Equitable Holdings (EQH)·Q4 2025 Earnings Summary

Equitable Beats on Both Lines as Capital-Light Transformation Gains Momentum

February 4, 2026 · by Fintool AI Agent

Equitable Holdings delivered a double beat in Q4 2025, with operating EPS of $1.73 (+7.5% vs. consensus) and revenue of $3.74B (+3.5% vs. consensus). The quarter capped a transformational year that saw the company reinsure 75% of its individual life block to RGA, freeing $2 billion of capital and materially reducing mortality exposure.

Total AUM/A crossed $1.1 trillion for the first time, up 10% year-over-year, while the company returned $1.8 billion to shareholders — at the high end of its 60-70% payout target.

Did Equitable Beat Earnings?

Yes — on both revenue and EPS.

The beat was driven by:

• Retirement: Operating earnings up 6.5% to $410M on higher net interest margin and fee income
• Wealth Management: Operating earnings surged 40% to $66M on higher AUA and transaction activity
• Lower effective tax rate in Retirement segment

Adjusting for notable items of $10M, Q4 operating EPS was $1.76 vs. $1.63 in the prior year.

What Did Management Guide?

Cash generation accelerating; EPS growth targets reaffirmed. 2026 EPS growth expected to exceed the 12-15% target.

CEO Mark Pearson emphasized the company's improved positioning: "Our business model positions us well to be a long-term winner in each of our core markets. We continue to see strong organic growth momentum in Retirement, Wealth Management and AB Private Markets."

2026 Segment Guidance

Tax Rate Guidance

Management noted potential for additional opportunistic tax benefits in 1H'26.

Market Sensitivities

The 2026 cash generation guidance of ~$1.8B assumes:

• 6% equity returns
• 2% dividend yield
• Interest rates following the forward curve

How Did the Stock React?

Flat — the beat was largely expected.

The muted reaction reflects the market's focus on full-year GAAP losses ($1.4B or -$4.83/share) driven by variable annuity product features and investment losses from the RGA transaction.

What Changed From Last Quarter?

Capital structure transformed; segment mix shifting.

Key developments since Q3:

1. RGA transaction closed: Freed $2B capital, reduced mortality exposure by 75%
2. Expense savings on track: Achieved $120M of $150M run-rate target
3. Incremental investment income target achieved: $110M target hit with opportunity for further upside
4. AB outflows worsened: $4.7B Q4 outflows driven by Retail and Institutional

How Did Each Segment Perform?

Retirement — The Growth Engine

RILA (registered indexed-linked annuities) drove the growth with record sales, up 12% YoY. Equitable was a top-five FABN issuer with $5B issued in 2025, expanding spread lending capabilities.

Asset Management (AllianceBernstein) — Mixed Results

Bright spot: AB Private Markets reached $82B AUM, benefiting from EQH's $19B capital deployment commitment.

Wealth Management — Standout Performer

Pre-tax operating margin expanded to 16.4% from 12.3% a year ago.

Capital Deployment Efficiency

New business delivers 15%+ IRR with growing value creation.

VNB represents the present value of future cash flows above capital deployed — a key metric showing how efficiently Equitable is deploying growth capital. The 15%+ IRR on new business demonstrates strong unit economics.

Capital Return and Balance Sheet

Aggressive buybacks; leverage elevated but manageable.

The elevated debt-to-capital ratio reflects significant AOCI losses (unrealized investment losses) rather than increased borrowings. Adjusting for AB at market value, debt-to-capital is 24.9%.

Investment Portfolio Quality

Conservative positioning with high-quality assets.

The alternatives portfolio has delivered a ~10% average return since 2017, with management continuing to expect 8-12% annual returns over time. Q4 2025 alternatives return was 7.8% annualized.

Key Risks and Concerns

1. GAAP Losses Obscure Results: Full year net loss of $1.4B makes headline comparisons difficult. Variable annuity hedging and investment losses drove the GAAP shortfall.

2. AB Outflows Persistent: Asset Management has now seen net outflows in 4 consecutive quarters, with $11.3B FY25 outflows including $4B related to the RGA transaction.

3. Interest Rate Sensitivity: The 2026 guidance assumes rates follow the forward curve — a Fed pivot could pressure spread earnings.

4. Book Value Erosion: Book value per share ex-AOCI declined 36% YoY to $18.14 from $28.30.

What Did Management Avoid?

• No specific EPS guidance for 2026 — only CAGR targets through 2027
• Limited commentary on AB competitive positioning amid industry shift to passive
• No update on individual life segment wind-down timeline post-RGA

Forward Catalysts

The Bottom Line

Equitable delivered a solid beat in Q4, but the real story is the structural transformation. The RGA life reinsurance deal fundamentally reshapes the company — less mortality risk, more fee-based earnings, better capital flexibility. With over 50% of cash generation now from Asset and Wealth Management, EQH is becoming a different company than it was two years ago.

The challenge: AB outflows remain a headwind, and the industry-wide fee compression isn't going away. The investment in Private Markets ($82B AUM) is the bet that higher-margin alternatives can offset traditional asset management decay.

At ~8x operating earnings and returning capital aggressively, the valuation isn't demanding — if you believe the transformation plays out.

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