Equitable Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 5, 2024
EQH$52.66-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001333986-24-000026
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001333986-24-000033
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 453 previous paragraphs and 477 current paragraphs.
258 unchanged; 99 reworded; 115 added; 85 removed; 11 previous and 5 current paragraphs rearranged.
Tables are not compared: 45 previous and 47 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (115)
Current report
In related work, the NAIC’s Financial Condition (E) Committee continues to develop a Framework for Regulation of Insurer Investments—A Holistic Review (the “Investment Framework”) related to insurer investment risk regulation, on which work began in 2023. The primary objective of the Investment Framework is to highlight areas where the insurance regulatory framework and the SVO can be enhanced to strengthen oversight of insurers’ investments in complex assets. The proposed changes to modernize investment oversight include (i) reducing / eliminating “blind” reliance on credit rating providers while continuing to use them by implementing a due diligence framework that oversees the effectiveness of credit rating providers; and (ii) bolstering the SVO’s risk analysis capabilities by investing in a risk analytics tool and adding specialized personnel.
Current report
In August 2024, the NAIC’s Financial Condition (E) Committee adopted an amendment to the Purposes and Procedures Manual that is designed to address the NAIC’s concerns about reliance on third-party credit ratings in the filing exemption process. The goal is to limit reliance on such credit ratings and enhance the SVO’s role in the filing exemption process. The NAIC developed the Purposes and Procedures Manual amendment to allow the SVO to “challenge” a security’s filing-exempt status based on a credit rating.
Current report
The Purposes and Procedures Manual amendment, as adopted by the Financial Condition (E) Committee, sets forth procedures for SVO staff to identify and evaluate a filing-exempt security with an NAIC Designation determined by a rating that appears to be an unreasonable assessment of investment risk. The procedures include sending an information request to insurers that hold the security under review and determining whether the NAIC Designation is three or more notches different from the SVO’s assessment, which would allow the SVO to request the removal of the credit rating from the filing exempt process. At any time during the process, an alternate credit rating may be requested and, if one is received, it will be incorporated into the filing exempt process. The Purposes and Procedures Manual amendment is scheduled to become effective on January 1, 2026, although the amendment still has to be adopted by the NAIC at its national meeting in November 2024.
Current report
Various industry groups brought litigation against the DOL seeking a variety of remedies for the Final Rule. On July 25, 2024, the U.S. District Court for the Eastern District of Texas (the “E.D. Tex.”) issued a stay of the effective date of portions of the Final Rule. On July 26, 2024, the U.S. District Court for the Northern District of Texas (the “N.D. Tex.”) issued a stay of the effective date of the Final Rule as a whole. As a result of these court opinions, it is uncertain whether the Final Rule will become effective.
Current report
The DOL has appealed the stay issued in the E.D. Tex. litigation to the U.S. Court of Appeals for the Fifth Circuit. The DOL has also filed an interlocutory appeal challenging the stay issued in the N.D. Tex. litigation to the U.S. Court of Appeals for the Fifth Circuit; the parties have jointly agreed to stay further proceedings pending the outcome of the interlocutory appeal.
Current report
Assumption Updates and Model Changes
Current report
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.
Current report
Impact of Assumption Updates and Model Changes on Income from Continuing Operations before income taxes and Net income (loss)
Current report
The table below presents the impact of our actuarial assumption update to our income (loss) from continuing operations, before income taxes and net income (loss).
Current report
2024 Assumption Updates
Current report
The impact of the economic assumption update in the third quarter 2024 was an increase of $20 million to income (loss) from continuing operations, before income taxes and an increase to net income (loss) of $16 million.
Current report
The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $20 million consisted of an increase in other income of $21 million, an increase in remeasurement of liability for future policy benefits of
Current report
$18 million, a decrease in policyholders’ benefits of $8 million and a decrease in change in MRBs and purchased MRBs of $9 million.
Current report
2023 Assumption Updates
Current report
The impact of the economic assumption update in the third quarter 2023 was a decrease of $5 million to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $4 million.
Current report
The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $5 million consisted of a decrease in other income of $9 million, an increase in remeasurement of liability for future policy benefits of $51 million, a decrease in policyholders’ benefits of $2 million and a decrease in change in MRBs and purchased MRBs of $53 million.
Current report
Model Changes
Current report
There were no material model changes in the first nine months of 2024 and 2023.
Current report
Impact of Assumption Updates and Model Changes on Pre-tax Non-GAAP Operating Earnings Adjustments
Current report
The table below presents the impact on pre-tax Non-GAAP Operating Earnings of our actuarial assumption updates by segment and Corporate and Other.
Current report
2024 Assumption Updates
Current report
The impact of our 2024 annual review on Non-GAAP Operating Earnings was favorable by $4 million before taking into consideration the tax impacts, or $3 million after tax.
Current report
The net impact of assumption changes on Non-GAAP Operating Earnings increased other income by $13 million, increased remeasurement of liability for future policy benefits by $18 million, and decreased policyholders’ benefits by $9 million. Non-GAAP Operating Earnings excludes items related to variable annuity product features, such as changes in the MRBs and purchased MRBs.
Current report
2023 Assumption Updates
Current report
The impact of our 2023 annual review on Non-GAAP Operating Earnings was favorable by $15 million before taking into consideration the tax impacts, or $12 million after tax.
Current report
The net impact of assumption changes on Non-GAAP Operating Earnings increased other income by $4 million, decreased remeasurement of liability for future policy benefits by $10 million and decreased policyholders’ benefits by $1 million. Non-GAAP Operating Earnings excludes items related to variable annuity product features, such as changes in the MRBs and purchased MRBs.
Current report
In the third quarter 2023, the Company updated its operating earnings measure to exclude the impact of the annual actuarial assumption update attributable to LFPB as the majority of the earnings volatility attributable to these assumption updates relate to the Company’s Legacy and non-business segment products and as such do not represent the Company’s ongoing revenue generating activities or future business strategy, and impedes comparability of operating results period over period. Non-GAAP Operating Earnings were favorably impacted by this change in the amount of $61 million for the three and nine months ended September 30, 2023, respectively.
Current report
During the third quarter 2024, the Company moved revenues and expenses related to payout annuitizations from the Legacy segment to the Individual Retirement segment. Now all payout annuities will be reported within the Individual Retirement segment as the block is managed on an aggregate basis. Prior periods have been recast to reflect this change.
Current report
(1)Includes the impact of favorable assumption updates of $16 million for the three and nine months ended September 30, 2024, respectively and 40 million for the three and nine months ended September 30, 2023, respectively.
Current report
(4)For the three and nine months ended September 30, 2024, includes $78 million contingent payment gain recognized in connection with a fair value remeasurement of the contingent payment liability associated with AB's acquisition of CarVal in 2022.
Current report
(5)For the three and nine months ended September 30, 2024 and 2023, respectively, non-recurring tax items reflect primarily the effect of uncertain tax positions for a given audit period. An increase of the deferred tax valuation allowance of $20 million and a decrease of $970 million for the three and nine months ended September 30, 2023, respectively.
Current report
(1)Includes the impact of favorable assumption updates of $0.05 for the three and nine months ended September 30, 2024, respectively and 0.11 for the three and nine months ended September 30, 2023, respectively.
Current report
(4)For the three and nine months ended September 30, 2024 includes $0.24 contingent payment gain recognized in connection with a fair value remeasurement of the contingent payment liability associated with AB's acquisition of CarVal in 2022.
Current report
(5)For the three and nine months ended September 30, 2024 and 2023, respectively, non-recurring tax items reflect primarily the effect of uncertain tax positions for a given audit period. An increase of the deferred tax valuation allowance of $0.06 and a decrease of $2.73 for the three and nine months ended September 30, 2023, respectively.
Current report
Unfavorable items included:
Current report
•Interest credited to policyholders’ account balances increased by $152 million mainly due to growth of SCS account values in our Individual Retirement segment, partially offset by lower interest expense on funding agreements in Corporate and Other.
Current report
•Commissions and distribution-related payments increased by $80 million mainly due to higher payments for the distribution of AB mutual funds resulting from higher average AUM in our Asset Management segment, and higher asset-based commissions and sales volume in our Individual Retirement segment.
Current report
•Net income attributable to noncontrolling interest increased by $89 million mainly due to higher pre-tax earnings.
Current report
These were partially offset by the following favorable items:
Current report
•Investment losses decreased by $365 million mainly due to our rebalancing program to reduce duration during the third quarter 2023.
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Removed paragraphs (85)
Previous report
Climate Risks
Previous report
In March 2024, the SEC adopted new rules that will require registrants to provide certain climate-related information in their registration statements and annual reports. The rules require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks will also include disclosure of a registrant’s greenhouse gas emissions. In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements. In April 2024, citing litigation challenging the rules that commenced immediately after they were issued, the SEC issued an order staying applicability of the rules while judicial review proceeds. We are currently evaluating the potential impact of these rules on our consolidated financial statements and related disclosures.
Previous report
In August 2023, the SEC adopted final private fund adviser reform rules under the Investment Advisers Act requiring private fund advisers registered with the SEC to, among other things, provide investors with quarterly and annual statements detailing information regarding private fund performance, fees, and expenses; obtain an annual audit for each private fund; obtain a fairness opinion or valuation opinion in connection with an adviser-led secondary transaction; not provide certain preferential rights to investors in a fund and disclose other preferential rights prior to an investor closing into the fund; and obtain investor consent prior to allocating certain fees or expenses to a fund or borrowing or receiving credit from a fund. On June 5, 2024, the United States Court of Appeals for the Fifth Circuit unanimously vacated the private fund adviser reform rules in their entirety. The SEC missed a deadline to ask for a rehearing after the Fifth Circuit Court of Appeals, and it is unclear whether the SEC will petition the United States Supreme Court to review the Fifth Circuit’s ruling.
Previous report
Privacy and Security of Customer Information and Cybersecurity Regulation
Previous report
Innovation and Technology
Previous report
The NAIC and state insurance regulators have been focused on addressing unfair discrimination in the use of consumer data and technology, and some states have passed laws targeting unfair discrimination practices. In New York, the NYDFS released a proposed circular letter for public comment in January 2024 on how insurers should develop and manage their use of external consumer data and artificial intelligence (“AI”) systems in underwriting and pricing so as not to harm consumers.
Previous report
On July 11, 2024, the NYDFS issued the final version of the circular letter, which applies to all authorized insurers in New York, such as Equitable Financial Life Insurance Company. Pursuant to the guidance, the NYDFS expects a licensed insurer to: (i) use a risk-based approach for utilizing external consumer data and information sources (“ECDIS”) and AI systems based on the company’s business model and the materiality of the risks inherent in using ECDIS and AI systems; (ii) analyze ECDIS and AI systems for unfair and unlawful discrimination; (iii) develop a corporate governance framework that provides oversight of the insurer’s use of ECDIS and AI systems; (iv) maintain appropriate risk management (e.g., using qualified personnel with clearly defined responsibilities) and internal controls, including over third-party vendors; and (v) provide notice to an insured or potential insured with certain information, such as whether the insurer uses AI systems in its underwriting or pricing process.
Previous report
In the fourth quarter of 2023, the Company updated its operating earnings measure to exclude the impact of realized amounts related to equity classified instruments. The recognition of the realized capital gains and losses from investments in current net investment income is generally considered distortive and not reflective of the ongoing core business activities of the segments. The presentation of operating earnings in prior periods was not revised to reflect this modification. The impact to operating earnings was immaterial for the three and six months ended June 30, 2023.
Previous report
(3)For the three and six months ended June 30, 2024, non-recurring tax items reflects the effect of uncertain tax positions for a given audit period and for the three and six months ended June 30, 2023 primarily includes a decrease of the deferred tax valuation allowance of $376 million and $990 million.
Previous report
(3)For the three and six months ended June 30, 2024, non-recurring tax items reflects the effect of uncertain tax positions for a given audit period and for the three and six months ended June 30, 2023 primarily includes a decrease of the deferred tax valuation allowance of $1.06 and $2.75.
Previous report
•Change in market risk benefits and purchased market risk benefits increased by $842 million mainly due to higher equity market appreciation and higher interest rate movements during the second quarter 2023 compared to the second quarter 2024.
Previous report
•Interest credited to policyholders’ account balances increased by $104 million mainly due to growth of SCS account values in our Individual Retirement segment, partially offset by lower interest expense on funding agreements in Corporate and Other.
Previous report
•Net income attributable to noncontrolling interest increased by $65 million mainly due to higher pre-tax earnings.
Previous report
•Fee-type revenue increased by $254 million mainly due to the gain on sale of AB’s Bernstein Research Service and higher advisory base fees and distribution revenue from higher average AUM from our Asset Management segment and higher advisory fees type revenue from our Wealth Management segment due to higher retirement sales and average asset balances.
Previous report
•Net investment income increased by $130 million mainly due to higher assets balances, higher investment yields and higher Alternative investment income, partially offset by losses from our JV equity method investments within our Asset Management segment.
Previous report
•Investment losses decreased by $40 million mainly due to liquidity sales in 2023.
Previous report
•Compensation, benefits, interest and other operating expenses decreased by $21 million mainly due to lower restructuring expenses, partially offset by an increase in compensation and benefits and interest expense.
Previous report
•Net investment income increased by $166 million mainly due to higher assets balances, higher investment yields and higher Alternative investment income.
Previous report
•Fee-type revenue increased by $100 million mainly due to higher advisory base fees and distribution revenue from higher average AUM from our Asset Management segment and advisory fees type revenue from our Wealth Management segment due to higher retirement sales and average asset balances and Employee Benefits premium growth in our Protection Solution segment, partially offset by lower revenue from Bernstein Research Services due to the sale of this business completed during April 2024.
Previous report
•Net derivative losses decreased $19 million mainly due to inflation swaps.
Previous report
•Interest credited to policyholders’ account balances increased by $103 million mainly due to growth of SCS account values in our Individual Retirement segment, partially offset by lower interest expense on funding agreements in Corporate and Other;
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
•Compensation, benefits, interest and other operating expenses increased by $142 million mainly due to an increase in legal expenses and higher compensation and benefits expense, partially offset by the recognition of incentive grant gain in connection with the AB headquarters relocation to Nashville in our Asset Management segment.
Previous report
•Amortization of DAC increased by $34 million mainly due to growth in our Individual Retirement segment from sales momentum.
Previous report
•Net income attributable to noncontrolling interest increased by $79 million mainly due to higher pre-tax earnings.
Previous report
•Net derivative losses decreased by $174 million mainly due to lower equity market appreciation during the first six months of 2024 compared to the first six months of 2023, partially offset by a larger interest rate movement during the first six months of 2024 compared to the first six months of 2023.
Previous report
•Investment losses decreased by $88 million mainly due to credit losses recognized in the first quarter of 2023 when intending to sell securities in an unrealized loss position in anticipation of Equitable Financial’s ordinary dividend to Holdings and liquidity sales.
Previous report
•Policyholders’ benefits decreased by $70 million mainly due to lower net mortality, partially offset by growth in Employee Benefits in our Protection Solutions segment and higher benefits from GMIB annuitizations, partially offset by higher premiums in fee-type revenue in our Legacy segment.
Previous report
•Net investment income increased by $372 million mainly due to higher income primarily due to higher asset balances, higher investment yields and higher Alternative investment income.
Previous report
•Policyholders’ benefits decreased by $70 million mainly due to lower net mortality, partially offset by growth in Employee Benefits in our Protection Solutions segment, and higher benefits from GMIB annuitizations, partially offset by higher premiums in fee-type revenue in our Legacy segment.
Previous report
•Interest credited to policyholders’ account balances increased by $206 million mainly due to growth of SCS account values in our Individual Retirement segment and higher interest rates in our Protection Solution segment, partially offset by lower interest expense on funding agreements.
Previous report
•Commissions and distribution-related payments increased by $127 million mainly due to higher distribution and advisory fee-type revenue from higher retirement sales and average asset balances in our Wealth Management segment and higher payments to financial intermediaries for the distribution of AB mutual funds resulting from average AUM in Asset Management.
Previous report
•Compensation, benefits, interest expense and other operating costs increased by $77 million mainly due to higher incentive compensation expense, partially offset by lower base compensation and other expenses driven by the sale of Bernstein Research Services and the recognition of an incentive grant gain in connection with the AB headquarters relocation to Nashville in our Asset Management segment; higher Benefits and Taxes and Sub-Advisory fees from our Protection Solutions and Legacy segments, and higher variable compensation from higher sales from our Individual Retirement and Wealth Management segments.
Previous report
•Amortization of DAC increased by $34 million mainly due to growth in our Individual Retirement segment from sales momentum.
Previous report
Operating earnings were flat at $234 million during the three months ended June 30, 2024 and in the three months ended June 30, 2023. The following notable items were the primary drivers of the change in operating earnings:
Previous report
•Net investment income increased by $157 million mainly due to higher SCS asset balances and higher investment yields.
Previous report
•Commissions and distribution-related payments increased by $17 million mainly due to higher asset levels commissions and sales volumes.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023 for the Individual Retirement Segment
Previous report
Operating earnings increased $28 million to $462 million during the six months ended June 30, 2024 from $434 million in the six months ended June 30, 2023. The following were notable changes in operating earnings (losses):
Previous report
•Interest credited to policyholders’ account balances increased by $235 million mainly due to growth of SCS account values.
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Reworded paragraphs (99)
Previous wording
U.S. equity markets showed strength in the second quarter of 2024, benefiting from a resilient U.S. economy with job creation consistently exceeding expectations, cooling inflation, and a widely held outlook for monetary easing, including expected interest rate reductions (based on statements of members of the Board of Governors of the Federal Reserve System), albeit at a slower pace than previously expected.
Current wording
U.S. equity markets showed strength in the third quarter 2024, benefiting from a resilient U.S. economy with the U.S. Bureau of Labor Statistics issuing a strong September 2024 jobs report that exceeded expectations, cooling inflation, and a widely held outlook for monetary easing, including a half-point interest rate reduction in September 2024, with additional, smaller rate cuts expected in the fourth quarter of 2024 and into 2025 (based on statements of members of the Board of Governors of the Federal Reserve System).
Previous wording
A wide variety of factors continue to impact financial and economic conditions. These factors include, among others, uncertainty regarding the federal debt limit, concerns regarding inflation, high fuel and energy costs, changes in fiscal or monetary policy and geopolitical tensions, including the U.S. presidential election. The Russian invasion of the Ukraine, the Israel-Hamas war and the potential for broader regional hostilities, and the ensuing conflicts and the sanctions and other measures imposed in response to these conflicts significantly contributed to volatility in the financial markets and have increased the level of economic and political uncertainty.
Current wording
A wide variety of factors continue to impact financial and economic conditions. These factors include, among others, uncertainty regarding the federal debt limit, concerns regarding inflation, high fuel and energy costs, changes in fiscal or monetary policy and geopolitical tensions, including the U.S. presidential election. The Russian invasion of the Ukraine, the Israel-Hamas war and broader Middle Eastern hostilities, including with Hezbollah in Lebanon and Iran, and the ensuing conflicts and the sanctions and other measures imposed in response to these conflicts, significantly contributed to volatility in the financial markets and have increased the level of economic and political uncertainty.
Previous wording
The NAIC is evaluating the risks associated with insurers’ investments in certain categories of structured securities, including CLOs. In March 2023, the NAIC adopted an amendment to the Purposes and Procedures Manual to give the NAIC’s Structured Securities Group, housed within the SVO, responsibility for modeling CLO securities and evaluating tranche level losses across all debt and equity tranches under a series of calibrated and weighted collateral stress scenarios in order to assign NAIC designations. Under the amended Purposes and Procedures Manual, CLO investments will no longer be broadly exempt from filing with the SVO based on ratings from Credit Rating Providers. The NAIC’s goal is to ensure that the weighted average RBC factor for owning all tranches of a CLO more closely aligns with what would be required for directly owning all of the underlying loan collateral, in order to avoid RBC arbitrage. In June 2024, the NAIC approved interim rules that raise capital requirements for holdings of CLO and other asset-backed security residual interests. The NAIC is also collaborating with interested parties to develop and refine the process for modeling CLO investments. Insurers are required to begin reporting the financially modeled NAIC designations for CLOs with their year-end 2024 financial statement filings, although the NAIC announced in March 2024 that implementation is expected to be delayed by a year to allow more time to develop the modeling methodology. The delay requires an amendment to the Purposes and Procedures Manual, which the NAIC is likely to adopt in August 2024.
Current wording
The NAIC is evaluating the risks associated with insurers’ investments in certain categories of structured securities, including CLOs. In March 2023, the NAIC adopted an amendment to the Purposes and Procedures Manual to give the NAIC’s Structured Securities Group, housed within the NAIC’s Securities Valuation Office (the, “SVO”), responsibility for modeling CLO securities and evaluating tranche level losses across all debt and equity tranches under a series of calibrated and weighted collateral stress scenarios in order to assign NAIC Designations. Under the amended Purposes and Procedures Manual, CLO investments will no longer be broadly exempt from filing with the SVO based on ratings from Credit Rating Providers. The NAIC’s goal is to ensure that the weighted average RBC factor for owning all tranches of a CLO more closely aligns with what would be required for directly owning all of the underlying loan collateral, in order to avoid RBC arbitrage. In June 2024, the NAIC approved interim rules that raise capital requirements for holdings of CLO and other asset-backed security residual interests. The NAIC is also collaborating with interested parties to develop and refine the process for modeling CLO investments. In August 2024, the NAIC delayed a requirement for insurers to begin reporting the financially modeled NAIC Designations for CLOs with their financial statement filings to year-end 2025 to allow more time to develop the modeling methodology.
Previous wording
In 2023, the U.S. Department of Labor (the “DOL”) proposed a regulation to change the definition of “fiduciary” for purposes of the Employee Retirement Income Security Act of 1974 (“ERISA”) and parallel provisions of the Internal Revenue Code of 1986, as amended (the “Code”), when a financial professional, including an insurance producer, provides investment advice, and proposed amendments to various existing prohibited transaction exemptions (“PTEs”), including PTE 84-14, that financial professionals rely on when they make investment recommendations to retirement investors. On April 23, 2024, the DOL finalized and published this new definition of “fiduciary” for purposes of ERISA and parallel provisions of the Code and finalized and published amendments to these PTEs (the “Final Rule”). Shortly thereafter, these changes were challenged in court, including by a coalition of insurance industry trade associations that filed a motion for a preliminary injunction and stay of portions of the Final Rule, including the regulation that changes the definition of “fiduciary” and the amendments to the PTEs. On July 25 and July 26, 2024, two federal district courts entered separate stays of the effective date of the Final Rule, including the regulation that changes the definition of “fiduciary” and the amendments to the PTEs. While this litigation proceeds, we are evaluating the potential impact of the Final Rule on our business, particularly as it pertains to the sale of insurance products to retirement investors.
Current wording
In 2023, the U.S. Department of Labor (the “DOL”) proposed a regulation to change the definition of “fiduciary” for purposes of the Employee Retirement Income Security Act of 1974 (“ERISA”) and parallel provisions of the Internal Revenue Code of 1986, as amended (the “Code”), when a financial professional, including an insurance producer, provides investment advice, and proposed amendments to various existing prohibited transaction exemptions (“PTEs”), including PTE 84-14 that financial professionals rely on when they make investment recommendations to retirement investors. On April 23, 2024, the DOL finalized and published this new definition of “fiduciary” for purposes of ERISA and parallel provisions of the Code and finalized and published amendments to these PTEs (the new definition and the PTE amendments collectively, the “Final Rule”).
Previous wording
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 market risk benefits for our Individual Retirement, Group Retirement, Protection Solutions, and Legacy segments (assumption reviews are not relevant for the Asset Management and Wealth Management segments). Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgement and reflect our best estimate as of the date of the applicable financial statements.
Current wording
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 MRB for our Individual Retirement, Group Retirement, Protection Solutions, and Legacy segments (assumption reviews are not relevant for the Asset Management and Wealth Management segments). Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgement and reflect our best estimate as of the date of the applicable financial statements.
Previous wording
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, market risk benefits and unearned revenues and assets for DAC and DSI. The valuation of these assets and liabilities (other than deposits) is based on differing accounting methods depending on the product, each of which requires numerous assumptions and considerable judgment. The accounting guidance applied in the valuation of these assets and liabilities includes, but is not limited to, the following: (i) traditional life insurance products for which assumptions are updated annually to estimate the value of future death, morbidity or income benefits; (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; and (iii) certain product guarantees reported as market risk benefits at fair value.
Current wording
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, MRBs and unearned revenues and assets for DAC and DSI. The valuation of these assets and liabilities (other than deposits) is based on differing accounting methods depending on the product, each of which requires numerous assumptions and considerable judgment. The accounting guidance applied in the valuation of these assets and liabilities includes, but is not limited to, the following: (i) traditional life insurance products for which assumptions are updated annually to estimate the value of future death, morbidity or income benefits; (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; and (iii) certain product guarantees reported as MRBs at fair value.
Previous wording
•Items related to variable annuity product features, which include: (i) changes in the fair value of market risk benefits and purchased market risk benefits, including the related attributed fees and claims, offset by derivatives and other securities used to hedge the market risk benefits which result in residual net income volatility as the change in fair value of certain securities is reflected in OCI and due to our statutory capital hedge program; and (ii) market adjustments to deposit asset or liability accounts arising from reinsurance agreements which do not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk;
Current wording
•Items related to variable annuity product features, which include: (i) changes in the fair value of MRB and purchased MRB, including the related attributed fees and claims, offset by derivatives and other securities used to hedge the MRB which result in residual net income volatility as the change in fair value of certain securities is reflected in OCI and due to our statutory capital hedge program; and (ii) market adjustments to deposit asset or liability accounts arising from reinsurance agreements which do not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk;
Previous wording
•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; 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, impact of the annual actuarial assumption updates attributable to LFPB; and
Current wording
•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; 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, impact of the annual actuarial assumption updates attributable to LFPB when the majority of the impact relates to the non-core business; and
Previous wording
(1)Includes certain gross legal expenses related to the cost of insurance litigation of $0 million and $106 million for the three and six months ended June 30, 2024, respectively and $35 million and $35 million for the three and six months ended June 30, 2023.
Current wording
(2)Includes certain gross legal expenses related to the COI litigation of $0 million and $106 million for the three and nine months ended September 30, 2024, respectively, and $0 million and $35 million for the three and nine months ended September 30, 2023, respectively. Includes the impact of unfavorable annual actuarial assumptions updates related to LFPB of $61 million for the three and nine months ended September 30, 2023.
Previous wording
(2)For the three and six months ended June 30, 2024, includes $82 million of the gain on sale on AB's Bernstein Research Service attributable to Holdings.
Current wording
(3)For the nine months ended September 30, 2024, includes $82 million of the gain on sale on AB's Bernstein Research Service attributable to Holdings.
Previous wording
(1)Includes certain gross legal expenses related to the cost of insurance litigation of $0.00 and $0.32 for the three and six months ended June 30, 2024, respectively and $0.10 and $0.10 for the three and six months ended June 30, 2023.
Current wording
(2)Includes certain gross legal expenses related to the COI litigation of $0 and $0.32 for the three and nine months ended September 30, 2024, respectively, and $0 and $0.10 for the three and nine months ended September 30, 2023, respectively. Includes the impact of unfavorable annual actuarial assumptions updates related to LFPB of $0.18 and $0.17 for the three and nine months ended September 30, 2023.
Previous wording
(2)For the three and six months ended June 30, 2024, includes $0.25 of the gain on sale on AB's Bernstein Research Service attributable to Holdings.
Current wording
(3)For the nine months ended September 30, 2024, includes $0.25 of the gain on sale on AB's Bernstein Research Service attributable to Holdings.
Previous wording
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. For additional information on our economic interest in AB see Note 1 of the Notes to Consolidated Financial Statements.
Current wording
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. For additional information on our economic interest in AB, see Note 1 of the Notes to the Consolidated Financial Statements.
Previous wording
Net income attributable to Holdings decreased $331 million to $428 million for the three months ended June 30, 2024 from $759 million in the three months ended June 30, 2023. The following notable items were the primary drivers for the change in net income (loss):
Current wording
Net income attributable to Holdings decreased $1.2 billion to a $134 million loss for the three months ended September 30, 2024 from $1.1 billion income in the three months ended September 30, 2023. The following notable items were the primary drivers for the change in net income (loss):
Previous wording
•Net derivative losses decreased by $709 million mainly due to lower equity market appreciation during the second quarter 2024 compared to the second quarter 2023.
Current wording
•Net derivative losses increased by $1.3 billion mainly due to higher equity market appreciation during the third quarter 2024 compared to the third quarter 2023.
Previous wording
•Change in market risk benefits and purchased market risk benefits decreased by $278 million mainly due to an increase in interest rates in the first quarter of 2024 compared to a decrease in the first quarter of 2023. This was partially offset by less favorable equity market movements in the second quarter of 2024 compared to second quarter of 2023.
Current wording
•Change in market risk benefits and purchased market risk benefits increased by $896 million mainly due to a decrease in interest rates in the third quarter 2024 compared to an increase in the third quarter 2023. This was partially offset by favorable equity market movements in the third quarter 2024 compared to unfavorable equity market movements in the third quarter 2023.
Previous wording
•Fee-type revenue increased by $256 million mainly driven by higher advisory base fees and distribution revenue from higher average AUM from our Asset Management segment and advisory fees type revenue from our Wealth Management segment from higher retirement sales and average asset balances, Employee Benefits premium growth in our Protection Solutions segment, partially offset by lower revenue from Bernstein Research Services due to the sale of this business completed during April 2024.
Current wording
•Fee-type revenue increased by $178 million mainly due to higher investment base advisory fees and distribution revenue from higher average AUM in our Asset Management segment, higher average Separate Account values from market appreciation and one-time assumption update in our Group Retirement segment, and higher Employee Benefits premium growth in our Protection Solutions segment, partially offset by lower revenue from Bernstein Research Services due to the sale of this business completed during April 2024.
Previous wording
•Policyholders’ benefits decreased by $17 million mainly due to lower net mortality in our Protection Solutions segment.
Current wording
•Policyholders’ benefits decreased by $30 million mainly due to lower net mortality in our Protection Solutions segment.
Previous wording
Non-GAAP Operating Earnings increased by $53 million to $494 million for the three months ended June 30, 2024 from $441 million in the three months ended June 30, 2023. The following notable items were the primary drivers for the change in Non-GAAP Operating Earnings:
Current wording
Non-GAAP Operating Earnings increased by $88 million to $501 million for the three months ended September 30, 2024 from $413 million in the three months ended September 30, 2023. The following notable items were the primary drivers for the change in Non-GAAP Operating Earnings:
Previous wording
•Policyholders’ benefits decreased by $17 million mainly due to lower net mortality in our Protection Solutions segment.
Current wording
•Policyholders’ benefits decreased by $36 million mainly due to lower net mortality in our Protection Solutions segment.
Previous wording
•Net income attributable to the noncontrolling interest increased by $24 million mainly due to higher pre-tax earnings.
Current wording
•Net income attributable to the noncontrolling interest increased by $29 million mainly due to higher pre-tax earnings.
Previous wording
Net income attributable to Holdings decreased by $394 million to a net income of $542 million for the six months ended June 30, 2024 from a net income of $936 million for the six months ended June 30, 2023. The following were notable changes in net income (loss):
Current wording
Net income attributable to Holdings decreased by $1.6 billion to net income of $408 million for the nine months ended September 30, 2024 from net income of $2.0 billion for the nine months ended September 30, 2023. The following were notable changes in net income (loss):
Previous wording
•Net investment income increased by $359 million mainly due to higher SCS assets balances, higher investment yields and higher Alternative investment income.
Current wording
•Interest credited to policyholders’ account balances increased by $359 million mainly due to growth of SCS account values in our Individual Retirement segment, partially offset by lower interest expense on funding agreements in Corporate and Other.
Previous wording
•Commissions and distribution-related payments increased by $127 million mainly due to higher distribution and advisory fee-type revenue from higher retirement sales and average asset balances in our Wealth Management segment and higher payments to financial intermediaries for the distribution of AB mutual funds resulting from average AUM in Asset Management segment.
Current wording
•Commissions and distribution-related payments increased by $207 million mainly due to higher payments to financial intermediaries for the distribution of AB mutual funds resulting from average AUM in our Asset Management segment, and higher asset-based commissions and sales volume in our Individual Retirement segment.
Previous wording
•Income tax expense increased by $1.2 billion primarily due to a partial release of the valuation allowance of $990 million on the deferred tax asset for the six months ended June 30, 2023 compared to no valuation allowance release for the six months ended June 30, 2024.
Current wording
•Income tax expense increased by $783 million primarily due to a partial release of the valuation allowance of $970 million on the deferred tax asset in the nine months ended September 30, 2023 compared to no valuation allowance release in the nine months ended September 30, 2024.
Previous wording
•Fee-type revenue increased by $385 million mainly driven by the gain on sale of AB’s Bernstein Research Service, higher advisory base fees and distribution revenue due to higher average AUM from our Asset Management segment and higher advisory fees type revenue from our Wealth Management segment from higher retirement sales and average asset balances.
Current wording
•Fee-type revenue increased by $563 million mainly driven by higher investment base advisory fees and distribution revenue from higher average AUM and the gain on sale of AB’s Bernstein Research Service in our Asset Management segment, higher advisory fee type revenue attributed to higher average asset balances in our Wealth Management segment, higher average Separate Account values from market appreciation and one-time assumption update in our Group Retirement segment, partially offset by lower revenue from Bernstein Research Services due to the sale of this business completed during April 2024.
Previous wording
Non-GAAP Operating Earnings increased by $179 million to $984 million for the six months ended June 30, 2024 from $805 million in the six months ended June 30, 2023. The following were notable changes in Non-GAAP Operating Earnings:
Current wording
Non-GAAP Operating Earnings increased by $267 million to $1.5 billion for the nine months ended September 30, 2024 from $1.2 billion in the nine months ended September 30, 2023. The following were notable changes in Non-GAAP Operating Earnings:
Previous wording
•Net investment income increased by $327 million mainly due to higher income primarily due to higher SCS asset balances, higher investment yields and higher Alternative investment income.
Current wording
•Interest credited to policyholders’ account balances increased by $327 million mainly due to growth of SCS account values in our Individual Retirement segment, partially offset by lower interest expense on funding agreements in Corporate and Other.
Previous wording
•Net income attributable to the noncontrolling interest increased by $41 million mainly due to higher pre-tax earnings.
Current wording
•Net income attributable to the noncontrolling interest increased by $70 million mainly due to higher pre-tax earnings.
Previous wording
•Income tax expense increased by $64 million mainly driven by higher pre-tax earnings in 2024.
Current wording
•Income tax expense increased by $62 million mainly driven by higher pre-tax earnings in 2024.
Previous wording
Income tax expense is calculated using the ETR and then allocated to our business segments using a 14% ETR for our retirement and protection businesses (Individual Retirement, Group Retirement, Protection Solutions and Legacy), a 27% ETR for Wealth Management and a 29% ETR for Asset Management.
Current wording
Income tax expense is calculated using the ETR and then allocated to our business segments using a 14% ETR for our retirement and protection businesses (Individual Retirement, Group Retirement, Protection Solutions and Legacy), a 29% ETR for Asset Management and a 26% ETR for Wealth Management .
Previous wording
(1)For the six months ended June 30, 2023, amounts reflect a total special payment applied to the accounts of active clients as part of a previously disclosed settlement agreement between Equitable Financial and the SEC.
Current wording
(1)For the nine months ended September 30, 2023, amounts reflect a total special payment applied to the accounts of active clients as part of a previously disclosed settlement agreement between Equitable Financial and the SEC.
Previous wording
•Fee-type revenue increased by $7 million due to higher average Separate Accounts values as a result of higher equity markets in 2024.
Current wording
•Fee-type revenue increased by $22 million due to higher average Separate Accounts values as a result of higher equity markets in 2024.
Previous wording
•Interest credited to policyholders’ account balances increased by $118 million mainly due to the growth of SCS account values.
Current wording
•Interest credited to policyholders’ account balances increased by $147 million mainly due to the growth of SCS account values.
Previous wording
•Amortization of DAC increased by $19 million mainly driven by growth in the business from sales momentum.
Current wording
•Amortization of DAC increased by $17 million mainly driven by growth in the business from sales momentum.
Previous wording
•Total AV as of June 30, 2024 was $101.9 billion, an increase of $3.6 billion, compared to March 31, 2024. The increase in AV was primarily due to $1.9 billion of net inflows, as well as $1.7 billion of equity market appreciation in second quarter 2024.
Current wording
•Total AV as of September 30, 2024 was $108.9 billion, an increase of $6.6 billion, compared to June 30, 2024. The increase in AV was primarily due to $4.7 billion of market appreciation and change in fair value of embedded derivative instruments in third quarter 2024 and $1.9 billion of net inflows.
Previous wording
•Net inflows of $1.9 billion were $356 million higher than in the three months ended June 30, 2023, mainly driven by higher gross premiums.
Current wording
•Net inflows of $1.9 billion were $240 million higher than in the three months ended September 30, 2023, mainly driven by higher gross premiums.
Previous wording
•Amortization of DAC increased by $39 million mainly due to growth in the business from sales momentum.
Current wording
•Amortization of DAC increased by $56 million mainly due to growth in the business from sales momentum.
Previous wording
•The increase in AV of $10.3 billion in the six months ended June 30, 2024 was driven by an increase in investments performance as a result of equity market appreciation of $6.8 billion in the six months ended June 30, 2024, as well as net inflows of $3.5 billion.
Current wording
•The increase in AV of $16.9 billion in the nine months ended September 30, 2024 was driven by an increase in investment performance as a result of market appreciation and change in fair value of embedded derivative instruments of $11.5 billion in the nine months ended September 30, 2024 and net inflows of $5.4 billion.
Previous wording
•Net inflows of $3.5 billion were $1.1 billion higher than in the six months ended June 30, 2023, mainly driven by higher sales in the six months ended June 30, 2024.
Current wording
•Net inflows of $5.4 billion were $1.3 billion higher than in the nine months ended September 30, 2023, mainly driven by higher sales in the nine months ended September 30, 2024.
Showing the first 40 of 99 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
While this litigation proceeds, we are evaluating the potential impact of the Final Rule on our business, particularly as it pertains to the sale of insurance products to retirement investors.
Current report — wording carried from elsewhere
•Amortization of DAC increased by $19 million mainly due to growth in the Individual Retirement segment from sales momentum.
Current report — wording carried from elsewhere
•Amortization of DAC increased by $53 million mainly due to growth in our Individual Retirement segment from sales momentum.
Current report — wording carried from elsewhere
•Amortization of DAC increased by $53 million mainly due to growth in our Individual Retirement segment from sales momentum.
Current report — wording carried from elsewhere
•Net income attributable to noncontrolling interest increased by $39 million due to higher pre-tax earnings.
Rearranged previous paragraphs (11)
Previous report — wording carried elsewhere
•Commissions and distribution-related payments increased by $70 million mainly due to higher distribution and advisory fee type revenue from higher retirement sales and average asset balances in our Wealth Management segment and higher payments for the distribution of AB mutual funds resulting from higher average AUM in our Asset Management segment.
Previous report — wording carried elsewhere
•Amortization of DAC increased by $14 million mainly due to growth in the Individual Retirement segment from sales momentum.
Previous report — wording carried elsewhere
•Income tax expense increased by $408 million primarily due to a partial release of the valuation allowance of $376 million on the deferred tax asset for the second quarter 2023 compared to no valuation allowance release for the second quarter 2024.
Previous report — wording carried elsewhere
•Commissions and distribution-related payments increased by $70 million mainly due to higher distribution and advisory fee type revenue from higher retirement sales and average asset balances in our Wealth Management segment and higher payments for the distribution of AB mutual funds resulting from higher average AUM in our Asset Management segment.
Previous report — wording carried elsewhere
•Amortization of DAC increased by $14 million mainly due to growth in the Individual Retirement segment from sales momentum.
Previous report — wording carried elsewhere
•Interest credited to policyholders’ account balances increased by $207 million mainly due to growth of SCS account values in our Individual Retirement segment, partially offset by lower interest expense on funding agreements.
Previous report — wording carried elsewhere
•Commissions and distribution-related payments increased by $30 million mainly due to higher payments for the distribution of AB mutual funds resulting from higher average AUM.
Previous report — wording carried elsewhere
•Net investment income increased by $58 million mainly due to higher Alternative investment income and higher investment yields.
Previous report — wording carried elsewhere
•Commissions and distribution-related payments increased by $39 million mainly due to higher distribution and advisory fee type revenue from higher retirement sales and average asset balances.
Previous report — wording carried elsewhere
•Compensation, benefits and other operating costs and expenses increased by $19 million mainly due to higher variable compensation from higher sales.
Previous report — wording carried elsewhere
•market risk benefits and purchased market risk benefits