income for instruments held at the end of the reporting period (2)$(18)$2 $— $— $— $— 
Balance, January 1, 2019$1,186 $39 $519 $— $64 $— 
Total gains (losses), realized and unrealized, included in:
Income (loss) as:
Net investment income (loss)4 — — — — — 
Investment gains (losses), net— 1 — — 6 — 
Subtotal4 1 — — 6 — 
Other comprehensive income (loss)5 2 1 — — — 
Purchases274 — 100 — — — 
Sales(122)(3)(84)— (5)— 
Transfers into Level 3 (1)14 — — — — — 
Transfers out of Level 3 (1)(104)— (436)— (29)— 
Balance, December 31, 2019$1,257 $39 $100 $— $36 $— 
Change in unrealized gains or losses for the period included in earnings for instruments held at the end of the reporting period (2)$— $— $— $— $6 $— 
Change in unrealized gains or losses for the period included in other comprehensive income for instruments held at the end of the reporting period (2)$4 $3 $— $— $— $— 
_____________
(1)Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.
(2)For instruments held as of December 31, 2021 or December 31, 2020, amounts are included in net investment income or net derivative gains (losses) in the consolidated statements of income (loss) or unrealized gains (losses) on investments in the consolidated statements of comprehensive income.
Other Equity Investments (9)GMIB Reinsurance
 Contract Asset		Amounts Due from ReinsurersSeparate Accounts AssetsGMxB Derivative Features LiabilityContingent Payment Arrangement
(in millions)
Balance, January 1, 2021$84 $2,488 $— $1 $(11,131)$(28)
Realized and unrealized gains (losses), included in Net income (loss) as:
Investment gains (losses), reported in net investment income21 — — — — — 
Net derivative gains (losses) (1) (6)— (625)517 — 2,841 — 
Total realized and unrealized gains (losses)21 (625)517 — 2,841 — 
Other comprehensive income (loss)— — — — — — 
185
 
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)
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Other Equity Investments (9)GMIB Reinsurance
 Contract Asset		Amounts Due from ReinsurersSeparate Accounts AssetsGMxB Derivative Features LiabilityContingent Payment Arrangement
(in millions)
Purchases (2)8 43 74 1 (463)(7)
Sales (3)(92)(58)(35)— 88 — 
Settlements (4)— — — — — — 
Other (7)— — 5,259 — — — 
Activity related to consolidated VIEs/VOEs(4)— — — — (3)
Transfers into Level 3 (5)— — 0— — — 
Transfers out of Level 3 (5)(1)— — (1)140 — 
Balance, December 31, 2021$16 $1,848 $5,815 $1 $(8,525)$(38)
Change in unrealized gains or losses for the period included in earnings for instruments held at the end of the reporting period (8)$2 $(625)$517 $— $2,841 $— 
Change in unrealized gains or losses for the period included in other comprehensive income for instruments held at the end of the reporting period (8)$— $— $— $— $— $— 
Balance, January 1, 2020$113 $2,139 $— $— $(8,502)$(23)
Realized and unrealized gains (losses), included in Net income (loss) as:— — — — — — 
Investment gains (losses), reported in net investment income(8)— — — — — 
Net derivative gains (losses)— 417 — — (2,253)— 
Total realized and unrealized gains (losses)(8)417 — — (2,253)— 
Other comprehensive income (loss)— — — — — — 
Purchases (2)9 43 — 1 (451)(4)
Sales (3)(26)(79)— — 75 — 
Settlements (4)— — — — — 1 
Change in estimate— (32)— — — 1 
Activity related to consolidated VIEs/VOEs(4)— — — — (3)
Transfers into Level 3 (5)— — — — — — 
Transfers out of Level 3 (5)— — — — — — 
Balance, December 31, 2020$84 $2,488 $— $1 $(11,131)$(28)
Change in unrealized gains or losses for the period included in earnings for instruments held at the end of the reporting period (8)$(8)$417 $74 $1 $(2,253)$(7)
 
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)
186
___________
(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).

The table below details changes in unrealized gains (losses) for 2018, 2017 and 2016 by category for Level 3 assets and liabilities still held at December 31, 2018, 2017 and 2016 respectively.
  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)
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Other Equity Investments (9)GMIB Reinsurance
 Contract Asset		Amounts Due from ReinsurersSeparate Accounts AssetsGMxB Derivative Features LiabilityContingent Payment Arrangement
(in millions)
Change in unrealized gains or losses for the period included in other comprehensive income for instruments held at the end of the reporting period (8)$— $— $— $— $— $— 
Balance, January 1, 2019$93 $1,733 $— $21 $(5,674)$(7)
Total gains (losses), realized and unrealized, included in:
Realized and unrealized gains (losses), included in Net income (loss) as:$— $— $— $— $— $— 
Investment gains (losses), net23 — — — — — 
Net derivative gains (losses)— 433 — — (2,442)— 
Non-performance risk (1)— — — — — — 
Total realized and unrealized gains (losses)23 433 — — (2,442)— 
Other comprehensive income (loss)— — — — — — 
Purchases (2)5 45 — — (427)(17)
Sales (3)(5)(72)— (1)41 — 
Settlements (4)— — — (2)— 1 
Change in estimate— — — — — 3 
Activity related to consolidated VIEs/VOEs(3)— — — — (3)
Transfers into Level 3 (6)— — — — — — 
Transfers out of Level 3 (6)— — — (18)— — 
Balance, December 31, 2019$113 $2,139 $— $— $(8,502)$(23)
Change in unrealized gains or losses for the period included in earnings for instruments held at the end of the reporting period (8)$23 $433 $— $— $(2,442)$— 
Change in unrealized gains or losses for the period included in other comprehensive income for instruments held at the end of the reporting period (8)$— $— $— $— $— $— 
______________
(1)For the years ended December 31, 2021 and 2020, the Company’s non-performance risk impact of $213 million and $(764) million for the GMxB Derivative Features Liability, $(23) million and $7 million for the GMIB Reinsurance Contract Asset, and $(19) million and $0 million for the Amounts Due from Reinsurers, respectively, is recorded through Net derivative gains (losses).
(2)For the GMIB reinsurance contract asset, Amounts Due from Reinsurers and GMxB derivative features liability, represents attributed fee.
(3)For the GMIB reinsurance contract asset and Amounts Due from Reinsurers, 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)Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.
(6)GMxB Derivative Features Liability excludes a $45 million settlement fee on CS Life reinsurance contract.
(7)Represents the opening ceded balance from the Venerable Transaction of the GMxB with no lapse guarantee riders.
(8)For instruments held as of December 31, 2021, December 31, 2020 and December 31, 2019, amounts are included in net investment income or net derivative gains (losses) in the consolidated statements of income (loss) or unrealized gains (losses) on investments in the consolidated statements of comprehensive income.
(9)Other Equity Investments include other invested assets.
  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
187
______________
(1)There is an investment expense that offsets this investment gain (loss).

EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Quantitative and Qualitative Information about Level 3 Fair Value Measurements
The following tables disclose quantitative information about Level 3 fair value measurements by category for assets and liabilities as of December 31, 20182021 and 2017,December 31, 2020, respectively.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Quantitative Information about Level 3 Fair Value Measurements atas of December 31, 20182021
Fair
Value
Valuation
Technique
Significant
Unobservable Input
RangeWeighted Average (2)
(in millions)
Assets:
Investments:
Fixed maturities, AFS:
Corporate$258Matrix pricing modelSpread over Benchmark20 bps - 270 bps144 bps
888Market comparable 
companies
EBITDA multiples
Discount rate
Cash flow multiples
Loan to value
4.9x - 62.3x
6.2% - 21.5%
0.5x - 10.0x
3.1% - 63.4%
13.0x
9.1%
5.5x
30.8%
Trading Securities, at Fair Value65Discounted Cash Flow
Earnings multiple
Discount factor
Discount years
7.3x
10.00%
11
Other equity investments4Market comparable companiesRevenue multiple7.8x - 10.3x9.5x
GMIB reinsurance contract asset1,848Discounted cash flow
Lapse rates
Withdrawal Rates
GMIB Utilization Rates
Non-performance risk
Volatility rates - Equity
Mortality: Ages 0-40
Ages 41-60
Ages 61-115

0.45%-20.86%
0.27%-8.66%
0.04%-60.44%
57 bps - 93 bps
11%-31%
0.01%-0.17%
0.06%-0.53%
0.31%-40.00%
2.65%
0.93%
5.27%
60 bps
24%
2.79%
(same for all ages)
(same for all ages)
Amount Due from Reinsurers5,813Discounted Cash Flow
Lapse rates
Withdrawal Rates
GMIB Utilization Rates
Non-performance risk (bps)
Volatility rates - Equity
Mortality: Ages 0-40
Ages 41-60
Ages 61-115
0.45%-20.86%
0.27%-8.66%
0.04%-60.44%
37 bps
11%-31%
0.01%-0.17%
0.06%-0.53%
0.31%-40.00%


1.70%
1.18%
7.20%
37 bps
24%
2.17%
(same for all ages)
(same for all ages)
Liabilities:
188
  
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%		  

AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Fair
Value
Valuation
Technique
Significant
Unobservable Input
RangeWeighted Average (2)
AB Contingent Consideration Payable38Discounted cash flow
Expected revenue growth rates
Discount rate
2.0% - 83.9%
1.9% - 10.4%
11.9%
7.0%
GMIBNLG8,503Discounted cash flow
Non-performance risk
Lapse rates
Withdrawal rates
Annuitization rates
Mortality rates (1):
Ages 0 - 40
Ages 41-60
Ages 61-115
111 bps
1.04%-23.57%
0.27%-8.66%
0.03%-100.00%

0.01%-0.19%
0.07%-0.57%
0.44%-43.60%
111 bps
3.55%
1.04%
5.24%

1.62%
(same for all ages)
(same for all ages)
GWBL/GMWB99Discounted cash flow
Lapse rates
Withdrawal Rates
Utilization Rates

Volatility rates - Equity
Non-performance risk(bps)
0.60%-20.86%
0.00%-8.00%
100% once starting
11%-31%
111 bps
2.65%
0.93%


24%
GIB(75)Discounted cash flow
Lapse rates
Withdrawal Rates
Utilization Rates
Volatility rates - Equity
Non-performance risk(bps)
0.60%-20.86%
0.13%-8.66%
0.04%-100.00%
11% - 31%
111 bps
2.65%
0.93%
5.27%
24%
GMAB(3)Discounted cash flow
Lapse rates
Volatility rates - Equity
Non-performance risk(bps)
0.60%-20.86%
11%-31%
111 bps
2.65%
24%
______________
(1)Mortality rates vary by age and demographic characteristic such as gender. Mortality rate assumptions are based on a combination of company and industry experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuating the embedded derivatives.
(2)For lapses, withdrawals, and utilizations the rates were weighted by counts; for mortality weighted average rates are shown for all ages combined; and for withdrawals the weighted averages were based on an estimated split of partial withdrawal and dollar-for-dollar withdrawals.
Quantitative Information about Level 3 Fair Value Measurements atas of December 31, 20172020
Fair
Value		Valuation
Technique		Significant
Unobservable Input		RangeWeighted Average (2)
(in millions)
Assets:
Investments:
Fixed maturities, AFS:
Corporate$34 Matrix pricing modelSpread over benchmark45 bps - 195 bps160 bps
1,148 Market comparable companies
EBITDA multiples
 Discount rate
 Cash flow multiples
3.5x - 33.1x
5.60% - 28.40%
1.9x-25.0x
10.8x
8.60%
6.8x
Trading Securities, at Fair Value39 Discounted cash flow
Earnings multiple
Discounts factor
Discount years
8.2x
10.00%
11
Other equity investments2 Market comparable companiesRevenue multiple9.7x - 26.4x18.5x
189
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
  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%		  
Fair
Value		Valuation
Technique		Significant
Unobservable Input		RangeWeighted Average (2)
(in millions)
GMIB reinsurance contract asset2,488 Discounted cash flow
Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115
43 - 85 bps
0.6% - 16%
0% - 2%
0% - 61%
7% - 32%

0.01% - 0.18%
0.07% - 0.54%
0.42% - 42.20%
50 bps
1.69%
0.91%
5.82%
24%

2.80%
(same for all ages)
(same for all ages)
Liabilities:
AB Contingent Consideration Payable28 Discounted cash flow
Expected revenue growth rates
Discount rate
0.7% - 50.0%
1.9% - 10.4%
4.9%
8.0%
GMIBNLG10,713 Discounted cash flow
Non-performance risk
Lapse rates
Withdrawal rates
Annuitization rates
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115
96.0 bps
1.1% - 25.7%
0.4% - 2%
0% - 100%

0.01% - 0.19%
0.06% - 0.53%
0.41% - 41.39%

3.19%
0.93%
5.51%

1.56%
(same for all ages)
(same for all ages)
Assumed GMIB Reinsurance Contracts195 Discounted cash flow
Non-performance risk
Lapse rates
Withdrawal rates (Age 0 - 85)
Withdrawal rates (Age 86+)
Utilization rates
Volatility rates - Equity
60 - 133 bps
1.1% - 11.1%
0.6% - 22.2%
1.1% - 100%
0% -30%
7%-32%
99 bps
1.69%
0.91%
(same for all ages)
5.82%
24%
GWBL/GMWB190 Discounted cash flow
Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates

Volatility rates - Equity
96.0 bps
0.8%-16%
0%-8%
100% once starting
7%-32%

1.69%
0.91%

24%
GIB31 Discounted cash flow
Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity
96.0 bps
0.8%-15.6%
0%-2%
0%-100%
7%-32%

1.69%
0.91%
5.82%
24%
GMAB2 Discounted cash flow
Non-performance risk
Lapse rates
Volatility rates - Equity
96.0 bps
0.8%-16%
7%-32%

1.69%
24%

______________
(1)Mortality rates vary by age and demographic characteristic such as gender. Mortality rate assumptions are based on a combination of company and industry experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuating the embedded derivatives.
(2)For lapses, withdrawals, and utilizations the rates were weighted by counts; for mortality weighted average rates are shown for all ages combined; and for withdrawals the weighted averages were based on an estimated split of partial withdrawal and dollar-for-dollar withdrawals.
190
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Level 3 Financial Instruments for which Quantitative Inputs are Not Available
Certain Privately Placed Debt Securities with Limited Trading Activity
Excluded from the tables above atas of December 31, 20182021 and 2017,December 31, 2020, respectively, are approximately $915$635 million and $973$743 million of Level 3 fair value measurements of investments for which the underlying quantitative inputs are not developed by the Company and are not readily available. These investments primarily consist of certain privately placed debt securities with limited trading activity, including residential mortgage- and asset-backed instruments, and their fair values generally reflect unadjusted prices obtained from independent valuation service providers and indicative, non-binding quotes obtained from third-party broker-dealers recognized as market participants. Significant increases or decreases in the fair value amounts received from these pricing sources may result in the Company’s reporting significantly higher or lower fair value measurements for these Level 3 investments.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


•The fair value of private placement securities is determined by application of a matrix pricing model or a market comparable company value technique. The significant unobservable input to the matrix pricing model valuation technique is the spread over the industry-specific benchmark yield curve. Generally, an increase or decrease in spreads would lead to directionally inverse movement in the fair value measurements of these securities. The significant unobservable input to the market comparable company valuation technique is the discount rate. Generally, a significant increase (decrease) in the discount rate would result in significantly lower (higher) fair value measurements of these securities.
•Residential mortgage-backed securities classified as Level 3 primarily consist of non-agency paper with low trading activity. Included in the tables above atas of December 31, 20182021 and 2017,December 31, 2020, there were no Level 3 securities that were determined by application of a matrix pricing model and for which the spread over the U.S. Treasury curve is the most significant unobservable input to the pricing result. Generally, a change in spreads would lead to directionally inverse movement in the fair value measurements of these securities.
•Asset-backed securities classified as Level 3 primarily consist of non-agency mortgage loan trust certificates, including subprime and Alt-A paper, credit tenant loans,risk transfer securities, and equipment financings. Included in the tables above atas of December 31, 20182021 and 2017,December 31, 2020, there were no securities that were determined by the application of matrix-pricing for which the spread over the U.S. Treasury curve is the most significant unobservable input to the pricing result. Significant increases (decreases) in spreads would resulthave resulted in significantly lower (higher) fair value measurements.
Other Equity Investments
Included in other equity investments classified as Level 3 are reporting entities’ venture capital securities in the Technology, Media and Telecommunications industries. The fair value measurements of these securities include significant unobservable inputs including an enterprise value to revenue multiples and a discount rate to account for liquidity and various risk factors. Significant increases (decreases) in the enterprise value to revenue multiple inputs in isolation would resulthave resulted in a significantly higher (lower) fair value measurement. Significant increases (decreases) in the discount rate would resulthave resulted in a significantly lower (higher) fair value measurement.
Separate Accounts assets classified as Level 3 in the table at December 31, 2018GMIB Reinsurance Contract Asset, Amounts Due from Reinsurers and 2017, primarily consist of a private real estate fund and mortgage loans. A third party appraisal valuation technique is used to measure the fair value of the private real estate investment fund, including consideration of observable replacement cost and sales comparisons for the underlying commercial properties, as well as the results from applying a discounted cash flow approach. Significant increase (decrease) in isolation in the capitalization rate and exit capitalization rate assumptions used in the discounted cash flow approach to the appraisal value would result in a higher (lower) measure of fair value. With respect to the fair value measurement of mortgage loans a discounted cash flow approach is applied, a significant increase (decrease) in the assumed spread over U.S. Treasury securities would produce a lower (higher) fair value measurement. Changes in the discount rate or factor used in the valuation techniques to determine the fair values of these private equity investments and mortgage loans generally are not correlated to changes in the other significant unobservable inputs. Significant increase (decrease) in isolation in the discount rate or factor would result in significantly lower (higher) fair value measurements. These fair value measurements are determined using substantially the same valuation techniques as earlier described above for the Company’s General Account investments in these securities.GMxB Derivative Features
Significant unobservable inputs with respect to the fair value measurement of the Level 3 GMIB reinsurance contract asset and the Level 3 liabilities identified in the table above are developed using the Company data. Validations of unobservable inputs are performed to the extent the Company has experience. When an input is changed the model is updated and the results of each step of the model are analyzed for reasonableness.
The significant unobservable inputs used in the fair value measurement of the Company’s GMIB reinsurance contract asset are lapse rates, withdrawal rates, and GMIB utilization rates. Significant increases in GMIB utilization rates or decreases in lapse or withdrawal rates in isolation would tend to increase the GMIB reinsurance contract asset.
Fair value measurement of the GMIB reinsurance contract asset, GMIB NLG Reinsurance and liabilities includes dynamic lapse and GMIB utilization assumptions whereby projected contractual lapses and GMIB utilization reflect the projected net amount of risks of the contract. As the net amount of risk of a contract increases, the assumed lapse rate decreases and the GMIB utilization increases. Increases in volatility would increase the asset and liabilities.
The significant unobservable inputs used in the fair value measurement of the Company’s GMIBNLG liability and GMIB NLG Reinsurance are lapse rates, withdrawal rates, GMIB utilization rates, adjustment for Non-performancenon-performance risk and GMIBNLGNLG forfeiture rates. GMIBNLGNLG forfeiture rates are caused by excess withdrawals above the annual GMIB accrual rate that cause the GMIBNLGNLG to expire. Significant decreases in lapse rates, GMIBNLGNLG forfeiture rates, adjustment for non-
AXA
191
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

non-performanceperformance risk and GMIB utilization rates would tend to increase the GMIBNLG liability and GMIB NLG Reinsurance, while decreases in withdrawal rates and volatility rates would tend to decrease the GMIBNLG liability.liability and GMIB NLG Reinsurance.
The significant unobservable inputs used in the fair value measurement of the Company’s GMWB and GWBL liability are lapse rates and withdrawal rates. Significant increases in withdrawal rates or decreases in lapse rates in isolation would tend to increase these liabilities. Increases in volatility would increase these liabilities.
During 2017, AB madeCarrying Value of Financial Instruments Not Otherwise Disclosed in Note 3 and Note 4 of the final contingent consideration payment relatingNotes to its 2014 acquisition and recorded a change in estimate and wrote off the remaining contingent consideration payable relating to its 2010 acquisition. During 2018, AB amended the contingent payment relating to its 2016 acquisition by modifying the earn-out structure and extending it one year. As part of this amendment, AB recorded a change in estimate and wrote off $2 million related to the contingent consideration.
At December 31, 2018 and 2017, one acquisition-related contingent consideration liability of $7 million and $11 million, respectively, remains relating to its 2016 acquisition, which was valued as of December 31, 2018 using a revenue growth rate of 17.6% and a discount rate ranging from 3.2% to 3.7% and was valued as of December 31, 2017 using a revenue growth rate of 31.0% and a discount rate ranging from 1.4% to 2.3%.
The MLOA contingent payment arrangements associated with the Renewal Rights Agreement (with a fair value of less than $1 million at December 31, 2018) is measured using projected premiums from these policies, net of potential surrenders and terminations, and applying a risk-adjusted discount factor (8.6% at December 31, 2018) to the resulting cash flows.
Certain financial instruments are exempt from the requirements for fair value disclosure, such as insurance liabilities other than financial guarantees and investment contracts, limited partnerships accounted for under the equity method and pension and other postretirement obligations.Consolidated Financial Statements
The carrying values and fair values atas of December 31, 20182021 and 2017December 31, 2020 for financial instruments not otherwise disclosed in Note 3 and Note 4 of the Notes to these Consolidated Financial Statements are presented in the table below.
Carrying Values and Fair Values for Financial Instruments Not Otherwise Disclosed
Carrying
Value		Fair Value
Carrying
Value		 Fair Value Level 1Level 2Level 3Total
Level 1 Level 2 Level 3 Total(in millions)
(in millions)
December 31, 2018:         
December 31, 2021:December 31, 2021:
Mortgage loans on real estate$11,835
 $—
 $—
 $11,494
 $11,494
Mortgage loans on real estate$14,033 $— $— $14,308 $14,308 
Policy loansPolicy loans$4,024 $— $— $5,050 $5,050 
Policyholders’ liabilities: Investment contracts(3)2,127
 —
 —
 2,174
 2,174
$2,035 $— $— $2,103 $2,103 
FHLBNY funding agreements4,002
 —
 3,956
 —
 3,956
Short-term and long-term debt4,955
 —
 4,749
 —
 4,749
Policy loans3,779
 —
 —
 4,183
 4,183
FHLB funding agreementsFHLB funding agreements$6,647 $— $6,679 $— $6,679 
FABN funding agreementsFABN funding agreements$6,689 $— $6,626 $— $6,626 
Short-term and long-term debt (2)Short-term and long-term debt (2)$3,839 $— $4,544 $— $4,544 
Separate Accounts liabilities7,406
 —
 —
 7,406
 7,406
Separate Accounts liabilities$11,620 $— $— $11,620 $11,620 
         
December 31, 2017:         
December 31, 2020:December 31, 2020:
Mortgage loans on real estate$10,952
 $—
 $—
 $10,912
 $10,912
Mortgage loans on real estate$13,159 $— $— $13,491 $13,491 
Loans to affiliates1,230
 —
 1,230
 —
 1,230
Policy loans (1)Policy loans (1)$4,118 $— $— $5,352 $5,352 
Policyholders’ liabilities: Investment contracts(1)2,224
 —
 —
 2,329
 2,329
$2,198 $— $— $2,416 $2,416 
FHLBNY funding agreements3,014
 —
 3,020
 —
 3,020
FHLB funding agreementsFHLB funding agreements$6,897 $— $6,990 $— $6,990 
FABN funding agreementsFABN funding agreements$1,939 $— $1,971 $— $1,971 
Short-term and long-term debt2,408
 —
 2,500
 —
 2,500
Short-term and long-term debt$4,115 $— $5,065 $— $5,065 
Loans from affiliates3,622
 —
 3,622
 —
 3,622
Policy loans3,819
 —
 —
 4,754
 4,754
Separate Accounts liabilities7,537
 —
 —
 7,537
 7,537
Separate Accounts liabilities$10,081 $— $— $10,081 $10,081 

_____________
(1)Excludes amounts reclassified as HFS.
(2)Excludes CLO short-term debt of $92 million which is inclusive as fair valued within Notes issued by consolidated VIE’s, at fair value using the fair value option.
(3) As our COLI policies are recorded at their cash surrender value, they are not requiredof December 31, 2021, reflects transfer of certain policyholders account balances to be included in the table above. For further details of our accounting policies pertainingfuture policyholder benefits and other policyholders liabilities related to COLI, see Note 2.structured settlement contracts.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Mortgage Loans on Real Estate
Fair values for commercial and agricultural mortgage loans on real estate are measured by discounting future contractual cash flows to be received on the mortgage loan using interest rates at which loans with similar characteristics and credit quality would be made. The discount rate is derived based on the appropriate U.S. Treasury rate with a like term to the remaining term of the loan to which a spread reflective of the risk premium associated with the specific loan is added. Fair values for mortgage loans anticipated to be foreclosed and problem mortgage loans are limited to the fair value of the underlying collateral, if lower.
Fair values for
192
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Policy Loans
The fair value of policy loans is calculated by discounting expected cash flows based upon the Company’s long-term debt related to real estate joint ventures are determined by a third-party appraisalU.S. Treasury yield curve and assessed for reasonableness. historical loan repayment patterns.
Short-term and Long-term Debt
The Company’s short-term debt primarily includes commercial paper with short-term maturities and carrying value approximates fair value. The fair values for the Company’s other long-term debt are determined by Bloomberg’s evaluated pricing service, which uses direct observations or observed comparables. The fair values of the Company’s borrowing and lending arrangements with AXA affiliated entities are determined in the same manner as for such transactions with third parties, including matrix pricing models for debt securities and discounted cash flow analysis for mortgage loans.
The fair value of policy loans is calculated by discounting expected cash flows based upon the U.S. treasury yield curve and historical loan repayment patterns.FHLB Funding Agreements
The fair values of the Company’s FHLB funding agreements are determined by discounted cash flow analysis based on the indicative funding agreement rates published by the FHLB.
FABN Funding Agreements
The fair values of Equitable Financial’s FABN funding agreements are determined by Bloomberg’s evaluated pricing service, which uses direct observations or observed comparables.
Policyholder Liabilities - Investment Contracts and Separate Accounts Liabilities
The fair values for the Company’s association plans contracts, supplementary contracts not involving life contingencies (“SCNILC”), deferred annuities and certain annuities, which are included in Policyholders’ account balances, and liabilities for investment contracts with fund investments in Separate Accounts, are estimated using projected cash flows discounted at rates reflecting current market rates. Significant unobservable inputs reflected in the cash flows include lapse rates and withdrawal rates. Incremental adjustments may be made to the fair value to reflect non-performance risk. Certain other products such as the Company’s association plans contracts, supplementary contracts not involving life contingencies, Access Accounts and Escrow Shield Plus product reserves are held at book value.
Financial Instruments Exempt from Fair Value Disclosure or Otherwise Not Required to be Disclosed
8)Exempt from Fair Value Disclosure Requirements
Certain financial instruments are exempt from the requirements for fair value disclosure, such as insurance liabilities other than financial guarantees and investment contracts, limited partnerships accounted for under the equity method and pension and other postretirement obligations.
Otherwise Not Required to be Included in the Table Above
The Company’s investment in COLI policies are recorded at their cash surrender value and are therefore not required to be included in the table above. See Note 2 of the Notes to these Consolidated Financial Statements for further description of the Company’s accounting policy related to its investment in COLI policies.
9)    INSURANCE LIABILITIES
Variable Annuity Contracts – GMDB, GMIB, GIB and GWBL and Other Features
The Company has certain variable annuity contracts with GMDB, GMIB, GIB and GWBL and other features in-force that guarantee one of the following:
•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.
193
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Liabilities for Variable Annuity Contracts with GMDB and GMIB Features and no GMIBNLGwithout NLG Rider Feature
The change in the liabilities for variable annuity contracts with GMDB and GMIB features and no GMIBNLGwithout a NLG feature are summarized in the tables below. The amounts for the direct contracts (before reinsurance ceded) and assumed contracts are reflected in the consolidated balance sheets in Futurefuture policy benefits and other policyholders’ liabilities. The amounts for the ceded contracts are reflected in the consolidated balance sheets in Amountsamounts due from reinsurers. The amounts for the ceded GMIB that are reflected in the consolidated balance sheets in GMIB reinsurance contract asset are at fair value.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Change in Liability for Variable Annuity Contracts with GMDB and GMIB Features and
No GMIBNLGNLG Feature
For the Years endedYear Ended December 31, 2018, 20172021, 2020 and 20162019
GMDBGMIB
DirectAssumedCededDirectAssumedCeded
(in millions)
Balance, January 1, 2019$4,662 $82 $(113)$3,746 $184 $(1,733)
Paid guarantee benefits(438)(21)14 (256)7 72 
Other changes in reserve556 15 (5)1,183 (4)(478)
Balance, December 31, 2019$4,780 $76 $(104)$4,673 $187 $(2,139)
Paid guarantee benefits(495)(22)15 (293)15 79 
Other changes in reserve812 18 1 1,646 (6)(428)
Balance, December 31, 2020$5,097 $72 $(88)$6,026 $196 $(2,488)
Paid guarantee benefits(461)(12)113 (377)(49)58 
Other changes in reserve315 14 (65)243 (7)603 
Impact of the Venerable Transaction (1) (2)— (74)(2,176)— (140)(2,141)
Balance, December 31, 2021$4,951 $— $(2,216)$5,892 $— $(3,968)
 GMDB GMIB
 DirectAssumedCeded DirectAssumedCeded
 (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 reserve552
19
(7) 241
10
27
Balance at December 31, 20163,164
121
(90) 3,802
258
(1,737)
Paid guarantee benefits(354)(21)14
 (151)(59)63
Other changes in reserve1,249
(5)(32) 1,101
(4)(220)
Balance at December 31, 20174,059
95
(108) 4,752
195
(1,894)
Paid guarantee benefits(393)(24)16
 (153)(12)44
Other changes in reserve993
11
(21) (856)1
118
Balance at December 31, 2018$4,659
$82
$(113) $3,743
$184
$(1,732)
_____________
(1)Change in Assumed is driven by the sale of CSLRC to Venerable.
(2)Includes the impact as of June 1, 2021 on the ceded reserves to Venerable. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction.
Liabilities for Embedded and Freestanding Insurance Related Derivatives
The liability for the GMxB derivative features, liability, the liability for SCS, SIO, MSO and IUL indexed features and the asset and liability for the GMIB reinsurance contracts and amounts due from reinsurers related to GMIB NLG product features (GMIB NLG Reinsurance) are considered embedded or freestanding insurance derivatives and are reported at fair value. For the fair value of the assets and liabilities associated with these embedded or freestanding insurance derivatives, see Note 7.8 of the Notes to these Consolidated Financial Statements.
Account Values and Net Amount at Risk
Account Values and Net Amount at Risk (“NAR”)NAR for direct and assumed variable annuity contracts in force with GMDB and GMIB features as of December 31, 20182021 are presented in the following tables by guarantee type. For contracts with the GMDB feature, the NAR in the event of death is the amount by which the GMDB feature exceeds the related Account Values. For contracts with the GMIB feature, the NAR in the event of annuitization is the amount by which the present value of the GMIB benefits exceed the related Account Values, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. Since variable annuity contracts with GMDB features may also offer GMIB guarantees in the same contract, the GMDB and GMIB amounts listed are not mutually exclusive.

194
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

Direct Variable Annuity Contracts with GMDB and GMIB Features
Asas of December 31, 2018
2021
Guarantee TypeGuarantee Type
Return of Premium Ratchet Roll-Up Combo TotalReturn of PremiumRatchetRoll-UpComboTotal
(in millions, except age and interest rate)(in millions, except age and interest rate)
Variable annuity contracts with GMDB features         Variable annuity contracts with GMDB features
Account Values invested in:         Account Values invested in:
General Account$14,035
 $102
 $61
 $184
 $14,382
General Account$16,188$84$51$156$16,479
Separate Accounts41,463
 8,382
 2,903
 30,406
 83,154
Separate Accounts59,8199,8603,41234,486107,577
Total Account Values$55,498
 $8,484
 $2,964
 $30,590
 $97,536
Total Account Values$76,007$9,944$3,463$34,642$124,056
         
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
NAR, grossNAR, gross$90 $30 $1,333$15,732$17,185
NAR, net of amounts reinsuredNAR, net of amounts reinsured$86 $26 $937$7,948$8,997
         
Average attained age of policyholders (in years)51.4
 67.0
 73.6
 69.0
 55.3
Average attained age of policyholders (in years)51.5 69.0 75.5 71.1 55.6 
Percentage of policyholders over age 7010.0% 43.0% 65.5% 49.9% 18.8%Percentage of policyholders over age 7011.7 %51.1 %72.6 %57.5 %20.7 %
Range of contractually specified interest ratesN/A N/A 3% - 6%
 3% - 6.5%
 3% - 6.5%
Range of contractually specified interest ratesN/AN/A3% - 6%3% - 6.5%3% - 6.5%
Variable annuity contracts with GMIB featuresVariable annuity contracts with GMIB features
Account Values invested in:Account Values invested in:
General AccountGeneral Account$— $— $16$202$218
Separate AccountsSeparate Accounts— — 26,44336,83363,276
Total Account ValuesTotal Account Values$— $— $26,459$37,035$63,494
NAR, grossNAR, gross$—$—$632$9,093$9,725
NAR, net of amounts reinsuredNAR, net of amounts reinsured$—$—$202$3,708$3,910
Average attained age of policyholders (in years)Average attained age of policyholders (in years)N/AN/A65.0 70.8 68.6 
Weighted average years remaining until annuitizationWeighted average years remaining until annuitizationN/AN/A6.0 0.6 2.7 
Range of contractually specified interest ratesRange of contractually specified interest ratesN/AN/A3% - 6%3% - 6.5%3% - 6.5%
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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 annuitizationN/A N/A 1.7
 0.5
 0.6
Range of contractually specified interest ratesN/A N/A 3% - 6%
 3% - 6.5%
 3% - 6.5%

Assumed Variable Annuity Contracts with GMDB and GMIB Features
As of December 31, 2018
 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 7043.5% 62.5% 78.6% 75.5% 63.6%
Range of contractually specified interest ratesN/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 7063.2% 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.

For more information about the reinsurance programs of the Company’s GMDB and GMIB exposure, see “Reinsurance Agreements” in Note 10.11 of the Notes to these Consolidated Financial Statements.
Separate AccountAccounts Investments by Investment Category Underlying Variable Annuity Contracts with GMDB and GMIB Features
The total Account Values of variable annuity contracts with GMDB and GMIB features include amounts allocated to the guaranteed interest option, which is part of the General Account and variable investment options that invest through Separate Accounts in variable insurance trusts. The following table presents the aggregate fair value of assets, by major investment category, held by Separate Accounts that support variable annuity contracts with GMDB and GMIB features. The investment performance of the assets impacts the related Account Values and, consequently, the
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NAR associated with the GMDB and GMIB benefits and guarantees. Because the Company’s variable annuity contracts offer both GMDB and GMIB features, GMDB and GMIB amounts are not mutually exclusive.






Investment in Variable Insurance Trust Mutual Funds
195
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
December 31,
As of December 31, 20212020
2018 2017GMDBGMIBGMDBGMIB
GMDBGMIB GMDBGMIB
(in millions)
Investment type:   
Mutual Fund TypeMutual Fund Type(in millions)
Equity$35,541
$15,759
 $41,658
$19,676
Equity$52,771 $20,015 $46,850 $18,771 
Fixed income5,173
2,812
 5,469
3,110
Fixed income5,391 2,507 5,506 2,701 
Balanced41,588
33,974
 46,577
38,398
Balanced48,390 40,491 47,053 39,439 
Other852
290
 968
314
Other1,025 263 1,111 275 
Total$83,154
$52,835
 $94,672
$61,498
Total$107,577 $63,276 $100,520 $61,186 
Hedging Programs for GMDB, GMIB, GIB and Other Features
Beginning in 2003, theThe Company establishedhas a program intended to hedge certain risks associated first with the GMDB feature and beginning in 2004, with the GMIB feature of the Accumulator series of variable annuity products. The program has also been extended to cover other guaranteed benefits as they have been made available. This program utilizes derivative contracts, such as exchange-traded equity, currency and interest rate futures contracts, total return and/or equity swaps, interest rate swap and floor contracts, swaptions, variance swaps as well as equity options, that collectively are managed in an effort to reduce the economic impact of unfavorable changes in guaranteed benefits’ exposures attributable to movements in the capital markets. At the present time, this program hedges certain economic risks on products sold from 2001 forward, to the extent such risks are not externally reinsured.
These programs do not qualify for hedge accounting treatment. Therefore, gains (losses) on the derivatives contracts used in these programs, including current period changes in fair value, are recognized in Net investment income (loss)net derivative gains (losses) in the period in which they occur, and may contribute to income (loss) volatility.
Variable and Interest-Sensitive Life Insurance Policies – GMIBNLGNLG
The GMIBNLGNLG feature contained in variable and interest-sensitive life insurance policies keeps them in force in situations where the policy value is not sufficient to cover monthly charges then due. The GMIBNLGNLG remains in effect so long as the policy meets a contractually specified premium funding test and certain other requirements.
The change in the liabilities for GMIBNLGNLG liabilities, reflected in the General Account in Futurefuture policy benefits and other policyholders’ liabilities in the consolidated balance sheets, is summarized in the table below.
Direct Liability (1)
Year Ended December 31,
202120202019
(in millions)
Beginning balance$1,022 $898 $813 
Paid guarantee benefits(84)(39)(20)
Other changes in reserves158 163 127 
Transfer to liabilities held-for-sale— — $(22)
Ending balance$1,096 $1,022 $898 
_____________
(1)There were no amounts of reinsurance ceded in any period presented.
10)    LEASES
 Direct Liability (1)
 (in millions)
Balance at January 1, 2016$1,247
Other changes in reserves64
Balance at December 31, 20161,311
Paid guarantee benefits(24)
Other changes in reserves(578)
Balance at December 31, 2017709
Paid guarantee benefits(23)
Other changes in reserves126
Balance at December 31, 2018$812
__________
(1)There were no amounts of reinsurance ceded in any period presented.


9)    REVENUE RECOGNITION

See “Revenue Recognition” in Note 2 descriptionsThe Company's operating leases primarily consist of revenues presentedreal estate leases for office space. The Company also has operating leases for various types of office furniture and equipment. For certain equipment leases, the Company applies a portfolio approach to effectively account for the RoU operating lease assets and liabilities. For lease agreements for which the lease term or classification was reassessed after the occurrence of a change in the table below. lease terms or a modification of the lease that did not result in a separate contract, the Company elected to combine the lease and related non-lease components for its operating leases; however, the non-lease components associated with the Company’s operating leases are primarily variable in nature and as such are not included in the determination of the RoU operating lease asset and lease liability, but are recognized in the period in which the obligation for those payments is incurred.
196
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The adoptionCompany’s operating leases may include options to extend or terminate the lease, which are not included in the determination of ASC 606 had nothe RoU operating asset or lease liability unless they are reasonably certain to be exercised. The Company's operating leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases. The Company typically does not include its renewal options in its lease terms for calculating its RoU operating lease asset and lease liability as the renewal options allow the Company to maintain operational flexibility and the Company is not reasonably certain it will exercise these renewal options until close to the initial end date of the lease. The Company’s lease agreements do not contain any material impactresidual value guarantees or material restrictive covenants.
As the Company's operating leases do not provide an implicit rate, the Company’s incremental borrowing rate, based on revenue recognitionthe information available at the lease commencement date, is used in 2018. determining the present value of lease payments.
The Company primarily subleases floor space within its New Jersey and New York lease properties to various third parties. The lease term for these subleases typically corresponds to the original lease term.
Balance Sheet Classification of Operating Lease Assets and Liabilities
December 31,
Balance Sheet Line Item20212020
(in millions)
Assets:  
Operating lease assetsOther assets$637 $691 
Liabilities:
Operating lease liabilitiesOther liabilities$768 $855 
The table below presentssummarizes the revenues recognizedcomponents of lease costs for the years ended December 31, 2018, 20172021, 2020 and 2016, disaggregated2019.
Lease Costs
Year Ended December 31,
202120202019
(in millions)
Operating lease cost$173 $169 $186 
Variable operating lease cost49 49 50 
Sublease income(55)(56)(72)
Short-term lease expense— — 2 
Net lease cost$167 $162 $166 

Maturities of lease liabilities as of December 31, 2021 are as follows:
Maturities of Lease Liabilities
December 31, 2021
(in millions)
Operating Leases:
2022$197 
2023183 
2024131 
202560 
202654 
Thereafter211 
Total lease payments836 
Less: Interest(68)
Present value of lease liabilities$768 

197
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
During April 2019, AB signed a lease, which commences in 2024, relating to approximately 190,000 square feet of space in New York City. The estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20 year lease term is approximately $448 million. During the fourth quarter of 2020, AB exercised an option to return a half floor of this space, which reduced the square footage from approximately 190,000 to 166,000 square feet and the base rent obligation from $448 million to $393 million.
During December 2020, Equitable Financial signed a 15-year lease which is expected to commence in 2023 once certain conditions of the lease are met, relating to approximately 130,000 square feet of space in New York City. In September 2021, Equitable Financial exercised its option to decrease the square footage under the lease by category:approximately 41,000 square feet, which reduced the square footage to approximately 89,000 square feet. Additionally, during December 2021, Equitable Financial amended its Syracuse office lease. The amendment included extending for an additional 5-year period, commencing January 1, 2024, approximately 143,000 square feet of space in Syracuse, NY.
The below table presents the Company’s weighted-average remaining operating lease term and weighted-average discount rate.
Weighted Averages - Remaining Operating Lease Term and Discount Rate
December 31,
20212020
Weighted-average remaining operating lease term7 years6 years
Weighted-average discount rate for operating leases2.80 %3.07 %

Supplemental cash flow information related to leases was as follows:
Lease Liabilities Information
Year Ended December 31,
202120202019
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$209 $210 $222 
Non-cash transactions:
Leased assets obtained in exchange for new operating lease liabilities$109 $156 $50 

198
 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 fees118
 95
 33
Research services439
 450
 480
Distribution services723
 701
 651
Shareholder services76
 75
 78
Other19
 18
 17
Total investment management and service fees$4,252
 $4,069
 $3,746
      
Other income$479
 $423
 $385
EQUITABLE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
10)11)    REINSURANCE AGREEMENTS
The Company assumes and cedes reinsurance with other insurance companies. The Company evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. Ceded reinsurance does not relieve the originating insurer of liability.
The following table summarizes the effect of reinsurance:reinsurance. The impact of the transactions described above results in a decrease to reinsurance assumed and an increase in reinsurance ceded.
Year Ended December 31,
202120202019
(in millions)
Direct premiums$970 $929 $1,068 
Reinsurance assumed189 222 220 
Reinsurance ceded(199)(154)(141)
Premiums$960 $997 $1,147 
Direct charges and fee income$4,250 $4,149 $4,197 
Reinsurance ceded(613)(414)(419)
Policy charges and fee income$3,637 $3,735 $3,778 
Direct policyholders’ benefits$3,843 $5,826 $4,711 
Reinsurance assumed238 241 240 
Reinsurance ceded(863)(741)(566)
Policyholders’ benefits$3,218 $5,326 $4,385 
Direct interest credited to policyholders’ account balances$1,271 $1,252 $1,322 
Reinsurance ceded(52)(30)(59)
Interest credited to policyholders’ account balances$1,219 $1,222 $1,263 
 Years Ended December 31,
 2018 2017 2016
   (in millions)  
Direct premiums$1,012
 $1,038
 $998
Reinsurance assumed214
 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
Ceded Reinsurance
The Company reinsures most of its new variable life, UL and term life policies on an excess of retention basis. The Company generally retains on a per life basis up to $25$25 million for single lives and $30$30 million for joint lives with the excess 100% reinsured. The Company also reinsures risk on certain substandard underwriting risks and in certain other cases.
Effective FebruaryOn June 1, 2018, AXA2021, Holdings completed the sale of CSLRC to VIAC. Immediately following the closing of the Transaction, CSLRC and Equitable LifeFinancial entered into the Reinsurance Agreement, pursuant to which Equitable Financial ceded to CSLRC, on a combined coinsurance reinsurance agreement (the “Coinsurance Agreement”) to cede 90% of its single premium deferred annuities (“SPDA”) products issuedand modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 1978-2001 and its Guaranteed Growth Annuity (“GGA”) single premium deferred annuity products issued between 2001-2014. As a result of this agreement, AXA Equitable Life transferred securities with a market value of $604 million and cash of $31 million to equal the statutory reserves of approximately $635 million. As the risks transferred by AXA Equitable Life to the reinsurer under the Coinsurance Agreement are not considered insurance risks and therefore do not qualify for reinsurance accounting, AXA Equitable Life applied deposit accounting. Accordingly, AXA Equitable Life recorded the transferred assets of $635 million as a deposit asset recorded in Other assets, net2006-2008. See Note 1 of the ceding commissions paidNotes to these Consolidated Financial Statements for details of the reinsurer.Venerable Transaction.
AtAs of December 31, 20182021 and 2017,December 31, 2020, the Company had reinsured with non-affiliates in the aggregate approximately 2.9%47.6% and 3.5%2.6%, respectively, of its current exposure to the GMDB obligation on annuity contracts in-force and, subject to

233








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


certain maximum amounts or caps in any one period, approximately 15.5%59.8% and 16.8%13.4% of its current liability exposure, respectively, resulting from the GMIB feature. For additional information, see Note 8.
Based on management’s estimates of future contract cash flows and experience, the estimated net fair values9 of the ceded GMIB reinsurance contracts, considered derivatives, were $1,732 million and $1,894 million at December 31, 2018 and 2017, respectively. The estimated fair values decreased $162 million and $93 million during 2018 and 2016, respectively, and increased $159 million during 2017.Notes to these Consolidated Financial Statements.
At December 31, 2018 and 2017, third-party reinsurance recoverables relatedIn addition to insurance contracts amounted to $4,895 million and $5,023 million, respectively. Additionally, $2,796 million and $2,962 million of the amounts due from reinsurers relates to two reinsurers, Zurich Insurance Company, Ltd. (AA- rating by S&P) and Protective Life Insurance Company (AA- rating by S&P).
At December 31, 2018 and 2017, amounts due to reinsurers were $1,438 million and $1,436 million, respectively. Included in this balance were policy loans ceded to RGA Reinsurance Company of $1,211 million and $1,212 million, respectively and policy loans ceded to Protective Life of $125 million and $128 million, respectively.
Theabove, the Company cedes substantially all of its group health business to a third-party insurer. Insurance liabilities ceded totaled $62 million and $71 million at December 31, 2018 and 2017, respectively.
The Company alsoinsurer, cedes a portion of its extended term insurance and paid-up life insurance and substantially all of its individual disability income business through various coinsurance agreements.
Assumed Reinsurance
In addition to the sale of insurance products, the Company currently assumes risk from professional reinsurers. The Company also hashad a run-off portfolio of assumed reinsurance liabilities at ACS Life.CSLRC which was sold to Venerable in June
199
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
2021. The Company assumes accident, life, health, annuity (including products covering GMDB and GMIB benefits), aviation, special risk and space risks by participating in or reinsuring various reinsurance pools and arrangements.
The following table summarizes the ceded reinsurance GMIB reinsurance contracts, third-party recoverables, amount due to reinsurance and assumed reserves.
December 31,
 20212020
(in millions)
Ceded Reinsurance:
Estimated net fair values of ceded GMIB reinsurance contracts, considered derivatives (1)$1,848 $2,488 
Estimated net fair values of ceded GMIB NLG ceded reserves to Venerable (2)5,813 — 
Third-party reinsurance recoverables related to insurance contracts14,679 4,566 
Top reinsurers:
Venerable Insurance and Annuity Company (A- KBRA (IFRS) rating)10,291 N/A
Zurich Life Insurance Company, Ltd. (AA- SAP rating)1,318 1,421 
Protective Life Insurance Company (AA- SAP rating)1,153 1,184 
RGA Reinsurance Company (AA- SAP rating))1,138 1,143 
Ceded group health reserves40 48 
Amount due to reinsurers1,381 1,381 
Top reinsurers:
RGA Reinsurance Company1,212 1,135
Protective Life Insurance Company111 116 
Venerable Insurance and Annuity Company27 N/A
Assumed Reinsurance:
Reinsurance assumed reserves798 788 
Estimated net fair values of assumed GMIB reserves (3)— 195 
______________
(1)The estimated fair values increased/(decreased) $(640) million, $349 million and $407 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(2)Reported in amounts due from reinsurers. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable transaction.
(3)Change in Reinsurance assumed reserves were $1,095 million and $1,111 million (including assumed GMIB reserves that have an estimated net fair valueis driven by the sale of $183 million and $194 million) at December 31, 2018 and 2017, respectively.CSLRC to Venerable.
For reinsurance agreements with affiliates, see “Related Party Transactions” in Note 12.
200
EQUITABLE HOLDINGS, INC.
11)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
12)    SHORT-TERM AND LONG-TERM DEBT
The following table sets forth the Company’s total consolidated borrowings. Short-term and long-term debt consists of the following:
December 31,
20212020
(in millions)
Short-term debt:
CLO Warehousing Debt (1)$92 $— 
Total short-term debt92 — 
Long-term debt:
Senior Notes (5.0%, due 2048)1,481 1,481 
Senior Notes (4.35%, due 2028)1,490 1,489 
Senior Notes (3.9%, due 2023)519 796 
Senior Debentures, (7.0%, due 2028)349 349 
Total long-term debt3,839 4,115 
Total short-term and long-term debt$3,931 $4,115 
 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 debt546
 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 2028349
 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 debt4,409
 551
Total short-term and long-term debt$4,955
 $2,408

AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(1) CLO Warehousing Debt related to VIE consolidation of CLO investment.
As of December 31, 2018,2021, the Company is in compliance with all debt covenants.
Short-term Debt
AB Commercial Paper
As of December 31, 20182021 and 2017,December 31, 2020, AB had $521 million and $491 million, respectively, inno commercial paper outstanding with weighted average interest rates of approximately2.7% and 1.6%, respectively.outstanding. The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings offor the commercial paper during the years ended December 31, 2018 and 2017outstanding in 2021 were $350 $157 million and$482 million, respectively, with a weighted average interest ratesrate of approximately 2.0% and 1.2%, respectively.
AXA Financial Commercial Paper
In June 2009, AXA Financial and AXA initiated a0.2%. Average daily borrowings for the commercial paper program onin 2020 were $83 million with a private placement basis under which AXA Financial or AXA could issue short-term unsecured notes in an aggregate amount not to exceed $2 billion outstanding at any time. The obligations of AXA Financial under the program were guaranteed by AXA. At December 31, 2017, $1.3 billion was outstanding with anweighted average interest rate of 1.6%0.4%. Holdings, as successor to AXA Financial after the AXA Financial Merger, was removed as an issuer under this program in October 2018.
AB Revolver Credit Facility
On December 1, 2016, AB entered intohas a $200 million committed, unsecured 364-day senior revolving credit facility (the “AB Revolver”"AB Revolver") with a leading international bank, and the other lending institutions that may be party thereto.On November 16, 2018, AB amended and restated the AB Revolver, extending the maturity date from November 28, 2018 towhich matured on November 16, 2021. There were no other significant changes included in the amendment. The AB Revolver is available for AB’sAB's and SCB LLC’sLLC's business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC’sLLC's operations. Both AB and SCB LLC canwere able to draw directly under the AB Revolver and management expects to draw on the AB Revolverdid so from time to time. AB has agreed to guarantee the obligations of SCB LLC under the AB Revolver. The AB Revolver contains affirmative, negative and financial covenants which arethat were identical to those of the Credit Facility. Borrowings under the Revolver bear interest at a rate per annum, which could be, at AB's option, a rate equal to an applicable margin, which was subject to adjustment based on the credit ratings of AB, Credit Facility described below.plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate. As of December 31, 20182021 and 2017,December 31, 2020, AB had $25 million and $75 millionno amounts outstanding under the AB Revolver, respectively, with interest rates of 3.4% and 2.4%, respectively.Revolver. Average daily borrowings for 20182021 and 20172020 were $19$13 million and $21$17 million,, respectively, with weighted average interest rates of 2.8%1.1% and 2.0%1.6%, respectively.
Long-term Debt
Holdings Senior Notes and Senior Debentures
On April 20, 2018, Holdings issued $800 million aggregate principal amount of 3.9% Senior Notes due 2023, $1.5 billion aggregate principal amount of 4.35% Senior Notes due 2028 and $1.5 billion aggregate principal amount of 5.0% Senior Notes due 2048 (together, the “Notes”). These amounts are recorded net of original issue discount and issuance costs. Under the Registration Rights Agreement associated with the Notes, Holdings agreed to use reasonable best efforts to cause a registration statement to be filed with the SEC that, upon effectiveness, would permit holders of the notes to exchange them for new notes containing identical terms except for the restrictions on transfer contained in the original notes. The offer to exchange the notes was completed on January 23, 2019.
As of December 31, 2018,2021 and 2020, the 3.9% Senior Notes due 2023 and 4.35% Senior Notes due 2028 remain outstanding. During 2021 Holdings made a principal prepayment of $280 million on the 3.9% Senior Notes due 2023,
201
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2021 and 2020, Holdings had outstanding $349 million aggregate principal amount of 7.0% Senior Debentures due 2028 (the “Senior Debentures”). As discussed above, onOn October 1, 2018, AXA Financial merged with and into its direct parent, Holdings, with Holdings continuing as the surviving entity.entity( the “AXA Financial Merger”). As a result of the AXA Financial Merger,merger, Holdings assumed AXA Financial’s obligations under the Senior Debentures.Debentures.
The Notes and Senior Debentures contain customary affirmative and negative covenants, including a limitation on certain liens and a limit on the Company’s ability to consolidate, merge or sell or otherwise dispose of all or substantially all of its assets. The Notes and Senior Debentures also include customary events of default (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all outstanding Notes and Senior Debentures may be accelerated. AtAs of December 31, 2018,2021, the Company was not in breach of any of the covenants.
AXA EQUITABLE HOLDINGS, INC.Contingent Funding Arrangements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For information regarding activity pertaining to our contingent funding arrangements, see Note 17 of the Notes to these Consolidated Financial Statements.
Credit Facilities
Holdings Two-Year Delayed Draw Term Loan
In February 2018, Holdings entered into a $3.9 billion two-year senior unsecured delayed draw term loan agreement which was terminated in April 2018.
Holdings Three-Year Delayed Draw Term Loan
On May 4, 2018, Holdings borrowed $300 million under a $500 million three-year senior unsecured delayed draw term loan agreement and terminated the remaining $200 million capacity at the date of the IPO.
Holdings Revolving Credit Facility
In February 2018, Holdings entered into a $2.5 billion five-year senior unsecured revolving credit facility with a syndicate of banks. In June 2021, Holdings entered into an amended and restated revolving credit agreement, which lowered the facility amount to $1.5 billion and extended the maturity date to June 24, 2026, among other changes. The revolving credit facility has a sub-limit of $1.5 billion for the issuance of letters of credit to support the life insurance business reinsured by EQ AZ Life Re and the third-party GMxB variable annuity business reinsured by CS Life RE Company (“CS Life RE”). AtRe. As of December 31, 2018,2021, the Company had $125 million and $600$0 million of undrawn letters of credit issued out of the $1.5 billion sub-limit for ACS Life and AXA Equitable Life, respectively,Financial as beneficiaries.beneficiary.
Bilateral Letter of Credit Facilities
In February 2018, the Company entered into bilateral letter of credit facilities, each guaranteed by Holdings, with an aggregate principal amount of approximately $1.9 billion, with multiple counterparties. In June 2021, Holdings entered into amendments with each of the following counterparties:
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 Corporateissuers of its bilateral letter of credit facilities to effect changes similar to those effected in the amended and Investment Bank ($400 million)
Landesbank Hessen-Thuringen Girozentrale ($300 million)
Commerzbank AG, New York Branch ($325 million)
Natixis, New York Branch ($250 million)
restated revolving credit agreement. The respective facility limits of the bilateral letter of credit facilities remained unchanged. These facilities support the life insurance business reinsured by EQ AZ Life Re. As of December 31, 2018, $1.9 billion of undrawn letters of credit were issued under these facilities, each of whichThe HSBC facility matures on February 16, 2023.2024 and the rest of the facilities mature on February 16, 2026.
AB Revolving Credit Facility
On September 27, 2018, AB amended and restated the existing $1.0 billionhas a $800 million committed, unsecured senior revolving credit facility (the “AB Credit Facility”) with a group of commercial banks and other lenders reducingwhich had an original maturity date of September 27, 2023. On October 13, 2021 AB amended and restated the principal amount to $800 million andexisting Credit Facility agreement, extending the maturity todate from September 27, 2023.2023 to October 13, 2026. There were no other significant changes included in the amendment.

The credit facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $200 million. Any such increase is subject to the consent of the affected lenders. The AB Credit Facility is available for AB and SCB LLC for business purposes, including the support of AB’s commercial paper program. Both AB and SCB LLC can draw directly under the AB Credit Facility and AB management expects tomay draw on the AB Credit Facility from time to time. AB has agreed to guarantee the obligations of SCB LLC under the AB Credit Facility.
The AB Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including, among other things, restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of December 31, 2018,2021, AB was in compliance with these covenants. The AB Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under the AB Credit Facility would automatically become immediately due and payable, and the lender’s commitments would automatically terminate.
AXA
202
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepayments and commitment reductions requested by AB are permitted at any time without a fee (other than customary breakage costs relating to the prepayment of any drawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the AB Credit Facility bear interest at a rate per annum, which will be, at AB’s option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: LIBOR; a floating base rate; or the Federal Funds rate.
As of December 31, 20182021 and 2017,2020, AB and SCB LLC had no amounts outstanding
under the AB Credit Facility. During the years ended the December 31, 20182021 and 2017,2020, AB and SCB LLC did not draw upon the AB Credit Facility.
On September 28, 2021, AB established a $100 million uncommitted line of credit with a financial institution. On October 11, 2021 AB established a $50 million uncommitted line of credit with a financial institution. Both uncommitted lines of credit are available for AB's and SCB LLC's business purposes. Both AB and SCB LLC can draw directly under these lines. AB has agreed to guarantee the obligations of SCB LLC under these lines of credit. As of December 31, 2021 , AB had no amounts outstanding under these lines of credit and not drawn upon them since their inception.
In addition, SCB LLC currently has three3 uncommitted lines of credit with three3 financial institutions. TwoNaN of these lines of credit permit borrowing up to an aggregate of approximately $175$165 million, with AB named as an additional borrower, while the other line has no stated limit. As of December 31, 20182021 and 2017,2020, SCB LLC had no bank loans outstanding.outstanding balance on these lines of credit. Average daily borrowings of bank loans during 20182021 and 20172020 were $3 million$47 thousand and $5$1 million, respectively, with weighted average interest rates of approximately 1.6%0.9% and 1.4%1.6%, respectively.
Termination of AXA Financial’s Participation in AXA Facilities
On the date of the IPO, AXA Financial terminated its participation in the following credit facilities guaranteed by AXA: (i) J.P. Morgan Chase Bank $250 million multi-currency revolving credit facility; (ii) Citibank $300 million multi-currency credit facility; (iii) Bank of America Merrill Lynch $300 million multi-currency revolving credit facility; and (iv) club deal unsecured revolving credit facility with a number of lending institutions for $1.3 billion.
Also, AXA Financial,AXA RE Arizona Company (“AXA RE Arizona”) and CS Life RE terminated their participation in an unsecured revolving credit facility guaranteed by AXA totaling €1.6 billion (or its equivalent in optional currencies) with a number of major European lending institutions.
On April 25, 2018, AXA Equitable Life (as successor to AXA RE Arizona) canceled its $1.5 billion revolving credit facility with AXA.
In the second quarter of 2018, AXA RE Arizona terminated its participation in the following credit facilities guaranteed by AXA: (i) $700 million letter of credit facility agreement with Commerzbank; (ii) $2.5 billion letter of credit facility agreement with Citibank Europe Plc; and (iii) $200 million letter of credit facility agreement with JP Morgan Europe Limits. AXA RE Arizona also terminated its participation in a $250 million letter of credit facility agreement with Helaba Landesbank Hessen-Thüringen.
12)13)    RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operating decisions. The Company has entered into a number of related party transactions with AXA and its subsidiaries that are not part of the Company (collectively, “AXA Affiliates”) and other related parties that are described herein.
Since transactions with related parties may raise potential or actual conflicts of interest between the related party and the Company, Holdings has implemented a related party transaction policy that requires related party transactions to be reviewed and approved by independent Audit Committee members.
Pre-IPO Transactions with AXA Affiliates
As former wholly-owned subsidiaries of AXA, Holdings and its subsidiaries have historically entered into various transactions with AXA Affiliates.
General Services Agreements with AXA Affiliates
Prior to the IPO, Holdings entered into cost-sharing and general service agreements with various AXA Affiliates pursuant to which the parties provided general corporate services (IT, human resources, legal, finance, etc.) to each other.
Loans to AXA Affiliates
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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
In December 2015, AXA IM Holding US received a $185 million three-month LIBOR plus 1.5% unsecured loan from AXA Financial. The loan was repaid on April 23, 2018.
In December 2013, Colisée Re received a$145 million4.75%loan from Holdings. The loan was repaid on March 26, 2018.
In September 2007, AXA received a $700 million 5.7% Senior Unsecured Note from Holdings. In January 2018, AXA pre-paid $50 million of the note. In April 2018, AXA pre-paid the remainder of this note.
In December 2008, AXA received a $500 million 5.4% term loan from AXA Financial. In December 2014, AXA repaid $300 million on this term loan. In January 2018, AXA pre-paid an additional $150 million of the loan. In April 2018, AXA pre-paid the remainder of this loan.
Loans from AXA Affiliates
 As of December 31,
 2018 2017
 (in millions)
Loans from Affiliates:   
AXA S.A. term loan, three- month LIBOR +1.06%, due 2024$—
 $1,007
AXA Japan Subordinated Notes, floating rate of LIBOR +1.20%, due 2020—
 770
AXA Belgium €300 million EURIBOR +0.06%, due 2018—
 391
AXA S.A. loan, LIBOR + 1.44%, due 2022—
 366
Coliseum Reinsurance Company, 4.75%, due 2028—
 387
AXA America Corporate Solutions, Inc., 1.85%, due 2018—
 110
Foreign Exchange impact of AXA Belgium loan—
 (31)
AXA S.A. loan, LIBOR + 0.439%, due 2018—
 622
Total Loans From Affiliates$—
 $3,622
In March 2010, AXA Financial issued subordinated notes to AXA Life Insurance Company Ltd., in the amount of $770 million (“AXA Japan Subordinated Notes”). The AXA Japan Subordinated Notes have a maturity date of March 30, 2020 and a floating interest rate of LIBOR plus 1.2%, which resets semiannually on March 30 and September 30. The notes were repaid on April 20, 2018.The 2018, 2017 and 2016 interest cost related to the AXA Japan Subordinated Notes totaled approximately $12 million, $19 million and $16 million, respectively.
In October 2012, AXA Financial issued a note denominated in Euros in the amount of €300 million or $391 million to AXA Belgium S.A. (“AXA Belgium”). This note had an interest rate of Europe Interbank Offered Rate (“EURIBOR”) plus 1.15% and a maturity date of October 23, 2017. Concurrently, AXA Financial entered into a swap with AXA, covering the exchange rate on both the interest and principal payments related to this note. The interest rate on the swap was 6-month LIBOR plus 1.48%. In October 2017, the note was extended to March 30, 2018. The extended note has a floating interest rate of one-month EURIBOR plus 0.06%. Concurrently, AXA Financial entered into a swap with AXA covering the exchange rate on both the interest and principal payments related to the extended note until March 30, 2018. Both the loan and the swap were repaid on March 29, 2018.The 2018, 2017 and 2016 interest cost related to this loan totaled approximately $2 million, $12 million and $9 million, respectively.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In 2013, Holdings received $242 million and $145 million 4.75% loans from Coliseum Reinsurance Company. The loans have maturity dates in December 2028. The loans were repaid on April 20, 2018. The 2018, 2017 and 2016 interest cost related to these loans totaled approximately $6 million, $18 million and $18 million, respectively.
In December 2014, AXA Financial issued a $2,727 million, three-month LIBOR plus 1.06% margin term loan to AXA. The loan has a maturity date of December 18, 2024. In June 2015, AXA Financial repaid $520 million and during 2016 repaid an additional $1,200 million of this loan. The outstanding balance on this loan at December 31, 2017 was $1,007 million.The interest cost related to this loan totaled approximately $10 million, $23 million, and $23 million in 2018, 2017, and 2016, respectively. On April 20, 2018, the remainder of this loan was repaid.
In 2015, AXA America Holdings, Inc. received a $366 million, three-month LIBOR plus 1.44% loan from AXA. The loan has a maturity date of October 8, 2022. This loan was repaid on April 20, 2018. The 2018, 2017 and 2016 interest cost related to this loan totaled approximately $6 million, $9 million and $8 million, respectively.
In 2017, Holdings repaid a $56 million 1.39% loan from AXA America Corporate Solutions, Inc. (“AXA CS”) originally made in 2015 and received a $100 million loan and a $10 million loan from AXA CS. The loans have interest rates of 1.86% and 1.76%, respectively, and were repaid on their maturity of February 5, 2018. The 2018, 2017 and 2016 interest cost related to these loans totaled approximately$2 million, $2 million and $1 million, respectively.
Reinsurance Assumed from AXA Affiliates
AXA Global Life retrocedes a quota share portion of certain life and health risks of various AXA affiliates to AXA Equitable Life and MLOA on a one-year term basis. Also, AXA Life Insurance Company Ltd. cedes a portion of its variable deferred annuity business to AXA Equitable Life.
Premiums earned in 2018, 2017 and 2016 were $8 million, $8 million and $9 million, respectively. Claims and expenses paid in 2018, 2017 and 2016 were $3 million, $2 million and $2 million, respectively.
Reinsurance Ceded to AXA Affiliates
AXA Equitable Life has entered into a stop loss reinsurance agreement with AXA Global Life to protect AXA Equitable Life with respect to a deterioration in its claim experience following the occurrence of an extreme mortality event.
AXA Equitable Life has accepted certain retrocession policies through reinsurance agreements with various reinsurers. AXA Equitable Life retrocedes to AXA Global Life the excess of its first retention layer.
Certain of our subsidiaries have entered into a Life Catastrophe Excess of Loss Reinsurance Agreement with a number of subscribing reinsurers, including AXA Global Life. AXA Global Life participates in 5% of the pool, pro-rata, across the upper and lower layers.
Premiums and expenses paid for the above agreements in 2018, 2017 and 2016 were $4 million, $4 million and $4 million, respectively.
On September 12, 2018 AXA Group acquired XL Catlin. The Company had previously ceded part of our disability income business to XL Catlin and as of December 31, 2018, the reserves ceded were $93 million.
Revolving Credit Facility with AXA
AXA previously provided a $1.5 billion revolving credit facility to AXA RE Arizona. On April 25, 2018, AXA Equitable Life (as successor to AXA RE Arizona) canceled this facility.
AXA Guarantees
AXA previously guaranteed some of the Company’s borrowings. As of June 12, 2018, AXA no longer provides any such guarantees.
Other Transactions with AXA Affiliates
In 2016, AXA Financial invested in ASV Capital B FPCI, a French Professional Private Equity Fund managed by AXA Strategic Ventures SAS. As of December 31, 2018 and 2017, the fair value of the investment in the fund was $23 million and $7 million, respectively.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In September 2017, AXA Equitable FMG made a €30 million capital commitment to ASV Diversified, a French Special Limited Partnership investing in venture funds specialized in both early stage and growth startups with new technologies and business models relevant to AXA’s business. This fund is managed by AXA Strategic Ventures SAS. As of December 31, 2018 and 2017, €0.8 million and €0.5 million in capital had been called, respectively.
In December 2017, AXA Tech paid approximately $18 million to AXA US Holdings Inc., a U.S. subsidiary of AXA, which is not a subsidiary of Holdings, in exchange for AXA US Holdings Inc. assuming certain liabilities pertaining to its servicing of AXA companies within the United States and in Latin America valued at approximately $18 million, including costs and expenses associated with providing infrastructure services to AXA and its subsidiaries.
Reorganization Transactions with AXA Affiliates
Prior to the IPO, the Company engaged in a number of reorganization transactions with AXA Affiliates.
Disposition of AXA CS
Holdings formerly held 78.99% of the shares of AXA CS. AXA CS and its subsidiaries have been excluded from the historical Consolidated Financial Statements since they were operated independently from the other Holdings subsidiaries.
In March 2018, Holdings sold its AXA CS shares to AXA for $630 million. In anticipation of this sale, in the fourth quarter of 2017, AXA made a short-term loan of $622 million to Holdings with interest calculated at three-month LIBOR plus 0.439% margin. Holdings’ repayment obligation to AXA in respect of this loan was set off against the purchase price for the AXA CS shares, and AXA paid Holdings the $8 million balance in cash. The net result of the sale was a decrease in Loans from affiliates of $622 million, an increase in cash of $8 million, and an increase in capital in excess of par of $630 million.
Disposition of Real Estate Joint Ventures
In March 2018, AXA Equitable Life sold its interest in two consolidated real estate joint ventures to AXA France for a total purchase price of approximately $143 million.
Acquisition of Noncontrolling Interest of AXA Financial
In March 2018, AXA contributed the 0.5% noncontrolling interest in AXA Financial to Holdings, resulting in AXA Financial becoming a wholly-owned subsidiary of Holdings. The contribution is reflected as a $66 million capital contribution.
Acquisition of Additional AB Units
On April 23, 2018, Holdings purchased: (i) 100% of the shares of AXA-IM Holding U.S. Inc., which owns 41,934,582 AB Units, for a purchase price of $1,113 million and (ii) 8,160,000 AB Units held by Coliseum Re for $217 million. On December 20, 2018, Holdings purchased 254,675 AB Holdings units from a former AB executive. As a result of these two transactions, Holdings ownership of AB increased to approximately 65%, Noncontrolling interest decreased by $29 million, Capital in excess of par increased by $17 million and taxes payable increased by $174 million.
Acquisition of 30.3% of AXA Venture Partners SAS
On May 7, 2018, Holdings made a capital contribution of approximately $3 million to AXA Venture Partners SAS in exchange for approximately 30.3% of the shares of AXA Venture Partners SAS and certain rights and protections as a shareholder of the company, including the right to appoint two members of the management committee as well as consent rights over significant transactions.
Post-IPO Transactions with AXA Affiliates
Prior to the IPO, Holdings and AXA entered into a number of agreements governing certain post-IPO transactions.
Transitional Services Agreement
Holdings and AXA entered into a Transitional Services Agreement, dated as of May 4, 2018 (the “TSA”), regarding the continued provision of services between the Company and AXA and its subsidiaries on a transitional basis. The
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


TSA replaced existing cost-sharing and general service agreements with various AXA subsidiaries and governs the following types of services:
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).
The fees for each service vary and may be based on costs, usage, previously established rates or other factors. Generally, all services other than specified long-term services will be provided until the third anniversary of the date of a change in control of Holdings, unless the service recipient elects to terminate the service earlier upon 180 days written notice. The specified long-term services will be provided until specific end dates listed in the TSA.
In addition to the above, AXA allocates a portion of its corporate overhead expenses to the Company. Expenses associated with overhead costs were $34 million, $35 million and $26 million, in 2018, 2017 and 2016, respectively.
Trademark License Agreement
On May 4, 2018, AXA and Holdings entered into a Trademark License Agreement (the “TLA”) that replaced the existing sub-licensing agreement between AXA Financial and AXA (the “Former TLA”). Under the TLA, AXA grants the Company a limited license to use certain trademarks (the “Licensed Marks”), including the name “AXA” and domain names, in the United States and Canada (the “Territory”). Under the TLA, the Company is obligated to pay AXA consideration for the grant of the license based on the same formula that applied under the Former TLA which takes into account the Company’s revenue (excluding certain items) and a notoriety index for the Licensed Marks in the Territory.
AXA may terminate the TLA upon a change in control of Holdings. After the termination of the TLA, the Company will be able to continue to use the Licensed Marks for a transition period, but the Company will be required to use reasonable best efforts to transition to other trademarks.
Tax Sharing Agreement
Holdings entered into a tax sharing agreement with AXA and AXA Investment Managers S.A. (“AXA IM SA”) on March 28, 2018 related to the sale of AXA-IM Holding U.S. Inc. and AXA CS, described above. The agreement generally allocates responsibility for the taxes of AXA-IM Holding U.S. Inc. and AXA CS to the seller of the applicable entity for taxable periods predating the sale and to the buyer of such entity for taxable periods postdating the sale, except that any taxes arising in connection with the sale transactions as a result of an adjustment by a taxing authority will instead be borne 90% by the seller and 10% by the buyer (or, if that taxes are attributable to any action or inaction of the seller or the buyer, 100% by the responsible party).
Share Repurchase from AXA
On November 20, 2018, Holdings repurchased approximately 30 million shares of its common stock from AXA at a total cost of approximately $592 million under the $800 million share repurchase authorization and pursuant to a share repurchase agreement. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets. See Note 20 for more information.
Investment Management and Administrative Services Provided by AXA Equitable FMGEIM and EIMG to Related Trusts
AXA Equitable FMG providesEIMG and EIM provide investment management and administrative services to EQAT, EQ Premier VIP Trust, 1290 Funds and the Other AXA Trusts, all of which are considered related parties. Investment management and service fees earned are calculated as a percentage of assets under management and are recorded as revenue as the related services are performed.
Investment Management and Related Services Provided by AB to Related Mutual Funds
AB provides investment management and related services to mutual funds sponsored by AB. Revenues earned by AB from providing these services were as follows:
Year Ended December 31,
202120202019
(in millions)
Investment management and services fees$1,645 $1,368 $1,276 
Distribution revenues637 516 441 
Other revenues - shareholder servicing fees86 79 75 
Other revenues - other8 8 7 
Total$2,376 $1,971 $1,799 
AXA

203
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

 Years Ended December 31,
 2018 2017 2016
 (in millions)
Investment management and services fees$1,207
 $1,148
 $999
Distribution revenues404
 398
 372
Other revenues - shareholder servicing fees74
 73
 76
Other revenues - other7
 7
 6
Total$1,692
 $1,626
 $1,453
Revenues and Expenses and Revenues for 2018, 2017 and 2016Transactions with Equitable Affiliates
The table below summarizes the expenses reimbursed to/from the Company and the fees received/paid by the Company in connection with certain services described above for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.
Year Ended December 31,
202120202019
(in millions)
Revenue received or accrued for:
Investment management and administrative services provided to EQAT, EQ Premier VIP Trust, 1290 Funds and Other AXA Trusts$840 $724 $732 
Total$840 $724 $732 
Expenses paid or accrued for:
Investment management services provided by AXA Strategic Ventures Corporation$2 $2 $2 
Total$2 $2 $2 

Contribution to the Equitable Foundation
The company made no funding contributions the years ended 2021 and 2020. For the year ended December 31, 2019, Equitable Financial made a funding contribution to the Equitable Foundation of $25 million. The Equitable Foundation is the philanthropic arm of Equitable Financial.
 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 Rosenberg2
 5
 15
Investment management services provided by AXA Strategic Ventures Corporation (“ASV Corp”)2
 2
 2
Guarantees and credit facility1
 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 affiliates6
 27
 29
Total$733
 $747
 $703

13)14)    EMPLOYEE BENEFIT PLANS
As a result of the AXA Financial Merger, Holdings assumed all of AXA Financial’s liabilities, including its obligations under two assumption agreements pursuant to which it legally assumed primary liability for certain employee benefit plans of AXA Equitable Life. Holdings also succeeded AXA Financial as the sponsor of the MONY Life Retirement Income Security Plan for Employees.
Pension Plans
Holdings and AXA Equitable LifeFinancial Retirement Plans
AXA Equitable LifeFinancial sponsors the AXA Equitable 401(k) Plan, a qualified defined contribution plan for eligible employees and financial professionals. The plan provides for both a company contribution, a company matching contribution, and a discretionary profit-sharing contribution. Expenses associated with this 401(k) Plan were $36$64 million, $28$49 million and $28$55 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
Holdings sponsors the MONY Life Retirement Income Security Plan for Employees and AXA Equitable LifeFinancial sponsors the AXA Equitable Retirement Plan (the “AXA“ Equitable LifeFinancial QP”), both of which are frozen qualified defined benefit plans covering eligible employees and financial professionals. These pension plans are non-contributory, and their benefits are generally based on a cash balance formula and/or, for certain participants, years of service and average earnings
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


over a specified period. Holdings and AXA Equitable LifeFinancial also sponsor certain nonqualified defined benefit plans, including the AXA Equitable Excess Retirement Plan, that provide retirement benefits in excess of the amount permitted under the tax law for the qualified plans. Effective December 31, 2015,Holdings has assumed primary liability for the obligations of AXAboth plans. Equitable Life under the AXA Equitable Life QP was transferred from AXA Equitable Life to AXA Financial pursuant to an assumption agreement (the “Assumption Agreement”). As a result of the AXA Financial Merger, Holdings assumed the obligations of AXA Financial under the Assumption Agreement. AXA Equitable Life remains secondarily liable for its obligations under the AXA Equitable LifeFinancial QP and would recognize such liability in the event Holdings does not perform under the terms of the Assumption Agreement.
On March 13, 2018, the Company signed a binding agreement with a third-party insurer to purchase two single premium, non-participating group annuity contracts with the intent of settling certain retiree liabilities under the MONY Life Retirement Income Security Plan for Employees and the AXA Equitable Life QP. Payment of the preliminary contribution amounts for the group annuity contracts was funded from plan assets on March 20, 2018, securing the third-party insurer’s irrevocable assumption of certain benefits obligations and commitment to issue the group annuity contracts. The annuity purchase transaction and consequent transfer of $254 million of the plans’ obligations to retirees or 10% of the aggregate pension benefit obligations resulted in a partial settlement of the plans.
The Company remeasured the plans’ assets and obligations on March 20, 2018, as required in the event of an accounting settlement. For the year end December 31, 2018, the Company recognized a pre-tax settlement loss of $109 million, largely attributable to recognition of a pro rata portion of the plans’ unamortized net actuarial losses accumulated in other comprehensive income and routine lump-sum distributions totaling $36 million made from the AXA Equitable Life QP and the MONY Life Retirement Income Security Plan for Employees.perform.
Holdings and AXA Equitable LifeFinancial use a December 31 measurement date for their pension plans.
AB Retirement Plans
AB maintains the Profit Sharing Plan for Employees of AB, a tax-qualified retirement plan for U.S. employees. Employer contributions under this plan are discretionary and generally are limited to the amount deductible for federal income tax purposes.
AB also maintains a qualified, non-contributory, defined benefit retirement plan covering current and former employees who were employed by AB in the United States prior to October 2, 2000 (the “AB Plan”). Benefits under the AB Plan are based on years of credited service, and average final base salary.salary, and primary Social Security benefits.
AB uses a December 31 measurement date for the AB Plan.
204
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Contributions and Funding Policy
The Company’s funding policy for its qualified pension plans is to satisfy its funding obligations each year in an amount not less than the minimum required by the Employee Retirement Income Security Act of 1974 (“ERISA”),ERISA, as amended by the Pension Protection Act, of 2006 (the “Pension Act”), and not greater than the maximum the Company can deduct for federal income tax purposes. For 2018, 2021, no cash contributions were made by Holdings orAXA Equitable LifeFinancial to their respective qualified pension plans. Based on the funded status of the plans atas of December 31, 2017,2020, AB contributed $5 million to the AB Plan during 2018. AB currently estimates that it will contribute $4 million to the AB Plan during 2019. 2021. AB currently estimates that it will not contribute to the AB Plan during 2022. No minimum funding contributions under ERISA are required to be made to the Holdingsand AXA Equitable LifeFinancial plans, and management does not expect to make any discretionary contributions to those plans during2019. 2022.
Net Periodic Pension Expense
Components of net periodic pension expense for the Company’s qualified and non-qualified plans were as follows:
AXA EQUITABLE HOLDINGS, INC.
Year Ended December 31,
2021

20202019
  (in millions)
Service cost$6 $6 $8 
Interest cost46 77 104 
Expected return on assets(154)(147)(152)
Actuarial (gain) loss1 1 1 
Net amortization99 103 94 
Impact of settlement6 7 — 
Net periodic pension expense$4 $47 $55 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 Years Ended December 31,
 2018
2017 2016
  (in millions)
Service cost$8
 $10
 $11
Interest cost103
 105
 108
Expected return on assets(163) (173) (177)
Actuarial (gain) loss1
 1
 1
Net amortization98
 126
 133
Impact of settlement109
 —
 —
Net periodic pension expense$156
 $69
 $76

Changes in Projected Benefit Obligation (“PBO”)PBO
Changes in the PBO of the Company’s qualified and non-qualified plans were comprised of:
 20212020
 (in millions)
Projected benefit obligation, beginning of year$3,180 $3,056 
Service cost— — 
Interest cost45 77 
Actuarial (gains)/losses (1)(95)272 
Benefits paid(198)(203)
Plan amendments and curtailments— — 
Settlements(32)(22)
Projected benefit obligation, end of year$2,900 3,180 
 2018 2017
 (in millions)
Projected benefit obligation, beginning of year$3,455
 $3,442
Service cost—
 —
Interest cost103
 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.

(1)Actuarial gains and losses are a product of changes in the discount rate as shown below.
The following table discloses the change in plan assets and the funded status of the Company’s qualified pension plans and non-qualified pension plans:
205
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
2018 2017 20212020
(in millions) (in millions)
Pension plan assets at fair value, beginning of year$2,839
 $2,679
Pension plan assets at fair value, beginning of year$2,744 $2,552 
Actual return on plan assets(53) 357
Actual return on plan assets259 373 
Contributions5
 4
Contributions— — 
Benefits paid(184) (201)Benefits paid(165)(165)
Annuity purchases(266) —
Annuity purchases(30)(16)
Pension plan assets at fair value, end of year2,341
 2,839
Pension plan assets at fair value, end of year2,808 2,744 
PBO2,874
 3,455
PBO2,900 3,180 
Excess of PBO over pension plan assets, end of year$(533) $(616)Excess of PBO over pension plan assets, end of year$92 $436 

Accrued pension costs of $(533)$93 million and $(616)$436 million atas of December 31, 20182021 and 2017,2020, respectively, were recognized in the accompanying consolidated balance sheets to reflect the fundedunfunded status of these plans. The aggregate PBO/accumulated benefit obligation (“ABO”) and fair value of pension plan assets for plans with PBOs/ABOs in excess of their assets were $2,874 million and $2,341 million, respectively, at December 31, 2018 and $3,455 million and $2,839 million, respectively, at December 31, 2017.
 December 31,
 20212020
  (in millions)
Projected benefit obligation$2,900 $3,180 
Accumulated benefit obligation2,900 3,180 
Fair value of plan assets$2,808 $2,744 

Unrecognized Net Actuarial (Gain) Loss
The following table discloses the amounts included in AOCI atas of December 31, 20182021 and 20172020 that have not yet been recognized as components of net periodic pension cost.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


As of December 31, December 31,
2018 2017 20212020
 (in millions)  (in millions)
Unrecognized net actuarial (gain) loss$1,123
 $1,315
Unrecognized net actuarial (gain) loss$620 $895 
Unrecognized prior service cost (credit)1
 1
Unrecognized prior service cost (credit)(1)(1)
Unrecognized net transition obligation (asset)Unrecognized net transition obligation (asset)— — 
Total$1,124
 $1,316
Total$619 $894 
Pension Plan Assets
The fair values of qualified pension plan assets are measured and ascribed to levels within the fair value hierarchy in a manner consistent with the fair values of the Company’s invested assets that are measured at fair value on a recurring basis. See Note 78 of the Notes to these Consolidated Financial Statements for a description of the fair value hierarchy.
The following table discloses the allocation of the fair value of total qualified pension plan assets atas of December 31, 20182021 and 2017:2020:
 December 31,
 20212020
Fixed maturities47.2 %47.2 %
Equity securities29.7 32.1 
Equity real estate16.5 14.7 
Cash and short-term investments2.5 1.7 
Other4.1 4.3 
Total100.0 %100.0 %

206
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
 As of December 31,
 2018 2017
Fixed maturities50.3% 46.2%
Equity securities22.9
 33.9
Equity real estate17.7
 13.9
Cash and short-term investments3.4
 1.4
Other5.7
 4.6
Total100.0% 100.0%
Qualified pension plan assets are invested with the primary objective of return, giving consideration to prudent risk. Guidelines regarding the allocation of plan assets are established by the respective Investment Committees for the plans and are designed with a long-term investment horizon. AtAs of December 31, 2018,2021, the qualified pension plans continued their investment allocation strategy to target a 50%[50%- 50%] mix of long-duration bonds and “return-seeking” assets, including public equities, real estate, hedge funds, and private equity.
The following tables disclose the fair values of qualified pension plan assets and their level of observability within the fair value hierarchy atas of December 31, 20182021 and 2017,2020, respectively.
 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 equity424
 78
 —
 502
Mutual funds53
 —
 —
 53
Private real estate investment trusts1
 —
 —
 1
Cash and cash equivalents34
 —
 —
 34
Short-term investments—
 22
 —
 22
Total assets in the fair value hierarchy512
 1,269
 1
 1,782
Investments measured at Net Asset Value—
 —
 —
 559
Investments at fair value$512
 $1,269
 $1
 $2,341
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Level 1Level 2Level 3Total
Level 1 Level 2 Level 3 Total(in millions)
(in millions)
       
December 31, 2017:       
December 31, 2021:December 31, 2021:
Fixed Maturities:       Fixed Maturities:
Corporate$—
 $792
 $2
 $794
 Corporate$— $842 $— $842 
U.S. Treasury, government and agency—
 471
 —
 471
 U.S. Treasury, government and agency— 426 — 426 
States and political subdivisions—
 26
 —
 26
 States and political subdivisions— 16 — 16 
Foreign governments—
 5
 —
 5
 Foreign governments— 18 — 18 
Commercial mortgage-backed—
 —
 1
 1
 Commercial mortgage-backed— — — — 
Common and preferred equity730
 98
 —
 828
Common equity, REITs and preferred equityCommon equity, REITs and preferred equity576 108 — 684 
Mutual funds99
 —
 —
 99
Mutual funds62 — — 62 
Commercial paper—
 44
 —
 44
Private real estate investment trusts2
 —
 —
 2
Collective TrustCollective Trust— 99 — 99 
Derivatives, netDerivatives, net— — — — 
Cash and cash equivalents12
 —
 —
 12
Cash and cash equivalents19 — — 19 
Short-term investments—
 27
 —
 27
Short-term investments— 46 — 46 
Total assets in the fair value hierarchy843
 1,463
 3
 2,309
Investments measured at Net Asset Value—
 —
 —
 530
Investments at fair value$843
 $1,463
 $3
 $2,839
Total Assets at Fair ValueTotal Assets at Fair Value657 1,555 — 2,212 
Investments measured at NAVInvestments measured at NAV— — — 593 
Total Investments at Fair ValueTotal Investments at Fair Value$657 $1,555 $— $2,805 
December 31, 2020:December 31, 2020:
Fixed Maturities:Fixed Maturities:
CorporateCorporate— $831 $— $831 
U.S. Treasury, government and agencyU.S. Treasury, government and agency— 412 — 412 
States and political subdivisionsStates and political subdivisions— 16 — 16 
Foreign governmentsForeign governments— 14 — 14 
Commercial mortgage-backedCommercial mortgage-backed— 1 — 1 
Common equity, REITs and preferred equityCommon equity, REITs and preferred equity622 113 — 735 
Mutual fundsMutual funds63 — — 63 
Collective TrustCollective Trust— 98 — 98 
Cash and cash equivalentsCash and cash equivalents23 — — 23 
Short-term investmentsShort-term investments— 21 — 21 
Total Assets at Fair ValueTotal Assets at Fair Value708 1,506 — 2,214 
Investments measured at NAVInvestments measured at NAV— — — 536 
Total Investments at Fair ValueTotal Investments at Fair Value$708 $1,506 $— $2,750 
The following table lists investments for which net asset value (“NAV”)NAV is calculated; NAV is used as a practical expedient to determine the fair value of these investments atas of December 31, 20182021 and 2017.2020.
207
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Practical Expedient Disclosure as of December 31, 20182021 and 20172020
InvestmentFair Value
Redemption Frequency
(If currently eligible)
Redemption Notice PeriodUnfunded Commitments
 (in millions)
December 31, 2021:
Private Equity Fund$72 N/A (1) (2)N/A$19 
Private Real Estate Investment Trust457 QuarterlyOne Quarter— 
Hedge Fund65 Calendar Quarters (3)Previous Quarter End$5 
Total (4)$594 
December 31, 2020:
Private Equity Fund$69 N/A (1)(2)N/A$21 
Private Real Estate Investment Trust397 QuarterlyOne Quarter— 
Hedge Fund69 Calendar Quarters (3)Previous Quarter End$4 
Total (4)$535 
InvestmentFair 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 Trust402
 Quarterly One Quarter —
Hedge Fund93
 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 Trust376
 Quarterly One Quarter —
Hedge Fund93
 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).
(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.

(2)Cannot sell interest in the vehicle without prior written consent of the managing member.
(3)March, June, September and December.
(4)Includes equity method investments of $109 million and $110 million as of December 31, 2021 and 2020, respectively.
The table below presents a reconciliation for all Level 3 fair values of qualified pension plan assets atas of December 31, 2018, 20172021, 2020 and 2016,2019, respectively:

AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Level 3 Instruments
Fair Value Measurements
Private Real Estate Investment TrustsOther Equity InvestmentsFixed Maturities
(in millions)
Balance, January 1, 2021$—$—$—
Actual return on plan assets — Sales/Settlements——(1)
Balance, December 31, 2021$—$—$(1)
Balance, January 1, 2020$— $— $1 
Actual return on plan assets — Sales/Settlements— — (1)
Balance, December 31, 2021$— $— $— 
Balance, January 1, 2019$— $— $2 
Actual return on plan assets — Sales/Settlements— — (1)
Balance, December 31, 2019$— $— $1 
 Private Real Estate Investment Trusts Other Equity Investments Fixed Maturities Total
 (in millions)
Balance, January 1, 2018$—
 $—
 $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

AtAs of December 31, 2018,2021, assets classified as Level 1, Level 2 and Level 3 comprise approximately 21.9%23.4%, 54.2%55.4% and 0.0%, respectively, of qualified pension plan assets. AtAs of December 31, 2017,2020, assets classified as Level 1, Level 2 and Level 3 comprised approximately 29.7%25.7%, 51.5%54.8% and 0.1%0.0%, respectively, of qualified pension plan assets. There are no significant concentrations of credit risk arising within or across categories of qualified pension plan assets.
In addition to the plan assets above, the Company and certain subsidiaries purchased COLI policies on the lives of certain key employees. Under the terms of these polices the Company and these subsidiaries are named as beneficiaries. The purpose of the COLI policies is to provide the Company additional funds with which to satisfy various employee benefit obligations held by the Company, including those associated with its nonqualified defined benefit plans and post-retirement benefit plans. As of December 31, 2021 and 2020, the carrying value of COLI was $1.01 billion and $992 million, respectively.
208
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Assumptions
Discount Rate    
The benefits obligations and related net periodic costs of the Company’s qualified and non-qualified pension plans are measured using discount rate assumptions that reflect the rates at which the plans’ benefits could be effectively settled. Projected nominal cash outflows to fund expected annual benefits payments under each of the plans are discounted using a published high-quality bond yield curve as a practical expedient for a matching bond approach. Beginning in 2014, the Company uses the Citigroup Pension Above-Median-AA Curve (the “Citigroup Curve”) for this purpose. The Company has concluded that an adjustment to the Citigroup Curve is not required after comparing the projected benefit streams of the plans to the cash flows and duration of the reference bonds.
Mortality
In October 2016, the Society of Actuaries (“SOA”) released MP-2016, its second annual update to the “gold standard” mortality projection scale issued by the SOA in 2014, reflecting three additional years of historical U.S. population historical mortality data (2012 through 2014). Similar to its predecessor (MP-2015), MP-2016 indicated that, while
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


mortality data continued to show longer lives, longevity was increasing at a slower rate and lagging behind that previously suggested both by MP-2015 and MP-2014. The Company considered this new data as well as observations made from current practice regarding how to best estimate improved trends in life expectancies and concluded to continue using the RP-2000 base mortality table projected on a full generational basis with Scale BB mortality improvements for purposes of measuring and reporting its consolidated defined benefit plan obligations atas of December 31, 2018.
Interest Cost
Beginning January 1, 2016, the Company adopted a spot rate/full yield curve approach for measuring the interest cost component of expense for each of its defined benefit plans, thereby reducing 2016 benefits expense by approximately $76 million.2021.
The following table discloses assumptions used to measure the Company’s pension benefit obligations and net periodic pension cost at and for the years ended December 31, 20182021 and 2017.2020.
December 31,
20212020
Discount rates:
Equitable Financial QP2.55%2.11%
Equitable Excess Retirement Plan2.47%1.99%
MONY Life Retirement Income Security Plan for Employees2.78%2.43%
AB Qualified Retirement Plan2.55%3.35%
Other defined benefit plans2.05%-2.78%1.46%-2.43%
Periodic cost1.18%-2.78%0.51%-2.43%
Cash balance interest crediting rate for pre-April 1, 2012 accruals4.00%4.00%
Cash balance interest crediting rate for post-April 1, 2012 accruals0.50%2.25%
Rates of compensation increase:
Benefit obligation5.97%5.99%
Periodic cost6.33%6.32%
Expected long-term rates of return on pension plan assets (periodic cost)6.25%6.25%
 As of December 31,
 2018 2017
Discount rates:   
AXA Equitable Life QP4.07% 3.4%
AXA Equitable Excess Retirement Plan4.01% 3.32%
MONY Life Retirement Income Security Plan for Employees4.2% 3.5%
AB Qualified Retirement Plan3.9% 4.55%
Other defined benefit plans3.75%-4.10% 3.00%-3.43%
Periodic cost3.00%-3.50% 3.17%-3.98%
Cash balance interest crediting rate for pre-April 1, 2012 accruals4.00% 4.00%
Cash balance interest crediting rate for post-April 1, 2012 accruals2.50% 1.25%
    
Rates of compensation increase:   
Benefit obligation5.99% 5.99%
Periodic cost6.34% 6.38%
    
Expected long-term rates of return on pension plan assets (periodic cost)6.75% 6.75%

The expected long-term rate of return assumption on plan assets is based upon the target asset allocation of the plan portfolio and is determined using forward-looking assumptions in the context of historical returns and volatilities for each asset class.
Prior to 1987, participants’ benefits under the AXA Equitable LifeFinancial QP were funded through the purchase of non-participating annuity contracts from AXA Equitable Life.Financial. Benefit payments under these contracts were approximately $6$4 million and $6$5 million for 20182021 and 2017,2020, respectively.
Post-Retirement Benefits
The Company eliminated any subsidy for post-retirement medical and dental coverage for individuals retiring on or after May 1, 2012. The Company continues to contribute to the cost of post-retirement medical and dental coverage for certain individuals who retired prior to May 1, 2012 based on years of service and age, subject to rights reserved in the
209
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
plans to change or eliminate these benefits. The Company funds these post-retirement benefits on a pay-as-you-go basis.
The Company sponsors the AXA Equitable Executive Survivor Benefits Plan (the “ESB Plan”) which provides post-retirement life insurance benefits to eligible executives. Eligible executives may choose up to four levels of coverage with each level providing a benefit equal to the executive’s compensation, subject to an overall $25$25 million cap. Aside from the ESB Plan, the Company does not currently offer post-retirement life insurance benefits but continues to provide post-retirement life insurance benefits to certain active and retired employees who were eligible for such benefits under discontinued plans.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The ESB Plan was closed to new participants on January 1, 2019.
For 20182021 and 2017,2020, post-retirement benefits payments were $46$28 million and $38$24 million, respectively, net of employee contributions.
The Company uses a December 31 measurement date for its post-retirement plans.
Components of Net Post-retirementPost-Retirement Benefits Costs
Year Ended December 31,
 202120202019
 (in millions)
Service cost$2 $2 $1 
Interest cost8 13 18 
Net amortization9 9 6 
Net periodic post-retirement benefits costs$19 $24 $25 
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Service cost$2
 $2
 $2
Interest cost16
 16
 16
Net amortization9
 6
 7
Net Periodic Post-Retirement Benefits Costs$27
 $24
 $25

Changes in the accumulated benefits obligation of the Company’s post-retirement plans recognized in the accompanying consolidated financial statements are described in the following table:
Accumulated Post-Retirement Benefits Obligation
December 31,
20212020
(in millions)
Accumulated post-retirement benefits obligation, beginning of year$516 $517 
Service cost2 2 
Interest cost8 13 
Contributions and benefits paid(28)(24)
Plan amendments/curtailments— (30)
Actuarial (gains) losses(32)38 
Accumulated post-retirement benefits obligation, end of year$466 $516 
 December 31,
 2018 2017
 (in millions)
Accumulated post-retirement benefits obligation, beginning of year$537
 $539
Service cost2
 2
Interest cost16
 16
Contributions and benefits paid(46) (38)
Actuarial (gains) losses(18) 18
Accumulated post-retirement benefits obligation, end of year$491
 $537

The post-retirement medical plan obligations of the Company are offset by an anticipated subsidy from Medicare Part D, which is assumed to increase with the healthcare cost trend.
Assumed Healthcare Cost Trend Rates used to Measure the Expected Cost of Benefits
December 31,
20212020
Following year5.1%5.6%
Ultimate rate to which cost increase is assumed to decline4.0%4.0%
Year in which the ultimate trend rate is reached20942095
 December 31,
 2018 2017
Following year10.2% 6.9%
Ultimate rate to which cost increase is assumed to decline4.3% 4.2%
Year in which the ultimate trend rate is reached2099 2097

The following table discloses the amounts included in AOCI atas of December 31, 20182021 and 20172020 that have not yet been recognized as components of net periodic post-retirement benefits cost:
210
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
December 31,December 31,
2018 201720212020
(in millions)(in millions)
Unrecognized net actuarial (gains) losses$116
 $143
Unrecognized net actuarial (gains) losses$135 $186 
Unrecognized prior service (credit)—
 —
Unrecognized prior service (credit)(26)(29)
Total$116
 $143
Total$109 $157 

The assumed discount rates for measuring the post-retirement benefit obligations atas of December 31, 20182021 and 20172020 were determined in substantially the same manner as described above for measuring the pension benefit obligations. The following table discloses the range of discrete single equivalent discount rates and related net periodic cost at and for the years ended December 31, 20182021 and 2017.2020.
AXA EQUITABLE HOLDINGS, INC.
December 31,
20212020
Discount rates:
Benefit obligation2.43%-2.72%1.97%-2.38%
Periodic cost2.34%-2.52%2.80%-3.16%
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 December 31,
 2018 2017
Discount rates:   
Benefit obligation3.52%-3.89% 2.80%-3.52%
Periodic cost3.00%-3.50% 3.17%-3.98%

The Company provides post-employment medical and life insurance coverage for certain disabled former employees. The accrued liabilities for these post-employment benefits were $10$3 million and $11$3 million, respectively, atas of December 31, 20182021 and 2017.2020. Components of net post-employment benefits costs follow:
Year Ended December 31,
 202120202019
 (in millions)
Service cost$1 $1 $1 
Interest cost— — — 
Net amortization— (5)— 
Net (gain) loss— — (1)
Net periodic post-employment benefits costs$1 $(4)$1 
 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

The following table provides an estimate of future benefits expected to be paid in each of the next five years, beginning January 1, 2019,2022, and in the aggregate frfor the five years thereafter. These estimates are based on the same assumptions used to measure the respective benefit obligations atas of December 31, 20182021 and include benefits attributable to estimated future employee service.
Postretirement Benefits
Health
Calendar YearPension BenefitsLife InsuranceGross Estimate PaymentEstimated Medicare Part D SubsidyNet Estimate Payment
(in millions)
2022$211,168 $— $— $— $— 
2023$250,713 $— $— $— $— 
2024$200,447 $— $— $— $— 
2025$196,067 $— $— $— $— 
2026$186,582 $— $— $— $— 
Years 2027 — 2030$2,453,131 $— $— $— $— 


Effective December 31, 2020, the current health plan coverages through the Equitable Retiree Group Health Plan were terminated. Medicare-eligible retirees and their Medicare-eligible dependents were given the opportunity to elect a Medicare
211
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
   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
2020223
 26
 15
 3
 12
2021220
 26
 14
 3
 11
2022216
 25
 13
 3
 10
2023209
 25
 12
 3
 9
Years 2024-20282,926
 541
 100
 9
 91
plan through the Aon Retiree Health Exchange effective January 1, 2021 and certain eligible retirees were offered a retiree health reimbursement account contribution to help pay for premiums and out-of-pocket expenses. Pre-65 retirees and their pre-65 dependents were given the opportunity to elect health coverage under the Aon Active Health Exchange effective January 1, 2021. Even though the effective date of the change in benefits doesn’t commence until January 1, 2021, the effect of the amendment must be recognized immediately and is reflected in the measurement of the accumulated postretirement benefit obligations as of December 31, 2020.
14)15)    SHARE-BASED COMPENSATION PROGRAMS
Compensation costs for 2018, 20172021, 2020 and 20162019 for share-based payment arrangements as further described herein are as follows:
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Performance Shares (1)$11
 $45
 $37
Stock Options2
 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.
AXA EQUITABLE HOLDINGS, INC.
Year Ended December 31,
202120202019
(in millions)
Performance Shares$17 $11 $29 
Stock Options— 7 4 
Restricted Stock Units257 234 243 
Total compensation expenses$274 $252 $276 
Income Tax Benefit$58 52 62 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(2)Reflects a $24 million adjustment for awards inSince 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.
Retirement and Protection Businesses
In 2017 and prior years, equity awards for employees, financial professionals and directors in our retirement and protection (“R&P”) businesses were available under the umbrella of AXA’s global equity program. Accordingly, equity awards granted in 2017 and prior years were linked to AXA’s stock.
Following the IPO, Holdings has granted and will continue to grant equity awards under the AXA Equitable Holdings, Inc. 2018 Omnibus Incentive Plan (theand the Equitable Holdings, Inc. 2019 Omnibus Incentive Plan (together the “Omnibus Plan”Plans”) which waswere adopted by Holdings on April 25, 2018.2018 and February 28, 2019 respectively. Awards under the Omnibus PlanPlans are linked to Holdings’ common stock. As of December 31, 2018,2021, the common stock reserved and available for issuance under the Omnibus PlanPlans was 5.522 million shares. Holdings may issue new shares or use common stock held in treasury for awards linked to Holdings’ common stock.
2018 Equity AwardsRetirement and Protection
All 2018 equityEquity awards for R&P employees, financial professionals and directors in 2021, 2020 and 2019 were granted under the Omnibus PlanPlans with the exception of the Holdings restricted stock units (“Holdings RSUs”) granted to financial professionals on May 17,in 2018. Accordingly, allAll grants discussed in this section will be settled in shares of Holdings’ common stock except for the RSUs granted to financial professionals in 2019 and 2018 which will be settled in cash. As described below, Holdings made various grants of equity awards linked to the value of Holdings’ common stock in 2018.
For awards with graded vesting schedules and service-only vesting conditions, including Holdings RSUs and other forms of share-based payment awards, the Company applies a straight-line expense attribution policy for the recognition of compensation cost. Actual forfeitures with respect to the 20182021, 2020, and 2019 grants were considered immaterial in the recognition of compensation cost.
Annual Awards
Each year, the Compensation Committee of the Holdings’ Board of Directors approves an equity-based award program with awards under the program granted at its regularly scheduled meeting in February. Annual awards under Holdings’ equity programs for 2021, 2020 and 2019 consisted of a mix of equity vehicles including Holdings RSUs, Holdings stock options and Holdings performance shares. If Holdings pays any ordinary dividend in cash, all outstanding Holdings RSUs and performance shares will accrue dividend equivalents in the form of additional Holdings RSUs or performance shares to be settled or forfeited consistent with the terms of the related award.
Holdings RSUs
Holdings RSUs granted to R&P employees under an annual program vest ratably in equal annual installments over a three-year period. The fair value of the awards was measured using the closing price of the Holdings share on the grant date, and the resulting compensation expense will be recognized over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Under the 2020 equity program, eligible R&P financial professionals were granted stock-settled Holdings RSUs which vest ratably in equal annual installments over a three-year period and are equity-classified. The fair value of these awards was measured using the closing price of the Holdings share on the grant date, and the resulting compensation
212
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
expense will be recognized over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Under the 2019 and 2018 equity programs, R&P financial professionals were granted cash-settled Holdings RSUs which vest ratably in equal installments over a three-year period. The cash payment for each RSU will equal the average closing price for a Holdings share on the NYSE over the 20 trading days immediately preceding the vesting date. These awards are liability-classified and require fair value remeasurement based upon the price of a Holdings share at the close of each reporting period.
Holdings Stock Options
Holdings stock options granted to R&P employees have a three-year graded vesting schedule, with one-third vesting on each of the three anniversaries. The total grant date fair value of Holdings stock options will be charged to expense over the shorter of the vesting period or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Holdings Performance Shares
Holdings performance shares granted to R&P employees are subject to performance conditions and a three-year cliff-vesting. The performance shares consist of two distinct tranches; one based on the Company’s return-on-equity targets (the “ROE Performance Shares”) and the other based on the Holdings’ relative total shareholder return targets (the “TSR Performance Shares”), each comprising approximately one-half of the award. Participants may receive from 0% to 200% of the unearned performance shares granted. The grant-date fair value of the ROE Performance Shares is established once all applicable Non-GAAP ROE targets are determined and approved. The fair value of the awards was measured using the closing price of the Holdings share on the grant date.
The grant-date fair value of the TSR Performance Shares was measured using a Monte Carlo approach. Under the Monte Carlo approach, stock returns were simulated for Holdings and the selected peer companies to estimate the payout percentages established by the conditions of the award. The aggregate grant-date fair value of the unearned TSR Performance Shares will be recognized as compensation expense over the shorter of the cliff-vesting period or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Director Awards
Holdings makes annual grants of unrestricted Holdings shares to non-employee directors of Holdings, Equitable Financial and Equitable America. The fair value of these awards was measured using the closing price of Holdings shares on the grant date. These awards immediately vest and all compensation expense is recognized at the grant date.
One-Time Awards Granted in 2018
Transaction Incentive Awards
On May 9, 2018, coincident with the IPO, Holdings granted one-time “Transaction Incentive Awards” to executive officers and certain other R&P employees in the form of 0.7 million722 thousand Holdings RSUs. FiftyNaN percent of the Holdings RSUs will vestvested based on service over athe two-year period from the IPO date (the “Service Units”), and fifty50 percent will vest based on service and aor market condition (the “Performance Units”). The market condition is based on share price growth of at least 130% or 150% within a two or five-year period, respectively. If theThe market condition is notwas achieved 50% of the Performance Units may still vest based on five years of continued serviceduring 2021 and the remaining Performance Units will be forfeited. The $7 million aggregate grant-date fair value of the 0.4 million Service Units was measured at the $20 IPO price of a Holdings share and will be charged to compensation expense over the stated requisite service periods.
The grant-date fair value of half of the Performance Units, or 0.2 million Holdings RSUs was also measured at the $20IPO price for a Holdings share as employees are still able to vest in these awards even if the share price growth targets are not achieved. The resulting$4 million for these awards will be charged to compensation expense over the five-year requisite servicefully vesting during this period. The grant-date fair value of $16.47 was used to value the remaining half of the Performance Units that are subject to risk of forfeiture for non-achievement of the Holdings share price conditions. The grant date fair value was measured using a Monte Carlo simulation from which a five-year requisite service period was derived, representing the median of the distribution of stock price paths on which the market condition is satisfied, over which the total $3 million compensation expense will be recognized. In 2018, the Company recognized compensation expense associated with the Transaction Incentive Awards of approximately$6 million.
Special IPO Grant
Also, on May 9, 2018, Holdings made a grant of 0.4 million Holdings RSUs to R&P employees and financial professionals, or 50 restricted stock units to each eligible individual, that cliff vested on November 9, 2018. The grant-date fair value of the award was measured using the $20 IPO price for a Holdings share and the resulting $7 million has been recognized as compensation expense over the six-month service period ending November 9, 2018.
Annual Awards Under 2018 Equity Program
Annual awards under Holdings’ 2018 equity program consisted of a mix of equity vehicles including Holdings RSUs, Holdings stock options and Holdings performance shares. If Holdings pays any ordinary dividend in cash, all outstanding Holdings RSUs and performance shares will accrue dividend equivalents in the form of additional Holdings RSUs or performance shares to be settled or forfeited consistent with the terms of the related award.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Holdings RSUs
On May 17, 2018, Holdings granted 1.3 million Holdings RSUs to R&P employees that vest ratably in equal annual installments over a three-year period on each of the first three anniversaries of March 1, 2018. The fair value of the award was measured using the closing price of the Holdings share on the grant date, and the resulting $27 million will be recognized as compensation expense over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible but not prior to March 1, 2019.
Also, on May 17, 2018, Holdings granted an award of 0.5 million cash-settled Holdings RSUs to eligible R&P financial professionals that vest ratably in equal installments over a three-yearperiod on each of the firstthreeanniversaries of March 1, 2018. The cash payment for each RSU will equal the average closing price for a Holdings share on the NYSE over the 20 trading days immediately preceding the vesting date. These awards are liability-classified and require fair value remeasurement based upon the price of a Holdings share at the close of each reporting period. In2018, the Company recognized expense associated with the annual awards of approximately $4 million.
Holdings Stock Options
On June 11, 2018, Holdings granted 1.0 million Holdings stock options to R&P employees. These options expire on March 1, 2028 and have a three-year graded vesting schedule, with one-third vesting on each of the three anniversaries of March 1, 2018. The exercise price for the options is $21.34, which was the closing price of a Holdings share on the grant date. The weighted average grant date fair value per option was estimated at $4.61 using a Black-Scholes options pricing model. Key assumptions used in the valuation included expected volatility of 25.4% based on historical selected peer data, a weighted average expected term of 5.7 years as determined by the simplified method, an expected dividend yield of 2.44% based on Holdings’ expected annualized dividend, and a risk-free interest rate of 2.83%. The total fair value of these options of approximately $5 million will be charged to expense over the shorter of the vesting period or the period up to the date at which the participant becomes retirement eligible but not prior to March 1, 2019. In 2018, the Company recognized expense associated with the June 11, 2018 option grant of approximately $2 million.
Holdings Performance Shares
On May 17, 2018, Holdings granted 0.4 million unearned Holdings performance shares to R&P employees, subject to performance conditions and a cliff-vesting term ending March 1, 2021. The performance shares consist of two distinct tranches; one based on the Company’s return-on-equity targets (the “ROE Performance Shares”) and the other based on the Holdings’ relative total shareholder return targets (the “TSR Performance Shares”), each comprising approximately one-half of the award. Participants may receive from 0% to 200% of the unearned performance shares granted. The grant-date fair value of the ROE Performance Shares will be established once the 2019 and 2020 Non-GAAP ROE target are determined and approved.
The grant-date fair value of the TSR Performance Shares was measured at $23.17 using a Monte Carlo approach. Under the Monte Carlo approach, stock returns were simulated for Holdings and the selected peer companies to estimate the payout percentages established by the conditions of the award. The resulting $5 million aggregate grant-date fair value of the unearned TSR Performance Shares will be recognized as compensation expense over the shorter of the cliff-vesting period or the period up to the date at which the participant becomes retirement eligible but not prior to March 1, 2019. In 2018, the Company recognized expense associated with the TSR Performance Share awards of approximately $2 million.
Director Awards
On May 17, 2018, Holdings granted 0.03 million unrestricted Holdings shares to non-officer directors of Holdings, AXA Equitable Life and MLOA. The fair value of these awards was measured using the $21.68 closing price of Holdings shares on the grant date. As these awards were immediately vested, their aggregate fair value of $0.6 million was immediately recognized as compensation expense.
Funding of Awards
The Company used common stock held in Treasury to fund the delivery of the 0.03 million unrestricted Holdings shares granted to the non-officer directors in the second quarter of 2018. Holdings may issue new shares or use common stock held in Treasury for the other outstanding awards linked to Holdings’ common stock.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Prior Equity Award Grants
In 2017 and Settlementsprior years, equity awards for employees, financial professional and directors in our R&P businesses were available under the umbrella of AXA’s global equity program. Accordingly, equity awards granted in 2017 and prior years were linked to AXA’s stock.
Prior to adoption of the Omnibus Plan, R&P employees were granted AXA ordinary share options under the AXA Stock Option Plan, for AXA Financial Employees and Associates (the “Stock Option Plan”). There is no limitation in the Stock Option Plan on the number of shares that may be issued pursuant to option or other grants.
R&P employees were also granted AXA performance shares under the AXA International Performance SharesShare Plan established for each year (the “Performance Share Plan”) and R&P financial professionals were granted performance units under the AXA Advisors Performance Unit Plan established for each year.Plan.
The fair values of these prior awards are measured at the grant date by reference to the closing price of the AXA ordinary share, and the result, as adjusted for achievement of performance targets and pre-vesting forfeitures, generally is attributed over the shorter of the requisite service period, the performance period, if any, or to the date at which
213
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
retirement eligibility is achieved and subsequent service no longer is required for continued vesting of the award. Remeasurements of fair value for subsequent price changes until settlement are made only for performance unit awards that are settled in cash. The fair value of performance units earned and reported in Other liabilities in the consolidated balance sheets at December 31, 2018 and 2017 was $32 million and $45 million, respectively. Approximately 2.0 million outstanding performance units and shares are at risk to achievement of 2017 performance criteria, primarily representing all of the performance shares granted June 19, 2015 and the second tranche of performance shares granted March 24, 2014, for which cumulative average 2017-2019 and 2016-2018 performance targets will determine the number of performance units and shares earned under those awards, respectively.
2017 and 2016 Performance Unit Grants
On June 21, 2017 and June 6, 2016, under the terms of the AXA Advisors Performance Unit Plan, approximately 0.6 million and 0.7 million performance units, respectively, were granted to R&P financial professionals. The performance units will be cash settled and are remeasured until settlement of the awards. The performance units will be earned based on meeting pre-established performance metrics tied to achievement of specific sales and earnings goals. For all awards, the number of performance units earned may vary between 0% and 130% of the number of performance units at stake.
As a result of the market decline during 2018, the remeasurement associated with 2017 and 2016 performance unit grants resulted in a reduction to compensation expense of $4 million. For the years ended 2017 and 2016, the expense was $15 million and $10 million, respectively.
2017 Performance Shares Grant
On June 21, 2017, under the terms of the 2017 Performance Share Plan, AXA awarded approximately 1.7 million unearned performance shares to R&P employees. For employees other than employees of AXA Tech, the extent to which 2017-2019 cumulative performance targets measuring the performance of AXA and the retirement and protection businesses are achieved will determine the number of performance shares earned. For employees of AXA Tech, the extent to which 2017-2019 cumulative performance targets measuring the performance of AXA and AXA Group Management Services (a group of AXA’s central functions and internal service companies) are achieved will determine the number of performance shares earned. For all R&P employees, the number of performance shares earned may vary between 0% and 130% of the number of performance shares at stake. The performance shares earned during this performance period will vest and be settled on the fourth anniversary of the award date. The plan will settle in AXA ordinary shares to all participants. In 2018 and 2017, the expense associated with the June 21, 2017 grant of performance shares was approximately $6 million and $14 million, respectively.
2016 Performance Shares Grant
On June 6, 2016, under the terms of the 2016 Performance Share Plan, AXA awarded approximately 1.9 million unearned performance shares to R&P employees. For R&P employees other than employees of AXA Tech, the extent to which 2017-2019 cumulative performance targets measuring the performance of AXA and the retirement and protection businesses are achieved will determine the number of performance shares earned. For employees of AXA Tech, the extent to which 2017-2019 cumulative performance targets measuring the performance of AXA and AXA Group Management Services (a group of AXA’s central functions and internal service companies) are achieved will determine the number of performance shares earned. For all R&P employees, the number of performance shares earned may vary between 0% and 130% of the number of performance shares at stake. The performance shares earned during this performance period will vest and be settled on the fourth anniversary of the award date. The plan will settle
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


in AXA ordinary shares to all participants. In 2018, 2017 and 2016, the expense associated with the June 6, 2016 grant of performance shares was approximately $5 million, $6 million and $15 million, respectively.
2017 Stock Options Grant
On June 21, 2017, 0.5 million options to purchase AXA ordinary shares were granted to R&P employees under the terms of the Stock Option Plan at an exercise price of €23.92. All of those options have a five-year graded vesting schedule, with one-third vesting on each of the third, fourth, and fifth anniversaries of the grant date. Of the total options awarded on June 21, 2017, 0.3 million are further subject to conditional vesting terms that require the AXA ordinary share price to outperform the Euro Stoxx Insurance Index over a specified period. All of the options granted on June 21, 2017 have a ten-year term. The weighted average grant date fair value per option award was estimated at €1.78 using a Black-Scholes options pricing model with modification to measure the value of the conditional vesting feature. Key assumptions used in the valuation included expected volatility of 25.05%, a weighted average expected term of 8.8 years, an expected dividend yield of 6.53% and a risk-free interest rate of 0.59%. The total fair value of these options (net of expected forfeitures) of approximately $1 million is charged to expense over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible. In 2018 and 2017, the Company recognized expenses associated with the June 21, 2017 grant of options of approximately$0.1 million and $0.6 million, respectively.
2016 Stock Options Grant
On June 6, 2016, 0.6 million options to purchase AXA ordinary shares were granted to R&P employees under the terms of the Stock Option Plan at an exercise price of €21.52. All of those options have a five-year graded vesting schedule, with one-third vesting on each of the third, fourth, and fifth anniversaries of the grant date. Of the total options awarded on June 6, 2016, 0.3 million are further subject to conditional vesting terms that require the AXA ordinary share price to outperform the Euro Stoxx Insurance Index over a specified period. All of the options granted on June 6, 2016 have a ten-year term. The weighted average grant date fair value per option award was estimated at €1.85 using a Black-Scholes options pricing model with modification to measure the value of the conditional vesting feature. Key assumptions used in the valuation included expected volatility of 26.60%, a weighted average expected term of 8.1 years, an expected dividend yield of 6.50% and a risk-free interest rate of 0.33%. The total fair value of these options (net of expected forfeitures) of approximately $1 million is charged to expense over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible. In 2018, 2017 and 2016 the Company recognized expenses associated with the June 6, 2016 grant of options of approximately $0.1 million, $0.1 million and $0.6 million, respectively.
Settlement of 2014 Grants in 2018
In June 2018, share distributions totaling approximately $22 million were made to active and former R&P employees in settlement of 0.8 million performance shares earned under the terms of the second tranche of the 2014 Performance Share Plan. In April 2018, cash distributions of approximately $7 million were made to active and former R&P financial professionals in settlement of 0.2 million performance units earned under the terms of the second tranche of the AXA Advisor Performance Unit Plan 2014.
Settlement of 2014 Grants in 2017
On March 24, 2017, share distributions totaling approximately $21 million were made to active and former R&P employees in settlement of 2.3 million performance shares earned under the terms of the 2014 Performance Share Plan. On April 7, 2017, cash distributions of approximately $6 million were made to active and former R&P financial professionals in settlement of 0.2 million performance units earned under the terms of the first tranche of the AXA Advisor Performance Unit Plan 2014.
Other Grants
Prior to the IPO, non-officer directors of Holdings and certain subsidiaries were granted restricted AXA ordinary shares (prior to 2011, AXA ADRs) and unrestricted AXA ordinary shares (prior to March 15, 2010, AXA ADRs) annually under The Equity Plan for Directors.
The Company has also granted AXA restricted stock units (“AXA RSUs”) to certain R&P executives. The AXA RSUs are phantom AXA ordinary shares that, once vested, entitle the recipient to a cash payment based on the average closing price of the AXA ordinary share over the twenty trading days immediately preceding the vesting date.
Investment Management and Research
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Employees and directors in our Investment Management and Research business participate in several unfunded long-term incentive compensation plans maintained by AB. Awards under these plans are linked to AB Holding Units.
Under the AB 2017 Long Term Incentive Plan (“2017 Plan”), which was adopted at a special meeting of AB Holding UnitholdersUnit holders held on September 29, 2017, the following forms of awards may be granted to AB employees and Directors: (i) restricted AB Holding Units or phantom restricted AB Holding Units (a “phantom” award is a contractual right to receive AB Holding Units at a later date or upon a specified event); (ii) options to buy AB Holding Units; and (iii) other AB Holding Unit-based awards (including, without limitation, AB Holding Unit appreciation rights and performance awards). The 2017 Plan will expire on September 30, 2027, and no awards under the 2017 Plan will be made after that date. Under the 2017 Plan, the aggregate number of AB Holding Units with respect to which awards may be granted is 60 million, including no more than 30 million newly-issued AB Holding Units.
AB engages in open-market purchases of AB Holding Units to help fund anticipated obligations under its long-term incentive compensation plans and for other corporate purposes. During 20182021, 2020, and 2017,2019 AB purchased 9.35.6 million, 5.4 million, and 6.0 million AB Holding Units for $268$262 million, 149 million and $220173 million, respectively. These amounts reflect open-market purchases of 6.52.6 million, 3.1 million and 5.22.9 million AB Holding Units for $183$117.9 million 74.0 million and $11782.7 million, respectively, with the remainder relating to purchases of AB Holding Units from AB employees to allow them to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards, offset by AB Holding Units purchased by AB employees as part of a distribution reinvestment election.
During 2018,2021, 2020, and 2017,2019 AB granted 8.77.0 million, 5.7 million, and 8.67.7 million restricted AB Holding units to AB employees and directors, respectively.
During 20182021, 2020, and 2017,2019 AB Holding issued 0.9 million100 thousand, 5 thousand, and 1.2 million500 thousand AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $17$3 million, 147 thousand and $2012 million, respectively, received from employees as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Holding Units.
As of December 31, 2018,2021, no options to buy AB Holding Units had been granted and 14.428.1 million AB Holding Units, net of withholding tax requirements, were subject to other AB Holding Unit awards made under the 2017 Plan or an equity compensation plan with similar terms that was canceled in 2017. AB Holding Unit-based awards (including options) in respect of 45.631.9 million AB Holding Units were available for grant as of December 31, 2018.2021.
Summary of Stock Option Activity
A summary of activity in the AXA and the CompanyHoldings option plans during 20182021 as follows:
AXA
214
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

 Options Outstanding
 EQH SharesAB Holding UnitsAXA Ordinary Shares
 
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, 20213,428 $21.14 148,985 $23.61 1,726 € 21.01
Options granted— — — — — — 
Options exercised(1,204)21.20 (143,211)23.75 (743)19.19 
Options forfeited, net(184)21.91 — — (109)22.34 
Options expired— — — — — — 
Options outstanding at December 31, 20212,040 $21.69 5,774 $20.12 874 € 22.39
Aggregate intrinsic value (1)$6,305 $165,829 (€ 2,370)
Weighted average remaining contractual term (in years)7.710.334.69 
Options exercisable at December 31, 2021843 $21.58 5,774 $20.12 758 € 22.38
Aggregate intrinsic value (1)$2,700 $165,829 (€ 2,049)
Weighted average remaining contractual term (in years)7.560.334.48 
_______________
 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 granted1,035
 $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, 2018994
 $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, 2021 of the respective underlying shares over the strike prices of the option awards. For awards with strike prices higher than market prices, intrinsic value is shown as zero.
__________
(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.


For the purpose of estimating the fair valueA summary of stock option awards,grant assumptions activity in the AXA and the Company applies the Black-Scholes modeloption plans during 2021, 2020, and attributes the result over the requisite service period using the graded-vesting method. A Monte-Carlo simulation approach was used to model the fair value of the conditional vesting feature of the awards of options to purchase Holdings and AXA ordinary shares. Shown below are the relevant input assumptions used to derive the fair values of options awarded in 2018, 2017 and 2016, respectively.2019 follows:
 EQH Shares (1)
 2021 (2)20202019
Dividend yield—%2.59%2.77%
Expected volatility—%26.00%25.70%
Risk-free interest rates—%1.19%2.49%
Expected life in years—6.05.9
Weighted average fair value per option at grant date$—$4.37$3.82
 EQH Shares AB Holding Units (1) AXA Ordinary Shares (2)
 2018 2018 2017 2016 2018 2017 2016
Dividend yield2.44% NA NA 7.10% NA 6.53% 6.50%
Expected volatility25.40% NA NA 31.00% NA 25.05% 26.6%
Risk-free interest rates2.83% NA NA 1.30% NA 0.59% 0.33%
Expected life in years9.7
 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.

As of December 31, 2018, approximately $1 million of unrecognized compensation cost related to AXA unvested stock option awards, net of estimated pre-vesting forfeitures, is expected to be recognized by the Company over a
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


weighted average period of 2.2 years. As of December 31, 2018, approximately $3 million of unrecognized compensation cost related to Holdings unvested stock option awards, net of estimated pre-vesting forfeitures, is expected to be recognized by the Company over a weighted average period of 0.8 years.
Options
The fair value of AXA stock options is calculated using the Black-Scholes option pricing model. The expected AXA dividend yieldvolatility is based on market consensus. AXA share price volatilityhistorical selected peer data, the weighted average expected term is estimated ondetermined by using the basissimplified method due to lack of implied volatility, which is checked against an analysis ofsufficient historical volatility to ensure consistency. The risk-free interest rate isdata, the expected dividend yield based on the Euro Swap Rate curve for the appropriate term. The effect ofHoldings’ expected early exercise is taken into account throughannualized dividend, and the use of an expected life assumption based on historical data.
The fair value of AB Holding Unit options is calculated using the Black-Scholes option pricing model. The expected cash distribution yield is based on the average of our distribution yield over the past four quarters. The volatility factor represents historical AB Holding Units price volatility over the same period as the expected term. The risk-free interest rate is based on the U.S. Treasury bond yield for the appropriate expected term. The
(2) No stock options granted during 2021.


As of December 31, 2021, approximately $74 thousand of unrecognized compensation cost related to AXA unvested stock option awards is expected term was calculated usingto be recognized by the simplified method, dueCompany over a weighted-average period of 0.2 years. Approximately $1 million of unrecognized compensation cost related to Holdings unvested stock option awards is expected to be recognized by the lackCompany over a weighted average period of sufficient historical data.1.06 years.
Summary of Restricted AwardsStock Unit Award Activity
The market price of a Holdings share is used as the basis for the fair value measure of a Holdings RSU. For purposes of determining compensation cost for stock-settled Holdings RSUs, fair value is fixed at the grant date until settlement, absent modification to the terms of the award. For liability-classified cash-settled Holdings and AXA RSUs, fair value is remeasured at the end of each reporting period.
For 2018, 2017 and 2016, respectively, the Company recognized compensation costsAs of $215 million, $185 million and $154 million for outstanding restricted stock and AXA RSUs. The fair values of awards made under these programs are measured at the grant date by reference to the closing price of the unrestricted shares, and the result generally is attributed over the shorter of the requisite service period, the performance period, if any, or to the date at which retirement eligibility is achieved and subsequent service no longer is required for continued vesting of the award. Remeasurements of fair value for subsequent price changes until settlement are made only for AXA RSUs.
At December 31, 2018,2021, approximately 2.3$3 million restricted Holdings RSUs and AXA ordinary share unit awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $30$41 million net of estimated pre-vesting forfeitures, and is expected to be recognized over a weighted averageweighted-average period of 1.21.9 years.
At
215
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2018,2021, approximately 20.2$18 million AB Holding Unit awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $87$137 million net of estimated pre-vesting forfeitures, is expected to be recognized over a weighted averageweighted-average period of 3.66.2 years
The following table summarizes Holdings restricted share units and AXA ordinary share unit activity for 2021.
Shares of Holdings Restricted Stock Units
Weighted-Average Grant Date
 Fair Value
Unvested as of January 1, 20213,666,611 $21.15 
Granted1,630,277 $28.01 
Forfeited(194,262)$24.43 
Vested(1,873,893)$20.81 
Unvested as of December 31, 20213,228,733 $24.61 
Summary of Performance Award Activity
As of December 31, 2021, approximately 2 million Holdings and AXA performance awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $19 million and is expected to be recognized over a weighted-average period of 1.5 years.
The following table summarizes restricted Holdings share and AXA ordinary shareperformance awards activity for 2018.2021.
Shares of Holdings Performance AwardsWeighted-Average Grant Date
 Fair Value		Shares of AXA Performance AwardsWeighted-Average Grant Date
Fair Value
Unvested as of January 1, 2021676,688 $22.14 2,806,126 $21.86 
Granted1,153,932 $29.91 — $— 
Forfeited(200,814)$28.28 (7,939)$27.18 
Vested(168,132)$23.17 (1,410,020)$23.94 
Other (1)— $— (1,325,420)$19.64 
Unvested as of December 31, 20211,461,674 $28.58 62,747 $21.28 
_______________
(1) One time true-up of AXA Performance Awards related to the transition to third party administrator.


216
 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
Granted2,877,011
 $20.83
 —
 $—
Cancelled92,526
 $21.21
 208
 $26.64
Vested511,575
 $21.09
 39,528
 $21.99
Unvested as of December 31, 20182,272,910
 $21.00
 53,984
 $20.38
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Employee Stock Purchase Plans
AXA Shareplan 2017
In 2017, eligible employees of participating subsidiaries were offered the opportunity to purchase newly issued AXA ordinary shares, subject to plan limits, under the terms of AXA Shareplan 2017. Eligible employees could have reserved a share purchase during the reservation period from August 28, 2017 through September 8, 2017 and could have canceled their reservation or elected to make a purchase for the first time during the retraction/subscription period from October 13, 2017 through October 17, 2017. The U.S. dollar purchase price was determined by applying the U.S. dollar/Euro forward exchange rate on October 11, 2017 to the discounted formula subscription price in Euros. Investment Option A permitted participants to purchase AXA ordinary shares at a 20% formula discounted price of €20.19 per share. Investment Option B permitted participants to purchase AXA ordinary shares at an 8.98% formula discounted price of €22.96 per share on a leveraged basis with a guaranteed return of initial investment plus a portion of any appreciation in the undiscounted value of the total shares purchased. For purposes of determining the amount of any appreciation, the AXA ordinary share price will be measured over a fifty-two week period preceding the scheduled end date of AXA Shareplan 2018, which is July 1, 2022. All subscriptions became binding and irrevocable on October 17, 2017.
The Company recognized compensation expense of $13 million and $19 million in the years ended December 31, 2017 and 2016, respectively, in connection with each respective year’s offering of AXA stock under the AXA Shareplan, representing the aggregate discount provided to participants for their purchase of AXA stock under each of those plans, as adjusted for the post-vesting, five-year holding period. The Company participants in AXA Shareplan 2017 and 2016 primarily invested under Investment Option B for the purchase of approximately of 4 million and 6 million AXA ordinary shares, respectively.
Holdings Stock Purchase Plan
During 2018, Holdings introduced the AXA Equitable Holdings, Inc. Stock Purchase Program (“SPP”). Participants are able to contribute up to 100% of their eligible compensation and receive a matching contribution in cash equal to 15% of their payroll contribution, which will be used to purchase Holdings shares. Purchases will be made on the last trading day of each month at the prevailing market rate.
15)16)    INCOME TAXES
Income from operations before income taxes included income (loss) from domestic operations of $2,305$(392) million, $1,163$(1.3) billion and $(2.2) billion for the years ended December 31, 2021, 2020 and 2019, and income from foreign operations of $223 million, $169 million and $1,908$131 million for the years ended December 31, 2018, 20172021, 2020 and 2016, and income from foreign operations of $1562019. Approximately $59 million, $143$45 million and $119 million for the years ended December 31, 2018, 2017 and 2016. Approximately $37 million, $30 million and $30$34 million of the Company’s income tax expense is attributed to foreign jurisdictions for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.
A summary of the income tax (expense) benefit in the consolidated statements of income (loss) follows:
Year Ended December 31,
 202120202019
(in millions)
Income tax (expense) benefit:
Current (expense) benefit$(129)$(5)$(71)
Deferred (expense) benefit274 749 664 
Total$145 $744 $593 
 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)

AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The Federal income taxes attributable to consolidated operations are different from the amounts determined by multiplying the earnings before income taxes and noncontrolling interest by the expected Federal income tax rate of 21%, 35% and 35% for 2018, 2017 and 2016, respectively.. The sources of the difference and their tax effects are as follows:
Year Ended December 31,
 202120202019
(in millions)
Expected income tax (expense) benefit$36 $229 $433 
Noncontrolling interest69 50 51 
Non-taxable investment income80 92 74 
Tax audit interest(14)(8)(24)
State income taxes(47)(38)(21)
Tax settlements/uncertain tax position release— 398 63 
Tax credits28 21 — 
Other(7)— 17 
Income tax (expense) benefit$145 $744 $593 
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Expected income tax (expense) benefit$(516) $(457) $(710)
Noncontrolling interest54
 138
 125
Non-taxable investment income (loss)105
 255
 177
Tax audit interest(22) (14) (32)
State income taxes(18) (16) (108)
Tax settlements/uncertain tax position release—
 228
 181
Change in tax law104
 (32) —
Intangibles(3) (138) (9)
Other(11) (13) (2)
Income tax (expense) benefit$(307) $(49) $(378)

The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations where a company does not have the necessary information available to complete its accounting for certain income tax effects of the Tax Reform Act. In accordance with SAB 118, the Company determined reasonable estimates for certain effects of the Tax Reform Act and recorded those estimates as provisional amounts in the 2017 financial statements. The accounting for the income tax effects of the Tax Reform Act has been completed.
The components of change in tax law are as follows:
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.
During the second quarter of 2017,2020, the Company agreed to the Internal Revenue Service’s Revenue Agent’s Report for its consolidated 2008 and 20092010 through 2013 Federal corporate income tax returns. The impact on the Company’s financial statements and unrecognized tax benefits was a tax benefit of $228$398 million. The Company’s financial statements include a tax expense of $129 million related to non-deductible goodwill due to the Company’s early adoption of revised goodwill impairment guidance in the first quarter of 2017.
During the firstsecond quarter of 2016, the Company agreed to the Internal Revenue Service’s Revenue Agent’s Report for MONY Life’s consolidated amended 2004-2007 Federal and consolidated 2008 and 2009 Federal corporate income tax returns. The impact on the Company’s statement of income (loss) is an income tax benefit of $21 million. Also during 2016,2019, the Company released an unrecognizeda state income tax benefit relatedliability due to the loss generated by the sale of MONY Life Insurance Company.recently drafted regulations. The benefit recorded in the Company’s financial statements was $160$63 million.
The components of the net deferred income taxes are as follows:
AXA
217
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

December 31,
 20212020
 AssetsLiabilitiesAssetsLiabilities
(in millions)
Compensation and related benefits$273 $— $297 $— 
Net operating loss and credits699 — 88 — 
Reserves and reinsurance2,281 — 1,528 — 
DAC— 874 — 638 
Unrealized investment gains/losses— 965 — 1,790 
Investments— 794 461 — 
Other— 76 — 170 
Total$3,253 $2,709 $2,374 $2,598 
 As of December 31,
 2018 2017
 Assets Liabilities Assets Liabilities
 (in millions)
Compensation and related benefits$312
 $—
 $328
 $—
Net operating loss90
 —
 35
 —
Reserves and reinsurance321
 —
 1,460
 —
DAC—
 1,175
 —
 850
Unrealized investment gains (losses)108
 —
 —
 373
Investments124
 —
 —
 891
Tax credits149
 —
 528
 —
Other—
 208
 170
 —
Total$1,104
 $1,383
 $2,521
 $2,114

The Company has Federal tax net operating loss carry forwardscarryforwards of $429$2.7 billion and $13 million, and $167 million, which will expire at various dates from 2030 through 2034, for the years ending December 31, 20182021 and 2017, respectively. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carry forwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized.
The Company had $140 million and $528 million of AMT credits for the years ended December 31, 2018 and 2017,2020, respectively, which are expected to be refunded or utilized against future taxable income.do not expire.

The Company provides income taxes on the unremitted earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are indefinitely reinvested outside the United States. As of December 31, 2018, $292021, $30 million of undistributed earnings of non-U.S. corporate subsidiaries were permanently invested outside the United States. At existing applicable income tax rates, additional taxes of approximately $8 million would need to be provided if such earnings are remitted.
A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows:
 202120202019
(in millions)
Balance at January 1,$316 $501 $539 
Additions for tax positions of prior years11 241 25 
Reductions for tax positions of prior years(4)(382)(63)
Additions for tax positions of current year— — — 
Settlements with tax authorities— (44)— 
Balance at December 31,$323 $316 $501 
Unrecognized tax benefits that, if recognized, would impact the effective rate$67 $77 $369 
 2018 2017 2016
 (in millions)
Balance at January 1,$477
 $729
 $802
Additions for tax positions of prior years91
 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

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. Interest and penalties included in the amounts of unrecognized tax benefits atas of December 31, 20182021 and 20172020 were $75$50 million and $83$36 million, respectively. For 2018, 20172021, 2020 and 2016,2019, respectively, there were $(8)$14 million, $(43)$(60) million and $25$21 million in interest expense (benefit) related to unrecognized tax benefits.
It is reasonably possible that the total amount of unrecognized tax benefits will change within the next 12 months due to the conclusion of IRS proceedings and the addition of new issues for open tax years. The possible change in the amount of unrecognized tax benefits cannot be estimated at this time.
As of December 31, 2018,2021, tax years 20102014 and subsequent remain subject to examination by the IRS.
218
16)    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)    
AOCI represents cumulative gains (losses) on items that are not reflected in income (loss). The balances for the past three years follow:
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued


 December 31,
 2018 2017 2016
 (in millions)
Unrealized gains (losses) on investments (1) (3)$(394) $830
 $140
Defined benefit pension plans (2)(968) (955) (1,055)
Foreign currency translation adjustments(72) (35) (77)
Total accumulated other comprehensive income (loss)(1,434) (160) (992)
Less: Accumulated other comprehensive (income) loss attributable to the noncontrolling interest38
 52
 71
Accumulated other comprehensive income (loss) attributable to Holdings$(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.

The components of OCI for the past three years, net of tax, follow:
 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 other563
 (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).

Investment gains and losses reclassified from AOCI to net income (loss) primarily consist of realized gains (losses) on sales and OTTI of AFS securities and are included in Total investment gains (losses), net on the consolidated statements of income (loss). Amounts reclassified from AOCI to net income (loss) as related to defined benefit plans primarily consist of amortizations of net (gains) losses and net prior service cost (credit) recognized as a component of net periodic cost and reported in Compensation and benefit expenses in the consolidated statements of income (loss). Amounts presented in the table above are net of tax.
17)    COMMITMENTS AND CONTINGENT LIABILITIES
Litigation
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


and Regulatory Matters
Litigation, regulatory and other loss contingencies arise in the ordinary course of the Company’s activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek, or they may be required only to state an amount sufficient to meet a court’s jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the merits or potential value of a claim. Litigation against the Company includes a variety of claims including, among other things, insurers’ sales practices, alleged agent misconduct, alleged failure to properly supervise agents, contract administration, product design, features and accompanying disclosure, cost of insurance increases, the use of captive reinsurers, payments of death benefits and the reporting and escheatment of unclaimed property, alleged breach of fiduciary duties, alleged mismanagement of client funds and other matters.
As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters.
The outcome of a litigation or regulatory matter is difficult to predict, and the amount or range of potential losses associated with these or other loss contingencies requires significant management judgment. It is not possible to predict the ultimate outcome or to provide reasonably possible losses or ranges of losses for all pending regulatory matters, litigation and other loss contingencies. While it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company’s financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory matters, nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company’s litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company’s results of operations or cash flows in a particular quarterly or annual period.
For some matters, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of December 31, 2018,2021, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, to be up to approximately $95$250 million.
For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company’s accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.
In August 2015, a lawsuit was filed in Connecticut Superior Court Judicial Division of New Haven entitled Richard T. O’Donnell, on behalf of himself and all others similarly situated v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action on behalf of all persons who purchased variable annuities from AXA Equitable Life,Financial, which were subsequently subjected to the volatility management strategy and who suffered injury as a result thereof. Plaintiff asserts a claim for breach of contract alleging that AXA Equitable LifeFinancial implemented the volatility management strategy in violation of applicable law. Plaintiff seeks an award of damages individually and on a classwide basis, and costs and disbursements, including attorneys’ fees, expert witness fees and other costs. In November 2015, the Connecticut Federal District Courtcase was transferred this action to the United States District Court for the Southern District of New York. In March 2017, the Southern District of New York and, in 2018, transferred back to Connecticut Superior Court. In August 2019, the court granted AXA Equitable Life’sFinancial’s motion to strike, which sought dismissal of the complaint, and in September 2019, Plaintiff filed an Amended Class Action Complaint. Equitable Financial filed renewed motions to strike and to dismiss the complaint.and for an entry of judgment in October 2019. In April 2017, the plaintiff filed a notice of appeal. In April 2018, the United States Court of Appeals for the Second Circuit reversed the trial court’s decision with instructions to remand the case to Connecticut state court. In September 2018, the Second Circuit issued its mandate, following AXA Equitable Life’s notification toAugust 2020, the court that it would not file a petitiongranted Equitable Financial’s motion for entry of judgment.
AXA
219
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

writPlaintiff filed a notice of certiorari.Theappeal and in February 2021, the appellate court reversed the entry of judgement and remanded the case was transferred in December 2018 and is pending into Connecticut Superior Court, Judicial District of Stamford. Court. We are vigorously defending this matter.
In February 2016, a lawsuit was filed in the United States District Court for the Southern District of New York entitled Brach Family Foundation, Inc. v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action brought on behalf of all owners of universal life (“UL”)UL policies subject to AXA Equitable Life’sFinancial’s COI rate increase. In early 2016, AXA Equitable LifeFinancial raised COI rates for certain UL policies issued between 2004 and 2007,2008, which had both issue ages 70 and above and a current face value amount of $1 million and above. A second putative class action was filed in Arizona in 2017 and consolidated with the Brach matter. The current consolidated amended class action complaint alleges the following claims: breach of contract; misrepresentations by AXA Equitable Life in violation of Section 4226 of the New York Insurance Law; violations of New York General Business Law Section 349; and violations of the California Unfair Competition Law, and the California Elder Abuse Statute. Plaintiffs seek;seek: (a) compensatory damages, costs, and, pre- and post-judgment interest; (b) with respect to their claim concerning Section 4226, a penalty in the amount of premiums paid by the plaintiffs and the putative class; and (c) injunctive relief and attorneys’ fees in connection with their statutory claims. FiveIn August 2020, the federal district court issued a decision certifying nationwide breach of contract and Section 4226 classes, and a New York State Section 349 class. Equitable Financial has commenced settlement discussions with the Brach class action plaintiffs through a non-binding mediation process. No assurances can be given about the outcome of that mediation process. Separately, a substantial number of policy owners have opted out of the Brach class action and are not participating in that mediation process. Most have not yet filed suit. Others filed suit previously. They include 5 other federal actions challenging the COI rate increase that are also pending against AXA Equitable LifeFinancial and have been coordinated with the Brach action for the purposes of pre-trial activities. They contain allegations similar to those in the Brach action as well as additional allegations for violations of various states’ consumer protection statutes and common law fraud. TwoNaN actions are also pending against AXA Equitable LifeFinancial in New York state court. AXA Equitable LifeFinancial is vigorously defending each of these matters.
Debt Maturities
The following table presentsAs with other financial services companies, the contractual maturitiesCompany periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters. For example, among other matters, the Company has been cooperating with the U.S. Securities and Exchange Commission (the “SEC”) concerning the SEC’s investigation into the Company’s long-term debt asnon-ERISA K-12 403(b) and 457 sales and disclosure practices.The Company has reached an agreement in principle, subject to agreement on documentation and approval by the SEC, to resolve that investigation, including the allegation that daily separate account and portfolio operating expenses disclosed in customer prospectuses and incorporated in the calculation of December 31, 2018:
 Calendar Year
 2020 2021 2022 2023 2024 and thereafter
Long-term debt$—
 $300
 $—
 $800
 $3,350

Leases
net investment portfolio results in quarterly account statements were not properly presented or referenced in those account statements. If approved, under the settlement, the Company would neither admit nor deny the allegations, prospectively modify the relevant account statements and cross-reference the relevant prospectus disclosures, and pay a civil monetary penalty of $50 million, to be distributed to plan participants. The Company has entered into operating leasesfully accrued for office space and certain other assets, principally information technology equipment and office furniture and equipment. Future minimum payments under non-cancelable operating leases for 2019 and the four successive years are $212 million, $186 million, $181 million, $166 million, $155 million and $293 million thereafter. Minimum future sublease rental income on these non-cancelable operating leases for 2019 and the four successive years is $59 million, $46 million, $44 million, $41 million, $40 million and $27 million thereafter.
Rent expense, which is amortized on a straight-line basis over the lifecost of the lease, was $143 million, $143 million, $140 million, respectively, for the years ended December 31, 2018, 2017 and 2016, net of sublease income of $12 million, $16 million, $16 million, respectively, for the years ended December 31, 2018, 2017 and 2016.settlement.
Obligations under Funding Agreements
Entering into FHLBNY membership,Pre-Capitalized Trust Securities (“P-Caps”)
In April 2019, pursuant to separate Purchase Agreements among Holdings, Credit Suisse Securities (USA) LLC, as representative of the several initial purchasers, and the Trusts (as defined below), Pine Street Trust I, a Delaware statutory trust (the “2029 Trust”), completed the issuance and sale of 600,000 of its Pre-Capitalized Trust Securities redeemable February 15, 2029 (the “2029 P-Caps”) for an aggregate purchase price of $600 million and Pine Street Trust II, a Delaware statutory trust (the “2049 Trust” and, together with the 2029 Trust, the “Trusts”), completed the issuance and sale of 400,000 of its Pre-Capitalized Trust Securities redeemable February 15, 2049 (the “2049 P-Caps” and, together with the 2029 P-Caps, the “P-Caps”) for an aggregate purchase price of $400 million in each case to qualified institutional buyers in reliance on Rule 144A that are also “qualified purchasers” for purposes of Section 3(c)(7) of the Investment Company Act of 1940, as amended.
The P-Caps are an off-balance sheet contingent funding arrangement that, upon Holdings’ election, gives Holdings the right over a ten-year period (in the case of the 2029 Trust) or over a thirty-year period (in the case of the 2049 Trust) to issue senior notes to these Trusts. The Trusts each invested the proceeds from the sale of their P-Caps in separate portfolios of principal and/or interest strips of U.S. Treasury securities. In return, Holdings will pay a semi-annual facility fee to the 2029 Trust and 2049 Trust calculated at a rate of 2.125% and 2.715% per annum, respectively, which will be applied to the unexercised portion of the contingent funding arrangement and Holdings will reimburse the
220
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Trusts for certain expenses. The facility fees are recorded in Other operating costs and expenses in the Consolidated Statements of Income (Loss).
Federal Home Loan Bank
As a member of the FHLB, Equitable Financial has access to collateralized borrowings. It also may issue funding agreements to the FHLB. Both the collateralized borrowings and funding agreements requires the ownership of FHLBNY stock and thewould require Equitable Financial to pledge ofqualified mortgage-backed assets and/or government securities as collateral. The Company has purchased FHLBNY stock of $190 million and pledged collateral with a carrying value of $6.1 billion, as of December 31, 2018. The CompanyEquitable Financial issues short-term funding agreements to the FHLBNYFHLB and uses the funds for asset, liability, and cash management purposes. The CompanyEquitable Financial issues long termlong-term funding agreements to the FHLBNYFHLB and uses the funds for spread lending purposes.
Entering into FHLB membership, borrowings and funding agreements requires the ownership of FHLB stock and the pledge of assets as collateral. Equitable Financial has purchased FHLB stock of $311 million and pledged collateral with a carrying value of $12.5 billion as of December 31, 2021. 
Funding agreements are reported in Policyholders’policyholders’ account balances in the consolidated balance sheets. For other instruments used for asset/liability and cash management purposes, see “Derivative and offsetting assets and liabilities” included in Note 3.4 of the Notes to these Consolidated Financial Statements. The table below summarizes the Company’s activity of funding agreements with the FHLBNY.FHLB.
Change in FHLB Funding Agreements during the Year Ended December 31, 2021
Outstanding Balance at December 31, 2020Issued During the PeriodRepaid During the PeriodLong-term Agreements Maturing Within One YearLong-term Agreements Maturing Within Five YearsOutstanding Balance at December 31, 2021
(in millions)
Short-term funding agreements:
Due in one year or less$5,634 $59,846 $60,504 $377 $— $5,353 
Long-term funding agreements:
Due in years two through five722 411 — (377)534 1,290 
Due in more than five years534 — — — (534)— 
Total long-term funding agreements1,256 411 — (377)— 1,290 
Total funding agreements (1)$6,890 $60,257 $60,504 $— $— $6,643 
_____________
(1)The $4 million and $7 million difference between the funding agreements carrying value shown in fair value table for December 31, 2021 and December 31, 2020, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements borrowing rates.
Funding Agreement-Backed Notes Program
Under the FABN program, Equitable Financial may issue funding agreements in U.S. dollar or other foreign currencies to a Delaware special purpose statutory trust (the “Trust”) in exchange for the proceeds from issuances of fixed and floating rate medium-term marketable notes issued by the Trust from time to time (the “Trust Notes”). The funding agreements have matching interest, maturity and currency payment terms to the applicable Trust notes. The Company hedges the foreign currency exposure of foreign currency denominated funding agreements using cross currency swaps as discussed in Note 4 of the Notes to these Consolidated Financial Statements. As of May 2021, the maximum aggregate principal amount of Trust notes permitted to be outstanding at any one time is $10 billion. Funding agreements issued to the Trust, including any foreign currency transaction adjustments, are reported in policyholders’ account balances in the consolidated balance sheets. Foreign currency transaction adjustments to policyholder’s account balances are recognized in net income (loss) as an adjustment to interest credited to policyholders’ account balances and are offset in interest credited to policyholders’ account balances by a release of AOCI from deferred changes in fair value of designated and qualifying cross currency swap cash flow hedges. The table below summarizes the Equitable Financial’s activity of funding agreements under the FABN.
AXA
221
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

Change in FABN Funding Agreements during the Year Ended December 31, 2021
Outstanding Balance at December 31, 2020Issued During the PeriodRepaid During the PeriodLong-term Agreements Maturing Within One YearLong-term Agreements Maturing Within Five YearsForeign Currency Transaction AdjustmentOutstanding Balance at December 31,
2021
(in millions)
Short-term funding agreements:
Due in one year or less$— $— $— $— $— $— $— 
Long-term funding agreements:
Due in years two through five1,150 3,450 — — — — 4,600 
Due in more than five years800 1,359 — — — (40)2,119 
Total long-term funding agreements1,950 4,809 — — — (40)6,719 
Total funding agreements (1)$1,950 $4,809 $— $— $— $(40)$6,719 
 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 agreements1,621
 Less than four years —
 —
 98
 Less than five years —
 —
 781
 Greater than five years —
 —
Total long-term funding agreements2,500
   —
 —
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 agreements1,244
 Less than four years 324
 —
 377
 Less than five years 303
 —
 879
 Greater than five years 135
 —
Total long-term funding agreements2,500
   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,(1)The $70 million and $11 million difference between the funding agreements notional value shown and carrying value table as of December 31, 2021 and December 31, 2020, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements borrowing rates.
Restructuring
As part of the Company’s on-going effortsissuance cost of the funding agreements and the foreign currency transaction adjustment.
Credit Facilities
For information regarding activity pertaining to reduce costs and operate more efficiently, from timeour credit facilities arrangements, see “Note 12 of the Notes to time, management has approved and initiated plans to reduce headcount and relocate certain operations. In 2018, 2017 and 2016 respectively, the Company recorded $7 million, $29 million and $21 million pre-tax charges related to severance and lease costs. The restructuring costs are included in other operating expenses and liabilities on the balance sheet and in other liabilities on the income statement.
On May 2, 2018, AB announced that they will establish their corporate headquarters in, and relocate approximately 1,050 jobs currently located in the New York metro area to, Nashville, TN. During the transition period, which began in 2018 and is expected to continue through 2024, AB expects to incur transition costs of approximately $155 million to $165 million. These costs include employee relocation, severance, recruitment, and overlapping compensation and occupancy costs. AB incurred $10 million of transition costs in 2018.these Consolidated Financial Statements.
Guarantees and Other Commitments
The Company provides certain guarantees or commitments to affiliates and others. AtAs of December 31, 2018,2021, these arrangements include commitments by the Company to provide equity financing of $952 million (including $304 million with affiliates and $12 million on consolidated VIEs)$1.3 billion to certain limited partnerships and real estate joint ventures under certain conditions. Management believes the Company will not incur material losses as a result of these commitments.
The Company had $17 million of undrawn letters of credit related to reinsurance as of December 31, 2021. The Company had $863 million of commitments under existing mortgage loan agreements as of December 31, 2021.
The Company is the obligor under certain structured settlement agreements it had entered into with unaffiliated insurance companies and beneficiaries. To satisfy its obligations under these agreements, the Company owns single premium annuities issued by previously wholly ownedwholly-owned life insurance subsidiaries. The Company has directed payment under these annuities to be made directly to the beneficiaries under the structured settlement agreements. A contingent liability exists with respect to these agreements should the previously wholly ownedwholly-owned subsidiaries be unable to meet their obligations. Management believes the need for the Company to satisfy those obligations is remote.
Holdings had $606 million of commitments under existing mortgage loan agreements at December 31, 2018.
AXA18)    INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
In accordance with statutory accounting practices, the following table presents the combined statutory net income (loss), surplus, capital stock & AVR, and securities on deposits for Equitable Life,Financial, Equitable America, USFL, Equitable L&A and MLOA receive statutory reserve credits for reinsurance treaties with EQ AZ Life Re to the extent EQ AZ Life Re holds assets in an irrevocable trust (the “EQ AZ Life Re Trust”). As of December 31, 2018,CS Life.
AXA
222
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued


EQ AZ Life Re holds $1.6 billion of assets in the EQ AZ Life Re Trust December 31, 2018 and letters of credit of $2.5 billion that are guaranteed by Holdings. Under the reinsurance transactions, EQ AZ Life Re is permitted to transfer assets from the EQ AZ Life Re Trust under certain circumstances. The level of statutory reserves held by EQ AZ Life Re fluctuate based on market movements, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust and/or additional letters of credit be secured, which could adversely impact EQ AZ Life Re’s liquidity.
 202120202019
(in millions)
Years Ended December 31,
Combined statutory net income (loss) (1) (2)$(936)$396 $3,821 
As of December 31,
Combined surplus, capital stock and AVR$6,864 $7,475 
Combined securities on deposits n accordance with various government and state regulations$65 $75 
AXA Corporate Solutions receives statutory reserve credits for reinsurance treaties with_____________
(1) For 2021, excludes CS Life REwhich was sold June 1, 2021.
(2) For 2020, excludes USFL which was sold April 1, 2020.

Equitable Financial did not pay ordinary dividends during 2021 due to the extent CS Life RE holds assets in an irrevocable trust (the “CS Life RE Trust”). As of December 31, 2018, CS Life RE holds $0.3 billion of assets in the CS Life RE Trustoperating losses. In 2020 and letters of credit of $125 million that are guaranteed by Holdings. Under the reinsurance transactions, CS Life RE is permitted to transfer assets from the CS Life RE Trust under certain circumstances. The level of statutory reserves held by CS Life RE fluctuate based on market movements, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust and/or additional letters of credit be secured, which could adversely impact CS Life RE’s liquidity.
In addition, CS Life RE utilizes derivative instruments that are collectively managed in an effort to reduce the economic impact of unfavorable changes to GMDB and GMIB reserves. The use of such instruments is accompanied by agreements which specify the circumstances under which the parties are required to pledge collateral related to the decline in the estimated fair value of specified instruments. Moreover, under the terms of a majority of the transactions, payments to counterparties related to the change in fair value of the instruments may be required. The amount of collateral pledged, and the amount of payments required to be made pursuant to such transactions may increase under certain circumstances, which could adversely impact CS Life RE’s liquidity.
18)    INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
For 2018, 2017 and 2016, respectively, AXA2019, Equitable Life’s, MLOA’s, USFL’s, AXA Equitable L&A’s and ACS Life’s combined statutory Net income (loss) totaled $3.0 billion, $0.9 billion and $0.7 billion. Combined statutory Surplus, Capital stock and Asset Valuation Reserve (“AVR”) totaled $8.4 billion and $9.2 billion at December 31, 2018 and 2017, respectively. At December 31, 2018, AXA Equitable Life, MLOA, USFL, AXA Equitable L&A and ACS Life, in accordance with various government and state regulations, had $77 million of securities on deposit with such government or state agencies.
In 2018, AXA Equitable LifeFinancial paid to its direct parent, which subsequently distributed such amount to Holdings, anordinary shareholder dividend of$1.1 billion. Also in 2018, AXA Equitable Life transferred its interests in ABLP, AB Holding $2.1 billion and the General Partner toAlpha Units Holdings, Inc., a newly formed subsidiary, and distributed the shares of that subsidiary to its direct parent which subsequently distributed such shares to Holdings (the “AB Ownership Transfer”). The AB Ownership transfer was consideredan extraordinary dividend of $1.7$1.0 billion, representing the equity value of Alpha Units Holdings, Inc. In connection with the AB Ownership Transfer, AXA Equitable Life paid an extraordinary cash dividend of $572 million and issued a surplus note to Holdings in the same amount. AXA Equitable Life repaid the outstanding principal balance of the surplus note in March 2019. respectively.
In 2017, AXA Equitable Life did not pay shareholder dividends and in 2016, AXA Equitable Life paid $1.1 billion in shareholder dividends.
Dividend Restrictions
As domestic insurance subsidiaries regulated by insurance laws of their respective domiciliary states, AXA Equitable Life, MLOA, USFL, AXAFinancial and Equitable Life and Annuity (“AXA Equitable L&A”) and ACS LifeAmerica are subject to restrictions as to the amounts they may pay as dividends and amounts they may repay of surplus notes to Holdings.
With respectState insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance company subsidiaries to AXA Equitable Life, a New York domiciled insurance subsidiary which is alsotheir parent companies, as well as on transactions between an insurer and its affiliates. Under the Company’s primary insurance subsidiary, New York insurance law provides thatlaws, which are applicable to Equitable Financial, a domestic stock life insurer may not, without prior approval of the New York State Department of Financial Services (“NYDFS”),NYDFS, pay aan ordinary dividend to its stockholders exceeding an amount calculated under one of two standards (the “Standards”). The first standard allows payment of an ordinary dividend out of the insurer’s earned surplus (as reportedbased on the insurer’s most recent annual statement) up to a limit calculated pursuant to a statutory formula provided that the NYDFS is given notice and opportunity to disapprove the dividend if certain qualitative tests are not met (the “Earned Surplus Standard”(“Ordinary Dividend”). The second standard allows paymentDividends in excess of an ordinary dividend up to a limit calculated pursuant to a different statutory formula without regard to the insurer’s earned surplus. Dividends exceeding these prescribed limitsthis amount require the insurer to file a notice of its intent to declare the dividends with the NYDFS and obtain prior approval or non-disapproval from the NYDFS.NYDFS with respect to such dividends (“Extraordinary Dividend”). Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any Ordinary Dividend that exceeds the Ordinary Dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).
Applying the formulas above, Equitable Financial could pay an Ordinary Dividend of up to approximately $865 million in 2022.
Intercompany Reinsurance
Equitable Financial and Equitable America receive statutory reserve credits for reinsurance treaties with EQ AZ Life Re to the extent EQ AZ Life Re holds assets in an irrevocable trust (the “EQ AZ Life Re Trust”). As of December 31, 2021, EQ AZ Life Re holds $12.4 billion of assets in the EQ AZ Life Re Trust and letters of credit of $1.9 billion that are guaranteed by Holdings. Under the reinsurance transactions, EQ AZ Life Re is permitted to transfer assets from the EQ AZ Life Re Trust under certain circumstances. The level of statutory reserves held by EQ AZ Life Re fluctuate based on market movements, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust and/or additional letters of credit be secured, which could adversely impact EQ AZ Life Re’s liquidity.
Prescribed and Permitted Accounting Practices
Equitable Financial was granted a permitted practice by the NYDFS to apply SSAP 108, Derivatives Hedging Variable Annuity Guarantees on a retroactive basis from January 1, 2021 through June 30, 2021, after reflecting the impacts of our reinsurance transaction with Venerable. The permitted practice was amended to also permit Equitable Financial to adopt SSAP 108 prospectively as of July 1, 2021. Application of the permitted practice partially mitigates the Regulation 213 impact of the Venerable Transaction on Equitable Financial’s statutory capital and surplus. The impact of the application of this permitted practice was an increase of approximately $1.4 billion in statutory special surplus
AXA
223
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

In applying the Standards, AXA Equitable Life could pay ordinary dividends up to approximately $1.0funds and an increase of $1.4 billion during 2019 or, if the amount under the Earned Surplus Standard was limited to the amount in statutory net income as of AXA Equitable Life’s positive unassigned funds as reported on its 2019 annual statement, $2.1 billion. However, in connection with the AB Ownership Transfer, AXA Equitable Life agreed with the NYDFS that it would not seek a dividend of greater than $1.0 billion under the Earned Surplus Standard during 2019.
Prescribed and Permitted Accounting Practices
At December 31, 20182021 and for the year then ended, which will be amortized over 5 years for AXA Equitable Life, MLOA, USFL and AXA Equitable L&A there were no differences in Net income (loss) and Capital and surplus resulting from practices prescribed and permitted by NYDFS, the Arizona Department of Insurance (the “AID”) and those prescribed by NAIC Accounting Practices and Procedures effective at December 31, 2018. At December 31, 2018, ACS Life had a difference in Capital and surplus based on the investment valuationeach of the Captive reinsurance subsidiary which follows a special purpose framework for Statutory reporting as agreed to with the AID from practices prescribedretrospective and permitted by the Delaware Department of Insurance and those prescribed by NAIC Accounting Practices and Procedures effective at December 31, 2018.prospective components. The impact of this permitted practice increasedalso resets Equitable Financial’s unassigned surplus to zero as of June 30, 2021 to reflect the statutory surplustransformative nature of the Venerable Transaction.
Equitable Financial and AVR of ACS Life by $86 million and $103 million at December 31, 2018 and 2017, respectively. ACS Life’s risk-based capital would have triggered a regulatory event without the use of this permitted practice in 2016.
AXA Equitable Life, USFL and MLOAAmerica cede a portion of their statutory reserves to EQ AZ Life Re, a captive reinsurer, as part of the Company’s capital management strategy. EQ AZ Life Re prepares financial statements in a special purpose framework for statutory reporting.
Differences between Statutory Accounting Principles and U.S. GAAP
Accounting practices used to prepare statutory financial statements for regulatory filings of stock life insurance companies differ in certain instances from U.S. GAAP. The differences between statutory surplus and capital stock determined in accordance with Statutory Accounting Principles (“SAP”)SAP and total equity under U.S. GAAP are primarily: (a) the inclusion in SAP of an AVR intended to stabilize surplus from fluctuations in the value of the investment portfolio; (b) future policy benefits and policyholders’ account balances under SAP differ from U.S. GAAP due to differences between actuarial assumptions and reserving methodologies; (c) certain policy acquisition costs are expensed under SAP but deferred under U.S. GAAP and amortized over future periods to achieve a matching of revenues and expenses; (d) under SAP, Federal income taxes are provided on the basis of amounts currently payable with limited recognition of deferred tax assets while under U.S. GAAP, deferred taxes are recorded for temporary differences between the financial statements and tax basis of assets and liabilities where the probability of realization is reasonably assured; (e) the valuation of assets under SAP and U.S. GAAP differ due to different investment valuation and depreciation methodologies, as well as the deferral of interest-related realized capital gains and losses on fixed income investments; (f) the valuation of the investment in AB and AB Holding under SAP reflects a portion of the market value appreciation rather than the equity in the underlying net assets as required under U.S. GAAP; (g) reporting the surplus notes as a component of surplus in SAP but as a liability in U.S. GAAP; (h) computer software development costs are capitalized under U.S. GAAP but expensed under SAP; (i) certain assets, primarily prepaid assets, are not admissible under SAP but are admissible under U.S. GAAP; and (j) cost of reinsurance which is recognized as expense under SAP and amortized over the life of the underlying reinsured policies under U.S. GAAP.
19)    BUSINESS SEGMENT INFORMATION
The Company has four4 reportable segments: Individual Retirement, Group Retirement, Investment Management and Research and Protection Solutions.
The Company changed its segment presentation in the fourth quarter 2017. The segment disclosures are based on the intention to provide the users of the financial statements with a view of the business from the Company’s perspective. As a result, the Company determined that it is more useful for a user of the financial statements to assess the historical performance on the basis which management currently evaluates the business. The reportable segments are based on the nature of the business activities, as they exist as of the initial filing date.
These segments reflect the manner by which the Company’s chief operating decision maker views and manages the business. A brief description of these segments follows:
•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.

266








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


•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-channels - Institutional, Retail and Private Wealth Management-andManagement - 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 lifeVUL, UL 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.
Measurement
Operating earnings (loss) is the financial measure which primarily focuses on the Company’s segments’ results of operations as well as the underlying profitability of the Company’s core business. By excluding items that can be
224
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
distortive and unpredictable such as investment gains (losses) and investment income (loss) from derivative instruments, the Company believes operating earnings (loss) by segment enhances the understanding of the Company’s underlying drivers of profitability and trends in the Company’s segments.
In the first quarter of 2018, the Company revised its Operating earnings definition as it relates to the treatment of certain elements of the profitability of its variable annuity products with indexed-linked features to align to the treatment of its variable annuity products with GMxB features. In addition, adjustments for variable annuity products with index-linked features previously included within Other adjustments in the calculation of Non-GAAP Operating Earnings are now included with the adjustments for variable annuity products with GMxB features in the broader adjustment category, Variable annuity product features. In order to improve the consistency and comparability of the financial statements, management revised the Notes to the Consolidated Financial Statements for the years ended December 31, 2017 and 2016 to include the revisions discussed herein.
Operating earnings is calculated by adjusting each segment’s Netnet income (loss) attributable to Holdings for the following items:
•Items related to Variablevariable annuity product features, which includeinclude: (i) certain changes in the fair value of the derivatives and other securities we use to hedge these features,features; (ii) the effect of benefit ratio unlock adjustments, including extraordinary economic conditions or events such as COVID-19; and (iii) changes in the fair value of the embedded derivatives reflected within variable annuity products’ net derivative results;
results and the impact of these items on DAC amortization on our SCS product;
•Investment (gains) losses, which includes other-than-temporarycredit loss impairments of securities,securities/investments, 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 includesprimarily include restructuring costs related to severance lease write-offs related to non-recurring restructuring activities, and separation, costs;COVID-19 related impacts, net derivative gains (losses) on certain Non-GMxB derivatives, net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments, unrealized gain/losses associated with equity securities and
certain legal accruals; 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.
period.
Revenues derived from any customer did not exceed 10% of revenues for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.
The table below presents operating earnings (loss) by segment and Corporate and Other and a reconciliation to Netnet income (loss) attributable to Holdings for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively:
 Year Ended December 31,
 202120202019
(in millions)
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Adjustments related to:
Variable annuity product features (1)4,145 3,912 4,863 
Investment (gains) losses(867)(744)(73)
Net actuarial (gains) losses related to pension and other postretirement benefit obligations120 109 99 
Other adjustments (2) (3) (4) (5)717 952 395 
Income tax expense (benefit) related to above adjustments (6)(864)(888)(1,097)
Non-recurring tax items (7)13 (391)(66)
Non-GAAP Operating Earnings$2,825 $2,302 $2,357 
Operating earnings (loss) by segment:
Individual Retirement$1,444 $1,536 $1,598 
Group Retirement$631 $491 $390 
Investment Management and Research$564 $432 $381 
Protection Solutions$317 $146 $336 
Corporate and Other (8)$(131)$(303)$(348)
AXA ______________
(1)Includes COVID-19 impact on variable annuity product features due to a first quarter 2020 assumption update of $1.5 billion and other COVID-19 related impacts of $35 million for the year ended December 31, 2020.
225
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

(2)Includes COVID-19 impact on other adjustments due to a first quarter 2020 assumption update of $1.0 billion and other COVID-19 related impacts of $86 million for the year ended December 31, 2020.
(3)Include separation costs of $82 million, $108 million and $222 million for the years ended December 31, 2021, 2020 and 2019, respectively.
 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) losses86
 191
 (1,983)
Goodwill impairment—
 369
 —
Net actuarial (gains) losses related to pension and other postretirement benefit obligations215
 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 Retirement389
 283
 167
Investment Management and Research381
 211
 161
Protection Solutions197
 502
 77
Corporate and Other (2)(356) (213) (181)
(4)Includes certain legal accruals related to the COI litigation of $207 million for the year ended December 31, 2021. No adjustments were made to prior period operating earnings as the impact was immaterial.
_______________(5)Includes Non-GMxB related derivative hedge gains and losses of $65 million, $(404) million and $36 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(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.

(6)Includes income taxes of $(554) million for the above COVID-19 items for the year ended December 31, 2020.
(7)Prior year includes a reduction in the reserve for uncertain tax positions resulting from the completion of an IRS examination in the year ended December 31, 2020.
(8)Includes interest expense and financing fees of $241 million $218 million and $228 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Segment revenues is a measure of the Company’s revenue by segment as adjusted to exclude certain items. The following table reconciles segment revenues to Totaltotal revenues by excluding the following items:
•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),(gains) losses, which include other-than-temporaryincludes credit loss impairments of securities,securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances; and
•Other adjustments, which primarily includes net derivative gains (losses) on certain Non-GMxB derivatives and net investment income (loss) from certain derivative instruments, excluding derivative instruments used to hedge risksitems including consolidated VIE investments, seed capital mark-to-market adjustments and unrealized gain/losses associated with interest margins on interest sensitive life and annuity contracts and freestanding and embedded derivatives associated with products with GMxB features.equity securities.
The table below presents segment revenues for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.
 Year Ended December 31,
 202120202019
(in millions)
Segment revenues:
Individual Retirement (1)$3,785 $4,311 $4,325 
Group Retirement (1)1,372 1,148 1,077 
Investment Management and Research (2)4,430 3,703 3,479 
Protection Solutions (1)3,358 3,144 3,366 
Corporate and Other (1)1,563 1,207 1,228 
Adjustments related to:
Variable annuity product features(4,268)(2,284)(3,935)
Investment gains (losses), net867 744 73 
Other adjustments to segment revenues (3)(71)442 6 
Total revenues$11,036 $12,415 $9,619 
 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 $128 million, $71 million and $76 million for the years ended December 31, 2021, 2020 and 2019, respectively, for services provided to the Company.
AXA EQUITABLE HOLDINGS, INC.(2)Inter-segment investment management and other fees of $126 million, $113 million and $104 million for the years ended December 31, 2021, 2020 and 2019, respectively, are included in segment revenues of the Investment Management and Research segment.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(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.

(3)Includes COVID-19 impact on other adjustments due to an assumption update of $46 million and other COVID-19 related impacts of $(30) million for the year ended December 31, 2020.
The table below presents total assets by segment as of December 31, 20182021 and 2017:2020:
226
 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 Research10,294
 10,057
Protection Solutions (1)44,633
 43,205
Corporate and Other21,464
 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.

20)    EQUITY
Dividends to Shareholders
On August 10, 2018, our Board of Directors declared a cash dividend on Holdings’ common stock of $0.13 per share, payable on August 30, 2018 to shareholders of record on August 23, 2018.
On November 9, 2018, our Board of Directors declared a cash dividend on Holdings’ common stock of $0.13 per share, payable on December 3, 2018 to shareholders of record on November 26, 2018.
The payment of any future dividends will be at the discretion of our Board of Directors and will depend on various factors.
Share Repurchase Program
On August 10, 2018, Holdings’ Board of Directors authorized a share repurchase program. Under the program, Holdings may purchase up to $500 million of its common stock beginning August 16, 2018 and expiring on 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. Holdings may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate Holdings to purchase any particular number of shares.
As of December 31, 2018, the Company repurchased approximately 32.5 million shares of its common stock at a total cost of approximately $648 million. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets. As of December 31, 2018, the Company reissued approximately 0.4 million shares of its treasury stock.
The timing and amount of share repurchases are determined by management based upon market conditions and other considerations, and repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Numerous factors could affect the timing and amount of any future repurchases under the share repurchase authorization, including increased capital needs of the Company due to changes in regulatory capital requirements, opportunities for growth and acquisitions, and the effect of adverse market conditions on the segments.
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

December 31,
 20212020
(in millions)
Total assets by segment:
Individual Retirement (1)$143,663 $135,764 
Group Retirement55,368 51,466 
Investment Management and Research11,602 11,179 
Protection Solutions50,686 48,568 
Corporate and Other30,943 28,420 
Total assets$292,262 $275,397 
21)    EARNINGS PER SHARE______________
Basic earnings(1) Increase in Individual Retirement as of December 31, 2021 is primarily due to Amounts due from Reinsurers related to ceded reserves on the Venerable Transaction (see Note 1 of the Notes to these Consolidated Financial Statements).
20)    EQUITY
Preferred Stock
Preferred stock authorized, issued and outstanding was as follows:
December 31, 2021December 31, 2020
SeriesShares AuthorizedShares
 Issued		Shares OutstandingShares AuthorizedShares
 Issued		Shares Outstanding
Series A32,000 32,000 32,000 32,000 32,000 32,000 
Series B20,000 20,000 20,000 20,000 20,000 20,000 
Series C12,000 12,000 12,000 — — — 
Total64,000 64,000 64,000 52,000 52,000 52,000 

Series A Fixed Rate Noncumulative Perpetual Preferred Stock
In November and December 2019, Holdings’ issued a total of 32 million depositary shares, each representing a 1/1,000th interest in share of Series A Preferred Stock, $1.00 par value per share, (“EPS”) is calculated by dividing net income (loss) attributable to Holdings common shareholders by the weighted-average numberwith a liquidation preference of common shares outstanding during the period. Diluted EPS is calculated by dividing the net income (loss) attributable to Holdings common shareholders, adjusted for the incremental dilution from AB, by the weighted-average number of common shares outstanding for the period plus the shares representing the dilutive effect of share-based awards.
On April 24, 2018, a 459.4752645-for-1 stock split of the common stock of Holdings was effected. All applicable share data, per share amounts and related information in the consolidated financial statements and notes thereto have been adjusted retroactively to give effect to the stock split.
The following table presents the reconciliation of the numerator for the basic and diluted net income per share calculations:
 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.

The following table presents the weighted average shares used in calculating basic and diluted earnings per common share:
 Years Ended December 31,
 2018 2017 2016
 (in millions)
Weighted Average Shares:     
Weighted average common stock outstanding for basic earnings per common share556.4
 561.0
 561.0
Effect of dilutive securities:     
Employee stock awards0.1
 —
 —
Weighted average common stock outstanding for diluted earnings per common share556.5
 561.0
 561.0
For the year ended December 31, 2018, approximately 2.7 million shares of outstanding stock awards were not included in the computation of diluted earnings per share because their effect was anti-dilutive.
The following table presents both basic and diluted income (loss)$25,000 per share, for aggregate net cash proceeds of $775 million ($800 million gross). The preferred stock ranks senior to Holdings’ common stock with respect to the payment of dividends and liquidation. Holdings’ will pay dividends on the Series A Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable quarterly in arrears, at an annual rate of 5.25% on the stated amount per share.  In connection with the issuance of the depositary shares and the underlying Series A Preferred Stock, Holdings’ incurred $25 million of issuance costs, which have been recorded as a reduction of additional paid-in capital. The Series A Preferred Stock is redeemable at Holdings’ option in whole or in part, on or after December 15, 2024, at a redemption price of $25,000 per share of preferred stock, plus declared and unpaid dividends. Prior to December 25, 2024, the preferred stock is redeemable at Holdings’ option, in whole but not in part, within 90 days of the occurrence of certain rating agency events at a redemption price equal to $25,500 per share, plus declared and unpaid dividends or certain regulatory capital events at a redemption price equal to $25,000 per share, plus any declared and unpaid dividends.
Series B Fixed Rate Reset Noncumulative Perpetual Preferred Stock
On August 11, 2020, Holdings issued 500,000 depositary shares, each period presented:representing a 1/25th interest in a share of Series B Preferred Stock, $1.00 par value per share and liquidation preference of $25,000 per share, for aggregate net cash proceeds of $494 million ($500 million gross). The Series B Preferred Stock ranks senior to Holdings’ common stock and on parity with Holdings’ Series A Preferred Stock with respect to the payment of dividends and liquidation. Holdings will pay dividends on the Series B Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable semi-annually in arrears, at an annual rate equal to the fixed rate of 4.950%, which is reset every 5 years starting on December 15, 2025 (“Reset Date”), at a rate per annum equal to the five-year U.S. Treasury Rate plus 4.736%.
227
 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
22)    REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

270








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,

continued

In connection with the issuance of the depositary shares and the underlying Series B Preferred Stock, Holdings incurred $6 million of issuance costs, which have been recorded as a reduction of additional paid-in capital. The Series B Preferred Stock is redeemable at Holdings’ option in whole or in part, from time to time, during the three-month period prior to, and including, each Reset Date, at a redemption price equal to $25,000 per share of preferred stock, plus any declared and unpaid dividends. Furthermore, the preferred stock is redeemable at Holdings’ option, in whole but not in part at any time, within 90 days after the occurrence of certain rating agency events at a redemption price equal to $25,500 per share, plus any declared and unpaid dividends or after the occurrence of certain regulatory capital events at a redemption price equal to $25,000 per share, plus any declared and unpaid dividends.
During the fourth quarterSeries C Fixed Rate Reset Noncumulative Perpetual Preferred Stock
On January 8, 2021, Holdings issued 12,000,000 depositary shares, each representing a 1/1,000th interest in a share of 2018, the Company identified certain cash flows that were incorrectly classified in the Company’s consolidated statementsSeries C Fixed Rate Noncumulative Perpetual Preferred Stock (“Series C Preferred Stock”), $1.00 par value per share and liquidation preference of $25,000 per share, for aggregate net cash flows.proceeds of $293 million ($300 million gross). The Company has determined that these misclassifications were not materialSeries C Preferred Stock ranks senior to Holdings’ common stock and on parity with Holdings’ Series A Preferred Stock and Series B Preferred Stock with respect to the financial statementspayment of any period. These have been correcteddividends and liquidation. Holdings will pay dividends on the Series C Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable quarterly in arrears, at an annual rate equal to the comparative consolidated statementsfixed rate of cash flows4.3%.
Dividends to Shareholders
Dividends declared per share were as follows for the year ended December 31, 2017 contained elsewhere in this filing.periods indicated:
The following table presents line items
Year ended December 31,
202120202019
Series A dividends declared$1,313 $1,378 $— 
Series B dividends declared$1,238 $426 $— 
Series C dividends declared$1,006 $— $— 
Common Stock
Dividends declared per share of common stock were as follows for the consolidated statement of cash flows for the year ended December 31, 2017 that have been affected by the revisions. For these items, the table details the amounts as previously reported and the impact upon those line items due to the reclassifications to conform to the current presentation, revisions and the amounts as currently revised.periods indicated:
Year Ended December 31,
202120202019
Dividends declared$0.71 $0.66 $0.58 
 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 partnerships140
 (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 benefits1,599
 —
 (502) 1,097
Current and deferred income taxes767
 —
 (777) (10)
Other, net127
 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:      

Deposits10,591
 —
 (675) 9,916
Withdrawals(6,140) —
 2,130
 (4,010)
Transfers (to) from Separate Accounts1,677
 —
 (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



23)    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The unaudited quarterly financial information for the years ended December 31, 2018 and 2017 are summarized in the table below:
AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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 deductions2,446
 2,644
 1,701
 2,826
Income (loss) before income taxes428
 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
 $2,922
Total benefits and other deductions2,991
 3,258
 2,759
 2,146
Income (loss) before income taxes(147) 630
 47
 776
Income tax (expense) benefit(37) 78
 59
 (149)
Net income (loss)(184) 708
 106
 627
Less: Net (income) loss attributable to the noncontrolling interest(93) (90) (96) (144)
Net Income (Loss) Attributable to Holdings$(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
Net Income (Loss) Volatility
The fluctuation in the Company’s quarterly Net income (loss) during 2018 and 2017 is not due to any specific events or transactions, but instead is driven primarily by the impact of changes in market conditions on the Company’s liabilities associated with GMxB features embedded in its variable annuity products, partially offset by derivatives the Company has in place to mitigate the movement in those liabilities. As those derivatives do not qualify for hedge accounting treatment, volatility in Net income (loss) result from the changes in value of the derivatives being recognized in the period in which they occur, with offsetting changes in the liabilities being partially recognized in the current period.
Revisions of Prior Period Interim Consolidated Financial Statements
The Company’s third quarter 2018 financial statements were revised to reflect the correction of errors identified by the Company in its previously issued financial statements. The impact of these errors was not considered to be material. However, in order to improve the consistency and comparability of the financial statements, management revised the Company’s consolidated financial statements for the three and six months ended March 31, 2018 and June 30, 2018, respectively, as well as the three and six months ended March 31, 2017 and June 30, 2017.
The table below presents the impacts of these revisions to the quarterly financial information presented above.

272








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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 deductions2,648
 (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 deductions2,465
 (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 deductions3,268
 (10) 3,258
Net income (loss)$698
 $10
 $708
      
Three Months Ended March 31, 2017     
Total revenues$2,830
 $14
 $2,844
Total benefits and other deductions2,997
 (6) 2,991
Net income (loss)$(197) $13
 $(184)

During the fourth quarter of 2018, the Company identified certain cash flows that were incorrectly classified in the Company’s historical consolidated statements of cash flows. The Company has determined that these mis-classifications were not material to the financial statements for any period. These misclassifications will be corrected in the comparative consolidated statements of cash flows for the three, six and nine months ended March 31, 2019, June 30, 2019 and September 30, 2019 that will appear in the Company’s first, second and third quarter 2019 Form 10-Q filings, respectively.
The following tables present line items for the consolidated statement of cash flows for the three months ended March 31, 2018 affected by the revisions. This information has been corrected from the information previously presented in the Company’s Q1 2018 Form 10-Q. For these items, the tables detail the amounts as previously reported and the impact upon those line items due to the reclassifications to conform to the current presentation, revisions and the amounts as currently revised. Prior period amounts have been reclassified to conform to current period presentation, where applicable, and are summarized in the accompanying tables.

273








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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) losses281
 —
 (45) 236
Amortization of deferred sales commission7
 (7) —
 —
Amortization of reinsurance cost5
 (5) —
 —
Amortization and depreciation(20) 184
 (5) 159
Distributions from joint ventures and limited partnerships25
 (25) —
 —
Equity (income) loss from limited partnerships—
 (38) —
 (38)
Changes in:      

Reinsurance recoverable

32
 —
 (3) 29
Capitalization of deferred policy acquisition costs15
 (172) —
 (157)
Future policy benefits(254) —
 6
 (248)
Current and deferred income taxes103
 —
 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 investments876
 —
 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


The following table presents line items for the consolidated statement of cash flows for the six months ended June 30, 2018 affected by the revisions. This information has been corrected from the information previously presented in the Company’s Q2 2018 Form 10-Q. For these items, the tables detail the amounts as previously reported and the impact upon those line items due to the reclassifications to conform to the current presentation, revisions and the amounts as currently revised.

274








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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
 $(1,930)
Net derivative (gains) losses354
 —
 (72) 282
Amortization of deferred sales commission13
 (13) —
 —
Amortization of reinsurance cost10
 (10) —
 —
Amortization and depreciation$(32) $380
 $11
 $359
Distributions from joint ventures and limited partnerships44
 (44) —
 —
Equity (income) loss from limited partnerships—
 (59) —
 (59)
Changes in:      

Reinsurance recoverable

20
 —
 9
 29
Capitalization of deferred policy acquisition costs14
 (357) —
 (343)
Future policy benefits(171) —
 (15) (186)
Current and deferred income taxes224
 —
 (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
Other261
 (139) —
 122
Cash settlements related to derivative instruments$(333) $—
 $(637) $(970)
Other, net419
 —
 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 equivalents2,019
 —
 —
 2,019
Cash and Cash Equivalents, end of period$6,833
 $—
 —
 $6,833


The following table presents line items for the consolidated statement of cash flows for the nine months ended September 30, 2018 affected by the revisions. This information has been corrected from the information previously presented in the Company’s Q3 2018 Form 10-Q. For these items, the tables detail the amounts as previously reported and the impact upon those line items due to the reclassifications to conform to the current presentation, revisions and the amounts as currently revised.

275








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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 cost17
 (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 taxes249
 —
 (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
 $—
 $139
Other335
 (139) —
 196
Cash settlements related to derivative instruments$(609) $—
 $(668) $(1,277)
Other, net319
 —
 (5) 314
Net cash provided by (used in) investing activities$(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

The following tables present line items for the consolidated statement of cash flows for the three months ended March 31, 2017 affected by the revisions. This information has been corrected from the information previously presented in the Company’s Q1 2018 Form 10-Q. For these items, the tables detail the amounts as previously reported and the impact upon those line items due to the reclassifications to conform to the current presentation, revisions and the amounts as currently revised.


276








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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 instruments235
 —
 (31) 204
Amortization of deferred sales commission9
 (9) —
 —
Amortization of reinsurance cost5
 (5) —
 —
Amortization and depreciation(42) 128
 (4) 82
Equity (income) loss from limited partnerships—
 (40) —
 (40)
Distributions from joint ventures and limited partnersh26
 (26) —
 —
Changes in:      

Net broker-dealer and customer related receivables/payables297
 —
 (10) 287
Reinsurance recoverable

27
 —
 3
 30
Capitalization of deferred policy acquisition costs(55) (114) 

 (169)
Future policy benefits296
 —
 52
 348
Current and deferred income taxes252
 —
 (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 investments573
 —
 (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:      —
Deposits2,790
 —
 (144) 2,646
Withdrawals(1,342) —
 376
 (966)
Transfers (to) from Separate Accounts186
 —
 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

The following tables present line items for the consolidated statement of cash flows for the six months ended June 30, 2017 that has been affected by the revisions. This information has been corrected from the information previously presented in the Company’s Q2 2018 Form 10-Q. For these items, the tables detail the amounts as previously reported and the impact upon those line items due to the reclassifications to conform to the current presentation, revisions and the amounts as currently revised.


277








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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 cost7
 (7) —
 —
Amortization of deferred sales commission17
 (17) —
 —
Amortization and depreciation(60) 203
 (5) 138
Equity (income) loss from limited partnerships—
 (66) —
 (66)
Distribution from joint ventures and limited partnerships53
 (53) —
 —
Changes in:      —
Reinsurance recoverable

40
 —
 9
 49
Capitalization of deferred policy acquisition costs(168) (179) —
 (347)
Future policy benefits1,516
 —
 (169) 1,347
Current and deferred income taxes123
 —
 (210) (87)
Other, net333
 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
 $(1,503)
Other, net179
 —
 (173) 6
Net cash provided by (used in) investing activities$(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 Accounts826
 —
 (97) 729
Net cash provided by (used in) financing activities$4,923
 $—
 $511
 $5,434
        
Change in cash and cash equivalents533
 —
 —
 533
Cash and Cash Equivalents, end of period$6,187
 $—
 $—
 $6,187


The following tables present line items for the consolidated statement of cash flows for the nine months ended September 30, 2017 affected by the revisions. This information has been corrected from the information previously presented in the Company’s Q3 2018 Form 10-Q. For these items, the tables detail the amounts as previously reported and the impact upon those line items due to the reclassifications to conform to the current presentation, revisions and the amounts as currently revised.

278








AXA EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 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 commission25
 (25) —
 —
Amortization of reinsurance cost11
 (11) —
 —
Amortization and depreciation$(121) $399
 $—
 $278
Equity (income) loss from limited partnerships—
 (103) —
 (103)
Distribution from joint ventures and limited partnerships94
 (94) —
 —
Changes in:      —
Reinsurance recoverable

115
 —
 10
 125
Capitalization of deferred policy acquisition costs(150) (363) —
 (513)
Future policy benefits1,587
 —
 (10) 1,577
Current and deferred income taxes498
 —
 (546) (48)
Other, net253
 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 Accounts1,617
 —
 (458) 1,159
Net cash provided by (used in) financing activities$6,299
 $—
 $711
 $7,010
        
Change in cash and cash equivalents792
 —
 —
 792
Cash and Cash Equivalents, end of period$6,446
 $—
 $—
 $6,446


24)    SUBSEQUENT EVENTS
Accelerated Share Repurchase Agreement
In January 2019, Holdings entered into an Accelerated Share RepurchaseASR agreement (the “ASR”) with a third-party financial institution to repurchase an aggregate of $150 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $150 million and received initial delivery of 6,956,5227 million shares. The ASR is scheduled to terminateterminated during the first quarter of 2019, at which time an additional 1 million shares may bewere delivered, or returned dependingat an average purchase price of $18.51 per share based on the daily volume-weighted average price of Holdings’ common stock.
Cash Dividend Declaredstock traded during the pricing period, less an agreed discount. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of December 31, 2019.
On February 14, 2019, Holdings’ Board of Directors declared a quarterly cash dividend of $0.13 per share of common stock, payable on March 15, 2019 to all stockholders of based on fourth quarter earnings record as of the close of business on March 5, 2019.

279









Share Repurchase Program
On February 27,November 6, 2019, Holdings’ Board of Directors authorized a $800$400 million share repurchase program with an expiration date of December 31, 2020. On February 26, 2020, Holdings’ Board of Directors authorized an increase of $600 million to the capacity of this program as well as the extension of the term of the program until March 31, 2021. This program was exhausted in January 2021. On October 23, 2020, Holdings’ Board of Directors authorized an incremental $500 million of share repurchase in 2021, subject to the close of the Venerable Transaction. In addition, on February 17, 2021 Holdings announced that its Board of Directors had authorized a $1.0 billion share repurchase program. Under this authorization,program, Holdings may, from time to time, purchase up to $1.0 billion of its common stock but it is not obligated to purchase any particular number of shares. Repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under the Exchange Act. As of December 31, 2021, Holdings had authorized capacity of

228
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
approximately $5 million remaining in its share repurchase program, which is inclusive of the $500 million related to the Venerable Transaction.
For the years ended December 31, 2021 , 2020 and 2019, the Company repurchased approximately 51.9 million, 23.7 million and 65.6 million shares of its common stock at a total cost of approximately $1.6 billion, $430 million and $1.3 billion, respectively through open market repurchases, ASRs and privately negotiated transactions. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets. For the years ended December 31, 2021 , 2020 and 2019, the Company reissued approximately 2.3 million, 743 thousand and 387 thousand shares of its treasury stock, respectively. For the year ended December 31, 2021 , 2020 and 2019, the Company retired approximately 32.0 million, 0 shares and 8.1 million shares of its treasury stock, respectively.
In January 2021, Holdings entered into an ASR with a third-party financial institution to repurchase an aggregate of $170 million of Holdings’ common stock. The ASR terminated during the first quarter of 2021, for a total of 6.3 million shares delivered. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of March 31, 2021.
In March 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $200 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $200 million and received initial delivery of 4.9 million shares. The ASR terminated during May 2021, at which time additional shares of 1.1 million were received.
On June 30, 2021, Holdings established an obligation to enter into an ASR with a third-party financial institution to repurchase an aggregate of $300 million of Holdings’ common stock. Pursuant to the ASR, on July 2, 2021, Holdings made a prepayment of $300 million to receive initial delivery of shares. The ASR terminated during the third quarter of 2021 and a total of 9.9 million shares were received. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of September 30, 2021.
In September 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $200 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $200 million and received initial delivery of 5.6 million shares. The ASR terminated during November 2021, at which time additional shares of 0.6 million were received.
On December 22, 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $140 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $140 million and received initial delivery of 3.4 million shares. The ASR terminated during January 2022, at which time additional shares of 0.7 million were received. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of December 31, 2021.
Accumulated Other Comprehensive Income (Loss)
AOCI represents cumulative gains (losses) on items that are not reflected in net income (loss). The balances as of December 31, 2021, and 2020 follow:
 December 31,
 20212020
 (in millions)
Unrealized gains (losses) on investments$2,684 $4,797 
Defined benefit pension plans(669)(935)
Foreign currency translation adjustments(45)(34)
Total accumulated other comprehensive income (loss)1,970 3,828 
Less: Accumulated other comprehensive income (loss) attributable to noncontrolling interest(34)(35)
Accumulated other comprehensive income (loss) attributable to Holdings$2,004 $3,863 


The components of OCI, net of taxes for the years ended December 31, 2021, 2020 and 2019 follow:

229
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

Year Ended December 31,
 

202120202019
 (in millions)
Change in net unrealized gains (losses) on investments:
Net unrealized gains (losses) arising during the period$(2,467)$4,887 $3,301 
(Gains) losses reclassified into net income (loss) during the period (1)(698)(653)(161)
Net unrealized gains (losses) on investments(3,165)4,234 3,140 
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other1,052 (1,278)(882)
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of $(562), $786, and $595)(2,113)2,956 2,258 
Change in defined benefit plans:
Reclassification to Net income (loss) of amortization of net prior service credit included in net periodic cost (2)266 48 (15)
Change in defined benefit plans (net of deferred income tax expense (benefit) of $68, $14, and $10)266 48 (15)
Foreign currency translation adjustments:
Foreign currency translation gains (losses) arising during the period(11)22 5 
(Gains) losses reclassified into net income (loss) during the period— — — 
Foreign currency translation adjustment(11)22 5 
Total other comprehensive income (loss), net of income taxes(1,858)3,026 2,248 
Less: Other comprehensive income (loss) attributable to noncontrolling interest1 7 (4)
Other comprehensive income (loss) attributable to Holdings$(1,859)$3,019 $2,252 
______________
(1)See “reclassification adjustments” in Note 3 of the Notes to these Consolidated Financial Statements. Reclassification amounts presented net of income tax expense (benefit) of $186 million, $(174) million, and $(43) million for the years ended December 31, 2021, 2020 and 2019, respectively.
(2)These AOCI components are included in the computation of net periodic costs (see Note 14 of the Notes to these Consolidated Financial Statement).

Investment gains and losses reclassified from AOCI to net income (loss) primarily consist of realized gains (losses) on sales and credit losses of AFS securities and are included in total investment gains (losses), net on the consolidated statements of income (loss). Amounts reclassified from AOCI to net income (loss) as related to defined benefit plans primarily consist of amortization of net (gains) losses and net prior service cost (credit) recognized as a component of net periodic cost and reported in compensation and benefits in the consolidated statements of income (loss). Amounts presented in the table above are net of tax.

230
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
21)EARNINGS PER COMMON SHARE
The following table presents a reconciliation of net income (loss) and weighted-average common shares used in calculating basic and diluted EPS for the periods indicated:
 Year Ended December 31,
 202120202019
(in millions)
Weighted-average common shares outstanding:
Weighted-average common shares outstanding — basic417.4 450.4 493.6 
Effect of dilutive securities:
Employee share awards (1)— — — 
Weighted-average common shares outstanding — diluted (2)417.4 450.4 493.6 
Net income (loss):
Net income (loss)$(24)$(349)$(1,467)
Less: Net income (loss) attributable to the noncontrolling interest415 299 297 
Net income (loss) attributable to Holdings(439)(648)(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings’ common shareholders$(518)$(701)$(1,764)
EPS:
Basic$(1.24)$(1.56)$(3.57)
Diluted$(1.24)$(1.56)$(3.57)
_____________
(1)Calculated using the treasury stock method.
(2)Due to net loss for the years ended December 31, 2021, 2020 and 2019, approximately 3.8 million, 1.7 million and 0.8 million shares were excluded from the diluted EPS calculation.

For the years ended December 31, 2021, 2020 and 2019 , 8.2 million, 10.0 million, and 6.2 million of outstanding stock awards, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive.


22)    REDEEMABLE NONCONTROLLING INTEREST
The changes in the components of redeemable noncontrolling interests are presented in the table that follows:
Years Ended December 31,
 202120202019
(in millions)
Balance, beginning of period$143 $365 $187 
Net earnings (loss) attributable to redeemable noncontrolling interests5 (3)34 
Purchase/change of redeemable noncontrolling interests320 (219)144 
Balance, end of period$468 $143 $365 

23)     HELD-FOR-SALE:
Assets and liabilities related to the business classified as HFS are separately reported in the Consolidated Balance Sheets beginning in the period in which the business is classified as HFS.

231
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Corporate Solutions Life Reinsurance Company
On October 27, 2020, Holdings entered into a Master Transaction Agreement with VIAC. See Note 1 of the Notes to these Consolidated Financial Statements for further information. As a result of the agreement, an estimated impairment loss of $15 million, net of income tax, was recorded for the year ended December 31, 2020 and is included in investment gains (losses), net in the consolidated statements of income (loss). The transaction closed on June 1, 2021 with a gain on sale, net of income tax, of less than $1 million. Accordingly, the Company recovered the impairment previously recorded, thus reflecting a gain of $15 million for the year ended December 31, 2021.
As of December 31, 2020, assets of CS Life and CS Life Re to be sold, net of the estimated impairment loss accrual, was $470 million which is reported in assets HFS and total liabilities of $322 million was reported in liabilities HFS. The assets and liabilities HFS are reported in the Corporate and Other segment. On June 1, 2021, Holdings completed the sale of CS Life and CS Life Re. Refer to Note 1 of the Notes to these Consolidated Financial Statement further details.
The following table summarizes the components of assets and liabilities HFS on the Consolidated Balance Sheets as of December 31, 2020:

December 31,
2020
(in millions)
Assets:
Fixed maturity securities$235 
Trading securities, at fair value189 
Other invested assets1 
Cash and cash equivalents39 
Other assets25 
Assets held-for-sale489 
Less: Loss accrual(19)
Total assets held-for-sale$470 
Liabilities:
Future policy benefits and other policyholder's liabilities:$320 
Broker-dealer related payables— 
Other liabilities2 
Total liabilities held-for-sale$322 
24)     SUBSEQUENT EVENTS
Share Repurchase Program
On February 9, 2022, the Company’s Board of Directors authorized a new $1.2 billion share repurchase program. Under this program, the Company may, from time to time purchase shares of its common stock through various means. HoldingsThe Company may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate Holdingsthe Company to purchase any particular number of shares.
AXA Equitable Holdings, Inc. 2019 Omnibus Incentive Plan (the “2019 Plan”)
In November 2018, our Board and AXA, as our then controlling stockholder, adopted the 2019 Plan, which became effective January 1, 2019, with a total of 5.2 million shares of common stock reserved for issuance thereunder. On February 25, 2019, the Compensation Committee of Holdings’ Board of Directors approved an amendment to the 2019 Plan increasing the amount of shares of Holdings’ common stock available for issuance in connection with equity awards granted under the Plan by two million shares. The holder of a majority of the outstanding shares of our common stock executed a written consent approving the increase on February 28, 2019.


280


232







Table of Contents


AXA EQUITABLE HOLDINGS, INC.
SCHEDULE I
SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 20182021
Cost (1)Fair Value
Carrying
Value
Cost (1) Fair Value 
Carrying
Value
 (in millions)
(in millions)
Fixed Maturities:     
Fixed maturities, AFS:Fixed maturities, AFS:
U.S. government, agencies and authorities$14,004
 $13,829
 $14,004
U.S. government, agencies and authorities$13,056 $15,385 $15,385 
State, municipalities and political subdivisions415
 461
 415
State, municipalities and political subdivisions586 662 662 
Foreign governments524
 530
 524
Foreign governments1,124 1,152 1,152 
Public utilities5,101
 5,046
 5,101
Public utilities6,493 6,807 6,807 
All other corporate bonds25,471
 25,132
 25,471
All other corporate bonds43,679 45,704 45,704 
Residential mortgage-backed225
 234
 225
Residential mortgage-backed90 98 98 
Asset-backed612
 601
 612
Asset-backed5,933 5,934 5,934 
Commercial mortgage-backedCommercial mortgage-backed2,427 2,421 2,421 
Redeemable preferred stocks449
 446
 449
Redeemable preferred stocks41 53 53 
Total fixed maturities46,801
 46,279
 46,801
Total fixed maturities, AFSTotal fixed maturities, AFS73,429 78,216 78,216 
Fixed maturities, at fair value using the fair value optionFixed maturities, at fair value using the fair value option1,637 1,641 1,641 
Mortgage loans on real estate (2)11,842
 11,494
 11,835
Mortgage loans on real estate (2)14,095 14,308 14,033 
Real estate held for the production of income52
 52
 52
Policy loans3,779
 4,183
 3,779
Policy loans4,024 5,050 4,024 
Other equity investments1,293
 1,334
 1,334
Other equity investments2,662 2,975 2,975 
Trading securities16,211
 16,017
 16,017
Trading securities559 631 631 
Other invested assets2,037
 2,037
 2,037
Other invested assets3,591 3,591 3,591 
Total Investments$82,015
 $81,396
 $81,855
Total Investments$99,997 $106,412 $105,111 
______________
(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.

(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.
AXA (2)Carrying value for mortgage loans on real estate represents original cost adjusted for amortization of premiums or accretion of discount and reduced by credit loss allowance.
233
EQUITABLE HOLDINGS, INC.
SCHEDULE II
BALANCE SHEETS (PARENT COMPANY)
DECEMBERBalance Sheets (Parent Company)
December 31, 2018 AND 20172021 and 2020
December 31,December 31,
20212020
(in millions, except share amounts)
ASSETS
Investment in consolidated subsidiaries$13,128 $15,603 
Fixed maturities available-for-sale, at fair value (amortized cost of $884 and $183)874 1,116 
Other equity investments92 66 
Total investments14,094 16,785 
Cash and cash equivalents867 1,972 
Goodwill and other intangible assets, net1,255 1,245 
Loans to affiliates755 675 
Current and deferred income taxes assets600 209 
Other assets547 903 
Total Assets$18,118 $21,789 
LIABILITIES
Short-term and long-term debt$3,839 $4,115 
Employee benefits liabilities853 1,177 
Loans from affiliates1,900 900 
Accrued liabilities7 21 
Total Liabilities$6,599 $6,213 
EQUITY ATTRIBUTABLE TO HOLDINGS
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preference$1,562 $1,269 
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 520,918,331 and 552,896,328 shares issued, respectively; 391,290,224 and 440,776,011 shares outstanding, respectively4 5 
Additional paid-in capital1,919 1,985 
Treasury stock, at cost, 129,628,107 and 112,120,317 shares, respectively(2,850)(2,245)
Retained earnings8,880 10,699 
Accumulated other comprehensive income (loss)2,004 3,863 
Total equity attributable to Holdings11,519 15,576 
Total Liabilities and Equity Attributable to Holdings$18,118 $21,789 
 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 investments23
 —
Other invested assets80
 —
Total investments17,182
 13,772
Cash and cash equivalents407
 44
Goodwill and other intangible assets, net1,265
 —
Loans to affiliates572
 1,045
Income taxes receivable—
 72
Other assets766
 1
Total Assets$20,192
 $14,934
    
LIABILITIES   
Short-term and long-term debt4,408
 —
Employee benefits liabilities1,184
 —
Loans from affiliates600
 1,484
Income taxes payable16
 —
Accrued liabilities118
 29
Total Liabilities6,326
 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, respectively5
 5
Capital in excess of par value1,908
 1,299
Treasury stock, at cost, 32,138,242 shares(640) —
Retained earnings13,989
 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


The financial information of AXA Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.


AXA











234
EQUITABLE HOLDINGS, INC.
SCHEDULE II

STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2018, 2017,2021, 2020, AND 20162019
202120202019
(in millions)
REVENUES
Equity in income (losses) from continuing operations of consolidated subsidiaries$(152)$(668)$(1,592)
Net investment income (loss)26 26 29 
Investment gains (losses), net(12)— (1)
Other income— — 12 
Total revenues(138)(642)(1,552)
EXPENSES
Interest expense241 229 237 
Other operating costs and expenses58 40 83 
Total expenses299 269 320 
Income (loss) from continuing operations, before income taxes(437)(911)(1,872)
Income tax (expense) benefit(2)263 108 
Net income (loss) attributable to Holdings(439)(648)(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings' common shareholders(518)(701)(1,764)
Other comprehensive income (loss)(1,859)3,019 2,252 
Total comprehensive income (loss) attributable to Holdings$(2,377)$2,318 $488 
 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 revenues2,425
 871
 1,300
      
EXPENSES     
Interest expense214
 31
 27
Other operating costs and expenses123
 22
 26
Total expenses337
 53
 53
Income (loss) from continuing operations, before income taxes2,088
 818
 1,247
Income tax (expense) benefit(268) 16
 7
Net income (loss) attributable to Holdings1,820
 834
 1,254
Other comprehensive income (loss)(1,192) 816
 (276)
Total comprehensive income (loss) attributable to Holdings$628
 $1,647
 $1,010


The financial information of AXA Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

235



AXA EQUITABLE HOLDINGS, INC.
SCHEDULE II
STATEMENTS OF CASH FLOWS (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2018, 2017,2021, 2020, AND 20162019

2018 2017 2016202120202019
(in millions)(in millions)
Net income (loss) attributable to Holdings$1,820
 $834
 $1,254
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:     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)Equity in net (earnings) loss of subsidiaries152 668 1,592 
Non-cash long term incentive compensation expenseNon-cash long term incentive compensation expense15 27 69 
Amortization and depreciation—
 —
 —
Amortization and depreciation60 40 33 
Equity (income) loss limited partnershipsEquity (income) loss limited partnerships(19)(8)1 
Changes in:     Changes in:
Current and deferred income taxes111
 (14) (6)
Current and deferred taxesCurrent and deferred taxes(151)(250)202 
Dividends from subsidiaries1,838
 20
 —
Dividends from subsidiaries792 2,877 1,341 
Other, net(264) 24
 27
Other, net14 (135)(76)
Net cash provided by (used in) operating activities$1,101
 $1
 $(18)Net cash provided by (used in) operating activities$424 $2,571 $1,398 
     
Cash flows from investing activities:     Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:     Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale18
 —
 —
Fixed maturities, available-for-sale$210 $131 $105 
Short-term investments1,038
    Short-term investments— — 80 
Payment for the purchase/origination of:     Payment for the purchase/origination of:
Fixed maturities, available-for-sale(355) —
 —
Fixed maturities, available-for-sale— (1,011)— 
Short-term investments(1,113)    Short-term investments— — — 
Other(16) —
 —
Other(7)(21)(14)
Repayment of loans to affiliates1,045
 —
 —
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 issuance on credit facilities to affiliatesNet issuance on credit facilities to affiliates(80)(115)(560)
Repayments of loans to affiliatesRepayments of loans to affiliates— — 572 
Proceeds from the sale of subsidiaryProceeds from the sale of subsidiary215 — — 
Increase in cash and cash equivalents from merger of AXA Tech Increase in cash and cash equivalents from merger of AXA Tech— — 11 
Net cash provided by (used in) investing activities$421
 $(955) $—
Net cash provided by (used in) investing activities$338 $(1,016)$194 
     
Cash flows from financing activities:     Cash flows from financing activities:
Issuance of long-term debt4,057
 —
 —
Issuance of preferred stockIssuance of preferred stock$293 $494 $775 
Repayment of long-term debtRepayment of long-term debt(280)— (300)
Proceeds from loans from affiliates800
 731
 —
Proceeds from loans from affiliates1,000 — 900 
Repayments of loans from affiliates(200) (56) —
Repayments of loans from affiliates— (300)(300)
Shareholder dividends paid(157) —
 —
Shareholder dividends paid(296)(297)(285)
Purchase of AllianceBernstein Units(1,340) —
 —
Preferred dividends paidPreferred dividends paid(79)(53)— 
Purchase of treasury shares(648) —
 —
Purchase of treasury shares(1,637)(430)(1,350)
Capital contribution from parent company8
 318
 —
Capital contribution to subsidiaries(3,679) —
 —
Capital contribution to subsidiaries(815)(350)(86)
Other, netOther, net(53)— — 
Net cash provided by (used in) financing activities$(1,159) $993
 $—
Net cash provided by (used in) financing activities$(1,867)$(936)$(646)
     
Change in cash and cash equivalents363
 39
 (18)Change in cash and cash equivalents(1,105)619 946 
Cash and cash equivalents, beginning of year44
 5
 23
Cash and cash equivalents, beginning of year1,972 1,353 407 
Cash and cash equivalents, end of year$407
 $44
 $5
Cash and cash equivalents, end of year$867 $1,972 $1,353 
     
Non-cash transactions:     
Goodwill and intangible assets$1,079
 $—
 $—
Equity investments$8
 $—
 $—
Non-cash transactions from investing and financing activities:Non-cash transactions from investing and financing activities:
Dividend of AB Units from subsidiaryDividend of AB Units from subsidiary$23 $— $— 
Other assets$774
 $—
 $—
Other assets$— $— $4 
Settlement of long-term debt$(349) $—
 $—
Employee benefit plans$(1,168) $—
 $—
Other liabilities$(20) $—
 $—
Other liabilities$— $— $(16)
The financial information of AXA Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

236
AXA
EQUITABLE HOLDINGS, INC.
SCHEDULE II
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
1)    BASIS OF PRESENTATION
The financial information of Holdings should be read in conjunction with the Consolidated Financial Statements and Notes thereto. AXA, the ultimate parent company of Holdings,The Company is the holding company for the AXA Group, a worldwide leader in life, property and casualty and health insurance, and asset management.diversified financial services organization.
2)    LOANS TO AFFILIATES
On November 4, 2019, Holdings made available to AB a $900 million committed, unsecured senior credit facility (the “EQH Facility”). The EQH Facility matures on November 4, 2024 and is available for AB's general business purposes. Borrowings by AB under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated. Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by AB from time to time until the maturity of the facility. AB or Holdings may reduce or terminate the commitment at any time without penalty upon proper notice. Holdings also may terminate the facility immediately upon a change of control of the general partner. In As of December 31, 2021 and 2020, $755 million and $675 million were outstanding under the EQH Facility respectively .
In 2018, AXA Equitable Financial received a $572 million loan from Holdings. The loan has an interest rate of 3.75% and matures in December 2019.
In 2013, Colisee Re received a $145 million loan from Holdings. The loan had an interest rate of 4.75%3.75% and a maturity date in December 2028. The loan was repaid on April 23, 2018.in March 2019.
3)    LOANS FROM AFFILIATES
In March 2010 AXA Financial issued Subordinated Notes to AXA Life Insurance Company LTD in the amount of $770 million. This loan was repaid on April 20, 2018
In December 2014, AXA FinancialJune 2021, Holdings received a $2,727 million, three-month LIBOR plus 1.06% margin$1.0 billion 10-year term loan from AXA. AXA Financial repaid $520 millionEquitable Financial. The loan has an interest rate of this loan3.23% and matures in June 2015 and repaid an additional $1,200 million of this loan in 2016. On April 20, 2018, the remainder of this loan was repaid.2031.
In 2015,November 2019, Holdings received a $366 million, three-month LIBOR plus 1.44% loan from AXA. This loan was repaid on April 20, 2018.
In December 2013, Coliseum Re issued $242 million and $145 million of 4.75% Senior Unsecured Notes to Holdings. These loans were repaid on March 26, 2018.
In 2017, Holdings received a $100 million and $10$900 million loan from AXA CS.Equitable Financial. The loans haveloan has an interest ratesrate of 1.86% and 1.76%, respectively, and were repaid on their maturity date of February 5, 2018.
In December 2017, Holdings received a $622 million, three-monthone- month LIBOR plus 0.439% margin term loan from AXA.1.33%. The loan matures on November 4, 2024. As of December 31, 2021, $900 million was repaidoutstanding on April 20, 2018.the loan.
In April 2018, Holdings received a $800 million loan from AXA Equitable.Equitable Financial. The loan has an interest rate of 3.69% and matureswould mature in April 2021. In December 2018, Holdings repaid $200 million of this loan. In December 2019, Holdings repaid $300 million. On December 30, 2020, the remainder of this loan was repaid.
Interest cost related to these loans from affiliates totaled $48$30 million, $77$32 million and $71$26 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
4)    RELATED PARTY TRANSACTIONS
Disposition of AXA CS
Holdings formerly held 78.99% of the shares of AXA CS, which holds certain AXA U.S. P&C business. AXA CS and its subsidiaries have been excluded from the historical Consolidated Financial Statements since they were operated independently from the other Holdings subsidiaries.
In March 2018, Holdings sold its AXA CS shares to AXA for $630 million. In anticipation of this sale, in the fourth quarter of 2017, AXA made a short-term loan of $622 million to Holdings with interest calculated at three-month LIBOR plus 0.439% margin. Holdings’ repayment obligation to AXA in respect of this loan was set off against the purchase price for the AXA CS shares, and AXA paid Holdings the $8 million balance in cash. The net result of the sale was a decrease in Loans from affiliates of $622 million, an increase in cash of $8 million, and an increase in capital in excess of par of $630 million.

Acquisition of Noncontrolling Interest of AXA Financial
In March 2018, AXA contributed the 0.5% noncontrolling interest in AXA Financial to Holdings, resulting in AXA Financial becoming a wholly-owned subsidiary of Holdings. The contribution is reflected as a $66 million capital contribution.
Acquisition of Additional AB Units
On April 23, 2018, Holdings purchased: (i) 100% of the shares of AXA-IM Holding U.S. Inc., which owns 41,934,582 AB Units, for a purchase price of $1,113 million and (ii) 8,160,000 AB Units held by Coliseum Re for $217 million. As a result of these two transactions, Holdings ownership of AB increased to approximately 65%, Noncontrolling interest decreased by $29 million, Capital in excess of par increased by $17 million and taxes payable increased by $174 million.
Pre-IPO Transactions with AXA Affiliates
As former wholly-owned subsidiaries of AXA, Holdings and its subsidiaries have historically entered into various transactions with AXA Affiliates.
General Services Agreements with AXA Affiliates
Prior to the IPO, Holdings entered into cost-sharing and general service agreements with various AXA Affiliates pursuant to which the parties provided general corporate services (IT, human resources, legal, finance, etc.) to each other.
5)    AXA FINANCIAL MERGER
On October 1, 2018, AXA Financial merged with and into its direct parent, Holdings, with Holdings continuing as the surviving entity (the “AXA Financial Merger”). As a result of the AXA Financial Merger, Holdings assumed all of AXA Financial’s assets and liabilities, including its obligations under the Senior Debentures, two assumption agreements under which it legally assumed primary liability for certain employee benefit plans of AXA Equitable Life and various guarantees for its subsidiaries. Holdings also replaced AXA Financial as a party to the $2 billion commercial paper program initiated by AXA and AXA Financial in June 2009. Holdings was removed as an issuer under the program in October 2018.
The following table discloses the assets and liabilities that Holdings assumed at the date of the merger.
 As of October 1, 2018
 Assets Liabilities
  (in millions)
Cash and cash equivalents$381
  
Goodwill and other intangibles assets, net1,079
  
Other equity investments13
  
Other assets777
  
 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
6)    INCOME TAXES
Holdings and certain of its consolidated subsidiaries and affiliates file a consolidated federal income tax return. Holdings has tax sharing agreements with certain of its subsidiaries and generally will either receive or pay these subsidiaries for utilization of the subsidiaries’ tax benefits or expense. Holdings settles these amounts annually.

5)    ISSUANCE OF SERIES A, SERIES B AND SERIES C FIXED RATE NONCUMULATIVE PERPETUAL PREFERRED STOCK
AXA See Note 20 of the Notes to these Consolidated Financial Statements.
6)    SHARE REPURCHASE
See Note 20 of the Notes to these Consolidated Financial Statements.
237
EQUITABLE HOLDINGS, INC.

SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 20182021
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs$3,639 $776 $— $1,066 $10 $5,491 
Policyholders’ account balances38,456 13,049 — 15,027 12,825 79,357 
Future policy benefits and other policyholders' liabilities22,904 3 — 4,843 8,967 36,717 
Policy charges and premium revenue1,867 371 — 2,016 343 4,597 
Net derivative gains (losses)(4,386)(29)(13)(83)46 (4,465)
Net investment income (loss)1,221 751 25 1,102 747 3,846 
Policyholders’ benefits and interest credited912 303 — 2,478 744 4,437 
Amortization of deferred policy acquisition costs294 2 — 95 2 393 
All other operating expenses (1)814 362 3,241 780 1,178 6,375 
 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 balances20,798
 11,617
 —
 13,989
 3,519
 49,923
Future policy benefits and other policyholders' liabilities16,076
 6
 —
 4,556
 10,360
 30,998
Policy charges and premium revenue2,124
 271
 —
 2,103
 420
 4,918
Net investment income (loss) (1)497
 552
 36
 903
 474
 2,462
Policyholders’ benefits and interest credited590
 294
 —
 2,308
 813
 4,005
Amortization of deferred policy acquisition costs183
 (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.

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 20172020
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs (2)$3,178 $632 $— $418 $15 $4,243 
Policyholders’ account balances (2)30,736 12,828 — 14,875 8,381 66,820 
Future policy benefits and other policyholders' liabilities (2)25,212 9 — 5,031 9,629 39,881 
Policy charges and premium revenue2,034 295 — 2,013 390 4,732 
Net derivative gains (losses)(1,999)(2)(36)413 (98)(1,722)
Net investment income (loss)1,337 644 36 941 519 3,477 
Policyholders’ benefits and interest credited3,086 305 — 2,372 785 6,548 
Amortization of deferred policy acquisition costs321 73 — 1,220 (1)1,613 
All other operating expenses (1)724 284 2,815 546 978 5,347 
 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 balances19,414
 11,318
 —
 13,908
 2,531
 47,171
Future policy benefits and other policyholders' liabilities15,202
 2
 —
 5,444
 9,682
 30,330
Policy charges and premium revenue2,116
 248
 —
 1,995
 458
 4,817
Net investment income (loss) (2)1,292
 523
 118
 850
 513
 3,296
Policyholders’ benefits and interest credited2,728
 282
 —
 1,432
 919
 5,361
Amortization of deferred policy acquisition costs114
 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.



AS OF AND FOR THE YEAR ENDED DECEMBER 31, 20162019
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs (2)$3,285 $659 $— $1,880 $13 $5,837 
Policyholders’ account balances (2)26,359 12,068 — 14,090 6,362 58,879 
Future policy benefits and other policyholders' liabilities (2)20,401 7 — 4,156 10,071 34,635 
Policy charges and premium revenue2,085 279 — 2,148 413 4,925 
Net derivative gains (losses)(3,850)6 (38)(28)(102)(4,012)
Net investment income (loss)1,478 593 99 967 562 3,699 
Policyholders’ benefits and interest credited2,321 304 — 2,172 851 5,648 
Amortization of deferred policy acquisition costs283 35 — 274 5 597 
All other operating expenses (1)785 318 2,709 576 1,046 5,434 
_____________
(1)Operating expenses are allocated to segments.
(2)Excludes amounts reclassified as HFS.
238
 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 credited1,195
 268
 —
 1,940
 906
 4,309
Amortization of deferred policy acquisition costs139
 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.


AXA EQUITABLE HOLDINGS, INC.


SCHEDULE IV
REINSURANCE (1)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2018, 20172021, 2020 AND 20162019
 
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 health49
 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 health54
 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 health61
 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.

 Gross AmountCeded to Other CompaniesAssumed from Other CompaniesNet AmountPercentage of Amount Assumed to Net
(in millions)
2021
Life insurance in-force$484,082 $185,203 $31,971 $330,850 9.7 %
Premiums:
Life insurance and annuities$802 $155 $181 $828 21.9 %
Accident and health168 44 8 132 6.1 %
Total premiums$970 $199 $189 $960 19.7 %
2020
Life insurance in-force$473,514 $94,231 $33,098 $412,381 8.0 %
Premiums:
Life insurance and annuities$805 $113 $213 $905 23.5 %
Accident and health124 41 9 92 9.8 %
Total premiums$929 $154 $222 $997 22.3 %
2019
Life insurance in-force$492,780 $65,427 $32,365 $459,718 7.0 %
Premiums:
Life insurance and annuities$971 $101 $211 $1,081 19.5 %
Accident and health97 40 9 66 13.6 %
Total premiums$1,068 $141 $220 $1,147 19.2 %
______________
(1)    Includes amounts related to the discontinued group life and health business.

Part II, Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Part II, Item 9A
CONTROLS AND PROCEDURES
Evaluation of Disclosure ControlsRetirement and ProceduresProtection
The managementEquity awards for R&P employees, financial professionals and directors in 2021, 2020 and 2019 were granted under the Omnibus Plans with the exception of the Company, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as definedHoldings restricted stock units (“Holdings RSUs”) granted to financial professionals in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2018. This evaluation is performed to determine if our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the CompanyAll grants discussed in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is accumulated and communicated to management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms.
Due to the material weaknesses described below, the Company’s CEO and CFO, concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2018.
As previously reported, the Company identified two material weaknesses in the design and operation of the Company’s internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The Company’s management, including the Company’s CEO and CFO, have concluded that we do not:
(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.
These material weaknesses resulted in misstatements in the Company’s previously issued annual and interim financial statements and resulted in:
(i) the revision of the interim financial statements for the nine, six, and three months ended September 30, June 30, and March 31, 2018 and 2017, respectively, and the annual financial statements for the year ended December 31, 2017;

(ii) the amended restatement of the interim financial statements for the nine months ended September 30, 2017 and the six months ended June 30, 2017, and the year ended December 31, 2016 and revisions for the six and three months ended June 30, 2018 and March 31, 2018, respectively, and the three months ended March 31, 2017 and the years ended December 31, 2017, 2015, 2014, and 2013, respectively;

(iii) the revision of the annual financial statements for the year ended December 31, 2017 and amended the restated annual financial statements for the year ended December 31, 2016, and amended the restated interim financial statements for the nine and six months ended September 30, 2017, and June 30, 2017, respectively;

(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.
These revisions and restatements were directly related to the material weaknesses described above and not indicative of any new material weaknesses. Until remediated, there is a reasonable possibility that these material weaknesses could result in a material misstatement of the Company’s consolidated financial statements or disclosures that would not be prevented or detected.
Remediation Status of Material Weaknesses
Management continues to execute its plan moving towards remediation of the material weaknesses. Since identifying the material weaknesses, management has performed the following activities:
Material Weakness Related to Actuarial Models, Assumptions and Data
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.
Material Weakness Related to Insufficient Personnel and Journal Entry Process
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.
While progress has been made to remediate both material weaknesses, as of December 31, 2018, we are still in the process of developing and implementing the enhanced processes and procedures and testing the operating effectiveness of these improved controls. We believe our actionsthis section will be effectivesettled in remediating the material weaknesses, and we continue to devote significant time and attention to these efforts. In addition, the material weaknesses will not be considered remediated until the applicable remedial processes and procedures have been in place for a sufficient period of time and management has concluded, through testing, that these controls are effective. Accordingly, the material weaknesses are not remediated as of December 31, 2018.

Changes in Internal Control Over Financial Reporting
We have undertaken the following activities which represent changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2018 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting:
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.
As described above, the Company continues to design and implement additional controls in connection with its remediation plan. These remediation efforts related to the material weaknesses described above represent changes in our internal control over financial reporting for the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Report on Internal Controls Over Financial Reporting
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.
Part II, Item 9B.
OTHER INFORMATION
None.

Part III, Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth certain information concerning our directors and executive officers. The respective age of each individual in the table below is as of March 1, 2019.
Name
Age
Position
Thomas Buberl45Chairman of the Board
Mark Pearson60Director; President and Chief Executive Officer
Gérald Harlin63Director
Daniel G. Kaye64Director
Ramon de Oliveira64Director
Bertrand Poupart-Lafarge51Director
Karima Silvent45Director
George Stansfield58Director
Charles G. T. Stonehill61Director
Seth Bernstein57President and Chief Executive Officer of AllianceBernstein Corporation
Dave S. Hattem62Senior Executive Vice President, General Counsel and Secretary
Jeffrey J. Hurd52Senior Executive Vice President and Chief Operating Officer
Nick Lane45Senior Executive Vice President and Head of U.S. Life, Retirement and Wealth Management
Anders Malmström51Senior Executive Vice President and Chief Financial Officer

Directors
Thomas Buberl
Mr. Buberl has been a director since September 2016 and Chairman of the Board since November 2017. He has been a director of AXA Equitable Life and MLOA since May 2016. Mr. Buberl has served as Chief Executive Officer of AXA since September 2016. From March 2016 to August 2016, Mr. Buberl served as Deputy Chief Executive Officer (Directeur Général Adjoint) of AXA. Prior thereto, Mr. Buberl served as Chief Executive Officer of AXA Konzern AG (May 2012 to April 2016), Chief Executive Officer for the global business line for the Health Business (March 2015 to March 2016) and Chief Executive Officer for the global business line for the Life and Savings Business (January 2016 to March 2016). From November 2008 to April 2012, Mr. Buberl served as Chief Executive Officer for Switzerland of Zurich Financial Services (“Zurich”). Prior to joining Zurich, Mr. Buberl held various management positions with Boston Consulting Group (February 2000 to October 2005) and Winterthur Group (November 2005 to October 2008). Mr. Buberl is also Chairman of the Board of Directors of XL Group Ltd. (Bermuda) and a member of the Supervisory Board of Bertelsmann SE & Co. KGaA (Germany).
Mr. Buberl brings to the Board his extensive experience and key leadership skills developed through his service as an executive, including invaluable perspective as the Chief Executive Officer of AXA. The Board also benefits from his perspective as a member of AXA’s Management Committee.
Mark Pearson, President and Chief Executive Officer
Mr. Pearson has been a director since January 2011 and currently serves as our President and Chief Executive Officer. He has been a director of AXA Equitable Life and MLOA since January 2011 and AllianceBernstein Corporation since February 2011. Mr. Pearson also serves as AXA Equitable Life’s Chairman of the Board and Chief Executive Officer. Mr. Pearson has been a member of the Executive Committee of AXA since 2008. From 2008 to 2011, he was the President and Chief Executive Officer of AXA Japan Holding Co. Ltd. (“AXA Japan”). Mr. Pearson joined AXA in 1995 with the acquisition of National Mutual Holdings and was appointed Regional Chief Executive of AXA Asia Life in 2001. Before joining AXA, Mr. Pearson spent approximately 20 years in the insurance sector, assuming several senior manager positions at Hill Samuel, Schroders, National Mutual Holdings and Friends Provident. Mr. Pearson is a Fellow of the Chartered Association of Certified Accountants and is a member of the Board of Directors of the American Council of Life Insurers.
Mr. Pearson brings to the Board diverse financial services experience developed though his service as an executive, including as a Chief Executive Officer, to AXA Equitable Life, AXA Japan and other AXA affiliates.
Gérald Harlin
Gérald Harlin has been a director since September 2016 and was Chairman and Chief Executive Officer from September 2016 to November 2017. He has been a director of AXA Equitable Life and MLOA since May 2018. Mr. Harlin has been AXA’s Deputy Chief Executive Officer (Directeur Général Adjoint) since December 2017, Chief Financial Officer since 2010, a member of AXA’s Executive Committee since July 2008 and a member of AXA’s Management Committee since July 2016. He holds various directorships within AXA: Chairman & Chief Executive Officer of AXA China (France), Chief Executive Officer and a member of the Management Board of Vinci B.V. (the Netherlands), Chairman of the Board of Directors of AXA Holdings Belgium SA (Belgium) and AXA Mediterranean Holdings, S.A.U. (Spain), Chairman of AXA Oeuvres d’Art (France) and Lor Patrimoine (France), Chairman of the Management Committee of AXA ASIA (France), a member of the Supervisory Board of AXA Liabilities Managers (France) and director of AXA Real Estate Investment Managers (France). Mr. Harlin is also AXA’s permanent representative to the board of AXA Investment Managers (France). From 2003 to 2009, Mr. Harlin served as Executive Vice President, Finance & Control of AXA. From 1979 to 1990, Mr. Harlin held various positions with the Total Group. He was Head of Corporate Finance Department for North America, Mining & Chemical Subsidiaries from 1989 to 1990.
Mr. Harlin brings to the Board his extensive experience and key leadership skills developed through his service as an executive, including invaluable perspective as the Chief Financial Officer of AXA. The Board also benefits from his perspective as a member of AXA’s Management Committee.
Daniel G. Kaye
Mr. Kaye has been a director since April 2018. He has been a director of AXA Equitable Life and MLOA since September 2015 and AllianceBernstein Corporation since May 2017. Mr. Kaye currently serves as the Chairman of the Audit Committee of AllianceBernstein Corporation and is a member of the Compensation Committee. Mr. Kaye was a member of the Board of Directors of AXA Insurance Company from April 2017 to December 2018. From January 2013 to May 2014, Mr. Kaye served

as Interim Chief Financial Officer and Treasurer of HealthEast Care System (“HealthEast”). Prior to joining HealthEast, Mr. Kaye spent 35 years with Ernst & Young LLP (“Ernst & Young”) from which he retired in 2012. Throughout his time at Ernst & Young, where he was an audit partner for 25 years, Mr. Kaye enjoyed a track record of increasing leadership and responsibilities, including serving as the New England Managing Partner and the Midwest Managing Partner of Assurance. Mr. Kaye was a member of the Board of Directors of Ferrellgas Partners L.P. (“Ferrellgas”) from August 2012 to November 2015 where he served on the Audit Committee and Corporate Governance and Nominating Committee (Chair). Mr. Kaye is a Certified Public Accountant and National Association of Corporate Directors (NACD) Board Leadership Fellow.
Mr. Kaye brings to the Board invaluable expertise as an audit committee financial expert, extensive financial services and insurance industry experience and his general knowledge and experience in financial matters developed through his roles at Ernst & Young and HealthEast. The Board also benefits from his experience as a director of Ferrellgas, AllianceBernstein Corporation and AXA Insurance Company.
Ramon de Oliveira
Mr. de Oliveira has been a director since April 2018. Mr. de Oliveira has been a member of AXA’s Board of Directors since April 2010, where he serves on the Finance Committee (Chair) and Audit Committee, and from April 2009 to May 2010, he was a member of AXA’s Supervisory Board. He is also currently a member of the Board of Directors of AllianceBernstein Corporation since May 2017, where he serves as a member of the Executive and Compensation Committees. He is currently the Managing Director of the consulting firm Investment Audit Practice, LLC, based in New York, NY. From 2002 to 2006, Mr. de Oliveira was an adjunct professor of Finance at Columbia University. Starting in 1977, he spent 24 years at JP Morgan & Co. where he was Chairman and Chief Executive Officer of JP Morgan Investment Management and was also a member of the firm’s Management Committee since its inception in 1995. Upon the merger with Chase Manhattan Bank in 2001, Mr. de Oliveira was the only executive from JP Morgan & Co. asked to join the Executive Committee of the new firm with operating responsibilities. Previously he has served as a director of JP Morgan Suisse, American Century Company, Inc., SunGard Data Systems, JACCAR Holdings and The Hartford Insurance Company. Mr. de Oliveira was a director of AXA Equitable Life and MLOA from May 2011 to May 2018.
Mr. de Oliveira brings to the Board extensive financial services experience, and key leadership and analytical skills developed through his roles within the financial services industry and academia. The Board also will benefit from his perspective as a director of AXA and as a former director of other companies.
Bertrand Poupart-Lafarge
Mr. Poupart-Lafarge has been a director since April 2018. He has been a director of AXA Equitable Life and MLOA since May 2018. Mr. Poupart-Lafarge has served as Chief Financial Officer of AXA France since January 2019. Mr. Poupart-Lafarge previously served as Chief Financial Officer of AXA UK from September 2013 to December 2018, and from April 2018 until September 2018, he also acted as interim Chief Executive Officer of AXA UK. Mr. Poupart-Lafarge started with AXA UK in September 2012 when he served as Deputy CFO (with responsibility for financial controls; planning, budgeting, reporting and tax; business intelligence; and finance projects). He also previously held the roles of Chief Investment Officer and Treasurer of AXA Equitable Life and, prior to that, Executive Vice President and Chief Financial Officer of AXA Canada. He has also held various roles in AXA France in Paris since 1997.
Mr. Poupart-Lafarge brings to the Board his extensive experience, knowledge and key leadership skills, developed through his service as an executive, including his experience as Chief Financial Officer of AXA France and AXA UK.
Karima Silvent
Mrs. Silvent has been a director since April 2018. She has been a director of AXA Equitable Life and MLOA since May 2018. Mrs. Silvent served as HR Director of AXA France from July 2016 to November 2017 and Global Head of HR for AXA Group since December 2017. In April 2012, she joined GIE AXA as Global HR Business Partner for Chief Operating Office functions (Operations, IT, Marketing and Distribution) and, in September 2013, she was appointed Global HR Director in charge of workforce transformation, culture, employer brand and recruiting and also in charge of talent and executive career management for support functions professional families (Finance, Legal & Compliance, IT, Marketing & Distribution, Operations, HR and Communication). Prior to that, in 2007, Mrs. Silvent joined Korian, a private health group (clinics, retirement homes), first as Group HR Director and in 2011 as Chief Operating Officer for the French Business Line. Previously, in 2002, she was Deputy Human Resources Director at the French, state-owned Health Service (Hôpitaux de Paris), with approximately 90,000 employees. In 1997, Mrs. Silvent was Deputy and then Head of the National Fund for Employment the French Ministry of Employment and Health, where she worked on employment reforms as well as helped private companies implement HR policies.

Mrs. Silvent brings to the Board her extensive experience, knowledge and key leadership skills, developed through her service in both the government and private sectors, in implementing and managing human resources and employment matters, including her experience as Global Head of HR for AXA Group and HR Director of AXA France.
George Stansfield
Mr. Stansfield has been a director since November 2017. He has been a director of AXA Equitable Life and MLOA since May 2017. Since December 2017, Mr. Stansfield has been Deputy Chief Executive Officer (Directeur Général Adjoint) of AXA, and since July 2016, Mr. Stansfield has been Group General Secretary and a member of AXA’s Management Committee. Mr. Stansfield was previously Head of AXA’s Group Human Resources from 2010 to 2016 and was AXA’s Group General Counsel from 2004 to 2016. Prior to 2004, Mr. Stansfield was an attorney in the legal department of AXA Equitable Life for 11 years. Mr. Stansfield holds various directorships within AXA: Chairman of the Supervisory Board of AXA Liabilities Managers (France), GIE AXA (France) and Kamet (France), Chairman of the Management Committee of AXA Venture Partners (France) and director or Management Committee member of AXA ASIA (France) and AXA Life Insurance Co Ltd. (Japan). Mr. Stansfield is also AXA’s permanent representative to the board of AXA Millésimes Finance, Château Petit Village, Château Pichon Longueville, SCI de L’Arlot and Société Belle Hélène. Mr. Stansfield is also a Trustee of the American Library of Paris, a non-profit organization and the largest English language lending library on the European mainland.
Mr. Stansfield brings to the Board his extensive experience and knowledge and key leadership skills developed through his service as an executive, including his experience as Group General Secretary and his perspective as a member of AXA’s Management Committee.
Charles G.T. Stonehill
Mr. Stonehill has been a director since April 2018. Mr. Stonehill is Founding Partner of Green & Blue Advisors LLC. He also serves as nonexecutive Vice Chairman of the Board of Directors of Julius Baer Group Ltd. Mr. Stonehill is a member of the Board of Directors of CommonBond, LLC and of PlayMagnus A/S. During his financial services career, Mr. Stonehill served as the Managing Director of Lazard Frères & Co., LLC, and global head of Lazard Capital Markets from 2002 to 2004. He served as Head of Investment Banking for the Americas of Credit Suisse First Boston from 1997 to 2002 and as Head of European Equities and Equity Capital Markets at Morgan Stanley & Co., Inc., from 1984 to 1997. Mr. Stonehill began his career at JP Morgan in the oil and gas investment banking group, where he worked from 1978 to 1984. Mr. Stonehill is also a director of AXA Equitable Life since November 2017. He served as a director of MLOA from November 2017 to May 2018.
Mr. Stonehill brings to the Board his expertise and distinguished track record of success in the financial services industry and over 30 years’ experience in energy markets, investment banking and capital markets.
Executive Officers
The current executive officers (other than our President and Chief Executive Officer, whose biography is included above in the Directors information) are as follows:
Seth Bernstein, President and Chief Executive Officer of AllianceBernstein Corporation
Mr. Bernstein has been the President and Chief Executive Officer of AllianceBernstein Corporation since May 2017. Mr. Bernstein is also a director of AllianceBernstein Corporation. From 2014 to 2017, Mr. Bernstein was Managing Director and Global Head of Managed Solutions and Strategy at JPMorgan Asset Management. In this role, he was responsible for the management of all discretionary assets within the Private Banking client segment. From 2012 to 2014, Mr. Bernstein was Managing Director and Global Head of Asset Management Solutions for JPMorgan Chase & Co. Among other roles, Mr. Bernstein was Managing Director and Global Head of Fixed Income & Currency from 2002 to 2012. Previously, Mr. Bernstein served as Chief Financial Officer at JPMorgan Chase’s investment management and private banking division. He is a member of the Board of Managers of Haverford College.
Dave S. Hattem, Senior Executive Vice President, General Counsel and Secretary
Mr. Hattem is responsible for the oversight of the Law Department, including the compliance, government relations and corporate secretary’s functions, helping the Company navigate the legal and regulatory environment to achieve its strategic goals. Mr. Hattem has been the Senior Executive Director and General Counsel of AXA Equitable Life since 2012. Prior to his election as General Counsel in 2010, he served as Senior Vice President and Deputy General Counsel of AXA Equitable Life from 2004 to 2010. Prior to joining AXA Equitable Life in 1994, Mr. Hattem served in several senior management positions in the Office of the United States Attorney for the Eastern District of New York. Mr. Hattem began his professional legal career as

an Associate in the Litigation Department of Barrett Smith Schapiro Simon & Armstrong. Mr. Hattem is Chairman of the Board of Directors of The Life Insurance Council of New York.
Jeffrey J. Hurd, Senior Executive Vice President and Chief Operating Officer
Mr. Hurd is responsible for overseeing the human resources, information technology and transformation office functions. The transformation office encompasses operations, data and analytics, procurement and oversight of strategic taskforces. Prior to joining us on January 8, 2018, Mr. Hurd held various positions at American International Group, Inc. (“AIG”), where he most recently served as executive vice president and chief operating officer. Mr. Hurd joined AIG in 1998 and served in various leadership positions there, including AIG deputy general counsel, general counsel and chief administrative officer of asset management, AIG chief administrative officer and executive vice president and chief human resources officer.
Nick Lane, Senior Executive Vice President and Head of U.S. Life, Retirement and Wealth Management
Mr. Lane oversees all aspects of the Company’s retirement and protection businesses, including Individual Retirement, Group Retirement and Protection Solutions, as well as distribution. Mr. Lane also serves as President of AXA Equitable Life. Prior to his most recent role as Chief Executive Officer of AXA Japan which commenced in 2016, Mr. Lane served in multiple roles with the Company, including Senior Executive Director and Head of U.S. Life and Retirement for AXA Equitable Life from 2013 to 2016. Before joining AXA Equitable Life in 2008, Mr. Lane was a leader in the sales and marketing practice of the strategic consulting firm McKinsey & Co. Prior to McKinsey & Co., Mr. Lane served as a captain in the United States Marine Corps.
Anders Malmström, Senior Executive Vice President and Chief Financial Officer
Mr. Malmström is responsible for all actuarial and investment functions, with oversight of the controller, tax, expense management and distribution finance areas. Mr. Malmström has been the Senior Executive Director and Chief Financial Officer of AXA Equitable Life since 2012. Prior to joining AXA Equitable Life, Mr. Malmström was a member of the Executive Board and served as the Head of the Life Business at AXA Winterthur. Prior to joining AXA Winterthur in January 2009, Mr. Malmström was a Senior Vice President at Swiss Life, where he was also a member of management. Mr. Malmström joined Swiss Life in 1997, and held several positions of increasing responsibility during his tenure. Mr. Malmström was appointed a Director of AB in 2017.
Corporate Governance
Board Composition and Director Independence
Our Board is composed of nine directors. Our directors are elected annually to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. The Shareholder Agreement with AXA provides AXA with certain rights relating to the composition of our Board. See “Certain Relationships and Related Party Transactions-Relationship with AXA-Shareholder Agreement.”
The number of members on our Board may be fixed by majority vote of the members of our Board. Any vacancy in the Board that results from (x) the death, disability, resignation or disqualification of any director shall be filled by an affirmative vote of at least a majority of the directors then in office, even if less than a quorum, or by a sole remaining director and (y) an increase in the number of directors or the removal of any director shall be filled (a) until the first date on which AXA ceases to beneficially own more than 50% of the outstanding shares of common stock, solely by an affirmative vote of the holders of at least a majority of the outstanding shares of common stock entitled to vote in an election of directors and (b) from and after the first date on which AXA ceases to beneficially own more than 50% of the outstanding shares of common stock, by an affirmative vote of at least a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Each director shall hold office until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.
Our Board has determined that Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill are “independent” as defined under the NYSE rules and the Exchange Act rules and regulations.

Controlled Company
AXA controls a majority of the voting power of our outstanding common stock and owns approximately 59% of our common stock. Accordingly, we are a “controlled company” within the meaning of the NYSE corporate governance standards. Under NYSE rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NYSE corporate governance standards, including:
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.
We continue to use these exemptions. Accordingly, our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance rules and requirements. The “controlled company” exception does not modify audit committee independence requirements of Rule 10A-3 under the Exchange Act and NYSE rules.
Board Committees
Our Board maintains an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, an Executive Committee and a Finance and Risk Committee. Under NYSE rules, our Audit Committee is required to be composed entirely of independent directors within one year from the date of the effectiveness of the IPO prospectus. As a controlled company, we are not required to have fully independent Compensation or Nominating and Corporate Governance Committees. The following is a brief description of our committees.
Audit Committee
The primary purposes of the Audit Committee are to: (i) assist the Board in overseeing (a) the quality and integrity of our financial statements, (b) the qualifications, independence and performance of our independent auditor, (c) our accounting, financial and external reporting policies and practices, (d) the performance of our internal audit function and (e) our compliance with legal and regulatory requirements, including without limitation any requirements promulgated by the Public Company Accounting Oversight Board and the Financial Accounting Standards Board; (ii) prepare the report of the Audit Committee required to be included in our annual proxy statement and (iii) exercise an oversight function, as contemplated by the Implementation Guide of the National Association of Insurance Commissioners for the Annual Financial Reporting Model Regulation, over the statutory financial reporting of certain insurance and captive reinsurance company subsidiaries of Holdings. The charter of our Audit Committee is available without charge on the investor relations portion of our website.
The members of our Audit Committee are Gérald Harlin, Daniel G. Kaye (Chair), Ramon de Oliveira and Charles G. T. Stonehill. Our Board has designated Gérald Harlin, Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill as “audit committee financial experts,” and each of Gérald Harlin, Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill has been determined to be “financially literate” under NYSE rules. Our Board has also determined that Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill are “independent” as defined under NYSE and Exchange Act rules and regulations.
Compensation Committee
The primary purposes of the Compensation Committee are to: (i) discharge the Board’s responsibilities relating to compensation of Holdings’ executive officers; (ii) take such other actions relating to the compensation and benefits structure of Holdings as the committee deems necessary or appropriate; and (iii) review management development and succession plans for the executive officers. The charter of our Compensation Committee is available without charge on the investor relations portion of our website.
The members of our Compensation Committee are Daniel G. Kaye, Ramon de Oliveira (Chair), George Stansfield and Charles G. T. Stonehill. Our Board has also determined that Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill are “independent” as defined under NYSE and Exchange Act rules and regulations. In light of our status as a “controlled company” within the meaning of the corporate governance standards of the NYSE, we are exempt from the requirement that our Compensation Committee be composed entirely of independent directors under listing standards applicable to membership on

the Compensation Committee. We have established a sub-committee of our Compensation Committee consisting of Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill for purposes of approving any equity-based compensation that we may wish to qualify for the exemption provided under Rule 16b-3 under the Exchange Act.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is responsible, among its other duties and responsibilities, for: (i) identifying individuals qualified and suitable to become Board members and recommending to the Board the director nominees for each annual meeting of stockholders; (ii) developing and recommending to the Board a set of corporate governance principles applicable to us; and (iii) otherwise taking a leadership role in shaping our corporate governance policies. The charter of our Nominating and Corporate Governance Committee is available without charge on the investor relations portion of our website.
The members of our Nominating and Corporate Governance Committee are Daniel G. Kaye, Ramon de Oliveira (Chair), George Stansfield and Charles G. T. Stonehill. Our Board has also determined that Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill are “independent” as defined under NYSE and Exchange Act rules and regulations. In light of our status as a “controlled company” within the meaning of the corporate governance standards of the NYSE, we are exempt from the requirement that our Nominating and Corporate Governance Committee be composed entirely of independent directors.
Executive Committee
The function of the Executive Committee is to exercise the authority of the Board in the management of Holdings between meetings of the Board with specified exceptions.
The members of our Executive Committee are Thomas Buberl (Chair), Mark Pearson, George Stansfield and Charles G. T. Stonehill.
Finance and Risk Committee
The primary purpose of the Finance and Risk Committee is to assist the Board in fulfilling its oversight of management’s responsibilities with respect to financial and capital matters, including strategies that bear upon our long-term financial sustainability. In addition, the Finance and Risk Committee oversees the governance of significant risks throughout the Company and the establishment and ongoing monitoring of the Company’s risk profile, risk capacity and risk appetite.
The members of our Finance and Risk Committee are Daniel G. Kaye, Ramon de Oliveira and Charles G. T. Stonehill (Chair).
Code of Ethics
We have a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees and financial professionals. We also have a Financial Code of Ethics that applies to the CEO, CFO and CAO, or persons performing similar functions, and other designated officers and associates. The Code of Business Conduct and Ethics and the Financial Code of Ethics each address matters such as conflicts of interest, confidentiality, fair dealing and compliance with laws and regulations. The Code of Business Conduct and Ethics and the Financial Code of Ethics are available without charge on the investor relations portion of our website at https://ir.axaequitableholdings.com/investors/corporate-governance/governance-documents.  We will promptly disclose any substantive changes in or waiver of, together with reasons for any waiver of, either of these codes granted to our directors or officers, including our Chief Executive Officer, Chief Financial Officer, senior corporate officers with financial, accounting and reporting responsibilities, including the Controller, and Chief Accounting Officer, and any other employee performing similar tasks or functions for the Company, by posting such information on our website at https://ir.axaequitableholdings.com/investors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires each director and executive officer of Holdings and each beneficial owner of more than ten percent of Holdings’ common stock except for the RSUs granted to filefinancial professionals in 2019 and 2018 which will be settled in cash.
For awards with graded vesting schedules and service-only vesting conditions, including Holdings RSUs and other forms of share-based payment awards, the SEC initial reportsCompany applies a straight-line expense attribution policy for the recognition of ownership and reports of changescompensation cost. Actual forfeitures with respect to his or her ownershipthe 2021, 2020, and 2019 grants were considered immaterial in the recognition of Holdings’ common stock. Tocompensation cost.
Annual Awards
Each year, the bestCompensation Committee of our knowledge, during 2018, all reports required by Section 16(a) were timely filed.

Corporate Governance of AB
AB’s activities are managed and controlled by the General Partner of AB Holding and ABLP. TheHoldings’ Board of Directors approves an equity-based award program with awards under the General Partner acts asprogram granted at its regularly scheduled meeting in February. Annual awards under Holdings’ equity programs for 2021, 2020 and 2019 consisted of a mix of equity vehicles including Holdings RSUs, Holdings stock options and Holdings performance shares. If Holdings pays any ordinary dividend in cash, all outstanding Holdings RSUs and performance shares will accrue dividend equivalents in the Boardform of each of AB Holding and ABLP. Neither ABLP Unitholders nor AB Holding Unitholders have any rightsadditional Holdings RSUs or performance shares to managebe settled or control AB Holding or ABLP or to elect directorsforfeited consistent with the terms of the General Partner.related award.
Holdings RSUs
Holdings RSUs granted to R&P employees under an annual program vest ratably in equal annual installments over a three-year period. The General Partner is an indirect, wholly owned subsidiary of Holdings.
The General Partner does not receive any compensation from ABLP and AB Holding for services rendered to them as their general partner. The General Partner holds a 1% general partnership interest in ABLP and 100,000 units of general partnership interest in AB Holding. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit.
The General Partner is entitled to reimbursement for any expenses it incurs in carrying out its activities as general partner of ABLP and AB Holding, including compensation paid by the General Partner to its directors and officers (to the extent such persons are not compensated directly by AB).
Part III, Item 11.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Our 2018 Named Executive Officers are:
 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
As President and Chief Executive Officer of Holdings, Mr. Pearson is responsible for the business strategy and operationsfair value of the entire Company. The other 2018 Named Executive Officers assist him in his oversight ofawards was measured using the Company as membersclosing price of the Holdings Management Committee (the “Management Committee”). In addition to their responsibilities as membersshare on the grant date, and the resulting compensation expense will be recognized over the shorter of the Management Committee, Messrs. Malmström, Hurdvesting term or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Under the 2020 equity program, eligible R&P financial professionals were granted stock-settled Holdings RSUs which vest ratably in equal annual installments over a three-year period and Hattem are responsibleequity-classified. The fair value of these awards was measured using the closing price of the Holdings share on the grant date, and the resulting compensation
212
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
expense will be recognized over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Under the 2019 and 2018 equity programs, R&P financial professionals were granted cash-settled Holdings RSUs which vest ratably in equal installments over a three-year period. The cash payment for day-to-day managementeach RSU will equal the average closing price for a Holdings share on the NYSE over the 20 trading days immediately preceding the vesting date. These awards are liability-classified and require fair value remeasurement based upon the price of various functionsa Holdings share at the close of each reporting period.
Holdings Stock Options
Holdings stock options granted to R&P employees have a three-year graded vesting schedule, with one-third vesting on each of the three anniversaries. The total grant date fair value of Holdings stock options will be charged to expense over the shorter of the vesting period or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Holdings Performance Shares
Holdings performance shares granted to R&P employees are subject to performance conditions and a three-year cliff-vesting. The performance shares consist of two distinct tranches; one based on the Company’s return-on-equity targets (the “ROE Performance Shares”) and the other based on the Holdings’ relative total shareholder return targets (the “TSR Performance Shares”), each comprising approximately one-half of the award. Participants may receive from 0% to 200% of the unearned performance shares granted. The grant-date fair value of the ROE Performance Shares is established once all applicable Non-GAAP ROE targets are determined and approved. The fair value of the awards was measured using the closing price of the Holdings share on the grant date.
The grant-date fair value of the TSR Performance Shares was measured using a Monte Carlo approach. Under the Monte Carlo approach, stock returns were simulated for our retirementHoldings and protection businesses as executives of AXA Equitable Life while Mr. Bernstein is responsible for day-to-day management of our investment management and research (“IM&R”) business as the Chief Executive Officer of AB.
Messrs. Pearson, Malmström, Hurd and Hattem (collectively,selected peer companies to estimate the “EQH Program Participants”) participate in Holdings’ compensation program for its executives (the “EQH Compensation Program”). Since AB has historically maintained its own plans and programs as a publicly-traded company, Mr. Bernstein participates in AB’s executive compensation program rather than the EQH Compensation Program. AB’s executive compensation is overseenpayout percentages established by the AB Board and AB Compensation Committee as further described below.
EQH COMPENSATION PROGRAM
COMPENSATION PHILOSOPHY
The overriding goalconditions of the EQH Compensation Programaward. The aggregate grant-date fair value of the unearned TSR Performance Shares will be recognized as compensation expense over the shorter of the cliff-vesting period or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Director Awards
Holdings makes annual grants of unrestricted Holdings shares to non-employee directors of Holdings, Equitable Financial and Equitable America. The fair value of these awards was measured using the closing price of Holdings shares on the grant date. These awards immediately vest and all compensation expense is to attract, retain and motivate top-performing executives dedicated to our long-term financial and operational success. To achieve this goal,recognized at the program incorporates metrics to measure our success and fosters a pay-for-performance culture by:grant date.
providing total compensation opportunities competitiveOne-Time Awards Granted in 2018
Transaction Incentive Awards
On May 9, 2018, coincident with the levelsIPO, Holdings granted one-time “Transaction Incentive Awards” to executive officers and certain other R&P employees in the form of total compensation available at722 thousand Holdings RSUs. NaN percent of the companies with which we most directly compete for talent;
making performance-based variable compensationHoldings RSUs vested based on service over the principal component of executive pay to ensure thattwo-year period from the financial success of executivesIPO date (the “Service Units”), and 50 percent vest based on service or market condition (the “Performance Units”). The market condition is based on corporate financialshare price growth of at least 130% or 150% within a two or five-year period, respectively. The market condition was achieved during 2021 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 DECISION-MAKING PROCESSRSUs fully vesting during this period.
Prior to the IPO
Prior to the IPO, Holdings was a wholly-owned indirect subsidiary of AXA, a French company. Accordingly, the EQH Program Participants’ compensation prior to 2018 was primarily based on AXA’s policies and related compensation plans and programs which were not geared toward standard practices for United States public companies in similar businesses.
In anticipation of the IPO, we engaged an independent compensation consultant, Pay Governance LLC (“Pay Governance”), in August 2017 to provide support in understanding industry practice in the United States and to assist in developing compensation policies and programs consistent with Holdings’ transition to a standalone public company. Since Holdings had not yet formed the Compensation Committee, Pay Governance’s work was overseen by management and certain members of the Board and was reviewed with the AXA Equitable Life Organization and Compensation Committee (the “OCC”), which consisted solely of independent directors. Prior to the IPO, the Board approved a number of compensation-related plans, policies and programs based on its review of the Pay Governance analyses discussed below and input from management and the OCC.
Compensation Peer Group Analysis
The first step in developing our compensation policies and programs was to establish a peer group against which those policies and programs would be assessed. Pay Governance assisted in the establishment of a peer group using a screening process under which nine potential peers were initially identified based on objective factors such as industry, geography and assets. This group was then supplemented by companies identified by management as competitors for talent and business. Finally, Pay Governance conducted a review of the peer groups used by others in our sector. The resulting Compensation Peer Group includes:
 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.
The purpose of the Compensation Peer Group is to inform - but not determine - compensation-related decisions. Specifically, we view a well-constructed peer group as a key part of a sound benchmarking process, but only a starting point since judgment is critical during both the benchmarking and compensation decision-making processes. We intend to review the Compensation Peer Group on an annual basis.
Compensation Practices Analysis
After the Compensation Peer Group was determined, Pay Governance conducted a comprehensive analysis of executive compensation practices and design features at the companies in the Compensation Peer Group as well as in the broader financial services sector (the “Pay Governance Practices Analysis”). The Pay Governance Practices Analysis focused on:
short-term incentive plan design,

long-term incentive plan design,
stock ownership guidelines,
perquisites,
claw-back policies,
severance practices and
retirement plan design.
Competitive Compensation Analysis
In addition to the Pay Governance Practices Analysis, in October 2017, Pay Governance performed a competitive compensation analysis for a number of executive positions, including the positions of Messrs. Pearson, Malmström and Hattem (the “Pay Governance Compensation Analysis”). Mr. Hurd’s position was not included in the Pay Governance Compensation Analysis since, at that time, he was not yet employed by the Company and the terms of his 2018 target direct compensation were under negotiation.
The Pay Governance Compensation Analysis was undertaken in accordance with our pre-existing target pay philosophy which Pay Governance confirmed was consistent with US practice:
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.
Consistent with our target pay philosophy, the base salaries, annual cash incentive awards and equity-based awards of our executives are targeted at the median with respect to those of comparable positions at our peers, unless individual factors require otherwise. For example, an executive’s experience and tenure may warrant a lower initial amount with an adjustment to the median over time. Base salaries and targets are reviewed each year.
The Pay Governance Compensation Analysis focused on the components of direct compensation and included a review of two market reference points other than the Compensation Peer Group to provide a broad perspective of the market and ensure a more comprehensive view of practices both within and outside our more direct comparators. These market reference points include:
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.
Pay Governance measured and compared actual pay levels not only on a total direct compensation basis but also by component to review and compare specific compensation elements as well as the particular mix of fixed versus variable, short-term versus long-term and cash versus equity-based compensation at the peer companies.
Following the IPO
Since its formation at the time of the IPO, the Compensation Committee has been, and continues to be, responsible for the general oversight of our compensation programs. Accordingly, the Compensation Committee is responsible for discharging the Board’s responsibilities relating to compensation of our executives including:
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.

The Compensation Committee is supported in its work by the Chief Executive Officer, our Human Resources Department and Pay Governance. Other than the Chief Executive Officer, no Named Executive Officer plays a decision-making role in determining the compensation of any other Named Executive Officer. Mr. Hurd plays an administrative role as described in the table below.
Person/EntityRole
Chief Executive OfficerAs 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 ResourcesHuman 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 GovernanceIn 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.
COMPENSATION COMPONENTS
The EQH Compensation Program includes the following key components:
ComponentDescription
Total Direct Compensation
Base Salary
What is it?
Fixed compensation for services.

What is the purpose of it?
For executives, base salary is intended to provide a fair level of fixed compensation based on the position held, the executive’s career experience, the scope of the position’s responsibilities and the executive’s own performance.
Short-Term Incentive Compensation
What is it?
Variable annual cash incentive awards determined based on performance relative to corporate and individual goals.

What is the purpose of it?
Short-term incentive compensation is intended to:
•
align cash incentive awards with corporate financial results and strategic objectives and reward executives based on corporate and individual performance;
•
enhance the performance assessment process with a focus on accountability;
•
differentiate compensation based on individual performance; and
•
provide competitive total annual compensation opportunities.
Equity-Based Awards
What is it?
Incentive awards consisting of equity vehicles subject to multi-year vesting requirements based on performance requirements and continued service.

What is the purpose of it?
Equity-based awards are intended to:
•
align long-term interests of award recipients with those of shareholders;
•
provide competitive total compensation opportunities; and
•
ensure focus on achievement of long-term strategic business objectives.

ComponentDescription
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.
Compensation Arrangements
Mr. Pearson is the only EQH Program Participant with an employment agreement. Under Mr. Pearson’s agreement, his employment will continue until he is age 65 unless the employment agreement is terminated earlier by Mr. Pearson or the Company on 30 days’ prior written notice.
As a new hire, Mr. Hurd entered into a letter agreement with AXA Equitable Life dated November 3, 2017 containing the terms of his 2018 target direct compensation. The terms of Mr. Hurd’s letter agreement were negotiated in the fall of 2017 and took into consideration his compensation from his previous employer as well as the importance of establishing the Chief Operating Officer position to facilitate the IPO. Prior to the IPO, the Board approved the terms contained in Mr. Hurd’s letter agreement, including a sign-on bonus of $300,000 that was paid to induce him to join the Company.
Base Salary
The Board reviewed the base salaries of the EQH Program Participants prior to the IPO and made certain adjustments in light of its review of the Pay Governance Compensation Analysis and input from management and the OCC. The following table shows the annual rate of base salary of the EQH Program Participants both before and after adjustment:
EQH Program ParticipantAnnual Rate of Base Salary Prior to AdjustmentAdjustment2018 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
None of the EQH Program Participants other than Mr. Pearson is entitled to a minimum rate of base salary. Under Mr. Pearson’s employment agreement, he is entitled to a minimum rate of base salary of $1,225,000 per year, except that his rate of base salary may be decreased in the case of across-the-board salary reductions similarly affecting all AXA Equitable Life officers with the title of Executive Director or higher.
The base salaries earned by the EQH Program Participants in 2018, 2017 and 2016 are reported in the Summary Compensation Table included below.

Short-Term Incentive Compensation
Variable cash incentive awards are generally available for the EQH Program Participants under the AXA Equitable Holdings, Inc. Short-Term Incentive Compensation Plan (the “STIC Plan”) which was approved by the Board prior to the IPO. The STIC Plan is an ongoing “umbrella” plan that allows the Compensation Committee or Board to establish annual programs setting forth performance goals and other terms and conditions applicable to cash incentive awards for employees.
The Board approved performance objectives and their relative weightings for a 2018 variable cash incentive award program under the STIC Plan (the “2018 STIC Program”) prior to the IPO. The EQH Program Participants were all eligible for awards under the 2018 STIC Program. The amount of an EQH Program Participant’s individual award under the 2018 STIC Program was determined by multiplying his 2018 STIC Program award target (his “STIC Target”) by a funding percentage (the “Final Funding Percentage”) and by his “Individual Assessment Percentage” as further described below. The calculation is as follows, subject to a maximum award of 200% of an executive’s STIC Target:
2018 STIC TargetXFinal Funding PercentageXIndividual Assessment Percentage=2018 STIC Program Award
This section describes each element of the award calculation.
STIC Targets
The Board reviewed the STIC Targets of the EQH Program Participants prior to the IPO and made certain adjustments in light of its review of the Pay Governance Compensation Analysis and input from management and the OCC. The following table shows the STIC Targets of the EQH Program Participants both before and after adjustment:
EQH Program ParticipantSTIC Target Prior to AdjustmentAdjustmentCurrent 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
We generally do not provide guaranteed annual incentive awards for any executives, except for certain limited guarantees for new hires. For example, Mr. Hurd was guaranteed a 2018 STIC Program award equal to his STIC Target of $1.5 million. Other than Mr. Hurd, no EQH Program Participant was guaranteed a cash incentive award under the 2018 STIC Program.
Final Funding Percentage
Performance Objectives
A preliminary funding percentage (the “Initial Funding Percentage”) for the 2018 STIC Program for the EQH Program Participants was determined by measuring corporate performance with respect to certain financial and other performance objectives reflecting our key performance indicators. Multiple key performance objectives were chosen to incent performance across a range of activities and balance different types of metrics.
The 2018 STIC Program performance objectives and their relative weightings were:
Non-GAAP Operating Earnings - 50%
Premiums and Flows - 25%
Strategic Initiatives - 25%

Non-GAAP Operating Earnings
What is it?Non-GAAP Operating Earnings is an after-tax financial measure used to evaluate our financial performance that is determined by making certain adjustments to our after-tax net income attributable to Holdings. Specifically, it excludes items that can be distortive or unpredictable from the results of operations and focuses on corporate performance with respect to ongoing operations. Accordingly, it is used as the basis for management’s decision-making.

Non-GAAP Operating Earnings is a financial measure that is not computed in accordance with U.S. GAAP. Please see “Management’s Discussion And Analysis of Financial Condition and Results of Operations-Key Operating Measures-Non-GAAP Operating Earnings” for a more complete description of the calculation of Non-GAAP Operating Earnings.
Why do we use it?Non-GAAP Operating Earnings was chosen as a performance objective for the 2018 STIC Program, and is the most highly weighted performance objective for 2018, due to our belief that it is the strongest indicator of corporate performance for a year.
Premiums and Flows
What is it?The Premiums and Flows performance objective measured the 2018 premiums of our Protection Solutions business, the 2018 net cash flows of our Group Retirement, IM&R and AXA Advisors broker-dealer (“Advisors B/D”) businesses and the 2018 net cash flows of our Individual Retirement business, excluding flows related to fixed rate GMxB products.
Why do we use it?Premiums and Flows was chosen as a performance objective for the 2018 STIC Program due to our belief that it is a strong indicator of future profitability and the competitiveness of our products.
Strategic Initiatives
What is it?
The Strategic Initiatives performance objective measured corporate performance with respect to specific 2018 goals set for certain ongoing initiatives required to ensure Holdings’ successful transition to a standalone public company, including:
•
creation and augmentation of the operational and technological capabilities necessary for a standalone public entity;
•
execution of general account optimization and growth and expense initiatives;
•
reallocation of our real estate footprint;
•
unwind of reinsurance provided to AXA Equitable Life by a captive reinsurer for certain variable annuities with guarantees (the “GMxB Unwind”);
•
execution of Holdings’ bond issuance;
•
implementation of a new hedging program;
•
achievement of our annualized premium equivalent sales budget;
•
augmentation of key leadership and staff and
•
achievement of our target payout ratio of at least 40-60% of Non-GAAP Operating Earnings on an annualized basis.
Why do we use it?Strategic Initiatives was chosen as a performance objective for the 2018 STIC Program to ensure employees’ focus on the critical activities required to ensure our future success.
The performance objectives were determined based on our strategy and focus at the time of the program’s design. Accordingly, the performance objectives and their weightings for future years may vary as different metrics become more relevant.
Calculation of Initial Funding Percentage
The Initial Funding Percentage was determined based on corporate performance with respect to targets approved by the Compensation Committee for each performance objective. For Non-GAAP Operating Earnings and Premiums and Flows, the targets were numerical. For each Strategic Initiative, the target was set as the accomplishment of the 2018 goal for that initiative. Once set, the targets for each performance objective were not permitted to change during the course of the year except for exceptional circumstances as determined by the Compensation Committee. The Compensation Committee did not make any changes to the targets.
Performance at target for a performance objective results in a contribution to the Initial Funding Percentage equal to that performance objective’s weighting. Accordingly, performance at target for all of the performance objectives would result in an Initial Funding Percentage of 100%. Performance below target for a performance objective results in a decreased contribution to the Initial Funding Percentage down to a minimum of 0%. Performance above target for a performance objective results in an increased contribution to the Initial Funding Percentage up to a maximum of twice the performance objective’s weighting. Accordingly, the Initial Funding Percentage could range from 0% to 200%.

The Non-GAAP Operating Earnings and Premiums and Flows performance objectives were also assigned caps and floors that were approved by the Compensation Committee. The cap and floor for the Non-GAAP Operating Earnings performance objective were set at +/- 20% of target while the caps and floors for the Premiums and Flows performance objective were set at +/- 15% of target. Performance at the cap or higher for a performance objective results in that performance objective’s maximum contribution to the Initial Funding Percentage. Performance at the floor or lower results in no contribution to the Initial Funding Percentage by the performance objective.
The Strategic Initiatives’ performance objective was not assigned specific caps or floors. Rather, its contribution to the Initial Funding Percentage (which could range from 0% to 50% as described above) was determined by Mr. Pearson’s qualitative assessment of performance with respect to each goal.
The Initial Funding Percentage was 120%. The following table presents the target and actual results for each of the performance objectives, along with their floors, caps, relative weightings and ultimate contribution to the Initial Funding Percentage. All amounts listed for floors, caps, target and actual results are in millions of U.S. dollars.
Performance ObjectiveFloorTargetCapWeightActual ResultsContribution 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 InitiativesN/A 2018 goals metN/A25%2018 goals met/ exceeded35%
Note: For results in-between the floor and target and target and cap, the contribution to the Initial Funding Percentage is determined by linear interpolation.
Mr. Pearson determined that the Strategic Initiatives performance objective’s contribution to the Initial Funding Percentage would be 35% since all goals were met or exceeded. Mr. Pearson noted, among other items, that:
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.
Determination of Final Funding Percentage
Once the Initial Funding Percentage was calculated as described above, it was reviewed by the Compensation Committee which had responsibility for determining the Final Funding Percentage. In making its determination, the Compensation Committee had discretion to increase or decrease the Initial Funding Percentage by twenty percentage points based on any relevant circumstances determined by the committee, provided that it could not increase the Initial Funding Percentage above the maximum of 200%.
Upon the recommendation of management, the Compensation Committee decreased the Initial Funding Percentage by six percentage points to determine the Final Funding Percentage of 114%. The decrease was made to eliminate the positive impact to Non-GAAP Operating Earnings of actuarial assumptions related to certain annuity business written

under prior management since the impacts of those actuarial assumption changes were not reflective of any current management decisions.
Individual Assessment Percentage and Approval of Awards
An EQH Program Participant’s Individual Assessment Percentage is based on his individual performance and demonstrated leadership behaviors and can range from 0% to 130%. The Compensation Committee reviewed the 2018 performance of each EQH Program Participant as well as Mr. Pearson’s recommendations for each EQH Program Participant’s Individual Assessment Percentage and 2018 STIC Program award. Based on its assessment of each EQH Program Participant’s performance, the Compensation Committee approved the amount of the 2018 STIC Program awards for each EQH Program Participant.
In making its recommendations, the Compensation Committee took into account the factors that it deemed relevant, including the following accomplishments achieved in 2018 by the EQH Program Participants.
Mr. Pearson
AccomplishmentsEnsured 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
AccomplishmentsProvided 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
AccomplishmentsProvided 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

The annual cash incentive awards and bonuses earned by the EQH Program Participants in 2018, 2017 and 2016 are reported in the Summary Compensation Table included below.
Equity-Based AwardsEquity Award Grants
In 2017 and prior years, annual equity-basedequity awards for the EQH Program Participants other than Mr. Hurdemployees, financial professional and directors in our R&P businesses were available under the umbrella of AXA’s global equity program. Equity-based awards were also granted from time to time to executives outside of AXA’s globalAccordingly, equity program as part of a sign-on package or as a retention vehicle. The value of the equity-based awards granted in 2017 and prior years waswere linked to the performance of AXA’s stock.
FollowingR&P employees were granted AXA ordinary share options under the IPO,Stock Option Plan, AXA performance shares under the Compensation Committee hasPerformance Share Plan and R&P financial professionals were granted performance units under the AXA Advisors Performance Unit Plan.
The fair values of these prior awards are measured at the grant date by reference to the closing price of the AXA ordinary share, and the result, as adjusted for achievement of performance targets and pre-vesting forfeitures, generally is attributed over the shorter of the requisite service period, the performance period, if any, or to the date at which
213
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
retirement eligibility is achieved and subsequent service no longer is required for continued vesting of the award. Remeasurements of fair value for subsequent price changes until settlement are made only for performance unit awards that are settled in cash.
Investment Management and Research
Employees and directors in our Investment Management and Research business participate in several unfunded long-term incentive compensation plans maintained by AB. Awards under these plans are linked to AB Holding Units.
Under the AB 2017 Long Term Incentive Plan (“2017 Plan”), which was adopted at a special meeting of AB Holding Unit holders held on September 29, 2017, the following forms of awards may be granted to AB employees and Directors: (i) restricted AB Holding Units or phantom restricted AB Holding Units (a “phantom” award is a contractual right to receive AB Holding Units at a later date or upon a specified event); (ii) options to buy AB Holding Units; and (iii) other AB Holding Unit-based awards (including, without limitation, AB Holding Unit appreciation rights and performance awards). The 2017 Plan will continue to grant equity-basedexpire on September 30, 2027, and no awards under the 2017 Plan will be made after that date. Under the 2017 Plan, the aggregate number of AB Holding Units with respect to which awards may be granted is 60 million, including no more than 30 million newly-issued AB Holding Units.
AB engages in open-market purchases of AB Holding Units to help fund anticipated obligations under its long-term incentive compensation plans and for other corporate purposes. During 2021, 2020, and 2019 AB purchased 5.6 million, 5.4 million, and 6.0 million AB Holding Units for $262 million, 149 million and 173 million, respectively. These amounts reflect open-market purchases of 2.6 million, 3.1 million and 2.9 million AB Holding Units for $117.9 million 74.0 million and 82.7 million, respectively, with the remainder relating to purchases of AB Holding Units from AB employees to allow them to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards, offset by AB Holding Units purchased by AB employees as part of a distribution reinvestment election.
During 2021, 2020, and 2019 AB granted 7.0 million, 5.7 million, and 7.7 million restricted AB Holding units to AB employees and directors, respectively.
During 2021, 2020, and 2019 AB Holding issued 100 thousand, 5 thousand, and 500 thousand AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $3 million, 147 thousand and 12 million, respectively, received from employees as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Holding Units.
As of December 31, 2021, no options to buy AB Holding Units had been granted and 28.1 million AB Holding Units, net of withholding tax requirements, were subject to other AB Holding Unit awards made under the 2017 Plan or an equity compensation plan with similar terms that was canceled in 2017. AB Holding Unit-based awards (including options) in respect of 31.9 million AB Holding Units were available for grant as of December 31, 2021.
Summary of Stock Option Activity
A summary of activity in the AXA Equitableand Holdings Inc. 2018 Omnibus Incentive Plan (the “2018 Equity Plan”)option plans during 2021 as follows:
214
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
 Options Outstanding
 EQH SharesAB Holding UnitsAXA Ordinary Shares
 
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, 20213,428 $21.14 148,985 $23.61 1,726 € 21.01
Options granted— — — — — — 
Options exercised(1,204)21.20 (143,211)23.75 (743)19.19 
Options forfeited, net(184)21.91 — — (109)22.34 
Options expired— — — — — — 
Options outstanding at December 31, 20212,040 $21.69 5,774 $20.12 874 € 22.39
Aggregate intrinsic value (1)$6,305 $165,829 (€ 2,370)
Weighted average remaining contractual term (in years)7.710.334.69 
Options exercisable at December 31, 2021843 $21.58 5,774 $20.12 758 € 22.38
Aggregate intrinsic value (1)$2,700 $165,829 (€ 2,049)
Weighted average remaining contractual term (in years)7.560.334.48 
_______________
(1) Aggregate intrinsic value, presented in thousands, is calculated as the excess of the closing market price on December 31, 2021 of the respective underlying shares over the strike prices of the option awards. For awards with strike prices higher than market prices, intrinsic value is shown as zero.

A summary of stock option grant assumptions activity in the AXA and the Company option plans during 2021, 2020, and 2019 follows:
 EQH Shares (1)
 2021 (2)20202019
Dividend yield—%2.59%2.77%
Expected volatility—%26.00%25.70%
Risk-free interest rates—%1.19%2.49%
Expected life in years—6.05.9
Weighted average fair value per option at grant date$—$4.37$3.82
_______________
(1) The expected volatility is based on historical selected peer data, the weighted average expected term is determined by using the simplified method due to lack of sufficient historical data, the expected dividend yield based on Holdings’ expected annualized dividend, and the risk-free interest rate is based on the U.S. Treasury bond yield for the appropriate expected term.
(2) No stock options granted during 2021.


As of December 31, 2021, approximately $74 thousand of unrecognized compensation cost related to AXA unvested stock option awards is expected to be recognized by the Company over a weighted-average period of 0.2 years. Approximately $1 million of unrecognized compensation cost related to Holdings unvested stock option awards is expected to be recognized by the Company over a weighted average period of 1.06 years.
Summary of Restricted Stock Unit Award Activity
The market price of a Holdings share is used as the basis for the fair value measure of a Holdings RSU. For purposes of determining compensation cost for stock-settled Holdings RSUs, fair value is fixed at the grant date until settlement, absent modification to the terms of the award. For liability-classified cash-settled Holdings and AXA RSUs, fair value is remeasured at the end of each reporting period.
As of December 31, 2021, approximately $3 million Holdings RSUs and AXA ordinary share unit awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $41 million and is expected to be recognized over a weighted-average period of 1.9 years.
215
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2021, approximately $18 million AB Holding Unit awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $137 million is expected to be recognized over a weighted-average period of 6.2 years
The following table summarizes Holdings restricted share units and AXA ordinary share unit activity for 2021.
Shares of Holdings Restricted Stock Units
Weighted-Average Grant Date
 Fair Value
Unvested as of January 1, 20213,666,611 $21.15 
Granted1,630,277 $28.01 
Forfeited(194,262)$24.43 
Vested(1,873,893)$20.81 
Unvested as of December 31, 20213,228,733 $24.61 
Summary of Performance Award Activity
As of December 31, 2021, approximately 2 million Holdings and AXA performance awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $19 million and is expected to be recognized over a weighted-average period of 1.5 years.
The following table summarizes Holdings and AXA performance awards activity for 2021.
Shares of Holdings Performance AwardsWeighted-Average Grant Date
 Fair Value		Shares of AXA Performance AwardsWeighted-Average Grant Date
Fair Value
Unvested as of January 1, 2021676,688 $22.14 2,806,126 $21.86 
Granted1,153,932 $29.91 — $— 
Forfeited(200,814)$28.28 (7,939)$27.18 
Vested(168,132)$23.17 (1,410,020)$23.94 
Other (1)— $— (1,325,420)$19.64 
Unvested as of December 31, 20211,461,674 $28.58 62,747 $21.28 
_______________
(1) One time true-up of AXA Performance Awards related to the transition to third party administrator.


216
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
16)    INCOME TAXES
Income from operations before income taxes included income (loss) from domestic operations of $(392) million, $(1.3) billion and $(2.2) billion for the years ended December 31, 2021, 2020 and 2019, and income from foreign operations of $223 million, $169 million and $131 million for the years ended December 31, 2021, 2020 and 2019. Approximately $59 million, $45 million and $34 million of the Company’s income tax expense is attributed to foreign jurisdictions for the years ended December 31, 2021, 2020 and 2019.
A summary of the income tax (expense) benefit in the consolidated statements of income (loss) follows:
Year Ended December 31,
 202120202019
(in millions)
Income tax (expense) benefit:
Current (expense) benefit$(129)$(5)$(71)
Deferred (expense) benefit274 749 664 
Total$145 $744 $593 

The Federal income taxes attributable to consolidated operations are different from the amounts determined by multiplying the earnings before income taxes and noncontrolling interest by the expected Federal income tax rate of 21%. The 2018 Equity Plansources of the difference and their tax effects are as follows:
Year Ended December 31,
 202120202019
(in millions)
Expected income tax (expense) benefit$36 $229 $433 
Noncontrolling interest69 50 51 
Non-taxable investment income80 92 74 
Tax audit interest(14)(8)(24)
State income taxes(47)(38)(21)
Tax settlements/uncertain tax position release— 398 63 
Tax credits28 21 — 
Other(7)— 17 
Income tax (expense) benefit$145 $744 $593 

During the fourth quarter of 2020, the Company agreed to the Internal Revenue Service’s Revenue Agent’s Report for its consolidated 2010 through 2013 Federal corporate income tax returns. The impact on the Company’s financial statements and unrecognized tax benefits was a tax benefit of $398 million.
During the second quarter of 2019, the Company released a state income tax liability due to recently drafted regulations. The benefit recorded in the Company’s financial statements was $63 million.
The components of the net deferred income taxes are as follows:
217
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
December 31,
 20212020
 AssetsLiabilitiesAssetsLiabilities
(in millions)
Compensation and related benefits$273 $— $297 $— 
Net operating loss and credits699 — 88 — 
Reserves and reinsurance2,281 — 1,528 — 
DAC— 874 — 638 
Unrealized investment gains/losses— 965 — 1,790 
Investments— 794 461 — 
Other— 76 — 170 
Total$3,253 $2,709 $2,374 $2,598 

The Company has Federal net operating loss carryforwards of $2.7 billion and $13 million, for the years ending December 31, 2021 and 2020, respectively, which do not expire.

The Company provides income taxes on the unremitted earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are indefinitely reinvested outside the United States. As of December 31, 2021, $30 million of undistributed earnings of non-U.S. corporate subsidiaries were permanently invested outside the United States. At existing applicable income tax rates, additional taxes of approximately $8 million would need to be provided if such earnings are remitted.
A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows:
 202120202019
(in millions)
Balance at January 1,$316 $501 $539 
Additions for tax positions of prior years11 241 25 
Reductions for tax positions of prior years(4)(382)(63)
Additions for tax positions of current year— — — 
Settlements with tax authorities— (44)— 
Balance at December 31,$323 $316 $501 
Unrecognized tax benefits that, if recognized, would impact the effective rate$67 $77 $369 

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. Interest and penalties included in the amounts of unrecognized tax benefits as of December 31, 2021 and 2020 were $50 million and $36 million, respectively. For 2021, 2020 and 2019, respectively, there were $14 million, $(60) million and $21 million in interest expense (benefit) related to unrecognized tax benefits.
It is an umbrella plan approvedreasonably possible that the total amount of unrecognized tax benefits will change within the next 12 months due to the conclusion of IRS proceedings and the addition of new issues for open tax years. The possible change in the amount of unrecognized tax benefits cannot be estimated at this time.
As of December 31, 2021, tax years 2014 and subsequent remain subject to examination by the BoardIRS.
218
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
17)    COMMITMENTS AND CONTINGENT LIABILITIES
Litigation and our shareholder priorRegulatory Matters
Litigation, regulatory and other loss contingencies arise in the ordinary course of the Company’s activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek, or they may be required only to state an amount sufficient to meet a court’s jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the IPO that allowsmerits or potential value of a claim. Litigation against the Compensation CommitteeCompany includes a variety of claims including, among other things, insurers’ sales practices, alleged agent misconduct, alleged failure to approveproperly supervise agents, contract administration, product design, features and accompanying disclosure, cost of insurance increases, payments of death benefits and the grantreporting and escheatment of equity-based awards under annual programs with varying termsunclaimed property, alleged breach of fiduciary duties, alleged mismanagement of client funds and conditions.other matters.
The Compensation Committee approves annual grantsoutcome of equity-based awards at its regularly scheduled February meeting. Equity-based awards may also be granteda litigation or regulatory matter is difficult to predict, and the amount or range of potential losses associated with these or other loss contingencies requires significant management judgment. It is not possible to predict the ultimate outcome or to provide reasonably possible losses or ranges of losses for all pending regulatory matters, litigation and other loss contingencies. While it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company’s financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory matters, nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company’s litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company’s results of operations or cash flows in a particular quarterly or annual period.
For some matters, the Company is able to estimate a range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of December 31, 2021, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, to be up to approximately $250 million.
For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company’s accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.
In August 2015, a lawsuit was filed in Connecticut Superior Court entitled Richard T. O’Donnell, on behalf of himself and all others similarly situated v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action on behalf of all persons who purchased variable annuities from Equitable Financial, which were subsequently subjected to the volatility management strategy and who suffered injury as a result thereof. Plaintiff asserts a claim for breach of contract alleging that Equitable Financial implemented the volatility management strategy in violation of applicable law. Plaintiff seeks an award of damages individually and on a classwide basis, and costs and disbursements, including attorneys’ fees, expert witness fees and other costs. In 2015, the case was transferred to the Southern District of New York and, in 2018, transferred back to Connecticut Superior Court. In August 2019, the court granted Equitable Financial’s motion to strike, which sought dismissal of the complaint, and in September 2019, Plaintiff filed an Amended Class Action Complaint. Equitable Financial filed renewed motions to strike and to dismiss and for an entry of judgment in October 2019. In August 2020, the court granted Equitable Financial’s motion for entry of judgment.
219
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Plaintiff filed a notice of appeal and in February 2021, the appellate court reversed the entry of judgement and remanded the case to Connecticut Superior Court. We are vigorously defending this matter.
In February 2016, a lawsuit was filed in the Southern District of New York entitled Brach Family Foundation, Inc. v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action brought on behalf of all owners of UL policies subject to Equitable Financial’s COI rate increase. In early 2016, Equitable Financial raised COI rates for certain UL policies issued between 2004 and 2008, which had both issue ages 70 and above and a current face value amount of $1 million and above. A second putative class action was filed in Arizona in 2017 and consolidated with the Brach matter. The consolidated amended class action complaint alleges the following claims: breach of contract; misrepresentations in violation of Section 4226 of the New York Insurance Law; violations of New York General Business Law Section 349; and violations of the California Unfair Competition Law, and the California Elder Abuse Statute. Plaintiffs seek: (a) compensatory damages, costs, and, pre- and post-judgment interest; (b) with respect to their claim concerning Section 4226, a penalty in the amount of premiums paid by the plaintiffs and the putative class; and (c) injunctive relief and attorneys’ fees in connection with their statutory claims. In August 2020, the federal district court issued a decision certifying nationwide breach of contract and Section 4226 classes, and a New York State Section 349 class. Equitable Financial has commenced settlement discussions with the Brach class action plaintiffs through a non-binding mediation process. No assurances can be given about the outcome of that mediation process. Separately, a substantial number of policy owners have opted out of the Brach class action and are not participating in that mediation process. Most have not yet filed suit. Others filed suit previously. They include 5 other federal actions challenging the COI rate increase that are also pending against Equitable Financial and have been coordinated with the Brach action for the purposes of pre-trial activities. They contain allegations similar to those in the Brach action as well as additional allegations for violations of various states’ consumer protection statutes and common law fraud. NaN actions are also pending against Equitable Financial in New York state court. Equitable Financial is vigorously defending each of these matters.
As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters. For example, among other matters, the Company has been cooperating with the U.S. Securities and Exchange Commission (the “SEC”) concerning the SEC’s investigation into the Company’s non-ERISA K-12 403(b) and 457 sales and disclosure practices.The Company has reached an agreement in principle, subject to agreement on documentation and approval by the SEC, to resolve that investigation, including the allegation that daily separate account and portfolio operating expenses disclosed in customer prospectuses and incorporated in the calculation of net investment portfolio results in quarterly account statements were not properly presented or referenced in those account statements. If approved, under the settlement, the Company would neither admit nor deny the allegations, prospectively modify the relevant account statements and cross-reference the relevant prospectus disclosures, and pay a civil monetary penalty of $50 million, to be distributed to plan participants. The Company has fully accrued for the cost of the settlement.
Obligations under Funding Agreements
Pre-Capitalized Trust Securities (“P-Caps”)
In April 2019, pursuant to separate Purchase Agreements among Holdings, Credit Suisse Securities (USA) LLC, as representative of the several initial purchasers, and the Trusts (as defined below), Pine Street Trust I, a Delaware statutory trust (the “2029 Trust”), completed the issuance and sale of 600,000 of its Pre-Capitalized Trust Securities redeemable February 15, 2029 (the “2029 P-Caps”) for an aggregate purchase price of $600 million and Pine Street Trust II, a Delaware statutory trust (the “2049 Trust” and, together with the 2029 Trust, the “Trusts”), completed the issuance and sale of 400,000 of its Pre-Capitalized Trust Securities redeemable February 15, 2049 (the “2049 P-Caps” and, together with the 2029 P-Caps, the “P-Caps”) for an aggregate purchase price of $400 million in each case to qualified institutional buyers in reliance on Rule 144A that are also “qualified purchasers” for purposes of Section 3(c)(7) of the Investment Company Act of 1940, as amended.
The P-Caps are an off-balance sheet contingent funding arrangement that, upon Holdings’ election, gives Holdings the right over a ten-year period (in the case of the 2029 Trust) or over a thirty-year period (in the case of the 2049 Trust) to issue senior notes to these Trusts. The Trusts each invested the proceeds from the sale of their P-Caps in separate portfolios of principal and/or interest strips of U.S. Treasury securities. In return, Holdings will pay a semi-annual facility fee to the 2029 Trust and 2049 Trust calculated at a rate of 2.125% and 2.715% per annum, respectively, which will be applied to the unexercised portion of the contingent funding arrangement and Holdings will reimburse the
220
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Trusts for certain expenses. The facility fees are recorded in Other operating costs and expenses in the Consolidated Statements of Income (Loss).
Federal Home Loan Bank
As a member of the FHLB, Equitable Financial has access to collateralized borrowings. It also may issue funding agreements to the FHLB. Both the collateralized borrowings and funding agreements would require Equitable Financial to pledge qualified mortgage-backed assets and/or government securities as collateral. Equitable Financial issues short-term funding agreements to the FHLB and uses the funds for asset, liability, and cash management purposes. Equitable Financial issues long-term funding agreements to the FHLB and uses the funds for spread lending purposes.
Entering into FHLB membership, borrowings and funding agreements requires the ownership of FHLB stock and the pledge of assets as collateral. Equitable Financial has purchased FHLB stock of $311 million and pledged collateral with a carrying value of $12.5 billion as of December 31, 2021. 
Funding agreements are reported in policyholders’ account balances in the consolidated balance sheets. For other instruments used for asset/liability and cash management purposes, see “Derivative and offsetting assets and liabilities” included in Note 4 of the Notes to these Consolidated Financial Statements. The table below summarizes the Company’s activity of funding agreements with the FHLB.
Change in FHLB Funding Agreements during the Year Ended December 31, 2021
Outstanding Balance at December 31, 2020Issued During the PeriodRepaid During the PeriodLong-term Agreements Maturing Within One YearLong-term Agreements Maturing Within Five YearsOutstanding Balance at December 31, 2021
(in millions)
Short-term funding agreements:
Due in one year or less$5,634 $59,846 $60,504 $377 $— $5,353 
Long-term funding agreements:
Due in years two through five722 411 — (377)534 1,290 
Due in more than five years534 — — — (534)— 
Total long-term funding agreements1,256 411 — (377)— 1,290 
Total funding agreements (1)$6,890 $60,257 $60,504 $— $— $6,643 
_____________
(1)The $4 million and $7 million difference between the funding agreements carrying value shown in fair value table for December 31, 2021 and December 31, 2020, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements borrowing rates.
Funding Agreement-Backed Notes Program
Under the FABN program, Equitable Financial may issue funding agreements in U.S. dollar or other foreign currencies to a Delaware special purpose statutory trust (the “Trust”) in exchange for the proceeds from issuances of fixed and floating rate medium-term marketable notes issued by the Trust from time to time (the “Trust Notes”). The funding agreements have matching interest, maturity and currency payment terms to the applicable Trust notes. The Company hedges the foreign currency exposure of foreign currency denominated funding agreements using cross currency swaps as discussed in Note 4 of the Notes to these Consolidated Financial Statements. As of May 2021, the maximum aggregate principal amount of Trust notes permitted to be outstanding at any one time is $10 billion. Funding agreements issued to the Trust, including any foreign currency transaction adjustments, are reported in policyholders’ account balances in the consolidated balance sheets. Foreign currency transaction adjustments to policyholder’s account balances are recognized in net income (loss) as an adjustment to interest credited to policyholders’ account balances and are offset in interest credited to policyholders’ account balances by a release of AOCI from deferred changes in fair value of designated and qualifying cross currency swap cash flow hedges. The table below summarizes the Equitable Financial’s activity of funding agreements under the FABN.
221
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Change in FABN Funding Agreements during the Year Ended December 31, 2021
Outstanding Balance at December 31, 2020Issued During the PeriodRepaid During the PeriodLong-term Agreements Maturing Within One YearLong-term Agreements Maturing Within Five YearsForeign Currency Transaction AdjustmentOutstanding Balance at December 31,
2021
(in millions)
Short-term funding agreements:
Due in one year or less$— $— $— $— $— $— $— 
Long-term funding agreements:
Due in years two through five1,150 3,450 — — — — 4,600 
Due in more than five years800 1,359 — — — (40)2,119 
Total long-term funding agreements1,950 4,809 — — — (40)6,719 
Total funding agreements (1)$1,950 $4,809 $— $— $— $(40)$6,719 
_____________
(1)The $70 million and $11 million difference between the funding agreements notional value shown and carrying value table as of December 31, 2021 and December 31, 2020, respectively, reflects the remaining amortization of the issuance cost of the funding agreements and the foreign currency transaction adjustment.
Credit Facilities
For information regarding activity pertaining to our credit facilities arrangements, see “Note 12 of the Notes to these Consolidated Financial Statements.
Guarantees and Other Commitments
The Company provides certain guarantees or commitments to affiliates and others. As of December 31, 2021, these arrangements include commitments by the Company to provide equity financing of $1.3 billion to certain limited partnerships and real estate joint ventures under certain conditions. Management believes the Company will not incur material losses as a result of these commitments.
The Company had $17 million of undrawn letters of credit related to reinsurance as of December 31, 2021. The Company had $863 million of commitments under existing mortgage loan agreements as of December 31, 2021.
The Company is the obligor under certain structured settlement agreements it had entered into with unaffiliated insurance companies and beneficiaries. To satisfy its obligations under these agreements, the Company owns single premium annuities issued by previously wholly-owned life insurance subsidiaries. The Company has directed payment under these annuities to be made directly to the beneficiaries under the structured settlement agreements. A contingent liability exists with respect to these agreements should the previously wholly-owned subsidiaries be unable to meet their obligations. Management believes the need for the Company to satisfy those obligations is remote.
18)    INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
In accordance with statutory accounting practices, the following table presents the combined statutory net income (loss), surplus, capital stock & AVR, and securities on deposits for Equitable Financial, Equitable America, USFL, Equitable L&A and CS Life.
222
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

 202120202019
(in millions)
Years Ended December 31,
Combined statutory net income (loss) (1) (2)$(936)$396 $3,821 
As of December 31,
Combined surplus, capital stock and AVR$6,864 $7,475 
Combined securities on deposits n accordance with various government and state regulations$65 $75 
_____________
(1) For 2021, excludes CS Life which was sold June 1, 2021.
(2) For 2020, excludes USFL which was sold April 1, 2020.

Equitable Financial did not pay ordinary dividends during 2021 due to operating losses. In 2020 and 2019, Equitable Financial paid to its direct parent, which subsequently distributed such amount to Holdings, an ordinary shareholder dividend of $2.1 billion and $1.0 billion, respectively.
Dividend Restrictions
As domestic insurance subsidiaries regulated by insurance laws of their respective domiciliary states, Equitable Financial and Equitable America are subject to restrictions as to the amounts they may pay as dividends and amounts they may repay of surplus notes to Holdings.
State insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance company subsidiaries to their parent companies, as well as on transactions between an insurer and its affiliates. Under the New York insurance laws, which are applicable to Equitable Financial, a domestic stock life insurer may not, without prior approval of the NYDFS, pay an ordinary dividend to its stockholders exceeding an amount calculated based on a statutory formula (“Ordinary Dividend”). Dividends in excess of this amount require the insurer to file a notice of its intent to declare the dividends with the NYDFS and obtain prior approval or non-disapproval from the NYDFS with respect to such dividends (“Extraordinary Dividend”). Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any Ordinary Dividend that exceeds the Ordinary Dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).
Applying the formulas above, Equitable Financial could pay an Ordinary Dividend of up to approximately $865 million in 2022.
Intercompany Reinsurance
Equitable Financial and Equitable America receive statutory reserve credits for reinsurance treaties with EQ AZ Life Re to the extent EQ AZ Life Re holds assets in an irrevocable trust (the “EQ AZ Life Re Trust”). As of December 31, 2021, EQ AZ Life Re holds $12.4 billion of assets in the EQ AZ Life Re Trust and letters of credit of $1.9 billion that are guaranteed by Holdings. Under the reinsurance transactions, EQ AZ Life Re is permitted to transfer assets from the EQ AZ Life Re Trust under certain circumstances. The level of statutory reserves held by EQ AZ Life Re fluctuate based on market movements, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust and/or additional letters of credit be secured, which could adversely impact EQ AZ Life Re’s liquidity.
Prescribed and Permitted Accounting Practices
Equitable Financial was granted a permitted practice by the NYDFS to apply SSAP 108, Derivatives Hedging Variable Annuity Guarantees on a retroactive basis from January 1, 2021 through June 30, 2021, after reflecting the impacts of our reinsurance transaction with Venerable. The permitted practice was amended to also permit Equitable Financial to adopt SSAP 108 prospectively as of July 1, 2021. Application of the permitted practice partially mitigates the Regulation 213 impact of the Venerable Transaction on Equitable Financial’s statutory capital and surplus. The impact of the application of this permitted practice was an increase of approximately $1.4 billion in statutory special surplus
223
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
funds and an increase of $1.4 billion in statutory net income as of December 31, 2021 and for the year then ended, which will be amortized over 5 years for each of the retrospective and prospective components. The permitted practice also resets Equitable Financial’s unassigned surplus to zero as of June 30, 2021 to reflect the transformative nature of the Venerable Transaction.
Equitable Financial and Equitable America cede a portion of their statutory reserves to EQ AZ Life Re, a captive reinsurer, as part of the Company’s capital management strategy. EQ AZ Life Re prepares financial statements in a sign-on package or retention vehicle.special purpose framework for statutory reporting.
Differences between Statutory Accounting Principles and U.S. GAAP
Accounting practices used to prepare statutory financial statements for regulatory filings of stock life insurance companies differ in certain instances from U.S. GAAP. The Compensation Committee has not delegated any authoritydifferences between statutory surplus and capital stock determined in accordance with SAP and total equity under U.S. GAAP are primarily: (a) the inclusion in SAP of an AVR intended to management to grant equity-based awards.
This section describesstabilize surplus from fluctuations in the terms of:
annual equity-based awards that were granted to the EQH Program Participants by the Compensation Committee (and approved by a subcommitteevalue of the Compensation Committee composed entirelyinvestment portfolio; (b) future policy benefits and policyholders’ account balances under SAP differ from U.S. GAAP due to differences between actuarial assumptions and reserving methodologies; (c) certain policy acquisition costs are expensed under SAP but deferred under U.S. GAAP and amortized over future periods to achieve a matching of independent directors) afterrevenues and expenses; (d) under SAP, Federal income taxes are provided on the IPO;basis of amounts currently payable with limited recognition of deferred tax assets while under U.S. GAAP, deferred taxes are recorded for temporary differences between the financial statements and tax basis of assets and liabilities where the probability of realization is reasonably assured; (e) the valuation of assets under SAP and U.S. GAAP differ due to different investment valuation and depreciation methodologies, as well as the deferral of interest-related realized capital gains and losses on fixed income investments; (f) the valuation of the investment in AB and AB Holding under SAP reflects a portion of the market value appreciation rather than the equity in the underlying net assets as required under U.S. GAAP; (g) reporting the surplus notes as a component of surplus in SAP but as a liability in U.S. GAAP; (h) computer software development costs are capitalized under U.S. GAAP but expensed under SAP; (i) certain assets, primarily prepaid assets, are not admissible under SAP but are admissible under U.S. GAAP; and (j) cost of reinsurance which is recognized as expense under SAP and amortized over the life of the underlying reinsured policies under U.S. GAAP.
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.
2018 Annual Equity-Based Awards19)    BUSINESS SEGMENT INFORMATION
The equity-based awardsCompany has 4 reportable segments: Individual Retirement, Group Retirement, Investment Management and Research and Protection Solutions.
These segments reflect the manner by which the Company’s chief operating decision maker views and manages the business. A brief description of these segments follows:
•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 VUL, UL 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.
Measurement
Operating earnings (loss) is the financial measure which primarily focuses on the Company’s segments’ results of operations as well as the underlying profitability of the Company’s core business. By excluding items that can be
224
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
distortive and unpredictable such as investment gains (losses) and investment income (loss) from derivative instruments, the Company believes operating earnings (loss) by segment enhances the understanding of the Company’s underlying drivers of profitability and trends in the Company’s segments.
Operating earnings is calculated by adjusting each segment’s net income (loss) attributable to Holdings for the EQH Program Participants granted under the 2018 equity program established under the 2018 Equity Plan (the “2018 Equity Program”) consisted of a mix of equity vehicles including both “full value” (restricted stock units and performance shares) and “appreciation only” (stock options) vehicles. All vehicles contain vesting requirementsfollowing items:
•Items related to service and the performance shares also require the satisfaction ofvariable annuity product features, which include: (i) certain performance criteria related to corporate performance to obtain a payout. This mix of equity vehicles was chosen to ensure alignment with corporate performance while retaining the ability to retain, motivate and reward the executives in the event of changes in the business environment or cycle.
The dollarfair value of the awardsderivatives and other securities we use to hedge these features; (ii) the effect of benefit ratio unlock adjustments, including extraordinary economic conditions or events such as COVID-19; and (iii) changes in the fair value of the embedded derivatives reflected within variable annuity products’ net derivative results and the impact of these items on DAC amortization on our SCS product;
•Investment (gains) losses, which includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
•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 primarily include restructuring costs related to severance and separation, COVID-19 related impacts, net derivative gains (losses) on certain Non-GMxB derivatives, net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments, unrealized gain/losses associated with equity securities and certain legal accruals; 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.
Revenues derived from any customer did not exceed 10% of revenues for the years ended December 31, 2021, 2020 and 2019.
The table below presents operating earnings (loss) by segment and Corporate and Other and a reconciliation to net income (loss) attributable to Holdings for the years ended December 31, 2021, 2020 and 2019, respectively:
 Year Ended December 31,
 202120202019
(in millions)
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Adjustments related to:
Variable annuity product features (1)4,145 3,912 4,863 
Investment (gains) losses(867)(744)(73)
Net actuarial (gains) losses related to pension and other postretirement benefit obligations120 109 99 
Other adjustments (2) (3) (4) (5)717 952 395 
Income tax expense (benefit) related to above adjustments (6)(864)(888)(1,097)
Non-recurring tax items (7)13 (391)(66)
Non-GAAP Operating Earnings$2,825 $2,302 $2,357 
Operating earnings (loss) by segment:
Individual Retirement$1,444 $1,536 $1,598 
Group Retirement$631 $491 $390 
Investment Management and Research$564 $432 $381 
Protection Solutions$317 $146 $336 
Corporate and Other (8)$(131)$(303)$(348)
______________
(1)Includes COVID-19 impact on variable annuity product features due to a first quarter 2020 assumption update of $1.5 billion and other COVID-19 related impacts of $35 million for the year ended December 31, 2020.
225
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(2)Includes COVID-19 impact on other adjustments due to a first quarter 2020 assumption update of $1.0 billion and other COVID-19 related impacts of $86 million for the year ended December 31, 2020.
(3)Include separation costs of $82 million, $108 million and $222 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(4)Includes certain legal accruals related to the COI litigation of $207 million for the year ended December 31, 2021. No adjustments were made to prior period operating earnings as the impact was immaterial.
(5)Includes Non-GMxB related derivative hedge gains and losses of $65 million, $(404) million and $36 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(6)Includes income taxes of $(554) million for the above COVID-19 items for the year ended December 31, 2020.
(7)Prior year includes a reduction in the reserve for uncertain tax positions resulting from the completion of an IRS examination in the year ended December 31, 2020.
(8)Includes interest expense and financing fees of $241 million $218 million and $228 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Segment revenues is a measure of the Company’s revenue by segment as adjusted to exclude certain items. The following table reconciles segment revenues to total revenues by excluding the following items:
•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 includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
•Other adjustments, which primarily includes net derivative gains (losses) on certain Non-GMxB derivatives and net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments and unrealized gain/losses associated with equity securities.
The table below presents segment revenues for the years ended December 31, 2021, 2020 and 2019.
 Year Ended December 31,
 202120202019
(in millions)
Segment revenues:
Individual Retirement (1)$3,785 $4,311 $4,325 
Group Retirement (1)1,372 1,148 1,077 
Investment Management and Research (2)4,430 3,703 3,479 
Protection Solutions (1)3,358 3,144 3,366 
Corporate and Other (1)1,563 1,207 1,228 
Adjustments related to:
Variable annuity product features(4,268)(2,284)(3,935)
Investment gains (losses), net867 744 73 
Other adjustments to segment revenues (3)(71)442 6 
Total revenues$11,036 $12,415 $9,619 
______________
(1)Includes investment expenses charged by AB of $128 million, $71 million and $76 million for the years ended December 31, 2021, 2020 and 2019, respectively, for services provided to the Company.
(2)Inter-segment investment management and other fees of $126 million, $113 million and $104 million for the years ended December 31, 2021, 2020 and 2019, respectively, are included in segment revenues of the Investment Management and Research segment.
(3)Includes COVID-19 impact on other adjustments due to an assumption update of $46 million and other COVID-19 related impacts of $(30) million for the year ended December 31, 2020.
The table below presents total assets by segment as of December 31, 2021 and 2020:
226
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
December 31,
 20212020
(in millions)
Total assets by segment:
Individual Retirement (1)$143,663 $135,764 
Group Retirement55,368 51,466 
Investment Management and Research11,602 11,179 
Protection Solutions50,686 48,568 
Corporate and Other30,943 28,420 
Total assets$292,262 $275,397 
______________
(1) Increase in Individual Retirement as of December 31, 2021 is primarily due to Amounts due from Reinsurers related to ceded reserves on the Venerable Transaction (see Note 1 of the Notes to these Consolidated Financial Statements).
20)    EQUITY
Preferred Stock
Preferred stock authorized, issued and outstanding was as follows:
December 31, 2021December 31, 2020
SeriesShares AuthorizedShares
 Issued		Shares OutstandingShares AuthorizedShares
 Issued		Shares Outstanding
Series A32,000 32,000 32,000 32,000 32,000 32,000 
Series B20,000 20,000 20,000 20,000 20,000 20,000 
Series C12,000 12,000 12,000 — — — 
Total64,000 64,000 64,000 52,000 52,000 52,000 

Series A Fixed Rate Noncumulative Perpetual Preferred Stock
In November and December 2019, Holdings’ issued a total of 32 million depositary shares, each EQH Program Participant were approvedrepresenting a 1/1,000th interest in share of Series A Preferred Stock, $1.00 par value per share, with a liquidation preference of $25,000 per share, for aggregate net cash proceeds of $775 million ($800 million gross). The preferred stock ranks senior to Holdings’ common stock with respect to the payment of dividends and liquidation. Holdings’ will pay dividends on the Series A Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable quarterly in arrears, at an annual rate of 5.25% on the stated amount per share.  In connection with the issuance of the depositary shares and the underlying Series A Preferred Stock, Holdings’ incurred $25 million of issuance costs, which have been recorded as a reduction of additional paid-in capital. The Series A Preferred Stock is redeemable at Holdings’ option in whole or in part, on or after December 15, 2024, at a redemption price of $25,000 per share of preferred stock, plus declared and unpaid dividends. Prior to December 25, 2024, the preferred stock is redeemable at Holdings’ option, in whole but not in part, within 90 days of the occurrence of certain rating agency events at a redemption price equal to $25,500 per share, plus declared and unpaid dividends or certain regulatory capital events at a redemption price equal to $25,000 per share, plus any declared and unpaid dividends.
Series B Fixed Rate Reset Noncumulative Perpetual Preferred Stock
On August 11, 2020, Holdings issued 500,000 depositary shares, each representing a 1/25th interest in a share of Series B Preferred Stock, $1.00 par value per share and liquidation preference of $25,000 per share, for aggregate net cash proceeds of $494 million ($500 million gross). The Series B Preferred Stock ranks senior to Holdings’ common stock and on parity with Holdings’ Series A Preferred Stock with respect to the payment of dividends and liquidation. Holdings will pay dividends on the Series B Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable semi-annually in arrears, at an annual rate equal to the fixed rate of 4.950%, which is reset every 5 years starting on December 15, 2025 (“Reset Date”), at a rate per annum equal to the five-year U.S. Treasury Rate plus 4.736%.
227
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
In connection with the issuance of the depositary shares and the underlying Series B Preferred Stock, Holdings incurred $6 million of issuance costs, which have been recorded as a reduction of additional paid-in capital. The Series B Preferred Stock is redeemable at Holdings’ option in whole or in part, from time to time, during the three-month period prior to, and including, each Reset Date, at a redemption price equal to $25,000 per share of preferred stock, plus any declared and unpaid dividends. Furthermore, the IPO. This dollarpreferred stock is redeemable at Holdings’ option, in whole but not in part at any time, within 90 days after the occurrence of certain rating agency events at a redemption price equal to $25,500 per share, plus any declared and unpaid dividends or after the occurrence of certain regulatory capital events at a redemption price equal to $25,000 per share, plus any declared and unpaid dividends.
Series C Fixed Rate Reset Noncumulative Perpetual Preferred Stock
On January 8, 2021, Holdings issued 12,000,000 depositary shares, each representing a 1/1,000th interest in a share of the Company’s Series C Fixed Rate Noncumulative Perpetual Preferred Stock (“Series C Preferred Stock”), $1.00 par value was then allocated betweenper share and liquidation preference of $25,000 per share, for aggregate net cash proceeds of $293 million ($300 million gross). The Series C Preferred Stock ranks senior to Holdings’ common stock and on parity with Holdings’ Series A Preferred Stock and Series B Preferred Stock with respect to the different equity vehicles. Performance shares receivedpayment of dividends and liquidation. Holdings will pay dividends on the highest allocation in accordance with our pay-for-performance culture. All individual equity grants were approvedSeries C Preferred Stock on a noncumulative basis only when, as and if declared by the Compensation CommitteeCompany’s Board of Directors (or a duly authorized committee of the Board) and will be payable quarterly in arrears, at its regularly-scheduled meeting on May 16, 2018,an annual rate equal to the fixed rate of 4.3%.
Dividends to Shareholders
Dividends declared per share were as follows for the periods indicated:
Year ended December 31,
202120202019
Series A dividends declared$1,313 $1,378 $— 
Series B dividends declared$1,238 $426 $— 
Series C dividends declared$1,006 $— $— 
Common Stock
Dividends declared per share of common stock were as follows for the periods indicated:
Year Ended December 31,
202120202019
Dividends declared$0.71 $0.66 $0.58 


Share Repurchase
In January 2019, Holdings entered into an ASR agreement with a grantthird-party financial institution to repurchase an aggregate of $150 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $150 million and received initial delivery of 7 million shares. The ASR terminated during the first quarter of 2019, at which time an additional 1 million shares were delivered, at an average purchase price of $18.51 per share based on the volume-weighted average price of Holdings’ common stock traded during the pricing period, less an agreed discount. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of December 31, 2019.
On November 6, 2019, Holdings’ Board of Directors authorized a $400 million share repurchase program with an expiration date of MayDecember 31, 2020. On February 26, 2020, Holdings’ Board of Directors authorized an increase of $600 million to the capacity of this program as well as the extension of the term of the program until March 31, 2021. This program was exhausted in January 2021. On October 23, 2020, Holdings’ Board of Directors authorized an incremental $500 million of share repurchase in 2021, subject to the close of the Venerable Transaction. In addition, on February 17, 2018 for restricted2021 Holdings announced that its Board of Directors had authorized a $1.0 billion share repurchase program. Under this program, Holdings may, from time to time, purchase up to $1.0 billion of its common stock unitsbut it is not obligated to purchase any particular number of shares. Repurchases may be effected in the open market, through derivative, accelerated repurchase and performanceother negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under the Exchange Act. As of December 31, 2021, Holdings had authorized capacity of

228
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
approximately $5 million remaining in its share repurchase program, which is inclusive of the $500 million related to the Venerable Transaction.
For the years ended December 31, 2021 , 2020 and 2019, the Company repurchased approximately 51.9 million, 23.7 million and 65.6 million shares of its common stock at a total cost of approximately $1.6 billion, $430 million and $1.3 billion, respectively through open market repurchases, ASRs and privately negotiated transactions. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets. For the years ended December 31, 2021 , 2020 and 2019, the Company reissued approximately 2.3 million, 743 thousand and 387 thousand shares of its treasury stock, respectively. For the year ended December 31, 2021 , 2020 and 2019, the Company retired approximately 32.0 million, 0 shares and 8.1 million shares of its treasury stock, respectively.
In January 2021, Holdings entered into an ASR with a third-party financial institution to repurchase an aggregate of $170 million of Holdings’ common stock. The ASR terminated during the first quarter of 2021, for a total of 6.3 million shares delivered. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of March 31, 2021.
In March 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $200 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $200 million and received initial delivery of 4.9 million shares. The ASR terminated during May 2021, at which time additional shares of 1.1 million were received.
On June 11, 201830, 2021, Holdings established an obligation to enter into an ASR with a third-party financial institution to repurchase an aggregate of $300 million of Holdings’ common stock. Pursuant to the ASR, on July 2, 2021, Holdings made a prepayment of $300 million to receive initial delivery of shares. The ASR terminated during the third quarter of 2021 and a total of 9.9 million shares were received. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of September 30, 2021.
In September 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $200 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $200 million and received initial delivery of 5.6 million shares. The ASR terminated during November 2021, at which time additional shares of 0.6 million were received.
On December 22, 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $140 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $140 million and received initial delivery of 3.4 million shares. The ASR terminated during January 2022, at which time additional shares of 0.7 million were received. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of December 31, 2021.
Accumulated Other Comprehensive Income (Loss)
AOCI represents cumulative gains (losses) on items that are not reflected in net income (loss). The balances as of December 31, 2021, and 2020 follow:
 December 31,
 20212020
 (in millions)
Unrealized gains (losses) on investments$2,684 $4,797 
Defined benefit pension plans(669)(935)
Foreign currency translation adjustments(45)(34)
Total accumulated other comprehensive income (loss)1,970 3,828 
Less: Accumulated other comprehensive income (loss) attributable to noncontrolling interest(34)(35)
Accumulated other comprehensive income (loss) attributable to Holdings$2,004 $3,863 


The components of OCI, net of taxes for the years ended December 31, 2021, 2020 and 2019 follow:

229
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

Year Ended December 31,
 

202120202019
 (in millions)
Change in net unrealized gains (losses) on investments:
Net unrealized gains (losses) arising during the period$(2,467)$4,887 $3,301 
(Gains) losses reclassified into net income (loss) during the period (1)(698)(653)(161)
Net unrealized gains (losses) on investments(3,165)4,234 3,140 
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other1,052 (1,278)(882)
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of $(562), $786, and $595)(2,113)2,956 2,258 
Change in defined benefit plans:
Reclassification to Net income (loss) of amortization of net prior service credit included in net periodic cost (2)266 48 (15)
Change in defined benefit plans (net of deferred income tax expense (benefit) of $68, $14, and $10)266 48 (15)
Foreign currency translation adjustments:
Foreign currency translation gains (losses) arising during the period(11)22 5 
(Gains) losses reclassified into net income (loss) during the period— — — 
Foreign currency translation adjustment(11)22 5 
Total other comprehensive income (loss), net of income taxes(1,858)3,026 2,248 
Less: Other comprehensive income (loss) attributable to noncontrolling interest1 7 (4)
Other comprehensive income (loss) attributable to Holdings$(1,859)$3,019 $2,252 
______________
(1)See “reclassification adjustments” in Note 3 of the Notes to these Consolidated Financial Statements. Reclassification amounts presented net of income tax expense (benefit) of $186 million, $(174) million, and $(43) million for the years ended December 31, 2021, 2020 and 2019, respectively.
(2)These AOCI components are included in the computation of net periodic costs (see Note 14 of the Notes to these Consolidated Financial Statement).

Investment gains and losses reclassified from AOCI to net income (loss) primarily consist of realized gains (losses) on sales and credit losses of AFS securities and are included in total investment gains (losses), net on the consolidated statements of income (loss). Amounts reclassified from AOCI to net income (loss) as related to defined benefit plans primarily consist of amortization of net (gains) losses and net prior service cost (credit) recognized as a component of net periodic cost and reported in compensation and benefits in the consolidated statements of income (loss). Amounts presented in the table above are net of tax.

230
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
21)EARNINGS PER COMMON SHARE
The following table presents a reconciliation of net income (loss) and weighted-average common shares used in calculating basic and diluted EPS for the periods indicated:
 Year Ended December 31,
 202120202019
(in millions)
Weighted-average common shares outstanding:
Weighted-average common shares outstanding — basic417.4 450.4 493.6 
Effect of dilutive securities:
Employee share awards (1)— — — 
Weighted-average common shares outstanding — diluted (2)417.4 450.4 493.6 
Net income (loss):
Net income (loss)$(24)$(349)$(1,467)
Less: Net income (loss) attributable to the noncontrolling interest415 299 297 
Net income (loss) attributable to Holdings(439)(648)(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings’ common shareholders$(518)$(701)$(1,764)
EPS:
Basic$(1.24)$(1.56)$(3.57)
Diluted$(1.24)$(1.56)$(3.57)
_____________
(1)Calculated using the treasury stock options.method.
(2)Due to net loss for the years ended December 31, 2021, 2020 and 2019, approximately 3.8 million, 1.7 million and 0.8 million shares were excluded from the diluted EPS calculation.

For the years ended December 31, 2021, 2020 and 2019 , 8.2 million, 10.0 million, and 6.2 million of outstanding stock awards, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive.


22)    REDEEMABLE NONCONTROLLING INTEREST
The changes in the components of redeemable noncontrolling interests are presented in the table that follows:
Years Ended December 31,
 202120202019
(in millions)
Balance, beginning of period$143 $365 $187 
Net earnings (loss) attributable to redeemable noncontrolling interests5 (3)34 
Purchase/change of redeemable noncontrolling interests320 (219)144 
Balance, end of period$468 $143 $365 

23)     HELD-FOR-SALE:
Assets and liabilities related to the business classified as HFS are separately reported in the Consolidated Balance Sheets beginning in the period in which the business is classified as HFS.

231
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Corporate Solutions Life Reinsurance Company
On October 27, 2020, Holdings entered into a Master Transaction Agreement with VIAC. See Note 1 of the Notes to these Consolidated Financial Statements for further information. As a result of the agreement, an estimated impairment loss of $15 million, net of income tax, was recorded for the year ended December 31, 2020 and is included in investment gains (losses), net in the consolidated statements of income (loss). The transaction closed on June 1, 2021 with a gain on sale, net of income tax, of less than $1 million. Accordingly, the Company recovered the impairment previously recorded, thus reflecting a gain of $15 million for the year ended December 31, 2021.
As of December 31, 2020, assets of CS Life and CS Life Re to be sold, net of the estimated impairment loss accrual, was $470 million which is reported in assets HFS and total liabilities of $322 million was reported in liabilities HFS. The assets and liabilities HFS are reported in the Corporate and Other segment. On June 1, 2021, Holdings completed the sale of CS Life and CS Life Re. Refer to Note 1 of the Notes to these Consolidated Financial Statement further details.
The following table provides an overviewsummarizes the components of assets and liabilities HFS on the different equity vehicles.Consolidated Balance Sheets as of December 31, 2020:

December 31,
2020
(in millions)
Assets:
Fixed maturity securities$235 
Trading securities, at fair value189 
Other invested assets1 
Cash and cash equivalents39 
Other assets25 
Assets held-for-sale489 
Less: Loss accrual(19)
Total assets held-for-sale$470 
Liabilities:
Future policy benefits and other policyholder's liabilities:$320 
Broker-dealer related payables— 
Other liabilities2 
Total liabilities held-for-sale$322 
VehicleDescriptionTypePayout RequirementsAllocation Percentage
EQH RSUsRestricted stock units that will be settled in shares of Holdings’ common stock.Full ValueService25%
EQH Stock OptionsStock options entitling the executives to purchase shares of Holdings common stock.Appreciation OnlyService25%
EQH Performance SharesPerformance shares that will be settled in shares of Holdings’ common stock.Full ValueService and Satisfaction of Performance Criteria50%

EQH RSUs
EQH RSUs have a vesting schedule of approximately three years, with one-third of the grant vesting on each of March 1, 2019, March 1, 2020 and March 1, 2021. EQH RSUs receive dividend equivalents with the same vesting schedule as their related units. The value of EQH RSUs will increase or decrease depending entirely on the price of Holdings’ common stock.
EQH Stock Options
EQH Stock Options have a term of approximately ten years and a vesting schedule of approximately three years, with one-third of the grant vesting on each of March 1, 2019, March 1, 2020 and March 1, 2021. The exercise price for the EQH Stock Options is $21.34, which was the closing price for Holdings’ common stock on the grant date. The value of the EQH Stock Options depends entirely on increases in the price of Holdings’ common stock.
EQH Performance Shares
EQH Performance Shares cliff vest after approximately three years on March 1, 2021. EQH Performance Shares receive dividend equivalents with the same vesting schedule as their related shares and were granted unearned. Two types of EQH Performance Shares were granted:
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”).
Non-GAAP Operating ROE and Relative TSR were chosen as the performance metrics for the EQH Performance Shares because they are important to our shareholders and critical to value creation. When approving these performance metrics, the Compensation Committee considered that, as a best practice, the performance shares should contain metrics that differ from the performance objectives contained in the 2018 STIC Program and that reflect both relative and absolute results.
Non-GAAP Operating ROE
What is it?Non-GAAP Operating ROE is a financial measure used to evaluate our capital efficiency and recurrent profitability. It is determined by dividing Non-GAAP Operating Earnings by the consolidated average equity attributable to Holdings, excluding accumulated other comprehensive income.

Non-GAAP Operating ROE is a financial measure that is not computed in accordance with U.S. GAAP. Please see “Management’s Discussion And Analysis of Financial Condition and Results of Operations-Key Operating Measures-Non-GAAP Operating ROE” for a more complete description of the calculation of Non-GAAP Operating ROE.
Why do we use it ?Non-GAAP Operating ROE was selected as a performance metric because it measures how well we use our capital to generate earnings growth, a critical component of value creation for our shareholders.
Relative TSR
What is it?Relative TSR compares the total amount a company returns to investors during a designated period, including both capital gains and dividends, to such amounts returned by the company’s peers.
Why do we use it?Relative TSR was selected as a performance metric to ensure that payouts are aligned with the experience of Holdings’ shareholders and to create incentives to outperform peers.

ROE Performance Shares
The number of ROE Performance Shares that are earned will be determined at the end of the performance period (January 1, 2018 - December 31, 2020) by multiplying the number of unearned ROE Performance Shares granted by the “Final ROE Performance Factor.” The Final ROE Performance Factor will be determined by averaging the “ROE Performance Factor” for each of the three calendar years in the ROE Performance Period. Specifically, the Company will be assigned target, maximum and threshold amounts for Non-GAAP Operating ROE for each of 2018, 2019 and 2020 that will determine the “ROE Performance Factor” for the applicable year as follows:

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 Amount100%
Threshold Amount25%
Below Threshold0%

Note: For results in-between the threshold and target and target and maximum amounts, the ROE Performance Factor for the applicable year will be determined by linear interpolation.

TSR Performance Shares
The number of TSR Performance Shares that are earned will be determined at the end of a performance period (May 17, 2018 - December 31, 2020) by multiplying the number of unearned TSR Performance Shares by the “TSR Performance Factor.” The TSR Performance Factor will be determined as follows, subject to a cap of 100% if Holdings’ total shareholder return for the performance period is negative:
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 percentile0%
Note: For results in-between the threshold and target and target and maximum amounts, the TSR Performance Factor will be determined by linear interpolation.

The peer group for determining Relative TSR was chosen to reflect our specific mix of businesses as well as our competitors for capital, business and executive talent. Accordingly, in addition to the Compensation Peer Group, it includes four prominent asset management companies with assets under management similar in scope to that of AB (Eaton Vance Corp, Invesco Ltd., Legg Mason, Inc. and T. Rowe Price) and an additional insurance company (Torchmark) to ensure a 75%/25% retirement and protection to asset management company mix and a robust peer set.
Equity Targets
The Board reviewed the Equity Targets of the EQH Program Participants prior to the IPO and made certain adjustments in light of its review of the Pay Governance Compensation Analysis and input from management and the OCC. The following table shows the Equity Targets of the EQH Program Participants both before and after adjustment:
EQH Program ParticipantEquity Target Prior to AdjustmentAdjustment2018 Equity Target
Mr. Pearson$2,350,000$1,500,000$3,850,000
Mr. Malmström$800,000$700,000$1,500,000
Mr. Hurd$1,800,000N/A$1,800,000
Mr. Hattem$750,000$250,000$1,000,000
We do not provide guaranteed equity-based awards for any employees, except for certain limited guarantees for new hires. For example, Mr. Hurd was guaranteed a 2018 Equity Program award of $1.8 million. Other than Mr. Hurd, no EQH Program Participant was guaranteed an award under the 2018 Equity Program.
Award Amounts
Each EQH Program Participant received an award under the 2018 Equity Program. The Board determined the U.S. dollar value of each award prior to the IPO based on the EQH Program Participants’ Equity Targets, its review of each executive’s potential future contributions, its consideration of the importance of retaining the executive in his or her current position and its review of the Pay Governance Compensation Analysis.
The amounts granted to the EQH Program Participants were as follows:

EQH Program ParticipantTotal US Dollar Value of Award
Mr. Pearson$3,850,000
Mr. Malmström$1,500,000
Mr. Hurd$1,800,000
Mr. Hattem$1,000,000
The amounts granted were determined as follows:
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.
Termination of Employment and Restrictive Covenants
Generally, if an EQH Program Participant terminates employment, his 2018 equity-based award will be forfeited with certain exceptions in the case of involuntary termination without cause after March 1, 2019 and termination due to death or disability. Also, in the event that an EQH Program Participant who is at least age 55 with ten years of service terminates employment after March 1, 2019, his equity-based award will continue to vest. Accordingly, since both Mr. Pearson and Mr. Hattem meet these age and service requirements, they will not forfeit their equity-based awards due to any service condition.
In the event that an EQH Program Participant who retains all or a portion of his equity-based award following termination of employment violates certain non-competition and non-solicitation covenants contained in his award agreement, any remaining portion of his award at the time of violation will be immediately forfeited. Also, any portion of his award that vested after termination, and any shares or cash issued upon exercise or settlement of that vested portion, will be immediately forfeited or paid to the Company together with all gains earned or accrued.
Detailed information on the 2018 Equity Program awards for each of the EQH Program Participants is reported in the 2018 Grants of Plan-Based Awards Table included below.
2018 Transaction Incentive Awards
Transaction Incentive Awards for each of the EQH Program Participants were approved by the Board under the 2018 Equity Plan at the time of the IPO. Transaction Incentive Awards were one-time awards granted to key executives who were critical to the success of the IPO to:
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.
All Transaction Incentive Awards were paid in the form of restricted stock units that will be settled in shares of Holdings’ common stock. The amount of the restricted stock units granted to each EQH Program Participant was determined by dividing his award value by the IPO price of $20.
The amounts received by the EQH Program Participants are listed in the table below.

EQH Program ParticipantU.S. Dollar Award Value
Mr. Pearson$3,700,000
Mr. Malmström$1,480,000
Mr. Hurd$740,000
Mr. Hattem$1,480,000
Vesting
Fifty percent of the restricted stock units will vest based on continued service (the “Service Units”) and fifty percent will vest based on the performance of Holdings’ share price (“Performance Units”) as follows:
Type Of UnitsVesting 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.
None of the Performance Units vested in 2018 since the performance conditions were not met.
Termination of Employment
The rules related to termination of employment applicable to the Transaction Incentive Awards are generally identical to those applicable to the annual equity-based awards described above, provided that the Transaction Incentive Awards do not continue to vest based on the satisfaction of any age and service requirements.
Detailed information on the Transaction Incentive Awards granted to each of the EQH Program Participants is reported in the 2018 Grants of Plan-Based Awards Table included below.
2018 Equity-Based Award Payouts
In 2018, Messrs. Pearson, Malmström and Hattem received a payout under the 2014 AXA International Performance Shares Plan (the “2014 AXA Performance Shares Plan”). Under the 2014 AXA Performance Shares Plan, 50% of the AXA performance shares granted to a participant had a cliff vesting schedule of three years (first tranche) and the remaining 50% had a cliff vesting schedule of four years (second tranche).
The number of AXA performance shares earned was determined for the first tranche at the end of a two-year performance period starting on January 1, 2014 and ending on December 31, 2015 and for the second tranche at the end of a three-year performance period starting on January 1, 2014 and ending on December 31, 2016, by multiplying the number of AXA performance shares granted for the applicable tranche by a performance percentage determined based on the performance of AXA Group and our retirement and protection businesses over the applicable performance period. The performance percentage for the first tranche was 123.77% and the performance percentage for the second tranche was 122.92%.
Detailed information on the payouts of 2014 AXA performance shares in 2018 is reported in the 2018 Option Exercises and Stock Vested Table included below.
Other Compensation and Benefit Programs
Benefit Plans
All AXA Equitable Life employees, including the EQH Program Participants, are offered a benefits program that includes health and disability coverage, life insurance and various deferred compensation and retirement benefits. In addition, certain

benefit programs are offered for executives that are not available to non-executive employees. The overall program is periodically reviewed to ensure that the benefits it provides continue to serve business objectives and remain cost-effective and competitive with the programs offered by large diversified financial services companies.
Qualified Retirement Plans
Why do we offer them?We believe that qualified retirement plans encourage long-term service.
What plans are offered?
The AXA Equitable 401(k) Plan (the “401(k) Plan”)
The 401(k) Plan is a tax-qualified defined contribution plan offered for eligible employees who may contribute to the 401(k) Plan on a before-tax, after-tax or Roth 401(k) basis (or any combination of the foregoing) up to tax law and plan limits. The 401(k) Plan also provides for discretionary performance-based contributions and employer contributions as follows:
•
the discretionary performance-based contribution for a calendar year is based on corporate performance for that year and ranges from 0% to 4% of annual eligible compensation (subject to tax law limits). A performance-based contribution of 1.5% of annual eligible compensation was made for the 2018 plan year and
•
the employer contribution for a calendar year is: (i) 2.5% of eligible compensation up to the Social Security Wage Base ($128,400 in 2018) plus, (ii) 5.0% of eligible compensation in excess of the Social Security Wage Base, up to the qualified plan compensation limit ($275,000 in 2018).
Effective January 1, 2019, a 3% employer matching contribution was added for participants’ voluntary deferrals under the plan. All of the EQH Program Participants were eligible to participate in the 401(k) Plan in 2018.
The AXA Equitable Retirement Plan (the “Retirement Plan”)
The Retirement Plan is a tax-qualified defined benefit plan that was previously offered to eligible employees. Prior to its freeze in December 2013, the Retirement Plan provided a cash balance benefit. Mr. Pearson and Mr. Hattem participate in the Retirement Plan.
Excess Retirement Plans
Why do we offer them?We believe that excess plans are an important component of competitive market-based compensation in our Compensation Peer Group and generally.
What plans are offered?
Excess 401(k) Contributions
Excess employer contributions for 401(k) Plan participants with eligible compensation in excess of the qualified plan compensation limit are made to accounts established for participants under the the AXA Equitable Post-2004 Variable Deferred Compensation Plan for Executives (the “Post-2004 VDCP”). For 2018, these contributions were equal to 10% of the participant’s eligible compensation. For 2019, this amount has been reduced to 5% of eligible compensation and a 3% excess matching contribution for participants’ voluntary deferrals under the Post-2004 VDCP has been introduced. All the EQH Program Participants were eligible to receive excess employer contributions in 2018.

The AXA Equitable Excess Retirement Plan (the “Excess Plan”)
The Excess Plan is a nonqualified defined benefit plan for eligible employees. Prior to its freeze in December 2013, the Excess Plan allowed eligible employees, including Mr. Pearson and Mr. Hattem, to earn retirement benefits in excess of what was permitted under tax law limits with respect to the Retirement Plan.
Voluntary Non-Qualified Deferred Compensation Plans
Why do we offer them?We believe that compensation deferral is a cost-effective method of enhancing the savings of executives.
What plans are offered?
The Post-2004 Plan
The Post-2004 Plan allows eligible employees to defer the receipt of certain compensation, including base salary and short-term incentive compensation awards. The amount deferred is credited to a bookkeeping account established in the participant’s name and participants may choose from a range of nominal investments according to which their accounts rise or decline. Participants annually elect the amount they want to defer, the date on which payment of their deferrals will begin and the form of payment. All of the EQH Program Participants were eligible to participate in the Post-2004 Plan in 2018.

The Variable Deferred Compensation Plan (“VDCP”)
Mr. Hattem also participated in the VDCP, the predecessor plan to the Post-2004 Plan prior to its freeze in 2004.

Financial Protection Plans
Why do we offer them?We believe that health, life insurance, disability and other financial protection plans are basic benefits that should be provided to all employees.
What plans are offered?
The AXA Equitable Executive Survivor Benefits Plan (the “ESB Plan”)
In addition to our generally available financial protection plans, certain grandfathered employees (including all of the EQH Program Participants), participate in the ESB Plan which offers benefits to a participant’s family in the case of his or her death. Eligible employees may choose up to four levels of coverage and the form of benefit to be paid at each level. Each level provides a benefit equal to one times the participant’s eligible compensation and offers different coverage choices. Generally, the participant can choose between a life insurance death benefit and a deferred compensation benefit payable upon death at each level. The ESB Plan was closed to new participants on January 1, 2019.
For additional information on 401(k) Plan benefits and excess 401(k) contributions for the Named Executive Officers as well as amounts voluntarily deferred by Mr. Hattem under the Post-2004 Plan and the VDCP, see the Summary Compensation Table and Non-qualified Deferred Compensation Table included below. For additional information on Retirement Plan, Excess Plan and ESB Plan benefits for the EQH Program Participants, see the Pension Benefits Table included below.
Perquisites
EQH Program Participants receive only de minimis perquisites. Financial planning and tax preparation services were provided in 2018 but have been eliminated for 2019 and future years for the EQH Program Participants other than Mr. Pearson.
Pursuant to his employment agreement, Mr. Pearson is entitled to unlimited personal use of a car and driver, two business class trips to the United Kingdom per year with his spouse, expatriate tax services, a company car for his personal use, excess liability insurance coverage and repatriation costs.
The incremental costs of perquisites for the EQH Program Participants during 2018 are included in the column entitled “All Other Compensation” in the Summary Compensation Table included below.
TERMINATION BENEFITS
Severance Benefits
The AXA Equitable Severance Benefit Plan (the “Severance Plan”)
The Severance Plan provides temporary income and other severance benefits to all eligible employees following certain involuntary terminations of employment. Temporary income payments are generally based on length of service or base salary. Payments are capped at the lesser of 52 weeks of base salary and $300,000. To obtain benefits under the Severance Plan, participants must execute a general release and waiver of claims against the Company.
The AXA Equitable Supplemental Severance Plan for Executives (the “Supplemental Severance Plan”)
The Supplemental Severance Plan provides additional severance benefits for the EQH Program Participants other than Mr. Pearson. The Supplemental Severance Plan requires a participant’s general release and waiver of claims to include provisions regarding non-competition and non-solicitation of employees and customers for twelve months following termination of employment.
Mr. Pearson’s Employment Agreement
Mr. Pearson waived the right to receive any benefits under the Severance Plan or the Supplemental Severance Plan. Rather, his employment agreement provides that, if his employment is involuntarily terminated prior to his attaining age 65 other than for cause or death, or Mr. Pearson resigns for “good reason,” Mr. Pearson will be entitled to certain severance benefits, including severance pay equal to two times the sum of his salary and short-term incentive compensation. The severance benefits are contingent upon Mr. Pearson releasing all claims against the Company and his entitlement to severance pay will be discontinued if he provides services for a competitor.

Change in Control Benefits
The Supplemental Severance Plan
In the event of a job elimination or voluntary termination for good reason within twelve months after a change in control of Holdings (not including a change in control related to AXA ceasing to own more than 50% of the shares of Holdings’ common stock), the EQH Program Participants, other than Mr. Pearson, are eligible to receive two times the sum of their base salary and short-term incentive compensation.
2018 Equity Plan
Generally, in the event of a change of control of Holdings (not including a change in control related to AXA ceasing to own more than 50% of the shares of Holdings’ common stock), equity awards granted under the 2018 Equity Plan that are not assumed or replaced with substitute awards having the same or better terms or conditions would fully vest and be cancelled for the same per share payment made to the shareholders in the change in control (less, in the case of options and stock appreciation rights, the applicable exercise or base price).
Mr. Pearson’s Employment Agreement
Under Mr. Pearson’s employment agreement, a change in control of Holdings (not including a change in control related to AXA ceasing to own more than 50% of the shares of Holdings’ common stock) would be deemed to be “good reason” entitling Mr. Pearson to terminate his employment and receive the severance benefits described above in “Mr. Pearson’s Employment Agreement.”
Prior Equity Awards
As mentioned above, the EQH Program Participants other than Mr. Hurd received equity-based awards in 2017 and prior years linked to the performance of AXA’s stock, including both stock options and performance shares. If there is a change in control of Holdings, all of these stock options would become immediately exercisable for their term regardless of the otherwise applicable exercise schedule.
All performance shares granted in 2017 and prior years would be forfeited upon a change in control. However, a change in control will not be deemed to occur for purposes of these performance shares unless AXA ceases to own at least 10% of the capital or voting rights of Holdings.
For additional information on severance and change in control benefits for the EQH Program Participants as of December 31, 2018, see “Potential Payments Upon Termination or Change in Control” below.
MR. BERNSTEIN’S COMPENSATION
COMPENSATION PHILOSOPHY
AB structures its executive compensation programs with the intent of enhancing firm-wide and individual performance and unitholder value. AB is also focused on ensuring that its compensation practices are competitive with those of industry peers and provide sufficient potential for wealth creation for its executives and employees generally, which it believes will enable it to meet the following key compensation goals:
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.
COMPENSATION DECISION-MAKING PROCESS
In 2018, AB management engaged McLagan Partners (“McLagan”) to provide compensation benchmarking data for Mr. Bernstein (“2018 Benchmarking Data”). The 2018 Benchmarking Data summarized 2017 compensation levels and 2018

salaries at selected asset management companies and banks comparable to AB in terms of size and business mix (“Comparable Companies”). The 2018 Benchmarking Data provided ranges of compensation levels at the Comparable Companies for positions similar to Mr. Bernstein’s, including base salary and total compensation.
The Comparable Companies, which AB management selected with input from McLagan, included:
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.
The AB Compensation Committee considered the 2018 Benchmarking Data in concluding that Mr. Bernstein’s 2018 compensation was appropriate and reasonable.
COMPENSATION COMPONENTS
Under his employment agreement with AB (the “Bernstein Employment Agreement”), Mr. Bernstein serves as the President and Chief Executive Officer of AB for a term that commenced on May 1, 2017 and ends on May 1, 2020, provided that the term shall automatically extend for one additional year on May 1, 2020 and each anniversary thereafter, unless the Bernstein Employment Agreement is terminated in accordance with its terms.
The terms of the Bernstein Employment Agreement were the result of arm’s length negotiations between Mr. Bernstein and senior AXA executives. The AB Board then approved the Bernstein Employment Agreement after having considered, among other things, the compensation package provided to Mr. Bernstein’s predecessor, the 2016 compensation and 2017 expected compensation of AB’s other executive officers and Mr. Bernstein’s compensation at his former employer.
Base Salary
Under the Bernstein Employment Agreement, Mr. Bernstein is entitled to a minimum base salary of $500,000 that is reviewed each year by the AB Compensation Committee. The AB Compensation Committee has not made any adjustments to Mr. Bernstein’s base salary, consistent with AB’s policy to keep executive base salaries low in relation to their total compensation.
Short-Term Incentive Compensation
A 2018 variable cash incentive award was available for Mr. Bernstein under AB’s 2018 Incentive Compensation Program (the “2018 AB STIC Program”). Mr. Bernstein’s annual award is not correlated with any specific targets for AB performance but is primarily is a function of AB’s financial performance and the AB Compensation Committee’s assessment of Mr. Bernstein’s performance.

Adjusted Compensation Ratio
For the 2018 AB STIC Program, the AB Compensation Committee approved the use of the “Adjusted Compensation Ratio” as the metric to consider in determining the total amount of incentive compensation paid to all of AB’s employees, including Mr. Bernstein. The Adjusted Compensation Ratio is the ratio of “adjusted employee compensation and benefits expense” to “adjusted net revenues.”
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.
The AB Compensation Committee has approved a 50% limit for the Adjusted Compensation Ratio, except in unexpected or unusual circumstances. For 2018, the Adjusted Compensation Ratio was 47.5%.
Mr. Bernstein’s Award
Mr. Bernstein’s short-term incentive compensation target is $3,000,000, subject to review and increase from time to time by the AB Compensation Committee in its sole discretion. Based on its subjective determination of Mr. Bernstein’s performance, the AB Compensation Committee approved an award of $3,500,000 for Mr. Bernstein under the 2018 AB STIC Program.
In making its determination, the AB Compensation Committee took into account the factors that it deemed relevant, including Mr. Pearson’s recommendations and Mr. Bernstein’s leadership with respect to the progress AB made across its three firm-wide initiatives in 2018, which were:
deliver differentiated return streams to clients;
commercialize and scale its suite of services; and
continue its rigorous focus on expense management.
Highlights during 2018 included active equity net inflows in AB’s retail and institutional channels, the highest amount of gross sales in its private wealth channel in 10 years, and an expansion of AB’s adjusted operating margin by 140 bps to 29.1%. The AB Compensation Committee also considered Mr. Bernstein’s leadership in AB’s continuing process of relocating its headquarters to Nashville.
Equity-Based Awards
Under the Bernstein Employment Agreement, Mr. Bernstein is eligible to receive annual equity-based awards in accordance with AB’s compensation practices and policies generally applicable to the firm’s executive officers as in effect from time to time. The target value for Mr. Bernstein’s annual equity-based awards is $3,500,000, subject to review and increase by the AB Compensation Committee in its sole discretion from time to time. The AB Compensation Committee approved an equity-based award to Mr. Bernstein with a grant date fair value equal to $4,000,000 and four-year pro-rata vesting during its regular meeting held on December 11, 2018 (the “2018 SB Award”).
The 2018 SB Award is denominated in restricted AB Holding Units to align Mr. Bernstein’s long-term interests directly with the interests of AB Unitholders and indirectly with the interests of our shareholders and AB clients, as strong performance

for AB clients generally contributes directly to increases in AB’s assets under management and improvements in our financial performance.
The AB Holding Units underlying the 2018 SB Award are restricted and are not permitted to be transferred by Mr. Bernstein. Mr. Bernstein has voluntarily elected to defer receipt of any vested portion of the 2018 SB Award until 2023. Quarterly cash distributions on vested and unvested restricted AB Holding Units in respect of the 2018 SB Award will be delivered to Mr. Bernstein when cash distributions generally are paid to all Unitholders.
If Mr. Bernstein resigns or is terminated without cause prior to the vesting date, he is eligible to continue to vest in the 2018 SB Award, subject to compliance with the restrictive covenants set forth in the applicable award agreement, including restrictions on competition, and restrictions on employee and client solicitation. The 2018 SB Award will immediately vest upon a termination due to death or disability. AB is permitted to clawback an award if Mr. Bernstein fails to adhere to risk management policies.
As a member of the Management Committee, Mr. Bernstein received a Transaction Incentive Award in 2018 with a dollar value of $740,000. Mr. Bernstein’s Transaction Incentive Award was granted by the EQH Board in the same form and is subject to the same terms and conditions as described above for the EQH Program Participants.
Other Compensation and Benefits
Under the Bernstein Employment Agreement, Mr. Bernstein is eligible to participate in all benefit plans available to AB executive officers and entitled to a company car and driver for business and personal use.
Mr. Bernstein participates in the Profit Sharing Plan for Employees of AB (as amended and restated as of January 1, 2015, as further amended as of January 1, 2017 and as further amended as of April 1, 2018, the “Profit Sharing Plan”), a tax-qualified retirement plan. The AB Compensation Committee determines the amount of annual company contributions (both the level of annual matching by the firm of an employee’s pre-tax salary deferral contributions and the annual company profit sharing contribution, if any).
With respect to 2018, the AB Compensation Committee determined that employee deferral contributions would be matched on a dollar-for-dollar basis up to 5% of eligible compensation and that there would be no profit-sharing contribution.
AB also pays the premiums associated with a life insurance policy purchased on behalf of Mr. Bernstein.
Termination Benefits
The Bernstein Employment Agreement includes severance and change-in-control provisions. If Mr. Bernstein’s employment is terminated without cause or he resigns for “good reason,” and he signs and does not revoke a waiver and release of claims, he will receive certain severance benefits, including a cash payment equal to the sum of his current base salary and bonus opportunity amount (the “Compensation Amount”). If such a termination occurs during the 12 months following a change in control in AB, he will receive the same severance benefits plus an additional payment equal to the Compensation Amount. For this purpose, a change in control of AB would not include a change in control related to AXA ceasing to own more than 50% of the shares of Holdings’ common stock.
If a change in control occurs prior to January 1, 2020, to the extent that payments to Mr. Bernstein would be subject to the excise tax under Section 4999 of the Code, Mr. Bernstein will be entitled to a gross-up payment to ensure that he will retain an amount equal to the excise tax imposed upon such payments, but if the payments do not exceed 110% of the statutory limit imposed by Section 280G of the Code, the payments will be reduced to the maximum amount that does not result in the imposition of such excise tax.
Mr. Bernstein negotiated these severance and change-in-control provisions to have the security and flexibility to focus on the business and preserve the value of his long-term incentive compensation. The AB Board and AXA determined that these provisions were reasonable and appropriate because they were necessary to recruit and retain Mr. Bernstein and provided Mr. Bernstein with effective incentives for future performance. Also, the AB Board and AXA determined to limit the applicability of the excise tax gross-up provision as the application of the excise tax is more burdensome on newly hired employees.
The AB Board and AXA further concluded that the change-in-control and termination provisions in the Bernstein Employment Agreement fit within AB’s overall compensation objectives because these provisions align with AB’s goal of providing executives with effective incentives for future performance, and:

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.
Following his termination of employment for any reason, Mr. Bernstein is subject to covenants with respect to non-competition for six months and non-solicitation of customers and employees for twelve months following termination.
For additional information on severance and change in control benefits for Mr. Bernstein as of December 31, 2018, see “Potential Payments Upon Termination or Change in Control” below.
COMPENSATION-RELATED POLICIES
The Board approved the following compensation-related policies prior to the IPO based on its review of the Pay Governance Practices Analysis and input from management and the OCC.
Clawbacks
Our claw-back and forfeiture policy provides that:
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.
For this purpose, an “executive officer” includes any officer of Holdings for purposes of Section 16 of the Securities Exchange Act of 1934, as amended. Currently, this includes the members of the Management Committee and the Chief Accounting Officer.
Stock Ownership Guidelines
The following stock ownership guidelines apply to members of the Management Committee:
ExecutiveRequirement
Chief Executive Officer6 x base salary
Other Management Committee Members3 x base salary
For purposes of determining whether the guidelines are met, the following are taken into account:
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.
The executives are required to retain 75% of any net Company Stock (after the payment of taxes and the costs of exercise and commissions for stock options) received as compensation until the applicable requirement is met. Once an executive satisfies the stock ownership guidelines, the executive will not be deemed to have fallen out of compliance solely by reason of a decline in the value of the Company Stock.

Hedging and Pledging
Holdings believes that, when an individual who owns Company securities engages in certain forms of hedging or monetization transactions, he or she may no longer have the same objectives as other holders of the Company securities. Accordingly, all Company employees and directors are prohibited from engaging in hedging or similar transactions with respect to Company securities that would allow them to continue to own the securities without the full risks and rewards of ownership. This includes transactions such as zero-cost collars and forward sale contracts that could allow them to lock in much of the value of their holdings in exchange for all or part of the potential for upside appreciation in the securities.
Company employees and directors are further prohibited from pledging Company securities as collateral for a loan (whether in a margin account or otherwise).
Rule 10b5-1 Trading Plan Policy
Holdings’ insider trading policy provides that our insiders may trade in Company securities during periods in which they would otherwise be restricted from doing so under the policy due to the possession of material non-public information or otherwise if they enter into a pre-established written trading plan in accordance with Rule 10b5-1 enacted by the SEC.
All trading plans must:
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.
ACCOUNTING AND TAX CONSIDERATIONS
Internal Revenue Code Section 162(m) (“Section 162(m)”) limits tax deductions relating to executive compensation of certain executives of publicly held companies. For taxable years prior to 2018, neither Holdings nor any of its subsidiaries, including AB, were deemed to be publicly held companies for this purpose.
Following the IPO, Holdings is deemed to constitute a publicly held company for purposes of Section 162(m). Accordingly, the Compensation Committee may consider the deductibility of executive compensation under Section 162(m) when making compensation decisions. However, the Compensation Committee will authorize compensation payments that are not deductible for federal income tax purposes when the committee believes that such payments are appropriate to attract, retain and incent executive talent.
Internal Revenue Code Section 409A (“Section 409A”) imposes stringent requirements that covered nonqualified deferred compensation arrangements must meet to avoid the imposition of additional taxes, including a 20% additional income tax, on the amounts deferred under the arrangements. The Company’s nonqualified deferred compensation arrangements that are subject to Section 409A are designed to comply with the requirements of Section 409A to avoid additional income taxes.
Accounting and other tax impacts not discussed above are also considered in the design of short-term incentive compensation and equity-based award programs.
CONSIDERATION OF MOST RECENT ‘SAY ON PAY’ VOTE
As a newly public company, Holdings has not yet conducted a “Say on Pay” vote.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed the preceding Compensation Discussion and Analysis and discussed with management. Based on the Compensation Committee’s review and discussion with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in Holdings’ annual report on Form 10-K and Holdings’ Proxy Statement.
This report is provided by the following members of the Board who comprise the Compensation Committee.

Ramon de Oliveira (Chair)Daniel Kaye
George StansfieldCharles Stonehill
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served as Compensation Committee members during 2018: Messrs. Kaye, Oliveira, Stansfield and Stonehill. During 2018, none of our executive officers served as: (a) a member of the compensation committee of any entity for which a member of our Board served as an executive officer or (b) a director of another entity, an executive officer of which serves as member of the Board.
CONSIDERATION OF RISK MATTERS IN DETERMINING COMPENSATION
Holdings has considered whether its compensation practices are reasonably likely to have a material adverse effect on Holdings and determined that they are not.
To support its analysis, Holdings engaged a compensation consultant to conduct a risk assessment of the 2018 STIC Program, the 2018 LTIC Program and sales incentive plans for the retirement and protection businesses (the “Risk Assessment”). The Risk Assessment confirmed that the programs have a number of features that contribute to prudent decision-making and avoid an incentive to take excessive risk. The Risk Assessment also noted good governance practices, well-defined oversight processes and well-honed day-to-day processes, roles and responsibilities with cross-functional representation.
Holdings also considered that AB generally denominates its equity-based awards in AB Holding Units and defers their delivery to sensitize employees to risk outcomes and discourage them from taking excessive risks, whether relating to investments, operations, regulatory compliance and/or cyber security, that could lead to a decrease in the value of the AB Holding Units and/or an adverse effect on AB’s long-term prospects. Also, all outstanding AB equity-based awards generally include a provision permitting AB to “claw-back” the unvested portion of the award if the AB Compensation Committee determines that (i) the employee failed to adhere to existing risk management policies and (ii) as a result of the employee’s failure, there has been or reasonably could be expected to be a material adverse impact on AB or the employee’s business unit.
SUMMARY COMPENSATION TABLE
The following table presents the total compensation of the Named Executive Officers for services performed in the years ended December 31, 2018, December 31, 2017 and December 31, 2016, except that no information is provided for 2017 and 2016 for Mr. Hurd and for 2016 for Mr. Bernstein since they were not Named Executive Officers in those years.
The total compensation reported in the following table includes items such as salary and non-equity incentive compensation as well as the grant date fair value of equity-based compensation. The equity-based compensation may never become payable or may end up with a value that is substantially different from the value reported here. The amounts in the Total column do not represent “Total Direct Compensation” as described in the Compensation Discussion and Analysis.

2018 SUMMARY COMPENSATION TABLE
Name and Principal PositionFiscal 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 OfficerMaximum Payout
Mr. Pearson$3,850,021
Mr. Malmström$1,500,054
Mr. Hurd$1,800,039
Mr. Hattem$1,000,036
For Mr. Bernstein, the amount reported in this column for 2018 represents the aggregate grant date fair value of his Transaction Incentive Award and the 2018 SB Award in accordance with FASB ASC Topic 718, and the assumptions made in calculating this amount can be found in Note 14 of the notes to Holdings’ consolidated financial statements for the year ended December 31, 2018. The EQH RSUs, EQH Performance Shares, Transaction Incentive Awards and 2018 SB Award are described in more detail below in “Supplemental Information for Summary Compensation and Grants of Plan-Based Awards Tables.”
(4)The amounts reported in this column for 2018 represent the aggregate grant date fair value of EQH Stock Options granted 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. EQH Stock Options are described in more
detail below in “Supplemental Information for Summary Compensation and Grants of Plan-Based Awards Tables.”
(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
Officer. The actuarial present value of Mr. Pearson’s and Mr. Hattem’s accumulated pension benefits decreased by $712,215 and
$216,816 respectively, primarily due to an increase in the discount rate used to determine the present value. The Named Executive Officers did not have any above-market earnings on non-qualified deferred compensation in 2018, 2017 or 2016. For more information regarding the pension benefits for each Named Executive Officer, see the Pension Benefits as of December 31, 2018 Table below.
(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 AWARD
The following table provides additional information about plan-based compensation disclosed in the Summary Compensation Table. This table includes both equity and non-equity awards granted during 2018.
 2018 GRANTS OF PLAN-BASED AWARDS
 NameGrant 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)
 
 ThresholdTargetMaximumThresholdTargetMaximum
 ($)($)($)(#)(#)(#)
       
 Mark Pearson  $—
$2,128,400
$4,256,800       
 06/11/201805/16/2018       208,786$21.34
$962,503
 05/17/201805/16/2018      44,396  $962,505
 05/17/201805/16/2018    41,54183,082   $962,505
 05/17/201805/16/2018    44,39688,792   $962,505
 05/09/201804/25/2018   46,25092,50092,50092,500  $3,700,000
 Anders Malmström  $—
$1,000,000
$2,000,000       
 06/11/201805/16/2018       81,345$21.34
$375,000
 05/17/201805/16/2018      17,298  $375,021
 05/17/201805/16/2018    16,18532,370   $375,006
 05/17/201805/16/2018    17,29834,596   $375,021
 05/09/201804/25/2018   18,50037,00037,00037,000  $1,480,000
 Jeff Hurd  $—
$1,500,000
$3,000,000       
 06/11/201805/16/2018       97,614$21.34
$450,001
 05/17/201805/16/2018      20,757  $450,012
 05/17/201805/16/2018    19,42223,306   $450,008
 05/17/201805/16/2018    20,75724,908   $450,012
 05/09/201804/25/2018   9,25018,50018,50018,500  $740,000
 Dave Hattem  $—
$750,000
$1,500,000       
 06/11/201805/16/2018       54,230$21.34
$250,000
 05/17/201805/16/2018      11,532  $250,014
 05/17/201805/16/2018    10,79021,580   $250,004
 05/17/201805/16/2018    11,53223,064   $250,014
 05/09/201804/25/2018   18,50037,00037,00037,000  $1,480,000
 Seth Bernstein12/11/201812/11/2018      149,868  $4,000,000
 05/09/201804/25/2018   9,25018,50018,50018,500  $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.


SUPPLEMENTAL INFORMATION FOR SUMMARY COMPENSATION AND GRANTS OF PLAN-BASED AWARDS TABLES
2018 Annual Equity-Based Awards for EQH Program Participants
EQH RSUs. EQH RSUs were granted on May 17, 2018 with a vesting schedule of approximately three years, with one-third of the grant vesting on each of March 1, 2019, March 1, 2020 and March 1, 2021. EQH RSUs receive dividend equivalents with the same vesting schedule as their related units.
EQH Stock Options. EQH Stock Options were granted on June 11, 2018 with a term of approximately ten years and a vesting schedule of approximately three years, with one-third of the grant vesting on each of March 1, 2019, March 1, 2020 and March 1, 2021. The exercise price for the EQH Stock Options is $21.34, which was the closing price for Holdings’ common stock on the grant date.
EQH Performance Shares. EQH Performance Shares were granted on May 17, 2018 and will cliff vest after approximately three years. EQH Performance Shares will receive dividend equivalents with the same vesting schedule as their related shares and were granted unearned. Two types of EQH Performance Shares were granted:
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.
ROE Performance Shares.The number of ROE Performance Shares that are earned will be determined at the end of the performance period (January 1, 2018 - December 31, 2020) by multiplying the number of unearned ROE Performance Shares granted by the “Final ROE Performance Factor.” The Final ROE Performance Factor will be determined by averaging the “ROE Performance Factor” for each of the three calendar years in the ROE Performance Period. Specifically, the Company will be assigned target, maximum and threshold amounts for Non-GAAP Operating ROE for each of 2018, 2019 and 2020 that will determine the “ROE Performance Factor” for the applicable year as follows:
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 Amount100%
Threshold Amount25%
Below Threshold0%

Note: For results in-between the threshold and target and target and maximum amounts, the ROE Performance Factor for the applicable year will be determined by linear interpolation.

TSR Performance Shares.The number of TSR Performance Shares that are earned will be determined at the end of a performance period (May 17, 2018 - December 31, 2020) by multiplying the number of unearned TSR Performance Shares by the “TSR Performance Factor.” The TSR Performance Factor will be determined as follows, subject to a cap of 100% if Holdings’ total shareholder return for the performance period is negative:
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 percentile0%

Note: For results in-between the threshold and target and target and maximum amounts, the TSR Performance Factor will be determined by linear interpolation.

2018 Transaction Incentive Awards
All Transaction Incentive Awards were paid in the form of restricted stock units that will be settled in shares of Holdings’ common stock. The amount of restricted stock units granted to each Named Executive Officer was determined by dividing his award value by the IPO price of $20. The restricted stock units vest as follows:

Type Of UnitsVesting 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.

2018 SB Award
The 2018 SB Award is denominated in restricted AB Holding Units and has a four-year pro-rata vesting schedule. The AB Holding Units underlying the 2018 SB Award are restricted and are not permitted to be transferred by Mr. Bernstein. Mr. Bernstein has voluntarily elected to defer receipt of any vested portion of the 2018 SB Award until 2023. Quarterly cash distributions on vested and unvested restricted AB Holding Units in respect of the 2018 SB Award will be delivered to Mr. Bernstein when cash distributions generally are paid to all Unitholders. If Mr. Bernstein resigns or is terminated without cause prior to the vesting date, he is eligible to continue to vest in the 2018 SB Award, subject to compliance with the restrictive covenants set forth in the applicable award agreement, including restrictions on competition, and restrictions on employee and client solicitation. The 2018 SB Award will immediately vest upon a termination due to death or disability. AB is permitted to claw-back an award if Mr. Bernstein fails to adhere to risk management policies.
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2018
The following table lists outstanding equity grants for each Named Executive Officer as of December 31, 2018. The table includes outstanding equity grants from past years as well as the current year. For the EQH Program Participants, equity grants in 2017 and prior years were awarded in respect of AXA ordinary shares.

OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 2018
OPTION AWARDSSTOCK AWARDS
NameNumber 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 ($) (2)Option Expiration DateNumber of Shares or Units of Stock That Have Not Vested (#) (3)Market Value of Shares or Units of Stock That Have Not Vested ($)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
03/24/2024182,967
$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 Malmström24,414
 12,206
$25.74
03/24/202459,395
$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
03/01/202830,007
$499,016
79,436
$1,321,021
Dave Hattem22,626
 11,314
$25.74
03/24/202453,629
$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 6/19/192018 Transaction Incentive Awards - Service Units Vesting Ratably on 5/10/19 and 5/10/202018 EQH RSUs - Vesting Ratably on 3/1/19, 3/1/20 and 3/1/21
Mr. Pearson92,32146,25044,396
Mr. Malmström 23,597 18,50017,298
Mr. Hurd  9,25020,757
Mr. Hattem 23,597 18,50011,532

For Mr. Bernstein, the first row reflects the remaining unvested 50% of the Service Units he received under his Transaction Incentive Award and the second row reflects unvested restricted AB Holding Units granted in 2017 (which vest ratably on May 1 of each of 2019, 2020 and 2021) and unvested restricted AB Holding Units granted in 2018 (which vest ratably on December 1 of each of 2019, 2020, 2021 and 2022).
(4)This column includes:

 2016 AXA Performance Shares Vesting 6/6/202017 AXA Performance Shares Vesting 6/21/212018 EQH Performance Shares Vesting 3/1/212018 Transaction Incentive Awards - Performance Units
Mr. Pearson106,32697,144
TSR - 41,541
ROE - 88,792
92,500
Mr. Malmström32,27730,377
TSR - 16,185
ROE - 34,596
37,000
Mr. Hurd——
TSR - 19,422
ROE - 41,514
18,500
Mr. Hattem34,29430,377
TSR - 10,790
ROE - 23,064
37,000
Mr. Bernstein———18,500

TSR Performance Shares are reported at target. ROE Performance Shares are reported at maximum.
OPTION EXERCISES AND STOCK VESTED IN 2018
The following table summarizes the value received from stock option exercises and stock awards vested during 2018.
2018 OPTION EXERCISES AND STOCK VESTED
 OPTION AWARDSSTOCK AWARDS
NameNumber of Shares Acquired on Exercise (1)Value Realized on Exercise (2)Number of Shares Acquired on Vesting (3)Value Realized on Vesting (4)
Mark Pearson570,840
$5,455,816
91,929
$2,155,632
Anders Malmström11,644
$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
The following table lists the pension program participation and actuarial present value of each Named Executive Officer’s defined benefit pension at December 31, 2018. Note that Messrs. Malmström and Hurd did not participate in the Retirement Plan or the Excess Plan since they were not eligible to participate in these plans prior to their freeze. Mr. Bernstein does not have any pension benefits.

PENSION BENEFITS AS OF DECEMBER 31, 2018
NamePlan Name (1)Number of Years Credited Service (2)Present Value of Accumulated BenefitPayments during the last fiscal year
Mark PearsonAXA Equitable Retirement Plan3
$70,561
$—
AXA Equitable Excess Retirement Plan3
$696,507
$—
AXA Equitable Executive Survivor Benefit Plan24
$3,591,990
$—
Anders MalmströmAXA Equitable Retirement Plan—
$—
$—
AXA Equitable Excess Retirement Plan—
$—
$—
AXA Equitable Executive Survivor Benefit Plan7
$626,356
$—
Jeffrey HurdAXA Equitable Retirement Plan—
$—
$—
AXA Equitable Excess Retirement Plan—
$—
$—
AXA Equitable Executive Survivor Benefit Plan—
$—
$—
Dave HattemAXA Equitable Retirement Plan19
$526,399
$—
AXA Equitable Excess Retirement Plan19
$1,090,680
$—
AXA Equitable Executive Survivor Benefit Plan25
$2,206,955
$—
Seth BernsteinAXA 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.

The Retirement Plan
The Retirement Plan is a tax-qualified defined benefit plan for eligible employees. The Retirement Plan was frozen effective December 31, 2013.
Participants became vested in their benefits under the Retirement Plan after three years of service. Participants are eligible to retire and begin receiving benefits under the Retirement Plan: (a) at age 65 (the “normal retirement date”) or (b) if they are at least age 55 with at least 5 full years of service (an “early retirement date”).
Prior to the freeze, the Retirement Plan provided a cash balance benefit whereby AXA Equitable Life established a notional account for each Retirement Plan participant. This notional account was credited with deemed pay credits equal to 5% of eligible compensation up to the Social Security wage base plus 10% of eligible compensation above the Social Security wage base. Eligible compensation included base salary and short-term incentive compensation and was subject to limits imposed by the Internal Revenue Code. These notional accounts continue to be credited with deemed interest credits. For pay credits earned on or after April 1, 2012 up to December 31, 2013, the interest rate is determined annually based on the average discount rates for one-year Treasury Constant Maturities. For pay credits earned prior to April 1, 2012, the annual interest rate is the greater of 4% and a rate derived from the average discount rates for one-year Treasury Constant Maturities. For 2018, pay credits earned prior to April 1, 2012 received an interest crediting rate of 4% while pay credits earned on or after April 1, 2012 received an interest crediting rate of 1.25%.
Participants elect the time and form of payment of their cash balance account after they separate from service. The normal form of payment depends on a participant’s marital status as of the payment commencement date. If the participant is unmarried, the normal form will be a single life annuity. If the participant is married, the normal form will be a 50% joint and survivor annuity. Subject to spousal consent requirements, participants may elect the following optional forms of payment for their cash balance account:
Single life annuity;
Optional joint and survivor annuity of any whole percentage between 1% and 100%; and

Lump sum.
Messrs. Pearson and Hattem are each entitled to a frozen cash balance benefit under the Retirement Plan and are currently eligible for early retirement under the plan.
For certain grandfathered participants, the Retirement Plan provides benefits under a traditional defined benefit formula based on final average pay, estimated Social Security benefits and years of service. None of the Named Executive Officers are grandfathered participants.
The Excess Plan
The purpose of the Excess Plan, which was frozen as of December 31, 2013 was to allow eligible employees to earn retirement benefits in excess of those permitted under the Retirement Plan. Specifically, the Retirement Plan is subject to rules under the Code that cap both the amount of eligible earnings that may be taken into account for determining benefits under the Retirement Plan and the amount of benefits that the Retirement Plan may pay annually. Prior to the freeze of the Retirement Plan, the Excess Plan permitted participants to accrue and be paid benefits that they would have earned and been paid under the Retirement Plan but for these limits. The Excess Plan is an unfunded plan and no assets are actually set aside in participants’ names.
The Excess Plan was amended effective September 1, 2008 to comply with the provisions of Code Section 409A. Pursuant to the amendment, a participant’s Excess Plan benefits vested after 2005 will generally be paid in a lump sum on the first day of the month following the month in which separation from service occurs provided that payment will be delayed six months for “specified employees” (generally, the fifty most highly-compensated officers of AXA Equitable Life and its affiliates), unless the participant made a special one-time election with respect to the time and form of payment of those benefits by November 14, 2008. Neither Mr. Pearson or Mr. Hattem made a special election. The time and form of payment of Excess Plan benefits that vested prior to 2005 are the same as the time and form of payment of the participant’s Retirement Plan benefits.
The ESB Plan
The ESB Plan offers financial protection to a participant’s family in the case of his or her death. Eligible employees may choose up to four levels of coverage and the form of benefit to be paid at each level. Each level provides a benefit equal to one times the participant’s eligible compensation (generally, base salary plus the higher of: (a) most recent short-term incentive compensation award and (b) the average of the three highest short-term incentive compensation awards), subject to an overall $25 million cap. Each level offers different coverage choices. Generally, the participant can choose between a life insurance death benefit and a deferred compensation benefit payable upon death at each level. Participants are not required to contribute to the cost of Level 1 or Level 2 coverage but are required to contribute annually to the cost of any options elected under Levels 3 and 4 until age 65.
Level 1 coverage continues after retirement until the participant attains age 65. Levels 2, 3 and 4 coverage continue after retirement until the participant’s death, provided that, for Levels 3 and 4 coverage, all required participant contributions are made.
The ESB Plan was closed to new participants on January 1, 2019.
Level 1
A participant can choose between the following two options at Level 1:
Lump Sum Option-Under the Lump Sum Option, a life insurance policy is purchased on the participant’s life. At the death of the participant, the participant’s beneficiary receives a tax-free lump sum death benefit from the policy. The participant is taxed annually on the value of the life insurance coverage provided.
Survivor Income Option-Upon the participant’s death, the Survivor Income Option provides the participant’s beneficiary with 15 annual payments approximating the value of the Lump Sum Option or a payment equal to the amount of the lump sum. The payments will be taxable but the participant is not subject to annual taxation.
Level 2
At Level 2, a participant can choose among the Lump Sum Option and Survivor Income Option, described above, and the following option:

Surviving Spouse Benefit Option-The Surviving Spouse Benefit Option provides the participant’s spouse with monthly income equal to about 25% of the participant’s monthly compensation (with an offset for social security). The payments are taxable but there is no annual taxation to the participant. The duration of the monthly income depends on the participant’s years of service (with a minimum duration of 5 years).
Levels 3 and 4
At Levels 3 and 4, a participant can choose among the Lump Sum Option and Survivor Income Option, described above and the following option:
Surviving Spouse Income Addition Option-The Surviving Spouse Income Addition Option provides monthly income to the participant’s spouse for life equal to 10% of the participant’s monthly compensation. The payments are taxable but there is no annual taxation to the participant.
NON-QUALIFIED DEFERRED COMPENSATION TABLE AS OF DECEMBER 31, 2018
The following table provides information on the excess 401(k) contributions received by the EQH Program Participants in 2018, as well as their aggregate balances in the Post-2004 Plan and VDCP. It also reflects Mr. Bernstein’s deferral of an equity award granted in 2017.
NON-QUALIFIED DEFERRED COMPENSATION AS OF DECEMBER 31, 2018
NamePlan NameExecutive Contributions in Last FYRegistrant Contributions in Last FY (1)Aggregate Earnings in Last FY (2)Aggregate Withdrawals/DistributionsAggregate Balance at Last FYE (3)
Mark PearsonThe Post-2004 Variable Deferred Compensation Plan$—
$349,964
$(53,972)$394,940
$1,409,626
Anders MalmströmThe Post-2004 Variable Deferred Compensation Plan$—
$146,116
$(23,655)$—
$574,495
Jeffrey HurdThe Post-2004 Variable Deferred Compensation Plan$—
$58,806
$(1,939)$—
$56,867
Dave HattemThe Post-2004 Variable Deferred Compensation Plan$—
$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 ParticipantAmount
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.

The Post-2004 Plan
The Post-2004 Plan allows eligible employees to defer the receipt of up to 25% of their base salary and short-term incentive compensation. Deferrals are credited to a bookkeeping account in the participant’s name on the first day of the month

following the month in which the compensation otherwise would have been paid to him or her. The account is used solely for record keeping purposes and no assets are actually placed into any account in the participant’s name.
Account balances in the Post-2004 Plan are credited with gains and losses as if invested in the available earnings crediting options chosen by the participant. The Post-2004 Plan currently offers a variety of earnings crediting options.
Each year, participants in the Post-2004 Plan can elect to make deferrals into an account they have already established under the plan or they may open a new account, provided that they may not allocate any new deferrals into an account if they are scheduled to receive payments from the account in the next calendar year.
When participants establish an account, they must elect the form and timing of payments for that account. They may receive payments of their account balance in a lump sum or in any combination of lump sum and/or annual installments paid over consecutive years. They may elect to commence payments from an account in July or December of any year after the year following the deferral election provided that payments must commence by the first July or December following age 71.
In addition, AXA Equitable Life provides excess 401(k) contributions in the Post-2004 Plan for participants in the 401(k) Plan with eligible compensation in excess of the qualified plan compensation limit. These contributions are equal to 10% of the participant’s (i) eligible compensation in excess of the qualified plan compensation limit ($275,000 in 2018) and (ii) voluntary deferrals to the Post-2004 Plan for the applicable year.
The VDCP
Under the VDCP, eligible employees were permitted to defer the receipt of up to 25% of their base salary and short-term incentive compensation. Deferrals were credited to a bookkeeping account in the participant’s name on the first day of the month following the month in which the compensation otherwise would have been paid to him or her. The account is used solely for record keeping purposes and no assets are actually placed into any account in the participant’s name. The VDCP was frozen as of December 31, 2004 so that no amounts earned or vested after 2004 can be deferred under the VDCP.
Account balances in the VDCP that are attributable to deferrals of base salary and short-term incentive compensation are credited with gains and losses as if invested in the available earnings crediting options chosen by the participant. The VDCP currently offers a variety of earnings crediting options.
Participants in the VDCP could elect to credit their deferrals to in-service or retirement distribution accounts. For retirement accounts, payments may be received in any combination of a lump sum and/or annual installments paid in consecutive years. Payments may begin in any January or July following the participant’s termination date, but they must begin by either the first January or the first July following the later of: (a) the participant’s attainment of age 65 and (b) the date that is thirteen months following the participant’s termination date. For in-service accounts, payments are made to the participant in December of the year elected by the participant in a lump sum or in up to five annual installments over consecutive years.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
EQH Program Participants
The table below and the accompanying text present the hypothetical payments and benefits that would have been payable if the EQH Program Participants terminated employment, or a change in control (“CIC”) of Holdings occurred on December 31, 2018 (the “Trigger Date”). The payments and benefits described below are hypothetical only, as no such payments or benefits have been paid or made available. Hypothetical payments or benefits that would be due under arrangements that are generally available on the same terms to all salaried employees are not described.
For purposes of this table:
“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.

In all cases included in the table, the EQH Program Participants would have been entitled to the benefits described in the pension and nonqualified deferred compensation tables above with the exception of benefits under the ESB Plan unless otherwise indicated below.
 Temporary Income PaymentsLump Sum PaymentsAXA Equity AwardsEQH 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

Retirement
The only EQH Program Participants eligible to retire on the Trigger Date were Messrs. Pearson and Hattem. For this purpose, “retirement” means termination of service on or after the normal retirement date or any early retirement date under the Retirement Plan. If Messrs. Pearson and Hattem had retired on the Trigger Date:
Lump Sum Payments
They would have received a 2018 STIC Program award equal to the lower of their 2017 cash incentive award and their 2018 STIC Target.
AXA Equity Awards
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.
EQH Equity Awards
Their EQH Equity Awards would have been forfeited.
If the Trigger Date occurred after March 1, 2019, their EQH Equity Awards (other than the Transaction Incentive Awards) would continue to vest pursuant to their terms, including satisfaction of any applicable performance criteria. Any vested options held at the time of termination would remain exercisable until the earlier of five years from the date of termination and their expiration.
Other
They would have been entitled to access to retiree medical coverage without any company subsidy as well as continued participation in the ESB Plan (the “Medical/ESB Benefits”).
Good Reason Termination - No CIC
Under his employment agreement, if Mr. Pearson had voluntarily terminated on the Trigger Date for “good reason” as described below, he would have been entitled to:
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.
The temporary income payments would have been paid over a two-year period beginning on the first payroll date of the Company following the 60th day after the date of termination of employment (the “Severance Period”).
For this purpose, “good reason” includes:
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).
The severance benefits are contingent upon Mr. Pearson releasing all claims against the Company and his entitlement to severance pay will be discontinued if he provides services for a competitor.
Mr. Pearson’s equity awards would have been treated as described above under “Retirement” and he would have received the Medical/ESB Benefits. Other than Mr. Pearson, the EQH Program Participants are not entitled to termination payments or benefits in connection with a termination for good reason unrelated to a CIC.

Involuntary Termination - No CIC
Temporary Income and Lump Sum Payments
If they had experienced an involuntary termination of employment unrelated to a CIC on the Trigger Date that satisfied the conditions in the Severance Plan (a “job elimination”), the EQH Program Participants other than Mr. Pearson would have been eligible for severance benefits under the Severance Plan, as supplemented by the Supplemental Severance Plan. To receive benefits, the executives would have been required to sign a separation agreement including a release of all claims against the Company. The agreement would also have included provisions regarding non-competition and non-solicitation of customers and employees for twelve months following termination of employment. The severance benefits would have included:
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.
Under Mr. Pearson’s employment agreement, he waived any right to participate in the Severance Plan or Supplemental Severance Plan. Rather, if Mr. Pearson’s employment had been terminated without “cause” on the Trigger Date, he would have been entitled to the same benefits as termination for good reason as described above, subject to the same conditions, provided that his severance benefits would cease after one year if certain performance conditions were not met for each of the two consecutive fiscal years immediately preceding the year of termination.
“Cause” is generally defined in Mr. Pearson’s employment agreement as: (i) willful failure to perform substantially his duties after reasonable notice of his failure; (ii) willful misconduct that is materially injurious to the company; (iii) conviction of, or plea of nolo contedere to, a felony; or (iv) willful breach of any written covenant or agreement with the company to not disclose information pertaining to the company or to not compete or interfere with the company.
AXA Equity Awards
Mr. Malmstrom would have had a one-year severance period during which he would have been treated as if he continued in the employ of the Company for purposes of his AXA stock options. Mr. Pearson’s and Mr. Hattem’s AXA Equity Awards would have been treated as described above under “Retirement”.
EQH Equity Awards
The EQH Program Participants would have retained a portion of their Transaction Incentive Awards equal to the amount of their unvested Performance Units as of the Trigger Date multiplied by the quotient of: (a) the number of full months elapsed between the grant date and the Trigger Date; and (b) sixty. The retained Performance Units would remain subject to their vesting conditions. The EQH Program Participants would have forfeited their other EQH Equity Awards upon an involuntary termination without cause on the Trigger Date.
If the involuntary termination without cause occurred after March 1, 2019, provided they signed and did not revoke a release of claims, Mr. Malmström and Mr. Hurd would retain a pro rata portion of the unvested EQH Performance Shares, which would remain outstanding and vest subject to the attainment of performance criteria. If Mr. Pearson and Mr. Hattem signed and did not revoke a release of claims, their EQH Equity Awards (other than the Transaction Incentive Awards) would continue to vest pursuant to their terms, including satisfaction of any applicable performance criteria. Any vested options held at the time of termination would remain exercisable until the earlier of five years from the date of termination and their expiration.
Other
Mr. Pearson and Mr. Hattem would have received the Medical/ESB Benefits.
Change in Control w/o Termination
AXA Equity Awards

If there had been a change in control of Holdings as of the Trigger Date, all unvested AXA stock options would have become immediately exercisable for their term regardless of the otherwise applicable exercise schedule. For the AXA stock options, a CIC would include: (i) a change in the ownership of Holdings such that AXA owns less than 50% of the total voting power of Holdings then outstanding equity securities; or (ii) a sale of all or substantially all of Holdings assets to a third party that is not an AXA affiliate.
EQH Equity Awards
Generally, in the event of a CIC, equity awards granted under the 2018 Equity Plan without performance criteria that are not assumed or replaced with substitute awards having the same or better terms or conditions would fully vest and be cancelled for the same per share payment made to the shareholders in the CIC (less, in the case of options and stock appreciation rights, the applicable exercise or base price).
Equity awards granted under the 2018 Equity Plan with performance criteria would be modified into time-vesting awards at the time of the CIC based on either target or actual levels of performance, and the modified awards would then either be replaced or assumed, or cashed out, as described above.
For the EQH Equity Awards, a CIC generally includes the following events:
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.
For purposes of the table above, we have assumed that the EQH Equity Awards are not assumed or replaced.
Other
No EQH Program Participant is eligible for a Code Section 280G excise tax gross-up in connection with a CIC.
Involuntary or Good Reason Termination - CIC
For purposes of the Severance Plan, the Supplemental Severance Plan and Mr. Pearson’s employment agreement, the definition of a CIC is identical to the definition described above for EQH Equity Awards.
EQH Program Participants other than Mr. Pearson
In the event of a job elimination within 12 months after a CIC, the EQH Program Participants other than Mr. Pearson are eligible to receive the following under the Severance Plan and the Supplemental Severance Plan:
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.
For this purpose, a job elimination includes certain voluntary terminations of employment by an executive for “good reason,” including:

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.
For a voluntary termination of employment for “good reason” to be treated as an involuntary termination, the executive must give notice of the existence of the “good reason” condition within 90 days of its initial existence and the Company must not remedy the condition within 30 days of the notice.
To receive benefits, the executives would have been required to sign a separation agreement including a release of all claims against the Company. The agreement would also have included provisions regarding non-competition and non-solicitation of customers and employees for twelve months following termination of employment.
Mr. Pearson
As mentioned above, Mr. Pearson’s employment agreement provides that “good reason” includes Mr. Pearson’s termination of employment in the event of a CIC (provided that Mr. Pearson delivers notice of termination within 180 days after the CIC). Accordingly, Mr. Pearson would have been entitled to the benefits described above for a voluntary termination for good reason, subject to the same conditions. Also, in the event of Mr. Pearson’s resignation due to a CIC, Mr. Pearson’s severance benefits will cease after one year if certain performance conditions are not met for each of the two consecutive fiscal years immediately preceding the year of termination.
EQH Equity Awards
Any EQH Equity Awards that are assumed and/or replaced with substitute awards in connection to the CIC will immediately vest in the event of an EQH Program Participant’s termination of employment without “cause” or for “good reason” within twenty-four months following a CIC. In the event of a participant’s termination of employment without “cause” or for “good reason” within the period ninety days prior to the CIC, the participant’s awards would be treated as if the participant’s termination occurred immediately after the CIC.
Other
Mr. Pearson and Mr. Hattem would have received the Medical/ESB Benefits.
Death
If the EQH Program Participants had terminated employment due to death on the Trigger Date:
AXA Equity Awards
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.
EQH Equity Awards
All EQH Equity Awards would have immediately vested. EQH stock options would have been exercisable until the earlier of one year from the date of death and their expiration. All other awards would have been immediately paid out, assuming target performance for EQH performance shares.
Disability
AXA Equity Awards
If an EQH Program Participant had terminated employment due to disability on the Trigger Date, he would have been treated as if he continued in the employ of the Company until the end of the vesting period for purposes of his AXA

performance share awards. Accordingly, he would have received AXA performance share payouts at the same time and in the same amounts as he would have received such payouts if he had not terminated employment. The estimated values of those payouts at the Trigger Date assume target performance except for 2015 performance shares for which the actual performance factor was used.
EQH Equity Awards
If an EQH Program Participant had terminated employment due to disability on the Trigger Date, he would have been treated as if he continued in the employ of the Company with respect to all of his EQH Equity Awards. The estimated values of payouts related to EQH Performance Shares at the Trigger Date assume target performance.
Restrictive Covenants
Mr. Pearson’s Employment Agreement
Mr. Pearson is subject to a confidentiality provision, in addition to covenants with respect to non-competition during his employment and twelve months thereafter (six months if he voluntarily terminates employment without good reason) and non-solicitation of customers and employees for twelve months following his termination of employment or, if longer, during the Severance Period.
The Supplemental Severance Plan
To receive benefits under the Supplemental Severance Plan, participants are required to sign a separation agreement including a release of all claims against the Company. The agreement also must include provisions regarding non-competition and non-solicitation of customers and employees for twelve months following termination of employment.
EQH Equity Awards
The award agreements for the EQH Equity Awards (other than the Transaction Incentive Awards) include provisions regarding non-competition and non-solicitation of customers and employees for twelve months following termination of employment. In the event that an EQH Program Participant who retains all or a portion of his equity-based award following termination of employment violates the non-competition and non-solicitation contained in his award agreement, any remaining portion of his award at the time of violation will be immediately forfeited. Also, any portion of his award that vested after termination, and any shares or cash issued upon exercise or settlement of that vested portion, will be immediately forfeited or paid to the Company together with all gains earned or accrued.
MR. BERNSTEIN
The table below and the accompanying text present the hypothetical payments and benefits that would have been payable if Mr. Bernstein terminated employment, or a CIC of AB (or, in the case of Mr. Bernstein’s Transaction Incentive Award, a CIC of Holdings) occurred on December 31, 2018 (the “Trigger Date”). The payments and benefits described below are hypothetical only, as no such payments or benefits have been paid or made available. Hypothetical payments or benefits that would be due under arrangements that are generally available on the same terms to all salaried employees are not described.
For purposes of these tables, hypothetical payments and benefits related to Mr. Bernstein’s equity awards are calculated using the closing price of the Holdings’ share on December 31, 2018 or the closing price of an AB Holding Unit on December 31, 2018 as applicable.
Transaction Incentive Award
 Acceleration of Award
Death$461,463
Disability$461,463
Involuntary Termination w/o Cause$35,904
CIC of Holdings$461,463

Death

If Mr. Bernstein had terminated employment due to death on the Trigger Date, he would have immediately vested in the unvested portion of his Transaction Incentive Award.
Disability
If Mr. Bernstein had terminated employment due to disability on the Trigger Date, he would have been treated as if he continued in the employ of the Company.
Involuntary Termination w/o Cause
If Mr. Bernstein’s employment had been involuntarily terminated on the Trigger Date without cause, he would have retained a portion of his Transaction Incentive Award equal to the amount of his unvested Performance Units as of the Trigger Date multiplied by the quotient of (a) the number of full months elapsed between the grant date and the Trigger Date over (b) sixty. The retained Performance Units would have remained subject to their vesting conditions.
CIC
In the event of a CIC on the Trigger Date, Mr. Bernstein would have immediately vested in the unvested portion of his Transaction Incentive Award.
Other Terminations
In the event of any other termination of employment, Mr. Bernstein would have forfeited any unvested portion of his Transaction Incentive Award.
Other Compensation and Benefits
 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.
In addition, the 2018 SB Award would continue to vest, subject to compliance with applicable agreements and restrictive covenants.
(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

determined fair market value premium rate. The Bernstein Employment Agreement defines “disability” as a good faith determination by AB that Mr. Bernstein is physically or mentally incapacitated and has been unable for a period of 180 days in the aggregate during any 12-month period to perform substantially all of the duties for which he is responsible immediately before the commencement of the incapacity.
(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.

Bernstein Employment Agreement Definitions
Change in Control
A CIC of AB includes, among other events:
the Company ceases to control the election of a majority of the AB Board or
AB Holding ceases to be publicly-traded.
Cause
Cause generally includes Mr. Bernstein’s conviction in certain types of criminal proceedings, Mr. Bernstein’s willful refusal to substantially perform his duties or other willful behavior.
Good Reason
Good reason generally includes Mr. Bernstein’s termination after the diminution of his position, authority, duties or responsibilities, any material breach by AB of the Bernstein Employment Agreement or any material compensation agreement and other similar events.
Golden Parachute Payments
In the event any payments to Mr. Bernstein constitute “golden parachute payments” within the meaning of Section 280G of the Code and would be subject to an excise tax imposed by Section 4999 of the Code, payments shall be reduced to the maximum amount that does not result in the imposition of such excise tax, but only if such reduction results in Mr. Bernstein receiving a higher net-after tax amount than he would receive absent the reduction.
If a CIC of AB occurs prior to January 1, 2020, to the extent that payments to Mr. Bernstein would be subject to the excise tax under Section 4999 of the Code, Mr. Bernstein will be entitled to a gross-up payment to ensure that he will retain an amount equal to the excise tax imposed upon such payments, but if the payments do not exceed 110% of the statutory limit imposed by Section 280G of the Code, the payments will be reduced to the maximum amount that does not result in the imposition of such excise tax.
No gross-up payment would have been required in the event of Mr. Bernstein’s termination of employment on the Trigger Date due to a CIC.
Restrictive Covenants
Mr. Bernstein is subject to a confidentiality provision, in addition to covenants with respect to non-competition during his employment and six months thereafter and non-solicitation of customers and employees for 12 months following his termination of employment.

2018 DIRECTOR COMPENSATION
The following table provides information on compensation that was paid to our directors in 2018 by the Company, other than Messrs. Buberl, Stansfield and Harlin who did not receive any such compensation and Mr. Pearson since all of his compensation is fully reflected in the Summary Compensation Table above.

During 2018, both Mr. Kaye and Mr. Oliveira served on the AB Board in addition to the Holdings Board. We believe their presence on the AB Board is important due to their deep knowledge of the Company and their relevant experience and expertise. Their service on the AB Board requires a significant time commitment since AB’s IM&R business involves significantly different business, legal and other considerations than Holdings’ retirement and protection businesses and AB is a publicly-traded company. Given the time and effort required of Mr. Kaye and Mr. Oliveira, we believe it is appropriate to compensate them for their services as directors of AB in addition to their services as directors of Holdings. Their AB compensation is consistent with that paid to other independent directors of the AB Board.
2018 DIRECTOR COMPENSATION
NameFees Earned or Paid in CashStock 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.

The grant date fair value of each award is as follows:
 Holdings Common StockRestricted AXA Ordinary SharesAXA Ordinary SharesRestricted AB Holding Units
Mr. Oliveira105,00045,00019,520170,000
Mr. Kaye105,00045,00019,520170,000
Mr. Stonehill105,00045,00019,520 

As of December 31, 2018, the directors had outstanding awards as follows:
 Restricted AXA Ordinary SharesAXA Ordinary Share OptionsRestricted AB Holding Units
Mr. Oliveira5,263 4,361 (all vested) 9,850
Mr. Kaye5,263  9,850
Mr. Stonehill2,858, 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.

Cash Retainers and Meeting Fees
All Holdings non-employee directors receive an annual cash retainer of $100,000. Committee Chairs receive the following additional cash retainers:
Audit Committee - $30,000
Compensation Committee - $25,000
Nominating and Corporate Governance Committee - $20,000
Finance and Risk Committee - $20,000
As AB directors, Messrs. Kaye and Oliveira receive an annual cash retainer of $85,000 and the following meeting fees:
$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.

Mr. Kaye also receives the following annual cash retainers from AB:
$25,000 for acting as Chair of the AB Audit Committee and
$6,000 for serving as a member of the AB Compensation Committee.
Mr. Oliveira also receives the following annual cash retainers from AB:
$6,000 for serving as a member of the AB Executive Committee;
$6,000 for serving as a member of the AB Compensation Committee.
Equity Awards
Holdings’ Common Stock
Non-employee directors of Holdings receive an annual equity retainer consisting of shares of Holdings’ common stock with a value of $150,000 ($105,000 for 2018).
AXA Ordinary Shares
Messrs. Kaye, Oliveira and Stonehill received AXA ordinary shares valued at $19,520 for their services from January 1, 2018 to May 9, 2018 as members of the AXA Financial, AXA Equitable Life and MLOA boards of directors.
AXA Ordinary Share Options
Prior to 2014, Messrs. Kaye and Oliveira received AXA ordinary share options as members of the AXA Financial, AXA Equitable Life and MLOA boards of directors.
The value of the AXA ordinary share option grants was determined using the Black-Scholes methodology or other methodology used with respect to option awards contemporaneously made to employees. The options were subject to a four-year vesting schedule whereby one-third of each grant vested on the second, third and fourth anniversaries of the grant date.
Restricted AXA Ordinary Shares
In the first quarter of 2018, Messrs. Oliveira, Kaye and Stonehill received restricted AXA ordinary shares valued at $45,000 as members of the AXA Financial, AXA Equitable Life and MLOA boards of directors. During the restricted period, the directors are entitled to exercise full voting rights on the restricted stock and receive all dividends and distributions. The restricted stock has a three-year cliff vesting schedule.
In the event a director dies or, after completing one year of service, is removed without cause, is not reelected, retires or resigns, his restricted stock will immediately become non-forfeitable; provided that if he performs an act of misconduct, all of his restricted stock then outstanding will be forfeited. Upon any other type of termination, all restricted stock is forfeited.
Directors may elect to defer receipt of at least ten percent of their restricted stock awards. Upon deferral, the director receives deferred stock units in the same number and with the same vesting restrictions, if any, as the underlying awards. The director is entitled to receive dividend equivalents on such deferred stock units, if applicable. The deferred stock units will be distributed in stock on an elected distribution date or upon the occurrence of certain events.
Upon a change in control of Holdings, unless the awards will be assumed or substituted following the change in control, the restricted stock will become immediately non-forfeitable.
Restricted AB Holdings Units
As AB directors, Messrs. Kaye and Oliveira receive an annual equity retainerconsisting of restricted AB Holding Units with a value of $170,000. These awards vest ratably on each of the first four anniversaries of the grant date. The restricted AB Holding Units are not forfeitable, except if the director is terminated for cause.
Benefits
Charitable Award Program for Directors

Under the Charitable Award Program for Directors, Messrs. Kaye, Oliveira and Stonehill may designate up to five charitable organizations and/or education institutions to receive an aggregate donation of $500,000 after their deaths. Although the Company may purchase life insurance policies insuring the lives of the directors to financially support the program, it has not elected to do so.
Matching Gifts
Non-employee directors of Holdings may participate in AXA Foundation’s Matching Gifts program. Under this program, the AXA Foundation matches donations made by participants to public charities of $50 or more, up to $2,000 per year.
Business Travel Accident
All Holdings directors are covered for accidental loss of life while traveling to, or returning from:
board or committee meetings;
trips taken at our request; and
trips for which the director is compensated.
Each director is covered up to four times his annual compensation, subject to certain maximums.
Director Education
All directors are encouraged to attend director education programs as they deem appropriate to stay abreast of developments in corporate governance and best practices relevant to their contribution to the board generally, as well as to their responsibilities in their specific committee assignments and other roles. We generally reimburse non-officer directors for the cost to attend director education programs offered by third parties, including related reasonable travel and lodging expenses, up to a maximum amount of $5,000 per director each calendar year.
Stock Ownership Guidelines
Holdings’ non-employee directors are required to hold five times the value of their annual cash retainer in shares of Holdings common stock and/or AB Holding Units. The directors are required to retain 100% of any net shares or units (after the payment of taxes) received as compensation until the ownership requirement is achieved.
Part III, Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information as of February 1, 2019 with respect to the ownership of our common stock by:
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.
The amounts and percentages of shares beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.
Percentage computations are based on approximately 521,905,236 shares of our common stock outstanding as of February 1, 2019.

Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock. Unless otherwise set forth in the footnotes to the table, the address for each listed stockholder is c/o 1290 Avenue of the Americas, New York, New York 10104.
Holdings Common Stock
Name of Beneficial Owner 
Number of
Shares Owned
Percent
of Class (%)
AXA (1)313,162,50060.0
Thomas Buberl——
Gérald Harlin——
Daniel G. Kaye10,844*
Ramon de Oliveira8,844*
Mark Pearson (2)198,097*
Bertrand Poupart-Lafarge——
Karima Silvent——
George Stansfield——
Charles G. T. Stonehill5,844*
Seth Bernstein8,351*
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*
____________
*Number of shares listed represents less than one percent of the outstanding Holdings common stock.

(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.


The following tables set forth information as of February 1, 2019 regarding the ownership of common stock of AXA and of AB Holding Units and AB Units by each of our directors and executive officers and by all of our directors and executive officers as a group.
AXA Common Stock (1)
Name of Beneficial Owner Number of Shares OwnedPercent of Class (%)
Thomas Buberl (2)600,193*
Gérald Harlin (3)590,021*
Daniel G. Kaye11,634*
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*
____________
*Number of shares listed represents less than 1% of the outstanding AXA common stock.

(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.

AB Holding Units and AB Units
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. Kaye13,379*——
Ramon de Oliveira13,379*——
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*——
____________
*Number of AB Holding Units listed represents less than 1% of the units outstanding.

(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.
Equity Compensation Plan Information
24)     SUBSEQUENT EVENTS
Share Repurchase Program
On February 9, 2022, the Company’s Board of Directors authorized a new $1.2 billion share repurchase program. Under this program, the Company may, from time to time purchase shares of its common stock through various means. The Company may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate the Company to purchase any particular number of shares.




232
Table of Contents

EQUITABLE HOLDINGS, INC.
SCHEDULE I
SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2021
Cost (1)Fair Value
Carrying
Value
 (in millions)
Fixed maturities, AFS:
U.S. government, agencies and authorities$13,056 $15,385 $15,385 
State, municipalities and political subdivisions586 662 662 
Foreign governments1,124 1,152 1,152 
Public utilities6,493 6,807 6,807 
All other corporate bonds43,679 45,704 45,704 
Residential mortgage-backed90 98 98 
Asset-backed5,933 5,934 5,934 
Commercial mortgage-backed2,427 2,421 2,421 
Redeemable preferred stocks41 53 53 
Total fixed maturities, AFS73,429 78,216 78,216 
Fixed maturities, at fair value using the fair value option1,637 1,641 1,641 
Mortgage loans on real estate (2)14,095 14,308 14,033 
Policy loans4,024 5,050 4,024 
Other equity investments2,662 2,975 2,975 
Trading securities559 631 631 
Other invested assets3,591 3,591 3,591 
Total Investments$99,997 $106,412 $105,111 
______________
(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 credit loss allowance.
233
EQUITABLE HOLDINGS, INC.
SCHEDULE II
Balance Sheets (Parent Company)
December 31, 2021 and 2020
December 31,December 31,
20212020
(in millions, except share amounts)
ASSETS
Investment in consolidated subsidiaries$13,128 $15,603 
Fixed maturities available-for-sale, at fair value (amortized cost of $884 and $183)874 1,116 
Other equity investments92 66 
Total investments14,094 16,785 
Cash and cash equivalents867 1,972 
Goodwill and other intangible assets, net1,255 1,245 
Loans to affiliates755 675 
Current and deferred income taxes assets600 209 
Other assets547 903 
Total Assets$18,118 $21,789 
LIABILITIES
Short-term and long-term debt$3,839 $4,115 
Employee benefits liabilities853 1,177 
Loans from affiliates1,900 900 
Accrued liabilities7 21 
Total Liabilities$6,599 $6,213 
EQUITY ATTRIBUTABLE TO HOLDINGS
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preference$1,562 $1,269 
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 520,918,331 and 552,896,328 shares issued, respectively; 391,290,224 and 440,776,011 shares outstanding, respectively4 5 
Additional paid-in capital1,919 1,985 
Treasury stock, at cost, 129,628,107 and 112,120,317 shares, respectively(2,850)(2,245)
Retained earnings8,880 10,699 
Accumulated other comprehensive income (loss)2,004 3,863 
Total equity attributable to Holdings11,519 15,576 
Total Liabilities and Equity Attributable to Holdings$18,118 $21,789 

The following table providesfinancial information asof Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.













234
EQUITABLE HOLDINGS, INC.
SCHEDULE II

STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2021, 2020, AND 2019
202120202019
(in millions)
REVENUES
Equity in income (losses) from continuing operations of consolidated subsidiaries$(152)$(668)$(1,592)
Net investment income (loss)26 26 29 
Investment gains (losses), net(12)— (1)
Other income— — 12 
Total revenues(138)(642)(1,552)
EXPENSES
Interest expense241 229 237 
Other operating costs and expenses58 40 83 
Total expenses299 269 320 
Income (loss) from continuing operations, before income taxes(437)(911)(1,872)
Income tax (expense) benefit(2)263 108 
Net income (loss) attributable to Holdings(439)(648)(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings' common shareholders(518)(701)(1,764)
Other comprehensive income (loss)(1,859)3,019 2,252 
Total comprehensive income (loss) attributable to Holdings$(2,377)$2,318 $488 

The financial information of Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.
235
EQUITABLE HOLDINGS, INC.
SCHEDULE II
STATEMENTS OF CASH FLOWS (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2021, 2020, AND 2019
202120202019
(in millions)
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in net (earnings) loss of subsidiaries152 668 1,592 
Non-cash long term incentive compensation expense15 27 69 
Amortization and depreciation60 40 33 
Equity (income) loss limited partnerships(19)(8)1 
Changes in:
Current and deferred taxes(151)(250)202 
Dividends from subsidiaries792 2,877 1,341 
Other, net14 (135)(76)
Net cash provided by (used in) operating activities$424 $2,571 $1,398 
Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale$210 $131 $105 
Short-term investments— — 80 
Payment for the purchase/origination of:
Fixed maturities, available-for-sale— (1,011)— 
Short-term investments— — — 
Other(7)(21)(14)
Net issuance on credit facilities to affiliates(80)(115)(560)
Repayments of loans to affiliates— — 572 
Proceeds from the sale of subsidiary215 — — 
 Increase in cash and cash equivalents from merger of AXA Tech— — 11 
Net cash provided by (used in) investing activities$338 $(1,016)$194 
Cash flows from financing activities:
Issuance of preferred stock$293 $494 $775 
Repayment of long-term debt(280)— (300)
Proceeds from loans from affiliates1,000 — 900 
Repayments of loans from affiliates— (300)(300)
Shareholder dividends paid(296)(297)(285)
Preferred dividends paid(79)(53)— 
Purchase of treasury shares(1,637)(430)(1,350)
Capital contribution to subsidiaries(815)(350)(86)
Other, net(53)— — 
Net cash provided by (used in) financing activities$(1,867)$(936)$(646)
Change in cash and cash equivalents(1,105)619 946 
Cash and cash equivalents, beginning of year1,972 1,353 407 
Cash and cash equivalents, end of year$867 $1,972 $1,353 
Non-cash transactions from investing and financing activities:
Dividend of AB Units from subsidiary$23 $— $— 
Other assets$— $— $4 
Other liabilities$— $— $(16)
The financial information of Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.
236
EQUITABLE HOLDINGS, INC.
SCHEDULE II
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
1)    BASIS OF PRESENTATION
The financial information of Holdings should be read in conjunction with the Consolidated Financial Statements and Notes thereto. The Company is the holding company for a diversified financial services organization.
2)    LOANS TO AFFILIATES
On November 4, 2019, Holdings made available to AB a $900 million committed, unsecured senior credit facility (the “EQH Facility”). The EQH Facility matures on November 4, 2024 and is available for AB's general business purposes. Borrowings by AB under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated. Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by AB from time to time until the maturity of the facility. AB or Holdings may reduce or terminate the commitment at any time without penalty upon proper notice. Holdings also may terminate the facility immediately upon a change of control of the general partner. In As of December 31, 2021 and 2020, $755 million and $675 million were outstanding under the EQH Facility respectively .
In 2018, regarding securities authorizedEquitable Financial received a $572 million loan from Holdings. The loan had an interest rate of 3.75% and was repaid in March 2019.
3)    LOANS FROM AFFILIATES
In June 2021, Holdings received a $1.0 billion 10-year term loan from Equitable Financial. The loan has an interest rate of 3.23% and matures in June 2031.
In November 2019, Holdings received a $900 million loan from Equitable Financial. The loan has an interest rate of one- month LIBOR plus 1.33%. The loan matures on November 4, 2024. As of December 31, 2021, $900 million was outstanding on the loan.
In April 2018, Holdings received a $800 million loan from Equitable Financial. The loan has an interest rate of 3.69% and would mature in April 2021. In December 2018, Holdings repaid $200 million of this loan. In December 2019, Holdings repaid $300 million. On December 30, 2020, the remainder of this loan was repaid.
Interest cost related to loans from affiliates totaled $30 million, $32 million and $26 million for issuance under our equity compensation plans. All outstanding awards relate to our common stock. For additional information about our equity compensation plans, seethe years ended December 31, 2021, 2020 and 2019, respectively.
4)    INCOME TAXES
Holdings and certain of its consolidated subsidiaries and affiliates file a consolidated federal income tax return. Holdings has tax sharing agreements with certain of its subsidiaries and generally will either receive or pay these subsidiaries for utilization of the subsidiaries’ tax benefits or expense. Holdings settles these amounts annually.
5)    ISSUANCE OF SERIES A, SERIES B AND SERIES C FIXED RATE NONCUMULATIVE PERPETUAL PREFERRED STOCK
See Note 1420 of the Notes to these Consolidated Financial Statements.
6)    SHARE REPURCHASE
See Note 20 of the Notes to these Consolidated Financial Statements.
237
Plan categoryNumber 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 Plan3,604,733
(1)$21.34
(2)6,936,010
     Stock Purchase Plan (3)    7,932,780
Equity compensation plans not approved by security holders—
   —
Total3,604,733
   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

EQUITABLE HOLDINGS, INC.
more than $50,000 through payroll deductions during any calendar year, and the maximum amount
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2021
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs$3,639 $776 $— $1,066 $10 $5,491 
Policyholders’ account balances38,456 13,049 — 15,027 12,825 79,357 
Future policy benefits and other policyholders' liabilities22,904 3 — 4,843 8,967 36,717 
Policy charges and premium revenue1,867 371 — 2,016 343 4,597 
Net derivative gains (losses)(4,386)(29)(13)(83)46 (4,465)
Net investment income (loss)1,221 751 25 1,102 747 3,846 
Policyholders’ benefits and interest credited912 303 — 2,478 744 4,437 
Amortization of deferred policy acquisition costs294 2 — 95 2 393 
All other operating expenses (1)814 362 3,241 780 1,178 6,375 

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2020
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs (2)$3,178 $632 $— $418 $15 $4,243 
Policyholders’ account balances (2)30,736 12,828 — 14,875 8,381 66,820 
Future policy benefits and other policyholders' liabilities (2)25,212 9 — 5,031 9,629 39,881 
Policy charges and premium revenue2,034 295 — 2,013 390 4,732 
Net derivative gains (losses)(1,999)(2)(36)413 (98)(1,722)
Net investment income (loss)1,337 644 36 941 519 3,477 
Policyholders’ benefits and interest credited3,086 305 — 2,372 785 6,548 
Amortization of deferred policy acquisition costs321 73 — 1,220 (1)1,613 
All other operating expenses (1)724 284 2,815 546 978 5,347 

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2019
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs (2)$3,285 $659 $— $1,880 $13 $5,837 
Policyholders’ account balances (2)26,359 12,068 — 14,090 6,362 58,879 
Future policy benefits and other policyholders' liabilities (2)20,401 7 — 4,156 10,071 34,635 
Policy charges and premium revenue2,085 279 — 2,148 413 4,925 
Net derivative gains (losses)(3,850)6 (38)(28)(102)(4,012)
Net investment income (loss)1,478 593 99 967 562 3,699 
Policyholders’ benefits and interest credited2,321 304 — 2,172 851 5,648 
Amortization of deferred policy acquisition costs283 35 — 274 5 597 
All other operating expenses (1)785 318 2,709 576 1,046 5,434 
_____________
(1)Operating expenses are allocated to segments.
(2)Excludes amounts reclassified as HFS.
238
EQUITABLE HOLDINGS, INC.
Part III, Item 13.
CERTAIN RELATIONSHIPS
SCHEDULE IV
REINSURANCE (1)
AS OF AND RELATED TRANSACTIONS,FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND DIRECTOR INDEPENDENCE2019
Policies and Procedures for Related Person Transactions
 Gross AmountCeded to Other CompaniesAssumed from Other CompaniesNet AmountPercentage of Amount Assumed to Net
(in millions)
2021
Life insurance in-force$484,082 $185,203 $31,971 $330,850 9.7 %
Premiums:
Life insurance and annuities$802 $155 $181 $828 21.9 %
Accident and health168 44 8 132 6.1 %
Total premiums$970 $199 $189 $960 19.7 %
2020
Life insurance in-force$473,514 $94,231 $33,098 $412,381 8.0 %
Premiums:
Life insurance and annuities$805 $113 $213 $905 23.5 %
Accident and health124 41 9 92 9.8 %
Total premiums$929 $154 $222 $997 22.3 %
2019
Life insurance in-force$492,780 $65,427 $32,365 $459,718 7.0 %
Premiums:
Life insurance and annuities$971 $101 $211 $1,081 19.5 %
Accident and health97 40 9 66 13.6 %
Total premiums$1,068 $141 $220 $1,147 19.2 %
Holdings______________
Our Board has approved the AXA Equitable Holdings, Inc Related Person Transaction Policy (the “Related Person Transaction Policy”) which sets forth procedures with respect to the review and approval of certain transactions between us and a “Related Person,” or a “Related Person Transaction.” Pursuant to the terms of the Related Person Transaction Policy, our Board, acting through our Audit Committee, must review and decide whether to approve or ratify any Related Person Transaction. Any potential Related Person Transaction is required to be reported to our legal department, which will then determine whether it should be submitted to our Audit Committee for consideration. The Audit Committee must then review and decide whether to approve any Related Person Transaction.
For the purposes of the Related Person Transaction Policy, a “Related Person Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect interest.
A “Related Person,” as defined in the Related Person Transaction Policy, means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of Holdings or a nominee to become a director of Holdings; any person who is known to be the beneficial owner of more than five percent of our common stock; any immediate family member of any of the foregoing persons, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than five percent beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than five percent beneficial owner; and any firm, corporation or other entity in which any of the foregoing persons is a general partner or, for other ownership interests, a limited partner or other owner in which such person has a beneficial ownership interest of ten percent or more.
AB
The partnership agreements for each of AB Holding and ABLP expressly permit AXA and its affiliates, which includes Holdings and its subsidiaries (collectively, “AXA Affiliates”), to provide services to AB Holding and ABLP if the terms of the transaction are approved by the General Partner in good faith as being comparable to (or more favorable to each such partnership than) those that would prevail in a transaction with an unaffiliated party. This requirement is conclusively presumed to be satisfied as to any transaction or arrangement that (i) in the reasonable and good faith judgment of the General Partner, meets that unaffiliated party standard, or (ii) has been approved by a majority of those directors of the General Partner who are not also directors, officers or employees of an affiliate of the General Partner.
In practice, ABLP’s management pricing committees review investment advisory agreements with AXA Affiliates, which is the manner in which the General Partner reaches a judgment regarding the appropriateness of the fees. Other transactions with AXA Affiliates are submitted to ABLP’s audit committee for review and approval.
Relationship with AXA
AXA holds a majority of our outstanding common stock, and as a result AXA has control of our business, including pursuant to the agreements described below. AXA has announced its intention to sell all of its interest in the Company over time, subject to any lock-up periods and market conditions. AXA is under no obligation to do so and retains the sole discretion to determine the timing of any future sales of shares of our common stock. See “Risk Factors-Risks Relating to Our Controlling Stockholder-AXA continues to control us, and AXA may have conflicts of interest with other stockholders. Conflicts of interest may arise because affiliates of our controlling stockholder have continuing agreements and business relationships with us.” In addition, we expect that AXA will continue to fully consolidate our financial results in AXA’s consolidated financial statements.

Shareholder Agreement
On May 4, 2018, we entered into a shareholder agreement (the “Shareholder Agreement”) with AXA that governs the relationship between AXA and us. The Shareholder Agreement addresses the composition of our Board and its committees, other corporate governance matters, AXA approval and consent rights with respect to specified business and corporate actions, and rights that AXA has with respect to business and financial information and financial accounting matters.
Board of Directors and AXA Rights with Respect to Director Designation
The Shareholder Agreement entitles AXA, in connection with any election of directors by our stockholders, to have our Board include in the candidates it designates for election (the “Company Slate”) a specified number of directors designated by AXA (“AXA Directors”). The number of AXA Directors that AXA is entitled to have included on the Company Slate is based on its beneficial ownership of our common stock, as follows:
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.
Following the Fourth Threshold Date, AXA has no further right to designate AXA Directors.
The Shareholder Agreement also provides that, until the Majority Holder Date, our Board shall consist of nine members, one of whom is our CEO and three of whom are independent directors, as defined by NYSE listing rules and Rule 10A-3 under the Exchange Act (“Independent Directors”). Until and including the date on which AXA ceases to beneficially own at least 30% of our outstanding common stock (which is referred to as the “Second Threshold Date”), our Board may not change the number of directors without the consent of AXA. Until the Majority Holder Date, we are also obligated under the Shareholder Agreement to, and to use our best efforts to cause the Board to, cause the Chairman of the Board to be an AXA Director.
In addition, the Shareholder Agreement includes provisions relating to the membership and conduct of our Board committees, including providing that:
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

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 Nominating and Governance Committee;until the Majority Holder Date, unless such action is required by applicable law to be approved solely by Independent Directors, our Nominating and Governance Committee may not act without the consent of a majority of the Nominating and Governance Committee, which majority must include an AXA Director;
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.”
Consent Rights
The Shareholder Agreement provides that, until the Second Threshold Date, the prior written consent of AXA is required before we may take any of the following actions, whether directly or indirectly through a subsidiary:
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

authorizing document) of any committee, including any action to increase or decrease size of any committee (whether by amendment or otherwise), except in each case as required by applicable law;
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.
Information Rights, Disclosure and Financial Accounting
The Shareholder Agreement requires us, as long as AXA is required under IFRS to consolidate our financial results with its financial results, and in any case for all financial periods commencing prior to the Majority Holder Date, to continue to provide AXA with (A) information and data relating to our and our subsidiaries’ business and financial results and (B) access to our personnel, data and systems. During this period, we are also required to provide all information required or requested by AXA (i) in order for AXA to comply with its Solvency II obligations and (ii) necessary for AXA to produce any requested actuarial indicators.
Following the time at which the provisions of the immediately preceding paragraph cease to apply, and until the later of (1)    the date when AXA is no longer required under IFRS (x) to account in its financial statements for its holdings in us under an equity method or (y) to consolidate our financial results with its financial results and (2) the Third Threshold Date, we are obligated to (A) provide AXA with (i) information and data relating to our business and financial results, (ii) access to our personnel, data and systems, (iii) information and data relating to AXA’s Solvency II obligations and (iv) information and data necessary for AXA to produce any requested actuarial indicators and (B) maintain all necessary controls and procedures.
The Shareholder Agreement provides that, until the date on which AXA is no longer required under IFRS to account in its financial statements for its holdings in us under an equity accounting method, AXA has certain access and cooperation rights with respect to the independent public registered accounting firm responsible for the audit of our financial statements and to our internal audit function.
The Shareholder Agreement also provides that, until the Third Threshold Date, we shall consult and coordinate with AXA with respect to public disclosures and filings, including in connection with our quarterly and annual financial results.
Rights with Respect to Policies and Conduct
The Shareholder Agreement provides that, until the Majority Holder Date, our Board shall, when determining to implement, amend or rescind any of our or our subsidiaries’ policies relating to risk, capital, investment, environmental and social responsibility or regulatory compliance (each, a “Critical Policy”), take into account our status as a consolidated subsidiary of AXA, and the interests of AXA with respect to such policies and the requirement for us to comply with AXA’s standards.
In addition, during any period in which AXA is deemed to control us for U.S., European Commission or French regulatory purposes, and in any case at all times prior to the Third Threshold Date, we (i) may not adopt or implement any policies or procedures, and at AXA’s reasonable request, must refrain from taking any actions, that would cause AXA to violate any applicable laws to which AXA is subject; (ii) must, prior to implementing, amending or rescinding any Critical Policy, consult with AXA and, to the extent consistent with its fiduciary duties, our Board must take into account the interests of AXA with respect thereto; and (iii) must maintain and observe the policies of AXA to the extent necessary for AXA to comply with its legal or regulatory obligations.

Provisions Relating to Specific Regulatory Requirements
Pursuant to the Shareholder Agreement, during any period in which we are deemed to be under the control of AXA and at all times prior to the Third Threshold Date, we must, upon request from AXA, promptly provide any information, records or documents requested or demanded by any governmental or regulatory authority with jurisdiction over AXA or necessary for AXA in connection with any filing, report or response to such entities and must, upon reasonable notice, provide access to such entities to our offices, employees and management, where and as required under applicable law.
Provisions Relating to Indemnification and Liability Insurance
The Shareholder Agreement provides that, until at least the day after the last date on which any director, officer, employee or certain designees of AXA or any of its subsidiaries (an “AXA Individual”) is a director, officer or employee of the Company, we must indemnify (including advancement of expenses) each such directors, officers and employees to the greatest extent permitted under Section 145 of the DGCL and other applicable laws. Such indemnification must continue as to any AXA Individual who becomes entitled to indemnification notwithstanding any subsequent change in our indemnification policies or, with respect to liabilities existing or arising from events that have occurred on or prior to such date, that such AXA Individual ceases to be a director, officer or employee of the Company. The Shareholder Agreement also requires that we renew annually our insurance coverage with respect to director and officer and other fiduciary liability and liabilities under U.S. federal and state securities laws covering directors, officers and employees of the Company, AXA Individuals, the Company and respective Subsidiaries of the Company.
Provisions with respect to certain obligations of the Company guaranteed by AXA or its subsidiaries
The Shareholder Agreement also provides that (i) to the extent AXA or any of its subsidiaries (other than the Company) shall at any time make any payments or be obligated to post collateral with respect to any Company obligations that are the subject of a guarantee by AXA or its subsidiaries, the Company shall immediately reimburse or transfer assets to AXA or such subsidiary for the full amount of such payments or collateral obligations and reimburse AXA or such subsidiary for all reasonable expenses incurred by AXA or the subsidiary in connection with making such payments or posting such collateral and (ii) the Company shall cooperate with AXA to ensure that appropriate steps are taken as may be necessary to implement such payment or collateral arrangements. In addition, the Shareholder Agreement also provides that the Company agrees to use its reasonable best efforts to novate or terminate such guarantees by AXA or its subsidiaries (other than the Company) as promptly as practicable following the IPO.
Term
The Shareholder Agreement terminates on the date that is one year following the Fourth Threshold Date, except for certain provisions including those relating to confidentiality, dispute resolution, provisions with respect to guaranteed obligations and the obligation to indemnify and maintain insurance.
Transitional Services Agreement
On May 4, 2008, we entered into a transitional services agreement (the “Transitional Services Agreement”) with AXA that governs the continued provision of certain services between AXA and us. Prior to the IPO, Holdings was a wholly-owned subsidiary of AXA. Accordingly, we, AXA and AXA’s subsidiaries each provide certain services to the others, share certain services and rely on certain third-party service providers to provide services pursuant to shared services contracts. AXA and its subsidiaries rely on certain contracts to which we are party for the provision of services that are important to its business. Likewise, we rely on certain contracts to which AXA or its subsidiaries are party for the provision of certain services. As we transition toward operating as a standalone public company, the parties to the Transitional Services Agreement and their respective subsidiaries (Holdings and its subsidiaries are not subsidiaries of AXA for purposes of the Transitional Services Agreement) will generally cease to provide services to one another and we will (i) cease to rely on the contracts that we have historically shared with AXA and (ii) replace them with new contracts between us and third-party service providers to the extent necessary. The Transitional Services Agreement (i) governs our migration away from shared services with AXA and its subsidiaries during specified transition periods and (ii) provides for the continued provision or procurement of certain services among us, AXA and its subsidiaries and third-party service providers. Certain contracts and services between us and AXA are not covered by the Transitional Services Agreement and continue pursuant to the terms of such contracts.

The Transitional Services Agreement provides for the continuation of services pursuant to the following types of arrangements:
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).
The Transitional Services Agreement governs the continued provision of these types of arrangements relating to the following categories of services:
information technology services, including, without limitation, data processing, data transmission, various software applications and platforms including maintenance agreements, databases, servicesIncludes amounts related to the managementdiscontinued group life and operation of both a production data center and a disaster recovery center and other related pass-through services;health business.
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;Part II, Item 9.
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”; andCHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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.None.
The fees for each of the services to be provided under the Transitional Services Agreement were mutually agreed upon and vary on the basis of usage and other factors. Although we believe the Transitional Services Agreement contains commercially reasonable terms (including fees for the services provided) that could have been negotiated with an independent third party, the terms of the agreement may later prove to be more or less favorable than arrangements we could make to provide these services internally or to obtain them from unaffiliated service providers in the future.
The Transitional Services Agreement terminates on the last date on which either party thereto is obligated to provide or procure any service to or for the other party in accordance with the terms of the Transitional Services Agreement and the schedules thereto. The services provided under the Transitional Services Agreement terminate at various times specified in the agreement and the schedules thereto, but the party receiving services may also elect to terminate any service by giving at least 180 days prior written notice to the provider of the service. In the event of elective early termination of a particular service, the service recipient is only responsible for the portion of the service fee covering the portion of the service provided or procured through the date of termination. In addition, subject to consent rights or requirements under third-party agreements and except as otherwise specified therein, the Transitional Services Agreement provides that the parties may agree to extensions of each service term.Part II, Item 9A
Subject to the certain exceptions and limitations set forth in the Transitional Services Agreement, Holdings and AXA agree to indemnify and hold harmless the other party from and against any and all losses relating to, arising out of or resulting from any breach of the Transitional Services Agreement to the extent caused by its or its subsidiaries infringement, misappropriation or violation of intellectual property rights of a third party in connection with the provision or receipt of services.CONTROLS AND PROCEDURES
Except for certain exceptions, the aggregate liability of each party to the Transitional Services Agreement is limited (x) in respect of any service, to an amount equal to 12 times the amount of service fees paid for the first full calendar month in respect of such service and (y) in the aggregate, to an amount equal to the total service fees paid and payable to such party during the 12 months prior to the occurrence of the event giving rise to the liability, except with respect to breaches of the Transitional Services Agreement’s confidentiality and systems security provisions, which are subject to a higher limit. Any claim for losses

arising out of or relating to the Transitional Services Agreement must be filed no later than three years after the claim has accrued.
Registration Rights Agreement
On May 4, 2018, we entered into a registration rights agreement (the “Registration Rights Agreement”) with AXA, pursuant to which AXA can require us to file one or more registration statements with the SEC covering the public resale of shares of our common stock beneficially owned by AXA. AXA may transfer all or any portion of its rights under the Registration Rights Agreement to a transferee of shares of our common stock constituting not less than 10% of our outstanding common stock. The rights of AXA and its permitted transferees under the Registration Rights Agreement will remain in effect with respect to all shares of our common stock covered by such agreement until such securities (a) are sold in a private transaction in which the transferor’s rights under the Registration Rights Agreement are not assigned to the transferee, (b) are sold pursuant to an effective registration statement, (c) are sold pursuant to Rule 144 or (d) shall have ceased to be outstanding.
Demand Registration. AXA can request an unlimited number of registrations under the Securities Act of all or any portion of our shares covered by the agreement, and we are obligated, subject to limited exceptions, to register such shares as requested by AXA. Subject to certain exceptions, we may defer the filing of a registration statement after a demand request has been made if, at the time of such request, our Board determines that any pending or imminent event would require disclosure of material, non-public information in the registration statement for such registration statement not to be materially misleading and would not otherwise be required to be publicly disclosed by us. We are not obligated to effect more than one demand registration in any 90-day period.
Shelf Registration. At any time after the date that is one year following the date of the Registration Rights Agreement or, if sooner, once we become eligible to use Form S-3, we are obligated, upon request by AXA to file a shelf registration statement to register all or any portion of our shares covered by the Registration Rights Agreement, and we are obligated, subject to limited exceptions, to register such shares as requested by AXA. AXA may, at any time and from time to time, request that we complete an unlimited number of shelf take downs.
Piggy-Back Registration. If at any time we intend to file on our behalf or on behalf of any of our other security holders a registration statement in connection with a public offering of any of our securities on a form and in a manner that would permit the registration for offer and sale of our common stock held by AXA, AXA has the right to include its shares of our common stock in that offering. AXA’s ability to participate in any such offering is subject to market “cut-back” exceptions.
Registration Procedures; Expenses. We are responsible for all registration expenses, including expenses incurred by us, in connection with the registration, offer and sale of securities under the Registration Rights Agreement by AXA, except for AXA’s legal fees and underwriting discounts, selling commissions and transfer taxes applicable to such sale.
The Registration Rights Agreement sets forth customary registration procedures, including an agreement by us to make our management available for road show presentations in connection with any underwritten offerings. We also agreed to indemnify AXA and its permitted transferees with respect to liabilities resulting from any material untrue statements or omissions in any registration statement used in any registration, other than untrue statements or omissions resulting from information furnished to us expressly for use in such registration statement by AXA or any permitted transferee.
Tax Sharing Agreement
We entered into a tax sharing agreement with AXA and AXA Investment Managers S.A., a société anonyme organized under the laws of France (“AXA IM SA”), dated March 28, 2018 (the “Tax Sharing Agreement”). The Tax Sharing Agreement allocates rights, obligations and responsibilities between AXA, AXA IM SA and us for taxes (i) arising in connection with the Reorganization and (ii) for taxable periods predating or postdating the Reorganization, and for related administrative and procedural matters, including the preparation and filing of tax returns, tax refunds, tax contests and cooperation between the parties.
The Tax Sharing Agreement generally allocates responsibility for the taxes of AXA IM Holding US and AXA CS to the seller of the applicable entity for taxable periods predating the sale and to the buyer of such entity for taxable periods postdating the sale, except that any taxes arising in connection with the Reorganization as a result of an adjustment by a taxing authority will instead be borne 90% by the seller and 10% by the buyer (or, if that taxes are attributable to any action or inaction of the seller or the buyer, 100% by the responsible party). The right to tax refunds is generally allocated to the party that would be responsible for the underlying taxes.

The Tax Sharing Agreement allocates control of tax audits and proceedings between the parties, and requires the parties to cooperate with one another in relation to the preparation and filing of tax returns and in connection with tax audits and proceedings. All current tax sharing, indemnification and similar agreements between us and AXA or between us and AXA IM SA, whether written or unwritten, the primary purpose of which is the allocation of taxes, have been terminated, and the Tax Sharing Agreement generally governs our rights, obligations and responsibilities in relation to taxes vis-à-vis AXA and AXA IM SA.
Trademark License Agreement
On May 4, 2018, we terminated our existing sublicensing agreement with AXA under which we were licensed to use certain trademarks, including “AXA”, and AXA (the “Prior TM Agreement”) and we entered into a new trademark license agreement (the “Trademark License Agreement”). Under the Trademark License Agreement, AXA granted us, subject to certain limitations, a limited, non-exclusive, non-transferable, non-sublicenseable license to use certain trademarks (the “Licensed Marks”), including the name “AXA” and domain names, for use in our retirement and protection business (as we and our subsidiaries had conducted such business prior to the effective date of the Trademark License Agreement) in the United States and Canada (the “Territory”). Under the Trademark License Agreement, we are obligated to pay AXA consideration for the grant of the license following the close of each financial year during the term of the Trademark License Agreement based on a formula that takes into account our revenue (excluding certain items) and a notoriety index for the Licensed Marks in the Territory. We are also required to pay such consideration during the Transition Period (as defined below). The Trademark License Agreement will remain in effect until it is terminated by AXA’s and our mutual agreement, or upon the occurrence of certain conditions, including AXA’s right to terminate upon a change in control of Holdings, which will occur when AXA no longer directly or indirectly owns or controls more than 50% of the voting capital stock of Holdings. Prior to the expiration of the Trademark License Agreement, we are not permitted to cease use of the Licensed Marks or otherwise rebrand our products and services. The Trademark License Agreement also restricts our use of marks confusingly similar to the Licensed Marks.
After the term of the Trademark License Agreement, we are able to continue to use the Licensed Marks for a transition period (the “Transition Period”) of 18 months (which period is subject to an extension, capped at a total of 36 months (we can request an extension of such period), for any Licensed Mark for which we cannot obtain government approvals), but we are required to use reasonable best efforts to transition to other trademarks.
The Trademark License Agreement contains reciprocal indemnification obligations, which are uncapped, with respect to third-party claims arising out of the indemnifying party’s breach.
Transactions with AXA Affiliates
Historically, we have entered into various transactions with AXA and its subsidiaries in the normal course of business including, among others, service agreements, reinsurance transactions, and lending and other financing arrangements. The transactions described below are between us and affiliates of AXA that are not also subsidiaries of Holdings.
Retirement and Protection
General Service AgreementsEquity awards for R&P employees, financial professionals and directors in 2021, 2020 and 2019 were granted under the Omnibus Plans with the exception of the Holdings restricted stock units (“Holdings RSUs”) granted to financial professionals in 2018. All grants discussed in this section will be settled in shares of Holdings’ common stock except for the RSUs granted to financial professionals in 2019 and 2018 which will be settled in cash.
Services Received from Affiliates
AffiliateServicesAmount Paid or Accrued for the Years Ended December 31,
  2018 2017 2016
  (in millions)
AXA US HoldingsAXA 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

AffiliateServicesAmount Paid or Accrued for the Years Ended December 31,
  2018 2017 2016
  (in millions)
GIE Informatique AXA (“GIE”)GIE provides corporate services, including marketing and branding, finance and control, strategy, business support and development, audit and legal; services related to our life business and advice on our strategic initiatives.$6.9
 $18.3
 $14.8
AXA Business Service Private Ltd. (“ABS”)ABS provides certain policy administration services, including policy records updates, account maintenance, certain claim review and approval services and employee records updates and reporting services.$14.9
 $13.3
 $14.4
AXA Investment Managers Inc. (“AXA IM”), AXA Real Estate Investment Managers (“AXA REIM”) and AXA Rosenberg Investment Management LLC (“AXA Rosenberg”)AXA IM, AXA REIM and AXA Rosenberg provide sub-advisory services to our retail mutual funds and advisory services to certain investments in our General Account.$1.9
 $5.3
 $15.0
AXA Strategic Ventures Corporation (“ASV Corp”)ASV Corp provides investment management services to AXA Strategic Ventures US, LLC$1.8
 $1.8
 $1.8
AXA Tech Morocco (“ATM”)ATM provides certain finance and accounting services.$—
 $0.2
 $0.1
AXA Tech France (“ATF”)ATF provides services related to our global intranet application platform and support services as well as security related services.$—
 $0.7
 $0.9
AXA Tech affiliates in: Switzerland, Germany, UK, Belgium, Med Region, Japan, AXA ColpatriaThese affiliates provide transversal technology strategy and related services.$—
 $0.5
 $0.5
AXA Tech India (“ATI”)ATI provides infrastructure monitoring and support, database services and application support.$—
 $(0.1) $2.1

Services Provided to Affiliates

AffiliateServicesAmount Paid or Accrued for Years Ended December 31,
  2018 2017 2016
  (in millions)
AXA US HoldingsWe 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 CorporationWe provide corporate services, including participation in employee benefit plans, finance and payroll services.$0.1
 $5.1
 $5.2
GIEWe administer the AXA Intranet site and provide other corporate services.$1.3
 $0.8
 $2.6
AXA Life Insurance Co., Ltd. (“AXA Life Japan”)We provide mainframe platform services and global e-mail hosting and application support.$—
 $—
 $5.0
SASWe host global security, transversal officers and big data infrastructure.$—
 $4.1
 $4.4
AXA Technology Services Mexico SAWe provide infrastructure hosting and support.$—
 $3.3
 $3.4
AXAWe host the AXA Lab business unit.$—
 $1.3
 $1.2
AGSWe host the AGS business unit.$—
 $1.6
 $0.7
AXA Liabilities ManagersWe host AXA Global Network connectivity and disaster recovery platform services.$—
 $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

Reinsurance Assumed
AXA Global Life retrocedesFor awards with graded vesting schedules and service-only vesting conditions, including Holdings RSUs and other forms of share-based payment awards, the Company applies a quota share portionstraight-line expense attribution policy for the recognition of certain life and health risks of various AXA affiliates to AXA Equitable Life and MLOA on a one-year term basis. Also, AXA Life Insurance Company Ltd. cedes a portion of its variable deferred annuity business to AXA Equitable Life.
Premiums earned in 2018, 2017 and 2016 were $8 million, $8 million and $9 million, respectively. Claims and expenses paid in 2018, 2017 and 2016 were $3 million, $2 million and $2 million, respectively.
Reinsurance Ceded
AXA Equitable Life has entered into a stop loss reinsurance agreement with AXA Global Life to protect AXA Equitable Lifecompensation cost. Actual forfeitures with respect to the 2021, 2020, and 2019 grants were considered immaterial in the recognition of compensation cost.
Annual Awards
Each year, the Compensation Committee of the Holdings’ Board of Directors approves an equity-based award program with awards under the program granted at its regularly scheduled meeting in February. Annual awards under Holdings’ equity programs for 2021, 2020 and 2019 consisted of a deteriorationmix of equity vehicles including Holdings RSUs, Holdings stock options and Holdings performance shares. If Holdings pays any ordinary dividend in its claim experiencecash, all outstanding Holdings RSUs and performance shares will accrue dividend equivalents in the form of additional Holdings RSUs or performance shares to be settled or forfeited consistent with the terms of the related award.
Holdings RSUs
Holdings RSUs granted to R&P employees under an annual program vest ratably in equal annual installments over a three-year period. The fair value of the awards was measured using the closing price of the Holdings share on the grant date, and the resulting compensation expense will be recognized over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Under the 2020 equity program, eligible R&P financial professionals were granted stock-settled Holdings RSUs which vest ratably in equal annual installments over a three-year period and are equity-classified. The fair value of these awards was measured using the closing price of the Holdings share on the grant date, and the resulting compensation
212
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
expense will be recognized over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Under the 2019 and 2018 equity programs, R&P financial professionals were granted cash-settled Holdings RSUs which vest ratably in equal installments over a three-year period. The cash payment for each RSU will equal the average closing price for a Holdings share on the NYSE over the 20 trading days immediately preceding the vesting date. These awards are liability-classified and require fair value remeasurement based upon the price of a Holdings share at the close of each reporting period.
Holdings Stock Options
Holdings stock options granted to R&P employees have a three-year graded vesting schedule, with one-third vesting on each of the three anniversaries. The total grant date fair value of Holdings stock options will be charged to expense over the shorter of the vesting period or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Holdings Performance Shares
Holdings performance shares granted to R&P employees are subject to performance conditions and a three-year cliff-vesting. The performance shares consist of two distinct tranches; one based on the Company’s return-on-equity targets (the “ROE Performance Shares”) and the other based on the Holdings’ relative total shareholder return targets (the “TSR Performance Shares”), each comprising approximately one-half of the award. Participants may receive from 0% to 200% of the unearned performance shares granted. The grant-date fair value of the ROE Performance Shares is established once all applicable Non-GAAP ROE targets are determined and approved. The fair value of the awards was measured using the closing price of the Holdings share on the grant date.
The grant-date fair value of the TSR Performance Shares was measured using a Monte Carlo approach. Under the Monte Carlo approach, stock returns were simulated for Holdings and the selected peer companies to estimate the payout percentages established by the conditions of the award. The aggregate grant-date fair value of the unearned TSR Performance Shares will be recognized as compensation expense over the shorter of the cliff-vesting period or the period up to the date at which the participant becomes retirement eligible, but not less than one year.
Director Awards
Holdings makes annual grants of unrestricted Holdings shares to non-employee directors of Holdings, Equitable Financial and Equitable America. The fair value of these awards was measured using the closing price of Holdings shares on the grant date. These awards immediately vest and all compensation expense is recognized at the grant date.
One-Time Awards Granted in 2018
Transaction Incentive Awards
On May 9, 2018, coincident with the IPO, Holdings granted one-time “Transaction Incentive Awards” to executive officers and certain other R&P employees in the form of 722 thousand Holdings RSUs. NaN percent of the Holdings RSUs vested based on service over the two-year period from the IPO date (the “Service Units”), and 50 percent vest based on service or market condition (the “Performance Units”). The market condition is based on share price growth of at least 130% or 150% within a two or five-year period, respectively. The market condition was achieved during 2021 and the RSUs fully vesting during this period.
Prior Equity Award Grants
In 2017 and prior years, equity awards for employees, financial professional and directors in our R&P businesses were available under the umbrella of AXA’s global equity program. Accordingly, equity awards granted in 2017 and prior years were linked to AXA’s stock.
R&P employees were granted AXA ordinary share options under the Stock Option Plan, AXA performance shares under the Performance Share Plan and R&P financial professionals were granted performance units under the AXA Advisors Performance Unit Plan.
The fair values of these prior awards are measured at the grant date by reference to the closing price of the AXA ordinary share, and the result, as adjusted for achievement of performance targets and pre-vesting forfeitures, generally is attributed over the shorter of the requisite service period, the performance period, if any, or to the date at which
213
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
retirement eligibility is achieved and subsequent service no longer is required for continued vesting of the award. Remeasurements of fair value for subsequent price changes until settlement are made only for performance unit awards that are settled in cash.
Investment Management and Research
Employees and directors in our Investment Management and Research business participate in several unfunded long-term incentive compensation plans maintained by AB. Awards under these plans are linked to AB Holding Units.
Under the AB 2017 Long Term Incentive Plan (“2017 Plan”), which was adopted at a special meeting of AB Holding Unit holders held on September 29, 2017, the following forms of awards may be granted to AB employees and Directors: (i) restricted AB Holding Units or phantom restricted AB Holding Units (a “phantom” award is a contractual right to receive AB Holding Units at a later date or upon a specified event); (ii) options to buy AB Holding Units; and (iii) other AB Holding Unit-based awards (including, without limitation, AB Holding Unit appreciation rights and performance awards). The 2017 Plan will expire on September 30, 2027, and no awards under the occurrence of an extreme mortality event.
AXA Equitable Life has accepted certain retrocession policies through reinsurance agreements with various reinsurers. AXA Equitable Life retrocedes to AXA Global Life2017 Plan will be made after that date. Under the excess of its first retention layer.
Certain of our subsidiaries have entered into a Life Catastrophe Excess of Loss Reinsurance Agreement with a2017 Plan, the aggregate number of subscribing reinsurers,AB Holding Units with respect to which awards may be granted is 60 million, including AXA Global Life. AXA Global Life participatesno more than 30 million newly-issued AB Holding Units.
AB engages in 5%open-market purchases of AB Holding Units to help fund anticipated obligations under its long-term incentive compensation plans and for other corporate purposes. During 2021, 2020, and 2019 AB purchased 5.6 million, 5.4 million, and 6.0 million AB Holding Units for $262 million, 149 million and 173 million, respectively. These amounts reflect open-market purchases of 2.6 million, 3.1 million and 2.9 million AB Holding Units for $117.9 million 74.0 million and 82.7 million, respectively, with the pool, pro-rata, acrossremainder relating to purchases of AB Holding Units from AB employees to allow them to fulfill statutory tax withholding requirements at the uppertime of distribution of long-term incentive compensation awards, offset by AB Holding Units purchased by AB employees as part of a distribution reinvestment election.
During 2021, 2020, and lower layers.2019 AB granted 7.0 million, 5.7 million, and 7.7 million restricted AB Holding units to AB employees and directors, respectively.
PremiumsDuring 2021, 2020, and expenses paid2019 AB Holding issued 100 thousand, 5 thousand, and 500 thousand AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $3 million, 147 thousand and 12 million, respectively, received from employees as payment in cash for the above agreementsexercise price to purchase the equivalent number of newly-issued AB Holding Units.
As of December 31, 2021, no options to buy AB Holding Units had been granted and 28.1 million AB Holding Units, net of withholding tax requirements, were subject to other AB Holding Unit awards made under the 2017 Plan or an equity compensation plan with similar terms that was canceled in 2018, 2017 and 20162017. AB Holding Unit-based awards (including options) in respect of 31.9 million AB Holding Units were $4 million, $4 million and $4 million, respectively.
On September 12, 2018 AXA Group acquired XL Catlin. The Company had previously ceded part of our disability income business to XL Catlin andavailable for grant as of December 31, 2018,2021.
Summary of Stock Option Activity
A summary of activity in the reserves ceded were $93 million.AXA and Holdings option plans during 2021 as follows:

214
EQUITABLE HOLDINGS, INC.
LoansNOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
 Options Outstanding
 EQH SharesAB Holding UnitsAXA Ordinary Shares
 
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, 20213,428 $21.14 148,985 $23.61 1,726 € 21.01
Options granted— — — — — — 
Options exercised(1,204)21.20 (143,211)23.75 (743)19.19 
Options forfeited, net(184)21.91 — — (109)22.34 
Options expired— — — — — — 
Options outstanding at December 31, 20212,040 $21.69 5,774 $20.12 874 € 22.39
Aggregate intrinsic value (1)$6,305 $165,829 (€ 2,370)
Weighted average remaining contractual term (in years)7.710.334.69 
Options exercisable at December 31, 2021843 $21.58 5,774 $20.12 758 € 22.38
Aggregate intrinsic value (1)$2,700 $165,829 (€ 2,049)
Weighted average remaining contractual term (in years)7.560.334.48 
_______________
(1) Aggregate intrinsic value, presented in thousands, is calculated as the excess of the closing market price on December 31, 2021 of the respective underlying shares over the strike prices of the option awards. For awards with strike prices higher than market prices, intrinsic value is shown as zero.

A summary of stock option grant assumptions activity in the AXA and the Company option plans during 2021, 2020, and 2019 follows:
 EQH Shares (1)
 2021 (2)20202019
Dividend yield—%2.59%2.77%
Expected volatility—%26.00%25.70%
Risk-free interest rates—%1.19%2.49%
Expected life in years—6.05.9
Weighted average fair value per option at grant date$—$4.37$3.82
_______________
(1) The expected volatility is based on historical selected peer data, the weighted average expected term is determined by using the simplified method due to Affiliateslack of sufficient historical data, the expected dividend yield based on Holdings’ expected annualized dividend, and the risk-free interest rate is based on the U.S. Treasury bond yield for the appropriate expected term.
In September 2007,(2) No stock options granted during 2021.


As of December 31, 2021, approximately $74 thousand of unrecognized compensation cost related to AXA receivedunvested stock option awards is expected to be recognized by the Company over a $700weighted-average period of 0.2 years. Approximately $1 million 5.7% Senior Unsecured Noteof unrecognized compensation cost related to Holdings unvested stock option awards is expected to be recognized by the Company over a weighted average period of 1.06 years.
Summary of Restricted Stock Unit Award Activity
The market price of a Holdings share is used as the basis for the fair value measure of a Holdings RSU. For purposes of determining compensation cost for stock-settled Holdings RSUs, fair value is fixed at the grant date until settlement, absent modification to the terms of the award. For liability-classified cash-settled Holdings and AXA RSUs, fair value is remeasured at the end of each reporting period.
As of December 31, 2021, approximately $3 million Holdings RSUs and AXA ordinary share unit awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $41 million and is expected to be recognized over a weighted-average period of 1.9 years.
215
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2021, approximately $18 million AB Holding Unit awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $137 million is expected to be recognized over a weighted-average period of 6.2 years
The following table summarizes Holdings restricted share units and AXA ordinary share unit activity for 2021.
Shares of Holdings Restricted Stock Units
Weighted-Average Grant Date
 Fair Value
Unvested as of January 1, 20213,666,611 $21.15 
Granted1,630,277 $28.01 
Forfeited(194,262)$24.43 
Vested(1,873,893)$20.81 
Unvested as of December 31, 20213,228,733 $24.61 
Summary of Performance Award Activity
As of December 31, 2021, approximately 2 million Holdings and AXA performance awards remain unvested. Unrecognized compensation cost related to these awards totaled approximately $19 million and is expected to be recognized over a weighted-average period of 1.5 years.
The following table summarizes Holdings and AXA performance awards activity for 2021.
Shares of Holdings Performance AwardsWeighted-Average Grant Date
 Fair Value		Shares of AXA Performance AwardsWeighted-Average Grant Date
Fair Value
Unvested as of January 1, 2021676,688 $22.14 2,806,126 $21.86 
Granted1,153,932 $29.91 — $— 
Forfeited(200,814)$28.28 (7,939)$27.18 
Vested(168,132)$23.17 (1,410,020)$23.94 
Other (1)— $— (1,325,420)$19.64 
Unvested as of December 31, 20211,461,674 $28.58 62,747 $21.28 
_______________
(1) One time true-up of AXA Performance Awards related to the transition to third party administrator.


216
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
16)    INCOME TAXES
Income from Holdings. In January 2018, AXA pre-paid $50operations before income taxes included income (loss) from domestic operations of $(392) million, $(1.3) billion and $(2.2) billion for the years ended December 31, 2021, 2020 and 2019, and income from foreign operations of $223 million, $169 million and $131 million for the years ended December 31, 2021, 2020 and 2019. Approximately $59 million, $45 million and $34 million of the note. In April 2018, AXA pre-paidCompany’s income tax expense is attributed to foreign jurisdictions for the remainderyears ended December 31, 2021, 2020 and 2019.
A summary of this note.the income tax (expense) benefit in the consolidated statements of income (loss) follows:
In
Year Ended December 31,
 202120202019
(in millions)
Income tax (expense) benefit:
Current (expense) benefit$(129)$(5)$(71)
Deferred (expense) benefit274 749 664 
Total$145 $744 $593 

The Federal income taxes attributable to consolidated operations are different from the amounts determined by multiplying the earnings before income taxes and noncontrolling interest by the expected Federal income tax rate of 21%. The sources of the difference and their tax effects are as follows:
Year Ended December 31,
 202120202019
(in millions)
Expected income tax (expense) benefit$36 $229 $433 
Noncontrolling interest69 50 51 
Non-taxable investment income80 92 74 
Tax audit interest(14)(8)(24)
State income taxes(47)(38)(21)
Tax settlements/uncertain tax position release— 398 63 
Tax credits28 21 — 
Other(7)— 17 
Income tax (expense) benefit$145 $744 $593 

During the fourth quarter of 2020, the Company agreed to the Internal Revenue Service’s Revenue Agent’s Report for its consolidated 2010 through 2013 Federal corporate income tax returns. The impact on the Company’s financial statements and unrecognized tax benefits was a tax benefit of $398 million.
During the second quarter of 2019, the Company released a state income tax liability due to recently drafted regulations. The benefit recorded in the Company’s financial statements was $63 million.
The components of the net deferred income taxes are as follows:
217
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
December 31,
 20212020
 AssetsLiabilitiesAssetsLiabilities
(in millions)
Compensation and related benefits$273 $— $297 $— 
Net operating loss and credits699 — 88 — 
Reserves and reinsurance2,281 — 1,528 — 
DAC— 874 — 638 
Unrealized investment gains/losses— 965 — 1,790 
Investments— 794 461 — 
Other— 76 — 170 
Total$3,253 $2,709 $2,374 $2,598 

The Company has Federal net operating loss carryforwards of $2.7 billion and $13 million, for the years ending December 2008, AXA received a $500 million 5.4% term loan from AXA Financial. In31, 2021 and 2020, respectively, which do not expire.

The Company provides income taxes on the unremitted earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are indefinitely reinvested outside the United States. As of December 2014, AXA repaid $300 million on this term loan. In January 2018, AXA pre-paid an additional $15031, 2021, $30 million of undistributed earnings of non-U.S. corporate subsidiaries were permanently invested outside the loan. In April 2018, AXA pre-paidUnited States. At existing applicable income tax rates, additional taxes of approximately $8 million would need to be provided if such earnings are remitted.
A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows:
 202120202019
(in millions)
Balance at January 1,$316 $501 $539 
Additions for tax positions of prior years11 241 25 
Reductions for tax positions of prior years(4)(382)(63)
Additions for tax positions of current year— — — 
Settlements with tax authorities— (44)— 
Balance at December 31,$323 $316 $501 
Unrecognized tax benefits that, if recognized, would impact the effective rate$67 $77 $369 

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. Interest and penalties included in the remainderamounts of this loan.unrecognized tax benefits as of December 31, 2021 and 2020 were $50 million and $36 million, respectively. For 2021, 2020 and 2019, respectively, there were $14 million, $(60) million and $21 million in interest expense (benefit) related to unrecognized tax benefits.
In December 2013, Colisée Re received a $145 million 4.75% loan from Holdings. The loan was repaid on March 26, 2018.
In December 2015, AXA IM Holding US received a $185 million three-month LIBOR plus 1.5% unsecured loan from AXA Financial. The loan was repaid on April 23, 2018.
In September 2016, AXA Tech issued a $12 million 2.0% unsecured loanIt is reasonably possible that the total amount of unrecognized tax benefits will change within the next 12 months due to AXA Technology Services SAS. $2 millionthe conclusion of this loan was repaid in December 2016, $5 million was repaid in January 2017IRS proceedings and the remainderaddition of the loan was repaid on March 27, 2017.
In June 2016, AXA Tech issued a $2 million 2.0% unsecured loan to AXA Technology Services Mexico SA.new issues for open tax years. The loan was repaid on March 27, 2017.
In October 2016, AXA Tech issued a $3 million 6.0% unsecured loan to PT AXA Technology Services Asia Indonesia. The loan is scheduled to mature on October 3, 2022. On December 31, 2017, this loan was transferred to AXA US Holdings Inc. for consideration equal to par value.
Loans from Affiliates
In March 2010, AXA Financial issued subordinated notes to AXA Life Insurance Company Ltd.,possible change in the amount of $770 million (“AXA Japan Subordinated Notes”).unrecognized tax benefits cannot be estimated at this time.
As of December 31, 2021, tax years 2014 and subsequent remain subject to examination by the IRS.
218
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
17)    COMMITMENTS AND CONTINGENT LIABILITIES
Litigation and Regulatory Matters
Litigation, regulatory and other loss contingencies arise in the ordinary course of the Company’s activities as a diversified financial services firm. The AXA Japan Subordinated NotesCompany is a defendant in a number of litigation matters arising from the conduct of its business. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek, or they may be required only to state an amount sufficient to meet a court’s jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the merits or potential value of a claim. Litigation against the Company includes a variety of claims including, among other things, insurers’ sales practices, alleged agent misconduct, alleged failure to properly supervise agents, contract administration, product design, features and accompanying disclosure, cost of insurance increases, payments of death benefits and the reporting and escheatment of unclaimed property, alleged breach of fiduciary duties, alleged mismanagement of client funds and other matters.
The outcome of a litigation or regulatory matter is difficult to predict, and the amount or range of potential losses associated with these or other loss contingencies requires significant management judgment. It is not possible to predict the ultimate outcome or to provide reasonably possible losses or ranges of losses for all pending regulatory matters, litigation and other loss contingencies. While it is possible that an adverse outcome in certain cases could have a maturitymaterial adverse effect upon the Company’s financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory matters, nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company’s litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company’s results of operations or cash flows in a particular quarterly or annual period.
For some matters, the Company is able to estimate a range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of December 31, 2021, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, to be up to approximately $250 million.
For other matters, the Company is currently not able to estimate the reasonably possible loss or range of March 30,loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company’s accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.
In August 2015, a lawsuit was filed in Connecticut Superior Court entitled Richard T. O’Donnell, on behalf of himself and all others similarly situated v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action on behalf of all persons who purchased variable annuities from Equitable Financial, which were subsequently subjected to the volatility management strategy and who suffered injury as a result thereof. Plaintiff asserts a claim for breach of contract alleging that Equitable Financial implemented the volatility management strategy in violation of applicable law. Plaintiff seeks an award of damages individually and on a classwide basis, and costs and disbursements, including attorneys’ fees, expert witness fees and other costs. In 2015, the case was transferred to the Southern District of New York and, in 2018, transferred back to Connecticut Superior Court. In August 2019, the court granted Equitable Financial’s motion to strike, which sought dismissal of the complaint, and in September 2019, Plaintiff filed an Amended Class Action Complaint. Equitable Financial filed renewed motions to strike and to dismiss and for an entry of judgment in October 2019. In August 2020, the court granted Equitable Financial’s motion for entry of judgment.
219
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Plaintiff filed a notice of appeal and in February 2021, the appellate court reversed the entry of judgement and remanded the case to Connecticut Superior Court. We are vigorously defending this matter.
In February 2016, a lawsuit was filed in the Southern District of New York entitled Brach Family Foundation, Inc. v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action brought on behalf of all owners of UL policies subject to Equitable Financial’s COI rate increase. In early 2016, Equitable Financial raised COI rates for certain UL policies issued between 2004 and 2008, which had both issue ages 70 and above and a floating interest ratecurrent face value amount of LIBOR plus 1.2%, which resets semiannually on March 30$1 million and September 30. The notes were repaid on April 20, 2018. The 2018,above. A second putative class action was filed in Arizona in 2017 and 2016 interest cost relatedconsolidated with the Brach matter. The consolidated amended class action complaint alleges the following claims: breach of contract; misrepresentations in violation of Section 4226 of the New York Insurance Law; violations of New York General Business Law Section 349; and violations of the California Unfair Competition Law, and the California Elder Abuse Statute. Plaintiffs seek: (a) compensatory damages, costs, and, pre- and post-judgment interest; (b) with respect to the AXA Japan Subordinated Notes totaled approximately $12 million, $19 million and $16 million, respectively.
In October 2012, AXA Financial issuedtheir claim concerning Section 4226, a note denominated in Eurospenalty in the amount of €300 millionpremiums paid by the plaintiffs and the putative class; and (c) injunctive relief and attorneys’ fees in connection with their statutory claims. In August 2020, the federal district court issued a decision certifying nationwide breach of contract and Section 4226 classes, and a New York State Section 349 class. Equitable Financial has commenced settlement discussions with the Brach class action plaintiffs through a non-binding mediation process. No assurances can be given about the outcome of that mediation process. Separately, a substantial number of policy owners have opted out of the Brach class action and are not participating in that mediation process. Most have not yet filed suit. Others filed suit previously. They include 5 other federal actions challenging the COI rate increase that are also pending against Equitable Financial and have been coordinated with the Brach action for the purposes of pre-trial activities. They contain allegations similar to those in the Brach action as well as additional allegations for violations of various states’ consumer protection statutes and common law fraud. NaN actions are also pending against Equitable Financial in New York state court. Equitable Financial is vigorously defending each of these matters.
As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or $391the financial services industry. It is the practice of the Company to cooperate fully in these matters. For example, among other matters, the Company has been cooperating with the U.S. Securities and Exchange Commission (the “SEC”) concerning the SEC’s investigation into the Company’s non-ERISA K-12 403(b) and 457 sales and disclosure practices.The Company has reached an agreement in principle, subject to agreement on documentation and approval by the SEC, to resolve that investigation, including the allegation that daily separate account and portfolio operating expenses disclosed in customer prospectuses and incorporated in the calculation of net investment portfolio results in quarterly account statements were not properly presented or referenced in those account statements. If approved, under the settlement, the Company would neither admit nor deny the allegations, prospectively modify the relevant account statements and cross-reference the relevant prospectus disclosures, and pay a civil monetary penalty of $50 million, to AXA Belgium S.A.be distributed to plan participants. The Company has fully accrued for the cost of the settlement.
Obligations under Funding Agreements
Pre-Capitalized Trust Securities (“AXA Belgium”P-Caps”). This note had
In April 2019, pursuant to separate Purchase Agreements among Holdings, Credit Suisse Securities (USA) LLC, as representative of the several initial purchasers, and the Trusts (as defined below), Pine Street Trust I, a Delaware statutory trust (the “2029 Trust”), completed the issuance and sale of 600,000 of its Pre-Capitalized Trust Securities redeemable February 15, 2029 (the “2029 P-Caps”) for an aggregate purchase price of $600 million and Pine Street Trust II, a Delaware statutory trust (the “2049 Trust” and, together with the 2029 Trust, the “Trusts”), completed the issuance and sale of 400,000 of its Pre-Capitalized Trust Securities redeemable February 15, 2049 (the “2049 P-Caps” and, together with the 2029 P-Caps, the “P-Caps”) for an aggregate purchase price of $400 million in each case to qualified institutional buyers in reliance on Rule 144A that are also “qualified purchasers” for purposes of Section 3(c)(7) of the Investment Company Act of 1940, as amended.
The P-Caps are an off-balance sheet contingent funding arrangement that, upon Holdings’ election, gives Holdings the right over a ten-year period (in the case of the 2029 Trust) or over a thirty-year period (in the case of the 2049 Trust) to issue senior notes to these Trusts. The Trusts each invested the proceeds from the sale of their P-Caps in separate portfolios of principal and/or interest strips of U.S. Treasury securities. In return, Holdings will pay a semi-annual facility fee to the 2029 Trust and 2049 Trust calculated at a rate of Europe Interbank Offered Rate (“EURIBOR”2.125% and 2.715% per annum, respectively, which will be applied to the unexercised portion of the contingent funding arrangement and Holdings will reimburse the
220
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Trusts for certain expenses. The facility fees are recorded in Other operating costs and expenses in the Consolidated Statements of Income (Loss).
Federal Home Loan Bank
As a member of the FHLB, Equitable Financial has access to collateralized borrowings. It also may issue funding agreements to the FHLB. Both the collateralized borrowings and funding agreements would require Equitable Financial to pledge qualified mortgage-backed assets and/or government securities as collateral. Equitable Financial issues short-term funding agreements to the FHLB and uses the funds for asset, liability, and cash management purposes. Equitable Financial issues long-term funding agreements to the FHLB and uses the funds for spread lending purposes.
Entering into FHLB membership, borrowings and funding agreements requires the ownership of FHLB stock and the pledge of assets as collateral. Equitable Financial has purchased FHLB stock of $311 million and pledged collateral with a carrying value of $12.5 billion as of December 31, 2021. 
Funding agreements are reported in policyholders’ account balances in the consolidated balance sheets. For other instruments used for asset/liability and cash management purposes, see “Derivative and offsetting assets and liabilities” included in Note 4 of the Notes to these Consolidated Financial Statements. The table below summarizes the Company’s activity of funding agreements with the FHLB.
Change in FHLB Funding Agreements during the Year Ended December 31, 2021
Outstanding Balance at December 31, 2020Issued During the PeriodRepaid During the PeriodLong-term Agreements Maturing Within One YearLong-term Agreements Maturing Within Five YearsOutstanding Balance at December 31, 2021
(in millions)
Short-term funding agreements:
Due in one year or less$5,634 $59,846 $60,504 $377 $— $5,353 
Long-term funding agreements:
Due in years two through five722 411 — (377)534 1,290 
Due in more than five years534 — — — (534)— 
Total long-term funding agreements1,256 411 — (377)— 1,290 
Total funding agreements (1)$6,890 $60,257 $60,504 $— $— $6,643 
_____________
(1)The $4 million and $7 million difference between the funding agreements carrying value shown in fair value table for December 31, 2021 and December 31, 2020, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements borrowing rates.
Funding Agreement-Backed Notes Program
Under the FABN program, Equitable Financial may issue funding agreements in U.S. dollar or other foreign currencies to a Delaware special purpose statutory trust (the “Trust”) plus 1.15%in exchange for the proceeds from issuances of fixed and floating rate medium-term marketable notes issued by the Trust from time to time (the “Trust Notes”). The funding agreements have matching interest, maturity and currency payment terms to the applicable Trust notes. The Company hedges the foreign currency exposure of foreign currency denominated funding agreements using cross currency swaps as discussed in Note 4 of the Notes to these Consolidated Financial Statements. As of May 2021, the maximum aggregate principal amount of Trust notes permitted to be outstanding at any one time is $10 billion. Funding agreements issued to the Trust, including any foreign currency transaction adjustments, are reported in policyholders’ account balances in the consolidated balance sheets. Foreign currency transaction adjustments to policyholder’s account balances are recognized in net income (loss) as an adjustment to interest credited to policyholders’ account balances and are offset in interest credited to policyholders’ account balances by a maturity daterelease of October 23, 2017. Concurrently, AXAAOCI from deferred changes in fair value of designated and qualifying cross currency swap cash flow hedges. The table below summarizes the Equitable Financial’s activity of funding agreements under the FABN.
221
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Change in FABN Funding Agreements during the Year Ended December 31, 2021
Outstanding Balance at December 31, 2020Issued During the PeriodRepaid During the PeriodLong-term Agreements Maturing Within One YearLong-term Agreements Maturing Within Five YearsForeign Currency Transaction AdjustmentOutstanding Balance at December 31,
2021
(in millions)
Short-term funding agreements:
Due in one year or less$— $— $— $— $— $— $— 
Long-term funding agreements:
Due in years two through five1,150 3,450 — — — — 4,600 
Due in more than five years800 1,359 — — — (40)2,119 
Total long-term funding agreements1,950 4,809 — — — (40)6,719 
Total funding agreements (1)$1,950 $4,809 $— $— $— $(40)$6,719 
_____________
(1)The $70 million and $11 million difference between the funding agreements notional value shown and carrying value table as of December 31, 2021 and December 31, 2020, respectively, reflects the remaining amortization of the issuance cost of the funding agreements and the foreign currency transaction adjustment.
Credit Facilities
For information regarding activity pertaining to our credit facilities arrangements, see “Note 12 of the Notes to these Consolidated Financial Statements.
Guarantees and Other Commitments
The Company provides certain guarantees or commitments to affiliates and others. As of December 31, 2021, these arrangements include commitments by the Company to provide equity financing of $1.3 billion to certain limited partnerships and real estate joint ventures under certain conditions. Management believes the Company will not incur material losses as a result of these commitments.
The Company had $17 million of undrawn letters of credit related to reinsurance as of December 31, 2021. The Company had $863 million of commitments under existing mortgage loan agreements as of December 31, 2021.
The Company is the obligor under certain structured settlement agreements it had entered into with unaffiliated insurance companies and beneficiaries. To satisfy its obligations under these agreements, the Company owns single premium annuities issued by previously wholly-owned life insurance subsidiaries. The Company has directed payment under these annuities to be made directly to the beneficiaries under the structured settlement agreements. A contingent liability exists with respect to these agreements should the previously wholly-owned subsidiaries be unable to meet their obligations. Management believes the need for the Company to satisfy those obligations is remote.
18)    INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
In accordance with statutory accounting practices, the following table presents the combined statutory net income (loss), surplus, capital stock & AVR, and securities on deposits for Equitable Financial, Equitable America, USFL, Equitable L&A and CS Life.
222
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

 202120202019
(in millions)
Years Ended December 31,
Combined statutory net income (loss) (1) (2)$(936)$396 $3,821 
As of December 31,
Combined surplus, capital stock and AVR$6,864 $7,475 
Combined securities on deposits n accordance with various government and state regulations$65 $75 
_____________
(1) For 2021, excludes CS Life which was sold June 1, 2021.
(2) For 2020, excludes USFL which was sold April 1, 2020.

Equitable Financial did not pay ordinary dividends during 2021 due to operating losses. In 2020 and 2019, Equitable Financial paid to its direct parent, which subsequently distributed such amount to Holdings, an ordinary shareholder dividend of $2.1 billion and $1.0 billion, respectively.
Dividend Restrictions
As domestic insurance subsidiaries regulated by insurance laws of their respective domiciliary states, Equitable Financial and Equitable America are subject to restrictions as to the amounts they may pay as dividends and amounts they may repay of surplus notes to Holdings.
State insurance statutes also typically place restrictions and limitations on the amount of dividends or other distributions payable by insurance company subsidiaries to their parent companies, as well as on transactions between an insurer and its affiliates. Under the New York insurance laws, which are applicable to Equitable Financial, a swapdomestic stock life insurer may not, without prior approval of the NYDFS, pay an ordinary dividend to its stockholders exceeding an amount calculated based on a statutory formula (“Ordinary Dividend”). Dividends in excess of this amount require the insurer to file a notice of its intent to declare the dividends with AXA, covering the exchange rateNYDFS and obtain prior approval or non-disapproval from the NYDFS with respect to such dividends (“Extraordinary Dividend”). Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable Financial will need the prior approval of the NYDFS to pay the portion, if any, of any Ordinary Dividend that exceeds the Ordinary Dividend that Equitable Financial would be permitted to pay under New York insurance law absent the application of such permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).
Applying the formulas above, Equitable Financial could pay an Ordinary Dividend of up to approximately $865 million in 2022.
Intercompany Reinsurance
Equitable Financial and Equitable America receive statutory reserve credits for reinsurance treaties with EQ AZ Life Re to the extent EQ AZ Life Re holds assets in an irrevocable trust (the “EQ AZ Life Re Trust”). As of December 31, 2021, EQ AZ Life Re holds $12.4 billion of assets in the EQ AZ Life Re Trust and letters of credit of $1.9 billion that are guaranteed by Holdings. Under the reinsurance transactions, EQ AZ Life Re is permitted to transfer assets from the EQ AZ Life Re Trust under certain circumstances. The level of statutory reserves held by EQ AZ Life Re fluctuate based on bothmarket movements, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust and/or additional letters of credit be secured, which could adversely impact EQ AZ Life Re’s liquidity.
Prescribed and Permitted Accounting Practices
Equitable Financial was granted a permitted practice by the interestNYDFS to apply SSAP 108, Derivatives Hedging Variable Annuity Guarantees on a retroactive basis from January 1, 2021 through June 30, 2021, after reflecting the impacts of our reinsurance transaction with Venerable. The permitted practice was amended to also permit Equitable Financial to adopt SSAP 108 prospectively as of July 1, 2021. Application of the permitted practice partially mitigates the Regulation 213 impact of the Venerable Transaction on Equitable Financial’s statutory capital and principal paymentssurplus. The impact of the application of this permitted practice was an increase of approximately $1.4 billion in statutory special surplus
223
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
funds and an increase of $1.4 billion in statutory net income as of December 31, 2021 and for the year then ended, which will be amortized over 5 years for each of the retrospective and prospective components. The permitted practice also resets Equitable Financial’s unassigned surplus to zero as of June 30, 2021 to reflect the transformative nature of the Venerable Transaction.
Equitable Financial and Equitable America cede a portion of their statutory reserves to EQ AZ Life Re, a captive reinsurer, as part of the Company’s capital management strategy. EQ AZ Life Re prepares financial statements in a special purpose framework for statutory reporting.
Differences between Statutory Accounting Principles and U.S. GAAP
Accounting practices used to prepare statutory financial statements for regulatory filings of stock life insurance companies differ in certain instances from U.S. GAAP. The differences between statutory surplus and capital stock determined in accordance with SAP and total equity under U.S. GAAP are primarily: (a) the inclusion in SAP of an AVR intended to stabilize surplus from fluctuations in the value of the investment portfolio; (b) future policy benefits and policyholders’ account balances under SAP differ from U.S. GAAP due to differences between actuarial assumptions and reserving methodologies; (c) certain policy acquisition costs are expensed under SAP but deferred under U.S. GAAP and amortized over future periods to achieve a matching of revenues and expenses; (d) under SAP, Federal income taxes are provided on the basis of amounts currently payable with limited recognition of deferred tax assets while under U.S. GAAP, deferred taxes are recorded for temporary differences between the financial statements and tax basis of assets and liabilities where the probability of realization is reasonably assured; (e) the valuation of assets under SAP and U.S. GAAP differ due to different investment valuation and depreciation methodologies, as well as the deferral of interest-related realized capital gains and losses on fixed income investments; (f) the valuation of the investment in AB and AB Holding under SAP reflects a portion of the market value appreciation rather than the equity in the underlying net assets as required under U.S. GAAP; (g) reporting the surplus notes as a component of surplus in SAP but as a liability in U.S. GAAP; (h) computer software development costs are capitalized under U.S. GAAP but expensed under SAP; (i) certain assets, primarily prepaid assets, are not admissible under SAP but are admissible under U.S. GAAP; and (j) cost of reinsurance which is recognized as expense under SAP and amortized over the life of the underlying reinsured policies under U.S. GAAP.
19)    BUSINESS SEGMENT INFORMATION
The Company has 4 reportable segments: Individual Retirement, Group Retirement, Investment Management and Research and Protection Solutions.
These segments reflect the manner by which the Company’s chief operating decision maker views and manages the business. A brief description of these segments follows:
•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 VUL, UL 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.
Measurement
Operating earnings (loss) is the financial measure which primarily focuses on the Company’s segments’ results of operations as well as the underlying profitability of the Company’s core business. By excluding items that can be
224
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
distortive and unpredictable such as investment gains (losses) and investment income (loss) from derivative instruments, the Company believes operating earnings (loss) by segment enhances the understanding of the Company’s underlying drivers of profitability and trends in the Company’s segments.
Operating earnings is calculated by adjusting each segment’s net income (loss) attributable to Holdings for the following items:
•Items related to this note. The interest ratevariable annuity product features, which include: (i) certain changes in the fair value of the derivatives and other securities we use to hedge these features; (ii) the effect of benefit ratio unlock adjustments, including extraordinary economic conditions or events such as COVID-19; and (iii) changes in the fair value of the embedded derivatives reflected within variable annuity products’ net derivative results and the impact of these items on DAC amortization on our SCS product;
•Investment (gains) losses, which includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
•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 swap was 6-month LIBOR plus 1.48%. In October 2017,one-time impact of the note was extendedsettlement of the defined benefit obligation;
•Other adjustments, which primarily include restructuring costs related to March 30, 2018. The extended note has a floating interest rate of one-month EURIBOR plus 0.06%. Concurrently, AXA Financial entered into a swapseverance and separation, COVID-19 related impacts, net derivative gains (losses) on certain Non-GMxB derivatives, net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments, unrealized gain/losses associated with AXA covering the exchange rate on both the interestequity securities and principal paymentscertain legal accruals; and
•Income tax expense (benefit) related to the extended note until March 30, 2018. Bothabove items and non-recurring tax items, which includes the loaneffect of uncertain tax positions for a given audit period.
Revenues derived from any customer did not exceed 10% of revenues for the years ended December 31, 2021, 2020 and 2019.
The table below presents operating earnings (loss) by segment and Corporate and Other and a reconciliation to net income (loss) attributable to Holdings for the swap were repaidyears ended December 31, 2021, 2020 and 2019, respectively:
 Year Ended December 31,
 202120202019
(in millions)
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Adjustments related to:
Variable annuity product features (1)4,145 3,912 4,863 
Investment (gains) losses(867)(744)(73)
Net actuarial (gains) losses related to pension and other postretirement benefit obligations120 109 99 
Other adjustments (2) (3) (4) (5)717 952 395 
Income tax expense (benefit) related to above adjustments (6)(864)(888)(1,097)
Non-recurring tax items (7)13 (391)(66)
Non-GAAP Operating Earnings$2,825 $2,302 $2,357 
Operating earnings (loss) by segment:
Individual Retirement$1,444 $1,536 $1,598 
Group Retirement$631 $491 $390 
Investment Management and Research$564 $432 $381 
Protection Solutions$317 $146 $336 
Corporate and Other (8)$(131)$(303)$(348)
______________
(1)Includes COVID-19 impact on March 29, 2018. The 2018, 2017variable annuity product features due to a first quarter 2020 assumption update of $1.5 billion and 2016 interest costother COVID-19 related impacts of $35 million for the year ended December 31, 2020.
225
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(2)Includes COVID-19 impact on other adjustments due to a first quarter 2020 assumption update of $1.0 billion and other COVID-19 related impacts of $86 million for the year ended December 31, 2020.
(3)Include separation costs of $82 million, $108 million and $222 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(4)Includes certain legal accruals related to this loan totaled approximately $2the COI litigation of $207 million $12for the year ended December 31, 2021. No adjustments were made to prior period operating earnings as the impact was immaterial.
(5)Includes Non-GMxB related derivative hedge gains and losses of $65 million, $(404) million and $9$36 million respectively.
In December 2014, AXA Financial issued a $2,727 million, three-month LIBOR plus 1.06% margin term loan to AXA. The loan has a maturity date of December 18, 2024. In June 2015, AXA Financial repaid $520 million and during 2016 repaid an additional $1,200 million of this loan. The outstanding balance on this loan atfor the years ended December 31, 2017 was $1,007 million. The interest cost related to this loan totaled approximately $102021, 2020 and 2019, respectively.
(6)Includes income taxes of $(554) million $23 million, and $23 millionfor the above COVID-19 items for the year ended December 31, 2020.
(7)Prior year includes a reduction in 2018, 2017, and 2016, respectively. On April 20, 2018, the remainderreserve for uncertain tax positions resulting from the completion of this loan was repaid.
In December 2015, AXA Financial received a $300 million 1-month LIBOR plus 0.58% unsecured loan from AXA. The Company repaid this loan on June 30, 2016.
In 2015, AXA America Holdings, Inc. received a $366 million, three-month LIBOR plus 1.44% loan from AXA. The loan has a maturity date of October 8, 2022. This loan was repaid on April 20, 2018. The 2018, 2017 and 2016 interest cost related to this loan totaled approximately $6 million, $9 million and $8 million, respectively.
In 2013, Holdings received $242 million and $145 million 4.75% loans from Coliseum Reinsurance Company. The loans have maturity datesan IRS examination in December 2028. The loans were repaid on April 20, 2018. The 2018, 2017 and 2016 interest cost related to these loans totaled approximately $6 million, $18 million and $18 million, respectively.

In 2017, Holdings repaid a $56 million 1.39% loan from AXA America Corporate Solutions, Inc. (“AXA CS”) originally made in 2015 and received a $100 million loan and a $10 million loan from AXA CS. The loans have interest rates of 1.86% and 1.76%, respectively, and were repaid on their maturity of February 5, 2018. The 2018, 2017 and 2016 interest cost related to these loans totaled approximately $2 million, $2 million and $1 million, respectively.
In December 2017, Holdings received a $622 million, 3-month LIBOR plus 0.439% margin term loan from AXA. The loan has a maturity date of June 8, 2018. The loan was repaid on March 22, 2018.
In January 2016, AXA Financial pre-paid a $177 million term loan from AXA Insurance UK PLC and $72 million term loan from AXA France IARD S.A. As a result of this pre-payment, AXA Financial incurred a prepayment penalty of $43 million.
In 2016, AXA Tech repaid a $4 million 12-month LIBOR plus 1.42% loan from SAS.
Guarantees
AXA Financial paid fees to AXA for certain guarantees related to our employee benefit plans which were terminated in May 2016. For the year ended December 31, 2016,2020.
(8)Includes interest expense and financing fees of $241 million $218 million and $228 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Segment revenues is a measure of the Company’s revenue by segment as adjusted to exclude certain items. The following table reconciles segment revenues to total revenues by excluding the following items:
•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 includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
•Other adjustments, which primarily includes net derivative gains (losses) on certain Non-GMxB derivatives and net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments and unrealized gain/losses associated with equity securities.
The table below presents segment revenues for the years ended December 31, 2021, 2020 and 2019.
 Year Ended December 31,
 202120202019
(in millions)
Segment revenues:
Individual Retirement (1)$3,785 $4,311 $4,325 
Group Retirement (1)1,372 1,148 1,077 
Investment Management and Research (2)4,430 3,703 3,479 
Protection Solutions (1)3,358 3,144 3,366 
Corporate and Other (1)1,563 1,207 1,228 
Adjustments related to:
Variable annuity product features(4,268)(2,284)(3,935)
Investment gains (losses), net867 744 73 
Other adjustments to segment revenues (3)(71)442 6 
Total revenues$11,036 $12,415 $9,619 
______________
(1)Includes investment expenses charged by AB of $128 million, $71 million and $76 million for the years ended December 31, 2021, 2020 and 2019, respectively, for services provided to the Company.
(2)Inter-segment investment management and other fees of $126 million, $113 million and $104 million for the years ended December 31, 2021, 2020 and 2019, respectively, are included in segment revenues of the Investment Management and Research segment.
(3)Includes COVID-19 impact on other adjustments due to an assumption update of $46 million and other COVID-19 related impacts of $(30) million for the year ended December 31, 2020.
The table below presents total assets by segment as of December 31, 2021 and 2020:
226
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
December 31,
 20212020
(in millions)
Total assets by segment:
Individual Retirement (1)$143,663 $135,764 
Group Retirement55,368 51,466 
Investment Management and Research11,602 11,179 
Protection Solutions50,686 48,568 
Corporate and Other30,943 28,420 
Total assets$292,262 $275,397 
______________
(1) Increase in Individual Retirement as of December 31, 2021 is primarily due to Amounts due from Reinsurers related to ceded reserves on the Venerable Transaction (see Note 1 of the Notes to these guaranteesConsolidated Financial Statements).
20)    EQUITY
Preferred Stock
Preferred stock authorized, issued and outstanding was as follows:
December 31, 2021December 31, 2020
SeriesShares AuthorizedShares
 Issued		Shares OutstandingShares AuthorizedShares
 Issued		Shares Outstanding
Series A32,000 32,000 32,000 32,000 32,000 32,000 
Series B20,000 20,000 20,000 20,000 20,000 20,000 
Series C12,000 12,000 12,000 — — — 
Total64,000 64,000 64,000 52,000 52,000 52,000 

Series A Fixed Rate Noncumulative Perpetual Preferred Stock
In November and December 2019, Holdings’ issued a total of 32 million depositary shares, each representing a 1/1,000th interest in share of Series A Preferred Stock, $1.00 par value per share, with a liquidation preference of $25,000 per share, for aggregate net cash proceeds of $775 million ($800 million gross). The preferred stock ranks senior to Holdings’ common stock with respect to the payment of dividends and liquidation. Holdings’ will pay dividends on the Series A Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable quarterly in arrears, at an annual rate of 5.25% on the stated amount per share.  In connection with the issuance of the depositary shares and the underlying Series A Preferred Stock, Holdings’ incurred $25 million of issuance costs, which have been recorded as a reduction of additional paid-in capital. The Series A Preferred Stock is redeemable at Holdings’ option in whole or in part, on or after December 15, 2024, at a redemption price of $25,000 per share of preferred stock, plus declared and unpaid dividends. Prior to December 25, 2024, the preferred stock is redeemable at Holdings’ option, in whole but not in part, within 90 days of the occurrence of certain rating agency events at a redemption price equal to $25,500 per share, plus declared and unpaid dividends or certain regulatory capital events at a redemption price equal to $25,000 per share, plus any declared and unpaid dividends.
Series B Fixed Rate Reset Noncumulative Perpetual Preferred Stock
On August 11, 2020, Holdings issued 500,000 depositary shares, each representing a 1/25th interest in a share of Series B Preferred Stock, $1.00 par value per share and liquidation preference of $25,000 per share, for aggregate net cash proceeds of $494 million ($500 million gross). The Series B Preferred Stock ranks senior to Holdings’ common stock and on parity with Holdings’ Series A Preferred Stock with respect to the payment of dividends and liquidation. Holdings will pay dividends on the Series B Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable semi-annually in arrears, at an annual rate equal to the fixed rate of 4.950%, which is reset every 5 years starting on December 15, 2025 (“Reset Date”), at a rate per annum equal to the five-year U.S. Treasury Rate plus 4.736%.
227
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
In connection with the issuance of the depositary shares and the underlying Series B Preferred Stock, Holdings incurred $6 million of issuance costs, which have been recorded as a reduction of additional paid-in capital. The Series B Preferred Stock is redeemable at Holdings’ option in whole or in part, from time to time, during the three-month period prior to, and including, each Reset Date, at a redemption price equal to $25,000 per share of preferred stock, plus any declared and unpaid dividends. Furthermore, the preferred stock is redeemable at Holdings’ option, in whole but not in part at any time, within 90 days after the occurrence of certain rating agency events at a redemption price equal to $25,500 per share, plus any declared and unpaid dividends or after the occurrence of certain regulatory capital events at a redemption price equal to $25,000 per share, plus any declared and unpaid dividends.
Series C Fixed Rate Reset Noncumulative Perpetual Preferred Stock
On January 8, 2021, Holdings issued 12,000,000 depositary shares, each representing a 1/1,000th interest in a share of the Company’s Series C Fixed Rate Noncumulative Perpetual Preferred Stock (“Series C Preferred Stock”), $1.00 par value per share and liquidation preference of $25,000 per share, for aggregate net cash proceeds of $293 million ($300 million gross). The Series C Preferred Stock ranks senior to Holdings’ common stock and on parity with Holdings’ Series A Preferred Stock and Series B Preferred Stock with respect to the payment of dividends and liquidation. Holdings will pay dividends on the Series C Preferred Stock on a noncumulative basis only when, as and if declared by the Company’s Board of Directors (or a duly authorized committee of the Board) and will be payable quarterly in arrears, at an annual rate equal to the fixed rate of 4.3%.
Dividends to Shareholders
Dividends declared per share were $0.4 million.as follows for the periods indicated:
We paid fees
Year ended December 31,
202120202019
Series A dividends declared$1,313 $1,378 $— 
Series B dividends declared$1,238 $426 $— 
Series C dividends declared$1,006 $— $— 
Common Stock
Dividends declared per share of common stock were as follows for the periods indicated:
Year Ended December 31,
202120202019
Dividends declared$0.71 $0.66 $0.58 


Share Repurchase
In January 2019, Holdings entered into an ASR agreement with a third-party financial institution to AXA forrepurchase an aggregate of $150 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $150 million and received initial delivery of 7 million shares. The ASR terminated during the first quarter of 2019, at which time an additional 1 million shares were delivered, at an average purchase price of $18.51 per share based on the volume-weighted average price of Holdings’ common stock traded during the pricing period, less an agreed discount. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of December 31, 2019.
On November 6, 2019, Holdings’ Board of Directors authorized a $400 million share repurchase program with an expiration date of December 31, 2020. On February 26, 2020, Holdings’ Board of Directors authorized an increase of $600 million to the capacity of this program as well as the extension of the term of the program until March 31, 2021. This program was exhausted in January 2021. On October 23, 2020, Holdings’ Board of Directors authorized an incremental $500 million of share repurchase in 2021, subject to the close of the Venerable Transaction. In addition, on February 17, 2021 Holdings announced that its guaranteeBoard of our borrowingDirectors had authorized a $1.0 billion share repurchase program. Under this program, Holdings may, from time to time, purchase up to $1.0 billion of its common stock but it is not obligated to purchase any particular number of shares. Repurchases may be effected in the open market, through derivative, accelerated repurchase and other negotiated transactions and through prearranged trading plans complying with Rule 10b5-1(c) under certain third-party credit facilities, commercial paper and from AXA Belgium. the Exchange Act. As of December 31, 2021, Holdings had authorized capacity of

228
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
approximately $5 million remaining in its share repurchase program, which is inclusive of the $500 million related to the Venerable Transaction.
For the years ended December 31, 2018, 20172021 , 2020 and 2016, fees associated with these guarantees were $1.32019, the Company repurchased approximately 51.9 million,, $8.7 23.7 million and $7.9 million, respectively. Following the GMxB Unwind, we no longer pay fees for AXA’s guarantee under third-party credit facilities or from AXA Belgium.
Other Transactions
In 2016, AXA Equitable Life and Saum Sing LLC (“Saum Sing”), formed Broad Vista Partners LLC (“Broad Vista”), of which AXA Equitable Life owns 70% and Saum Sing owns 30%. On June 30, 2016, Broad Vista entered into a real estate joint venture with a third party and AXA Equitable Life invested approximately $25 million.
In 2016, AXA Financial invested in ASV Capital B FPCI, a French Professional Private Equity Fund managed by AXA Strategic Ventures SAS. As of December 31, 2018 and 2017, the fair value of the investment in the fund was $23 million and $7 million, respectively.
AXA RE Arizona benefited from a $1.5 billion revolving credit facility with AXA prior to the execution of the GMxB Unwind. For the years ended December 31, 2018, 2017 and 2016, fees associated with this facility were $2 million, $1 million and $5 million, respectively. As a result of the GMxB Unwind, we no longer benefit from this revolving credit facility.
Pursuant to the Prior TM Agreement, we could use the “AXA” trademarks as an umbrella brand, as part of the name of our companies or investment funds managed by us and other specified purposes. For the years ended December 31, 2018, 2017 and 2016, fees associated with this agreement totaled $3 million, $3 million and $2 million, respectively.
In September 2017, AXA Equitable FMG made a €30 million capital commitment to ASV Diversified, a French Special Limited Partnership investing in venture funds specialized in both early stage and growth startups with new technologies and business models relevant to AXA’s business. This fund is managed by AXA Strategic Ventures SAS. As of December 31, 2018 and 2017, €0.8 million and €0.5 million in capital had been called, respectively.
In December 2017, AXA Tech paid approximately $18 million to AXA US Holdings Inc., a U.S. subsidiary of AXA, which is not a subsidiary of Holdings, in exchange for AXA US Holdings Inc. assuming certain liabilities pertaining to its servicing of AXA companies within the United States and in Latin America valued at approximately $18 million, including costs and expenses associated with providing infrastructure services to AXA and its subsidiaries.
On May 7, 2018, Holdings made a capital contribution of approximately $3 million to AXA Venture Partners SAS in exchange for approximately 30.3% of the shares of AXA Venture Partners SAS and certain rights and protections as a shareholder of the company, including the right to appoint two members of the management committee as well as consent rights over significant transactions.

Share Repurchase from AXA
On November 20, 2018, Holdings repurchased approximately 3065.6 million shares of its common stock from AXA at a total cost of approximately $592$1.6 billion, $430 million under the $800 million share repurchase authorization and pursuant to a share repurchase agreement.$1.3 billion, respectively through open market repurchases, ASRs and privately negotiated transactions. The repurchased common stock was recorded as treasury stock in the consolidated balance sheets. For the years ended December 31, 2021 , 2020 and 2019, the Company reissued approximately 2.3 million, 743 thousand and 387 thousand shares of its treasury stock, respectively. For the year ended December 31, 2021 , 2020 and 2019, the Company retired approximately 32.0 million, 0 shares and 8.1 million shares of its treasury stock, respectively.
In January 2021, Holdings entered into an ASR with a third-party financial institution to repurchase an aggregate of $170 million of Holdings’ common stock. The ASR terminated during the first quarter of 2021, for a total of 6.3 million shares delivered. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of March 31, 2021.
In March 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $200 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $200 million and received initial delivery of 4.9 million shares. The ASR terminated during May 2021, at which time additional shares of 1.1 million were received.
On June 30, 2021, Holdings established an obligation to enter into an ASR with a third-party financial institution to repurchase an aggregate of $300 million of Holdings’ common stock. Pursuant to the ASR, on July 2, 2021, Holdings made a prepayment of $300 million to receive initial delivery of shares. The ASR terminated during the third quarter of 2021 and a total of 9.9 million shares were received. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of September 30, 2021.
In September 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $200 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $200 million and received initial delivery of 5.6 million shares. The ASR terminated during November 2021, at which time additional shares of 0.6 million were received.
On December 22, 2021, Holdings entered into an ASR contract with a third-party financial institution to repurchase an aggregate of $140 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $140 million and received initial delivery of 3.4 million shares. The ASR terminated during January 2022, at which time additional shares of 0.7 million were received. Shares repurchased under the ASR were retired upon receipt resulting in a reduction of Holdings’ total issued shares as of December 31, 2021.
Accumulated Other Comprehensive Income (Loss)
AOCI represents cumulative gains (losses) on items that are not reflected in net income (loss). The balances as of December 31, 2021, and 2020 follow:
 December 31,
 20212020
 (in millions)
Unrealized gains (losses) on investments$2,684 $4,797 
Defined benefit pension plans(669)(935)
Foreign currency translation adjustments(45)(34)
Total accumulated other comprehensive income (loss)1,970 3,828 
Less: Accumulated other comprehensive income (loss) attributable to noncontrolling interest(34)(35)
Accumulated other comprehensive income (loss) attributable to Holdings$2,004 $3,863 


The components of OCI, net of taxes for the years ended December 31, 2021, 2020 and 2019 follow:

229
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued

Year Ended December 31,
 

202120202019
 (in millions)
Change in net unrealized gains (losses) on investments:
Net unrealized gains (losses) arising during the period$(2,467)$4,887 $3,301 
(Gains) losses reclassified into net income (loss) during the period (1)(698)(653)(161)
Net unrealized gains (losses) on investments(3,165)4,234 3,140 
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other1,052 (1,278)(882)
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of $(562), $786, and $595)(2,113)2,956 2,258 
Change in defined benefit plans:
Reclassification to Net income (loss) of amortization of net prior service credit included in net periodic cost (2)266 48 (15)
Change in defined benefit plans (net of deferred income tax expense (benefit) of $68, $14, and $10)266 48 (15)
Foreign currency translation adjustments:
Foreign currency translation gains (losses) arising during the period(11)22 5 
(Gains) losses reclassified into net income (loss) during the period— — — 
Foreign currency translation adjustment(11)22 5 
Total other comprehensive income (loss), net of income taxes(1,858)3,026 2,248 
Less: Other comprehensive income (loss) attributable to noncontrolling interest1 7 (4)
Other comprehensive income (loss) attributable to Holdings$(1,859)$3,019 $2,252 
______________
(1)See “reclassification adjustments” in Note 3 of the Notes to these Consolidated Financial Statements. Reclassification amounts presented net of income tax expense (benefit) of $186 million, $(174) million, and $(43) million for the years ended December 31, 2021, 2020 and 2019, respectively.
(2)These AOCI components are included in the computation of net periodic costs (see Note 14 of the Notes to these Consolidated Financial Statement).

Investment gains and losses reclassified from AOCI to net income (loss) primarily consist of realized gains (losses) on sales and credit losses of AFS securities and are included in total investment gains (losses), net on the consolidated statements of income (loss). Amounts reclassified from AOCI to net income (loss) as related to defined benefit plans primarily consist of amortization of net (gains) losses and net prior service cost (credit) recognized as a component of net periodic cost and reported in compensation and benefits in the consolidated statements of income (loss). Amounts presented in the table above are net of tax.

230
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
21)EARNINGS PER COMMON SHARE
The following table presents a reconciliation of net income (loss) and weighted-average common shares used in calculating basic and diluted EPS for the periods indicated:
 Year Ended December 31,
 202120202019
(in millions)
Weighted-average common shares outstanding:
Weighted-average common shares outstanding — basic417.4 450.4 493.6 
Effect of dilutive securities:
Employee share awards (1)— — — 
Weighted-average common shares outstanding — diluted (2)417.4 450.4 493.6 
Net income (loss):
Net income (loss)$(24)$(349)$(1,467)
Less: Net income (loss) attributable to the noncontrolling interest415 299 297 
Net income (loss) attributable to Holdings(439)(648)(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings’ common shareholders$(518)$(701)$(1,764)
EPS:
Basic$(1.24)$(1.56)$(3.57)
Diluted$(1.24)$(1.56)$(3.57)
_____________
(1)Calculated using the treasury stock method.
(2)Due to net loss for the years ended December 31, 2021, 2020 and 2019, approximately 3.8 million, 1.7 million and 0.8 million shares were excluded from the diluted EPS calculation.

For the years ended December 31, 2021, 2020 and 2019 , 8.2 million, 10.0 million, and 6.2 million of outstanding stock awards, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive.


22)    REDEEMABLE NONCONTROLLING INTEREST
The changes in the components of redeemable noncontrolling interests are presented in the table that follows:
Years Ended December 31,
 202120202019
(in millions)
Balance, beginning of period$143 $365 $187 
Net earnings (loss) attributable to redeemable noncontrolling interests5 (3)34 
Purchase/change of redeemable noncontrolling interests320 (219)144 
Balance, end of period$468 $143 $365 

23)     HELD-FOR-SALE:
Assets and liabilities related to the business classified as HFS are separately reported in the Consolidated Balance Sheets beginning in the period in which the business is classified as HFS.

231
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Corporate Solutions Life Reinsurance Company
On October 27, 2020, Holdings entered into a Master Transaction Agreement with VIAC. See Note 1 of the Notes to these Consolidated Financial Statements for further information. As a result of the agreement, an estimated impairment loss of $15 million, net of income tax, was recorded for the year ended December 31, 2020 and is included in investment gains (losses), net in the consolidated statements of income (loss). The transaction closed on June 1, 2021 with a gain on sale, net of income tax, of less than $1 million. Accordingly, the Company recovered the impairment previously recorded, thus reflecting a gain of $15 million for the year ended December 31, 2021.
As of December 31, 2020, assets of CS Life and CS Life Re to be sold, net of the estimated impairment loss accrual, was $470 million which is reported in assets HFS and total liabilities of $322 million was reported in liabilities HFS. The assets and liabilities HFS are reported in the Corporate and Other segment. On June 1, 2021, Holdings completed the sale of CS Life and CS Life Re. Refer to Note 1 of the Notes to these Consolidated Financial Statement further details.
The following table summarizes the components of assets and liabilities HFS on the Consolidated Balance Sheets as of December 31, 2020:

December 31,
2020
(in millions)
Assets:
Fixed maturity securities$235 
Trading securities, at fair value189 
Other invested assets1 
Cash and cash equivalents39 
Other assets25 
Assets held-for-sale489 
Less: Loss accrual(19)
Total assets held-for-sale$470 
Liabilities:
Future policy benefits and other policyholder's liabilities:$320 
Broker-dealer related payables— 
Other liabilities2 
Total liabilities held-for-sale$322 
24)     SUBSEQUENT EVENTS
Share Repurchase Program
On February 9, 2022, the Company’s Board of Directors authorized a new $1.2 billion share repurchase program. Under this program, the Company may, from time to time purchase shares of its common stock through various means. The Company may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate the Company to purchase any particular number of shares.




232
Table of Contents

EQUITABLE HOLDINGS, INC.
SCHEDULE I
SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2021
Cost (1)Fair Value
Carrying
Value
 (in millions)
Fixed maturities, AFS:
U.S. government, agencies and authorities$13,056 $15,385 $15,385 
State, municipalities and political subdivisions586 662 662 
Foreign governments1,124 1,152 1,152 
Public utilities6,493 6,807 6,807 
All other corporate bonds43,679 45,704 45,704 
Residential mortgage-backed90 98 98 
Asset-backed5,933 5,934 5,934 
Commercial mortgage-backed2,427 2,421 2,421 
Redeemable preferred stocks41 53 53 
Total fixed maturities, AFS73,429 78,216 78,216 
Fixed maturities, at fair value using the fair value option1,637 1,641 1,641 
Mortgage loans on real estate (2)14,095 14,308 14,033 
Policy loans4,024 5,050 4,024 
Other equity investments2,662 2,975 2,975 
Trading securities559 631 631 
Other invested assets3,591 3,591 3,591 
Total Investments$99,997 $106,412 $105,111 
______________
(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 credit loss allowance.
233
EQUITABLE HOLDINGS, INC.
SCHEDULE II
Balance Sheets (Parent Company)
December 31, 2021 and 2020
December 31,December 31,
20212020
(in millions, except share amounts)
ASSETS
Investment in consolidated subsidiaries$13,128 $15,603 
Fixed maturities available-for-sale, at fair value (amortized cost of $884 and $183)874 1,116 
Other equity investments92 66 
Total investments14,094 16,785 
Cash and cash equivalents867 1,972 
Goodwill and other intangible assets, net1,255 1,245 
Loans to affiliates755 675 
Current and deferred income taxes assets600 209 
Other assets547 903 
Total Assets$18,118 $21,789 
LIABILITIES
Short-term and long-term debt$3,839 $4,115 
Employee benefits liabilities853 1,177 
Loans from affiliates1,900 900 
Accrued liabilities7 21 
Total Liabilities$6,599 $6,213 
EQUITY ATTRIBUTABLE TO HOLDINGS
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preference$1,562 $1,269 
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 520,918,331 and 552,896,328 shares issued, respectively; 391,290,224 and 440,776,011 shares outstanding, respectively4 5 
Additional paid-in capital1,919 1,985 
Treasury stock, at cost, 129,628,107 and 112,120,317 shares, respectively(2,850)(2,245)
Retained earnings8,880 10,699 
Accumulated other comprehensive income (loss)2,004 3,863 
Total equity attributable to Holdings11,519 15,576 
Total Liabilities and Equity Attributable to Holdings$18,118 $21,789 

The financial information of Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.













234
EQUITABLE HOLDINGS, INC.
SCHEDULE II

STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2021, 2020, AND 2019
202120202019
(in millions)
REVENUES
Equity in income (losses) from continuing operations of consolidated subsidiaries$(152)$(668)$(1,592)
Net investment income (loss)26 26 29 
Investment gains (losses), net(12)— (1)
Other income— — 12 
Total revenues(138)(642)(1,552)
EXPENSES
Interest expense241 229 237 
Other operating costs and expenses58 40 83 
Total expenses299 269 320 
Income (loss) from continuing operations, before income taxes(437)(911)(1,872)
Income tax (expense) benefit(2)263 108 
Net income (loss) attributable to Holdings(439)(648)(1,764)
Less: Preferred stock dividends79 53 — 
Net income (loss) available to Holdings' common shareholders(518)(701)(1,764)
Other comprehensive income (loss)(1,859)3,019 2,252 
Total comprehensive income (loss) attributable to Holdings$(2,377)$2,318 $488 

The financial information of Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.
235
EQUITABLE HOLDINGS, INC.
SCHEDULE II
STATEMENTS OF CASH FLOWS (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2021, 2020, AND 2019
202120202019
(in millions)
Net income (loss) attributable to Holdings$(439)$(648)$(1,764)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in net (earnings) loss of subsidiaries152 668 1,592 
Non-cash long term incentive compensation expense15 27 69 
Amortization and depreciation60 40 33 
Equity (income) loss limited partnerships(19)(8)1 
Changes in:
Current and deferred taxes(151)(250)202 
Dividends from subsidiaries792 2,877 1,341 
Other, net14 (135)(76)
Net cash provided by (used in) operating activities$424 $2,571 $1,398 
Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale$210 $131 $105 
Short-term investments— — 80 
Payment for the purchase/origination of:
Fixed maturities, available-for-sale— (1,011)— 
Short-term investments— — — 
Other(7)(21)(14)
Net issuance on credit facilities to affiliates(80)(115)(560)
Repayments of loans to affiliates— — 572 
Proceeds from the sale of subsidiary215 — — 
 Increase in cash and cash equivalents from merger of AXA Tech— — 11 
Net cash provided by (used in) investing activities$338 $(1,016)$194 
Cash flows from financing activities:
Issuance of preferred stock$293 $494 $775 
Repayment of long-term debt(280)— (300)
Proceeds from loans from affiliates1,000 — 900 
Repayments of loans from affiliates— (300)(300)
Shareholder dividends paid(296)(297)(285)
Preferred dividends paid(79)(53)— 
Purchase of treasury shares(1,637)(430)(1,350)
Capital contribution to subsidiaries(815)(350)(86)
Other, net(53)— — 
Net cash provided by (used in) financing activities$(1,867)$(936)$(646)
Change in cash and cash equivalents(1,105)619 946 
Cash and cash equivalents, beginning of year1,972 1,353 407 
Cash and cash equivalents, end of year$867 $1,972 $1,353 
Non-cash transactions from investing and financing activities:
Dividend of AB Units from subsidiary$23 $— $— 
Other assets$— $— $4 
Other liabilities$— $— $(16)
The financial information of Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto.
236
EQUITABLE HOLDINGS, INC.
SCHEDULE II
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
1)    BASIS OF PRESENTATION
The financial information of Holdings should be read in conjunction with the Consolidated Financial Statements and Notes thereto. The Company is the holding company for a diversified financial services organization.
2)    LOANS TO AFFILIATES
On November 4, 2019, Holdings made available to AB a $900 million committed, unsecured senior credit facility (the “EQH Facility”). The EQH Facility matures on November 4, 2024 and is available for AB's general business purposes. Borrowings by AB under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated. Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by AB from time to time until the maturity of the facility. AB or Holdings may reduce or terminate the commitment at any time without penalty upon proper notice. Holdings also may terminate the facility immediately upon a change of control of the general partner. In As of December 31, 2021 and 2020, $755 million and $675 million were outstanding under the EQH Facility respectively .
In 2018, Equitable Financial received a $572 million loan from Holdings. The loan had an interest rate of 3.75% and was repaid in March 2019.
3)    LOANS FROM AFFILIATES
In June 2021, Holdings received a $1.0 billion 10-year term loan from Equitable Financial. The loan has an interest rate of 3.23% and matures in June 2031.
In November 2019, Holdings received a $900 million loan from Equitable Financial. The loan has an interest rate of one- month LIBOR plus 1.33%. The loan matures on November 4, 2024. As of December 31, 2021, $900 million was outstanding on the loan.
In April 2018, Holdings received a $800 million loan from Equitable Financial. The loan has an interest rate of 3.69% and would mature in April 2021. In December 2018, Holdings repaid $200 million of this loan. In December 2019, Holdings repaid $300 million. On December 30, 2020, the remainder of this loan was repaid.
Interest cost related to loans from affiliates totaled $30 million, $32 million and $26 million for the years ended December 31, 2021, 2020 and 2019, respectively.
4)    INCOME TAXES
Holdings and certain of its consolidated subsidiaries and affiliates file a consolidated federal income tax return. Holdings has tax sharing agreements with certain of its subsidiaries and generally will either receive or pay these subsidiaries for utilization of the subsidiaries’ tax benefits or expense. Holdings settles these amounts annually.
5)    ISSUANCE OF SERIES A, SERIES B AND SERIES C FIXED RATE NONCUMULATIVE PERPETUAL PREFERRED STOCK
See Note 20 of the Notes to these Consolidated Financial Statements for further information.Statements.
Investment Management and Research6)    SHARE REPURCHASE
We pay fees for certain services, including data processing, support for certain investment operations functions, maintenance and development support for applications, portfolio-related services and cooperative technology development and procurement services for our Investment Management and Research businessSee Note 20 of the Notes to these Consolidated Financial Statements.
237
EQUITABLE HOLDINGS, INC.

SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2021
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs$3,639 $776 $— $1,066 $10 $5,491 
Policyholders’ account balances38,456 13,049 — 15,027 12,825 79,357 
Future policy benefits and other policyholders' liabilities22,904 3 — 4,843 8,967 36,717 
Policy charges and premium revenue1,867 371 — 2,016 343 4,597 
Net derivative gains (losses)(4,386)(29)(13)(83)46 (4,465)
Net investment income (loss)1,221 751 25 1,102 747 3,846 
Policyholders’ benefits and interest credited912 303 — 2,478 744 4,437 
Amortization of deferred policy acquisition costs294 2 — 95 2 393 
All other operating expenses (1)814 362 3,241 780 1,178 6,375 

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2020
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs (2)$3,178 $632 $— $418 $15 $4,243 
Policyholders’ account balances (2)30,736 12,828 — 14,875 8,381 66,820 
Future policy benefits and other policyholders' liabilities (2)25,212 9 — 5,031 9,629 39,881 
Policy charges and premium revenue2,034 295 — 2,013 390 4,732 
Net derivative gains (losses)(1,999)(2)(36)413 (98)(1,722)
Net investment income (loss)1,337 644 36 941 519 3,477 
Policyholders’ benefits and interest credited3,086 305 — 2,372 785 6,548 
Amortization of deferred policy acquisition costs321 73 — 1,220 (1)1,613 
All other operating expenses (1)724 284 2,815 546 978 5,347 

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2019
Individual RetirementGroup RetirementInvestment Management and ResearchProtection SolutionsCorporate and OtherTotal
 (in millions)
Deferred policy acquisition costs (2)$3,285 $659 $— $1,880 $13 $5,837 
Policyholders’ account balances (2)26,359 12,068 — 14,090 6,362 58,879 
Future policy benefits and other policyholders' liabilities (2)20,401 7 — 4,156 10,071 34,635 
Policy charges and premium revenue2,085 279 — 2,148 413 4,925 
Net derivative gains (losses)(3,850)6 (38)(28)(102)(4,012)
Net investment income (loss)1,478 593 99 967 562 3,699 
Policyholders’ benefits and interest credited2,321 304 — 2,172 851 5,648 
Amortization of deferred policy acquisition costs283 35 — 274 5 597 
All other operating expenses (1)785 318 2,709 576 1,046 5,434 
_____________
(1)Operating expenses are allocated to segments.
(2)Excludes amounts reclassified as HFS.
238
EQUITABLE HOLDINGS, INC.


SCHEDULE IV
REINSURANCE (1)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019
 Gross AmountCeded to Other CompaniesAssumed from Other CompaniesNet AmountPercentage of Amount Assumed to Net
(in millions)
2021
Life insurance in-force$484,082 $185,203 $31,971 $330,850 9.7 %
Premiums:
Life insurance and annuities$802 $155 $181 $828 21.9 %
Accident and health168 44 8 132 6.1 %
Total premiums$970 $199 $189 $960 19.7 %
2020
Life insurance in-force$473,514 $94,231 $33,098 $412,381 8.0 %
Premiums:
Life insurance and annuities$805 $113 $213 $905 23.5 %
Accident and health124 41 9 92 9.8 %
Total premiums$929 $154 $222 $997 22.3 %
2019
Life insurance in-force$492,780 $65,427 $32,365 $459,718 7.0 %
Premiums:
Life insurance and annuities$971 $101 $211 $1,081 19.5 %
Accident and health97 40 9 66 13.6 %
Total premiums$1,068 $141 $220 $1,147 19.2 %
______________
(1)    Includes amounts related to the following related parties, eachdiscontinued group life and health business.

Part II, Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Part II, Item 9A
CONTROLS AND PROCEDURES
Evaluation of whomDisclosure Controls and Procedures
The management of the Company, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended) as of December 31, 2021. This evaluation is an affiliateperformed to determine if our disclosure controls and procedures are effective to provide reasonable assurance that (i) information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of AXA:1934, as amended, is accumulated and communicated to management, including the Company’s CEO and CFO, as
239
Table of Contents
Name of Related PartyAmount 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
appropriate, to allow timely decisions regarding required disclosure and (ii) such information is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms.
Based on this evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021.

Management’s Annual Report on Internal Control Over Financial Reporting
We provide investmentManagement is responsible for establishing and maintaining adequate internal control over financial reporting. Management evaluated the design and operating effectiveness of the Company’s internal control over financial reporting based on the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”). Based on the evaluation, management distribution and stockholder servicing related servicesconcluded that the Company’s internal control over financial reporting was effective as of December 31, 2021. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the following related parties, eachrisk that controls may become inadequate because of whom is an affiliatechanges in conditions, or that the degree of AXA:compliance with the policies or procedures may deteriorate.

Name of Related PartyAmount 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

In addition, we make commission and distribution payments to AXA affiliates who distribute our sponsored mutual funds. For the years ended 2018, 2017 and 2016, these payments totaled $17.6 million, $15.4 million and $11.8 million, respectively.

Reorganization Transactions with AXA Affiliates
Prior to the IPO, we engaged in a number of reorganization transactions with AXA Affiliates.
Disposition of AXA CS
Holdings formerly held 78.99%The effectiveness of the sharesCompany’s internal control over financial reporting as of AXA CS. AXA CS and its subsidiaries haveDecember 31, 2021 has been excluded from the historical Consolidatedaudited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Statements since theyReporting
There were operated independently from the other Holdings subsidiaries.
In March 2018, Holdings sold its AXA CS shares to AXA for $630 million. In anticipation of this sale,no changes in the fourthCompany’s internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act during the quarter of 2017, AXA made a short-term loan of $622 millionended December 31, 2021, that have affected, or are reasonably likely to Holdings with interest calculated at three-month LIBOR plus 0.439% margin. Holdings’ repayment obligation to AXA in respect of this loan was set off againstmaterially affect, the purchase price for the AXA CS shares, and AXA paid Holdings the $8 million balance in cash. The net result of the sale was a decrease in Loans from affiliates of $622 million, an increase in cash of $8 million, and an increase in capital in excess of par of $630 million.Company’s internal control over financial reporting.
Disposition of Real Estate Joint Ventures
In March 2018, AXA Equitable Life sold its interest in two consolidated real estate joint ventures to AXA France for a total purchase price of approximately $143 million.Part II, Item 9B.
Acquisition of Noncontrolling Interest of AXA FinancialOTHER INFORMATION
In March 2018, AXA contributed the 0.5% noncontrolling interest in AXA Financial to Holdings, resulting in AXA Financial becoming a wholly-owned subsidiary of Holdings. The contribution is reflected as a $66 million capital contribution.None.
Acquisition of Additional AB Units
On April 23, 2018, Holdings purchased: (i) 100% of the shares of AXA-IM Holding U.S. Inc., which owns 41,934,582 AB Units, for a purchase price of $1,113 million and (ii) 8,160,000 AB Units held by Coliseum Re for $217 million. On December 20, 2018, Holdings purchased 254,675 AB Holdings units from former AB executive. As a result of these two transactions, Holdings ownership of AB increased to approximately 65%, Noncontrolling interest decreased by $29 million, Capital in excess of par increased by $17 million and taxes payable increased by $174 million.Part II, Item 9C.
Acquisition of 30.3% of AXA Venture Partners SASDISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
On May 7, 2018, Holdings made a capital contribution of approximately $3 million to AXA Venture Partners SAS in exchange for approximately 30.3% of the shares of AXA Venture Partners SAS and certain rights and protections as a shareholder of the company, including the right to appoint two members of the management committee as well as consent rights over significant transactions.
Director Indemnification AgreementsNot applicable.
In connection with the IPO, we entered into indemnification agreements with our directors. The indemnification agreements provide the directors with contractual rights to indemnification and expense rights.
DIRECTOR INDEPENDENCE
See “Directors, Executive Officers and Corp Governance—Corporate Governance” in
Part III, Item 10 of this Report.

10.
Part III, Item 14.
PRINCIPAL ACCOUNTANT FEESDIRECTORS, EXECUTIVE OFFICERS AND SERVICESCORPORATE GOVERNANCE
The information required by this item is incorporated by reference to, and will be contained in, the Company’s 20192022 Proxy Statement.

Part III, Item 11.
EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to, and will be contained in, the Company’s 2022 Proxy Statement.

Table of Contents
Part III, Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table provides information as of December 31, 2021, regarding securities authorized for issuance under our equity compensation plans. All outstanding awards relate to our common stock. For additional information about our equity compensation plans, see Note 15 of Notes to these Consolidated Financial Statements.
Plan categoryNumber of securities to be issued upon exercise of outstanding options, warrants and rightsWeighted-average exercise price of outstanding options, warrants and rightsNumber 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 Plan8,321,336(1)21.30(2)22,081,126
     Stock Purchase Plan (3) (4)5,718,317
Equity compensation plans not approved by security holders——
Total8,321,33627,799,443
_____________
(1)Represents 2,441,969 outstanding options, 3,032,385 outstanding RSUs and 2,846,982 outstanding performance shares as of December 31, 2021 under the 2018 & 2019 Omnibus Plan. Totals include dividend equivalents on performance shares of 76,366 and on RSUs of 176,807. The number of performance shares represents the number of shares that would be received based on maximum performance, reduced for cancellations through December 31, 2021. 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 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.
(4) Through December 31, 2021, eligible participants received a 15% match on Holdings share purchases up to a maximum of $3,750 per
calendar year. Beginning January 1, 2022, eligible participants will receive a 10% match on Holdings share purchases, up to a maximum of $1,000 per calendar year. Employer matching contributions will be used to purchase additional shares for the participant. Participants may not contribute more than $50,000 through payroll deductions during any calendar year.

All of the other information required by this item is incorporated by reference to, and will be contained in, the Company’s 2022 Proxy Statement.
241
Table of Contents
Part III, Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference to, and will be contained in, the Company’s 2022 Proxy Statement.
Part III, Item 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to, and will be contained in, the Company’s 2022 Proxy Statement.

Part IV, Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report:
Page Number
1.
126
2.Financial Statement Schedules: 
 
232
 
234
 
238
 
239
3.
Exhibits: See the accompanying Index to Exhibits.
249

  Page Number
1.    
Financial Statements—Item 8. Financial Statements and Supplementary Data
166
2.    Financial Statement Schedules: 
 
Schedule I—Summary of Investments Other Than Investments in Related Parties as of December 31, 2018
281
 
Schedule II—Condensed Financial Information of Parent Company as of December 31, 2018 and 2017, and for the years ended December 31, 2018, 2017 and 2016
282
 
Schedule III—Supplementary Insurance Information as of and for the years ended December 31, 2018, 2017 and 2016
287
 
Schedule IV—Reinsurance for the years ended December 31, 2018, 2017 and 2016
289
3.
Exhibits: See the accompanying Exhibit Index.
 

Part IV, Item 16.
FORM 10-K SUMMARY
None.

GLOSSARY
Selected Financial Terms
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 investmentsInvestments 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 AXAEquitable Advisors platform. We provide administrative services for these assets and generally record the revenues received as distribution fees.
Annualized Premium100% of first year recurring premiums (up to target) and 10% of excess first year premiums or first year premiums from single premium products.
242
Table of Contents
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 RatioCalculated 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.
Fee-Type RevenueRevenue from fees and related items, including policy charges and fee income, premiums, investment management and service fees, and other income.
Gross PremiumsFYP and Renewal premium and deposits.
Invested assetsIncludes fixed maturity securities, equity securities, mortgage loans, policy loans, alternative investments and short-term investments.
P&CProperty and casualty.
Premium and depositsAmounts 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 ReservesEquals the aggregate value of Policyholders’ account balances and Future policy benefits for policies in our Protection Solutions segment.
ReinsuranceInsurance policies purchased by insurers to limit the total loss they would experience from an insurance claim.
Renewal premium and depositsPremiums 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.

363









Value of business acquired (“VOBA”)Present value of estimated future gross profits from in-force policies of acquired businesses.
Product Terms
Product Terms
401(k)
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.
243
Table of Contents
Accumulation phaseThe 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.
AffluentRefers to individuals with $250,000 to $999,999 of investable assets.
AnnuitantThe 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.
AnnuitizationThe process of converting an annuity investment into a series of periodic income payments, generally for life.
Benefit baseA 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.
Cash surrender valueThe amount an insurance company pays (minus any surrender charge) to the policyholder when the contract or policy is voluntarily terminated prematurely.
Deferred annuityAn 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.
Dollar-for-dollar withdrawalA 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.
Fixed annuityAn 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.
Fixed Rate GMxBGuarantees on our individual variable annuity products that are based on a rate that is fixed at issue.
Floating Rate GMxBGuarantees 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.
Future policy benefits
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).


General Account Investment PortfolioMeans theThe invested assets held in the General Account.

364









General AccountMeans theThe assets held in the general accounts of our insurance companies as well as assets held in our separate accounts on which we bear the investment risk.
GMxBA general reference to all forms of variable annuity guaranteed benefits, including guaranteed minimum living benefits, or GMLBs (such as GMIBs, GMWBs and GMABs), and guaranteed minimum death benefits, or GMDBs (inclusive of return of premium death benefit guarantees).
Guaranteed income benefit (“GIB”)An optional benefit which 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.
Guaranteed minimum accumulation benefits (“GMAB”)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.
244
Table of Contents
Guaranteed minimum death

benefits (“GMDB”)
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.
Guaranteed minimum income benefits (“GMIB”)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.
Guaranteed minimum living

benefits (“GMLB”)
A reference to all forms of guaranteed minimum living benefits, including GMIBs, GMWBs and GMABs (does not include GMDBs).
Guaranteed minimum withdrawal benefits (“GMWB”)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.
Guaranteed Universal Life (“GUL”)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.
Guaranteed withdrawal benefit for life (“GWBL”)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.
High net worthRefers to individuals with $1,000,000 or more of investable assets.
Index-linked annuitiesAn 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.
Indexed Universal Life (“IUL”)A permanent life insurance offering built on a universal life insurance framework that uses an equity-linked approach for generating policy investment returns.
Living benefitsOptional benefits (available at an additional cost) that guarantee that the policyholder will get back at least his original investment when the money is withdrawn.
Mortality and expense risk fee (“M&E fee”)A fee charged by insurance companies to compensate for the risk they take by issuing life insurance and variable annuity contracts.
Net flowsNet 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.

365









Policyholder account balances
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.
Return of premium (“ROP”) death benefitThis 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.
RiderAn optional feature or benefit that a policyholder can purchase at an additional cost.
Roll-up rateThe guaranteed percentage that the benefit base increases by each year.
Separate AccountRefers 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.
245
Table of Contents
Surrender chargeA 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.
Surrender rateRepresents annualized surrenders and withdrawals as a percentage of average AV.
Universal life (“UL”) productsLife 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.
Variable annuityA 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.
Variable Universal Life (“VUL”)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.
Whole Life (“WL”)A life insurance policy that is guaranteed to remain in-force for the policyholder’s lifetime, provided the required premiums are paid.



ACRONYMS
366
•“AB” or “AllianceBernstein” means AB Holding and ABLP.

•“AB Holding” means AllianceBernstein Holding L.P., a Delaware limited partnership.

•“AB Holding Units” means units representing assignments of beneficial ownership of limited partnership interests in AB Holding.

•“AB Units” means units of limited partnership interests in ABLP.

•“ABLP” means AllianceBernstein L.P., a Delaware limited partnership and the operating partnership for the AB business.

•“AFS” means available-for-sale

•“AGL” means AXA Global Life

•“AOCI” means accumulated other comprehensive income

•“ASC” means Accounting Standards Codification
•“ASR” means accelerated share repurchase
•“ASU” means Accounting Standards Update
•“AUM” means assets under management
•“AUA” means assets under administration
•“AV” means Account Value
•“AVR” means asset valuation reserve
•“AXA” means AXA S.A., a société anonyme organized under the laws of France, and formerly our controlling stockholder.
•“AXA CS” means AXA America Corporate Solutions, Inc.
•“AXA Financial” means AXA Financial, Inc., a Delaware corporation and a former 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.
•“AXA RSUs” means AXA restricted stock units
•“AXA Tech” means AXA Technology Services America, Inc, formerly a Delaware corporation and wholly-owned subsidiary of Holdings which merged into Holdings in November 2019.
•“BPs” means basis points
•“CDS” means credit default swaps
•“CDSC” means contingent deferred sales commissions
•“CEA” means Commodity Exchange Act
•“CECL” means current expected credit losses
•“CFTC” means U.S. Commodity Futures Trading Commission
•“CLO” means collateralized loan obligation
•“COLI” means corporate owned life insurance
•“Company” means Equitable Holdings, Inc. with its consolidated subsidiaries
•“CPH” means CPH Capital Fondsmaeglerselskab A/S
•“CS Life” means Corporate Solutions Life Reinsurance Company, a Delaware corporation and a wholly-owned direct subsidiary of Holdings.
246
Table of Contents

•“CS Life RE” means CS Life RE Company, an Arizona corporation and a wholly-owned indirect subsidiary of Holdings.
•“CSA” means credit support annex
•“CTE” means conditional tail expectation
•“DAC” means deferred policy acquisition costs
•“DCO” means designated clearing organization
•“DI” means disability income
•“Dodd-Frank Act” means Dodd-Frank Wall Street Reform and Consumer Protection Act
•“DOL” means U.S. Department of Labor
•“DSC” means debt service coverage
•“DSI” means deferred sales inducement
•“EAFE” means European, Australasia, and Far East
•“EFS” means Equitable Financial Services, LLC, a Delaware corporation and a wholly-owned direct subsidiary of Holdings
•“EIM” means Equitable Investment Management Group, LLC, a Delaware limited liability company and a wholly-owned indirect subsidiary of Holdings.
•“EIMG” means Equitable Investment Management Group, LLC, a Delaware limited liability company and a wholly-owned indirect subsidiary of Holdings.
•“EPS” means earnings per share
•“Equitable Advisors” means Equitable 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.
•“Equitable America” means Equitable Financial Life Insurance Company of America (f/k/a MONY Life Insurance Company of America), an Arizona corporation and a wholly-owned indirect subsidiary of Holdings.
•“Equitable Distributors” means Equitable 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.
•“Equitable L&A” means Equitable Financial Life and Annuity Company, a Colorado corporation and a wholly-owned indirect subsidiary of Holdings.
•“Equitable Financial” means Equitable Financial Life Insurance Company, a New York corporation, a life insurance company and a wholly-owned subsidiary of EFS.
•“Equitable Network” means Equitable Network, LLC, a Delaware limited liability company and wholly-owned indirect subsidiary of Holdings and
its subsidiary, Equitable Network of Puerto Rico, Inc.
•“EQ Premier VIP Trust” means EQ 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.
•“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.
•“EQ AZ Life Re” means EQ AZ Life Re Company, an Arizona corporation and a wholly-owned indirect subsidiary of Holdings.
•“ERISA” means Employee Retirement Income Security Act of 1974
•“ESG” means environmental,social and governance
•“ETF” means exchange traded funds
•“ETR” means effective tax rate
•“Exchange Act” means Securities Exchange Act of 1934, as amended
•“FABN” means Funding Agreement Backed Notes Program
•“FASB” means Financial Accounting Standards Board
•“FDIC” means Federal Deposit Insurance Corporation
•“FHLB” means Federal Home Loan Bank
•“FINRA” means Financial Industry Regulatory Authority, Inc.
•“FIO” means Federal Insurance Office
•“FSOC” means Financial Stability Oversight Council
•“FYP” means first year premium and deposits
•The “General Partner” means AllianceBernstein Corporation, a Delaware corporation and the general partner of AB Holding and ABLP.
•“GIO” means guaranteed interest option
•“GUL” means guaranteed universal life
•“HFS” means held-for-sale
•“Holdings” means Equitable Holdings, Inc.
•“HTM” means held-to-maturity
•“Investment Advisers Act” means Investment Advisers Act of 1940, as amended
•“IPO” means initial public offering
•“IRS” means Internal Revenue Service
•“ISDA Master Agreement” means International Swaps and Derivatives Association Master Agreement
247
Table of Contents
•“IUL” means indexed universal life
•“IUS” means Investments Under Surveillance
•“K-12 education market” means individuals in the kindergarten, primary and secondary education market
•“LGD” means loss given default
•“LIBOR” means London Interbank Offered Rate
•“LTV” means loan-to-value
•“Manual” means Accounting Practices and Procedures Manual as established by the NAIC
•“MD&A” means Management’s Discussion and Analysis of Financial Condition and Results of Operations
•“MLICA” means MONY Life Insurance Company of the Americas, Ltd
•“MRBs” means market risk benefits
•“MSO” meansMarket Stabilizer Option
•“NAIC” means National Association of Insurance Commissioners
•“NAR” means net amount at risk
•“NAV” means net asset value
•“NFA” means National Futures Association
•“NLG” means no-lapse guarantee
•“NYDFS” means New York State Department of Financial Services
•“OCI” means other comprehensive income
•“OTC” means over-the-counter
•“PBO” means projected benefit obligation
•“PD” means probability of default
•“Pension Act” means Pension Protection Act of 2006
•“Performance Share Plan” means AXA International Performance Shares Plan
•“PFBL” means profits followed by losses
•“R&P” means retirement and protection
•“RBG” means the Retirement Benefits Group, a specialized division of Equitable Advisors
•“REIT” means real estate investment trusts
•“RMD” means required minimum distributions
•“RoU” means right of use
•“RSUs” means restricted stock units
•“RTM” means reversion to the mean
•“SAP” means statutory accounting principles
•“SCB LLC” means Sanford C. Bernstein & Co., LLC, a registered investment adviser and broker-dealer.
•“SCBL” means Sanford C. Bernstein Limited
•“SCS” means Structured Capital Strategies
•“SEC” means U.S. Securities and Exchange Commission
•“Series A Preferred Stock” means Holdings’ Series A Fixed Rate Noncumulative Perpetual Preferred Stock
•“Series B Preferred Stock” means Holdings’ Series B Fixed Rate Reset Noncumulative Perpetual Preferred Stock
•“Series C Preferred Stock” means Holdings’ Series C Fixed Rate Reset Noncumulative Perpetual Preferred Stock
•“SIO” means structured investment option
•“SPE” means special purpose entity
•“Stock Option Plan” means AXA Stock Option Plan for AXA Financial Employees and Associates
•“SVO” means Securities Valuation Office
•“TDRs” means troubled debt restructurings
•“TIPS” means treasury inflation-protected securities
•“TLA” means trademark license agreement
•“TSA” means transitional service agreement
•“U.S. GAAP” means accounting principles generally accepted in the United States of America
•“UL” means universal life
•“ULSG” means universal life products with secondary guarantee
•“USFL” means U.S. Financial Life Insurance Company
•“Venerable” means Venerable Holdings, Inc., a Delaware corporation
•“VIAC” means Venerable Insurance and Annuity Company
•“VIE” means variable interest entity
•“VISL” means variable interest-sensitive life
•“VOE” means voting interest entity
•“VUL” means variable universal life
248
Table of Contents

INDEX TO EXHIBITS
Exhibit NumberExhibit Description
3.1
Amended and Restated Certificate of Incorporation of AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 3.1 to AXA Equitable Holdings, Inc.’sour Form 10-Q for the quarterly period ending March 31, 2018, as filed on June 20, 2018 (the “Q-1 2018 Form 10-Q”)).
3.1.1
Certificate of Amendment of Certificate of Incorporation, effective January 13, 2020 (incorporated by reference to Exhibit 3.1 to our Form 8-K, filed on January 10, 2010).
3.2
Fourth Amended and Restated By-laws of AXA Equitable Holdings, Inc. (incorporated by reference to Exhibit 3.23.1 to the Q-1 2018our Form 10-Q)8-K filed on February 17, 2021).
3.3
Certificate of Designations with respect to the Series A Preferred Stock of the Company, dated November 21, 2019 (incorporated by reference to Exhibit 3.1 to our Form 8-K filed on November 21, 2019).
3.4
Certificate of Designations with respect to the Series B Preferred Stock of the Company, filed August 7, 2020 (incorporated by reference to Exhibit 3.1 to our Form 8-K filed on August 11, 2020).
3.5
Certificate of Designation with respect to the Series C Preferred Stock of the Company, dated January 6, 2021 (incorporated by reference to Exhibit 3.1 to our Form 8-K filed on January 6, 2021).
4.1
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”)).
4.2
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).
4.3
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).
4.4
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).
4.5
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).
4.6
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).
4.7
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).
4.8
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).
4.94.9#
Registration Rights Agreement, dated as of April 20, 2018, among AXA Equitable Holdings, Inc. and the initial purchasers named thereinDescription of the 3.900% Senior Notes due 2023,Registrant’s Securities Registered Pursuant to Section 12 of 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-4Securities Exchange Act of AXA Equitable Holdings, Inc., File No. 333-228689).1934.
10.1
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).
10.2
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).
10.3
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).
10.4
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).
10.5
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).
10.610.2†
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).
10.7†
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).
10.7.1†10.2.1†
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).
10.7.2†10.2.2†
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).
10.7.3†#10.2.3†
Letter Agreement, dated February 27, 2019, between AXA Equitable Holdings, Inc., AXA Equitable Life Insurance Company and Mark Pearson. (incorporated by reference to Exhibit 10.7.3 to our Form 10-K for the fiscal year ended December 31, 2018, as filed March 8, 2019 (the “2018 Form 10-K”)).
10.8†10.2.4†
Waiver Agreement, dated May 9, 2019, to Mark Pearson’s Employment Agreement dated March 9, 2011 (incorporated by reference to Exhibit 10.1 to AXA Equitable Holdings, Inc.’s Form 10-Q for the quarterly period ending June 30, 2019, as filed on August 9, 2019).
249
Table of Contents
10.2.5†
Letter Agreement, dated December 18, 2019, between AXA Equitable Holdings, Inc., AXA Equitable Life Insurance Company and Mark Pearson (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on December 19, 2019).
10.3†
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).

367









10.910.4
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).
10.10
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).
10.1110.5
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).
10.1210.6
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).
10.1310.7
RevolvingAmended and Restated 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 thereto13, 2021 (incorporated by reference to Exhibit 10.01 toof AB Holding’s Form 8-K, as filed October 3, 2018).19, 2021)
10.1410.8†

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).
10.15†
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).
10.16†
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).
10.17†
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).
10.18†10.8.1†

Amendment to the Profit Sharing Plan for Employees of 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).
 10.19†
Employment Agreement,, dated as of April 28,October 20, 2016 and effective as of January 1, 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).
10.20†
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).
10.2110.8.2†
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).
10.22†
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).
10.23
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).
10.24
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 ).
10.25
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).
10.26
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).
10.27
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).

368









10.28
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).
10.29
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).
10.30
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).
10.31
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).
10.32
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).
10.33†
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).
10.34†
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).
10.35†
AXA Stock Option Plan for AXA Financial Employees and Associates (incorporated by reference to Exhibit 10.36 to the IPO Form S-1).
10.36†
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).
10.37†
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).
 10.38†
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).
10.39†
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).
 10.40†
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).
10.41†
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).
10.42†
AXA Financial, Inc. Restricted Stock Unit Award Agreements (incorporated by reference to Exhibit 10.44 to the IPO Form S-1).
10.43†
AXA Equitable Severance Benefit Plan (incorporated by reference to Exhibit 10.45 to the IPO Form S-1).
10.44†
AXA Equitable Supplemental Severance Plan for Executives (incorporated by reference to Exhibit 10.25 to the Q-1 2018 Form 10-Q).
 10.45†
AXA Equitable Executive Survivor Benefits Plan (incorporated by reference to Exhibit 10.47 to the IPO Form S-1).
10.46†
Amended and Restated Variable Deferred Compensation Plan for Executives (incorporated by reference to Exhibit 10.48 to the IPO Form S-1).
10.47†
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).
  10.48†
AXA Equitable Excess Retirement Plan (incorporated by reference to Exhibit 10.50 to the IPO Form S-1).
10.49†
AXA Financial, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.51 to the IPO Form S-1).
10.50†
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).
10.51†
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).
10.52†
AXA Equitable Post-2004 Variable Deferred Compensation Plan for Directors (incorporated by reference to Exhibit 10.54 to the IPO Form S-1).
10.53†
AXA Financial, Inc. Charitable Award Program for Directors (incorporated by reference to Exhibit 10.55 to the IPO Form S-1).
10.54†
AXA Equitable Holdings, Inc. Short-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.56 to the IPO Form S-1).

369









10.55†
AXA Equitable Holdings, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.57 to the IPO Form S-1).
10.56†
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).
 10.57†
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).
10.58†
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).
10.59
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”)).
10.60†
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).
10.61†#
AXA Equitable Holdings, Inc. 2019 Omnibus Incentive Plan.
10.62†#
AXA Equitable Holdings, Inc. Stock Purchase Plan.
10.63†
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).
10.64†
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).
10.65†
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).
10.66†
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).
10.67†
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).
10.68†
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).
10.69†#10.9†
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).
10.9.1†
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).
10.9.2†
Amendment No. 2 to Seth P. Bernstein’s Employment Agreement (incorporated by reference to Exhibit 10.2 to our Form 8-K filed on December 19, 2019).
10.10†
AB 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).
10.11
Amended and Restated Revolving Credit Agreement, dated as of June 24, 2021, by and among the Company, the Subsidiary Account Parties party thereto, the banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on June 29, 2021).
10.12
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 ).
10.12.1
Amendment No. 1 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Natixis, New York Branch (incorporated by reference to Exhibit 10.2 to our Form 8-K filed on March 26, 2021).
10.12.2
Amendment No. 2 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Natixis, New York Branch (incorporated by reference to Exhibit 10.2 to our Form 8-K filed on June 29, 2021).
10.13
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).
10.13.1
Amendment No. 1 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and HSBC Bank USA, National Association (incorporated by reference to Exhibit 10.3 to our Form 8-K filed on March 26, 2021).
10.13.2
Amendment No. 2 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and HSBC Bank USA, National Association (incorporated by reference to Exhibit 10.3 to our Form 8-K filed on June 29, 2021).
10.14
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).
250
Table of Contents
10.14.1
Amendment No. 1 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Citibank Europe PLC (incorporated by reference to Exhibit 10.4 to our Form 8-K filed on March 26, 2021).
10.14.2
Amendment No. 2 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Citibank Europe PLC (incorporated by reference to Exhibit 10.4 to our Form 8-K filed on June 29, 2021).
10.15
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).
10.15.1
Amendment No. 1 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Credit Agricole Corporate and Investment Bank (incorporated by reference to Exhibit 10.5 to our Form 8-K filed on March 26, 2021).
10.15.2
Amendment No. 2 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Credit Agricole Corporate and Investment Bank (incorporated by reference to Exhibit 10.5 to our Form 8-K filed on June 29, 2021).
10.16
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).
10.16.1
Amendment No. 1 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Barclays Bank PLC (incorporated by reference to Exhibit 10.6 to our Form 8-K filed on March 26, 2021).
10.16.2
Amendment No. 2 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Barclays Bank PLC (incorporated by reference to Exhibit 10.6 to our Form 8-K filed on June 29, 2021).
10.17
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).
10.17.1
Amendment No. 1 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and JPMorgan Chase Bank, N.A (incorporated by reference to Exhibit 10.7 to our Form 8-K filed on March 26, 2021).
10.17.2
Amendment No. 2 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.7 to our Form 8-K filed on June 29, 2021).
10.18
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).
10.18.1
Second Amendment to Reimbursement Agreement by and among 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 10.8 to our Form 8-K filed on March 26, 2021).
10.18.2
Third Amendment to Reimbursement Agreement by and among 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 10.8 to our Form 8-K filed on June 29, 2021).
10.18.3
Fourth Amendment to Reimbursement Agreement by and among 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 10.1 to our Form 8-K filed on December 16, 2021).
10.19
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).
10.19.1
Amendment No. 1 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Commerzbank AG, New York Branch (incorporated by reference to Exhibit 10.9 to our Form 8-K filed on March 26, 2021).
10.19.2
Amendment No. 2 to Reimbursement Agreement by and among Equitable Holdings, Inc., the Subsidiary Account Parties (as defined therein) party thereto and Commerzbank AG, New York Branch (incorporated by reference to Exhibit 10.9 to our Form 8-K filed on June 29, 2021).
10.20†
Equitable Severance Benefit Plan (incorporated by reference to Exhibit 10.45 to the IPO Form S-1).
10.21†
Equitable Supplemental Severance Plan for Executives (incorporated by reference to Exhibit 10.25 to the Q-1 2018 Form 10-Q).
251
Table of Contents
10.22.1†
Equitable Supplemental Severance Plan for Executives, as amended and restated as of August 9, 2019 (incorporated by reference to Exhibit 10.2 to our Form 10-Q for the quarterly period ending June 30, 2019, as filed on August 9, 2019).
10.23†
Equitable Executive Survivor Benefits Plan (incorporated by reference to Exhibit 10.47 to the IPO Form S-1).
10.24†
Amended and Restated Variable Deferred Compensation Plan for Executives (incorporated by reference to Exhibit 10.48 to the IPO Form S-1).
10.25†
Amended and Restated Equitable Post-2004 Variable Deferred Compensation Plan for Executives (incorporated by reference to Exhibit 10.49 to the IPO Form S-1).
10.26†
Amendment to the AXA Equitable Post-2004 Variable Deferred Compensation Plan for Executives, effective as of January 1, 2019.2019 (incorporated by reference to Exhibit 10.69 to the 2018 Form 10-K).
10.70†#10.27†
Equitable Excess Retirement Plan (incorporated by reference to Exhibit 10.50 to the IPO Form S-1).
10.28†
Equitable Holdings, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.51 to the IPO Form S-1).
10.29†
Form of Stock Option Agreement under the Equitable Holdings, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.52 to the IPO Form S-1).
10.30†
Form of Restricted Stock Agreement under the Equitable Holdings, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.53 to the IPO Form S-1).
10.31†
Equitable Post-2004 Variable Deferred Compensation Plan for Directors (incorporated by reference to Exhibit 10.54 to the IPO Form S-1).
10.32†
Equitable Holdings, Inc. Charitable Award Program for Directors (incorporated by reference to Exhibit 10.55 to the IPO Form S-1).
10.33†
Equitable Holdings, Inc. Short-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.56 to the IPO Form S-1).
10.34†
AXA Equitable Holdings, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.57 to the IPO Form S-1).
10.35†
Equitable Holdings, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Appendix B of the Equitable Holdings, Inc. DEF 14A, as filed on April 8, 2020).
10.36†
Equitable Holdings, Inc. Stock Purchase Plan (incorporated by reference to Exhibit 10.62 to the 2018 Form 10-K).
10.37†#
Form of Performance Shares Award Agreement under the 20182019 Omnibus Incentive Plan, effective as of February 14, 2019.16, 2022.
10.71†10.38†#
Form of Restricted Stock Unit Award Agreement under the 20182019 Omnibus Incentive Plan, effective as of February 14, 2019.16, 2022.
10.72†#10.39†
Form of Performance Shares Award Agreement under the 2019 Omnibus Incentive Plan for awards granted before February 16, 2022 (incorporated by reference to Exhibit 10.56 to our Form 10-K for the fiscal year ended December 31, 2020, as filed February 24, 2021 (the “2020 Form 10-K)).
10.40†
Form of Restricted Stock Unit Award Agreement under the 2019 Omnibus Incentive Plan for awards granted before February 16, 2022 (incorporated by reference to Exhibit 10.57 to the 2020 Form 10-K).
10.41†
Form of Stock Option Award Agreement under the 20182019 Omnibus Incentive Plan effectivefor awards granted before February 16, 2022 (incorporated by reference to Exhibit 10.58 to the 2020 Form 10-K).
10.42†
AllianceBernstein 2021 Incentive Compensation Award Program (incorporated by reference to Exhibit 10.01 to AB Holding’s Form 10-K for the fiscal year ended December 31, 2021, as filed February 11, 2022 (the “AB 2021 Form 10-K”).
10.43†
AllianceBernstein 2021 Deferred Cash Compensation Program (incorporated by reference to Exhibit 10.02 of the AB 2021 Form 10-K).
10.44†
Form of Award Agreement, dated as of February 14, 2019.December 31, 2021, under Incentive Compensation Award Program, Deferred Cash Compensation Program and AB 2017 Long Term Incentive Plan (incorporated by reference to Exhibit 10.03 of the AB 2021 Form 10-K).
10.45†
Form of Award Agreement under AB 2017 Long Term Incentive Plan relating to equity compensation awards to Independent Directors (incorporated by reference to Exhibit 10.04 of the AB 2021 Form 10-K).
10.46†
AllianceBernstein Change in Control Plan for Executive Officers (incorporated by reference to Exhibit 99.01 to AB Holding’s Form 8-K, as filed December 14, 2020).
10.47
Master Transaction Agreement, dated as of October 27, 2020 among Equitable Holdings, Inc., Venerable Insurance and Annuity Company and solely with respect to Article XIV, Venerable Holdings, Inc. (incorporated by reference to Exhibit 10.64 to the 202 Form 10-K.
252
Table of Contents
10.48
Coinsurance and Modified Coinsurance Agreement, dated as of June 1, 2021, between Equitable Financial Life Insurance Company and Corporate Solutions Life Reinsurance Company (redacted) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Equitable Financial Life Insurance Company on June 1, 2021).
21.1#
List of Subsidiaries of AXA Equitable Holdings, Inc.
23.1#
Consent of PricewaterhouseCoopers LLP.
31.1#
Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2#
Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1#
Certification of the Registrant’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2#
Certification of the Registrant’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document

370









101.PRE101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibits 101)
#Filed herewith.
†#Filed herewith.
†Identifies each management contract or compensatory plan or arrangement.

371









SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, AXA Equitable Holdings, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 8, 2019.February 22, 2022.
EQUITABLE HOLDINGS, INC.
AXA EQUITABLE HOLDINGS, INC.
By:
By:/s/ Mark Pearson
Name: Mark Pearson
Title: President and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, and in the capacities indicated, on March 8, 2019.February 22, 2022.
253
Table of Contents
SignatureTitle
/s/ Mark PearsonPresident and Chief Executive Officer and Director
(Principal Executive Officer)
 Mark Pearson
SignatureTitle
/s/ Mark PearsonRobin M. RajuPresident and Chief Executive Officer; Director (Principal Executive Officer)
 Mark Pearson
/s/ Anders MalmströmSenior Executive Vice President and Chief Financial Officer (Principal
(Principal Financial Officer)
 Anders B. MalmströmRobin M. Raju
/s/ William EckertSenior Vice President, Chief Accounting Officer and Controller (Principal
(Principal Accounting Officer)
 William Eckert
/s/ Thomas BuberlFrancis HondalDirector
 Thomas BuberlFrancis Hondal
/s/ Gérald HarlinDirector
 Gérald Harlin
/s/ George StansfieldDirector
 George Stansfield
/s/ Karima SilventDirector
 Karima Silvent
/s/ Bertrand Poupart-LafargeDirector
 Bertrand Poupart-Lafarge
/s/ Daniel G. KayeDirector
Daniel G. Kaye
/s/ Ramon de OliveiraJoan M. Lamm-TennantDirectorChair of the Board
Ramon de OliveiraJoan M. Lamm-Tennant
/s/ Kristi A. Matus
Director
Kristi A. Matus
/s/ Bertram L. ScottDirector
Bertram L. Scott
/s/ George H. StansfieldDirector
George H. Stansfield
/s/ Charles G. T. Stonehill

Director
Charles G. T. Stonehill


372








254