- Strong results across Retirement1, Asset and Wealth
Management businesses with $3.2 billion core inflows2
- Robust balance sheet, strong capital position with $1.8
billion3 of cash at HoldCo and high quality investment portfolio
with 96% of fixed maturities rated investment grade
- Net income of $177 million; Net income per share of
$0.45
- Non-GAAP operating earnings4 of $364 million, or $0.96 per
share; adjusting for notable items5, Non-GAAP operating earnings of
$456 million, or $1.21 per share
- Returned $286 million in the quarter, consistently
delivering on payout target
Equitable Holdings, Inc. (“Equitable Holdings”, “Holdings”, or
the “Company”) (NYSE: EQH) today announced financial results for
the first quarter ended March 31, 2023.
“We reported non-GAAP operating earnings of $0.96 per share, or
$1.21 per share after adjusting for notable items, up 9% compared
to the fourth quarter 2022 and down 18% compared to the prior year
quarter. Adjusted results, which account for volatility in
mortality and lower alternatives performance, were in line with
expectations with equity markets driving fee-based earnings. Our
Retirement, Asset and Wealth Management businesses continue to
generate strong new business value with in-demand offerings leading
to $3.2 billion in core net inflows2,” said Mark Pearson, President
and Chief Executive Officer.
Mr. Pearson continued, “With an increasing focus on the balance
sheet across our industry, we are well-positioned for periods of
market stress with a conservatively positioned and high quality
investment portfolio, which is A2-rated with fixed maturities that
are 96% investment grade, and a strong capital position supported
by $1.8 billion of cash and liquid assets at Holdings3.”
Mr. Pearson concluded, “This quarter, we have also enhanced our
disclosures, providing further transparency into the strength of
our integrated business model, and look forward to highlighting the
significant opportunity ahead for Equitable Holdings at our
inaugural Investor Day on May 10th.”
Consolidated Results
First Quarter
(in millions, except per share amounts or
unless otherwise noted)
2023
2022
Total Assets Under
Management/Administration (“AUM/A”, in billions)
$
864
$
935
Net income attributable to Holdings
177
530
Net income attributable to Holdings per
common share
0.45
1.32
Non-GAAP operating earnings
364
499
Non-GAAP operating earnings per common
share (“EPS”)
0.96
1.24
As of March 31, 2023, total AUM/A was $864 billion, a
year-over-year decrease of 7.6%, driven by lower markets over the
prior twelve months.
The Net income attributable to Holdings for the first quarter of
2023 was $177 million compared to $530 million in the first quarter
of 2022.
Non-GAAP operating earnings in the first quarter of 2023 was
$364 million compared to $499 million in the first quarter of 2022.
Adjusting for notable items6 of $92 million, first quarter 2023
Non-GAAP operating earnings were $456 million or $1.21 per
share.
As of March 31, 2023, book value per common share, including
accumulated other comprehensive income (“AOCI”), was $6.10. Book
value per common share, excluding AOCI, was $24.25.
Business
Highlights
- Business segment highlights:
- Individual Retirement (“IR”) reported net inflows of $932
million supported by continued demand for industry-leading RILA
products with first year premiums up 12% over prior year.
- Group Retirement (“GR”) reported net inflows of $30 million led
by the tax-exempt market which had $639 million of total premiums
in the quarter.
- Investment Management and Research (AllianceBernstein or “AB”)7
reported net inflows of $0.8 billion, with $1.8 billion of active
inflows, meeting demand for taxable fixed income and municipals in
higher rate environment.
- Protection Solutions (“PS”) reported $786 million in gross
written premiums, up 1% over prior year quarter, with $330 million
of gross premiums in the quarter continuing the Company’s strategic
shift toward accumulation-oriented VUL.
- Wealth Management (“WM”) reported net inflows of $1.4 billion
supported by $2.3 billion of advisory sales continuing the
Company’s shift toward fee-based advisory AUA.
- Legacy (“L”) reported $523 million net outflows and continues
to run-off at $2 billion to $3 billion per annum.
- Capital management program:
- The Company returned $286 million to shareholders in the
quarter, including $72 million of quarterly cash dividends and $214
million of share repurchases, which is in line with our 55-65%
payout target.
- The Company intends to increase its quarterly cash dividend
from $0.20 to $0.22 per share in the second quarter.8
- The Company reported cash and liquid assets of $1.8 billion at
Holdings9, which remains above the $500 million minimum target,
with a continued focus on maximizing financial flexibility to
support consistent capital return.
- Fair value hedging program targets the Company’s economic
liability while protecting the statutory balance sheet to CTE98 and
maintained over 95% hedging effectiveness in the quarter.
- Delivering long-term shareholder value:
- Continuing to deliver 8-10% long-term annualized Non-GAAP EPS
growth supported by the Company realizing $60 million of its $80
million net expense savings target. The Company is on track to
complete the program by year end 2023.
- Enhanced disclosures highlight the strength of the Company’s
integrated business model, delivering organic growth across
Retirement, Asset Management and the Company’s new Wealth
Management segment.
- New Legacy segment, which includes more capital intensive
pre-2011 fixed-rate variable annuities previously reported in
Individual Retirement, represents approximately 16% of account
value10 with $2 billion to $3 billion of expected outflows per
annum.
Business Segment
Results
Individual Retirement
(in millions, unless otherwise noted)
Q1 2023
Q1 2022
Account value (in billions)
$
78.8
$
79.6
Segment net flows
932
665
Operating earnings (loss)
200
203
- Account value decreased by 1% primarily due to lower markets,
partially offset by continued demand for protected equity products
through volatile markets.
- Net inflows of $932 million were higher over prior year quarter
supported by continued demand for less capital-intensive products
which include industry leading RILA offerings.
- Operating earnings decreased from $203 million in the prior
year quarter to $200 million, primarily driven by lower fee-type
revenue on lower average account values partially offset by higher
net investment income due to higher SCS asset balances.
- Operating earnings adjusting for notable items11 increased from
$200 million in the prior year quarter to $204 million. Notable
items of $4 million in the current period reflect lower net
investment income from alternatives.
Group Retirement
(in millions, unless otherwise noted)
Q1 2023
Q1 2022
Account value (in billions) (1)
$
33.6
$
46.0
Segment net flows (2)
30
523
Operating earnings (loss)
89
144
(1) Effective October 3, 2022, AV excludes
activity related to ceded AV to Global Atlantic. In addition,
roll-forward reflects the AV ceded to Global Atlantic as of the
transaction date.
(2) For the three months ended March 31,
2023, net out flows of $180 million are excluded as these amounts
are related to ceded AV to Global Atlantic.
- Account value decreased by 27% driven primarily by the
reinsurance transaction with Global Atlantic, which reduced account
value by c. $9.4 billion, and market performance over the prior
twelve months.
- Net inflows of $30 million decreased versus prior year quarter,
primarily due to a large institutional mandate in the first quarter
of 2022, with tax-exempt channel inflows in the current period
supported by premiums of $639 million and lower redemptions due to
reinsured policies.
- Operating earnings decreased from $144 million in the prior
year quarter to $89 million primarily due to lower net investment
income from alternatives income and lower fee-type revenue on lower
average account values.
- Operating earnings adjusting for notable items11 decreased from
$139 million in the prior year quarter to $97 million. Notable
items of $8 million reflect lower net investment income from
alternatives.
AllianceBernstein
(in millions, unless otherwise noted)
Q1 2023
Q1 2022
Total AUM (in billions)
$
675.9
$
735.4
Segment net flows (in billions)
0.8
11.4
Operating earnings (loss)
99
136
- AUM decreased by 8% due to market performance over the prior
twelve months.
- First quarter net inflows of $0.8 billion were driven by net
inflows of $1.6 billion in Retail and $1.9 billion in Private
Wealth with growth in the quarter driven by taxable bonds,
municipals and money markets.
- Operating earnings decreased from $136 million in the prior
year quarter to $99 million, primarily due to lower base fees on
lower average AUM and lower performance fees.
Protection Solutions
(in millions)
Q1 2023
Q1 2022
Gross written premiums
$
786
$
778
Annualized premiums
292
77
Operating earnings (loss)
(35)
(3)
- Gross written premiums increased 1% year-over-year with higher
Employee Benefits premiums partially offset by lower Life premiums
compared to prior year quarter.
- Operating earnings decreased from a $3 million loss in the
prior year quarter to a $35 million loss, primarily due higher than
expected mortality and lower net investment income from lower
alternatives income.
- Operating earnings adjusting for notable items12 decreased from
$109 million in the prior year quarter to $46 million. Notable
items of $81 million reflect elevated mortality and lower net
investment income from alternatives.
Wealth Management
(in millions, unless otherwise noted)
Q1 2023
Q1 2022
Total AUA (in billions)
$
75.6
$
78.9
Net Flows (in billions)
1.4
1.7
Operating earnings (loss)
32
32
- AUA decreased by 4% due to market performance, partially offset
by net inflows, over the last twelve months.
- First quarter net inflows of $1.4 billion supported by Advisory
net inflows of $828 million in the quarter.
- Operating earnings were $32 million, in line with prior year
quarter, with higher interest income offsetting lower fees on lower
balances.
Legacy
(in millions)
Q1 2023
Q1 2022
Account value (in billions)
$
22.0
$
26.8
Net Flows (1)
(523
)
(613
)
Operating earnings (loss)
60
63
(1) Net flows excluded as it
relates to AV ceded to Venerable for the discrete periods of March
31, 2022 and March 31, 2023 were $(316) million and $(292) million,
respectively.
- Account value decreased by 18% primarily due to lower markets
and expected outflows over the prior twelve months.
- First quarter net outflows of $523 million in line with
expectations as this business continues to run-off at $2 billion to
$3 billion per annum.
- Operating earnings decreased from $63 million in the prior year
quarter to $60 million, primarily due to lower fees on lower
account balances.
- Operating earnings adjusting for notable items13 increased from
$60 million in the prior year quarter to $64 million. Notable items
of $4 million in the current period reflect lower net investment
income from alternatives.
Corporate and Other (“C&O”)
Operating loss of $81 million in the first quarter increased
compared to operating loss of $76 million in the prior year
quarter, primarily driven by higher interest credited partially
offset by higher net investment income and lower expenses compared
to the prior year quarter. Operating loss after adjusting for
notable items13 increased from $82 million in the prior year
quarter to $86 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 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
March 31,
(in millions)
2023
2022
Non-GAAP Operating Earnings
364
$
499
Post-tax Adjustments related to notable
items:
Individual Retirement
4
(3
)
Group Retirement
8
(5
)
Investment Management and Research
—
—
Protection Solutions
81
112
Wealth Management
—
—
Legacy
4
(3
)
Corporate & Other
(5
)
(6
)
Notable items subtotal
92
95
Less: impact of actuarial assumption
update
—
—
Non-GAAP Operating Earnings, less Notable
Items
$
456
$
594
Impact of notable items by item category:
Three Months Ended
March 31,
(in millions)
2023
2022
Non-GAAP Operating Earnings
364
$
499
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
Mortality
62
143
Expenses
—
—
Net Investment Income
47
(24
)
Subtotal
109
119
Post-tax impact of Notable Items
92
95
Less: impact of actuarial assumption
update
—
—
Non-GAAP Operating Earnings, less Notable
Items
$
456
$
594
Impact of Notable Items by segment and corporate &
other:
Three months ended 3/31/2023
($m)
IR
GR
AB
PS
WM
L
C&O
Consolidated
Non-GAAP Operating Earnings
200
89
99
(35
)
32
60
(81
)
364
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
—
—
—
—
—
Mortality
—
—
—
77
—
—
(15
)
62
Expenses
—
—
—
—
—
—
—
—
Net Investment Income
4
9
—
19
—
5
9
47
Pre-tax Subtotal
4
9
—
96
—
5
(6
)
109
Tax adjustment
(1
)
(1
)
—
(15
)
—
(1
)
1
(17
)
Post-tax impact of Notable
Items
4
8
—
81
—
4
(5
)
92
Impact of Actuarial Assumption Update
—
—
—
—
—
—
—
—
Non-GAAP Operating Earnings, less
Notable Items
204
97
99
46
32
64
(86
)
456
Three months ended 3/31/2022
($m)
IR
GR
AB
PS
WM
L
C&O
Consolidated
Non-GAAP Operating Earnings
203
144
136
(3
)
32
63
(76
)
499
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
—
—
—
—
—
Mortality
—
—
—
143
—
—
—
143
Expenses
—
—
—
—
—
—
—
—
Net Investment Income
(3
)
(6
)
—
(8
)
—
(3
)
(4
)
(24
)
Pre-tax Subtotal
(3
)
(6
)
—
135
—
(3
)
(4
)
119
Tax adjustment
(1
)
0
—
(23
)
—
0
(1
)
(24
)
Post-tax impact of Notable
Items
(3
)
(5
)
—
112
—
(3
)
(6
)
95
Impact of Actuarial Assumption Update
—
—
—
—
—
—
—
—
Non-GAAP Operating Earnings, less
Notable Items
200
139
136
109
32
60
(82
)
594
Earnings Conference Call
Equitable Holdings will host a conference call at 8 a.m. ET May
4, 2023 to discuss its first quarter 2023 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 First Quarter 2023 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 financial services
holding company comprised of two complementary and well-established
principal franchises, Equitable and AllianceBernstein. Founded in
1859, Equitable provides advice, protection and retirement
strategies to individuals, families and small businesses.
AllianceBernstein is a global investment management firm that
offers high-quality research and diversified investment services to
institutional investors, individuals and private wealth clients in
major world markets. Equitable Holdings has approximately 12,300
employees and financial professionals, $864 billion in assets under
management and administration (as of 3/31/2023) and more than 5
million client relationships globally.
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. “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 plateauing or decreasing economic growth
and 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
Investment Management and Research 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 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.
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
EPS, and Book Value per common share, excluding AOCI, 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 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, AV,
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 market risk benefits and
purchased market risk benefits, including the related attributed
fees and claims, offset by derivatives and other securities used to
hedge the market risk benefits 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; and 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; 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 a decrease of a deferred
tax valuation allowance.
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 months and three months ended March 31, 2023 and 2022:
Three Months Ended
March 31,
(in millions)
2023
2022
Net income (loss) attributable to
Holdings
$
177
$
530
Adjustments related to:
Variable annuity product features
861
(616
)
Investment (gains) losses
87
326
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
9
19
Other adjustments (1) (2)
45
228
Income tax expense (benefit) related to
above adjustments
(210
)
9
Non-recurring tax items (3)
(605
)
3
Non-GAAP Operating Earnings
$
364
$
499
_______________
(1)
Includes certain gross legal
expenses related to the cost of insurance litigation, and claims
related to a commercial relationship of, $0 million and $59 million
for the three months ended March 31, 2023 and 2022, respectively.
Includes policyholder benefit costs of $75 million for the three
months ended March 31, 2022 stemming from a deal to repurchase UL
policies from one entity that had invested in numerous policies
purchased in the life settlement market.
(2)
Includes Non-GMxB related
derivative hedge losses of $0 million and ($2) million for the
three months ended March 31, 2023 and 2022, respectively.
(3)
For the three months ended March,
31 2023, non-recurring tax items reflect the effect of uncertain
tax positions for a given audit period and a decrease of a deferred
tax valuation allowance.
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
months and three months ended March 31, 2023 and 2022.
Three Months Ended
March 31,
(per share amounts)
2023
2022
Net income (loss) attributable to Holdings
(1)
$
0.49
$
1.35
Less: Preferred stock dividend
0.04
0.04
Net Income (loss) available to common
shareholders
0.45
1.33
Adjustments related to:
Variable annuity product features
2.36
(1.57
)
Investment (gains) losses
0.24
0.83
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
0.02
0.05
Other adjustments (2) (3) (4)
0.13
0.58
Income tax expense (benefit) related to
above adjustments
(0.58
)
0.02
Non-recurring tax items (5)
(1.66
)
0.01
Non-GAAP Operating Earnings
$
0.96
$
1.25
_______________
(1)
For periods presented with a net
loss, basic shares are used for EPS.
(2)
The impact per common share is
$0.00 and $0.21 for the three months ended March 31, 2022.
Separation costs were completed during 2021.
(3)
Includes certain gross legal
expenses related to the cost of insurance litigation and claims
related to a commercial relationship of $0 million and $59 million
for the three months ended March 31, 2023 and 2022, respectively.
Includes policyholder benefit costs of $75 million for the three
months ended March 31, 2022 stemming from a deal to repurchase UL
policies from one entity that had invested in numerous policies
purchased in the life settlement market. The legal accruals impact
per common share is $0.00 and $0.15 for the three months ended
March 31, 2023 and 2022, respectively. Includes policyholder
benefit costs of $0.19 for the three months ended March 31, 2022
stemming from a deal to repurchase UL policies from one entity that
had invested in numerous policies purchased in the life settlement
market. No adjustments were made to prior period Non-GAAP Operating
EPS as the impact was immaterial.
(4)
Includes Non-GMxB related
derivative hedge losses of $0.01 and $(0.01) for the three months
ended March 31, 2023 and 2022, respectively.
(5)
For the three months ended March,
31 2023, non-recurring tax items reflect the effect of uncertain
tax positions for a given audit period and a decrease of a deferred
tax valuation allowance.
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.
March 31,
2023
December 31,
2022
Book value per common share
$
6.10
$
(0.44
)
Per share impact of AOCI
18.15
24.63
Book Value per common share, excluding
AOCI
$
24.25
$
24.19
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
March 31,
2023
2022
(in millions)
REVENUES
Policy charges and fee income
$
588
$
650
Premiums
276
247
Net derivative gains (losses)
(841
)
159
Net investment income (loss)
990
804
Investment gains (losses), net:
Credit losses on available-for-sale debt
securities and loans
(66
)
10
Other investment gains (losses), net
(21
)
(336
)
Total investment gains (losses), net
(87
)
(326
)
Investment management and service fees
1,180
1,355
Other income
251
257
Total revenues
2,357
3,146
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
730
802
Remeasurement of liability for future
policy benefits
4
22
Change in market risk benefits and
purchased market risk benefits
20
(467
)
Interest credited to policyholders’
account balances
463
313
Compensation and benefits
583
596
Commissions and distribution-related
payments
380
422
Interest expense
61
47
Amortization of deferred policy
acquisition costs
152
143
Other operating costs and expenses
423
534
Total benefits and other deductions
2,816
2,412
Income (loss) from continuing operations,
before income taxes
(459
)
734
Income tax (expense) benefit
725
(137
)
Net income (loss)
266
597
Less: Net income (loss) attributable to
the noncontrolling interest
89
67
Net income (loss) attributable to
Holdings
177
530
Less: Preferred stock dividends
14
14
Net income (loss) available to Holdings’
common shareholders
$
163
$
516
Earnings
Per Common Share
Three Months Ended
March 31,
2023
2022
(in millions)
Earnings per common share
Basic
$
0.45
$
1.33
Diluted
$
0.45
$
1.32
Weighted average shares
Weighted average common stock outstanding
for basic earnings per common share
361.9
388.6
Weighted average common stock outstanding
for diluted earnings per common share (1)
364.1
391.7
(1)
Due to net loss for the three
months ended March 31, 2022 approximately 3.1 million share awards
were excluded from the diluted EPS calculation.
Results
of Operations by Segment
Three Months Ended
March 31,
2023
2022
(in millions)
Operating earnings (loss) by
segment:
Individual Retirement
$
200
$
203
Group Retirement
89
144
Investment Management and Research
99
136
Protection Solutions
(35
)
(3
)
Wealth Management
32
32
Legacy
60
63
Corporate and Other (1)
(81
)
(76
)
Non-GAAP Operating Earnings
$
364
$
499
(1)
Includes interest expense and
financing fees of $62 million and $53 million for the three months
ended March 31, 2023, and 2022 respectively.
Select
Balance Sheet Statistics
March 31,
2023
December 31,
2022
(in millions)
ASSETS
Total investments and cash and cash
equivalents
$
101,241
$
97,378
Separate Accounts assets
119,752
114,853
Total assets
261,500
252,702
LIABILITIES
Long-term debt
$
3,819
$
3,322
Future policy benefits and other
policyholders' liabilities
16,738
16,603
Policyholders’ account balances
86,761
83,866
Total liabilities
255,416
249,106
EQUITY
Preferred stock
1,562
1,562
Accumulated other comprehensive income
(loss)
(6,516
)
(8,992
)
Total equity attributable to Holdings
$
3,754
$
1,401
Total equity attributable to Holdings'
common shareholders (ex. AOCI)
8,708
8,831
Assets
Under Management (Unaudited)
March 31, 2023
December 31, 2022
(in billions)
Assets Under
Management
AB AUM
$ 675.9
$ 646.4
Exclusion for General Account and other
Affiliated Accounts
(69.3)
(66.8)
Exclusion for Separate Accounts
(39.5)
(38.2)
AB third party
$ 567.2
$ 541.4
Total company AUM
AB third party
$ 567.2
$ 541.4
General Account and other Affiliated
Accounts (1) (3) (4)
101.2
97.4
Separate Accounts (2) (3) (4)
119.8
114.9
Total AUM
$ 788.1
$ 753.6
_______________
(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 March 31, 2022, June 30, 2022,
September 30, 2022, December 31, 2022 and March 31, 2023, Separate
Account and General Account AUM is inclusive of $15.1 billion, $60
million, $12.7 billion, $60 million, $11.7 billion, $58 million,
$12.1 billion, $56 million, $12.3 billion and $54 million,
respectively, Account Value ceded to Venerable. For additional
information on the Venerable transaction see Note 1 of the Notes to
Consolidated Financial Statements within the 10-K.
(4) As of March 31, 2022 and December 31,
2023, Separate Account is inclusive $0.0 billion and $5.6 billion
& General Account AUM is inclusive $0.0 billion and $3.9
billion, respectively, Account Value ceded to Global Atlantic. For
additional information on the Global Atlantic transaction see
MD&A - Executive Summary “Global Atlantic Reinsurance
Transaction" within the 10-K.
______________________________ 1 Includes Individual Retirement,
Group Retirement and Protection Solutions. 2 Includes Individual
Retirement, Group Retirement, Investment Management and Research
and Wealth Management segments. 3 Holding Company cash of $2.4
billion as of March 31, 2023; $1.8 billion is net of $520 million
debt repayment in April 2023. 4 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. 5 Please refer to Exhibit 1 for detailed reconciliation
and definitions related to notable items. 6 Please refer to Exhibit
1 for detailed reconciliation and definitions related to notable
items. 7 Refers to AllianceBernstein L.P. and AllianceBernstein
Holding L.P., collectively. 8 Any declaration of dividends will be
at the discretion of the Board of Directors and will depend on our
financial condition and other factors. 9 Holding Company cash of
$2.4 billion as of March 31, 2023; $1.8 billion is net of $520
million debt repayment in April 2023. 10 Includes Individual
Retirement, Group Retirement and Legacy segment account value. 11
Please refer to Exhibit 1 for detailed reconciliation and
definitions related to notable items. 12 Please refer to Exhibit 1
for detailed reconciliation and definitions related to notable
items. 13 Please refer to Exhibit 1 for detailed reconciliation and
definitions related to notable items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005834/en/
Investor Relations Işıl Müderrisoğlu (212) 314-2476
IR@equitable.com
Media Relations Sophia Kim (212) 314-2010
mediarelations@equitable.com
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