- Solid performance through continued market
headwinds
- Net income of $273m; Net income per share of $0.69
- Non-GAAP operating earnings1 of $498m, or $1.28 per share;
adjusting for notable items2, Non-GAAP operating earnings of $511m,
or $1.32 per share
- Economic balance sheet, supported by fair value hedging and
conservatively positioned investment portfolio, prove resilient in
volatile markets
- Results benefited from a favorable assumption update as
economic reserves incorporate emerging experience
- Prudent capital management with $2.0bn of cash at Holdings;
continuing to deliver on 50-60% payout ratio target returning
$0.3bn to shareholders in the quarter, and $1.0bn year to
date3
Equitable Holdings, Inc. (“Equitable Holdings”, “Holdings”, or
the “Company”) (NYSE: EQH) today announced financial results for
the third quarter ended September 30, 2022.
“In the tough economic environment, we delivered solid results
reporting third quarter Non-GAAP operating earnings of $1.28 per
share which, after adjusting for a favorable assumption update in
the quarter, were in line with our expectations reflecting a 5%
decline in AUM this quarter. In asset management, we were not
immune to industry-wide net outflows this quarter but flows remain
positive for the year as we continue to benefit from a global
distribution platform and continued growth in private markets with
our strategic shift supporting a fee-rate improvement of 7% over
the prior year. In retirement, we saw continued demand for our core
tax-advantaged offerings with $1.2 billion of inflows in the
quarter as clients turn to their advisors seeking protection and
secure income amidst market volatility and an uncertain economic
outlook,” said Mark Pearson, President and Chief Executive
Officer.
Mr. Pearson continued, "Our fair value model and the strength of
our capital management program proved resilient in the quarter
protecting our balance sheet while we continue to deliver on our
50-60% payout ratio target. As markets continue to be challenged,
we remain prudent, managing what we can control, with investment
and productivity initiatives in place to drive growth and with our
integrated business model pairing retirement, asset management and
advice which are well-positioned to deliver long-term shareholder
value."
Consolidated Results
Third Quarter
(in millions, except per share amounts or
unless otherwise noted)
2022
2021
Total Assets Under Management (“AUM”, in
billions)
$
716
$
870
Net income (loss) attributable to
Holdings
273
672
Net income (loss) attributable to Holdings
per common share
0.69
1.59
Non-GAAP operating earnings (loss)
498
818
Non-GAAP operating earnings (loss) per
common share (“EPS”)
1.28
1.94
As of September 30, 2022, total AUM was $716 billion, a
year-over-year decrease of 17.7% driven by lower markets partially
offset by net inflows over the prior twelve months.
The Net income attributable to Holdings for the third quarter of
2022 was $273 million compared to $672 million in the third quarter
of 2021 driven primarily by non-economic market impacts from
hedging under U.S. GAAP accounting.
Non-GAAP operating earnings in the third quarter of 2022 was
$498 million compared to $818 million in the third quarter of 2021.
Excluding notable items4 of $13 million, third quarter 2022
Non-GAAP operating earnings were $511 million or $1.32 per
share.
As of September 30, 2022, book value per common share, including
accumulated other comprehensive income (“AOCI”), was $4.84. Book
value per common share, excluding AOCI, was $26.13.
Business
Highlights
- Business segment highlights:
- Individual Retirement (“IR”) reported record net inflows of
$765 million, benefiting from the continued demand for our
industry-leading Structured Capital Strategies (“SCS”) buffered
annuity, with first year premiums up 7% over prior year, and lower
outflows in the quarter.
- Group Retirement (“GR”) reported total premiums of $861
million, up 1% on a year-over-year basis, led by the tax-exempt
market with total premiums up 13% over prior year.
- Investment Management and Research (AllianceBernstein or “AB”)5
reported net outflows of $10.5 billion, or $6.6 billion excluding
expected outflows from AXA, with the CarVal acquisition supporting
a 7% fee-rate improvement over prior year and institutional
pipeline growth to $24.7 billion, up 142% from prior quarter.
- Protection Solutions (“PS”) continues to benefit from our
strategic shift to less interest-sensitive VUL with $315 million in
VUL premiums, up 9% over prior year.
- Capital management program:
- The Company returned $275 million in the quarter, including $75
million of quarterly cash dividends and $200 million of share
repurchases, which is in line with our 50-60% payout target.
- The Company reported cash and liquid assets of $2.0 billion at
Holdings as of quarter-end which includes a $930 million dividend
from Equitable Financial in July.
- Fair value hedging program targets the Company’s economic
liability while protecting the statutory balance sheet to CTE98 and
maintained c. 95% hedging effectiveness through volatile
markets.
- Delivering long-term shareholder value:
- Organic cash flow growth paired with consistent capital return
has resulted in free cash flow6 per share growth of c. 120% since
IPO, providing significant value proposition to shareholders.
- Continuing to deliver 8-10% long-term annualized EPS growth
supported by the Company’s general account rebalancing efforts,
realizing $167 million of $180 million incremental investment
income target to date, and expense savings of $43 million of $80
million net expense savings target.
- Completed annual actuarial assumption review:
- The Company completed its annual actuarial assumption update
benefiting from reserving, which is based on emerging policyholder
and market experience, resulting in a $144 million favorable impact
to net income and a $23 million favorable impact to non-GAAP
operating earnings on a post-tax basis.
Business Segment
Results
Individual Retirement
(in millions, unless otherwise noted)
Q3 2022
Q3 2021
Account value (in billions)
$
90.5
$
107.7
Segment net
flows
Current Product Offering
1,263
702
Legacy (1)
(498
)
(689
)
Total segment net flows
765
13
Operating earnings (loss)
270
316
(1) Net flows of $(258) million and $(322) million not included
in Q3 2022 and Q3 2021, respectively, as it relates to AV ceded to
Venerable.
- Account value decreased by 16% primarily due to lower markets,
partially offset by continued demand for protected equity products
through volatile markets with $2 billion of SCS first year
premiums, up 7% over prior year, and lower redemptions leading to
record net inflows since our IPO.
- Net inflows of $765 million increased compared to the third
quarter of 2021 led by net inflows of $1.3 billion from our current
product offering of less capital-intensive products, which was
partially offset outflows from the legacy VA block of $(498)
million.
- Operating earnings decreased from $316 million in the prior
year quarter to $270 million, primarily driven by lower fee-type
revenue on lower average account values and lower net investment
income from lower alternatives investments and prepayments
partially offset by higher income from floating rate securities,
higher SCS asset balances and general account optimization.
- In the current period, results were $28 million lower due to
notable items which include an $11 million adjustment from
assumption updates and $17 million of one-time items, primarily a
higher tax rate. Operating earnings less notable items7 decreased
from $338 million in the prior year quarter to $298 million.
Group Retirement
(in millions, unless otherwise noted)
Q3 2022
Q3 2021
Account value (in billions)
$
39.7
$
45.9
Segment net flows
(57
)
(135
)
Operating earnings (loss)
134
192
- Account value decreased by 14% driven primarily by market
performance over the prior twelve months.
- Net flows of $(57) million improved versus the prior year
quarter primarily due to net inflows in our tax-exempt market which
was supported by premium growth, including first year premiums up
29% over prior year, and strong persistency.
- Operating earnings decreased from $192 million in the prior
year quarter to $134 million, primarily due to lower net investment
income, with lower alternatives income and prepayments, partially
offset by higher income from floating rate securities and general
account optimization, and lower fee-type revenue on lower average
account values.
- In the current period, results were $17 million higher due to
notable items which include a $28 million adjustment from a
favorable assumption update partially offset by $11 million of
one-time items, primarily non-recurring expenses. Operating
earnings less notable items8 decreased from $149 million in the
prior year quarter to $117 million.
AllianceBernstein
(in millions, unless otherwise noted)
Q3 2022
Q3 2021
Total AUM (in billions)
$
612.7
$
742.2
Segment net flows (in billions)
(10.5
)
7.2
Operating earnings (loss)
94
134
- AUM decreased by 17% due to market performance partially offset
by net inflows over the prior twelve months.
- Third quarter net outflows of $10.5 billion, or $6.6 billion
excluding expected AXA redemptions, were driven by net outflows in
Retail and Institutional channels partially offset by net inflows
in the Private Wealth channel.
- Operating earnings decreased from $134 million in the prior
year quarter to $94 million, primarily due to lower base fees on
lower average AUM.
Protection Solutions
(in millions)
Q3 2022
Q3 2021
Gross written premiums
$
769
$
754
Annualized premiums
74
67
Operating earnings (loss)
72
160
- Gross written premiums increased 2% year-over-year with
continued success in our strategic shift to less interest-sensitive
VUL accumulation products with premiums up 9% year-over-year.
- Operating earnings decreased from $160 million in the prior
year quarter to $72 million, primarily due to lower net investment
income from lower alternatives income and prepayments partially
offset by higher income from floating rate securities and general
account optimization.
- In the current period, results were $8 million higher due to
notable items which include $6 million of assumption updates and $2
million of one-time items, primarily favorable mortality partially
offset by non-recurring expenses and a higher tax rate. Operating
earnings excluding notable items6 decreased from $101 million in
the prior year quarter to $64 million.
Corporate and Other (“C&O”) Operating loss of $72
million in the third quarter increased compared to operating gain
of $16 million in the prior year quarter, primarily driven by lower
net investment income from lower alternatives income and
prepayments partially offset by general account optimization.
Operating loss excluding notable items9 decreased from $63 million
in the prior year quarter to $61 million.
Exhibit 1: Notable
Items
Notable items represent the impact on results from our annual
actuarial assumption review, approximate impacts attributable to
significant variances from the Company’s expectations, and other
items that the Company believes may not be indicative of future
performance. The Company chooses to highlight the impact of these
items and Non-GAAP measures, less notable items to provide a better
understanding of our results of operations in a given period.
Certain figures may not sum due to rounding.
Impact of notable items by segment and Corporate &
Other:
Three Months Ended
September 30,
(in millions)
2022
2021
Non-GAAP Operating Earnings
498
$
818
Post-tax Adjustments related to notable
items:
Individual Retirement
17
(15
)
Group Retirement
11
(16
)
Investment Management and Research
—
—
Protection Solutions
(2
)
(43
)
Corporate & Other
11
(79
)
Notable items subtotal
37
(153
)
Less: impact of actuarial assumption
update
(23
)
(6
)
Non-GAAP Operating Earnings, less Notable
Items
$
511
$
660
Impact of notable items by item category:
Three Months Ended
September 30,
(in millions)
2022
2021
Non-GAAP Operating Earnings
498
$
818
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
Mortality
(16
)
(24
)
Expenses
30
—
Net Investment Income
11
(162
)
Subtotal
25
(185
)
Post-tax impact of Notable Items
37
(153
)
Less: impact of actuarial assumption
update
(23
)
(6
)
Non-GAAP Operating Earnings, less Notable
Items
$
511
$
660
Impact of Notable Items by segment and corporate &
other:
Three months ended 9/30/2022
($m)
IR
GR
AB
PS
C&O
Consolidated
Non-GAAP Operating Earnings
270
134
94
72
(72
)
498
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
—
—
—
Mortality
—
—
—
(16
)
—
(16
)
Expenses
2
6
—
5
17
30
Net Investment Income
3
3
—
4
2
11
Pre-tax Subtotal
4
9
—
(7
)
19
25
Tax adjustment
13
2
—
5
(7
)
12
Post-tax impact of Notable
Items
17
11
—
(2
)
11
37
Impact of Actuarial Assumption Update
11
(28
)
—
(6
)
—
(23
)
Non-GAAP Operating Earnings, less
Notable Items
298
117
94
64
(61
)
511
Three months ended 9/30/2021
($m)
IR
GR
AB
PS
C&O
Consolidated
Non-GAAP Operating Earnings
316
192
134
160
16
818
Pre-tax adjustments related to Notable
Items:
Actuarial Updates/Reserve
—
—
—
(24
)
—
(24
)
Mortality
—
—
—
—
—
—
Expenses
—
—
—
—
—
—
Net Investment Income
(21
)
(20
)
—
(29
)
(91
)
(162
)
Pre-tax Subtotal
(21
)
(20
)
—
(53
)
(91
)
(185
)
Tax adjustment
6
5
—
10
12
32
Post-tax impact of Notable
Items
(15
)
(16
)
—
(43
)
(79
)
(153
)
Impact of Actuarial Assumption Update
37
(27
)
—
(16
)
—
(6
)
Non-GAAP Operating Earnings, less
Notable Items
338
149
134
101
(63
)
660
Earnings Conference Call Equitable Holdings will host a
conference call at 8 a.m. ET November 3, 2022 to discuss its third
quarter 2022 results. The conference call webcast, along with
additional earnings materials will be accessible on the company’s
investor relations website at ir.equitableholdings.com. Please log
on to the webcast at least 15 minutes prior to the call to download
and install any necessary software.
To register for the conference call, please use the following
link: EQH Third Quarter 2022 Earnings Call
After registering, you will receive an email confirmation
including dial in details and a unique conference call code for
entry. Registration is open through the live call. To ensure you
are connected for the full call we suggest registering a day in
advance or at minimum 10 minutes before the start of the call.
A webcast replay will be made available on the Equitable
Holdings Investor Relations website at
ir.equitableholdings.com.
About Equitable Holdings Equitable Holdings, Inc. (NYSE:
EQH) is a financial services holding company comprised of two
complementary and well-established principal franchises, Equitable
and AllianceBernstein. Founded in 1859, Equitable provides advice,
protection and retirement strategies to individuals, families and
small businesses. AllianceBernstein is a global investment
management firm that offers high-quality research and diversified
investment services to institutional investors, individuals and
private wealth clients in major world markets. Equitable Holdings
has approximately 12,000 employees and financial professionals,
$716 billion in assets under management (as of 9/30/2022) and more
than 5 million client relationships globally.
Note Regarding Forward-Looking Statements This press
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
“expects,” “believes,” “anticipates,” “intends,” “seeks,” “aims,”
“plans,” “assumes,” “estimates,” “projects,” “should,” “would,”
“could,” “may,” “will,” “shall” or variations of such words are
generally part of forward-looking statements. Forward-looking
statements are made based on management’s current expectations and
beliefs concerning future developments and their potential effects
upon Equitable Holdings, Inc. (“Holdings”) and its consolidated
subsidiaries. “We,” “us” and “our” refer to Holdings and its
consolidated subsidiaries, unless the context refers only to
Holdings as a corporate entity. There can be no assurance that
future developments affecting Holdings will be those anticipated by
management. Forward-looking statements include, without limitation,
all matters that are not historical facts.
These forward-looking statements are not a guarantee of future
performance and involve risks and uncertainties, and there are
certain important factors that could cause actual results to
differ, possibly materially, from expectations or estimates
reflected in such forward-looking statements, including, among
others: (i) conditions in the financial markets and economy,
including the impact of COVID-19 and related economic conditions,
equity market declines and volatility, interest rate fluctuations,
impacts on our goodwill and changes in liquidity and access to and
cost of capital; (ii) operational factors, including reliance on
the payment of dividends to Holdings by its subsidiaries,
protection of confidential customer information or proprietary
business information, operational failures by us or our service
providers, catastrophic events, such as the outbreak of pandemic
diseases including COVID-19, potential strategic transactions, and
changes in accounting standards; (iii) credit, counterparties and
investments, including counterparty default on derivative
contracts, failure of financial institutions, defaults by third
parties and affiliates and economic downturns, defaults and other
events adversely affecting our investments; (iv) our reinsurance
and hedging programs; (v) our products, structure and product
distribution, including variable annuity guaranteed benefits
features within certain of our products, variations in statutory
capital requirements, financial strength and claims-paying ratings,
state insurance laws limiting the ability of our insurance
subsidiaries to pay dividends and key product distribution
relationships; (vi) estimates, assumptions and valuations,
including risk management policies and procedures, potential
inadequacy of reserves and experience differing from pricing
expectations, amortization of deferred acquisition costs and
financial models; (vii) our Investment Management and Research
segment, including fluctuations in assets under management and the
industry-wide shift from actively-managed investment services to
passive services; (viii) legal and regulatory risks, including
federal and state legislation affecting financial institutions,
insurance regulation and tax reform; (ix) risks related to our
common stock and (x) general risks, including strong industry
competition, information systems failing or being compromised and
protecting our intellectual property.
Forward-looking statements should be read in conjunction with
the other cautionary statements, risks, uncertainties and other
factors identified in Holdings’ filings with the Securities and
Exchange Commission. Further, any forward-looking statement speaks
only as of the date on which it is made, and we undertake no
obligation to update or revise any forward-looking statement to
reflect events or circumstances after the date on which the
statement is made or to reflect the occurrence of unanticipated
events, except as otherwise may be required by law.
Use of Non-GAAP Financial Measures In addition to our
results presented in accordance with U.S. GAAP, we report Non-GAAP
Operating Earnings, Non-GAAP Operating EPS, and Book Value per
common share, excluding AOCI, each of which is a measure that is
not determined in accordance with U.S. GAAP. Management principally
uses these non-GAAP financial measures in evaluating performance
because they present a clearer picture of our operating performance
and they allow management to allocate resources. Similarly,
management believes that the use of these Non-GAAP financial
measures, together with relevant U.S. GAAP measures, provide
investors with a better understanding of our results of operations
and the underlying profitability drivers and trends of our
business. These non-GAAP financial measures are intended to remove
from our results of operations the impact of market changes (where
there is mismatch in the valuation of assets and liabilities) as
well as certain other expenses which are not part of our underlying
profitability drivers or likely to re-occur in the foreseeable
future, as such items fluctuate from period-to-period in a manner
inconsistent with these drivers. These measures should be
considered supplementary to our results that are presented in
accordance with U.S. GAAP and should not be viewed as a substitute
for the U.S. GAAP measures. Other companies may use similarly
titled non-GAAP financial measures that are calculated differently
from the way we calculate such measures. Consequently, our non-GAAP
financial measures may not be comparable to similar measures used
by other companies.
We also discuss certain operating measures, including AUM, AV,
and certain other operating measures, which management believes
provide useful information about our businesses and the operational
factors underlying our financial performance.
Non-GAAP Operating Earnings Non-GAAP Operating Earnings is an
after-tax non-GAAP financial measure used to evaluate our financial
performance on a consolidated basis that is determined by making
certain adjustments to our consolidated after-tax net income
attributable to Holdings. The most significant of such adjustments
relates to our derivative positions, which protect economic value
and statutory capital, and are more sensitive to changes in market
conditions than the variable annuity product liabilities as valued
under U.S. GAAP. This is a large source of volatility in net
income.
Non-GAAP Operating Earnings equals our consolidated after-tax
net income attributable to Holdings adjusted to eliminate the
impact of the following items:
- Items related to variable annuity product features, which
include: (i) certain changes in the fair value of the derivatives
and other securities we use to hedge these features; (ii) the
effect of benefit ratio unlock adjustments, including extraordinary
economic conditions or events such as COVID-19; (iii) changes in
the fair value of the embedded derivatives reflected within
variable annuity products’ net derivative results and the impact of
these items on DAC amortization on our SCS product; and (iv) DAC
amortization for the SCS variable annuity product arising from
near-term fluctuations in index segment returns;
- Investment (gains) losses, which includes credit loss
impairments of securities/investments, sales or disposals of
securities/investments, realized capital gains/losses and valuation
allowances;
- Net actuarial (gains) losses, which includes actuarial gains
and losses as a result of differences between actual and expected
experience on pension plan assets or projected benefit obligation
during a given period related to pension, other postretirement
benefit obligations, and the one-time impact of the settlement of
the defined benefit obligation;
- Other adjustments, which primarily include restructuring costs
related to severance and separation, COVID-19 related impacts, net
derivative gains (losses) on certain Non-GMxB derivatives, net
investment income from certain items including consolidated VIE
investments, seed capital mark-to-market adjustments, unrealized
gain/losses associated with equity securities, certain legal
accruals; and a bespoke deal to repurchase UL policies from one
entity that had invested in numerous policies purchased in the life
settlement market, which disposed of the risk of additional COI
litigation by that entity related to those UL policies; and
- Income tax expense (benefit) related to the above items and
non-recurring tax items, which includes the effect of uncertain tax
positions for a given audit period.
Because Non-GAAP Operating Earnings excludes the foregoing items
that can be distortive or unpredictable, management believes that
this measure enhances the understanding of the Company’s underlying
drivers of profitability and trends in our business, thereby
allowing management to make decisions that will positively impact
our business.
We use the prevailing corporate federal income tax rate of 21%
while taking into account any non-recurring differences for events
recognized differently in our financial statements and federal
income tax returns as well as partnership income taxed at lower
rates when reconciling Net income (loss) attributable to Holdings
to Non-GAAP Operating Earnings.
The table below presents a reconciliation of Net income (loss)
attributable to Holdings to Non-GAAP Operating Earnings for the
three months and nine months ended September 30, 2022 and 2021:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)
2022
2021
2022
2021
Net income (loss) attributable to
Holdings
$
273
$
672
$
2,574
$
(693
)
Adjustments related to:
Variable annuity product features
(114
)
172
(2,639
)
3,632
Investment (gains) losses
333
(164
)
890
(767
)
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
19
27
57
87
Other adjustments (1) (2) (3)
39
141
407
672
Income tax expense (benefit) related to
above adjustments
(59
)
(35
)
270
(761
)
Non-recurring tax items
7
5
13
6
Non-GAAP Operating Earnings
$
498
$
818
$
1,572
$
2,176
_______________ (1)
Includes Separation Costs of $25 million
and $62 million for the three months and nine months ended
September 30, 2021, respectively. Separation costs were completed
during 2021.
(2)
Includes certain gross legal expenses
related to the cost of insurance litigation of $2 million and $0
million, $168 million and $180 million for the three and nine
months ended September 30, 2022 and 2021, respectively. Includes
policyholder benefit costs of $0 million and $75 million for the
three and nine months ended September 30, 2022 stemming from a deal
to repurchase UL policies from one entity that had invested in
numerous policies purchased in the life settlement market.
(3)
Includes Non-GMxB related derivative hedge
losses of ($28) million, ($4) million, ($68) million and $140
million for the three and nine months ended September 30, 2022 and
2021, respectively.
Non-GAAP Operating EPS Non-GAAP Operating Earnings per common
share is calculated by dividing Non-GAAP Operating Earnings less
preferred dividends by diluted common shares outstanding. The table
below presents a reconciliation of GAAP EPS to Non-GAAP Operating
EPS for the three months and nine months ended September 30, 2022
and 2021.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(per share amounts)
2022
2021
2022
2021
Net income (loss) attributable to Holdings
(1)
$
0.72
$
1.62
$
6.72
$
(1.64
)
Less: Preferred stock dividend
0.03
0.03
0.14
0.12
Net Income (loss) available to common
shareholders
0.69
1.59
6.58
(1.76
)
Adjustments related to:
Variable annuity product features
(0.31
)
0.41
(6.89
)
8.58
Investment (gains) losses
0.87
(0.41
)
2.32
(1.81
)
Net actuarial (gains) losses related to
pension and other postretirement benefit obligations
0.05
0.07
0.15
0.21
Other adjustments (2) (3) (4)
0.12
0.35
1.06
1.59
Income tax expense (benefit) related to
above adjustments
(0.16
)
(0.08
)
0.71
(1.80
)
Non-recurring tax items
0.02
0.01
0.03
0.01
Non-GAAP Operating Earnings
$
1.28
$
1.94
$
3.96
$
5.02
_______________ (1)
For periods presented with a net loss,
basic shares are used for EPS .
(2)
Includes separation costs of $0.06 and
$0.15 for the three months and nine months ended September 30,
2021, respectively.
(3)
Includes certain gross legal expenses
related to the cost of insurance litigation of $2 million and $0
million, $168 million and $180 million for the three and nine
months ended September 30, 2022 and 2021, respectively. Includes
policyholder benefit costs of $0 million and $75 million for the
three and nine months ended September 30, 2022 stemming from a deal
to repurchase UL policies from one entity that had invested in
numerous policies purchased in the life settlement market. The
legal accruals impact per common share is $0.01 and $0.00, $0.44
and $0.43 for the three and nine months ended September 30, 2022
and 2021, respectively. Includes policyholder benefit costs of
$0.00 and $0.20 for the three and nine months ended September 30,
2022 stemming from a deal to repurchase UL policies from one entity
that had invested in numerous policies purchased in the life
settlement market. No adjustments were made to prior period
non-GAAP operating EPS as the impact was immaterial.
(4)
Includes Non-GMxB related derivative hedge
losses of ($0.07), ($0.01), ($0.18) and $0.31 for the three and
nine months ended September 30, 2022 and 2021, respectively.
Book Value per common share, excluding AOCI We use the term
“book value” to refer to total equity attributable to Holdings’
common shareholders. Book Value per common share, excluding AOCI,
is our total equity attributable to Holdings, excluding AOCI and
preferred stock, divided by ending common shares outstanding.
September 30,
2022
December 31,
2021
Book value per common share
$
4.84
$
25.45
Per share impact of AOCI
21.29
(5.12
)
Book Value per common share, excluding
AOCI
$
26.13
$
20.33
Other Operating Measures We also use certain operating
measures which management believes provide useful information about
our businesses and the operational factors underlying our financial
performance.
Account Value (“AV”) Account value generally equals the
aggregate policy account value of our retirement products.
Assets Under Management (“AUM”) AUM means investment assets that
are managed by one of our subsidiaries and includes: (i) assets
managed by AB, (ii) the assets in our general account investment
portfolio and (iii) the separate account assets of our Individual
Retirement, Group Retirement and Protection Solutions businesses.
Total AUM reflects exclusions between segments to avoid double
counting.
Segment net flows Net change in segment customer account
balances in a period including, but not limited to, gross premiums,
surrenders, withdrawals and benefits. It excludes investment
performance, interest credited to customer accounts and policy
charges.
Consolidated
Statements of Income (Loss) (Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in millions)
REVENUES
Policy charges and fee income
$
796
$
867
$
2,449
$
2,755
Premiums
259
230
744
729
Net derivative gains (losses)
68
(185
)
3,118
(3,930
)
Net investment income (loss)
842
997
2,357
2,914
Investment gains (losses), net:
Credit losses on available-for-sale debt
securities and loans
(267
)
(2
)
(266
)
4
Other investment gains (losses), net
(65
)
165
(624
)
763
Total investment gains (losses), net
(332
)
163
(890
)
767
Investment management and service fees
1,179
1,323
3,731
3,898
Other income
197
220
612
585
Total revenues
3,009
3,615
12,121
7,718
BENEFITS AND OTHER DEDUCTIONS
Policyholders’ benefits
625
751
2,599
2,518
Interest credited to policyholders’
account balances
378
305
1,002
905
Compensation and benefits
566
614
1,679
1,762
Commissions and distribution-related
payments
368
436
1,184
1,215
Interest expense
51
59
148
184
Amortization of deferred policy
acquisition costs
105
64
446
257
Other operating costs and expenses
497
456
1,617
1,511
Total benefits and other deductions
2,590
2,685
8,675
8,352
Income (loss) from continuing operations,
before income taxes
419
930
3,446
(634
)
Income tax (expense) benefit
(92
)
(165
)
(707
)
222
Net income (loss)
327
765
2,739
(412
)
Less: Net income (loss) attributable to
the noncontrolling interest
54
93
165
281
Net income (loss) attributable to
Holdings
273
672
2,574
(693
)
Less: Preferred stock dividends
14
14
54
53
Net income (loss) available to Holdings’
common shareholders
$
259
$
658
$
2,520
$
(746
)
Earnings Per Common
Share
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in millions)
Earnings per common share
Basic
$
0.69
$
1.60
$
6.62
$
(1.76
)
Diluted
$
0.69
$
1.59
$
6.58
$
(1.76
)
Weighted average shares
Weighted average common stock outstanding
for basic earnings per common share
374.5
411.3
380.6
423.2
Weighted average common stock outstanding
for diluted earnings per common share (1)
376.8
414.6
382.9
423.2
(1)
Due to net loss for the nine months ended
September 30, 2021 approximately 3.7 million share awards were
excluded from the diluted EPS calculation.
Results of Operations
by Segment
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in millions)
Operating earnings (loss) by
segment:
Individual Retirement
$
270
$
316
$
837
$
1,093
Group Retirement
134
192
415
514
Investment Management and Research
94
134
330
381
Protection Solutions
72
160
208
264
Corporate and Other (1)
(72
)
16
(218
)
(76
)
Non-GAAP Operating Earnings
$
498
$
818
$
1,572
$
2,176
(1)
Includes interest expense and financing fees of $51 million, $65
million, $156 million and $180 million for the three and nine
months ended September 30, 2022, and 2021 respectively.
Select Balance Sheet
Statistics
September 30,
2022
December 31,
2021
(in millions)
ASSETS
Total investments and cash and cash
equivalents
$
96,656
$
110,299
Separate Accounts assets
109,622
147,306
Total assets
245,600
292,262
LIABILITIES
Short-term and long-term debt
$
4,088
$
3,931
Future policy benefits and other
policyholders' liabilities
34,225
36,717
Policyholders’ account balances
79,999
79,357
Total liabilities
240,413
278,699
EQUITY
Preferred stock
1,562
1,562
Accumulated other comprehensive income
(loss)
(7,876
)
2,004
Total equity attributable to Holdings
$
3,354
$
11,519
Total equity attributable to Holdings'
common shareholders (ex. AOCI)
9,668
7,953
Assets Under
Management (Unaudited)
September 30,
2022
December 31,
2021
(in billions)
Assets Under Management
AB AUM
$
612.7
$
778.6
Exclusion for General Account and other
Affiliated Accounts
(66.8
)
(79.7
)
Exclusion for Separate Accounts
(36.1
)
(48.8
)
AB third party
$
509.8
$
650.1
Total company AUM
AB third party
$
509.8
$
650.1
General Account and other Affiliated
Accounts (1) (3)
96.7
110.3
Separate Accounts (2) (3)
109.6
147.3
Total AUM
$
716.1
$
907.7
_______________
(1)
“General Account and Other Affiliated
Accounts” refers to assets held in the general accounts of our
insurance companies and other assets on which we bear the
investment risk.
(2)
“Separate Accounts” refers to the separate
account investment assets of our insurance subsidiaries excluding
any assets on which we bear the investment risk.
(3)
As of September 30, 2021, December 31,
2021, March 31, 2022, June 30, 2022 and September 30, 2022,
Separate Account and General Account AUM is inclusive of $16.3
billion, $64 million, $16.6 billion, $61 million, $15.1 billion,
$60 million, $12.7 billion, $60 million, $11.7 billion and $58
million, respectively, Account Value ceded to Venerable. For
additional information on the Venerable transaction see Note 1 of
the Notes to Consolidated Financial Statements within the 10-Q.
____________________ 1 This press release includes certain
Non-GAAP financial measures. More information on these measures and
reconciliations to the most comparable U.S. GAAP measures can be
found in the “Use of Non-GAAP Financial Measures” section of this
release. 2 Please refer to Exhibit 1 for detailed reconciliation
and definitions related to notable items. 3 Year to date includes
$112 million of repurchases accelerated from first quarter 2022
into fourth quarter 2021. 4 Please refer to Exhibit 1 for detailed
reconciliation and definitions related to notable items. 5 Refers
to AllianceBernstein L.P. and AllianceBernstein Holding L.P.,
collectively. 6 Free cash flow is annual dividends to Equitable
Holdings from its subsidiaries less annual Holding Company
expenses. 7 Please refer to Exhibit 1 for detailed reconciliation
and definitions related to notable items. 8 Please refer to Exhibit
1 for detailed reconciliation and definitions related to notable
items. 9 Please refer to Exhibit 1 for detailed reconciliation and
definitions related to notable items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221102005907/en/
Investor Relations Işıl Müderrisoğlu (212) 314-2476
IR@equitable.com
Media Relations Todd Williamson (212) 314-2010
mediarelations@equitable.com
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