Equitable (EQH) Q2 Earnings call transcript Jul 31, 2024
Equitable Holdings' second quarter earnings call painted a picture of a company in a strong position, with robust growth across its Retirement, Asset Management, and Wealth Management businesses. The company's earnings momentum, driven by organic growth and favorable demographic trends, bodes well for its future prospects.
Strong Financial Performance
Equitable Holdings reported non-GAAP operating earnings of $494 million or $1.43 per share, up 23% year-over-year. This strong performance was underpinned by a 20% increase in non-GAAP operating EPS, driven by healthy organic growth and positive market tailwinds. Assets under management and administration increased by 11% to $986 billion, supported by favorable markets and positive net inflows. The company also returned $325 million to shareholders, maintaining a 65% payout ratio within its target range of 60% to 70%.
Capital Management and Dividends
Equitable Holdings' capital management strategy is a key factor in its financial strength. The company ended the quarter with $1.6 billion of cash at the holding company and a combined NAIC RBC ratio of approximately 425% to 450%, above its target range of 375% to 400%. This strong capital position allows the company to maintain flexibility and return capital to shareholders while investing in growth opportunities.
Business Segment Highlights
The Retirement segment produced $2.3 billion of net inflows, translating to a 7% annualized organic growth rate. This growth was primarily driven by strong demand for Equitable's industry-leading RILA product, with Individual Retirement sales up 23% year-over-year. The company's Wealth Management segment also reported strong organic growth, with $1.5 billion of advisory net inflows. Asset Management's AB reported $0.9 billion of net inflows, marking the second consecutive quarter of positive organic growth.
Future Growth Opportunities
Equitable Holdings is well positioned to capitalize on the favorable demographic trends in the U.S. retirement market. The company's strategic focus on defending and growing its core Retirement and Asset Management businesses, as well as scaling its Wealth Management and Private Markets businesses, positions it for future growth. Equitable's emphasis on capital optimization and efficient expense management, as well as its partnerships with industry leaders like BlackRock, underscore its commitment to sustainable growth and shareholder value creation.
Looking Ahead
With a strong financial performance, a clear growth strategy, and a solid capital position, Equitable Holdings is well positioned to navigate the challenges and opportunities ahead. The company's focus on organic growth, capital management, and strategic partnerships is expected to drive continued earnings momentum and deliver value to its stakeholders. As the company moves forward, it will continue to monitor market trends and adapt its strategy to maximize its growth potential and maintain its competitive edge.