What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-10 compared with 2022-02-11 · 264 added, 227 removed, 651 unchanged (43% of the section changed)

1 unchanged sentence

Impact of COVID-19

General Economic Conditions

COVID-19 has significantly impacted the global economy since the first quarter of 2020, and its impact may persist for months to come.

While most businesses have re-opened, vaccinations are progressing in most portions of the world and leading economic indicators, other than heightened inflation, have improved significantly, the overall extent and duration of COVID-19's impact on businesses and economic activity generally remains unclear.

Various countries around the world, and most areas in the U.S., have continued to experience surges in the rates of COVID-19 infections and hospitalizations, which have resulted from the emergence and spread of virus variants (particularly the "delta variant" during the second half of 2021 and the "omicron variant" more recently), greatly increased social interactions, including at colleges and universities and social venues, after re-opening of economies, and decreased usage of mitigation techniques, such as mask-wearing and social distancing, in combination with large portions of the population remaining unvaccinated.

These ongoing circumstances surrounding the virus may adversely affect consumer sentiment and the durability of business re-openings, and they also may slow economic recovery and possibly cause market volatility and even a new downturn.

At the onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., the U.K., Hong Kong, Shanghai, Singapore and Taiwan.

We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which generally remained in place throughout 2020 and 2021 to ensure operating continuity for all critical functions.

We also instituted a notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive.

As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and advise of key developments.

Additionally, we continue to monitor communications from the World Health Organization and the U.S.

Centers for Disease Control and Prevention, and in the third quarter of 2021 engaged an epidemiologist on a consulting basis, to ensure we have current and accurate information.

Furthermore, we have continued to enhance our virtual programs to support business functions, such as training on cybersecurity and enhancements to our existing technology platforms, which has increased the effectiveness of our remote work force.

There has been a heightened focus on the emotional well-being of our employees, and we have provided regular touch points with employees through virtual town halls and management communications.

Additionally, we have maintained regular communications and updates on the virus and the Company's response, which are posted on the Company's internal website, to ensure transparent communication with our employees.

The economic impact of COVID-19 and any additional declines in the financial markets could have a significant adverse effect on our AUM and revenues, particularly if economic activity does not continue to recover and inflation continues unabated.

Further, we have benefited from certain of our adjusted operating expenses declining significantly as a result of the COVID-19 pandemic, such as costs for travel and entertainment and client meetings, particularly during 2020.

Although these costs increased in 2021, they have not yet returned to a normalized level.

These cost savings have benefited our margins.

If financial markets continue to normalize and economic activity increases, we do not anticipate continued cost savings related to COVID-19, and these savings are not indicative of our future performance.

Although countries throughout the world continue to grapple with re-opening their economies, there is a significant risk that the opening process may be interrupted or reversed if infection and hospitalization rates increase.

Also, any reluctance of consumers to resume spending could do long-term damage to the global economy, which would have an adverse effect on our business.

Additionally, as most of our workforce continues working remotely, at least part of the time, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.

Ultimately, the return to normal business and economic activity will likely require the broad application of effective vaccines.

The distribution of multiple safe, effective vaccines was initiated towards the end of the fourth quarter of 2020, and the distribution of such vaccines generally increased globally throughout 2021.

However, the rate of new vaccinations in the U.S.

plateaued, and in some areas began to decline, by the end of the second quarter of 2021, and the rate at which vaccination "boosters" have been administered has lagged.

If global vaccination rates do not improve further, a significant risk will remain that COVID-19 and/or a variant thereof, could accelerate global health concerns and, in so doing, cause heightened market and economic turmoil in the future.

2021 Annual Report 33

AB continues to actively monitor COVID-19 developments and their impact on our employees, business and operations.

The aggregate extent to which COVID-19, including its impact on the global economy, affects AB’s business, liquidity, results of operations and financial condition, will depend on future COVID-19 developments that are highly uncertain, including the scope and duration of COVID-19 and any recovery period, the emergence, spread and seriousness of COVID-19 variants, the continuing prevalence of severe, unconstrained and/or escalating rates of infection and hospitalization in various countries and regions, the availability, adoption and efficacy of treatments and vaccines, and future actions taken by governmental authorities, central banks and other parties in response to COVID-19.

Further, we have benefited from certain of our adjusted operating expenses declining significantly due to COVID-19, generally owing to depressed levels of travel and entertainment and in-person client meetings, during both 2020 and 2021.

While these costs started to return in 2022, results in 2022 did not reach historical levels;

the prior-year savings are not indicative of our future performance.

Additionally, as most of our workforce continues working in a hybrid model, which includes the option of two remote days each week, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.

Executive Overview (1)

Our total assets under management (" AUM ") as of December 31, 2021 were $778.6 billion, up $92.7 billion, or 13.5%, during 2021.

The increase was driven primarily by market appreciation of $66.6 billion and net inflows of $26.1 billion (reflecting Retail net inflows of $20.8 billion, Private Wealth Management net inflows of $3.0 billion and Institutional net inflows of $2.3 billion).

As previously disclosed, we expect additional redemptions by AXA of low-fee retail AUM in the first half of 2022 of approximately $5 billion.

Institutional AUM increased $21.5 billion, or 6.8%, to $337.1 billion during 2021, primarily due to market appreciation of $19.4 billion and net inflows of $2.3 billion, primarily driven by growth in active equities.

Gross sales increased $0.8 billion, from $30.9 billion in 2020 to $31.7 billion in 2021.

Redemptions and terminations increased $0.1 billion, from $23.3 billion in 2020 to $23.4 billion in 2021.

Institutional sales and redemptions in 2021 include $8.7 billion in sales and $10.0 billion in redemptions associated with the reinsurance agreement entered into by Equitable Financial Life Insurance Company (" Equitable Financial ") and a subsidiary of Venerable Holdings, Inc., pursuant to which Equitable Financial ceded to Venerable a portion of its legacy variable annuity business;

AB remained the preferred investment manager for the General Account assets transferred

Retail AUM increased $54.6 billion, or 20.6%, to $319.9 billion during 2021, primarily due to market appreciation of $33.6 billion and net inflows of $20.8 billion, primarily driven by growth in active equities.

Gross sales increased $21.1 billion, from $78.9 billion in 2020 to $100.0 billion in 2021.

Redemptions and terminations decreased $4.4 billion, from $69.5 billion in 2020 to $65.1 billion in 2021.

Private Wealth Management AUM increased $16.6 billion, or 15.8%, to $121.6 billion during 2021, due to market appreciation of $13.6 billion and net inflows of $3.0 billion, primarily driven by growth in alternatives and multi-asset solutions.

Our total assets under management (" AUM ") as of December 31, 2022 were $646.4 billion, down $132.2 billion, or 17.0%, during 2022.

The decrease was driven primarily by market depreciation of $140.4 billion and net outflows of $3.6 billion (reflecting Retail net outflows of $11.6 billion, offset by Institutional net inflows of $6.3 billion and Private Wealth Management net inflows of $1.7 billion), offset by the addition of $12.2 billion due to the acquisition of CarVal Investors L.P.

(" CarVal ") in the third quarter.

AXA S.A.(" AXA ") redeemed approximately $4.5 billion of low-fee fixed income and equity mandates in 2022.

Going forward, any AXA-related redemptions or new sales (reflecting, for example, recent commitments by AXA to certain of our private alternative strategies) will be considered as part of our normal course of business.

Institutional AUM decreased $39.8 billion, or 11.8%, to $297.3 billion during 2022, primarily due to market depreciation of $57.8 billion, partially offset by the addition of $12.2 billion due to the acquisition of CarVal and net inflows of $6.3 billion.

Gross sales increased $0.5 billion, from $31.7 billion in 2021 to $32.2 billion in 2022.

Redemptions and terminations decreased $10.1 billion, from $23.4 billion in 2021 to $13.3 billion in 2022.

Bernstein Research Services (" Bernstein ") revenue decreased $7.7 million, or 1.7%, in 2021.

The decrease was due to lower trading activity driven by lower global market volatility as compared to the COVID-related volatility in 2020.

This was partially offset by higher research payments across Bernstein and Autonomous Research (" Autonomous ") products.

Our 2021 net revenues of $4.4 billion increased $733.1 million, or 19.8%, compared to net revenues of $3.7 billion in the prior year.

The increase was primarily driven by higher base advisory fees of $486.6 million, higher distribution revenues of $122.5 million and higher performance-based fees of $112.5 million.

Our operating expenses of $3.2 billion increased $424.0 million, or 15.1%, compared to operating expenses of $2.8 billion in the prior year.

The increase was primarily due to higher employee compensation and benefits expenses of $221.8 million, higher promotion and servicing expenses of $153.5 million and higher general and administrative expenses of $64.5 million.

Our operating income increased $309.0 million, or 34.1%, to $1.2 billion from $907.4 million in 2020 and our operating margin increased to 27.3% in 2021 from 24.6% in 2020.

Institutional net inflows included $2.3 billion of AXA redemptions.

Retail AUM decreased $77.0 billion, or 24.1%, to $242.9 billion during 2022, primarily due to market depreciation of $65.5 billion and net outflows of $11.6 billion.

Net outflows included $2.2 billion of AXA redemptions.

Gross sales decreased $34.1 billion, from $100.0 billion in 2021 to $65.9 billion in 2022.

Redemptions and terminations increased $1.2 billion, from $65.1 billion in 2021 to $66.3 billion in 2022.

Private Wealth Management AUM decreased $15.4 billion, or 12.6%, to $106.2 billion during 2022, due to market depreciation of $17.1 billion, offset by net inflows of $1.7 billion.

Gross sales decreased $0.8 billion, from $18.3 billion in 2021 to $17.5 billion in 2022.

Redemptions and terminations increased $0.5 billion, from $15.3 billion in 2021 to $15.8 billion in 2022.

Bernstein Research Services (" BRS ") revenue decreased $35.7 million, or 7.9%, in 2022.

The decrease was driven by significantly lower customer trading activity in Europe and Asia due to local market conditions.

In the fourth quarter of 2022, AB and Société Générale (EURONEXT:

SCGLY, “ SocGen ”), a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses.

As a result, the BRS business has been classified as held for sale.

For further discussion, see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 .

Our 2022 net revenues of $4.1 billion decreased $387.3 million, or 8.7%, compared to net revenues of $4.4 billion in the prior year.

The decrease was primarily driven by lower base advisory fees of $123.6 million, higher investment losses of $101.8 million, lower performance-based fees of $99.9 million, lower distribution revenues of $45.0 million, lower Bernstein Research Services revenue of $35.7 million and lower shareholder servicing fees of $3.6 million, partially offset by higher net dividend and interest income of $21.6 million.

Our operating expenses of $3.2 billion increased $14.1 million, or 0.4%, compared to the prior year.

The increase was primarily due to higher general and administrative expenses of $86.0 million, higher amortization of intangible assets of $20.9 million, higher interest on borrowings of $12.8 million and higher contingent payment arrangements of $3.9 million, offset by lower promotion and servicing expenses of $60.1 million and lower employee compensation and benefits expenses of $49.4 million.

Our operating income decreased $401.4 million, or 33.0%, to $0.8 billion from $1.2 billion in 2021 and our operating margin decreased to 21.5% in 2022 from 27.3% in 2021.

1 Percentage change figures are calculated using assets under management rounded to the nearest million, while financial statement amounts are rounded to the nearest hundred thousand.

2022 Annual Report 33

Market Environment

Despite a selloff in November resulting from fears surrounding inflation and the rising cases of the omicron variant, U.S.

equity markets finished higher in 2021.

The S&P 500, Dow Jones Industrial Average and Nasdaq each rallied to finish the year with solid gains.

With rising inflation remaining a key concern, the Federal Reserve signaled it would begin tapering its quantitative easing at a faster pace and will begin raising their target interest rate in the first half of 2022.

Meanwhile, U.S.

government negotiations surrounding the Build Back Better package and the Infrastructure and Investments Jobs Act continued, with concerns the fiscal stimulus could drive inflation even higher in 2022.

In the U.K., equities lagged the global gains in 2021 but rose in fourth quarter.

Brexit, however, has placed constraints on labor supply and, in turn, upward pressure on wages and inflation.

In response, the Bank of England raised interest rates, despite the spread of the omicron variant.

In China, equities significantly underperformed global equities.

The People’s Bank of China reduced the reserve requirement ratio, releasing inexpensive funds for banks to lend, and announced that this cut is not the beginning of an easing cycle, but rather a regular monetary policy action.

The risks in China, however, around the property market will likely remain a key watchpoint over the coming months.

1 Percentage change figures are calculated using assets under management rounded to the nearest million, while financial statement amounts are rounded to the nearest thousand.

AllianceBernstein

In Europe, MiFID II, which became effective on January 3, 2018, has made significant modifications to the manner in which European broker-dealers can be compensated for research.

These modifications are believed to have significantly reduced the overall research spend by European buy-side firms, which has decreased the revenues we derive from our European clients.

Our European clients may continue to reduce their research budgets, which could result in a significant decline in our sell-side revenues.

Also, while MiFID II is not applicable to firms operating outside of Europe, competitive and client pressures may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions.

If that occurs, we would expect that research budgets from those clients will decrease further, which could result in an additional significant decline in our sell-side revenues.

Additionally, these competitive and client pressures may result in our buy-side operation paying for research out of our own resources instead of through bundled trading commissions, which could increase our firm's expenses and decrease our operating income.

The ultimate impact of MiFID II on payments for research globally remains uncertain.

While equity markets were positive in the fourth quarter of 2022, with the S&P 500 Index (" S&P ") and Dow Jones Industrial Average both registering gains, both indexes declined for the full year ended December 31, 2022.

The S&P declined 18.1% for the full year, while the Nasdaq declined by 33.1% and was down 8.7% in December.

Inflation remains the dominant issue for U.S.

markets, fueling consumer concerns of a potential recession.

While the U.S.

consumer has been largely resilient so far, higher interest rates have weighed on home building, trade and business investments.

Despite signs that the labor market and inflation are easing, the Federal Reserve has maintained its aggressive stance on monetary policy.

At its December meeting, the Federal Reserve increased interest rates and indicated that, while future rate increases are likely to be less severe, they continue to be needed.

In the U.K., the new prime minister reversed the tax cuts introduced by his predecessor and added some tax increases.

These actions calmed the market and reduced the pressure on mortgage rates.

However, monetary tightening, steep energy prices and supply-side constraints from Brexit create a challenging outlook for consumers.

In China, key watch-points include the property market and overall growth in the economy.

The Chinese government has announced new support measures, but it is unclear whether these measures will be sufficient to re-create historical growth patterns.

Relationship with EQH and its Subsidiaries

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EQH is collaborating with AB in order to improve the risk-adjusted yield for the General Accounts of EQH's insurance subsidiaries by investing additional assets at AB, including the utilization of AB's higher-fee, longer-duration alternative offerings.

Equitable Financial has agreed to provide $10 billion in permanent capital 2 over the next three years to build out AB’s private illiquid offerings, including private alternatives and private placements.

We expect this anticipated capital from Equitable Financial will accelerate both organic and inorganic growth in our private alternatives business, allowing us to continue to deliver for our clients, employees, unitholders and other stakeholders.

Equitable Financial Life Insurance Company, a subsidiary of EQH (" Equitable Financial "), has agreed to provide $10 billion in permanent capital 2 to build out AB's private illiquid offerings, including private alternatives and private placements.

Deployment of this capital commitment is more than 50% completed and is expected to continue over approximately the next two years.

We expect this anticipated capital from Equitable Financial will continue to accelerate both organic and inorganic growth in our private alternatives business, allowing us to continue to deliver for our clients, employees, unitholders and other stakeholders.

For example, included in this $10 billion commitment by EQH is $750 million in capital to be deployed through AB CarVal.

Relocation Strategy

2 unchanged sentences

We expect to reach a total of 1,250 employees in Nashville by the end of 2024.

We have been actively relocating jobs and expect this transition to take several more years.

We will continue to maintain a principal location in New York City, which houses our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses.

7 unchanged sentences

In 2022, our net income per unit (" EPU ") increased $0.07 as a result of our relocation strategy, which compares to the $0.06 EPU increase that occurred in 2021.

We also expect to achieve EPU accretion in each year thereafter.

We also expect to achieve EPU accretion in each future year.

Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings of approximately $75 million to $80 million, which will result from a combination of occupancy and compensation-related savings.

4 unchanged sentences

Although Equitable Financial has indicated its intention over time to provide this investment capital to AB, which is mutually beneficial to both firms, it has no binding commitment to do so.

2021 Annual Report 35

AllianceBernstein

During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our new Nashville headquarters.

Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134 million.

AllianceBernstein

Although we have presented many of our transition costs and annual expense savings with numerical specificity, and we believe these targets to be reasonable as of the date of this report, the uncertainties surrounding the assumptions we discuss above create a significant risk that these targets may not be achieved.

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(1) Distributions reflect the impact of AB’s non-GAAP adjustments.

AB Holding had net income of $274.2 million in 2022 compared to $385.8 million in 2021, reflecting lower net income attributable to AB Unitholders, partially offset by higher weighted average equity ownership interest.

AB Holding had net income of $385.8 million in 2021 compared to $279.4 million in 2020, reflecting higher net income attributable to AB Unitholders and higher weighted average equity ownership interest.

AB Holding had net income of $279.4 million in 2020 compared to $238.6 million in 2019, reflecting higher net income attributable to AB Unitholders.

AB Holding's partnership gross income is derived from its interest in AB.

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AB non-GAAP adjustments, before taxes $ 75,745 $ 2,959 $ 6,393

AB Income tax benefit (expense) on non-GAAP adjustments 71 (523) 1,070

AB Income tax (expense) benefit on non-GAAP adjustments (6,395) 71 (523)

AB non-GAAP adjustments, after taxes 69,350 3,030 5,870

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The increase primarily resulted from higher cash distributions received from AB of $86.3 million.

During the years ended December 31, 2021, 2020 and 2019, net cash used in investing activities was $3.4 million, $0.1 million and $11.5 million, respectively, reflecting investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units.

During the years ended December 31, 2022, 2021 and 2020, net cash used in investing activities was $1.8 million, $3.4 million and $0.1 million, respectively, reflecting investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units and capital contributions to AB.

During the year ended December 31, 2022, net cash used in financing activities was $360.8 million, compared to $351.7 million during the corresponding 2021 period.

The increase primarily was due to higher cash distributions to Unitholders of $86.6 million, offset by higher proceeds from exercise of compensatory options to buy AB Holding Units of $3.3 million.

The increase was due to cash distributions to Unitholders of $3.5 million and proceeds from exercise of compensatory options to buy AB Holding Units of $3.2 million, offset by lower capital contributions from AB of $2.3 million.

During the year ended December 31, 2021, net cash used in financing activities was $351.7 million, compared to $269.9 million during the corresponding 2020 period.

The increase was primarily due to higher cash distributions to Unitholders of $48.4 million, partially offset by lower proceeds from exercise of compensatory options to buy AB Holding Units of $11.4 million.

The increase primarily was due to higher cash distributions to Unitholders of $86.6 million, offset by higher proceeds from exercise of compensatory options to buy AB Holding Units of $3.3 million.

Management believes that AB Holding will have the resources it needs to meet its financial obligations as a result of the cash flow AB Holding realizes from its investment in AB.

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

Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions."

2022 Annual Report 37

9 unchanged sentences

Cash flow/unreinvested dividends (12.6) (11.2) — (23.8)

Net long-term inflows (1)

Net long-term inflows (outflows) (1)

6.3 (11.6) 1.7 (3.6)

Adjustments (2)

(0.4) — — (0.4)

Acquisition (3)

12.2 — — 12.2

Transfers (0.1) 0.1 — —

Market appreciation 19.4 33.6 13.6 66.6

Market depreciation (57.8) (65.5) (17.1) (140.4)

Net change (39.8) (77.0) (15.4) (132.2)

5 unchanged sentences

Cash flow/unreinvested dividends (6.0) (14.1) — (20.1)

Net long-term inflows (outflows) (1)

Net long-term inflows (1)

2.3 20.8 3.0 26.1

Acquisitions — 0.2 — 0.2

Transfers (0.2) 0.2 — —

2 unchanged sentences

Balance as of December 31, 2021 $ 337.1 $ 319.9 $ 121.6 $ 778.6

(1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

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

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

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

AllianceBernstein

10 unchanged sentences

Cash flow/unreinvested dividends (9.7) (4.0) (10.8) (0.4) 0.3 0.8 (23.8)

Net long-term inflows (outflows) (3)

Net long-term (outflows) inflows (3)

(2.7) (5.3) (17.9) 0.6 (1.3) 23.0 (3.6)

Market appreciation (depreciation) 47.9 14.6 (7.0) 0.8 (0.3) 10.6 66.6

Adjustments (4)

— — — — — (0.4) (0.4)

Acquisition (5)

— — — — — 12.2 12.2

Market (depreciation) (67.0) (12.5) (38.1) (5.2) (2.5) (15.1) (140.4)

Net change (69.7) (17.8) (56.0) (4.6) (3.8) 19.7 (132.2)

7 unchanged sentences

21.9 (7.5) (9.9) 6.0 5.0 10.6 26.1

Acquisitions — — — — — 0.2 0.2

Market appreciation 33.2 9.0 14.7 2.2 0.8 5.5 65.4

Market appreciation (depreciation) 47.9 14.6 (7.0) 0.8 (0.3) 10.6 66.6

Net change 69.8 7.1 (16.9) 6.8 4.7 21.2 92.7

2 unchanged sentences

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

(3) Fixed income - taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively.

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

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

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

2022 Annual Report 39

Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services during 2021 and 2020 are as follows:

Net long-term (outflows) inflows for actively managed investment services as compared to passively managed investment services during 2022 and 2021 are as follows:

Years Ended December 31

10 unchanged sentences

Total (4.5) (0.2)

Total net long-term inflows (outflows) $ 26.1 $ (2.6)

Total net long-term (outflows) inflows $ (3.6) $ 26.1

Average assets under management by distribution channel and investment service are as follows:

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

AllianceBernstein

During 2021, our Institutional channel average AUM of $325.7 billion increased $39.8 billion, or 13.9%, compared to 2020, primarily due to this AUM increasing $21.5 billion, or 6.8%, to $337.1 billion over the last twelve months.

The $21.5 billion increase in AUM resulted primarily from market appreciation of $19.4 billion and net inflows of $2.3 billion.

During 2022, our Institutional channel average AUM of $308.4 billion decreased $17.3 billion, or 5.3%, compared to 2021, primarily due to this AUM decreasing $39.8 billion, or 11.8%, to $297.3 billion from December 31, 2021.

The $39.8 billion decrease in AUM resulted primarily from market depreciation of $57.8 billion, partially offset by an addition of $12.2 billion due to the acquisition of CarVal and net inflows of $6.3 billion.

The $21.5 billion increase in AUM resulted primarily from market appreciation of $19.4 billion and net inflows of $2.3 billion.

During 2021, our Retail channel average AUM of $291.0 billion increased $54.5 billion, or 23.0%, compared to 2020, primarily due to this AUM increasing $54.6 billion, or 20.6%, to $319.9 billion over the last twelve months.

The $54.6 billion increase in AUM resulted primarily from market appreciation of $33.6 billion and net inflows of $20.8 billion.

During 2022, our Retail channel average AUM of $267.8 billion decreased $23.2 billion, or 8.0%, compared to 2021, primarily due to this AUM decreasing $77.0 billion, or 24.1%, to $242.9 billion from December 31, 2021.

The $77.0 billion decrease in AUM resulted primarily from market depreciation of $65.5 billion and net outflows of $11.6 billion.

The $26.1 billion increase in AUM resulted primarily from market appreciation of $28.1 billion, partially offset by net outflows of $1.6 billion.

During 2021, our Private Wealth Management channel average AUM of $114.1 billion increased $17.0 billion, or 17.5%, compared to 2020, primarily due to this AUM increasing $16.6 billion, or 15.8%, to $121.6 billion over the last twelve months.

The $54.6 billion increase in AUM resulted primarily from market appreciation of $33.6 billion and net inflows of $20.8 billion.

During 2022, our Private Wealth Management channel average AUM of $110.3 billion decreased $3.8 billion, or 3.3%, compared to 2021, primarily due to this AUM decreasing $15.4 billion, or 12.6%, to $106.2 billion from December 31, 2021.

The $15.4 billion decrease in AUM resulted from market depreciation of $17.1 billion, offset by net inflows of $1.7 billion.

The $4.0 billion increase in AUM resulted primarily from market appreciation of $6.8 billion, partially offset by net outflows of $2.0 billion.

The $16.6 billion increase in AUM resulted primarily from market appreciation of $13.6 billion and net inflows of $3.0 billion.

Absolute investment composite returns, gross of fees, and relative performance as of December 31, 2022 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows:

75 unchanged sentences

S&P 500 Index) 9.5 (0.9) (1.8)

Global Strategic Core Equity

Absolute return (10.7) 5.0 7.3

Relative return (vs.

S&P 500 Index) 7.5 — 1.2

(1) Reflects annualized returns.

9 unchanged sentences

Net income 775,457 1,153,734 861,783 (32.8) 33.9

Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641 n/m n/m

Net (loss) income of consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169) n/m n/m

Net income attributable to AB Unitholders $ 831,813 $ 1,148,623 $ 865,952 (27.6) 32.6

3 unchanged sentences

21.5 % 27.3 % 24.6 %

(1) Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.

(1) Operating income excluding net (loss) income attributable to non-controlling interests as a percentage of net revenues.

Net income attributable to AB Unitholders for the year ended December 31, 2022 decreased $316.8 million from the year ended December 31, 2021.

The decrease primarily is due to (in millions):

Lower base advisory fees $ (123.6)

Higher investment losses (101.8)

Lower performance-based fees (99.9)

Higher general and administrative expenses (86.0)

Lower distribution revenues (45.0)

Lower Bernstein Research Services revenue (35.7)

Lower promotion and servicing expenses 60.1

Higher net loss of consolidated entities attributable to non-controlling interest 61.5

Lower employee compensation and benefits 49.4

Net income attributable to AB Unitholders for the year ended December 31, 2021 increased $282.7 million from the year ended December 31, 2020.

The increase primarily is due to (in millions):

The increase primarily was due to (in millions):

Higher base advisory fees $ 486.6

4 unchanged sentences

Higher general and administrative expenses (64.5)

Net income attributable to AB Unitholders for the year ended December 31, 2020 increased $113.9 million from the year ended December 31, 2019.

The increase primarily was due to (in millions):

Higher base advisory fees $ 90.4

Higher distribution revenues 74.7

Higher Bernstein Research Services revenue 51.8

Higher net income of consolidated entities attributable to non-controlling interest 33.8

Lower performance-based fees 33.0

Higher promotion and servicing expenses (63.6)

Higher investment losses (55.1)

Higher employee compensation and benefits (51.4)

2022 Annual Report 43

30 unchanged sentences

Impact of consolidated company-sponsored funds 57,436 (6,933) 954

Long-term incentive compensation-related investment gains and dividend and interest (6,694) (6,772) (8,939)

Incentive compensation-related items (7,083) (6,694) (6,772)

Write-down of investment — 1,880 859

2 unchanged sentences

Real estate (825) (3,162) 2,880

Long-term incentive compensation-related items 687 (83) 1,217

Incentive compensation-related items 3,461 687 (83)

EQH award compensation 606 940 802

1 unchanged sentence

Acquisition-related expenses 72,503 2,614 1,935

Contingent payment arrangements (600) (1,366) (3,051)

Sub-total of non-GAAP adjustments 75,745 2,959 6,393

Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641

Net (loss) income of consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169)

Adjusted operating income 947,197 1,214,310 917,998

7 unchanged sentences

Adjusted operating margin 28.4% 33.6% 30.1%

Adjusted operating income for the year ended December 31, 2022 decreased $267.1 million, or 22.0%, from the year ended December 31, 2021, primarily due to lower performance-based fees of $130.9 million, lower investment advisory base fees of $99.1 million, lower Bernstein Research Services revenue of $35.7 million and higher general and administrative expenses of $32.3 million, partially offset by lower employee compensation and benefits expense of $58.4 million.

Adjusted operating income for the year ended December 31, 2021 increased $296.3 million, or 32.3%, from the year ended December 31, 2020, primarily due to higher investment advisory base fees of $460.9 million and higher performance-based fees of $91.7 million, partially offset by higher employee compensation and benefits expenses of $221.4 million and higher general and administrative expenses of $49.2 million.

Adjusted operating income for the year ended December 31, 2020 increased $115.6 million, or 14.4%, from the year ended December 31, 2019, primarily due to higher investment advisory base fees of $74.1 million, higher Bernstein Research Services revenue of $51.8 million, lower promotion and servicing expenses of $33.4 million and higher performance-based fees of $33.2 million, partially offset by higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $56.1 million and higher net investment losses of $22.8 million.

2022 Annual Report 45

7 unchanged sentences

We adjust investment advisory and services fees and other revenues for pass through costs, primarily related to our transfer agent and shareholder servicing fees.

These fees do not affect operating income, but they do affect our operating margin.

As such, we exclude these fees from adjusted net revenues.

Also, we adjust for certain performance-based fees passed through to our investment advisors.

These fees do not affect operating income, as such, we exclude these fees from adjusted net revenues.

We adjust for the revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such consolidated company-sponsored investment funds and AB's investment gains and losses on its investments in such consolidated company-sponsored investment funds that were eliminated in consolidation.

Also, adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments.

Adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments.

Also, we adjust for certain acquisition-related pass-through performance-based fees and performance related compensation.

During the fourth quarter of 2021, we wrote down an equity method investment;

4 unchanged sentences

Adjusted Operating Income

Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) our senior management's EQH award compensation, as discussed below , (4) the write-down of investments ( discussed immediately above ), (5) acquisition-related expenses, (6) adjustments to contingent payment arrangements, and (7) the impact of consolidated company-sponsored investment funds.

Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) the equity compensation paid by EQH to certain AB executives, as discussed below , (4) the write-down of investments ( discussed immediately above ), (5) acquisition-related expenses and (6) the impact of consolidated company-sponsored investment funds.

Real estate charges (credits) incurred during the fourth quarter of 2019 through the fourth quarter of 2020, while excluded in the period in which the charges (credits) were recorded, are included ratably over the remaining applicable lease term.

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The non-GAAP measures exclude gains and losses and dividends and interest on employee long-term incentive compensation-related investments included in revenues and compensation expense.

The board of directors of EQH granted to Seth P.

Bernstein, our CEO, equity awards in connection with EQH's IPO.

The board of directors of EQH granted to Seth Bernstein, our CEO, equity awards in connection with EQH's IPO.

Additionally, equity awards were granted to Mr.

Bernstein and other members of AB's senior management for their membership on the EQH Management Committee.

Bernstein and other AB executives for their membership on the EQH Management Committee.

These individuals may receive additional equity or cash compensation from EQH in the future related to their service on the Management Committee.

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Acquisition-related expenses have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers.

During 2021 and 2020, these expenses included an intangible asset impairment charge of $1.0 million and $1.5 million, respectively, relating to our 2016 acquisition.

Acquisition-related expenses include professional fees and the recording of changes in estimates to contingent payment arrangements associated with our acquisitions.

Beginning in the first quarter of 2022, acquisition-related expenses also include certain compensation-related expenses, amortization of intangible assets for contracts acquired and accretion expense with respect to contingent payment arrangements.

During 2022 and 2021, these expenses included an intangible asset impairment charge of $5.6 million and $1.0 million, respectively, related to various historical acquisitions.

The recording of changes in estimates of contingent consideration payable with respect to contingent payment arrangements associated with our acquisitions are not considered part of our core operating results and, accordingly, have been excluded.

7 unchanged sentences

Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenues.

2022 Annual Report 47

The components of net revenues are as follows:

19 unchanged sentences

Distribution revenues 607,195 652,240 529,781 (6.9) 23.1

Dividend and interest income 38,734 50,923 104,421 (23.9) (51.2)

Dividend and interest income 123,091 38,734 50,923 n/m (23.9)

Investment (losses) gains (102,413) (636) (16,401) n/m (96.1)

1 unchanged sentence

Total revenues 4,120,728 4,445,288 3,724,186 (7.3) 19.4

Interest expense 3,686 15,650 57,205 (76.4) (72.6)

Interest expense 66,438 3,686 15,650 n/m (76.4)

Net revenues $ 4,054,290 $ 4,441,602 $ 3,708,536 (8.7) 19.8

2021 Annual Report 49

Investment Advisory and Services Fees

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mid prices from recognized pricing vendors and brokers for credit default swaps;

and quoted bids or spreads from pricing vendors and brokers for other derivative products.

and quoted bids or spreads from pricing

AllianceBernstein

vendors and brokers for other derivative products.

Fair valuation methods include:

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The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios.

We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments.

We also have a Pricing Group, which is overseen by the Valuation Committee and is responsible for managing the pricing process for all investments.

We sometimes charge our clients performance-based fees.

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We are eligible to earn performance-based fees on 10.6%, 9.2% and 0.5% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 6.6% of our AUM).

Our investment advisory and services fees increased by $599.1 million, or 23.1%, in 2021, due to a $486.6 million, or 19.8%, increase in base fees and a $112.5 million increase in performance-based fees.

The increase in base fees is primarily due to an 18.0% increase in average AUM, as well as a slight increase in our portfolio fee rate.

Our investment advisory and services fees decreased by $223.5 million, or 7.0%, in 2022, due to a $123.6 million, or 4.2%, decrease in base fees and a $99.9 million decrease in performance-based fees.

The decrease in base fees is primarily due to a 6.1% decrease in average AUM, partially offset by a slight increase in our portfolio fee rate.

The increase in base fees is primarily due to a 7.9% increase in average AUM, partially offset by a lower portfolio fee rate.

Performance-based fees increased $112.5 million, or 84.8%, in 2021, primarily due to higher performance fees earned on Private Credit Services, U.S.

The increase in base fees was primarily due to a 18.0% increase in average AUM, as well as a slight increase in our portfolio fee rate.

Performance-based fees decreased $99.9 million, or 40.7%, in 2022, primarily due to lower performance-based fees earned on Financial Services Opportunities fund, U.S.

Select Equity fund, Arya Partners fund and Private Credit Services fund, partially offset by higher U.S.

Real Estate Funds fees.

Performance-based fees increased $112.5 million, or 84.8%, in 2021, primarily due to higher performance-based fees earned on Private Credit Services, U.S.

Real Estate Funds, Financial Services Opportunities and U.S.

Select Equity, partially offset by lower Arya Partners fees.

Performance-based fees increased $33.0 million, or 33.1%, in 2020, primarily due to higher performance-based fees earned on Arya Partners, partially offset by lower Private Credit Services fees.

Institutional investment advisory and services fees increased $74.3 million, or 14.5%, in 2021, due to an increase in base fees of $82.0 million, or 17.9%, partially offset by a decrease in performance-based fees of $7.8 million.

The increase in base fees is primarily due to a 13.9% increase in average AUM, an increase in the portfolio fee rate and a shift in product mix from fixed income to active equities and alternatives, which generally earn higher fees.

Institutional investment advisory and services fees increased $32.8 million, or 6.9%, in 2020, due to an increase in in performance-based fees of $25.5 million and an increase in base fees of $7.3 million, or 1.6%.

The increase in base fees was primarily due to a 7.7% increase in average AUM, partially offset by a lower portfolio fee rate.

AllianceBernstein

Institutional investment advisory and services fees increased $73.2 million, or 12.5%, in 2022, due to an increase in base fees of $41.5 million, or 7.7%, and an increase in performance-based fees of $31.7 million.

The increase in base fees is primarily due to a higher portfolio fee rate, partially offset by a 5.3% decrease in average AUM.

The increase in base fees was primarily due to a 13.9% increase in average AUM, an increase in portfolio fee rate and a shift in product mix from fixed income to active equities and alternatives, which generally earn higher fees.

Retail investment advisory and services fees decreased $169.6 million, or 11.4%, in 2022, due to a decrease in base fees of $120.5 million, or 8.4%, and a $49.1 million decrease in performance-based fees.

The decrease in base fees is primarily due to a 8.0% decrease in average AUM.

Retail investment advisory and services fees increased $281.9 million, or 23.3%, in 2021, due to an increase in base fees of $255.6 million, or 21.5%, and a $26.3 million increase in performance-based fees.

The increase in base fees is primarily due to a 23.0% increase in average AUM.

Retail investment advisory and services fees increased $112.0 million, or 10.2%, in 2020, due to an increase in base fees of $110.1 million, or 10.2%, and a $1.9 million increase in performance-based fees.

The increase in performance-based fees was primarily due to a 11.4% increase in average AUM, partially offset by a lower portfolio fee rate.

Private Wealth Management investment advisory and services fees increased by $243.0 million, or 27.8%, in 2021, due to a increase in base fees of $148.9 million, or 18.2%, and a $94.0 million increase in performance-based fees.

Private Wealth Management investment advisory and services fees decreased by $127.1 million, or 11.4%, in 2022, due to a decrease in base fees of $44.6 million, or 4.6%, and an $82.5 million decrease in performance-based fees.

The decrease in base fees is primarily due to a 3.3% decrease in average AUM.

Private Wealth Management investment advisory and services fees increased $243.0 million, or 27.8%, in 2021, due to an increase in base fees of $148.9 million, or 18.2%, and a $94.0 million increase in performance-based fees.

The increase in base fees is primarily due to a 17.5% increase in average AUM.

Private Wealth Management investment advisory and services fees decreased $21.4 million, or 2.4%, in 2020, due to an decrease in base fees of $27.0 million, or 3.2%, partially offset by a increase in performance-based fees of $5.6 million.

The decrease in base fees was primarily due to the impact of a lower portfolio fee rate, as well as a product mix shift with high fee value equity strategies representing a lower percentage of our total AUM than in prior periods.

Bernstein Research Services

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These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser extent, but increasingly, by paying us directly for research through commission sharing agreements or cash payments.

In the fourth quarter of 2022, AB and SocGen, a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses.

As a result, the BRS business has been classified as held for sale.

For further discussion, see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 .

2022 Annual Report 49

Revenues from Bernstein Research Services decreased $35.7 million, or 7.9%, in 2022.

The decrease was driven by significantly lower customer trading activity in Europe and Asia due to local market conditions.

Revenues from Bernstein Research Services decreased $7.7 million, or 1.7%, in 2021.

The decrease was due to lower trading activity driven by lower global market volatility as compared to the COVID-related volatility in 2020.

This was partially offset by higher research payments across Bernstein and Autonomous products.

Revenues from Bernstein Research Services increased $51.8 million, or 12.7%, in 2020.

The increase was due to higher market volatility in 2020, particularly between March and June 2020, primarily as a result of the COVID-19 pandemic, which led to higher customer activity and greater global trading volumes.

Any decreases in customer activity and trading volumes will have a corresponding effect on Bernstein Research Services revenue.

Furthermore, all of 2020 included revenues from our acquisition of Autonomous (which closed on April 1, 2019).

This was partially offset by higher research payments across Bernstein and Autonomous Research products.

Distribution Revenues

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Period-over-period fluctuations of distribution revenues typically are in line with fluctuations of the corresponding average AUM of these mutual funds.

Distribution revenues increased $122.5 million, or 23.1%, in 2021, primarily due to the corresponding average AUM of these mutual funds increasing 17.2%.

Distribution revenues decreased $45.0 million, or 6.9%, in 2022, primarily due to the corresponding average AUM of these mutual funds decreasing 12.4%, partially offset by a shift in product mix from mutual funds with lower distribution rates to mutual funds with higher distribution rates.

Distribution revenues increased $122.5 million, or 23.1%, in 2021, primarily due to the corresponding average AUM of these mutual funds increasing 17.2%.

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Interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts.

Dividend and interest income increased $84.4 million in 2022, primarily due to higher interest earned on customer margin balances, higher interest earned on U.S.

Treasury Bills as well as higher dividend and interest income in our consolidated company-sponsored investment funds.

Interest expense increased $62.8 million in 2022, due to higher interest paid on cash balances in customers' brokerage accounts.

Dividend and interest income decreased $12.2 million, or 23.9%, in 2021, primarily due to lower interest earned on U.S.

1 unchanged sentence

Interest expense decreased $12.0 million, or 76.4%, in 2021, due to lower interest paid on cash balances in customers' brokerage accounts.

Dividend and interest income decreased $53.5 million, or 51.2%, in 2020, primarily due to lower interest earned on customer margin balances and U.S.

Treasury Bills, as well as lower dividend and interest income in our consolidated company-sponsored investment funds.

Interest expense decreased $41.6 million, or 72.6%, in 2020, due to lower interest paid on cash balances in customers' brokerage accounts.

2021 Annual Report 51

AllianceBernstein

Investment Gains (Losses)

9 unchanged sentences

Realized gains $ 1,345 $ 2,213 $ 2,655

Unrealized gains 2,446 2,914 5,859

Unrealized (losses) gains (10,626) 2,446 2,914

Investments held by consolidated company-sponsored investment funds:

Realized (losses) gains (46,293) (2,341) 3,357

Unrealized (losses) gains (1,882) (854) 36,150

Unrealized (losses) (73,194) (1,882) (854)

Seed capital investments:

7 unchanged sentences

Realized (losses) (1,384) (829) (1,188)

Unrealized (losses) gains (278) (337) 331

Unrealized gains (losses) 669 (278) (337)

$ (102,413) $ (636) $ (16,401)

1 unchanged sentence

Other revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration and recordkeeping services provided to company-sponsored mutual funds and the General Accounts of EQH and its subsidiaries, and other miscellaneous revenues.

Other revenues decreased $2.9 million, or 2.6%, in 2022, primarily due to lower shareholder servicing fees.

Other revenues increased $3.7 million, or 3.5%, in 2021, primarily due to higher shareholder servicing fees, partially offset by lower brokerage income.

Other revenues increased $7.1 million, or 7.3%, in 2020, primarily due to higher shareholder servicing fees, higher brokerage income and higher mutual fund reimbursements, partially offset by lower investment income related to our consolidated company-sponsored investment funds.

AllianceBernstein

2022 Annual Report 51

The components of expenses are as follows:

9 unchanged sentences

General and administrative 641,635 555,608 491,070 15.5 13.1

General and administrative 555,608 485,544 484,750 14.4 0.2

Real estate charges — 5,526 3,324 (100.0) 66.2

555,608 491,070 488,074 13.1 0.6

Contingent payment arrangements 2,710 1,855 (510) 46.1 n/m

Interest on borrowings 5,145 6,180 13,035 (16.7) (52.6)

Amortization of intangible assets 5,697 21,372 28,759 (73.3) (25.7)

Contingent payment arrangements 6,563 2,710 1,855 142.2 46.1

Interest on borrowings 17,906 5,145 6,180 n/a (16.7)

Amortization of intangible assets 26,564 5,697 21,372 n/a (73.3)

Total $ 3,239,194 $ 3,225,140 $ 2,801,100 0.4 15.1

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The amounts of incentive compensation we award are designed to motivate, reward and retain top talent while aligning our executives' interests with the interests of our Unitholders.

Senior management, with the approval of the Compensation and Workplace Practices Committee of the Board of Directors of AllianceBernstein Corporation (“ Compensation Committee ”), periodically confirms that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues.

Senior management, together with the Compensation and Workplace Practices Committee of the Board of Directors of AllianceBernstein Corporation (“ Compensation Committee ”), continue to believe that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues.

Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented as a non-GAAP measure ( discussed earlier in this Item 7 ).

Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were 0.9%, 0.9% and 1.2% of adjusted net revenues for 2021, 2020 and 2019, respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to some of our firm's senior management relating to their roles as members of the EQH Management Committee.

Senior management, with the approval of the Compensation Committee, has established as an objective that adjusted employee compensation and benefits expense generally should not exceed 50% of our adjusted net revenues, except in unexpected or unusual circumstances.

Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were 1.1%, 0.9% and 0.9% of adjusted net revenues for 2022, 2021 and 2020, respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to some of our firm's executives relating to their roles as members of the EQH Management Committee.

Senior management, with the approval of the Compensation Committee, has established as an objective that adjusted employee compensation and benefits expense, excluding the impact of performance-based fees, generally should not exceed 50% of our adjusted net revenues in any year, except in unexpected or unusual circumstances.

Our ratios of adjusted compensation expense as a percentage of adjusted net revenues were 48.4%, 46.5% and 47.9%, respectively, for the years ended December 31, 2022, 2021 and 2020.

In 2021, employee compensation and benefits expense increased $221.8 million, or 14.8%, primarily due to higher incentive compensation of $124.6 million, higher base compensation of $48.9 million (primarily higher base salaries), higher commissions of $25.0 million, higher fringes of $20.1 million and higher other employment costs of $3.3 million.

In 2020, employee compensation and benefits expense increased $51.4 million, or 3.6%, primarily due to higher incentive compensation of $58.8 million and higher base compensation of $13.5 million (primarily higher base salaries), offset by lower fringes of $8.5 million, lower commissions of $6.2 million and lower other employment costs of $6.2 million.

2021 Annual Report 53

In 2022, employee compensation and benefits expense decreased $49.4 million, or 2.9%, primarily due to lower incentive compensation of $107.7 million, partially offset by higher base compensation of $39.8 million, higher commissions of $12.7 million and higher other employment costs of $5.3 million.

In 2021, employee compensation and benefits expense increased $221.8 million, or 14.8%, primarily due to higher incentive compensation of $124.6 million, higher base compensation of $48.9 million, higher commissions of $25.0 million, higher fringes of $20.1 million and higher other employment costs of $3.3 million.

Promotion and Servicing

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Also included in this expense category are costs related to trade execution and clearance, travel and entertainment, advertising and promotional materials.

Promotion and servicing expenses increased $153.5 million, or 19.5%, in 2021.

The increase was primarily due to higher distribution-related payments of $138.8 million, higher transfer fees of $10.1 million, higher amortization of deferred sales commissions of $7.0 million and higher marketing expenses of $4.9 million, partially offset by lower trade execution and clearance expenses of $7.4 million.

AllianceBernstein

Promotion and servicing expenses decreased $60.1 million, or 6.4%, in 2022.

The decrease was primarily due to lower distribution-related payments of $78.5 million, lower transfer fees of $4.9 million and lower trade execution and clearance expenses of $3.1 million, partially offset by higher travel and entertainment expenses of $15.4 million and higher firm meeting expenses of $8.8 million.

Promotion and servicing expenses increased $153.5 million, or 19.5%, in 2021.

The increase primarily was due to higher distribution-related payments of $81.3 million, higher amortization of deferred sales commissions of $12.3 million, higher trade execution and clearance expenses of $7.9 million and higher transfer fees of $4.8 million, offset by lower travel and entertainment expenses of $34.3 million and lower marketing expense of $8.4 million.

The decrease in travel and entertainment and marketing expense was primarily as a result of cost savings associated with the COVID-19 pandemic.

The increase primarily was due to higher distribution-related payments of $138.8 million, higher transfer fees of $10.1 million, higher amortization of deferred sales commissions of $7.0 million and higher marketing expenses of $4.9 million, partially offset by lower trade execution and clearance expenses of $7.4 million.

General and Administrative

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General and administrative expenses increased $86.0 million, or 15.5%, in 2022.

The increase was primarily due to higher portfolio services fees of $34.0 million, higher technology fees of $14.3 million, higher office-related expenses of $7.6 million, higher professional fees of $6.6 million and an unfavorable foreign exchange translation impact of $5.2 million, partially offset by lower charitable contributions of $4.9 million.

General and administrative expenses increased $3.0 million, or 0.6%, during 2020, primarily due to higher technology fees of $4.7 million, higher charitable contributions of $3.9 million, higher portfolio service fees of $3.6 million, higher real estate charges of $2.2 million and higher other taxes of $1.6 million, partially offset by lower professional fees of $9.1 million and lower office-related expenses of $3.5 million.

The increase was primarily due to higher professional fees of $27.3 million, higher portfolio services fees of $21.3 million, higher technology fees of $19.1 million, a valuation adjustment of $7.4 million associated with the classification of BRS as held for sale, higher office-related expenses of $6.9 million and a $5.6 million impairment of certain acquisition related intangible assets.

General and administrative expenses increased $64.5 million, or 13.1%, in 2021.

The increase was primarily due to higher portfolio services of $34.0 million, higher technology fees of $14.3 million, higher office-related expenses of $7.6 million, higher professional fees of $6.6 million and an unfavorable foreign exchange translation impact of $5.2 million, partially offset by lower charitable contributions of $4.9 million.

Contingent Payment Arrangements

Contingent payment arrangements reflect changes in estimates of contingent payment liabilities associated with acquisitions in previous periods, as well as accretion expense of these liabilities.

The expense of $2.7 million for 2021 reflects accretion expense of $3.3 million, offset by the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $0.6 million.

Contingent payment arrangements reflect changes in estimates of contingent payment liabilities associated with acquisitions in current and previous periods, as well as accretion expense of these liabilities.

In 2022, we recognized $6.6 million in accretion expense related to our contingent considerations payable.

Interest on Borrowings

Interest expense increased $12.8 million in 2022, reflecting higher interest rates on borrowings and higher weighted average borrowings.

Average daily borrowings for the EQH facilities and commercial paper were $845.5 million at a weighted average interest rate of 1.7% during 2022 compared to $561.6 million and 0.2% during 2021.

Interest expense decreased $1.0 million, or 16.7%, in 2021, reflecting lower interest rates partially offset by higher weighted average borrowings.

Average daily borrowings for both the EQH facility and commercial paper were $561.6 million at a weighted average interest rate of 0.2% during 2021 compared to $554.0 million and 0.5% during 2020.

Interest expense decreased 52.6% in 2020, reflecting lower interest rates partially offset by higher weighted average borrowings.

Average daily borrowings for both the EQH facility and commercial paper were $554.0 million at a weighted average interest rate of 0.5% during 2020 compared to $436.9 million and 2.5% during 2019.

Amortization of Intangible Assets

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These assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life.

Amortization of intangible assets decreased $15.7 million, or 73.3%, and $7.4 million, or 25.7%, in 2021 and 2020, respectively.

The decrease in both periods was primarily due to the full amortization of intangible assets related to the Bernstein acquisition as of September 30, 2020.

As a result, $5.2 million of quarterly amortization expense ceased after the third quarter of 2020.

AllianceBernstein

On July 1, 2022, AB acquired CarVal, which resulted in recording of $303.0 million of finite-lived intangible assets primarily relating to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years ( see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 ).

Amortization of intangible assets increased $20.9 million in 2022.

The increase was primarily due to the acquired intangible assets associated with the CarVal acquisition.

Amortization of intangible assets decreased $15.7 million, or 73.3%, in 2021.

The decrease in the prior year was primarily due to the full amortization of intangible assets related to the Bernstein acquisition.

AB, a private limited partnership, is not subject to federal or state corporate income taxes.

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Foreign corporate subsidiaries generally are subject to taxes in the jurisdictions where they are located.

Income tax expense increased $17.1 million, or 37.4%, in 2021 compared to 2020.

Income tax expense decreased $23.1 million, or 36.8%, in 2022 compared to 2021.

This decrease is due to lower pre-tax book income and one-time discrete items which resulted in a lower effective tax rate in 2022 of 4.9% compared to 5.2% in 2021.

Income tax expense decreased $17.1 million, or 37.4%, in 2021 compared to 2020.

This increase is due to higher pre-tax book income which resulted in a higher effective tax rate in 2021 of 5.2% compared to 5.0% in 2020.

Income tax expense increased $3.9 million, or 9.3%, in 2020 compared to 2019.

This increase is due to higher pre-tax book income, offset by a slightly lower effective tax rate in 2020 of 5.0% compared to 5.1% in 2019.

The decrease in our effective tax rate was driven by a reduction of one-time discrete items.

Net Income (Loss) of Consolidated Entities Attributable to Non-Controlling Interests

Net income (loss) of consolidated entities attributable to non-controlling interests primarily consists of limited partner interests owned by other investors in our consolidated company-sponsored investment funds.

2022 Annual Report 53

Net (Loss) Income of Consolidated Entities Attributable to Non-Controlling Interests

Net (loss) income of consolidated entities attributable to non-controlling interests primarily consists of limited partner interests owned by other investors in our consolidated company-sponsored investment funds.

In 2022, we had $56.4 million of net loss of consolidated entities attributable to non-controlling interests, primarily due to losses on investments held by our consolidated company-sponsored investment funds.

In 2021, we had $5.1 million of net income of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds.

In 2020 we had $4.2 million of net losses of consolidated entities attributable to non-controlling interests, primarily due to losses on investments held by our consolidated company-sponsored investment funds.

In 2019 we had $29.6 million of net gains of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds.

Capital Resources and Liquidity

Cash flows from operating activities primarily include the receipt of investment advisory and services fees and other revenues offset by the payment of operating expenses incurred in the normal course of business.

Our cash flows from operating activities have historically been positive and sufficient in supporting our operations.

Our cash flows from operating activities have historically been positive and sufficient to support our operations.

We do not anticipate this to change in the foreseeable future.

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During 2022, net cash provided by operating activities was $1.1 billion, compared to $1.3 billion during 2021.

The change primarily was due to lower earnings of $265.1 million (after non-cash reconciling items), a decrease in accrued compensation of $200.8 million and a decrease in broker-dealer related payables (net of receivable and segregated U.S.

Treasury Bills activity) of $169.2 million, partially offset by net activity of our consolidated company-sponsored investment funds of $252.0 million and an increase in fees receivable of $193.3 million.

During 2021, net cash provided by operating activities was $1.3 billion, compared to $1.5 billion during 2020.

The change primarily was due to net activity of our consolidated company-sponsored investment funds of $560.6 million, an increase in other assets of $75.7 million and higher net purchases of broker-dealer investments of $33.3 million, partially offset by higher earnings of $346.2 million, an increase in broker-dealer related payables (net of receivable and segregated U.S.

Treasury Bills activity) of $72.9 million and an increase in accounts payable and accrued expenses of $25.2 million.

During 2020, net cash provided by operating activities was $1.5 billion, compared to $827.5 million during 2019.

The change primarily was due to net activity of our consolidated company-sponsored investment funds of $468.2 million, an increase in broker-dealer related payables (net of receivable and segregated U.S.

Treasury Bills activity) of $368.0 million, a decrease in other assets of $92.3 million, an increase in accounts payable and accrued expenses of $67.2 million and an increase in accrued compensation of $54.4 million, partially offset by higher net purchases of broker-dealer investments of $454.1 million.

During 2022, net cash used in investing activities was $22.0 million, compared to $65.7 million during 2021.

The change is primarily due to higher purchases of furniture, equipment and leasehold improvements of $20.4 million, partially offset by lower cash paid for acquisitions, net of cash acquired, of $9.8 million and lower purchases of equity method investments of $4.1 million.

The change is primarily due the acquisition of CarVal, net cash acquired of $40.3 million in 2022.

During 2021, net cash used in investing activities was $65.7 million, compared to $59.1 million during 2020.

The change is primarily due to $13.6 million paid for acquisitions, net of cash acquired, $4.1 million paid for equity method investments and higher purchases of furniture, equipment and leasehold improvements of $13.2 million.

During 2022, net cash used in financing activities was $1.1 billion, compared to $0.9 billion during 2021.

The change reflects lower net purchases of non-controlling interests of consolidated company-sponsored investment funds in 2022 of $309.9 million, repayment of CarVal debt subsequent to acquisition of $42.7 million and an decrease in overdrafts payable of $41.6 million, partially offset by higher net borrowings of debt of $155.0 million and a decrease in the net purchases of AB Holding Units to fund long-term incentive compensation plans of $51.3 million.

During 2021, net cash used in financing activities was $0.9 billion, compared to $1.1 billion during 2020.

The change reflects the net purchases of non-controlling interests of consolidated company-sponsored investment funds in 2021 as compared to net redemptions in 2020 (impact of $532.7 million), partially offset by higher distributions to the General Partner and Unitholders of $223.0 million as a result of higher earnings (distributions on earnings are paid one quarter in arrears) and an increase in the net purchases of AB Holding Units to fund long-term incentive compensation plans of $113.2 million.

During 2020, net cash used in financing activities was $1.1 billion, compared to $775.0 million during 2019.

The change reflects higher redemptions of non-controlling interests of consolidated company-sponsored investment funds of $369.1 million and higher distributions to the General Partner and Unitholders of $133.4 million, partially offset by higher net proceeds of debt of $112.9 million and an increase in overdrafts payable of $47.3 million.

2021 Annual Report 55

As of December 31, 2021, AB had $1.3 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds), all of which is available for liquidity but consist primarily of cash on deposit for our broker-dealers related to various customer clearing activities, and cash held by foreign subsidiaries of $675.3 million.

As of December 31, 2022, AB had $1.1 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds and cash held for sale), all of which is available for liquidity but consist primarily of cash on deposit for our broker-dealers related to various customer clearing activities and cash held by foreign subsidiaries of $497.0 million.

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Debt and Credit Facilities

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If SCB LLC is unable to meet its obligations, AB will pay the obligations when due or on demand.

In addition, during 2021 AB established two additional uncommitted lines of credit for $100.0 million and $50.0 million, respectively, which are available for both AB's and SCB LLC's business.

SCB LLC currently has five uncommitted lines of credit with five financial institutions.

Four of these lines of credit permit us to borrow up to an aggregate of approximately $315.0 million, with AB named as an additional borrower, while the other line has no stated limit.

AB has guaranteed the obligations of SCB LLC under these lines of credit.

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The majority of our compensation and benefits obligations are paid out in less than one year, while the deferred compensation obligations are payable over various periods, with the majority payable over periods of up to three years.

Accrued compensation and benefits at December 31, 2021 totaled $353.6 million.

Accrued compensation and benefits as of December 31, 2022 totaled $399.3 million.

This amount excludes our accrued pension obligation.

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We do not currently anticipate that we will contribute to the Retirement Plan during 2023.

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The 2017 Tax Act (enacted in the U.S.

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Management elected to pay the transition tax in installments over an eight-year period from 2018 to 2025.

The federal transition tax obligation at December 31, 2021 totaled $13.3 million and is recorded to income tax payable on our consolidated statement of financial condition.

The federal transition tax obligation as of December 31, 2022 totaled $11.7 million and is recorded to income tax payable on our consolidated statement of financial condition.

See Note 21 to our consolidated financial statements in Item 8 for further discussion of our taxes.

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See Note 12 to our consolidated financial statements in Item 8 for a discussion of our debt.

2022 Annual Report 55

Contingencies

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Management believes that the critical accounting policies and estimates discussed below involve significant management judgment due to the sensitivity of the methods and assumptions used.

As of December 31, 2021, we had goodwill of $3.1 billion on the consolidated statement of financial condition.

Our acquisitions are accounted for under the acquisition method of accounting, where the cost of the acquisition is allocated on the basis of the estimated fair value of the assets acquired and the liabilities assumed.

The excess of the purchase price over the fair value of identifiable assets acquired, net of liabilities assumed, results in the recognition of goodwill.

On July 1, 2022, AB Holding acquired a 100% ownership interest in CarVal Investors L.P.

(“ CarVal ”).

Immediately following its acquisition of CarVal (the " CarVal acquisition "), AB Holding contributed 100% of its equity interests in CarVal to AB in exchange for AB Units (s ee Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8) .

On November 22, 2022, AB and SocGen, a leading Eu ropean bank, announced plans to form a joint venture combining their respective cash equities and research businesses.

As such, the BRS business has been classified as held for sale and $159.8 million of goodwill recorded on the consolidated statement of financial condition has been allocated to the held for sale disposal group.

As AB is a single reporting unit, we have allocated goodwill to the disposal group based on the relative fair values of (1) the disposal group and (2) the portion of the reporting unit that will be retained.

For further discussion, see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 .

As of December 31, 2022, we had goodwill of $3.6 billion on the consolidated statement of financial condition, which included $666.1 million as a result of the CarVal acquisition in the third quarter of 2022, $2.8 billion as a result of the Sanford C.

Bernstein Inc.

(“ Bernstein ”) acquisition in 2000 and $291.9 million in regard to various smaller acquisitions.

Approximately $159.8 million of goodwill has been classified as assets held for sale on the consolidated statement of financial condition.

We have determined that AB has only one reporting segment and reporting unit.

We test our goodwill annually, as of September 30, for impairment.

As of September 30, 2021, the impairment test indicated that goodwill was not impaired.

The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as significant declines in AUM, revenues, earnings or the price of an AB Holding Unit.

On an annual basis, or when circumstances warrant, goodwill is tested for impairment utilizing the market approach where the fair value of the reporting unit is based on its unadjusted market valuation (AB Units outstanding multiplied by AB Holding's Unit price) and earnings multiples.

The price of a publicly-traded AB Holding Unit serves as a reasonable starting point for valuing an AB Unit because each represents the same fractional interest in our underlying business.

Our market approach analysis also includes comparable industry earnings multiples applied to our earnings forecast and assumes a control premium (when applicable).

Throughout the year, the carrying value of goodwill is also reviewed for impairment if certain events or changes in circumstances occur and trigger whether an interim impairment test may be required.

Such changes in circumstances may include, but are not limited to, a sustained decrease in the price of an AB Holding Unit or declines in AB’s market capitalization that would suggest that the fair value of the reporting unit is less than the carrying amount;

significant and unanticipated declines in AB’s assets under management or revenues;

and/or lower than expected earnings per unit.

We test our goodwill annually, as of September 30, for impairment or if certain events or changes in circumstances occur and trigger an interim impairment test.

The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as, but not limited to significant transactions including acquisitions or divestitures and significant declines in AUM, revenues, earnings or the price of an AB Holding Unit.

Any of these changes in circumstances could suggest the possibility that goodwill is impaired, but none of these events or circumstances by itself would indicate that it is more likely than not that goodwill is impaired.

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A holistic evaluation of all events since the most recent quantitative impairment test must be done to determine whether it is more likely than not that the reporting unit is impaired.

For our annual impairment test, we utilize the market approach where the fair value of the reporting unit is based on its unadjusted market valuation (AB Units outstanding multiplied by AB Holding's Unit price) and earnings multiples.

The price of a publicly traded AB Holding Unit serves as a reasonable starting point for valuing an AB Unit because each represents the same fractional interest in our underlying business.

Our market approach analysis also includes comparable industry earnings multiples applied to our earnings forecast and assumes a control premium (when applicable).

The announcement of the joint venture between AB and SocGen and classification of the BRS business as held for sale during the fourth quarter of 2022 was a triggering event requiring an interim impairment test;

as such, we tested our goodwill as of December 31, 2022.

The impairment test indicated that goodwill was not impaired.

Under ASU 2017-04, Simplifying the Test for Goodwill Impairment, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

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However, it is important that management's determination of fair value reflect the impact of changing market conditions, including the severity and anticipated duration of any such changes.

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Business Combinations

We account for business combinations using the acquisition method of accounting whereby the identifiable assets and liabilities of the acquired business, as well as any noncontrolling interest in the acquired business, are recorded at their estimated fair values as of the date that we obtain control of the acquired business.

Any purchase consideration in excess of the estimated fair values of the net assets acquired is recorded as goodwill.

Acquisition-related expenses are expensed as incurred.

Often, as part of the business combination, intangible assets are recorded based on their estimated fair value at the time of acquisition and primarily relate to acquired investment management contracts.

We periodically review indefinite-lived intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable.

If the carrying value exceeds fair value, we perform additional impairment tests to measure the amount of the impairment loss, if any.

We periodically enter into contingent payment arrangements in connection with our business combinations.

In these arrangements, we agree to pay additional consideration to the sellers to the extent that certain performance targets are achieved.

We estimate the fair value of these potential future obligations at the time a business combination is consummated and record a liability on a discounted basis on our consolidated statement of financial condition.

We then accrete the obligation to its expected payment amount over the measurement period.

If our expected payment amount subsequently changes, the obligation is modified in the current period resulting in a gain or loss.

Both gains and losses resulting from changes to expected payments and the accretion of these obligations to their expected payment amounts are reflected within contingent payment arrangements in our consolidated statements of income.

Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed.

For intangible assets and contingent liabilities, we typically use a method that is a form of the income approach, whereby a forecast of future cash flows attributable to the asset are discounted to present value using a risk-adjusted discount rate.

Similarly for contingent liabilities, we develop a forecast of future cash flows attributable to the performance objectives that are then discounted to present value using a risk-adjusted discount rate.

Some of the more significant estimates and assumptions inherent in the income approach include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows.

See Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 .

Assets and Liabilities Held for Sale

The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including:

(i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year.

Management performs an assessment of held for sale at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary.

Assets and liabilities held for sale are presented separately within the consolidated statements of financial condition with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell.

Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale.

For each reporting period the disposal group remains classified as held for sale, the carrying value of the disposal group is adjusted for subsequent changes in fair value less costs to sell.

A loss is recognized for any subsequent decrease in fair value less costs to sell, while a gain is recognized in any subsequent period for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized.

If, in any period, the carrying value of the disposal group exceeds the estimated fair value less costs to sell, a loss is recognized on sale rather than an impairment loss.

Loss Contingencies

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AB) and the availability of cash to make these purchases.

• Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues:

• Our determination that adjusted employee compensation expense, excluding the impact of performance-based fees, generally should not exceed 50% of our adjusted net revenues on an annual basis:

Aggregate employee compensation reflects employee performance and competitive compensation levels.

Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.

• The adverse impact of COVID-19:

The aggregate extent to which COVID-19, including its impact on the global economy, affects AB’s business, liquidity, results of operations and financial condition, will depend on future COVID-19 developments that are highly uncertain, including the scope and duration of the disease and any recovery period, the emergence, spread and seriousness of COVID-19 variants, the continuing prevalence of severe, unconstrained and/or escalating rates of infection and hospitalization in various countries and regions, the availability, adoption and efficacy of treatments and vaccines, and future actions taken by governmental authorities, central banks and other parties in response to COVID-19.

• The impact of our acquisition of CarVal:

The impact of our acquisition of CarVal:

These statements concern expected growth, client and stockholder benefits, key assumptions, revenue realization, financial benefits or returns, accretion and integration costs.

Actual results may differ materially from future results expressed or implied by our forward-looking statements as a result of similar risks to those that impact our other similar business lines, as well as the risk that we are not able to realize the anticipated benefits of the transaction, including the realization of revenue, accretion, and financial benefits or returns, in full or that we may take longer to realize benefits than expected, due, among other reasons, to the

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challenges of integrating a new business and personnel.

The anticipated benefits may also be adversely impacted by the risk that AB Holding units to be issued after the closing are issued at a price below anticipated levels.

We caution readers to carefully consider such factors.

• Our Relocation Strategy:

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• the timing for execution of each phase of our relocation implementation plan.

• The Adverse Impact of COVID-19:

The severity of the expected adverse impact on our AUM and revenues of the economic downturn caused by the COVID-19 pandemic will depend on the depth and length of the downturn and its impact on the companies in which we invest.

Our conclusions about the possible continuing significant adverse impact on us is based on our assumptions that the recovery will be gradual and that there may be lasting unemployment and economic damage.

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believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis