Equitable (EQH) 4 May 232023 Q1 Earnings call transcript

Thank you for standing by, and welcome to the Equitable Holdings First Quarter Earnings Call. [Operator Instructions] Finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Isil Muderrisoglu, Head of Investor Relations, to begin the conference. Isil, over to you.

to First welcome Call. XXXX and morning, Equitable Quarter Holdings Earnings Good for found be call our Materials can ir.equitableholdings.com. on today's website at

begin, SEC rules to like regulations regarding information is I some and and we forward-looking certain the today we note to subject disclosure. of present Before that would

or results Our in materially forward-looking such from differ by may statements. expressed those indicated

additional So X of Slide harbor language I'd on like to presentation refer information. for you to the safe our

of Equitable Joining of and Officer me Burke, on Chief Financial Officer Chief Officer. Mark call Equitable Operating Chief and Kate President Robin President Pearson, Holdings; Officer; today's is and AllianceBernstein's Lane, our Chief Financial Raju, Executive Nick Financial;

Investor as to related we found call, over comparable are on their accounting supplement. I our presentation release, this be slide and on non-GAAP may prepared not the to definitions the During portion GAAP like of measures the in website, Robin based of for known earnings Mark and accepted measures. non-GAAP these now most be measures turn Reconciliation financial discussing directly our and measures certain remarks. financial Relations generally would that to also will call principles,

core and our and our LDTI quarter, time today's the joining Good we business. additional separating portfolio you disclosures the retirement provided our accounting we wealth under call. is segment are legacy new This thank morning, standard. management for And this presenting results new first also our from through VA

were to markets quarter XXXX and quarter, the movements $XXX prior included lower and past Adjusting alternative down or share. equity get share $X.XX, period, X% Non-GAAP up Let's $X.XX on compared Slide it. On were claims in we X alternatives. notable from straight into million which items in for quarter. elevated highlights year X, reflecting operating XX% and earnings present returns, earnings this mortality per per

the up X% $XXX X% year-to-date. period under administration billion, Assets at down and ended management year-over-year, but

businesses, core with asset wealth $X.X positive this management. and our billion Our inflows in strong quarter results across businesses delivered retirement,

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to Turning capital.

on that across In million billion share we at in supporting consistently can of deliver payout have million we giving We cash our market Holdings, guidance $XXX shareholders, including confidence returned $X.X flexibility cycles. to $XXX financial and repurchases. quarter, the

which delivered As such, in at stated the guidance. upper our the is of a end XX% payout we quarter,

levels. remain Our target RBC ratios above

most the introduction change and closer XX accounting the accounting in new quarter of alignment This standards, greater transparency Equitable over years. sees meaningful and the the value LDTI management. fair welcomes between the

be to for are show businesses investors. taking what will better opportunity this think we way We also in a our

and are that before market-leading this like the have This business. book that capital-intensive hedging XX% spread-based more it scenarios, and we products. Products to value, lumped legacy was and benefits. in business assets have is of years have of now the perfectly we withstand since was billion from obscuring our the worst retirement IPO. that living of legacy since average Firstly, longer risks matched is no The needed we in buyback legacy the successful reinsurance, significant. no IPO, out only account portfolio the retirement very core the with reflects reduced our splitting VA our value X% SCS danger reducing our over CTEXX, capital-intensive and XX% programs, by are fact and in $XX The on our X the been is capital-light total. Through ALM individual the

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Turning X. Slide to

see changed our the our offerings. now AUM new $XX and greater will into investors a spread-based segment in of of segment, of totals the This size, operating mix disclosures. Retirement, of visibility earnings in our an power earnings fee-based retirement XX% has You billion earnings approximately in has have Individual momentum and overview In and in what largest quarter. core

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of seed now money are third-party XXX% return every for the account at very uniquely last acquisition, new has We CarVal approximately broad and built funds received alternatives Equitable sales. of and sales positioned year. Equitable been AB in the returns. Equitable nearly platform, adviser life for Equitable which retirement uses in risk-weighted annuity management. go build-out and its insurance from also successful to the XX% business XX,XXX advisers $X of see a advice, general asset markets to AB's has $XX of has higher in attracting private stands $X billion. in including now third-party of

our to general over AB, higher which $XX attractive deployed yields of at billion provides have revenue XX% capital high and account fee multiple commitment We AB.

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from demand all $X In XX% persistency. of XX% our RILA to billion led from and Turning strong retirement, continue by had our benefiting as sales come demand delivered client net up year-over-year, premiums, affiliated Approximately inflows, billion quarter on $X.X of in we and innovate for we suite the products, capitalize of with distribution. We to our equity. another protected businesses. strong

our progress to We expense achieve continue rate remain target also achieving $XX through We on savings to initiatives by quarter run year-end. on million track end. this

the on a inflows of flows billion X% segment, $X.X inflows active $XX and of administration fixed Equitable to asset $XX year-to-date in generated CarVal. the and X/X focused now positive billion, our quarter we on advisers In new improve and free planners, resilient to risk, the retail $X.X AB's be to cash with wealth the continued our financial in fee conversion of generated in higher give pipeline $X.X XX% confidence business. In remains retirement, channel, investors with comfortable with asset productivity net to billion. realized improved shift we our keen XXX $XX to of platform. In markets and management Turning under wealth to alternatives, businesses we billion taking institutional rate which our of this management. take fee-based which addition all of X% private flow strong advice, income platform investment driven margin us high to by expect year-over-year, unique summary, have yields. AB's in billion, growth comprised and continue assets net towards we're Advisers, management growth continue networth in AB's billion is improvements of more continues markets. In global private products. Through as planning wealth advantage of became by

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pass the Robin data over into me to you. Robin? go for to Let

Mark. you, Thank

highlighted. areas minutes Turning spend to just a Slide few X. I X will now discussing the Mark

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lower as Additionally, would you expect. year-over-year, were alternatives

by share and up the offset fourth real year-over-year declines traditional $XX strategies, for down performance million per XXXX. the comparable private a or by our in which growth our per earnings over $XXX non-GAAP can our equity strategy. against was in impact year-over-year. In equity in SCS as operating is in million X% business additional and notable which of quarter gains market largely which lower the alternative our experienced productivity, on our estate spread of savings count had you by by our portfolio and share, strong results, but an investments, captured in This Our reduced driven benefit share the we share returns, in quarter, continue were million the growing XX% quarter. see of we $X.XX $XX to also of buybacks, which Adjusting X% offset execute basis, items

This hedges, rate million assets the OCI. Quarter $XXX with market year-over-year end reduced management to administration under reported general We movements, results. in sensitivity line GAAP interest as captured quarter. market account income LDTI's net lower. equity in and declines assets which and by to Turning positive in under movement XX% are reflects our was of drove

net under up markets However, elevated each the inflows X% quarter and drove the assets our in first management businesses and versus in administration of quarter. last

XX. Slide to Turning

prudent capital capital reduction repurchases, Our a ongoing return count management in the we returned million X includes of In to in volatility. consistently resulting million us has $XXX million, despite enabled which the quarter. $XXX quarter, market the share

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following a billion cash $X.X maturity have cash the repayment latest company. number in the April. holding This our of debt is of We at net

through XXXX. we various no debt more As a flexibility us have until cycles This financial forward. market maturities to reminder, provides going navigate

generation above up by with XXX from Additionally, holding $X.X yield to company. our the track now the of [Audio billion back to this month, will $X.XX and enabled remarks. X% coming XX% Mark we this cash nearly Gap] This our up diverse we of nearly to closing management for company will generation per X.X% are year. guidance to Mark? our call sources AB, the wealth dividend of I on entities for cash is share, our to $X.XX. This for S&P dividend turn is which yield increase the bring intend average unregulated from

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our We consistently again wealth Through looking to continue providing to host on and asset have for meeting of team proud anniversary with value our highlighting to delivered and productivity week we enhanced questions. information your management execute the our line additional and we'll IPO, for public open now as XX% as we disclosures, to including to what to earnings and our targets, on since investors also our to our We're returning Investor retirement, clients ahead Day a incredibly of are franchises. company. I'm shareholders. X-year shareholders next XX% looks our opportunity the Equitable growing management you, savings Holdings. Thank forward stated and forward we

[Operator question our begin Instructions] will from Elyse We Wells from first Greenspan Fargo.

net first and the have and of of in billion guys question, so you guys you target. at debt My so time. a remarks, mentioned volatile that's right, good have amount just above times prepared recent parent, obviously $X.X your couple uncertain maturity the A

where So about lot uncertainties now? would right how deal to out of reference your to we target, be in you just think want a we should with as million $XXX there

at the from the holdco program; and coming flows business. and two, in risk We're we cash management continued type strong that that AllianceBernstein economic along in of with that's the wealth environment. Good able quite one, the pleased with of this diversified management $X.X be company to from to our business, And cash dividends up to a morning, sit market Sure. hedging Retirement Elyse. of have the of, reflection sources holding we billion have

meet we'll allow term, which us payout have to this over the at cash XX% ratio. continually we the And relates cash -- Given reassess billion until $X.X environment on We market company year, the prefer up. free flow will holdco track our a as have to generate holding uncertainty around environment, it to we're clears of still the this buffer XX% to us. market to still the long position the

your just Could Arizona? on business in your an New to update you also of provide out York us progress moving

Sure.

there multiple steps there. are So

Arizona. Individual our be moving new was business, Retirement one to We year. business completed out last of first that The written

our largest is the policies business Retirement the came of from from Arizona non-New billion of our company. $X.X from all which line, this So York Individual our line, sales year

the year. is we're Second on then on of And company our business will our working completed be Retirement reinsurance. and in-force, third, to be this track internal in Group our on that process restructuring

We that update on an forward look continue and to providing once work to completed.

next Your question of Bhullar Jimmy from line JPMorgan. from the comes

loan So you book. portion any months that's on first, list and are just are on how the portfolio? loans specifically in that the the or able Any on to overall your a question trended watch on book of metrics your provide problem office mortgage for -- those recent commercial and

our I'll especially Jimmy. general sector account, of to Sure. is A see Class rate would comments and office that of a that office tenants important strong X% maturities buildings, Thanks, when are. over coverage all strong which XX% few a capabilities who our total loans a we we occupancy sector CML date amount. Less just a a reiterate underwriting about And is credit, and just debt-to-service the really that spectrum. and troubled in of up in wide just in limited debt-to-service like come you means your It's ratio, on than in risk coverage be a X% the the sector, what's any portfolio. certainly we're But have other sector, in, in ratio have which nearly XXXX. the

also well look different at you if in of and that actually X% quality and then of and feel decreased in latest most CMX we the portion CMX from So our the it's portfolio XXXX portfolio. quarter. X% the And CMX the in to positioned pieces,

time, we we think Jimmy, annual important. and on our that's not appraisals an you basis, same that's update everybody and something So at we've as improvement. seen And actually the know, does,

longer-term expectation maybe because the on seasonal of business volatility power the for And how Protection the beyond mortality Protection annual much what's basis? or was normal your versus of then the And loss business, on of poor seasonality? earnings

Sure.

did is face we which and amounts is on from But So state, more higher quarter volatility. VUL things occurring an side. business the of on lead up into we on seasonality. written see of higher some the to naturally this endemic first Protection to of see few move mortality One lead are COVID normal and mortality a the most that policies, a our to pandemic top

see season did think quarters, into But higher we X year, a bad, flu the which our amounts. expectations. addition, XXXX-XXXX and back those in face important, line especially look it's reserves has particularly In mortality and if I impacting been was over last higher you with our GAAP

you line So is X in XXXX, the the result quarters although cumulative see by volatility, and you is positive in our that followed line X important, profitability end business. negatives, consecutively saw in and of for and shows the what's pricing

we our rate put market. to forward year, that back run look into protection expect to the we'd As to mortality we the normalize out

And so with in in expectations. we far mortality line April, see

Okay. not? And on currently performing you are just the on the or or mortgage have watchlist loans, loans do not that any

We do.

to But XXX X have on book to our high as of the is I monitor. we close overall continue about the We everything, loans and watchlist, quality. said,

in or it come And X Okay. has last few fairly just been consistent that up has months? the

Been consistent.

question next of Gallagher Your Tom the from is EVR. from line

went from that just of you down follow loans I on correctly, I up you XXXX year-end hear last mortgage the you CMX-rated to answer commercial gave wanted book. to loan ratings X% in X% at in on Did QX? Robin, migration

right. That's

was year. the it -- last over Our improved actually over ratings

in were in to it So moved XXXX down X% ratings and CMX. X% our

even this actually the overall environment. despite improved the quality of So book

all So again, who office back that are that the quality and in. the It's goes your about the space tenants the to you're of underwriting, testament.

Okay. XXXX. to year clear that I year-end was timing, I'm just -- it Is on though. was at down -- want that to a make that X% sure

have would something get end been your that reflected Or would at RBC this tailwind of quarter that in is an that on? then at 'XX? past year-end just we So happened RBC that the

to from last X% over the down. it's No, year. It moved X%

at So reflected year-end. today, as And some of here X%. of we it's first is that in stand as quarter, the

you. Got

just over in big the a So was that one of year? that course drop wasn't quarter, the

Correct.

Okay. for $XXX company. My the a Life 'XX, you're million think $XXX reiterating of the cash out dividend implies is that other $X.X that generation to question million I billion of still

reading, from what this I I recall think of $X.X capacity year. have you billion dividend

curious going higher approach midyear you're the to Life just billion we're what on how out thinking get capital the a something than Is $X.X to dividend that, take guess, depending it how lot about of as of company? I you decision generation a how So your much possible of looks?

Sure.

have have York. capacity, the business, moving in we're to York position strong the business company. So flow capital successful that to and we'll New the intend to in the Keep need the our if excess $X.X we we've New capital the dividend $XXX ordinary York use retirement million our dividend a mind non-New to we'll and We although capital to meet also of assumes guidance from from is cash our free policies market, billion fund given the in business. in for liabilities that those

the So we'll extraordinary liabilities non-New dividend -- the that as elect well. to to that use some we capacity we to that back the of capital entity York move

cash you basis the leading flow So free $XXX million free to a at of is the I number look to cash billion $X.X guidance. from think need flow

of comes line Andrew Kligerman from Suisse. next Your Crédit the question from

Just mortgage these following reevaluate up loans. commercial every on you the year, loans. Robin, that mentioned you

have we first about Is LTV? thinking Could that changed it a potentially year-end the a So should in lot how number? quarter? XX% be the

income tenants update buildings an with of the the the annual as basis, -- the number these is we as of historically, But in quarter. those we quarter have different yes, and on first strong is that a market first seen I Look, year and in tenants. from you've the reflects the environments think it strength -- XX% that we're in coming

know of we our all addition, any third-party lower that should appraisals received. In are than appraisals that you

those relates conservative as to So our a appraisal as it taking meaning we're LTVs to methodology approach well.

I'm Robin. sorry,

course during property year, of So happens on each the the other you're updates words, getting in each and a year. once

there some 'XX. of course in not are the be old several that they're could months XQ So that completed

within done 'XX, year. been they're of the a Some it? that XQ could think have right it to for way in all example, but about Is

that's think to the right it. about way Yes,

any to And bit Okay. looks RILA regard about product any on wholesaling? it feature a what's Individual then sales? there -- changes; the little major Got up the Retirement in talk first terms last the driving billion, it. segment, little premiums and of $X.XX year solid from with any strong really Were two, major bit one, Could you a year. color

Sure. This is Nick.

come we're we're increase value XXXX evidenced capture share in a positioned XX% to, value off volume of to the a some with well and quarter, stories. in also and record in and third you party first did alluded you privilege Advisers building we We track communicating innovation. but mentioned, network the equity new As our given both a of I RILA distinct of by record distribution think long Look, record as protected of distribution the where of based disproportionate affiliated have segments our track sales. our and out Equitable

and forward. macro think a edge our the So continue given given to to we trends go sustainable distinct position, we have

And call the different was that out from any you ago? would particular year feature

consistent attribute would to performance. structural of it our I modes

Day forward forward. to to I next and a We continue look we've innovate, week. detail obviously going sustainable I into more got at think Investor So edge going

line of Suneet comes Jefferies. the Your next from Kamath from question

like of time your So from that's X sector. the XX%, lot got with But which your payout of seems that broadly it about deck, on life XX% to if lift you capital-light, about maybe which line sense. ratio, LDTI, a think a spent in Slide I makes talking

as eventually your to denominator? guess, to business I the we more sort opposed expect the the XX% upside in XX% of should that driven by mix, changes given So numerator to some

ratio the to to, XX%, that at outcomes from payout Suneet. is XX% larger range had at time. recall the IPO, Thanks, Sure. as business you just our I'll mix of that you we representing point

which continue year, the cash. XX% of of business business isn't LDTI certainly going As is do because that move new time, mix could we never over shift mix, recognized that a we've higher. earnings to improved think under XX% to to move just could ratio to you have under we well a that as recognized and move lead improve from that but overall, closer to as in continue mix that GAAP heard I business writes for the business it's is in Nick, given as be retail-oriented as aggregate payout But to But yes, lot our cash, we time. that profitable, to sales business now fund XX%. Over XXX%

Okay. when business 'XX. wealth $XX That you looking guess, then, just like was I that in flat. the million LDTI Revenues earnings looks And sense. I on in give the were out in makes put you management at your million and to business, 'XX went that it disclosures, like supplement $XXX from the

the So the be and market seemed driver came there expenses, growth challenges. big that despite to

such just what I So forward? big that caused earnings trajectory And what's big kind we little that so just like wanted sense on happened expense maybe unpack a move, to 'XX this business that's lift? maybe of side of going a like the a get bit of that in the

is This Nick. Sure.

continues assets accounts. in to The P&L Equitable As through a business, reminder, there the Advisers. unpack cash a that by our fast saw, It will sweep growing are our and the drivers Investor new fees as management the net distribution is the evidence, a and Day you be fees, increase main X wealth advisory in flows. segmentation entire of comprehensive

about excited move So believe growth edge and continue a have distinctive we're to that we business the of forward. to

good pretty Suneet. a It's model,

flat a look the interest from down, earnings that are year-over-year, benefiting rate big you piece If just mentioned. sweeps and being Nick despite AUA

interest an I So had we million think benefit rate $XX sweeps. from year-over-year

to fastest-growing it's we'll model we this So sit in business of as today. environment, and here grow, continue our it's type a good that market line

That talk of week, about management cover that we focused you but businesses, have have sort on of one thinking about? growing of guys I you'll that some another internally just other sort this is in could bank makes a in of quiver sneak the next of and in arrow driving that something maybe growth. wealth Is just that more If kind companies sense. the terms are

get -- Day. answering Nick on I we have our addition but look, that other we to couldn't will bank on more it all imagine questions about on Investor in touch -- and a questions the

this have gives LPL us interest sweep accounts leveraging rate with at model a benefiting relationship leverage our from We good and good level. type pretty the of that internal

the have. we comfortable pretty we So in model that feel

the line Alex of question comes Your next Scott, Goldman Sachs. from

wanted that help GAAP of provide? I business, do could could First you legacy restructuring, to some just just one this whether of something capital that value amount that's allocation, of of and through or you the amount I kind of us stat is you it? think capital as what kind business. is on all backing to backing Is the allocation of that had if see the frame

as measure almost a XX% legacy XX% year-end, small. years. Look, today as the is to highlighted It's about $X The we $X think the our $XX since the call. $X quite billion to CTEXX, about capital from organically I off on bit it, behind to And billion we total by by run and declined AUM. business has IPO of billion it over billion continues Sure. of

on shareholders. and the So business. to it And and grow Venerable continue we're for validated time, flow core business reserved. was quite we'll cash generate run It's That done work transaction. pleased over that through off, fully with good the will that

Got question more it. And a theoretical had, second question. the mean, really I I

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Benguigui Your line question next from comes of from Barclays. Tracy the

not funding upon realize topic FABNs the your I are ALM, agreements. like touch that I of On surrenderable. to would

match FABNs of noticed with So operating XXXX XXXX run-on is is that concept. due that duration deposits really no assets. your billion. I there's But and debt $X.X to key the And type backed

you any So that backing to balance? those go assets order opportunistically and my in maintain see could down? Or balance the question the that so is, did with approach do actually you same market issues duration, more you build have refinancing assumption in

Tracy, the thanks for question.

book FABN perfectly Our is matched.

and duration-matched. We ensure we And an as well. know, that opportunistic you in agencies trade that as that it's it's the have marketplace, -- perfectly have we rating require

Okay. Awesome.

was season. at prior flu XX,XXX, like it's this it looks and your low looking telling just comment on to clarification quick seasons a morning does data pre-pandemic. Just actually CDC feel about a I versus which higher

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generate XX that's to and from across generation. points That's all that of protection right. capital That's the retirement we businesses, RBC purely organic expect

of comes KBW. from from line question the Ryan next Your Krueger

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Citi. Michael Your of Ward line next the question from comes from

was the on the was you if office wondering could the component wondering I isolate I just loan in test. RBC points. stress mortgage

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at points. combined the all it's XX So

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you then migration and line. the XXX%, assumes after, have loan on we take take ratings test. some see well we assumes above a you assume migration And that's that the on in that it on as doesn't stress hit our It it what equity of

then Okay. And more. maybe one

or Just commercial have property office you any loans extended already?

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good with with a the tenants. We long-standing history work have [indiscernible]. We extensions on them

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day, joining are there today's As of you Enjoy the today's no us. This may further your I for would for presentation, and thank speakers to all like disconnect. now and our concludes you rest thank questions, conference. now