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 Balance Sheet in future policy benefits and other policyholders’ liabilities:



	GMDB			GMIB			Total
	(In Millions)
Balance at January 1, 2016	$	2,986		$	5,297		$	8,283
Paid guarantee benefits	(280		)	(249		)	(529		)
Other changes in reserve	491			1,170			1,661
Balance at September 30, 2016	$	3,197		$	6,218		$	9,415
Balance at January 1, 2015	$	1,729		$	5,644		$	7,373
Paid guarantee benefits	(229		)	(45		)	(274		)
Other changes in reserve	413			784			1,197
Balance at September 30, 2015	$	1,913		$	6,383		$	8,296

Related GMDB reinsurance ceded amounts were:



	Nine Months Ended September 30,
	2016			2015
	(In Millions)
Balance, beginning of year	$	1,430		$	832
Paid guarantee benefits	(137		)	(108		)
Other changes in reserve	253			193
Balance, End of Period	$	1,546		$	917

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

The September 30, 2016 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	$	13,552		$	124		$	74		$	233		$	13,983
Separate Accounts	$	40,144		$	8,857		$	3,420		$	33,935		$	86,356
Net amount at risk, gross	$	252		$	190		$	2,318		$	16,366		$	19,126
Net amount at risk, net of amounts reinsured	$	252		$	133		$	1,576		$	7,021		$	8,982
Average attained age of contractholders	51.3			65.7			72.2			66.9			55.2
Percentage of contractholders over age 70	9.2		%	36.6		%	59.7		%	40.0		%	17.1		%
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			$	35		$	335		$	370
Separate Accounts	N/A			N/A			$	17,592		$	39,968		$	57,560
Net amount at risk, gross	N/A			N/A			$	1,322		$	8,850		$	10,172
Net amount at risk, net of amounts reinsured	N/A			N/A			$	406		$	2,289		$	2,695
Weighted average years remaining until annuitization	N/A			N/A			1.6			1.4			1.4
Range of contractually specified interest rates	N/A			N/A			3%-6%			3%-6.5%			3%-6.5%

At September 30, 2016, the Company had reinsured with non-affiliates and affiliates in the aggregate approximately 3.9% and 49.1%, respectively, of its current exposure to the GMDB obligation on annuity contracts in-force and, subject to certain maximum amounts or caps in any one period, approximately 17.9% and 55.6%, respectively, of its current liability exposure resulting from the GMIB feature.

The liability for SCS, SIO, MSO, IUL, GIB and GWBL and Other Features, not included above, was $950 million and $494 million at September 30, 2016 and December 31, 2015, 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.

•

Variable Annuity In-force management. The Company continues to proactively manage its variable annuity in-force business. 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 December 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 buyback programs are mutually beneficial to both the Company and contractholders who no longer need or want the GMDB or GMIB rider. To reflect the actual payments and reinsurance credit received from the December 2015 buyback that completed in March 2016 the Company recognized a $4 million increase to Net earnings in the first nine months of 2016. 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



	September 30, 2016		December 31, 2015
	(In Millions)
GMDB:
Equity	$	68,655	$	66,230
Fixed income	2,630		2,686
Balanced	14,718		15,350
Other	353		374
Total	$	86,356	$	84,640
GMIB:
Equity	$	45,339	$	43,874
Fixed income	1,772		1,819
Balanced	10,296		10,696
Other	153		170
Total	$	57,560	$	56,559

C) Hedging Programs for GMDB and GMIB 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 equity and fixed income markets. At the present time, this program hedges certain economic risks on products sold, to the extent such risks are not reinsured. At September 30, 2016, the total account value and net amount at risk of the hedged variable annuity contracts were $51,698 million and $7,862 million, respectively, with the GMDB feature and $38,172 million and $3,808 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 Balance Sheet in Future policy benefits and other policyholders’ liabilities and the related reinsurance ceded:



	Direct Liability		Reinsurance Ceded			Net
	(In Millions)
Balance at January 1, 2016	$	1,084	$	(539	)	$	545
Other changes in reserves	36		(66		)	(30		)
Balance at September 30, 2016	$	1,120	$	(605	)	$	515
Balance at January 1, 2015	$	964	$	(555	)	$	409
Other changes in reserves	116		38			154
Balance at September 30, 2015	$	1,080	$	(517	)	$	563