Equitable Holdings, Inc.

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 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.

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, high fuel and energy costs, changes in fiscal or monetary policy and geopolitical tensions. 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, have significantly contributed to volatility in the financial markets and have increased the level of economic and political uncertainty. Consumer and economic uncertainty due to rapid changes in global trade policies, including announced tariff increases and potential additional tariff increases, are also causing market volatility and heightening concerns regarding inflation. For further information on the risk of increased volatility in the financial markets to our business, see “Risk Factors—Risks Relating to Conditions in the Financial Markets and the Economy—Conditions in the global capital markets and the economyand Equity market declines and volatility” in the Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

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.

Current wording

Our U.S. life insurance subsidiaries are regulated primarily at the state level, with some policies and products also subject to federal regulation. Holdings and its insurance subsidiaries are subject to regulation under the insurance holding company laws of various U.S. jurisdictions. 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.

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 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.

Current wording

The NAIC is evaluating the risks associated with insurers’ investments in certain categories of structured securities, including CLOs. In 2023, the NAIC approved interim rules that raise capital requirements for holdings of CLO and other asset-backed security residual interests. Effective January 1, 2024, the NAIC adopted an amendment to the Purposes and Procedures Manual of the NAIC Investment Analysis Office (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.The Purposes and Procedures Manual requires insurers to begin reporting the financially modeled NAIC Designations for CLOs with their year-end 2025 financial statement. The NAIC is collaborating with interested parties to refine the process for modeling CLO investments.

Previous wording

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 wording

In related work, the NAIC’s Financial Condition (E) Committee launched a holistic review of the insurance regulatory framework related to insurer investment risk regulation, on which work began in 2023. The primary objective 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.

Previous wording

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 wording

In November 2024, the NAIC adopted an amendment to the Purposes and Procedures Manual that 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, without limitation, 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.

Previous wording

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 wording

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. The DOL appealed the stays issued in these cases to the U.S. Court of Appeals for the Fifth Circuit, but in early 2025, the court granted the DOL’s motion to pause proceedings while it reviews its posture on these cases. 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.

Previous wording

For additional information on regulatory developments and the risks we face, see “Business—Regulation” in the Annual Report on Form 10-K for the year ended December 31, 2023 and “Risk Factors—Legal and Regulatory Risks” in the 2023 Form 10-K.

Current wording

For additional information on regulatory developments and the risks we face, see “Business—Regulation” and “Risk Factors—Legal and Regulatory Risks” in the 2024 Form 10-K.

Previous wording

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, together with the GMxB MRBs assets and liabilities are recognized in the periods in which they occur. This results in net income volatility as further described below. In addition, net income is impacted by changes in our reinsurers credit spread, while changes in the Company’s credit spread is recorded in other comprehensive income. See “—Significant Factors Impacting Our Results—Impact of Hedging and GMxB Reinsurance on Results.”

Current wording

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. We are using a combination of General Account assets and derivatives to manage duration gap on an economic basis. The changes in the values of the derivatives associated with these programs due to equity and interest rate movements, together with the GMxB MRBs assets and liabilities are recognized in net income in the periods in which they occur, while the General Account asset gains and losses are recognized in OCI resulting in an offset between OCI and net income. In addition, we conduct macro hedging to protect our statutory capital which could also cause net income volatility as further described below. Net income is also impacted by changes in our reinsurers credit spread, while changes in the Company’s credit spread is recorded in OCI. See “—Significant Factors Impacting Our Results—Impact of Hedging and GMxB Reinsurance on Results.”

Previous wording

In addition to our dynamic hedging strategy, we have static hedge positions designed to mitigate the adverse impact of changing market conditions on our statutory capital. We believe this program will continue to preserve the economic value of our variable annuity contracts and better protect our target variable annuity asset level. However, these static hedge positions increase the size of our derivative positions and may result in net income volatility on a period-over-period basis.

Current wording

In addition to our dynamic hedging strategy, we have static hedge positions designed to mitigate the adverse impact of changing market conditions on our statutory capital. We believe this program will continue to preserve the economic value of our variable annuity contracts and better protect our target variable annuity asset level. However, these static hedge positions increase the size of our derivative positions and may result in additional net income volatility on a period-over-period basis.

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 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.

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 MRBs 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

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 a 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.

Current wording

In addition to our results presented in accordance with U.S. GAAP, we report Non-GAAP Operating Earnings, 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 a 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.

Previous wording

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 the variable annuity product MRBs. This is a large source of volatility in net income.

Current wording

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

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 when the majority of the impact relates to the non-core business; and

Current wording

•Other adjustments, which primarily include restructuring costs related to severance and separation, lease write-offs related to non-recurring restructuring activities, 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

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 wording

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 are reported within the Individual Retirement segment as the block is managed on an aggregate basis. Prior periods have been recast to reflect this change.

Previous wording

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.

Current wording

Because Non-GAAP Operating Earnings excludes the foregoing items that can be distortive or unpredictable, management believes that this measure enhances the understanding of our underlying drivers of profitability and trends in our business, thereby allowing management to make decisions that will positively impact our business.

Previous wording

The following table presents return on average equity attributable to Holdings’ common shareholders, excluding AOCI and Non-GAAP Operating ROE for the year ended September 30, 2024.

Current wording

The following table presents return on average equity attributable to Holdings’ common shareholders, excluding AOCI and Non-GAAP Operating ROE for the trailing twelve months:

Previous 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):

Current wording

Net income attributable to Holdings decreased $29 million to $63 million during the three months ended March 31, 2025 from $92 million in the three months ended March 31, 2024. The following were notable changes in net income (loss):

Previous 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.

Current wording

•Change in market risk benefits and purchased market risk benefits increased by $1.8 billion mainly due to a decrease in interest rates in the first quarter 2025 compared to an increase in the first quarter 2024, further driven by unfavorable equity market movements in the first quarter 2025 compared to favorable equity market movements in the first quarter 2024.

Previous wording

•Net derivative losses increased by $1.2 billion mainly due to higher equity market appreciation during the first nine months of 2024 compared to the first nine months of 2023.

Current wording

•Net derivative gains were $799 million for the three months ended March 31, 2025 compared to losses of $1.4 billion for the first three months of the prior year primarily driven by lower equity market depreciation during 2025 compared to higher equity market appreciation during 2024.

Previous wording

•Fee-type revenue increased by $38 million mainly due to higher average Separate Account values.

Current wording

•Net investment income increased by $38 million mainly due to higher average asset balances, partially offset by lower investment yields.

Previous 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:

Current wording

Non-GAAP Operating Earnings decreased by $56 million to $421 million for the three months ended March 31, 2025 from $477 million in the three months ended March 31, 2024. The following were notable changes in Non-GAAP Operating Earnings:

Previous wording

•Income tax expense decreased by $16 million mainly driven by a lower ETR in 2024.

Current wording

•Amortization of DAC increased by $16 million mainly due to growth in our Individual Retirement segment from sales momentum.

Previous wording

•Compensation, benefits, interest expense and other operating costs decreased by $17 million mainly due to lower base compensation and other expenses driven by the sale of Bernstein Research Services and lower interest expense from lower weighted average borrowings, partially offset by higher incentive compensation related to higher average AUM and increased office related expenses.

Current wording

•Compensation, benefits, interest expense and other operating costs decreased by $31 million mainly due to lower base compensation and other expenses driven by the sale of BRS, lower interest expense from lower weighted average borrowings, and lower office related expenses, partially offset by the recognition of a $21 million incentive grant gain in the prior year related to AB headquarters relocation to Nashville in our Asset Management segment.

Previous wording

•Income tax expense increased by $62 million mainly driven by higher pre-tax earnings in 2024.

Current wording

•Income tax expense decreased by $8 million mainly driven by lower pre-tax earnings in 2025.

Previous wording

•Income tax expense increased by $21 million primarily due to higher pre-tax earnings, partially offset by a lower ETR for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Current wording

•Commissions and distribution-related payments increased by $21 million mainly due to higher asset-based commissions and sales volumes.

Previous wording

•Policyholders’ benefits increased by $14 million mainly due to growth in the payout business.

Current wording

•Policyholders’ benefits increased by $15 million mainly due to growth in the payout business.

Previous wording

•Amortization of DAC increased by $56 million mainly due to growth in the business from sales momentum.

Current wording

•Amortization of DAC increased by $15 million mainly due to growth in the business from sales momentum.

Previous 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.

Current wording

•The decline in AV of $0.9 billion in the three months ended March 31, 2025 was driven by a decrease in investment performance as a result of market depreciation and change in fair value of embedded derivative instruments of $(2.3) billion in the three months ended March 31, 2025, partially offset by net inflows of $1.4 billion.

Previous wording

•Interest credited to policyholders’ account balances increased by $11 million mainly due to higher average account balances in our institutional market (offset in Net investment income).

Current wording

•Interest credited to policyholders’ account balances increased by $11 million mainly due to higher average account balances in institutional markets (offset in Net investment income).

Previous wording

•The increase in AV of $4.4 billion in the nine months ended September 30, 2024 was primarily driven by equity market appreciation and net inflows of $30 million.

Current wording

•The decrease in AV of $0.7 billion in the three months ended March 31, 2025 was primarily driven by equity market depreciation, partially offset by net inflows of $192 million.

Previous wording

•Net inflows of $30 million for the nine months ended September 30, 2024 increased $151 million compared to the nine months ended September 30, 2023, mainly driven by large institutional lump sum premiums partially offset by higher tax-exempt and corporate surrenders.

Current wording

•Net inflows of $192 million for the three months ended March 31, 2025 improved by $324 million compared to the three months ended March 31, 2024, mainly driven by large institutional lump sum premiums and higher flows in the tax-exempt market partially offset by lower flows in the corporate market.

Previous wording

The Asset Management segment provides diversified investment management 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 61%, and 61% during the three and nine months ended September 30, 2024 and 2023.

Current wording

The Asset Management segment provides diversified investment management 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 62% and 61% during the three months ended March 31, 2025 and 2024.

Previous wording

•Compensation, benefits, interest expense and other operating costs increased by $4 million mainly due to higher incentive compensation expense and other expenses including office related expenses, partially offset by lower base compensation and other expenses driven by the sale of Bernstein Research Services and the recognition of a $21 million incentive grant gain in connection with the AB headquarters relocation to Nashville.

Current wording

•Compensation, benefits, interest expense and other operating costs decreased by $58 million mainly due to lower base compensation and other expenses driven by the sale of BRS, lower interest expense from lower weighted average borrowings, and lower office related expenses, partially offset by the recognition of a $21 million incentive grant gain in the prior year related to AB headquarters relocation to Nashville.

Previous wording

•Fee-type revenue increased by $177 million primarily due to higher investment base advisory fees and higher distribution revenue from higher average AUM, higher performance based fees, 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 $8 million primarily due to higher investment base advisory fees and higher distribution revenue from higher average AUM, higher performance based fees, partially offset by lower revenue from BRS due to the sale of this business completed during April 2024.

Previous wording

•Remeasurement of liability for future policy benefits increased by $28 million mainly due to unfavorable assumption updates and model changes in the third quarter 2024 related to our core business.

Current wording

•Commissions and distribution-related payments increased by $28 million mainly due to higher payments to financial intermediaries for the distribution of AB mutual funds resulting from higher average AUM.

Previous wording

•Total AUM as of September 30, 2024 was $805.9 billion, up $80.7 billion, or 11.1%, compared to December 31, 2023. The increase is a result of market appreciation of $78.2 billion and net inflows of $2.5 billion. Market appreciation of $78.2 billion attributed to Retail of $35.5 billion, Institutions of $28.4 billion and Private Wealth of $14.3 billion. Net inflows were driven by Retail and Private Wealth net inflows of $12.3 billion and $0.6 billion respectively, which were partially offset by Institutions net outflows of $10.4 billion.

Current wording

•Total AUM as of March 31, 2025 was $784.5 billion, down $(7.7) billion, or (1.0)%, compared to December 31, 2024. The decrease is primarily the result of market depreciation of ($10.1) billion, partially offset by net inflows of $2.4 billion. Market depreciation of $(10.1) billion is attributed to Retail of $(11.1) billion and Private Wealth of $(0.6) billion, partially offset by Institutions of $1.6 billion. Net inflows were driven by Retail net inflows of $0.9 billion, Private Wealth net inflows of $0.8 billion and Institutions net inflows of $0.7 billion.

Previous wording

The Wealth Management segment is an emerging leader in the wealth management space with a differentiated advice value proposition that offers discretionary and non-discretionary investment advisory accounts, financial planning and advice, life insurance, and annuity products. In 2023, we began reporting this business separately from our other segments and Corporate and Other.

Current wording

The Wealth Management segment is an emerging leader in the wealth management space with a differentiated advice value proposition that offers discretionary and non-discretionary investment advisory accounts, financial planning and advice, life insurance, and annuity products.

Previous wording

Operating earnings increased by $12 million to $46 million during the three months ended September 30, 2024 from $34 million in the three months ended September 30, 2023. The following notable items were the primary drivers of the change in operating earnings:

Current wording

Operating earnings increased $3 million to $46 million during the three months ended March 31, 2025 compared to $43 million in the three months ended March 31, 2024. The following were notable changes in operating earnings (losses):

Previous wording

•Investment management, service fees and other income increased by $60 million mainly due to higher advisory fee type revenue attributed to higher average assets balances combined with increased distribution fees from higher retirement sales.

Current wording

•Investment management, service fees and other income increased by $41 million mainly due to higher advisory fee type revenue attributed to higher average asset balances combined with increased distribution fees from higher retirement sales.

Previous wording

•Commissions and distribution-related payments increased by $37 million mainly due to higher distribution and advisory fee type revenue from higher retirement sales and average asset balances.

Current wording

•Commissions and distribution-related payments increased by $33 million mainly due to higher distribution and advisory fee-type revenue from higher retirement sales and average asset balances.