AXA Financial, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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13-3623351
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|||
(State or other jurisdiction of
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(I.R.S. Employer
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|||
incorporation or organization)
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Identification No.)
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1290 Avenue of the Americas, New York, New York
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10104
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||
(Address of principal executive offices)
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(Zip Code)
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(212) 554-1234
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(Registrant’s telephone number, including area code)
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Not applicable
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||
(Former name, former address, and former fiscal year if changed since last report.)
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Yes
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x |
No
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o |
Yes
|
o |
No
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o |
Large accelerated filer [ ]
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Accelerated filer [ ]
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||
Non-accelerated filer [X] (Do not check if a smaller reporting company)
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Smaller reporting company [ ]
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Page
|
PART I
|
FINANCIAL INFORMATION
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Item 1.
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Consolidated Financial Statements (Unaudited)
|
|||
· |
Consolidated Balance Sheets, March 31, 2011 and December 31, 2010
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4
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||
· |
Consolidated Statements of Earnings (Loss), Quarters Ended March 31, 2011 and 2010
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5
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||
· |
Consolidated Statements of Equity and Comprehensive Income (Loss), Quarters Ended March 31, 2011 and 2010
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6
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||
· |
Consolidated Statements of Cash Flows, Quarters Ended March 31, 2011 and 2010
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7
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||
· |
Notes to Consolidated Financial Statements
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9
|
||
Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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44
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||
Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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78
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||
Item 4.
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Controls and Procedures
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78
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||
PART II
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OTHER INFORMATION
|
|||
Item 1.
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Legal Proceedings
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79
|
||
Item 1A.
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Risk Factors
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79
|
||
Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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79
|
||
Item 3.
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Defaults Upon Senior Securities
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79
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||
Item 4.
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(Removed and Reserved)
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79
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||
Item 5.
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Other Information
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79
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||
Item 6.
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Exhibits
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79
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||
SIGNATURES
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80
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|||
March 31,
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December 31,
|
|||||||
2011
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2010
|
|||||||
(In Millions)
|
||||||||
ASSETS
|
||||||||
Investments:
|
||||||||
Fixed maturities available for sale, at fair value
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$ | 41,893 | $ | 41,798 | ||||
Mortgage loans on real estate
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4,864 | 4,826 | ||||||
Equity real estate, held for the production of income
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546 | 540 | ||||||
Policy loans
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4,915 | 4,930 | ||||||
Other equity investments
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1,869 | 1,727 | ||||||
Trading securities
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3,039 | 2,990 | ||||||
Other invested assets
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1,818 | 1,863 | ||||||
Total investments
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58,944 | 58,674 | ||||||
Cash and cash equivalents
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3,754 | 4,436 | ||||||
Cash and securities segregated, at fair value
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1,330 | 1,110 | ||||||
Broker-dealer related receivables
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1,308 | 1,389 | ||||||
Deferred policy acquisition costs
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8,635 | 8,682 | ||||||
Goodwill and other intangible assets, net
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5,272 | 5,282 | ||||||
Value of business acquired
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384 | 384 | ||||||
Amounts due from reinsurers
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4,240 | 4,293 | ||||||
Loans to affiliates
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1,279 | 1,280 | ||||||
Other assets
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4,010 | 4,262 | ||||||
Separate Accounts’ assets
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97,536 | 94,125 | ||||||
Total Assets
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$ | 186,692 | $ | 183,917 | ||||
LIABILITIES
|
||||||||
Policyholders’ account balances
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$ | 28,037 | $ | 27,900 | ||||
Future policy benefits and other policyholders liabilities
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27,402 | 27,559 | ||||||
Broker-dealer related payables
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3,019 | 2,962 | ||||||
Customers related payables
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1,771 | 1,770 | ||||||
Short-term and long-term debt
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1,520 | 1,454 | ||||||
Loans from affiliates
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5,162 | 5,376 | ||||||
Income taxes payable
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1,520 | 1,687 | ||||||
Other liabilities
|
6,288 | 6,291 | ||||||
Separate Accounts’ liabilities
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97,536 | 94,125 | ||||||
Total liabilities
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172,255 | 169,124 | ||||||
Commitments and contingent liabilities (Note 10)
|
||||||||
EQUITY
|
||||||||
AXA Financial, Inc. equity:
|
||||||||
Common stock, $.01 par value, 2.00 billion shares authorized,
|
||||||||
436.2 million shares issued and outstanding
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4 | 4 | ||||||
Capital in excess of par value
|
703 | 685 | ||||||
Retained earnings
|
11,151 | 11,456 | ||||||
Accumulated other comprehensive income (loss)
|
(758 | ) | (764 | ) | ||||
Treasury shares, at cost
|
(21 | ) | (23 | ) | ||||
Total AXA Financial, Inc. equity
|
11,079 | 11,358 | ||||||
Noncontrolling interest
|
3,358 | 3,435 | ||||||
Total equity
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14,437 | 14,793 | ||||||
Total Liabilities and Equity
|
$ | 186,692 | $ | 183,917 |
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
REVENUES
|
||||||||
Universal life and investment-type product policy fee income
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$ | 947 | $ | 775 | ||||
Premiums
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393 | 390 | ||||||
Net investment income (loss):
|
||||||||
Investment income (loss) from derivative instruments
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(875 | ) | (337 | ) | ||||
Other investment income (loss)
|
799 | 784 | ||||||
Total net investment income (loss)
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(76 | ) | 447 | |||||
Investment gains (losses), net:
|
||||||||
Total other-than-temporary impairment losses
|
- | (44 | ) | |||||
Portion of loss recognized in other
|
||||||||
comprehensive income (loss)
|
- | 3 | ||||||
Net impairment losses recognized
|
- | (41 | ) | |||||
Other investment gains (losses), net
|
(1 | ) | 24 | |||||
Total investment gains (losses), net
|
(1 | ) | (17 | ) | ||||
Commissions, fees and other income
|
1,046 | 968 | ||||||
Increase (decrease) in fair value of reinsurance contracts
|
(201 | ) | (36 | ) | ||||
Total revenues
|
2,108 | 2,527 | ||||||
BENEFITS AND OTHER DEDUCTIONS
|
||||||||
Policyholders’ benefits
|
787 | 902 | ||||||
Interest credited to policyholders’ account balances
|
271 | 265 | ||||||
Compensation and benefits
|
604 | 618 | ||||||
Commissions
|
254 | 221 | ||||||
Distribution related payments
|
75 | 67 | ||||||
Amortization of deferred sales commissions
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10 | 12 | ||||||
Interest expense
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84 | 95 | ||||||
Amortization of deferred policy acquisition costs and
|
||||||||
value of business acquired
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272 | (67 | ) | |||||
Capitalization of deferred policy acquisition costs
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(230 | ) | (219 | ) | ||||
Rent expense
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70 | 72 | ||||||
Amortization of other intangible assets
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10 | 10 | ||||||
Other operating costs and expenses
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316 | 282 | ||||||
Total benefits and other deductions
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2,523 | 2,258 |
Earnings (loss) from continuing operations before income taxes
|
(415 | ) | 269 | |||||
Income tax (expense) benefit
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170 | 78 | ||||||
Net earnings (loss)
|
(245 | ) | 347 | |||||
Less: net (earnings) loss attributable to the noncontrolling interest
|
(60 | ) | (60 | ) | ||||
Net Earnings (Loss) Attributable to AXA Financial, Inc.
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$ | (305 | ) | $ | 287 | |||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
EQUITY
|
||||||||
AXA Financial. Inc. Equity:
|
||||||||
Common stock, at par value, beginning of year and end of period
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$ | 4 | $ | 4 | ||||
Capital in excess of par value, beginning of year
|
685 | 649 | ||||||
Changes in capital in excess of par value
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18 | 6 | ||||||
Capital in excess of par value, end of period
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703 | 655 | ||||||
Retained earnings, beginning of year
|
11,456 | 11,401 | ||||||
Net earnings (loss) attributable to AXA Financial, Inc.
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(305 | ) | 287 | |||||
Retained earnings, end of period
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11,151 | 11,688 | ||||||
Accumulated other comprehensive income (loss), beginning of year
|
(764 | ) | (1,347 | ) | ||||
Other comprehensive income (loss) attributable to AXA Financial, Inc.
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6 | 161 | ||||||
Accumulated other comprehensive income (loss), end of period
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(758 | ) | (1,186 | ) | ||||
Treasury shares at cost, beginning of year
|
(23 | ) | (34 | ) | ||||
Changes in treasury shares
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2 | 14 | ||||||
Treasury shares at cost, end of period
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(21 | ) | (20 | ) | ||||
Total AXA Financial, Inc. equity, end of period
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11,079 | 11,141 | ||||||
Noncontrolling interest, beginning of year
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3,435 | 3,568 | ||||||
Purchase of AllianceBernstein Units by noncontrolling interest
|
- | 2 | ||||||
Repurchase of AllianceBernstein Holding units
|
(28 | ) | (16 | ) | ||||
Purchase of noncontrolling interest in consolidated entity
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(32 | ) | - | |||||
Net earnings (loss) attributable to noncontrolling interest
|
60 | 60 | ||||||
Dividends paid to non-controlling interest
|
(80 | ) | (108 | ) | ||||
Other comprehensive income (loss) attributable to noncontrolling interest
|
(7 | ) | 2 | |||||
Other changes in noncontrolling interest
|
10 | 31 | ||||||
Noncontrolling interest, end of period
|
3,358 | 3,539 | ||||||
Total Equity, End of Period
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$ | 14,437 | $ | 14,680 | ||||
COMPREHENSIVE INCOME (LOSS)
|
||||||||
Net earnings (loss)
|
$ | (245 | ) | $ | 347 | |||
Other comprehensive income (loss), net of income taxes:
|
||||||||
Change in unrealized gains (losses), net of reclassification adjustment
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25 | 184 | ||||||
Changes in defined benefit plan related items, not yet recognized in periodic benefit cost, net of reclassification adjustment
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(26 | ) | (21 | ) | ||||
Total other comprehensive income (loss), net of income taxes
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(1 | ) | 163 | |||||
Comprehensive income (loss)
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(246 | ) | 510 | |||||
Less: Comprehensive (income) loss attributable
to noncontrolling interest
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(53 | ) | (62 | ) | ||||
Comprehensive Income (Loss) Attributable to AXA Financial, Inc.
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$ | (299 | ) | $ | 448 |
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Net earnings (loss)
|
$ | (245 | ) | $ | 347 | |||
Adjustments to reconcile net earnings (loss) to net cash provided by
|
||||||||
(used in) operating activities:
|
||||||||
Interest credited to policyholders’ account balances
|
271 | 265 | ||||||
Universal life and investment-type product policy fee income
|
(947 | ) | (775 | ) | ||||
Net change in broker-dealer and customer related receivables/payables
|
101 | (99 | ) | |||||
(Income) loss on derivative instruments
|
799 | 600 | ||||||
Investment (gains) losses, net
|
1 | 17 | ||||||
Change in deferred policy acquisition costs and
|
||||||||
value of business acquired
|
42 | (286 | ) | |||||
Change in future policy benefits
|
(75 | ) | 70 | |||||
Change in income taxes payable
|
(179 | ) | 20 | |||||
Contribution to Pension Plans
|
(257 | ) | (170 | ) | ||||
Change in segregated cash and securities, net
|
(220 | ) | (19 | ) | ||||
Change in fair value of reinsurance contracts
|
201 | 36 | ||||||
Equity (income) loss in other limited partnerships
|
(103 | ) | (28 | ) | ||||
Amortization of deferred compensation
|
58 | 39 | ||||||
Amortization of deferred sales commission
|
10 | 12 | ||||||
Other depreciation and amortization
|
51 | 56 | ||||||
Amortization of other intangible assets
|
10 | 10 | ||||||
Other, net
|
93 | 108 | ||||||
Net cash provided by (used in) operating activities
|
(389 | ) | 203 | |||||
Cash flows from investing activities:
|
||||||||
Maturities and repayments of fixed maturities and mortgage loans on real estate
|
1,414 | 631 | ||||||
Sales of investments
|
5,524 | 6,632 | ||||||
Purchases of investments
|
(7,020 | ) | (7,466 | ) | ||||
Cash settlements related to derivative instruments
|
(950 | ) | (820 | ) | ||||
Decrease in loans to affiliates
|
- | 500 | ||||||
Increase in loans to affiliates
|
- | (6 | ) | |||||
Change in short-term investments
|
10 | 9 | ||||||
Change in capitalized software, leasehold improvements and
|
||||||||
EDP equipment
|
(24 | ) | (6 | ) | ||||
Other, net
|
7 | (25 | ) | |||||
Net cash provided by (used in) investing activities
|
(1,039 | ) | (551 | ) | ||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Cash flows from financing activities:
|
||||||||
Policyholders’ account balances:
|
||||||||
Deposits
|
$ | 849 | $ | 801 | ||||
Withdrawals and transfers to Separate Accounts
|
(128 | ) | (228 | ) | ||||
Change in short-term financings
|
136 | 286 | ||||||
Repayments of long-term debt
|
- | (300 | ) | |||||
Repayments of loans from affiliates
|
(300 | ) | - | |||||
Change in securities sold under agreements to repurchase
|
(77 | ) | - | |||||
Change in collateralized pledged assets
|
203 | 869 | ||||||
Change in collateralized pledged liabilities
|
223 | (353 | ) | |||||
Repurchase of AllianceBernstein Holding units
|
(50 | ) | (24 | ) | ||||
Distribution to noncontrolling interests in consolidated subsidiaries
|
(80 | ) | (108 | ) | ||||
Other, net
|
(30 | ) | 17 | |||||
Net cash provided by (used in) financing activities
|
746 | 960 | ||||||
Change in cash and cash equivalents
|
(682 | ) | 612 | |||||
Cash and cash equivalents, beginning of year
|
4,436 | 3,039 | ||||||
Cash and Cash Equivalents, End of Period
|
$ | 3,754 | $ | 3,651 | ||||
Supplemental cash flow information:
|
||||||||
Interest Paid
|
$ | 25 | $ | 32 | ||||
Income Taxes (Refunded) Paid
|
$ | (15 | ) | $ | (273 | ) |
1)
|
ORGANIZATION AND BASIS OF PRESENTATION
|
2)
|
ACCOUNTING CHANGES AND NEW ACCOUNTING PRONOUNCEMENTS
|
·
|
Consider the receivable impaired when calculating the allowance for credit losses; and
|
·
|
Provide additional disclosures about its troubled debt restructuring activities in accordance with the requirements of recently issued guidance on disclosures about the credit quality of financing receivables and the allowance for credit losses.
|
3)
|
INVESTMENTS
|
Gross
|
Gross
|
|||||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
OTTI
|
|||||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
in AOCI (3)
|
||||||||||||||||
(In Millions)
|
||||||||||||||||||||
March 31, 2011:
|
||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||
Corporate
|
$ | 28,080 | $ | 1,816 | $ | 118 | $ | 29,778 | $ | - | ||||||||||
U.S. Treasury, government and agency
|
5,156 | 42 | 146 | 5,052 | - | |||||||||||||||
States and political subdivisions
|
567 | 10 | 14 | 563 | - | |||||||||||||||
Foreign governments
|
579 | 61 | 2 | 638 | - | |||||||||||||||
Commercial mortgage-backed
|
1,722 | 19 | 425 | 1,316 | 24 | |||||||||||||||
Residential mortgage-backed (1)
|
2,213 | 91 | - | 2,304 | - | |||||||||||||||
Asset-backed (2)
|
563 | 14 | 10 | 567 | 6 | |||||||||||||||
Redeemable preferred stock
|
1,705 | 28 | 58 | 1,675 | - | |||||||||||||||
Total Fixed Maturities
|
40,585 | 2,081 | 773 | 41,893 | 30 | |||||||||||||||
Equity securities
|
26 | 2 | - | 28 | - | |||||||||||||||
Total at March 31, 2011
|
$ | 40,611 | $ | 2,083 | $ | 773 | $ | 41,921 | $ | 30 | ||||||||||
December 31, 2010:
|
||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||
Corporate
|
$ | 27,963 | $ | 1,903 | $ | 133 | $ | 29,733 | $ | - | ||||||||||
U.S. Treasury, government and agency
|
5,180 | 50 | 110 | 5,120 | - | |||||||||||||||
States and political subdivisions
|
586 | 11 | 20 | 577 | - | |||||||||||||||
Foreign governments
|
581 | 65 | 2 | 644 | - | |||||||||||||||
Commercial mortgage-backed
|
1,807 | 5 | 487 | 1,325 | 25 | |||||||||||||||
Residential mortgage-backed (1)
|
2,195 | 93 | 1 | 2,287 | - | |||||||||||||||
Asset-backed (2)
|
476 | 15 | 12 | 479 | 7 | |||||||||||||||
Redeemable preferred stock
|
1,704 | 24 | 95 | 1,633 | - | |||||||||||||||
Total Fixed Maturities
|
40,492 | 2,166 | 860 | 41,798 | 32 | |||||||||||||||
Equity securities
|
30 | - | 2 | 28 | - | |||||||||||||||
Total at December 31, 2010
|
$ | 40,522 | $ | 2,166 | $ | 862 | $ | 41,826 | $ | 32 |
(1)
|
Includes publicly traded agency pass-through securities and collateralized mortgage obligations.
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
(3)
|
Amounts represent OTTI losses in AOCI, which were not included in earnings (loss) in accordance with current accounting guidance.
|
Amortized
|
||||||||
Cost
|
Fair Value
|
|||||||
(In Millions)
|
||||||||
Due in one year or less
|
$ | 3,829 | $ | 3,889 | ||||
Due in years two through five
|
11,800 | 12,523 | ||||||
Due in years six through ten
|
13,835 | 14,575 | ||||||
Due after ten years
|
4,919 | 5,044 | ||||||
Subtotal
|
34,383 | 36,031 | ||||||
Commercial mortgage-backed securities
|
1,722 | 1,316 | ||||||
Residential mortgage-backed securities
|
2,213 | 2,304 | ||||||
Asset-backed securities
|
563 | 567 | ||||||
Total
|
$ | 38,881 | $ | 40,218 |
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Credit losses recognized in earnings (loss) (1)
|
$ | - | $ | (41 | ) | |||
Non-credit losses recognized in OCI
|
- | (3 | ) | |||||
Total OTTI
|
$ | - | $ | (44 | ) |
(1)
|
For first quarters 2011 and 2010, respectively, included in credit losses recognized in earnings (loss) were OTTI of $0 million and $0 million related to AFS fixed maturities as AXA Financial Group intended to sell or expected to be required to sell these impaired fixed maturities prior to recovering their amortized cost.
|
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Balances at January 1
|
$ | (553 | ) | $ | (292 | ) | ||
Previously recognized impairments on securities that matured, paid, prepaid or sold
|
39 | 3 | ||||||
Recognized impairments on securities impaired to fair value this period (1)
|
- | - | ||||||
Impairments recognized this period on securities not previously impaired
|
- | (41 | ) | |||||
Additional impairments this period on securities previously impaired
|
- | - | ||||||
Increases due to passage of time on previously recorded credit losses
|
- | - | ||||||
Accretion of previously recognized impairments due to increases in expected cash flows
|
- | - | ||||||
Balances at March 31
|
$ | (514 | ) | $ | (330 | ) | ||
(1)
|
Represents circumstances where the Insurance Group determined in the current period that it intends to sell the security or it is more likely than not that it will be required to sell the security before recovery of the security’s amortized cost.
|
March 31,
|
December 31,
|
||||||||
2011
|
2010
|
||||||||
(In Millions)
|
|||||||||
AFS Securities:
|
|||||||||
Fixed maturities:
|
|||||||||
With OTTI loss
|
$ | (8 | ) | $ | (20 | ) | |||
All other
|
1,316 | 1,326 | |||||||
Equity securities
|
2 | (2 | ) | ||||||
Net Unrealized Gains (Losses)
|
$ | 1,310 | $ | 1,304 |
Net
Unrealized |
DAC and
VOBA |
Policyholders
Liabilities |
Deferred
Income |
AOCI
Gain (Loss) |
||||||||||||||||
(In Millions)
|
||||||||||||||||||||
Balance, January 1, 2011
|
$ | (20 | ) | $ | 3 | $ | (49 | ) | $ | 23 | $ | (43 | ) | |||||||
Net investment gains (losses)
|
||||||||||||||||||||
arising during the period
|
12 | - | - | - | 12 | |||||||||||||||
Reclassification adjustment for
|
||||||||||||||||||||
OTTI losses:
|
||||||||||||||||||||
Included in Net earnings (loss)
|
- | - | - | - | - | |||||||||||||||
Excluded from Net
|
||||||||||||||||||||
earnings (loss) (1)
|
- | - | - | - | - | |||||||||||||||
Impact of net unrealized
|
||||||||||||||||||||
investment gains (losses) on:
|
||||||||||||||||||||
DAC and VOBA
|
- | - | - | - | - | |||||||||||||||
Deferred income taxes
|
- | - | - | (19 | ) | (19 | ) | |||||||||||||
Policyholders liabilities
|
- | - | 43 | - | 43 | |||||||||||||||
Balance, March 31, 2011
|
$ | (8 | ) | $ | 3 | $ | (6 | ) | $ | 4 | $ | (7 | ) | |||||||
Balance, January 1, 2010
|
$ | (13 | ) | $ | 6 | $ | (1 | ) | $ | 3 | $ | (5 | ) | |||||||
Net investment gains (losses)
|
||||||||||||||||||||
arising during the period
|
1 | - | - | - | 1 | |||||||||||||||
Reclassification adjustment for
|
||||||||||||||||||||
OTTI losses:
|
||||||||||||||||||||
Included in Net earnings (loss)
|
- | - | - | - | - | |||||||||||||||
Excluded from Net
|
||||||||||||||||||||
earnings (loss) (1)
|
(3 | ) | - | - | - | (3 | ) | |||||||||||||
Impact of net unrealized
|
||||||||||||||||||||
investment gains (losses) on:
|
||||||||||||||||||||
DAC and VOBA
|
- | (6 | ) | - | - | (6 | ) | |||||||||||||
Deferred income taxes
|
- | - | - | 12 | 12 | |||||||||||||||
Policyholders liabilities
|
- | - | (28 | ) | - | (28 | ) | |||||||||||||
Balance, March 31, 2010
|
$ | (15 | ) | $ | - | $ | (29 | ) | $ | 15 | $ | (29 | ) |
|
(1)
|
Represents “transfers in” related to the portion of OTTI losses recognized during the period that were not recognized in earnings (loss) for securities with no prior OTTI loss.
|
Net
Unrealized |
DAC and
VOBA |
Policyholders
Liabilities |
Deferred
Income |
AOCI
Gain (Loss) |
||||||||||||||||
(In Millions)
|
||||||||||||||||||||
Balance, January 1, 2011
|
$ | 1,324 | $ | (154 | ) | $ | (264 | ) | $ | (319 | ) | $ | 587 | |||||||
Net investment gains (losses)
|
||||||||||||||||||||
arising during the period
|
(10 | ) | - | - | - | (10 | ) | |||||||||||||
Reclassification adjustment for
|
||||||||||||||||||||
OTTI losses:
|
||||||||||||||||||||
Included in Net earnings (loss)
|
4 | - | - | - | 4 | |||||||||||||||
Excluded from Net
|
||||||||||||||||||||
earnings (loss) (1)
|
- | - | - | - | - | |||||||||||||||
Impact of net unrealized
|
||||||||||||||||||||
investment gains (losses) on:
|
||||||||||||||||||||
DAC and VOBA
|
- | (5 | ) | - | - | (5 | ) | |||||||||||||
Deferred income taxes
|
- | - | - | 18 | 18 | |||||||||||||||
Policyholders liabilities
|
- | - | (37 | ) | - | (37 | ) | |||||||||||||
Balance, March 31, 2011
|
$ | 1,318 | $ | (159 | ) | $ | (301 | ) | $ | (301 | ) | $ | 557 | |||||||
Balance, January 1, 2010
|
$ | (61 | ) | $ | (31 | ) | $ | (68 | ) | $ | 40 | $ | (120 | ) | ||||||
Net investment gains (losses)
|
||||||||||||||||||||
arising during the period
|
455 | - | - | - | 455 | |||||||||||||||
Reclassification adjustment for
|
||||||||||||||||||||
OTTI losses:
|
||||||||||||||||||||
Included in Net earnings (loss)
|
(15 | ) | - | - | - | (15 | ) | |||||||||||||
Excluded from Net
|
||||||||||||||||||||
earnings (loss) (1)
|
3 | - | - | - | 3 | |||||||||||||||
Impact of net unrealized
|
||||||||||||||||||||
investment gains (losses) on:
|
||||||||||||||||||||
DAC and VOBA
|
- | (46 | ) | - | - | (46 | ) | |||||||||||||
Deferred income taxes
|
- | - | - | (102 | ) | (102 | ) | |||||||||||||
Policyholders liabilities
|
- | - | (64 | ) | - | (64 | ) | |||||||||||||
Balance, March 31, 2010
|
$ | 382 | $ | (77 | ) | $ | (132 | ) | $ | (62 | ) | $ | 111 |
(1)
|
Represents “transfers out” related to the portion of OTTI losses during the period that were not recognized in earnings (loss) for securities with no prior OTTI loss.
|
|
March 31, 2011
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Gross
|
Gross
|
Gross
|
||||||||||||||||||||||
Unrealized
|
Unrealized
|
Unrealized
|
||||||||||||||||||||||
Fair Value
|
Losses
|
Fair Value
|
Losses
|
Fair Value
|
Losses
|
|||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||||||
Corporate
|
$ | 3,714 | $ | (84 | ) | $ | 373 | $ | (34 | ) | $ | 4,087 | $ | (118 | ) | |||||||||
U.S. Treasury, government
|
||||||||||||||||||||||||
and agency
|
1,981 | (82 | ) | 193 | (64 | ) | 2,174 | (146 | ) | |||||||||||||||
States and political subdivisions
|
277 | (9 | ) | 39 | (5 | ) | 316 | (14 | ) | |||||||||||||||
Foreign governments
|
79 | (2 | ) | 10 | - | 89 | (2 | ) | ||||||||||||||||
Commercial mortgage-backed
|
80 | (6 | ) | 1,101 | (419 | ) | 1,181 | (425 | ) | |||||||||||||||
Residential mortgage-backed
|
194 | - | 2 | - | 196 | - | ||||||||||||||||||
Asset-backed
|
154 | (1 | ) | 70 | (9 | ) | 224 | (10 | ) | |||||||||||||||
Redeemable preferred stock
|
396 | (11 | ) | 833 | (47 | ) | 1,229 | (58 | ) | |||||||||||||||
Total
|
$ | 6,875 | $ | (195 | ) | $ | 2,621 | $ | (578 | ) | $ | 9,496 | $ | (773 | ) |
December 31, 2010
|
||||||||||||||||||||||||
Less Than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Gross
|
Gross
|
Gross
|
||||||||||||||||||||||
Unrealized
|
Unrealized
|
Unrealized
|
||||||||||||||||||||||
Fair Value
|
Losses
|
Fair Value
|
Losses
|
Fair Value
|
Losses
|
|||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||||||
Corporate
|
$ | 2,640 | $ | (83 | ) | $ | 532 | $ | (50 | ) | $ | 3,172 | $ | (133 | ) | |||||||||
U.S. Treasury, government
|
||||||||||||||||||||||||
and agency
|
1,818 | (56 | ) | 202 | (54 | ) | 2,020 | (110 | ) | |||||||||||||||
States and political subdivisions
|
283 | (13 | ) | 37 | (7 | ) | 320 | (20 | ) | |||||||||||||||
Foreign governments
|
79 | (2 | ) | 10 | - | 89 | (2 | ) | ||||||||||||||||
Commercial mortgage-backed
|
80 | (4 | ) | 1,115 | (483 | ) | 1,195 | (487 | ) | |||||||||||||||
Residential mortgage-backed
|
157 | - | 2 | (1 | ) | 159 | (1 | ) | ||||||||||||||||
Asset-backed
|
114 | (1 | ) | 74 | (11 | ) | 188 | (12 | ) | |||||||||||||||
Redeemable preferred stock
|
327 | (7 | ) | 972 | (88 | ) | 1,299 | (95 | ) | |||||||||||||||
Total
|
$ | 5,498 | $ | (166 | ) | $ | 2,944 | $ | (694 | ) | $ | 8,442 | $ | (860 | ) |
Mortgage Loans
|
||||||||||||
Commercial | Agricultural | Total | ||||||||||
(In Millions)
|
||||||||||||
Allowance for credit losses: | ||||||||||||
Beginning balance, January 1
|
$ | 49 | $ | - | $ | 49 | ||||||
Charge-offs
|
- | - | - | |||||||||
Recoveries
|
- | - | - | |||||||||
Provision
|
- | - | - | |||||||||
Ending Balance, March 31
|
$ | 49 | $ | - | $ | 49 | ||||||
Ending Balance, March 31:
|
||||||||||||
Individually Evaluated for Impairment
|
$ | 49 | $ | - | $ | 49 | ||||||
Collectively Evaluated for Impairment
|
$ | - | $ | - | $ | - | ||||||
Loans Acquired with Deteriorated
|
||||||||||||
Credit Quality
|
$ | - | $ | - | $ | - |
Mortgage Loans by Loan-to-Value and Debt Service Coverage Ratios
|
|||||||||||||||||||||||||||||
March 31, 2011
|
|||||||||||||||||||||||||||||
Debt Service Coverage Ratio
|
|||||||||||||||||||||||||||||
Less
|
Total
|
||||||||||||||||||||||||||||
Loan-to-Value Ratio (2):
|
|||||||||||||||||||||||||||||
Greater
|
1.8x to
|
1.5x to
|
1.2x to
|
1.0x to
|
than
|
Mortgage
|
|||||||||||||||||||||||
than 2.0x
|
2.0x | 1.8x | 1.5x | 1.2x | 1.0x |
Loans
|
|||||||||||||||||||||||
(In Millions)
|
|||||||||||||||||||||||||||||
Commercial Mortgage Loans (1)
|
|||||||||||||||||||||||||||||
0% - 50% | $ | 123 | $ | - | $ | 10 | $ | 61 | $ | 10 | $ | 18 | $ | 222 | |||||||||||||||
50% - 70% | 158 | 207 | 284 | 210 | 89 | 2 | 950 | ||||||||||||||||||||||
70% - 90% | 69 | 61 | 522 | 437 | 277 | 50 | 1,416 | ||||||||||||||||||||||
90% plus
|
10 | - | 134 | 108 | 515 | 142 | 909 | ||||||||||||||||||||||
Total Commercial
|
|||||||||||||||||||||||||||||
Mortgage Loans
|
$ | 360 | $ | 268 | $ | 950 | $ | 816 | $ | 891 | $ | 212 | $ | 3,497 | |||||||||||||||
Agricultural Mortgage Loans (1)
|
|||||||||||||||||||||||||||||
0% - 50% | $ | 155 | $ | 80 | $ | 158 | $ | 268 | $ | 194 | $ | 67 | $ | 922 | |||||||||||||||
50% - 70% | 53 | 11 | 138 | 152 | 102 | 32 | 488 | ||||||||||||||||||||||
70% - 90% | - | - | - | - | - | - | - | ||||||||||||||||||||||
90% plus
|
- | - | - | - | 3 | 3 | 6 | ||||||||||||||||||||||
Total Agricultural
|
|||||||||||||||||||||||||||||
Mortgage Loans
|
$ | 208 | $ | 91 | $ | 296 | $ | 420 | $ | 299 | $ | 102 | $ | 1,416 | |||||||||||||||
Total Mortgage Loans (1)
|
|||||||||||||||||||||||||||||
0% - 50% | $ | 278 | $ | 80 | $ | 168 | $ | 329 | $ | 204 | $ | 85 | $ | 1,144 | |||||||||||||||
50% - 70% | 211 | 218 | 422 | 362 | 191 | 34 | 1,438 | ||||||||||||||||||||||
70% - 90% | 69 | 61 | 522 | 437 | 277 | 50 | 1,416 | ||||||||||||||||||||||
90% plus
|
10 | - | 134 | 108 | 518 | 145 | 915 | ||||||||||||||||||||||
Total Mortgage
Loans |
$ | 568 | $ | 359 | $ | 1,246 | $ | 1,236 | $ | 1,190 | $ | 314 | $ | 4,913 |
(1)
|
The debt service coverage ratio is calculated using the most recently reported net operating income results
|
(2)
|
The loan-to-value ratio is derived from current loan balance divided by the fair market value of the property. The fair market value of the underlying commercial properties is updated annually.
|
Age Analysis of Past Due Mortgage Loans
|
30-59
Days
|
60-89
Days
|
90 Days
Or >
|
Total | Current |
Total
Financing
Receivables
|
Recorded
Investment |
||||||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||||||
Commercial
|
$ | - | $ | - | $ | - | $ | - | $ | 3,497 | $ | 3,497 | $ | - | ||||||||||||||
Agricultural
|
2 | 37 | 4 | 43 | 1,373 | 1,416 | - | |||||||||||||||||||||
Total
|
$ | 2 | $ | 37 | $ | 4 | $ | 43 | $ | 4,870 | $ | 4,913 | $ | - |
Impaired Mortgage Loans
|
||||||||||||||||||||
March 31, 2011
|
||||||||||||||||||||
Unpaid
|
Average
|
Interest
|
||||||||||||||||||
Recorded
|
Principal
|
Related
|
Recorded
|
Income
|
||||||||||||||||
Investment
|
Balance
|
Allowance
|
Investment(1)
|
Recognized
|
||||||||||||||||
(In Millions)
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial mortgage loans - other
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Agricultural mortgage loans
|
3 | 3 | - | 3 | - | |||||||||||||||
Total
|
$ | 3 | $ | 3 | $ | - | $ | 3 | $ | - | ||||||||||
With related allowance recorded:
|
||||||||||||||||||||
Commercial mortgage loans - other
|
$ | 223 | $ | 223 | $ | (49 | ) | $ | 243 | $ | 3 | |||||||||
Agricultural mortgage loans
|
- | - | - | 3 | - | |||||||||||||||
Total
|
$ | 223 | $ | 223 | $ | (49 | ) | $ | 246 | $ | 3 |
Impaired Mortgage Loans
|
||||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||
Unpaid
|
Average
|
Interest
|
||||||||||||||||||
Recorded
|
Principal
|
Related
|
Recorded
|
Income
|
||||||||||||||||
Investment
|
Balance
|
Allowance
|
Investment(1)
|
Recognized
|
||||||||||||||||
(In Millions)
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial mortgage loans - other
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Agricultural mortgage loans
|
3 | 3 | - | 2 | - | |||||||||||||||
Total
|
$ | 3 | $ | 3 | $ | - | $ | 2 | $ | - | ||||||||||
With related allowance recorded:
|
||||||||||||||||||||
Commercial mortgage loans - other
|
$ | 262 | $ | 262 | $ | (49 | ) | $ | 160 | $ | 10 | |||||||||
Agricultural mortgage loans
|
- | - | - | - | - | |||||||||||||||
Total
|
$ | 262 | $ | 262 | $ | (49 | ) | $ | 160 | $ | 10 |
Gains
(Losses)
Reported In Earnings (Loss)
|
||||||||||||||||
Fair Value
|
||||||||||||||||
Notional Amount
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||||||
(In Millions)
|
||||||||||||||||
Freestanding derivatives:
|
||||||||||||||||
Equity contracts(1):
|
||||||||||||||||
Futures
|
$ | 9,286 | $ | - | $ | 1 | $ | (594 | ) | |||||||
Swaps
|
1,313 | 8 | 17 | (54 | ) | |||||||||||
Options
|
180 | 28 | 19 | 3 | ||||||||||||
Interest rate contracts (1):
|
||||||||||||||||
Floors
|
9,000 | 286 | - | (8 | ) | |||||||||||
Swaps
|
12,005 | 361 | 55 | (71 | ) | |||||||||||
Futures
|
14,254 | - | - | (88 | ) | |||||||||||
Swaptions
|
7,818 | 230 | - | (62 | ) | |||||||||||
Other freestanding contracts (1):
|
||||||||||||||||
Foreign currency contracts
|
103 | 1 | - | (1 | ) | |||||||||||
Net investment income (loss)
|
(875 | ) | ||||||||||||||
Foreign currency contracts (2,4)
|
3,873 | - | 227 | 76 | ||||||||||||
Embedded derivatives:
|
||||||||||||||||
GMIB reinsurance contracts (2)
|
- | 1,022 | - | (201 | ) | |||||||||||
GWBL and other features (3)
|
- | 3 | - | 41 | ||||||||||||
Total, March 31, 2011
|
$ | 57,832 | $ | 1,939 | $ | 319 | $ | (959 | ) |
(1)
|
Reported in Other invested assets in the consolidated balance sheets.
|
(2)
|
Reported in Other assets or Other liabilities in the consolidated balance sheets.
|
(3)
|
Reported in Future policy benefits and other policyholders liabilities.
|
(4)
|
Reported in Commissions, fees and other income.
|
At December 31, 2010
|
Gains (Losses) Reported In Earnings (Loss) March 31, 2010
|
|||||||||||||||
Fair Value
|
||||||||||||||||
Notional Amount
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||||||
(In Millions)
|
||||||||||||||||
Freestanding derivatives:
|
||||||||||||||||
Equity contracts(1):
|
||||||||||||||||
Futures
|
$ | 8,920 | $ | - | $ | - | $ | (538 | ) | |||||||
Swaps
|
1,698 | - | 50 | (30 | ) | |||||||||||
Options
|
1,070 | 5 | 1 | (32 | ) | |||||||||||
Interest rate contracts (1):
|
||||||||||||||||
Floors
|
9,000 | 326 | - | 28 | ||||||||||||
Swaps
|
12,166 | 389 | 366 | 134 | ||||||||||||
Futures
|
14,859 | - | - | 106 | ||||||||||||
Swaptions
|
11,150 | 306 | - | (5 | ) | |||||||||||
Other freestanding contracts (1):
|
||||||||||||||||
Foreign currency contracts
|
133 | - | 1 | - | ||||||||||||
Net investment income (loss)
|
(337 | ) | ||||||||||||||
Foreign currency contracts (2,4)
|
3,873 | - | 303 | (263 | ) | |||||||||||
Embedded derivatives:
|
||||||||||||||||
GMIB reinsurance contracts (2)
|
- | 1,223 | - | (36 | ) | |||||||||||
GWBL and other features (3)
|
- | - | 38 | 14 | ||||||||||||
Total
|
$ | 62,869 | $ | 2,249 | $ | 759 | $ | (622 | ) |
(1)
|
Reported in Other invested assets in the consolidated balance sheets.
|
(2)
|
Reported in Other assets or Other liabilities in the consolidated balance sheets.
|
(3)
|
Reported in Future policy benefits and other policyholders liabilities.
|
(4)
|
Reported in Commissions, fees and other income.
|
4)
|
CLOSED BLOCKS
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
CLOSED BLOCK LIABILITIES:
|
||||||||
Future policy benefits, policyholders’ account balances and other
|
$ | 8,224 | $ | 8,272 | ||||
Policyholder dividend obligation
|
111 | 119 | ||||||
Other liabilities
|
161 | 142 | ||||||
Total Closed Block liabilities
|
8,496 | 8,533 | ||||||
ASSETS DESIGNATED TO THE CLOSED BLOCK:
|
||||||||
Fixed maturities available for sale, at fair value
|
||||||||
(amortized cost of $5,500 and $5,416)
|
5,688 | 5,605 | ||||||
Mortgage loans on real estate
|
971 | 981 | ||||||
Policy loans
|
1,107 | 1,119 | ||||||
Cash and other invested assets
|
194 | 281 | ||||||
Other assets
|
235 | 245 | ||||||
Total assets designated to the Closed Block
|
8,195 | 8,231 | ||||||
Excess of Closed Block liabilities over assets designated to the
|
||||||||
Closed Block
|
301 | 302 | ||||||
Amounts included in accumulated other comprehensive income (loss):
|
||||||||
Net unrealized investment gains (losses), net of deferred
|
||||||||
income tax (expense) benefit of $(30) and $(28) and
|
||||||||
policyholder dividend obligation of $(111) and $(119)
|
56 | 53 | ||||||
Maximum Future Earnings To Be Recognized From Closed Block
|
||||||||
Assets and Liabilities
|
$ | 357 | $ | 355 |
Three Months Ended
March 31,
|
||||||||
2011 | 2010 | |||||||
(In Millions)
|
||||||||
REVENUES: | ||||||||
Premiums and other income
|
$ | 92 | $ | 95 | ||||
Investment income (loss) (net of investment expenses of $0 and $0)
|
110 | 118 | ||||||
Investment gains (losses), net:
|
||||||||
Total OTTI losses
|
- | - | ||||||
Portion of loss recognized in other comprehensive income (loss)
|
- | - | ||||||
Net impairment losses recognized
|
- | - | ||||||
Other investment gains (losses), net
|
1 | 6 | ||||||
Total investment gains (losses), net
|
1 | 6 | ||||||
Total revenues
|
203 | 219 | ||||||
BENEFITS AND OTHER DEDUCTIONS:
|
||||||||
Policyholders’ benefits and dividends
|
205 | 203 | ||||||
Other operating costs and expenses
|
1 | 1 | ||||||
Total benefits and other deductions
|
206 | 204 | ||||||
Net revenues before income taxes
|
(3 | ) | 15 | |||||
Income tax (expense) benefit
|
1 | (5 | ) | |||||
Net Revenues
|
$ | (2 | ) | $ | 10 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Balances, beginning of year
|
$ | 119 | $ | - | ||||
Unrealized investment gains (losses)
|
(8 | ) | 55 | |||||
Balances, End of Period
|
$ | 111 | $ | 55 |
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
CLOSED BLOCK LIABILITIES:
|
||||||||
Future policy benefits, policyholders’ account balances and other
|
$ | 6,636 | $ | 6,685 | ||||
Policyholder dividend obligation
|
306 | 298 | ||||||
Other liabilities
|
39 | 29 | ||||||
Total Closed Block liabilities
|
6,981 | 7,012 | ||||||
ASSETS DESIGNATED TO THE CLOSED BLOCK:
|
||||||||
Fixed maturities available for sale, at fair value
|
||||||||
(amortized cost of $4,023 and $3,943)
|
4,218 | 4,136 | ||||||
Mortgage loans on real estate
|
742 | 752 | ||||||
Policy loans
|
893 | 898 | ||||||
Cash and other invested assets
|
32 | 113 | ||||||
Other assets
|
268 | 274 | ||||||
Total assets designated to the Closed Block
|
6,153 | 6,173 | ||||||
Excess of Closed Block liabilities over assets designated to
|
||||||||
the Closed Block
|
828 | 839 | ||||||
Amounts included in accumulated other comprehensive income:
|
||||||||
Net of policyholder dividend obligation of $(196) and $(194)
|
- | - | ||||||
Maximum Future Earnings To Be Recognized From Closed Block
|
||||||||
Assets and Liabilities
|
$ | 828 | $ | 839 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
REVENUES:
|
||||||||
Premiums and other income
|
$ | 62 | $ | 70 | ||||
Investment income (loss) (net of investment expenses of ($0 and $0)
|
77 | 83 | ||||||
Investment gains (losses), net:
|
||||||||
Total OTTI losses
|
- | - | ||||||
Portion of loss recognized in other comprehensive income (loss)
|
- | - | ||||||
Net impairment losses recognized
|
- | - | ||||||
Other investment gains (losses), net
|
- | (7 | ) | |||||
Total investment gains (losses), net
|
- | (7 | ) | |||||
Total revenues
|
139 | 146 | ||||||
BENEFITS AND OTHER DEDUCTIONS:
|
||||||||
Policyholders’ benefits and dividends
|
121 | 129 | ||||||
Other operating costs and expenses
|
1 | 1 | ||||||
Total benefits and other deductions
|
122 | 130 | ||||||
Net revenues before income taxes
|
17 | 16 | ||||||
Income tax (expense) benefit
|
(6 | ) | (6 | ) | ||||
Net Revenues
|
$ | 11 | $ | 10 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Balances, beginning of year
|
$ | 298 | $ | 189 | ||||
Applicable to net revenues (losses)
|
6 | (5 | ) | |||||
Unrealized investment gains (losses)
|
2 | 37 | ||||||
Balances, End of Period
|
$ | 306 | $ | 221 |
5)
|
GMDB, GMIB, GWBL AND NO LAPSE GUARANTEE FEATURES
|
·
|
Return of Premium: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals);
|
·
|
Ratchet: the benefit is the greatest of current account value, premiums paid (adjusted for withdrawals), or the highest account value on any anniversary up to contractually specified ages (adjusted for withdrawals);
|
·
|
Roll-Up: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified interest rates up to specified ages;
|
·
|
Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit, which may include a five year or an annual reset; or
|
·
|
Withdrawal: the withdrawal is guaranteed up to a maximum amount per year for life.
|
GMDB
|
GMIB
|
Total
|
||||||||||
(In Millions)
|
||||||||||||
Balance at January 1, 2011
|
$ | 1,271 | $ | 2,313 | $ | 3,584 | ||||||
Paid guarantee benefits
|
(43 | ) | (10 | ) | (53 | ) | ||||||
Other changes in reserve
|
76 | 7 | 83 | |||||||||
Balance at March 31, 2011
|
$ | 1,304 | $ | 2,310 | $ | 3,614 | ||||||
Balance at January 1, 2010
|
$ | 1,092 | $ | 1,561 | $ | 2,653 | ||||||
Paid guarantee benefits
|
(48 | ) | (11 | ) | (59 | ) | ||||||
Other changes in reserve
|
76 | 42 | 118 | |||||||||
Balance at March 31, 2010
|
$ | 1,120 | $ | 1,592 | $ | 2,712 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Balances, beginning of year
|
$ | 85 | $ | 94 | ||||
Paid guarantee benefits
|
(5 | ) | (4 | ) | ||||
Other changes in reserve
|
4 | 4 | ||||||
Balances, End of Period
|
$ | 84 | $ | 94 |
Return
of |
Ratchet
|
Roll-Up
|
Combo
|
Total
|
||||||||||||||||
(Dollars In Millions)
|
||||||||||||||||||||
GMDB:
|
||||||||||||||||||||
Account values invested in:
|
||||||||||||||||||||
General Account
|
$ | 11,828 | $ | 468 | $ | 129 | $ | 498 | $ | 12,923 | ||||||||||
Separate Accounts
|
$ | 30,900 | $ | 8,447 | $ | 4,330 | $ | 36,071 | $ | 79,748 | ||||||||||
Net amount at risk, gross
|
$ | 812 | $ | 912 | $ | 2,482 | $ | 9,531 | $ | 13,737 | ||||||||||
Net amount at risk, net of
|
||||||||||||||||||||
amounts reinsured
|
$ | 812 | $ | 828 | $ | 1,642 | $ | 9,516 | $ | 12,798 |
Average attained age
|
||||||||||||||||||||
of contractholders
|
50.3 | 63.2 | 68.1 | 63.4 | 54.1 | |||||||||||||||
Percentage of contractholders
|
||||||||||||||||||||
over age 70
|
8.0% | 25.7% | 45.2% | 26.5% | 13.8% | |||||||||||||||
Range of contractually specified
|
||||||||||||||||||||
interest rates
|
N/A | N/A | 3%-6% | 3%-6.5% | 3%-6.5% | |||||||||||||||
GMIB:
|
||||||||||||||||||||
Account values invested in:
|
||||||||||||||||||||
General Account
|
N/A |
N/A
|
$
|
55
|
$
|
578
|
$
|
633
|
||||||||||||
Separate Accounts
|
N/A
|
N/A
|
$
|
3,003
|
$
|
48,839
|
$
|
51,842
|
||||||||||||
Net amount at risk, gross
|
N/A
|
N/A
|
$
|
1,100
|
$
|
665
|
$
|
1,765
|
||||||||||||
Net amount at risk, net of
|
||||||||||||||||||||
amounts reinsured
|
N/A
|
N/A
|
$
|
323
|
$
|
592
|
$
|
915
|
||||||||||||
Weighted average years remaining
|
||||||||||||||||||||
until annuitization
|
N/A
|
N/A
|
0.6
|
5.5
|
5.5
|
|||||||||||||||
Range of contractually specified
|
||||||||||||||||||||
interest rates
|
N/A
|
N/A
|
3%-6%
|
3%-6.5%
|
3%-6.5%
|
March 31,
2011
|
December 31,
2010 |
||||||||
(In Millions)
|
|||||||||
GMDB:
|
|||||||||
Equity
|
$ | 52,511 | $ | 49,925 | |||||
Fixed income
|
3,959 | 4,109 | |||||||
Balanced
|
22,562 | 22,252 | |||||||
Other
|
716 | 768 | |||||||
Total
|
$ | 79,748 | $ | 77,054 | |||||
GMIB:
|
|||||||||
Equity
|
$ | 33,427 | $ | 31,911 | |||||
Fixed income
|
2,361 | 2,471 | |||||||
Balanced
|
15,708 | 15,629 | |||||||
Other
|
346 | 375 | |||||||
Total
|
$ | 51,842 | $ | 50,386 |
Direct Liability(1)
|
||||
(In Millions)
|
||||
Balance at January 1, 2011
|
$ | 375 | ||
Other changes in reserves
|
12 | |||
Balance at March 31, 2011
|
$ | 387 | ||
Balance at January 1, 2010
|
$ | 255 | ||
Other changes in reserves
|
53 | |||
Balance at March 31, 2010
|
$ | 308 |
6)
|
FAIR VALUE DISCLOSURES
|
Level 1
|
Quoted prices for identical instruments in active markets. Level 1 fair values generally are supported by market transactions that occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data.
|
Level 3
|
Unobservable inputs supported by little or no market activity and often requiring significant management judgment or estimation, such as an entity’s own assumptions about the cash flows or other significant components of value that market participants would use in pricing the asset or liability.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(In Millions)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Investments:
|
||||||||||||||||
Fixed maturities, available-for-sale:
|
||||||||||||||||
Corporate
|
$ | 7 | $ | 29,266 | $ | 505 | $ | 29,778 | ||||||||
U.S. Treasury, government
|
||||||||||||||||
and agency
|
- | 5,052 | - | 5,052 | ||||||||||||
States and political subdivisions
|
- | 515 | 48 | 563 | ||||||||||||
Foreign governments
|
- | 618 | 20 | 638 | ||||||||||||
Commercial mortgage-backed
|
- | - | 1,316 | 1,316 | ||||||||||||
Residential mortgage-backed (1)
|
- | 2,304 | - | 2,304 | ||||||||||||
Asset-backed (2)
|
- | 423 | 144 | 567 | ||||||||||||
Redeemable preferred stock
|
306 | 1,358 | 11 | 1,675 | ||||||||||||
Subtotal
|
313 | 39,536 | 2,044 | 41,893 | ||||||||||||
Other equity investments
|
63 | - | 17 | 80 | ||||||||||||
Trading securities
|
487 | 2,552 | - | 3,039 | ||||||||||||
Other invested assets:
|
||||||||||||||||
Short-term
|
- | 342 | - | 342 | ||||||||||||
Swaps
|
- | 297 | - | 297 | ||||||||||||
Options
|
- | 8 | - | 8 | ||||||||||||
Floors
|
- | 286 | - | 286 | ||||||||||||
Swaptions
|
- | 230 | - | 230 | ||||||||||||
Subtotal
|
- | 1,163 | - | 1,163 | ||||||||||||
Cash equivalents
|
3,082 | - | - | 3,082 | ||||||||||||
Segregated securities
|
- | 1,330 | - | 1,330 | ||||||||||||
GMIB reinsurance contracts
|
- | - | 1,022 | 1,022 | ||||||||||||
Separate Accounts’ assets
|
94,927 | 2,397 | 212 | 97,536 | ||||||||||||
Total Assets
|
$ | 98,872 | $ | 46,978 | $ | 3,295 | $ | 149,145 | ||||||||
Liabilities:
|
||||||||||||||||
Other liabilities:
|
||||||||||||||||
Foreign currency swap
|
$ | - | $ | 227 | $ | - | $ | 227 | ||||||||
GWBL and other features’ liability
|
- | - | (3 | ) | (3 | ) | ||||||||||
Total Liabilities
|
$ | - | $ | 227 | $ | (3 | ) | $ | 224 |
(1)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(In Millions)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Investments:
|
||||||||||||||||
Fixed maturities, available-for-sale:
|
||||||||||||||||
Corporate
|
$ | 6 | $ | 29,282 | $ | 445 | $ | 29,733 | ||||||||
U.S. Treasury, government
|
||||||||||||||||
and agency
|
- | 5,120 | - | 5,120 | ||||||||||||
States and political subdivisions
|
- | 528 | 49 | 577 | ||||||||||||
Foreign governments
|
- | 623 | 21 | 644 | ||||||||||||
Commercial mortgage-backed
|
- | - | 1,326 | 1,326 | ||||||||||||
Residential mortgage-backed (1)
|
- | 2,287 | - | 2,287 | ||||||||||||
Asset-backed (2)
|
- | 311 | 167 | 478 | ||||||||||||
Redeemable preferred stock
|
281 | 1,342 | 10 | 1,633 | ||||||||||||
Subtotal
|
287 | 39,493 | 2,018 | 41,798 | ||||||||||||
Other equity investments
|
54 | - | 17 | 71 | ||||||||||||
Trading securities
|
425 | 2,565 | - | 2,990 | ||||||||||||
Other invested assets:
|
||||||||||||||||
Short-term investments
|
- | 352 | - | 352 | ||||||||||||
Swaps
|
- | (27 | ) | - | (27 | ) | ||||||||||
Futures
|
- | - | - | - | ||||||||||||
Options
|
- | 4 | - | 4 | ||||||||||||
Floors
|
- | 326 | - | 326 | ||||||||||||
Swaptions
|
- | 306 | - | 306 | ||||||||||||
Subtotal
|
- | 961 | - | 961 | ||||||||||||
Cash equivalents
|
3,764 | - | - | 3,764 | ||||||||||||
Segregated securities
|
- | 1,110 | - | 1,110 | ||||||||||||
GMIB reinsurance contracts
|
- | - | 1,223 | 1,223 | ||||||||||||
Separate Accounts’ assets
|
91,734 | 2,184 | 207 | 94,125 | ||||||||||||
Total Assets
|
$ | 96,264 | $ | 46,313 | $ | 3,465 | $ | 146,042 | ||||||||
Liabilities:
|
||||||||||||||||
Other liabilities:
|
||||||||||||||||
Foreign currency swap
|
$ | - | $ | 304 | $ | - | $ | 304 | ||||||||
GWBL and other features’ liability
|
- | - | 38 | 38 | ||||||||||||
Total Liabilities
|
$ | - | $ | 304 | $ | 38 | $ | 342 |
(1)
|
Includes publicly traded agency pass-through securities and collateralized obligations.
|
(2)
|
Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
|
Corporate
|
State and
Political
Subdivisions
|
Foreign
Govts
|
Commercial
Mortgage-
backed
|
Asset-
backed
|
||||||||||||||||
(In Millions)
|
||||||||||||||||||||
Balance, January 1, 2011
|
$ | 445 | $ | 49 | $ | 21 | $ | 1,326 | $ | 167 | ||||||||||
Total gains (losses), realized and
|
||||||||||||||||||||
unrealized, included in:
|
||||||||||||||||||||
Earnings (loss) as:
|
||||||||||||||||||||
Net investment income (loss) | - | - | - | 1 | - | |||||||||||||||
Investment gains (losses), net | - | - | - | 2 | 1 | |||||||||||||||
Increase (decrease) in the fair | ||||||||||||||||||||
value of the reinsurance contracts | - | - | - | - | - | |||||||||||||||
Subtotal | - | - | - | 3 | 1 | |||||||||||||||
Other comprehensive
|
||||||||||||||||||||
income (loss)
|
(4 | ) | (1 | ) | - | 75 | 2 | |||||||||||||
Purchases
|
82 | - | - | - | - | |||||||||||||||
Issuances
|
- | - | - | - | - | |||||||||||||||
Sales
|
(8 | ) | - | (1 | ) | (88 | ) | (8 | ) | |||||||||||
Settlements
|
- | - | - | - | - | |||||||||||||||
Transfers into Level 3 (2)
|
13 | - | - | - | 1 | |||||||||||||||
Transfers out of Level 3 (2)
|
(23 | ) | - | - | - | (19 | ) | |||||||||||||
Balance, March 31, 2011
|
$ | 505 | $ | 48 | $ | 20 | $ | 1,316 | $ | 144 | ||||||||||
Balance, January 1, 2010
|
$ | 636 | $ | 21 | $ | 53 | $ | 1,782 | $ | 238 | ||||||||||
Total gains (losses), realized and
|
||||||||||||||||||||
unrealized, included in:
|
||||||||||||||||||||
Earnings (loss) as:
|
||||||||||||||||||||
Net investment income (loss)
|
- | - | - | 1 | - | |||||||||||||||
Investment gains (losses), net
|
- | - | - | (41 | ) | - | ||||||||||||||
Increase (decrease) in the fair
|
||||||||||||||||||||
value of the reinsurance contracts
|
- | - | - | - | - | |||||||||||||||
Subtotal
|
- | - | - | (40 | ) | - | ||||||||||||||
Other comprehensive
|
||||||||||||||||||||
income (loss)
|
11 | (71 | ) | 3 | ||||||||||||||||
Purchases/issuances
|
90 | - | - | |||||||||||||||||
Sales/settlements
|
(19 | ) | - | (11 | ) | |||||||||||||||
Transfers into/out Level 3 (2)
|
(159 | ) | (20 | ) | (5 | ) | - | (21 | ) | |||||||||||
Balance, March 31, 2010
|
$ | 559 | $ | 1 | $ | 48 | $ | 1,671 | $ | 209 | ||||||||||
(1)
|
There were no U.S. Treasury, government and agency or Residential Mortgage-backed classified as Level 3 at March 31, 2011 and 2010.
|
(2)
|
Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
|
Redeem-
able |
Other
Equity |
Other
Invested |
GMIB
Reinsurance |
Separate
Accounts |
GWBL
and Other |
|||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||
Balance, January 1, 2011
|
$ | 10 | $ | 17 | $ | - | $ | 1,223 | $ | 207 | $ | 38 | ||||||||||||
Total gains (losses), realized
|
||||||||||||||||||||||||
and unrealized, included in:
|
||||||||||||||||||||||||
Earnings (loss) as:
|
||||||||||||||||||||||||
Net investment income (loss)
|
- | - | - | - | - | - | ||||||||||||||||||
Investment gains (losses), net
|
- | - | - | - | 5 | - | ||||||||||||||||||
Increase (decrease)
|
||||||||||||||||||||||||
in the fair value of the
|
||||||||||||||||||||||||
reinsurance contracts
|
- | - | - | (206 | ) | - | - | |||||||||||||||||
Policyholders’ benefits
|
- | - | - | - | - | (46 | ) | |||||||||||||||||
Subtotal
|
- | - | - | (206 | ) | 5 | (46 | ) | ||||||||||||||||
Other comprehensive
|
||||||||||||||||||||||||
income (loss)
|
1 | - | - | - | - | - | ||||||||||||||||||
Purchases
|
- | - | - | 13 | - | 5 | ||||||||||||||||||
Issuances
|
- | - | - | - | - | - | ||||||||||||||||||
Sales
|
- | - | - | (8 | ) | - | - | |||||||||||||||||
Settlements
|
- | - | - | - | - | - | ||||||||||||||||||
Transfers into Level 3 (2)
|
- | - | - | - | - | - | ||||||||||||||||||
Transfers out of Level 3 (2)
|
- | - | - | - | - | - | ||||||||||||||||||
Balance, March 31, 2011
|
$ | 11 | $ | 17 | $ | - | $ | 1,022 | $ | 212 | $ | (3 | ) | |||||||||||
Balance, January 1, 2011
|
$ | 36 | $ | 2 | $ | 300 | $ | 981 | $ | 230 | $ | 55 | ||||||||||||
Total gains (losses), realized
|
||||||||||||||||||||||||
and unrealized, included in:
|
||||||||||||||||||||||||
Earnings (loss) as:
|
||||||||||||||||||||||||
Net investment income (loss)
|
- | - | (7 | ) | - | - | - | |||||||||||||||||
Investment gains (losses), net
|
- | - | - | - | (24 | ) | - | |||||||||||||||||
Increase (decrease)
|
||||||||||||||||||||||||
in the fair value of the
|
||||||||||||||||||||||||
reinsurance contracts
|
- | - | - | (42 | ) | - | - | |||||||||||||||||
Policyholders’ benefits
|
- | - | - | - | - | (17 | ) | |||||||||||||||||
Subtotal
|
- | - | (7 | ) | (42 | ) | (24 | ) | (17 | ) | ||||||||||||||
Other comprehensive
|
||||||||||||||||||||||||
income (loss)
|
3 | - | - | - | - | - | ||||||||||||||||||
Purchases/ issuances
|
- | - | - | 6 | 1 | 2 | ||||||||||||||||||
Sales/ settlements
|
- | - | - | - | (1 | ) | - | |||||||||||||||||
Transfers into/out of Level 3 (2)
|
(10 | ) | - | (300 | ) | - | 1 | - | ||||||||||||||||
Balance, March 31, 2011
|
$ | 29 | $ | 2 | $ | (7 | ) | $ | 945 | $ | 207 | $ | 40 |
(1)
|
Includes Trading securities’ Level 3 amount.
|
(2)
|
Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
|
Earnings (Loss)
|
||||||||||||||||||||
Net
Investment |
Investment
Gains(Losses),
Net
|
Increase
(Decrease) in |
OCI
|
Policyholders’
Benefits |
||||||||||||||||
(In Millions)
|
||||||||||||||||||||
Level 3 Instruments:
|
||||||||||||||||||||
Still Held at March 31, 2011(1):
|
||||||||||||||||||||
Change in unrealized gains (losses):
|
||||||||||||||||||||
Fixed maturities, available-for-sale:
|
||||||||||||||||||||
Corporate
|
$ | - | $ | - | $ | - | $ | (4 | ) | $ | - | |||||||||
Commercial mortgage-backed
|
- | - | - | 68 | - | |||||||||||||||
Asset-backed
|
- | - | - | 2 | - | |||||||||||||||
Redeemable preferred stock
|
- | - | - | 1 | - | |||||||||||||||
Other fixed maturities,
|
||||||||||||||||||||
available-for-sale
|
- | - | - | (1 | ) | - | ||||||||||||||
Subtotal
|
- | - | - | 66 | - | |||||||||||||||
Other invested assets
|
- | - | - | - | - | |||||||||||||||
GMIB reinsurance contracts
|
- | - | (201 | ) | - | - | ||||||||||||||
Separate Accounts’ assets
|
- | 5 | - | - | - | |||||||||||||||
GWBL and other
|
||||||||||||||||||||
features’ liability
|
- | - | - | - | 41 | |||||||||||||||
Total
|
$ | - | $ | 5 | $ | (201 | ) | $ | - | $ | 41 | |||||||||
Still Held at March 31, 2010 (1):
|
||||||||||||||||||||
Change in unrealized gains (losses):
|
||||||||||||||||||||
Fixed maturities,available-for-sale:
|
||||||||||||||||||||
Corporate
|
$ | - | $ | - | $ | - | $ | 11 | $ | - | ||||||||||
Commercial mortgage-backed
|
- | - | - | (71 | ) | - | ||||||||||||||
Asset-backed
|
- | - | - | 3 | - | |||||||||||||||
Redeemable preferred stock
|
- | - | - | 3 | - | |||||||||||||||
Other fixed maturities,
|
||||||||||||||||||||
available-for-sale
|
- | - | - | - | - | |||||||||||||||
Subtotal
|
- | - | - | (54 | ) | - | ||||||||||||||
Other invested assets
|
(7 | ) | - | - | - | - | ||||||||||||||
GMIB reinsurance contracts
|
- | - | (36 | ) | - | - | ||||||||||||||
Separate Accounts’ assets
|
- | (24 | ) | - | - | - | ||||||||||||||
GWBL and other
|
||||||||||||||||||||
features’ liability
|
- | - | - | - | 14 | |||||||||||||||
Total
|
$ | (7 | ) | $ | (24 | ) | $ | (36 | ) | $ | (54 | ) | $ | 14 |
(1)
|
There were no Equity securities classified as AFS, Other equity investments, Cash equivalents or Segregated securities at March 31, 2011 and 2010.
|
March 31, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||||||
(In Millions)
|
||||||||||||||||
Consolidated:
|
||||||||||||||||
Mortgage loans on real estate
|
$ | 4,864 | $ | 4,991 | $ | 4,826 | $ | 4,950 | ||||||||
Other limited partnership interests
|
1,699 | 1,699 | 1,556 | 1,556 | ||||||||||||
Loans to affiliates
|
1,279 | 1,300 | 1,280 | 1,292 | ||||||||||||
Policyholders liabilities - Investment contracts
|
3,131 | 3,187 | 3,179 | 3,262 | ||||||||||||
Long-term debt
|
659 | 710 | 659 | 697 | ||||||||||||
Closed Blocks:
|
||||||||||||||||
Mortgage loans on real estate
|
$ | 1,713 | $ | 1,763 | $ | 1,733 | $ | 1,778 | ||||||||
Other equity investments
|
1 | 1 | 1 | 1 | ||||||||||||
SCNILC liability
|
7 | 7 | 7 | 7 | ||||||||||||
7)
|
EMPLOYEE BENEFIT PLANS
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Net Periodic Pension Expense:
|
||||||||
(Qualified and Non-qualified Plans)
|
||||||||
Service cost
|
$ | 13 | $ | 14 | ||||
Interest cost
|
43 | 46 | ||||||
Expected return on assets
|
(35 | ) | (33 | ) | ||||
Net amortization
|
42 | 36 | ||||||
Total
|
$ | 63 | $ | 63 |
Net Postretirement Benefits Costs:
|
||||||||
Service cost
|
$ | 1 | $ | 1 | ||||
Interest cost
|
8 | 8 | ||||||
Net amortization
|
2 | 1 | ||||||
Total
|
$ | 11 | $ | 10 |
Net Postemployment Benefits Costs:
|
||||||||
Service cost
|
$ | 2 | $ | 1 | ||||
Total
|
$ | 2 | $ | 1 |
8)
|
SHARE-BASED COMPENSATION PROGRAMS
|
9)
|
INCOME TAXES
|
10)
|
LITIGATION
|
11)
|
ALLIANCEBERNSTEIN REAL ESTATE CHARGES
|
12)
|
BUSINESS SEGMENT INFORMATION
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Segment revenues:
|
||||||||
Financial Advisory/Insurance
|
$ | 1,358 | $ | 1,803 | ||||
Investment Management (1)
|
755 | 730 | ||||||
Consolidation/elimination
|
(5 | ) | (6 | ) | ||||
Total Revenues
|
$ | 2,108 | $ | 2,527 | ||||
(1) Net of interest expense incurred on securities borrowed.
|
||||||||
Segment earnings (loss) from continuing operations, before income taxes:
|
||||||||
Financial Advisory/Insurance
|
$ | (532 | ) | $ | 153 | |||
Investment Management
|
117 | 114 | ||||||
Consolidation/elimination
|
- | 2 | ||||||
Total Earnings (Loss) from Continuing Operations,
|
||||||||
before Income Taxes
|
$ | (415 | ) | $ | 269 |
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Segment assets:
|
||||||||
Financial Advisory/Insurance
|
$ | 174,029 | $ | 171,595 | ||||
Investment Management
|
12,692 | 12,363 | ||||||
Consolidation/elimination
|
(29 | ) | (41 | ) | ||||
Total Assets
|
$ | 186,692 | $ | 183,917 |
·
|
GMIB reinsurance contracts. GMIB reinsurance contracts are used to cede to affiliated and non-affiliated reinsurers a portion of the exposure on variable annuity products that offer the GMIB feature. Under U.S. GAAP, the GMIB reinsurance contracts ceded to non-affiliated reinsurers are accounted for as derivatives and are reported at fair value. Gross reserves for GMIB, on the other hand, are calculated under U.S. GAAP on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts and therefore will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market and/or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts. Because the changes in the fair value of the GMIB reinsurance contracts are recorded in the period in which they occur while offsetting changes in gross reserves for GMIB will be recognized over time, earnings will tend to be more volatile, particularly during periods in which equity markets and/or interest rates change significantly.
|
·
|
Hedging programs. Hedging programs are used to hedge certain risks associated with the VA Guarantee Features. These programs currently utilize various derivative instruments that are managed in an effort to reduce the economic impact of unfavorable changes in VA Guarantee Features’ exposures attributable to movements in the equity markets and interest rates. Although these programs are designed to provide a measure of economic protection against the impact adverse market conditions may have with respect to VA Guarantee Features, they do not qualify for hedge accounting treatment under U.S. GAAP, meaning that as in the case of the GMIB reinsurance contracts, changes in the value of the derivatives will be recognized in the period in which they occur while offsetting changes in reserves will be recognized over time, which will contribute to earnings volatility.
|
Three Months Ended March 31,
|
Year Ended December 31,
|
|||||||||||
2011
|
2010
|
2010
|
||||||||||
(In Millions)
|
||||||||||||
Income (loss) on free-standing derivatives (1)
|
$ | (848 | ) | $ | (307 | ) | $ | (478 | ) | |||
Increase (decrease) in fair value of GMIB reinsurance contracts (2)
|
(201 | ) | (36 | ) | 243 | |||||||
(Increase) decrease in GMDB, GMIB and GWBL reserves, net of related GMDB reinsurance (3)
|
10 | (46 | ) | (922 | ) | |||||||
Total
|
$ | (1,039 | ) | $ | (389 | ) | $ | (1,157 | ) |
(1)
|
Reported in Net investment income (loss) in the consolidated statement of earnings (loss)
|
(2)
|
Reported in Increase (decrease) in fair value of reinsurance contracts in the consolidated statement of earnings (loss)
|
(3)
|
Reported in Policyholders’ benefits in the consolidated statement of earnings (loss)
|
|
· Financial Advisory/Insurance Revenue Recognition
|
|
· Insurance Reserves and Policyholder Benefits
|
|
· DAC and VOBA
|
|
· Goodwill and Other Intangible Assets
|
|
· Investment Management Revenue Recognition and Related Expenses
|
|
· Share-based and Other Compensation Programs
|
|
· Pension and Other Postretirement Benefit Plans
|
|
· Investments – Impairments and Fair Value Measurements
|
|
· Income Taxes
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Universal life and investment-type product policy fee income
|
$ | 947 | $ | 775 | ||||
Premiums
|
393 | 390 | ||||||
Net investment income:
|
||||||||
Investment loss from derivative instruments
|
(875 | ) | (337 | ) | ||||
Other investment income
|
799 | 784 | ||||||
Total net investment income
|
(76 | ) | 447 | |||||
Investment (losses) gains, net:
|
||||||||
Total other-than-temporary impairment losses
|
- | (44 | ) | |||||
Portion of loss recognized in other comprehensive income
|
- | 3 | ||||||
Net impairment losses recognized
|
- | (41 | ) | |||||
Other investment gains, net
|
(1 | ) | 24 | |||||
Total investment (losses) gains, net
|
(1 | ) | (17 | ) | ||||
Commissions, fees and other income
|
1,046 | 968 | ||||||
Decrease in fair value of reinsurance contracts
|
(201 | ) | (36 | ) | ||||
Total revenues
|
2,108 | 2,527 | ||||||
Policyholders’ benefits
|
787 | 902 | ||||||
Interest credited to policyholders’ account balances
|
271 | 265 | ||||||
Compensation and benefits
|
604 | 618 | ||||||
Commissions
|
254 | 221 | ||||||
Distribution plan payments
|
75 | 67 | ||||||
Amortization of deferred sales commissions
|
10 | 12 | ||||||
Interest expense
|
84 | 95 | ||||||
Amortization of deferred policy acquisition costs and value of business acquired
|
272 | (67 | ) | |||||
Capitalization of deferred policy acquisition costs
|
(230 | ) | (219 | ) | ||||
Rent expense
|
70 | 72 | ||||||
Amortization of other intangible assets
|
10 | 10 | ||||||
Other operating costs and expenses
|
316 | 282 | ||||||
Total benefits and other deductions
|
2,523 | 2,258 | ||||||
Earnings (loss) from continuing operations before income taxes
|
(415 | ) | 269 | |||||
Income tax (expense) benefit
|
170 | 78 | ||||||
Net earnings (loss)
|
(245 | ) | 347 | |||||
Less: net earnings attributable to the noncontrolling interest
|
(60 | ) | (60 | ) | ||||
Net Earnings (Loss) Attributable to AXA Financial, Inc.
|
$ | (305 | ) | $ | 287 | |||
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Universal life and investment-type product policy fee income
|
$ | 947 | $ | 775 | ||||
Premiums
|
393 | 390 | ||||||
Net investment income:
|
||||||||
Investment loss from derivative instruments
|
(874 | ) | (337 | ) | ||||
Other investment income
|
778 | 776 | ||||||
Total net investment income
|
(96 | ) | 439 | |||||
Investment (losses) gains, net:
|
||||||||
Total other-than-temporary impairment losses
|
- | (44 | ) | |||||
Portion of losses recognized in other comprehensive income
|
- | 3 | ||||||
Net impairment losses recognized
|
- | (41 | ) | |||||
Other investment gains, net
|
2 | 20 | ||||||
Total investment (losses) gains, net
|
2 | (21 | ) | |||||
Commissions, fees and other income
|
313 | 256 | ||||||
Decrease in fair value of reinsurance contracts
|
(201 | ) | (36 | ) | ||||
Total revenues
|
1,358 | 1,803 | ||||||
Policyholders’ benefits
|
787 | 902 | ||||||
Interest credited to policyholders’ account balances
|
271 | 265 | ||||||
Compensation and benefits
|
243 | 278 | ||||||
Commission costs
|
254 | 221 | ||||||
Interest expense
|
83 | 85 | ||||||
Amortization of DAC and VOBA
|
272 | (67 | ) | |||||
Capitalization of DAC
|
(230 | ) | (219 | ) | ||||
Rent expense
|
24 | 26 | ||||||
Amortization of other intangible assets, net
|
1 | 1 | ||||||
All other operating costs and expenses
|
185 | 158 | ||||||
Total benefits and other deductions
|
1,890 | 1,650 | ||||||
Earnings (Loss) from Operations before Income Taxes
|
$ | (532 | ) | $ | 153 |
·
|
features and pricing of various products, including but not limited to variable annuity products, continue to change rapidly, in response to changing customer preferences, company risk appetites, capital utilization and other factors, and
|
·
|
various insurance companies, including one or more in the Insurance Group, have eliminated and/or limited sales of certain annuity and life insurance products or features
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Retail
|
(In Millions)
|
|||||||
Annuities
|
||||||||
First year
|
$ | 768 | $ | 697 | ||||
Renewal
|
598 | 596 | ||||||
1,366 | 1,293 | |||||||
Life(1)
|
||||||||
First year
|
75 | 67 | ||||||
Renewal
|
566 | 580 | ||||||
641 | 647 | |||||||
Other(2)
|
||||||||
First year
|
3 | 3 | ||||||
Renewal
|
66 | 67 | ||||||
69 | 70 | |||||||
Total retail
|
2,076 | 2,010 | ||||||
Wholesale:
|
||||||||
Annuities
|
||||||||
First year
|
366 | 298 | ||||||
Renewal
|
111 | 122 | ||||||
477 | 420 | |||||||
Life(1)
|
||||||||
First year
|
40 | 31 | ||||||
Renewal
|
184 | 163 | ||||||
224 | 194 | |||||||
Other
|
- | - | ||||||
Total wholesale
|
701 | 614 | ||||||
Total Premiums and Deposits
|
$ | 2,777 | $ | 2,624 | ||||
Total Mutual Fund Sales(3)
|
$ | 1,120 | $ | 1,126 |
(1)
|
Includes variable, interest-sensitive and traditional life products.
|
(2)
|
Includes reinsurance assumed and health insurance.
|
(3)
|
Includes through AXA Advisors’ advisory accounts.
|
Three Months Ended March 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Amount
|
Rate (1)
|
Amount
|
Rate (1)
|
|||||||||||||
(Dollars in Millions)
|
||||||||||||||||
Annuities
|
$ | 1,690 | 6.8 | % | $ | 1,466 | 6.6 | % | ||||||||
Variable and interest-sensitive life
|
236 | 4.4 | 222 | 4.4 | ||||||||||||
Traditional life
|
145 | 4.0 | 151 | 4.1 | ||||||||||||
Total
|
$ | 2,071 | $ | 1,839 |
(1)
|
Surrender rates are based on the average surrenderable future policy benefits and/or policyholders’ account balances for the related policies and contracts in force during 2011 and 2010, respectively.
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Revenues:
|
||||||||
Investment advisory and services fees(1)
|
$ | 515 | $ | 512 | ||||
Bernstein research services
|
120 | 111 | ||||||
Distribution revenues
|
89 | 80 | ||||||
Other revenues(1)
|
26 | 27 | ||||||
Commissions, fees and other income
|
750 | 730 | ||||||
Investment income (loss)
|
9 | (3 | ) | |||||
Less: interest expense to finance trading activities
|
(1 | ) | (1 | ) | ||||
Net investment income (loss)
|
8 | (4 | ) | |||||
Investment gains (losses), net
|
(3 | ) | 4 | |||||
Total revenues
|
755 | 730 | ||||||
Expenses:
|
||||||||
Compensation and benefits
|
361 | 340 | ||||||
Distribution related payments
|
75 | 67 | ||||||
Amortization of deferred sales commissions
|
10 | 12 | ||||||
Real estate charge
|
- | 12 | ||||||
Interest expense
|
1 | 10 | ||||||
Rent expense
|
46 | 46 | ||||||
Amortization of other intangible assets, net
|
9 | 9 | ||||||
Other operating costs and expenses
|
136 | 120 | ||||||
Total expenses
|
638 | 616 | ||||||
Earnings from Operations before Income Taxes
|
$ | 117 | $ | 114 |
(1)
|
Included fees earned by AllianceBernstein totaling $17 million in the first quarters of both 2011 and 2010 for services provided to the Insurance Group.
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
FEES
|
||||||||
Third party
|
$ | 498 | $ | 495 | ||||
General Account and other
|
11 | 9 | ||||||
Insurance Group Separate Accounts
|
6 | 8 | ||||||
Total Fees
|
$ | 515 | $ | 512 | ||||
ASSETS UNDER MANAGEMENT
|
||||||||
Assets by Manager
|
||||||||
AllianceBernstein
|
||||||||
Third party
|
$ | 415,977 | $ | 432,406 | ||||
General Account and other
|
35,803 | 34,677 | ||||||
Insurance Group Separate Accounts
|
25,520 | 25,217 | ||||||
Total AllianceBernstein
|
477,300 | 492,300 | ||||||
Insurance Group
|
||||||||
General Account and other(2)
|
27,977 | 25,624 | ||||||
Insurance Group Separate Accounts
|
72,000 | 63,941 | ||||||
Total Insurance Group
|
99,977 | 89,565 | ||||||
Assets by Account:
|
||||||||
Third party(1)
|
415,977 | 432,406 | ||||||
General Account and other(2)
|
63,780 | 60,301 | ||||||
Insurance Group Separate Accounts
|
97,520 | 89,158 | ||||||
Total Assets Under Management
|
$ | 577,277 | $ | 581,865 |
(1)
|
Includes $44.34 billion and $41.77 billion of assets managed on behalf of AXA affiliates at March 31, 2011 and 2010, respectively. Third party assets under management include 100% of the estimated fair value of real estate owned by joint ventures in which third party clients own an interest.
|
(2)
|
Includes invested assets of AXA Financial not managed by the AllianceBernstein, principally policy loans, totaling approximately $22.57 billion and $20.16 billion at March 31, 2011 and 2010, respectively, and mortgages and equity real estate totaling $5.41 billion and $5.46 billion at March 31, 2011 and 2010, respectively.
|
Holding
|
||||||||||||||||
Balance
|
Company
|
|||||||||||||||
Sheet Total
|
Other (1)
|
Group (2) (4)
|
GAIA (5)
|
|||||||||||||
(In Millions)
|
||||||||||||||||
Balance Sheet Captions:
|
||||||||||||||||
Fixed maturities, available-for-sale, at fair value (3)
|
$ | 41,893 | $ | (279 | ) | $ | 1 | $ | 42,171 | |||||||
Mortgage loans on real estate
|
4,864 | (388 | ) | - | 5,252 | |||||||||||
Equity real estate
|
546 | (1 | ) | 396 | 151 | |||||||||||
Policy loans
|
4,915 | (144 | ) | - | 5,059 | |||||||||||
Other equity investments
|
1,869 | 335 | - | 1,534 | ||||||||||||
Trading securities
|
3,039 | 531 | - | 2,508 | ||||||||||||
Other invested assets
|
1,818 | 1,806 | - | 12 | ||||||||||||
Total investments
|
58,944 | 1,860 | 397 | 56,687 | ||||||||||||
Cash and cash equivalents
|
3,754 | 1,081 | 280 | 2,393 | ||||||||||||
Debt & other
|
(1,520 | ) | 985 | (943 | ) | (1,562 | ) | |||||||||
Total
|
$ | 61,178 | $ | 3,926 | $ | (266 | ) | $ | 57,518 |
(1)
|
Assets listed in the “Other” category principally consist of assets held in portfolios other than the Holding Company Group and the General Account which are not managed as part of GAIA, related accrued income or expense, certain reclassifications and intercompany adjustments and, for fixed maturities, the reversal of net unrealized gains (losses). The “Other” category is deducted in arriving at GAIA.
|
(2)
|
The “Holding Company Group” category includes that group’s assets, which are not managed as part of GAIA. The “Holding Company Group” category is deducted in arriving at GAIA.
|
(3)
|
Includes Insurance Group loans to affiliates and other miscellaneous assets and liabilities related to GAIA that are reclassified from various balance sheet lines.
|
(4)
|
At March 31, 2011, the principal investment of the Holding Company Group is a real estate property purchased from AXA Equitable in June 2009 with a carrying value of $396 million.
|
(5)
|
GAIA investments are presented at their amortized costs for fixed maturities and carrying values for all other invested assets.
|
Three Months Ended March 31,
|
Year Ended December
|
|||||||||||||||||||
2011
|
2010
|
31, 2010 | ||||||||||||||||||
Yield (1)
|
Amount
|
Yield (1)
|
Amount
|
Amount
|
||||||||||||||||
(Dollars in Millions)
|
||||||||||||||||||||
Fixed Maturities:
|
||||||||||||||||||||
Investment grade
|
||||||||||||||||||||
Income
|
5.07 | % | $ | 485 | 5.29 | % | $ | 500 | ||||||||||||
Ending assets(2)
|
39,371 | 39,046 | $ | 39,224 | ||||||||||||||||
Below investment grade
|
||||||||||||||||||||
Income
|
7.08 | % | 50 | 6.44 | % | 51 | ||||||||||||||
Ending assets
|
2,800 | 3,222 | 2,955 | |||||||||||||||||
Mortgages:
|
||||||||||||||||||||
Income
|
6.92 | % | 88 | 6.98 | % | 90 | ||||||||||||||
Ending assets(3)
|
5,252 | 5,351 | 5,209 | |||||||||||||||||
Equity Real Estate:
|
||||||||||||||||||||
Income(4)
|
16.50 | % | 6 | 21.22 | % | 5 | ||||||||||||||
Ending assets(4)
|
151 | 98 | 141 | |||||||||||||||||
Other Equity Investments:
|
||||||||||||||||||||
Income
|
32.12 | % | 105 | 13.80 | % | 44 | ||||||||||||||
Ending assets(5)
|
1,534 | 1,434 | 1,484 | |||||||||||||||||
Policy Loans:
|
||||||||||||||||||||
Income
|
6.21 | % | 76 | 6.37 | % | 80 | ||||||||||||||
Ending assets(6)
|
5,059 | 5,110 | 5,082 | |||||||||||||||||
Cash and Short-term Investments:
|
||||||||||||||||||||
Income
|
.20 | % | 1 | .26 | % | 2 | ||||||||||||||
Ending assets(7)
|
2,393 | 2,473 | 3,345 | |||||||||||||||||
Trading Securities:
|
||||||||||||||||||||
Income
|
(1.82 | )% | (12 | ) | 8.41 | % | 28 | |||||||||||||
Ending assets(8)
|
2,508 | 1,283 | 2,502 | |||||||||||||||||
Other Invested Assets
|
||||||||||||||||||||
Income
|
94.70 | % | 2 | (99.3 | )% | (4 | ) | |||||||||||||
Ending assets(9)
|
12 | 2 | 8 | |||||||||||||||||
Total Invested Assets:
|
||||||||||||||||||||
Income
|
5.68 | % | 801 | 5.70 | % | 796 | ||||||||||||||
Ending assets
|
59,080 | 58,019 | 59,950 | |||||||||||||||||
Debt and Other:
|
||||||||||||||||||||
Interest expense and other
|
6.51 | % | (27 | ) | 7.08 | % | (27 | ) | ||||||||||||
Ending liabilities(10)
|
(1,562 | ) | (1,562 | ) | (1,836 | ) | ||||||||||||||
Total:
|
||||||||||||||||||||
Income
|
5.50 | % | 774 | 5.66 | % | 769 | ||||||||||||||
Investment fees
|
(.12 | )% | (17 | ) | (.12 | )% | (15 | ) | ||||||||||||
Income
|
5.38 | % | $ | 757 | 5.54 | % | $ | 754 | ||||||||||||
Ending Net Assets
|
$ | 57,518 | $ | 56,457 | $ | 58,114 |
(1)
|
Yields have been calculated on a compound annual effective rate basis using the quarterly average asset carrying values, excluding unrealized gains (losses) in fixed maturities and adjusted for the current period’s income and fees.
|
(2)
|
Fixed maturities investment assets are shown net of securities purchased but not yet paid for of $(110) million, $(103) million and $0 million, and include accrued income of $507 million, $522 million and $493 million, amounts due from securities sales of $0 million, $231 million and $1 million and other assets of $2 million, $2 million and $2 million at March 31, 2011 and 2010 and December 31, 2010, respectively.
|
(3)
|
Mortgage investment assets include accrued income of $48 million, $49 million and $38 million and are adjusted for related escrow and other liability balances of $(55) million, $(44) million and $(50) million at March 31, 2011 and 2010 and December 31, 2010, respectively.
|
(4)
|
Equity real estate carrying values included accrued income of $2 million, $2 million and $2 million and were adjusted for related liability balances of $(1) million, $(2) million and $(1) million as of March 31, 2011 and 2010 and December 31, 2010, respectively.
|
(5)
|
Other equity investment assets included no accrued income nor pending trade settlements at March 31, 2011 and 2010 and December 31, 2010.
|
(6)
|
Policy loan asset values include accrued income of $146 million, $151 million and $154 million at March 31, 2011 and 2010 and December 31, 2010, respectively.
|
(7)
|
Cash and short-term investment assets include net payables from collateral movements of $(679) million, $(316) million and $(252) million and were adjusted for unsettled trades, cash in transit and accrued income of $(2) million, $0 million and $(1) million at March 31, 2011 and 2010 and December 31, 2010, respectively.
|
(8)
|
Trading securities include ending accrued income of $14 million, $3 million and $17 million at March 31, 2011 and 2010 and December 31, 2010, respectively.
|
(9)
|
Other invested assets include General Account interest rate floors and options.
|
(10)
|
Debt and other includes accrued expenses of $(29) million, $(35) million and $(9) million at March 31, 2011 and 2010 and December 31, 2009, respectively.
|
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Fair Value
|
|||||||||||||
(In Millions)
|
||||||||||||||||
At March 31, 2011:
|
||||||||||||||||
Corporate securities:(2)
|
||||||||||||||||
Finance
|
$ | 8,744 | $ | 381 | $ | 31 | $ | 9,094 | ||||||||
Manufacturing
|
7,524 | 539 | 34 | 8,029 | ||||||||||||
Utilities
|
4,458 | 289 | 21 | 4,726 | ||||||||||||
Services
|
4,187 | 285 | 17 | 4,455 | ||||||||||||
Energy
|
1,884 | 138 | 1 | 2,021 | ||||||||||||
Retail and wholesale
|
1,455 | 101 | 3 | 1,553 | ||||||||||||
Transportation
|
972 | 76 | 9 | 1,039 | ||||||||||||
Other
|
47 | 3 | 1 | 49 | ||||||||||||
Total corporate securities
|
29,271 | 1,812 | 117 | 30,966 | ||||||||||||
U.S. government and agency
|
5,153 | 46 | 148 | 5,051 | ||||||||||||
Commercial mortgage-backed
|
1,722 | 18 | 425 | 1,315 | ||||||||||||
Residential mortgage-backed(3)
|
2,211 | 91 | - | 2,302 | ||||||||||||
Preferred stock
|
1,705 | 28 | 58 | 1,675 | ||||||||||||
State and municipal
|
567 | 10 | 14 | 563 | ||||||||||||
Foreign government
|
579 | 61 | 2 | 638 | ||||||||||||
Asset-backed securities
|
563 | 14 | 10 | 567 | ||||||||||||
Total
|
$ | 41,771 | $ | 2,080 | $ | 774 | $ | 43,077 | ||||||||
At December 31, 2010:
|
||||||||||||||||
Corporate securities:
|
||||||||||||||||
Finance
|
$ | 8,605 | $ | 380 | $ | 40 | $ | 8,945 | ||||||||
Manufacturing
|
7,524 | 566 | 38 | 8,052 | ||||||||||||
Utilities
|
4,582 | 312 | 23 | 4,871 | ||||||||||||
Services
|
4,032 | 299 | 12 | 4,319 | ||||||||||||
Energy
|
1,814 | 152 | 1 | 1,965 | ||||||||||||
Retail and wholesale
|
1,514 | 106 | 9 | 1,611 | ||||||||||||
Transportation
|
1,026 | 79 | 9 | 1,096 | ||||||||||||
Other
|
59 | 4 | - | 63 | ||||||||||||
Total corporate securities | 29,156 | 1,898 | 132 | 30,922 | ||||||||||||
U.S. government and agency
|
5,179 | 50 | 109 | 5,120 | ||||||||||||
Commercial mortgage-backed
|
1,807 | 5 | 487 | 1,325 | ||||||||||||
Residential mortgage-backed(2)
|
2,195 | 93 | 1 | 2,287 | ||||||||||||
Preferred stock
|
1,704 | 24 | 95 | 1,633 | ||||||||||||
State and municipal
|
586 | 11 | 20 | 577 | ||||||||||||
Foreign government
|
581 | 65 | 2 | 644 | ||||||||||||
Asset-backed securities
|
475 | 15 | 12 | 478 | ||||||||||||
Total
|
$ | 41,683 | $ | 2,161 | $ | 858 | $ | 42,986 |
(1)
|
Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.
|
(2)
|
Includes publicly traded agency pass-through securities and collateralized mortgage obligations.
|
NAIC
Designation (1)
|
Rating Agency
Equivalent
|
Amortized Cost
|
Gross Unrealized Gains
|
Gross Unrealized Losses
|
Fair Value
|
|||||||||||||
(In Millions)
|
||||||||||||||||||
At March 31, 2011
|
||||||||||||||||||
1 |
Aaa, Aa, A
|
$ | 21,261 | $ | 1,023 | $ | 235 | $ | 22,049 | |||||||||
2 |
Baa
|
8,718 | 543 | 59 | 9,202 | |||||||||||||
Investment grade
|
29,979 | 1,566 | 294 | 31,251 | ||||||||||||||
3 |
Ba
|
849 | 27 | 22 | 854 | |||||||||||||
4 | B | 321 | 1 | 22 | 300 | |||||||||||||
5 |
C and lower
|
90 | 1 | 15 | 76 | |||||||||||||
6 |
In or near default
|
91 | 7 | 20 | 78 | |||||||||||||
Below investment grade
|
1,351 | 36 | 79 | 1,308 | ||||||||||||||
Total
|
$ | 31,330 | $ | 1,602 | $ | 373 | $ | 32,559 | ||||||||||
At December 31, 2010
|
||||||||||||||||||
1 |
Aaa, Aa, A
|
$ | 21,017 | $ | 1,102 | $ | 215 | $ | 21,904 | |||||||||
2 |
Baa
|
9,133 | 560 | 80 | 9,613 | |||||||||||||
Investment grade
|
30,150 | 1,662 | 295 | 31,517 | ||||||||||||||
3 |
Ba
|
947 | 15 | 43 | 919 | |||||||||||||
4 | B | 244 | - | 32 | 212 | |||||||||||||
5 |
C and lower
|
79 | - | 21 | 58 | |||||||||||||
6 |
In or near default
|
95 | 5 | 28 | 72 | |||||||||||||
Below investment grade
|
1,365 | 20 | 124 | 1,261 | ||||||||||||||
Total
|
$ | 31,515 | $ | 1,682 | $ | 419 | $ | 32,778 |
(1)
|
At March 31, 2011 and December 31, 2010, no securities had been categorized based on expected NAIC designation pending receipt of SVO ratings.
|
NAIC
Designation (1)
|
Rating Agency
Equivalent
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
(In Millions)
|
At March 31, 2011
|
||||||||||||||||||
1 |
Aaa, Aa, A
|
$ | 5,370 | $ | 214 | $ | 135 | $ | 5,449 | |||||||||
2 |
Baa
|
3,896 | 238 | 19 | 4,115 | |||||||||||||
Investment grade
|
9,266 | 452 | 154 | 9,564 | ||||||||||||||
3 |
Ba
|
485 | 7 | 33 | 459 | |||||||||||||
4 | B | 195 | 10 | 46 | 159 | |||||||||||||
5 |
C and lower
|
151 | - | 55 | 96 | |||||||||||||
6 |
In or near default
|
344 | 9 | 113 | 240 | |||||||||||||
Below investment grade
|
1,175 | 26 | 247 | 954 | ||||||||||||||
Total
|
$ | 10,441 | $ | 478 | $ | 401 | $ | 10,518 | ||||||||||
At December 31, 2010
|
||||||||||||||||||
1 |
Aaa, Aa, A
|
$ | 5,167 | $ | 225 | $ | 126 | $ | 5,266 | |||||||||
2 |
Baa
|
3,817 | 236 | 22 | 4,031 | |||||||||||||
Investment grade
|
8,984 | 461 | 148 | 9,297 | ||||||||||||||
3 |
Ba
|
456 | 10 | 45 | 421 | |||||||||||||
4 | B | 230 | - | 49 | 181 | |||||||||||||
5 |
C and lower
|
157 | 1 | 67 | 91 | |||||||||||||
6 |
In or near default
|
341 | 7 | 130 | 218 | |||||||||||||
Below investment grade
|
1,184 | 18 | 291 | 911 | ||||||||||||||
Total
|
$ | 10,168 | $ | 479 | $ | 439 | $ | 10,208 |
(1)
|
Includes, at March 31, 2011 and December 31, 2010, respectively, 20 securities with amortized cost of $292 million (fair value, $288 million) and 14 securities with amortized cost of $148 million (fair value, $154 million) that have been categorized based on expected NAIC designation pending receipt of SVO ratings.
|
NAIC
Designation (1)
|
Rating Agency
Equivalent
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
(In Millions)
|
At March 31, 2011
|
1 |
Aaa, Aa, A
|
$ | 16,372 | $ | 1,010 | $ | 59 | $ | 17,323 | |||||||||
2 |
Baa
|
11,934 | 760 | 47 | 12,647 | |||||||||||||
Investment grade
|
28,306 | 1,770 | 106 | 29,970 | ||||||||||||||
3 |
Ba
|
821 | 30 | 9 | 842 | |||||||||||||
4 | B | 96 | 2 | 1 | 97 | |||||||||||||
5 |
C and lower
|
39 | 1 | 1 | 39 | |||||||||||||
6 |
In or near default
|
9 | 9 | - | 18 | |||||||||||||
Below investment grade
|
965 | 42 | 11 | 996 | ||||||||||||||
Total
|
$ | 29,271 | $ | 1,812 | $ | 117 | $ | 30,966 | ||||||||||
At December 31, 2010
|
||||||||||||||||||
1 |
Aaa, Aa, A
|
$ | 15,931 | $ | 1,093 | $ | 54 | $ | 16,970 | |||||||||
2 |
Baa
|
12,207 | 776 | 53 | 12,930 | |||||||||||||
Investment grade
|
28,138 | 1,869 | 107 | 29,900 | ||||||||||||||
3 |
Ba
|
819 | 21 | 15 | 825 | |||||||||||||
4 | B | 156 | - | 8 | 148 | |||||||||||||
5 |
C and lower
|
34 | - | 2 | 32 | |||||||||||||
6 |
In or near default
|
9 | 8 | - | 17 | |||||||||||||
Below investment grade
|
1,018 | 29 | 25 | 1,022 | ||||||||||||||
Total
|
$ | 29,156 | $ | 1,898 | $ | 132 | $ | 30,922 |
March 31, 2011
|
||||||||||||||||||||||||||||
Moody’s Agency Rating
|
Total
|
Total December 31, 2010
|
||||||||||||||||||||||||||
Aaa
|
Aa
|
A |
Baa
|
Ba and Below
|
||||||||||||||||||||||||
Vintage
|
(In Millions)
|
|||||||||||||||||||||||||||
At amortized cost:
|
||||||||||||||||||||||||||||
2004 and prior years
|
$ | 1 | $ | 23 | $ | 50 | $ | 126 | $ | 154 | $ | 354 | $ | 359 | ||||||||||||||
2005
|
18 | 74 | 76 | 176 | 365 | 709 | 785 | |||||||||||||||||||||
2006
|
- | - | - | 6 | 429 | 435 | 435 | |||||||||||||||||||||
2007
|
- | - | 3 | - | 221 | 224 | 228 | |||||||||||||||||||||
Total CMBS
|
$ | 19 | $ | 97 | $ | 129 | $ | 308 | $ | 1,169 | $ | 1,722 | $ | 1,807 | ||||||||||||||
At fair value:
|
||||||||||||||||||||||||||||
2004 and prior years
|
$ | 1 | $ | 24 | $ | 47 | $ | 121 | $ | 135 | $ | 328 | $ | 330 | ||||||||||||||
2005
|
17 | 72 | 68 | 160 | 279 | 596 | 631 | |||||||||||||||||||||
2006
|
- | - | - | 5 | 265 | 270 | 256 | |||||||||||||||||||||
2007
|
- | - | 2 | - | 119 | 121 | 108 | |||||||||||||||||||||
Total CMBS
|
$ | 18 | $ | 96 | $ | 117 | $ | 286 | $ | 798 | $ | 1,315 | $ | 1,325 |
March 31, 2011
|
December 31, 2010
|
|||||||
(In Millions)
|
||||||||
Commercial mortgage loans
|
$ | 3,892 | $ | 3,804 | ||||
Agricultural mortgage loans
|
1,416 | 1,466 | ||||||
Total Mortgage Loans
|
$ | 5,308 | $ | 5,270 |
March 31, 2011
|
December 31, 2010
|
|||||||||||||||
Amortized Cost
|
% of Total
|
Amortized Cost
|
% of Total
|
|||||||||||||
(Dollars in Millions)
|
||||||||||||||||
By U.S. Region:
|
||||||||||||||||
Pacific
|
$ | 1,571 | 29.6 | % | $ | 1,478 | 28.1 | % | ||||||||
Middle Atlantic
|
1,068 | 20.1 | 1,090 | 20.7 | ||||||||||||
South Atlantic
|
804 | 15.2 | 750 | 14.2 | ||||||||||||
East North Central
|
639 | 12.1 | 687 | 13.0 | ||||||||||||
Mountain
|
447 | 8.4 | 450 | 8.5 | ||||||||||||
West North Central
|
340 | 6.4 | 362 | 6.9 | ||||||||||||
West South Central
|
314 | 5.9 | 325 | 6.2 | ||||||||||||
East South Central
|
66 | 1.2 | 69 | 1.3 | ||||||||||||
New England
|
59 | 1.1 | 59 | 1.1 | ||||||||||||
Total Mortgage Loans
|
$ | 5,308 | 100.0 | % | $ | 5,270 | 100.0 | % | ||||||||
By Property Type:
|
||||||||||||||||
Office
|
$ | 1,724 | 32.5 | % | $ | 1,585 | 30.1 | % | ||||||||
Agricultural
|
1,416 | 26.7 | 1,466 | 27.8 | ||||||||||||
Apartment
|
892 | 16.8 | 929 | 17.6 | ||||||||||||
Retail
|
485 | 9.1 | 488 | 9.3 | ||||||||||||
Industrial
|
472 | 8.9 | 482 | 9.1 | ||||||||||||
Hospitality
|
266 | 5.0 | 267 | 5.1 | ||||||||||||
Other
|
53 | 1.0 | 53 | 1.0 | ||||||||||||
Total Mortgage Loans
|
$ | 5,308 | 100.0 | % | $ | 5,270 | 100.0 | % |
Debt Service Coverage Ratio(1)
|
Total
Mortgage
Loans
|
|||||||||||||||||||||||||||
Loan-to-Value Ratio
|
Greater
than 2.0x
|
1.8x to
2.0x
|
1.5x to
1.8x
|
1.2x to
1.5x
|
1.0x to
1.2x
|
Less than
1.0x
|
||||||||||||||||||||||
(In Millions)
|
||||||||||||||||||||||||||||
0% - 50% | $ | 278 | $ | 80 | $ | 168 | $ | 329 | $ | 204 | $ | 85 | $ | 1,144 | ||||||||||||||
50% - 70% | 210 | 219 | 422 | 757 | 191 | 34 | 1,833 | |||||||||||||||||||||
70% - 90% | 69 | 61 | 522 | 437 | 277 | 50 | 1,416 | |||||||||||||||||||||
90% plus
|
10 | - | 134 | 108 | 518 | 145 | 915 | |||||||||||||||||||||
Total Commercial
|
||||||||||||||||||||||||||||
and Agricultural
|
||||||||||||||||||||||||||||
Mortgage Loans
|
$ | 567 | $ | 360 | $ | 1,246 | $ | 1,631 | $ | 1,190 | $ | 314 | $ | 5,308 |
(1)
|
The debt service coverage ratio is calculated using actual results from property operations.
|
March 31, 2011
|
||||||||
Year of Origination
|
Amortized Cost
|
% of Total
|
||||||
(Dollars In Millions)
|
||||||||
2011
|
$ | 257 | 4.8 | % | ||||
2010
|
398 | 7.5 | ||||||
2009
|
569 | 10.7 | ||||||
2008
|
366 | 6.9 | ||||||
2007
|
1,008 | 19.0 | ||||||
2006 and prior
|
2,710 | 51.1 | ||||||
Total Mortgage Loans
|
$ | 5,308 | 100.0 | % |
March 31, 2011
|
December 31, 2010
|
|||||||
(In Millions)
|
||||||||
Balances, beginning of year
|
$ | 49 | $ | 18 | ||||
Additions charged to income
|
- | 33 | ||||||
Deductions for writedowns and asset dispositions
|
- | (2 | ) | |||||
Balances, End of Period
|
$ | 49 | $ | 49 |
March 31, 2011
|
December 31, 2010
|
|||||||
(In Millions)
|
||||||||
Common stock
|
$ | 63 | $ | 54 | ||||
Joint ventures and limited partnerships:
|
||||||||
Private equity
|
1,146 | 1,093 | ||||||
Hedge funds
|
226 | 246 | ||||||
Real estate related
|
99 | 91 | ||||||
Total Other Equity Investments
|
$ | 1,534 | $ | 1,484 |
Notional
Amount
|
Fair Value |
Income
(Loss)
Reported in
Net Earnings
(Loss)
|
||||||||||||||
Asset Derivatives
|
Liability Derivatives
|
|||||||||||||||
(In Millions)
|
||||||||||||||||
Freestanding derivatives
|
||||||||||||||||
Equity contracts(1):
|
||||||||||||||||
Futures
|
$ | 9,249 | $ | - | $ | - | $ | (593 | ) | |||||||
Swaps
|
1,286 | 8 | 16 | (55 | ) | |||||||||||
Options
|
180 | 28 | 19 | 3 | ||||||||||||
Interest rate contracts(1):
|
||||||||||||||||
Floors
|
9,000 | 286 | - | (8 | ) | |||||||||||
Swaps
|
11,946 | 360 | 54 | (71 | ) | |||||||||||
Futures
|
14,254 | - | - | (88 | ) | |||||||||||
Swaptions
|
7,818 | 230 | - | (62 | ) | |||||||||||
Net investment income (loss)
|
(874 | ) | ||||||||||||||
Embedded derivatives:
|
||||||||||||||||
GMIB reinsurance contracts(2)
|
1,022 | - | (201 | ) | ||||||||||||
GWBL and other features(3)
|
- | (3 | ) | 41 | ||||||||||||
Total, March 31, 2011
|
$ | 53,733 | $ | 1,934 | $ | 86 | $ | 1,034 |
(1)
|
Reported in Other invested assets in the consolidated balance sheets.
|
(2)
|
Reported in Other assets in the consolidated balance sheets.
|
(3)
|
Reported in Future policy benefits and other policyholders liabilities.
|
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Fixed maturities
|
$ | 3 | $ | (14 | ) | |||
Other equity investments
|
- | 3 | ||||||
Derivatives
|
- | - | ||||||
Other
|
(1 | ) | (9 | ) | ||||
$ | 2 | $ | (20 | ) |
Three Months Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
(In Millions)
|
||||||||
Gross realized investment gains:
|
||||||||
Gross gains on sales and maturities
|
$ | 11 | $ | 42 | ||||
Other
|
- | - | ||||||
Total gross realized investment gains
|
11 | 42 | ||||||
Gross realized investment losses:
|
||||||||
Other-than-temporary impairments recognized in earnings (loss)
|
- | (41 | ) | |||||
Gross losses on sales and maturities
|
(8 | ) | (15 | ) | ||||
Credit related losses on sales
|
- | - | ||||||
Other
|
- | - | ||||||
Total gross realized investment losses
|
(8 | ) | (56 | ) | ||||
Total Net Realized Gains (Losses)
|
$ | 3 | $ | (14 | ) |
Three Months Ended March 31,
|
||||||||
2011
|
2010 (1)
|
|||||||
(In Millions)
|
||||||||
Fixed maturities (2):
|
||||||||
Public fixed maturities
|
$ | - | $ | (11 | ) | |||
Private fixed maturities
|
- | (30 | ) | |||||
Total fixed maturities
|
$ | - | $ | (41 | ) |
(1)
|
Excludes $3 million of other-than-temporary impairments recorded in Other Comprehensive Income (Loss), representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of impairment.
|
(2)
|
No OTTI amounts were reported for equity securities and other invested assets during either reporting period.
|
March 31, 2011
|
December 31, 2010
|
|||||||||||||||
Amount
|
% of Total
|
Amount
|
% of Total
|
|||||||||||||
(Dollars in Millions)
|
||||||||||||||||
Not subject to discretionary withdrawal provisions
|
$ | 5,770 | 26.3 | % | $ | 5,611 | 25.8 | % | ||||||||
Subject to discretionary withdrawal, with adjustment:
|
||||||||||||||||
With market value adjustment
|
1,015 | 4.6 | 960 | 4.4 | ||||||||||||
At contract value, less surrender charge of 5% or more
|
1,356 | 6.2 | 1,523 | 7.0 | ||||||||||||
Subtotal
|
2,371 | 10.8 | 2,483 | 11.4 | ||||||||||||
Subject to discretionary withdrawal at contract value with no surrender charge or surrender charge of less than 5%
|
13,836 | 62.9 | 13,648 | 62.8 | ||||||||||||
Total Annuity Reserves And Deposit Liabilities
|
$ | 21,977 | 100.0 | % | $ | 21,742 | 100.0 | % |
PART II | OTHER INFORMATION | ||
Item 1. | Legal Proceedings | ||
See Note 10 to the Consolidated Financial Statements contained herein. Except as disclosed in Note 10 to the Consolidated Financial Statements there have been no new material legal proceedings and no new material developments in legal proceedings previously reported in the 2010 Form 10-K. | |||
Item 1A. | Risk Factors | ||
There have been no material changes to the risk factors described in Part I, Item 1A, “Risk Factors,” included in the 2010 Form 10-K. | |||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||
NONE | |||
Item 3. | Defaults Upon Senior Securities | ||
NONE | |||
Item 4. | (Removed and Reserved) | ||
Item 5. | Other Information | ||
NONE | |||
Item 6. | Exhibits | ||
Number
|
Description and Method of Filing
|
||
31.1
|
Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
31.2
|
Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
32.1
|
Certification of the Registrant’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
32.2
|
Certification of the Registrant’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Date:
|
May 13, 2011
|
AXA FINANCIAL, INC.
|
By:
|
/s/ Richard S. Dziadzio
|
||||
Name:
|
Richard S. Dziadzio
|
||||
Title:
|
Senior Executive Vice President and
|
||||
Chief Financial Officer
|
|||||
Date:
|
May 13, 2011
|
/s/ Alvin H. Fenichel
|
|||
Name:
|
Alvin H. Fenichel
|
||||
Title:
|
Senior Vice President and
|
||||
Chief Accounting Officer
|