A mixed bag for Equitable’s Q2 earnings

Equitable Holdings Inc., one of the nation’s largest financial service companies, turned in a mixed financial scorecard for the second quarter of this year, showing a blend of successes with some challenges across its various business segments.

In the second quarter of 2023, Equitable reported a net income attributable to Holdings of $759 million, or $2.06 per share, a significant decrease from the $967 million the company reported in the second quarter of 2022.  It’s Non-GAAP operating earnings, which excludes certain items that are considered non-operational, or one-time, was $441, or $1.17 per share, a decline from $493 million in the year-ago quarter.

Operating earnings this quarter were up 75% year over year, and 30% compared to the prior quarter, benefiting from higher interest rates on cash accounts

The company said the headwinds in its investment management sectors were partially offset by noteworthy achievements in its retirement and wealth management sectors.

Record quarter for retirement accounts

It reported a record quarter in retirement accounts with $1.4 billion of net inflows in asset management and collectively delivered about $900 million of cash generation, including a $600 million dividend from its insurance entity in July.

“Given this progress, we are confident in our ability to achieve our 2023 Cash Generation guidance of $1.3 billion,” Mark Pearson, Equitable’s president and CEO, told investors in a Thursday morning earnings call. “Our capital ratios remain resilient…and we also continue to maintain financial flexibility at holdings with $1.6 billion dollars of available cash. We returned $304 million to shareholders in the quarter, including $226 million in share repurchases in line with our enhanced 60 to 70% target payout ratio. We are taking meaningful actions of the last five years to optimize our capital structure. And now over 50% of cash flow come from non-insurance regulated sources today, compared to only 17% at the time or our IPO.”

The Individual Retirement division emerged as a standout performer, recording $1.5 billion in net inflows. This growth was bolstered by a 21% surge in first-year premiums compared to the previous year's quarter. Equitable attributes this to sustained demand for its Registered Index-Linked Annuities products.

Some challenges for Equitable

The Investment Management and Research arm, represented by AllianceBernstein, was challenged with net outflows amounting to $4.0 billion. These outflows were driven in part by pre-announced, low-fee institutional withdrawals of $6.2 billion in April. However, the quarter witnessed a partial recovery, as firmwide net inflows in May and June helped temper the overall impact.

Equitable reported cash and liquid assets totaling $1.6 billion at the Holdings level. This amount remains comfortably above the company's minimum target of $500 million.

“We are focused on defending and growing our core businesses, scaling adjacent businesses and seeding future growth, all whilst ensuring we are a force for good in the communities in which we live and work,” said Pearson. “We have defined success through our new financial goals to increase cash generation by 50% to $2 billion by 2027.”

Equitable stock rose slightly in mid-day trading following the investor call, to $28.52 per share, up $0.04.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].