AllianceBernstein Holding L.P. Units

Hello, everyone, and thank you for joining us. Welcome to the Alliance Bernstein Second Quarter 2026 Earnings Review. At this time, all participants are in a listen-only mode. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. If you would like to recall your question, withdraw your question, press star one again. 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. Ioanis Jorgali. Please go ahead.

Good morning, everyone, and welcome to our second quarter 2026 earnings review. Today's conference call is being webcast and is accompanied by slide presentation available in the investor relations section of our website at www.alliancebernstein.com. Joining us today 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 2 of our presentation. You can also find our Safe Harbor language in the MD&A of our TEN-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 GAAP reporting and a reconciliation of GAAP 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. Despite an uncertain geopolitical and policy backdrop, markets recovered during the second quarter, supported by resilient economic growth and strong corporate earnings. Against this backdrop, Alliance Bernstein generated its strongest sales quarter in five years, returned to positive organic growth, and reached its objective of 90 to 100 billion in private markets AUM more than a year ahead of our 2027 commitment. On slide three, I'll review the key business highlights of our second quarter. First, assets under management ended the quarter at a record level, exceeding $905 billion. This milestone reflects both market appreciation and, more importantly, the returns on years of investment and strategic initiatives that are now driving organic growth across insurance, private wealth, private markets, retirement, SMAs, and active ETFs. Within insurance, we now manage nearly $218 billion, including $128 billion in general account assets. We continue to see strong momentum in third-party insurance, where we manage $61 billion across roughly 100 clients. This includes $34 billion of general account assets, which are up more than 30% year-over-year. In the first half of 2026, we initiated seven new relationships and deployed nearly $3 billion of third-party insurance capital on a gross basis, while general account assets grew organically at a 6% annualized rate. As we discussed last quarter, the proposed combination of equitable and core bridge represents the next-step function acceleration of our flywheel. Over time, we'll add at least $100 billion of core bridge assets, meaningfully enhancing AB's scale and providing an organic glide path toward $1 trillion in firm-wide AUM. While it's too early to be specific, we see synergies from partnering with Corbridge and the New Equitable that go well beyond just managing $100 billion of incremental assets. Bernstein Private Wealth continues to strengthen its position as a leading advice-led wealth platform, ending the quarter with $167 billion of assets and contributing nearly 40% of firm-wide revenue. By serving as our clients' trusted advisor, we build durable, long-term relationships and deliver integrated solutions across traditional and alternative investments. Second, we continue to expand our investment and distribution footprint through strategic partnerships, tax-aware solutions, and vehicle innovation. A core element of our strategy is making our investment capabilities available in vehicles and formats that clients want. We continue to globalize our active ETF franchise. After initially launching three strategies in Taiwan, we've introduced five new strategies in Europe, where we pioneered a dual share class structure, offering active usage ETF shares alongside mutual funds. Our platform now spans 31 strategies and over $20 billion of AUM, with assets growing 73% organically over the past year. From a near-standing start nearly four years ago, this platform now generates an annualized run rate of approximately $100 million in management fees. This growth reflects both client demand for active exposures and more efficient wrappers and our ability to globalize successful investment capabilities across channels. Our SMA platform reached $69 billion of AUM and generated 17% annualized organic growth over the last year. While municipals are still the foundation of our SMA business, we're encouraged by the early momentum from extending our capabilities into taxable fixed income. We see SMAs as a meaningful long-term growth opportunity as personalization, technology, and advisor demand continue to converge. Our customized retirement platform has grown to $117 billion in assets. As plan sponsors increasingly see customized retirement solutions, lifetime income, and access to broader asset classes, AB is well positioned to help improve participant outcomes. A recent example is ABC1, our partnership with Brookfield and Carlisle, which combines private credit, private equity, and private real assets in a single diversified sleeve designed to sit alongside existing target date funds and managed accounts. We believe that this solution validates AB's role as a trusted asset allocator and thought leader in the retirement solutions Broadening participant access to private markets through a scalable and efficient structure in partnership with market-leading alternative managers. Third, strong sales momentum translated into a return to organic growth. Firm-wide net flows were nearly 800 million in the second quarter, ending four consecutive quarters of outflows. This marked our strongest quarter of gross sales in five years, reflecting broad-based demand across most of our strategic growth areas. Fixed income was the key driver of inflows. During the quarter, we funded a $9 billion passive fixed income mandate from Equitable, reflecting the continued expansion of our relationship beyond pre-announced commitments. In addition, strong demand for tax-efficient income and continued market share gains in our municipal franchise generated approximately $3 billion of inflows. Alternatives and multi-asset solutions generated more than $4 billion of net inflows, Marking this is our sixth consecutive quarter of positive organic growth. Institutional deployments into private market strategies accelerated during the quarter, supported by demand across private credit, commercial real estate debt, and insurance-oriented solutions. These inflows more than offset continued pressure in active equities and taxable fixed income. Active equity outflows were nearly $11 billion, while taxable fixed income outflows exceeded $4 billion. Both were largely driven by retail redemptions concentrated in Asia Pacific, where allocation preferences are increasingly favoring local equity markets given their strong recent performance. Slide four provides an overview of our financial results, which Tom will discuss in greater detail shortly. Skipping to slide five, I'll review our investment performance starting with fixed income. Credit markets delivered healthy returns during the second quarter despite higher volatility. Following a temporary widening in spreads during April, risk assets recovered as corporate fundamentals remained resilient and investors continued to find value in attractive all-in yields, despite tight spreads. Rates moved modestly higher as markets recalibrated their expectations for a higher long-term equilibrium rate. Against this backdrop, the Bloomberg U.S. Ag returned 0.7%, while the Global High Yield Index returned 3.7% during the quarter. Our one-year relative performance improves sequentially, with 68% of AUM outperforming. Longer-term performance remains competitive, with 81% and 61% of AUM outperforming over the three-year and five-year periods respectively. Within our flagship income strategies, American Income outperformed its benchmark and performed in line with its peer category, while Global High Yield outperformed its category and modestly lagged its benchmark during the second quarter. Turning to equities, markets rebounded sharply in the second quarter, with very strong returns across regions. Developed markets posted exceptional returns, with the S&P 500 gaining 15%, its strongest quarterly advance in six years. Emerging markets were a standout performer globally, as the MSCI Emerging Market Index surged 24%. The global recovery was supported by de-escalation in the Middle East, leading to lower energy prices and continued enthusiasm around AI. Technology and semiconductor stocks again led the advance, extending a period of unusually narrow market leadership. Against this backdrop, our performance struggled, with 23, 28, and 31 percent of equity AUM outperforming over the one, three, and five-year periods, respectively. Our relative performance continues to reflect a market increasingly driven by a narrow set of beneficiaries from the AI build-out. Our largest U.S. growth strategies, which emphasize quality, diversification, and valuation discipline, have been at a step with this environment, weighing on our AUM-weighted performance. Recent volatility among AI-linked equities and the unwind of leveraged positions have reinforced the importance of diversification and the risks associated with over-reliance on a single market theme. More broadly, our equity platform remains diversified across styles, sectors, and geographies. We have over 25 services with more than $45 billion of assets under management that continue to outperform over both the three and five-year periods. This includes our $10 billion international strategic equity service, which ranks in the top percentile across one, three, and five-year periods. We believe diversification across fixed income and quality-oriented equities can help clients generate income, stay invested, and broaden their sources of return beyond a handful of market leaders over leveraged to the AI build-out. Now turning to slide six. Retail net flows rebounded in the second quarter driven by record sales momentum and continued demand for fixed income. Gross sales reached 31 billion, the highest level in five years, Driving $900 million of net inflows in the channel's first quarter of positive organic growth since the first quarter of 2025. Excluding fixed income mandate from Equitable, our gross sales were $22 billion, up 14% versus the same period in 2025. As noted, fixed income was the primary driver led by continued demand for tax-efficient income, in addition to the $9 billion fixed income index mandate mentioned earlier. Active equity outflows are still elevated, driven primarily by U.S. large cap growth redemptions across U.S. and Japan. At the same time, we continue to build diversified sources of growth across the retail platform, including active ETFs and thematic strategies. For example, our security of the future surpassed $5 billion in assets under management and generated nearly $2 billion of inflows during the quarter. Moving to slide seven, I'll cover our institutional channel. Institutional flows also returned to positive territory in the second quarter, generating more than half a billion dollars of net inflows. Demand was driven by alternatives and multi-asset, with over 4 billion of net inflows growing at an 11% annualized organic rate. This marked the sixth consecutive quarter of positive organic growth for the category. Roughly 5 billion in deployments were broad-based across our private markets platform, including residential mortgages, commercial real estate debt, private placements, and NAV Lending. Active equity outflows persisted, but improved sequentially, declining to approximately $3 billion in the quarter. Earlier this month, we successfully onboarded $12 billion of commercial mortgage loans from Equitable ahead of schedule. Beyond the revenue contribution, the mandate roughly doubles our scale in the strategically important private asset class, expands our origination and servicing capabilities, and further strengthens the flywheel between long-duration insurance capital and AB's differentiated private markets platform. We expect to begin earning management fees on the established assets in the fourth quarter at a high single-digit fee rate. The blended fee rate will increase over time as new originations and servicing revenues are layered in. Our remaining pipeline totals approximately $14 billion and is well diversified, including roughly $5 billion in private alternatives, $3 billion in customized retirement, $3 billion in fixed income, and $2 billion in indexed equities. I'd note that this pipeline does not include any of the $100 billion in expected assets from Corbridge. As a result, we have good visibility into future growth. Turning to slide 8, I will cover Bernstein Private Wealth. Private Wealth experienced this typical seasonal pressure on net flows during the second quarter, but underlying business momentum remained strong as we continued to deepen relationships with ultra-high net worth individuals and families. As expected, tax-related selling weighed on our quarterly net flows, which were negative $700 million. However, net new assets have grown at a 6% annualized rate over the last 12 months. Client engagement remains strong with demand concentrated in alternatives, tax-efficient solutions, and passive equities. Our ability to deliver customized after-tax outcomes across both public and private markets continues to differentiate Bernstein with ultra-high net worth clients. Product innovation also supported organic growth, including strong capital raise for our newly launched high-yield muni strategies designed to address increasingly sophisticated tax management needs More broadly, Bernstein Private Wealth remains one of our most important strategic growth vectors. It provides direct access to ultra-high net worth clients, expands opportunities to deliver holistic investment solutions, and serves as a valuable distribution channel for alternatives, tax-efficient equities, fixed income, and customized portfolio strategies. I'll now turn to slide nine, which highlights the continued growth and diversification of our private alternatives platform. I'm particularly proud to report that we've already reached $91 billion of private market assets under management, achieving our $90 to $100 billion investor day target more than a year ahead of our original 2027 commitment. This milestone reflects the successful execution of a long-term strategy and the hard work of colleagues across our investment, distribution, operations and client service teams. I want to thank everyone across the firm who helped make this achievement possible. Over the past several years, we've built a diversified private markets platform spanning corporate direct lending, alternative credit, commercial real estate debt and private placements. Together, these capabilities provide differentiated sources of return and allow us to serve a broad range of client needs across institutional, insurance, retail, and private wealth channels. Importantly, we continue to see a strong growth trajectory. As I mentioned earlier, we successfully onboarded nearly $12 billion of commercial mortgage loans in July that are not reflected on the slide. Including those assets, our private market AUM would already exceed the upper end of our original target range. Closing with slide 10, I'd like to bring together the themes we've discussed today. The proposed combination of equitable and core bridge strengthens what we believe to be a unique competitive advantage for AB. At its core, the flywheel is straightforward. It starts with an asset-light approach that leverages long-duration insurance capital to seed and scale capabilities that can be extended across a much broader client base. The addition of core bridge meaningfully expands that opportunity. As the $100 billion is allocated over time, it will provide greater scale across the combined general account, enhancing our ability to originate differentiated assets, establish track records, develop new investment capabilities, and accelerate growth across the broader platform. Particularly, capabilities across private placements, residential and commercial mortgages, and asset-based finance are not one-off mandates. They become scalable investment platforms that can be distributed across third-party insurance clients, institutional investors, retail wealth, and over time defined contribution. We believe insurance, private wealth, retirement, and private markets represent some of the largest and fastest growing pools of capital globally. Increasingly, AB is differentiated at the intersection of these opportunities, complying scale, customization, investment breadth, and direct client relationships in a way that are difficult to replicate. In conclusion, the second quarter reinforces the direction of travel for AB. We reached record AUM, returned to positive organic growth, generated our strongest sales quarter in five years, and continued to scale the strategic growth platforms we've spent years building. Taken together, these results demonstrate the increasing earnings power of the franchise and the benefits of investing in areas where we see sustained client demand and long-term growth opportunities. Now I'll pass it to Tom to review our financial results.