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Equitable Holdings, Inc. (EQH)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 non-GAAP operating EPS was $1.10 (or $1.41 ex-notable items) vs $1.43 in Q2 2024 and $1.30 in Q1 2025; EPS shortfall was driven by elevated mortality in Individual Life and a $74m after-tax notable item from late-reported COLI claims in Protection Solutions .
  • Revenue was $2.36B vs $3.51B in Q2 2024 and $4.58B in Q1 2025; GAAP revenue remains volatile due to derivatives and market risk benefit accounting .
  • Strategic catalysts: closed RGA reinsurance (75% of Individual Life) freeing $2B+ of value and cutting mortality exposure by 75%; plan at least $500m incremental buybacks; combined NAIC RBC >500% pro‑forma alongside $1.7B of subsidiary dividends to HoldCo in 2H’25 .
  • Management expects EPS growth to accelerate in 2H’25; AB raised FY25 performance fee outlook to $110–$130m (from $90–$105m) and ended the quarter at record AUM/A of $1.1T .

What Went Well and What Went Wrong

  • What Went Well

    • Closed Individual Life reinsurance with RGA, creating $2B+ of value and reducing mortality exposure by 75%—“This will…reduce our exposure to future mortality claims by 75%” .
    • Record scale and organic momentum: Retirement net inflows $1.9B, Wealth Management advisory net inflows $2.0B; AUM/A up 8% YoY to $1.1T .
    • AB strength: adjusted operating margin ~32.3%; pipeline reached $22B; private markets AUM $77B, +20% YoY .

  • What Went Wrong

    • Protection Solutions loss ($58m) on elevated mortality and a $74m after-tax notable from late-reported COLI claims tied to a third-party administrator .
    • Fee-based revenue pressure in Retirement from lower average separate account balances and lower MVAs; CFO flagged $220–$225m as a Q3 baseline for IR earnings under “normal markets” .
    • Asset Management faced $6.7B net outflows concentrated in April market volatility (though returned to inflow in June) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenues ($B)$3.51 $4.58 $2.36
Net Income (Loss) Attributable to Holdings ($M)$428 $63 $(349)
Non-GAAP Operating Earnings ($M)$495 $421 $352
Non-GAAP Operating EPS ($)$1.43 $1.30 $1.10
Non-GAAP Op. EPS ex-notable items ($)$1.53 $1.35 $1.41
AUM/A ($T)$0.987 $1.006 $1.070

Segment Operating Earnings ($M)

SegmentQ2 2024Q1 2025Q2 2025
Individual Retirement246 216 215
Group Retirement125 130 124
Asset Management (AB)101 126 131
Protection Solutions72 (17) (58)
Wealth Management44 46 51
Legacy28 24 28
Corporate & Other(121) (104) (139)
Total Non-GAAP Operating Earnings495 421 352

Key KPIs

KPIQ2 2024Q1 2025Q2 2025
Retirement Net Flows ($B)2.3 (IR 1.9; GR 0.4) 1.6 (IR 1.4; GR 0.192) 1.9 (IR 1.7; GR 0.217)
AB AUM ($B)769.5 784.5 829.1
AB Active Net Flows ($B)0.9 2.4 (6.7)
Wealth Mgmt Advisory Net New ($B)1.6 2.0 2.0
Protection Solutions Benefit Ratio72.1% 82.0% 90.7%

Versus Estimates (S&P Global)

MetricQ1 2025Q2 2025
EPS Consensus Mean ($)1.47604*1.30029*
EPS Actual ($)1.30 1.10
Revenue Consensus Mean ($B)3.983*3.938*
Revenue Actual ($B)4.576 2.362

Values retrieved from S&P Global.*

Interpretation: EQH missed EPS and revenue consensus in Q2 (non-GAAP EPS $1.10 vs $1.30*; revenue $2.36B vs $3.94B*), largely due to elevated mortality and Protection Solutions notables; Q1 had an EPS miss but revenue outperformed consensus .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
AB Performance FeesFY 2025$90–$105m (prior) $110–$130m Raised
Cash GenerationFY 2025$1.6–$1.7B (reiterated from Q4/Q1) $1.6–$1.7B Maintained
EPS Growth Trajectory2H 2025n/aExpect acceleration in 2H’25 New qualitative
Share Repurchases2H 2025Plan incremental $500m At least $500m incremental in 2H’25 Reaffirmed
Dividends to HoldCo2H 2025n/a~$1.7B planned (incl. ~$1.0B life proceeds) New
RBC RatioPro-forma 2H 2025≥400% target; c.425% YE’24 >500% pro-forma post-life deal & dividends Higher
Common DividendOngoingIntention to raise to $0.27/Q in Q2 Declared $0.27/Q (payable Aug 12, 2025) Implemented

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Mortality / Life ReinsuranceEvaluating solutions; guidance $200–$300m PS ex-notes; volatility acknowledged Elevated mortality; life reinsurance on track mid‑year RGA deal closed; 75% exposure reduction; notable late COLI claims Improving risk profile
Capital Return$1.3B FY24; 60–70% payout; buybacks ongoing Plan $500m incremental buybacks post-close At least $500m incremental in 2H’25; RBC >500%; $1.7B dividends to HoldCo Accretive deployment
AB Private Markets / Insurance AMPrivate markets scaling; Ruby Re sidecar Private credit commitments with EQH; growth momentum $77B PM AUM; $22B pipeline; higher fee outlook Strengthening
RILA/Product PerformanceRecord sales; disciplined caps; competition manageable Robust April sales; IR baseline $220–$225m Q3 Sustained demand; NIM dynamics (MVAs lower) Solid, with mix shift
In‑Plan Annuities$600m 2024 flows (LifePath) Expect $250m in Q2; lumpy funding ~$250m BlackRock LifePath in Q2; continued partnerships Building category
Bermuda Re (internal)Entity established to enhance cash flow consistency Optionality for in‑force/flow reinsurance Ceded ~$30B group annuities internally Improving predictability
AI/Technology——GenAI used for operational efficiency; EB API launch Incremental enablement

Management Commentary

  • “We closed our Individual Life reinsurance transaction with RGA…creating over $2 billion of value, further strengthening our balance sheet and reducing our exposure to future mortality claims by 75%.” — CEO Mark Pearson .
  • “We expect earnings per share growth to accelerate in the second half of 2025 and remain confident in achieving our 2027 financial targets.” — CEO Mark Pearson .
  • “In Protection Solutions, we had $74 million after tax of negative one time items driven primarily by…late reporting of some COLI claims.” — CFO Robin Raju .
  • “Looking forward, we view $220–$225 million as a good baseline for third quarter earnings for Individual Retirement assuming normal markets.” — CFO Robin Raju .
  • “AB…now expects full year performance fees of $110–$130 million, up from our prior forecast of $90–$105 million.” — CFO Robin Raju .

Q&A Highlights

  • Individual Retirement outlook: CFO set Q3 IR baseline at $220–$225m; NIM spread expected to stabilize as older high‑margin cohorts roll off; MVAs were ~zero in Q2 and may bounce around .
  • Capital deployment: At least $500m incremental buybacks in 2H’25; potential ~$500m debt paydown; balance between buybacks, opportunistic M&A, and leverage targets .
  • RILA competition: Management emphasized disciplined pricing (15% IRR target) and advantaged affiliated distribution; competition expands the “pie” but teaser pricing is unsustainable .
  • Bermuda internal reinsurance: ~$30B ceded; goal is cash flow consistency aligned with economic hedging rather than unlocking excess capital .
  • GenAI: Focused initially on operations and productivity; exploring value-add in advice and alpha generation .

Estimates Context

  • Q2 2025: EPS $1.10 vs consensus $1.30029*; revenue $2.36B vs consensus $3.94B*; miss driven by Protection Solutions mortality/notables and lower fee-based revenues in Retirement .
  • Q1 2025: EPS $1.30 vs consensus $1.47604*; revenue $4.58B vs consensus $3.98B*; EPS miss with revenue beat amid derivative-related volatility .
    Values retrieved from S&P Global.*

Where estimates may adjust: upward for AB performance fees and margin durability; downward for Protection Solutions near-term earnings given Q2 notables and elevated mortality commentary; stable to improving for Retirement and Wealth Management given net inflows and record AUM/A .

Key Takeaways for Investors

  • The RGA life reinsurance materially de-risks earnings and frees $2B+ for accretive deployment; expect EPS growth re-acceleration in 2H as mortality exposure drops and buybacks execute .
  • Near-term EPS pressure stemmed from Protection Solutions notables and mortality; this should normalize post-transaction, with PS earnings guided toward the lower end historically .
  • AB is a bright spot: higher FY25 performance fee outlook and strong private markets/insurance AM momentum support consolidated cash and EPS resiliency .
  • Retirement engine remains healthy (RILA demand, LifePath Paycheck in-plan flows), but mix shift and MVAs can dampen quarterly optics; management provided IR earnings baselines to anchor expectations .
  • Balance sheet strength (RBC >500% pro-forma) and $1.7B planned dividends to HoldCo underpin at least $500m incremental buybacks, enhancing per-share metrics in 2H’25 .
  • Watch list: mortality trends in Protection Solutions, AB flow recovery after April volatility, execution on internal Bermuda reinsurance for cash stability, and pacing of buybacks/debt paydown .