Equitable Holdings calls Q4 results ‘strong,’ despite missing analyst expectations

By Doug Bailey

Financial services and insurance firm Equitable Holdings defended its 2022 fourth quarter and year-end results, calling them “strong” when considering the tough economic and market environments.

The New York City-based Equitable reported a net income loss for the fourth quarter of $789 million, or a loss of $2.21 per share, compared to a net income of $254 million, $0.56 per share, in the previous year’s fourth quarter. Non-GAAP operating earnings fell to $436 million for the quarter, compared with $649 million a year previous.

For the year, Equitable said its net income improved to $178 billion, or $5.08 per share on revenue of $754 billion, from a 2021 loss of $439 billion, on revenue of $908 billion.

The company blamed the results, which badly missed Wall Street expectations, on lower markets, hedging and non-performance risk under GAAP accounting.

“We delivered strong results despite turbulent markets this year,” said Mark Pearson, Equitable’s president and chief executive officer. Pearson noted that operating earnings really fell just 8% while equity markets plunged 20%, and bond values dropped 13%.

”Managing what is within our control is important particularly in these markets,” he said. “We have achieved our $180 million incremental general account investment income target one year ahead of schedule and realized net expense savings of $50 million.”

In a Thursday conference call with analysts and investors, the company focused on positive aspects of the year’s performance.

Demonstrated 'strong demand'

“Our businesses demonstrated strong demand for the client solutions we provide during these volatile markets,” said Robin Raju, Equitable’s chief financial officer. He said individual retirement accounts, total premiums, sales and structured capital strategies were all up significantly for the year.

“Results reflect the benefit of rising rates, helping us achieve record new business value,” he said. “In 2022, an individual with a 60:40 portfolio had a negative return of 16%. But if that same individual bought our SCS solution with a 20% buffer at the start of the year, the market impact would have been fully absorbed, demonstrating the all-weather portfolio we offer for clients.”

He said Equitable’s retirement business benefited from nearly $800 million in premiums in 2022.

“We expect to continue to see flows as the SECURE Act enabled us to address the growing need for income in the large 401(k) market,” he said.

Raju said the corporation is making progress on shifting its business mix with more than 50% of its earnings coming from Group Protection and Asset Management businesses.

“We will split the Individual Retirement segment between our core business, which is more spread oriented and our legacy business, which will continue to run off,” he said. “Second, we are going to break out our Wealth Management business from Corporate and other. This is a business that generates a 100 million in cash annually. And when we break it out, you’ll see it’s a faster growing part of our overall business due to the strong organic growth the business unit has delivered.”

In mid-day trading Thursday, Equitable stock fell more than 1% to $32.312 per share.

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