Equitable Holdings, Inc. (EQH) FY 2023 MD&A

Executive Summary

Overview

We are one of America’s leading financial services companies, providing: (i) advice and solutions for helping Americans set and meet their retirement goals and protect and transfer their wealth across generations; and (ii) a wide range of investment management insights, expertise and innovations to drive better investment decisions and outcomes for clients worldwide.

We manage our business through six segments: Individual Retirement, Group Retirement, Investment Management and Research, Protection Solutions, Wealth Management and Legacy. We report certain activities and items that are not included in these segments in Corporate and Other. See Note 21 of the Notes to the Consolidated Financial Statements for further information on our segments.

We benefit from our complementary mix of businesses. This business mix provides diversity in our earnings sources, which helps offset fluctuations in market conditions and variability in business results, while offering growth opportunities.

Internal Reinsurance Treaty

On May 17, 2023, Equitable Financial entered into a reinsurance agreement (the “Reinsurance Treaty”) with its affiliate, Equitable America, effective April 1, 2023. Pursuant to the Reinsurance Treaty, virtually all of Equitable Financial’s net retained General Account liabilities, including all of its net retained liabilities relating to the living benefit and death riders related to (i) its variable annuity contracts issued outside the State of New York prior to October 1, 2022 (and with respect to its EQUI-VEST variable annuity contracts, issued outside the State of New York prior to February 1, 2023) and (ii) certain universal life insurance policies issued outside the State of New York prior to October 1, 2022, were reinsured to Equitable America on a coinsurance funds withheld basis. In addition, all of the Separate Accounts liabilities relating to such variable annuity contracts were reinsured to Equitable America on a modified coinsurance basis. Equitable America’s obligations under the Reinsurance Treaty are secured through Equitable Financial’s retention of certain assets supporting the reinsured liabilities. This reinsurance treaty has no impact to the consolidated financial statements of the Company. The NYDFS and the Arizona Department of Insurance and Financial Institutions each approved the Reinsurance Treaty.

The Reinsurance Treaty further diversifies Equitable Financial’s sources of regulated cash flows and supports more stable dividends to the Company from Equitable Financial and Equitable America.

As a condition to approving the Reinsurance Treaty, the NYDFS has required that Equitable Financial seek to novate the reinsured contracts on a reasonable best efforts basis either to Equitable America or another affiliate over the next three years. Novations of the reinsured contracts are subject to additional regulatory approvals, as well as certain policyholder approvals.

Long - Duration Targeted Improvements (“LDTI”) Adoption

Effective January 1, 2023, the Company adopted ASU 2018-12 and elected a transition date of January 1, 2021, thereby permitting the Company to implement the standard only for the last two fiscal years rather than the customary last three fiscal years.

The Company adopted ASU 2018-12 for liability for future policy benefits, additional insurance liabilities, DAC and balances amortized on a basis consistent with DAC on a modified retrospective basis. ASU 2018-12 was adopted for MRBs on a full retrospective basis. See Note 2 of the Notes to the Consolidated Financial Statements for further information on the adoption of LDTI.

67

One of the most significant changes as result of the LDTI implementation are the MRBs. The following table presents the balances and changes to the balances for the market risk benefits for the GMxB benefits on deferred variable annuities:

____________

(1)    The effect of actual market movement in equity is materially offset by hedging gains/losses, which are not shown in the table above.

(2)    Attributed fees accrued represents the portion of the fees set aside to fund future GMxB claims. For our Core business, the $407 million attributed fees set aside is less than the explicit GMxB Rider fees we actually collect from policyholders. For our Core business, the net riders fees (rider fees charged minus attributed fees) reported in our policy charges and fee income is $78 million. This means that the GMxB rider fees we charge more than cover the future claims and hedging costs associated with the GMxB riders. For our Legacy business, the attributed fees of $843 million set aside to fund future GMxB claims is more than the rider fees actually collected from policyholders. This is because the product was not sufficiently priced for the claims we now expect. This required us to attribute a portion of the base contract fees, in addition to the rider fees, to reserve for the rider claims. Net rider fees (rider fees charged minus attributed fees), net of reinsurance, for Legacy business reported in the policy charges and fee income are a loss of $275 million, and are more than covered by base contract fees.

(3)    Actual policyholder behavior different from expected behavior measures the effectiveness of our modeling of policyholder behavior. Put differently, it measures the difference between our expectations about how our MRB rider reserves would change in response to policyholder behavior, and how our MRB rider reserves actually changed in response to policyholder behavior. For our Core business, the MRB rider reserve was $23 million higher than we expected after accounting for actual policyholder behavior. The unfavorable impact of this actual policyholder behavior was more than covered by the excess rider fees noted above. For our Legacy business, the impact on our GAAP earnings from policyholder behavior, net of reinsurance, was a net gain of $55 million.

(4)    Changes in future economic assumptions represents the impact from interest rates on the MRB balance. These fluctuations are offset through our interest rate hedging program which is reflected partially in GAAP Net Income with the remainder reflected in OCI.

Macroeconomic and Industry Trends

Our business and consolidated results of operations are significantly affected by economic conditions and consumer confidence, conditions in the global capital markets and the interest rate environment.

Financial and Economic Environment

A wide variety of factors continue to impact global financial and economic conditions. These factors include, among others, uncertainty regarding the federal debt limit, volatility in the capital markets, equity market declines, plateauing or decreasing economic growth, high fuel and energy costs, changes in fiscal or monetary policy and geopolitical tensions. The Russian invasion of the Ukraine and Hamas’s attack on Israel, and the ensuing conflicts and the sanctions and other measures imposed in response to these conflicts significantly increased the level of volatility in the financial markets and have increased the level of economic and political uncertainty.

68

Stressed conditions, volatility and disruptions in the capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio. In addition, our insurance liabilities and derivatives are sensitive to changing market factors, including equity market performance and interest rates, which continued to rise in 2023 but are expected to fall in 2024 based on statements of members of the Board of Governors of the Federal Reserve System. An increase in market volatility could continue to affect our business, including through effects on the yields we earn on invested assets, changes in required reserves and capital and fluctuations in the value of our AUM, AV or AUA from which we derive our fee income. These effects could be exacerbated by uncertainty about future fiscal policy, changes in tax policy, the scope of potential deregulation and levels of global trade.

The potential for increased volatility could pressure sales and reduce demand for our products as consumers consider purchasing alternative products to meet their objectives. In addition, this environment could make it difficult to consistently develop products that are attractive to customers. Financial performance can be adversely affected by market volatility and equity market declines as fees driven by AV and AUM fluctuate, hedging costs increase and revenues decline due to reduced sales and increased outflows. However, US equity markets registered strong gains in the final quarter of 2023, buoyed by slowing inflation data and expectations that the Federal Reserve Board has finished its rate hiking cycle and will move towards cuts in 2024.

We will continue to monitor the behavior of our customers and other factors, including mortality rates, morbidity rates, annuitization rates and lapse and surrender rates, which change in response to changes in capital market conditions, to ensure that our products and solutions remain attractive and profitable. For additional information on our sensitivity to interest rates and capital market prices, see “Risk Factors—Risks Relating to Conditions in the Financial Markets and Economy” and “Quantitative and Qualitative Disclosures About Market Risk.”

Regulatory Developments

Our life insurance subsidiaries are regulated primarily at the state level, with some policies and products also subject to federal regulation. In addition, Holdings and its insurance subsidiaries are subject to regulation under the insurance holding company laws of various U.S. jurisdictions. Furthermore, on an ongoing basis, regulators refine capital requirements and introduce new reserving standards. Regulations recently adopted or currently under review can potentially impact our statutory reserve, capital requirements and profitability of the industry and result in increased regulation and oversight for the industry. For additional information on regulatory developments and the risks we face, see “Business—Regulation” and “Risk Factors—Legal and Regulatory Risks.”

Revenues

Our revenues come from three principal sources:

•fee income derived from our retirement and protection products and our investment management and research services;

•premiums from our traditional life insurance and annuity products; and

•investment income from our General Account investment portfolio.

Our fee income varies directly in relation to the amount of the underlying AV or benefit base of our retirement and protection products and the amount of AUM of our Investment Management and Research business. AV and AUM, each as defined in “Key Operating Measures,” are influenced by changes in economic conditions, primarily equity market returns, as well as net flows. Our premium income is driven by the growth in new policies written and the persistency of our in-force policies, both of which are influenced by a combination of factors, including our efforts to attract and retain customers and market conditions that influence demand for our products. Our investment income is driven by the yield on our General Account investment portfolio and is impacted by the prevailing level of interest rates as we reinvest cash associated with maturing investments and net flows to the portfolio.

Benefits and Other Deductions

Our primary expenses are:

•policyholders’ benefits and interest credited to policyholders’ account balances;

•sales commissions and compensation paid to intermediaries and advisors that distribute our products and services; and

69

•compensation and benefits provided to our employees and other operating expenses.

Policyholders’ benefits are driven primarily by mortality, customer withdrawals, and benefits which change in response to changes in capital market conditions. In addition, some of our policyholders’ benefits are directly tied to the AV and benefit base of our variable annuity products. Interest credited to policyholders varies in relation to the amount of the underlying AV or benefit base. Sales commissions and compensation paid to intermediaries and advisors vary in relation to premium and fee income generated from these sources, whereas compensation and benefits to our employees are more constant and impacted by market wages and decline with increases in efficiency. Our ability to manage these expenses across various economic cycles and products is critical to the profitability of our company.

Net Income Volatility

We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. We are using a combination of General Account assets and derivatives to manage duration gap on an economic basis. The changes in the values of the derivatives associated with these programs due to equity and interest rate movements, together with the GMxB MRBs assets and liabilities, are recognized in net income in the periods in which they occur, while the General Account asset gains and losses are recorded in OCI resulting in an offset between OCI and net income. In addition, we conduct macro hedging to protect our statutory capital which could also cause net income volatility as further described below. Net income is also impacted by changes in our reinsurers credit spread, while changes in the Company’s credit spread is recorded in OCI. See “—Significant Factors Impacting Our Results—Impact of Hedging and GMIB Reinsurance on Results.”

In addition to our dynamic hedging strategy, we have static hedge positions designed to mitigate the adverse impact of changing market conditions on our statutory capital. We believe this program will continue to preserve the economic value of our variable annuity contracts and better protect our target variable annuity asset level. However, these static hedge positions increase the size of our derivative positions and may result in additional net income volatility on a period-over-period basis.

Due to the impacts on our net income of equity market and interest rate movements and other items that are not part of the underlying profitability drivers of our business, we evaluate and manage our business performance using Non-GAAP Operating Earnings, a non-GAAP financial measure that is intended to remove these impacts from our results. See “—Key Operating Measures—Non-GAAP Operating Earnings.”

Significant Factors Impacting Our Results

The following significant factors have impacted, and may in the future impact, our financial condition, results of operations or cash flows.

Impact of Hedging and GMxB Reinsurance on Results

We have offered and continue to offer variable annuity products with GMxB features. The future claims exposure on these features is sensitive to movements in the equity markets and interest rates. Accordingly, we have implemented hedging and reinsurance programs designed to mitigate the economic exposure to us from these features due to equity market and interest rate movements. These programs include:

•Variable annuity hedging programs. We use a dynamic hedging program (within this program, generally, we reevaluate our economic exposure at least daily and rebalance our hedge positions accordingly) to mitigate certain risks associated with the GMxB features that are embedded in our liabilities for our variable annuity products. This program utilizes various derivative instruments that are managed in an effort to reduce the economic impact of unfavorable changes in GMxB features’ exposures attributable to movements in the equity markets and interest rates. Although this program is designed to provide a measure of economic protection against the impact of adverse market conditions, it does not qualify for hedge accounting treatment. Accordingly, changes in value of the derivatives will be recognized in the period in which they occur with offsetting changes in reserves recognized in the current period. In addition, we utilize AFS fixed maturity securities in our General Account to mitigate the economic impact of unfavorable changes in GMxB features’ exposures attributable to movements in interest rates. However, the economic effect of interest rate changes on such securities is reflected in OCI, which results in net income volatility as the economic effect of interest rates on our GMxB MRB liabilities is reflected in net income.

70

•In addition to our dynamic hedging program, we have a hedging program using static hedge positions (derivative positions intended to be HTM with less frequent re-balancing) to protect our statutory capital against stress scenarios. This program, in addition to our dynamic hedge program, has increased the size of our derivative positions, resulting in additional net income volatility. The impacts are most pronounced for variable annuity products.

•GMxB reinsurance contracts. Historically, GMxB reinsurance contracts were used to cede to non-affiliated reinsurers a portion of our exposure to variable annuity products that offer GMxB features. We account for the reinsurance contracts as MRBs and report them at fair value. In addition, on June 1, 2021, we ceded legacy variable annuity policies sold by Equitable Financial between 2006-2008 (the “Block”), comprised of non-New York “Accumulator” policies containing fixed rate GMIB and/or GMDB guarantees.

Effect of Assumption Updates on Operating Results

During the third quarter of each year, we conduct our annual review of the assumptions underlying the valuation of DAC, deferred sales inducement assets, unearned revenue liabilities, liabilities for future policyholder benefits and market risk benefits for our Individual Retirement, Group Retirement, Protection Solutions, and Legacy segments (assumption reviews are not relevant for the Investment Management and Research and Wealth Management segments). Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgement and reflect our best estimate as of the date of the applicable financial statements.

Most of the variable annuity products, variable universal life insurance and universal life insurance products we offer maintain policyholder deposits that are reported as liabilities and classified within either Separate Accounts liabilities or policyholder account balances. Our products and riders also impact liabilities for future policyholder benefits, market risk benefits and unearned revenues and assets for DAC and DSI. The valuation of these assets and liabilities (other than deposits) is based on differing accounting methods depending on the product, each of which requires numerous assumptions and considerable judgment. The accounting guidance applied in the valuation of these assets and liabilities includes, but is not limited to, the following: (i) traditional life insurance products for which assumptions are updated annually to estimate the value of future death, morbidity or income benefits; (ii) universal life insurance and variable life insurance secondary guarantees for which benefit liabilities are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments; and (iii) certain product guarantees reported as market risk benefits at fair value.

For further details of our accounting policies and related judgments pertaining to assumption updates, see Note 2 of the Notes to the Consolidated Financial Statements.

Assumption Updates and Model Changes

We conduct our annual review of our assumptions and models during the third quarter of each year. We also update our assumptions as needed in the event we become aware of economic conditions or events that could require a change in our assumptions that we believe may have a significant impact to the carrying value of product liabilities and assets and consequently materially impact our earnings in the period of the change.

Impact of Assumption Updates and Model Changes on Income from Continuing Operations before income taxes and Net income (loss)

The table below presents the impact of our actuarial assumption update to our income (loss) from continuing operations, before income taxes and net income (loss).

71

2023 Assumption Updates

The impact of the economic assumption update during 2023 was a decrease of $5 million to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $4 million.

The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $5 million consisted of a decrease in other income of $9 million, an increase in remeasurement of liability for future policy benefits of $51 million, a decrease in policyholders’ benefits of $2 million and an decrease in change in market risk benefits and purchased market risk benefits of $53 million.

2022 Assumption Updates

The impact of the economic assumption update during 2022 was a decrease of $206 million to income (loss) from continuing operations, before income taxes and a decrease to net income (loss) of $163 million.

The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $206 million consisted of a increase in remeasurement of liability for future policy benefits of $14 million, a decrease in policyholders’ benefits of $13 million, an increase in change in market risk benefits and purchased market risk benefits of $204 million and an increase in interest credited to policyholder’s account balances of $1 million.

2021 Assumption Updates

The impact of the economic assumption update during 2021 was an increase of $400 million to income (loss) from continuing operations, before income taxes and an increase to net income (loss) of $316 million. As part of this annual update, the reference interest rate utilized in our GAAP fair value calculations was updated from the LIBOR swap curve to the US Treasury curve due to the impending cessation of LIBOR and our GAAP fair value liability risk margins. There were no other significant change to the process used to calculate the MRB balances.

The net impact of this assumption update on income (loss) from continuing operations, before income taxes of $400 million consisted of an increase in remeasurement of liability for future policy benefits of $33 million, an increase in policyholders’ benefits of $11 million, a decrease in change in market risk benefits and purchased market risk benefits of $446 million, an increase in interest credited to policyholder’s account balances of $1 million and a decrease in the amortization of DAC of $1 million.

Model Changes

There were no material model changes during 2023, 2022 and 2021.

Impact of Assumption Updates and Model Changes on Pre-tax Non-GAAP Operating Earnings Adjustments

The table below presents the impact on pre-tax Non-GAAP Operating Earnings of our actuarial assumption updates by segment and Corporate and Other.

2023 Assumption Updates

The impact of our 2023 annual review on Non-GAAP Operating Earnings was favorable by $15 million before taking into consideration the tax impacts, or $12 million after tax.

72

The net impact of assumption changes on Non-GAAP Operating Earnings increased other income by $4 million, decreased remeasurement of liability for future policy benefits by $10 million, and decreased policyholders’ benefits by $1 million. Non-GAAP Operating Earnings excludes items related to variable annuity product features, such as changes in the market risk benefits and purchased market risk benefits.

2022 Assumption Updates

The impact of our 2022 annual review on Non-GAAP Operating Earnings was unfavorable by $2 million before taking into consideration the tax impacts or $1 million after tax.

The net impact of assumption changes on Non-GAAP Operating Earnings increased remeasurement of liability for future policy benefits by $14 million, decreased policyholders’ benefits by $13 million and increased interest credited by to policyholder’s account balances by $1 million. Non-GAAP Operating Earnings excludes items related to variable annuity product features, such as changes in the market risk benefits and purchased market risk benefits.

2021 Assumption Updates

The impact of our 2021 annual review on Non-GAAP Operating Earnings was unfavorable by $48 million before taking into consideration the tax impacts or $38 million after tax. For Individual Retirement segment, the impacts primarily reflect updated mortality on our older payout business. For Group Retirement segment, the impacts reflect updated economic assumptions. The annual update for Protection Solutions segment reflects favorable economic conditions and surrenders primarily on the VUL line. This, in turn, creates future profits and lowers the accrual on our PFBL reserve.

The net impact of assumption changes on Non-GAAP Operating Earnings increased remeasurement of liability for future policy benefits by $33 million, increased Policyholders’ benefits by $11 million, increased interest credited by to policyholder’s account balances by $1 million and increased Amortization of DAC by $1 million. Non-GAAP Operating Earnings excludes items related to Variable annuity product features, such as changes in the market risk benefits and purchased market risk benefits.

Productivity

As part of our continuing efforts to drive productivity improvements, in May 2023, we began a new program expected to achieve $150 million of run-rate expense savings by 2027, of which $38 million has been achieved as of December 31, 2023. We expect to achieve these savings by optimizing our real estate footprint at both Equitable and AB in addition to other initiatives to improve operational efficiency.

As previously announced, we entered into a 15-year lease agreement in New York, NY at 1345 Avenue of the Americas which commenced in 2023 and will reduce rental expense beginning in 2024. We also realized expense efficiencies in office space leases as follows: in Syracuse, NY, we occupy space under a lease that was scheduled to expire in 2023, but which was amended to extend a portion of the space through 2028 at a lower total cost; and in Jersey City, NJ, we occupied space under a lease that expired in 2023 and was not extended or replaced.

As previously announced in 2018, AB established its corporate headquarters in Nashville, Tennessee at 501 Commerce Street and began the process of transitioning Finance, IT, Operations, Legal, Compliance, Internal Audit, Human Capital, and Sales and Marketing functions. As of December 31, 2023, 1,048 employees were located in Nashville. AB will continue to operate a principal location in New York City, which houses Portfolio Management, Sell-side Research and Trading, and New York-based Wealth Management Private Wealth businesses. Beginning in 2025, once this transition period has been completed, AB expects to realize an estimated $75 million of annual savings from a combination of lower occupancy and compensation expenses.

73

Key Operating Measures

In addition to our results presented in accordance with U.S. GAAP, we report Non-GAAP Operating Earnings, Non-GAAP Operating ROE, and Non-GAAP operating common EPS, each of which is a measure that is not determined in accordance with U.S. GAAP. Management principally uses these non-GAAP financial measures in evaluating performance because they present a clearer picture of our operating performance and they allow management to allocate resources. Similarly, management believes that the use of these Non-GAAP financial measures, together with relevant U.S. GAAP measures, provide investors with a better understanding of our results of operations and the underlying profitability drivers and trends of our business. These non-GAAP financial measures are intended to remove from our results of operations the impact of market changes (where there is a mismatch in the valuation of assets and liabilities) as well as certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results that are presented in accordance with U.S. GAAP and should not be viewed as a substitute for the U.S. GAAP measures. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Consequently, our non-GAAP financial measures may not be comparable to similar measures used by other companies.

We also discuss certain operating measures, including AUM, AUA, AV, Protection Solutions reserves and certain other operating measures, which management believes provide useful information about our businesses and the operational factors underlying our financial performance.

Non-GAAP Operating Earnings

Non-GAAP Operating Earnings is an after-tax non-GAAP financial measure used to evaluate our financial performance on a consolidated basis that is determined by making certain adjustments to our consolidated after-tax net income attributable to Holdings. The most significant of such adjustments relates to our derivative positions, which protect economic value and statutory capital, and the variable annuity product MRBs. This is a large source of volatility in net income.

Non-GAAP Operating Earnings equals our consolidated after-tax net income attributable to Holdings adjusted to eliminate the impact of the following items:

•Items related to variable annuity product features, which include: (i) changes in the fair value of market risk benefits and purchased market risk benefits, including the related attributed fees and claims, offset by derivatives and other securities used to hedge the market risk benefits which result in residual net income volatility as the change in fair value of certain securities is reflected in OCI and due to our statutory capital hedge program; and (ii) market adjustments to deposit asset or liability accounts arising from reinsurance agreements which do not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk;

•Investment (gains) losses, which includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;

•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 primarily include restructuring costs related to severance and separation, lease write-offs related to non-recurring restructuring activities, COVID-19 related impacts, net derivative gains (losses) on certain Non-GMxB derivatives, net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments, unrealized gain/losses and realized capital gains/losses from sales or disposals of select securities, certain legal accruals; a bespoke deal to repurchase UL policies from one entity that had invested in numerous policies purchased in the life settlement market, which disposed of the risk of additional COI litigation by that entity related to those UL policies, impact of the annual actuarial assumption updates attributable to LFPB; 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 a decrease of deferred tax valuation allowance.

In the third quarter 2023, the Company updated its operating earnings measure to exclude the impact of the annual actuarial assumption update attributable to LFPB as the majority of the earnings volatility attributable to these assumption updates relate to the Company’s Legacy and non-business segment products and as such do not represent the Company’s ongoing revenue generating activities or future business strategy, and impede comparability of operating results period over period. Operating earnings were favorably impacted by this change in the amount of $61 million for the year ended December 31, 2023. The presentation of operating earnings in prior periods was not revised to reflect this modification because the impact to those periods was immaterial.

74

Also, in the fourth quarter of 2023, the Company updated its operating earnings measure to exclude the impact of realized amounts related to equity classified instruments. The recognition of the realized capital gains and losses from investments in current net investment income is generally considered distortive and not reflective of the ongoing core business activities of the segments. Operating earnings were favorably impacted in the amount of $8 million for the year ended December 31, 2023. The presentation of operating earnings in prior periods was not revised to reflect this modification. The impact to operating earnings would have been $36 million favorable for the year ended December 31, 2022 and $50 million unfavorable for the year ended December 31, 2021.

Because Non-GAAP Operating Earnings excludes the foregoing items that can be distortive or unpredictable, management believes that this measure enhances the understanding of the Company’s underlying drivers of profitability and trends in our business, thereby allowing management to make decisions that will positively impact our business.

We use the prevailing corporate federal income tax rate of 21% while taking into account any non-recurring differences for events recognized differently in our financial statements and federal income tax returns as well as partnership income taxed at lower rates when reconciling Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings.

The table below presents a reconciliation of net income (loss) attributable to Holdings to Non-GAAP Operating Earnings:

___________

(1)Includes separation costs of $82 million for the year ended December 31, 2021. Separation costs were completed during 2021.

(2)Includes Non-GMxB related derivative hedge losses of $26 million, ($34) million and $65 million for the years ended December 31, 2023, 2022 and 2021, respectively.

(3)Includes certain gross legal expenses related to the cost of insurance litigation and claims related to a commercial relationship of $144 million, $218 million and $207 million for the year ended December 31, 2023, 2022 and 2021, respectively. Includes policyholder benefit costs of $75 million for the year ended December 31, 2022. Includes the impact of annual actuarial assumptions updates related to LFPB of $61 million for the year ended December 31, 2023. Prior period impact was immaterial and was not revised.

(4)Non-recurring tax items reflect primarily the effect of uncertain tax positions for a given audit period. For the twelve months ended December 31, 2023 includes tax valuation allowance decrease of $1 billion.

(5)Includes the impact of favorable assumption updates of $40 million for the year ended December 31, 2023. Includes the impact of unfavorable assumption updates of $204 million for the year ended December 31, 2022.

Non-GAAP Operating ROE

We calculate Non-GAAP Operating ROE by dividing Non-GAAP Operating Earnings for the previous twelve calendar months by consolidated average equity attributable to Holdings’ common shareholders, excluding AOCI. AOCI fluctuates period-to-period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities. Therefore, we believe excluding AOCI is more effective for analyzing the trends of our operations.

The following table presents return on average equity attributable to Holdings’ common shareholders, excluding AOCI and Non-GAAP Operating ROE for the year ended December 31, 2023.

75

Non-GAAP Operating Common EPS

Non-GAAP operating common EPS is calculated by dividing Non-GAAP Operating Earnings by diluted common shares outstanding. The following table sets forth Non-GAAP operating common EPS:

______________

(1)Includes separation costs of $0.20 for the year ended December 31, 2021. Separation costs were completed during 2021.

(2)Includes Non-GMxB related derivative hedge losses of $0.07, $(0.09) and $0.14 for the years ended December 31, 2023, 2022 and 2021, respectively.

(3)Includes certain gross legal expenses related to the COI litigation and claims related to a commercial relationship of $0.41, $0.57 and $0.50 for the years ended December 31, 2023, 2022 and 2021, respectively. Includes policyholder benefit costs of $0.20 for the year ended December 31, 2022 stemming from a deal to repurchase UL policies from one entity that had invested in numerous policies purchased in the life settlement market.

(4)Non-recurring tax items reflect primarily the effect of uncertain tax positions for a given audit period. The twelve months ended December 31, 2023 includes tax valuation allowance decrease of $2.84 per common share.

(5)Includes the impact of favorable assumption updates of $0.11 for the year ended December 31, 2023. Includes the impact of unfavorable assumption updates of $0.54 for the year ended December 31, 2022.

Assets Under Management

AUM means investment assets that are managed by one of our subsidiaries and includes: (i) assets managed by AB; (ii) the assets in our General Account investment portfolio; and (iii) the Separate Accounts assets of our Individual Retirement, Group Retirement and Protection Solutions businesses. Total AUM reflects exclusions between segments to avoid double counting.

Assets Under Administration

AUA includes non-insurance client assets that are invested in our savings and investment products or serviced by our Equitable Advisors platform. We provide administrative services for these assets and generally record the revenues received as distribution fees.

Account Value

76

AV generally equals the aggregate policy account value of our retirement products. General Account AV refers to account balances in investment options that are backed by the General Account while Separate Accounts AV refers to Separate Accounts investment assets.

Protection Solutions Reserves

Protection Solutions reserves equals the aggregate value of policyholders’ account balances and future policy benefits for policies in our Protection Solutions segment.

77

Consolidated Results of Operations

Our consolidated results of operations are significantly affected by conditions in the capital markets and the economy because we offer market sensitive products. These products have been a significant driver of our results of operations. Because the future claims exposure on these products is sensitive to movements in the equity markets and interest rates, we have in place various hedging and reinsurance programs that are designed to mitigate the economic risk of movements in the equity markets and interest rates. The volatility in net income attributable to Holdings for the periods presented below results from the mismatch between: (i) the change in carrying value of the reserves for GMDB and certain GMIB features that do not fully and immediately reflect the impact of equity and interest market fluctuations; (ii) the change in fair value of products with the GMIB feature that have a no-lapse guarantee; and (iii) our hedging and reinsurance programs.

Ownership and Consolidation of AllianceBernstein

Our indirect, wholly-owned subsidiary, AllianceBernstein Corporation, is the General Partner of AB. Accordingly, AB’s results are fully reflected in our consolidated financial statements.

Our average economic interest in AB was approximately 61%, 64% and 65% for the years ended December 31, 2023, 2022 and 2021 respectively. The slight decrease was due to the issuance of AB Units relating to AB’s 100% acquisition of CarVal Investments L.P. (“CarVal”). On July 1, 2022, AB issued 3.2 million AB Units (with a fair value of $133 million) with the remaining 12.1 million AB units (with a fair value of $456 million) issued on November 1, 2022. AB also recorded a contingent consideration payable of $229 million (to be paid predominantly in AB Units) based on CarVal achieving certain performance objectives over a six-year period ending December 31, 2027.

Consolidated Results of Operations

The following table summarizes our consolidated statements of income (loss):

Consolidated Statements of Income (Loss)

78

The following table summarizes our Non-GAAP Operating Earnings per common share:

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

Net Income (Loss) Attributable to Holdings

Net income attributable to Holdings decreased by $851 million to a net income of $1.3 billion for the year ended December 31, 2023 from a net income of $2.2 billion for the year ended December 31, 2022. The following notable items were the primary drivers for the change in net income (loss):

79

Unfavorable items included:

•Net derivative losses increased by $3.3 billion mainly due to equity market appreciation during the year ended December 31, 2023 compared to equity market depreciation during 2022.

•Interest credited to policyholders’ account balances increased by $673 million mainly due to higher interest rates on funding agreements in Corporate and Other and growth of SCS account values in our Individual Retirement segment, partially offset by the impact of the Global Atlantic Transaction in our Group Retirement segment.

•Amortization of DAC increased by $55 million mainly due to growth in our Individual Retirement segment from sales momentum and an increased run-rate from model updates in the third quarter of 2023.

•Fee-type revenue decreased by $49 million mainly driven by lower recognition of deferred gain from the Venerable Transaction due to market movements in 2023, ceded assets from the Global Atlantic Transaction from our Group Retirement segment, partially offset by higher premiums due to growth in our Protections Solutions segment.

•Policyholders’ benefits increased by $38 million mainly due to growth in Employee Benefits in our Protection Solutions segment (offset by higher premiums in Fee-type revenue).

•Net income attributable to noncontrolling interest increased by $100 million mainly due to gains from AB’s consolidated VIEs and an increase in noncontrolling interest.

These were partially offset by the following favorable items:

•Net investment income increased by $1.0 billion mainly due to higher asset balances, higher investment yields, and higher income from seed capital investments, partially offset by lower alternative investment income.

•Change in market risk benefits and purchased market risk benefits decreased by $527 million mainly due to an increase in equity markets during 2023 compared to a decrease during 2022, partially offset by a lower increase in interest rates from 2023 compared to 2022.

•Investment losses decreased by $232 million mainly due to rebalancing in 2022 versus sales to reduce duration in 2023.

•Compensation, benefits, interest and other operating expenses decreased by $133 million mainly due to lower COI accrual, partially offset by an increase in pension costs resulting from the higher interest rate environment.

•Income tax expense decreased by $1.5 billion primarily due to a partial release of the valuation allowance of $1 billion on the deferred tax asset, and lower pre-tax income for the year ended December 31, 2023 compared to the year ended December 31, 2022.

See “—Significant Factors Impacting Our Results—Effect of Assumption Updates on Operating Results” for more information regarding assumption updates.

Non-GAAP Operating Earnings

Non-GAAP Operating Earnings decreased by $32 million to $1.7 billion for the year ended December 31, 2023 from $1.7 billion in the year ended December 31, 2022. The following notable items were the primary drivers for the change in Non-GAAP Operating Earnings:

Unfavorable items included:

•Interest credited to policyholders’ account balances increased by $673 million mainly due to higher interest rates on funding agreements in Corporate and Other and growth of SCS account values in our Individual Retirement segment, partially offset by the impact of the Global Atlantic Transaction in our Group Retirement segment.

•Policyholders’ benefits increased by $132 million mainly due to higher net mortality, growth in Employee Benefits in our Protection Solutions segment, and higher benefits from GMIB annuitizations in our Legacy segment (offset by higher premiums in fee-type revenue).

•Amortization of DAC increased by $55 million mainly due to growth in our Individual Retirement segment from sales momentum and an increased run-rate from model updates in the third quarter of 2023.

•Compensation, benefits, interest expense and other operating costs increased by $39 million mainly due to higher interest expense related to higher average outstanding borrowings and higher interest rates, higher incentive

80

compensation and base compensation expense, primarily offset by lower general and administrative cost related to lower portfolio servicing and professional fees, in our Investment Management and Research segment.

•Net income attributable to the noncontrolling interest increased by $23 million mainly due to an increase in noncontrolling interest, partially offset by lower pre-tax earnings.

These were partially offset by the following favorable items:

•Net investment income increased by $746 million mainly due to higher assets, higher investment yields and higher income from seed capital investments, partially offset by lower alternative investment income.

•Fee-type revenue increased by $86 million mainly driven by higher interest income from sweep accounts in our Wealth Management segment and higher premiums due to growth in Employee Benefits in our Protection Solutions segment, partially offset by lower assets from the Global Atlantic Transaction in our Group Retirement segment.

•Remeasurement of liability for future policy benefits decreased by $70 million mainly due to favorable assumption updates and model changes in 2023 compared to 2022 and unfavorable experience in prior period in our legacy assumed life insurance business.

•Net derivative gains decreased by $37 million primarily due to higher losses from economically hedging seed capital investments in rising equity markets in our Investment Management and Research segment.

•Income tax expense decreased by $48 million mainly driven by lower pre-tax earnings and a lower effective tax rate in 2023.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021

Net Income Attributable to Holdings

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Non-GAAP Operating Earnings

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Results of Operations by Segment

We manage our business through the following six segments: Individual Retirement, Group Retirement, Investment Management and Research, Protection Solutions, Wealth Management and Legacy. We report certain activities and items that are not included in our six segments in Corporate and Other. The following section presents our discussion of operating earnings (loss) by segment and AUM, AV and Protection Solutions Reserves by segment, as applicable. Consistent with U.S. GAAP guidance for segment reporting, operating earnings (loss) is our U.S. GAAP measure of segment performance. See Note 21 of the Notes to the Consolidated Financial Statements for further information on our segments.

The following table summarizes operating earnings (loss) on our segments and Corporate and Other:

81

Effective Tax Rates by Segment

For 2023, 2022 and 2021 income tax expense was allocated to the Company’s business segments using a 16%, 17% and 16% ETR respectively, for our retirement and protection businesses (Individual Retirement, Group Retirement, Protection Solutions and Legacy), 24%, 26% and 30% ETR for Wealth Management and a 23%, 28% and 27% ETR for Investment Management and Research.

Individual Retirement

The Individual Retirement segment includes our variable annuity products which primarily meet the needs of individuals saving for retirement or seeking retirement income.

The following table summarizes operating earnings (loss) of our Individual Retirement segment:

Key components of operating earnings (loss) were:

The following table summarizes AV for our Individual Retirement segment:

_____________

(1)AV presented are net of reinsurance.

82

The following table summarizes a roll-forward of AV for our Individual Retirement segment:

______________

(1)For the year ended December 31, 2023, amounts reflect a total special payment applied to the accounts of active clients during the three months ended March 31, 2023, as part of a previously disclosed settlement agreement between Equitable Financial and the SEC.

(2)For the year ended December 31, 2021, amounts reflect $(38) million transfer of policyholders account balances to future policyholder benefits and other policyholders liabilities related to structured settlement contracts and $57 million of AV transfer of a closed block of GMxB business from the Group Retirement Segment to the Individual Retirement Segment.

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 for the Individual Retirement Segment

Operating earnings

Operating earnings increased $88 million to $850 million during the year ended December 31, 2023 from $762 million in the year ended December 31, 2022. The following notable items were the primary drivers of the change in operating earnings:

Favorable items included:

•Net investment income increased by $587 million mainly due to higher SCS asset balances and higher investment yields, partially offset by lower income from TIPS (offset in derivatives).

•Net derivative losses decreased by $22 million mainly due to lower losses from TIPS hedging (offset in net investment income).

These were partially offset by the following unfavorable items:

•Interest credited to policyholders’ account balances increased by $381 million mainly due to growth of SCS account values.

•Amortization of DAC increased by $54 million mainly due to growth in the business from sales momentum and an increased run-rate from model updates in the third quarter of 2023.

•Compensation, benefits, interest expense and other operating costs increased by $29 million mainly due to an increase in pension costs resulting from the higher interest rate environment.

•Commissions and distribution-related payments increased by $26 million mainly due to growth in the SCS business.

•Policyholders’ benefits increased by $26 million mainly due to higher annuitization activity in the non-GMxB block, which is offset by higher premiums.

•Income tax expense increased by $8 million partially driven by higher pre-tax earnings, partly offset by a lower effective tax rate for the year ended December 31, 2023.

Net Flows and AV

•The increase in AV of $17.4 billion in the year ended December 31, 2023 was driven by an increase in investments performance as a result of equity market appreciation of $11.8 billion in the year ended December 31, 2023, as well as net inflows of $5.6 billion.

83

•Net inflows of $5.6 billion were $1.6 billion higher than in the year ended December 31, 2022, mainly driven by higher sales in the year ended December 31, 2023 as compared to 2022.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Individual Retirement Segment

Operating earnings

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Net Flows and AV

For a discussion on net flows and AV comparative results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Group Retirement

The Group Retirement segment offers tax-deferred investment and retirement services or products to plans sponsored by educational entities, municipalities and not-for-profit entities, as well as small and medium-sized businesses.

The following table summarizes operating earnings (loss) of our Group Retirement segment:

Key components of operating earnings (loss) are:

84

The following table summarizes AV and AUA for our Group Retirement segment:

____________

(1)    AV presented are net of reinsurance.

The following table summarizes a roll-forward of AV and AUA for our Group Retirement segment:

____________

(1)Prior period amounts related to the AV and AUA roll-forward were updated to include Mutual Fund AUA. The impact of the revision to the beginning balance of the year ended December 31, 2021 was $297 million. Net Flows revision impact for the year ended December 31, 2021 was $129 million. Investment performance, interest credited and policy charges revision impact for the year ended December 31, 2021 was $30 million.

(2)For the year ended December 31, 2021, amounts reflect AV transfer of GMxB closed block business from Group Retirement Segment to the Individual Retirement Segment.

(3)For the year ended December 31, 2023 and 2022, net outflows of $848 million and $179 million and investment performance, interest credited and policy charges of $1.2 billion and $(422) million, respectively, are excluded as these amounts are related to ceded AV to Global Atlantic.

(4)Effective October 3, 2022, AV excludes activity related to ceded AV to Global Atlantic Transaction. In addition, roll-forward reflects the AV ceded pursuant to the Global Atlantic Transaction as of the transaction date.

(5)For the year ended December 31, 2023, amounts reflect a total special payment applied to the accounts of active clients as part of a previously disclosed settlement agreement between Equitable Financial and the SEC.

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 for the Group Retirement Segment

Operating earnings

Operating earnings decreased by $47 million to $399 million during the year ended December 31, 2023 from $446 million during the year ended December 31, 2022. The following notable items were the primary drivers of the change in operating earnings:

Unfavorable items included:

•Net investment income decreased by $127 million due to lower alternative investment income, lower income from TIPS partially offset in derivatives and lower assets from the Global Atlantic Transaction, partially offset by higher investment yields.

•Fee-type revenue decreased by $39 million primarily due to lower assets from the Global Atlantic Transaction, partially offset by higher equity market performance.

85

These were partially offset by the following favorable items:

•Interest credited to policyholders’ account balances decreased by $66 million mainly due to the portion of policies ceded from the Global Atlantic Transaction.

•Net derivative losses decreased by $29 million due to lower losses from TIPS hedging (offset in net investment income).

•Compensation, benefits, interest expense and other operating costs decreased by $11 million mainly due to expense efficiencies and sub-advisory expense ceded as part of the Global Atlantic Transaction, offset in revenue.

•Income tax expense decreased by $14 million driven by lower pre-tax earnings and a lower effective tax rate in 2023.

Net Flows and AV

•The increase in AV of $4.5 billion in the year ended December 31, 2023 was driven by equity market appreciation slightly offset by net outflows of $256 million.

•Net outflows of $256 million for the year ended December 31, 2023 decreased $890 million compared to the year ended December 31, 2022, driven by a large lump sum premium in our institutional market in 2022 and higher surrender activity in 2023, partially offset by our reinsurance benefit from the portion of policies ceded as part of the Global Atlantic Transaction.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Group Retirement Segment

Operating earnings

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Net Flows and AV

For a discussion on net flows and AV comparative results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Investment Management and Research

The Investment Management and Research segment provides diversified investment management, research and related services to a broad range of clients around the world. Operating earnings (loss), net of tax, presented here represents our average economic interest in AB of approximately 61%, 64% and 65% during the years ended December 31, 2023, 2022 and 2021.

Key components of operating earnings (loss) were:

86

Changes in AUM in the Investment Management and Research segment were as follows:

__________

(1)Approximately $0.4 billion of Institutional AUM was removed from AB total assets under management during the second quarter 2022 due to a change in the fee structure.

(2)Net flows include $4.5 billion and $1.3 billion of AXA redemptions for 2022 and 2021, respectively.

(3)The CarVal acquisition added approximately $12.2 billion of Institutional AUM in the third quarter 2022.

Average AUM in the Investment Management and Research segment for the periods presented by distribution channel and investment services were as follows:

87

____________

(1)Includes index and enhanced index services.

(2)Includes certain multi-asset solutions and services not included in equity of fixed income services.

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 for the Investment Management and Research Segment

Operating earnings

Operating earnings decreased $13 million to $411 million during the year ended December 31, 2023 from $424 million in the year ended December 31, 2022. The following notable items were the primary drivers of the change in operating earnings:

Unfavorable items included:

•Compensation, benefits, interest expense and other operating costs increased by $84 million mainly due to higher interest expense related to higher average outstanding borrowings and higher interest rates, higher incentive compensation and base compensation expense, primarily offset by lower general and administrative costs related to lower portfolio servicing fees and professional fees.

•Net derivative gains decreased by $57 million mainly due to lower income from economically hedging the seed capital investments (partially offset by net investment income).

These were offset by the following favorable items:

•Net investment income increased by $61 million mainly due to higher income from seed capital investments (partially offset by net derivative losses).

•Commissions and distribution-related payments decreased by $20 million mainly due to lower payments to financial intermediaries for the distribution of AB mutual funds.

•Fee-type revenue increased by $8 million primarily due to higher other income from higher net interest earned on customer margin balances, higher advisory base fees driven by a slight shift in product mix to alternatives offset by lower average AUM, all which were partially offset by lower Bernstein Research Services driven by lower global customer trading activity due to prevailing macro-economic environment.

•Income tax expense decreased by $36 million primarily due to a lower effective tax rate due to a release of the valuation allowance and lower pre-tax earnings for 2023 compared to 2022.

88

Long-Term Net Flows and AUM

•Total AUM as of December 31, 2023 was $725.2 billion, up $78.8 billion, or 12.2%, compared to December 31, 2022. The increase is a result of market appreciation of $85.8 billion, partially offset by net outflows of $7.0 billion. Market appreciation of $85.8 billion attributed to Retail of $40.3 billion, Institutions of $31.5 billion and Private Wealth of $14.0 billion. Institutions net outflows of $11.8 billion were partially offset by Private Wealth and Retail net inflows of $3.7 billion and $1.1 billion, respectively.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Investment Management and Research Segment

Operating earnings

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Net Flows and AUM

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Protection Solutions

The Protection Solutions segment includes our life insurance and employee benefits businesses. We provide a targeted range of products aimed at serving the financial needs of our clients throughout their lives, including VUL, IUL and term life products. In 2015, we entered the employee benefits market and currently offer a suite of dental, vision, life, as well as short- and long-term disability insurance products to small and medium-size businesses.

The following table summarizes operating earnings (loss) of our Protection Solutions segment:

89

Key components of operating earnings (loss) were:

The following table summarizes Protection Solutions Reserves for our Protection Solutions segment:

_______________

(1)Does not include Protection Solutions Reserves for our employee benefits business as it is a scaling business and therefore has immaterial in-force policies.

The following table presents our in-force face amounts for our individual life insurance products:

_______________

(1)Includes individual life insurance and does not include employee benefits as it is a scaling business and therefore has immaterial in-force policies.

(2)UL includes GUL.

(3)VUL includes VL and COLI.

90

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 for the Protection Solutions Segment

Operating earnings (loss)

Operating earnings decreased $46 million to $51 million during the year ended December 31, 2023 from $97 million in the year ended December 31, 2022. The following notable items were the primary drivers of the change in the operating loss:

Unfavorable items included:

•Policyholders’ benefits increased by $79 million mainly due to higher net mortality and growth in Employee Benefits (partially offset in fee-type revenue).

•Compensation, benefits, interest expense and other operating costs increased by $38 million mainly due to higher pension and other benefit costs.

•Net investment income decreased by $29 million mainly due to lower average assets and lower alternative investment income, partially offset by higher investment yields.

•Commissions and distribution-related payments increased by $16 million mainly due to growth in Life and Employee Benefits.

•Interest credited to policyholders’ account balances increased by $9 million mainly due to higher interest rates.

These were partially offset by the following favorable items:

•Fee-type revenue increased by $85 million mainly driven by higher premiums due to growth in Employee Benefits (offset in policyholders’ benefits) and Life.

•Remeasurement of liability for future policy benefits decreased by $29 million mainly due to elevated claims in 2022 compared to 2023.

•Net derivative losses decreased by $4 million mainly due to lower losses from TIPS hedging (offset in net investment income).

•Income tax expense decreased by $10 million primarily due to lower pre-tax earnings.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Protection Solutions Segment

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Wealth Management

The Wealth Management segment is an emerging leader in the wealth management space with a differentiated advice value proposition that offers discretionary and non-discretionary investment advisory accounts, financial planning and advice, life insurance, and annuity products. In 2023, we began reporting this business separately from our other segments and Corporate and Other.

The following table summarizes operating earnings (loss) of our Wealth Management segment:

91

Key components of operating earnings (loss) were:

The following table summarizes revenue by activity type for our Wealth Management segment:

The following table summarizes a roll-forward of AUA for our Wealth Management segment:

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 for the Wealth Management Segment

Operating earnings

Operating earnings increased $58 million to $159 million during the year ended December 31, 2023 compared to $101 million in the year ended December 31, 2022. The following were notable changes:

92

Favorable items included:

•Investment management, service fees and other income increased by $94 million mainly due to higher interest income from sweep accounts combined with increased distribution fees and advisory fees type revenue from higher retirement sales and average asset balances.

•Net investment income increased by $11 million mainly due to higher interest rates.

These were partially offset by the following unfavorable items:

•Commissions and distribution-related payments increased by $28 million mainly due to higher distribution and advisory fee-type revenue from higher retirement sales and average asset balances

•Income tax expense increased by $16 million primarily due to higher pre-tax earnings.

Net Flows and AUA

•The increase in AUA of $14.6 billion in the year ended December 31, 2023 was driven by equity market appreciation of $9.1 billion and net flows of $5.5 billion.

•Advisory net flows were lower in 2023 with mix shift to brokerage .

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Wealth Management Segment

Operating earnings

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Net Flows and AUA

For a discussion on net flows and AUA comparative results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Legacy

The Legacy segment consists of our capital intensive fixed-rate GMxB business written prior to 2011.

The following table summarizes operating earnings (loss) of our Legacy segment:

93

Key components of operating earnings (loss) were:

The following table summarizes AV for our Legacy segment:

_______________

(1)AV presented are net of reinsurance.

The following table summarizes a roll-forward of AV for our Legacy segment:

_____________

(1)For the years ended December 31, 2023, 2022 and 2021, net flows of $(1.1) billion, $(312) million and $(830) million and investment performance, interest credited and policy charges of $1.6 billion, $689 million and $589 million, respectively, are excluded as these amounts are related to ceded AV to Venerable.

94

(2)Effective June 1, 2021, AV excludes activity related to ceded AV to Venerable. In addition, roll-forward reflects the AV ceded to Venerable as of the transaction date. For additional information on the Venerable Transaction see Note 1 of the Notes to Consolidated Financial Statements.

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 for the Legacy Segment

Operating earnings

Operating earnings decreased $49 million to $186 million during the three months ended December 31, 2023 from $235 million in the year ended December 31, 2022. The following notable items were the primary drivers of the change in operating earnings:

Unfavorable items included:

•Policyholders’ benefits increased by $50 million mainly due to higher benefits from GMIB annuitizations, (partially offset by higher premiums in fee-type revenue).

•Compensation, benefits, interest expense and other operating costs increased by $17 million mainly due to a one-time favorable legal reserve release in 2022.

•Net investment income decreased by $14 million mainly due to lower alternative investment income, partially offset by higher investment yields

These were partially offset by the following favorable items:

•Commissions and distribution-related payments decreased by $15 million mainly due to lower asset-based commissions from lower average account values.

•Income tax expense decreased by $13 million primarily due to lower pre-tax earnings.

Net Flows and AV

•The increase in AV of $683 million in the year ended December 31, 2023 was driven by equity market appreciation, partially offset by net outflows of $2.3 billion.

•Net outflows of $2.3 billion were consistent with the year ended December 31, 2022.

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 for the Legacy Segment

Operating earnings

For a discussion that compares results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

Net Flows and AV

For a discussion on net flows and AV comparative results for the year ended December 31, 2022 to the year ended December 31, 2021 refer to the MD&A section in our Recast 2022 Annual Report.

95

Corporate and Other

Corporate and Other includes some of our financing and investment expenses. It also includes: the Closed Block, run-off variable annuity reinsurance business, run-off group pension business, run-off health business, benefit plans for our employees, certain strategic investments and certain unallocated items, including capital and related investments, interest expense and financing fees and corporate expense. AB’s results of operations are reflected in the Investment Management and Research segment. Accordingly, Corporate and Other does not include any items applicable to AB.

The following table summarizes operating earnings (loss) of Corporate and Other:

General Account Investment Portfolio

Our investment philosophy is driven by our long-term commitments to clients, robust risk management and strategic asset allocation. Our General Account investment portfolio investment strategy seeks to achieve sustainable risk-adjusted returns by focusing on principal preservation and investment return, subject to duration and liquidity requirements by product as well as diversification of investment risks. Investment activities are undertaken based on established investment guidelines and are required to comply with applicable laws and insurance regulations.

Risk tolerances are established for credit risk, market risk, liquidity risk and concentration risk across issuers and asset classes, each of which seek to mitigate the impact of cash flow variability arising from these risks. Significant interest rate increases and market volatility since 2022 have reduced the fair value of fixed maturities from a net unrealized gain position to a net unrealized loss. As a part of asset and liability management, we maintain a weighted average duration for our General Account investment portfolio that is within an acceptable range of the estimated duration of our liabilities given our risk appetite and hedging programs.

The General Account investment portfolio consists largely of investment grade fixed maturities, short-term investments, commercial, agricultural and residential mortgage loans, alternative investments and other financial instruments. Fixed maturities include publicly issued corporate bonds, government bonds, privately placed notes and bonds, bonds issued by states and municipalities, agency and non-agency mortgage-backed securities and asset-backed securities. In addition, from time to time we use derivatives to hedge our exposure to equity markets, interest rates, foreign currency and credit spreads.

We incorporate ESG factors into the investment processes for a significant portion of our General Account portfolio. As investors with a long-term horizon, we believe that companies with sustainable practices are better positioned to deliver value to stakeholders over an extended period. These companies are more likely to increase sales through sustainable products, reduce energy costs and attract and retain talent. This belief underpins our approach to sustainable investing, where we seek to enhance the sustainability and quality of our investment portfolio.

Investments in our surplus portfolio are generally comprised of a mix of fixed maturity investment grade and below investment grade securities as well as various alternative investments, primarily private equity and real estate equity. Although alternative investments are subject to period over period earnings fluctuations, they have historically achieved returns in excess of the fixed maturity portfolio.

The General Account investment portfolio reflects certain differences from the presentation of the U.S. GAAP Consolidated Financial Statements. This presentation is consistent with how we manage the General Account investment portfolio. For further investment information, see Note 3 and Note 4 of the Notes to the Consolidated Financial Statements.

Investment Results of the General Account Investment Portfolio

The following table summarizes the General Account investment portfolio results with Non-GAAP Operating Earnings adjustments by asset category for the periods indicated. This presentation is consistent with how we measure investment performance for management purposes.

96

_____________

(1)Includes, as of December 31, 2023, December 31, 2022 and December 31, 2021 respectively, $361 million, $400 million and $319 million of other invested assets. Amounts for certain consolidated VIE investments are shown net of associated non-controlling interest.

(2)Amount for fixed maturities and mortgages represents original cost, reduced by repayments, write-downs, adjusted amortization of premiums, accretion of discount and allowances. Cost for equity securities represents original cost reduced by write-downs; cost for other limited partnership interests represents original cost adjusted for equity in earnings and reduced by distributions.

(3)Cash and Short-term net of collateral expense.

(4)Fixed maturities yield excludes out of period income adjustment .

AFS Fixed Maturities

The fixed maturity portfolio consists largely of investment grade corporate debt securities and includes significant amounts of U.S. government and agency obligations. The below investment grade securities in the General Account investment portfolio consist of loans to middle market companies, public high yield securities, bank loans, as well as “fallen angels,” originally purchased as investment grade investments.

AFS Fixed Maturities by Industry

The following table sets forth these fixed maturities by industry category along with their associated gross unrealized gains and losses:

97

AFS Fixed Maturities by Industry (1)

______________

(1)Investment data has been classified based on standard industry categorizations for domestic public holdings and similar classifications by industry for all other holdings.

(2)Includes publicly traded agency pass-through securities and collateralized obligations.

(3)Includes credit-tranched securities collateralized by sub-prime mortgages, credit risk transfer securities and other asset types.

98

Fixed Maturities Credit Quality

The SVO of the NAIC evaluates the investments of insurers for regulatory reporting purposes and assigns fixed maturities to one of six categories (“NAIC Designations”). NAIC Designations of “1” or “2” include fixed maturities considered investment grade, which include securities rated Baa3 or higher by Moody’s or BBB- or higher by Standard & Poor’s. NAIC Designations of “3” through “6” are referred to as below investment grade, which include securities rated Ba1 or lower by Moody’s and BB+ or lower by Standard & Poor’s. As a result of time lags between the funding of investments and the completion of the SVO filing process, the fixed maturity portfolio typically includes securities that have not yet been rated by the SVO as of each balance sheet date. Pending receipt of SVO ratings, the categorization of these securities by NAIC designation is based on the expected ratings indicated by internal analysis.

The following table sets forth the General Account’s fixed maturities portfolio by NAIC rating:

AFS Fixed Maturities