CLOSED BLOCK

The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in AOCI) represents the expected maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. As of January 1, 2001, AXA Equitable has developed an actuarial calculation of the expected timing of AXA Equitable’s Closed Block’s earnings.

If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.

Many expenses related to Closed Block operations, including amortization of DAC, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block.

Summarized financial information for the Closed Block follows:



	June 30, 2017		December 31, 2016
	(In Millions)
CLOSED BLOCK LIABILITIES:
Future policy benefits, policyholders’ account balances and other	$	7,067	$	7,179
Policyholder dividend obligation	47		52
Other liabilities	204		43
Total Closed Block liabilities	7,318		7,274
ASSETS DESIGNATED TO THE CLOSED BLOCK:
Fixed maturities, available for sale, at fair value (amortized cost of $4,092 and $3,884)	4,267		4,025
Mortgage loans on real estate	1,791		1,623
Policy loans	805		839
Cash and other invested assets	136		444
Other assets	173		181
Total assets designated to the Closed Block	7,172		7,112
Excess of Closed Block liabilities over assets designated to the Closed Block	146		162
Amounts included in accumulated other comprehensive income (loss):
Net unrealized investment gains (losses), net of policyholder dividend obligation of $(47) and $(52)	139		100
Maximum Future Earnings To Be Recognized From Closed Block Assets and Liabilities	$	285	$	262

Closed Block revenues and expenses were as follows:



	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
	(In Millions)
REVENUES:
Premiums and other income	$	57		$	60	$	115		$	122
Net investment income (loss)	79			84		162			174
Net investment gains (losses)	(1		)	—		(16		)	1
Total revenues	135			144		261			297
BENEFITS AND OTHER DEDUCTIONS:
Policyholders’ benefits and dividends	129			138		284			273
Other operating costs and expenses	1			1		1			2
Total benefits and other deductions	130			139		285			275
Net revenues (loss) before income taxes	5			5		(24		)	22
Income tax (expense) benefit	(2		)	3		8			(8		)
Net Revenues (Losses)	$	3		$	8	$	(16	)	$	14

Reconciliation of the policyholder dividend obligation follows:



	Six Months Ended June 30,
	2017			2016
	(In Millions)
Balances, beginning of year	$	52		$	81
Unrealized investment gains (losses), net of DAC	(5		)	140
Balances, End of Period	$	47		$	221