8-K: Equitable Holdings Reports Strong Q3 2024 Results Driven by Record AUM and Net Inflows

Equitable Holdings announced strong third-quarter 2024 results, highlighted by record assets under management and administration of $1.0 trillion and significant net inflows across its Retirement, Wealth Management, and Asset Management segments.

Summary

• Equitable Holdings reported a net loss of $134 million, or $(0.47) per share, for the third quarter of 2024.
• However, non-GAAP operating earnings were $501 million, or $1.53 per share, and $521 million, or $1.59 per share, when adjusted for notable items.
• The company experienced strong organic growth with net inflows of $1.7 billion in Retirement, $1.9 billion in Wealth Management, and $1.1 billion in Asset Management.
• Assets under management and administration reached a record $1.0 trillion, a 20% increase year-over-year.
• Equitable Holdings returned $330 million to shareholders, aligning with its 60-70% payout ratio target.
• The company now expects 2024 cash generation to be at the high end of its $1.4 billion to $1.5 billion guidance range.
• They remain on track to deliver $2.0 billion of annual cash generation by 2027.

Sentiment

Score: 8

Explanation: The document presents a generally positive outlook with strong growth metrics and increased profitability, despite a net loss. The company's forward-looking statements and management's confidence contribute to a positive sentiment.

Positives

• The company experienced strong organic growth across all business segments.
• Wealth Management reported record advisory net inflows of $1.9 billion.
• AllianceBernstein reported its third consecutive quarter of net inflows, including $2.2 billion of active net inflows.
• Individual Retirement first year premiums were up 27% over the prior year quarter.
• Protection Solutions saw gross written premiums of $793 million, with VUL first year premiums up 25% and Employee Benefits first year premiums up 32%.

Negatives

• The company reported a net loss of $134 million, or $(0.47) per share, for the third quarter of 2024.
• Group Retirement experienced net outflows of $246 million, including $87 million in the tax-exempt channel.
• Legacy had $712 million of net outflows and continues to run-off at $2-$3 billion annually.

Risks

• The company's results are subject to market conditions, including equity market declines and interest rate fluctuations.
• Operational factors, such as reliance on dividends from subsidiaries and potential strategic transactions, could impact performance.
• Credit, counterparty, and investment risks, including defaults by third parties, could affect the company's financial condition.
• Legal and regulatory risks, including changes in legislation and insurance regulation, could pose challenges.
• The company faces strong industry competition and risks related to information systems and intellectual property.

Future Outlook

The company expects 2024 cash generation to be at the high end of its $1.4 billion to $1.5 billion guidance range and remains on track to deliver $2.0 billion of annual cash generation by 2027.

Management Comments

• Our third quarter results highlight sustained organic growth momentum across the company.
• The combination of strong new business activity and favorable market conditions drove assets under management and administration to a record $1.0 trillion, which will support future growth in both feeand spread-based earnings.
• Based on our strong business performance and the capital generated year-to-date, we now expect 2024 cash generation to be at the higher end of our $1.4 billion to $1.5 billion guidance range.

Industry Context

The results reflect a positive trend in the financial services sector, with strong growth in assets under management and net inflows, indicating investor confidence and demand for retirement and wealth management solutions. The company's performance is also influenced by market conditions and the broader economic environment.

Comparison to Industry Standards

• Equitable's 20% year-over-year growth in AUM is strong compared to industry averages, which typically range from 5-15% for large financial institutions.
• The net inflows in Retirement, Wealth Management, and Asset Management are also above average, indicating a competitive edge in attracting and retaining clients.
• Companies like Prudential Financial and Lincoln National, which also operate in the insurance and retirement space, have reported similar trends in AUM growth, but Equitable's growth rate appears to be at the higher end.
• The 60-70% payout ratio is consistent with industry standards for returning capital to shareholders, but the specific amount of $330 million is significant given the company's size.
• The company's target of $2.0 billion in annual cash generation by 2027 is ambitious and would place it among the top performers in the sector if achieved.

Stakeholder Impact

• Shareholders will benefit from the increased shareholder returns and positive financial performance.
• Employees may experience job security and potential growth opportunities due to the company's strong performance.
• Customers will benefit from the company's continued focus on providing retirement and wealth management solutions.
• Suppliers and creditors will benefit from the company's strong financial position and ability to meet its obligations.

Next Steps

• The company will host a conference call on November 5, 2024, to discuss the third-quarter results.
• The company will continue to focus on achieving its 2027 strategic targets, including expense savings and incremental investment income.

Key Dates

Keywords

Equitable Holdings, Financial Results, Assets Under Management, Net Inflows, Operating Earnings, Retirement, Wealth Management, Asset Management, Shareholder Returns, Cash Generation