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 without NLG, before reinsurance ceded, reflected in the Consolidated Balance Sheet in Future policy benefits and other policyholders’ liabilities:



	GMDB			GMIB			Total
	(in millions)
Balance at January 1, 2017	$	3,165		$	3,872		$	7,037
Paid guarantee benefits	(272		)	(102		)	(374		)
Other changes in reserve	1,083			847			1,930
Balance at September 30, 2017	$	3,976		$	4,617		$	8,593
Balance at January 1, 2016	$	2,991		$	3,889		$	6,880
Paid guarantee benefits	(280		)	(249		)	(529		)
Other changes in reserve	478			903			1,381
Balance at September 30, 2016	$	3,189		$	4,543		$	7,732

The following table summarizes the ceded GMDB liabilities, reflected in the Consolidated Balance Sheet in amounts due to reinsurers:



	Nine Months Ended September 30,
	2017			2016
	(in millions)
Balance, beginning of year	$	1,558		$	1,430
Paid guarantee benefits	(132		)	(137		)
Other changes in reserve	555			253
Balance, End of Period	$	1,981		$	1,546

The liability for the GMxB derivative features and the liability for SCS, SIO, MSO and IUL indexed features are considered embedded or freestanding insurance derivatives and are reported at fair value. Summarized in the table below are the fair values of these liabilities at September 30, 2017 and December 31, 2016:



	September 30, 2017			December 31, 2016
	(In Millions)

GMIBNLG ⁽¹⁾	$	4,289		$	5,125
SCS,MSO, IUL features⁽²⁾	1,437			875
GWBL/GMWB⁽¹⁾	85			114
GIB⁽¹⁾	(6		)	30
GMAB⁽¹⁾	8			20
Total Embedded derivatives liability⁽¹⁾	$	5,813		$	6,164

GMIB reinsurance contract asset ⁽³⁾	$	10,933		$	10,309


(1)	Reported in Future policyholders' benefits and other policyholders' liabilities in the Consolidated Balance Sheets.


(2)	Reported in Policyholders' account balances in the Consolidated Balance Sheets.


(3)	Reported in GMIB reinsurance contract asset in the Consolidated Balance Sheets.

The September 30, 2017 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	$	13,860		$	112		$	67		$	207		$	14,246
Separate Accounts	$	44,277		$	9,375		$	3,479		$	35,272		$	92,403
Net amount at risk, gross	$	180		$	64		$	2,059		$	15,775		$	18,078
Net amount at risk, net of amounts reinsured	$	180		$	44		$	1,403		$	6,556		$	8,183
Average attained age of contractholders	51.4			66.2			72.8			68.1			55.3
Percentage of contractholders over age 70	9.6		%	39.4		%	62.4		%	45.6		%	18.0		%
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			$	24		$	303		$	327
Separate Accounts	N/A			N/A			$	20,382		$	40,687		$	61,069
Net amount at risk, gross	N/A			N/A			$	982		$	6,655		$	7,637
Net amount at risk, net of amounts reinsured	N/A			N/A			$	297		$	1,649		$	1,946
Weighted average years remaining until annuitization	N/A			N/A			1.7			0.9			1.0
Range of contractually specified interest rates	N/A			N/A			3%-6%			3%-6.5%			3%-6.5%

At September 30, 2017, the Company had reinsured with non-affiliates and affiliates in the aggregate approximately 3.7% and 51.1%, 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 17.2% and 57.3%, respectively, of its current liability exposure resulting from the GMIB feature.

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, 2017		December 31, 2016
	(in millions)
GMDB:
Equity	$	75,751	$	69,625
Fixed income	2,288		2,483
Balanced	14,056		14,434
Other	308		348
Total	$	92,403	$	86,890
GMIB:
Equity	$	49,177	$	45,931
Fixed income	1,602		1,671
Balanced	10,148		10,097
Other	142		149
Total	$	61,069	$	57,848

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 September 30, 2017, the total account value and net amount at risk of the hedged variable annuity contracts were $54,712 million and $7,195 million, respectively, with the GMDB feature and $41,146 million and $2,866 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 income (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, 2017	$	1,208		$	(619	)	$	589
Paid Guaranteed Benefits	—			—			—
Other changes in reserves	216			(70		)	146
Balance at September 30, 2017	$	1,424		$	(689	)	$	735
Balance at January 1, 2016	$	1,155		$	(519	)	$	636
Other changes in reserves	(29		)	(82		)	(111		)
Balance at September 30, 2016	$	1,126		$	(601	)	$	525

E) Loss Recognition Testing

After the initial establishment of reserves, loss recognition tests are performed using best estimate assumptions as of the testing date without provisions for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for the aggregate product group are insufficient to provide for expected future policy benefits and expenses for that line of business (i.e., reserves net of any DAC asset), DAC is first written off, and thereafter a premium deficiency reserve is established by a charge to income.

In 2017 and 2016, we determined that we had a loss recognition in certain of our variable interest sensitive life insurance products due to low interest rates. As of September 30, 2017 and December 31, 2016, we wrote off $134 million and $308 million, respectively, of the DAC balance through accelerated amortization.

In addition, we are required to analyze the impacts from net unrealized investment gains and losses on our available-for-sale investment securities backing insurance liabilities, as if those unrealized investment gains and losses were realized. These adjustments result in the recognition of unrealized gains and losses on related insurance assets and liabilities in a manner consistent with the recognition of the unrealized gains and losses on available-for-sale investment securities within the statements of comprehensive income and changes in equity. Changes to net unrealized investment (gains) losses may increase or decrease the ending DAC balance. Similar to a loss recognition event, when the DAC balance is reduced to zero, additional insurance liabilities are established if necessary. Unlike a loss recognition event, based on changes in net unrealized investment (gains) losses, these adjustments may reverse from period to period. In 2017 and 2016, due primarily to the decline in interest rates increasing unrealized investments gains, we wrote-off $78 million and $22 million during the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, of our DAC balance, and a cumulative decrease in the accumulated effect of net unrealized investment gains of approximately $147 million and $41 million as of September 30, 2017 and December 31, 2016, respectively, with an offsetting amount recorded in other comprehensive income (loss). There was no impact to net income (loss).