SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: September 4, 2002
Date of earliest event reported: September 3, 2002
AXA FINANCIAL, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 1-11166 13-3623351
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
1290 Avenue of the Americas
New York, New York 10104
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(Address of principal executive offices) (Zip Code)
(212) 554-1234
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(Registrant's telephone number, including area code)
None
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(Former name or address, if changed since last report)
ITEM 9. REGULATION FD DISCLOSURE
The information provided in connection with Item 9 of this report is being
furnished pursuant to Regulation FD of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). In accordance with General Instruction B of Form
8-K, the information provided in connection with Item 9 of this report shall not
be deemed to be "filed" for purposes of Section 18 of the Exchange Act or
otherwise subject to the liabilities of that section or Sections 11 and 12(a)
(2) of the Securities Act of 1933, as amended (the "Securities Act"), nor shall
it be deemed incorporated by reference in any filing under the Securities Act.
The furnishing of the information set forth in connection with Item 9 of this
report is not intended to, and does not, constitute a determination or admission
as to the materiality or completeness of such information that is required to be
disclosed solely by Regulation FD.
At a meeting held with security analysts on September 3, 2002, Vice Chairman and
Chief Financial Officer of the Registrant, Stanley B. Tulin, discussed the
following relating to DAC amortization:
Deferred Acquisition Costs ("DAC") for interest sensitive and variable life
insurance and variable annuities are amortized in accordance with the
requirements of SFAS No. 97, "Accounting and Reporting by Insurance Enterprises
for Certain Long-Duration Contracts and for Realized Gains and Losses from the
Sale of Investments". DAC is amortized over the expected total life of the
contracts as a constant percentage of estimated gross profits arising
principally from investment results, separate account fees, mortality and
expense margins and surrender charges based on historical and anticipated future
experience, updated at the end of each accounting period. The effect on the
amortization of DAC of revisions to estimated gross profits is reflected in
earnings in the period such estimated gross profits are revised ("DAC
unlocking"). A decrease in expected gross profits would accelerate DAC
amortization. Conversely, an increase in expected gross profits would slow DAC
amortization.
In second quarter 2002, among the assumptions modified to reflect emerging
experience were projected future separate account performance, annuity
surrenders and life mortality.
Expected future gross profit assumptions related to separate account performance
are set using a long term view of expected average market returns by applying a
reversion to the mean approach. In applying this approach in prior periods,
future assumptions of separate account performance were set such that actual
market returns would, when combined with estimated returns over the following
four years, generate an average gross return of 9% over that period. The average
gross long term return estimate of 9% is developed with reference to historical
long term equity market performance. As indicated in Table 1 below, in 2000, the
favorable actual performance in earlier periods was combined with estimates of
lower future performance resulting in an average gross separate account return
of 9%, on a cumulative basis. However, continued poor market performance through
the second quarter of 2002 would have required estimates of future separate
account performance in excess of levels thought reasonable in the current
environment. Therefore, the assumptions for future gross long term separate
account performance as of June 30, 2002 have been set at 9%, without regard to
actual performance through June 30, 2002. As in prior periods, the reversion to
the mean approach will continue to be applied, subject to assessment of the
reasonableness of resulting estimates of future return assumptions.
Annuity surrender and life mortality assumptions, in the aggregate, have been
adjusted to more closely reflect improved emerging experience.
The net effect of updating the assumptions underlying the estimate of future
gross profits as required by SFAS No. 97, including projected future separate
account performance, annuity surrenders and life mortality, resulted in no
significant change to the aggregate total gross profits expected from these
products.
TABLE 1:
Separate Account Performance Assumptions Used in 2000 - Reversion to the mean
(9% gross; 7.5% net of separate account level fees and expenses)
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Actual net performance Assumed net future performance
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1997 19.0% 2000 - 7.5%
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1998 17.5 2001 - 7.5
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1999 22.5 2002 - 3.0
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2003 4.0
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2004 7.5
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Now - After unlocking, we are now assuming a level 7.5% net future performance
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Actual net performance Assumed net future performance
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2000 -12.7% 2H02 7.5%
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2001 -16.0 2003 7.5
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1H02 -18.0 2004 7.5
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2005 7.5
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2006 7.5
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TABLE 2:
Equivest Surrender Rates
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BACK IN 2000:
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Weighted DAC Assumption Q1 2000 Actual Difference
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13.9% 9.2% 4.7%
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NOW:
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Weighted DAC Assumption ast 18 months Actual Difference
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8.7% 8.5% 0.2%
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This report contains forward-looking statements. While these forward-looking
statements represent our judgments and future expectations, a number of risks,
uncertainties and other important factors could cause actual developments and
results to differ materially from our expectations. These factors include
certain key factors that could adversely affect our businesses and financial
performance contained in our past and future filings and reports we file with
the SEC. The Registrant is not under any obligation to (and expressly disclaims
any such obligations to) update or alter its forward-looking statements whether
as a result of new information, future events or otherwise.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AXA FINANCIAL, INC.
Date: September 4, 2002 By: /s/ Alvin H. Fenichel
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Name: Alvin H. Fenichel
Title: Senior Vice President
and Controller
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