Attached files
file | filename |
---|---|
EX-31.1 - EX-31.1 - Equitable Financial Life Insurance Co | y03967exv31w1.htm |
EX-32.1 - EX-32.1 - Equitable Financial Life Insurance Co | y03967exv32w1.htm |
EX-31.2 - EX-31.2 - Equitable Financial Life Insurance Co | y03967exv31w2.htm |
EX-32.2 - EX-32.2 - Equitable Financial Life Insurance Co | y03967exv32w2.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-25280
AXA EQUITABLE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
New York | 13-5570651 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
1290 Avenue of the Americas, New York, New York | 10104 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code (212) 554-1234
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on | ||
Title of each class | which registered | |
None | None | |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (Par Value $1.25 Per Share)
Common Stock (Par Value $1.25 Per Share)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
Yes o No þ
Note Checking the box above will not relieve any registrant required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act from their obligations under those sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§229.405 of this chapter) is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.
See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
No voting or non-voting common equity of the registrant is held by non-affiliates of the registrant
as of June 30, 2009.
As of March 10, 2010, 2,000,000 shares of the registrants Common Stock were outstanding.
REDUCED DISCLOSURE FORMAT:
Registrant meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and
is therefore filing this Form with the reduced disclosure format.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of AllianceBernstein L.P.s Annual Report on Form 10-K for the fiscal year ended December
31, 2009 are incorporated by reference into Part I hereof.
Table of Contents
EXPLANATORY NOTE
On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act repealed Rule
436(g) promulgated under the Securities Act of 1933, as amended (the Securities Act), thereby
eliminating the exemption from the expert consent and liability provisions under the Securities Act
for any credit ratings issued by a nationally recognized statistical rating organization. As a
result, companies that wish to include certain information relating to their ratings in periodic
reports that may be incorporated by reference into future registration statements or prospectuses
must obtain the consent of the applicable rating agencies. The rating agencies have indicated that
they are not providing any consents at this time. The Staff of the Securities and Exchange
Commission issued new Compliance & Disclosure Interpretations on July 22, 2010 stating that
information constituting issuer disclosure-related ratings information will be permitted without
the need for rating agencies consent. This Annual Report on Form 10-K/A modifies Part I, Item I
(Business) of our original filing to delete previous disclosure concerning the financial strength
or claims-paying rating of AXA Equitable Life Insurance Company as it may not be considered to
constitute issuer disclosure-related ratings information.
This Amendment No.1 does not reflect events occurring after the filing of the original Annual
Report on Form 10-K and, other than deleting previous disclosure concerning the financial strength
or claims-paying rating of AXA Equitable Life Insurance Company, does not modify or update any
other the disclosures in the original Annual Report on Form 10-K in
any way.
ii
TABLE OF CONTENTS
Part I, Item 1 | ||||||||
Part IV, Item 15. | ||||||||
SIGNATURES | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 |
Table of Contents
Part I, Item 1.
BUSINESS1
OVERVIEW
AXA Equitable, established in the State of New York in 1859, is among the largest life insurance
companies in the United States, with approximately 2.26 million insurance policies and contracts in
force as of December 31, 2009. AXA Equitable is part of a diversified financial services
organization offering a broad spectrum of financial advisory, insurance and investment management
services. Together with its affiliates, including AllianceBernstein, the Company is a leading
asset manager, with total assets under management of approximately $571.28 billion at December 31,
2009, of which approximately $495.50 billion were managed by AllianceBernstein. AXA Equitable is a
wholly owned subsidiary of AXA Financial, which is a wholly owned subsidiary of AXA S.A. (AXA), a
French holding company for an international group of insurance and related financial services
companies. AXA is subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the Exchange Act), and files annual reports on Form 20-F. In January 2010, AXA
announced that it intends to voluntarily delist its American Depositary Shares from the New York
Stock Exchange and deregister with the U.S. Securities and Exchange Commission. For additional
information regarding AXA, see Parent Company.
SEGMENT INFORMATION
AXA Equitable conducts operations in two business segments, the Insurance segment and the
Investment Management segment. The insurance business conducted principally by AXA Equitable and
its subsidiary, AXA Distributors, is reported in the Insurance segment. The investment management
business of AllianceBernstein, a leading global investment management firm, is reported in the
Investment Management segment. For additional information on AXA Equitables business segments,
see Managements Discussion and Analysis of Financial Condition and Results of Operations -
Results Of Continuing Operations By Segment and Note 21 of Notes to Consolidated Financial
Statements.
Insurance
AXA Equitable offers a variety of traditional, variable and interest-sensitive life insurance
products, variable and fixed-interest annuity products, mutual funds and other investment products,
asset management, financial planning and other services principally to individuals, small and
medium-size businesses and professional and trade associations. The Insurance segment, which also
includes Separate Accounts for individual and group life insurance and annuity products, accounted
for approximately $336.3 million of total revenues, after intersegment eliminations, for the year
ended December 31, 2009.
Insurance segment products are offered on a retail basis in all 50 states, the District of Columbia
and Puerto Rico by financial professionals associated with AXA Advisors, an affiliated
broker-dealer, and AXA Network, an affiliated insurance general agency. AXA Distributors, a
broker-dealer and insurance general agency subsidiary of AXA Equitable, distributes AXA Equitables
products on a wholesale basis in all 50 states, the District of Columbia and Puerto Rico through
national and regional securities firms, independent financial planning and other broker-dealers,
banks and brokerage general agencies.
1 | As used in this Form 10-K, the term AXA Equitable refers to AXA Equitable Life Insurance Company, a New York stock life insurance corporation, AXA Financial refers to AXA Financial, Inc., a Delaware corporation incorporated in 1991, AXA Financial Group refers to AXA Financial and its consolidated subsidiaries, and the Company refers to AXA Equitable and its consolidated subsidiaries. The term AXA Distributors refers to AXA Distributors, LLC and its subsidiaries, AXA Advisors refers to AXA Advisors, LLC, a Delaware limited liability company, and AXA Network refers to AXA Network, LLC, a Delaware limited liability company and its subsidiaries. The term AllianceBernstein refers to AllianceBernstein L.P. (formerly Alliance Capital Management L.P.), a Delaware limited partnership, and its subsidiaries. The term General Account refers to the assets held in the general account of AXA Equitable and all of the investment assets held in certain of AXA Equitables Separate Accounts on which AXA Equitable bears the investment risk. The term Separate Accounts refers to the Separate Account investment assets of AXA Equitable excluding the assets held in those Separate Accounts on which AXA Equitable bears the investment risk. The term General Account Investment Assets refers to assets held in the General Account associated with AXA Equitables continuing operations (which includes the Closed Block described below) and does not include assets held in the General Account associated primarily with AXA Equitables Wind-up Annuity line of business (Wind-up Annuities). |
1-1
Table of Contents
For additional information on this segment, see Managements Discussion and Analysis of Financial
Condition and Results of Operations Results of Continuing Operations By Segment Insurance, and
Employees, Competition and Regulation.
Products
Insurance Product Offerings. In the aftermath of the global financial crisis and the continuing
difficult conditions in the economy, the market for annuity and life insurance products of the
types issued by AXA Equitable continues to be very dynamic. Among other things, the features and
pricing of various insurance products continue to change rapidly, various insurance companies,
including AXA Equitable, have eliminated and/or limited the sales of certain annuity and life
insurance products and/or features, and overall industry sales of variable annuity and life
insurance products declined in 2009. Changes to certain of AXA Equitables insurance product
features including, e.g., guarantee features, pricing and/or Separate Account investment options,
have made some of the annuity and life insurance products offered by AXA Equitable less competitive
in the marketplace. This, in turn, adversely affected sales in 2009 and may continue to adversely
affect overall sales of AXA Equitables annuity and life insurance products.
AXA Equitable continues to review and develop its product offerings in light of changing market
conditions and other factors, with a view towards increasing the diversification in its product
portfolio, increasing distribution management capability, and enhancing the management of its
in-force business, with the objective of driving profitable growth while managing risk. For
example, in 2009, AXA Equitable launched Retirement Cornerstone(SM), an innovative variable annuity
that offers two platforms, one of which offers guaranteed lifetime income based on a floating rate
design and the other of which offers a wide array of investment options with traditional
annuitization benefits based solely on non-guaranteed account performance.
As conditions in the insurance products marketplace, capital markets and economy continue to
evolve, AXA Equitable expects to offer new and/or different products, and it may also further
revise, suspend or discontinue one or more of its current product offerings.
Variable Annuities and Variable Life Insurance. AXA Equitable is among the countrys leading
issuers of variable annuity and variable life insurance products. Variable annuity and variable
life insurance products offer purchasers the opportunity to invest some or all of their account
values in various Separate Account investment options. The growth of Separate Account assets under
management remains a strategic objective of the Company, which seeks to increase fee-based revenues
derived from managing funds for its clients.
Variable annuity products continue to account for a substantial portion of AXA Equitables sales,
with 70.8% of AXA Equitables total premiums and deposits in 2009 attributable to variable
annuities. Variable annuity products offered by AXA Equitable principally include deferred
variable annuities sold in the individual (non-qualified) markets, as individual retirement
annuities, in public school systems as tax sheltered annuities and as group annuities in the
employer-sponsored retirement plan markets. A significant portion of the variable annuities sold
by AXA Equitable offer one or more enhanced guarantee features in addition to the standard return
of principal death benefit guarantee. Such enhanced guarantee features may include an enhanced
guaranteed minimum death benefit (GMDB) and/or guaranteed minimum living benefits. Guaranteed
minimum living benefits principally include guaranteed minimum income benefits (GMIB), although
AXA Equitable also offers guaranteed minimum accumulation benefits and guaranteed withdrawal
benefits for life (GWBL). For additional information regarding these guaranteed minimum benefit
features, see Notes 2, 8, and 9 of Notes to Consolidated Financial Statements.
Variable life insurance products accounted for 9.5% of AXA Equitables total premiums and deposits
in 2009. Variable life insurance products offered by AXA Equitable include single-life products,
second-to-die policies (which pay death benefits following the death of both insureds) and products
for the corporate-owned life insurance (COLI) market.
As noted above, variable annuity and variable life products offer purchasers the opportunity to
direct the investment of their account values into various Separate Account investment options.
Over the past five years, Separate Account assets for individual variable annuities and variable
life insurance policies have increased by $22.46 billion to $84.02 billion at December 31, 2009.
Of the 2009 year-end amount, approximately $42.34 billion was invested through EQ Advisors Trust
(EQAT) and approximately $37.29 billion was invested through AXA Premier VIP Trust (VIP Trust).
EQAT and VIP Trust are mutual funds for which AXA Equitable serves as investment manager (and in
certain instances provides day to day portfolio management services as the investment adviser) and
1-2
Table of Contents
administrator. The balance of such Separate Account assets is invested through various other
mutual funds for which third parties serve as investment manager.
EQAT is a mutual fund offering variable life and annuity contractholders a choice of single or
multi-advised equity, bond and money market investment portfolios, a family of eight hybrid
portfolios whose assets are allocated among multiple subadvisers and seven asset allocation
portfolios that invest exclusively in other portfolios of EQAT and/or VIP Trust and a new series of
twelve portfolios, the AXA Tactical Manager Portfolios, whose assets are allocated among multiple
subadvisers and employ an investment strategy that seeks to reduce equity exposure when the
volatility index has increased to levels that are meaningfully higher than long-term historic
averages. VIP Trust is a mutual fund offering variable life and annuity contractholders a choice
of multi-advised equity and bond investment portfolios, as well as nine asset allocation portfolios
that invest exclusively in other portfolios of EQAT and/or VIP Trust.
Day-to-day portfolio management services for each investment portfolio offered pursuant to EQAT and
VIP are provided, on a subadvisory basis, by various affiliated and unaffiliated investment
subadvisers. As of December 31, 2009, AXA Equitable served as the investment adviser to
twenty-seven portfolios (or an allocated portion of a portfolio) representing approximately 16.9%
of the total assets in EQAT portfolios and nine portfolios representing approximately 68.7% of the
total assets of the VIP Trust portfolios. As of December 31, 2009, AllianceBernstein and AXA
Rosenberg Investment Management (AXA Rosenberg), each an AXA affiliate, provided investment
advisory services to portfolios representing approximately 24.9% of the total assets in EQAT
portfolios and approximately 5.6% of the total assets in the VIP Trust portfolios, and unaffiliated
investment subadvisers provided investment advisory services in respect of the balance of the
assets in the respective EQAT and VIP Trust portfolios.
Fixed Annuities and Traditional and Interest Sensitive Life Insurance. In addition to variable
annuity and variable life insurance products, AXA Equitable issues or has issued a variety of fixed
annuity products, including individual single premium deferred annuities, which credit an initial
and subsequent annually declared interest rate, and payout annuity products, including traditional
immediate annuities. Fixed annuity products have not been a significant product for the Insurance
Group in recent years, accounting for 0.8% of AXA Equitables total premium and deposits in 2009.
AXA Equitable also issues an array of traditional and interest-sensitive life insurance products,
including universal life, whole life and term life insurance. Traditional and interest-sensitive
life insurance products accounted for 13.8% of AXA Equitables total premium and deposits in 2009
and continue to represent a significant product line for AXA Equitable.
For additional information on assets under management, see Managements Discussion and Analysis of
Financial Condition and Results of Operations Results of Continuing Operations by Segment and
Managements Discussion and Analysis of Financial Condition and Results of Operations Assets
Under Management.
Markets
AXA Equitable primarily targets affluent and emerging affluent individuals such as professionals
and business owners, as well as employees of public school systems, universities, not-for-profit
entities and certain other tax-exempt organizations, and existing customers. Variable annuity
products are primarily targeted at individuals saving for retirement or seeking retirement income
(using either qualified programs, such as individual retirement annuities, or non-qualified
investments) as well as employers (including, among others, educational and not-for-profit
entities, and small and medium-sized businesses) seeking to offer retirement savings programs such
as 401(k) or 403(b) plans. Variable and interest-sensitive life insurance is targeted at
individuals for protection and estate planning purposes, and at business owners to assist in, among
other things, business continuation planning and funding for executive benefits. Mutual funds and
other investment products are intended for a broad spectrum of clients to meet a variety of asset
accumulation and investment needs. Mutual funds and other investment products add breadth and
depth to the range of needs-based services and products AXA Equitable is able to provide.
Distribution
Retail Distribution. AXA Equitable distributes its annuity, life insurance and other products
directly to the public through financial professionals associated with AXA Advisors and AXA
Network. These financial professionals also have access to and can offer a broad array of annuity,
life insurance and investment products and services from unaffiliated insurers and other financial
service providers. AXA Advisors has outsourced certain administrative
1-3
Table of Contents
services, including clearing and transaction processing and customer service, for the non-insurance
investment brokerage business of AXA Advisors to LPL Financial Corporation (LPL). Pursuant to
this arrangement, AXA Advisors financial professionals have access to certain LPL proprietary
technology, including brokerage and advisory platforms and research services.
AXA Equitable has entered into agreements pursuant to which it compensates AXA Advisors and AXA
Network for distributing and servicing AXA Equitables products. The agreements provide that
compensation will not exceed any limitations imposed by applicable law. Under these agreements,
AXA Equitable provides to each of AXA Advisors and AXA Network personnel, property and services
reasonably necessary for their operations. AXA Advisors and AXA Network reimburse AXA Equitable
for their actual costs (direct and indirect) and expenses under the respective agreements.
Wholesale Distribution. AXA Equitable also distributes its annuity and life insurance products on
a wholesale basis through AXA Distributors. AXA Distributors distributes AXA Equitables annuity
products through third-party national and regional securities firms, independent financial
planners, other broker-dealers and banks. AXA Distributors, through its AXA Partners division,
also distributes AXA Equitables life insurance products on a wholesale basis principally through
brokerage general agencies.
Annuities and life insurance distributed by AXA Distributors accounted for 31.7% and 48.4% of AXA
Equitables total annuity and life insurance premiums and deposits in 2009 and 2008, respectively.
Annuities distributed by AXA Distributors accounted for 42.1% and 60.8% of AXA Equitables total
first year annuity premiums and deposits in 2009 and 2008, respectively, and 26.5% and 45.3% of AXA
Equitables total annuity premiums and deposits in 2009 and 2008, respectively. Life insurance
products distributed by the AXA Partners division of AXA Distributors accounted for 37.7% and 40.9%
of AXA Equitables total first year life insurance premiums and deposits in 2009 and 2008,
respectively, and 19.3% and 15.9% of AXA Equitables total life insurance premiums and deposits in
2009 and 2008, respectively. For additional information on premiums and deposits, see
Managements Discussion and Analysis of Financial Condition and Results of Operations Premiums
and Deposits.
Reinsurance and Hedging
AXA Equitable has in place reinsurance and hedging programs to reduce its exposure to mortality,
equity market declines, interest rate fluctuations and certain other product features.
In 2009, AXA Equitable generally retained up to a maximum of $25 million of mortality risk on
single-life policies and $30 million of mortality risk on second-to-die policies. For amounts
issued in excess of those limits, AXA Equitable typically obtained reinsurance from unaffiliated
third parties. The reinsurance arrangements obligate the reinsurer to pay a portion of any death
claim in excess of the amount retained by AXA Equitable in exchange for an agreed-upon premium.
AXA Equitable also reinsures to non-affiliated reinsurers a portion of its exposure on variable
annuity products that offer a GMIB and/or GMDB feature. At December 31, 2009, AXA Equitable had
reinsured to non-affiliated reinsurers, subject to certain maximum amounts or caps in any one
period, approximately 45.2% of its net amount at risk resulting from the GMIB feature and
approximately 6.1% of its net amount at risk to the GMDB obligation on annuity contracts in force
as of December 31, 2009.
A contingent liability exists with respect to reinsurance should the reinsurers be unable to meet
their obligations. AXA Equitable evaluates the financial condition of its reinsurers in an effort
to minimize its exposure to significant losses from reinsurer insolvencies. AXA Equitable is not a
party to any risk reinsurance arrangement with any non-affiliated reinsurer pursuant to which the
amount of reserves on reinsurance ceded to such reinsurer equals more than 1.38% of the total
policy reserves of AXA Equitable (including Separate Accounts).
In addition to non-affiliated reinsurance, in 2008, AXA Equitable ceded to AXA Financial (Bermuda)
Ltd. (AXA Bermuda) a 100% quota share of all liabilities for variable annuity GMDB and GMIB
riders issued on or after January 1, 2006 and in force on September 30, 2008. For AXA Equitable,
the GMDB/GMIB reinsurance transaction allowed for a more efficient use of its capital. AXA
Bermuda, a captive life reinsurance company established by AXA Financial in 2003, also reinsures
level premium term insurance and lapse protection riders under universal life insurance policies
issued by AXA Equitable and USFL. For additional information on AXA Bermuda, see Managements
Discussion and Analysis of Financial Condition and Results of Operations Liquidity
1-4
Table of Contents
and Capital Resources and Supplementary Information Reinsurance and Note 11 of Notes to
Consolidated Financial Statements.
AXA Equitable has adopted certain hedging programs that are designed to mitigate the exposure to
movements in the equity markets and interest rates on, among other things, GMIB, GMDB and GWBL
liabilities that have not been reinsured for contracts issued after January 1, 2001. The operation
of these hedging programs are based on models involving numerous estimates and assumptions,
including among others, mortality, lapse, surrender and withdrawal rates, election rates, market
volatility, interest rates and correlation among various market movements. There can be no
assurance that ultimate actual experience will not differ materially from our assumptions,
particularly (but not only) during periods of high market volatility which could adversely impact
consolidated results of operations and financial condition.
For additional information about reinsurance and hedging strategies implemented by AXA Equitable,
see Item 1A Risk Factors, Quantitative and Qualitative Disclosures about Market Risk and
Notes 2, 8, and 9 of Notes to Consolidated Financial Statements.
Reinsurance Assumed. AXA Equitable also acts as a retrocessionaire by assuming life reinsurance
from non-affiliated reinsurers. Mortality risk through reinsurance assumed is managed using the
same corporate retention limits noted above (i.e., $25 million on single-life policies and $30
million on second-to-die policies), although, in practice, AXA Equitable is currently using lower
internal retention limits for life reinsurance assumed. AXA Equitable has also assumed accident,
health, aviation and space risks by participating in or reinsuring various reinsurance pools and
arrangements. AXA Equitable generally discontinued its participation in new accident, health,
aviation and space reinsurance pools and arrangements for years following 2000, but continues to be
exposed to claims in connection with pools it participated in prior to that time. AXA Equitable
audits or otherwise reviews the records of many of these reinsurance pools and arrangements as part
of its ongoing efforts to manage its claims risk.
General Account Investment Portfolio
The General Account consists of a diversified portfolio of principally fixed-income investments.
The following table summarizes General Account Investment Assets of AXA Equitable by asset category
at December 31, 2009:
AXA Equitable
General Account Investment Assets
Net Amortized Cost (1)
(Dollars in Millions)
General Account Investment Assets
Net Amortized Cost (1)
(Dollars in Millions)
Amount | % of Total | |||||||
Fixed maturities |
$ | 28,320.5 | 73.6 | % | ||||
Mortgages |
3,953.0 | 10.3 | ||||||
Equity real estate |
98.8 | .3 | ||||||
Other equity investments |
1,168.8 | 3.0 | ||||||
Policy loans |
3,881.9 | 10.1 | ||||||
Cash and short-term investments (2) |
1,044.9 | 2.7 | ||||||
Total |
$ | 38,467.9 | 100.0 | % | ||||
(1) | Net amortized cost is the cost of the General Account Investment Assets (adjusted for impairments in value deemed to be other than temporary, if any) less depreciation and amortization, where applicable, and less valuation allowances on mortgage and real estate portfolios. | |
(2) | Comprised of Cash and cash equivalents and short-term investments included within the Other invested assets caption on the consolidated balance sheet. |
AXA Equitable has an asset/liability management approach with separate investment objectives for
specific classes of product liabilities, such as life insurance, annuity and group pension. AXA
Equitable has investment guidelines for each product line that form the basis for investment
strategies to manage such product lines investment return
1-5
Table of Contents
and liquidity requirements, consistent with managements overall investment objectives for the
General Account investment portfolio. Investments frequently meet the investment objectives of
more than one class of product liabilities; each such class may be allocated a pro rata interest in
such investments and the returns therefrom.
Investment Surveillance. As part of AXA Equitables investment management process, management,
with the assistance of its investment advisors, constantly monitors General Account investment
performance. This internal review process culminates with a quarterly review of assets by AXA
Equitables Investments Under Surveillance Committee that evaluates whether any investments are
other than temporarily impaired and, therefore, are written down to their fair value and whether
specific investments should be put on an interest non-accrual basis.
Investment Management
General. The Investment Management segment is principally comprised of the investment management
business of AllianceBernstein. AllianceBernstein offers a broad range of investment products and
services to its clients, including: (a) to its institutional clients, AllianceBernstein offers
separately managed accounts, sub-advisory relationships, structured products, collective investment
trusts, mutual funds, hedge funds and other investment vehicles, (b) to its retail clients,
AllianceBernstein offers retail mutual funds sponsored by AllianceBernstein, its subsidiaries and
its affiliated joint venture companies, sub-advisory services to mutual funds sponsored by third
parties, separately managed account programs that are sponsored by various financial intermediaries
worldwide and other investment vehicles, (c) to its private clients, AllianceBernstein offers
diversified investment management services through separately managed accounts, hedge funds, mutual
funds and other investment vehicles, and (d) to institutional investors, AllianceBernstein offers
research, portfolio strategy and brokerage-related services, and to issuers of publicly-traded
securities, AllianceBernstein offers equity capital markets services.
AllianceBernsteins portfolio managers oversee a number of different types of investment services
within various vehicles and strategies. AllianceBernsteins services include: (a) value equities,
generally targeting stocks that are out of favor and considered undervalued; (b) growth equities,
generally targeting stocks with under-appreciated growth potential; (c) fixed income securities,
including taxable and tax-exempt securities; (d) blend strategies, combining style-pure investment
components with systematic rebalancing; (e) passive management, including both index and enhanced
index strategies; (f) alternative investments, such as hedge funds, currency management strategies,
venture capital and, beginning in 2010, direct real estate investing, and (g) asset allocation
services, by which AllianceBernstein offers blend strategies specifically-tailored for its clients
(e.g., customized target date fund retirement services for defined contribution sponsors).
The Investment Management segment in 2009 accounted for approximately $2.94 billion of total
revenues, after intersegment eliminations. As of December 31, 2009, AllianceBernstein had
approximately $495.50 billion in assets under management including approximately $300.00 billion
from institutional clients, approximately $120.70 billion from retail clients and approximately
$74.80 billion from private clients. As of December 31, 2009, assets of AXA, AXA Financial and AXA
Equitable, including investments in EQAT and VIP Trust, represented approximately 22.0% of
AllianceBernsteins total assets under management, and fees and other charges for the management of
those assets accounted for approximately 4.0% of AllianceBernsteins total revenues. The
Investment Management segment continues to provide asset management services to AXA Equitable.
Interest in AllianceBernstein. In October 2000, AllianceBernstein acquired SCB Inc., formerly
known as Sanford C. Bernstein, Inc. (Bernstein). In connection with this acquisition (the
Bernstein Acquisition), Bernstein and SCB Partners Inc. (SCB Partners) were granted the right
to sell limited partnership interests in AllianceBernstein (AllianceBernstein Units) to AXA
Financial or an entity designated by AXA Financial (the AllianceBernstein Put). Following the
Bernstein Acquisition, AXA Financial, either directly or indirectly through wholly owned
subsidiaries, acquired a total of 30.6 million AllianceBernstein Units for an aggregate purchase
price of approximately $1.63 billion through several purchases made pursuant to the
AllianceBernstein Put. In March 2009, AXA Financial Group sold 41.9 million AllianceBernstein
Units to an affiliate of AXA. In 2009, AllianceBernstein awarded 9.8 million restricted
AllianceBernstein Holding units in connection with compensation plans for senior officers and
employees and in connection with certain employees employment and separation agreements. AXA
Financial Groups consolidated economic interest in AllianceBernstein as of December 31, 2009 was
approximately 44.8%, including the general partnership interests held indirectly by AXA Equitable
as the sole shareholder of the general partner (AB General Partner) of AllianceBernstein Holding
L.P. (AllianceBernstein Holding), and AllianceBernstein. As of December 31, 2009, on a
stand-alone basis, AXA Equitables economic interest in AllianceBernstein was approximately 37.1%.
At December 31, 2009, AXA and its subsidiaries beneficial ownership in AllianceBernstein was
approximately 62.1%.
1-6
Table of Contents
For additional information about AllianceBernstein, including its results of operations, see
Business Regulation and Managements Discussion and Analysis of Financial Condition and
Results of Operations Results of Continuing Operations by Segment Investment Management and
Note 1 of Notes to Consolidated Financial Statements and AllianceBernstein L.P.s Annual Report on
Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission
(the SEC) on February 11, 2010.
EMPLOYEES
As of December 31, 2009, AXA Equitable had approximately 5,139 full-time employees and
AllianceBernstein had approximately 4,369 full-time employees.
COMPETITION
Insurance. There is strong competition among insurers, banks, brokerage firms and other financial
institutions and providers seeking clients for the types of products and services provided by AXA
Equitable, including insurance, annuity and other investment products and services. Competition is
particularly intense among a broad range of financial institutions and other financial service
providers for retirement and other savings dollars. In addition, the trend toward consolidation
has been significantly accelerating as a result of the recent economic turmoil. For additional
information regarding competition, see Item 1A Risk Factors.
The principal competitive factors affecting AXA Equitables business are its financial strength as
evidenced, in part, by its financial and claims-paying ratings; access to capital; access to
diversified sources of distribution; size and scale; product quality, range, features/functionality
and price; its ability to bring customized products to the market quickly; its ability to explain
complicated products and features to its distribution channels and customers; crediting rates on
fixed products; visibility, recognition and understanding of its brands in the marketplace;
reputation and quality of service; and (with respect to variable insurance and annuity products,
mutual funds and other investment products) investment options, flexibility and investment
management performance. For additional information of the competitiveness of our products, see
Business Products.
Investment Management. The financial services industry is intensely competitive and new entrants
are continually attracted to it. No single or small group of competitors is dominant in the
industry. AllianceBernstein competes in all aspects of its business with numerous investment
management firms, mutual fund sponsors, brokerage and investment banking firms, insurance
companies, banks, savings and loan associations and other financial institutions that often provide
investment products that have similar features and objectives as those AllianceBernstein offers.
AllianceBernsteins competitors offer a wide range of financial services to the same customers that
AllianceBernstein seeks to serve. Some of AllianceBernsteins competitors are larger, have a
broader range of product choices and investment capabilities, conduct business in more markets,
have substantially greater resources than AllianceBernstein. These factors may place
AllianceBernstein at a competitive disadvantage and AllianceBernstein can give no assurance that
its strategies and efforts to maintain and enhance its current client relationships, and create new
ones, will be successful. To grow its business, AllianceBernstein must be able to compete
effectively for assets under management. Key competitive factors include (i) AllianceBernsteins
investment performance for its clients; (ii) AllianceBernsteins commitment to place the interests
of its clients first; (iii) the quality of AllianceBernsteins research; (iv) AllianceBernsteins
ability to attract, retain and motivate highly skilled, and often highly specialized, personnel;
(v) the array of investment products AllianceBernstein offers; (vi) the fees AllianceBernstein
charges; (vii) Morningstar/Lipper rankings for the AllianceBernstein Funds; (viii)
AllianceBernsteins operational effectiveness; (ix) AllianceBernsteins ability to further develop
and market its brand; and (x) AllianceBernsteins global presence.
AXA, AXA Equitable and certain of their direct and indirect subsidiaries offer financial services,
some of which compete with those offered by AllianceBernstein. AllianceBernsteins partnership
agreement specifically allows AXA Financial and its subsidiaries (other than the AB General
Partner) to compete with AllianceBernstein and to exploit opportunities that may be available to
AllianceBernstein.
1-7
Table of Contents
REGULATION
Insurance Supervision. AXA Equitable is licensed to transact insurance business, and is subject to
extensive regulation and supervision by insurance regulators, in all 50 states of the United
States, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands and nine of Canadas
twelve provinces and territories. AXA Equitable is domiciled in New York and is primarily
regulated by the Superintendent (the Superintendent) of the New York Insurance Department (the
NYID). The extent of regulation varies, but most jurisdictions have laws and regulations
governing sales practices, standards of solvency, levels of reserves, risk-based capital, permitted
types and concentrations of investments and business conduct to be maintained by insurance
companies, as well as agent licensing, approval of policy forms and, for certain lines of
insurance, approval or filing of rates. Insurance regulators have the discretionary authority to
limit or prohibit new issuances of business to policyholders within their jurisdictions when, in
their judgment, such regulators determine that the issuing company is not maintaining adequate
statutory surplus or capital. Additionally, the New York Insurance Law limits sales commissions
and certain other marketing expenses that may be incurred by AXA Equitable. For additional
information on Insurance Supervision, see Risk Factors in Item 1A.
Each of the members of the Insurance Group is required to file detailed annual financial
statements, prepared on a statutory accounting basis, with supervisory agencies in each of the
jurisdictions in which it does business. Such agencies may conduct regular or targeted
examinations of the operations and accounts of members of AXA Equitable, and make requests for
particular information from them. For example, in October 2009, the domestic insurance regulator
of AXA Equitable concluded its periodic statutory examination of the books, records and accounts of
AXA Equitable for the years 2001 through 2005. In addition to oversight by state insurance
regulators, in recent years, the insurance industry has seen an increase in inquiries from state
attorneys general and other state officials regarding compliance with certain state insurance and
securities laws. AXA Equitable has received and responded to such inquiries from time to time.
Holding Company and Shareholder Dividend Regulation. Several states, including New York, regulate
transactions between an insurer and its affiliates under insurance holding company acts. These
acts contain certain reporting requirements and restrictions on provision of services and on
transactions, such as intercompany service agreements, asset transfers, reinsurance, loans and
shareholder dividend payments by insurers. Depending on their size, such transactions and payments
may be subject to prior notice to, or approval by, the insurance department of the applicable
state. In 2009, AXA Equitable did not pay any shareholder dividends.
Securities Laws. AXA Equitable and certain policies and contracts offered by it are subject to
regulation under the Federal securities laws administered by the SEC and under certain state
securities laws. The SEC conducts regular examinations of AXA Equitables operations, and from
time to time makes requests for particular information from AXA Equitable.
AXA Advisors, AXA Distributors, AllianceBernstein Investments, Inc. and Sanford C. Bernstein & Co.,
LLC are registered as broker-dealers (collectively the Broker-Dealers) under the Exchange Act.
The Broker-Dealers are subject to extensive regulation by the SEC and are members of, and subject
to regulation by, the Financial Industry Regulatory Authority, Inc. (FINRA). The Broker-Dealers
are subject to the capital requirements of the SEC and/or FINRA, which specify minimum levels of
capital (net capital) that the Broker-Dealers are required to maintain and also limit the amount
of leverage that the Broker-Dealers are able to employ in their businesses. The SEC and FINRA also
regulate the sales practices of the Broker-Dealers. In recent years, the SEC and FINRA have
intensified their scrutiny of sales practices relating to variable annuities, variable life
insurance and mutual funds, among other products. For example, FINRA proposed, and the SEC
approved, increased suitability requirements and additional compliance procedures relating to sales
of variable annuities that could negatively impact sales of annuity products. In addition, the
Broker-Dealers are also subject to regulation by state securities administrators in those states in
which they conduct business.
The SEC, FINRA and other governmental regulatory authorities, including state securities
administrators, may institute administrative or judicial proceedings that may result in censure,
fines, the issuance of cease-and-desist orders, the suspension or expulsion of a broker-dealer or
member, its officers or employees or other similar sanctions.
Certain Separate Accounts of AXA Equitable are registered as investment companies under the
Investment Company Act of 1940, as amended (the Investment Company Act). Separate Account
interests under certain annuity contracts and insurance policies issued by AXA Equitable are also
registered under the Securities Act of
1-8
Table of Contents
1933, as amended (the Securities Act). EQAT and VIP Trust are registered as investment companies
under the Investment Company Act and shares offered by these investment companies are also
registered under the Securities Act. Many of the investment companies managed by
AllianceBernstein, including a variety of mutual funds and other pooled investment vehicles, are
registered with the SEC under the Investment Company Act, and, if appropriate, shares of these
entities are registered under the Securities Act.
AXA Equitable, AXA Advisors and certain of its affiliates and AllianceBernstein and certain of its
affiliates also are registered as investment advisors under the Investment Advisers Act of 1940, as
amended (the Investment Advisers Act). The investment advisory activities of such registered
investment advisors are subject to various Federal and state laws and regulations and to the laws
in those foreign countries in which they conduct business. These laws and regulations generally
grant supervisory agencies broad administrative powers, including the power to limit or restrict
the carrying on of business for failure to comply with such laws and regulations. In case of such
an event, the possible sanctions that may be imposed include the suspension of individual
employees, limitations on engaging in business for specific periods, revocation of registration as
an investment advisor, censures and fines.
Regulators, including the SEC, FINRA and state attorneys general, continue to focus attention on
various practices in or affecting the investment management and/or mutual fund industries,
including portfolio management, valuation and the use of fund assets for distribution. AXA
Equitable and certain subsidiaries have provided, and in certain cases continue to provide,
information and documents to the SEC, FINRA, state attorneys general, state insurance regulators
and other regulators on a wide range of issues. Ongoing or future regulatory investigations could
result in fines, other sanctions and/or other costs.
Potential Regulatory Initiatives Related to Financial Markets. As discussed above, the Companys
businesses are subject to extensive laws and regulations that are administered and/or enforced by a
number of different governmental authorities and non-governmental self-regulatory bodies. In light
of the recent financial crisis, various legislative proposals have been introduced that would
increase the regulation of financial firms of all types and/or overhaul the regulatory structure
and agencies that oversee the financial services industry. In this regard, there is increasing
support for Federal regulation of the insurance industry by means of an optional or mandatory
Federal charter or license. Some legislative proposals currently being considered could, if
enacted, give one or more Federal regulators supervisory authority over a number of financial
services companies, including insurance companies, viewed as systemically important. This
authority could include the ability to impose prudential regulation and/or market conduct
regulation. The nature and extent of any changes to the regulatory structure and/or laws or
regulations to which the insurance business may in the future be subject cannot be predicted, nor
can management predict the effect of any such changes on, among other things, the way business is
conducted, products are offered or capital is managed.
Federal Tax Initiatives. Although the Federal government generally does not directly regulate the
insurance business, currently, many Federal tax laws affect the business in a variety of ways.
There are a number of existing, expiring, newly enacted and previously or currently proposed
Federal tax initiatives that may significantly affect AXA Equitable including, among others, the
following.
Estate and Related Taxes. Under Federal tax legislation passed in 2001, exemption amounts
had been increasing and rates had been decreasing for estate and generation skipping taxes. Such
taxes are repealed for 2010, but are scheduled to return to their 2001 levels thereafter.
Legislative proposals range from retroactively eliminating the one-year repeal, continuing taxes
at, above or below the 2009 exemption amounts and rates, to making permanent the 2010 one-year
repeal. Although a continuation of the repeal beyond 2010 seems unlikely, elimination of the
estate tax would likely have an adverse impact on life insurance sales since a significant portion
of life insurance sales are made in conjunction with estate planning. Conversely, a continuation
or an increase of the estate tax should benefit sales and persistency.
Income, Capital Gains and Dividend Tax Rates. Federal tax legislation passed in 2001 also
reduced income tax rates and tax rates on long-term capital gains and qualifying corporate
dividends. Such changes have lessened the tax appeal of cash value life insurance and annuity
products. Unless extended, these lower rates are set to expire after 2010. The Obama
administration has expressed an intention to seek to increase the income tax rates for higher
income taxpayers and to reduce income tax rates for middle and lower income taxpayers. The tax
advantages of cash value life insurance and annuity products would favorably increase in the event
of higher income and capital gains tax rates but would be reduced by lower tax rates.
1-9
Table of Contents
Other Proposals. Recent proposals put forth by the Obama administration include a
potentially adverse change to the tax benefits of corporate owned life insurance which could
curtail new sales, a plan to reduce barriers to the annuitization of amounts held in certain
qualified plans which could benefit annuity sales, and extending the favorable annuitization tax
rules to partial annuitizations of non-qualified deferred annuity contracts which could help sales
but result in earlier payout elections. The U.S. Congress may also consider proposals for, among
other things, the comprehensive overhaul of the Federal tax law and/or tax incentives targeted
particularly to lower and middle income taxpayers. For example, there may be renewed interest in
tax reform options, which could present sweeping changes to many longstanding tax rules. One
possible change includes the creation of new tax-favored savings accounts that would replace many
existing qualified plan arrangements. Others would eliminate or limit certain tax benefits
currently available to cash value life insurance and deferred annuity products. Enactment of these
changes or similar alternatives would likely adversely affect new sales and, possibly, funding and
persistency of existing cash value life insurance and deferred annuity products.
Recent tax rulings indicate lifetime annuity guarantees can be placed upon mutual fund type
investment portfolios outside the annuity contract. Such portfolios would not be taxed-deferred
but would be eligible to pass capital gain or loss and dividend treatment to the holders.
Development of such new annuity designs could impact the attractiveness or pricing of current
annuity guarantee designs but expand the market for such guarantees.
The current, rapidly changing economic environment may increase the likelihood of substantial
changes to Federal tax law. Management cannot predict what, if any, legislation will actually be
proposed or enacted based on these proposals or what other proposals or legislation, if any, may be
introduced or enacted relating to AXA Equitables business or what the effect of any such
legislation might be.
Privacy of Customer Information. AXA Financial has adopted a privacy policy outlining procedures
and practices to be followed by members of the AXA Financial Group relating to the collection,
disclosure and protection of customer information. Customer information may only be used to
conduct company business. AXA Financial Group companies may not disclose customer information to
third parties except as required or permitted by law. Customer information may not be sold or
rented to third parties. A copy of the privacy policy is mailed to customers on an annual basis.
Federal and state laws and regulations require financial institutions to protect the security and
confidentiality of customer information and report breaches in which customer information is
intentionally or accidentally disclosed to third parties. Violation of these laws and regulations
may result in significant fines and remediation costs. Legislation currently under consideration
in the U.S. Congress and state legislatures could create additional obligations relating to the use
and protection of customer information.
PARENT COMPANY
AXA, the ultimate parent company of AXA Equitable, is the holding company for an international
group of insurance and related financial services companies engaged in the financial protection and
wealth management business. AXA is one of the worlds largest insurance groups, operating
primarily in Europe, North America, the Asia/Pacific region and, to a lesser extent, in other
regions including the Middle East, Africa and Latin America. AXA has five operating business
segments: life and savings, property and casualty, international insurance, asset management and
banking.
Neither AXA nor any affiliate of AXA has any obligation to provide additional capital or credit
support to AXA Financial or any of its subsidiaries.
Voting Trust. In connection with AXAs application to the Superintendent for approval of its
acquisition of the capital stock of AXA Financial, AXA and the initial Trustees of the Voting Trust
entered into a Voting Trust Agreement dated as of May 12, 1992 (as amended by the First Amendment,
dated January 22, 1997, and as amended and restated by the Amended and Restated Voting Trust
Agreement, dated May 12, 2002, the Voting Trust Agreement). Pursuant to the Voting Trust
Agreement, AXA and its affiliates (AXA Parties) have deposited the shares of AXA Financials
Common Stock held by them in the Voting Trust. The purpose of the Voting Trust is to ensure for
insurance regulatory purposes that certain indirect minority shareholders of AXA will not be able
to exercise control over AXA Financial or AXA Equitable.
AXA and any other holder of voting trust certificates will remain the beneficial owner of the
shares deposited by it, except that the Trustees will be entitled to exercise all voting rights
attached to the deposited shares so long as such shares remain subject to the Voting Trust. In
voting the deposited shares, the Trustees must act to protect the
1-10
Table of Contents
legitimate economic interests of AXA and any other holders of voting trust certificates (but with a
view to ensuring that certain indirect minority shareholders of AXA do not exercise control over
AXA Financial or AXA Equitable). All dividends and distributions (other than those that are paid
in the form of shares required to be deposited in the Voting Trust) in respect of deposited shares
will be paid directly to the holders of voting trust certificates. If a holder of voting trust
certificates sells or transfers deposited shares to a person who is not an AXA Party and is not
(and does not, in connection with such sale or transfer, become) a holder of voting trust
certificates, the shares sold or transferred will be released from the Voting Trust. The initial
term of the Voting Trust ended in 2002 and the term of the Voting Trust has been extended, with the
prior approval of the Superintendent, until May 12, 2012. Future extensions of the term of the
Voting Trust remain subject to the prior approval of the Superintendent.
OTHER INFORMATION
All of AXA Equitables officers and employees, including its chief executive officer, chief
financial officer and chief accounting officer, are subject to the Policy Statement on Ethics (the
Code), a code of ethics as defined under Regulation S-K.
The Code complies with Section 406 of the Sarbanes-Oxley Act of 2002 and is available on AXA
Financials website at www.axa-equitable.com. The Company intends to satisfy the disclosure
requirements under Item 5.05 of Form 8-K regarding certain amendments to or waivers from provisions
of the Code that apply to its chief executive officer, chief financial officer and chief accounting
officer by posting such information on its website at the above address.
1-11
Table of Contents
Part IV, Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit Index
Number | Description | |
31.1
|
Section 302 Certification made by the registrants Chief Executive Officer | |
31.2
|
Section 302 Certification made by the registrants Chief Financial Officer | |
32.1
|
Section 906 Certification made by the registrants Chief Executive Officer | |
32.2
|
Section 906 Certification made by the registrants Chief Financial Officer |
15-1
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, AXA
Equitable Life Insurance Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: September 17, 2010 | AXA EQUITABLE LIFE INSURANCE COMPANY |
|||
By: | /s/ Christopher M. Condron | |||
Name: | Christopher M. Condron | |||
Chairman of the Board, President and Chief Executive Officer, Director |
||||
E-1