Yahoo Finance Equitable Holdings Inc (EQH) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and ...
Non-GAAP Operating Earnings: $490 million
Earnings Per Share (EPS): $1.43, up 49% year-over-year
Assets Under Management and Administration: Increased 13% year-over-year to $974 billion
Stock Buybacks: $253 million in Q1
Dividends: Paid $73 million in common dividends
Total Payout Ratio: 68%
Liquid Assets: $1.9 billion at quarter end
Cash Generation Forecast: $1.4 billion to $1.5 billion in 2024
Net Inflows: Retirement segment $1.5 billion
Sales and Deposits Growth: Up 42% year-over-year
Private Wealth AUA: Up 22% to $92 billion
Net Income: $114 million for the quarter
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Equitable Holdings Inc reported strong first quarter results with non-GAAP operating earnings of $490 million, up 49% year-over-year.
The company experienced strong demand for its retirement, asset management, and wealth management solutions, driving significant value of new business.
Assets under management and administration increased by 13% year-over-year to $974 billion, supported by favorable interest rates and equity market tailwinds.
Equitable Holdings Inc returned substantial capital to shareholders, with $253 million in stock buybacks and $73 million in dividends during the quarter.
The company is well-positioned in the U.S. retirement market, leveraging its integrated business model to capture growth opportunities across distribution, product manufacturing, and asset management.
Negative Points
The company noted the loss of a large low-fee passive mandate in its asset management business, partially offsetting strong active net inflows.
Despite positive net flows in retirement and wealth management, the company observed higher outflows in its Group Retirement segment due to higher interest rates impacting net flows.
Variable investment income was below the company's target range of 8% to 12%, although there was some recovery this quarter.
The company's protection solutions business still faces potential volatility despite two quarters of mortality claims being in line with expectations.
Equitable Holdings Inc is still navigating the impacts of regulatory changes, including the DOL rule, although it does not anticipate a material impact on its business.
Q & A Highlights
Q: Can you provide some color on the demand for Individual Retirement net flows? A: (Nicholas Burritt Lane, President of Equitable, Senior EVP & Head of Retirement, Wealth Management & Protection Solutions) The demand is coming from structural demographics, particularly pre-retirees or retirees looking for protected equity stories, often transitioning from 401(k)s as they approach retirement. This segment is the fastest-growing according to LIMRA, with a 50% increase in sales year-over-year and near-record net flows.
Q: With $1.9 billion of cash at the holding company and expecting another $1.4 billion this year, at what point do you feel comfortable drawing down some of that excess? A: (Robin Matthew Raju, Senior EVP & CFO) We are comfortable with our strong capital position, which allows us to capitalize on growth opportunities and maintain our 60% to 70% payout ratio target. We plan to naturally draw down the holdco cash as we continue to pay out at the higher end of our ratio.
Q: Can you discuss the outlook for Protection Solutions given the recent trend in mortality rates? A: (Robin Matthew Raju, Senior EVP & CFO) After a challenging 2023, we've seen two consecutive quarters with claims in line with expectations. We continue to evaluate options to improve profitability and reduce volatility in our protection business, including potential reinsurance.
Q: What are the expectations for AllianceBernstein's inflows for the rest of the year? A: (Onur Erzan, Head of Global Client Group & Private Wealth of AllianceBernstein Corporation) We anticipate continued strong flows into our fixed income and private alternatives, supported by new product launches. While equities are more unpredictable, we see strengths in areas like our Japanese franchise.
Q: What impact do you expect from the BlackRock LifePath Paycheck rollout on group retirement flows in 2Q? A: (Mark Pearson, President, CEO & Director) We are bullish on the in-plan guarantee opportunity, which we believe will significantly contribute to long-term growth. Initial flows from the BlackRock partnership have been received, and we expect it to be meaningful on net flows starting this year.
Q: How sustainable is the earnings power in Group Retirement given the current macro environment? A: (Robin Matthew Raju, Senior EVP & CFO) The growth in earnings is sustainable, supported by good operating leverage, strong equity markets, and higher yields. The BlackRock LifePath product is expected to further enhance this growth over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
