Equitable Holdings Inc (EQH) Q1 2025 Earnings Call Highlights: Navigating Volatility with ...

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Thu, May 1, 2025, 1:11 AM 4 min read

Non-GAAP Operating Earnings: $421 million, or $1.30 per share, down 7% year over year on a per share basis.
Adjusted Non-GAAP Operating EPS: $1.35, down 3% compared to the prior year.
Protection Solutions Segment Loss: $17 million.
Retirement Net Inflows: $1.6 billion in the first quarter.
Wealth Management Advisory Net Inflows: $2 billion.
AB Operating Earnings Growth: 19% year over year.
AB Total Active Net Inflows: $2.7 billion.
Private Markets AUM Growth: Up 20% year over year to $75 billion.
Capital Returned to Shareholders: $335 million in the first quarter, representing an 80% payout ratio.
Ownership in AllianceBernstein: Increased to 69% through a $760 million purchase of AB Holding units.
Combined NAIC RBC Ratio: Approximately 425% at year-end.
Holding Company Liquidity: $1.1 billion after recent transactions.
Total Assets Under Management and Administration: $1 trillion, up 3% year over year.
Book Value Per Share ex AOCI: $27.62.
Adjusted Book Value Per Share: $39.96 as of March 31.
GAAP Net Income: $63 million for the quarter.
Share Repurchases: $261 million in the first quarter.
Quarterly Cash Dividend Increase: 13% to $0.27 per share, pending Board approval.

Warning! GuruFocus has detected 4 Warning Signs with NOG.

Release Date: April 30, 2025

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

Positive Points

Equitable Holdings Inc (NYSE:EQH) reported strong net inflows in its retirement and wealth management businesses, with $1.6 billion in retirement net inflows and $2 billion in advisory net inflows.
AllianceBernstein (AB), a subsidiary of Equitable Holdings Inc (NYSE:EQH), delivered positive net flows across all distribution channels, with a 19% year-over-year increase in operating earnings.
Equitable Holdings Inc (NYSE:EQH) returned $335 million to shareholders in the first quarter, representing an 80% payout ratio, and plans to execute $500 million of incremental share repurchases post the RGA reinsurance transaction.
The company is well-positioned to navigate macro volatility with a strong balance sheet, including a 425% combined NAIC RBC ratio and $1.1 billion of holding company liquidity.
Equitable Holdings Inc (NYSE:EQH) has a robust product portfolio, including the RILA product, which provides downside protection and upside participation, attracting strong demand in volatile markets.

Negative Points

Non-GAAP operating earnings per share decreased by 7% year over year, impacted by elevated mortality claims in the individual life insurance block.
The Protection Solutions segment reported a loss of $17 million due to high individual life mortality claims.
Equitable Holdings Inc (NYSE:EQH) experienced a decline in fee income due to a decrease in average separate account assets and fewer fee days in the first quarter.
The company faces near-term headwinds from market volatility and tax payments, which have pressured April flows.
Equitable Holdings Inc (NYSE:EQH) is exposed to equity market volatility, which affects fee-related earnings, particularly in the Individual Retirement segment.

Q & A Highlights

Q: Can you size the extraordinary dividend you plan to take up to the holding company from the $2 billion proceeds? A: We expect a $2 billion capital release from the life insurance company post-transaction with RGA. We've redeployed about $750 million in AB, leaving us with $1.5 billion. We plan to deploy $500 million on top of the $750 million already invested, leaving about $1 billion for an extraordinary dividend later this year. Given the share price pullback, buybacks are a consideration, but debt repayment will be necessary to manage leverage ratios.

Q: Are you seeing incremental demand for your products given market volatility? A: Yes, we are seeing robust sales in April. Research shows 70% of people are concerned about volatility's impact on retirement assets. Our distribution and product portfolio are well-positioned to meet this demand, with April being a good month for us.

Q: What was the impact of seasonally elevated expenses and lower fee days on earnings or EPS? A: We had some seasonality in expenses related to benefits, taxes, and long-term incentive comp, particularly in individual retirement, impacting earnings by about $10 million pretax. We expect some expenses to normalize next quarter, but equity market volatility remains a factor.

Q: How do you view the momentum of net flows given the volatility in April? A: We see strong structural drivers and heightened volatility enhancing interest in our products. In individual retirement, we had $1.4 billion in net flows with an 8% organic growth rate. Our buffered annuity provides downside protection with upside potential, and we expect consistent growth in our group retirement business.

Q: Are there any plans to move business to your Bermuda entity in the near term? A: Bermuda is operational and provides good optionality for managing cash flows. No further updates at this time, but it remains a part of our capital optimization toolkit.

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

This article first appeared on GuruFocus.

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