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Employees say:"When I first came to this company, it felt very welcoming and I had a lot of people who helped me grow as a person and as a developer here at Equitable. Ever since then, I have made so many new connections with different people and all of them are all super nice, genuine people. What makes this place unique and a great place to work is the great management, the people, as well as the work-life balance—its insane, the amount of PTO you get. "

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Employees say:"Individuals respect and care for one another which highly contributes to productivity and success. Everyone takes their work very seriously (with a sense of humor as well) and are dedicated to providing a quality end result/product. To be honest—I feel that the culture is very unique for insurance, in a positive way, and is a testament to those that have shaped the organization."

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F500-2021-244-Equitable Holdings

Headquartered in New York City, the company provides financial services in the form of retirement planning, insurance, and investment management.

This year's Fortune 500 marks the 66th running of the list.

Founded in 1859, Equitable is a New York City financial services holding company that provides variable annuity, life insurance, and employee benefit products to both individuals and businesses.

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Equitable Holdings is a financial services company with six distinct offerings: individual retirement, group retirement, asset management, protection solutions, wealth management, and legacy. Through these segments, both individuals and organizations can access retirement plans and asset management services. Other offerings across the segments include life insurance policies and employee benefit packages. The company started in 1859 and now has approximately 12,000 employees and financial professionals.

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Equitable Holdings (EQH): Company Profile, Stock Price, News, Rankings

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Equitable Holdings

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Hello, everyone. Thank you for joining us, and welcome to the Equitable Holdings full year and fourth quarter earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Erik Bass, Head of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Equitable Holdings full year and fourth quarter 2025 earnings call. Materials for today's call can be found on our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the safe harbor language on slide two of our presentation for additional information. Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings, Robin Raju, our Chief Financial Officer, Nick Lane, President of Equitable Financial, Onur Erzan, President of AllianceBernstein, and Tom Simeone, Chief Financial Officer for AllianceBernstein.

During this call, we will be discussing certain financial measures that are not based on Generally Accepted Accounting Principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website and in our earnings release, slide presentation, and financial supplement. I will now turn the call over to Mark.

Good morning, and thank you for joining today's call. Before diving into our 2025 results and 2026 outlook, I want to take a step back to reflect on the journey Equitable Holdings has been on since our IPO. We have been intentional about refining our business mix to focus on three core growth engines: U.S. retirement, asset management, and wealth management. These are very attractive and growing markets, and they are integral to our mission of helping our clients secure their financial well-being and live long and fulfilling lives. Our integrated model positions us well to be one of the long-term winners in each of them. At the same time, we have been reshaping our balance sheet to become more capital light, reduce exposure to legacy insurance risks, and increase the quality of cash flows.

You saw further evidence of this in 2025 with the execution of our life reinsurance transaction with RGA, and we believe these actions will create a more valuable company. Our business has solid momentum entering 2026, and we remain focused on achieving all of our 2027 financial targets. Turning to slide 3, I will provide some brief highlights from our 2025 results. Full-year non-GAAP operating earnings were $5.64 per share, or $6.21 per share after adjusting for notable items. This was up 1% over 2024, as growth was held back by elevated mortality claims. The past two quarters have shown increased earnings power, and we expect EPS growth to accelerate in 2026.

We produced full-year organic cash generation of $1.6 billion, consistent with our $1.6 billion-$1.7 billion guidance range. In 2026, we expect this to increase to approximately $1.8 billion, and we remain on track to reach $2 billion in 2027. Assets under management and administration ended 2025 at a record $1.1 trillion, up 10% year-over-year, which will support growth in fee and spread-based earnings. Finally, we returned $1.8 billion to shareholders in 2025, which includes $500 million of additional share repurchases executed following the life reinsurance transaction. Excluding these incremental buybacks, our payout ratio was 68% at the high end of our 60%-70% target range. Moving to organic growth, we continue to see healthy trends despite competitive market conditions.

In Retirement, we produced $5.9 billion of net flows in 2025, a 4% organic growth rate, helped by another year of record RILA sales. We also leaned into the funding agreement-backed note market to take advantage of attractive spreads and had $5 billion of new issuance. This is not reflected in our retirement net flows, but will help support growth in spread-based earnings. Wealth Management also continues to see strong momentum, with full-year net inflows of $8.4 billion, a 13% organic growth rate. The number of wealth planners, who are our most productive advisors focused on holistic wealth planning, increased by 12%. AllianceBernstein experienced mixed dynamics in 2025... It had overall net outflows of $11.3 billion, which includes $4 billion of low-fee outflows related to the RGA transaction.

On the other hand, AB continues to see strong momentum in its private markets business, which increased AUM by 18% to $82 billion, and is well-positioned to achieve its target of $90 billion-$100 billion in AUM by the end of 2027. AB ended 2025 with an institutional pipeline of $20 billion, and it has over $3 billion of additional insurance wins that are also expected to fund in 2026. One incremental growth opportunity is commercial real estate lending. AB is making investments to enhance its platform and will onboard more than $10 billion of Equitable's commercial mortgage loan portfolio in the second half of the year. This is a win for both companies and is another good example of the flywheel benefits between Equitable and AB. Finally, we continue to make strong progress on our strategic initiatives.

I already mentioned the life reinsurance transaction with RGA, which freed $2 billion of capital and reduced our mortality exposure by 75%. We used a portion of the proceeds to help drive growth in asset and wealth management by increasing our ownership stake in AB and funding an investment in the FCA Re sidecar and the acquisition of Stifel Independent Advisors. We are also on track to realize our targeted $150 million of expense savings by 2027, with $120 million currently in our run rate results. We have already achieved our $110 million target for incremental investment income from shifting to private markets and see opportunity for further upside. Moving to slide four, we highlight some of the key performance indicators for our growth strategy and the progress since our 2023 Investor Day.

I've already mentioned several of these, so I'll just focus on a couple of areas. In retirement, net flows and AUM growth are running ahead of Investor Day forecasts. We also are making progress in growing our institutional business, which had over $600 million of net inflows in 2025 across in-plan annuities and HSAs. We expect a similar level of inflows in 2026 and forecast this to ramp further over time. In wealth management, we achieved our target of $200 million in annual earnings two years ahead of plan, and the business has excellent momentum, given top-quartile organic growth and rising advisor productivity. We expect wealth management to sustain double-digit annual earnings growth, assuming normal market conditions.

Finally, AB has done a good job in executing on its margin initiatives, and it reported a 33.7% adjusted operating margin in 2025 at the upper end of its targeted range. At the same time, it is seeing benefits from growth investments in areas such as private markets, insurance asset management, and active ETFs. Overall, we see good commercial growth momentum, which will support further growth in earnings and cash flows. Slide five provides an update on progress against our 2027 financial targets. Starting with cash generation, we remain on track to reach $2 billion in 2027. As I mentioned earlier, we forecast $1.8 billion of cash generation in 2026, which represents greater than 10% year-over-year growth.

Over 50% of cash flows coming from assets and wealth management, and we now have a track record of paying dividends from our Arizona insurance entity, giving us good visibility into future cash flows. Through 12 quarters, our payout ratio is 67% at the high end of our targeted 60%-70% range. Note that this does not include the $500 million of incremental share repurchases funded by the RGA transaction. The one area where we are currently below our target is earnings per share growth, which has been 8% through the first three years of our plan. We attribute this primarily to the elevated mortality claims experienced in 2025. Our exposure to mortality is significantly reduced following the life reinsurance transaction, and we expect EPS growth to improve in 2026, getting us back on track.

Turning to slide six, I want to highlight some of the reasons we feel confident in projecting strong growth in 2026. First, we ended 2025 with a record level of assets under management across each of our business segments, which bodes well for growth in fee and spread-based earnings. Given the healthy organic growth momentum we have discussed, particularly in retirement and wealth management, we expect continued growth in assets under management and advice moving forward. Importantly, we also have significantly less exposure to future fluctuations in mortality claims. The RGA transaction reduced our net mortality exposure by 75%, so even if 2025's experience were to recur, the bottom line impact would be materially reduced.... Finally, we will get the full benefit from the additional share repurchases executed in the second half of 2025.

We've reduced our share count by 9% over the past year, which provides a nice tailwind for EPS growth in 2026. Equitable is well positioned in attractive growing markets, and I'm confident in our ability to execute on the opportunity in front of us. I will now turn the call over to Robin to discuss our fourth quarter results and outlook in more detail.

Thank you, Mark. Turning to slide seven, I'll provide some more detail on our fourth quarter results. On a consolidated basis, non-GAAP operating earnings were $513 million, or $1.73 per share, and we reported net income of $215 million. The only notable item we had in the quarter was $10 million of non-cash expense in Corporate and Other, related to the write-off of a legacy software investment. Excluding this, non-GAAP operating earnings per share would have been $1.76, up 8% year-over-year. Our consolidated tax rate was approximately 18% this quarter, consistent with the guidance we provided. Total assets under management and administration increased 10% year-over-year to a record 1.1 trillion, which provides a tailwind for earnings as we enter 2026.

Adjusted book value per share ex-AOCI and with AB at market value was $33.84. In our view, this is a more meaningful number than reported book value per share, which significantly understates the fair value of our AB stake. On this basis, our adjusted debt-to-capital ratio ended the year at 25%. On slide eight, I'll provide some further details on our segment-level earnings drivers. In retirement, fourth quarter earnings increased 4% year-over-year and 2% sequentially, after adjusting for notable items. Given differences in tax rates across different periods, I'll focus on pre-tax results. Net interest margin, or NIM, increased 2% sequentially, driven by the growth in general account assets. As expected, our NIM spread compressed modestly versus the third quarter, reflecting the runoff of our very profitable older RILA block and some timing noise in investment income.

We expect some additional spread compression in the first half of 2026, but anticipate spreads will stabilize after that. Over time, we expect quarterly NIM growth to roughly track the growth in general account assets, excluding embedded derivatives. Fee-based revenues increased 8% sequentially, driven by higher average separate account AUM, as well as a favorable catch-up adjustment. Offsetting the growth in revenues was higher commission expense. While we expect commissions to trend higher over time with increased sales, the sequential growth was inflated by an allocation true-up with wealth management. This shifted some earnings between segments, but had a neutral impact at a total company level. Putting it all together, we view this quarter's level of pre-tax retirement earnings as a reasonable starting point from which to project future growth. Turning to asset management, AB reported strong fourth quarter results, with earnings up 4% sequentially.

Base fees continue to benefit from growth in average AUM, and performance fees of $82 million came in above our guidance. AB delivered a full year margin of 33.7% at the upper end of our 30-35% guidance range provided at Investor Day. As a reminder, AB has seasonality in results, given the timing of performance fees, but the business is entering 2026 with solid earnings momentum. Moving to wealth management, fourth quarter earnings increased 40% year-over-year, and the business exceeded our target of $200 million in annual earnings two years ahead of schedule. Results in this quarter benefited from a favorable commission adjustment from retirement and elevated transaction fees, and we view $60 million of quarterly earnings as a better run rate.

We continue to forecast double-digit earnings growth moving forward, supported by steady increases in AUA and advisor productivity. Wealth Management attracted $2.1 billion of advisory net flows in the quarter and $8.4 billion for the full year at 13% organic growth rate. This compares favorably versus industry peers, and we are excited about the outlook for 2026. Finally, Corporate and Other reported a loss of $123 million in the quarter. This was higher than our expectation due to $10 million of one-time expenses, approximately $25 million of elevated mortality, and a lower tax rate. The adverse mortality experience was concentrated in December and resulted from a high number of small claims with less reinsurance coverage. While we still retain some exposure to fluctuations in mortality, the RGA transaction has significantly narrowed the range of potential outcomes going forward.

Turning to slide nine, I'll highlight Equitable's capital management program and cash flow outlook. In the fourth quarter, we returned $354 million to shareholders, including $277 million of share repurchases. For the full year, we reduced shares outstanding by 9%, which included $500 million of incremental share repurchases, funded by proceeds from our individual life reinsurance transaction. Our full year payout ratio was 95%, or 68%, excluding the additional $500 million of buybacks. We ended the year with $1.1 billion of cash at the holding company, up from $800 million at the end of the third quarter, and comfortably above our $500 million minimum target. During the fourth quarter, we received approximately $600 million of subsidiary dividends, including the annual distribution from our wealth management business.

As a reminder, our holding company cash position tends to be elevated at year-end due to timing of subsidiary distribution, and we expect it to trend lower in the first half of 2026. For the full year, we had total cash generation of $2.6 billion, which includes $1 billion of proceeds from the RGA transaction. Organic cash generation was modestly above $1.6 billion and in line with our guidance range. As Mark mentioned, we expect approximately $1.8 billion of cash generation in 2026, and we remain on track to achieve $2 billion of annual cash generation in 2027. Finally, we expect our year-end 2025 combined NAIC RBC ratio to be approximately 475%, above our target of 400% plus.

This year-over-year increase reflects the benefit of the RGA transaction and provides us with ample capital flexibility moving forward. On slide 10, we highlight the value of new business, or VNB, which is generated mainly in our retirement business. VNB represents the present value of expected future cash flows from new sales, which is above and beyond the capital deployed to fund growth. It is intended to provide investors with some visibility into the drivers of future growth and cash flow from our insurance subsidiaries. In 2025, we had record retirement sales, which helped drive an increase in VNB to $600 million. We deployed about $580 million of capital to support these sales. While our VNB margin declined modestly due to a shift in sales mix and a low spread environment, we continue to generate a 15%+ IRR on new business.

We are able to achieve above-industry returns as a result of our unique distribution model, which leverages Equitable Advisors and results in a lower average cost of funds and a top quartile expense ratio in our retirement business. I would also note VNB did not include the impact of distribution fees earned in our wealth management business or investment management fees earned by AB. These are additional benefits of our integrated business model that show up as non-insurance earnings and cash flows. Turning to slide 11. I want to conclude by providing some additional guidance to help you forecast our results for 2026 and beyond. This assumes an 8% total return for equity markets and interest rates following the forward curve. We also forecast an 8%-9% return for our alternative portfolio.

Starting with retirement, we expect mid to high single-digit growth in pre-tax earnings, with spreads stabilizing in the second half of the year. Asset management results will be highly sensitive to markets, but we have provided some baseline guidance for the compensation ratio and non-comp expenses. In addition, AB has good visibility into achieving performance fees of at least $80 million-$100 million in 2026. In wealth management, we forecast double-digit growth in earnings from the full year 2025 level. Turning to corporate and other, we project a full year loss in the $350 million-$400 million range. There will be some quarterly volatility in results based on the seasonal pattern of mortality, with higher expected claims in the first and fourth quarters of the year. We have also increased our baseline GAAP assumption for mortality to incorporate recent experience.

Finally, we expect a total company tax rate of approximately 20% and segment tax rates of 16% for retirement, 26% for wealth management, and 28% for asset management. We may have opportunity to execute on additional opportunistic tax planning initiatives in the first half of 2026, which could reduce our consolidated tax rate below the 20% level. Putting it all together, we expect growth in 2026 earnings per share, excluding notable items, to exceed our 12%-15% target. I will now turn the call back over to Mark. Mark?

Thanks, Robin. As I mentioned at the beginning of the call, Equitable has been on a journey since our IPO to build a more profitable and faster-growing company, and we enter 2026 with solid momentum. We have a strong balance sheet and continue to increase our organic cash generation. This has enabled us to consistently return capital to shareholders while also investing for growth.

... You can see this in the strong net flows we are generating across retirement, wealth management, and AB Private Markets, and each of our business segments ended the year with record AUM. As Robin and I have both discussed, we have tailwinds that should drive stronger earnings per share growth in 2026, and we remain focused on achieving our 2027 financial targets. We will now open the line to take your questions.

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Suneet Kamath from Jefferies. Your line is open. Please go ahead.

Great, thanks. I just wanted to start with private credit again. It seems like your stock trades like a private equity company, except on the days when those stocks go up. And I know you have some slides in the back talking about private credit, but can you just talk a little bit about how you're feeling about the quality of what you have in the portfolio? I don't know if you have a watch list, if you can talk about some of the sectors that you're particularly focused on. It just seems like this is an ongoing kind of overhang on the stock. Thanks.

Sure. Morning, Suneet, and we look forward to the multiple of those private credit companies for Equitable as well, over time. But, we added, slide 16 in the earnings presentation. It gives them a little bit more, disclosure on our private credit, portfolio. So private credit, if you take a step back, it's about 16% of our total GA. Within that, almost 50% of that is within corporate private placements, which is nothing new for insurance companies, over time. There has been some recent noise about software, that's typically found in the direct lending portion of the portfolio. That's about 4% of the private credit portfolio or 1%; direct lending is 1% of the total GA. Software, specifically within the direct lending, is a small portion of that.

It's 15 basis points of the total General Account, so it's really immaterial for us, and we're underweight the industry benchmarks on our software exposure within that, for Equitable on the General Account. Maybe I'll pass to Onur to speak about private credit at Alliance Bernstein within the broader client portfolios as well. Onur?

Yeah. Thanks, Robin. Just to start with the broader context, if you think about our AUM, which is approaching $900 billion, private credit, broadly defined, makes up roughly $82 billion, both in terms of fee-paying and fee-eligible assets. Within that, the corporate direct lending that Robin mentioned makes up roughly 25% of that 82. So within the grand scheme of things, it's also a relatively small exposure to AB overall as a category. And within that, we have some exposure to software in line with other corporate direct lending franchises, but our experience so far has been spectacular. Over the last decade plus, we have deployed $15 billion with software companies. We had zero net losses in that.

When we look at our current portfolio, our elevated risk rating is only 3% of those companies that is in our portfolio. So the results, it's not a big exposure for us either. Second, we feel confident about our history of underwriting discipline. And then third, we are remaining very confident about the health of our current portfolio. So overall, it's not a big event for us so far, so we remain relatively constructive.

Yeah, and just to wrap it up, yeah, private credit. It's an important asset class for us. You know, the liabilities within the insurance company fit well with private credit. With AB, as Onur mentioned, we get good direct look at the underwriting that makes us comfortable with the risk in there, and it delivers good risk-adjusted returns for us. So it's an asset class that we think it's important for insurance companies to invest in. They're important for the economy, and they're important for our clients at AB. And so, we'll maintain our discipline and ensure we deliver good risk-adjusted returns for our clients.

Okay, appreciate that. And then just shifting gears to wealth management. You know, one of the things we're hearing is, you know, competition for advisors has been increasing, and then there's pretty sizable packages being offered. You know, when I look at your 12% growth in wealth planning, just curious, how much of that is coming from, you know, external hires versus, you know, internal promotions? And what is your sort of target market in terms of the practices that you go after? Thanks.

Yeah, thanks. This is Nick. Look, we're very encouraged by our organic growth rate that we see coming from our existing advisors. That was $8.4 billion of net flows for the year. We bring a distinct model out to the space, given our people, our planning, and our platform. We're one of the few platforms that continue to bring new advisors into the industry, and that gives us a pipeline to grow wealth planners, as Mark highlighted, which were up 12% year-over-year and have more than doubled since we IPO'd, um, back in 2018. We're very pleased with the progress of our EXP hiring efforts. We recruited $1.4 billion in assets for the year in 2025. As context, it's a large addressable market. There are about 150,000 Series 7 producers.

About 12,000 a year are looking for new homes. We hired a 20-year veteran to run our EXP hires, knows the market well, and has built a disciplined approach here at Equitable. We are very intentional about the type of advisors we target and believe we have a distinct model for EXP hires who are looking to grow their businesses or transition their practices to other advisors. So we've got an edge. We'll remain disciplined. We're very bullish about our organic growth drivers and productivity and wealth planners, and we see EXPs as a force multiple on top of them.

Your next question comes from the line of Tom Gallagher from Evercore ISI. Your line is open. Please go ahead.

Good morning. First question is, when I look at the value of your AB stake now, and I compare it to the value of the Equitable stock, you know, everyone looks at that, tracks it from time to time. That valuation spread is probably as big as it's been in a very long time, because AB's done well, Equitable, not so much. Is there anything structurally you can do to close that valuation gap when you think about potential corporate strategies? Or is that more of a theoretical gap that you're just gonna have to live with and hope it closes over time?

Morning, Tom. It's Mark. Thank you very much for the question. Yes, we see the gap as well, and it is perplexing from, you know, from time to time. But, you know, having said that, AB has done incredibly well in the last year or so, or the last years or so. And part of the benefit in AB is this integrated model that we talk about, this flywheel, this ability for Equitable to help seed strategies in AB, and they've executed extremely well over there. Looking at our valuation, I think there's two or three things which we'd point to investors. One, attractive and growing markets. You know, being in U.S.

retirement, asset management, and wealth management, having record AUM there, it's a good place to be. We're very pleased with the way the integrated model is working now, this flywheel. We can point to really strong benefits on that. And, you know, we have a good track record of execution. So, I mean, putting it all together, we can see upside here, and we can see upside in the valuation for EQH. It certainly is not an expensive stock now. It's 6x future earnings.

What we have to do is the management team is really, really focused on the things that we can control, and that's growing the business, making sure that a flywheel works, being disciplined on the expenses, and increasing that cash generation, and I'm sure that will close the gap.

Thanks. Thanks for that, Mark. My follow-up is just on mortality exposure. I guess, Robin, one, two-part question. One, can you just give us an idea of the embedded earnings in the corporate loss that's related to life insurance now? And secondly, is there any opportunity to further reduce your exposure to mortality? Like, could you potentially get RGA to buy out the remaining 25%, or is that the expectation you're just gonna keep that exposure going forward? Thanks.

Thanks, Tom. So let me just touch on mortality, a bit, taking a step back. So in the quarter, we did see a mix of some large claims, also smaller claims that we didn't have reinsurance coverage on before the RGA transaction benefits kick in. So this led to about $25 million adverse mortality in the quarter that we mentioned. And for 2026, we felt that it was prudent to include in our corporate and other guide of $350 million-$400 million, an increased GAAP guidance of about $50 million in terms of mortality. Now, that may be conservative because it's slightly worse than our three-year average, but it's closer to recent experience, so we felt it was prudent to include that in the guidance that we've given.

We're not gonna disclose, like, subsegments within corporate and other because there's noise within there, but I think that's the best you can look at is the $350 million-$400 million. That includes some prudence in it. And I think over time, in 2027, we expect that to improve as we expect the life earnings to improve and some of the other pieces in corporate and other to improve as well. If you, if you think about our remaining 25% of the exposure, it's much smaller now than it was previously. We feel as though the volatility that we have is manageable. It's small, even in an adverse quarter like this, where it was $25 million.

That being said, we'll always look at different solutions if we think it's pertinent and we wanna continue to drive execution and shareholder value. So we'll always look to see where we can do that.

Your next question comes from the line of Wes Carmichael from Wells Fargo. Please go ahead. Your line is open.

... Hey, thank you. Good morning. Maybe a bit more of a specific question for Robin, but in the retirement segment, in realizing you had pretty strong sales this quarter, but the commission and distribution expense line picked up, I think, sequentially about $25 million. I'm just curious if you think there's a higher ratio of commission and distribution expense relative to sales going forward.

Sure. So, as Mark mentioned on the call, I'm sure Nick can go deeper on, but we've seen great growth in the retirement business, 4% organic growth. In it, we've seen good top line growth in SCS as well. As you recall, the mix of where that sales come from, whether it's Equitable Advisors or third-party changes, the commissions that come up upfront as we can DAC less in Equitable Advisors. So that's a big portion of the drive. That being said, going forward, you know, with less upfront DAC, that means less DAC amortization. So we expect over time, the earnings from the retirement business to well exceed well and beyond the commission expense that we have, along with the NIM growth that we'll see going forward.

Wes, remember, we had that one time through-

Yeah. Wes, just remember we had that one time true up as well that I mentioned between Retirement and Wealth Management on the call.

Yep. Thank you. My follow-up was on the FABN program. I, I know you've been more active there recently, additional spread source. Could you talk about maybe how meaningfully you think you can grow that program from here and what the issuance environment looks like in 2026? I know in 2025 was kind of a record year for the industry.

Sure. We've been able to lean in on the FABN program in 2025, almost $5 billion in issuances. It comes with very attractive IRRs and good spread earnings, also benefiting the flywheel as AB manages those assets, so we get good risk-adjusted returns from that program. Overall, as a reminder, the FABN flows aren't included in the retirement 4% organic growth rate that we gave. If it was, it would be about 7% organic growth rate, so it's incremental to retirement earnings and helps us grow going forward. As long as, you know, FABN, it's a very disciplined liability that we have. If the pricing's there, we'll go and execute an issue if we can get the IRRs that we want. If it's not there, we won't.

So we'll be disciplined in that market, and it really depends on where Equitable spreads trade relative to broader industry spreads. And so that's what we're looking. But from where we sit here today, we still see opportunities to grow that FABN business going forward.

Your next question comes from the line of Alex Scott from Barclays. Please go ahead. Your line is open.

Hi, good morning. I have one on cash flow and just the conversion of earnings. You know, I guess just, just inherent in you guys confirming the cash flow targets that you've laid out, but not necessarily the absolute earnings levels. It sort of suggests that cash conversion is improving. So I just wanted to make sure I understand that correctly. And can you talk about some of the underlying drivers, the types of businesses you'll be shifting towards? We actually changed sort of the guidance that you've talked about in terms of conversion over time, and what kind of upside is there as you continue to make shift?

Sure, Alex. I think I, I think I got it. You came in a little broken up, but it was about the cash generation, the mix, and the conversion. So, as just taking a step back, we were able to upstream $2.6 billion of cash this past year in 2025, $1 billion of that related to the benefit from the RGA transaction. So $1.6 billion of organic cash generation, 50% of that is coming from asset and wealth businesses. So that's close to 90% conversion of rate on those businesses that you'll see. Going forward, we expect to grow cash flows 10% next year to $1.8 billion.

This growth is driven by higher asset and wealth earnings and larger expected retirement dividends as well, reflecting the profitable growth in the business that we see. Now, keep in mind, one factor that we have is the capital release from the run-off legacy block. That has a very high conversion rate. So that's why uniquely in our IRR day plan, you saw cash growing faster than earnings because we're getting the benefit of the capital release on the legacy block that we see. So we still feel very confident on the $2 billion target. You can see that naturally come through, and we're excited about the future.

Got it. If we could go back to retirement and the, the spread, what are some of the dynamics that will cause that to stabilize in the mid part of the year? I mean, does that have to do with the market value adjustments, or, or is that more related to the 2020 run-off and what you see there? I just wanted to better understand it.

Yeah. So the question was on spread in retirement and whether it's in when the market value adjustments, MVAs, or from the run-off. So it's a little bit of both that you saw in 2025. We saw a year-over-year decrease in MVAs. We don't assume any benefits from MVAs going forward. And then we see the run-off of that very profitable RILA block. As you recall, we were the only ones in the market, so we had very strong margins, and now margins have normalized to, you know, 15%+, IRRs on that business. That business is less than 15% of our total RILA block, so that continues to run off, and we expect some less spread compression going forward. If you look at this quarter versus last quarter, it's about 3 basis points of spread compression.

I think that's, you know, anywhere from two to four in the first half of next year of 2026. I think is fair. And then going forward, you're going to see, spreads move in line and grow, NIM grow with the general account balance in the retirement business. So, and then keep in mind as well, taking a step, even if you saw spread compression quarter-over-quarter, NIM is growing. So we're actually growing nominal value in terms of earnings in that retirement business, and that'll continue going forward with the strong organic growth. So, all in all, retirement business we feel comfortable with. We expect that, as you saw in our guidance, to grow on a pre-tax basis between mid-single-digit to high-single-digit, and so we're excited about the future growth coming through.

Your next question comes from Jimmy Bhullar from J.P. Morgan. Your line is open.

Hi. I had a question on individual life, but before that, I think, obviously, you guys have done a good job of de-risking the business, including the RGA deal, but some of the disclosure changes you've made recently, they make it harder to analyze your results. I don't know anybody who would want individual life bumped into, like, corporate, where you can't see what the hell's going on with that business. I doubt you're within the company analyzing it that way, but from the outside, that's how people have to do it. The question is on, like, maybe if you could go into a little bit more detail on what you've seen in the business that's caused the results to get worse, maybe either by policy type or issue age.

Is it more of an aberration or is there something with the pricing or anything, or the macro environment that's made the business perform worse? And what caused you to maybe increase your or reduce your earnings or increase your loss assumption for that block?

Sure. Thanks, thanks, Jimmy. So taking a step back, I think it's most important for us, and we tell you and investors, focus on cash. I mean, that's the most important metric that we can give you out in the street. Cash flow has grown from $1.6 billion to $1.8 billion next year into $2 billion by 2027. So that's the most important metric I can, I can give you, 'cause that's what's really coming through in the businesses for some of the noise that you'll see in the GAAP reporting overall. The life business specifically, as we've talked about historically, you know, mortality, we have volatility because we have large face amounts and we have older issue ages within that block. So as a result, there's some volatility within when those policies die.

The underlying economics, the economics of it are good. The cash is okay, 'cause the assumptions are more conservative on cash than they are in GAAP. From that volatility perspective, we did the RGA transaction to reduce 75% of that volatility going forward. We think the guide that we're giving is prudent. You know, it's conservative versus a three-year average, but, you know, from what we've seen recently, we thought it was prudent to give you a guide that gave us an opportunity to ensure that we hit the numbers, even if we have some volatility, but also provides upside for 2027 compared if that improves. So all in all, we feel we feel good about the business where it is with the reinsurance transactions that we've done.

Also, the lower retention rate on new business that we have minimizes that volatility going forward. So, we feel okay with there.

Then maybe just following up with Nick on the RILA market. Seems like more and more companies have entered the market in recent years, including some of the guys backed by PE insurers. Are you seeing competition disciplined, or are some of the carriers being more aggressive beyond just offering maybe introductory specials and whatever else? Like, how do you feel about the competitive environment in the RILA market?

Yeah, thanks for the question. Look, first, we continue to see growing demand for RILAs, given the demographics and heightened by the current period of macro uncertainty. It's a product that's right for the times. As Mark highlighted, fourth quarter RILA sales were robust across all channels, up 12% year-over-year, another record high, with $1.4 billion of net flows. Look, as the market leader with a durable edge, we have a track record of benefiting from this growing demand. You've seen us more than double our RILA sales in the last three years, and we've delivered record sales in nine out of the last 10 quarters.

To your point on competitive intensity, we saw players enter at the tail end of 2024, so we've been operating what I would say in this new normal for over a year. We're always vigilant on competitive trends, especially on pricing. Traditionally, we see new entrants offer teaser rates and then revert to more sustainable levels, and we saw this dynamic in the fourth quarter, for those who entered in the beginning of the year. We have conviction that given our Equitable flywheel, this gives us an edge. We have the differentiated distribution with Equitable Advisors and privileged third-party networks, which attract lower costs of liabilities. We generate attractive yields and have line of sight for how we do that through AB.

We have scale as the number one player and decades-long relationships, and I think we have a track record of innovation to continue to meet emerging needs that we see in the marketplace. So we believe that's hard to replicate. So looking forward, we'll continue to be vigilant on competition. We're confident in our, in our momentum, and we have conviction that we're in a privileged position to capture a disproportionate share of the value being created in that space.

Your next question comes from the line of Joel Hurwitz from Dowling & Partners. Your line is open. Please go ahead.

Hey, good morning. Robin, wanted to get an update on the 27 targets. Last quarter, I think you said the midpoint of that 12%-15% EPS CAGR was achievable. I guess, do you still think that's the case, especially with the mortality outlook?

Sure, Joe, we're, we're very focused on delivering all of our 2027 targets. As Mark mentioned, we remain on track for the $2 billion of cash, the 60%-70% payout ratio, and where we're lagging, to your point, is on the earnings per share growth. I think the guidance that we've given you in this quarter should allow you to get to that range on the 12%-15%. I think the guidance we give you probably gets us to the lower end of the range, which would be fair. Keep in mind, though, depending on how we track during the year, we still have levers in place, such as expenses, to get in that range.

So that's what we're focused on delivering, is the 12%-15%, but also ensuring that the business continues to grow, going forward, even post-2027, so we can continue to drive cash flows and earnings growth for shareholders.

Got you. That's helpful. And then just on the payout ratio, with cash generation moving to $1.8 billion, and I think what you're implying on earnings, why shouldn't the payout ratio be moving up? I know we have to take out interest expense, but I feel like if I do that, cash generation ex-interest expenses is more towards, like, by the mid-70% of your operating earnings.

Yeah. So if you look on the payout ratio, since our IPO has been on the higher end of the range that we deliver on, and I think if you look at where the stock is trading and relative to expectations, you can expect us to be probably in the higher end of the range. But keep in mind, though, the opportunities to invest in growth are the best that we've seen in some time. With interest rates where they are, the consumer needs for us to grow in the retirement business and asset management and wealth businesses, there are a lot of good investment opportunities that deliver very strong returns for shareholders as well.

We'll continue to buy back a good amount of stock at these levels, but more importantly, we're investing for future growth to ensure that we continue to capture the retirement opportunity in the U.S. and continue to grow in asset and wealth.

Your next question comes from the line of Yaron Kinar from Mizuho. Your line is open. Please go ahead.

Thanks. Good morning. You mentioned the durable edge you have in the RILA market. That being said, market share for Equitable in the new sales is shrinking, albeit from an enviable market-leading position, due to the increased competition. So I'm assuming you're not willing to compromise on IRRs here, and would that potentially mean that one of the company's growth engines moderates in coming years, even as the RILA market continues to grow?

This is Nick. Look, obviously, the competitive landscape has changed from a decade ago since we were a pioneer in launching the RILA market and had 100% share in that market. As we highlighted, look, we see the pie continuing to grow, given the demographics and the nature of the product in these times. We would expect to continue to maintain our leadership position in this space. We are very intentional, and I think this speaks to the power of our distribution, of being able to pivot our sales based on where we see consumer value and shareholder value. So as you mentioned, we are extremely disciplined on IRRs. We're delivering our targeted IRRs today, and we continue to see strong momentum, as Mark highlighted, in our sales and flows.

It's Mark here. I'll just add a couple of things which is unique to the RILA market. Firstly, there's about $600 billion of assets coming out of 401(k)s a year, going precisely into this type of market. So, you know, it's not necessarily coming out of disposable income for consumers; it's coming out of their savings vehicles. So that protects it from some of the economic issues we see consumers have. And then, secondly, to Nick's point, we've had this product a long time. We don't look at market share, we look at sales growth, and sales growth is at record level, so we're happy with that one.

But one of the things that gives us comfort on RILA is that we know it works in low and high interest rates. There are some annuity products that work incredibly well in high interest rates and not in low interest rates, but we've seen RILA through the cycle, Nick, and you know, we know it has a very strong customer proposition when rates are low, as well as when rates are high. So it's a good part of the retirement market to be in.

Thank you. That makes sense. And then my follow-up, just going back to slide 10, the VNBs. Has the VNB payback period changed over time? Can you give us any quantification of that?

Sure. We haven't disclosed payback period, but our VNB over time has, and payback period, it has come down over time and IRRs have gone up. If you look, the RILA product is specifically what we just spoke about, is a shorter duration product compared to most of the longer duration products that we've been selling. We're also, we exited the individual third-party life market last year. That's longer duration, so much shorter duration, faster payback periods, faster cash conversion on the product portfolio that we sell today versus what we sold years ago.

... Okay, but you can't quantify it at this point?

It's materially lower than what it used to be.

Equitable Holdings (EQH) Q4 2025 Earnings Call Transcript

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