Full Transcript: Equitable Holdings Q2 2026 Earnings Call

Equitable Holdings (NYSE: EQH ) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

The full earnings call is available at Summary Equitable Holdings Inc. 75 excluding notable items. The company is progressing with its merger with Corbridge, expecting to close by the end of 2026, which is anticipated to drive at least 10% accretion to earnings and cash flow per share by 2028. 2 trillion, driven by positive net flows and favorable equity markets, and returned $449 million of capital to shareholders.

The company continues to see healthy organic growth across its segments, with notable net inflows in retirement, wealth management, and AllianceBernstein. Strategic initiatives include expanding in institutional markets and seeding growth in high-potential new markets, supported by the merger, which will enhance capabilities and distribution. Equitable Holdings is on track to meet its 2026 financial targets, including a targeted payout ratio of 60-70% and expected EPS growth of over 15% for the full year.

Management highlighted the advantages of the merger with Corbridge, emphasizing the potential for expense and revenue synergies and the expanded scale and distribution benefits. Full Transcript OPERATOR Hello everyone. Thank you for joining us and welcome to Equitable Holdings Inc. second quarter 2026 earnings call.

After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. I will now hand the conference over to Eric Bass, Chief Strategy Officer and Head of Investor Relations.

Eric, please go ahead. Erik Bass, Chief Strategy Officer Thank you. Good morning and welcome to Equitable Holdings second quarter 2026 earnings call. com.

Before we begin, I would like to note that some of the information we present today is forward looking and subject to certain SEC rules and regulations regarding disclosure. Our results may differ materially from those expressed in or indicated by such forward-looking statements. Please refer to the safe harbor language on slide 2 of our presentation for additional information.

Joining me on today's call are Mark Pearson, President and Chief Executive Officer of Equitable Holdings; Robin Raju, our Chief Financial Officer; Nick Lane, President of Equitable Financial; Owner Airzon, President of AllianceBernstein; and Tom Simeone, Chief Financial Officer of AllianceBernstein. During this call we will be discussing certain financial measures that are not based on Generally Accepted Accounting Principles, also known as non-GAAP measures.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website and in our earnings release, slide presentation, and financial supplement. We will also refer to the pending transaction with Corbridge. Any statements about the transaction made during this call are not an offer of securities. A registration statement containing a prospectus will be filed with the SEC in connection with the transaction.

I will now turn the call over to Mark. Mark Pearson, CEO and President Good morning and thank you for joining today's call. During the second quarter, Equitable made significant progress in advancing our transformational merger with Corbridge while also delivering strong growth in earnings and positive net flows across each of our segments. Last week the shareholders of both companies approved the merger and we remain on track to close by year end.

Slide 4 highlights why we are so excited about the opportunity for the new Equitable and our strategy for accelerating growth and driving shareholder value. We will win with customers by being the easiest company to do business with while leveraging our scale, advantages and formidable distribution to deliver a full range of attractive product solutions across multiple channels. S. retirement, life insurance, institutional and asset and wealth management and the merged company will have the capabilities, distribution, breadth and scale needed to be a long-term winner in each of them.

The new Equitable will deliver at least 10% accretion to earnings and cash flow per share by the end of 2028 and produce a 15% plus ROE on a capital base of over $30 billion. We are confident that as we execute the merger and validate our competitive advantages, it will translate into a higher valuation over time. Turning to slide 5, I'll start by providing an update on the progress we have made on achieving merger approvals and beginning to integrate the two companies. On July 30, shareholders of both Equitable and Corbridge approved the merger with over 97% voting in support of the transaction.

We have also completed the federal antitrust review process and have filed for all required regulatory approvals. We continue to expect the transaction to close by the end of 2026. During the quarter, we established the organization structure for the new company including the first three levels of management. This has enabled us to commence integration planning and map out how we will achieve meaningful expense, revenue and capital synergies.

We remain confident in delivering on all of the financial targets provided at the time of announcement. While looking forward to day one for the new Equitable, we remain focused on achieving our 2026 financial targets and are not treating this as a gap year. 75 excluding notable items. This represents a 24% year-over-year increase consistent with our guidance of EPS growth of greater than 15% in 2026.

2 trillion, up 10% year over year, driven by positive net flows and uplift from favorable equity markets. During the quarter we returned $449 million of capital to shareholders including $366 million of share repurchases. This represents a 92% payout ratio as we took advantage of our attractive valuation to accelerate buybacks after being in blackout for a portion of the first quarter. As Robin will discuss, we expect to achieve our targeted 60 to 70% payout ratio in 2026.

Turning to our businesses, we continue to see healthy organic growth trends with each of our businesses delivering positive net flows in the second quarter. 7 billion of net inflows driven by 10% growth in RILA sales and increased institutional volumes. 6 billion of net issuance in the second quarter. In wealth management we had $2 billion of advisory inflows in the quarter.

The business has a trailing twelve-month organic growth rate of 11% which compares favorably with peers. 8 billion. Retail flows benefited from a $9 billion sub-advisory mandate win from Equitable separate accounts, which is another example of the flywheel benefits between Equitable and AB. Institutional flows were also positive in the quarter and we expect the momentum to continue in the second half of the year.

In July, AB onboarded $12 billion of commercial mortgage loans from Equitable and it has an additional unfunded pipeline of $14 billion. Private markets remains a bright spot with AUM up 18% year over year to $91 billion at June 30, reaching the 90 to 100 billion target level over a year ahead of schedule. Moving to Slide 6, I will provide some more details on how we are executing on our growth strategy. As a reminder, this entails defending and growing our core retirement and asset management businesses, scaling adjacent businesses like Wealth Management and AB private markets, and seeding future growth in high-potential new markets.

Our retirement business has produced positive net flows every year since our IPO and the annualized organic growth rate in the first half of 2026 was 4%. If we include our spread lending business, which is producing very attractive IRRs in the current spread environment, the organic growth rate increases to 6% in retirement. We also continue to invest in fast-growing new institutional markets like in-plan annuities and HSAs. We expect over $500 million of institutional flows in 2026 with potential flows to accelerate meaningfully over the next few years.

We are excited that the Corbridge merger will expand our presence in institutional markets, adding capabilities like pension risk transfer and structured settlements, and the combined company's larger balance sheet provides additional capacity for future growth. Turning to wealth management, the business delivered 10% annual organic growth in the first half of the year, advisor productivity increased 13% and total AUA is up 27% to $141 billion. We closed on the Stifel Independent Advisors acquisition in the first quarter and the Corbridge merger will add an additional $20 billion of AUA, helping to scale our platform.

Finally, AB has strong momentum in target growth areas like private markets, insurance and active ETFs. Equitable has invested nearly $25 billion of capital in AB's private market strategies above our initial $20 billion commitment and AB is making good progress in scaling these with third-party investors. As I mentioned earlier, total Private Markets AUM ended the quarter at $91 billion and is on track to exceed the original target of 90 to 100 billion by the end of 2027. Insurance continues to be a strong source of flows with seven new relationships added year to date and total third-party insurance AUM of $61 billion is up 16% year over year.

While most of the new flows relate to general account wins, as this quarter showed, AB and Equitable can also work together to drive additional separate account flows. AB also continues to drive inflows in its active ETF platform, which now consists of 31 strategies with over $20 billion of AUM and generates approximately $100 million of annual fee income. On slide 7 we show progress towards achieving the Investor Day targets laid out in 2023. We remain committed to delivering on our standalone growth targets so that the new Equitable can hit the ground running in 2027.

8 billion of cash flow to the holding company in 2026 and $2 billion in 2027. 9 billion of insurance subsidiary dividends during the second half of the year, giving us clear line of sight to achieving our targets. Our payout ratio was 70% in the first half of 2026, consistent with our 60 to 70% target. The cumulative payout since Investor Day has been 68%, highlighting our commitment to returning capital to shareholders.

Finally, we delivered 25% growth in EPS in the first half of the year. This puts our cumulative growth rate at 10%, slightly below our 12 to 15% target range. Based on our business momentum and outlook, we expect to be at the low end of the range by the end of 2026. Putting it all together, we have good momentum and are entering the merger with Corbridge from a position of strength.

I will now turn the call over to Robyn to discuss Equitable's second quarter results in more detail. Robin Raju, Chief Financial Officer Thanks, Mark. On slide 8, I'll provide some more detail on our second-quarter results. 70 per share.

We reported a net loss of 453 million driven by non-economic impacts from our hedge portfolio resulting from strong equity markets. We had two notable items in the quarter: 49 million of below-plan alternative investment returns, which was partially offset by a 35 million benefit from favorable tax items. 75, up 24% year over year. Our alternative investments portfolio, which is about 2% of our total general account, produced an annualized return of slightly over 1% in the quarter as results were pressured by the lagged impact of first-quarter market declines on our private equity holdings.

Looking to the second half of the year, we expect returns to be higher than the first half, but we will be in a position to better provide guidance later in the quarter. Our consolidated tax rate of 15% benefited from some opportunistic tax planning. We forecast returning to a more normal tax rate of approximately 20% in the third quarter. For the first half of 2026, earnings per share excluding notable items increased about 25%, putting us on track to achieve our guidance of earnings per share growth of greater than 15% for the full year.

92. As a reminder, at the close of the merger with Corebridge, our GAAP shareholders' equity will reflect the fair value of assets and liabilities. This will result in a more meaningful book value, return on equity, and leverage ratio. Finally, before going deeper into the drivers of our results, I want to provide a few comments on the recently announced sale of our Employee Benefits business to The Hartford.

We entered the Employee Benefits business in 2015 as a greenfield build focused on serving small businesses with a unique technology platform. We have grown to over 800,000 customers and approximately 500 million of premiums to date, but the business is not yet profitable due to the lack of scale. Given our focus on executing a successful merger with Corebridge and allocating capital to our at-scale businesses, we felt this was the right time to reevaluate our strategy. When we were approached by The Hartford, it was clear that they were a more natural owner for the business and would be a good home for our customers and employees.

The transaction will have a neutral to slightly positive impact on near-term earnings, and we will use the proceeds to invest in growing our other at-scale businesses. Turning to slide nine, I'll provide some more details on our segment-level earnings drivers. In Retirement, second-quarter earnings excluding notable items were 408 million. Net interest margin, or NIM, increased 11% year over year and 1% sequentially, despite lower alternative investment income.

Core spreads excluding alternatives increased by 1 basis point sequentially to 174 basis points. While there can be some quarterly volatility, we expect core spreads to remain near the current levels moving forward. Fee-based revenues also increased on a year-over-year and sequential basis, helped by strong equity markets. We expect additional improvement in the third quarter based on higher average asset levels.

Turning to Asset Management, AB reported earnings of 158 million, up 21% year over year. Assets ended the quarter at a record 906 billion, which bodes well for fee earnings moving forward. 7 basis points has declined modestly due to mix shift, we continue to produce an attractive incremental margin on new revenues. We also raised our forecast for the full-year 2026 performance fees from 95 to 115 million to 115 to 135 million, with most of that benefit expected in the fourth quarter.

Moving to Wealth Management, earnings increased 26% year over year as the business continues to deliver strong organic growth and increased advisor productivity. As a reminder, Wealth Management advisory fees get calculated on a one-quarter lag, so the benefit of the equity market rally will show up in the third-quarter results. We continue to expect double-digit annual growth in Wealth Management earnings. Finally, in Corporate and Other, we reported a loss of 106 million in the quarter after adjusting for notable items.

This is slightly higher than the range implied by our full-year guidance of a 350 to 400 million loss in the quarter. We had a larger-than-normal accrual for long-term compensation expense due to the 19% increase in our stock price. In addition, mortality was modestly elevated in the quarter due to a few large claims. For the first half of the year, the corporate loss ex notable items was 204 million, close to the expectations.

On slide 10, I'll highlight Equitable Holdings' strong balance sheet and cash flow, which enables us to be a consistent returner of capital to shareholders. We ended the second quarter with 800 million of cash and liquid assets at the holding company, and our estimated combined NAIC RBC ratio was well above our target operating level of 400% as of mid-year. 8 billion, which includes about 900 million of insurance company dividends that will be paid in the second half of 2026. We have received the required regulatory approvals from Arizona for all planned extraordinary dividends.

During the second quarter, we returned 449 million of capital to shareholders, including 366 million of share repurchases. Our payout ratio was 92% for the quarter as we took advantage of our attractive valuation and caught up on forgone purchases from earlier in the year when we were in blackout due to the pending merger announcement. We had a 70% payout ratio for the first half of 2026 and expect to have a full-year payout ratio of 60% to 70%.