Equitable NYSE: EQH said second-quarter operating earnings rose as the company advanced its pending merger with Corebridge and reported positive net flows across all of its business segments. Shareholders of both companies approved the transaction on July 30, and Equitable said it remains on track to close the merger by the end of 2026.
President and Chief Executive Officer Mark Pearson said the company has established the first three levels of management for the combined organization and begun integration planning, including work on expense, revenue and capital synergies. More than 97% of voting shareholders supported the transaction, and federal antitrust review has been completed, according to the company.
“We remain focused on achieving our 2026 financial targets and are not treating this as a gap year,” Pearson said.
Second-Quarter Results and Capital Returns
Equitable reported non-GAAP operating earnings of $488 million, or $1.70 per share, for the second quarter. Excluding notable items, operating earnings were $1.75 per share, up 24% from a year earlier. The company reported a net loss of $453 million, which Chief Financial Officer Robin Raju attributed to non-economic hedge portfolio impacts resulting from strong equity markets.
Notable items included $49 million of below-plan alternative investment returns, partly offset by a $35 million benefit from favorable tax items. Equitable’s alternative-investment portfolio, representing about 2% of its total general account, generated an annualized return slightly above 1% during the quarter. Raju said private-equity results were affected by the lagged effect of first-quarter market declines.
The company expects alternative-investment returns to improve in the second half, though it plans to provide more detailed guidance later in the quarter. Equitable’s consolidated tax rate was 15% in the second quarter, aided by tax planning, but management expects a more typical rate of about 20% in the third quarter.
Assets under management and administration reached a record $1.2 trillion, up 10% year over year, supported by favorable equity markets and net inflows. Equitable returned $449 million of capital to shareholders during the quarter, including $366 million in share repurchases. Its quarterly payout ratio was 92%, while its first-half payout ratio was 70%. The company continues to target a full-year payout ratio of 60% to 70%.
Equitable ended the quarter with $800 million of cash and liquid assets at the holding company and said its estimated combined NAIC risk-based capital ratio remained well above its 400% target operating level. Management reaffirmed its goal of generating roughly $1.8 billion of holding-company cash flow in 2026.
Business Segment Momentum
In Retirement, Equitable recorded $1.7 billion of net inflows, led by 10% growth in registered index-linked annuity, or RILA, sales and higher institutional volumes. Its spread-lending operation generated $2.6 billion of net issuance during the period.
Retirement earnings, excluding notable items, were $408 million. Net interest margin increased 11% from a year earlier and 1% sequentially, while core spreads excluding alternatives rose by one basis point from the first quarter to 174 basis points. Raju said management expects core spreads to remain near current levels, although quarterly volatility remains possible.
Wealth Management generated $2 billion in advisory inflows and posted an 11% trailing-12-month organic growth rate. Total assets under administration increased 27% to $141 billion, while advisor productivity rose 13%. Segment earnings increased 26% year over year. Nick Lane, president of Equitable Financial, said the company expects margins to increase as the business adds scale and assets.
AllianceBernstein returned to positive organic growth with $800 million in net inflows. Its assets ended the quarter at a record $906 billion, and earnings rose 21% year over year to $158 million. The asset manager’s retail flows benefited from a $9 billion sub-advisory mandate from Equitable separate accounts, while institutional flows were also positive.
In July, AllianceBernstein onboarded $12 billion of Equitable commercial mortgage loans that had previously been managed by a third party. AllianceBernstein Chief Financial Officer Tom Simeone said the transferred book carries fee rates in the high single digits and will begin generating fees for AllianceBernstein in the fourth quarter. The company also cited a $14 billion unfunded commercial-mortgage-loan pipeline.
Private-markets assets under management at AllianceBernstein rose 18% year over year to $91 billion, reaching the company’s $90 billion-to-$100 billion target range more than a year ahead of schedule. Active ETF assets surpassed $20 billion across 31 strategies and generate about $100 million in annual fee income, according to Equitable.
Corebridge Strategy and Revenue Synergies
Equitable has said the merger with Corebridge is expected to generate at least 10% accretion to earnings and cash flow per share by the end of 2028 and produce a return on equity above 15% on a capital base exceeding $30 billion. Management said it remains confident in the financial targets announced with the deal.
Pearson said the company is now working through technology-stack decisions and integration planning. He said outreach to external distribution partners has been positive, with partners seeking to identify ways to expand their relationships with the combined company.
Raju said the companies must continue operating independently until the deal closes, but planning is underway for potential revenue initiatives. These include distributing Corebridge fixed annuities, term life insurance and indexed universal life products through Equitable Advisors. Equitable Advisors currently sells approximately $2 billion of fixed annuities, he said.
Management also expects the merger to expand its institutional-market capabilities through offerings such as pension risk transfer, guaranteed investment contracts, stable value and structured settlements. The larger combined balance sheet is expected to provide more capacity for institutional and spread-lending growth.
Employee Benefits Sale
Equitable also discussed its planned sale of its employee benefits business to The Hartford. The business, established in 2015, has grown to more than 800,000 customers and about $500 million in premiums but has not yet become profitable because of insufficient scale, Raju said.
The transaction is expected to have a neutral to slightly positive near-term effect on earnings. Equitable plans to use proceeds to invest in its larger-scale businesses as it prepares for the Corebridge merger.
About Equitable (NYSE:EQH)
Equitable Holdings, Inc NYSE: EQH is a leading provider of life insurance, annuities and retirement plan services in the United States. Through its insurance subsidiary, AXA Equitable Life Insurance Company, the firm offers a broad range of permanent and term life insurance products designed to help individuals and families manage risk and build wealth. In addition, Equitable provides fixed, variable and indexed annuity solutions to support income planning in retirement, as well as a suite of group retirement and pension plan services for employers and plan sponsors.
The company also maintains an asset management arm that delivers investment strategies across equities, fixed income and alternative asset classes for both retail and institutional clients.
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