AllianceBernstein Holding L.P. Units

Thank you for standing by and welcome to the Alliance Bernstein first quarter 2026 earnings review. At this time all participants are in a listen only mode. After the remarks there will be a question and answer session and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded and will be available for replay on our website shortly after the conclusion of this call. I would now like to turn the conference over to the host for this call, head of investor relations for AB, Mr. Yannis Jargali. Please go ahead.

Good morning, everyone, and welcome to our first quarter 2026 earnings review. Today's conference call is being webcast and is accompanied by a slide presentation available in the investor relations section of our website at www.alliancepernstein.com. Joining us to discuss The company's quarterly results are Seth Bernstein, our Chief Executive Officer, and Tom Simeone, our Chief Financial Officer. Onur Erzan, our President, will join us for the question and answer session following our prepared remarks. Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure, so I would like to point out the safe harbor language on slide two of our presentations. You can also find our safe harbor language in the MD&A of our 10-Q, which we will file on Friday. We base our distribution to unit holders on our adjusted results, which we provide in addition to and not as a substitute for our GAP results. Our standard GAP reporting and a reconciliation of GAP to adjusted results are in our presentation appendix, press release, and our 10-Q. Under Regulation FD, management may only address questions of material nature from the investment community in a public forum, so please ask all such questions during this call. Now, I'll turn it over to Seth.

Good morning, and thank you for joining us today. While the first quarter was marked by geopolitical tensions and elevated volatility, AB's results underscored the resilience of our platform and our diversified business mix. I want to start by highlighting the key themes that shape this quarter listed on slide three. First, the proposed equitable core bridge merger will provide a step function acceleration of our flywheel and meaningfully enhance AB's scale and growth outlook. The combined company will have over $350 billion of general account assets and generate $70 to $80 billion of new liabilities annually, positioning AB among the most strategically important players in the insurance asset management channels. Over time, we expect to manage at least $100 billion of general and separate account assets from Corbridge. We look forward to supporting our new partner in delivering better outcomes for their policyholders, while we benefit from enhanced scale, improved earnings durability, and increased capacity to invest for growth. We believe this announcement will further accelerate the momentum already evident across our insurance franchise. Today, we serve more than 90 third-party insurance clients with $58 billion of AUM, including $32 billion of general account assets. Deployments from recently announced strategic insurance partnerships are progressing ahead of schedule and are expanding beyond the initial mandates. We are well positioned to benefit as these partnerships continue to grow. Second, while we continue to drive inflows from secular growth engines like insurance, private markets, and active ETFs, We had firm-wide active net outflows of approximately $6 billion in the first quarter, concentrated within a subset of active equity strategies. Active equity outflows of roughly $11 billion spanned across channels and reflect recent performance challenges as well as client allocation decisions. We also had taxable fixed income outflows of nearly $2 billion, as positive institutional engagement was offset by retail redemptions concentrated in the Asia-Pacific regions. Turning to the positives, we generated over $3 billion of organic inflows and tax-exempt fixed income and alternatives multi-asset strategies, respectively. Our private market platform reached $85 billion in AUM, up 13% year-over-year, reflecting strong institutional momentum. At the same time, our SMA business stands at $63 billion, growing organically at 15% annualized rate in the first quarter. We continue to build on our technological edge and efficiency benefits for financial advisors, expanding from a predominantly municipal-focused SMA offering to a broader multi-asset toolkit. We're seeing real traction in taxable fixed-income SMAs, highlighted by a recently funded $300 million mandate. AB has long been a market leader in tax-optimized fixed-income SMAs, an area made increasingly scalable by recent advances in data science. Our active ETF lineup now encompasses 25 strategies with more than $16 billion in AUM of over 150% year-over-year, with eight of our ETFs surpassing $1 billion AUM, including our five-star rated disruptors ETF, ticker FWD. Our security of the future thematic portfolio has surpassed $4 billion in assets, nearly tripling from a year ago, with $1.7 billion of inflows in the first quarter alone. While these offerings are currently smaller than some of our larger marquee services, they represent emerging durable growth engines that will reshape the composition of our AUM over time. Looking forward, our institutional channel is positioned for accelerating net flows in the second half of 2026, supported by the largest pipeline on record, surpassing $27 billion in AUM. Third, our distribution platform provides direct access to secularly growing channels, including ultra-high net worth, insurance asset management, and defined contribution. Together, these account for more than 45% of firm-wide AUM and provide relative stability across market cycles. Bernstein Private Wealth ended the quarter with $155 billion in assets under management, and it contributes more than one-third of firm-wide revenues. Our insurance asset management business now manages approximately $120 billion of insurance general account assets across a growing roster of global partners. Our customized retirement business exceeds $100 billion in defined contribution assets, and we continue to innovate by incorporating a broader set of asset classes, including private markets and insurance solutions that provide guaranteed lifetime income. Overall, while this quarter's results reflect mixed dynamics and pressure from the challenging macro backdrop, We believe our broad product capabilities and differentiated distribution position AB well to generate organic growth over time. Slide four provides an overview of our financial results, and Tom will walk through these in greater detail later. Turning to slide five, I'll review our investment performance, starting with fixed income. Global bond markets posted modestly negative returns in the first quarter. as heightened geopolitical tension, rising energy prices, and shifting policy expectations pushed yields higher across most developed markets. Credit markets were mixed. Investment-grade and high-yield corporates posted modest declines overall, with U.S. corporates outperforming Eurozone peers, while secured-size assets proved resilient. The Bloomberg U.S. Aggregate Index was roughly flat, outperforming the global aggregate, which returned negative 1.1% in the quarter. Our American income and global high-yield products both underperformed their respective benchmarks in the first quarter. Yield curve positioning and allocation to emerging markets detracted from AIP's relative returns, while GHY was similarly affected by European high-yield exposure and EM corporates. Notwithstanding near-term headwinds, our fixed income platform continues to form well over longer measurement periods. when half of our assets outperformed over the one-year period, while 80% outperformed over three years and 64% over five years. Turning to equities, U.S. equity markets were hurt in the first quarter of 2026, with the S&P 500 returning negative 4.3%. The quarter began constructively, but reversed with the emergence of credit concerns, AI-related disintermediation risks, and escalating geopolitical tensions. Despite some early signs of improvement in year-to-date relative performance, our track records remain pressured and below our expectations. 23% of assets under management outperformed over the one year, 24% over three years, and 44% over five years. This primarily reflects the outsized impact of our larger U.S.-oriented growth strategies that have underperformed this quality growth derated in recent quarters. However, our equity platform is intentionally diversified across styles and geographies, avoiding over-reliance on any single market regime. International and emerging market strategies with a smaller AUM base continue to perform well. In fact, we have more than 25 strategies with nearly $40 billion of AUM that are outperforming their respective benchmarks or composites over both the three- and five-year periods, with eight out of the ten largest among them being international or global strategies. As market breadth began to improve entering 2026, a growing share of our growth, value, core, and thematic strategies delivered stronger relative results. Looking ahead, we believe a more balanced earnings environment and continued economic stability could favor international and value-oriented strategies, while lower tracking error portfolios may provide clients with more consistent participation across shifting market leadership. Turning to slide six, I'll discuss our retail highlights. Retail growth sales rose sequentially and surpassed $23 billion for the first time in four quarters. However, the channel recorded net outflows of nearly $6 billion in the first quarter, reflecting elevated redemptions. Active equity and taxable fixed income each exceeded $4 billion in outflows, driven primarily by redemptions from select marquee U.S. services in Asia Pacific, as relative value and capital flows have shifted toward neighboring and domestic markets. Passive equities and passive fixed income also posted outflows. These headwinds were partially offset by more than $3 billion of tax-exempt inflows and nearly $1 billion of alternatives and multi-asset inflows, continuing their durable organic growth trajectories. Our retail muni SMA platform has consecutively positive quarterly inflows for more than three years, a testament to the compounding strength of our market-leading capabilities. We are well-positioned as the bond reallocation trend continues to unfold, particularly as we extend our success into tax-aware SMAs. Moving to slide seven, I'll cover our institutional channel. Institutional gross sales also increased, both sequentially and year over year. However, the channel had roughly $2 billion of net outflows, primarily driven by more than $5 billion in active equity outflows. Despite some short-term headwinds from insurance hedging activity, the channel recorded over $2 billion of inflows in taxable fixed income, reflecting broadly improved institutional appetite. Alternatives multi-asset also saw positive inflows for the fifth consecutive quarter, supported by deployments in private markets and fundings of defined contribution plans. Institutional engagement across private credit has persisted, with nearly $1 billion of deployments on the back of improved terms and widening spreads. This includes direct lending, where ABPCI recently secured a half-billion third-party institutional mandate reflected on our pipelines. Furthermore, our pipeline has reached a record-high $27.5 billion in assets under management, supported by $9 billion in new commitments. This growth reflects expansion of our recently announced insurance partnerships to include additional mandates. It also includes an increase in Equitable's commercial mortgage loan commitments to $12 billion, up from the previously announced $10 billion. The pipeline fee rate declined slightly to 19 basis points, primarily due to the addition of sizable fixed income and passive equity mandates. Excluding roughly $5 billion in passive mandates included in the pipeline, the fee rate for active AUMs stands at 23 basis points. Next on slide 8, I'll cover private wealth. Quarterly growth sales continued to set new records of Bernstein private wealth, with the channel registering its third consecutive quarter of organic growth. Inflows grew nearly 2% annualized, while net new client assets rose 5% annualized in the first quarter. Redemption requests for private credit products that offer periodic liquidity stayed well below our 2.5% quarterly cap. This is a testament to the combined strength of our highly specialized advisory sales force, coupled with ABPCI's strong investment track record, built on a decade-long partnership since Bernstein was among the pioneers that distributed direct lending as an asset class. I'm particularly proud of the differentiated client service we offer in Alternatives. reinforced by the seamless collaboration between our homegrown distribution and investment teams, a defining advantage for Alliance Bernstein. Advisor Headcount is tracking ahead of our 5% annual growth target. We believe our platform offers exceptional support and training that drives industry-leading advisor productivity, attracting both experienced and emerging talent. As we continue to invest in Advisor Headcount growth and productivity, including integrating generative AI capabilities into daily advisor workflows, we anticipate continuous client experience improvement, along with more targeted and effective prospecting. Advisor headcount remains a key area of focused investment and a critical lever for long-term growth within the channel. I will close with slides 9 and 10, which highlight the momentum of our private markets platform and the opportunities from the equitable core bridge merger. In partnership with Equitable, we have scaled our private markets platform to $85 billion in fee-paying and fee-eligible AUM, anchored primarily in credit-oriented strategies, including direct lending, asset-based finance, commercial real estate debt, and investment-grade and corporate structured private placements. Equitable's $20 billion permanent capital commitment, now fully deployed and exceeding the original commitment, has been a critical catalyst, accelerating our expansion in private markets while strengthening our ability to seed and scale higher-feed strategies. Our collaboration continues to deepen and evolve, progressing across residential mortgage solutions, structured private placements, and most recently, commercial mortgage loans. Each initiative builds incremental scale while broadening the applicability of our capabilities across third-party insurance and other institutional client channels. Our goal is to serve a diverse base of retail, institutional, and insurance clients across a wide range of risk-return objectives. The proposed equitable core bridge merger amplifies the supply wheel. With a combined general account asset base exceeding $350 billion and a broader liability profile, the merged company will be one of the largest players in the industry, creating significant opportunities for AB. Importantly, the strategies developed for equitable are not bespoke or standalone solutions. They form the commercial foundation from which we serve a growing universe of third-party insurance and institutional clients worldwide. Amplifying the flywheel with the inclusion of Corbidge is a defining moment in AB's evolution, not simply additive to our existing asset base, but potentially transformative in its impact on scale, earnings, durability, and long-term strategic positioning. With a proven operating model, a powerful strategic partner, and a focused growth strategy, We're well positioned to achieve our $90 to $100 billion private markets AUM target by 2027 and extend our growth trajectory beyond that milestone. With that, I will pass it on to Tom to discuss our financial results.