Equitable Holdings Talks Big EPS Growth, CoreBridge Deal

Equitable Holdings, Inc. ((EQH)) has held its Q1 earnings call. Read on for the main highlights of the call.

Equitable Holdings’ latest earnings call struck an upbeat tone, underscoring strong profit growth, rising assets and a fortified balance sheet, even as management acknowledged pressure from asset‑management outflows and weaker alternatives performance. Executives framed the pending CoreBridge merger as a transformational catalyst, but stressed that much of the upside remains execution‑dependent.

Strong Earnings Trajectory and Profitability

Equitable reported non‑GAAP operating EPS of $1.62, or $1.68 after notable items, a robust 25% jump from a year ago, with non‑GAAP operating earnings reaching $472 million and net income at $621 million, or $2.14 per share. Management signaled confidence that EPS growth in 2026 will surpass the high end of its 12%–15% target range, reinforcing the company’s profitability momentum.

Expanding Assets Under Management

Total assets under management and administration climbed to $1.1 trillion, up 9% year over year, reflecting both market appreciation and solid net inflows. Executives highlighted that higher average AUM versus 2025 should serve as a near‑term tailwind for earnings, bolstering fee income and supporting the company’s longer‑term return objectives.

Sales Growth and Wealth Inflow Momentum

Total sales rose 10% from the prior year and Equitable generated $1.3 billion of net inflows in the quarter, showcasing solid demand across its platforms. Wealth Management was a standout, delivering $2.0 billion of advisory net inflows and a 13% trailing 12‑month organic growth rate, underscoring the appeal of its advisory and retirement offerings.

AB Earnings Growth and Fee Upside

AllianceBernstein posted an 11% year‑over‑year increase in earnings, helped by higher base fees and Equitable’s increased ownership stake, with base fees buoyed by a 7% gain in AUM. AB also raised its full‑year performance fee forecast from $95 million to $115 million, signaling management’s confidence in performance‑driven revenue despite a choppy flow backdrop.

Private Markets Scale and Institutional Pipeline

Private markets AUM grew 13% year over year to $85 billion, demonstrating the firm’s growing presence in higher‑fee alternative strategies that remain in demand with institutions. AB highlighted a record institutional pipeline of nearly $28 billion and expects to receive at least $100 billion of additional assets from the CoreBridge combination over the next few years, providing a powerful future inflow engine.

Balance Sheet Strength and Capital Position

Management emphasized a robust capital profile, pointing to a combined NAIC RBC ratio of roughly 475% and pro forma GAAP book value above $30 billion, alongside over $25 billion of statutory capital. Holding‑company liquidity stands at $1.2 billion, well above the $500 million target, while the adjusted debt‑to‑capital ratio improved to 24.5%, down 40 basis points sequentially and leaving ample flexibility.

Shareholder Returns and Payout Strategy

Equitable returned $223 million to shareholders in the quarter, including $147 million in share repurchases, reflecting a disciplined yet active capital return stance. The company reiterated its goal of a 60%–70% payout ratio by 2026 and plans to remain opportunistic in buyback windows, with the option of an accelerated repurchase backstop should conditions warrant.

Strategic Merger with CoreBridge

The planned merger with CoreBridge is positioned as a scale‑building move that will create a combined company serving about 12 million customers with $1.5 trillion of AUMA and roughly $540 billion of retirement and institutional AUM. Management projects at least $500 million of expense synergies, immediate EPS accretion and more than 10% run‑rate EPS accretion by 2028, supporting an earnings power north of $5 billion and over $4 billion of annual holding‑company cash flow.

Improving Retirement Spreads and Underlying Margins

In the Retirement segment, net investment margin improved 3% sequentially, with spreads excluding alternatives and market value adjustment effects ticking about 1 basis point higher. Excluding alternatives, NIM spread expanded roughly 5 basis points, pointing to stabilizing and gradually improving underlying economics in the core retirement book even amid rate volatility.

Mortality Experience and Risk Profile

Mortality metrics were a bright spot, as the benefit ratio improved to about 83%, the lowest level in the past year and a support to earnings in the quarter. On the asset side, private credit accounts for 18% of the general account with roughly 95% considered investment grade, and management noted that stress tests indicate the RBC ratio would still stay above 400% even under a severe downturn.

AB Net Outflows and Revenue Headwinds

Against these positives, AB faced $7.1 billion of net outflows in the quarter, driven mainly by active equities and taxable fixed income strategies, which remain under pressure across the industry. These outflows are a meaningful near‑term headwind to fee revenue and AUM growth, and they temper some of the earnings uplift from higher markets and performance fees.

Weaker Alternatives Returns and Lower Income

Alternatives, which constitute about 2% of the general account, produced an annualized 3.5% return in the quarter and are expected to yield only 2%–3% in the second quarter, prompting a reset of expectations. Full‑year alternatives returns are now projected below the prior 8%–9% guidance, reducing the anticipated contribution from this historically higher‑return asset class and trimming some upside from spread income.

Fee Compression and Mix Shift at AB

Although AB’s AUM climbed 7% year over year, the firm is contending with lower average fee rates due to an asset mix skewing toward lower‑fee strategies, while performance fees were modest in the quarter. This combination is creating a more volatile revenue profile, as growth in balances does not fully translate into proportional fee growth and leaves earnings more sensitive to flows and mix.

Corporate & Other Losses and Integration Costs

Corporate & Other posted an adjusted loss of $98 million in the quarter, and management reaffirmed full‑year loss guidance of $350 million to $400 million, reflecting ongoing corporate overhead and deal‑related costs. These expenses underscore the near‑term earnings drag from integration and central functions even as the company positions for higher long‑term profitability post‑merger.

Accounting Uncertainty Around the Merger

Management also highlighted potential purchase‑accounting impacts from the CoreBridge deal, including items such as VOBA, DAC, fair‑value adjustments and goodwill, but stressed that these remain undetermined. Without definitive guidance on the GAAP earnings effects prior to closing, investors may face some near‑term opacity in reported results as merger accounting is finalized.

Non‑Recurring Items and MVA Effects

The quarter included several one‑off items, including roughly $10 million of favorable market value adjustment benefit and additional notable tax and alternatives‑related adjustments that affected reported earnings. Management cautioned that these factors are not expected to be reliable drivers of future quarters, urging investors to focus on underlying trends rather than transient boosts.

Flow Volatility and Execution Risk

Leadership acknowledged that near‑term flows, particularly at AB, could remain choppy even with a record institutional pipeline and the prospect of CoreBridge assets migrating over time, introducing execution risk to fee‑revenue plans. This volatility, combined with industry competition, means translating pipeline into sustained net inflows will be critical to realizing the merger and earnings ambitions.

Forward‑Looking Guidance and Outlook

Looking ahead, management reaffirmed its strong 2026 targets, expecting EPS growth to exceed the top of the 12%–15% range while targeting returns on equity above 15% and $1.8 billion of cash generation in 2026, supported by today’s $1.2 billion in holding‑company liquidity. The CoreBridge merger is forecast to be immediately accretive, deliver at least $500 million in cost synergies and 10%‑plus EPS accretion by 2028, with pro forma capital levels, leverage and AUM scale all designed to underpin more than $5 billion of annual earnings power and over $4 billion of holding‑company cash flow.

Equitable’s call painted a picture of a company leaning into scale, capital strength and organic momentum to drive higher earnings and shareholder returns, even as it navigates asset‑management outflows and softer alternatives returns. For investors, the story now hinges on flawless execution of the CoreBridge integration and AB’s ability to convert its pipeline into durable inflows, but the upside case remains compelling if management hits its marks.