0000727920 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2019-12-31
Table of Contents


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, 2019 March 31, 2020
ORor
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission File Number 000-20501No. 001-20501
————————————————
equitablelogo02.jpg
AXA Equitable Life Insurance CompanyEQUITABLE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
New York 13-5570651
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

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

(212) 554-1234
(Registrant’s telephone number, including area code)
Not applicableSecurities registered pursuant to Section 12(b) of the Act: None
(Former name, former address, and former fiscal year if changed since last report.)Securities registered pursuant to Section 12(g) of the Act: None

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☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yesx☒    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an “emerging growth company”. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨☐Accelerated filer¨☐
Non-accelerated filerx☒Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐No x
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of exchange on which registered
Not ApplicableNot ApplicableNot Applicable
☒
As of November 7, 2019,March 10, 2020, 2,000,000 shares of the registrant’s $1.25 par value Common Stock were outstanding.outstanding, all of which were owned indirectly by Equitable Holdings, Inc.
REDUCED DISCLOSURE FORMAT
AXA Equitable Life Insurance Company meets the conditions set forth in General Instruction H(1)(H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q inwith the reduced disclosure format.





TABLE OF CONTENTS

  Page
PART I - FINANCIAL INFORMATION
 
Item 1.
Consolidated Financial Statements
 
 
Unaudited Consolidated Balance Sheets, September 30, 2019March 31, 2020 and December 31, 2018
2
Unaudited Consolidated Statements of Income (Loss), Three and Nine Months Ended September 30, 2019 and 2018
3
Unaudited Consolidated Statements of Comprehensive Income (Loss), Three and Nine Months Ended September 30, 2019 and 2018
4
 
Unaudited Consolidated Statements of Equity,Income (Loss), Three and Nine Months Ended September 30,March 31, 2020 and 2019
4
Unaudited Consolidated Statements of Comprehensive Income (Loss), Three Months Ended March 31, 2020 and 20182019
5
 
Unaudited Consolidated Statements of Equity, Three Months Ended March 31, 2020 and 2019
6
Unaudited Consolidated Statements of Cash Flows, NineThree Months Ended September 30,March 31, 2020 and 2019 and 2018
7
 
Notes to Consolidated Financial Statements (Unaudited):
Note 1 - Organization
9
 
Note 12 - OrganizationSignificant Accounting Policies
9
 
Note 23 - Significant Accounting PoliciesInvestments
916
 
Note 34 - InvestmentsDerivatives
1325
 
Note 45 - DerivativesClosed Block
2129
 
Note 56 - Closed BlockInsurance Liabilities
2731
 
Note 67 - Insurance LiabilitiesFair Value Disclosures
2833
 
Note 78 - Fair Value DisclosuresLoans to Affiliates
3245
 
Note 89 - LeasesIncome Taxes
45
Note 10 - Related Party Transactions
45
Note 11 - Equity
45
Note 12 - Redeemable Noncontrolling Interest
46
 
Note 913 - Income TaxesCommitments and Contingent Liabilities
4846
 
Note 1014 - Related Party Transactions
48
Note 11 - EquitySubsequent Events
49
Note 12 - Redeemable Noncontrolling InterestItem 2.
50
Note 13 - Commitments and Contingent Liabilities
50
Note 14 - Discontinued Operations
52
Note 15 - Revision of Prior Period Financial Statements
53
Note 16 - Subsequent Events
55
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
5650
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
6459
Item 4.
Controls and Procedures
65Controls and Procedures
59
   
PART II - OTHER INFORMATION
 
Item 1.
Legal Proceedings
6762
Item 1A.
Risk Factors
6762
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
6763
Item 3.
Defaults Upon Senior Securities
6763
Item 4.
Mine Safety Disclosures
6763
Item 5.
Other Information
6763
Item 6.
Exhibits
6863
   
SIGNATURESSignatures
6964




NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
Certain of the statements included or incorporated by reference in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “intends,” “seeks,” “aims,” “plans,” “assumes,” “estimates,” “projects,” “should,” “would,” “could,” “may,” “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 concerning future developments and their potential effects upon AXA Equitable Life Insurance Company (“AXA Equitable”Equitable Life”) and its consolidated subsidiaries. “We,” “us” and “our” refer to AXA Equitable Life and its consolidated subsidiaries, unless the context refers only to AXA Equitable Life as a corporate entity. There can be no assurance that future developments affecting AXA Equitable Life will be those anticipated by management. Forward-looking statements include, without limitation, all matters that are not historical facts.
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) conditions in the financial markets and economy, including equity market declines and volatility, interest rate fluctuations and changes in liquidity, and access to and cost of capital;capital and the impact of COVID-19 and related economic conditions; (ii) operational factors, remediation of our material weaknesses,weakness, indebtedness, elements of our business strategy not being effective in accomplishing our objectives, protection of confidential customer information or proprietary business information, information systems failing or being compromised, our separation and rebranding, strong industry competition;competition and catastrophic events, such as the outbreak of pandemic diseases including COVID-19; (iii) credit, counterparties and investments, including counterparty default on derivative contracts, failure of financial institutions, defaults, errors or omissions by third parties and affiliates and gross unrealized losses on fixed maturity and equity securities; (iv) our reinsurance and hedging programs; (v) our products, structure and product distribution, including variable annuity guaranteed benefits features within certain of our products, complex regulation and administration of our products, variations in statutory capital requirements, financial strength and claims-paying ratings and key product distribution relationships; (vi) estimates, assumptions and valuations, including risk management policies and procedures, potential inadequacy of reserves, actual mortality, longevity, morbidity and morbiditylapse experience differing from pricing expectations or reserves, amortization of deferred policy acquisition costsDeferred Policy Acquisition Costs (“DAC”) and financial models; and (vii) legal and regulatory risks, including federal and state legislation affecting financial institutions, insurance regulation and tax reform; and (viii) risks related to our separation and rebranding.reform.
Forward-looking statements should be read in conjunction with the other cautionary statements, risks, uncertainties and other factors identified in AXA Equitable’sEquitable Life’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, as amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q, including in the section entitled “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.





13

Part I FINANCIAL INFORMATION
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
AXA EQUITABLE LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETSConsolidated Balance Sheets
(UNAUDITED)

March 31, 2020 (Unaudited) and December 31, 2019
September 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
(in millions, except share data)(in millions, except share data)
ASSETS    
Investments:    
Fixed maturities available-for-sale, at fair value (amortized cost of $57,475 and $42,492)$61,445
 $41,915
Mortgage loans on real estate (net of valuation allowance of $0 and $7)12,005
 11,818
Real estate held for production of income (1)27
 52
Fixed maturities available-for-sale, at fair value (amortized cost of $61,331 and $59,278) (allowance for credit losses of $2 at March 31, 2020)$66,371
 $62,362
Mortgage loans on real estate (net of allowance for credit losses of $46 at March 31, 2020)12,106
 12,090
Policy loans3,272
 3,267
3,255
 3,270
Other equity investments (1)1,148
 1,144
1,210
 1,149
Trading securities, at fair value8,444
 15,166
6,076
 6,598
Other invested assets1,753
 1,554
1,595
 2,156
Total investments88,094
 74,916
90,613
 87,625
Cash and cash equivalents1,553
 2,622
7,492
 1,492
Deferred policy acquisition costs4,237
 5,011
4,068
 4,337
Amounts due from reinsurers3,008
 3,124
Amounts due from reinsurers (allowance for credit losses of $6 at March 31, 2020)3,031
 3,001
Loans to affiliates600
 600
1,200
 1,200
GMIB reinsurance contract asset, at fair value2,853
 1,991
3,305
 2,466
Current and deferred income taxes—
 438
—
 224
Other assets3,071
 2,763
5,000
 3,050
Separate Accounts assets118,907
 108,487
104,132
 124,646
Total Assets$222,323
 $199,952
$218,841
 $228,041
   
LIABILITIES      
Policyholders’ account balances$53,060
 $46,403
$52,385
 $55,421
Future policy benefits and other policyholders' liabilities35,211
 29,808
37,830
 33,976
Broker-dealer related payables221
 69
473
 428
Securities sold under agreements to repurchase—
 573
Amounts due to reinsurers85
 113
75
 105
Loans from affiliates—
 572
Current and deferred income taxes174
 —
1,637
 —
Other liabilities1,368
 1,460
3,396
 1,768
Separate Accounts liabilities118,907
 108,487
104,132
 124,646
Total Liabilities$209,026
 $187,485
$199,928
 $216,344
Redeemable noncontrolling interest (2)46
 39
$32
 $39
Commitments and contingent liabilities (Note 13)
 

 

   
EQUITY      
Equity attributable to AXA Equitable:   
Equity attributable to Equitable Life:  

Common stock, $1.25 par value; 2,000,000 shares authorized, issued and outstanding$2
 $2
$2
 $2
Additional paid-in capital7,829
 7,807
7,811
 7,809
Retained earnings3,270
 5,098
7,953
 2,242
Accumulated other comprehensive income (loss)2,138
 (491)3,106
 1,592
Total equity attributable to AXA Equitable13,239
 12,416
Total equity attributable to Equitable Life18,872
 11,645
Noncontrolling interest12
 12
9
 13
Total Equity13,251
 12,428
18,881
 11,658
Total Liabilities, Redeemable Noncontrolling Interest and Equity$222,323
 $199,952
$218,841
 $228,041

______________
(1)See Note 2 for details of balances with variable interest entities.
(2)
See Note 12 for detaildetails of Redeemable noncontrolling interest.
See Notes to Consolidated Financial Statements (Unaudited).


2
 Three Months Ended March 31,
 2020 2019
 (in millions)
REVENUES   
Policy charges and fee income$904
 $859
Premiums236
 232
Net derivative gains (losses)9,533
 (1,555)
Net investment income (loss)591
 904
Investment gains (losses), net:   
Credit losses on AFS debt securities and loans(12) —
Other investment gains (losses), net67
 (8)
Total investment gains (losses), net55
 (8)
Investment management and service fees252
 248
Other income17
 10
Total revenues11,588
 690
    
BENEFITS AND OTHER DEDUCTIONS   
Policyholders’ benefits2,597
 819
Interest credited to policyholders’ account balances289
 269
Compensation and benefits80
 82
Commissions161
 157
Interest expense—
 4
Amortization of deferred policy acquisition costs1,058
 165
Other operating costs and expenses213
 184
Total benefits and other deductions4,398
 1,680
Income (loss) from continuing operations, before income taxes7,190
 (990)
Income tax (expense) benefit(1,454) 162
Net income (loss)5,736
 (828)
Less: Net income (loss) attributable to the noncontrolling interest(7) 2
Net income (loss) attributable to Equitable Life$5,743
 $(830)

See Notes to Consolidated Financial Statements (Unaudited).

4
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)Consolidated Statements of Comprehensive Income (Loss)
(UNAUDITED)For the Three Months Ended March 31, 2020 and 2019 (Unaudited)




 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (in millions)
REVENUES       
Policy charges and fee income$853
 $900
 $2,577
 $2,644
Premiums232
 217
 696
 657
Net derivative gains (losses)(342) (2,000) (2,075) (3,102)
Net investment income (loss)744
 642
 2,527
 1,693
Investment gains (losses), net:
 

 
 

Total other-than-temporary impairment losses—
 (4) —
 (4)
Other investment gains (losses), net201
 (5) 181
 77
Total investment gains (losses), net201
 (9) 181
 73
Investment management and service fees258
 267
 761
 781
Other income—
 10
 40
 41
Total revenues1,946
 27
 4,707
 2,787
        
BENEFITS AND OTHER DEDUCTIONS       
Policyholders’ benefits1,634
 206
 3,321
 1,987
Interest credited to policyholders’ account balances280
 259
 837
 754
Compensation and benefits70
 77
 237
 300
Commissions153
 146
 462
 465
Interest expense—
 9
 4
 27
Amortization of deferred policy acquisition costs32
 (88) 341
 303
Other operating costs and expenses214
 154
 614
 2,717
Total benefits and other deductions2,383
 763
 5,816
 6,553
Income (loss) from continuing operations, before income taxes(437) (736) (1,109) (3,766)
Income tax (expense) benefit from continuing operations175
 196
 284
 828
Net income (loss) from continuing operations(262) (540) (825) (2,938)
Less: Net (income) loss from discontinued operations, net of taxes and noncontrolling interest—
 (31) —
 (81)
Net income (loss)(262) (509) (825) (2,857)
Less: Net income (loss) attributable to the noncontrolling interest—
 2
 3
 1
Net income (loss) attributable to AXA Equitable$(262) $(511) $(828) $(2,858)
 Three Months Ended March 31,
 2020 2019
 (in millions)
COMPREHENSIVE INCOME (LOSS)   
Net income (loss)$5,736
 $(828)
    
Other comprehensive income (loss), net of income taxes:   
Change in unrealized gains (losses), net of adjustments (1)1,514
 764
Other comprehensive income (loss), net of income taxes1,514
 764
    
Comprehensive income (loss) (2)7,250
 (64)
Less: Comprehensive income (loss) attributable to the noncontrolling interest (2)(7) 2
Comprehensive income (loss) attributable to Equitable Life (3)$7,257
 $(66)

_____________
(1)See Note 11 for details of Change in unrealized gains (losses), net of adjustments.
(2)Amount as of March 31, 2019 was reclassified to conform to the current year’s presentation.
(3)Amount as of March 31, 2019 was previously reported as $(64) million.



See Notes to Consolidated Financial Statements (Unaudited).



35
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)Consolidated Statements of Equity
(UNAUDITED)For the Three Months Ended March 31, 2020 and 2019 (Unaudited)



 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (in millions)
COMPREHENSIVE INCOME (LOSS)       
Net income (loss)$(262) $(509) $(825) $(2,857)
Other comprehensive income (loss) net of income taxes:       
Change in unrealized gains (losses), net of reclassification adjustment574
 (403) 2,629
 (1,458)
Changes in defined benefit plan related items not yet recognized in periodic benefit cost, net of reclassification adjustment—
 (3) —
 (8)
Other comprehensive income (loss) from discontinued operations—
 3
 —
 1
Total other comprehensive income (loss), net of income taxes574
 (403) 2,629
 (1,465)
Comprehensive income (loss) attributable to AXA Equitable$312
 $(912) $1,804
 $(4,322)

Three Months Ended March 31,

 AXA Equitable Equity    

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Non-controlling Interest Total Equity

(in millions)
January 1, 2020$2
 $7,809
 $2,242
 $1,592
 $11,645
 $13
 $11,658
Cumulative effect of adoption of ASU 2016-13, CECL—
 —
 (32) —
 (32) —
 (32)
Net income (loss)—
 —
 5,743
 —
 5,743
 (2) 5,741
Other comprehensive income (loss)—
 —
 —
 1,514
 1,514
 —
 1,514
Other—
 2
 —
 —
 2
 (2) —
March 31, 2020$2
 $7,811
 $7,953
 $3,106
 $18,872
 $9
 $18,881
January 1, 2019$2
 $7,807
 $5,098
 $(491) $12,416
 $12
 $12,428
Net income (loss)—
 —
 (830) —
 (830) —
 (830)
Other comprehensive income (loss)—
 —
 —
 764
 764
 —
 764
Other—
 8
 —
 —
 8
 —
 8
March 31, 2019$2
 $7,815
 $4,268
 $273
 $12,358
 $12
 $12,370


See Notes to Consolidated Financial Statements (Unaudited).




46
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EQUITYConsolidated Statements of Cash Flows
(UNAUDITED)For the Three Months Ended March 31, 2020 and 2019 (Unaudited)



 Three Months Ended September 30,
 AXA Equitable Equity Noncontrolling Interest Total Equity
 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Continuing Operations Discontinued Operations Total 
 (in millions)
July 1, 2019$2
 $7,822
 $4,532
 $1,564
 $13,920
 $12
 $—
 $12
 $13,932
Dividend to parent company—

—

(1,000)
—

(1,000)
—

—

—

(1,000)
Net income (loss)—
 —
 (262) —
 (262) —
 —
 —
 (262)
Other comprehensive income (loss)—
 —
 —
 574
 574
 —
 —
 —
 574
Other—
 7
 —
 —
 7
 —
 —
 —
 7
September 30, 2019$2
 $7,829
 $3,270
 $2,138
 $13,239
 $12
 $—
 $12
 $13,251
 Three Months Ended March 31,
 2020 2019
 (in millions)
Cash flows from operating activities:   
Net income (loss)$5,736
 $(828)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   
Interest credited to policyholders’ account balances289
 269
Policy charges and fee income(904) (859)
Net derivative (gains) losses(9,533) 1,555
Credit losses on AFS debt securities and loans12
 —
Investment (gains) losses, net(67) 8
Realized and unrealized (gains) losses on trading securities148
 (250)
Non-cash long-term incentive compensation expense4
 8
Amortization and depreciation1,025
 143
Equity (income) loss from limited partnerships(25) (11)
Changes in:   
Reinsurance recoverable(97) (97)
Capitalization of deferred policy acquisition costs(159) (145)
Future policy benefits1,817
 41
Current and deferred income taxes1,462
 54
Other, net(329) (36)
Net cash provided by (used in) operating activities$(621) $(148)
    
Cash flows from investing activities:   
Proceeds from the sale/maturity/prepayment of:   
Fixed maturities, available-for-sale$2,576
 $2,662
Mortgage loans on real estate120
 216
Trading account securities476
 3,376
Real estate joint ventures—
 1
Short-term investments715
 747
Other132
 41
Payment for the purchase/origination of:   
Fixed maturities, available-for-sale(4,772) (5,065)
Mortgage loans on real estate(181) (517)
Trading account securities(110) (518)
Short-term investments(359) (681)
Other(183) (62)
Cash settlements related to derivative instruments5,630
 (978)
Investment in capitalized software, leasehold improvements and EDP equipment(11) (13)
Other, net84
 97
Net cash provided by (used in) investing activities$4,117
 $(694)
    

July 1, 2018$2
 $7,770
 $6,599
 $(464) $13,907
 $12
 $3,027
 $3,039
 $16,946
Repurchase of AB Holding units—
 —
 —
 —
 —
 —
 (34) (34) (34)
Dividend to parent company—
 —
 (1,100) —
 (1,100) —
 —
 —
 (1,100)
Dividends paid to noncontrolling interest—
 —
 —
 —
 —
 —
 (134) (134) (134)
Net income (loss)—
 —
 (511) —
 (511) —
 143
 143
 (368)
Other comprehensive income (loss)—
 —
 —
 (403) (403) —
 (3) (3) (406)
Other (1)—
 1
 —
 —
 1
 —
 (3) (3) (2)
September 30, 2018$2
 $7,771
 $4,988
 $(867) $11,894
 $12
 $2,996
 $3,008
 $14,902


57
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AXA EQUITABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EQUITY — CONTINUEDConsolidated Statements of Cash Flows
(UNAUDITED)

For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

 Nine Months Ended September 30,
 AXA Equitable Equity Noncontrolling Interest Total Equity
 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Continuing Operations Discontinued Operations Total 
 (in millions)
January 1, 2019$2
 $7,807
 $5,098
 $(491) $12,416
 $12
 $—
 $12
 $12,428
Dividend to parent company—

—

(1,000)
—

(1,000)
—

—

—

(1,000)
Net income (loss)—
 —
 (828) —
 (828) —
 —
 —
 (828)
Other comprehensive income (loss)—
 —
 —
 2,629
 2,629
 —
 —
 —
 2,629
Other—
 22
 —
 —
 22
 —
 —
 —
 22
September 30, 2019$2
 $7,829
 $3,270
 $2,138
 $13,239
 $12
 $—
 $12
 $13,251
January 1, 2018$2
 $6,859
 $8,938
 $598
 $16,397
 $19
 $3,076
 $3,095
 $19,492
Cumulative effect of adoption of revenue recognition standard ASC 606—
 —
 8
 —
 8
 —
 25
 25
 33
De-consolidation of real estate joint ventures—
 —
 —
 —
 —
 (8) —
 (8) (8)
Repurchase of AB Holding units—
 —
 —
 —
 —
 —
 (59) (59) (59)
Dividend to parent company—
 —
 (1,100) —
 (1,100) —
 —
 —
 (1,100)
Dividends paid to noncontrolling interest—
 —
 —
 —
 —
 —
 (468) (468) (468)
Net income (loss)—
 —
 (2,858) —
 (2,858) 1
 417
 418
 (2,440)
Other comprehensive income (loss)—
 —
 —
 (1,465) (1,465) —
 (10) (10) (1,475)
Other (1)—
 912
 —
 —
 912
 —
 15
 15
 927
September 30, 2018$2
 $7,771
 $4,988
 $(867) $11,894
 $12
 $2,996
 $3,008
 $14,902
______________
(1)Includes impact of the GMxB unwind with AXA RE Arizona. See Note 12 in the Company’s Annual Report on Form 10-K.
See Notes to Consolidated Financial Statements (Unaudited).




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AXA EQUITABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)



 Nine Months Ended September 30,
2019 2018
 (in millions)
Cash flows from operating activities:   
Net income (loss) (1)$(825) $(2,419)
Adjustments to reconcile Net income (loss) to Net cash provided by (used in) operating activities:   
Interest credited to policyholders’ account balances837
 754
Policy charges and fee income(2,577) (2,644)
Net derivative (gains) losses2,075
 3,106
Investment (gains) losses, net(181) (73)
Realized and unrealized (gains) losses on trading securities(421) 206
Non-cash long-term incentive compensation expense23
 13
Amortization and depreciation (2)267
 258
Amortization of deferred cost of reinsurance asset—
 1,884
Equity (income) loss from limited partnerships (2)(63) (83)
Cash received on the recapture of captive reinsurance—
 1,273
Changes in:   
Net broker-dealer and customer related receivables/payables3
 414
Reinsurance recoverable(123) 106
Segregated cash and securities, net—
 (438)
Capitalization of deferred policy acquisition costs (2)(466) (432)
Future policy benefits1,035
 (599)
Current and deferred income taxes(81) (664)
Other, net(215) 448
Net cash provided by (used in) operating activities$(712) $1,110
    
Cash flows from investing activities:   
Proceeds from the sale/maturity/prepayment of:   
Fixed maturities, available-for-sale$9,394
 $5,942
Mortgage loans on real estate708
 375
Trading account securities8,216
 6,990
Real estate joint ventures3
 140
Short-term investments (2)1,916
 1,806
Other145
 204
Payment for the purchase/origination of:   
Fixed maturities, available-for-sale(23,834) (6,422)
Mortgage loans on real estate(913) (1,485)
Trading account securities(923) (8,103)
Short-term investments (2)(2,134) (1,326)
Other(305) (146)
Cash settlements related to derivative instruments191
 (1,076)
Issuance of loans to affiliates—
 (1,100)
Repayments of loans to affiliates—
 700
Investment in capitalized software, leasehold improvements and EDP equipment(49) (79)
Other, net—
 285
Net cash provided by (used in) investing activities$(7,585) $(3,295)
 Three Months Ended March 31,
 2020 2019
 (in millions)
Cash flows from financing activities:   
Policyholders’ account balances:   
Deposits$2,362
 $2,271
Withdrawals(1,117) (1,048)
Transfer (to) from Separate Accounts529
 445
Change in collateralized pledged assets45
 (6)
Change in collateralized pledged liabilities667
 625
Repayment of loans from affiliates—
 (572)
Increase (decrease) in securities sold under agreement to repurchase—
 (573)
Other, net18
 —
Net cash provided by (used in) financing activities$2,504
 $1,142
    
Change in cash and cash equivalents6,000
 300
Cash and cash equivalents, beginning of year1,492
 2,622
Cash and cash equivalents, end of year$7,492
 $2,922
    
Non-cash transactions:   
Right-of-use assets obtained in exchange for lease obligations$13
 $1




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AXA EQUITABLE LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS-CONTINUED
(UNAUDITED)

 Nine Months Ended September 30,
2019 2018
 (in millions)
Cash flows from financing activities:   
Policyholders’ account balances:   
Deposits$9,464
 $6,184
Withdrawals(3,433) (3,254)
Transfers (to) from Separate Accounts1,427
 1,379
Change in short-term financings—
 (168)
Change in collateralized pledged assets3
 (62)
Change in collateralized pledged liabilities1,898
 279
 Increase (decrease) in overdrafts payable—
 (39)
Shareholder dividend paid(1,000) (1,100)
Purchases of AB Holding Units to fund long-term incentive compensation plan
awards, net
—
 (83)
Repurchase of AB Holding Units—
 (59)
Purchase (redemption) of noncontrolling interests of consolidated company-sponsored investment funds14
 (519)
Distribution to noncontrolling interests in consolidated subsidiaries—
 (468)
Repayment of loans from affiliates(572) 13
Increase (decrease) in securities sold under agreement to repurchase(573) —
Other, net—
 (1)
Net cash provided by (used in) financing activities$7,228
 $2,102
    
Effect of exchange rate changes on Cash and cash equivalents—
 (9)
Change in Cash and cash equivalents(1,069) (92)
Cash and cash equivalents, beginning of year2,622
 3,409
Cash and cash equivalents, end of period$1,553
 $3,317
    
Cash and cash equivalents of disposed subsidiary:   
Beginning of year  $1,009
End of period  $635
    
Cash and cash equivalents of continuing operations:   
Beginning of year  $2,400
End of period  $2,682
    
Cash flows of disposed subsidiary:   
Net cash provided by (used in):   
Operating activities  $705
Investing activities  $204
Financing activities  $(1,274)
Effect of exchange rate changes on Cash and cash equivalents  $(9)
    
Non-cash transactions during the period:   
(Settlement) issuance of long-term debt

 $(202)
Transfer of assets to reinsurer

 $(604)
Repayment of loans from affiliates  $300
_____________
(1)Net income (loss) includes $438 million in the nine months ended September 30, 2018 of the discontinued operations that are not included in Net income (loss) in the Consolidated Statements of Income (Loss).
(2)Prior period amounts have been reclassified to conform to the current period’s presentation. See Note 15 for further information.


See Notes to Consolidated Financial Statements (Unaudited).



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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited)




1)    ORGANIZATION
Consolidation
AXA Equitable Life Insurance Company’s (“AXA Equitable”Equitable Life” and, collectively with its consolidated subsidiaries, the “Company”) primary business is providing variable annuity, life insurance and employee benefit products to both individuals and businesses. The Company is an indirect, wholly-owned subsidiary of AXA Equitable Holdings, Inc. (“Holdings”). As of September 30, 2019 and December 31, 2018, AXA S.A. (“AXA”),Equitable Life is a French holdingstock life insurance company fororganized in 1859 under the AXA Group, owned approximately 39% and 59%, respectively,laws of the outstanding common stockState of Holdings.New York. It is licensed to sell life insurance and annuities in New York, and sells such products primarily through affiliated distributors.
The accompanying consolidated financial statements represent the consolidated resultsCompany’s two principal subsidiaries include AXA Distributors, LLC (“Equitable Distributors”) and financial position of AXA Equitable and not the consolidated results and financial position of Holdings.
Discontinued Operations
In the fourth quarter of 2018, the Company transferred its economic interest in the business of AllianceBernstein Holding L.P.Funds Management Group, LLC (“AB Holding”), AllianceBernstein L.P. (“ABLP”) and their subsidiaries (collectively, “AB”) to a newly created wholly-owned subsidiary of Holdings (the “AB Business Transfer”FMG”). See Note 14 for additional information.Both Equitable Distributors and FMG are wholly-owned Delaware limited liability companies.
2)
SIGNIFICANT ACCOUNTING POLICIES
2)    SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The unaudited interim consolidated financial statements (the “consolidated financial statements”) have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) on a basis consistent with reporting interim financial information in accordance with instructions to the Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Intercompany balances and transactions have been eliminated.
In the opinion of management, all adjustments necessary for a fair statement of the financial position and results of operations have been made. All such adjustments are of a normal, recurring nature.nature, with the exception of the Company’s update of its interest rate assumption as further described in Assumption Updates and Model Changes. Interim results are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.
The accompanying consolidated financial statements present the consolidated results of operations, financial condition and cash flows of the Company and its subsidiaries and those investment companies, partnerships and joint ventures in which the Company has control and a majority economic interest as well as those variable interest entities (“VIEs”) that meet the requirements for consolidation.
All significant intercompany transactions and balances have been eliminated in consolidation. The terms “third“first quarter 2019”2020” and “third“first quarter 2018”2019” refer to the three months ended September 30,March 31, 2020 and 2019, and 2018, respectively. The terms “first nine months of 2019” and “first nine months of 2018” refer

9
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to the nine months ended September 30, 2019 and 2018, respectively.Consolidated Financial Statements(Unaudited), Continued

Adoption of New Accounting Pronouncements
DescriptionEffect on the Financial Statement or Other Significant Matters
ASU 2017-12: Derivatives and Hedging2016-13: Financial Instruments—Credit Losses (Topic 815)326), as clarified and amended by ASU 2019-04: 2018-19: Codification Improvements to Topic 326, Financial Instruments—Credit Losses;Losses, ASU 2019-04: Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging;Hedging, and Topic 825, Financial Instruments and ASU 2019-05: Financial Instruments—Credit Losses (Topic 326) Targeted Transition Relief, ASU 2019-11: Codification Improvements to Topic 326, Financial Instruments-Credit Losses
The amendments in these ASUs better alignASU 2016-13 contains new guidance which introduces an entity’s risk management activitiesapproach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial reporting for hedging relationships through changesassets with credit deterioration since their origination.

ASU 2019-05 provides entities that have instruments within the scope of Subtopic 326-20 an option to bothirrevocably elect the designationfair value option on an instrument-by instrument basis upon adoption of Topic 326.

ASU 2018-19, ASU 2019-04 and measurementASU 2019-11 clarified the codification guidance for qualifying hedging relationships and did not materially change the presentation of hedge results.standard.
On January 1, 2019,2020, the Company adopted the new hedging guidance. Adoptionstandard and completed implementation of this guidance did not haveits updated expected credit loss models, processes and controls related to the identified financial assets that fall within the scope of the new standard. Upon adoption, the Company recorded a material impactcumulative effect adjustment to reduce the opening retained earnings balance by approximately $40 million, on a pre-tax and pre-DAC basis. The adjustment is primarily attributable to an increase in the allowance for credit losses associated with the Company’s consolidated financial statements.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

DescriptionEffect on the Financial Statement or Other Significant Matterscommercial and agricultural mortgage loan portfolios and reinsurance.

Results for reporting periods beginning after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.
ASU 2017-08: Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20)2018-13: Fair Value Measurement (Topic 820)
This ASU requires certain premiums on callable debt securitiesimproves the effectiveness of fair value disclosures in the notes to be amortizedfinancial statements. Amendments in this ASU impact the disclosure requirements in Topic 820, including the removal, modification and addition to the earliest call date and is intendedexisting disclosure requirements.
The Company elected to better align interest income recognition with the manner in which market participants price these instruments.On January 1,early adopt during 2019 the removed disclosures relating to transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and valuation processes for Level 3 fair value measurements. The Company adopted the new guidanceadditional disclosures related to Level 3 fair value information on accounting for certain premiums on callable debt securities. As the Company’s existing accounting practices aligned with the guidance in the ASU, adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.January 1, 2020.
ASU 2016-02: Leases (Topic 842)
This ASU contains revised guidance to lease accounting that will require lessees to recognize on the balance sheet a “right-of-use” asset and a lease liability for virtually all lease arrangements, including those embedded in other contracts. Lessor accounting will remain substantially unchanged from the current model but has been updated to align with certain changes made to the lessee model.On January 1, 2019, the Company adopted the new leases standard using the simplified modified retrospective transition method, as of the adoption date. Prior comparable periods will not be adjusted or presented under this method. We applied several practical expedients offered by ASC 842 upon adoption of this standard. These included continuing to account for existing leases based on judgment made under legacy U.S. GAAP as it relates to determining classification of leases, unamortized initial direct costs and whether contracts are leases or contain leases. We also used the practical expedient to use hindsight in determining lease terms (using knowledge and expectations as of the standard’s adoption date instead of the previous assumptions under legacy U.S. GAAP) and evaluated impairment of our right-of-use (“RoU”) assets in the transition period (using most up-to-date information.) Adoption of this standard resulted in the recognition, as of January 1, 2019, of additional RoU operating lease assets of $347 million reported in Other assets and operating lease liabilities of $439 million reported in Other liabilities in accompanying consolidated balance sheets. The operating RoU assets recognized as of January 1, 2019 are net of deferred rent of $58 million and liabilities associated with previously recognized impairments of $34 million. See Note 8 for additional information.
Future Adoption of New Accounting Pronouncements
DescriptionEffective Date and Method of AdoptionEffect on the Financial Statement or Other Significant Matters
ASU 2018-17:Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities
This ASU provides guidance requiring that indirect interests held through related parties in common control arrangements be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.
Effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. All entities are required to apply the amendments in this update retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented.The Company will adoptadopted this new standard effective for January 1, 2020. Management does not expect the adoptionAdoption of this standard todid not materially impact the Company’s financial position or results of operations.
ASU 2018-13: Fair Value Measurement (Topic 820)
This ASU improves the effectiveness of fair value disclosures in the notes to financial statements. Amendments in this ASU modify disclosure requirements in Topic 820, including the removal or modification of certain disclosure requirements, and the addition of new disclosure requirements.Effective for fiscal years beginning after December 15, 2019. Early adoption is permitted, with the option to early adopt amendments to remove or modify disclosures, with full adoption of additional requirements delayed until their effective date. Amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively. All other amendments should be applied retrospectively.Management has elected to early adopt the removed disclosures relating to transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and valuation processes for Level 3 fair value measurements. The Company will delay adoption of the additional disclosures until their effective date.



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AXA EQUITABLE LIFE INSURANCE COMPANYFuture Adoption of New Accounting Pronouncements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

DescriptionEffective Date and Method of AdoptionEffect on the Financial Statement or Other Significant Matters
ASU 2018-12:2018-12: Financial Services—Services - Insurance (Topic 944); ASU 2019-09: Financial Services - Insurance (Topic 944): Effective Date
This ASU provides targeted improvements to existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity. The ASU primarily impacts four key areas, including:
Effective for fiscal years beginning after December 31, 2020. Early adoption is permitted.

On October 16, 2019, the FASB affirmed its previous decision to delay the effective date to fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.
Management currently is evaluating the impact that adoption of this guidance will have on the Company’s consolidated financial statements, however the adoption of the ASU is expected to have a significant impact on the Company’s consolidated financial condition, results of operations, cash flows and required disclosures, as well as processes and controls.


Measurement of the liability for future policy benefits for traditional and limited payment contracts. The ASU requires companies to review, and if necessary, update, cash flow assumptions at least annually for non-participating traditional and limited-payment insurance contracts. Interest rates used to discount the liability will need to be updated quarterly using an upper medium grade (low credit risk) fixed-income instrument yield.
In November 2019, ASU 2019-09 was issued which modified ASU 2018-12 to be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted.

For the liability for future policyholder benefits for traditional and limited payment contracts, companies can elect one of two adoption methods. Companies can either elect a modified retrospective transition method applied to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCIAccumulated other comprehensive
income (“AOCI”) or a full retrospective transition method using actual historical experience information as of contract inception. The same adoption method must be used for deferred policy acquisition costs.
The Company is currently evaluating the impact that adoption of this guidance will have on the Company’s consolidated financial statements, however the adoption of the ASU is expected to have a significant impact on the Company’s consolidated financial condition, results of operations, cash flows and required disclosures, as well as processes and controls.


10
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

DescriptionEffective Date and Method of AdoptionEffect on the Financial Statement or Other Significant Matters
Measurement of market risk benefits (“MRBs”). MRBs, as defined under the ASU, will encompass certain GMxB features associated with variable annuity products and other general account annuities with other than nominal market risk. The ASU requires MRBs to be measured at fair value with changes in value attributable to changes in instrument-specific credit risk recognized in OCI.


Amortization of deferred policy acquisition costs. The ASU simplifies the amortization of deferred policy acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins, requiring such balances to be amortized on a constant level basis over the expected term of the contracts. Deferred costs will be required to be written off for unexpected contract terminations but will not be subject to impairment testing.



Expanded footnote disclosures. The ASU requires additional disclosures including disaggregated rollforwardsroll-forwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, MRBs, Separate Accountsseparate account liabilities and deferred policy acquisition costs. Companies will also be required to disclose information about significant inputs, judgements, assumptions and methods used in measurement.
For MRBs, the ASU should be applied retrospectively as of the beginning of the earliest period presented.



For deferred policy acquisition costs,

companies can elect one of two adoption methods. Companies can either elect a modified retrospective transition method applied to contracts in force as of the beginning of the earliest period presented on the basis of their existing carrying amounts, adjusted for the removal of any related amounts in AOCI or a full retrospective transition method using actual historical experience information as of contract inception. The same adoption method must be used for the liability for future policyholder benefits for traditional and limited payment contracts.


ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, as well as clarifying and amending existing guidance.Effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted.The Company is currently evaluating the impact adopting the guidance will have on the Company’s consolidated financial statements, however the adoption is not expected to materially impact the Company’s financial position, results of operation, or cash flows.

ASU2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

The amendments in this ASU provide optional expedients and exceptions to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.  The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.This ASU is effective as of March 12, 2020 through December 31, 2022.The Company will determine the applicability of the optional expedients and exceptions provided under the ASU as reference rate reform continues to develop.



Investments
The carrying values of fixed maturities classified as available-for-sale (“AFS”) are reported at fair value. Changes in fair value are reported in other comprehensive income (“OCI”), net of allowance for credit losses, policy related amounts and deferred income taxes. With the adoption of the new Financial Instruments-Credit Losses standard, changes in credit losses are recognized in Investment gains (losses), net. The redeemable preferred stock investments that are reported in fixed maturities include real estate investment trusts (“REIT”), perpetual preferred stock and redeemable preferred stock. These securities may not have a stated maturity, may not be cumulative and do not provide for mandatory redemption by the issuer.

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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


The Company 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. The Company’s management, with the assistance of its investment advisors, evaluates AFS debt securities that experienced a decline in fair value below amortized cost for credit losses which are evaluated in accordance with the new financial instruments credit losses guidance effective January 1, 2020. Integral to this review is an assessment made each quarter, on a security-by-security basis, by the Company’s Investments Under Surveillance (“IUS”) Committee, of various indicators of credit deterioration to determine whether the investment security has experienced a credit loss. This assessment includes, but is not limited to, consideration of the 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.
The Company recognizes an allowance for credit losses on AFS debt securities with a corresponding adjustment to earnings rather than a direct write down that reduces the cost basis of the investment, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Any improvements in estimated credit losses on AFS debt securities are recognized immediately in earnings. Management does not use the length of time a security has been in an unrealized loss position as a factor, either by itself or in combination with other factors, to conclude that a credit loss does not exist, as they were permitted to do prior to January 1, 2020.
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 allowance is recognized in income (loss) 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 at the date of acquisition. 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 require use of management judgment and consider internal credit analyses as well as market observable data relevant to the collectability of the security.
Write-offs of AFS debt securities are recorded when all or a portion of a financial asset is deemed uncollectible. Full or partial write-offs are recorded as reductions to the amortized cost basis of the AFS debt security and deducted from the allowance in the period in which the financial assets are deemed uncollectible. The Company elected to reverse accrued interest deemed uncollectible as a reversal of interest income. In instances where the Company collects cash that it has previously written off, the recovery will be recognized through earnings or as a reduction of the amortized cost basis for interest and principal, respectively.
Real estate held for the production of income is stated at depreciated cost less allowance for credit losses. Depreciation of real estate held for production of income is computed using the straight-line method over the estimated useful lives of the properties, which generally range from 40 to 50 years.
Policy loans represent funds loaned to policyholders up to the cash surrender value of the associated insurance policies and are carried at the unpaid principal balances due to the Company from the policyholders. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. Policy loans are fully collateralized by the cash surrender value of the associated insurance policies.
Partnerships, investment companies and joint venture interests that the Company has control of and has an economic interest in or those that meet the requirements for consolidation under accounting guidance for consolidation of VIEs are consolidated. Those that the Company does not have control of and does not have a majority economic interest in and those that do not meet the VIE requirements for consolidation are reported on the equity method of accounting and are reported in other equity investments. The Company records its interests in certain of these partnerships on a month or one quarter lag.
Trading securities, which include equity securities and fixed maturities, are carried at fair value based on quoted market prices, with realized and unrealized gains (losses) reported in net investment income (loss) in the consolidated statements of income (loss).
Corporate owned life insurance (“COLI”) has been purchased by the Company and certain subsidiaries on the lives of certain key employees and the Company and these subsidiaries are named as beneficiaries under these policies. COLI

12
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued
DescriptionEffective Date and Method of AdoptionEffect on the Financial Statement or Other Significant Matters
ASU 2016-13: Financial Instruments—Credit Losses (Topic 326), as clarified and amended byASU 2018-19: Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ASU 2019-04: Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments andASU 2019-05: Financial Instruments—Credit Losses (Topic 326) Targeted Transition Relief
ASU 2016-13 contains new guidance which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.
ASU 2019-05 provides entities that have instruments within the scope of Subtopic 326-20 an option to irrevocably elect the fair value option on an instrument-by instrument basis upon adoption of Topic 326. ASU 2018-19 and ASU 2019-05, clarified the codification guidance and did not materially change the standards.		Effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. These amendments should be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.The Company is continuing to develop, validate and implement its updated expected credit loss models, processes and controls related to the identified financial assets that fall within the scope of the new standard. While Management expects the adoption will not materially impact the Company’s financial position or results of operations, it currently anticipates that the standard will have the most impact to its commercial and agricultural mortgage loan portfolios. However, the extent of the impact will depend on various factors including the economic environment, structure and size of the Company’s loan portfolio and other assets impacted by the standard.

is carried at the cash surrender value of the policies. At March 31, 2020 and December 31, 2019, the carrying value of COLI was $874 million and $942 million, respectively, and is reported in Other invested assets in the consolidated balance sheets.
Cash and cash equivalents includes cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid debt instruments purchased with an original maturity of three months or less. Due to the short-term nature of these investments, the recorded value is deemed to approximate fair value.
All securities owned, including U.S. government and agency securities, mortgage-backed securities, futures and forwards transactions, are reported in the consolidated financial statements on a trade-date basis.
Commercial and Agricultural Mortgage Loans on Real Estate
Mortgage loans are stated at unpaid principal balances, net of unamortized discounts and the allowance for credit losses. The Company calculates the allowance for credit losses in accordance with the current expected credit losses (“CECL”) model in order to provide for the risk of credit losses in the lending process.
Expected credit losses for loans with similar risk characteristics are estimated on a collective (i.e., pool) basis in order to meet CECL’s risk of loss concept which requires the Company to consider possibilities of loss, even if remote.
For collectively evaluated mortgages, the Company estimates the allowance for credit losses based on the amortized cost basis of its mortgages over their expected life using a probability of default (“PD”) / loss given default (“LGD”) model. The PD/LGD model incorporates the Company’s reasonable and supportable forecast of macroeconomic information over a specified period. For periods beyond the reasonable and supportable forecast period, the model reverts to historical loss information.
The CECL model is configured to the Company’s specifications and takes into consideration the detailed risk attributes of each discrete loan in the mortgage portfolio which include, but are not limited to the following:
Loan-to-value (“LTV”) ratio - Derived from current loan balance divided by the fair market value of the property. An LTV ratio in excess of 100% indicates an underwater mortgage. 
Debt service coverage (“DSC”) ratio - Derived from actual operating earnings divided by annual debt service. If the ratio is below 1.0x, then the income from the property does not support the debt.
Occupancy - Criteria varies by property type but low or below market occupancy is an indicator of sub-par property performance.
Lease expirations - The percentage of leases expiring in the upcoming 12 to 36 months are monitored as a decline in rent and/or occupancy may negatively impact the debt service coverage ratio. In the case of single-tenant properties or properties with large tenant exposure, the lease expiration is a material risk factor.
Other - Any other factors such as maturity, borrower/tenant related issues, payment status, property condition, or current economic conditions may call into question the performance of the loan.
For individually evaluated mortgages, the Company continues to recognize an allowance on the present value of expected future cash flows discounted at the loan’s original effective interest rate or on its collateral value.
Mortgage loans that do not share similar risk characteristics with other loans in the portfolio are individually evaluated quarterly by the Company’s IUS Committee. The allowance for credit losses on these individually evaluated mortgages is a loan-specific reserve as a result of the loan review process that is 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. The individually assessed allowance for mortgage loans can increase or decrease from period to period based on such factors.
Individually assessed loans may include, but are not limited to, mortgages that have deteriorated in credit quality such as troubled debt restructurings (“TDR”) and reasonably expected TDRs, mortgages for which foreclosure is probable, and mortgages which have been classified as “potential problem” or “problem” loans within the Company’s IUS Committee processes as described below.
Within the IUS process, 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 are also identified, consisting of mortgage loans not currently classified as problem mortgages but for which management has doubts as to the ability of the borrower to comply with the present loan payment terms and which may result in the loan becoming a problem or

13
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

being modified. The decision whether to classify a performing mortgage loan as a potential problem involves judgments by management as to likely future industry conditions and developments with respect to the borrower or the individual mortgaged property.
Individually assessed mortgage loans without provision for losses are mortgage loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. Interest income earned on mortgage loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on mortgage loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows.
Mortgage loans are placed on nonaccrual status once management believes the collection of accrued interest is not probable. Once mortgage loans are classified as nonaccrual mortgage 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 has been restructured to where the collection of interest is considered likely. The Company charges off loan balances and accrued interest that are deemed uncollectible.
Net Investment Income (Loss), Investment Gains (Losses), Net and Unrealized Investment Gains (Losses)
Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of revenue. Changes in the allowance for credit losses are included in Investment gains (losses), net.
Realized and unrealized holding gains (losses) on trading and equity securities are reflected in Net investment income (loss).
Unrealized investment gains (losses) on fixed maturities designated as AFS held by the Company are accounted for as a separate component of AOCI, net of related deferred income taxes, as are amounts attributable to certain pension operations, Closed Block’s policyholders’ dividend obligation, insurance liability loss recognition, DAC related to UL policies, investment-type products and participating traditional life policies.
Changes in unrealized gains (losses) reflect changes in fair value of only those fixed maturities classified as AFS and do not reflect any change in fair value of policyholders’ account balances and future policy benefits.
Accounting and Consolidation of Variable Interest Entities (“VIEs”)VIEs
At September 30, 2019,For all new investment products and entities developed by the Company (other than Collateralized Debt Obligations (“CDOs”)), the Company first determines whether the entity is a VIE, which involves determining an entity’s variability and variable interests, identifying the holders of the equity investment at risk and assessing the five characteristics of a VIE. Once an entity has been determined to be a VIE, the Company then identifies the primary beneficiary of the VIE. If the Company is deemed to be the primary beneficiary of the VIE, then the Company consolidates the entity.
Management of the Company reviews quarterly its investment management agreements and its investments in, and other financial arrangements with, certain entities that hold client assets under management (“AUM”) to determine the entities that the Company is required to consolidate under this guidance. These entities include certain mutual fund products, hedge funds, structured products, group trusts, collective investment trusts and limited partnerships.
The analysis performed to identify variable interests held, determine whether entities are VIEs or VOEs, and evaluate whether the Company has a controlling financial interest in such entities requires the exercise of judgment and is updated on a continuous basis as circumstances change or new entities are developed. The primary beneficiary evaluation generally is performed qualitatively based on all facts and circumstances, including consideration of economic interests in the VIE held directly and indirectly through related parties and entities under common control, as well as quantitatively, as appropriate.

14
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

Consolidated VIEs
At March 31, 2020 and December 31, 2019, the Company consolidated 1 real estate joint venture for which it was identified as the primary beneficiary under the VIE model. The consolidated entity is jointly owned by Equitable Life and AXA France and holds an investment in a real estate venture. Included in Other invested assets in the Company’s consolidated balance sheets at March 31, 2020 and December 31, 2019 are total assets of $32 million and $32 million, respectively related to this VIE, primarily resulting from the consolidated presentation of this real estate joint venture as real estate held for sale. Redeemable noncontrolling interests are presented in mezzanine equity and non-redeemable noncontrolling interests are presented within permanent equity.
Non-Consolidated VIEs
At March 31, 2020 and December 31, 2019, respectively, the Company held approximately $1.2 billion and $1.1 billion of investment assets in the form of equity interests issued by non-corporate legal entities determined under the guidance to be VIEs, such as limited partnerships and limited liability companies, including hedge funds, private equity funds and real estate-related funds. As an equity investor, the Company is considered to have a variable interest in each of these VIEs as a result of its participation in the risks and/or rewards these funds were designed to create by their defined portfolio objectives and strategies. Primarily through qualitative assessment, including consideration of related party interests or other financial arrangements, if any, the Company was not identified as primary beneficiary of any of these VIEs, largely due to its inability to direct the activities that most significantly impact their economic performance. Consequently, the Company continues to reflect these equity interests in the consolidated balance sheets as Other equity investments and to applyapplies the equity method of accounting for these positions. The net assets of these non-consolidated VIEs are $169.6approximately $151.4 billion and $160.2 billion at September 30, 2019.March 31, 2020 and December 31, 2019, respectively. The Company’s maximum exposure to loss from its direct involvement with these VIEs is the carrying value of its investment of $1.2 billion and $1.1 billion and $865 millionapproximately $1.0 billion and $1.1 billion of unfunded commitments at September 30, 2019.March 31, 2020 and December 31, 2019, respectively. The Company has no further economic interest in these VIEs in the form of guarantees, derivatives, credit enhancements or similar instruments and obligations.
At September 30,In addition, at March 31, 2020 and December 31, 2019 the Company consolidated one, Other invested assets includes real estate joint venture for which it was identified as primary beneficiary under the VIE model. The consolidated entity is jointly owned by AXA Equitable Life Insurance Company (“AXA Equitable Life”) and AXA France and holds an investment in a real estate venture. Included in the Company’s consolidated balance sheet at September 30, 2019 related to this VIE is $33 million of Real estate held for productionsale of income. In addition, one$(5) million and $(5) million, respectively, as related to 1 non-consolidated real estate joint venture totaling $19 million at September 30, 2019 has been deemed to be “held for sale” and is reported in Other invested assets.venture.
Assumption Updates and Model Changes
The Company conducts its annual review of its assumptions and models during the third quarter of each year. The annual review encompasses assumptions underlying the valuation of unearned revenue liabilities, embedded derivatives for the Company’sour insurance business, liabilities for future policyholder benefits, deferred policy acquisition cost (“DAC”)DAC and deferred sales inducement assets (“DSI”) assets. There was no material.
However, the Company updates its assumptions as needed in the event it becomes aware of economic conditions or events that could require a change in assumptions that it believes may have a significant impact from model changes duringto the thirdcarrying value of product liabilities and assets or more frequently if evidence suggest that assumptions should be revised .
Due to the extraordinary economic conditions driven by the COVID-19 pandemic in the first quarter of 20192020, the Company updated its interest rate assumption to grade from the current spot interest rate curve to an ultimate five-year historical average over a 10-year period.  As such, the 10-year U.S. Treasury yield grades from the current level to an ultimate 5-year average of 2.25%.
The low interest rates environment and 2018subsequent update to our Income (loss) from continuing operations, before income taxes or Net income (loss).the interest rate assumption caused a loss recognition event for the Company’s life interest-sensitive products, as well as to certain run-off business. This loss recognition event caused an acceleration of DAC amortization on the life interest-sensitive products and an increase in the premium deficiency reserve on the run-off business in the first quarter of 2020.
The net impact of the economic assumption changesupdate in the thirdfirst quarter of 2019decreased2020 increased Policyholders’ benefits by $1.3 billion, increased Amortization of DAC by $861 million, increased Policy charges and fee income by $11$54 million, increased Policyholders’ benefits by $886 million, increased Net derivative losses by $548 million, and decreased Interest credited to policyholders��policyholders’ account balances by $14 million and decreased Amortization of DAC by $77


12
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

million. This resulted in a decrease in Income (loss) from operations, before incometaxesof$1.4 billion and decreased Net income (loss) by $1.1 billion.
The net impact of assumption changes in the third quarter of 2018 decreased Policy charges and fee income by $12 million, decreased Policyholders’ benefits by $684 million, increased Net derivative losses by $1.1 billion and decreased the Amortization of DAC by $165$6 million. This resulted in a decrease in Income (loss) from continuing operations, before income taxes of $228 million$2.1 billion and decreased Net income (loss) by $187 million.of $1.7 billion.

15
Reclassification
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

3)    INVESTMENTS
Fixed Maturities Available-for-Sale
Accounting for impairments of DAC Capitalizationfixed maturities classified as AFS has changed from a direct write-down, or other-than-temporary impairment (“OTTI”) approach to an allowance for credit loss model starting in 2020 upon adoption of the new credit impairment guidance (see Note 2, Significant Accounting Policies – Investments).
DuringThe components of fair value and amortized cost for fixed maturities classified as AFS on the fourth quarter of 2018,consolidated balance sheets excludes accrued interest receivable because the Company changed the presentation of the capitalization of DAC in the consolidated statements of income for all prior periods presented herein by netting the capitalized amountselected to present accrued interest receivable within the applicable expense line items, such as Compensation and benefits, Commissions and Other operating costs and expenses. Previously,assets. Accrued interest receivable on AFS fixed maturities at March 31, 2020 was $464 million.
When the Company had netteddetermines that there is more than 50% likelihood that it is not going to recover the capitalized amounts withinprincipal and interest cash flows related to an AFS debt security, the Amortizationsecurity is placed on nonaccrual status and the Company reverses Accrued interest receivable against Interest income. Since the nonaccrual policy results in a timely reversal of DAC. There was no impactAccrued interest receivable, the Company does not record an allowance for credit losses on Net income (loss) or Comprehensive income (loss) from this reclassification.Accrued interest receivable.
The reclassification adjustmentstotal amount of accrued interest written off for the three and nine months ended September 30, 2018 are presentedMarch 31, 2020 for AFS fixed maturities was $1 million.
Comparative tables as of December 31, 2019 include OTTI, reported net of tax in the table below. Capitalization of DAC reclassified to CompensationOCI and benefits, Commissions and Other operating costs and expenses reduced the amounts previously reported in those expense line items, while the capitalization of DAC reclassified from the Amortization of deferred policy acquisition costs line item increases that expense line item.
 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
 (in millions)
Reductions to expense line items:   
Compensation and benefits$33
 $98
Commissions118
 331
Other operating costs and expenses—
 3
Total reductions$151
 $432
    
Increase to expense line item:   
Amortization of deferred policy acquisition costs$151
 $432

Revision of Prior Period Financial Statements
During the fourth quarter of 2018, the Company identified certain cash flows that were incorrectly classified in the Company’s consolidated statements of cash flows. The Company has determined that these misclassifications were not material to its financial statements of any period.
The impact of items included in the revision tables withinNote 15 on the consolidated statement of cash flows for the nine months ended September 30, 2018were corrected in the comparative consolidated statements of cash flows included herein. See Note 15 for further information.
3)    INVESTMENTS
Fixed MaturitiesAOCI until realized.
The following tables provide information relating to the Company’s fixed maturities classified as available-for-sale (“AFS”).AFS.


13
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Available-for-SaleAFS Fixed Maturities by Classification
Amortized
Cost		 Gross Unrealized
Gains		 Gross Unrealized
Losses		 Fair
Value		 OTTI
in AOCI (4)		Amortized
Cost		 Allowance for Credit Losses (4) Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair Value
(in millions)(in millions)
September 30, 2019:         
March 31, 2020:         
Fixed Maturities:         
Corporate (1)$43,805
 $2
 $1,627
 $792
 $44,638
U.S. Treasury, government and agency14,195
 —
 4,255
 —
 18,450
States and political subdivisions607
 —
 68
 6
 669
Foreign governments481
 —
 27
 12
 496
Residential mortgage-backed (2)154
 —
 12
 —
 166
Asset-backed (3)1,509
 —
 5
 124
 1,390
Commercial mortgage-backed37
 —
 2
 —
 39
Redeemable preferred stock543
 —
 11
 31
 523
Total at March 31, 2020$61,331
 $2
 $6,007
 $965
 $66,371
         
December 31, 2019:         
Fixed Maturities:                  
Corporate (1)$41,221
 $2,189
 $49
 $43,361
 $—
$42,347
 $—
 $2,178
 $61
 $44,464
U.S. Treasury, government and agency14,036
 1,743
 55
 15,724
 —
14,385
 —
 1,151
 305
 15,231
States and political subdivisions567
 79
 1
 645
 —
584
 —
 68
 3
 649
Foreign governments481
 42
 6
 517
 —
460
 —
 35
 5
 490
Residential mortgage-backed (2)170
 12
 —
 182
 —
161
 —
 12
 —
 173
Asset-backed (3)600
 4
 2
 602
 —
843
 —
 3
 2
 844
Redeemable preferred stock400
 17
 3
 414
 —
498
 —
 18
 5
 511
Total at September 30, 2019$57,475
 $4,086
 $116
 $61,445
 $—
         
December 31, 2018:         
Fixed Maturities:         
Corporate (1)$26,690
 $385
 $699
 $26,376
 $—
U.S. Treasury, government and agency13,646
 143
 454
 13,335
 —
States and political subdivisions408
 47
 1
 454
 —
Foreign governments515
 17
 13
 519
 —
Residential mortgage-backed (2)193
 9
 —
 202
 —
Asset-backed (3)600
 1
 11
 590
 2
Redeemable preferred stock440
 16
 17
 439
 —
Total at December 31, 2018$42,492
 $618
 $1,195
 $41,915
 $2
Total at December 31, 2019$59,278
 $—
 $3,465
 $381
 $62,362
______________
(1)Corporate fixed maturities includesinclude both public and private issues.
(2)Includes publicly traded agency pass-through securities and collateralized obligations.
(3)Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
(4)Amounts represent OTTIthe allowance for credit losses in AOCI, which were not included in Net income (loss)for 2020 - (see Note 2 Significant Accounting Policies - Investments).

16
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

The contractual maturities of AFS fixed maturities at September 30, 2019March 31, 2020 are shown in the table below. Bonds not due at a single maturity date have been included in the table in the final year of 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.
Contractual Maturities of Available-for-SaleAFS Fixed Maturities
 Amortized Cost (Less Allowance for Credit Losses) Fair Value
 (in millions)
March 31, 2020 (1):   
Contractual maturities:   
Due in one year or less$4,472
 $4,466
Due in years two through five13,620
 13,697
Due in years six through ten16,703
 17,130
Due after ten years24,291
 28,960
Subtotal59,086
 64,253
Residential mortgage-backed154
 166
Asset-backed1,509
 1,390
Commercial mortgage-backed37
 39
Redeemable preferred stock543
 523
Total at March 31, 2020$61,329
 $66,371
______________
 Amortized Cost Fair Value
 (in millions)
September 30, 2019:   
Due in one year or less$3,099
 $3,118
Due in years two through five13,296
 13,691
Due in years six through ten15,689
 16,769
Due after ten years24,221
 26,669
Subtotal56,305
 60,247
Residential mortgage-backed170
 182
Asset-backed600
 602
Redeemable preferred stock400
 414
Total at September 30, 2019$57,475
 $61,445


14
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1)Net amortized cost is equal to amortized cost, less any allowance for credit losses to the extent applicable.
The following table shows proceeds from sales, gross gains (losses) from sales and credit losses for AFS fixed maturities duringfor the three and nine months ended September 30, 2019March 31, 2020 and 2018:2019:
Proceeds andfrom Sales, Gross Gains (Losses) onfrom Sales and Credit Losses for Available-for-SaleAFS Fixed Maturities
 Three Months Ended March 31,
 2020 2019
 (in millions)
Proceeds from sales$1,722
 $1,361
Gross gains on sales$69
 $8
Gross losses on sales$(3) $(15)
    
Credit losses (1)$(2) $—
______________
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (in millions)
Proceeds from sales$3,839
 $973
 $6,756
 $4,774
Gross gains on sales$207
 $6
 $224
 $140
Gross losses on sales$(4) $(4) $(25) $(59)
        
Total OTTI$—
 $(4) $—
 $(4)
Non-credit losses recognized in OCI—
 —
 —
 —
Credit losses recognized in Net income (loss)$—
 $(4) $—
 $(4)
(1)Commencing with the Company’s adoption of ASU 2016-13 on January 1, 2020, credit losses on AFS debt securities were recognized as an allowance for credit losses. In 2019 and prior, credit losses on AFS fixed maturities were recognized as OTTI.
The following table sets forth the amount of credit loss impairments on AFS fixed maturities held by the Company at the dates indicated and the corresponding changes in such amounts:
Available-for-Sale
17
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

AFS Fixed Maturities - Credit Loss Impairments
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (in millions)
Balances, beginning of period$(18) $(9) $(46) $(10)
Previously recognized impairments on securities that matured, paid, prepaid or sold3
 —
 31
 1
Recognized impairments on securities impaired to fair value this period (1)—
 —
 —
 —
Impairments recognized this period on securities not previously impaired—
 (4) —
 (4)
Additional impairments this period on securities previously impaired—
 —
 —
 —
Increases due to passage of time on previously recorded credit losses—
 —
 —
 —
Accretion of previously recognized impairments due to increases in expected cash flows—
 —
 —
 —
Balances at September 30,$(15) $(13) $(15) $(13)
 Three Months Ended March 31,
 2020 2019
 (in millions)
Balance at January 1,$(15) $(46)
Previously recognized impairments on securities that matured, paid, prepaid or sold—
 28
Recognized impairments on securities impaired to fair value this period (1)—
 —
Credit losses recognized this period on securities for which credit losses were not previously recognized(2) —
Additional credit losses this period on securities previously impaired—
 —
Increases due to passage of time on previously recorded credit losses—
 —
Accretion of previously recognized impairments due to increases in expected cash flows (for OTTI securities 2019 and prior)—
 —
Balance at March 31,$(17) $(18)
______________
(1)Represents circumstances where the Company 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 (losses) on AFS fixed maturities classified as AFS are included in the consolidated balance sheets as a component of AOCI.
Changes in net unrealized investment gains (losses) recognized in AOCI include reclassification adjustments to reflect amounts realized in Net income (loss) for the current period that had been part of OCI in earlier periods. The tables that follow below present a roll-forward of net unrealized investment gains (losses) recognized in AOCI,: split between amounts related to fixed maturities on which a credit loss has been recognized, and all other:

Net Unrealized Gains (Losses) on AFS Fixed Maturities

15
 Net Unrealized Gains (Losses) on Investments DAC   Policyholders’ Liabilities Deferred Income Tax Asset (Liability) AOCI Gain (Loss) Related to Net Unrealized Investment  Gains (Losses) 
 (in millions)
Balance, January 1, 2020$3,084
 $(831) $(192) $(433) $1,628
Net investment gains (losses) arising during the period2,026
 —
 —
 —
 2,026
Reclassification adjustment:        —
Included in Net income (loss)(63) —
 —
 —
 (63)
Excluded from Net income (loss)—
 —
 —
 —
 —
Impact of net unrealized investment gains (losses) on:        
DAC—
 626
 —
 —
 626
Deferred income taxes—
 —
 —
 (373) (373)
Policyholders’ liabilities—
 —
 (812) —
 (812)
Net unrealized investment gains (losses) excluding credit losses5,047
 (205) (1,004) (806) 3,032
Net unrealized investment gains (losses) with credit losses(7) —
 1
 1
 (5)
Balance, March 31, 2020$5,040
 $(205) $(1,003) $(805) $3,027
          

18
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued

Net Unrealized Gains (Losses) on Available-for-Sale Fixed Maturities
Net
Unrealized
Gains
(Losses) on
Investments		 DAC Policyholders’
Liabilities		 Deferred
Income
Tax Asset
(Liability)		 AOCI Gain
(Loss) Related
to Net
Unrealized
Investment
Gains (Losses)		Net Unrealized Gains (Losses) on Investments DAC   Policyholders’ Liabilities Deferred Income Tax Asset (Liability) AOCI Gain (Loss) Related to Net Unrealized Investment  Gains (Losses) 
(in millions)(in millions)
Balances at July 1, 2019$2,622
 $(534) $(86) $(420) $1,582
Balance, January 1, 2019$(577) $39
 $(55) $125
 $(468)
Net investment gains (losses) arising during the period1,548
 —
 —
 —
 1,548
1,583
 —
 —
 —
 1,583
Reclassification adjustment:        —
         
Included in Net income (loss)(201) —
 —
 —
 (201)(3) —
 —
 —
 (3)
Excluded from Net income (loss) (1)—
 —
 —
 —
 —
—
 —
 —
 —
 —
Impact of net unrealized investment gains (losses) on:                  
DAC—
 (291) —
 —
 (291)—
 (655) —
 —
 (655)
Deferred income taxes—
 —
 —
 (156) (156)—
 —
 —
 (211) (211)
Policyholders’ liabilities—
 —
 (315) —
 (315)—
 —
 77
 —
 77
Net unrealized investment gains (losses) excluding OTTI losses3,969
 (825) (401) (576) 2,167
Net unrealized investment gains (losses) with OTTI losses1
 (1) —
 —
 —
Balances at September 30, 2019$3,970
 $(826) $(401) $(576) $2,167
         
Balances at July 1, 2018$(245) $11
 $(110) $(27) $(371)
Net investment gains (losses) arising during the period(554) —
 —
 —
 (554)
Reclassification adjustment:         
Included in Net income (loss)10
 —
 —
 —
 10
Excluded from Net income (loss) (1)—
 —
 —
 —
 —
Impact of net unrealized investment gains (losses) on:         
DAC—
 72
 —
 —
 72
Deferred income taxes—
 —
 —
 112
 112
Policyholders’ liabilities—
 —
 (62) —
 (62)
Net unrealized investment gains (losses) excluding OTTI losses(789) 83
 (172) 85
 (793)
Net unrealized investment gains (losses) with OTTI losses1
 —
 —
 —
 1
Balances at September 30, 2018$(788) $83
 $(172) $85
 $(792)
Net unrealized investment gains (losses) excluding credit losses1,003
 (616) 22
 (86) 323
Net unrealized investment gains (losses) with credit losses (1)—
 —
 —
 —
 —
Balance, March 31, 2019$1,003
 $(616) $22
 $(86) $323
______________
(1)Represents “transfers out” related to the portion of OTTICredit losses during the period thatfor 2019 were not recognized in Net income (loss) for securities with no prior OTTI losses.


16
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 Net
Unrealized
Gains
(Losses) on
Investments		 DAC Policyholders’
Liabilities		 Deferred
Income
Tax Asset
(Liability)		 AOCI Gain
(Loss) Related
to Net
Unrealized
Investment
Gains (Losses)
 (in millions)
Balances at January 1, 2019$(577) $39
 $(55) $125
 $(468)
Net investment gains (losses) arising during the period4,754
 —
 —
 —
 4,754
Reclassification adjustment:        —
Included in Net income (loss)(208) —
 —
 —
 (208)
Excluded from Net income (loss) (1)—
 —
 —
 —
 —
Impact of net unrealized investment gains (losses) on:         
DAC—
 (864) —
 —
 (864)
Deferred income taxes—
 —
 —
 (701) (701)
Policyholders’ liabilities—
 —
 (346) —
 (346)
Net unrealized investment gains (losses) excluding OTTI losses3,969
 (825) (401) (576) 2,167
Net unrealized investment gains (losses) with OTTI losses1
 (1) —
 —
 —
Balances at September 30, 2019$3,970
 $(826) $(401) $(576) $2,167
          
Balances at January 1, 2018$1,526
 $(315) $(232) $(300) $679
Net investment gains (losses) arising during the period(2,240) —
 —
 —
 (2,240)
Reclassification adjustment:        
Included in Net income (loss)(75) —
 —
 —
 (75)
Excluded from Net income (loss) (1)—
 —
 —
 —
 —
Impact of net unrealized investment gains (losses) on:        
DAC—
 398
 —
 —
 398
Deferred income taxes—
 —
 —
 385
 385
Policyholders’ liabilities—
 —
 60
 —
 60
Net unrealized investment gains (losses) excluding OTTI losses(789) 83
 (172) 85
 (793)
Net unrealized investment gains (losses) with OTTI losses1
 —
 —
 —
 1
Balances at September 30, 2018$(788) $83
 $(172) $85
 $(792)
______________
(1)Represents “transfers out” related to the portion of OTTI losses during the period that were not recognized in Net income (loss) for securities with no prior OTTI losses.
The following tables disclose the fair values and gross unrealized losses of the 339 securities1,620 issues at September 30, 2019March 31, 2020 and the 1,471 securities390 issues at December 31, 20182019 that are not deemed to be other-than-temporarily impaired,have credit losses, 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:

AFS Fixed Maturities in an Unrealized Loss Position for Which No Allowance Is Recorded

17
 Less Than 12 Months 12 Months or Longer Total
 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
 (in millions)
March 31, 2020:           
Fixed Maturities:           
Corporate$13,696
 $701
 $262
 $88
 $13,958
 $789
States and political subdivisions173
 6
 —
 —
 173
 6
Foreign governments127
 4
 36
 8
 163
 12
Asset-backed1,202
 117
 61
 7
 1,263
 124
Redeemable preferred stock263
 25
 43
 6
 306
 31
Total at March 31, 2020$15,461
 $853
 $402
 $109
 $15,863
 $962
            
December 31, 2019 (1):           
Fixed Maturities:           
Corporate$2,669
 $41
 $366
 $20
 $3,035
 $61
U.S. Treasury, government and agency4,245
 305
 2
 —
 4,247
 305
States and political subdivisions123
 3
 —
 —
 123
 3
Foreign governments11
 —
 47
 5
 58
 5
Asset-backed319
 —
 201
 2
 520
 2
Redeemable preferred stock29
 —
 49
 5
 78
 5
Total at December 31, 2019$7,396
 $349
 $665
 $32
 $8,061
 $381

19
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


Continuous Gross Unrealized Losses for Available-for-Sale Fixed Maturities______________
(1)Amounts represents fixed maturities in an unrealized loss position that are not deemed to be other-than-temporarily impaired for 2019.
 Less Than 12 Months 12 Months or Longer Total
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 (in millions)
September 30, 2019:           
Fixed Maturities:           
Corporate$2,489
 $24
 $526
 $25
 $3,015
 $49
U.S. Treasury, government and agency1,568
 55
 —
 —
 1,568
 55
States and political subdivisions33
 1
 —
 —
 33
 1
Foreign governments—
 —
 47
 6
 47
 6
Asset-backed251
 1
 143
 1
 394
 2
Redeemable preferred stock—
 —
 50
 3
 50
 3
Total at September 30, 2019$4,341
 $81
 $766
 $35
 $5,107
 $116
            
December 31, 2018:           
Fixed Maturities:           
Corporate$8,369
 $306
 $6,161
 $393
 $14,530
 $699
U.S. Treasury, government and agency2,636
 68
 3,154
 386
 5,790
 454
States and political subdivisions—
 —
 19
 1
 19
 1
Foreign governments109
 3
 76
 10
 185
 13
Residential mortgage-backed—
 —
 13
 —
 13
 —
Asset-backed558
 11
 6
 —
 564
 11
Redeemable preferred stock160
 12
 31
 5
 191
 17
Total at December 31, 2018$11,832
 $400
 $9,460
 $795
 $21,292
 $1,195
The Company’s investments in fixed maturities do not include concentrations of credit risk of any single issuer greater than 10% of the consolidated equity of the Company, other than securities of the U.S. government, U.S. government agencies, and certain securities guaranteed by the U.S. government. The Company maintains a diversified portfolio of corporate securities across industries and issuers and does not have exposure to any single issuer in excess of 0.6% of total corporate securities. The largest exposures to a single issuer of corporate securities held at September 30, 2019March 31, 2020 and December 31, 20182019 were $278$275 million and $210$279 million, respectively, representing 2.1%1.5% and 1.7%2.4% of the consolidated equity of the CompanyCompany.
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 National Association of Insurance Commissioners (“NAIC”) designation of 3 (medium investment grade), 4 or 5 (below investment grade) or 6 (in or near default). At September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, approximately $1.7 billion and $1.4 billion, or 2.7% and $1.2 billion, or 2.4% and 2.9%2.3%, of the $57.5$61.3 billion and $42.5$59.3 billion aggregate amortized cost of fixed maturities held by the Company were considered to be other than investment grade. These securities had gross unrealized losses of $205 million and $21 million and $30 million at September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
At September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, the $35$109 million and $795$32 million of gross unrealized losses of twelve months or more were concentrated in corporate and U.S. Treasury, government and agency securities.securities, as applicable. In accordance with the policy described in Note 2, the Company concluded that an adjustment to income for OTTI (prior to January 1, 2020) nor an allowance for credit losses (after January 1, 2020) for these securities was not warranted at either September 30, 2019March 31, 2020 or 2018.December 31, 2019. At September 30, 2019March 31, 2020 and December 31, 2018,2019, the Company did not intend to sell the securities nor will it likely be required to dispose of the securities before the anticipated recovery of their remaining amortized cost basis.
At September 30, 2019Based on the Company’s evaluation both qualitatively and quantitatively of the drivers of the decline in fair value of fixed maturity securities, the Company determined that the unrealized loss was primarily due to increases in credit spreads and changes in credit ratings due to the impact of the COVID-19 pandemic on financial markets and assessments of fundamental risks.
Mortgage Loans
The Company utilizes a PD/LGD model, configured in accordance with the Company’s policies that meet the concepts in the CECL framework, to estimate expected credit losses for mortgage loans as a product of PD, LGD and the exposure at default across various economic scenarios. The PD and LGD are estimated at the loan-level based on loans’ current and forecasted risk characteristics as well as macroeconomic forecasts. The PD is estimated using both macroeconomic conditions as well as individual loan risk characteristics including loan-to-value (“LTV”) ratios, debt service coverage (“DSC”) ratios, seasoning, collateral type, geography, and underlying credit. The LGD is driven primarily by the type and value of collateral, and secondarily by expected liquidation costs and time to recovery.
The model also incorporates the Company’s reasonable and supportable forecasts of the macroeconomic variables deemed to be correlated to the credit risk of its loans. The length of the reasonable and supportable forecast period is reassessed on a quarterly basis and may be adjusted as appropriate over time to be consistent with macroeconomic conditions and the environment as of the reporting date. Reversion to historical loss information is performed for periods beyond the reasonable and supportable forecast period.
The components of amortized cost for mortgage loans on the consolidated balance sheets excludes accrued interest amounts because the Company presents accrued interest receivables within Other assets. Accrued interest receivable on commercial and agricultural mortgage loans at March 31, 2020 and December 31, 2018,2019 was $29 million and $32 million, respectively. NaN accrued interest was written off for the fair valuethree months ended March 31, 2020 for commercial and agricultural mortgage loans.
Once mortgage loans are placed on nonaccrual status, the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in the timely reversal of accrued interest receivable, the Company’s trading account securitiesCompany does not record an allowance for credit losses on accrued interest receivable.
At March 31, 2020, the Company had 0 loans for which foreclosure was $8.4 billionprobable included within the individually assessed mortgage loans, and $15.2 billion, respectively. At September 30, 2019 and December 31, 2018, trading account securitiesaccordingly had 0 associated allowance for credit losses.



1820
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


included the General Account’s investment in Separate Accounts which had carrying values of $54 million and $48 million, respectively.Allowance for Credit Losses on Mortgage Loans
Net unrealized and realized gains (losses) on trading account equity securities are included in Net investment income (loss)The change in the Consolidated Statements of Income (Loss). The table below shows a breakdown of Net investment income (loss) from trading account securities during the three and nine months ended September 30, 2019 and 2018:
Net Investment Income (Loss) from Trading Account Securities
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (in millions)
Net investment gains (losses) recognized during the period on securities held at the end of the period$7
 $(36) $431
 $(231)
Net investment gains (losses) recognized on securities sold during the period13
 (19) (10) (17)
Net investment gains (losses) on trading securities arising during the period20
 (55) 421
 (248)
Interest and dividend income from trading securities59
 89
 220
 228
Net investment income (loss) from trading securities$79
 $34
 $641
 $(20)
Mortgage Loans
The payment terms of mortgage loans may from time to time be restructured or modified.
At September 30, 2019 and December 31, 2018, the carrying values of problem commercial mortgage loans on real estate that had been classified as non-accrual loans were $– and $19 million, respectively.
Allowancesallowance for credit losses for commercial mortgage loans were $– and $7 million foragricultural mortgage loans during the ninethree months ended September 30, 2019 and 2018, respectively. There were no allowancesMarch 31, 2020 was as follows:
 Three Months Ended March 31,
 2020
 (in millions)
Allowance for credit losses on mortgage loans (1): 
Commercial mortgages: 
Beginning Balance, January 1,$(33)
Current-period provision for expected credit losses(11)
Write-offs charged against the allowance—
Recoveries of amounts previously written off1
Net change in allowance(10)
Ending Balance, March 31,$(43)
  
Agricultural mortgages: 
Beginning Balance, January 1,$(3)
Current-period provision for expected credit losses—
Write-offs charged against the allowance—
Recoveries of amounts previously written off—
Net change in allowance—
Ending Balance, March 31,$(3)
  
Total allowance for credit losses$(46)
____________
(1)See Note 2 for discussion of the transition balance.
The change in the allowance for credit losses for agriculturalis attributable to:
increases/decreases in the loan balance due to new originations, maturing mortgages, and loan amortization;
changes in credit quality; and
changes in market assumptions primarily related to COVID-19 driven economic changes.
Credit Quality Information
The following tables summarize the Company’s mortgage loans segregated by risk rating exposure for the ninethree months ended September 30, 2019 and 2018.March 31, 2020.
LTV Ratios (1)(3)
 At March 31, 2020
 Amortized Cost Basis by Origination Year
 2020 2019 2018 2017 2016 Prior Total
 (in millions)
Mortgage loans:             
Commercial:             
0% - 50%$—
 $—
 $28
 $324
 $196
 $637
 $1,185
50% - 70%119
 767
 1,003
 1,072
 2,501
 2,046
 7,508
70% - 90%—
 85
 209
 10
 59
 391
 754
90% plus—
 —
 —
 —
 —
 —
 —
Total commercial$119
 $852
 $1,240
 $1,406
 $2,756
 $3,074
 $9,447
              

21
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

 At March 31, 2020
 Amortized Cost Basis by Origination Year
 2020 2019 2018 2017 2016 Prior Total
 (in millions)
Agricultural:             
0% - 50%$30
 $136
 $164
 $171
 $270
 $834
 $1,605
50% - 70%38
 165
 187
 126
 145
 420
 1,081
70% - 90%—
 —
 3
 —
 —
 16
 19
90% plus—
 —
 —
 —
 —
 —
 —
Total agricultural$68
 $301
 $354
 $297
 $415
 $1,270
 $2,705
              
Total mortgage loans:             
0% - 50%$30
 $136
 $192
 $495
 $466
 $1,471
 $2,790
50% - 70%157
 932
 1,190
 1,198
 2,646
 2,466
 8,589
70% - 90%—
 85
 212
 10
 59
 407
 773
90% plus—
 —
 —
 —
 —
 —
 —
Total mortgage loans$187
 $1,153
 $1,594
 $1,703
 $3,171
 $4,344
 $12,152

Debt Service Coverage Ratios (2)(3)
 At March 31, 2020
 Amortized Cost Basis by Origination Year
 2020 2019 2018 2017 2016 Prior Total
 (in millions)
Mortgage loans:             
Commercial:             
Greater than 2.0x$119
 $373
 $680
 $583
 $2,225
 $1,340
 $5,320
1.8x to 2.0x—
 184
 48
 379
 40
 451
 1,102
1.5x to 1.8x—
 242
 223
 332
 491
 577
 1,865
1.2x to 1.5x—
 —
 207
 75
 —
 590
 872
1.0x to 1.2x—
 53
 82
 37
 —
 116
 288
Less than 1.0x—
 —
 —
 —
 —
 —
 —
Total commercial$119
 $852
 $1,240
 $1,406
 $2,756
 $3,074
 $9,447
              
Agricultural             
Greater than 2.0x$3
 $38
 $41
 $37
 $77
 $189
 $385
1.8x to 2.0x7
 30
 15
 17
 22
 102
 193
1.5x to 1.8x26
 39
 47
 49
 62
 249
 472
1.2x to 1.5x12
 127
 150
 121
 174
 413
 997
1.0x to 1.2x17
 57
 92
 72
 61
 276
 575
Less than 1.0x3
 10
 9
 1
 19
 41
 83
Total agricultural$68
 $301
 $354
 $297
 $415
 $1,270
 $2,705
              
Total mortgage loans             
Greater than 2.0x$122
 $411
 $721
 $620
 $2,302
 $1,529
 $5,705
1.8x to 2.0x7
 214
 63
 396
 62
 553
 1,295
1.5x to 1.8x26
 281
 270
 381
 553
 826
 2,337
1.2x to 1.5x12
 127
 357
 196
 174
 1,003
 1,869
1.0x to 1.2x17
 110
 174
 109
 61
 392
 863
Less than 1.0x3
 10
 9
 1
 19
 41
 83
Total mortgage loans$187
 $1,153
 $1,594
 $1,703
 $3,171
 $4,344
 $12,152
_____________

22
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

(1)The LTV ratio is derived from current loan balance divided by the fair value of the property. The fair value of the underlying commercial properties is updated annually.
(2)The DSC ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service.
(3)Amounts presented at amortized cost basis.
The following tables provide information relating to the loan-to-valueLTV and debt service coverageDSC ratios for commercial and agricultural mortgage loans at September 30, 2019March 31, 2020 and December 31, 2018.2019. 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-ValueLTV and Debt Service CoverageDSC Ratios
Debt Service Coverage Ratio (1) 
Total Mortgage
Loans
DSC Ratio (2) (3)
Loan-to-Value Ratio (2):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 
LTV Ratio (1) (3):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
(in millions)(in millions)
September 30, 2019:             
Commercial Mortgage Loans:             
March 31, 2020:             
Mortgage loans:             
Commercial:             
0% - 50%$794
 $39
 $215
 $24
 $—
 $—
 $1,072
$925
 $21
 $214
 $25
 $—
 $—
 $1,185
50% - 70%4,296
 1,041
 1,255
 769
 208
 —
 7,569
4,143
 983
 1,437
 704
 241
 —
 7,508
70% - 90%158
 110
 70
 98
 142
 —
 578
252
 98
 214
 143
 47
 —
 754
90% plus—
 —
 46
 —
 —
 —
 46
—
 —
 —
 —
 —
 —
 —
Total Commercial Mortgage Loans$5,248
 $1,190
 $1,586
 $891
 $350
 $—
 $9,265
Total commercial$5,320
 $1,102
 $1,865
 $872
 $288
 $—
 $9,447
             
Agricultural:             
0% - 50%$304
 $110
 $252
 $558
 $333
 $48
 $1,605
50% - 70%81
 83
 220
 420
 242
 35
 1,081
70% - 90%—
 —
 —
 19
 —
 —
 19
90% plus—
 —
 —
 —
 —
 —
 —
Total agricultural$385
 $193
 $472
 $997
 $575
 $83
 $2,705
             
Total mortgage loans:             
0% - 50%$1,229
 $131
 $466
 $583
 $333
 $48
 $2,790
50% - 70%4,224
 1,066
 1,657
 1,124
 483
 35
 8,589
70% - 90%252
 98
 214
 162
 47
 —
 773
90% plus—
 —
 —
 —
 —
 —
 —
Total mortgage loans$5,705
 $1,295
 $2,337
 $1,869
 $863
 $83
 $12,152
             
December 31, 2019:             
Mortgage loans:             
Commercial:             
0% - 50%$887
 $38
 $214
 $24
 $—
 $—
 $1,163
50% - 70%4,097
 1,195
 1,118
 795
 242
 —
 7,447
70% - 90%251
 98
 214
 154
 46
 —
 763
90% plus—
 —
 —
 —
 —
 —
 —
Total commercial$5,235
 $1,331
 $1,546
 $973
 $288
 $—
 $9,373
             



1923
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


 DSC Ratio (2) (3)
LTV Ratio (1) (3):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
 (in millions)
Agricultural:             
0% - 50%$322
 $104
 $241
 $545
 $321
 $50
 $1,583
50% - 70%82
 87
 236
 426
 251
 33
 1,115
70% - 90%—
 —
 —
 19
 —
 —
 19
90% plus—
 —
 —
 —
 —
 —
 —
Total agricultural$404
 $191
 $477
 $990
 $572
 $83
 $2,717
              
Total mortgage loans:             
0% - 50%$1,209
 $142
 $455
 $569
 $321
 $50
 $2,746
50% - 70%4,179
 1,282
 1,354
 1,221
 493
 33
 8,562
70% - 90%251
 98
 214
 173
 46
 —
 782
90% plus—
 —
 —
 —
 —
 —
 —
Total mortgage loans$5,639
 $1,522
 $2,023
 $1,963
 $860
 $83
 $12,090
 Debt Service Coverage Ratio (1) 
Total Mortgage
Loans
Loan-to-Value Ratio (2):Greater than 2.0x 1.8x to 2.0x 1.5x to 1.8x 1.2x to 1.5x 1.0x to 1.2x Less than 1.0x 
 (in millions)
Agricultural Mortgage Loans:             
0% - 50%$291
 $108
 $257
 $568
 $327
 $45
 $1,596
50% - 70%106
 81
 240
 403
 263
 32
 1,125
70% - 90%—
 —
 —
 19
 —
 —
 19
90% plus—
 —
 —
 —
 —
 —
 —
Total Agricultural Mortgage Loans$397
 $189
 $497
 $990
 $590
 $77
 $2,740
              
Total Mortgage Loans:             
0% - 50%$1,085
 $147
 $472
 $592
 $327
 $45
 $2,668
50% - 70%4,402
 1,122
 1,495
 1,172
 471
 32
 8,694
70% - 90%158
 110
 70
 117
 142
 —
 597
90% plus—
 —
 46
 —
 —
 —
 46
Total Mortgage Loans$5,645
 $1,379
 $2,083
 $1,881
 $940
 $77
 $12,005
              
December 31, 2018:             
Commercial Mortgage Loans:             
0% - 50%$780
 $21
 $247
 $24
 $—
 $—
 $1,072
50% - 70%4,908
 656
 1,146
 325
 151
 —
 7,186
70% - 90%260
 —
 117
 370
 98
 —
 845
90% plus—
 —
 —
 27
 —
 —
 27
Total Commercial Mortgage Loans$5,948
 $677
 $1,510
 $746
 $249
 $—
 $9,130
              
Agricultural Mortgage Loans:             
0% - 50%$282
 $147
 $267
 $543
 $321
 $51
 $1,611
50% - 70%112
 46
 246
 379
 224
 31
 1,038
70% - 90%—
 —
 —
 19
 27
 —
 46
90% plus—
 —
 —
 —
 —
 —
 —
Total Agricultural Mortgage Loans$394
 $193
 $513
 $941
 $572
 $82
 $2,695
              
Total Mortgage Loans:             
0% - 50%$1,062
 $168
 $514
 $567
 $321
 $51
 $2,683
50% - 70%5,020
 702
 1,392
 704
 375
 31
 8,224
70% - 90%260
 —
 117
 389
 125
 —
 891
90% plus—
 —
 —
 27
 —
 —
 27
Total Mortgage Loans$6,342
 $870
 $2,023
 $1,687
 $821
 $82
 $11,825
______________
(1)The debt service coverageLTV ratio is derived from current loan balance divided by the fair value of the property. The fair value of the underlying commercial properties is updated annually.
(2)The DSC ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service.
(2)(3)The loan-to-value ratio is derived from current loan balance divided by the most recent fair value estimate of the property. The fair value of the underlying commercial properties is updated annually.Amounts presented at amortized cost basis.
Past-Due and Nonaccrual Mortgage Loan Status
The following table provides information relating to the aging analysis of past duepast-due mortgage loans at September 30, 2019March 31, 2020 and December 31, 2018.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

2019, respectively:
Age Analysis of Past Due Mortgage Loans (1)
30-59 Days 60-89 Days 
90 Days
or More
 Total Current Total Financing Receivables Recorded Investment 90 Days or More and AccruingAccruing Loans Non-accruing Loans Total Loans Non-accruing Loans with No Allowance Interest Income on Non-accruing Loans
      (in millions)    Past Due Current Total 
September 30, 2019:             
30-59 Days 
60-89
Days
 
90
Days
or  More
 Total Current Total Non-accruing Loans Total Loans Non-accruing Loans with No Allowance Interest Income on Non-accruing Loans
(in millions)
March 31, 2020:            
Mortgage loans:                   
Commercial$—
 $—
 $—
 $—
 $9,265
 $9,265
 $—
$—
 $—
 $—
 $—
 $9,447
 $9,447
 $—
 $9,447
 $—
 $—
Agricultural25
 5
 75
 105
 2,635
 2,740
 75
7
 17
 63
 87
 2,618
 2,705
 —
 2,705
 —
 —
Total Mortgage Loans$25
 $5
 $75
 $105
 $11,900
 $12,005
 $75
Total$7
 $17
 $63
 $87
 $12,065
 $12,152
 $—
 $12,152
 $—
 $—
                                
December 31, 2018:             
December 31, 2019:                   
Mortgage loans:                   
Commercial$—
 $—
 $27
 $27
 $9,103
 $9,130
 $—
$—
 $—
 $—
 $—
 $9,373
 $9,373
 $—
 $9,373
 $—
 $—
Agricultural18
 8
 42
 68
 2,627
 2,695
 40
57
 1
 66
 124
 2,593
 2,717
 66
 2,783
 —
 —
Total Mortgage Loans$18
 $8
 $69
 $95
 $11,730
 $11,825
 $40
Total$57
 $1
 $66
 $124
 $11,966
 $12,090
 $66
 $12,156
 $—
 $—
_______________
(1)Amounts presented at amortized cost basis.
At March 31, 2020 and December 31, 2019, the carrying values of problem mortgage loans that had been classified as non-accrual loans were $0 million and $0 million, respectively.

24
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

Trading Securities
At March 31, 2020 and December 31, 2019, respectively, the fair value of the Company’s trading securities was $6.1 billion and $6.6 billion. At March 31, 2020 and December 31, 2019, respectively, trading securities included the General Account’s investment in Separate Accounts, which had carrying values of $45 million and $58 million.
Net unrealized and realized gains (losses) on trading securities are included in Net investment income (loss) in the consolidated statements of income (loss). The table below shows a breakdown of Net investment income (loss) from trading securities during the three months ended March 31, 2020 and 2019:
Net Investment Income (Loss) from Trading Securities
 Three Months Ended March 31,
 2020 2019
 (in millions)
Net investment gains (losses) recognized during the period on securities held at the end of the period$(163) $274
Net investment gains (losses) recognized on securities sold during the period3
 (24)
Unrealized and realized gains (losses) on trading securities(160) 250
Interest and dividend income from trading securities49
 90
Net investment income (loss) from trading securities$(111) $340


4)    DERIVATIVES
The Company uses derivatives as part of its overall asset/liability risk management primarily to reduce exposures to equity market and interest rate risks. Derivative hedging strategies are designed to reduce these risks from an economic perspective and are all executed within the framework of a “Derivative Use Plan” approved by applicable states’ insurance law. Derivatives are generally not accounted for using hedge accounting, with the exception of Treasury Inflation-Protected Securities (“TIPS”), which is discussed further below. 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, fund performance, 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, bond and bond-index total return swaps, swaptions, variance swaps and equity options, credit and foreign exchange derivatives, as well as bond and repo transactions to support the hedging. The Company bought interest rate swaptions during the second quarter of 2019 to reduce the impact of unfavorable changes in interest rates. The derivative contracts are collectively managed in an effort to reduce the economic impact of unfavorable changes in guaranteed benefits’ exposures attributable to movements in capital markets. In addition, as part of its hedging strategy, the Company targets an asset level for all variable annuity products at or above a CTE98 level under most economic scenarios. CTEscenarios (Conditional Tail Expectation, or “CTE”, is a statistical measure of tail risk which quantifies the total asset requirement to sustain a loss if an event outside a given probability level has occurred. CTE98 denotes the financial resources a company would need to cover the average of the worst 2% of scenarios.)
Derivatives Utilized to Hedge Exposure to Variable Annuities with Guarantee Features
The Company has issued and continues to offer variable annuity products with GMxB 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 policyholders’ account balances would support. The risk associated with the GMIB feature is that under-performance of the financial markets could result in the present value of GMIB, in the event of annuitization, being higher than what accumulated policyholders’ account balances would support, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. The risk associated with products that have a GMxB derivative features liability is that under-performance of the financial markets could result in the GMxB derivative features’ benefits being higher than what accumulated policyholders’ account balances would support.
For GMxB features, the Company retains certain risks including basis, credit spread and some volatility risk and risk associated with actual versus expected actuarial assumptions for mortality, lapse and surrender, withdrawal and policyholder election rates, among other things. The derivative contracts are managed to correlate with changes in the value of the GMxB features that result from financial markets movements. A portion of exposure to realized equity volatility is hedged using equity options and variance swaps and a portion of exposure to credit risk is hedged using

25
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

total return swaps on fixed income indices. Additionally, the Company is party to total return swaps for which the


21
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

reference U.S. Treasury securities are contemporaneously purchased from the market and sold to the swap counterparty. As these transactions result in a transfer of control of the U.S. Treasury securities to the swap counterparty, the Company derecognizes these securities with consequent gain or loss from the sale. The Company has also 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 the Company. The reinsurance of the GMIB features is accounted for as a derivative.
The Company has in place an economic hedge program using interest rate swaps and treasuryU.S. Treasury futures to partially protect the overall profitability of future variable annuity sales against declining interest rates.
Derivatives Utilized to Hedge Crediting Rate Exposure on SCS, SIO, MSO and IUL Products/Investment Options
The Company hedges crediting rates in the Structured Capital Strategies (“SCS”) variable annuity, Structured Investment Option in the EQUI-VEST variable annuity series (“SIO”), Market Stabilizer Option (“MSO”) in the variable life insurance products and Indexed Universal Life (“IUL”) insurance products. These products permit the contract owner to participate in the performance of an index, ETF or commodity price movement up to a cap for a set period of time. They also contain a protection feature, in which the Company will absorb, up to a certain percentage, the loss of value in an index, ETF or commodity price, which varies by product segment.
In order to support the returns associated with these features, the Company enters into derivative contracts whose payouts, in combination with fixed income investments, emulate those of the index, ETF or commodity price, subject to caps and buffers, thereby substantially reducing any exposure to market-related earnings volatility.
Derivatives Used to Hedge Equity Market Risks Associated with the General Account’s Seed Money Investments in Retail Mutual Funds
The Company’s General Account seed money investments in retail mutual funds expose us to market risk, including equity market risk which is partially hedged through equity-index futures contracts to minimize such risk.
Derivatives Used to Hedge Universal Life Products with Secondary Guarantee (“ULSG”) Policy
The Company implemented a hedge program using fixed income total return swaps to mitigate the interest rate exposure in the ULSG policy statutory liability.
Derivatives Used for General Account Investment Portfolio
The Company maintains a strategy in its General Account investment portfolio to replicate the credit exposure of fixed maturity securities otherwise permissible for investment under its investment guidelines through the sale of credit default swaps (“CDSs”). Under the terms of these swaps, the Company receives quarterly fixed premiums that, together with any initial amount paid or received at trade inception, replicate the credit spread otherwise currently obtainable by purchasing the referenced entity’s bonds of similar maturity. These credit derivatives generally have remaining terms of five years or less and are recorded at fair value with changes in fair value, including the yield component that emerges from initial amounts paid or received, reported in Net derivative gains (losses).
The Company manages its credit exposure taking into consideration both cash and derivatives based positions and selects the reference entities in its replicated credit exposures in a manner consistent with its selection of fixed maturities. In addition, the Company generally transacts the sale of CDSs in single name reference entities of investment grade credit quality and with counterparties subject to collateral posting requirements. If there is an event of default by the reference entity or other such credit event as defined under the terms of the swap contract, the Company is obligated to perform under the credit derivative and, at the counterparty’s option, either pay the referenced amount of the contract less an auction-determined recovery amount or pay the referenced amount of the contract and receive in return the defaulted or similar security of the reference entity for recovery by sale at the contract settlement auction.
To date, there have been no events of default or circumstances indicative of a deterioration in the credit quality of the named referenced entities to require or suggest that the Company will have to perform under these CDSs. The maximum potential amount of future payments the Company could be required to make under these credit derivatives is limited to the par value of the referenced securities which is the U.S. dollar or euro-equivalent of the derivative’s notional amount. The Standard North American CDS Contract (“SNAC”) or Standard European Corporate Contract

26
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

(“STEC”) under which the Company executes these CDS sales transactions does not contain recourse provisions for recovery of amounts paid under the credit derivative.


22
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The Company purchased 30-year TIPS and other sovereign bonds, both inflation linkedinflation-linked and non-inflation linked, as General Account investments and enters into asset or cross-currency basis swaps, to result in payment of the given bond’s coupons and principal at maturity in the bond’s specified currency to the swap counterparty in return for fixed dollar amounts. These swaps, when considered in combination with the bonds, together result in a net position that is intended to replicate a dollar-denominated fixed-coupon cash bond with a yield higher than a term-equivalent U.S. Treasury bond.
In June 2019, the Company terminated a program to mitigate its duration gap using total return swaps for which the reference U.S. Treasury securities are sold to the swap counterparty under arrangements economically similar to repurchase agreements. The Company terminated $3.9 billion, in notional, of total return swaps reported in other invested assets in the Company’s balance sheet. The terminated total return swaps had a gain of $121 million.
The tables below present quantitative disclosures about the Company’s derivative instruments, including those embedded in other contracts required to be accounted for as derivative instruments.instruments:
Derivative Instruments by Category
At September 30, 2019 Gains (Losses) Reported in Net Income (Loss) Nine Months Ended September 30, 2019At March 31, 2020 Three Months Ended March 31, 2020
  Fair Value   Fair Value 
Notional
Amount
 
Asset
Derivatives
 
Liability
Derivatives
 Notional
Amount		 Derivative Assets 
Derivative
Liabilities
 
Net Derivative
Gains (Losses) (2)
(in millions)(in millions)
Freestanding Derivatives (1) (2):       
Derivative instruments:       
Freestanding derivatives (1):       
Equity contracts:              
Futures$6,686
 $—
 $—
 $(967)$5,625
 $—
 $—
 $258
Swaps9,561
 81
 56
 (1,263)12,857
 583
 115
 3,763
Options49,081
 3,946
 1,513
 1,241
29,975
 2,539
 3,083
 (3,843)
Interest rate contracts:              
Swaps25,781
 1,196
 382
 2,844
22,813
 2,472
 340
 3,578
Futures15,934
 —
 —
 183
26,261
 —
 —
 1,993
Swaptions3,201
 196
 —
 146
—
 —
 —
 9
Credit contracts:              
Credit default swaps1,232
 19
 —
 13
1,232
 9
 7
 (13)
Other freestanding contracts:              
Foreign currency contracts1,114
 5
 5
 (13)347
 —
 —
 (3)
Margin—
 —
 —
 —
—
 79
 171
 —
Collateral—
 —
 3,472
 —
—
 27
 3,753
 —
              
Embedded Derivatives (2):       
GMIB reinsurance contracts—
 2,853
 —
 882
GMxB derivative features liability (3)—
 —
 9,363
 (3,643)
SCS, SIO, MSO and IUL indexed features (4)—
 —
 2,178
 (1,498)
Total$112,590
 $8,296
 $16,969
 $(2,075)
Embedded derivatives:       
GMIB reinsurance contracts (3)—
 3,305
 —
 892
GMxB derivative features liability (4)—
 —
 9,509
 (1,165)
SCS, SIO, MSO and IUL indexed features (5)—
 —
 (966) 4,067
Total derivative instruments$99,110
 $9,014
 $16,012
 

       
Net derivative gains (losses) (6)
 
 
 $9,536
______________
(1)Reported in Other invested assets in the consolidated balance sheets.
(2)Reported in Net derivative gains (losses) in the consolidated statements of income (loss).
(3)Reported in GMIB reinsurance contract asset in the consolidated balance sheets.
(4)Reported in Future policy benefits and other policyholders’ liabilities in the consolidated balance sheets.
(4)(5)SCS, SIO, MSO and IUL indexed features are reportedReported in Policyholders’ account balances in the consolidated balance sheets.
(6)Investment fees of $3 million are reported in Net derivative gains (losses) in the consolidated statements of income (loss).




2327
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


Derivative Instruments by Category
 At December 31, 2018 Gains (Losses) Reported in Net Income (Loss) Nine Months Ended September 30, 2018
   Fair Value 
 
Notional
Amount
 
Asset
Derivatives
 
Liability
Derivatives
 
 (in millions)
Freestanding Derivatives (1) (2):       
Equity contracts:       
Futures$10,411
 $—
 $—
 $(489)
Swaps7,697
 140
 168
 (482)
Options21,698
 2,119
 1,163
 674
Interest rate contracts:       
Swaps27,003
 632
 194
 (1,012)
Futures11,448
 —
 —
 52
Credit contracts:       
Credit default swaps1,282
 17
 —
 4
Other freestanding contracts:       
Foreign currency contracts2,097
 27
 14
 59
Margin—
 7
 5
 —
Collateral—
 3
 1,564
 —
        
Embedded Derivatives (2):       
GMIB reinsurance contracts—
 1,991
 —
 (1,488)
GMxB derivative features liability (3)—
 —
 5,431
 394
SCS, SIO, MSO and IUL indexed features (4)—
 —
 687
 (814)
Total$81,636
 $4,936
 $9,226
 $(3,102)
 At December 31, 2019 Three Months Ended March 31, 2019
   Fair Value 
 Notional
Amount		 Derivative Assets 
Derivative
Liabilities
 
Net Derivative
Gains (Losses) (2)
 (in millions)
Derivative instruments:       
Freestanding derivatives (1):       
Equity contracts:       
Futures$3,510
 $—
 $—
 $(738)
Swaps17,064
 9
 279
 (973)
Options47,766
 5,080
 1,749
 1,101
Interest rate contracts:       
Swaps23,700
 467
 523
 648
Futures20,424
 —
 —
 55
Swaptions3,201
 16
 —
 —
Credit contracts:       
Credit default swaps1,232
 18
 —
 10
Other freestanding contracts:       
Foreign currency contracts501
 3
 —
 10
Margin—
 140
 —
 —
Collateral—
 72
 3,001
 —
        
Embedded derivatives:       
GMIB reinsurance contracts (3)—
 2,466
 —
 27
GMxB derivative features liability (4)—
 —
 8,246
 (409)
SCS, SIO, MSO and IUL indexed features (5)—
 —
 3,150
 (1,286)
Total derivative instruments$117,398
 $8,271
 $16,948
 

        
Net derivative gains (losses)
 
 
 $(1,555)
______________
(1)Reported in Other invested assets in the consolidated balance sheets.
(2)Reported in Net derivative gains (losses) in the consolidated statements of income (loss).
(3)Reported in GMIB reinsurance contract asset in the consolidated balance sheets.
(4)Reported in Future policy benefits and other policyholders’ liabilities in the consolidated balance sheets.
(4)(5)SCS, SIO, MSO and IUL indexed features are reportedReported in Policyholders’ account balances in the consolidated balance sheets.
Equity-Based and Treasury Futures Contracts Margin
All outstanding equity-based and treasury futures contracts at September 30,March 31, 2020 and December 31, 2019 are exchange-traded and net settled daily in cash. At September 30,March 31, 2020 and December 31, 2019, respectively, the Company had open exchange-traded futures positions on: (i) the S&P 500, Russell 2000 and Emerging Market indices, having initial margin requirements of $253$240 million and $58 million, (ii) the 2-year, 5-year and 10-year U.S. Treasury Notes on U.S. Treasury bonds and ultra-long bonds, having initial margin requirements of $44$649 million and $165 million, and (iii) the Euro Stoxx, FTSE 100, Topix, ASX 200 and European, Australasia, and Far East (“EAFE”) indices as well as corresponding currency futures on the Euro/U.S. dollar, Pound/U.S. dollar, Australian dollar/U.S. dollar, and Yen/U.S. dollar, having initial margin requirements of $26$159 million and $60 million.
Collateral Arrangements
The Company generally has executed a Credit Support Annex (“CSA”) under the International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) it maintains with each of its over-the-counter (“OTC”) derivative counterparties that requires both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities, U.S. government and government agency securities and investment grade corporate bonds. The Company nets the fair value of all derivative financial instruments with counterparties for which an ISDA Master Agreement and related CSA have been executed. At September 30, 2019March 31, 2020 and December 31, 2018, 2019,

28
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

respectively, the Company held $3.5$3.8 billion and $1.6$3.0 billion in cash and securities collateral delivered by trade counterparties, representing the fair value of the related derivative agreements. The unrestricted cash collateral is


24
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

reported in Other invested assets. The Company posted collateral of $–$27 million and $3$72 million at September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, in the normal operation of its collateral arrangements.
Securities Repurchase and Reverse Repurchase Transactions
Securities repurchase and reverse repurchase transactions are conducted by the Company under a standardized securities industry master agreement, amended to suit the requirements of each respective counterparty. The Company’s securities repurchase and reverse repurchase agreements are accounted for as secured borrowing or lending arrangements, respectively and are reported in the consolidated balance sheets on a gross basis. At September 30, 2019 and December 31, 2018, the balance outstanding under securities repurchase transactions was $– and $573 million, respectively. The Company utilized these repurchase and reverse repurchase agreements for asset liability and cash management purposes. For other instruments used for asset and liability management purposes, see Note 13.
The following table presents information about the Company’s offsetting of financial assets and liabilities and derivative instruments at September 30, 2019.March 31, 2020:
Offsetting of Financial Assets and Liabilities and Derivative Instruments
At September 30, 2019March 31, 2020
 Gross Amount Recognized Gross Amount Offset in the Balance Sheets Net Amount Presented in the Balance Sheets Gross Amount not Offset in the Balance Sheets (1) Net Amount
 (in millions)    
Assets:         
Derivative assets$5,710
 $5,475
 $235
 $(162) $73
Other financial assets1,360
 —
 1,360
 —
 1,360
Other invested assets$7,070
 $5,475
 $1,595
 $(162) $1,433
          
Liabilities:         
Derivative liabilities$7,307
 $5,475
 $1,832
 $—
 $1,832
Other financial liabilities1,564
 —
 1,564
 —
 1,564
Other liabilities$8,871
 $5,475
 $3,396
 $—
 $3,396
______________
 
Gross Amount
Recognized
 
Gross Amount
Offset in the Balance Sheets
 
Net Amount
Presented in the
Balance Sheets
 (in millions)
Assets:     
Total derivatives$5,445
 $5,404
 $41
Other financial instruments1,712
 —
 1,712
Other invested assets$7,157
 $5,404
 $1,753
      
Liabilities:     
Total derivatives$5,429
 $5,404
 $25
Other financial liabilities1,343
 —
 1,343
Other liabilities$6,772
 $5,404
 $1,368
(1) Primarily financial instrument sent (held).

The following table presents information about the Company’s gross collateral amounts that are not offset in the consolidated balance sheets at September 30, 2019.
Collateral Amounts Not Offset in the Consolidated Balance Sheets
At September 30, 2019
 Net Amount of Derivative Contracts Collateral (Received)/Held  
 
Financial
Instruments
 Cash 
Net
Amount
 (in millions)
Assets:      
Total derivatives$3,488
 $10
 $3,437
 $41
Other financial instruments1,712
 —
 —
 1,712
Other invested assets$5,200
 $10
 $3,437
 $1,753
        
Liabilities:      
Total derivatives$25
 $—
 $—
 $25
Other financial liabilities1,343
 —
 —
 1,343
Other liabilities$1,368
 $—
 $—
 $1,368

The Company had no securities sold under agreements to repurchase at September 30, 2019.


25
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table presents information about the Company’s offsetting of financial assets and liabilities and derivative instruments atDecember 31, 2018.2019.
Offsetting of Financial Assets and Liabilities and Derivative Instruments
At December 31, 20182019
 Gross Amount Recognized Gross Amount Offset in the Balance Sheets Net Amount Presented in the Balance Sheets Gross Amount not Offset in the Balance Sheets (1) Net Amount
 (in millions)
Assets:         
Derivative assets$5,804
 $5,429
 $375
 $(77) $298
Other financial instruments1,781
 —
 1,781
 —
 1,781
Other invested assets$7,585
 $5,429
 $2,156
 $(77) $2,079
          
Liabilities:         
Derivative liabilities$5,474
 $5,429
 $45
 $—
 $45
Other financial liabilities1,723
 —
 1,723
 —
 1,723
Other liabilities$7,197
 $5,429
 $1,768
 $—
 $1,768
 Gross Amount Recognized Gross Amount Offset in the Balance Sheets Net Amount Presented in the Balance Sheets
 (in millions)
Assets:     
Total derivatives$2,946
 $2,912
 $34
Other financial instruments1,520
 —
 1,520
Other invested assets$4,466
 $2,912
 $1,554
Securities purchased under agreement to resell$—
 $—
 $—
      
Liabilities:     
Total derivatives$3,109
 $2,912
 $197
Other financial liabilities1,263
 —
 1,263
Other liabilities$4,372
 $2,912
 $1,460
Securities sold under agreement to repurchase (1)$571
 $—
 $571
______________
(1)Excludes expense of $2 million in Securities sold under agreement to repurchase.Primarily financial instrument sent (held).
The following table presents information about
5)    CLOSED BLOCK
As a result of demutualization, the Company’s gross collateral amountsClosed Block was established in 1992 for the benefit of certain individual participating policies that were in force on that date. Assets, liabilities and earnings of the Closed Block are specifically identified to support its participating policyholders.
Assets allocated to the Closed Block inure solely to the benefit of the Closed Block policyholders and will not offset inrevert to the consolidated balance sheets at December 31, 2018.benefit of the Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of the Company’s General Account, any of its Separate Accounts or any affiliate of the Company without the approval of the New York State Department of Financial Services (the “NYDFS”). Closed Block
Collateral Amounts Not Offset in the Consolidated Balance Sheets
At December 31, 2018
 Net Amount of Derivative Contracts Collateral (Received)/Held  
 Financial Instruments Cash (3) 
Net
Amount
 (in millions)
Assets:       
Total derivatives$1,397
 $—
 $(1,363) $34
Other financial instruments1,520
 —
 —
 1,520
Other invested assets$2,917
 $—
 $(1,363) $1,554
Securities purchased under agreement to resell$—
 $—
 $—
 $—
        
Liabilities:       
Total derivatives$197
 $—
 $—
 $197
Other financial liabilities1,263
 —
 —
 1,263
Other liabilities$1,460
 $—
 $—
 $1,460
Securities sold under agreement to repurchase (1) (2) (3)$571
 $(588) $—
 $(17)
______________
(1)Excludes expense of $2 million in Securities sold under agreement to repurchase.
(2)U.S. Treasury and agency securities are in Fixed maturities available-for-sale on the consolidated balance sheets.
(3)Cash is included in Cash and cash equivalents on consolidated balance sheets.
The following table presents information about repurchase agreements accounted for as secured borrowings in the consolidated balance sheets at December 31, 2018.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited)


Repurchase Agreement Accountedassets and liabilities are carried on the same basis as similar assets and liabilities held in the General Account. For more information on the Closed Block, see Note 5 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for as Secured Borrowings
Atthe year ended December 31, 20182019.
 Remaining Contractual Maturity of the Agreements
 Overnight and Continuous Up to 30 days 30–90 days Greater Than 90 days Total
 (in millions)
Securities sold under agreement to repurchase (1):         
U.S. Treasury and agency securities$—
 $571
 $—
 $—
 $571
Total$—
 $571
 $—
 $—
 $571
______________
(1)Excludes expense of $2 million in Securities sold under agreement to repurchase on the consolidated balance sheets.
5)    CLOSED BLOCK
Summarized financial information for the Company’s Closed Block is as follows:
 March 31, 2020 December 31, 2019
 (in millions)
Closed Block Liabilities:   
Future policy benefits, policyholders’ account balances and other$6,404
 $6,478
Policyholder dividend obligation—
 2
Other liabilities76
 38
Total Closed Block liabilities6,480
 6,518
    
Assets Designated to the Closed Block:   
Fixed maturities available-for-sale, at fair value, net of allowance for credit losses of $0 and $0 (amortized cost of $3,557 and $3,558)3,684
 3,754
Mortgage loans on real estate, net of allowance for credit losses of $4 and $01,742
 1,759
Policy loans676
 706
Cash and other invested assets112
 82
Other assets133
 145
Total assets designated to the Closed Block6,347
 6,446
    
Excess of Closed Block liabilities over assets designated to the Closed Block133
 72
Amounts included in accumulated other comprehensive income (loss):   
Net unrealized investment gains (losses), net of policyholders’ dividend obligation: $0 and $(2); and net of income tax: $27 and $41111
 164
Maximum future earnings to be recognized from Closed Block assets and liabilities$244
 $236
 September 30, 2019 December 31, 2018
 (in millions)
Closed Block Liabilities:   
Future policy benefits, policyholders’ account balances and other$6,558
 $6,709
Policyholder dividend obligation5
 —
Other liabilities61
 47
Total Closed Block liabilities6,624
 6,756
    
Assets Designated to the Closed Block:   
Fixed maturities, available-for-sale, at fair value (amortized cost of $3,648 and $3,680)3,869
 3,672
Mortgage loans on real estate, net of valuation allowance of $0 and $01,800
 1,824
Policy loans716
 736
Cash and other invested assets10
 76
Other assets167
 179
Total assets designated to the Closed Block6,562
 6,487
    
Excess of Closed Block liabilities over assets designated to the Closed Block62
 269
Amounts included in accumulated other comprehensive income (loss):   
Net unrealized investment gains (losses), net of policyholders' dividend obligation $5 and $0219
 8
Maximum future earnings to be recognized from Closed Block assets and liabilities$281
 $277


27
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)



The Company’s Closed Block revenues and expenses arewere as follows:
 Three Months Ended March 31,
 2020 2019
 (in millions)
Revenues:   
Premiums and other income$42
 $48
Net investment income (loss)66
 67
Investment gains (losses), net—
 (1)
Total revenues108
 114
    
Benefits and Other Deductions:   
Policyholders’ benefits and dividends103
 121
Other operating costs and expenses—
 1
Total benefits and other deductions103
 122
Net income (loss), before income taxes5
 (8)
Income tax (expense) benefit—
 (1)
Net income (loss)$5
 $(9)


30
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (in millions)
Revenues:       
Premiums and other income$42
 $44
 $136
 $144
Net investment income (loss)69
 72
 208
 218
Investment gains (losses), net—
 —
 (1) 1
Total revenues111
 116
 343
 363
        
Benefits and Other Deductions:       
Policyholders’ benefits and dividends108
 123
 343
 372
Other operating costs and expenses—
 1
 1
 3
Total benefits and other deductions108
 124
 344
 375
Net income (loss) before income taxes3
 (8) (1) (12)
Income tax (expense) benefit—
 2
 (2) 2
Net income (loss)$3
 $(6) $(3) $(10)
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

6)    INSURANCE LIABILITIES
Variable Annuity Contracts – GMDB, GMIB, GIB and GWBL and Other Features
The Company has certain variable annuity contracts with GMDB, GMIB, GIB and GWBL and other features in-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 either a five year or an annual reset; or
Withdrawal: the withdrawal is guaranteed up to a maximum amount per year for life.
Liabilities for Variable Annuity Contracts with GMDB and GMIB Featureswithout No-Lapse Guarantee Rider (“NLG”) Feature
The change in the liabilities for variable annuity contracts with GMDB and GMIB features and nowithout a NLG guarantee rider feature are summarized in the tables below. The amounts for the direct contracts (before reinsurance ceded) and assumed contracts are reflected in the consolidated balance sheets in Future policy benefits and other policyholders’ liabilities. The amounts for the ceded contracts are reflected in the consolidated balance sheets in Amounts due from reinsurers.


28
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Change in Liability for Variable Annuity Contracts with GMDB and GMIB Features and No NLG Feature
For the Three and Nine Months Ended September 30,March 31, 2020 and 2019 and 2018
 GMDB GMIB
 Direct Ceded Direct Ceded
 (in millions)
Balance at January 1, 20204,779
 (98) 4,688
 (2,466)
Paid guarantee benefits(111) 5
 (74) 20
Other changes in reserve379
 (12) 1,683
 (859)
Balance at March 31, 2020$5,047
 $(105) $6,297
 $(3,305)
        
Balance at January 1, 20194,654
 (107) 3,741
 (1,991)
Paid guarantee benefits(118) 4
 (56) 21
Other changes in reserve129
 —
 55
 (39)
Balance at March 31, 2019$4,665
 $(103) $3,740
 $(2,009)
 Three Months Ended September 30,
 2019 2018
 Direct Ceded Direct Ceded
 (in millions)
Beginning balance$4,710
 $(100) $4,124
 $(97)
Paid guarantee benefits(102) 2
 (91) 3
Other changes in reserve159
 (3) 485
 (9)
Ending balance$4,767
 $(101) $4,518
 $(103)
        
 Nine Months Ended September 30,
 2019 2018
 Direct Ceded Direct Ceded
 (in millions)
Beginning balance$4,654
 $(107) $4,054
 $(2,030)
Paid guarantee benefits(328) 11
 (291) 67
Other changes in reserve441
 (5) 755
 1,860
Ending balance$4,767
 $(101) $4,518
 $(103)
Change in Liability for Variable Annuity Contracts with GMIB Features and No NLG Feature
Three and Nine Months Ended September 30, 2019 and 2018
 Three Months Ended September 30,
 2019 2018
 Direct Ceded Direct Ceded
 (in millions)
Beginning balance$3,759
 $(2,196) $4,701
 $(1,825)
Paid guarantee benefits(70) 20
 (43) 1
Other changes in reserve992
 (677) (1,053) 253
Ending balance$4,681
 $(2,853) $3,605
 $(1,571)
        
 Nine Months Ended September 30,
 2019 2018
 Direct Ceded Direct Ceded
 (in millions)
Beginning balance$3,741
 $(1,991) $4,754
 $(10,488)
Paid guarantee benefits(182) 55
 (108) 49
Other changes in reserve1,122
 (917) (1,041) 8,868
Ending balance$4,681
 $(2,853) $3,605
 $(1,571)


Liabilities for Embedded and Freestanding Insurance Related Derivatives
The liability for the GMxB derivative features, liability, the liability for SCS, SIO, MSO and IUL indexed features and the asset and liability for the GMIB reinsurance contracts are considered embedded or freestanding insurance derivatives and are reported at fair value. For the fair value of the assets and liabilitiesassociated with these embedded or freestanding insurance derivatives,see Note 7.7.
Account Values and Net Amount at Risk
Account Values and Net Amount at Risk (“NAR”) for direct variable annuity contracts in-forcein force with GMDB and GMIB features as of September 30, 2019March 31, 2020 are presented in the following tables by guarantee type. For contracts with the GMDB feature, the NAR in the event of death is the amount by which the GMDB feature exceeds the related


29
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Account Values. For contracts with the GMIB feature, the NAR in the event of annuitizationis the amount by which the present value of the GMIB benefits exceed the 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 features may also offer GMIB guarantees in the same contract, the GMDB and GMIB amounts listed are not mutually exclusive:exclusive.

31
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

Direct Variable Annuity Contracts with GMDB and GMIB Features
at September 30, 2019March 31, 2020
 Guarantee Type
 Return of Premium Ratchet Roll-Up Combo Total
 (in millions, except age and interest rate)
Variable annuity contracts with GMDB features         
Account Values invested in:         
General Account$14,662
 $92
 $58
 $176
 $14,988
Separate Accounts40,733
 7,887
 2,607
 27,713
 78,940
Total Account Values$55,395
 $7,979
 $2,665
 $27,889
 $93,928
          
Net Amount at Risk, gross$715
 $877
 $2,296
 $22,881
 $26,769
Net Amount at Risk, net of amounts reinsured$715
 $857
 $1,647
 $22,881
 $26,100
          
Average attained age of policyholders (in years)51.1
 67.8
 74.4
 69.6
 55.1
Percentage of policyholders over age 7010.7% 45.7% 68.7% 51.6% 19.5%
Range of contractually specified interest ratesN/A
 N/A
 3% - 6%
 3% - 6.5%
 3% - 6.5%
          
Variable annuity contracts with GMIB features         
Account Values invested in:         
General Account$—
 $—
 $18
 $228
 $246
Separate Accounts—
 —
 20,724
 29,476
 50,200
Total Account Values$—
 $—
 $20,742
 $29,704
 $50,446
          
Net Amount at Risk, gross$—
 $—
 $1,360
 $17,568
 $18,928
Net Amount at Risk, net of amounts reinsured$—
 $—
 $425
 $15,774
 $16,199
          
Average attained age of policyholders (in years)N/A
 N/A
 68.9
 69.7
 69.6
Weighted average years remaining until annuitizationN/A
 N/A
 1.6
 0.3
 0.4
Range of contractually specified interest ratesN/A
 N/A
 3% - 6%
 3% - 6.5%
 3% - 6.5%

 Guarantee Type
 
Return of
Premium
 Ratchet Roll-Up Combo Total
 (in millions, except age and interest rate)
Variable annuity contracts with GMDB features         
Account Values invested in:         
General Account$14,483
 $94
 $58
 $181
 $14,816
Separate Accounts46,286
 8,937
 3,071
 32,067
 90,361
Total Account Values$60,769
 $9,031
 $3,129
 $32,248
 $105,177
          
Net amount at risk, gross$123
 $80
 $1,980
 $18,846
 $21,029
Net amount at risk, net of amounts reinsured$123
 $76
 $1,388
 $18,846
 $20,433
          
Average attained age of policyholders (in years)51.2 67.4 74.1 69.2 55.1
Percentage of policyholders over age 7010.5% 44.9% 67.5% 49.9% 19.3%
Range of contractually specified interest ratesN/A
 N/A
 3% - 6%
 3% - 6.5%
 3% - 6.5%
          
Variable annuity contracts with GMIB features         
Account Values invested in:         
General Account$—
 $—
 $20
 $233
 $253
Separate Accounts—
 —
 22,484
 34,718
 57,202
Total Account Values$—
 $—
 $22,504
 $34,951
 $57,455
          
Net amount at risk, gross$—
 $—
 $981
 $10,696
 $11,677
Net amount at risk, net of amounts reinsured$—
 $—
 $309
 $9,678
 $9,987
          
Average attained age of policyholders (in years)N/A N/A 68.7
 69.3
 69.2
Weighted-average number of years remaining until annuitizationN/A N/A 1.7
 0.4
 0.5
Range of contractually specified interest ratesN/A N/A 3% - 6% 3% - 6.5% 3% - 6.5%
For more information about the reinsurance programs of the Company’s GMDB and GMIB exposure, see “Reinsurance Agreements”“Reinsurance” in Note 10 of the Notes to the Consolidated Financial StatementsCompany’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018.2019.
Separate Accounts Investments by Investment Category Underlying Variable Annuity Contracts with GMDB and GMIB Features
The total account valuesAccount 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 that 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 features. The investment performance of the assets impacts the related account valuesAccount Values and, consequently, the


30
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NAR associated with the GMDB and GMIB benefits and guarantees. Because the Company’s variable annuity contracts offer both GMDB and GMIB features, GMDB and GMIB amounts are not mutually exclusive.

32
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

Investment in Variable Insurance Trust Mutual Funds
 March 31, 2020 December 31, 2019
Mutual Fund TypeGMDB GMIB GMDB GMIB
 (in millions)
Equity$32,913
 $13,765
 $42,489
 $17,941
Fixed income5,151
 2,680
 5,263
 2,699
Balanced39,965
 33,483
 45,871
 38,445
Other911
 272
 865
 263
Total$78,940
 $50,200
 $94,488
 $59,348
 September 30, 2019 December 31, 2018
Mutual Fund TypeGMDB GMIB GMDB GMIB
 (in millions)
Equity$39,866
 $17,056
 $35,541
 $15,759
Fixed income5,277
 2,748
 5,173
 2,812
Balanced44,347
 37,132
 41,588
 33,974
Other871
 266
 852
 290
Total$90,361
 $57,202
 $83,154
 $52,835

Hedging Programs for GMDB, GMIB, GIB and Other Features
The Company has a program intended to hedge certain risks associated first with the GMDB feature and with the GMIB feature of the Accumulator series of variable annuity products. The program has also been extended to cover other guaranteed benefits as they have been made available. This program utilizes derivative contracts, such as exchange-traded equity, currency and interest rate futures contracts, total return and/or equity swaps, interest rate swap and floor contracts, swaptions, variance swaps as well as equity options, that collectively are managed in an effort to reduce the economic impact of unfavorable changes in guaranteed benefits’ exposures attributable to movements in the capital markets. At the present time, this program hedges certain economic risks on products sold from 2001 forward, to the extent such risks are not externally reinsured.
These programs do not qualify for hedge accounting treatment. Therefore, gains (losses) on the derivatives contracts used in these programs, including current period changes in fair value, are recognized in Net derivative gains (losses) in the period in which they occur, and may contribute to income (loss) volatility.
Variable and Interest-Sensitive Life Insurance Policies - NLG
The NLG 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 NLG remains in effect so long as the policy meets a contractually specified premium funding test and certain other requirements.
The change in the fair value of the NLG feature reflected in the General Account in Future policy benefits and other policyholders’ liabilities in the consolidated balance sheets is summarized in the table below.
 Direct Liability Reinsurance Ceded Net
 (in millions)
Balance at January 1, 2020893
 (807) 86
Paid guarantee benefits(13) —
 (13)
Other changes in reserves40
 (20) 20
Balance at March 31, 2020$920
 $(827) $93
      
Balance at January 1, 2019787
 (733) 54
Paid guarantee benefits(7) —
 (7)
Other changes in reserves21
 (11) 10
Balance at March 31, 2019$801
 $(744) $57


31
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 Three Months Ended September 30,
 2019 2018
 
Direct
Liability
 
Reinsurance
Ceded
 Net 
Direct
Liability
 
Reinsurance
Ceded
 Net
 (in millions)
Beginning balance$819
 $(755) $64
 $716
 $(689) $27
Paid guaranteed benefits(6) —
 (6) (4) —
 (4)
Other changes in reserves52
 (37) 15
 43
 (28) 15
Ending balance$865
 $(792) $73
 $755
 $(717) $38
            
 Nine Months Ended September 30,
 2019 2018
 
Direct
Liability
 
Reinsurance
Ceded
 Net 
Direct
Liability
 
Reinsurance
Ceded
 Net
 (in millions)
Beginning balance$787
 $(733) $54
 $692
 $(664) $28
Paid guaranteed benefits(16) —
 (16) (13) —
 (13)
Other changes in reserves94
 (59) 35
 76
 (53) 23
Ending balance$865
 $(792) $73
 $755
 $(717) $38

7)    FAIR VALUE DISCLOSURES
The accounting guidance establishes 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 1Unadjusted quoted prices for identical instruments in active markets. Level 1 fair values generally are supported by market transactions that occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 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.

33
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

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.
The Company uses unadjusted quoted market prices to measure fair value 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 the Company’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 value cannot be substantiated by direct comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument.
Management is responsible for the determination of the value of investments carried at fair value and the supporting methodologies and assumptions. Under the terms of various service agreements, the Company often utilizes independent valuation service providers to gather, analyze, and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual securities. These independent valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested. As further described below with respect to specific asset classes, these inputs include, but are not limited to, market prices for recent trades and transactions in comparable securities, benchmark yields, interest rate yield curves, credit spreads, quoted prices for similar securities, and other market-


32
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

observablemarket-observable information, as applicable. Specific attributes of the security being valued also are considered, including its term, interest rate, credit rating, industry sector, and when applicable, collateral quality and other security- or issuer-specific information. When insufficient market observable information is available upon which to measure fair value, the Company either will request brokers knowledgeable about these securities to provide a non-binding quote or will employ internal valuation models. Fair values received from independent valuation service providers and brokers and those internally modeled or otherwise estimated are assessed for reasonableness.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below. At September 30, 2019March 31, 2020 and December 31, 2018,2019, no assets were required to be measured at fair value on a non-recurring basis. Fair value measurements are required on a non-recurring basis for certain assets, including goodwill and mortgage loans on real estate, only when an impairment or other event occurs. When such fair value measurements are recorded, they must be classified and disclosed within the fair value hierarchy.

34
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

Fair Value Measurements at September 30, 2019March 31, 2020
 Level 1 Level 2 Level 3 Total
 (in millions)
Assets:       
Investments:       
Fixed maturities, AFS:       
Corporate (1)$—
 $43,464
 $1,174
 $44,638
U.S. Treasury, government and agency—
 18,450
 —
 18,450
States and political subdivisions—
 633
 36
 669
Foreign governments—
 496
 —
 496
Residential mortgage-backed (2)—
 166
 —
 166
Asset-backed (3)—
 1,350
 40
 1,390
Commercial mortgage-backed—
 39
 —
 39
Redeemable preferred stock250
 273
 —
 523
Total fixed maturities, AFS250
 64,871
 1,250
 66,371
Other equity investments12
 —
 —
 12
Trading securities265
 5,811
 —
 6,076
Other invested assets:       
Short-term investments—
 124
 —
 124
Assets of consolidated VIEs/VOEs—
 —
 15
 15
Swaps—
 2,600
 —
 2,600
Credit default swaps—
 2
 —
 2
Options—
 (544) —
 (544)
Total other invested assets—
 2,182

15

2,197
Cash equivalents7,100
 —
 —
 7,100
GMIB reinsurance contracts asset—
 —
 3,305
 3,305
Separate Accounts assets (4)100,873
 2,618
 —
 103,491
Total Assets$108,500
 $75,482
 $4,570
 $188,552
        
Liabilities:       
GMxB derivative features’ liability$—
 $—
 $9,509
 $9,509
SCS, SIO, MSO and IUL indexed features’ liability—
 (966) —
 (966)
Total Liabilities$—
 $(966) $9,509
 $8,543
 Level 1 Level 2 Level 3 Total
 (in millions)
Assets:       
Investments:       
Fixed maturities, available-for-sale:       
Corporate (1)$—
 $42,153
 $1,208
 $43,361
U.S. Treasury, government and agency—
 15,724
 —
 15,724
States and political subdivisions—
 606
 39
 645
Foreign governments—
 517
 —
 517
Residential mortgage-backed (2)—
 182
 —
 182
Asset-backed (3)—
 70
 532
 602
Redeemable preferred stock141
 273
 —
 414
Total fixed maturities, available-for-sale141
 59,525
 1,779
 61,445
Other equity investments13
 —
 —
 13
Trading securities314
 8,130
 —
 8,444
Other invested assets:       
Short-term investments—
 437
 —
 437
Assets of consolidated VIEs/VOEs—
 —
 16
 16
Swaps—
 839
 —
 839
Credit default swaps—
 19
 —
 19
Options—
 2,433
 —
 2,433
Swaptions—
 196
 —
 196
Total other invested assets—
 3,924
 16
 3,940
Cash equivalents1,379
 —
 —
 1,379
GMIB reinsurance contract asset—
 —
 2,853
 2,853
Separate Accounts assets115,405
 2,927
 358
 118,690
Total Assets$117,252
 $74,506
 $5,006
 $196,764
        
Liabilities:       
GMxB derivative features’ liability$—
 $—
 $9,363
 $9,363
SCS, SIO, MSO and IUL indexed features’ liability—
 2,178
 —
 2,178
Total Liabilities$—
 $2,178
 $9,363
 $11,541
______________
(1)Corporate fixed maturities includes both public and private issues.
(2)Includes publicly traded agency pass-through securities and collateralized obligations.
(3)Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
(4)Separate Accounts assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate and commercial mortgages. At March 31, 2020 the fair value of such investments was $361 million.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


Fair Value Measurements at December 31, 20182019
 Level 1 Level 2 Level 3 Total
 (in millions)
Assets:       
Investments:       
Fixed maturities, AFS:       
Corporate (1)$—
 $43,218
 $1,246
 $44,464
U.S. Treasury, government and agency—
 15,231
 —
 15,231
States and political subdivisions—
 610
 39
 649
Foreign governments—
 490
 —
 490
Residential mortgage-backed (2)—
 173
 —
 173
Asset-backed (3)—
 744
 100
 844
Redeemable preferred stock237
 274
 —
 511
Total fixed maturities, AFS237
 60,740
 1,385
 62,362
Other equity investments13
 —
 —
 13
Trading securities321
 6,277
 —
 6,598
Other invested assets:      
Short-term investments—
 468
 —
 468
Assets of consolidated VIEs/VOEs—
 —
 16
 16
Swaps—
 (326) —
 (326)
Credit default swaps—
 18
 —
 18
Options—
 3,331
 —
 3,331
Total other invested assets—
 3,491
 16
 3,507
Cash equivalents1,155
 —
 —
 1,155
GMIB reinsurance contracts asset—
 —
 2,466
 2,466
Separate Accounts assets (4)121,184
 2,878
 —
 124,062
Total Assets$122,910
 $73,386
 $3,867
 $200,163
        
Liabilities:       
GMxB derivative features’ liability$—
 $—
 $8,246
 $8,246
SCS, SIO, MSO and IUL indexed features’ liability—
 3,150
 —
 3,150
Total Liabilities$—
 $3,150
 $8,246
 $11,396
 Level 1 Level 2 Level 3 Total
 (in millions)
Assets:       
Investments:       
Fixed maturities, available-for-sale:       
Corporate (1)$—
 $25,202
 $1,174
 $26,376
U.S. Treasury, government and agency—
 13,335
 —
 13,335
States and political subdivisions—
 416
 38
 454
Foreign governments—
 519
 —
 519
Residential mortgage-backed (2)—
 202
 —
 202
Asset-backed (3)—
 71
 519
 590
Redeemable preferred stock163
 276
 —
 439
Total fixed maturities, available-for-sale163
 40,021
 1,731
 41,915
Other equity investments12
 —
 —
 12
Trading securities218
 14,919
 29
 15,166
Other invested assets:       
Short-term investments—
 412
 —
 412
Assets of consolidated VIEs/VOEs—
 —
 19
 19
Swaps—
 423
 —
 423
Credit default swaps—
 17
 —
 17
Options—
 956
 —
 956
Total other invested assets—
 1,808
 19
 1,827
Cash equivalents2,160
 —
 —
 2,160
GMIB reinsurance contracts asset—
 —
 1,991
 1,991
Separate Accounts assets105,159
 2,733
 374
 108,266
Total Assets$107,712
 $59,481
 $4,144
 $171,337
        
Liabilities:       
GMxB derivative features’ liability$—
 $—
 $5,431
 $5,431
SCS, SIO, MSO and IUL indexed features’ liability—
 687
 —
 687
Total Liabilities$—
 $687
 $5,431
 $6,118
______________
(1)Corporate fixed maturities includes both public and private issues.
(2)Includes publicly traded agency pass-through securities and collateralized obligations.
(3)Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.
(4)Separate Accounts assets included in the fair value hierarchy exclude investments in entities that calculate NAV per share (or its equivalent) as a practical expedient. Such investments excluded from the fair value hierarchy include investments in real estate and commercial mortgages. At December 31, 2019 the fair value of such investments was $356 million.
Public Fixed Maturities
The fair values of the Company’s public fixed maturities are generally based on prices obtained from independent valuation service providers and for which the Company maintains a vendor hierarchy by asset type based on historical pricing experience and vendor expertise. Although each security generally is priced by multiple independent valuation service providers, the Company ultimately uses the price received from the independent valuation service provider highest in the vendor hierarchy based on the respective asset type, with limited exception. To validate reasonableness, prices also are internally reviewed by those with relevant expertise through comparison with directly observed recent market trades. Consistent with the fair value hierarchy, public fixed maturities validated in this manner generally are reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs.

36
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

Private Fixed Maturities
The fair values of the Company’s private fixed maturities are determined from prices obtained from independent valuation service providers. Prices not obtained from an independent valuation service provider are determined by using a discounted cash flow model or a market comparable company valuation technique. In certain cases, these models use observable inputs with a discount rate based upon the average of spread surveys collected from private


34
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

market intermediaries who are active in both primary and secondary transactions, taking into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Generally, these securities have been reflected within Level 2. For certain private fixed maturities, the discounted cash flow model or a market comparable company valuation technique may also incorporate unobservable inputs, which reflect the Company’s own assumptions about the inputs market participants would use in pricing the asset. To the extent management determines that such unobservable inputs are significant to the fair value measurement of a security, a Level 3 classification generally is made.
Freestanding Derivative Positions
The net fair value of the Company’s freestanding derivative positions as disclosed in Note 4 are generally based on prices obtained either from independent valuation service providers or derived by applying market inputs from recognized vendors into industry standard pricing models. The majority of these derivative contracts are traded in the OTC derivative market and are 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, including overnight index swap (“OIS”) 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 sources or reliably interpolated if less observable.
Level Classifications of the Company’s Financial Instruments
Financial Instruments Classified as Level 1
Investments classified as Level 1 primarily include redeemable preferred stock, trading securities, 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-term nature.
Financial Instruments Classified as Level 2
Investments classified as Level 2 are measured at fair value on a recurring basis and primarily include U.S. government and agency securities and certain corporate debt securities, such as public and 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.
Observable inputs generally used to measure the fair value of securities classified as Level 2 include benchmark yields, reported secondary trades, issuer spreads, benchmark securities and other 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. The Company’s AAA-rated mortgage- and asset-backed securities are classified as Level 2 for which the observability of market inputs to their pricing models is supported by sufficient, albeit more recently contracted, market activity in these sectors.
Certain Company products, such as the SCS and EQUI-VEST variable annuity products, IUL and the MSO fund available in some life contracts offer investment options which permit the contract owner to participate in the performance of an index, ETF or commodity price. These investment options, which depending on the product and on the index selected can currently have one, three, five or six yearterms, provide for participation in the performance of specified indices, ETF or commodity price movement up to a segment-specific declared maximum rate. Under certain conditions that vary by product, e.g., holding these segments for the full term, these segments also shield policyholders

37
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

from some or all negative investment performance associated with these indices, ETF or commodity prices. These investment options have defined formulaic liability amounts, and the current values of the option component of these segment reserves are accounted for as Level 2 embedded derivatives. The fair values of these embedded derivatives are based on data obtained from independent valuation service providers.
Financial Instruments Classified as Level 3
The Company’s investments classified as Level 3 primarily include corporate debt securities, such as private fixed maturities and asset-backed securities. 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 are fixed maturities with indicative pricing obtained from brokers that otherwise could not be corroborated to market observable data.


35
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The Company also issues certain benefits on its variable annuity products that are accounted for as derivatives and are also considered Level 3. The GMIBNLG feature allows the policyholder to receive guaranteed minimum lifetime annuity payments based on predetermined annuity purchase rates applied to the contract’s benefit base if and when the contract account value is depleted and the NLG feature is activated. The GMWB feature allows the policyholder to withdraw at minimum, over the life of the contract, an amount based on the contract’s benefit base. The GWBL feature allows the policyholder to withdraw, each year for the life of the contract, a specified annual percentage of an amount based on the contract’s benefit base. The GMAB feature increases the contract account value at the end of a specified period to a GMAB base. The GIB feature provides a lifetime annuity based on predetermined annuity purchase rates if and when the contract account value is depleted. This lifetime annuity is based on predetermined annuity purchase rates applied to a GIB base.
Level 3 also includes the GMIB reinsurance contract assets which are accounted for as derivative contracts. The GMIB reinsurance contract asset and liabilities’ fair value reflects the present value of reinsurance premiums and recoveries and risk margins over a range of market consistent economic scenarios while GMxB derivative features liability reflects the present value of expected future payments (benefits) less fees, adjusted for risk margins and nonperformance risk, attributable to GMxB derivative features’ liability over a range of market-consistent economic scenarios.
The valuations of the GMIB reinsurance contract asset and GMxB derivative features liability incorporate significant non-observable assumptions related to policyholder behavior, risk margins and projections of equity Separate Accounts funds. The credit risks of the counterparty and of the Company are considered in determining the fair values of its GMIB reinsurance contract asset and GMxB derivative features liability positions, respectively, after taking into account the effects of collateral arrangements. Incremental adjustment to the swap curve for non-performance risk is made to the fair values of the GMIB reinsurance contract asset and liabilities and GMIBNLG feature to reflect the claims-paying ratings of counterparties and the Company. Equity and fixed income volatilities were modeled to reflect current market volatilities. Due to the unique, long duration of the GMIBNLG feature, adjustments were made to the equity volatilities to remove the illiquidity bias associated with the longer tenors and risk margins were applied to the non-capital markets inputs to the GMIBNLG valuations.
After giving consideration to collateral arrangements, the Company reduced the fair value of its GMIB reinsurance contract asset by $237$585 million and $184$175 million at September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, to recognize incremental counterparty non-performance risk.
Lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, which include other factors such as considering surrender charges. Generally, lapse rates are assumed to be lower in periods when a surrender charge applies. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. For valuing the embedded derivative, lapse rates vary throughout the period over which cash flows are projected.
The Company’s consolidated VIEs/VOEs hold investments that are classified as Level 3, and primarily consist of corporate bonds that are vendor priced with no ratings available, bank loans, non-agency collateralized mortgage obligations and asset-backed securities.
Transfers of Financial Instruments Between Levels 2 and 3
During the ninethree months ended September 30, 2019,March 31, 2020, AFS fixed maturities with fair values of $104$126 million were transferred out of Level 3 and into Level 2 principally due to the availability of trading activity and/or market observable inputs to

38
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

measure and validate their fair values. In addition, AFS fixed maturities with fair value of $0 million were transferred from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately 0.7% of total equity at March 31, 2020.
During the three months ended March 31, 2019, AFS fixed maturities with fair values of $69 million were transferred out of Level 3 and into Level 2 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 $14$17 million were transferred from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately 0.9%0.7% of total equity at September 30,March 31, 2019.
During the nine months ended September 30, 2018, AFS fixed maturities with fair values of $28 million were transferred out of Level 3 and into Level 2 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 $65 million were transferred from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately 0.6% of total equity at September 30, 2018.
The tables below present reconciliations for all Level 3 assets and liabilities for the threeat March 31, 2020 and nine months ended September 30, 2019, and 2018.respectively.


36
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Level 3 Instruments - Fair Value Measurements
Corporate State and Political Subdivisions 
Asset-
backed
Corporate State and Political Subdivisions Asset-backed
(in millions)(in millions)
Balance, July 1, 2019$1,290
 $39
 $534
Total gains (losses), realized and unrealized, included in:     
Balance, January 1, 2020$1,246
 $39
 $100
Total gains and (losses), realized and unrealized, included in:     
Net income (loss) as:          
Net investment income (loss)—
 —
 —
1
 —
 —
Investment gains (losses), net—
 —
 —
(2) —
 —
Subtotal—
 —
 —
(1) —
 —
Other comprehensive income (loss)(7) 1
 —
(60) (3) (8)
Purchases(2) —
 71
61
 —
 48
Sales(42) (1) (73)(46) —
 —
Transfers into Level 3 (1)—
 —
 —
—
 —
 —
Transfers out of Level 3 (1)(31) —
 —
(26) —
 (100)
Balance, September 30, 2019$1,208
 $39
 $532
Balance, March 31, 2020$1,174
 $36
 $40
          
Balance, July 1, 2018$1,152
 $38
 $538
Total gains (losses), realized and unrealized, included in:     
Balance, January 1, 2019$1,174
 $38
 $519
Total gains and (losses), realized and unrealized, included in:     
Net income (loss) as:          
Net investment income (loss)3
 —
 (1)1
 —
 —
Investment gains (losses), net(4) —
 —
—
 —
 —
Subtotal(1) —
 (1)1
 —
 —
Other comprehensive income (loss)(1) —
 1
9
 1
 4
Purchases36
 —
 —
70
 —
 11
Sales(52) —
 (1)(33) —
 —
Transfers into Level 3 (1)—
 —
 —
17
 —
 —
Transfers out of Level 3 (1)—
 —
 —
(69) —
 —
Balance, September 30, 2018$1,134
 $38
 $537
Balance, March 31, 2019$1,169
 $39
 $534
______________
(1)Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.
 Corporate State and Political Subdivisions 
Asset-
backed
 (in millions)
Balance, January 1, 2019$1,174
 $38
 $519
Total gains (losses), realized and unrealized, included in:     
Net income (loss) as:     
Net investment income (loss)3
 —
 —
Investment gains (losses), net—
 —
 —
Subtotal3
 —
 —
Other comprehensive income (loss)3
 3
 5
Purchases219
 —
 81
Sales(101) (2) (73)
Transfers into Level 3 (1)14
 —
 —
Transfers out of Level 3 (1)(104) —
 —
Balance, September 30, 2019$1,208
 $39
 $532



3739
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued



 Other Equity Investments GMIB Reinsurance Contract Asset Separate Accounts Assets GMxB Derivative Features Liability
 (in millions)
Balance, January 1, 2020$16
 $2,466
 $—
 $(8,246)
Realized and unrealized gains (losses), included in Net income (loss) as:       
Investment gains (losses), net—
 —
 —
 —
Net derivative gains (losses), excluding non-performance risk—
 1,220
 —
 (3,900)
Non-performance risk (1)—
 (328) —
 2,735
Total realized and unrealized gains (losses)—

892

—

(1,165)
Purchases (2)—
 11
 —
 (109)
Sales (3)—
 (19) —
 11
Settlements—
 —
 —
 —
Change in estimate (4)—
 (45) —
 —
Activity related to consolidated VIEs/VOEs(1) —
 —
 —
Transfers into Level 3 (5)—
 —
 —
 —
Transfers out of Level 3 (5)—
 —
 —
 —
Balance, March 31, 2020$15
 $3,305
 $—
 $(9,509)
        
Balance, January 1, 2019$48
 $1,991
 $21
 $(5,431)
Realized and unrealized gains (losses), included in Net income (loss) as:       
Investment gains (losses), net—
 —
 —
 —
Net derivative gains (losses), excluding non-performance risk—
 (13) —
 51
Non-performance risk (1)—
 40
 —
 (460)
Total realized and unrealized gains (losses)—
 27
 —
 (409)
Other comprehensive income (loss)—
 —
 —
 —
Purchases (2)—
 12
 4
 (107)
Sales (3)—
 (21) —
 3
Settlements—
 —
 (1) —
Activity related to consolidated VIEs/VOEs(1) —
 —
 —
Transfers into Level 3 (5)
—
 —
 —
 —
Transfers out of Level 3 (5)(29) —
 (1) —
Balance, March 31, 2019$18
 $2,009
 $23
 $(5,944)
 Corporate State and Political Subdivisions 
Asset-
backed
 (in millions)
      
Balance, January 1, 2018$1,139
 $40
 $8
Total gains (losses), realized and unrealized, included in:     
Net income (loss) as:     
Net investment income (loss)8
 —
 (1)
Investment gains (losses), net(4) —
 —
Subtotal4
 —
 (1)
Other comprehensive income (loss)(15) (1) —
Purchases236
 —
 533
Sales(267) (1) (3)
Transfers into Level 3 (1)65
 —
 —
Transfers out of Level 3 (1)(28) —
 —
Balance, September 30, 2018$1,134
 $38
 $537
______________
(1)Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.
 Other Equity Investments GMIB Reinsurance Contract Asset Separate Accounts Assets GMxB Derivative Features Liability
 (in millions)
Balance, July 1, 2019$16
 $2,196
 $389
 $(6,749)
Total gains (losses), realized and unrealized, included in:       
Net income (loss) as:       
Investment gains (losses), net—
 —
 (14) —
Net derivative gains (losses), excluding non-performance risk—
 694
 —
 (2,682)
Non-performance risk (1)—
 (29) —
 154
Subtotal—
 665
 (14) (2,528)
Other comprehensive income (loss)—
 —
 —
 —
Purchases (2)—
 12
 (4) (99)
Sales (3)—
 (20) (1) 13
Settlements—
 —
 (1) —
Activity related to consolidated VIEs/VOEs—
 —
 —
 —
Transfers into Level 3 (4)—
 —
 —
 —
Transfers out of Level 3 (4)—
 —
 (11) —
Balance, September 30, 2019$16
 $2,853
 $358
 $(9,363)


38
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 Other Equity Investments GMIB Reinsurance Contract Asset Separate Accounts Assets GMxB Derivative Features Liability
 (in millions)
Balance, July 1, 2018$23
 $1,825
 $361
 $(3,534)
Total gains (losses), realized and unrealized, included in:       
Net income (loss) as:       
Net investment income (loss)—
 —
 —
 —
Investment gains (losses), net—
 —
 6
 —
Net derivative gains (losses), excluding non-performance risk—
 (311) —
 (485)
Non-performance risk (1)—
 56
 —
 (49)
Subtotal—
 (255) 6
 (534)
Other comprehensive income (loss)—
 —
 —
 —
Purchases (2)—
 12
 1
 (96)
Sales (3)—
 (11) —
 7
Settlements—
 —
 (1) —
Activity related to consolidated VIEs/VOEs(1) —
 —
 —
Transfers into Level 3 (4)—
 —
 —
 —
Transfers out of Level 3 (4)—
 —
 —
 —
Balance, September 30, 2018$22
 $1,571
 $367
 $(4,157)
______________
(1)The Company’s non-performance risk is recorded through Net derivative gains (losses).
(2)For the GMIB reinsurance contract asset and GMxB derivative features liability, represents attributed fee.
(3)For the GMIB reinsurance contract asset, represents recoveries from reinsurers and for the GMxB derivative features liability, represents benefits paid.
(4)For the GMIB reinsurance contract asset, represents a transfer from amounts due from reinsurers.
(5)Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.


39
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 Other Equity Investments GMIB Reinsurance Contract Asset Separate Accounts Assets GMxB Derivative Features Liability
 (in millions)
Balance, January 1, 2019$48
 $1,991
 $374
 $(5,431)
Total gains (losses), realized and unrealized, included in:       
Net income (loss) as:       
Investment gains (losses), net—
 —
 (2) —
Net derivative gains (losses), excluding non-performance risk—
 859
 —
 (3,338)
Non-performance risk (1)—
 23
 —
 (306)
Subtotal—
 882
 (2) (3,643)
Other comprehensive income (loss)—
 —
 —
 —
Purchases (2)—
 35
 3
 (309)
Sales (3)—
 (55) (1) 20
Settlements—
 —
 (4) —
Activity related to consolidated VIEs/VOEs(3) —
 —
 —
Transfers into Level 3 (4)—
 —
 —
 —
Transfers out of Level 3 (4)(29) —
 (12) —
Balance, September 30, 2019$16
 $2,853
 $358
 $(9,363)
        
Balance, January 1, 2018$25
 $10,488
 $349
 $(4,256)
Total gains (losses), realized and unrealized, included in:       
Net income (loss) as:       
Net investment income (loss)—
 —
 —
 —
Investment gains (losses), net—
 —
 19
 —
Net derivative gains (losses), excluding non-performance risk—
 (1,487) —
 322
Non-performance risk (1)—
 (1) —
 72
Subtotal—
 (1,488) 19
 394
Other comprehensive income (loss)—
 —
 —
 —
Purchases (2)—
 83
 4
 (305)
Sales (3)—
 (49) (1) 10
Settlements—
 (7,463) (4) —
Activity related to consolidated VIEs/VOEs(3) —
 —
 —
Transfers into Level 3 (4)5
 —
 —
 —
Transfers out of Level 3 (4)(5) —
 —
 —
Balance, September 30, 2018$22
 $1,571
 $367
 $(4,157)
______________
(1)The Company’s non-performance risk is recorded through Net derivative gains (losses).
(2)For the GMIB reinsurance contract asset and GMxB derivative features liability, represents attributed fee.
(3)For the GMIB reinsurance contract asset, represents recoveries from reinsurers and for the GMxB derivative features liability represents benefits paid.
(4)Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.
The table below details changes in unrealized gains (losses) for the ninethree months ended September 30,March 31, 2020 and 2019 and 2018 by category for Level 3 assets and liabilities still held at September 30,March 31, 2020 and 2019, and 2018.respectively.



40
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


Change in Unrealized Gains (Losses) for Level 3 Instruments
Net Income (Loss) Net Income (Loss)  
Investment Gains (Losses), Net Net Derivative Gains (Losses) OCINet Derivative Gains (Losses) OCI
(in millions)(in millions)
Held at September 30, 2019:     
Held at March 31, 2020:   
Change in unrealized gains (losses):        
Fixed maturities, available-for-sale:     
Fixed maturities, AFS:   
Corporate$—
 $—
 $3
$—
 $(60)
State and political subdivisions—
 —
 3
—
 (3)
Asset-backed—
 —
 4
—
 (8)
Subtotal—
 —
 10
Total fixed maturities, AFS—
 (71)
GMIB reinsurance contracts—
 882
 —
892
 —
Separate Accounts assets (1)(14) —
 —
GMxB derivative features liability—
 (3,643) —
(1,165) —
Total$(14) $(2,761) $10
$(273) $(71)
        
Held at September 30, 2018:     
Held at March 31, 2019:   
Change in unrealized gains (losses):        
Fixed maturities, available-for-sale:     
Fixed maturities, AFS:   
Corporate$—
 $—
 $(13)$—
 $9
State and political subdivisions—
 —
 (1)—
 1
Asset-backed—
 —
 —
—
 4
Subtotal—
 —
 (14)
Total fixed maturities, AFS—
 14
GMIB reinsurance contracts—
 (1,488) —
27
 —
Separate Accounts assets (1)19
 —
 —
GMxB derivative features liability—
 394
 —
(409) —
Total$19
 $(1,094) $(14)$(382) $14
______________Quantitative and Qualitative Information about Level 3 Fair Value Measurements
(1)There is an investment expense that offsets this investment gain (loss).
The following tables disclose quantitative information about Level 3 fair value measurements by category for assets and liabilities at September 30, 2019March 31, 2020 and December 31, 2018.2019, respectively.
Quantitative Information about Level 3 Fair Value Measurements at September 30, 2019
March 31, 2020
 Fair
Value		 Valuation
Technique		 Significant
Unobservable Input		 Range Weighted Average
Fair
Value
 Valuation Technique 
Significant
Unobservable Input
 Range Weighted Average (2)
 (in millions) (in millions) 
Assets:     
Investments:     
Fixed maturities, available-for-sale:   
Fixed maturities, AFS:  
Corporate $60
 Matrix pricing model Spread over benchmark 15 - 580 bps 181 bps$57
 Matrix pricing 
model		 Spread over Benchmark 15 - 580 bps 280 bps
 996
 
Market 
comparable 
companies
 EBITDA multiples
Discount rate
Cash flow multiples		 3.9x - 63.3x
6.5% - 16.5%
4.5x - 54.6x		 14.9x
10.1%
11.0x		1,034
 Market 
comparable 
companies		 EBITDA multiples
Discount rate
Cash flow multiples		 3.2x - 31.5x
6.0% - 25.2%
0.8x - 25.8x		 14.0x
10.1%
11.1x
Separate Accounts assets 350
 Third party appraisal Capitalization rate
Exit capitalization rate
Discount rate		 4.4%
5.5%
6.4%		 
 1
 Discounted cash flow Spread over U.S. Treasury curve
Discount factor		 253 bps
4.3%		 
GMIB reinsurance contract asset3,305
 Discounted cash flow Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 61 - 115		 144 - 293 bps
0.8% - 10%
0.0% - 8.0%
0.0% - 49.0%
20.0% - 37.0%

0.01% - 0.18%
0.07% - 0.54%
0.42% - 42.20%		 233 bps
1.56%
1.19%
6.59%
27%


All Ages 2.71%



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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)Notes to Consolidated Financial Statements(Unaudited), Continued


 
Fair
Value
 Valuation
Technique		 
Significant
Unobservable Input
 Range Weighted Average (2)
 (in millions)
GMIB reinsurance contract asset2,853
Discounted cash flowLapse rates
Withdrawal rates
Utilization rates
Non-performance risk
Volatility rates - Equity
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115		0.8% - 10%
0.0% - 8.0%
0.0% - 49.0%
56 - 138 bps
10.0% - 31.0%

0.01% - 0.18%
0.07% - 0.54%
0.42% - 42.0%		  
Liabilities:         
GMIBNLG9,3089,206

 Discounted cash flow 
Non-performance risk

Lapse rates

Withdrawal rates

Annuitization rates

Mortality rates (1):

Ages 0 - 40

Ages 41 - 60

Ages 6061 - 115
 159304 bps

0.8% - 19.9%

0.3% - 11.0%

0.0% - 100.0%



0.01% - 0.19%

0.06% - 0.53%

0.41% - 41.2%41.39%		 2.75%
1.21%
6.46%

All Ages 1.34%
GWBL/GMWB146125

 Discounted cash flow Non-performance risk
Lapse rates

Withdrawal rates

Utilization rates

Volatility rates - Equity		 304 bps
0.8% - 10.0%

0.0% - 7.0%

100% after starting
10.0%
20.0% - 31.0%37.0%		 
1.75%
1.19%

27%
GIB3825

 Discounted cash flow Non-performance risk
Lapse rates

Withdrawal rates

Utilization rates

Volatility rates - Equity		 304 bps
1.2% - 19.9%

0.0% - 8.0%

0.0% - 100.0%
10.0%
20.0% - 31.0%37.0%		 
1.75%
1.19%
6.59%
27%
GMAB177

 Discounted cash flow Non-performance risk
Lapse rates

Volatility rates - Equity		 304 bps
1.0% - 10.0%
10.0%
20.0% - 31.0%37.0%		 
1.75%
27%
______________
(1)Mortality rates vary by age and demographic characteristic such as gender. Mortality rate assumptions are based on a combination of company and industry experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuating the embedded derivatives.
(2)For Lapses, Withdrawals, and Utilizations the rates were weighted by counts, for Mortality weighted average rates are shown for all ages combined and for Withdrawals the weighted averages were based on an estimated split of partial withdrawal and dollar-for-dollar withdrawals.
Quantitative Information about Level 3 Fair Value Measurements at December 31, 2018
  Fair
Value		 Valuation
Technique		 Significant
Unobservable Input		 Range Weighted Average
  (in millions)  
Assets:          
Investments:          
Fixed maturities, available-for-sale:          
Corporate $93
 Matrix pricing model Spread over benchmark 15 - 580 bps 104 bps
  881
 Market comparable companies EBITDA multiples
Discount rate
Cash flow multiples		 4.1x - 37.8x
6.4% - 16.5%
1.8x - 18.0x		 12.1x
10.7%
11.4x
Separate Accounts assets 352
 Third party appraisal Capitalization rate
Exit capitalization rate
Discount rate		 4.4%
5.6%
6.5%		  
  1
 Discounted cash flow Spread over U.S. Treasury curve
Discount factor		 248 bps
5.1%		  
GMIB reinsurance contract asset 1,991
 Discounted cash flow 
Lapse rates
Withdrawal rates
Utilization rates
Non-performance risk
Volatility rates - Equity
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115
 1.0% - 6.27%
0.0% - 8.0%
0.0% - 16.0%
74 - 159 bps
10.0% - 34.0%

0.01% - 0.18%
0.07% - 0.54%
0.42% - 42.0%		  


42
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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

2019
 
Fair
Value
 Valuation
Technique		 
Significant
Unobservable Input
 Range Weighted Average
 (in millions)
Assets:
Investments:
Fixed maturities, AFS:
Corporate$51
Matrix pricing modelSpread over benchmark65 - 580 bps186 bps
1,025
Market comparable companiesEBITDA multiples
Discount rate
Cash flow multiples		3.3x - 56.7x
3.9% - 16.5%
0.8x - 48.1x		14.3x
10.0%
10.7x
GMIB reinsurance contract asset2,466
Discounted cash flowNon-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity
Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115		55 - 109 bps
0.8% - 10%
0.0% - 8.0%
0.0% - 49.0%
9.0% - 30.0%

0.01% - 0.18%
0.07% - 0.54%
0.42% - 42.20%		  
Liabilities:         
GMIBNLG8,1285,341

 Discounted cash flow 
Non-performance risk

Lapse rates

Withdrawal rates

Annuitization rates


Mortality rates (1):

Ages 0 - 40

Ages 41 - 60

Ages 60 - 115
 189124 bps

0.8% - 26.2%
0.0%19.9%
0.3% - 12.1%
11.0%
0.0% - 100.0%



0.01% - 0.19%

0.06% - 0.53%

0.41% - 41.2%41.39%

42
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

GWBL/GMWB109
Discounted cash flowNon-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity		124 bps
0.8% - 10.0%
0.0% - 7.0%
100% after starting
9.0% - 30.0%		  
GWBL/GMWBGIB5
 130Discounted cash flow
Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity		124 bps
1.2% - 19.9%
0.0% - 8.0%
0.0% - 100.0%
9.0% - 30.0%
GMAB4
 Discounted cash flow Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity		0.5% - 5.7%
0.0% - 7.0%
100% after starting
10.0% - 34.0%
GIB(48)Discounted cash flowLapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity		0.5% - 5.7%
0.0% - 8.0%
0.0% - 16.0%
10.0% - 34.0%
GMAB7
Discounted cash flowLapse rates

Volatility rates - Equity		 1.0% - 5.7%
10.0%
9.0% - 34.0%30.0%		  
______________
(1)Mortality rates vary by age and demographic characteristic such as gender. Mortality rate assumptions are based on a combination of company and industry experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuating the embedded derivatives.
Level 3 Financial Instruments for which Quantitative Inputs are Not Available
Certain Privately Placed Debt Securities with Limited Trading Activity
Excluded from the tables above at September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, are approximately $746$174 million and $826$325 million of Level 3 fair value measurements of investments for which the underlying quantitative inputs are not developed by the Company and are not readily available. These investments primarily consist of certain privately placed debt securities with limited trading activity, including residential mortgage- and asset-backed instruments, and their fair values generally reflect unadjusted prices obtained from independent valuation service providers and indicative, non-binding quotes obtained from third-party broker-dealers recognized as market participants. Significant increases or decreases in the fair value amounts received from these pricing sources may result in the Company’s reporting significantly higher or lower fair value measurements for these Level 3 investments.
The fair value of private placement securities is determined by application of a matrix pricing model or a market comparable company value technique. The significant unobservable input to the matrix pricing model valuation technique is the spread over the industry-specific benchmark yield curve. Generally, an increase or decrease in spreads would lead to directionally inverse movement in the fair value measurements of these securities. The significant unobservable input to the market comparable company valuation technique is the discount rate. Generally, a significant increase (decrease) in the discount rate would result in significantly lower (higher) fair value measurements of these securities.
•
Residential mortgage-backed securities classified as Level 3 primarily consist of non-agency paper with low trading activity. Included in the tables above at March 31, 2020 and December 31, 2019, there were no Level 3 securities that were determined by application of a matrix pricing model and for which the spread over the U.S. Treasury curve is the most significant unobservable input to the pricing result. Generally, a change in spreads would lead to directionally inverse movement in the fair value measurements of these securities.
•
Asset-backed securities classified as Level 3 primarily consist of non-agency mortgage loan trust certificates, including subprime and Alt-A paper, credit tenant loans, and equipment financings. Included in the tables above at March 31, 2020 and December 31, 2019, there were no securities that were determined by the application of matrix-pricing for which the spread over the U.S. Treasury curve is the most significant unobservable input to the pricing result. Significant increases (decreases) in spreads would have resulted in significantly lower (higher) fair value measurements.
Residential mortgage-backed securities classified as Level 3 primarily consist of non-agency paper with low trading activity. Included in the tables above at September 30, 2019
GMIB Reinsurance Contract Asset and December 31, 2018, there were no Level 3 securities that were determined by application of a matrix pricing model and for which the spread over the U.S. Treasury curve is the most significant unobservable input to the pricing result. Generally, a change in spreads would lead to directionally inverse movement in the fair value measurements of these securities.
Asset-backed securities classified as Level 3 primarily consist of non-agency mortgage loan trust certificates, including subprime and Alt-A paper, credit tenant loans, and equipment financings. Included in the tables above at September 30, 2019 and December 31, 2018, there were no securities that were determined by the application of matrix-pricing for which the spread over the U.S. Treasury curve is the most significant unobservable input to the pricing result. Significant increases (decreases) in spreads would have resulted in significantly lower (higher) fair value measurements.
Separate Accounts assets classified as Level 3 in the table at September 30, 2019 and December 31, 2018, primarily consist of a private real estate fund and mortgage loans. A third-party appraisal valuation technique is used to measure the fair value of the private real estate investment fund, including consideration of observable replacement cost and


43
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

sales comparisons for the underlying commercial properties, as well as the results from applying a discounted cash flow approach. Significant increase (decrease) in isolation in the capitalization rate and exit capitalization rate assumptions used in the discounted cash flow approach to the appraisal value would have resulted in a higher (lower) measure of fair value. With respect to the fair value measurement of mortgage loans a discounted cash flow approach is applied, a significant increase (decrease) in the assumed spread over U.S. Treasury securities would have produced a lower (higher) fair value measurement. Changes in the discount rate or factor used in the valuation techniques to determine the fair values of these private equity investments and mortgage loans generally are not correlated to changes in the other significant unobservable inputs. Significant increase (decrease) in isolation in the discount rate or factor would have resulted in significantly lower (higher) fair value measurements. These fair value measurements are determined using substantially the same valuation techniques as earlier described above for the Company’s General Account investments in these securities.GMxB Derivative Features Liability
Significant unobservable inputs with respect to the fair value measurement of the Level 3 GMIB reinsurance contract asset and the Level 3 liabilities identified in the table above are developed using the Company data.
The significant unobservable inputs used in the fair value measurement of the Company’s GMIB reinsurance contract asset are lapse rates, withdrawal rates and GMIB utilization rates. Significant increases in GMIB utilization rates or decreases in lapse or withdrawal rates in isolation would tend to increase the GMIB reinsurance contract asset.
Fair value measurement of the GMIB reinsurance contract asset and liabilities includes dynamic lapse and GMIB utilization assumptions whereby projected contractual lapses and GMIB utilization reflect the projected net amount of

43
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

risks of the contract. As the net amount of risk of a contract increases, the assumed lapse rate decreases and the GMIB utilization increases. Increases in volatility would increase the asset and liabilities.
The significant unobservable inputs used in the fair value measurement of the Company’s GMIBNLG liability are lapse rates, withdrawal rates, GMIB utilization rates, adjustment for Non-performance risk and NLG forfeiture rates. NLG forfeiture rates are caused by excess withdrawals above the annual GMIB accrual rate that cause the NLG to expire. Significant decreases in lapse rates, NLG forfeiture rates, adjustment for non-performance risk and GMIB utilization rates would tend to increase the GMIBNLG liability, while decreases in withdrawal rates and volatility rates would tend to decrease the GMIBNLG liability.
The significant unobservable inputs used in the fair value measurement of the Company’s GMWB and GWBL liability are lapse rates and withdrawal rates. Significant increases in withdrawal rates or decreases in lapse rates in isolation would tend to increase these liabilities. Increases in volatility would increase these liabilities.
Certain financial instruments are exempt from the requirements for fair value disclosure, such as insurance liabilities other than financial guaranteesCarrying Value of Financial Instruments Not Otherwise Disclosed in Note 3 and investment contracts, limited partnerships accounted for under the equity method and pension and other postretirement obligations.Note 4
The carrying values and fair values at September 30, 2019March 31, 2020 and December 31, 20182019 for financial instruments not otherwise disclosed in Note 3 and Note 4 are presented in the table below.


44
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Carrying Values and Fair Values for Financial Instruments Not Otherwise Disclosed
 
Carrying
Value
 Fair Value
 Level 1 Level 2 Level 3 Total
 (in millions)
March 31, 2020:         
Mortgage loans on real estate$12,106
 $—
 $—
 $12,117
 $12,117
Policy loans$3,255
 $—
 $—
 $4,173
 $4,173
Loans to affiliates$1,200
 $—
 $1,220
 $—
 $1,220
Policyholders’ liabilities: Investment contracts$1,954
 $—
 $—
 $2,063
 $2,063
FHLBNY funding agreements$6,759
 $—
 $6,835
 $—
 $6,835
Separate Accounts liabilities$7,563
 $—
 $—
 $7,563
 $7,563
          
December 31, 2019:         
Mortgage loans on real estate$12,090
 $—
 $—
 $12,317
 $12,317
Policy loans$3,270
 $—
 $—
 $4,199
 $4,199
Loans to affiliates$1,200
 $—
 $1,224
 $—
 $1,224
Policyholders’ liabilities: Investment contracts$1,922
 $—
 $—
 $2,029
 $2,029
FHLBNY funding agreements$6,909
 $—
 $6,957
 $—
 $6,957
Separate Accounts liabilities$9,041
 $—
 $—
 $9,041
 $9,041

 Carrying Value Fair Value
  Level 1 Level 2 Level 3 Total
 (in millions)
September 30, 2019:         
Mortgage loans on real estate$12,005
 $—
 $—
 $12,274
 $12,274
FHLBNY Funding Agreements$6,510
 $—
 $6,562
 $—
 $6,562
Policy loans$3,272
 $—
 $—
 $4,246
 $4,246
Loans to affiliates$600
 $—
 $613
 $—
 $613
Policyholders’ liabilities: Investment contracts$1,931
 $—
 $—
 $2,127
 $2,127
Separate Accounts liabilities$8,424
 $—
 $—
 $8,424
 $8,424
          
December 31, 2018:         
Mortgage loans on real estate$11,818
 $—
 $—
 $11,478
 $11,478
FHLBNY Funding Agreements$4,002
 $—
 $3,956
 $—
 $3,956
Policy loans$3,267
 $—
 $—
 $3,944
 $3,944
Loans to affiliates$600
 $—
 $603
 $—
 $603
Policyholders’ liabilities: Investment contracts$1,974
 $—
 $—
 $2,015
 $2,015
Loans from affiliates$572
 $—
 $572
 $—
 $572
Separate Accounts liabilities$7,406
 $—
 $—
 $7,406
 $7,406

As the Company’s COLI policies are recorded at their cash surrender value, they are not required to be included in the table above.Mortgage Loans on Real Estate
Fair values for commercial and agricultural mortgage loans on real estate are measured by discounting future contractual cash flows to be received on the mortgage loan using interest rates at which loans with similar characteristics and credit quality would be made. The discount rate is derived based on the appropriate U.S. Treasury rate with a like term to the remaining term of the loan to which a spread reflective of the risk premium associated with the specific loan is added. Fair values for mortgage loans anticipated to be foreclosed and problem mortgage loans are limited to the fair value of the underlying collateral, if lower.
Policy Loans
The fair value of policy loans is calculated by discounting expected cash flows based upon the U.S. treasuryTreasury yield curve and historical loan repayment patterns.
Loans to Affiliates
The fair value of loans to affiliates is calculated by matrix or model pricing. 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.

44
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

FHLB Funding Agreements
The fair values of the Company'sCompany’s funding agreements are determined by discounted cash flow analysis based on the indicative funding agreement rates published by the FHLB.
Policyholder Liabilities - Investment Contracts and Separate Accounts Liabilities
The fair values for the Company’s association plans contracts, supplementary contracts not involving life contingencies (“SCNILC”), deferred annuities and certain annuities, which are included in Policyholders’ account balances and liabilities for investment contracts with fund investments in Separate Accounts are estimated using projected cash flows discounted at rates reflecting current market rates. Significant unobservable inputs reflected in the cash flows include lapse rates and withdrawal rates. Incremental adjustments may be made to the fair value to reflect non-performance risk. Certain other products such as Access Accounts and Escrow Shield Plus product reserves are held at book value.

Financial Instruments Exempt from Fair Value Disclosure or Otherwise Not Required to be Disclosed

Exempt from Fair Value Disclosure Requirements
45
Certain financial instruments are exempt from the requirements for fair value disclosure, such as insurance liabilities other than financial guarantees and investment contracts, limited partnerships accounted for under the equity method and pension and other postretirement obligations.
Table of Contents
AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

8)    LEASES
The Company does not record leases with an initial term of 12 months or less in its consolidated balance sheets, but instead recognizes lease expense for these leases on a straight-line basis over the lease term. For leases with a term greater than one year, the Company records in its consolidated balance sheets at the time of lease commencement or modification a right of use (“RoU”) operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognizedOtherwise Not Required to be Included in the consolidated statements of income over the lease term on a straight-line basis. RoU operating lease assets represent theTable Above
The Company’s rightinvestment in Corporate Owned Life Insurance (“COLI”) policies are recorded at their cash surrender value and are therefore not required to use an underlying asset for the lease term and RoU operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
The Company's operating leases primarily consist of real estate leases for office space. The Company also has operating leases for various types of office furniture and equipment. For certain equipment leases, the Company applies a portfolio approach to effectively account for the RoU operating lease assets and liabilities. For certain lease agreements entered into after the adoption of ASC 842 or for lease agreements for which the lease term or classification was reassessed after the occurrence of a change in the lease terms or a modification of the lease that did not result in a separate contract, the Company elected to combine the lease and related non-lease components for its operating leases; however, the non-lease components associated with the Company’s operating leases are primarily variable in nature and as such are notbe included in the determination oftable above. See Note 2to the RoU operating lease asset and lease liability, but are recognized in the period in which the obligation for those payments is incurred.
The Company’s operating leases may include options to extend or terminate the lease, which are notconsolidated financial statements included in the determinationAnnual Report on Form 10-K for the year ended December 31, 2019 for further description of the RoU operating asset or lease liability unless they are reasonably certain to be exercised. The Company's operating leases have remaining lease terms of 1 year to 12 years, some of which include options to extend the leases. The Company typically does not include its renewal options in its lease terms for calculating its RoU operating lease asset and lease liability as the renewal options allow the Company to maintain operational flexibility and the Company is not reasonably certain it will exercise these renewal options until close to the initial end date of the lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
As the Company's operating leases do not provide an implicit rate, the Company’s incremental borrowing rate, based on the information available at the lease commencement date, is used in determining the present value of lease payments.
The Company primarily subleases floor space within its New Jersey and New York lease properties to various third parties. The lease term for these subleases typically corresponds to the original lease term.
Balance Sheet Classification of Operating Lease Assets and Liabilities
 Balance Sheet Line Item September 30, 2019
 (in millions)
Assets   
Operating lease assetsOther Assets $333
Liabilities   
Operating lease liabilitiesOther Liabilities $426


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The table below summarizes the components of lease costs for the three and nine months ended September 30, 2019.
Lease Costs
 Three Months Ended
September 30, 2019		 Nine Months Ended
September 30, 2019
 (in millions)
Operating lease cost (1)$20
 $57
Variable operating lease cost3
 8
Sublease income(5) (13)
Short-term lease expense—
 2
Net lease cost$18
 $54
_____________
(1)Operating lease cost for the three months ended March 31, 2019 previously reported as $53 million, has been revised to $20 million to properly exclude impairments recognized prior to the adoption of ASC 842.
Maturities of lease liabilities as of September 30, 2019 are as follows:
Maturities of Lease Liabilities
 September 30, 2019
 (in millions)
Operating Leases (1): 
2019$24
202095
202191
202287
202379
Thereafter90
Total lease payments466
Less: Interest(40)
Present value of lease liabilities$426

During 2018, AXA Equitable Life entered into one additional operating real estate lease with an estimated total base rent of $11 million. This operating lease commenced in August 2019 with a lease term of 10 years.
The below table presents the Company’s weighted-average remaining operating lease term and weighted-average discount rate.
Weighted Averages - Remaining Operating Lease Term and Discount Rate
September 30, 2019
Weighted-average remaining operating lease term6 years
Weighted-average discount rate for operating leases3.10%
Supplemental cash flow informationaccounting policy related to leases was as follows:
Lease Liabilities Information
 Nine Months Ended September 30, 2019
 (in millions)
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows from operating leases$65
Non-cash transactions: 
Leased assets obtained in exchange for new operating lease liabilities$42


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table presents the Company’s future minimum lease obligation under ASC 840 as of December 31, 2018:
 December 31, 2018
Calendar Year(in millions)
2019$81
2020$74
2021$69
2022$67
2023$63
Thereafter$66
its investment in COLI policies.
8)    LOANS TO AFFILIATES
Loans Issued to Holdings
In April 2018, Equitable Life made a $800 million loan to Holdings. The loan has an interest rate of 3.69% and matures in April 2021. In December 2018, and in December 2019, Holdings repaid $200 million and $300 million, respectively. At March 31, 2020, the amount outstanding was $300 million.
In November 2019, Equitable Life made a $900 million loan to Holdings. The loan has an interest rate of one-month LIBOR plus 1.33%. The loan matures on November 24, 2024. At March 31, 2020, the amount outstanding was $900 million.
9)    INCOME TAXES
Income tax expense for the three and nine months ended September 30,March 31, 2020 and 2019 and 2018 was computed using an estimated annual effective tax rate (“ETR”), with discrete items recognized in the period in which they occur. The estimated ETR is revised, as necessary, at the end of successive interim reporting periods. The tax benefit recognized year-to-date 2019 was limited to the amount that would have been recognized if the year-to-date loss was the anticipated loss for the full year.
10)    RELATED PARTY TRANSACTIONS
The Company’sCompany did not enter into any new significant transactions during the nine months ended September 30, 2019 with related parties are summarized below.
Loans from Affiliates
Senior Surplus Notes
On December 28, 2018, AXA Equitable issued a $572 million senior surplus note due December 28, 2019 to Holdings, which bears interest at a fixed rate of 3.75%, payable semi-annually. The surplus note is intended to have priority in right of payments and in all other respects to any and all other surplus notes issued by AXA Equitable at any time. AXA Equitable repaid this note and $4 million of related interest expense on March 5, 2019.
Investment management fees
The Company recorded investment management fee expense from AllianceBernstein of $25 million and $23 million forduring the three months ended September 30, 2019 and 2018, respectively, and $76 million and $65 million, for the nine months ended September 30, 2019 and 2018, respectively.March 31, 2020.
Commitment to Invest in Fund Sponsored by AXA Real Estate Investment Managers US LLC (“AXA REIM”)
AXA Equitable has an outstanding commitment as of September 30, 2019 to invest $15 million in a real estate private equity fund sponsored by AXA REIM.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

11)    EQUITY
Accumulated Other Comprehensive Income (Loss)
AOCI represents cumulative gains (losses) on items that are not reflected in Net income (loss). The balances as of September 30,March 31, 2020 and 2019 and 2018 follow:

45
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued
 September 30,
 2019 2018
 (in millions)
Unrealized gains (losses) on investments$2,145
 $(845)
Defined benefit pension plans(7) (4)
Total accumulated other comprehensive income (loss) from continuing operations2,138
 (849)
Less: Accumulated other comprehensive income (loss) attributable to discontinued operations, net of noncontrolling interest—
 18
Accumulated other comprehensive income (loss) attributable to AXA Equitable$2,138
 $(867)

 March 31,
 2020 2019
 (in millions)
Unrealized gains (losses) on investments$3,111
 $280
Defined benefit pension plans(5) (7)
Accumulated other comprehensive income (loss) attributable to Equitable Life$3,106
 $273

The components of OCI, net of taxes for the three and nine months ended September 30,March 31, 2020 and 2019 and 2018, follow:
 Three Months Ended March 31,
 2020 2019
 (in millions)
Change in net unrealized gains (losses) on investments:   
Net unrealized gains (losses) arising during the period$1,596
 $1,243
(Gains) losses reclassified into Net income (loss) during the period (1)(48) 6
Net unrealized gains (losses) on investments1,548
 1,249
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other(34) (485)
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of $403 and $203)1,514
 764
Other comprehensive income (loss), attributable to Equitable Life$1,514
 $764

 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
 (in millions)
Change in net unrealized gains (losses) on investments:       
Net unrealized gains (losses) arising during the period$1,224
 $(438) $3,750
 $(1,770)
(Gains) losses reclassified to Net income (loss) during the period (1)(159) 8
 (157) (59)
Net unrealized gains (losses) on investments1,065
 (430) 3,593
 (1,829)
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other(491) 27
 (964) 371
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of $152, $(107), $693 and $(387))574
 (403) 2,629
 (1,458)
Change in defined benefit plans:       
Reclassification to Net income (loss) of amortization of net prior service credit included in net periodic cost—
 (3) —
 (8)
Change in defined benefit plans (net of deferred income tax expense (benefit) of $0, $(1), $0 and $(2))—
 (3) —
 (8)
Total other comprehensive income (loss), net of income taxes from continuing operations574
 (406) 2,629
 (1,466)
Other comprehensive income (loss) from discontinued operations, net of income taxes—
 3
 —
 1
Other comprehensive income (loss) attributable to AXA Equitable$574
 $(403) $2,629
 $(1,465)
__________________________
(1)
See “Reclassification adjustments” in Note 3.3. Reclassification amounts are presented net of income tax expense (benefit) of $(43) million, $2 million, $(42)$(13) million and $(16)$1 million for the three and nine months ended September 30,March 31, 2020 and 2019, and 2018, respectively.

Investment gains and losses reclassified from AOCI to Net income (loss) primarily consist of realized gains (losses) on sales and OTTIcredit losses of AFS securities and are included in Total investment gains (losses), net on the consolidated statements of income (loss). Amounts reclassified from AOCI to Net income (loss) as related to defined benefit plans primarily consist of amortizationsamortization of net (gains) losses and net prior service cost (credit) recognized as a component of net periodic cost and reported in Compensation and benefit expensesbenefits in the consolidated statements of income (loss). Amounts presented in the table above are net of tax.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

12)     REDEEMABLE NONCONTROLLING INTEREST
The changes in the components of redeemable noncontrolling interests were:are presented in the table that follows:
 Three Months Ended March 31,
 2020 2019
 (in millions)
Balance, beginning of period$39
 $39
Net earnings (loss) attributable to redeemable noncontrolling interests(5) 2
Purchase/change of redeemable noncontrolling interests(2) 7
Balance, end of period$32

$48
 Three Months Ended September 30, Nine Months Ended
September 30, 2019
 2019 2018 2019 2018
 (in millions)
Balance, beginning of period$42
 $37
 $39
 $25
Net earnings (loss) attributable to redeemable noncontrolling interests—
 2
 3
 —
Purchase/change of redeemable noncontrolling interests3
 (1) 4
 13
Balance, end of period$46
 $38
 $46
 $38

13)    COMMITMENTS AND CONTINGENT LIABILITIES
Litigation
Litigation, regulatory and other loss contingencies arise in the ordinary course of the Company’s activities as a diversified financial services firm. The Company is a defendant in a number of litigation matters arising from the conduct of its business. In some of these matters, claimants seek to recover very large or indeterminate amounts, including compensatory, punitive, treble and exemplary damages. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages and other relief. Claimants are not always required to specify the monetary damages they seek, or they may be required only to state an amount sufficient to meet a court’s jurisdictional requirements. Moreover, some jurisdictions allow claimants to allege monetary damages that far exceed any reasonably possible verdict. The variability in pleading requirements and past experience demonstrates that the

46
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

monetary and other relief that may be requested in a lawsuit or claim often bears little relevance to the merits or potential value of a claim. Litigation against the Company includes a variety of claims including, among other things, insurers’ sales practices, alleged agent misconduct, alleged failure to properly supervise agents, contract administration, product design, features and accompanying disclosure, cost of insurance increases, the use of captive reinsurers, payments of death benefits and the reporting and escheatment of unclaimed property, alleged breach of fiduciary duties, alleged mismanagement of client funds and other matters.
As with other financial services companies, the Company periodically receives informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the Company or the financial services industry. It is the practice of the Company to cooperate fully in these matters.
The outcome of a litigation or regulatory matter is difficult to predict, and the amount or range of potential losses associated with these or other loss contingencies requires significant management judgment. It is not possible to predict the ultimate outcome or to provide reasonably possible losses or ranges of losses for all pending regulatory matters, litigation and other loss contingencies. While it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company’s financial position, based on information currently known, management believes that neither the outcome of pending litigation and regulatory matters, nor potential liabilities associated with other loss contingencies, are likely to have such an effect. However, given the large and indeterminate amounts sought in certain litigation and the inherent unpredictability of all such matters, it is possible that an adverse outcome in certain of the Company’s litigation or regulatory matters, or liabilities arising from other loss contingencies, could, from time to time, have a material adverse effect upon the Company’s results of operations or cash flows in a particular quarterly or annual period.
For some matters, where a loss is reasonably possible, the Company is able to estimate a possible range of loss. For such matters in which a loss is probable, an accrual has been made. For matters where the Company however, believes a loss is reasonably possible, but not probable, no accrual is required. For matters for which an accrual has been made, but there remains a reasonably possible range of loss in excess of the amounts accrued or for matters where no accrual is required, the Company develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

of September 30, 2019,March 31, 2020, the Company estimates the aggregate range of reasonably possible losses, in excess of any amounts accrued for these matters as of such date, to be up to approximately $100 million.
For other matters, the Company is currently not able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from plaintiffs and other parties, investigation of factual allegations, rulings by a court on motions or appeals, analysis by experts and the progress of settlement discussions. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and regulatory contingencies and updates the Company’s accruals, disclosures and reasonably possible losses or ranges of loss based on such reviews.
In August 2015, a lawsuit was filed in Connecticut Superior Court, Judicial Division of New Haven entitled Richard T. O’Donnell, on behalf of himself and all others similarly situated v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action on behalf of all persons who purchased variable annuities from AXA Equitable Life, which were subsequently subjected to the volatility management strategy and who suffered injury as a result thereof. Plaintiff asserts a claim for breach of contract alleging that AXA Equitable Life implemented the volatility management strategy in violation of applicable law. Plaintiff seeks an award of damages individually and on a classwide basis, and costs and disbursements, including attorneys’ fees, expert witness fees and other costs.  In November 2015, the Connecticut Federal District Court transferred this action to the United States District Court for the Southern District of New York. In March 2017, the Southern District of New York granted AXA Equitable’sEquitable Life’s motion to dismiss the complaint. In April 2017, the plaintiff filed a notice of appeal. In April 2018, the United States Court of Appeals for the Second Circuit reversed the trial court’s decision with instructions to remand the case to Connecticut state court. In September 2018, the Second Circuit issued its mandate, following AXA Equitable’sEquitable Life’s notification to the court that it would not file a petition for writ of certiorari.The case was transferred in December 2018 and is pending in Connecticut Superior Court, Judicial District of Stamford. We are vigorously defending this matter.
In February 2016, a lawsuit was filed in the United States District Court for the Southern District of New York entitled Brach Family Foundation, Inc. v. AXA Equitable Life Insurance Company. This lawsuit is a putative class action brought on behalf of all owners of universal life (“UL”) policies subject to AXA Equitable’sEquitable Life’s COI rate increase. In early 2016, AXA Equitable Life raised COI rates for certain UL policies issued between 2004 and 2007, which had both issue ages 70 and above and a current face value amount of $1 million and above. A second putative class action was filed in Arizona in 2017 and consolidated with the Brach matter. The current consolidated amended class action complaint

47
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

alleges the following claims: breach of contract; misrepresentations by AXA Equitable Life in violation of Section 4226 of the New York Insurance Law; violations of New York General Business Law Section 349; and violations of the California Unfair Competition Law, and the California Elder Abuse Statute. Plaintiffs seek; (a) compensatory damages, costs, and, pre- and post-judgment interest; (b) with respect to their claim concerning Section 4226, a penalty in the amount of premiums paid by the plaintiffs and the putative class; and (c) injunctive relief and attorneys’ fees in connection with their statutory claims. Five other federal actions challenging the COI rate increase are also pending against AXA Equitable Life and have been coordinated with the Brach action for the purposes of pre-trial activities. They contain allegations similar to those in the Brach action as well as additional allegations for violations of various states’ consumer protection statutes and common law fraud. Three actions are also pending against AXA Equitable Life in New York state court. AXA Equitable Life is vigorously defending each of these matters.
ObligationObligations under Funding Agreements
Federal Home Loan Bank of New York
As a member of the FHLBNY, AXA Equitable Life has access to collateralized borrowings. It also may issue funding agreements to the FHLBNY. Both the collateralized borrowings and funding agreements would require AXA Equitable Life to pledge qualified mortgage-backed assets and/or government securities as collateral. AXA Equitable Life issues short-term funding agreements to the FHLBNY and uses the funds for asset, liability, and cash management purposes. AXA Equitable Life issues long-term funding agreements to the FHLBNY and uses the funds for spread lending purposes. For other instruments used for asset liability management purposes see Note 4.
Entering into FHLBNY membership, borrowings and funding agreements requires the ownership of FHLBNY stock and the pledge of assets as collateral. Equitable Life has purchased FHLBNY stock of $315 million and pledged collateral with a carrying value of $9.8 billion as of March 31, 2020. 
Funding agreements are reported in Policyholders’ account balances in the consolidated balance sheets. For other instruments used for asset/liability and cash management purposes, see “Derivative and offsetting assets and liabilities” included in Note 4. The table below summarizes the Company’s activity of funding agreements with the FHLBNY.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Change in FHLBNY Funding Agreements during the NineThree Months Ended September 30, 2019March 31, 2020
Outstanding Balance at December 31, 2018 Issued During the Period Repaid During the Period Long-term Agreements Maturing Within One Year Outstanding Balance at September 30, 2019Outstanding Balance at December 31,
2019		 Issued During the Period Repaid During the Period Long-term Agreements Maturing Within One Year Outstanding Balance at March 31,
2020
(in millions)(in millions)
Short-term funding agreements:                  
Due in one year or less$1,640
 $17,080
 $14,570
 $58
 $4,208
$4,608
 $11,750
 $11,900
 $174
 $4,632
Long-term funding agreements:                  
Due in years two through five1,569
 —
 —
 (58) 1,511
1,646
 —
 —
 (174) 1,472
Due in more than five years781
 —
 —
 —
 781
646
 —
 —
 —
 646
Total long-term funding agreements2,350
 —
 —
 (58) 2,292
2,292
 —
 —
 (174) 2,119
Total funding agreements (1)$3,990
 $17,080
 $14,570
 $—
 $6,500
$6,900
 $11,750
 $11,900
 $—
 $6,750
__________________________
(1)The $10$9 million and $12$9 million difference between the funding agreements carrying valuesvalue shown in Note 7 in the Carrying Values and Fair Valuesfair value table for Financial Instruments Not Otherwise Disclosed table at September 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements’agreements borrowing rates.
Guarantees and Other Commitments
The Company provides certain guarantees or commitments to affiliates and others. At September 30, 2019,March 31, 2020, these arrangements include commitments by the Company had $876 million of commitments underto provide equity financing arrangementsof $1.0 billion (including $179 million with affiliates) to certain limited partnerships including $246 million of commitments to funds managed by affiliates. In addition, at September 30, 2019,and real estate joint ventures under certain conditions. Management believes the Company will not incur material losses as a result of these commitments.
The Company is the obligor under certain structured settlement agreements it had $179 million of commitmentsentered into with unaffiliated insurance companies and beneficiaries. To satisfy its obligations under equity financing arrangementsthese agreements, the Company owns single premium annuities issued by previously wholly-owned life insurance subsidiaries. The Company has directed payment under these annuities to existing mortgage loanbe made directly to the beneficiaries under the structured settlement agreements. A contingent

48
AXA EQUITABLE LIFE INSURANCE COMPANY
Notes to Consolidated Financial Statements(Unaudited), Continued

liability exists with respect to these agreements should the previously wholly-owned subsidiaries be unable to meet their obligations. Management believes the need for the Company to satisfy those obligations is remote.
The Company had $17 million of undrawn letters of credit related to reinsurance at September 30, 2019.March 31, 2020. The Company had $426 million commitments under existing mortgage loan agreements at March 31, 2020.
Pursuant to certain assumption agreements (the “Assumption Agreements”) on October 1, 2018, Holdings, AXA Financial legally assumed primary liability from AXA Equitable Life for all current and future liabilities of AXA Equitable Life under certain employee benefit plans that provide participants with medical, life insurance and deferred compensation benefits as well as under the AXA Equitable Retirement plan, a frozen qualified pension plan. AXA Equitable Life remains secondarily liable for its obligations under these plans and would recognize such liabilities in the event HoldingsAXA Financial does not perform under the terms of the Assumption Agreements. On October 1, 2018, AXA Financial merged with and into its direct parent, Holdings, with Holdings continuing as the surviving entity.
14)    DISCONTINUED OPERATIONSSUBSEQUENT EVENTS
Effective December 31, 2018, the Company and its subsidiaries transferred all economic interests in the business of AB to a newly created entity, Alpha Unit Holdings, LLC (“Alpha”). COVID-19 Pandemic
The Company distributed all equity interests in Alphahas evaluated the effects of events subsequent to AXA Equitable Financial Services, LLC, a wholly-owned subsidiaryMarch 31, 2020, and through the date of Holdings. The AB transfer and subsequent distributionthe filing of Alpha equity interests (“the AB Business Transfer”) removed the authority to control the business of AB and as such, the results of AB are reflected in the Company’sthese unaudited consolidated financial statements as discontinuedwith the Securities and Exchange Commission. Subsequent to March 31, 2020, equity and financial markets have experienced significant volatility and interest rates have continued to decline due to the COVID-19 pandemic. The Company is currently unable to determine the extent of the impact of the pandemic to its operations and are presented in Net income (loss) from discontinued operations, net of taxes. Intercompany transactions between the Company and AB prior to the AB Business Transfer have been eliminated. Ongoing service transactions with AB are reported as related party transactions as further described in Note 10.financial condition.



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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSConsolidated Statements of Cash Flows
(UNAUDITED)

The table below presents AB’s revenues recognized in three and nine months ended September 30, 2018, disaggregated by category:
 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
 (in millions)
Investment management and service fees:   
Base fees$571
 $1,700
Performance-based fees41
 83
Research services103
 324
Distribution services104
 318
Shareholder services19
 58
Other5
 16
Total investment management and service fees$843
 $2,499
The following table presentsFor the amounts related to the Net income of AB that has been reflected in Discontinued Operations:
 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
 (in millions)
REVENUES   
Net derivative gains (losses)$(6) $(4)
Net investment income (loss)10
 55
Investment management and service fees826
 2,446
Other income3
 6
Total revenues833
 2,503
    
BENEFITS AND OTHER DEDUCTIONS   
Compensation and benefits357
 1,061
Distribution-related payments107
 323
Interest expense3
 7
Other operating costs and expenses187
 547
Total benefits and other deductions654
 1,938
Income from discontinued operations, before income taxes179
 565
Income tax expense(21) (46)
Net income from discontinued operations, net of taxes158
 519
Less: Net income attributable to the noncontrolling interest(127) (438)
Net income from discontinued operations, net of taxes and noncontrolling interest$31

$81
15)REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS
Reclassification of DAC Capitalization
During the fourth quarter of 2018, the Company changed the presentation of the capitalization of DAC in the consolidated statements of income for all prior periods presented herein by netting the capitalized amounts within the applicable expense line items, such as Compensation and benefits, Commissions and Other operating costs and expenses. Previously, the Company had netted the capitalized amounts within the Amortization of DAC. There was no impact on Net income (loss) or Comprehensive income (loss) from this reclassification. See Note 2 for further details of this reclassification.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Revisions of Prior Period Financial Statements
During the fourth quarter of 2018, the Company identified certain cash flows that were incorrectly classified in the Company’s consolidated statements of cash flows. The Company has determined that these misclassifications were not material to its financial statements of any period.
The impact of items included in the following revision tables on the consolidated statement of cash flows for the nine months ended September 30, 2018 were corrected in the comparative consolidated statements of cash flows included herein for the nine months ended September 30, 2019 and 2018.
Discontinued Operations
As further described in Note 14, as a result of the AB Business Transfer in the fourth quarter of 2018, AB’s operations are now reflected as discontinued operations in the Company’s consolidated financial statements. The financial information for prior periods presented in the consolidated financial statements have been adjusted to reflect AB as discontinued operations.
Revision of Consolidated Financial Statements for the NineThree Months Ended September 30, 2018
The following tables present line items of the consolidated statement of cash flows for the nine months ended September 30, 2018 that have been affected by the revisions. This information has been corrected from the information previously presented in the Company’s September 30, 2018 Form 10-Q. For these items, the tables detail the amounts as previously reportedMarch 31, 2020 and the impact upon those line items due to the reclassifications to conform to the current presentation, the adjustment for discontinued operations, revisions and the amounts as currently revised. Prior period amounts have been reclassified to conform to current period presentation, where applicable, and are summarized in the accompanying tables. Tables for the other consolidated financial statements as of or for the three and nine months ended September 30, 2018 are not presented as these revisions were already reflected in the Company’s September 30, 2018 Form 10-Q.


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AXA EQUITABLE LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)2019 (Unaudited)


 Nine Months Ended September 30, 2018
 As Pre-viously
Reported		 Presentation Reclassifi-cations As Adjusted Impact of Revisions As Revised
 (in millions)
Consolidated Statement of Cash Flows:         
Cash flows from operating activities:         
Adjustments to reconcile Net income (loss) to Net cash provided by (used in) operating activities:         
Amortization of deferred sales commission$17
 $(17) $—
 $—
 $—
Amortization and depreciation(60) 318
 258
 —
 258
Equity (income) loss from limited partnerships—
 (83) (83) —
 (83)
Distribution from joint ventures and limited partnerships63
 (63) —
 —
 —
Cash received on the recapture of captive reinsurance1,099
 —
 1,099
 174
 1,273
Changes in:         
DAC(129) 129
 —
 —
 —
Capitalization of DAC—
 (432) (432) —
 (432)
Future policy benefits(58) —
 (58) (541) (599)
Reinsurance recoverable20
 —
 20
 86
 106
Current and deferred income taxes(264) —
 (264) (400) (664)
Other, net123
 146
 269
 179
 448
Net cash provided by (used in) operating activities$1,614
 $(2) $1,612
 $(502) $1,110
Cash flows from investing activities:         
Proceeds from the sale/maturity/prepayment of:         
Trading account securities$6,913
 $—
 $6,913
 $77
 $6,990
Real estate joint ventures—
 140
 140
 —
 140
Short-term investments—
 1,806
 1,806
 —
 1,806
Other344
 (140) 204
 —
 204
Short-term investments—
 (1,530) (1,530) 204
 (1,326)
Cash settlements related to derivative instruments(584) —
 (584) (492) (1,076)
Change in short-term investments350
 (273) 77
 (77) —
Other, net305
 (1) 304
 (19) 285
Net cash provided by (used in) investing activities$(2,990) $2
 $(2,988) $(307) $(3,295)
Cash flows from financing activities:         
Policyholders’ account balances:         
Deposits$7,852
 $—
 $7,852
 $(1,668) $6,184
Withdrawals(4,014) —
 (4,014) 760
 (3,254)
Transfers (to) from Separate Accounts(338) —
 (338) 1,717
 1,379
Net cash provided by (used in) financing activities$1,293
 $—
 $1,293
 $809
 $2,102

16)    SUBSEQUENT EVENTS
Holdings Notes
On November 4, 2019, Holdings issued $900 million of floating rate notes due November 4, 2024 to AXA Equitable (the “Notes”). The Notes will generally bear interest at a rate per annum equal to the sum of: (i) the LIBOR rate calculated for the interest period; and (ii) 1.33%.


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Item 2. 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of financial condition and results of operations is presented pursuant to General Instruction (H)(2)(a) of Form 10-Q. The management’s narrative 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 “Note Regarding Forward-looking Statements and Information” included elsewhere herein and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in Part II, Item 7 and “Risk Factors” in Part I, Item 1A included in AXA Equitable’s Equitable Life’s Annual Report on Form 10-K for the year ended December 31, 20182019 (“20182019 Form 10-K”). The management’s narrative that follows represents a discussion and analysis of AXA Equitable’sEquitable Life’s financial condition and results of operations and not the financial condition and results of operations of AXA Equitable Holdings, Inc. (“Holdings”).
Executive Summary
Overview
We are one of America’s leading financial services companies, providing advice and solutions for helping Americans set and meet their retirement goals and protect and transfer their wealth across generations.
We benefit from our complementary mix of businesses. This business mix provides diversity in our earnings sources, which helps offset fluctuations in market conditions and variability in business results, while offering growth opportunities.
GMxB Unwind
On April 12, 2018, we completed an unwind of the reinsurance provided to us by AXA RE Arizona for certain variable annuities with GMxB features (the “GMxB Unwind”). Accordingly, all business previously reinsured to AXA RE Arizona, with the exception of the GMxB business, was novated to EQ AZ Life Re Company (“EQ AZ”), a newly formed captive insurance company organized under the laws of Arizona, which is an indirect wholly owned subsidiary of Holdings. For more information about the GMxB Unwind, see note 12 of the Notes to the Consolidated Financial Statements included in our 2018 Form 10-K for more information about the GMxB unwind.
Transfer of AB Units
In the fourth quarter of 2018, we transferred our interest in AB (including units of the limited partnership interest in AllianceBernstein L.P., units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. and shares of AllianceBernstein Corporation) to a wholly-owned subsidiary of Holdings (the “AB Business Transfer”). As a result of this transaction, the previously consolidated results of AB have been reclassified to Discontinued operations in the consolidated financial statements. For more information about the Transfer of AB Units, see Note 14 of the Notes to the Consolidated Financial Statements.
As a result of the AB Business Transfer, we now operate as a single segment entity based on the manner in which we use financial information to evaluate business performance and to determine the allocation of resources. We benefit from our complementary mix of product offerings. This mix in product offerings provides diversity in our earnings sources, which helps offset fluctuations in market conditions and variability in business results, while offering growth opportunities.
COVID-19 Impact
During the latter part of the first quarter of 2020, the COVID-19 pandemic negatively impacted the U.S. and global economies, created significant volatility and disruption in the capital markets, lowered equity market valuations, dramatically increased unemployment levels and fueled concerns that it will lead to a global recession. In addition, the pandemic resulted in the temporary closures of many businesses and schools and the institution of social distancing and sheltering in place requirements in many states and local communities. The effects from the pandemic have continued into May 2020 and are likely to persist for months to come. Governments around the world have responded to COVID-19 with economic stimulus measures, including a $2 trillion emergency relief bill passed in the U.S. These measures are intended to steady businesses and consumers until economic activity and financial markets meaningfully recover. The timing and magnitude of any such recovery, however, remains uncertain.
As a financial services company, factors such as the volatility and strength of equity markets, interest rates, consumer spending, and government debt and spending all affect the business and economic environment and, ultimately, the amount and profitability of our business. During the current economic downturn, the demand for our products and services and our investment returns could be materially and adversely affected. Action taken by state insurance departments, including the NYDFS, to require insurers to offer flexible premium payment plans, relax payment dates, waive late fees and penalties in order to avoid canceling or non-renewing polices may negatively affect our results of operations. Additionally, the profitability of many of our retirement, protection and investment products depends in part on the value of the AUM supporting them, which may decline substantially depending on any of the foregoing conditions. While our results for the first quarter of 2020 were strong, the ongoing economic impact and the potential for continued volatility and declines in the capital markets could have a significant adverse effect on our business, results of operations and financial condition, particularly if economic activity and financial markets do not recover or recover slowly.
While the COVID-19 pandemic significantly affected the capital markets and economy, we believe the actions we have previously taken help assure that our economic balance sheet is protected from interest rate and equity declines. These actions include redesigning our product portfolio to concentrate on offering less capital-intensive products and implementing a hedging strategy that manages and protects against the economic risks associated with our in-force GMxB products. In addition to our hedging strategy, we employ various other methods to manage the risks of our in-force variable annuity products, including asset-liability matching, volatility management tools within the Separate Accounts and an active in-force management program, including buyout offers for certain products. Our General Account was impacted both from declining interest rates, which had a positive effect on fair value, and sharply increased credit spreads, which had a negative impact on fair value. Due to the General Account’s exposure to U.S. government bonds and credit quality of the portfolio, we feel that our balance sheet is well positioned to withstand the extreme volatility in the equity market.

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

In light of the unprecedented decline in long-term interest rates in the quarter, we updated our long-term interest rate assumption to grade from current rates over 10-years to the 5-year historical average (currently 2.25%). This change resulted in an unfavorable impact to net income of $(1.7) billion. For additional information, see “—Significant Factors Impacting Our Results—Assumption Updates and Model Changes.”
The table below presents the impact of COVID-19 related impacts on Income (loss) from continuing operations, before income taxes and on Net income (loss) during the first quarter of 2020:
 Three Months Ended March 31, 2020
 COVID-19 Impacts
 Interest Rate Assumption Update Impacts other than Interest Rate Assumption
Update (1)		 Total
 (in millions)
Net income (loss) from continuing operations, before income taxes$(2,144) $(86) $(2,230)
Income tax (expense) benefit450
 18
 468
Net income (loss) from continuing operations, before income taxes$(1,694) $(68) $(1,762)
_______________
(1) Includes amounts primarily due to non-variable annuity hedging impacts resulting from unprecedented volatility in equity markets.
Operationally, we acted quickly and implemented our risk management and contingency plans as the COVID-19 pandemic evolved during the quarter. For example, among other things, we implemented travel restrictions, imposed self-quarantine requirements for employees and affiliated advisors who were exposed to someone who tested positive or had traveled to certain countries with active COVID-19 outbreaks and, finally, we temporarily closed our corporate locations and affiliated advisor branch offices. As a result, most of our employee and affiliated advisors are working remotely with only a few operationally critical employees working at certain of our facilities for business continuity purposes. The remote working arrangement has detracted from the ability of our affiliated advisors to sell our products in the normal course and, as a result, the demand for our products and services has been impacted and going forward could decline significantly as the pandemic persists. We are also mindful that an extended period of remote work arrangements could strain our business continuity plans, introduce additional operational risk, including cybersecurity and privacy risks, and impair our ability to effectively manage our business.
While the COVID-19 pandemic has negatively impacted aspects of our business in the first quarter of 2020, the extent and nature of its impact is highly uncertain. For additional information regarding the potential impacts of the COVID-19 pandemic, see “Risk Factors—The novel coronavirus (COVID-19) pandemic has adversely impacted our business, and the ultimate effect on our business, results of operations and financial condition will depend on future developments that are highly uncertain, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.”
Revenues
Our revenues come from three principal sources:
fee income derived from our products
premiums from our traditional life insurance and annuity products; and
investment income from our General Account investment portfolio.
Our fee income varies directly in relation to the amount of the underlying account valueAV or benefit base of our life insurance and annuity products which are influenced by changes in economic conditions, primarily equity market returns, as well as net flows. Our premium income is driven by the growth in new policies written and the persistency of our in-force policies, both of which are influenced by a combination of factors, including our efforts to attract and retain customers and market conditions that influence demand for our products. Our investment income is driven by the yield on our General Account investment portfolio and is impacted by the prevailing level of interest rates as we reinvest cash associated with maturing investments and net flows to the portfolio.


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Benefits and Other Deductions
Our primary expenses are:
policyholders’ benefits and interest credited to policyholders’ account balances;
sales commissions and compensation paid to intermediaries and advisors that distribute our products and services; and

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

compensation and benefits provided to our employees and other operating expenses.
Policyholders’ benefits are driven primarily by mortality, customer withdrawals and benefits which change in response to changes in capital market conditions. In addition, some of our policyholders’ benefits are directly tied to the AV and benefit base of our variable annuity products. Interest credited to policyholders varies in relation to the amount of the underlying AV or benefit base. Sales commissions and compensation paid to intermediaries and advisors vary in relation to premium and fee income generated from these sources, whereas compensation and benefits to our employees are more constant and impacted by market wages and decline with increases in efficiency. Our ability to manage these expenses across various economic cycles and products is critical to the profitability of our company.
Net Income Volatility
We have offered and continue to offer variable annuity products with variable annuity guaranteed benefits (“GMxB”) features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. Changes in the values of the derivatives associated with these programs due to equity market and interest rate movements are recognized in the periods in which they occur while corresponding changes in substantially all offsetting liabilities are recognized over time. This results in net income volatility as further described below. See “—Significant Factors Impacting Our Results—Impact of Hedging and GMIB Reinsurance on Results.”
In addition to our dynamic hedging strategy, we have static hedge positions designed to mitigate the adverse impact of changing market conditions on our statutory capital. We believe this program will continue to preserve the economic value of our variable annuity contracts and better protect our target variable annuity asset level. However, these static hedge positions increase the size of our derivative positions and may result in higher net income volatility on a period-over-period basis.
An additional source of Net income (loss) volatility is the impact of the Company’s annual actuarial assumption review. See “—Significant Factors Impacting Our Results— Assumption Updates and Model Changes”, for further detail of the impact of assumption updates on Net income (loss) in first quarter 2020.
Significant Factors Impacting Our Results
The following significant factors have impacted, and may in the future impact, our financial condition, results of operations or cash flows.
Impact of Hedging and GMIB Reinsurance on Results
We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. These programs include:
•
Variable annuity hedging programs. We use a dynamic hedging program (within this program, generally, we reevaluate our economic exposure at least daily and rebalance our hedge positions accordingly) to mitigate certain risks associated with the GMxB features that are embedded in our liabilities for our variable annuity products. This program utilizes various derivative instruments that are managed in an effort to reduce the economic impact of unfavorable changes in GMxB features’ exposures attributable to movements in the equity markets and interest rates. Although this program is designed to provide a measure of economic protection against the impact of adverse market conditions, it does not qualify for hedge accounting treatment. Accordingly, changes in value of the derivatives will be recognized in the period in which they occur with offsetting changes in reserves partially recognized in the current period, resulting in net income volatility. In addition to our dynamic hedging program, we have a hedging program using static hedge positions (derivative positions intended to be held to maturity with less frequent re-balancing) to protect our statutory capital against stress scenarios. This program in addition to our dynamic hedge program has increased the size of our derivative positions, resulting in an increase in net income volatility.
•
GMIB reinsurance contracts. Historically, GMIB reinsurance contracts were used to cede to affiliated and non-affiliated reinsurers a portion of our exposure to variable annuity products that offer a GMIB feature. We account for the GMIB reinsurance contracts as derivatives and report them at fair value. Gross GMIB reserves are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts. Accordingly, our gross reserves will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts. Because
Variable annuity hedging programs. We use a dynamic hedging program (within this program, generally, we reevaluate our economic exposure at least daily and rebalance our hedge positions accordingly) to mitigate certain risks associated with the GMxB features that are embedded in our liabilities for our variable annuity products. This program utilizes various derivative instruments that are managed in an effort to reduce the economic impact of unfavorable changes in GMxB features’ exposures attributable to movements in the equity markets and interest rates. Although this program is designed to provide a measure of economic protection against the impact of adverse market conditions, it does not qualify for hedge accounting treatment. Accordingly, changes in value of the derivatives will be recognized in the period in which they occur with offsetting changes in reserves partially recognized in the current period, resulting in net income volatility. In addition to our dynamic hedging program, we have a hedging program using static hedge positions (derivative positions intended to be held to maturity with less frequent re-balancing) to protect our statutory capital against stress scenarios. This program in addition to our dynamic hedge program has increased the size of our derivative positions, resulting in an increase in net income volatility. 
GMIB reinsurance contracts. Historically, GMIB reinsurance contracts were used to cede to non-affiliated reinsurers a portion of our exposure to variable annuity products that offer a GMIB feature. We account for the GMIB reinsurance



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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)


contracts as derivatives and report them at fair value. Gross GMIB reserves are calculated on the basis of assumptions related to projected benefits and related contract charges over the lives of the contracts. Accordingly, our gross reserves will not immediately reflect the offsetting impact on future claims exposure resulting from the same capital market or interest rate fluctuations that cause gains or losses on the fair value of the GMIB reinsurance contracts. Because changes in the fair value of the GMIB reinsurance contracts are recorded in the period in which they occur and a majority of the changes in gross reserves for GMIB are recognized over time, net income will be more volatile.
Effect of Assumption Updates on Operating Results
DuringOur actuaries oversee the valuation of the product liabilities and assets and review the underlying inputs and assumptions. We comprehensively review the actuarial assumptions underlying these valuations and update assumptions during the third quarter 2019, we conducted our annual review of the assumptions underlying the valuation of DAC, deferred sales inducement assets, unearned revenue liabilities, liabilities for future policyholder benefits and embedded derivatives.each year. Assumptions are based on a combination of companyCompany experience, industry experience, management actions and expert judgment and reflect our best estimate as of the date of eachthe applicable financial statement. Asstatements. Changes in assumptions can result in a result of this review, some assumptions were updated, resulting in increases and decreases insignificant change to the carrying valuesvalue of these product liabilities and assets.assets and, consequently, the impact could be material to earnings in the period of the change.
Most of the variable annuity products, variable universal life insurance and universal life insurance products we offer maintain policyholder deposits that are reported as liabilities and classified within either Separate Accounts liabilities or policyholder account balances. Our products and riders also impact liabilities for future policyholder benefits and unearned revenues and assets for DAC and deferred sales inducements (“DSI”). The valuation of these assets and liabilities (other than deposits) are based on differing accounting methods depending on the product, each of which requires numerous assumptions and considerable judgment. The accounting guidance applied in the valuation of these assets and liabilities includes, but is not limited to, the following: (i) traditional life insurance products for which assumptions are locked in at inception; (ii)��universal life insurance and variable life insurance secondary guarantees for which benefit liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments; (iii) certain product guarantees for which benefit liabilities are accrued over the life of the contract in proportion to actual and future expected policy assessments; and (iv) certain product guarantees reported as embedded derivatives at fair value.
For further details of our accounting policies and related judgments pertaining to assumption updates, see Note 2 to the notes to the Company’s consolidated financial statements and “—Summary of Critical Accounting Estimates —Liability for Future Policy Benefits” included in the Annual Report on Form 10-K for the year ended December 31, 2019.
Assumption Updates and Model Changes
We conduct our annual review of our assumptions and models during the third quarter of each year. However, we update our assumptions as needed in the event we become aware of economic conditions or events that could change require a change in our assumptions that we believe may have a significant impact to the carrying value of product liabilities and assets and consequently materially impact our earnings in the period of the change.
Due to the extraordinary economic conditions driven by the COVID-19 pandemic in the first quarter of 2020, we updated our interest rate assumption to grade from the current spot interest rate curve to an ultimate five-year historical average over a 10-year period. As such, the 10-year U.S. Treasury yield grades from the current level to an ultimate 5-year average of 2.25%.
The low interest rates environment and subsequent update to the interest rate assumption caused a loss recognition event for our life interest-sensitive products, as well as to certain run-off business. This loss recognition event caused an acceleration of DAC amortization on our life interest-sensitive products and an increase in the premium deficiency reserve on the run-off business in the first quarter of 2020.
Impact of Assumption Updates and Model Changes on Income from Continuing Operations before income taxes and Net income (loss)
The table below presents the impact of our actuarial assumption updates during the third quarter of 2019 and 2018three months ended March 31, 2020 to our Income (loss) from continuing operations, before income taxes and Net income (loss). There was no material impact from model changes during:

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the third quarter ofThree Months Ended March 31, 2020 and 2019 and 2018 to our Income (loss) from continuing operations, before income taxes or Net income (loss).(Unaudited)

 Nine Months Ended September 30,
 2019 2018
 (in millions)
Impact of assumption updates on Net income (loss):   
Variable annuity product features related assumption updates$(1,438) $(331)
All other assumption updates84
 103
Impact of assumption updates on Income (loss) from continuing operations, before income tax(1,354) (228)
Income tax (expense) benefit on assumption updates284
 41
Net income (loss) impact of assumption updates$(1,070) $(187)
 Three Months Ended March 31, 2020
 (in millions)
Impact of assumption update on Net income (loss): 
Variable annuity product features related assumption update$(1,456)
Assumption updates for other business(688)
Impact of assumption updates on Income (loss) from continuing operations, before income tax(2,144)
Income tax (expense) benefit on assumption update450
Net income (loss) impact of assumption update$(1,694)

20192020 Assumption UpdatesUpdate
The impact of the economic assumption updatesupdate in the thirdfirst quarter of 20192020 was a decrease of $1.4$2.1 billion to Income (loss) from continuing operations, before income taxes and a decrease to Net income (loss) of $1.1$1.7 billion. This includes a $1.4 billion unfavorable impact on the reserves for our Variable annuity product features as a result of unfavorable updates to our: (i)


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interest rate assumptions; and (ii) policyholder behavior, primarily lapse and withdrawal assumptions, further magnified by low interest rates.
The net impact of thesethis assumption updatesupdate on Income (loss) from continuing operations, before income taxes of $1.4$2.1 billion consisted of a decreasean increase in Policyholders’ benefits of $1.3 billion, an increase in the Amortization of DAC of $861 million, an increase in Policy charges and fee income of $11$54 million an increase in Policyholders’ benefits of $886 million, an increase in Net derivative losses of $548 million,and a decrease in Interest credited to policyholders’ account balances of $14 million and a decrease in Amortization of DAC of $77 million.
2018 Assumption Updates
The impact of assumption updates in the third quarter of 2018 was a decrease of $228 million to Income (loss) from continuing operations, before income taxes and a decrease to Net income (loss) of $187 million. This includes a $331 million unfavorable impact on the reserves for our Variable annuity product features as a result of unfavorable updates to policyholder behavior, primarily due to annuitization assumptions, partially offset by favorable updates to economic assumptions.
The assumption changes during 2018 consisted of a decrease in Policy charges and fee income of $12 million, a decrease in Policyholders’ benefits of $684 million, an increase in Net derivative losses of $1.1 billion, and a decrease in the Amortization of DAC of $165$6 million.
Macroeconomic and Industry Trends
Our business and consolidated results of operations are significantly affected by economic conditions and consumer confidence, conditions in the global capital markets and the interest rate environment.
Financial and Economic Environment
A wide varietyAlthough the first quarter started strong, uncertainties were prevalent at the end of factors continuethe quarter, as the capital markets reacted to impact global financialthe COVID-19 pandemic. As the pandemic evolved during the latter part of the quarter, equity markets experienced significant volatility and economic conditions. These factors include, among others, concerns over economic growth in the United States, continued lowdeclines, interest rates including following the sharp declinedropped to historical lows and many state and local governments ordered non-essential businesses to close and residents to shelter in the second quarterplace at home. This resulted in an unprecedented slow-down in economic activity, a related dramatic increase in unemployment and fears of 2019, falling unemployment rates, the U.S. Federal Reserve’s potential plans to lower short-term interest rates, fluctuations in the strength of the U.S. dollar, the uncertainty created by what actions the current administration may pursue, concerns overa global trade wars, changes in tax policy, global economic factors including programs by the European Central Bank and the United Kingdom’s vote to exit from the European Union and other geopolitical issues. Additionally, many of the products and solutions we sell are tax-advantaged or tax-deferred. If U.S. tax laws were to change, such that our products and solutions are no longer tax-advantaged or tax-deferred, demand for our products could materially decrease.
recession. Stressed conditions, volatility and disruptions in the capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors. An increase in market volatility could continue to affect our business, including through effects on the yields we earn on invested assets, changes in required reserves and capital and fluctuations in the value of our Account Values.AV, from which we derive our fee income. These effects could be exacerbated by uncertainty about future fiscal policy, changes in tax policy, the scope of potential deregulation and levels of global trade.
In the short- to medium-term, theThe potential for increased volatility, coupled with prevailing interest rates remaining below historical averages, could pressure sales and reduce demand for our products as consumers consider purchasing alternative products to meet their objectives. In addition, this environment could make it difficult to consistently develop products that are attractive to customers. Financial performance can be adversely affected by market volatility and equity market declines as fees driven by Account ValuesAV fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows.
We monitor the behavior of our customers and other factors, including mortality rates, morbidity rates, annuitization rates and lapse and surrender rates, which change in response to changes in capital market conditions, to ensure that our products and solutions remain attractive and profitable.
Interest Rate Environment
We believe the interest rate environment will continue to impact our business and financial performance in the future for several reasons, including the following:
Certain of our variable annuity and life insurance products pay guaranteed minimum interest crediting rates. We are required to pay these guaranteed minimum rates even if earnings on our investment portfolio decline, with the resulting investment margin compression negatively impacting earnings. In addition, we expect more policyholders to


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hold policies with comparatively high guaranteed rates longer (lower lapse rates) in a low interest rate environment.

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

Conversely, a rise in average yield on our investment portfolio should positively impact earnings. Similarly, we expect policyholders would be less likely to hold policies with existing guaranteed rates (higher lapse rates) as interest rates rise.
A prolonged low interest rate environment also may subject us to increased hedging costs or an increase in the amount of statutory reserves that our insurance subsidiaries are required to hold for GMxB features, lowering their statutory surplus, which would adversely affect their ability to pay dividends to us. In addition, it may also increase the perceived value of GMxB features to our policyholders, which in turn may lead to a higher rate of annuitization and higher persistency of those products over time. Finally, low interest rates may continue to cause an acceleration of DAC amortization or reserve increase due to loss recognition for interest-sensitive products.
For a discussion on derivatives we used to hedge interest rates, see Note 4 of the Notes to the Consolidated Financial Statements.
Regulatory Developments
We are regulated primarily by the New York State Department of Financial Services (“NYDFS”), with some policies and products also subject to federal regulation. On an ongoing basis, regulators refine capital requirements and introduce new reserving standards. Regulations recently adopted or currently under review can potentially impact our statutory reserve, capital requirements and capital requirements.
National Associationprofitability of Insurance Commissioners (“NAIC”)the industry and result in increased regulation and oversight for the industry.
•
COVID-19 Impact. In March 2020, in connection with the COVID-19 pandemic, many U.S. state insurance regulators began issuing bulletins, directives and guidance encouraging, requesting or directing licensed life insurance companies to implement life insurance policy measures such as: providing grace periods to policyholders for the payment of insurance premiums and forbearing on the cancellation or non-renewal of life insurance policies due to non-payment of premium. In addition, some states’ governors have issued emergency orders and state insurance commissioners have promulgated emergency regulations requiring such actions. For example, the NYDFS promulgated a consolidated emergency regulation on March 30, 2020 requiring insurance company actions with respect to many lines of insurance. Among other requirements, the NYDFS’ Emergency Insurance Regulation 216 provides that where a policyholder can demonstrate financial hardship as a result of the COVID-19 pandemic, insurers authorized to write life insurance or annuities in the state must, with respect to group life insurance policies, extend grace periods for the payment of premiums and fees to 90 days. With respect to any life insurance policy or annuity contracts where the policyholder can demonstrate financial hardship as a result of the COVID-19 pandemic, New York licensed insurers are prohibited from imposing any late fees or reporting such policyholder to a credit reporting agency or debt collection agency in the event of a policyholder’s failure to timely pay premium and must permit policyholders who did not make a premium payment due to financial hardship as a result of the COVID-19 pandemic to pay the premium over a 12-month period. In connection with the NYDFS’ emergency measure, an insurer shall accept a policyholder’s written attestation as proof of financial hardship as a result of the COVID-19 pandemic.
•
Variable Annuity Capital Standards. In 2015, the NAIC Financial Condition (E) Committee established a working group to study and address, as appropriate, regulatory issues resulting from variable annuity captive reinsurance transactions, including reforms that would improve the current statutory reserve and RBC framework for insurance companies that sell variable annuity products. In August 2018, the NAIC adopted the new framework developed and proposed by this working group. Following its referral to various NAIC committees to develop the full implementation details, the new framework became operational in January 2020. Among other changes, the new framework includes new prescriptions for reflecting hedge effectiveness, investment returns, interest rates, mortality and policyholder behavior in calculating statutory reserves and RBC. Once effective, it is expected to materially change the level of variable annuity reserves and RBC requirements as well as their sensitivity to capital markets including interest rate, equity markets, volatility and credit spreads. Overall, we believe the NAIC reform has moved variable annuity capital standards towards an economic framework and is consistent with how we manage our business. Equitable Life adopted the NAIC reserve and capital framework for the year ended December 31, 2019.
On February 26, 2020 the NYDFS adopted amendments to Regulation 213 that differ from the NAIC Financial Condition (E) Committee established a working group to study and address, as appropriate, regulatory issues resulting from variable annuity captive reinsurance transactions, including reforms that would improve the current statutory reserve and RBC framework for insurance companies that sell variable annuity products. In August 2018, the NAIC adopted the new framework developed and proposed by this working group. Following its referral to various NAIC committees to develop the full implementation details, the new framework becomes operational in January 2020, unless adopted earlier. Among other changes, the new framework includes new prescriptions for reflecting hedge effectiveness, investment returns, interest rates, mortality and policyholder behavior in calculating statutory reserves and RBC. Once effective, it is expected to materially change the level of variable annuity reserves and RBC requirements as well as their sensitivity to capital markets including interest rate, equity markets, volatility and credit spreads. Overall, we believe the NAIC reform has moved variable annuity capital standards towards an economic framework and is consistent with how we manage our business. The Company intends to adopt the NAIC reserve and capital frameworkframework. These amendments will not materially affect Equitable Life’s GAAP financial condition, results of operations or stockholders’ equity. However,  Regulation 213, as amended, absent management action, will require Equitable Life to carry statutory basis reserves for the year ended December 31, 2019. However, the NYDFS recently proposed a rule for adoption that differs from the standards of the NAIC framework. The proposed rule requires reservesits variable annuity contract obligations equal to be the greater of those required under (i) the NAIC standard or (ii) a revised version of the current NYDFS requirement in effect prior to the adoption of the amendment for policiescontracts issued prior to January 1, 2020, and for policies issued after that date it establishes a new standard that we believe is more conservative than the NAIC standard.  Absent management action, we believe that the adoption of the amendments will materially increase the statutory basis reserves that Equitable Life w

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

ill be required to carry and, will materially and adversely affect the capacity of Equitable Life to distribute dividends to Holdings beyond 2020. Holdings is considering management actions to mitigate the impact of Regulation 213. These actions could include seeking further amendment of Regulation 213 or exemptive relief therefrom to make the regulation’s application to Equitable Life more consistent with the NAIC reserve and capital framework, as well as changing Holdings’ underwriting practices to emphasize issuing variable annuity products out of affiliates which are not domiciled in New York, increasing the use of reinsurance and other corporate transactions intended to reduce the impact of the regulation. There can be no assurance that any management action individually or collectively will fully mitigate the impact of Regulation 213. Other state insurance regulators may also propose and adopt standards different from the NAIC framework.
Fiduciary Rules/“Best Interest” Standards of Conduct. In the wake of the March 2018 federal appeals court decision to vacate the DOL Rule, the NAIC as well as state regulators are currently considering whether to apply an impartial conduct standard similar to the DOL Rule to recommendations made in connection with certain annuities and, in one case, to life insurance policies. For example, the NAIC is actively working on a proposal to raise the advice standard for annuity sales and in July 2018, the NYDFS issued a final version of Regulation 187 that adopts a “best interest” standard for recommendations regarding the sale of life insurance and annuity products in New York. Regulation 187 took effect on August 1, 2019 with respect to annuity sales and will take effect on February 1, 2020 for life insurance sales and is applicable to sales of life insurance and annuity products in New York. In November 2018, the primary agent groups in New York launched a legal challenge against the NYDFS over the adoption of Regulation 187. In July 2019, the New York State Supreme Court dismissed the plaintiff’s legal challenge, and upheld the NYDFS’s authority to extend the rule to life insurance products. A notice of appeal was filed in September 2019. We have developed our compliance framework for Regulation 187 with respect to annuity sales and are assessing the impact it may have on our life insurance business. In addition, state regulators and legislatures in Nevada, New Jersey and Maryland have proposed measures that would make broker-dealers, sales agents, and investment advisers and their representatives to be subject to a fiduciary duty when providing products and services to customers, including pension plans and IRAs. Beyond the New York regulation, the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.


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•
Fiduciary Rules / “Best Interest” Standards of Conduct. In the wake of the March 2018 federal appeals court decision to vacate the DOL Fiduciary Rule, the DOL announced that it plans to issue revised fiduciary investment advice regulations. At this time, we cannot predict when those regulations will be issued, what form they may take or their potential impact on us. In addition, the NAIC as well as state regulators either have adopted or are currently considering whether to apply an impartial conduct standard similar to the DOL Fiduciary Rule to recommendations made in connection with certain annuities and, in one case, to life insurance policies. For example, the NAIC has amended its Suitability in Annuity Transactions Model Regulation to apply to a best interest of the consumer standard on insurance producers’ annuity recommendations and to require that insurers supervise such recommendations, and in July 2018, the NYDFS issued a final version of Regulation 187 that adopts a “best interest” standard for recommendations regarding the sale of life insurance and annuity products in New York. Regulation 187 took effect on August 1, 2019 with respect to annuity sales and took effect on February 1, 2020 for life insurance sales and is applicable to sales of life insurance and annuity products in New York. We have developed our compliance framework for Regulation 187 with respect to annuity sales as well as our life insurance business. In addition, state regulators and legislatures in Nevada, New Jersey, Maryland and Massachusetts have proposed measures that would make broker-dealers, sales agents, and investment advisers and their representatives to be subject to a fiduciary duty when providing products and services to customers, including pension plans and IRAs. Massachusetts has adopted such a regulation applying a fiduciary duty standard to broker-dealers and their agents, but it does not apply to insurance product sales, including variable annuities. Beyond the New York regulation, the likelihood of enactment of any such state-based regulation is uncertain at this time, but if implemented, these regulations could have adverse effects on our business and consolidated results of operations.
In June 2019, the SEC released a set of rules that, among other things, enhance the existing standard of conduct for broker-dealers to require them to act in the best interest of their clients “Regulation(“Regulation Best Interest”); clarify the nature of the fiduciary obligations owed by registered investment advisers to their clients; impose new disclosure requirements aimed at ensuring investors understand the nature of their relationship with their investment professionals; and restrict certain broker-dealers and their financial professionals from using the terms “adviser” or “advisor”. The effective date for compliance with these rules is June 30, 2020. Investment advisers to retail clients will also be required to file new Form CRS, providing disclosures about its standard of conduct and conflicts of interest, with the SEC and deliver copies of the Form CRS to its retail clients. The intent of these rules is to impose on broker-dealers an enhanced duty of care to their customers similar to that which applies to investment advisers under existing law. Two lawsuits, one by severalseven states and the District of Columbia and the other by private firms, were filed in September 2019 and currently are pending, seeking to vacate Regulation Best Interest. Former Rep. Barney Frank, D-Mass, and former Sen. Chris Dodd, D-Conn, recently submitted an amicus brief supporting a lawsuit initiated by XY Planning Network against the SEC with respect to Regulation Best Interest, arguing that the regulation violates the rule-making mandate in the Dodd-Frank Act and, as a result, should be struck down. We are monitoring these developments and evaluating the potential effect they may have on our business.
Derivatives Regulation. The amount In addition, FINRA is also currently focusing on how broker-dealers identify and manage conflicts of collateral we are required to pledge and the expenses we incur under our derivatives transactions are expected to increase as a result of the requirement to pledge initial margin for non-centrally cleared derivative transactions (“OTC” derivatives) entered into after the phase-in period, which will likely be applicable to us in September 2020 as a result of adoption by the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve Board, the FDIC, the Farm Credit Administration, and the Federal Housing Finance Agency and the CFTCinterest.
•
Derivatives Regulation. The amount of collateral we are required to pledge and the expenses we incur under our derivatives transactions are expected to increase as a result of the requirement to pledge initial margin for non-centrally cleared derivative transactions (“OTC” derivatives) entered into after the phase-in period, which will likely be applicable to us in September 2021 as a result of adoption by the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve Board, the FDIC, the Farm Credit Administration, and the Federal Housing Finance Agency and the Commodity Futures Trading Commission of final margin requirements for OTC derivatives. Also, in June and September 2019, the SEC adopted a set of rules that establish capital, margin and segregation requirements for security-based swaps and set recordkeeping and reporting requirements for OTC derivatives. Also, the SEC has finalized and adopted the final set of rules related to security-based swaps, which triggers the compliance date for security-based swap entities registration and compliance with previously adopted rules regarding margin, capital, segregation, recordkeeping and reporting and business conduct for security-based swaps. The rules became effective on April 6, 2020. The compliance date for registration of (i) security-based swap dealers that incur a registration obligation as a result of meeting certain thresholds to be set by the SEC on August 6, 2021 will be November 1, 2021 and (ii) major security-based swap participants that incur a registration obligation as a result of

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

security-based swap dealers, major security-based swap participantsactivities in their quarter ending September 30, 2021 will be December 1, 2021. We continue to monitor developments and broker-dealers. The rules are part of the larger regulatory framework that the SEC is establishing over non-bank security-based swap dealers (“SBSD’s”), non-bank major security-based swap dealers (“MSBSP’s”), and certain broker-dealers that are not SBSD’s that imposes registration, disqualification, recordkeeping and reporting requirements, and cross-border regulation. The compliance date for the new rules is 18 months after the adoption by the SEC of the final rules on cross-border application of security-based swap requirements, which have been proposed and are pending. We are monitoring these developments and evaluating the potential effect these rules might have on our business.
Impact of the SECURE Act
On December 20, 2019, President Trump signed into law the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”). The SECURE Act contains a number of provisions that affect the administration and operation of defined contribution plans such as 401(k) and 403(b) plans and IRAs, including provisions that encourage additional retirement savings and lifetime income options, promote the adoption of retirement plans by small employers, provide lifetime income portability, and accelerate the distribution of retirement benefits of deceased retirees. Many provisions of the SECURE Act become effective for plan years beginning after December 31, 2019. At this time, we cannot predict the impact the SECURE Act will have on our business, financial condition or results of operations.
Impact of the CARES Act
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. Several tax provisions were included as part of a broad economic relief package. These include the temporary allowance of Net Operating Loss carrybacks and the acceleration of Alternative Minimum Tax (“AMT”) credit refunds. The Company is assessing the economic and financial statement impact of these provisions.
Impact of the Tax Reform Act
OnIn December 22, 2017, President Trump signed into law the Tax Reform Act a broad overhaul of the U.S. Internal Revenue Code that changed long-standing provisions governing the taxation of U.S. corporations, including life insurance companies.
was signed into law. The Tax Reform Act reduced the federal corporate income tax rate to 21% and repealed the corporate Alternative Minimum Tax (“AMT”)AMT while keeping existing AMT credits. It also contained measures affecting our insurance companies,the Company, including changes to the DRD, insurance reserves and tax DAC. As a result of the Tax Reform Act, our Net incomeIncome has improved.
In August 2018, the NAIC adopted changes to the RBC calculation, including the C-3 Phase II Total Asset Requirement for variable annuities, to reflect the 21% corporate income tax rate in RBC, which resulted in a reduction to our Combined RBC Ratio.
Overall, the Tax Reform Act had a net positive economic impact on us and we continue to monitor regulations related to this reform.
Consolidated Results of Operations
Our consolidated results of operations are significantly affected by conditions in the capital markets and the economy because we offer market sensitive products. These products have been a significant driver of our results of operations. Because the future claims exposure on these products is sensitive to movements in the equity markets and interest rates, we have in place various hedging and reinsurance programs that are designed to mitigate the economic risks of movements in the equity markets and interest rates. The volatility in Net income attributable to AXA Equitable Life for the periods presented below results from the mismatch between: (i) the change in carrying value of the reserves for GMDB and certain GMIB features that do not fully and immediately reflect the impact of equity and interest market fluctuations; and (ii) the change in fair value of products with the GMIB feature that has a no-lapse guarantee, and our hedging and reinsurance programs.
Reclassification of DAC Capitalization


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During the fourth quarter of 2018, we changed the presentation of the capitalization of DAC in the consolidated statements of income for all prior periods presented herein by netting the capitalized amounts within the applicable expense line items, such as Compensation and benefits, Commissions and Other operating costs and expenses. Previously, the capitalized amounts were netted within the Amortization of DAC. There was no impact on Net income (loss) or Comprehensive income (loss) from this reclassification. See Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for further detail of the reclassification adjustments for the nine months ended September 30, 2018.
The following table summarizes our consolidated statements of income (loss) (unaudited) for the ninethree months ended September 30,March 31, 2020 and 2019:

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 and 2018:(Unaudited)

Consolidated Statement of Income (Loss)
(Unaudited)
Nine Months Ended September 30,Three Months Ended March 31,
2019 20182020 2019
(in millions)(in millions)
REVENUES      
Policy charges and fee income$2,577
 $2,644
$904
 $859
Premiums696
 657
236
 232
Net derivative gains (losses)(2,075) (3,102)9,533
 (1,555)
Net investment income (loss)2,527
 1,693
591
 904
Investment gains (losses), net:      
Total other-than-temporary impairment losses—
 (4)
Credit losses on AFS debt securities and loans(12) —
Other investment gains (losses), net181
 77
67
 (8)
Total investment gains (losses), net181
 73
55
 (8)
Investment management and service fees761
 781
252
 248
Other income40
 41
17
 10
Total revenues4,707
 2,787
11,588
 690
   
BENEFITS AND OTHER DEDUCTIONS      
Policyholders’ benefits3,321
 1,987
2,597
 819
Interest credited to policyholders’ account balances837
 754
289
 269
Compensation and benefits237
 300
80
 82
Commissions462
 465
161
 157
Interest expense4
 27
—
 4
Amortization of deferred policy acquisition costs341
 303
1,058
 165
Other operating costs and expenses614
 2,717
213
 184
Total benefits and other deductions5,816
 6,553
4,398
 1,680
Income (loss) from continuing operations, before income taxes(1,109) (3,766)7,190
 (990)
Income tax (expense) benefit from continuing operations284
 828
Net income (loss) from continuing operations(825) (2,938)
Less: Net (income) loss from discontinued operations, net of taxes and noncontrolling interest—
 (81)
Income tax (expense) benefit(1,454) 162
Net income (loss)(825) (2,857)5,736
 (828)
Less: Net income (loss) attributable to the noncontrolling interest3
 1
(7) 2
Net income (loss) attributable to AXA Equitable$(828) $(2,858)
Net income (loss) attributable to Equitable Life$5,743
 $(830)

The following discussion compares the results for the ninethree months ended September 30, 2019March 31, 2020 to the results for the ninethree months ended September 30, 2018.March 31, 2019.
NineThree Months Ended September 30, 2019March 31, 2020 Compared to the NineThree Months Ended September 30, 2018March 31, 2019
Net Income (Loss) Attributable to AXA Equitable Life
Net lossincome (loss) attributable to AXA Equitable decreasedLife increased by $2.0$6.6 billion, to a net lossincome of $828 million$5.7 billion for the first ninethree months of 2019ended March 31, 2020 from a net loss of $2.9 billion$830 million for the first ninethree months of 2018,ended March 31, 2019, primarily driven by the following notable items:
•
Increase in Net derivative gains of $11.1 billion driven by gains from freestanding derivatives reflecting the decrease in both equity market and interest rates in the first quarter of 2020 compared to increases in the first quarter of 2019, as well as the positive impacts from non-performance risk and credit spreads.
•
Increase in Net investment gains of $63 million primarily due to the rebalancing of our U.S. Treasury portfolio.
•
Increase in Policy charges and fee income of $45 million mainly due to an decrease in the initial fee liability for our life products reflecting the impact of assumption updates related to COVID-19 (offset in Amortization of DAC).
•
Increase in Investment management and service fees and Other income of $11 million primarily due to higher average Separate Accounts AV in our variable annuity products.



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Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)


Other operating costs and expenses decreased by $2.1Partially offsetting this increase were the following notable items:
Increase in Policyholders’ benefits of $1.8 billion mainly due to the $1.9 billion amortization of the deferred cost of reinsurance asset, including the write-off of $1.8 billion of this asset and the settlement of outstanding payments of $273 million, both related to the GMxB Unwind in 2018.
Net derivative losses decreased by $1.0 billion mainly due to income from freestanding derivatives reflecting lower interest rates partially offset by an increase in our GMxB liabilities driven by the fair valueunfavorable impact from assumption updates related to COVID-19 as well as the adverse impact of the GMIBNLG liability reflectingdrop in equity market in the impactfirst quarter of lower interest rates partially2020, offset by lesshigher Net Derivatives gains.
Increase in Amortization of an increaseDAC of $893 million mainly in our life products driven by the liability as a result of assumption updates (a $548 million and $1.1 billion unfavorable impact of assumption updates related to COVID-19. As a result of the lower interest rate assumption, our life products experienced loss recognition resulting in 2019 and 2018, respectively).an acceleration of DAC amortization.
Decrease in Net investment income (loss) increased by $834of $313 million mainly due to a change in the market value of trading securities supporting our variable annuity products due to lower interest rateshigher credit spreads in 2020 compared to 2019.
Increase in Other operating costs and higher investment income from higher asset balances and General Account investment portfolio optimization.
Net investment gains increased by $108 million primarily due to the rebalancingexpenses of our U.S. Treasury portfolio partially offset by a real estate impairment in 2019.
Compensation and benefits decreased by $63$29 million mainly due to a non-recurring loss resulting from the annuity purchase transaction and partial settlement of the employee pension planhigher allocated separation costs.
Increase in the first nine months of 2018.
Interest expense decreased by $23 million due to lower repurchase agreement costs.
Partially offsetting this decrease were the following notable items:
Policyholders’ benefits increased by $1.3 billion mainly driven by the impact of assumption updates in our GMxB reserves (the $889 million impact of unfavorable assumption updates in 2019 compared to the $734 million impact of favorable assumption updates in 2018), the impacts of interest rates and equity markets and the absence of a $490 million write-off of ceded reserves resulting from the GMxB unwind in 2018. Partially offsetting the increase in our GMxB reserves was a decrease in our life reserves mainly driven by the $31 million impact of favorable assumption updates in 2019 compared to the $48 million impact of unfavorable assumption updates in 2018, combined with a reserve adjustment on our disability waiver rider reserves.
Interest credited to policyholders’ account balances increased by $83of $20 million primarilymainly driven by higher SCS AV as a result of new business growth and higher interest credited on funding agreements, due to higher balances.growth.
Amortization of DAC increased by $38 million mainly due to higher amortization in our Retirement products primarily due to the impact of interest rate and equity market movements on assets supporting our SCS block and higher normal amortization partially offset by the higher favorable impact of assumption updates ($93 million in 2019 compared to $77 million in 2018). Partially offsetting the higher amortization of DAC in our Retirement products was lower amortization in our Life products mainly due to the non repeat of a $187 million DAC write-off as we exited loss recognition in the second quarter of 2018 and an in force update that reduced the amortization of DAC by $27 million (offset in policy charges and fee income) in 2019 partially offset by the $16 million impact of unfavorable assumption updates in 2019 compared to the $88 million impact of favorable assumption updates in 2018.
Policy charges and fee income and Premiums decreased by $28 million mainly due to lower fees from our retirement products driven by lower average Separate Accounts AV and an inforce update that reduced our policy charges and fee income (offset in Amortization of DAC) for our life products. Partially offsetting the lower fee income were higher premiums from our employee benefits and term life products and and lower ceded fee income as a result of the GMxB unwind.
Investment management and service fees and Other income decreased by $21 million primarily due to lower average Separate Accounts AV in our individual retirement products.
Income tax benefit decreased by $544 million primarily driven by a lower pre-tax loss.
•
Income tax benefit decreased by $1.6 billion primarily driven by a pre-tax income in the first quarter of 2020 compared to pre-tax loss in the first quarter of 2019.
See “—Significant Factors Impacting Our Results—Assumption Updates and Model Changes” for more information regarding the COVID-19-related assumption updates.update.
Adoption and Future Adoption of New Accounting Pronouncements
See Note 2 of the Notes to the Consolidated Financial Statements included herein.


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Summary of Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in our consolidated financial statements included elsewhere herein. For a discussion of our significant accounting policies, see Note 2 of the Notes to the Consolidated Financial StatementsCompany’s consolidated financial statements included in our 2018the Annual Report on Form 10-K.10-K for the year ended December 31, 2019. The most critical estimates include those used in determining:
liabilities for future policy benefits;
accounting for reinsurance;
capitalization and amortization of DAC and policyholder bonus interest credits;
estimated fair values of investments in the absence of quoted market values and investment impairments;
estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation;
measurement of income taxes and the valuation of deferred tax assets; and
liabilities for litigation and regulatory matters.
In applying our accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries while others are specific to our business and operations. Actual results could differ from these estimates.
A discussion of each of the critical accounting estimates may be found in the 2018 Form 10-K, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates.”
Item 3.     Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.


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Item 4.
CONTROLS AND PROCEDURES     Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The management of the Company, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2019.March 31, 2020. This evaluation is performed to determine if our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is accumulated and communicated to management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded,

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Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms.
Due to the material weaknessesweakness described below, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2019.March 31, 2020.
As previously reported, the Company identified twoa material weaknessesweakness in the design and operation of the Company’s internal control over financial reporting.  A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. The Company’s management, including the Company’s CEO and CFO, have concluded that we do not:not maintain effective controls to timely validate that actuarial models are properly configured to capture all relevant product features and provide reasonable assurance timely reviews of assumptions and data have occurred, and, as a result, errors were identified in future policyholders’ benefits and deferred policy acquisition costs balances.
(i)maintain effective controls to timely validate that actuarial models are properly configured to capture all relevant product features and provide reasonable assurance timely reviews of assumptions and data have occurred, and, as a result, errors were identified in future policyholders’ benefits and DAC balances; and
(ii)maintain sufficient experienced personnel to prepare the Company’s consolidated financial statements and to verify consolidating and adjusting journal entries are completely and accurately recorded to the appropriate accounts and, as a result, errors were identified in the consolidated financial statements, including in the presentation and disclosure between sections of the statements of cash flows.
TheseThis material weaknessesweakness resulted in misstatements in the Company’s previously issued annual and interim financial statements and resulted in:
(i)the revision of the interim financial statements for the nine, six, and three months ended September 30, June 30, and March 31, 2018 and 2017, respectively, and the annual financial statements for the year ended December 31, 2017;
(ii)the revision for the three and six months ended March 31, 2018 and June 30, 2018, respectively, as well as the three, six and nine months ended March 31, 2017, June 30, 2017 and September 30, 2017, respectively and for the years ended December 31, 2017 and 20162016;
(iii)the revision of the interim financial statements for the three months ended March 31, 2018, the nine months ended September 30, 2017, the six months ended June 30, 2017 and the annual financial statements for the years ended December 31, 2017 and 20162016; and
(iv) the restatement of the annual financial statements for the year ended December 31, 2016, the revision to each of the quarterly interim periods for 2017 and 2016, and the revision of the annual financial statements for the year ended December 31, 2015.
These revisions and restatements were directly related to the material weaknessesweakness described above and not indicative of any new material weaknesses. Until remediated, there is a reasonable possibility that thesethis material weaknessesweakness could result in a material misstatement of the Company’s consolidated financial statements or disclosures that would not be prevented or detected.


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Remediation Status of Material WeaknessesWeakness
Management continues to execute its plan moving towards remediation ofFor the material weaknesses. Since identifying the material weaknesses,weakness related to Actuarial Models, Assumptions and Data, management has performed the following activities:implemented and tested new or enhanced controls as described below but determined that further sustained operation is necessary.
Remediation Activities: Material Weakness Related to Actuarial Models, Assumptions and Data
We have designed, implemented and implementedtested an enhanced model validation control framework, including a rotational schedule to periodically re-validate all U.S. GAAP models.
We have designed, implemented and implementedtested enhanced controls and governance processes for new model implementations.
We have designed, implemented and implementedtested enhanced controls for model changes.
We have designed, implemented and implementedtested enhanced controls over the annual assumption setting process, including a comprehensive master assumption inventory and risk framework.
We have designed, implemented and implementedtested new controls and are redesigning certain of these controls to validate the reliabilityreliability of significant data flows feeding actuarial models and assumptions.
assumptions
WeFirst quarter 2020 controls have begunoperated as designed. However, given that certain controls noted above have only operated effectively in one financial closing cycle during the process of testing the designyear, and operating effectiveness of the newly implemented controls.
Material Weakness Related to Insufficient Personnel and Journal Entry Process
With respect to insufficient personnel,controls are still being redesigned, we have strengthened our finance team by adding approximately 25 employees to the Accountingdetermined that further work and Financial Reporting areas. These additional resources have provided the additional requisite skills and experience needed to support a public-company accounting and reporting environment, with the majority possessing a CPA license, “Big 4” public accounting experience, and/or prior working experience in public-company finance roles. We have conducted both specific job-related training and general training on SOX controls and U.S. GAAP-related technical topics to new and existing staff.
To improve controls over journal entries, a less controlled secondary process that was used for consolidating certain entities, reflecting adjustments to prior periods and generating the business segment disclosures, has been eliminated. Beginning with third quarter 2018, all journal entries are recorded in the Company’s general ledger and the secondary processsustained operation is no longer necessary.
We have enhancedappropriate before concluding the controls over journal entries throughare operationally effective.

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Consolidated Statements of Cash Flows
For the implementation of new standards designed to ensure effective reviewThree Months Ended March 31, 2020 and approval of journal entries with sufficient supporting documentation.2019 (Unaudited)
We have designed and implemented new management review controls within the period end financial reporting process that will operate at a level of precision sufficient to detect errors that could result in a material misstatement.
•We have begun the process of testing the design and operating effectiveness of the newly implemented controls.
While progress has been made to remediate both material weaknesses, as of September 30, 2019, we are still in the process of developing and implementing the enhanced processes and procedures and testing the operating effectiveness of these improved controls. We believe our actions will be effective in remediating the material weaknesses, and we continue to devote significant time and attention to these efforts. In addition, the material weaknesses will not be considered remediated until the applicable remedial processes and procedures have been in place for a sufficient period of time and management has concluded, through testing, that these controls are effective. Accordingly, the material weaknesses are not remediated as of September 30, 2019. Management will conclude on the effectiveness of the above remediation efforts of the material weaknesses in connection with the Company’s December 31, 2019 consolidated financial statements.
Changes in Internal Control Over Financial Reporting
As described above, the Company continues to design and implement additionalcertain controls in connection with its remediation plan. These remediation efforts related to the material weaknessesweakness described above represent changes in our internal control over financial reporting for the quarter ended September 30, 2019March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



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PART II. Part II     OTHER INFORMATION
Item 1.     Legal Proceedings
SeeFor information regarding certain legal proceedings pending against us, see Note 13 of the Notes to the Consolidated Financial Statements contained herein. Except as disclosedStatements. See also “Risk Factors—Legal and Regulatory Risks—Legal and regulatory actions could have a material adverse effect on our reputation, business, results of operations or financial condition” in Note 13, there have been no new material legal proceedings and no new material developments in legal proceedings previously reported inour Annual Report on Form 10-K for the 2018 Form 10-K.year ended December 31, 2019.
Item 1A. Risk Factors
You should carefully consider the risks described in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2018, as amended or supplemented in our subsequently filed Quarterly Report on Form 10-Q. These risks could materially affect our business, consolidated results of operations or financial condition. These risks are not exclusive, and additional risks2019. Risks to which we are subject include, but are not limited to, the factors mentioned under “Note Regarding Forward-Looking Statements and Information” above and the risks of our businesses described elsewhere in this Quarterly Report on Form 10-Q.
The novel coronavirus (COVID-19) pandemic has adversely impacted our business, and the ultimate effect on our business, results of operations and financial condition will depend on future developments that are highly uncertain, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.
The COVID-19 pandemic has negatively impacted the U.S. and global economies, lowered equity market valuations, created significant volatility and disruption in the capital markets, dramatically increased unemployment levels and has fueled concerns that it will lead to a global recession. In addition, the pandemic has resulted in temporary closures of many businesses and schools and the institution of social distancing and sheltering in place requirements in many states and local communities. Businesses or schools that reopen may also restrict or limit access for the foreseeable future or on a permanent basis. As a result, our ability to sell products through our regular channels and the demand for our products and services could be significantly impacted. The extent to which the COVID-19 pandemic impacts our business, results of operations or financial condition will depend on future developments that are highly uncertain, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic, and could cause us to revise financial targets or other guidance we have previously provided.
While we have implemented risk management and contingency plans and taken other precautions with respect to the COVID-19 pandemic, such measures may not adequately protect our business from the full impacts of the pandemic. Currently, most of our employees and affiliated advisors are working remotely with only a few operationally critical employees working at certain of our facilities for business continuity purposes. An extended period of remote work arrangements could strain our business continuity plans, introduce additional operational risk, including but not limited to cybersecurity risks, and impair our ability to effectively manage our business. We also outsource a variety of functions to third parties, including certain of our administrative operations which are in India. As a result, we rely upon the successful implementation and execution of the business continuity planning of such entities in the current environment. While we closely monitor the business continuity activities of these third parties, successful implementation and execution of their business continuity strategies are largely outside our control. If one or more of the third parties to whom we outsource certain critical business activities experience operational failures as a result of the impacts from the spread of COVID-19, or claim that they cannot perform due to a force majeure, it could adversely impact our business, results of operations or financial condition.
Economic uncertainty and unemployment resulting from the impacts of the spread of COVID-19 may have an adverse effect on product sales and also result in existing policyholders seeking sources of liquidity and withdrawing at rates greater than we previously expected. COVID-19 could have an adverse effect on our insurance business due to increased mortality and, in certain cases, morbidity rates. In addition, many state insurance departments, including the NYDFS, are requiring insurers to offer flexible premium payment plans, relax payment dates, waive late fees and penalties in order to avoid canceling or non-renewing polices. If policyholder lapse and surrender rates or premium waivers significantly exceed our expectations, we may need to change our assumptions, models or reserves. The cost of reinsurance to us for these policies could increase, and we may encounter decreased availability of such reinsurance. Each of these could have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flows.
Our investment portfolio (specifically, the increased risk of defaults, downgrades and volatility in the valuations of certain investment assets we hold) has been, and may continue to be, adversely affected as a result the COVID-19 pandemic and uncertainty regarding its outcome. Moreover, declines in equity markets and interest rates, reduced liquidity or a continued slowdown in the U.S. or in global economic conditions may also adversely affect the values and cash flows of these assets. Our

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AXA EQUITABLE LIFE INSURANCE COMPANY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)

investments in mortgages and commercial mortgage-backed securities have been, and could continue to be, negatively affected by delays or failures of borrowers to make payments of principal and interest when due. In some jurisdictions, local governments have imposed delays or moratoriums on many forms of enforcement actions.  More broadly, increased unemployment, slowing economic conditions, and uncertainty about occupant requirements evolving out of the COVID-19 crisis could negatively impact underlying real estate values over the longer term. The recent market volatility has also caused significant increases in credit spreads, which may increase our borrowing costs and decrease product fee income. Further, severe market volatility may leave us unable to react to market events in a prudent manner consistent with our historical investment practices. Market dislocations, decreases in observable market activity or unavailability of information, in each case, arising from the spread of COVID-19, may restrict our access to key inputs used to derive certain estimates and assumptions made in connection with financial reporting or otherwise. Restricted access to such inputs may make our financial statement balances and estimates and assumptions used to run our business subject to greater variability and subjectivity.
Additionally, COVID-19 could negatively affect our internal controls over financial reporting as the vast majority of our employees are required to work from home and on-site locations remain closed, and therefore new processes, procedures, and controls could be required to respond to changes in our business environment. Further, should any key employees become ill from COVID-19 and unable to work, our ability to operate our internal controls may be adversely impacted.
Any of these events could cause or contribute to the risks and uncertainties enumerated in our Annual Report on Form 10-K and could materially adversely affect our business, results of operations or financial condition.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3.     Defaults Upon Senior Securities
Not applicable.
Item 4.    Mine Safety Disclosures
Not Applicable.applicable.
Item 5.    Other Information
Iran Threat Reduction and Syria Human Rights Act
Holdings, AXA Equitable and their subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and Syria Human Rights Act, nor were they involved in the AXA Group matters described immediately below.
The non-U.S. based subsidiaries of AXA operate in compliance with applicable laws and regulations of the various jurisdictions in which they operate, including applicable international (United Nations and European Union) laws and regulations. While AXA Group companies based and operating outside the United States generally are not subject to U.S. law, as an international group, AXA has in place policies and standards (including the AXA Group International Sanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law.
AXA has informed us that AXA Konzern AG, an AXA insurance subsidiary organized under the laws of Germany, provides accident and health insurance to diplomats based at the Iranian Embassy in Berlin, Germany. The total annual premium of these policies is approximately $109,150 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $18,385.
In addition, AXA has informed us that AXA Insurance Ireland, an AXA insurance subsidiary, provides statutorily required car insurance under four separate policies to the Iranian Embassy in Dublin, Ireland. AXA has informed us that compliance with the Declined Cases Agreement of the Irish Government prohibits the cancellation of these policies unless another insurer is willing to assume the coverage. The total annual premium for these policies is approximately $7,115 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $853.
Also, AXA has informed us that AXA Sigorta, a subsidiary of AXA organized under the laws of the Republic of Turkey, provides car insurance coverage for vehicle pools and compulsory earthquake coverage of the Iranian General Consulate and the Iranian Embassy in Istanbul, Turkey. Motor liability insurance coverage is compulsory in Turkey and cannot be canceled unilaterally. The total annual premium in respect of these policies is approximately $3,150 and the annual net profit, which is difficult to calculate with precision, is estimated to be $473.


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Additionally, AXA has informed us that AXA Winterthur, an AXA insurance subsidiary organized under the laws of Switzerland, provides Naftiran Intertrade, a wholly-owned subsidiary of the Iranian state-owned National Iranian Oil Company, with life, disability and accident coverage for its employees. In addition, AXA Winterthur also provides car and property insurance coverage for the Iranian Embassy in Bern. The provision of these forms of coverage is mandatory in Switzerland. The total annual premium of these policies is approximately $396,597 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $59,489.
Also, AXA has informed us that AXA Egypt, an AXA insurance subsidiary organized under the laws of Egypt, provides the Iranian state-owned Iran Development Bank, two life insurance contracts, covering individuals who have loans with the bank. The total annual premium of these policies is approximately $20,650 and annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $2,000.
In addition, AXA has informed us that AXA Hong Kong, an AXA insurance subsidiary organized under the laws of Hong Kong, provided the Iranian state-owned Hong Kong Branch of Melli Bank PLC, which was re-designated on November 5, 2018 pursuant to E.O. 13224, with group health insurance for its employees. This business has now been canceled. The total annual premium of these policies is approximately $27,122 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $4,339.
Lastly, AXA has informed us that AXA XL, which AXA acquired during the third quarter of 2018, through various non-U.S. subsidiaries, provides insurance to marine policyholders located outside of the U.S. or reinsurance coverage to non-U.S. insurers of marine risks as well as mutual associations of ship owners that provide their members with protection and liability coverage. The provision of these coverages may involve entities or activities related to Iran, including transporting crude oil, petrochemicals and refined petroleum products. AXA XL’s non-U.S. subsidiaries insure or reinsure multiple voyages and fleets containing multiple ships, so they are unable to attribute gross revenues and net profits from such marine policies to activities with Iran. As the activities of these insureds and re-insureds are permitted under applicable laws and regulations, AXA XL intends for its non-U.S. subsidiaries to continue providing such coverage to its insureds and re-insureds to the extent permitted by applicable law.
The aggregate annual premium for the above-referenced insurance policies is approximately $563,784, representing approximately 0.0006% of AXA’s 2018 consolidated revenues, which exceed $100 billion. The related net profit, which is difficult to calculate with precision, is estimated to be $85,539, representing approximately 0.002% of AXA’s 2018 aggregate net profit.None.
Item 6.    Exhibits
NumberDescription and Method of Filing
31.1#
#Section 302 Certification ofmade by the Registrant’sregistrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2#
#Section 302 Certification ofmade by the Registrant’sregistrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1#
#Section 906 Certification ofmade by the Registrant’sregistrant’s Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2#
#Section 906 Certification ofmade by the Registrant’sregistrant’s Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
_____________
104
#Filed herewith.Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibits 101).

______________
#    Filed herewith.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, AXA Equitable Life Insurance Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.authorized May 13, 2020.
Date: November 8, 2019May 13, 2020AXA EQUITABLE LIFE INSURANCE COMPANY
   
 By:/s/ Anders Malmström
  Name:Anders Malmström
  Title:Senior Executive Director and Chief Financial Officer
(Principal Financial Officer)
    
Date: November 8, 2019May 13, 2020 /s/ William Eckert
  Name:William Eckert
  Title:Managing Director and Chief Accounting Officer and Controller
(Principal Accounting Officer)



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