Equitable Holdings, Inc. Q3 FY2026 earnings call

• Merger Progress: The merger with CoreBridge is on track for year-end closing, with regulatory approvals expected in Q4. The new entity will be the only company with a top-five position in every major product category.
• Strategic Positioning: New Equitable will leverage scale to achieve lower unit costs, access directly originated assets via partnerships with AB, BlackRock, and Blackstone, and benefit from a multi-channel distribution network of over 5,000 advisors.
• Private Markets Expansion: AllianceBernstein’s private markets AUM reached $105 billion, exceeding targets. AB onboarded $12 billion of commercial mortgage loans from Equitable, enhancing its platform to win third-party mandates.
• Employee Benefits Sale: The sale of the employee benefits business to The Hartford closed on October 1st, allowing Equitable to exit a market where it lacked competitive scale.
• Integration Planning: Over 100 leaders have been named for the top 500 roles to ensure a quick start post-merger. More than $100 million in run-rate expense savings has already been identified, putting the company on track for $150 million in Year 1 and $500 million by end of 2028.

• Retirement: Non-GAAP operating earnings excluding notable items were $409 million. Net interest margin (NIM) increased 12% year-over-year, driven by growth in general account assets and higher returns in the alternatives portfolio. Fee-based revenues rose 16% year-over-year.
• Asset Management (AllianceBernstein): Reported earnings of $152 million, roughly flat year-over-year. Total AUM ended at $900 billion. Adjusted margin increased 50 basis points sequentially due to favorable mix shifts and timing, despite a modest decline in average base fee rate.
• Wealth Management: Reported strong third-quarter earnings of $75 million, up 27% year-over-year, driven by robust organic growth and a one-time payment from the Default acquisition. Advisory assets grew 22% year-over-year.
• Corporate & Other: Reported a loss of $82 million after adjusting for notable items, benefiting from improved mortality experience and lower expenses.

• Full-Year EPS Growth: Maintaining guidance for greater than 15% growth in non-GAAP earnings per share excluding notable items for 2026; YTD growth is currently 22%.
• Alternatives Returns: Forecasting low single-digit annualized returns for the fourth quarter due to headwinds from higher interest rates impacting real estate equity; full-year expectation remains 4% to 5%.
• AllianceBernstein Performance Fees: Raised full-year guidance for performance fees to $135–$150 million, implying $62–$77 million for Q4.
• Capital Return: Targeting a 60%–70% payout ratio for the full year; current YTD payout ratio is 66%.
• Cash Generation: Projecting full-year 2026 cash generation of $1.8 billion at the holding company level.

• Interest Rate Sensitivity: Higher interest rates negatively impact real estate equity returns within the alternatives portfolio and create timing mismatches between liability resets and asset yields in the retirement segment.
• Credit and Commercial Mortgage Loan (CML) Exposure: While the CML portfolio is high-quality with strong LTVs, sustained high interest rates pose potential risks to commercial real estate values, though stress tests show resilience.
• Operational Execution Risk: The success of the merger depends on realizing anticipated revenue and expense synergies; failure to integrate effectively could dilute value.
• Market Volatility: Fluctuations in equity markets and fixed income returns can impact AUM levels and alternative investment returns, which are below long-term expectations.

Q: Analyst asked about the impact of high interest rates on policyholder behavior and product design, specifically regarding lapses and annuity competition. / A: CFO noted that while high rates drive positive net flows and record RILA sales, they also lead to higher lapses, creating a balanced but manageable dynamic. Rates are generally viewed as beneficial for the retirement business, though they pressure real estate returns in the alternatives portfolio, leading to a lowered single-digit return forecast for Q4.

Q: Analyst inquired how much of the projected $70-$80 billion annual liability generation for New Equitable AllianceBernstein could manage and what capabilities need building. / A: Management stated AB, alongside partners like Blackstone and BlackRock, is well-positioned to handle this volume. AB is actively developing capabilities in private credit and infrastructure to support longer-duration liabilities from CoreBridge, expanding its robust offering to win third-party mandates beyond internal needs.

Q: Analyst requested details on the decrease in retirement flows from Q2 to Q3 and the movement between separate and general accounts. / A: President clarified that individual retirement generated $1.5 billion in flows driven by record RILA sales, while group retirement flows were seasonally softer due to summer school payroll cycles. Institutional flows were lumpy with one major BlackRock plan onboarded, while corporate block outflows persisted but are being mitigated through advisor retention strategies.

Q: Analyst asked if the $37 million prior-period reinsurance adjustment was an economic change or accounting-only. / A: CFO confirmed it was purely an accounting timing adjustment related to the RGA transaction, not an economic change with the reinsurer. It represented a true-up of recognition timing for previously ceded and settled amounts, having no impact on actual cash flows with the partner.

Q: Analyst questioned whether industry retail annuity sales would accelerate further given higher risk-free rates and what drives this trend. / A: President attributed continued momentum primarily to demographic tailwinds, specifically baby boomers seeking secure retirement solutions and advice. He emphasized that Equitable is uniquely positioned to capture this demand, expecting sales growth to continue based on these fundamental structural drivers rather than just rate environments.