~~0000727920 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2019-12-31~~

0000727920us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberefl:AssetsofConsolidatedVIEsVOEsMember2019-12-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————————————

FORM 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2020



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. ~~001-20501~~000-20501

————————————————

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~Equitable Financial 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)

(~~212~~) (212) 554-1234

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

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. Yes ☒ 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). Yes ☒ 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 filer

☒

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 ☒

As of ~~March 10,~~November 3, 2020, 2,000,000 shares of the registrant’s $1.25 par value Common Stock were outstanding, all of which were owned indirectly by Equitable Holdings, Inc.

REDUCED DISCLOSURE FORMAT

~~AXA~~ Equitable Financial Life Insurance Company meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

See Notes to Consolidated Financial Statements (Unaudited).

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	~~Unaudited~~ Consolidated Balance Sheets, ~~March 31,~~September 30, 2020 (Unaudited) and December 31, 2019	4
	~~Unaudited~~ Consolidated Statements of Income (Loss), Three and Nine Months Ended ~~March 31,~~September 30, 2020 and 2019 (Unaudited)	45
	~~Unaudited~~ Consolidated Statements of Comprehensive Income (Loss), Three and Nine Months Ended ~~March 31,~~September 30, 2020 and 2019 (Unaudited)	56
	~~Unaudited~~ Consolidated Statements of Equity, Three and Nine Months Ended ~~March 31,~~Septe mber 30, 2020 and 2019 (Unaudited)	67
	~~Unaudited~~ Consolidated Statements of Cash Flows, ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2020 and 2019 (Unaudited)	78
	Notes to Consolidated Financial Statements (Unaudited):
	Note 1 - Organization	910
	Note 2 - Significant Accounting Policies	910
	Note 3 - Investments	1619
	Note 4 - Derivatives	2528
	Note 5 - Closed Block	2933
	Note 6 - Insurance Liabilities	3135
	Note 7 - Fair Value Disclosures	3338
	Note 8 - Loans to Affiliates	4550
	Note 9 - Income Taxes	4551
	Note 10 - Related Party ~~Transactions~~	4551
	Note 111 1 - Equity	4551
	Note 121 2 - Redeemable Noncontrolling Interest	4652
	Note 13 - Commitments and Contingent Liabilities	4652
	Note 14 - ~~Subsequent Events~~Revision of Prior Period Financial Statements	4955
	Note 15 - Subsequent Events	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	77	50
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	87	59
Item 4.	Controls and Procedures	87	59

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	~~Legal Proceedings~~90	62
Item 1A.	Risk Factors	~~Risk Factors~~90	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90	63
Item 3.	Defaults Upon Senior Securities	90	63
Item 4.	Mine Safety Disclosures	90	63
Item 5.	Other Information	~~Other Information~~90	63
Item 6.	Exhibits	~~Exhibits~~90	63

Signatures		6491

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 Financial Life Insurance Company (“Equitable ~~Life”~~Financial”) and its consolidated subsidiaries. “We,” “us” and “our” refer to Equitable ~~Life~~Financial and its consolidated subsidiaries, unless the context refers only to Equitable ~~Life~~Financial as a corporate entity. There can be no assurance that future developments affecting Equitable ~~Life~~Financial 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, access to and cost of capital and the impact of COVID-19 and related economic conditions; (ii) operational factors, remediation of our material weakness, indebtedness, protection of confidential customer information or proprietary business information, information systems failing or being compromised, our separation and rebranding, strong industry competition and catastrophic events, such as the outbreak of pandemic diseases including ~~COVID-19~~;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 lapse experience differing from pricing expectations or reserves, amortization of Deferred 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.

Forward-looking statements should be read in conjunction with the other cautionary statements, risks, uncertainties and other factors identified in Equitable ~~Life’s~~Financial’s Annual Report on Form 10-K for the year ended December 31, 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.

Part I FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Consolidated Balance Sheets

~~March 31,~~September 30, 2020 (Unaudited) and December 31, 2019

March 31, 2020 December 31, 2019
(in millions, except share data)
ASSETS
Investments:
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 loans 3,255
3,270
Other equity investments (1) 1,210
1,149
Trading securities, at fair value 6,076
6,598
Other invested assets 1,595
2,156
Total investments 90,613
87,625
Cash and cash equivalents 7,492
1,492
Deferred policy acquisition costs 4,068
4,337
Amounts due from reinsurers (allowance for credit losses of $6 at March 31, 2020) 3,031
3,001
Loans to affiliates 1,200
1,200
GMIB reinsurance contract asset, at fair value 3,305
2,466
Current and deferred income taxes —
224
Other assets 5,000
3,050
Separate Accounts assets 104,132
124,646
Total Assets $ 218,841
$ 228,041

LIABILITIES
Policyholders’ account balances $ 52,385
$ 55,421
Future policy benefits and other policyholders' liabilities 37,830
33,976
Broker-dealer related payables 473
428
Amounts due to reinsurers 75
105
Current and deferred income taxes 1,637
—
Other liabilities 3,396
1,768
Separate Accounts liabilities 104,132
124,646
Total Liabilities $ 199,928
$ 216,344
Redeemable noncontrolling interest (2) $ 32
$ 39
Commitments and contingent liabilities (Note 13)

EQUITY
Equity attributable to Equitable Life:

Common stock, $1.25 par value; 2,000,000 shares authorized, issued and outstanding $ 2
$ 2
Additional paid-in capital 7,811
7,809
Retained earnings 7,953
2,242
Accumulated other comprehensive income (loss) 3,106
1,592
Total equity attributable to Equitable Life 18,872
11,645
Noncontrolling interest 9
13
Total Equity 18,881
11,658
Total Liabilities, Redeemable Noncontrolling Interest and Equity $ 218,841
$ 228,041


	September 30, 2020		December 31, 2019
	(in millions, except share data)
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost of $66,277 and $59,278) (allowance for credit losses of $13 at September 30, 2020)	$	74,814	$	62,362
Mortgage loans on real estate (net of allowance for credit losses of $70 at September 30, 2020)	12,785		12,090

Policy loans	3,647		3,270
Other equity investments (1)	1,260		1,149
Trading securities, at fair value	5,787		6,598
Other invested assets	1,523		2,156
Total investments	99,816		87,625
Cash and cash equivalents	3,962		1,492
Deferred policy acquisition costs	3,735		4,222

Amounts due from reinsurers (allowance for credit losses of $0 at September 30, 2020)	3,032		3,002
Loans to affiliates	1,200		1,200
GMIB reinsurance contract asset, at fair value	3,247		2,466
Current and deferred income taxes	0		249
Other assets	3,854		3,050
Separate Accounts assets	121,099		124,646
Total Assets	$	239,945	$	227,952

LIABILITIES
Policyholders’ account balances	$	59,099	$	55,421
Future policy benefits and other policyholders' liabilities	41,117		33,979
Broker-dealer related payables	432		428

Amounts due to reinsurers	112		105


Current and deferred income taxes	1,130		0
Other liabilities	2,519		1,769
Separate Accounts liabilities	121,099		124,646
Total Liabilities	$	225,508	$	216,348
Redeemable noncontrolling interest (2)	$	38	$	39
Commitments and contingent liabilities (Note 13)

EQUITY
Equity attributable to Equitable Financial:
Common stock, $1.25 par value; 2,000,000 shares authorized, issued and outstanding	$	2	$	2
Additional paid-in capital	7,831		7,809
Retained earnings	1,634		2,145
Accumulated other comprehensive income (loss)	4,923		1,596
Total equity attributable to Equitable Financial	14,390		11,552
Noncontrolling interest	9		13
Total Equity	14,399		11,565
Total Liabilities, Redeemable Noncontrolling Interest and Equity	$	239,945	$	227,952

______________


~~(1)~~	~~See Note 2 for details of balances with variable interest entities.~~


~~(2)~~	~~See Note 12 for details of Redeemable noncontrolling interest.~~

(1)See Note 2 for details of balances with variable interest entities.

(2)See Note 12 for details of Redeemable noncontrolling interest.

See Notes to Consolidated Financial Statements (Unaudited).

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Consolidated Statements of Income (Loss)

For the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)

Three Months Ended March 31,
2020 2019
(in millions)
REVENUES
Policy charges and fee income $ 904
$ 859
Premiums 236
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), net 67
(8 )
Total investment gains (losses), net 55
(8 )
Investment management and service fees 252
248
Other income 17
10
Total revenues 11,588
690

BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits 2,597
819
Interest credited to policyholders’ account balances 289
269
Compensation and benefits 80
82
Commissions 161
157
Interest expense —
4
Amortization of deferred policy acquisition costs 1,058
165
Other operating costs and expenses 213
184
Total benefits and other deductions 4,398
1,680
Income (loss) from continuing operations, before income taxes 7,190
(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 )



	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
REVENUES
Policy charges and fee income	$	853	$	899	$	2,582	$	2,619
Premiums	178		232		613		696
Net derivative gains (losses)	(1,527)		(343)		2,097		(2,080)
Net investment income (loss)	809		744		2,334		2,527
Investment gains (losses), net:
Credit losses on AFS debt securities and loans	(4)		0		(47)		0
Other investment gains (losses), net	19		201		262		181
Total investment gains (losses), net	15		201		215		181
Investment management and service fees	257		258		744		761
Other income	18		(1)		43		39
Total revenues	603		1,990		8,628		4,743

BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits	950		1,642		4,267		3,356
Interest credited to policyholders’ account balances	277		296		845		859
Compensation and benefits	76		70		210		237
Commissions	153		153		462		462
Interest expense	0		0		0		4
Amortization of deferred policy acquisition costs	119		54		1,290		345
Other operating costs and expenses	221		214		653		614
Total benefits and other deductions	1,796		2,429		7,727		5,877
Income (loss) from continuing operations, before income taxes	(1,193)		(439)		901		(1,134)
Income tax (expense) benefit	249		175		(181)		289
Net income (loss)	(944)		(264)		720		(845)
Less: Net income (loss) attributable to the noncontrolling interest	2		0		(1)		3
Net income (loss) attributable to Equitable Financial	$	(946)	$	(264)	$	721	$	(848)

See Notes to Consolidated Financial Statements (Unaudited).

~~Table of Contents~~

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Consolidated Statements of Comprehensive Income (Loss)

For the Three and Nine Months Ended ~~March 31,~~September 30, 2020 and 2019 (Unaudited)


	Three Months Ended March 31,							Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019				2020			2019			2020			2019
	(in millions)							(in millions)
COMPREHENSIVE INCOME (LOSS)							COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$	5,736		$	(828	)	Net income (loss)	$	(944)		$	(264)		$	720		$	(845)

Other comprehensive income (loss), net of income taxes:							Other comprehensive income (loss), net of income taxes:
Change in unrealized gains (losses), net of adjustments (1)	1,514			764			Change in unrealized gains (losses), net of adjustments (1)	247			730			3,327			2,721

Other comprehensive income (loss), net of income taxes	1,514			764			Other comprehensive income (loss), net of income taxes	247			730			3,327			2,721

Comprehensive income (loss) ~~(2)~~	7,250			(64		)	(697)			466			4,047			1,876
Less: Comprehensive income (loss) attributable to the noncontrolling interest (2)	(7		)	2			Less: Comprehensive income (loss) attributable to the noncontrolling interest (2)	2			0			(1)			3
Comprehensive income (loss) attributable to Equitable Life (3)	$	7,257		$	(66	)
Comprehensive income (loss) attributable to Equitable Financial							Comprehensive income (loss) attributable to Equitable Financial	$	(699)		$	466		$	4,048		$	1,873

_____________


~~(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.~~

(1)See Note 11 for details of Change in unrealized gains (losses), net of adjustments.

(2)Amounts for the three and nine months ended September 30, 2019 were reclassified to conform to the current year’s presentation.

See Notes to Consolidated Financial Statements (Unaudited).

~~Table of Contents~~

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Consolidated Statements of Equity

For the Three and Nine Months Ended ~~March 31,~~September 30, 2020 and 2019 (Unaudited)


	Three Months Ended September 30,
	Equitable Financial Equity
	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total		Non-controlling Interest		Total Equity
	(in millions)
July 1, 2020	$	2	$	7,821	$	2,580	$	4,676	$	15,079	$	9	$	15,088
Dividend to parent company	—		—		0		—		0		—		0

Net income (loss)	—		—		(946)		—		(946)		—		(946)
Other comprehensive income (loss)	—		—		—		247		247		—		247
Other	—		10		—		—		10		—		10
September 30, 2020	$	2	$	7,831	$	1,634	$	4,923	$	14,390	$	9	$	14,399


	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		)
July 1, 2019																			July 1, 2019	$	2	$	7,822	$	4,455	$	1,490	$	13,769	$	12	$	13,781
Dividend to parent company																			Dividend to parent company	—		—		(1,000)		—		—		—		(1,000)
Net income (loss)	—		—		5,743			—		5,743			(2		)	5,741			Net income (loss)	—		—		(264)		—		(264)		—		(264)
Other comprehensive income (loss)	—		—		—			1,514		1,514			—			1,514			Other comprehensive income (loss)	—		—		—		730		730		—		730
Other	—		2		—			—		2			(2		)	—			Other	—		7		—		—		7		—		7
March 31, 2020	$	2	$	7,811	$	7,953		$	3,106	$	18,872		$	9		$	18,881
September 30, 2019																			September 30, 2019	$	2	$	7,829	$	3,191	$	2,220	$	13,242	$	12	$	13,254


																				Nine Months Ended September 30,
January 1, 2019	$	2	$	7,807	$	5,098		$	(491	)	$	12,416		$	12	$	12,428
																				Equitable Financial 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																			January 1, 2020	$	2	$	7,809	$	2,145	$	1,596	$	11,552	$	13	$	11,565
Dividend to parent company																			Dividend to parent company	—		—		(1,200)		—		(1,200)		0		(1,200)
Cumulative effect of adoption of ASU 2016-13, CECL																			Cumulative effect of adoption of ASU 2016-13, CECL	—		—		(32)		—		(32)		—		(32)
Net income (loss)	—		—		(830		)	—			(830		)	—		(830		)	Net income (loss)	—		—		721		—		721		(2)		719
Other comprehensive income (loss)	—		—		—			764			764			—		764			Other comprehensive income (loss)	—		—		—		3,327		3,327		—		3,327
Other	—		8		—			—			8			—		8			Other	—		22		—		—		22		(2)		20
March 31, 2019	$	2	$	7,815	$	4,268		$	273		$	12,358		$	12	$	12,370
September 30, 2020																			September 30, 2020	$	2	$	7,831	$	1,634	$	4,923	$	14,390	$	9	$	14,399





January 1, 2019	$	2	$	7,807	$	5,039	$	(501)	$	12,347	$	12	$	12,359
Dividend to parent company	—		—		(1,000)		—		—		—		(1,000)
Net income (loss)	—		—		(848)		—		(848)		—		(848)
Other comprehensive income (loss)	—		—		—		2,721		2,721		—		2,721
Other	—		22		—		—		22		—		22
September 30, 2019	$	2	$	7,829	$	3,191	$	2,220	$	13,242	$	12	$	13,254

See Notes to Consolidated Financial Statements (Unaudited).

~~Table of Contents~~

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows

For the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2020 and 2019 (Unaudited)


	Nine Months Ended September 30,
	2020		2019
	(in millions)
Cash flows from operating activities:
Net income (loss)	$	720	$	(845)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Interest credited to policyholders’ account balances	845		859
Policy charges and fee income	(2,582)		(2,619)
Net derivative (gains) losses	(2,097)		2,080
Credit losses on AFS debt securities and loans	47		0
Investment (gains) losses, net	(262)		(181)
Realized and unrealized (gains) losses on trading securities	(98)		(421)
Non-cash long-term incentive compensation expense	21		23
Amortization and depreciation	1,230		271
Equity (income) loss from limited partnerships	13		(63)
Changes in:
Reinsurance recoverable	(202)		(127)
Capitalization of deferred policy acquisition costs	(414)		(466)
Future policy benefits	1,811		1,075
Current and deferred income taxes	502		(86)
Other, net	(171)		(212)
Net cash provided by (used in) operating activities	$	(637)	$	(712)

Cash flows from investing activities:
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale	$	10,002	$	9,394
Mortgage loans on real estate	454		708
Trading account securities	1,320		8,216
Real estate joint ventures	0		3
Short-term investments	1,431		1,916
Other	519		145
Payment for the purchase/origination of:
Fixed maturities, available-for-sale	(16,620)		(23,834)
Mortgage loans on real estate	(1,208)		(913)
Trading account securities	(403)		(923)
Short-term investments	(1,098)		(2,134)
Other	(678)		(305)
Cash settlements related to derivative instruments, net	2,560		191
Investment in capitalized software, leasehold improvements and EDP equipment	(31)		(49)
Other, net	(397)		0
Net cash provided by (used in) investing activities	$	(4,149)	$	(7,585)

See Notes to Consolidated Financial Statements (Unaudited).

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 balances 289
269
Policy charges and fee income (904 ) (859 )
Net derivative (gains) losses (9,533 ) 1,555
Credit losses on AFS debt securities and loans 12
—
Investment (gains) losses, net (67 ) 8
Realized and unrealized (gains) losses on trading securities 148
(250 )
Non-cash long-term incentive compensation expense 4
8
Amortization and depreciation 1,025
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 benefits 1,817
41
Current and deferred income taxes 1,462
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 estate 120
216
Trading account securities 476
3,376
Real estate joint ventures —
1
Short-term investments 715
747
Other 132
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 instruments 5,630
(978 )
Investment in capitalized software, leasehold improvements and EDP equipment (11 ) (13 )
Other, net 84
97
Net cash provided by (used in) investing activities $ 4,117
$ (694 )

~~Table of Contents~~

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows

For the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2020 and 2019 (Unaudited)


	Nine Months Ended September 30,
	2020		2019
	(in millions)
Cash flows from financing activities:
Policyholders’ account balances:
Deposits	$	7,542	$	9,464
Withdrawals	(3,144)		(3,433)
Transfer (to) from Separate Accounts	1,966		1,427
Change in collateralized pledged assets	58		3
Change in collateralized pledged liabilities	1,981		1,898
Shareholder dividend paid	(1,200)		(1,000)
Purchase (redemption) of noncontrolling interests of consolidated company-sponsored investment funds	4		14
Repayment of loans from affiliates	0		(572)
Increase (decrease) in securities sold under agreement to repurchase	0		(573)
Other, net	49		0
Net cash provided by (used in) financing activities	$	7,256	$	7,228

Change in cash and cash equivalents	2,470		(1,069)
Cash and cash equivalents, beginning of year	1,492		2,622
Cash and cash equivalents, end of year	$	3,962	$	1,553

Non-cash transactions:
Right-of-use assets obtained in exchange for lease obligations	$	20	$	42

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 Accounts 529
445
Change in collateralized pledged assets 45
(6 )
Change in collateralized pledged liabilities 667
625
Repayment of loans from affiliates —
(572 )
Increase (decrease) in securities sold under agreement to repurchase —
(573 )
Other, net 18
—
Net cash provided by (used in) financing activities $ 2,504
$ 1,142

Change in cash and cash equivalents 6,000
300
Cash and cash equivalents, beginning of year 1,492
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

See Notes to Consolidated Financial Statements (Unaudited).

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited)

1) ORGANIZATION

~~AXA~~ Equitable Financial Life Insurance Company’s (“Equitable ~~Life”~~Financial” 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 Equitable Holdings, Inc. (“Holdings”). Equitable ~~Life~~Financial is a stock life insurance company organized in 1859 under the laws of the State of New York. ~~It is licensed to sell life insurance and annuities in New York, and sells such products primarily through affiliated distributors.~~

The Company’s ~~two~~2 principal subsidiaries include ~~AXA~~Equitable Distributors, LLC (“Equitable Distributors”) and ~~AXA~~ Equitable ~~Funds~~Investment Management, ~~Group,~~ LLC (“~~FMG”~~EIM”). Both Equitable Distributors and ~~FMG~~EIM are wholly-owned Delaware limited liability companies.


2)	2) SIGNIFICANT ACCOUNTING POLICIES ~~SIGNIFICANT ACCOUNTING POLICIES~~

Basis of Presentation and Principles of Consolidation

The unaudited interim consolidated financial statements (the “consolidated financial statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “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”).

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, with the exception of the Company’s update of its interest rate assumption and adoption of new economic scenario generator as further described below 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, 2019.

The accompanying unaudited 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 “~~first~~“third quarter ~~2020~~”2020” and “~~first~~“third quarter ~~2019~~”2019” refer to the three months ended ~~March 31,~~September 30, 2020 and 2019, respectively. The terms “first nine months of 2020” and “first nine months of 2019” refer to the nine months ended September 30, 2020 and 2019, respectively.

Certain prior year amounts have been reclassified to conform to the current year’s presentation.

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

Adoption of New Accounting Pronouncements



Description			Effect on the Financial Statement or Other Significant Matters
ASU 2016-13: Financial Instruments—Credit Losses (Topic 326), as clarified and amended by ASU 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 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
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~~instrument-by-instrument basis upon adoption of Topic 326. ASU 2018-19, ASU 2019-04 and ASU 2019-11 clarified the codification guidance and did not materially change the standard.			On January 1, 2020, the Company adopted the new standard and completed implementation of its updated current expected credit ~~loss~~losses (“CECL”) 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 cumulative 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 commercial 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 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 impact the disclosure requirements in Topic 820, including the removal, modification and addition to existing disclosure requirements.			The Company elected to early adopt during 2019 the ~~removed~~removal of 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 additional disclosures related to Level 3 fair value information on January 1, 2020.
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.			The Company adopted this new standard effective for January 1, 2020. Adoption of this standard did not materially impact the Company’s financial position or results of operations.

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

Future Adoption of New Accounting Pronouncements



Description	Effective Date and Method of Adoption	Effect on the Financial Statement or Other Significant Matters
ASU 2018-12: Financial 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: 1. 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. On September 30, 2020, the FASB tentatively affirmed its decision to defer the effective date of the amendments in ASU 2018-12, for all insurance entities by one year. Early adoption would still be allowed. 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 inAccumulated 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.

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued



Description	Effective Date and Method of Adoption	Effect on the Financial Statement or Other Significant Matters
2. Measurement of market risk benefits (“MRBs”). MRBs, as defined under the ASU, will encompass certain ~~GMxB~~variable annuity guaranteed benefit (“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.~~ Other comprehensive income (“OCI”). 3. Amortization of deferred acquisition costs. The ASU simplifies the amortization of deferred 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. 4. Expanded footnote disclosures. The ASU requires additional disclosures including disaggregated roll-forwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, MRBs, separate account liabilities and deferred 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.

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

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”),~~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.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~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, and 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.

When the Company determines that there is more than 50% likelihood that it is not going to recover the principal and interest cash flows related to an AFS debt security, the security 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 accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.

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.

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

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

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

is carried at the cash surrender value of the policies. At ~~March 31,~~September 30, 2020 and December 31, 2019,, the carrying value of COLI was ~~$874~~$962 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”)~~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. 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. For periods beyond the reasonable and supportable forecast period, the model reverts to historical loss information. 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 LTV ratios, 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 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~~

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes 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.~~Consolidated Financial Statements(Unaudited), Continued

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.~~loans. Based on its monthly monitoring of mortgages, a class of potential problem ~~mortgages~~loans are also identified, consisting of mortgage loans not currently classified as problem ~~mortgages~~loans 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

~~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.

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. 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 does not record an allowance for credit losses on accrued interest receivable.

Troubled Debt Restructuring

The Company invests in commercial and agricultural mortgage loans included in the balance sheet as Mortgage loans on real estate and privately negotiated fixed maturities included in the balance sheet as Fixed maturities AFS. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a troubled debt restructuring has occurred. A modification is a troubled debt restructuring when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific credit allowance recorded in connection with the troubled debt restructuring. A credit allowance may have been recorded prior to the quarter when the loan is modified in a troubled debt restructuring. Accordingly, the carrying value (net of the allowance) before and after modification through a troubled debt restructuring may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.

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).

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

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 VIEs

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,~~voting interest entities (“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.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

Consolidated VIEs

At ~~March 31,~~September 30, 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~~Financial 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,~~September 30, 2020 and December 31, 2019 are total assets of ~~$32~~$31 million ~~and~~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,~~September 30, 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. Additionally, as of September 30, 2020, Equitable Financial holds $18 million of equity interests in a newly formed Special Purpose Entity (“SPE”) established to purchase loans from the market in anticipation of a Collateralized Loan Obligation (“CLO”) transaction. 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 applies the equity method of accounting for these positions. The net assets of these non-consolidated VIEs are approximately ~~$151.4~~$156.6 billion and $160.2 billion at ~~March 31,~~September 30, 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 approximately ~~$1.0~~$1.2 billion and $1.1 billion of unfunded commitments at ~~March 31,~~September 30, 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.

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

In addition, at ~~March 31,~~September 30, 2020 and December 31, 2019,, Other invested assets includes real estate held for ~~sale~~production of ~~$(5)~~income of $(4) million and ~~$(5)~~$(5) million,, respectively, as related to 1 non-consolidated real estate joint 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 our insurance business, liabilities for future policyholder benefits, DAC and deferred sales inducement ~~assets~~ (“DSI”). assets.

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 to the carrying value of product liabilities and assets ~~or more frequently if evidence suggest that~~and consequently materially impact its earnings in the period of the change.

Annual Update

The net impact of assumption changes in the third quarter of 2020 decreased Policy charges and fee income by $21 million, increased Policyholders’ benefits by $175 million, increased Interest credited to policyholders’ account balances by $8 million, increased Net derivative gains by $106 million, and increased Amortization of DAC by $26 million. This resulted in a decrease in Income (loss) from operations, before income taxes of $124 million and decreased Net income (loss) by $98 million. Third quarter 2020 assumption updates include a pre-tax gain of $421 million attributable to the removal of the credit risk adjustment from our fair value scenario calibration to better align with U.S. valuation practices, offset by updates to our mortality and policyholder behavior assumptions ~~should be revised .~~to reflect emerging experience.

~~Due~~The net impact of assumption changes in the third quarter of 2019 decreased Policy charges and fee income by $11 million, increased Policyholders’ benefits by $886 million, decreased Interest credited to policyholders’ account balances by $14 million, increased Net derivative losses by $548 million and decreased Amortization of DAC by $77 million. This resulted in a decrease in Income (loss) from operations, before income taxes of $1.4 billion and decreased Net income (loss) by $1.1 billion.

First Quarter Update

In the first quarter of 2020, due to the extraordinary economic conditions driven by the COVID-19 pandemic, ~~in the first quarter of 2020,~~ the Company updated its interest rate assumption to grade from the current ~~spot~~ interest rate ~~curve~~environment 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 Company determined that no assumption updates were necessary in the second quarter of 2020.

The low interest ~~rates~~rate environment and ~~subsequent~~ update to 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 update in the first quarter of 2020 increased ~~Policyholders’ benefits by $1.3 billion, increased Amortization of DAC by $861 million, increased~~ Policy charges and fee income by $54 million, ~~and~~increased Policyholders’ benefits by $1.3 billion, decreased Interest credited to policyholders’ account balances by $6 million, and increased Amortization of DAC by $840 million. This resulted in a decrease in Income (loss) from continuing operations, before income taxes of $2.1 billion and decreased Net income (loss) of $1.7 billion.

Model Changes

In the first quarter of 2020, the Company adopted a new economic scenario generator to calculate the fair value of the GMIB reinsurance contract asset and GMxB derivative features liability, eliminating reliance on AXA Group for scenario production. The new economic scenario generator allows for a tighter calibration of U.S. indices, better reflecting the Company’s actual portfolio. The net impact of the new economic scenario generator resulted in an increase in Income (loss) from continuing operations, before income taxes of $165 million, and an increase to Net Income (loss) of $130 million during the first nine months of 2020.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~Revision of Prior Period Financial Statements

The Company identified certain errors in its previously issued financial statements primarily related to the calculation of actuarially determined insurance contract assets and liabilities. The impact of these errors to the current and the prior periods consolidated financial statements were not considered to be material. In order to improve the consistency and comparability of the financial statements, management revised the consolidated financial statements to include the revisions discussed herein. See Note 14 to the Notes to Consolidated Financial Statements~~(Unaudited), Continued~~

for details of the revisions.

3) INVESTMENTS

Fixed Maturities Available-for-Sale

Accounting for credit impairments of fixed 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~~CECL (see Note 2, Significant Accounting Policies – Investments).

The components of fair value and amortized cost for fixed maturities classified as AFS on the consolidated balance sheets excludes accrued interest receivable because the Company elected to present accrued interest receivable within Other assets. Accrued interest receivable on AFS fixed maturities at ~~March 31,~~September 30, 2020 was ~~$464~~ $510 million.

When the Company determines that there is more than 50% likelihood that it is not going to recover the principal and interest cash flows related to an AFS debt security, the security 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 Accrued interest receivable, the Company does not record an allowance for credit losses on Accrued interest receivable.

~~The total amount of~~There was 0 accrued interest written off for ~~the three months ended March 31, 2020 for~~ AFS fixed maturities ~~was $1 million.~~for the three and nine months ended September 30, 2020.

Comparative tables as of December 31, 2019 include OTTI, reported net of tax in OCI and in AOCI until realized.

The following tables provide information relating to the Company’s fixed maturities classified as AFS.

AFS Fixed Maturities by Classification


	Amortized Cost		Allowance for Credit Losses (4)		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
September 30, 2020:
Fixed Maturities:
Corporate (1)	$	47,421	$	13	$	4,281	$	170	$	51,519
U.S. Treasury, government and agency	13,126		0		4,158		0		17,284
States and political subdivisions	706		0		109		0		815
Foreign governments	828		0		80		6		902
Residential mortgage-backed (2)	132		0		13		0		145
Asset-backed (3)	2,584		0		25		18		2,591
Commercial mortgage-backed	1,067		0		50		0		1,117
Redeemable preferred stock	413		0		31		3		441
Total at September 30, 2020	$	66,277	$	13	$	8,747	$	197	$	74,814

December 31, 2019:
Fixed Maturities:
Corporate (1)	$	42,347	$	0	$	2,178	$	61	$	44,464
U.S. Treasury, government and agency	14,385		0		1,151		305		15,231
States and political subdivisions	584		0		68		3		649
Foreign governments	460		0		35		5		490
Residential mortgage-backed (2)	161		0		12		0		173
Asset-backed (3)	843		0		3		2		844
Redeemable preferred stock	498		0		18		5		511
Total at December 31, 2019	$	59,278	$	0	$	3,465	$	381	$	62,362

Amortized
Cost Allowance for Credit Losses (4) Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value
(in millions)
March 31, 2020:
Fixed Maturities:
Corporate (1) $ 43,805
$ 2
$ 1,627
$ 792
$ 44,638
U.S. Treasury, government and agency 14,195
—
4,255
—
18,450
States and political subdivisions 607
—
68
6
669
Foreign governments 481
—
27
12
496
Residential mortgage-backed (2) 154
—
12
—
166
Asset-backed (3) 1,509
—
5
124
1,390
Commercial mortgage-backed 37
—
2
—
39
Redeemable preferred stock 543
—
11
31
523
Total at March 31, 2020 $ 61,331
$ 2
$ 6,007
$ 965
$ 66,371

December 31, 2019:
Fixed Maturities:
Corporate (1) $ 42,347
$ —
$ 2,178
$ 61
$ 44,464
U.S. Treasury, government and agency 14,385
—
1,151
305
15,231
States and political subdivisions 584
—
68
3
649
Foreign governments 460
—
35
5
490
Residential mortgage-backed (2) 161
—
12
—
173
Asset-backed (3) 843
—
3
2
844
Redeemable preferred stock 498
—
18
5
511
Total at December 31, 2019 $ 59,278
$ —
$ 3,465
$ 381
$ 62,362
______________

~~______________~~(1)Corporate fixed maturities include both public and private issues.


~~(1)~~	~~Corporate fixed maturities include 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 the allowance for credit losses for 2020 - (see Note 2 Significant Accounting Policies - Investments).~~

(2)Includes publicly traded agency pass-through securities and collateralized obligations.

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

(3)Includes credit-tranched securities collateralized by sub-prime mortgages and other asset types and credit tenant loans.

(4)Amounts represent the allowance for credit losses for 2020 - (see Note 2 Significant Accounting Policies - Investments).

The contractual maturities of AFS fixed maturities at ~~March 31,~~September 30, 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 AFS Fixed Maturities


	Amortized Cost (Less Allowance for Credit Losses)		Fair Value
	(in millions)
September 30, 2020:
Contractual maturities:
Due in one year or less	$	4,094	$	4,126
Due in years two through five	14,862		15,722
Due in years six through ten	16,872		18,691
Due after ten years	26,240		31,981
Subtotal	62,068		70,520
Residential mortgage-backed	132		145
Asset-backed	2,584		2,591
Commercial mortgage-backed	1,067		1,117
Redeemable preferred stock	413		441
Total at September 30, 2020	$	66,264	$	74,814

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 five 13,620
13,697
Due in years six through ten 16,703
17,130
Due after ten years 24,291
28,960
Subtotal 59,086
64,253
Residential mortgage-backed 154
166
Asset-backed 1,509
1,390
Commercial mortgage-backed 37
39
Redeemable preferred stock 543
523
Total at March 31, 2020 $ 61,329
$ 66,371

~~______________~~


~~(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 for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019:

Proceeds from Sales, Gross Gains (Losses) from Sales and Credit Losses for AFS Fixed Maturities


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Proceeds from sales	$	1,399	$	3,839	$	5,985	$	6,756
Gross gains on sales	$	23	$	207	$	297	$	224
Gross losses on sales	$	(5)	$	(4)	$	(32)	$	(25)

Credit losses (1)	$	0	$	0	$	(13)	$	0

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 ) $ —
______________

~~______________~~(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. Prior to this, credit losses on AFS fixed maturities were recognized as OTTI.


~~(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:~~amounts.

AFS Fixed Maturities - Credit Loss Impairments


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Balance, beginning of period	$	28	$	18	$	15	$	46
Previously recognized impairments on securities that matured, paid, prepaid or sold	0		(3)		0		(31)
Recognized impairments on securities impaired to fair value this period (1)	0		0		0		0

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

~~AFS Fixed Maturities - Credit Loss Impairments~~


	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		)	—			Credit losses recognized this period on securities for which credit losses were not previously recognized	(2)		0		7		0
Additional credit losses this period on securities previously impaired	—			—			Additional credit losses this period on securities previously impaired	2		0		6		0
Increases due to passage of time on previously recorded credit losses	—			—			Increases due to passage of time on previously recorded credit losses	0		0		0		0
Accretion of previously recognized impairments due to increases in expected cash flows (for OTTI securities 2019 and prior)	—			—			Accretion of previously recognized impairments due to increases in expected cash flows (for OTTI securities 2019 and prior)	0		0		0		0
Balance at March 31,	$	(17	)	$	(18	)
Balance at September 30,							Balance at September 30,	$	28	$	15	$	28	$	15

______________


~~(1)~~	(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 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~~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 ~~OCI in earlier periods.~~ the security’s amortized cost.

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:~~other.

Net Unrealized Gains (Losses) on AFS 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)
(in millions)
Balance, January 1, 2020 $ 3,084
$ (831 ) $ (192 ) $ (433 ) $ 1,628
Net investment gains (losses) arising during the period 2,026
—
—
—
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 losses 5,047
(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


	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, July 1, 2020	$	8,207	$	(494)	$	(1,801)	$	(1,242)	$	4,670
Net investment gains (losses) arising during the period	345		—		—		—		345
Reclassification adjustment:									—
Included in Net income (loss)	(18)		—		—		—		(18)
Excluded from Net income (loss)	0		—		—		—		0
Impact of net unrealized investment gains (losses)	0		54		(6)		(79)		(31)
Net unrealized investment gains (losses) excluding credit losses	8,534		(440)		(1,807)		(1,321)		4,966
Net unrealized investment gains (losses) with credit losses	3		0		(1)		0		2
Balance, September 30, 2020	$	8,537	$	(440)	$	(1,808)	$	(1,321)	$	4,968

Balance, July 1, 2019	$	2,622	$	(616)	$	(98)	$	(420)	$	1,488
Net investment gains (losses) arising during the period	1,548��		—		—		—		1,548
Reclassification adjustment:									—
Included in Net income (loss)	(201)		—		—		—		(201)
Excluded from Net income (loss)	0		—		—		—		0
Impact of net unrealized investment gains (losses)	0		(324)		(122)		(156)		(602)
Net unrealized investment gains (losses) excluding credit losses	3,969		(940)		(220)		(576)		2,233
Net unrealized investment gains (losses) with credit losses (1)	1		0		0		0		1
Balance, September 30, 2019	$	3,970	$	(940)	$	(220)	$	(576)	$	2,234

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued


																	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)
Balance, January 1, 2020																Balance, January 1, 2020	$	3,084	$	(826)	$	(192)	$	(433)	$	1,633
Net investment gains (losses) arising during the period																Net investment gains (losses) arising during the period	5,707		—		—		—		5,707
Reclassification adjustment:																Reclassification adjustment:									—
Included in Net income (loss)																Included in Net income (loss)	(248)		—		—		—		(248)
Excluded from Net income (loss)																Excluded from Net income (loss)	0		—		—		—		0
Impact of net unrealized investment gains (losses)																Impact of net unrealized investment gains (losses)	0		386		(1,617)		(889)		(2,120)
Net unrealized investment gains (losses) excluding credit losses																Net unrealized investment gains (losses) excluding credit losses	8,543		(440)		(1,809)		(1,322)		4,972
Net unrealized investment gains (losses) with credit losses																Net unrealized investment gains (losses) with credit losses	(6)		0		1		1		(4)
Balance, September 30, 2020																Balance, September 30, 2020	$	8,537	$	(440)	$	(1,808)	$	(1,321)	$	4,968
	(in millions)
Balance, January 1, 2019	$	(577	)	$	39		$	(55	)	$	125		$	(468	)	Balance, January 1, 2019	$	(577)	$	37	$	(69)	$	125	$	(484)
Net investment gains (losses) arising during the period	1,583			—			—			—			1,583			Net investment gains (losses) arising during the period	4,754		—		—		—		4,754
Reclassification adjustment:																Reclassification adjustment:
Included in Net income (loss)	(3		)	—			—			—			(3		)	Included in Net income (loss)	(208)		—		—		—		(208)
Excluded from Net income (loss)	—			—			—			—			—			Excluded from Net income (loss)	0		—		—		—		0
Impact of net unrealized investment gains (losses) on:
DAC	—			(655		)	—			—			(655		)
Deferred income taxes	—			—			—			(211		)	(211		)
Policyholders’ liabilities	—			—			77			—			77
Impact of net unrealized investment gains (losses)																Impact of net unrealized investment gains (losses)	0		(977)		(151)		(701)		(1,829)
Net unrealized investment gains (losses) excluding credit losses	1,003			(616		)	22			(86		)	323			Net unrealized investment gains (losses) excluding credit losses	3,969		(940)		(220)		(576)		2,233
Net unrealized investment gains (losses) with credit losses (1)	—			—			—			—			—			Net unrealized investment gains (losses) with credit losses (1)	1		0		0		0		1
Balance, March 31, 2019	$	1,003		$	(616	)	$	22		$	(86	)	$	323
Balance, September 30, 2019																Balance, September 30, 2019	$	3,970	$	(940)	$	(220)	$	(576)	$	2,234

______________


~~(1)~~	~~Credit losses for 2019 were OTTI losses.~~

(1)Credit losses for 2019 were OTTI losses.

The following tables disclose the fair values and gross unrealized losses of the ~~1,620~~709 issues at ~~March 31,~~September 30, 2020 and the 390 issues at December 31, 2019 that are not deemed to 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

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 subdivisions 173
6
—
—
173
6
Foreign governments 127
4
36
8
163
12
Asset-backed 1,202
117
61
7
1,263
124
Redeemable preferred stock 263
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 agency 4,245
305
2
—
4,247
305
States and political subdivisions 123
3
—
—
123
3
Foreign governments 11
—
47
5
58
5
Asset-backed 319
—
201
2
520
2
Redeemable preferred stock 29
—
49
5
78
5
Total at December 31, 2019 $ 7,396
$ 349
$ 665
$ 32
$ 8,061
$ 381


	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, 2020:
Fixed Maturities:
Corporate	$	4,063	$	116	$	365	$	49	$	4,428	$	165


Foreign governments	88		1		31		5		119		6

Asset-backed	1,324		16		74		2		1,398		18

Redeemable preferred stock	59		1		11		2		70		3
Total at September 30, 2020	$	5,534	$	134	$	481	$	58	$	6,015	$	192

December 31, 2019: (1)

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued


	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)
Fixed Maturities:
Corporate	$	2,669	$	41	$	366	$	20	$	3,035	$	61
U.S. Treasury, government and agency	4,245		305		2		0		4,247		305
States and political subdivisions	123		3		0		0		123		3
Foreign governments	11		0		47		5		58		5

Asset-backed	319		0		201		2		520		2

Redeemable preferred stock	29		0		49		5		78		5
Total at December 31, 2019	$	7,396	$	349	$	665	$	32	$	8,061	$	381

______________


~~(1)~~	~~Amounts represents fixed maturities in an unrealized loss position that are not deemed to be other-than-temporarily impaired for 2019.~~

(1)Amounts represents fixed maturities in an unrealized loss position that are not deemed to be OTTI for 2019.

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 ~~March 31,~~September 30, 2020 and December 31, 2019 were ~~$275~~$321 million and $279 million, respectively, representing ~~1.5%~~2.2% and 2.4% of the consolidated equity of the Company.

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 ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively, approximately ~~$1.7~~$2.0 billion and $1.4 billion, or ~~2.7%~~3.0% and 2.3%, of the ~~$61.3~~$66.3 billion and $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~~$81 million and $21 million at ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively.

At ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively, the ~~$109~~$58 million and $32 million of gross unrealized losses of twelve months or more were primarily concentrated in corporate 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 ~~March 31,~~September 30, 2020 or December 31, 2019. At ~~March 31,~~September 30, 2020 and December 31, 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.

Based on the Company’s evaluation both qualitatively and quantitatively of the drivers of the decline in fair value of fixed maturity securities as of September 30, 2020, 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 on Real Estate

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,~~September 30, 2020 was $29 million and ~~December 31, 2019~~$32 million, respectively. There was ~~$29 million~~ ~~and~~ ~~$32 million, respectively. NaN~~0 accrued interest ~~was~~ written off ~~for the~~ ~~three months ended March 31, 2020~~ for commercial and agricultural mortgage ~~loans.~~

~~Once mortgage~~ loans ~~are placed on nonaccrual status,~~for the Company reverses accrued interest receivable against interest income. Since the nonaccrual policy results in the timely reversal of accrued interest receivable, the Company does not record an allowance for credit losses on accrued interest receivable.three and nine months ended September 30, 2020.

At ~~March 31,~~September 30, 2020, the Company had 0 loans for which foreclosure was probable included within the individually assessed mortgage loans, and accordingly had 0 associated allowance for credit losses.

2023

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

Allowance for Credit Losses on Mortgage Loans

The change in the allowance for credit losses for commercial mortgage loans and agricultural mortgage loans during the three and nine months ended ~~March 31,~~September 30, 2020 was as follows:


	Three Months Ended March 31,				Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
	2020
	(in millions)				(in millions)
Allowance for credit losses on mortgage loans (1):				Allowance for credit losses on mortgage loans (1):
Commercial mortgages:				Commercial mortgages:
Beginning Balance, January 1,	$	(33	)
Balance, beginning of period				Balance, beginning of period	$	62	$	33
Current-period provision for expected credit losses	(11		)	Current-period provision for expected credit losses	4		33
Write-offs charged against the allowance	—			Write-offs charged against the allowance	0		0
Recoveries of amounts previously written off	1			Recoveries of amounts previously written off	0		0
Net change in allowance	(10		)	Net change in allowance	4		33
Ending Balance, March 31,	$	(43	)
Ending Balance, September 30,				Ending Balance, September 30,	$	66	$	66

Agricultural mortgages:				Agricultural mortgages:
Beginning Balance, January 1,	$	(3	)
Balance, beginning of period				Balance, beginning of period	$	4	$	3
Current-period provision for expected credit losses	—			Current-period provision for expected credit losses	0		1
Write-offs charged against the allowance	—			Write-offs charged against the allowance	0		0
Recoveries of amounts previously written off	—			Recoveries of amounts previously written off	0		0
Net change in allowance	—			Net change in allowance	0		1
Ending Balance, March 31,	$	(3	)
Ending Balance, September 30,				Ending Balance, September 30,	$	4	$	4

Total allowance for credit losses	$	(46	)	Total allowance for credit losses	$	70	$	70

____________


~~(1)~~	~~See Note 2 for discussion of the transition balance.~~

(1) See Note 2 for discussion of the allowance of credit losses transition balance, which is included in the Balance, beginning of period.

The change in the allowance for credit losses is 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 thethree months ended March 31,~~at September 30, 2020.

LTV Ratios (1)~~(3)~~


	At September 30, 2020
	Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Mortgage loans:
Commercial:
0% - 50%	$	0	$	0	$	0	$	324	$	170	$	650	$	1,144
50% - 70%	935		411		885		760		2,432		1,608		7,031
70% - 90%	90		394		368		115		153		574		1,694
90% plus	0		0		12		5		0		216		233
Total commercial	$	1,025	$	805	$	1,265	$	1,204	$	2,755	$	3,048	$	10,102

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

~~AXA~~ EQUITABLE FINANCIAL 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


	At September 30, 2020
	Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Total
	(in millions)
Agricultural:
0% - 50%	$	181	$	137	$	168	$	161	$	232	$	679	$	1,558
50% - 70%	253		131		172		110		136		372		1,174
70% - 90%	0		0		3		0		0		18		21
90% plus	0		0		0		0		0		0		0
Total agricultural	$	434	$	268	$	343	$	271	$	368	$	1,069	$	2,753

Total mortgage loans:
0% - 50%	$	181	$	137	$	168	$	485	$	402	$	1,329	$	2,702
50% - 70%	1,188		542		1,057		870		2,568		1,980		8,205
70% - 90%	90		394		371		115		153		592		1,715
90% plus	0		0		12		5		0		216		233
Total mortgage loans	$	1,459	$	1,073	$	1,608	$	1,475	$	3,123	$	4,117	$	12,855

Debt Service Coverage Ratios (2)~~(3)~~


	At March 31, 2020															At September 30, 2020
	Amortized Cost Basis by Origination Year															Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Total			2020		2019		2018		2017		2016		Prior		Total
	(in millions)															(in millions)
Mortgage loans:															Mortgage loans:
Commercial:															Commercial:
Greater than 2.0x	$	119	$	373	$	680	$	583	$	2,225	$	1,340	$	5,320	Greater than 2.0x	$	749	$	492	$	772	$	268	$	2,036	$	1,268	$	5,585
1.8x to 2.0x	—		184		48		379		40		451		1,102		1.8x to 2.0x	227		77		118		378		184		524		1,508
1.5x to 1.8x	—		242		223		332		491		577		1,865		1.5x to 1.8x	49		138		186		480		437		569		1,859
1.2x to 1.5x	—		—		207		75		—		590		872		1.2x to 1.5x	0		56		154		78		97		533		918
1.0x to 1.2x	—		53		82		37		—		116		288		1.0x to 1.2x	0		42		35		0		1		82		160
Less than 1.0x	—		—		—		—		—		—		—		Less than 1.0x	0		0		0		0		0		72		72
Total commercial	$	119	$	852	$	1,240	$	1,406	$	2,756	$	3,074	$	9,447	Total commercial	$	1,025	$	805	$	1,265	$	1,204	$	2,755	$	3,048	$	10,102

Agricultural															Agricultural
Greater than 2.0x	$	3	$	38	$	41	$	37	$	77	$	189	$	385	Greater than 2.0x	$	52	$	27	$	39	$	38	$	73	$	158	$	387
1.8x to 2.0x	7		30		15		17		22		102		193		1.8x to 2.0x	33		36		14		15		21		90		209
1.5x to 1.8x	26		39		47		49		62		249		472		1.5x to 1.8x	103		38		45		41		52		212		491
1.2x to 1.5x	12		127		150		121		174		413		997		1.2x to 1.5x	165		118		146		105		147		327		1,008
1.0x to 1.2x	17		57		92		72		61		276		575		1.0x to 1.2x	77		39		91		71		57		265		600
Less than 1.0x	3		10		9		1		19		41		83		Less than 1.0x	4		10		8		1		18		17		58
Total agricultural	$	68	$	301	$	354	$	297	$	415	$	1,270	$	2,705	Total agricultural	$	434	$	268	$	343	$	271	$	368	$	1,069	$	2,753

Total mortgage loans															Total mortgage loans
Greater than 2.0x	$	122	$	411	$	721	$	620	$	2,302	$	1,529	$	5,705	Greater than 2.0x	$	801	$	519	$	811	$	306	$	2,109	$	1,426	$	5,972
1.8x to 2.0x	7		214		63		396		62		553		1,295		1.8x to 2.0x	260		113		132		393		205		614		1,717
1.5x to 1.8x	26		281		270		381		553		826		2,337		1.5x to 1.8x	152		176		231		521		489		781		2,350
1.2x to 1.5x	12		127		357		196		174		1,003		1,869		1.2x to 1.5x	165		174		300		183		244		860		1,926
1.0x to 1.2x	17		110		174		109		61		392		863		1.0x to 1.2x	77		81		126		71		58		347		760
Less than 1.0x	3		10		9		1		19		41		83		Less than 1.0x	4		10		8		1		18		89		130
Total mortgage loans	$	187	$	1,153	$	1,594	$	1,703	$	3,171	$	4,344	$	12,152	Total mortgage loans	$	1,459	$	1,073	$	1,608	$	1,475	$	3,123	$	4,117	$	12,855

_____________

2225

~~AXA~~ EQUITABLE FINANCIAL 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 for each mortgage loan.


~~(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.~~

(2)The DSC ratio is calculated using the most recently reported operating income results from property operations divided by annual debt service.

The following tables provide information relating to the LTV and DSC ratios for commercial and agricultural mortgage loans at ~~March 31,~~September 30, 2020 and December 31, ~~2019~~.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 LTV and DSC Ratios

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)
March 31, 2020:
Mortgage loans:
Commercial:
0% - 50% $ 925
$ 21
$ 214
$ 25
$ —
$ —
$ 1,185
50% - 70% 4,143
983
1,437
704
241
—
7,508
70% - 90% 252
98
214
143
47
—
754
90% plus —
—
—
—
—
—
—
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


	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)
September 30, 2020:
Mortgage loans:
Commercial:
0% - 50%	$	935	$	0	$	185	$	24	$	0	$	0	$	1,144
50% - 70%	3,992		1,160		1,342		511		26		0		7,031
70% - 90%	574		348		332		306		134		0		1,694
90% plus	84		0		0		77		0		72		233
Total commercial	$	5,585	$	1,508	$	1,859	$	918	$	160	$	72	$	10,102

Agricultural:
0% - 50%	$	283	$	107	$	271	$	529	$	335	$	33	$	1,558
50% - 70%	104		100		220		460		265		25		1,174
70% - 90%	0		2		0		19		0		0		21
90% plus	0		0		0		0		0		0		0
Total agricultural	$	387	$	209	$	491	$	1,008	$	600	$	58	$	2,753

Total mortgage loans:
0% - 50%	$	1,218	$	107	$	456	$	553	$	335	$	33	$	2,702
50% - 70%	4,096		1,260		1,562		971		291		25		8,205
70% - 90%	574		350		332		325		134		0		1,715
90% plus	84		0		0		77		0		72		233
Total mortgage loans	$	5,972	$	1,717	$	2,350	$	1,926	$	760	$	130	$	12,855

December 31, 2019:
Mortgage loans:
Commercial:
0% - 50%	$	887	$	38	$	214	$	24	$	0	$	0	$	1,163
50% - 70%	4,097		1,195		1,118		795		242		0		7,447
70% - 90%	251		98		214		154		46		0		763
90% plus	0		0		0		0		0		0		0
Total commercial	$	5,235	$	1,331	$	1,546	$	973	$	288	$	0	$	9,373

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

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%	0		0		0		19		0		0		19
90% plus	0		0		0		0		0		0		0
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		0		782
90% plus	0		0		0		0		0		0		0
Total mortgage loans	$	5,639	$	1,522	$	2,023	$	1,963	$	860	$	83	$	12,090

______________

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

~~______________~~(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 for each mortgage loan.


~~(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.~~

(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.

Past-Due and Nonaccrual Mortgage Loan Status

The following table provides information relating to the aging analysis of past-due mortgage loans at ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively:

Age Analysis of Past Due Mortgage Loans (1)


																						Accruing Loans												Non-accruing Loans		Total Loans		Non-accruing Loans with No Allowance		Interest Income on Non-accruing Loans(2)
	Accruing Loans												Non-accruing Loans		Total Loans		Non-accruing Loans with No Allowance		Interest Income on Non-accruing Loans			Past Due								Current		Total
	Past Due								Current		Total											30-59 Days		60-89 Days		90 Days or More		Total
	30-59 Days		60-89 Days		90 Days or More		Total															(in millions)
	(in millions)
March 31, 2020:
September 30, 2020:																					September 30, 2020:
Mortgage loans:																					Mortgage loans:
Commercial	$	—	$	—	$	—	$	—	$	9,447	$	9,447	$	—	$	9,447	$	—	$	—	Commercial	$	0	$	0	$	0	$	0	$	10,102	$	10,102	$	0	$	10,102	$	0	$	0
Agricultural	7		17		63		87		2,618		2,705		—		2,705		—		—		Agricultural	24		6		135		165		2,588		2,753		0		2,753		0		0
Total	$	7	$	17	$	63	$	87	$	12,065	$	12,152	$	—	$	12,152	$	—	$	—	Total	$	24	$	6	$	135	$	165	$	12,690	$	12,855	$	0	$	12,855	$	0	$	0

December 31, 2019:																					December 31, 2019:
Mortgage loans:																					Mortgage loans:
Commercial	$	—	$	—	$	—	$	—	$	9,373	$	9,373	$	—	$	9,373	$	—	$	—	Commercial	$	0	$	0	$	0	$	0	$	9,373	$	9,373	$	0	$	9,373	$	0	$	0
Agricultural	57		1		66		124		2,593		2,717		66		2,783		—		—		Agricultural	57		1		66		124		2,593		2,717		0		2,717		0		0
Total	$	57	$	1	$	66	$	124	$	11,966	$	12,090	$	66	$	12,156	$	—	$	—	Total	$	57	$	1	$	66	$	124	$	11,966	$	12,090	$	0	$	12,090	$	0	$	0

_______________


~~(1)~~	~~Amounts presented at amortized cost basis.~~

(1)Amounts presented at amortized cost basis.

(2) Amounts for 2020 represent results for both the three and nine months ended September 30, 2020.

At ~~March 31,~~September 30, 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.

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

Troubled Debt Restructuring

For the nine months ended September 30, 2020, the Company had 1 commercial mortgage loan on real estate accounted for as a TDR with a pre-modification cost basis of $75 million and post-modification carrying value of $75 million. The 1 commercial mortgage loan TDR is 0.07% of the Company’s total invested assets. For the nine months ended September 30, 2020, the Company had 6 new privately negotiated fixed maturity TDRs with a pre-modification cost basis of $50 million and post-modification carrying value of $44 million. These TDRs did not have subsequent payment defaults nor additional commitments to lend. The 6 privately negotiated fixed maturity TDRs are 0.04% of the Company’s total invested assets. There were no mortgage loan on real estate or fixed maturities accounted for as a TDR during 2019.

Trading Securities

At ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively, the fair value of the Company’s trading securities was ~~$6.1~~$5.8 billion and $6.6 billion. At ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively, trading securities included the General Account’s investment in Separate Accounts, which had carrying values of ~~$45~~$37 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 and nine months ended ~~March 31,~~September 30, 2020 and ~~2019~~:2019:

Net Investment Income (Loss) from Trading Securities


	Three Months Ended March 31,							Three Months Ended September 30,				Nine Months Ended September 30,
	2020			2019				2020		2019		2020		2019
	(in millions)							(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 during the period on securities held at the end of the period	$	(1)	$	7	$	86	$	431
Net investment gains (losses) recognized on securities sold during the period	3			(24		)	Net investment gains (losses) recognized on securities sold during the period	(5)		13		12		(10)
Unrealized and realized gains (losses) on trading securities	(160		)	250			Unrealized and realized gains (losses) on trading securities	(6)		20		98		421
Interest and dividend income from trading securities	49			90			Interest and dividend income from trading securities	58		59		152		220
Net investment income (loss) from trading securities	$	(111	)	$	340		Net investment income (loss) from trading securities	$	52	$	79	$	250	$	641

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 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 (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.)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

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

~~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 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 U.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~~Exchange Traded Funds (“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”~~CDS”). 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

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

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~~CDS 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. The Company purchased CDS to mitigate its exposure to a reference entity through cash positions. These positions do not replicate credit spreads.

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.~~CDS. 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 dollar or euro-equivalent of the derivative’s notional amount. The Standard North American CDS Contract (“SNAC”) or Standard European Corporate Contract

~~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.

The Company purchased 30-year TIPS and other sovereign bonds, both inflation-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.

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:

~~Derivative Instruments by Category~~

At March 31, 2020 Three Months Ended March 31, 2020
Fair Value
Notional
Amount Derivative Assets
Derivative
Liabilities

Net Derivative
Gains (Losses) (2)
(in millions)
Derivative instruments:
Freestanding derivatives (1):
Equity contracts:
Futures $ 5,625
$ —
$ —
$ 258
Swaps 12,857
583
115
3,763
Options 29,975
2,539
3,083
(3,843 )
Interest rate contracts:
Swaps 22,813
2,472
340
3,578
Futures 26,261
—
—
1,993
Swaptions —
—
—
9
Credit contracts:
Credit default swaps 1,232
9
7
(13 )
Other freestanding contracts:
Foreign currency contracts 347
—
—
(3 )
Margin —
79
171
—
Collateral —
27
3,753
—

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.~~


~~(5)~~	~~Reported 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).~~

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

Derivative Instruments by Category


	At December 31, 2019						Three Months Ended March 31, 2019				At September 30, 2020						Nine Months Ended September 30, 2020
			Fair Value										Fair Value
	Notional Amount		Derivative Assets		Derivative Liabilities		Net Derivative Gains (Losses) (2)				Notional Amount		Derivative Assets		Derivative Liabilities		Net Derivative Gains (Losses) (2)
	(in millions)										(in millions)
Derivative instruments:										Derivative instruments:
Freestanding derivatives (1):										Freestanding derivatives (1):
Equity contracts:										Equity contracts:
Futures	$	3,510	$	—	$	—	$	(738	)	Futures	$	3,739	$	0	$	0	$	(347)
Swaps	17,064		9		279		(973		)	Swaps	20,667		27		18		(594)
Options	47,766		5,080		1,749		1,101			Options	31,679		5,543		2,791		(480)
Interest rate contracts:										Interest rate contracts:
Swaps	23,700		467		523		648			Swaps	23,952		1,696		338		3,588
Futures	20,424		—		—		55			Futures	19,484		0		0		2,058
Swaptions	3,201		16		—		—			Swaptions	0		0		0		9
Credit contracts:										Credit contracts:
Credit default swaps	1,232		18		—		10			Credit default swaps	1,252		9		4		(4)
Other freestanding contracts:										Other freestanding contracts:
Foreign currency contracts	501		3		—		10			Foreign currency contracts	347		0		0		(3)
Margin	—		140		—		—			Margin	0		40		125		0
Collateral	—		72		3,001		—			Collateral	0		14		4,959		0

Embedded derivatives:										Embedded derivatives:
GMIB reinsurance contracts (3)	—		2,466		—		27			GMIB reinsurance contracts (3)	0		3,247		0		849
GMxB derivative features liability (4)	—		—		8,246		(409		)	GMxB derivative features liability (4)	0		0		11,985		(3,382)
SCS, SIO, MSO and IUL indexed features (5)	—		—		3,150		(1,286		)	SCS, SIO, MSO and IUL indexed features (5)	0		0		2,502		410
Total derivative instruments	$	117,398	$	8,271	$	16,948				Total derivative instruments	$	101,120	$	10,576	$	22,722

Net derivative gains (losses)							$	(1,555	)
Net derivative gains (losses) (6)										Net derivative gains (losses) (6)							$	2,104

______________


~~(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.~~


~~(5)~~	~~Reported in Policyholders’ account balances in the consolidated balance sheets.~~

(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.

(5)Reported in Policyholders’ account balances in the consolidated balance sheets.

(6)Investment fees of $9 million are reported in Net derivative gains (losses) in the consolidated statements of income (loss).

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

Derivative Instruments by Category


	At December 31, 2019						Nine Months Ended September 30, 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	$	0	$	0	$	(967)
Swaps	17,064		9		279		(1,263)
Options	47,766		5,080		1,749		1,241
Interest rate contracts:
Swaps	23,700		467		523		2,844
Futures	20,424		0		0		183
Swaptions	3,201		16		0		146
Credit contracts:
Credit default swaps	1,232		18		0		13
Other freestanding contracts:
Foreign currency contracts	501		3		0		(13)
Margin	0		140		0		0
Collateral	0		72		3,001		0

Embedded derivatives:
GMIB reinsurance contracts (3)	0		2,466		0		881
GMxB derivative features liability (4)	0		0		8,316		(3,656)
SCS, SIO, MSO and IUL indexed features (5)	0		0		3,150		(1,489)
Total derivative instruments	$	117,398	$	8,271	$	17,018

Net derivative gains (losses)							$	(2,080)

______________

(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.

(5)Reported 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 ~~March 31,~~September 30, 2020 and December 31, 2019 are exchange-traded and net settled daily in cash. At ~~March 31,~~September 30, 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 ~~$240~~$205 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 ~~$649~~$314 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 ~~$159~~$40 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~~ ~~March 31, 2020 and December 31, 2019~~,

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

an ISDA Master Agreement and related CSA have been executed. At September 30, 2020 and December 31, 2019, respectively, the Company held ~~$3.8~~$5.0 billion and $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 reported in Other invested assets. The Company posted collateral of ~~$27~~$14 million and $72 million at ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively, in the normal operation of its collateral arrangements.

The following table presents information about the Company’s offsetting of financial assets and liabilities and derivative instruments at ~~March 31,~~September 30, 2020:

Offsetting of Financial Assets and Liabilities and Derivative Instruments

At ~~March 31,~~September 30, 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	$	7,330	$	7,241	$	89	$	(54)	$	35
Other financial assets	1,434		0		1,434		0		1,434
Other invested assets	$	8,764	$	7,241	$	1,523	$	(54)	$	1,469

Liabilities:
Derivative liabilities	$	8,181	$	7,241	$	940	$	0	$	940
Other financial liabilities	1,579		0		1,579		0		1,579
Other liabilities	$	9,760	$	7,241	$	2,519	$	0	$	2,519

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 assets 1,360
—
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 liabilities 1,564
—
1,564
—
1,564
Other liabilities $ 8,871
$ 5,475
$ 3,396
$ —
$ 3,396

______________

(1) ~~Primarily financial instrument~~Financial instruments sent (held).

The following table presents information about the Company’s offsetting of financial assets and liabilities and derivative instruments atDecember 31, ~~2019~~.2019.

Offsetting of Financial Assets and Liabilities and Derivative Instruments

At December 31, 2019


	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 instruments	1,781		0		1,781		0		1,781
Other invested assets	$	7,585	$	5,429	$	2,156	$	(77)	$	2,079

Liabilities:
Derivative liabilities	$	5,474	$	5,429	$	45	$	0	$	45
Other financial liabilities	1,724		0		1,724		0		1,724
Other liabilities	$	7,198	$	5,429	$	1,769	$	0	$	1,769

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 instruments 1,781
—
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 liabilities 1,723
—
1,723
—
1,723
Other liabilities $ 7,197
$ 5,429
$ 1,768
$ —
$ 1,768

______________


~~(1)~~	~~Primarily financial instrument sent (held).~~

(1)Financial instruments sent (held).

5) CLOSED BLOCK

As a result of demutualization, the Company’s Closed 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 revert to the 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

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited)

Company without the approval of the New York State Department of Financial Services (the “NYDFS”). Closed Block

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited)~~

assets 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 the year ended December 31, 2019.

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 liabilities 76
38
Total Closed Block liabilities 6,480
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 $0 1,742
1,759
Policy loans 676
706
Cash and other invested assets 112
82
Other assets 133
145
Total assets designated to the Closed Block 6,347
6,446

Excess of Closed Block liabilities over assets designated to the Closed Block 133
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 $41 111
164
Maximum future earnings to be recognized from Closed Block assets and liabilities $ 244
$ 236



	September 30, 2020		December 31, 2019
	(in millions)
Closed Block Liabilities:
Future policy benefits, policyholders’ account balances and other	$	6,260	$	6,478
Policyholder dividend obligation	149		2
Other liabilities	58		38
Total Closed Block liabilities	6,467		6,518

Assets Designated to the Closed Block:
Fixed maturities available-for-sale, at fair value (amortized cost of $3,440 and $3,558) (allowance for credit losses of $0 at September 30, 2020)	3,788		3,754
Mortgage loans on real estate (net of allowance for credit losses of $6 at September 30, 2020)	1,782		1,759
Policy loans	656		706
Cash and other invested assets	3		82
Other assets	172		145
Total assets designated to the Closed Block	6,401		6,446

Excess of Closed Block liabilities over assets designated to the Closed Block	66		72
Amounts included in accumulated other comprehensive income (loss):
Net unrealized investment gains (losses), net of policyholders’ dividend obligation: $149 and $2; and net of income tax: $42 and $41	168		164
Maximum future earnings to be recognized from Closed Block assets and liabilities	$	234	$	236

The Company’s Closed Block revenues and expenses were 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 revenues 108
114

Benefits and Other Deductions:
Policyholders’ benefits and dividends 103
121
Other operating costs and expenses —
1
Total benefits and other deductions 103
122
Net income (loss), before income taxes 5
(8 )
Income tax (expense) benefit —
(1 )
Net income (loss) $ 5
$ (9 )


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Revenues:
Premiums and other income	$	36	$	42	$	118	$	136
Net investment income (loss)	61		69		190		208
Investment gains (losses), net	1		0		(1)		(1)
Total revenues	98		111		307		343

Benefits and Other Deductions:
Policyholders’ benefits and dividends	96		108		302		343
Other operating costs and expenses	0		0		1		1
Total benefits and other deductions	96		108		303		344
Net income (loss), before income taxes	2		3		4		(1)
Income tax (expense) benefit	(1)		0		(2)		(2)
Net income (loss)	$	1	$	3	$	2	$	(3)

~~AXA~~ EQUITABLE FINANCIAL 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 without 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. The amounts for the ceded IB are reflected in the consolidated balance sheets in GMIB reinsurance contract asset, at fair value.

Change in Liability for Variable Annuity Contracts with GMDB and GMIB Features and No NLG Feature

For the Three and Nine Months Ended ~~March 31,~~September 30, 2020 and 2019


	GMDB				GMIB
	Direct		Ceded		Direct		Ceded
	(in millions)
Balance at July 1, 2020	$	4,998	$	(99)	$	6,121	$	(3,433)
Paid guarantee benefits	(121)		3		(110)		21
Other changes in reserve	235		9		113		165
Balance at September 30, 2020	$	5,112	$	(87)	$	6,124	$	(3,247)

Balance at July 1, 2019	$	4,709	$	(100)	$	3,757	$	(2,197)
Paid guarantee benefits	(102)		3		(70)		20
Other changes in reserve	155		(4)		979		(676)
Balance at September 30, 2019	$	4,762	$	(101)	$	4,666	$	(2,853)


														GMDB				GMIB
														Direct		Ceded		Direct		Ceded
														(in millions)

	GMDB						GMIB
	Direct			Ceded			Direct			Ceded
	(in millions)
Balance at January 1, 2020	4,779			(98		)	4,688			(2,466		)	Balance at January 1, 2020	$	4,775	$	(99)	$	4,671	$	(2,466)
Paid guarantee benefits	(111		)	5			(74		)	20			Paid guarantee benefits	(372)		12		(287)		58
Other changes in reserve	379			(12		)	1,683			(859		)	Other changes in reserve	709		0		1,740		(839)
Balance at March 31, 2020	$	5,047		$	(105	)	$	6,297		$	(3,305	)
Balance at September 30, 2020													Balance at September 30, 2020	$	5,112	$	(87)	$	6,124	$	(3,247)

Balance at January 1, 2019	4,654			(107		)	3,741			(1,991		)	Balance at January 1, 2019	$	4,657	$	(107)	$	3,744	$	(1,993)
Paid guarantee benefits	(118		)	4			(56		)	21			Paid guarantee benefits	(328)		11		(182)		55
Other changes in reserve	129			—			55			(39		)	Other changes in reserve	433		(5)		1,104		(915)
Balance at March 31, 2019	$	4,665		$	(103	)	$	3,740		$	(2,009	)
Balance at September 30, 2019													Balance at September 30, 2019	$	4,762	$	(101)	$	4,666	$	(2,853)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

Liabilities for Embedded and Freestanding Insurance Related Derivatives

The liability for the GMxB derivative features, 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. Fair Value Disclosures.

Account Values and Net Amount at Risk

Account Values and Net Amount at Risk (“NAR”) for direct variable annuity contracts in force with GMDB and GMIB features as of ~~March 31,~~September 30, 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 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.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

Direct Variable Annuity Contracts with GMDB and GMIB Features

at ~~March 31,~~September 30, 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 Accounts 40,733
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 70 10.7 % 45.7 % 68.7 % 51.6 % 19.5 %
Range of contractually specified interest rates N/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 annuitization N/A
N/A
1.6
0.3
0.4
Range of contractually specified interest rates N/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	$	15,155		$	89		$	57		$	171		$	15,472
Separate Accounts	48,407			8,812			3,021			31,083			91,323
Total Account Values	$	63,562		$	8,901		$	3,078		$	31,254		$	106,795

Net Amount at Risk, gross	$	125		$	94		$	1,864		$	19,561		$	21,644
Net Amount at Risk, net of amounts reinsured	$	125		$	91		$	1,319		$	19,561		$	21,096

Average attained age of policyholders (in years)	51.3			68.1			74.7			70.0			55.3
Percentage of policyholders over age 70	11.0		%	47.7		%	69.8		%	53.3		%	20.0		%
Range of contractually specified interest rates	N/A			N/A			3% - 6%			3% - 6.5%			3% - 6.5%

Variable annuity contracts with GMIB features
Account Values invested in:
General Account	$	0		$	0		$	17		$	220		$	237
Separate Accounts	0			0			23,124			33,217			56,341
Total Account Values	$	0		$	0		$	23,141		$	33,437		$	56,578

Net Amount at Risk, gross	$	0		$	0		$	1,100		$	14,461		$	15,561
Net Amount at Risk, net of amounts reinsured	$	0		$	0		$	349		$	13,066		$	13,415

Average attained age of policyholders (in years)	N/A			N/A			64.0			70.0			67.8
Weighted average years remaining until annuitization	N/A			N/A			5.7			0.7			2.5
Range of contractually specified interest rates	N/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” in Note 10 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, ~~2019~~.2019.

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

Separate Accounts Investments by Investment Category Underlying Variable Annuity Contracts with GMDB and GMIB Features

The total Account Values of variable annuity contracts with GMDB and GMIB features include amounts allocated to the guaranteed interest option, which is part of the General Account and variable investment options 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 Values and, consequently, the 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.

~~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 Type GMDB GMIB GMDB GMIB
(in millions)
Equity $ 32,913
$ 13,765
$ 42,489
$ 17,941
Fixed income 5,151
2,680
5,263
2,699
Balanced 39,965
33,483
45,871
38,445
Other 911
272
865
263
Total $ 78,940
$ 50,200
$ 94,488
$ 59,348



	September 30, 2020				December 31, 2019
Mutual Fund Type	GMDB		GMIB		GMDB		GMIB
	(in millions)
Equity	$	41,259	$	16,739	$	42,489	$	17,941
Fixed income	5,371		2,679		5,263		2,699
Balanced	43,685		36,656		45,872		38,445
Other	1,008		267		865		263
Total	$	91,323	$	56,341	$	94,489	$	59,348

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.

Direct Liability Reinsurance Ceded Net
(in millions)
Balance at January 1, 2020 893
(807 ) 86
Paid guarantee benefits (13 ) —
(13 )
Other changes in reserves 40
(20 ) 20
Balance at March 31, 2020 $ 920
$ (827 ) $ 93

Balance at January 1, 2019 787
(733 ) 54
Paid guarantee benefits (7 ) —
(7 )
Other changes in reserves 21
(11 ) 10
Balance at March 31, 2019 $ 801
$ (744 ) $ 57

The change in the NLG liabilities, reflected in Future policy benefits and other policyholders’ liabilities in the consolidated balance sheets, is summarized in the table below.

2020

2019

Direct Liability

Reinsurance Ceded

Net

Direct Liability

Reinsurance Ceded

Net

(in millions)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	2020						2019
	Direct Liability		Reinsurance Ceded		Net		Direct Liability		Reinsurance Ceded		Net





Balance at July 1,	$	941	$	(841)	$	100	$	821	$	(756)	$	65
Paid guarantee benefits	(6)		0		(6)		(7)		0		(7)
Other changes in reserves	61		(31)		30		54		(31)		23
Balance at September 30,	$	996	$	(872)	$	124	$	868	$	(787)	$	81

Balance at January 1,	$	894	$	(808)	$	86	$	788	$	(734)	$	54
Paid guarantee benefits	(32)		0		(32)		(16)		0		(16)
Other changes in reserves	134		(64)		70		96		(53)		43
Balance at September 30,	$	996	$	(872)	$	124	$	868	$	(787)	$	81

7) FAIR VALUE DISCLOSURES

~~The accounting guidance~~U.S. GAAP 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 1~~	Level 1 Unadjusted quoted prices for identical instruments in active markets. Level 1 fair values generally are supported by market transactions that occur with sufficient frequency and volume to provide pricing information on an ongoing basis.


~~Level 2~~	Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data.

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~Level 3 Unobservable inputs supported by little or no market activity and often requiring significant management judgment or estimation, such as an entity’s own assumptions about the cash flows or other significant components of value that market participants would use in pricing the asset or liability.


~~Level 3~~	Unobservable inputs supported by little or no market activity and often requiring significant management judgment or estimation, such as an entity’s own assumptions about the cash flows or other significant components of value that market participants would use in pricing the asset or liability.

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-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.

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

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 ~~March 31,~~September 30, 2020 and December 31, 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.

Fair Value Measurements at September 30, 2020


	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Investments:
Fixed maturities, AFS:
Corporate (1)	$	0	$	50,040	$	1,479	$	51,519
U.S. Treasury, government and agency	0		17,284		0		17,284
States and political subdivisions	0		776		39		815
Foreign governments	0		902		0		902
Residential mortgage-backed (2)	0		145		0		145
Asset-backed (3)	0		2,578		13		2,591
Commercial mortgage-backed	0		1,117		0		1,117
Redeemable preferred stock	367		74		0		441
Total fixed maturities, AFS	367		72,916		1,531		74,814
Other equity investments	20		0		4		24
Trading securities	258		5,529		0		5,787
Other invested assets:
Short-term investments	0		106		0		106
Assets of consolidated VIEs/VOEs	0		0		12		12
Swaps	0		1,367		0		1,367
Credit default swaps	0		5		0		5
Options	0		2,752		0		2,752
Total other invested assets	0		4,230		12		4,242
Cash equivalents	2,488		1,031		0		3,519
GMIB reinsurance contracts asset	0		0		3,247		3,247
Separate Accounts assets (4)	118,085		2,424		0		120,509
Total Assets	$	121,218	$	86,130	$	4,794	$	212,142

Liabilities:
GMxB derivative features’ liability	$	0	$	0	$	11,985	$	11,985
SCS, SIO, MSO and IUL indexed features’ liability	0		2,502		0		2,502
Total Liabilities	$	0	$	2,502	$	11,985	$	14,487

______________

(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 September 30, 2020 the fair value of such investments was $356 million.

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

~~Fair Value Measurements at March 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 stock 250
273
—
523
Total fixed maturities, AFS 250
64,871
1,250
66,371
Other equity investments 12
—
—
12
Trading securities 265
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 equivalents 7,100
—
—
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

~~______________~~


~~(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.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

Fair Value Measurements at December 31, 2019


	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Investments:
Fixed maturities, AFS:
Corporate (1)	$	0	$	43,218	$	1,246	$	44,464
U.S. Treasury, government and agency	0		15,231		0		15,231
States and political subdivisions	0		610		39		649
Foreign governments	0		490		0		490
Residential mortgage-backed (2)	0		173		0		173
Asset-backed (3)	0		744		100		844
Redeemable preferred stock	237		274		0		511
Total fixed maturities, AFS	237		60,740		1,385		62,362
Other equity investments	13		0		0		13
Trading securities	321		6,277		0		6,598
Other invested assets:
Short-term investments	0		468		0		468
Assets of consolidated VIEs/VOEs	0		0		16		16
Swaps	0		(326)		0		(326)
Credit default swaps	0		18		0		18
Options	0		3,331		0		3,331
Total other invested assets	0		3,491		16		3,507
Cash equivalents	1,155		0		0		1,155
GMIB reinsurance contracts asset	0		0		2,466		2,466
Separate Accounts assets (4)	121,184		2,878		0		124,062
Total Assets	$	122,910	$	73,386	$	3,867	$	200,163

Liabilities:
GMxB derivative features’ liability	$	0	$	0	$	8,316	$	8,316
SCS, SIO, MSO and IUL indexed features’ liability	0		3,150		0		3,150
Total Liabilities	$	0	$	3,150	$	8,316	$	11,466

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 stock 237
274
—
511
Total fixed maturities, AFS 237
60,740
1,385
62,362
Other equity investments 13
—
—
13
Trading securities 321
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 equivalents 1,155
—
—
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
______________

~~______________~~(1)Corporate fixed maturities includes both public and private issues.


~~(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.

(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.

3640

~~AXA~~ EQUITABLE FINANCIAL 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 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

~~AXA~~ EQUITABLE FINANCIAL 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.

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 ~~$585~~$263 million and $175 million at ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively, to recognize incremental counterparty non-performance risk.

Lapse rates are adjusted at the contract level based on a comparison of the ~~actuarially~~actuarial 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, primarily 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 ~~three~~nine months ended ~~March 31,~~September 30, 2020,, AFS fixed maturities with fair values of ~~$126~~$103 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~~

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued

observable inputs to measure and validate their fair values. In addition, AFS fixed maturities with fair value of $0$189 million were transferred from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately ~~0.7%~~2.0% of total equity at ~~March 31,~~September 30, 2020.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2019,, AFS fixed maturities with fair values of ~~$69~~$104 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 ~~$17~~$14 million were transferred from Level 2 into the Level 3 classification. These transfers in the aggregate represent approximately ~~0.7%~~0.9% of total equity at ~~March 31,~~September 30, 2019.

The tables below present reconciliations for all Level 3 assets and liabilities ~~at March 31,~~for the three and nine months ended September 30, 2020 and 2019, respectively.

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, January 1, 2020	$	1,246		$	39		$	100
Balance, July 1, 2020										Balance, July 1, 2020	$	1,652	$	40	$	0
Total gains and (losses), realized and unrealized, included in:										Total gains and (losses), realized and unrealized, included in:
Net income (loss) as:										Net income (loss) as:
Net investment income (loss)	1			—			—			Net investment income (loss)	0		0		0
Investment gains (losses), net	(2		)	—			—			Investment gains (losses), net	(1)		0		0
Subtotal	(1		)	—			—			Subtotal	(1)		0		0
Other comprehensive income (loss)	(60		)	(3		)	(8		)	Other comprehensive income (loss)	18		(1)		0
Purchases	61			—			48			Purchases	(138)		0		13
Sales	(46		)	—			—			Sales	(22)		0		0
Transfers into Level 3 (1)	—			—			—			Transfers into Level 3 (1)	(30)		0		0
Transfers out of Level 3 (1)	(26		)	—			(100		)	Transfers out of Level 3 (1)	0		0		0
Balance, March 31, 2020	$	1,174		$	36		$	40
Balance, September 30, 2020										Balance, September 30, 2020	$	1,479	$	39	$	13

Balance, January 1, 2019	$	1,174		$	38		$	519
Balance, July 1, 2019										Balance, July 1, 2019	$	1,290	$	39	$	534
Total gains and (losses), realized and unrealized, included in:										Total gains and (losses), realized and unrealized, included in:
Net income (loss) as:										Net income (loss) as:
Net investment income (loss)	1			—			—			Net investment income (loss)	0		0		0
Investment gains (losses), net	—			—			—			Investment gains (losses), net	0		0		0
Subtotal	1			—			—			Subtotal	0		0		0
Other comprehensive income (loss)	9			1			4			Other comprehensive income (loss)	(7)		1		0
Purchases	70			—			11			Purchases	(2)		0		71
Sales	(33		)	—			—			Sales	(42)		(1)		(73)
Transfers into Level 3 (1)	17			—			—			Transfers into Level 3 (1)	0		0		0
Transfers out of Level 3 (1)	(69		)	—			—			Transfers out of Level 3 (1)	(31)		0		0
Balance, March 31, 2019	$	1,169		$	39		$	534
Balance, September 30, 2019										Balance, September 30, 2019	$	1,208	$	39	$	532

______________


~~(1)~~	~~Transfers into/out of the Level 3 classification are reflected at beginning-of-period fair values.~~

(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, 2020	$	1,246	$	39	$	100
Total gains and (losses), realized and unrealized, included in:
Net income (loss) as:
Net investment income (loss)	2		0		0
Investment gains (losses), net	(14)		0		0
Subtotal	(12)		0		0

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

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)
Other comprehensive income (loss)	(36)		1		0
Purchases	207		0		13
Sales	(112)		(1)		0
Transfers into Level 3 (1)	189		0		0
Transfers out of Level 3 (1)	(3)		0		(100)
Balance, September 30, 2020	$	1,479	$	39	$	13

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		0		0
Investment gains (losses), net	0		0		0
Subtotal	3		0		0
Other comprehensive income (loss)	3		3		5
Purchases	219		0		81
Sales	(101)		(2)		(73)
Transfers into Level 3 (1)	14		0		0
Transfers out of Level 3 (1)	(104)		0		0
Balance, September 30, 2019	$	1,208	$	39	$	532

______________


~~(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 GMxB derivative features liability, represents benefits paid.~~


~~(4)~~	~~For the GMIB reinsurance contract asset, represents a transfer from amounts due from reinsurers.~~


~~(5)~~	(1)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~~ ~~three months ended March 31, 2020 and 2019~~ ~~by category for~~ Level 3 ~~assets and liabilities still held~~classification are reflected at ~~March 31, 2020 and 2019, respectively.~~beginning-of-period fair values.


	Other Equity Investments		GMIB Reinsurance Contract Asset		Separate Accounts Assets		GMxB Derivative Features Liability
	(in millions)
Balance, July 1, 2020	$	16	$	3,433	$	0	$	(12,458)
Realized and unrealized gains (losses), included in Net income (loss) as:
Investment gains (losses), net	0		0		0		0
Net derivative gains (losses) (1)	0		(177)		0		570
Total realized and unrealized gains (losses)	0		(177)		0		570
Other comprehensive income (loss)	0		0		0		0
Purchases (2)	3		11		0		(113)
Sales (3)	0		(21)		0		16
Change in estimate (4)	0		1		0		0
Activity related to consolidated VIEs/VOEs	(3)		0		0		0
Transfers into Level 3 (5)	0		0		0		0
Transfers out of Level 3 (5)	0		0		0		0
Balance, September 30, 2020	$	16	$	3,247	$	0	$	(11,985)

Balance, July 1, 2019	$	16	$	2,198	$	25	$	(6,813)
Realized and unrealized gains (losses), included in Net income (loss) as:
Investment gains (losses), net	0		0		0		0
Net derivative gains (losses)	0		664		0		(2,535)
Total realized and unrealized gains (losses)	0		664		0		(2,535)
Other comprehensive income (loss)	0		0		0		0
Purchases (2)	0		11		(5)		(100)

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements (Unaudited), Continued


Sales (3)	0		(20)		(1)		12
Settlements	0		0		(1)		0
Activity related to consolidated VIEs/VOEs	0		0		0		0
Transfers into Level 3 (5)	0		0		0		0
Transfers out of Level 3 (5)	0		0		(11)		0
Balance, September 30, 2019	$	16	$	2,853	$	7	$	(9,436)

______________

(1)The Company’s nonperformance risk impact of ($458) million for the GMxB derivative features liability and $6 million for the GMIB reinsurance contract asset the three months ended September 2020, respectively, 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 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.


	Other Equity Investments		GMIB Reinsurance Contract Asset		Separate Accounts Assets		GMxB Derivative Features Liability
	(in millions)
Balance, January 1, 2020	$	16	$	2,466	$	0	$	(8,316)
Realized and unrealized gains (losses), included in Net income (loss) as:
Investment gains (losses), net	0		0		0		0
Net derivative gains (losses) (1)	0		849		0		(3,382)
Total realized and unrealized gains (losses)	0		849		0		(3,382)
Other comprehensive income (loss)	0
Purchases (2)	4		34		0		(328)
Sales (3)	0		(58)		0		41
Settlements	0		0		0		0
Change in estimate (4)	0		(44)		0		0
Activity related to consolidated VIEs/VOEs	(4)		0		0		0
Transfers into Level 3 (5)	0		0		0		0
Transfers out of Level 3 (5)	0		0		0		0
Balance, September 30, 2020	$	16	$	3,247	$	0	$	(11,985)

Balance, January 1, 2019	$	48	$	1,993	$	21	$	(5,491)
Realized and unrealized gains (losses), included in Net income (loss) as:
Investment gains (losses), net	0		0		0		0
Net derivative gains (losses)	0		881		0		(3,656)
Total realized and unrealized gains (losses)	0		881		0		(3,656)
Other comprehensive income (loss)	0		0		0		0
Purchases (2)	0		34		3		(309)
Sales (3)	0		(55)		(1)		20
Settlements	0		0		(4)		0
Activity related to consolidated VIEs/VOEs	(3)		0		0		0
Transfers into Level 3 (5)	0		0		0		0
Transfers out of Level 3 (5)	(29)		0		(12)		0
Balance, September 30, 2019	$	16	$	2,853	$	7	$	(9,436)

______________

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

(1)The Company’s nonperformance risk impact of $35 million for the GMxB derivative features liability and ($50) million for the GMIB reinsurance contract asset the nine months ended September 2020, respectively, 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 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.

The table below details changes in unrealized gains (losses) for the nine months ended September 30, 2020 and 2019 by category for Level 3 assets and liabilities still held at September 30, 2020 and 2019, respectively.

Change in Unrealized Gains (Losses) for Level 3 Instruments


								Net Income (Loss)
								Investment Gains (Losses), Net		Net Derivative Gains (Losses)		OCI
								(in millions)
Held at September 30, 2020:							Held at September 30, 2020:
Change in unrealized gains (losses):							Change in unrealized gains (losses):
Fixed maturities, AFS:							Fixed maturities, AFS:
Corporate							Corporate	$	0	$	0	$	(37)
State and political subdivisions							State and political subdivisions	0		0		2

Total fixed maturities, AFS							Total fixed maturities, AFS	0		0		(35)
GMIB reinsurance contracts							GMIB reinsurance contracts	0		849		0

GMxB derivative features liability							GMxB derivative features liability	0		(3,382)		0
Total							Total	$	0	$	(2,533)	$	(35)

Held at September 30, 2019:							Held at September 30, 2019:
Change in unrealized gains (losses):							Change in unrealized gains (losses):
Fixed maturities, AFS:							Fixed maturities, AFS:
Corporate							Corporate	$	0	$	0	$	3
State and political subdivisions							State and political subdivisions	0		0		3

Asset-backed							Asset-backed	0		0		4
Total fixed maturities, AFS							Total fixed maturities, AFS	0		0		10
GMIB reinsurance contracts							GMIB reinsurance contracts	0		881		0
Separate Account assets							Separate Account assets	(14)		0		0
GMxB derivative features liability							GMxB derivative features liability	0		(3,656)		0
Total							Total	$	(14)	$	(2,775)	$	10

	Net Income (Loss)
	Net Derivative Gains (Losses)			OCI
	(in millions)
Held at March 31, 2020:
Change in unrealized gains (losses):
Fixed maturities, AFS:
Corporate	$	—		$	(60	)
State and political subdivisions	—			(3		)
Asset-backed	—			(8		)
Total fixed maturities, AFS	—			(71		)
GMIB reinsurance contracts	892			—
GMxB derivative features liability	(1,165		)	—
Total	$	(273	)	$	(71	)

Held at March 31, 2019:
Change in unrealized gains (losses):
Fixed maturities, AFS:
Corporate	$	—		$	9
State and political subdivisions	—			1
Asset-backed	—			4
Total fixed maturities, AFS	—			14
GMIB reinsurance contracts	27			—
GMxB derivative features liability	(409		)	—
Total	$	(382	)	$	14

Quantitative and Qualitative Information about Level 3 Fair Value Measurements

The following tables disclose quantitative information about Level 3 fair value measurements by category for assets and liabilities at ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively.

Quantitative Information about Level 3 Fair Value Measurements at~~March 31,~~ September 30, 2020

Fair
Value
Valuation Technique
Significant
Unobservable Input
Range Weighted Average (2)
(in millions)
Assets:
Investments:
Fixed maturities, AFS:
Corporate $ 57
Matrix pricing
model Spread over Benchmark 15 - 580 bps 280 bps
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
GMIB reinsurance contract asset 3,305
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%

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

Fair

Value

Valuation Technique

Significant

Unobservable Input

Range

Weighted Average (2)

(in millions)

~~Liabilities:~~Assets:

~~GMIBNLG~~Investments:

~~9,308~~

Fixed maturities, AFS:

Corporate

Matrix pricing
model

Spread over Benchmark

270 - 610 bps

288 bps

1,105

Market
comparable
companies

EBITDA multiples
Discount rate
Cash flow multiples

3.5x-31.8x
5.1% - 25.4%
0.9x -25.0x

14.4x
10.0%
10.7x

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

Fair

Value

Valuation Technique

Significant

Unobservable Input

Range

Weighted Average (2)

(in millions)

Other equity investments

Market comparable companies

Revenue multiple

3.5x - 18.0x

9.5x

GMIB reinsurance contract asset

3,247

Discounted cash flow

Non-performance risk
Lapse rates
Withdrawal rates
~~Annuitization~~Utilization rates
Volatility rates - Equity
Mortality ~~rates~~Rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 61 - 115

~~304~~60 - 125 bps
~~0.8% - 19.9%~~0.6%-16%
~~0.3% - 11.0%~~0%-2%
~~0.0% - 100.0%~~0%-61%
16%-34%

0.01% ~~- 0.19%~~-0.18%
~~0.06% - 0.53%~~0.07%-0.54%
~~0.41% - 41.39%~~0.42%-42.20%

~~2.75%~~72 bps
~~1.21%~~1.56%
~~6.46%~~0.96%
6.37%
25%

~~All Ages 1.34%~~2.72%
(same for all ages)
(same for all ages)

~~GWBL/GMWB~~Liabilities:

~~146~~

GMIBNLG

11,682

Discounted cash flow

Non-performance risk
Lapse rates
Withdrawal rates
Annuitization rates
Mortality Rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 61 - 115

141.0 bps
1.1%-25.7%
0.4%-2%
0%-100%

0.01%-0.19%
0.06%-0.53%
0.41%-41.39%

3.06%
0.96%
5.92%

1.48%
(same for all ages)
(same for all ages)

GWBL/GMWB

220

Discounted cash flow

Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity

~~304~~141.0 bps
0.8% ~~- 10.0%~~-16%
~~0.0% - 7.0%~~0%-8%
100% ~~after~~once starting
~~20.0% - 37.0%~~16%-34%

~~1.75%~~1.56%
~~1.19%~~0.96%

~~27%~~24.57%

GIB

3877

Discounted cash flow

Non-performance risk
Lapse rates
Withdrawal rates
Utilization rates
Volatility rates - Equity

~~304~~141.0 bps
~~1.2% - 19.9%~~0.8%-15.6%
~~0.0% - 8.0%~~0%-2%
~~0.0% - 100.0%~~0%-100%
~~20.0% - 37.0%~~16%-34%

~~1.75%~~1.56%
~~1.19%~~0.96%
~~6.59%~~6.37%
~~27%~~25%

GMAB

176

Discounted cash flow

Non-performance risk
Lapse rates
Volatility rates - Equity

~~304~~141.0 bps
~~1.0% - 10.0%~~0.8%-16%
~~20.0% - 37.0%~~16%-34%

~~1.75%~~1.56%
~~27%~~25%

______________


~~(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.

(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, 2019

Fair

Value

Valuation Technique

Significant

Unobservable Input

Range

Weighted Average

(in millions)

Assets:

Investments:

Fixed maturities, AFS:

Corporate

Matrix pricing model

Spread over benchmark

65 - 580 bps

186 bps

1,025

Market comparable companies

EBITDA multiples
Discount rate
Cash flow multiples

3.3x - 56.7x
3.9% - 16.5%
0.8x - 48.1x

14.3x
10.0%
10.7x

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

GMIB reinsurance contract asset

2,466

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 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:

GMIBNLG

~~8,128~~8,135

Discounted cash flow

Non-performance risk
Lapse rates
Withdrawal rates
Annuitization rates

Mortality rates (1):
Ages 0 - 40
Ages 41 - 60
Ages 60 - 115

124 bps
0.8% - 19.9%
0.3% - 11.0%
0.0% - 100.0%

0.01% - 0.19%
0.06% - 0.53%
0.41% - 41.39%

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

GWBL/GMWB

~~109~~172

Discounted cash flow

Non-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%

GIB

Discounted 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%

GMAB

Discounted cash flow

Lapse rates
Volatility rates - Equity

1.0% - 10.0%
9.0% - 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 ~~March 31,~~September 30, 2020 and December 31, 2019,, respectively, are approximately ~~$174~~$417 million and $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~~

•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, 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

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

above at September 30, 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.

GMIB Reinsurance Contract Asset and 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

~~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.

Carrying Value of Financial Instruments Not Otherwise Disclosed in Note 3 and Note 4

The carrying values and fair values at ~~March 31,~~September 30, 2020 and December 31, 2019 for financial instruments not otherwise disclosed in Note 3 and Note 4 are presented in the table below.

Carrying Values and Fair Values for Financial Instruments Not Otherwise Disclosed


	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
September 30, 2020:
Mortgage loans on real estate	$	12,785	$	0	$	0	$	13,032	$	13,032
Policy loans	$	3,647	$	0	$	0	$	4,726	$	4,726
Loans to affiliates	$	1,200	$	0	$	1,241	$	0	$	1,241
Policyholders’ liabilities: Investment contracts	$	2,063	$	0	$	0	$	2,280	$	2,280
FHLB funding agreements (1)	$	6,848	$	0	$	6,940	$	0	$	6,940
FABN funding agreements (2)	$	1,143	$	0	$	1,168	$	0	$	1,168
Separate Accounts liabilities	$	9,000	$	0	$	0	$	9,000	$	9,000

December 31, 2019:
Mortgage loans on real estate	$	12,090	$	0	$	0	$	12,317	$	12,317
Policy loans	$	3,270	$	0	$	0	$	4,199	$	4,199
Loans to affiliates	$	1,200	$	0	$	1,224	$	0	$	1,224
Policyholders’ liabilities: Investment contracts	$	1,922	$	0	$	0	$	2,029	$	2,029
FHLB funding agreements (1)	$	6,909	$	0	$	6,957	$	0	$	6,957
Separate Accounts liabilities	$	9,041	$	0	$	0	$	9,041	$	9,041

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
_____________

(1)Federal Home Loan Bank of New York (“FHLB”)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

(2)Funding Agreement Backed Notes Program (“FABN”)

(3)Excludes amounts reclassified as Held-for-Sale.

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. Treasury 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.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

FHLB Funding Agreements

The fair values of the Company’s FHLB funding agreements are determined by discounted cash flow analysis based on the indicative funding agreement rates published by the FHLB.

FABN Funding Agreements

The fair values of the Company’s FABN funding agreements are determined by Bloomberg’s evaluated pricing service, which uses direct observations or observed comparables.

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 the Company’s association plans contracts, supplementary contracts not involving life contingencies (“SCNILC”), 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

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.

Otherwise Not Required to be Included in the Table Above

The Company’s investment in Corporate Owned Life Insurance (“COLI”) policies are recorded at their cash surrender value and are therefore not required to be included in the table above. See Note 2to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019 for further description of the Company’s accounting policy related to its investment in COLI policies.

8) LOANS TO AFFILIATES

Loans Issued to Holdings

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

In April 2018, Equitable ~~Life~~Financial 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 in principal, respectively. At ~~March 31,~~September 30, 2020, the amount outstanding was $300 million.

In November 2019, Equitable ~~Life~~Financial 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,~~September 30, 2020, the amount outstanding was $900 million.

9) INCOME TAXES

Income tax expense for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019 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.

10) RELATED PARTY TRANSACTIONS

The Company did not enter into any new significant transactions with related parties during the ~~three~~nine months ended ~~March 31, 2020~~.September 30, 2020.

11) EQUITY

AOCI represents cumulative gains (losses) on items that are not reflected in Net income (loss). The balances as of ~~March 31,~~September 30, 2020 and 2019 follow:

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

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


	September 30,
	2020		2019
	(in millions)
Unrealized gains (losses) on investments	$	4,927	$	2,226
Defined benefit pension plans	(4)		(7)
Accumulated other comprehensive income (loss) attributable to Equitable Financial	$	4,923	$	2,220

The components of OCI, net of taxes for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019, follow:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Change in net unrealized gains (losses) on investments:
Net unrealized gains (losses) arising during the period	$	295	$	1,224	$	4,524	$	3,750
(Gains) losses reclassified into net income (loss) during the period (1)	(23)		(159)		(205)		(157)
Net unrealized gains (losses) on investments	271		1,065		4,318		3,593
Adjustments for policyholders’ liabilities, DAC, insurance liability loss recognition and other	(24)		(335)		(992)		(872)
Change in unrealized gains (losses), net of adjustments (net of deferred income tax expense (benefit) of 66, $194, $884 and $718)	247		730		3,327		2,721
Other comprehensive income (loss), attributable to Equitable Financial	$	247	$	730	$	3,327	$	2,721

____________

(1)~~, follow:~~See “Reclassification adjustments” in Note 3. Reclassification amounts presented net of income tax expense (benefit) of $(6) million, $(42) million, $(55) million and $(42) million for the three and nine months ended September 30, 2020 and 2019, respectively.

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 investments 1,548
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

~~____________~~


~~(1)~~	See “Reclassification adjustments” in Note 3. Reclassification amounts presented net of income tax expense (benefit) of $(13) million and $1 million for the three months ended March 31, 2020 and 2019, respectively.

Investment gains and losses reclassified from AOCI to Net income (loss) primarily consist of realized gains (losses) on sales and credit 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

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

primarily consist of amortization of net (gains) losses and net prior service cost (credit) recognized as a component of net periodic cost and reported in Compensation and benefits in the consolidated statements of income (loss). Amounts presented in the table above are net of tax.

12) REDEEMABLE NONCONTROLLING INTEREST

The changes in the components of redeemable noncontrolling interests are presented in the table that follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in millions)
Balance, beginning of period	$	36	$	42	$	39	$	39
Net earnings (loss) attributable to redeemable noncontrolling interests	3		0		0		3
Purchase/change of redeemable noncontrolling interests	(1)		4		(1)		4
Balance, end of period	$	38	$	46	$	38	$	46

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

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 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

~~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, 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, 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 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

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

develops an estimate of the unaccrued amounts of the reasonably possible range of losses. As of ~~March 31,~~September 30, 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 Equitable ~~Life,~~Financial, 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 Equitable ~~Life~~Financial 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 Equitable ~~Life’s~~Financial’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 Equitable ~~Life’s~~Financial’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~~to the Connecticut Superior Court, Judicial District of Stamford. In December 2018, Equitable Financial sought dismissal of the complaint by filing a motion to strike, which the court granted in August 2019. Plaintiff filed an Amended Class Action Complaint in September 2019. Equitable Financial filed a motion for entry of judgment in October 2019. On August 3, 2020, the court granted Equitable Financial’s motion for entry of judgment. In August 2020, Plaintiff filed a notice of appeal. 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 Equitable ~~Life’s~~Financial’s COI rate increase. In early 2016, Equitable ~~Life~~Financial 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

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Notes to Consolidated Financial Statements(Unaudited), Continued~~

alleges the following claims: breach of contract; misrepresentations by Equitable ~~Life~~Financial 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~~In August 2020, the federal district court issued a decision granting in part Brach Plaintiffs’ motion for class certification. The court certified nationwide breach of contract and Section 4226 classes, and a New York State Section 349 class, and class notice has gone out. Equitable Financial filed a petition seeking permission to appeal the decision to certify the Section 4226 class and New York State Section 349 class. NaN other federal actions challenging the COI rate increase are also pending against Equitable ~~Life~~Financial 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~~NaN actions are also pending against Equitable ~~Life~~Financial in New York state court. Equitable ~~Life~~Financial is vigorously defending each of these matters.

Obligations under Funding Agreements

Federal Home Loan Bank of New York

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

As a member of the ~~FHLBNY,~~FHLB, Equitable ~~Life~~Financial has access to collateralized borrowings. It also may issue funding agreements to the FHLBNY. Both the collateralized borrowings and funding agreements would require Equitable ~~Life~~Financial to pledge qualified mortgage-backed assets and/or government securities as collateral. Equitable ~~Life~~Financial issues short-term funding agreements to the FHLBNY and uses the funds for asset, liability, and cash management purposes. Equitable ~~Life~~Financial issues long-term funding agreements to the FHLBNY and uses the funds for spread lending purposes.

Entering into ~~FHLBNY~~FHLB membership, borrowings and funding agreements requires the ownership of ~~FHLBNY~~FHLB stock and the pledge of assets as collateral. Equitable ~~Life~~Financial has purchased ~~FHLBNY~~FHLB stock of ~~$315~~$320 million and pledged collateral with a carrying value of ~~$9.8~~$8.7 billion as of ~~March 31,~~September 30, 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.~~FHLB.

Change in ~~FHLBNY~~FHLB Funding Agreements during the ~~Three~~Nine Months Ended ~~March~~September 30, 2020


	Outstanding Balance at December 31, 2019		Issued During the Period		Repaid During the Period		Long-term Agreements Maturing Within One Year		Long-term Agreements Maturing Within Five Years		Outstanding Balance at September 30, 2020
	(in millions)
Short-term funding agreements:
Due in one year or less	$	4,608	$	34,298	$	34,358	$	490	$	0	$	5,038
Long-term funding agreements:
Due in years two through five	1,646		0		0		(490)		112		1,268
Due in more than five years	646		0		0		0		(112)		534
Total long-term funding agreements	2,292		0		0		(490)		0		1,802
Total funding agreements (1)	$	6,900	$	34,298	$	34,358	$	0	$	0	$	6,840

____________

(1)The $8 million and $9 million difference between the funding agreements carrying value shown in fair value table for September 30, 2020 and December 31, ~~2020~~2019, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements borrowing rates.

Funding Agreement-Backed Notes Program

Under the FABN, Equitable Financial may issue funding agreements to a Delaware special purpose statutory trust (the “Trust”) in exchange for the proceeds from issuances of fixed and floating rate medium-term marketable notes issued by the Trust from time to time (the “Trust notes”). The funding agreements have matching interest and maturity payment terms to the applicable Trust notes. The maximum aggregate principal amount of Trust notes permitted to be outstanding at any one time is $5 billion. Funding agreements issued to the Trust are reported in policyholders’ account balances in the consolidated balance sheets. The table below summarizes the Company’s activity of funding agreements under the FABN.

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued

Outstanding 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)
Short-term funding agreements:
Due in one year or less $ 4,608
$ 11,750
$ 11,900
$ 174
$ 4,632
Long-term funding agreements:
Due in years two through five 1,646
—
—
(174 ) 1,472
Due in more than five years 646
—
—
—
646
Total long-term funding agreements 2,292
—
—
(174 ) 2,119
Total funding agreements (1) $ 6,900
$ 11,750
$ 11,900
$ —
$ 6,750
Change in FABN Funding Agreements during the Nine Months Ended September 30, 2020

~~____________~~


	Outstanding Balance at December 31, 2019		Issued During the Period		Repaid During the Period		Long-term Agreements Maturing Within One Year		Long-term Agreements Maturing Within Five Years		Outstanding Balance at September 30, 2020
	(in millions)
Short-term funding agreements:
Due in one year or less	0		$	0	$	0	$	0	$	0	$	0
Long-term funding agreements:
Due in years two through five	0		650		0		0		0		650
Due in more than five years	0		500		0		0		0		500
Total long-term funding agreements	0		1,150		0		0		0		1,150
Total funding agreements (1)	$	0	$	1,150	$	0	$	0	$	0	$	1,150


~~(1)~~	The $9 million and $9 million difference between the funding agreements carrying value shown in fair value table for March 31, 2020 and December 31, 2019, respectively, reflects the remaining amortization of a hedge implemented and closed, which locked in the funding agreements borrowing rates.

_____________

(1) The $7 million difference between the funding agreements notional value shown and carrying value table at September 30,

2020, reflects the remaining amortization of the issuance cost of the funding agreements.

Guarantees and Other Commitments

The Company provides certain guarantees or commitments to affiliates and others. At ~~March 31,~~September 30, 2020, these arrangements include commitments by the Company to provide equity financing of ~~$1.0~~$1.2 billion (including ~~$179~~$248 million with affiliates) to certain limited partnerships 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 entered into with unaffiliated insurance companies and beneficiaries. To satisfy its obligations under these agreements, the Company owns single premium annuities issued by previously wholly-owned life insurance subsidiaries. The Company has directed payment under these annuities to be made directly to the beneficiaries under the structured settlement agreements. A contingent

~~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 ~~March 31,~~September 30, 2020. The Company had ~~$426~~$469 million of commitments under existing mortgage loan agreements at ~~March 31,~~September 30, 2020.

Pursuant to certain assumption agreements (the “Assumption Agreements”), AXA Financial legally assumed primary liability from Equitable ~~Life~~Financial for all current and future liabilities of Equitable ~~Life~~Financial 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. Equitable ~~Life~~Financial remains secondarily liable for its obligations under these plans and would recognize such liabilities in the event AXA 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) ~~SUBSEQUENT EVENTS~~

~~COVID-19 Pandemic~~REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

The Company ~~has~~identified certain errors primarily related to the calculations of actuarially determined insurance contract assets and liabilities that impacted previously issued consolidated financial statements. Management evaluated these adjustments and concluded they were not material to any previously reported quarterly or annual financial statements. In order to improve the ~~effects of events subsequent to March 31, 2020,~~consistency and ~~through the date~~comparability of the ~~filing of these unaudited consolidated~~ financial statements, ~~with~~management revised the ~~Securities~~financial statements and ~~Exchange Commission. Subsequent~~related disclosures to ~~March 31, 2020, equity~~correct these errors as shown below.

Management assessed the materiality of this change within prior period financial statements based upon SEC Staff Accounting Bulletin Number 99, Materiality, which is since codified in Accounting Standards Codification ("ASC") 250, Accounting Changes and Error Corrections. The prior period comparative financial ~~markets~~statements that are presented herein have ~~experienced significant volatility and interest rates~~been revised.

The following tables present line items for prior period financial statements that have ~~continued to decline~~been affected by the revision. For these line items, the tables detail the amounts as previously reported, the impact upon those line items due to the ~~COVID-19 pandemic. The Company is~~revision, and the amounts as currently ~~unable to determine~~revised within the ~~extent of the impact of the pandemic to its operations and~~ financial ~~condition.~~

statements.

~~Table of Contents~~

~~AXA~~ EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements ~~of Cash Flows~~

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

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	June 30, 2020		March 31, 2020
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Balance Sheets:
ASSETS







Other invested assets	1,962		0		1,962		1,595		12		1,607





Deferred policy acquisition costs	3,746		(70)		3,676		4,068		(85)		3,983








Total Assets	$	232,378	$	(70)	$	232,308	$	218,841	$	(73)	$	218,768
LIABILITIES

Future policy benefits and other policyholders’ liabilities	41,382		29		41,411		37,830		32		37,862






Current and deferred income taxes	1,020		(21)		999		1,637		(22)		1,615



Total Liabilities	$	217,176	$	8	$	217,184	$	199,928	$	10	$	199,938



EQUITY



Retained earnings	2,658		(78)		2,580		7,953		(83)		7,870

Total equity attributable to Equitable Financial	15,157		(78)		15,079		18,872		(83)		18,789

Total Equity	15,166		(78)		15,088		18,881		(83)		18,798

Total Liabilities, Redeemable Noncontrolling interest and Equity	232,378		(70)		232,308		$	218,841	$	(73)	$	218,768

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	December 31, 2019		December 31, 2018
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Balance Sheets:
ASSETS
Investments:












Deferred policy acquisition costs	4,337		(115)		4,222		5,011		(52)		4,959

Amounts due from reinsurers	3,001		1		3,002		3,124		0		3,124

GMIB reinsurance contract asset, at fair value	2,466		0		2,466		1,991		1		1,992
Current and deferred income taxes	224		25		249		438		35		473
Other assets	3,050		0		3,050		2,763		22		2,785


Total Assets	$	228,041	$	(89)	$	227,952	$	199,952	$	6	$	199,958
LIABILITIES

Future policy benefits and other policyholders’ liabilities	33,976		3		33,979		29,808		75		29,883







Other liabilities	1,768		1		1,769		1,460		0		1,460


Total Liabilities	$	216,344	$	4	$	216,348	$	187,485	$	75	$	187,560



EQUITY



Retained earnings	2,242		(97)		2,145		5,098		(59)		5,039
Accumulated other comprehensive income (loss)	1,592		4		1,596		(491)		(10)		(501)
Total equity attributable to Equitable Financial	11,645		(93)		11,552		12,416		(69)		12,347

Total Equity	11,658		(93)		11,565		12,428		(69)		12,359

Total Liabilities, Redeemable Noncontrolling interest and Equity	$	228,041	$	(89)	$	227,952	$	199,952	$	6	$	199,958


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Income (Loss)
REVENUES
Policy charges and fee income	$	825	$	(1)	$	824	$	1,729	$	0	$	1,729

Net derivative gains (losses)	(5,903)		(5)		(5,908)		3,630		(6)		3,624
Net investment income (loss)	934		(13)		921		1,525		0		1,525





Other income	8		2		10		25		0		25
Total revenues	(3,557)		(17)		(3,574)		8,031		(6)		8,025

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	700		(9)		691		3,297		20		3,317




Amortization of deferred policy acquisition costs	164		(15)		149		1,222		(51)		1,171
Other operating costs and expenses	218		0		218		431		1		432
Total benefits and deductions	1,563		(24)		1,539		5,961		(30)		5,931
Income (loss) from continuing operations, before income taxes	(5,120)		7		(5,113)		2,070		24		2,094
Income tax (expense) benefit from continuing operations	1,029		(2)		1,027		(425)		(5)		(430)


Net income (loss)	(4,091)		5		(4,086)		1,645		19		1,664

Net income (loss) attributable to Equitable Financial	$	(4,095)	$	5	$	(4,090)	$	1,648	$	19	$	1,667

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended March 31, 2020
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Income (Loss)
REVENUES:
Policy charges and fee income	904		1		905

Net derivative gains (losses)	9,533		(1)		9,532
Net investment income (loss)	591		13		604





Other income	17		(2)		15
Total revenues	11,588		11		11,599

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	2,597		29		2,626
Interest credited to policyholders’ account balances	289		0		289



Amortization of deferred policy acquisition costs	1,058		(36)		1,022
Other operating costs and expenses	213		1		214
Total benefits and deductions	4,398		(6)		4,392
Income (loss) from continuing operations, before income taxes	7,190		17		7,207
Income tax (expense) benefit from continuing operations	(1,454)		(3)		(1,457)


Net income (loss)	5,736		14		5,750

Net income (loss) attributable to Equitable Financial	$	5,743	$	14	$	5,757

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Year Ended December 31, 2019		Year Ended December 31, 2018
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Income (Loss)
REVENUES
Policy charges and fee income	$	3,450	$	37	$	3,487	$	3,523	$	(8)	$	3,515

Net derivative gains (losses)	(3,820)		(11)		(3,831)		(1,010)		(24)		(1,034)






Other income	56		0		56		65		(1)		64
Total revenues	5,148		26		5,174		6,951		(33)		6,918

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	4,119		(31)		4,088		3,005		(45)		2,960
Interest credited to policyholders’ account balances	1,127		22		1,149		1,002		(23)		979

Commissions	629		0		629		620		5		625

Amortization of deferred policy acquisition costs	452		68		520		431		20		451
Other operating costs and expenses	912		0		912		2,918		1		2,919
Total benefits and deductions	7,578		59		7,637		8,432		(42)		8,390
Income (loss) from continuing operations, before income taxes	(2,430)		(33)		(2,463)		(1,481)		9		(1,472)
Income tax (expense) benefit from continuing operations	584		(5)		579		446		10		456


Net income (loss)	(1,846)		(38)		(1,884)		(921)		19		(902)

Net income (loss) attributable to Equitable Financial	$	(1,851)	$	(38)	$	(1,889)	$	(918)	$	19	$	(899)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Income (Loss)
REVENUES
Policy charges and fee income	$	853	$	46	$	899	$	2,577	$	42	$	2,619

Net derivative gains (losses)	(342)		(1)		(343)		(2,075)		(5)		(2,080)






Other income	0		(1)		(1)		40		(1)		39
Total revenues	1,946		44		1,990		4,707		36		4,743

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	1,634		8		1,642		3,321		35		3,356
Interest credited to policyholders’ account balances	280		16		296		837		22		859



Amortization of deferred policy acquisition costs	32		22		54		341		4		345

Total benefits and deductions	2,383		46		2,429		5,816		61		5,877
Income (loss) from continuing operations, before income taxes	(437)		(2)		(439)		(1,109)		(25)		(1,134)
Income tax (expense) benefit from continuing operations	175		0		175		284		5		289


Net income (loss)	(262)		(2)		(264)		(825)		(20)		(845)

Net income (loss) attributable to Equitable Financial	$	(262)	$	(2)	$	(264)	$	(828)	$	(20)	$	(848)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Income (Loss)
REVENUES
Policy charges and fee income	$	865	$	(2)	$	863	$	1,724	$	(4)	$	1,720

Net derivative gains (losses)	(178)		(1)		(179)		(1,733)		(4)		(1,737)







Total revenues	2,071		(3)		2,068		2,761		(8)		2,753

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	868		(7)		861		1,687		27		1,714
Interest credited to policyholders’ account balances	288		3		291		557		6		563



Amortization of deferred policy acquisition costs	144		(2)		142		309		(18)		291

Total benefits and deductions	1,753		(6)		1,747		3,433		15		3,448
Income (loss) from continuing operations, before income taxes	318		3		321		(672)		(23)		(695)
Income tax (expense) benefit from continuing operations	(53)		0		(53)		109		5		114


Net income (loss)	265		3		268		(563)		(18)		(581)

Net income (loss) attributable to Equitable Financial	$	264	$	3	$	267	$	(566)	$	(18)	$	(584)


	Three Months Ended March 31, 2019
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Income (Loss)
REVENUES:
Policy charges and fee income	859		(2)		857

Net derivative gains (losses)	(1,555)		(3)		(1,558)
Net investment income (loss)	904		0		904





Other income	10		0		10
Total revenues	690		(5)		685

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	819		34		853
Interest credited to policyholders’ account balances	269		3		272



Amortization of deferred policy acquisition costs	165		(16)		149
Other operating costs and expenses	184		0		184
Total benefits and deductions	1,680		21		1,701
Income (loss) from continuing operations, before income taxes	(990)		(26)		(1,016)
Income tax (expense) benefit from continuing operations	162		5		167


Net income (loss)	(828)		(21)		(849)

Net income (loss) attributable to Equitable Financial	$	(830)	$	(21)	$	(851)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Year Ended December 31, 2017
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Income (Loss)
REVENUES:
Policy charges and fee income	3,294		(5)		3,289

Net derivative gains (losses)	894		(16)		878







Total revenues	8,456		(21)		8,435

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	3,473		8		3,481


Commissions	628		7		635

Amortization of deferred policy acquisition costs	900		25		925

Total benefits and deductions	6,907		40		6,947
Income (loss) from continuing operations, before income taxes	1,549		(61)		1,488
Income tax (expense) benefit from continuing operations	1,210		8		1,218
Net income (loss) from continuing operations	2,759		(53)		2,706

Net income (loss)	2,844		(53)		2,791

Net income (loss) attributable to Equitable Financial	$	2,843	$	(53)	$	2,790


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$	(4,091)	$	5	$	(4,086)	$	1,645	$	19	$	1,664

Change in unrealized gains (losses), net of reclassification adjustment	1,569		0		1,569		3,083		(4)		3,079


Other comprehensive income	1,570		0		1,570		3,084		(4)		3,080
Comprehensive income (loss)	(2,521)		5		(2,516)		4,729		15		4,744
Less: Comprehensive income (loss) attributable to noncontrolling interest	(3)		7		4		(3)		0		(3)
Comprehensive income (loss) attributable to Equitable Financial	$	(2,518)	$	(2)	$	(2,520)	$	4,732	$	15	$	4,747

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended March 31, 2020
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$	5,736	$	14	$	5,750

Change in unrealized gains (losses), net of reclassification adjustment	1,514		(4)		1,510


Other comprehensive income	1,514		(4)		1,510
Comprehensive income (loss)	7,250		10		7,260

Comprehensive income (loss) attributable to Equitable Financial	$	7,257	$	10	$	7,267

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Year Ended December 31, 2019		Year Ended December 31, 2018
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$	(1,846)	$	(38)	$	(1,884)	$	(921)	$	19	$	(902)

Change in unrealized gains (losses), net of reclassification adjustment	2,081		14		2,095		(1,230)		9		(1,221)


Other comprehensive income	2,083		14		2,097		(1,234)		9		(1,225)
Comprehensive income (loss)	237		(24)		213		(2,155)		28		(2,127)
Less: Comprehensive income (loss) attributable to noncontrolling interest	0		5		5		0		(3)		(3)
Comprehensive income (loss) attributable to Equitable Financial	$	237	$	(29)	$	208	$	(2,155)	$	31	$	(2,124)

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$	(262)	$	(2)	$	(264)	$	(825)	$	(20)	$	(845)

Change in unrealized gains (losses), net of reclassification adjustment	574		156		730		2,629		92		2,721


Other comprehensive income	574		156		730		2,629		92		2,721
Comprehensive income (loss)	312		154		466		1,804		72		1,876
Less: Comprehensive income (loss) attributable to noncontrolling interest	0		0		0		0		3		3
Comprehensive income (loss) attributable to Equitable Financial	$	312	$	154	$	466	$	1,804	$	69	$	1,873

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$	265	$	3	$	268	$	(563)	$	(18)	$	(581)

Change in unrealized gains (losses), net of reclassification adjustment	1,291		(65)		1,226		2,055		(64)		1,991


Other comprehensive income	1,291		(65)		1,226		2,055		(64)		1,991
Comprehensive income (loss)	1,556		(62)		1,494		1,492		(82)		1,410
Less: Comprehensive income (loss) attributable to noncontrolling interest	0		1		1		0		3		3
Comprehensive income (loss) attributable to Equitable Financial	$	1,556	$	(63)	$	1,493	$	1,492	$	(85)	$	1,407


	Three Months Ended March 31, 2019
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$	(828)	$	(21)	$	(849)

Change in unrealized gains (losses), net of reclassification adjustment	764		1		765


Other comprehensive income	764		1		765
Comprehensive income (loss)	(64)		(20)		(84)
Less: Comprehensive income (loss) attributable to noncontrolling interest	0		2		2
Comprehensive income (loss) attributable to Equitable Financial	$	(64)	$	(22)	$	(86)


	Year Ended December 31, 2017
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Comprehensive Income:
Net income (loss)	$	2,844	$	(53)	$	2,791

Change in unrealized gains (losses), net of reclassification adjustment	584		(20)		564


Other comprehensive income	602		(20)		582
Comprehensive income (loss)	3,446		(73)		3,373
Less: Comprehensive income (loss) attributable to noncontrolling interest	0		1		1
Comprehensive income (loss) attributable to Equitable Financial	$	3,446	$	(74)	$	3,372

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Equity:











Retained earnings, beginning of year	$	7,953	$	(83)	$	7,870	$	2,242	$	(97)	$	2,145


Net income (loss) attributable to Equitable Financial	(4,095)		5		(4,090)		1,648		19		1,667


Retained earnings, end of period	$	2,658	$	(78)	$	2,580	$	2,658	$	(78)	$	2,580
Accumulated other comprehensive income (loss), beginning of year	$	3,106	$	0	$	3,106	$	1,592	$	4	$	1,596

Other comprehensive income (loss)	1,570		0		1,570		3,084		(4)		3,080



Total Equitable Financial equity, end of period	$	15,157	$	(78)	$	15,079	$	15,157	$	(78)	$	15,079































Total equity, end of period	$	15,166	$	(78)	$	15,088	$	15,166	$	(78)	$	15,088

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended March 31, 2020
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Equity:











Retained earnings, beginning of year	$	2,242	$	(97)	$	2,145


Net income (loss) attributable to Equitable Financial	5,743		$	14	5,757


Retained earnings, end of period	$	7,953	$	(83)	$	7,870
Accumulated other comprehensive income (loss), beginning of year	$	1,592	$	4	$	1,596

Other comprehensive income (loss)	1,514		(4)		1,510



Total Equitable Financial equity, end of period	$	18,872	$	(83)	$	18,789































Total equity, end of period	$	18,881	$	(83)	$	18,798

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Year Ended December 31, 2019		Year Ended December 31, 2018
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Equity:











Retained earnings, beginning of year	$	5,098	$	(59)	$	5,039	$	8,938	$	(78)	$	8,860


Net income (loss) attributable to Equitable Financial	(1,851)		(38)		(1,889)		(918)		19		(899)


Retained earnings, end of year	$	2,242	$	(97)	$	2,145	$	5,098	$	(59)	$	5,039
Accumulated other comprehensive income (loss), beginning of year	$	(491)	$	(10)	$	(501)	$	598	$	(19)	$	579

Other comprehensive income (loss)	2,083		14		2,097		(1,234)		9		(1,225)


Accumulated other comprehensive income (loss), end of year	$	1,592	$	4	$	1,596	$	(491)	$	(10)	$	(501)
Total Equitable Financial equity, end of year	$	11,645	$	(93)	$	11,552	$	12,416	$	(69)	$	12,347































Total equity, end of year	$	11,658	$	(93)	$	11,565	$	12,428	$	(69)	$	12,359

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Equity:











Retained earnings, beginning of year	$	4,532	$	(77)	$	4,455	$	5,098	$	(59)	$	5,039


Net income (loss) attributable to Equitable Financial	(262)		(2)		(264)		(828)		(20)		(848)


Retained earnings, end of period	$	3,270	$	(79)	$	3,191	$	3,270	$	(79)	$	3,191
Accumulated other comprehensive income (loss), beginning of year	$	1,564	$	(74)	$	1,490	$	(491)	$	(10)	$	(501)

Other comprehensive income (loss)	574		156		730		2,629		92		2,721


Accumulated other comprehensive income (loss), end of period	$	2,138	$	82	$	2,220	$	2,138	$	82	$	2,220
Total Equitable Financial equity, end of period	$	13,239	$	3	$	13,242	$	13,239	$	3	$	13,242































Total equity, end of period	$	13,251	$	3	$	13,254	$	13,251	$	3	$	13,254

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Equity:











Retained earnings, beginning of year	$	4,268	$	(80)	$	4,188	$	5,098	$	(59)	$	5,039


Net income (loss) attributable to Equitable Financial	264		3		267		(566)		(18)		(584)


Retained earnings, end of period	$	4,532	$	(77)	$	4,455	$	4,532	$	(77)	$	4,455
Accumulated other comprehensive income (loss), beginning of year	$	273	$	(9)	$	264	$	(491)	$	(10)	$	(501)

Other comprehensive income (loss)	1,291		(65)		1,226		2,055		(64)		1,991


Accumulated other comprehensive income (loss), end of period	$	1,564	$	(74)	$	1,490	$	1,564	$	(74)	$	1,490
Total Equitable Financial equity, end of period	$	13,920	$	(151)	$	13,769	$	13,920	$	(151)	$	13,769































Total equity, end of period	$	13,932	$	(151)	$	13,781	$	13,932	$	(151)	$	13,781


	Three Months Ended March 31, 2019
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Equity:











Retained earnings, beginning of year	$	5,098	$	(59)	$	5,039


Net income (loss) attributable to Equitable Financial	(830)		$	(21)	(851)


Retained earnings, end of period	$	4,268	$	(80)	$	4,188
Accumulated other comprehensive income (loss), beginning of year	$	(491)	$	(10)	$	(501)

Other comprehensive income (loss)	764		1		765


Accumulated other comprehensive income (loss), end of period	$	273	$	(9)	$	264
Total Equitable Financial equity, end of period	$	12,358	$	(89)	$	12,269































Total equity, end of period	$	12,370	$	(89)	$	12,281


	Year Ended December 31, 2017
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Equity:











Retained earnings, beginning of year	$	6,095	$	(25)	$	6,070


Net income (loss) attributable to Equitable Financial	2,843		$	(53)	2,790


Retained earnings, end of period	$	8,938	$	(78)	$	8,860
Accumulated other comprehensive income (loss), beginning of year	$	(4)	$	1	$	(3)

Other comprehensive income (loss)	602		(20)		582


Accumulated other comprehensive income (loss), end of period	$	598	$	(19)	$	579
Total Equitable Financial equity, end of period	$	16,397	$	(97)	$	16,300































Total equity, end of period	$	19,492	$	(97)	$	19,395

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	June 30, 2020		March 31, 2020
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Cash Flows:
Cash flow from operating activities:
Net income (loss)	$	1,645	$	19	$	1,664	$	5,736	$	14	$	5,750

Policy charges and fee income	(1,729)		0		(1,729)		(904)		(1)		(905)

Net derivative (gains) losses	(3,630)		6		(3,624)		(9,533)		1		(9,532)







Amortization and depreciation	1,181		(51)		1,130		1,025		(35)		990










Future policy benefits	1,666		20		1,686		1,817		29		1,846
Reinsurance recoverable	(149)		0		(149)		(97)		1		(96)
Current and deferred income taxes	433		6		439		1,462		3		1,465




Net cash provided by (used in) operating activities	$	(868)	$	0	$	(868)	$	(621)	$	12	$	(609)



































Change in collateralized pledged assets	58		0		58		45		(1)		44
Change in collateralized pledged liabilities	247		0		247		667		(11)		656

















Net cash provided by (used in) financing activities	$	2,308	$	0	$	2,308	$	2,504	$	(12)	$	2,492



Cash and cash equivalents, end of period	$	4,318	$	0	$	4,318	$	7,492	$	0	$	7,492

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	December 31, 2019		December 31, 2018
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Cash Flows:
Cash flow from operating activities:
Net income (loss) (1)	$	(1,846)	$	(38)	$	(1,884)	$	(358)	$	19	$	(339)
Adjustments to reconcile Net income (loss) to Net cash provided by (used in) operating activities:
Policy charges and fee income	(3,450)		(37)		(3,487)		(3,523)		8		(3,515)
Interest credited to policyholders' account balances	1,127		22		1,149		1,002		(23)		979
Net derivative (gains) losses	3,820		11		3,831		1,010		24		1,034







Amortization and depreciation	323		68		391		340		20		360









Capitalization of DAC	(648)		0		(648)		(597)		5		(592)
Future policy benefits	1,115		(31)		1,084		(284)		(46)		(330)

Current and deferred income taxes	(334)		5		(329)		(556)		(7)		(563)




Net cash provided by (used in) operating activities	$	(606)	$	0	$	(606)	$	1,418	$	0	$	1,418


























































Cash and cash equivalents, end of period	$	1,492	$	0	$	1,492	$	2,622	$	0	$	2,622

_____________

(1) December 31, 2018 Net Income (Loss) includes $563 million of discontinued operations that are not included in Net Income (Loss) in the Consolidated Statement of Income (Loss).

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	September 30, 2019		June 30, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Cash Flows:
Cash flow from operating activities:
Net income (loss)	$	(825)	$	(20)	$	(845)	$	(563)	$	(18)	$	(581)
Adjustments to reconcile Net income (loss) to Net cash provided by (used in) operating activities:
Policy charges and fee income	(2,577)		(42)		(2,619)		(1,724)		4		(1,720)
Interest credited to policyholders' account balances	837		22		859		557		6		563
Net derivative (gains) losses	2,075		5		2,080		1,733		4		1,737







Amortization and depreciation	267		4		271		268		(18)		250










Future policy benefits	1,035		40		1,075		91		27		118
Reinsurance recoverable	(123)		(4)		(127)		(59)		0		(59)
Current and deferred income taxes	(81)		(5)		(86)		99		(5)		94




Net cash provided by (used in) operating activities	$	(712)	$	0	$	(712)	$	(283)	$	0	$	(283)


























































Cash and cash equivalents, end of period	$	1,553	$	0	$	1,553	$	3,093	$	0	$	3,093

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements(Unaudited), Continued


	March 31, 2019
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Cash Flows:
Cash flow from operating activities:
Net income (loss)	$	(828)	$	(21)	$	(849)
Adjustments to reconcile Net income (loss) to Net cash provided by (used in) operating activities:
Policy charges and fee income	(859)		2		(857)
Interest credited to policyholders' account balances	269		3		272
Net derivative (gains) losses	1,555		3		1,558







Amortization and depreciation	143		(16)		127










Future policy benefits	41		34		75

Current and deferred income taxes	54		(5)		49




Net cash provided by (used in) operating activities	$	(148)	$	0	$	(148)


























































Cash and cash equivalents, end of period	2,922		0		2,922


	December 31, 2017
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Consolidated Statements of Cash Flows:
Cash flow from operating activities:
Net income (loss) (1)	$	3,377	$	(54)	$	3,323
Adjustments to reconcile Net income (loss) to Net cash provided by (used in) operating activities:
Policy charges and fee income	(3,294)		5		(3,289)

Net derivative (gains) losses	(870)		16		(854)







Amortization and depreciation	825		25		850










Future policy benefits	1,189		8		1,197






Net cash provided by (used in) operating activities	$	(381)	$	0	$	(381)


























































Cash and cash equivalents, end of period	3,409		0		3,409

_____________

(1) Net Income (Loss) includes $533 million of discontinued operations that are not included in Net Income (Loss) in the Consolidated Statement of Income (Loss).

15) SUBSEQUENT EVENTS

On October 27, 2020, Holdings entered into a Master Transaction Agreement with Venerable Insurance and Annuity Company (“VIAC”), and Venerable Holdings, Inc., a Delaware corporation. VIAC will acquire all of the shares of the capital stock of Corporate Solutions Life Reinsurance Company (“CSLRC”), and, immediately following such sale, Equitable Financial will enter into a coinsurance and modified coinsurance agreement, pursuant to which Equitable Financial will cede to CSLRC, on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008 supported by general account assets of approximately $12 billion (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit guarantees. Equitable Financial will reinsure the separate accounts relating to the Block on a modified coinsurance basis. Equitable Financial will also acquire a surplus note in aggregate principal amount of $50 million issued by VIAC in the transaction.

Item 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 Equitable ~~Life’s~~Financial’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”). The management’s narrative that follows represents a discussion and analysis of Equitable ~~Life’s~~Financial’s financial condition and results of operations and not the financial condition and results of operations of 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 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.

Reinsurance of Legacy Variable Annuity Block and Sale of Runoff Variable Annuity Reinsurance Entity

On October 27, 2020, Holdings announced that it had entered into a Master Transaction Agreement with Venerable Insurance and Annuity Company, an insurance company domiciled in Iowa (“VIAC”), and Venerable Holdings, Inc., a Delaware corporation, pursuant to which, among other things, VIAC will acquire all of the shares of the capital stock of Corporate Solutions Life Reinsurance Company, an insurance company domiciled in Delaware and wholly owned subsidiary of Holdings (“CSLRC”), and, immediately following such sale, Equitable Financial will enter into a coinsurance and modified coinsurance agreement, pursuant to which Equitable Financial will cede to CSLRC, on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008 supported by general account assets of approximately $12 billion (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate Guaranteed Minimum Income Benefit and/or Guaranteed Minimum Death Benefit guarantees. Equitable Financial will reinsure the separate accounts relating to the Block on a modified coinsurance basis. Equitable Financial will also acquire a surplus note in aggregate principal amount of $50 million issued by VIAC in the transaction.

COVID-19 Impact

~~During the latter part of the first quarter of 2020, the~~The COVID-19 pandemic has negatively impacted the U.S. and global ~~economies, created~~economies. In the third quarter, financial markets continued to experience significant volatility and ~~disruption~~unemployment levels remained high. The pandemic continues to evolve in the ~~capital markets, lowered equity market valuations, dramatically increased unemployment levels~~U.S., and ~~fueled concerns that it will lead~~while certain states and municipalities have re-opened, others are pausing re-opening plans or reinstating lockdowns due to ~~a global recession. In addition, the pandemic resulted~~surges in ~~the temporary closures of many businesses~~COVID-19 cases. States and municipalities have instituted varying plans for in-person instruction at schools, but surging national infection rates and the ~~institution~~possibility of ~~social distancing~~a localized outbreak create uncertainty and ~~sheltering in place requirements in many states and local communities.~~threaten continued in-person instruction. 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~~continued to ~~COVID-19 with~~implement economic stimulus measures ~~including a $2 trillion emergency relief bill passed in the U.S. These measures~~that 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. In addition, the growing number of COVID-19 related deaths could have an adverse effect on our insurance business due to increased mortality and, in certain cases, morbidity rates.

To date, COVID-related impacts, including adverse mortality experience, have been manageable and below initial expectations. In response to the current environment, we are adapting our processes to meet client needs. For example, we have modified our underwriting policies to offer a fluid-less, touchless process to help more clients access the protection they need. In addition, we have accelerated our digital adoption programs, leading to improved outcomes for clients, advisors, and the company. With schools closed and an uncertain outlook on reopening, we have developed digital tools and enhanced our

remote engagement with our educator clients, which is resulting in improved retention and increases in retirement plan contributions.

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 has declined and may continue to decline substantially depending on any of the foregoing conditions. ~~While our results for the first quarter of 2020 were strong, the~~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~~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)~~

capital markets.

In light of the unprecedented decline in long-term interest rates in the first quarter of 2020, we updated our long-term GAAP 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) benefit 450
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.~~evolved. 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 currently working ~~remotely with only a few operationally critical employees working at certain of our facilities for business continuity purposes.~~remotely. 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 adversely impacted and ~~going forward~~ could decline ~~significantly~~further 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,~~and financial results, the extent and nature of its full financial impact ~~is highly uncertain.~~cannot reasonably be estimated at this time due to the uncertainty as to the severity and duration of the pandemic. 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~~could materially adversely affect our business, results of ~~operations and~~operation or financial condition ~~will depend on future developments that are highly uncertain, including~~in the ~~scope~~future.” in our Forms 10-Q for the quarters ended March 31, 2020 and ~~duration of the pandemic and actions taken by governmental authorities in response to the pandemic.”~~June 30, 2020.

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 AV 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.

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”)~~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 not measured at fair value, 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 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

~~Table~~

against stress scenarios. This program in addition to our dynamic hedge program has increased the size of ~~Contents~~our derivative positions, resulting in an increase in net income volatility.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Consolidated Statements~~•GMIB reinsurance contracts. Historically, GMIB reinsurance contracts were used to cede to affiliated and non-affiliated reinsurers a portion of ~~Cash Flows~~

~~For~~our exposure to variable annuity products that offer a GMIB feature. We account for the ~~Three Months Ended March 31, 2020~~GMIB reinsurance contracts as derivatives and ~~2019 (Unaudited)~~

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

Our 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 of each year. Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgment and reflect our best estimate as of the date of the applicable financial statements. Changes in assumptions can result in a significant change to the carrying value of product liabilities and 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”).~~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~~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~~2019 Form ~~10-K for the year ended December 31, 2019.~~10-K.

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~~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 update during the three and nine months ended September 30, 2020 and 2019 to our Income (loss) from continuing operations, before income taxes and Net income (loss).


	Three Months Ended September 30,				Nine Months Ended September 30, (1)
	2020		2019		2020		2019
	(in millions)
Impact of assumption update on Net income (loss):
Variable annuity product features related assumption update	$	(41)	$	(1,438)	$	(1,496)	$	(1,438)
Assumption updates for other business	(83)		84		(750)		84
Impact of assumption updates on Income (loss) from continuing operations, before income tax	(124)		(1,354)		(2,246)		(1,354)
Income tax (expense) benefit on assumption update	26		284		472		284
Net income (loss) impact of assumption update	$	(98)	$	(1,070)	$	(1,774)	$	(1,070)

(1) During the first quarter of 2020, we updated interest rate assumption and the impact was a decrease to Net income (loss) of $1.7 billion. See Note 2 for further details on the assumption update.

2020 Assumption Updates

Annual Update

The impact of the economic assumption update in the third quarter of 2020 was a decrease of $124 million to Income (loss) from continuing operations, before income taxes and a decrease to Net income (loss) of $98 million.

The net impact of this assumption update on Income (loss) from continuing operations, before income taxes of $124 million consisted of a decrease in Policy charges and fee income of $21 million, an increase in Policyholders’ benefits of $175 million, an increase in Interest credited to policyholders’ account balances of $8 million, an increase in Net derivative gains of $106 million and an increase in the Amortization of DAC of $26 million. Third quarter 2020 assumption updates include a pre-tax gain of $421 million attributable to the removal of the credit risk adjustment from our fair value scenario calibration to better align with US valuation practices, offset by updates to our mortality and policyholder behavior assumptions to reflect emerging experience,

First Quarter Update

In the first quarter of 2020, 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~~environment 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%. We determined that no assumption updates were necessary in the second quarter of 2020.

The low interest ~~rates~~rate 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 three months ended March 31, 2020 to our Income (loss) from continuing operations, before income taxes and Net income (loss):

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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)~~

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 update 450
Net income (loss) impact of assumption update $ (1,694 )

~~2020 Assumption Update~~

The impact of the economic assumption update in the first quarter of 2020 was a decrease of $2.1 billion to Income (loss) from continuing operations, before income taxes and a decrease to Net income (loss) of $1.7 billion.

The net impact of this assumption update on Income (loss) from continuing operations, before income taxes of $2.1 billion consisted of an 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 $54 million, ~~and~~an increase in Policyholders’ benefits of $1.3 billion, a decrease in Interest credited to policyholders’ account balances of $6 million and an increase in the Amortization of DAC of $840 million.

2019 Assumption Updates

The impact of assumption updates in the third quarter of 2019 was a decrease of $1.4 billion to Income (loss) from continuing operations, before income taxes and a decrease to Net income (loss) of $1.1 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) interest rate assumptions; and (ii) policyholder behavior, primarily lapse and withdrawal assumptions, further magnified by low interest rates.

The net impact of these assumption updates on Income (loss) from continuing operations, before income taxes of $1.4 billion consisted of a decrease in Policy charges and fee income of $11 million, an increase in Policyholders’ benefits of $886 million, a decrease in Interest credited to policyholders’ account balances of $14 million, an increase in Net derivative losses of $548 million and a decrease in Amortization of DAC of $77 million.

Impact of Assumption Update and COVID-19 Impacts on Income from Continuing Operations before income taxes and Net income (loss)

The unprecedented and rapid spread of COVID-19 and the related restrictions and social distancing measures implemented throughout the world have caused severe, lasting turmoil in the financial markets during the first nine months of 2020.

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) which all occurred during the first six months of 2020:


	Nine Months Ended September 30, 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	$	(2,122)	$	(105)	$	(2,227)
Income tax (expense) benefit	446		22		468
Net income (loss) from continuing operations, net of taxes	$	(1,676)	$	(83)	$	(1,759)

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(1) Includes amounts primarily due to non-variable annuity hedging impacts resulting from unprecedented volatility in equity markets and accelerated amortization of DAC due to loss recognition in the first half of 2020 resulting from first quarter 2020 interest rate assumption update.

2020 Model Changes

In the first quarter of 2020, we adopted a new economic scenario generator to calculate the fair value of the GMIB reinsurance contract asset and GMxB derivative features liability, eliminating reliance on AXA Group for scenario production. The new economic scenario generator allows for a tighter calibration of U.S. indices, better reflecting our actual portfolio. The net impact of the new economic scenario generator resulted in an increase in Income (loss) from continuing operations, before income taxes of $165 million, and an increase to Net Income (loss) of $130 million for the nine months ended September 30, 2020

2019 Model Changes

There was no material impact from model changes during the first nine months of 2019 to our Income (loss) from continuing operations, before income taxes or Net income (loss).

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

In the face of the ongoing pandemic, financial markets continued to experience significant volatility and unemployment levels remained high during the third quarter. Although the financial market recovered most of the first quarter ~~started strong, uncertainties were prevalent at~~losses in the ~~end~~months since, the prospect of continued volatility remains, especially given the uncertainty surrounding continued civil unrest across the U.S. centered around racial inequality, the presidential and congressional election and the continued economic effects of the quarter, as the capital markets reacted to the COVID-19 pandemic. As the pandemic evolved during the latter part of the quarter, equity markets experienced significant volatility and declines, interest rates dropped to historical lows and many state and local governments ordered non-essential businesses to close and residents to shelter in place at home. This resulted in an unprecedented slow-down in economic activity, a related dramatic increase in unemployment and fears of a global recession.virus. 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 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.

The potential for increased volatility, coupled with prevailing interest rates continuing to fall and/or 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 AV 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 hold policies with comparatively high guaranteed rates longer (lower lapse rates) in a low interest rate environment.

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~~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.~~Statements in this Form 10-Q.

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 profitability of 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 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 emergency regulations requiring insurance company actions with respect to many lines of insurance. Among other requirements, these emergency measures temporarily required New York licensed life insurers to extend the grace period for the payment of premiums and fees to 90 days for any life policyholder or group certificate holder facing financial hardship as a result of the COVID-19 pandemic. In addition, licensed life insurers were required to provide 90 days to exercise rights or benefits for a policyholder who was unable timely to exercise such rights as a result of the COVID-19 pandemic. New York licensed insurers were 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 were required to 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. These measures expired on July 6, 2020, however we cannot predict what future orders or regulations, if any, will be implemented as a result of the ongoing 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. The new framework will 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 Financial adopted the NAIC reserve and capital framework for the year ended December 31, 2019.

•

~~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 variable annuity reserve and capital framework. These amendments will not materially affect Equitable ~~Life’s~~Financial’s GAAP financial condition, results of operations or stockholders’ equity. However, Regulation 213, as amended, absent management action, will require Equitable ~~Life~~Financial to carry statutory basis reserves for its variable annuity contract obligations equal to the greater of those required under (i) the NAIC standard or (ii) a revised version of the NYDFS requirement in effect prior to the adoption of the amendment for contracts issued prior to January 1, 2020, and for policies issued after that date, 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~~Financial will be required to carry and, will materially and adversely affect the capacity of Equitable ~~Life~~Financial 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~~Financial 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 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.

DOL Fiduciary Rule and “Best Interest” PTEs. In the wake of the March 2018 Fifth Circuit federal appeals court decision to vacate the DOL Fiduciary Rule, the DOL announced that it planned to issue revised fiduciary investment advice regulations. In June 2020, the DOL proposed a “best interest” prohibited transaction exemption (“PTE”) for investment advice fiduciaries under ERISA. The proposal restores the five-part test for determining fiduciary status that was in effect prior to the DOL Fiduciary Rule, although the scope of the PTE now extends to rollover transactions if they constitute “investment advice” under the five-part test. If fiduciary status is triggered, the PTE prescribes a set of impartial conduct standards and disclosure obligations that are intended to be consistent with the SEC’s Regulation Best Interest. We are currently assessing the proposed PTE to determine the impact it may have on our business.

Other “Best Interest” Standards of Conduct. Following the decision to vacate the DOL Fiduciary Rule in 2018, , the NAIC adopted, and state regulators either have adopted or are currently considering whether to apply, an impartial conduct or fiduciary standard 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 a best interest of the consumer standard to insurance producers’ annuity recommendations and require that insurers supervise such recommendations. To date, the amended regulation has been adopted in Iowa and Arizona. 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. 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 and Maryland have proposed measures that would make broker-dealers, sales agents, and investment advisers and their representatives 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.

Regulation Best Interest. 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~~retail customers (“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~~ unless they act in an investment advisory capacity. These rules became effective ~~date for compliance with these rules is~~on June 30, 2020. Investment advisers to retail clients ~~will also be~~as well as broker-dealers serving retail customers are now required to deliver to retail clients and customers and file with

the SEC the new Form CRS, ~~providing~~which provides disclosures about its standard of conduct and conflicts of ~~interest,~~interest. Broker-dealers must also provide more detailed disclosures to retail clients in connection with ~~the SEC and deliver copies of the Form CRS to its retail clients.~~securities transactions. The intent of these rules is to impose on broker-dealers an enhanced duty of care to their natural person customers similar to that which applies to investment advisers under existing ~~law. Two lawsuits, one by seven states~~law and to require both broker-dealers and investment advisers to provide enhanced disclosure regarding the ~~District~~nature of ~~Columbia~~their services to retail clients and ~~the other by private firms, were filed~~customers and associated conflicts of interest. We have developed systems and processes and put in ~~September 2019~~place policies and ~~currently~~procedures to ensure that we are ~~pending, seeking to vacate~~in compliance with Regulation Best Interest. ~~Former Rep. Barney Frank, D-Mass,~~Meanwhile, the SEC’s examination staff and ~~former Sen. Chris Dodd, D-Conn, recently submitted an amicus brief supporting a lawsuit initiated~~FINRA are focusing on examining compliance efforts by ~~XY Planning Network against the SEC~~broker-dealers with ~~respect to~~ Regulation Best ~~Interest, arguing that~~Interest.

Derivatives Regulation. The amount of collateral we are required to pledge and the ~~regulation violates the rule-making mandate in the Dodd-Frank Act and,~~expenses we incur under our derivatives transactions are expected to increase as a result ~~should be struck down. We are monitoring these developments~~of the requirement to pledge initial margin for non-centrally cleared derivative transactions (“OTC” derivatives) entered into after the phase-in period, which is expected to become applicable to us in September 2021 as a result of adoption by the Office of the Comptroller of the Currency, the Federal Reserve Board, the FDIC, the Farm Credit Administration, and ~~evaluating~~ the ~~potential effect they may have on our business. In addition, FINRA is also currently focusing on how broker-dealers identify~~Federal Housing Finance Agency and ~~manage conflicts~~the Commodity Futures Trading Commission of ~~interest.~~

•

~~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.final margin requirements for OTC derivatives, absent further delays. 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 ~~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 activities in their quarter ending September 30, 2021 will be December 1, 2021. We continue to monitor developments and are 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~~do not expect material impacts to our business from the SECURE ~~Act will have on our business, financial condition or results of operations.~~Act.

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~~Cut and Jobs Act

In December 2017, the Tax ~~Reform~~Cut and Jobs Act (“TCJA”) was signed into law. The ~~Tax Reform Act~~TCJA reduced the federal corporate income tax rate to 21% and repealed the corporate AMT while keeping existing AMT credits. It also contained measures affecting the Company, including changes to the DRD, insurance reserves and tax DAC. As a result of the ~~Tax Reform Act,~~TCJA, our Net Income 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~~TCJA 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 Equitable ~~Life~~Financial 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.

The following table summarizes our consolidated statements of income (loss) ~~(unaudited)~~ for the ~~three~~nine months ended ~~March 31,~~September 30, 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 (Unaudited)~~

Consolidated Statement of Income (Loss)

~~(Unaudited)~~


	Nine Months Ended September 30,
	2020		2019
	(in millions)
REVENUES
Policy charges and fee income	$	2,582	$	2,619
Premiums	613		696
Net derivative gains (losses)	2,097		(2,080)
Net investment income (loss)	2,334		2,527
Investment gains (losses), net:
Credit losses on AFS debt securities and loans	(47)		—
Other investment gains (losses), net	262		181
Total investment gains (losses), net	215		181
Investment management and service fees	744		761
Other income	43		39
Total revenues	8,628		4,743

BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits	4,267		3,356
Interest credited to policyholders’ account balances	845		859
Compensation and benefits	210		237
Commissions	462		462
Interest expense	—		4
Amortization of deferred policy acquisition costs	1,290		345
Other operating costs and expenses	653		614
Total benefits and other deductions	7,727		5,877
Income (loss) from continuing operations, before income taxes	901		(1,134)
Income tax (expense) benefit	(181)		289
Net income (loss)	720		(845)
Less: Net income (loss) attributable to the noncontrolling interest	(1)		3
Net income (loss) attributable to Equitable Financial	$	721	$	(848)

The following discussion compares the results for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 to the ~~three~~nine months ended ~~March 31,~~September 30, 2019.

~~Three~~Nine Months Ended ~~March 31,~~September 30, 2020 Compared to the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2019

Net Income (Loss) Attributable to Equitable ~~Life~~Financial

Net income (loss) attributable to Equitable ~~Life~~Financial increased by ~~$6.6~~$1.6 billion, to a net income of ~~$5.7 billion~~$721 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 from a net loss of ~~$830~~$848 million for the ~~three~~nine months ended ~~March 31,~~September 30, 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~~ •Increase in Net derivative gains of $4.2 billion mainly reflecting the gains from the first quarter 2020 decrease in interest rates and a lower improvement in equity markets in 2020 when compared to 2019. •Increase in Net investment gains of $34 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.~~

~~Table~~

•Decrease in Interest credited to policyholders’ account balances of ~~Contents~~$14 million mainly driven by lower FHLB funding agreements costs due to lower interest rates partially offset by higher interest credited in SCS product due to new business growth.

~~AXA EQUITABLE LIFE INSURANCE COMPANY~~

~~Consolidated Statements of Cash Flows~~

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

Partially offsetting this increase were the following notable items:

Increase in Policyholders’ benefits of $1.8 billion mainly due to an increase in our GMxB liabilities driven by the unfavorable impact from assumption updates related to COVID-19 as well as the adverse impact of the drop in equity market in the first quarter of 2020, offset by higher Net Derivatives gains.

•Increase in Amortization of DAC of ~~$893~~$945 million mainly due to the impact of the assumption updates including the first quarter of 2020 assumption update related to COVID-19.

•Increase in ~~our life products driven by~~Policyholders’ benefits of $911 million mainly due to the higher unfavorable impact of assumption updates ~~related~~in 2020 including the first quarter assumption update due to ~~COVID-19. As a result~~COVID-19, the unfavorable impact of equity markets in our GMxB liabilities, the ~~lower interest rate assumption, our life products experienced~~re-establishment of profits followed by loss ~~recognition resulting~~(“PFBL”) reserve and an increase in ~~an acceleration of DAC amortization.~~term and employee benefits product reserves, partially offset by favorable net mortality.

•Decrease in Net investment income of ~~$313~~$193 million mainly ~~due to a change~~driven by changes in the market value of trading securities supporting our variable annuity products and lower income from alternative investments partially offset by higher investment income from fixed maturities available-for-sale due to higher ~~credit spreads~~asset balances and the General Account investment portfolio optimization.

•Decrease in Revenue from fees and related items (“fee-type revenue”), including Policy charges and fee income, Premiums, Investment Management service fees and Other income, of $133 million primarily due to lower average Separate Accounts AV in our variable annuity products reflecting outflows in our older fixed-rate GMxB block and lower premiums on traditional products (offset in Policyholders' benefits) as well as higher ceded premiums, partially offset by the favorable impact of assumption updates for our life products.

•Increase in Compensation, benefits and other operating expenses of $12 million mainly driven by higher software and consulting costs partially offset by productivity initiatives and COVID 19 related expense saves.

•Income tax expense increased by $470 million primarily driven by pre-tax income in 2020 compared to ~~2019.~~

~~Increase~~a pre-tax loss in ~~Other operating costs and expenses of $29 million mainly due to higher allocated separation costs.~~

~~Increase in Interest credited to policyholders’ account balances of $20 million mainly driven by new business growth.~~


•	~~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 update.

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 to the Company’s consolidated financial statements included in ~~the Annual Report on~~our 2019 Form ~~10-K for the year ended December 31, 2019~~.10-K. 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4. 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 ~~March 31,~~September 30, 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 weakness described below, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures were not effective as of ~~March 31,~~September 30, 2020.

As previously reported, the Company identified a material weakness 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 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.

This material weakness 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 2016;


~~(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 2016; and

(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 2016;

(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 2016; 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 weakness described above and not indicative of any new material weaknesses. Until remediated, there is a reasonable possibility that this material weakness could result in a material misstatement of the Company’s consolidated financial statements or disclosures that would not be prevented or detected.

Remediation Status of Material Weakness

For the material weakness related to Actuarial Models, Assumptions and Data, management has 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 tested an enhanced model validation control framework, including a rotational schedule to periodically re-validate all U.S. GAAP models.

•We have designed, implemented and tested enhanced controls and governance processes for new model implementations.

•We have designed, implemented and tested enhanced controls for model changes.

•We have designed, implemented and tested enhanced controls over the annual assumption setting process, including a comprehensive master assumption inventory and risk framework.

•We have designed, implemented and tested new controls and are redesigning certain of these controls to validate the reliability of significant data flows feeding actuarial models and assumptions

~~First~~

Third quarter 2020 controls have operated as designed. However, given that certain controls noted above have only operated effectively in one financial closing cycle during the year, and controls are still being redesigned, we have determined that further work and sustained operation is appropriate before concluding the controls are operationally effective.

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~~Consolidated Statements of Cash Flows~~

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

Changes in Internal Control Over Financial Reporting

As described above, the Company continues to design certain controls in connection with its remediation plan. These remediation efforts related to the material weakness described above represent changes in our internal control over financial reporting for the quarter ended ~~March 31,~~September 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II OTHER INFORMATION

~~Part II~~ ~~OTHER INFORMATION~~

Item 1. Legal Proceedings

For information regarding certain legal proceedings pending against us, see Note 13 of the Notes to the Consolidated Financial ~~Statements.~~Statements (unaudited) in this Form 10-Q. See ~~also~~ “Risk Factors—Legal and Regulatory Risks—Legal and ~~regulatory~~regulatory” actions could have a material adverse effect on our reputation, business, results of operations or financial condition” in our ~~Annual Report on~~ Form 10-K for the 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, ~~2019.~~2019 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020. 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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~~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.

Item 5. Other Information

None.

Item 6. Exhibits



Number		Description
~~31.1~~3.1	#	By-laws of Equitable Financial Life Insurance Company, as amended September 23, 2020.
31.1	#	Section 302 Certification made by the registrant’s Chief Executive Officer
31.2	#	Section 302 Certification made by the registrant’s Chief Financial Officer
32.1	#	Section 906 Certification made by the registrant’s Chief Executive Officer
32.2	#	Section 906 Certification made by the registrant’s Chief Financial Officer
101.INS		XBRL 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.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibits 101).

______________

# Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~AXA~~ Equitable Financial Life Insurance Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly ~~authorized May 13, 2020.~~

authorized.


Date: November 5, 2020			EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

~~Date: May 13, 2020~~			~~AXA EQUITABLE LIFE INSURANCE COMPANY~~
By:
	~~By:~~	/s/ Anders Malmström
				Name:	Anders Malmström
				Title:	Senior Executive Director and Chief Financial Officer (Principal Financial Officer)

Date: ~~May 13,~~November 5, 2020				/s/ William Eckert
				Name:	William Eckert
				Title:	Managing Director and Chief Accounting Officer (Principal Accounting Officer)

6491



	Fair Value		Valuation Technique	Significant Unobservable Input	Range	Weighted Average (2)
	(in millions)
Assets:
Investments:
Fixed maturities, AFS:
Corporate	$	57	Matrix pricing model	Spread over Benchmark	15 - 580 bps	280 bps
	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
GMIB reinsurance contract asset	3,305		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%



	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