20
22
Annual
Report
Our mission
To help our clients secure their
financial well-being so they can
pursue long and fulfilling lives.
Our business principles
We have a passion
for our business
We work to the
highest standards
We are a trusted
partner to our clients
We treat everyone with
respect and dignity
We are stronger
as a team
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
1
2022 Annual Report Mark
Pearson
Equitable CEO
Dear fellow shareholders,
This year was unlike any we have ever experienced. Interest rates rose at
the fastest pace on record, inflation reached heights not seen in 40 years
and we saw both the bond and equity markets fall more than 10%, the
first time this has happened since the 1870s. This environment posed
new financial challenges for Americans across the country, and I’m proud
that in such a year we paid out $4.5 billion in benefits to our clients and
were a pillar of trust through uncertainty and volatility. Together, the people
of Equitable continued to work toward serving our stakeholders, and
I thank our more than 12,000 employees and financial professionals
for their hard work and dedication.
insurance finance strength rating to A1, citing our strong execution as a
standalone company and prudent risk management. Building on this, we
completed our transaction with Global Atlantic to reinsure a portion of our
variable annuity assets to secure future free cash flows and unlock greater
capital flexibility. And, we completed the $180 million investment income
target one year ahead of schedule and have completed $50 million of our
$80 million year-end 2023 productivity target. It is now five years since
our IPO, and I am proud that we have cumulatively returned $6 billion to
shareholders, helping drive a total shareholder return of 59% since IPO
through year-end 2022.
We were able to withstand the headwinds of last year because our solid
foundation is backed by our strong balance sheet. In the year, our risk-
based capital ratio was 425%, above our minimum target of 375-400%, and
we have $2 billion of cash and liquid assets at the Holding Company, above
our minimum threshold. Our non-GAAP operating earnings were $2 billion1
and we reported assets under management of $754 billion, down 17%, in
line with markets. Our integrated business model across retirement, asset
management and distribution drove net flows of $10 billion, which
contributed to a record value of new business.2 Our asset management
business, AllianceBernstein, completed its acquisition of CarVal Investors,
enhancing its Private Markets platform, which reached $56 billion in assets.
For our shareholders, we returned $1.3 billion in the year, resulting in a 57%
payout ratio, which was at the higher end of our guidance.3,4 Earlier in the
year, Moody’s upgraded our senior unsecured debt ratings to Baa1 and our
For our people, we unveiled our leader-led work model, which supports
the flexibility of our people while balancing team needs. Through this
approach, we have seen higher engagement across the organization and
believe this to be a key pillar to attract and retain talent. And as I shared
in last year’s letter, we remain committed to using our big systems to
drive change. This includes:
• Delivering innovative solutions to our more than 5 million client
relationships through our premier distribution, which includes our
approximately 4,300 Equitable Advisors, nearly 1,000 third-party
partners and over 200 Bernstein Financial Advisors.
• Committing c.$1.3 billion towards our $1-2 billion impact investing
goal, which supports projects that combat climate change, promote
sustainability, and reduce inequities.
• Rolling out our New Ways of Working, which leverages agile
methodologies to increase the metabolism of the organization.
To date, we have invested over 45,000 hours of training and will have
100% of the organization operating under this framework in 2023.
• Tapping into our Equitable Foundation, providing $1 million of scholarships
to high school students across the country who have demonstrated
leadership, determination and commitment to their communities.
Again, I want to thank the people of Equitable and AllianceBernstein. These
results, especially in a year like 2022, are a testament to the talent and
expertise across our organizations. Going forward, we will continue to serve
our stakeholders by controlling what we can control and managing the
business to economic realities. The resilience of our people and how we
manage our business in good times and in tough ones are at the heart of
what we were able to accomplish in 2022. It is for these reasons and more
that I’m confident that our brightest days are ahead and that we are well-
placed to fulfill our mission to help our clients secure their financial well-
being so they can pursue long and fulfilling lives.
Sincerely,
Mark Pearson
1 This is a Non-GAAP financial measure. For a reconciliation of this to the most directly comparable GAAP
2 Net inflows include $4.6 billion of Core Retirement inflows, representing Individual Retirement Current Product
measure, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Key Operating Measures” Part II, Item 7 on Form 10-K for the year ended December 31, 2022.
Offering and Group Retirement, $4.5 billion of Wealth Management advisory and brokerage inflows from
Equitable Advisors and $0.9 billion of AllianceBernstein inflows, excluding $4.5 billion of AXA redemptions.
3 2022 capital return includes $112 million of repurchases accelerated from first quarter 2022 into fourth quarter 2021.
4 Payout ratio target is total capital returns to common shareholders as a percentage of Non-GAAP operating
earnings adjusted for notable items.
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
2
2022 Annual Report Strong
results
amidst
headwinds
As 2021 tailwinds gave way to headwinds, the value of our
product solutions and advice shone through for clients. This
resulted in $10 billion of net flows5 across our core businesses
highlighting the strength of our distribution and the value of the
solutions we provide in tough economic times. In 2022, we
reported non-GAAP operating earnings of $2 billion,6 down 29%
from prior year and total AUM of $754 billion, down 17% over the
prior year due to markets sharply declining. For shareholders,
we returned $1.3 billion, generating a total payout of 57%, a
testament to the strength of our balance sheet.7,8
2021
$754bn
2021
2021
$2.0bn
$1.3bn
2022
2022
2022
Assets under
management
Non-GAAP
operating earnings
Returned to
shareholders
5 Net inflows include $4.6 billion of Core Retirement inflows, representing Individual Retirement Current Product Offering and Group Retirement, $4.5 billion of Wealth Management advisory and brokerage inflows from Equitable Advisors and $0.9 billion of AllianceBernstein inflows, excluding $4.5 billion of AXA redemptions.
6 This is a Non-GAAP financial measure. For a reconciliation of this to the most directly comparable GAAP measure, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Measures” Part II, Item 7 on Form 10-K for the year ended December 31, 2022.
7 2022 capital return includes $112 million of repurchases accelerated from first quarter 2022 into fourth quarter 2021.
8 Payout ratio target is total capital returns to common shareholders as a percentage of Non-GAAP operating earnings adjusted for notable items.
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
3
2022 Annual Report Strong
balance sheet
In 2022, Moody’s upgraded the
financial strength rating of our life
insurance subsidiaries to A1 from A2
and the senior unsecured debt rating of
Equitable Holdings to Baa1 from Baa2.
2021
A1
Baa1
2022
2022
2021
Integrated
business model
We have three complementary businesses across retirement,
asset management and affiliated distribution across Equitable and
AllianceBernstein. In retirement, we saw premiums9 up 6% year over
year, driven by record sales in our Individual Retirement business.
We continued to see demand for advice,
with $10.4 billion in wealth management
sales and $4.5 billion in inflows,
representing 5% organic growth.10
$10.4bn
The upgrades reflect the strength of our balance sheet, the
success of our operations since becoming a standalone entity
and demonstrates the effectiveness of our prudent economic
risk management program amid market volatility.
Of our $19 billion in retirement premiums, nearly $800 million was
attributable to AllianceBernstein’s Lifetime Income Strategy, which
combines a target-date portfolio with a guaranteed withdrawal benefit
at retirement to generate an income stream for participants.
Additionally, last year we closed a landmark financial
transaction with Global Atlantic to secure our long-
term cash flows and have greater capital flexibility.
Equitable and AllianceBernstein continue to leverage synergies
to drive growth, with c.70% of Equitable’s $10 billion capital
commitment deployed to help grow AllianceBernstein’s Private
Markets business and attract third-party assets to the strategies.
c.70%
9 Includes full-year total premiums for Individual Retirement, Group Retirement and Protection Solutions segments.
10 Represents investment product premiums.
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
4
4
2022 Annual ReportA2Baa2 We are
a trusted
partner to
our clients
Our mission is uniquely matched for the moment. In this period of
market volatility, depleted savings and economic turbulence, trust
is at a premium. During the year, we paid out nearly $4.5 billion in
benefits just as families battled record inflation, the highest interest
rates in over a decade, and added household economic pressures.
Our business segments each provide unique retirement solutions
to help our clients navigate these challenging times.
11 Excludes Annual Lock segments, which account for c.$4.6bn of SCS net premiums.
12 LIMRA, Not-for-Profit Survey, Q3 2022 Results, based on 403(b) plan participants and contributions.
This applies specifically and exclusively to Equitable Financial Life Insurance Company (Equitable Financial).
Individual Retirement
We remain a leading provider of variable annuity products to individuals saving for retirement and
looking for protected equity or seeking guaranteed income, maintaining our #1 position in the RILA
market. We saw record sales in our flagship buffered annuity, Structured Capital Strategies®, of nearly
$8 billion and through the buffer, we protected $1.7 billion of account value, and 42% of open contracts
saw negative index returns fully offset.11
“ With the advice of our Financial Advisor, Equitable has given us the confidence to stay invested during
these volatile markets, while helping us keep a long-term perspective regarding our investment decisions.”
Dr. Sarah Pitarra, Jason Pitarra | Structured Capital Strategies® clients | Texas
Group Retirement
We continue to support nearly 1 million educators through our 403(b) business, where we were the #1
provider.12 Additionally, this business serves other public-sector employees, small-to-medium-size
businesses and institutions. Through our newly formed institutional segment, Equitable continues to
partner with BlackRock on its LifePath paycheck solution, and we saw nearly $800 million of
premiums driven by AllianceBernstein’s Lifetime Income Strategy.
“ As an educator nearing retirement, I turned to the experts for a 403(b) investment strategy
to help me achieve my retirement goals. I feel confident that I made an excellent choice!”
Tom Baffuto | EQUI-VEST ® client | New York
Protection Solutions
We provide a suite of individual, as well as group products, to small-and-medium-sized business
markets through our Life and Employee Benefits businesses. Gross written premiums were $3.1 billion,
driven by the shift to accumulation products and growth in Employee Benefits. In the year, we provided
protection and security for our clients when they needed us most, paying out $2.6 billion in gross claims.
“ Protecting my family is extremely important to me, so choosing a company with a long history of financial
strength and a life insurance product with tax advantages and flexibility provides me peace of mind.”
Carter Weil | Optimizer ® client | Connecticut
AllianceBernstein
AllianceBernstein is a leading provider of diversified investment management, research and related
services to a broad range of clients around the world. The business continued to expand its alternatives
capabilities with the acquisition of CarVal Investors, which helped drive an effective fee rate increase of
3% versus prior year. Additionally, AB was recognized as the #6 Most Trusted Financial Companies by
Investor’s Business Daily and continued to grow its responsible investing platform with nearly $24 billion
of assets in its Portfolios with Purpose.
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
5
2022 Annual Report Emerging businesses
Private Alternatives
Wealth Management
Employee Benefits
AllianceBernstein’s Private
Markets AUM has grown 57% with
$56 billion assets under management
driven by the acquisition of CarVal
Investors, a leading global private
alternatives investment manager.
We continued to see growth and momentum
in our broker-dealer with $73 billion of assets
under administration, primarily driven by our
team of Wealth Management advisors.
We plan to introduce Wealth Management as
its own segment in 2023.
We continued to see strong
momentum in our Employee
Benefits business, which now
covers over 740,000 lives, up
29% over prior year.
Affiliated distribution
Our network of financial professionals nationwide provides advice and solutions
that help our more than 5 million client relationships across Equitable and
AllianceBernstein serving pre-retirees, educators, small businesses and
institutions so they can look ahead to their futures with confidence.
Equitable serves 3 million clients with the support of our affiliated
advisors and partnerships with nearly 1,000 third-party partners.13
Our more than 4,000 advisors nationwide work with our clients every day
to help deliver solutions that can help them live long and fulfilling lives.
And our Holistic Life Planning approach considers an
individual’s sense of purpose, physical health and
emotional wellness in addition to financial goals.
In 2022, we announced a partnership with Columbia University,
which invites Equitable Advisors Financial Professionals to study
a curriculum on holistic financial planning and coaching clients
on reaching their life goals and dreams.
13 Individual policyholder count for Individual Retirement, Group Retirement, Life, Broker Dealer as of December 31, 2022.
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
6
2022 Annual Report4k We remain committed
to being a force for good
We are committed to being a force for good in the communities where we live and work. Leveraging our “big systems” across the
organization, combined with the power of our more than 8,000 people, we were able to have a positive impact in 2022. We committed
c.$1.3 billion towards our $1-2 billion impact investing goal, supporting initiatives that combat climate change, promote sustainability, and
reduce inequities. Examples of these investments include energy efficiency and renewable energy projects as well as projects that support
affordable housing and provide access to essential services to under-served populations.14 Equitable employees and financial professionals
packed kits for educators, served warm meals at food centers and built homes for those who need shelter, donating more than 5,000 hours
of volunteer time. And through our Equitable Foundation, we focus on college access and career advancement, fostering equity and
opportunity as well as supporting healthy and vibrant communities through grantmaking and nonprofit partnerships.
Matching gifts
Equitable Excellence Scholarship®
Supporting our educators
FOUNDATION
In 2022, 20% of our people participated
in our Matching Gifts program.
Entering its 20th year, Equitable Excellence®
awarded $1 million in scholarships in 2022.
$3.2m
As a result, more than $3.2 million was donated
to nonprofit organizations and charitable causes.
with more than $30 million in scholarships.
Since its inception in 2003, we have supported
more than 7,000 students
$30m
800
educators
We provided 800 educators with mental health,
wellness and professional development resources.
Our marketing campaign “Let’s Plan How” is helping
educators plan for their futures, including retirement.
14 Includes investments made as of January 1, 2022 and all investments allocated to Equitable’s Sustainable FABN issuance.
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
7
2022 Annual Report We are
stronger
as a team
We believe that to drive the best results, we need to build and maintain a sustainable workforce. To do
this, we began our New Ways of Working journey over 3 years ago, which we created to increase the
metabolism of the organization. This enterprise-wide program has enabled us to move faster, drive
innovation and empower our people. To date, we have invested over 45,000 hours of training our
people in agile methodologies, adaptive leadership and design thinking and have seen greater
diversity in leadership positions and increases in our psychological safety scores.
In 2022, we were fortunate to begin coming back to work together in person. To support this
transition, we developed our leader-led, flexible work model that allows for individuals and teams to
set the office cadence that works for them. Since the launch of this work model, we have seen higher
engagement across the organization and believe it will be a key pillar to attract and retain top talent.
We remain committed to fostering and developing our talent inside Equitable. Our programs are targeted at a variety of groups and are tailored to serve a variety of stakeholders:
Black Excellence is a 9-month long program aimed at
providing development opportunity for Black employees
through a curated curriculum, networking opportunities
and capstone project, and was designed in partnership
with our CEO Taskforce to Advance Racial Equity.
CORE (Career, Outlook, Resources, Engage)
Partnership Program is a year-long effort
that pairs executives with diverse talent in
the organization to support their personal
and professional growth.
Emerging Leaders Program is an 18-month
rotational leadership development program,
with 3, 6-month-long rotations across our
Innovation & Design Office, Finance and one
of our business segments.
Equitable’s People Inspiring Change (EPIC) is
an employee-led innovation program driven by
the Innovation & Design Office that provides a
mechanism to dynamically fund new ideas
outside of typical planning cycles.
McKinsey Academy is our partnership with
McKinsey designed to improve diverse talent
pipeline for organizations and equip leaders with
the networks, capabilities, mindsets and behaviors
to achieve their professional aspirations.
Tandem is a 12-month-long program that is
committed to the retention and development
of women inside the organization by
accelerating their career trajectories.
Talent Accelerator Program (TAP) is a 12-week
rotational program within our Innovation & Design
Office specifically for our Black employees, created
to help cohort members develop new skills and
foster career growth within the organization.
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
8
2022 Annual Report 2022
highlights
Serving our clients, people,
communities and shareholders
JUL 2022-JUL 2023
USA
$4.5bn
benefits paid to clients
5m client relationships across
Equitable and AllianceBernstein
c.120%
free cash flow growth since IPO
>$6bn returned to
shareholders since IPO
c.$1.3bn
committed to impact investments
7k
scholarship recipients
since 2003
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
9
2022 Annual Report Management Committee
Mark Pearson
Seth Bernstein
Kate Burke
Onur Erzan
José Ramón González
President and Chief Executive
Officer, Equitable Holdings
President and Chief Executive
Officer, AllianceBernstein
Corporation
Chief Operating Officer and
Head of Private Wealth,
AllianceBernstein Corporation
Head of Global Client Group,
AllianceBernstein Corporation
Chief Legal Officer and Corporate
Secretary, Equitable Holdings
Jeffrey J. Hurd
Chief Operating Officer,
Equitable Holdings
Nick Lane
President, Equitable
Robin M. Raju
Chief Financial Officer,
Equitable Holdings
Aaron Sarfatti
Stephanie Withers
Chief Risk and Strategy Officer,
Equitable Holdings
Chief Auditor, Equitable Holdings
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
10
2022 Annual Report Board of Directors
Joan Lamm-Tennant
Mark Pearson
Francis A. Hondal
Arlene Isaacs-Lowe
Daniel Kaye
Chair of the Board
President and Chief Executive
Officer, Equitable Holdings
Director
Director
Director
Craig MacKay
Kristi A. Matus
Bertram L. Scott
George Stansfield
Charles G.T. Stonehill
Director
Director
Director
Director
Director
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
11
2022 Annual Report Shareholder information
Headquarters
Transfer agent
Equitable Holdings, Inc.
1290 Avenue of the Americas
New York, NY 10104
Stock listing
NYSE: EQH
Investor relations
Website
ir.equitableholdings.com
Email
ir@equitable.com
Computershare is the transfer agent for Equitable Holdings, Inc. Registered
stockholders may contact Computershare for assistance with their account.
Investor center website
computershare.com/investor
Email
web.queries@computershare.com
Telephone inquiries
(877) 373-6374 (U.S., Canada, Puerto Rico)
(781) 575-3100 (non-U.S.)
Standard mail
Computershare
PO Box 505000
Louisville, KY 40233-5000
Shareholder online inquiries
Overnight mail
www-us.computershare.com/investor/contact
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
Opening remarks
Strong results
A trusted partner
A force for good
Stronger as a team
Closing
12
2022 Annual Report UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————————————
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
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
————————————————
Equitable Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
90-0226248
(I.R.S. Employer Identification No.)
1290 Avenue of the Americas, New York, New York
10104
(Address of principal executive offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
(212) 554-1234
(Registrant’s telephone number, including area code)
Title of each class
Trading symbol
Name of each exchange on which registered
Common Stock
Depositary Shares, each representing a 1/1,000th interest
in a share of Fixed Rate Noncumulative Perpetual
Preferred Stock, Series A
Depositary Shares, each representing a 1/1,000th interest
in a share of Fixed Rate Noncumulative Perpetual
Preferred Stock, Series C
Securities registered pursuant to Section 12(g) of the Act: None
EQH
EQH PR A
EQH PR C
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
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 ☐
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 ☒ 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 ☒ No ☐
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.
No ☒
No ☒
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ 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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at June 30, 2022 was approximately $9.8
billion.
As of February 17, 2023, 361,809,749 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 2023 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year
ended December 31, 2022 (the “2023 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Exhibits, Financial Statement Schedules
Form 10-K Summary
Part IV
Item 15.
Item 16.
Glossary
Acronyms
Index to Exhibits
Signatures
Page
5
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246
249
253
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 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 plateauing or decreasing economic growth and geopolitical conflicts 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,
protection of confidential customer information or proprietary business information, operational failures by us or our service
providers, potential strategic transactions, changes in accounting standards, and 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 by third parties and affiliates and economic downturns, defaults
and 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, 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 and experience differing from pricing
expectations, 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; (viii) recruitment and retention of key employees and experienced and productive financial
professionals; (ix) subjectivity of the determination of the amount of allowances and impairments taken on our investments; (x)
legal and regulatory risks, including federal and state legislation affecting financial institutions, insurance regulation and tax
reform; (xi) risks related to our common stock and (xii) general risks, including strong industry competition, information
systems failing or being compromised and protecting our 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.
Throughout this Annual Report on Form 10-K we use certain defined terms and abbreviations, which are defined or
summarized in the “Glossary” and “Acronyms” sections.
4
Part I, Item 1.
Overview
BUSINESS
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 12,400 employees and advisors are entrusted with more than $750 billion of
AUM through two complementary and well-established principal franchises, Equitable and AllianceBernstein, providing:
•
•
Advice and solutions for helping Americans to 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 have market-leading positions in our four segments: Individual Retirement, Group Retirement, Investment
Management and Research, and Protection Solutions.
We distribute our products through a premier affiliated and third-party distribution platform, consisting of:
Affiliated Distribution:
•
Our affiliated retail sales force, Equitable Advisors, which has approximately 4,300 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 clients.
Third-Party Distribution:
•
•
Approximately 1,000 distribution agreements with banks, broker dealers, insurance carriers, brokerage general
agencies, independent marketing organizations and wires giving us access to more than 145,000 financial professionals
to market our retirement, protection and investment solutions; and
An AB global distribution team of more than 500 professionals, who engage with more than 5,000 retail distribution
partners and more than 700 institutional clients.
5
Our Organizational Structure
We are a holding company that operates our business through a number of direct and indirect subsidiaries. Our two
principal franchises include Equitable and AllianceBernstein. The following organizational chart presents the ownership of our
principal subsidiaries as of December 31, 2022.
(1) We own an approximate 61% economic interest in AB through various wholly-owned subsidiaries. Our economic interest consists of
approximately 60% of the AB Units, 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-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. 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.
6
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 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.
• 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.
•
•
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 life insurance products on attractive protection segments such as VUL insurance
and IUL 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 Notes 1 and 19 of the Notes to the Consolidated Financial Statements.
Individual Retirement
Our Individual Retirement segment is a leading provider of individual variable annuity products, which are primarily sold
to affluent and high net worth individuals saving for retirement or seeking guaranteed retirement income. We have a long
history of innovation, as one of the first companies, in 1968, 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 that provides some downside protection to investors, while still giving them the opportunity to invest for
growth. Our Individual Retirement business is an important source of earnings and cash flow for our company, and we believe
our hedging strategy preserves a substantial portion 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.
We principally focus on selling three variable annuity products, each of which provides policyholders with distinct
benefits, features and return profiles. We continue to innovate our offering, periodically updating our product benefits and
introducing new variable annuity products to meet the evolving needs of our clients while managing the risk and return of these
variable annuity products to our company. Due to our innovation, our product mix has evolved considerably since the 2008
financial crisis. The majority of our sales in 2022 consisted of products without variable annuity guarantee benefits features
(“GMxB features”) (other than the ROP death benefit), and less than 1% of 2022 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 profiles.
Our current primary product offering, ordered below according to sales volume for the year ended December 31, 2022,
includes:
•
•
Structured Capital Strategies (“SCS”). SCS is an index-linked variable annuity product which 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 SCS Income, a new version of SCS, offering a GMxB feature. SCS Income is also an index-linked annuity
that combines lifetime income options with some protection from equity market volatility.
Retirement Cornerstone (“RC”). 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.
7
•
•
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. An
optional SIO feature allows a 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 92% floating rate GMxB
products and non-GMxB products in 2022. In addition, AV has shifted from 77% Fixed Rate GMxB products in 2008 to 23%
in 2022.
Evolution of Variable Annuity FYP
The following tables present the relative contribution to FYP of each of the above products and GMxB features for the
years ended December 31, 2022, 2021 and 2020.
FYP by Product
SCS
Retirement Cornerstone
Investment Edge
Other
Total FYP
2022
Year Ended December 31,
2021
(in millions)
2020
$
$
7,953 $
1,626
1,036
868
11,483 $
7,627 $
1,951
1,048
357
10,983 $
4,891
1,506
448
328
7,173
8
2008Non-GMxB 1%ROP Death Benefit Only 9%Fixed Rate GMxB 90%Year Ended December 31, 2022Non-GMxB80%ROP Death Benefit Only3%Floating Rate GMxB12%Other5%
FYP by Guarantee Feature
Non-GMxB
ROP Death Benefit Only
Total Non-GMxB & ROP Death Benefit Only
Floating Rate GMxB
Fixed Rate GMxB
Total GMxB
Other
Total FYP
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
$
$
$
9,192 $
317
9,509 $
1,392 $
—
1,392 $
8,648 $
703
9,351 $
1,623 $
3
1,626 $
582
11,483 $
6
10,983 $
5,342
532
5,874
1,278
21
1,299
—
7,173
Our sales for the years ended December 31, 2022, 2021 and 2020 further demonstrate the result of our product sales
evolution, as 80%, 79% and 74% 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, 2022,
the total AV of our variable annuity products was $95.8 billion, consisting of $57.0 billion of Separate Accounts AV and $38.8
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, 2022, 2021 and 2020:
Account Value
Non-GMxB
ROP Death Benefit Only (1)
Total Non-GMxB & ROP Death Benefit Only
Floating Rate GMxB
Fixed Rate GMxB (1)
Other
Total Variable Annuity AV
2022
December 31,
2021
(in millions)
2020
$
$
42,244 $
9,850
52,094
21,146
21,949
570
95,759 $
43,843 $
11,438
55,281
26,486
30,137
—
111,904 $
36,162
10,438
46,600
25,168
45,622
—
117,390
9
(1) AV is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to the Consolidated Financial Statements.
The following table presents our variable annuity benefit base by GMxB feature for the Individual Retirement segment as
of December 31, 2022, 2021 and 2020. 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.
Benefit Base
ROP Death Benefit Only (1)
Floating Rate GMxB
GMDB
GMIB
Fixed Rate GMxB
GMDB (1)
GMIB (1)
Other
2022
December 31,
2021
(in millions)
2020
$
$
$
$
$
$
6,616 $
6,444 $
6,141
23,501 $
24,882 $
23,574 $
24,123 $
32,487 $
33,455 $
582 $
34,017 $
34,719 $
— $
23,095
23,029
58,028
60,695
—
(1) Benefit base is net of amounts ceded to Venerable during 2021. See Note 1 of the Notes to the 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 more information on GMxB riders, see “—Overview of GMxB Features.”
Markets
For our Individual Retirement segment, we target sales of our products to both retirees seeking retirement income and a
broader class of investors, including affluent, high net worth individuals and families saving for retirement, registered
investment advisers and their clients, as well as younger investors who have maxed out contributions to other retirement
accounts but are seeking tax-deferred growth opportunities. 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.
10
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. SCS Income serves clients who want exposure to equity markets but
also want to protect against market correction while seeking guaranteed income. Retirement Cornerstone serves clients who
want growth potential 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, 2022, 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 170 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.
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, 2022.
FYP by Distribution
Other than Equitable Advisors, no single distribution firm contributed more than 10% of our sales in 2022.
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.
11
Year Ended December 31, 2022Equitable Advisors35%Broker Dealers36%Banks21%Insurance Partners8% 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
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. Fees that we collect
include mortality & expense, administrative charges and distribution charges; withdrawal charges; investment management
fees, 12b-1 fees, death benefit rider charges, living benefit rider charges and investment income.
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. We have also introduced several other risk management programs, some of which are
described in this section below.
12
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. We enter into both centrally cleared and over-the-counter derivatives and
have material credit exposure to derivatives dealer counterparties and clearing house members.
Reinsurance
We use 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.
Non-affiliate Reinsurance. We have reinsured to non-affiliated reinsurers a portion of our exposure on variable annuity
products that offer a GMxB feature. As of December 31, 2022, 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 41.6% of our NAR to the GMDB obligation on variable annuity contracts in force as of December 31, 2022. For
additional information regarding our use of reinsurance, see Note 11 of the Notes to the 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.”
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
We have historically offered GMDB features in isolation or together with GMLB features. A GMDB is an optional benefit
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.
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.
13
GMDB In-Force (1)
ROP Death Benefit Only (3)
Floating Rate GMDB
Greater of Ratchet or Roll-up
All Other (2)
Total Floating Rate GMDB
Fixed Rate GMDB
Greater of Ratchet or Roll-up (3)
All Other (2) (3)
Total Fixed Rate GMDB
Other
Total GMDB
2022
December 31,
2021
2020
Account
Value
Benefit
Base
Account
Value
Benefit
Base
Account
Value
Benefit
Base
(in millions)
$
9,850 $
6,616 $ 11,437 $
6,443 $ 10,437 $
6,141
$
5,390 $
15,756
7,995
15,100
$ 21,146 $ 23,501 $ 26,486 $ 23,574 $ 25,168 $ 23,095
7,105 $
19,381
7,867 $
15,707
7,768 $
15,733
7,121 $
18,047
$ 10,689 $ 20,721 $ 14,748 $ 21,518 $ 26,800 $ 42,521
15,507
$ 21,949 $ 32,487 $ 30,138 $ 34,207 $ 45,622 $ 58,028
12,689
15,390
11,260
11,766
18,822
570
—
$ 53,515 $ 63,186 $ 68,061 $ 64,224 $ 81,227 $ 87,264
582
—
—
—
______________
(1) See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December
31, 2022, 2021 and 2020 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
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 45% of our variable annuity block included living benefit guarantees as of
December 31, 2022.
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.
14
GMLB In-Force (1)
Floating Rate GMLB
GMIB
Other (GIB)
Total Floating Rate GMLB
Fixed Rate GMLB
GMIB
All Other (e.g., GWBL / GMWB, GMAB, other) (2)
Total Fixed Rate GMLB
2022
December 31,
2021
2020
Account
Benefit
Account
Value
Base
Value
Benefit
Base
Account
Value
Benefit
Base
(in millions)
$ 18,848 $ 24,882 $ 23,435 $ 24,123 $ 22,002 $ 23,029
2,978
$ 20,818 $ 27,555 $ 26,058 $ 26,919 $ 24,764 $ 26,007
2,796
2,623
1,970
2,762
2,673
$ 16,889 $ 33,455 $ 40,065 $ 59,341 $ 39,369 $ 60,695
1,165
$ 18,099 $ 35,170 $ 40,911 $ 60,494 $ 40,199 $ 61,860
1,210
1,153
1,715
830
846
Total GMLB
$ 38,917 $ 62,725 $ 66,969 $ 87,413 $ 64,963 $ 87,867
______________
(1) See table summarizing the NAR and reserves of policyholders by type of GMxB feature for variable annuity contracts as of December
31, 2022, 2021 and 2020 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, 2022, 2021 and 2020. 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.
15
GMDB
ROP Death Benefit Only (1) (2)
Floating Rate GMDB
Fixed Rate GMDB (2)
Total
2022
December 31,
2021
2020
NAR
Reserves
NAR
Reserves
NAR
Reserves
(in millions)
$
575
3,010
12,091
$ 15,676 $
N/A $
415
2,502
2,917 $
75
851
8,061
8,987 $
N/A $
377
2,360
2,737 $ 18,271 $
84
943
17,244
N/A
332
4,674
5,006
2022
December 31,
2021
2020
NAR
Reserves
NAR
Reserves
NAR
Reserves
(in millions)
GMIB
Floating Rate GMIB
Fixed Rate GMIB (2)
Total
$
$
— $
176 $
— $
3,228
3,228 $
3,851
4,027 $
3,910
3,910 $
— $
172 $
136
4,441
14,110
10,461
4,613 $ 10,461 $ 14,246
______________
(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 the Consolidated Financial Statements for details of
the Venerable Transaction.
16
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, a dedicated subset of
over 1,000 Equitable Advisors, is the primary distributor of our products and related solutions to individuals in the K-12
education market.
The tax-exempt 403(b)/457(b) market, which includes our 403(b) K–12 education market business, accounted for 63% of
gross premiums within the Group Retirement business for the year ended December 31, 2022. The institutional lifetime income
market accounts for 17%, the corporate 401(k) market accounts for 16% and the remaining 4% is Other as of December 31,
2022.
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 certain available indices subject
to a performance cap, with some downside protection against 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 $519 million, or 1.6%, of our total AV is
invested in products with GMxB features (other than ROP death benefits) as of December 31, 2022. This includes Institutional
products with guaranteed benefits.
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 proprietary and third
party-sponsored 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.
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.
17
The chart below illustrates our net flows for the years ended December 31, 2022, 2021 and 2020.
Net Flows
Gross Premiums
Surrenders, Withdrawals and Benefits
Net Flows (2)
______________
Year Ended December 31,
2022
2021 (1)
(in millions)
2020
$
$
4,448 $
(3,814)
634 $
3,839 $
(4,016)
(177) $
3,343
(3,047)
296
(1) Prior period amounts related to the AV and AUA roll-forward were updated to include Mutual Fund AUA. The impact of the revision to
Net Flows for the year ended December 31, 2021 was $129 million.
(2) For the year ended December 31, 2022, net outflows of $179 million are excluded as these amounts are related to ceded AV to Global
Atlantic. For additional information regarding the Global Atlantic Transaction, see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Executive Summary—Global Atlantic Transaction” and Note 1 of the Notes to the Consolidated
Financial Statements.
The following table presents the gross premiums for each of our markets for the periods specified.
Gross Premiums by Market (2)
Tax-Exempt
Corporate
Institutional
Other
Total FYP
Tax-Exempt
Corporate
Other
Total Renewal Premiums
Gross Premiums
Year Ended December 31,
2022
2021 (1)
(in millions)
2020
$
$
1,001 $
323
772
22
2,118
1,785
377
168
2,330
4,448 $
1,017 $
450
9
25
1,501
1,789
373
176
2,338
3,839 $
724
392
—
60
1,176
1,632
342
193
2,167
3,343
______________
(1) Prior period amounts related to the AV and AUA roll-forward were updated to include Mutual Fund AUA. The impact of the revision to
Gross Premiums for the year ended December 31, 2021 was $216 million, respectively.
(2) For the year ended December 31, 2022, Gross premiums are exclusive of $72 million related to ceded AV to Global Atlantic. For
additional information regarding the Global Atlantic Transaction, see “Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Executive Summary—Global Atlantic Transaction” and Note 1 of the Notes to the Consolidated Financial
Statements.
Markets
We primarily operate in the tax-exempt 403(b)/457(b), corporate 401(k) and other markets.
•
•
Tax-exempt 403(b)/457(b)/491(a). Our core customer base consists of governmental plans of which Public School
Districts and their employees make up the majority of our portfolio.
Overall, the 403(b) and 457(b) markets represent 47% of FYP in the Group Retirement segment for the year ended
December 31, 2022. 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
18
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).
Institutional 401(k). In 2022, we expanded our presence in the institutional lifetime income market through our
relationship with AllianceBernstein. Our Institutional business offers GMxB and other annuity guarantees to large
institutional retirement plans (>$500M in assets). The products are distributed through asset managers in the defined
contribution markets. In 2022, we received a substantial portion of our premium through AllianceBernstein's Lifetime
Income Solutions product. We are actively seeking to expand the institutional business in 2023.
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.
AV by Market
Tax-Exempt (1)
Corporate
Institutional
Other
AV (2)
______________
2022 (1)
December 31,
2021 (1)
(in millions)
2020
$
$
22,942 $
4,299
468
4,296
32,005 $
37,072 $
5,367
70
5,301
47,810 $
32,586
4,920
57
4,896
42,459
(1) Total AV revised to include ERV/E360R AUM and AUA in Other.
(2) For the year ended December 31, 2022, AV is exclusive of $9.6 billion related to ceded AV to Global Atlantic. For additional
information regarding the Global Atlantic Transaction, see “Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Executive Summary—Global Atlantic Transaction” and Note 1 of the Notes to the Consolidated Financial Statements.
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, 2022, these channels represented approximately 56% and 44% 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 95% of our 403(b) sales in 2022.
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:
19
FYP by Distribution
Equitable Advisors
Third-Party
Total
Competition
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
1,187 $
931
2,118 $
1,155 $
151
1,306 $
1,078
98
1,176
We compete with select insurance companies, asset managers, record keepers and diversified financial institutions that
target similar market segments. 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.
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 rider charges.
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, 2022, approximately 44% of our General Account AV has a minimum guaranteed rate of 3-4%. Given
the growth in net flows to our newer products, the slowing in flows to older blocks due to retirement and the 2022 reinsurance
transaction (see “Reinsurance” below) ceding legacy Group EQUI-VEST deferred variable annuity contracts, which
predominately include Equitable Financial’s highest guaranteed general account crediting rates of 3%, 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
20
illustrates the guaranteed minimum rates applicable to our General Account AV for products with the GIO, as of December 31,
2022.
Guaranteed Minimum Interest Rate
1 – < 2%
2 – < 3%
3%
4%
Total
Total General
Account AV
(in billions)
$
$
3.6
1.1
3.6
0.1
8.4
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.
Reinsurance
On October 3, 2022, Equitable Financial completed the transactions (the “Global Atlantic Transaction”) contemplated by
the previously announced Master Transaction Agreement, dated August 16, 2022, by and between Equitable Financial and First
Allmerica Financial Life Insurance Company, a Massachusetts-domiciled insurance company (the “Reinsurer”), a wholly
owned subsidiary of Global Atlantic Financial Group.
At the closing of the Global Atlantic Transaction, Equitable Financial and the Reinsurer entered into a Coinsurance and
Modified Coinsurance Agreement (the “EQUI-VEST Reinsurance Agreement”), pursuant to which Equitable Financial ceded
to the Reinsurer, on a combined coinsurance and modified coinsurance basis, a 50% quota share of approximately 360,000
legacy Group EQUI-VEST deferred variable annuity contracts issued by Equitable Financial between 1980 and 2008, which
predominately include Equitable Financial’s highest guaranteed general account crediting rates of 3%, supported by general
account assets of approximately $4 billion and $5 billion of separate account value (the “Reinsured Contracts”). At the closing
of the Global Atlantic Transaction, Reinsurer deposited assets supporting the general account liabilities relating to the
Reinsured Contracts into a trust account for the benefit of Equitable Financial, which assets will secure its obligations to
Equitable Financial under the EQUI-VEST Reinsurance Agreement. Commonwealth Annuity and Life Insurance Company, an
insurance company domiciled in the Commonwealth of Massachusetts and affiliate of Reinsurer (“Commonwealth”), provided
a guarantee of Reinsurer’s payment obligation to Equitable Financial under the EQUI-VEST Reinsurance Agreement.
For additional information regarding the Global Atlantic Transaction, see “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Executive Summary—Global Atlantic Transaction” and Note 1 of the Notes to
the Consolidated Financial Statements.
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, 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 61% 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 $646.4 billion in AUM as of December 31, 2022,
composed of 42% equities, 39% fixed income and 19% multi-asset class solutions, alternatives and other assets. By distribution
21
channel, institutional clients represented 46% of AUM, while retail and private wealth clients represented 38% and 16%
respectively, as of December 31, 2022.
AB’s high-quality, in-depth research is the foundation of its asset management and private wealth management businesses.
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.
We are AB’s largest client. We represented 16% of AB’s total AUM as of December 31, 2022 and 4% of AB’s net
revenues for the year ended December 31, 2022.
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 believes that by using differentiated research insights and a disciplined process to build high-active-share portfolios,
AB can achieve strong investment results for its clients over time. Key to this philosophy is developing and integrating ESG
and climate research, as well as AB’s approach to engagement. AB’s global research network, intellectual curiosity and
collaborative culture allow AB to advance clients' investment objectives, whether AB’s clients are seeking responsibility
generated idiosyncratic alpha, total return, downside mitigation, or sustainability and impact-focused outcomes.
AB’s investment services include expertise in:
•
•
•
•
Actively-managed equity strategies across global and regional universes, as well as 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;
Actively-managed Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private
equity;
Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG
leaders, change catalysts) equity, fixed income and multi-asset strategies that address AB’s clients evolving need to
invest their capital with purpose while pursuing strong investment returns;
• Multi-asset services and solutions, including dynamic asset allocation, customized target-date funds and target-risk
funds; and
•
Some passive management, including index, ESG index and enhanced index strategies.
Markets
AB operates in major markets around the world, including the United States, EMEA (Europe, the Middle East and Africa)
and Asia. AB’s AUM by investment service and client domicile are as follows:
By Investment Service ($ in billions):
22
December 31, 2022U.S.$36957%Non-U.S.$27743%December 31, 2021U.S.$44657%Non-U.S.$33343%December 31, 2020U.S.$38256%Non-U.S.$30444% By Client Domicile ($ in billions):
Distribution Channels
AB distributes its products and solutions through three buy-side distribution channels: Institutions, Retail and Private
Wealth and its sell-side business, Bernstein Research Services.
Institutions
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
AB partners with its clients, embracing innovation and 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.
Bernstein Research Services
23
December 31, 2022U.S.$46071%Non-U.S.$18629%December 31, 2021U.S.53068%Non-U.S.24932%December 31, 2020U.S.$46067%Non-U.S.$22633% AB offers high-quality fundamental and quantitative research and trade execution services in equities and listed options to
institutional investors, such as mutual fund and hedge fund managers, pension funds and other institutional investors
(“Bernstein Research Services”). AB serves its clients, which are based in major markets around the world, through trading
professionals, who are primarily based in New York, London and Hong Kong, and research analysts, who provide fundamental
company and industry research along with quantitative research into securities valuation and factors affecting stock-price
movements.
Additionally, AB occasionally provides equity capital markets services to issuers of publicly-traded securities, such as
initial public offerings and follow-on offerings, generally acting as co-manager in such offerings.
In the fourth quarter of 2022, AB and Société Générale, a leading European bank, announced plans to form a joint venture
combining their respective cash equities and research businesses. As a result, the Bernstein Research Services business has been
classified as held for sale. For further discussion, see Note 23 of the Notes to the Consolidated Financial Statements.
Custody
AB’s U.S.-based broker-dealer subsidiary acts as custodian for the majority of AB’s Private Wealth 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.”
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:
Institutions
Retail
Private Wealth
Total
2022
December 31,
2021
(in billions)
2020
$
$
297.3 $
242.9
106.2
646.4 $
337.1 $
319.9
121.6
778.6 $
315.6
265.3
105.0
685.9
24
AUM by investment service were as follows:
Equity
Actively Managed
Passively Managed (1)
Total Equity
Fixed Income
Actively Managed
Taxable
Tax-exempt
Total Actively Managed
Passively Managed (1)
Total Fixed Income
Alternatives/Multi-Asset Solutions (2)
Actively Managed
Passively Managed (1)
Total Other
Total
2022
December 31,
2021
(in billions)
2020
$
217.9 $
53.8
271.7
287.6 $
71.6
359.2
190.3
52.5
242.8
9.4
252.2
246.3
57.1
303.4
13.2
316.6
115.8
6.7
122.5
646.4 $
97.3
5.5
102.8
778.6 $
$
217.8
64.5
282.3
263.2
50.3
313.5
8.5
322.0
79.1
2.5
81.6
685.9
_____________
(1)
(2)
Includes index and enhanced index services.
Includes certain multi-asset solutions and services not included in equity or fixed income services.
Changes in AUM for the years ended December 31, 2022 and 2021 are as follows:
Balance, December 31, 2021
Long-term flows:
Sales/new accounts
Redemptions/terminations
Cash flow/unreinvested dividends
Net long-term inflows (outflows) (1)
Adjustments (2)
Acquisitions (3)
Transfers
Market appreciation (depreciation)
Net change
Balance, December 31, 2022
Distribution Channel
Institutions
Retail
Private
Wealth
Total
(in billions)
$
337.1 $
319.9 $
121.6 $
778.6
32.2
(13.3)
(12.6)
6.3
(0.4)
12.2
(0.1)
(57.8)
(39.8)
297.3 $
65.9
(66.3)
(11.2)
(11.6)
—
—
0.1
(65.5)
(77.0)
242.9 $
17.5
(15.8)
—
1.7
—
—
—
(17.1)
(15.4)
106.2 $
115.6
(95.4)
(23.8)
(3.6)
(0.4)
12.2
—
(140.4)
(132.2)
646.4
$
25
Balance, December 31, 2020
Long-term flows:
Sales/new accounts
Redemptions/terminations
Cash flow/unreinvested dividends
Net long-term inflows (outflows) (1)
Adjustment
Acquisition
Transfers
Market appreciation
Net change
Balance, December 31, 2021
Distribution Channel
Institutions
Retail
Private
Wealth
Total
(in billions)
$
315.6 $
265.3 $
105.0 $
685.9
31.7
(23.4)
(6.0)
2.3
—
—
(0.2)
19.4
21.5
337.1 $
100.0
(65.1)
(14.1)
20.8
—
—
0.2
33.6
54.6
319.9 $
18.3
(15.3)
—
3.0
—
—
—
13.6
16.6
121.6 $
150.0
(103.8)
(20.1)
26.1
—
—
—
66.6
92.7
778.6
$
______________
(1) Net flows include $4.5 billion and $1.3 billion of AXA redemptions for 2022 and 2021, respectively.
(2) Approximately $400 million of Institutional AUM was removed from our total assets under management during the second quarter of
2022 due to a change in the fee structure.
(3) The CarVal acquisition added approximately $12.2 billion of Institutional AUM in the third quarter of 2022.
Investment Services
Equity
Actively
Managed
Equity
Passively
Managed
(1)
Fixed Income
Actively
Managed—
Taxable
Fixed Income
Actively
Managed—
Tax Exempt
(in billions)
Fixed
Income
Passively
Managed
(1)
Alternatives
/Multi-Asset
Solutions (2)
Total
$ 287.6 $
71.6 $
246.3 $
57.1 $
13.2 $
102.8 $ 778.6
46.0
(39.0)
1.8
(3.1)
25.5
(32.6)
16.0
(15.0)
(0.1)
(1.5)
26.4
(4.2)
115.6
(95.4)
(9.7)
(4.0)
(10.8)
(0.4)
0.3
0.8
(23.8)
(2.7)
—
—
(67.0)
(69.7)
$ 217.9 $
(5.3)
—
—
(12.5)
(17.8)
53.8 $
(17.9)
—
—
(38.1)
(56.0)
190.3 $
0.6
—
—
(5.2)
(4.6)
52.5 $
(1.3)
—
—
(2.5)
(3.8)
9.4 $
(3.6)
23.0
(0.4)
(0.4)
12.2
12.2
(140.4)
(15.1)
19.7
(132.2)
122.5 $ 646.4
Balance, December 31, 2021
Long-term flows:
Sales/new accounts
Redemptions/terminations
Cash flow/unreinvested
dividends
Net long-term inflows (outflows)
(3)
Adjustments (4)
Acquisitions (5)
Market appreciation (depreciation)
Net change
Balance, December 31, 2022
26
Investment Services
Equity
Actively
Managed
Equity
Passively
Managed
(1)
Fixed Income
Actively
Managed—
Taxable
Fixed Income
Actively
Managed—
Tax Exempt
(in billions)
Fixed
Income
Passively
Managed
(1)
Alternatives
/Multi-Asset
Solutions (2)
Total
$ 217.8 $
64.5 $
263.2 $
50.3 $
8.5 $
81.6 $ 685.9
72.9
(39.6)
1.4
(1.1)
44.9
(52.6)
13.5
(7.8)
4.6
(0.4)
12.7
(2.3)
150.0
(103.8)
(11.4)
(7.8)
(2.2)
0.3
0.8
0.2
(20.1)
21.9
47.9
69.8
$ 287.6 $
(7.5)
14.6
7.1
71.6 $
(9.9)
(7.0)
(16.9)
246.3 $
6.0
0.8
6.8
57.1 $
5.0
(0.3)
4.7
13.2 $
10.6
26.1
10.6
66.6
92.7
21.2
102.8 $ 778.6
Balance, December 31, 2020
Long-term flows:
Sales/new accounts
Redemptions/terminations
Cash flow/unreinvested
dividends
Net long-term inflows (outflows)
(3)
Market appreciation
Net change
Balance, December 31, 2021
Includes index and enhanced index services.
Includes certain multi-asset solutions and services not included in equity or fixed income services.
______________
(1)
(2)
(3) Net flows include $4.5 billion and $1.3 billion of AXA redemptions for 2022 and 2021, respectively.
(4) Approximately $400 million of Institutional AUM was removed from our total assets under management during the second quarter of
2022 due to a change in the fee structure.
(5) The CarVal acquisition added approximately $12.2 billion of Institutional AUM in the third quarter of 2022.
Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment
services for the years ended December 31, 2022, 2021 and 2020, respectively, are as follows:
Actively Managed
Equity
Fixed Income
Alternatives/Multi-Asset Solutions
Passively Managed
Equity
Fixed Income
Alternatives/Multi-Asset Solutions
Total net long-term inflows (outflows)
Year Ended December 31,
2022
2021
(in billions)
2020
$
$
$
(2.7) $
(17.3)
20.9
0.9
(5.3) $
(1.3)
2.1
(4.5)
(3.6) $
21.9 $
(3.9)
8.3
26.3
(7.5) $
5.0
2.3
(0.2)
26.1 $
7.4
(8.8)
4.5
3.1
(4.6)
(1.6)
0.5
(5.7)
(2.6)
Average AUM by distribution channel and investment service were as follows:
Distribution Channel:
Institutions
Retail
Private Wealth
Total
Year Ended December 31,
2022
2021
(in billions)
2020
$
$
308.4 $
267.8
110.3
686.5 $
325.7 $
291.0
114.1
730.8 $
285.9
236.5
97.1
619.5
27
Investment Service:
Equity Actively Managed
Equity Passively Managed (1)
Fixed Income Actively Managed – Taxable
Fixed Income Actively Managed – Tax-exempt
Fixed Income Passively Managed (1)
Alternatives/Multi-Asset Solutions (2)
Total
Year Ended December 31,
2022
2021
(in billions)
2020
$
$
239.7 $
60.4
210.0
54.1
11.5
110.8
686.5 $
252.2 $
68.7
253.1
53.8
9.6
93.4
730.8 $
179.8
57.1
254.4
47.9
9.4
70.9
619.5
___________
(1)
(2)
Includes index and enhanced index services.
Includes certain multi-asset solutions and services not included in equity or fixed income services.
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:
Investment advisory and services fees:
Institutions:
Base fees
Performance-based fees
Retail:
Base fees
Performance-based fees
Private Wealth:
Base fees
Performance-based fees
Total:
Base fees
Performance-based fees
Bernstein Research Services
Distribution revenues
Dividend and interest income
Investment (losses) gains
Other revenues
Total revenues
Less: Interest expense
Net revenues
Year Ended December 31,
2022
2021
(in millions)
2020
$
582 $
77
659
540 $
46
586
1,321
2
1,323
922
66
988
2,825
145
2,970
416
607
123
(102)
106
4,120
66
4,054 $
1,442
51
1,493
967
149
1,116
2,949
246
3,195
452
652
39
(1)
108
4,445
4
4,441 $
$
28
458
53
511
1,187
24
1,211
818
55
873
2,463
132
2,595
460
530
51
(16)
105
3,725
16
3,709
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 87%, 7% and 6% of our total life
insurance annualized premium, respectively, for the year ended December 31, 2022. 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 73% of our total life insurance sales for the year ended
December 31, 2022.
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
addition, we offer a full suite of Supplemental Health products including Accident, Critical Illness and Hospital Indemnity. 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
29
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.”
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 29% of all eligible policies and elected on 25% of all new policies sold
during the year ended December 31, 2022. 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:
Annualized Premium
Indexed Universal Life
Variable Universal Life
Term
Total
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
13 $
184
13
210 $
25 $
169
16
210 $
60
91
18
169
The following table presents individual life insurance FYP and renewals by product and total gross premiums for the
periods indicated:
30
FYP by Product Line
Indexed Universal Life
Variable Universal Life
Term
Other (1)
Total
Renewals by Product Line
Universal Life
Indexed Universal Life
Variable Universal Life
Term
Other (1)
Total
Total Gross Premiums
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
$
$
$
19 $
309
13
1
342 $
764 $
304
989
373
17
2,447 $
45 $
287
16
1
349 $
824 $
310
968
379
19
2,500 $
144
144
18
1
307
845
276
947
375
19
2,462
2,789 $
2,849 $
2,769
______________
(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:
In-force face amount by product: (1)
Universal Life (2)
Indexed Universal Life
Variable Universal Life (3)
Term
Whole Life
Total in-force face amount
Protection Solutions Reserves (4)
General Account
Separate Accounts
Total Protection Solutions Reserves
2022
December 31,
2021
(in billions)
2020
$
$
43.1 $
27.5
133.4
211.9
1.1
417.0 $
2022
45.9 $
27.9
132.8
215.4
1.2
423.2 $
December 31,
2021
(in millions)
48.7
27.7
127.7
215.2
1.3
420.6
2020
$
$
18,237 $
13,634
31,871 $
18,625 $
17,012
35,637 $
18,905
14,771
33,676
______________
(1) Does not include life insurance sold as part of our employee benefits business.
(2) UL includes guaranteed universal life insurance products.
31
(3) VUL includes variable life insurance and COLI.
(4) Does not include Protection Solutions Reserves for our employee benefits business.
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 2022:
Shift in Product Sales (Annualized Premiums)
(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
While we serve all Equitable client segments, we specialize in Small to Medium Enterprises and high-income/high-net
worth clients and their advisers. We also complement our permanent product suite with term products for clients with simpler
needs. 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 shifted 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.
The following table presents individual life insurance annualized premium by distribution channel for the periods
indicated:
Annualized Premium by Distribution
Equitable Advisors
Third-Party Firms
Total
32
2022
Year Ended December 31,
2021
2020
(in millions)
$
$
152 $
58
210 $
162 $
48
210 $
126
42
168
2008WL 1%UL (1) 49%VUL 35%Term 15%Year Ended December 31, 2022IUL6%VUL88%Term6%
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).
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 portion of our in-force 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.
33
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. Our hedging exposes us to
counterparty risk as well as fellow customer default risk, in respect to certain types of cleared contracts.
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 helps put 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, Accident and Hospital
Indemnity insurance products.
The following table presents employee benefits gross premiums and annualized premium for the periods indicated:
Employee Benefits Gross Premiums
Group life insurance sales
Short-term disability
Long-term disability
Dental
Vision
Other (1)
Total
Annualized premium
_______________
(1) Other includes Critical Illness and Accident insurance products.
Markets
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
$
104 $
62
61
55
9
4
295 $
82 $
44
43
40
6
1
216 $
82 $
76 $
64
25
30
28
4
—
151
52
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,
34
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
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, 2022, the Equitable Advisors broker-dealer business included $72.8 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.
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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 the 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”), a wholly owned indirect
subsidiary of Holdings. Effective August 1, 2021, EIM replaced EIMG as the administrator of EQAT, EQ Premier VIP Trust
and 1290 Funds (each, a “Trust” and collectively, the “Trusts”). 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. Effective December 30, 2022, the name of EIM changed to Equitable Financial
Investment Management, LLC. On June 10, 2022, Equitable Holdings completed the formation of Equitable Investment
Management II, LLC, a wholly owned indirect subsidiary of Holdings (“EIM II”, and collectively with EIMG and EIM,
“Equitable Investment Management”). Effective January 1, 2023, EIM II replaced EIM as the administrator of each Trust.
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 services 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 EQAT and
EQ Premier VIP 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.
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 provided administrative services to the Portfolios from August 1, 2021 to December 31, 2022. Effective January 1,
2023, EIM II provides administrative services to the Portfolios. The administrative services that EIM II 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.
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EIM 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, and the U.S.
Virgin Islands. 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, New York’s insurance laws limit 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.”
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 the Consolidated
Financial Statements.
Holding Company and Shareholder Dividend Regulation
All states regulate transactions between an insurer and its affiliates under their insurance holding company laws. 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 insurer’s domiciliary insurance regulator.
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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. In addition, states require the ultimate controlling person of a U.S. insurer to file an annual
enterprise risk report with the lead state regulator 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 laws also 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
New York’s insurance laws, which are applicable to Equitable Financial, a domestic stock life insurer may pay an ordinary
dividend to its stockholders without regulatory approval provided that the amount does not exceed the statutory formula
(“Ordinary Dividend”). Dividends in excess of this amount require a New York domestic life insurer to file a notice of its intent
to declare the dividend with the NYDFS and obtain prior approval or non-disapproval from the NYDFS with respect to such
dividend (“Extraordinary Dividend”). Due to a permitted statutory accounting practice agreed to with the NYDFS, Equitable
Financial needs 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’s insurance laws absent the application of such
permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).
Other states’ insurance laws have limitations on dividends similar to New York’s, providing that dividends in excess of
prescribed limits, based on an insurance company’s earnings and surplus for the prior year, are considered to be extraordinary
dividends and require explicit approval from the insurer’s domiciliary insurance 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 its domiciliary insurance regulator for any dividend payable from
other than 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 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.
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
the 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 risk management framework and conduct an
internal risk and solvency assessment of their 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’s Corporate Governance Annual Disclosure Model Act has been adopted by our insurance subsidiaries’
domiciliary states. It requires insurers to annually file detailed information regarding their corporate governance policies.
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The NAIC amended the Standard Valuation Law to require a principle-based approach to reserving for life insurance 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 has been adopted in
all 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 through proposed enhancements to supervisory practices related to liquidity, recovery and resolution, capital stress
testing and counterparty exposure concentrations for life insurers. In 2020, the NAIC adopted amendments to the Model
Holding Company Act and Regulation that implement an annual filing requirement related to a liquidity stress-testing
framework (the “Liquidity Stress Test”) 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).
The Liquidity Stress Test is used as a regulatory tool in jurisdictions which have adopted the holding company amendments.
Our insurance subsidiaries’ domiciliary states have not yet adopted the amendments, although a bill is pending in the New York
State legislature and the amendments are expected to be widely adopted. We cannot predict what impact this tool may have on
the Company.
The NAIC also developed a group capital calculation tool (“GCC”) using an RBC aggregation methodology for all entities
within the insurance holding company system, including non-U.S. entities. The GCC provides 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 adopted the GCC Template and Instructions and implemented the annual filing requirement with
an insurance group’s lead state regulator. The GCC filing requirement becomes effective when the holding company
amendments have been adopted by the state where an insurance group’s lead state regulator is located.
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 focused on insurance companies’ use of affiliated captive reinsurers or
offshore entities.
The NAIC adopted a revised preamble to the NAIC accreditation standards (the “Standard”) which applies the Standard to
captive insurers that assume level premium term life insurance (“XXX”) business and universal life with secondary guarantees
(“AXXX”) business. The NAIC also developed 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 a ceding
insurer’s actuary to opine on the insurer’s reserves and 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 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 been adopted by our
insurance subsidiaries’ domiciliary states.
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 framework which is consistent
with how we manage our business. The Company adopted the NAIC reserve and capital framework for the year ended
December 31, 2019.
As noted above, New York’s Regulation 213, which is applicable to Equitable Financial, differs from the NAIC’s variable
annuity reserve and capital framework described above. Regulation 213 requires New York licensed insurers, to carry statutory
basis reserves for 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
39
issued prior to January 1, 2020, and for policies issued after that date a new standard that is more conservative than the NAIC
standard. As a result, Regulation 213 materially increases the statutory basis reserves that New York licensed insurers are
required to carry which could adversely affect their capacity to distribute dividends. 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.
In order to mitigate the impacts of Regulation 213 discussed above, the Company completed a series of management
actions prior to year-end 2022. Equitable Financial entered into a reinsurance agreement with Swiss Re Life & Health America
Inc., we completed the Global Atlantic Reinsurance Transaction, we completed certain internal restructurings that increase cash
flows to Holdings from non-life insurance entities, and we changed our underwriting practices to emphasize issuing products
out of our non-New York domiciled insurance subsidiary. Equitable Financial was also granted a permitted practice by the
NYDFS which partially mitigates Regulation 213’s impact from the Venerable Transaction to make the regulation’s application
to Equitable Financial more consistent with the NAIC reserve and capital framework. We are considering further management
actions intended to reduce any future potential impacts of Regulation 213 which could include seeking further amendment of
Regulation 213 or exemptive relief therefrom, 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 the Consolidated Financial Statements for 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 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 approved RBC revisions for corporate bonds, real estate equity and longevity risk that took effect at year-end
2021 and had a minimal RBC impact on Equitable Financial. The NAIC also approved an RBC update for mortality risk that
took effect at year-end 2022, which had a minimal impact on Equitable Financial. As of the date of the most 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.
Regulation of Investments
State insurance laws and regulations limit the amount of investments that our insurance subsidiaries may have in certain
asset categories, such as below investment grade fixed income securities, real estate equity, other equity investments, and
derivatives, and require diversification of investment portfolios. Investments exceeding regulatory limitations are not admitted
for purposes of measuring surplus. In some instances, laws require us to divest any non-qualifying investments.
The NAIC has been evaluating the risks associated with insurers’ investments in certain categories of structured securities,
including CLOs. The NAIC is considering a proposal to assign NAIC designations to CLOs based on modeling by the
Securities Valuation Office as opposed to NRSRO credit ratings. Under this proposal, the NAIC Structured Securities Group
(SSG) would model CLO securities and evaluate tranche level losses across all debt and equity tranches under a series of
calibrated and weighted collateral stress scenarios to assign NAIC designations. The NAIC’s goal is to ensure that the aggregate
RBC factor for owning all tranches of a CLO more closely aligns with what is required for owning all of the underlying loan
collateral, in order to address RBC arbitrage. The NAIC is also considering an interim solution for residual/equity tranches.
These changes would be implemented at year-end 2023 at the earliest. It is possible that the NAIC may propose new regulations
or changes to statutory accounting principles regarding CLOs.
Guaranty Associations and Similar Arrangements
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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 based on their proportionate share of premiums
written 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, New York’s Insurance Regulation 210 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 and
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
(effective on July 1, 2019) and Texas (effective on January 1, 2021), the likelihood of enacting of any additional state-based
regulation is uncertain at this time, but if implemented, these regulations could have an adverse effect 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. Among other regulation, 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, direct inquiries to the
Broker-Dealers and bring enforcement actions against the Broker-Dealers. Broker-Dealers are required to obtain approval from
FINRA for material changes in their businesses as well as certain restructuring and mergers and acquisition events. The Broker-
Dealers are also subject to registration and regulation by regulatory authorities in the foreign jurisdictions in which they do
business.
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
advisers are subject to various federal and state laws and regulations and to the laws in those foreign countries in which they
41
conduct business. These U.S. and foreign 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, and state securities regulators and 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 provide regular financial reporting, as well as, and in certain cases, additional
information and documents to the SEC, FINRA, the CFTC, NFA, state securities regulators and 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 the Consolidated Financial Statements.
The SEC, FINRA, the CFTC and other governmental regulatory authorities may institute administrative or judicial
proceedings against our subsidiaries or their personnel that may result in censure, fines, the issuance of cease-and-desist orders,
trading prohibitions, the suspension or expulsion of a broker-dealer, investment adviser, 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 established the FIO within the U.S. Treasury Department and reformed 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.
The FIO’s authority 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
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.
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In October 2022, the SEC adopted final rules requiring the recovery of erroneously awarded compensation as mandated by
the Dodd-Frank Act. The rules will, among other things, require national securities exchanges to establish listing standards that
would require listed companies to adopt and comply with a compensation recovery policy, often known as a clawback policy,
and require listed companies to provide disclosure about such policies and how they are being implemented. In the event a
company is required to prepare an accounting restatement, including to correct an error that would result in a material
misstatement if the error were corrected in the current period or left uncorrected in the current period, the company must
recover from any current or former executive officers incentive-based compensation that was erroneously awarded during the
three years preceding the date such a restatement was required. The recoverable amount would be the amount of incentive-
based compensation received in excess of the amount that otherwise would have been received had it been determined based on
the restated financial measure. The updated listing standards related to clawback policies will become effective no later than
November 28, 2023. Listed companies will be required to adopt a clawback policy no later than 60 days following the
applicable listing standards effective date and make the required disclosure in proxy and information statements, as well as
annual reports filed after the adoption of their clawback policy. We are currently awaiting the finalization of the relevant listing
standards and are evaluating our existing clawback policy to determine if any updates are required.
On August 25, 2022, the SEC adopted final rules implementing the pay versus performance requirement as mandated by
the Dodd-Frank Act. The rules require public companies to disclose the relationship between their executive compensation and
financial performance in proxy or information statements in which executive compensation disclosures are required. Under the
new rules, companies will be required to provide a table disclosing specified executive compensation and financial performance
measures for the five most recently completed fiscal years after an initial phase-in period. Companies are also required to
describe the relationship between the actual executive compensation paid, as defined by the new rules, and each of the financial
performance measures in the table, as well as the company’s total shareholder return (“TSR”) and the TSR of its selected peer
group. In addition, companies are required to disclose three to seven financial performance measures they determine to be the
most important performance measures for linking executive compensation actually paid to company performance. These final
rules are effective in proxy and information statements for fiscal years ending on or after December 16, 2022.
The following aspects of our operations could also be affected by the Dodd-Frank Act:
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 has largely been
implemented. The Dodd-Frank Act provided 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,
currency and treasury and other exempted securities. Security-based swaps include, among other things, OTC derivatives on
single securities, baskets of securities, narrow-based indexes or loans. The Dodd-Frank Act also granted authority to the U.S.
Secretary of the Treasury to exclude physically-settled foreign exchange instruments from regulation as swaps, which the
Secretary implemented shortly after adoption of the Dodd-Frank Act.
The Dodd-Frank Act authorized the SEC and the CFTC to mandate that specified types 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. Public trade
reporting of security-based swaps went into effect in February 2022. In December 2021, the SEC proposed rule 10B-1 under
the Exchange Act to require next day public reporting of security-based swaps that exceed certain specified thresholds.
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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 for us. 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.
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.
The SEC recently proposed a new Regulation Best Execution, which would supplement existing best execution rules
enforced by FINRA and the Municipal Securities Rulemaking Board. In conjunction with Regulation Best Execution, the SEC
also proposed other rules or rule modifications that, if adopted as proposed, would materially impact broker-dealers operating in
the equity markets. These proposals include: (i) the Order Competition Rule, which would require certain retail customer orders
to be exposed first to a “qualified auction” operated by an open competition trading center prior to execution in the over-the-
counter market; (ii) amendments to Regulation NMS to adopt, among other things, minimum pricing increments for quoting
and trading of listed stocks and reduce exchange access fees; and (iii) amendments to disclosure requirements under Regulation
NMS to require monthly publication of order execution quality information in listed equity by certain large broker-dealers and
trading platforms in addition to the market centers that are currently required to publish such reports. If adopted, the proposals
will likely increase costs for our broker-dealers.
Investment Adviser Regulation
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Changes to the marketing requirements for registered investment advisers were adopted in December 2020 and became
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 developed systems and processes and put in place policies and procedures to ensure that we are in compliance with
the amended rule. The SEC is currently focused on examining compliance efforts with newly amended Rule 206(4)-1. The SEC
has also adopted new reporting requirements for registered investment advisers regarding “say on pay” and more expansive
reporting on voting practices by managers for registered funds on Form N-PX. In October 2022, the SEC also proposed a new
rule and rule amendments under the Investment Advisers Act that would prohibit registered investment advisers from
outsourcing certain services and functions without conducting due diligence and monitoring the proposed service providers.
Both the new requirements and the new proposals, if adopted, will create substantially greater compliance requirements and
costs for our investment adviser entities.
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 is now
effective and subject to enforcement. 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. The DOL has noted that it may further amend its fiduciary regulations, including PTE 2020-02
and, possibly, other existing prohibited transaction exemptions in the near future. To date, nothing has been proposed.
However, recent press reports have suggested that the Department of Labor soon may move forward with re-drafting a rule
defining the term “fiduciary.”
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 two 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
Division of the NYS Supreme Court, Third Department, overturned Regulation 187 for being unconstitutionally vague,
although the New York State Court of Appeals reversed this ruling on October 20, 2022. 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.
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 to integrate financial risks from climate change
into their governance frameworks, risk management processes, and business strategies.
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On November 15, 2021, the NYDFS issued additional guidance stating that New York domestic insurers, such as Equitable
Financial, are expected to manage financial risks from climate change by taking 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). As of
August 15, 2022, New York domestic insurers should have implemented certain corporate governance changes and developed
plans to implement the organizational structure changes (e.g., defining roles and responsibilities related to managing climate
risk). With respect to implementing more involved changes (e.g., reflecting climate risks in the ORSA and using scenario
analysis when developing business strategies), insurers are encouraged to start working on these changes, although the NYDFS
intends to issue additional guidance with more specific timing information. We have developed our compliance framework with
respect to the November 2021 guidance.
The NYDFS also adopted an amendment to the regulation governing enterprise risk management, applicable to New York
domestic and foreign authorized insurers, which requires an insurance group’s enterprise risk management function to address
certain additional risks, including climate change risk.
In addition, the FIO is authorized to monitor the U.S. insurance industry under the Dodd-Frank Act, as discussed above. In
furtherance of President Biden’s Executive Order on Climate-Related Financial Risk, dated May 20, 2021, the FIO sought
public comment on climate-related financial risks in the insurance industry. The FIO is assessing how the insurance sector may
mitigate climate risks and help achieve national climate-related goals.
In March 2022, the SEC released proposed rule changes on climate-related disclosure. The proposed rule changes would
require companies to include certain climate-related disclosures including information about climate-related risks that have had
or reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain
climate-related financial statement metrics in a note to the audited financial statements. Among other things, the required
information about climate-related risks also would include disclosure of a company’s greenhouse gas emissions, information
about climate-related targets and goals, and if a transition plan, has been adopted as part of climate-related risk management
strategy, and requires extensive attestation requirements. If adopted as proposed, the rule changes are expected to result in
additional compliance and reporting costs.
Finally, on May 25, 2022, the SEC proposed amendments to existing rules that would require registered investment
companies and investment advisers to include specific disclosures regarding their environmental, social and governance
(“ESG”) strategies in prospectuses and shareholder reports and Form ADV.
NYDFS Guidance on Diversity and Corporate Governance
Insurance regulators are also focused on the topic of race, diversity and inclusion. In New York, the NYDFS issued a
circular letter in 2021 stating that it expects the insurers it regulates, such as Equitable Financial, to make diversity of their
leadership a business priority and a key element of their corporate governance. The NYDFS collected data from insurers that
met certain premium thresholds, including Equitable Financial, regarding the diversity of their corporate boards and
management. The NYDFS plans to publish this data on an aggregate basis to measure progress in the industry, and it now
includes diversity-related questions in its examination process. We are considering the NYDFS’ guidance as part of our
commitment to diversity and inclusion. The NAIC is also evaluating issues related to this topic, and it is examining practices in
the insurance industry to determine how barriers are created that disadvantage people of color or historically underrepresented
groups.
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.
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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 announced that publication of LIBOR will cease after June 2023. The cessation dates of many of
these USD and non-USD LIBOR settings have occurred and publication of the remaining USD LIBOR settings (overnight and
one, three, six and 12 month USD LIBOR) will cease after June 2023. The Financial Conduct Authority (“FCA”) has proposed
that the Intercontinental Exchange (“ICE”) Benchmark Administration, the administrator of LIBOR, continue publication of
one-, three- and six-month USD LIBOR settings on a “synthetic,” or non-representative, basis through the end of September
2024.
In March 2022, federal legislation was enacted to address, for USD LIBOR settings scheduled to cease being published at
the end of June 2023, the transition to alternative reference rates for all U.S. law governed contracts with non-existent or
inadequate USD LIBOR fallback provisions. Except with respect to the one-week and two-month USD LIBOR tenors, the
federal legislation supersedes all state law addressing the USD LIBOR transition, including legislation enacted in New York in
2021. The Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) adopted regulations in December
2022 that implements this legislation by identifying benchmark rates based on the Secured Overnight Financing Rate (“SOFR”)
that will replace LIBOR in specified financial contracts after June 30, 2023. The regulation authorizes specified “determining
persons” to select a benchmark replacement and substitutes a Federal Reserve Board-specified replacement where a
determining person does not select a workable benchmark replacement by at least June 30, 2023. Each Federal Reserve Board-
specified replacement specified in the regulation incorporates spread adjustments.
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, have disposed of the
instrument or negotiated fallback terms.
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.
On August 16, 2022, President Biden signed the Inflation Reduction Act into law which introduces a 15% minimum tax
based on financial statement income as well as a 1% excise tax on share buybacks, effective for tax years beginning in 2023.
While neither the minimum tax nor the excise tax on share buybacks are currently expected to have a significant impact on the
Company, we continue to monitor developments and regulations associated with the Inflation Reduction Act for any potential
future impacts on our business, results of operations and financial condition.
The SECURE 2.0 Act of 2022 (“SECURE 2.0”), signed into law on December 29, 2022, makes significant changes to
existing law for retirement plans by building upon provisions in the Setting Every Community Up for Retirement Enhancement
Act of 2019. SECURE 2.0 introduces new requirements and considerations for plan sponsors that are intended to expand
coverage, increase savings, preserve income, and simplify plan rules and administrative procedures. Among other provisions,
SECURE 2.0 directs the DOL to review its current interpretive bulletin regarding ERISA plan sponsors’ selection of annuity
providers for purposes of transferring plan sponsor benefit plan liability to such annuity providers. Such review could result in
the DOL’s imposition of new or different requirements on plan sponsors or on annuity providers or could make such selection
process more difficult for the parties involved.
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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, integrity,
confidentiality, and availability of customer information, and to notify customers about their policies and practices relating to
their collection and disclosure of customer information and their practices related to protecting the security 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 in 2017 adopted the Cybersecurity Requirements for
Financial Services Companies (the “NY Cybersecurity Regulation”), a regulation applicable to banking and insurance entities
under its jurisdiction. The NY Cybersecurity regulation requires covered 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 July and November
2022, the NYDFS formally proposed amendments to the NY Cybersecurity Regulation, which, if adopted, would require new
technical reporting, governance and oversight measures be implemented, enhance certain cybersecurity safeguards (e.g., annual
audits, vulnerability assessments, and password controls and monitoring), and mandate notifications in the event that a covered
entity makes a cyber-ransom payment. The comment period on these proposed amendments ended in January 2023. We cannot
predict whether the amendments will be adopted, what form they will take, or what effect they would have on our business or
compliance efforts.
In addition to the NY Cybersecurity Regulation, the NAIC adopted the Insurance Data Security Model Law for entities
licensed under the relevant state’s insurance laws. The model law requires such entities to establish 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. Several states have adopted the model law, although it has not been adopted by
any of our significant insurance subsidiaries’ domiciliary states. We expect additional states to 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 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 delete and limit certain uses of
that information. 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”), which came into effect on
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January 1, 2023, amends the CCPA to provide California consumers the right to correct personal information, limit certain uses
of sensitive data and the sharing of data that does not constitute a sale, and establishes a new agency, the California Privacy
Rights Agency, to adopt rules for and enforce the CCPA and CPRA. The CPRA may require additional compliance efforts,
such as changes to our policies, procedures and operations. Several other states have adopted, or are considering, similar
comprehensive privacy laws or regulations in the near future. To date, several of these state laws (such as those enacted in
Colorado, Utah, and Virginia) include entity-wide exemptions for financial institutions that are subject to privacy protections in
the Gramm-Leach-Bliley Act or similar, state-level financial privacy laws.
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. The effective date for the updated
Safeguards Rule is June 9, 2023. Failure to comply with new regulation or requirements may result in enforcement action, fines
and/or other operational or reputational harms. Further, in March 2022, the SEC released proposed rules enhancing
cybersecurity risk and management disclosure requirements for companies. If enacted, the proposed rules would, among other
things, require disclosure of any material cybersecurity incident on its Form 8-K within four business days of determining that
the incident it has experienced is material. They would also require periodic disclosures of, among other things, (i) details on
the company’s cybersecurity policies and procedures, (ii) cybersecurity governance, oversight policies and risk management
policies, including the board of directors’ oversight of cybersecurity risks, (iii) the relevant expertise of members of the board
of directors with respect to cybersecurity issues and (iv) details of any cybersecurity incident that was previously disclosed on
Form 8-K, as well as any undisclosed incidents that were non-material, but have become material in the aggregate.
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
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, 2022, we had approximately 8,200 full time employees. Of these, approximately 4,400 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. Central to achieving our goals and strategies as an organization is building a culture of employee engagement
and inclusion, professional excellence and continuous learning. We have made significant strides towards delivering on these
three fronts.
Culture of Inclusion
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Equitable consistently scores highly on workplace quality rankings because of our emphasis on employee engagement and
inclusion. 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. Equitable has also received a perfect score on the Human Rights Campaign
Foundation's Corporate Equality Index (“CEI”) for the 8th consecutive year, which recognizes our inclusive workplace culture.
In addition, we received a perfect score for the second consecutive year as a “Best Place to Work for Disability Inclusion”, with
participation in the Disability Equality Index (“DEI”) since 2015. We strive to maintain and expand upon our efforts that have
garnered us this recognition.
Professional Excellence
Equitable seeks to help our clients secure their financial well-being so they can pursue long and fulfilling lives. To achieve
that mission, we must deliver best-in-class services while increasing our speed to market to maximize our impact on our
customers’ financial outcomes. This requires our employees to buy into our mission and genuinely enjoy working with and for
us. We recently launched a new workplace initiative called New Ways of Working (“NWOW”) to strengthen our employee
experience. NWOW, which is tailored to the Equitable environment, sharpens our focus on the following five areas of the
employee experience: (i) Adaptive Leadership — empowering those closest to the work with decision-making authority; (ii)
Outcomes, Objectives & Key Results (“OKRs”) — long-term objectives and a goal-setting framework; (iii) Dynamic Enablers
— processes and tools that promote innovation, autonomy and skills development; (iv) Enterprise Agile — adapting in the face
of rapid change; and (v) Design Thinking — client-centric solutions design. We believe that by prioritizing these five areas, our
business can adapt with greater speed, agility, creativity and client focus.
Of particular importance is Equitable’s focus on Outcomes, which establishes clear, measurable, and aspirational goals to
both inspire and collectively focus teams across the organization. We recognize that our employees must believe in the
possibility of their success. Further, our definition of success must be attainable. By clearly articulating and refining our view of
employee success, we can ensure a balanced, holistic approach that will deliver successful outcomes for our employees, and by
extension, our clients and investors. Since we adopted NWOW, we have seen its positive impact on our culture, as measured
through our employee engagement and culture drivers survey results.
About two-thirds of Equitable employees are operating under NWOW, and the rest of our organization will make the
transition in 2023. Equitable’s NWOW has fundamentally changed the way we think, work and lead as a company, ensuring we
are better positioned to grow, meet our clients’ needs and attract the best talent.
Continuous Learning
Our culture of continuous learning and professional excellence starts with the relationship between the employee and
manager, which continues through peer discussions, skill building and bringing professional aspirations into focus. We
encourage our employees to take advantage of rich experiences that support their career and growth, including skill acquisition
and strengthening. Employees own their own growth and development enabled by user-friendly resources in Thrive, our
centralized HR hub, or by taking advantage of the wide range of Learning and Development courses. Additionally, the
Company offers tuition assistance to support educational endeavors.
Diversity, Equity and Inclusion
At Equitable, building a more diverse, equitable and inclusive workplace is an essential and ongoing endeavor. It helps us
better serve our clients and communities, creates a more supportive and productive work environment, and ultimately enables
our people to achieve their full potential.
Our DEI vision is to inspire, lead and serve as a model for the financial industry of an inclusive, diverse, empowering and
equitable workplace for all. To achieve our vision, our specific strategic goals are to:
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Attract, retain and advance diverse talent. By strategically and thoughtfully recruiting and advancing diverse
talent, we seek to create the most effective and impactful team in the financial services industry.
Create and uphold an inclusive company culture. Employees thrive in a culture that values contributions from
all and encourages collaboration, flexibility and fairness. A culture that enables us to work at our full potential,
set higher standards and maximize value for clients, employees, financial professionals, shareholders, and
communities.
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Instill commitment and accountability at all levels. An inclusive workplace is only possible when all are
committed to and accountable for its creation and success. We strive to have every person at Equitable do their
part to bend the “arc of history” toward a more just and equitable company and society.
Our Employee Resource Groups, Field Advisory Councils and Diversity Advocates 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 with the intention to more deeply focus and
accelerate our efforts within our Black community and create a new approach which will ultimately be used to benefit all
people and diverse communities within our company. Our mission 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. Based on the research performed by the Taskforce, we launched several talent programs reaching
nearly 200 individuals. We have seen increases in our Black employee net promoter score and psychological safety. As we look
ahead, the learnings and experience from the Taskforce will serve as a playbook for how we can advance other
underrepresented populations within our organization.
We are committed to continue deepening our understanding of the issues facing the communities we serve. We recognize
that there is a critical need for improved financial wellness and access to financial advisors in diverse markets. In 2022, we
hosted 5 Impact and Black Financial Empowerment Days across our branch offices in Atlanta, Cleveland, Philadelphia,
Washington DC and Jacksonville. These events bring together senior headquarter and branch leaders, along with top financial
professionals to discuss improving diversity in financial advising, through directed recruiting efforts and client acquisition.
Talent Acquisition
The Talent Acquisition Team at Equitable is charged with conveying to the external talent market the merits of working for
Equitable. One of its principal areas of focus has been in growing the number of diverse employees amongst Equitable’s ranks,
an effort which saw great success in 2022. As part of Equitable’s recruiting strategy, we have implemented diverse interview
panels and diverse interview candidate slates to ensure that hiring managers are interviewing highly qualified diverse candidates
and that those candidates are interviewing with a diverse group of Equitable employees. In addition, we partnered with
diversity-focused external organizations (i.e, Prospanica and National Black MBA) to drive more diverse candidate flow to
open roles at Equitable. Equitable has also expanded its outreach more broadly through its social media presence, leading to an
increase in total applicants, including an increase in ethnically diverse candidates and an increase in women applying to
Equitable. This has translated into the hiring of an increased number of people of color.
Employee Development and Engagement
At Equitable, our power is in our people. We believe our people are at the heart of our business. Attracting, developing,
and retaining talent is crucial to our long-term success and strategy. We actively cultivate and reward passion and innovation in
our people. We embrace diverse thought on our teams by continuously investing in and creating opportunities for our
employees to deliver meaningful work at Equitable.
Employee Development
We encourage our team members to take advantage of the rich experiences that Equitable has to support career and growth,
including learning new skills and strengthening existing ones. Equitable invests in various talent programs to support the
development of our colleagues and financial professionals. These programs range from three months to a full-year engagement
and include developmental learning, mentorship or sponsorship and coaching engagements.
We have also developed a career model framework to drive a high performing, skills-based workforce, which uses a
common language of skills and behaviors required for employees to take the next step in their current career path or to
transition to a new path entirely. All three dimensions of the career model framework – Craftsmanship Skills, Core
Competencies and Execution – work together to provide the foundation for development, assessment, and feedback. Apart from
our talent programs, Equitable offers a wide range of Learning and Development courses aimed at improving everything from
communication skills to product knowledge to digital expertise, all delivered through multi-channel learning platforms.
Our commitment to employee development is measurable by the quality of our workforce and our approach to career
progression. At Equitable, career progression is defined holistically to include skill progression, internal career model mobility,
people leadership elevation and proficiency level “promotion.”
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Employee Engagement
Key to our employee development efforts is the ability of our leaders to keep employees engaged in our hybrid work
structure. As we returned to the physical workplace in greater numbers in 2022, we reinforced the leadership skills of people
leaders to help meet the need for adaptive leadership in a hybrid world. These tools and resources supported our leaders through
this transition and as they transformed their teams through the NWOW transition and pivoted towards data-driven management.
They also ensured our employees remained engaged, even when performing work remotely in our hybrid working structure.
Recognizing the importance of in-person collaboration and innovation, which are major drivers of success in our
organization, we emphasized programming to enable our employees to socialize and collaborate with colleagues. Employee
engagement surveys cited these as the top two benefits of returning to the office. We also enhanced our recognition efforts by
embedding recognition in the employee life cycle. We found that these efforts made our employees feel valued, which created a
retention benefit.
As we strive to continuously listen, learn and adapt, we execute a multi-channeled employee listening strategy, including
pulse surveys and ad-hoc focus groups as we measure our culture and amplify the valued voice our people.
Compensation and Benefits
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 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. We offer many resources designed to support employees in their family life,
including child and elder care support, college coaching and tutoring services and adoption support.
Health and Safety
As we enter a fourth year of COVID-19 in the workplace, we are committed to the health and safety of our employees,
financial professionals and their families. Subject matter experts meet regularly to assess current CDC output and guidelines,
establish or update policy and maintain an internal communication hub, which remains our primary source of information.
Our corporate locations, as well as our retail branches, are open and available for use. As part of our hybrid work
environment, employees are engaging in more in-person events or defined schedules via a leader-led methodology. Our model
is a flexible, leader-led approach, where we value the power of in-person connection and celebrate the benefits of being able to
work remotely. This hybrid strategy has been well received and has become part of our overall talent and retention strategy.
We have maintained 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-19 updates and answered
employees’ questions. As an on-going benefit, we continue with our 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.
Specific to our engagement, we continue to offer complimentary membership to an online tutoring service during the
school year. Our suite of resources, designed to support employees in their family life, also continues to include child and elder
care support through Bright Horizons, College Coach, financial wellness, health wellness, adoption support, family and medical
leave and paid parental leave of between 8 and 16 weeks. 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.
While we continue to make progress, benchmark with our peers, and maintain a direct line of communication with our
colleagues, we also recognize the landscape continues to shift. At Equitable, we remain committed to understanding these
shifts, and to pivoting while balancing the needs of the business, with the safety of our employees.
Equitable Foundation
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Equitable Foundation directs the Company’s philanthropic and volunteer activities. 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.
We believe the best way to achieve our aspirations is through programs that drive greater impact by simultaneously (i)
focusing our efforts around key areas and geographies, while also (ii) harnessing our biggest systems including Equitable’s
General Account, our $100 million endowment, Equitable Foundation, and the power of our people. Our key focus areas and
aspirations include the following:
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College access and career advancement – We aspire to provide programmatic support, scholarships, and social capital
to empower students and educators to reach their full potential.
Healthy and vibrant communities – We aspire to help drive community vitality, support social causes, and advance
social and economic mobility.
Equity and opportunity – deliver programs to help foster greater equity and opportunity within the communities where
we live and work.
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 2022, Equitable
Foundation matched over $1.2 million to nonprofits directed by our employees and financial professionals.
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 its clients around the world. The intellectual capital and distinctive knowledge of AB’s
employees are collectively the most important assets of AB, so the long-term sustainability and success of AB is heavily
dependent on its people. In 2022, AB’s human capital and administrative services teams became its "People" team, a key
acknowledgement of the central role they play in supporting AB’s employees and advancing their work experience. AB is
keenly focused on:
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fostering an inclusive culture by incorporating diversity, equity 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.
As a result, we have a strong firm culture that helps us maximize performance and drive excellence. Further, our firm’s role
as a fiduciary is embedded in our culture. As a fiduciary, our firm’s primary objective is to act in our clients' best interests and
help them reach their financial goals.
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 talent
acquisition associates focused on recruiting, and AB has implemented various people-related initiatives to develop and provide
for a balanced workforce. Additionally, AB offers internship programs for students to work in positions across functional areas
of the firm, and an important part of AB’s emerging talent and post-graduate recruitment strategy is to convert a high
percentage of AB’s interns into full-time employees.
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Employee Engagement
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 AB’s 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 AB’s 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,
including AB’s firm- wide philanthropic initiative, AB Gives Back. Other initiatives in support of these objectives include a
five-year refresh award, whereby employees receive two additional weeks off for every five years of service. In addition, AB
utilizes AB Voice, a periodic survey designed to measure employee satisfaction and engagement, allowing AB to identify and
address performance gaps.
Diversity, Equity and Inclusion
AB’s continued commitment to DEI across all facets of AB aligns with broader industry recognition of the workplace as
both a working and learning community. AB believes that AB plays a critical role in empowering its people though purpose and
fostering an inclusive, collaborative environment and equitable culture that allows for connectivity, belonging and success at
every level.
A key element of AB’s ongoing journey has been to adapt as appropriate to evolving DEI industry trends. In 2022, AB
formally incorporated the concept of "equity" into AB’s strategy and team name in an effort to more accurately reflect AB’s
current and anticipated approach.
AB's community engagement efforts have been further integrated under the DEI umbrella. To support AB’s grantee and
community partners, bolster its commitment to its non-profit clients, and add value for its current and future employees, AB’s
approach leverages four programs under the "AB Gives Back" brand: philanthropy, volunteering, board participation and gift
matching. Some highlights include improved student attendance and financial literacy in inner city neighborhoods and over
3,000 employee volunteer hours completed in 2022.
AB has enhanced its talent attraction and retention approach to position AB as an employer of choice and increase
investment in its people. AB has developed a diverse talent strategy with a goal of gaining a deeper understanding of the needs
of diverse talent and also equipping managers with the necessary tools to effectively manage an increasingly diverse workforce.
The strategy includes incorporating the concept of inclusive leadership into the firm-wide leadership development curriculum
and providing opportunities to build relationships across the firm at all levels.
Finally, AB’s people remain its top priority. Over the course of the last year, there has been a continued focus on education
and deepening engagement across all pillars of AB’s 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 and personal wellness, and raising awareness for various
underrepresented communities.
Compensation and Benefits
AB consistently invests 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 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 AB’s employees directly with the interests of AB’s Unitholders and indirectly with the interests of its
clients, as strong performance for AB’s clients generally contributes directly to increases in AUM and improved financial
performance for the firm.
Health, Safety and Flexibility of AB’s Workforce
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During 2020, at the onset of COVID-19, AB mobilized to ensure the health and safety of its employees globally. 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. Then, while continuing to closely monitor COVID-19 related conditions
globally, AB developed return-to-office programs tailored locally, so that employees could feel safe knowing that their health,
and the health of their families, were a priority. This meant a staggered return to the office so that AB could monitor data while
complying with local ordinances.
Beginning in July 2021, in the U.S. AB returned to the office three days a week, alternating weeks through the end of 2021.
In early 2022, while most of AB’s employees returned to the office full-time, AB offered employees the ability to work
remotely up to two days per week given the ability and diligence AB’s employees demonstrated while working remotely. By
the end of 2022, all employees had returned to the office utilizing a hybrid work schedule, including the flexibility to work
remotely up to two days per week. AB believes this approach allows AB’s employees to maintain the important benefits of in-
person collaboration while providing greater work-life balance.
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
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 continue to impact economic conditions and consumer confidence. These factors
include, among others, concerns over resurgences of COVID-19 and consumer and government reactions thereto, the potential
of a U.S. government default, increased volatility in the capital markets, equity market declines, rising interest rates,
inflationary pressures fueling concerns of a potential recession, plateauing or decreasing economic growth, high fuel and energy
costs and changes in fiscal or monetary policy. The Russian invasion of the Ukraine and the sanctions and other measures
imposed in response to this conflict have significantly increased the level of volatility in the financial markets and have
increased the level of economic and political uncertainty. 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.
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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 our AUM, the AV of our annuity and variable life contracts, or
AUA, 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.
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:
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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;
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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; and
rising interest rates could cause our statutory interest maintenance reserve to become negative which could impact our
capital and liquidity.
The coronavirus (COVID-19) pandemic.
The COVID-19 pandemic has negatively impacted the U.S. and global economies. Over the last few years, 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. As businesses and schools have reopened, many have restricted or limited access. Although pandemic-related
restrictions have been lifted in many places, resurgences of COVID-19 in various regions and appearances of new variants of
the virus, has resulted, and may continue to result, in their full or partial reinstitution. In addition, although many countries have
vaccinated large segments of their population, COVID-19 continues to interrupt business activities and trade in many countries,
which has caused a significant impact on the economies and financial markets of many countries including an economic
downturn. We expect these impacts to continue for the foreseeable future. While we have implemented risk management and
contingency plans with respect to COVID-19, such measures may not adequately protect our business from the full impacts of
the pandemic. For additional information about COVID-19, see “Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Macroeconomic and Industry Trends - COVID-19 Impact.
The extent of COVID-19’s impact on us will depend on future developments that are still highly uncertain, including the
severity and duration of future outbreaks, actions taken by governments and other third parties in response to such outbreaks
and the availability and efficacy of vaccines against COVID-19 and its variants.
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
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.
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In addition, one of the most serious threats facing the U.S. economy is the disagreement over the federal debt limit which,
if not addressed in the coming months, could lead to a default on the federal debt, adverse market impact and a recession this
year.
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
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.
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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 obligations to report such misconduct publicly, regulatory
enforcement proceeds and, even findings that violations of law were committed by us or our subsidiaries, regulatory sanctions
or serious reputational or financial harm. Certain types of violations may result in our inability to act as an investment adviser
or broker-dealer or to represent issuers in Regulation D offerings by acting as placement agent, general partner or other roles.
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, reinsurance, 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 the 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.
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.
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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.
Further, because, beginning in January 2022, U.S. banks would no longer extend loans based on LIBOR, new lines of credit we
enter into since then have been benchmarked to a new benchmark rate, which has typically been the SOFR. SOFR is the
average rate at which institutions can borrow U.S. dollars overnight while posting U.S. Treasury bonds as collateral. SOFR is
published by the New York Federal Reserve Bank. Given 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 have now completed the process of either disposing of
the instrument or negotiating a fallback rate. There is no assurance that the alternative rates we negotiate will not be materially
less favorable than the previous, LIBOR-based rate.
Increasing scrutiny and evolving expectations regarding ESG matters.
There is increasing scrutiny and evolving expectations from investors, customers, regulators and other stakeholders on ESG
practices and disclosures, including those related to environmental stewardship, climate change, diversity, equity and inclusion,
racial justice and workplace conduct. Legislators and regulators have imposed and likely will continue to impose ESG-related
legislation, rules and guidance, which may conflict with one another and impose additional costs on us, impede our business
opportunities or expose us to new or additional risks. For example, the SEC has proposed new ESG reporting rules, including
relating to climate change, which, if adopted as proposed, could result in additional compliance and reporting costs. See
“Business—Regulation—Climate Risks.” In addition, state attorneys general and other state officials have spoken out against
ESG motivated investing by some investment managers and terminated contracts with managers based on their following
certain ESG-motivated strategies. Moreover, proxy advisory firms that provide voting recommendations to investors have
developed ratings for evaluating companies on their approach to different ESG matters, and unfavorable ratings of our company
or our industry may lead to negative investor sentiment and the diversion of investment to other companies or industries. If we
are unable to meet these standards or expectations, whether established by us or third parties, it could result in adverse publicity,
reputational harm, or loss of customer and/or investor confidence, which could adversely affect our business, results of
operations, financial condition and liquidity.
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
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obligations. Defaults by one or more of these parties could have a material adverse effect on our business, results of operations
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.
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. 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.
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
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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
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
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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 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 pay 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
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 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,
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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 needs 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’s insurance laws 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 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.
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
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
64
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
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.
65
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, service changes and interest rate changes. 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, 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
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
66
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. Finally, extensive changes proposed by the SEC to the equity market
structure, including Regulation Best Execution, the proposed Order Competition Rule and proposed changes to Regulation
NMS established, among other things, minimum pricing increments and requiring disclosures by larger broker-dealers and
specified trading platforms, if adopted as proposed, could substantially increase the cost of conducting AB’s buy-side and
broker-dealer operations and, possibly, adversely impact trade execution quality.
AB may be unable to develop new products and services, and the development of new products and services may expose AB
to reputational harm, additional costs or operational risk.
AB’s financial performance depends, in part, on its ability to react nimbly to changes in the asset management industry,
respond to evolving client needs, and develop, market and manage new investment products and services. Conversely, the
development and introduction of new products and services, including the creation of products with concentrations in industries
or sectors specific to individual client criteria, or with a focus on ESG, requires continuous innovative effort on AB’s part and
may require significant time and resources as well as ongoing support and investment. Substantial risk and uncertainties are
associated with the introduction of new products and services, including the implementation of new and appropriate operational
controls and procedures, shifting client and market preferences, the introduction of competing products or services, and
compliance with regulatory and disclosure requirements.
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.
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
fundamental research. These models are developed by senior quantitative professionals and typically are implemented by IT
67
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
(applicable state and local) corporate income tax on its net income. Further, unitholders would be subject to federal (and
applicable state and local) taxes upon receipt of dividends.
Legal and Regulatory Risks
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 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.
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
68
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 proposed, imposed and may continue to impose new requirements or issue new guidance aimed
at addressing or mitigating climate change-related risks and further regulating the industries in which we operate. For example,
the SEC recently proposed amendments to Rule 22e-4 under the Investment Company Act, which was itself only recently
implemented, that would impose substantial new costs on top of those recently spent by us to comply with the rule. Other SEC
proposals relating to registered funds, such as proposed amendments to Rule 22c-1 of the Investment Company Act, would
require adoption of “swing pricing” and a “hard close” by all open-end funds other than money market funds, which could
substantially increase the operating costs associated with our funds and potentially adversely impact the appeal of the products
to certain investors.. These emerging regulatory initiatives 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 and regulatory actions pending against us, see Note 17 of the Notes to the Consolidated Financial Statements.
Certain provisions in our certificate of incorporation and by-laws.
Risks Relating to Our Common Stock
Our second amended and restated certificate of incorporation and our sixth 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 second amended and restated certificate of incorporation and amended and
sixth 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 second 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
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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 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.
None.
Part I, Item 2.
UNRESOLVED STAFF COMMENTS
PROPERTIES
Our principal executive offices at 1290 Avenue of the Americas, New York, NY are occupied pursuant to a lease that
extends through 2023. We have entered into a 15-year lease agreement in New York, NY at 1345 Avenue of the Americas that
is expected to commence in 2023. We also have significant office space leases as follows: in Syracuse, NY, we occupy space
under a lease that was scheduled to expire in 2023, but which was amended to extend a portion of the space through 2028; in
Jersey City, NJ, we occupy space under a lease that expires in 2023 and will not be extended or replaced; and in Charlotte, NC,
we occupy space 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,
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NY pursuant to a lease expiring in 2024 that will be replaced by a 20-year lease agreement in New York, NY at 66 Hudson
Boulevard that is expected to commence in 2024. AB also leases space in San Antonio, TX under a lease expiring in 2029.
Part I, Item 3.
For information regarding certain legal proceedings pending against us, see Note 17 of the Notes to the Consolidated
Financial Statements. See “Risk Factors—Legal and Regulatory Risks—Legal proceedings and regulatory actions.”
LEGAL PROCEEDINGS
Part I, Item 4.
Not Applicable.
Part II, Item 5.
MINE SAFETY DISCLOSURES
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, 2023, there were ten 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.
Equity Compensation Plan
For information regarding our equity compensation plan, see “Security Ownership of Certain Beneficial Owners and
Related Stockholder Matters”—“Equity Compensation Plan Information.”
Purchases of Equity Securities by the Issuer
The following table summarizes Holdings’ repurchases of its common stock during the three months ended December 31,
2022.
Period
Month #1 (October 1-31)
Month #2 (November 1-30)
Month #3 (December 1-31)
Total
Total Number of Shares
(or Units) Purchased
Average Price Paid per
Share (or Unit)
Total Number of Shares
(or Units) Purchased as
Part of Publicly
Announced Programs
Approximate Dollar
Value of Shares (or
Units) that May Yet Be
Purchased Under the
Program (1)
— $
2,067,601 $
2,963,165 $
5,030,766 $
—
30.36
29.23
29.69
— $
2,067,601 $
2,963,165 $
5,030,766 $
526,909,756
470,861,960
372,048,651
372,048,651
_____________
(1) See Note 20 of the Notes to the Consolidated Financial Statements for the Share Repurchase program.
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, 2022, the
Company repurchased approximately 5 million shares of its common stock, at a total cost of approximately $149 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, 2022, 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.
May 14,
2018
Dec 31,
2018
Dec 31,
2019
Dec 31,
2020
Dec 31,
2021
Dec 31,
2022
Equitable Holdings, Inc.
S&P 500
S&P 500 Financials
S&P 500 Insurance
$
$
$
$
100.00
100.00
100.00
100.00
$
$
$
$
78.71
93.08
85.59
91.70
$
$
$
$
120.53 $
127.79
122.39 $
144.74
113.09 $
111.13
118.64 $
118.38
$
$
$
$
169.33 $
151.10
183.22 $
152.62
150.98 $
133.96
155.02 $
170.53
72
Period EndingIndex Value[Cumulative Total Return Based upon an initial investment of $100 on May 14, 2018]Equitable Holdings, Inc.S&P 500 S&P 500 Financials S&P 500 Insurance May 14, 2018Dec 31, 2018Dec 31, 2019Dec 31, 2020Dec 31, 2021Dec 31, 2022$60$80$100$120$140$160$180$200 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 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, 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 the 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.
Global Atlantic Reinsurance Transaction
On October 3, 2022, Equitable Financial completed the transactions (the “Global Atlantic Transaction”) contemplated by
the previously announced Master Transaction Agreement, dated August 16, 2022, by and between Equitable Financial and First
Allmerica Financial Life Insurance Company, a Massachusetts-domiciled insurance company (the “Reinsurer”), a wholly
owned subsidiary of Global Atlantic Financial Group.
At the closing of the Global Atlantic Transaction, Equitable Financial and the Reinsurer entered into a Coinsurance and
Modified Coinsurance Agreement (the “EQUI-VEST Reinsurance Agreement”), pursuant to which Equitable Financial ceded
to the Reinsurer, on a combined coinsurance and modified coinsurance basis, a 50% quota share of approximately 360,000
legacy Group EQUI-VEST deferred variable annuity contracts issued by Equitable Financial between 1980 and 2008, which
predominately include Equitable Financial’s highest guaranteed general account crediting rates of 3%, supported by general
account assets of approximately $4 billion and $5 billion of separate account value (the “Reinsured Contracts”). At the closing
of the Global Atlantic Transaction, Reinsurer deposited assets supporting the general account liabilities relating to the
Reinsured Contracts into a trust account for the benefit of Equitable Financial, which assets will secure its obligations to
Equitable Financial under the EQUI-VEST Reinsurance Agreement. Commonwealth Annuity and Life Insurance Company, an
insurance company domiciled in the Commonwealth of Massachusetts and affiliate of Reinsurer (“Commonwealth”), provided
a guarantee of Reinsurer’s payment obligation to Equitable Financial under the EQUI-VEST Reinsurance Agreement.
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, among
others, concerns over resurgences of COVID-19, increased volatility in the capital markets, equity market declines, rising
interest rates, inflationary pressures fueling concerns of a potential recession, plateauing or decreasing economic growth, high
fuel and energy costs, changes in fiscal or monetary policy and geopolitical tensions. The invasion of the Ukraine by Russian
and the sanctions and other measures imposed in response to this conflict significantly increased the level of volatility in the
financial markets and have increased the level of economic and political uncertainty.
73
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. In addition, our insurance liabilities and
derivatives are sensitive to changing market factors, including equity market performance and interest rates, which are
anticipated to continue to rise in 2023 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 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 “Risk Factors - Risks Relating to Conditions in the Financial Markets and Economy” and “Quantitative and
Qualitative Disclosures About Market Risk.”
COVID-19 Impact
COVID-19 continues to evolve, and we continue to closely monitor developments and the impact on our business,
operations and investment portfolio. Although COVID-19 restrictions, including temporary business and school closures have
been lifted in many places, resurgences of COVID-19 in various regions and appearances of new variants of the virus, has
resulted, and may continue to result, in their full or partial reinstitution. In addition, although many countries have vaccinated
large segments of their population, COVID-19 continues to interrupt business activities and trade in many countries, which has
caused a significant impact on the economies and financial markets of many countries including an economic downturn. We
expect these impacts to continue for the foreseeable future, which could adversely affect demand for our products and services
and our investment returns. Indeed, 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 factors such as the volatility and
strength of equity markets, interest rates, consumer spending, and government debt and spending.
In response to the various pandemic related restrictions over the last few years we have adapted our processes to meet
client needs. For example, we offer our modified underwriting policies with 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. We further developed digital tools and enhanced our remote engagement, which is resulting
in improved retention and increases in retirement plan contributions. As businesses and the economy continue to return to pre-
pandemic activity levels, we believe we can continue to leverage our digital enhancements to continue to grow our business,
even as we return to in-person engagement and sales.
While COVID-19 significantly affected the capital markets and economy, we believe we have taken the appropriate actions
to help assure that our economic balance sheet is protected from 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.
The extent and nature of COVID-19’s full negative financial impact on our business cannot reasonably be estimated at this
time due to developments that are still highly uncertain, including the severity and duration of future outbreaks, actions taken
by governmental authorities and other third parties in response to such outbreaks and the availability and efficacy of vaccines
against COVID-19 and its variants. For additional information regarding the potential impacts of COVID-19, see “Risk Factors
—Risks Relating to Conditions in the Financial Markets and Economy—The coronavirus (COVID-19) pandemic.”
74
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.”
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.
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
75
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
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) is based on differing
76
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 the 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 years ended December 31, 2022, 2021 and
2020 to our income (loss) from continuing operations, before income taxes and net income (loss).
Impact of assumption update on Net income (loss):
Variable annuity product features related assumption update
Assumption updates for other business
Impact of assumption updates on Income (loss) from continuing operations,
before income tax
Income tax benefit on assumption update
Net income (loss) impact of assumption update
2022 Assumption Updates
Year Ended December 31,
2022
2021
2020
(in millions)
$
$
175 $
7
182
(38)
144 $
(91) $
(17)
(108)
23
(85) $
(1,531)
(1,060)
(2,591)
544
(2,047)
The impact of the economic assumption update during 2022 was an increase of $182 million to income (loss) from
continuing operations, before income taxes and an increase to net income (loss) of $144 million.
The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $182
million, consisted of a decrease in policy charges and fee income of $23 million, a decrease in policyholders’ benefits of $243
million, an increase in interest credited to policyholder account balances of $1 million, an increase in net derivative losses of
$80 million and a decrease in the amortization of DAC of $43 million.
2021 Assumption Updates
The impact of the economic 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, the
reference interest rate utilized in our U.S. GAAP fair value calculations was updated from the LIBOR swap curve to the US
Treasury curve due to the impending cessation of LIBOR and our U.S. GAAP fair value liability risk margins were increased,
resulting in little impact to overall valuation as our view regarding market participant pricing of our guarantees has not changed
at this time.
77
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.
Model Changes
There were no material model changes during 2022 and 2021.
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 2022,
2021 and 2020 by segment and Corporate and Other.
Impact of assumption updates by segment:
Individual Retirement
Group Retirement
Protection Solutions
Impact of assumption updates on Corporate and Other
Total impact on pre-tax Non-GAAP Operating Earnings
2022 Assumption Updates
Year Ended December 31, (1)
2022
2021
2020
$
$
(13) $
34
7
—
28 $
(47) $
35
20
—
8 $
(28)
(3)
4
(12)
(39)
The impact of our 2022 annual review on Non-GAAP operating earnings was favorable by $28 million before taking into
consideration the tax impacts or $22 million after tax. For Individual Retirement segment, the impacts primarily reflect updated
78
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 decreased Policy charges and fee income by $23
million, decreased Policyholders’ benefits by $9 million, and decreased Amortization of DAC by $43 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.
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 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 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.
Productivity Strategies
Retirement and Protection Businesses
As part of our continuing efforts to drive productivity improvements, in January 2021, we began a new program expected
to achieve $80 million of targeted run-rate expense savings by 2023, of which $50 million has been achieved as of December
31, 2022. We expect to achieve these savings by shifting our workforce into an agile working model, leveraging technology-
enabled capabilities, optimizing our real estate footprint, and continuing to realize a portion of COVID-19 related savings.
Investment Management and Research Business
As previously announced, AB has established its corporate headquarters in Nashville, Tennessee and relocated
approximately 1,063 jobs from the New York metro area. Beginning in 2025, AB estimates ongoing annual expense savings of
approximately $75 million to $80 million, which will result from a combination of occupancy and compensation-related
savings.
79
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, and Non-GAAP 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-GAAP financial measures, together with relevant U.S. GAAP measures, provide 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.
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 variable 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; (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; and (iv) DAC amortization for the SCS variable annuity product arising from near-
term fluctuations in index segment returns;
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, lease write-offs
related to non-recurring restructuring activities, 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 and realized capital gains/losses from sales or disposals of select
securities, certain legal accruals; and a bespoke deal to repurchase UL policies from one entity that had invested in
numerous policies purchased in the life settlement market, which disposed of the risk of additional COI litigation by
that entity related to those UL policies; 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.
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.
80
We use the prevailing corporate federal income tax rate of 21% 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.
The table below presents a reconciliation of net income (loss) attributable to Holdings to Non-GAAP Operating Earnings for
the years ended December 31, 2022, 2021 and 2020:
Net income (loss) attributable to Holdings
Adjustments related to:
Variable annuity product features (1)
Investment (gains) losses
Net actuarial (gains) losses related to pension and other
postretirement benefit obligations
Other adjustments (2) (3) (4) (5)
Income tax expense (benefit) related to above adjustments (6)
Non-recurring tax items (7)
Non-GAAP Operating Earnings
$
Year Ended December 31,
2022
2021
(in millions)
2020
$
1,785 $
(439) $
(648)
(1,315)
945
82
552
(56)
16
2,009 $
4,145
(867)
120
717
(864)
13
2,825 $
3,912
(744)
109
952
(888)
(391)
2,302
___________
(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.
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.
Includes separation costs of $82 million and $108 million for the years ended December 31, 2021 and 2020, respectively. Separation
costs were completed during 2021.
Includes Non-GMxB related derivative hedge losses of ($34) million, $65 million and ($404) million for the years ended December
31, 2022, 2021 and 2020, respectively.
Includes certain gross legal expenses related to the cost of insurance litigation and claims related to a commercial relationship of $218
million and $207 million for the year ended December 31, 2022 and 2021, respectively. Includes policyholder benefit costs of $75
million for the year ended December 31, 2022.
Includes income taxes of ($554) million for the above related COVID-19 items for the year ended December 31, 2020.
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.
(2)
(3)
(4)
(5)
(6)
(7)
Non-GAAP Operating ROE
We calculate Non-GAAP Operating ROE by dividing Non-GAAP Operating Earnings for the previous twelve calendar
months by consolidated average equity attributable to Holdings’ common shareholders, excluding AOCI. 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 AFS securities. Therefore, we believe excluding
AOCI is more effective for analyzing the trends of our operations.
The following table presents return on average equity attributable to Holdings’ common shareholders, excluding AOCI and
Non-GAAP Operating ROE for the year ended December 31, 2022.
Net income (loss) available to Holdings’ common shareholders
Average equity attributable to Holdings’ common shareholders, excluding AOCI
Return on average equity attributable to Holdings’ common shareholders, excluding AOCI
Non-GAAP Operating Earnings available to Holdings’ common shareholders
Average equity attributable to Holdings’ common shareholders, excluding AOCI
Non-GAAP Operating ROE
81
Year Ended December
31, 2022
(in millions)
$
$
$
$
1,705
9,088
18.8 %
1,929
9,088
21.2 %
Non-GAAP Operating Common EPS
Non-GAAP operating common EPS is calculated by dividing Non-GAAP Operating Earnings by diluted common shares
outstanding. The following table sets forth Non-GAAP operating common EPS for the years ended December 31, 2022, 2021
and 2020.
2022
Year Ended December 31,
2021
(per share amounts)
2020
Net income (loss) attributable to Holdings (1)
$
Less: Preferred stock dividends
Net income (loss) available to Holdings’ common shareholders
Adjustments related to:
Variable annuity product features (2)
Investment (gains) losses
Net actuarial (gains) losses related to pension and other
postretirement benefit obligations
Other adjustments (3) (4) (5) (6)
Income tax expense (benefit) related to above adjustments (7)
Non-recurring tax items (8)
Non-GAAP operating earnings
$
4.70 $
0.21
4.49
(3.46)
2.49
0.22
1.45
(0.15)
0.04
5.08 $
(1.05) $
0.19
(1.24)
9.93
(2.08)
0.29
1.72
(2.07)
0.03
6.58 $
(1.44)
0.12
(1.56)
8.68
(1.65)
0.24
2.12
(1.97)
(0.87)
4.99
______________
(1) For periods presented with a net loss, basic shares was used for the years ended December 31, 2022, 2021 and 2020.
(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.
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.
Includes separation costs of $0.20 and $0.24 for the years ended December 31, 2021 and 2020, respectively. Separation costs were
completed during 2021.
Includes Non-GMxB related derivative hedge losses of ($0.09), $0.14 and ($0.90) for the years ended December 31, 2022 and 2021,
respectively.
Includes certain gross legal expenses related to the cost of insurance litigation and claims related to a commercial relationship of $0.57
and $0.50 for the years ended December 31, 2022 and 2021, respectively. Includes policyholder benefit costs of $0.20 for the year ended
December 31, 2022 stemming from a deal to repurchase UL policies from one entity that had invested in numerous policies purchased in
the life settlement market. No adjustments were made to prior period non-GAAP operating EPS as the impact was immaterial.
Includes income taxes of ($1.23) for the above related COVID-19 items for the year ended December 31, 2020.
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.
(3)
(4)
(5)
(6)
(7)
(8)
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 Accounts 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
Equitable 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
82
Protection Solutions Reserves
Protection Solutions reserves equals the aggregate value of policyholders’ account balances and future 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 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 average economic interest in AB was approximately 64%, 65% and 65% for the years ended December 31, 2022, 2021
and 2020 respectively. The slight decrease was due to the issuance of AB Units relating to AB’s 100% acquisition of CarVal
Investments L.P. (“CarVal”). On July 1, 2022, AB issued 3.2 million AB Units (with a fair value of $133 million) with the
remaining 12.1 million AB units (with a fair value of $456 million) issued on November 1, 2022. AB also recorded a contingent
consideration payable of $229 million (to be paid predominantly in AB Units) based on CarVal achieving certain performance
objectives over a six-year period ending December 31, 2027.
Consolidated Results of Operations
The following table summarizes our consolidated statements of income (loss) for the years ended December 31, 2022, 2021
and 2020:
Consolidated Statement of Income (Loss)
Year Ended December 31,
2022
2021
2020
(in millions, except per share data)
$
3,241 $
994
1,696
3,315
3,637 $
960
(4,465)
3,846
3,735
997
(1,722)
3,477
(314)
(631)
(945)
4,891
825
14,017
2
866
868
5,395
795
11,036
(58)
802
744
4,608
576
12,415
REVENUES
Policy charges and fee income
Premiums
Net derivative gains (losses)
Net investment income (loss)
Investment gains (losses), net:
Credit losses on available-for-sale debt securities and loans
Other investment gains (losses), net
Total investment gains (losses), net
Investment management and service fees
Other income
Total revenues
83
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
Interest credited to policyholders’ account balances
Compensation and benefits
Commissions and distribution-related payments
Interest expense
Amortization of deferred policy acquisition costs
Other operating costs and expenses
Total benefits and other deductions
Income (loss) from continuing operations, before income taxes
Income tax (expense) benefit
Net income (loss)
Less: Net income (loss) attributable to the noncontrolling interest
Net income (loss) attributable to Holdings
Less: Preferred stock dividends
Year Ended December 31,
2022
2021
2020
(in millions, except per share data)
3,385
1,409
2,199
1,567
201
542
2,189
11,492
2,525
(499)
2,026
241
1,785
80
3,218
1,219
2,360
1,662
244
393
2,109
11,205
(169)
145
(24)
415
(439)
79
5,326
1,222
2,096
1,351
200
1,613
1,700
13,508
(1,093)
744
(349)
299
(648)
53
Net income (loss) available to Holdings’ common shareholders
$
1,705 $
(518) $
(701)
EARNINGS PER COMMON SHARE
Net income (loss) applicable to Holdings’ common shareholders per common share:
Basic
Diluted
Weighted average common shares outstanding (in millions):
Basic
Diluted
Non-GAAP Operating Earnings
$
$
4.52 $
4.49 $
(1.24) $
(1.24) $
(1.56)
(1.56)
377.6
379.9
417.4
417.4
450.4
450.4
Year Ended December 31,
2022
2021
(in millions)
2020
$
2,009 $
2,825 $
2,302
The following table summarizes our Non-GAAP Operating Earnings per common share for the years ended December 31,
2022, 2021 and 2020:
Non-GAAP operating earnings per common share:
Basic
Diluted
Year Ended December 31,
2022
2021
2020
$ 5.11
$ 5.08
$ 6.58
$ 6.58
$ 4.99
$ 4.99
84
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021
Net Income Attributable to Holdings
Net income attributable to Holdings increased by $2.2 billion to a net income of $1.8 billion for the year ended December
31, 2022 from a net loss of $439 million for the year ended December 31, 2021. The following notable items were the primary
drivers for the change in net income (loss):
Favorable items included:
•
•
•
•
Net derivative gains increased $6.2 billion from a $4.5 billion loss in prior period driven by reduced interest rate
derivative positions and equity market depreciation during 2022 as compared to equity market appreciation in 2021.
Compensation, benefits and other operating expenses decreased by $81 million mainly due to lower fund expenses as a
result of lower average assets due to the Venerable Transaction, lower separation expenses, lower legal reserve
accruals, reduced compensation & benefits and continued improvement from our efficiency program partially offset by
higher general and administrative expenses in our Investment Management and Research segment and unfavorable
COLI impacts related to 2022 equity market depreciation.
Commissions and distribution-related payments decreased by $95 million mainly due to lower payments to financial
intermediaries for the distribution of AB mutual funds in our Investment Management and Research segment, lower
AV in our Individual Retirement segment related to equity market depreciation during 2022 partially offset by higher
sales of Employee Benefits products in our Protection Solutions segment.
Net income attributable to noncontrolling interest decreased by $174 million mainly due to losses from AB’s
consolidated VIEs and lower AB pre-tax income.
These were partially offset by the following unfavorable items:
•
•
•
•
•
•
•
Investment gains decreased by $1.8 billion mainly due to rebalancing in the General Account portfolio associated with
the Venerable Transaction in 2021 and Global Atlantic Transaction in 2022 and the duration program during 2022.
Fee-type revenue decreased by $836 million mainly driven by lower fees primarily from our Individual Retirement
segment as a result of lower average Separate Accounts AV due to lower equity markets and the impact of AV ceded
to Venerable and lower fees in our Investment Management and Research segment.
Net investment income decreased by $531 million mainly due to lower alternative investment income, lower assets due
to the Venerable and Global Atlantic transactions, and lower income from seed capital investments (offset by hedging
gains in derivatives), partially offset by higher income from floating rate securities, higher SCS asset balances and GA
optimization.
Interest credited to policyholders’ account balances increased by $190 million mainly due to increased interest rates
and average outstanding amounts of funding agreements and growth of SCS AV during 2022.
Policyholders’ benefits increased by $167 million mainly due to equity market depreciation during 2022 compared to
equity market appreciation during 2021 (offset in Net Derivative gains), higher claims in Individual Retirement
segment and higher life mortality net of PFBL reserve accruals partially offset by the impact of the Venerable
Transaction on the GMxB reserve accrual.
Amortization of DAC increased by $149 million mainly due to equity market depreciation and less favorable
assumption updates during 2022 compared to 2021.
Income tax expense increased by $644 million primarily due to pre-tax income in the year ended 2022 compared to a
pre-tax loss in the year ended 2021, and a higher effective tax rate in the year ended 2022.
See “—Significant Factors Impacting Our Results—Effect of Assumption Updates on Operating Results” for more
information regarding assumption updates.
Non-GAAP Operating Earnings
Non-GAAP Operating Earnings decreased by $816 million to $2.0 billion for the year ended December 31, 2022 from $2.8
billion in the year ended December 31, 2021. The following notable items were the primary drivers for the change in Non-
GAAP Operating Earnings.
85
Unfavorable items included:
• Fee-type revenue decreased by $852 million mainly driven by lower fees primarily from our Individual Retirement
segment as a result of lower average Separate Accounts AV due to lower equity markets and the impact of AV
ceded to Venerable and lower fees in our Investment Management and Research segment.
• Net investment income decreased by $410 million mainly due to lower alternative investment income, lower assets
due to the Venerable and Global Atlantic transactions, and lower income from seed capital investments (offset by
hedging gains in derivatives) partially offset by higher income from floating rate securities, higher SCS asset
balances and GA optimization.
• Policyholders’ benefits increased by $412 million mainly due to the equity market depreciation during 2022
compared to equity market appreciation during 2021 (offset in Net Derivative gains), higher claims in Individual
Retirement segment and higher life mortality net of PFBL reserve accruals, partially offset by the impact of the
Venerable Transaction on the GMxB reserve accrual.
• Interest credited to policyholders’ account balances increased by $190 million mainly due to increased interest rates
and average outstanding amounts of funding agreements and growth of SCS AV during 2022.
• Amortization of DAC increased by $98 million mainly due to equity market depreciation and less favorable
assumption updates during 2022 compared to 2021.
These were partially offset by the following favorable items:
• Net derivative gains increased $742 million from a $208 million loss in the prior period mainly due to equity market
depreciation (offset in Policyholders’ benefits) during 2022.
• Commissions and distribution-related payments decreased by $95 million mainly due to lower payments to financial
intermediaries for the distribution of AB mutual funds in our Investment Management and Research segment, lower
AV in our Individual Retirement segment related to equity market depreciation during 2022 partially offset by
higher sales of Employee Benefits products in our Protection Solutions segment.
• Earnings attributable to the noncontrolling interest decreased by $89 million mainly due to lower pre-tax Operating
earnings in our Investment Management and Research segment.
• Compensation, benefits and other operating costs and expenses decreased by $42 million mainly due to lower fund
expenses as a result of lower average assets due to the Venerable Transaction, lower legal accruals, reduced
compensation & benefits and continued improvement from our efficiency program partially offset by higher general
and administrative expenses in our Investment Management and Research segment and unfavorable COLI impacts
related to 2022 equity markets.
• Income tax expense decreased by $158 million mainly driven by lower pre-tax earnings, partially offset by a higher
effective tax rate.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020
Net Income Attributable to Holdings
For discussion that compares results for the year ended December 31, 2021 to the year ended December 31, 2020 refer to
the MD&A section in our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”).
Non-GAAP Operating Earnings
For discussion that compares results for the year ended December 31, 2021 to the year ended December 31, 2020 refer to
the MD&A section in our 2021 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 the
Consolidated Financial Statements for further information on our segments.
86
The following table summarizes operating earnings (loss) on our segments and Corporate and Other for the years ended
December 31, 2022, 2021 and 2020:
Operating earnings (loss) by segment:
Individual Retirement
Group Retirement
Investment Management and Research
Protection Solutions
Corporate and Other
Non-GAAP Operating Earnings
Effective Tax Rates by Segment
Year Ended December 31,
2022
2021
2020
(in millions)
$
$
1,140 $
525
424
179
(259)
2,009 $
1,444 $
631
564
317
(131)
2,825 $
1,536
491
432
146
(303)
2,302
For 2022, 2021 and 2020 Income tax expense was allocated to the Company’s business segments using a 19%, 17% and
16% ETR respectively, for our retirement and protection businesses (Individual Retirement, Group Retirement, and Protection
Solutions) and a 28%, 27% and 27% ETR for Investment Management and Research.
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:
Operating earnings
Year Ended December 31,
2022
2021
2020
(in millions)
$
1,140 $
1,444 $
1,536
87
Key components of operating earnings are:
REVENUES
Policy charges, fee income and premiums
Net investment income
Net derivative gains (losses)
Investment management, service fees and other income
Segment revenues
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
Interest credited to policyholders’ account balances
Commissions and distribution-related payments
Amortization of deferred policy acquisition costs
Compensation, benefits and other operating costs and expenses
Interest expense
Segment benefits and other deductions
Year Ended December 31,
2022
2021
2020
(in millions)
$
$
$
$
1,513 $
1,308
495
604
3,920 $
1,867 $
1,287
(128)
759
3,785 $
1,142 $
373
283
362
358
1
2,519 $
720 $
276
328
303
411
—
2,038 $
2,034
1,246
331
700
4,311
1,207
312
281
299
382
—
2,481
The following table summarizes AV for our Individual Retirement segment as of the dates indicated:
AV (1)
General Account
Separate Accounts
Total AV
(1) AV presented are net of reinsurance.
December 31, 2022
December 31, 2021
(in millions)
$
$
38,748 $
57,011
95,759 $
37,698
74,206
111,904
The following table summarizes a roll-forward of AV for our Individual Retirement segment for the periods presented:
Balance as of beginning of period
Gross premiums
Surrenders, withdrawals and benefits
Net flows (1)
Investment performance, interest credited and policy charges (1)
Ceded to Venerable (2)
Reclassified to Liabilities held for sale
Other (3) (4)
Balance as of end of period
Year Ended December 31,
2022
2021
2020
(in millions)
$ 111,904 $ 117,390 $
11,746
(10,046)
1,700
(17,845)
—
—
—
11,249
(12,143)
(894)
12,316
(16,927)
—
19
$ 95,759 $ 111,904 $
108,922
7,493
(8,622)
(1,129)
9,606
—
(3)
(6)
117,390
______________
(1) For the years ended December 31, 2022 and 2021, net flows of ($312) million and ($830) million and investment performance, interest
credited and policy charges of $689 million and $589 million, respectively, are excluded as these amounts are related to ceded AV to
Venerable.
88
(2) Effective June 1, 2021, AV excludes activity related to ceded AV to Venerable. In addition, 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 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 and $57 million of AV transfer of a closed block of
GMxB business from the Group Retirement Segment to the Individual Retirement Segment.
(4) 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.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Individual Retirement
Segment
Operating earnings
Operating earnings decreased $304 million to $1.1 billion during the year ended December 31, 2022 from $1.4 billion in
the year ended December 31, 2021. The following notable items were the primary drivers of the change in operating earnings:
Unfavorable items included:
•
•
•
Fee-type revenue decreased by $420 million mainly due to lower average Separate Accounts AV as result of lower
equity markets and the impact of AV ceded to Venerable, partially offset by commission reimbursements in Other
Income.
Interest credited to policyholders’ account balances increased by $97 million mainly due to the growth of SCS AV
during 2022.
Amortization of DAC increased by $59 million mainly due to equity market depreciation during 2022 compared to
equity market appreciation in 2021.
These were partially offset by the following favorable items:
•
•
•
◦
•
Net GMxB results increased $92 million primarily due to improved GMxB margin from the Venerable Transaction,
which mitigated the higher claims in 2022. GMxB results are included in policy charges and fee income, net derivative
gains (losses), and policyholders’ benefits.
Compensation, benefits and other operating costs and expenses decreased by $53 million primarily due to lower
compensation related expenses, primarily associated with lower headcount, and lower subadvisory fees.
Commissions and distribution-related payments decreased by $45 million mainly due to lower AV due to equity
market depreciation during 2022.
Net investment income increased by $21 million mainly due to higher income from floating rate securities, higher SCS
asset balances and GA optimization, partially offset by lower alternative investment income, lower prepayments and
lower assets due to the Venerable transaction.
Income tax expense decreased by $42 million mainly driven by lower pre-tax earnings partially offset by a higher
effective tax rate in 2022.
Net Flows and AV
•
•
The decline in AV of $16.1 billion in the year ended December 31, 2022 was driven by a decrease in investments
performance and interest credited to account balances, net of policy charges of $17.8 billion as a result of equity
market depreciation in 2022, partially offset by net inflows of $1.7 billion.
Net inflows of $1.7 billion were $2.6 billion higher than in the year ended December 31, 2021, mainly driven by $3.9
billion of inflows on our newer, less capital-intensive products, partially offset by $2.2 billion of outflows on our older
fixed-rate GMxB block.
89
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 for the Individual Retirement
Segment
Operating earnings
For discussion that compares results for the year ended December 31, 2021 to the year ended December 31, 2020 refer to
the MD&A section in our 2021 Form 10-K.
Net Flows and AV
For discussion on net flows and AV comparative results for the year ended December 31, 2021 to the year ended
December 31, 2020 refer to the MD&A section in our 2021 Form 10-K.
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:
Operating earnings
Key components of operating earnings are:
REVENUES
Policy charges, fee income and premiums
Net investment income
Net derivative (losses) gains
Investment management, service fees and other income
Segment revenues
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
Interest credited to policyholders’ account balances
Commissions and distribution-related payments
Amortization of deferred policy acquisition costs
Compensation, benefits and other operating costs and expenses
Interest expense
Segment benefits and other deductions
Year Ended December 31,
2022
2021
2020
(in millions)
$
525 $
631 $
491
Year Ended December 31,
2022
2021
2020
(in millions)
318 $
624
(25)
256
1,173 $
371 $
752
(19)
268
1,372 $
295
641
1
211
1,148
— $
281
57
12
177
1
528 $
— $
303
56
—
248
—
607 $
2
303
45
21
192
—
563
$
$
$
$
The following table summarizes AV and AUA for our Group Retirement segment as of the dates indicated:
90
AV and AUA
General Account
Separate Accounts and Mutual Funds (1)
Total AV and AUA (2)
December 31,
2022
2021
(in millions)
$
$
9,175 $
22,830
32,005 $
13,046
34,763
47,809
____________
(1) Prior period amounts related to Separate Account AV and Mutual Funds AUA were revised to include Mutual Fund AUA. The impact of
the revision to December 31, 2021 total AV and AUA was $457 million.
(2) AV presented are net of reinsurance.
The following table summarizes a roll-forward of AV and AUA for our Group Retirement segment for the periods
indicated:
Year Ended December 31,
2022
2021
2020
Balance as of beginning of period (1)
Gross premiums
Surrenders, withdrawals and benefits
Net flows (1) (3)
Investment performance, interest credited and policy charges (1) (3)
Ceded to Global Atlantic (4)
Other (2)
Balance as of end of period
(in millions)
$ 47,809 $ 42,756 $ 37,880
3,343
(3,047)
296
4,283
—
—
$ 32,005 $ 47,809 $ 42,459
4,448
(3,814)
634
(7,075)
(9,363)
—
3,839
(4,016)
(177)
5,287
—
(57)
____________
(1) Prior period amounts related to the AV and AUA roll-forward were updated to include Mutual Fund AUA. The impact of the revision to
the beginning balance of the year ended December 31, 2021 was $297 million. Net Flows revision impact for the year ended December
31, 2021 was $129 million. Investment performance, interest credited and policy charges revision impact for the year ended December
31, 2021 was $30 million.
(2) For the year ended December 31, 2021, amounts reflect AV transfer of GMxB closed block business from Group Retirement Segment to
the Individual Retirement Segment.
(3) For the year ended December 31, 2022, net outflows of $179 million and investment performance, interest credited and policy charges of
($422) million, respectively, are excluded as these amounts are related to ceded AV to Global Atlantic.
(4) Effective October 3, 2022, AV excludes activity related to ceded AV to Global Atlantic Transaction. In addition, roll-forward reflects the
AV ceded pursuant to the Global Atlantic Transaction as of the transaction date. For additional information on the Global Atlantic
Transaction see MD&A - Executive Summary “Global Atlantic Reinsurance Transaction”.
91
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Group Retirement Segment
Operating earnings
Operating earnings decreased by $106 million to $525 million during the year ended December 31, 2022 from $631 million
during the year ended December 31, 2021. The following notable items were the primary drivers of the change in operating
earnings:
Unfavorable items included:
•
•
•
•
•
•
Net investment income decreased by $128 million primarily due to lower alternative investment income, lower
prepayments and lower assets from the Global Atlantic Transaction partially offset by higher income from floating rate
securities and GA optimization.
Fee-type revenue decreased by $65 million due to lower average Separate Account AV from market depreciation and
ceded assets from the Global Atlantic Transaction.
Amortization of DAC increased by $12 million mainly due to a one-time positive adjustment in 2021.
These were partially offset by the following favorable items:
Compensation, benefits and other operating costs and expenses decreased by $71 million mainly due to one-time
litigation expense in 2021.
Interest credited to policyholders’ account balances decreased by $22 million mainly due to the portion of policies
ceded from the Global Atlantic Transaction.
Income tax expense decreased by $14 million primarily driven by lower pretax earnings partially offset by a higher
effective tax rate in 2022.
Net Flows and AV
•
•
The decrease in AV of $15.8 billion in the year ended December 31, 2022 was primarily due to the Global Atlantic
Transaction and market depreciation, partially offset by net inflows of $634 million.
Net inflows of $634 million increased by $811 million compared to 2021, driven by net outflows from the portion of
policies ceded pursuant to the Global Atlantic Transaction, gross premiums reflecting strong sales and client
engagement, partially offset by modestly higher outflows.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 for the Group Retirement
Segment
Operating earnings
For discussion that compares results for the year ended December 31, 2021 to the year ended December 31, 2020 refer to
the MD&A section in our 2021 Form 10-K.
Net Flows and AV
For discussion on net flows and AV comparative results for the year ended December 31, 2021 to the year ended December
31, 2020 refer to the MD&A section in our 2021 Form 10-K.
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
average economic interest in AB of approximately 64%, 65% and 65% during years ended December 31, 2022, 2021 and 2020.
92
Operating earnings
Key components of operating earnings are:
REVENUES
Net investment income
Net derivative gains (losses)
Investment management, service fees and other income
Segment revenues
BENEFITS AND OTHER DEDUCTIONS
Commissions and distribution related payments
Compensation, benefits and other operating costs and expenses
Interest expense
Segment benefits and other deductions
Year Ended December 31,
2022
2021
2020
(in millions)
$
424 $
564 $
432
Year Ended December 31,
2022
2021
2020
(in millions)
$
$
(43) $
41
4,107
4,105 $
13 $
(13)
4,430
4,430 $
31
(36)
3,708
3,703
$
630 $
708 $
2,519
18
3,167 $
2,507
5
3,220 $
$
569
2,211
6
2,786
Changes in AUM in the Investment Management and Research segment for the periods presented were as follows:
Balance as of beginning of period
Long-term flows
Sales/new accounts
Redemptions/terminations
Cash flow/unreinvested dividends
Net long-term inflows (outflows) (2)
Adjustments (1)
Acquisition (3)
Market appreciation (depreciation)
Net change
Balance as of end of period
Year Ended December 31,
2022
2021
2020
(in billions)
$
778.6 $
685.9 $
622.9
115.6
(95.4)
(23.8)
(3.6)
(0.4)
12.2
(140.4)
(132.2)
646.4 $
150.0
(103.8)
(20.1)
26.1
—
—
66.6
92.7
778.6 $
124.1
(109.3)
(17.4)
(2.6)
—
0.2
65.4
63.0
685.9
$
__________
(1) Approximately $0.4 billion of Institutional AUM was removed from AB total assets under management during the second quarter 2022
due to a change in the fee structure.
(2) Net flows include $4.5 billion and $1.3 billion of AXA redemptions for 2022 and 2021, respectively.
(3) The CarVal acquisition added approximately $12.2 billion of Institutional AUM in the third quarter 2022.
93
Average AUM in the Investment Management and Research segment for the periods presented by distribution channel and
investment services were as follows:
Distribution Channel:
Institutions
Retail
Private Wealth
Total
Investment Service:
Equity Actively Managed
Equity Passively Managed (1)
Fixed Income Actively Managed – Taxable
Fixed Income Actively Managed – Tax-exempt
Fixed Income Passively Managed (1)
Alternatives/Multi-Asset Solutions (2)
Total
Year Ended December 31,
2022
2021
2020
(in billions)
$
$
$
$
308.4 $
267.8
110.3
686.5 $
325.7 $
291.0
114.1
730.8 $
239.7 $
60.4
210.0
54.1
11.5
110.8
686.5 $
252.2 $
68.7
253.1
53.8
9.6
93.4
730.8 $
285.9
236.5
97.1
619.5
179.8
57.1
254.4
47.9
9.4
70.9
619.5
____________
(1)
(2)
Includes index and enhanced index services.
Includes certain multi-asset solutions and services not included in equity of fixed income services.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Investment Management and
Research Segment
Operating earnings
Operating earnings decreased $140 million to $424 million during the year ended December 31, 2022 from $564 million in
the year ended December 31, 2021. The following notable items were the primary drivers of the change in operating earnings:
Unfavorable items included:
• Fee-type revenue decreased by $323 million primarily due to lower investment advisory base fees, performance based
fees and Bernstein Research Services revenues. The decrease in investment advisory base fees was primarily driven by
lower average AUM. The decrease in performance based fees was primarily due to lower performance fees earned on
Financial Services Opportunities, U.S. Select Equity, Arya Partners and Private Credit Services, partially offset by
higher U.S. Real Estate Funds fees. The decrease in Bernstein Research Services revenues were primarily driven by
significantly lower customer trading activity in Europe and Asia due to local market conditions.
• Compensation, benefits, interest expense and other operating costs increased by $25 million mainly due to higher
general and administrative costs, primarily relating to higher professional fees, portfolio servicing fees and technology
fees, partially offset by lower compensation and benefit costs.
• Net investment income, net of derivative gains, was unfavorable by $2 million. Net investment income decreased by
$56 million mainly due to higher losses on the seed capital investments subject to market risk, offset by an increase in
net derivative gains of $54 million mainly due to higher gains from economically hedging the seed capital investments.
These were partially offset by the following favorable items:
• Commissions and distribution-related payments decreased by $78 million mainly due to lower payments to financial
intermediaries for the distribution of AB mutual funds.
• Earnings attributable to noncontrolling interest decreased by $86 million due to lower pre-tax earnings.
• Income tax expense decreased by $46 million due to lower pre-tax earnings.
94
Long-Term Net Flows and AUM
• Total AUM as of December 31, 2022 was $646.4 billion, down ($132.2) billion, or 17.0%, compared to December 31,
2021. The decrease was primarily as a result of market depreciation of ($140.4) billion and net outflows of
($3.6) billion, offset by the addition of $12.2 billion due to the acquisition of CarVal. Retail net outflows were
($11.6) billion, partially offset by Institutional and Private Wealth net inflows of $6.3 billion and $1.7 billion
• Excluding AXA redemptions of $4.5 billion, AB generated net inflows of $0.9 billion during the year ended December
31, 2022.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 for the Investment Management
and Research Segment
Operating earnings
For discussion that compares results for the year ended December 31, 2021 to the year ended December 31, 2020 refer to
the MD&A section in our 2021 Form 10-K.
Net Flows and AUM
For discussion that compares results for the year ended December 31, 2021 to the year ended December 31, 2020 refer to
the MD&A section in our 2021 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.
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. 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:
Operating earnings (loss)
Year Ended December 31,
2022
2021
2020
(in millions)
$
179 $
317 $
146
95
Key components of operating earnings (loss) are:
REVENUES
Policy charges, fee income and premiums
Net investment income
Net derivative (losses) gains
Investment management, service fees and other income
Segment revenues
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
Interest credited to policyholders’ account balances
Commissions and distribution related payments
Amortization of deferred policy acquisition costs
Compensation, benefits and other operating costs and expenses
Interest expense
Segment benefits and other deductions
Year Ended December 31,
2022
2021
2020
(in millions)
2,087 $
981
(20)
254
3,302 $
2,016 $
1,102
(20)
260
3,358 $
1,970
944
5
225
3,144
1,906 $
511
191
112
361
1
3,082 $
1,850 $
516
170
93
345
—
2,974 $
1,875
514
160
84
337
—
2,970
$
$
$
$
The following table summarizes Protection Solutions Reserves for our Protection Solutions segment as of the dates
presented:
Protection Solutions Reserves (1)
General Account
Separate Accounts
Total Protection Solutions Reserves
December 31, 2022
December 31, 2021
(in millions)
$
$
18,237 $
13,634
31,871 $
18,625
17,012
35,637
_______________
(1) Does not include Protection Solutions Reserves for our employee benefits business as it is a scaling 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:
In-force face amount by product: (1)
Universal Life (2)
Indexed Universal Life
Variable Universal Life (3)
Term
Whole Life
Total in-force face amount
December 31, 2022
December 31, 2021
(in billions)
$
$
43.1 $
27.5
133.4
211.9
1.1
417.0 $
45.9
27.9
132.8
215.4
1.2
423.2
_______________
(1)
Includes individual life insurance and does not include employee benefits as it is a scaling business and therefore has immaterial in-
force policies.
(2) UL includes GUL.
(3) VUL includes VL and COLI.
96
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Protection Solutions Segment
Operating earnings
Operating earnings decreased $138 million to $179 million during the year ended December 31, 2022 from $317 million in
the year ended December 31, 2021. The following notable items were the primary drivers of the change in operating earnings:
Unfavorable items included:
• Net investment income decreased by $121 million mainly due to lower alternative investment income and lower
prepayments, partially offset by higher income from floating rate securities, TIPS, and GA optimization.
• Policyholders’ benefits increased by $56 million mainly due to higher life mortality, net of PFBL reserve accruals, and
growth in Employee Benefits.
• Commissions and distribution-related payments increased by $21 million mainly due to higher sales of Employee
Benefits products.
• Amortization of DAC increased by $19 million mainly due to less favorable assumption updates in 2022 compared to
2021.
• Compensation, benefits and other operating costs and expenses increased by $16 million mainly due to higher
consulting fees and higher travel expenses.
These were partially offset by the following favorable items:
• Fee-type revenue increased by $65 million mainly driven by higher premiums due to growth in Employee Benefits
(offset in Policyholder’s benefits).
•
Income tax expense decreased by $26 million primarily due to lower pre-tax earnings, partially offset by a higher
effective tax rate in 2022.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 for the Protection Solutions
Segment
For discussion that compares results for the year ended December 31, 2021 to the year ended December 31, 2020 refer to
the MD&A section in our 2021 Form 10-K.
Corporate and Other
Corporate and Other includes some of our financing and investment expenses. It also includes: Equitable 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 operating earnings (loss) of Corporate and Other for the periods presented:
Operating earnings (loss)
Year Ended December 31,
2022
2021
2020
(in millions)
$
(259) $
(131) $
(303)
97
General Account Investment Portfolio
The General Account investment portfolio is used to support the insurance and annuity liabilities of our Individual
Retirement, Group Retirement and Protection Solutions business segments. In the first quarter 2022, the Company changed its
methodology for allocating its General Account investment portfolio, which resulted in a change in the asset and net investment
income allocation amongst the Company’s business segments. Following this change, the segmentation of the general account
investments is now more closely aligned with the liability characteristics of the product groups. Management determined that
the change in the allocation methodology allows for improved flexibility and infuses an active asset liability management
practice into the segmentation process. Additionally, the Company also changed its basis for allocating the spread earned from
our FHLB investment borrowing and FABN programs. The spread earned from our FHLB investment borrowing and FABN
programs includes the investment income on the assets less interest credited on the funding agreements. The net spread as
reflected in net investment income is allocated to the segments based on the percentage of the individual segment insurance
liabilities over the combined segment insurance liabilities.
Our investment philosophy is driven by our long-term commitments to clients, robust risk management and strategic asset
allocation. Our General Account investment portfolio investment strategy seeks to achieve sustainable risk-adjusted returns by
focusing on principal preservation and investment return, subject to duration and liquidity requirements by product as well as
diversification of investment risks. Investment activities are undertaken based on established investment 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 issuers and asset
classes, each of which seek to mitigate the impact of cash flow variability arising from these risks. Significant interest rate
increases and market volatility in 2022 have reduced the fair value of fixed maturities from a net unrealized gain position to a
net unrealized loss. These effects apply across the portfolio and are being assessed within aggregate asset and liability
management strategies. As a part of asset and liability management, 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.
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. In addition, from time to time we use derivatives for
hedging purposes to reduce our exposure to equity markets, interest rates, foreign currency and credit spreads.
We incorporate ESG factors into the investment processes for a significant portion of our General Account 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. 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 and quality of our investment portfolio.
Investments in our surplus portfolio are generally comprised of a mix of fixed maturity investment grade and below
investment grade securities as well as various alternative investments, primarily private equity and real estate equity. Although
alternative investments are subject to period over period earnings fluctuations, they have historically achieved returns in excess
of the fixed maturity portfolio.
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, see Note 3 and Note 4 of the Notes to the Consolidated Financial Statements.
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.
98
Fixed Maturities:
Income (loss)
Ending assets
Mortgages:
Income (loss)
Ending assets
Other Equity Investments: (1)
Income (loss)
Ending assets
Policy Loans:
Income (loss)
Ending assets
Cash and Short-term Investments:
Income (loss)
Ending assets
Funding agreements:
Interest expense and other
Ending assets (liabilities)
Total Invested Assets:
Income (loss)
Ending Assets
Short Duration Fixed Maturities:
Income (loss)
Ending assets
Total:
Investment income (loss)
Less: investment fees (3)
Investment Income, Net
Ending Net Assets
Year Ended December 31,
2022
2021
2020
Yield
Amount (2)
Yield
(Dollars in millions)
Amount (2)
Yield
Amount (2)
3.57 % $ 2,619
72,255
3.40 % $ 2,429
72,545
3.46 % $
3.92 %
587
16,481
4.08 %
547
14,033
4.13 %
5.21 %
5.35 %
(1.44) %
171
3,433
215
4,033
(24)
1,419
(156)
(8,501)
20.45 %
5.01 %
(0.13) %
534
2,901
203
4,024
(2)
1,662
(56)
(6,647)
6.14 %
5.28 %
0.03 %
3.79 %
3,412
89,120
4.28 %
3,655
88,518
3.72 %
3.62 %
4.48 %
5
87
78
142
3.39 %
2,318
71,738
517
13,159
95
1,621
204
4,118
1
2,095
(75)
(6,897)
3,060
85,834
184
4,704
3.79 %
(0.15) %
3.63 %
3,417
(138)
3,279
$ 89,207
4.28 %
(0.14) %
4.15 %
3,733
(118)
3,615
$ 88,660
3.70 %
(0.12) %
3.57 %
3,244
(107)
3,137
$ 90,538
_____________
(1)
Includes, as of December 31, 2022, December 31, 2021 and December 31, 2020 respectively, $400 million, $319 million and $333
million of other invested assets. Amounts for certain consolidated VIE investments are shown net of associated non-controlling interest.
(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.
Investment fees are inclusive of investment management fees paid to AB.
(3)
AFS 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 below investment grade securities in the General Account investment portfolio
consist of loans to middle market companies, public high yield securities, bank loans, as well as “fallen angels,” originally
purchased as investment grade investments.
AFS 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.
99
AFS Fixed Maturities by Industry (1)
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
(in millions)
Gross
Unrealized
Losses
Fair Value
Percentage
of Total (%)
$ 13,537 $
11,797
6,808
8,299
3,740
3,394
2,277
124
49,976
7,054
908
41
609
985
3,823
8,859
$ 72,255 $
$ 12,954 $
12,212
6,446
8,191
3,854
3,390
2,181
60
49,288
13,056
90
41
586
1,124
2,427
5,933
$ 72,545 $
— $
2
—
22
—
—
—
—
24
—
—
—
—
—
—
—
24 $
— $
1
—
21
—
—
—
—
22
—
—
—
—
—
—
—
22 $
9 $
14
14
16
11
14
8
3
89
1
1
2
7
2
—
4
106 $
1,682 $ 11,864
10,016
1,793
5,759
1,063
7,057
1,236
3,177
574
2,975
433
1,918
367
112
15
42,878
7,163
5,837
1,218
822
87
43
—
527
89
836
151
3,235
588
8,490
373
9,669 $ 62,668
545 $
775
351
380
174
218
156
2
2,601
2,344
8
12
78
42
19
21
5,125 $
59 $ 13,440
12,947
39
6,761
36
8,500
50
4,011
17
3,590
18
2,327
10
62
—
51,638
229
15,385
15
98
—
53
—
661
3
1,152
14
2,421
25
5,934
20
306 $ 77,342
19 %
16 %
9 %
11 %
5 %
5 %
3 %
— %
68 %
10 %
1 %
— %
1 %
1 %
5 %
14 %
100 %
17 %
17 %
9 %
11 %
5 %
5 %
3 %
— %
67 %
20 %
— %
— %
1 %
1 %
3 %
8 %
100 %
As of December 31, 2022
Corporate Securities:
Finance
Manufacturing
Utilities
Services
Energy
Retail and wholesale
Transportation
Other
Total corporate securities
U.S. government
Residential mortgage-backed (2)
Preferred stock
State & political
Foreign governments
Commercial mortgage-backed
Asset-backed securities
Total
As of December 31, 2021
Corporate Securities:
Finance
Manufacturing
Utilities
Services
Energy
Retail and wholesale
Transportation
Other
Total corporate securities
U.S. government
Residential mortgage-backed (2)
Preferred stock
State & political
Foreign governments
Commercial mortgage-backed
Asset-backed securities
Total
______________
(1)
Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by
industry for all other holdings.
Includes publicly traded agency pass-through securities and collateralized obligations.
(2)
100
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.
AFS Fixed Maturities
NAIC Designation
Rating Agency Equivalent
As of December 31, 2022
1................................ Aaa, Aa, A
2................................ Baa
Investment grade
3................................ Ba
4................................ B
5................................ Caa
6................................ Ca, C
Below investment
grade
Total Fixed Maturities
As of December 31, 2021:
1................................ Aaa, Aa, A
2................................ Baa
Investment grade
3................................ Ba
4................................ B
5................................ Caa
6................................ Ca, C
Below investment
grade
Total Fixed Maturities
Mortgage Loans
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
(in millions)
Gross
Unrealized
Losses
Fair Value
$ 44,612 $
24,843
69,455
1,565
1,161
64
10
2,800
$ 72,255 $
$ 44,653 $
25,141
69,794
1,601
992
130
28
— $
—
—
2
20
2
—
24
24 $
— $
—
—
1
19
2
—
56 $
47
103
1
1
1
—
5,652 $ 39,016
21,086
3,804
60,102
9,456
1,434
130
1,067
75
56
7
9
1
3
106 $
213
2,566
9,669 $ 62,668
3,734 $
1,357
5,091
22
8
4
—
158 $ 48,229
26,371
127
74,600
285
1,608
14
976
5
131
1
27
1
2,751
$ 72,545 $
22
22 $
34
5,125 $
21
2,742
306 $ 77,342
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.
101
Mortgage Loans by Region and Property Type
December 31, 2022
December 31, 2021
Amortized
Cost
% of Total
Amortized
Cost
% of Total
(in millions)
$
$
$
$
$
$
$
4,903
3,529
2,059
1,087
1,368
826
1,111
859
475
16,217
393
393
16,610
4,749
5,657
2,590
327
2,125
427
735
16,610
30 % $
21
12
7
8
5
7
5
3
98 % $
2 % $
$
2
100 % $
29 % $
33
16
2
13
3
4
100 % $
4,297
3,441
1,982
1,103
978
834
609
579
146
13,969
126
126
14,095
3,944
4,694
2,644
728
1,204
410
471
14,095
30 %
24
14
8
7
6
5
4
1
99 %
1 %
1
100 %
28 %
33
19
5
9
3
3
100 %
By Region:
U.S. Regions:
Pacific
Middle Atlantic
South Atlantic
East North Central
Mountain
West North Central
West South Central
New England
East South Central
Total U.S.
Other Regions:
Europe
Total Other
Total Mortgage Loans
By Property Type:
Office
Multifamily
Agricultural loans
Retail
Industrial
Hospitality
Other
Total Mortgage Loans
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 2023.
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, 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
102
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.
Highly Liquid Assets, beginning of period
$
Year Ended December 31,
2022
2021
(in millions)
1,742 $
1,801
(225)
—
1,576
(849)
(294)
(1,143)
—
(80)
(80)
—
—
—
—
(235)
(235)
(209)
341
132
3,088
792
(815)
215
192
(1,637)
(296)
(1,933)
293
(79)
214
—
(280)
(280)
1,000
(80)
920
(233)
(226)
(459)
250
1,992 $
(1,346)
1,742
$
Dividends from subsidiaries
Capital contributions to subsidiaries
M&A Activity
Total Business Capital Activity
Purchase of treasury shares
Shareholder dividends paid
Total Share Repurchases, Dividends and Acquisition Activity
Issuance of preferred stock
Preferred stock dividend
Total Preferred Stock Activity
Issuance of long-term debt
Repayment of long-term debt
Total External Debt Activity
Proceeds from loans from affiliates
Net decrease (increase) in existing facilities to affiliates (1)
Total Affiliated Debt Activity
Interest paid on external debt and P-Caps
Others, net
Total Other Activity
Net increase (decrease) in highly liquid assets
Highly Liquid Assets, end of period
(1) Represents net activity of draws and repayments of existing credit facilities between Holdings and affiliates.
103
Capital Contribution to Our Subsidiaries
During the year ended December 31, 2022, Holdings made cash capital contributions of $225 million.
Loans from Our Subsidiaries
There were no loans from our subsidiaries during the year ended December 31, 2022.
Cash Distributions from Our Subsidiaries
During the year ended December 31, 2022, Holdings received pretax cash distributions from AB of $577 million and post-
tax distributions from Equitable Financial of $930 million, Equitable Advisors of $85 million and EIM of $210 million.
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’s 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. Extraordinary Dividends 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. 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 formula above, Equitable Financial could pay an
Ordinary Dividend of up to approximately $1.7 billion in 2023.
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.
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, 2022, 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, 2022, the ownership structure of ABLP, including AB Units outstanding as well as the general
partner’s 1% interest, was as follows:
104
Owner
EQH and its subsidiaries
AB Holding
Unaffiliated holders
Total
Percentage
Ownership
59.9 %
39.4 %
0.7 %
100.0 %
Including both the general partnership and limited partnership interests in AB Holding and ABLP, Holdings and its
subsidiaries had an approximate 61% economic interest in AB as of December 31, 2022. The issuance of AB Units relating to
the CarVal acquisition is not expected to have a significant impact on the Company’s cash flows.
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, 2022, 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 the Consolidated Financial Statements
in this Form 10-.
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
For information pertaining to our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock see Note
20 of the Notes to the Consolidated Financial Statements.
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.
105
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 Preferred Stock, Series B Preferred Stock 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 the Consolidated Financial Statements.
Share Repurchase Programs
For information regarding activity pertaining to share repurchase programs, see Note 20 of the Notes to the 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 the Consolidated Financial
Statements for a description of our retirement and protection businesses’ portfolio of liquid assets.
Hedging Activities
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
106
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 the 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 the 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.
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, 2022 and 2021, AB had $900 million and $755 million outstanding under the EQH Facility, with
interest rates of approximately 4.3% and 0.2%, respectively. Average daily borrowing of the EQH Facility during the full year
2022 and the full year 2021 were $655 million and $405 million, respectively, with a weighted average interest rates of
approximately 1.7% and 0.2%, respectively.
EQH Uncommitted Facility
In addition to the EQH Facility, AB entered into a $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 interest generally 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, 2022, AB had $90 million outstanding balance on the EQH Uncommitted Facility, with interest rate of
approximately 4.3%. Average daily borrowing of the EQH Uncommitted Facility during the full year 2022 was $1 million with
weighted average interest rate of approximately 4.3%. During 2021, AB did not draw on the facility.
107
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.
See Note 18 of the Notes to the Consolidated Financial Statements for additional information relating to Prescribed and
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 subsidiary 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 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 the
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, S&P and Moody’s have a stable outlook.
Last review date
Financial Strength Ratings:
Equitable Financial Life Insurance Company
Equitable Financial Life Insurance Company of America
Credit Ratings:
Equitable Holdings, Inc.
Last review date
AllianceBernstein L.P.
AM Best
Feb '23
A
A
bbb+
S&P
Jun '22
A+
A+
BBB+
Sep '22
A
Moody’s
Jan '23
A1
A1
Baa1
Jan '23
A2
108
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, 2022. Short-term cash requirements are considered to be requirements within the next 12 months and 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.
Material Cash Requirements:
Insurance liabilities (1)
FHLB Funding Agreements
Interest on FHLB Funding Agreements
FABN Funding Agreements
Interest on FABN Funding Agreements
Operating leases, net of sublease commitments
Long-Term and Short-term Debt
Interest on long-term debt and short-term debt
Interest on P-Caps
Employee benefits
Funding Commitments
Total Material Cash Requirements
Estimated Payments Due by Year
Total
2023
2024-2025
2026-2027
2028 and
thereafter
(in millions)
$ 111,931 $
8,501
346
7,159
369
1,003
3,870
2,416
371
3,304
2,118
$ 141,388 $
2,582 $
6,130
113
1,000
95
144
520
175
24
211
520
11,514 $
6,465 $
1,049
109
1,900
172
198
—
330
47
444
832
11,546 $
7,389 $
630
52
2,100
76
149
—
330
47
369
766
11,908 $
95,495
692
72
2,159
26
512
3,350
1,581
253
2,280
—
106,420
______________
(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 $314 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:
•
•
As of December 31, 2022, AB had a $399 million accrual for compensation and benefits, of which $10 million is
expected to be paid in 2023, $15 million in 2024-2025, $17 million in 2026-2027 and $38 million in 2028 and
thereafter. Further, AB expects to make contributions to its qualified profit-sharing plan of $18 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, 2022, 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, 2022, AB had funded $22
million of this commitment.
109
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 the 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
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.
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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 the 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 the 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 Note 7 of the Notes to the Consolidated Financial Statements.
The GMDB/GMIB reserve balance before reinsurance ceded was $10.9 billion as of December 31, 2022. 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, 2022
1% decrease in future rate of return
1% increase in future rate of return
Traditional Annuities
Increase/(Decrease) in
GMDB/GMIB Reserves
(in millions)
$
$
1,547
(1,583)
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.
Interest rates used in establishing such liabilities range from 1.5% to 5.4% (weighted average of 3.6%). 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
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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 the 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, 2022, the average rate of investment yields assumed (excluding policy loans) were 4.4% 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’ 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.
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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.
We did not have a loss recognition event in 2022 or 2021. 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.
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
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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, 2022
Decrease in future mortality by 1%
Increase in future mortality by 1%
Sensitivity of DAC to Changes in Future Rate of Return Assumptions
Increase/(Decrease)
in DAC
(in millions)
$
$
17
(17)
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, 2022, 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% (4.9% net of product weighted average Separate Accounts fees), and the gross maximum and minimum short-term
annual rate of return limitations were 15.0% (12.9% net of product weighted average Separate Accounts fees and Investment
Advisory fees) and 0.0% (2.1)% 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. 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
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. At December 31,
2022, current projections of future average gross market returns assume approximately an 11.0% annualized return for sixteen
quarters, followed by 7.3% annualized return for four quarters, followed by 7.0% thereafter.
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.
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DAC Sensitivity - Rate of Return
December 31, 2022
Increase/(Decrease)
in DAC
(in millions)
$
$
(126)
145
Decrease in future rate of return by 1%
Increase in future rate of return by 1%
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 the Consolidated Financial Statements.
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.
115
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.
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.
116
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 Note 2 and Note 3 of the Notes to the 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.
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 the Consolidated Financial Statements for
additional details on significant inputs into the OTC derivative pricing models and credit risk adjustment.
117
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 the 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
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.
118
100% increase in Holdings’ credit spread
As reported
50% decrease in Holdings’ credit spread
Future policyholders’ benefits and other
policyholders’ liabilities
(before reinsurance ceded)
(in billions)
$
$
$
4.7
5.8
6.4
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, 2022, our goodwill of $5.1 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.
At December 31, 2022, we determined that it was more likely than not that a portion of our capital deferred tax assets would not
be realized. The Company recorded a valuation allowance of $1.6 billion through Other Comprehensive Income. For more
information, see Note 16 - Income Taxes.
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
119
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 the 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 the 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 81.6% and 83.7%
of the fair value of the General Account investment portfolio as of December 31, 2022 and 2021, 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, 2022 and 2021 would have on the fair value of fixed maturities and mortgage loans:
120
Interest Rate Risk Exposure
December 31, 2022
Impact of
+1%
Change
Impact of
-1%
Change
Fair Value
December 31, 2021
Impact of
+1%
Change
Impact of
-1% Change
Fair Value
Fixed Income Investments:
AFS securities:
Fixed rate
Floating rate
Trading securities:
Fixed rate
Floating rate
Mortgage loans
(in millions)
$ 53,135 $ (3,992) $ 4,625 $ 70,242 $ (7,166) $ 8,657
83
$ 9,533 $
10 $ 7,100 $
(10) $
(77) $
87 $
$
$
— $
$ 14,690 $
(1) $
— $
(640) $
145 $
1 $
— $
— $
689 $ 14,308 $
(2) $
— $
(743) $
2
—
314
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, 2022 and 2021:
Equity Price Risk Exposure
December 31, 2022
Impact
of+10% Equity
Price Change
Impact of
-10% Equity
Price Change
December 31, 2021
Impact
of+10% Equity
Price Change
Impact of
-10% Equity
Price Change
Fair Value
Fair Value
Equity Investments
$
728 $
73 $
(in millions)
(73) $
817 $
82 $
(82)
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, 2022 and 2021, the aggregate carrying values of insurance contracts with interest rate risk were
$17.5 billion and $15.4 billion, respectively. The aggregate fair value of such liabilities as of December 31, 2022 and 2021 were
$16.5 billion and $15.4 billion, respectively. The impact of a relative 1% decrease in interest rates would be an increase in the
fair value of those liabilities of $394 million and $355 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.
121
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 the 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, 2022 and 2021, the net
fair values of our derivatives were $1.1 billion and $1.6 billion, 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
Weighted
Average Term
(Years)
Impact of -1%
Change
(in millions, except for Weighted Average Term)
Fair
Value
Impact of +1%
Change
15
—
—
11
—
—
$
$
$
$
(212) $
(74)
—
(286) $
(460) $
—
—
(460) $
(653)
125
—
(528)
(111) $
1,150
—
1,039 $
(440) $
—
—
(440) $
(693)
(908)
—
(1,601)
December 31, 2022
Swaps
Futures
Swaptions
Total
December 31, 2021
Swaps
Futures
Swaptions
Total
Notional
Amount
$
$
$
$
2,450
12,975
—
15,425
2,831
12,598
—
15,429
122
December 31, 2022
Futures
Swaps
Options
Total
December 31, 2021
Futures
Swaps
Options
Total
Notional
Amount
Weighted
Average Term
(Years)
Fair Value
Balance after
-10% Equity Price Shift
(in millions, except for Weighted Average Term)
Equity Sensitivity
$
$
$
$
4,714
11,159
40,072
55,945
2,484
13,310
48,439
64,233
—
1
4
—
1
2
$
$
$
$
— $
38
4,171
4,209 $
— $
5
6,959
6,964 $
249
1,154
2,133
3,536
93
1,336
5,381
6,810
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 $1.2 billion and $1.8 billion as of December 31, 2022 and
2021, respectively. The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of
December 31, 2022 and 2021, respectively, would increase the balances of the reinsurance contract asset by $120 million and
$169 million. The Amounts due from Reinsurers at fair value was $4.1 billion and $5.8 billion at December 31, 2022 and 2021.
The potential fair value exposure to an immediate 10% drop in equity prices from those prevailing as of December 31, 2022 and
2021 is $344 million and $447 million, respectively.
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 $5.8 billion
and $8.5 billion as of December 31, 2022 and 2021, respectively. The potential fair value exposure to an immediate 10% drop
in equity prices from those prevailing as of December 31, 2022 and 2021, respectively, would be to increase the liability
balance by $708 million and $990 million.
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, 2022 and
2021:
Interest Rate Risk Exposure
December 31, 2022
December 31, 2021
Fair Value
Balance After
-1% Change
Balance After
+1% Change
Fair Value
Balance After
-1% Change
Balance After
+1% Change
(in millions)
$
93 $
100 $
87 $
101 $
109 $
94
Fixed Income Investments:
Trading
123
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, 2022 and 2021:
Equity Price Risk Exposure
Equity Investments:
Trading
Other investments
December 31, 2022
Balance After
+10% Equity
Price Change
Balance After
-10% Equity
Price Change
Fair Value
December 31, 2021
Balance After
+10% Equity
Price Change
Balance After
-10% Equity
Price Change
Fair Value
(in millions)
$
$
66 $
58 $
72 $
64 $
59 $
53 $
86 $
87 $
94 $
96 $
77
78
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.
124
Item 8. Financial Statements and Supplementary Data
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) .... 126
Consolidated Balance Sheets, December 31, 2022 and 2021 ................................................................................................ 130
Consolidated Statements of Income (Loss), Years Ended December 31, 2022, 2021 and 2020 ........................................... 131
Consolidated Statements of Comprehensive Income (Loss), Years Ended December 31, 2022, 2021 and 2020 ................. 132
Consolidated Statements of Equity, Years Ended December 31, 2022, 2021 and 2020 ....................................................... 133
Consolidated Statements of Cash Flows, Years Ended December 31, 2022, 2021 and 2020 ............................................... 134
Notes to Consolidated Financial Statements
Note 1 - Organization
Note 2 - Significant Accounting Policies
Note 3 - Investments
Note 4 - Derivatives
Note 5 - Goodwill and Other Intangible Assets
Note 6 - Closed Block
Note 7 - DAC and Policyholder Bonus Interest Credits
Note 8 - Fair Value Disclosures
Note 9 - Insurance Liabilities
Note 10 - Leases
Note 11 - Reinsurance
Note 12 - Short-term and Long-term Debt
Note 13 - Related Party Transactions
Note 14 - Employee Benefit Plans
Note 15 - Share-Based and Other Compensation Programs
Note 16 - Income Taxes
Note 17 - Commitments and Contingent Liabilities
Note 18 - Insurance Group Statutory Financial Information
Note 19 - Business Segment Information
Note 20 - Equity
Note 21 - Earnings Per Share
Note 22 - Redeemable Noncontrolling Interest
Note 23 - Held-For-Sale
Note 24 - Subsequent Events
136
137
156
168
175
175
178
178
193
196
199
201
203
203
211
214
216
219
222
225
229
229
229
230
Audited Consolidated Financial Statement Schedules
Schedule I - Summary of Investments - Other than Investments in Related Parties, December 31, 2022 ............................ 232
Schedule II - Balance Sheets ( Parent Company), December 31, 2022 and 2021 and Years Ended December 31, 2022,
2021 and 2020 ........................................................................................................................................................................ 233
Schedule III - Supplementary Insurance Information, as of and for the Years Ended December 31, 2022, 2021 and 2020 237
Schedule IV - Reinsurance, Years Ended December 31, 2022, 2021 and 2020 .................................................................... 238
125
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, 2022, 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, 2022 and 2021, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2022 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, 2022, 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.
As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has
excluded CarVal Investors L.P. (CarVal) from its assessment of internal control over financial reporting as of
December 31, 2022 because it was acquired by AllianceBernstein L.P., a subsidiary of the Company, during 2022. We
have also excluded CarVal from our audit of internal control over financial reporting. Total assets and total revenues of
CarVal that were excluded from management’s assessment and our audit of internal control over financial reporting
each constitute less than 1% of the related consolidated financial statement amounts as of and for the year ended
December 31, 2022.
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
126
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.
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 $8.2 billion of DAC as of December 31, 2022, 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.
127
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 $34.1 billion as of December 31, 2022, 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 $17.2 billion as of December 31,
2022, 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
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, 2022, the fair value of the GMIB features accounted for
as embedded derivatives and presented within future policy benefits and other policyholders’ liabilities was $5.8
billion, GMIB reinsurance contract asset, at fair value was $1.2 billion, and amounts due from reinsurers was $4.1
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
128
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
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 21, 2023
We have served as the Company’s auditor since 1993.
129
EQUITABLE HOLDINGS, INC.
Consolidated Balance Sheets
December 31, 2022 and 2021
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost of $72,991 and $73,429)
(allowance for credit losses of $24 and $22)
Fixed maturities, at fair value using the fair value option (1)
Mortgage loans on real estate (net of allowance for credit losses of $129 and $62) (1)
Policy loans
Other equity investments (1)
Trading securities, at fair value
Other invested assets (1)
Total investments
Cash and cash equivalents (1)
Cash and securities segregated, at fair value
Broker-dealer related receivables
Deferred policy acquisition costs
Goodwill and other intangible assets, net
Amounts due from reinsurers (allowance for credit losses of $10 and $5) (includes amounts
accounted for at fair value of $4,114 and $5,813) (3)
GMIB reinsurance contract asset, at fair value
Current and deferred income taxes
Other assets (1)
Assets held-for-sale
Separate Accounts assets
Total Assets
LIABILITIES
Policyholders’ account balances
Future policy benefits and other policyholders' liabilities
Broker-dealer related payables
Customer related payables
Amounts due to reinsurers
Short-term debt
Long-term debt
Notes issued by consolidated variable interest entities, at fair value using the fair value option (1)
Other liabilities (1)
Liabilities held-for-sale
Separate Accounts liabilities
Total Liabilities
Redeemable noncontrolling interest (1) (2)
Commitments and contingent liabilities (4)
EQUITY
Equity attributable to Holdings:
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation preference
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 508,418,442 and 520,918,331
shares issued, respectively; 365,081,940 and 391,290,224 shares outstanding, respectively
Additional paid-in capital
Treasury stock, at cost, 143,336,502 and 129,628,107 shares, respectively
Retained earnings
Accumulated other comprehensive income (loss)
Total equity attributable to Holdings
Noncontrolling interest
Total Equity
Total Liabilities, Redeemable Noncontrolling Interest and Equity
$
$
$
$
$
$
$
December 31
2022
2021
(in millions, except share data)
63,361 $
1,508
16,481
4,033
3,152
677
3,885
93,097
4,281
1,522
2,338
8,158
5,482
17,201
1,229
714
4,031
562
114,853
253,468 $
83,855 $
34,124
715
3,323
1,533
759
3,322
1,150
5,873
108
114,853
249,615 $
455 $
78,216
1,641
14,033
4,024
2,975
631
3,591
105,111
5,188
1,504
2,599
5,491
4,728
14,679
1,848
195
3,613
—
147,306
292,262
79,357
36,717
1,283
3,600
1,381
92
3,839
1,191
3,933
—
147,306
278,699
468
1,562 $
1,562
4
2,299
(3,297)
9,924
(8,834)
1,658
1,740
3,398
253,468 $
4
1,919
(2,850)
8,880
2,004
11,519
1,576
13,095
292,262
____________
(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.
(4) See Note 17 of the Notes to these Consolidated Financial Statements for details of commitments and contingent liabilities.
See Notes to Consolidated Financial Statements.
130
EQUITABLE HOLDINGS, INC.
Consolidated Statements of Income (Loss)
Years Ended December 31, 2022, 2021 and 2020
Year Ended December 31,
2022
2021
2020
(in millions, except per share data)
$
3,241 $
994
1,696
3,315
3,637 $
960
(4,465)
3,846
(314)
(631)
(945)
4,891
825
14,017
3,385
1,409
2,199
1,567
201
542
2,189
11,492
2,525
(499)
2,026
241
1,785
80
1,705 $
2
866
868
5,395
795
11,036
3,218
1,219
2,360
1,662
244
393
2,109
11,205
(169)
145
(24)
415
(439)
79
(518) $
3,735
997
(1,722)
3,477
(58)
802
744
4,608
576
12,415
5,326
1,222
2,096
1,351
200
1,613
1,700
13,508
(1,093)
744
(349)
299
(648)
53
(701)
4.52 $
4.49 $
(1.24) $
(1.24) $
(1.56)
(1.56)
377.6
379.9
417.4
417.4
450.4
450.4
REVENUES
Policy charges and fee income
Premiums
Net derivative gains (losses)
Net investment income (loss)
Investment gains (losses), net:
Credit and intent to sell losses on available for sale debt securities and loans
Other investment gains (losses), net
Total investment gains (losses), net
Investment management and service fees
Other income
Total revenues
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
Interest credited to policyholders’ account balances
Compensation and benefits
Commissions and distribution-related payments
Interest expense
Amortization of deferred policy acquisition costs
Other operating costs and expenses
Total benefits and other deductions
Income (loss) from continuing operations, before income taxes
Income tax (expense) benefit
Net income (loss)
Less: Net income (loss) attributable to the noncontrolling interest
Net income (loss) attributable to Holdings
Less: Preferred stock dividends
Net income (loss) available to Holdings’ common shareholders
EARNINGS PER COMMON SHARE
Net income (loss) applicable to Holdings’ common shareholders per common
share:
Basic
Diluted
Weighted average common shares outstanding (in millions):
Basic
Diluted
$
$
$
See Notes to Consolidated Financial Statements.
131
EQUITABLE HOLDINGS, INC.
Consolidated Statements of Comprehensive Income (Loss)
Years Ended December 31, 2022, 2021 and 2020
COMPREHENSIVE INCOME (LOSS)
Net income (loss)
Other comprehensive income (loss) net of income taxes:
Year Ended December 31,
2022
2021
(in millions)
2020
$
2,026 $
(24) $
(349)
Change in unrealized gains (losses), net of reclassification adjustment
Changes in defined benefit plan related items not yet recognized in periodic benefit
cost, net of reclassification adjustment
Foreign currency translation adjustment
Total other comprehensive income (loss), net of income taxes
Comprehensive income (loss)
Less: Comprehensive income (loss) attributable to the noncontrolling interest
Comprehensive income (loss) attributable to Holdings
(10,826)
(2,113)
2,956
18
(46)
(10,854)
(8,828)
225
(9,053) $
266
(11)
(1,858)
(1,882)
416
(2,298) $
$
48
22
3,026
2,677
306
2,371
See Notes to Consolidated Financial Statements.
132
EQUITABLE HOLDINGS, INC.
Consolidated Statements of Equity
Years Ended December 31, 2022, 2021 and 2020
Year Ended December 31,
Equity Attributable to Holdings
Preferred
Stock and
Additional
Paid-In
Capital
Common
Stock
Additional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Holdings
Equity
Non-
controlling
Interest
Total
Equity
(in millions)
$
1,562
$
4
$
1,919
$
(2,850) $
8,880
$
2,004
$
11,519
$
1,576
$ 13,095
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
87
(34)
—
—
—
—
314
—
—
—
—
13
38
(815)
—
330
—
—
—
—
—
—
—
—
—
—
(38)
(330)
—
—
—
(294)
(80)
1,785
—
1
—
—
—
—
—
—
—
—
—
—
125
(849)
(38)
—
—
—
314
(294)
(80)
1,785
199
—
—
—
(211)
(401)
275
—
—
300
324
(849)
(38)
—
(211)
(401)
589
(294)
(80)
2,085
(10,838)
(10,838)
(16)
(10,854)
—
14
18
32
January 1, 2022
Stock compensation
Purchase of treasury stock
Reissuance of treasury stock
Retirement of common stock
Repurchase of AB Holding units
Dividends paid to noncontrolling interest
Issuance of AB Units for CarVal acquisition
Dividends on common stock (cash dividends
declared per common share of $0.78)
Dividends on preferred stock
Net income (loss)
Other comprehensive income (loss)
Other
December 31, 2022
$
1,562
$
4
$
2,299
$
(3,297) $
9,924
$
(8,834) $
1,658
$
1,740
$
3,398
January 1, 2021
Stock compensation
Purchase of treasury stock
Reissuance of treasury stock
Retirement of common stock
Repurchase of AB Holding units
Dividends paid to noncontrolling interest
Dividends on common stock (cash dividends
declared per common share of $0.71)
Dividends on preferred stock
Issuance of preferred stock
Net income (loss)
Other comprehensive income (loss)
Other
December 31, 2021
January 1, 2020
Cumulative effect of adoption of ASU
2016-03, Current Expected Credit Loss
Stock compensation
Purchase of treasury stock
Reissuance of treasury stock
Repurchase of AB Holding units
Dividends paid to noncontrolling interest
Dividends on common stock (cash dividends
declared per common share of $0.66)
Dividends on preferred stock
Issuance of preferred stock
Net income (loss)
Other comprehensive income (loss)
Other
December 31, 2020
$
1,269
$
5
$
1,985
$
(2,245) $ 10,699
$
3,863
$
15,576
$
1,601
$
17,177
—
—
—
—
—
—
—
—
293
—
—
—
—
(1)
—
—
—
—
—
—
—
—
—
—
15
(27)
51
(1,610)
—
—
—
—
—
—
—
—
—
(54)
—
954
—
—
—
—
—
—
—
—
—
—
(51)
(954)
—
—
(296)
(79)
—
(439)
—
—
—
—
—
—
—
—
—
—
66
(1,638)
(51)
—
—
—
(296)
(79)
293
(439)
(1,859)
(1,859)
—
—
(54)
220
—
—
—
(262)
(393)
—
—
—
410
1
(1)
286
(1,638)
(51)
—
(262)
(393)
(296)
(79)
293
(29)
(1,858)
(55)
$
1,562
$
4
$
1,919
$
(2,850) $
8,880
$
2,004
$
11,519
$
1,576
$
13,095
$
775
$
5
$
1,920
$
(1,832) $ 11,744
$
844
$
13,456
$
1,591
$ 15,047
—
—
—
—
—
—
—
—
494
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27
—
—
(48)
—
—
—
—
—
—
86
—
17
(430)
—
—
—
—
—
—
—
—
—
(30)
—
—
(17)
—
—
(297)
(53)
—
(648)
—
—
—
—
—
—
—
—
—
—
—
—
(30)
44
(430)
(17)
(48)
—
(297)
(53)
494
(648)
3,019
—
3,019
86
—
69
—
—
(53)
(305)
—
—
—
302
7
(10)
(30)
113
(430)
(17)
(101)
(305)
(297)
(53)
494
(346)
3,026
76
$
1,269
$
5
$
1,985
$
(2,245) $ 10,699
$
3,863
$
15,576
$
1,601
$ 17,177
See Notes to Consolidated Financial Statements.
133
EQUITABLE HOLDINGS, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2022, 2021 and 2020
Cash flows from operating activities:
Net income (loss)
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
Net derivative (gains) losses
Credit and intent to sell losses on available for sale debt securities and loans
Investment (gains) losses, net
(Gains) losses on businesses held-for-sale
Realized and unrealized (gains) losses on trading securities
Non-cash long-term incentive compensation expense
Amortization and depreciation
Equity (income) loss from limited partnerships
Changes in:
Net broker-dealer and customer related receivables/payables
Reinsurance recoverable (1)
Segregated cash and securities, net
Capitalization of deferred policy acquisition costs
Future policy benefits
Current and deferred income taxes
Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale
Fixed maturities, at fair value using the fair value option
Mortgage loans on real estate
Trading account securities
Real estate joint ventures
Short term investments
Other
Payment for the purchase/origination of:
Fixed maturities, available-for-sale
Fixed maturities, at fair value using the fair value option
Mortgage loans on real estate
Trading account securities
Short term investments
Other
Purchase of business, net of cash acquired
Cash from the sale of business, net of cash sold
Cash settlements related to derivative instruments, net
See Notes to Consolidated Financial Statements.
134
Year Ended December 31,
2022
2021
2020
(in millions)
$ 2,026 $
(24) $
(349)
1,222
1,219
1,409
(3,241) (3,637) (3,735)
1,722
(1,696) 4,465
58
(872)
69
(170)
210
1,757
(83)
(2)
(863)
(3)
26
226
497
(553)
314
631
7
198
286
814
(146)
189
(131)
(1,106) (1,077)
667
(401)
250
(659)
(670)
(875)
(299) 1,953
(571)
(451)
(209)
476
(61)
(756) $
(18)
(842)
44
372
(92)
(851) $
$
$ 15,547 $ 34,434 $ 18,986
7
630
2,162
55
1,497
1,005
525
1,154
371
—
575
573
763
1,696
5,159
—
87
1,716
(488) (1,792)
(18,502) (43,344) (28,197)
(311)
(3,683) (2,546) (1,747)
(244)
(708)
(521)
(1,502)
(18) (1,098)
(1,173) (2,553) (1,167)
—
—
215
164
(316) (5,937) 1,166
40
—
EQUITABLE HOLDINGS, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2022, 2021 and 2020
Year Ended December 31,
2022
2021
2020
(in millions)
Investment in capitalized software, leasehold improvements and EDP equipment
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Policyholders’ account balances:
Deposits
Withdrawals
Transfers (to) from Separate Accounts
Change in short-term financings
Change in collateralized pledged assets
Change in collateralized pledged liabilities
(Decrease) increase in overdrafts payable
Repayment of long-term debt
Repayment of acquisition-related debt obligation
Proceeds from notes issued by consolidated VIEs
Dividends paid on common stock
Dividends paid on preferred stock
Issuance of preferred stock
Purchases of AB Holding Units to fund long-term incentive compensation plan awards
Purchase of treasury shares
Purchases (redemptions) of noncontrolling interests of consolidated
company-sponsored investment funds
Distribution to noncontrolling interest of consolidated subsidiaries
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Change in cash of businesses held-for-sale
Cash and cash equivalents, end of year
Supplemental cash flow information:
Interest paid
Income taxes (refunded) paid
Non-cash transactions from investing and financing activities:
Transfer of assets to reinsurer
(167)
80
(107)
(160)
$ (7,487) $ (12,689) $ (7,823)
(120)
(205)
$ 16,367 $ 17,521
11,446
(6,962) (7,069) (4,332)
2,452
1,985
1,447
—
92
147
(139)
34
36
848
(1,575) 1,413
(13)
16
(25)
—
(280)
—
—
—
(43)
313
873
6
(297)
(296)
(294)
(53)
(79)
(80)
494
293
—
(149)
(262)
(211)
(430)
(849) (1,637)
52
(401)
31
(210)
(304)
48
$ 7,646 $ 12,511 $ 9,674
346
(392)
(47)
$
5,188
(56) $
(748)
(18) $
23
(952) 1,813
4,405
(39)
$ 4,281 $ 5,188 $ 6,179
6,179
(159)
(39)
$
$
263 $
89 $
215 $
305 $
215
(173)
$ (2,762) $ (9,023) $ —
_______________
(1) Amount includes cash paid for Global Atlantic Transaction in 2022 of $7 million and for Venerable Transaction in 2021 of $494 million.
See Note 1 of the Notes to these Consolidated Financial Statements.
See Notes to Consolidated Financial Statements.
135
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements
1)
ORGANIZATION
Equitable Holdings, Inc. is the holding company for a diversified financial services organization. The Company
conducts operations in four 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 - 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.
Global Atlantic Reinsurance Transaction
On October 3, 2022, Equitable Financial completed the transactions (the “Global Atlantic Transaction”) contemplated
by the previously announced Master Transaction Agreement, dated August 16, 2022, by and between Equitable
Financial and First Allmerica Financial Life Insurance Company, a Massachusetts-domiciled insurance company (the
“Reinsurer”), a wholly owned subsidiary of Global Atlantic Financial Group.
At the closing of the Global Atlantic Transaction, Equitable Financial and the Reinsurer entered into a Coinsurance
and Modified Coinsurance Agreement (the “EQUI-VEST Reinsurance Agreement”), pursuant to which Equitable
Financial ceded to the Reinsurer, on a combined coinsurance and modified coinsurance basis, a 50% quota share of
approximately 360,000 legacy Group EQUI-VEST deferred variable annuity contracts issued by Equitable Financial
between 1980 and 2008, which predominately include Equitable Financial’s highest guaranteed general account
crediting rates of 3%, supported by general account assets of approximately $4 billion and $5 billion of Separate
Account value (the “Reinsured Contracts”). The Reinsured Contracts predominately include certain of Equitable
Financial’s contracts that offer the highest guaranteed general account crediting rates of 3%. At the closing of the
Global Atlantic Transaction, the Reinsurer deposited assets supporting the general account liabilities relating to the
Reinsured Contracts into a trust account for the benefit of Equitable Financial, which assets will secure its obligations
to Equitable Financial under the EQUI-VEST Reinsurance Agreement. Commonwealth Annuity and Life Insurance
Company, an insurance company domiciled in the Commonwealth of Massachusetts and affiliate of the Reinsurer
(“Commonwealth”), provided a guarantee of the Reinsurer’s payment obligation to Equitable Financial under the
EQUI-VEST Reinsurance Agreement.
The Company transferred assets of $2.8 billion, including primarily available-for-sale securities, cash and policy loans
as the consideration for the reinsurance transaction. In addition, the Company recorded $4.1 billion of direct insurance
liabilities ceded under the reinsurance contract included in amounts due from reinsurers and $1.2 billion of deferred
136
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
gain on cost of reinsurance included within other liabilities. Additionally, $5.3 billion of Separate Account liabilities
were ceded under a modified coinsurance portion of the agreement.
Carval Acquisition
As of December 31, 2022 and 2021, the Company’s economic interest in AB was approximately 61% and 65%,
respectively. The slight decrease was due to the issuance of AB Units relating to AB’s 100% acquisition of CarVal
Investments L.P. (“CarVal”). On July 1, 2022, AB issued 3.2 million AB Units (with a fair value of $133 million) with
the remaining 12.1 million AB units (with a fair value of $456 million) issued on November 1, 2022. AB also recorded
a contingent consideration payable of $229 million (to be paid predominantly in AB Units) based on CarVal achieving
certain performance objectives over a six-year period ending December 31, 2027. 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.
Venerable Reinsurance Transaction
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
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, ABLP, entered into an
investment advisory agreement with CS Life pursuant to which ABLP 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
137
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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 “2022”,
“2021” and “2020” refer to the years ended December 31, 2022, 2021 and 2020, respectively.
Recent Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of
Accounting Standards Updates (“ASUs”) to the FASB Accounting Standards Codification (“ASC”). The Company
considers the applicability and impact of all ASUs. ASUs listed below include those that have been adopted during the
current fiscal year and/or those that have been issued but not yet adopted as of December 31, 2022, and as of the date
of this filing. ASUs not listed below were assessed and determined to be either not applicable or not material.
138
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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
provides
to
targeted
This ASU
existing
improvements
measurement,
recognition,
disclosure
presentation,
requirements
long-duration
for
contracts issued by an insurance
entity. The ASU primarily impacts
four key areas, including:
and
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
and
insurance
limited-payment
contracts. The ASU also prescribes
the discount rate to be used in
measuring the liability for future
policy benefits for traditional and
long-duration
limited
contracts.
traditional
payment
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.
of
the
costs.
deferred
3. Amortization
The ASU
acquisition
simplifies
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.
additional
requires
The ASU
disclosures
information
including
about significant inputs, judgements,
assumptions and methods used in
measurement.
finance processes
actuarial valuation
The Company has finalized key accounting policy
decisions and executed the intended implementation plan
systems,
including modifying
modernizing key
including data
sourcing, analytical procedures and reporting, and
updating internal controls. The Company is ready for
adoption of the guidance as of January 1, 2023 using the
modified retrospective approach, except for Market Risk
Benefits (MRBs) which will use the full retrospective
approach.
Based upon the modified retrospective transition method,
the Company estimates that the January 1, 2021 transition
date impact from LDTI adoption is a decrease in total
U.S. GAAP equity of $3.3 billion. This is primarily due to
accounting for our variable annuity guarantees that are
not currently measured at fair value as MRBs in the
extremely low interest rate environment as of January 1,
2021. For full year 2021, U.S. GAAP net income under
LDTI basis is estimated to be $2.2 billion higher than the
previously reported 2021 net income of ($440) million
due to better alignment between MRB liabilities and our
economic hedging program. As of December 31, 2021,
the impact on total equity is a decrease of approximately
$1.1 billion and in line with our prior estimates.
The U.S. GAAP net income for full year 2022 is
estimated to be positive and less volatile under LDTI.
The estimated impact to total U.S. GAAP equity as of
December 31, 2022 is expected to be significantly
mitigated by the Company’s present use of a near
industry low interest rate assumption of 2.25% on GMIB
business that results in a positive impact from accounting
for its variable annuity guarantees as MRBs under the
guidance at December 31, 2022.
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
interim periods
years,
within
years,
beginning after December 15,
2022.
is
allowed.
and
those
adoption
Early
fiscal
liability
for
benefits
future
For
the
policyholder
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,
the
adjusted
removal of any related amounts
in AOCI or a full retrospective
transition method using actual
experience
historical
contract
information
inception. The same adoption
for
method must be used
deferred
acquisition
costs.
as of
policy
for
For MRBs, the ASU should be
applied retrospectively as of the
beginning of the earliest period
presented.
139
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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
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
140
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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, 2022 and 2021, the carrying value of COLI was $886 million and $1.0
billion, 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.
Securities Sold under Agreements to Repurchase
Securities sold under agreements to repurchase 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. Securities sold under agreements to repurchase
transactions are conducted by the Company under a standardized securities industry master agreement, amended to suit
the requirements of each respective counterparty. Transfers of securities under these agreements to repurchase
are evaluated by the Company to determine whether they satisfy the criteria for accounting treatment as secured
borrowing arrangements. Agreements not meeting the criteria would require recognition of the transferred
securities as sales with related forward repurchase commitments. All of the Company’s securities repurchase
transactions are accounted for as secured borrowings with the related obligations distinctly captioned in the
consolidated balance sheets on a gross basis. As of December 31, 2022 and 2021 the Company had no Securities sold
under agreements to repurchase outstanding. During the year ended December 31, 2021 there was no activity on
Securities sold under agreements to repurchase.
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.
141
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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.
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
142
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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
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
143
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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.
Held-for-Sale
The Company classifies assets and liabilities (“disposal group”) as held-for-sale when the specified criteria in
Accounting Standards Codification 360, Property, Plant and Equipment, are met. Assets and liabilities held-for-sale
are presented separately within the Consolidated Balance Sheets. Depreciation of property, plant and equipment and
amortization of intangible and right-of-use assets are not recorded while these assets are classified as held-for-sale. If,
in any period, the carrying value of the disposal group exceeds the estimated fair value, less costs to sell, an
impairment loss will be recognized. See Note 23 of the Notes to these Consolidated Financial Statements for additional
information regarding the disposal group.
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 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 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
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.
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
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Notes to Consolidated Financial Statements, Continued
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
resulting in higher expected future gross profits and lower DAC amortization for the period. The opposite occurs when
returns are lower than expected.
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Notes to Consolidated Financial Statements, Continued
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, 2022, the average gross
short-term and long-term annual return estimate on variable and interest-sensitive life insurance and variable annuities
was 7.0% (4.9% net of product weighted average Separate Accounts fees), and the gross maximum and minimum
short-term annual rate of return limitations were 15.0% (12.9% net of product weighted average Separate Accounts
fees and Investment Advisory fees) and 0.0% ((2.1)% 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. 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, 2022, the average rate of assumed investment yields, excluding policy loans, for the Company was 4.4%
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
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.
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Notes to Consolidated Financial Statements, Continued
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
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
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Notes to Consolidated Financial Statements, Continued
liabilities range from 3.5% to 7.3% (weighted average of 5.0%) for approximately 99.5% of life insurance liabilities
and from 1.5% to 5.4% (weighted average of 3.6%) 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.
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
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Notes to Consolidated Financial Statements, Continued
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.
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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”), the purchase of AB Units, and AB’s acquisition of CarVal on July 1, 2022. 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 uses 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, 2022 and 2021.
The Company’s intangible assets primarily relate to AB’s acquisition of CarVal 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.
As of December 31, 2022 and 2021, respectively, net deferred sales commissions from AB totaled $52 million and $75
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, 2022 net asset balance for each of the next three years is $29
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Notes to Consolidated Financial Statements, Continued
million, $18 million and $5 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, 2022 and 2021, 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 $224 million
and $193 million as of December 31, 2022 and 2021, respectively. Amortization of capitalized computer software and
hosting arrangements in 2022, 2021 and 2020 was $45 million, $57 million and $60 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.
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
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EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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 may be used to pay for equity research services in accordance with
Section 28(e) of the Exchange Act and 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
dependent upon the contractual arrangements with the customer and the specific product sold as further described
below.
152
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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.
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
153
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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, 2022 and 2021, respectively, Equitable Financial holds $85 million and $109 million of equity
interests in the CLOs. The Company consolidated the CLOs as of December 31, 2022 and 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 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, 2022,
Equitable Financial holds $76 million of equity interests in a SPE established to purchase loans from the market in
anticipation of a new CLO transaction. The Company consolidated the SPE as of December 31, 2022 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 $1.5 billion and $1.6 billion notes issued by consolidated variable interest
entities, at fair value using the fair value option with total liabilities of $1.2 billion and $1.2 billion at December 31,
2022 and 2021, respectively. The unpaid outstanding principal balance of the notes and short-term borrowing is $1.4
billion and $1.3 billion at December 31, 2022 and 2021.
Consolidated Limited Partnerships and LLCs
As of December 31, 2022 and 2021 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, Other equity investments, Trading securities, cash and other liabilities in the Company’s consolidated balance
sheets at December 31, 2022 and 2021 are total net assets of $644 million and $219 million, respectively related to
these VIEs.
Consolidated AB-Sponsored Investment Funds
Included in the Company’s consolidated balance sheet as of December 31, 2022 and 2021 are assets of $581 million
and $734 million, liabilities of $56 million and $87 million, and redeemable noncontrolling interests of $369 million
and $421 million, respectively, associated with the consolidation of AB-sponsored investment funds.
Non-Consolidated VIEs
As of December 31, 2022 and 2021 respectively, the Company held approximately $2.4 billion and $2.1 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. 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 $282.5 billion and $245.6 billion as of December 31, 2022 and 2021
respectively. The Company’s maximum exposure to loss from its direct involvement with these VIEs is the carrying
value of its investment of $2.4 billion and $2.1 billion and approximately $1.3 billion and $1.2 billion of unfunded
154
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
commitments as of December 31, 2022 and 2021, 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, 2022 and 2021, the net assets of investment products sponsored by AB that are non-consolidated
VIEs are approximately $46.4 billion and $68.9 billion, respectively. The Company’s maximum exposure to loss from
its direct involvement with these VIEs is its investment of $6 million and $9 million as of December 31, 2022 and
2021. 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 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 2022 decreased policy charges and fee income by $23 million, decreased
policyholders’ benefits by $243 million, increased interest credited to policyholder account balances by $1 million,
decreased net derivative gains by $80 million and decreased amortization of DAC by $43 million. This resulted in an
increase in income (loss) from operations, before income taxes of $182 million and increased net income (loss) by
$144 million.
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.
The net impact of assumption changes during 2020 was an increase in policy charges and fee income of $23 million,
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.
Model Changes
There were no material model changes in 2022 and 2021.
155
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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, 2022 and 2021 was $591 million
and $506 million, respectively. There was no accrued interest written off for AFS fixed maturities for the years ended
December 31, 2022, 2021 and 2020.
The following tables provide information relating to the Company’s fixed maturities classified as AFS.
AFS Fixed Maturities by Classification
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
(in millions)
Gross
Unrealized
Losses
Fair Value
December 31, 2022
Fixed Maturities:
Corporate (1)
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Residential mortgage-backed (2)
Asset-backed (3)
Commercial mortgage-backed
Redeemable preferred stock
Total at December 31, 2022
December 31, 2021:
Fixed Maturities:
Corporate (1)
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Residential mortgage-backed (2)
Asset-backed (3)
Commercial mortgage-backed
Redeemable preferred stock
Total at December 31, 2021
$ 50,712 $
7,054
609
985
908
8,859
3,823
41
$ 72,991 $
$ 50,172 $
13,056
586
1,124
90
5,933
2,427
41
$ 73,429 $
24 $
—
—
—
—
—
—
—
24 $
22 $
—
—
—
—
—
—
—
22 $
89 $
1
7
2
1
4
—
2
106 $
7,206 $ 43,571
5,837
1,218
527
89
836
151
822
87
8,490
373
3,235
588
43
—
9,712 $ 63,361
2,601 $
2,344
78
42
8
21
19
12
5,125 $
240 $ 52,511
15,385
15
662
2
1,152
14
98
—
5,934
20
2,421
25
—
53
316 $ 78,216
______________
(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.
The contractual maturities of AFS fixed maturities as of December 31, 2022 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.
156
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Contractual Maturities of AFS Fixed Maturities
December 31, 2022
Contractual maturities:
Due in one year or less
Due in years two through five
Due in years six through ten
Due after ten years
Subtotal
Residential mortgage-backed
Asset-backed
Commercial mortgage-backed
Redeemable preferred stock
Total at December 31, 2022
Amortized Cost
(Less Allowance
for Credit Losses)
Fair Value
(in millions)
$
$
1,858 $
15,031
16,281
26,166
59,336
908
8,859
3,823
41
72,967 $
1,834
14,222
14,433
20,282
50,771
822
8,490
3,235
43
63,361
The following table shows proceeds from sales, gross gains (losses) from sales and allowance for credit losses for AFS
fixed maturities for the years ended December 31, 2022, 2021 and 2020:
Proceeds from Sales, Gross Gains (Losses) from Sales and Allowance for Credit and Intent to Sell Losses for AFS Fixed
Maturities
Year Ended December 31,
2022
2021
2020
(in millions)
Proceeds from sales
Gross gains on sales
Gross losses on sales
$ 11,932 $ 27,363 $ 12,903
862
$
(41)
$
1,152 $
(195) $
45 $
(663) $
Net (increase) decrease in Allowance for Credit and Intent to Sell losses (1)
$
(247) $
(16) $
(13)
______________
(1) Amounts as of year ended December 31, 2022 reflect an impairment on AFS Securities of $245 million related to the Global Atlantic
Transaction. See Note 11 of the Notes to these Consolidated Financial Statements for additional details on the Global Atlantic
Transaction.
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.
157
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
AFS Fixed Maturities - Credit and Intent to Sell Loss Impairments
Balance, beginning of period
Previously recognized impairments on securities that matured, paid, prepaid or sold
$
Recognized impairments on securities impaired to fair value this period (1) (2)
Credit losses recognized this period on securities for which credit losses were not
previously recognized
Additional credit losses this period on securities previously impaired
Increases due to passage of time on previously recorded credit losses
Accretion of previously recognized impairments due to increases in expected cash flows
(for OTTI securities 2019 and prior)
Balance at December 31,
Year Ended December 31,
2022
2021
2020
(in millions)
44 $
(263)
246
—
9
—
32 $
(4)
—
9
7
—
—
36 $
—
44 $
$
21
(2)
—
6
7
—
—
32
______________
(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.
(2) Amounts for year ended December 31, 2022 reflect an impairment on AFS Securities of $245 million related to the Global Atlantic
Transaction. See Note 11 of the Notes to these Consolidated Financial Statements for additional details on the Global Atlantic
Transaction.
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 Investments
DAC
Policyholders’
Liabilities
(in millions)
AOCI Gain
(Loss) Related
to Net
Unrealized
Investment
Gains (Losses)
Deferred
Income
Tax Asset
(Liability)
Balance, January 1, 2022
Net investment gains (losses) arising during the
period
Reclassification adjustment:
Included in net income (loss)
Other (1)
Impact of net unrealized investment gains
(losses)
Net unrealized investment gains (losses)
excluding credit losses
Net unrealized investment gains (losses) with
credit losses
Balance, December 31, 2022
Balance, January 1, 2021
Net investment gains (losses) arising during the
period
Reclassification adjustment:
Included in net income (loss)
Other (2)
Impact of net unrealized investment gains
(losses)
$
4,809 $
(782) $
(418) $
(757) $
2,852
(15,275)
867
—
—
—
—
—
2,366
—
—
—
96
—
(15,275)
—
(1,569)
867
(1,569)
2,508
4,970
(9,599)
1,584
(322)
182
(8,155)
(7)
(9,606) $
1
1,585 $
—
(322) $
1
183 $
(5)
(8,160)
8,811 $
(1,548) $
(1,065) $
(1,302) $
4,896
(3,122)
(846)
(33)
—
—
—
—
—
—
—
—
—
(3,122)
(846)
(33)
—
767
648
544
1,959
$
$
158
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Net Unrealized
Gains (Losses)
on Investments
DAC
Policyholders’
Liabilities
(in millions)
AOCI Gain
(Loss) Related
to Net
Unrealized
Investment
Gains (Losses)
Deferred
Income
Tax Asset
(Liability)
$
$
4,810
(781)
(417)
(758)
2,854
(1)
(1)
(1)
1
(2)
4,809 $
(782) $
(418) $
(757) $
2,852
3,453 $
(894) $
(189) $
(497) $
1,873
6,192
—
(828)
—
—
—
—
—
—
—
—
—
6,192
—
(828)
—
(655)
(877)
(806)
(2,338)
8,817
(1,549)
(1,066)
(1,303)
4,899
(6)
8,811 $
1
(1,548) $
1
(1,065) $
1
(1,302) $
(3)
4,896
$
Net unrealized investment gains (losses)
excluding credit losses
Net unrealized investment gains (losses) with
credit losses
Balance, December 31, 2021
Balance, January 1, 2020
Net investment gains (losses) arising during the
period
Reclassification adjustment:
Included in net income (loss)
Impact of net unrealized investment gains
(losses)
Net unrealized investment gains (losses)
excluding credit losses
Net unrealized investment gains (losses) with
credit losses
Balance, December 31, 2020
_____________
(1) Reflects a Deferred Tax Asset valuation allowance of $1.6 billion recorded during the fourth quarter of 2022. See Note 16 of the Notes to
these Consolidated Financial Statements for additional details.
(2) Effective January 1, 2021, certain preferred stock have been reclassified to other equity investments.
The following tables disclose the fair values and gross unrealized losses of the 5,209 issues as of December 31, 2022
and the 2,060 issues as of December 31, 2021 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
December 31, 2022
Fixed Maturities:
Corporate
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Residential mortgage-backed
Asset-backed
Commercial mortgage-backed
Total at December 31, 2022
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)
$ 24,580 $
5,564
130
349
671
6,298
1,577
$ 39,169 $
2,668 $ 16,534 $
1,200
25
42
49
230
201
204
173
417
83
1,765
1,640
4,536 $ 41,114 $
18
64
109
38
143
387
5,768
303
766
754
8,063
3,217
4,415 $ 20,816 $
5,295 $ 59,985 $
7,204
1,218
89
151
87
373
588
9,710
159
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
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, 2021:
Fixed Maturities:
Corporate
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Residential mortgage-backed
Asset-backed
Commercial mortgage-backed
Total at December 31, 2021
$ 10,571 $
993
120
349
—
3,865
1,527
$ 17,425 $
163 $
11
2
6
—
20
21
223 $
1,633 $
105
11
92
—
38
96
1,975 $
75 $ 12,204 $
4
—
8
—
—
4
91 $ 19,400 $
1,098
131
441
—
3,903
1,623
238
15
2
14
—
20
25
314
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 0.8% of
total corporate securities. The largest exposures to a single issuer of corporate securities held as of December 31, 2022
and 2021 were $327 million and $322 million, respectively, representing 9.6% and 2.5% 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, 2022 and 2021, respectively,
approximately $2.9 billion and $2.9 billion, or 4.0% and 3.9%, of the $73.0 billion and $73.4 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 $208 million and $18 million as of December 31, 2022 and 2021,
respectively.
As of December 31, 2022 and 2021, respectively, the $5.3 billion and $91 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
of the Notes to these Consolidated Financial Statements, the Company concluded that an adjustment to the allowance
for credit losses for these securities was not warranted at either December 31, 2022 or December 31, 2021. As of
December 31, 2022 and 2021, 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, 2022, the Company determined that the unrealized loss was primarily due
to increases in interest rates and credit spreads.
Mortgage Loans on Real Estate
Accrued interest receivable on commercial and agricultural mortgage loans as of December 31, 2022 and 2021 was
$71 million and $57 million, respectively. There was no accrued interest written off for commercial and agricultural
mortgage loans for the years ended December 31, 2022 and 2021.
As of December 31, 2022, 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
The change in the allowance for credit losses for commercial mortgage loans and agricultural mortgage loans during
the years ended December 31, 2022 and 2021 were as follows:
160
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
2022
Year Ended December 31,
2021
(in millions)
2020
Allowance for credit losses on mortgage loans:
Commercial mortgages:
Balance, beginning of period
Current-period provision for expected credit losses
Write-offs charged against the allowance
Recoveries of amounts previously written off
Net change in allowance
Balance, end of period
Agricultural mortgages:
Balance, beginning of period
Current-period provision for expected credit losses
Write-offs charged against the allowance
Recoveries of amounts previously written off
Net change in allowance
Balance, end of period
Total allowance for credit losses
$
$
$
$
$
57 $
66
—
—
66
123 $
5 $
1
—
—
1
6 $
77 $
(20)
—
—
(20)
57 $
4 $
1
—
—
1
5 $
33
44
—
—
44
77
3
1
—
—
1
4
129 $
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; and
changes in credit quality and economic assumptions.
Credit Quality Information
The following tables summarize the Company’s mortgage loans segregated by risk rating exposure as of December 31,
2022 and 2021.
Loan to Value (“LTV”) Ratios (1)
December 31, 2022
Amortized Cost Basis by Origination Year
2022
2021
2020
2019
2018
Prior
(in millions)
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
Mortgage loans:
Commercial:
0% - 50%
50% - 70%
70% - 90%
90% plus
Total commercial
Agricultural:
130 $ — $ — $
624 $
$
2,285
363
—
1,569
415
—
$ 3,272 $ 2,114 $ 1,369 $
906
463
—
119 $ 1,259 $ — $ — $ 2,132
8,278
328
623
313
—
3,342
—
424
329
34
—
—
—
268
35
34 $ 14,020
328 $
642 $ 1,201 $ 5,060 $
2,254
1,314
233
161
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
December 31, 2022
Amortized Cost Basis by Origination Year
2022
2021
2020
2019
2018
Prior
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
(in millions)
$
$
163 $
190
—
—
353 $
182 $
185
—
—
367 $
228 $
222
—
—
450 $
129 $
68
—
—
197 $
725 $ — $ — $ 1,559
132 $
1,015
267
—
83
16
16
—
—
—
—
—
—
215 $ 1,008 $ — $ — $ 2,590
—
—
—
787 $
312 $
228 $
$
2,475
363
—
1,754
415
—
$ 3,625 $ 2,481 $ 1,819 $
1,128
463
—
251 $ 1,984 $ — $ — $ 3,691
129 $
9,293
328
706
381
—
3,358
—
424
329
34
—
—
—
268
35
34 $ 16,610
328 $
839 $ 1,416 $ 6,068 $
2,521
1,330
233
Debt Service Coverage Ratios (“DSC”) (2)
December 31, 2022
Amortized Cost Basis by Origination Year
2022
2021
2020
2019
2018
Prior
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
$
771 $ 1,159 $ 1,113 $
158
337
1,041
507
458
215
390
259
43
48
$ 3,272 $ 2,114 $ 1,369 $
164
32
—
60
—
(in millions)
571 $ 1,923 $ — $ — $ 5,639
102 $
1,681
279
186
197
—
2,267
4
176
153
—
2,382
—
73
92
—
1,439
45
160
98
34
—
—
—
612
35
34 $ 14,020
328 $
642 $ 1,201 $ 5,060 $
482
1,175
917
492
71
$
51 $
16
69
107
91
19
353 $
40 $
58
42
147
80
—
367 $
62 $
35
111
177
61
4
450 $
21 $
24
18
98
30
6
197 $
162
379
12 $
198
—
14
455
—
19
926
—
99
579
—
60
11
53
—
215 $ 1,008 $ — $ — $ 2,590
193 $ — $ — $
51
196
298
257
13
—
—
—
—
—
0% - 50%
50% - 70%
70% - 90%
90% plus
Total agricultural
Total mortgage loans:
0% - 50%
50% - 70%
70% - 90%
90% plus
Total mortgage loans
Mortgage loans:
Commercial:
Greater than 2.0x
1.8x to 2.0x
1.5x to 1.8x
1.2x to 1.5x
1.0x to 1.2x
Less than 1.0x
Total commercial
Agricultural:
Greater than 2.0x
1.8x to 2.0x
1.5x to 1.8x
1.2x to 1.5x
1.0x to 1.2x
Less than 1.0x
Total agricultural
$
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
December 31, 2022
Amortized Cost Basis by Origination Year
2022
2021
2020
2019
2018
Prior
(in millions)
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
Total mortgage loans:
Greater than 2.0x
1.8x to 2.0x
1.5x to 1.8x
1.2x to 1.5x
1.0x to 1.2x
Less than 1.0x
Total mortgage loans
$
822 $ 1,199 $ 1,175 $
174
406
1,148
598
477
273
432
406
123
48
$ 3,625 $ 2,481 $ 1,819 $
199
143
177
121
4
123 $
221
171
190
128
6
583 $ 2,116 $ — $ — $ 6,018
1,879
279
200
—
2,722
4
195
—
3,308
—
172
—
2,018
45
220
34
—
—
665
46
34 $ 16,610
328 $
839 $ 1,416 $ 6,068 $
533
1,371
1,215
749
84
______________
(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, 2021
Amortized Cost Basis by Origination Year
2021
2020
2019
2018
2017
Prior
(in millions)
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
Mortgage loans:
Commercial:
0% - 50%
50% - 70%
70% - 90%
90% plus
$ — $ — $ — $
1,944
190
—
1,286
236
—
184 $
619
415
35
339
412
—
751 $ 1,253 $ 1,065 $ 4,587 $
293 $ 1,009 $ — $ — $ 1,486
—
7,351
139
491
2,501
—
—
276
—
113
—
5
139 $ — $ 11,451
2,533
972
73
Total commercial
$ 2,134 $ 1,522 $
Agricultural:
0% - 50%
50% - 70%
70% - 90%
90% plus
Total agricultural
$
$
180 $
200
—
—
380 $
212 $
268
—
—
480 $
128 $
102
—
—
230 $
129 $
126
—
—
255 $
738 $ — $ — $ 1,506
119 $
1,121
338
—
87
17
17
—
—
—
—
—
—
206 $ 1,093 $ — $ — $ 2,644
—
—
—
163
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
December 31, 2021
Amortized Cost Basis by Origination Year
2021
2020
2019
2018
2017
Prior
(in millions)
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
Total mortgage loans:
0% - 50%
50% - 70%
70% - 90%
90% plus
180 $
212 $
$
2,144
190
—
1,554
236
—
Total mortgage loans
$ 2,514 $ 2,002 $
128 $
441
412
—
981 $ 1,508 $ 1,271 $ 5,680 $
412 $ 1,747 $ — $ — $ 2,992
—
8,472
139
578
2,518
—
—
276
—
113
—
5
139 $ — $ 14,095
313 $
745
415
35
2,871
989
73
DSC Ratios (2)
December 31, 2021
Amortized Cost Basis by Origination Year
2021
2020
2019
2018
2017
Prior
(in millions)
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
Mortgage loans:
Commercial:
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
$ 1,143 $ 1,243 $
185
275
264
267
—
135
49
95
—
—
Total commercial
$ 2,134 $ 1,522 $
210 $
182
284
75
—
—
751 $ 1,253 $ 1,065 $ 4,587 $
485 $ 2,235 $ — $ — $ 6,088
—
1,149
68
161
—
1,952
48
166
—
1,489
—
253
—
665
23
—
—
108
—
—
139 $ — $ 11,451
772 $
46
211
101
88
35
372
919
701
287
73
164
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
December 31, 2021
Amortized Cost Basis by Origination Year
2021
2020
2019
2018
2017
Prior
(in millions)
Revolving
Loans
Amortized
Cost Basis
Revolving
Loans
Converted
to Term
Loans
Amortized
Cost Basis
Total
$
Agricultural:
Greater than 2.0x
1.8x to 2.0x
1.5x to 1.8x
1.2x to 1.5x
1.0x to 1.2x
Less than 1.0x
Total agricultural
$
49 $
52
43
161
75
—
380 $
64 $
37
113
179
83
4
480 $
25 $
25
28
112
31
9
230 $
22 $
14
22
116
77
4
255 $
Total mortgage loans:
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
$ 1,192 $ 1,307 $
237
318
425
342
—
172
162
274
83
4
235 $
207
312
187
31
9
794 $
60
233
217
165
39
24 $
14
41
72
54
1
394
212
—
440
—
995
—
546
—
57
—
206 $ 1,093 $ — $ — $ 2,644
210 $ — $ — $
70
193
355
226
39
—
—
—
—
—
509 $ 2,445 $ — $ — $ 6,482
—
1,361
68
175
—
2,392
48
207
—
2,484
—
325
1,211
—
23
54
—
165
—
1
139 $ — $ 14,095
442
1,112
1,056
513
112
Total mortgage loans
$ 2,514 $ 2,002 $
981 $ 1,508 $ 1,271 $ 5,680 $
______________
(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-due mortgage loans as of December 31, 2022
and 2021, respectively.
Age Analysis of Past Due Mortgage Loans (1)
Accruing Loans
Past Due
30-59
Days
60-89
Days
90
Days
or
More
Total
Current
Total
(in millions)
Non-
accruing
Loans
Total
Loans
Non-
accruing
Loans
with No
Allowance
Interest
Income
on Non-
accruing
Loans
December 31, 2022:
Mortgage loans:
Commercial
Agricultural
Total
$ 56 $ — $ — $ 56 $ 13,964 $ 14,020 $ — $ 14,020 $ — $ —
16
—
2,574
16 $ 16,610 $ — $ —
$ 59 $ 5 $ 13 $ 77 $ 16,517 $ 16,594 $
2,590
2,553
21
13
—
5
3
165
EQUITABLE HOLDINGS, INC.
Notes to Consolidated Financial Statements, Continued
Accruing Loans
Past Due
30-59
Days
60-89
Days
90
Days
or
More
Total
Current
Total
(in millions)
Non-
accruing
Loans
Total
Loans
Non-
accruing
Loans
with No
Allowance
Interest
Income
on Non-
accruing
Loans
$ — $ — $ — $ — $ 11,451 $ 11,451 $ — $ 11,451 $ — $ —
—
2,628
16
16 $ 14,095 $ — $ —
$ 1 $ 1 $ 25 $ 27 $ 14,052 $ 14,079 $
2,644
2,601
27
25
—
1
1
December 31, 2021:
Mortgage loans:
Commercial
Agricultural
Total
_______________
(1) Amounts presented at amortized cost basis.
As of December 31, 2022 and 2021, the carrying values of problem mortgage loans that had been classified as non-
accrual loans were $14 million and $14 million, respectively. The carrying values of those mortgage loans are
presented net of an allowance of $2 million and $2 million, respectively, as of December 31, 2022 and 2021.
Troubled Debt Restructuring
During the years ended December 31, 2022, 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
years ended December 31, 2022 and 2021.
Unrealized and Realized Gains (Losses) from Equity Securities
Net investment gains (losses) recognized during the period on securities
held at the end of the period
Net investment gains (losses) recognized on securities sold during the
period
Unrealized and realized gains (losses) on equity securities
$
$
Trading Securities
Year Ended December 31,
2022
2021
(in millions)
(114) $
(36)
(150) $
(19)
45
26
As of December 31, 2022 and 2021, respectively, the fair value of the Company’s trading securities was $677 million
and $631 million. As of December 31, 2022 and 2021, respectively, trading securities included the General Account’s
investment in Separate Accounts had carrying values of $39 million and $45 million.
The table below shows a breakdown of net investment income (loss) from trading securities during the years ended
December 31, 2022, 2021 and 2020.
166
Net Investment Income (Loss) from Trading Securities
Year Ended December 31,
2022
2021
2020
(in millions)
Net investment gains (losses) recognized during the period on securities held at the end of
the period
Net investment gains (losses) recognized on securities sold during the period
Unrealized and realized gains (losses) on trading securities
Interest and dividend income from trading securities
Net investment income (loss) from trading securities
$
$
(198) $
—
(198)
29
(169) $
(274) $
248
(26)
99
73 $
128
42
170
217
387
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 years ended December 31, 2022 and 2021.
Net Investment Income (Loss) from Fixed Maturities, at Fair Value using the Fair Value Option
Net investment gains (losses) recognized during the period on securities
held at the end of the period
Net investment gains (losses) recognized on securities sold during the
period
Unrealized and realized gains (losses) from fixed maturities
Interest and dividend income from fixed maturities
Net investment income (loss) from fixed maturities
$
$
Year Ended December 31,
2022
2021
(in millions)
(14) $
2
(12)
7
(5) $
12
4
16
19
35
Net Investment Income (Loss)
The following table breaks out net investment income (loss) by asset category:
Fixed maturities
Mortgage loans on real estate
Other equity investments
Policy loans
Trading securities
Other investment income
Fixed maturities, at fair value using the fair value option
Gross investment income (loss)
Investment expenses
Net investment income (loss)
Investment Gains (Losses), Net
Year Ended December 31,
2022
2021
(in millions)
2020
2,625 $
587
134
215
(169)
33
(5)
3,420
(105)
3,315 $
2,440 $
546
609
203
73
17
35
3,923
(77)
3,846 $
2,341
516
67
204
387
33
1
3,549
(72)
3,477
$
$
Investment gains (losses), net, including changes in the valuation allowances and credit losses are as follows:
167
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Fixed maturities
Mortgage loans on real estate
Other equity investments (1)
Other
Investment gains (losses), net
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
(868) $
(66)
—
(11)
(945) $
847 $
19
—
2
868 $
828
(45)
30
(69)
744
_____________
(1) Investment gains (losses), net of Other equity investments includes Real Estate Held for production during the years ended December 31,
2021 and December 31, 2020.
For the years ended December 31, 2022, 2021 and 2020, respectively, investment results passed through to certain
participating group annuity contracts as interest credited to policyholders’ account balances totaled $1 million, $2
million and $2 million.
4)
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
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 TIPS and
cash flow hedges, which are 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 Utilized to Hedge 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
168
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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 to CS Life. 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 U.S. Treasury futures to partially protect the overall
profitability of future variable annuity sales against declining interest rates.
Derivatives Utilized to Hedge Crediting Rate Exposure on SCS, SIO, MSO and IUL Products/Investment Options
The Company hedges crediting rates in the SCS variable annuity, SIO in the EQUI-VEST variable annuity series,
MSO in the variable life insurance products and 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.
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, thereby substantially reducing any exposure to market-related earnings volatility.
Derivatives Used 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 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
amounts paid or received, reported in 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 CDS 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 its 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 the CDS that it sold. The
maximum potential amount of future payments the Company could be required to make under the credit derivatives
sold is limited to the par value of the referenced securities which is the dollar or euro-equivalent of the derivative’s
notional amount. The Standard North American CDS Contract or Standard European Corporate Contract under which
the Company executes these CDS sales transactions does not contain recourse provisions for recovery of amounts paid
under the credit derivative.
169
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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 purchases private placement debt securities and issues funding agreements in the FABN program in
currencies other than its functional U.S. dollar currency. The Company enters into cross currency swaps with external
counterparties to hedge the exposure of the foreign currency denominated cash flows of these instruments. The foreign
currency received from or paid to the cross currency swap counterparty is exchanged for fixed U.S. dollar amounts
with improved net investment yields or net product costs over equivalent U.S. 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 quarter ended June 30, 2021.
These cross currency swaps are for the period the foreign currency denominated private placement debt securities and
funding agreement are outstanding, with the longest cross currency swap expiring in 2033. Since these cross currency
swaps are designated and qualify as cash flow hedges, the corresponding interest accruals are recognized in Net
investment income and in Interest credited to policyholders’ account balances.
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:
170
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Derivative Instruments by Category
Derivatives: designated for hedge accounting (1)
Cash flow hedges:
Currency swaps
Interest swaps
Total: designated for hedge accounting
Derivatives: not designated for hedge accounting (1)
Equity contracts:
Futures
Swaps
Options
Interest rate contracts:
Futures
Swaps
Credit contracts:
Credit default swaps
Currency contracts
Currency swaps
Currency forwards
Other freestanding contracts:
Margin
Collateral
Total: not designated for hedge accounting
Embedded derivatives:
Amounts due from reinsurers (5)
GMIB reinsurance contracts (2)
GMxB derivative features liability (3)
SCS, SIO, MSO and IUL indexed features (4)
Total embedded derivatives
December 31, 2022
Fair Value
December 31, 2021
Fair Value
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Notional
Amount
Derivative
Assets
Derivative
Liabilities
(in millions)
$ 1,431 $
955
2,386
99 $
—
99
85 $
294
379
921 $
955
1,876
7 $
—
7
42
395
437
5,151
11,188
40,122
12,693
1,515
327
397
62
—
—
71,455
—
—
—
—
—
2
39
7,583
—
9
3,412
2,640
13,378
48,489
—
6
12,024
1
4
5,065
—
—
18
4
31
226
142
8,045
4,114
1,229
—
—
5,343
—
166
12,575
1,889
9
13
32
774
541
79
—
—
9
1
8
—
46
10
—
7
—
4,472
8,113
—
—
80,365
125
178
12,351
—
6,160
11,293
—
—
5,764
4,164
9,928
—
—
—
—
—
5,813
1,848
—
—
7,661
—
—
8,525
6,773
15,298
Total derivative instruments
$ 73,841 $ 13,487 $ 18,420 $ 82,241 $ 20,019 $ 27,028
___________
(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) Represents GMIB NLG ceded related to the Venerable Transaction.
The following table presents the effects of derivative instruments on the consolidated statements of income and
comprehensive income (loss).
Derivative Instruments by Category
171
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Year Ended December 31, 2022
Year Ended December 31, 2021
Year Ended December 31, 2020
Net
Derivatives
Gain(Losses)
(1)
NII (2)
Interest
Credited To
Policyholder
Account
Balances
AOCI
Net
Derivatives
Gain(Losses)
(1)
Interest
Credited To
Policyholder
Account
Balances
(in millions)
AOCI
Net
Derivatives
Gain(Losses)
(1)
Interest
Credited To
Policyholder
Account
Balances
AOCI
$
19 $
7 $
(86) —
(4) $ 24 $
206
—
(2) $
(69)
(45) $
—
5 $
(87)
— $
(9)
— $ —
(87)
—
(67)
7
(4) 230
(71)
(45)
(82)
(9)
—
(87)
—
285
2,644
—
(2,750) —
—
—
—
—
—
—
(567)
(3,614)
3,886
—
—
—
—
—
—
(1,011)
(3,368)
1,663
—
—
—
—
—
—
(1,688) —
(492) —
—
—
—
—
—
—
—
—
(728)
(2,317)
—
—
—
—
—
—
—
1,740
2,832
9
—
—
—
—
—
—
7
—
—
—
(2)
—
—
—
—
—
10
—
—
—
3
—
—
—
3
2
—
—
(4)
—
—
—
—
—
—
—
(1,981) —
—
—
(3,337)
—
—
1,861
—
—
(1,706) —
—
—
517
—
—
—
—
—
(581) —
—
—
(625)
—
—
417
—
—
3,076
—
—
—
2,841
—
—
(2,253)
—
—
172
Derivatives:
Designated for
Hedge
accounting
Cash Flow
Hedges:
Currency
Swaps
Interest Swaps
Total:
Designated for
Hedge
accounting
Derivatives:
Not
Designated for
Hedge
accounting
Equity
contracts
Futures
Swaps
Options
Interest Rate
contracts
Futures
Swaps
Swaptions
Credit
contracts
Credit Default
Swaps
Currency
contracts
Currency
Swaps
Currency
forwards
Total: Not
Designated for
Hedge
accounting
Embedded
Derivatives
Amounts due
from reinsurers
GMIB
reinsurance
contracts
GMxB
derivative
features
liability (3)
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Year Ended December 31, 2022
Year Ended December 31, 2021
Year Ended December 31, 2020
Net
Derivatives
Gain(Losses)
(1)
NII (2)
Interest
Credited To
Policyholder
Account
Balances
AOCI
Net
Derivatives
Gain(Losses)
(1)
Interest
Credited To
Policyholder
Account
Balances
(in millions)
AOCI
Net
Derivatives
Gain(Losses)
(1)
Interest
Credited To
Policyholder
Account
Balances
AOCI
2,955
—
—
—
(3,835)
—
—
(1,738)
—
—
3,744
—
—
—
(1,102)
—
—
(3,574)
—
—
$
1,696 $
7 $
(4) $ 230 $
(4,510) $
(45) $ (82) $
(1,722) $
— $ (87)
SCS, SIO,MSO
and IUL
indexed
features
Total
Embedded
Derivatives
Total
derivatives
instruments
_____________
(1) Reported in net derivative gains (losses) in the consolidated statements of income (loss).
(2) Net Investment Income (“NII”).
(3) Excludes settlement fees of $45 million on CS Life reinsurance contract for the year ended December 31, 2021.
The following table presents a roll-forward of cash flow hedges recognized in AOCI.
Roll-forward of Cash flow hedges in AOCI
Balance, beginning of period
Amount recorded in AOCI
Currency swaps
Interest swaps
Total amount recorded in AOCI
Amount reclassified from AOCI to income
Currency swaps (1)
Interest swaps (1)
Total amount reclassified from AOCI to income
Balance, end of period (2)
Year Ended December 31,
2022
2021
2020
(in millions)
$
(208) $
(126) $
(38)
29
102
131
(35)
(183)
(218)
(5)
104
99
22 $
40
96
136
(208) $
$
—
(108)
(108)
—
20
20
(126)
_______________
(1) Currency swaps reclassified from AOCI to income are reported in net investment income in the consolidated statements of income (loss).
Interest swaps reclassified from AOCI to income are reported in net derivative gains (losses) in the consolidated statements of income
(loss).
(2) The Company does not estimate the amount of the deferred losses in AOCI at years ended December 31, 2022, 2021 and 2020 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 as of December 31, 2022 and 2021 are exchange-traded
and net settled daily in cash. As of December 31, 2022 and 2021, 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 $247 million and $109 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 $113 million and $200 million, and (iii)
the Euro Stoxx, FTSE 100, Topix, ASX 200 and 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 $16 million and $16 million.
173
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Collateral Arrangements
The Company generally has executed a CSA under the ISDA Master Agreement it maintains with each of its 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 ISDA Master Agreement and related CSA have been executed. As of December 31, 2022 and 2021, respectively,
the Company held $4.5 billion and $6.2 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 other
invested assets. The Company posted collateral of $142 million and $178 million as of December 31, 2022 and 2021,
respectively, in the normal operation of its collateral arrangements. The Company is exposed to losses in the event of
non-performance by counterparties to financial derivative transactions with a positive fair value. The Company
manages credit risk by: (i) entering into derivative transactions with highly rated major international financial
institutions and other creditworthy counterparties governed by master netting agreements, as applicable; (ii) trading
through central clearing and OTC parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and
(iv) setting limits on single party credit exposures which are subject to periodic management review.
Substantially all of the Company’s derivative agreements have zero thresholds which require daily full
collateralization by the party in a liability position. In addition, certain of the Company’s derivative agreements
contain credit-risk related contingent features; if the credit rating of one of the parties to the derivative agreement is to
fall below a certain level, the party with positive fair value could request termination at the then fair value or demand
immediate full collateralization from the party whose credit rating fell and is in a net liability position.
As of December 31, 2022 and 2021, there were no net liability derivative positions with counterparties with credit risk-
related contingent features whose credit rating has fallen. All derivatives have been appropriately collateralized by the
Company or the counterparty in accordance with the terms of the derivative agreements.
The following tables presents information about the Company’s offsetting of financial assets and liabilities and
derivative instruments as of December 31, 2022 and 2021:
Offsetting of Financial Assets and Liabilities and Derivative Instruments
As of December 31, 2022
Assets:
Derivative assets (1)
Other financial assets
Other invested assets
Liabilities:
Derivative liabilities (2)
Other financial liabilities
Other liabilities
Gross Amount
Recognized
Gross Amount
Offset in the
Balance Sheets
Net Amount
Presented in the
Balance Sheets
(in millions)
Gross Amount not
Offset in the
Balance Sheets (3)
Net Amount
$
$
$
$
8,143 $
2,789
10,932 $
7,047 $
—
7,047 $
1,096 $
2,789
3,885 $
(848) $
—
(848) $
7,645 $
5,275
12,920 $
7,047 $
—
7,047 $
598 $
5,275
5,873 $
— $
—
— $
248
2,789
3,037
598
5,275
5,873
______________
(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) Financial instruments/Collateral sent (held).
As of December 31, 2021
174
Assets:
Derivative assets (1)
Other financial assets
Other invested assets
Liabilities:
Derivative liabilities (2)
Other financial liabilities
Other liabilities
Gross Amount
Recognized
Gross Amount
Offset in the
Balance Sheets
Net Amount
Presented in the
Balance Sheets
(in millions)
Gross Amount not
Offset in the
Balance Sheets (3)
Net Amount
$
$
$
$
12,358 $
1,989
14,347 $
10,756 $
—
10,756 $
1,602 $
1,989
3,591 $
(961) $
—
(961) $
10,770 $
3,919
14,689 $
10,756 $
—
10,756 $
14 $
3,919
3,933 $
— $
—
— $
641
1,989
2,630
14
3,919
3,933
______________
(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) Financial instruments sent (held).
5)
GOODWILL
Goodwill
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 carrying value of goodwill from the Company’s Investment Management reporting unit totaled $5.1 billion and
$4.6 billion at December 31, 2022 and 2021, resulting from its investment in AB as well as direct strategic acquisitions
of AB, including its purchases of Sanford C. Bernstein, Inc and CarVal. The increase of $496 million as of December
31, 2022 was a result of the CarVal acquisition, which generated $666 million of goodwill, offset by the reallocation of
$170 million of goodwill to held-for-sale assets. See Note 1 of the Notes to these Consolidated Financial Statements
for information on the CarVal acquisition.
On November 22, 2022, AB and Société Générale, a leading European bank, announced plans to form a joint venture
combining their respective cash equities and research businesses, as such AB’s Bernstein Research Services business
was classified as held-for-sale and $170 million of goodwill recorded was allocated to the held-for-sale disposal group.
See Note 23 of the Notes to these Consolidated Financial Statements for additional information.
As of December 31, 2022 and 2021, 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.
Other Intangible Assets
The Company’s intangible assets primarily relate to the CarVal acquisition and reflect amounts assigned to acquired
investment management contracts based on their estimated fair values at the time of acquisition, less accumulated
amortization.
The gross carrying amount of AB-related intangible assets was $1.2 billion as of December 31, 2022 and $932 million
as of December 31, 2021, and the accumulated amortization of these intangible assets was $853 million and
$809 million as of December 31, 2022 and 2021, respectively. The net increase of $257 million as of December 31,
2022 was primarily a result of the CarVal acquisition. Amortization expense for AB-related intangible assets totaled
$43 million, $21 million, and $37 million for 2022, 2021 and 2020, respectively. Estimated annual amortization
expense for each of the next five years is approximately $60 million, $60 million, $60 million, $59 million and $38
million, respectively.
6)
CLOSED BLOCK
175
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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 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.
176
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Summarized financial information for the Company’s Closed Block is as follows:
Closed Block Liabilities:
Future policy benefits, policyholders’ account balances and other
Policyholder dividend obligation
Other liabilities
Total Closed Block liabilities
December 31,
2022
2021
(in millions)
$
5,688 $
—
68
5,756
Assets Designated to the Closed Block:
Fixed maturities AFS, at fair value (amortized cost of $3,171 and $3,185) (allowance for
credit losses of $0 and $0)
Mortgage loans on real estate (net of allowance for credit losses of $4 and $4)
Policy loans
Cash and other invested assets
Other assets
Total assets designated to the Closed Block
Excess of Closed Block liabilities over assets designated to the Closed Block
Amounts included in AOCI:
2,948
1,645
569
—
155
5,317
439
Net unrealized investment gains (losses), net of policyholders’ dividend obligation:
$0 and $0; and net of income tax: $47 and ($43)
Maximum future earnings to be recognized from Closed Block assets and liabilities $
(166)
273 $
The Company’s Closed Block revenues and expenses were as follows:
5,928
—
39
5,967
3,390
1,771
602
63
90
5,916
51
172
223
Revenues:
Premiums and other income
Net investment income (loss)
Investment gains (losses), net
Total revenues
Benefits and Other Deductions:
Policyholders’ benefits and dividends
Other operating costs and expenses
Total benefits and other deductions
Net income (loss), before income taxes
Income tax (expense) benefit
Net income (loss)
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
125 $
221
(3)
343
144 $
237
4
385
328
2
330
13
(1)
12 $
372
3
375
10
(2)
8 $
157
251
—
408
399
1
400
8
(2)
6
177
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
A reconciliation of the Company’s policyholder dividend obligation follows:
Year Ended December 31,
2021
2022
2020
Beginning balance
Unrealized investment gains (losses)
Ending balance
(in millions)
$
$
— $
160 $
—
— $
(160)
— $
2
158
160
7)
DAC AND POLICYHOLDER BONUS INTEREST CREDITS
Changes in the DAC asset for the years ended December 31, 2022, 2021 and 2020 were as follows:
Balance, beginning of year
Capitalization of commissions, sales and issue expenses
Amortization:
Impact of assumptions updates and model changes
All other
Total amortization
Change in unrealized investment gains and losses
Reclassified to assets HFS
Balance, end of year
2022
December 31,
2021
(in millions)
2020
$
5,491 $
842
4,243 $
875
5,840
669
43
(585)
(542)
2,367
—
8,158 $
58
451
(393)
766
—
5,491 $
(1,109)
(504)
(1,613)
(654)
1
4,243
$
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 are reported in Interest credited to
policyholders’ account balances. For the years ended December 31, 2022, 2021 and 2020 changes were as follows:
Balance, beginning of year
Amortization charged to income
Balance, end of year
8)
FAIR VALUE DISCLOSURES
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
373 $
(39)
334 $
404 $
(31)
373 $
430
(26)
404
U.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 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.
178
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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.
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, 2022, 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. As of December 31, 2021, no assets or liabilities were required to be measured at fair value
on a non-recurring basis.
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.
179
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Fair Value Measurements as of December 31, 2022
Assets
Investments
Fixed maturities, AFS:
Corporate (1)
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Residential mortgage-backed (2)
Asset-backed (3)
Commercial mortgage-backed
Redeemable preferred stock
Total fixed maturities, AFS
Fixed maturities, at fair value using the fair value option
Other equity investments (7)
Trading securities
Other invested assets:
Short-term investments
Assets of consolidated VIEs/VOEs
Swaps
Credit default swaps
Futures
Options
Total other invested assets
Cash equivalents
Segregated securities
Amounts due from reinsurer (6)
GMIB reinsurance contracts asset
Separate Accounts assets (4)
Total Assets
Liabilities
Notes issued by consolidated VIE’s, at fair value using the
fair value option (5)
GMxB derivative features’ liability
SCS, SIO, MSO and IUL indexed features’ liability
Liabilities of consolidated VIEs and VOEs
Contingent payment arrangements
Total Liabilities
Level 1
Level 2
Level 3
Total
(in millions)
$
$
$
$
— $
—
—
—
—
—
—
—
—
—
214
290
—
131
—
—
2
—
133
2,386
—
—
—
111,744
114,767 $
41,450 $
5,837
499
836
788
8,490
3,203
43
61,146
1,284
497
332
943
393
(425)
9
—
4,171
5,091
501
1,522
—
—
2,436
72,809 $
— $
—
—
15
—
15 $
1,374 $
—
4,164
7
—
5,545 $
2,121 $
—
28
—
34
—
32
—
2,215
224
12
55
—
5
—
—
—
—
5
—
—
4,114
1,229
1
7,855 $
— $
5,764
—
—
247
6,011 $
43,571
5,837
527
836
822
8,490
3,235
43
63,361
1,508
723
677
943
529
(425)
9
2
4,171
5,229
2,887
1,522
4,114
1,229
114,181
195,431
1,374
5,764
4,164
22
247
11,571
______________
(1) Corporate fixed maturities includes both public and private issues.
(2)
Includes publicly traded agency pass-through securities and collateralized obligations.
Includes credit-tranched securities collateralized by sub-prime mortgages, credit risk transfer securities and other asset types.
(3)
(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, 2022, the fair value of such investments was $456 million.
180
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(5)
Includes CLO short-term debt of $239 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 $15 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.
(6) This represents GMIB NLG ceded reserves related to the Venerable Transaction. See Note 1 of the Notes to these Consolidated Financial
Statements for details of the Venerable Transaction.
Includes short position equity securities of $12 million that are reported in other liabilities.
(7)
Fair Value Measurements as of December 31, 2021
Level 1
Level 2
Level 3
Total
(in millions)
Assets
Investments
Fixed maturities, AFS:
Corporate (1)
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Residential mortgage-backed (2)
Asset-backed (3)
Commercial mortgage-backed (2)
Redeemable preferred stock
Total fixed maturities, AFS
Fixed maturities, at fair value using the fair value option
Other equity investments
Trading securities
Other invested assets:
Short-term investments
Assets of consolidated VIEs/VOEs
Swaps
Credit default swaps
Futures
Options
Swaptions
Total other invested assets
Cash equivalents
Segregated securities
Amounts due from reinsurer
GMIB reinsurance contracts asset
Separate Accounts assets (4)
Total Assets
Liabilities
Notes issued by consolidated VIE’s, at fair value using the
fair value option (5)
GMxB derivative features’ liability
SCS, SIO, MSO and IUL indexed features’ liability
Liabilities of consolidated VIEs and VOEs
Contingent payment arrangements
Total Liabilities
______________
— $
—
—
—
—
—
—
—
—
322
340
—
166
—
—
(1)
—
—
165
3,275
—
—
—
144,124
148,226 $
51,007 $
15,385
627
1,152
98
5,926
2,401
53
76,649
1,440
457
226
30
450
(473)
(1)
—
6,959
—
6,965
293
1,504
—
—
2,572
90,106 $
— $
—
—
16
—
16 $
1,277 $
—
6,773
2
—
8,052 $
$
$
$
$
181
1,504 $
—
35
—
—
8
20
—
1,567
201
5
65
—
11
—
—
—
—
—
11
—
—
5,813
1,848
1
9,511 $
— $
8,525
—
—
38
8,563 $
52,511
15,385
662
1,152
98
5,934
2,421
53
78,216
1,641
784
631
30
627
(473)
(1)
(1)
6,959
—
7,141
3,568
1,504
5,813
1,848
146,697
247,843
1,277
8,525
6,773
18
38
16,631
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(1) Corporate fixed maturities includes both public and private issues.
(2)
(3)
(4) Separate Accounts assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its
Includes publicly traded agency pass-through securities and collateralized obligations.
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
(5)
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, 2021, the fair value of such investments was $404 million.
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 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.
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.
Freestanding Derivative Positions
The net fair value of the Company’s freestanding derivative positions as disclosed in Note 4 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 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.
Level Classifications of the Company’s Financial Instruments
Financial Instruments Classified as Level 1
Investments classified as Level 1 primarily include redeemable preferred stock, trading securities, cash equivalents and
Separate Accounts 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
182
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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.
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, certain corporate debt securities and financial assets and liabilities accounted for
using the fair value option, such as public and private fixed maturities. 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, EQUI-VEST variable annuity products, IUL and 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 one, three, five or six 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 classified 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 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 also issues certain benefits on its variable annuity products that are accounted for as derivatives and are
also considered Level 3. The GMIB NLG 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 NLG 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, net 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
183
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
nonperformance risk, attributable to GMxB derivative features’ liability over a range of market-consistent economic
scenarios.
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 equity
projections of Separate Account 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 U.S. Treasury curve for non-performance risk is made to the fair values of the GMIB reinsurance
contract asset, GMIB NLG Reinsurance and GMIB NLG feature to reflect the claims-paying ratings of counterparties
and the Company. Due to the unique, long duration of the GMIB NLG feature and GMIB NLG Reinsurance, risk
margins were applied to the non-capital markets inputs to the GMIB NLG valuations.
After giving consideration to collateral arrangements, the impact to the fair value of its GMIB reinsurance contract
asset was a decrease of $74 million and $107 million as of December 31, 2022 and 2021, respectively, to recognize
incremental counterparty 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 $151 million and $210 million at December 31, 2022 and 2021 to recognize incremental
counterparty non-performance risk.
Lapse rates are adjusted at the contract level based on a comparison of the actuarial 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-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 2016 and
2019 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 consolidated VIEs/VOEs hold investments that are classified as
Level 3, primarily corporate bonds that are vendor priced with no ratings available, bank loans, non-agency
collateralized mortgage obligations and asset-backed securities.
Transfers of Financial Instruments Between Levels 2 and 3
During the year ended December 31, 2022, fixed maturities with fair values of $200 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, fixed maturities with fair value of $213 million were transferred
from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately 12.2% of total
equity as of December 31, 2022.
During the year ended December 31, 2021, fixed maturities with fair values of $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, fixed maturities with fair value of $27 million were transferred from
Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately 6.2% of total equity as
of December 31, 2021.
184
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The tables below present reconciliations for all Level 3 assets and liabilities and changes in unrealized gains (losses)
for the years ended December 31, 2022, 2021 and 2020, respectively.
Balance, January 1, 2022
Total gains and (losses), realized and
unrealized, included in:
Net income (loss) as:
Net investment income (loss)
Investment gains (losses), net
Subtotal
Other comprehensive income (loss)
Purchases
Sales
Activity related to consolidated VIEs/VOEs
Transfers into Level 3 (1)
Transfers out of Level 3 (1)
Balance, December 31, 2022
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 other comprehensive
income for instruments held at the end of the
reporting period (2)
Balance, January 1, 2021
Total gains and (losses), realized and
unrealized, included in:
Net income (loss) as:
Net investment income (loss)
Investment gains (losses), net
Subtotal
Other comprehensive income (loss)
Purchases
Sales
Activity related to consolidated VIEs/VOEs
Transfers into Level 3 (1)
Transfers out of Level 3 (1)
Balance, December 31, 2021
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 other comprehensive
income for instruments held at the end of the
reporting period (2)
Corporate
State and
Political
Subdivisi
ons
Asset-
backed
CMBS
RMBS
(in millions)
Trading
Securities,
at Fair
Value
Fixed
maturities,
at FVO
$ 1,504 $
35 $
8 $
20 $ — $
65 $
201
5
(5)
—
(159)
1,107
(378)
—
168
(121)
$ 2,121 $
—
—
—
—
—
—
(5)
—
(2)
—
—
—
28 $ — $
—
—
—
—
—
—
(2) —
—
34
—
14
—
(2) —
—
—
—
—
—
—
—
(6) —
32 $
34 $
—
(10)
(10)
—
—
—
—
—
—
55 $
(11)
—
(11)
—
98
(36)
—
45
(73)
224
$ — $ — $ — $ — $ — $
(10) $
(2)
$
(156) $
(5) $ — $
(2) $ — $
— $
—
$ 1,702 $
39 $
20 $ — $ — $
39 $
80
5
(16)
(11)
34
938
(473)
—
27
(713)
$ 1,504 $
—
—
—
(2)
—
(2)
—
—
—
35 $
—
—
—
—
6
—
—
—
—
20
(18) —
—
—
—
—
—
—
8 $
—
—
—
—
—
—
—
—
—
20 $ — $
—
26
26
—
—
—
—
—
—
65 $
5
—
5
—
211
(23)
—
—
(72)
201
$ — $ — $ — $ — $ — $
26 $
5
$
28 $
(2) $ — $ — $ — $
— $
—
185
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Balance, January 1, 2020
Total gains and (losses), realized and
unrealized, included in:
Net income (loss) as:
Net investment income (loss)
Investment gains (losses), net
Subtotal
Other comprehensive income (loss)
Purchases
Sales
Activity related to consolidated VIEs/VOEs
Transfers into Level 3 (1)
Transfers out of Level 3 (1)
Balance, December 31, 2020
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 other comprehensive
income for instruments held at the end of the
reporting period (2)
Corporate
State and
Political
Subdivisi
ons
Asset-
backed
CMBS
RMBS
(in millions)
Trading
Securities,
at Fair
Value
Fixed
maturities,
at FVO
$ 1,257 $
39 $
100 $ — $ — $
36 $
—
4
(16)
(12)
(17)
514
(226)
—
189
(3)
$ 1,702 $
—
—
—
2
—
(2)
—
—
—
39 $
—
—
—
—
20
—
—
—
—
—
—
—
—
—
—
—
(100) —
—
—
—
—
—
—
—
—
—
20 $ — $ — $
—
3
3
—
—
—
—
—
—
39 $
—
—
—
—
81
(1)
—
—
—
80
$ — $ — $ — $ — $ — $
3 $
—
$
(18) $
2 $ — $ — $ — $
— $
—
________
(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, 2022 or December 31, 2021, 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.
Balance, January 1, 2022
Realized and unrealized gains (losses), included
in Net income (loss) as:
Investment gains (losses), reported in net
investment income
Net derivative gains (losses) (1)
Total realized and unrealized gains
(losses)
Other comprehensive income (loss)
Purchases (2)
Sales (3)
Settlements
Other (8)
Activity related to consolidated VIEs/VOEs
Transfers into Level 3 (4)
Transfers out of Level 3 (4)
Balance, December 31, 2022
$
Other
Equity
Investments
(7)
GMIB
Reinsurance
Contract
Asset
Amounts
Due from
Reinsurers
Separate
Accounts
Assets
(in millions)
GMxB
Derivative
Features
Liability
Contingent
Payment
Arrangement
$
16 $
1,848 $
5,815 $
1 $
(8,525) $
(38)
—
(581)
—
(1,706)
—
—
—
3,076
(581)
—
40
(78)
—
—
—
—
—
1,229 $
(1,706)
—
122
(117)
—
—
—
—
—
4,114 $
—
—
—
—
—
—
—
—
—
1 $
3,076
—
(462)
147
—
—
—
—
—
(5,764) $
—
—
—
—
(231)
—
—
22
—
—
—
(247)
(1)
—
(1)
—
8
—
—
—
(3)
—
(3)
17 $
186
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Other
Equity
Investments
(7)
GMIB
Reinsurance
Contract
Asset
Amounts
Due from
Reinsurers
Separate
Accounts
Assets
(in millions)
GMxB
Derivative
Features
Liability
Contingent
Payment
Arrangement
Change in unrealized gains or losses for the
period included in earnings for instruments held
at the end of the reporting period (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 (6)
Balance, January 1, 2021
Realized and unrealized gains (losses), included
in Net income (loss) as:
Investment gains (losses), reported in net
investment income
Net derivative gains (losses) (1) (5)
Total realized and unrealized gains
(losses)
Other comprehensive income (loss)
Purchases (2)
Sales (3)
Other
Activity related to consolidated VIEs/VOEs
Transfers into Level 3 (4)
Transfers out of Level 3 (4)
Balance, December 31, 2021
Change in unrealized gains or losses for the
period included in earnings for instruments held
at the end of the reporting period (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 (6)
Balance, January 1, 2020
Realized and unrealized gains (losses), included
in Net income (loss) as:
Investment gains (losses), reported in net
investment income
Net derivative gains (losses) (1) (5)
Total realized and unrealized gains
(losses)
Other comprehensive income (loss)
Purchases (2)
Sales (3)
Settlements (4)
Change in estimate
Activity related to consolidated VIEs/VOEs
Transfers into Level 3 (4)
Transfers out of Level 3 (4)
Balance, December 31, 2020
$
$
$
$
$
$
$
$
(1) $
(581) $
(1,706) $
— $
3,076 $
—
— $
— $
— $
— $
— $
—
84 $
2,488 $
— $
1 $ (11,131) $
(28)
21
—
21
—
8
(92)
—
(4)
—
(1)
16 $
—
(625)
(625)
—
43
(58)
—
—
—
—
1,848 $
—
517
517
—
74
(35)
5,259
—
—
—
5,815 $
—
—
—
2,841
—
—
1
—
—
—
—
(1)
1 $
2,841
—
(463)
88
—
—
—
140
(8,525) $
—
—
—
—
(7)
—
—
(3)
—
—
(38)
2 $
(625) $
517 $
— $
2,841 $
—
— $
— $
— $
— $
— $
—
113 $
2,139 $
— $
— $
(8,502) $
(23)
—
417
417
—
43
(79)
—
(32)
—
—
—
2,488 $
—
—
—
—
—
—
—
—
—
—
—
— $
—
—
—
(2,253)
(2,253)
—
(451)
75
—
—
—
—
—
—
—
1
—
—
—
—
—
—
1 $ (11,131) $
—
—
—
—
(4)
—
1
1
(3)
—
—
(28)
(8)
—
(8)
—
9
(26)
—
—
(4)
—
—
84 $
187
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Other
Equity
Investments
(7)
GMIB
Reinsurance
Contract
Asset
Amounts
Due from
Reinsurers
Separate
Accounts
Assets
(in millions)
GMxB
Derivative
Features
Liability
Contingent
Payment
Arrangement
Change in unrealized gains or losses for the
period included in earnings for instruments held
at the end of the reporting period (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 (6)
$
$
(8) $
417 $
74 $
1 $
(2,253) $
(7)
— $
— $
— $
— $
— $
—
_____________
(1) For the years ended December 31, 2022, 2021 and 2020, the Company’s non-performance risk impact of $522 million, $213 million and
($764) million for the GMxB Derivative Features Liability, ($35) million, ($23) million and $7 million for the GMIB Reinsurance
Contract Asset, and ($60) million, ($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) Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.
(5) For the year ended December 31, 2021, GMxB Derivative Features Liability excludes settlement fees on CS Life reinsurance contract
of $45 million.
(6) For instruments held as of December 31, 2022 or December 31, 2021, 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.
(7) Other Equity Investments include other invested assets.
(8) Contingent Payment Arrangements Other includes $7 million of accretion and ($29) million of held-for-sale reclassifications.
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, 2022 and 2021, respectively.
Quantitative Information about Level 3 Fair Value Measurements as of December 31, 2022
Fair
Value
Valuation
Technique
Significant
Unobservable Input
(in millions)
Range
Weighted Average (2)
Assets:
Investments:
Fixed maturities, AFS:
Corporate
$ 417 Matrix
pricing model
1,029
Market
comparable
companies
Trading Securities, at Fair
Value
55 Discounted
Cash Flow
Other equity investments
4
Market
comparable
companies
Spread over Benchmark
20 bps - 797 bps
205 bps
EBITDA multiples
Discount rate
Cash flow multiples
Loan to value
5.3x - 35.8x
9.0% - 45.7%
0.0x - 10.3x
0.0% - 40.4%
13.6x
11.9%
6.1x
12.0%
Earnings multiple
Discount factor
Discount years
8.3x
10.0%
7
Revenue multiple
0.5x - 10.8x
2.4x
188
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Fair
Value
Valuation
Technique
Significant
Unobservable Input
GMIB reinsurance contract
asset
1,229 Discounted
cash flow
Amount Due from Reinsurers 4,114 Discounted
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
Range
0.26%-26.23%
0.06%-10.93%
0.04%-62.30%
69 bps - 133 bps
14%-32%
0.01%-0.17%
0.06%-0.52%
0.32%-40.00%
Weighted Average (2)
3.05%
0.99%
5.40%
70 bps
24%
3.09%
(same for all ages)
(same for all ages)
Lapse rates
Withdrawal Rates
GMIB Utilization Rates
Non-performance risk (bps)
Volatility rates - Equity
Mortality: Ages 0-40
Ages 41-60
Ages 61-115
0.26%-26.23%
0.06%-10.93%
0.04%-62.30%
51 bps
14%-32%
0.01%-0.17%
0.06%-0.52%
0.32%-40.00%
2.01%
1.32%
7.95%
51 bps
24%
2.33%
(same for all ages)
(same for all ages)
Liabilities:
AB Contingent Consideration
Payable
$ 247 Discounted
cash flow
Expected revenue growth rates
Discount rate
2.0% - 83.9%
1.9% - 10.4%
GMIB NLG
5,761 Discounted
cash flow
GWBL/GMWB
70 Discounted
cash flow
GIB
GMAB
______________
(65) Discounted
cash flow
(2) Discounted
cash flow
Non-performance risk
Lapse rates
Withdrawal rates
Annuitization rates
Mortality rates (1):
Ages 0 - 40
Ages 41-60
Ages 61-115
Lapse rates
Withdrawal Rates
Utilization Rates
Volatility rates - Equity
Non-performance risk(bps)
147 bps
0.26%-35.42%
0.06%-10.93%
0.04%-100.00%
0.01%-0.18%
0.07%-0.54%
0.42%-41.42%
0.35%-26.23%
0.00%-8.00%
100% once
starting
14%-32%
147 bps
Lapse rates
Withdrawal Rates
Utilization Rates
Volatility rates - Equity
Non-performance risk(bps)
0.35%-26.23%
0.20%-1.24%
0.04%-100.00%
14% - 32%
147 bps
Lapse rates
Volatility rates - Equity
Non-performance risk(bps)
0.35%-26.23%
14%-32%
147 bps
11.5%
4.5%
147 bps
4.26%
1.25%
5.95%
1.73%
(same for all ages)
(same for all ages)
3.05%
0.99%
24%
3.05%
0.99%
5.40%
24%
3.05%
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 as of December 31, 2021
Fair
Value
Valuation
Technique
Significant
Unobservable Input
(in millions)
Range
Weighted Average (2)
Assets:
Investments:
Fixed maturities, AFS:
Corporate
$ 258 Matrix pricing model
Spread over benchmark
20 bps - 270 bps
144 bps
189
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Fair
Value
Valuation
Technique
Significant
Unobservable Input
(in millions)
Range
Weighted Average (2)
888
Market comparable
companies
Trading Securities, at Fair
Value
65 Discounted cash flow
Other equity investments
4
Market comparable
companies
GMIB reinsurance contract
asset
1,848 Discounted cash flow
Amount Due from Reinsurers 5,813 Discounted Cash Flow
Liabilities:
AB Contingent
Consideration Payable
38 Discounted cash flow
GMIB NLG
8,503 Discounted cash flow
GWBL/GMWB
99 Discounted cash flow
GIB
GMAB
(75) Discounted cash flow
(3) Discounted cash flow
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%
Earnings multiple
Discounts factor
Discount years
7.3x
10.00%
11
Revenue multiple
7.8x - 10.3x
Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115
Lapse rates
Withdrawal Rates
GMIB Utilization Rates
Non-performance risk (bps)
Volatility rates - Equity
Mortality: Ages 0-40
Ages 41-60
Ages 61-115
57 bps - 93 bps
0.45% - 20.86%
0.27% - 8.66%
0.04% - 60.44%
11% - 31%
0.01% - 0.17%
0.06% - 0.53%
0.31% - 40.00%
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%
13.0x
9.1%
5.5x
30.8%
9.5x
60 bps
2.65%
0.93%
5.27%
24%
2.79%
(same for all ages)
(same for all ages)
1.70%
1.18%
7.20%
37 bps
24%
2.17%
(same for all ages)
(same for all ages)
Expected revenue growth rates
Discount rate
Non-performance risk
Lapse rates
Withdrawal rates
Annuitization rates
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115
2.0% - 83.9%
1.9% - 10.4%
111 bps
1.04% - 23.57%
0.27% - 8.66%
0.03% -100.00%
11.9%
7.0%
111 bps
3.55%
1.04%
5.24%
0.01% - 0.19%
0.07% - 0.57%
0.44% - 43.60%
1.62%
(same for all ages)
(same for all ages)
Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity
111 bps
0.60%-20.86%
0.00%-8.00%
100% once
starting
11%-31%
Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity
Non-performance risk
Lapse rates
Volatility rates - Equity
111 bps
0.60%-20.86%
0.13%-8.66%
0.04%-100.00%
11%-31%
111 bps
0.60%-20.86%
11%-31%
2.65%
0.93%
24%
2.65%
0.93%
5.27%
24%
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.
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 as of December 31, 2022 and 2021, respectively, are approximately $1.0 billion and
$635 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.
•
•
•
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 as of December 31, 2022 and 2021, 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 risk transfer securities, and equipment financings. Included in the
tables above as of December 31, 2022 and 2021, 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 have resulted in
significantly lower (higher) fair value measurements.
Other Equity Investments
Included in other equity investments classified as Level 3 are 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 have
resulted in a significantly higher (lower) fair value measurement. Significant increases (decreases) in the discount rate
would have resulted in a significantly lower (higher) fair value measurement.
GMIB Reinsurance Contract Asset, Amounts Due from Reinsurers and 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 Company data.
The significant unobservable inputs used in the fair value measurement of the Company’s GMIB reinsurance contract
asset are lapse rates, withdrawal rates, non-performance risk 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 GMIB NLG liability and
GMIB NLG Reinsurance are lapse rates, withdrawal rates, GMIB utilization rates, adjustment for non-performance
risk and NLG forfeiture rates. NLG forfeiture rates are caused by excess withdrawals above the annual GMIB accrual
rate that cause the NLG to expire. Significant decreases in lapse rates, NLG forfeiture rates, adjustment for non-
191
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
performance risk and GMIB utilization rates would tend to increase the GMIB NLG liability and GMIB NLG
Reinsurance, while decreases in withdrawal rates and volatility rates would tend to decrease the GMIB NLG 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.
Carrying Value of Financial Instruments Not Otherwise Disclosed in Note 3 and Note 4 of the Notes to these
Consolidated Financial Statements
The carrying values and fair values as of December 31, 2022 and 2021 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
December 31, 2022:
Mortgage loans on real estate
Policy loans
Policyholders’ liabilities: Investment contracts
FHLB funding agreements
FABN funding agreements
Short-term debt (1)
Long-term debt
Separate Accounts liabilities
December 31, 2021 (1):
Mortgage loans on real estate
Policy loans
Policyholders’ liabilities: Investment contracts
FHLB funding agreements
FABN funding agreements
Long-term debt
Separate Accounts liabilities
Carrying
Value
Level 1
Fair Value
Level 2
(in millions)
Level 3
Total
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
16,481 $
4,033 $
1,916 $
8,505 $
7,095 $
520 $
3,322 $
10,236 $
14,033 $
4,024 $
2,035 $
6,647 $
6,689 $
3,839 $
11,620 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
8,390 $
6,384 $
518 $
3,130 $
— $
— $
— $
— $
6,679 $
6,626 $
4,544 $
— $
14,690 $
4,349 $
1,750 $
— $
— $
— $
— $
10,236 $
14,308 $
5,050 $
2,103 $
— $
— $
— $
11,620 $
14,690
4,349
1,750
8,390
6,384
518
3,130
10,236
14,308
5,050
2,103
6,679
6,626
4,544
11,620
_____________
(1) As of December 31, 2022 and 2021, excludes CLO short-term debt of $239 million and $92 million, which is inclusive as fair valued
within Notes issued by consolidated VIE’s, at fair value using the fair value option.
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.
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 U.S. Treasury yield
curve and historical loan repayment patterns.
Short-term Debt
The Company’s short-term debt primarily includes long-term debt that has been reclassified to short-term due to an
upcoming maturity date within one year. The fair values for the Company’s short-term debt are determined by
Bloomberg’s evaluated pricing service, which uses direct observations or observed comparables.
Long-term Debt
The fair values for the Company’s long-term debt are determined by Bloomberg’s evaluated pricing service, which
uses direct observations or observed comparables.
FHLB Funding Agreements
The fair values of Equitable Financial’s FHLB long term funding agreements’ fair values are determined based on
indicative market rates published by FHLB, provided to AB and modeled for each note’s FMV. FHLB Short-term
funding agreements’ fair values are reflective of notional/par value plus accrued interest.
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 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
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);
193
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
•
•
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.
Liabilities for Variable Annuity Contracts with GMDB and GMIB Features without NLG Rider Feature
The change in the liabilities for variable annuity contracts with GMDB and GMIB features and without 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 future policy benefits and other policyholders’ liabilities.
The amounts for the ceded contracts are reflected in the consolidated balance sheets in amounts 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.
Change in Liability for Variable Annuity Contracts with GMDB and GMIB Features and No NLG Feature
Years Ended December 31, 2022, 2021 and 2020
GMDB
Assumed
(1) (2)
Direct
Ceded
Direct
GMIB
Assumed
(1) (2)
Ceded
Balance, January 1, 2020
Paid guarantee benefits
Other changes in reserve
Balance, December 31, 2020
Paid guarantee benefits
Other changes in reserve
Impact of the Venerable Transaction
Balance, December 31, 2021
Paid guarantee benefits
Other changes in reserve
Balance, December 31, 2022
$ 4,780 $
(495)
812
$ 5,097 $
(461)
315
—
$ 4,951 $
(595)
886
$ 5,242 $
15
1
(in millions)
(104) $ 4,673 $
(293)
1,646
(88) $ 6,026 $
(377)
113
243
(65)
—
(2,176)
76 $
(22)
18
72 $
(12)
14
(74)
— $ (2,216) $ 5,892 $
(602)
—
—
336
— $ (2,326) $ 5,626 $
249
(359)
187 $ (2,139)
79
15
(428)
(6)
196 $ (2,488)
58
(49)
603
(7)
(2,141)
(140)
— $ (3,968)
76
—
—
646
— $ (3,246)
______________
(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, 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 8 of the Notes to these Consolidated Financial Statements.
Account Values and Net Amount at Risk
Account Values and NAR for direct variable annuity contracts in force with GMDB and GMIB features as of
December 31, 2022 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
as of December 31, 2022
Variable annuity contracts with GMDB features
Account Values invested in:
General Account
Separate Accounts
Total Account Values
NAR, gross
NAR, net of amounts reinsured
Guarantee Type
Return of
Premium
Ratchet
Combo
Roll-Up
(in millions, except age and interest rate)
Total
$ 16,891
47,608
$ 64,499
$
$
97
7,445
7,542
$
$
739
726
$ 1,422
$ 1,291
$
$
$
$
46
2,452
2,498
$
144
25,211
$ 25,355
$ 17,178
82,716
$ 99,894
1,843
1,341
$ 23,101
$ 12,469
$ 27,105
$ 15,827
Average attained age of policyholders (in years)
Percentage of policyholders over age 70
Range of contractually specified interest rates
51.6
12.1 %
N/A
69.8
52.8 %
N/A
76.1
74.7 %
55.3
21.1 %
3% - 6% 3% - 6.5% 3% - 6.5%
71.8
60.7 %
Variable annuity contracts with GMIB features
Account Values invested in:
General Account
Separate Accounts
Total Account Values
$ —
—
$ —
$ —
—
$ —
$
14
21,001
$ 21,015
$
188
26,529
$ 26,717
$
202
47,530
$ 47,732
NAR, gross
NAR, net of amounts reinsured
$
$
—
—
$
$
—
—
$
$
489
157
$
$
7,540
3,071
$
$
8,029
3,228
Average attained age of policyholders (in years)
Weighted average years remaining until annuitization
Range of contractually specified interest rates
N/A
N/A
N/A
N/A
N/A
N/A
65.8
5.4
69.2
2.4
3% - 6% 3% - 6.5% 3% - 6.5%
71.4
0.5
For more information about the reinsurance programs of the Company’s GMDB and GMIB exposure, see
“Reinsurance” in Note 11 of the Notes to these Consolidated Financial Statements 2021 Form 10-K.
Separate Accounts 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
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.
195
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Investment in Variable Insurance Trust Mutual Funds
Mutual Fund Type
Equity
Fixed income
Balanced
Other
Total
December 31, 2022
December 31, 2021
GMDB
GMIB
GMDB
GMIB
$
$
39,779 $
4,416
37,398
1,123
82,716 $
(in millions)
14,075 $
1,964
31,240
251
52,771 $
5,391
48,390
1,025
47,530 $ 107,577 $
20,015
2,507
40,491
263
63,276
Hedging Programs for GMDB, GMIB, GIB and Other Features
The Company has a program intended to hedge certain risks associated first with the GMDB feature and 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 derivative gains (losses) in
the period in which they occur, and may contribute to income (loss) volatility.
Variable and Interest-Sensitive Life Insurance Policies – NLG
The NLG 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 NLG remains in effect so long as the
policy meets a contractually specified premium funding test and certain other requirements.
The change in the NLG liabilities, reflected in future policy benefits and other policyholders’ liabilities in the
consolidated balance sheets, is summarized in the table below.
Beginning balance
Paid guarantee benefits
Other changes in reserves
Ending balance
_____________
(1) There were no amounts of reinsurance ceded in any period presented.
10)
LEASES
Direct Liability (1)
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
1,096 $
(79)
145
1,162 $
1,022 $
(84)
158
1,096 $
898
(39)
163
1,022
The Company's operating leases primarily consist of real 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 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 Company’s operating leases may include options to extend or terminate the lease, which are not included in the
determination of the 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 residual 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 the information available at the lease commencement date, is used in 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
Assets:
Operating lease assets
Liabilities:
Operating lease liabilities
Balance Sheet Line Item
2022
2021
December 31,
(in millions)
Other assets
Other liabilities
$
$
520 $
637
618 $
768
The table below summarizes the components of lease costs for the years ended December 31, 2022, 2021 and 2020.
Lease Costs
Operating lease cost
Variable operating lease cost
Sublease income
Short-term lease expense
Net lease cost
Maturities of lease liabilities as of December 31, 2022 are as follows:
Maturities of Lease Liabilities
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
179 $
52
(53)
—
178 $
173 $
49
(55)
—
167 $
169
49
(56)
—
162
Operating Leases:
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
December 31, 2022
(in millions)
$
$
186
144
69
61
52
170
682
(64)
618
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)
197
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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.
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 89,000 square feet of space in New York City. 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
Weighted-average remaining operating lease term
Weighted-average discount rate for operating leases
Supplemental cash flow information related to leases was as follows:
Lease Liabilities Information
December 31,
2022
2021
7 years
2.77 %
7 years
2.80 %
Year Ended December 31,
2021
2020
2022
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Non-cash transactions:
Leased assets obtained in exchange for new operating lease liabilities
$
$
202 $
209 $
210
46 $
109 $
156
198
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
11)
REINSURANCE
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. The impact of the transactions described above results in a
decrease to reinsurance assumed and an increase in reinsurance ceded.
Direct premiums
Reinsurance assumed
Reinsurance ceded
Premiums
Direct charges and fee income
Reinsurance ceded
Policy charges and fee income
Direct policyholders’ benefits
Reinsurance assumed
Reinsurance ceded
Policyholders’ benefits
Direct interest credited to policyholders’ account balances
Reinsurance ceded
Interest credited to policyholders’ account balances
Ceded Reinsurance
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
$
$
$
$
$
$
1,042 $
180
(228)
994 $
3,932 $
(691)
3,241 $
4,371 $
209
(1,195)
3,385 $
1,433 $
(24)
1,409 $
970 $
189
(199)
960 $
4,250 $
(613)
3,637 $
3,843 $
238
(863)
3,218 $
1,271 $
(52)
1,219 $
929
222
(154)
997
4,149
(414)
3,735
5,826
241
(741)
5,326
1,252
(30)
1,222
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 million for single lives and $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.
On June 1, 2021, Holdings completed the sale of CSLRC to VIAC. Immediately following the closing of the
Transaction, CSLRC and Equitable Financial entered into the Reinsurance Agreement, pursuant to which Equitable
Financial ceded to CSLRC, on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies
sold by Equitable Financial between 2006-2008. See Note 1 of the Notes to these Consolidated Financial Statements for
details of the Venerable Transaction.
On October 3, 2022, as part of the Global Atlantic Transaction, Equitable Financial ceded to First Allmerica Financial
Life Insurance Company on a combined coinsurance and modified coinsurance basis, a 50% quota share of
approximately 360,000 legacy Group EQUI-VEST deferred variable annuity contracts issued by Equitable Financial
between 1980 and 2008.
As of December 31, 2022 and 2021, the Company had reinsured with non-affiliates in the aggregate approximately
41.6% and 47.6%, respectively, of its current exposure to the GMDB obligation on annuity contracts in-force and,
subject to certain maximum amounts or caps in any one period, approximately 59.8% and 59.8% of its current liability
exposure, respectively, resulting from the GMIB feature. For additional information, see Note 9 of the Notes to these
Consolidated Financial Statements.
In addition to the above, the Company cedes a portion of its group health, extended term insurance, and paid-up life
insurance and substantially all of its individual disability income business through various coinsurance agreements.
199
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Assumed Reinsurance
In addition to the sale of insurance products, the Company currently assumes risk from professional reinsurers. The
Company also had a run-off portfolio of assumed reinsurance liabilities at CSLRC which was sold to Venerable in June
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,
2022
2021
(in millions)
Ceded Reinsurance:
Estimated net fair values of ceded GMIB reinsurance contracts, considered derivatives (1)
Estimated net fair values of ceded GMIB NLG ceded reserves to Venerable (2)
Third-party reinsurance recoverables related to insurance contracts
$
1,229 $
4,114
17,201
1,848
5,813
14,679
10,291
1,138
1,318
40
1,381
1,212
—
111
8,966
4,005
1,272
1,181
47
1,533
1,171
147
104
Top reinsurers:
Venerable Insurance and Annuity Company (A- KBRA (IFRS) rating)
First Allmerica-GAF
RGA Reinsurance Company (AA- S&P rating))
Zurich Life Insurance Company, Ltd. (AA- S&P rating)
Ceded group health reserves
Amount due to reinsurers
Top reinsurers:
RGA Reinsurance Company
First Allmerica-GAF
Protective Life Insurance Company
Assumed Reinsurance:
Reinsurance assumed reserves
662
798
______________
(1) The estimated fair values increased/(decreased) ($619) million, ($640) million and $349 million for the years ended December 31, 2022,
2021 and 2020, 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.
200
EQUITABLE HOLDINGS, INC.
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:
Short-term debt:
CLO short-term debt (5.74%) (1)
Current portion of Long-term debt (2)
Total short-term debt
Long-term debt:
Senior Notes (5.00%, due 2048)
Senior Notes (4.35%, due 2028)
Senior Notes (3.90%, due 2023)
Senior Debentures, (7.00%, due 2028)
Total long-term debt
Total borrowings
December 31,
2022
2021
(in millions)
$
$
239 $
520
759
1,481
1,491
—
350
3,322
4,081 $
92
—
92
1,481
1,490
519
349
3,839
3,931
______________
(1) CLO Warehousing Debt related to VIE consolidation of CLO investment.
(2) Current portion of Long-term debt have been reclassified to short-term debt for the year ended December 31, 2022 as the maturity date is
within one year of year ended December 31, 2022.
As of December 31, 2022, the Company is in compliance with all debt covenants.
Short-term Debt
AB Commercial Paper
As of December 31, 2022 and 2021, AB had no commercial paper 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 for the commercial paper outstanding in 2022 were $190 million with a
weighted average interest rate of 1.5%. Average daily borrowings for the commercial paper in 2021 were $157 million
with a weighted average interest rate of 0.2%.
AB Revolver Credit Facility
AB had a $200 million committed, unsecured senior revolving credit facility (the "AB Revolver") with a leading
international bank, which matured on November 16, 2021. Average daily borrowings for 2021 were $13 million, with
weighted average interest rates of 1.1%.
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. During 2021 Holdings made a principal prepayment of $280 million on the 3.9% Senior Notes due. As
of December 31, 2022, the 3.9% Senior Notes due 2023 are classified as short-term as their maturity date is within one
year.
201
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2022 and 2021, Holdings had outstanding $350 million and $349 million aggregate principal
amount of 7.0% Senior Debentures due 2028 (the “Senior Debentures”). 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 AXA Financial’s obligations under the Senior
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. As of December 31, 2022, the Company was not in
breach of any of the covenants.
Contingent Funding Arrangements
For information regarding activity pertaining to our contingent funding arrangements, see Note 17 of the Notes to
these Consolidated Financial Statements.
Credit Facilities
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. As of December 31, 2022, the Company had $225 million of undrawn letters of
credit issued out of the $1.5 billion sub-limit for Equitable Financial as 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 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. These facilities support the life insurance business reinsured by EQ AZ Life Re.
The HSBC facility matures on February 16, 2024 and the rest of the facilities mature on February 16, 2026 and
February 2027. The bilateral letter of credit facilities were not drawn upon during December 31, 2022 and 2021.
AB Credit Facility
AB has a $800 million committed, unsecured senior revolving credit facility (the “AB Credit Facility”) with a group of
commercial banks and other lenders which matures on October 13, 2026. 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 may 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, restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a
maximum leverage ratio. As of December 31, 2022, 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.
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
202
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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, 2022 and 2021, AB had no amounts outstanding under the AB Credit Facility. During the years
ended the December 31, 2022 and 2021, AB and SCB LLC did not draw upon the AB Credit Facility.
In addition, SCB LLC currently has five uncommitted lines of credit with five financial institutions. Four of these lines
of credit permit borrowing up to an aggregate of approximately $315 million, with AB named as an additional
borrower, while the other line has no stated limit. As of December 31, 2022 and 2021, SCB LLC had no outstanding
balance on these lines of credit. Average daily borrowings during the years ended 2022 and 2021 were $1 million and
$47 thousand with weighted average interest rates of approximately 3.7% and 0.9%, respectively.
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.
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:
Investment management and services fees
Distribution revenues
Other revenues - shareholder servicing fees
Other revenues - other
Total
2022
Year Ended December 31,
2021
(in millions)
2020
$
$
1,453 $
591
79
8
2,131 $
1,645 $
637
86
8
2,376 $
1,368
516
79
8
1,971
Investment Management and Administrative Services Provided by EIM and EIMG to Related Trusts
EIMG 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.
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, 2022, 2021 and 2020.
Revenue received or accrued for:
Investment management and administrative services provided to
EQAT, EQ Premier VIP Trust, 1290 Funds (1)
Total
_______
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
708 $
708 $
840 $
840 $
724
724
(1) For years ended 2021 and 2020, amounts included fees received from Other AXA Trusts of $4 million.
14)
EMPLOYEE BENEFIT PLANS
Pension Plans
Holdings and Equitable Financial Retirement Plans
Equitable Financial sponsors the Equitable 401(k) Plan, a qualified defined contribution plan for eligible employees
and financial professionals. The plan provides for a company contribution, a company matching contribution, and a
203
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
discretionary profit-sharing contribution. Expenses associated with this 401(k) Plan were $38 million, $64 million and
$49 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Holdings sponsors the MONY Life Retirement Income Security Plan for Employees and Equitable Financial sponsors
the Equitable Retirement Plan (the “ Equitable Financial 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
over a specified period. Holdings has assumed primary liability for both plans. Equitable Financial remains secondarily
liable for its obligations under the Equitable Financial QP and would recognize such liability in the event Holdings
does not perform. Holdings and Equitable Financial also sponsor certain nonqualified deferred compensation plans,
including the Equitable Excess Retirement Plan, that provide retirement benefits in excess of the amount permitted
under the tax law for the qualified plans.
Holdings and Equitable Financial 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, average final base salary, and primary Social Security benefits.
AB uses a December 31 measurement date for the AB Plan.
Net Periodic Pension Expense (Benefit)
Components of net periodic pension expense for the Company’s qualified and non-qualified plans were as follows:
Service cost
Interest cost
Expected return on assets
Actuarial (gain) loss
Net amortization
Impact of settlement
Net periodic pension expense (benefit)
2022
Year Ended December 31,
2021
(in millions)
2020
$
$
6 $
57
(159)
1
65
6
(24) $
6 $
46
(154)
1
99
6
4 $
6
77
(147)
1
103
7
47
Changes in Projected Benefit Obligation (PBO)
Changes in the PBO of the Company’s qualified and non-qualified plans were comprised of:
Projected benefit obligation, beginning of year
Interest cost
Actuarial (gains)/losses (1)
Benefits paid
Settlements
Projected benefit obligation, end of year
______________
(1) Actuarial gains and losses are a product of changes in the discount rate as shown below.
2022
2021
(in millions)
2,900 $
57
(487)
(190)
(26)
2,254
3,180
45
(95)
(198)
(32)
2,900
$
$
204
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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:
Pension plan assets at fair value, beginning of year
Actual return on plan assets
Benefits paid
Annuity purchases
Pension plan assets at fair value, end of year
PBO
Excess of PBO over pension plan assets, end of year
2022
2021
(in millions)
$
2,808 $
(515)
(158)
(25)
2,110
2,254
$
144 $
2,744
259
(165)
(30)
2,808
2,900
92
Accrued pension costs of $144 million and $93 million as of December 31, 2022 and 2021, respectively, were recognized
in the accompanying consolidated balance sheets to reflect the unfunded status of these plans.
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Unrecognized Net Actuarial (Gain) Loss
December 31,
2022
2021
(in millions)
2,254 $
2,254 $
2,110 $
2,900
2,900
2,808
$
$
$
The following table discloses the amounts included in AOCI as of December 31, 2022 and 2021 that have not yet been
recognized as components of net periodic pension cost.
Unrecognized net actuarial (gain) loss
Unrecognized prior service cost (credit)
Total
Pension Plan Assets
December 31,
2022
2021
(in millions)
744 $
(1)
743 $
620
(1)
619
$
$
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 8 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 as of December 31,
2022 and 2021:
Fixed maturities
Equity securities
Equity real estate
Cash and short-term investments
Other
Total
December 31,
2022
2021
46.4 %
21.4
22.6
4.0
5.6
100.0 %
47.2 %
29.7
16.5
2.5
4.1
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. As of December 31, 2022, the qualified pension plans
205
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
continued their investment allocation strategy to target a 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 as of December 31, 2022 and 2021, respectively.
Level 1
Level 2
(in millions)
Total
December 31, 2022:
Fixed Maturities:
Corporate
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Common equity, REITs and preferred equity
Mutual funds
Collective Trust
Cash and cash equivalents
Short-term investments
Total Assets at Fair Value
Investments measured at NAV
Total Investments at Fair Value
December 31, 2021:
Fixed Maturities:
Corporate
U.S. Treasury, government and agency
States and political subdivisions
Foreign governments
Common equity, REITs and preferred equity
Mutual funds
Collective Trust
Cash and cash equivalents
Short-term investments
Total Assets at Fair Value
Investments measured at NAV
Total Investments at Fair Value
$
— $
—
619 $
336
—
—
308
30
—
47
—
385
—
8
15
59
—
61
—
34
1,132
—
385 $
1,132 $
— $
—
—
—
576
62
—
19
—
657
—
657 $
842 $
426
16
18
108
—
99
—
46
1,555
—
1,555 $
$
$
$
619
336
8
15
367
30
61
47
34
1,517
600
2,117
842
426
16
18
684
62
99
19
46
2,212
593
2,805
The following table lists investments for which NAV is calculated; NAV is used as a practical expedient to determine
the fair value of these investments as of December 31, 2022 and 2021.
206
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Practical Expedient Disclosure as of December 31, 2022 and 2021
Investment
Fair Value
Redemption
Frequency
(If currently eligible)
Redemption Notice
Period
Unfunded
Commitments
(in millions)
December 31, 2022:
Private Equity Fund
Private Real Estate Investment Trust
Hedge Fund
Total (4)
December 31, 2021:
Private Equity Fund
Private Real Estate Investment Trust
Hedge Fund
Total (4)
$
$
$
$
79
468
53
600
72
457
65
594
N/A (1) (2)
Quarterly
Calendar
Quarters (3)
N/A
One Quarter
Previous Quarter
End
$
$
N/A (1)(2)
Quarterly
Calendar
Quarters (3)
N/A
One Quarter
Previous Quarter
End
$
$
16
—
10
19
—
5
_______________
(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.
(4)
Includes equity method investments of $111 million and $109 million as of December 31, 2022 and 2021, respectively.
The table below presents a reconciliation for all Level 3 fair values of qualified pension plan assets as of December 31,
2022, 2021 and 2020, respectively:
Level 3 Instruments
Fair Value Measurements
Balance, January 1, 2022
Actual return on plan assets — Sales/Settlements
Balance, December 31, 2022
Balance, January 1, 2021
Actual return on plan assets — Sales/Settlements
Balance, December 31, 2021
Balance, January 1, 2020
Actual return on plan assets — Sales/Settlements
Balance, December 31, 2020
Private Real
Estate Investment
Trusts
Other Equity
Investments
(in millions)
Fixed Maturities
$
$
$
$
$
$
— $
—
— $
— $
—
— $
— $
—
— $
— $
—
— $
— $
—
— $
— $
—
— $
(1)
(1)
(2)
—
(1)
(1)
1
(1)
—
As of December 31, 2022, assets classified as Level 1, Level 2 and Level 3 comprise approximately 18.2%, 53.5% and
0.0%, respectively, of qualified pension plan assets. As of December 31, 2021, assets classified as Level 1, Level 2 and
Level 3 comprised approximately 23.4%, 55.4% and 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
$886 million and $$1.0 billion, respectively.
207
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
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 as of
December 31, 2022.
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, 2022 and 2021.
Discount rates:
Equitable Financial QP
Equitable Excess Retirement Plan
MONY Life Retirement Income Security Plan for Employees
AB Qualified Retirement Plan
Other defined benefit plans
Periodic cost
Cash balance interest crediting rate for pre-April 1, 2012 accruals
Cash balance interest crediting rate for post-April 1, 2012 accruals
Rates of compensation increase:
Benefit obligation
Periodic cost
Expected long-term rates of return on pension plan assets (periodic cost)
December 31,
2022
2021
2.55%
5.13%
2.47%
5.09%
2.78%
5.22%
2.55%
5.50%
4.93%-5.22%
2.05%-2.78%
4.84% - 5.20% 1.18%-2.78%
4.00%
0.25%
5.96%
6.37%
6.25%
4.00%
0.50%
5.97%
6.33%
6.25%
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 Equitable Financial QP were funded through the
purchase of non-participating annuity contracts from Equitable Financial. Benefit payments under these contracts were
approximately $3 million and $4 million for 2022 and 2021, 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
208
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 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 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. The ESB Plan was closed to new participants on January 1, 2019.
For 2022 and 2021, post-retirement benefits payments were $20 million and $28 million, respectively, net of employee
contributions.
The Company uses a December 31 measurement date for its post-retirement plans.
Components of Net Post-Retirement Benefits Costs
Service cost
Interest cost
Net amortization
Net periodic post-retirement benefits costs
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
2 $
10
6
18 $
2 $
8
9
19 $
2
13
9
24
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
Accumulated post-retirement benefits obligation, beginning of year
Service cost
Interest cost
Contributions and benefits paid
Actuarial (gains) losses
Accumulated post-retirement benefits obligation, end of year
December 31,
2022
2021
(in millions)
466 $
2
10
(20)
(109)
349 $
516
2
8
(28)
(32)
466
$
$
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
Following year
Ultimate rate to which cost increase is assumed to decline
Year in which the ultimate trend rate is reached
December 31,
2022
5.4%
3.9%
2096
2021
5.1%
4.0%
2094
The following table discloses the amounts included in AOCI as of December 31, 2022 and 2021 that have not yet been
recognized as components of net periodic post-retirement benefits cost:
209
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Unrecognized net actuarial (gains) losses
Unrecognized prior service (credit)
Total
December 31,
2022
2021
(in millions)
17 $
(24)
(7) $
135
(26)
109
$
$
The assumed discount rates for measuring the post-retirement benefit obligations as of December 31, 2022 and 2021
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, 2022 and 2021.
Discount rates:
Benefit obligation
Periodic cost
December 31,
2022
2021
5.07%-5.20% 2.43%-2.72%
2.71%-4.58% 2.34%-2.52%
The Company provides post-employment medical and life insurance coverage for certain disabled former employees.
The accrued liabilities for these post-employment benefits were $2 million and $3 million, respectively, as of
December 31, 2022 and 2021. Components of net post-employment benefits costs follow:
Service cost
Interest cost
Net amortization
Net (gain) loss
Net periodic post-employment benefits costs
2022
Year Ended December 31,
2021
(in millions)
2020
$
$
1 $
—
—
—
1 $
1 $
—
—
—
1 $
1
—
(5)
—
(4)
The following table provides an estimate of future benefits expected to be paid in each of the next five years,
beginning January 1, 2023, and in the aggregate for the five years thereafter. These estimates are based on the same
assumptions used to measure the respective benefit obligations as of December 31, 2022 and include benefits
attributable to estimated future employee service.
Calendar Year
Pension Benefits
Life Insurance
Postretirement Benefits
Health
Estimated
Medicare Part
D Subsidy
Net Estimate
Payment
Gross Estimate
Payment
(in millions)
2023
2024
2025
2026
2027
2028 to 2032
210,551 $
$
245,066 $
$
198,657 $
$
188,175 $
$
$
180,393 $
$ 2,280,266 $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
—
—
—
—
—
—
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 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.
210
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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 was recognized immediately and is reflected in the
measurement of the accumulated postretirement benefit obligations as of December 31, 2020.
15)
SHARE-BASED COMPENSATION PROGRAMS
Compensation costs for 2022, 2021 and 2020 for share-based payment arrangements as further described herein are as
follows:
Performance Shares
Stock Options
Restricted Stock Units
Total compensation expenses
Income Tax Benefit
2022
(in millions)
$
$
$
Year Ended December 31,
2021
2020
31 $
1
296
328 $
68 $
17 $
—
257
274 $
58 $
11
7
234
252
52
Since 2018, Holdings has granted equity awards under the Equitable Holdings, Inc. 2018 Omnibus Incentive Plan and
the Equitable Holdings, Inc. 2019 Omnibus Incentive Plan (together the “Omnibus Plans”) which were adopted by
Holdings on April 25, 2018 and February 28, 2019 respectively. Awards under the Omnibus Plans are linked to
Holdings’ common stock. As of December 31, 2022, the common stock reserved and available for issuance under the
Omnibus Plans was 22 million shares. Holdings may issue new shares or use common stock held in treasury for
awards linked to Holdings’ common stock.
Retirement and Protection
Equity awards for R&P employees, financial professionals and directors in 2022, 2021 and 2020 were granted under
the Omnibus Plans. All grants discussed in this section will be settled in shares of Holdings’ common stock.
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 2022, 2021, and 2020 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 2022, 2021 and 2020 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.
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
211
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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.
Prior Equity Award Grants
In 2017 and prior years, equity awards for employees, financial professional and directors in our 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.
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
retirement eligibility is achieved and subsequent service no longer is required for continued vesting of the award.
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 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 2022, 2021, and 2020 AB purchased
5.2 million, 5.6 million and 5.4 million AB Holding Units for $212 million, $262 million and $149 million,
respectively. These amounts reflect open-market purchases of 2.3 million, 2.6 million and 3.1 million AB Holding
Units for $92.7 million, $117.9 million and $74.0 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 2022, 2021, and 2020 AB granted 4.7 million, 7 million and 5.7 million restricted AB Holding units to AB
employees and directors, respectively.
During 2022, 2021, and 2020 AB Holding issued 6 thousand, 100 thousand and 5 thousand AB Holding Units,
respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $100 thousand, $3
million and $147 thousand respectively, received from employees as payment in cash for the exercise price to purchase
the equivalent number of newly-issued AB Holding Units.
212
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
As of December 31, 2022, no options to buy AB Holding Units had been granted and 29.8 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 30.2 million AB Holding Units were available for grant as of December 31, 2022.
Summary of Stock Option Activity
A summary of activity in the Holdings, AB and AXA option plans during 2022 as follows:
EQH Shares
Number
Outstanding
(in 000’s)
Weighted
Average
Exercise
Price
Options Outstanding
AB Holding Units
AXA Ordinary Shares
Number
Outstanding
(In 000’s)
Weighted
Average
Exercise
Price
Number
Outstanding
(in 000’s)
Weighted
Average
Exercise
Price
€ 22.39
—
—
—
—
€ 22.95
—
€ 23.03
—
Options outstanding at January 1, 2022
Options granted
Options exercised
Options forfeited, net
Options expired
Options outstanding at December 31,
2022
Aggregate intrinsic value (1)
Weighted average remaining
contractual term (in years)
Options exercisable at December 31,
2022
Aggregate intrinsic value (1)
Weighted average remaining
contractual term (in years)
2,040 $
21.69
5,774 $
20.12
—
18.05
22.58
—
21.75
5,895
—
(73)
(24)
—
1,943 $
$
6.55
1,517 $
$
21.45
5,058
6.41
—
20.12
—
—
—
—
—
—
—
(5,774)
—
—
— $
$
0.00
— $
$
0.00
874
—
(181)
(27)
—
666
4.00
630
3.91
€
€
_______________
(1) Aggregate intrinsic value, presented in thousands, is calculated as the excess of the closing market price on December 31, 2022 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 Company option plans during the years ended December
31, 2022, 2021, and 2020 follows:
Dividend yield
Expected volatility
Risk-free interest rates
Expected life in years
Weighted average fair value per option at grant date
EQH Shares (1)
2022 (2)
2021 (2)
— %
— %
— %
—
—
$
— %
— %
— %
—
—
$
$
2020
2.59 %
26.00 %
1.19 %
6.0
4.37
_______________
(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 the years December 31, 2022 and 2021 .
As of December 31, 2022, 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 $113 thousand 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 0.1 years.
213
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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, 2022, approximately 3 million Holdings RSUs remain unvested. Unrecognized compensation cost
related to these awards totaled approximately $33 million and is expected to be recognized over a weighted-average
period of 1.64.
As of December 31, 2022, approximately 15 million AB Holding Unit awards remain unvested. Unrecognized
compensation cost related to these awards totaled approximately $114 million is expected to be recognized over a
weighted-average period of 6.1 years.
The following table summarizes Holdings restricted share units activity for 2022.
Unvested as of January 1, 2022
Granted
Forfeited
Vested
Unvested as of December 31, 2022
Summary of Performance Award Activity
Shares of Holdings
Restricted Stock
Units
3,228,733 $
1,340,926
(172,349)
(1,608,145)
2,789,165 $
Weighted-Average
Grant Date
Fair Value
21.15
33.28
28.39
23.03
29.46
As of December 31, 2022, approximately 1.3 million Holdings awards remain unvested. Unrecognized compensation
cost related to these awards totaled approximately $10 million and is expected to be recognized over a weighted-
average period of 1.53 years.
The following table summarizes Holdings and AXA performance awards activity for 2022.
Unvested as of January 1, 2022
Granted
Forfeited
Vested
Unvested as of December 31, 2022
16)
INCOME TAXES
Shares of Holdings
Performance
Awards
Weighted-Average
Grant Date
Fair Value
Shares of AXA
Performance
Awards
Weighted-Average
Grant Date
Fair Value
1,217,222 $
704,769
(107,921)
(486,475)
1,327,595 $
28.93
33.01
28.43
23.89
32.98
62,747 $
—
—
(62,747)
— $
21.28
—
—
21.28
—
Income from operations before income taxes included income (loss) from domestic operations of $2.4 billion, ($392)
million and ($1.3) billion for the years ended December 31, 2022, 2021 and 2020, and income from foreign operations
of $135 million, $223 million and $169 million for the years ended December 31, 2022, 2021 and 2020.
Approximately $35 million, $59 million and $45 million of the Company’s income tax expense is attributed to foreign
jurisdictions for the years ended December 31, 2022, 2021 and 2020.
A summary of the income tax (expense) benefit in the consolidated statements of income (loss) follows:
214
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Income tax (expense) benefit:
Current (expense) benefit
Deferred (expense) benefit
Total
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
(5) $
(494)
(499) $
(129) $
274
145 $
(5)
749
744
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:
Expected income tax (expense) benefit
Noncontrolling interest
Non-taxable investment income
Tax audit interest
State income taxes
Tax settlements/uncertain tax position release
Tax credits
Other
Income tax (expense) benefit
Year Ended December 31,
2022
2021
(in millions)
2020
$
$
(531) $
40
53
(13)
(63)
—
22
(7)
(499) $
36 $
69
80
(14)
(47)
—
28
(7)
145 $
229
50
92
(8)
(38)
398
21
—
744
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.
The components of the net deferred income taxes are as follows:
Compensation and related benefits
Net operating loss and credits
Reserves and reinsurance
DAC
Unrealized investment gains/losses
Investments
Other
Valuation allowance
Total
December 31,
2022
2021
Assets
Liabilities
Assets
Liabilities
$
$
226 $
240
1,607
—
2,012
—
92
(1,570)
2,607 $
(in millions)
— $
—
—
1,405
—
235
—
—
1,640 $
273 $
699
2,281
—
—
—
—
—
3,253 $
—
—
—
874
965
794
76
—
2,709
During the fourth quarter of 2022, the Company established a valuation allowance of $1.6 billion against its deferred
tax assets related to unrealized capital losses in the available-for-sale securities portfolio. When assessing
recoverability, the Company considers its ability and intent to hold the underlying securities to recovery. The recent
increase in interest rates caused the portfolio to swing to an unrealized loss position. Due to the potential need for
liquidity in a macro stress environment, the Company does not currently have the intent to hold the underlying
securities to recovery. Based on all available evidence, as of December 31, 2022, the Company concluded that a
valuation allowance should be established on the deferred tax assets related to unrealized tax capital losses, net of
realized capital gains, that are not more-likely-than-not to be realized.
215
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The Company has Federal net operating loss carryforwards of $810 million and $2.7 billion, for the years ending
December 31, 2022 and 2021, 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, 2022, $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:
Balance at January 1,
Additions for tax positions of prior years
Reductions for tax positions of prior years
Additions for tax positions of current year
Settlements with tax authorities
Balance at December 31,
Unrecognized tax benefits that, if recognized, would impact the
effective rate
2022
2021
(in millions)
2020
323 $
(9)
—
—
—
314 $
316 $
11
(4)
—
—
323 $
501
241
(382)
—
(44)
316
58 $
67 $
77
$
$
$
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, 2022 and 2021 were $63
million and $50 million, respectively. For 2022, 2021 and 2020, respectively, there were $13 million, $14 million and
($60) 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, 2022, tax years 2014 and subsequent remain subject to examination by the IRS.
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 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 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 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
216
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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, 2022, 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 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 the District of Arizona in 2017 and
consolidated with the Brach matter in federal court in New York. 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. Owners of a substantial number of policies
opted out of the Brach class action. Most opt-out policies are not yet the subject of litigation. Others filed suit
previously including three federal actions that have been coordinated with the Brach action and contain similar
allegations along with additional allegations for violations of state consumer protection statutes and common law
fraud. In March 2022, the federal district court issued a summary judgment decision, denying in significant part but
granting in part Equitable Financial’s motion and denying the motion filed by plaintiffs in the coordinated actions. In
July 2022, the federal district court granted Equitable Financial’s motion to reconsider its summary judgment decision
in part and granted summary judgment as to a portion of the Section 4226 class. The federal district court also agreed
to consider whether it should decertify the Section 4226 class. In January 2023, the federal district court declined to
decertify the class and instead modified it to replace certain class members. Beginning October 30, 2023, the federal
district court will hold one consolidated trial for the Brach action and the three coordinated actions. Equitable
Financial has commenced settlement discussions with the Brach class action plaintiffs and plaintiffs in the coordinated
actions. No assurances can be given about the outcome of those settlement discussions. Equitable Financial has settled
actual and threatened litigations challenging the COI increase by individual policyowners and one entity that invested
in numerous policies purchased in the life settlement market. Two actions are also pending against Equitable Financial
in New York state court. In July 2022, the trial court in one of the New York state court actions, Hobish v. AXA
Equitable Life Insurance Company, granted in significant part Equitable Financial’s motion for summary judgment
and denied plaintiff’s cross motion. That plaintiff filed a notice of appeal and Equitable filed a notice of cross-appeal.
Equitable Financial is vigorously defending each of these matters.
As with other financial services companies, Equitable Financial 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.
217
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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
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 (“FHLB”)
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 $394 million and pledged collateral
with a carrying value of $11.8 billion as of December 31, 2022.
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, 2022
Outstanding
Balance at
December 31,
2021
Issued
During the
Period
Repaid
During the
Period
Long-term
Agreements
Maturing Within
One Year
(in millions)
Long-term
Agreements
Maturing
Within Five
Years
Outstanding
Balance at
December 31,
2022
Short-term funding agreements:
Due in one year or less
$
5,353 $ 54,316 $ (53,790) $
251 $
— $
6,130
Long-term funding agreements:
Due in years two through five
Due in more than five years
Total long-term funding
agreements
Total funding agreements (1)
$
1,290
—
640
692
—
—
1,290
6,643 $ 55,648 $ (53,790) $
1,332
—
(251)
—
(251)
— $
—
—
—
— $
1,679
692
2,371
8,501
_____________
(1) The $4 million and $4 million difference between the funding agreements carrying value shown in fair value table for December 31,
2022 and 2021, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding
agreements borrowing rates.
218
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Funding Agreement-Backed Notes Program (“FABN”)
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 December 31,
2022, the maximum aggregate principal amount of Trust Notes permitted to be outstanding at any one time is $10.0
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 Equitable Financial’s activity of funding agreements under the FABN program.
Change in FABN Funding Agreements during the Year Ended December 31, 2022
Outstanding
Balance at
December 31,
2021
Issued
During
the Period
Repaid
During
the
Period
Long-term
Agreements
Maturing
Within One
Year
Long-term
Agreements
Maturing
Within Five
Years
(in millions)
Foreign
Currency
Transaction
Adjustment
Outstanding
Balance at
December 31,
2022
Short-term funding agreements:
Due in one year or less
$
— $ — $ — $ 1,500 $
— $
— $
1,500
Long-term funding agreements:
Due in years two through five
Due in more than five years
4,600
2,119
400
—
—
—
(1,500)
—
500
(500)
—
(34)
Total long-term funding agreements
Total funding agreements (1)
$
6,719
6,719 $
400
—
400 $ — $
(1,500)
— $
—
— $
(34)
(34) $
4,000
1,585
5,585
7,085
_____________
(1) The $66 million and $70 million difference between the funding agreements notional value shown and carrying value table as of
December 31, 2022 and 2021, 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, 2022, 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, 2022. The
Company had $703 million of commitments under existing mortgage loan agreements as of December 31, 2022.
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
219
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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.
Years Ended December 31,
Combined statutory net income (loss) (1) (2)
As of December 31,
Combined surplus, capital stock and AVR
Combined securities on deposits in accordance with various government
and state regulations
_____________
(1) For 2021, excludes CS Life which was sold June 1, 2021.
(2) For 2020, excludes USFL which was sold April 1, 2020.
2022
2021
(in millions)
2020
148 $
(936) $
396
7,125 $
6,864
17 $
65
$
$
$
In 2022 and 2020, Equitable Financial paid to its direct parent, which subsequently distributed such amount to
Holdings, an ordinary shareholder dividend of $930 million and $2.1 billion, respectively. Equitable Financial did not
pay ordinary dividends during 2021 due to operating losses.
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 New York’s 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’s insurance laws 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 $1.7 billion
in 2023.
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,
2022, EQ AZ Life Re holds $1.7 billion of assets in the EQ AZ Life Re Trust and letters of credit of $2.1 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
As of December 31, 2022, the following three prescribed and permitted practices resulted in net income (loss) and
capital and surplus that is different from the statutory surplus that would have been reported had NAIC statutory
accounting practices been applied.
220
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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 and to consider the impact of both the interest rate derivatives and the
general account assets used to fully hedge the interest rate risk inherent in its variable annuity guarantees when
determining the amount of the deferred asset or liability under SSAP 108. Application of the permitted practice
partially mitigates the New York Insurance Regulation 213 (“Reg 213”) impact of the Venerable Transaction on
Equitable Financial’s statutory capital and surplus and enables Equitable Financial to more effectively neutralize the
impact of interest rates on its statutory surplus and to better align with our economic hedging program. The impact of
applying this permitted practice relative to SSAP 108 as written was an increase of approximately $86 million in
statutory special surplus funds, a decrease of $1.3 billion in statutory net income for the year ended December 31,
2022 and an increase of $1.4 billion for the year ended December 31, 2021, which will be amortized over five years
for each of the retrospective and prospective components. The permitted practice also reset Equitable Financial’s
unassigned surplus to zero as of June 30, 2021 to reflect the transformative nature of the Venerable Transaction.
The NAIC Accounting Practices and Procedures manual (“NAIC SAP”) has been adopted as a component of
prescribed or permitted practices by the State of New York. However, Reg 213 adopted in May of 2019 and as
amended in February 2020 and March 2021, differs from the NAIC variable annuity reserve and capital framework.
Reg 213 requires 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 first amendment for contracts issued prior to January 1, 2020, and for policies issued
after that date a new standard that in current market conditions imposes more conservative reserving requirements for
variable annuity contracts than the NAIC standard.
The impact of the application of Reg 213 was a decrease of approximately $1.9 billion in statutory surplus as of
December 31, 2022 compared to statutory surplus under the NAIC variable annuity framework. Our hedging program
is designed to hedge the economics of our insurance liabilities and largely offsets Reg 213 and NAIC framework
reserve movements due to interest rates and equities. The NYDFS allows domestic insurance companies a five year
phase-in provision for Reg 213 reserves. As of September 30, 2022, Equitable Financial’s Reg 213 reserves were
100% phased-in. As of December 31, 2022, given the prevailing market conditions and business mix, there are no Reg
213 redundant reserves over the US RBC CTE 98 total asset requirement (“TAR”). Finally, the continued application
of Reg 213 resulted in a corresponding decrease of $0.7 billion in statutory net income for the year ended December
31, 2022, which was largely offset by net income gains on our hedging program during the same period as noted.
During the fourth quarter 2020, Equitable Financial received approval from NYDFS for its proposed amended Plan of
Operation for Separate Account No. 68 (“SA 68”) for our Structured Capital Strategies product and Separate Account
No. 69 (“SA 69”) for our Equi-Vest product Structured Investment Option, to change the accounting basis of these two
non-insulated Separate Accounts from fair value to book value in accordance with Section 1414 of the Insurance Law
to align with how we manage and measure our overall general account asset portfolio. In order to facilitate this change
and comply with Section 4240(a)(10), the Company also sought approval to amend the Plans to remove the
requirement to comply with Section 4240(a)(5)(iii) and substitute it with a commitment to comply with Section
4240(a)(5)(i). Similarly, the Company updated the reserves section of each Plan to reflect the fact that Regulation 128
would no longer be applicable upon the change in accounting basis. We applied this change effective January 1, 2021.
The impact of the application is an increase of approximately $2.2 billion in statutory surplus and an increase in
statutory net income for the year ended December 31, 2022 of $2.3 billion, respectively.
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,
221
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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 four 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 - 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
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 variable 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; (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; and (iv) DAC amortization for the SCS
variable annuity product arising from near-term fluctuations in index segment returns;
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
222
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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, lease
write-offs related to non-recurring restructuring activities, 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 and realized capital gains/
losses from sales or disposals of select securities, certain legal accruals; and a bespoke deal to repurchase UL
policies from one entity that had invested in numerous policies purchased in the life settlement market, which
disposed of the risk of additional COI litigation by that entity related to those UL policies; 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.
•
•
In the first quarter 2022, the Company updated its Operating earnings measure to exclude the DAC amortization
impact of near-term fluctuations in indexed segment returns on the SCS variable annuity product to reflect the impact
of market fluctuations consistently with the long term duration of the product. Operating earnings were favorably
impacted by this change in the amount of $78 million for the year ended December 31, 2022. The presentation of
Operating earnings in prior periods was not revised to reflect this modification, however, the Company estimated that
had the treatment in the Company’s Operating earnings measure of the Amortization of DAC for SCS been modified
in 2020, the pre-tax impact on Operating earnings of excluding the SCS-related DAC amortization from Operating
earnings would have been a decrease of $16 million and $34 million for the years ended December 31, 2021 and 2020,
respectively.
The General Account investment portfolio is used to support the insurance and annuity liabilities of our Individual
Retirement, Group Retirement and Protection Solutions businesses segments. In the first quarter 2022, the Company
changed its methodology for allocating its General Account investment portfolio, which resulted in a change in the
asset and net investment income allocation amongst the Company’s business segments. Following this change, the
segmentation of the general account investments is now more closely aligned with the liability characteristics of the
product groups. Management determined that the change in the allocation methodology allows for improved flexibility
and infuses an active asset liability management practice into the segmentation process. Additionally, the Company
also changed its basis for allocating the spread earned from our FHLB investment borrowing and FABN programs. The
spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the assets
less interest credited on the funding agreements. The net spread as reflected in net investment income is allocated to
the segments based on the percentage of the individual segment insurance liabilities over the combined segments
insurance liabilities.
This change in measurement only impacts our segment disclosures, and thus has no impact on our overall consolidated
financial statements. Historical segment operating income (loss), revenues and assets have not been recast in the tables
as the impact was immaterial.
Revenues derived from any customer did not exceed 10% of revenues for the years ended December 31, 2022, 2021
and 2020.
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, 2022, 2021 and 2020, respectively:
Net income (loss) attributable to Holdings
Adjustments related to:
Year Ended December 31,
2022
2021
(in millions)
2020
$
1,785 $
(439) $
(648)
Variable annuity product features (1)
Investment (gains) losses
Net actuarial (gains) losses related to pension and other postretirement benefit
obligations
Other adjustments (2) (3) (4) (5)
Income tax expense (benefit) related to above adjustments (6)
(1,315)
945
4,145
(867)
3,912
(744)
82
552
(56)
120
717
(864)
109
952
(888)
223
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Year Ended December 31,
Non-recurring tax items (7)
Non-GAAP Operating Earnings
Operating earnings (loss) by segment:
Individual Retirement
Group Retirement
Investment Management and Research
Protection Solutions
Corporate and Other (8)
$
$
$
$
$
$
2022
2021
(in millions)
13
2,825 $
2020
(391)
2,302
16
2,009 $
1,140 $
525 $
424 $
179 $
(259) $
1,444 $
631 $
564 $
317 $
(131) $
1,536
491
432
146
(303)
______________
(1)
(2)
(3)
(4)
(5)
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.
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.
Includes separation costs of $82 million and $108 million for the for the years ended December 31, 2021 and 2020, respectively.
Separation costs were completed during 2021.
Includes certain gross legal expenses related to the COI litigation and claims related to a commercial relationship of $218 million and
$207 million for the years ended December 31, 2022 and 2021, respectively. Includes policyholder benefit costs of $75 million for the
years ended December 31, 2022 stemming from a deal to repurchase UL policies from one entity that had invested in numerous policies
purchased in the life settlement market. No adjustments were made for years ended December 31, 2020 operating earnings as the impact
was immaterial.
Includes Non-GMxB related derivative hedge gains and losses of ($34) million, $65 million and ($404) million for the years ended
December 31, 2022, 2021 and 2020, respectively.
Includes income taxes of $(554) million for the above COVID-19 items for the year ended December 31, 2020.
(6)
(7) Prior year includes a reduction in the reserve for uncertain tax positions resulting from the completion of an IRS examination in the year
(8)
ended December 31, 2020.
Includes interest expense and financing fees of $205 million, $241 million and $218 million for the years ended December 31, 2022,
2021 and 2020, 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.
224
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The table below presents segment revenues for the years ended December 31, 2022, 2021 and 2020.
Segment revenues:
Individual Retirement (1)
Group Retirement (1)
Investment Management and Research (2)
Protection Solutions (1)
Corporate and Other (1)
Adjustments related to:
Variable annuity product features
Investment gains (losses), net
Other adjustments to segment revenues (3)
Total revenues
Year Ended December 31,
2022
2021
2020
(in millions)
$
3,920 $
1,173
4,105
3,302
1,488
3,785 $
1,372
4,430
3,358
1,563
4,311
1,148
3,703
3,144
1,207
1,123
(945)
(149)
(2,284)
744
442
$ 14,017 $ 11,036 $ 12,415
(4,268)
867
(71)
______________
(1)
Includes investment expenses charged by AB of $95 million, $128 million and $71 million for the years ended December 31, 2022, 2021
and 2020, respectively, for services provided to the Company.
Inter-segment investment management and other fees of $134 million, $126 million and $113 million for the years ended December 31,
2022, 2021 and 2020, respectively, are included in segment revenues of the Investment Management and Research segment.
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.
(2)
(3)
The table below presents total assets by segment as of December 31, 2022 and 2021:
Total assets by segment:
Individual Retirement
Group Retirement
Investment Management and Research
Protection Solutions
Corporate and Other
Total assets
20)
EQUITY
Preferred Stock
December 31, 2022 December 31, 2021
(in millions)
$
$
125,588 $
42,656
12,633
37,730
34,861
253,468 $
143,663
55,368
11,602
50,686
30,943
292,262
Preferred stock authorized, issued and outstanding was as follows:
Series
Series A
Series B
Series C
Total
December 31, 2022
December 31, 2021
Shares
Authorized
Shares
Issued
32,000
20,000
12,000
64,000
32,000
20,000
12,000
64,000
Shares
Outstanding
32,000
20,000
12,000
64,000
Shares
Authorized
Shares
Issued
Shares
Outstanding
32,000
20,000
12,000
64,000
32,000
20,000
12,000
64,000
32,000
20,000
12,000
64,000
Series A Fixed Rate Noncumulative Perpetual Preferred Stock
225
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
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 has 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%.
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 as follows for the periods indicated:
Series A dividends declared
Series B dividends declared
Series C dividends declared
Common Stock
Year ended December 31,
2022
2021
2020
$
$
$
1,313 $
1,238 $
1,075 $
1,313 $
1,238 $
1,006 $
1,378
426
—
Dividends declared per share of common stock were as follows for the periods indicated:
226
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Dividends declared
Share Repurchase
Year Ended December 31,
2022
2021
2020
$
0.78 $
0.71 $
0.66
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. As of December 31, 2022,
Holdings had authorized capacity of approximately $372 million remaining in its share repurchase program.
For the years ended December 31, 2022, 2021 and 2020, the Company repurchased approximately 28.2 million, 51.9
million and 23.7 million shares of its common stock at a total cost of approximately $0.8 billion, $1.6 billion and $0.4
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,
2022, 2021 and 2020, the Company reissued approximately 2.0 million, 2.3 million and 743 thousand shares of its
treasury stock, respectively. For the year ended December 31, 2022, 2021 and 2020, the Company retired
approximately 12.5 million, 32 million and 0 shares of its treasury stock, respectively.
In April 2022, Holdings entered into an ASR with a third-party financial institution to repurchase an aggregate of $100
million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $100 million and initially
received 2.6 million shares. The ASR terminated during April 2022, at which time 684,700 additional shares of
common stock were received.
In May 2022, Holdings entered into an 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 initially
received 4.3 million shares. The ASR terminated during July 2022, at which time 1.2 million additional shares of
common stock were received.
In September 2022, Holdings entered into an ASR contract with a third-party financial institution to repurchase an
aggregate of $37.5 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $37.5
million and received initial delivery of 1.1 million shares. The ASR terminated during November 2022, at which time
0.2 million additional shares of common stock were received.
In December 2022, Holdings entered into an ASR with a third-party financial institution to repurchase an aggregate of
$61 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $61 million and
initially received 1.7 million shares. The ASR terminated during February 2023, at which time an additional
0.3 million shares of common stock were received.
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, 2022, and 2021 follow:
Unrealized gains (losses) on investments
Defined benefit pension plans
Foreign currency translation adjustments
$
Total accumulated other comprehensive income (loss)
Less: Accumulated other comprehensive income (loss) attributable to noncontrolling interest
Accumulated other comprehensive income (loss) attributable to Holdings
$
December 31,
2022
2021
(in millions)
(8,142) $
(651)
(91)
(8,884)
(50)
(8,834) $
2,684
(669)
(45)
1,970
(34)
2,004
227
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
The components of OCI, net of taxes for the years ended December 31, 2022, 2021 and 2020 follow:
Change in net unrealized gains (losses) on investments:
Net unrealized gains (losses) arising during the period (1)
(Gains) losses reclassified into net income (loss) during the period (2)
$
Net unrealized gains (losses) on investments
Adjustments for policyholders’ liabilities, DAC, insurance liability loss
recognition and other
Change in unrealized gains (losses), net of adjustments (net of
deferred income tax expense (benefit) of ($891), ($562), and $786)
Change in defined benefit plans:
Reclassification to Net income (loss) of amortization of net prior service
credit included in net periodic cost (3)
Change in defined benefit plans (net of deferred income tax expense
(benefit) of ($1), $68, and $14)
Foreign currency translation adjustments:
Foreign currency translation gains (losses) arising during the period
(Gains) losses reclassified into net income (loss) during the period
Foreign currency translation adjustment
Total other comprehensive income (loss), net of income taxes
Less: Other comprehensive income (loss) attributable to noncontrolling
interest
Other comprehensive income (loss) attributable to Holdings
Year Ended December 31,
2022
2021
(in millions)
2020
(13,637) $
685
(12,952)
(2,467) $
(698)
(3,165)
4,887
(653)
4,234
2,126
1,052
(1,278)
(10,826)
(2,113)
2,956
18
18
(46)
—
(46)
(10,854)
266
266
(11)
—
(11)
(1,858)
(16)
(10,838) $
$
1
(1,859) $
48
48
22
—
22
3,026
7
3,019
______________
(1) For 2022, unrealized gains (losses) arising during the period is presented net of a valuation allowance of $1.6 billion established during
the fourth quarter of 2022. The Company established the valuation allowance against its deferred tax assets related to unrealized capital
losses in the available for sale securities portfolio. See Note 16 of the Notes to these Consolidated Financial Statements for details on the
valuation allowance.
(2) See “reclassification adjustments” in Note 3 of the Notes to these Consolidated Financial Statements. Reclassification amounts presented
net of income tax expense (benefit) of ($182) million, $186 million, and ($174) million for the years ended December 31, 2022, 2021
and 2020, respectively.
(3) 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.
228
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:
Weighted-average common shares outstanding:
Weighted-average common shares outstanding — basic
Effect of dilutive securities:
Employee share awards (1)
Weighted-average common shares outstanding — diluted (2)
Net income (loss):
Net income (loss)
Less: Net income (loss) attributable to the noncontrolling interest
Net income (loss) attributable to Holdings
Less: Preferred stock dividends
Net income (loss) available to Holdings’ common shareholders
EPS:
Basic
Diluted
Year Ended December 31,
2022
2021
(in millions)
2020
377.6
417.4
450.4
2.3
379.9
—
417.4
—
450.4
$
$
$
$
2,026 $
241
1,785
80
1,705 $
(24) $
415
(439)
79
(518) $
(349)
299
(648)
53
(701)
4.52 $
4.49 $
(1.24) $
(1.24) $
(1.56)
(1.56)
_____________
(1) Calculated using the treasury stock method.
(2) Due to net loss for the years ended December 31, 2021 and 2020, approximately 3.8 million and 1.7 million shares were excluded from
the diluted EPS calculation.
For the years ended December 31, 2022, 2021 and 2020, 3.9 million, 8.2 million, and 10.0 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:
Balance, beginning of period
Net earnings (loss) attributable to redeemable noncontrolling interests
Purchase/change of redeemable noncontrolling interests
Balance, end of period
23)
HELD-FOR-SALE:
Year Ended December 31,
2022
2021
2020
(in millions)
$
$
468 $
(59)
46
455 $
143 $
5
320
468 $
365
(3)
(219)
143
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.
229
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
AB Bernstein Research Services
On November 22, 2022, AB and Société Générale, a leading European bank, announced plans to form a joint venture
combining their respective cash equities and research businesses. The consummation of the joint venture is subject to
customary closing conditions, including regulatory clearances. The closing is expected to occur before the end of 2023.
Upon closing, AB will own a 49% interest in the joint venture and Société Générale will own a 51% interest in the
joint venture, with an option to reach 100% ownership after five years. The assets and liabilities of AB's research
services business recorded at fair value, less cost to sell have been classified as held-for-sale in our Consolidated
Financial Statements. As a result of classifying these assets as held-for-sale, AB recognized a non-cash valuation
adjustment of $7 million on the consolidated statement of income, to recognize the net carrying value at lower of cost
or fair value, less estimated costs to sell.
The following table summarizes the assets and liabilities classified as held-for-sale as of December 31, 2022 on the
Company’s consolidated balance sheet:
Cash and cash equivalents
Broker-dealer related receivables
Trading securities, at fair value
Goodwill and other intangible assets ,net
Other assets (2)
Total assets held-for-sale
Broker-dealer related payables
Customers related payables
Other liabilities
Total liabilities held-for-sale
December 31,
2022 (1)
(in millions)
159
74
25
175
129
562
33
10
65
108
$
$
____________
(1) The assets and liabilities classified as held-for-sale are reported within our Investment Management & Research
segment.
(2) Other assets includes a valuation adjustment of ($7) million.
These assets and liabilities are reported under the Investment Management & Research segment. The company has
determined that AB’s exit from the research business did not represent a strategic shift that had a major effect on AB’s
or the Company’s consolidated results of operations, and therefore, are not classified as discontinued operations.
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.
24)
SUBSEQUENT EVENTS
Debt Offering
On January 11, 2023, the Company issued $500 million aggregate principal amount of senior notes (the “Senior
Notes”). These amounts will be recorded net of the underwriting discount and issuance costs of $5 million. The
Company will pay semiannual interest on the Senior Notes on January 11 and July 11 of each year, commencing on
230
EQUITABLE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
July 11, 2023, and the Senior Notes will mature on January 11, 2033. The Senior Notes bear interest at 5.594% per
annum. On any date prior to October 11, 2032, the Company may redeem some or all of the Senior Notes, subject to a
make-whole provision. At any time on or after October 11, 2032, the Company may, at its option, redeem the Notes in
whole or in part, at a price equal to 100% of the principal amount of the Senior Notes being redeemed plus accrued and
unpaid interest thereon to the redemption date. The Senior Notes contain customary affirmative and negative
covenants, including a limitation on certain liens and a limit on the Company’s ability to consolidate, merge, sell or
otherwise dispose of all or substantially all of its assets. The Senior Notes 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 Senior Notes may be accelerated.
Share Repurchase
On February 9, 2023, the Company’s Board of Directors authorized a new $700 million 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. As of February 9, 2023,
Holdings had authorized capacity of approximately $1.1 billion remaining in its share repurchase program.
Accelerated Share Repurchase Agreement
In January 2023, Holdings entered into an ASR with a third-party financial institution to repurchase an aggregate of
$75 million of Holdings’ common stock. Pursuant to the ASR, Holdings made a prepayment of $75 million and
received initial delivery of 2.0 million Holdings’ shares. The ASR is scheduled to terminate during the first quarter of
2023, at which time additional shares may be delivered or returned depending on the daily volume-weighted average
price of Holdings’ common stock.
231
EQUITABLE HOLDINGS, INC.
SCHEDULE I
SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2022
Fixed maturities, AFS:
U.S. government, agencies and authorities
State, municipalities and political subdivisions
Foreign governments
Public utilities
All other corporate bonds
Residential mortgage-backed
Asset-backed
Commercial mortgage-backed
Redeemable preferred stocks
Total fixed maturities, AFS
Fixed maturities, at fair value using the fair value option
Mortgage loans on real estate (2)
Policy loans
Other equity investments
Trading securities
Other invested assets
Total Investments
Cost (1)
Fair Value
(in millions)
Carrying
Value
$
$
7,054 $
609
985
6,829
43,883
908
8,859
3,823
41
72,991
1,599
16,610
4,033
2,938
639
3,885
102,695 $
5,837 $
527
836
5,778
37,793
822
8,490
3,235
43
63,361
1,508
14,690
4,349
3,152
677
3,885
91,622 $
5,837
527
836
5,778
37,793
822
8,490
3,235
43
63,361
1,508
16,481
4,033
3,152
677
3,885
93,097
______________
(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.
232
EQUITABLE HOLDINGS, INC.
SCHEDULE II
Balance Sheets (Parent Company)
December 31, 2022 and 2021
ASSETS
Investment in consolidated subsidiaries
Fixed maturities available-for-sale, at fair value (amortized cost of $737 and $884)
Other equity investments
Other invested assets
Total investments
Cash and cash equivalents
Goodwill and other intangible assets, net
Loans to affiliates
Receivable from affiliates
Current and deferred income taxes assets
Other assets
Total Assets
LIABILITIES
Short-term debt
Long-term debt
Employee benefits liabilities
Loans from affiliates
Payable to affiliates
Other liabilities
Total Liabilities
December 31,
2022
2021
(in millions, except share amounts)
$
$
$
$
2,929 $
693
139
448
4,209
711
1,242
990
714
521
265
8,652 $
520 $
3,322
777
1,900
394
81
6,994 $
13,128
874
92
—
14,094
867
1,255
755
585
600
44
18,200
—
3,839
853
1,900
48
41
6,681
EQUITY ATTRIBUTABLE TO HOLDINGS
Preferred stock and additional paid-in capital, $1 par value and $25,000 liquidation
preference
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 508,418,442 and
520,918,331 shares issued, respectively; 365,081,940 and 391,290,224 shares
outstanding, respectively
Additional paid-in capital
Treasury stock, at cost, 143,336,502 and 129,628,107 shares, respectively
Retained earnings
Accumulated other comprehensive income (loss)
Total equity attributable to Holdings
Total Liabilities and Equity Attributable to Holdings
$
1,562 $
1,562
4
2,299
(3,297)
9,924
(8,834)
1,658
8,652 $
$
4
1,919
(2,850)
8,880
2,004
11,519
18,200
The financial information of Equitable Holdings, Inc. should be read in conjunction with the Consolidated Financial Statements
and Notes thereto.
233
EQUITABLE HOLDINGS, INC.
SCHEDULE II
STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2022, 2021, AND 2020
REVENUES
Equity in income (losses) from continuing operations of consolidated subsidiaries
Net investment income (loss)
Investment gains (losses), net
Total revenues
$
EXPENSES
Interest expense
Other operating costs and expenses
Total expenses
Income (loss) from continuing operations, before income taxes
Income tax (expense) benefit
Net income (loss) attributable to Holdings
Less: Preferred stock dividends
Net income (loss) available to Holdings' common shareholders
$
2022
2021
(in millions)
2020
1,935 $
66
—
2,001
248
33
281
1,720
65
1,785
80
1,705 $
(152) $
26
(12)
(138)
241
58
299
(437)
(2)
(439)
79
(518) $
(668)
26
—
(642)
229
40
269
(911)
263
(648)
53
(701)
COMPREHENSIVE INCOME (LOSS)
Net income (loss)
Other comprehensive income (loss) net of income taxes:
Change in net unrealized gains (losses) on investments
Change in defined benefit plans
Equity in net other comprehensive income (loss) from continuing operations of
consolidated subsidiaries
Total other comprehensive income (loss), net of income taxes
Comprehensive income (loss)
$
1,785 $
(439) $
(648)
(6)
10
(85)
251
(10,842)
(10,838)
(9,053) $
(2,025)
(1,859)
(2,298) $
$
47
53
2,919
3,019
2,371
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 CASH FLOWS (PARENT COMPANY)
YEARS ENDED DECEMBER 31, 2022, 2021, AND 2020
Net income (loss) attributable to Holdings
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Equity in net (earnings) loss of subsidiaries
Non-cash long term incentive compensation expense
Amortization and depreciation
Equity (income) loss limited partnerships
Dividends from subsidiaries
Changes in:
Current and deferred taxes
Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale
Short-term investments
Other
Payment for the purchase/origination of:
Fixed maturities, available-for-sale
Short-term investments
Other
Net issuance on credit facilities to affiliates
Proceeds from the sale of subsidiary
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Issuance of preferred stock
Repayment of long-term debt
Proceeds from loans from affiliates
Repayments of loans from affiliates
Shareholder dividends paid
Preferred dividends paid
Purchase of treasury shares
Capital contribution to subsidiaries
Other, net
Net cash provided by (used in) financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental cash flow information:
Interest paid
Income taxes (refunded) paid
Non-cash transactions from investing and financing activities:
Change in investment in subsidiary from issuance of AB Units for CarVal acquisition
Non-cash dividends from subsidiaries
Dividend of AB Units from subsidiary
2022
2021
(in millions)
2020
$
1,785 $
(439) $
(648)
(1,935)
64
57
(29)
1,801
152
15
60
(19)
792
104
(23)
1,824 $
(151)
14
424 $
131 $
550
5
—
(1,000)
(16)
(235)
—
(565) $
— $
—
—
—
(294)
(80)
(849)
(225)
33
(1,415) $
(156)
867
711 $
210 $
—
—
—
—
(7)
(80)
215
338 $
293 $
(280)
1,000
—
(296)
(79)
(1,637)
(815)
(53)
(1,867) $
(1,105)
1,972
867 $
668
27
40
(8)
2,877
(250)
(135)
2,571
131
—
—
(1,011)
—
(21)
(115)
—
(1,016)
494
—
—
(300)
(297)
(53)
(430)
(350)
—
(936)
619
1,353
1,972
185 $
153 $
209 $
153 $
196
(265)
314 $
22 $
— $
— $
— $
23 $
—
—
—
$
$
$
$
$
$
$
$
$
$
$
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
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, 2022 and 2021, $900 million and $755 million were outstanding under the EQH Facility with
interest rates of approximately 4.3% and 0.2%, respectively, respectively.
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. As of December 31, 2022 and 2021, $1.0 billion was outstanding on the loan.
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, 2022 and 2021, $900
million was outstanding on the loan.
Interest cost related to loans from affiliates totaled $60 million, $30 million and $32 million for the years ended
December 31, 2022, 2021 and 2020, 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 the Consolidated Financial Statements.
6)
SHARE REPURCHASE
See Note 20 of the Notes to the Consolidated Financial Statements.
236
EQUITABLE HOLDINGS, INC.
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2022
Individual
Retirement
Group
Retirement
Investment
Management
and Research
Protection
Solutions
Corporate
and Other
Total
(in millions)
Deferred policy acquisition costs
Policyholders’ account balances
Future policy benefits and other policyholders'
liabilities
Policy charges and premium revenue
Net derivative gains (losses)
Net investment income (loss)
Policyholders’ benefits and interest credited
Amortization of deferred policy acquisition costs
All other operating expenses (1)
$ 4,661 $ 1,075 $
40,790
13,141
— $ 2,124 $
14,939
—
298 $ 8,158
83,855
14,985
20,578
1,513
1,626
1,239
1,237
419
726
(16)
318
(7)
605
281
8
249
—
—
41
(108)
—
—
3,255
5,129
2,087
(16)
961
2,477
112
753
8,433
317
52
618
799
3
1,173
34,124
4,235
1,696
3,315
4,794
542
6,156
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2021
Individual
Retirement
Group
Retirement
Investment
Management
and Research
Protection
Solutions
Corporate
and Other
Total
(in millions)
Deferred policy acquisition costs (2)
Policyholders’ account balances (2)
Future policy benefits and other policyholders'
liabilities (2)
Policy charges and premium revenue
Net derivative gains (losses)
Net investment income (loss)
Policyholders’ benefits and interest credited
Amortization of deferred policy acquisition costs
All other operating expenses (1)
$ 3,639 $
38,456
13,049
776 $
— $ 1,066 $
15,027
—
10 $ 5,491
79,357
12,825
22,904
1,867
(4,386)
1,221
912
294
814
3
371
(29)
751
303
2
362
—
—
(13)
25
—
—
3,241
4,843
2,016
(83)
1,102
2,478
95
780
8,967
343
46
747
744
2
1,178
36,717
4,597
(4,465)
3,846
4,437
393
6,375
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2020
Individual
Retirement
Group
Retirement
Investment
Management
and Research
Protection
Solutions
Corporate
and Other
Total
Deferred policy acquisition costs (2)
Policyholders’ account balances (2)
Future policy benefits and other policyholders'
liabilities (2)
Policy charges and premium revenue
Net derivative gains (losses)
Net investment income (loss)
Policyholders’ benefits and interest credited
Amortization of deferred policy acquisition costs
All other operating expenses (1)
_____________
(1) Operating expenses are allocated to segments.
(2) Excludes amounts reclassified as HFS.
$ 3,178 $
30,736
12,828
632 $
(in millions)
— $
—
418 $
14,875
25,212
2,034
(1,999)
1,337
3,086
321
724
9
295
(2)
644
305
73
284
—
—
(36)
36
—
—
2,815
5,031
2,013
413
941
2,372
1,220
546
237
15 $ 4,243
66,820
8,381
9,629
390
(98)
519
785
(1)
978
39,881
4,732
(1,722)
3,477
6,548
1,613
5,347
EQUITABLE HOLDINGS, INC.
SCHEDULE IV
REINSURANCE (1)
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020
2022
Life insurance in-force
Premiums:
Life insurance and annuities
Accident and health
Total premiums
2021
Life insurance in-force
Premiums:
Life insurance and annuities
Accident and health
Total premiums
2020
Life insurance in-force
Premiums:
Life insurance and annuities
Accident and health
Total premiums
Gross Amount
Ceded to Other
Companies
Assumed from
Other
Companies
(in millions)
Net Amount
Percentage
of Amount
Assumed to Net
$
483,069 $
174,819 $
31,337 $
339,587
9.2 %
$
$
822 $
220
1,042 $
182 $
46
228 $
172 $
8
180 $
812
182
994
21.2 %
4.4 %
18.1 %
$
484,082 $
185,203 $
31,971 $
330,850
9.7 %
$
$
802 $
168
970 $
155 $
44
199 $
181 $
8
189 $
828
132
960
21.9 %
6.1 %
19.7 %
$
473,514 $
94,231 $
33,098 $
412,381
8.0 %
$
$
805 $
124
929 $
113 $
41
154 $
213 $
9
222 $
905
92
997
23.5 %
9.8 %
22.3 %
______________
(1)
Includes amounts related to the discontinued group life and health business.
238
Part II, Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Part II, Item 9A
Evaluation of Disclosure Controls and Procedures
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, 2022. This evaluation is
performed 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 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 (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, 2022.
Management’s Annual Report on Internal Control Over Financial Reporting
Management 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 concluded that
the Company’s internal control over financial reporting was effective as of December 31, 2022. 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.
On July 1, 2022, AllianceBernstein L.P. completed its acquisition of CarVal Investors L.P. (“CarVal”). Consistent with
guidance issued by the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted
from management’s report on internal control over financial reporting in the year of acquisition, management excluded an
assessment of the effectiveness of the Company’s internal control over financial reporting related to CarVal. Total assets and
total revenues of CarVal that were excluded from management’s assessment each constitute less than 1% as of and for the year
ended December 31, 2022.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been audited 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 Reporting
There were no changes in the Company’s internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act during the quarter ended December 31, 2022, that have affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
Part II, Item 9B.
Sixth Amended and Restated By-laws
OTHER INFORMATION
On February 15, 2023, the Board of Directors of Equitable Holdings, Inc. (the “Board”) approved the Sixth Amended and
Restated By-laws of Equitable Holdings, Inc. (the “By-laws”), effective as of February 15, 2023. The Board approved
239
amendments to provisions of the By-laws intended to address universal proxy rules recently adopted by the U.S. Securities and
Exchange Commission (the "SEC"), by, among other things, clarifying that no person may solicit proxies in support of a
director nominee, other than the Board's nominees, unless such person has complied with Rule 14a-19 under the Securities
Exchange Act of 1934, as amended, including applicable notice and solicitation requirements. Further, any stockholder directly
or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, with the white proxy card
being reserved for exclusive use by the Board.
The amendments also require any candidate for the Board nominated by a stockholder to provide additional background
information by completing a Director Questionnaire.
The Board also approved the restatement of the By-laws to better conform the By-laws with recent amendments in
Delaware corporate law relating to the provision of stockholder lists at the annual meeting. This amendment is intended to
address privacy concerns relating to the broadcast of stockholder information via the virtual meeting format by removing the
requirement that stockholder lists be provided during a meeting.
The foregoing description of the changes contained in the By-laws does not purport to be complete and is qualified in its
entirety by reference to the full text of the By-laws, a copy of which is attached hereto as Exhibit 3.2 to this Form 10-K and is
incorporated herein by reference.
Mark Pearson Employment Agreement
On February 15, 2023, Equitable Holdings, Inc., Equitable Financial Life Insurance Company and Mark Pearson, the
Company’s President and Chief Executive Officer, entered into a letter agreement (the “Letter Agreement”) amending the term
of Mr. Pearson’s employment agreement to delete the references to the automatic termination of the agreement upon Mr.
Pearson reaching 65 years of age.
The foregoing description of the Letter Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the Letter Agreement, a copy of which is attached hereto as Exhibit 10.2.6 to this Form 10-K and is
incorporated herein by reference.
Part II, Item 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
Part III, Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated by reference to, and will be contained in, the Company’s 2023 Proxy
Statement.
Part III, Item 11.
The information required by this item is incorporated by reference to, and will be contained in, the Company’s 2023 Proxy
EXECUTIVE COMPENSATION
Statement.
Part III, Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Equity Compensation Plan Information
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The following table provides information as of December 31, 2022, 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 the Consolidated Financial Statements.
Plan category
Equity compensation plans approved by
security holders
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a))
(a)
(b)
(c)
Omnibus Plan ......................................................
7,485,758
(1)
21.79
(2)
Stock Purchase Plan (3) (4) .................................
Equity compensation plans not approved by
security holders
Total
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7,485,758
20,262,086
5,094,881
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25,356,967
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(1) Represents 1,907,979 outstanding options, 2,854,295 outstanding RSUs and 2,723,484 outstanding performance shares as of December
31, 2022 under the 2018 & 2019 Omnibus Plan. Totals include dividend equivalents on performance shares of 71,425 and on RSUs of
132,751. The number of performance shares represents the number of shares that would be received based on maximum performance,
reduced for cancellations through December 31, 2022. 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
2023 Proxy Statement.
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 2023 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 2023 Proxy
Statement.
241
Part IV, Item 15.
The following documents are filed as part of this report:
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Page Number
1.
2.
Financial Statements—Item 8. Financial Statements and Supplementary Data
Financial Statement Schedules:
Schedule I—Summary of Investments Other Than Investments in Related Parties as of December
31, 2022
Schedule II—Condensed Financial Information of Parent Company as of December 31, 2022 and
2021, and for the Years Ended December 31, 2022, 2021 and 2020
Schedule III—Supplementary Insurance Information as of December 31, 2022 and 2021 and for the
Years Ended December 31, 2022, 2021 and 2020
Schedule IV—Reinsurance for the Years Ended December 31, 2022, 2021 and 2020
3.
Exhibits: See the accompanying Index to Exhibits.
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237
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Part IV, Item 16.
None.
Selected Financial Terms
Account Value (“AV”)
FORM 10-K SUMMARY
GLOSSARY
Generally equals the aggregate policy account value of our retirement and protection
products. General Account AV refers to account balances in investment options that
are backed by the General Account while Separate Accounts AV refers to Separate
Accounts investment assets.
Alternative investments
Investments in real estate and real estate joint ventures and other limited
partnerships.
Assets under administration (“AUA”)
Includes non-insurance client assets that are invested in our savings and investment
products or serviced by our Equitable Advisors platform. We provide administrative
services for these assets and generally record the revenues received as distribution
fees.
Annualized Premium
100% of first year recurring premiums (up to target) and 10% of excess first year
premiums or first year premiums from single premium products.
Assets under management (“AUM”)
Combined RBC Ratio
Conditional tail expectation (“CTE”)
Deferred policy acquisition cost (“DAC”)
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.
Calculated as the overall aggregate RBC ratio for the Company’s insurance
subsidiaries including capital held for its life insurance and variable annuity
liabilities and non-variable annuity insurance liabilities.
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.
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.
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Deferred sales inducements (“DSI”)
Fee-Type Revenue
Gross Premiums
Invested assets
P&C
Premium and deposits
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.
Revenue from fees and related items, including policy charges and fee income,
premiums, investment management and service fees, and other income.
FYP and Renewal premium and deposits.
Includes fixed maturity securities, equity securities, mortgage loans, policy loans,
alternative investments and short-term investments.
Property and casualty.
Amounts a policyholder agrees to pay for an insurance policy or annuity contract
that may be paid in one or a series of payments as defined by the terms of the policy
or contract.
Protection Solutions Reserves
Equals the aggregate value of Policyholders’ account balances and Future policy
benefits for policies in our Protection Solutions segment.
Reinsurance
Insurance policies purchased by insurers to limit the total loss they would
experience from an insurance claim.
Renewal premium and deposits
Premiums and deposits after the first twelve months of the policy or contract.
Risk-based capital (“RBC”)
Rules to determine insurance company statutory capital requirements. It is based on
rules published by the National Association of Insurance Commissioners (“NAIC”).
Total adjusted capital (“TAC”)
Primarily consists of capital and surplus, and the asset valuation reserve.
Product Terms
401(k)
403(b)
457(b)
Accumulation phase
Affluent
Annuitant
Annuitization
Benefit base
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.
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.
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.
The phase of a variable annuity contract during which assets accumulate based on
the policyholder’s lump sum or periodic deposits and reinvested interest, capital
gains and dividends that are generally tax-deferred.
Refers to individuals with $250,000 to $999,999 of investable assets.
The person who receives annuity payments or the person whose life expectancy
determines the amount of variable annuity payments upon annuitization of an
annuity to be paid for life.
The process of converting an annuity investment into a series of periodic income
payments, generally for life.
A notional amount (not actual cash value) used to calculate the owner’s guaranteed
benefits within an annuity contract. The death benefit and living benefit within the
same contract may not have the same benefit base.
Cash surrender value
The amount an insurance company pays (minus any surrender charge) to the
policyholder when the contract or policy is voluntarily terminated prematurely.
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Deferred annuity
An annuity purchased with premiums paid either over a period of years or as a lump
sum, for which savings accumulate prior to annuitization or surrender, and upon
annuitization, such savings are exchanged for either a future lump sum or periodic
payments for a specified length of time or for a lifetime.
Dollar-for-dollar withdrawal
A method of calculating the reduction of a variable annuity benefit base after a
withdrawal in which the benefit is reduced by one dollar for every dollar withdrawn.
Fixed annuity
Fixed Rate GMxB
Floating Rate GMxB
Future policy benefits
An annuity that guarantees a set annual rate of return with interest at rates we
determine, subject to specified minimums. Credited interest rates are guaranteed not
to change for certain limited periods of time.
Guarantees on our individual variable annuity products that are based on a rate that
is fixed at issue.
Guarantees on our individual variable annuity products that are based on a rate that
varies with a specified index rate, subject to a cap and floor.
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 Portfolio
The invested assets held in the General Account.
General Account (“GA”)
GMxB
Guaranteed income benefit (“GIB”)
Guaranteed minimum accumulation benefits
(“GMAB”)
The 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.
A 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).
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.
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.
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 worth
Refers to individuals with $1,000,000 or more of investable assets.
244
Index-linked annuities
An annuity that provides for asset accumulation and asset distribution needs with an
ability to share in the upside from certain financial markets such as equity indices,
or an interest rate benchmark. With an index-linked annuity, the policyholder’s AV
can grow or decline due to various external financial market indices performance.
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 benefits
Optional benefits (available at an additional cost) that guarantee that the
policyholder will get back at least his original investment when the money is
withdrawn.
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 flows
Policyholder account balances
Return of premium (“ROP”) death benefit
Rider
Roll-up rate
Separate Account
Surrender charge
Net change in customer account balances in a period including, but not limited to,
gross premiums, surrenders, withdrawals and benefits. It excludes investment
performance, interest credited to customer accounts and policy charges.
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.
This death benefit pays the greater of the account value at the time of a claim
following the owner’s death or the total contributions to the contract (subject to
adjustment for withdrawals). The charge for this benefit is usually included in the
M&E fee that is deducted daily from the net assets in each variable investment
option. We also refer to this death benefit as the Return of Principal death benefit.
An optional feature or benefit that a policyholder can purchase at an additional cost.
The guaranteed percentage that the benefit base increases by each year.
Refers to the separate account investment assets of our insurance subsidiaries
excluding the assets held in those separate accounts on which we bear the
investment risk.
A fee paid by a contract owner for the early withdrawal of an amount that exceeds a
specific percentage or for cancellation of the contract within a specified amount of
time after purchase.
Surrender rate
Represents annualized surrenders and withdrawals as a percentage of average AV.
Universal life (“UL”) products
Variable annuity
Variable Universal Life (“VUL”)
Whole Life (“WL”)
Life insurance products that provide a death benefit in return for payment of
specified annual policy charges that are generally related to specific costs, which
may change over time. To the extent that the policyholder chooses to pay more than
the charges required in any given year to keep the policy in-force, the excess
premium will be placed into the AV of the policy and credited with a stated interest
rate on a monthly basis.
A type of annuity that offers guaranteed periodic payments for a defined period of
time or for life and gives purchasers the ability to invest in various markets though
the underlying investment options, which may result in potentially higher, but
variable, returns.
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.
A life insurance policy that is guaranteed to remain in-force for the policyholder’s
lifetime, provided the required premiums are paid.
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ACRONYMS
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“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.
“AOCI” means accumulated other comprehensive
income.
“ASC” means Accounting Standards Codification
“ASR” means accelerated share repurchase
“ASU” means Accounting Standards Update
“ASX” means Australian Securities Exchange
“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 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.
“bps” means basis points
“CDC” means Center for Disease Control and
Prevention
“CDS” means credit default swaps
“CDSC” means
commissions
contingent deferred
sales
“CEA” means Commodity Exchange Act
“CECL” means current expected credit losses
“CEO” means Chief Executive Officer
“CFTC” means U.S. Commodity Futures Trading
Commission
“CLO” means collateralized loan obligation
“CMBS” means commercial mortgage-backed
security
“COI” means cost of insurance
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“COLI” means corporate owned life insurance
“Company” means Equitable Holdings, Inc. with
its consolidated subsidiaries
“COVID-19” means coronavirus disease of 2019
“CS Life” means Corporate Solutions Life
Reinsurance Company, a Delaware corporation
and a wholly-owned direct
subsidiary of
Holdings.
“CSA” means credit support annex
“CSLRC” means Corporate Solutions Life
Reinsurance Company
“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
“EAFE” means European, Australasia, and Far
East
“EBITDA” means earnings before interest, taxes,
depreciation and amortization
“EDP” means electronic data processing
“EFS” means Equitable Financial Services, LLC,
a Delaware corporation and a wholly-owned
direct subsidiary of Holdings
“EIM” means Equitable Investment Management
liability
Group, LLC, a Delaware
company and a wholly-owned indirect subsidiary
of Holdings.
limited
means
Equitable
“EIMG”
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
retirement and
protection businesses and a wholly-owned indirect
subsidiary of Holdings.
for our
“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.
Insurance Company,
“Equitable Financial” means Equitable Financial
Life
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
governance
environmental,
social
and
“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
Corporation
Insurance
“FHLB” means Federal Home Loan Bank
“FINRA” means Financial Industry Regulatory
Authority, Inc.
“FIO” means Federal Insurance Office
“FMV” means fair market value
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“FSOC” means Financial Stability Oversight
Council
“FTSE” means Financial Times Stock Exchange
“FVO” means fair value option
“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
“HFS” means held-for-sale
“Holdings” means Equitable Holdings, Inc.
“HTM” means held-to-maturity
“HR” means Human Resources
“IFRS” means International Financial Reporting
Standards
“IT” means information technology
“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
“IUS” means Investments Under Surveillance
“K-12 education market” means individuals in the
kindergarten, primary and secondary education
market
“KBRA” means Kroll Bond Rating Agency
“LDTI” means
improvements
long
duration
targeted
“LGD” means loss given default
“LIBOR” means London Interbank Offered Rate
“LIS” means AllianceBernstein Lifetime Income
Strategy
“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
“MRBs” means market risk benefits
“MSCI” means Morgan Stanley Capital
International
“MSO” means Market Stabilizer Option
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“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
“SSAP” means
Accounting Practice
Statements
of
Standard
“SVO” means Securities Valuation Office
“TDRs” means troubled debt restructurings
“TIPS” means
securities
treasury
inflation-protected
“Topix” means Tokyo Stock Price Index
“U.S.” means United States
“U.S. GAAP” means accounting principles
generally accepted
the United States of
America
in
“USD” means United States Dollar
“ULSG” means universal life products with
secondary guarantee
“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
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“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
“NMS” means National Market System
“NRSRO” means Nationally Recognized
Statistical Ratings Organization
“NYDFS” means New York State Department of
Financial Services
“NYSE” means New York Stock Exchange
“OCI” means other comprehensive income
“OTC” means over-the-counter
“OTTI” means other than temporary impairment
“PBO” means projected benefit obligation
“PD” means probability of default
“Pension Act” means Pension Protection Act of
2006
“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
“RoU” means right of use
“RMBS” means
security
residential mortgage-backed
“ROE” means return on equity
“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
“SECURE” means Setting Every Community Up
for Retirement Enhancement
“Series A Preferred Stock” means Holdings’
Series A Fixed Rate Noncumulative Perpetual
Preferred Stock
248
Exhibit
Number
3.1
3.2#
3.3
3.4
3.5
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
INDEX TO EXHIBITS
Exhibit Description
Second Amended and Restated Certificate of Incorporation of Equitable Holdings, Inc., effective May 19, 2022
(incorporated by reference to Exhibit 3.1 to our Form 8-K, filed on May 20, 2022).
Equitable Holdings, Inc. Sixth Amended and Restated By-laws, effective February 15, 2023.
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).
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).
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).
Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to our Registration Statement on
Form S-1, File No. 333-221521 (the “IPO Form S-1”)).
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).
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).
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).
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).
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).
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).
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).
4.10
4.11#
10.1
Third Supplemental Indenture, dated January 11, 2023, between Equitable Holdings, Inc., as issuer, and The Bank
of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to our Current Report on
Form 8-K, filed on January 11, 2023).
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of
1934.
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).
10.2†
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).
10.2.1† 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).
10.2.2† Letter Agreement, dated May 14, 2015, between AXA Financial, Inc., AXA Equitable Life Insurance Company
10.2.3†
and Mark Pearson (incorporated by reference to Exhibit 10.7.2 to the IPO Form S-1).
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, (the “2018 Form 10-K”)).
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.
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).
249
10.2.6†# Letter Agreement, dated February 14, 2023, between Equitable Holdings, Inc., Equitable Financial Life Insurance
Company and Mark Pearson.
10.3†
10.4
10.5
10.6
10.7
10.8†
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 our Form 10-Q for the quarterly period ending March 31,
2018).
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).
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).
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).
Amended and Restated Revolving Credit Agreement, dated as of October 13, 2021 (incorporated by reference to
Exhibit 10.01 of AB Holding’s Form 8-K).
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).
10.8.1† 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, 2017).
10.8.2† 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).
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 filed on 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).
10.9.2† Amendment No. 2 to Seth P. Bernstein’s Employment Agreement (incorporated by reference to Exhibit 10.2 to
10.10†
10.11
10.12
our Form 8-K filed on December 19, 2019).
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).
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).
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
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
10.18.1
10.18.2
10.18.3
10.19
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).
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).
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).
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).
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).
10.19.3 Amendment No. 3 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 10.1 to our Form 8-K filed on June 10, 2022).
Equitable Severance Benefit Plan (incorporated by reference to Exhibit 10.45 to the IPO Form S-1).
10.20†
251
10.21†
10.22†
Equitable Supplemental Severance Plan for Executives (incorporated by reference to Exhibit 10.25 to our Form
10-Q for the quarterly period ending March 31, 2018).
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).
10.23†
Equitable Executive Survivor Benefits Plan (incorporated by reference to Exhibit 10.47 to the IPO Form S-1).
10.24†
10.25†
10.26†
10.27†
10.28†
10.29†
10.30†
10.31†
10.32†
10.33†
10.34†
10.35†
10.36†
10.37†
10.38†
10.39†#
10.40† #
10.41†
10.42†
10.43†
10.44†
10.45†
10.46†
10.47
Amended and Restated Variable Deferred Compensation Plan for Executives (incorporated by reference to
Exhibit 10.48 to the IPO Form S-1).
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).
Amendment to the Equitable Post-2004 Variable Deferred Compensation Plan for Executives, effective as of
January 1, 2019 (incorporated by reference to Exhibit 10.69 to the 2018 Form 10-K).
Equitable Excess Retirement Plan (incorporated by reference to Exhibit 10.50 to the IPO Form S-1).
Equitable Holdings, Inc. Equity Plan for Directors (incorporated by reference to Exhibit 10.51 to the IPO
Form S-1).
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).
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).
Equitable Post-2004 Variable Deferred Compensation Plan for Directors (incorporated by reference to Exhibit
10.54 to the IPO Form S-1).
Equitable Holdings, Inc. Charitable Award Program for Directors (incorporated by reference to Exhibit 10.55 to
the IPO Form S-1).
Equitable Holdings, Inc. Short-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.56 to
the IPO Form S-1).
AXA Equitable Holdings, Inc. 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.57 to the
IPO Form S-1).
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).
Equitable Holdings, Inc. Stock Purchase Plan (incorporated by reference to Exhibit 10.62 to the 2018 Form 10-
K).
Form of 2022 Performance Shares Award Agreement under the 2019 Omnibus Incentive Plan, effective February
16, 2022 (incorporated by reference to Exhibit 10.37 to our Form 10-K for the fiscal period ended December 31,
2021 (the “2021 Form 10-K)).
Form of 2022 Restricted Stock Unit Award Agreement under the 2019 Omnibus Incentive Plan, effective
February 16, 2022 (incorporated by reference to Exhibit 10.38 to the 2021 Form 10-K).
Form of 2023 Performance Share Award Agreement under the 2019 Omnibus Incentive Plan, effective February
15, 2023.
Form of 2023 Restricted Stock Unit Award Agreement under the 2019 Omnibus Incentive Plan, effective
February 15, 2023.
Form of Stock Option Award Agreement under the 2019 Omnibus Incentive Plan for awards granted before
February 16, 2022 (incorporated by reference to Exhibit 10.58 to our Form 10-K for the fiscal period ended
December 31, 2020 (the “2020 Form 10-K”)).
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, (the “AB 2021 Form 10-K”).
AllianceBernstein 2021 Deferred Cash Compensation Program (incorporated by reference to Exhibit 10.02 of the
AB 2021 Form 10-K).
Form of Award Agreement, dated as of 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).
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).
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).
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 2020 Form 10-K).
252
10.48
10.49
10.50
21.1#
23.1#
31.1#
31.2#
32.1#
32.2#
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 on Form 8-K filed by Equitable Financial Life Insurance Company on June 1, 2021).
Master Transaction Agreement, dated as of August 16, 2022 among Equitable Financial Life Insurance Company
and First Allmerica Financial Life Insurance Company (redacted) (incorporated by reference to Exhibit 10.1 to
our Form 10-Q for the quarterly period ending September 30, 2022).
Coinsurance and Modified Coinsurance Agreement, dated as of October 3, 2022, between Equitable Financial
Life Insurance Company and First Allmerica Financial Life Insurance Company (redacted) (incorporated by
reference to Exhibit 10.2 to our Form 10-Q for the quarterly period ending September 30, 2022).
List of Subsidiaries of Equitable Holdings, Inc.
Consent of PricewaterhouseCoopers LLP.
Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of the Registrant’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Certification of the Registrant’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibits 101)
#
†
Filed herewith.
Identifies each management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Equitable Holdings, Inc. has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 21, 2023.
EQUITABLE HOLDINGS, INC.
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 February 21, 2023.
253
Signature
/s/ Mark Pearson
Mark Pearson
/s/ Robin M. Raju
Robin M. Raju
/s/ William Eckert
William Eckert
/s/ Francis Hondal
Francis Hondal
/s/ Arlene Isaacs-Lowe
Arlene Isaacs-Lowe
/s/ Daniel G. Kaye
Daniel G. Kaye
/s/ Joan M. Lamm-Tennant
Joan M. Lamm-Tennant
/s/ Craig MacKay
Craig MacKay
/s/ Kristi A. Matus
Kristi A. Matus
/s/ Bertram L. Scott
Bertram L. Scott
/s/ George H. Stansfield
George H. Stansfield
/s/ Charles G. T. Stonehill
Charles G. T. Stonehill
Title
President and Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Chair of the Board
Director
Director
Director
Director
Director
254
© 2023 Equitable Holdings, Inc. All rights reserved.