FINANCIAL STATEMENTS

 

INDEX TO FINANCIAL STATEMENTS

 

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA

 

		Page
Report of Independent Auditors		F-1
Financial Statements — Statutory Basis:
Balance Sheets — Statutory Basis, December 31, 2025 and December  31, 2024		F-3
Statements of Operations — Statutory Basis, Years Ended December  31, 2025, 2024 and 2023		F-4
Statements of Changes in Capital and Surplus — Statutory Basis, Years Ended December 31, 2025, 2024 and 2023		F-5
Statements of Cash Flows — Statutory Basis, Years Ended December  31, 2025, 2024 and 2023		F-6
Notes to Financial Statements — Statutory Basis
Note 1 — Organization and Description of Business		F-7
Note 2 — Summary Significant Accounting Policies		F-7
Note 3 — Investments		F-16
Note 4 — Joint Ventures, Partnerships and Limited Liability Companies		F-31
Note 5 — Investment Income		F-31
Note 6 — Derivative Instruments		F-32
Note 7 — Income Taxes		F-35
Note 8 — Information Concerning Parent, Subsidiaries and Affiliates		F-40
Note 9 — Capital and Surplus and Shareholders Dividend Restrictions		F-42
Note 10 — Commitments and Contingencies		F-43
Note 11 — Fair value of Other Financial Instruments		F-46
Note 12 — Reinsurance Agreements		F-48
Note 13 — Reserves for Life Contracts and Deposit Type Contracts		F-51
Note 14 — Variable Annuity Contracts — Guaranteed Minimum Death Benefit (“GMDB”) and Guaranteed Minimum Income Benefit (“GMIB”)		F-52
Note 15 — Analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal Characteristics		F-53
Note 16 — Analysis of Life Actuarial Reserves by Withdrawal Characteristics		F-54
Note 17 — Premiums and Annuity Considerations Deferred and Uncollected		F-56
Note 18 — Separate Accounts		F-56
Note 19 — Unpaid Claim and Claim Expenses		F-58
Note 20 — Debt and Federal Home Loan Bank		F-58
Note 21 — Share-based Compensation		F-61
Note 22 — Subsequent Events		F-61

To the Board of Directors of Equitable Financial Life Insurance Company of America

 

Opinions

 

We have audited the accompanying statutory financial statements of Equitable Financial Life Insurance Company of America (the “Company”), which comprise the statutory statements of assets, liabilities, surplus and other funds as of December 31, 2025 and 2024, and the related statutory statements of summary of operations, of changes in capital and surplus, and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “financial statements”).

 

Unmodified Opinion on Statutory Basis of Accounting

 

In our opinion, the accompanying financial statements present fairly, in all material respects, the assets, liabilities, surplus and other funds of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in accordance with the accounting practices prescribed or permitted by the Arizona Department of Insurance and Financial Institutions described in Note 2.

 

Adverse Opinion on U.S. Generally Accepted Accounting Principles

 

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the accompanying financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2025 and 2024, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2025.

 

Basis for Opinions

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

 

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

 

As described in Note 2 to the financial statements, the financial statements are prepared by the Company on the basis of the accounting practices prescribed or permitted by the Arizona Department of Insurance and Financial Institutions, which is a basis of accounting other than accounting principles generally accepted in the United States of America.

 

The effects on the financial statements of the variances between the statutory basis of accounting described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

 

Responsibilities of Management for the Financial Statements

 

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Arizona Department of Insurance and Financial Institutions. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are available to be issued.

 

F-1

Auditors’ Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

 

In performing an audit in accordance with US GAAS, we:

 

•

Exercise professional judgment and maintain professional skepticism throughout the audit.

 

•

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

 

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

 

•

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

 

•

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

 

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

April 7, 2026

 

F-2

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA

Balance Sheets — Statutory Basis

December 31, 2025 and 2024

 

		2025				2024
		(in millions)
ASSETS
Cash and Invested assets:
Cash, cash equivalents and short-term investments		$	3,773.4			$	166.1
Fixed maturities			7,593.2				3,019.5
Perpetual preferred stocks			—				1.2
Common stocks			5.4				3.9
Mortgage loans			557.7				68.4
Policy loans			104.5				196.9
Derivatives and other invested assets			570.3				151.3
Total invested assets			12,604.5				3,607.3
Investment income due and accrued			79.9				26.2
Funds held by or deposited with reinsured companies			5,351.0				11,669.6
Net deferred tax asset			—				26.0
Deferred asset — derivatives			1,668.7				1,571.7
Deferred asset on non-economic novation			516.4				—
Other assets			339.5				198.3
Separate account assets			92,888.4				32,830.8
Total assets		$	113,448.4			$	49,929.9
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Policy reserves & deposit type funds		$	11,228.2			$	14,276.0
Policy and contract claims			124.9				174.0
Transfer to (from) separate accounts due and accrued			(3,810.9	)			(3,786.3	)
Asset valuation reserve			212.4				61.7
Amounts withheld or retained by company as agent or trustee			7,086.9				2,522.5
Net deferred tax liability			149.9				—
Fund held under coinsurance			1,088.2				—
Other liabilities			426.7				246.9
Separate account liabilities			92,859.6				32,371.5
Total liabilities			109,365.9				45,866.3
Capital and surplus:
Common stock, $1.00 per share par value, 5,000,000 shares authorized, 2,500,000 shares issued and outstanding			2.5				2.5
Paid-in surplus			299.6				1,884.6
Special surplus funds			2,027.5				1,624.7
Unassigned surplus			1,752.9				551.8
Total capital and surplus			4,082.5				4,063.6
Total liabilities and capital and surplus		$	113,448.4			$	49,929.9

 

 

See Notes to Financial Statements — Statutory Basis.

 

F-3

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA

Statements of Operations — Statutory Basis

Years Ended December 31, 2025, 2024 and 2023

 

		2025				2024				2023
		(in millions)
PREMIUMS AND OTHER REVENUES:
Premiums and annuity considerations		$	8,493.3			$	18,326.5			$	24,640.3
Net investment income (loss)			(255.6	)			120.2				104.8
Separate accounts net gain/(loss) including associated separate account fees			865.7				74.1				(342.2	)
Separate accounts’ modified coinsurance reinsurance assumed			10,583.1			$	12,937.3				7,710.2
Funds withheld reinsurance assumed income net of SSAP 108 deferral			(613.9	)			(92.8	)			52.9
Commission and expense allowances on reinsurance ceded			3,342.9				4.4				10.2
Other income			62.7				65.9				46.6
Total premiums and other revenues		$	22,478.2			$	31,435.6			$	32,222.8
BENEFITS AND EXPENSES:
Policyholder benefits			16,098.6				15,812.9				9,970.5
Increase (decrease) in reserves			(7,190.3	)			12.1				11,924.4
Commission and expense allowances on reinsurance assumed			333.8				485.0				1,381.4
Separate Accounts’ modified coinsurance reinsurance ceded			1,133.0				118.2				97.3
Commissions			1,146.1				882.1				601.3
Operating expenses			279.7				212.7				193.8
Funds withheld reinsurance ceded			195.7				—				—
Transfer to or (from) separate accounts, net			9,328.0				13,597.1				6,663.3
Total benefits and expenses		$	21,324.6			$	31,120.1			$	30,832.0
Net gain (loss) from operations before federal income taxes (“FIT”)			1,153.6				315.5				1,390.8
FIT expense (benefit) incurred (excluding tax on capital gains)			350.7				(31.5	)			686.7
Net gain (loss) from operations			802.9				347.0				704.1
Net realized capital gains (losses), net of tax			118.5			$	370.9				87.5
Net income (loss)		$	921.4			$	717.9			$	791.6

 

 

See Notes to Financial Statements — Statutory Basis.

 

F-4

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA

Statements of Changes in Capital and Surplus — Statutory Basis

Years Ended December 31, 2025, 2024 and 2023

 

CHANGES IN CAPITAL AND SURPLUS

 

		December 31,
		2025				2024				2023
		(in millions)
Balance — beginning of year		$	4,063.6			$	4,394.6			$	402.9
Prior year adjustment			13.7				—				—
Adjusted balance — beginning of year			4,077.3				4,394.6				402.9
Net income (loss)			921.4				717.9				791.6
Change in net unrealized capital gains (losses), net of tax			16.3				(278.3	)			293.8
Change in asset valuation reserve			(150.7	)			(27.8	)			(17.0	)
Change in net admitted deferred tax asset excluding tax on unrealized gains			(180.1	)			(9.8	)			10.5
Changes in surplus as a result of reinsurance			881.1				(28.6	)			1,837.2
Change in deferred asset on novation (net of amortization)			399.5				—				—
Surplus (contributed to) withdrawn from Separate account			656.8				(478.7	)			(386.6	)
Other change in surplus in Separate account			(954.6	)			478.7				389.3
Other changes to surplus			0.5				(3.6	)			22.9
Paid-in surplus — (return of capital)/capital contributions			(1,585.0	)			—				1,050.0
Dividends to stockholders			—				(700.8	)			—
Balance — end of year		$	4,082.5			$	4,063.6			$	4,394.6

 

 

See Notes to Financial Statements — Statutory Basis.

 

F-5

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA

Statements of Cash Flows — Statutory Basis

Years Ended December 31, 2025, 2024 and 2023

 

		December 31,
		2025				2024				2023
		(in millions)
Cash from operations:
Premiums and other considerations		$	17,373.6			$	15,718.3			$	12,244.2
Net investment income			(225.4	)			109.8				100.1
Other income			426.6				169.0				7,210.4
Total income			17,574.8				15,997.1				19,554.7
Policy benefits			4,227.6				1,011.0				9,869.6
Net transfer to (from) separate account			8,554.1				15,000.4				9,687.8
Commissions, expenses, other deductions			2,224.4				1,186.2				398.1
Federal income taxes (paid) recovered			386.6				779.6				0.4
Total expenses			15,392.7				17,977.2				19,955.9
Net cash from (used in) operations			2,182.1				(1,980.1	)			(401.2	)
Cash from investing activities:
Proceeds from investments sold, matured or repaid:
Fixed maturities			3,113.6				560.2				504.0
Common stocks			1.2				19.2				74.8
Mortgage loans			5.1				—				—
Other invested assets			5.1				—				—
Derivatives and other miscellaneous proceeds			18.8				969.7				30.2
Total investment proceeds			3,143.8				1,549.1				609.0
Cost of investments acquired:
Fixed maturities			7,754.0				914.0				1,093.8
Common stocks			1.5				2.9				74.8
Mortgage loans			494.3				—				51.4
Change in policy loans			150.6				25.5				29.8
Other invested assets			116.2				34.2				—
Derivatives and other investments payments			95.9				20.7				575.2
Total investments acquired			8,612.5				997.3				1,825.0
Net cash (used in) provided by investing activities			(5,468.7	)			551.8				(1,216.0	)
Cash from (used in) financing activities and miscellaneous sources:
Capital and paid in surplus			(1,585.0	)			—				1,050.0
Dividend to stockholders			—				(700.8	)			—
Net deposits on deposit-type contracts			4,139.0				(2.0	)			5.7
Other cash provided (applied)			4,339.9				1,768.1				900.5
Net cash from (used in) financing activities and miscellaneous sources			6,893.9				1,065.3				1,956.2
Net change in cash, cash equivalents, and short-term investments			3,607.3				(363.0	)			339.0
Cash, cash equivalents and short-term investments, beginning of year			166.1				529.1				190.1
Cash, cash equivalents and short-term investments, end of year		$	3,773.4			$	166.1			$	529.1

 

For supplemental disclosures of cash flow information for non-cash transactions see Note 2.

 

See Notes to Financial Statements — Statutory Basis.

 

F-6

Equitable Financial Life Insurance Company of America

 

Notes to Financial Statements — Statutory Basis

 

1)	ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Equitable Financial Life Insurance Company of America (herein referred to as either “EFLOA” or the “Company”), is an Arizona stock life insurance company whose primary business is to provide life insurance, annuity and group employee benefit products to both individuals and businesses. The Company is a wholly owned subsidiary of Equitable Financial Services, LLC (“EFS”) a downstream holding company of Equitable Holdings, Inc., and collectively with its consolidated subsidiaries referred to herein as “Holdings”. The Company is an indirect, wholly-owned subsidiary of Holdings. EFLOA is licensed to sell its products in 49 states (not including New York), the District of Columbia and Puerto Rico.

 

There were number of large reinsurance, recapture and novation transactions during 2025 and 2023 that impacted the Company. For additional information on the Reinsurance Agreements see Note 12.

 

2)	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying financial statements of EFLOA have been prepared in conformity with accounting practices prescribed or permitted by the Arizona Department of Insurance and Financial Institutions (“AZ DIFI”) (“SAP”).

 

There were number of large reinsurance, recapture and novation transactions during 2025 and 2023 that impacted the Company.

 

Use of Estimates in Preparation of the Financial Statements

 

The preparation of financial statements in conformity with SAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results could differ from those estimates.

 

Some of the significant estimates include valuation of investments, including derivatives (in the absence of quoted fair values) and those used in determining the measurement of a recognized other than temporary impairments; aggregate reserves; claim liabilities; provision for income taxes and valuation of deferred tax assets; and reserves for contingent liabilities, including reserves for losses in connection with unresolved legal matters, if applicable.

 

Significant Accounting Policies

 

The Arizona Department of Insurance and Financial Institutions recognizes only SAP for determining and reporting the financial condition and results of operations of an insurance company in order to determine its solvency under the Arizona State Insurance Laws. The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of Arizona. NAIC SAP is comprised of the Preamble, the Statements of Statutory Accounting Principles (“SSAP”), and Appendices.

 

AZ DIFI has adopted certain prescribed accounting practices that differ from those found in NAIC SAP, some of which affect the financial statements of the Company. Additionally, the Company has been granted a permitted practice. These are discussed in more detail as follows:

 

Prescribed Accounting Practice

 

During 2022, the Company received approval from AZ DIFI pursuant to A.R.S. 20-515 for Separate Account No. 68A (“SA 68A”) for our Structured Capital Strategies product, Separate Account No. 69A (“SA 69A”) for our EQUI-VEST product Structured Investment Option and Separate Account No. 71A (“SA 71A”) for our Investment Edge Structured Investment Option, to permit us to use book value as the accounting basis of these three non-insulated Separate Accounts instead of fair value in accordance with the NAIC Accounting and Practices and Procedures Manual to align with how we manage and measure our overall general account asset portfolio. The impact of the application is a decrease of approximately $1,013.6 million in statutory surplus as of December 31, 2025 and a decrease in statutory net income of $935.4 million for the full year ended December 31, 2025.

 

F-7

Permitted Accounting Practice

 

The AZ DIFI granted to EFLOA a permitted practice to deviate from SSAP No. 108 by applying special accounting treatment for specific derivatives hedging variable annuity benefits subject to fluctuations as a result of interest rate sensitivities. The permitted practice expands on SSAP No. 108 hedge accounting to include equity risks for the full scope of Variable Annuity (VA) contracts (i.e., not just the rider guarantees but for the VA total contract). The permitted practice allows EFLOA to adopt SSAP 108 retroactively from October 1, 2023 and applies to both directly held VA hedges as well as VA hedges in the EFLOA funds withheld asset that resulted from the reinsurance agreement (the “Reinsurance Treaty”) with Equitable Financial Life Insurance Company (“EFLIC”), an affiliate of the Company, effective April 1, 2023. In the calculation of the amount of excess VA equity and interest rate derivative hedging gains gains/losses to defer (including Net Investment Income on our Equity Total Return Swaps), the permitted practice allows us to compare our total equity and interest derivatives gains and losses to 100% of our target liability change. Any hedge gain or loss deferrals will follow SSAP No. 108 amortization rules (i.e. 10-year straight line).

 

This permitted practice impacts the following financial statement line items:

 

•

Statement of Assets, liabilities and surplus lines: Deferred asset — derivatives and Special surplus funds.

 

•

Statement of Summary of Operations and Statements of Changes in Capital Surplus lines: Net Investment Income, Funds Withheld reinsurance assumed income net of SSAP 108 deferred, Net Realized Capital Gains (losses) and Net Change in Net Unrealized Capital Gains (losses).

 

The impact of applying this permitted practice relative to SSAP 108 as written was an increase of approximately $17.5 million in statutory net income and $1,404.5 million in special surplus funds as of December 31, 2025.

 

If the Company had not used all of the aforementioned prescribed and permitted practices that differ from NAIC SAP, a risk-based capital regulatory event would not have been triggered.

 

As discussed, there were differences in EFLOA’s net income and capital and surplus between SAP and NAIC SAP in 2025, 2024 and 2023. A reconciliation of net income and surplus between NAIC SAP and practices prescribed and permitted by the state of Arizona is shown below (in millions):

 

		SSAP#				F/S Page				F/S Line #				2025				2024				2023
NET INCOME
(1) EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA basis			XXX				XXX				XXX			$	921.4			$	717.9			$	791.6
(2) State Prescribed Practices that increase/decrease NAIC SAP
SA 68A, 69A, 71A book value vs. fair value			N/A				N/A				N/A				(935.4	)			15.4				(93.4	)
(3) State Permitted Practices that increase/decrease NAIC SAP
SSAP 108, Derivatives Hedging Deferral (Direct and Assumed)			N/A				N/A				N/A				17.5				788.7				653.5
(4) NAIC SAP (1 - 2 - 3 = 4)			XXX				XXX				XXX			$	1,839.3			$	(86.2	)		$	231.5
ENDING SURPLUS AT DECEMBER 31,
(5) EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA state basis			XXX				XXX				XXX			$	4,082.5			$	4,063.6			$	4,394.6
(6) State Prescribed Practices that increase/decrease NAIC SAP
SA 68A, 69A, 71A book value vs. fair value			N/A				N/A				N/A				(1,013.6	)			(78.3	)			(93.7	)
(7) State Permitted Practices that increase/decrease NAIC SAP
SSAP 108, Derivatives Hedging Deferral (Direct and Assumed)			N/A				N/A				N/A				1,404.5				1,381.0				621.3
(8) NAIC SAP (5 - 6 - 7 = 8)			XXX				XXX				XXX			$	3,691.6			$	2,760.9			$	3,867.0

 

F-8

Listed below is the supplemental disclosures of cash flow transactions for non-cash items excluded in the Cash Flow:

 

		2025*				2024				2023*
		(in millions)
Premiums and annuity considerations		$	8,432.9			$	(165.0	)		$	(13,165.3	)
Miscellaneous Income			(5,074.1	)			(844.2	)			(6.3	)
Total			3,358.8				(1,009.2	)			(13,171.6	)
Commissions and expenses paid			—				(118.7	)			(1,072.4	)
Total			—				(118.7	)			(1,072.4	)
Net cash from operations		$	3,358.8			$	(890.5	)		$	(12,099.2	)
Bonds proceeds			910.5				(77.0	)			(17.6	)
Stocks proceeds			(1.2	)			—				—
Other Invested assets proceeds			(250.0	)			—				—
Total investment proceeds			659.3				(77.0	)			(17.6	)
Bonds acquired			1,822.3				(77.0	)			(17.6	)
Stocks acquired			(1.2	)			—
Total investments acquired			1,821.1				(77.0	)			(17.6	)
Net increase (decrease) in policy loans and premium notes			367.8				—				—
Net cash from investments		$	(1,529.6	)		$	—			$	—
Capital and paid in surplus			250.0				—				—
Other cash provided (applied)			(2,079.2	)			890.5				12,099.2
Net cash from financing and miscellaneous sources		$	(1,829.2	)		$	890.5			$	12,099.2
Total non-cash transactions		$	—			$	—			$	—

 

*

2025 and 2023 is primarily driven by of large reinsurance transactions.

 

Accounting Changes

 

Accounting changes adopted to conform to the provisions of NAIC SAP are reported as changes in accounting principles. The cumulative effect of changes in accounting principles are reported as an adjustment to unassigned surplus in the period of the change in accounting principle. The cumulative effect is the difference between the amount of capital and surplus at the beginning of the year and the amount of capital and surplus that would have been reported at that date if the new accounting principles had been applied retroactively for all prior periods There were no significant accounting changes in 2025 that required adjustments to opening unassigned surplus.

 

Effective January 1, 2025 the Company’s General Account and non insulated Separate Accounts adopted revisions to SSAP 26 — Bonds to incorporate their principles-based bond definition project’s (PBBD) concepts on what should be reported as a long-term bond. In accordance with the transition guidance specifically for PBBD, this is not a change in accounting principle.

 

In accordance with adoption of the revision to SSAP 26 — Bonds, effective January 1, 2025, the Company’s General Account and non insulated Separate Accounts had no impacted investments to reclassify from Schedule D. The Company adopted SSAP No. 21 — Other Admitted Assets with respect to residual accounting that resulted in a change in measurement to cost recovery. This has no impact other than the change the measurement basis going forward.

 

Prior Year Adjustments recorded in 2025:

 

During the third quarter of 2025, the Company discovered an error relating to the calculation of asset-based commissions for certain retail variable annuity policies. The error resulted in an overstatement of commission expense paid by the Company to its distribution company affiliate, Equitable Network, for the years 2023 and 2024. As a result of this error and in accordance of SSAP No. 3 — Accounting Changes and Corrections of Errors, the Company recorded a prior year correction to increase opening surplus by $13.7 million within Statements of Changes in Capital and Surplus, Prior year adjustments and included a current and deferred tax expense of $2.9 million within the appropriate tax lines. The Company’s management does not believe this correction to be material to the Company’s results of operations, financial position, or cash flow for any of the Company’s previously filed annual statements.

 

F-9

Reconciliation of Annual Statement to Audited Financial Statements

 

Listed below is the reconciliation between the accompanying audited financial statements and the annual statements as filed 2024 and 2023 (in millions):

 

No reconciliation is required between the accompany audited financial statements and the annual statements for the year ended 2025, as there are no adjusting items

 

		Total Assets				Total Liabilities				Capital and Surplus				2024 Net Income				2024 Changes in Capital and Surplus (excluding Net Income)				2024 Net Changes in Capital and Surplus
December 31, 2024
Annual Statement as filed		$	49,935.0			$	45,871.4			$	4,063.6			$	717.9			$	(1,062.8	)		$	(344.9	)
Current year impact of 2023 Audited Adjustments			(5.1	)			(5.1	)			—				—				13.9				13.9
Audited statutory financial statements as reported herein		$	49,929.9			$	45,866.3			$	4,063.6			$	717.9			$	(1,048.9	)		$	(331.0	)

 

		Total Assets				Total Liabilities				Capital and Surplus				2023 Net Income				2023 Changes in Capital and Surplus (excluding Net Income)				2023 Net Changes in Capital and Surplus
December 31, 2023
Annual Statement as filed		$	32,491.1			$	28,082.6			$	4,408.5			$	811.8			$	3,193.8			$	4,005.6
Shared based compensation awards charge			—				2.1				(2.1	)			(2.1	)			—				(2.1	)
Separate account fee income assumed			(22.9	)			(4.8	)			(18.1	)			(18.1	)			—				(18.1	)
Day 1 Initial Premium Reinsurance Treaty with EFLIC			(9.5	)			(15.8	)			6.3				—				6.3				6.3
Separate account MODCO Day 2 premiums/benefits			—				—				—				—				—				—
Accounts remap MODCO/FWH			—				—				—				—				—				—
Audited statutory financial statements as reported herein		$	32,458.7			$	28,064.1			$	4,394.6			$	791.6			$	3,200.1			$	3,991.7

 

Difference between Generally Accepted Accounting Principles (“GAAP”) and SAP

 

The differences between statutory surplus and capital stock determined in accordance with SAP and total shareholder’s equity under GAAP are primarily:

 

(a) the inclusion in SAP of an Asset Valuation Reserve (“AVR”);

 

(b) policy reserves and deposit type funds under SAP differ from GAAP due to differences between actuarial assumptions and reserving methodologies;

 

(c) certain policy acquisition costs are expensed under SAP but deferred under GAAP and amortized over future periods;

 

 

F-10

(d) under SAP, Federal income taxes are provided on the basis of amounts currently payable and deferred federal income taxes are provided for temporary differences for the expected future tax consequences of events that have been recognized in the Company’s financial statements. Changes in deferred income taxes are charged directly to surplus and have no impact on earnings. Further, deferred tax assets are reflected to the extent the probability of realization is more likely that not and admissibility of deferred tax assets that are considered realizable is limited while under GAAP, current and deferred Federal income taxes are reported in both income and comprehensive income and deferred federal income taxes are provided for temporary differences for the expected future tax consequences of events that have been recognized in the Company’s financial statements. Deferred tax assets are subject to a similar realization assessment under GAAP;

 

(e) the valuation of assets under SAP and GAAP differ due to different investment valuation and depreciation methodologies, as well as the deferral under SAP of interest-related realized capital gains and losses on fixed income investments through the Interest Maintenance Reserve (“IMR”) intended to stabilize surplus from fluctuations in the value of the investment portfolio;

 

(f) reporting the surplus notes as a component of surplus in SAP but as a liability in GAAP

 

(g) under GAAP, subsidiaries’ financial results are consolidated within the parent company’s financial statements while under SAP the subsidiaries’ equity is recorded in the parent company’s financial statements;

 

(h) certain products and ceded reinsurance contracts are considered embedded derivatives and are reported at fair value under GAAP, where under SAP they are reported as gross and ceded reserve liabilities based on the appropriate SAP accounting principles;

 

(i) reserves and reinsurance recoverables on unpaid claims on reinsured business are netted in aggregate reserves and the liability for life policy claims, respectively, under SAP while under GAAP these reinsured amounts are reflected as an asset;

 

(j) under SAP, premiums, regardless of policy type, are recognized when due and include the change in the deferred premium asset while under GAAP revenue recognition varies by product type and does not include the change in deferred premiums;

 

(k) certain assets, primarily prepaid assets, negative IMR, certain deferred taxes and computer software development costs, are not admissible under SAP but are admissible under GAAP

 

(l) general account derivatives unrealized gains and losses flow through surplus under SAP but through income under GAAP, except for the coupon accrual component of swaps which flows through net investment income.

 

(m) for reinsurance of in-force life insurance contracts, under SAP requires the ceded commission gain/loss to be recognized immediately either through operations (loss) or through surplus and subsequently amortized into net income over the life of the policies (gain) while under GAAP these requires the recognition of gain/loss to be delayed into future periods.

 

(n) under SAP, non-economic assumption reinsurance transaction in accordance with SSAP No. 61R paragraph 65, no gain/loss is recognized at the time of novation while under GAAP, there is no explicit guidance for non-economic assumption reinsurance transactions or novation.

 

The Company does not produce standalone GAAP financial statements effective January 1, 2025. The effects of the differences between GAAP and SAP on the accompanying statutory financial statements have not been determined, but are presumed to be material.

 

F-11

Listed below are the Company’s Statutory and GAAP Net Income and Capital and Surplus/Shareholders Equity as of 2024 and 2023 (in millions):

 

		2024				2023
GAAP Net Income		$	560.0			$	1,191.0
GAAP to STAT Adjustments			157.9				(399.4	)
Statutory Net Income (Loss)		$	717.9			$	791.6
GAAP Shareholder’s Equity		$	1,911.0			$	2,160.0
GAAP to STAT Adjustments			2,152.6				2,234.6
Statutory Capital and Surplus		$	4,063.6			$	4,394.6

 

Other Accounting Policies

 

Recognition of Premium and Related Expenses

 

Premiums, considerations and purchase payments are generally recognized as income when due. Payments on deposit type contracts are recorded to the policy reserve. Policy acquisition costs incurred in connection with the acquiring of new business, such as commissions, underwriting, agency and policy issuance expenses, are charged to operations as incurred.

 

Reinsurance ceded

 

Policy and contract liabilities ceded to reinsurers under coinsurance agreements have been reported as reductions of the related reserves. Any reinsurance balance amounts deemed to be uncollectible are written off through a charge to earnings. A liability for reinsurance balances is provided for unsecured policy reserves ceded to reinsurers not authorized to assume such business. Changes to the liability for unauthorized reinsurers are credited or charged to surplus. Any increase in surplus net of tax resulting from a new reinsurance agreement is recognized as a direct credit to surplus. Recognition of the surplus increase as income is amortized net of tax as earnings emerge from the business reinsured, with no additional impact to surplus. Losses from new reinsurance treaties are expensed immediately.

 

Coinsurance with Funds Withheld

 

Premiums paid or payable to the reinsurer net of any experience refunds shall reduce premium income. Policy benefit payments paid by the reinsurer shall reduce reported policy benefits. Expense allowances paid by the reinsurer shall be reported separately in the summary of operations as earned. Policy reserves are reduced for the portion of the obligation assumed by the reinsurer. Amounts withheld by the ceding entity shall be recorded as a separate liability with any interest payable on the amounts withheld reported as a component of Funds withheld reinsurance ceded net investment income.

 

Valuation of Investments

 

Fixed maturities, which consist of long-term bonds, are stated primarily at amortized cost in accordance with the valuation prescribed by the Arizona Department of Insurance and Financial Institutions and the NAIC. The new NAIC Designation Category applies wherever an NAIC Designation is reported and produced by the SVO. The more granular delineations of credit risk are called an NAIC Designation Category, a combination of the NAIC Designation and NAIC Designation Modifier, and are distributed as follows, 20 in total: 7 for the NAIC 1 Designation grade indicated by the letters A through G; 3 delineations for each of the NAIC Designation grades NAIC 2, NAIC 3, NAIC 4 and NAIC 5 indicated by the letters A, B and C, and 1 delineation for NAIC Designation grade NAIC 6 with no NAIC Designation Modifier. Bonds rated in the top five NAIC Designations are generally valued at amortized cost while bonds rated at the lowest NAIC Designation is valued at lower of amortized cost or fair market value.

 

The Company follows both the prospective and retrospective methods for amortizing bond premium and discount. Both methods require the recalculation of the effective yield at each reporting date if there has been a change in the underlying assumptions. For the prospective method, the recalculated yield will equate the carrying amount of the investment to the present value of the anticipated future cash flows. The recalculated yield is then used to accrue income on the investment balance for subsequent accounting periods. There are no accounting changes in the current period unless the undiscounted anticipated cash flow is less than the carrying amount of the investment. For the retrospective method, the recalculated yield is the rate that equates the present value of actual and anticipated future cash flows with the original cost of the investment.

 

F-12

The current balance of the investment is increased or decreased to the amount that would have resulted had the revised yield been applied since inception and investment income is correspondingly decreased or increased. For other than temporary impairments, the cost basis of the bond excluding loan-backed and structured securities is written down to fair value as a new cost basis and the amount of the write down is accounted for as a realized loss.

 

Mortgage backed and assets backed bonds are amortized using the effective interest method including anticipated prepayments from the date of purchase; significant changes in the estimated cash flows from original purchase assumptions are accounted for using the retrospective method. Mortgage backed and asset backed bonds carrying values are adjusted for impairment deemed to be other than temporary through write-downs recorded as realized capital losses.

 

Prepayment assumptions for loan-backed bonds and structured securities were obtained from broker-dealer survey values or internal estimates. These assumptions are consistent with the current interest rate and economic environment.

 

Publicly and not publicly traded unaffiliated common stocks are stated at fair value.

 

Preferred stock are measured based on the underlying characteristics (redeemable, perpetual or mandatory convertible) and the quality rating expressed as an NAIC designation. Highest-quality, high-quality or medium quality redeemable preferred stocks (NAIC designations 1 to 3) are stated at amortized cost. All other redeemable preferred stocks (NAIC designations 4 to 6) are reported at the lower of amortized cost or fair value. Perpetual preferred stocks are stated at fair value, not to exceed any currently effective call price. Mandatory convertible preferred stocks (regardless if the preferred stock is redeemable or perpetual) are reported at fair value, not to exceed any currently effective call price, in the periods prior to conversion. Impairments in value deemed to be other than temporary are recorded through write-downs and accounted for as realized capital losses.

 

Short-term investments are stated at cost or amortized cost, which approximates fair value.

 

Cash and cash equivalents includes cash on hand, money market funds, amounts due from banks, highly liquid debt instruments purchased with a maturity of three months or less, and certificates of deposit with a maturity of one year or less.

 

Mortgage loans on real estate are stated at unpaid principal balances net of unamortized discounts or premiums, fees and valuation allowances. Valuation allowances are established for mortgage loans that are considered impaired by management and recorded based on the difference between collateral value less estimated sales costs and the amortized cost of the mortgage loan. A mortgage loan that is considered other than temporary impairment impaired by management is written down to collateral value less estimated sales costs with the write-down recorded as a realized capital loss. Mortgage loans for which foreclosure is probable are considered other than temporarily impaired by management.

 

Policy loans are stated at unpaid principal balances.

 

Equity partnership investments are accounted for using the equity method. The individual partnerships are reflected at fair value with mark to market adjustments recorded to unrealized capital gains and losses; partnership values are adjusted for impairments in value deemed to be other than temporary through write-downs recorded as realized capital losses.

 

All insurance subsidiaries are reported at their respective statutory net equity values.

 

The Company enters into securities lending agreements with agent banks whereby blocks of securities are loaned to third parties, primarily major brokerage firms. The agreements require a minimum of 102% and 105% of the fair value of the domestic and foreign securities loaned to be held as collateral. To further minimize the credit risks related to these programs, the financial condition of counterparties is monitored on a regular basis. A securities lending payable for the overnight and continuous loans is included in liabilities in the amount of cash collateral received. Income and expenses associated with securities lending transactions are reported within net investment income.

 

Derivatives are used for asset/liability risk management. If the hedging relationship is effective, the derivative is accounted for in the same manner as the hedged item. If the derivative is not in an effective hedging relationship, the derivative is marked to fair value by recording an unrealized gain or loss (see Note 6 for additional information).

 

F-13

In addition, EFLOA has executed various collateral arrangements with counterparties regarding over-the-counter derivative transactions that require both pledging and accepting collateral either in the form of cash or high-quality securities, such as Treasuries or those issued by government agencies, or, for some counterparties, investment-grade corporate bonds.

 

As of September 2023, the NAIC adopted a change to the reporting of net negative Interest Maintenance Reserve (IMR). Reporting entities that qualify pursuant to certain limitations, are permitted to admit previously disallowed negative IMR up to 10% of the reporting entity’s adjusted general account capital and surplus as required to be shown on the statutory balance sheet of the reporting entity for its most recently filed statement with its domiciliary state commissioner. The capital and surplus cap is adjusted to exclude any net positive goodwill, EDP equipment and operating system software, net deferred tax assets and admitted net negative (disallowed) IMR. As a result of the change, as of December 31, 2025 and 2024, EFLOA was able to record an asset totaling $23.6 million and $52.0 million, respectively, within the Other assets line item.

 

Realized Investment Gains (Losses) and Unrealized Capital Gains (Losses)

 

Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of net income. The change in unrealized capital gains (losses) is presented as a component of change in surplus.

 

The AVR and IMR are required under SAP. The AVR for the General Account and Separate Accounts for which EFLOA bears the investment risk is determined by a specified formula and provides for possible future investment losses through charges to capital and surplus. The AVR requires reserves for bonds, preferred stocks, common stocks, mortgage loans on real estate, real estate, and other investments. The IMR captures, for all types of fixed income investments, the realized investment gains and losses which result from changes in the overall level of interest rates. These deferred investment gains or losses are amortized into income over the remaining term to maturity of the investments sold.

 

Fair Value of Financial Instruments

 

Included in various investment related line items in the financial statements are certain financial instruments carried at fair value. Other financial instruments are periodically measured at fair value, such as when impaired, or, for certain bonds and preferred stock when carried at the lower of cost or market.

 

The accounting guidance established a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, and identifies three levels of inputs that may be used to measure fair value:

 

Level 1		Quoted prices for identical instruments in active markets. Level 1 fair values generally are supported by market transactions that occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar instruments, quoted prices in markets that are not active, and inputs to model-derived valuations that are directly observable or can be corroborated by observable market data.
Level 3		Unobservable inputs supported by little or no market activity and often requiring significant management judgment or estimation, such as an entity’s own assumptions about the cash flows or other significant components of value that market participants would use in pricing the asset or liability.

 

The Company determines fair value based upon quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are measured using present value or other valuation techniques. The fair value determinations are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such adjustments do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair values cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument.

 

Management is responsible for the determination of the value of investments carried at fair value and the supporting methodologies and assumptions. Under the terms of various service agreements, the Company often utilizes independent valuation service providers to gather, analyze, and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual securities. These independent valuation service providers typically obtain

 

F-14

data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested. As further described below with respect to specific asset classes, these inputs include, but are not limited to, market prices for recent trades and transactions in comparable securities, benchmark yields, interest rate yield curves, credit spreads, quoted prices for similar securities, and other market-observable information, as applicable. Specific attributes of the security being valued also are considered, including its term, interest rate, credit rating, industry sector, and when applicable, collateral quality and other security- or issuer-specific information. When insufficient market observable information is available upon which to measure fair value, the Company either will request brokers knowledgeable about these securities to provide a non-binding quote or will employ widely accepted internal valuation models. Fair values received from independent valuation service providers and brokers and those internally modeled or otherwise estimated are assessed for reasonableness. To validate reasonableness, prices also are internally reviewed by those with relevant expertise through comparison with directly observed recent market trades.

 

Separate Accounts

 

Separate account assets and liabilities represent primarily segregated funds administered and invested by the Company for the benefit of certain contract holders. Approximately 38 percent of these assets consist of securities reported at fair value and 62 percent consist of fixed maturity securities carried at amortized cost in book value separate accounts. Securities carried at amortized cost had a carrying value of $54,731.7 million, fair value of $55,569.6 million, and unrealized gain of $837.9 million as of December 31, 2025. Securities carried at amortized cost had a carrying value of $23,774.8 million, fair value of $23,798.8 million, and unrealized gain of $24.0 million as of December 31, 2024. Premiums, benefits and expenses of the separate accounts are included in the Company’s Statements of Operations.

 

Under the 2025 Reinsurance agreement with Equitable Financial Bermuda RE Ltd. (“EFBR”) and the 2013 reinsurance agreement with Protective Life Insurance Company (“Protective”), separate account products subject to the agreement are ceded on a modified coinsurance (“MODCO”) basis, with separate account assets and liabilities remaining with EFLOA. The separate account net gains from operations and fees associated with these separate account contracts and the Net transfers to or (from) Separate Accounts are ceded to Protective, and included in the “Separate Accounts’ modified coinsurance reinsurance ceded” line in the Statements of Operations. 

 

Non-Admitted Assets

 

Certain assets designated as “non-admitted” (certain deferred taxes, prepaid expenses, accrued interest on certain investments, negative IMR and intangible asset) are excluded from assets and statutory surplus. The Company had $4.8 million and $5.3 million of non-admitted assets as of December 31, 2025 and 2024, respectively.

 

Policy and Contract Claims

 

Policy and contract claim expenses are reported in the period when the Company determines they are incurred. The claim liability would include an estimate for claims incurred but not reported.

 

Aggregate Reserves

 

Aggregate reserves for insurance and annuity policies are generally computed under the Commissioners’ Reserve Valuation Method and Commissioners’ Annuity Reserve Valuation Method, respectively, or otherwise under the net level premium method or comparable method, and are subject to reserve adequacy testing. Reserves for variable annuity products are principle-based reserves (“PBR”) and are computed in accordance to NAIC VM-21. Reserves for the indexed universal life products introduced in 2018 and later and variable universal life products introduced in 2019 and later are PBR computed in accordance with NAIC VM-20.

 

Benefit reserves are computed using statutory mortality and interest requirements and are generally determined without consideration of future withdrawals. Interest rates used in establishing such reserves range from 3.5% to 6.0% for life insurance reserves and from 2.8% to 5.3 % for annuity reserves.

 

Federal Income Taxes

 

The Company has a tax sharing agreement with Holdings and is included in a consolidated federal income tax return together with Holdings and other affiliates. In accordance with the tax sharing agreement, tax expense is based on a separate company computation. Any loss not currently usable is carried forward and credited when usable by the Company on a separate basis.

 

F-15

3)	INVESTMENTS

 

Fixed Maturities

 

The following table provides additional information relating to fixed maturities and common stocks held (in millions):

 

		Carrying Value				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
December 31, 2025
Issuer Credit Obligations:
U.S. Government Obligations		$	248.5			$	8.4			$	—			$	256.9
Other U.S. Government Obligations			21.0				0.6				—				21.6
Non-U.S. Sovereign Jurisdiction Securities			38.1				1.1				2.3				36.9
Municipal Bonds — General Obligations (Direct & Guaranteed)			16.2				—				3.2				13.0
Municipal bonds — Special Revenue			19.6				0.2				4.0				15.8
Corporate Bonds (Unaffiliated)			2,811.2				53.6				190.7				2,674.1
Corporate Bonds (Affiliated)			800.0				—				—				800.0
Single Entity Backed Obligations (Unaffiliated)			4.6				—				0.3				4.3
Bonds Issued by Funds Representing Operating Entities (Unaffiliated)			3.1				—				0.1				3.0
Bank Loans — Acquired (Unaffiliated)			237.7				1.4				0.1				239.0
Total Issuer Credit Obligations		$	4,200.0			$	65.3			$	200.7			$	4,064.6
Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities (MBS) — Guaranteed		$	137.5			$	2.7			$	—			$	140.2
Agency Residential MBS - Not/Partially Guaranteed			111.0				2.9				—				113.9
Non-Agency Residential MBS (Unaffiliated)			880.2				8.1				4.5				883.8
Non-Agency Commercial MBS (Unaffiliated)			438.9				3.7				0.4				442.2
Non-Agency — CLOs/CBOs/CDOs (Unaffiliated)			508.6				0.8				0.2				509.2
Other Financial ABS — Self Liquidating (Unaffiliated)			341.5				2.5				0.7				343.3
Lease-Backed Securities — Practical Expedient (Unaffiliated)			275.1				1.3				0.6				275.8
Other Non-Financial ABS — Practical Expedient (Unaffiliated)			544.1				1.9				1.8				544.2
Lease-Backed Securities — Full Analysis (Unaffiliated)			94.2				0.4				0.6				94.0
Other Non-Financial ABS — Full Analysis (Unaffiliated)			62.1				0.4				—				62.5
Total Asset-Backed Securities		$	3,393.2			$	24.7			$	8.8			$	3,409.1
Total Bonds		$	7,593.2			$	90.0			$	209.5			$	7,473.7
		Carrying Value				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
December 31, 2024
U.S. Government		$	187.0			$	1.4			$	1.0			$	187.4
All Other Governments			9.7				0.2				0.1				9.8
States, Territories & Possessions			31.0				—				7.0				24.0
Political Subdivisions of States and Territories			3.9				—				1.0				2.9
Special Revenue & Special Assess. Obligations			61.0				2.7				1.2				62.5
Industrial & Misc. (Unaffiliated)			2,726.9				9.7				301.2				2,435.4
Total Fixed Maturities		$	3,019.5			$	14.0			$	311.5			$	2,722.0

 

F-16

Proceeds from sales of investments in fixed maturities and common stocks during 2025 2024 and 2023 were $1,729.7 million, $19.2 million and $375.8 million, respectively. Gross gains of $4.3 million in 2025, $0.1 million in 2024 and $0.1 million in 2023 and gross losses of $11.9 million in 2025, $0.2 million in 2024 and $5.0 million in 2023, respectively were realized on these sales.

 

The carrying value and estimated fair value of fixed maturities at December 31, 2025, by contractual maturity are as follows (in millions):

 

		Carrying Value				Estimated Fair Value
Due in one year or less		$	80.3			$	80.2
Due after one year through five years			1,570.3				1,569.6
Due after five years through ten years			864.8				869.9
Due after ten years through twenty years			1,684.1				1,658.6
Due after twenty years			3,193.6				3,091.8
Mortgage-backed securities			200.1				203.6
Total Fixed maturities		$	7,593.2			$	7,473.7

 

Fixed maturities not due at a single maturity date have been included in the above table in the year of final maturity. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.The Company’s management, with the assistance of its investment advisors, monitors the investment performance of its portfolio and reviews the Company’s securities with unrealized losses for other-than-temporary impairments (“OTTI”). Integral to this review is an assessment made each quarter, on a security-by-security basis, by the Company’s Investments Under Surveillance (“IUS”) Committee, of various indicators of credit deterioration to determine whether the investment security is expected to recover. This assessment includes, but is not limited to, consideration of the duration and severity of the unrealized loss, failure, if any, of the issuer of the security to make scheduled payments, actions taken by rating agencies, adverse conditions specifically related to the security or sector, the financial strength, liquidity, and continued viability of the issuer and, for equity securities only, the intent and ability to hold the investment until recovery, and results in identification of specific securities for which OTTI is recognized.

 

The following table discloses fixed maturities (381 issues) and (581 issues) that have been in a continuous unrealized loss position for less than a twelve month period or greater than a twelve month period as of December 31, 2025 and 2024, respectively (in millions):

 

		Less than 12 Months								12 Months or Longer								Total
		Estimated Fair Value				Gross Unrealized Losses*				Estimated Fair Value				Gross Unrealized Losses*				Estimated Fair Value				Gross Unrealized Losses*
December 31, 2025
Fixed Maturities:
Issuer Credit Obligations
Corporate Bonds		$	255.6			$	3.3			$	711.0			$	187.8			$	966.6			$	191.1
Government Bonds			—				—				17.3				2.4				17.3				2.4
Municipal Bonds			—				—				25.6				7.2				25.6				7.2
Specific Instruments			18.3				—				—				—				18.3				—
Asset-Backed Securities
Financial ABS — Self-liquidating		$	418.9			$	4.7			$	9.8			$	3.6				428.7				8.3
Non-Financial ABS — Full Analysis			30.5				0.6				—				—				30.5				0.6
Non-Financial ABS — Practical Expedient			259.1				1.9				7.5				0.5				266.6				2.4
Total Fixed Maturities		$	982.4			$	10.5			$	771.2			$	201.5			$	1,753.6			$	212.0

 

*

Foreign exchange and lower of cost or market (valuation allowance) of $2.5 million is included in Gross Unrealized Losses as of 2025.

 

F-17

		Less than 12 Months								12 Months or Longer								Total
		Estimated Fair Value				Gross Unrealized Losses*				Estimated Fair Value				Gross Unrealized Losses*				Estimated Fair Value				Gross Unrealized Losses*
December 31, 2024
Fixed Maturities:
U.S. Government		$	61.4			$	1.0			$	2.5			$	—			$	63.9			$	1.0
All Other Government			4.6				0.1				—				—				4.6				0.1
States, Territories & Possessions			—				—				24.0				7.0				24.0				7.0
Political Subdivision of States and Territories			—				—				2.9				1.0				2.9				1.0
Special Revenue & Special Assess. Obligations			—				—				7.5				1.2				7.5				1.2
Industrial & Misc. (Unaffliliated)			177.9				3.9				1,442.2				297.3				1,620.1				301.2
Total Fixed Maturities		$	243.9			$	5.0			$	1,479.1			$	306.5			$	1,723.0			$	311.5

 

*

Foreign exchange and lower of cost or market (valuation allowance) of $0 is included in Gross Unrealized Losses as of 2024.

 

All contractual payments remain current and the Company has the ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value. There was other than temporary impairments of fixed maturities of $7.6 million in 2025 none in 2024 and none in 2023.

 

The Company’s fixed maturity investments are classified by the NAIC designation ratings from 1 to 6. Some securities are classified as other than investment grade by the various rating agencies, i.e., a rating below Baa3/BBB- or NAIC designation of 3 (medium grade), 4 or 5 (below investment grade) or 6 (in or near default). At December 31, 2025 and 2024, approximately 0.4% and 0.0% respectively, of the Company’s fixed maturities was considered to be other than investment grade.

 

At December 31, 2025 and 2024, there were no carrying values of investments held for the production of income which were non-income producing, for the twelve months preceding the balance sheet dates.

 

At December 31, 2025 and 2024, EFLOA, in accordance with various government and state regulations, had $8.5 million and $8.3 million fair value of securities deposited with government or state agencies, respectively.

 

Equitable is an equity investor in other limited partnership interests which invest primarily in securities with a total carrying value of $145.5 million and $33.4 million respectively, at December 31, 2025 and 2024.

 

Subprime Exposure

 

Subprime residential mortgages are mortgage loans made by banks or mortgage lenders to residential borrowers with lower credit ratings. The criteria used to categorize such subprime borrowers include Fair Isaac Credit Organization (“FICO”) scores, interest rates charged, debt-to-income ratios and loan-to-value ratios. Alt-A residential mortgages are mortgage loans where the risk profile falls between prime and subprime; borrowers typically have clean credit histories but the mortgage loan has an increased risk profile due to higher loan-to-value and debt-to-income ratios and/or inadequate documentation of the borrowers’ income. Residential Mortgage Backed Securities (“RMBS”) are securities whose cash flows are backed by the principal and interest payments from a set of residential mortgage loans.

 

The Company has no direct or indirect exposure through investments in subprime mortgage loans.

 

The Company has no underwriting exposure to subprime mortgage risk through Mortgage Guaranty coverage, Financial Guaranty coverage, Directors & Officers liability, Errors and Omissions liability, and any other lines of insurance.

 

EFLOA does not originate, purchase or warehouse residential mortgages and is not in the mortgage servicing business.

 

Mortgage Loans

 

Mortgage Loans, including Mezzanine Real Estate Loans

 

F-18

The maximum and minimum lending rates for new mortgage loans during 2025 were: 

 

Commercial mortgages: 6.93% and 5.33%

 

The maximum percentage of any one loan to the value of security at the time of the loan, were:

 

Commercial mortgages: 66.03%

 

Taxes, assessments and any amounts advanced and not included in the mortgage loan total:

 

Current Year		Prior Year
$         0		$       0

 

Age Analysis of Mortgage Loans and Identification of Mortgage Loans in which the Insurer is a Participant or Co-Lender in a Mortgage Loan Agreement:

 

a. Current Year		Commercial
1. Recorded Investment (ALL)		Insured				All Other				Mezzanine				Total
(a) Current		$	—			$	557.7			$	—			$	557.7
(b) 30 - 59 days past due			—				—				—				—
(c) 60 - 89 days past due			—				—				—				—
(d) 90 - 179 days past due			—				—				—				—
(e) 180+ days past due			—				—				—				—
2. Accruing Interest 90 -179 Days Past Due
(a) Recorded Investment		$	—			$	—			$	—				—
(b) Interest Accrued			—				—				—				—
3. Accruing Interest 180+ Days Past Due
(a) Recorded Investment		$	—			$	—			$	—				—
(b) Interest Accrued			—				—				—				—
4. Interest Reduced
(a) Recorded Investment		$	—			$	—			$	—				—
(b) Number of Loans			—				—				—				—
(c) Percentage Reduced*			0.00	%			0.00	%			0.00	%			0.00	%
5. Participant or Co-Lender in a Mortgage
Loan Agreement
(a) Recorded Investment		$	—			$	232.1			$	—			$	232.1
* weighted-average % of the aggregated reduced recorded investments

 

b. Prior Year		Commercial
1. Recorded Investment (ALL)		Insured				All Other				Mezzanine				Total
(a) Current		$	—			$	68.4			$	—			$	68.4
(b) 30 - 59 days past due			—				—				—				—
(c) 60 - 89 days past due			—				—				—				—
(d) 90 - 179 days past due			—				—				—				—
(e) 180+ past due			—				—				—				—
2. Accruing Interest 90 -179 Days Past Due
(a) Recorded Investment		$	—			$	—			$	—				—
(b) Interest Accrued			—				—				—				—
3. Accruing Interest 180+ Days Past Due
(a) Recorded Investment		$	—			$	—			$	—				—
(b) Interest Accrued			—				—				—				—
4. Interest Reduced
(a) Recorded Investment		$	—			$	—			$	—				—
(b) Number of Loans			—				—				—				—
(c) Percentage Reduced*			0.00	%			0.00	%			0.00	%			0.00	%
5. Participant or Co-Lender in a Mortgage
Loan Agreement
(a) Recorded Investment			—				—				—				—
* weighted-average % of the aggregated reduced recorded investments

 

F-19