Equitable Holdings, Inc. ((EQH)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Equitable Holdings, Inc. recently held its earnings call, revealing a mixed sentiment characterized by strong growth in certain areas and challenges in others. The company reported impressive growth in assets under management and wealth management, alongside successful capital deployment strategies. However, these positives were tempered by a decline in operating earnings, net outflows in asset management, and elevated mortality impacts affecting the quarter’s performance. Despite these mixed results, Equitable Holdings appears well-positioned for future growth.
Record Assets Under Management
Equitable Holdings ended the quarter with record assets under management of $1.1 trillion, marking a 4% sequential increase. This achievement indicates strong potential for future earnings growth, reflecting the company’s robust asset management capabilities.
Strong Wealth Management Growth
The Wealth Management division experienced another strong quarter, with $2.2 billion in advisory net inflows, translating to a 12% annualized growth rate. Additionally, advisor productivity saw an 8% year-over-year increase, underscoring the division’s continued success.
Successful Capital Deployment
Equitable Holdings demonstrated effective capital deployment by allocating $1.5 billion to enhance shareholder value and support future growth. This included $676 million in share repurchases and a reduction of $500 million in outstanding debt, showcasing the company’s commitment to financial stability and growth.
Asset Management Earnings Surge
AllianceBernstein (AB), a key component of Equitable’s asset management segment, delivered a strong performance with a 39% year-over-year increase in earnings. This was driven by a 6% sequential increase in fee revenue, with the adjusted margin improving to 34.2%.
Growth in Retirement Business
The retirement business reported $1.1 billion in net flows for the quarter, fueled by continued growth in RILA sales. This growth highlights the segment’s strength and its contribution to the company’s overall performance.
Decline in Operating Earnings
Despite these successes, Equitable Holdings faced a decline in non-GAAP operating earnings, which were reported at $455 million or $1.48 per share, representing a 6% year-over-year decrease on a per-share basis.
Net Outflows in Asset Management
The asset management segment reported total net outflows of $2.3 billion, including $4 billion of low-fee assets transferred to RGA as part of a life reinsurance transaction. This outflow presents a challenge for the company moving forward.
Elevated Mortality Impact
The company experienced elevated mortality, leading to a $36 million adjustment for July mortality experience. This adjustment negatively impacted the overall earnings for the quarter.
GAAP Net Loss
Equitable Holdings reported a GAAP net loss of $1.3 billion, primarily due to a one-time impact from asset transfers at the closing of the individual life reinsurance transaction.
Forward-Looking Guidance
During the earnings call, Equitable Holdings provided forward-looking guidance, emphasizing strong organic growth momentum. The company reported non-GAAP operating earnings of $455 million for the quarter, equating to $1.48 per share, with an adjusted EPS of $1.67, marking a 2% increase from the previous year. The company remains confident in achieving its 2027 financial targets, including a $2 billion annual cash generation goal, supported by robust growth in its retirement and wealth management segments.
In summary, Equitable Holdings, Inc. presented a mixed earnings call, with strong growth in assets under management and wealth management, alongside successful capital deployment. However, challenges such as a decline in operating earnings, net outflows in asset management, and elevated mortality impacts were also evident. Despite these challenges, the company remains optimistic about its future growth prospects and financial targets.