-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NcaGQQpgcTIz//jxpFPzbAogRYFW8jqN1nGz2/owF8IYjt2UrAs1aNpascXhq5a4 iR6Odrao8DolCKDzqPIewQ== 0000771726-02-000324.txt : 20020904 0000771726-02-000324.hdr.sgml : 20020904 20020904165851 ACCESSION NUMBER: 0000771726-02-000324 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020904 ITEM INFORMATION: FILED AS OF DATE: 20020904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXA FINANCIAL INC CENTRAL INDEX KEY: 0000888002 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 133623351 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11166 FILM NUMBER: 02756742 BUSINESS ADDRESS: STREET 1: 1290 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10104 BUSINESS PHONE: 2125541234 MAIL ADDRESS: STREET 1: 1290 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10104 FORMER COMPANY: FORMER CONFORMED NAME: EQUITABLE COMPANIES INC DATE OF NAME CHANGE: 19950721 8-K 1 file001.txt ITEM 9 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: September 4, 2002 Date of earliest event reported: September 3, 2002 AXA FINANCIAL, INC. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 1-11166 13-3623351 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) 1290 Avenue of the Americas New York, New York 10104 - ---------------------------------------- --------------- (Address of principal executive offices) (Zip Code) (212) 554-1234 ---------------------------------- (Registrant's telephone number, including area code) None - -------------------------------------------------------------------------------- (Former name or address, if changed since last report) ITEM 9. REGULATION FD DISCLOSURE The information provided in connection with Item 9 of this report is being furnished pursuant to Regulation FD of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with General Instruction B of Form 8-K, the information provided in connection with Item 9 of this report shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section or Sections 11 and 12(a) (2) of the Securities Act of 1933, as amended (the "Securities Act"), nor shall it be deemed incorporated by reference in any filing under the Securities Act. The furnishing of the information set forth in connection with Item 9 of this report is not intended to, and does not, constitute a determination or admission as to the materiality or completeness of such information that is required to be disclosed solely by Regulation FD. At a meeting held with security analysts on September 3, 2002, Vice Chairman and Chief Financial Officer of the Registrant, Stanley B. Tulin, discussed the following relating to DAC amortization: Deferred Acquisition Costs ("DAC") for interest sensitive and variable life insurance and variable annuities are amortized in accordance with the requirements of SFAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments". DAC is amortized over the expected total life of the contracts as a constant percentage of estimated gross profits arising principally from investment results, separate account fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, updated at the end of each accounting period. The effect on the amortization of DAC of revisions to estimated gross profits is reflected in earnings in the period such estimated gross profits are revised ("DAC unlocking"). A decrease in expected gross profits would accelerate DAC amortization. Conversely, an increase in expected gross profits would slow DAC amortization. In second quarter 2002, among the assumptions modified to reflect emerging experience were projected future separate account performance, annuity surrenders and life mortality. Expected future gross profit assumptions related to separate account performance are set using a long term view of expected average market returns by applying a reversion to the mean approach. In applying this approach in prior periods, future assumptions of separate account performance were set such that actual market returns would, when combined with estimated returns over the following four years, generate an average gross return of 9% over that period. The average gross long term return estimate of 9% is developed with reference to historical long term equity market performance. As indicated in Table 1 below, in 2000, the favorable actual performance in earlier periods was combined with estimates of lower future performance resulting in an average gross separate account return of 9%, on a cumulative basis. However, continued poor market performance through the second quarter of 2002 would have required estimates of future separate account performance in excess of levels thought reasonable in the current environment. Therefore, the assumptions for future gross long term separate account performance as of June 30, 2002 have been set at 9%, without regard to actual performance through June 30, 2002. As in prior periods, the reversion to the mean approach will continue to be applied, subject to assessment of the reasonableness of resulting estimates of future return assumptions. Annuity surrender and life mortality assumptions, in the aggregate, have been adjusted to more closely reflect improved emerging experience. The net effect of updating the assumptions underlying the estimate of future gross profits as required by SFAS No. 97, including projected future separate account performance, annuity surrenders and life mortality, resulted in no significant change to the aggregate total gross profits expected from these products. TABLE 1: Separate Account Performance Assumptions Used in 2000 - Reversion to the mean (9% gross; 7.5% net of separate account level fees and expenses)
- -------------------------------------------------------------------------------- Actual net performance Assumed net future performance - -------------------------------------------------------------------------------- 1997 19.0% 2000 - 7.5% - -------------------------------------------------------------------------------- 1998 17.5 2001 - 7.5 - -------------------------------------------------------------------------------- 1999 22.5 2002 - 3.0 - -------------------------------------------------------------------------------- 2003 4.0 - -------------------------------------------------------------------------------- 2004 7.5 - --------------------------------------------------------------------------------
Now - After unlocking, we are now assuming a level 7.5% net future performance
- -------------------------------------------------------------------------------- Actual net performance Assumed net future performance - -------------------------------------------------------------------------------- 2000 -12.7% 2H02 7.5% - -------------------------------------------------------------------------------- 2001 -16.0 2003 7.5 - -------------------------------------------------------------------------------- 1H02 -18.0 2004 7.5 - -------------------------------------------------------------------------------- 2005 7.5 - -------------------------------------------------------------------------------- 2006 7.5 - --------------------------------------------------------------------------------
TABLE 2: Equivest Surrender Rates
- -------------------------------------------------------------------------------- BACK IN 2000: - -------------------------------------------------------------------------------- Weighted DAC Assumption Q1 2000 Actual Difference - -------------------------------------------------------------------------------- 13.9% 9.2% 4.7% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOW: - -------------------------------------------------------------------------------- Weighted DAC Assumption ast 18 months Actual Difference - -------------------------------------------------------------------------------- 8.7% 8.5% 0.2% - --------------------------------------------------------------------------------
This report contains forward-looking statements. While these forward-looking statements represent our judgments and future expectations, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include certain key factors that could adversely affect our businesses and financial performance contained in our past and future filings and reports we file with the SEC. The Registrant is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AXA FINANCIAL, INC. Date: September 4, 2002 By: /s/ Alvin H. Fenichel --------------------------------- Name: Alvin H. Fenichel Title: Senior Vice President and Controller 3 -----END PRIVACY-ENHANCED MESSAGE-----