Press release·02/24/2025 20:59:39

Overview of the Company’s Financial Performance

Equitable Holdings, Inc. (Holdings) is a diversified financial services company that provides a range of retirement, protection, and wealth management products and services to individual and institutional customers. The company’s consolidated results of operations are significantly affected by economic conditions, consumer confidence, capital market performance, and interest rates.

In 2024, Holdings reported net income attributable to the company of $1.3 billion, relatively flat compared to 2023. This was driven by several favorable factors, including:

• Higher fee-type revenue, up $907 million, due to growth in investment advisory fees, distribution revenue, and asset values
• Lower investment losses, down $580 million, from rebalancing the investment portfolio
• Increased net investment income, up $576 million, from higher asset balances, yields, and alternative investments

These were partially offset by higher interest credited to policyholders, up $416 million, and increased commissions and distribution payments, up $306 million, from higher sales volumes.

Revenue and Profit Trends

Holdings’ revenues come from three main sources: fee income, premiums, and investment income. Fee income, which varies with asset values and account balances, increased 13% in 2024 due to higher average assets under management (AUM) and administration (AUA). Premiums grew 5% year-over-year. Net investment income rose 9% driven by higher asset balances, yields, and alternative investment performance.

On the expense side, policyholders’ benefits decreased 2% in 2024, while interest credited to policyholders’ accounts increased 20% due to growth in account values. Commissions and distribution payments rose 19% in line with higher fee and premium revenues. Compensation, benefits, and other operating costs increased 5%.

Overall, Holdings’ Non-GAAP Operating Earnings, which exclude market-related volatility, grew 18% to $2.0 billion in 2024. This improvement was driven by the increase in fee-type revenues and net investment income, partially offset by higher interest credited and commission expenses.

Segment Performance

Holdings manages its business through six segments: Individual Retirement, Group Retirement, Asset Management, Protection Solutions, Wealth Management, and Legacy.

The Individual Retirement segment, which includes variable annuities, saw operating earnings increase 8% to $953 million in 2024. This was driven by higher net investment income and fee revenue, partially offset by increased interest credited on growing account values.

The Group Retirement segment’s operating earnings rose 31% to $522 million, benefiting from higher fee revenue on increased average Separate Account values.

The Asset Management segment, which includes AllianceBernstein (AB), reported a 17% increase in operating earnings to $479 million. This was primarily due to higher investment advisory fees and distribution revenue from higher average AUM, partially offset by increased commission payments and compensation costs.

The Protection Solutions segment’s operating earnings increased 265% to $186 million, driven by lower policyholders’ benefits and higher net investment income, partially offset by higher interest credited.

The newer Wealth Management segment saw operating earnings grow 16% to $184 million, benefiting from higher advisory and distribution fees on increased AUA.

The Legacy segment, which includes the company’s run-off variable annuity and life insurance blocks, reported a 13% decline in operating earnings to $131 million due to lower net investment income.

Strengths and Weaknesses

Key strengths of Holdings include:

• Diversified business mix across retirement, protection, and wealth management products and services
• Strong market positions in the individual and group retirement markets
• Growing asset management platform through AllianceBernstein
• Disciplined risk management, including hedging programs for variable annuity guarantees
• Productivity initiatives driving expense savings

Potential weaknesses and risks include:

• Exposure to equity market and interest rate volatility, which can impact earnings and capital
• Regulatory changes that could affect reserve, capital, and profitability requirements
• Competition in the retirement and wealth management spaces
• Runoff of legacy variable annuity and life insurance blocks

Outlook and Future Prospects

Looking ahead, Holdings expects to continue benefiting from favorable demographic trends supporting demand for its retirement, protection, and wealth management solutions. The company’s productivity initiatives are expected to generate $150 million in annual expense savings by 2027, enhancing profitability.

The pending reinsurance transaction with Reinsurance Group of America (RGA) is expected to generate over $2 billion in value for Holdings, including a positive ceding commission and capital release. This will further strengthen the company’s financial position.

Holdings also plans to return capital to shareholders through a $1.8 billion tender offer for AllianceBernstein units and an additional $1.5 billion share repurchase authorization. These actions demonstrate the company’s commitment to optimizing its capital structure and enhancing shareholder value.

Overall, Holdings appears well-positioned to navigate the evolving market and regulatory environment. Its diversified business model, disciplined risk management, and productivity initiatives position the company for continued growth and profitability. However, the company remains exposed to macroeconomic and market risks that could impact its financial performance.