Equitable Holdings, Inc. (EQH) Q2 2024 Earnings Call Transcript
AInvestThursday, Aug 1, 2024 4:24 pm ET
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In its latest earnings call, Equitable Holdings, a leading financial services company, showcased a strong performance for the second quarter of 2024, highlighting organic growth across its Retirement, Asset Management, and Wealth Management businesses. The company's financial health and strategic initiatives are well-positioned to capitalize on favorable demographic trends and macroeconomic tailwinds in the U.S. retirement market.

Financial Highlights and Growth Targets

Equitable Holdings reported non-GAAP operating earnings of $494 million or $1.43 per share, a 23% year-over-year increase on a per share basis. This growth was driven by robust demand for its industry-leading RILA product, which saw Individual Retirement sales increase by 23%. The company's assets under management and administration grew by 11% year-over-year to $986 billion, reflecting favorable markets and positive net inflows.

Equitable Holdings remains committed to its strategic growth targets, including a goal to generate $1.4 billion to $1.5 billion in cash in 2024 and grow cash generation to $2 billion by 2027. The company's capital flexibility is evident, with a combined NAIC RBC ratio of approximately 425% to 450%, above its target range of 375% to 400%.

Investment in Growth and Innovation

A significant focus for Equitable Holdings is its investment in growth opportunities, particularly in the retirement market. The company has received inflows from the first four BlackRock LifePath Paycheck clients, totaling over $500 million, marking a key milestone in building out its in-plan annuity business. Equitable is also exploring partnerships with other asset managers to embed annuity options within 401(k) plans, signaling a strategic shift in the retirement market.

In terms of capital deployment, Equitable Holdings returned $325 million to shareholders during the quarter, highlighting its commitment to shareholder returns while maintaining capital flexibility. The company also announced approval for an additional dividend later in the year, further underscoring its financial strength and predictable cash generation.

Navigating Challenges and Opportunities

Despite the positive financial results, Equitable Holdings faces challenges, particularly in managing protection business volatility and navigating interest rate environments. The company is exploring solutions to improve the return on capital and reduce volatility in the protection business, with a focus on exploring various options, including sidecars and risk transfer solutions.

In the Wealth Management segment, Equitable Holdings is working to balance growth and capital management, particularly as it relates to its LifePath Paycheck product. The company is exploring capital optimization initiatives to support growth while maintaining its focus on shareholder value.

Looking Ahead

Equitable Holdings is well-positioned for the future, with a clear strategic focus on growth, innovation, and capital management. The company's robust financial performance, coupled with its strategic initiatives, positions it well to capitalize on favorable demographic trends and macroeconomic tailwinds. Investors and analysts will be closely watching Equitable Holdings' progress as it continues to navigate the complexities of the financial services landscape and deliver value to its stakeholders.

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