Equitable Holdings’ earnings fall 22% in Q1, but remains strong in liquid assets

Equitable Holdings Inc., the global diversified financial services company, said its operating earnings fell 22% in the first quarter of 2023 compared to the same period a year ago, with net income of $177 million versus $530 million a year ago.

The company said its assets under management also slipped a bit, down 8% to $864 billion. Quarterly earnings per share badly missed most Wall Street estimates, coming in at $0.96 per share, against consensus predictions of $1.19 per share.

Insurance sector cited for earnings' lag

Company executives posited a variety of reasons for the financial results, particularly an underperforming insurance sector, soaring interest rates, inflation, and “volatility in mortality and lower alternatives performance.”

Still, the company said it returned $286 million to shareholders in the quarter, including $72 million of quarterly cash dividends and $214 million of share repurchases, which were in line with its 55-65% payout target. Moreover, the company intends to increase its quarterly dividend in the second quarter from $0.20 per share, to $0.22

It also noted that Equitable’s holding company is sitting on a pile of cash and liquid assets, more than three times its minimum target, giving it a strong balance sheet and the ability to weather any economic stresses. It credited the healthy cash position on strong risk management and hedging programs and its diversified sources of cash flows in its wealth management and retirement businesses.

Given the market environment we prefer to have a buffer at the holding company until this uncertainty clears up,” said Equitable’s chief financial officer, Robin M. Raju.

Well positioned for market stress

He said the company is well positioned for periods of market stress with a conservatively positioned and high-quality investment portfolio, which is A2-rated with fixed maturities that are 96% investment grade.

“We expect mortality rates will normalize, and so far in April it’s in line with expectation,” Raju said.

Raju said the company’s wealth management business, Equitable Advisors, is the fastest growing business segment in the company, with earnings jumping from $58 million in 2021 to $101 million in 2022, Its “core inflows” in its retirement, asset and wealth management business contributed $3.2 billion.

Overall, it was numbers like those that made the company comfortable with its position despite falling quarterly Equitable Holdings earnings.

On Wall Street, Equitable stock fell more than 6%, to 22.99 per share, from a high of $31.60 in March.

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].