Equitable’s 2026 Earnings to Outpace 12%-15% Target Despite Mortality Hurdles

Date of Call: Feb 5, 2026

Financials Results

• EPS: $6.21 per share (non-GAAP), up 1% over 2024

Guidance:

• Expect $1.8 billion organic cash generation in 2026, up >10% YOY, and $2 billion by 2027.
• Forecast double-digit earnings growth in Wealth Management in 2026.
• Expect mid- to high single-digit growth in pretax earnings in Retirement for 2026.
• Project Corporate and Other loss in the $350M-$400M range for 2026.
• Expect total company tax rate ~20% and segment-specific rates for 2026.
• Expect EPS growth in 2026 to exceed the 12%-15% target range.

Business Commentary:

Earnings and Cash Generation:

• Equitable Holdings reported non-GAAP operating earnings of $5.64 per share for 2025, which is up 1% compared to 2024, despite elevated mortality claims.
• The company produced organic cash generation of $1.6 billion, aligning with their guidance, and expects to increase this to approximately $1.8 billion in 2026.
• The growth in earnings and cash generation is attributed to solid momentum in their core growth engines, including U.S. retirement, asset management, and wealth management, as well as strategic reinsurance transactions that have improved capital quality.

Asset Management and Wealth Management Growth:

• Assets under management and administration ended 2025 at a record $1.1 trillion, marking a 10% year-over-year increase.
• Wealth Management reported net inflows of $8.4 billion, representing a 13% organic growth rate, with the number of wealth planners increasing by 12%.
• The growth in these segments is driven by strong momentum in net flows, increased advisory assets, and a focus on holistic wealth planning, supported by strategic investments and acquisitions.

AllianceBernstein Performance and Strategic Investments:

• AllianceBernstein experienced net outflows of $11.3 billion, including $4 billion of low fee outflows related to the RGA transaction.
• The company's private markets business increased AUM by 18% to $82 billion, positioning it well to achieve its target of $90 billion to $100 billion in AUM by the end of 2027.
• Despite outflows, AllianceBernstein is benefiting from strategic growth investments in private markets, insurance asset management, and active ETFs, supported by a strong institutional pipeline.

Mortality Claims and Reinsurance Strategy:

• Elevated mortality claims in 2025 impacted the company's earnings, with adverse claims concentrated in December, resulting in a $25 million loss.
• The life reinsurance transaction with RGA reduced Equitable's mortality exposure by 75%, freeing up $2 billion of capital.
• This strategic move is aimed at reducing volatility and exposure to future mortality fluctuations, allowing the company to focus on growth in other core business segments.

2026 Outlook and Strategic Confidence:

• Equitable projects growth in 2026 earnings per share excluding notable items to exceed their target of 12% to 15%.
• The company forecasts mid- to high single-digit growth in pretax earnings for the retirement segment and double-digit earnings growth for Wealth Management.
• Strategic confidence stems from record AUM levels, reduced mortality exposure, and strong organic growth momentum in key business segments, positioning Equitable for continued growth and execution of long-term financial targets.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed confidence: 'business has solid momentum entering 2026,' 'we feel confident in projecting strong growth in 2026,' 'Equitable is well positioned in attractive growing markets,' and 'we remain focused on achieving all of our 2027 financial targets,' with tailwinds from reduced mortality exposure and record AUM.

Q&A:

• Question from Suneet Kamath (Jefferies): Concerns about private credit portfolio quality and specific sectors of focus.
  Response: Private credit is about 16% of GA, with software exposure immaterial (15 bps of GA). AllianceBernstein's experience has been strong with zero net losses in software investments over a decade; overall exposure is small and underweight vs. benchmarks.

• Question from Suneet Kamath (Jefferies): Wealth management growth drivers, specifically external hires vs. internal promotions and target market.
  Response: Organic growth is strong with existing advisers. EXP hiring is intentional, targeting about 12,000 producers annually; Equitable's distinct model and platform provide an edge. Wealth planners increased 12% YOY.

• Question from Thomas Gallagher (Evercore ISI): Potential corporate strategies to address valuation gap between AB stake and EQH stock.
  Response: Management focuses on controllable factors: growing the business, executing the integrated flywheel model, controlling expenses, and increasing cash generation, believing this will close the valuation gap over time.

• Question from Thomas Gallagher (Evercore ISI): Embedded earnings in corporate loss related to life insurance and opportunities to further reduce mortality exposure.
  Response: Corporate and Other loss guidance of $350M-$400M for 2026 includes prudence for mortality; recent experience is slightly worse than 3-year average. Remaining 25% exposure is manageable; company will explore solutions if permanent.

• Question from Wesley Carmichael (Wells Fargo): Commission and distribution expense ratio relative to sales in Retirement going forward.
  Response: Commission expense was inflated sequentially by a true-up with Wealth Management. Over time, lower upfront DAC will lead to lower DAC amortization, with earnings expected to outpace commission expense growth.

• Question from Wesley Carmichael (Wells Fargo): Growth potential and issuance environment for the FABN program in 2026.
  Response: FABN issuance was ~$5 billion in 2025, providing attractive IRRs; not included in Retirement organic growth rate. Discipline on pricing and IRRs will guide activity; opportunities for growth remain.

• Question from Taylor Scott (Barclays): Cash flow conversion drivers and guidance; impact of business mix shift.
  Response: Organic cash generation was $1.6B in 2025 with ~90% conversion from Asset and Wealth businesses. Capital release from legacy block runoff drives high conversion; $2B cash target remains on track.

• Question from Taylor Scott (Barclays): Dynamics causing Retirement spread to stabilize in mid-2026 (MVAs or runoff?).
  Response: Spread compression in 2025 due to decreased MVAs and runoff of profitable older RILA block. Expect 2-4 bps compression in first half of 2026, then stabilization; NIM will grow with general account assets.

• Question from Jamminder Bhullar (JPMorgan): Details on Individual Life performance deterioration and assumptions.
  Response: Mortality volatility in Individual Life is due to large face amounts and older issue ages. RGA transaction reduced volatility by 75%; 2026 guide is conservative vs. 3-year average, providing upside if experience improves.

• Question from Jamminder Bhullar (JPMorgan): Competitive environment in RILA market and discipline among new entrants.
  Response: Demand for RILA remains strong. New entrants typically offer teaser rates, which revert to sustainable levels. Equitable's flywheel, distribution, scale, and innovation provide a durable edge to maintain leadership.

• Question from Joel Hurwitz (Dowling & Partners): Update on 2027 EPS CAGR target (12%-15%) given mortality outlook.
  Response: Company remains on track for 2027 cash and payout ratio targets. 2026 guidance likely gets to lower end of EPS CAGR range, but levers exist to achieve 12%-15%.

• Question from Joel Hurwitz (Dowling & Partners): Payout ratio implications with higher cash generation; balance between buybacks and growth investment.
  Response: Payout ratio has been at high end of 60%-70% range. Company will continue buybacks at current levels while investing for future growth in Retirement, Asset, and Wealth businesses.

• Question from Yaron Kinar (Mizuho): RILA market share trends and potential moderation of growth engine despite discipline on IRRs.
  Response: Equitable maintains leadership with record sales growth. Competitive landscape has changed, but discipline on IRRs is maintained; product is protected from economic cycles due to assets flowing from 401(k)s.

• Question from Yaron Kinar (Mizuho): VNB payback period trends and quantification.
  Response: VNB payback period has materially decreased over time due to shorter-duration products like RILA; IRRs have improved, but specific payback period not disclosed.

• Question from Michael Ward (UBS): Roll-off timeline for the profitable older RILA block impacting spreads.
  Response: Spread compression from runoff expected to be immaterial (~2-4 bps per quarter) through first half of 2026, then stabilize in second half; NIM will grow with general account.

• Question from Michael Ward (UBS): Uptake trends in in-plan annuities and life paycheck products.
  Response: Momentum in in-plan annuities with ~$920M in institutional sales in 2025 and ~$1.8B in AUM. Market is in early innings with regulatory tailwinds; pipeline for 2026 is strong.

Contradiction Point 1

Valuation Gap Between EQH Stock and AB Stake

Management expresses concern over the persistent valuation gap and cites business strengths to justify EQH's value.

Can structural actions close the valuation gap between your AB stake and your stock, or is this gap unavoidable? - Thomas Gallagher (Evercore ISI Institutional Equities)

2025Q4: The valuation gap is perplexing... Points to attractive growing markets... integrated model... Notes EQH is not an expensive stock at 6x future earnings. - Mark Pearson(CFO)

What was the revenue growth for the quarter? - N/A

2025Q3: [No direct comment on the valuation gap between EQH and AB. The focus was on capital deployment and RGA proceeds.] - **Traceability:** (2025Q4-3, 2025Q3-N/A)

Contradiction Point 2

Mortality Loss Outlook and Normalization Confidence

The confidence in the quick normalization of mortality losses appears to have weakened.

What are the embedded earnings in the current corporate loss related to life insurance; is there an opportunity to further reduce mortality exposure (e.g., through RGA acquiring the remaining 25%)? - Thomas Gallagher (Evercore ISI Institutional Equities)

2025Q4: In Q4, elevated mortality claims were concentrated in December... 2026 guidance projects a loss... Expects mortality loss to improve in 2027... - Robin Raju(CFO)

Excluding the $36 million one-time mortality adjustment, how much was underlying mortality below expectations, and why are you confident it will normalize? - Thomas Gallagher (Evercore ISI)

2025Q3: Underlying mortality was about $10 million worse than expected for August and September. The impact was relatively modest... mortality is not expected to be highly volatile going forward. - Robin Raju(CFO)

Contradiction Point 3

Timeline for RILA Block Runoff and Spread Compression

Different timelines provided for when the profitable older RILA block runoff will stop driving spread compression.

How long will the 15% RILA block runoff last, and when will it cease driving spread compression? - Michael Ward (UBS Investment Bank)

2025Q4: Runoff of the very profitable older block will be largely complete by H2 2026. Spreads to stabilize thereafter... - Robin Raju(CFO)

What is the split between legacy high-return RILA business and newer business at target margins? - Ryan Krueger (Keefe, Bruyette, & Woods)

2025Q2: The older RILA book will continue to runoff over the next few quarters. - Robin Raju(CFO)

Contradiction Point 4

Outlook for Individual Life Business Volatility

Contradiction on whether the business's volatility is being actively managed or if it's an inherent, persistent feature.

What caused the decline in Individual Life results—aberration or pricing/macro factors—and why were loss assumptions increased? - Jamminder Bhullar (JPMorgan Chase & Co)

2025Q4: Life business has volatility due to large face amounts and older issue ages. Underlying economics are good. - Robin Raju(CFO)

With the deal closed, will results be more consistent starting in Q3, and is there expected additional noise? - Wilma Burdis (Raymond James)

2025Q2: The 75% reduction in mortality exposure should lead to stronger results, supported by better markets... - Robin Raju(CFO)

Contradiction Point 5

Payback Period for Variable Annuity Block (VNB)

Contradiction on whether the payback period for VNB has improved and if it can be quantified.

Has the VNB payback period changed over time, and can you quantify the change? - Yaron Kinar (Mizuho Securities USA LLC)

2025Q4: Not disclosed, but has materially improved over time... Cannot provide specific number but notes it is 'materially lower' than in past years. - Robin Raju(CFO)

What factors support the $2 billion cash flow target for 2027 given the lower equity outlook, and was the increased AB ownership considered in the Investor Day target? - Nick Anido (Wells Fargo)

2025Q1: The $2 billion target was based on an 8% equity return and does not include the AB ownership increase or the RGA transaction... Confidence remains high due to strong execution history. - Robin Raju(CFO)