CLOSED BLOCK

The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in AOCI) represents the expected maximum future post-tax earnings from the Closed Block that would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. As of January 1, 2001, AXA Equitable has developed an actuarial calculation of the expected timing of AXA Equitable’s Closed Block’s earnings.

If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block.

Many expenses related to Closed Block operations, including amortization of DAC, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block.

Summarized financial information for the Closed Block follows:



	March 31, 2016		December 31, 2015
	(In Millions)
CLOSED BLOCK LIABILITIES:
Future policy benefits, policyholders’ account balances and other	$	7,296	$	7,363
Policyholder dividend obligation	160		81
Other liabilities	71		100
Total Closed Block liabilities	7,527		7,544
ASSETS DESIGNATED TO THE CLOSED BLOCK:
Fixed maturities, available for sale, at fair value (amortized cost of $4,216 and $4,426)	4,466		4,599
Mortgage loans on real estate	1,738		1,575
Policy loans	872		881
Cash and other invested assets	101		49
Other assets	177		258
Total assets designated to the Closed Block	7,354		7,362
Excess of Closed Block liabilities over assets designated to the Closed Block	173		182
Amounts included in accumulated other comprehensive income (loss):
Net unrealized investment gains (losses), net of deferred income tax (expense) benefit of $(35) and $(36) and policyholder dividend obligation of $(160) and $(81)	65		67
Maximum Future Earnings To Be Recognized From Closed Block Assets and Liabilities	$	238	$	249

Closed Block revenues and expenses were as follows:



	Three Months Ended March 31,
	2016			2015
	(In Millions)
REVENUES:
Premiums and other income	$	63		$	69
Net investment income (loss)	89			92
Net investment gains (losses)	1			1
Total revenues	153			162
BENEFITS AND OTHER DEDUCTIONS:
Policyholders’ benefits and dividends	136			153
Other operating costs and expenses	—			—
Total benefits and other deductions	136			153
Net revenues (loss) before income taxes	17			9
Income tax (expense) benefit	(6		)	(3		)
Net Revenues (Losses)	$	11		$	6

Reconciliation of the policyholder dividend obligation follows:



	Three Months Ended March 31,
	2016		2015
	(In Millions)
Balances, beginning of year	$	81	$	201
Unrealized investment gains (losses), net of DAC	79		29
Balances, End of Period	$	160	$	230