Equitable Holdings reported full-year 2025 non-GAAP operating earnings of $5.64 per share (or $6.21 adjusted), a 1% increase over 2024, driven by record assets under management and administration (AUM/A) of $1.1 trillion, up 10% year-over-year. Fourth quarter adjusted operating EPS reached $1.76, up 8% year-over-year, with organic cash generation for the year totaling $1.6 billion, in line with guidance. Key performance drivers included strong net flows in Retirement ($5.9 billion) and Wealth Management ($8.4 billion), while the Asset Management segment faced $11.3 billion in net outflows, partially attributed to the RGA reinsurance transaction. Strategic highlights feature the completion of the RGA life reinsurance deal, which reduced mortality exposure by 75% and freed $2 billion of capital, and the achievement of the $200 million annual earnings target in Wealth Management two years ahead of schedule. Looking ahead to 2026, management projects organic cash generation to grow to approximately $1.8 billion and expects EPS growth to exceed its 12-15% target range, supported by reduced share count and stabilized spreads in the second half of the year.
| Metric | Value | Change |
|---|---|---|
| Q4 Adj. Operating EPS | $1.76 | +8% YoY |
| FY 2025 Adj. Operating EPS | $6.21 | +1% YoY |
| Total AUM/A | $1.1 Trillion | +10% YoY |
| Organic Cash Generation | $1.6 Billion | In-line with guidance |
| Retirement Net Flows | $5.9 Billion | 4% organic growth |
| Wealth Mgmt Net Inflows | $8.4 Billion | 13% organic growth |
| AB Private Markets AUM | $82 Billion | +18% |
| Payout Ratio | 68% | High end of 60-70% range |
| Corporate & Other Loss (Q4) | $123 Million | Higher than expected |
Management emphasized the successful execution of the RGA life reinsurance transaction as a pivotal strategic shift, which reduced net mortality exposure by 75% and freed $2 billion of capital. This de-risking is central to their strategy of becoming more capital-light and reducing volatility in earnings. The proceeds were strategically utilized to increase ownership in AllianceBernstein (AB) and fund growth initiatives, signaling a focus on allocating capital toward higher-return, fee-based businesses rather than legacy insurance risks.
The 'Equitable Flywheel' remains a core strategic theme, highlighting the symbiotic relationship between Equitable's insurance distribution and AB's asset management capabilities. This integration was cited as a durable competitive advantage, particularly in the Retirement and Wealth Management segments. Management noted that AB managing assets for Equitable's general account and funding agreement-backed notes (FABN) generates 'good risk-adjusted returns' and supports fee-based earnings growth.
Wealth Management has emerged as a primary growth engine, achieving its $200 million annual earnings target two years ahead of schedule. The segment reported a 13% organic growth rate with $8.4 billion in net inflows, driven by a 12% increase in productive wealth planners. Management signaled continued investment in this segment to sustain double-digit earnings growth, viewing it as a critical component of the fee-based revenue mix.
In the Retirement segment, management is pivoting towards spread-based earnings through the expansion of Funding Agreement-Backed Notes (FABN), issuing $5 billion in 2025. While RILA sales remained robust at record levels, the focus on FABN indicates a strategic intent to leverage the general account to generate yield in a disciplined manner, utilizing AB's private markets expertise to enhance returns.
AllianceBernstein (AB) is strategically shifting its mix towards higher-fee private markets and insurance asset management, with private markets AUM increasing 18% to $82 billion. Despite overall net outflows of $11.3 billion (largely due to the RGA transaction and low-fee outflows), management highlighted a $20 billion institutional pipeline and a new initiative to onboard over $10 billion of Equitable's commercial mortgage loan portfolio. This signals a strategic reallocation toward higher-margin, less correlated asset classes to drive long-term fee growth.
Elevated mortality claims persisted in the fourth quarter, causing a $25 million adverse impact and contributing to a higher-than-expected loss in the Corporate and Other segment ($123 million). Management increased the baseline GAAP mortality assumption for 2026, embedding a $350 million to $400 million loss guidance for Corporate and Other. While the RGA transaction reduced exposure, the remaining 25% volatility and the decision to increase loss assumptions suggest underlying risk that could pressure earnings if adverse trends continue.
AllianceBernstein reported total net outflows of $11.3 billion for the full year, including $4 billion related to the RGA transaction. While management emphasized growth in private markets and institutional pipelines, the persistent outflows from legacy or low-fee segments raise concerns about the firm's ability to stabilize total AUM and grow base fees in a competitive environment.
The Retirement segment faces near-term margin pressure, with Net Interest Margin (NIM) spread compressing due to the runoff of a highly profitable legacy RILA block. Management guided for continued spread compression of 2-4 basis points in the first half of 2026 before stabilization. This compression creates a headwind for earnings growth that must be offset by volume growth or cost reductions.
An analyst explicitly criticized the company's disclosure changes, specifically the burial of Individual Life results within the 'Corporate and Other' segment, stating, 'I don't know anybody who would want individual life pumped into like corporate where you can't see what the hell is going on with that business.' Management's defense focused on cash flow rather than segment transparency, which may erode investor confidence regarding the visibility of underlying business performance.
The valuation gap between Equitable's market capitalization and the value of its stake in AllianceBernstein remains a significant overhang. While management views this as an opportunity, the persistent discount suggests the market may not fully buy into the 'flywheel' narrative or may be discounting the holding company structure and associated costs.
Overall: Management conveyed a tone of disciplined confidence and resilience throughout the call. While acknowledging headwinds such as elevated mortality claims and competitive pressures in the RILA market, executives remained steadfast in their strategic execution, frequently emphasizing 'momentum' and 'progress.' The demeanor shifted from defensive regarding transparency issues to highly assertive when discussing the strength of their 'flywheel' model and capital deployment capabilities.
Confidence: HIGH - Management displayed high confidence, evidenced by specific guidance to exceed 12-15% EPS growth in 2026 and the early achievement of long-term financial targets. They provided detailed, data-backed rebuttals to analyst concerns regarding private credit and mortality, using phrases like 'we remain on track' and 'I'm confident in our ability to execute.'
~$1.8 billion
Exceed 12% to 15% target
$350 million to $400 million
Mid- to high-single digit
Double-digit
$80 million to $100 million
$2.0 billion
Hedging & Uncertainty: Management utilized hedging language primarily around mortality and market assumptions, using terms like 'prudent,' 'conservative,' and 'volatility' to frame their guidance. For instance, Robin Raju stated, '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.' This pattern suggests a desire to lower expectations for the Corporate and Other segment to ensure future beats. Regarding market performance, they relied on standard forward-looking disclaimers, stating guidance 'assumes an 8% total return for equity markets,' thereby attributing future performance to external factors.
"Our business has solid momentum entering 2026, and we remain focused on achieving all of our 2027 financial targets." - Mark Pearson, CEO
"We expect growth in 2026 earnings per share, excluding notable items, to exceed our 12% to 15% target." - Robin Raju, CFO
"We're very disciplined in IRRs. We're delivering our targeted IRRs today." - Nicholas Lane, President of Equitable Financial
"So overall, it's not a big event for us so far. So we remain relatively constructive." - Onur Erzan, President of AllianceBernstein
"We have a strong balance sheet and continue to increase our organic cash generation." - Mark Pearson, CEO
"We're always vigilant on competitive trends, especially on pricing." - Nicholas Lane, President of Equitable Financial
"We feel as though the volatility that we have is manageable." - Robin Raju, CFO
Analyst Sentiment: Analysts exhibited skepticism regarding transparency, specifically the reporting of Individual Life within 'Corporate and Other,' and concern over the quality of private credit assets. Questions were direct and probing, focusing on the sustainability of RILA margins amidst competition and the structural causes of increased mortality losses.
Management Responses: Management responses were generally defensive but detailed, particularly regarding private credit exposure and mortality assumptions. They sought to reframe the narrative around 'cash generation' rather than segment earnings when pressed on transparency. Executives remained disciplined on pricing and IRR targets, refusing to chase market share in RILA at the expense of profitability.
Private Credit Portfolio Quality: Analysts sought reassurance on software exposure and credit quality. Management clarified exposure was immaterial (15 bps of GA) and underweight benchmarks.
Mortality and Individual Life: Analysts questioned the increased loss assumptions and transparency of the segment. Management defended the 'prudent' guidance and the RGA transaction's impact on reducing volatility.
RILA Competition: Questions arose regarding market share loss and pricing discipline. Management emphasized sales growth over share and maintained a disciplined stance on IRRs.
Valuation and Corporate Strategy: Analysts asked about the valuation gap between EQH and AB. Management focused on 'controllables' like execution and buybacks rather than structural changes.
Equitable Holdings presents a compelling value proposition, trading at approximately 6x future earnings with a clear path to double-digit EPS growth exceeding 12-15% in 2026. The successful de-risking of the balance sheet via the RGA transaction significantly reduces mortality volatility, while the pivot towards fee-based businesses (Wealth Management and Asset Management) drives higher quality cash generation, expected to reach $1.8 billion this year. The stock appears undervalued relative to its stake in AllianceBernstein, and management's disciplined capital allocation, including aggressive share buybacks (9% reduction in shares), provides a catalyst for re-rating. While near-term spread compression and elevated mortality claims create noise, the underlying momentum in Retirement and Wealth segments supports a positive long-term thesis.
Management views private credit as an 'important asset class' for insurance companies and the economy, noting that their liabilities fit well with these assets. They remain 'constructive' on the asset class despite market noise.
Guidance assumes interest rates 'following the forward curve.' Management noted that RILA products perform well in both high and low-rate environments, providing insulation from rate fluctuations.
The company's guidance is based on an assumption of an 8% total return for equity markets in 2026.
Demographics and macro uncertainty are driving 'strong demand' for RILA products. Management sees a 'growing pie' with $600 billion annually rolling out of 401(k)s into this market.