Equitable Holdings, Inc.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and one. I would now like to turn the call over to Eric Bass, head of investor relations. You may begin.

Thank you. Good morning and welcome to Equitable Holdings' second quarter 2024 earnings call. Material for today's call can be found on our website at ir.equitableholdings.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 two 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, Jackie Marks, Alliance Bernstein's Chief Financial Officer, and Onur Ercan, Head of Alliance Bernstein's Global Client Group and Private Wealth Business. 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 may be found on the investor relations portion of our website and in our earnings release, slide presentation, and financial supplement. I will now turn the call over to Mark.

Good morning, and thank you for joining today's call. Equitable Holdings' second quarter results showcase the company's building earnings momentum, driven by strong organic growth across our retirement, asset management, and wealth management businesses. It continues to be a great time to operate in the U.S. retirement market, and Equitable and Alliance Bernstein are well positioned to capitalize on favorable demographic trends and current macro tailwinds. We provided ambitious growth targets at our investor day last May, and the entire management team is focused on executing our strategy. As I'll discuss in a few minutes, we are tracking well against our plan, and I feel confident in our ability to deliver on our commitments to shareholders. First, turning to slide three, I'll provide a few highlights from the second quarter. Non-GAAP operating earnings were $494 million or $1.43 per share, which is up 23% year over year on a per share basis. Adjusting for non-recurring items in the period, non-GAAP operating EPS was $1.52, which is up 20% compared to the prior year and above a 12% to 15% annualized growth guidance. Assets under management and administration increased 11% year over year to $986 billion, supported by another quarter of favorable markets and positive net inflows across our retirement, asset management, and wealth management businesses. Turning to capital, we returned $325 million to shareholders during the quarter, which equates to a 65% payout ratio within our target range of 60 to 70%. We continue to maintain capital flexibility, ending the quarter with $1.6 billion of cash at the holding company and a combined NAIC RBC ratio of approximately 425 to 450% above our 375 to 400% target. In July, we paid an ordinary dividend of $440 million from our Arizona insurance entity. And as Robin will discuss shortly, we have approval to take an additional dividend later in the year. As a result, we remain on track to generate 1.4 to 1.5 billion of cash in 2024, with approximately 50% of this coming from non-insurance businesses. Turning to our business results, we had another very strong quarter of organic growth. Our retirement businesses produced $2.3 billion of net inflows, which translates to a 7% annualized organic growth rate. The primary driver continues to be strong demand for our industry-leading Ryla product, with individual retirement sales up 23% year over year. In wealth management, we reported another quarter of strong organic growth with $1.5 billion of advisory net inflows. Moving to asset management, AB reported $0.9 billion of net inflows, marking the second consecutive quarter of positive organic growth. Second quarter active net inflows were $1.3 billion, as AB continues to see good momentum in the retail channel. AB's adjusted operating margin also improves 380 basis points year over year, reflecting the benefit from the Bernstein Research deconsolidation and positive operating leverage to higher equity markets. Finally, I want to highlight an important milestone in building out our in-plan annuity business. which we see as a key future growth opportunity for Equitable. This quarter, we received inflows from the first four BlackRock LifePath paycheck clients, which totaled over $500 million. As we've mentioned previously, these flows will be lumpy. While we don't have complete visibility into when plans will fund, we currently expect minimal new flows in the third quarter, with more plans funding in the fourth quarter and the first half of 2025. We're also having discussions with other potential asset manager partners, and we're pleased to see the recognition across the industry of the need for guaranteed income solutions within defined contribution plans. Now I want to take a few minutes to provide an update on how we're tracking against our investor day targets. On slide four, we provide a scorecard against our three primary financial targets, which are to grow annual cash generation to $2 billion by 2027, deliver a 60 to 70% payout ratio, and grow non-GAAP operating earnings per share 12 to 15% annually. We expect to generate $1.4 to $1.5 billion of cash in 2024. which is up 8 to 15% from 2023 and consistent with our plan. Looking forward, we expect to steadily increase annual cash generation, driven by profitable new business growth, actions we're taking to enhance investment portfolio yields and reduce expenses, and capital release as our legacy business runs off. This strong cash flow enables us to consistently return capital to shareholders regardless of the market environment. Over the past six quarters, we've had a payout ratio of 67% at the upper end of our 60 to 70% target range. During this time period, we have reduced shares outstanding by 12%. Turning to earnings growth, we had a slow start in 2023 due to headwinds from elevated mortality and the lagged impact of the equity market decline in 2022. However, we believe we've reached the inflection point and non-GAAP EPS excluding notable items is up 19% year to date. The cumulative annualized EPS growth rate over the past six quarters is now up to 9% and we remain confident in achieving 12 to 15% annualized growth through 2027. given healthy organic growth trends, good visibility into achieving our investment income and expense saving targets, and the ongoing benefit from share repurchases. Turning to slide five, I'll go a little deeper into some of our business segment KPIs and strategy for achieving our growth targets. The first pillar of our strategy is to defend and grow our core retirement and asset management businesses. In retirement, which includes our leading individual and group retirement segments, year-to-date organic growth is 6%, which in combination with market tailwinds is driving strong AUM growth. Since the start of 2023, annualized AUM growth is 21%, well ahead of our 5% to 7% target. In asset management, AB continues to outpace industry peers with year-to-date net inflows of $1.4 billion. And much of this growth is coming in higher margin retail and private market segments. AB is also making good progress against its target to improve margins by 350 to 500 basis points by 2027. The Bernstein Research Joint Venture closed in April. which will boost annual margins by 200 to 250 basis points. Margins will improve by another 100 to 150 basis points starting in the fourth quarter of 2024 from the full realization of the benefits from the Nashville relocation. Our second area of strategic focus is scaling our wealth management and private markets businesses. Wealth management closed the quarter with $94 billion in assets under administration, up 17% over prior year. Year-to-date organic growth of 5% in our advisory channel is in line with our long-term experience. We had a particularly strong second quarter with $1.5 billion in advisor net inflows, offsetting an expected outflow in quarter one. we remain confident in our 2027 target to increase earnings to $200 million annually with a trailing 12 month operating earnings for the segment totaling $172 million. Looking forward, we expect growth in AUA and a mixed shift towards higher margin advisory assets to offset any potential headwinds from lower short-term interest rates. Turning to AUB's private markets platform, AUM has grown 5% year over year and is now up to $64 billion. During the second quarter, Equitable finished deploying the first $10 billion of its $20 billion capital commitment, with $1 billion of this going to Carvel. These investments have helped enhance Equitable's general account yield, and AB is able to leverage the seed capital to grow third-party assets. By 2027, AB expects to have 90 to $100 billion of private markets AUM, with this business accounting for 20% of its revenues. Finally, we are investing capital to drive growth beyond our 2027 plan. As I mentioned earlier, we are very excited about the opportunity to embed annuity auctions within 401 plans. which provides equitable with access to a sizable new market and new potential customers. We currently have offerings with AB and BlackRock and are in discussions with additional asset managers. We received over $500 million of inflows from BlackRock in second quarter and are encouraged by the initial plan sponsor interest in its life path paycheck solution. AB also reached a milestone in the first half of the year by successfully launching its first fund in China. While this market may take time to materialize, AB has a differentiated brand and distribution in Asia and should be poised to benefit when investor sentiment on China improves. Summing up, I'm pleased with the progress we've made against our strategic objectives to date. and we remain focused on achieving our Invest Today commitments. I'll now turn the call over to Robert to go through our second quarter results in more detail. Thank you, Mark.