UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________

FORM 10-Q

(Mark One)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended    September 30, 2009March 31, 2010

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________

Commission File No. 1-11166

AXA Financial, Inc.
(Exact name of registrant as specified in its charter)

Delaware13-3623351
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)

1290 Avenue of the Americas, New York, New York10104
(Address of principal executive offices)(Zip Code)

(212) 554-1234
Registrant’s telephone number, including area code

Not applicable
(Former name, former address, and former fiscal year if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 Yesx Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
 Yeso Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
o  
Accelerated filer  o
 
Non-accelerated filer
x(Do   (Do not check if a smaller reporting company) 
Smaller reporting company  o
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YesoNox
Yes  o    No  x

As of November 9, 2009,At May 20, 2010, 436,192,949 shares of the registrant’s Common Stock were outstanding.
REDUCED DISCLOSURE FORMAT:

Registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

Page 1 of 61
 
 

AXA FINANCIAL, INC.
FORM 10-Q
FOR THE QUARTERLY PERIODQUARTER ENDED SEPTEMBER 30, 2009MARCH 31, 2010

TABLE OF CONTENTS


  Page

PART IFINANCIAL INFORMATION 

Item 1:1.Consolidated Financial Statements (Unaudited) 
 
·   ●   Consolidated Balance Sheets, September 30, 2009March 31, 2010 and December 31, 20082009
  43
 
·   ●   Consolidated Statements of Earnings Three Months(Loss), Quarters Ended
   March 31, 2010 and Nine Months Ended September 30,2009
  6
                       2009 and 2008
4
 
·   ●   Consolidated Statements of Equity Nine Monthsand Comprehensive
Income (Loss), Quarters Ended September 30,March 31, 2010 and 2009 and 2008 
  8
6
 
·   ●Consolidated Statements of Cash Flows, Nine MonthsQuarters Ended September 30,
March 31, 2010 and 2009 and 2008
  9
7
 
·   ●Notes to Consolidated Financial Statements
119
   
Item 2:2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (“Management Narrative”) 50 
 Results of Operations41
   
Item 3:3.Quantitative and Qualitative Disclosures About Market Risk* Risk5881
   
Item 4(T):.Controls and Procedures5881
   
PART IIOTHER INFORMATION 
   
Item 1:1.Legal Proceedings5982
   
Item 1A:1A.Risk Factors5982
   
Item 2:2.Unregistered Sales of Equity Securities and Use of Proceeds* Proceeds5982
   
Item 3:3.Defaults Upon Senior Securities *                                                                                                        5982
   
Item 4:4.Submission of Matters to a Vote of Security Holders*Holders5982
   
Item 5:5.Other Information5982
   
Item 6:6.Exhibits6082
 
SIGNATURES 61
83


*Omitted pursuant to General Instruction H to Form 10-Q.











 
2
 

FORWARD-LOOKING STATEMENTS

Some of the statements made in this report, including statements made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Risk Factors” and elsewhere, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include, among other things, discussions concerning potential exposure of AXA Financial, Inc. and its subsidiaries to market risks and the impact of new accounting pronouncements, as well as statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions, as indicated by words such as “believes,” “estimates,” “intends,” “anticipates,” “plans,” “expects,” “projects,” “should,” “probably,” “risk,” “target,” “goals,” “objectives,” or similar expressions.  AXA Financial, Inc. assumes no duty to update any forward-looking statement.  Forward-looking statements are based on management’s expectations and beliefs concerning future developments and their potential effects and are subject to risks and uncertainties.  Forward-looking statements are not a guarantee of future performance.  Actual results could differ materially from those anticipated by forward-looking statements due to a number of important factors, including those discussed under “Risk Factors” in Part I, Item 1A of AXA Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008, and Part II, Item 1A in this Form 10-Q and elsewhere in this report.

3

PART I  FINANCIAL INFORMATION
Item 1:  Consolidated Financial Statements

AXA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
  March 31,  December 31, 
  2010  2009 
  (In Millions) 
ASSETS      
Investments:      
Fixed maturities available for sale, at fair value $40,824.9  $40,131.6 
Mortgage loans on real estate  4,948.6   4,939.1 
Equity real estate, held for the production of income  508.8   515.0 
Policy loans  4,960.7   4,973.4 
Other equity investments  1,690.8   1,681.0 
Trading securities  1,795.1   1,928.5 
Other invested assets  1,336.8   1,632.6 
Total investments  56,065.7   55,801.2 
Cash and cash equivalents  3,651.4   3,038.7 
Cash and securities segregated, at fair value  1,004.8   985.7 
Broker-dealer related receivables  1,172.5   1,087.6 
Deferred policy acquisition costs  9,284.6   9,015.4 
Goodwill and other intangible assets, net  5,261.8   5,271.8 
Value of business acquired  411.5   448.3 
Amounts due from reinsurers  4,240.1   4,237.1 
Loans to affiliates  1,218.0   1,712.0 
Other assets  4,309.3   4,097.9 
Separate Accounts’ assets  89,135.9   86,129.2 
         
Total Assets $175,755.6  $171,824.9 
         
LIABILITIES        
Policyholders’ account balances $27,563.6  $27,522.4 
Future policy benefits and other policyholders liabilities  26,520.3   26,320.3 
Broker-dealer related payables  1,900.4   1,788.4 
Customers related payables  1,506.5   1,430.7 
Short-term and long-term debt  1,511.2   1,581.4 
Loans from affiliates  5,072.5   5,300.3 
Income taxes payable  1,958.8   1,684.1 
Other liabilities  5,906.3   5,827.2 
Separate Accounts’ liabilities  89,135.9   86,129.2 
Total liabilities  161,075.5   157,584.0 
         
Commitments and contingent liabilities (Note 11)        
         
EQUITY        
AXA Financial, Inc. equity:        
Common stock, $.01 par value, 2.00 billion shares authorized,        
436.2 million shares issued and outstanding  3.9   3.9 
Capital in excess of par value  655.1   648.9 
Retained earnings  11,688.2   11,401.1 
Accumulated other comprehensive loss  (1,185.9)  (1,346.4)
Treasury shares, at cost  (20.1)  (34.3)
Total AXA Financial, Inc. equity  11,141.2   10,673.2 
Noncontrolling interest  3,538.9   3,567.7 
Total equity  14,680.1   14,240.9 
         
Total Liabilities and Equity $175,755.6  $171,824.9 

       
  
September 30,
2009
  
December 31,
2008
 
  (In Millions) 
ASSETS      
Investments:      
Fixed maturities available for sale, at fair value
 $40,604.2  $33,415.9 
Mortgage loans on real estate
  5,035.0   5,174.0 
Equity real estate, held for the production of income
  426.0   370.3 
Policy loans
  4,977.9   5,045.2 
Other equity investments
  1,629.7   1,789.9 
Trading securities
  1,829.3   322.7 
Other invested assets
  1,772.2   3,425.1 
Total investments
  56,274.3   49,543.1 
Cash and cash equivalents
  3,773.9   10,061.2 
Cash and securities segregated, at fair value
  1,274.3   2,572.6 
Broker-dealer related receivables
  1,192.2   1,020.4 
Deferred policy acquisition costs
  8,764.3   8,503.3 
Goodwill and other intangible assets, net
  5,282.7   5,316.1 
Value of business acquired
  456.8   666.5 
Amounts due from reinsurers
  4,234.3   4,286.6 
Loans to affiliates
  1,200.0   1,143.5 
Other assets
  4,686.2   5,095.8 
Separate Accounts’ assets
  83,628.6   69,614.4 
Total Assets
 $170,767.6  $157,823.5 
         
LIABILITIES        
Policyholders’ account balances
 $27,675.6  $28,258.8 
Future policy benefits and other policyholders liabilities
  25,817.2   26,274.6 
Broker-dealer related payables
  2,213.4   934.8 
Customers related payables
  1,617.7   2,753.1 
Short-term and long-term debt
  1,386.7   1,625.8 
Loans from affiliates
  5,230.0   4,530.0 
Income taxes payable
  1,974.9   2,892.5 
Other liabilities
  6,390.7   6,303.0 
Noncontrolling interest subject to redemption rights
  -   135.0 
Separate Accounts’ liabilities
  83,628.6   69,614.4 
Total liabilities
  155,934.8   143,322.0 
         
Commitments and contingent liabilities (Note 11)        
See Notes to Consolidated Financial Statements.

3

AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
QUARTERS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)

  2010  2009 
  (In Millions) 
       
REVENUES      
Universal life and investment-type product policy fee income $774.7  $728.8 
Premiums  389.6   375.7 
Net investment income:        
Investment loss from derivative instruments  (337.0)  (26.1)
Other investment income  784.0   510.1 
Total net investment income  447.0   484.0 
Investment (losses) gains, net:        
Total other-than-temporary impairment losses  (44.1)  (27.5)
Portion of loss recognized in other        
comprehensive income  3.2   - 
Net impairment losses recognized  (40.9)  (27.5)
Other investment gains, net  24.4   196.7 
Total investment (losses) gains, net  (16.5)  169.2 
Commissions, fees and other income  968.0   838.8 
Decrease in fair value of reinsurance contracts  (35.6)  (302.2)
Total revenues  2,527.2   2,294.3 
         
BENEFITS AND OTHER DEDUCTIONS        
Policyholders’ benefits  901.8   936.0 
Interest credited to policyholders’ account balances  265.4   289.7 
Compensation and benefits  618.0   568.8 
Commissions  221.2   264.1 
Distribution plan payments  58.6   42.4 
Amortization of deferred sales commissions  12.1   14.9 
Interest expense  94.9   76.6 
Amortization of deferred policy acquisition costs and        
value of business acquired  (67.1)  118.9 
Capitalization of deferred policy acquisition costs  (218.6)  (304.0)
Rent expense  78.7   75.3 
Amortization of other intangible assets  9.9   9.7 
Other operating costs and expenses  283.1   291.3 
Total benefits and other deductions  2,258.0   2,383.7 
         



 
4
 

AXA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETSSTATEMENTS OF EARNINGS (LOSS)
QUARTERS ENDED MARCH 31, 2010 AND 2009 - CONTINUED
(UNAUDITED)

       
  
September 30,
2009
  
December 31,
2008
 
  (In Millions) 
       
EQUITY      
AXA Financial, Inc. equity:      
Common stock, $.01 par value, 2.00 billion shares authorized,      
436.2 million shares issued and outstanding
 $3.9  $3.9 
Capital in excess of par value
  689.4   1,298.9 
Retained earnings
  12,013.2   14,448.8 
Accumulated other comprehensive loss
  (1,334.3)  (2,854.4)
Treasury shares, at cost
  (41.3)  (58.3)
Total AXA Financial, Inc. equity
  11,330.9   12,838.9 
Noncontrolling interest
  3,501.9   1,662.6 
Total equity
  14,832.8   14,501.5 
         
Total Liabilities and Equity
 $170,767.6  $157,823.5 




  2010  2009 
  (In Millions) 
    
Earnings (loss) from continuing operations before income taxes $269.2  $(89.4)
Income tax benefit  77.6   57.0 
         
Earnings (loss)  from continuing operations, net of income taxes  346.8   (32.4)
Loss from discontinued operations, net of income taxes  -   (1.9)
         
Net earnings (loss)  346.8   (34.3)
Less: net earnings attributable to the noncontrolling interest  (59.7)  (4.8)
         
Net Earnings (Loss) Attributable to AXA Financial, Inc. $287.1  $(39.1)
         
         
Amounts attributable to AXA Financial:        
Earnings (loss)  from continuing operations,        
net of income taxes $287.1  $(37.2)
Losses from discontinued operations, net of income taxes  -   (1.9)
         
Net Earnings (Loss) $287.1  $(39.1)




See Notes to Consolidated Financial Statements.

5

AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)
QUARTERS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)

  2010  2009 
  (In Millions) 
EQUITY      
AXA Financial. Inc. Equity:      
Common stock, at par value, beginning of year and end of period $3.9  $3.9 
         
Capital in excess of par value, beginning of year  648.9   1,298.9 
Sale of AllianceBernstein Units to noncontrolling interest  -   (619.4)
Changes in capital in excess of par value  6.2   4.8 
Capital in excess of par value, end of period  655.1   684.3 
         
Retained earnings, beginning of year  11,401.1   14,448.8 
Net earnings (loss) attributable to AXA Financial, Inc.  287.1   (39.1)
Retained earnings, end of period  11,688.2   14,409.7 
         
Accumulated other comprehensive loss, beginning of year  (1,346.4)  (2,854.4)
Other comprehensive income (loss) attributable to AXA Financial, Inc.  160.5   (324.3)
Accumulated other comprehensive loss, end of period  (1,185.9)  (3,178.7)
         
Treasury shares at cost, beginning of year  (34.3)  (58.3)
Changes in treasury shares  14.2   1.9 
Treasury shares at cost, end of period  (20.1)  (56.4)
         
Total AXA Financial, Inc. equity, end of period  11,141.2   11,862.8 
         
Noncontrolling interest, beginning of year  3,567.7   1,662.6 
Purchase of AllianceBernstein Units by noncontrolling interest  2.7   1,552.9 
Purchase of AllianceBernstein Put  -   135.0 
Net earnings attributable to noncontrolling interest  59.7   4.8 
Dividends paid to non-controlling interest  (108.4)  (38.2)
Capital contributions  -   5.4 
Other comprehensive income (loss) attributable to noncontrolling interest  2.4   (24.1)
Other changes in noncontrolling interest  14.8   10.5 
         
Noncontrolling interest, end of period  3,538.9   3,308.9 
         
Total Equity, End of Period $14,680.1  $15,171.7 
         
COMPREHENSIVE INCOME (LOSS)        
Net earnings (loss) $346.8  $(34.3)
Other comprehensive income (loss), net of income taxes:        
Change in unrealized gains (losses), net of reclassification adjustment  183.6   (346.3)
Changes in defined benefit plan related items, not yet recognized in 
periodic benefit cost, net of reclassification adjustment
  (20.7)  (2.1)
Total other comprehensive income (loss), net of income taxes  162.9   (348.4)
Comprehensive income (loss)  509.7   (382.7)
Comprehensive (income) loss attributable to noncontrolling interest  (62.1)  19.3 
         
Comprehensive Income (Loss) Attributable to AXA Financial, Inc. $447.6  $(363.4)

See Notes to Consolidated Financial Statements.

6


AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED MARCH 31, 2010 AND 2009
(UNAUDITED)

  2010  2009 
  (In Millions) 
    
Net earnings (loss) $346.8  $(34.3)
Adjustments to reconcile net earnings (loss) to net cash provided by        
(used in) operating activities:        
Interest credited to policyholders’ account balances  265.4   285.1 
Universal life and investment-type product policy fee income  (774.7)  (728.8)
Net change in broker-dealer and customer related receivables/payables  (98.9)  (312.7)
Losses on derivative instruments  600.3   26.1 
Investment losses (gains), net  16.5   (169.2)
Change in deferred policy acquisition costs and        
value of business acquired  (285.7)  (185.1)
Change in future policy benefits  65.9   44.1 
Change in income taxes payable  20.4   (36.9)
Change in segregated cash and securities, net  (19.1)  350.4 
Change in fair value of guaranteed minimum income benefit        
reinsurance contracts  35.6   302.2 
Equity (income) loss in other limited partnerships  (28.2)  112.3 
Amortization of deferred sales commission  12.1   14.9 
Other depreciation and amortization  56.3   54.8 
Amortization of other intangible assets  9.9   9.7 
Other, net  (19.2)  (59.0)
         
Net cash provided by (used in) operating activities  203.4   (326.4)
         
Cash flows from investing activities:        
Maturities and repayments  631.0   555.0 
Sales of investments  6,632.5   1,773.0 
Purchases of investments  (7,465.8)  (4,462.8)
Cash settlements related to derivative instruments  (819.7)  (451.6)
Decrease in loans to affiliates  500.0   1.5 
Increase in loans to affiliates  (6.0)  (6.5)
Change in short-term investments  9.2   (176.4)
Change in capitalized software, leasehold improvements and        
EDP equipment  (5.8)  (63.9)
Other, net  (26.4)  127.4 
         
Net cash used in investing activities  (551.0)  (2,704.3)


7

AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED MARCH 31, 2010 AND 2009 - CONTINUED
(UNAUDITED)

   2010   2009 
   (In Millions) 
Cash flows from financing activities:      
Policyholders’ account balances:      
Deposits $801.5  $1,328.6 
Withdrawals and transfers to Separate Accounts  (228.0)  (748.6)
Sale of AllianceBernstein Units  -   600.0 
Change in short-term financings  285.7   62.8 
Repayments of long-term debt  (300.0)  - 
Proceeds from loans from affiliates  -   500.0 
Decrease in collateralized pledged assets  868.7   - 
Decrease in collateralized pledged liabilities  (353.4)  (711.5)
Other, net  (114.2)  (45.4)
         
Net cash provided by financing activities  960.3   985.9 
         
Change in cash and cash equivalents  612.7   (2,044.8)
Cash and cash equivalents, beginning of year  3,038.7   10,061.2 
         
Cash and Cash Equivalents, End of Period $3,651.4  $8,016.4 
         
Supplemental cash flow information:        
Interest Paid $31.6  $31.8 
Income Taxes (Refunded) Paid $(273.1) $19.6 

























See Notes to Consolidated Financial Statements.

 
5

AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2009  2008  2009 2008 
  (In Millions) 
             
REVENUES            
Universal life and investment-type            
product policy fee income $800.4  $819.1  $2,312.8  $2,394.0 
Premiums  362.5   367.9   1,099.5   1,136.7 
Net investment (loss) income:                
Investment (loss) income from derivative instruments
  (1,268.8)  897.3   (5,364.3)  1,449.4 
Other investment income  900.2   569.2   2,153.1   2,016.8 
Total net investment (loss) income  (368.6)  1,466.5   (3,211.2)  3,466.2 
Investment (losses) gains, net:                
Total other-than-temporary impairment losses  (113.2)  (317.2)  (226.8)  (382.5)
Portion of loss recognized in other comprehensive income
  .8   -   4.1   - 
Net impairment losses recognized  (112.4)  (317.2)  (222.7)  (382.5)
Other investment gains (losses), net  5.8   (14.4)  204.8   13.3 
Total investment (losses), net  (106.6)  (331.6)  (17.9)  (369.2)
Commissions, fees and other income  929.4   1,227.6   2,634.6   3,883.3 
(Decrease) increase in fair value of reinsurance contracts
  (21.2)  205.1   (741.1)  389.9 
Total revenues  1,595.9   3,754.6   2,076.7   10,900.9 
                 
                 
BENEFITS AND OTHER DEDUCTIONS                
Policyholders’ benefits                                                                  735.2   857.4   1,853.3   2,453.4 
Interest credited to policyholders’ account balances  290.2   306.6   859.3   893.1 
Compensation and benefits  593.8   573.8   1,758.6   1,931.6 
Commissions                                                                  207.7   324.9   692.9   1,019.0 
Distribution plan payments  55.2   70.0   146.4   227.9 
Amortization of deferred sales commissions  13.4   19.4   42.1   61.9 
Interest expense                        72.6   43.7   224.8   146.9 
Amortization of deferred policy acquisition costs                
and value of business acquired       (19.4)  1,250.3   (68.9)  1,800.0 
Capitalization of deferred policy acquisition costs  (213.9)  (354.1)  (758.6)  (1,114.9)
Rent expense                                        77.7   73.8   221.1   218.2 
Amortization of other intangible assets   9.9   9.7   29.7   29.2 
Other operating costs and expenses  247.4   285.9   815.2   953.1 
Total benefits and other deductions    2,069.8   3,461.4   5,815.9   8,619.4 






6

AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF EARNINGS - CONTINUED
(UNAUDITED)


  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2009  2008  2009  2008 
  (In Millions) 
             
(Loss) earnings from continuing operations            
before income taxes $(473.9) $293.2  $(3,739.2) $2,281.5 
Income tax benefit (expense)  205.8   (107.2)  1,443.6   (735.3)
                 
(Loss) earnings from continuing operations,                
net of income taxes                                                                (268.1)  186.0   (2,295.6)  1,546.2 
Losses from discontinued operations,                
net of income taxes                                                                (7.2)  (.2)  (10.7)  (1.8)
Gain on disposal of discontinued                
operations, net of income taxes  -   -   -   5.8 
                 
Net (loss) earnings                                                                  (275.3)  185.8   (2,306.3)  1,550.2 
Less: net earnings attributable to the                
noncontrolling interest                                                             (129.8)  (87.5)  (203.6)  (302.7)
                 
Net (Loss) Earnings Attributable to AXA Financial $(405.1) $98.3  $(2,509.9) $1,247.5 
                 
                 
Amounts attributable to AXA Financial:                
(Loss) earnings from continuing operations,                
net of income taxes                                                               $(397.9) $98.5  $(2,499.2) $1,243.5 
Losses from discontinued operations,                
net of income taxes                                                                (7.2)  (.2)  (10.7)  (1.8)
Gain on disposal of discontinued                
operations, net of income taxes  -   -   -   5.8 
                 
Net (Loss) Earnings Attributable to AXA Financial $(405.1) $98.3  $(2,509.9) $1,247.5 













See Notes to Consolidated Financial Statements

7


AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)

  2009  2008 
  (In Millions) 
    
EQUITY      
AXA Financial, Inc. Equity:      
Common stock, at par value, beginning of year and end of period $3.9  $3.9 
         
Capital in excess of par value, beginning of year        1,298.9   1,250.0 
Sale of AllianceBernstein Units to noncontrolling interest  (619.4)  - 
Changes in capital in excess of par value        9.9   36.4 
Capital in excess of par value, end of period       689.4   1,286.4 
         
Retained earnings, beginning of year                                                                                         14,448.8   10,863.8 
Net (loss) earnings attributable to AXA Financial, Inc.   (2,509.9)  1,247.5 
Impact of implementing new accounting standards, net of taxes  74.3   - 
Retained earnings, end of period          12,013.2   12,111.3 
         
Accumulated other comprehensive loss, beginning of year  (2,854.4)  (478.8)
Impact of implementing new accounting standards, net of taxes  (74.3)  - 
Other comprehensive income (loss) attributable to AXA Financial, Inc.  1,594.4   (1,494.4)
Accumulated other comprehensive loss, end of period   (1,334.3)  (1,973.2)
         
Treasury shares at cost, beginning of year        (58.3)  (116.9)
Changes in treasury shares         17.0   52.5 
Treasury shares at cost, end of period     (41.3)  (64.4)
         
Total AXA Financial, Inc. equity, end of period   11,330.9   11,364.0 
         
Noncontrolling interest, beginning of year     1,662.6   1,681.2 
Purchase of AllianceBernstein Units by noncontrolling interest  1,552.9   31.9 
Purchase of AllianceBernstein Put    135.0   - 
Net earnings attributable to noncontrolling interest     203.6   302.7 
Dividends paid to noncontrolling interest       (128.7)  (313.4)
Capital contributions              19.4   12.8 
Other comprehensive income (loss) attributable to noncontrolling interest  33.4   (18.3)
Other changes in noncontrolling interest     23.7   24.8 
         
Noncontrolling interest, end of period     3,501.9   1,721.7 
         
Total Equity, End of Period                                                                                             $14,832.8  $13,085.7 









See Notes to Consolidated Financial Statements.

8
 

AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)


  2009  2008 
  (In Millions) 
       
Net (loss) earnings                                                                                             $(2,306.3) $1,550.2 
Adjustments to reconcile net (loss) earnings to net cash        
used in operating activities:        
Interest credited to policyholders’ account balances    859.3   893.1 
Universal life and investment-type product policy fee income  (2,312.8)  (2,394.0)
Net change in broker-dealer customer related receivables/payables  (1,342.4)  (487.7)
Change in investment income related to derivative instruments  5,364.3   (1,449.4)
Investment  losses, net                                          17.9   369.3 
Change in segregated cash and securities, net     1,298.3   10.2 
Change in deferred policy acquisition costs and        
value of business acquired      (827.6)  685.1 
Change in future policy benefits     (572.0)  211.3 
Change in income taxes payable          (1,480.7)  503.7 
Change in accounts payable and accrued expenses     177.1   277.4 
Amortization of deferred sales commission   42.1   61.9 
Other depreciation and amortization   172.1   137.1 
Amortization of other intangibles      29.7   29.2 
Change in fair value of guaranteed minimum income benefit        
reinsurance contracts    741.1   (389.9)
Other, net             (27.5)  (232.3)
         
Net cash used in operating activities    (167.4)  (224.8)
         
Cash flows from investing activities:        
Maturities and repayments of fixed maturities and        
mortgage loans on real estate
  2,100.9   1,926.0 
Sales of investments
  9,296.3   810.2 
Purchases of investments   (16,062.5)  (2,582.2)
Cash settlements related to derivative instruments   (3,986.7)  1,659.5 
Change in short-term investments  217.9   (3.3)
Decrease in loans to affiliates  11.5   - 
Increase in loans to affiliates    (1.5)  (2.9)
Change in capitalized software, leasehold improvements        
and EDP equipment   (103.0)  (119.7)
Other, net                    66.8   98.7 
         
Net cash (used in) provided by investing activities   (8,460.3)  1,786.3 
         


9

AXA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 - CONTINUED
(UNAUDITED)




  2009  2008 
  (In Millions) 
       
Cash flows from financing activities:      
Policyholders’ account balances:      
Deposits
 $2,945.9  $3,443.1 
Withdrawals and transfers to Separate Accounts  (2,187.6)  (2,304.2)
Sale of AllianceBernstein Units                               600.0   - 
Repayments of long-term debt    -   (250.0)
Change in short-term financing
  (239.9)  192.6 
Proceeds from loans from affiliates
  1,600.0   250.0 
Repayment of loans from affiliates  (900.0)  (65.0)
Increase in securities sold under agreements to repurchase  1,300.0   - 
Decrease in collateralized pledged liabilities   (713.9)  - 
Other, net        (64.1)  (81.1)
         
Net cash provided by financing activities  2,340.4   1,185.4 
         
Change in cash and cash equivalents  (6,287.3)  2,746.9 
Cash and cash equivalents, beginning of year  10,061.2   2,055.8 
         
Cash and Cash Equivalents, End of Period  $3,773.9  $4,802.7 
         
Supplemental cash flow information        
Interest Paid                         $83.5  $100.9 
Income Taxes (Refunded) Paid             $(81.6) $222.7 
         





See Notes to Consolidated Financial Statements.

10

AXA FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


1)  ORGANIZATION AND BASIS OF PRESENTATION

The preparation of the accompanying unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.  The accompanying unaudited interim consolidated financial statements reflect all adjustments necessary in the opinion of management for a fair statement of the consolidated financial position of AXA Financial Group and its consolidated results of operations and cash flows for the periods presented.  All significant intercompany transactions and balances have been eliminated in consolidation.  These statements should be read in conjunction with the audited consolidated financial statements of AXA Financial Group for the year ended December 31, 2008.2009.  The results of operations for the ninethree months ended September 30, 2009March 31, 2010 are not necessarily indicative of the results to be expected for the full year.  Events and transactions subsequent to the balance sheet date have been evaluated by management, for purpose of recognition or disclosure in these consolidated financial statements, through their date of issue on November 9, 2009.

On January 6, 2009, AXA America, Holdings Inc. (“AXA America”), the holding company for AXA Financial and an indirect wholly owned subsidiary of AXA, purchased the finalremaining 8.16 million AllianceBernstein Units from SCB Partners at a price of $18.349 per Unit pursuant to the final installment of the AB Put.  As a result of this transaction, minority interest subject to redemption rights totaling $135.0 million were reclassified as noncontrolling interestsinterest in first quarter 2009.

On March 30, 2009, AXA Financial Group sold 41.9 million AllianceBernstein Units to an affiliate of AXA.  Proceeds received on this transaction totaled $600.0 million.  AXA Financial Group’s book value of these units on the date of the sale was $1,552.9 million.  As a result of the sale, AXA Financial Group recorded a charge to Capital in excess of par value of $619.4 million (net of a deferred tax benefit of $333.5 million).  AXA Financial Group’s economic interest in AllianceBernstein was reduced to 46.4% upon completion of this transaction.  As AXA Equitable remains the General Partner of the limited partnership, AllianceBernstein continues to be consolidated in AXA Financial’s consolidated financial statements.

On March 1, 2010, AllianceBernstein management announced their intention to make open-market purchases of up to 3.0 million Holding Units, from time to time and at their discretion, to help fund their incentive compensation award program’s obligations.  In first quarter 2010, AllianceBernstein purchased 833,970 units at an average price of $28.31 per unit.  At March 31, 2010 and December 31, 2009 AXA Financial Group’s economic interest in AllianceBernstein was 44.9% and 44.8%, respectively.   At March 31, 2010, AXA and its subsidiaries’ economic interest in AllianceBernstein was approximately 62.3%.

The terms “third“first quarter 2009”2010” and “third“first quarter 2008”2009” refer to the three months ended September 30,March 31, 2010 and 2009, and 2008, respectively.  The terms “first nine months of 2009” and “first nine months of 2008” refer to the nine months ended September 30, 2009 and 2008, respectively.

Certain reclassifications have been made in the amounts presented for prior periods to conform those periods to the current presentation.


2)  ACCOUNTING CHANGES AND NEW ACCOUNTING PRONOUNCEMENTS

FASB Accounting Standards Codification

On June 30, 2009, the FASB issued Accounting Standards Update No. (“ASU”) 2009-01 to the FASB Accounting Standards CodificationTM (“ASC” or the “Codification”) establishing the Codification as the source of authoritative principles and standards recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP.  SEC rules and interpretative releases continue to be sources of authoritative U.S. GAAP for SEC registrants.  Going forward, the FASB will issue ASUs instead of Statements, FSPs or EITF abstracts.  While not authoritative in their own right, ASUs will serve to update the Codification, provide background information about the guidance, and provide the rationale for the change(s) in the Codification.

The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  References to authoritative accounting guidance made in these consolidated financial statements reflect either the FASB Codification topic or sub-topic description, as appropriate.


11

Accounting Changes

Effective December 31, 2008, AXA Financial Group adopted the new guidance for Beneficial Interests in Securitized Financial Assets.  This guidance broadens the other-than-temporary impairment assessment for interests in securitized financial assets to conform to the model applicable to all other debt securities by permitting reasonable management judgment of the probability to collect all projected cash flows.   Debt securities with amortized cost and fair values of approximately $2,001.8 million and $1,391.7 million, respectively at September 30, 2009 and $1,996.0 million and $1,403.8 million, respectively at December 31, 2008 are potentially impacted by this amendment.  Adoption of this guidance did not have an impact on AXA Financial Group’s consolidated results of operations or financial position.

Beginning first quarter 2009, AXA Financial Group began implementing new disclosure requirements which requires enhanced disclosures of an entity’s objectives and strategies for using derivatives, including tabular presentation of fair value amounts, gains and losses, and related hedged items, with appropriate cross-referencing to the financial statements.  This guidance was effective for interim and annual reporting periods beginning January 1, 2009.

Effective January 1, 2009, AXA Financial Group began implementation ofadopted the new guidance for the presentation of noncontrolling interests.  AXA Financial Group was required to:
·  Recharacterize minority interests previously classified within liabilities, as noncontrolling interests reported as a component of consolidated equity on the balance sheet,
·  Include total income in net income, with separate disclosure on the face of the consolidated income statement of the attribution of income between controlling and noncontrolling interests, and
·  Account for increases and decreases in noncontrolling interests as equity transactions with any difference between proceeds of a purchase or issuance of noncontrolling interests being accounted for as a change to the controlling entity’s equity instead of as current period gains/losses in the consolidated income statement.  Only when the controlling entity loses control and deconsolidates a subsidiary will a gain or loss be recognized.
This guidance was effective prospectively for fiscal years beginning on or after December 15, 2008 except for its specific transition provisions for retroactive adoption of the balance sheet and income statement presentation and disclosure requirements for existing minority interests that are reflected in these consolidated financial statements for all periods presented.  Asstatements.  On a result of the implementation ofprospective basis, beginning January 1, 2009, this guidance which required retrospective application of presentation requirements, total equity at December 31, 2008that increases and 2007 increased by $1,662.6 million and $1,681.2 million, respectively, representingdecreases in noncontrolling interest, and total liabilities at December 31, 2008 and 2007 decreased by $1,662.6 million and $1,681.2 million, respectively, as a result of the elimination of minority interest.  Additionally, for third quarter and the nine months ended September 30, 2008, respectively, (Loss) earnings from continuing operations, net of income taxes increased by $87.5 million and $302.7 million and net earnings attributable to the noncontrolling interest increased by $87.5 million and $302.7 million.

Effective second quarter 2009, AXA Financial Group implemented the interim period transition disclosure requirements about the fair value of financial instruments, including the method(s) and significant assumptions used to estimate fair value.  This guidance requires presentation of comparative disclosures only for periods ending after initial adoption.  The disclosures required by this guidance are provided herein in Note 7 of Notes to Consolidated Financial Statements.

Beginning second quarter 2009, AXA Financial Group implemented the new guidance that modifies the recognition guidance for other-than-temporary impairments (“OTTI”) of debt securities to make it more operational and expands the presentation and disclosure of OTTI on debt and equity securities in the financial statements.  For Available for Sale (“AFS”) debt securities in an unrealized loss position, this guidance requires the total fair value loss tointerests be recognized in earnings as an OTTI if management intends to sell the debt security or more likely-than-not will be required to sell the debt security before its anticipated recovery.  If these criteria are not met, both qualitative and quantitative assessments are required to evaluate the security’s collectability and determine whether an OTTI is considered to have occurred.

This guidance requires only the credit loss component of any resulting OTTI to be recognized in earnings, as measured by the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security, while the remainder of the fair value loss is recognized in other comprehensive income (“OCI”).  In periods subsequent to the recognition of an OTTI, the debt security is accounted for as if it had been purchased onequity transactions with any difference between proceeds of a purchase or issuance of noncontrolling interests recognized as a change to the measurement datecontrolling entity’s equity instead of current period gains/losses in the OTTI, with an amortized cost basis reduced byconsolidated income statement.  Only when the amount of the OTTI recognized in earnings.controlling entity loses control and deconsolidates a subsidiary will a gain or loss be recognized.

129
As
In April 2010, the FASB issued guidance on how investments held through Separate Accounts affect an insurer’s consolidation analysis of those investments.  This guidance clarifies that insurers would not be required byin their evaluation of whether to consolidate investments to combine their General Account interest with the transition provisions of this guidance, a cumulative effect adjustment was calculated for all AFS debt securitiesSeparate Accounts in the same investment, unless the Separate Account interest is held as of April 1, 2009 for which an OTTI previously was recognized and for which at April 1, 2009 there was no intention or likely requirement to sell the security before recovery of its amortized cost.  As a result, an increase to Retained earnings of $74.3 million was recorded as of April 1, 2009 with a corresponding decrease to Accumulated Other Comprehensive Income (“AOCI”) to reclassify the noncredit portion of these previously recognized OTTI amounts.  In addition, the amortized cost basis of the AFS debt securities comprising the reclassification amount was increased by $141.8 million at April 1, 2009, or the amount of the cumulative effect adjustment, pre-DAC and tax.  The fair value of AFS debt securities at April 1, 2009 was not changed as a result of the implementation of this guidance.

(Loss) earnings from continuing operations, net of income taxes, and Net (loss) earnings attributable to AXA Financial for third quarter and the first nine months of 2009 reflect increases of $0.8 million and $4.1 million, respectively, from recognition in OCI of the noncredit portions of OTTI subsequent to initial implementation of this guidance at April 1, 2009.  The consolidated financial statements have been modified to separately present the total OTTI recognized in Investment (losses) gains, net, with an offset for the amountbenefit of noncredit OTTI recognized in OCI, on the face of the consolidated statements of earnings, and to present the OTTI recognized in AOCI on the face of the consolidated statements of equity and comprehensive income for all periods subsequent to implementation of this guidance.  In addition, Note 3 of Notes to Consolidated Financial Statements has been expanded to include new and more frequent disclosures about OTTI for debt and equity securities regarding expected cash flows, credit losses, and an aging of securities with unrealized losses.

Effective April 1, 2009, AXA Financial Group implemented the new guidancea related to Fair Value Measurements and Disclosures.  This modification retains the “exit price” objective of fair value measurement and provides additional guidance for estimating fair value when the volume and level of market activity for the asset or liability have significantly decreased in relation to normal market activity.  This guidance also references guidance on distinguishing distressed or forced transactions not determinative of fair value from orderly transactions between market participants under prevailing market conditions.  As further described in Note 7 of Notes to Consolidated Financial Statements, beginning in fourth quarter 2008, under previous guidance, AXA Financial Group concluded that markets for certain CMBS securities were inactive and, consequently, changed its methodology for measuring the fair value of these CMBS securities to minimize reliance on market trading activity and the pricing of isolated transactions.  Implementation of the revised guidance did not have an impact on AXA Financial Group’s consolidated results of operations or financial position.  New and expanded interim period disclosures required by this guidance with respect to fair value measurements are provided in Note 7 of Notes to Consolidated Financial Statements.

Effective January 1, 2008, AXA Financial Group implemented new guidance which establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.  It applies only to fair value measurements that were already required or permitted under U.S. GAAP, except for measurements of share-based payments and measurements that are similar to, but not intended to be, fair value.  Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  AXA Financial Group’s implementation of this guidance at January 1, 2008 required only a remeasurement of the fair value of the GMIB reinsurance asset, resulting in an increase in net income of $68.2 million, related to an increase in the fair value of the GMIB reinsurance asset of $209.2 million, offset by increased DAC amortization of $104.3 million and increased Federal income taxes of $36.7 million.  This increase in the GMIB reinsurance asset’s fair value was due primarily to updates to the capital markets assumptions and risk margins, reflective of market participant assumptions required by the exit value model of this guidance.

New Accounting Pronouncements and Accounting Standards Updates

New guidance was issued in September 2009 permitting an entity as a practical expedient to fair value investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent), using the investment’s NAV.  Such investees may include hedge funds, offshore fund vehicles and fund of funds.  Among other requirements, the NAV must have been calculated in accordance with U.S. GAAP for investment companies.  Additional disclosure requirements such as the nature of any restrictions on redemption, any unfunded commitments and the investment strategies of the investees are required of all such investments regardless of whether the fair value is measured using the practical expedient.party policyholder.  This guidance is effective for interim and annual reporting periods endingbeginning after December 15, 2009 and, though earlier2010 with early adoption is permitted it willwith changes to be implemented by AXA Financial Group in its year end 2009 consolidated financial statements.  Management has not yet determined the possible effectapplied retroactively.  Implementation of this new guidance will not have a material impact on AXA Financial Group.

13
New guidance for the fair value measurement of liabilities was issued in August 2009, providing clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques:   
·  a valuation technique that uses:
othe quoted price of the identical liability when traded as an asset,
oquoted prices for similar liabilities or similar liabilities when traded as assets, or
·  another valuation technique that is consistent with the principles of Fair Value Measurements and Disclosures, such as an income approach (like a present value technique) or a market approach (like a technique based on the amount the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability at the measurement date.
This guidance is effective for the first reporting period (including interim periods) beginning after issuance and, therefore, will be adopted by AXA Financial Group in its year end 2009Group’s consolidated financial statements.  Management has not yet determined the possible effect this new guidance will have on AXA Financial Group.

On June 12, 2009, the FASB issued new guidance that eliminates the concept of qualifying special-purpose entities (“QSPEs”)QSPEs and their exemption from consolidation in the financial statements of a transferor of financial assets.  In addition, the new guidance modifies and clarifies the conditions for derecognition of transferred financial assets, including partial transfers and subsequent measurement of retained interests.  Enhanced disclosure also is required about financial asset transfers and any continuing involvement of the transferor.  For calendar-year consolidated financial statements, such as those of AXA Financial Group, this new guidance isbecame effective for interim and annual reporting periods beginning January 1, 2010. Management doesImplementation of this guidance did not expect the implementation will have a material effect on AXA Financial Group’s consolidated financial statements.
 
Also issued by the FASB on June 12, 2009 was new guidance that modifies the approach and increases the frequency for assessing whether a VIE must be consolidated and requires additional disclosures about an entity’s involvement with VIEs.  The guidance removes the quantitative-based risks-and-rewards calculation for identifying the primary beneficiary and, instead, requires a variable-interest holder to qualitatively assess whether it has a controlling financial interest in a VIE, without consideration of kick-out and participating rights unless unilaterally held.  Continuous reassessments of whether an enterprise is the primary beneficiary of a VIE are required.  For calendar-year consolidated financial statements, such as those of AXA Financial Group, this new guidance isbecame effective for interim and annual reporting periods beginning January 1, 2010.  Earlier application is prohibited.  Management is currently evaluating the impactAll existing consolidation conclusions were required to be recalculated under this new guidance, may have on AXA Financial Group.  The implementation of this guidance may require a significant amount of assets, liabilities, revenues and expensesresulting in the reassessment of certain VIEs in which AllianceBernstein hashad a minimal financial ownership interest to be includedfor potential consolidated presentation in AXA Financial Group’s consolidated financial statements,statements.  In January 2010, the FASB deferred portions of this guidance as they relate to asset managers.  As such, AXA Financial Group determined that all entities for which AXA Financial Group is a sponsor and/or investment manager, other than collateralized debt obligations and collateralized loan obligations (collectively “CDOs”), qualify for the scope deferral and continue to be assessed for consolidation under the previous guidance for consolidation of VIEs.  Implementation of this guidance did not have a material effect on AXA Financial Group’s consolidated financial statements.

New Accounting Pronouncements

In January 2010, the FASB issued new guidance for accounting and reporting for decreases in ownership of a subsidiary.  This guidance clarifies the scope of a decrease in ownership provisions for consolidations and expands the disclosures about the deconsolidation of a subsidiary or derecognition of a group of assets within the scope of consolidation.  This guidance is effective for interim and annual reporting periods ending on or after December 15, 2009.  Implementation of this guidance did not have a material impact on AXA Financial Group’s consolidated financial statements.

In January 2010, the FASB issued new guidance for improving disclosures about fair value measurements.  This guidance requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. In addition, for Level 3 fair value measurements, a reporting entity should present separately information about purchases, sales, issuances and settlements.  This guidance is effective for interim and annual reporting periods ending on or after December 15, 2009 except for disclosures for Level 3 fair value measurements which are effective for fiscal years beginning after December 15, 2010.  These new disclosures have been included in the Notes to AXA Financial Group’s consolidated financial stat ements, as appropriate.

In March 2010, the FASB issued new guidance to eliminate the scope exception for embedded credit derivatives in beneficial interests in securitized financial assets, such as asset-backed securities, credit-linked notes, and collateralized loan and debt obligations, except for those created solely by subordination.  This guidance provides clarification and related additional examples to improve financial reporting by resolving potential ambiguity about the extent of the embedded credit derivative scope exception.  This guidance is effective for the first interim reporting period beginning after June 15, 2010.  Management does not expect the implementation will have a material effect on AXA Financial Group’s consolidated financial statements.


10
In April 2010, the FASB issued new guidance on stock compensation.  This guidance provides clarification that an employee share-based payment award with corresponding offsetsan exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to noncontrolling interest.contain a condition that is not a market performance or service condition.  Therefore, such an award should not be classified as a liability if it otherwise qualifies as equity.  This guidance is effective for the first interim reporting period beginning after December 15, 2010.  Management does not expect the implementation will have a material effect on AXA Financial Group’s consolidated financial statements.


 
1411
 


3)  INVESTMENTS

Fixed Maturities and Equity Securities

The following table provides information relating to fixed maturities and equity securities classified as available for sale:AFS:

Available for SaleAvailable-for-Sale Securities by Classification

Other-than-
GrossGrosstemporary
AmortizedUnrealizedUnrealizedImpairments
CostGainsLossesFair Value
in AOCI (3)
(In Millions)
               
    Gross  Gross       
  Amortized Unrealized  Unrealized     OTTI 
  Cost Gains  Losses  Fair Value  
in AOCI (3)
 
  (In Millions) 
                
March 31, 2010:               
Fixed Maturities:               
Corporate $27,225.2  $1,527.9  $159.5  $28,593.6  $.7 
U.S. Treasury, government                    
and agency(4)
  5,458.4   38.7   269.3   5,227.8   - 
States and political                    
subdivisions  441.2   7.9   14.3   434.8   - 
Foreign governments  386.6   49.2   .3   435.5   - 
Commercial mortgage-backed  2,399.0   3.7   731.5   1,671.2   5.4 
Residential mortgage-backed (1)
  2,245.4   74.4   .1   2,319.7   - 
Asset-backed (2)
  268.2   11.1   20.0   259.3   7.6 
Redeemable preferred stock  2,041.7   18.5   177.2   1,883.0   - 
Total Fixed Maturities  40,465.7   1,731.4   1,372.2   40,824.9   13.7 
                     
Equity securities  45.1   7.8   -   52.9   - 
                     
Total at March 31, 2010 $40,510.8  $1,739.2  $1,372.2  $40,877.8  $13.7 
    
September 30, 2009:               
Fixed Maturities:               
Corporate                                          $27,489.4  $1,407.5  $366.1  $28,530.8  $2.2 
U.S. Treasury, government                    
and agency                                         3,982.9   16.9   137.8   3,862.0   - 
States and political                    
subdivisions                                         300.2   10.0   2.8   307.4   - 
Foreign governments                                           303.0   39.6   -   342.6   - 
Commercial mortgage-backed  2,579.2   3.5   645.5   1,937.2   - 
Residential mortgage-backed (1)
  3,287.8   70.7   2.1   3,356.4   - 
Asset-backed (2)                                         
  467.1   23.6   29.9   460.8   14.9 
Redeemable preferred stock  2,201.3   5.2   399.5   1,807.0   - 
Total Fixed Maturities   40,610.9   1,577.0   1,583.7   40,604.2   17.1 
                     
Equity securities  43.2   6.2   -   49.4   - 
                     
Total at September 30, 2009 $40,654.1  $1,583.2  $1,583.7  $40,653.6  $17.1 
    
December 31, 2008            
December 31, 2009               
Fixed Maturities:                           
Corporate  $26,231.0  $280.1  $2,344.3  $24,166.8  $27,863.3  $1,353.5  $291.8  $28,925.0  $.7 
U.S. Treasury, government                                    
and agency   1,922.7   299.1   .1   2,221.7   4,213.5   23.2   281.2   3,955.5   - 
States and political                                    
subdivisions   204.7   12.0   10.4   206.3   467.3   7.4   19.3   455.4   - 
Foreign governments   269.9   42.7   5.7   306.9   325.8   35.4   .3   360.9   - 
Commercial mortgage-backed  2,793.4   4.0   707.8   2,089.6   2,439.1   2.2   659.1   1,782.2   2.2 
Residential mortgage-backed (1)
  1,939.8   75.5   .2   2,015.1   2,456.0   59.8   .2   2,515.6   - 
Asset-backed (2)
  1,026.3   42.3   38.6   1,030.0   304.7   11.5   23.1   293.1   7.9 
Redeemable preferred stock  2,294.0   .9   915.4   1,379.5   2,145.5   8.5   310.1   1,843.9   - 
Total Fixed Maturities   36,681.8   756.6   4,022.5   33,415.9   40,215.2   1,501.5   1,585.1   40,131.6   10.8 
                                    
Equity securities   35.9   -   4.8   31.1   48.5   9.8   -   58.3   - 
                                    
Total at December 31, 2008 $36,717.7  $756.6  $4,027.3  $33,447.0 
Total at December 31, 2009 $40,263.7  $1,511.3  $1,585.1  $40,189.9  $10.8 

(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 since the adoption of new guidance on April 1, 2009.in accordance with current accounting guidance.

(4)  Reflects $1,097.9 million of amortized cost of FDIC insured bonds that were reported as Corporate in 2009 and moved to U.S. Treasury, government and agency in 2010. 
12
As further described in Note 7, AXA Financial Group determines the fair values of fixed maturities and equity securities based upon quoted prices in active markets, when available, or through the use of alternative approaches when market quotes are not readily accessible or available.  These alternative approaches include matrix or model pricing and use of independent pricing services, each supported by reference to principal market trades or other observable market assumptions for similar securities.  More specifically, the matrix pricing approach to fair value is a discounted cash flow methodology that incorporates market interest rates commensurate with the credit quality and duration of the investment.

At March 31, 2010 and December 31, 2009, respectively, AXA Financial had trading fixed maturities with an amortized cost of $159.7 million and $114.6 million and carrying values of $160.7 million and $125.9 million.  Gross unrealized gains on trading fixed maturities were $1.3 million and $12.3 million and gross unrealized losses were $0.1 million and $1.0 million at March 31, 2010 and December 31, 2009, respectively.
15

The contractual maturities of AFS fixed maturities (excluding redeemable preferred stock) at September 30, 2009March 31, 2010 are shown in the table below.  Bonds not due at a single maturity date have been included in the table in the year of final maturity.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 Available for Sale 
 Amortized   
 Cost Fair Value 
 (In Millions) 
   
Due in one year or less
 $776.8  $789.1 
Due in years two through five
  12,630.1   13,145.4 
Due in years six through ten
  13,459.8   13,814.5 
Due after ten years
  5,208.8   5,293.8 
Subtotal
  32,075.5   33,042.8 
Commercial mortgage-backed securities 
  2,579.2   1,937.2 
Residential mortgage-backed securities
  3,287.8   3,356.4 
Asset-backed securities
  467.1   460.8 
Total
 $38,409.6  $38,797.2 
Available-for-Sale Fixed Maturities
Contractual Maturities at March 31, 2010
Amortized
CostFair Value
(In Millions)
   
Due in one year or less $2,141.0  $2,206.4 
Due in years two through five  13,129.5   13,792.7 
Due in years six through ten  12,981.5   13,476.3 
Due after ten years  5,259.4   5,216.3 
Subtotal  33,511.4   34,691.7 
Commercial mortgage-backed securities   2,399.0   1,671.2 
Residential mortgage-backed securities  2,245.4   2,319.7 
Asset-backed securities  268.2   259.3 
Total $38,424.0  $38,941.9 

For the first nine monthsquarters of 20092010 and 2008,2009, proceeds received on sales of fixed maturities classified as available for saleAFS amounted to $3,688.2$574.2 million and $361.7$1,818.2 million, respectively.  Gross gains of $251.1$28.9 million and $4.7$189.4 million and gross losses of $83.9$16.8 million and $34.4$1.3 million were realized on these sales for the first nine monthsquarters of 2010 and of 2009, respectively.  The change in unrealized gains (losses) related to fixed maturities classified as AFS for the first quarters of 2010 and of 2008,2009 amounted to $442.8 million and $(724.6) million, respectively.

AXA Financial Group’s management, with the assistance of its investment advisors, monitors the investment performance of its portfolio and reviews AFS securities with unrealized losses for OTTI.  Integral to this review is an assessment made each quarter, on a security-by-security basis, by AXA Financial Group’s Investments Under Surveillance Committee, of various indicators of credit deterioration to determine whether the investment security is expected to recover.  This assessment includes, but is not limited to, consideration of the duration and severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity, and continued viability of the issuer and, for equity securities only, the intent and ability to hold the investment until recovery, and results in identification of specific securities for which OTTI is recognized.

As discussed in Note 2 of Notes to Consolidated Financial Statements, ifIf there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting OTTI is recognized in earnings and the remainder of the fair value loss is recognized in OCI.  The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security.  The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment.  Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries.  These assumptions and estimates requirerequ ire use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security.  For mortgage- and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.

13

During the first nine monthsquarter of 2009,2010, AXA Financial Group recognized total OTTI of $226.8$44.1 million on AFS securities, all related to fixed maturities.  Total OTTI of fixed maturities, for the first nine months of 2009 was comprised of $222.7$40.9 million credit losses recognized in earnings and $4.1$3.2 million non-credit losses recognized in OCI.  At March 31, 2010, no additional OTTI was recognized in earnings related declines in fair value below amortized cost.to AFS fixed maturities as AXA Financial Group doesdid not intend to sell and doesdid not expect to be required to sell these impaired fixed maturities prior to recovering their amortized cost.  For third quarter 2009, AXA Financial Group recognized totalAt March 31, 2010, OTTI of $113.1$0.2 million was recognized on AFS fixed maturities, of which $112.3 million of credit losses were recorded in earnings and the remaining $0.8 million non-credit related portion of the decline in fair value was recorded in OCI. 
equity securities.
16

The following table sets forth the amount of credit loss impairments on fixed maturity securities held by the Insurance Group at the dates indicated, for which a portion of the OTTI loss was recognized in OCI, and the corresponding changes in such amounts.

Fixed Maturities - Credit Loss Impairments
(In Millions)

Balance at March 31, 2009 $- 
Cumulative adjustment related to implementing new guidance on April 1, 2009 (202.8) 
Balance at January 1, 2010 $(292.0) 
Previously recognized impairments on securities that matured, paid, prepaid or sold 30.3  3.2 
Previously recognized impairments on securities impaired to fair value this period (1)
 -  - 
Impairments recognized this period on securities not previously impaired (90.3)  (40.9)
Additional impairments this period on securities previously impaired  (22.1)  - 
Increases due to passage of time on previously recorded credit losses  -  - 
Accretion of previously recognized impairments due to increases in expected cash flows  -   - 
Balance at June 30, 2009   (284.9) 
Previously recognized impairments on securities that matured, paid, prepaid or sold 20.3 
Previously recognized impairments on securities impaired to fair value this period (1)
 - 
Impairments recognized this period on securities not previously impaired (112.3) 
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  - 
Balance at September 30, 2009  $(376.9) 
Balance at March 31, 2010 $(329.7) 

(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.

Net unrealized investment gains and losses(losses) on fixed maturities and equity securities classified as available for saleAFS are included in the consolidated balance sheets as a component of AOCI.  The table below presents these amounts as of the dates indicated:

   March 31,  December 31, 
   2010   2009 
  (In Millions) 
AFS Securities:
      
Fixed maturities:      
With OTTI loss $(15.5) $(13.0)
All other  374.7   (70.6)
Equity securities  7.8   9.8 
Net Unrealized Gains (losses) $367.0  $(73.8)


14
  September 30,   December 31, 
   2009   2008 
  (In Millions) 
AFS Securities:
      
Fixed maturities:      
With OTTI loss                                                                                    $.3  $- 
All other                                                                                     (7.0)  (3,265.9)
Equity securities                                                                                       6.2   (4.8)
Net Unrealized Losses                                                                                         $(.5) $(3,270.7)
         

Changes in net unrealized investment gains and losses(losses) recognized in AOCI include reclassification adjustments to reflect amounts realized in Net earnings (loss) for the current period that had been part of OCI in earlier periods.  The tables that follow below present a rollforward of net unrealized investment (losses) gains and losses recognized in AOCI, split between amounts related to fixed maturity securities on which an OTTI loss has been recognized, and all other:

17
Net Unrealized (Losses) Gains (Losses) on Fixed Maturities with OTTI Losses

              AOCI 
  Net        Deferred  (Loss) 
  Unrealized        Income  Related to Net 
  Gains        Tax  Unrealized 
  (Losses) on  DAC and  Policyholders  (Liability)  Investment 
  Investments  VOBA  Liabilities  Asset  Gains (Losses) 
  (In Millions) 
                
Balance, June 30, 2009
 $(133.5) $18.6  $-  $40.2  $(74.7)
Cumulative impact of implementing                    
new guidance on April 1, 2009  -   -   -   -   - 
Net investment gains (losses)                    
arising during the period
  133.8   -   -   -   133.8 
Reclassification adjustment for                    
OTTI (losses) included in                    
Net (loss) earnings
  -   -   -   -   - 
Reclassification adjustment for                    
OTTI (losses) excluded from                    
Net (loss) earnings (1) 
  -   -   -   -   - 
Impact of net unrealized investment                    
gains (losses) on DAC/VOBA  -   (15.1)   -   -   (15.1) 
Impact of net unrealized investment                    
gains (losses) on deferred income                    
taxes
  -   -   -   (40.9)   (40.9) 
Impact of net unrealized investment                    
gains (losses) on Policyholders                    
liabilities
  -   -   (1.9)   -   (1.9) 
Balance, September 30, 2009 $.3  $ 3.5  $(1.9)  $.7  $1.2 
                     
Balance, March 31, 2009
 $-  $ -  $-  $-  $- 
Cumulative impact of implementing                    
new guidance on April 1, 2009  (58.5)  13.0   -   15.9   (29.6)
Net investment gains (losses)                    
arising during the period
  39.6   -   -   -   39.6 
Reclassification adjustment for                    
OTTI (losses) included in                    
Net (loss) earnings
  22.0   -   -   -   22.0 
Reclassification adjustment for                    
OTTI (losses) excluded from                    
Net (loss) earnings (1) 
  (2.8)  -   -   -   (2.8)
Impact of net unrealized investment                    
gains (losses) on DAC/VOBA  -   (9.5)   -   -   (9.5) 
Impact of net unrealized investment                    
gains (losses) on deferred income                    
taxes
  -   -   -   (16.6)   (16.6) 
Impact of net unrealized investment                    
gains (losses) on Policyholders                    
liabilities
  -   -   (1.9)   -   (1.9) 
Balance, September 30, 2009 $.3  $3.5  $(1.9)  $(.7)  $1.2 
                     

         AOCI 
 Net     Deferred Loss 
 Unrealized     Income Related to Net 
 (Losses)     Tax Unrealized 
 Gains on DAC and Policyholders (Liability) Investment 
 Investments VOBA Liabilities Asset  (Losses) Gains 
 (In Millions) 
                
Balance, January 1, 2010 $(13.0) $5.1  $(.6) $2.6  $(5.9)
Net investment gains (losses)                    
arising during the period  .7   -   -   -   .7 
Reclassification adjustment for
OTTI (losses):
                    
Included in Net earnings (loss)  -   -   -   -   - 
Excluded from Net
earnings (loss) (1)
  (3.2)  -   -   -   (3.2)
Impact of net unrealized investment gains (losses) on:                    
DAC and VOBA  -   (4.7)  -   -   (4.7)
Deferred income taxes  -   -   -   12.2   12.2 
Policyholders liabilities  -   -   (27.7)  -   (27.7)
Balance, March 31, 2010 $(15.5) $.4  $(28.3) $14.8  $(28.6)

(1)Represents “transfers in” related to the portion of OTTI losses recognized during the period that were not recognized in earnings for securities with no prior OTTI loss.

 
1815
 


All Other Net Unrealized Investment Gains (Losses) in AOCI

              AOCI 
  Net        Deferred  (Loss) 
  Unrealized        Income  Related to Net 
  Gains        Tax  Unrealized 
  (Losses) on  DAC and  Policyholders  (Liability)  Investment 
  Investments  VOBA  Liabilities  Asset  Gains (Losses) 
  (In Millions) 
                
Balance, June 30, 2009
 $(1,919.1) $343.5  $132.8  $505.3  $(937.5)
Cumulative impact of implementing                    
new guidance on April 1, 2009  -   -   -   -   - 
Net investment gains (losses)                    
arising during the period
  1,788.5   -   -   -   1,788.5 
Reclassification adjustment for                    
OTTI (losses) included in                    
Net (loss) earnings
  129.8   -   -   -   129.8 
Reclassification adjustment for                    
OTTI (losses) excluded from                    
Net (loss) earnings (1) 
  -   -   -   -   - 
Impact of net unrealized investment                    
gains (losses) on DAC/VOBA  -   (377.1)   -   -   (377.1) 
Impact of net unrealized investment                    
gains (losses) on deferred income                    
taxes
  -   -   -   (461.1)   (461.1) 
Impact of net unrealized investment                    
gains (losses) on Policyholders                    
liabilities
  -   -   (223.9)   -   (223.9) 
Balance, September 30, 2009 $(.8) $(33.6)  $(91.1)  $44.2  $(81.3)
                     
Balance, January 1, 2009
 $(3,270.6) $721.0  $103.3  $856.5  $(1,589.8)
Cumulative impact of implementing                    
new guidance on April 1, 2009  (83.3)  22.1   -   21.4   (39.8)
Net investment gains (losses)                    
arising during the period
  3,299.2   -   -   -   3,299.2 
Reclassification adjustment for                    
OTTI (losses) included in                    
Net (loss) earnings
  51.1   -   -   -   51.1 
Reclassification adjustment for                    
OTTI (losses) excluded from                    
Net (loss) earnings (1) 
  2.8   -   -   -   2.8 
Impact of net unrealized investment                    
gains (losses) on DAC/VOBA  -   (776.7)   -   -   (776.7) 
Impact of net unrealized investment                    
gains (losses) on deferred income                    
taxes
  -   -   -   (833.7)   (833.7) 
Impact of net unrealized investment                    
gains (losses) on Policyholders                    
liabilities
  -   -   (194.4)   -   (194.4) 
Balance, September 30, 2009 $(.8) $(33.6)  $(91.1)  $44.2  $(81.3)
                     
         AOCI 
 Net     Deferred Gains (Loss) 
 Unrealized     Income Related to Net 
 Gains     Tax Unrealized 
 (Losses) on DAC and Policyholders (Liability) Investment 
 Investments VOBA Liabilities Asset Gains (Losses) 
 (In Millions) 
                
Balance, January 1, 2010 $(60.8) $(29.3) $(68.3) $75.0  $(83.4)
Net investment gains (losses)                    
arising during the period  455.3   -   -   -   455.3 
Reclassification adjustment for
OTTI (losses):
                    
Included in Net earnings (loss)  (15.2)  -   -   -   (15.2)
Excluded from Net
earnings (loss)(1)
  3.2   -   -   -   3.2 
Impact of net unrealized investment gains (losses) on:                    
DAC and VOBA  -   (48.4)  -   -   (48.4)
Deferred income taxes  -   -   -   (137.0)  (137.0)
Policyholders liabilities  -   -   (64.4)  -   (64.4)
Balance, March 31, 2010 $382.5  $(77.7) $(132.7) $(62.0) $110.1 


 
(1)
Represents “transfers out” related to the portion of OTTI losses during the period that were not recognized in earnings for securities with no prior OTTI loss.

1916
The following tables disclose the fair values and gross unrealized losses of the 843961 issues at September 30, 2009March 31, 2010 and 1,808865 issues at December 31, 20082009 of fixed maturities that hadare not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the specified periods at the dates indicated:

 September 30, 2009  March 31, 2010 
 
Less Than 12 Months (1)
  
12 Months or Longer (1)
  Total  Less Than 12 Months  12 Months or Longer  Total 
    Gross     Gross     Gross     Gross     Gross     Gross 
    Unrealized     Unrealized     Unrealized     Unrealized     Unrealized     Unrealized 
 Fair Value  Losses  Fair Value  Losses  Fair Value  Losses  Fair Value  Losses  Fair Value  Losses  Fair Value  Losses 
 (In Millions)  (In Millions) 
                                    
Fixed Maturities:                                    
Corporate  $1,365.3  $(136.5) $3,043.1  $(229.6) $4,408.4  $(366.1) $2,931.4  $(50.4) $1,667.2  $(109.1) $4,598.6  $(159.5)
U.S. Treasury,                        
government and agency  2,814.1   (137.8)  -   -   2,814.1   (137.8)
States and political                        
subdivisions   -   -   35.8   (2.8)  35.8   (2.8)
U.S. Treasury, government and agency
  2,540.3   (269.3)  -   -   2,540.3   (269.3)
States and political subdivisions
  220.8   (10.2)  20.7   (4.1)  241.5   (14.3)
Foreign governments  6.2   -   1.0   -   7.2   -   3.8   (.3)  4.2   -   8.0   (.3)
Commercial mortgage-backed  407.0   (320.6)  1,386.2   (324.9)  1,793.2   (645.5)  327.5   (239.6)  1,197.7   (491.9)  1,525.2   (731.5)
Residential mortgage-backed  301.4   (2.1)  -   -   301.4   (2.1)  -   -   2.4   (.1)  2.4   (.1)
Asset-backed  90.5   (14.2)  66.5   (15.7)  157.0   (29.9)  34.4   (2.8)  76.0   (17.2)  110.4   (20.0)
Redeemable                        
preferred stock   321.1   (157.1)  1,300.3   (242.4)  1,621.4   (399.5)
Redeemable preferred stock  346.9   (53.1)  1,332.2   (124.1)  1,679.1   (177.2)
                                                
 $5,305.6  $(768.3) $5,832.9  $(815.4) $11,138.5  $(1,583.7)
Total $6,405.1  $(625.7) $4,300.4  $(746.5) $10,705.5  $(1,372.2)


  December 31, 2009 
  
Less Than 12 Months (1)
  
12 Months or Longer (1)
  Total 
     Gross     Gross     Gross 
     Unrealized     Unrealized     Unrealized 
  Fair Value  Losses  Fair Value  Losses  Fair Value  Losses 
  (In Millions) 
                   
Fixed Maturities:                  
Corporate $3,224.3  $(109.0) $2,214.6  $(182.8) $5,438.9  $(291.8)
U.S. Treasury, government and agency  3,297.4   (281.2)  -   -   3,297.4   (281.2)
States and political subdivisions  262.0   (14.5)  38.0   (4.8)  300.0   (19.3)
Foreign governments  42.9   (.3)  5.1   -   48.0   (.3)
Commercial mortgage-backed  208.8   (137.8)  1,466.0   (521.3)  1,674.8   (659.1)
Residential mortgage-backed  54.0   -   2.4   (.2)  56.4   (.2)
Asset-backed  51.7   (6.1)  84.1   (17.0)  135.8   (23.1)
Redeemable preferred stock  293.0   (91.2)  1,368.7   (218.9)  1,661.7   (310.1)
                         
Total $7,434.1  $(640.1) $5,178.9  $(945.0) $12,613.0  $(1,585.1)

 (1)The month count for aging of unrealized losses was reset back to historical unrealized loss month counts for securities impacted by the adoption of new guidance on April 1, 2009.guidance.

  December 31, 2008 
  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                             $12,660.7  $(1,286.7) $5,091.0  $(1,057.6) $17,751.7  $(2,344.3)
U.S. Treasury,                        
government and agency    209.5   (.1)  -   -   209.5   (.1)
States and political                        
subdivisions                            63.4   (7.8)  28.5   (2.6)  91.9   (10.4)
Foreign governments  70.9   (5.7)  -   -   70.9   (5.7)
Commercial mortgage-backed  380.6   (26.2)  1,685.5   (681.6)  2,066.1   (707.8)
Residential mortgage-backed   53.2   (.2)  .2   -   53.4   (.2)
Asset-backed  80.1   (7.2)  89.2   (31.4)  169.3   (38.6)
Redeemable                        
preferred stock                            486.6   (326.1)  834.7   (589.4)  1,321.3   (915.5)
                         
  $14,005.0  $(1,660.0) $7,729.1  $(2,362.6) $21,734.1  $(4,022.6)

17
The Insurance Group’s investments in fixed maturity securities do not include concentrations of credit risk of any single issuer greater than 10% of the consolidated equity of AXA Financial, Inc., other than securities of the U.S. government, U.S. government agencies, and certain securities guaranteed by the U.S. government.  The Insurance Group maintains a diversified portfolio of corporate securities across industries and issuers and does not have exposure to any single issuer in excess of .11%0.32% of total investments.  The largest exposureexposures to a single issuer of corporate securities held at September 30, 2009March 31, 2010 and December 31, 2008 was $178.32009 were $181.8 million and $232.4$198.2 million, respectively.  Corporate high yield securities, consisting primarily of public high yield bonds, are classified as other than investment grade by the various rating agencies, i.e., a rating below Baa3/BBB- or the NAIC designation of 3 (medium grade), 4 or 5 (below investment grade) or 6 (in or near default).  At September 30, 2009March 31, 2010 and December 31, 2008,2009, respectively, approximately $2,906.8$3,180.2 million and $1,239.2$2,869.2 million, or 7.2%7.9% and 3.4%7.1%, of the $40,610.9$40,465.7 million and $36,681.8$40,215.2 million aggregate amortized cost of fixed maturities held by the Insurance Group were considered to be other than investment grade.  These securities had net unrealized losses of $603.1$713.3 million and $287.8$632.7 million at September 30, 2009March 31, 2010 and December 31, 2008,2009, respectively.

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The Insurance Group does not originate, purchase or warehouse residential mortgages and is not in the mortgage servicing business.  The Insurance Group’s fixed maturity investment portfolio includes RMBS backed by subprime and Alt-A residential mortgages, comprised of loans made by banks or mortgage lenders to residential borrowers with lower credit ratings.  The criteria used to categorize such subprime borrowers include FICO scores, interest rates charged, debt-to-income ratios and loan-to-value ratios.  Alt-A residential mortgages are mortgage loans where the risk profile falls between prime and subprime; borrowers typically have clean credit histories but the mortgage loan has an increased risk profile due to higher loan-to-value and debt-to-income ratios and/or inadequate documentation of the borrowers’b orrowers’ income.  At September 30,March 31, 2010 and December 31, 2009, respectively, the Insurance Group owned $54.6$49.1 million and $51.6 million in RMBS backed by subprime residential mortgage loans and $24.4$21.9 million and $23.0 million in RMBS backed by Alt-A residential mortgage loans.  RMBS backed by subprime and Alt-A residential mortgages are fixed income investments supporting General Account liabilities.

At September 30, 2009,March 31, 2010, the carrying value of fixed maturities that were non-income producing for the twelve months preceding that date was $68.4$72.2 million.

For the third quarterfirst quarters of 2010 and first nine months of 2009, and of 2008, investment income is shown net of investment expenses of $38.7 million, $104.1 million, $42.6$37.4 million and $129.5$31.2 million, respectively.

At September 30, 2009March 31, 2010 and December 31, 2008,2009, respectively, AXA Financial Group’s trading account securities had amortized costs of $1,690.1$1,797.6 million and $514.5$1,819.8 million and fair values of $1,829.3$1,795.1 million and $322.7$1,928.5 million.  Included in the trading classification at September 30,March 31, 2010 and December 31, 2009, respectively, were U.S. Treasury securities with aggregate amortized costcosts of $1,293.6 million and $1,488.2 million and fair valuevalues of $1,297.7$1,279.6 million and $1,305.2$1,443.9 million, respectively pledged under reverse repurchase agreements accounted for as collateralized borrowings and reported in Broker-dealer related payables in the consolidated balance sheets.  Also at September 30, 2009March 31, 2010 and December 31, 2008,2009, respectively, Other equity investments included the General Account’s investment in Separate Accounts which had carryingcarryin g values of $50.6$38.2 million and $39.0$38.5 million and costs of $49.2$35.0 million and $44.7$36.0 million as well as other equity securities with carrying values of $49.4$52.9 million and $31.1$58.3 million and costs of $43.2$45.1 million and $35.9$48.5 million.

In the third quarterfirst quarters of 2010 and the first nine months of 2009, and of 2008,respectively, net unrealized and realized holding gains (losses) on trading account equity securities, including earnings (losses) on the General Account’s investment in Separate Accounts, of $83.9 million, $115.6 million, $(138.5)$14.5 million and $(218.4)$(44.4) million, respectively, were included in Net investment income in the consolidated statements of earnings.  Gross unrealized gains on trading fixed maturities were $17.1 million, $14.8 million, $2.5 million, and zero in third quarter and the first nine months of 2009 and 2008, respectively.  Gross unrealized losses were zero, $4.1 million, $2.4 million, and $4.6 million for third quarter and the first nine months of 2009 and 2008, respectively.

Mortgage Loans

Investment valuation allowances for mortgage loans totaled $16.4$27.0 million and zero$18.3 million at September 30, 2009March 31, 2010 and December 31, 2008,2009, respectively.

Impaired mortgage loans without investment valuation allowances totaled zero$0.9 million at both September 30, 2009 and DecemberMarch 31, 2008.2010. During the first nine monthsquarters of 20092010 and 2008,2009, respectively, AXA Financial Group’s average recorded investment in impaired mortgage loans was $33.8$127.8 million and $11.2$0.2 million.  Interest income recognized on these impaired mortgage loans totaled $1.4$1.8 million and $0.7 millionzero for the first nine monthsquarters of 20092010 and 2008,2009, respectively.

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Mortgage loans on real estate are placed on nonaccrual status once management believes the collection of accrued interest is doubtful.  Once mortgage loans on real estate are classified as nonaccrual loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan on real estate has been restructured to where the collection of interest is considered likely.  At September 30, 2009March 31, 2010 and December 31, 2008,2009, respectively, the carrying values of mortgage loans on real estate that had been classified as nonaccrual loans were $94.2$16.5 million and zero.$15.3 million.

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Derivatives

The Insurance Group has issued and continues to offer certain variable annuity products with GMDB, GMIB and GWBL features.  The risk associated with the GMDB feature is that under-performance of the financial markets could result in GMDB benefits, in the event of death, being higher than what accumulated policyholder account balances would support.  The risk associated with the GMIB/GWBL feature is that under-performance of the financial markets could result in GMIB/GWBL benefits, in the event of elections, being higher than what accumulated policyholders account balances would support.  AXA Financial Group uses derivatives for asset/liability risk management primarily to reduce exposures to equity market declines and interest rate fluctuations.  Derivative hedging strategies are designed to reduce these risks from an economic perspective while also considering their impacts on accounting resultsresults.  Operation of these hedging programs is based on models involving numerous estimates and statutory liabilities.assumptions, including, among others, mortality, lapse, surrender and withdrawal rates, election rates, market volatility and interest rates.

A wide range of derivative contracts are used in these hedging programs, including exchange traded equity and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts, variance swaps and swaptions.  For both GMDB and GMIB, AXA Financial Group retains certain risks including basis and most volatility risk and risk associated with actual versus expected assumptions for mortality, lapse, surrender, withdrawal and contractholder election rates, among other things.  The derivative contracts are managed to correlate with changes in the value of the GMDB and GMIB feature that result from financial markets movements.  AXA Financial Group has purchased reinsurance contracts to mitigate the risks associated with GMDB features and the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts issued by AXA Financial Group and uses repurchase agreements to finance the purchase of U.S. Treasury securities to reduce the economic impact of unfavorable changes in exposures attributable to interest rates as part of the variable annuity hedging strategy.

GWBL features and reinsurance contracts covering GMIB exposure are considered derivatives for accounting purposes and, therefore, must be reported in the balance sheet at their fair value.  None of the derivatives used in these programs were designated as qualifying hedges under the guidance for accounting purposes.  The table below presents quantitative disclosures about AXA Financial Group’s derivative instruments in the first nine months of 2009, including those embedded in other contracts though required to be accounted for as derivative instruments.  Gainsderivatives and hedging.  All gains (losses) on derivatives are reported in Net investment income in the consolidated statements of earnings except those resulting from changes in the fair values of the embedded derivatives.  The changesderivatives: the GWBL features are reported in fair value ofPolicyholder’s benefits, and the GMIB reinsurance contracts are reported on a separate line in the consolidated statementsstatement of earnings, whilerespectively.

In addition to its hedging program that seeks to mitigate economic exposures specifically related to variable annuity contracts with GMDB, GMIB, and GWBL features, in fourth quarter 2008 and continuing into 2009, the changesInsurance Group implemented hedging programs to provide additional protection against the adverse effects of equity market and interest rate declines on its statutory liabilities and in fair valuesfirst quarter 2010. A majority of this protection expired in first quarter 2010, but a portion of the GWBL features are reportedequity market protection extends into 2011.  In the first quarter of 2010 an anticipatory hedge program was initiated to protect against declining interest rates and the impact they could have on projected variable annuity sales through third quarter 2010.



19


The table below presents quantitative disclosures about AXA Financial Group’s derivative instruments, including those embedded in Policyholder’s benefits in the consolidated statements of earnings.other contracts though required to be accounted for as derivative instruments.

Derivative Instruments by Category

March 31, 2010
          Gains (Losses) Reported     Fair Value  Gains (Losses) 
 At September 30, 2009  In Net Earnings  Notional  Asset  Liability  Reported in Net 
    Fair Value  Three Months  Nine Months  Amount  Derivatives  Derivatives  Earnings (Loss) 
 Notional  Asset  Liability  Ended  Ended 
 Amount  Derivatives  Derivatives  Sept. 30, 2009  Sept. 30, 2009 
 (In Millions) 
Freestanding derivatives:               
Freestanding derivatives    (In Millions)    
Equity contracts (1):
                           
Futures $9,481.0  $-  $-  $(1,466.7) $(2,129.8) $8,290.8  $-  $-  $(537.7)
Swaps  1,315.2   7.2   84.5   (216.3)  (494.8)  1,599.2   3.2   42.8   (30.3)
Options  10,650.0   764.9   919.6   (256.1)  (707.1)  1,000.0   19.8   -   (32.2)
                                    
Interest rate contracts (1):
                                    
Floors  21,000.0   355.1   -   61.8   (105.0)  15,000.0   295.5   -   27.8 
Swaps   8,937.0   388.8   6.7   331.3   57.5   9,409.0   140.1   21.3   134.1 
Futures  10,101.8   -       267.0   (1,994.6)  15,378.0   -   -   105.9 
Swaptions   1,200.0   71.7   -   10.3   10.2   1,200.0   40.1   -   (4.6)
                                    
Other freestanding contracts (2):
  -   .6   -   (.1)  (.7)
Net investment loss              (337.0) 
                                    
Net investment income              (1,268.8)  (5,364.3)
Foreign currency contracts(1,4):
  3,872.5   -   376.2   (263.3)
                                    
Embedded derivatives:                                    
GMIB reinsurance contracts(2)
  -   1,244.2       (21.2)  (741.1)  -   945.0   -   (35.6)
                    
GWBL features(3)
  -   -   110.1   13.3   162.5   -   -   40.5   14.4 
                                    
Total  $62,685.0  $2,832.5  $1,120.9  $(1,276.7) $(5,942.9)
Balances, March 31, 2010 $55,749.5  $1,443.7  $480.8  $(621.5)

(1)  Reported in Other invested assets or Other liabilities in the consolidated balance sheets.
(2)  
Reported in Other assets in the consolidated balance sheets.
(3)  
Reported in Future policy benefits and other policyholder liabilities.

(4)  
Reported in Commissions, fees and other income.
Margins or “spreads” on interest-sensitive life insurance and annuity contracts are affected by interest rate fluctuations as the yield on portfolio investments, primarily fixed maturities, are intended to support required payments under these contracts, including interest rates credited to their policy and contract holders.  The Insurance Group currently uses interest rate floors to reduce the risk associated with minimum crediting rate guarantees on these interest-sensitive contracts.

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As more fully described in Note 6 of Notes to Consolidated Financial Statements, the Insurance Group utilizes hedging programs designed to mitigate a portion of the benefits exposure due to movements in the equity markets and interest rates on GMDB, GMIB and GWBL liabilities that have not been reinsured.  The risk associated with the GMDB feature is that under-performance of the financial markets could result in GMDB benefits, in the event of death, being higher than what accumulated policyholder account balances would support.  The risk associated with the GMIB/GWBL features is that under-performance of the financial markets could result in GMIB/GWBL benefits, in the event of election, being higher than what accumulated policyholders’ account balances would support.  Operation of these hedging programs is based on models involving numerous estimates and assumptions, including, among others, mortality, lapse, surrender and withdrawal rates, election rates, market volatility and interest rates.  A wide range of derivative contracts are used in these hedging programs, including exchange traded equity and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts and swaptions.

The above-described hedging program seeks to mitigate economic exposures specifically related to variable annuity contracts with GMDB, GMIB, and GWBL features and does not fully hedge the Insurance Group’s statutory liability requirements.  Beginning in fourth quarter 2008 and continuing in 2009, the Insurance Group implemented a hedging program to provide additional protection against the adverse effects of equity market and interest rate declines on its statutory liabilities.

AXA Financial also uses interest rate swaps to reduce exposure to interest rate fluctuations on certain of its long-term loans from affiliates and debt obligations.  In addition, AXA Financial uses foreign exchange derivatives to reduce exposure to currency fluctuations that may arise from non-U.S.-dollar denominated financial instruments.  In December 2009, AXA Financial entered into a currency swap with AXA to hedge foreign exchange exposure from intercompany borrowings denominated in British pounds sterling.  The Insurance Group is exposed to equity market fluctuations through investments in Separate Accounts and may enter into derivative contracts specifically to minimize such risk.

AXA Financial Group may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments.  AXA Financial Group controls and minimizes its counterparty exposure through a credit appraisal and approval process.  In addition, AXA Financial Group has executed various collateral arrangements with counterparties to over-the-counter derivative transactions that require both pledging and accepting collateral either in the form of cash or high-quality securities, such as TreasuriesU.S. Treasury Securities or those issued by government agencies.  At September 30,March 31, 2010, and December 31, 2009, respectively, AXA Financial Group held $389.9$340.0 million and $694.7 million in cash collateral delivereddelive red by trade counterparties, representing the fair value of the related derivative agreements.  This unrestricted cash collateral is reported in Cash and cash equivalents, and the obligation to return it is reported in Other liabilities in the consolidated balance sheets.  In addition,
20
At March 31, 2010, AXA Financial Group also held approximately $39.6 millionhad open exchange-traded futures positions on the S&P 500, Russell 1000, NASDAQ 100 and Emerging Market indices, having initial margin requirements of $586.6 million.  At March 31, 2010, AXA Financial Group had open exchange-traded futures positions on the 10-year and 30-year U.S. Treasury securities under these collateral agreements at September 30, 2009.Note, having initial margin requirements of $168.3 million.  At that same date, AXA Financial Group had open exchange-traded future positions on the Euro Stoxx, FTSE 100, European, Australasia, Far East and Topix indices as well as corresponding currency futures on the Euro/U.S. dollar, Yen/U.S. dollar and Pound/U.S. dollar, having initial margin requirements of $19.8 million.  All exchange-traded futures contracts are net cash settled daily.  All outstanding equity-basedequity-b ased and treasury futures contracts at September 30, 2009March 31, 2010 are exchange-traded and net settled daily in cash.

Although notional amount is the most commonly used measure of volume in the derivatives market, it is not used as a measure of credit risk.  Generally, the current credit exposure of AXA Financial Group’s derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received pursuant to credit support annexes.  A derivative with positive value (a derivative asset) indicates existence of credit risk because the counterparty would owe money to AXA Financial Group if the contract were closed.  Alternatively, a derivative contract with negative value (a derivative liability) indicates AXA Financial Group would owe money to the counterparty if the contract were closed.c losed.  However, generally if there is more than one derivative transaction with a single counterparty, a master netting arrangement exists with respect to derivative transactions with that counterparty to provide for net settlement.

Certain of AXA Financial Group’s standardized contracts for over-the-counter derivative transactions (“ISDA Master Agreements”) contain credit risk related contingent provisions related to its credit rating.  In some ISDA Master Agreements, if the credit rating falls below a specified threshold, either a default or a termination event permitting the counterparty to terminate the ISDA Master Agreement would be triggered.  In all agreements that provide for collateralization, various levels of collateralization of net liability positions are applicable, depending upon the credit rating of the counterparty.  The aggregate fair value of all collateralized derivative transactions that were in a liability position at September 30,March 31, 2010 and December 31, 2009, was $442.6respectively, were $11.2 million and $7 98.3 million for which AXA Financial Group had posted collateral of $463.8$7.6 million and $852.9 million in the normal operation of its collateral arrangements.  If the investment grade related contingent features had been triggered on September 30, 2009,March 31, 2010, AXA Financial Group would not have been required to post any additional collateral to its counterparties.


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4)  CLOSED BLOCKS

The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in accumulated other comprehensive income) represents the expected maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force.  As of January 1, 2001, AXA Financial Group has developed an actuarial calculation of the expected timing of AXA Equitable’s Closed Block’s earnings.  Further, in connection with the acquisition of MONY, AXA Financial Group has developed an actuarial calculation of the expected timing of MONY Life Closed Block earnings as of July 1, 2004.

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

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

The operations of the AXA Equitable and MONY Life Closed Blocks are managed separately.


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AXA Equitable Closed Block

Summarized financial information for the AXA Equitable Closed Block is as follows:

 March 31,  December 31, 
 September 30,  December 31,  2010  2009 
 2009  2008  (In Millions) 
 (In Millions)    
CLOSED BLOCK LIABILITIES:         
Future policy benefits, policyholders’ account balances and other $8,452.9  $8,544.8  $8,376.3  $8,411.7 
Policyholder dividend obligation  55.1   - 
Other liabilities   115.0   71.3   54.5   69.8 
Total Closed Block liabilities   8,567.9   8,616.1   8,485.9   8,481.5 
                
        
ASSETS DESIGNATED TO THE CLOSED BLOCK:                
Fixed maturities, available for sale, at fair value        
(amortized cost of $5,587.0 and $5,517.6)  5,651.2   5,041.5 
Fixed maturities available for sale, at fair value        
(amortized cost of $5,544.7 and $5,575.5)  5,653.2   5,631.2 
Mortgage loans on real estate   1,072.3   1,107.1   1,016.5   1,028.5 
Policy loans   1,163.8   1,180.3   1,152.2   1,157.5 
Cash and other invested assets   77.7   104.2   85.4   68.2 
Other assets   264.9   472.4   254.9   264.1 
Total assets designated to the Closed Block  8,229.9   7,905.5   8,162.2   8,149.5 
                
Excess of Closed Block liabilities over assets designated to the                
Closed Block   338.0   710.6   323.7   332.0 
                
Amounts included in accumulated other comprehensive income (loss):        
Net unrealized investment gains (losses), net of deferred        
income tax (expense) benefit of $(20.0) and $166.4 and        
policyholder dividend obligation of $17.9 and $0  37.2   (309.2)
Amounts included in accumulated other comprehensive income:        
Net unrealized investment gains, net of deferred        
income tax expense of $22.6 and $23.4 and policyholder        
dividend obligation of $(55.1) and $0  42.0   43.6 
                
Maximum Future Earnings To Be Recognized From Closed Block                
Assets and Liabilities  $375.2  $401.4  $365.7  $375.6 

2522

AXA Equitable’sEquitable Closed Block revenues and expenses were as follows:

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2009  2008  2009  2008 
  (In Millions) 
REVENUES:             
Premiums and other income $88.6  $ 92.1  $ 284.4   $ 293.0 
Investment income (net of investment                
expenses of $0, $0.2, $0 and $1.0)  119.8   123.3   362.6   373.7 
Investment gains (losses), net:                
Total other-than-temporary                
impairment losses                                                      (5.7)  (41.1)  (7.8)  (45.3)
Portion of loss recognized in other                
comprehensive income                                                      -   -   -   - 
Net impairment losses recognized  (5.7)  (41.1)  (7.8)  (45.3)
Other investment (losses) gains, net  (2.3)  .1   9.1   (.4)
Total investment (losses) gains, net  (8.0)  (41.0)  1.3   (45.7)
Total revenues                                                         200.4   174.4   648.3   621.0 
                 
BENEFITS AND OTHER DEDUCTIONS:                
Policyholders’ benefits and dividends  192.1   199.6   606.3   612.1 
Other operating costs and expenses  .4   .5   1.7   2.1 
Total benefits and other deductions  192.5   200.1   608.0   614.2 
                 
Net revenues (losses) before income taxes  7.9   (25.7)  40.3   6.8 
Income tax (expense) benefit                                                         (2.8)  9.0   (14.1)  (2.4)
Net Revenues (Losses)  $5.1  $(16.7 )  $26.2    $4.4  
  Three Months Ended 
  March 31, 
  2010 2009 
  (In Millions) 
    
REVENUES:   
Premiums and other income $94.9  $99.9 
Investment income (net of investment expenses of $0 and $0)  118.1   120.2 
Investment gains, net:
Total OTTI losses
  -   - 
Portion of loss recognized in
other comprehensive income
  -   - 
Net impairment losses recognized  -   - 
Other investment gains, net  6.2   7.5 
Total investment gains, net  6.2   7.5 
Total revenues  219.2   227.6 
         
         
BENEFITS AND OTHER DEDUCTIONS:        
Policyholders’ benefits and dividends  203.2   208.9 
Other operating costs and expenses  .8   .6 
Total benefits and other deductions  204.0   209.5 
         
Net revenues before income taxes  15.2   18.1 
Income taxes  (5.3)  (6.3)
Net Revenues $9.9  $11.8 

A reconciliationReconciliation of AXA Equitable’sthe policyholder dividend obligation follows:

Nine Months Ended  Three Months Ended 
September 30,  March 31, 
2009 2008  2010 2009 
(In Millions)  (In Millions) 
            
Balances, beginning of year  $-  $-  $-  $- 
Unrealized investment gains   17.9   -   55.1   - 
Balances, End of Period  $17.9  $-  $55.1  $- 


 
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MONY Life Closed Block

Summarized financial information for the MONY Life Closed Block follows:

 September 30,  December 31,  March 31,  December 31, 
 2009  2008  2010  2009 
 (In Millions)  (In Millions) 
CLOSED BLOCK LIABILITIES:   
   
CLOSED BLOCK LIABILITIES   
Future policy benefits, policyholders’ account balances and other $6,839.4  $6,957.2  $6,773.2  $6,818.6 
Policyholder dividend obligation   201.7   6.5   221.2   188.8 
Other liabilities   62.5   40.4   39.9   39.0 
Total Closed Block liabilities   7,103.6   7,004.1   7,034.3   7,046.4 
                
ASSETS DESIGNATED TO THE CLOSED BLOCK:        
ASSETS DESIGNATED TO THE CLOSED BLOCK        
Fixed maturities available for sale, at fair value                
(amortized cost $4,024.6 and $3,986.7)  4,099.6   3,650.6 
(amortized cost of $3,961.3 and $3,995.8)  4,067.3   4,064.8 
Mortgage loans on real estate  864.2   885.5   819.5   832.2 
Policy loans   925.4   940.2   910.1   920.9 
Cash and other invested assets   69.4   84.7   88.2   67.5 
Other assets   245.4   355.4   273.3   274.2 
Total assets designated to the Closed Block   6,204.0   5,916.4   6,158.4   6,159.6 
                
Excess of Closed Block liabilities over assets designated        
to the Closed Block   899.6   1,087.7 
Excess of Closed Block liabilities over assets designated to        
the Closed Block  875.9   886.8 
                
Amounts included in accumulated other comprehensive income (loss):        
Net unrealized investment gains (losses), net of policyholder        
dividend obligation of $(85.4) and $103.3 and deferred        
income tax benefit of $0 and $81.5  -   (151.4)
Amounts included in accumulated other comprehensive income:        
Net of policyholder dividend obligation of $116.3 and $79.3  -   - 
                
Maximum Future Earnings To Be Recognized From Closed Block                
Assets and Liabilities  $899.6  $936.3  $875.9  $886.8 


27


MONY Life Closed Block revenues and expenses follow:


  Three Months Ended 
  March 31, 
  2010  2009 
  (In Millions) 
    
REVENUES:      
Premiums and other income $69.7  $73.0 
Investment income (net of investment expenses of  $0 and $0)  83.3   82.8 
Investment (losses) gains, net:        
Total OTTI losses  -   - 
Portion of loss recognized in other        
comprehensive income  -   - 
Net impairment losses recognized  -   - 
Other investment (losses) gains, net  (6.7)  27.5 
Total investment (losses) gains, net  (6.7)  27.5 
Total revenues  146.3   183.3 
         
BENEFITS AND OTHER DEDUCTIONS:        
Policyholders’ benefits and dividends  129.1   163.2 
Other operating costs and expenses  .6   .7 
Total benefits and other deductions  129.7   163.9 
         
Net revenues before income taxes  16.6   19.4 
Income taxes  (5.7)  (6.8)
Net Revenues $10.9  $12.6 
 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2009 2008 2009 2008
 (In Millions)
REVENUES:            
Premiums and other income                                                       $71.8  $78.3  $222.2  $240.1 
Investment income (net of                
investment expenses of $0, $0,                
$0 and $0)                                                     82.1   84.2   248.3   255.4 
Investment (losses) gains, net:                
Total other-than-temporary                
impairment losses                                                    (3.6)  (41.8)  (5.7)  (44.3)
Portion of loss recognized in other                
comprehensive income                                                    -   -   -   - 
Net impairment losses recognized  (3.6)  (41.8)  (5.7)  (44.3)
Other investment (losses) gains, net  (12.8)  .2   13.0   7.5 
Total investment (losses) gains, net  (16.4)  (41.6)  7.3   (36.8)
Total revenues                                                        137.5   120.9   477.8   458.7 
                 
BENEFITS AND                
OTHER DEDUCTIONS:                
Policyholders’ benefits and dividends  115.9   98.9   419.3   393.0 
Other operating costs and expenses  .7   1.0   2.1   2.6 
Total benefits and other deductions  116.6   99.9   421.4   395.6 
                 
Net revenues before income taxes  20.9   21.0   56.4   63.1 
Income tax expense                                                        (7.3)  (7.3)  (19.7)  (22.1)
Net Revenues                                                       $13.6  $13.7  $36.7  $41.0 

24
A reconciliation
Reconciliation of the MONY Life’sLife policyholder dividend obligation follows:

  
Nine Months Ended
September 30,
 
  2009  2008 
  
(In Millions)
 
    
Balance, beginning of year   $6.5  $129.4 
Applicable to net revenues (losses)  6.5   (31.7)
Unrealized investment gains (losses)  188.7   (86.7)
Balance, End of Period $201.7  $11.0 

  Three Months Ended 
  March 31, 
  2010 2009 
  (In Millions) 
    
Balances, beginning of year $188.8  $6.5 
Applicable to net revenues  (4.6)  26.5 
Unrealized investment gains (losses)  37.0   (29.4)
Balances, End of Period $221.2  $3.6 

5)  DISCONTINUED OPERATIONS

AXA Financial Group’s discontinued operations include Wind-up Annuities,include: equity real estate held-for-saleheld-for-sale; disposals of businesses; and, Enterprise.through December 31, 2009, Wind-up Annuities.  No real estate was held for sale at March 31, 2010 and December 31, 2009.  The following table reconciles the Losses from discontinued operations, net of income taxes and Gains on disposal of discontinued operations, net of income taxes to the amounts reflected in the consolidated statements of earnings for the third quarterfirst quarters of 2010 and first nine months of 2009 and 2008:2009:

 Three Months Ended 
 March 31, 
 2010 2009 
 (In Millions) 
Losses from Discontinued Operations,
Net of Income Taxes:
  
Wind-up Annuities $-  $(1.5)
Disposal of business - Enterprise  -   (.4)
Total $-  $(1.9)


 
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  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2009  2008  2009  2008 
  (In Millions) 
             
Losses from Discontinued Operations, Net of Income Taxes:            
Wind-up Annuities                                                        $(7.6) $-  $(11.8) $- 
Real estate held-for-sale  -   (.1)  -   1.6 
Enterprise  .4   (.1)  1.1   (3.4)
Total $(7.2) $(.2) $(10.7) $(1.8)
                 
Gain on Disposal of Discontinued Operations, Net of Income Taxes:
                
Real estate held-for-sale $-  $-  $-  $6.3 
Disposal of business - Enterprise  -   -   -   (.5)
Total $-  $-  $-  $5.8 

Wind-up-Annuities

Summarized financial information for Wind-up Annuities follows:

  September 30,  December 31, 
  2009  2008 
  (In Millions) 
    
BALANCE SHEETS      
Fixed maturities, available for sale, at fair value      
(amortized cost of $497.5 and $661.8)                                                                                  $510.8  $602.1 
Mortgage loans on real estate                                                                                     151.1   1.2 
Equity real estate                                                                                     88.0   162.2 
Other invested assets                                                                                     1.3   1.3 
Total investments                                                                                   751.2   766.8 
Other assets                                                                                     145.8   77.1 
Total Assets                                                                                    $897.0  $843.9 
         
Policyholders liabilities                                                                                    $709.9  $723.4 
Other liabilities                                                                                     187.1   120.5 
Total Liabilities                                                                                    $897.0  $843.9 


29
  Three Months Ended  Nine Months Ended 
  September 30  September 30 
  2009  2008  2009  2008 
  (In Millions) 
STATEMENTS OF EARNINGS            
Investment income (net of investment            
expenses of $0.6, $5.1, $9.8 and $14.4) $15.0  $17.3  $46.0  $48.7 
Investment (losses) gains, net:                
Total other-than-temporary                
impairment losses      (3.1)  (5.2)  (5.1)  (5.2)
Portion of loss recognized in other                
comprehensive income  -   -   -   - 
Net impairment losses recognized  (3.1)  (5.2)  (5.1)  (5.2)
Other investment gains (losses), net  (2.6)  -   (2.1)  .8 
Total investment (losses) net  (5.7)  (5.2)  (7.2)  (4.4)
Total revenues                                                          9.3   12.1   38.8   44.3 
                 
Benefits and other deductions                                                          18.1   19.4   53.4   57.1 
Losses charged to                
allowance for future losses                                                        -   (7.3)  -   (12.8)
Pre-tax loss from operations                                                          (8.8)  -   (14.6)  - 
                 
Income tax benefit                                                          4.3   -   6.3   - 
Loss from Wind-up Annuities                                                          (4.5)  -   (8.3)  - 
Consolidation elimination                                                          (3.1)  -   (3.5)  - 
                 
Loss from Wind-up Annuities,                
as Consolidated                                                       $(7.6) $-  $(11.8) $- 

During second quarter 2009, an equity real estate property with a book value of $123.5 million was sold from Wind-up Annuities to a wholly owned subsidiary of AXA Financial for $319.6 million.  In connection with the sale, Wind-up Annuities acquired a $150.0 million mortgage on the sold property from the affiliate and acquired a $50.3 million interest in another equity real estate property from continuing operations.

AXA Financial Group’s quarterly process for evaluating the need for an allowance for future losses involves comparison of the current period’s results of Wind-up Annuities to previous projections and re-estimation of future expected losses, if appropriate, to determine whether an adjustment is required.  Investment and benefit cash flow projections are updated annually as part of AXA Financial Group’s annual planning process.  If AXA Financial Group’s analysis in any given period indicates that an allowance for future losses is not necessary, any current period Wind-up Annuities’ operating losses or earnings are recognized as (Losses) earnings from discontinued operations, net of income taxes in the consolidated statement of earnings.  At September 30, 2009, no allowance for future losses was necessary based upon projections of reasonably assured future net investing and operating cash flows.

The determination of projected future cash flows involves numerous estimates and subjective judgments regarding the expected performance of invested assets held for the Wind-up Annuities’ business and the expected run-off of Wind-up Annuities liabilities.  There can be no assurance the projected future cash flows will not differ from the cash flows ultimately realized.  To the extent actual results or future projections of Wind-up Annuities are lower than management’s current estimates and assumptions and result in operating losses not being offset by reasonably assured future net investing and operating cash flows, an allowance for future losses may be necessary.  In particular, to the extent income, sales proceeds and holding periods for equity real estate differ from management’s previous assumptions, the establishment of a loss allowance liability may result.

Enterprise

In the first nine months of 2008, changes in the reserve estimate resulted in a benefit of $1.8 million pre-tax ($1.2 million post-tax) being recorded.  In first nine months of 2008, impairments of $2.7 million pre-tax ($1.7 million post-tax) were recorded on intangible assets associated with investment management and distribution contracts based upon fair value.  Proceeds received on the disposition of the AXA Enterprise funds in the first nine months of 2008 totaled $3.3 million.  The balances of these intangible assets were zero at September 30, 2009 and December 31, 2008.

30
Real Estate Held-for-Sale

No real estate was held for sale at September 30, 2009 and December 31, 2008.


6)  GMDB, GMIB, GWBL AND NO LAPSE GUARANTEE FEATURES

A)  Variable Annuity Contracts – GMDB, GMIB and GWBL

AXA Equitable, MONY Life and MLOA have certain variable annuity contracts with GMDB, GMIB and/or Guaranteed Withdrawal Benefit for Life (“GWBL”)GWBL features in forcein-force that guarantee one of the following:

·   ●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.

The following table summarizes the GMDB and GMIB liabilities, before reinsurance ceded, reflected in the General Account in future policy benefits and other policyholders liabilities:

 GMDB  GMIB  Total  GMDB  GMIB  Total 
 (In Millions)  (In Millions) 
   
Balance at January 1, 2010 $1,092.4  $1,615.4  $2,707.8 
Paid guarantee benefits  (48.4)  (11.1)  (59.5)
Other changes in reserve  76.2   28.8   105.0 
Balance at March 31, 2010 $1,120.2  $1,633.1  $2,753.3 
               
Balance at January 1, 2009  $987.3  $1,982.8  $2,970.1  $987.3  $1,982.8  $2,970.1 
Paid guarantee benefits   (198.6)  (45.9)  (244.5)  (81.8)  (20.1)  (101.9)
Other changes in reserve   260.1   (135.7)  124.4   216.6   1.7   218.3 
Balance at September 30, 2009  $1,048.8  $1,801.2  $2,850.0 
            
Balance at January 1, 2008  $254.4  $310.3  $564.7 
Paid guarantee benefits   (63.5)  (3.7)  (67.2)
Other changes in reserve   149.2   107.1   256.3 
Balance at September 30, 2008  $340.1  $413.7  $753.8 
Balance at March 31, 2009 $1,122.1  $1,964.4  $3,086.5 

Related GMDB reinsurance ceded amounts were:

 Three Months Ended 
 March 31, 
 2010 2009 
 (In Millions) 
   
Balances, beginning of year $93.6  $94.7 
Paid guarantee benefits  (4.4)  (5.2)
Other changes in reserve  4.1   16.0 
Balances, End of Period $93.3  $105.5 

3126
 Nine Months Ended 
 September 30, 
 2009 2008 
 (In Millions) 
   
Balances, beginning of year                                                                                           $94.7  $28.7 
Paid guarantee benefits                                                                                         (15.3)  (12.2)
Other changes in reserve                                                                                         19.3   19.2 
Balances, End of Period                                                                                           $98.7  $35.7 

The GMIB reinsurance contracts are considered derivatives and are reported at fair value.

The September 30, 2009March 31, 2010 values for variable annuity contracts in-force on such date with GMDB and GMIB features are presented in the following table.  For contracts with the GMDB feature, the net amount at risk in the event of death is the amount by which the GMDB benefits exceed related account values.  For contracts with the GMIB feature, the net amount at risk in the event of annuitization is the amount by which the present value of the GMIB benefits exceeds related account values, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates.  Since variable annuity contracts with GMDB guarantees may also offer GMIB guarantees in the same contract, the GMDB and GMIBGMI B amounts listed are not mutually exclusive:

 Return             
 of             
 
Return
Of
Premium
   
Ratchet
   
Roll-Up
   
Combo
   
Total
  Premium  Ratchet  Roll-Up  Combo  Total 
 (Dollars In Millions)  (Dollars In Millions) 
                              
GMDB:                              
Account values invested in:                              
General Account
 $11,208  $533  $362  $639  $12,742  $11,398  $503  $ 154  $528  $12,583 
Separate Accounts
 $24,625  $7,429  $4,759  $30,820  $67,633  $27,383  $7,865  $ 4,288  $32,869  $72,405 
Net amount at risk, gross
 $2,977  $2,125  $3,025  $10,833  $18,960  $1,884  $1,635  $ 2,747  $10,120  $16,386 
                    
Net amount at risk, net of                                        
amounts reinsured
 $2,977  $1,912  $2,074  $10,799  $17,762  $1,884  $1,050  $ 1,845  $4,108  $8,887 
Average attained age of                    
contractholders
  49.7   62.5   66.4   62.1   53.6 
Average attained age                    
of contractholders  49.7   62.5   67.2   62.1   53.6 
Percentage of contractholders                                        
over age 70
  7.6%  23.5%  41.1%  22.6%  12.9%  7.6%  23.5%  42.4%  22.6%  12.9%
Range of contractually specified                                        
interest rates
  N/A   N/A   3%-6%  3%-6.5%  3%-6.5%  N/A   N/A   3%-6%  3%-6.5%  3%-6.5%
                                        
GMIB:                                        
Account values invested in:                                        
General Account
  N/A   N/A  $65  $876  $941   N/A   N/A  $ 62  $729  $791 
Separate Accounts
  N/A   N/A  $2,908  $41,902  $44,810   N/A   N/A  $ 2,976  $45,218  $48,194 
Net amount at risk, gross
  N/A   N/A  $1,466  $1,701  $3,167   N/A   N/A  $ 1,150  $518  $1,668 
Net amount at risk, net of                                        
amounts reinsured
  N/A   N/A  $427  $1,461  $1,888   N/A   N/A  $ 335  $116  $451 
Weighted average years remaining                                        
until annuitization
  N/A   N/A   1.3   7.4   6.8   N/A   N/A   1.3   7.4   6.8 
Range of contractually specified                                        
interest rates   N/A   N/A   3%-6%  3%-6.5%  3%-6.5%  N/A   N/A   3%-6%  3%-6.5%  3%-6.5%

The GWBL related liability was $110.1$40.5 million and $54.9 million at September 30, 2009;March 31, 2010 and December 31, 2009, respectively; which is valuedaccounted for as an embedded derivative.  This liability reflects the present value of expected future payments (benefits) less the fees attributable to the GWBL feature over a range of market consistent economic scenarios.

 
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B)  Separate Account Investments by Investment Category Underlying GMDB and GMIB Features

The total account values of variable annuity contracts with GMDB and GMIB features include amounts allocated to the guaranteed interest option, which is part of the General Account and variable investment options whichthat invest through Separate Accounts in variable insurance trusts.  The following table presents the aggregate fair value of assets, by major investment category, held by Separate Accounts that support variable annuity contracts with GMDB and GMIB benefits and guarantees.  The investment performance of the assets impacts the related account values and, consequently, the net amount of risk associated with the GMDB and GMIB benefits and guarantees.  Since variable annuity contracts with GMDB benefits and guarantees may also offer GMIB benefits and guarantees in each contract, the GMDB and GMIB amountsamo unts listed are not mutually exclusive:

Investment in Variable Insurance Trust Mutual Funds 
    
  September 30, December 31, 
  2009 2008 
  (In Millions) 
    
GMDB:      
Equity                                                                                       $41,288  $31,402 
Fixed income                                                                                        4,182   3,964 
Balanced                                                                                        20,520   17,495 
Other                                                                                        1,643   2,499 
Total                                                                                       $67,633  $55,360 
         
GMIB:        
Equity                                                                                       $26,450  $19,207 
Fixed income                                                                                        2,568   2,238 
Balanced                                                                                        15,093   12,887 
Other                                                                                        699   1,278 
Total                                                                                       $44,810  $35,610 
Investment in Variable Insurance Trust Mutual Funds

  March 31, December 31, 
  2010 2009 
  (In Millions) 
    
GMDB:      
Equity $44,467  $42,513 
Fixed income  4,147   4,113 
Balanced  21,538   20,965 
Other  2,253   2,317 
Total $72,405  $69,908 
         
GMIB:        
Equity $29,370  $27,911 
Fixed income  2,566   2,530 
Balanced  15,718   15,351 
Other  540   626 
Total $48,194  $46,418 

C)  Hedging Programs for GMDB, GMIB and GWBL Features

Beginning in 2003, AXA Equitable established a program intended to hedge certain risks associated first with the GMDB feature and, beginning in 2004, with the GMIB feature of the Accumulator® series of variable annuity products.  This program currently utilizes derivative instruments, such as exchange-traded futures contracts, options and interest rate swap and floor contracts as well as repurchase agreement transactions, that collectively are managed in an effort to reduce the economic impact of unfavorable changes in GMDB, GMIB and GWBL exposures attributable to movements in the equity and fixed income markets.  At the present time, this program hedges suchcertain economic risks on products sold from 2001 forward, to the extent such risks are not reinsured.  At September 30, 2009,March 31, 2010, the total account value and net amount at risk of the hedged Accumulator® series of variable annuity contracts were $53,189.0$56,243 million and $14,322.0$12,747 million, respectively, with the GMDB feature and $37,780.0$40,605 million and $1,472.0$463 million, respectively, with the GMIB feature.

These programs do not qualify for hedge accounting treatment.  Therefore, gains or losses on the derivativederivatives contracts used in these programs, including current period changes in fair value, are recognized in investment income in the period in which they occur, and may contribute to earnings volatility.

D)  Variable and Interest-Sensitive Life Insurance Policies - No Lapse Guarantee

The no lapse guarantee feature contained in variable and interest-sensitive life insurance policies keeps them in force in situations where the policy value is not sufficient to cover monthly charges then due.  The no lapse guarantee remains in effect so long as the policy meets a contractually specified premium funding test and certain other requirements.


 
3328
 

The following table summarizes the no lapse guarantee liabilities reflected in the General Account in Future policy benefits and other policyholders liabilities, and the related reinsurance ceded:liabilities:

  Direct Liability  Reinsurance Ceded  Net 
  (In Millions) 
    
Balance at January 1, 2009                                                               $202.9  $-  $202.9 
Other changes in reserves                                                             32.0   -   32.0 
Balance at September 30, 2009                                                               $234.9  $-  $234.9 
             
Balance at January 1, 2008                                                               $135.0  $-  $135.0 
Other changes in reserves                                                             63.0   -   63.0 
Balance at September 30, 2008                                                               $198.0  $-  $198.0 
  Direct Liability(1) 
   (in Millions) 
     
Balance at January 1, 2010 $254.9 
Other changes in reserves  53.0 
Balance at March 31, 2010 $307.9 
     
Balance at January 1, 2009 $202.9 
Other changes in reserves  2.0 
Balance at March 31, 2009 $204.9 

(1)    There were no amounts of reinsurance ceded in any period presented.

7)  FAIR VALUE DISCLOSURES

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  U.S. GAAP also establishesThe accounting guidance established a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, and identifies three levels of inputs that may be used to measure fair value:

Level 1Quoted 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 2Observable 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 3Unobservable 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.
AXA Financial Group defines fair value as the quoted market prices for those instruments that are actively traded in financial markets.  In cases where quoted market prices are not available, fair values are measured using present value or other valuation techniques.  The fair value determinations are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties.  Such adjustments do not reflect any premium or discount that could result from offering for sale at one time AXA Financial Group’s entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses.   In many cases, the fair values cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument.


 
3429
 

Assets and liabilities measured at fair value on a recurring basis are summarized below as of the dates indicated:below:  

Fair Value Measurements at September 30, 2009March 31, 2010

 Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
 (In Millions)  (In Millions) 
Assets                        
Investments:                        
Fixed maturities available for sale            
Fixed maturities, available-for-sale:            
Corporate  $-  $27,777.2  $760.4  $28,537.6  $-  $28,034.6  $559.0  $28,593.6 
U.S. Treasury, government and                
agency   -   3,862.0   -   3,862.0 
U.S. Treasury, government                
and agency  -   5,227.8   -   5,227.8 
States and political subdivisions  -   192.7   114.6   307.3   -   387.3   47.5   434.8 
Foreign governments   -   294.6   48.0   342.6   -   434.5   1.0   435.5 
Commercial mortgage-backed(1)
  -   26.4   1,910.8   1,937.2   -   -   1,671.2   1,671.2 
Residential mortgage-backed(1)
  -   3,349.6   -   3,349.6   -   2,319.5   .2   2,319.7 
Asset-backed(2)
  -   211.2   249.7   460.9   -   51.0   208.3   259.3 
Redeemable preferred stock   260.7   1,497.3   49.0   1,807.0   302.6   1,551.0   29.4   1,883.0 
Subtotal   260.7   37,211.0   3,132.5   40,604.2   302.6   38,005.7   2,516.6   40,824.9 
Equity securities, available for sale  -   -   -   - 
Other equity investments   98.2   -   1.8   100.0   89.5   -   1.7   91.2 
Trading securities   524.1   1,305.2   -   1,829.3   460.2   1,334.5   .4   1,795.1 
Other invested assets   -   301.7   426.8   728.5 
Loans to affiliates   -   1,200.0   -   1,200.0 
Other invested assets:                
Short-term  -   294.2   -   294.2 
Swaps  -   85.7   (6.5)   79.2 
Options  -   19.8   -   19.8 
Floors  -   295.5   -   295.5 
Swaptions  -   40.1   -   40.1 
Subtotal  -   735.3   (6.5)   728.8 
Cash equivalents   3,115.1   -   -   3,115.1   2,955.2   -   -   2,955.2 
Segregated securities   -   1,274.3   -   1,274.3   -   1,004.8   -   1,004.8 
GMIB reinsurance contracts   -   -   1,244.2   1,244.2   -   -   945.0   945.0 
Separate Accounts’ assets   81,691.4   1,696.1   241.1   83,628.6   87,140.3   1,788.7   206.9   89,135.9 
Total Assets  $85,689.5  $42,988.3  $5,046.4  $133,724.2  $90,947.8  $42,869.0  $3,664.1  $137,480.9 
                                
Liabilities                                
Other invested liabilities:
Foreign currency swap
 $-  $376.2   $-   $376.2 
GWBL features’ liability  $-  $-  $110.1  $110.1   -   -   40.5   40.5 
Total Liabilities  $-  $-  $110.1  $110.1  $-  $376.2  $40.5  $416.7 

(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.

Fair Value Measurements at December 31, 2008
  Level 1  Level 2  Level 3  Total 
 (In Millions) 
             
Assets            
Investments:            
Fixed maturities available for sale $200.6  $30,167.5  $3,047.8  $33,415.9 
Other equity investments
  67.2   -   2.7   69.9 
Trading securities
  322.6   -   .1   322.7 
Other invested assets
  35.4   1,135.3   547.0   1,717.7 
Loans to affiliates
  -   1,133.5   -   1,133.5 
Cash equivalents
  6,787.7   -   -   6,787.7 
Segregated securities
  -   2,572.6   -   2,572.6 
GMIB reinsurance contracts
  -   -   1,985.3   1,985.3 
Separate Accounts’ assets
  68,008.6   1,271.1   334.7   69,614.4 
Total Assets
 $75,422.1  $36,280.0  $5,917.6  $117,619.7 
                 
Liabilities                
GWBL features’ liability
 $-  $-  $272.6  $272.6 
Total Liabilities
 $-  $-  $272.6  $272.6 


 
3530
 


Fair Value Measurements at December 31, 2009

  Level 1  Level 2  Level 3  Total 
  (In Millions) 
Assets            
Investments:            
Fixed maturities, available-for-sale:            
Corporate $-  $28,289.2  $635.8  $28,925.0 
U.S. Treasury, government                
and agency  -   3,955.5   -   3,955.5 
States and political subdivisions  -   402.7   52.6   455.3 
Foreign governments  -   340.2   20.7   360.9 
Commercial mortgage-backed  -   -   1,782.3   1,782.3 
Residential mortgage-backed(1)
  -   2,515.6   -   2,515.6 
Asset-backed(2)
  -   55.4   237.6   293.0 
Redeemable preferred stock  260.2   1,547.4   36.4   1,844.0 
Subtotal  260.2   37,106.0   2,765.4   40,131.6 
Other equity investments  95.1   -   1.7   96.8 
Trading securities  423.0   1,504.8   .7   1,928.5 
Other invested assets  -   (144.0)  299.6   155.6 
Cash equivalents  2,329.0   -   -   2,329.0 
Segregated securities  -   985.7   -   985.7 
GMIB reinsurance contracts  -   -   980.6   980.6 
Separate Accounts’ assets  84,191.1   1,708.4   229.7   86,129.2 
Total Assets $87,298.4  $41,160.9  $4,277.7  $132,737.0 
                 
Liabilities                
GWBL features’ liability $-  $-  $54.9  $54.9 
Total Liabilities $-  $-  $54.9  $54.9 
(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. 
At September 30,March 31, 2010 and December 31, 2009, respectively, investments classified as Level 1 comprise approximately 65.9%67.1% and 66.1% of invested assets measured at fair value on a recurring basis and primarily include redeemable preferred stock, cash and cash equivalents and Separate Accounts assets.  Fair value measurements classified as Level 1 include exchange-traded prices of fixed maturities, equity securities and derivative contracts, and net asset values for transacting subscriptions and redemptions of mutual fund shares held by Separate Accounts.  Cash equivalents classified as Level 1 include money market accounts, overnight commercial paper and highly liquid debt instruments purchased with an original maturity of three months or less, and are carried at cost as a proxy for fair value measurement due to their short-terms hort-term nature.

At September 30,March 31, 2010 and December 31, 2009, respectively, investments classified as Level 2 comprise approximately 31.2%30.9% and 30.7% of invested assets measured at fair value on a recurring basis and primarily include U.S. government and agency securities and certain corporate debt securities, such as private fixed maturities.  As market quotes generally are not readily available or accessible for these securities, their fair value measures are determined utilizing relevant information generated by market transactions involving comparable securities and often are based on model pricing techniques that effectively discount prospective cash flows to present value using appropriate sector-adjusted credit spreads commensurate with the security’s duration, also taking into consideration issuer-specific credit quality and liquidity.liquidi ty.  These valuation methodologies have been studied and evaluated by AXA Financial Group and the resulting prices determined to be representative of exit values.  Segregated securities classified as Level 2 are U.S. Treasury Bills segregated by AllianceBernstein in a special reserve bank custody account for the exclusive benefit of brokerage customers, as required by Rule 15c3-3 of the Exchange Act and for which fair values are based on quoted yields in secondary markets.


31

Observable inputs generally used to measure the fair value of securities classified as Level 2 include benchmark yields, reported secondary trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data.  Additional observable inputs are used when available, and as may be appropriate, for certain security types, such as prepayment, default, and collateral information for the purpose of measuring the fair value of mortgage- and asset-backed securities.  At September 30,March 31, 2010 and December 31, 2009, respectively, approximately $2,785.2$2,345.6 million and $2,846.5 million of AAA-rated mortgage- and asset- backedasset-backed securities are classified as Level 2, including commercial mortgage obligations, for which the observability of market inputs to their pricing models is supported by sufficient, albeit more recently contracted, market activity in these sectors.

As disclosed in Note 3, of Notes to Consolidated Financial Statements, the net fair value of freestanding derivative positions is approximately $577.4$58.4 million at September 30, 2009,March 31, 2010, or approximately 32.6%5.9% of Other invested assets measured at fair value on a recurring basis.  The majority of these derivative contracts is traded in the over-the-counter (“OTC”)OTC derivative market and is classified in Level 2.  The fair values of derivative assets and liabilities traded in the OTC market are determined using quantitative models that require use of the contractual terms of the derivative instruments and multiple market inputs, including interest rates, prices, and indices to generate continuous yield or pricing curves and volatility factors, which then are applied to value the positions.  The predominance of market inputs is actively quoted and can be validated through external sourcessourc es or reliably interpolated if less observable.

The credit risk of the counterparty and of AXA Financial Group are considered in determining the fair values of all OTC derivative asset and liability positions, respectively, after taking into account the effects of master netting agreements and collateral arrangements.  Each reporting period, AXA Financial Group values its derivative positions using the standard swap curve and evaluates whether to adjust the embedded credit spread to reflect any changes in counterparty or its own credit standing.  As a result, AXA Financial Group reduced the fair value of its OTC derivative asset exposures by $5.8$2.2 million at September 30, 2009March 31, 2010 to recognize incremental counterparty non-performance risk.  The unadjusted swap curve was determined to be reflective of the non-performance risk of AXA Financial Group for purpose of determiningde termining the fair value of its OTC liability positions at September 30, 2009.March 31, 2010.

At September 30,March 31, 2010 and December 31, 2009, respectively, investments classified as Level 3 comprise approximately 2.9%2.0% and 2.5% of invested assets measured at fair value on a recurring basis and primarily include corporate debt securities, such as private fixed maturities.  Determinations to classify fair value measures within Level 3 of the valuation hierarchy generally are based upon the significance of the unobservable factors to the overall fair value measurement.  Included in the Level 3 classification at September 30,March 31, 2010 and December 31, 2009, respectively, were approximately $667.2$329.0 million and $460.6 million of fixed maturities with indicative pricing obtained from brokers that otherwise could not be corroborated to market observable data.  AXA Financial Group applies various due-diligence procedures, as considered appropriate, to validate these non-binding broker quotes for reasonableness, based on its understanding of the markets, including use of internally-developed assumptions about inputs a market participant would use to price the security.  In addition, approximately $2,160.4$1,879.7 million and $2,019.9 million of mortgage- and asset-backed securities, including CMBS, are classified as Level 3 at September 30, 2009.March 31, 2010 and December 31, 2009, respectively.  Prior to fourth quarter 2008, pricing of thesethe CMBS was sourced from a third partythird-party service, whose process placed significant reliance on market trading activity.  Beginning in fourth quarter 2008, the lack of sufficient observable trading data made it difficult, at best, to validate prices of CMBS below the senior AAA tranche.  Consequently, AXA Financial Group instead applied a risk-adjusted present value technique to the projected cash flows of these securities, as adjusted for origination year, default metrics, and levelleve l of subordination, with the objective of maximizing observable inputs, and weighted the result with a 10% attribution to pricing sourced from the third party service.  At September 30, 2009,March 31, 2010, AXA Financial Group continued to apply this methodology to measure the fair valuesvalue of CMBS below the senior AAA tranche, having demonstrated ongoing insufficient frequency and volume of observable trading activity in these securities during third quarter.securities.

36
Level 3 also includes the GMIB reinsurance asset and the GWBL features’ liability, which are accounted for as derivative contracts.  The GMIB reinsurance assetasset’s fair value reflects the present value of reinsurance premiums and recoveries and risk margins over a range of market consistent economic scenarios while the GWBL related liability reflects the present value of expected future payments (benefits) less fees, adjusted for risk margins, attributable to the GWBL feature over a range of market-consistent economic scenarios.  The valuations of both the GMIB asset and GWBL features’ liability incorporate significant non-observable assumptions related to policyholder behavior, risk margins and projections of equity Separate Account funds consistent with the S&P 500 Index.  Using methodologymeth odology similar to that described for measuring non-performance risk of OTC derivative exposures, incremental adjustment is made to the resulting fair values of the GMIB asset to reflect change in the claims-paying ratings of counterparties to the reinsurance treaties and of AXA Equitable, respectively.  After giving consideration to collateral arrangements, AXA Financial Group reduced the fair value of its GMIB asset by $14.5$10.6 million at September 30, 2009March 31, 2010 to recognize incremental counterparty non-performance risk.  The unadjusted swap curve was determined to be reflective of the AA quality claims-paying rating of AXA Equitable, therefore, no incremental adjustment was made for non-performance risk for purpose of determining the fair value of the GWBL features’ liability embedded derivative at September 30, 2009.March 31, 2010.

3732

In first quarter 2010, AFS fixed maturities with fair values of $223.9 million and $26.5 million were transferred out of Level 3 and into Level 2 and out of Level 2 and into Level 1, respectively, principally due to the availability of trading activity and/or market observable inputs to measure and validate their fair values.  In addition, AFS fixed maturities with fair value of $8.7 million were transferred into the Level 3 classification.  These transfers in the aggregate represent approximately $1.8% of total equity at March 31, 2010.

The table below presents a reconciliation for all Level 3 assets and liabilities for third quarter and the first nine monthsquarters of 2010 and 2009, and 2008:respectively:

Level 3 Instruments
Fair Value Measurements
(In Millions)

 
   
Corporate
   
U.S.
Treasury,
Govt and
Agency
   
Foreign
Govts
   
State and
Political
Sub-
divisions
   
Commer-
cial
Mortgage-
backed
   
Residen-
tial
Mortgage
backed
   
Asset-
backed
 
Discrete third quarter:                     
Balance, July 1, 2009 $602.1  $-  $19.3  $53.4  $1,962.7  $-  $243.4 
Total gains (losses),                            
realized and unrealized,                            
included in:                            
Earnings as:                            
Net investment income  .5   -   -   -   .8   -   (.4)
Investment gains                            
(losses), net                   .1   -   -   -   (32.5)  -   (1.3)
(Decrease) increase in the                            
fair value of  the                            
reinsurance contracts  -   -   -   -   -   -   - 
Subtotal                              .6   -   -   -   (31.7)      (1.7)
Other comprehensive                            
income                              38.7   -   2.7   1.7   (2.0)  -   18.7 
Purchases/issuance
  140.5   -   26.0   60.0   -   -   - 
Sales/settlements                                   (60.4)  -   -   (.5)  (18.2)  -   (10.7)
Transfers into/out of                            
Level 3(2)
  38.9   -   -   -   -   -   - 
Balance, Sept. 30, 2009 $760.4  $-  $48.0  $114.6  $1,910.8  $-  $249.7 
                             
First nine months                            
of 2009:                            
Balance, January 1, 2009 $629.2  $-  $64.0  $61.8  $1,940.6  $-  $328.9 
Total gains (losses),                            
realized and unrealized,                            
included in:                            
Earnings as:                            
Net investment income  .6   -   -   -   2.5   -   (1.1)
Investment gains                            
(losses), net                         (4.0)  -   -   -   (32.5)  -   (15.4)
(Decrease) increase in the                            
fair value of  the                            
reinsurance contracts  -   -   -   -   -   -   - 
Subtotal                     ��        (3.4)  -   -   -   (30.0)  -   (16.5)
Other comprehensive                            
income                              51.4   -   3.8   (7.7)  54.6   -   14.5 
Purchases/issuances   186.0   -   27.0   62.2   -   -   - 
Sales/settlements                                   (89.2)  -   (.2)  (1.7)  (54.4)  -   (45.0)
Transfers into/out of                            
Level 3(2)          
  (13.6)  -   (46.6)  -   -   -   (32.2)
Balance, Sept. 30, 2009 $760.4  $-  $48.0  $114.6  $1,910.8  $-  $249.7 
      U.S.      State and  Commer-  Residen-    
     Treasury,     Political   cial  tial    
     Govt and   Foreign  Sub-  Mortgage-  Mortgage  Asset- 
   Corporate  Agency   Govts   divisions  backed   backed   backed 
                             
Balance, January 1, 2010 $635.8  $-  $20.7  $52.6  $1,782.3  $-  $237.6 
Total gains (losses),                            
realized and unrealized,                            
included in:                            
Earnings as:                            
Net investment income  .3   -   -   -   .8   -   - 
Investment losses, net  -   -   -   -   (40.8)  -   .5 
Decrease in the fair value of                            
the reinsurance contracts  -   -   -   -   -   -   - 
Subtotal  .3   -   -   -   (40.0)  -   .5 
Other comprehensive                            
income (loss)  11.2   -   -   .4   (71.0)  -   2.6 
Purchases/issuances                                  89.8   -   -   -   -   -   - 
Sales/settlements  (19.3)  -   -   (.2)  (.1)  -   (11.2)
Transfers into/out of                            
Level 3 (2)
  (158.8)  -   (19.7)  (5.3)  -   .2   (21.2)
Balance, March 31, 2010 $559.0  $-  $1.0  $47.5  $1,671.2  $.2  $208.3 

(1)Includes Trading securities’ Level 3 amount.
(2)Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.

38



  Redeem-             
  able  Other  Other  GMIB  Separate GWBL 
  Preferred  Equity  Invested  Reinsurance  Accounts Features 
  Stock  
Investments(1)
  Assets  Asset  Assets Liability 
Discrete third quarter:                  
Balance, July 1, 2009 $13.5  $1.8  $436.6  $1,265.4  $261.8  $123.4 
Total gains (losses),                        
realized and unrealized,                        
included in:                        
Earnings as:                        
Net investment income  -   -   (39.7)  -   -   - 
Investment gains                        
(losses), net  (78.4)  -   -   -   (23.9)  - 
(Decrease) increase in the                        
fair value of the                        
reinsurance contracts  -   -   -   8.0   -   - 
Policyholders’ benefits  -   -   -   -   -   (16.8)
Subtotal  (78.4)  -   (39.7)  8.0   (23.9)  (16.8)
Other comprehensive                        
income  91.9   .2   -   -   -   - 
Purchases/issuances  -   -   29.9   (29.2)  4.5   3.5 
Sales/settlements  -   (.2)  -   -   (1.3)  - 
Transfers into/out of                        
Level 3(2)
  22.0   -   -   -   -   - 
Balance, Sept. 30, 2009 $49.0  $1.8  $426.8  $1,244.2  $241.1  $110.1 
                         
First nine months of 2009:                        
Balance, January 1, 2009 $23.3  $2.9  $547.0  $1,985.3  $334.7  $272.6 
Total gains (losses),                        
realized and unrealized,                        
included in:                        
Earnings as:                        
Net investment income  .1   -   (199.2)  -   -   - 
Investment gains                        
(losses), net  (78.4)  -   -   -   (92.8)  - 
(Decrease) increase in the                        
fair value of the                        
reinsurance contracts  -   -   -   (736.1)  -   - 
Policyholders’ benefits   -    -   -   -   -   (170.9)
Subtotal  (78.3)  -   (199.2)  (736.1)  (92.8)  (170.9)
Other comprehensive                        
income  62.2   .1   -   -   -   - 
Purchases/issuances  -   -   79.0   (5.0)  (5.8)  8.4 
Sales/settlements                                     -   (1.2)  -   -   4.1   - 
Transfers into/out of                        
Level 3(2)
  41.8   -   -   -   .9   - 
Balance, Sept. 30, 2009 $49.0  $1.8  $426.8  $1,244.2  $241.1  $110.1 
(1)Includes Trading securities’ Level 3 amount.
(2)Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
39
  Fixed  Other             
  Maturities  Equity  Other  GMIB  Separate  GWBL 
  Available  Investments  Invested  Reinsurance  Accounts  Features 
  For Sale   (1)  Assets  Asset  Assets  Liability 
                    
Discrete third quarter:                   
Balance, July 1, 2008   $2,740.5  $2.5  $175.9  $309.4  $26.7  $- 
Total gains (losses),                        
realized and unrealized,                        
included in:                        
Earnings as:                        
Net investment income  .5       3.0       -   - 
Investment gains                        
(losses), net  (33.7)      -       (2.4)  - 
(Decrease) increase in                        
fair value of the                        
reinsurance contracts  -   -   -   191.1   -   - 
Policyholder’s Benefits  -   -   -   -   -   41.9 
Subtotal   (33.2)      3.0   191.1   (2.4)  41.9 
Other comprehensive                        
income   (271.0)  .4   -   -   -   - 
Purchases/issuances and                        
sales/settlements, net  (13.3)  (.2)  17.7   14.0   (2.5)  5.0 
Transfers into/out of                        
Level 3(2)
  19.2   -   (.1)  -   6.2   - 
Balance, Sept. 30, 2008 $2,442.2  $2.7  $196.5  $514.5  $28.0  $46.9 
                         
First nine months of 2008:                        
Balance, Dec. 31, 2007 $3,103.7  $3.9  $158.0  $124.6  $41.2  $- 
Impact of adopting                        
new guidance on Jan. 1                        
included in earnings  -   -   -   209.2   -   - 
Balance, Jan. 1, 2008  3,103.7   3.9   158.0   333.8   41.2   - 
Total gains (losses),                        
realized and unrealized,                        
included in:                        
Earnings as:                        
Net investment income  1.6   -   8.7   -   -   - 
Investment gains                        
(losses), net  (81.5)  (1.3)  -   -   (7.1)  - 
(Decrease) increase in                        
fair value of the                        
reinsurance contracts  -   -   -   136.7   -   - 
Policyholder’s Benefits  -   -   -   -   -   41.9 
Subtotal     (79.9)  (1.3)  8.7   136.7   (7.1)  41.9 
Other comprehensive                        
income   (696.0)  .3   -   -   -   - 
Purchases/issuances and                        
sales/settlements, net  (47.8)  (.2)  26.9   44.0   (12.3)  5.0 
Transfers into/out of                        
Level 3(2)
  162.2   -   2.9   -   6.2   - 
Balance, Sept. 30, 2008 $2,442.2  $2.7  $196.5  $514.5  $28.0  $46.9 
                         
                         
(1)  
(2)  
Includes Trading securities’ Level 3 amount.
(2)  Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.



 
4033
 

  Redeem-                
  able  Other  Other  GMIB  Separate  GWBL 
  Preferred  Equity  Invested  Reinsurance  Accounts  Features 
  Stock  
Investments(1)
  Assets  Asset  Assets  Liability 
                         
Balance, January 1, 2010 $36.4  $2.4  $299.6  $980.6  $229.7  $54.9 
Total gains (losses),                        
realized and unrealized,                        
included in:                        
Earnings as:                        
Net investment income  -   -   (6.5)  -   -   - 
Investment losses, net  -   -   -   -   (24.0)  - 
Decrease in the fair value of
                        
the reinsurance contracts  -   -   -   (41.7)  -   - 
Policyholders’ benefits  -   -   -   -   -   (16.7)
Subtotal  -   -   (6.5)  (41.7)  (24.0)  (16.7)
Other comprehensive                        
income (loss)  3.4   -   -   -   -   - 
Purchases/issuances  -   -   -   6.1   1.4   2.3 
Sales/settlements  -   (.3)  -   -   (1.1)  - 
Transfers into/out of��                       
Level 3 (2)
  (10.4)  -   (299.6)  -   .9   - 
Balance, March 31, 2010 $29.4  $2.1  $(6.5) $945.0  $206.9  $40.5 
(1)  Includes Trading securities’ Level 3 amount.
(2)  Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.

Level 3 Instruments
Fair Value Measurements
(In Millions)

  Fixed                
  Maturities  Other  Other  GMIB  Separate  GWBL 
  Available-  Equity  Invested  Reinsurance  Accounts  Features 
  For-Sale  
Investments(1)
  Assets  Asset  Assets  Liability 
                   
Balance, January 1, 2009 $3,047.8  $2.8  $547.0  $1,985.3  $334.7  $272.6 
Total gains (losses),                        
realized and unrealized,                        
included in:                        
Earnings as:                        
Net investment income  .6   -   (136.7)  -   -   - 
Investment (losses)                        
gains, net  (3.9)  -   -   -   (32.2)  - 
Decrease in fair value of                        
reinsurance contracts  -   -   -   (309.4)  -   - 
Policyholders’ benefits  -   -   -   -   -   (14.4)
Subtotal  (3.3)  -   (136.7)  (309.4)  (32.2)  (14.4)
Other comprehensive                        
income  (179.2)  .1   -   -   -     
Purchases/issuances and                        
sales/settlements, net  29.0   (.1)  22.8   7.2   (3.2)  1.9 
Transfers into/out of                        
Level 3(2)
  (98.3)  (.1)  -   -   .9   - 
Balance, March 31, 2009 $2,796.0  $2.7  $433.1  $1,683.1  $300.2  $260.1 
(1)  Includes Trading securities’ Level 3 amount.
(2)  Transfers into/out of Level 3 classification are reflected at beginning-of-period fair values.
34
The table below details changes in unrealized gains (losses) for the discrete third quarterfirst quarters of 2010 and first nine months of 2009 and 2008 by category for Level 3 assets and liabilities still held at September 30,March 31, 2010 and 2009, and 2008, respectively:

 Earnings        Earnings       
    Investment  Change in  Other        Investment  Decrease in       
 Net  Gains  Fair Value of  Compre-  Policy-  Net  Gains  Fair Value of     Policy- 
 Investment  (Losses),  Reinsurance  hensive  holder  Investment  (Losses),  Reinsurance     holders’ 
 Income  Net  Contracts  Income  Benefits  Income  Net  Contracts  OCI  Benefits 
 (In Millions)  (In Millions) 
Level 3 Instruments                              
Discrete Third Quarter 2009               
Still Held at Sept. 30, 2009:               
Change in unrealized gains or losses
               
Fixed maturities available for sale
               
Still Held at March 31, 2010:               
Change in unrealized gains               
or losses               
Fixed maturities,               
available-for-sale:               
Corporate
 $-  $-  $-  $34.7  $-  $-  $-  $-  $11.1  $- 
U.S. Treasury, government                                        
and agency
  -   -   -   -   -   -   -   -   -   - 
State and political                                        
subdivisions
  -   -   -   1.8   -   -   -   -   .4   - 
Foreign Governments
  -   -   -   2.7   - 
Foreign governments  -   -   -   -   - 
Commercial                                        
mortgage-backed
  -   -   -   (2.3)  -   -   -   -   (70.9)  - 
Residential                                        
mortgage-backed
  -   -   -   -   -   -   -   -   -   - 
Asset-backed
  -   -   -   18.7   -   -   -   -   2.5   - 
Redeemable preferred stock  -   -   -   91.9   -   -   -   -   3.4   - 
Subtotal
  -   -   -   147.5   -   -   -   -   (53.5)  - 
Equity securities,                                        
available for sale
  -   -   -   -   - 
available-for-sale  -   -   -   -   - 
Other equity investments  -   -   -   (.2)  -   -   -   -   .1   - 
Other invested assets
  (9.7)  -   -   -   -   (6.5)  -   -   -   - 
Cash equivalents
  -   -   -   -   -   -   -   -   -   - 
Segregated securities
  -   -   -   -   -   -   -   -   -   - 
GMIB reinsurance contracts  -   -   (21.2)  -   -   -   -   (35.6)  -   - 
Separate Accounts’ assets  -   (26.4)  -   -   -   -   (24.1)  -   -   - 
GWBL features’ liability  -   -   -   -   (13.3)  -   -   -   -   14.4 
Total
 $(9.7) $(26.4) $(21.2) $147.3  $(13.3) $(6.5) $(24.1) $(35.6) $(53.4) $14.4 
                    


 
4135
 


  Earnings       
     Investment  Change in  Other    
  Net  Gains  Fair Value of  Compre-  Policy- 
  Investment  (Losses),  Reinsurance  hensive  holders 
  Income  Net  Contracts  Income  Benefits 
  (In Millions) 
Level 3 Instruments               
First Nine Months of 2009               
Still Held at Sept. 30, 2009:               
Change in unrealized gains or losses
               
Fixed maturities available for sale
               
Corporate
 $-  $-  $-  $32.4  $- 
U.S. Treasury, government                    
and agency
  -   -   -   -   - 
State and political                    
subdivisions
  -   -   -   (7.7)  - 
Foreign Governments
  -   -   -   3.8   - 
Commercial                    
mortgage-backed
  -   -   -   46.1   - 
Residential                    
mortgage-backed
  -   -   -   -   - 
Asset-backed
  -   -   -   1.4   - 
Redeemable preferred stock  -   -   -   62.2   - 
Subtotal
  -   -   -   138.2   - 
Equity securities,                    
available for sale
  -   -   -   -   - 
Other equity investments  -   -   -   .2   - 
Other invested assets
  (120.2)  -   -   -   - 
Cash equivalents
  -   -   -   -   - 
Segregated securities
  -   -   -   -   - 
GMIB reinsurance contracts  -   -   (741.1)  -   - 
Separate Accounts’ assets  -   (95.7)  -   -   - 
GWBL features’ liability  -   -   -   -   (162.5)
Total
 $(120.2) $(95.7) $(741.1) $138.4  $(162.5)
                     


 
42
 


 Earnings     Earnings       
    Investment  Commissions  Other     Investment  Decrease in       
 Net  Gains  Fees and  Compre-  Net  Gains  Fair Value of     Policy- 
 Investment  (Losses),  Other  hensive  Investment  (Losses),  Reinsurance     holder 
 Income  Net  Income  Income  Income  Net  Contracts  OCI  Benefits 
 (In Millions)  (In Millions) 
Level 3 Instruments:            
Discrete Third Quarter 2008            
Still Held at Sept. 30, 2008:            
Change in unrealized gains or losses
            
Fixed maturities            
available for sale
 $-  $-  $-  $(275.0)
Other equity investments
  -   -   -   .4 
Other invested assets
  20.7   -   -   - 
Cash equivalents
  -   -   -   - 
Segregated securities
  -   -   -   - 
GMIB reinsurance contracts  -   -   191.1   - 
Separate Accounts’ assets
  -   (2.4)  -   - 
GWBL features’ liabilities
  -   41.9   -   - 
Total
 $20.7  $39.5  $191.1  $(274.6)
                
First Nine Months of 2008                
Still Held at Sept. 30, 2008:                
Level 3 Instruments               
Still Held at March 31, 2009:               
Change in unrealized gains                               
or losses                               
Fixed maturities                
available for sale
 $-  $-  $-  $(697.6)
Fixed maturities,               
available-for-sale $-  $-  $-  $(179.3) $- 
Other equity investments
  -   -   -   .4   -   -   -   .1   - 
Other invested assets
  35.6   -   -   -   (113.9)  -   -   -   - 
Cash equivalents
  -   -   -   -   -   -   -   -   - 
Segregated securities
  -   -   -   -   -   -   -   -   - 
GMIB reinsurance contracts  -   -   136.7   -   -   -   (302.2)  -   - 
Separate Accounts’ assets
  -   (6.9)  -   -   -   (32.2)  -   -   - 
GWBL features’ liability
  -   41.9   -   -   -   -   -   -   12.5 
Total
 $35.6  $35.0  $136.7  $(697.2) $(113.9) $(32.2) $(302.2) $(179.2) $12.5 

Fair value measurements are required on a non-recurring basis for certain assets, including goodwill, mortgage loans on real estate, equity real estate held for production of income, and equity real estate held for sale, only when an other-than-temporary impairment or other event occurs.  When such fair value measurements are recorded, they must be classified and disclosed within the fair value hierarchy.  In third quarter and the first nine monthsquarters of both2010 and 2009, and 2008, no assets were required to be measured at fair value on a non-recurring basis.

43
The carrying values and fair values at September 30,March 31, 2010 and December 31, 2009 for financial instruments not otherwise disclosed in Note 3 of Notes to Consolidated Financial Statements are presented in the table below.  Certain financial instruments are exempt from the requirements for fair value disclosure, such as insurance liabilities other than financial guarantees and investment contracts and pension and other postretirement obligations.

      
 March 31, 2010  December 31, 2009 
 Carrying     Carrying  Fair  Carrying  Fair 
 Value  Fair Value  Value  Value  Value  Value 
 (In Millions)  (In Millions) 
         
Consolidated:                  
Mortgage loans on real estate $5,035.0  $4,916.3  $4,948.6  $4,947.5  $4,939.1  $4,904.5 
Other limited partnership interests  1,359.8   1,359.8   1,457.5   1,457.5   1,421.5   1,421.5 
Policyholders liabilities:                        
Investment contracts   3,490.6   3,501.6   3,334.6   3,365.2   3,382.4   3,389.8 
Guaranteed interest contracts  5.1   5.4   -   - 
Long-term debt   1,072.7   1,029.8   550.3   568.7   550.2   580.7 
Loans to Affiliates  1,218.0   1,280.9   1,712.0   1,772.3 
                        
Closed Blocks:                        
Mortgage loans on real estate  1,936.6   1,871.5  $1,836.0  $1,812.1  $1,860.7  $1,822.6 
Other equity investments   1.6   1.6   1.5   1.5   1.5   1.5 
SCNILC liability   7.9   7.9   7.2   7.2   7.6   7.6 
        
Wind-up Annuities:        
Mortgage loans on real estate  151.1   153.7 
Other equity investments   1.3   1.3 
Guaranteed interest contracts  5.6   6.3 

Fair values for mortgage loans on real estate are measured by discounting future contractual cash flows using interest rates at which loans with similar characteristics and credit quality would be made.  Fair values for foreclosed mortgage loans and problem mortgage loans are limited to the fair value of the underlying collateral if lower.

36
Other limited partnership interests and other equity investments, including interests in investment companies, are accounted for under the equity method and their resulting carrying values are used as a proxy for fair value measurement.method.

The fair values for AXA Financial Group’s association plan contracts, supplementary contracts not involving life contingencies (“SCNILC”)SCNILC, deferred annuities and certain annuities, which are included in Policyholders’ account balances, and guaranteed interest contracts are estimated using projected cash flows discounted at rates reflecting current market rates.

The fair values for single premium deferred annuities, included in policyholders’ account balances, are estimated as the discounted value of projected cash flows. Expected cash flows are discounted back to the present at the current market rates.

Fair values for long-term debt are determined using published market values, when available, or contractual cash flows discounted at market interest rates.  The fair values for non-recourse mortgage debt are determined by discounting contractual cash flows at a rate that takes into account the level of current market interest rates and collateral risk.  The fair values for recourse mortgage debt are determined by discounting contractual cash flows at a rate based upon current interest rates of other companies with credit ratings similar to AXA Financial Group.  AXA Financial Group’s fair value of short-term borrowings approximates its carrying value.  The fair values of AXA Financial Group’s borrowing and lending arrangements with AXA affiliated entities are determined in the same manner as herein described for such transactions with third-parties.


44


8)  EMPLOYEE BENEFIT PLANS

Generally, AXA Financial Group’s funding policy to its qualified pension plans (other than those of AllianceBernstein) is to make minimum annual aggregate contributions of approximately $30.0 million unless the minimum contributionsas required by ERISA are greater.law.  AllianceBernstein’s policy is to satisfy its funding obligation to its qualified retirement plan each year in an amount not less than the minimum required by ERISA, as amended by the Pension Protection Act, and not greater than the maximum it can deduct for Federal income tax purposes.

In the first nine monthsquarter of 2009,2010, cash contributions by AllianceBernstein and AXA Financial Group (other than AllianceBernstein) to their respective qualified pension plans were $12.8 millionzero and $44.0$170.0 million.  AllianceBernstein and AXA Financial Group do not plan on making anycurrently estimate they will make additional contributions this year.to their respective qualified retirement plans of $6.0 million and $71.0 million before year end 2010.

Components of net periodic pension expense for theAXA Financial Group’s qualified and non-qualified plans were as follow:

Three Months Ended Nine Months Ended  Three Months Ended 
September 30, September 30,  March 31, 
2009 2008 2009 2008  2010  2009 
(In Millions)  (In Millions) 
                   
Service cost  $9.0  $15.6  $37.2  $44.7  $13.8 $14.1 
Interest cost on projected benefit obligation  47.3   47.0   143.5   143.9 
Interest cost  45.6  48.1 
Expected return on assets   (33.1)  (55.9)  (104.0)  (171.2)  (32.5) (35.5)
Net amortization   29.1   13.6   86.5   39.7   36.3  28.7 
Curtailment gain   -   (.8)  -   (.8)
Net Periodic Pension Expense  $52.3  $19.5  $163.2  $56.3  $63.2 $55.4 

Components of AXA Financial Group’s net postretirement benefitbenefits costs follow:

 Three Months Ended Nine Months Ended 
 September 30, September 30, 
 2009 2008 2009 2008 
 (In Millions) 
             
Service cost                                                       $.4  $.5  $1.5  $1.8 
Interest cost on accumulated postretirement                
benefit obligation                                                     9.1   9.1   26.7   27.0 
Net amortization                                                        .9   1.1   2.1   3.2 
Net Postretirement Benefits                                                       $10.4  $10.7  $30.3  $32.0 
  Three Months Ended 
  March 31, 
  2010  2009 
   (in Millions)  
        
Service cost $.6 $.6 
Interest cost  8.5  8.8 
Net amortization  1.0  .6 
Net Periodic Postretirement Benefits Costs $10.1 $10.0 

37
Components of net postemployment benefitbenefits costs follow:

 Three Months Ended Nine Months Ended 
 September 30, September 30, 
 2009 2008 2009 2008 
 (In Millions) 
             
Service cost                                                       $1.4  $1.2  $3.7  $3.6 
Interest cost projected benefit obligation  .5   .4   1.2   1.2 
Net amortization                                                        1.9   (2.0)  1.9   (2.0)
Net Periodic Postemployment Costs $3.8  $(.4) $6.8  $2.8 

On June 27, 2008, AXA Financial announced certain benefit plans changes.  Subject to specific grandfathering provisions, active participants in certain MONY Life retirement plans will accrue future benefits under formulas the same as or similar to those provided under AXA Equitable plans.  Some of these changes took effect as of October 1, 2008 while others took effect as of January 1, 2009.  In addition, effective January 1, 2009, certain sales force participants under AXA Equitable’s non-qualified pension plan received their plan benefits on an annual basis rather than after separation from service.  Also, retiree life coverage for former MONY Life employees and sales force were adjusted to the standard amount offered under the AXA Equitable Group Life Insurance Plan as of January 1, 2009, subject to certain grandfathering provisions.  In second quarter 2008, AXA Financial recognized an aggregate reduction in its pension and other postretirement benefits obligations of approximately $35.3 million resulting from remeasurement of the respective benefit obligations coincident with announcement of these modifications in benefits entitlements.  This reduction was reflected as an increase in other comprehensive income and will reduce net periodic benefit cost in future periods based on applicable recognition or amortization requirements.
   Three Months Ended 
  March 31, 
    2010   2009 
  (In Millions) 
        
Service cost $1.3 $1.2 
Interest cost  .4  .4 
Net Periodic Postemployment Benefits Costs $1.7 $1.6 


45
9)  SHARE-BASED COMPENSATION PROGRAMS

AXA and AXA Financial sponsor various share-based compensation plans for eligible employees and associates of AXA Financial and its subsidiaries.  AllianceBernstein also sponsors its own unit option plans for certain of its employees.  For the third quarterfirst quarters of 2010 and first nine months of 2009, and of 2008, respectively, AXA Financial Group recognized compensation costs of $19.6 million, $49.0 million, $16.4 million and $53.0 millioncost for share-based payment arrangements.arrangements of $58.5 million and $5.9 million.

On May 10, 2009,April 1, 2010, approximately 318,051620,507 performance units earned under the AXA Performance Unit Plan 20072008 were fully vested for total value of approximately $5.1$13.5 million.  Distributions to participants were made on May 21, 2009,April 22, 2010, resulting in cash settlements of approximately 85%81.5% of these performance units for aggregate value of approximately $4.3$10.9 million and equity settlements of the remainder with approximately 46,615114,757 restricted AXA ADRsordinary shares for aggregate value of approximately $0.8$2.6 million.  These AXA ADRsordinary shares were sourced from immediate exchange on a one-for-one basis of the 220,000 AXA ADRs for which AXA Financial Group paid $7.4 million in settlement on MayApril 10, 20092010 of a forward purchase contract entered into on September 26, 2007 by which AXA Financial took delivery of 78,000 shares for payment of approximately $3.6 million.June 16, 2008.

On March 20, 2009,19, 2010, approximately 1.72.3 million options to purchase AXA ordinary shares were granted under the terms of the Stock Option Plan at an exercise price of 10.0015.43 euros.  Approximately 1.42.2 million of those options have a four-year graded vesting schedule, with one-third vesting on each of the second, third, and fourth anniversaries of the grant date, and approximately 0.30.1 million have a four-year cliff vesting term.  In addition, approximately 0.20.4 million of the total options awarded on March 20, 200919, 2010 are further subject to conditional vesting terms that require the AXA ordinary share price to outperform the Euro Stoxx Insurance Index measured between March 20, 200919, 2010 and March 20, 2013.19, 2014.  All of the options granted on March 20, 200929, 2010 have a ten-year contractual term.  The weighted average grant date fair value per option award was estimated at $2.57$3.73 using a Monte-Carlo simulation approachBlack-Scholes options pricing model with modification to modelmeasure the value of the conditional vesting feature.  Key assumptions used in the valuation included expected volatility of 57.5%36.5%, a weighted average expected term of 5.56.4 years, an expected dividend yield of 10.69%6.52% and a risk-free interest rate of 2.74%2.5%.  The total fair value of this award net(net of expected forfeitures,forfeitures) of approximately $3.7$7.8 million is charged to expense over the shorter of the vesting term or the period up to the date at which the participant becomes retirement eligible.  In thirdfirst quarter and first nine months of 2009,2010, the expense associated with the March 20, 200919, 2010 grant of options was approximately $0.3 million and $3.0 million, respectively.$4.5 million.

On March 20, 2009,19, 2010, under the terms of the AXA Performance Unit Plan 2009,2010, the AXA Management Board awarded approximately 1.31.6 million unearned performance units to employees of AXA Financial’s subsidiaries.  During each year that the performance unit awards are outstanding, a pro-rata portion of the units may be earned based on criteriaThe extent to which 2010-2011 cumulative two-year targets measuring the performance of AXA and AXA Financial Group.  The extent to which performance targetsGroup are met determinesachieved will determine the number of performance units earned, which may vary in linear formula between 0% and 130% of the number of performance units at stake.  Performance units earned under the 2009 plan cliff-vest on the second anniversaryHalf of their award date.  When fully-vested, the performance units earned during this two-year cumulative performance period will vest and be settled in cash or, in some cases, a combinationon each of cash (70%)the second and stock (30%),third anniversaries of the latter equity portion having transfer restrictions for a two-year period.  For 2009 awards, theaward date.  The price used to value the performance units at each settlement date will be the average opening price of the AXA ordinary share for the last 20 trading days of the vesting period converted to U.S. dollars using the Euro to U.S. dollar exchange rate on March 31, 2011.2012 and 2013, respectively.  Participants may elect to receive cash, AXA ordinary shares, or a combination thereof, in settlement of performance units earned, however, settlement is limited to 50% or reduced to 0% if AXA pays a dividend only in one of the two years during the cumulative two-year performance period or does not pay any dividends, respectively.  In thirdfirst quarter and first nine months of 2009,2010, the expense associated with the March 20, 200919, 2010 grant of performance units was approximately $2.5 million and $10.0 million, respectively.$11.5 million.

On June 16, 2008, AXA Financial entered into a total return swap and a forward purchase contract on the AXA ADR to limit its price exposure on awards expected to vest on April 1, 2010 under the terms of the AXA Performance Unit Plan 2008.  Terms of the swap agreement require quarterly payments by AXA Financial of a LIBOR-based spread in exchange for a total return payment on the AXA ADR based on 773,000 notional shares.  The forward purchase contract requires AXA Financial to take delivery of 220,000 AXA ADRs on April 10, 2010 for payment of $33.7329 per share, or approximately $7.4 million.  The forward purchase obligation has been recognized by AXA Financial Group in its consolidated balance sheets at September 30, 2009 and December 31, 2008 as a direct reduction of capital in excess of par value and does not require adjustment in future periods for changes in value.

4638
 
During the reservation period from September 1, 2009 through September 16, 2009 and the November 2, 2009 through November 13, 2009 period (the “Retraction/Subscription Period”), eligible employees of participating AXA Financial subsidiaries were offered the opportunity to reserve a subscription to purchase newly issued AXA stock, subject to plan limits, under the terms of AXA Shareplan 2009.  The U.S. dollar purchase price of $22.06 per share was determined by applying the U.S. dollar/Euro forward exchange rate on October 28, 2009 to the discounted formula subscription price in Euros.  Reserved subscriptions not cancelled during the Retraction/Subscription Period become binding and irrevocable at November 13, 2009.

10)  INCOME TAXES

Income taxes for the interim periodsperiod ended September 30, 2009 and September 30, 2008March 31, 2010 have been computed using an estimated annual effective tax rate.  This rate is revised, if necessary, at the end of each successive interim period to reflect the current estimate of the annual effective tax rate.  In addition, theThe tax benefit for the period ended September 30, 2009March 31, 2010 reflected an additionala benefit in the amount of $15.1$148.4 million for the release in second quarter of tax audit reserves held by the Investment Management segment.

At September 30, 2009, unrecognized tax benefits increased by $9.5 million from $605.8 million at December 31, 2008 to $615.3 million.  The net increase was attributable to unrecognized tax benefitsprimarily related to the filing of the 2008 Federal income tax return partially offset by the release of tax audit reserves relatedstate deferred taxes due to the completionconversion of various state and city tax audits and developments inACMC, Inc. from a corporation to a limited liability company.

Income taxes for the Federal tax law. Of the total $615.3 million of unrecognized tax benefits held at September 30,interim period ended March 31, 2009 $501.0 million would affect thewere computed using a discrete effective tax rate and $114.3 million aremethod.  The use of the discrete method was more appropriate than the annual effective tax positionsrate method for whichthis period.  The estimated annual effective tax rate was not considered reliable due to its sensitivity to minimal changes to forecasted annual pre-tax earnings.  Under the ultimate deductibility is highly certain butdiscrete method, AXA Financial Group determined the tax expense based upon actual results as if the interim period were an annual period.  The tax benefit for which there is uncertainty about the timing of such deductibility.

period ended March 31, 2009 was greater than the expected tax benefit primarily due to the Separate Account dividends received deduction.

11)  LITIGATION

There have been no new material legal proceedings and no material developments in specific litigations previously reported in AXA Financial Group’s Notes to Consolidated Financial Statements for the year ended December 31, 2008, except as described below:

In Wiggenhorn, in April 2009, plaintiffs filed a petition for a writ of certiorari with the Supreme Court of the United States.  In October 2009, the Supreme Court of the United Stated declined to grant plaintiffs petition for writ of certiorari.

In the Meola consolidated wage and hour litigation, in May 2009, the Court granted preliminary approval of the settlement and the settlement proceeds were turned over to the Class Administrator.  In June 2009, notices were sent out to class members.  In September 2009, the Court granted final approval of the settlement.2009.

Although the outcome of litigation generally cannot be predicted with certainty, management intends to vigorously defend against the allegations made by the plaintiffs in the actions described above and those described in AXA Financial Group’s Notes to Consolidated Financial Statements for the year ended December 31, 2008,2009, and believes that the ultimate resolution of the litigation described therein involving AXA Financial and/or its subsidiaries should not have a material adverse effect on the consolidated financial position of AXA Financial Group.  Management cannot make an estimate of loss, if any, or predict whether or not any of the litigations described above or in AXA Financial Group’s Notes to Consolidated Financial Statements for the year ended December 31, 20082009 will have a material adverse effect on AXA Financial Group’s consolidatedconsolidat ed results of operations in any particular period.

In addition to the matters described above and in AXA Financial Group’s Notes to Consolidated Financial Statements for the year ended December 31, 2008,2009, a number of lawsuits continue to behave been filed against life and health insurers in the jurisdictions in which AXA Equitable, MONY Life, and their respective insurance subsidiaries do business involving insurers’ sales practices, alleged agent misconduct, alleged failure to properly supervise agents, contract administration and other matters.  The resolutionSome of lawsuits alleging these and other claims in the pastlawsuits have resulted in the award of substantial judgments against other insurers, including material amounts of punitive damages, or in substantial settlements.  In some states, juries have substantial discretion in awarding punitive damages.  AXA Equitable, AXA Life, MONY Life, MLOA and USFL, like other life and health insurers, from time to time are involved in such litigations.  Some of these actions and proceedings filed against AXA Financial and its subsidiaries have been brought on behalf of various alleged classes of claimants and certain of these claimants seek damages of unspecified amounts.  While the ultimate outcome of such matters cannot be predicted with certainty, in the opinion of management no such pending matter is likely to have a material adverse effect on AXA Financial Group’s consolidated financial position or results of operations.  However, it should be noted that the frequency of large damage awards, including large punitive damage awards that bear little or no relation to actual economic damages incurred by plaintiffs in some jurisdictions, continues to create the potential for an unpredictable judgment in any given matter.


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12)  BUSINESS SEGMENT INFORMATION

The following tables reconcile segment revenues and earnings from continuing operations before income taxes to total revenues and earnings as reported on the consolidated statements of earnings and segment assets to total assets on the consolidated balance sheets, respectively:respectively.

 Three Months Ended 
 March 31, 
 2010 2009  
  (In Millions) 
Segment revenues:      
Financial Advisory/Insurance $1,803.3  $1,699.6 
Investment Management (1)
  729.6   601.2 
Consolidation/elimination  (5.7)  (6.5)
Total Revenues $2,527.2  $2,294.3 
  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2009  2008  2009  2008 
  (In Millions) 
Segment revenues:            
Financial Advisory/Insurance                                                 $783.7  $2,928.3  $(51.5) $8,008.9 
Investment Management (1)
  824.4   848.4   2,154.8   2,956.7 
Consolidation/elimination                                                  (12.2)  (22.1)  (26.6)  (64.7)
Total Revenues                                                 $1,595.9  $3,754.6  $2,076.7  $10,900.9 
(1) Net of interest expense incurred on securities borrowed.
Segment earnings (loss) from continuing operations before      
income taxes:      
Financial Advisory/Insurance $154.0  $(100.5)
Investment Management  113.2   11.1 
Consolidation/elimination  2.0   - 
Total Earnings (Loss) from Continuing Operations        
before Income Taxes $269.2  $(89.4)

(1) Net of interest expense incurred on securities borrowed.

Segment (loss) earnings from            
continuing operations before income taxes:            
Financial Advisory/Insurance                                                 $(690.2) $62.4  $(4,082.6) $1,481.8 
Investment Management                                                  215.9   233.4   341.9   802.8 
Consolidation/elimination                                                  .4   (2.6)  1.5   (3.1)
Total (Loss) Earnings from Continuing                
Operations before Income Taxes $(473.9) $293.2  $(3,739.2) $2,281.5 

    
 September 30,  December 31, March 31, December 31, 
 2009  2008 2010 2009 
 (In Millions) (In Millions) 
            
Segment assets:            
Financial Advisory/Insurance  $158,263.3  $144,467.7  $163,513.0  $159,818.1 
Investment Management   12,602.8   13,377.3   12,293.6   12,026.1 
Consolidation/elimination   (98.5)  (21.5)  (51.0)  (19.3)
Total Assets  $170,767.6  $157,823.5  $175,755.6  $171,824.9 

 
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13)  COMPREHENSIVE INCOME (LOSS)

The components of comprehensive (loss) income follow:

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2009  2008  2009  2008 
  (In Millions) 
    
Net (loss) earnings                                                            $(275.3) $185.8  $(2,306.3) $1,550.2 
                 
Other comprehensive income (loss),                
net of income taxes                
Change in unrealized gains (losses) ,                
net of reclassification adjustment  979.1   (943.8)  1,703.0   (1,561.3)
Change in defined benefit plan related items                
not yet recognized in periodic benefit cost,                
net of reclassification adjustment  (43.8)  8.5   (75.2)  48.6 
Total other comprehensive income (loss),                
net of income taxes  935.3   (935.3)  1,627.8   (1,512.7)
Comprehensive income (loss)  660.0   (749.5)  (678.5)  37.5 
Comprehensive income attributable to                
noncontrolling interest  (159.3)  (68.7)  (237.0)  (284.4)
Comprehensive Income (Loss)                
Attributable to AXA Financial, Inc. $500.7  $(818.2) $(915.5) $(246.9)



 
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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS


Management’s discussion and analysis is omitted pursuant to General Instruction H of Form 10-Q.  The management narrativefinancial condition and results of operations for AXA Financial Group that follows should be read in conjunction with the Consolidated Financial Statements and the related Notes to Consolidated Financial Statements included elsewhere herein, with the information provided under “Forward-looking Statements” included elsewhere herein and with the management narrative found in the Management’s Discussion and Analysis (“MD&A”) in Part II, Item 7 and “Risk Factors” in Part I, Item 1A included in AXA Financial Group’s Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 Form 10-K”).
FORWARD-LOOKING STATEMENTS
Certain of the statements included or incorporated by reference in this Quarterly Report on Form 10-Q, including but not limited to those in Management’s Discussion and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  Words such as “expects,” “believes,” “anticipates,” “includes,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall” or variations of such words are generally part of forward-looking statements.  Forward-looking statements are made based on management’s current expectations and beliefs co ncerning future developments and their potential effects upon AXA Financial, Inc. and its subsidiaries.  There can be no assurance that future developments affecting AXA Financial, Inc. and its subsidiaries will be those anticipated by management.  These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (i) disruption in the financial markets and general economic conditions, particularly in light of the recent financial crisis; (ii) equity market declines and volatility causing, among other things, a reduction in the demand for our subsidiaries products, a reduction in the revenue derived by our subsidiaries from asset-based fees, a reduction in the value of securities held for investment, including the investment in AllianceBernst ein, an acceleration in DAC and VOBA amortization and an increase in the liabilities related to annuity contracts offering enhanced guarantee features, and may lead to changes in the fair value of our GMIB reinsurance contracts, causing our earnings to be volatile; (iii) changes in interest rates causing, among other things, a reduction in our portfolio earnings, a reduction in the margins on interest sensitive annuity and life insurance contracts and an increase in the reserve requirements for such products, and a reduction in the demand for the types of products offered by our subsidiaries; (iv) ineffectiveness of our reinsurance and hedging programs to protect against the full extent of the exposure or loss we seek to mitigate; (v) changes to statutory reserves and/or risk based capital requirements; (vi) AXA Financial, Inc.’s reliance on AXA for most of its liquidity and capital needs; (vii) AXA Financial, Inc.’s primary reliance, as a holding company, on dividends or distributions from its&# 160;subsidiaries and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends or distributions; (viii) liquidity of certain investments; (ix) investment losses and defaults, and changes to investment valuations; (x) changes in assumptions related to deferred policy acquisition costs, valuation of business acquired or goodwill; (xi) differences between actual experience regarding mortality, morbidity, persistency, surrender experience, interest rates or market returns and the assumptions used in pricing products, establishing liabilities and reserves or for other purposes; (xii) counterparty non-performance; (xiii) changes in our insurance companies’ claims-paying or credit ratings; (xiv) adverse determinations in litigation or regulatory matters; (xv) regulatory or legislative changes, including government actions in response to the stress experienced by the global financial markets; (xvi) changes in tax law; (xvii) heightened competition, including with respect t o pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors and for personnel; (xviii) changes in statutory reserve requirements; (xix) changes in accounting standards, practices and/or policies; (xx) the effects of business disruption or economic contraction due to terrorism, other hostilities, pandemics, or natural or man-made catastrophes; (xxi) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; (xxii) our brand and reputation in the marketplace; (xxiii) the unknown impact on our subsidiaries’ businesses resulting from changes in the demographics of their client base, as baby-boomers move from the asset-accumulation to the asset-distribution stage of life; (xxiv) the impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including our ability to integrate acquisitions and to obtain the anticipated results and synergies from acqu isitions; (xxv) significant changes in securities market valuations affecting fee income, poor investment performance resulting in a loss of clients or other factors affecting the performance of AllianceBernstein; and (xxvi) other risks and uncertainties described from time to time in AXA Financial, Inc.’s filings with the SEC.
41
AXA Financial, Inc. does not intend, and is under no obligation, to update any particular forward-looking statement included in this document.  See “Risk Factors” sections included in AXA Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, 20082009 for discussion of certain risks relating to its businesses.
OVERVIEW
Introduction
AXA Financial Group is a diversified financial services organization offering a broad spectrum of financial advisory, insurance and investment management products and services.  It is a leading asset manager, with total assets under management of approximately $590.88 billion at March 31, 2010, of which approximately $501.31 billion were managed by AllianceBernstein.  Through its insurance company subsidiaries, AXA Financial Group is also among the oldest and largest life insurance organizations in the United States.  AXA Financial is a wholly owned subsidiary of AXA S.A. (“2008 Form 10-K”AXA”), a French holding company for an international group of insurance and Part II, Item 1Arelated financial services companies.
AXA Financial Group conducts operations in this Form 10-Q.two business segments, the Financial Advisory/Insurance segment and the Investment Management segment.  The financial advisory and insurance business conducted by AXA Equitable, AXA Advisors, AXA Network, AXA Distributors and their subsidiaries and the MONY Companies is reported in the Financial Advisory/Insurance segment.  The Financial Advisory/Insurance segment offers a variety of traditional, variable and interest-sensitive life insurance products, variable and fixed-interest annuity products, mutual funds and other investment products and asset management, financial planning and other services principally to individuals, small and medium-size businesses and professional and trade associations.  The Investment Management is principally comprised of the investm ent management business of AllianceBernstein, a leading global investment management firm.  AllianceBernstein earns revenues primarily by charging fees for managing the investment assets of, and providing research to, its clients.


Market Environment and Sales
INTRODUCTION

During the third quarter 2009, equity markets continued to improve from the lows experienced during first quarter 2009. At the end of third quarter 2009, U.S. Treasury interest rate yields, especially on longer maturities, remained above year-end 2008 interest rate yields.  Volatility for both equity markets and interest rates continued to subside during third quarter 2009, and were considerably below the high levels experienced during the fourth quarter 2008.  Market volatility, equity market performance and interest rate levels all impact AXA Financial Group’s business and consolidated results of operations, cash flows and financial condition are affected by conditions in the financial markets and the economy generally.  In the aftermath of the recent financial crisis and the ongoing uncertain conditions in the economy, the market for annuity and life insurance products of the types issued by the Insurance Group is dynamic.  Among other things, the features and pricing of various insurance products continue to change and some insurance companies have eliminated or limited the sales of certain annuity and life insurance products or features.  Changes to certain of the Insurance Group’s insurance product features, including guarantee features, pricing or Separate Account investment options, have made some of the annuity and life insurance products offered by the Insurance Group less competitive in the marketplace.  This, in turn, adversely affected sales in first quarter 2010, particularly in the wholesale channel, and may continue to adversely affect overall sales of the Insurance Group’s annuity and life insurance products.  The Insurance Group continues to review and modify its existing product offerings and has introduced new products with a view towards increasing the diversification in its product portfolio and driving profitable growth while managing risk.
As conditions in the insurance products marketplace, capital markets and economy continue to evolve, the Insurance Group may need to make further adjustments to its product offerings.
CRITICAL ACCOUNTING ESTIMATES
Application of Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment.  Management, on an ongoing basis, reviews estimates and assumptions used in the preparation of the consolidated financial statements.  If management determines that modifications in assumptions and estimates are appropriate given current facts and circumstances, the consolidated results of operations and financial position as reported in the Consolidated Financial Statements could change significantly.
Management believes the accounting policies relating to the following areas are most dependent on the application of estimates and assumptions:
·  Insurance Reserves and Policyholder Benefits
·  DAC and VOBA
·  Goodwill and Other Intangible Assets
·  Pension and Other Postretirement Benefit Plans
·  Investments – Impairments and Fair Value Measurements
·  Income Taxes

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Insurance Reserves and Policyholder Benefits
Participating Traditional Life Insurance Policies
For participating traditional life policies substantially all of which are in the Closed Blocks, future policy benefit liabilities are calculated using a net level premium method accrued as a level proportion of the premium paid by the policyholder.  The net level premium method reflects actuarial assumptions equal to guaranteed mortality and dividend fund interest rates.  The liability for annual dividends represents the accrual of the annual dividends earned.  Terminal dividends are accrued in proportion to gross margins over the life of the contract.   Gains and losses related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in “Policyholders’ dividends,” for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.  If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected.  If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero).  If over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations.  If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.
Non-participating Traditional Life Policies
The future policy benefit reserves for non-participating traditional life insurance policies relate primarily to non-participating term life products and are calculated using a net level premium method  equal to the present value of expected future benefits plus the present value of future maintenance expenses less the present value of future net premiums.  The expected future benefits and expenses are determined using assumptions on the basis of actuarial assumptions as to mortality, persistency and interest established at policy issue.  Reserve assumptions established at policy issue reflect best estimate assumptions based on the Insurance Group’s experience that, together with interest and expense assumptions, includes a margin for adverse deviation.  After the reserves are initially est ablished, premium deficiency tests are performed using best estimate assumptions as of the testing date without provisions for adverse deviation.  When the liabilities for future policy benefits plus the present value of expected future gross premiums for a product are insufficient to provide for expected future policy benefits and expenses for that product (i.e., reserves net of any DAC asset), DAC and the value of business acquired ("VOBA") are written off and thereafter, if required, a premium deficiency reserve is established by a charge to earnings.  Best estimate assumptions are determined by product group.  Mortality assumptions are reviewed annually and are generally based on the Insurance Group’s historical experience or standard industry tables, as applicable; expense assumptions are based on current levels of maintenance costs, adjusted for the effects of inflation; and interest rate assumptions are based on current and expected net investment returns.
Universal Life and Investment-type Contracts
Policyholders’ account balances for universal life and investment-type contracts represent an accumulation of gross premium payments plus credited interest less expense and mortality charges and withdrawals.
The Insurance Group issues certain variable annuity products with GMDB, GMIB and GWBL features.  The GMDB feature provides that in the event of an insured’s death, the beneficiary will receive the higher of the current contract account balance or another amount defined in the contract. The GMIB feature which, if elected by the policyholder after a stipulated waiting period from contract issuance, guarantees a minimum lifetime annuity based on predetermined annuity purchase rates that may be in excess of what the contract account value can purchase at then-current annuity purchase rates applied to a guaranteed minimum income benefit base.
43
Reserves for GMDB and GMIB obligations are calculated on the basis of actuarial assumptions related to projected benefits and related contract charges generally over the lives of the contracts using assumptions consistent with those used in estimating gross profits for purposes of amortizing DAC and VOBA.  The determination of this estimated liability is based on models that involve numerous estimates and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender and withdrawal rates, mortality experience, and, for contracts with the GMIB feature, GMIB election rates.  Assumptions related to contractholder behavior and mortality are updated when a material change in behavior or mortality experience is observed in an interim period.
GWBL features are accounted for as embedded derivatives, with fair values calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the embedded derivative feature. The determination of the fair value for the GWBL features is based upon models involving numerous estimates and subjective judgments.
Sensitivity of Future Rate of Return Assumptions on GMDB/GMIB Reserves
The future rate of return assumptions used in establishing reserves for GMDB and GMIB features regarding Separate Account performance used for purposes of this calculation are set using a long-term view of expected average market returns by applying a reversion to the mean approach, consistent with that used for DAC and VOBA amortization.  For additional information regarding the future expected rate of return assumptions and the reversion to the mean approach, see, “—DAC and VOBA”.
The GMDB/GMIB reserve balance before reinsurance ceded was $2.8 billion at March 31, 2010. The following table provides the sensitivity of the reserves for GMDB and GMIB features related to variable annuity policies relative to the future rate of return assumptions by quantifying the adjustments to these reserves that would be required assuming both a 100 basis point (“BP”) increase and decrease in the future rate of return.  This sensitivity considers only the direct effect of changes in the future rate of return on operating results due to the change in the reserve balance and not changes in any other assumptions such as persistency, mortality, or expenses included in the evaluation of the reserves, or any changes on DAC or other balances including hedging derivatives and the GMIB reinsurance asset.
GMDB/GMIB Reserves
Sensitivity - - Rate of Return
March 31, 2010
(In Millions)
  
Increase/(Reduction) in
GMDB/GMIB Reserves
 
100 BP decrease in future rate of return $418 
100 BP increase in future rate of return  (412) 

Traditional Annuities
The reserves for future policy benefits for annuities include group pension, payout and Wind ups annuities, and during the accumulation period are equal to accumulated contractholders’ fund balances and, after annuitization, are equal to the present value of expected future payments based on assumptions as to mortality, retirement, maintenance expense, and interest rates.  Interest rates used in establishing such liabilities reflect current rates at the time contracts were issued, which range from 2.25% to 9.98%.  Premium deficiency testing is performed by product group using best estimate assumptions.  If reserves determined based on these assumptions are greater than the existing reserves, the existing reserves are adjusted to the greater amount.
44
Reinsurance
For reinsurance contracts other than those covering GMIB exposure, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities.  GMIB reinsurance contracts are used to cede 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 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, therefore, will not immediately reflect the offsetting impact on future claims exposure resulting from the s ame capital market and/or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts.
Health
Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest.  Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest.
DAC and VOBA
Acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business, including commissions, underwriting, agency and policy issue expenses, are deferred.  Depending on the type of contract, DAC is amortized over the expected total life of the contract group, based on AXA Financial Group’s estimates of the level and timing of gross margins, gross profits or assessments, or anticipated premiums.  In calculating DAC amortization we are required to make assumptions about investment results including hedging costs, Separate Account performance, Separate Account fees, mortality and expense margins, lapse rates and anticipated surrender charges that impact the estimates of the level and timing of estimated gross profits or assessments, margins and anticipated future experience. VOBA, which arose from the acquisition of MONY, was established in accordance with purchase accounting guidance for business combinations.  VOBA is the actuarially determined present value of estimated future gross profits from insurance contracts in force at the date of the acquisition.  DAC and VOBA are amortized over the expected life of the contracts (over periods up to 40 years from date of issue) according to the type of contract using the methods described below as applicable.  DAC and VOBA are subject to loss recognition testing at the end of each accounting period.
Participating Traditional Life Policies
For participating traditional life policies (substantially all of which are in the Closed Block), DAC and VOBA are amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield.
At March 31, 2010, the average rate of assumed investment yields, excluding policy loans, for AXA Equitable was 6.00% grading to 5.5% over 10 years and for MONY Life was 5.0%.  Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends.  The effect on the accumulated amortization of DAC and VOBA of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised.  The effect on the DAC and VOBA assets that would result from realization of unrealized gains (losses) is recognized with an offset to accumulated comprehensive income in consolidated equity as of the balance sheet date.  Many of the factors that affect gross margins are included in the determination of AXA Financial Group’s dividends to these policyholders. DAC and VOBA adjustments related to participating traditional life policies do not create significant volatility in results of operations as the Closed Block recognizes a cumulative policyholder dividend obligation expense in “Policyholders’ dividends,” for the excess of actual cumulative earnings over expected cumulative earnings as determined at the time of demutualization.
45
Non-participating Traditional Life Insurance Policies
DAC and VOBA associated with non-participating traditional life policies are amortized in proportion to anticipated premiums.  Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts.  Deviations from estimated experience are reflected in earnings in the period such deviations occur.  For these contracts, the amortization periods generally are for the total life of the policy.  DAC and VOBA related to these policies are subject to recoverability testing as part of AXA Financial Group’s premium deficiency testing.  If a premium deficiency exists, DAC and VOBA is reduced by the amount of the deficiency or to zero through a charge to current period earnings.  If the de ficiency exceeds the DAC balance, the reserve for future policy benefits is increased by the excess, reflected in earnings in the period such deficiency occurs.
Universal Life and Investment-type Contracts
DAC and VOBA associated with variable and universal life policies and variable and fixed annuity contracts are amortized over the expected total life of the contract group as a constant percentage of estimated gross profits or based upon estimated assessments.
The calculation of gross profits considers investment results including hedging costs, Separate Account fees, mortality and expense margins, contract persistency and surrender charges based on historical and anticipated future experience. When estimated gross profits are expected to be negative for multiple years of a contract’s total life, DAC and VOBA are amortized using the present value of estimated assessments.
Quarterly adjustments to the DAC and VOBA balance are made for current period experience and market performance related adjustments, and the impact of reviews of estimated total gross profits.  The quarterly adjustments for current period experience reflect the impact of differences between actual and previously estimated expected gross profits for a given period.  Total estimated gross profits include both actual experience and estimates of gross profits for future periods.  To the extent each period’s actual experience differs from the previous estimate for that period, the assumed level of total gross profits may change.  In these cases, cumulative adjustment to all previous periods’ costs is recognized.  Recoverability testing is also performed at the end of each reporti ng period to ensure the DAC and VOBA balance does not exceed the present value of estimated gross profits.
During each accounting period, the DAC and VOBA balance is evaluated and adjusted with a corresponding charge or credit to current period earnings for the effects of AXA Financial Group’s actual gross profits and changes in the assumptions regarding estimated future gross profits.  A decrease in expected gross profits or assessments would accelerate DAC and VOBA amortization.  Conversely, an increase in expected gross profits or assessments would slow DAC and VOBA amortization.  The effect on the DAC and VOBA assets that would result from realization of unrealized gains (losses) is recognized with an offset to accumulated comprehensive income in consolidated shareholder’s equity as of the balance sheet date.
For the variable and universal life policies a significant portion of the gross profits is derived from mortality margins and therefore, are significantly influenced by the mortality assumptions used.  Mortality assumptions represent the Company’s expected claims experience over the life of these policies and are based on a long-term average of actual company experience.  This assumption is updated quarterly to reflect recent experience as it emerges.  Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC and VOBA amortization.  Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC and VOBA amortization.  Generally, life mortality expe rience has been improving in recent years.  However, changes to the mortality assumptions in future periods could have a significant adverse or favorable effect on the results of operations.
Sensitivity of DAC to Changes in Future Mortality Assumptions
The variable and universal life policies contracts DAC balance was $3.5 billion at March 31, 2010.  The following table demonstrates the sensitivity of the DAC balance relative to future mortality assumptions by quantifying the adjustments that would be required, assuming an increase and decrease in the future mortality rate by 1%.  This information considers only the direct effect of changes in the mortality assumptions on the DAC balance and not changes in any other assumptions used in the measurement of the DAC balance and does not assume changes in reserves.
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DAC Sensitivity - Mortality
March 31, 2010
(In Millions)
  
Increase/(Reduction) in DAC
Decrease in future mortality by 1%$36
Increase in future mortality by 1% (41)

A significant assumption in the amortization of DAC and VOBA on variable life insurance and variable annuities relates to projected future Separate Account performance.  Management sets estimated future gross profit or assessment assumptions related to Separate Account performance using a long-term view of expected average market returns by applying a reversion to the mean approach, a commonly used industry practice.  This future return approach influences the fees earned, costs incurred associated with the GMDB and GMIB features related to the variable annuity contracts. This applies to variable life policies to a lesser degree.  Returns that are higher than expectations for a given period produce higher than expected account balances, increase the fees earned and decrease the costs incurred associated wi th the GMDB and GMIB features related to the variable annuity contracts, resulting in higher expected future gross profits and lower DAC amortization for the period.  The opposite occurs when returns are lower than expected.
In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance and subject to assessment of the reasonableness of resulting estimates of future return assumptions.  For purposes of making this reasonableness assessment, management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return.  At March 31, 2010, the average gross short-term and long-term annual return estimate on variable and interest-sensitive life insurance and variable annuities is 9.0% (6.9% net of product weighted average Separate Account fees), and the gross maximum and minimum annual rate of return limitations are 15% (12.9% net of product weighted average Separate Account fees) and 0% ((2.1) net of product weighted average Separate Account fees), respectively.  The maximum duration over which these rate limitations may be applied is 5 years.  This approach will continue to be applied in future periods. AXA Financial Group’s long-term expected rate of return assumptions generally are not impacted by short-term market fluctuations.
If actual market returns continue at levels that would result in assuming future market returns of 15.0% for more than 5 years in order to reach the average gross long-term return estimate, the application of the 5 year maximum duration limitation would result in an acceleration of DAC and VOBA amortization.  Conversely, actual market returns resulting in assumed future market returns of 0.0% for more than 5 years would result in a required deceleration of DAC and VOBA amortization.  As of March 31, 2010, current projections of future average gross market returns assume a 0% annualized return for the next five quarters, which is within the maximum and minimum limitations, and assume a reversion to the mean of 9% after eight quarters.
Sensitivity of DAC to Changes in Future Rate of Return Assumptions
The variable annuity contracts DAC balance was $4.9 billion at March 31, 2010.  The following table provides an example of the sensitivity of that DAC balance relative to future return assumptions by quantifying the adjustments to the DAC balance that would be required assuming both an increase and decrease in the future rate of return by 1%.  This information considers only the effect of changes in the future Separate Account rate of return and not changes in any other assumptions used in the measurement of the DAC balance.
DAC Sensitivity - Rate of Return
March 31, 2010
(In Millions)
Increase/(Reduction) in DAC
Decrease in future rate of return by 1%$                        (51)
Increase in future rate of return by 1%                           47

47
Goodwill and Other Intangible Assets
AXA Financial tests goodwill for recoverability on an annual basis as of December 31 each year and at interim periods if events occur or circumstances change that would indicate the potential for impairment is more likely than not.  The test requires a comparison of the fair value of each reporting unit that has goodwill associated with its operations to its carrying amount, including goodwill.  If this comparison results in a shortfall of fair value, the impairment loss would be calculated as the excess of recorded goodwill over its implied fair value, the latter measure requiring application of business combination purchase accounting guidance to determine the fair value of all individual assets and liabilities of the reporting unit.  Any impairment loss would reduce the recorded amount of goodwill with a corresponding charge to earnings.
Total goodwill recognized in the consolidated balance sheet of AXA Financial at December 31, 2009 was $4.77 billion, comprised of amounts assigned to its two reporting units: $368.7 million related to the Financial Advisory/Insurance segment, principally arising from the MONY Acquisition, and $4.40 billion related to the Investment Management segment, primarily from the Bernstein Acquisition and purchases of AllianceBernstein Units.  At December 31, 2009, these reporting units had fair values that exceeded their carrying amounts and consequently, goodwill was not impaired.  At March 31, 2010, the total carrying value of goodwill was $4.77 billion.  During first quarter 2010, no events occurred or circumstances changed from year-end 2009 that more likely than not would have reduced the fair values of AXA Fi nancial’s reporting units below their carrying values.
The remaining useful lives of intangible assets being amortized are evaluated each period to determine whether events and circumstances warrant their revision.  All intangible assets are periodically reviewed for impairment if events or circumstances indicate that the carrying value may not be recoverable.  If the carrying value exceeds fair value, additional impairment tests are performed to measure the amount of the impairment loss, if any, to be charged to earnings with a corresponding reduction of the carrying value of the intangible asset.
Financial Advisory/Insurance
The fair value of the Financial Advisory/Insurance reporting unit for purpose of goodwill recoverability testing consists of net assets plus expected future earnings from existing in-force and new business.  A discounted cash flow valuation technique is applied to amounts projected in management’s current business plan in order to estimate the value of expected future earnings.  Key assumptions and judgments used in this valuation approach include long term growth rates, projections of new and renewal business, as well as margins on such business, the level of interest rates, credit spreads, equity market levels, hedge costs, economic capital required to support the mix of business, and the discount rate believed to be appropriate for the risk associated with the reporting unit.  Market transactions and metrics, including implied pricing of comparable companies based on book and earnings multiples, are used to corroborate the resulting fair value measure.  Significant or prolonged weakness in the financial markets and the economy generally would adversely impact the goodwill impairment testing for the Financial Advisory/Insurance reporting unit.  In addition, the future cash flow expectations and other assumptions underlying management’s current business plan could be negatively impacted by other risks to which this reporting unit’s business is subject, including, but not limited to, reduced product margins, increased surrender rates, and severe adverse mortality.
The following presents a summary of other intangible assets as of March 31, 2010 and December 31, 2009 related to the MONY Acquisition:
Intangible Assets Subject to Amortization
(In Millions)
  
Gross Carrying Amount
  
Accumulated Amortization
  
Net
 
March 31, 2010:         
Insurance distribution network $26.0  $(13.2)  $12.8 
             
December 31, 2009            
Insurance distribution network $26.0  $(12.6)  $13.4 

For first quarter 2010 and 2009, total amortization expense related to these intangible assets was $0.6 million and $0.6 million, respectively.  Intangible assets amortization expense is estimated at $2.4 million annually.  The insurance distribution network intangible assets related to the MONY Acquisition are amortized on a straight-line basis with an estimated useful life of 10-20 years.
48
Investment Management
AXA Financial primarily uses a discounted cash flow valuation technique to measure the fair value of its Investment Management reporting unit for purpose of goodwill impairment testing.  Cash flow projections are based on AllianceBernstein’s current business plan, which factors in current market conditions and all material events that have impacted, or that management believes at the time could potentially impact, future expected cash flows for the first 4 years and a compounded annual growth rate thereafter.  The resulting amount, net of noncontrolling interest, is tax-effected to reflect taxes incurred at the AXA Financial Group level.
Key assumptions and judgments used in the discounted cash flow valuation methodology to estimate the fair value of the Investment Management reporting unit are particularly sensitive to equity market levels, including AllianceBernstein’s assets under management, revenues and profitability.  Consequently, to the extent that securities valuations are depressed for prolonged periods, subsequent impairment testing may be based upon different assumptions and future cash flow projections than used at December 31, 2009.  In addition, management’s current business plan could be negatively impacted by other risks to which AllianceBernstein’s business is subject, including, but not limited to, retention of investment management contracts, selling and distribution agreements, and existing relationships with clients and various financial intermediaries.
Intangible assets related to the Investment Management segment principally consist of costs assigned to investment management contracts acquired in connection with the Bernstein Acquisition and purchases of AllianceBernstein Units, less accumulated amortization recognized on a straight-line basis over their estimated useful life of approximately 20 years.  The gross carrying amount and accumulated amortization of these intangible assets were $841.7 million and $357.9 million, respectively, at March 31, 2010 and $841.7 million and $348.6 million, respectively, at December 31, 2009.  Amortization expense related to these AllianceBernstein intangible assets totaled $9.3 million and $9.1 million for the three months ended March 31, 2010 and 2009, respectively, and estimated amortization expense for each of the next 5 years is expected to be approximately $22.0 million.
Each quarter, AllianceBernstein tests intangible assets for impairment quarterly by comparing their fair value, as determined by applying a present value technique to expected cash flows, to their carrying value.  Significant assumptions used to estimate the expected cash flows from the investment management contracts are updated to reflect management’s consideration of current market conditions and expectations made with respect to customer account attrition and asset growth rates.  As of March 31, 2010 and December 31, 2009, AllianceBernstein determined that these intangible assets were not impaired.
Pension and Other Postretirement Benefit Plans
AXA Financial Group (other than AllianceBernstein) sponsors qualified and non-qualified defined benefit plans covering substantially all employees (including certain qualified part-time employees), managers and certain agents.  AXA Financial Group also provides certain medical and life insurance benefits (collectively, “postretirement benefits”) for qualifying employees, managers and agents retiring from AXA Financial Group.  AllianceBernstein maintains a qualified, non-contributory, defined benefit retirement plan (“Retirement Plan”) covering current and former employees who were employed by AllianceBernstein in the United States prior to October 2, 2000.  AXA Financial Group uses a December 31 measurement date for its pension and postretirement plans.
For first quarter 2010, AXA Financial recognized net periodic cost of $63.2 million and $10.1 million as related to its qualified and non-qualified pension plans and postretirement benefits plans, respectively.  Each component of net periodic pension and postretirement benefits cost is based on AXA Financial Group’s best estimate of long-term actuarial and investment return assumptions and consider, as appropriate, an assumed discount rate, an expected rate of return on plan assets, inflation costs, expected increases in compensation levels and trends in health care costs.  Of these assumptions, the discount rate and expected rate of return assumptions generally have the most significant impact on the resulting net periodic cost associated with these plans. Actual experience different from that assumed general ly is recognized prospectively over future periods; however, significant variances could result in immediate recognition of net periodic cost or benefit if they exceed certain prescribed thresholds or in conjunction with a reconsideration of the related assumptions.
The discount rate assumptions used by AXA Financial Group to measure its pension and postretirement benefits obligations reflect the rates at which those benefits could be effectively settled.  Projected nominal cash outflows to fund expected annual benefits payments under AXA Financial Group’s pension and postretirement benefits plans are discounted using a published high-quality bond yield curve.  A discount rate assumption of 6.00% was used by AXA Financial Group to measure each of these benefits obligations at December 31, 2009 and to estimate 2010 net periodic cost.  A 100 BP change in the discount rate assumption would have impacted AXA Financial Group’s first quarter 2010 net periodic cost as shown in the table below; the information provided in the table considers only changes in the as sumed discount rate without consideration of possible changes in any other assumptions described above that could ultimately accompany any changes in the assumed discount rate.

49
Pension and Post-Retirement Net Periodic Cost
Sensitivity – Discount Rate
For the Three Months Ended March 31, 2010
(In Millions)
  
Increase/(Decrease) in Net Periodic Pension Cost
  
Increase/(Decrease) in
Net Periodic Other Postretirement Cost
 
100 BP increase in discount rate $(4.9)  $(0.6) 
100 BP decrease in discount rate  4.8   0.6 
Guidelines regarding the allocation of plan assets are formalized by the respective Investment Committees established by the funded benefit plans of AXA Equitable and MONY Life and are designed with a long-term investment horizon.  In January 2009, the asset allocation strategy of the qualified defined benefit pension plans was revised to target 30%-40% equities, 50%-60% high quality bonds, and 10%-15% equity real estate and other investments.  Prior to this change, the target asset mix included equity securities, fixed maturities and real estate at 65%, 25% and 10%, respectively.  Certain qualified pension plans of AXA Financial Group have developed hedging strategies to lessen downside equity risk.  In developing the expected long-term rate of return assumption on measuresplan assets, management consid ered the historical returns and future expectations for returns for each asset category, the target asset allocation of the plan portfolio, and hedging programs executed by the plans.  At January 1, 2010, the beginning of the 2010 measurement year, the fair value of AXA Financial Group’s plan assets was $1.67 billion.  Given that level of plan assets, as adjusted for expected amounts and timing of contributions and benefits payments, a 100 BP change in the 6.75% expected long-term rate of return assumption would have impacted AXA Financial Group’s first quarter 2010 net periodic cost as shown in the table below; the information provided in the table considers only changes in the assumed long-term rate of return without consideration of possible changes in any other assumptions described above that could ultimately accompany any changes in the assumed long-term rate of return.
Net Periodic Pension Cost
Sensitivity – Rate of Return
March 31, 2010
(In Millions)
Increase/(Decrease) in Net Periodic Pension Cost
100 BP increase in expected rate of return$(4.7)
100 BP decrease in expected rate of return4.7

Note 8 to the Consolidated Financial Statements included herein describes the respective funding policies of AXA Financial Group (excluding AllianceBernstein) and of AllianceBernstein to their qualified pension plans, including amounts expected to be contributed for 2010.  Contribution estimates, which are subject to change, are based on regulatory requirements, future market conditions, and assumptions used for actuarial computations of the plans’ obligations and assets.
Investments – Impairments and Valuation Allowances and Fair Value Measurements
AXA Financial Group’s investment portfolio principally consists of public and private fixed maturities, mortgage loans, equity securities, and derivative financial instruments, including swaps, forwards, futures, and option contracts, used to manage various risks relating to its business operations.  In applying AXA Financial Group’s accounting policies with respect to these investments, estimates, assumptions, and judgments are required about matters that are inherently uncertain, particularly in the identification and recognition of other-than-temporary impairments (“OTTI”), determination of the valuation allowance for losses on mortgage loans, and measurements of fair value.
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Impairments and Valuation Allowances
The assessment of whether OTTIs have occurred is performed quarterly by AXA Financial Group’s Investments Under Surveillance (“IUS”) Committee, with the assistance of its investment advisors, on a security-by-security basis for each available-for-sale fixed maturity and equity security that has experienced a decline in fair value for purpose of evaluating the underlying reasons.  The analysis begins with a review of gross unrealized losses by the following categories of securities: (i) all investment grade and below investment grade fixed maturities for which fair value has declined and remained below amortized cost by 20% or more; (ii) below-investment-grade fixed maturities for which fair value has declined and remained below amortized cost for a period greater than 12 months; and (iii) equity securities f or which fair value has declined and remained below cost by 20% or greater or remained below cost for a period of 6 months or greater.  Integral to the analysis is an assessment of various indicators of credit deterioration to determine whether the investment security is expected to recover, including, but not limited to, consideration of the duration and severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity, and continued viability of the issuer and, for equity securities only, the intent and ability to hold the investment until recovery, resulting in identification of specific securities for which OTTI is recognized.
If there is no intent to sell or likely requirement to dispose of the fixed maturity security before its recovery, only the credit loss component of any resulting OTTI is recognized in earnings and the remainder of the fair value loss is recognized in OCI.  The amount of credit loss is the shortfall of the present value of the cash flows expected to be collected as compared to the amortized cost basis of the security.  The present value is calculated by discounting management’s best estimate of projected future cash flows at the effective interest rate implicit in the debt security prior to impairment.  Projections of future cash flows are based on assumptions regarding probability of default and estimates regarding the amount and timing of recoveries.  These assumptions and estimates requi re use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security.  For mortgage- and asset-backed securities, projected future cash flows also include assumptions regarding prepayments and underlying collateral value.
Mortgage loans also are reviewed quarterly by the IUS Committee for impairment on a loan-by-loan basis, including an assessment of related collateral value.  Commercial mortgages 60 days or more past due and agricultural mortgages 90 days or more past due, as well as all mortgages in the process of foreclosure, are identified as problem mortgages.  Based on its monthly monitoring of mortgages, a class of potential problem mortgages also is identified, consisting of mortgage loans not currently classified as problems but for which management has takendoubts as to mitigatethe ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or being restructured.  The decision whether to classify a performing mortgage loan as a potential problem involves significant subjective judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
For problem mortgage loans a valuation allowance is established to provide for the risk of credit losses inherent in the lending process.  The allowance includes loan specific reserves for loans determined to be non-performing as a result of the loan review process.  A non-performing loan is defined as a loan for which it is probable that amounts due according to the contractual terms of the loan agreement will not be collected.  The loan specific portion of the loss allowance is based on AXA Financial Group assessment as to ultimate collectability of loan principal and interest.  Valuation allowances for a non-performing loan are recorded based on the present value of expected future cash flows discounted at the loan’s effective interest rate or based on the fair value of the collateral if the loan is collateral dependent.  The valuation allowance for mortgage loans can increase or decrease from period to period based on such factors.
Fair Value Measurements
Investments reported at fair value in the consolidated balance sheets of AXA Financial, Inc. include fixed maturity and equity securities classified as available-for-sale, trading securities, and certain other invested assets, such as freestanding derivatives.  In addition, reinsurance contracts covering GMIB exposure and the GWBL feature in certain variable annuity products issued by AXA Financial Group are considered embedded derivatives and reported at fair value.
When available, the estimated fair value of securities is based on quoted prices in active markets that are readily and regularly obtainable; these generally are the most liquid holdings and their valuation does not involve management judgment.  When quoted prices in active markets are not available, AXA Financial Group estimates fair value based on market standard valuation methodologies, including discounted cash flow methodologies, matrix pricing, or other similar techniques.  For securities with reasonable price transparency, the significant inputs to these valuation methodologies either are observable in the market or can be derived principally from or corroborated by observable market data.  When the volume or le vel of activity results in little or no price transparency, significant inputs no longer can be supported by reference to market observable data but instead must be based on management’s estimation and judgment.   Substantially the same approach is used by AXA Financial Group to measure the fair values of freestanding and embedded derivatives with exception for consideration of the effects of equity market performance, interestmaster netting agreements and collateral arrangements as well as incremental value or risk ascribed to changes in own or counterparty credit risk.
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As required by the accounting guidance, AXA Financial Group categorizes its assets and liabilities measured at fair value into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique, giving the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  For additional information regarding the key estimates and assumptions surrounding the determinations of fair value measurements, see Note 7 to the Consolidated Financial Statements included herein.
Income Taxes
Income taxes represent the net amount of income taxes that AXA Financial Group expects to pay to or receive from various taxing jurisdictions in connection with its operations. AXA Financial Group provides for Federal and state income taxes currently payable, as well as those deferred due to temporary differences between the financial reporting and tax bases of assets and liabilities.  Deferred tax assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse.  The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryforward periods under the tax law in the applicable jurisdiction.  Valuation allowances are established when manageme nt determines, based on available information, that it is more likely than not that deferred tax assets will not be realized.  Management considers all available evidence including past operating results, the existence of cumulative losses in the most recent years, forecasted earnings, future taxable income and market volatility,prudent and feasible tax planning strategies.  AXA Financial Group’s accounting for income taxes represents management’s best estimate of the tax consequences of various events and transactions.
Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities and in evaluating AXA Financial Group’s tax positions including evaluating uncertainties under the guidance for Accounting for Uncertainty in Income taxes.  Under the guidance, AXA Financial Group determines whether it is more-likely-than-not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements.  Tax positions are then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.
AXA Financial Group’s tax positions are reviewed quarterly and the balances are adjusted as new information becomes available.
ACCOUNTING CHANGES AND NEW ACCOUNTING PRONOUNCEMENTS
See Note 2 to the Consolidated Financial Statements included herein for a discussion of recently adopted accounting pronouncements, including guidance on consolidation of VIEs and investments held through Separate Accounts.  Also see “Management's Discussion and AnalysisNote 2 to the Consolidated Financial Statements included herein for a discussion of recently issued accounting pronouncements.
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CONSOLIDATED RESULTS OF OPERATIONS
The consolidated earnings narrative that follows discusses the results for first quarter 2010 compared to the comparable 2009 period’s results.
AXA Financial, Condition andInc. - Consolidated Results of Operations”Operations
(In Millions)
  
Three Months Ended March 31,
 
  
2010
  
2009
 
Universal life and investment-type product policy fee income $774.7  $728.8 
Premiums  389.6   375.7 
Net investment income:        
Investment loss from derivative instruments  (337.0)  (26.1)
Other investment income  784.0   510.1 
Total net investment income  447.0   484.0 
Investment (losses) gains, net:        
Total other-than-temporary impairment losses  (44.1)  (27.5)
Portion of loss recognized in other comprehensive income  3.2   - 
Net impairment losses recognized  (40.9)  (27.5)
Other investment gains, net  24.4   196.7 
Total investment (losses) gains, net  (16.5)  169.2 
Commissions, fees and other income  968.0   838.8 
Decrease in fair value of reinsurance contracts  (35.6)  (302.2)
Total revenues  2,527.2   2,294.3 
         
Policyholders’ benefits  901.8   936.0 
Interest credited to policyholders’ account balances  265.4   289.7 
Compensation and benefits  618.0   568.8 
Commissions  221.2   264.1 
Distribution plan payments  58.6   42.4 
Amortization of deferred sales commissions  12.1   14.9 
Interest expense                                                                                              94.9   76.6 
Amortization of deferred policy acquisition costs and value of business acquired  (67.1)  118.9 
Capitalization of deferred policy acquisition costs  (218.6)  (304.0)
Rent expense  78.7   75.3 
Amortization of other intangible assets  9.9   9.7 
Other operating costs and expenses  283.1   291.3 
Total benefits and other deductions  2,258.0   2,383.7 
         
Earnings (loss) from continuing operations before income taxes  269.2   (89.4)
Income tax benefit  77.6   57.0 
         
Earnings (loss)  from continuing operations, net of income taxes  346.8   (32.4)
Loss from discontinued operations, net of income taxes  -   (1.9)
         
Net earnings (loss)  346.8   (34.3)
Less: net earnings attributable to the noncontrolling interest  (59.7)  (4.8)
         
Net Earnings (Loss) Attributable to AXA Financial, Inc. $287.1  $(39.1)
         


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First Quarter 2010 Compared to First Quarter 2009
Net earnings attributable to the AXA Financial Group in first quarter 2010 was $287.1 million, a difference of $326.2 million from the $39.1 million of net loss attributable to AXA Financial Group during first quarter 2009.
Net earnings attributable to the noncontrolling interest was $59.7 million in first quarter 2010 as compared to $4.8 million in the 2009 period; the increase was due to higher AllianceBernstein earnings and a higher noncontrolling interest.
Total enterprise net earnings of $346.8 million was reported in first quarter 2010, an increase of $436.2 million from the $34.3 million of net loss reported for first quarter 2009.
Income tax benefit in first quarter 2010 was $77.6 million compared to the income tax benefit of $57.0 in first quarter 2009.  While there was pre-tax income for first quarter 2010 as compared to pre-tax losses in first quarter 2009, there was a tax benefit of $148.4 million in the 2010 quarter primarily due to the release of state deferred taxes held in the Investment Management segment resulting from the conversion of an AXA Equitable subsidiary from a corporation to a limited liability company, ACMC LLC ("ACMC").  As a limited liability company, ACMC's income will be subject to state income taxes at the rate of its sole owner, AXA Equitable; that rate is substantially less than the rate previously applicable to ACMC as a corporation.  ACMC's principal asset is its holding of AllianceBernstein Units.  There will continue to be a reduction of related taxes in future periods, but to a far lesser degree.  Income taxes for the first quarter of 2010 were determined using an estimated annual effective tax rate while the income taxes for the first quarter of 2009 were determined using a discrete method.   The tax benefit for first quarter 2009 included a $25.0 million adjustment to the amount of tax benefit recognized in 2008 Form 10-K.for the Separate Accounts dividends received deduction.


Earnings from continuing operations before income taxes were $269.2 million for first quarter 2010, an increase of $358.6 million from the $89.4 million in pre-tax loss reported for the year earlier quarter.  The Financial Advisory/Insurance segment’s earnings from continuing operations of $154.0 million in first quarter 2010, $254.5 million higher than first quarter 2009’s loss of $100.5 million, was primarily due to a smaller decrease in the fair value of reinsurance contracts, lower DAC amortization, higher policy fees and commissions, fees and other income.  The Investment Management segment’s earnings from continuing operations were $113.2 million in first quarter 2010, $102.1 million higher than in first quarter 2009, principally due to higher investment advisory and services fees partial ly offset by higher compensation and benefits at AllianceBernstein in the 2010 quarter.
GENERAL

In recent years, variable annuity products with GMDB, GMIB and GWBL features (the “VA Guarantee Features”) have been the predominant products issued by AXA Equitable.  These products account for over half of AXA Equitable’s Separate Accounts assets and have been a significant driver of its results.  Because the future claims exposure on these products is sensitive to movements in the equity markets and interest rates, the Insurance Group has in place various hedging and reinsurance programs that are designed to mitigate the impact of movements in the equity markets and interest rates.  Due to the accounting treatment under U.S. GAAP, certain of these hedging and reinsurance programs contribute to earnings volatility. These programs generally include, among others, the following:

·  
GMIB reinsurance contractscontracts.  .  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 reinsurancereinsuranc e 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.  This was the case during the first nine months of 2009 as the significant increase in long-term interest rates caused a decline in the fair value of the reinsurance contracts, which was not fully offset by the change in the gross reserves, contributing to the significant loss for the period.

·  
Hedging programsprograms.  .  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 US.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 offsettingof fsetting changes in reserves will be recognized over time, which will contribute to earnings volatility.  This was the case during the first nine months of 2009, as significant increases in equity markets and long-term interest rates caused a decline in the fair value of derivatives used in these hedging programs, which was not fully offset by the change in the gross reserves, contributing to the significant loss for the period.

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For the first nine months of 2009, the decrease in consolidated net earnings and earnings from continuing operations were largely due to the increases in equity markets and long-term interest rates which resulted in a decrease in the fair value of the GMIB reinsurance contracts and hedging program derivatives, which were not fully offset by the change in the U.S. GAAP reserves.  Conversely, during fiscal year 2008, the decline in the equity markets and interest rates resulted in increases to the fair value of the GMIB reinsurance contracts and hedging program derivatives, which significantly exceeded the change in the gross reserves, significantly contributing to the earnings for full year 2008.  The table below shows, for the nine months ended September 30,first quarter 2010 and 2009 and 2008 and the year ended December 31, 2008,2009, the impact on (Loss) earningsEarnings (loss) from continuing operations before income taxes of the items discussed above (prior to the impact of Amortization of deferred acquisition costs):

     
 
Nine Months Ended
September 30,
 
Year Ended
December 31,
 
 2009 2008  2008 
 (In Millions) 
          
Decrease (increase) in GMDB, GMIB and GWBL         
reserves, net of related GMDB reinsurance (1)
 $394.6  $(229.0) $(2,612.0)
(Decrease) increase in fair value of            
GMIB reinsurance contracts (2)
  (741.1)  389.9   1,860.7 
(Losses) gains on free-standing derivatives (3)
  (5,364.3)  1,449.4   6,753.5 
Total $(5,710.8) $1,610.3  $6,002.2 
  
Three Months Ended March 31,
  
Year Ended December 31,
 
  
2010
  
2009
  
2009
 
  (In Millions) 
    
Losses on free-standing derivatives (1)
 $(336.0) $(26.1) $(6,955.4)
Decrease in fair value of GMIB reinsurance contracts (2)
  (35.6)  (302.2)  (1,004.6)
(Increase) decrease in GMDB, GMIB and GWBL reserves, net of related GMDB reinsurance (3) 
  (45.8)  (93.1)  533.8 
Total
 $(417.4) $(421.4) $(7,426.2)

(1)Reported in Policyholders’ benefitsNet investment income in the consolidated statement of earnings (loss)
(2)Reported in (Decrease) increaseDecrease in fair value of reinsurance contracts in the consolidated statement of earnings (loss)
(3)Reported in Net investment (loss) incomePolicyholders’ benefits in the consolidated statement of earnings (loss)

TheTotal consolidated and segment results of operations narratives that follow discuss the resultsrevenues for the first nine months of 2009 compared to the corresponding 2008 period’s results.


CONSOLIDATED RESULTS OF OPERATIONS

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

There was a $2.51 billion net loss attributable to the AXA Financial Group were $2.53 billion in first quarter 2010, an increase of $232.9 million from the $2.29 billion reported in the 2009 quarter.  The Financial Advisory/Insurance segment posted a $103.7 million increase in its revenues while the Investment Management segment’s increase was $128.4 million.  The increase of Financial Advisory/Insurance segment revenues to $1.80 billion in the 2010 period as compared to $1.70 billion in first nine monthsquarter 2009 was principally due to a lower decrease in the fair value of 2009, a difference of $3.76 billion from the $1.25 billion of net earnings attributable to AXA Financial Group during the first nine months of 2008.

Net earnings attributable to the noncontrolling interest was $203.6reinsurance contracts accounted for as derivatives ($(35.6) million and $(302.2) million in the respective 2010 and 2009 quarters) and $36.2 million higher commissions, fees and other income partially offset by the $182.0 million and $76.9 million decreases in investment (losses) gains, net and net investment income.  The Investment Management segment’s $729.6 million in revenues for first nine months of 2009quarter 2010 as compared to $302.7$601.2 million in the 2008 period;2009 period primarily was due to $67.3 million higher investment advisory and services fees, a $35.1 million improvement in net investment losses and the $22.2 million increase in distribution revenues at AllianceBernstein.
Consolidated total benefits and expenses were $2.26 billion in first quarter 2010, a decrease of $125.7 million from the $2.38 billion total for the comparable quarter in 2009.  The Financial Advisory/Insurance segment’s total expenses were $1.65 billion, a decrease of $150.8 million from the first quarter 2009 total of $1.80 billion.  The first quarter 2010 total expenses for the Investment Management segment were $616.4 million, $26.3 higher than the $590.1 million in expenses in first quarter 2009.  The Financial Advisory/Insurance segment’s decrease was principally due to lower AllianceBernstein earnings.

A total enterprise net lossnegative amortization of $2.31 billion was reported in the first nine monthsDAC of 2009, a decrease of $3.86 billion from the $1.55 billion of net earnings reported for the first nine months of 2008.  The first nine months of 2008 net earnings included $68.2 million related to the positive earnings impact of the January 1, 2008 adoption of new accounting guidance related to fair value measurement and disclosure of the GMIB reinsurance asset’s fair value (net of the related increases of $104.3 million in DAC amortization and $36.5 million in income taxes).

During the first nine months of 2009, the discontinued Wind-up Annuities business produced post-tax losses of $11.8 million; in the corresponding 2008 period, Wind-up Annuities’ net earnings/loss was zero.  In the first nine months of 2008, a post-tax loss of $0.5 million was recognized related to the disposition of AXA Enterprise Funds with post-tax income of $1.1 million and losses of $3.4 million from the discontinued Enterprise operations reported in the first nine months of 2009 and 2008, respectively.  Post-tax earnings and gains from real estate held for sale, which are reported as discontinued operations, were $1.6 million and $6.3 million, respectively, in the first nine months of 2008; there were no results from real estate held for sale in the first nine months of 2009.

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The income tax benefit in the first nine months of 2009 was $1.44 billion as compared to an income tax expense of $735.3$67.1 million in the first nine months2010 quarter compared to amortization of 2008.  The change was primarily due to the change in pre-tax results from earnings$118.9 million in the 2008 period to lossescomparable 2009 quarter, a $42.9 million decrease in the current period.  Included in the 2009 tax benefit was $15.1commissions, and $34.2 million of tax benefit related to the release of tax audit reserves held by the Investment Management segment.   Income taxes for the first nine months of 2009 were determined using an estimated annual effective tax rate. The tax benefit for the first nine months of 2009 was greater than the expected tax benefit primarily due to non-taxable investment income and the Separate Account dividends received deduction.

Loss from continuing operations before income taxes was $3.74 billion for the first nine months of 2009, as compared to the $2.28 billion in pre-tax earnings reported for the year earlier period.  The Financial Advisory/Insurance segment’s pre-tax loss from continuing operations of $4.08 billion in the first nine months of 2009, $5.72 billion lower than the first nine months of 2008’s earnings of $1.48 billion, was primarily due to net investment losses resulting from losses on derivative instruments and the decline in the fair value of the reinsurance contracts as compared to an increase in the 2008 periodpolicyholders' b enefits partially offset by $85.4 million lower DAC amortizationcapitalization and lower policyholders’ benefits as well as lower investment losses in the first nine months of 2009.  The Investment Management segment’s pre-tax earnings from continuing operations were $1.81 billion in the first nine months of 2009, $341.0$34.7 million lower than in the first nine months of 2008, as lower investment advisory and services fees and distribution revenues were partially offset by lowerhigher compensation and benefits and investment gains at AllianceBernsteinbenefits.  The increase in the 2009 period as compared to investment losses in the first nine months of 2008.

Revenues.  In the first nine months of 2009, revenues decreased $8.82 billion to $2.08 billion as a result of the $8.22 billion decrease for the Financial Advisory/Insurance segment and the $801.9 million decreaseexpenses for the Investment Management segment.  The revenue declinesegment was related to $16.2 million higher amortization expense and a negative $51.5 million for$14.5 increase in compensation and benefits at AllianceBernstein.
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RESULTS OF OPERATIONS BY SEGMENT
Financial Advisory/Insurance Segment
Financial Advisory/Insurance - Results of Operations
(In Millions)
  
Three Months Ended March 31,
 
  
2010
  
2009
 
Universal life and investment-type product policy fee income $774.7  $728.8 
Premiums  389.6   375.7 
Net investment income:        
Investment loss from derivative instruments  (336.9)  (23.3)
Other investment income  775.6   538.9 
Total net investment income  438.7   515.6 
Investment (losses) gains, net:        
Total other-than-temporary impairment losses  (44.1)  (27.5)
Portion of losses recognized in other comprehensive income  3.2   - 
Net impairment losses recognized  (40.9)  (27.5)
Other investment gains, net  20.6   189.2 
Total investment (losses) gains, net  (20.3)  161.7 
Commissions, fees and other income  256.2   220.0 
Decrease in fair value of reinsurance contracts  (35.6)  (302.2)
Total revenues  1,804.1   1,699.6 
         
Policyholders’ benefits  901.8   936.0 
Interest credited to policyholders’ account balances  265.4   289.7 
Compensation and benefits  278.2   243.5 
Commission costs  221.2   264.1 
Interest expense  84.2   64.4 
Amortization of DAC and VOBA  (67.1)  118.9 
Capitalization of DAC  (218.6)  (304.0)
Rent expense  25.8   24.7 
Amortization of other intangible assets, net  .6   .6 
All other operating costs and expenses  157.8   162.2 
Total benefits and other deductions  1,649.3   1,800.1 
         
Earnings (Loss) from Operations before Income Taxes $154.8  $(100.5)

Revenues
In first quarter 2010, the Financial Advisory/Insurance segment’s revenues increased $103.7 million to $1.80 billion from $1.70 billion in the 2009 quarter.  The revenue increase for this segment was principally due to net investment losses caused by declines in the fair values of derivative instruments in the 2009 period as compared to income in the related 2008 period, a lower decrease in the fair value of the reinsurance contractscontract as compared to an increase in the 2008 period,2009 quarter, and lowerhigher commissions, fees and other income partially offset by lower investment losses in the 2010 quarter as compared to investment gains in first nine months ofquarter 2009 while the Investment Management segment’s decrease in revenuesand to $2.15 billion resulted principally from lower net investment advisory and services fees and lower distribution revenues at AllianceBernstein that were partiallyincome as higher other investment income was more than offset by mark-to-market gainshigher investment losses on its trading portfolio in the 2009 period rather than losses as in the first nine months of 2008.derivatives.

Policy fee income totaled $2.31 billion$774.7 million in the first nine months of 2009, $81.2quarter 2010, $45.9 million lowerhigher than for the first nine months of 2008.quarter 2009.  This decreaseincrease resulted from lowerhigher fees earned on lowerhigher average Separate Account balances due primarily to market depreciation during 2008,appreciation.
The $13.9 million increase in premiums to $389.6 million in first quarter 2010 as compared to $375.7 million in the 2009 quarter was primarily due to $16.8 million higher term life insurance premiums partially offset by higherlower premiums for traditional life insurance policy charges and higher GMDB/GMIB fees.policies in the Closed Block.

In theNet investment income decreased $76.9 million to $438.7 million in first nine months of 2009, net investment losses totaled $3.21 billion, a decrease of $6.68 billionquarter 2010 from the $3.47 billion of net investment income$515.6 million reported in the 20082009 period.  The $6.96 billion decline indecrease was the Financial Advisory/Insurance segment was partially offset by a $283.2net effect of the $313.6 million increase in the Investment Management segment.investment losses from derivative instruments and the $236.7 million increase in other investment income.  The Financial Advisory/Insurance segment’s decrease was primarily due to the decreasesegment reported a higher loss in the fair value of derivative instruments (a $5.36 billion$336.9 million decline in fair value in the first nine months of 2009quarter 2010 as compared to an increase of $1.45 billion$23.3 million in first quarter 2009).  Other investment income increased to $775.6 million in the first nine months of 2008).  Further respective decreases of $193.12010 quarter primarily due to $202.8 million, $44.6$27.5 million and $22.9$14.9 million were reported inof higher investment income related tofrom equity limited partnerships, short-term investments, and mortgage loans.  These declines were partially offset by the $49.8 million increase related tomark-to-market gains on trading account securities $6.4and fixed maturities.
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Investment losses, net totaled $20.3 million in earningsfirst quarter 2010 as compared to $26.9 million in investment losses on Separate Accounts surplus and a $17.1 million increase in fixed maturities’ investment income.  The Investment Management segment’s increase in the 2009 period was primarily due to mark-to-marketnet gains of $130.7 million as compared to $187.1 million of mark-to-market losses in the first nine months of 2008 on investments related to deferred compensation plan obligations at AllianceBernstein, partially offset by lower dividend and interest income.  AllianceBernstein expects that for 2009 and future years, all deferred awards will be in the form of restricted AllianceBernstein Holding units.  As a result, the amount of deferred compensation related investments on which it recognizes mark-to-market gains and losses will decline as the corresponding awards previously made vest and are paid.

Investment losses totaled $17.9 million in the first nine months of 2009, as compared to $369.2$161.7 million in the prior year’s comparable period as a result of lower losses in thequarter.  The Financial Advisory/Insurance segment and higher gainssegment’s loss in the Investment Management segment.  Net OTTI losses were $222.7 million in the 2009 period, as compared to $382.5 million in losses in the first nine months of 2008.  The 2009 net OTTI losses were due to writedowns on the Insurance Group’s fixed maturities portfolio including $32.7 million on certain CMBS securities.  The 2008 net OTTI losses included writedowns on Lehman Brothers Holdings Inc. and Washington Mutual, Inc. debt of $188.4 million and $92.8 million, respectively. There were $159.7 million of other investment gains for the Financial Advisory/Insurance segment in the first nine months of 2009 as compared to losses of $13.3 million in the first nine months of 2008quarter 2010 was primarily due to $175.6$26.8 million of gains from the sale of General Account fixed maturities, updown from $(17.1)$189.7 million of losses in the year earlier period offset by $16.4and higher writedowns on fixed maturities $(40.9) million in lossesfirst quarter 2010 as compared to $8.4 of gains$(27.5) million in first quarter 2009.  In addition, there were $(8.7) million in losses on mortgage loans in the 2009 and 2008 periods, respectively.  The Investment Management segment’s $18.8 million increase resulted from higher gains on sales of investments.2010.

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Commissions, fees and other income decreased $ 1.25 billionincreased $36.2 million to $ 2.63 billion$256.2 million in the first nine months of 2009 with a $1.10 billion decrease in the Investment Management segment and $178.6 million lower income in thequarter 2010.  The Financial Advisory/Insurance segment.  The Investment Management segment decrease was due to the $947.9 million, $117.5 million and $27.8 million respective decreases in investment advisory and services fees, distribution revenues and institutional research services income at AllianceBernstein in thesegment’s first nine months of 2009 as compared to the first nine months of 2008.  The decrease to $1.38 billion in investment advisory and services fees was primarily due to a 29.2% decrease in average assets under management (“AUM”) and the impact of a shift in product mix toward fixed income and domestic equity services, which generally have lower fee rates, partially offset by slightly higher performance-based fees ($13.4 million and $12.0 million in the 2009 and 2008 periods, respectively).  The decline in distribution revenues to $196.4 millionquarter 2010 increase was principally due to lower average mutual fund AUM.  The decrease to $325.8$55.1 million in institutional research services revenues related to lower levels of client trading activity and lower security valuations in European markets, partially offset by market share gains.  The Financial Advisory/Insurance segment decrease to $704.0 million in the first nine months of 2009 was principally due to a $168.6 million decline inhigher gross investment management and distribution fees received from EQAT and VIP Trust due to a lowerhigher asset base.base primarily due to market appreciation.

In the first nine months of 2009,quarter 2010, there was a $741.1$35.6 million decrease in the fair value of the GMIB reinsurance contracts, which are accounted for as derivatives, as compared to a $389.9$302.2 million increasedecrease in their fair value in the first nine months of 2008;quarter 2009; both periods’quarters’ changes reflected equity market fluctuations However,however, the 2008 period’s increase also included the January 1, 2008 increase of $209.2 million related2009 decrease was primarily due to the fair value adjustment of the GMIB reinsurance contracts upon the adoption of new guidance on fair value measurement and disclosure.increase in interest rates.

Benefits and Other Deductions.  
Total benefits and other deductions decreased $2.80 billion$150.8 million in the first nine months of 2009quarter 2010 to $5.82$1.65 billion principally due to the Financial Advisory/Insurance segment’s reported decrease of $2.50 billion primarily as a result of lower$186.0 million decline in DAC and VOBA amortization the decline in policyholders’ benefits and lower commissions in the first nine months of 2009 supplemented by the $341.0 million decline in the Investment Management segment.quarter 2010 to a negative $67.1 million.

Policyholders’ benefits totaled $1.85 billion,$901.8 million, a decrease of $600.1$34.2 million from the $2.45 billion$936.0 million reported for the first nine months of 2008.quarter 2009.  The decrease was principally due to the $232.1a $35.7 million declinedecrease in the GMDB/GMIB reservespolicyholder dividends ($141.4 million in first quarter 2010 as compared to an $182.1$177.1 million in the 2009 quarter) resulting from the Closed Blocks policyholders’ dividend obligation’s reactivity to realized losses as compared to realized gains in the respective quarters.  In addition, the increase in GMDB/GMIB reserves was $45.4 million lower in the 2010 quarter ($60.2 million as compared to first quarter 2009’s $105.6 million), the GWBL reserve’s decrease was $1.9 million higher in first quarter 2010 while death benefits paid (primarily in the Closed Blocks) declined $9.4 million.  T hese decreases were offset by the $55.0 million increase in the year earlier period and a $162.5 million decrease in the GWBL reserve as compared to a $46.9 million increase in the 2008 period, partially offset by a $19.6 million increase in death claims and $35.8 million higher policyholder dividends.no-lapse guarantee reserve.

Total compensation and benefits decreased $173.0increased $34.7 million to $1.76 billion$278.2 million in the first nine months of 2009 due to the decrease of $205.2 million for the Investment Management segment.quarter 2010.  The Investment Management segment’s decrease in the first nine months of 2009 to $1.01 billion resulted from: an $84.4 million decrease in base compensation, fringe benefits and other employment costs due primarily to workforce reductions and lower recruitment costs, partially offset by higher severance costs; a $30.7 million decrease in incentive compensation at AllianceBernstein due to lower headcount, lower estimated year-end cash incentive payments partially offset by higher deferred compensation expense; and $25.0 million lower commission expense reflecting lower sales volume and revenues across all three distribution channels.  Compensation and benefitsincrease for the Financial Advisory/Insurance segment increased $32.1was primarily due to a $29.7 million to $748.2increase in share-based and other compensation programs and the $9.9 million during the first nine months of 2009 as decreases in salaries and share-based compensation were more thanhigher employee benefit plan costs partially offset by higher pension plan expenses resulting from the market driven depreciation in the fair value of the plan’s assets in 2008 and a lower expected rate of return on plan assets.salaries.

For the first nine months of 2009,quarter 2010, commissions in the Financial Advisory/Insurance segment totaled $692.9$221.2 million, a decrease of $326.1$42.9 million from the first nine months of 2008quarter 2009 principally due to lower sales of interest-sensitive life insurance and variable annuity products.

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There was an $81.5 million decline in distribution plan payments in the Investment Management segment, from $227.9 million in the first nine months of 2008 to $146.4 million in the first nine months of 2009.  The decrease resulted from lower average Retail Services’ AUM at AllianceBernstein.

Interest expense rose $77.9$19.8 million to $224.8$84.2 million in the first nine months of 2009quarter 2010 as compared to $146.9$64.4 million in the comparable 2008 period, with the2009 quarter.  The Financial Advisory/Insurance segment’s $93.8 million increase being partially offset by the Investment Management segment’s $12.4 million decline.  The increase to $192.3 million for the Financial Advisory/Insurance segment was due to an $88.4 million increase related toincreased interest on fourth quarter 2008 and first quarter 2009resulting from higher average borrowings from AXA and a $3.3 million increase related to AXA Bermuda’s short-term credit facility, partially offset byfor the absence of $4.1 million of interest on the $250 million Senior Note and AXA Equitable’s short-term promissory note, both repaid in 2008.  The Investment Management segment’s decrease was the result of significantly lower interest rates and lower borrowing levels in the first nine months of 2009 as compared to the first nine months of 2008 at AllianceBernstein.comparable quarters.

DAC and VOBA amortization was a negative $68.9$67.1 million in the first nine monthsquarter 2010, a change of 2009, a decline of $1.87 billion$186.0 million from the $1.80 billion charge$118.9 million of expense reported in the corresponding 2008 period.  In the first nine months of 2009 the level ofquarter.  First quarter 2010 had significant hedge losses from positive equity market performance resulting in negative amortization for the DAC associated withAccumulator® product, as well as lowering the Accumulator® products wasfuture cost of hedging.  Conversely, first quarter 2009 had small hedge gains resulting from negative equity market performance partially offset by losses on interest rate derivatives due to reactivity toincreasing interest rates.  These factors resulted in a small negative gross profits in the first nine months of 2009 and lower projected future costs of hedging of the GMIB feature of the Accumulator® products as higher interest rates have reduced the projected hedge levels.  Due primarily to the significant decline in Separate Accounts balances during 2008, future estimated gross profits for certain issue yearsamortization for the Accumulator® products were expected to be negative as the increasesproduct in the fair values of derivatives used to hedge certain risks related to these products2009 quarter.  These gains and losses are recognized in current earnings while the related reserves do not fully offset by changes in GMDB and immediately reflect the impact of equity markets and interest rate fluctuations.  As required under U.S. GAAP, for those issue years with future estimated negative gross profits, the DAC amortization method was changed in fourth quarter 2008GMIB reserves.  Amortization from one based on estimated gross profits to one based on estimated account balances for the Accumulator® products.  In second quarter 2009, the surrender assumption for the variable lifeall other products was updated to reflect emerging deterioration in persistency which resulted in an increase in amortization, which partially offset the negative DAC amortization associated with the Accumulator® products.  In the first nine months of 2008, DAC amortization reflected reactivity to a material increase in the fair value of the derivative instruments associated with the GMDB/GMIB hedging program and of the related GMIB reinsurance contracts.  This was offset by the $28.7 million effect of DAC unlocking in the 2008 period, principally related to the recognition of higher estimated future margins associated with GMDB/GMIB hedging programs, higher expected fees related to variable life and annuity contracts, and expectations of life mortality improvements partially offset by the impact of the reversion to the mean methodology on Separate Account fee revenuepositive for variable annuity products as well as higher mortality on certain older life contracts and higher surrenders of certain older annuity contracts.both periods.

For universal life insurance products and investment-type products, DAC and VOBA are amortized over the expected total life of the contract group 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.  If, at any point in time, estimated gross profits are expected to be negative during the contract life, thereafter, DAC is amortized using the present value of estimated assessments.  The effect on the amortization of DAC and VOBA of revisions to estimated gross profits or assessments is reflected in earnings in the period such estimated gross profits or assessments are revised.  A decrease in expected gross profits or assessments would accelerate DAC and VOBA amortization.  Conversely, an increase in expected gross profits or assessments would slow DAC and VOBA amortization.  The effect on the DAC and VOBA assets that would result from realization of unrealized gains (losses) is recognized with an offset to accumulated comprehensive income in consolidated equity as of the balance sheet date.

A significant assumption in the amortization of DAC and VOBA on variable and interest-sensitive life insurance and variable annuities relates to projected future Separate Account performance.  Management sets estimated future gross profit assumptions related to Separate Account performance using a long-term view of expected average market returns by applying a reversion to the mean approach.  In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance and subject to assessment of the reasonableness of resulting estimates of future return assumptions.  For purposes of making this reasonableness assessment, management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return.  Currently, the average gross long-term annual return estimate is 9.0% (6.7% net of product weighted average Separate Account fees), and the gross maximum and minimum short-term annual rate of return limitations are 15.0% (12.7% net of product weighted average Separate Account fees) and 0.0% ((2.3%) net of product weighted average Separate Account fees), respectively.  The maximum duration over which these rate limitations may be applied is 5 years.  This approach will continue to be applied in future periods.  If actual market returns continue at levels that would result in assuming future market returns of 15.0% for more than 5 years in order to reach the average gross long-term return estimate, the application of the 5 year maximum duration limitation would result in an acceleration of DAC and VOBA amortization.  Conversely, actual market returns resulting in assumed future market returns of 0.0% for more than 5 years would result in a required deceleration of DAC and VOBA amortization.  As of September 30, 2009, current projections of future average gross market returns assume a 0% annualized return for the next five quarters, which is within the maximum and minimum limitations, and assume a reversion to the mean of 9% thereafter.

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In addition, projections of future mortality assumptions related to variable and interest-sensitive life insurance products are based on a long-term average of actual experience.  This assumption is updated quarterly to reflect recent experience as it emerges.  Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC and VOBA amortization.  Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC and VOBA amortization.  Generally, life mortality experience has been improving in recent years.

Other significant assumptions underlying gross profit estimates relate to contract persistency and General Account investment spread.

DAC capitalization totaled $758.6$218.6 million, a decrease of $356.3$85.4 million from the $1.11 billion$304.0 million reported in the first nine months of 2008quarter 2009 primarily due to lower sales of variable annuity and interest-sensitive life insurance and variable annuity products.

The $137.9 million decrease in other operating costs and expenses resulted from decreases of $149.4 million and $25.4 million for the Financial Advisory/Insurance and Investment Management segments, respectively.  The decrease in the Financial Advisory/Insurance segment was principally due to lower sub-advisory fees at EQAT and VIP Trust due to the declines in average asset balances as well as lower travel, advertising and legal expenses, partially offset by higher consulting fees.  The Investment Management segment’s decrease in the first nine months of 2009 primarily resulted from lower travel and entertainment expenses and lower legal costs, partially offset by the absence of an insurance reimbursement of $35.3 million received in third quarter 2008, at AllianceBernstein.

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Premiums and Deposits.  
The marketfollowing table lists sales for annuitymajor insurance product lines and life insurance productsmutual funds.  Premiums and deposits are presented net of the types issued by the Insurance Group continues to be very dynamic as a resultinternal conversions and are presented gross of the recent upheaval in the capital markets.  Among other things:reinsurance ceded.
Premiums, Deposits and Mutual Fund Sales
(In Millions)
  
Three Months Ended March 31,
 
  
2010
  
2009
 
Retail      
Annuities      
First year $697.0  $1,031.2 
Renewal  595.7   535.6 
   1,292.7   1,566.8 
         
Life(1)
        
First year  66.9   74.9 
Renewal  579.6   586.2 
   646.5   661.1 
Other(2)
        
First year  2.8   2.3 
Renewal  67.6   69.2 
   70.4   71.5 
         
Total retail  2,009.6   2,299.4 
         
Wholesale:        
Annuities        
First year  297.5   1,390.1 
Renewal  122.0   52.7 
   419.5   1,442.8 
Life(1)
        
First year  31.0   36.9 
Renewal  163.0   151.7 
   194.0   188.6 
         
Other  .5   .7 
         
Total wholesale  614.0   1,632.1 
         
Total Premiums and Deposits $2,623.6  $3,931.5 
         
Total Mutual Fund Sales(3)
 $1,126.2  $683.9 

·  (1)featuresIncludes variable, interest-sensitive 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,traditional life products.
·  (2)various insurance companies, including one or more in the Insurance Group, have eliminated and/or limited sales of certain annuityIncludes reinsurance assumed and life insurance products or features, andhealth insurance.
·  (3)overall industry sales of  variable annuity and life insurance products have declined, in some cases substantially, due in part to changing customer preferences, a phenomenon also observed following previous periods of significant market decline and/or volatility.Includes through AXA Advisors’ advisory accounts.

Recent changes to certain features including, e.g., guarantee features, pricing and/or Separate Account investment options, have made some of the annuity and life insurance products offered by the Insurance Group less competitive in the marketplace.  This, in turn, has adversely affected and may continue to adversely affect overall sales of the Insurance Group’s annuity and life insurance products.  The Insurance Group continues to assess its product offerings in light of changing market conditions and other factors, with a view toward appropriately balancing risk management, cost, marketability and other considerations.  As conditions in the marketplace and capital markets continue to evolve, the Insurance Group plans to offer new and/or different products, and it may also further revise, suspend or discontinue one or more of its product offerings.

Total premiums and deposits for insurance and annuity products for the first nine months of 2009quarter 2010 were $9.22$2.62 billion, a decrease of $4.76$1.31 billion from the $13.98$3.93 billion in the 2008 period2009 quarter while total first year premiums and deposits decreased $4.65$1.44 billion to $5.02$1.10 billion in the first nine months of 2009quarter 2010 from $9.67$2.54 billion in the first nine months of 2008.quarter 2009.  The annuity lines’ first year annuity premiums and deposits decreased $4.51$1.43 billion to $4.72 billion$994.5 million due to the 49.2%a $1.44 billion decrease in sales of variable annuities (decreases of $3.67 billion to $2.24($1.10 billion in the wholesale channel and of $850.0$340.0 million to $2.43 billion in the retail channel) due to high level of sales in first quarter 2009 preceding the launch of a redesigned Accumulator® product with reduced benefits and the difficult economic and market environment and actions taken by management in response thereto.first quarter 2010.  First year life insurance premiums and deposits for the life insuranc e products decreased $129.4$13.9 million, with the $78.2$13.8 million decrease in sales of interest-sensitive life insurance products in the wholesale channel and the $49.5$7.8 million and $6.6 million respective decreasesdecrease in variable and interest-sensitive life insurance sales in the retail channel being partially offset by a $6.5 million increase in first year variableterm life insurance sales in the wholesale channel.

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The Insurance Group continues to review and develop its product offerings in light of changing market conditions and other factors, with a view towards increasing the diversification in its product portfolio.  For example, in late 2009, AXA Equitable launched Retirement Cornerstone(SM) in the retail channel, an innovative variable annuity that offers two platforms, one of which offers guaranteed lifetime income based on a floating rate design and the other of which offers a wide array of investment options with traditional annuitization benefits based solely on non-guaranteed account performance in the retail channel.  The distribution of the product in the wholesale channel began with a limited release in March 2010 before a broader launch in second quarter 2010.
As conditions in the insurance products marketplace, capital markets and economy continue to evolve, the Insurance Group may need to make further adjustments to its product offerings.
Surrenders and Withdrawals.Withdrawals
The following table presents surrender and withdrawal amounts and rates for major insurance product lines.   Annuity surrenders and withdrawals are presented net of internal replacements.
Surrenders and Withdrawals
(In Millions)
  
Three Months Ended March 31,
 
  
2010
  
2009
 
  
Amount
  
Rate (1)
  
Amount
  
Rate (1)
 
Annuities
 $1,465.6  6.6%  $1,395.8   7.8% 
Variable and interest-sensitive life
  222.2   4.4    261.3  5.7  
Traditional life
  151.3   4.1    173.4  4.6  
               
Total $1,839.1     $1,830.5    

(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 2010 and 2009, respectively.

Surrenders and withdrawals decreased $1.75 billion,increased $8.6 million, from $6.90$1.83 billion in the first nine months of 2008quarter 2009 to $5.15$1.84 billion for the first nine months of 2009.quarter 2010.  There were $1.76 billion and $15.8was a $69.8 million decreasesincrease in individual annuities and variable and interest-sensitive life insurance surrenders and withdrawals, respectively, with an increasedecreases of $37.2$39.1 million and $22.1 million reported for the variable and interest sensitive traditional life insurance line.lines, respectively.  The annualized annuities surrender rate decreased to 6.8%6.6% in the first nine months of 2009quarter 2010 from 7.9%7.8% in the first nine months of 2008.quarter 2009.  The individual life insurance products’ annualized surrender rate increaseddecreased from 5.1% in first quarter 2009 to 4.7% in the first nine months of 2009 from 4.2% in the 2008 period.2010 quarter.  The surrender and withdrawal rates described above continue to fall within the range of expected experience and the Insurance Group continues to closely monitor surrender and withdrawal rates.experience.
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Investment Management Segment
Investment Management - Results of Operations
(In Millions)
  
Three Months Ended March 31,
 
  
2010
  
2009
 
Revenues:      
Investment advisory and services fees (1)
 $512.3  $445.0 
Bernstein research services  110.7   105.6 
Distribution revenues  80.3   58.1 
Other revenues(1)
  27.3   20.2 
Commissions, fees and other income  730.6   628.9 
         
Investment losses  (4.1)  (33.4)
Less: interest expense to finance trading activities  (.7)  (1.8)
Net investment losses  (4.8)  (35.2)
         
Investment gains, net  3.8   7.5 
Total revenues  729.6   601.2 
         
Expenses:        
Compensation and benefits  319.4   313.8 
Distribution plan payments  58.6   42.4 
Amortization of deferred sales commissions  12.1   14.9 
Interest expense  10.7   12.2 
Rent expense  52.9   50.6 
Amortization of other intangible assets, net  9.3   9.1 
Other operating costs and expenses  153.4   147.1 
Total expenses  616.4   590.1 
         
Earnings from Operations before Income Taxes $113.2  $11.1 

Assets Under Management.  Breakdowns
(1)Included fees earned by AllianceBernstein totaling $17.4 million and $14.9 million in 2010 and 2009, respectively, for services provided to the Insurance Group.

Revenues
The Investment Management segment’s pre-tax earnings from continuing operations for first quarter 2010 were $113.2 million, an increase of $102.1 million from $11.1 million in the prior year’s comparable period.
Revenues totaled $729.6 million in the 2010 quarter, an increase of $128.4 million from $601.2 million in the 2009 quarter, primarily due to higher investment advisory and services fees, Bernstein research services and distribution revenues.
Investment advisory and services fees include base fees and performance fees.  In first quarter 2010, investment advisory and services fees totaled $512.3 million, an increase of $67.3 million from the $445.0 million in the 2009 quarter.  The 2010 increase in investment advisory and services fees was primarily due to the 15.6% increase in average assets under management follow:(“AUM”) across all three distribution channels (Institutional Investments, Retail and Private Client) partially offset by a $9.6 million decrease in performance fees from $12.3 million in first quarter 2009 to $2.7 million in the 2010 quarter.

In first quarter 2010, the Bernstein research revenues were $110.7 million, a $5.1 million increase over the $105.6 million in the 2009 period.  This increase was the result of higher European revenues being partially offset by modest declines in the U.S.
The distribution revenues increased $22.2 million to $80.3 million in first quarter 2010 as compared to $58.1 million in first quarter 2009.  This increase was also due to higher average mutual fund AUM.
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Net investment (losses) income consisted principally of dividend and interest income, offset by interest expense related to interest accrued on cash balances on customers’ brokerage accounts and realized and unrealized (losses) gains on trading and other investments.  The $30.4 million decrease in net investment losses to $(4.8) million in first quarter 2010 was primarily due to the $11.2 million of realized and unrealized gains on trading account securities related to deferred compensation plan obligations in the 2010 as compared to $28.2 million in losses in first quarter 2009.  In addition, there were $3.4 million higher investment results on seed money investments.  These increases were partially offset by $12.8 million in venture capital fund losses and lower interest earned on U.S. Treasury Bil l balances and other investments, reflecting lower interest rates and lower average balances.
The first quarter 2010 decrease of $3.7 million to $3.8 million in investment gains, net principally resulted from lower gains on sales of investments.
Expenses
The Investment Management segment’s total expenses were $616.4 million in first quarter 2010, an increase of $26.3 million as compared to $590.1 million in the comparable 2009 quarter principally due to higher distribution plans payments and higher compensation and benefits.
AllianceBernstein’s employee compensation and benefits expense in the 2010 period was $319.4 million as compared to $313.8 million in the comparable 2009 quarter as higher incentive compensation and commission expenses were partially offset by lower base compensation.  Incentive compensation increased $24.2 million in first quarter 2010 due to higher deferred compensation expense resulting from mark-to-market gains on related investments and higher cash incentive payments.  Commission expense increased $0.4 million in the 2010 quarter reflecting higher retail sales volume.  Base compensation, fringe benefits and other employment costs for first quarter 2010 decreased $19.0 million due to lower severance and lower salaries related to workforce reductions in 2009.
The distribution plan payment increase of $16.2 million to $58.6 million in first quarter 20010 from $42.4 million in the first three months of 2009 resulted from higher average Retail Services assets under management.
The increase of $6.3 million to $153.4 million in other operating costs and expenses was primarily a result of higher distribution expenses in first quarter 2010.
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Fees and Assets under Management
Breakdowns of fees and assets under management follow:
Fees and Assets Under Management
(In Millions)

September 30,  
Three Months Ended March 31,
 
2009 2008  
2010
  
2009
 
  
FEES      
Third party  $437,830  $535,653  $707.66  $582.67 
General Account and other   61,067   52,330   9.38   9.02 
Insurance Group Separate Accounts   83,678   83,655   8.05   5.87 
Total Fees
 $725.09  $597.56 
        
ASSETS UNDER MANAGEMENT        
Assets by Manager        
AllianceBernstein        
Third party $441,420  $361,137 
General Account and other  34,677   35,278 
Insurance Group Separate Accounts  25,217   14,299 
Total AllianceBernstein
  501,314   410,714 
        
Insurance Group        
Third party  -   0 
General Account and other (2)
  25,624   26,007 
Insurance Group Separate Accounts  63,941   51,116 
Total Insurance Group  89,565   77,123 
        
Total by Account:        
Third party (1)
  441,420   361,137 
General Account and other (2)
  60,301   61,285 
Insurance Group Separate Accounts  89,158   65,415 
Total Assets Under Management  $582,575  $671,638  $590,879  $487,837 

(1)Includes $49.68 billion and $58.63 billion of assets managed on behalf of AXA affiliates at March 31, 2010 and 2009, 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 $20.16 billion and $20.38 billion at March 31, 2010 and 2009, respectively, and mortgages and equity real estate totaling $5.46 billion and $5.62 billion at March 31, 2010 and 2009, respectively.

Fees for assets under management increased 21% during first quarter 2010 from the comparable 2009 period as a result of the continued growth in assets under management for third parties and the Separate Accounts.  Total assets under management increased $103.04 billion, primarily due to $80.28 billion higher third party assets under management at September 30, 2009 decreased $97.82 billion from September 30, 2008 primarilyAllianceBernstein.  The AllianceBernstein growth in first quarter 2010 was principally due to market depreciation and net outflows.appreciation.  General Account and other assets under management increased $8.74decreased $(0.98) billion from the first nine months of 2008.quarter 2009.  The $23.74 billion increase in Insurance Group Separate Account assets under management were basically unchangedat the end of first quarter 2010 as compared to March 31, 2009 resulted from September 30, 2008.increases in EQAT’s and other Separate Accounts’ AUM due to mar ket appreciation.

AllianceBernstein assets under management at September 30, 2009the end of first quarter 2010 totaled $497.82$501.3 billion as compared to $589.56$410.7 billion at September 30, 2008 withMarch 31, 2009 as market depreciationappreciation of $11.5$150.8 billion andwas partially offset by net outflows of $80.2$60.2 billion.  The gross outflowsinflows of $69.9$14.4 billion, $36.6$28.8 billion and $17.1$7.8 billion in institutional investment, retail and private client channels, respectively, were partially offset by inflowsthe outflows of $17.7$67.3 billion, $18.8$32.0 billion and $6.9$11.9 billion, respectively.  Non-US clients accounted for 56.6%36.2% of the September 30,March 31, 2010 total.
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GENERAL ACCOUNTS INVESTMENT PORTFOLIO
The Insurance Group’s consolidated investment portfolio is composed of the General Account investment portfolios of the Financial Advisory/Insurance segment and investment assets of AXA Financial (“the Holding Company”) and its distribution and non-operating subsidiaries (together, the “Holding Company Group”).  The General Account Investment Assets (“GAIA”) portfolio consists of a well diversified portfolio of public and private fixed maturities, commercial and agricultural mortgages and other loans, equity securities and other invested assets.
The General Accounts’ portfolios and investment results support the insurance and annuity liabilities of the segment’s business operations.  The following table reconciles the consolidated balance sheet asset amounts to GAIA.
General Account Investment Assets
March 31, 2010
(In Millions)
Balance Sheet Captions: 
Balance Sheet Total
  
Other (1)
  
Holding Company Group (2)
  
GAIA (5)
 
Fixed maturities, available for sale, at fair value (3)
 $40,824.9  $(793.0) $2.6  $41,615.3 
Mortgage loans on real estate  4,948.7   (398.3)  -   5,347.0 
Equity real estate  508.8   (0.3)  412.3(4)  96.8 
Policy loans  4,960.7   1.6   -   4,959.1 
Other equity investments  1,690.8   256.3   -   1,434.5 
Trading securities  1,795.0   515.4   -   1,279.6 
Other invested assets  935.3   935.3   -   - 
Total investments  55,664.2   517.0   414.9   54,732.3 
Cash and cash equivalents  3,651.4   711.9   150.0   2,789.5 
Debt & other  (1,511.2)  1,118.9   (1,103.3)   (1,526.8)
Total $57,804.4  $2,347.8  $(538.4)  $55,995.0 

(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, 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 General Account Investment Assets.  The “Holding Company Group” category is deducted in arriving at General Account Investment Assets.
(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, 2010, 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 $412.3 million.
(5)GAIA investments are presented at their amortized costs for fixed maturities and carrying values for all other invested assets.


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Investment Results of General Account Investment Assets
The following table summarizes investment results by asset category for the periods indicated.
Investment Results By Asset Category
(In Millions)
  
Three Months Ended March 31,
  Year Ended December 
  
2010
  
2009
   31, 2009 
  
Yield (1)
 
Amount
  
Yield  (1)
 
Amount
  
Amount
 
Fixed Maturities:                
Investment grade
                
Income
  5.29% $500.1   5.55% $512.7     
Ending assets (2)
      39,045.9       39,093.5  $38,960.7 
Below investment grade
                    
Income
  6.44%  51.3   6.66%  33.0     
Ending assets (2)
      3,222.1       2,009.5   2,898.3 
Mortgages:                    
Income
  6.98%  90.1   6.66%  83.9     
Ending assets (3)
      5,351.1       5,077.2   5,328.1 
Equity Real Estate:                    
Income (4)
  21.22%  4.7   27.73%  18.4     
Ending assets(4)
      97.7       502.6   99.0 
Other Equity Investments:                    
Income  13.80%  44.1   (29.95)%  (120.0)    
Ending assets (5)
      1,434.2       1,400.7   1,295.6 
Policy Loans:                    
Income  6.42%  79.7   6.37%  79.5     
Ending assets (6)
      5,109.6       5,163.5   5,130.5 
Cash and Short-term Investments:                    
Income  0.26%  1.6   0.71%  13.2     
Ending assets (7)
      2,473.0       6,991.8   2,259.7 
Trading Securities:                    
Income  8.41%  27.5   -   -     
Ending assets (8)
      1,283.0       -   1,447.7 
                     
Total Invested Assets:                    
Income  5.70%  799.1   4.54%  620.7     
Ending Assets      58,016.6       60,238.8   57,419.6 
                     
Debt and Other:                    
Interest expense and other  7.08%  (26.5)  7.09%  (26.5)    
Ending assets (liabilities) (9)
      (1,562.1)      (1,561.4)  (1,535.7)
                     
Total:                    
Income  5.66% $772.6   4.18% $594.2     
Investment fees  (0.12)%  (15.1)  (0.10)%  (13.2)    
Income  5.54% $757.5   4.08% $581.0     
Ending net assets     $56,454.5      $58,677.4  $55,883.9 

(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 $(103.0) million, $(854.4) million and $0 million, and include accrued income of $522.3 million, $525.6 million and $485.8 million, amounts due from securities sales of $231.1 million, $4.7 million and $0.2 million and other assets of $2.3 million, $2.3 million and $2.3 million at March 31, 2010 and 2009 and December 31, 2009, respectively.
(3)Mortgage investment assets include accrued income of $48.5 million, $41.2 million and $38.0 million and are adjusted for related escrow and other liability balances of $(44.4) million, $(64.3) million and $(71.8) million at March 31, 2010 and 2009 and December 31, 2009, respectively.
(4)Equity real estate carrying values included accrued income of $2.9 million, $4.5 million and $2.9 million and were adjusted for related liability balances of $(2.0) million, $(24.0) million and $(2.8) million as of March 31, 2010 and 2009 and December 31, 2009, respectively.
(5)Other equity investment assets included accrued income and pending trade settlements of $(0.3) million, $(2.2) million and $8.5 million at March 31, 2010 and 2009 and December 31, 2009, respectively.
(6)Policy loan asset values include accrued income of $150.5 million, $154.5 million and $158.6 million at March 31, 2010 and 2009 and December 31, 2009, respectively.
(7)Cash and short-term investment assets include net payables from collateral movements of $(316.3) million, $(393.1) million and $198.7 million and were adjusted for cash in transit and accrued income of $(0.2) million, $(3.6) million and $1.3 million at March 31, 2010 and 2009 and December 31, 2009, respectively.
(8)Trading securities include ending accrued income of $3.4 million and $4.0 million at March 31, 2010 and December 31, 2009, respectively.
(9)Debt and other includes accrued expenses of $35.3 million, $36.5 million and $7.8 million at March 31, 2010 and 2009 and December 31, 2009, respectively.

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Fixed Maturities
The fixed maturity portfolio consists largely of investment grade corporate debt securities and includes significant amounts of US government and agency obligations.  At March 31, 2010, 76.4% of the fixed maturity portfolio was publicly traded.  At March 31, 2010, GAIA held commercial mortgage backed securities (“CMBS”) with an amortized cost of $2.4 billion, all of it publicly traded.  The General Account has no exposure to the sovereign debt of Greece, Portugal, Iceland or the Republic of Ireland.  The total exposure to Eurozone sovereign debt is $15.1 million at March 31, 2010.
Fixed Maturities by Industry
The General Accounts’ fixed maturities portfolios include publicly-traded and privately-placed corporate debt securities across an array of industry categories.
The following table sets forth these fixed maturities by industry category as of the dates indicated along with their associated gross unrealized gains and losses.
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Fixed Maturities by Industry (1)
(In Millions)
  
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
             
At March 31, 2010:            
Corporate securities: (2)
            
Finance $8,345.9  $286.9  $79.3  $8,553.5 
Manufacturing  7,052.8   435.5   28.3   7,460.0 
Utilities  4,562.6   242.1   22.9   4,781.8 
Services  4,352.6   281.3   12.6   4,621.3 
Energy  1,881.6   142.9   0.8   2,023.7 
Retail and wholesale  1,271.0   77.6   8.4   1,340.2 
Transportation  715.7   51.3   6.7   760.3 
Other  198.5   8.1   0.3   206.3 
Total corporate securities                                                       28,380.7   1,525.7   159.3   29,747.1 
U.S. government  5,452.5   38.6   269.4   5,221.7 
Commercial mortgage-backed  2,399.0   3.7   731.5   1,671.2 
Residential mortgage-backed (3)
  2,245.4   74.4   0.1   2,319.7 
Preferred stock  2,041.7   18.6   177.3   1,883.0 
State & municipal  441.2   7.9   14.3   434.8 
Foreign government  386.6   49.2   0.3   435.5 
Asset-backed securities  268.2   11.1   20.0   259.3 
Total $41,615.3  $1,729.2  $1,372.2  $41,972.3 
                 
At December 31, 2009:                
Corporate securities: (2)
                
Finance $9,014.4  $228.4  $168.2  $9,074.6 
Manufacturing  6,967.5   385.6   52.9   7,300.2 
Utilities  4,533.3   218.0   32.8   4,718.5 
Services  4,276.8   252.4   13.2   4,516.0 
Energy  2,013.5   142.5   1.7   2,154.3 
Retail and wholesale  1,279.6   66.3   10.4   1,335.5 
Transportation  755.5   51.2   12.4   794.3 
Other  182.6   7.3   0.2   189.7 
Total corporate securities                                                       29,023.2   1,351.7   291.8   30,083.1 
U.S. government  4,209.0   23.1   281.2   3,950.9 
Commercial mortgage-backed  2,439.1   2.2   659.0   1,782.3 
Residential mortgage-backed (3)
  2,456.0   59.8   0.2   2,515.6 
Preferred stock  2,145.5   8.5   310.1   1,843.9 
State & municipal  467.3   7.4   19.3   455.4 
Foreign government  325.8   35.4   0.3   360.9 
Asset-backed securities  304.7   11.5   23.1   293.1 
Total $41,370.6  $1,499.6  $1,585.0  $41,285.2 

(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)Reflects $1.10 billion of amortized cost FDIC insured bonds that were reported as Corporate in 2009 and moved to U.S. Government in 2010.
(3)Includes publicly traded agency pass-through securities and collateralized mortgage obligations.

Fixed Maturities Credit Quality
The Securities Valuation Office ("SVO") or the NAIC, evaluates the investments of insurers for regulatory reporting purposes and assigns fixed maturity securities to one of six categories ("NAIC Designations”).  NAIC designations of “1” or “2” include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moody’s or BBB- or higher by Standard & Poor’s. NAIC Designations of “3” through “6” are referred to as below investment grade, which include securities rated Ba1 or lower by Moody’s and BB+ or lower by Standard & Poor’s.  As a result of time lags between the funding of investments, the finalization of legal documents and the completion of the SVO filing process, the fixed maturity portfolio generally includes securities that have not yet been rated by the SVO as of each balance sheet date.  Pending receipt of SVO ratings, the categorization of these securities by NAIC designation is based on the expected ratings indicated by internal analysis.
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The amortized cost of the General Accounts’ public and private below investment grade fixed maturities totaled $3.1 billion, or 7.4%, of the total fixed maturities at March 31, 2010 and $2.7 billion, or 6.5%, of the total fixed maturities at December 31, 2009.  Below investment grade fixed maturities represented 55.1% and 38.9% of the gross unrealized losses at March 31, 2010 and December 31, 2009, total.  During third quarterrespectively. The increase in below investment grade fixed maturity securities is due to credit migration on existing securities, rather than new originations or purchases.
Public Fixed Maturities Credit Quality.  The following table sets forth the General Accounts’ public fixed maturities portfolios by NAIC rating at the dates indicated.
Public Fixed Maturities
NAIC Designation (1)
  
Rating Agency Equivalent
  
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
              
At March 31, 2010             
 1  Aaa, Aa, A  $20,655.4  $849.4  $396.7  $21,108.1 
 2  Baa   9,507.9   500.0   116.9   9,891.0 
    Investment grade   30,163.3   1,349.4   513.6   30,999.1 
                      
 3  Ba   1,326.1   17.8   101.5   1,242.4 
 4  B   257.0   0.7   42.3   215.4 
 5  C and lower   15.5   -   3.7   11.8 
 6  In or near default   35.9   4.7   1.0   39.6 
    Below investment grade   1,634.5   23.2   148.5   1,509.2 
Total Public Fixed Maturities  $31,797.8  $1,372.6  $662.1  $32,508.3 
                       
At December 31, 2009                 
 1  Aaa, Aa, A  $20,773.6  $763.0  $487.6  $21,049.0 
 2  Baa   9,644.3   427.7   226.9   9,845.1 
    Investment grade   30,417.9   1,190.7   714.5   30,894.1 
                       
 3  Ba   1,168.2   8.2   130.1   1,046.3 
 4  B   270.7   -   56.0   214.7 
 5  C and lower   16.2   -   6.2   10.0 
 6  In or near default   36.9   3.0   0.1   39.8 
    Below investment grade   1,492.0   11.2   192.4   1,310.8 
Total Public Fixed Maturities  $31,909.9  $1,201.9  $906.9  $32,204.9 

(1)Includes, at March 31, 2010 and December 31, 2009 respectively, 2 securities with amortized cost of $7.6 million (fair value, $7.6 million) and no securities that have been categorized based on expected NAIC designation pending receipt of SVO ratings.

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Private Fixed Maturities Credit Quality.  The following table sets forth the General Accounts’ private fixed maturities portfolios by NAIC rating at the dates indicated.
Private Fixed Maturities
NAIC Designation (1)
  
Rating Agency Equivalent
  
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
                 
At March 31, 2010             
 1  Aaa, Aa, A  $4,602.4  $152.6  $34.1  $4,720.9 
 2  Baa   3,766.6   184.6   67.8   3,883.4 
    Investment grade   8,369.0   337.2   101.9   8,604.3 
                      
 3  Ba   583.6   5.2   127.4   461.4 
 4  B   593.0   7.7   285.5   315.2 
 5  C and lower   188.7   0.9   131.6   58.0 
 6  In or near default   83.2   5.6   63.7   25.1 
    Below investment grade   1,448.5   19.4   608.2   859.7 
Total Private Fixed Maturities  $9,817.5  $356.6  $710.1  $9,464.0 
                       
At December 31, 2009                 
 1  Aaa, Aa, A  $4,279.4  $138.3  $72.0  $4,345.7 
 2  Baa   3,976.8   142.9   181.9   3,937.8 
    Investment grade   8,256.2   281.2   253.9   8,283.5 
                       
 3  Ba   642.3   6.4   158.1   490.6 
 4  B   450.8   5.7   210.2   246.3 
 5  C and lower   86.7   0.7   55.2   32.2 
 6  In or near default   24.7   3.7   0.7   27.7 
    Below investment grade   1,204.5   16.5   424.2   796.8 
Total Private Fixed Maturities  $9,460.7  $297.7  $678.1  $9,080.3 

(1)Includes, at March 31, 2010 and December 31, 2009, respectively, 18 securities with amortized cost of $209.7 million (fair value, $217.0 million) and 15 securities, with amortized cost of $148.1 million (fair value, $153.9 million) that have been categorized based on expected NAIC designation pending receipt of SVO ratings.

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Corporate Fixed Maturities Credit Quality.  The following table sets forth the General Accounts’ public and private holdings of corporate fixed maturities by NAIC rating at the dates indicated.
Corporate Fixed Maturities
NAIC Designation
 
Rating Agency Equivalent
 
Amortized Cost
  
Gross Unrealized Gains
  
Gross Unrealized Losses
  
Fair Value
 
               
At March 31, 2010            
 1 Aaa, Aa, A $15,015.8  $821.7  $39.5  $15,798.0 
 2 Baa  12,099.7   666.7   68.3   12,698.1 
   Investment grade  27,115.5   1,488.4   107.8   28,496.1 
                    
 3 Ba  1,074.8   19.9   38.3   1,056.4 
 4 B  173.0   7.7   11.3   169.4 
 5 C and lower  5.0   -   1.2   3.8 
 6 In or near default  12.4   9.7   0.7   21.4 
   Below investment grade  1,265.2   37.3   51.5   1,251.0 
Total Corporate Fixed Maturities $28,380.7  $1,525.7  $159.3  $29,747.1 
                    
At December 31, 2009                
 1 Aaa, Aa, A $15,736.5(1) $765.7  $63.5  $16,438.7 
 2 Baa  11,945.6   561.7   134.1   12,373.2 
   Investment grade  27,682.1   1,327.4   197.6   28,811.9 
                    
 3 Ba  1,137.7   11.9   75.7   1,073.9 
 4 B  166.4   5.7   16.6   155.5 
 5 C and lower  8.4   -   1.2   7.2 
 6 In or near default  28.6   6.7   0.7   34.6 
   Below investment grade  1,341.1   24.3   94.2   1,271.2 
Total Corporate Fixed Maturities $29,023.2  $1,351.7  $291.8  $30,083.1 

(1)Includes $1.10 billion of amortized cost for FDIC insured bonds that were reported as Corporate fixed maturities in 2009 and reclassified as U.S. Government securities in 2010.

Asset-backed Securities
At March 31, 2010, the amortized cost and fair value of asset backed securities held were $268.2 million and $259.3, respectively; at December 31, 2009, outflows slowedthose amounts were $304.7 million and $293.0 million, respectively.  At March 31, 2010, the amortized cost and fair value of asset backed securities collateralized by sub prime mortgages were $71.1 million and $59.6, respectively.  At that same date, the  amortized cost and fair value of asset backed securities collateralized by non sub prime mortgages were $73.1 million and $71.3 million, respectively.
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Commercial Mortgage-backed Securities
Weakness in all three distribution channels, most notablycommercial real estate fundamentals, along with an overall decrease in liquidity and availability of capital, led to a very difficult refinancing environment and an increase in overall delinquency rates on commercial mortgages in the Institutional channelcommercial mortgage-backed securities market.
The following table sets forth the amortized cost and fair value of the Insurance Group’s commercial mortgage-backed securities at the dates indicated by credit quality and by year of issuance (vintage).
Commercial Mortgage-Backed Securities
March 31, 2010
 (In Millions)
  
Moody’s Agency Rating
  Total  Total 
Vintage 
Aaa
  
Aa
   A  
Baa
  
Ba
and Below
  
Amortized
Cost
  
December 31, 2009
 
At amortized cost:                      
2004 $57.9  $80.8  $165.9  $233.2  $56.7  $594.5  $594.5 
2005  107.8   130.6   149.4   185.6   227.6   801.0   822.4 
2006  -   -   4.7   124.9   433.1   562.7   575.8 
2007  9.9   2.5   8.9   -   419.5   440.8   446.5 
Total CMBS $175.6  $213.9  $328.9  $543.7  $1,136.9  $2,399.0  $2,439.1 
                             
At fair value:                            
2004 $55.7  $81.6  $162.2  $210.8  $48.3  $558.6  $554.1 
2005  98.1   124.7   132.9   159.6   167.8   683.1   681.5 
2006  -   -   3.6   96.3   193.3   293.2   327.3 
2007  4.3   2.1   3.4   -   126.5   136.3   219.4 
Total CMBS $158.1  $208.4  $302.1  $466.7  $535.9  $1,671.2  $1,782.3 

Mortgages
Investment Mix
At March 31, 2010 and December 31, 2009, respectively, approximately 9.52% and 9.50% of GAIA were in commercial and agricultural mortgage loans.  The table below shows the composition of the commercial and agricultural mortgage loan portfolio at amortized cost, before the loss allowance, at the dates indicated.
  
March 31, 2010
  
December 31, 2009
 
  (In Millions) 
Commercial mortgage loans
 $3,847.9  $3,815.9 
Agricultural mortgage loans
  1,526.1   1,539.8 
         
Total Mortgage Loans
 $5,374.0  $5,355.7 

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The investment strategy for the mortgage loan portfolio emphasizes diversification by property type and geographic location with a primary focus on asset quality.  The tables below show the breakdown of the amortized cost of the General Accounts investments in mortgage loans by geographic region and property type at the dates indicated.
Mortgage Loans by Region and Property Type
  
March 31, 2010
  
December 31, 2009
 
  
Amortized Cost
  
% of Total
  
Amortized Cost
  
% of Total
 
  (In Millions) 
By Region:            
U.S. Regions:            
Pacific $1,462.2   27.2% $1,420.2   26.5%
South Atlantic  729.2   13.6   733.9   13.7 
Middle Atlantic  1,183.1   22.0   1,186.3   22.2 
East North Central  682.6   12.7   685.9   12.8 
West South Central  332.1   6.2   339.1   6.3 
Mountain  465.4   8.7   467.5   8.7 
New England  60.6   1.1   62.4   1.2 
West North Central  387.8   7.2   392.1   7.3 
East South Central  71.0   1.3   68.3   1.3 
                 
Total Mortgage Loans $5,374.0   100.0% $5,355.7   100.0%
                 
By Property Type:                
Industrial buildings $518.2   9.6% $519.4   9.7%
Retail stores  502.9   9.4   504.7   9.4 
Office buildings  1,701.2   31.6   1,661.3   31.0 
Apartment complexes  792.9   14.8   796.1   14.9 
Other  54.2   1.0   54.5   1.0 
Hospitality  278.5   5.2   279.9   5.2 
Agricultural properties  1,526.1   28.4   1,539.8   28.8 
                 
Total Mortgage Loans $5,374.0   100.0% $5,355.7   100.0%

At March 31, 2010, the General Account investments in commercial mortgage loans had a weighted average loan-to-value ratio of 76% while the agricultural mortgage loans weighted average loan-to-value ratio was 44%.
The values used in these ratio calculations were developed as part of the periodic review of the commercial and agricultural mortgage loan portfolio, which includes an evaluation of the underlying collateral value.
Mortgage Loans by Loan-to-Value and
Debt Service Coverage Ratios
March 31, 2010
(In Millions)
  
Debt Service Coverage Ratio (1)
    
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
  
Total Mortgage Loans
 
    
0% - 50% $889.6  $110.7  $86.5  $44.5  $23.1  $86.5  $1,240.9 
50% - 70%  644.3   142.4   310.1   571.3   41.7   32.8   1,742.6 
70% - 90%  104.4   274.7   565.3   371.7   74.3   8.2   1,398.6 
90% plus  37.9   64.0   73.8   334.7   362.2   119.3   991.9 
Total Commercial and Agricultural Mortgage Loans $1,676.2  $591.8  $1,035.7  $1,322.2  $501.3  $246.8  $5,374.0 

(1)The debt service coverage ratio is calculated using actual results from property operations.

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The tables below show the breakdown of the commercial and agricultural mortgage loans by year of origination at March 31, 2010.
Mortgage Loans by Year of Origination
  
March 31, 2010
 
Year of Origination 
Amortized Cost
  
% of Total
 
  (Dollars In Millions) 
         
2010 $72.7   1.4%
2009  607.0   11.3 
2008  391.2   7.3 
2007  1,095.4   20.4 
2006  851.2   15.8 
2005 and prior  2,356.5   43.8 
         
Total Mortgage Loans $5,374.0   100.0%

At March 31, 2010 and December 31, 2009, respectively, $0.9 million and $0.3 million of mortgage loans were classified as problem loans while $1.7 million and $2.3 million were classified as potential problem loans.  There were no loans in the restructured category at either date.
Valuation allowances for the commercial mortgage loan portfolio were related to loan specific reserves.  The following table sets forth the change in valuation allowances for the commercial mortgage loan portfolio at the dates indicated.  There were no valuation allowances for agricultural mortgages at March 31, 2010 and December 31, 2009.
  
March 31, 2010
  
December 31, 2009
 
  (In Millions) 
         
Balances, beginning of year
 $18.3  $- 
Additions charged to income
  9.1   18.8 
Deductions for writedowns and asset dispositions  (.4)  (.5)
         
Balances, End of Period
 $27.0  $18.3 

Other Equity Investments
At March 31, 2010, private equity partnerships, hedge funds and real-estate related partnerships were 95.0% of total other equity investments.  These interests, which represent 2.4% of GAIA, consist of a diversified portfolio of LBO, mezzanine, venture capital and other alternative limited partnerships, diversified by sponsor, fund and vintage year.  The portfolio is actively managed to control risk and generate investment returns over the long term.  As demonstrated by the negative mark to market investment income returns in 2009 followed by positive returns in 2010, returns are sensitive to overall market developments.
Other Equity Investments - Classifications
  
March 31, 2010
  
December 31, 2009
 
  (In Millions) 
         
Common stock
 $71.8  $72.0 
Joint ventures and limited partnerships:        
Private equity
  1,029.1   967.9 
Hedge funds
  252.3   260.1 
Real estate related
  81.3   91.0 
         
Total Other Equity Investments
 $1,434.5  $1,391.0 

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Trading Securities
At March 31, 2010 and December 31, 2009, respectively, the Insurance Group’s trading account securities included U.S. Treasury securities pledged under repurchase agreements with amortized costs of $1.29 billion and $1.49 billion and fair values of $1.28 billion and $1.44 billion.  The repurchase agreements are accounted for as collateralized borrowings and reported in Broker-dealer related payables in the consolidated balance sheets.
Repurchase Agreements
The Insurance Group uses repurchase agreements to finance the purchase of U.S. Treasury securities to reduce the economic impact of unfavorable changes in exposures attributable to interest rates as part of the variable annuity hedging strategy.  During first quarter 2010 and full year 2009, the Insurance Group’s maximum outstanding repurchase agreements were $2.05 billion and $ 3.76 billion, respectively.  There are no repurchase agreements that are treated as sales.
Off Balance Sheet Transactions
At March 31, 2010 and December 31, 2009, there were no off balance sheet transactions the Insurance Group was a party to.
Derivatives
The Insurance Group has issued and continues to offer certain variable annuity products with GMDB, GMIB and GWBL features.  The risk associated with the GMDB feature is that under-performance of the financial markets could result in GMDB benefits, in the event of death, being higher than what accumulated policyholder account balances would support.  The risk associated with the GMIB/GWBL feature is that under-performance of the financial markets could result in GMIB/GWBL benefits, in the event of elections, being higher than what accumulated policyholders account balances would support.  The Insurance Group uses derivatives for asset/liability risk management primarily to reduce exposures to equity market declines and interest rate fluctuations.  Derivative hedging strategies are designed to redu ce these risks from an economic perspective.  Operation of these hedging programs is based on models involving numerous estimates and assumptions, including, among others, mortality, lapse, surrender and withdrawal rates, election rates, market volatility and interest rates.
A wide range of derivative contracts are used in these hedging programs, including exchange traded equity, currency and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts, variance swaps and swaptions.  The Insurance Group does not currently use credit derivatives.  For both GMDB and GMIB, the Insurance Group retains basis and most volatility risk and risk associated with actual versus expected assumptions for mortality, lapse, surrender, withdrawal and contractholder election rates, among other things.  The derivative contracts are managed to correlate with changes in the value of the GMDB and GMIB feature that result from financial markets movements.  The Insurance Group has purchased reinsurance contracts to mitigate the risks associ ated with the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts issued by the Insurance Group.  In addition, the Insurance Group uses repurchase agreements to finance the purchase of U.S. Treasury securities to reduce the economic impact of unfavorable changes in exposures attributable to interest rates as part of the variable annuity hedging strategy.
Reinsurance contracts covering GMIB exposure and the GWBL features are both considered derivatives for accounting purposes and, therefore, must be reported in the balance sheet at their fair value.  None of the derivatives used in these programs were designated as qualifying hedges under U.S. GAAP accounting guidance for derivatives and hedging.  All gains (losses) on derivatives are reported in Net investment income in the consolidated statements of earnings except those resulting from changes in the fair values of the embedded derivatives: the GWBL features are reported in Policyholder’s benefits, and the GMIB reinsurance contracts are reported on a separate line in the consolidated statement of earnings, respectively.
In addition to its hedging program that seeks to mitigate economic exposures specifically related to variable annuity contracts with GMDB, GMIB, and GWBL features, beginning in fourth quarter 2008 and continuing through 2009, the Insurance Group implemented hedging programs to provide additional protection against the adverse effects of equity market and interest rate declines on its statutory liabilities.  All of the interest rate and a majority of AllianceBernstein’s investment services outperformedthe equity derivatives used in these programs expired or were removed in first quarter 2010.  In first quarter 2010, the Insurance Group implemented hedging programs to provide additional protection against the adverse effects of interest rate declines on guarantees that will be provided by the Insurance Group in its variable annuity contracts expected to be sold over th e next several months.
Margins or “spreads” on interest-sensitive life insurance and annuity contracts are affected by interest rate fluctuations as the yield on portfolio investments, primarily fixed maturities, are intended to support required payments under these contracts, including interest rates credited to their benchmarks and/or peer averages.policy and contract holders.  The Insurance Group currently uses interest rate floors to reduce the risk associated with minimum crediting rate guarantees on these interest-sensitive contracts.
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The table below presents quantitative disclosures about the Insurance Group’s derivative instruments, including those embedded in other contracts though required to be accounted for as derivative instruments.
Derivative Instruments by Category
At March 31, 2010
     
Fair Value
    
  
Notional Amount
  
Asset Derivatives
  
Liability Derivatives
  
Gains (Losses) Reported in Net (Loss) Earnings
 
  (In Millions) 
Freestanding derivatives            
Equity contracts (1):
            
Futures $8,290.8  $   $-  $(537.7)
Swaps  1,580.4   3.2   41.1   (29.3)
Options  1,000.0   19.8   -   (32.2)
                 
Interest rate contracts (1):
                
Floors  15,000.0   295.5   -   27.8 
Swaps  9,409.0   140.2   21.3   134.1 
Futures  15,378.0   -   -   105.9 
Swaptions  1,200.0   40.1   -   (4.6)
                 
Net investment loss              (336.0)
                 
Embedded derivatives:                
GMIB reinsurance contracts (2)
  -   945.0   -   (35.6)
                 
GWBL features (3)
  -   -   40.5   14.4 
                 
Balances, March 31, 2010 $51,858.2  $1,443.8  $102.9  $(357.2)

(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 policyholder liabilities.

Realized Investment Gains and Losses
Realized investment gains and losses are generated from numerous sources, including the sale of fixed maturity securities, equity securities, investments in limited partnerships and other types of investments, as well as adjustments to the cost basis of investments for other-than-temporary impairments. Realized investment gains and losses are also generated from prepayment premiums received on private fixed maturity securities, recoveries of principal on previously impaired securities, provisions for losses on commercial mortgage and other loans, fair value changes on commercial mortgage loans carried at fair value, and fair value changes on embedded derivatives and free-standing derivatives that do not qualify for hedge accounting treatment.
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The following tables set forth “Realized investment gains (losses), net,” for the periods indicated:
Realized Investment Gains (Losses), Net
  
Three Months Ended March 31,
 
  
2010
  
2009
 
  (In Millions) 
         
Fixed maturities $(14.1) $162.2 
Other equity investments  2.5   (0.5)
Derivatives  -   - 
Other  (8.7)  - 
  $(20.3) $161.7 

Net realized losses on fixed maturities were $(14.1) million in first quarter 2010, compared to net realized gains of $162.2 million in the comparable 2009 quarter, as set forth in the following table:
Fixed Maturities
Realized Investment Gains (Losses)
  
Three Months Ended March 31,
 
  
2010
  
2009
 
  (In Millions) 
Gross realized investment gains:      
Gross gains on sales and maturities $41.5  $190.5 
Other  -   - 
Total gross realized investment gains  41.5   190.5 
Gross realized investment losses:        
Other-than-temporary impairments recognized in earnings (loss)  (40.9)  (27.5)
Gross losses on sales and maturities  (14.7)  (0.8)
Credit related losses on sales  -   - 
Other  -   - 
Total gross realized investment losses  (55.6)  (28.3)
Total $(14.1) $162.2 

The following tables set forth, for the periods indicated, the composition of other-than-temporary impairments recorded in earnings by asset type.
Other-Than-Temporary Impairments Recorded in Earnings (Loss)
  
Three Months Ended March 31,
 
  
2010(1)
  
2009
 
  (In Millions) 
Fixed maturities      
Public fixed maturities $(10.6) $(22.9)
Private fixed maturities  (30.3)  (4.6)
Total fixed maturities $(40.9) $(27.5)

(1)Excludes $(3.2) 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.

At March 31, 2010 and December 31, 2009, respectively, the $(40.9) million and $(27.5) million in other-than-temporary impairments on fixed maturities recorded in income were due to credit events or adverse conditions of the respective issuer.  In these situations, management believes such circumstances have caused, or will lead to, a deficiency in the contractual cash flows related to the investment.  The amount of the impairment recorded in earnings is the difference between the amortized cost of the debt security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment.
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LIQUIDITY AND CAPITAL RESOURCES
Overview
Liquidity management is focused around a centralized funds management process.  This centralized process includes the monitoring and control of cash flow associated with policyholder receipts and disbursements and General Account portfolio principal, interest and investment activity.  Funds are managed through a banking system designed to reduce float and maximize funds availability.  The derivative transactions used to hedge the Insurance Group’s variable annuity products are integrated into AXA Financial’s overall liquidity process; forecast potential payments and collateral calls during the life of and at the settlement of each derivative transaction are included in the cash flow forecast.  Information regarding liquidity needs and availability is reported by various departments an d investment managers.  The information is used to produce forecasts of available funds and cash flow.  Significant market volatility can affect daily cash requirements due to the settlement and collateral calls of derivative transactions.
In addition to gathering and analyzing information on funding needs, AXA Financial Group has a centralized process for both investing short-term cash and borrowing funds to meet cash needs.  In general, the short-term investment positions have a maturity profile of 1-7 days with considerable flexibility as to availability.
In managing the liquidity of the Financial Advisory/Insurance segment’s business, management also considers the risk of policyholder and contractholder withdrawals of funds earlier than assumed when selecting assets to support these contractual obligations.  Surrender charges and other contract provisions are used to mitigate the extent, timing and profitability impact of withdrawals of funds by customers from annuity contracts and deposit liabilities.  The following table sets forth withdrawal characteristics of the Insurance Group’s General Account annuity reserves and deposit liabilities (based on statutory liability values) as of the dates indicated.
General Accounts Annuity Reserves and Deposit Liabilities
(Dollars in Millions)
  
March 31, 2010
  
December 31, 2009
 
  
Amount
  
% of Total
  
Amount
  
% of Total
 
    
Not subject to discretionary withdrawal provisions $5,052.8   24.1% $5,003.8   23.9%
                 
Subject to discretionary withdrawal, with adjustment:                
With market value adjustment
  969.0   4.6   1,019.5   4.9 
At contract value, less surrender charge of 5% or more
  1,904.6   9.1   2,057.0   9.8 
Subtotal
  2,873.6   13.7   3,076.5   14.7 
                 
Subject to discretionary withdrawal at contract value with no surrender charge or surrender charge of less than 5%  13,013.0   62.2   12,852.3   61.4 
                 
Total Annuity Reserves And Deposit Liabilities $20,939.4   100.0% $20,932.6   100.0%

Analysis of Statement of Cash Flows
Cash and cash equivalents of $3.65 billion at March 31, 2010 increased $612.7 million from $3.04 billion at December 31, 2009.  Cash inflows are primarily provided by operations, policyholder deposits, short-term financings, proceeds from sales of investments and borrowings from affiliates.  Significant cash outflows include purchases of investments, policyholder withdrawals, repayments of long- and short-term debt and borrowings and loans to affiliates.
Net cash provided by operating activities was $203.4 million in first quarter 2010 as compared to the $326.4 million of cash used in operating activities in the 2009 quarter.  The cash provided by operating activities in the 2010 quarter primarily resulted from net earnings of $346.8 million in first quarter 2010 as compared to a loss of $34.3 million in the year earlier quarter and the $574.2 million of  higher losses from derivative instruments partially offset by the $266.6 million lower decrease in the fair value of reinsurance contracts in first quarter 2010 compared to first quarter 2009.
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Cash flows used in investing activities decreased $2.15 billion, from $2.70 billion in first quarter 2009 to $551.0 million in the 2010 quarter.  The $3.00 billion increase to $7.47 billion in investment purchases in the 2010 quarter was more than offset by the $4.93 billion higher sales maturities and repayments of investments.  Cash settlements of derivatives increased $368.1 million to $819.7 million while the decrease in loans to affiliates was $498.5 higher, totaling $500.0 million in first quarter 2010 due to the repayment by AXA Financial.  On June 16,SA in the 2010 quarter.
Cash flows provided by financing activities decreased $25.6 million from $985.9 million in first quarter 2009 to $960.3 in the 2010 quarter.  The impact of declines in deposits to and withdrawals from policyholders’ account balances of $527.1 million and $520.6 million, respectively, was minimal.  The 2009 period had two transactions that contributed $1.10 billion of cash: the $600.0 million sale of AllianceBernstein units and $500.0 million in proceeds from additional borrowings from affiliates.  The 2010 quarter period included the $300.0 million repayment by AXF of its third-party debt.  Short-term financings increased $223.2 million period over period.  Collateralized pledge liabilities declined $358.1 million to $353.4 million in first quarter 2010.  Collateralized pledged assets decreased some $868.7 million in the 2010 quarter; there was no comparable decrease in the corresponding 2009 period.
AXA Financial (the “Holding Company”)
Liquidity Requirements
In 2010, AXA Financial expects to fund most of its liquidity and capital needs through additional borrowings from AXA or its affiliates and/or from third parties.  While AXA or its affiliates historically have provided funding to AXA Financial, neither AXA nor any affiliate has any obligation to provide AXA Financial with additional liquidity and capital.
AXA Financial’s cash requirements include debt service, operating expenses, taxes, certain employee benefits and the provision of funding to certain of our non-insurance company subsidiaries to meet their capital requirements.
Sources of liquidity for AXA Financial include (i) borrowings from AXA and/or AXA affiliates, (ii) borrowings from third parties, including under AXA Financial’s bank credit facilities and commercial paper program, (iii) dividends principally from AXA Equitable and MONY Life, as well as interest income from AXA Equitable’s surplus notes and (iv) interest, dividends, distributions and/or sales proceeds on investments and other assets.  Insurance subsidiaries may be restricted by operation of applicable insurance laws (particularly New York Insurance law in the case of AXA Equitable and MONY Life) from making dividend payments or their own need for funds.  In March 2010, $300 million of AXA Financial's third party Senior Notes issued to third parties were repaid.  In August 2010, AXA Financial will repay an additional $480 million of its Senior Notes.  The remaining $350.0 million of Senior Notes mature in 2028.
In 2009, AXA Financial issued a $440.0 million short-term note to AXA.  This note bears interest at a rate of LIBOR plus 15 basis points.  The proceeds from this note, whose original July 31, 2009 maturity date was amended to extend to October 16, 2009 and amended again to December 16, 2009, was contributed to a newly formed non-insurance subsidiary to support the purchase of investment real estatereceived no dividends from AXA Equitable.  In connection with this purchase (the “AXA Equitable Property”), this subsidiary issued $660.0 million of 8% mortgage notes with a ten year term, $400.0 million to AXA Equitable, whichand MONY Life; it is eliminateduncertain whether any dividends will be received in consolidation,2010.
Existing Credit Facilities and $260.0 million to AXA UK PLC, an AXA affiliate, which is reported in Loans from affiliates on the consolidated balance sheet.Commercial Paper Programs

On June 3, 2009, AXA Financial and its parent, AXA, initiated a commercial paper program on a private placement basis under which AXA Financial or AXA may issue short-term unsecured notes in an aggregate amount not to exceed $1.50 billion outstanding at any time.  The program is rated “A-1” by S&P, “P-1” by Moody’s and “F-1” by Fitch.  At March 31, 2010, $275 million was outstanding; the average balance outstanding during first quarter 2010 was $105.8 million.  At December 31, 2009, no borrowings were outstanding.
AXA and certain of its subsidiaries, including AXA Financial, have a €3.50 billion global revolving credit facility and a $1.00 billion letter of credit facility, which is set to mature on June 8, 2012, with a group of 27 commercial banks and other lenders.  Under the terms of the revolving credit facility, up to $500.0 million is available to AXA Financial for general corporate purposes, while the letter of credit facility makes up to $960.0 million available to AXA Bermuda.
In December 2009, AXA, AXA Financial and AXA Bermuda entered into a credit agreement with a number of major European lending institutions.  The credit agreement provides for an unsecured revolving credit facility totaling €1.40 billion (or its equivalent in optional currencies).  The obligations of AXA Financial and AXA Bermuda are guaranteed by AXA.  Amounts under the credit agreement may be borrowed for general corporate purposes until its maturity date in December 2014.
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Debt Covenants, Compliance and the Absence of Material Adverse Changes
AXA Financial’s  senior debt have covenants regarding change of ownership and certain ratios.  There are no material adverse change (“MAC”) clauses in any of AXA Financial's debt.  MAC clauses are specific covenants regarding material financial changes or rating changes that could result in a cancellation of the agreement or default.  At March 31, 2010, AXA Financial Group was not in breach of any long-term debt covenants. AXA Financial's senior debt is rated “A+” by S&P, “A2” by Moody’s and “A-” by Fitch.
2010 Borrowings and Loans
On June 15, 2009,March 30, 2010, AXA Financial issued $0.3subordinated notes to an affiliate, AXA Life Insurance Company, LTD, in the amount of $770.0 million which was repaidthat mature on June 16, 2009.

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On March 31, 2008, AXA Financial30, 2020.  The proceeds were used to redeem $770.0 million of affiliate notes issued a $250.0 million short-term notein July 2004 whose proceeds had been used to AXA.fund the MONY Acquisition.  The note, which matured on June 16, 2008, bore interest at the rate of three-month LIBOR plus 10 basis points.  The note was rolled over to December 16, 2008, atnew subordinated notes have an interest rate of three-month LIBOR plus 25 basis points and rolled over on December 16, 2008 to December 16, 2009 maturity date. The funds were used to pay the $250.0 million of third-party debt that matured on April 1, 2008.1.20%.

Securities Lending Program
AXA Financial continuesGroup does not have an active securities lending program.
Ratings
Claims-paying and financial strength ratings are important factors in establishing the competitive position of the Insurance Group. A downgrade in these ratings could adversely affect AXA Financial's business and results of operations by reducing new sales of products or increasing surrenders and withdrawals from existing contracts. A downgrade in AXA Financial's ratings may, among other things, also adversely affect AXA Financial's cost of raising capital or limit our access to expectsources of capital.
As of the date of this filing, AXA Financial's long-term debt rating was “A” from Standard & Poor's Corporation (stable outlook), “A2” from Moody's Investors Service (stable outlook), “a-” from A.M. Best Company, Inc. (negative outlook) and “A-” from Fitch Investors Service, L.P. (negative outlook). As of the date of this filing, the financial strength or claims-paying rating of AXA Equitable was “AA-” from Standard & Poor's Corporation (stable outlook), “Aa3” from Moody's Investors Service (stable outlook), “A+” from A.M. Best Company, Inc. (negative outlook), and “AA-” from Fitch Investors Services, L.P. (negative outlook). As of the date of this filing, the financial strength or claims-paying ratings of MONY Life and MLOA were “AA-” from Standard & Poor's Corporation (stable outlook), “Aa3” from Moody's Investors Service (stable outlook), “A+” from A.M. Best Company, Inc. (negative outlook), and “AA-” from Fitch Investors Service, L.P. (negative outlook).
The Insurance Group
Liquidity Requirements
The Insurance Group’s liquidity requirements principally relate to fund mostthe liabilities associated with its various life insurance and annuity products in its continuing operations; the active management of various economic hedging programs; shareholder dividends to AXA Financial; and operating expenses, including debt service.  The Insurance Group’s liabilities include, among other things, the payment of benefits under life insurance and annuity products, as well as cash payments in connection with policy surrenders, withdrawals and loans.
The Insurance Group’s liquidity needs are affected by: fluctuations in mortality; other benefit payments; policyholder-directed transfers from General Account to Separate Account investment options; and the level of surrenders and withdrawals previously discussed in “Results of Continuing Operations by Segment - Financial Advisory/Insurance,” as well as by debt service requirements and dividends to its shareholders.
Legislation has been introduced in the U.S. Congress that would establish new regulatory requirements for the over-the-counter derivatives markets, affecting items such as capital requirements, margin, clearing and execution.  If certain of the current proposals impacting the Insurance Group were adopted, complying with the new requirements could adversely affect the liquidity position of the Insurance Group and increase the cost of the Insurance Group’s hedging programs.
Each of the members of the Insurance Group is subject to the regulatory capital requirements of its liquidity needs throughplace of domicile, which are designed to monitor capital adequacy.  The level of an insurer’s required capital is impacted by many factors including, but not limited to, business mix, product design, sales volume, invested assets, liabilities, reserves and movements in the capital markets, including interest rates and equity markets.  At December 31, 2009, the total adjusted capital of each of the members of the Insurance Group was in excess of its respective regulatory capital requirements and management believes that the members of the Insurance Group have (or have the ability to meet) the necessary capital resources to support their business.  For additional information, see “Item 1 – Bu siness – Regulation” and “Item 1A – Risk Factors” in the 2009 Form 10-K.
Members of the Insurance Group monitor their respective regulatory capital requirements on an ongoing basis taking into account the prevailing conditions in the capital markets.  Lower interest rates and/or poor equity market performance, increase the reserve requirements and capital needed to support the variable annuity guarantee business.  While future capital requirements will depend on future market conditions, management believes that the Insurance Group will continue to have the ability to meet the capital requirements necessary to support its business.  For additional information, see “Item 1A – Risk Factors” in the 2009 Form 10-K.
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Sources of Liquidity
The principal sources of the Insurance Group’s cash flows are premiums, deposits and charges on policies and contracts, investment income, repayments of principal and sales proceeds from its fixed maturity portfolios, sales of other General Account Investment Assets, borrowings from AXA or itsthird-parties and affiliates and/orand dividends and distributions from third parties.subsidiaries.

The Insurance Group.  On June 17, 2009, AXA Equitable’s continuingGroup’s primary source of short-term liquidity to support its insurance operations and its discontinued Wind-up Annuities business sold the AXA Equitable Property valued at $1.10 billionis a pool of liquid, high-quality short-term instruments structured to a non-insurance subsidiary of AXA Financialprovide liquidity in exchange for $700.0 million in cash and $400.0 million in 8% ten year term mortgage notes on the property.  The $440.0 million excess of the AXA Equitable Property’s fair value over its carrying value was accounted for asexpected cash requirements.  In addition, a capital contributionportfolio of public bonds including U.S. Treasury and agency securities and other investment grade fixed maturities is available to AXA Equitable that is eliminated in consolidation.  For segment reporting purposes,meet the financial positionInsurance Group’s liquidity needs.  Other liquidity sources include dividends and operating results of the AXA Financial subsidiary are included in the Financial Advisory/Insurance segment.distributions from AllianceBernstein.

Existing Credit Facilities and Commercial Paper Programs
On February 13, 2009, AXA Bermuda entered into an agreement with AXA that makes available a $500.0 million revolving credit facility.  On May 6, 2009, the revolving credit facility was amended to make a total of $1.00 billion available under the facility.  During second quarter 2009, Bermuda utilized $900.0 million was utilized under the facility; the entire amount plus interest of $3.3 million was repaid during the quarter.  No amounts were outstanding under this facility on September 30, 2009.March 31, 2010.

At September 30, 2009,On July 17, 2008, AXA Equitable and MONY Life were accepted as members of the Federal Home Loan Bank of New York (“FHLBNY”), which provides these companies with access to collateralized borrowings and other FHLBNY products.  At March 31, 2010, there were no outstanding borrowings from FHLBNY.
Guarantees and Other Commitments
The Insurance Group had no short-term debtapproximately $2.20 billion of undrawn letters of credit related to reinsurance as well as $59.0 million of commitments under existing mortgage loan agreements at March 31, 2010.  For further information on guarantees and commitments, see the “Supplementary Information” section in Item 7 – Management Discussion and Analysis of Financial Condition and Results of Operations in the 2009 Form 10-K.
Statutory Regulation, Capital and Dividends
Several states, including New York, regulate transactions between an insurer and its affiliates under insurance holding company acts.  These acts contain certain reporting requirements and restrictions on provision of services and on transactions, such as intercompany service agreements, asset transfers, reinsurance, loans and shareholder dividend payments by insurers.  Depending on their size, such transactions and payments may be subject to prior notice to, or commercial paper outstanding.  Duringapproval by, the insurance department of the applicable state.
AXA Equitable, MONY Life and AXA Life are restricted as to the amounts they may pay as dividends to AXA Financial.  Under the applicable states’ insurance law, a domestic life insurer may, without prior approval of the Superintendent, pay a dividend to its shareholders not exceeding an amount calculated based on a statutory formula.  This formula would permit AXA Equitable, MONY Life and AXA Life to pay shareholder dividends not greater than $311.6 million, $72.9 million and $5.5 million, respectively, during 2010.  Payment of dividends exceeding this amount requires the insurer to file notice of its intent to declare such dividends with the Superintendent who then has 30 days to disapprove the distribution.
For first nine months of 2008,quarter 2010 and 2009, respectively, AXA Equitable’s, $350.0MONY Life’s and AXA Life’s combined statutory net (loss) income totaled $(496.8) million short-term promissory note,and $286.1 million.  Statutory surplus, capital stock and Asset Valuation Reserve totaled $5,536.1 million and $4,681.4 million at March 31, 2010 and December 31, 2009, respectively.
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In first quarter 2010 and 2009, no shareholder dividends were paid by members of which $101.7 million was reported in the discontinued Wind-up Annuities business, bore interest at a rate of three-month LIBOR plus 50 basis points and was repaid on September 23, 2008.Insurance Group to AXA Financial.

Members of the Insurance Group monitor their capital requirements on an ongoing basis taking into account the prevailing conditions in the capital markets.  Lower interest rates and/or poor equity market performance, both of which have been experienced recently, increase the capital needed to support the variable annuity guarantee business.  While future capital requirements will depend on future market conditions, management believes that the Insurance Group will continue to have the ability to meet the capital requirements necessary to support its business.

AllianceBernstein.  
For the ninethree months ended September 30, 2008,March 31, 2010 and 2009, respectively, cash flows included inflows of $13.4$5.3 million and zero, representing the additional investmentinvestments by AllianceBernstein HoldingHoldings with proceeds from the exercise of options to acquire AllianceBernstein Holdings units; no such investments were made in the related 2009 period.  Outflowsunits offset by outflows related to purchases of AllianceBernstein Holdings units totaled $0.2totaling $23.8 million and $3.2$0.6 million for the nine months ended September 30, 2009 and 2008, respectively, which were used to fund deferred compensation plans.  Cash flows in the first nine months ofquarter 2010 and 2009, respectively, also included $25.0$(43.1) million and $693.0$10.6 million from the (repayment) issuance of commercial paper and zero and $66.0 million of net proceeds from short-term bank loans.  There was a net reduction in cash flows of $258.7 million and $475.4 million in the respective 2009 and 2008 periods related to net repayments of commercial paper.  Capital expenditures at AllianceBernstein were $43.5$0.5 million in first quarter 2010 compared to $28.7 million in first quarter 2009.  Proceeds from net sales of investmen ts totaled $0.3 million in the first nine months of 2009 compared to $61.2 millionquarter, there were zero net proceeds in the comparable 2008 period.  Net purchases of investments in the first nine months of 2009 totaled $6.1 million while net sales of investments totaled $10.6 million in the first nine months of 2008.2010 quarter.  Available cash flow for cash distributions from AllianceBernstein totaled $365.5$194.3 million and $711.6$99.2 million for the first nine months ofquarter 2010 and 2009, respectively.
At March 31, 2010 and 2008,2009, respectively, while distributions paid were $265.7AllianceBernstein had $206.0 million and $835.1$295.9 million for the same respective periods.

At September 30, 2009, AllianceBernstein had $27.0 million outstanding under its commercial paper program and $25.0outstanding; $50.0 million was outstanding under its revolving credit facility at March 31, 2009.  At March 31, 2009,  AllianceBernstein had $16.0 million of short-term debt related to SCB LLC’s revolving credit facility.outstanding bank loan; there were no SCB LLC borrowings outstanding at March 31, 2010.

SUPPLEMENTARY INFORMATION
AXA Financial Group is involved in a number of ventures and transactions with AXA and certain of its affiliates.  See Notes 11 and 18 of Notes to the Consolidated Financial Statements in AXA Financial’s 2009 Form 10-K as well as AllianceBernstein’s Report on Form 10-K for the year ended December 31, 2009 for information on related party transactions.
Contractual Obligations
AXA Financial Group’s consolidated contractual agreements include policyholder obligations, long-term debt, loans from affiliates, employee benefits, operating leases and various funding commitments.  See the “Supplementary Information – Contractual Obligation” section in Item 7 – Management Discussion and Analysis of Financial Condition and Results of Operations in AXA Financial’s 2009 Form 10-K for additional information.
 
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Item 3.                  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted pursuantThere have been no material changes to General Instruction H tothe quantitative and qualitative disclosures about market risk described in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in the 2009 Form 10-Q.10-K.


Item 4(T).                  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of AXA Financial Group'sGroup’s disclosure controls and procedures (as defined in Rule 13a -15(e)13a-15(e) of the Securities Exchange Act of 1934, as amended) as of September 30, 2009.March 31, 2010.  Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that AXA Financial Group's disclosure controls and procedures were effective as of September 30, 2009.March 31, 2010.

Changes in Internal Control Over Financial Reporting

There has been no change in AXA Financial Group’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, AXA Financial Group’s internal control over financial reporting.



 
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PART II                  OTHER INFORMATION

PART IIOTHER INFORMATION
Item 1.
Legal Proceedings
See Note 11 of Notes to the Consolidated Financial Statements contained herein.  Except as disclosed in Note 11 of Notes 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 20082009 Form 10-K.

Item 1A.Risk Factors
 
There have been no material changes to the risk factors described in Item 1A, “Risk Factors,” included in the 20082009 Form 10-K except as noted below:
In 2007 and again in 2009, Congress proposed tax legislation that would cause certain publicly-traded partnerships (“PTPs”) to be taxed as corporations, thus subjecting their income to a higher level of income tax.  AllianceBernstein Holding is a PTP that derives its income from asset manager or investment management services through its ownership interest in AllianceBernstein.  However, the legislation, in the form proposed, would not affect AllianceBernstein Holding’s tax status.  In addition, AllianceBernstein continues to receive consistent indications from a number of individuals involved in the legislative process that AllianceBernstein Holding’s tax status is not the focus of the proposed legislation, and that they do not expect to change that approach.  However, AllianceBernstein cannot predict whether, or in what form, the proposed tax legislation will pass, and is unable to determine what effect any new legislation might have on AllianceBernstein.  If AllianceBernstein Holding were to lose its Federal tax status as a grandfathered PTP, it would be subject to corporate income tax, which would reduce materially its net income and quarterly distributions to AllianceBernstein Holding unitholders.

In its current form, the proposed legislation would not affect AllianceBernstein because it is a private partnership.
10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
  
 Omitted pursuant to General Instruction H to Form 10-Q.NONE


Item 3.Defaults Upon Senior Securities
  
 Omitted pursuant to General Instruction H to Form 10-Q.NONE 


Item 4.Submission of Matters to a Vote of Security Holders
  
 Omitted pursuant to General Instruction H to Form 10-Q.NONE


Item 5.Other Information
  
 NoneNONE


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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


 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, AXA Financial, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date:May 20, 2010 AXA FINANCIAL, INC.


Date:November 9, 2009 By:/s/ Richard S. Dziadzio
    Name:Richard S. Dziadzio
    Title:Executive Vice President and
     Chief Financial Officer
     
Date:November 9, 2009May 20, 2010  /s/ Alvin H. Fenichel
    Name:Alvin H. Fenichel
    Title:Senior Vice President and
     Chief Accounting Officer

 
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