(Mark One) | FORM 10-K |
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2007 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | |
o | SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
New York | 13-5570651 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
1290 Avenue of the Americas, New York, New York | 10104 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
None | None |
Yes | o | No | x |
Yes | o | No | x |
Yes | x | No | o |
Large accelerated filer o | Accelerated filer o | ||
Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company o | ||
Yes | o | No | x |
Part I | Page | ||||
Item 1. | Business | 1-1 | |||
Overview | 1-1 | ||||
Segment Information | 1-1 | ||||
Employees | 1-7 | ||||
Competition | 1-7 | ||||
Regulation | 1-7 | ||||
Parent Company | 1-10 | ||||
Other Information | 1-11 | ||||
Item 1A. | Risk Factors | 1A-1 | |||
Item 1B. | Unresolved Staff Comments | 1B-1 | |||
Item 2. | Properties | 2-1 | |||
Item 3. | Legal Proceedings | 3-1 | |||
Item 4. | Submission of Matters to a Vote of Security Holders* | 4-1 | |||
Part II | |||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 5-1 | |||
Item 6. | Selected Financial Data* | 6-1 | |||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (“Management Narrative”) | 7-1 | |||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 7A-1 | |||
Item 8. | Financial Statements and Supplementary Data | FS-1 | |||
Item 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure | 9-1 | |||
Item 9A(T). | Controls and Procedures | 9A-1 | |||
Item 9B. | Other Information | 9B-1 | |||
Part III | |||||
Item 10. | Directors, Executive Officers and Corporate Governance | 10-1 | |||
Item 11. | Executive Compensation* | 11-1 | |||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters* | 12-1 | |||
Item 13. | Certain Relationships and Related Transactions, and Director Independence* | 13-1 | |||
Item 14. | Principal Accounting Fees and Services | 14-1 | |||
Part IV | |||||
Item 15. | Exhibits, Financial Statement Schedules | 15-1 | |||
Signatures | S-1 | ||||
Index to Exhibits | E-1 | ||||
*Omitted pursuant to General Instruction I to Form 10-K |
Amount | % of Total | |||||
Fixed maturities | $ | 27,596.5 | 73.3 | % | ||
Mortgages | 3,730.6 | 9.9 | ||||
Equity real estate | 382.0 | 1.0 | ||||
Other equity investments | 1,500.5 | 4.0 | ||||
Policy loans | 3,937.3 | 10.5 | ||||
Cash and short-term investments (2) | 485.0 | 1.3 | ||||
Total | $ | 37,631.9 | 100.0 | % | ||
(1) | Net amortized cost is the cost of the General Account Investment Assets (adjusted for impairments in value deemed to be other than temporary, if any) less depreciation and amortization, where applicable, and less valuation allowances on mortgage and real estate portfolios. |
(2) | Comprised of “Cash and cash equivalents” and short-term investments included within the “Other invested assets” caption on the consolidated balance sheet. |
· | Sustained equity market declines that result in decreases in the account values of our variable life and annuity contracts could reduce the amount of revenue we derive from fees charged on those account and asset values; |
· | Sustained equity market declines that result in decreases in the account values of our variable life and annuity contracts that provide guaranteed benefits would increase the size of our potential obligations related to such guaranteed benefits. This could result in an increase in claims and reserves related to those contracts, net of any reinsurance reimbursements or proceeds from our hedging program; |
· | Increased volatility of equity markets may result in changes to the fair value of our GMIB reinsurance contracts, which could result in increased volatility of our earnings; |
· | Increased volatility of equity markets may increase surrenders and withdrawals of our variable life and annuity contracts or cause contract owners to reallocate a portion of their account balances to less volatile investment options (which may have lower fees), which could negatively impact our future profitability; |
· | Equity market declines could negatively impact the value of equity securities we hold for investment, including our investment in AllianceBernstein, thereby reducing our capital; |
· | Equity price declines may decrease the value of assets held to fund payments to employees from our qualified pension plan, which could result in increased pension plan costs; and |
· | Deferred acquisition costs, referred to as DAC, and value of business acquired, referred to as VOBA, are accounting methods for amortizing the sales costs related to the acquisition of new life insurance and annuity business over the period in which that business will generate earnings for us. DAC and VOBA amortization rates are based in part on investment return and related estimates that, in turn, are based on actual market trends and reasonable expectations as to future performance drawn from those trends. Equity market declines could lead to reductions in these estimates that, in turn, could accelerate our DAC and VOBA amortization and reduce our current earnings. |
· | We could experience long-term interruptions in our service due to the vulnerability of our information and operation systems and those of our significant vendors to the effects of catastrophic events. Some of our operational systems are not fully redundant, and our disaster recovery and business continuity planning cannot account for all eventualities. Additionally, unanticipated problems with our disaster recovery systems could further impede our ability to conduct business, particularly if those problems affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. |
· | The occurrence of a pandemic disease such as the Avian Influenza Virus (H5N1) could have a material adverse effect on our liquidity and the operating results of the Insurance segment due to increased mortality and, in certain cases, morbidity rates. |
· | The occurrence of any pandemic disease, natural disaster or terrorist attacks or any catastrophic event which results in our workforce being unable to be physically located at one of our facilities could result in lengthy interruptions in our service. |
· | A terrorist attack on the financial services industry in the United States could have severe negative effects on our investment portfolio and disrupt our business operations. Any continuous and heightened threat of terrorist attacks could also result in increased costs of reinsurance. |
2007 | 2006 | |||||||
(In Millions) | ||||||||
(Losses) Earnings from Discontinued Operations, Net of Income Taxes: | ||||||||
Wind-up Annuities | $ | (.1 | ) | $ | 30.2 | |||
Real estate held-for-sale | (6.8 | ) | 1.1 | |||||
Disposal of business - Enterprise | 1.0 | (.1 | ) | |||||
Total | $ | (5.9 | ) | $ | 31.2 | |||
Gains (Losses) on Disposal of Discontinued Operations, Net of Income Taxes: | ||||||||
Disposal of business - Enterprise | $ | (.4 | ) | $ | (1.9 | ) | ||
Real estate held-for-sale | 3.2 | - | ||||||
Total | $ | 2.8 | $ | (1.9 | ) |
2007 | 2006 | |||||||
Universal life and investment-type product policy fee income | $ | 2,741.7 | $ | 2,252.7 | ||||
Premiums | 804.9 | 817.8 | ||||||
Net investment income | 2,548.4 | 2,237.1 | ||||||
Investment losses, net | (40.6 | ) | (3.0 | ) | ||||
Commissions, fees and other income | 883.6 | 662.3 | ||||||
Total revenues | 6,938.0 | 5,966.9 | ||||||
Policyholders’ benefits | 1,998.5 | 1,960.5 | ||||||
Interest credited to policyholders’ account balances | 1,065.2 | 1,082.5 | ||||||
Compensation and benefits | 595.4 | 520.6 | ||||||
Commissions | 1,744.2 | 1,394.4 | ||||||
Amortization of DAC | 1,099.2 | 689.3 | ||||||
Capitalization of DAC | (1,719.3 | ) | (1,363.4 | ) | ||||
Rent expense | 53.8 | 48.4 | ||||||
Amortization of other intangible assets, net | (.3 | ) | - | |||||
Interest expense | 48.8 | 47.6 | ||||||
All other operating costs and expenses | 753.6 | 705.1 | ||||||
Total benefits and other deductions | 5,639.1 | 5,085.0 | ||||||
Earnings from Continuing Operations before Income Taxes and Minority Interest | $ | 1,298.9 | $ | 881.9 |
2007 | 2006 | |||||||
Revenues: | ||||||||
Investment advisory and services fees (1) | $ | 3,386.2 | $ | 2,890.2 | ||||
Distribution revenues | 473.4 | 421.0 | ||||||
Institutional research services | 423.5 | 375.1 | ||||||
Other revenues | 116.4 | 132.3 | ||||||
Commissions, fees and other income | 4,399.5 | 3,818.6 | ||||||
Investment income | 323.3 | 322.0 | ||||||
Less: interest expense to finance trading activities | (194.4 | ) | (187.8 | ) | ||||
Net investment income | 128.9 | 134.2 | ||||||
Investment gains, net | 33.4 | 49.9 | ||||||
Total revenues | 4,561.8 | 4,002.7 | ||||||
Expenses: | ||||||||
Compensation and benefits | 1,858.1 | 1,570.1 | ||||||
Distribution plan payments | 335.1 | 292.9 | ||||||
Amortization of deferred sales commissions | 95.5 | 100.4 | ||||||
Interest expense | 23.2 | 22.8 | ||||||
Rent expense | 170.5 | 155.7 | ||||||
Amortization of other intangible assets, net | 23.5 | 23.6 | ||||||
Other operating costs and expenses | 672.0 | 647.2 | ||||||
Total expenses | 3,177.9 | 2,812.7 | ||||||
Earnings from Continuing Operations before Income Taxes and Minority Interest | $ | 1,383.9 | $ | 1,190.0 |
(1) | Included fees earned by AllianceBernstein totaling $31.8 million and $32.2 million in 2007 and 2006, respectively, for services provided to the Insurance Group. |
December 31, | ||||||||
2007 | 2006 | |||||||
Third party (1) | $ | 734,112 | $ | 646,899 | ||||
General Account and other (2) | 50,576 | 51,617 | ||||||
Insurance Group Separate Accounts | 96,726 | 84,989 | ||||||
Total Assets Under Management | $ | 881,414 | $ | 783,505 |
(1) | Includes $34.01 billion and $29.46 billion of assets managed on behalf of AXA affiliates at December 31, 2007 and 2006, respectively. Also included in 2007 and 2006 are $19.75 billion and $17.83 billion, respectively, in assets related to an Australian joint venture between AllianceBernstein and an AXA affiliate. |
(2) | Includes invested assets of the Company not managed by AllianceBernstein, principally cash and short-term investments and policy loans, totaling approximately $10.92 billion and $9.71 billion at December 31, 2007 and 2006, respectively, as well as mortgages and equity real estate totaling $4.28 billion and $3.98 billion at December 31, 2007 and 2006, respectively. |
Contractual Obligations – December 31, 2007 | ||||||||||||||||||||
(In Millions) | ||||||||||||||||||||
Payments Due by Period | ||||||||||||||||||||
Less than | Over | |||||||||||||||||||
Total | 1 year | 1 – 3 years | 4 – 5 years | 5 years | ||||||||||||||||
Contractual obligations: | ||||||||||||||||||||
Policyholders liabilities - | ||||||||||||||||||||
policyholders' account balances, future policy benefits and other policyholders liabilities(1) | $ | 76,799.8 | $ | 2,876.8 | $ | 5,646.7 | $ | 4,978.5 | $ | 63,297.8 | ||||||||||
Long-term debt | 448.3 | 248.3 | - | - | 200.0 | |||||||||||||||
Operating leases | 2,878.9 | 196.6 | 387.2 | 337.3 | 1,957.8 | |||||||||||||||
Employee benefits | 42.3 | 1.8 | 6.1 | 8.9 | 25.5 | |||||||||||||||
Total Contractual Obligations | $ | 80,169.3 | $ | 3,323.5 | $ | 6,040.0 | $ | 5,324.7 | $ | 65,481.1 |
(1) | Policyholders liabilities represent estimated cash flows out of the General Account related to the payment of death and disability claims, policy surrenders and withdrawals, annuity payments, minimum guarantees on Separate Account funded contracts, matured endowments, benefits under accident and health contracts, policyholder dividends and future renewal premium-based and fund-based commissions offset by contractual future premiums and deposits on in-force contracts. These estimated cash flows are based on mortality, morbidity and lapse assumptions comparable with the Company’s experience and assume market growth and interest crediting consistent with assumptions used in amortizing DAC. These amounts are undiscounted and, therefore, exceed the Policyholders’ account balances and Future policy benefits and other policyholder liabilities included in the consolidated balance sheet included elsewhere herein. They do not reflect projected recoveries from reinsurance agreements. Due to the use of assumptions, actual cash flows will differ from these estimates (see “Critical Accounting Estimates – Future Policy Benefits”). Separate Accounts liabilities have been excluded as they are legally insulated from General Account obligations and will be funded by cash flows from Separate Accounts assets. |
Interest Rate Risk Exposure | |
(In Millions) |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Fair Value | Balance After +100 Base | Fair Value | Balance After +100 Basis | |||||||||||||
Continuing Operations: | ||||||||||||||||
Fixed maturities: | ||||||||||||||||
Fixed rate | $ | 27,433.0 | $ | 25,994.8 | $ | 29,137.4 | $ | 27,656.5 | ||||||||
Floating rate | 300.9 | 300.5 | 260.5 | 259.9 | ||||||||||||
Mortgage loans | 3,766.9 | 3,594.6 | 3,285.6 | 3,144.1 | ||||||||||||
Wind-up Annuities: | ||||||||||||||||
Fixed maturities: | ||||||||||||||||
Fixed rate | $ | 705.0 | $ | 678.5 | $ | 764.8 | $ | 735.6 | ||||||||
Mortgage loans | 2.3 | 2.3 | 3.0 | 3.0 |
Equity Price Risk Exposure | |||
(In Millions) |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Fair Value | Balance After -10% Equity Price Change | Fair Value | Balance After -10% Equity Price Change | |||||||||||||
Insurance Group: | ||||||||||||||||
Continuing operations | $ | 7.2 | $ | 6.5 | $ | 232.5 | $ | 209.3 | ||||||||
Wind-up Annuities | - | - | - | - |
Interest Rate Sensitivity | ||||||||||||||||||||
Notional Amount | Weighted AverageTerm (Years) | Balance After -100 Basis Point Change | Fair Value | Balance After +100 Basis Point Change | ||||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Options: | ||||||||||||||||||||
Floors | $ | 27,000.0 | 3.25 | $ | 193.2 | $ | 162.9 | $ | (79.0 | ) | ||||||||||
Futures | 1,159.4 | .22 | 71.0 | - | (71.0 | ) | ||||||||||||||
Interest rate swaps | 125.0 | 9.14 | 9.3 | 4.9 | (9.2 | ) | ||||||||||||||
Total | $ | 28,284.4 | $ | 273.5 | $ | 167.8 | $ | (159.2 | ) | |||||||||||
December 31, 2006 | ||||||||||||||||||||
Options: | ||||||||||||||||||||
Floors | $ | 32,000.0 | 2.88 | $ | 30.2 | $ | 8.7 | $ | 4.3 | |||||||||||
Futures | 565.8 | .22 | 40.5 | - | (40.5 | ) | ||||||||||||||
Total | $ | 32,565.8 | $ | 70.7 | $ | 8.7 | $ | (36.2 | ) | |||||||||||
Equity Sensitivity | ||||||||||||||||||||
Fair Value | Balance after -10% Equity Price Shift | |||||||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Futures | $ | (5,081.1 | ) | .22 | $ | - | $ | 508.1 | ||||||||||||
December 31, 2006 | ||||||||||||||||||||
Futures | $ | (2,970.5 | ) | .22 | $ | - | $ | 297.0 | ||||||||||||
Interest Rate Risk Exposure |
(In Millions) |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Fair Value | Balance After -100 Basis Point Change | Fair Value | Balance After -100 Basis Point Change | |||||||||||||
Continuing Operations: | ||||||||||||||||
Fixed rate | $ | 224.6 | $ | 238.6 | $ | 229.7 | $ | 245.6 |
Interest Rate Risk Exposure | ||
(In Millions) |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Fair Value | Balance After +100 Basis Point Change | Fair Value | Balance After +100 Basis Point Change | |||||||||||||
Fixed Income Investments: | ||||||||||||||||
Trading | $ | 106.2 | $ | 101.0 | $ | 31.7 | $ | 30.2 | ||||||||
Available-for-sale and other investments | 28.4 | 27.0 | 32.0 | 30.5 |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Fair Value | Balance After -10% equity Price Change | Fair Value | Balance After -10% Equity Price Change | |||||||||||||
Equity Investments: | ||||||||||||||||
Trading | $ | 466.1 | $ | 419.5 | $ | 432.1 | $ | 388.9 | ||||||||
Available for sale and other i nvestments | 314.5 | 283.0 | 251.8 | 226.7 |
December 31, 2007 | December 31, 2006 | ||||||||||||||||
Fair Value | Balance ChangeAfter -100 Basis Point | Balance After -10% | Fair Value | Balance After -100 | Balance After -10% Exchange Rate Change | ||||||||||||
Debt | $ | 534.0 | $ | 557.5 | $ | 534.0 | $ | 335.0 | $ | 349.4 | $ | 335.0 |
Reports of Independent Registered Public Accounting Firms: | |
Report of PricewaterhouseCoopers LLP on AXA Equitable Life Insurance Company | F-1 |
Report of KPMG LLP on AllianceBernstein L.P. | F-2 |
Report of KPMG LLP on AllianceBernstein Holding L.P. | F-3 |
Consolidated Financial Statements: | |
Consolidated Balance Sheets, December 31, 2007 and 2006 | F-4 |
Consolidated Statements of Earnings, Years Ended December 31, 2007, 2006 and 2005 | F-5 |
Consolidated Statements of Shareholder’s Equity and Comprehensive Income, Years Ended | |
December 31, 2007, 2006 and 2005 | F-6 |
Consolidated Statements of Cash Flows, Years Ended December 31, 2007, 2006 and 2005 | F-7 |
Notes to Consolidated Financial Statements | F-9 |
Report of Independent Registered Public Accounting Firm on Financial Statement Schedules | F-58 |
Consolidated Financial Statement Schedules: | |
Schedule I - Summary of Investments - Other than Investments in Related Parties, | |
December 31, 2007 | F-59 |
Schedule II - Balance Sheets (Parent Company), December 31, 2007 and 2006 | F-60 |
Schedule II - Statements of Earnings (Parent Company), Years Ended | |
December 31, 2007, 2006 and 2005 | F-61 |
Schedule II – Statements of Cash Flows (Parent Company), Years Ended | |
December 31, 2007, 2006 and 2005 | F-62 |
Schedule III – Supplementary Insurance Information, Years Ended | |
December 31, 2007, 2006 and 2005 | F-63 |
Schedule IV – Reinsurance, Years Ended December 31, 2007, 2006 and 2005 | F-66 |
2007 | 2006 | |||||||
(In Millions) | ||||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed maturities available for sale, at estimated fair value | $ | 27,159.5 | $ | 29,031.1 | ||||
Mortgage loans on real estate | 3,730.6 | 3,240.7 | ||||||
Equity real estate, held for the production of income | 381.7 | 396.9 | ||||||
Policy loans | 3,938.8 | 3,898.1 | ||||||
Other equity investments | 1,820.3 | 1,562.1 | ||||||
Trading securities | 573.3 | 465.1 | ||||||
Other invested assets | 1,000.9 | 891.6 | ||||||
Total investments | 38,605.1 | 39,485.6 | ||||||
Cash and cash equivalents | 1,173.2 | 1,122.2 | ||||||
Cash and securities segregated, at estimated fair value | 2,370.0 | 2,009.8 | ||||||
Broker-dealer related receivables | 1,623.5 | 3,481.0 | ||||||
Deferred policy acquisition costs | 9,019.3 | 8,316.5 | ||||||
Goodwill and other intangible assets, net | 3,724.6 | 3,738.6 | ||||||
Amounts due from reinsurers | 2,890.6 | 2,689.3 | ||||||
Loans to affiliates | 638.3 | 400.0 | ||||||
Other assets | 3,341.8 | 3,241.5 | ||||||
Separate Accounts’ assets | 96,539.6 | 84,801.6 | ||||||
Total Assets | $ | 159,926.0 | $ | 149,286.1 | ||||
LIABILITIES | ||||||||
Policyholders’ account balances | $ | 25,168.2 | $ | 26,439.0 | ||||
Future policy benefits and other policyholders liabilities | 14,304.7 | 14,085.4 | ||||||
Broker-dealer related payables | 595.1 | 950.3 | ||||||
Customers related payables | 2,722.2 | 3,980.7 | ||||||
Amounts due to reinsurers | 1,119.5 | 1,070.8 | ||||||
Short-term and long-term debt | 982.0 | 783.0 | ||||||
Loans from affiliates | 325.0 | 325.0 | ||||||
Income taxes payable | 3,398.9 | 2,971.8 | ||||||
Other liabilities | 1,963.2 | 1,818.2 | ||||||
Separate Accounts’ liabilities | 96,539.6 | 84,801.6 | ||||||
Minority interest in equity of consolidated subsidiaries | 2,478.9 | 2,289.9 | ||||||
Minority interest subject to redemption rights | 142.7 | 288.0 | ||||||
Total liabilities | 149,740.0 | 139,803.7 | ||||||
Commitments and contingent liabilities (Notes 2, 5, 9, 18 and 19) | ||||||||
SHAREHOLDER’S EQUITY | ||||||||
Common stock, $1.25 par value, 2.0 million shares authorized, issued and outstanding | 2.5 | 2.5 | ||||||
Capital in excess of par value | 5,265.4 | 5,139.6 | ||||||
Retained earnings | 5,186.0 | 4,507.6 | ||||||
Accumulated other comprehensive loss | (267.9 | ) | (167.3 | ) | ||||
Total shareholder’s equity | 10,186.0 | 9,482.4 | ||||||
Total Liabilities and Shareholder’s Equity | $ | 159,926.0 | $ | 149,286.1 | ||||
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
REVENUES | ||||||||||||
Universal life and investment-type product policy fee income | $ | 2,741.7 | $ | 2,252.7 | $ | 1,889.3 | ||||||
Premiums | 804.9 | 817.8 | 881.7 | |||||||||
Net investment income | 2,695.0 | 2,389.2 | 2,481.8 | |||||||||
Investment (losses) gains, net | (7.2 | ) | 46.9 | 55.4 | ||||||||
Commissions, fees and other income | 5,174.0 | 4,373.0 | 3,626.2 | |||||||||
Total revenues | 11,408.4 | 9,879.6 | 8,934.4 | |||||||||
BENEFITS AND OTHER DEDUCTIONS | ||||||||||||
Policyholders’ benefits | 1,998.5 | 1,960.5 | 1,859.8 | |||||||||
Interest credited to policyholders’ account balances | 1,065.2 | 1,082.5 | 1,065.5 | |||||||||
Compensation and benefits | 2,453.2 | 2,090.4 | 1,802.9 | |||||||||
Commissions | 1,744.2 | 1,394.4 | 1,128.7 | |||||||||
Distribution plan payments | 335.1 | 292.9 | 292.0 | |||||||||
Amortization of deferred sales commissions | 95.5 | 100.4 | 132.0 | |||||||||
Interest expense | 72.0 | 70.4 | 76.3 | |||||||||
Amortization of deferred policy acquisition costs | 1,099.2 | 689.3 | 601.3 | |||||||||
Capitalization of deferred policy acquisition costs | (1,719.3 | ) | (1,363.4 | ) | (1,199.4 | ) | ||||||
Rent expense | 224.3 | 204.1 | 165.2 | |||||||||
Amortization of other intangible assets | 23.2 | 23.6 | 23.5 | |||||||||
Other operating costs and expenses | 1,334.5 | 1,262.6 | 952.4 | |||||||||
Total benefits and other deductions | 8,725.6 | 7,807.7 | 6,900.2 | |||||||||
Earnings from continuing operations before | ||||||||||||
income taxes and minority interest | 2,682.8 | 2,071.9 | 2,034.2 | |||||||||
Income taxes | (759.8 | ) | (424.5 | ) | (515.8 | ) | ||||||
Minority interest in net income of consolidated subsidiaries | (686.3 | ) | (599.9 | ) | (466.9 | ) | ||||||
Earnings from continuing operations | 1,236.7 | 1,047.5 | 1,051.5 | |||||||||
(Losses) earnings from discontinued operations, net of income taxes | (5.9 | ) | 31.2 | 22.3 | ||||||||
Gains (losses) on disposal of discontinued operations, net of income taxes | 2.8 | (1.9 | ) | - | ||||||||
Net Earnings | $ | 1,233.6 | $ | 1,076.8 | $ | 1,073.8 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
SHAREHOLDER’S EQUITY | ||||||||||||
Common stock, at par value, beginning and end of year | $ | 2.5 | $ | 2.5 | $ | 2.5 | ||||||
Capital in excess of par value, beginning of year | 5,139.6 | 4,976.3 | 4,890.9 | |||||||||
Changes in capital in excess of par value | 125.8 | 163.3 | 85.4 | |||||||||
Capital in excess of par value, end of year | 5,265.4 | 5,139.6 | 4,976.3 | |||||||||
Retained earnings, beginning of year | 4,507.6 | 4,030.8 | 3,457.0 | |||||||||
Cumulative effect adjustment to adopt FIN 48 | 44.8 | - | - | |||||||||
Retained earnings, beginning of year as adjusted | 4,552.4 | 4,030.8 | 3,457.0 | |||||||||
Net earnings | 1,233.6 | 1,076.8 | 1,073.8 | |||||||||
Dividends on common stock | (600.0 | ) | (600.0 | ) | (500.0 | ) | ||||||
Retained earnings, end of year | 5,186.0 | 4,507.6 | 4,030.8 | |||||||||
Accumulated other comprehensive (loss) income, beginning of year | (167.3 | ) | 432.3 | 874.1 | ||||||||
Other comprehensive loss | (100.6 | ) | (150.1 | ) | (441.8 | ) | ||||||
Adjustment to initially apply SFAS No.158, net of income taxes | - | (449.5 | ) | - | ||||||||
Accumulated other comprehensive (loss) income, end of year | (267.9 | ) | (167.3 | ) | 432.3 | |||||||
Total Shareholder’s Equity, End of Year | $ | 10,186.0 | $ | 9,482.4 | $ | 9,441.9 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
COMPREHENSIVE INCOME | ||||||||||||
Net earnings | $ | 1,233.6 | $ | 1,076.8 | $ | 1,073.8 | ||||||
Change in unrealized losses, net of | ||||||||||||
reclassification adjustment | (178.6 | ) | (150.1 | ) | (441.8 | ) | ||||||
Defined benefit plans: | ||||||||||||
Net gain arising during year | 38.8 | - | - | |||||||||
Prior service cost arising during year | 1.7 | - | - | |||||||||
Less: reclassification adjustment for: | ||||||||||||
Amortization of net losses included in net periodic cost | 41.2 | - | - | |||||||||
Amortization of net prior service credit | ||||||||||||
included in net periodic cost | (3.6 | ) | - | - | ||||||||
Amortization of net transition asset | (.1 | ) | - | - | ||||||||
Other comprehensive income – defined benefit plans | 78.0 | - | - | |||||||||
Other comprehensive loss | (100.6 | ) | (150.1 | ) | (441.8 | ) | ||||||
Comprehensive Income | $ | 1,133.0 | $ | 926.7 | $ | 632.0 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Net earnings | $ | 1,233.6 | $ | 1,076.8 | $ | 1,073.8 | ||||||
Adjustments to reconcile net earnings to net cash provided | ||||||||||||
by operating activities: | ||||||||||||
Interest credited to policyholders’ account balances | 1,065.2 | 1,082.5 | 1,065.5 | |||||||||
Universal life and investment-type product policy fee income | (2,741.7 | ) | (2,252.7 | ) | (1,889.3 | ) | ||||||
Net change in broker-dealer and customer related receivables/payables | 98.5 | 117.2 | (347.4 | ) | ||||||||
Investment losses (gains), net | 7.2 | (46.9 | ) | (55.4 | ) | |||||||
Change in deferred policy acquisition costs | (620.1 | ) | (674.1 | ) | (598.1 | ) | ||||||
Change in future policy benefits | 95.4 | 52.7 | 64.4 | |||||||||
Change in income taxes payable | 532.9 | 425.9 | 340.5 | |||||||||
Change in accounts payable and accrued expenses | 102.6 | 85.5 | 23.7 | |||||||||
Change in segregated cash and securities, net | (360.3 | ) | (245.0 | ) | (240.0 | ) | ||||||
Minority interest in net income of consolidated subsidiaries | 686.3 | 599.9 | 466.9 | |||||||||
Change in fair value of guaranteed minimum income benefit reinsurance contracts | (6.9 | ) | 14.8 | (42.6 | ) | |||||||
Amortization of deferred sales commissions | 95.5 | 100.4 | 132.0 | |||||||||
Other depreciation and amortization | 133.8 | 144.9 | 149.6 | |||||||||
Amortization of other intangible assets, net | 23.2 | 23.6 | 23.6 | |||||||||
(Gains) losses on disposal of discontinued operations | (2.8 | ) | 1.9 | - | ||||||||
Other, net | (5.0 | ) | 363.5 | (134.6 | ) | |||||||
Net cash provided by operating activities | 337.4 | 870.9 | 32.6 | |||||||||
Cash flows from investing activities: | ||||||||||||
Maturities and repayments | 2,143.1 | 2,962.2 | 2,926.2 | |||||||||
Sales of investments | 2,356.5 | 1,536.9 | 2,432.9 | |||||||||
Purchases of investments | (3,525.3 | ) | (4,262.3 | ) | (5,869.1 | ) | ||||||
Change in short-term investments | 107.0 | 65.6 | 13.8 | |||||||||
Decrease in loans to affiliates | 400.0 | - | - | |||||||||
Increase in loans to affiliates | (650.0 | ) | - | - | ||||||||
Change in capitalized software, leasehold improvements and EDP equipment | (205.0 | ) | (146.1 | ) | (101.2 | ) | ||||||
Other, net | (189.5 | ) | (390.4 | ) | (116.3 | ) | ||||||
Net cash provided by (used in) investing activities | 436.8 | (234.1 | ) | (713.7 | ) |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Cash flows from financing activities: | ||||||||||||
Policyholders’ account balances: | ||||||||||||
Deposits | $ | 4,102.1 | $ | 3,865.2 | $ | 3,816.8 | ||||||
Withdrawals from and transfers to Separate Accounts | (3,831.7 | ) | (3,569.1 | ) | (2,779.1 | ) | ||||||
Net change in short-term financings | 199.0 | 327.7 | - | |||||||||
Repayments of long-term debt | - | (400.0 | ) | (400.0 | ) | |||||||
Proceeds in loans from affiliates | - | - | 325.0 | |||||||||
Shareholder dividends paid | (600.0 | ) | (600.0 | ) | (500.0 | ) | ||||||
Other, net | (592.6 | ) | (206.5 | ) | (417.3 | ) | ||||||
Net cash (used in) provided by financing activities | (723.2 | ) | (582.7 | ) | 45.4 | |||||||
Change in cash and cash equivalents | 51.0 | 54.1 | (635.7 | ) | ||||||||
Cash and cash equivalents, beginning of year | 1,122.2 | 1,068.1 | 1,703.8 | |||||||||
Cash and Cash Equivalents, End of Year | $ | 1,173.2 | $ | 1,122.2 | $ | 1,068.1 | ||||||
Supplemental cash flow information: | ||||||||||||
Interest Paid | $ | 52.6 | $ | 59.9 | $ | 74.5 | ||||||
Income Taxes Paid (Refunded) | $ | 178.1 | $ | (40.8 | ) | $ | 146.5 |
1) | ORGANIZATION |
· | The acquirer will recognize 100% of the fair values of acquired assets and assumed liabilities (with few exceptions) upon initially obtaining control even if it has not acquired 100% of the target company, |
· | Contingent considerations will be included in the purchase price consideration on a fair value basis while transaction costs will be expensed as incurred, and |
· | The requirements in SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” must be met at the acquisition date in order to accrue for a restructuring plan. |
· | Recharacterize minority interests, currently classified within liabilities, as noncontrolling interests to be reported as a component of consolidated equity on the balance sheet, |
· | Include total income in net income, with separate disclosure on the face of the consolidated income statement of the attribution of income between controlling and noncontrolling interests, and |
· | Account for increases and decreases in noncontrolling interests as equity transactions with any difference between proceeds of a purchase or issuance of noncontrolling interests being accounted for as a change to the controlling entity’s equity instead of as current period gains/losses in the consolidated income statement. Only when the controlling entity loses control and deconsolidates a subsidiary will a gain or loss be recognized. |
· | Management having the authority to approve the action commits the organization to a plan to sell the property. | ||
· | The property is available for immediate sale in its present condition subject only to terms that are usual and customary for the sale of such assets. | ||
· | An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated and are continuing. | ||
· | The sale of the asset is probable and transfer of the asset is expected to qualify for recognition as a completed sale within one year. | ||
· | The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value. | ||
· | Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(In Millions) | ||||||||||||||||
December 31, 2007 | ||||||||||||||||
Fixed Maturities: | ||||||||||||||||
Available for Sale: | ||||||||||||||||
Corporate | $ | 22,340.2 | $ | 623.7 | $ | 539.6 | $ | 22,424.3 | ||||||||
Mortgage-backed | 1,215.4 | 3.9 | 15.9 | 1,203.4 | ||||||||||||
U.S. Treasury, government and agency securities | 1,320.6 | 63.2 | 1.1 | 1,382.7 | ||||||||||||
States and political subdivisions | 169.8 | 16.7 | .6 | 185.9 | ||||||||||||
Foreign governments | 237.0 | 41.9 | - | 278.9 | ||||||||||||
Redeemable preferred stock | 1,730.7 | 51.3 | 97.7 | 1,684.3 | ||||||||||||
Total Available for Sale | $ | 27,013.7 | $ | 800.7 | $ | 654.9 | $ | 27,159.5 | ||||||||
Equity Securities: | ||||||||||||||||
Available for sale | $ | 25.1 | $ | .8 | $ | .1 | $ | 25.8 | ||||||||
Trading securities | 482.2 | 8.7 | 23.8 | 467.1 | ||||||||||||
Total Equity Securities | $ | 507.3 | $ | 9.5 | $ | 23.9 | $ | 492.9 | ||||||||
December 31, 2006 | ||||||||||||||||
Fixed Maturities: | ||||||||||||||||
Available for Sale: | ||||||||||||||||
Corporate | $ | 23,023.3 | $ | 690.4 | $ | 264.5 | $ | 23,449.2 | ||||||||
Mortgage-backed | 1,931.1 | 2.7 | 38.3 | 1,895.5 | ||||||||||||
U.S. Treasury, government and agency securities | 1,284.3 | 29.9 | 10.4 | 1,303.8 | ||||||||||||
States and political subdivisions | 170.2 | 17.3 | .9 | 186.6 | ||||||||||||
Foreign governments | 219.2 | 38.1 | .3 | 257.0 | ||||||||||||
Redeemable preferred stock | 1,879.8 | 78.8 | 19.6 | 1,939.0 | ||||||||||||
Total Available for Sale | $ | 28,507.9 | $ | 857.2 | $ | 334.0 | $ | 29,031.1 | ||||||||
Equity Securities: | ||||||||||||||||
Available for sale | $ | 95.7 | $ | 2.2 | $ | .9 | $ | 97.0 | ||||||||
Trading securities | 408.0 | 35.4 | 9.9 | 433.5 | ||||||||||||
Total Equity Securities | $ | 503.7 | $ | 37.6 | $ | 10.8 | $ | 530.5 |
The contractual maturity of bonds at December 31, 2007 is shown below: | ||||||||
Available for Sale | ||||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
(In Millions) | ||||||||
Due in one year or less | $ | 783.5 | $ | 789.8 | ||||
Due in years two through five | 7,393.4 | 7,668.3 | ||||||
Due in years six through ten | 8,928.7 | 8,855.0 | ||||||
Due after ten years | 6,962.0 | 6,958.7 | ||||||
Subtotal | 24,067.6 | 24,271.8 | ||||||
Mortgage-backed securities | 1,215.4 | 1,203.4 | ||||||
Total | $ | 25,283.0 | $ | 25,475.2 |
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
(In Millions) | ||||||||||||||||||||||||
Fixed Maturities: | ||||||||||||||||||||||||
Corporate | $ | 4,424.5 | $ | 286.4 | $ | 4,786.7 | $ | 253.2 | $ | 9,211.2 | $ | 539.6 | ||||||||||||
Mortgage-backed | 29.1 | .1 | 967.9 | 15.8 | 997.0 | 15.9 | ||||||||||||||||||
U.S. Treasury, government and agency securities | 105.6 | .3 | 127.2 | .8 | 232.8 | 1.1 | ||||||||||||||||||
States and political subdivisions | - | - | 22.6 | .6 | 22.6 | .6 | ||||||||||||||||||
Foreign governments | 2.0 | - | 5.0 | - | 7.0 | - | ||||||||||||||||||
Redeemable preferred stock | 510.2 | 47.7 | 528.8 | 50.0 | 1,039.0 | 97.7 | ||||||||||||||||||
Total Temporarily Impaired Securities | $ | 5,071.4 | $ | 334.5 | $ | 6,438.2 | $ | 320.4 | $ | 11,509.6 | $ | 654.9 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Impaired mortgage loans with investment valuation allowances | $ | 11.4 | $ | 76.8 | ||||
Impaired mortgage loans without investment valuation allowances | - | .1 | ||||||
Recorded investment in impaired mortgage loans | 11.4 | 76.9 | ||||||
Investment valuation allowances | (1.4 | ) | (11.3 | ) | ||||
Net Impaired Mortgage Loans | $ | 10.0 | $ | 65.6 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Balances, beginning of year | $ | 21.0 | $ | 11.8 | $ | 11.3 | ||||||
Additions charged to income | 20.9 | 10.1 | 3.6 | |||||||||
Deductions for writedowns and | ||||||||||||
asset dispositions | (40.5 | ) | (.9 | ) | (3.1 | ) | ||||||
Balances, End of Year | $ | 1.4 | $ | 21.0 | $ | 11.8 | ||||||
Balances, end of year comprise: | ||||||||||||
Mortgage loans on real estate | $ | 1.4 | $ | 11.3 | $ | 11.8 | ||||||
Equity real estate | - | 9.7 | - | |||||||||
Total | $ | 1.4 | $ | 21.0 | $ | 11.8 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
BALANCE SHEETS | ||||||||
Investments in real estate, at depreciated cost | $ | 391.3 | $ | 421.7 | ||||
Investments in securities, generally at estimated fair value | 99.3 | 94.6 | ||||||
Cash and cash equivalents | 2.4 | 9.7 | ||||||
Other assets | - | 22.3 | ||||||
Total Assets | $ | 493.0 | $ | 548.3 | ||||
Borrowed funds - third party | $ | 273.1 | $ | 278.1 | ||||
Other liabilities | 4.8 | 6.8 | ||||||
Total liabilities | 277.9 | 284.9 | ||||||
Partners’ capital | 215.1 | 263.4 | ||||||
Total Liabilities and Partners’ Capital | $ | 493.0 | $ | 548.3 | ||||
The Company’s Carrying Value in These Entities Included Above | $ | 79.5 | $ | 78.7 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
STATEMENTS OF EARNINGS | ||||||||||||
Revenues of real estate joint ventures | $ | 77.5 | $ | 88.5 | $ | 98.2 | ||||||
Net revenues of other limited partnership interests | 15.3 | (1.3 | ) | 6.3 | ||||||||
Interest expense – third party | (18.2 | ) | (18.5 | ) | (18.2 | ) | ||||||
Other expenses | (43.8 | ) | (53.7 | ) | (62.2 | ) | ||||||
Net Earnings | $ | 30.8 | $ | 15.0 | $ | 24.1 | ||||||
The Company's Equity in Net Earnings of These Entities Included Above | $ | 24.6 | $ | 14.4 | $ | 11.6 |
DerivativesAt December 31, 2007, the Company had open exchange-traded futures positions on the S&P 500, Russell 1000, NASDAQ 100 and Emerging Market indices, having initial margin requirements of $189.9 million. At December 31, 2007, the Company had open exchange-traded futures positions on the 10-year U.S. Treasury Note, having initial margin requirements of $12.3 million. At that same date, the Company had open exchange-trade future positions on the Euro Stoxx, FTSE 100, European, Australasia, Far East (“EAFE”) and Topix indices as well as corresponding currency futures on the Euro/U.S. dollar, Yen/U.S. dollar and Pound/U.S. dollar, having initial margin requirements of $53.0 million. All contracts are net cash settled daily.The outstanding notional amounts of derivative financial instruments purchased and sold at December 31, 2007 and 2006 were:
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Notional Amount by Derivative Type: | ||||||||
Options: | ||||||||
Floors | $ | 27,000 | $ | 32,000 | ||||
Exchange traded U.S. Treasuries, and equity index futures | 6,241 | 3,536 | ||||||
Interest rate swaps | 125 | - | ||||||
Total | $ | 33,366 | $ | 35,536 |
At December 31, 2007 and 2006 and during the years then ended, no significant financial instruments contained implicit or explicit terms that met the definitions of an embedded derivative component that needed to be separated from the host contract and accounted for as a derivative under the provisions of SFAS No. 133.
The carrying value of goodwill related to the AllianceBernstein totaled $3.4 billion at December 31, 2007 and 2006.
The gross carrying amount of AllianceBernstein related intangible assets were $556.2 million and $563.7 million at December 31, 2007 and 2006, respectively and the accumulated amortization of these intangible assets were $243.7 million and $232.1 million at December 31, 2007 and 2006, respectively. Amortization expense related to the AllianceBernstein intangible assets totaled $23.5 million, $23.6 million and $23.5 million for 2007, 2006 and 2005, respectively.At December 31, 2007 and 2006, respectively, net deferred sales commissions totaled $183.6 million and $194.9 million and are included within the Investment Management segment’s Other assets. The estimated amortization expense of deferred sales commissions based on the December 31, 2007 net balance for each of the next five years is $35.6 million, $29.9 million, $24.9 million, $20.2 million and $16.7 million.
December 31, | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||
(In Millions) | ||||||||||||||||
Consolidated: | ||||||||||||||||
Mortgage loans on real estate | $ | 3,730.6 | $ | 3,766.9 | $ | 3,240.7 | $ | 3,285.7 | ||||||||
Other limited partnership interests | 1,607.9 | 1,607.9 | 1,260.1 | 1,260.1 | ||||||||||||
Policyholders liabilities: | ||||||||||||||||
Investment contracts | 3,817.8 | 3,878.9 | 4,708.7 | 4,772.6 | ||||||||||||
Long-term debt | 199.8 | 224.6 | 199.8 | 229.7 | ||||||||||||
Closed Block: | ||||||||||||||||
Mortgage loans on real estate | $ | 1,099.3 | $ | 1,111.4 | $ | 809.4 | $ | 827.8 | ||||||||
Other equity investments | 3.6 | 3.6 | 2.2 | 2.2 | ||||||||||||
SCNILC liability | 9.2 | 9.2 | 10.4 | 10.3 | ||||||||||||
Wind-up Annuities: | ||||||||||||||||
Mortgage loans on real estate | $ | 2.2 | $ | 2.3 | $ | 2.9 | $ | 3.0 | ||||||||
Other equity investments | 1.6 | 1.6 | 2.3 | 2.3 | ||||||||||||
Guaranteed interest contracts | 5.5 | 5.8 | 5.8 | 6.0 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
CLOSED BLOCK LIABILITIES: | ||||||||
Future policy benefits, policyholders’ account balances and other | $ | 8,657.3 | $ | 8,759.5 | ||||
Policyholder dividend obligation | - | 3.2 | ||||||
Other liabilities | 115.2 | 29.1 | ||||||
Total Closed Block liabilities | 8,772.5 | 8,791.8 | ||||||
ASSETS DESIGNATED TO THE CLOSED BLOCK: | ||||||||
Fixed maturities, available for sale, at estimated fair value | ||||||||
(amortized cost of $5,816.6 and $5,967.6) | 5,825.6 | 6,019.4 | ||||||
Mortgage loans on real estate | 1,099.3 | 809.4 | ||||||
Policy loans | 1,197.5 | 1,233.1 | ||||||
Cash and other invested assets | 4.7 | 6.8 | ||||||
Other assets | 240.1 | 286.2 | ||||||
Total assets designated to the Closed Block | 8,367.2 | 8,354.9 | ||||||
Excess of Closed Block liabilities over assets designated to the Closed Block | 405.3 | 436.9 | ||||||
Amounts included in accumulated other comprehensive income: | ||||||||
Net unrealized investment gains, net of deferred income tax | ||||||||
expense of $3.2 and $17.0 and policyholder dividend | ||||||||
obligation of $0 and $3.2 | 5.9 | 31.6 | ||||||
Maximum Future Earnings To Be Recognized From Closed Block | ||||||||
Assets and Liabilities | $ | 411.2 | $ | 468.5 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
REVENUES: | ||||||||||||
Premiums and other income | $ | 409.6 | $ | 428.1 | $ | 449.3 | ||||||
Investment income (net of investment expenses of $.2, $.1, and $0) | 501.8 | 520.2 | 525.9 | |||||||||
Investment gains, net | 7.9 | 1.7 | 1.2 | |||||||||
Total revenues | 919.3 | 950.0 | 976.4 | |||||||||
BENEFITS AND OTHER DEDUCTIONS: | ||||||||||||
Policyholders’ benefits and dividends | 828.2 | 852.2 | 842.5 | |||||||||
Other operating costs and expenses | 2.7 | 3.0 | 3.4 | |||||||||
Total benefits and other deductions | 830.9 | 855.2 | 845.9 | |||||||||
Net revenues before income taxes | 88.4 | 94.8 | 130.5 | |||||||||
Income tax expense | (31.0 | ) | (31.1 | ) | (45.6 | ) | ||||||
Net Revenues | $ | 57.4 | $ | 63.7 | $ | 84.9 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Balance at beginning of year | $ | 3.2 | $ | 73.7 | ||||
Increase in unrealized investment losses | (3.2 | ) | (70.5 | ) | ||||
Balance at End of Year | $ | - | $ | 3.2 |
December 31, | ||||
2006 | ||||
(In Millions) | ||||
Impaired mortgage loans with investment valuation allowances | $ | 17.8 | ||
Impaired mortgage loans without investment valuation allowances | .1 | |||
Recorded investment in impaired mortgage loans | 17.9 | |||
Investment valuation allowances | (7.3 | ) | ||
Net Impaired Mortgage Loans | $ | 10.6 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Balance, beginning of year | $ | 650.7 | $ | 555.0 | ||||
Contractholder bonus interest credits deferred | 174.7 | 155.4 | ||||||
Amortization charged to income | (71.2 | ) | (59.7 | ) | ||||
Balance, End of Year | $ | 754.2 | $ | 650.7 |
· | 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; or |
· | Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit which may include a five year or annual reset. |
GMDB | GMIB | Total | ||||||||||
(In Millions) | ||||||||||||
Balance at January 1, 2005 | $ | 67.6 | $ | 117.6 | $ | 185.2 | ||||||
Paid guarantee benefits | (39.6 | ) | (2.2 | ) | (41.8 | ) | ||||||
Other changes in reserve | 87.2 | 58.2 | 145.4 | |||||||||
Balance at December 31, 2005 | 115.2 | 173.6 | 288.8 | |||||||||
Paid guarantee benefits | (31.6 | ) | (3.3 | ) | (34.9 | ) | ||||||
Other changes in reserve | 80.1 | 58.0 | 138.1 | |||||||||
Balance at December 31, 2006 | 163.7 | 228.3 | 392.0 | |||||||||
Paid guarantee benefits | (30.6 | ) | (2.7 | ) | (33.3 | ) | ||||||
Other changes in reserve | 120.0 | 84.3 | 204.3 | |||||||||
Balance at December 31, 2007 | $ | 253.1 | $ | 309.9 | $ | 563.0 |
GMDB | ||||
Balance at January 1, 2005 | $ | 10.3 | ||
Paid guarantee benefits | (12.1 | ) | ||
Other changes in reserve | 24.5 | |||
Balance at December 31, 2005 | 22.7 | |||
Paid guarantee benefits | (9.1 | ) | ||
Other changes in reserve | 10.0 | |||
Balance at December 31, 2006 | 23.6 | |||
Paid guarantee benefits | (7.6 | ) | ||
Other changes in reserve | 11.5 | |||
Balance at December 31, 2007 | $ | 27.5 |
Return of Premium | Ratchet | Roll-Up | Combo | Total | ||||||||||||||||
(Dollars In Millions) | ||||||||||||||||||||
GMDB: | ||||||||||||||||||||
Account values invested in: | ||||||||||||||||||||
General Account | $ | 10,563 | $ | 375 | $ | 310 | $ | 747 | $ | 11,995 | ||||||||||
Separate Accounts | $ | 28,826 | $ | 8,493 | $ | 7,279 | $ | 31,078 | $ | 75,676 | ||||||||||
Net amount at risk, gross | $ | 234 | $ | 234 | $ | 1,404 | $ | 557 | $ | 2,429 | ||||||||||
Net amount at risk, net of | ||||||||||||||||||||
amounts reinsured | $ | 234 | $ | 183 | $ | 853 | $ | 557 | $ | 1,827 | ||||||||||
Average attained age of | ||||||||||||||||||||
contractholders | 49.3 | 61.5 | 65.3 | 61.6 | 52.8 | |||||||||||||||
Percentage of contractholders | ||||||||||||||||||||
over age 70 | 7.3 | % | 23.5 | % | 37.1 | % | 21.6 | % | 12.1 | % | ||||||||||
Range of contractually specified | ||||||||||||||||||||
interest rates | N/A | N/A | 3%-6 | % | 3% - 6.5 | % | ||||||||||||||
GMIB: | ||||||||||||||||||||
Account values invested in: | ||||||||||||||||||||
General Account | N/A | N/A | $ | 70 | $ | 989 | $ | 1,059 | ||||||||||||
Separate Accounts | N/A | N/A | $ | 4,640 | $ | 41,712 | $ | 46,352 | ||||||||||||
Net amount at risk, gross | N/A | N/A | $ | 274 | $ | - | $ | 274 | ||||||||||||
Net amount at risk, net of | ||||||||||||||||||||
amounts reinsured | N/A | N/A | $ | 71 | $ | - | $ | 71 | ||||||||||||
Weighted average years remaining | ||||||||||||||||||||
until earliest annuitization | N/A | N/A | 2.0 | 8.1 | 7.4 | |||||||||||||||
Range of contractually specified | ||||||||||||||||||||
interest rates | N/A | N/A | 3% - 6 | % | 3% - 6.5 | % |
Investment in Variable Insurance Trust Mutual Funds | ||||||||
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
GMDB: | ||||||||
Equity | $ | 48,587 | $ | 42,885 | ||||
Fixed income | 4,392 | 4,438 | ||||||
Balanced | 20,546 | 14,863 | ||||||
Other | 2,151 | 2,121 | ||||||
Total | $ | 75,676 | $ | 64,307 | ||||
GMIB: | ||||||||
Equity | $ | 27,831 | $ | 22,828 | ||||
Fixed income | 2,687 | 2,727 | ||||||
Balanced | 14,816 | 10,439 | ||||||
Other | 1,018 | 990 | ||||||
Total | $ | 46,352 | $ | 36,984 |
Direct Liability | Reinsurance Ceded | Net | ||||||||||
(In Millions) | ||||||||||||
Balance at January 1, 2005 | $ | 20.5 | $ | (6.1 | ) | $ | 14.4 | |||||
Other changes in reserve | 14.3 | (14.3 | ) | - | ||||||||
Balance at December 31, 2005 | 34.8 | (20.4 | ) | 14.4 | ||||||||
Other changes in reserve | 32.0 | (27.5 | ) | 4.5 | ||||||||
Balance at December 31, 2006 | 66.8 | (47.9 | ) | 18.9 | ||||||||
Other changes in reserve | 68.2 | (59.7 | ) | 8.5 | ||||||||
Balance at December 31, 2007 | $ | 135.0 | $ | (107.6 | ) | $ | 27.4 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Direct premiums | $ | 855.1 | $ | 858.6 | $ | 912.6 | ||||||
Reinsurance assumed | 193.0 | 188.4 | 162.5 | |||||||||
Reinsurance ceded | (243.2 | ) | (229.2 | ) | (193.4 | ) | ||||||
Premiums | $ | 804.9 | $ | 817.8 | $ | 881.7 | ||||||
Universal Life and Investment-type Product | ||||||||||||
Policy Fee Income Ceded | $ | 153.9 | $ | 99.0 | $ | 118.4 | ||||||
Policyholders’ Benefits Ceded | $ | 510.7 | $ | 387.5 | $ | 304.1 | ||||||
Interest Credited to Policyholders’ Account | ||||||||||||
Balances Ceded | $ | 56.1 | $ | 53.8 | $ | 50.9 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Incurred benefits related to current year | $ | 32.9 | $ | 35.8 | $ | 35.6 | ||||||
Incurred benefits related to prior years | 13.2 | 9.9 | 50.3 | |||||||||
Total Incurred Benefits | $ | 46.1 | $ | 45.7 | $ | 85.9 | ||||||
Benefits paid related to current year | $ | 11.9 | $ | 14.0 | $ | 14.8 | ||||||
Benefits paid related to prior years | 32.8 | 30.0 | 44.7 | |||||||||
Total Benefits Paid | $ | 44.7 | $ | 44.0 | $ | 59.5 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Short-term debt: | ||||||||
Promissory note (with interest rates of 5.16% and 5.27%) | $ | 248.3 | $ | 248.3 | ||||
AllianceBernstein commercial paper | 533.9 | 334.9 | ||||||
Total short-term debt | 782.2 | 583.2 | ||||||
Long-term debt: | ||||||||
AXA Equitable: | ||||||||
Surplus Notes, 7.70%, due 2015 | 199.8 | 199.8 | ||||||
Total long-term debt | 199.8 | 199.8 | ||||||
Total Short-term and Long-term Debt | $ | 982.0 | $ | 783.0 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Investment advisory and services fees | $ | 1,025.4 | $ | 840.5 | $ | 728.5 | ||||||
Distribution revenues | 473.4 | 421.0 | 397.8 | |||||||||
Other revenues - shareholder servicing fees | 103.6 | 97.2 | 99.3 | |||||||||
Other revenues – other | 6.5 | 6.9 | 8.0 | |||||||||
Institutional research services | 1.6 | 1.9 | 3.9 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Service cost | $ | 39.0 | $ | 37.6 | $ | 36.0 | ||||||
Interest cost on projected benefit obligations | 128.8 | 122.1 | 123.7 | |||||||||
Expected return on assets | (191.0 | ) | (184.8 | ) | (173.7 | ) | ||||||
Net amortization and deferrals | 57.5 | 81.0 | 78.8 | |||||||||
Net Periodic Pension Expense | $ | 34.3 | $ | 55.9 | $ | 64.8 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Benefit obligations, beginning of year | $ | 2,294.3 | $ | 2,365.5 | ||||
Service cost | 31.0 | 30.6 | ||||||
Interest cost | 128.8 | 122.1 | ||||||
Plan amendments | 8.2 | - | ||||||
Actuarial (gains) losses | (73.6 | ) | (64.7 | ) | ||||
Benefits paid | (166.6 | ) | (159.2 | ) | ||||
Benefit Obligations, End of Year | $ | 2,222.1 | $ | 2,294.3 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Plan assets at fair value, beginning of year | $ | 2,396.0 | $ | 2,278.5 | ||||
Actual return on plan assets | 191.2 | 282.0 | ||||||
Contributions | 4.8 | 4.3 | ||||||
Benefits paid and fees | (176.3 | ) | (168.8 | ) | ||||
Plan assets at fair value, end of year | 2,415.7 | 2,396.0 | ||||||
Projected benefit obligations | 2,222.1 | 2,294.3 | ||||||
Overfunding of Plan Assets Over Projected Benefit Obligations | $ | 193.6 | $ | 101.7 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Unrecognized net actuarial loss | $ | 575.8 | $ | 710.7 | ||||
Unrecognized prior service credit | (4.9 | ) | (18.8 | ) | ||||
Unrecognized net transition asset | (.8 | ) | (.8 | ) | ||||
Total | $ | 570.1 | $ | 691.1 |
December 31, | ||||||||||||||||
2007 | 2006 | |||||||||||||||
(In Millions) | ||||||||||||||||
Estimated Fair Value | % | Estimated Fair Value | % | |||||||||||||
Corporate and government debt securities | $ | 414.3 | 17.1 | $ | 429.8 | 18.0 | ||||||||||
Equity securities | 1,723.7 | 71.4 | 1,720.7 | 71.8 | ||||||||||||
Equity real estate | 277.7 | 11.5 | 245.5 | 10.2 | ||||||||||||
Total Plan Assets | $ | 2,415.7 | 100.0 | $ | 2,396.0 | 100.0 |
2007 | 2006 | |||||||
Discount rate: | ||||||||
Benefit obligation | 6.25% | 5.75% | ||||||
Periodic cost | 5.75% | 5.25% | ||||||
Rate of compensation increase: | ||||||||
Benefit obligation and periodic cost | 6.00% | 6.00% | ||||||
Expected long-term rate of return on plan assets (periodic cost) | 8.50% | 8.50% |
Pension Benefits | ||||
(In Millions) | ||||
2008 | $ | 174.3 | ||
2009 | 187.2 | |||
2010 | 188.8 | |||
2011 | 189.8 | |||
2012 | 192.4 | |||
Years 2013-2017 | 945.5 |
13) | SHARE-BASED COMPENSATION |
Options Outstanding | ||||||||||||||||
AllianceBernstein | ||||||||||||||||
AXA Ordinary Shares | AXA ADRs | Holding Units | ||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||
Number | Average’ | Number | Average’ | Number | Average’ | |||||||||||
Outstanding | Exercise | Outstanding | Exercise | Outstanding | Exercise | |||||||||||
(In Millions) | Price | (In Millions) | Price | (In Millions) | Price | |||||||||||
Options outstanding at January 1, 2007 | 7.4 | € | 24.82 | 26.8 | $ | 23.03 | 4.8 | $ | 41.62 | |||||||
Options granted | 3.1 | € | 34.56 | - | $ | - | 3.7 | $ | 85.07 | |||||||
Options exercised | (.1) | € | 20.67 | (7.4) | $ | 24.12 | (1.2) | $ | 39.25 | |||||||
Options forfeited | (.1) | € | 23.42 | (.4) | $ | 22.54 | - (2) | $ | 33.18 | |||||||
Options expired | - | - | - | - | ||||||||||||
Options Outstanding at | ||||||||||||||||
December 31, 2007 | 10.3 | € | 27.77 | 19.0 | $ | 22.64 | 7.3 | $ | 64.20 | |||||||
Aggregate Intrinsic Value (1) | € | 23.0 | $ | 323.3 | $ | 80.37 | ||||||||||
Weighted Average | ||||||||||||||||
Remaining | ||||||||||||||||
Contractual Term | ||||||||||||||||
(in years) | 8.27 | 3.94 | 6.9 | |||||||||||||
Options Exercisable at | ||||||||||||||||
December 31, 2007 | 3.3 | € | 20.46 | 15.8 | $ | 22.53 | 3.5 | $ | 42.52 | |||||||
Aggregate Intrinsic Value (1) | € | 23.0 | $ | 270.8 | $ | 115.4 | ||||||||||
Weighted Average Remaining | ||||||||||||||||
Contractual Term (in years) | 7.26 | 3.36 | 3.5 |
(1) | Intrinsic value, presented in millions, is calculated as the excess of the closing market price on December 31, 2007 of the respective underlying shares over the strike prices of the option awards. |
(2) | Approximately 19,500 options on AllianceBernstein Holding units were forfeited in 2007. |
AXA Ordinary | AXA | AllianceBernstein | |||||||||||||||||
Shares | ADRs | Holding Units | |||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | ||||||||||||||
Dividend yield | 4.10% | 3.48% | 3.01% | 5.6-5.7% | 6% | 6.2% | |||||||||||||
Expected volatility | 27.5% | 28% | 25% | 27.7-30.8% | 31% | 31% | |||||||||||||
Risk-free interest rate | 4.40% | 3.77% | 4.27% | 3.5-4.9% | 4.9% | 3.7% | |||||||||||||
Expected life in years | 5.5 | 5.0 | 5.0 | 6.0-9.5 | 6.5 | 3.0 | |||||||||||||
Weighted average fair | |||||||||||||||||||
value per option at | |||||||||||||||||||
grant date | $9.61 | $7.45 | $4.85 | $15.96 | $12.35 | $7.04 | |||||||||||||
Shares of Restricted Stock | Weighted Average Grant Date Fair Value | |||||||||
Unvested as of January 1, 2007 | 514,035 | $ | 23.91 | |||||||
Granted | 100,187 | $ | 44.59 | |||||||
Vested | (161,756 | ) | $ | 24.55 | ||||||
Forfeited | (43,955 | ) | ||||||||
Unvested as of December 31, 2007 | 408,511 | $ | 29.67 |
14) | NET INVESTMENT INCOME AND INVESTMENT (LOSSES) GAINS, NET |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Fixed maturities | $ | 1,728.5 | $ | 1,848.6 | $ | 1,870.0 | ||||||
Mortgage loans on real estate | 233.5 | 245.9 | 238.2 | |||||||||
Equity real estate | 93.6 | 88.2 | 96.5 | |||||||||
Other equity investments | 237.4 | 181.2 | 155.2 | |||||||||
Policy loans | 255.9 | 249.8 | 248.8 | |||||||||
Short-term investments | 55.1 | 55.2 | 25.1 | |||||||||
Derivative investments | 86.6 | (302.4 | ) | (85.5 | ) | |||||||
Broker-dealer related receivables | 234.6 | 226.5 | 124.8 | |||||||||
Trading securities | 36.0 | 53.4 | 28.6 | |||||||||
Other investment income | 50.7 | 43.9 | 16.2 | |||||||||
Gross investment income | 3,011.9 | 2,690.3 | 2,717.9 | |||||||||
Investment expenses | (122.5 | ) | (113.3 | ) | (140.2 | ) | ||||||
Interest expenses | (194.4 | ) | (187.8 | ) | (95.9 | ) | ||||||
Net Investment Income | $ | 2,695.0 | $ | 2,389.2 | $ | 2,481.8 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Fixed maturities | $ | (55.6 | ) | $ | (11.5 | ) | $ | 11.1 | ||||
Mortgage loans on real estate | 7.8 | .2 | (2.2 | ) | ||||||||
Equity real estate | 7.3 | 8.8 | 3.9 | |||||||||
Other equity investments | 16.9 | 20.1 | 30.7 | |||||||||
Other (1) | 16.4 | 29.3 | 11.9 | |||||||||
Investment (Losses) Gains, Net | $ | (7.2 | ) | $ | 46.9 | $ | 55.4 |
(1) | In 2007, AllianceBernstein issued units to its employees under long-term incentive plans. As a result of this transaction, the company recorded a non-cash realized gain of $17.7 million and $29.7 million for 2007 and 2006 respectively. |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Balance, beginning of year | $ | 282.2 | $ | 432.3 | $ | 874.1 | ||||||
Changes in unrealized investment gains (losses) | (380.5 | ) | (431.4 | ) | (1,008.1 | ) | ||||||
Changes in unrealized investment (gains) losses | ||||||||||||
attributable to: | ||||||||||||
Participating group annuity contracts, | ||||||||||||
Closed Block policyholder dividend | ||||||||||||
obligation and other | 15.0 | 90.9 | 186.3 | |||||||||
DAC | 83.5 | 85.8 | 146.2 | |||||||||
Deferred income taxes | 103.4 | 104.6 | 233.8 | |||||||||
Balance, End of Year | $ | 103.6 | $ | 282.2 | $ | 432.3 | ||||||
Balance, end of year comprises: | ||||||||||||
Unrealized investment gains (losses) on: | ||||||||||||
Fixed maturities | $ | 155.5 | $ | 535.4 | $ | 966.5 | ||||||
Other equity investments | .8 | 1.4 | 1.7 | |||||||||
Subtotal | 156.3 | 536.8 | 968.2 | |||||||||
Amounts of unrealized investment (gains) losses | ||||||||||||
attributable to: | ||||||||||||
Participating group annuity contracts, | ||||||||||||
Closed Block policyholder dividend | ||||||||||||
obligation and other | 16.4 | 1.4 | (89.4 | ) | ||||||||
DAC | (26.9 | ) | (110.4 | ) | (196.0 | ) | ||||||
Deferred income taxes | (42.2 | ) | (145.6 | ) | (250.5 | ) | ||||||
Total | $ | 103.6 | $ | 282.2 | $ | 432.3 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Income tax expense: | ||||||||||||
Current expense | $ | 464.0 | $ | 438.6 | $ | 237.5 | ||||||
Deferred expense (benefit) | 295.8 | (11.3 | ) | 278.3 | ||||||||
Total | $ | 759.8 | $ | 427.3 | $ | 515.8 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Expected income tax expense | $ | 939.0 | $ | 725.2 | $ | 712.0 | ||||||
Minority interest | (227.3 | ) | (224.1 | ) | (175.9 | ) | ||||||
Separate Account investment activity | (52.0 | ) | (45.4 | ) | (87.2 | ) | ||||||
Non-taxable investment income | (21.7 | ) | (23.1 | ) | (19.7 | ) | ||||||
Adjustment of tax audit reserves | 21.5 | (86.2 | ) | 11.1 | ||||||||
State income taxes | 50.2 | 38.0 | 28.3 | |||||||||
AllianceBernstein income and foreign taxes | 40.2 | 32.9 | 41.4 | |||||||||
Other | 9.9 | 7.2 | 5.8 | |||||||||
Income Tax Expense | $ | 759.8 | $ | 424.5 | $ | 515.8 |
December 31, 2007 | December 31, 2006 | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
(In Millions) | ||||||||||||||||
Compensation and related benefits | $ | - | $ | 35.4 | $ | 54.6 | $ | - | ||||||||
Reserves and reinsurance | 1,312.2 | - | 1,160.3 | - | ||||||||||||
DAC | - | 2,735.5 | - | 2,433.5 | ||||||||||||
Unrealized investment gains | - | 42.5 | - | 129.8 | ||||||||||||
Investments | - | 1,044.2 | - | 916.5 | ||||||||||||
Other | 81.5 | - | 64.1 | |||||||||||||
Total | $ | 1,393.7 | $ | 3,857.6 | $ | 1,279.0 | $ | 3,479.8 |
2007 | ||||
(In Millions) | ||||
Balance at January 1, 2007 (date of adoption) | $ | 325.2 | ||
Additions for tax positions of prior years | 19.2 | |||
Reductions for tax positions of prior years | (1.5 | ) | ||
Additions for tax positions of current years | 3.4 | |||
Reductions for tax positions of current years | (.3 | ) | ||
Settlements with tax authorities | (2.4 | ) | ||
Reductions as a result of a lapse of the applicable statute of limitations | - | |||
Balance, End of Year | $ | 343.6 | ||
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
(Losses) Earnings from Discontinued Operations, | ||||||||||||
Net of Income Taxes: | ||||||||||||
Wind-up Annuities | $ | (.1 | ) | $ | 30.2 | $ | 15.2 | |||||
Real estate held-for-sale | (6.8 | ) | 1.1 | 7.2 | ||||||||
Disposal of business - Enterprise | 1.0 | (.1 | ) | (.1 | ) | |||||||
Total | $ | (5.9 | ) | $ | 31.2 | $ | 22.3 | |||||
Gains (Losses) on Disposal of Discontinued Operations, | ||||||||||||
Net of Income Taxes: | ||||||||||||
Real estate held for sale | $ | 3.2 | $ | - | $ | - | ||||||
Disposal of business - Enterprise | (.4 | ) | (1.9 | ) | - | |||||||
Total | $ | 2.8 | $ | (1.9 | ) | $ | - |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
BALANCE SHEETS | ||||||||
Fixed maturities, available for sale, at estimated fair value | ||||||||
(amortized cost of $696.3 and $752.7) | $ | 705.0 | $ | 764.8 | ||||
Equity real estate | 165.0 | 169.5 | ||||||
Mortgage loans on real estate | 2.2 | 2.9 | ||||||
Other invested assets | 1.8 | 2.6 | ||||||
Total investments | 874.0 | 939.8 | ||||||
Cash and cash equivalents | - | .1 | ||||||
Other assets | 27.3 | 13.7 | ||||||
Total Assets | $ | 901.3 | $ | 953.6 | ||||
Policyholders liabilities | $ | 756.1 | $ | 788.2 | ||||
Allowance for future losses | - | 1.0 | ||||||
Other liabilities | 145.2 | 164.4 | ||||||
Total Liabilities | $ | 901.3 | $ | 953.6 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
STATEMENTS OF EARNINGS | ||||||||||||
Investment income (net of investment expenses of $19.6, $19.0 and $18.4) | $ | 64.9 | $ | 71.3 | $ | 70.0 | ||||||
Investment (losses) gains, net | (.8 | ) | 6.0 | (.3 | ) | |||||||
Policy fees, premiums and other income | .2 | - | - | |||||||||
Total revenues | 64.3 | 77.3 | 69.7 | |||||||||
Benefits and other deductions | 79.9 | 84.7 | 87.1 | |||||||||
Losses charged to the allowance for future losses | (15.6 | ) | (7.4 | ) | (17.4 | ) | ||||||
Pre-tax loss from operations | - | - | - | |||||||||
Pre-tax (loss from strengthening) earnings from releasing the allowance for future losses | (.1 | ) | 37.1 | 23.2 | ||||||||
Income tax expense | - | (6.9 | ) | (8.0 | ) | |||||||
Earnings from Wind-up Annuities | $ | (.1 | ) | $ | 30.2 | $ | 15.2 |
The Company’s quarterly process for evaluating the need for an allowance for future losses involves comparison of the current period’s results of Wind-up Annuities to previous projections and re-estimation of future expected losses, if appropriate, to determine whether an adjustment is required. Investment and benefit cash flow projections are updated annually as part of the Company’s annual planning process. These updated assumptions and estimates resulted in releases of the allowance in 2006 and 2005. If the Company’s analysis in any given period indicates that an allowance for future losses is not necessary, any current period Wind-up Annuities’ operating losses are deferred to the extent that such losses are expected to be offset by reasonably assured future net investing and operating cash flows. Management believes the $18.0 million of deferred operating losses at December 31, 2007 are offset by projections of reasonably assured future net investing and operating cash flows. |
The determination of projected future cash flows involves numerous estimates and subjective judgments regarding the expected performance of invested assets held by Wind-up Annuities and the expected run-off of Wind-up Annuities liabilities. There can be no assurance the projected future cash flows will not differ from the cash flows ultimately realized. To the extent actual results or future projections of Wind-up Annuities are lower than management’s current estimates and assumptions and result in deferred operating losses not being offset by reasonably assured future net investing and operating cash flows, the difference would be reflected in the consolidated statements of earnings in Wind-up Annuities. In particular, to the extent income, sales proceeds and holding periods for equity real estate differ from management’s previous assumptions, periodic adjustments to the loss allowance liability or deferred operating loss asset, as applicable, may result. |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Unrealized gains on investments | $ | 103.6 | $ | 282.2 | $ | 432.3 | ||||||
Defined benefit pensions plans | (371.5 | ) | (449.5 | ) | - | |||||||
Total Accumulated Other Comprehensive (Loss) Income | $ | (267.9 | ) | $ | (167.3 | ) | $ | 432.3 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Net unrealized (losses) gains on investments: | ||||||||||||
Net unrealized (losses) gains arising during the year | $ | (357.8 | ) | $ | (416.6 | ) | $ | (966.2 | ) | |||
Losses reclassified into net earnings during the year | (22.7 | ) | (14.8 | ) | (41.9 | ) | ||||||
Net unrealized (losses) gains on investments | (380.5 | ) | (431.4 | ) | (1,008.1 | ) | ||||||
Adjustments for policyholders liabilities, | ||||||||||||
DAC and deferred income taxes | 201.9 | 281.3 | 566.3 | |||||||||
Change in unrealized losses, net of adjustments | (178.6 | ) | (150.1 | ) | (441.8 | ) | ||||||
Change in defined benefits pension plans | 78.0 | - | - | |||||||||
Total Other Comprehensive Loss | $ | (100.6 | ) | $ | (150.1 | ) | $ | (441.8 | ) |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Net change in statutory surplus and capital stock | $ | 71.7 | $ | 1,386.5 | $ | 779.6 | ||||||
Change in AVR | (167.2 | ) | 279.3 | 260.6 | ||||||||
Net change in statutory surplus, capital stock and AVR | (95.5 | ) | 1,665.8 | 1,040.2 | ||||||||
Adjustments: | ||||||||||||
Future policy benefits and policyholders’ account balances | 415.1 | (144.3 | ) | (56.6 | ) | |||||||
DAC | 620.1 | 674.1 | 598.0 | |||||||||
Deferred income taxes | (677.8 | ) | 517.3 | 227.6 | ||||||||
Valuation of investments | 2.8 | 2.6 | 40.0 | |||||||||
Valuation of investment subsidiary | 461.7 | (2,122.7 | ) | (1,278.3 | ) | |||||||
Change in fair value of guaranteed minimum income benefit reinsurance contracts | 6.9 | (14.8 | ) | 42.6 | ||||||||
Shareholder dividends paid | 600.0 | 600.0 | 500.0 | |||||||||
Changes in non-admitted assets | 19.4 | (57.4 | ) | .5 | ||||||||
Other, net | (150.3 | ) | (72.6 | ) | (71.1 | ) | ||||||
GAAP adjustments for Wind-up Annuities | 31.2 | 28.8 | 30.9 | |||||||||
Consolidated Net Earnings | $ | 1,233.6 | $ | 1,076.8 | $ | 1,073.8 |
December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Statutory surplus and capital stock | $ | 6,569.3 | $ | 6,497.6 | $ | 5,111.1 | ||||||
AVR | 1,242.7 | 1,409.9 | 1,130.6 | |||||||||
Statutory surplus, capital stock and AVR | 7,812.0 | 7,907.5 | 6,241.7 | |||||||||
Adjustments: | ||||||||||||
Future policy benefits and policyholders’ account balances | (2,270.2 | ) | (2,574.1 | ) | (2,351.0 | ) | ||||||
DAC | 9,019.3 | 8,316.5 | 7,557.3 | |||||||||
Deferred income taxes | (1,089.3 | ) | (627.1 | ) | (1,294.6 | ) | ||||||
Valuation of investments | 457.1 | 867.9 | 1,281.6 | |||||||||
Valuation of investment subsidiary | (4,458.3 | ) | (4,920.0 | ) | (2,797.3 | ) | ||||||
Fair value of GMIB reinsurance contracts | 124.7 | 117.8 | 132.6 | |||||||||
Non-admitted assets | 1,014.5 | 994.5 | 1,051.6 | |||||||||
Issuance of surplus notes | (524.8 | ) | (524.8 | ) | (524.8 | ) | ||||||
Adjustment to initially apply SFAS No. 158, net of income taxes | - | (449.5 | ) | - | ||||||||
Other, net | 76.0 | 433.6 | 225.4 | |||||||||
GAAP adjustments for Wind-up Annuities | 1.5 | (59.9 | ) | (80.6 | ) | |||||||
Consolidated Shareholder’s Equity | $ | 10,162.5 | $ | 9,482.4 | $ | 9,441.9 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Segment revenues: | ||||||||||||
Insurance | $ | 6,938.0 | $ | 5,966.9 | $ | 5,754.1 | ||||||
Investment Management (1) | 4,561.8 | 4,002.7 | 3,265.0 | |||||||||
Consolidation/elimination | (91.4 | ) | (90.0 | ) | (84.7 | ) | ||||||
Total Revenues | $ | 11,408.4 | $ | 9,879.6 | $ | 8,934.4 | ||||||
(1) Intersegment investment advisory and other fees of approximately $128.9 million, $120.8 million and $123.7 million for 2007, 2006 and 2005, respectively, are included in total revenues of the Investment Management segment. |
Segment earnings from continuing | 2007 | 2006 | 2005 | |||||||||
operations before income | (In Millions) | |||||||||||
taxes and minority interest: | ||||||||||||
Insurance | $ | 1,298.9 | $ | 881.9 | $ | 1,110.0 | ||||||
Investment Management | 1,383.9 | 1,190.0 | 924.2 | |||||||||
Consolidation/elimination | - | - | - | |||||||||
Total Earnings from Continuing Operations | ||||||||||||
before Income Taxes and Minority Interest | $ | 2,682.8 | $ | 2,071.9 | $ | 2,034.2 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Segment assets: | ||||||||
Insurance | $ | 144,962.2 | $ | 133,047.0 | ||||
Investment Management | 14,962.7 | 16,239.4 | ||||||
Consolidation/elimination | 1.1 | (.3 | ) | |||||
Total Assets | $ | 159,926.0 | $ | 149,286.1 |
Three Months Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
(In Millions) | ||||||||||||||||
2007 | ||||||||||||||||
Total Revenues | $ | 2,677.9 | $ | 2,608.2 | $ | 2,938.5 | $ | 3,183.8 | ||||||||
Earnings from Continuing Operations | $ | 295.7 | $ | 232.0 | $ | 356.6 | $ | 352.4 | ||||||||
Net Earnings | $ | 299.6 | $ | 218.2 | $ | 362.4 | $ | 353.4 | ||||||||
2006 | ||||||||||||||||
Total Revenues | $ | 2,241.6 | $ | 2,607.3 | $ | 2,413.3 | $ | 2,617.4 | ||||||||
Earnings from Continuing Operations | $ | 232.5 | $ | 315.3 | $ | 280.5 | $ | 219.2 | ||||||||
Net Earnings | $ | 235.2 | $ | 314.2 | $ | 308.6 | $ | 218.8 | ||||||||
Estimated | Carrying | |||||||||||
Type of Investment | Cost (A) | Fair Value | Value | |||||||||
(In Millions) | ||||||||||||
Fixed maturities: | ||||||||||||
U.S. government, agencies and authorities | $ | 1,320.6 | $ | 1,382.7 | $ | 1,382.7 | ||||||
State, municipalities and political subdivisions | 169.8 | 185.9 | 185.9 | |||||||||
Foreign governments | 237.0 | 278.9 | 278.9 | |||||||||
Public utilities | 2,976.3 | 3,062.0 | 3,062.0 | |||||||||
All other corporate bonds | 20,579.3 | 20,565.7 | 20,565.7 | |||||||||
Redeemable preferred stocks | 1,730.7 | 1,684.3 | 1,684.3 | |||||||||
Total fixed maturities | 27,013.7 | 27,159.5 | 27,159.5 | |||||||||
Equity securities: | ||||||||||||
Common stocks: | ||||||||||||
Industrial, miscellaneous and all other | 25.1 | 25.8 | 25.8 | |||||||||
Mortgage loans on real estate | 3,730.6 | 3,766.9 | 3,730.6 | |||||||||
Real estate | 209.0 | XXX | 209.0 | |||||||||
Real estate acquired in satisfaction of debt | 113.0 | XXX | 113.0 | |||||||||
Real estate joint ventures | 59.7 | XXX | 59.7 | |||||||||
Policy loans | 3,938.8 | XXX | 3,938.8 | |||||||||
Other limited partnership interests and equity investments | 1,794.5 | 1,794.5 | 1,794.5 | |||||||||
Trading securities | 587.5 | 573.3 | 573.3 | |||||||||
Other invested assets | 1,000.9 | 1,000.9 | 1,000.9 | |||||||||
Total Investments | $ | 38,472.8 | $ | 34,320.9 | $ | 38,605.1 |
(A) | Cost for fixed maturities represents original cost, reduced by repayments and writedowns and adjusted for amortization of premiums or accretion of discount; for equity securities, cost represents original cost reduced by writedowns; for other limited partnership interests, cost represents original cost adjusted for equity in earnings and distributions. |
2007 | 2006 | |||||||
(In Millions) | ||||||||
ASSETS | ||||||||
Investment: | ||||||||
Fixed maturities: | ||||||||
Available for sale, at estimated fair value (amortized | ||||||||
cost of $26,683.9 and $28,192.9, respectively) | $ | 26,838.9 | $ | 28,714.3 | ||||
Mortgage loans on real estate | 3,730.6 | 3,240.7 | ||||||
Equity real estate | 382.0 | 397.2 | ||||||
Policy loans | 3,692.6 | 3,651.8 | ||||||
Investments in and loans to affiliates | 1,659.1 | 1,735.4 | ||||||
Other equity investments | 1,520.3 | 1,316.2 | ||||||
Other invested assets | 996.0 | 865.7 | ||||||
Total investments | 38,819.5 | 39,921.3 | ||||||
Cash and cash equivalents | 513.5 | 478.9 | ||||||
Deferred policy acquisition costs | 8,992.3 | 8,286.3 | ||||||
Amounts due from reinsurers | 1,773.0 | 1,614.5 | ||||||
Other assets | 2,495.7 | 2,558.9 | ||||||
Loans to affiliates | 638.3 | 400.0 | ||||||
Prepaid pension asset | 199.3 | 114.9 | ||||||
Separate Accounts assets | 96,539.6 | 84,801.6 | ||||||
Total Assets | $ | 149,971.2 | $ | 138,176.4 | ||||
LIABILITIES | ||||||||
Policyholders’ account balances | $ | 24,743.4 | $ | 26,021.8 | ||||
Future policy benefits and other policyholders liabilities | 14,181.7 | 13,959.2 | ||||||
Short-term and long-term debt | 773.2 | 773.1 | ||||||
Income taxes payable | 2,317.3 | 2,064.3 | ||||||
Other liabilities | 1,230.0 | 1,074.0 | ||||||
Separate Accounts liabilities | 96,539.6 | 84,801.6 | ||||||
Total liabilities | 139,785.2 | 128,694.0 | ||||||
SHAREHOLDER’S EQUITY | ||||||||
Common stock, $1.25 par value, 2.0 million shares authorized, issued | ||||||||
and outstanding | 2.5 | 2.5 | ||||||
Capital in excess of par value | 5,265.4 | 5,139.6 | ||||||
Retained earnings | 5,186.0 | 4,507.6 | ||||||
Accumulated other comprehensive loss | (267.9 | ) | (167.3 | ) | ||||
Total shareholder’s equity | 10,186.0 | 9,482.4 | ||||||
Total Liabilities and Shareholder’s Equity | $ | 149,971.2 | $ | 138,176.4 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
REVENUES | ||||||||||||
Universal life and investment-type product policy fee income | $ | 2,741.6 | $ | 2,252.6 | $ | 1,888.1 | ||||||
Premiums | 800.0 | 813.9 | 877.2 | |||||||||
Net investment income | 2,544.4 | 2,232.1 | 2,416.1 | |||||||||
Investment (losses) gains, net | (39.0 | ) | (4.0 | ) | 14.1 | |||||||
Equity in earnings of subsidiaries | 345.5 | 308.7 | 236.2 | |||||||||
Commissions, fees and other income | 767.9 | 576.4 | 494.9 | |||||||||
Total revenues | 7,160.4 | 6,179.7 | 5,926.6 | |||||||||
BENEFITS AND OTHER DEDUCTIONS | ||||||||||||
Policyholders’ benefits | 1,993.5 | 1,956.0 | 1,862.8 | |||||||||
Interest credited to policyholders’ account balances | 1,044.4 | 1,061.3 | 1,044.5 | |||||||||
Compensation and benefits | 734.2 | 690.5 | 535.8 | |||||||||
Commissions | 1,835.3 | 1,474.9 | 1,243.9 | |||||||||
Interest expense | 48.8 | 47.6 | 52.8 | |||||||||
Amortization of deferred policy acquisition costs | 1,095.2 | 684.5 | 596.7 | |||||||||
Capitalization of deferred policy acquisition costs | (1,718.7 | ) | (1,363.0 | ) | (1,198.9 | ) | ||||||
Rent expense | 47.4 | 41.3 | 45.2 | |||||||||
Amortization and depreciation | 65.8 | 70.4 | 67.6 | |||||||||
Premium taxes | 41.5 | 37.2 | 35.3 | |||||||||
Other operating costs and expenses | 307.9 | 266.8 | 283.6 | |||||||||
Total benefits and other deductions | 5,495.3 | 4,967.5 | 4,569.3 | |||||||||
Earnings from continuing operations before income taxes | 1,665.1 | 1,212.2 | 1,357.3 | |||||||||
Income tax expense | (428.4 | ) | (164.7 | ) | (305.8 | ) | ||||||
Earnings from continuing operations | 1,236.7 | 1,047.5 | 1,051.5 | |||||||||
Equity in (losses) earnings from discontinued operations, net of income taxes | (5.9 | ) | 31.2 | 22.3 | ||||||||
Equity in gains (losses) on sale of discontinued operations, net of income taxes | 2.8 | (1.9 | ) | - | ||||||||
Net Earnings | $ | 1,233.6 | $ | 1,076.8 | $ | 1,073.8 |
2007 | 2006 | 2005 | ||||||||
(In Millions) | ||||||||||
Net earnings | $ | 1,233.6 | $ | 1,076.8 | $ | 1,073.8 | ||||
Adjustments to reconcile net earnings to net cash | ||||||||||
provided by operating activities: | ||||||||||
Interest credited to policyholders’ account balances | 1,044.4 | 1,061.3 | 1,044.5 | |||||||
Universal life and investment-type policy fee income | (2,741.6 | ) | (2,252.6 | ) | (1,888.1 | ) | ||||
Investment losses (gains) net | 39.0 | 4.0 | (14.1 | ) | ||||||
Equity in net earnings of subsidiaries | (345.5 | ) | (309.5 | ) | (236.2 | ) | ||||
Dividends from subsidiaries | 442.5 | 277.1 | 232.1 | |||||||
Change in deferred policy acquisition costs | (623.5 | ) | (678.5 | ) | (602.2 | ) | ||||
Change in future policy benefits and other policyholder funds | 96.9 | 52.0 | 75.7 | |||||||
Change in prepaid pension asset | (2.3 | ) | 51.6 | (16.9 | ) | |||||
Change in fair value of guaranteed minimum income benefit reinsurance contract | (6.9 | ) | 14.8 | (42.6 | ) | |||||
Change in amounts due to (from) affiliates | (6.4 | ) | 125.1 | (32.1 | ) | |||||
Change in income tax payable | 442.7 | 314.4 | 266.6 | |||||||
Amortization and depreciation | 71.7 | 95.7 | 94.6 | |||||||
Other, net | 182.8 | 490.2 | 59.2 | |||||||
Net cash provided by (used in) operating activities | (172.6 | ) | 322.4 | 14.3 | ||||||
Cash flows from investing activities: | ||||||||||
Maturities and repayments | 2,115.7 | 2,906.1 | 2,868.5 | |||||||
Sales | 2,125.5 | 1,543.6 | 2,450.9 | |||||||
Purchases | (3,397.0 | ) | (3,983.3 | ) | (5,827.2 | ) | ||||
Change in short-term investments | 107.0 | 65.6 | 13.8 | |||||||
Change in policy loans | (40.7 | ) | (46.7 | ) | (0.2 | ) | ||||
Other, net | (433.6 | ) | (445.4 | ) | (238.3 | ) | ||||
Net cash provided by (used in) investing activities | 476.9 | 39.9 | (732.5 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Policyholders’ account balances: | ||||||||||
Deposits | 4,127.6 | 3,897.7 | 3,821.9 | |||||||
Withdrawals and transfers to Separate Accounts | (3,812.8 | ) | (3,552.2 | ) | (2,757.6 | ) | ||||
Shareholder dividends paid | (600.0 | ) | (600.0 | ) | (500.0 | ) | ||||
Repayment of long-term debt | - | - | (400.0 | ) | ||||||
Increase in loans from affiliates | - | - | 325.0 | |||||||
Other, net | 15.5 | 4.5 | (1.9 | ) | ||||||
Net cash (used in) provided by financing activities | (269.7 | ) | (250.0 | ) | 487.4 | |||||
Change in cash and cash equivalents | 34.6 | 112.3 | (230.8 | ) | ||||||
Cash and cash equivalents, beginning of year | 478.9 | 366.6 | 597.4 | |||||||
Cash and Cash Equivalents, End of Year | $ | 513.5 | $ | 478.9 | $ | 366.6 | ||||
Supplemental cash flow information: | ||||||||||
Interest Paid | $ | 29.2 | $ | 27.8 | $ | 43.2 | ||||
Income Taxes Paid | $ | 115.0 | $ | 77.3 | $ | 90.0 |
Segment | Deferred Policy Acquisition Costs | Policyholders’ Account Balances | Future Policy Benefits And Other Policyholders’ Funds | Policy Charges and Premium Revenue | (1) Net Investment Income | Policyholders’ Benefits and Interest Credited | Amortization of Deferred Policy Acquisition Costs | (2) Other Operating Expense | |||||||||||||||||
(In Millions) | |||||||||||||||||||||||||
Insurance | $ | 9,019.3 | $ | 25,168.2 | $ | 14,304.7 | $ | 3,546.6 | $ | 2,548.4 | $ | 3,063.7 | $ | 1,099.2 | $ | 1,476.2 | |||||||||
Investment | |||||||||||||||||||||||||
Management | - | - | - | - | 128.9 | - | - | 3,177.9 | |||||||||||||||||
Consolidation/ | |||||||||||||||||||||||||
elimination | - | - | - | - | 17.7 | - | - | (91.4 | ) | ||||||||||||||||
Total | $ | 9,019.3 | $ | 25,168.2 | $ | 14,304.7 | $ | 3,546.6 | $ | 2,695.0 | $ | 3,063.7 | $ | 1,099.2 | $ | 4,562.7 |
(1) | Net investment income is based upon specific identification of portfolios within segments. |
(2) | Operating expenses are principally incurred directly by a segment. |
Segment | Deferred Policy Acquisition Costs | Policyholders’ Account Balances | Future Policy Benefits And Other Policyholders’ Funds | Policy Charges and Premium Revenue | (1) Net Investment Income | Policyholders’ Benefits and Interest Credited | Amortization of Deferred Policy Acquisition Costs | (2) Other Operating Expense | |||||||||||||||||
(In Millions) | |||||||||||||||||||||||||
Insurance | $ | 8,316.5 | $ | 26,439.0 | $ | 14,085.4 | $ | 3,070.5 | $ | 2,237.1 | $ | 3,043.0 | $ | 689.3 | $ | 1,352.7 | |||||||||
Investment | |||||||||||||||||||||||||
Management | - | - | - | - | 134.2 | - | - | 2,812.7 | |||||||||||||||||
Consolidation/ | |||||||||||||||||||||||||
elimination | - | - | - | - | 17.9 | - | - | (90.0 | ) | ||||||||||||||||
Total | $ | 8,316.5 | $ | 26,439.0 | $ | 14,085.4 | $ | 3,070.5 | $ | 2,389.2 | $ | 3,043.0 | $ | 689.3 | $ | 4,075.4 |
(1) | Net investment income is based upon specific identification of portfolios within segments. |
(2) | Operating expenses are principally incurred directly by a segment. |
Segment | Policy Charges and Premium Revenue | (1) Net Investment Income | Policyholders’ Benefits and Interest Credited | Amortization of Deferred Policy Acquisition Costs | (2) Other Operating Expense | |||||||||||||||
(In Millions) | ||||||||||||||||||||
Insurance | $ | 2,771.0 | $ | 2,415.1 | $ | 2,925.3 | $ | 601.3 | $ | 1,117.5 | ||||||||||
Investment Management | - | 49.1 | - | - | 2,340.8 | |||||||||||||||
Consolidation/Elimination | - | 17.6 | - | - | (84.7 | ) | ||||||||||||||
Total | $ | 2,771.0 | $ | 2,481.8 | $ | 2,925.3 | $ | 601.3 | $ | 3,373.6 |
(1) | Net investment income is based upon specific identification of portfolios within segments. |
(2) | Operating expenses are principally incurred directly by a segment. |
Assumed | Percentage | |||||||||||||
Ceded to | from | of Amount | ||||||||||||
Gross | Other | Other | Net | Assumed | ||||||||||
Amount | Companies | Companies | Amount | to Net | ||||||||||
(Dollars In Millions) | ||||||||||||||
2007 | ||||||||||||||
Life Insurance In-Force | $ | 319,395.8 | $ | 129,342.7 | $ | 42,201.0 | $ | 232,254.1 | 18.17 | % | ||||
Premiums: | ||||||||||||||
Life insurance and annuities | $ | 735.1 | $ | 159.7 | $ | 168.0 | $ | 743.4 | 22.60 | % | ||||
Accident and health | 120.0 | 83.5 | 25.0 | 61.5 | 40.65 | % | ||||||||
Total Premiums | $ | 855.1 | $ | 243.2 | $ | 193.0 | 804.9 | 23.99 | % | |||||
2006 | ||||||||||||||
Life Insurance In-Force | $ | 297,114.1 | $ | 113,545.9 | $ | 39,347.2 | $ | 222,915.4 | 17.66 | % | ||||
Premiums: | ||||||||||||||
Life insurance and annuities | $ | 732.5 | $ | 139.8 | $ | 163.7 | $ | 756.4 | 21.64 | % | ||||
Accident and health | 126.1 | 89.4 | 24.7 | 61.4 | 40.23 | % | ||||||||
Total Premiums | $ | 858.6 | $ | 229.2 | $ | 188.4 | $ | 817.8 | 23.04 | % | ||||
2005 | ||||||||||||||
Life Insurance In-Force | $ | 280,180.3 | $ | 100,893.7 | $ | 41,273.9 | $ | 220,560.5 | 18.71 | % | ||||
Premiums: | ||||||||||||||
Life insurance and annuities | $ | 778.9 | $ | 105.1 | $ | 143.8 | $ | 817.6 | 17.59 | % | ||||
Accident and health | 133.7 | 88.3 | 18.7 | 64.1 | 29.17 | % | ||||||||
Total Premiums | $ | 912.6 | $ | 193.4 | $ | 162.5 | $ | 881.7 | 18.43 | % | ||||
(A) | Includes amounts related to the discontinued group life and health business. |
2007 | 2006 | |||||||
(In Thousands) | ||||||||
Principal Accounting Fees and Services: | ||||||||
Audit fees | $ | 19,470 | $ | 21,325 | ||||
Audit related fees | 2,626 | 2,187 | ||||||
Tax fees | 2,158 | 1,845 | ||||||
All other fees | 175 | 78 | ||||||
Total | $ | 24,429 | $ | 25,435 |
(A) | The following documents are filed as part of this report: |
1. | Financial Statements |
2. | Consolidated Financial Statement Schedules |
3. | Exhibits |
Date: | March 12, 2008 | AXA EQUITABLE LIFE INSURANCE COMPANY |
By: | /s/ Christopher M. Condron | |||
Name: | Christopher M. Condron | |||
Chairman of the Board, President and Chief Executive Officer, Director |
/s/ Christopher M. Condron | Chairman of the Board, President and Chief | March 12, 2008 | ||
Christopher M. Condron | Executive Officer, Director | |||
/s/ Richard S. Dziadzio | Executive Vice President and | March 12, 2008 | ||
Richard S. Dziadzio | Chief Financial Officer | |||
/s/ Alvin H. Fenichel | Senior Vice President and Controller | March 12, 2008 | ||
Alvin H. Fenichel | ||||
/s/ Henri de Castries | Director | March 12, 2008 | ||
Henri de Castries | ||||
/s/ Bruce W. Calvert | Director | March 12, 2008 | ||
Bruce W. Calvert | ||||
/s/ Denis Duverne | Director | March 12, 2008 | ||
Denis Duverne | ||||
/s/ Charlynn Goins | Director | March 12, 2008 | ||
Charlynn Goins | ||||
/s/Anthony J. Hamilton | Director | March 12, 2008 | ||
Anthony J. Hamilton | ||||
/s/ Mary R. Henderson | Director | March 12, 2008 | ||
Mary R. Henderson | ||||
/s/ James F. Higgins | Director | March 12, 2008 | ||
James F. Higgins |
/s/ Scott D. Miller | Director | March 12, 2008 | ||
Scott D. Miller | ||||
/s/ Joseph H. Moglia | Director | March 12, 2008 | ||
Joseph H. Moglia | ||||
/s/ Lorie A. Slutsky | Director | March 12, 2008 | ||
Lorie A. Slutsky | ||||
/s/ Ezra Suleiman | Director | March 12, 2008 | ||
Ezra Suleiman | ||||
/s/ Peter J. Tobin | Director | March 12, 2008 | ||
Peter J. Tobin |
Tag | ||||||
Number | Description | Method of Filing | Value | |||
2.1 | Stock Purchase Agreement dated as of August 30, 2000 among CSG, AXA, Equitable Life, AXA Participations Belgium and AXA Financial | Filed as Exhibit 2.1 to AXA Financial’s Current Report on Form 8-K dated November 14, 2000 and incorporated herein by reference | ||||
2.2 | Letter Agreement dated as of October 6, 2000 to the Stock Purchase Agreement among CSG, AXA, Equitable Life, AXA Participations Belgium and AXA Financial | Filed as Exhibit 2.2 to AXA Financial’s Current Report on Form 8-K dated November 14, 2000 and incorporated herein by reference | ||||
3.1 | Restated Charter of Equitable Life, as amended January 1, 1997 | Filed as Exhibit 3.1(a) to registrant’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference | ||||
3.2 | Restated Charter of AXA Equitable, as amended December 6, 2004 | Filed as Exhibit 3.2 to registrant’s Annual Report on Form 10-K for the year ended December 31, 3004 and incorporated herein by reference | ||||
3.3 | Restated By-laws of Equitable Life, as amended November 21, 1996 | Filed as Exhibit 3.2(a) to registrant’s Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference | ||||
10.1 | Cooperation Agreement, dated as of July 18, 1991, as amended among Equitable Life, AXA Financial and AXA | Filed as Exhibit 10(d) to AXA Financial’s Form S-1 Registration Statement (No. 33-48115), dated May 26, 1992 and incorporated herein by reference | ||||
10.2 | Letter Agreement, dated May 12, 1992, among AXA Financial, Equitable Life and AXA | Filed as Exhibit 10(e) to AXA Financial’s Form S-1 Registration Statement (No. 33-48115), dated May 26, 1992 and incorporated herein by reference | ||||
10.3 | Amended and Restated Reinsurance Agreement, dated as of March 29, 1990, between Equitable Life and First Equicor Life Insurance Company | Filed as Exhibit 10(o) to AXA Financial’s Form S-1 Registration Statement (No. 33-48115), dated May 26, 1992 and incorporated herein by reference | ||||
10.4 | Fiscal Agency Agreement between Equitable Life and The Chase Manhattan Bank, N.A. | Filed as Exhibit 10.5 to registrant’s Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by reference | ||||
Tag | ||||||
Number | Description | Method of Filing | Value | |||
10.5 | Distribution and Servicing Agreement between AXA Advisors (as successor to Equico Securities, Inc.) and Equitable Life dated as of May 1, 1994 | Filed as Exhibit 10.7 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference | ||||
10.6 | Agreement for Cooperative and Joint Use of Personnel, Property and Services between Equitable Life and AXA Advisors dated as of September 21, 1999 | Filed as Exhibit 10.8 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference | ||||
10.7 | General Agent Sales Agreement between Equitable Life and AXA Network dated as of January 1, 2000 | Filed as Exhibit 10.9 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference | ||||
10.8 | Agreement for Services by Equitable Life to AXA Network dated as of January 1, 2000 | Filed as Exhibit 10.10 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference | ||||
13.1 | AllianceBernstein Risk Factors | Filed herewith | EX-13.1 | |||
21 | Subsidiaries of the registrant | Omitted pursuant to General Instruction I of Form 10-K | ||||
31.1 | Section 302 Certification made by the registrant’s Chief Executive Officer | Filed herewith | EX-31.1 | |||
31.2 | Section 302 Certification made by the registrant’s Chief Financial Officer | Filed herewith | EX-31.2 | |||
32.1 | Section 906 Certification made by the registrant’s Chief Executive Officer | Filed herewith | EX-32.1 | |||
32.2 | Section 906 Certification made by the registrant’s Chief Financial Officer | Filed herewith | EX-32.2 |