• Non-GAAP Operating Earnings: $501 million or $1.53 per share, up 34% year-over-year.
• Adjusted Non-GAAP EPS: $1.59 per share, up 22% year-over-year.
• Assets Under Management and Administration: Increased 20% year-over-year, exceeding $1 trillion.
• Shareholder Returns: $330 million returned, equating to a 65% payout ratio.
• Holding Company Cash: Increased to $2 billion, reflecting a $440 million dividend.
• Retirement Net Inflows: $1.7 billion in the quarter.
• Asset Management Net Inflows: $1.1 billion total, with $2.2 billion active net inflows.
• Wealth Management Advisory Net Inflows: $1.9 billion, with assets under administration exceeding $100 billion.
• Group Retirement Sales: Up 25% year-over-year.
• AB Adjusted Operating Margin: Expected baseline of 33% in 2025, up over 400 basis points from 2022.
• GAAP Net Loss: $134 million, driven by non-economic impacts from hedge portfolio.
• Individual Retirement Net Interest Margin: Increased 5% year-over-year.
• Group Retirement Net Interest Margin: Up 12% year-over-year.
• Alternatives Portfolio Return: Annualized return of 6% in the third quarter.
• Cash Generation Guidance: Expected at the high end of $1.4 billion to $1.5 billion for 2024.

• Warning! GuruFocus has detected 7 Warning Sign with EQH.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Equitable Holdings Inc (NYSE:EQH) reported a 34% year-over-year increase in non-GAAP operating earnings per share, reaching $1.53.
• Assets under management and administration increased by 20% year-over-year, surpassing the $1 trillion mark.
• The company returned $330 million to shareholders during the quarter, maintaining a payout ratio within their targeted range of 60% to 70%.
• Equitable Holdings Inc (NYSE:EQH) experienced positive net flows across retirement, asset management, and wealth management businesses.
• The company completed its annual assumption update with no major changes, validating its conservative approach to assumption setting.

Negative Points

• Equitable Holdings Inc (NYSE:EQH) reported a GAAP net loss of $134 million in the quarter, driven by non-economic impacts from its hedge portfolio.
• Individual Retirement earnings declined on a sequential basis, with some quarterly noise in net interest margin.
• Commission expenses increased due to strong sales, posing a short-term headwind for Individual Retirement earnings.
• The company faces increased competition in the retirement market, which may lead to a decrease in market share.
• Market value adjustment gains on early surrenders declined sharply, affecting Individual Retirement reported spread income.

Q & A Highlights

Q: What is driving the strong annuity sales, and what are the risks to this growth outlook? A: Mark Pearson, President and CEO, explained that while demographic trends have been present for some time, they have not yet peaked, with 4.1 million Americans turning 65 each year. Increased awareness and innovation, such as the RILA market, are also contributing to strong sales. Risks include potential interest rate declines, which could make fixed annuity products less attractive, though protected equity products like RILA may still perform well.

Q: Is Equitable Holdings considering expanding its annuity product lineup beyond RILA? A: Nicholas Lane, Head of Retirement, Wealth Management, and Protection Solutions, stated that the company is focused on segments where it can leverage its unique business model for attractive returns. Equitable is the market leader in RILA, the fastest-growing annuity segment, and is concentrating on leveraging its distribution strengths and emerging retirement needs.

Q: How does Equitable Holdings view the competitive landscape in the RILA market with new entrants? A: Mark Pearson acknowledged that market share might decrease as competition increases, but growth will not slow. Equitable benefits from its integrated business model, participating in all parts of the value chain, which provides a competitive edge. Nicholas Lane added that while new entrants might offer teaser rates, Equitable remains disciplined on cap rates and continues to generate attractive returns.

Q: Can you provide insight into the expected flows from the BlackRock LifePath Paycheck product in the fourth quarter? A: Mark Pearson mentioned that while no flows are expected in the fourth quarter, they anticipate flows starting in the first half of 2025. The partnership with BlackRock, along with others, positions Equitable well for future growth, although none of their 2027 targets rely on this business.

Q: What is the outlook for Equitable Holdings' cash generation and capital management priorities? A: Robin Raju, CFO, indicated that the company expects to achieve the high end of its $1.4 billion to $1.5 billion cash generation guidance for 2024, with a significant portion from noninsurance entities. Equitable plans to reduce its excess cash position over time in a disciplined manner, while continuing to invest in growth and return capital to shareholders.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.