REGISTRATION NO. 333-284953

Filed with the Securities and Exchange Commission on April 21, 2026

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM S-1

Post-Effective Amendment No. 2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

 

ARIZONA

(STATE OR OTHER JURISDICTION OF

INCORPORATION OR ORGANIZATION)

6311

(PRIMARY STANDARD INDUSTRIAL

CLASSIFICATION CODE NUMBER)

86-0222062

(I. R. S. EMPLOYER IDENTIFICATION NUMBER)

8501 IBM DRIVE, SUITE 150

CHARLOTTE, NC 28262-4333

(212) 554-1234

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,

INCLUDING AREA CODE, OF REGISTRANT’S PRINCIPAL EXECUTIVE OFFICES)

 

 

ALFRED AYENSU-GHARTEY

VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL

EQUITABLE FINANCIAL LIFE INSURANCE COMPANY OF AMERICA

8501 IBM DRIVE, SUITE 150

CHARLOTTE, NC 28262-4333

(212) 554-1234

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,

INCLUDING AREA CODE, OF AGENT FOR SERVICE)

 

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462 (b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462 (c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462 (d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		[ ]		Accelerated filer		[ ]
Non-accelerated filer		☒ (do not check if a smaller reporting company)		Smaller reporting company		[ ]
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act . ☐

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

Market Stabilizer Option^® Issued by Equitable Financial Life Insurance Company and Equitable Financial Life Insurance Company of America

 

Prospectus dated May 1, 2026

 

Please read and keep this Prospectus for future reference. It contains important information that you should know before purchasing or taking any other action under your policy. Also, this Prospectus must be read along with the variable life insurance policy prospectus. This Prospectus is in addition to the variable life insurance policy prospectus and all information in the variable life insurance policy prospectus continues to apply unless addressed by this Prospectus.

 

 

The SEC has not approved or disapproved these securities or determined if this Prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The policies are not insured by the FDIC or any other agency. They are not deposits or other obligations of any bank and are not bank guaranteed. They are subject to investment risks and possible loss of principal and previously credited interest.

 

Contents of this Prospectus

 

 

When we address the reader of this Prospectus with words such as “you” and “your,” we mean the person who has the right or responsibility that the Prospectus is discussing at that point. This is usually the policy owner.

 

3

The Company

 

 

 

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1. Definitions

 

 

 

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2. Key Features of the Market Stabilizer Option^®

 

 

 

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3. Fee Table Summary

 

 

MSO Charges		When Charge is Deducted		Guaranteed Maximum
Variable Index Segment Account Charge		At the beginning of each policy month during the Segment Term		1.65%(1)
Mortality and Expense Risk Charge(2)		Monthly		Policy Year   1-10 11+		Annual % of your value in the MSO(3)   1.00% 0.50%

 

Other		When Charge is Deducted		Maximum Spread Percentage that May be Deducted
Loan Interest Spread(4) for Amounts of Policy Loans Allocated to MSO Segment		On each policy anniversary (or on loan termination, if earlier)		5%

 

Other		When Charge is Deducted		Maximum Amount that May be Deducted
Early Distribution Adjustment		On Early Distribution		90% of Segment Account Value(5)

(1)	The current non-guaranteed rate is 0.40%.

(2)

The base variable life insurance policy’s mortality and expense risk charge will also apply to a Segment Account Value or any amounts held in the MSO Holding Account. Amounts in the MSO Holding Account reflect fees and expenses of the EQ/Money Market Portfolio. Please see “Charges” in this Prospectus for more information. Please refer to the variable life insurance policy prospectus for more information.

(3)	The current non-guaranteed rate is 0.40% in policy years 1-8 and 0.05% thereafter.

(4)

We charge interest on policy loans but credit you with interest on the amount of the policy account value we hold as collateral for the loan. The “spread” is the difference between the interest rate we charge you on a policy loan and the interest rate we credit to you on the amount of your policy account value that we hold as collateral for the loan.

(5)

The actual amount of an Early Distribution Adjustment is determined by a formula that depends on, among other things, how the Index has performed since the Segment Start Date, as discussed in detail under “Early Distribution Adjustment” in this Prospectus. The maximum amount of the adjustment would occur if there is a total distribution at a time when the Index has declined to zero.

 

This fee table applies specifically to the MSO and should be read in conjunction with the fee table in the variable life insurance policy prospectus.

 

Changes in charges

 

Any changes that we make in our current charges or charge rates will be on a basis that is equitable to all policies belonging to a given class, and will be determined based on reasonable assumptions as to expenses, mortality, investment income, lapses and policy claims associated with morbidity. For the sake of clarity, the assumptions referenced above include taxes, the cost of hedging, longevity, volatility, other market conditions, surrenders, persistency, conversions, disability, accident, illness, inability to perform activities of daily living, and cognitive impairment, if applicable. Any changes in charges may apply to then in force policies, as well as to new policies. You will be notified in writing of any changes in charges under your policy.

 

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4. Risk Factors

 

 

 

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5. Description of the Market Stabilizer Option^®

 

 

 

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6. Distribution of the policy

 

 

 

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7. Additional Information

 

 

 

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Appendix: Early Distribution Adjustment Examples

 

 

Hypothetical Early Distribution Adjustment Examples

 

A. Examples of Early Distribution Adjustment to determine Segment Distribution Value

 

The following examples represent a policy owner who has invested in both Segments 1 and 2. They are meant to show how much value is available to a policy owner when there is an Early Distribution from these Segments as well as the impact of Early Distribution Adjustments on these Segments. The date of such hypothetical surrender or distribution is the Valuation Date specified below and, on that date, the examples assume 9 months remain until Segment 1’s maturity date and 3 months remain until Segment 2’s maturity date.

 

Explanation of formulas and derivation of Put Option Factors is provided in notes (1)-(3) below.

 

Division of MSO into Segments		Segment 1 (Distribution after 3 months)		Segment 2 (Distribution after 9 months)		Total
Start Date		3rd Friday of July, Calendar Year Y		3rd Friday of January, Calendar Year Y
Maturity Date		3rd Friday of July, Calendar Year Y+1		3rd Friday of January, Calendar Year Y+1
Segment Term		1 year		1 year
Valuation Date		3rd Friday of October, Calendar Year Y		3rd Friday of October, Calendar Year Y
Initial Segment Account		1,000		1,000		2,000
Remaining Segment Term		9 months / 12 months = 9/12 = 0.75		3 months / 12 months = 3/12 = 0.25

 

Example I – The Index is down 10% at the time of the Early Distribution Adjustment

 

Change in Index Value		–10%		–10%		Total
Put Option Factor		0.079765		0.045706
Early Distribution Adjustment		Put Option Component: 1000 * 0.079765 = 79.77		Put Option Component: 1000 * 0.045706 = 45.71		125.47
Segment Distribution Value		1000 – 79.77 = 920.23		1000 – 45.71 = 954.29		1,874.53
Total % change in Segment Account Value due to the EDA		-8.0%		-4.6%

 

Example II – The Index is up 10% at the time of the Early Distribution Adjustment

 

Change in Index Value		10%		10%		Total
Put Option Factor		0.021492		0.002964
		Put Option Component: 1000 * 0.021492 = 21.49		Put Option Component: 1000 * 0.002964 = 2.96
Early Distribution Adjustment						24.46
Segment Distribution Value		1000 – 21.49 = 978.51		1000 – 2.96 = 997.04		1,975.54
Total % change in Segment Account Value due to the EDA		-2.1%		-0.3%

 

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Example III – The Index is down 40% at the time of the Early Distribution Adjustment

 

Change in Index Value		–40%		–40%		Total
Put Option Factor		0.303317		0.300557
Early Distribution Adjustment		Put Option Component: 1000 * 0.303317 = 303.32		Put Option Component: 1000 * 0.300557 = 300.56		603.87
Segment Distribution Value		1000 – 303.32 = 696.68		1000 – 300.56 = 699.44		1,396.13
Total % change in Segment Account Value due to the EDA		-30.3%		-30.1%

 

Example IV – The Index is up 40% at the time of the Early Distribution Adjustment

 

Change in Index Value		40%		40%		Total
Put Option Factor		0.001981		0.000008
Early Distribution Adjustment		Put Option Component: 1000 * 0.001981 = 1.98		Put Option Component: 1000 * 0.000008 = 0.01		1.99
Segment Distribution Value		1000 – 1.98 = 998.02		1000 – 0.01 = 999.99		1,998.01
Total % change in Segment Account Value due to the EDA		-0.2%		0.0%

 

(1)	Early Distribution Adjustment = (Segment Account Value) x [ (Put Option Factor) – (Number of days between Valuation Date and Maturity Date) /( Number of days between Start Date and Maturity Date) x ( 0.0090 / (1 – 0.0090) )].

 

(2)	Segment Distribution Value = (Segment Account Value) – (Early Distribution Adjustment).

 

(3)

Derivation of Put Option Factor: In practice, the Put Option Factor will be calculated based on a Black Scholes model, with input values which are consistent with current market prices. We will utilize implied volatility quotes – the standard measure used by the market to quote option prices – as an input to a Black Scholes model in order to derive the estimated market prices. The input values to the Black Scholes model that have been utilized to generate the hypothetical examples above are as follows: (1) Implied volatility – 25%; (2) OIS rate corresponding to remainder of segment term – 1.09% annually; (3) Index dividend yield – 2% annually.

 

[B.	Example of an Early Distribution Adjustment corresponding to a loan allocated to Segments, for the Segment Distribution Values and Segment Account Values listed above for a change in Index Value of –40%

 

This example is meant to show the effect on a policy if, rather than a full distribution, you took a loan in the circumstances outlined in Example III above when the Index is down 40%. Thus the policy owner is assumed to have an initial Segment Account Value of 1,000 in each of Segment 1 and Segment 2. It is also assumed that 9 months remain until Segment 1’s maturity date and 3 months remain until Segment 2’s maturity date.

 

Loan Amount: 750

Loan Date: 3rd Friday of October, Calendar Year Y

 

Explanation of formulas is provided in notes (a)-(d) below.

 

The Index is down 40% at the time of the Early Distribution Adjustment

 

Change in Index Value		–40%		–40%		Total
Segment Account Value before Loan		1,000.00		1,000.00		2,000.00
Loan Allocation(a)		373.34		376.66		750.00
Early Distribution Adjustment(b)		69.91		66.59		136.55
Segment Account Value after Loan(c)		556.73		556.72		1,113.45
Segment Distribution Value after Loan(d)		468.93		473.10		942.03

 

(a)

When more than one Segment is being used, we would allocate the loan between the Segments proportionately to the Segment Distribution Value in each. We take the Segment Distribution Value of each Segment (shown in Example III above) and divide it by the total Segment Distribution Values for Segments 1 and 2. This gives us the proportionate amount of the loan that should be allocated to each Segment. For example, for Segment 1, that would be 750 x (842.27/1,692.03) = 373.34

 

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(b)

This is the Early Distribution Adjustment that would be deducted from each Segment, as a result of the loan, based on the amount of the loan that is allocated to that Segment. It is equal to a percentage of the Early Distribution Adjustment that would apply if a full distribution from the Segment were being made, rather than only a partial distribution. This percentage would be 44.32545% for Segment 1 in this example: i.e., 373.34 (the amount of reduction in Segment Distribution Value as a result of the loan) divided by 842.27 (the Segment Distribution Value before the loan). Thus, the Early Distribution Adjustment that is deducted for Segment 1 due to the loan in this example would be 69.91 (i.e., 44.32545% of the 157.73 Early Distribution adjustment shown in Example III above that would apply if a full rather than only a partial distribution from the Segment were being made). Of this 69.91, 72.43 would be attributable to the Put Option Component and -2.51 would be attributable to the Charge Refund Component (which are calculated by applying 44.32545% to the 163.40 Put Option Component and the 5.67 Charge Refund Component shown in Example III). Similarly, the Early Distribution Adjustment deducted as a result of the loan from Segment 2 would be 66.59, of which 67.43 would be attributable to the Put Option Component and -0.84 would be attributable to the Charge Refund Component.

 

(c)	The Segment Account Value after Loan represents the Segment Account Value before Loan minus the Loan Allocation and the Early Distribution Adjustment. For example, for Segment 1, that would be 1,000 – 373.34 – 69.93 = 556.73.

 

(d)

Segment Distribution Value after Loan represents the amount a policy owner would receive from a Segment if they decided to surrender their policy immediately after this loan transaction. We would take the pre-loan Segment Distribution Value (shown in Example III above) and subtract the Loan Allocation. For example, for Segment 1, that would be 842.27 – 373.34 = 468.93.]

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

 

Table of Contents:		Page
Business		A-2
Employees		A-16
Risk Factors		A-17
Description of Property		A-28
Legal Proceedings		A-29
Selected Financial Data		A-30
Management’s Discussion and Analysis of Financial Condition and Results of Operations		A-31
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		A-49
Quantitative and Qualitative Disclosures About Market Risk		A-50
Directors, Executive Officers, Promoters and Control Persons		A-53
Executive Compensation		A-59
Security Ownership of Certain Beneficial Owners and Management		A-110
Transactions with Related Persons, Promoters and Certain Control Persons		A-112
Transactions with Related Parties		A-112
Financial Statements and Notes to Financial Statements—Statutory Basis		A-113
Glossary		A-190
Acronyms		A-195

 

 

APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

FORWARD-LOOKING INFORMATION

 

Certain of the statements included or incorporated by reference in this Form S-1 constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “forecasts,” “intends,” “seeks,” “aims,” “plans,” “assumes,” “estimates,” “projects,” “should,” “would,” “could,” “may,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Equitable Financial Life Insurance Company (“Equitable Financial”) and its consolidated subsidiaries. These forward-looking statements include, but are not limited to, statements regarding projections, estimates, forecasts and other financial and performance metrics and projections of market expectations. “We,” “us” and “our” refer to Equitable Financial and its consolidated subsidiaries, unless the context refers only to Equitable Financial as a corporate entity. There can be no assurance that future developments affecting Equitable Financial will be those anticipated by management. Forward-looking statements include, without limitation, all matters that are not historical facts.

 

These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (i) conditions in the financial markets and economy, including the impact of geopolitical conflicts, changes in tariffs and trade barriers, and related economic conditions, equity market declines and volatility, interest rate fluctuations and changes in liquidity and access to and cost of capital; (ii) operational factors, protection of confidential customer information or proprietary business information, operational failures by us or our service providers, potential strategic transactions, changes in accounting standards, and catastrophic events, such as outbreak of pandemic diseases; (iii) credit, counterparties and investments, including counterparty default on derivative contracts, failure of financial institutions, defaults by third parties and affiliates and economic downturns, defaults and other events adversely affecting our investments; (iv) our reinsurance and hedging programs; (v) our products, structure and product distribution, including variable annuity guaranteed benefits features within certain of our products, variations in statutory capital requirements, financial strength and claims-paying ratings and key product distribution relationships; (vi) estimates, assumptions and valuations, including risk management policies and procedures, potential inadequacy of reserves and experience differing from pricing expectations, amortization of deferred acquisition costs and financial models; (vii) recruitment and retention of key employees and experienced and productive financial professionals; (viii) subjectivity of the determination of the amount of allowances and impairments taken on our investments; (ix) legal and regulatory risks, including federal and state legislation affecting financial institutions, insurance regulation and tax reform; and (x) general risks, including strong industry competition, information systems failing or being compromised and protecting our intellectual property.

 

You should read this Form S-1 completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Form S-1 are qualified by these cautionary statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

 

Other risks, uncertainties and factors, including those discussed under “Risk Factors,” could cause our actual results to differ materially from those projected in any forward-looking statements we make. Readers should read carefully the factors described in “Risk Factors” to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

 

Throughout this Form S-1 we use certain defined terms and abbreviations, which are defined or summarized in the “Glossary” and “Acronyms” sections.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

BUSINESS

 

Overview

 

We are a principal franchise of Equitable Holdings, Inc., one of America’s leading financial services providers. We provide advice, protection and retirement strategies to individuals, families and small businesses.

 

Products

 

We are a leading provider of individual annuities, workplace retirement savings plans, and institutional savings products. Our individual annuity products are primarily sold to affluent and high net worth individuals saving for retirement or seeking guaranteed retirement income. These products are distributed through both Equitable Advisors and third-party distribution channels (“Third-Party Distributors”), including banks, broker-dealers, investment advisers and insurance partners. Our current product offerings primarily include:

 

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Registered Indexed Linked Annuities (RILAs): RILAs allow the policyholder to invest in various investment options, whose performance is tied to one or more securities indices, commodities indices or ETFs over a set period of time. Upside participation in index returns is subject to a cap, while downside exposure is reduced by a buffer. We market our RILA products under the Structured Capital Strategies (“SCS”) brand.

 

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Traditional Variable Annuities: Our RC variable annuity product offers two platforms: (i) RC Performance, which offers access to a broad selection of funds with annuitization benefits based solely on non-guaranteed account investment performance and (ii) RC Protection, which offers access to a focused selection of funds and an optional floating-rate GMxB feature providing guaranteed income for life. Our investment-only variable annuity, Investment Edge, is a retirement savings product offering a range of funds and structured investment options. Investment Edge does not offer any GMxB feature other than an optional return of premium death benefit.

 

We also offer products to plans sponsored by educational entities, municipalities and not-for-profit entities, as well as small and medium-sized businesses. We operate in the 403(b), 457(b) and 401(k) markets where we sell mutual fund-based products and group variable annuity products.

 

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Open Architecture Mutual Fund Platform: We also offer a mutual fund-based product to complement our variable annuity products. This platform provides a similar service offering to our variable annuities and allows plan sponsors to select from thousands of proprietary and third party-sponsored mutual funds and offer a group fixed annuity that operates very similarly to the GIO as an available investment option.

 

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Group Variable Annuities: Our variable annuities offer defined contribution plan record-keeping, as well as administrative and participant services combined with a variety of proprietary and non-proprietary investment options. Our investment lineup mostly consists of proprietary variable investment options that are managed by EIMG, which provides discretionary investment management services that include developing and executing asset allocation strategies and providing rigorous oversight of sub-advisors for the investment options. In addition, our products also offer the following features: (i) GIO — provides a fixed interest rate and guarantee of principal; (ii) SIO — provides upside market participation that tracks certain available indices subject to a performance cap, with some downside protection against losses in the investment over a one, three or five-year period; and (iii) Personal Income Benefit — an optional GMxB feature that enables participants to obtain a guaranteed withdrawal benefit for life for an additional fee. While GMxB features and Institutional products with guaranteed benefits provide differentiation in the market, this accounts for approximately 1.3% of our total AV (other than ROP death benefits) as of December 31, 2025.

 

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Services: Both our variable annuity and open architecture mutual fund products offer a suite of tools and services to enable plan participants to obtain education and guidance on their contributions and investment decisions and plan fiduciary services. Education and guidance are available online or in person from a team of plan relationship and enrollment specialists and/or the advisor that sold the product. Our clients’ retirement contributions come through payroll deductions, which creates a stable and recurring source of renewal premiums.

 

We also offer institutional savings and income products, including:

 

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In-plan Annuities: We partner with asset management firms to embed guaranteed lifetime income solutions within target date funds which allow plan participants to accrue guaranteed lifetime income that can be converted to a guaranteed payment stream in retirement. Equitable currently is a participating insurer in AB’s Lifetime Income Strategy and BlackRock’s LifePath Paycheck offering.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

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Guaranteed Investment Contracts: We partner with asset management firms to embed synthetic guaranteed investment contracts (“GICs”) within stable value funds. The synthetic GICs provide principal protection to the assets within the fund that are wrapped by the insurance contract, enabling the fund to meet its investment objective of low volatility.

 

In addition, we offer a targeted range of life insurance products aimed at serving the financial needs of our clients. Our life insurance products are primarily designed to help individuals and small and medium-sized businesses with protection, wealth accumulation and transfer of wealth at death, as well as corporate planning solutions including non-qualified deferred compensation, succession planning and key person insurance. We target select segments of the life insurance market, including VUL and COLI. We currently focus on the asset accumulation and protection segments of the market. We plan to grow our operating earnings over time through earnings generated from sales of our repositioned product portfolio and by proactively managing and optimizing our in-force book. Beginning in 2025, our life insurance products are primarily distributed through Equitable Advisors.

 

Finally, through our employee benefits business, we offer small and medium-sized businesses a unique technology platform and a competitive suite of group insurance products. Our core products consist of Group Life Insurance (including Accidental Death & Dismemberment), Supplemental Life, Dental, Vision, Short-Term Disability and Long-Term Disability. In addition, we offer a full suite of Supplemental Health products including Accident, Critical Illness and Hospital Indemnity. Our employee benefits’ solutions are distributed through Equitable Advisors and select third-party firms, including the traditional broker channel, strategic partnerships (medical partners, professional employer organizations (“PEOs”), and associations), General Agencies, TPAs and Retail Equitable Advisors.

 

Underwriting and Pricing

 

We price our products based upon our expected investment returns and assumptions for mortality, longevity and persistency for our policyholders collectively. Our pricing considers historical experience, potential volatility in the markets and account value, and the expected time to retirement. Our product pricing models also reflect capital requirements, hedging costs and operating expenses. Investment-oriented products are priced based on various factors, which may include investment return, expenses, persistency and optionality.

 

Our annuity products generally include penalties for early withdrawals. From time to time, we reevaluate the type and level of GMxB and other features we offer. We periodically review the nature and pricing of the features we offer as the needs of our clients, the economic environment and our risk appetite evolve.

 

Life insurance products are priced based upon assumptions including, but not limited to, expected future premium payments, surrender rates, mortality and morbidity rates, investment returns, hedging costs, equity returns, expenses and inflation and capital requirements.

 

Employee benefits pricing reflects the claims experience and the risk characteristics of each group. We consider demographic information and, for larger groups, the experience of the group. The claims experience is reviewed at the time of policy issuance and during the renewal timeframes, resulting in periodic pricing adjustments at the group level.

 

Risk Management

 

Risk Management

 

We approach risk management of our products: (i) prospectively, by assessing, and from time to time, modifying our current product offerings to manage our risk and (ii) retrospectively, by implementing actions to reduce our exposure and manage the risks associated with in-force contracts. We use a combination of hedging and reinsurance programs to appropriately manage our risk and for capital management purposes.

 

Hedging

 

In respect of our variable annuity products, we employ dynamic and static hedging using derivatives contracts, including futures and total return swaps (both equity and fixed income), options and variance swaps, as well as, to a lesser extent, bond investments and repurchase agreements to, in the case of dynamic hedging, offset economic liability from equity market and interest rate changes, and in the case of static hedging, maintain a target asset level for all variable annuities. For our other tax-deferred investment and retirement services, we employ derivative contracts whose payouts, in combination with fixed income investments, emulate those of certain securities indices, commodities indices, or ETFs, subject to caps and buffers, to support the returns associated with the SIO.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Reinsurance

 

We use affiliated and non-affiliated reinsurance to mitigate a portion of the risks that we face in certain of our retirement and protection products. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. For additional information on our reinsurance, see Note 17 of the Notes to the Statutory Financial Statements.

 

COMPETITION

 

The insurance industry is highly competitive, with no single provider dominating the market across individual annuity products. We compete primarily with other life insurers, banks, mutual fund companies and other investment managers in the individual annuity space. Several factors distinguishing competitors to clients include: product features, access to capital, access to diversified sources of distribution, financial strength ratings, investment options, brand recognition, quality of service, and technological capabilities.

 

Our group annuity products compete with select insurance companies, asset managers, record keepers and diversified financial institutions that target similar market segments. In the K–12 public education market, competitors are primarily insurance-based providers that focus on school districts. In the small and medium-sized business market, the primary competitors are insurance-based providers and mutual fund companies. The main features that distinguish our offering to clients include our RBG distribution model, the product features we offer to clients, including guarantees, and our financial strength.

 

It is difficult to provide unique annuity products because, once such products are made available to the public, they can be replicated by our competitors. Competition may affect, among other matters, the growth of our business and the pricing and profitability of our products.

 

Equitable Investment Management

 

Equitable Investment Management supports each of our retirement and protection businesses. Accordingly, Equitable Investment Management results are embedded in our financial results. EIMG helps add value and marketing appeal to our insurance products by bringing investment management expertise and specialized strategies to the underlying investment lineup of each product. In addition, by advising on an attractive array of proprietary investment portfolios (each, a “Portfolio,” and together, the “Portfolios”), EIMG brings investment acumen, financial controls and economies of scale to the construction of underlying investment options for our products.

 

EIMG provides investment management services to proprietary investment vehicles sponsored by the Company, including investment companies that are underlying investment options for our variable insurance and annuity products, and EIM LLC provides investment management services to our retail mutual funds. Each of EIMG and EIM LLC is registered as an investment adviser under the Investment Advisers Act. EIMG serves as the investment adviser to EQAT and to two private investment trusts established in the Cayman Islands. EQAT and each private investment trust is a “series” type of trust with multiple Portfolios. EIMG provides discretionary investment management services to the Portfolios, including, among other things, (1) portfolio management services for the Portfolios; (2) selecting, monitoring and overseeing investment sub-advisers; and (3) developing and executing asset allocation strategies for multi-advised Portfolios and Portfolios structured as funds-of-funds. EIMG is further charged with ensuring that the other parts of the Company that interact with the Trusts, such as product management, the distribution system and the financial organization, have a specific point of contact.

 

EIMG has a variety of responsibilities for the management of its investment company clients. One of EIMG’s primary responsibilities is to provide clients with portfolio management and investment advisory services, principally by reviewing whether to appoint, dismiss or replace sub-advisers to each Portfolio, and thereafter monitoring and reviewing each sub-adviser’s performance through qualitative and quantitative analysis, as well as periodic in-person, telephonic and written consultations with the sub-advisers. Currently, EIMG has entered into sub-advisory agreements with more than 40 different sub-advisers, including AB. Another primary responsibility of EIMG is to develop and monitor the investment program of each Portfolio, including Portfolio investment objectives, policies and asset allocations for the Portfolios, select investments for Portfolios (or portions thereof) for which it provides direct investment selection services, and ensure that investments and asset allocations are consistent with the guidelines that have been approved by clients.

 

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EIM LLC is the investment advisor to our retail 1290 Funds and provides administrative services to both Trusts. EIM LLC provides or oversees the provision of all investment advisory and portfolio management to the 1290 Funds. EIM LLC has supervisory responsibility for the management and investment of 1290 Fund assets and develops investment objectives and investment policies for the funds. It is also responsible for overseeing sub-advisors and determining whether to appoint, dismiss or replace sub-advisors to each 1290 Fund. Currently, EIM LLC has entered into sub-advisory agreements with six different sub-advisors. The administrative services that EIM LLC provides to the Trusts include, among others, coordination of each Portfolio’s audit, financial statements and tax returns; expense management and budgeting; legal administrative services and compliance monitoring; portfolio accounting services, including daily NAV accounting; risk management; oversight of proxy voting procedures and an anti-money laundering program.

 

General Account Investment Management

 

Equitable Financial Investment Management, LLC (“EFIM”) is the investment manager for Equitable Financial’s General Account portfolio.

 

EFIM provides investment management services to our General Account portfolio. It provides investment advisory and asset management services including, but not limited to, providing investment advice on strategic investment management activities, asset strategies through affiliated and unaffiliated asset managers, strategic oversight of the General Account portfolio, portfolio management, yield/duration optimization, asset liability management, asset allocation, liquidity and close alignment to business strategies, as well as advising on other services in accordance with the investment advisory and management agreement. Subject to oversight and supervision, EFIM may delegate any of its duties with respect to some or all of the assets of the General Account to a sub-adviser. Currently, EFIM has entered into sub-advisory agreements with three (3) different sub-advisers, including AB.

 

REGULATION

 

Insurance Regulation

 

We are licensed to transact insurance business and are subject to extensive regulation and supervision by insurance regulators, in all 50 states of the United States, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. The primary regulator of a U.S. insurance company, however, is located in its state or country of domicile. We are domiciled in New York and are primarily regulated by the Superintendent of the NYDFS. The extent of regulation by jurisdiction varies, but most jurisdictions have laws and regulations governing the financial aspects and business conduct of insurers. State laws in the United States grant insurance regulatory authorities broad administrative powers with respect to, among other things, licensing companies to transact business, sales practices, establishing statutory capital and reserve requirements and solvency standards, reinsurance and hedging, protecting privacy and data security, regulating advertising, restricting the payment of dividends and other transactions between affiliates, permitted types and concentrations of investments and business conduct to be maintained by insurance companies as well as agent and insurance producer licensing, and, to the extent applicable to the particular type of insurance, approval or filing of policy forms and rates. Insurance regulators have the discretionary authority to limit or prohibit new issuances of business to policyholders within their jurisdictions when, in their judgment, such regulators determine that the issuing company is not maintaining adequate statutory surplus or capital. Additionally, New York’s insurance laws limit sales commissions and certain other marketing expenses that we may incur.

 

Supervisory agencies in each of the U.S.-based jurisdictions in which we do business may conduct regular or targeted examinations of our operations and accounts and make requests for particular information from us. For example, supervisory agencies generally conduct financial examinations of the books, records, accounts and business practices of insurers domiciled in their states every three to five years. From time to time, regulators raise issues during examinations or audits of us that could, if determined adversely, have a material adverse effect on us. In addition, regulators’ interpretations of regulations by may change and statutes may be enacted with retroactive impact, particularly in areas such as accounting or statutory reserve requirements. In addition to oversight by state insurance regulators in recent years, the insurance industry has seen increased inquiries from state attorneys general and other state officials regarding compliance with certain state insurance, securities and other applicable laws. We have received and responded to such inquiries from time to time. For additional information on legal and regulatory risks, see “Risk Factors — Legal and Regulatory Risks.”

 

We are required to file detailed annual and quarterly financial statements, prepared on a statutory accounting basis or in accordance with other accounting practices prescribed or permitted by the applicable regulator, with supervisory agencies in each of the jurisdictions in which we do business. The NAIC has approved a series of uniform SAPs that have been adopted by

 

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all state insurance regulators, in some cases with certain modifications. As a basis of accounting, SAPs were developed to monitor and regulate the solvency of insurance companies. In developing SAPs, insurance regulators were primarily concerned with ensuring an insurer’s ability to pay all its current and future obligations to policyholders. As a result, statutory accounting focuses on conservatively valuing the insurers’ assets and liabilities , generally in accordance with standards specified by the insurer’s domiciliary state. The values for assets, liabilities and equity reflected in financial statements prepared in accordance with U.S. GAAP usually differ from those reflected in financial statements prepared under SAP. See Note 2 of the Notes to the Statutory Financial Statements.

 

Holding Company and Shareholder Dividend Regulation

 

All states regulate transactions between an insurer and its affiliates under their insurance holding company laws and regulations, which vary by jurisdiction, but generally require that all transactions affecting insurers within a holding company system be fair and reasonable and, in many cases, require prior notice and approval or non-disapproval by the insurer’s domiciliary insurance regulator.

 

Insurance holding company laws and regulations also generally require a controlled insurance company (i.e., an insurer that is a subsidiary of an insurance holding company) to register and file with state insurance regulatory authorities certain reports, including information concerning its capital structure, ownership, financial condition, certain intercompany transactions and general business operations. In addition, states require a U.S. insurer’s ultimate controlling person to file an annual enterprise risk report with the insurance holding company system’s lead state regulator identifying risks likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.

 

State insurance laws also restrict and limit the amount of dividends or other distributions payable by an insurance company’s subsidiaries to its parent company, as well as transactions between an insurer and its affiliates. As a holding company, Holdings depends on dividends from its subsidiaries to meet its obligations, and these restrictions may limit or prevent us from making dividend or other payments to Holdings. These restrictions are based, in part, on earned surplus and the prior year’s statutory income and policyholder surplus. In general, dividends may be paid only from earned surplus (typically defined as available or unassigned surplus, subject to possible adjustments) which is derived from realized net profits on the company’s business. Dividends up to specified levels are considered ordinary and generally may be made without prior regulatory approval. Meanwhile, dividends paid from sources other than earned surplus or in larger amounts, often called “extraordinary dividends,” are generally subject to approval by the insurance commissioner of the relevant state of domicile.

 

From time to time, the NAIC and various state insurance regulators have considered, and may in the future consider, proposals to further limit dividend payments that an insurance company may make without regulatory approval. For instance, under Under New York’s insurance laws, which apply to us, a domestic stock life insurer may pay an ordinary dividend to its stockholders without regulatory approval provided that the amount does not exceed the statutory formula (“Ordinary Dividend”). Dividends in excess of this amount require a New York domestic life insurer to file a notice of its intent to declare the dividend with the NYDFS and obtain prior approval or non-disapproval from the NYDFS with respect to such dividend (“Extraordinary Dividend”). Furthermore, due to a permitted statutory accounting practice agreed to with the NYDFS following NYDFS’s enactment of Regulation 213, we need the prior approval of the NYDFS to pay the portion, if any, of any Ordinary Dividend that exceeds the Ordinary Dividend that we would be permitted to pay under New York’s insurance laws absent the application of such permitted practice (such excess, the “Permitted Practice Ordinary Dividend”).

 

For additional information on shareholder dividends, see Note 11 of the Notes to the Statutory Financial Statements.

 

Other states’ insurance laws similarly limit dividends, providing that dividends in excess of prescribed limits, based on an insurance company’s earnings and surplus for the prior year, are considered to be extraordinary dividends and require explicit approval from the insurer’s domiciliary insurance regulator. In addition, the insurance laws of some states require that any dividend to a domestic insurance company’s stockholders be paid from the insurer’s earned surplus or that prior approval or non-disapproval be obtained from its domiciliary insurance regulator for any dividend payable from other than earned surplus. In general, if New York adopts more stringent restrictions on dividend payments, this could have the effect of significantly reducing our payment of dividends or other amounts payable to Holdings without prior approval by regulatory authorities.

 

Insurance holding company laws and regulations also regulate changes in control. State laws provide that no person, corporation or other entity may acquire control of a domestic insurance company, or any parent company of such insurance company, without the prior approval of the insurance company’s domiciliary state insurance regulator. Generally, any person acquiring, directly or indirectly, 10% or more of the voting securities of an insurance company is presumed to have acquired

 

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“control” of the company. This statutory presumption may be rebutted by a showing that control does not exist in fact. State insurance regulators, however, may also find that “control” exists in circumstances in which a person owns or controls, directly or indirectly, less than 10% of the voting securities.

 

The laws and regulations regarding acquisitions of control may discourage potential acquisition proposals and may delay or prevent a change of control involving us, including through unsolicited transactions that some of our shareholders might consider desirable.

 

NAIC

 

The mandate of the NAIC is to benefit state insurance regulatory authorities and consumers by promulgating model insurance laws and regulations for adoption by the states. The NAIC has established statutory accounting principles set forth in the Manual. However, a state may have adopted or in the future may adopt SAP’s that differ from the Manual. Changes to the Manual or states’ adoption of prescribed differences to the Manual may impact our statutory capital and surplus.

 

The NAIC’s Risk Management and Own Risk and Solvency Assessment Model Act (“ORSA”), which has been enacted by our domiciliary state, requires insurers to maintain a risk management framework and conduct an internal risk and solvency assessment of their material risks in normal and stressed environments. The assessment is documented in a confidential annual ORSA summary report, a copy of which must be made available to regulators as required or upon request.

 

The NAIC’s Corporate Governance Annual Disclosure Model Act has also been adopted the domiciliary states of other Holdings’ subsidiaries. It requires insurers to annually file detailed information regarding their corporate governance policies.

 

The NAIC’s Manual contains a principle-based approach to reserving for life insurance and annuity contracts. Principle-based reserving is designed to better address reserving for life insurance and annuity products. It has been adopted in all states, although in New York, principle-based reserving became effective with the adoption of Regulation 213, which differs from the NAIC Standard Valuation Law, as discussed further below.

 

In recent years, the NAIC’s macro-prudential initiative was intended to enhance risk identification efforts through enhancements to supervisory practices related to liquidity, recovery and resolution, capital stress testing and counterparty exposure concentrations for life insurers. In connection with this initiative, the NAIC amended the Model Holding Company Act and Regulation in 2020 to implement an annual filing requirement for a liquidity stress-testing framework (the “Liquidity Stress Test”) for certain large U.S. life insurers and insurance groups (based on amounts of certain types of business written or material exposure to certain investment transactions, such as derivatives and securities lending). The Liquidity Stress Test is used as a regulatory tool in the jurisdictions that have adopted the holding company amendments.

 

The NAIC’s GCC tool uses a RBC aggregation methodology for all entities within an insurance holding company system, including non-U.S. entities. The 2020 Model Holding Company Act and Regulation amendments also adopted the GCC Template and Instructions and implemented the annual GCC filing requirement with an insurance group’s lead state regulator. The GCC filing requirement becomes effective when the holding company amendments have been adopted by the state where an insurance group’s lead state regulator is located. In August 2023, New York adopted legislation codifying the Liquidity Stress Test and the GCC.

 

In August 2023, the NAIC adopted a short-term solution related to the accounting treatment of an insurer’s negative interest maintenance reserve (“IMR”) balance, which may occur when a rising interest rate environment causes an insurer’s IMR balance to become negative as a result of bond sales executed at a capital loss. Previous statutory accounting guidance required the non-admittance of negative IMR, which can result in lower reported surplus and RBC ratios. The NAIC’s interim statutory accounting guidance, which is effective on December 31, 2026, allows an insurer with an authorized control level RBC greater than 300% to admit negative IMR for an amount up to 10% of its general account capital and surplus, subject to certain restrictions and reporting obligations. The NAIC is developing a long-term solution for this issue, and an NAIC ad hoc group meets regularly to discuss various IMR-related topics.

 

Captive Reinsurance Regulation and Variable Annuity Capital Standards

 

We use an affiliated captive reinsurer as part of our capital management strategy with respect to level premium term life insurance (“XXX”) business and UL with secondary guarantees (“AXXX”) business. NAIC actuarial guideline (“AG 48”) enhances the statutory financial statement disclosure of an insurer’s use of captives and narrows permissible assets backing

 

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statutory reserves. The NAIC’s Term and Universal Life Insurance Reserve Financing Model Regulation codifies the same substantive requirements as AG 48. States must either adopt the model regulation or use AG 48 to satisfy the NAIC accreditation requirement.

 

The NAIC adopted a new framework for variable annuity captive reinsurance transactions that became operational in 2020, which includes reforms that improve the statutory reserve and RBC framework for insurance companies that sell variable annuity products. Among other changes, the framework includes new prescriptions for reflecting hedge effectiveness, investment returns, interest rates, mortality and policyholder behavior in calculating statutory reserves and RBC. Overall, we believe the NAIC reform has moved variable annuity capital standards towards an economic framework which is consistent with how we manage our business. The Company adopted the NAIC reserve and capital framework for the year ended December 31, 2019.

 

As previously noted, New York’s Regulation 213, which applies to Equitable Financial, differs from the NAIC’s variable annuity reserve and capital framework described above. Regulation 213 requires New York licensed insurers to carry statutory basis reserves for variable annuity contract obligations equal to the greater of those required under (i) the NAIC standard or (ii) a revised version of the NYDFS requirement in effect prior to the adoption of the regulation’s first amendment for contracts issued prior to January 1, 2020, and for policies issued after that date a new standard that is more conservative than the NAIC standard. As a result, Regulation 213 materially increases the statutory basis reserves that New York licensed insurers are required to carry which could adversely affect their capacity to distribute dividends. As a holding company, Holdings relies on dividends and other payments from its subsidiaries and, accordingly, any material limitation on Equitable Financial’s dividend capacity could materially affect Holdings’ ability to return capital to stockholders through dividends and stock repurchases.

 

In order to mitigate the impacts of Regulation 213 discussed above, the Company completed a series of management actions prior to year-end 2022. We were also granted a permitted practice by the NYDFS which partially mitigates Regulation 213’s impact from the Venerable transaction to make the regulation’s application to us more consistent with the NAIC reserve and capital framework. In addition, in May 2023, we completed a reinsurance transaction whereby it reinsured virtually all of our 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, to our affiliate, Equitable America. In addition, all of the separate account liabilities relating to such variable annuity contracts were reinsured as part of that transaction. There can be no assurance that any of these management actions individually or collectively will fully mitigate the impact of Regulation 213. Other state insurance regulators may also propose and adopt standards that differ from the NAIC framework. See Note 2 of the Notes to the Statutory Financial Statements for additional detail on the permitted practice granted by the NYDFS.

 

We cannot predict what revisions, if any, will be made to the model laws and regulations relating to the use of captives. Any regulatory action that limits our ability to achieve desired benefits from the use of or materially increases our cost of using captive reinsurance and applies retroactively, without grandfathering provisions for existing captive variable annuity reinsurance entities, could have a material adverse effect on our financial condition or results of operations. For additional information on our use of a captive reinsurance company, see “Risk Factors — Legal and Regulatory Risks.”

 

Surplus and Capital

 

Insurers are required to maintain their capital and surplus at or above minimum levels. Regulators have discretionary authority to limit or prohibit an insurer’s sales to policyholders if the regulators determine that such insurer has not met these standards or that the further transaction of business would be hazardous to policyholders.

 

Risk-Based Capital

 

We report our RBC based on a formula calculated by applying factors to various asset, premium and statutory reserve items, as well as taking into account the risk characteristics of the insurer. The major categories of risk involved are asset risk, insurance risk, interest rate risk, market risk and business risk. The formula is used as a regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose RBC ratio does not meet or exceed certain RBC levels. The NAIC approved RBC revisions for corporate bonds, real estate equity and longevity risk that took effect at year-end 2021, and RBC update for mortality risk that took effect at year-end 2022, each of which had a minimal RBC impact on Equitable Financial. As of the date of the most recent annual statutory financial statements filed with insurance regulators, our RBC was in excess of each of those RBC levels.

 

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Regulation of Investments

 

State insurance laws and regulations limit what we may invest in certain asset categories, such as below investment grade fixed income securities, real estate equity, other equity investments, and derivatives, and require diversification of investment portfolios. Investments exceeding regulatory limitations are not admitted for purposes of measuring surplus. In some instances, laws require us to divest any non-qualifying investments.

 

In recent years, the NAIC has been focused on enhancing regulatory oversight of insurers’ investments in complex assets, such as leveraged loans and CLOs. In March 2023, the NAIC adopted an amendment to the Manual to assign risk weights to CLOs based on its own modeling as opposed to credit ratings. Under the amendment, effective as of January 1, 2026, the NAIC’s Structured Securities Group will model CLO investments and evaluate tranche level losses across all debt and equity tranches under a series of calibrated and weighted collateral stress scenarios to assign NAIC designations that minimize RBC arbitrage. The NAIC’s goal is to ensure that the aggregate RBC factor for owning all tranches of a CLO is the same as that required for owning all of the underlying loan collateral.

 

In addition, in 2023, the NAIC increased the RBC factor for structured security residual tranches from 30% to 45% effective for year-end 2024 RBC filings. The NAIC is currently reviewing the RBC treatment of CLOs.

 

More broadly, in August 2023, the NAIC’s Financial Condition (E) Committee launched a holistic review of its approach to insurer investment risk regulation. The primary objective is to enhance insurance regulatory framework in order to strengthen oversight of insurers’ investments. More specifically, the NAIC is focused on the SVO’s discretion to review NAIC designations for individual investments, the appropriate extent of SVO reliance on CRPs, and oversight of the development of new RBC charges for CLOs and other structured securities. Proposed changes to modernize investment oversight include: (i) reducing or eliminating “blind” reliance on CRPs while continuing to utilize them by implementing a due diligence framework that oversees the effectiveness of CRPs and (ii) bolstering the SVO’s portfolio risk analysis capabilities by investing in a risk analytics tool and adding specialized personnel. The NAIC has also been focused on insurers’ use of ratings by nationally recognized statistical rating organizations and other CRPs for rating certain of their investments, instead of submitting such investments to the SVO. Certain investments are subject to an exemption from filing with the SVO if they have been assigned a current, monitored rating by certain approved CRPs that meet specified requirements.

 

The NAIC’s designation of an investment held by an insurance company affects the RBC charge applied to such investment and therefore impacts the insurer’s overall RBC ratio. In November 2024, the NAIC adopted an amendment to the Manual, which became effective January 1, 2026, setting forth procedures for the SVO staff to identify and evaluate a filing exempt security with an NAIC designation determined by a rating that appears to be an unreasonable assessment of investment risk. The procedures include, without limitation, sending an information request to insurers that hold the security under review and determining whether the NAIC designation is three or more notches different than the SVO’s assessment, which allows the SVO to request the removal of the CRP credit rating from the filing exempt process. At any time during the process, an alternate CRP credit rating may be requested and if one is received, it will be incorporated in the filing exempt process.

 

We cannot predict what form any final proposals may take, or what effect their adoption may have on our business and compliance costs.

 

Guaranty Associations and Similar Arrangements

 

Each state in which we are admitted to transact business requires life insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay certain contractual insurance benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. The laws are designed to protect policyholders from losses under insurance policies issued by insurance companies that become impaired or insolvent. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state based on their proportionate share of premiums written in the lines of business in which the impaired, insolvent or failed insurer is engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets.

 

During each of the past five years, the assessments levied against us have not been material.

 

Adjusting Non-Guaranteed Elements of Life Insurance Products

 

State regulators have considered whether to apply regulatory standards to the determination and/or readjustment of non-guaranteed elements (“NGEs”) within life insurance policies and annuity contracts that may be adjusted at the insurer’s

 

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discretion, such as the COI for UL insurance policies and interest crediting rates for life insurance policies and annuity contracts. For example, New York’s Insurance Regulation 210 establishes standards for the determination and any readjustment of NGEs, including a prohibition on increasing profit margins on existing business or recouping past losses on such business, and requires advance notice of any adverse change in a NGE to both the NYDFS and affected policyholders. We have developed policies and procedures designed to comply with Regulation 210 and to date, have not seen adverse effects on our business. It is possible, however, that Regulation 210 could adversely impact management’s ability to determine and/or readjust NGEs in the future. Beyond the New York regulation and similar rules enacted in California (effective on July 1, 2019) and Texas (effective on January 1, 2021), the likelihood of enacting of any additional state-based regulation is uncertain at this time, but if implemented, these regulations could have an adverse effect on our business and consolidated results of operations.

 

Broker-Dealer and Securities Regulation and Commodities Regulation

 

We and certain policies and contracts offered by us are subject to regulation under the Federal securities laws, self-regulatory organization rules, and certain state securities laws. Federal and state regulators may conduct examinations and inspections of our operations.

 

Certain of our affiliates, including Equitable Advisors, Equitable Distributors, SCB LLC and AllianceBernstein Investments, Inc., are registered as broker-dealers (collectively, the “Broker-Dealers”) with the SEC and members of FINRA. The SEC and FINRA subject the Broker-Dealers to extensive regulation, including minimum “net capital” requirements and sales practices rules like Regulation Best Interest (“Reg BI”). Reg BI requires the Broker-Dealers, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer to provide specified disclosures and act in the retail customer’s best interest. The intent of Reg BI is to impose on broker-dealers an enhanced duty of care to their customers, similar to that which applies to investment advisers. We have developed systems and processes and put in place policies and procedures to ensure that we are in compliance with Reg BI. In recent years, the SEC and FINRA have intensified their scrutiny of sales practices relating to variable annuities, variable life insurance and alternative investments, among other products. The Broker-Dealers are also subject to registration and regulation by regulatory authorities in the foreign jurisdictions in which they do business. In December 2023, the SEC adopted rules to require covered clearing agencies to adopt policies and procedures reasonably designed to require every direct participant of the agency to submit for clearing eligible secondary market transactions in U.S. Treasury securities, which will effectively require those participants to clear eligible cash transactions by December 31, 2026, and eligible repurchase transactions by June 30, 2027. The rule’s potential effect on the U.S. Treasury securities market is uncertain.

 

Certain of our Separate Accounts are registered as investment companies under the Investment Company Act. Separate Accounts interests under certain annuity contracts and insurance policies issued by us are also registered under the Securities Act. EQAT and 1290 Funds are registered as investment companies under the Investment Company Act and shares offered by these investment companies are also registered under the Securities Act. Many of the investment companies managed by AB, including a variety of mutual funds and other pooled investment vehicles, are registered with the SEC under the Investment Company Act, and, if appropriate, shares of these entities are registered under the Securities Act.

 

Certain subsidiaries and affiliates including EIMG, EIM LLC, Equitable Advisors and AB and certain of its subsidiaries are registered as investment advisers under the Investment Advisers Act. The investment advisory activities of such registered investment advisers are subject to various federal and state laws and regulations and to the laws in those foreign countries in which they conduct business. These U.S. and foreign laws and regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations. Changes to the marketing requirements for registered investment advisers were adopted in December 2020 and became effective in November 2022. The amended rules imposed a number of new requirements that will affect marketing of certain advisory products, including, in particular, private funds. We developed systems and processes and put in place policies and procedures to ensure that we are in compliance with the amended rule. The SEC is currently focused on examining compliance efforts with newly amended Rule 206(4)-1. The SEC has also adopted new reporting requirements for institutional investment managers regarding “say on pay” and more expansive reporting on voting practices by managers for registered funds on Form N-PX. The new requirements will create substantially greater compliance requirements and costs for our investment adviser entities.

 

EIMG (as a commodity pool operator), AB and certain of its subsidiaries (as commodity pool operators and commodity trading advisers), and SCB LLC (as a commodity pool operator, commodity trading advisor, and introducing broker) are registered with the CFTC and members of the NFA. These entities are subject to certain legal requirements and restrictions in the CEA and in the rules and regulations of the CFTC and the rules and by-laws of the NFA, including investor protection, disclosure, reporting and recordkeeping requirements, and anti-fraud prohibitions, and are subject to periodic inspections and audits by the CFTC and NFA.

 

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Regulators, including the SEC, FINRA, and state securities regulators and attorneys general, continue to focus attention on various practices in or affecting the investment management and/or mutual fund industries, including portfolio management, valuation, fee break points, and the use of fund assets for distribution.

 

We and certain of our subsidiaries provide regular financial reporting, as well as, and in certain cases, additional information and documents to the SEC, FINRA, the CFTC, NFA, state securities regulators and attorneys general, the NYDFS and other state insurance regulators, and other regulators regarding our compliance with insurance, securities and other laws and regulations regarding the conduct of our businesses.

 

The SEC, FINRA, the CFTC and other governmental regulatory authorities may institute administrative or judicial proceedings against our subsidiaries or their personnel that may result in censure, fines, the issuance of cease-and-desist orders, trading prohibitions, the suspension or expulsion of a broker-dealer, investment adviser, commodity pool operator, or other type of regulated entity, or member, its officers, registered representatives or employees or other similar sanctions.

 

Dodd-Frank Wall Street Reform and Consumer Protection Act

 

Currently, the U.S. federal government does not directly regulate the business of insurance. While the Dodd-Frank Act does not remove primary responsibility for the supervision and regulation of insurance from the states, Title V of the Dodd-Frank Act established the FIO within the U.S. Treasury Department and reformed the regulation of the non-admitted property and casualty insurance market and the reinsurance market. The Dodd-Frank Act also established the FSOC, which is authorized to designate certain non-bank financial companies, including insurers, as systemically significant if the FSOC determines that the financial institution could pose a threat to U.S. financial stability. Such a designation would subject a non-bank SIFI to supervision and heightened prudential standards by the Federal Reserve. On November 3, 2023, the FSOC adopted guidance that establishes a new process for designating certain non-bank financial institutions as SIFIs. Under this guidance, the FSOC is no longer required to conduct a cost-benefit analysis and an assessment of the likelihood of a non-bank financial company’s material financial distress before considering the designation of the company. The revised process could have the effect of simplifying and shortening FSOC’s procedures for designating certain financial companies as non-bank SIFIs.

 

The FIO’s authority extends to all lines of insurance except health insurance, crop insurance and (unless included with life or annuity components) long-term care insurance. Under the Dodd-Frank Act, the FIO is charged with monitoring all aspects of the insurance industry (including identifying gaps in regulation that could contribute to a systemic crisis), recommending to the FSOC the designation of any insurer and its affiliates as a non-bank financial company subject to oversight by the Board of Governors of the Federal Reserve System (including the administration of stress testing on capital), assisting the Treasury Secretary in negotiating “covered agreements” with non-U.S. governments or regulatory authorities, and, with respect to state insurance laws and regulation, determining whether state insurance measures are pre-empted by such covered agreements.

 

In addition, the FIO is empowered to request and collect data (including financial data) on and from the insurance industry and insurers (including reinsurers) and their affiliates. In such capacity, the FIO may require an insurer or an affiliate of an insurer to submit such data or information as the FIO may reasonably require. In addition, the FIO’s approval is required to subject a financial company whose largest U.S. subsidiary is an insurer to the special orderly liquidation process outside the federal bankruptcy code, administered by the FDIC pursuant to the Dodd-Frank Act. U.S. insurance subsidiaries of any such financial company, however, would be subject to rehabilitation and liquidation proceedings under state insurance law. The Dodd-Frank Act also reformed the regulation of the non-admitted property/casualty insurance market (commonly referred to as excess and surplus lines) and the reinsurance markets, including prohibiting the ability of non-domiciliary state insurance regulators to deny credit for reinsurance when recognized by the ceding insurer’s domiciliary state regulator.

 

In October 2022, the SEC adopted final rules requiring the recovery of erroneously awarded compensation as mandated by the Dodd-Frank Act.

 

The following aspects of our operations could also be affected by the Dodd-Frank Act:

 

Heightened Standards and Safeguards

 

The FSOC may recommend that state insurance regulators or other regulators apply new or heightened standards and safeguards for activities or practices we and other insurers or other financial services companies engage in if the FSOC determines that those activities or practices could create or increase the risk that significant liquidity, credit or other problems spread among financial companies. We cannot predict whether any such recommendations will be made or their effect on our business, consolidated results of operations or financial condition.

 

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Over-The-Counter Derivatives Regulation

 

The Dodd-Frank Act includes a framework of regulation for the OTC derivatives markets, which has largely been implemented. The Dodd-Frank Act provided authority to the CFTC to regulate “swaps” and the SEC to regulate “security based swaps.”

 

The Dodd-Frank Act authorized the SEC and the CFTC to mandate that specified types of OTC derivatives must be executed in regulated markets and be submitted for clearing to regulated clearinghouses and directed the CFTC and SEC to establish documentation, recordkeeping and registration requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap participants for swaps, security-based swaps and specified other derivatives that continued to trade on the OTC market. The Dodd-Frank Act also directed the SEC, CFTC, the Office of the Comptroller of the Currency, the Federal Reserve Board, the FDIC, the Farm Credit Administration, and the Federal Housing Finance Agency (collectively, the “Prudential Regulators”), with respect to the respective entities they regulate, to develop margin rules for OTC derivatives and capital rules for regulated dealers and major participants.

 

Under the CFTC’s and SEC’s regulations, swaps and security-based swaps traded by a non-banking entity are currently subject to variation margin requirements as well as, for most entities, initial margin, as mandated by the CFTC and SEC. Under regulations adopted by the Prudential Regulators, both swaps and security-based swaps traded by banking entities are currently subject to variation margin requirements and, for most entities, initial margin requirements as well. Initial margin requirements imposed by the CFTC, the SEC, and the Prudential Regulators are being phased in over a period of time. As a result, initial margin requirements took effect in September 2021 for us. The CFTC regulations require us to post and collect variation margin (comprised of specified liquid instruments and subject to a required haircut) in connection with trading of swaps with CFTC-regulated swap dealers, and the regulations adopted by the Prudential Regulators require us to post and collect variation margin when trading either swaps or security-based swaps with a dealer regulated by the Prudential Regulators. SEC regulations require posting and collection of variation margin by both us and our counterparty but require posting of initial margin only by the entity facing the broker-dealer or security-based swap dealer but not the broker-dealer or security-based swap dealer itself.

 

In addition, regulations adopted by the Prudential Regulators that became effective in 2019 require certain bank-regulated counterparties and certain of their affiliates to include in qualified financial contracts, including many derivatives contracts, repurchase agreements and securities lending agreements, terms that delay or restrict the rights of counterparties, such as us, to terminate such contracts, foreclose upon collateral, exercise other default rights or restrict transfers of affiliate credit enhancements (such as guarantees) in the event that the bank-regulated counterparty and/or its affiliates are subject to certain types of resolution or insolvency proceedings. It is possible that these requirements in the market, could adversely affect our ability to terminate existing derivatives agreements or to realize amounts to be received under such agreements. The Dodd-Frank Act and related federal regulations and foreign derivatives requirements expose us to operational, compliance, execution and other risks, including central counterparty insolvency risk.

 

We use derivatives to mitigate a wide range of risks in connection with our business, including the impact of increased benefit exposures from certain variable annuity products that offer GMxB features. We have always been subject to the risk that our hedging and other management procedures might prove ineffective in reducing the risks to which insurance policies expose us or that unanticipated policyholder behavior or mortality, combined with adverse market events, could produce economic losses beyond the scope of the risk management techniques employed. Any such losses could be increased by higher costs of writing derivatives (including customized derivatives) and the reduced availability of customized derivatives that might result from the enactment and implementation of new regulations.

 

Fiduciary Rules / “Best Interest” Standards of Conduct

 

We provide certain products and services to employee benefit plans that are subject to the ERISA and certain provisions of the Internal Revenue Code of 1986, as amended (the “Code”). Our activities are subject to the restrictions imposed by ERISA and the Code, including the requirement that fiduciaries must perform their duties solely in the interests of plan participants and beneficiaries, and fiduciaries may not cause or permit a covered plan to engage in certain prohibited transactions with persons (parties-in-interest) who have certain relationships with respect to such plans. The applicable provisions of ERISA and the Code are subject to enforcement by the DOL, the IRS and the Pension Benefit Guaranty Corporation.

 

Since 2015, the DOL has pursued various proposed regulations to change the definition of “fiduciary” for purposes of ERISA and parallel provisions of the Code when a financial professional, including an insurance producer, provides investment advice, and proposed amendments to various existing prohibited transaction exemptions (“PTEs”), that financial professionals rely on when they make investment recommendations to retirement investors.

 

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Following stays issued by the U.S. District Court for the Eastern District of Texas and the U.S. District Court for the Northern District of Texas, in November 2025, the DOL voluntarily withdrew its appeal of the stays and has indicated its intention to initiate a new fiduciary rulemaking in May 2026. We do not yet know the impact, if any, of a new DOL fiduciary rule on our business, particularly as it pertains to the sale of insurance products to retirement investors.

 

In addition, in January 2020, the NAIC revised the Suitability in Annuity Transactions Model Regulation to apply a best interest of the consumer standard on insurance producers’ annuity recommendations and to require that insurers supervise such recommendations. U.S. states, including Arizona and Colorado, have adopted the revised regulation. As a notable exception, the NYDFS amended Regulation 187- Suitability and Best Interests in Life Insurance and Annuity Transactions (“Regulation 187”) to add a “best interest” standard for recommendations regarding the sale of life insurance and annuity products in New York. We have developed our compliance framework for Regulation 187 with respect to annuity sales as well as our life insurance business.

 

Massachusetts has also adopted a regulation applying a fiduciary duty standard to broker-dealers and their agents that requires us to make changes to certain policies and procedures to ensure compliance. The North American Securities Administrators Association has adopted a broker-dealer conduct model rule that states might seek to also adopt and is designed to account for revisions to federal conduct standards for broker-dealers and agents arising out of the adoption of Reg BI by the SEC and other changes that have occurred in the financial services industry in recent years, including the blurring of brokerage and advisory service models. Other states have either adopted or are considering adoption of fiduciary and other conduct standards for broker-dealers.

 

Climate Risks

 

Climate risk has come under increased scrutiny by insurance regulators and other regulatory agencies. In September 2020, the NYDFS announced that it expects New York domestic and foreign authorized insurers to integrate financial risks from climate change into their governance frameworks, risk management processes, and business strategies by taking actions that are proportionate to the nature, scale and complexity of their businesses.

 

In November 2021, the NYDFS issued additional guidance for New York domestic insurers, such as Equitable Financial, to: (i) incorporate climate risk into its financial risk management; (ii) manage climate risk through its enterprise risk management functions and ensure that its organizational structure defines roles and responsibilities for managing such risk; (iii) use scenario analysis when developing business strategies and identifying risks; and (iv) incorporate climate risk management into its corporate governance structure at the group or insurer entity level (i.e., an insurer’s board of directors should understand climate risk and oversee the team responsible for managing such risk). We have developed our compliance framework with respect to the November 2021 guidance.

 

In addition, New York’s regulation governing enterprise risk management, applicable to New York domestic and foreign authorized insurers, was amended to require an insurance group’s enterprise risk management function to address climate change risk.

 

In September 2023, the California legislature passed a law that requiring firms with annual revenues of over $1.0 billion that do business in the state to publicly report their greenhouse gas emissions, beginning in 2026 for calendar year 2025.

 

In 2022, the NAIC adopted a disclosure standard for insurance companies to report their climate-related risks, which applies to insurers that meet the reporting threshold of $100 million in countrywide direct premium and are licensed in one of the participating jurisdictions and is consistent with the international Task Force on Climate-Related Financial Disclosures.

 

In addition, the FIO assessed how the insurance sector may mitigate climate risks and help achieve national climate-related goals pursuant to its authority under the Dodd-Frank Act. In June 2023, the FIO released a report titled, “Insurance Supervision and Regulation of Climate-Related Risks,” which evaluates climate-related issues and gaps in insurer regulation. The report urged insurance regulators to adopt climate-related risk-monitoring guidance in order to enhance their regulation and supervision of insurers.

 

Diversity and Corporate Governance

 

In recent years, the NAIC and state insurance regulators have evaluated issues related to diversity within the insurance industry. In New York, the NYDFS issued a 2021 circular letter stating that it expects the insurers it regulates, such as Equitable Financial, to make diversity of their leadership a business priority and a key element of their corporate governance.

 

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Federal Tax Legislation, Regulation, and Administration

 

Although we cannot predict what legislative, regulatory, or administrative changes may or may not occur with respect to the federal tax law, we nevertheless endeavor to consider the possible ramifications of such changes on the profitability of our business and the attractiveness of our products to consumers. In this regard, we analyze multiple streams of information, including those described below.

 

Enacted Legislation

 

At present, the federal tax laws generally permit certain holders of life insurance and annuity products to defer taxation on the build-up of value within such products (commonly referred to as “inside build-up”) until payments are made to the policyholders or other beneficiaries. From time to time, Congress considers legislation that could enhance or reduce (or eliminate) the benefit of tax deferral on some life insurance and annuity products. The modification or elimination of this tax-favored status could also reduce demand for our products. In addition, if the treatment of earnings accrued inside an annuity contract was changed prospectively, and the tax-favored status of existing contracts was grandfathered, holders of existing contracts would be less likely to surrender or rollover their contracts. These changes could reduce our earnings and negatively impact our business.

 

On July 4, 2025, President Trump signed into law “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14,” commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”). This sweeping legislative package is designed to extend the expiring provisions of the Tax Cuts and Jobs Act (“TCJA”) and deliver additional tax relief for individuals and businesses. The tax provisions in the OBBBA are not expected to have a material impact on the Company.

 

Regulatory and Other Administrative Guidance from the Treasury Department and the IRS

 

Regulatory and other administrative guidance from the Treasury Department and the IRS also could impact the amount of federal tax that we pay. For example, the adoption of “principles based” approaches for calculating statutory reserves may lead the Treasury Department and the IRS to issue guidance that changes the way that deductible insurance reserves are determined, potentially reducing future tax deductions for us.

 

Privacy and Security of Customer Information and Cybersecurity Regulation

 

We are subject to federal and state laws and regulations that require financial institutions to protect the security, integrity, confidentiality, and availability of customer information, and to detect, prevent and mitigate identity theft. Consistent with these laws and regulations, we maintain a formal data protection compliance program designed to ensure that our systems, those of third parties on which we rely, and our confidential and sensitive information maintained and processed thereon, have reasonable protections in place. Federal and state laws also generally require that financial institutions provide customers with a privacy policy describing their data collection and handling practices, and to provide notices to affected individuals, law enforcement, regulators and/or potentially others, each as applicable in the event of a security incident resulting in the unauthorized access to or acquisition of certain customer information. Federal and state laws and regulations govern the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail or fax messages to both consumers and customers, and regulate the permissible uses of certain categories of customer information. Failure to implement and maintain reasonable and effective information- and cybersecurity programs, or any violation of applicable data protection laws, may result in significant fines, remediation costs, regulatory enforcement, litigation, and/or reputational damage.

 

As cyber threats continue to evolve, regulators continue to develop new rules imposing specific cybersecurity safeguards and program oversight requirements. For instance, in 2017, the NYDFS adopted the Cybersecurity Requirements for Financial Services Companies (the “NY Cybersecurity Regulation”). The NY Cybersecurity Regulation requires banking and insurance entities subject to NYDFS’ jurisdiction to, among other things, assess risks associated with their information systems, including the consumer private data and confidential business data they hold, and to implement a cybersecurity program designed to protect against such risks. In November 2023, the NYDFS adopted amendments to the NY Cybersecurity Regulation. These include (i) new governance and oversight measures, including that a senior governing body (i.e., the board of directors) have sufficient understanding of cybersecurity-related matters to exercise effective oversight; (ii) enhanced cybersecurity safeguards and technical controls (e.g., annual audits, vulnerability assessments, and password controls and monitoring); (iii) notification to the NYDFS of certain cybersecurity events or incidents; and (iv) annual certification to NYDFS of material compliance with the NY Cybersecurity Regulation. The amendments became effective between November 2024 and November 2025. We have

 

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adopted a cybersecurity policy outlining our policies and procedures for the protection of our information systems and information stored on those systems that conforms to the amended NY Cybersecurity Regulation, and will continue to assess the effect of the amendments on our business and compliance strategy.

 

Similarly, the NAIC adopted the Insurance Data Security Model Law for entities licensed under the relevant state’s insurance laws. The model law requires such entities to establish standards for data security and for the investigation and notification to insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information. Approximately half of states have adopted the model law or a form thereof, although it has not been adopted by New York. We expect additional states to adopt the model law, even though it is not an NAIC Standard, but we cannot predict whether, or in what form or when, they may do so.

 

The NAIC’s Privacy Protections (H) Working Group (“PPWG”) is developing amendments to update the Privacy of Consumer Financial and Health Information Regulation (Model Law #672). The proposed amendments would expand the definition of nonpublic personal information; add consumer rights to request access, correction and deletion of nonpublic personal information; and add requirements for contracts with third-party service providers. We cannot predict whether changes to Model Law #672 will be adopted, what form they will take, or what effect they would have on our business or compliance efforts.

 

In July 2023, the SEC adopted the Risk Management, Strategy, Governance, and Incident Disclosure Final Rule (the “Cybersecurity Final Rule”) enhancing disclosure requirements for registered companies covering cybersecurity risk, management and governance. The Cybersecurity Final Rule requires registrants to disclose material cybersecurity incidents on Form 8-K within four business days of a determination that a cybersecurity incident is material. The rule also requires periodic disclosures of, among other things, details on the company’s process to assess, identify, and manage cybersecurity risks, cybersecurity governance, and the role of management and the board of directors in overseeing such a compliance program. The Cybersecurity Final Rule reporting requirements became effective in December 2023. In addition, federal regulators are increasingly focused on, and several have established specific and potentially burdensome requirements regarding, data protection. For instance, in October 2021, the Federal Trade Commission announced significant amendments to the Standards for Safeguarding Customer Information Rule (the “Safeguards Rule”), which became effective in June 2023, that require financial institutions to implement specific data security measures. Failure to comply with any of the above cyber-and data security regulations or requirements may result in enforcement action, fines and/or other operational or reputational harms.

 

Under the California Consumer Privacy Act, as amended (the “CCPA”), California residents enjoy the right to know what information a business has collected from them, its sourcing and sharing, and the right to collect, delete and limit certain uses of that information. The CCPA also establishes a private right of action with potentially significant statutory damages, whereby businesses that fail to implement reasonable security measures resulting in a breach of personal information could be liable to affected California consumers. Certain data processing which is otherwise regulated, including under the Gramm-Leach-Bliley Act, is excluded from the CCPA; however, this is not an entity-wide exclusion and does not apply to the private right of action. The California Privacy Protection Agency (“CPPA”) enforces the CCPA and is authorized to promulgate regulations under the law. The CPPA adopted updated CCPA regulations in September 2025 (effective as of January 1, 2026) regarding cybersecurity audits, risk assessments, and the use of automated decision-making technologies, and further clarifying how the CCPA applies to personal information collected by insurance companies.

 

Under the CPPA’s rules, a significant portion of the information we collect is not subject to the CCPA, but certain information, including information about our California-based employees, may remain subject to the law. Several other states have adopted, or are considering, comprehensive privacy laws similar to the CCPA; however, these generally include entity- and/or data-level exemptions for financial institutions that are subject to privacy protections in the Gramm-Leach-Bliley Act or similar, state-level financial privacy laws. We cannot predict what impact these and any future laws or regulations may have on our compliance efforts or business operations.

 

Innovation and Technology

 

As a result of increased innovation and technology, the NAIC and insurance regulators are focused on the use of “big data” techniques, such as the use of artificial intelligence (“AI”), machine learning and automated decision-making. In December 2023, the NAIC’s Innovation, Cybersecurity and Technology (H) Committee (the “(H) Committee”) adopted the Model Bulletin on the Use of Artificial Intelligence Systems by Insurers (the “AI Bulletin”). Approximately half of states have adopted the AI Bulletin, which outlines regulators’ expectations as to how insurers should govern the development, acquisition and use of AI technologies, as well as the types of information that regulators may request during an investigation or examination of an

 

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insurer in regard to AI systems. The Third-Party Data and Models (H) Working Group is developing a framework for the regulatory oversight of insurers’ use of third-party data and models. In addition, the NAIC’s Big Data and Artificial Intelligence (H) Working Group is evaluating AI-use outcomes and how well the current regulatory framework addresses potential harms from the use of AI. The goal is to develop an overall AI regulatory framework that could be incorporated into an NAIC regulatory handbook. For example, the Working Group is developing a tool to collect information about an insurer’s use of AI during an examination or investigation.

 

Further, some states and state insurance regulators have been focused on addressing unfair discrimination potentially resulting from the use of consumer data and AI technology. For instance, in 2021, Colorado enacted a law prohibiting insurers from using external consumer data and information sources (“ECDIS”), as well as algorithms or predictive models that use ECDIS, in a way that unfairly discriminates based on race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity or gender expression. In August 2023, the Colorado Division of Insurance adopted the first regulation under the law, effective on November 14, 2023, requiring life insurers to adopt a governance and risk management framework for the use of AI, machine learning and other technologies that utilize “external consumer data.” We expect the regulation to be extended to other lines of insurance. Similarly, in July 2024, the NYDFS published a circular letter, which provides guidance on how insurers should develop and manage their use of external consumer data and AI systems in underwriting and pricing so as not to harm consumers.

 

We expect AI and big data to remain important issues for the NAIC and state insurance regulators. We cannot predict which additional regulators will adopt the AI Bulletin, or what, if any, changes to laws or regulations may be enacted with regard to “big data” or AI technologies.

 

Environmental Considerations

 

Federal, state and local environmental laws and regulations apply to our ownership and operation of real property. Inherent in owning and operating real property are the risk of environmental liabilities and the costs of any required clean-up. Under the laws of certain states, contamination of a property may give rise to a lien on the property to secure recovery of the costs of clean-up, which could adversely affect our mortgage lending business. In some states, this lien may have priority over the lien of an existing mortgage against such property. In addition, in some states and under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA, we may be liable, in certain circumstances, as an “owner” or “operator,” for costs of cleaning-up releases or threatened releases of hazardous substances at a property mortgaged to us. We also risk environmental liability when we foreclose on a property mortgaged to us. However, federal legislation provides for a safe harbor from CERCLA liability for secured lenders, provided that certain requirements are met. Application of various other federal and state environmental laws could also result in the imposition of liability on us for costs associated with environmental hazards.

 

We routinely conduct environmental assessments prior to making a mortgage loan or taking title to real estate, whether through acquisition for investment or through foreclosure on real estate collateralizing mortgages. We cannot provide assurance that unexpected environmental liabilities will not arise. However, based on information currently available to us, we believe that any costs associated with compliance with environmental laws and regulations or any clean-up of properties would not have a material adverse effect on our consolidated results of operations.

 

Intellectual Property

 

We rely on a combination of copyright, trademark, patent and trade secret laws to establish and protect our intellectual property rights. We regard our intellectual property as valuable assets and protect them against infringement.

 

EMPLOYEES

 

As of December 31, 2025, the Company had approximately 3,500 full time employees.

 

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RISK FACTORS

 

You should read and consider all of the risks described below, as well as other information set forth in this Registration Statement on Form S-1. The risks described below are not the only ones we face. Many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our businesses, results of operations, financial condition or liquidity.

 

Risks Relating to Our Business

 

Risks Relating to Conditions in the Financial Markets and Economy

 

Conditions in the global capital markets and the economy.

 

Our business, results of operations or financial condition are materially affected by conditions in the global capital markets and the economy. A wide variety of factors continue to impact economic conditions and consumer confidence. These factors include, among others, uncertainty regarding the federal debt limit, volatility in the capital markets, equity market declines, inflationary pressures, plateauing or decreasing economic growth, high fuel and energy costs and changes in fiscal or monetary policy. The Russian invasion of Ukraine, hostilities in the Middle East, and the ensuing conflicts and the sanctions and other measures imposed in response to these conflicts, as well as tariff and trade disputes, have significantly increased the level of volatility in the financial markets and have increased the level of economic and political uncertainty. Given our interest rate and equity market exposure in our investment and derivatives portfolios and many of our products, these factors could have a material adverse effect on us. The value of our investments and derivatives portfolios may also be adversely affected by reductions in price transparency, changes in the assumptions or methodology we use to estimate fair value and changes in investor confidence or preferences, which could potentially result in higher realized or unrealized losses. Market volatility may also make it difficult to transact in or to value certain of our securities if trading becomes less frequent.

 

In an economic downturn, the demand for our products and our investment returns could be materially and adversely affected. The profitability of many of our products depends in part on the value of the assets supporting them, which may fluctuate substantially depending on various market conditions. In addition, a change in market conditions could cause a change in consumer sentiment and adversely affect sales and could cause the actual persistency of these products to vary from their anticipated persistency and adversely affect profitability. Our policyholders may choose to defer paying insurance premiums or stop paying insurance premiums altogether. In addition, market conditions may adversely affect the availability and cost of reinsurance protections and the availability and performance of hedging instruments.

 

Equity market declines and volatility.

 

Declines or volatility in the equity markets can negatively impact our business, results of operations or financial condition. For example, equity market declines or volatility could decrease our AUM, the AV of our annuity and variable life contracts, or AUA, which, in turn, would reduce the amount of revenue we derive from fees charged on those account and asset values. Our variable annuity business is particularly sensitive to equity markets, and sustained weakness or stagnation in equity markets could decrease its revenues and earnings. At the same time, for variable annuity contracts that include GMxB features, equity market declines increase the amount of our potential obligations related to such GMxB features and could increase the cost of executing GMxB-related hedges beyond what was anticipated in the pricing of the products being hedged. This could result in an increase in claims and reserves related to those contracts, net of any reinsurance reimbursements or proceeds from our hedging programs. Equity market declines and volatility may also influence policyholder behavior, which may adversely impact the levels of surrenders, withdrawals and amounts of withdrawals of our annuity and variable life contracts or cause policyholders to reallocate a portion of their account balances to more conservative investment options (which may have lower fees), which could negatively impact our future profitability or increase our benefit obligations particularly if they were to remain in such options during an equity market increase. Market volatility can negatively impact the value of equity securities we hold for investment which could in turn reduce the statutory capital of certain of our insurance subsidiaries. In addition, equity market volatility could reduce demand for variable products relative to fixed products and reduce our current earnings and result in changes to reserves, which could increase the volatility of our earnings. Lastly, periods of high market volatility or adverse conditions could decrease the availability or increase the cost of derivatives.

 

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Interest rate fluctuations.

 

Some of our retirement products and certain of our investment products, and our investment returns, are sensitive to interest rate fluctuations, and changes in interest rates and interest rate benchmarks may adversely affect our investment returns and results of operations, including in the following respects:

 

•

changes in interest rates may reduce the spread on some of our products between the amounts that we are required to pay under the contracts and the rate of return we are able to earn on our General Account investments supporting the contracts;

 

•

when interest rates rise rapidly, policy loans and surrenders and withdrawals of annuity contracts and life insurance policies may increase, requiring us to sell investment assets potentially resulting in realized investment losses, which could reduce our net income;

 

•

a decline in interest rates accompanied by unexpected prepayments of certain investments may result in reduced investment income and a decline in our profitability. An increase in interest rates accompanied by unexpected extensions of certain lower yielding investments may result in a decline in our profitability;

 

•

changes in the relationship between long-term and short-term interest rates may adversely affect the profitability of some of our products;

 

•

changes in interest rates could result in changes to our reserves;

 

•

changes in interest rates may adversely impact our liquidity and increase our costs of financing and hedges;

 

•

we may not be able to effectively mitigate and we may sometimes choose not to fully mitigate or to increase, the interest rate risk of our assets relative to our liabilities; and

 

•

the delay between the time we make changes in interest rate and other assumptions used for product pricing and the time we are able to reflect such changes in assumptions in products available for sale may negatively impact the long-term profitability of certain products sold during the intervening period.

 

Adverse capital and credit market conditions.

 

Volatility and disruption in the capital and credit markets may exert downward pressure on the availability of liquidity and credit capacity. We need liquidity to pay our policyholder benefits, operating expenses (including potential hedging losses), interest expenses and any distributions on our capital stock, to collateralize certain of our contractual obligations (including in relation to our hedging program), and to remain properly capitalized. Without sufficient liquidity, we could be required to curtail our operations and our business would suffer. While we expect that our future liquidity needs will be satisfied primarily through cash generated by our operations and borrowings from third parties, it is possible that we will not be able to meet our anticipated short-term and long-term benefit and expense payment obligations. If current resources are insufficient to satisfy our needs, we may access financing sources such as bank debt or the capital markets. However, these resources may not be available during times of stress or may only be available on unfavorable terms. If we are unable to obtain such financing on acceptable terms, our business could be adversely impacted.

 

Disruptions, uncertainty or volatility in the capital and credit markets may limit our ability to raise additional capital to support business growth, or to counter-balance the consequences of losses or increased regulatory reserves and rating agency capital requirements. This could force us to: (i) delay raising capital; (ii) eliminate dividends paid on our capital stock; (iii) issue capital of different types or under different terms than we would otherwise; or (iv) incur a higher cost of capital than would prevail in a more stable market environment. Ratings agencies may change our credit ratings, and any downgrade is likely to increase our borrowing costs and limit our access to the capital markets and could be detrimental to our business relationships with distribution partners. Our business, results of operations, financial condition, liquidity, statutory capital or rating agency capital position could be materially and adversely affected by disruptions in the capital and credit markets.

 

Risks Relating to Our Operations

 

Failure to protect the confidentiality, integrity, or availability of customer information or proprietary business information.

 

We and certain of our vendors retain confidential information (including customer transactional data and personal information about our customers, the employees and customers of our customers, and our own employees). The privacy or security of this information may be compromised, including as a result of an information security breach. We have implemented a formal, risk-

 

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based data security program, including physical, technical, and administrative safeguards; however, failure to implement and maintain effective data protection and cybersecurity programs that comply with applicable law, or any compromise of the security, confidentiality, integrity, or availability of our information systems, or those of our vendors, the cloud-based systems we use, or the sensitive information stored on such systems, through cyber-attacks, employee error or malfeasance, system degradation, or for any other reason that results in unauthorized access, use, modification, disclosure or destruction of personally identifiable information, customer information, or other confidential or proprietary information, or the disruption of critical operations and services, could damage our reputation, deter people from purchasing our products, subject us to significant civil and criminal liability and require us to incur significant technical, legal and other expenses any of which could have a material adverse effect on our business, results of operations or financial condition. Moreover, while we maintain cyber incident liability insurance, it may be insufficient to cover all costs and liabilities associated with a cyber incident, or we may be unable to retain or obtain such insurance in the future on commercially practicable terms. For further information on the cybersecurity and data privacy laws applicable to our insurance subsidiaries, see “Cybersecurity—Overview of Equitable Cybersecurity Risk Management” and “Cybersecurity—Governance of Cybersecurity Risk Management.”

 

Our operational failures or those of service providers on which we rely.

 

Weaknesses or failures in our internal processes or systems or those of our vendors could lead to disruption of our operations, liability to clients, exposure to regulatory enforcement action or harm to our reputation. Our business is highly dependent on our ability to process large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal and regulatory standards. If we make a mistake in performing our services that causes financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, business, results of operations or financial condition.

 

Our reliance on vendors creates a number of business risks, such as the risk that we may not maintain service quality, control or effective management of the outsourced business operations and that we cannot control the facilities or networks of such vendors. We are also at risk of being unable to meet legal, regulatory, financial or customer obligations if the facilities or networks of a vendor are disrupted, damaged or fail due to physical disruptions, such as fire, natural disaster, pandemic or power outage, or other impacts to vendors, including labor strikes, political unrest, and terrorist attacks. Since certain vendors conduct operations for us outside the United States, the political and military events in foreign jurisdictions could have an adverse impact on our outsourced operations. We may be adversely affected by a vendor who fails to deliver contracted services, which could lower revenues, increase costs, reduce profits, disrupt business, or damage our reputation.

 

Use or misuse of artificial intelligence technologies.

 

The development and deployment of AI tools and technologies, including generative AI, and its use and anticipated use by us or by third parties on whom we rely, may increase the operational risks discussed above or create new operational risks that we are not currently anticipating. AI technologies offer potential benefits in areas such as customer service personalization and process automation, and we expect to use AI and generative AI to help deliver products and services and support critical functions. We also expect third parties on whom we rely to do the same. AI and generative AI may be misused by us or by such third parties, and that risk is increased by the relative newness of the technology, the speed at which it is being adopted, and the uncertain and evolving policy and regulatory landscape governing its use. Such misuse could expose us to legal or regulatory risk, damage customer relationships or cause reputational harm. Our competitors may also adopt AI or generative AI more quickly or more effectively than we do, which could cause competitive harm. Because the generative AI technology is so new, many of the potential risks of generative AI are currently unknowable.

 

The occurrence of a catastrophe, including natural or man-made disasters and/or pandemics or other public health issues.

 

Any catastrophic event, terrorist attacks, accidents, floods, severe storms or hurricanes, pandemics and other public health issues, cyber-terrorism, or the failure of telecommunications or other critical infrastructure could have a material and adverse effect on our business. We could experience long-term interruptions in our service and the services provided by our significant vendors. Some of our operational systems are not fully redundant, and our disaster recovery and business continuity planning cannot account for all eventualities. Additionally, unanticipated problems with our disaster recovery systems could further impede our ability to conduct business, particularly if those problems affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. We could experience a material adverse effect on our liquidity, financial condition and operating results due to increased mortality and, in certain cases, morbidity

 

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rates and/or its impact on the economy and financial markets. We may also experience lower sales or other negative impacts to the use of services we provide if economic conditions worsen due to a catastrophe or pandemic or other public health emergency, as the financial condition of current or potential customers, policyholders, and clients may be adversely affected. See “ — Conditions in the global capital markets and economy.” A catastrophe may affect our computer-based data processing, transmission, storage and retrieval systems and destroy valuable data. Climate change may increase the frequency and severity of weather-related disasters and pandemics. These events could result in an adverse impact on our ability to conduct our business, including our ability to sell our products and services and our ability to adjudicate and pay claims in a timely manner.

 

If economic conditions worsen as a result of a catastrophe, pandemic or other public health issue, companies may be unable to make interest and principal payments on their debt securities or mortgage loans that we hold for investment purposes. Accordingly, we may still incur significant losses that can result in a decline in net investment income (“NII”) and/or material increases in credit losses on our investment portfolios. With respect to commercial real estate, there could be potential impacts to estimates of expected losses resulting from lower underlying values, reflecting current market conditions at that time.

 

Our ability to recruit, motivate and retain key employees and experienced and productive financial professionals.

 

Our business depends on our ability to recruit, motivate and retain highly skilled, technical, investment, managerial and executive personnel, and there is no assurance that we will be able to do so. Our financial professionals and our key employees are key factors driving our sales. Intense competition exists among insurers and other financial services companies for financial professionals and key employees. We cannot provide assurances that we will be successful in our respective efforts to recruit, motivate and retain key employees and top financial professionals and the loss of such employees and professionals could have a material adverse effect on our business, results of operations or financial condition.

 

Misconduct by our employees or financial professionals.

 

Misconduct and excessive or inappropriate risk taking by our employees, financial professionals, agents, intermediaries, representatives of our broker-dealer subsidiaries or employees of our vendors could result in public reporting, regulatory enforcement proceedings, regulatory sanctions or serious reputational or financial harm, as well as significant technical, legal and other expenses. Certain types of violations may result in our inability to act as an investment adviser or broker-dealer or to represent issuers in Regulation D offerings by acting as placement agent, general partner or another role. We employ controls and procedures designed to monitor employees’ and financial professionals’ business decisions and to prevent them from taking excessive or inappropriate risks, including with respect to information security, but employees may take such risks regardless of such controls and procedures.

 

Changes in accounting standards.

 

We are required to comply with statutory accounting principles (“SAP”). SAP and various components of SAP (such as actuarial reserving methodology) are subject to constant review by the NAIC and its task forces and committees, as well as state insurance departments, in an effort to address emerging issues and otherwise improve financial reporting. Various proposals are pending before committees and task forces of the NAIC, some of which, if enacted, could have negative effects on insurance industry participants. The NAIC continuously examines existing laws and regulations in the United States. We cannot predict whether or in what form such reforms will be enacted and, if so, whether the enacted reforms will positively or negatively affect us.

 

In addition, the NAIC Accounting Practices and Procedures manual provides that state insurance departments may permit insurance companies domiciled in their jurisdiction to depart from SAP by granting them permitted accounting practices. We cannot predict whether or when the insurance departments of the states of domicile of our competitors may permit them to utilize advantageous accounting practices that depart from SAP, the use of which may not be permitted by NYDFS.

 

For a discussion of accounting pronouncements and their potential impact on our business, see Note 2 of the Notes to the Statutory Financial Statements.

 

Continued scrutiny and evolving expectations regarding ESG matters.

 

There is continued scrutiny and evolving expectations from investors, customers, regulators and other stakeholders on ESG practices and disclosures, including those related to environmental stewardship, climate change, diversity, equity and inclusion,

 

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racial justice and workplace conduct. Legislators and regulators have imposed and may continue to impose ESG-related legislation, rules and guidance, which may conflict with one another and impose additional costs on us, impede our business opportunities or expose us to new or additional risks. In addition, state attorneys general and other state officials have spoken out against ESG motivated investing by some investment managers and terminated contracts with managers based on their following certain ESG motivated strategies. Moreover, proxy advisory firms that provide voting recommendations to investors have developed ratings for evaluating companies on their approach to different ESG matters, and unfavorable ratings of our company or our industry may lead to negative investor sentiment and the diversion of investment to other companies or industries. If we are unable to meet these standards or expectations, whether established by us or third parties, it could result in adverse publicity, reputational harm, or loss of customer and/or investor confidence, which could adversely affect our business, results of operations, financial condition and liquidity.

 

Risks Relating to Credit, Counterparties and Investments

 

Our counterparties’ requirements to pledge collateral related to declines in estimated fair value of derivative contracts.

 

We use derivatives and other instruments to help us mitigate various business risks. Our transactions with financial and other institutions generally specify the circumstances under which the parties are required to pledge collateral related to any decline in the market value of the derivatives contracts. If our counterparties fail or refuse to honor their obligations under these contracts, we could face significant losses to the extent collateral agreements do not fully offset our exposures and our hedges of the related risk will be ineffective. Such failure could have a material adverse effect on our business, results of operations or financial condition.

 

Changes in the actual or perceived soundness or condition of other financial institutions and market participants.

 

A default by any financial institution or by a sovereign could lead to additional defaults by other market participants. Such failures could disrupt securities markets or clearance and settlement systems and lead to a chain of defaults, because the commercial and financial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. Even the perceived lack of creditworthiness of a financial institution may lead to market-wide liquidity problems and losses or defaults by us or by other institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries with which we interact on a daily basis. Systemic risk could have a material adverse effect on our ability to raise new funding and on our business, results of operations or financial condition. In addition, such a failure could impact future product sales as a potential result of reduced confidence in the financial services industry.

 

Economic downturns, defaults and other events may adversely affect our investments.

 

The occurrence of a major economic downturn, acts of corporate malfeasance, widening credit risk spreads, ratings downgrades or other events that adversely affect the issuers or guarantors of securities we own or the underlying collateral of structured securities we own could cause the estimated fair value of our fixed maturity securities portfolio and corresponding earnings to decline and cause the default rate of the fixed maturity securities in our investment portfolio to increase. We may have to hold more capital to support our securities to maintain our RBC level, should securities we hold suffer a ratings downgrade. Levels of write-downs or impairments are impacted by intent to sell, or our assessment of the likelihood that we will be required to sell, fixed maturity securities, as well as our intent and ability to hold equity securities which have declined in value until recovery. Realized losses or impairments on these securities may have a material adverse effect on our business, results of operations, liquidity or financial condition in, or at the end of, any quarterly or annual period.

 

Some of our investments are relatively illiquid and may be difficult to sell.

 

We hold certain investments that may lack liquidity, such as privately placed fixed maturity securities, mortgage loans, commercial mortgage-backed securities and private alternative investments. In the past, even some of our very high quality investments experienced reduced liquidity during periods of market volatility or disruption. If we were required to liquidate these investments on short notice or were required to post or return collateral, we may have difficulty doing so and be forced to sell them for less than we otherwise would have been able to realize. The reported values of our relatively illiquid types of investments do not necessarily reflect the current market price for the asset. If we were forced to sell certain of our assets in the current market, there can be no assurance that we would be able to sell them for the prices at which we have recorded them and we might be forced to sell them at significantly lower prices, which could have a material adverse effect on our business, results of operations, liquidity or financial condition.

 

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Defaults on our mortgage loans and volatility in performance.

 

A portion of our investment portfolio consists of mortgage loans on commercial, residential, and agricultural real estate. Although we manage credit risk and market valuation risk for our commercial, residential, and agricultural real estate assets through geographic, property type and product type diversification and asset allocation, general economic conditions in the commercial and agricultural real estate sectors will continue to influence the performance of these investments. With respect to commercial real estate, there could be potential impacts to estimates of expected losses resulting from lower underlying values, reflecting current market conditions at that time. These factors, which are beyond our control, could have a material adverse effect on our business, results of operations, liquidity or financial condition. An increase in the default rate of our mortgage loan investments or fluctuations in their performance could have a material adverse effect on our business, results of operations, liquidity or financial condition.

 

Risks Relating to Our Retirement and Protection Businesses

 

Risks Relating to Reinsurance and Hedging

 

Our reinsurance and hedging programs.

 

We seek to mitigate some risks associated with the GMxB features or minimum crediting rate contained in certain of our retirement and protection products through our hedging and reinsurance programs. However, these programs cannot eliminate all of the risks, and no assurance can be given as to the extent to which such programs will be completely effective in reducing such risks.

 

Reinsurance—We use reinsurance to mitigate a portion of the risks that we face, principally in certain of our in-force annuity and life insurance products. Under our reinsurance arrangements, other insurers assume a portion of the obligation to pay claims and related expenses to which we are subject. However, we remain liable as the direct insurer on all risks we reinsure and, therefore, are subject to the risk that our reinsurer is unable or unwilling to pay or reimburse claims at the time demand is made. The inability or unwillingness of a reinsurer to meet its obligations to us, or the inability to collect under our reinsurance treaties for any other reason, could have a material adverse impact on our business, results of operations or financial condition. Prolonged or severe adverse mortality or morbidity experience could result in increased reinsurance costs, and ultimately may reduce the availability of reinsurance for future life insurance sales, if available at all. If, for new sales, we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient, we would either have to be willing to accept an increase in our net exposures, revise our pricing to reflect higher reinsurance premiums or limit the amount of new business written on any individual life. If this were to occur, we may be exposed to reduced profitability and cash flow strain or we may not be able to price new business at competitive rates. The premium rates and other fees that we charge are based, in part, on the assumption that reinsurance will be available at a certain cost. If a reinsurer raises the rates that it charges on a block of in-force business, we may not be able to pass the increased costs onto our customers and our profitability will be negatively impacted. Additionally, such a rate increase could result in our recapturing of the business, which may result in a need to maintain additional reserves, reduce reinsurance receivables and expose us to greater risks.

 

Hedging Programs — We use a hedging program to mitigate a portion of the unreinsured risks we face in, among other areas, the GMxB features of our variable annuity products and minimum crediting rates on our variable annuity and life products from unfavorable changes in benefit exposures due to movements in the capital markets. In certain cases, however, we may not be able to effectively apply these techniques because the derivatives markets in question may not be of sufficient size or liquidity or there could be an operational error in the application of our hedging strategy or for other reasons. The operation of our hedging programs is based on models involving numerous estimates and assumptions. There can be no assurance that ultimate actual experience will not differ materially from our assumptions, particularly, but not only, during periods of high market volatility, which could adversely impact our business, results of operations or financial condition. For example, in the past, due to, among other things, levels of volatility in the equity and interest rate markets above our assumptions as well as deviations between actual and assumed surrender and withdrawal rates, gains from our hedging programs did not fully offset the economic effect of the increase in the potential net benefits payable under the GMxB features offered in certain of our products. If these circumstances were to re-occur in the future or if, for other reasons, results from our hedging programs in the future do not correlate with the economic effect of changes in benefit exposures to customers, we could experience economic losses which could have a material adverse impact on our business, results of operations or financial condition. Additionally, our strategies may result in under or over-hedging our liability exposure, which could result in an increase in our hedging losses and greater volatility in our earnings and have a material adverse effect on our business, results of operations or financial condition. For further discussion, see “—Risks Relating to Estimates, Assumptions and Valuations — Our risk management policies and procedures.”

 

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Our reinsurance arrangement with affiliated captives.

 

The reinsurance arrangement with EQ AZ Life Re (the “Affiliated Captive”) provides important capital management benefits to us. Under applicable statutory accounting rules, we are currently, and will in the future be, entitled to a credit in the calculations of our reserves for amounts reinsured to the Affiliated Captive, to the extent the Affiliated Captive holds assets in trust or provides letters of credit or other financing acceptable to our domestic regulator. The level of assets required to be maintained in the trust fluctuates based on market and interest rate movements, age of the policies, mortality experience and policyholder behavior. Increasing reserve requirements may necessitate that additional assets be placed in trust or additional letters of credit secured, which could impact the liquidity of the Affiliated Captive.

 

Risks Relating to Our Products, Our Structure and Product Distribution

 

GMxB features within certain of our products.

 

Certain of the variable annuity products we offer and certain in-force variable annuity products we offered historically, and certain variable annuity risks we assumed historically through reinsurance, include GMxB features. We also offer index-linked variable annuities with guarantees against a defined floor on losses. GMxB features are designed to offer protection to policyholders against changes in equity markets and interest rates. Any such periods of significant and sustained negative or low Separate Accounts returns, increased equity volatility or reduced interest rates will result in an increase in the valuation of our liabilities associated with those products. In addition, if the Separate Account assets consisting of fixed income securities, which support the guaranteed index-linked return feature, are insufficient to reflect a period of sustained growth in the equity-index on which the product is based, we may be required to support such Separate Accounts with assets from our General Account and increase our liabilities. An increase in these liabilities would result in a decrease in our net income and depending on the magnitude of any such increase, could materially and adversely affect our financial condition, including our capitalization, as well as the financial strength ratings which are necessary to support our product sales.

 

Additionally, we make assumptions regarding policyholder behavior at the time of pricing and in selecting and using the GMxB features inherent within our products. An increase in the valuation of the liability could result to the extent emerging and actual experience deviates from these policyholder option use assumptions. If we update our assumptions based on our actuarial assumption review, we could be required to increase the liabilities we record for future policy benefits and claims to a level that may materially and adversely affect our business, results of operations or financial condition which, in certain circumstances, could impair our solvency. In addition, we have in the past updated our assumptions on policyholder behavior, which has negatively impacted our net income, and there can be no assurance that similar updates will not be required in the future.

 

In addition, hedging instruments may not effectively offset the costs of GMxB features or may otherwise be insufficient in relation to our obligations. Furthermore, we are subject to the risk that changes in policyholder behavior or mortality, combined with adverse market events, could produce economic losses not addressed by our risk management techniques. These factors, individually or collectively, may have a material adverse effect on our business, results of operations, including net income, capitalization, financial condition or liquidity, including our ability to pay dividends to Holdings.

 

The amount of statutory capital that we have and the amount of statutory capital we must hold to meet our statutory capital requirements and our financial strength and credit ratings can vary significantly.

 

In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors. For further information on the NAIC review of the RBC treatment of certain complex assets in which insurers have invested during recent years, see “Business — Regulation — Insurance Regulation—Risk Based Capital.” Additionally, state insurance regulators have significant leeway in how to interpret existing regulations, which could further impact the amount of statutory capital or reserves that we must maintain. We are primarily regulated by the NYDFS, which from time to time has taken more stringent positions than other state insurance regulators on matters affecting, among other things, statutory capital or reserves. In certain circumstances, particularly those involving significant market declines, the effect of these more stringent positions may be that our financial condition appears to be worse than competitors who are not subject to the same stringent standards, which could have a material adverse impact on our business, results of operations or financial condition. Moreover, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of capital we must hold in order to maintain our current ratings. To the extent that our statutory capital resources are deemed to be insufficient to maintain a particular rating by one or more rating agencies, our financial strength and credit ratings might be downgraded by one or more rating agencies. There can be no assurance that we will be able to maintain our current RBC ratio in the future or that our RBC ratio will not fall to a level that could have a material adverse effect on our business, results of operations or financial condition.

 

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Our failure to meet our RBC requirements or minimum capital and surplus requirements could subject us to further examination or corrective action imposed by insurance regulators, including limitations on our ability to write additional business, supervision by regulators, rehabilitation, or seizure or liquidation. Any corrective action imposed could have a material adverse effect on our business, results of operations or financial condition. A decline in RBC ratios may limit our ability to pay dividends, could result in a loss of customers or new business, and could be a factor in causing ratings agencies to downgrade our financial strength ratings, each of which could have a material adverse effect on our business, results of operations or financial condition.

 

A downgrade in our financial strength and claims-paying ratings.

 

Claims-paying and financial strength ratings are important factors in establishing the competitive position of insurance companies. They indicate the rating agencies’ opinions regarding an insurance company’s ability to meet policyholder obligations and are important to maintaining public confidence in our products and our competitive position. A downgrade of our ratings or those of Equitable America or Holdings could adversely affect our business, results of operations or financial condition by, among other things, reducing new sales of our products, increasing surrenders and withdrawals from our existing contracts, possibly requiring us to reduce prices or take other actions for many of our products and services to remain competitive, or adversely affecting our ability to obtain reinsurance or obtain reasonable pricing on reinsurance. A downgrade in our ratings may also adversely affect our ability to hedge our risks, our cost of raising capital or limit our access to capital.

 

A loss of, or significant change in, key product distribution relationships.

 

We distribute certain products under agreements with third-party distributors and other members of the financial services industry that are not affiliated with us. We compete with other financial institutions to attract and retain commercial relationships in each of these channels. An interruption or significant change in certain key relationships could materially and adversely affect our ability to market our products and could have a material adverse effect on our business, results of operation or financial condition. Distributors may elect to alter, reduce or terminate their distribution relationships with us, including for such reasons as changes in our distribution strategy, adverse developments in our business, adverse rating agency actions or concerns about market-related risks. Alternatively, we may terminate one or more distribution agreements due to, for example, a loss of confidence in, or a change in control of, one of the third-party distributors, which could reduce sales.

 

We are also at risk that key distribution partners may merge or change their business models in ways that affect how our products are sold, either in response to changing business priorities or as a result of shifts in regulatory supervision or potential changes in state and federal laws and regulations regarding standards of conduct applicable to third-party distributors when providing investment advice to retail and other customers. Our key distribution relationships may also be adversely impacted by regulatory changes that increase the costs associated with marketing, or restrict the ability of distribution partners to receive sales and promotion-related charges.

 

Risks Relating to Estimates, Assumptions and Valuations

 

Our risk management policies and procedures.

 

Our policies and procedures, including hedging programs, to identify, monitor and manage risks may not be adequate or fully effective. Many of our methods of managing risk and exposures are based upon our use of historical market behavior or statistics based on historical models. As a result, these methods may not predict future exposures, which could be significantly greater than the historical measures indicate. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record and verify large numbers of transactions and events. These policies and procedures may not be fully effective.

 

We employ various strategies to mitigate risks inherent in our business and operations. These risks include current or future changes in the fair value of our assets and liabilities, current or future changes in cash flows, the effect of interest rates, equity markets and credit spread changes, the occurrence of credit defaults and changes in mortality and longevity. We seek to control these risks by, among other things, entering into reinsurance contracts and through our hedging programs. Developing an effective strategy for dealing with these risks is complex, and no strategy can completely insulate us from such risks. Our hedging strategies also rely on assumptions and projections that may prove to be incorrect or prove to be inadequate. Moreover, definitions used in our derivatives contracts may differ from those used in the contract being hedged. Accordingly,

 

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our hedging activities may not have the desired beneficial impact on our business, results of operations or financial condition. Further, the nature, timing, design or execution of our hedging transactions could actually increase our risks and losses. Our hedging strategies and the derivatives that we use, or may use in the future, may not adequately mitigate or offset the hedged risk and our hedging transactions may result in losses, including both losses based on the risk being hedged as well as losses based on the derivative. The terms of the derivatives and other instruments used to hedge the stated risks may not match those of the instruments they are hedging which could cause unpredictability in results.

 

Our reserves could be inadequate and product profitability could decrease due to differences between our actual experience and management’s estimates and assumptions.

 

Our reserve requirements for our direct and reinsurance assumed business are calculated based on a number of estimates and assumptions, including estimates and assumptions related to future mortality, morbidity, longevity, persistency, interest rates, future equity performance, reinvestment rates, claims experience and policyholder elections (i.e., the exercise or non-exercise of rights by policyholders under the contracts). The assumptions and estimates used in connection with the reserve estimation process are inherently uncertain and involve the exercise of significant judgment. We review the appropriateness of reserves and the underlying assumptions at least annually and, if necessary, update our assumptions as additional information becomes available. We cannot, however, determine with precision the amounts that we will pay for, or the timing of payment of, actual benefits and claims or whether the assets supporting the policy liabilities will grow to the level assumed prior to payment of benefits or claims. Our claim costs could increase significantly, and our reserves could be inadequate if actual results differ significantly from our estimates and assumptions. If so, we will be required to increase reserves, which could materially and adversely impact our business, results of operations or financial condition. Future reserve increases in connection with experience updates could be material and adverse to the results of operations or financial condition of the Company. Future changes as a result of future assumptions reviews could require us to make material additional capital contributions to one or more of our insurance company subsidiaries or could otherwise materially and adversely impact our business, results of operations or financial condition and may negatively and materially impact our stock price.

 

Significant deviations in actual experience from our pricing assumptions could have an adverse effect on the profitability of our products. If actual persistency is significantly different from that assumed in our current reserving assumptions, our reserves for future policy benefits may prove to be inadequate. Although some of our variable annuity and life insurance products permit us to increase premiums or adjust other charges and credits during the life of the policy or contract, the adjustments permitted under the terms of the policies or contracts may not be sufficient to maintain profitability. Many of our variable annuity and life insurance products do not permit us to increase premiums or adjust other charges and credits or limit those adjustments during the life of the policy or contract. Even if we are permitted under the contract to increase premiums or adjust other charges and credits, we may not be able to do so due to litigation, point of sale disclosures, regulatory reputation and market risk or due to actions by our competitors. In addition, the development of a secondary market for life insurance could adversely affect the profitability of existing business and our pricing assumptions for new business.

 

Our financial models rely on estimates, assumptions and projections.

 

We use models in our hedging programs and many other aspects of our operations including, but not limited to, product development and pricing, capital management, the estimation of actuarial reserves, and the valuation of certain other assets and liabilities. These models rely on estimates, assumptions and projections that are inherently uncertain and involve the exercise of significant judgment. Due to the complexity of such models, it is possible that errors in the models could exist and our controls could fail to detect such errors. Failure to detect such errors could materially and adversely impact our business, results of operations or financial condition.

 

Subjectivity of the determination of the amount of allowances and impairments taken on our investments.

 

The determination of the amount of allowances and impairments varies by investment type and is based upon our evaluation of known and inherent risks associated with the respective asset class. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. There can be no assurance that management’s judgments, as reflected in our financial statements, will ultimately prove to be an accurate estimate of the actual diminution in realized value. Historical trends may not be indicative of future impairments or allowances. Additional impairments may need to be taken or allowances provided for in the future that could have a material adverse effect on our business, results of operations or financial condition. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within our financial statements and the period-to-period changes in estimated fair value could vary significantly. Decreases in the estimated fair value of securities we hold may have a material adverse effect on our business, results of operations or financial condition.

 

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Legal and Regulatory Risks

 

We are heavily regulated.

 

We are heavily regulated, and regulators continue to increase their oversight over financial services companies. The adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will continue to affect, our business, including making our efforts to comply more expensive and time-consuming. In recent years, insurance regulators and the NAIC have been focused on enhancing regulatory oversight of insurers’ investments in complex assets, such as leveraged loans and CLOs, the use of AI technologies and “big data,” and the management of climate risk. For additional information on regulatory developments and the risks we face, see “Business—Regulation”.

 

Our products are subject to a complex and extensive array of state and federal tax, securities, insurance and employee benefit plan laws and regulations, which are administered and enforced by a number of different governmental and self-regulatory authorities, including, among others, state insurance regulators, state securities administrators, state banking authorities, the SEC, FINRA, the DOL and the IRS. Failure to administer our products in accordance with contract provisions or applicable law, or to meet any of these complex tax, securities or insurance requirements could subject us to administrative penalties imposed by a governmental or self-regulatory authority, unanticipated costs associated with remedying such failure or other claims, litigation, harm to our reputation or interruption of our operations.

 

We are required to file periodic and other reports within certain time periods imposed by U.S. federal securities laws, rules and regulations. Failure to file such reports within the designated time period or failure to accurately report our financial condition or results of operations could require us to curtail or cease sales of certain of our products or delay the launch of new products or new features, which could cause a significant disruption in our business. If our affiliated and third-party distribution platforms are required to curtail or cease sales of our products, we may lose shelf space for our products indefinitely, even once we are able to resume sales.

 

In addition, regulators have proposed, imposed and may continue to impose new requirements or issue new guidance aimed at addressing or mitigating climate change-related risks and further regulating the industries in which we operate. These new or pending regulatory initiatives could result in increased compliance costs to us and changes to our corporate governance and risk management practices. It is difficult to predict how the new administration will impact these or other regulatory initiatives. “Business—Regulation”.

 

Changes in U.S. tax laws and regulations or interpretations thereof.

 

Changes in tax laws and regulations or interpretations of such laws, including U.S. tax reform, could increase our corporate taxes and reduce our earnings. Changes may increase our ETR or have implications that make our products less attractive to consumers. Tax authorities may enact laws, change regulations to increase existing taxes, or add new types of taxes and authorities who have not imposed taxes in the past, may impose additional taxes. Any such changes may harm our business, results of operations or financial condition.

 

Legal proceedings and regulatory actions.

 

A number of lawsuits and regulatory inquiries have been filed or commenced against us and other financial services companies in the jurisdictions in which we do business. Some of these matters have resulted in the award of substantial fines and judgments, including material amounts of punitive damages, or in substantial settlements. We face a significant risk of, and from time to time we are involved in, such actions and proceedings, including class action lawsuits. The frequency of large damage awards, including large punitive damage awards and regulatory fines that bear little or no relation to actual economic damages incurred, continues to create the potential for an unpredictable judgment in any given matter. In addition, investigations or examinations by federal and state regulators and other governmental and self-regulatory agencies could result in legal proceedings (including securities class actions and stockholder derivative litigation), adverse publicity, sanctions, fines and other costs. A substantial legal liability or a significant federal, state or other regulatory action against us, as well as regulatory inquiries or investigations, may divert management’s time and attention, could create adverse publicity and harm our reputation, result in material fines or penalties, result in significant expense, including legal and settlement costs, and otherwise have a material adverse effect on our business, results of operations or financial condition. For information regarding legal proceedings and regulatory actions pending against us, see Note 12 of the Notes to the Statutory Financial Statements.

 

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General Risks

 

Competition from other insurance companies, banks and other financial institutions.

 

We face strong competition from others offering the types of products and services we provide. It is difficult to provide unique insurance products because, once such products are made available to the public, they often are reproduced and offered by our competitors. If competitors charge lower fees for similar products or services, we may decide to reduce the fees on our own products or services in order to retain or attract customers.

 

Competition may adversely impact our market share and profitability. Many of our competitors are large and well-established and some have greater market share or breadth of distribution, offer a broader range of products, services or features, assume a greater level of risk, have greater financial resources, have higher claims-paying or credit ratings, have better brand recognition or have more established relationships with clients than we do. We also face competition from new market entrants or non-traditional or online competitors, many of whom are leveraging digital technology that may challenge the position of traditional financial service companies. Due to the competitive nature of the financial services industry, there can be no assurance that we will continue to effectively compete within the industry or that competition will not materially and adversely impact our business, results of operations or financial condition.

 

Protecting our intellectual property.

 

We rely on a combination of contractual rights, copyright, trademark and trade secret laws to establish and protect our intellectual property. Third parties may infringe or misappropriate our intellectual property. The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could have a material adverse effect on our business and our ability to compete. Third parties may have, or may eventually be issued, patents or other protections that could be infringed by our products, methods, processes or services or could limit our ability to offer certain product features. If we were found to have infringed or misappropriated a third-party patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from using and benefiting from certain patents, copyrights, trademarks, trade secrets or licenses. Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative. Any of these scenarios could harm our reputation and have a material adverse effect on our business, results of operations or financial condition.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

DESCRIPTION OF PROPERTY

 

Equitable Financial’s principal executive offices at 1345 Avenue of the Americas, New York, NY pursuant to a lease that will expire in 2039. We also have significant office space leases in Syracuse, NY, pursuant to a lease that will expire in 2028, and in Charlotte, NC, where we occupy space under a lease that expires in 2028.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

LEGAL PROCEEDINGS

 

For information on certain legal proceedings pending against us, see Note 12 of the Notes to the Statutory Financial Statements, Litigation section, and “Risk Factors — Legal and Regulatory Risks — Legal proceedings and regulatory actions.”

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

SELECTED FINANCIAL DATA

 

Not applicable.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for EFLIC should be read in conjunction with “Risk Factors,” “Selected Financial Data — Statutory Basis” and the financial statements and related Notes to Financial Statements — Statutory Basis included elsewhere herein. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors.

 

Basis of Presentation

 

The financial information included herein is prepared and presented in accordance with Statutory Accounting Principles (“U.S. SAP”) prescribed or permitted by the New York department of financial services (“NYDFS”). 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 New York. However, New York Regulation 213 (“Reg 213”), adopted in May of 2019 and as amended in February 2020 and March 2021, differs from the NAIC variable annuity reserve and capital framework. Certain differences exist between U.S. SAP and accounting principles generally accepted in the United States of America (“U.S. GAAP”), which are material. For a summary of such differences, see “Notes to Financial Statements — Summary of Significant Accounting Policies — Basis of Presentation.”

 

The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. The most significant estimates include those used in determining the carrying values of investments including the amount of mortgage loan investment valuation reserves, other-than-temporary impairments (“OTTI”), the liabilities for benefits reserves, and the determination of admissible deferred tax assets. Although some variability is inherent in these estimates, management believes the amounts presented are appropriate.

 

EXECUTIVE SUMMARY

 

Overview

 

Equitable Financial Life Insurance Company (“Equitable”, “Equitable Financial” or the “Company”), is a stock life insurance company chartered by the State of New York and is a direct, wholly-owned subsidiary of Equitable Financial Services, LLC (“EFS”), a wholly-owned subsidiary of Equitable Holdings, Inc. and collectively with its consolidated subsidiaries referred to herein as “Equitable Holdings” or “Holdings”. Equitable, established in the State of New York in 1859, is among the largest life insurance companies in the United States. Equitable is part of a diversified financial services organization offering a broad spectrum of financial advisory, insurance and investment management services. Management’s Discussion and Analysis of Financial Condition and Results of Operations of Equitable should be read in conjunction with the Statutory financial statements and related notes to the Statutory financial statements of Equitable.

 

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

 

U.S. stocks finished higher in the fourth quarter of 2025, despite a long government shutdown and signs of a cooling labor market. The S&P 500 gained 2.7% for the quarter and delivered about 18% for the year, its third straight year of double-digit returns. Small-cap stocks, represented by the Russell 2000, rose 2.2% in the fourth quarter and ended the year up 13%.

 

Despite the above, 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

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Russian invasion of the Ukraine, Middle Eastern hostilities, and the ensuing conflicts and the sanctions and other measures imposed in response to these conflicts, tariffs and trade disputes, significantly increased the level of volatility in the financial markets and have increased the level of economic and political uncertainty.

 

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 fell three times in 2025, including by 0.25% in December 2025. However, the Federal Reserve signaled a more cautious approach for 2026, which contributed to some late-year market volatility. 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.

 

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.”

 

Interest Rate Environment

We believe the interest rate environment will continue to impact our business and financial performance in the future. A prolonged low interest rate environment may subject us to increased hedging costs or an increase in the amount of reserves we are required to hold, lowering our surplus.

 

Regulatory Developments

 

We are regulated primarily by the NYDFS, with some policies and products also subject to federal regulation. 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 the regulatory developments and risk 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 products;

 

•

premiums from our traditional life insurance and annuity products; and

 

•

investment income from our General Account investment portfolio (“GAIA”).

 

Our fee income varies directly in relation to the amount of the underlying AV or benefit base of our life insurance and annuity products which 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 GAIA and is impacted by the prevailing level of interest rates as we reinvest cash associated with maturing investments and net flows to the portfolio.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Benefits and Other Deductions

 

Our primary expenses are:

 

•

policyholders’ benefits and change in reserves;

 

•

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

 

•

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

 

Policyholders’ benefits are driven primarily by mortality, interest rate fluctuations, 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. 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. Changes in the values of the derivatives associated with these programs due to equity market and interest rate movements are recognized in the periods in which they occur. This results in net income volatility as further described below. See “ — Significant Factors Impacting Our Results — Impact of Hedging.”

 

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 higher net income volatility on a period-over-period basis.

 

An additional source of net income (loss) volatility is the impact of the Company’s annual actuarial assumption review. See “ — Significant Factors Impacting Our Results — Effect of Assumption Updates,” for further detail of the impact of assumption updates on net income (loss).

 

Significant Factors Impacting Our Results

 

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

 

Impact of Hedging

 

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 partially recognized in the current period, resulting in net income volatility. In addition to our dynamic hedging program, we have a hedging program using static hedge positions (derivative positions intended to be held-to-maturity with less frequent re-balancing) to protect our statutory capital against stress scenarios. This program complements our dynamic hedge program and may result in net income volatility.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Significant Transactions

 

There were number of large reinsurance, recapture and novation transactions during 2025 and prior years that impacted the Company. See Note 12 for further detail.

 

Effect of Assumption Updates

 

Our actuaries oversee the valuation of the product liabilities and assets and review the underlying inputs and assumptions. We comprehensively review the actuarial assumptions underlying these valuations and update assumptions annually. Assumptions are based on a combination of Company experience, industry experience, management actions and expert judgment and reflect our prudent estimate (best estimate + margin) as of the date of the applicable consolidated financial statements. Changes in assumptions can result in a significant change to the carrying value of product liabilities and assets and, consequently, the impact could be material to earnings in the period of the change.

 

Assumption Updates and Model Changes

 

In 2025, the Company increased its statutory reserves by approximately $37 million due to unfavorable lapse assumption updates partially offset by favorable expense assumption updates to align with experience.

 

In 2024, the Company decreased its statutory reserves by approximately $156 million due to a reduction in assumption margins.

 

In 2023, the Company increased its statutory reserves by approximately $324 million due to primarily Universal Life w/ Secondary Guarantees updates regarding mortality, premium funding, & surrenders to align with experience.

 

Model Changes

 

No material model changes in 2025, 2024, nor 2023.

 

RESULTS OF OPERATIONS

 

The Company’s 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 earnings and surplus narratives that follow discuss the results for 2025 compared to 2024’s results, followed by the results for 2024 compared to 2023’s results.

 

		Years Ended December 31,
		2025				2024				2023
		(in millions)
Premiums and annuity considerations			(1,778.6	)		$	8,045.7				(3,624.0	)
Net investment income			649.9				422.6				485.8
Commissions and expense allowances on reinsurance ceded			2,078.3				859.8				(143.1	)
Other income			2,026.9				2,028.4				1,985.1
Total revenues			2,976.5				11,356.5				(1,296.2	)
Policyholder benefits			7,890.6				8,610.9				10,197.1
Increase (decrease) in reserves			(8,921.9	)			(885.8	)			(15,325.6	)
Commissions & operating expenses			1,538.9				1,751.9				1,697.8
Net transfers to or (from) Separate Accounts			(10,907.1	)			(12,979.4	)			(6,230.8	)
Separate Accounts’ modified coinsurance reinsurance ceded			12,814.5				15,385.5				9,750.7
Funds withheld reinsurance ceded interest credited			(1,047.7	)			(1,388.6	)			(935.0	)
Other deductions			1,444.5				652.3				483.0
Total benefits and expenses			2,811.8				11,146.8				(362.8	)

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

		Years Ended December 31,
		2025				2024				2023
		(in millions)
Net gain (loss) from operations before dividends & federal income taxes (“FIT”)		$	164.7			$	209.7			$	(933.4	)
Dividends to policyholders			80.2				98.3				97.8
Net gain (loss) from operations before FIT			84.5				111.4				(1,031.2	)
FIT incurred (excluding tax on capital gains)			129.4				118.9				121.8
Net gain (loss) from operations			(44.9	)			(7.5	)			(1,153.0	)
Net realized capital losses			(777.5	)			(510.9	)			(513.9	)
Net income (loss)			(822.4	)			(518.4	)			(1,666.9	)
CHANGES IN CAPITAL AND SURPLUS
Balance — beginning of year		$	869.3			$	1,550.9			$	5,439.9
Prior year adjustments			10.4				—				—
Adjusted Balance — beginning of year			879.7				1,550.9				5,439.9
Net income (loss)			(822.4	)			(518.4	)			(1,666.9	)
Change in net unrealized capital gains (losses)			217.6				116.5				(116.1	)
Change in net admitted deferred tax asset (excl. tax on unrealized capital gains)			286.3				3.9				(375.0	)
Change in asset valuation reserve			164.3				(39.4	)			(116.7	)
Other paid in surplus adjustments			(1.8	)			(4.4	)			(3.5	)
Cumulative effect of changes in accounting principles			—				—				264.9
Change in surplus as a result of reinsurance			1,327.9				(238.6	)			(204.7	)
Dividends to shareholders			—				—				(1,653.0	)
Other changes to surplus			105.3				(1.2	)			(18.0	)
Balance — end of year		$	2,156.9			$	869.3			$	1,550.9

 

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

 

Net loss from operations reported in the Company’s Summary of Operations for the year ended December 31, 2025 were $44.9 million compared to $7.5 million for the year ended December 31, 2024. The net loss reported in the Company’s Financial Statements for the year ended December 31, 2025 was 822.4 million compared to $518.4 million for the year ended December 31, 2024.

 

Net gains from operations before FIT was $84.5 million for the year ended December 31, 2025 compared to $111.4 million in 2024, representing an unfavorable change of $(26.9) million between the periods primarily due to higher mortality.

 

The larger Summary of Operations lines and line variances are noted below:

 

Premiums and annuity considerations

 

Total premiums and annuity considerations were $(1,778.6) million for the year ended December 31, 2025 compared to $8,045.7 million for the year ended December 31, 2024, a decrease of 9,824.3 million. The decrease in premiums is primarily driven by the initial ceded premium calculated under the RGA Reinsurance Treaty totaling approximately $12.5 billion, partially offset by $2.8 billion from the recapture of Internal Re life business from EQAZ and EFLOA. In addition, most new business sales outside of New York are being issued through EFLOA. The decline in life premiums also reflects the ongoing run-off of the Closed Block business, partially offset by increases driven by new sales of the SCS variable annuity product and fixed annuities.

 

Net investment income

 

Total net investment income was $649.9 million for the year ended 2025, an increase of $227.3 million from $422.6 million in 2024 primarily due to lower derivative losses on VA products partially offset by lower average asset balances post the Internal Re life novation and the RGA reinsurance transaction.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Commissions and expense allowances on reinsurance ceded

 

The 2025 and 2024 Commissions and expense allowances on reinsurance ceded were $2,078.3 million and $859.8 million, respectively, resulting in an increase of $1,218.5 million. The Company recognized a $2.3 billion pre-tax ceded commission gain from the RGA transaction — 21% or $0.5 billion was recognized through operations immediately in this line. Prior to the closing of RGA reinsurance transaction the Company executed a 75% partial recapture of the Life block of business that had been previously ceded to EFLOA on a funds withheld reinsurance basis during 2023. The recaptured business from EFLOA consisted of certain universal life insurance policies issued outside the State of New York prior to October 1, 2022. The Company recorded a $0.8 billion gain from operations on the recaptured life business from EFLOA during Q3 2025. The Company had previously recorded a $1.5 billion loss from operations back in 2023 when the business was initially ceded to EFLOA.

 

Policyholder benefits

 

For the year ended December 31, 2025, the Company reported policyholder benefits of $7,890.6 million, a decrease of $720.3 million from $8,610.9 million reported for the year ended December 31, 2024. The primary driver of the decrease in death benefits and surrender benefits is the reinsurance treaty the Company entered into during the third quarter that ceded 75% of the life business to RGA. There was an offsetting increase in annuity benefits primarily driven by the aging of the VA block of business and higher account values due to higher equity markets.

 

Increase (decrease) in reserves

 

Life, annuity and health reserves decreased by $8,036.1 million from $(8,921.9) million and $(885.8) million in 2025 and 2024, respectively. Immediately prior to the RGA transaction, the Company recaptured ceded business from EFLOA and EQAZ and recorded increases in reserves, i.e. decreases in ceded reserves of $4.2 billion. The Company recorded approximately $12.7 billion of ceded reserves under the treaty with RGA.

 

Commissions & operating expenses

 

Commissions were $1,538.9 million and $1,751.9 million for 2025 and 2024, respectively. The decrease of $213.0 million in commissions and operating expenses reflects the decline in premiums as under the 49/1 initiative most of the new sales business has moved to EFLOA, except for New York business and Puerto Rico VA business.

 

Net transfers to (from) Separate Accounts

 

Net transfers were $(10,907.1) million during 2025 compared to (12,979.4) million in 2024, a decline of 2,072.3 million. The primary driver of the decline is the ceding of the CARVM allowance to RGA under the new reinsurance treaty. Additionally, the decline reflects fewer new annuity sales due to new sales occurring through EFLOA (except for New York).

 

Separate Account MODCO Reinsurance

 

In 2025 and 2024, there were Separate Account MODCO reinsurance ceded of $12,814.5 million and $15,385.5 million, respectively. The increase year over year represents primarily the ceding of the Separate Account gains from operations (mainly SCS) and Separate Account fees under the 2023 Reinsurance Treaty ceded to EFLOA.

 

Funds withheld reinsurance ceded interest credited

 

Under the 2023 Reinsurance Treaty, the Company retains the assets and cedes the earnings from the assets to EFLOA. In 2025 and 2024, the Company ceded $(1,047.7) million and $(1,388.6) million, respectively, of derivative NII losses (primarily due large derivative hedge losses due to high equity markets) to EFLOA of funds withheld investment income, partially offset by funds withheld ceded investment income on fixed maturities and mortgage loans.

 

Other deductions

 

The primary driver of the year-over-year increase in this line of $792.2 million from $652.3 million in 2024 to $1,444.5 million in 2025 is primarily attributable to the impact of IMR ceded to RGA, as well as the $154 million in residual liability owed to RGA, which accounts for 75% of the shortfall where Closed Block Liabilities exceeded Closed Block Assets as of July 31, 2025, partially offset by decreases in both disbursements and ceded investment management and service fees.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Dividends to policyholders

 

In 2025, the Company paid $80.2 million in dividends to policyholders; $18.1 million less than the 2024 amount of $98.3 million. The decrease is primarily due to ceding 75% of the Closed Block to RGA under the new reinsurance treaty.

 

Federal Income Taxes incurred

 

Equitable Financial had Federal Income Tax expense on operations of $129.4 million and $118.9 million in 2025 and 2024, respectively. The tax amounts in 2025 and 2024 are the result of the tax law that mostly eliminates the ability to take current tax credits for operating losses. Instead the net operating losses are carried forward in the DTA. As a result, the current tax on this line with the current tax reported in realized and unrealized capital gains lines nets to a tax expense of $24.6 million and tax expense of $26.5 million in 2025 and 2024, respectively.

 

Net realized capital gains (losses) net of tax

 

Net realized capital losses increased by $(266.6) million from $(510.9) million in 2024 to $(777.5) million in 2025. Under Statutory rules, interest related losses such as those on bond and preferred stock sales are deferred through the IMR reserve and amortized over the life of the bonds that were sold.

 

Other Items Affecting Surplus

 

Change in net unrealized capital gains (losses)

 

The change in net unrealized capital gains increased by $101.1 million from 116.50 million in 2024 to $217.6 million in 2025 primarily driven by gains from bonds and preferred stock offset by foreign exchange losses. Offsetting these losses were GMxB hedge gains as interest rates rose in the fourth quarter of 2025.

 

Change in net admitted deferred tax asset (excl. tax on unrealized capital gains)

 

In 2024, low surplus resulted in changes in gross DTA being almost entirely offset by an opposing changes in non-admitted DTA, resulting in very little impact to this line. After the RGA deal in 2025, surplus increased significantly and as a result, the 15% of surplus non-admission was no longer a factor. Therefore, even though gross DTA declined compared to 2024, we were able to admit substantially more gross DTA in 2025. This drove the large positive figure in 2025.

 

Change in asset valuation reserve

 

In 2025 and 2024, the change in AVR were $164.3 million and $(39.4) million, respectively. The AVR liability consists of a default component (primarily bonds, preferred stock, and mortgage loans) and an equity component (primarily common stock, real estate, and other invested assets) and is a liability under Statutory accounting practices that establishes reserves for substantially all invested assets except policy loans and life insurance subsidiaries. The change in AVR generally minimizes the effect on surplus for all realized and unrealized gains and losses on such assets, other than those resulting from changes in interest rates (which are captured in the IMR). AVR is added back to determine Statutory Capital and Total Adjusted Capital within the RBC calculation. As of December 31, 2025, the AVR is at 100% maximum.

 

Change in surplus as a result of reinsurance

 

This line includes amortization into operations the income of previously recorded surplus gains on reinsurance. The primary driver of the $1,566.5 million increase in this line from $(238.6) million in 2024 to $1,327.9 million in 2025 is 79% of the Day 1 gain from the RGA transaction.

 

Other changes to surplus

 

The increase of $106.5 million in this line from $(1.2) million in 2024 to $105.3 million in 2025 is primarily due to the correction of a $106.2 million error with prior year surplus impact. See Note 2 — Summary of Significant Accounting Policies (“Prior Year Adjustments recorded in 2025”).

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

 

Net loss from operations reported in the Company’s Summary of Operations for the year ended December 31, 2024 were $7.5 million compared to $1,153.00 million for the year ended December 31, 2023. The net loss reported in the Company’s Financial Statements for the year ended December 31, 2024 was $518.4 million compared to $1,666.9 million for the year ended December 31, 2023.

 

Net gains from operations before FIT was $111.4 million for the year ended December 31, 2024 compared to a net loss of $1,031.2 million in 2023, representing a favorable change of $1,142.6 million between the periods primarily due to the 2023 Reinsurance Treaty.

 

The larger Summary of Operations lines and line variances are noted below:

 

Premiums and annuity considerations

 

Total premiums and annuity considerations were $8,045.7 million for the year ended December 31, 2024 compared to $(3,624.0) million for the year ended December 31, 2023, an increase of $11,669.7 million. Total insurance premiums and annuity considerations and deposits, (excluding the 2023 initial premiums of $12.1 billion ceded to EFLOA (Reinsurance Treaty) decreased by $0.4 billion from 2023. The $0.4 billion decrease in premiums is primarily driven by a decline in new business sales. Most new business sales outside of New York are being issued through EFLOA. In addition, the decrease in life premiums includes the run-off of the Closed Block business.

 

As discussed in the “Separate Account MODCO reinsurance ceded” line below, this line as well as annuity benefits and surrenders were significantly impacted in 2024 to now include under SSAP 61R, the ceded “Day 2” Separate Account MODCO reinsurance relative to the applicable policies under the Reinsurance Treaty, Venerable and Global Atlantic. This is a “presentation” entry, as under MODCO reinsurance all assets and liabilities remain with the Company and do not get transferred to the assuming company. This 2024 MODCO ceded premiums of ($879.5 million) had a net zero impact on net gain from operations, net income and a net zero impact to its overall ending capital and surplus position.

 

Net investment income

 

Total net investment income was $422.6 million for the year ended 2024, a decrease of $63.2 million from $485.8 million in 2023. The decrease in net investment income is primarily driven by lower interest income on bonds and higher interest expense, partially offset by lower derivative losses, increases in common stock, other invested assets, and interest income on mortgage loans.

 

Commissions and expense allowances on reinsurance ceded

 

The 2024 and 2023 Commissions and expense allowances on reinsurance ceded were $859.8 million and $(143.1) million, respectively. In 2024, the commission and allowance received from EFLOA, as well as other reinsurers under our various other reinsurance agreements makes up the entire balance of the line. The 2023 amount included $865.9 million loss from the initial ceded commission to EFLOA for the internal reinsurance transaction, partially offset by commission and expense allowances received from EFLOA, as well as other reinsurers under our various other reinsurance agreements.

 

Policyholder benefits

 

For the year ended December 31, 2024, the Company reported policyholder benefits of $8.6 billion, a decrease of $1.6 billion from $10.2 billion reported for the year ended December 31, 2023. Policyholders’ benefits are driven primarily by mortality, customer withdrawals, and benefits which change in response to changes in capital market conditions. 

 

Increase (decrease) in reserves

 

Life, annuity and health reserves decreased $(885.8) million and $(15,325.6) million in 2024 and 2023, respectively. 2023 was significantly impacted by the 2023 Reinsurance Treaty. In 2024 and 2023, decreases in GMxB direct reserves were primarily driven by higher equity markets (S&P up 23.3% vs. up 24.2% in 2024 and 2023, respectively).

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Commissions & operating expenses

 

Commissions were $1,751.9 million and $1,697.8 million for 2024 and 2023, respectively. The year over year increase in this line primarily reflects higher New York new VA sales.

 

Net transfers to or (from) Separate Accounts

 

Net transfers were $(12,979.4) million during 2024 compared to $(6,230.8) million in 2023, a decline of $6,748.6 million. The $6,748.6 million decrease in net transfers from Separate accounts is primarily due to the $(4,319.7) million decrease in net withdrawals and $(2,236.6) million favorable variance in expense allowance. The variance in net receipts/(withdrawals) is primarily due to lower premiums and higher surrenders year over year. The decline is attributable to any new annuity sales outside of New York in 2024 are being sold through EFLOA. The variance in expense allowance was driven by inclusion of 2023 initial ceded CARVM allowance.

 

Separate Account MODCO Reinsurance

 

In 2024 and 2023, there were Separate Account MODCO reinsurance ceded of $15.4 billion and $9.8 billion, respectively. The increase year over year represents primarily the ceding of the Separate Account gains from operations (mainly SCS) and Separate Account fees under the 2023 Reinsurance Treaty ceded to EFLOA.

 

Funds withheld reinsurance ceded interest credited

 

Under the Reinsurance Treaty, the Company retains the assets and cedes the earnings from the assets to EFLOA. In 2024 and 2023, the Company ceded $1,302.4 million and $930.3 million, respectively, of derivative NII losses (primarily due large derivative hedge losses due to high equity markets) to EFLOA of funds withheld investment income, partially offset by funds withheld ceded investment income on fixed maturities and mortgage loans.

 

Other deductions

 

The primary driver of the year-over-year increase in this line of $169.3 million from $483.0 million in 2023 to $652.3 million in 2024 is primarily attributable to an increase in the investment and management fees ceded to EFLOA, Global Atlantic and Venerable under our three variable annuity reinsurance agreements, and an increase in other miscellaneous disbursements mainly representing Equitable Distributors distribution fee expenses, allocated shared-based compensation expenses from parent, and litigation expenses.

 

Federal Income Taxes incurred

 

Equitable had Federal Income Tax expense on operations of $118.9 million and $121.8 million in 2024 and 2023, respectively. The tax amounts in 2024 and 2023 are the result of the tax law that mostly eliminates the ability to take current tax credits for operating losses. Instead the net operating losses are carried forward in the DTA. As a result, the current tax on this line with the current tax reported in realized and unrealized capital gains lines nets to a negligible tax expense of $26.5 million and tax expense of $22.0 million in 2024 and 2023, respectively.

 

Net realized capital gains (losses) net of tax

 

Net realized capital losses were steady between $(513.9) million in 2023 to $(510.9) million 2024. Under Statutory rules, interest related losses such as those on bond and preferred stock sales are deferred through the IMR reserve and amortized over the life of the bonds that were sold.

 

Other Items Affecting Surplus

 

Change in net unrealized capital gains (losses)

 

The change in net unrealized capital gains (losses) increased by $232.6 million from $(116.1) million in 2023 to $116.5 million in 2024 primarily driven by losses from bonds and preferred stock offset by mortgage loan and derivative gains.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Change in net admitted deferred tax asset (excl. tax on unrealized capital gains)

 

Net DTA (gross net of non-admitted DTA) which drives this line, was impacted significantly in 2023 by a huge decline in Company’s surplus which caused our Gross DTA to be significantly impacted by the SSAP 101 tax guidance whereby the net DTA was limited to no more than 15% of overall surplus (excluding DTA). By applying that haircut for the first time in 2023, it significantly increased the non-admission of the DTA, which caused the large negative in this line. In 2024, since the Company’s surplus was still very low, any change in the gross DTA was essentially completely offset by an opposite direction change in non-admitted DTA, thus in very little coming through in this line in 2024.

 

Change in asset valuation reserve

 

The AVR liability consists of a default component (primarily bonds, preferred stock, and mortgage loans) and an equity component (primarily common stock, real estate, and other invested assets) and is a liability under Statutory accounting practices that establishes reserves for substantially all invested assets except policy loans and life insurance subsidiaries. The change in AVR generally minimizes the effect on surplus for all realized and unrealized gains and losses on such assets, other than those resulting from changes in interest rates (which are captured in the IMR). AVR is added back to determine Statutory Capital and Total Adjusted Capital within the RBC calculation. As of December 31, 2024, the AVR is at 93.9% maximum.

 

Cumulative effect of changes in accounting principles

 

In 2023, the Company elected to modify the reserving methodology used in its computation of FHLB Funding Agreement and Funding Agreements-Backed Notes policy reserves. Effective January 1, 2023, the Company changed its reserving methodology from utilizing the present value of the future cash flows discounted at the coupon rate to the statutory prescribed maximum valuation interest rate. The Company determined that this valuation technique provides a more exact determination of the FHLB Funding Agreement and FABN policy reserves. Funding agreements issued are reported within Page 3, Line 3 — Liability for deposit type contracts. As a result, the Company recorded a change in accounting principle in the amount of $264.9 million within Page 4, Line 49 – Cumulative effect of changes in accounting principles and within Page 3, Line 3 — Liability for deposit type contracts.

 

Change in surplus as a result of reinsurance

 

The 2024 and 2023 changes in surplus of $(238.6) million and $(204.7) million, respectively, represents the amortization from surplus to net gains from operations of the ceded commissions surplus gains recorded on two large reinsurance agreements from 2021 and 2022.

 

Dividends to shareholders

 

The Company paid no ordinary dividend to its parent company EFS in 2024. In 2023, the Company paid a $1,050.0 million and a $603.0 million ordinary dividend to EFS during May 2023 and July 2023, respectively.

 

Financial Position

 

General Account Investment Portfolio

 

The General Account consists of a diversified portfolio of investments. Equitable has an asset/liability management approach with separate investment objectives for specific classes of product liabilities, such as insurance, annuity and group pension. Equitable has investment guidelines for each product line that form the basis for investment strategies to manage such product line’s investment return and liquidity requirements, consistent with management’s overall investment objectives for the General Account Investment Portfolio. Investments frequently meet the investment objectives of more than one class of product liabilities; each such class may be allocated a pro-rata interest in such investments and the returns there from.

 

As part of Equitable’s investment management process, management, with the assistance of its investment advisors constantly monitors investment performance. This internal review process culminates with a quarterly review of certain assets by Equitable’s Investments Under Surveillance Committee which evaluates whether any investments are other than temporarily impaired and whether specific investments should be put on an interest non-accrual basis.

 

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The following table summarizes the General Account investment assets by asset category:

 

General Account Investment Assets
Statement Value
($ in millions)
		12/31/2025								12/31/2024
		Amount				%				Amount				%
Bonds		$	11,669.7				27.4			$	36,244.5				62.8
Preferred stocks			137.7				0.3				254.8				0.4
Common stocks			324.5				0.8				336.0				0.6
Mortgage loans			12,402.2				29.1			$	12,489.0				21.6
Real estate			63.7				0.1				55.6				0.1
Policy loans			1,332.2				3.1				3,761.4				6.5
Cash, cash equivalents and short-term investments			1,969.7				4.6				348.2				0.6
Derivatives			418.8				1.0				334.3				0.6
Securities lending reinvested collateral			129.3				0.3				57.2				0.1
Other invested assets			3,473.2				8.2				3,093.5				5.4
All other invested assets			10,678.0				25.1				781.0				1.3
Total		$	42,599.0				100.0	%		$	57,755.5				100.0	%

 

Contain in the above invested assets used to support the ceded funds withheld coinsurance and General Account MODCO is as follows ($ in millions):

 

		12/31/2025								12/31/2024
		Amount				%				Amount				%
Bonds		$	4,678.1				49.5	%		$	7,686.4				62.0	%
Mortgage loans			3,597.5				38.1	%			3,528.5				28.5	%
Policy loans			374.7				4.0	%			274.2				2.2	%
Cash, cash equivalents and short-term investments			252.4				2.7	%			14.2				0.1	%
Derivatives			55.2				0.6	%			128.8				1.0	%
Other invested assets			533.4				5.6	%			644.3				5.2	%
All other invested assets			21.5				0.2	%			319.0				2.6	%
Over-funded funds withheld adjustment down to liability			(69.2	)			(0.7	)%			(204.3	)			(1.6	)%
		$	9,443.6				100.0	%		$	12,391.1				100.0	%

 

The following table summarizes the carrying value of Equitable’s bonds and preferred stocks by National Association of Insurance Commissioners (“NAIC”) designation:

 

Statement Value
($ in millions)
		12/31/2025								12/31/2024
NAIC Designation		Amount				%				Amount				%
1			13,125.1				58.8			$	21,925.3				60.1
2			7,998.8				35.9				13,049.2				35.7
3			381.6				1.8				656.1				1.8
4			611.2				2.7				661.9				1.8
5			185.3				0.8				187.2				0.5
6			5.3				0.0				19.6				0.1
Total		$	22,307.3				100.0	%		$	36,499.3				100.0	%

 

Preferred stock is valued 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

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

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.

 

On December 26, 2025, the Company re-issued the $400 million and $150 million of floating rate notes to EFS. The notes has an interest rate of one-month SOFR plus 0.2% and these notes will mature on September 25, 2026.

 

On December 26, 2025, the Company completed the issuance of $200 million in floating rate notes to EFS. These notes will accrue interest on the outstanding principal during each applicable interest period at an annual rate equal to the specified Interest Rate. The notes will mature on September 25, 2026.

 

On June 2021, the Company purchased a $1.0 billion 10-year term loan from Holdings. The loan has an interest rate of 3.23% and matures in June 2031.

 

On April 29, 2015, Equitable purchased a $300.0 million note issued by EIMG. The note paid interest 2.43% quarterly and matured on April 28, 2020. On April 28, 2020, the $300.0 million note was re-issued and pays interest quarterly at an annual interest rate of 4.33% and matures on April 28, 2025.

 

On November 4, 2019, the Company purchased a $900 million note from Holdings. The loan has an interest rate annually of one month LIBOR plus 1.33% and matures on November 4, 2024. The loan was reissued on November 4, 2024, with an interest rate of one-month CME Term SOFR plus 1.25% and matures on November 4, 2029. In December 4, 2025, $500 million of the loan was sold to EFLOA. As of December 31, 2025, the amount outstanding on the note from Holdings is $400 million.

 

Mortgage backed and asset 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 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. The retrospective adjustment method is predominately used for all securities except issues in default; the prospective adjustment method was used for issues in default and issues that have a variable interest rate.

 

At December 31, 2025 and 2024, the Company recorded $12,402.2 million and $12,489.0 million, respectively, of mortgage loans. Mortgage loans consist of $976.0 million commercial and $264.2 million agricultural mortgage loans. Equitable’s investment policy with regard to the origination of new General Account mortgage loans involves a review of the economics of the property being financed, the loan to value ratio, adherence to guidelines that provide for diversification of Equitable’s mortgage portfolio by property type and location and a review of prevailing industry lending practices.

 

The Company invests in commercial and agricultural mortgage loans and privately negotiated fixed maturities. Under certain circumstances, modifications are granted to these contracts. Each modification is evaluated as to whether a troubled debt restructuring (“TDR”) has occurred. A modification is a TDR when the borrower is in financial difficulty and the creditor makes concessions. Generally, the types of concessions may include reducing the face amount or maturity amount of the debt as originally stated, reducing the contractual interest rate, extending the maturity date at an interest rate lower than current market interest rates and/or reducing accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific credit allowance recorded in connection with the TDR. A credit allowance may have been recorded prior to the period when the loan is modified in a TDR. Accordingly, the carrying value (net of the allowance) before and after modification through a TDR may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.

 

Real estate partnerships are reported principally on the equity method of accounting. The results of real estate joint ventures are adjusted for depreciation, write-downs and valuation allowances. As of December 31, 2025 and 2024, Equitable owned $653.4 million and $639.3 million, respectively, of joint venture real estate, an increase of $14.1 million.

 

Equity interests and other consists of affiliated LLC’s, mezzanine, venture capital and other limited partnership interests, alternative limited partnerships, common stock, mortgage loans and other equity securities. Alternative funds utilize trading

 

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strategies that may be leveraged, and attempt to protect against market risk through a variety of methods, including short sales, financial futures, options and other derivative instruments. Additionally, Equitable has a surplus position in its Separate Accounts, of which a substantial portion is invested in equity-based funds. Returns on equity investments can be very volatile and investment results for any period are not representative of any other period. With the persistence of high price volatility, Equitable believes that publicly-traded common stocks should be actively managed to control risks and generate investment returns. As of December 31, 2025, Equitable had $2,819.8 million of Equity interests and other, a increase of $29.6 million from year end 2024 driven by market appreciation.

 

Securities Lending Program

 

Beginning in 2023, The Company has entered 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. As of December 31, 2025 and 2024, the Company reported $129.3 million and $57.2 million, respectively, of cash collateral received.

 

Derivative Instruments

 

The Company uses derivatives as part of its overall asset/liability risk management primarily to reduce exposures to equity market and interest rate risks. Derivative hedging strategies are designed to reduce these risks from an economic perspective and are all executed within the framework of a “Derivative Use Plan” approved by the NYDFS. Derivatives are generally not accounted for using hedge accounting, with the exception of Treasury Inflation-Protected Securities (“TIPS”), which is discussed further below. Operation of these hedging programs is based on models involving numerous estimates and assumptions, including, among others, mortality, lapse, surrender and withdrawal rates, election rates, fund performance, market volatility and interest rates. A wide range of derivative contracts are used in these hedging programs, including exchange traded equity, currency and interest rate futures contracts, total return and/or other equity swaps, interest rate swap and floor contracts, bond and bond-index total return swaps, swaptions, variance swaps and equity options, credit and foreign exchange derivatives,as well as bond and repo transactions to support the hedging. The derivative contracts are collectively managed in an effort to reduce the economic impact of unfavorable changes in guaranteed benefits’ exposures attributable to movements in capital markets. In addition, as part of its hedging strategy, the Company targets an asset level for all variable annuity products at or above a CTE98 level under most economic scenarios (CTE is a statistical measure of tail risk which quantifies the total asset requirement to sustain a loss if an event outside a given probability level has occurred. CTE98 denotes the financial resources a company would need to cover the average of the worst 2% of scenarios.)

 

The Company has issued and continues to offer variable annuity products with GMxB features. The risk associated with the GMDB feature is that under-performance of the financial markets could result in GMDB benefits, in the event of death, being higher than what accumulated policyholders’ account balances would support. The risk associated with the GMIB feature is that under-performance of the financial markets could result in the present value of GMIB, in the event of annuitization, being higher than what accumulated policyholders’ account balances would support, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. The risk associated with products that have a GMxB derivative features liability is that under-performance of the financial markets could result in the GMxB derivative features’ benefits being higher than what accumulated policyholders’account balances would support.

 

For GMxB features, the Company retains certain risks including basis, credit spread and some volatility risk and risk associated with actual experience versus expected actuarial assumptions for mortality, lapse and surrender, withdrawal and policyholder election rates, among other things. The derivative contracts are managed to correlate with changes in the value of the GMxB features that result from financial markets movements. A portion of exposure to realized equity volatility is hedged using equity options and variance swaps and a portion of exposure to credit risk is hedged using total return swaps on fixed income indices. Additionally, the Company is party to total return swaps for which the reference U.S. Treasury securities are contemporaneously purchased from the market and sold to the swap counterparty. As these transactions result in a transfer of control of the U.S. Treasury securities to the swap counterparty, the Company de-recognizes these securities with consequent gain or loss from the sale. The Company has also purchased reinsurance contracts to mitigate the risks associated with GMDB features and the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts issued by the Company. The Company has in place an economic hedge program using interest rate swaps and U.S. Treasury futures to partially protect the overall profitability of future variable annuity sales against declining interest rates.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

The Company hedges crediting rates in the SCS variable annuity, SIO in the EQUI-VEST variable annuity series, MSO in the variable life insurance products and IUL insurance products. These products permit the contract owner to participate in the performance of an index, ETFs or commodity price movement up to a cap for a set period of time. They also contain a protection feature, in which the Company will absorb, up to a certain percentage, the loss of value in an index, ETF or commodity price, which varies by product segment. Effective 1/1/2017, with the approval of the NYDFS, the company moved its SCS derivative-hedges from the General Account to the Separate Account.

 

In order to support the returns associated with these features, the Company enters into derivative contracts whose payouts, in combination with fixed income investments, emulate those of the index, ETF or commodity price, subject to caps and buffers.

 

The Company’s General Account seed money investments in retail mutual funds exposes us to market risk, including equity market risk which is partially hedged through equity-index futures contracts to minimize such risk.

 

The Company purchased CDS to mitigate its exposure to a reference entity through cash positions. These positions do not replicate credit spreads. The Company purchased 30-year Treasury Inflation Protected Securities (“TIPS”) and other sovereign bonds, both inflation linked and non-inflation linked, as General Account investments and enters into asset or cross-currency basis swaps, to result in payment of the given bond’s coupons and principal at maturity in the bond’s specified currency to the swap counterparty in return for fixed dollar amounts. These swaps, when considered in combination with the bonds, together result in a net position that is intended to replicate a dollar-denominated fixed-coupon cash bond with a yield higher than a term-equivalent U.S Treasury bond.

 

The Company purchases private placement debt securities and issues funding agreements in the FABN program in currencies other than its functional US dollar currency. The Company enters into cross currency swaps with external counterparties to hedge the exposure of the foreign currency denominated cash flows of these instruments. The foreign currency received from or paid to the cross currency swap counterparty is exchanged for fixed US dollar amounts with improved net investment yields or net product costs over equivalent US dollar denominated instruments issued at that time. The transactions are accounted for as cash flow hedges when they are designated in hedging relationships and qualify for hedge accounting. The first cross currency swap hedges were designated and applied hedge accounting during the quarter ended June 30, 2021.

 

The Company has no derivatives with financing premiums.

 

The Company generally has executed a Credit Support Annex (“CSA”) under the International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) it maintains with each of its over-the-counter (“OTC”) derivative counterparties that requires both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities, U.S. government and government agency securities and investment grade corporate bonds. The Company nets the fair value of all derivative financial instruments with counterparties for which an ISDA Master Agreement and related CSA have been executed. At December 31, 2025 and 2024, respectively, the Company held $8.4 billion and $13.6 billion in cash and securities collateral delivered by trade counterparties, representing the fair value of the related derivative agreements. The unrestricted cash collateral is reported in Cash and cash equivalents, and the obligation to return it is reported in Amounts withheld or retained by company or trustee in the balance sheets. The Company posted collateral of $143.9 million and $132.3 million at December 31, 2025 and 2024 in the normal operation of its collateral arrangements.

 

The Company further controls and minimizes its counterparty exposure through a credit appraisal and approval process. See footnote number 8 in Equitable’s statutory annual statement for additional information on derivatives.

 

Derivatives Under SSAP No. 108 — Derivative Hedging Variable Annuity Guarantees.

 

The Company has issued and continues to offer variable annuity products with GMxB features. The risk associated with the GMDB feature is that underperformance of the financial markets could result in GMDB benefits, in the event of death, being higher than what accumulated policyholders’ account balances would support. The risk associated with the GMIB feature is that under-performance of the financial markets could result in the present value of GMIB, in the event of annuitization, being higher than what accumulated policyholders’ account balances would support, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. The risk associated with products that have a GMxB derivative features liability is that under-performance of the financial markets could result in the GMxB derivative features’ benefits being higher than what accumulated policyholders’ account balances would support. For GMxB features, the Company retains certain risks including basis, credit spread and some volatility risk and risk associated with actual experience versus expected actuarial assumptions for mortality, lapse and surrender, withdrawal and policyholder election rates, among other things. Derivative contracts are managed to correlate with changes in the present value of the GMxB features that result from financial markets movements.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Under our VM-21 compliant Clearly Defined Hedging Strategy (“CDHS”), 100% of the interest rate risk of the GMXB features are hedged via a portfolio of duration-matched treasury futures, interest rate swaps, total return swaps on treasuries, and general account assets. Our hedging strategy is unchanged from the prior reporting period, and the total return on the derivative portfolio has been highly effective in covering the target rho of the hedged obligation. The hedge effectiveness is measured in accordance with the requirements outlined in SSAP 108 and assesses the change in fair value of hedge target due to interest rate fluctuation against the change in value of the portfolio of designated hedge derivatives due to rates.

 

Deferred Tax Asset (“DTA”)

 

Equitable recorded $275.8 million and $111.6 million of net admitted deferred tax assets in 2025 and 2024, respectively. The decrease is primarily attributable to a determined lower amount of tax vs. book reserve differences that are expected to reverse in the next three years due to the impacts of the 2023 Reinsurance Treaty, further impacted by the 15% of surplus “haircut” in 2025 and 2024.

 

The net admitted DTA is comprised of $2,191.8 million and $1,698.4 million of gross deferred tax assets (net of DTLs), partially offset by $1,146.7 million of non-admitted deferred tax assets, a $769.3 million STAT valuation allowance adjustment in 2025, and $1,586.8 million of non-admitted deferred tax assets as of December 31, 2024. The large increase in gross DTA and corresponding decrease in non-admitted DTA as of December 31, 2025, is primarily driven by higher net operating loss (“NOL”) carryforwards attributable to the initial ceded commission loss on the Reinsurance Treaty with EFLOA. The increase in gross DTA of $508.9 million was partially offset by a decrease in non-admitted DTA of $420.7 million, reflecting the 15% of surplus haircut applied to a lower surplus base.

 

The December 31, 2025 gross DTA of $2,191.8 million (gross deferred tax assets of $2,469.0 million net of gross deferred tax liabilities of $277.2 million) and the December 31, 2024 gross DTA of $1,698.4 million (gross deferred tax assets of $2,051.4 million net of gross deferred tax liabilities of $353.0 million) are both primarily comprised of NOL tax credit carryforwards, book/tax reserve differences, and proxy DAC, partially offset by compensation accruals. Additionally, investment-related DTA (primarily unrealized losses and permanent impairments) is more than offset by investment-related DTL (primarily unrealized gains). Although DAC is not a statutory accounting concept, the IRS requires the calculation of a proxy DAC amount for tax reporting purposes.

 

In 2025 and 2024, the Company reclassified certain deferred tax assets that had been utilized on its Tax return into the current tax liability account. This adjustment results in a reduction to the non-admitted deferred tax asset, with an ending amount of $1,146.7 million and $1,586.8 million as of December 31, 2025 and 2024, respectively.

 

The Inflation reduction Act was enacted on August 16, 2022 and included a new corporate alternative minimum tax (“CAMT”). The Act and CAMT go into effect for tax years beginning after 2022.

 

The Company is included in a consolidated federal income tax return together with its ultimate domestic parent, EQH. EQH. EQH has determined that it is an applicable corporation for CAMT in 2025. EQH has determined that it does not expect to be liable for CAMT in 2025.

 

Corporate Owned Life Insurance (“COLI”)

 

Equitable owns COLI policies issued by an affiliate Equitable Financial Life and Annuity Company (“EFLA”), which are in turn 100% ceded to a third party reinsurer. In 2025 and 2024, the value recorded was $1,116.8 million and $969.3 million, respectively. The increase is primarily driven by market appreciation on these variable life policies.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Liquidity refers to our ability to generate adequate amounts of cash from our operating, investment and financing activities to meet our cash requirements with a prudent margin of safety. Capital refers to our long-term financial resources available to support business operations and future growth. Our ability to generate and maintain sufficient liquidity and capital is dependent on the profitability of our businesses, timing of cash flows related to our investments and products, our ability to access the capital markets, general economic conditions and the alternative sources of liquidity and capital described herein.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Sources and Uses of Liquidity of Equitable Financial

 

Equitable Financial’s principal sources of cash flows are premiums and charges on policies and contracts, investment income, repayments of principal and proceeds from sales of fixed maturities and other General Account Investment Assets and capital contributions from EFS. Liquidity management is focused around a centralized funds management process. This centralized process includes the monitoring and control of cash flow associated with policyholder receipts and disbursements and General Account portfolio principal, interest and investment activity. Funds are managed through a banking system designed to reduce float and maximize funds availability.

 

In addition to gathering and analyzing information on funding needs, the Company has a centralized process for both investing short-term cash and borrowing funds to meet cash needs. In general, the short-term investment positions have a maturity profile of 1-7 days with considerable flexibility as to availability.

 

Equitable Financial’s liquidity requirements principally relate to the payment of benefits under its various life insurance products, cash payments relating to policy surrenders, withdrawals and loans and payment of its operating expenses, including payments to affiliates in connection with service agreements. Management believes there is sufficient liquidity in the form of cash and cash equivalent, and its bond portfolio together with cash flows from operations and scheduled maturities of fixed maturities to satisfy Equitable Financial’s liquidity needs. In addition, the Company has the capacity to receive capital contributions from its parent EFS.

 

Equitable Financial is a member of the FHLB, which provides access to collateralized borrowings and other FHLB products. See Note 10 of the Notes to Financial Statements for further description of our FHLB program.

 

Under the FABN program, Equitable may issue funding agreements in U.S. dollars or other foreign currencies. See Note 10 of the Notes to Financial Statements for further description of our FABN program.

 

Under the FABCP program, Equitable may issue funding agreements in U.S. dollars to the SPLLC. See Note 10 of the Notes to Financial Statements for further description of our FABCP program.

 

Capital Management Policies

 

Our Board of Directors and senior management are directly involved in the governance of our capital management process, including proposed changes to our capital plan, capital targets and capital policies.

 

Capital Position and Structure

 

We manage our capital position to maintain financial strength and credit ratings that facilitate the distribution of our products and provide our desired level of access to the bank and public financing markets.

 

Cash Flow Analysis

 

We believe that cash flows from our operations are adequate to satisfy current liquidity requirements. The continued adequacy of our liquidity will depend upon factors such as future market conditions, changes in interest rate levels, policyholder perceptions of our financial strength, policyholder behavior, the effectiveness of our hedging programs, catastrophic events and the relative safety and attractiveness of competing products. Changes in any of these factors may result in reduced or increased cash outflows. Our cash flows from investment activities result from repayments of principal, proceeds from maturities and sales of invested assets and investment income, net of amounts reinvested. The primary liquidity risks with respect to these cash flows are the risk of default by debtors or bond insurers, commitments to invest and market volatility. We closely manage these risks through our asset/liability management process and regular monitoring of our liquidity position.

 

		Years Ended December 31,
		2025				2024				2023
		(in millions)
Cash and cash equivalents, beginning of year		$	348.2			$	1,978.3			$	393.0
Net cash provided by (used in) operations			(1,613.8	)			(540.3	)			(1,277.1	)
Net cash provided by (used in) investing activities			3,992.0				(1,541.6	)			4,812.6
Net cash provided by (used in) financing activities and miscellaneous sources			(756.7	)			451.8				(1,950.2	)
Net increase (decrease)			1,621.5				(1,630.1	)			1,585.3
Cash and cash equivalents, end of year		$	1,969.7			$	348.2			$	1,978.3

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

 

Cash and cash equivalents at December 31, 2025 were $1,969.7 million, an increase of $1,621.5 million from $348.2 million at December 31, 2024.

 

Cash outflows from operations were $1,613.8 million in 2025 as compared to cash outflows of $540.3 million in 2024. Cash flows from operating activities include such sources as premiums, investment income, Separate accounts fee income and other income offset by such uses as life insurance benefit payments, compensation reimbursements and other cash expenditures.

 

Net cash provided (used) in investing activities was $3,992.0 million in 2025, an increase of $5,533.6 million from cash used of $(1,541.6) million in 2024, primarily due to higher proceeds from sales of fixed maturities in 2025, partially offset by lower acquisitions of fixed maturities.

 

Net cash provided (used) in financing activities and miscellaneous sources was $(756.7) million in 2025 as compared to net cash from financing activities and miscellaneous sources of $451.8 million in 2024. The variance in financing and miscellaneous sources of $(1,208.5) million was due primarily due to decreases in Other cash applied, partially offset by an increase in net deposits on deposits-type contracts (funding agreements).

 

Years Ended December 31, 2024 Compared to the Year Ended December 31, 2023

 

Cash and cash equivalents at December 31, 2024 were $348.2.1 million, a decrease of $1,630.1 million from $1,978.3 million at December 31, 2023.

 

Cash outflows from operations were $540.3 million in 2024 as compared to cash outflows of $1,277.1 million in 2023. Cash flows from operating activities include such sources as premiums, investment income Separate accounts fee income and other income offset by such uses as life insurance benefit payments, compensation reimbursements and other cash expenditures.

 

Net cash used in investing activities was $1,541.6 million in 2024, a decrease of $6,354.2 million from cash provided of $4,812.6 million in 2023 primarily due to higher proceeds from sales of fixed maturities in 2023, partially offset by lower acquisitions of fixed maturities.

 

Net cash provided (used) in financing activities and miscellaneous sources was $$451.8 million in 2024 as compared to net cash from financing activities and miscellaneous sources of $(1,950.2) million in 2023. The variance in financing and miscellaneous sources of $2,402.0 million was due primarily to higher cash applied in 2024 and dividends to EQH in 2023, partially offset by higher net withdrawals on deposit-type contracts (funding agreements).

 

Equitable Financial is subject to the regulatory capital requirements of New York, which are designed to monitor capital adequacy. The level of an insurer’s required capital is impacted by many factors including, but not limited to, business mix, product design, sales volume, invested assets, liabilities, reserves and movements in the capital markets, including interest rates and equity markets. As of December 31, 2025, the total adjusted capital of Equitable Financial was in excess of New York’s regulatory capital requirements.

 

RBC requirements are used as minimum capital requirements by the NAIC and the state insurance departments to evaluate the capital condition of regulated insurance companies. RBC is based on a formula calculated by applying factors to various asset, premium, claim, expense and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk, market risk and business risk and is calculated on a quarterly basis and made public on an annual basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. At the date of most recent annual statutory financial statement filed with insurance regulators, our total adjusted capital subject to these requirements was in excess of each of those RBC levels.

 

Equitable Financial is restricted as to the amounts it may pay as dividends to EFS. Under New York Insurance Law, a domestic life insurer may not, without prior approval of the Director of Insurance, pay a dividend to its shareholder exceeding an amount calculated based on a statutory formula. Based on this formula Equitable Financial had no Ordinary Dividend capacity in 2025 and will have no Ordinary Dividend capacity in 2026.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Captive Reinsurance

 

We use a captive reinsurance company to more effectively manage our reserves and capital on an economic basis and to enable the aggregation and transfer of risks. Our captive reinsurance company assumes business from affiliates only and is closed to new business. Our captive reinsurance company is a wholly-owned subsidiary located in the United States. In addition to state insurance regulation, our captive reinsurance company is subject to internal policies governing its activities. We continue to analyze the use of our existing captive reinsurance structure, as well as additional third-party reinsurance arrangements.

 

Description of Certain Indebtedness

 

EFLIC had no debt outstanding as of December 31, 2025 or 2024.

 

Ratings

 

Financial strength ratings (which are sometimes referred to as “claims-paying” ratings) and credit ratings are important factors affecting public confidence in an insurer and its competitive position in marketing products. Our credit ratings are also important for our ability to raise capital through the issuance of debt and for the cost of such financing..

 

Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under an insurance policy.

 

A.M. Best

S&P

Moody’s

Last review date

Feb ’25

Mar ’25

May ‘25

Financial Strength Ratings:

Equitable Financial Life Insurance Company

A

A+

A1

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our businesses are subject to financial, market, political and economic risks, as well as to risks inherent in our business operations. The discussion that follows provides additional information on market risks arising from our insurance asset/liability management and investment management activities. Such risks are evaluated and managed by each business on a decentralized basis. Primary market risk exposure results from interest rate fluctuations, equity price movements and changes in credit quality.

 

Investments with Interest Rate Risk — Fair Value

 

Assets with interest rate risk include AFS and trading fixed maturities and mortgage loans that make up 82.2% and 85.4% of total cash and invested assets as of December 31, 2025 and 2024, respectively. As part of our asset/liability management, quantitative analyses are used to model the impact various changes in interest rates have on assets with interest rate risk. The table that follows shows the impact an immediate one percent increase/decrease in interest rates as of December 31, 2025 and 2024 would have on the fair value of fixed maturities and mortgage loans:

 

Interest Rate Risk Exposure

 

		December 31, 2025												December 31, 2024
		Fair Value				Impact of +1% Change				Impact of -1% Change				Fair Value				Impact of +1% Change				Impact of -1% Change
		(in millions)
Fixed Income Investments:
AFS securities:
Fixed rate		$	17,655			$	(1,154	)		$	1,315			$	26,392			$	(1,932	)		$	2,238
Floating rate		$	2,222			$	(2	)		$	3			$	5,534			$	(8	)		$	8
Mortgage loans		$	11,661			$	(403	)		$	420			$	11,246			$	(403	)		$	423

 

A one percent increase/decrease in interest rates is a hypothetical rate scenario used to demonstrate potential risk; it does not represent management’s view of future market changes. While these fair value measurements provide a representation of interest rate sensitivity of fixed maturities and mortgage loans, they are based on various portfolio exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to management’s assessment of changing market conditions and available investment opportunities.

 

Investments with Equity Price Risk — Fair Value

 

The investment portfolios also have direct holdings of public and private equity securities. The following table shows the potential exposure from those equity security investments, measured in terms of fair value, to an immediate 10% increase/decrease in equity prices from those prevailing as of December 31, 2025 and 2024:

 

Equity Price Risk Exposure

 

		December 31, 2025												December 31, 2024
		Fair Value				Impact of +10% Equity Price Change				Impact of -10% Equity Price Change				Fair Value				Impact of +10% Equity Price Change				Impact of -10% Equity Price Change
		(in millions)
Equity Investments		$	325			$	32			$	(32	)		$	336			$	34			$	(34	)

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent management’s view of future market changes. The fair value measurements shown are based on the equity securities portfolio exposures at a particular point in time and these exposures will change as a result of ongoing portfolio activities in response to management’s assessment of changing market conditions and available investment opportunities.

 

Liabilities with Interest Rate and Equity Price Risk

 

As of December 31, 2025, the aggregate carrying values of insurance contracts with interest rate risk was $2.6 billion. The impact of a relative 1% decrease in interest rates would be an increase in the carrying value of these liabilities of $4 million. The impact of a relative 1% decrease in equity returns is a $1 million increase in reserve. While these measurements provide a representation of the interest rate and equity price sensitivity of insurance liabilities, they are based on the composition of such liabilities at a particular point in time and may not be representative of future results.

 

Asset/liability management is integrated into many aspects of operations, including investment decisions, product development and determination of crediting rates. As part of our risk management process, numerous economic scenarios are modeled, including cash flow testing required for insurance regulatory purposes, to determine if existing assets would be sufficient to meet projected liability cash flows. Key variables include policyholder behavior, such as persistency, under differing crediting rate strategies.

 

Derivatives and Interest Rate and Equity Risks — Fair Value

 

We primarily use derivative contracts for asset/liability risk management, to mitigate our exposure to equity market decline and interest rate risks and for hedging individual securities. In addition, we periodically enter into forward, exchange-traded futures and interest rate swap, swaptions and floor contracts to reduce the economic impact of movements in the equity and fixed income markets, including the program to hedge certain risks associated with the GMxB features. As more fully described in Note 2 and Note 6 of the Notes to the Statutory Financial Statements, various traditional derivative financial instruments are used to achieve these objectives. To minimize credit risk exposure associated with its derivative transactions, each counterparty’s credit is appraised and approved, and risk control limits and monitoring procedures are applied. Credit limits are established and monitored on the basis of potential exposures that take into consideration current market values and estimates of potential future movements in market values given potential fluctuations in market interest rates. To reduce credit exposures in OTC derivative transactions, we enter into master agreements that provide for a netting of financial exposures with the counterparty and allow for collateral arrangements. We further control and minimize counterparty exposure through a credit appraisal and approval process. Under the ISDA Master Agreement, we have executed a CSA with each of our OTC derivative counterparties that require both posting and accepting collateral either in the form of cash or high-quality securities, such as U.S. Treasury securities or those issued by government agencies.

 

Mark to market exposure is a point-in-time measure of the value of a derivative contract in the open market. A positive value indicates existence of credit risk for us because the counterparty would owe money to us if the contract were closed. Alternatively, a negative value indicates we would owe money to the counterparty if the contract were closed. If there is more than one derivative transaction outstanding with a counterparty, a master netting arrangement exists with the counterparty. In that case, the market risk represents the net of the positive and negative exposures with the single counterparty. In management’s view, the net potential exposure is the better measure of credit risk.

 

As of December 31, 2025 and 2024, the net fair values of our derivatives were $476.6 million and $401.1 million, respectively. The net fair values for our derivatives inclusive of separate accounts were $9,407.1 million and $13,375.2 million at December 31, 2025 and 2024, respectively.

 

The tables below show the equity sensitivities of those derivatives, measured in terms of fair value. These exposures will change as a result of ongoing portfolio and risk management activities.

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Derivative Financial Instruments*

 

										Interest Rate Sensitivity
		Notional Amount				Weighted Average Term (Years)				Fair Value After -100 Basis Point Change				Fair Value				Fair Value After +100 Basis Point Change
		(In millions, except for Weighted Average Term)
December 31, 2025
Swaps		$	1,546				11			$	94			$	(11	)		$	(95	)
Futures			5,040				—				(47	)			—				54
Total		$	6,586							$	47			$	(11	)		$	(41	)
December 31, 2024
Swaps		$	1,606				12			$	(242	)		$	(347	)		$	(432	)
Futures			7,815				—				76				—				(51	)
Total		$	9,421							$	(166	)		$	(347	)		$	(483	)

 

										Equity Sensitivity
		Notional Amount				Weighted Average Term (Years)				Fair Value				Fair Value -10% Equity Price Shift
		(In millions, except for Weighted Average Term)
December 31, 2025
Futures		$	10,547				—			$	—			$	57
Swaps			12,150				1				9				964
Options			36,334				2				8,787				7,029
Total		$	59,031							$	8,796			$	8,050
December 31, 2024
Futures		$	9,338				—			$	—			$	34
Swaps			16,047				1				57				1,439
Options			56,755				2				13,197				10,540
Total		$	82,140							$	13,254			$	12,013

*Includes General & Separate Account

 

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APPENDIX: INFORMATION ABOUT EQUITABLE FINANCIAL LIFE INSURANCE COMPANY