Good morning. My name is Mathew and I will be your conference operator today. At this time I would like to welcome everyone to the AXA Equitable Holdings, Inc. Second Quarter Earnings Call and Webcast. [Operator Instructions] Than you. Kevin Molloy, Head of Investor Relations, you may begin your conference.

Thank you. Good morning and welcome to AXA Equitable Holdings’ second-quarter 2018 earnings call. Materials for today's call can be found on our website at ir.axaequitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may material differ from those expressed in or indicated by such forward-looking statements. So I’d like to point out the Safe Harbor language in Slide 2 of our presentation. You can also find our Safe Harbor language in our second quarter 10-Q. Joining me on today's call is Mark Pearson, President and Chief Executive Officer of AXA Equitable Holdings; and Anders Malmstrom, our Chief Financial Officer. Also on the line is John Weisenseel, AllianceBernstein’s Chief Financial Officer. During this call we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website, in our earnings release, slide presentation, and the financial supplement. I would like now to turn the call over to Mark and Anders for their prepared remarks.

Thank you, Kevin, and good morning, everyone. As we discussed on our last earnings call, the second quarter of 2018 was the landmark quarter for the company, during which we completed our initial public offering and began trading on the New York Stock Exchange. In addition, let me remind you of some of the other key milestones we have achieved. In April, we raised $3.8 billion in long-term debt with a weighted average duration of 16.9 years at a 4.52% average coupon. In order to repay internal loans to AXA SA and purchase AXA’s remaining interest in the AllianceBernstein, bringing our ownership of AB to approximately 65%. We also merged our primary captive variable annuity reinsurer into AXA Equitable Life, which positions us well for the upcoming, anticipated NAIC variable annuity reform. Today, I’m also pleased to announce the commencement of our capital management program, which we believe reflects the strength of our balance sheet and the confidence we have in this company to produce sustainable cash flows. The first part of our capital management program is our common stock dividend. We have declared our firsts quarterly cash dividend of $0.13 per share payable on August 30, which gives an annualized yield of approximately 2.4%. Secondly, our Board of Directors has approved a $500 million share repurchase program which we will start to execute in the open market during this, the third quarter of 2018. In order to limit the impact of the program and the liquidity of our public float, big spray that share repurchases will primarily occur from AXA. As a reminder, AXA’s post IPO lockup period ends in early November. The commencement of this capital management program allows us to optimize the capital we hold in our company and delivers on our long-term commitment to return 40%…

Thank you, Mark. And good morning everyone. On Slide 6, I will review our overall results for the second quarter, before providing more details by segment. Non-GAAP operating earnings in the second quarter of 2018 increased 27% year-over-year to $506 million, driven by higher revenues from increased policy charges and fees combined with improved GMxB margins and net investment income. As Mark mentioned, we had two important changes reflected in our capital structure during the second quarter. First, we increased our ownership of AB to approximately 65%. And second, we issued new public debt to complete our initial capital structure. On a per share basis, non-GAAP operating earnings per share was $0.90, also up 27% year-over-year, given our steady share count of 561 million shares outstanding during the quarter. Net income for the quarter was $158 million, down from $608 million in the prior year period, primarily due to favorable one-time items that occurred in the second quarter of 2017. On the year-to-date basis, net income increased 3% to $326 million compared to the first half of 2017. As a reminder, we conduct our annual actuarial assumption review in the third quarter. The difference between operating earnings and net income in the quarter can be explained, primarily by the recurring accounting mismatch of our variable annuity product features of $280 million. For your information, included in this amount is a $24 million cost for our target hedge options. The remaining $256 million are due to the mark-to-market valuation. In addition, we recorded $33 million of separation costs in the period. Total AUM, an important driver of our fee-based business grew 4% year-over-year to approximately $656 billion, driven predominantly by market depreciation. And sequentially, our operating ROE increased to 100 basis points to 14.6%, primarily driven by higher operating earnings in…

Thanks Anders, before breaking for questions I'd like to reiterate this quarter's performance in the context of our long-term financial targets. On Slide 12, we’ve shown a familiar snapshot of our key financial targets. Having completed our IPO during the second quarter I am pleased with our strong results. Our leading positions within select markets, premier multichannel distribution platform and investment expertise position us well to continue to generate earnings growth, maintain financial stability through market cycles and generate attractive returns and strong cash flows for shareholders. We've positioned the company to maintain a strong balance sheet while delivering disciplined financial growth. We are holding ourselves accountable to the level of 5% to 7% compound annual growth in non-GAAP operating earnings through 2020, supported in part by the 30% adjusted operating margin target that AB has publicly reported. And with a target payout ratio of 40% to 60%, this should result in an operating ROE in the mid-teens by 2020. We expect to maintain strong capitalization of CTE98 for the variable annuity business and 350% to 400% RBC with the other insurance businesses. With that we will open the call to Q&A.

Thank you. [Operator Instructions] Our first question comes from the line of Ryan Krueger with KBW. Your line is open.

Hi thanks good morning. You found uptick in the ROA and earnings power in Individual Retirement in the quarter, can you just talk about it, if you view the second quarter has a good run rate for that business going forward?

Yes. So this is Anders speaking, look, I think overall – absolutely I think it was it was a good quarter for the Individual Retirement business, I think we had good flows even though not as last year but overall I think it was very good quarter.

Hi, I it’s Mark, I think as well we saw an uptick in the sales into the quarter two relative to quarter one, so that's something we’ve been looking for after all the DOL noise has died down so that was a good trend.

Thanks. And then it sounds like you're comfortable with the NAIC VA reform, but any updates on potential impacts from that? And I guess, also do you expect a shift from reserves to statutory capital when this comes to? And will that impact your dividend capacity going forward?

This is again Anders speaking. Look, I think, overall, as we said, we are supportive of the VA reform I think it goes in the right direction. It's more economic than it is today. So I think that's important. The reform has been proved of that now it's important to the committees go through the details they are going to do that over the next couple of months. I think from our perspective, we are comfortable with the outcome of the reform. We don't think that it has a material impact on our dividend capacity going forward. But as I said, I think we have to go through the details now once the committee finalizes the details.

Okay, thank you.

Our next question comes from the line of Erik Bass with Autonomous Research, your line is open.

Hi thank you. First just had a clarification question on the buyback and then – while the authorization goes through March, should we really view this as 2018 capital return? So the 40% to 60% of expected capital return for 2019 would be on top of this, even if the buyback does stretch in to the first quarter?

Yes. Erik, that's correct. That would be a good summary of the position.

Okay, thank you. And then on protection, do you have any sense of how long you'd expected to take rebuild positive margin and exit loss recognition? And until that happens I realized there was going to be some volatility, but you have a sense of what the normal level of quarterly or annual earnings that we should expect?

Yes, look I think it's going to take us is another couple of quarters to get out of loss recognition testing. There’s basically two things that really helped us on that front. One is obviously, strong new sales that have a good margin that will help us and to get out of loss recognition testing. The other thing is the interest rates increase, let's say, more than what you expect in your assumptions. And from that perspective, as we told you, we're going to expect that we're going to stay in couple of quarters in a loss recognition testing. But to your second question about the underlying trends, I mean, if you take out the duck amortization that you see in this business, it's actually take that out, overall, you see a positive trend in the business and it's really encouraging that we're going to see strong earnings in the out years.

Thank you. And just one last one on protection, it's a little bit surprised to see the drop in net investment income quarter-over-quarter because I think that was a business that you have highlighted as one of the bigger beneficiaries from the general account restructuring. Is there a noise in this quarter? Or I guess, how should we think about the investment income allocation to the businesses?

Yes, I think good question. When you look at the, how we manage the investments and portfolio overall, we have the central investment portfolio and it really helps us on the ALM. That's how we manage ALM and then we allocate investment income to the segments. And you see some small noise. If you actually look at the half year results, you don't see that. It's really kind of a noise, as you say. But overall I think we had a strong improvement on the investment income overall from this program. I think as Mark mentioned before, its $48 million already realized in our results. So the segments get the benefit, but you see some small noise there.

Okay. Thank you.

Our next question comes from the line of Andrew Kligerman with Credit Suisse, your line is open.

Good morning. Quick technical question. On the variable annuity product features, which get more below the line, I believe the guidance on overall variable annuity hedging, I guess, about $700 million a year, but now you're also including some effects from the SCS product. So could you break out the, maybe your targeted or guided effects from the SCS product into hedging going forward below the operating line?

So, I think, Andrew, good morning. I think, you're absolutely, correct. I think if you look at the overall impact coming from the market, the majority is related to mark-to-market. I think I gave you the breakdown overall the impact operating to net income is $280 million out of $256 million is really mark-to-market, the rest is coming from the static hedge cost. We don't break it out what is coming from GMxB and what is coming from SCS majority is GMxB. Obviously, I think to give you the guidance, we gave you guidance in a normal year but I think, as you know, it's very sensitive to equity markets, so it can be higher, can be lower, average when you follow the plan, which, I think, think, assumes 6% equity growth that the guidance is still valid.

Is 700% is still valid going forward?

Absolutely.

Okay. Great. And then shifting over to Group Retirements, really solid in terms of sales and flows and renewals, but it seems modestly down in each – flattish in each of these categories. What are your strategies going forward and expectations in terms of growth in this sector?

Hi, this is Mark, maybe I will take that Andrews. First, as you know, we've got a pretty good position there, particularly in the 403(b) business. So the growth strategies are really penetrating further those 8,700 school districts we have. Getting productivity and the ones where we are active. We've seen a nice uptick in our BG advisers. These are dedicated advisers just over 1,000. So growing the adviser force is key to that growth strategy, as well as improving the existing productivity. And we've started to do some work both direct and with third-party distributors as well. So they are the main drivers behind the growth strategies in the Group Retirement business.

And do you think you can get those numbers moving up year-over-year going forward?

Yes. That is part of the plan. As I say, we are in a very solid position there. It's an advised base model, works if you like. And it's really key to that organic strategy leave. We put to the market of looking to the 3% to 4% growth on [indiscernible].

And just lastly any quick color on Brian Winikoff's departure?

Brian has been commuting from Boston, and he home yet to New York and spoke to me about wanted to get to the closer to the family. So that's really decision Brian came to. And we – as I said earlier, we want to thank him for what he has done. He has added a great deal to the business. And as I said in my earlier comments, really delighted to be welcoming Nick into the team. And Nick, as some of you might know, have spent 12 years to 15 years in the business. So he is going to bring a lot of energy. Brian will be staying with us through the end of the year, and it will be a nice smooth transition for when Nick arrives in quarter one of 2019

Great, thanks Mark.

Thanks.

Our next question comes from the line of Suneet Kamath with Citi Bank, your line is open.

Thanks. Just on the GMxB portion of the $200 million number I had thought that may be FASB was considering some accounting changes that might make the GMIB a little bit more apples-to-apples with some of the other VA writers out there, which would potentially eliminate this asymmetry. Is that something that you're hearing as well and any thoughts on that?

Yes. This is Anders. Absolutely, its moving towards fair value. I think if I'm right, it will be in 2022 or 2021. So it's coming pretty soon. I think from my personal point of view, I think, that goes in the right direction. I think it's the right way to look at it so it will be much more fair value and you're going to see this gap is going to be much, much closer if not going to go away between operating and net – from that particular item.

Right, which is the majority of, I think what you said [indiscernible]?

Absolutely. And I think it goes in the right direction, absolutely. And I think it's economic and it's how we look at the business.

Got it. And then sort of related to VA also, I wanted to try to go back to the present value cash flow analysis that you guys provided at the time of the IPO. Our understanding is that includes all of the VA that's in individual and most of the VA in group, which I think is, a little bit different than how other companies sure that. Is it possible to get a sense of what that would look like if you took of the Group Retirement VAs?

Look, I think, you're absolutely, correct. When we talk about VAs, we take all the VAs to once Individual Retirement and once in Group Retirement. We don't separate them, but if you want to from a cash flow, you can go to account values and make your own assessment where the cash flows are coming from. But obviously the capital requirement is more on the Individual Retirement side than on the Group Retirement side.

In other words, so is the risk profile is more skewed to the Individual Retirement?

Absolutely.

And may be just last one if I could. On Group Retirement similar to Ryan's question, it seems like the ROCE there I think, 25.4% was generally higher than what we're seeing from other companies I know everyone has a different business mix. But any thoughts to the sustainability of that ROCE?

Look I think, I mean, you're going to see some swings quarter-over-quarter, as you saw in our case. But I would say, we will be steadily above the 20% range from an ROCE, which is our target. We don't expect to go to 30%, obviously. But I think you're going to see a solid ROCE coming from Group Retirement.

Got it. Thanks.

[Operator Instructions] Our next question comes from the line of Alex Scott with Goldman Sachs, your line is open.

I guess the first question was on the follow-up on NAIC capital reform, I guess one of your peers mentioned they would adopt it early. Or what's your view on that and potentially adopting it early? And I know you gave the sensitivity of 100 point impact from tax reform on the RBC, but do you have any sense of how this new capital framework would impact the RBC?

Yes. To your question about the early adopting. I think it's early to make a final determination, if you want an early adopt or not. As we said before, the framework is now approved. The committees go through the details, and we now have to implement these details once they have fine. And then we're going to make a decision if you want to early adopt or not. I think the important point on our side is that we're not constrained right now through the standard not to be able to pay dividends. We can pay dividends, and we actually – we just a state out of the operating entities. So I don't think early adoption would actually changed the way we think about that cash upstream on a going forward basis. So I'm really – I think I want to go to the details once you get the details we have to decide that whether the adoption make sense or not. To your second question, yes, tax reform, impact of about 13% of our RBC which translates into 100 points. We're not yet there to give a number on the NAIC, but we expect that has an impact on RBC, but there will be reset, I think, in the whole industry of the NAIC reform gets implemented.

And then may be a one follow-up question just on the corporate segment. I know there is sort of lot going on between wealth management there, I think some of the variable annuity reinsurance piece that's in there and there are moving pieces in the quarter’s[ph] interest expense and so forth. Could you help us think about it like on a go-forward basis, what's the reasonable expectation for the corporate loss? And how much volatility around that should we expect?

Look, I think of that all the restructuring has been done, now you know the biggest change in corporate and other was really the debt. And I think we have now issued the debt. We have the interest cost, we know them. And as you mentioned all the other businesses in there that have some volatility. I think we're pretty much on run rate from a going forward basis, I can expect maybe $10 million plus or minus of that volatility there, and that should give you some guidance.

Okay, thank you.

There are no further questions at this time. I'll turn the call back over to Kevin Molloy, Head of Investor Relations.

Okay. Thank you. Thanks everyone for joining us this morning. As always, if you have any follow-up questions, please don't hesitate to give us a call or e-mail. You can reach us at us at 212-314-2476 or through email at ir@axa-equitable.com. Thanks and have a great day.

This concludes today's conference call. You may now disconnect.