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BUSINESS SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Business Segment Information
BUSINESS SEGMENT INFORMATION
The Company has four reportable segments: Individual Retirement, Group Retirement, Investment Management and Research and Protection Solutions.
The Company changed its segment presentation in the fourth quarter 2017. The segment disclosures are based on the intention to provide the users of the financial statements with a view of the business from the Company’s perspective. As a result, the Company determined that it is more useful for a user of the financial statements to assess the historical performance on the basis which management currently evaluates the business. The reportable segments are based on the nature of the business activities.
These segments reflect the manner by which the Company’s chief operating decision maker views and manages the business. A brief description of these segments follows:
•
The Individual Retirement segment offers a diverse suite of variable annuity products which are primarily sold to affluent and high net worth individuals saving for retirement or seeking retirement income.
•
The Group Retirement segment offers tax-deferred investment and retirement plans to be sponsored by educational entities, municipalities and not-for-profit entities as well as small and medium-sized businesses.
•
The Investment Management and Research segment provides diversified investment management, research and related solutions globally to a broad range of clients through three main client channels- Institutional, Retail and Private Wealth Management-and distributes its institutional research products and solutions through Bernstein Research Services.
•
The Protection Solutions segment includes our life insurance and group employee benefits businesses. Our life insurance business offers a variety of variable universal life, universal life and term life products to help affluent and high net worth individuals, as well as small and medium-sized business owners, with their wealth protection, wealth transfer and corporate needs. Our group employee benefits business offers a suite of dental, vision, life, and short- and long-term disability and other insurance products to small and medium-size businesses across the United States.
Measurement
Operating earnings (loss) is the financial measure which primarily focuses on the Company’s segments’ results of operations as well as the underlying profitability of the Company’s core business. By excluding items that can be distortive and unpredictable such as investment gains (losses) and investment income (loss) from derivative instruments, the Company believes operating earnings (loss) by segment enhances the understanding of the Company’s underlying drivers of profitability and trends in the Company’s segments.
In the second quarter of 2018, the Company revised its Operating earnings definition as it relates to the treatment of certain elements of the profitability of its variable annuity products with indexed-linked features to align to the treatment of its variable annuity products with GMxB features. In addition, adjustments for variable annuity products with index-linked features previously included within Other adjustments in the calculation of Non-GAAP Operating Earnings are now included with the adjustments for variable annuity products with GMxB features in the broader adjustment category, Variable annuity product features.
Operating earnings is calculated by adjusting each segment’s Net income (loss) attributable to AXA Equitable for the following items:
•
Items related to Variable annuity product features which include certain changes in the fair value of the derivatives and other securities we use to hedge these features, the effect of benefit ratio unlock adjustments and changes in the fair value of the embedded derivatives reflected within Variable annuity products’ net derivative results;
•
Investment (gains) losses, which includes other-than-temporary impairments of securities, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
•
Loss on the recapture of GMxB business previously ceded to AXA Arizona;
•
Net actuarial (gains) losses, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period related to pension, other postretirement benefit obligations and the one-time impact of the settlement of the defined benefit obligation;
•
Other adjustments, which includes restructuring costs related to severance, lease write-offs related to non-recurring restructuring activities and separation costs; and
•
Income tax expense (benefit) related to the above items and non-recurring tax items which includes the effect of uncertain tax positions for a given audit period and the Tax Reform Act.
Revenues derived from any customer did not exceed 10% of revenues for the three and six months ended June 30, 2018 and 2017.
The table below presents operating earnings (loss) by segment and Corporate and Other and a reconciliation to Net income (loss) attributable to AXA Equitable for the three and six months ended June 30, 2018 and 2017, respectively:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in millions)
Net income (loss) attributable to AXA Equitable
(2,114
)
 
1,500

 
(2,401
)
 
1,328

Adjustments related to:
 
 
 
 
 
 
 
Variable annuity product features (1)
516

 
(1,258
)
 
1,252

 
(785
)
Investment (gains) losses
5

 
(10
)
 
(82
)
 
1

Loss on the recapture of GMxB business previously ceded to AXA Arizona
2,627

 
—

 
2,627

 
—

Net actuarial (gains) losses related to pension and other postretirement benefit obligations
20

 
21

 
113

 
48

Other adjustments
47

 
22

 
107

 
6

Income tax expense (benefit) related to above adjustments
(671
)
 
444

 
(832
)
 
259

Non-recurring tax items
15

 
(222
)
 
22

 
(218
)
Non-GAAP Operating Earnings
$
445

 
$
497

 
$
806

 
$
639

Operating earnings (loss) by segment:
 
 
 
 
 
 
 
Individual Retirement
$
399

 
$
473

 
$
695

 
$
610

Group Retirement
49

 
64

 
134

 
113

Investment Management and Research
53

 
53

 
104

 
65

Protection Solutions
(1
)
 
(11
)
 
(13
)
 
(39
)
Corporate and Other(1)
(55
)
 
(82
)
 
(114
)
 
(110
)
Total
$
445

 
$
497

 
$
806

 
$
639

(1)
Includes interest expense of $11 million, $22 million, $6 million, and $11 million, for the three and six months ended June 30, 2018 and 2017, respectively.
Segment revenues are a measure of the Company’s revenue by segment as adjusted to exclude certain items. The following table reconciles segment revenues to Total revenues by excluding the following items:
•
Items related to Variable annuity product features, which include certain changes in the fair value of the derivatives and other securities we use to hedge these features and changes in the fair value of the embedded derivatives reflected within the net derivative results of Variable annuity product features;
•
Investment gains (losses), which include other-than-temporary impairments of securities, sales or disposals of securities/investments, realized capital gains/losses, and valuation allowances; and
•
Other adjustments, which includes the impact of adoption of revenue recognition standard (ASC 606).
The table below presents Segment revenues for the three and six months ended June 30, 2018 and 2017.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in millions)
Segment revenues:
 
 
 
 
 
 
 
Individual Retirement(1)
$
1,053

 
$
955

 
$
1,690

 
$
1,843

Group Retirement(1)
246

 
203

 
486

 
438

Investment Management and Research(2)
843

 
773

 
1,752

 
1,515

Protection Solutions(1)
620

 
595

 
1,265

 
1,229

Corporate and Other(1)
198

 
232

 
395

 
469

Adjustments related to:
 
 
 
 
 
 
 
Variable annuity product features
(510
)
 
1,759

 
(1,237
)
 
1,287

Investment gains (losses)
(5
)
 
10

 
82

 
(1
)
Other adjustments to segment revenues
(6
)
 
21

 
(46
)
 
43

Total revenues
$
2,439

 
$
4,548

 
$
4,387

 
$
6,823

(1)
Includes investment expenses charged by AB of approximately $16 million, $32 million, $13 million and $24 million for the three and six months ended June 30, 2018 and 2017, respectively, for services provided to the Company.
(2)
Inter-segment investment management and other fees of approximately $23 million, $46 million, $18 million and $36 million for the three and six months ended June 30, 2018 and 2017, respectively, are included in total revenues of the Investment Management and Research segment.

The table below presents Total assets by segment as of June 30, 2018 and December 31, 2017:
 
June 30,
2018
 
December 31,
2017
 
(in millions)
Total assets by segment:
 
 
 
Individual Retirement
$
104,958

 
$
120,612

Group Retirement
43,877

 
40,472

Investment Management and Research
9,182

 
10,079

Protection Solutions
38,319

 
34,328

Corporate and Other
22,970

 
20,494

Total assets
$
219,306

 
$
225,985