Equitable Holdings, Inc. (EQH)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered strong operating performance: Non-GAAP operating earnings of $522 million and $1.57 EPS; adjusting for notable items, EPS was $1.65, up 23% YoY, while GAAP diluted EPS was $2.76 on hedge-related noneconomic impacts .
• Record full-year cash generation of $1.5 billion and return of $1.3 billion to shareholders (66% payout); guidance raised to $1.6–$1.7 billion cash generation in 2025; EPS growth target maintained at 12–15% annually .
• Segment highlights: Asset Management (AB) earnings rose on higher performance fees and seasonal strength; Individual Retirement and Wealth Management saw robust net inflows and productivity gains; Group Retirement remained mixed with corporate channel outflows .
• Protection Solutions was pressured by elevated net mortality from two large claims and below-plan alternative returns; Corporate & Other losses widened on variable expenses tied to strong sales; AB targets 33%+ adjusted operating margin in 2025—potential stock catalyst with Bermuda reinsurer optionality .

What Went Well and What Went Wrong

What Went Well

• Robust growth momentum with strong net inflows across Retirement and Wealth Management: “Our Retirement businesses reported record net inflows of $7.1 billion for the full year… In Wealth Management, we had $4.0 billion of advisory net inflows” — Mark Pearson .
• AB’s strong quarter and margin aspirations: “AB reported very strong fourth quarter earnings, helped by $66 million of performance fees… we still forecast an adjusted operating margin of 33% in 2025” — Robin Raju .
• Cash generation and capital returns: “Cash generation of $1.5 billion in 2024… returned $1.3 billion to shareholders… payout ratio of 66%” — Mark Pearson .

What Went Wrong

• Protection Solutions: elevated net mortality from two large claims (reinsurance coverage 12% vs typical 15%), pushing FY’25 earnings guide to the lower end ($200–$300 million) — CFO commentary .
• Asset Management institutional outflows: AB saw Q4 net outflows of $4.8 billion, driven by institutional channel; retail and private wealth partially offset .
• Corporate & Other widened losses: Q4 operating loss increased to $(128) million; variable expenses rose with strong 2024 sales and incentive compensation accruals — management commentary and segment results .

Financial Results

Key Consolidated Metrics vs Prior Quarters

Note: Comparison vs Wall Street consensus is unavailable due to S&P Global data access limitations in this session.

Segment Operating Earnings (YoY and QoQ context)

KPIs and Flows

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Non-GAAP operating earnings per share of $5.93 increased 29% from 2023… above our 12–15% target. Strong sales and net inflows helped drive steady growth… contributing to a 15% increase in annual cash generation to $1.5 billion.” — Mark Pearson .
• “AB reported very strong fourth quarter earnings, helped by $66 million of performance fees… and we still forecast an adjusted operating margin of 33% in 2025.” — Robin Raju .
• “We forecast Non-GAAP operating EPS growth to be consistent with our 12–15% target and project cash generation to increase to $1.6–1.7 billion [in 2025].” — Mark Pearson .
• “We established a new Bermuda reinsurance subsidiary… provides optionality… to reinsure in-force liabilities and/or new business” — Robin Raju .

Q&A Highlights

• Bermuda optionality: Entity provides flexibility to reinsure in-force or new business to sustain payout and growth; supports pathway to $2B cash by 2027 .
• AB structure: C‑Corp conversion analysis suggests current partnership structure best for unitholders; higher taxes would dilute earnings — AB CFO; EQH concurs .
• Protection Solutions: FY’25 earnings expected at lower end ($200–$250M) given volatility and alternative returns at the low end; reinsurance explored but pricing unattractive, with broader actions forthcoming in 1H’25 .
• RILA market dynamics: Competitive pressures noted; EQH maintains pricing discipline and ~15% IRRs, leveraging adviser distribution and AB’s asset platform .
• Capital flexibility: ~$1.8B holdco cash; reduction to target over time while maintaining discipline amid macro uncertainty .

Estimates Context

• S&P Global/Capital IQ consensus estimates were unavailable during this session; therefore, beat/miss vs Street for Q4 2024 could not be shown. Expect comparisons to focus on Non-GAAP operating EPS and segment operating earnings in future updates once estimates are accessible.

Key Takeaways for Investors

• Operating momentum intact across Retirement, Wealth, and AB; Q4 Non-GAAP EPS less notable items rose to $1.65, and AB delivered outsized earnings on performance fees .
• Cash generation trajectory raised to $1.6–$1.7B for 2025 with optionality from the Bermuda reinsurer; supports continued 60–70% payout .
• Protection Solutions remains volatile near-term; management signaling actions (expense, reinsurance/third-party) to improve returns by mid-2025 .
• Asset Management institutional outflows in Q4 offset strong retail/private wealth; 2025 AB margin target (33%+) is a lever for multiple expansion if execution continues .
• RILA competition intensifying, but EQH’s integrated model (Equitable advisers + AB private credit/markets) helps sustain disciplined pricing and IRRs .
• Watch for in‑plan guarantee scaling (BlackRock, JPMAM) and pooled employer plan initiatives as catalysts for Retirement/Wealth flows in 2025 .
• Near-term trading: Seasonal and alternative income dynamics may pressure Q1, but full-year alternative returns expected to grade up; focus on AB margin delivery, Bermuda deployment, and Protection Solutions update in 1H’25 .