Asset manager AB's earnings outlook and tax considerations discussed at 2016 Merrill Lynch conference

modified will not likely change the outlook. LM feels its strong positioning in global distribution and product sets bodes well to perform in a new fiduciary world. ¢ Additionally, a lower potential U.S. corporate tax rate will not change its cash tax rate which is likely to be 6-7% through 2021 and in the mid-teens through 2025 after that. However, it would impact GAAP EPS and a lower corporate tax rate would lower the value of LM’s DTA. AB (AB), B-1-8, Buy Presenting from AB was Peter Kraus, Chairman & CEO. Peter expects AB to generate above average organic growth and hopes to accelerate it given its product mix and mostly favorable investment performance. In addition, he sees the potential for new pricing in the industry, and does not expect a significant change in the DOL impact from the election or a lower corporate tax rate on their tax rate. e When asked what would get you more interested in AB’s stock, 55% of investors said they wanted to see consistent positive organic growth, 18% said a better operating margin, another 18% said diversification from fixed income flows (i.e. equity and alternative flows), and only 9% of investors wanted to see a simplified structure and increased float. Chart 59: What would get you more interested in investing in AB stock? 70% 60% 50% 40% 30% 20% 10% 0% Consistent positive organic | Operatingleverage andan — Further diversification from Amore simplified structure and growth improving margin fixed income flows increased float Source: BofA Merrill Lynch Global Research « AB has seen and expects to continue to see above average organic growth (ex 3Q which was weighed down by lumpy institutional outflows) given a relatively new and attractive product set, strong investment performance (notable improvement in recent years), better traction with the consultant community, and opportunities to gain in the retail and private wealth channels. ¢ Regarding potential changes post the election, AB had a similar tone to other asset managers on DOL, in the sense that it likely gets delayed/modestly modified, but regardless of what happens, asset managers and distributors need to accept that the industry is living in a new fiduciary world with minimized (potentially no) conflicts of interest which ultimately is a good thing for end clients. A lower potential corporate tax rate would not likely benefit AB given its tax structure/low current tax rate. BankofAmerica <2” 40 2016 Future of Financials Conference | 17 November 2016 Merrill Lynch HOUSE_OVERSIGHT_014354