RELATED PARTY TRANSACTIONS

The Company’s significant transactions during the nine months ended September 30, 2018 with related parties are summarized below.

Cost Sharing and General Service Agreements

In the second quarter of 2018, AXA Equitable entered into a general services agreement with Holdings whereby AXA Equitable will benefit from the services received by Holdings from AXA and certain of its subsidiaries for a limited period following the Holdings IPO under a transition services agreement. The general services agreement with Holdings replaces existing cost-sharing and general service agreements with various AXA subsidiaries. AXA Equitable continues to provide services to Holdings and various AXA subsidiaries under a separate existing general services agreement with Holdings.

Insurance Related Transactions

Prior to April 2018, the Company ceded to AXA RE Arizona, an indirect, wholly owned subsidiary of Holdings, a (i) 100% quota share of all liabilities for variable annuities with GMxB riders issued on or after January 1, 2006 and in-force on September 30, 2008 (the “GMxB Business”), (ii) 100% quota share of all liabilities for variable annuities with GMIB riders issued on or after May 1, 1999 through August 31, 2005 in excess of the liability assumed by two unaffiliated reinsurers, which are subject to certain maximum amounts or limitations on aggregate claims, and (iii) 90% quota share of level premium term insurance issued by AXA Equitable on or after March 1, 2003 through December 31, 2008 and lapse protection riders under certain series of universal life insurance policies issued by AXA Equitable on or after June 1, 2003 through June 30, 2007.

On April 12, 2018, the Company completed the unwind of the reinsurance previously provided to the Company by AXA RE Arizona. Accordingly, all of the business previously ceded to AXA RE Arizona, with the exception of the GMxB Business, was novated to EQ AZ Life Re Company (“EQ AZ”), a newly formed captive insurance company organized under the laws of Arizona, which is an indirect wholly owned subsidiary of Holdings. Following the novation of business to EQ AZ, AXA RE Arizona was merged with and into AXA Equitable. Following AXA RE Arizona’s merger with and into AXA Equitable, the GMxB Business is not subject to any new internal or third-party reinsurance arrangements, though in the future AXA Equitable may reinsure the GMxB Business with third parties.

AXA RE Arizona novated the Life Business from AXA RE Arizona to EQ AZ as part of the GMxB Unwind. As a result, EQ AZ reinsures a 90% quota share of level premium term insurance issued by AXA Equitable on or after March 1, 2003 through December 31, 2008 and lapse protection riders under UL insurance policies issued by AXA Equitable on or after June 1, 2003 through June 30, 2007 and the Excess Risks.

The GMxB Unwind was considered a pre-existing relationship required to be effectively settled at fair value. The loss relating to this relationship resulted from the settlement of the reinsurance contracts at fair value and the write-off of previously recorded assets and liabilities related to this relationship recorded in the Company’s historical accounts. The pre-tax loss recognized in the second quarter of 2018 was $2,603 million ($2,056 million net of tax). The Company wrote-off a $1.8 billion Deferred cost of reinsurance asset which was previously reported in Other assets. Additionally, the remaining portion of the loss was determining by calculating the difference between the fair value of the assets received compared to the fair value of the assets and liabilities already recorded within the Company's consolidated financial statements. The Company's primary assets previously recorded were reinsurance recoverables, including the reinsurance recoverable associated with GMDB business. There was an approximate $400 million difference between the fair value of the GMDB recoverable compared to its carrying value which is accounted for under ASC 944.

The assets received and the assets removed were as follows:



	As of April 12, 2018
	(in millions)
	Assets Received		Assets Removed
Assets at fair value:
Fixed income securities	$	7,442
Money Market funds	2
Accrued interest	43
Derivatives	303
Cash	1,098
Total	$	8,888

Deferred cost of reinsurance asset			$	1,839
GMDB ceded reserves			2,317
GMIB reinsurance contract asset			7,463
Payable to AXA RE Arizona			270
Total			$	11,889

Significant non-cash transactions involved in the unwind of the reinsurance previously provided to the Company by AXA RE Arizona included: (a) the increase in total investments includes non-cash activities of $7,790 million for assets received related to the recapture transaction, (b) cancellation of the $300 million surplus note between the Company and AXA RE Arizona, and (c) settlement of the intercompany receivables/payables to AXA RE Arizona of $270 million. In addition, upon merging the remaining assets of AXA Re Arizona into AXA Equitable, $1.2 billion of deferred tax assets were recorded on the balance sheet through an adjustment to Capital in excess of par value.

The reinsurance arrangements with EQ AZ provide important capital management benefits to AXA Equitable. At September 30, 2018, the Company’s GMIB reinsurance contract asset with EQ AZ had carrying value of $189 million, and is reported in GMIB reinsurance contract asset, at fair value in the consolidated balance sheets. Ceded premiums and policy fee income for September 30, 2018 totaled approximately $24 million, Ceded claims paid for September 30, 2018, were $14 million.

AXA Equitable receives statutory reserve credits for reinsurance treaties with EQ AZ to the extent that EQ AZ holds assets in an irrevocable trust (the “Trust”). At September 30, 2018, EQ AZ held assets of $1.1 billion in the Trust, and had letters of credit of $2.4 billion, which are guaranteed by Holdings. Under the reinsurance transactions, EQ AZ is permitted to transfer assets from the Trust under certain circumstances. The level of statutory reserves held by EQ AZ fluctuate based on market movements, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust and/or securing additional letters of credit, which could adversely impact EQ AZ’s liquidity.

Loans to Affiliates

On April 20, 2018, the Company transferred cash in exchange for an $800 million note from Holdings with an interest rate of 3.69% and maturing on April 20, 2021.

Settlement of Borrowings Between the Company and Affiliates

On April 20, 2018, AXA pre-paid the remaining $650 million of a $700 million note and $50 million of a $500 million term loan and related accrued interest from the Company.

Insurance Coverage Provided by XL Catlin

Prior to AXA Group’s acquisition of XL Catlin on September 12, 2018, Holdings and the Company had various property and casualty insurance coverages provided by XL Catlin that will be terminated by December 31, 2018. In addition, the Company ceded disability income business to XL Catlin. As of September 30, 2018, the reserves ceded were $92 million.