Equitable Holdings, Inc.

Hello and welcome to the Equitable Holdings first quarter earnings call. 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, please press star one on your telephone keypad. I would now like to turn the conference over to Eric Basque, head of investor relations. You may begin.

Thank you. Good morning and welcome to Equitable Holdings' first quarter 2025 earnings call. Materials 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, Tom Simeone, 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 and related definitions 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. Given recent volatile markets, we recognize the first quarter may seem like a distant memory. Therefore, in addition to reviewing our results, we will also take a step back to focus on the powerful underlying growth drivers for our business and why investors should be confident in Equitable's ability to navigate periods of volatility and create long-term shareholder value. Since our IPO in 2018, we have executed through periods of economic and market disruption, maintaining positive net flows and consistent capital return to shareholders, even during the depths of the pandemic and the market sell-off in 2022. Equitable is operating from a position of strength, given our robust balance sheet, integrated business model, and differentiated distribution. Periods of uncertainty only heighten the need for retirement and investment advice, and I'm confident that if we stay connected to our clients and focus on controlling what we can control, we will deliver value for all our stakeholders. Turning to slide three, let me briefly cover our first quarter results. Non-GAAP operating earnings were $421 million, or $1.30 per share, down 7% year over year on a per share basis. Adjusting for notable items, non-GAAP operating EPS was $1.35, which is down 3% compared to the prior year. As Robin will discuss in more detail later, we experienced a very high level of large individual life mortality claims this quarter, and our protection solutions segment reported a loss of $17 million. While disappointed with the result, this quarter underscores why we made the decision to reinsure 75% of our individual life block to RGA. This transaction is on track to close mid-year and will significantly reduce our exposure to mortality volatility moving forward. Results for our retirement and wealth management businesses reflect some seasonality in revenues and expenses, but had solid underlying growth momentum. AB operating earnings rose 19% year over year, driven by higher average AUM and improved margins. Our retirement businesses produced $1.6 billion of net inflows in the first quarter, driven by momentum in our Ryla franchise and expansion of our institutional offering. We also had $2 billion of advisory net inflows in our wealth management business. Advisor productivity is up 8%, and the business has a 12% organic growth rate on a trailing 12-month basis. Finally, AV delivered positive net flows across each of its three distribution channels and had total active net inflows of $2.7 billion. We are particularly excited about the momentum in its private markets business, where AUM is up 20% year-over-year to $75 billion, and the pipeline remains strong. While the market volatility and tax payments have pressured April flows, AB is well positioned given its global investment platform, diversified asset mix, and unique distribution platforms. Moving to capital, we returned $335 million to shareholders in the first quarter, which represents an 80% payout ratio. In April, we also purchased $760 million of AB holding units through a tender offer. increasing our ownership in Alliance Bernstein to 69%. There are significant flywheel benefits between Equitable and AB, and we are excited to be able to capture more of these economics for our shareholders. We expect to close the RGA reinsurance transaction in the middle of the year, which will free over $2 billion of capital and enhance our focus on retirement, asset management, and wealth management. We also plan to execute $500 million of incremental share repurchases post-close. Robin will discuss potential uses of the remaining capital later, and we'll be in the fortunate position of having significant excess capital. Clearly, the market environment has changed meaningfully over the past month, but Equitable is well positioned to navigate a period of macro volatility. It starts with having a strong balance sheet. Our year-end combined NAIC RBC ratio was approximately 425%. And we have $1.1 billion of holding company liquidity after purchasing the AB units and tendering for some of our outstanding Series B preferred securities in April. This is before factoring in the $2 billion benefit from the reinsurance transaction. We fully hedge the equity market and interest rate exposure underlying the product guarantees we offer, protecting our capital position. Therefore, market declines only impact our income statement and not our balance sheet. We also benefit from getting over 50% of our cash flow from non-insurance businesses, which enables us to consistently return capital to shareholders, even during periods of stress like we're experiencing now. I'm confident that equitable has the right strategy and approach to emerge from this period even stronger than it is today. One of the reasons I'm confident is because of the durable growth drivers underlying the markets where we have chosen to play, which we highlight on slide four. If anything, periods of market volatility increase the need for and highlight the value of the advice we provide and the retirement and investment solutions we offer. There are 4 million Americans turning 65 each year and over $600 billion of assets coming out of 401k plans annually. These retirees need help figuring out how to ensure they will have enough assets and income to support them for the rest of their lives. The life insurance industry is uniquely suited to provide protected equity solutions like RILAs or guaranteed income. The last month provides a reminder that markets can go down, underscoring the value that our offering provides to policyholders. We have generated positive net flows in our retirement businesses every year that we've been a public company, highlighting the strong secular demand drivers and appeal of our all-weather product portfolio. Another key reason that we have been successful in growing our retirement franchise is the unique distribution we have through equitable advisors. 65% of Americans are looking for investment advice, and advisor-mediated assets have grown twice as fast as overall US financial assets. These trends are driving growth in our wealth management business, which has a 12% organic growth rate for advisory assets over the past year. We're also attracting new advisors and helping them grow their practices with productivity up 8% year over year. The final component of our flywheel is asset management, which is critical to enabling us to deliver value to our clients. Because AB is able to produce strong investment returns, we can offer attractive annuity and protection solutions, driving sales and positive net flows. These flows then enable AB to invest in new capabilities, such as expanding its private markets offering, creating value for itself and equitable. AB has been able to consistently generate positive active net flows and is well positioned to be a winner in two of the fastest growing segments in the market, private credit and insurance asset management. We firmly believe that combining insurance and asset management provides competitive advantages for both firms, and we were excited to recently increase our ownership in AB to 69%. Turning to slide five, I want to spend a minute reviewing Equitable's strong track record of managing through volatile markets since our IPO. It all starts with having a robust balance sheet. As a reminder, Equitable takes a market-neutral approach to hedging, which means that we fully hedge the equity market and interest rate exposure underlying our product guarantees. Therefore, our capital position is relatively insensitive to market movements, which you have seen in our stable RBC ratio over time. We also set prudent assumptions for policyholder behavior and insurance risk factors, which had been validated by the positive seeding commissions we have received when executing third-party reinsurance transactions. Equitable entered this period of volatility from a position of strength with a 425% combined NAIC RBC ratio and $1.1 billion of holding company liquidity after the AB and preferred tenders. We are on track to close the life reinsurance transaction in the middle of the year, which will free over $2 billion of capital and provide significant resources that can be used to take advantages of opportunities in the market, including additional share buybacks. We plan to bring a sizable dividend to the holding company post-close and still expect our RBC ratio to increase by 75 to 100 points. Equitable also benefits from generating predictable cash flow with about 50% of cash coming from our asset and wealth management businesses. This has enabled us to consistently return capital to shareholders, maintaining our buybacks even during the peak of the pandemic. Leaning into share repurchases during periods of market declines helps offset the impact of lower fee income on EPS and creates value for our shareholders. Putting it all together, I feel confident that Equitable is well positioned to manage this period of volatility and uncertainty and will also be ready to play offense if opportunities emerge. I'll now turn it over to Robin to discuss our financial results in more detail.