Equitable Holdings, Inc. ((EQH)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Equitable Holdings, Inc. recently held its earnings call, which revealed a generally positive sentiment despite some challenges. The company reported strong growth in assets under management and significant capital freed by a reinsurance transaction. Robust inflows in retirement and wealth management were also highlighted. However, there were concerns about a decline in non-GAAP operating earnings due to high mortality claims and net outflows in asset management. Overall, the positive achievements and future prospects slightly outweighed the negative aspects.
Record AUM and Administration
Assets under management and administration reached a record $1.1 trillion, marking a 5% increase year-to-date. This milestone indicates strong future growth potential for Equitable Holdings, showcasing the company’s ability to effectively manage and grow its asset base.
Strong Retirement and Wealth Management Inflows
The retirement business produced $1.9 billion of net inflows, while Wealth Management saw $2 billion of advisory net inflows, achieving a 12% trailing 12-month organic growth rate. These figures underscore the robust performance and growth potential in Equitable’s retirement and wealth management segments.
Individual Life Reinsurance Transaction
Equitable Holdings successfully closed a significant reinsurance transaction with RGA, freeing over $2 billion of capital and reducing mortality exposure by 75%. This strategic move enhances the company’s financial flexibility and risk management capabilities.
Shareholder Returns and Capital Management
The company returned $318 million to shareholders with a 74% payout ratio and plans for at least $500 million of incremental share repurchases in the second half of 2025. These actions reflect Equitable’s commitment to delivering value to its shareholders.
AB’s Private Markets Growth
AB’s private markets AUM grew 20% year-over-year, reaching $77 billion, with a pipeline increased to $22 billion. This growth highlights the strength and potential of AB’s private markets business.
Decline in Non-GAAP Operating Earnings
Non-GAAP operating earnings were reported at $352 million, down 23% year-over-year on a per-share basis, primarily due to elevated individual life mortality claims. This decline poses a challenge for the company, impacting its overall earnings performance.
Net Outflows in Asset Management
AB reported net outflows of $6.7 billion in the second quarter, including active net outflows of $4.8 billion. However, the business returned to net inflow in June, indicating potential stabilization and recovery in asset management.
Mortality Claims Impact
Elevated individual life mortality claims were the primary driver for the decline in earnings, impacting earnings by approximately $35 million after tax. This issue remains a significant concern for the company’s financial health.
Forward-Looking Guidance
During the earnings call, Equitable Holdings provided guidance indicating a mixed performance. Non-GAAP operating earnings were reported at $352 million or $1.10 per share, down 23% year-over-year. Adjusted non-GAAP operating EPS stood at $1.41, marking an 8% decrease compared to the previous year. Despite challenges, the company is optimistic about accelerating growth in the latter half of the year and achieving its 2027 financial targets. Actions include $500 million in share repurchases and potential debt reduction.
In summary, Equitable Holdings, Inc.’s earnings call presented a generally positive outlook with strong growth in assets under management and significant capital freed by a reinsurance transaction. While challenges such as a decline in non-GAAP operating earnings and net outflows in asset management were noted, the company’s future prospects and strategic actions appear promising. Investors and stakeholders can look forward to potential growth and value creation in the coming years.