GMDB, GMIB, GIB, GWBL AND OTHER FEATURES AND NO LAPSE GUARANTEE FEATURES

A) Variable Annuity Contracts – GMDB, GMIB, GIB and GWBL and Other Features

The Company has certain variable annuity contracts with GMDB, GMIB, GIB and GWBL and other features in-force that guarantee one of the following:


•	Return of Premium: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals);


•	Ratchet: the benefit is the greatest of current account value, premiums paid (adjusted for withdrawals), or the highest account value on any anniversary up to contractually specified ages (adjusted for withdrawals);


•	Roll-Up: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified interest rates up to specified ages;


•	Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit, which may include either a five year or an annual reset; or


•	Withdrawal: the withdrawal is guaranteed up to a maximum amount per year for life.

The following table summarizes the GMDB and GMIB liabilities, before reinsurance ceded, reflected in the General Account in future policy benefits and other policyholders’ liabilities:



	GMDB			GMIB			Total
	(In Millions)
Balance at January 1, 2013	$	1,772		4,561			$	6,333
Paid guarantee benefits	(237		)	(325		)	(562		)
Other changes in reserve	91			(33		)	58
Balance at December 31, 2013	1,626			4,203			5,829
Paid guarantee benefits	(231		)	(220		)	(451		)
Other changes in reserve	334			1,661			1,995
Balance at December 31, 2014	1,729			5,644			7,373
Paid guarantee benefits	(313		)	(89		)	(402		)
Other changes in reserve	1,570			(258		)	1,312
Balance at December 31, 2015	$	2,986		$	5,297		$	8,283

Related GMDB reinsurance ceded amounts were:



	GMDB
	(In Millions)
Balance at January 1, 2013	$	844
Paid guarantee benefits	(109		)
Other changes in reserve	56
Balance at December 31, 2013	791
Paid guarantee benefits	(114		)
Other changes in reserve	155
Balance at December 31, 2014	832
Paid guarantee benefits	(148		)
Other changes in reserve	746
Balance at December 31, 2015	$	1,430

The GMIB reinsurance contracts are considered derivatives and are reported at fair value.

The December 31, 2015 values for variable annuity contracts in force on such date with GMDB and GMIB features are presented in the following table. For contracts with the GMDB feature, the net amount at risk in the event of death is the amount by which the GMDB benefits exceed related account values. For contracts with the GMIB feature, the net amount at risk in the event of annuitization is the amount by which the present value of the GMIB benefits exceeds related account values, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. Since variable annuity contracts with GMDB guarantees may also offer GMIB guarantees in the same contract, the GMDB and GMIB amounts listed are not mutually exclusive:



	Return of Premium			Ratchet			Roll-Up			Combo			Total
	(Dollars In Millions)
GMDB:
Account values invested in:
General Account	$	13,037		$	132		$	78		$	244		$	13,491
Separate Accounts	$	38,438		$	8,570		$	3,472		$	34,160		$	84,640
Net amount at risk, gross	$	397		$	422		$	2,389		$	15,872		$	19,080
Net amount at risk, net of amounts reinsured	$	397		$	302		$	1,616		$	6,743		$	9,058
Average attained age of contractholders	51.1			65.4			71.7			66.4			55.0
Percentage of contractholders over age 70	9.0		%	35.4		%	58.1		%	38.2		%	16.6		%
Range of contractually specified interest rates	N/A			N/A			3%-6%			3%-6.5%			3%-6.5%
GMIB:
Account values invested in:
General Account	N/A			N/A			$	41		$	351		$	392
Separate Accounts	N/A			N/A			$	15,467		$	41,092		$	56,559
Net amount at risk, gross	N/A			N/A			$	1,179		$	6,232		$	7,411
Net amount at risk, net of amounts reinsured	N/A			N/A			$	351		$	1,561		$	1,912
Weighted average years remaining until annuitization	N/A			N/A			1.4			1.9			1.9
Range of contractually specified interest rates	N/A			N/A			3%-6%			3%-6.5%			3%-6.5%

The liability for SCS, SIO, MSO and IUL indexed features and the GIB and GWBL and other features, not included above, was $494 million and $508 million at December 31, 2015 and 2014, respectively, which are accounted for as embedded derivatives. The liability for GIB, GWBL and other features reflects the present value of expected future payments (benefits) less the fees attributable to these features over a range of market consistent economic scenarios. The liability for SCS, SIO, MSO and IUL reflects the present value of expected future payments assuming the segments are held to maturity.

In-force management

The Company continues to proactively manage its in-force business. For example:

•

GMIB/GWBL Lump Sum Option. In 2015, the Company added a lump sum option to certain contracts with GMIB and GWBL benefits. Prior to the addition of this option, if an eligible contractholder’s adjusted account value fell to zero, the contractholder would automatically receive a stream of payments over his or her lifetime. With this option, eligible contractholders now have the ability to receive a percentage of the present value of those lifetime payments in a one-time lump sum payment.


•	GMDB/GMIB Buyback. Beginning in 2012, the Company initiated several programs to purchase from certain contractholders the GMDB and GMIB riders contained in their Accumulator® contracts. Most recently in 2015, the Company initiated a program to give contractholders an option to elect a full buyout of their rider or a new partial (50%) buyout of their rider.

The Company believes that the lump sum option and buyback programs are mutually beneficial to both the Company and contractholders who no longer need or want the GMDB, GMIB or GWBL rider. As a result of the 2015 buyback program, the Company is assuming a change in the short-term behavior of remaining contractholders, as those who do not accept are assumed to be less likely to surrender their contract over the short term. The Company is also incorporating the expectation that some contractholders will utilize the new lump sum option product feature.

Due to the difference in accounting recognition between the GMDB/GMIB and GWBL reserves and the fair value of the GMIB reinsurance contract asset, the net impact of the addition of the lump sum option to certain contracts and the 2015 buyback offer is an after-tax loss of $247 million, which was recognized in 2015. The net impact of a 2013 buyback that completed in 2014 was an after-tax loss of $29 million and $20 million to Net earnings in 2014 and 2013, respectively. For additional information, see “Accounting for VA Guarantee Features” in Note 2.

B) Separate Account Investments by Investment Category Underlying GMDB and GMIB Features

The total account values of variable annuity contracts with GMDB and GMIB features include amounts allocated to the guaranteed interest option, which is part of the General Account and variable investment options that invest through Separate Accounts in variable insurance trusts. The following table presents the aggregate fair value of assets, by major investment category, held by Separate Accounts that support variable annuity contracts with GMDB and GMIB benefits and guarantees. The investment performance of the assets impacts the related account values and, consequently, the net amount of risk associated with the GMDB and GMIB benefits and guarantees. Since variable annuity contracts with GMDB benefits and guarantees may also offer GMIB benefits and guarantees in each contract, the GMDB and GMIB amounts listed are not mutually exclusive:

Investment in Variable Insurance Trust Mutual Funds



	December 31,
	2015		2014
	(In Millions)
GMDB:
Equity	$	66,230	$	67,108
Fixed income	2,686		3,031
Balanced	15,350		17,505
Other	374		404
Total	$	84,640	$	88,048
GMIB:
Equity	$	43,874	$	43,850
Fixed income	1,819		1,988
Balanced	10,696		12,060
Other	170		186
Total	$	56,559	$	58,084

C) Hedging Programs for GMDB, GMIB, GIB and GWBL and Other Features

Beginning in 2003, AXA Equitable established a program intended to hedge certain risks associated first with the GMDB feature and, beginning in 2004, with the GMIB feature of the Accumulator® series of variable annuity products. The program has also been extended to cover other guaranteed benefits as they have been made available. This program utilizes derivative contracts, such as exchange-traded equity, currency and interest rate futures contracts, total return and/or equity swaps, interest rate swap and floor contracts, swaptions, variance swaps as well as equity options, that collectively are managed in an effort to reduce the economic impact of unfavorable changes in guaranteed benefits’ exposures attributable to movements in the capital markets. At the present time, this program hedges certain economic risks on products sold from 2001 forward, to the extent such risks are not reinsured. At December 31, 2015, the total account value and net amount at risk of the hedged variable annuity contracts were $50,333 million and $7,841 million, respectively, with the GMDB feature and $32,740 million and $1,560 million, respectively, with the GMIB and GIB feature.

These programs do not qualify for hedge accounting treatment. Therefore, gains (losses) on the derivatives contracts used in these programs, including current period changes in fair value, are recognized in net investment income (loss) in the period in which they occur, and may contribute to earnings (loss) volatility.

D) Variable and Interest-Sensitive Life Insurance Policies – No Lapse Guarantee

The no lapse guarantee feature contained in variable and interest-sensitive life insurance policies keeps them in force in situations where the policy value is not sufficient to cover monthly charges then due. The no lapse guarantee remains in effect so long as the policy meets a contractually specified premium funding test and certain other requirements.

The following table summarizes the no lapse guarantee liabilities, reflected in the General Account in Future policy benefits and other policyholders’ liabilities, the related reinsurance reserve ceded, reflected in Amounts due from reinsurers and deferred cost of reinsurance, reflected in Other assets in the Consolidated balance sheets.



	Direct Liability		Reinsurance Ceded			Net
	(In Millions)
Balance at January 1, 2013	$	556	$	(310	)	$	246
Other changes in reserves	273		(131		)	142
Balance at December 31, 2013	829		(441		)	388
Other changes in reserves	135		(114		)	21
Balance at December 31, 2014	964		(555		)	409
Other changes in reserves	120		16			136
Balance at December 31, 2015	$	1,084	$	(539	)	$	545