- Integrated business model delivering strong results
including record net inflows of $1.4 billion in Retirement1 and
$1.3 billion of net inflows in Wealth Management
- Cash generation2 of $0.9 billion to Holdings year-to-date,
on track to achieve $1.3 billion 2023 guidance
- Returned $304 million in the quarter, consistently
delivering on payout target
- Net income of $759 million; Net income per share of
$2.06
- Non-GAAP operating earnings3 of $441 million, or
$1.17 per share; adjusting for notable items4, Non-GAAP operating
earnings of $480 million, or $1.27 per share
- Resilient capital ratios with combined insurance company RBC
of approximately 425-450%, consistent across market cycles,
highlights conservative balance sheet and fair value
management
Equitable Holdings, Inc. (“Equitable Holdings”, “Holdings”, or
the “Company”) (NYSE: EQH) today announced financial results for
the second quarter ended June 30, 2023.
“We reported non-GAAP operating earnings of $1.17 per share or
$1.27 per share after adjusting for notable items, which is up 5%
compared to first quarter 2023 and up 2% compared to the prior year
quarter. Adjusted results, which account for lower alternatives
performance and elevated mortality, were in line with expectations
with positive equity returns and higher interest rates benefiting
fee- and spread-based earnings.” said Mark Pearson, President and
Chief Executive Officer.
Mr. Pearson continued, “At our inaugural investor day in May, we
outlined key growth initiatives with meaningful updates to our
financial guidance to 2027 including $2 billion of cash generation,
12-15% non-GAAP operating earnings per share growth and an upward
revision to our payout ratio, now 60-70% of non-GAAP operating
earnings. Results in the quarter further support our ability to
deliver profitable growth for shareholders. In Retirement, we
reported record net inflows of $1.4 billion as we continue to reach
clients through our distribution platform and industry-leading
buffered annuity. Asset Management net outflows were $4.0 billion
in the quarter with positive flows in May and June following $6.2
billion of expected low-fee institutional redemptions in April.
AB’s institutional pipeline remains strong with growth in Private
Markets supporting a 2% fee-rate improvement year-over-year. In
Wealth Management, demand for advice drove another quarter of
organic growth with $1.3 billion of net inflows.”
Mr. Pearson concluded, “While our in-demand product offering and
strong new business activity supports our growth targets, our
conservative balance sheet, fair value approach to product design
and capital management continues to differentiate Equitable while
driving significant value for shareholders. We have generated $0.9
billion of cash to Holdings year-to-date, including a $0.6 billion
dividend from Equitable Financial in July, which supports our
ability to consistently deliver on our 60-70% payout target. In
addition, our capital ratios remain resilient through market cycles
with a combined RBC ratio of approximately 425-450% as of the half
year, above our 375-400% target.”
Consolidated Results
Second Quarter
(in millions, except per share amounts or
unless otherwise noted)
2023
2022
Total Assets Under
Management/Administration (“AUM/A”, in billions)
$
887
$
824
Net income attributable to Holdings
759
967
Net income attributable to Holdings per
common share
2.06
2.47
Non-GAAP operating earnings
441
493
Non-GAAP operating earnings per common
share (“EPS”)
1.17
1.23
As of June 30, 2023, total AUM/A was $887 billion, a
year-over-year increase of 8%, driven by higher markets over the
prior twelve months.
The Net income attributable to Holdings for the second quarter
of 2023 was $759 million compared to $967 million in the second
quarter of 2022.
Non-GAAP operating earnings in the second quarter of 2023 was
$441 million compared to $493 million in the second quarter of
2022. Adjusting for notable items5 of $39 million, second quarter
2023 Non-GAAP operating earnings were $480 million or $1.27 per
share.
As of June 30, 2023, book value per common share, including
accumulated other comprehensive income (“AOCI”), was $5.69. Book
value per common share, excluding AOCI, was $26.08.
Business
Highlights
- Business segment highlights:
- Individual Retirement (“IR”) reported record net inflows of
$1.5 billion with first year premiums up 21% over prior year
quarter supported by continued demand for industry-leading RILA
products.
- Group Retirement (“GR”) reported net outflows of $66 million in
the quarter. The tax-exempt channel, which includes its industry
leading 403(b) offering for K-12 educators, reported $769 million
of total premiums in the quarter leading to net inflows in the
channel.
- Investment Management and Research (AllianceBernstein or “AB”)6
reported net outflows of $4.0 billion with pre-announced, low-fee
institutional outflows of $6.2 billion in April partially offset by
firmwide net inflows in May and June.
- Protection Solutions (“PS”) reported $770 million in gross
written premiums with Employee Benefits and accumulation-oriented
VUL gross premiums up 15% and 4%, respectively, over prior year
quarter.
- Wealth Management (“WM”) reported net inflows of $1.3 billion,
another quarter of organic growth, supported by advisor
productivity up 2% compared to the first quarter of 2023.
- Legacy (“L”) reported $569 million of net outflows and
continues to run-off at $2 billion to $3 billion per annum.
- Capital management program:
- The Company returned $304 million to shareholders in the
quarter, including $78 million of quarterly cash dividends and $226
million of share repurchases, which is in line with the Company’s
60-70% payout target.
- The Company reported cash and liquid assets of $1.6 billion at
Holdings, which remains above the $500 million minimum target, with
a continued focus on maximizing financial flexibility to support
consistent capital return.
- The Company maintained its strong financial condition with a
combined insurance company RBC ratio of approximately 425-450% at
quarter end, above the minimum combined RBC target of
375-400%.
- Delivering long-term shareholder value:
- The Company is on track to achieve $30 million of its $150
million net expense savings target by year end and $45 million of
its $110 million incremental income target in the Company’s general
account by year end.
- As of quarter end, the Company has deployed $7.5 billion of its
initial $10 billion capital commitment to AB’s Private Markets
platform with an additional $10 billion committed to AB bringing
the cumulative commitment to $20 billion by 2027.
- The Company continues to deliver strong cash generation with a
$0.6 billion dividend from Equitable Financial to the Holding
Company in July bringing year-to-date cash generation7 to $0.9
billion. The Company remains on track to achieve its $1.3 billion
cash generation guidance for 2023.
Business Segment
Results
Individual Retirement
(in millions, unless otherwise noted)
Q2 2023
Q2 2022
Account value (in billions)
$
83.9
$
71.8
Segment net flows (in billions)
1.5
1.2
Operating earnings (loss)
234
186
- Account value increased by 17% primarily due to market
performance and net inflows over the prior twelve months.
- Net inflows of $1.5 billion in the quarter were higher over the
prior year quarter with record sales of $3.6 billion.
- Operating earnings increased from $186 million in the prior
year quarter to $234 million, primarily driven by higher net
investment income due to higher interest rates and higher SCS asset
balances.
- Operating earnings adjusting for notable items8 increased from
$204 million in the prior year quarter to $224 million. Notable
items of $10 million in the current period reflect a one-time model
update and favorable tax items in the quarter partially offset by
lower net investment income from alternatives.
Group Retirement
(in millions, unless otherwise noted)
Q2 2023
Q2 2022
Account value (in billions) (1)
$
35.0
$
41.2
Segment net flows (2)
(66
)
144
Operating earnings (loss)
107
111
(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 June 30, 2023, net out flows of $140 million are
excluded as these amounts are related to ceded AV to Global
Atlantic.
- Account value decreased primarily due to the reinsurance
transaction with Global Atlantic, which reduced account value by
c.$9.4 billion, partially offset by market performance over the
prior twelve months.
- Net outflows of $(66) million with inflows in the Company’s
core tax-exempt market offset by outflows in older institutional
products and corporate market.
- Operating earnings decreased from $111 million in the prior
year quarter to $107 million primarily due to lower net investment
income and lower fee-type revenue on lower average account
balances.
- Operating earnings adjusting for notable items8 decreased from
$117 million in the prior year quarter to $103 million. Notable
items of $4 million reflect a one-time model update partially
offset by lower net investment income from alternatives.
AllianceBernstein
(in millions, unless otherwise noted)
Q2 2023
Q2 2022
Total AUM (in billions)
$
691.5
$
646.8
Segment net flows (in billions)
(4.0
)
(2.7
)
Operating earnings (loss)
99
101
- AUM increased by 7% due to market performance over the prior
twelve months.
- Second quarter net outflows of $4.0 billion include $6.2
billion of pre-announced low-fee institutional redemptions in April
with inflows in May and June. Investors continued to favor fixed
income, which grew 9% annualized organically, mostly offsetting
active equity outflows.
- Operating earnings decreased from $101 million in the prior
year quarter to $99 million primarily due to higher compensation
and benefits expenses.
- Operating earnings adjusting for notable items9 decreased from
$101 million in the prior year quarter to $89 million. Notable
items of $10 million reflect favorable tax items in the
quarter.
Protection Solutions
(in millions)
Q2 2023
Q2 2022
Gross written premiums
$
770
$
760
Annualized premiums
78
67
Operating earnings (loss)
24
110
- Gross written premiums increased 1% year-over-year with higher
Employee Benefits and Variable Universal Life premiums compared to
the prior year quarter.
- Operating earnings decreased from $110 million in the prior
year quarter to $24 million, primarily due to higher than expected
mortality and lower net investment income from lower
alternatives.
- Operating earnings adjusting for notable items9 decreased from
$92 million in the prior year quarter to $77 million. Notable items
of $53 million reflect elevated mortality and lower net investment
income from alternatives.
Wealth Management
(in millions, unless otherwise noted)
Q2 2023
Q2 2022
Total AUA (in billions)
$
80.4
$
70.4
Net Flows (in billions)
1.3
1.2
Operating earnings (loss)
42
24
- AUA increased by 14% due to market performance and net inflows
over the last twelve months.
- Net inflows of $1.3 billion in the quarter with focus on
driving higher-fee advisory AUA.
- Operating earnings increased from $24 million in prior year
quarter to $42 million with distribution fees from higher
retirement sales in addition to increased interest income from
sweep accounts due to higher interest rates.
Legacy
(in millions)
Q2 2023
Q2 2022
Account value (in billions)
$
22.4
$
22.5
Net Flows (1)
(569
)
(531
)
Operating earnings (loss)
45
57
(1) Net flows excluded as it relates to AV
ceded to Venerable for the discrete periods of June 30, 2023 and
June 30, 2022 were $(269) million and $(266) million,
respectively.
- Account value decreased by 1% primarily due to expected
outflows partially offset by market performance over the prior
twelve months.
- Net outflows of $569 million in line with expectations as this
business continues to run-off at $2 billion to $3 billion per
annum.
- Operating earnings decreased from $57 million in the prior year
quarter to $45 million, primarily due to lower fee-type revenue on
lower average account values.
- Operating earnings adjusting for notable items10 decreased from
$55 million in the prior year quarter to $48 million. Notable items
of $3 million in the current period reflect lower net investment
income from alternatives.
Corporate and Other (“C&O”)
Operating loss of $110 million in the second quarter increased
from an operating loss of $96 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
items10 increased from $96 million in the prior year quarter to
$102 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 June
30,
(in millions)
2023
2022
Non-GAAP Operating Earnings
441
$
493
Post-tax Adjustments related to notable
items:
Individual Retirement
(10
)
18
Group Retirement
(4
)
6
Investment Management and Research
(10
)
—
Protection Solutions
53
(18
)
Corporate & Other
7
1
Wealth Management
—
—
Legacy
3
(2
)
Notable items subtotal
39
5
Less: impact of actuarial assumption
update
—
—
Non-GAAP Operating Earnings, less Notable
Items
$
480
$
498
Impact of notable items by item category:
Three Months Ended June
30,
(in millions)
2023
2022
Non-GAAP Operating Earnings
441
$
493
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
(21
)
—
Mortality
53
(26
)
Expenses
—
12
Net Investment Income
38
17
Subtotal
70
3
Post-tax impact of Notable Items
39
5
Less: impact of actuarial assumption
update
—
—
Non-GAAP Operating Earnings, less Notable
Items
$
480
$
498
Impact of Notable Items by segment and corporate &
other:
Three Months Ended 6/30/2023
IR
GR
AB
PS
WM
L
C&O
Consolidated
Non-GAAP Operating Earnings
234
107
99
24
42
45
(110
)
441
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
(8
)
(9
)
—
—
—
—
(5
)
(21
)
Mortality
—
—
—
48
—
—
5
53
Expenses
—
—
—
—
—
—
—
—
Net Investment Income
3
8
—
16
—
4
7
38
Pre-tax Subtotal
(5
)
(1
)
—
64
—
4
8
70
Tax adjustment
(5
)
(3
)
(10
)
(11
)
—
(1
)
(1
)
(31
)
Post-tax impact of Notable
Items
(10
)
(4
)
(10
)
53
—
3
7
39
Impact of Actuarial Assumption Update
—
—
—
—
—
—
—
—
Non-GAAP Operating Earnings, less
Notable Items
224
103
89
77
42
48
(102
)
480
Three Months Ended 6/30/2022
IR
GR
AB
PS
WM
L
C&O
Consolidated
Non-GAAP Operating Earnings
186
111
101
110
24
57
(96
)
493
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
—
—
—
—
—
Mortality
—
—
—
(26
)
—
—
—
(26
)
Expenses
4
5
—
3
—
—
—
12
Net Investment Income
15
—
—
1
—
—
—
17
Pre-tax Subtotal
19
5
—
(22
)
—
—
—
3
Tax adjustment
(1
)
1
—
4
—
(3
)
1
3
Post-tax impact of Notable
Items
18
6
—
(18
)
—
(2
)
1
5
Impact of Actuarial Assumption Update
—
—
—
—
—
—
—
—
Non-GAAP Operating Earnings, less
Notable Items
204
117
101
92
24
55
(96
)
498
Earnings Conference Call
Equitable Holdings will host a conference call at 8 a.m. ET
August 3, 2023 to discuss its second 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 Second 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, $887 billion in assets under
management and administration (as of 6/30/2023) 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.
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
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 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 six months ended June 30, 2023 and 2022:
Three Months Ended June
30,
Six Months Ended June
30,
(in millions)
2023
2022
2023
2022
Net income (loss) attributable to
Holdings
$
759
$
967
$
936
$
1,497
Adjustments related to:
Variable annuity product features
(65
)
(1,031
)
796
(1,647
)
Investment (gains) losses
56
231
143
557
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
9
19
18
38
Other adjustments (1) (2)
62
177
107
405
Income tax expense (benefit) related to
above adjustments
(13
)
127
(223
)
136
Non-recurring tax items (3)
(367
)
3
(972
)
6
Non-GAAP Operating Earnings
$
441
$
493
$
805
$
992
_____________________ (1)
Includes certain gross legal expenses
related to the cost of insurance litigation, and claims related to
a commercial relationship of, $35 million, $107 million, $35
million and $166 million for the three and six months ended June
30, 2023 and 2022, respectively. Includes policyholder benefit
costs of $75 million for the six months ended June 30, 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 $7 million, ($38) million, $9 million and ($40) million
for the three and six months ended June 30, 2023 and 2022,
respectively.
(3)
For the three and six months ended June
30, 2023, non-recurring tax items reflect primarily the effect of
uncertain tax positions for a given audit period and a decrease of
the deferred tax valuation allowance of $376 million and $990
million.
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 six months ended June 30, 2023 and 2022.
Three Months Ended June
30,
Six Months Ended June
30,
(per share amounts)
2023
2022
2023
2022
Net income (loss) attributable to Holdings
(1)
$
2.13
$
2.54
$
2.60
$
3.87
Less: Preferred stock dividend
0.07
0.07
0.11
0.10
Net Income (loss) available to common
shareholders
2.06
2.47
2.49
3.77
Adjustments related to:
Variable annuity product features
(0.18
)
(2.71
)
2.21
(4.27
)
Investment (gains) losses
0.16
0.61
0.40
1.44
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
0.03
0.05
0.05
0.10
Other adjustments (2) (3)
0.17
0.47
0.30
1.05
Income tax expense (benefit) related to
above adjustments
(0.04
)
0.33
(0.62
)
0.35
Non-recurring tax items (4)
(1.03
)
0.01
(2.70
)
0.02
Non-GAAP Operating Earnings
$
1.17
$
1.23
$
2.13
$
2.46
______________________________ (1)
For periods presented with a net loss,
basic shares are used for EPS.
(2)
Includes certain gross legal expenses
related to the cost of insurance litigation and claims related to a
commercial relationship of $35 million, $107 million, $35 million
and $166 million for the three and six months ended June 30, 2023
and 2022, respectively. Includes policyholder benefit costs of $75
million for the six months ended June 30, 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 $0.10, $0.28, $0.10 and
$0.43 for the three and six months ended June 30, 2023 and 2022,
respectively. Includes policyholder benefit costs of $0.19 for the
six months ended June 30, 2022 stemming from a deal to repurchase
UL policies from one entity that had invested in numerous policies
purchased in the life settlement market.
(3)
Includes Non-GMxB related derivative hedge
losses of $0.02, $(0.10), $0.03 and $(0.10) for the three and six
months ended June 30, 2023 and 2022, respectively.
(4)
For the three and six months ended June
30, 2023, non-recurring tax items per common share reflect
primarily the effect of uncertain tax positions for a given audit
period and a decrease of the deferred tax valuation allowance of
$1.06 and $2.75.
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.
June 30, 2023
December 31, 2022
Book value per common share
$
5.69
$
(0.44
)
Per share impact of AOCI
20.39
24.63
Book Value per common share, excluding
AOCI
$
26.08
$
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in millions)
REVENUES
Policy charges and fee income
$
594
$
620
$
1,182
$
1,270
Premiums
280
238
556
485
Net derivative gains (losses)
(917
)
1,858
(1,758
)
2,017
Net investment income (loss)
1,036
711
2,026
1,515
Investment gains (losses), net:
Credit losses on available-for-sale debt
securities and loans
(14
)
(9
)
(80
)
1
Other investment gains (losses), net
(42
)
(223
)
(63
)
(559
)
Total investment gains (losses), net
(56
)
(232
)
(143
)
(558
)
Investment management and service fees
1,182
1,197
2,362
2,552
Other income
258
298
509
555
Total revenues
2,377
4,690
4,734
7,836
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
684
589
1,414
1,391
Remeasurement of liability for future
policy benefits
(7
)
12
(3
)
34
Change in market risk benefits and
purchased market risk benefits
(975
)
814
(955
)
347
Interest credited to policyholders’
account balances
501
310
964
623
Compensation and benefits
566
518
1,149
1,114
Commissions and distribution-related
payments
393
394
773
816
Interest expense
55
50
116
97
Amortization of deferred policy
acquisition costs
155
145
307
288
Other operating costs and expenses
466
583
889
1,117
Total benefits and other deductions
1,838
3,415
4,654
5,827
Income (loss) from continuing operations,
before income taxes
539
1,275
80
2,009
Income tax (expense) benefit
292
(264
)
1,017
(401
)
Net income (loss)
831
1,011
1,097
1,608
Less: Net income (loss) attributable to
the noncontrolling interest
72
44
161
111
Net income (loss) attributable to
Holdings
759
967
936
1,497
Less: Preferred stock dividends
26
26
40
40
Net income (loss) available to Holdings’
common shareholders
$
733
$
941
$
896
$
1,457
Earnings
Per Common Share
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in millions)
Earnings per common share
Basic
$
2.06
$
2.48
$
2.50
$
3.80
Diluted
$
2.06
$
2.47
$
2.49
$
3.77
Weighted average shares
Weighted average common stock outstanding
for basic earnings per common share
355.2
378.9
358.5
383.7
Weighted average common stock outstanding
for diluted earnings per common share (1)
356.1
380.6
360.0
386.1
(1)
Due to net loss for the six months ended
June 30, 2022 approximately 2.3 million share awards were excluded
from the diluted EPS calculation.
Results
of Operations by Segment
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in millions)
Operating earnings (loss) by
segment:
Individual Retirement
$
234
$
186
$
434
$
389
Group Retirement
107
111
196
255
Investment Management and Research
99
101
198
237
Protection Solutions
24
110
(11
)
107
Wealth Management
42
24
74
56
Legacy
45
57
105
120
Corporate and Other (1)
(110
)
(96
)
(191
)
(172
)
Non-GAAP Operating Earnings
$
441
$
493
$
805
$
992
(1)
Includes interest expense and financing
fees of $57 million and $52 million for the three and six months
ended June 30, 2023, and 2022 respectively.
Select
Balance Sheet Statistics
June 30, 2023
December 31, 2022
(in millions)
ASSETS
Total investments and cash and cash
equivalents
$
105,415
$
97,378
Separate Accounts assets
123,898
114,853
Total assets
269,006
252,702
LIABILITIES
Long-term debt
$
3,819
$
3,322
Future policy benefits and other
policyholders' liabilities
16,786
16,603
Policyholders’ account balances
91,595
83,866
Total liabilities
263,215
249,106
EQUITY
Preferred stock
1,562
1,562
Accumulated other comprehensive income
(loss)
(7,142
)
(8,992
)
Total equity attributable to Holdings
$
3,553
$
1,401
Total equity attributable to Holdings'
common shareholders (ex. AOCI)
9,133
8,831
Assets
Under Management (Unaudited)
June 30, 2023
December 31, 2022
(in billions)
Assets Under
Management
AB AUM
$
691.5
$
646.4
Exclusion for General Account and other
Affiliated Accounts
(73.7
)
(66.8
)
Exclusion for Separate Accounts
(41.0
)
(38.2
)
AB third party
$
576.8
$
541.4
Total company AUM
AB third party
$
576.8
$
541.4
General Account and other Affiliated
Accounts (1) (3) (4)
105.4
97.4
Separate Accounts (2) (3) (4)
123.9
114.9
Total AUM
$
806.1
$
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 June 30, 2023 and December 31,
2022, Separate Account and General Account AUM is inclusive of
$12.6 billion and $52 million as well as $12.1 billion and $56
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 June 30, 2023 and December 31,
2022, Separate Account is inclusive $6.3 billion and $5.6 billion
& General Account AUM is inclusive $3.8 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 and
Group Retirement segments. 2 Cash generation is net dividends and
distributions to Equitable Holdings from its subsidiaries. 3 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. 4 Please refer to
Exhibit 1 for detailed reconciliation and definitions related to
notable items. 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 Cash generation is net dividends and distributions
to Equitable Holdings from its subsidiaries. 8 Please refer to
Exhibit 1 for detailed reconciliation and definitions related to
notable items. 9 Please refer to Exhibit 1 for detailed
reconciliation and definitions related to notable items. 10 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/20230802167650/en/
Investor Relations Thomas Lewis (212) 314-2476
IR@equitable.com Media Relations Todd Williamson (212)
314-2010 mediarelations@equitable.com
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