Equitable takes a hit on reinsurance deal, powers ahead in wealth space

Equitable Holdings is sticking with a big-picture growth strategy, one that required the company to take a third-quarter earnings hit.

A significant reinsurance deal with RGA led to a $1.3 billion net loss for the quarter. But it will help Equitable smooth out its risks going forward, explained Chief Financial Officer Robin Raju.

The transaction involved the transfer of assets and policies, resulting in a significant accounting loss.

“The transaction had an effective date of April 1, so it covers claims in July,” Raju explained. “However, the reinsurance benefit is not reflected under U.S. [accounting principles], as we did not close the transaction until July 31. … Going forward, we expect to see significantly less volatility in our life results.”

The deal calls for RGA to reinsure 75% of Equitable's individual life insurance block, which includes about $32 billion in reserves. This strategic deal helps Equitable reduce mortality risk and generates over $2 billion in capital to reinvest in its core growth areas, like wealth management.

CEO Mark Pearson outlined “four key pillars to our strategy”:

• Defend and grow the retirement and asset management businesses.
• Scale our high growth and high multiple wealth management and private markets businesses.
• Seed future growth by investing in high-potential opportunities like annuities and 401(k) plans and emerging asset management markets.
• Be a “force for good and deliver on our mission to help our clients secure their financial well-being so they can live long and fulfilling lives.”

In Other News

Stifel acquisition. In a deal announced last week, Equitable is acquiring Stifel Independent Advisors, a subsidiary with over 110 independent financial advisors managing approximately $9 billion in client assets.

The deal, expected to close in early 2026, will fold these advisors into Equitable Advisors, where they will gain access to Equitable's resources, while Stifel will refocus on its employee-based advisory and investment banking channels.

“This is a good example of the type of bolt-on acquisition we will look at to help scale our wealth management business at a reasonable cost,” Pearson said.

Private credit and ratings. As in other earnings calls this week, Equitable executives were asked about comments this week by UBS Chairman Colm Kelleher that life insurers chase for better ratings are creating a “looming systemic risk” to global finance.

During the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit on Tuesday, Kelleher accused the insurance industry, particularly in the United States, of engaging in “ratings arbitrage” similar to what banks did with subprime loans in the run-up to the 2008 financial crisis.

The insurance industry, with many companies backed by private equity firms, are investing heavily in illiquid private credit assets.

About 90% of Equitable’s fixed maturity portfolio is rated by at least one of the big three rating agencies, Raju noted. Equitable has just $200 million, all within its middle market lending portfolio, rated by embattled agency Egan-Jones Ratings Co., he added.

Bloomberg reported in June that Egan-Jones was being scrutinized for its “top-tier ratings” of private debt instruments.

“We don't rely on ratings,” Raju said. “What we rely on at Equitable Holdings is the underwriting capability within our general account team and at AllianceBernstein. … [W]e need to get comfortable first with the underwriting of the portfolio that we're being compensated for any risk that there is, and then you would get the rating.”

Quarterly Snapshot

• Deployed over $17 billion of its $20 billion capital commitment to AllianceBernstein to support growth in AB’s Private Markets business.
• Reported cash and liquid assets of $800 million as of quarter end, above the company’s $500 million minimum target.
• Completed its annual actuarial assumption update, which resulted in a post-tax reduction of $63 million to net income and a $1 million favorable impact to non-GAAP operating earnings.
• In the Retirement segment, first-year premiums of $5.5 billion increased by 3% but net inflows of $1.1 billion were lower than the prior-year quarter.

Management Perspective

“[W]e have a track record as a pioneer, having been the first to launch this product over a decade ago, and continue to deliver on the value proposition, consistent stories, and the relationships with over 15,000 advisors in the third-party space.”

Nick Lane, president of Equitable, on the company’s registered indexed-linked annuity plans

By The Numbers

• Net Income: -$1.3 billion (-$132 million in Q3 2024)
• Assets Under Management: $1.1 trillion ($1 trillion in Q3 2024)
• Operating Earnings: $455 million ($517 million in Q3 2024)
• Earnings Per Share: $1.48 ($1.58 in Q3 2024)
• Share Repurchases: $676 million in Q3 2025
• Dividend Declared: $81 million in Q3 2025
• Stock Price Movement: Shares declined more than 4% by mid-afternoon Wednesday

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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.