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  • Equitable Holdings Reports Third Quarter 2024 Results

    November 5, 2024 by Equitable Holdings, Inc

    NEW YORK–(BUSINESS WIRE)–Equitable Holdings, Inc. (“Equitable Holdings”, “Holdings”, or the “Company”) (NYSE: EQH) today announced financial results for the third quarter ended September 30, 2024.

    “Our third quarter results highlight sustained organic growth momentum across the company. Non-GAAP operating earnings per share of $1.53 increased 34% from the prior year quarter and were up 22% excluding notable items. In Retirement, our business is growing as we find solutions to serve more Americans’ retirement needs, and we reported net inflows of $1.7 billion in the quarter. Our Wealth Management business delivered record advisory net inflows of $1.9 billion supported by advisor headcount growth and increased productivity. AllianceBernstein also reported its third consecutive quarter of net inflows, including $2.2 billion of active net inflows. The combination of strong new business activity and favorable market conditions drove assets under management and administration to a record $1.0 trillion, which will support future growth in both fee- and spread-based earnings,” said Mark Pearson, President and Chief Executive Officer.

    Mr. Pearson concluded, “Turning to capital, we returned $330 million to shareholders in the quarter, which translates to a 65% payout ratio, consistent with our 60-70% target. Based on our strong business performance and the capital generated year-to-date, we now expect 2024 cash generation to be at the higher end of our $1.4 billion to $1.5 billion guidance range. We remain on track to deliver $2.0 billion of annual cash generation by 2027.”

    Consolidated Results

     

     

     

     

    Third Quarter

    (in millions, except per share amounts or unless otherwise noted)

     

    2024

     

     

     

    2023

     

    Total Assets Under Management/Administration (“AUM/A”, in billions)

    $

    1,034

     

     

    $

    860

     

    Net income (loss) attributable to Holdings

     

    (134

    )

     

     

    1,064

     

    Net income (loss) attributable to Holdings per common share

     

    (0.47

    )

     

     

    3.02

     

    Non-GAAP operating earnings

     

    501

     

     

     

    413

     

    Non-GAAP operating earnings per common share (“EPS”)

     

    1.53

     

     

     

    1.15

     

    As of September 30, 2024, total AUM/A was $1.0 trillion, a year-over-year increase of 20%, primarily driven by higher markets over the prior twelve months.

    Net income (loss) attributable to Holdings for the third quarter of 2024 was $(134) million compared to $1.1 billion in the third quarter of 2023.

    Non-GAAP operating earnings in the third quarter of 2024 was $501 million compared to $413 million in the third quarter of 2023. Adjusting for notable items5 of $20 million, third quarter 2024 Non-GAAP operating earnings was $521 million or $1.59 per share.

    As of September 30, 2024, book value per common share including accumulated other comprehensive income (“AOCI”) was $5.26. Book value per common share excluding AOCI was $26.16.

    Business Highlights

    • Business segment highlights:
      • Individual Retirement (“IR”) reported third quarter net inflows of $1.9 billion, and first year premiums were up 27% over the prior year quarter, with growth across all products. On a trailing twelve month basis, organic growth was 9%.
      • Group Retirement (“GR”) reported third quarter net outflows of $246 million, including $87 million of outflows in the tax-exempt channel, which reflects seasonality in the business.
      • Asset Management (AllianceBernstein or “AB”)6 reported net inflows of $1.1 billion. Active net inflows of $2.2 billion were primarily driven by the retail channel.
      • Protection Solutions (“PS”) reported $793 million of gross written premiums with accumulation-oriented VUL first year premiums up 25% and Employee Benefits first year premiums up 32% over the prior year quarter.
      • Wealth Management (“WM”) reported record advisory net inflows of $1.9 billion, with total assets under administration reaching $100 billion. On a trailing twelve month basis, advisory organic growth was 8%.
      • Legacy (“L”) had $712 million of net outflows and continues to run-off at $2-$3 billion annually.
    • Capital management program:
      • The Company returned $330 million to shareholders in the third quarter, including $76 million of quarterly cash dividends and $254 million of share repurchases. This was consistent with our payout ratio target of 60-70% of Non-GAAP operating earnings.
      • The Company reported cash and liquid assets of $2.0 billion at Holdings7 as of quarter end, which remains above the $500 million minimum target.
    • Delivering shareholder value:
      • The Company has deployed $11 billion of its $20 billion capital commitment to AB. This supports growth in AB’s Private Markets business, which currently has $68 billion in assets under management.
      • The Company remains on track to achieve its 2027 strategic targets of $150 million of net expense savings and $110 million of incremental general account investment income.
    • Completed annual actuarial assumption review:
      • The Company completed its annual actuarial assumption update, which resulted in post-tax benefits of $16 million to net income and $3 million to Non-GAAP operating earnings.

    Business Segment Results

    Individual Retirement

    (in millions, unless otherwise noted)

    Q3 2024

     

    Q3 2023

    Account value (in billions)

    $

    108.9

     

     

    $

    83.5

     

    Segment net flows (in billions)

     

    1.9

     

     

     

    1.7

     

    Operating earnings (loss)

     

    225

     

     

     

    220

     

    • Account value increased by 30%, driven by positive market performance and net inflows over the prior twelve months.
    • Net inflows of $1.9 billion in the quarter were higher versus the prior year quarter, and first year premiums of $4.9 billion increased by 27%.
    • Operating earnings of $225 million, were up year-over-year primarily due to higher net interest margin and fee-type revenue partially offset by higher commissions and distribution-related payments.
    • Operating earnings adjusted for notable items8 decreased from $233 million in the prior year quarter to $231 million. Notable items of $6 million in the current period reflects lower net investment income from alternatives and a true-up commission adjustment.

    Group Retirement

    (in millions, unless otherwise noted)

    Q3 2024

     

    Q3 2023

    Account value (in billions)

    $

    40.9

     

     

    $

    33.9

     

    Segment net flows

     

    (246

    )

     

     

    (130

    )

    Operating earnings (loss)

     

    141

     

     

     

    105

     

    • Account value increased by 21%, primarily due to market performance over the prior twelve months.
    • Net outflows of $246 million in the third quarter, including $87 million of net outflows from the tax-exempt channel due to seasonality in the K-12 educators offering. Institutional net inflows were limited in the quarter, in line with expectations, with additional plans expected to fund in 1H’25.
    • Operating earnings increased from $105 million in the prior year quarter to $141 million, primarily due to higher fee-based revenue and higher net interest margin.
    • Operating earnings adjusted for notable items8 increased from $113 million in the prior year quarter to $134 million. Notable items were $(8) million in the quarter and reflect an annual assumption update partially offset by lower net investment income from alternatives and one-time model updates.

    Asset Management

    (in millions, unless otherwise noted)

    Q3 2024

     

    Q3 2023

    Total AUM (in billions)

    $

    805.9

     

     

    $

    669.0

     

    Segment net flows (in billions)

     

    1.1

     

     

     

    (1.9

    )

    Operating earnings (loss)

     

    111

     

     

     

    99

     

    • AUM increased by 20% due to market performance over the prior twelve months.
    • Net inflows of $1.1 billion in the quarter as net inflows of $5.4 billion in the Retail channel and $0.1 billion in Private Wealth were partially offset by net outflows of $4.4 billion in the Institutional channel.
    • Operating earnings increased from $99 million in the prior year quarter to $111 million, primarily due to higher base fees on higher average AUM and lower expenses, partially offset by higher commissions and distribution related expenses.

    Protection Solutions

    (in millions)

    Q3 2024

     

    Q3 2023

    Gross written premiums

    $

    793

     

     

    $

    756

     

    Annualized premiums

     

    88

     

     

     

    79

     

    Operating earnings (loss)

     

    46

     

     

     

    34

     

    • Annualized premiums increased 11% year-over-year, driven by VUL and Employee Benefits.
    • Operating earnings increased from $34 million in the prior year quarter to $46 million, primarily due to improved net mortality experience, partially offset by annual assumption and one-time model updates.
    • Operating earnings adjusted for notable items9 increased from $62 million in the prior year quarter to $73 million. Notable items of $27 million this period reflect the impact from annual assumption and one-time model updates and lower net investment income from alternatives.

    Wealth Management

    (in millions, unless otherwise noted)

    Q3 2024

     

    Q3 2023

    Total AUA (in billions)

    $

    100.4

     

     

    $

    79.4

     

    Advisory Net Flows (in billions)

     

    1.9

     

     

     

    0.9

     

    Operating earnings (loss)

     

    50

     

     

     

    40

     
    • AUA increased by 27% due to market performance and net inflows over the last twelve months.
    • Record advisory net inflows of $1.9 billion in the quarter, primarily attributable to increased sales.
    • Operating earnings increased from $40 million in the prior year quarter to $50 million, primarily due to higher advisory and distribution fees partially offset by higher commissions and distribution-related payments.

    Legacy

    (in millions)

    Q3 2024

     

    Q3 2023

    Account value (in billions)

    $

    22.3

     

     

    $

    20.6

     

    Net Flows

     

    (712

    )

     

     

    (560

    )

    Operating earnings (loss)

     

    27

     

     

     

    31

     

    • Account value increased 8% versus the prior year period as positive market performance was partially offset by outflows as the block runs off.
    • Net outflows of $712 million were in line with expectations as this business continues to run-off at $2 billion to $3 billion annually.
    • Operating earnings decreased from $31 million in the prior year quarter to $27 million, primarily due to lower net investment income as a result from lower average asset balances.
    • Operating earnings adjusted for notable items10 increased from $29 million in the prior year quarter to $34 million. Notable items of $6 million in the current period include the impact from the annual assumption update and lower net investment income.

    Corporate and Other (“C&O”)

    The operating loss of $99 million in the third quarter decreased from an operating loss of $116 million in the prior year quarter. After adjusting for notable items10, the operating loss increased from $109 million in the prior year quarter to $111 million.

    Exhibit 1: Notable Items

    Notable items represent the impact on results from our annual actuarial assumption review, approximate impacts attributable to significant variances from the Company’s expectations, and other items that the Company believes may not be indicative of future performance. The Company chooses to highlight the impact of these items and give Non-GAAP measures less notable items to provide a better understanding of our results of operations in a given period. Certain figures may not sum due to rounding.

    Impact of notable items by segment and Corporate & Other:

     

    Three Months Ended
    September 30,

    (in millions)

     

    2024

     

     

     

    2023

     

    Non-GAAP Operating Earnings

    $

    501

     

     

    $

    413

     

    Post-tax Adjustments related to notable items:

     

     

     

    Individual Retirement

     

    6

     

     

     

    13

     

    Group Retirement

     

    9

     

     

     

    9

     

    Asset Management

     

     

     

     

     

    Protection Solutions

     

    18

     

     

     

    37

     

    Wealth Management

     

     

     

     

     

    Legacy

     

     

     

     

    1

     

    Corporate & Other

     

    (10

    )

     

     

    8

     

    Notable items subtotal

     

    23

     

     

     

    68

     

    Impact of Actuarial Assumption Update

     

    (3

    )

     

     

    (13

    )

    Non-GAAP Operating Earnings, less Notable Items

    $

    521

     

     

    $

    468

     

     

     

     

     

    Impact of notable items by item category:

     

    Three Months Ended
    September 30,

    (in millions)

     

    2024

     

     

     

    2023

     

    Non-GAAP Operating Earnings

    $

    501

     

     

    $

    413

     

    Pre-tax adjustments related to Notable Items:

     

     

     

    Model Updates/True-Up Adjustments

     

    12

     

     

     

    4

     

    Mortality

     

     

     

     

    35

     

    Expenses

     

     

     

     

     

    Net Investment Income

     

    16

     

     

     

    24

     

    Subtotal

     

    27

     

     

     

    63

     

    Post-tax impact of Notable Items

     

    23

     

     

     

    68

     

    Impact of Actuarial Assumption Update

     

    (3

    )

     

     

    (13

    )

    Non-GAAP Operating Earnings, less Notable Items

    $

    521

     

     

    $

    468

     

     

     

     

     

    Earnings Conference Call

    Equitable Holdings will host a conference call at 9 a.m. ET on November 5, 2024 to discuss its third quarter 2024 results. The conference call webcast, along with additional earnings materials, will be accessible on the company’s investor relations website at ir.equitableholdings.com. Please log on to the webcast at least 15 minutes prior to the call to download and install any necessary software.

    To register for the conference call, please use the following link:
    EQH Third Quarter 2024 Earnings Call

    After registering, you will receive an email confirmation including dial in details and a unique conference call code for entry. Registration is open through the live call. To ensure you are connected for the full call we suggest registering a day in advance or at minimum 10 minutes before the start of the call.

    A webcast replay will be made available on the Equitable Holdings Investor Relations website at ir.equitableholdings.com.

    About Equitable Holdings

    Equitable Holdings, Inc. (NYSE: EQH) is a leading financial services holding company comprised of complementary and well-established businesses, Equitable, AllianceBernstein and Equitable Advisors. Equitable Holdings has $1,034 billion in assets under management and administration (as of 9/30/2024) and more than 5 million client relationships globally. Founded in 1859, Equitable provides retirement and protection strategies to individuals, families and small businesses. AllianceBernstein is a global investment management firm that offers diversified investment services to institutional investors, individuals and private wealth clients. Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) has 4,400 duly registered and licensed financial professionals that provide financial planning, wealth management, retirement planning, protection and risk management services to clients across the country.

    Note Regarding Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “intends,” “seeks,” “aims,” “plans,” “assumes,” “estimates,” “projects,” “should,” “would,” “could,” “may,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Equitable Holdings, Inc. (“Holdings”) and its consolidated subsidiaries. These forward-looking statements include, but are not limited to, statements regarding projections, estimates, forecasts and other financial and performance metrics and projections of market expectations. “We,” “us” and “our” refer to Holdings and its consolidated subsidiaries, unless the context refers only to Holdings as a corporate entity. There can be no assurance that future developments affecting Holdings will be those anticipated by management. Forward-looking statements include, without limitation, all matters that are not historical facts.

    These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (i) conditions in the financial markets and economy, including the impact of geopolitical conflicts and related economic conditions, equity market declines and volatility, interest rate fluctuations, impacts on our goodwill and changes in liquidity and access to and cost of capital; (ii) operational factors, including reliance on the payment of dividends to Holdings by its subsidiaries, protection of confidential customer information or proprietary business information, operational failures by us or our service providers, potential strategic transactions, changes in accounting standards, and catastrophic events, such as the outbreak of pandemic diseases including COVID-19; (iii) credit, counterparties and investments, including counterparty default on derivative contracts, failure of financial institutions, defaults by third parties and affiliates and economic downturns, defaults and other events adversely affecting our investments; (iv) our reinsurance and hedging programs; (v) our products, structure and product distribution, including variable annuity guaranteed benefits features within certain of our products, variations in statutory capital requirements, financial strength and claims-paying ratings, state insurance laws limiting the ability of our insurance subsidiaries to pay dividends and key product distribution relationships; (vi) estimates, assumptions and valuations, including risk management policies and procedures, potential inadequacy of reserves and experience differing from pricing expectations, amortization of deferred acquisition costs and financial models; (vii) our Asset Management segment, including fluctuations in assets under management and the industry-wide shift from actively-managed investment services to passive services; (viii) recruitment and retention of key employees and experienced and productive financial professionals; (ix) subjectivity of the determination of the amount of allowances and impairments taken on our investments; (x) legal and regulatory risks, including federal and state legislation affecting financial institutions, insurance regulation and tax reform; (xi) risks related to our common stock and (xii) general risks, including strong industry competition, information systems failing or being compromised and protecting our intellectual property.

    Forward-looking statements, including any financial guidance, should be read in conjunction with the other cautionary statements, risks, uncertainties and other factors identified in Holdings’ filings with the Securities and Exchange Commission. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

    Forward-looking Non-GAAP Metrics

    The Company has presented forward-looking statements regarding Non-GAAP operating earnings, Non-GAAP operating earnings per share and Adjusted Operating Margin at AB. These non-GAAP financial measures are derived by excluding certain amounts, expenses or income, from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts that are excluded from these non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period. We are unable to present a quantitative reconciliation of forward-looking adjusted operating earnings per share and payout ratio targeted to non-GAAP operating earnings to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict all of the necessary components of such GAAP measures without unreasonable effort or expense. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the Company’s future financial results. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others changes in connection with quarter-end and year-end adjustments. Any variations between the Company’s actual results and preliminary financial data set forth above may be material.

    Use of Non-GAAP Financial Measures

    In addition to our results presented in accordance with U.S. GAAP, we report Non-GAAP Operating Earnings, Non-GAAP Operating ROE, and Non-GAAP operating common EPS, each of which is a measure that is not determined in accordance with U.S. GAAP. Management principally uses these non-GAAP financial measures in evaluating performance because they present a clearer picture of our operating performance and they allow management to allocate resources. Similarly, management believes that the use of these Non-GAAP financial measures, together with relevant U.S. GAAP measures, provide investors with a better understanding of our results of operations and the underlying profitability drivers and trends of our business. These non-GAAP financial measures are intended to remove from our results of operations the impact of market changes (where there is a mismatch in the valuation of assets and liabilities) as well as certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results that are presented in accordance with U.S. GAAP and should not be viewed as a substitute for the U.S. GAAP measures. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Consequently, our non-GAAP financial measures may not be comparable to similar measures used by other companies.

    We also discuss certain operating measures, including AUM, AUA, AV, Protection Solutions reserves and certain other operating measures, which management believes provide useful information about our businesses and the operational factors underlying our financial performance.

    Non-GAAP Operating Earnings

    Non-GAAP Operating Earnings is an after-tax non-GAAP financial measure used to evaluate our financial performance on a consolidated basis that is determined by making certain adjustments to our consolidated after-tax net income attributable to Holdings. The most significant of such adjustments relates to our derivative positions, which protect economic value and statutory capital, and the variable annuity product MRBs. This is a large source of volatility in net income.

    Non-GAAP Operating Earnings equals our consolidated after-tax net income attributable to Holdings adjusted to eliminate the impact of the following items:

    • Items related to variable annuity product features, which include: (i) changes in the fair value of MRB and purchased MRB, including the related attributed fees and claims, offset by derivatives and other securities used to hedge the MRB which result in residual net income volatility as the change in fair value of certain securities is reflected in OCI and due to our statutory capital hedge program; and (ii) market adjustments to deposit asset or liability accounts arising from reinsurance agreements which do not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk;
    • Investment (gains) losses, which includes credit loss impairments of securities/investments, sales or disposals of securities/investments, realized capital gains/losses and valuation allowances;
    • Net actuarial (gains) losses, which includes actuarial gains and losses as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period related to pension, other postretirement benefit obligations, and the one-time impact of the settlement of the defined benefit obligation;
    • Other adjustments, which primarily include restructuring costs related to severance and separation, lease write-offs related to non-recurring restructuring activities, COVID-19 related impacts, net derivative gains (losses) on certain Non-GMxB derivatives, Net investment income from certain items including consolidated VIE investments, seed capital mark-to-market adjustments, unrealized gain/losses and realized capital gains/losses from sales or disposals of select securities, certain legal accruals; a bespoke deal to repurchase UL policies from one entity that had invested in numerous policies purchased in the life settlement market, which disposed of the risk of additional COI litigation by that entity related to those UL policies, impact of the annual actuarial assumption updates attributable to LFPB when the majority of the impact relates to the non-core business; and
    • Income tax expense (benefit) related to the above items and non-recurring tax items, which includes the effect of uncertain tax positions for a given audit period and changes to the deferred tax valuation allowance.

    In the fourth quarter of 2023, the Company updated its operating earnings measure to exclude the impact of realized amounts related to equity classified instruments. The recognition of the realized capital gains and losses from investments in current Net investment income is generally considered distortive and not reflective of the ongoing core business activities of the segments. The presentation of operating earnings in prior periods was not revised to reflect this modification. The impact to operating earnings was immaterial for the three and nine months ended September 30, 2023.

    In the first quarter of 2024, the Company began allocating to its business segments collateral expense resulting from a designated rate to be paid on the collateral held back to counterparties. The new segment allocation methodology for collateral expense is based on the income earned on cash equivalents held in the surplus segments and income earned in portfolios backing collateral expenses, such that the collateral expense would be allocated to the segments up to that amount. Any remaining amount is included within Corporate and Other. This expense was previously recorded in Corporate and Other with no allocation to our business segments in prior reporting periods.

    The presentation of operating earnings in prior periods was not revised to reflect this modification, however, the Company estimated that allocating collateral expense to the segments for the twelve months ended December 31, 2023 and 2022, respectively, would have resulted in a decrease to operating earnings of $4.0 million and $0.8 million for Individual Retirement, $7.7 million and $1.4 million for Group Retirement, $21.9 million and $2.5 million for Protection Solutions, $4.2 million and $1.0 million for Legacy, and an increase of $37.8 million and $5.7 million for Corporate and Other. The impact to operating earnings for each segment during the quarters of 2023 was not material. Total Company operating earnings were not impacted.

    During the third quarter 2024, the Company moved revenues and expenses related to payout annuitizations from the Legacy segment to the Individual Retirement segment. Now all payout annuities will be reported within the Individual Retirement segment as the block is managed on an aggregate basis. Prior periods have been recast to reflect this change.

    Because Non-GAAP Operating Earnings excludes the foregoing items that can be distortive or unpredictable, management believes that this measure enhances the understanding of the Company’s underlying drivers of profitability and trends in our business, thereby allowing management to make decisions that will positively impact our business.

    We use the prevailing corporate federal income tax rate of 21% while taking into account any non-recurring differences for events recognized differently in our financial statements and federal income tax returns as well as partnership income taxed at lower rates when reconciling Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings.

    The table below presents a reconciliation of Net income (loss) attributable to Holdings to Non-GAAP Operating Earnings for the three and nine months ended September 30, 2024 and 2023:

     

     

    Three Months Ended
    September 30,

     

    Nine Months Ended
    September 30,

    (in millions)

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

    Net income (loss) attributable to Holdings

     

    $

    (134

    )

     

    $

    1,064

     

     

    $

    408

     

     

    $

    2,000

     

    Adjustments related to:

     

     

     

     

     

     

     

     

    Variable annuity product features (1)

     

     

    738

     

     

     

    (1,380

    )

     

     

    1,136

     

     

     

    (584

    )

    Investment (gains) losses

     

     

    46

     

     

     

    411

     

     

     

    101

     

     

     

    554

     

    Net actuarial (gains) losses related to pension and other postretirement benefit obligations

     

     

    13

     

     

     

    8

     

     

     

    44

     

     

     

    26

     

    Other adjustments (2) (3) (4)

     

     

     

     

     

    91

     

     

     

    59

     

     

     

    198

     

    Income tax expense (benefit) related to above adjustments

     

     

    (167

    )

     

     

    183

     

     

     

    (281

    )

     

     

    (40

    )

    Non-recurring tax items (5)

     

     

    5

     

     

     

    36

     

     

     

    18

     

     

     

    (936

    )

    Non-GAAP Operating Earnings

     

    $

    501

     

     

    $

    413

     

     

    $

    1,485

     

     

    $

    1,218

     

     

     

     

     

     

     

     

     

     

    _______________

    (1)

     

    Includes the impact of favorable assumption updates of $16 million for the three and nine months ended September 30, 2024, respectively and 40 million for the three and nine months ended September 30, 2023, respectively.

    (2)

     

    Includes certain gross legal expenses related to the COI litigation of $0 million and $106 million for the three and nine months ended September 30, 2024, respectively, and $0 million and $35 million for the three and nine months ended September 30, 2023, respectively. Includes the impact of unfavorable annual actuarial assumptions updates related to LFPB of $61 million for the three and nine months ended September 30, 2023.

    (3)

     

    For the nine months ended September 30, 2024, includes $82 million of the gain on sale on AB’s Bernstein Research Service attributable to Holdings.

    (4)

     

    For the three and nine months ended September 30, 2024, includes $78 million contingent payment gain recognized in connection with a fair value remeasurement of the contingent payment liability associated with AB’s acquisition of CarVal in 2022.

    (5)

     

    For the three and nine months ended September 30, 2024 and 2023, respectively, non-recurring tax items reflect primarily the effect of uncertain tax positions for a given audit period. An increase of the deferred tax valuation allowance of $20 million and a decrease of $970 million for the three and nine months ended September 30, 2023, respectively.

    Non-GAAP Operating EPS

    Non-GAAP Operating Earnings per common share is calculated by dividing Non-GAAP Operating Earnings less preferred stock dividends by diluted common shares outstanding. The table below presents a reconciliation of GAAP EPS to Non-GAAP Operating EPS for the three and nine months ended September 30, 2024 and 2023.

     

    Three Months Ended
    September 30,

     

    Nine Months Ended
    September 30,

    (per share amounts)

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

    Net income (loss) attributable to Holdings

    $

    (0.42

    )

     

    $

    3.06

     

     

    $

    1.25

     

     

    $

    5.62

     

    Less: Preferred stock dividend

     

    0.05

     

     

     

    0.04

     

     

     

    0.17

     

     

     

    0.15

     

    Net Income (loss) available to common shareholders

     

    (0.47

    )

     

     

    3.02

     

     

     

    1.08

     

     

     

    5.47

     

    Adjustments related to:

     

     

     

     

     

     

     

    Variable annuity product features (1)

     

    2.32

     

     

     

    (3.97

    )

     

     

    3.47

     

     

     

    (1.64

    )

    Investment (gains) losses

     

    0.14

     

     

     

    1.18

     

     

     

    0.31

     

     

     

    1.56

     

    Net actuarial (gains) losses related to pension and other postretirement benefit obligations

     

    0.04

     

     

     

    0.02

     

     

     

    0.13

     

     

     

    0.07

     

    Other adjustments (2) (3) (4)

     

     

     

     

    0.27

     

     

     

    0.19

     

     

     

    0.55

     

    Income tax expense (benefit) related to above adjustments

     

    (0.52

    )

     

     

    0.53

     

     

     

    (0.86

    )

     

     

    (0.11

    )

    Non-recurring tax items (5)

     

    0.02

     

     

     

    0.10

     

     

     

    0.05

     

     

     

    (2.63

    )

    Non-GAAP Operating Earnings

    $

    1.53

     

     

    $

    1.15

     

     

    $

    4.37

     

     

    $

    3.27

     

     

     

     

     

     

     

     

     

    _______________

    (1)

     

    Includes the impact of favorable assumption updates of $0.05 for the three and nine months ended September 30, 2024, respectively and 0.11 for the three and nine months ended September 30, 2023, respectively.

    (2)

     

    Includes certain gross legal expenses related to the COI litigation of $0 and $0.32 for the three and nine months ended September 30, 2024, respectively, and $0 and $0.10 for the three and nine months ended September 30, 2023, respectively. Includes the impact of unfavorable annual actuarial assumptions updates related to LFPB of $0.18 and $0.17 for the three and nine months ended September 30, 2023.

    (3)

     

    For the nine months ended September 30, 2024, includes $0.25 of the gain on sale on AB’s Bernstein Research Service attributable to Holdings.

    (4)

     

    For the three and nine months ended September 30, 2024 includes $0.24 contingent payment gain recognized in connection with a fair value remeasurement of the contingent payment liability associated with AB’s acquisition of CarVal in 2022.

    (5)

     

    For the three and nine months ended September 30, 2024 and 2023, respectively, non-recurring tax items reflect primarily the effect of uncertain tax positions for a given audit period. An increase of the deferred tax valuation allowance of $0.06 and a decrease of $2.73 for the three and nine months ended September 30, 2023, respectively.

    Book Value per common share, excluding AOCI

    We use the term “book value” to refer to total equity attributable to Holdings’ common shareholders. Book Value per common share, excluding AOCI, is our total equity attributable to Holdings, excluding AOCI and preferred stock, divided by ending common shares outstanding.

     

    September 30,
    2024

     

    December 31,
    2023

    Book value per common share

    $

    5.26

     

     

    $

    3.26

     

    Per share impact of AOCI

     

    20.90

     

     

     

    23.30

     

    Book Value per common share, excluding AOCI

    $

    26.16

     

     

    $

    26.56

     

    Other Operating Measures

    We also use certain operating measures which management believes provide useful information about our businesses and the operational factors underlying our financial performance.

    Account Value (“AV”)

    Account value generally equals the aggregate policy account value of our retirement products.

    Assets Under Management (“AUM”)

    AUM means investment assets that are managed by one of our subsidiaries and includes: (i) assets managed by AB, (ii) the assets in our general account investment portfolio and (iii) the separate account assets of our Individual Retirement, Group Retirement and Protection Solutions businesses. Total AUM reflects exclusions between segments to avoid double counting.

    Assets Under Management (“AUA”)

    AUA means advisory and brokerage investment assets included in the Company’s Wealth Management segment.

    Segment net flows

    Net change in segment customer account balances in a period including, but not limited to, gross premiums, surrenders, withdrawals and benefits. It excludes investment performance, interest credited to customer accounts and policy charges.

    Consolidated Statements of Income (Loss) (Unaudited)

     

    Three Months Ended
    September 30,

     

    Nine Months Ended
    September 30,

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

     

    (in millions)

    REVENUES

     

     

     

     

     

     

     

    Policy charges and fee income

    $

    626

     

     

    $

    599

     

     

    $

    1,857

     

     

    $

    1,781

     

    Premiums

     

    313

     

     

     

    267

     

     

     

    870

     

     

     

    823

     

    Net derivative gains (losses)

     

    (714

    )

     

     

    615

     

     

     

    (2,298

    )

     

     

    (1,143

    )

    Net investment income (loss)

     

    1,309

     

     

     

    1,071

     

     

     

    3,694

     

     

     

    3,097

     

    Investment gains (losses), net:

     

     

     

     

     

     

     

    Credit losses on available-for-sale debt securities and loans

     

    (28

    )

     

     

    (65

    )

     

     

    (63

    )

     

     

    (145

    )

    Other investment gains (losses), net

     

    (18

    )

     

     

    (346

    )

     

     

    (38

    )

     

     

    (409

    )

    Total investment gains (losses), net

     

    (46

    )

     

     

    (411

    )

     

     

    (101

    )

     

     

    (554

    )

    Investment management and service fees

     

    1,287

     

     

     

    1,217

     

     

     

    3,805

     

     

     

    3,579

     

    Other income

     

    301

     

     

     

    266

     

     

     

    989

     

     

     

    775

     

    Total revenues

     

    3,076

     

     

     

    3,624

     

     

     

    8,816

     

     

     

    8,358

     

    BENEFITS AND OTHER DEDUCTIONS

     

     

     

     

     

     

     

    Policyholders’ benefits

     

    663

     

     

     

    693

     

     

     

    2,007

     

     

     

    2,107

     

    Remeasurement of liability for future policy benefits

     

    16

     

     

     

    49

     

     

     

    9

     

     

     

    46

     

    Change in market risk benefits and purchased market risk benefits

     

    79

     

     

     

    (817

    )

     

     

    (1,154

    )

     

     

    (1,772

    )

    Interest credited to policyholders’ account balances

     

    708

     

     

     

    556

     

     

     

    1,879

     

     

     

    1,520

     

    Compensation and benefits

     

    571

     

     

     

    593

     

     

     

    1,768

     

     

     

    1,742

     

    Commissions and distribution-related payments

     

    485

     

     

     

    405

     

     

     

    1,385

     

     

     

    1,178

     

    Interest expense

     

    55

     

     

     

    55

     

     

     

    174

     

     

     

    171

     

    Amortization of deferred policy acquisition costs

     

    184

     

     

     

    165

     

     

     

    525

     

     

     

    472

     

    Other operating costs and expenses

     

    329

     

     

     

    450

     

     

     

    1,309

     

     

     

    1,339

     

    Total benefits and other deductions

     

    3,090

     

     

     

    2,149

     

     

     

    7,902

     

     

     

    6,803

     

    Income (loss) from continuing operations, before income taxes

     

    (14

    )

     

     

    1,475

     

     

     

    914

     

     

     

    1,555

     

    Income tax (expense) benefit

     

    40

     

     

     

    (340

    )

     

     

    (106

    )

     

     

    677

     

    Net income (loss)

     

    26

     

     

     

    1,135

     

     

     

    808

     

     

     

    2,232

     

    Less: Net income (loss) attributable to the noncontrolling interest

     

    160

     

     

     

    71

     

     

     

    400

     

     

     

    232

     

    Net income (loss) attributable to Holdings

     

    (134

    )

     

     

    1,064

     

     

     

    408

     

     

     

    2,000

     

    Less: Preferred stock dividends

     

    14

     

     

     

    14

     

     

     

    54

     

     

     

    54

     

    Net income (loss) available to Holdings’ common shareholders

    $

    (148

    )

     

    $

    1,050

     

     

    $

    354

     

     

    $

    1,946

     

     

     

     

     

     

     

     

     

    Earnings Per Common Share

     

    Three Months Ended
    September 30,

     

    Nine Months Ended
    September 30,

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

     

    (in millions)

    Earnings per common share

     

     

     

     

     

     

     

    Basic

    $

    (0.47

    )

     

    $

    3.03

     

     

    $

    1.09

     

     

    $

    5.49

     

    Diluted

    $

    (0.47

    )

     

    $

    3.02

     

     

    $

    1.08

     

     

    $

    5.47

     

    Weighted average shares

     

     

     

     

     

     

     

    Weighted average common stock outstanding for basic earnings per common share

     

    318.2

     

     

     

    346.4

     

     

     

    324.2

     

     

     

    354.4

     

    Weighted average common stock outstanding for diluted earnings per common share (1)

     

    318.2

     

     

     

    348.0

     

     

     

    327.7

     

     

     

    355.9

     

     

     

     

     

     

     

     

     

    (1)

     

    For the three and nine months ended September 30, 2024 and 2023, 6.4 million, 3.0 million, 3.5 million and 2.4 million, respectively, of outstanding stock awards, were not included in the computation of diluted earnings per share because their effect was anti-dilutive.

    Results of Operations by Segment

     

    Three Months Ended
    September 30,

     

    Nine Months Ended
    September 30,

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

     

    (in millions)

    Operating earnings (loss) by segment:

     

     

     

     

     

     

     

    Individual Retirement

    $

    225

     

     

    $

    220

     

     

    $

    713

     

     

    $

    671

     

    Group Retirement

     

    141

     

     

     

    105

     

     

     

    390

     

     

     

    301

     

    Asset Management

     

    111

     

     

     

    99

     

     

     

    318

     

     

     

    297

     

    Protection Solutions

     

    46

     

     

     

    34

     

     

     

    154

     

     

     

    23

     

    Wealth Management

     

    50

     

     

     

    40

     

     

     

    137

     

     

     

    114

     

    Legacy

     

    27

     

     

     

    31

     

     

     

    93

     

     

     

    119

     

    Corporate and Other (1)

     

    (99

    )

     

     

    (116

    )

     

     

    (320

    )

     

     

    (307

    )

    Non-GAAP Operating Earnings

    $

    501

     

     

    $

    413

     

     

    $

    1,485

     

     

    $

    1,218

     

     

     

     

     

     

     

     

     

    _______________

    (1)

     

    Includes interest expense and financing fees of $57 million and $171 million for the three and nine months ended September 30, 2024, respectively, and $54 million and $173 million for the three and nine months ended September 30, 2023, respectively.

    Select Balance Sheet Statistics

     

    September 30,
    2024

     

    December 31,
    2023

     

    (in millions)

    ASSETS

     

     

     

    Total investments and cash and cash equivalents

    $

    123,825

     

     

    $

    110,412

     

    Separate Accounts assets

     

    137,407

     

     

     

    127,251

     

    Total assets

     

    298,989

     

     

     

    276,814

     

     

     

     

     

    LIABILITIES

     

     

     

    Long-term debt

    $

    3,831

     

     

    $

    3,820

     

    Future policy benefits and other policyholders’ liabilities

     

    17,936

     

     

     

    17,363

     

    Policyholders’ account balances

     

    107,433

     

     

     

    95,673

     

    Total liabilities

     

    292,791

     

     

     

    271,656

     

     

     

     

     

    EQUITY

     

     

     

    Preferred stock

     

    1,562

     

     

     

    1,562

     

    Accumulated other comprehensive income (loss)

     

    (6,595

    )

     

     

    (7,777

    )

    Total equity attributable to Holdings

    $

    3,220

     

     

    $

    2,649

     

    Total equity attributable to Holdings’ common shareholders (ex. AOCI)

     

    8,253

     

     

     

    8,864

     

    Assets Under Management (Unaudited)

     

    September 30,
    2024

     

    December 31,
    2023

     

    (in billions)

    Assets Under Management

     

     

     

    AB AUM

    $

    805.9

     

     

    $

    725.2

     

    Exclusion for General Account and other Affiliated Accounts

     

    (71.7

    )

     

     

    (75.0

    )

    Exclusion for Separate Accounts

     

    (61.7

    )

     

     

    (44.5

    )

    AB third party

    $

    672.6

     

     

    $

    605.7

     

     

     

     

     

    Total company AUM

     

     

     

    AB third party

    $

    672.6

     

     

    $

    605.7

     

    General Account and other Affiliated Accounts (1) (3) (4)

     

    123.8

     

     

     

    110.4

     

    Separate Accounts (2) (3) (4)

     

    137.4

     

     

     

    127.3

     

    Total AUM

    $

    933.8

     

     

    $

    843.4

     

     

     

     

     

    _______________

    (1)

     

    “General Account and Other Affiliated Accounts” refers to assets held in the general accounts of our insurance companies and other assets on which we bear the investment risk.

    (2)

     

    “Separate Accounts” refers to the separate account investment assets of our insurance subsidiaries excluding any assets on which we bear the investment risk.

    (3)

     

    As of September 30, 2024 and December 31, 2023, Separate Account is inclusive of $12.8 billion and $12.5 billion & General Account AUM is inclusive of $44 million and $49 million, respectively, Account Value ceded to Venerable.

    (4)

     

    As of September 30, 2024 and December 31, 2023, Separate Account is inclusive of $7.1 billion and $6.4 billion & General Account AUM is inclusive of $3.3 billion and $3.6 billion, respectively, Account Value ceded to Global Atlantic.

    _________________________

    1 Includes Individual Retirement and Group Retirement

    2 This press release includes certain Non-GAAP financial measures. More information on these measures and reconciliations to the most comparable U.S. GAAP measures can be found in the “Use of Non-GAAP Financial Measures” section of this release.

    3 Please refer to Exhibit 1 for a detailed reconciliation and definitions related to notable items.

    4 Cash generation is the cash flow from asset and wealth management subsidiaries, along with capital generated in excess of the target combined NAIC RBC ratio at the insurance subsidiaries; Financial guidance assumes normal market conditions including 6% equity return, 2% dividend yield and interest rates following the forward curve is net dividends and distributions to Equitable Holdings from its subsidiaries

    5 Please refer to Exhibit 1 for detailed reconciliation and definitions related to notable items.

    6 Refers to AllianceBernstein L.P. and AllianceBernstein Holding L.P., collectively.

    7 Excludes c.$400 million of cash at Holdings which is available to AllianceBernstein through its credit facility with Equitable Holdings.

    8 Please refer to Exhibit 1 for a detailed reconciliation and definitions related to notable items.

    9 Please refer to Exhibit 1 for a detailed reconciliation and definitions related to notable items.

    10 Please refer to Exhibit 1 for a detailed reconciliation and definitions related to notable items.

     

    Contacts

    Investor Relations
    Erik Bass
    (212) 314-2476
    IR@equitable.com

    Media Relations
    Sophia Kim
    (212) 314-2010
    mediarelations@equitable.com

    Originally Posted at Business Wire on November 4, 2024 by Equitable Holdings, Inc.

    Categories: Industry Articles
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