Executive Summary / Key Takeaways

• Equitable Holdings is strategically positioned to benefit from the significant and growing U.S. retirement market, driven by favorable demographics and increasing demand for advice and protected solutions.
• The company's integrated business model, spanning insurance, asset management (AllianceBernstein (AB)), and wealth management (Equitable Advisors), provides a competitive advantage by capturing value across the retirement chain and fostering synergistic growth.
• Recent financial performance demonstrates healthy organic growth momentum, particularly in Retirement, Asset Management, and Wealth Management, translating into strong Non-GAAP operating earnings and progress towards 2027 financial targets.
• The planned reinsurance transaction with RGA (RGA) is a pivotal move to significantly reduce mortality volatility in the Protection segment and free up over $2 billion in capital, enhancing financial flexibility for strategic deployment, including planned incremental share repurchases.
• Equitable maintains a robust capital position and predictable cash flows, with over 50% from non-insurance businesses, supporting consistent capital return to shareholders while funding attractive growth opportunities.

The Integrated Engine Driving Retirement Solutions

Equitable Holdings stands as a diversified financial services organization strategically focused on the expansive U.S. retirement market. Its operational footprint is organized across six key segments: Individual Retirement, Group Retirement, Asset Management, Protection Solutions, Wealth Management, and Legacy. This structure reflects a deliberate approach to serve clients across various financial needs, from wealth accumulation and protection to investment management and retirement income. The company's history, marked by its 1992 demutualization and subsequent evolution, including its 2018 IPO, has shaped its current form as a publicly traded entity leveraging an integrated business model.

At the core of Equitable's strategy is the synergy between its insurance, asset management (through its significant interest in AllianceBernstein), and wealth management arms. This integrated approach allows Equitable to participate in multiple parts of the retirement value chain – from manufacturing innovative products like RILAs and structured annuities to distributing them through its proprietary Equitable Advisors network and managing the underlying assets via AllianceBernstein. This contrasts with competitors who may specialize in only one or two areas, potentially giving Equitable an edge in capturing economics and maintaining client relationships. The company's distribution network, particularly Equitable Advisors, is highlighted as a unique asset, providing a stable source of flows and enabling the launch of new products.

Technological sophistication underpins Equitable's operations and product design. The company employs advanced financial modeling, risk management systems, and quantitative hedging strategies. These are critical for designing and managing complex products like variable annuities with guaranteed benefits (GMxB features) and structured products (SCS, SIO, MSO, IUL indexed features). The valuation of embedded derivatives within these products relies on sophisticated models incorporating numerous estimates and market-consistent economic scenarios. Furthermore, the company utilizes AI-driven tools for analytics and processing, contributing to operational efficiency. This technological capability allows Equitable to offer products with specific risk/return profiles, manage associated market risks effectively through dynamic hedging programs, and process transactions with greater speed. For instance, AI tools are noted to offer 10-15% faster processing, enhancing overall efficiency. This technological foundation, combined with its integrated business model, positions Equitable to develop and deliver tailored solutions in a competitive market.

The competitive landscape in the U.S. retirement and asset management sectors is dynamic, featuring large, diversified players like Prudential Financial (PRU), MetLife (MET), Lincoln National Corporation (LNC), and Principal Financial Group (PFG). While these competitors possess significant scale and broad market presence, Equitable differentiates itself through its tightly integrated model and proprietary distribution. Compared to peers like Prudential and MetLife, Equitable's scale is smaller (e.g., $1 trillion AUM vs. PRU's ~$1.4 trillion or MET's ~$1.1 trillion), which can sometimes translate to higher costs or less global reach. However, Equitable's focus on efficiency, particularly within its U.S. operations and advisor network, provides a competitive counterpoint. Its integrated approach, allowing participation across manufacturing, distribution, and asset management, enables it to potentially capture more economics per client than pure manufacturers. The partnership with AllianceBernstein is a key differentiator, providing access to investment expertise and private credit capabilities that support the insurance business's investment yield and offer growth avenues for AB. While competitors like Corebridge (CRBG) and Apollo (APO) are increasing focus on areas like RILA, Equitable, as a market pioneer, leverages its established position and distribution relationships, although market share percentage may shift as the overall market pie grows.

Performance Reflecting Strategic Momentum

Equitable's recent financial performance underscores the traction gained from its strategic focus areas. For the three months ended March 31, 2025, the company reported Non-GAAP operating earnings of $421 million, or $1.30 per share. While this represented a 7% year-over-year decrease on a per-share basis, primarily impacted by notable items including below-plan alternative investment income and elevated individual life mortality claims, the underlying business segments showed solid momentum. Adjusting for notable items, Non-GAAP operating EPS was $1.35, down 3% year-over-year. GAAP net income for the quarter was $63 million, influenced by non-economic hedging impacts.

The Protection Solutions segment reported a loss of $17 million in Q1 2025, significantly impacted by approximately $80 million in elevated mortality claims pre-tax, partly attributed to a harsh flu season. This volatility highlights a key risk the company is actively addressing. In contrast, the Retirement and Wealth Management segments, despite some expected seasonality in Q1, demonstrated underlying strength. AllianceBernstein's operating earnings rose 19% year-over-year in Q1 2025, driven by higher average AUM and improved margins, reaching a 33.7% adjusted operating margin.

Looking at the full year 2024, Equitable reported Non-GAAP operating earnings of $2 billion, or $5.93 per share, representing a 29% year-over-year increase on a per-share basis. Excluding notable items, Non-GAAP operating EPS grew 20%, bringing the two-year growth rate to 12%, aligning with the lower end of the company's 12%-15% annualized growth target through 2027. This growth was supported by a 10% year-over-year increase in assets under management and administration, surpassing $1 trillion, driven by market appreciation and positive net inflows across segments.

Operational achievements contribute directly to financial performance. Through the end of 2024, Equitable and AllianceBernstein achieved $100 million in run-rate expense saves, progressing towards a $150 million target by 2027. Strategic repositioning of the investment portfolio has generated $80 million in incremental net investment income to date, ahead of the $110 million target by 2027. AllianceBernstein's completion of its NYC office relocation is expected to contribute an additional 100-150 basis points of margin expansion starting in Q4 2024.

Liquidity and capital management remain central to Equitable's strategy. The company ended Q1 2025 with $2.2 billion in cash and liquid assets at the holding company, comfortably above its $500 million target. The year-end 2024 combined NAIC RBC ratio was approximately 425%, exceeding the 375%-400% target range. Equitable generated $1.5 billion in cash flow to the holding company in 2024, at the high end of its guidance range, with over 50% originating from non-insurance businesses. This predictable cash flow supports consistent capital return, with a 66% payout ratio in 2024, within the 60%-70% target. Share repurchases have been a significant component of capital return, reducing shares outstanding by approximately 7% in 2024 and 8% over the trailing 12 months ending Q2 2024.

Outlook and Strategic Trajectory

Equitable's outlook is anchored by its confidence in the U.S. retirement market and the continued execution of its strategic initiatives. The company forecasts cash generation of $1.6 billion to $1.7 billion in 2025, representing a 7% to 13% year-over-year increase from 2024, keeping it on track to achieve its $2 billion annual cash generation target by 2027. Non-GAAP operating EPS growth is expected to remain consistent with the 12%-15% target range in 2025.

Key assumptions underpinning this outlook include sustained organic growth momentum, particularly in the Retirement and Wealth Management segments, driven by strong demand for products like RILAs and increasing advisor productivity. AllianceBernstein is expected to benefit from its strategic focus areas, including growing its private markets platform to $90 billion-$100 billion in AUM by 2027, which is projected to account for over 20% of its revenues. AB expects to achieve a baseline adjusted operating margin of 33% in 2025, assuming neutral markets, with further expansion anticipated as the business scales. Alternative investment returns are projected to be at the lower end of the 8%-12% long-term target range in 2025, an improvement from 2024, with returns expected to grade up through the year as M&A and IPO activity potentially accelerates.

A transformative element of the near-term outlook is the planned reinsurance transaction with RGA, expected to close in mid-2025. This transaction will reinsure 75% of the in-force individual life insurance block, significantly reducing exposure to mortality volatility. It is anticipated to free up over $2 billion in capital, which the company plans to deploy strategically. This includes a planned $500 million of incremental share repurchases post-close, in addition to the ongoing 60%-70% payout ratio. The company also expects to take an extraordinary dividend of approximately $1 billion from the insurance company later in 2025 following the close. This influx of capital provides substantial financial flexibility for further potential buybacks (balanced with debt management) or other strategic opportunities.

While the outlook is positive, risks remain. Market volatility, as seen in early 2025, can impact fee income (based on AUM) and alternative investment returns. Interest rate fluctuations can affect spread income and product demand, although Equitable's diversified product suite aims to mitigate this. Credit risk in the general account investment portfolio, particularly in sectors like commercial real estate, is a persistent consideration, though the portfolio is monitored and stress-tested. Regulatory changes, including potential impacts from the DOL fiduciary rule, NAIC capital/reserve requirements, and SEC clearing rules, could affect operations and capital. Competition, particularly from new entrants or aggressive pricing strategies in key markets like RILA, could pressure margins and market share, although Equitable's integrated model and distribution are seen as strong defenses. Despite Q1 2025 results, mortality volatility in the Protection segment remains a risk until the RGA transaction closes.

Conclusion

Equitable Holdings is executing a clear strategy to capitalize on the compelling growth dynamics of the U.S. retirement market. Its integrated business model, combining insurance, asset management, and wealth management capabilities, provides a differentiated competitive position and drives synergistic value creation. Recent financial performance, marked by strong organic growth and progress towards ambitious 2027 targets, underscores the effectiveness of this approach. While challenges such as market volatility and mortality fluctuations can impact near-term results, the planned reinsurance transaction with RGA is poised to significantly de-risk the Protection segment and unlock substantial capital, enhancing financial flexibility. With a robust balance sheet, predictable cash flows, and a strategic focus on high-growth areas and operational efficiency, Equitable appears well-positioned to continue delivering value for shareholders by meeting the evolving retirement needs of its clients.