UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K | |
(Mark One) | |
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 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-11166 AXA FINANCIAL, INC. (Exact name of registrant as specified in its charter) |
Delaware | 13-3623351 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1290 Avenue of the Americas, New York, New York | 10104 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (212) 554-1234 | ||
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Name of each exchange on which registered | |
None | None | |
Securities registered pursuant to Section 12(g) of the Act: | ||
None | ||
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company o |
Part I | ||
Item 1. | Business | 1-1 |
Overview | 1-1 | |
Segment Information | 1-1 | |
Employees and Financial Professionals | 1-6 | |
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 | $ | 36,300.6 | 72.8 | % | ||||
Mortgages | 5,210.4 | 10.4 | ||||||
Equity real estate | 382.3 | 0.8 | ||||||
Other equity investments | 1,679.4 | 3.4 | ||||||
Policy loans | 5,035.8 | 10.1 | ||||||
Cash and short-term investments (2) | 1,245.2 | 2.5 | ||||||
Total | $ | 49,853.7 | 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 Financial Advisory/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 | (6.7 | ) | 12.0 | |||||
Disposal of business - Enterprise | (2.4 | ) | (6.1 | ) | ||||
Total | $ | (9.2 | ) | $ | 36.1 | |||
(Losses) Gains on Disposal of Discontinued Operations, Net of Income Taxes: | ||||||||
Real estate held-for-sale | $ | 3.1 | $ | 62.1 | ||||
Discontinued Investment Banking and Brokerage segment | - | 53.9 | ||||||
Disposal of business - Advest | - | 4.1 | ||||||
Disposal of business - Enterprise | (6.7 | ) | (2.9 | ) | ||||
Total | $ | (3.6 | ) | $ | 117.2 |
2007 | 2006 | |||||||
Universal life and investment-type product policy fee income | $ | 2,973.1 | $ | 2,468.3 | ||||
Premiums | 1,561.6 | 1,581.6 | ||||||
Net investment income | 3,235.7 | 2,943.4 | ||||||
Investment losses, net | (63.2 | ) | (8.2 | ) | ||||
Commissions, fees and other income | 1,167.2 | 938.7 | ||||||
Total revenues | 8,874.4 | 7,923.8 | ||||||
Policyholders’ benefits | 3,089.8 | 2,997.6 | ||||||
Interest credited to policyholders’ account balances | 1,192.3 | 1,216.5 | ||||||
Compensation and benefits | 1,104.2 | 1,035.3 | ||||||
Commission costs | 1,624.7 | 1,295.3 | ||||||
Interest expense | 177.5 | 180.7 | ||||||
Amortization of DAC and VOBA | 1,217.5 | 812.6 | ||||||
Capitalization of DAC | (1,806.1 | ) | (1,458.8 | ) | ||||
Rent expense | 99.4 | 89.2 | ||||||
Amortization of other intangible assets, net | 33.7 | 4.8 | ||||||
All other operating costs and expenses | 799.5 | 798.4 | ||||||
Total benefits and other deductions | 7,532.5 | 6,971.6 | ||||||
Earnings from Continuing Operations before | ||||||||
Income Taxes and Minority Interest | $ | 1,341.9 | $ | 952.2 |
2007 | 2006 | |||||||
Revenues: | ||||||||
Investment advisory and services fees (1) | $ | 3,386.2 | $ | 2,890.2 | ||||
Distribution revenues | 473.4 | 421.0 | ||||||
Institutional research services | 423.6 | 375.1 | ||||||
Other revenues (1) | 126.8 | 124.3 | ||||||
Commissions, fees and other income | 4,410.0 | 3,810.6 | ||||||
Investment income | 313.7 | 328.7 | ||||||
Less: interest expense to finance trading activities | (194.4 | ) | (187.8 | ) | ||||
Net investment income | 119.3 | 140.9 | ||||||
Investment gains, net | 32.6 | 53.2 | ||||||
Total revenues | 4,561.9 | 4,004.7 | ||||||
Expenses: | ||||||||
Compensation and benefits | 1,864.5 | 1,570.2 | ||||||
Distribution plan payments | 335.1 | 292.9 | ||||||
Amortization of deferred sales commissions | 95.5 | 100.4 | ||||||
Interest expense | 78.8 | 78.6 | ||||||
Rent expense | 170.5 | 155.7 | ||||||
Amortization of other intangible assets, net �� | 34.9 | 27.6 | ||||||
Other operating costs and expenses | 676.0 | 651.0 | ||||||
Total expenses | 3,255.3 | 2,876.4 | ||||||
Earnings from Continuing Operations before | ||||||||
Income Taxes and Minority Interest | $ | 1,306.6 | $ | 1,128.3 |
(1) | Included fees earned by AllianceBernstein totaling $41.3 million and $41.8 million in 2007 and 2006, respectively, for services provided to the Insurance Group. |
December 31, | ||||||||
2007 | 2006 | |||||||
Third party (1) | $ | 734,774 | $ | 651,562 | ||||
General Account and other (2) | 53,676 | 54,688 | ||||||
Insurance Group Separate Accounts | 100,175 | 88,758 | ||||||
Total Assets Under Management | $ | 888,625 | $ | 795,008 |
(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 AXA Financial Group not managed by AllianceBernstein, principally cash and short-term investments and policy loans, totaling approximately $12.5 billion and $11.3 billion at December 31, 2007 and 2006, respectively, as well as mortgages and equity real estate totaling $5.8 billion and $5.42 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) | $ | 98,058.8 | $ | 3,580.6 | $ | 7,135.6 | $ | 6,450.0 | $ | 80,892.6 | ||||||||||
Long-term debt | 1,830.2 | 498.3 | 780.0 | - | 551.9 | |||||||||||||||
Operating leases | 2,998.3 | 219.9 | 412.8 | 362.9 | 2,002.7 | |||||||||||||||
Employee benefits | 1,006.5 | 101.3 | 211.9 | 204.9 | 488.4 | |||||||||||||||
Total Contractual | ||||||||||||||||||||
Obligations | $ | 103,893.8 | $ | 4,400.1 | $ | 8,540.3 | $ | 7,017.8 | $ | 83,935.6 |
(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 AXA Financial Group’s experience and assume market growth and interest crediting consistent with assumptions used in amortizing DAC and VOBA. 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 | |||||||||||||
Insurance Group | ||||||||||||||||
Continuing Operations: | ||||||||||||||||
Fixed maturities: | ||||||||||||||||
Fixed rate | $ | 35,925.5 | $ | 34,065.9 | $ | 38,068.7 | $ | 36,139.7 | ||||||||
Floating rate | 356.6 | 356.1 | 279.5 | 278.9 | ||||||||||||
Mortgage loans | 5,237.0 | 5,002.8 | 4,703.0 | 4,503.6 | ||||||||||||
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 | ||||||||||||
AXA Financial | ||||||||||||||||
Fixed maturities: | ||||||||||||||||
Fixed rate | $ | 5.0 | $ | 4.7 | $ | 11.5 | $ | 11.1 |
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 | $ | 25.6 | $ | 23.1 | $ | 262.8 | $ | 236.5 | ||||||||
AXA Financial | $ | .2 | $ | .2 | $ | 1.4 | $ | 1.3 |
Interest Rate Sensitivity | ||||||||||||||||||||
Notional Amount | Weighted Average | Balance After -100 Basis | Fair Value | Balance After +100 Basis | ||||||||||||||||
December 31, 2007 | ||||||||||||||||||||
Insurance Group: | ||||||||||||||||||||
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 | ) | ||||||||||||||
AXA Financial: | ||||||||||||||||||||
3 rd party swaps | 850.0 | 1.5 | (6.8 | ) | 4.8 | 16.5 | ||||||||||||||
Total | $ | 29,134.4 | $ | 266.7 | $ | 172.6 | $ | (142.7 | ) | |||||||||||
December 31, 2006 | ||||||||||||||||||||
Insurance Group: | ||||||||||||||||||||
Options: | ||||||||||||||||||||
Floors | $ | 32,000.0 | 2.88 | $ | 30.2 | $ | 8.7 | $ | 4.3 | |||||||||||
Futures | 565.8 | .22 | 40.5 | - | (40.5 | ) | ||||||||||||||
AXA Financial: | ||||||||||||||||||||
Swaps with AXA | 1,280.0 | 2.0 | 16.6 | 39.2 | 61.8 | |||||||||||||||
3 rd party swaps | 1,080.0 | .29 | (10.8 | ) | (13.2 | ) | (15.9 | ) | ||||||||||||
Total | $ | 34,925.8 | $ | 76.5 | $ | 34.7 | $ | 9.7 | ||||||||||||
Equity Sensitivity | ||||||||||||||||
Fair Value | -10% Equity Balance after Price Shift | |||||||||||||||
December 31, 2007 | ||||||||||||||||
Insurance Group: | ||||||||||||||||
Futures | $ | (5,081.1 | ) | .22 | $ | - | $ | 508.1 | ||||||||
December 31, 2006 | ||||||||||||||||
Insurance Group: | ||||||||||||||||
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 | |||||||||||||
Insurance Group | ||||||||||||||||
Continuing Operations: | ||||||||||||||||
Fixed rate | $ | 227.3 | $ | 241.6 | $ | 232.5 | $ | 248.6 | ||||||||
AXA Financial | ||||||||||||||||
Fixed rate | $ | 1,218.5 | $ | 1,283.4 | $ | 1,481.1 | $ | 1,558.3 |
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 |
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 | |||||||||||||
Equity Investments: | ||||||||||||||||
Trading | $ | 466.1 | $ | 419.5 | $ | 432.1 | $ | 388.9 | ||||||||
Available for sale and other | ||||||||||||||||
investments | 314.5 | 283.0 | 251.8 | 226.7 |
Interest Rate Risk Exposure
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Debt |
| $ | 534.0 |
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| $ | 557.5 |
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| $ | 534.0 |
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| $ | 335.0 |
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| $ | 349.4 |
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| $ | 335.0 |
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For further information on AllianceBernstein’s market risk, see AllianceBernstein and AllianceBernstein Holding’s Annual Reports on Form 10-K for the year ended December 31, 2007.
Reports of Independent Registered Public Accounting Firms: | |
Report of PricewaterhouseCoopers LLP on AXA Financial, Inc. | 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 Consolidated Financial Statement Schedules | F-65 |
Consolidated Financial Statement Schedules: | |
Schedule I - Summary of Investments - Other than Investments in Related Parties, | |
December 31, 2007 | F-66 |
Schedule II - Balance Sheets (Parent Company), December 31, 2007 and 2006 | F-67 |
Schedule II - Statements of Earnings (Parent Company), | |
Years Ended December 31, 2007, 2006 and 2005 | F-68 |
Schedule II - Statements of Cash Flows (Parent Company), | |
Years Ended December 31, 2007, 2006 and 2005 | F-69 |
Schedule III - Supplementary Insurance Information, | |
Years Ended December 31, 2007, 2006 and 2005 | F-70 |
Schedule IV - Reinsurance, Years Ended December 31, 2007, 2006 and 2005 | F-73 |
Report of Independent Registered Public Accounting Firm
The General Partner and Unitholders
AllianceBernstein L.P.:
We have audited the accompanying consolidated statements of income, changes in partners’ capital and comprehensive income and cash flows for the year ended December 31, 2005 of AllianceBernstein L.P. and subsidiaries (“AllianceBernstein”), formerly Alliance Capital Management L.P. These consolidated financial statements are the responsibility of the management of the General Partner. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of AllianceBernstein for the year ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
February 24, 2006
Report of Independent Registered Public Accounting Firm
The General Partner and Unitholders
AllianceBernstein Holding L.P.:
We have audited the accompanying statements of income, changes in partners’ capital and comprehensive income and cash flows for the year ended December 31, 2005 of AllianceBernstein Holding L.P. (“AllianceBernstein Holding”), formerly Alliance Capital Management Holding L.P. These financial statements are the responsibility of the management of the General Partner. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of AllianceBernstein Holding for the year ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
February 24, 2006
2007 | 2006 | |||||||
(In Millions) | ||||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed maturities available for sale, at estimated fair value | $ | 35,663.7 | $ | 37,991.8 | ||||
Mortgage loans on real estate | 5,210.4 | 4,664.6 | ||||||
Equity real estate, held for the production of income | 382.0 | 412.9 | ||||||
Policy loans | 5,037.3 | 5,007.5 | ||||||
Other equity investments | 1,997.2 | 1,735.3 | ||||||
Trading securities | 573.3 | 465.1 | ||||||
Other invested assets | 1,212.4 | 1,119.6 | ||||||
Total investments | 50,076.3 | 51,396.8 | ||||||
Cash and cash equivalents | 2,055.8 | 1,771.6 | ||||||
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 | 9,369.9 | 8,609.9 | ||||||
Goodwill and other intangible assets, net | 5,380.7 | 4,868.9 | ||||||
Value of business acquired | 610.2 | 689.5 | ||||||
Amounts due from reinsurers | 3,435.7 | 3,339.3 | ||||||
Loans to affiliates | 691.4 | 400.0 | ||||||
Other assets | 3,647.7 | 3,585.8 | ||||||
Separate Accounts’ assets | 100,011.1 | 88,593.1 | ||||||
Total Assets | $ | 179,272.3 | $ | 168,745.7 | ||||
LIABILITIES | ||||||||
Policyholders’ account balances | $ | 28,420.5 | $ | 29,895.6 | ||||
Future policy benefits and other policyholders liabilities | 22,934.1 | 22,754.7 | ||||||
Broker-dealer related payables | 595.1 | 954.9 | ||||||
Customers related payables | 2,722.2 | 3,980.8 | ||||||
Short-term and long-term debt | 2,381.5 | 2,190.2 | ||||||
Loans from affiliates | 1,345.0 | 1,280.0 | ||||||
Income taxes payable | 2,580.3 | 2,120.3 | ||||||
Other liabilities | 4,936.6 | 5,037.9 | ||||||
Separate Accounts’ liabilities | 100,011.1 | 88,593.1 | ||||||
Minority interest in equity of consolidated subsidiaries | 1,681.2 | 1,631.6 | ||||||
Minority interest subject to redemption rights | 142.7 | 288.0 | ||||||
Total liabilities | 167,750.3 | 158,727.1 | ||||||
Commitments and contingent liabilities (Notes 2, 5, 12, 13, 18 and 19) | ||||||||
SHAREHOLDER’S EQUITY | ||||||||
Common stock, $.01 par value, 500 million shares authorized, | ||||||||
436.2 million shares issued and outstanding | 3.9 | 3.9 | ||||||
Capital in excess of par value | 1,250.0 | 1,122.4 | ||||||
Retained earnings | 10,863.8 | 9,494.7 | ||||||
Accumulated other comprehensive loss | (478.8 | ) | (378.9 | ) | ||||
Treasury shares, at cost | (116.9 | ) | (223.5 | ) | ||||
Total shareholder’s equity | 11,522.0 | 10,018.6 | ||||||
Total Liabilities and Shareholder’s Equity | $ | 179,272.3 | $ | 168,745.7 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
REVENUES | ||||||||||||
Universal life and investment-type product policy fee income | $ | 2,973.1 | $ | 2,468.3 | $ | 2,090.2 | ||||||
Premiums | 1,561.6 | 1,581.6 | 1,648.8 | |||||||||
Net investment income | 3,393.0 | 3,106.6 | 3,200.1 | |||||||||
Investment (losses) gains, net | (30.6 | ) | 45.0 | 56.4 | ||||||||
Commissions, fees and other income | 5,447.8 | 4,637.0 | 3,886.6 | |||||||||
Total revenues | 13,344.9 | 11,838.5 | 10,882.1 | |||||||||
BENEFITS AND OTHER DEDUCTIONS | ||||||||||||
Policyholders’ benefits | 3,089.8 | 2,997.6 | 2,842.4 | |||||||||
Interest credited to policyholders’ account balances | 1,192.3 | 1,216.5 | 1,206.9 |
Compensation and benefits | 2,968.3 | 2,605.2 | 2,272.6 | |||||||||
Commissions | 1,624.7 | 1,295.3 | 1,104.9 | |||||||||
Distribution plan payments | 335.1 | 292.9 | 292.0 | |||||||||
Amortization of deferred sales commissions | 95.5 | 100.4 | 132.0 | |||||||||
Interest expense | 256.3 | 259.3 | 256.9 | |||||||||
Amortization of deferred policy acquisition costs and | ||||||||||||
value of business acquired | 1,217.5 | 812.6 | 682.0 | |||||||||
Capitalization of deferred policy acquisition costs | (1,806.1 | ) | (1,458.8 | ) | (1,347.6 | ) | ||||||
Rent expense | 269.9 | 244.9 | 226.6 | |||||||||
Amortization of other intangible assets | 68.6 | 32.4 | 32.4 | |||||||||
Other operating costs and expenses | 1,384.6 | 1,359.7 | 1,111.8 | |||||||||
Total benefits and other deductions | 10,696.5 | 9,758.0 | 8,812.9 | |||||||||
Earnings from continuing operations before | ||||||||||||
income taxes and minority interest | 2,648.4 | 2,080.5 | 2,069.2 | |||||||||
Income taxes | (844.6 | ) | (515.9 | ) | (591.5 | ) | ||||||
Minority interest in net income of consolidated subsidiaries | (466.7 | ) | (436.7 | ) | (338.7 | ) | ||||||
Earnings from continuing operations | 1,337.1 | 1,127.9 | 1,139.0 | |||||||||
(Losses) earnings from discontinued operations, net of income taxes | (9.2 | ) | 36.1 | 20.2 | ||||||||
(Losses) gains on disposal of discontinued operations, | ||||||||||||
net of income taxes | (3.6 | ) | 117.2 | (85.4 | ) | |||||||
Net Earnings | $ | 1,324.3 | 1,281.2 | $ | 1,073.8 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
SHAREHOLDER’S EQUITY | ||||||||||||
Common stock, at par value, beginning and end of year | $ | 3.9 | $ | 3.9 | $ | 3.9 | ||||||
Capital in excess of par value, beginning of year | 1,122.4 | 1,047.8 | 1,073.5 | |||||||||
Changes in capital in excess of par value | 127.6 | 74.6 | (25.7 | ) | ||||||||
Capital in excess of par value, end of year | 1,250.0 | 1,122.4 | 1,047.8 | |||||||||
Retained earnings, beginning of year | 9,494.7 | 8,213.5 | 7,139.7 | |||||||||
Cumulative effect adjustment to adopt FIN 48 | 44.8 | - | - | |||||||||
Retained earnings, beginning of year as adjusted | 9,539.5 | 8,213.5 | 7,139.7 | |||||||||
Net earnings | 1,324.3 | 1,281.2 | 1,073.8 | |||||||||
Retained earnings, end of year | 10,863.8 | 9,494.7 | 8,213.5 | |||||||||
Accumulated other comprehensive (loss) income, | ||||||||||||
beginning of year | (378.9 | ) | 345.5 | 866.1 | ||||||||
Other comprehensive loss | (99.9 | ) | (142.7 | ) | (520.6 | ) | ||||||
Adjustment to initially apply SFAS No. 158, | ||||||||||||
net of income taxes | - | (581.7 | ) | - | ||||||||
Accumulated other comprehensive (loss) income, end of year | (478.8 | ) | (378.9 | ) | 345.5 | |||||||
Treasury shares at cost, beginning of year | (223.5 | ) | (364.8 | ) | (19.4 | ) | ||||||
Changes in treasury shares | 106.6 | 141.3 | (345.4 | ) | ||||||||
Treasury shares at cost, end of year | (116.9 | ) | (223.5 | ) | (364.8 | ) | ||||||
Total Shareholder’s Equity, End of Year | $ | 11,522.0 | $ | 10,018.6 | $ | 9,245.9 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
COMPREHENSIVE INCOME | ||||||||||||
Net earnings | $ | 1,324.3 | $ | 1,281.2 | $ | 1,073.8 | ||||||
Change in unrealized losses, net of | ||||||||||||
reclassification adjustment | (223.4 | ) | (161.2 | ) | (501.9 | ) | ||||||
Defined benefit plans: | ||||||||||||
Net gain arising during year | 68.8 | - | - | |||||||||
Prior service cost arising during year | 1.7 | - | - | |||||||||
Less: reclassification adjustment for: | ||||||||||||
Amortization of net losses included in net periodic cost | 54.4 | - | - | |||||||||
Amortization of net prior service credit | ||||||||||||
included in net periodic cost | (1.3 | ) | - | - | ||||||||
Amortization of net transition asset | (.1 | ) | - | - | ||||||||
Minimum pension liability adjustment | - | 18.5 | (18.7 | ) | ||||||||
Other comprehensive income – defined benefit plans | 123.5 | 18.5 | (18.7 | ) | ||||||||
Other comprehensive loss | (99.9 | ) | (142.7 | ) | (520.6 | ) | ||||||
Comprehensive Income | $ | 1,224.4 | $ | 1,138.5 | $ | 553.2 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Net earnings | $ | 1,324.3 | $ | 1,281.2 | $ | 1,073.8 | ||||||
Adjustments to reconcile net earnings to net cash | ||||||||||||
provided by operating activities: | ||||||||||||
Interest credited to policyholders’ account balances | 1,192.3 | 1,216.5 | 1,206.9 | |||||||||
Universal life and investment-type product | ||||||||||||
policy fee income | (2,973.1 | ) | (2,468.3 | ) | (2,090.2 | ) | ||||||
Net change in broker-dealer and customer | ||||||||||||
related receivables/payables | 91.5 | 119.0 | (352.2 | ) | ||||||||
Investment losses (gains), net | 30.1 | (45.0 | ) | (56.4 | ) | |||||||
Change in deferred policy acquisition costs and | ||||||||||||
value of business acquired | (588.6 | ) | (646.2 | ) | (665.6 | ) | ||||||
Change in future policy benefits | 139.6 | 23.2 | 153.3 | |||||||||
Change in income taxes payable | 617.5 | 339.5 | 468.4 | |||||||||
Change in segregated cash and securities, net | (360.2 | ) | (245.0 | ) | (240.0 | ) | ||||||
Change in fair value of guaranteed minimum income | ||||||||||||
benefit reinsurance contracts | (6.9 | ) | 14.9 | (42.7 | ) | |||||||
Change in accounts payable and accrued expenses | 99.7 | 75.6 | 37.1 | |||||||||
Amortization of deferred sales commission | 95.5 | 100.4 | 132.0 | |||||||||
Other depreciation and amortization | 207.5 | 229.7 | 274.7 | |||||||||
Amortization of other intangible assets | 68.6 | 32.4 | 32.4 | |||||||||
Losses (gains) on disposal of discontinued operations | 3.6 | (117.2 | ) | 85.4 | ||||||||
Minority interest in net income of consolidated subsidiaries | 466.8 | 436.7 | 338.7 | |||||||||
Other, net | (214.7 | ) | 403.2 | (173.4 | ) | |||||||
Net cash provided by operating activities | 193.5 | 750.6 | 182.2 | |||||||||
Cash flows from investing activities: | ||||||||||||
Maturities and repayments | 3,078.7 | 4,256.4 | 4,189.0 | |||||||||
Sales of investments | 2,726.9 | 2,344.7 | 2,748.9 | |||||||||
Purchases of investments | (4,527.5 | ) | (6,087.1 | ) | (7,748.0 | ) | ||||||
Change in short-term investments | (24.6 | ) | 11.1 | 59.2 | ||||||||
Purchase of minority interest in consolidated subsidiary | (745.7 | ) | - | - | ||||||||
Disposition of The Advest Group, Inc. | - | - | 400.0 | |||||||||
Decrease in loans to affiliates | 400.0 | - | - | |||||||||
Increase in loans to affiliates | (704.0 | ) | - | - | ||||||||
Change in capitalized software, leasehold improvements | ||||||||||||
and EDP equipment | (217.0 | ) | (159.3 | ) | (141.5 | ) | ||||||
Other, net | (37.4 | ) | (442.9 | ) | (138.2 | ) | ||||||
Net cash used in investing activities | (50.6 | ) | (77.1 | ) | (630.6 | ) |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Cash flows from financing activities: | ||||||||||||
Policyholders’ account balances: | ||||||||||||
Deposits | $ | 4,716.3 | $ | 4,316.2 | $ | 4,649.9 | ||||||
Withdrawals and transfers to Separate Accounts | (4,591.3 | ) | (4,233.3 | ) | (3,630.2 | ) | ||||||
Proceeds in loans from affiliates | 850.0 | 335.0 | 11.1 | |||||||||
Repayments of loans from affiliates | (785.0 | ) | (635.0 | ) | - | |||||||
Net change in short-term financings | 198.2 | 337.7 | - | |||||||||
Repayments of long-term debt | - | (700.0 | ) | (675.0 | ) | |||||||
Purchases of treasury shares | (7.6 | ) | (4.3 | ) | (372.6 | ) | ||||||
Other, net | (239.3 | ) | (144.6 | ) | (266.5 | ) | ||||||
Net cash provided by (used in) financing activities | 141.3 | (728.3 | ) | (283.3 | ) | |||||||
Change in cash and cash equivalents | 284.2 | (54.8 | ) | (731.7 | ) | |||||||
Cash and cash equivalents, beginning of year | 1,771.6 | 1,826.4 | 2,558.1 | |||||||||
Cash and Cash Equivalents, End of Year | $ | 2,055.8 | $ | 1,771.6 | $ | 1,826.4 | ||||||
Supplemental cash flow information: | ||||||||||||
Interest Paid | $ | 155.6 | $ | 178.7 | $ | 217.5 | ||||||
Income Taxes Paid | $ | 154.9 | $ | 89.7 | $ | 164.4 |
1) | ORGANIZATION |
2) | SIGNIFICANT ACCOUNTING POLICIES |
• | 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. |
3) | INVESTMENTS |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(In Millions) | ||||||||||||||||
December 31, 2007 | ||||||||||||||||
Fixed Maturities: | ||||||||||||||||
Available for Sale: | ||||||||||||||||
Corporate | $ | 29,782.7 | $ | 676.6 | $ | 724.1 | $ | 29,735.2 | ||||||||
Mortgage-backed | 1,382.2 | 4.7 | 16.8 | 1,370.1 | ||||||||||||
U.S. Treasury, government | ||||||||||||||||
and agency securities | 1,862.6 | 85.6 | 1.1 | 1,947.1 | ||||||||||||
States and political | ||||||||||||||||
subdivisions | 181.1 | 17.3 | .6 | 197.8 | ||||||||||||
Foreign governments | 306.9 | 44.1 | - | 351.0 | ||||||||||||
Redeemable preferred stock | 2,155.1 | 51.7 | 144.3 | 2,062.5 | ||||||||||||
Total Available for Sale | $ | 35,670.6 | $ | 880.0 | $ | 886.9 | $ | 35,663.7 | ||||||||
Equity Securities: | ||||||||||||||||
Available for sale | $ | 49.1 | $ | 1.6 | $ | 8.6 | $ | 42.1 | ||||||||
Trading securities | 482.2 | 8.7 | 23.8 | 467.1 | ||||||||||||
Total Equity Securities | $ | 531.3 | $ | 10.3 | $ | 32.4 | $ | 509.2 | ||||||||
December 31, 2006 | ||||||||||||||||
Fixed Maturities: | ||||||||||||||||
Available for Sale: | ||||||||||||||||
Corporate | $ | 30,561.1 | $ | 728.8 | $ | 388.4 | $ | 30,901.5 | ||||||||
Mortgage-backed | 2,187.7 | 2.8 | 41.6 | 2,148.9 | ||||||||||||
U.S. Treasury, government | ||||||||||||||||
and agency securities | 2,034.1 | 38.9 | 15.5 | 2,057.5 | ||||||||||||
States and political | ||||||||||||||||
subdivisions | 181.5 | 17.8 | 1.0 | 198.3 | ||||||||||||
Foreign governments | 294.5 | 38.5 | 1.0 | 332.0 | ||||||||||||
Redeemable preferred stock | 2,305.2 | 81.2 | 32.8 | 2,353.6 | ||||||||||||
Total Available for Sale | $ | 37,564.1 | $ | 908.0 | $ | 480.3 | $ | 37,991.8 | ||||||||
Equity Securities: | ||||||||||||||||
Available for sale | $ | 119.6 | $ | 5.5 | $ | .8 | $ | 124.3 | ||||||||
Trading securities | 408.0 | 35.4 | 9.9 | 433.5 | ||||||||||||
Total Equity Securities | $ | 527.6 | $ | 40.9 | $ | 10.7 | $ | 557.8 |
Available for Sale | ||||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
(In Millions) | ||||||||
Due in one year or less | $ | 1,269.2 | $ | 1,273.5 | ||||
Due in years two through five | 9,304.2 | 9,592.7 | ||||||
Due in years six through ten | 12,943.8 | 12,816.2 | ||||||
Due after ten years | 8,616.1 | 8,548.7 | ||||||
Subtotal | 32,133.3 | 32,231.1 | ||||||
Mortgage-backed securities | 1,382.2 | 1,370.1 | ||||||
Total | $ | 33,515.5 | $ | 33,601.2 |
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 | $ | 6,526.5 | $ | 394.8 | $ | 6,854.3 | $ | 329.3 | $ | 13,380.8 | $ | 724.1 | ||||||||||||
Mortgage-backed | 30.0 | .1 | 1,072.8 | 16.7 | 1,102.8 | 16.8 | ||||||||||||||||||
U.S. Treasury, | ||||||||||||||||||||||||
government and | ||||||||||||||||||||||||
agency securities | 133.2 | .3 | 147.4 | .8 | 280.6 | 1.1 | ||||||||||||||||||
States and political | ||||||||||||||||||||||||
subdivisions | - | - | 24.7 | .6 | 24.7 | .6 | ||||||||||||||||||
Foreign governments | 12.1 | - | 5.0 | - | 17.1 | - | ||||||||||||||||||
Redeemable | ||||||||||||||||||||||||
preferred stock | 622.6 | 66.4 | 778.0 | 77.9 | 1,400.6 | 144.3 | ||||||||||||||||||
Total Temporarily | ||||||||||||||||||||||||
Impaired Securities | $ | 7,324.4 | $ | 461.6 | $ | 8,882.2 | $ | 425.3 | $ | 16,206.6 | $ | 886.9 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Impaired mortgage loans with investment valuation allowances | $ | 11.4 | $ | 91.0 | ||||
Impaired mortgage loans without investment valuation allowances | 2.7 | 7.1 | ||||||
Recorded investment in impaired mortgage loans | 14.1 | 98.1 | ||||||
Investment valuation allowances | (1.4 | ) | (13.0 | ) | ||||
Net Impaired Mortgage Loans | $ | 12.7 | $ | 85.1 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Balances, beginning of year | $ | 22.6 | $ | 13.4 | $ | 11.8 | ||||||
Additions charged to income | 20.9 | 10.1 | 5.2 | |||||||||
Deductions for writedowns and | ||||||||||||
asset dispositions | (42.1 | ) | (.9 | ) | (3.6 | ) | ||||||
Balances, End of Year | $ | 1.4 | $ | 22.6 | $ | 13.4 | ||||||
Balances, end of year comprise: | ||||||||||||
Mortgage loans on real estate | $ | 1.4 | $ | 12.9 | $ | 13.4 | ||||||
Equity real estate | - | 9.7 | - | |||||||||
Total | $ | 1.4 | $ | 22.6 | $ | 13.4 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
BALANCE SHEETS | ||||||||
Investments in real estate, at depreciated cost | $ | 462.6 | $ | 421.7 | ||||
Investments in securities, generally at estimated fair value | 544.3 | 294.8 | ||||||
Cash and cash equivalents | 3.3 | 10.6 | ||||||
Other assets | 1.6 | 24.4 | ||||||
Total Assets | $ | 1,011.8 | $ | 751.5 | ||||
Borrowed funds - third party | $ | 273.1 | $ | 278.1 | ||||
Other liabilities | 316.0 | 115.7 | ||||||
Total liabilities | 589.1 | 393.8 | ||||||
Partners’ capital | 422.7 | 357.7 | ||||||
Total Liabilities and Partners’ Capital | $ | 1,011.8 | $ | 751.5 | ||||
AXA Financial Group’s Carrying Value in | ||||||||
These Entities Included Above | $ | 115.3 | $ | 100.1 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
STATEMENTS OF EARNINGS | ||||||||||||
Revenues of real estate joint ventures | $ | 78.7 | $ | 88.5 | $ | 98.2 | ||||||
Net revenues of other limited partnership interests | 45.5 | 16.7 | 6.3 | |||||||||
Interest expense - third party | (18.2 | ) | (18.5 | ) | (18.2 | ) | ||||||
Other expenses | (67.4 | ) | (62.8 | ) | (62.2 | ) | ||||||
Net Earnings | $ | 38.6 | $ | 23.9 | $ | 24.1 | ||||||
AXA Financial Group’s Equity in Net Earnings of | ||||||||||||
These Entities Included Above | $ | 24.3 | $ | 16.4 | $ | 11.6 |
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 | 1,013 | 2,360 | ||||||
Total | $ | 34,254 | $ | 37,896 |
4) | GOODWILL AND OTHER INTANGIBLE ASSETS |
Gross | ||||||||||||
Carrying | Accumulated | |||||||||||
Amount | Amortization | Net | ||||||||||
(In Millions) | ||||||||||||
December 31, 2007 | ||||||||||||
VOBA | $ | 868.8 | $ | (258.6 | ) | $ | 610.2 | |||||
Insurance distribution network (1) | 26.0 | (8.0 | ) | 18.0 | ||||||||
Total | $ | 894.8 | $ | (266.6 | ) | $ | 628.2 | |||||
December 31, 2006 | ||||||||||||
VOBA | $ | 868.8 | $ | (179.3 | ) (2) | $ | 689.5 | |||||
Insurance distribution network | 64.0 | (12.1 | ) | 51.9 | ||||||||
Total | $ | 932.8 | $ | (191.4 | ) | $ | 741.4 | |||||
5) | FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS |
December 31, | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||
(In Millions) | ||||||||||||||||
AXA Financial Group: | ||||||||||||||||
Mortgage loans on real estate | $ | 5,210.4 | $ | 5,237.0 | $ | 4,664.6 | $ | 4,703.1 | ||||||||
Other limited partnership interests | 1,768.5 | 1,768.5 | 1,405.8 | 1,405.8 | ||||||||||||
Policyholders liabilities: | ||||||||||||||||
Investment contracts | 4,516.5 | 4,608.6 | 5,476.4 | 5,573.3 | ||||||||||||
Long-term debt | 1,349.3 | 1,445.8 | 1,607.0 | 1,713.6 | ||||||||||||
Closed Blocks: | ||||||||||||||||
Mortgage loans on real estate | $ | 1,909.7 | $ | 1,907.7 | $ | 1,501.8 | $ | 1,511.8 | ||||||||
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 | ||||||||||||
6) | CLOSED BLOCKS |
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, beginning of year | $ | 3.2 | $ | 73.7 | ||||
Increase in unrealized investment losses | (3.2 | ) | (70.5 | ) | ||||
Balance, 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) | ||||||||
CLOSED BLOCK LIABILITIES: | ||||||||
Future policy benefits, policyholders’ account balances and other | $ | 7,072.0 | $ | 7,202.8 | ||||
Policyholder dividend obligation | 129.4 | 109.6 | ||||||
Other liabilities | 48.1 | 35.6 | ||||||
Total Closed Block liabilities | 7,249.5 | 7,348.0 | ||||||
ASSETS DESIGNATED TO THE CLOSED BLOCK: | ||||||||
Fixed maturities, available for sale, at estimated fair value | ||||||||
(amortized cost of $4,106.4 and $4,277.6) | 4,082.5 | 4,237.2 | ||||||
Mortgage loans on real estate �� | 810.3 | 692.4 | ||||||
Policy loans | 951.3 | 977.9 | ||||||
Cash and other invested assets | 152.6 | 54.7 | ||||||
Other assets | 261.5 | 333.9 | ||||||
Total assets designated to the Closed Block | 6,258.2 | 6,296.1 | ||||||
Excess of Closed Block liabilities over assets designated to | ||||||||
the Closed Block | 991.3 | 1,051.9 | ||||||
Amounts included in accumulated other comprehensive income: | ||||||||
Net unrealized investment gains, net of policyholder | ||||||||
dividend obligation of $23.9 and $40.3 | - | - | ||||||
Maximum Future Earnings To Be Recognized From | ||||||||
Closed Block Assets and Liabilities | $ | 991.3 | $ | 1,051.9 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
REVENUES: | ||||||||||||
Premiums and other income | $ | 340.4 | $ | 363.0 | $ | 410.0 | ||||||
Investment income (net of investment | ||||||||||||
expenses of $6.5, $6.3, and $5.8) | 344.9 | 342.0 | 340.9 | |||||||||
Investment losses, net | (1.3 | ) | (2.0 | ) | (3.9 | ) | ||||||
Total revenues | 684.0 | 703.0 | 747.0 | |||||||||
BENEFITS AND OTHER DEDUCTIONS: | ||||||||||||
Policyholders’ benefits and dividends | 587.1 | 604.5 | 644.8 | |||||||||
Other operating costs and expenses | 3.8 | 4.0 | 4.5 | |||||||||
Total benefits and other deductions | 590.9 | 608.5 | 649.3 | |||||||||
Net revenues before income taxes | 93.1 | 94.5 | 97.7 | |||||||||
Income tax expense | (32.5 | ) | (33.0 | ) | (34.2 | ) | ||||||
Net Revenues | $ | 60.6 | $ | 61.5 | $ | 63.5 |
2007 | 2006 | |||||||
(In Millions) | ||||||||
Balance, beginning of year | $ | 109.6 | $ | 142.5 | ||||
Applicable to net revenues | 3.4 | 6.2 | ||||||
Decrease (increase) in unrealized investment losses | 16.4 | (39.1 | ) | |||||
Balance, End of Year | $ | 129.4 | $ | 109.6 |
December 31, | ||||
2006 | ||||
(In Millions) | ||||
Impaired mortgage loans with investment valuation allowances | $ | - | ||
Impaired mortgage loans without investment valuation allowances | .2 | |||
Recorded investment in impaired mortgage loans | .2 | |||
Investment valuation allowances | - | |||
Net Impaired Mortgage Loans | $ | .2 |
7) | CONTRACTHOLDER BONUS INTEREST CREDITS |
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 |
8) | GMDB, GMIB AND NO LAPSE GUARANTEE FEATURES |
• | 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 | $ | 68.5 | $ | 117.7 | $ | 186.2 | ||||||
Paid guarantee benefits | (42.7 | ) | (2.2 | ) | (44.9 | ) | ||||||
Other changes in reserve | 90.0 | 58.3 | 148.3 | |||||||||
Balance at December 31, 2005 | 115.8 | 173.8 | 289.6 | |||||||||
Paid guarantee benefits | (34.1 | ) | (3.3 | ) | (37.4 | ) | ||||||
Other changes in reserve | 82.7 | 58.1 | 140.8 | |||||||||
Balance at December 31, 2006 | 164.4 | 228.6 | 393.0 | |||||||||
Paid guarantee benefits | (32.2 | ) | (2.7 | ) | (34.9 | ) | ||||||
Other changes in reserve | 122.2 | 84.4 | 206.6 | |||||||||
Balance at December 31, 2007 | $ | 254.4 | $ | 310.3 | $ | 564.7 |
GMDB | ||||
(In Millions) | ||||
Balance at January 1, 2005 | $ | 9.3 | ||
Paid guarantee benefits ceded | (12.2 | ) | ||
Other changes in reserve | 25.8 | |||
Balance at December 31, 2005 | 22.9 | |||
Paid guarantee benefits ceded | (9.2 | ) | ||
Other changes in reserve | 10.4 | |||
Balance at December 31, 2006 | 24.1 | |||
Paid guarantee benefits | (7.8 | ) | ||
Other changes in reserve | 12.4 | |||
Balance at December 31, 2007 | $ | 28.7 |
Return of | Ratchet | Roll-Up | Combo | Total | ||||||||||||||||
(Dollars In Millions) | ||||||||||||||||||||
GMDB: | ||||||||||||||||||||
Account values invested in: | ||||||||||||||||||||
General Account | $ | 10,735 | $ | 648 | $ | 310 | $ | 775 | $ | 12,468 | ||||||||||
Separate Accounts | $ | 29,673 | $ | 9,898 | $ | 7,279 | $ | 31,243 | $ | 78,093 | ||||||||||
Net amount at risk, gross | $ | 242 | $ | 309 | $ | 1,404 | $ | 561 | $ | 2,516 | ||||||||||
Net amount at risk, net of | ||||||||||||||||||||
amounts reinsured | $ | 242 | $ | 255 | $ | 853 | $ | 557 | $ | 1,907 | ||||||||||
Average attained age of | ||||||||||||||||||||
contractholders | 49.6 | 61.7 | 65.3 | 61.6 | 53.2 | |||||||||||||||
Percentage of contractholders | ||||||||||||||||||||
over age 70 | 7.6 | % | 22.1 | % | 37.1 | % | 21.6 | % | 12.4 | % | ||||||||||
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 | $ | 98 | $ | 989 | $ | 1,087 | ||||||||||||
Separate Accounts | N/A | N/A | $ | 4,806 | $ | 41,712 | $ | 46,518 | ||||||||||||
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 | ||||||||||||||||||||
annuitization | N/A | N/A | 2.1 | 8.1 | 7.3 | |||||||||||||||
Range of contractually | ||||||||||||||||||||
specified interest rates | N/A | N/A | 3% - 6 | % | 3% - 6.5 | % | ||||||||||||||
Investment in Variable Insurance Trust Mutual Funds | |||||||
December 31, | |||||||
2007 | 2006 | ||||||
(In Millions) | |||||||
GMDB: | |||||||
Equity | $ | 50,567 | $ | 45,083 | |||
Fixed income | 4,693 | 4,824 | |||||
Balanced | 20,590 | 14,927 | |||||
Other | 2,243 | 2,221 | |||||
Total | $ | 78,093 | $ | 67,055 | |||
GMIB: | |||||||
Equity | $ | 27,966 | $ | 22,966 | |||
Fixed income | 2,711 | 2,756 | |||||
Balanced | 14,816 | 10,442 | |||||
Other | 1,025 | 995 | |||||
Total | $ | 46,518 | $ | 37,159 |
Direct Liability | Reinsurance Ceded | Net | ||||||||||
(In Millions) | ||||||||||||
Balance at January 1, 2005 | $ | 21.0 | $ | - | $ | 21.0 | ||||||
Other changes in reserves | 14.0 | - | 14.0 | |||||||||
Balance at December 31, 2005 | 35.0 | - | 35.0 | |||||||||
Other changes in reserves | 31.8 | - | 31.8 | |||||||||
Balance at December 31, 2006 | 66.8 | - | 66.8 | |||||||||
Other changes in reserves | 68.1 | - | 68.1 | |||||||||
Balance at December 31, 2007 | $ | 134.9 | $ | - | $ | 134.9 |
9) | REINSURANCE AGREEMENTS |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Direct premiums | $ | 1,631.1 | $ | 1,665.2 | $ | 1,761.2 | ||||||
Reinsurance assumed | 198.7 | 197.2 | 171.7 | |||||||||
Reinsurance ceded | (268.2 | ) | (280.8 | ) | (284.1 | ) | ||||||
Premiums | $ | 1,561.6 | $ | 1,581.6 | $ | 1,648.8 | ||||||
Universal Life and Investment-type Product | ||||||||||||
Policy Fee Income Ceded | $ | 200.9 | $ | 145.4 | $ | 169.3 | ||||||
Policyholders’ Benefits Ceded | $ | 544.0 | $ | 521.9 | $ | 434.2 | ||||||
Interest Credited to Policyholders’ Account | ||||||||||||
Balances Ceded | $ | 56.1 | $ | 53.8 | $ | 50.9 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Incurred benefits related to current year | $ | 33.0 | $ | 36.0 | $ | 35.7 | ||||||
Incurred benefits related to prior years | 13.4 | 9.9 | 50.4 | |||||||||
Total Incurred Benefits | $ | 46.4 | $ | 45.9 | $ | 86.1 | ||||||
Benefits paid related to current year | $ | 12.0 | $ | 14.2 | $ | 14.9 | ||||||
Benefits paid related to prior years | 33.0 | 30.1 | 44.9 | |||||||||
Total Benefits Paid | $ | 45.0 | $ | 44.3 | $ | 59.8 |
10) | SHORT-TERM AND LONG-TERM DEBT |
Short-term and long-term debt consists of the following: |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Short-term debt: | ||||||||
Promissory note (with interest rates of 5.16% and 5.27%) | $ | 248.3 | $ | 248.3 | ||||
Current portion of long-term debt | 250.0 | - | ||||||
AllianceBernstein commercial paper | 533.9 | 334.9 | ||||||
Total short-term debt | 1,032.2 | 583.2 | ||||||
Long-term debt: | ||||||||
AXA Financial: | ||||||||
Senior Notes, 7.75%, due through 2010 | 479.0 | 478.5 | ||||||
Senior Notes, 6.5%, due 2008 | - | 250.0 | ||||||
Senior Debentures, 7.0%, due 2028 | 348.2 | 348.1 | ||||||
Senior Notes, 8.35%, due 2010 | 320.4 | 328.7 | ||||||
Total AXA Financial | 1,147.6 | 1,405.3 | ||||||
MONY Life: | ||||||||
Surplus Notes, 11.25%, due 2024 | 1.9 | 1.9 | ||||||
Total MONY Life | 1.9 | 1.9 | ||||||
AXA Equitable: | ||||||||
Surplus Notes, 7.70%, due 2015 | 199.8 | 199.8 | ||||||
Total AXA Equitable | 199.8 | 199.8 | ||||||
Total long-term debt | 1,349.3 | 1,607.0 | ||||||
Total Short-term and Long-term Debt | $ | 2,381.5 | $ | 2,190.2 |
11) | RELATED PARTY TRANSACTIONS |
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 |
12) | EMPLOYEE BENEFIT PLANS |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Service cost | $ | 58.0 | $ | 57.0 | $ | 54.9 | ||||||
Interest cost on projected benefit obligations | 185.8 | 174.4 | 178.1 | |||||||||
Expected return on assets | (225.4 | ) | (217.3 | ) | (207.1 | ) | ||||||
Net amortization and deferrals | 75.1 | 100.3 | 97.3 | |||||||||
Net Periodic Pension Expense | $ | 93.5 | $ | 114.4 | $ | 123.2 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Benefit obligations, beginning of year | $ | 3,274.6 | $ | 3,407.4 | ||||
Service cost | 50.0 | 50.0 | ||||||
Interest cost | 185.8 | 174.4 | ||||||
Actuarial losses (gains) | (81.4 | ) | (131.6 | ) | ||||
Benefits paid | (241.2 | ) | (225.6 | ) | ||||
Plan amendments | (4.2 | ) | - | |||||
Benefit Obligations, End of Year | $ | 3,183.6 | $ | 3,274.6 |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Plan assets at fair value, beginning of year | $ | 2,811.5 | $ | 2,671.1 | ||||
Actual return on plan assets | 216.6 | 339.8 | ||||||
Contributions | 4.9 | 4.4 | ||||||
Benefits paid and fees | (215.2 | ) | (203.8 | ) | ||||
Plan assets at fair value, end of year | 2,817.8 | 2,811.5 | ||||||
Projected benefit obligations | 3,183.6 | 3,274.6 | ||||||
Underfunding of Plan Assets Over Projected Benefit Obligations | $ | (365.8 | ) | $ | (463.1 | ) |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Unrecognized net actuarial loss | $ | 710.4 | $ | 853.2 | ||||
Unrecognized prior service cost (credit) | (5.7 | ) | (2.3 | ) | ||||
Unrecognized net transition obligation (asset) | (.8 | ) | (.8 | ) | ||||
Total | $ | 703.9 | $ | 850.1 |
December 31, | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Estimated Fair Value | % | Estimated Fair Value | % | |||||||||||||
(Dollars In Millions) | ||||||||||||||||
Corporate and government debt securities | $ | 456.7 | 16.2 | $ | 469.4 | 16.7 | ||||||||||
Equity securities | 2,075.3 | 73.6 | 2,084.9 | 74.2 | ||||||||||||
Equity real estate | 277.7 | 9.9 | 245.5 | 8.7 | ||||||||||||
Short-term investments | 8.1 | .3 | 11.7 | .4 | ||||||||||||
Total Plan Assets | $ | 2,817.8 | 100.0 | $ | 2,811.5 | 100.0 |
AXA Financial Group | ||||||||
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% |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Service costs | $ | 2.7 | $ | 6.4 | $ | 7.1 | ||||||
Interest cost on accumulated postretirement | ||||||||||||
benefits obligation | 35.3 | 35.5 | 37.3 | |||||||||
Net amortization and deferrals | 6.5 | 9.3 | 3.3 | |||||||||
Curtailment gain | - | (45.4 | ) | - | ||||||||
Plan recalculation adjustment (1) | - | - | 28.5 | |||||||||
Other | - | (5.4 | ) | - | ||||||||
Net Periodic Postretirement Benefits Costs | $ | 44.5 | $ | .4 | $ | 76.2 |
(1) | Included an adjustment in third quarter 2005 of the survivor income benefits liability related to prior periods. |
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Accumulated postretirement benefits obligation, | ||||||||
beginning of year | $ | 650.5 | $ | 704.6 | ||||
Service cost | 2.7 | 6.4 | ||||||
Interest cost | 35.3 | 35.5 | ||||||
Contributions and benefits paid | (46.5 | ) | (48.9 | ) | ||||
Medicare Part D Subsidy | (4.6 | ) | (4.3 | ) | ||||
Actuarial losses (gains) | (41.2 | ) | (34.9 | ) | ||||
Plan amendments | - | (15.4 | ) | |||||
Plan recalculation adjustment (1) | - | 7.5 | ||||||
Accumulated Postretirement Benefits Obligation, End of Year | $ | 596.2 | $ | 650.5 |
(1) | Included an adjustment in 2006 of the postretirement liability related to prior periods. |
December 31, | |||||||
2007 | 2006 | ||||||
(In Millions) | |||||||
Unrecognized net actuarial loss | $ | 102.5 | $ | 151.4 | |||
Unrecognized prior service credit | (11.4 | ) | (12.6 | ) | |||
Total | $ | 91.1 | $ | 138.8 |
2007 | 2006 | |||||
Discount rate: | ||||||
Benefit obligation | 6.25% | 5.75% | ||||
Periodic cost | 5.75% | 5.25% |
2007 | 2006 | 2005 | ||||||||
(In Millions) | ||||||||||
Service cost | $ | 4.5 | $ | 6.0 | $ | 5.8 | ||||
Interest cost on projected benefit obligations | 1.6 | 1.3 | 1.8 | |||||||
Plan recalculation adjustment (1) | - | (12.1 | ) | - | ||||||
Net actuarial gain | (9.2 | ) | - | - | ||||||
Net Periodic Post-employment Benefits Cost | $ | (3.1 | ) | $ | (4.8 | ) | $ | 7.6 |
(1) | Included an adjustment in 2006 of the post-employment liability related to prior periods. |
Postretirement Benefits | ||||||||||||||||||||
Health | ||||||||||||||||||||
Pension Benefits | Life Insurance | Gross Estimated | Estimated Medicare | Net Estimated | ||||||||||||||||
(In Millions) | ||||||||||||||||||||
2008 | $ | 240.8 | $ | 24.5 | $ | 34.2 | $ | 5.2 | $ | 29.0 | ||||||||||
2009 | 262.6 | 24.8 | 33.4 | 5.7 | 27.7 | |||||||||||||||
2010 | 256.6 | 25.0 | 32.5 | 6.1 | 26.4 | |||||||||||||||
2011 | 258.6 | 25.2 | 31.4 | 6.5 | 24.9 | |||||||||||||||
2012 | 264.4 | 25.3 | 30.0 | 7.0 | 23.0 | |||||||||||||||
Years 2013 - 2017 | 1,322.8 | 126.4 | 130.5 | 41.9 | 88.6 |
13) | SHARE-BASED AND OTHER COMPENSATION PROGRAMS |
Options Outstanding | ||||||||||||||||||||||||
AXA Ordinary Shares | AXA ADRs | AllianceBernstein Holding Units | ||||||||||||||||||||||
Number Outstanding | Weighted Average | Number Outstanding | Weighted Average | Number Outstanding | Weighted Average | |||||||||||||||||||
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, net | (.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 Shares | AXA ADRs | AllianceBernstein 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 | Weighted Average | |||||||
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 GAINS (LOSSES), NET |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Fixed maturities | $ | 2,217.3 | $ | 2,326.8 | $ | 2,330.7 | ||||||
Mortgage loans on real estate | 338.3 | 362.1 | 363.2 | |||||||||
Equity real estate | 103.5 | 98.1 | 114.1 | |||||||||
Other equity investments | 261.6 | 200.9 | 187.2 | |||||||||
Policy loans | 321.9 | 316.7 | 317.0 | |||||||||
Short-term investments | 97.1 | 91.9 | 45.3 | |||||||||
Derivative investments | 67.5 | (290.7 | ) | (67.5 | ) | |||||||
Broker-dealer related receivables | 234.6 | 226.5 | 124.8 | |||||||||
Trading securities | 36.0 | 53.4 | 28.6 | |||||||||
Other investment income | 58.3 | 43.4 | 17.1 | |||||||||
Gross investment income | 3,736.1 | 3,429.1 | 3,460.5 | |||||||||
Investment expenses | (148.7 | ) | (134.7 | ) | (164.5 | ) | ||||||
Interest expense | (194.4 | ) | (187.8 | ) | (95.9 | ) | ||||||
Net Investment Income | $ | 3,393.0 | $ | 3,106.6 | $ | 3,200.1 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Fixed maturities | $ | (95.0 | ) | $ | (20.3 | ) | $ | 6.9 | ||||
Mortgage loans on real estate | 9.4 | 2.6 | (.1 | ) | ||||||||
Equity real estate | 12.9 | 8.9 | 4.0 | |||||||||
Other equity investments | 16.6 | 21.2 | 31.1 | |||||||||
Other (1) | 25.5 | 32.6 | 14.5 | |||||||||
Investment Gains (Losses), Net | $ | (30.6 | ) | $ | 45.0 | $ | 56.4 |
(1) | In 2007 and 2006, respectively, AllianceBernstein issued units to its employees under long-term incentive plans. As a result of these transactions, AXA Financial Group recorded non-cash realized gains of $26.7 million and $33.0 million for 2007 and 2006, respectively. |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Balance, beginning of year | $ | 262.2 | $ | 423.4 | $ | 925.3 | ||||||
Changes in unrealized investment gains (losses) | (441.1 | ) | (494.8 | ) | (1,227.1 | ) | ||||||
Changes in unrealized investment gains (losses) | ||||||||||||
attributable to: | ||||||||||||
Participating group annuity contracts, | ||||||||||||
Closed Blocks policyholder dividend | ||||||||||||
obligation and other | (2.5 | ) | 134.2 | 289.5 | ||||||||
DAC and VOBA | 92.8 | 91.6 | 171.3 | |||||||||
Deferred income taxes | 127.4 | 107.8 | 264.4 | |||||||||
Balance, End of Year | $ | 38.8 | $ | 262.2 | $ | 423.4 | ||||||
Balance, end of year comprises: | ||||||||||||
Unrealized investment gains (losses) on: | ||||||||||||
Fixed maturities | $ | 2.0 | $ | 439.3 | $ | 936.3 | ||||||
Other equity investments | 1.3 | 5.1 | 2.9 | |||||||||
Total | 3.3 | 444.4 | 939.2 | |||||||||
Amounts of unrealized investment gains (losses) | ||||||||||||
attributable to: | ||||||||||||
Participating group annuity contracts, | ||||||||||||
Closed Blocks policyholder dividend | ||||||||||||
obligation and other | 46.2 | 48.7 | (85.5 | ) | ||||||||
DAC and VOBA | (6.2 | ) | (99.0 | ) | (190.6 | ) | ||||||
Deferred income taxes | (4.5 | ) | (131.9 | ) | (239.7 | ) | ||||||
Total | $ | 38.8 | $ | 262.2 | $ | 423.4 |
15) | INCOME TAXES |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Income tax expense: | ||||||||||||
Current expense | $ | 621.4 | $ | 533.3 | $ | 291.6 | ||||||
Deferred expense (benefit) | 223.2 | (17.4 | ) | 299.9 | ||||||||
Total | $ | 844.6 | $ | 515.9 | $ | 591.5 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Expected income tax expense | $ | 926.9 | $ | 728.2 | $ | 724.2 | ||||||
Minority interest | (132.6 | ) | (163.1 | ) | (127.2 | ) | ||||||
Separate Accounts investment activity | (53.5 | ) | (48.6 | ) | (91.4 | ) | ||||||
Non-taxable investment income | (25.4 | ) | (23.5 | ) | (20.7 | ) | ||||||
Adjustment of tax audit reserves | 26.4 | (82.4 | ) | 19.1 | ||||||||
State income taxes | 55.5 | 50.4 | 34.9 | |||||||||
AllianceBernstein income and foreign taxes | 40.2 | 48.7 | 43.6 | |||||||||
Other | 7.1 | 6.2 | 9.0 | |||||||||
Income Tax Expense | $ | 844.6 | $ | 515.9 | $ | 591.5 |
December 31, 2007 | December 31, 2006 | ||||||||||||
Assets | Liabilities | Assets | Liabilities | ||||||||||
(In Millions) | |||||||||||||
Compensation and related benefits | $ | 593.3 | $ | - | $ | 664.4 | $ | - | |||||
Reserves and reinsurance | 1,615.5 | - | 1,436.0 | - | |||||||||
DAC and VOBA | - | 2,957.4 | - | 2,647.0 | |||||||||
Unrealized investment gains | - | 4.8 | - | 121.3 | |||||||||
Investments | - | 919.3 | - | 818.9 | |||||||||
Other | 157.5 | - | 125.1 | - | |||||||||
Total | $ | 2,366.3 | $ | 3,881.5 | $ | 2,225.5 | $ | 3,587.2 |
2007 | ||||
(In Millions) | ||||
Balance at January 1, 2007 (date of adoption) | $ | 494.8 | ||
Additions for tax positions of prior years | 33.2 | |||
Reductions for tax positions of prior years | (18.6 | ) | ||
Additions for tax positions of current years | 7.5 | |||
Reductions for tax positions of current years | (1.2 | ) | ||
Settlements with tax authorities | (58.9 | ) | ||
Reductions as a result of a lapse of the applicable statue of limitations | - | |||
Balance, End of Year | $ | 456.8 |
16) | DISCONTINUED OPERATIONS |
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 | (6.7 | ) | 12.0 | 12.5 | ||||||||
Disposal of business - Advest | - | - | (6.7 | ) | ||||||||
Disposal of business - Enterprise | (2.4 | ) | (6.1 | ) | (0.8 | ) | ||||||
Total | $ | (9.2 | ) | $ | 36.1 | $ | 20.2 | |||||
(Losses) Gains on Disposal of Discontinued Operations, Net of Income Taxes: | ||||||||||||
Real estate held-for-sale | $ | 3.1 | $ | 62.1 | $ | - | ||||||
Discontinued Investment Banking and Brokerage segment | - | 53.9 | - | |||||||||
Disposal of business - Advest | - | 4.1 | (85.4 | ) | ||||||||
Disposal of business - Enterprise | (6.7 | ) | (2.9 | ) | - | |||||||
Total | $ | (3.6 | ) | $ | 117.2 | $ | (85.4 | ) |
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 |
17) | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME |
December 31, | ||||||||||
2007 | 2006 | 2005 | ||||||||
(In Millions)
| ||||||||||
Unrealized gains on investments | $ | 38.8 | $ | 262.2 | $ | 423.4 | ||||
Defined benefit pension and other | ||||||||||
postretirement plans | (517.6 | ) | (641.1 | ) | - | |||||
Minimum pension liability | - | - | (77.9 | ) | ||||||
Total Accumulated Other | ||||||||||
Comprehensive (Loss) Income | $ | (478.8 | ) | $ | (378.9 | ) | $ | 345.5 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Net unrealized (losses) gains on investments: | ||||||||||||
Net unrealized losses (gains) | ||||||||||||
arising during the period | $ | (419.9 | ) | $ | (481.8 | ) | $ | (1,182.4 | ) | |||
Losses reclassified into net earnings | ||||||||||||
during the period | (21.2 | ) | (13.0 | ) | (44.7 | ) | ||||||
Net unrealized (losses) gains on investments | (441.1 | ) | (494.8 | ) | (1,227.1 | ) | ||||||
Adjustments for policyholders liabilities, DAC | ||||||||||||
and VOBA and deferred income taxes | 217.7 | 333.6 | 725.2 | |||||||||
Change in unrealized (losses) gains, net of | ||||||||||||
adjustments | (223.4 | ) | (161.2 | ) | (501.9 | ) | ||||||
Change in minimum pension liability | - | 18.5 | (18.7 | ) | ||||||||
Change in defined benefit pension and other | ||||||||||||
postretirement plans | 123.5 | |||||||||||
Total Other Comprehensive Loss | $ | (99.9 | ) | $ | (142.7 | ) | $ | (520.6 | ) |
18) | COMMITMENTS AND CONTINGENT LIABILITIES |
19) | LITIGATION |
20) | INSURANCE GROUP STATUTORY FINANCIAL INFORMATION |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Net change in statutory surplus and | ||||||||||||
capital stock | $ | (36.6 | ) | $ | 1,487.4 | $ | 917.3 | |||||
Change in AVR | (201.2 | ) | 339.5 | 301.8 | ||||||||
Net change in statutory surplus, capital stock | ||||||||||||
and AVR | (237.8 | ) | 1,826.9 | 1,219.1 | ||||||||
Adjustments: | ||||||||||||
Future policy benefits and policyholders’ | ||||||||||||
account balances | 473.1 | (29.6 | ) | 99.6 | ||||||||
DAC and VOBA | 596.1 | 652.8 | 663.2 | |||||||||
Deferred income taxes | (694.6 | ) | 608.8 | 131.6 | ||||||||
Valuation of investments | (18.5 | ) | (67.9 | ) | (48.1 | ) | ||||||
Valuation of investment subsidiary | 483.7 | (2,224.8 | ) | (1,340.1 | ) | |||||||
Change in fair value of GMIB contracts | 6.9 | (14.9 | ) | 42.7 | ||||||||
Shareholder dividends paid | 680.0 | 635.0 | 575.0 | |||||||||
Changes in non-admitted assets | 67.0 | (151.3 | ) | (59.6 | ) | |||||||
AXA Financial and other subsidiaries | (3.2 | ) | 4.1 | (161.5 | ) | |||||||
Other, net | (59.6 | ) | 13.3 | (79.0 | ) | |||||||
GAAP adjustments for Wind-up Annuities | 31.2 | 28.8 | 30.9 | |||||||||
AXA Financial Group’s GAAP Consolidated | ||||||||||||
Net Earnings | $ | 1,324.3 | $ | 1,281.2 | $ | 1,073.8 |
December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Statutory surplus and capital stock | $ | 7,530.5 | $ | 7,567.1 | $ | 6,079.7 | ||||||
AVR | 1,409.8 | 1,611.0 | 1,271.5 | |||||||||
Statutory surplus, capital stock and AVR | 8,940.3 | 9,178.1 | 7,351.2 | |||||||||
Adjustments: | ||||||||||||
Future policy benefits and policyholders’ | ||||||||||||
account balances | (2,352.2 | ) | (2,627.9 | ) | (2,447.2 | ) | ||||||
DAC and VOBA | 9,980.1 | 9,299.4 | 8,562.3 | |||||||||
Deferred income taxes | (1,202.7 | ) | (881.5 | ) | (1,250.8 | ) | ||||||
Valuation of investments | 474.4 | 988.2 | 1,429.8 | |||||||||
Valuation of investment subsidiary | (4,779.4 | ) | (5,263.1 | ) | (3,038.3 | ) | ||||||
Fair value of GMIB reinsurance contracts | 124.6 | 117.7 | 132.7 | |||||||||
Non-admitted assets | 1,331.6 | 1,263.9 | 1,112.5 | |||||||||
Issuance of surplus notes | (525.9 | ) | (625.9 | ) | (739.8 | ) | ||||||
Goodwill related to the MONY Acquisition | 391.1 | 414.6 | 427.5 | |||||||||
Adjustment to initially apply SFAS No. 158, | ||||||||||||
net of income taxes | - | (581.7 | ) | - | ||||||||
AXA Financial and other subsidiaries | (380.0 | ) | (1,076.5 | ) | (1,795.8 | ) | ||||||
Other, net | (481.4 | ) | (126.8 | ) | (417.6 | ) | ||||||
GAAP adjustments for Wind-up Annuities | 1.5 | (59.9 | ) | (80.6 | ) | |||||||
AXA Financial Group’s GAAP Consolidated | ||||||||||||
Shareholder’s Equity | $ | 11,522.0 | $ | 10,018.6 | $ | 9,245.9 |
21) | BUSINESS SEGMENT INFORMATION |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Segment revenues: | ||||||||||||
Financial Advisory/Insurance | $ | 8,874.4 | $ | 7,923.8 | $ | 7,713.4 | ||||||
Investment Management (1) | 4,561.9 | 4,004.7 | 3,267.4 | |||||||||
Consolidation/elimination | (91.4 | ) | (90.0 | ) | (98.7 | ) | ||||||
Total Revenues | $ | 13,344.9 | $ | 11,838.5 | $ | 10,882.1 |
(1) | Intersegment investment advisory and other fees of approximately $124.7 million, $120.8 million and $123.7 million for 2007, 2006 and 2005, respectively, are included in total revenues of the Investment Management segment. |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Segment earnings from continuing operations | ||||||||||||
before income taxes and minority interest: | ||||||||||||
Financial Advisory/Insurance | $ | 1,341.9 | $ | 952.2 | $ | 1,208.6 | ||||||
Investment Management | 1,306.6 | 1,128.3 | 860.6 | |||||||||
Consolidation/elimination | (.1 | ) | - | - | ||||||||
Total Earnings from Continuing Operations before | ||||||||||||
Income Taxes and Minority Interest | $ | 2,648.4 | $ | 2,080.5 | $ | 2,069.2 | ||||||
December 31, | ||||||||
2007 | 2006 | |||||||
(In Millions) | ||||||||
Segment assets: | ||||||||
Financial Advisory/Insurance | $ | 163,056.9 | $ | 151,821.7 | ||||
Investment Management | 16,243.6 | 16,938.7 | ||||||
Consolidation/elimination | (28.2 | ) | (14.7 | ) | ||||
Total Assets | $ | 179,272.3 | $ | 168,745.7 |
22) | QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) |
Three Months Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
(In Millions) | ||||||||||||||||
2007 | ||||||||||||||||
Total Revenues | $ | 3,173.7 | $ | 3,088.4 | $ | 3,415.4 | $ | 3,667.4 | ||||||||
Earnings from Continuing | ||||||||||||||||
Operations | $ | 337.6 | $ | 253.2 | $ | 396.1 | $ | 350.2 | ||||||||
Net Earnings | $ | 336.9 | $ | 233.9 | $ | 403.5 | $ | 350.0 | ||||||||
2006 | ||||||||||||||||
Total Revenues | $ | 2,752.6 | $ | 3,097.7 | $ | 2,871.7 | $ | 3,116.5 | ||||||||
Earnings from Continuing | ||||||||||||||||
Operations | $ | 270.8 | $ | 370.9 | $ | 300.1 | $ | 186.1 | ||||||||
Net Earnings | $ | 281.6 | $ | 372.9 | $ | 442.0 | $ | 184.7 |
Estimated | Carrying | |||||||||||
Type of Investment | Cost (A) | Fair Value | Value | |||||||||
(In Millions) | ||||||||||||
Fixed maturities: | ||||||||||||
U.S. government, agencies and authorities | $ | 1,862.6 | $ | 1,947.1 | $ | 1,947.1 | ||||||
State, municipalities and political subdivisions | 181.1 | 197.8 | 197.8 | |||||||||
Foreign governments | 306.9 | 351.0 | 351.0 | |||||||||
Public utilities | 3,875.2 | 3,961.9 | 3,961.9 | |||||||||
All other corporate bonds | 27,289.7 | 27,143.4 | 27,143.4 | |||||||||
Redeemable preferred stocks | 2,155.1 | 2,062.5 | 2,062.5 | |||||||||
Total fixed maturities | 35,670.6 | 35,663.7 | 35,663.7 | |||||||||
Equity securities: | ||||||||||||
Common stocks: | ||||||||||||
Industrial, miscellaneous and all other | 49.1 | 42.1 | 42.1 | |||||||||
Mortgage loans on real estate | 5,210.4 | 5,237.0 | 5,210.4 | |||||||||
Real estate | 209.3 | XXX | 209.3 | |||||||||
Real estate acquired in satisfaction of debt | 113.0 | XXX | 113.0 | |||||||||
Real estate joint ventures | 59.7 | XXX | 59.7 | |||||||||
Policy loans | 5,037.3 | XXX | 5,037.3 | |||||||||
Other limited partnership interests and | ||||||||||||
equity investments | 1,955.1 | 1,955.1 | 1,955.1 | |||||||||
Trading securities | 587.5 | 573.3 | 573.3 | |||||||||
Other invested assets | 1,212.4 | 1,212.4 | 1,212.4 | |||||||||
Total Investments | $ | 50,104.4 | $ | 44,683.6 | $ | 50,076.3 |
(A) | Cost for fixed maturities represents original cost, reduced by repayments and writedowns and adjusted for amortization of premiums or accretion of discount; cost for equity securities represents original cost reduced by writedowns; cost for other limited partnership interests represents original cost adjusted for equity in earnings and reduced by distributions. |
2007 | 2006 | |||||||
(In Millions) | ||||||||
ASSETS | ||||||||
Investment in consolidated subsidiaries | $ | 13,295.9 | $ | 12,279.2 | ||||
Fixed maturities available for sale, at estimated fair value | ||||||||
(amortized costs, $5.0 and $5.5) | 5.0 | 5.5 | ||||||
Other invested assets | .2 | 22.6 | ||||||
Total investments | 13,301.1 | 12,307.3 | ||||||
Cash and cash equivalents | 95.5 | 144.1 | ||||||
Loans to affiliates | 329.0 | 425.5 | ||||||
Intangible assets, net | 1,131.5 | 548.7 | ||||||
Income taxes receivable | 321.6 | 429.7 | ||||||
Other assets | 563.7 | 512.1 | ||||||
Total Assets | $ | 15,742.4 | $ | 14,367.4 | ||||
LIABILITIES | ||||||||
Short-term and long-term debt | $ | 1,397.5 | $ | 1,405.3 | ||||
Loans from affiliates | 1,345.0 | 1,280.0 | ||||||
Liability for employee benefit plans | 1,284.0 | 1,318.4 | ||||||
Accrued liabilities | 193.9 | 345.1 | ||||||
Total liabilities | 4,220.4 | 4,348.8 | ||||||
SHAREHOLDER’S EQUITY | ||||||||
Common stock, $.01 par value, 500 million shares authorized, | ||||||||
436.2 million shares issued and outstanding | 3.9 | 3.9 | ||||||
Capital in excess of par value | 1,250.0 | 1,122.4 | ||||||
Retained earnings | 10,863.8 | 9,494.7 | ||||||
Accumulated other comprehensive loss | (478.8 | ) | (378.9 | ) | ||||
Treasury shares, at cost | (116.9 | ) | (223.5 | ) | ||||
Total shareholder’s equity | 11,522.0 | 10,018.6 | ||||||
Total Liabilities and Shareholder’s Equity | $ | 15,742.4 | $ | 14,367.4 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
REVENUES | ||||||||||||
Equity in earnings from continuing operations of consolidated subsidiaries | $ | 1,562.4 | $ | 1,324.9 | $ | 1,295.1 | ||||||
Net investment income | 17.0 | 39.0 | 39.7 | |||||||||
Investment gains (losses), net | 8.2 | 3.4 | (.7 | ) | ||||||||
Other income | 1.1 | - | - | |||||||||
Total revenues | 1,588.7 | 1,367.3 | 1,334.1 | |||||||||
EXPENSES | ||||||||||||
Interest expense | 203.6 | 196.5 | 170.2 | |||||||||
Amortization of other intangible assets | 13.0 | 5.5 | 4.6 | |||||||||
General and administrative expenses | 21.1 | 34.3 | 28.7 | |||||||||
Total expenses | 237.7 | 236.3 | 203.5 | |||||||||
Earnings from continuing operations before | ||||||||||||
income taxes | 1,351.0 | 1,131.0 | 1,130.6 | |||||||||
Income tax (expense) benefit | (13.9 | ) | (3.1 | ) | 8.4 | |||||||
Earnings from continuing operations | 1,337.1 | 1,127.9 | 1,139.0 | |||||||||
Equity in (losses) earnings from discontinued operations, net of income taxes | (9.2 | ) | 36.1 | 20.2 | ||||||||
Equity in (losses) gains on disposal of discontinued operations, net of income taxes | (3.6 | ) | 117.2 | (85.4 | ) | |||||||
Net Earnings | $ | 1,324.3 | $ | 1,281.2 | $ | 1,073.8 |
2007 | 2006 | 2005 | ||||||||||
(In Millions) | ||||||||||||
Net earnings | $ | 1,324.3 | $ | 1,281.2 | $ | 1,073.8 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Equity in net earnings of subsidiaries | (1,549.6 | ) | (1,415.4 | ) | (1,315.5 | ) | ||||||
Dividends from subsidiaries | 880.4 | 768.2 | 639.7 | |||||||||
Investment (gains) losses, net | (8.2 | ) | (3.4 | ) | .7 | |||||||
Change in income tax receivable | 183.6 | (28.8 | ) | (8.0 | ) | |||||||
Other | (161.6 | ) | (108.3 | ) | 98.9 | |||||||
Net cash provided by operating activities | 668.9 | 493.5 | 489.6 | |||||||||
Cash flows from investing activities: | ||||||||||||
Maturities and repayments | .8 | 6.8 | 3.8 | |||||||||
Sales | 4.9 | 2.4 | 14.4 | |||||||||
Purchase of AllianceBernstein Units | (745.7 | ) | - | - | ||||||||
Decrease in loans to affiliates | 100.0 | 115.0 | - | |||||||||
Increase in loans to affiliates | (4.0 | ) | - | - | ||||||||
Purchases | - | (3.8 | ) | (2.8 | ) | |||||||
Contribution to subsidiaries | (160.1 | ) | (268.4 | ) | - | |||||||
Other | 17.3 | (7.9 | ) | (18.9 | ) | |||||||
| ||||||||||||
Net cash used in investing activities | (786.8 | ) | (155.9 | ) | (3.5 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Repayment of long-term debt | - | - | (275.0 | ) | ||||||||
Increase in short-term debt | (.8 | ) | 10.0 | 17.8 | ||||||||
Proceeds from loans from affiliates | 850.0 | 335.0 | 11.1 | |||||||||
Repayment of loans from affiliates | (785.0 | ) | (635.0 | ) | - | |||||||
Sales of treasury shares | (7.6 | ) | (4.3 | ) | (372.6 | ) | ||||||
Other | 12.7 | 17.1 | 27.8 | |||||||||
Net cash provided by (used in) financing activities | 69.3 | (277.2 | ) | (590.9 | ) | |||||||
| ||||||||||||
Change in cash and cash equivalents | (48.6 | ) | 60.4 | (104.8 | ) | |||||||
Cash and cash equivalents, beginning of year | 144.1 | 83.7 | 188.5 | |||||||||
Cash and Cash Equivalents, End of Year | $ | 95.5 | $ | 144.1 | $ | 83.7 | ||||||
Supplemental cash flow information: | ||||||||||||
Interest Paid | $ | 78.0 | $ | 78.0 | $ | 123.5 | ||||||
Income Taxes Refunded | $ | 20.7 | $ | 19.3 | $ | - |
Future Policy | Policy | Amortization | |||||||||||||||||||||||
Deferred | Benefits | Charges | (1) | Policyholders’ | of Deferred | (2) | |||||||||||||||||||
Policy | Policyholders’ | and Other | And | Net | Benefits and | Policy | Other | ||||||||||||||||||
Acquisition | Account | Policyholders’ | Premium | Investment | Interest | Acquisition | Operating | ||||||||||||||||||
Segment | Costs | Balances | Funds | Revenue | Income | Credited | Costs | Expense | |||||||||||||||||
(In Millions) | |||||||||||||||||||||||||
Financial Advisory/Insurance | $ | 9,369.9 | $ | 28,420.5 | $ | 22,934.1 | $ | 4,534.7 | $ | 3,235.7 | $ | 4,282.1 | $ | 1,217.5 | $ | 2,032.9 | |||||||||
Investment Management | - | - | - | - | 129.6 | - | - | 3,255.3 | |||||||||||||||||
Consolidation/Elimination | - | - | - | - | 27.7 | - | - | (91.3 | ) | ||||||||||||||||
Total | $ | 9,369.9 | $ | 28,420.5 | $ | 22,934.1 | $ | 4,534.7 | $ | 3,393.0 | $ | 4,282.1 | $ | 1,217.5 | $ | 5,196.9 |
(1) | Net investment income is based upon specific identification of portfolios within segments. |
(2) | Operating expenses are principally incurred directly by a segment. |
Future Policy | Policy | Amortization | |||||||||||||||||||||||
Deferred | Benefits | Charges | (1) | Policyholders’ | of Deferred | (2) | |||||||||||||||||||
Policy | Policyholders’ | and Other | And | Net | Benefits and | Policy | Other | ||||||||||||||||||
Acquisition | Account | Policyholders’ | Premium | Investment | Interest | Acquisition | Operating | ||||||||||||||||||
Segment | Costs | Balances | Funds | Revenue | Income | Credited | Costs | Expense | |||||||||||||||||
(In Millions) | |||||||||||||||||||||||||
Financial Advisory/Insurance | $ | 8,609.9 | $ | 29,895.6 | $ | 22,754.7 | $ | 4,049.9 | $ | 2,943.4 | $ | 4,214.1 | $ | 812.6 | $ | 1,944.9 | |||||||||
Investment Management | - | - | - | - | 132.9 | - | - | 2,876.4 | |||||||||||||||||
Consolidation/ Elimination | - | - | - | - | 30.3 | - | - | (90.0 | ) | ||||||||||||||||
Total | $ | 8,609.9 | $ | 29,895.6 | $ | 22,754.7 | $ | 4,049.9 | $ | 3,106.6 | $ | 4,214.1 | $ | 812.6 | $ | 4,731.3 | |||||||||
(1) | Net investment income is based upon specific identification of portfolios within segments. |
(2) | Operating expenses are principally incurred directly by a segment. |
Policy | Amortization | |||||||||||||||||||
Charges | (1) | Policyholders’ | of Deferred | (2) | ||||||||||||||||
and | Net | Benefits and | Policy | Other | ||||||||||||||||
Premium | Investment | Interest | Acquisition | Operating | ||||||||||||||||
Segment | Revenue | Income | Credited | Costs | Expense | |||||||||||||||
(In Millions) | ||||||||||||||||||||
Financial Advisory/Insurance | $ | 3,739.0 | $ | 3,132.9 | $ | 4,049.3 | $ | 682.0 | $ | 1,773.5 | ||||||||||
Investment Management | - | 50.8 | - | - | 2,406.8 | |||||||||||||||
Consolidation/Elimination | - | 16.4 | - | - | (98.7 | ) | ||||||||||||||
Total | $ | 3,739.0 | $ | 3,200.1 | $ | 4,049.3 | $ | 682.0 | $ | 4,081.6 |
(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 | $ | 473,580.9 | $ | 209,940.4 | $ | 40,334.2 | $ | 303,974.7 | 13.27 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance and annuities | $ | 1,511.1 | $ | 184.7 | $ | 173.7 | $ | 1,500.1 | 11.58 | % | ||||||||||
Accident and health | 120.0 | 83.5 | 25.0 | 61.5 | 40.65 | % | ||||||||||||||
Total Premiums | $ | 1,631.1 | $ | 268.2 | $ | 198.7 | $ | 1,561.6 | 12.72 | % | ||||||||||
2006 | ||||||||||||||||||||
Life Insurance In-force | $ | 452,148.6 | $ | 154,656.3 | $ | 48,259.3 | $ | 345,751.6 | 13.96 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance and | ||||||||||||||||||||
annuities | $ | 1,539.1 | $ | 191.4 | $ | 172.5 | $ | 1,520.2 | 11.35 | % | ||||||||||
Accident and health | 126.1 | 89.4 | 24.7 | 61.4 | 40.23 | % | ||||||||||||||
Total Premiums | $ | 1,665.2 | $ | 280.8 | $ | 197.2 | $ | 1,581.6 | 12.47 | % | ||||||||||
2005 | ||||||||||||||||||||
Life Insurance In-force | $ | 437,434.5 | $ | 143,078.7 | $ | 50,606.1 | $ | 344,961.9 | 14.67 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance and | ||||||||||||||||||||
annuities | $ | 1,627.5 | $ | 195.8 | $ | 153.0 | $ | 1,584.7 | 9.65 | % | ||||||||||
Accident and health | 133.7 | 88.3 | 18.7 | 64.1 | 29.17 | % | ||||||||||||||
Total Premiums | $ | 1,761.2 | $ | 284.1 | $ | 171.7 | $ | 1,648.8 | 10.41 | % | ||||||||||
(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 FINANCIAL, INC. |
By: | /s/ Christopher M. Condron | |||
Name: | Christopher M. Condron | |||
President and Chief Executive Officer, Director |
/s/ Henri de Castries | Chairman of the Board, Director | March 12, 2008 | |||
Henri de Castries | |||||
/s/ Christopher M. Condron | President and Chief Executive Officer, | March 12, 2008 | |||
Christopher M. Condron | 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/ 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 | ||||
Number | Description | Method of Filing | ||||
2.1 | Acquisition Agreement dated as of June 20, 2000, amended and restated as of October 2, 2000, among AllianceBernstein, AllianceBernstein Holding, Alliance Capital Management LLC, Bernstein, Bernstein Technologies Inc., SCB Partners Inc., Sanford C. Bernstein & Co., LLC, and SCB LLC | Filed as Exhibit 2.1 to Alliance’s Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference | ||||
2.2 | Purchase Agreement dated as of June 20, 2000 by and among Alliance, AXA Financial and Bernstein | Filed as Exhibit 10.18 to Alliance’s Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference | ||||
2.3 | Financing Agreement dated as of June 20, 2000 between AXA Financial and Alliance | Filed as Exhibit 10.19 to Alliance’s Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference | ||||
2.4 | Letter Agreement dated as of June 20, 2000 between AXA Financial and Bernstein | Filed as Exhibit 10.20 to Alliance’s Annual Report on Form 10-K for the year ended December 31, 2000 and incorporated herein by reference | ||||
2.5 | Agreement and Plan of Merger dated as of September 17, 2003 among AXA Financial, AIMA Acquisition Co. and MONY | Filed as Exhibit 2.1 to the registrant’s Current Report on Form 8-K dated September 18, 2003 and incorporated herein by reference | ||||
2.6 | Amendment No.1 to the Agreement and Plan of Merger dated as of February 22, 2004 among AXA Financial, AIMA Acquisition Co. and MONY | Filed as Exhibit 2.1 to the registrant’s Current Report on Form 8-K dated February 23, 2004 and incorporated herein by reference | ||||
2.7 | Acquisition agreement dated as September 14, 2005 between AXA Financial, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. | Filed as Exhibit 99.1 to the registrant’s Current Report on Form 8-K dated September 14, 2005 and incorporated herein by reference | ||||
3.1 | Restated Certificate of Incorporation of AXA Financial | Filed as Exhibit 4.01(a) to Post-Effective Amendment No. 1 to the registrant’s Form S-3 Registration Statement (No. 333-03224), dated May 27, 1997 and incorporated herein by reference | ||||
3.2 | Amendment to Restated Certificate of Incorporation of AXA Financial | Filed as Exhibit 4.01(g) to Post-Effective Amendment No. 1 to the registrant’s Form S-3 Registration Statement (No. 333-03224), dated May 27, 1997 and incorporated herein by reference | ||||
3.3 | Corrected Certificate of Amendment of Restated Certificate of Incorporation of AXA Financial | Filed as Exhibit 3 to the registrant’s Current Report on Form 8-K dated September 1, 1999 and incorporated herein by reference | ||||
Number | Description | Method of Filing | ||||
3.4 | Amendment to the Restated Certificate of Incorporation of AXA Financial dated May 19, 2000 | Filed as Exhibit 3.4 to the registrant’s Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference | ||||
3.5 | By-laws of AXA Financial, as amended effective March 23, 2000 | Filed as Exhibit 3.3 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference | ||||
4.1 | Form of Certificate for AXA Financial’s Common Stock, par value $.01 per share | Filed as Exhibit 4(c) to the registrant’s Form S-1 Registration Statement (No. 33-48115), dated May 26, 1992 and incorporated herein by reference | ||||
4.2 | Indenture, dated as of December 1, 1993, from AXA Financial to Chemical Bank, as Trustee | Filed as Exhibit 4.02 to the registrant’s Form S-4 Registration Statement (No. 33-73102), dated December 17, 1993 and incorporated herein by reference | ||||
4.3 | Fourth Supplemental Indenture, dated April 1, 1998, from AXA Financial to The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, together with forms of global Senior Note and global Senior Indenture | Filed as Exhibit 4.18(a) to the registrant’s Current Report on Form 8-K dated April 7, 1998 and incorporated herein by reference | ||||
4.4 | Fifth Supplemental Indenture, dated July 28, 2000, from AXA Financial to The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, together with the form of global Senior Note | Filed as Exhibit 4.18(d) to the registrant’s Current Report on Form 8-K dated July 31, 2000 and incorporated herein by reference | ||||
9.1(a) | Voting Trust Agreement dated as of May 12, 1992, among AXA, Claude Bébéar, Patrice Garnier and Henri de Clermont-Tonnerre | Filed as Exhibit 9 to the registrant’s Form S-1 Registration Statement (No. 33-48115), dated May 26, 1992 and incorporated herein by reference | ||||
9.1(b) | First Amendment dated January 22, 1997 to the Voting Trust Agreement dated as of May 12, 1992 | Filed as Exhibit 9(b) to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference | ||||
9.1(c) | Amended and Restated Voting Trust Agreement dated May 12, 2002 | Filed as Exhibit 9.1(c) to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference | ||||
10.1 | Cooperation Agreement, dated as of July 18, 1991, as amended among AXA Equitable, AXA Financial and AXA | Filed as Exhibit 10(d) to the registrant’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 Equitable, AXA Financial and AXA | Filed as Exhibit 10(e) to the registrant’s Form S-1 Registration Statement (No. 33-48115), dated May 26, 1992 and incorporated herein by reference | ||||
Number | Description | Method of Filing | ||||
10.3 | Amended and Restated Reinsurance Agreement, dated as of March 29, 1990, between AXA Equitable and First Equicor Life Insurance Company | Filed as Exhibit 10(o) to the registrant’s Form S-1 Registration Statement (No. 33-48115), dated May 26, 1992 and incorporated herein by reference | ||||
10.4 | The Amended and Restated Transfer Agreement dated as of February 23, 1993, as amended and restated on May 28, 1993, among Alliance, Equitable Capital and Equitable Investment Corporation | Filed as Exhibit 19 to the registrant’s Statement on Schedule 13D dated July 29, 1993 and incorporated herein by reference | ||||
10.5 | Management Compensation Arrangements with Messrs. Bébéar and de Castries | Filed as Exhibit 10.22 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference | ||||
10.6 | Exchange Agreement dated as of September 27, 1994, between AXA and AXA Financial | Filed as Exhibit 10.01 to registrant’s Form S-4 Registration Statement (No. 33-84462), dated September 28, 1994 and incorporated herein by reference | ||||
10.7 | Employment Agreement dated May 11, 2001 between AXA Financial, AXA Equitable and Christopher M. Condron + | Filed as Exhibit 10.16 to the registrant’s Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by reference | ||||
13.1 | AllianceBernstein Risk Factors | Filed herewith | ||||
18 | Preferability Letter from PricewaterhouseCoopers LLP | Filed as Exhibit 18 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002 and incorporated herein by reference | ||||
21 | Subsidiaries of the registrant | Omitted pursuant to General Instruction I of Form 10-K | ||||
23.1 | Consent of PricewaterhouseCoopers LLP | Filed herewith | ||||
23.2 | Consent of KPMG LLP (regarding AllianceBernstein L.P. and subsidiaries) | Filed herewith | ||||
23.3 | Consent of KPMG LLP (regarding AllianceBernstein Holding L.P.) | Filed herewith | ||||
31.1 | Section 302 Certification made by the registrant’s Chief Executive Officer | Filed herewith | ||||
31.2 | Section 302 Certification made by the registrant’s Chief Financial Officer | Filed herewith | ||||
Number | Description | Method of Filing | ||||
32.1 | Section 906 Certification made by the registrant’s Chief Executive Officer | Filed herewith | ||||
32.2 | Section 906 Certification made by the registrant’s Chief Financial Officer | Filed herewith |