Equitable Holdings, Inc. ((EQH)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Equitable Holdings, Inc. painted a picture of mixed sentiment, with notable strengths and challenges. The company reported strong net inflows and increased advisor productivity, alongside impressive performance from AllianceBernstein and a robust balance sheet. However, these positives were tempered by a decline in non-GAAP earnings and elevated mortality claims impacting the Protection Solutions segment. Market volatility also posed challenges, affecting fee income and April flows.
Strong Net Inflows and Advisor Productivity
The Retirement businesses of Equitable Holdings produced $1.6 billion in net inflows during the first quarter. The Wealth Management business also saw $2 billion in advisory net inflows, with advisor productivity up by 8% and a 12% organic growth rate on a trailing 12-month basis. These figures underscore the company’s ability to attract and manage assets effectively.
AllianceBernstein Performance
AllianceBernstein (AB) reported a 19% increase in operating earnings year-over-year, driven by higher average assets under management (AUM) and improved margins. AB achieved positive net flows across its three distribution channels, with total active net inflows of $2.7 billion. The private markets business saw AUM rise by 20% year-over-year to $75 billion.
Capital Return to Shareholders
Equitable Holdings demonstrated a strong commitment to returning capital to shareholders, with $335 million returned in the first quarter, representing an 80% payout ratio. The company also increased its ownership in AllianceBernstein to 69% by purchasing $760 million of AB Holding units.
Robust Balance Sheet
Equitable Holdings reported a combined NAIC RBC ratio of approximately 425% at year-end, with $1.1 billion in holding company liquidity. This robust balance sheet positions the company well to weather macroeconomic volatility, bolstered by the anticipated $2 billion benefit from a reinsurance transaction.
Decline in Non-GAAP Operating Earnings
Non-GAAP operating earnings were reported at $421 million, or $1.30 per share, marking a 7% decline year-over-year on a per-share basis. Adjusted for notable items, the earnings per share were $1.35, down 3% compared to the previous year.
Elevated Mortality Claims in Protection Solutions
The Protection Solutions segment faced challenges, reporting a loss of $17 million due to a high level of large individual life mortality claims. These elevated claims reduced earnings per share by approximately $0.20 relative to normal expectations.
Market Volatility Impacts
Market volatility and tax payments have pressured April flows for AllianceBernstein. A decline in average separate account assets and fewer fee days in the first quarter negatively impacted fee income, highlighting the challenges posed by market conditions.
Forward-Looking Guidance
Looking ahead, Equitable Holdings plans to execute $500 million in additional share repurchases following a reinsurance transaction with RGA, expected to close mid-year, releasing over $2 billion of capital. The company emphasized its strong balance sheet and liquidity, ensuring resilience against ongoing market volatility. The Retirement and Wealth Management divisions are expected to continue their solid growth trajectory.
In summary, Equitable Holdings, Inc. delivered a mixed earnings call, showcasing strong net inflows and advisor productivity, alongside impressive AllianceBernstein performance. However, the decline in non-GAAP earnings and elevated mortality claims presented challenges. The company’s robust balance sheet and strategic plans for capital return and growth provide a positive outlook amid market volatility.