8-K: Equitable Holdings Reports Strong Full Year and Fourth Quarter 2024 Results, Driven by Record Net Inflows

Equitable Holdings announces robust growth in 2024, with record net inflows and increased Non-GAAP operating earnings per share.

Summary

• Equitable Holdings reported full year net income of $1.3 billion, or $3.78 per share, and fourth quarter net income of $899 million, or $2.76 per share.
• Non-GAAP operating earnings were $2.0 billion, or $5.93 per share for the full year, and $522 million, or $1.57 per share for the fourth quarter.
• Adjusting for notable items, Non-GAAP operating earnings were $2.1 billion, or $6.18 per share, for the full year, and $549 million, or $1.65 per share, for the fourth quarter.
• The company generated $1.5 billion in cash in 2024 and expects to increase this to $1.6-1.7 billion in 2025.
• Equitable Holdings returned $1.3 billion to shareholders in 2024, including $335 million in the fourth quarter, representing a payout ratio of 66%, in line with the 60-70% target.
• Total Assets Under Management/Administration (AUM/A) reached $1.0 trillion as of December 31, 2024, a 10% year-over-year increase.
• Individual Retirement reported full year net inflows of $7.2 billion, and first year premiums were up 30% over the prior year.
• Wealth Management reported full year advisory net inflows of $4.0 billion, with total assets under administration reaching $100.6 billion.
• Asset Management delivered $4.3 billion of active net inflows in 2024.
• The combined NAIC RBC ratio was approximately 425% at year end, above the company's target of 375-400%.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, record net inflows, and increased operating earnings. The company is meeting its targets and expects continued growth in the future.

Positives

• The company experienced robust growth momentum with record net inflows in Retirement, Wealth Management, and Asset Management.
• Non-GAAP operating earnings per share increased significantly, exceeding the company's target.
• Cash generation is strong and expected to increase further in the coming year.
• The company is delivering on its commitment to return capital to shareholders.
• Total AUM/A has increased substantially, driven by positive net inflows and market performance.
• Individual Retirement and Wealth Management segments are performing well, with strong net inflows and increased premiums.
• The company's capital management program is on track, with cash and liquid assets above the minimum target and a healthy NAIC RBC ratio.
• Expense savings and incremental investment income targets are being achieved.

Negatives

• Group Retirement reported full year net outflows of $104 million.
• Asset Management reported full year net outflows of $2.2 billion, although this was partially offset by active net inflows.
• Legacy business continues to run-off at $2-$3 billion annually.
• Book value per common share decreased significantly, although book value per common share excluding AOCI increased.
• Net income attributable to Holdings was flat compared to 2023.

Risks

• The company is subject to conditions in the financial markets and economy, including geopolitical conflicts and interest rate fluctuations.
• Operational risks include reliance on dividend payments from subsidiaries and potential operational failures.
• Credit risks include counterparty default on derivative contracts and defaults by third parties.
• The company faces risks related to its products, structure, and product distribution, including variable annuity guaranteed benefits features.
• Estimates, assumptions, and valuations are subject to potential inadequacy of reserves and experience differing from pricing expectations.
• The Asset Management segment is subject to fluctuations in assets under management and the industry-wide shift from actively-managed investment services to passive services.
• Legal and regulatory risks include federal and state legislation affecting financial institutions, insurance regulation, and tax reform.

Future Outlook

Equitable Holdings expects strong momentum to continue in 2025, forecasting Non-GAAP operating EPS growth consistent with its 12-15% target and projecting cash generation to increase to $1.6-1.7 billion.

Management Comments

• '2024 highlighted the building growth momentum for Equitable Holdings and we remain on track to deliver on each of our 2027 financial targets,' said Mark Pearson, President and Chief Executive Officer.
• Mr. Pearson concluded, 'Looking forward, we expect our strong momentum to continue in 2025.'

Industry Context

Equitable's integrated business model positions it well to benefit from the growth in the US retirement market and the need for advice-driven solutions, while AllianceBernstein navigates challenging industry dynamics in asset management.

Comparison to Industry Standards

• Equitable Holdings' performance can be compared to other major players in the financial services industry, such as Prudential Financial, MetLife, and Lincoln National, particularly in terms of net inflows, AUM growth, and return on equity.
• AllianceBernstein's asset management performance can be benchmarked against firms like BlackRock, Vanguard, and State Street, focusing on active vs. passive net flows and adjusted operating margin.
• The NAIC RBC ratio of 425% can be compared to the target ratios and actual ratios of other insurance companies to assess Equitable's capital adequacy.

Stakeholder Impact

• Shareholders will benefit from the company's strong financial performance and capital return program.
• Employees will benefit from the company's growth and success.
• Customers will benefit from the company's strong financial position and ability to provide retirement and protection strategies.
• Suppliers and creditors will benefit from the company's financial stability.

Next Steps

• The company will continue to execute against its strategic initiatives.
• Equitable Holdings will host a conference call on February 6, 2025, to discuss the results.

Key Dates

Keywords

Equitable Holdings, financial results, net inflows, operating earnings, AUM, retirement, wealth management, asset management, shareholder value, cash generation