Equitable Holdings, Inc.

Ladies and gentlemen, thank you for standing by and welcome to Equitable Holdings first quarter 2020 earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your touchtone phone. If you require any further assistance, please press star zero. Thank you. I would now like to hand the conference over to your speaker for today. Jessica Baer, Head of Investor Relations, please go ahead.

Thank you. Good morning and welcome to Equitable Holdings' first quarter 2020 earnings call. Materials for today's call can be found at our website at ir.equitableholdings.com. Before we begin, I would like to note that some of the information we present today is is forward-looking and subject to certain SEC rules and regulations regarding disclosure. Our results may materially differ from those expressed in or indicated by such forward-looking statements. So I'd like to point out the Safe Harbor language on slide two of our presentation. You can also find our Safe Harbor language in our TEN-Q. Joining me on today's call is Mark Pearson, President and Chief Executive Officer of Equivalent Holdings, Anders Malmstrom, our Chief Financial Officer, and Nick Lane, President of Equitable Life. Also on the line is John Wiesensee, Alliance Bernstein's Chief Financial Officer. 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 in our earnings release, slide presentation, and financial supplement. I would now like to turn the call over to Mark, Anders, and Nick for their prepared remarks.

Good morning, everyone, and thank you for joining the call. It's obviously a difficult time for most people, so first and most importantly, I hope that you and your families are all safe and well. We're going to try and do three things today. I'm going to give an overview. Then Anders will take you through our balance sheet and results. And lastly, Nick will give an update on what we're seeing in April and talk about the robustness of our business model. So now, turning to slide three. During this terrible pandemic and its tremendous human and economic challenges, equitable has a special role to play. It is times like this that we Equitable show our role in society. Our purpose is to protect families and secure the financial well-being of our clients so they can live long and fulfilling lives. And I'm so proud of the ingenuity and commitment of our people in delivering exactly this. 98% of the Equitable workforce is working remotely today. And of course, we are supporting our people with a comprehensive Stay Well program. They've done a remarkable job at accelerating our digital outreach, launching new planning tools, and keeping the highest levels of service and advice to our clients. We recognize also that we are part of a wider community and that many in society need an extra hand now. Through the Equitable Foundation, we have been providing financial support, particularly geared towards feeding and educating children. Today we'll talk about earnings for the first quarter. But it's most important now that we cover the strength of our balance sheet and how our business model will fare in these volatile times. Equitable has a resilient balance sheet. Our RBC ratio is approximately 450 to 475%. We have over $1 billion of liquidity at Equitable Holdings and nearly $7 billion at Equitable Life. Our strong position today is the result of a decade-long risk management program. This includes strategies to remove basis risk exposure, pioneering volatility management tools, and introducing new categories for products like Buffett annuities. And at all times, we've maintained a high-quality fixed income portfolio with strong emphasis on diversification. Most importantly, we hedge to our full economic liabilities. This means that we immunize our balance sheet to interest rates. We managed to a near zero duration gap, despite a regulatory framework that is slow to react to sharp falls in interest rates, and today still permits reverting to a 3.5% or higher interest rate level. Our resilience comes not from what we've done in the past quarter, but what we have done over the past decade. Looking at the first quarter results, a strong quarter. Non-GAAP operating earnings per common share amounted to $1.08, up 10% year over year, reflecting higher AUM and delivery of our productivity and GA rebalancing strategies. In Q1 and through the end of April, we are seeing limited adverse experience on COVID-19 mortality and minimal increase in lapses or withdrawals. Recurring premium flows are solid. For April, the first month of significant disruption and social distancing, new business activity across the board was about 70% of normal levels. As of the quarter end, our AUM across both Equitable and Alliance Bernstein, excluding any double count, was $646 billion, down 12% from December 31, 2019. Despite this, we remain on track to meet our stated capitalization payout ratio and $75 million net savings targets. Now, looking forward, the economic outlook is, of course, uncertain, even unknown. We will not be providing today an economic forecast for what is to happen. We don't know. We will, however, reaffirm market sensitivity of our earnings in line with prior guidance of $150 million per annum for a 10% equity market decline. We see no advantage in trying to anchor to one scenario. We know, however, it is important today not only to give comfort about our balance sheet, but also to show you why we believe Equitable's business model is able to adapt to create value across a broad range of future scenarios. We can adapt and create value for three reasons. Firstly, remember that our large in-force portfolio gives us stability. For the year 2020, 95% of our operating revenues will come from our policies in force on January the 1st. Second, there are three features unique about our business model. One, we have a history of developing economically sound products, which are even more in demand today. Consumers' reaction to this virus is translating into high demand for financial advice and family protection. Obviously, people have heightened awareness of the need to look after their families for known events like retirement and unknown events like pandemics and illnesses. Two, our affiliated distribution and broad range of third-party partnerships gives us stability and privileged access to end clients. We also benefit from the ability to change Our product makes fast. And three, we are a trusted leader in resilient sectors. We are the number one provider of retirement solutions to the K-12 public sector educators market, and our variable annuity products provide added attraction for retirement planners in this volatile environment. We alone can provide a secure income for retirement. Our subsidiary, Alliance Bernstein, continues to perform well in its sector, and offers us portfolio diversification and non-regulated cash flows. Finally, Equitable has benefited from our recent IPO. The whole process of setting up the company, from our risk policy, establishing the initial balance sheet to CTE98 asset levels, and putting in place a hedging program no longer reliant on a foreign parent, has really caused us to think deeply about how we deliver value to both clients and shareholders. So, despite the significant dislocation and the uncertain short-term future, I'm confident that our robust business model and the fantastic people who make up this organization means that Equitable will continue as a strong and meaningful player. So, in summary, a truly unprecedented quarter a pandemic the like of which we have never seen and we certainly never planned for. But what we at Equitable had planned for is total immunization of our balance sheet on falls in interest rates and equity markets, and this has proven extremely valuable. Our hedging program is working as designed, and today we find ourselves with over $7 billion of liquidity in the life company. No reliance on a future reversion to mean interest rate. and a business model which is proving its robustness at a time of extreme disruption. Let me hand over now to Anders to go into more detail. Anders?