When Equitable came out with the first registered indexed-linked annuity in 2011, the industry gave it the skeptical side eye, an executive recalled.
"Everyone looked at us like we had three eyes and two heads or something," said Robin Raju, chief financial officer. "No one was interested in the product in 2011 and now everyone sells the product."
Also known as buffered or structured annuities, the indexed-linked products offer consumers limited downside, with a chance to participate in market growth. With interest rates at historic lows, booming equity markets, and memories of the 2008-09 economic collapse retaining a grip, investors turned to RILAs in droves.
“The good thing about the RILA product versus a fixed product is it provides clients with more upside opportunity. That's really attractive for consumers, but also advisors in this space who are comparing the two.”Robin Raju, chief financial officer, Equitable
Equitable turned its early advantage into market dominance. In the latest breakdown from the first half of 2022, LIMRA places Equitable at No. 1 in RILA sales with $4.3 billion. The company posted a strong third quarter as well, Raju said, with $3 billion in sales, $2 billion of which were RILAs.
The Structured Capital Strategies product continues to sell well even though interest rates are on the rise and equity markets have plummeted.
"The good thing about the RILA product versus a fixed product is it provides clients with more upside opportunity," Raju explained. "That's really attractive for consumers, but also advisors in this space who are comparing the two."
For the quarter, Equitable reported net income of $273 million, compared to $672 million in the third quarter of 2021 driven primarily by non-economic market impacts from hedging, the insurer reported.
Equitable Holdings operates through four segments: Individual Retirement, Group Retirement, Investment Management and Research, and Protection Solutions. Notably, the company suffered a 5% decline in assets under management in the third quarter, President and CEO Mark Pearson said.
"In asset management, we were not immune to industry-wide net outflows this quarter but flows remain positive for the year as we continue to benefit from a global distribution platform and continued growth in private markets with our strategic shift supporting a fee-rate improvement of 7% over the prior year," Pearson said in a news release.
Equitable reported these business segment highlights:
Individual Retirement reported record net inflows of $765 million, benefiting from the continued demand for our industry-leading Structured Capital Strategies buffered annuity, with first year premiums up 7% over prior year, and lower outflows in the quarter.
Group Retirement reported total premiums of $861 million, up 1% on a year-over-year basis, led by the tax-exempt market with total premiums up 13% over prior year.
Investment Management and Research (AllianceBernstein) reported net outflows of $10.5 billion, or $6.6 billion excluding expected outflows from AXA, with the CarVal acquisition supporting a 7% fee-rate improvement over prior year and institutional pipeline growth to $24.7 billion, up 142% from prior quarter.
Protection Solutions continues to benefit from our strategic shift to less interest-sensitive VUL with $315 million in VUL premiums, up 9% over prior year.
In a Thursday earnings note, Morgan Stanley Research gave Equitable high marks for "highly predictable earnings that have generally exceeded consensus expectations."
"Despite adverse market conditions, the company continues to deliver core earnings above our expectations, showing the strength of its underlying organic growth and capital management," Morgan Stanley concluded.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.